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Warren E. Burger: We will hear arguments next in Radzanower against Touche and Ross. Mr. Sands you may proceed whenever you are ready. Ira Jay Sands: Thank you sir. Mr. Chief Justice and Mr. Justices of the Court, we have a very simple factual situation here, in which a National Bank is one of a number of defendants under a 1934 Act, securities action a 10 (b) (5) claim. And, we go back to a widely known dispute in this nation, in which we find the Third Circuit now, recently aligned against all of the other Circuits, as to whether in a securities related 10 (b) (5) action, the plaintiff must divide his case and must sue the National Bank in the particular district in which that National Bank was established or whether under the wide venue provisions of the 34 Act, a plaintiff may join the National Bank, together with the other defendants in the district in which the violations took place or as the 34 Act permits, where the defendants maybe located or found. It is our position, that in the Second Circuit, where this action commenced, under the Bruns, Nordeman case, this situation is jelled and a divided or bifurcated litigation will be required. It is our position sir, however, that that is erroneous and that the 1864 National Bank Act was not necessarily repealed by implication or otherwise by the 1934 Act, but that the venue provision of the 1864 Act was broadened, was extended in the one instance in connection with a 1934 Securities Act violation. Now, to lightly touch upon ancient history in these hollowed -- William H. Rehnquist: Mr. Sands, you say in one instance and you are talking of course about the 34 Act, but 15 U.S.C. 77 V, the 33 Act, and the Interstate Land Sales Regulation, there are certainly are other Acts giving general venue for specific courses of action, which would be effective by a decision in this case, are there not? Ira Jay Sands: Your Honor, we of course, are concerned with a 34 Act and a 33 Act, which were overlaid as well. However, Your Honor is correct, when any Act states that the defendants maybe sued in a venue where they maybe found or where transaction took place. I would agree Mr. Justice Rehnquist that the argument I am professing for the 34 Act would apply if the language were similar. Now, going back to Ancient history of these hallowed halls, we know that a National Bank is an arm of the American government. The cases are -- the law had not been cited for the lack of pilling on additional material. The First National Bank was organized in the late 1700s as an arm of the government and it could not be sued as the government cannot be sued without its consent. Now, until the 1863, as modified by the 1864 Act, one could not sue a National Bank, which was set-up to administer currency, which was set-up to administer the fiscal policies of the United States, except as specifically permitted by the Congress, by the sovereign. William H. Rehnquist: I thought that there were no National Banks until 1863, before that it was the Bank of the United States? Ira Jay Sands: Your Honor, my understanding is that there were national chattered banks prior to 1863, but the 1863 legislation, which then found itself amended in 1864 was an all encompassing scheme for the institution and the using the broad scale operation of national banks, but the first bank we find out in the brief of the SEC as amicus in their footnote -- William H. Rehnquist: Well, the point may not be important to your argument, but I did not mean to have you spend a real good time on it. Ira Jay Sands: My recollection is not precise as to the thing in the SEC's amicus brief, but it is in the footnote that the First Bank was called Bank of the United States and then we had a lapse of its charter some ten years or so later and then later another bank was set-up to administer the fiscal policy of the United States called the First Bank of the United States or First National Bank of United States. And, the 1863, 1864 legislation was all encompassing, a schematic to operate national banks. Now, we take the position that this was permission by the sovereign to be sued to have one of its instrumentalities sue and the sovereign determined where it can be sued. It can be sued in the district in which it was constituted. Now, we take no issue at that until 1933-34. In 1933 and 1934 of course, we find as it is commonly called the Roosevelt Legislation concerning the 33 Act, and the 34 Act, the so-called remedial statutes concerning banks and the like and we find that we have a number of cases of Bell against Hood, SEC against Joyner (ph), the remedial statutes. We go all the way down to Affiliated Youth case, which was decided only recently, SEC against Capital Gains Bureau, the idea that the remedial statutes be broadly and non-restrictively interpreted. Harry A. Blackmun: Mr. Sands is there anything in the legislative history that shows that Congress actually considered national banks at the time of the enactment of the Securities Acts? Ira Jay Sands: Mr. Justice Blackmun I say yes, emphatically yes. The national banks in 33 and 34 were under consideration. There is a senate report, which is referred to in our briefs. The SEC has referred to that. The Control has referred to it, as well, as we did. The problems of national banks were divided in our analysis in two parts. One; the necessity to protect the investors and the deposits. We all remember the run on the Bank of United States. Harry A. Blackmun: Direct my question, however, to the venue provisions? Ira Jay Sands: Yes sir. There is nothing precise Mr. Justice Blackmun that we have been able to locate, which indicated that the Congress considered the venue provision of national banks at that time. We can only reason from our incisiveness, which we hope is accurate. In that there is decisional law, which indicates that Congress knows every statute on the subject when it legislates. Congress did set-up the Glass-Steagall Act to concern itself basically with protection of depositors, protection of the bank itself in that regard. Congress set-up the 33 and 34 Act in which it did not set forth any exceptions, whatever, to the venue provision with regard to any actions concerning the 33 and 34 Act. There is no legislative history that the precise question was ever discussed. It is merely by inference. Now, our position is that there is no reason for implied repeal, although the facts as they approach would give us the effect of the implied repeal, if we would like to, but judicially we are constrained to say that both may exist together if that is possible. Now, our interpretation of these Acts would leave both fully intact in securities matters, the plaintiff and the commission would have its choice of venue, in non-securities matters or except as Mr. Justice Rehnquist aptly pointed out in other matters where there maybe specific statutory language, one would have to follow the Bank Act of 64. Now, Congress did exempt in the 33 and 34 Act when it is so desired. There were certain definite exemptions in Levin against Great Western Sugar Company, which was a District Court of New Jersey case which started the Third Circuit run of matters that indicated that there was a wider venue than did the Second Circuit. The judge said, “A quick examination of the 33 and 34 Acts reveal that on a number of the cases the legislative draftsman found fit to exempt national banks and their securities from provisions of the act.” And then, he cites 15 U.S.C. 77 (c), 15 U.S.C. 77 (l),” etcetera. It becomes clear that the legislative draftsman knew about national banks, when writing the securities acts and knew how to exempt them from provisions of the acts, when they chose to do so. It would be a new usurpation of legislative prerogatives for this Court to impute an exception to the 34 Act in view of the background just described. Now, the Chicago Bank as amicus in its brief admits that there are exceptions for United States Banks, for National Banks and for the United States government from the registration requirements of the 3 (a) (2) of the 33 Act. The Controller admits that as well on page 6 and again on page 16. In this Court, in Carnation against Pacific Conference in 1965, quoted United States against Borden, which is 308 US to this effect, “If Congress had desire to grant any further immunity, Congress doubtless would have said so.” The courts have in addition carved out additional immunities from the 1864 venue. For instance, this Court in 1968, in Great American Insurance against United States carved down an exception for a claim being filed by a national bank in the Court of Claims and said that the national bank must go to another district where the Court of Claims were sitting in a particular matter, in order to file its claim and the national bank there said, “But you are taking us out of the district that the 1964 Act required.” This Court said, “No, if you are filing the claim under the Court of Claims Act you must go to that district, where that matter is now pending.” In transfers under the JPML, which happen all the time, the JPML has consistently said to national banks, “You must follow along the case. You are not protected in any manner by the 1864 venue to have a separate bifurcated pre-trial in your own district. You must follow the case and of course, you come back later on after the pre-trial is concluded” and we have that in such cases Pittsburgh and Lake Erie Railroad, Great Western Ranches, Len Turner (ph). We have that in Westec. Now, we have another rule, which has been followed by the District Courts, I have not found authority that it has come up here and that is concerning the impleaded third party, where a national bank is impleaded as a third party and then says, “Wait, I can only be sued in my own District.” The District Courts, the Circuit Courts, we have a Fifth Circuit, Lone Star Package against Baltimore and Ohio Railroad said and there were others, said, “No, if you are a third party impleaded defendant, you must go to the district, where the action is being litigated.” Basically, the reasoning behind that I believe has been judicial economy. We can just visualize the number of different bifurcated trials that would result if the banks had that cloak of immunity. Now, I do not, in fact I insist that the Congress did not in 1864 give the banks a cloak of immunity, but the Congress as the sovereign in 1863 and 1864 opened the field, opened the wall of sovereign immunity and gave us permission to sue national banks at that time. And then, in 1934 the Congress again opened the wall of immunity, because of the overriding concern for the populous involved in the securities frauds. So, it is not a question by which our national banks have for 30 years impressed the lower Courts that they are protected, that there is immunity, that the statute was made for their protection. I say no. I say the 1864 statute was made to permit the banks to be sued, not to protect the banks from all suits. The 1934 statute was enacted to permit banks to be sued a little more widely in a more practical sense. Now, there is no reason why both of these interesting statutes may not live together, may not be supplementary, may not each be fully effective, they certainly can co-exist. We found that in the Robertson case 422 U.S., where we had two Acts, which permitted to co-exist. This Court has frequently admonished the lower Courts to attempt to prevent conflict in statutes, achieve the aim of the 1934 Act of Merrill Lynch against Ware, not many years ago. We have been admonished to interpret statutes by practical experience and practical experience certainly would permit the banks to be sued in a securities-related matter, in the same district where everyone else is Aaron Boyle against United States in ‘72. Now, even going back to these interesting old cases, such as Red Rock against Henry, unless the Acts are completely repugnant keep them both alive and we have a long line of decisions. In Wilmot against Mudge, which is 103 U.S. back in 1880, this Court said that both statutes can be said to have their own spheres of operation, if both can stand by any reasonable construction, that construction must be adapted, the basic tenant of law in this nation. We have an interesting case 1846 Beals against Hale and there this Court discussed a parliamentary example, where parliament said that a particular crime was punishable at Assizes Court and then, parliament subsequently allowed another Court to have jurisdiction. This Court stated that examples like that, you must reconcile them, they both must exist and the government in a particular situation like that would have a choice of either forum. Now, in the Posadas case, Posadas against National City Bank, which my learned brother has attempted to interpret against us, this Court said in 1936 that we must seek to interpret the new statute as a continuation of the old statute whenever possible. There certainly has been no statement in any statute or in any interpretation by this Court that a previous Act may not be enlarged, that a venue may not be enlarged. The United States both carries against U.S., 400 U.S. 351 in 1971, which concerned seamen wages and the old law was that the shipping commissioners would determine any problem of seaman's wages. Then, came a modern law, which set-up the Labor Management Relations Act, a very modern procedure, but it did not repeal the old. This Court held that the old Act was a very literal one; the new Act was a progressive one. However, that did not permit this Court and did not permit a Court to abrogate or repeal the old Act and that they both would exist as two separate possible methods of procedure by the seaman, who was injured in his financial rights. Now, we do have our decisions of this Court, which insist that the power to enforce, implies the power to make effective the right of recovery afforded by the 34 Act or by remedial statutes, a case against Borac (ph), which cites with approval, Bell against Hood, 1946, may I quote this shortly. “It is well settled that where legal rights have been invaded and a federal statute provides for a general right to sue for such invasion, Federal Courts may use any available remedy to make good the wrong done.” Potter Stewart: What is you say is, just before you proceed if I may interrupt you, it has been your submission up to now that these two statues can co-exist without -- can compatibly and continually co-exist. Have I understood you correctly, have I? Ira Jay Sands: That is my strongest argument. I feel strongly about that. I have also placed my leg on the other point that even if they cannot co-exist. Potter Stewart: If one only looked only at the text of the venue provision of the National Bank Act, the 1864 Act, your argument will have a very great deal of (Inaudible) I think, because it simple provides that actions and proceedings against any banking association maybe be brought, but we have Langdeau case and the Michigan case, which construed that language in that statute to say that this is exclusive, it is not permissive, that it is exclusive and I do not really follow you when you said that these two venue statutes can co-exist. I do not mean that you will loose your case if they cannot, but the Security Exchange Commission, for example tells us that these two venue statutes are in hopeless and irreconcilable conflict? Ira Jay Sands: I cannot -- Potter Stewart: You obviously disagree, because you say they can both co-exist? Ira Jay Sands: I do not fully agree with my very learned brother at the SEC and I have told him that. I think he has taken a strong viewpoint, they cannot co-exist. It is my position sir that the cases, which you mentioned refer not to two special federal venue statutes. Potter Stewart: No, but they did construe the venue provision of the National Bank Act. Ira Jay Sands: Yes sir, but they construed vis-à-vis a State Act. They did not construe vis-à-vis an equally significant federal statute. The 1864 statute did not say that no future Act may further enlarge venue and the 1934 Act did further enlarge venue. The case which Your Honor has cited, construed the question of permissiveness with regard to state venue and there, there is no question in mind. I do not know of a single decision reasonably interpreted, which would permit any state statute to enlarge the 1864 venue provisions, but Congress is Congress. Congress is in effect a continuing body from the day of the founding fathers to this day. Congress may change its mind. Congress may enlarge what has previously had restricted. Potter Stewart: There is no question to the fact that Congress could have amended the National Bank Act venue provision. It could have repealed it. It could have done a variety of things to it, but everybody agrees, I gather that there is nothing -- Congress has certainly done nothing explicit with respect to the 1864 Act? Ira Jay Sands: Explicit it did not, implicit we believe they did. Implicit -- I am sorry I did not mean to interrupt you sir. Potter Stewart: No, go on. Ira Jay Sands: Implicit we believe they did for the precise reason that the 34 Act was an all encompassing method of operations with regard to security, something quite new in this nation. The exception was not put in there. I have mentioned that the 34 Act did accept, precisely accept certain activities vis-à-vis securities of national banks, specifically except National Banks, United State Government Securities and similar and I read Judge Bloomfeld’s opinion, language in the District of Connecticut in which he said they knew how, a little sarcastic as I read it, and interesting in his emphasis, they knew how to except if they wish to except. There was no exception. There could be now exception to a state statue which attempted to broaden the 1864 law or accept from the 1864 law. I therefore, I differed with my brother at the SEC in their amicus brief, when I said that the 34 statute is a supplementary to the 64 statute. William H. Rehnquist: Why did you abandon your waiver argument? Ira Jay Sands: I have not sir. William H. Rehnquist: I thought maybe you have? Ira Jay Sands: No sir, I have not. I feel that waiver is a hard road to hold -- William H. Rehnquist: I notice you did not cite the Nearble case 308 U.S. where this Court held that there had been a waiver by a corporate defendant of a right to be sued under the statute, by filing of a consent to service of process, not too different from that in our case? Ira Jay Sands: No sir, we did not cite that case. There have been situations where waiver has taken place. Byron R. White: You did not -- you have not raised the waiver issue in your petition for certiorari, right? Ira Jay Sands: We did sir. I believe we raised it in the petition for cert and we have raised in each one of our briefs. We have not, however, hammered hard upon it. I feel that waiver is our weakest argument in this regard. Byron R. White: Do you think your question presented -- subsumes the waiver issue? You present one question, should not there be important once brought a serious conflict by declaring the more liberal venue provisions of Securities Act prevail over the stringent national bank Act, that is the question that you presented? Ira Jay Sands: Yes sir. Byron R. White: Does that include waiver? Ira Jay Sands: No sir. Byron R. White: What is the end of the waiver question? Ira Jay Sands: No, the two questions, which I did present in our brief, I include the second as a waiver and I have said sir without a question that the waiver is the weakest of the two arguments. Byron R. White: We did not add certiorari on that question, because it was not presented? Ira Jay Sands: I am perfectly content Your Honor to hold firm on the question of both statutes living together or in the alternative. Byron R. White: Your argument is is quite error somehow? Ira Jay Sands: No, I do not sir. Harry A. Blackmun: (Inaudible) the waiver not in the question presented, but you talked about it elsewhere -- Ira Jay Sands: In the body sir. Harry A. Blackmun: You gave much greater emphasis to it in the District Court than you have here in your brief? Ira Jay Sands: Your Honor, Mr. Gatley (ph) who argued in the District Court and in the Circuit Court was met with the dilemma. There is no question as you said to Judge Mulligan, there is no question about that the law of the Second Circuit is very clear, the Bruns, Nordeman case and when Mr. Gatley presented orally the Third Circuit decision and the Judge Mulligan said, “Do you wish us to reverse ourselves?” Mr. Gatley’s language in effect was a polite suggestion that in view of the fact that the retired Chief Judge had previously reluctantly affirmed in the Bruns’ case that he politely was suggesting that perhaps you might reconsider it. In view of the fact that you now have a peg to hang your hat on, the waiver question. The reluctance was something that we were hoping would cause the panel to change. The panel is very quick to affirm. Mr. Gatley held in his hand a Xerox copy of the Third Circuit of the Ronson against Liquifin decision and I believe if I recall correctly you read a passage from it. The waiver was the peg to hang ones hat upon and we could not expect the District Court to reverse the Circuit by a frontal attack upon the propriety of the 1864 statute, either as implied repeal, which I still maintain is our second leg or the cooperation between the two of the supplementary effect, the either or situation. Justices Black and Douglas, may they rest in peace, did have this interesting concurrence in the Michigan National Bank case in which they spoke, they tried to get around it by claiming that there was a waiver situation, because the bank came across the state line to do business and conferred its self in the new state. The problem that we do have with our adversaries is that historically they have taken the position that the National Bank Act of 64 is mandatory and we insist it is mandatory only against a state conflicting decision. It is not mandatory against another special venue provision. Now, a perfect example, although we have not found case law in this Court on two special venue statutes, is the jurisdiction question. Warren E. Burger: (Inaudible) counsel. Ira Jay Sands: I am sorry sir. May I close with one sentence, sir? Warren E. Burger: (Inaudible) Ira Jay Sands: Thank you. I would suggest, I will urge that any doubts be resolve in favor of lessening the burden of duplicative litigation. We have the Amel (ph) against United States case, which came from the Court of Claims, a multi party wage claim and this Court said, “One form eliminates any problem with transferring venue from several District Courts to one locale. If we are here misconstruing the intent of Congress --” Warren E. Burger: Is that in your brief? Ira Jay Sands: No sir. Warren E. Burger: Go on, finish it. Ira Jay Sands: It can easily set the matter to rest by new congressional explicit language. Thank you sir. Warren E. Burger: Mr. Gates. Samuel E. Gates: Mr. Chief Justice may it please the Court. I am here appearing for the respondent First National Bank of Boston only. At the outset I would like to set the record straight in the posture of this case. Before the lower courts, the only issue raised by petitioner in this case was one of waiver. The allegations of this complaint, a charge that there has been a violation of Section 10 (b), the New York State statute and the common law and that arose out of the latest issue and some false misleading statements by TelePrompter Inc, which have been developed as a result as a formal complaint and investigation by the SEC, where upon a class action was brought in the Southern District of New York. The plaintiff purported to bring the action under the venue provisions of Section 27 of the Exchange Act. That complaint does not allege that the bank which was the agent bank in a $150 million credit loan agreement had anything to do with the latest issue of the false statements. It does not allege that the bank purchased and sold TelePrompter stock or that made any profit out of any of the transactions complained off. The basis of jurisdiction and the cause of action against the bank, as I see it and I am not sure that I am right is that the bank is a alleged to have aided and abet the other defendants. And, it reached this fiduciary obligations to the investing public, because it did not disclose to the SEC, to the New York Stock Exchange and the public generally some information which it had learned as a lending bank and which is alleged to be inconsistent with the statements issued by the TelePrompter. Where upon, relying upon this Court’s decisions in Langdeau and Robertson, which makes mandatory the application of Section 94, we moved under as Rule 12 and Section 94 to dismiss for lack of proper venue. At this point Your Honors, may I say, I want to make our position perfectly clear. We are not saying that the Exchange Act does not apply to a national bank. We are saying only that the venue must be laid in the District where the bank is established. Whatever rights the petitioner may have here, he can pursue in the District of Massachusetts. Now, petitioner has conceded that the bank is established in Boston and indeed as it has been since 1864, right after the National Banking Act was put into effect. And, he conceded in his affidavit, which appears at page 77 (a) of the appendix, that under normal circumstances, Section 94 of the National Bank Act would prevent a bank foreign to this meaningless Southern District from being sued in the Southern District, but they argued because the bank had qualified under Section 131 (3) of the New York Banking law to engage in a limited fiduciary capacity in its activities in New York that constituted an in test waiver. Now, this was the issue which was before the District Court. The District Court found as a fact that there have been no waiver. Petitioner appealed to the Second Circuit, again on the issue of waiver. William H. Rehnquist: Was Nearble (ph) argued to the District Court? Samuel E. Gates: It was not your Honor; it was not cited in any of the briefs. At no time in the District Court or in the Court of Appeals, in any of this record until you get to the oral argument before the Second Circuit is there ever a reference to the fact that there might be some conflict between Section 27 and Section 94. There is not one word of implied repeal or repeal by implication. Only when it got to oral argument was the Ronson case, decided by the Third Circuit in 1973 ever mentioned. And then, when it was mentioned by counsel for the petitioner, he did not urge that as a basis for an implied repeal. He did not rely upon it on that basis at all. Now, petitioner has agreed and answered the questions from Mr. Justice White that is effect he has abandoned his argument of waiver. I submit Your Honors please that one has only to look at the question which appears on page 3 of the petition for Certiorari to see that there is a single question positive and that question -- Byron R. White: Are you implying that that question is not properly here either? Samuel E. Gates: Well, yes I am Your Honor. Byron R. White: Well, you made this very argument in your opposition for the petition for Certiorari. Samuel E. Gates: That is correct. Byron R. White: And we granted the petition with that single question in it? Samuel E. Gates: I am well aware that this Court has the right to -- Byron R. White: (Voice Overlap) we nevertheless, we had this very argument -- Samuel E. Gates: I understand that Justice White that you have that, but I suggest that on this record and I say with no disrespect, that Certiorari was improperly granted. It was not passed upon by the District Court or the Circuit Court and as I understand Certiorari, a matter is brought here for your review. Byron R. White: If you have any doubt how the Court of Appeals for the Second Circuit would have decided the issue that is now stated that was stated in the petition for Certiorari? Samuel E. Gates: None whatsoever as I read the opinion of Chief Judge Henry Friendly in Bruns against Nordeman, followed by the decision of Clyde (ph) against Power (ph), I can see no possibility that Second taking it for a review and as a matter a fact, the Ninth Circuit both in 1970 and 1972 had precisely this issue -- Byron R. White: Are you suggesting we ought to send this case -- to dismiss for petition for cert as improperly granted or vacated and remand so that the Second Circuit may tell us what the answer to this question is in the Second Circuit? Samuel E. Gates: I think it would presumptuous Mr. Justice White for me to tell you what this Court ought to do and I would therefore refrain from responding, but let me answer it this way. At the time of the argument, before the Second Circuit, Judge Mulligan, who was the presiding judge turned to Mr. Gatley (ph) and said, “Counsel, are you suggesting that this court reconsider or overrule its decision in Bruns against Nordeman and Mr. Gatley responded in the negative that he was not asking that that be done. I submit that on the law as developed in this area. Going back a great many years, but referring specifically to your opinion Mr. Justice White in Langdeau followed by Robertson and the cases that have followed subsequent to that, that there is no need to repeal, particularly when you say the subsidy provision of the Act can be applied. Granted there maybe some inconvenience, granted there may be some hardship, but in this case, I submit that the hardship is much, much less than it was in Michigan National Bank against Robertson and if we are going to decide that repeal by implication is to be determined by the hardship, it would concrete of the decisions that have come down from this Court in the past. Let me move from this question of fact that I have some doubt of whether I should be here today, I know I am, let me try to deal with this question of implied repeal a little bit. This Court has not directly passed on the question which the petitioner posits here today. I am frank to say that there is such a shift in position that occurs with respect to this petition that I am not sure just what I am called upon to respond to. In the Lower Courts we were talking about waiver. The petitioner for certiorari talks about the broader provisions of the Securities law prevailing over the narrow provisions of the Banking Act or can they co-exist and then in the reply brief we get a completely different -- Warren E. Burger: We will resume there at 1 o' clock. Mr. Gates. Samuel E. Gates: Thank you Mr. Chief Justice. Warren E. Burger: Mr. Gates you may pick up where you left off. Samuel E. Gates: Mr. Chief Justice, and may it please the Court. I think when we recessed at the luncheon recess that I was about to say that in Bruns, Nordeman, then Chief Judge Friendly relying upon this Court’s decisions in Borden, Robertson and Langdeau found that there were no basis for implied repeal. Mr. Sands this morning in his brief said and attempted to differentiate at least Langdaeu and Robertson on the grounds that they only have state statutes involved. Now, that precise question was presented to Judge Friendly at the Second Circuit and what I think was a very careful analysis, he rejected that argument, saying in these words, “It would indeed strain language to say that the same verbs are merely permissive with respect to suites in federal courts, although prohibitory as to actions in state courts.” Now, clearly Section 27 -- John Paul Stevens: But did he not go on and say that they were foreclosed in that Circuit by an earlier decision too? Samuel E. Gates: That is not my recollection -- John Paul Stevens: I think that were two points that he made. Samuel E. Gates: I will stand corrected if I am in error. Clearly Section 27 does not by its express terms repeal Section 94, nor did Congress say as petitioner has asserted in his reply brief that enacting the 34 Act and I quote, “Congress intended that a National Bank in the Securities’ case could be sued in certain, specified additional Act districts.” Petitioner admittedly get no help from the legislative history. He has acknowledged this morning that he can make only an implicit argument. What he argues that the two statues can co-exist, but the principal thrust of his opening argument seems to be that the implied repeal of Section 94 can be found, because the broad public interest at the time of the enactment of Securities Act required it. The 1934 Congress was consumer concerned that the 1934 Act was meant to supersede any earlier conflicting statutes. But suffice, we are able to ascertain nothing supports these assertions except the (Inaudible) of counsel. But they go even farther at page 16 of the opening brief and they say, “Congress' silence evidences its intent in 1934 to impose the venue provisions of the 1934 Act on all concerned.” We can find no case from this or any other court, which supports the thesis that silence, will support implied repeal. However, as Mr. Sands has acknowledged this morning, the SEC in its brief makes a completely different argument, saying that the adherence to the decisions of the Second and Ninth Circuits would frustrate the policy of the ‘34 Act and would have an adverse effect upon the enforcement activities of the commission. I would remind this Court that the 1934 Act has been in effect for 42 years, yet the commission in its brief does not cite a single instance where a resort by a National Bank to the provisions of Section 94 as evinced upon or interfered or adversely affected the Commission’s enforcement activities. The sole justification advanced in support of this thesis is that the Commission may be unable some day to join some National Bank in some unidentified future enforcement procedures. An argument was made just ten years ago, before the Southern District of New York in an action entitled General Electric Credit Corporation against (Inaudible), where the Commission again filed an amicus brief. The Department of Justice representing the Controller of Currency took an opposite point of view. Judge Tanny made a very careful survey of the situation and he came to the conclusion that there was nothing to support the conclusion of implied repeal. Now, in somewhat different context, but I submit a similar situation, Mr. Justice White in writing for this Court said in Mercantile National Bank, that this was a problem for Congress to consider. It was not a problem for this Court. One would have thought had been in fact an interference with the Commission's enforcement activities during the last 40 years that they would have gone to Congress and sought help. They have not been reluctant to do so in the past, but they have not done so here. Whatever maybe the speculative views of petitioner as to the intentions of Congress or whatever the SEC believes are the controlling policy considerations. We have been unable to find any support in any decisions from this Court, which will sustain an argument for implied repeal. To the contrary, this Court consistently taken the view that absent a waiver by a bank, the Section 94 mandates that all transitory actions shall be brought only in the district where the bank is established. In order to sustain implied repeal, there are two cardinal precepts as we read the cases, which must be undertaken and established by the petitioners. One; there must be a clear and manifest intent to repeal and two; there must be a positive repugnance or an irreconcilable conflict. We find neither of those present in this situation. There is nothing to support in our judgment, clear and manifest intent to repeal. In an effort to buttress the arguments of the petitioner and its own arguments, the SEC in its brief refers to the report of Senator Fletcher of the Senate banking and currency committee and says that this sustains the position. I submit that the Fletcher report is completely irrelevant to this arguments. It was not submitted to the Senate of the United States until after the 34 Act had become law and it made no recommendations of any kind with respect to immediate legislation. Now, certainly at the time that the 1934 Act was adopted, Congress was aware and this is conceded by petitioner, of the special status which Congress has granted to national banks, going back to 1864. William H. Rehnquist: Mr. Gates would it had been sufficient in your view, dealing with the repeal intent, if somebody had got up on the floor of Congress and said that the 34 Act venue provision is broad and we mean it to apply just in its literal language? Samuel E. Gates: It would have been very considerable assistance Mr. Justice Rehnquist, if we had found something like that, but we have found nothing of that in nature to indicate that there was any real consideration given to this particular issue. It is quite true that the Congress was concerned about abuses which have been developing and existed in the Securities industry, but they were also well aware of the special status of national banks. William H. Rehnquist: But, if it would have been sufficient instead of get on the floor and say that why is not even more impressive that they used broad, general language in the statute itself? Samuel E. Gates: Well, I suppose one can make that argument, I do not happen to subscribe to it, based upon the decisions which have emanated from this Court, but certainly, conceptually one can make that argument and I would be lacking in candor if I did not acknowledge it. But, I cannot believe that simply by enacting Section 27 and by silence that it can be properly construed that Congress intended to amend or repeal Section 94, but to petitioner it seems to me at more difficult burden in sustaining implied repeal in that he must show positive repugnance or irreconcilable conflict between the two statutes. And, I submit that petitioner has made no attempt at such a showing. In his reply brief at page 3, he concedes that implied repeal is more difficult to establish, than what he terms co-existence. I think it might have been might be a little accurate if he had said it was impossible, under these circumstances to establish implied repeal. And then, on the next page of his reply brief, that is on page 4, under the heading, the two venue statutes are supplementary and not in conflict. He apparently abandons any effort at showing repugnance and he characterizes this as the major point of his argument. He said this morning there is no reason why they cannot co-exist, a position which is diametrically opposed to that of the SEC, which pep the entire brief that it submitted as amicus in establishing that there was repugnance and a direct conflict. I submit that when petitioner is talking about harmonization of the two statues that you can make them each effective in its own sphere. He is engaged in, if I may use a colloquialism, kidding himself. He asserts that each special statutes is a special grant by Congress to a forum and that more than one statutes applies, a plaintiff has the benefit of both and he can make his choice, that is of Section 27 or Section 94. With respect that I suggest that if that were the law, and in the situation there would be no need for us to be here today. I would suggest also that even if he is correct, the fact that he may make the choice does not mean that he is going to be able to stay in that forum, because Section 1404 (a) of the judicial code is still in the books. It my well be that a defendant can invoke the provisions of that Section. I submit that petitioner is really not asking for harmonization. He is asking for an exception, an implied repeal Section 94, where Securities Act law violations are charged and he would equate such exception to that exception recognized by this Court with respect to purely local actions in Cassey against Adams (ph). As I have indicated and as Mr. Sands agrees, the Commission that is not on the Court with petitioner's view is that the two statutes can co-exist. Rather he argues that the two venues statutes are in direct and irreconcilable conflict and the Section 27 supersedes Section 94. It says that they are repugnant in both their policies and their practical effects. However, he does concede that if Section 94 prevails then bank can be sued only in Boston. It seems to me that by making such concession, it is an overt admission that the Exchange Act can be made to work against the bank in Boston. Now, in attempting to establish repugnance, the Commission relies on two cases decided by this Court only last June. Gordon against New York Stock Exchange and United States against NASD. He argues that Section 94 has been impliedly repealed by Section 27, because such repeal is necessary in this case to make the federal record choice scheme work in the Securities industry. In that regard, it seems to me that the Commission overlooks Silver against the New York Stock Exchange, which says that if there is repeal by implication, it will be granted only to the extent necessary to make the act work and then, only to the minimum. But, those two cases if the Court please, I submit are distinguishable. In each of those cases the requirements of implied repeal had been clearly satisfied. In order to make the regulatory scheme work as envisioned by Congress with respect to fixed rate commissions and with respect to the sales and distribution of mutual funds, this Court held that the anti-trust laws have to give way. There was no way to reconcile the restrictive agreements, which were developed in the Securities industry with the anti-trust laws, the scheme that been envisaged by Congress. But, there is nothing in the case at Bar, which makes these holdings opposite. As I said earlier the substantive provisions of this law can work in Boston as well as they can in New York. The bank is not immune from the terms of the securities laws nor is it exempt from potential liability that violates the terms. We say only that the issue whether it violated the term should be determined in the District of Massachusetts rather in the District of New York. Byron R. White: Has there been some case in this Court construing the word located in Section 94? Samuel E. Gates: There is Mr. Justice White, but I am frank to tell you the name of it escapes me. Byron R. White: Do you think it is actually been decided here that located means the place of its incorporation? Samuel E. Gates: No, Your Honor. Byron R. White: What does it means then? Samuel E. Gates: I understand that located equates itself to what I would term what might be the principal place of business, if you talk about it in terms of general corporate law. Whereas established which is the word which is used with respect to a national bank, being sued in a federal context I understand it means the place where its charter says that it is established, the home office. Byron R. White: But, it says that the or in any state county or municipal court in the county or city in which the said association is located? Samuel E. Gates: That is correct Mr. Justice White, but as I interpret the statute, as I have understood from the decisions from this and other courts, the word locate relates itself to actions, which are brought in state courts and that is where the bank must be located. Whereas you are talking about actions in the federal court, the word establish is used. Byron R. White: What if this action has been brought under state law in a state court? Samuel E. Gates: Well, then under you Honor’s decision in Langdeau I do not think we have any problem.[Laughter] Byron R. White: Well, I know, but that case did not focus on location, did it? Samuel E. Gates: Well, there were 145 defendants in that action of which two were national banks and in an opinion written by Your Honor you said that they had to be go to another (Voice Overlap). Byron R. White: The big issue in Langdeau is whether it was exclusive, whether that venue provision was -- whether the word may must -- Samuel E. Gates: That is quite true. Byron R. White: And, it did not really go to the question what the meaning of located was? Samuel E. Gates: That is also correct. Byron R. White: Well, so again I ask you, do you know of any cases that construes it? Samuel E. Gates: I have to tell you I do not. Byron R. White: Okay, thank you. Samuel E. Gates: Thank you, Mr. Justice White. Warren E. Burger: (Inaudible) Samuel E. Gates: It has -- I am sorry Your Honor, thank you very much. Warren E. Burger: Thank you gentlemen. The case is submitted.

Earl Warren: Number 893, Caryl Chessman versus Harley O.Teets. William O. Douglas: Mr. Davis, are you ready? George T. Davis: Yes, Your Honor. May it please the Court, colleagues from California, my associate. I'm representing, petitioner, Caryl Chessman in this matter together with Ms. Rosalie Asher. This is a petition for a writ of certiorari and we are here today on a hearing having been granted. The petition was directed to the Ninth Circuit Court of Appeals who had affirmed the judgment of the United States District Court in California, denying a petition for a writ of habeas corpus which had been filed by Caryl Chessman. The question as framed by this Court in effect is whether under the circumstances of this case, the failure of the trial court in Los Angeles at the time of the original trial and thereafter, whether the failure at the time of the settlement of the trial record by that Court to allow Mr. Chessman or counsel for Mr. Chessman to be present at settlement proceedings was of such a nature as to denying him due process of law under the Fourteenth Amendment to the Constitution of the United States. William O. Douglas: Wasn't that the -- their question was the same one that was here in 1950? George T. Davis: At that time, I think the petition raised that question but this Court at that time sent the case back, I believe. William O. Douglas: We denied certiorari. George T. Davis: Denied certiorari. That is correct, sir. William O. Douglas: But wasn't that single question presented on a petition? George T. Davis: Not that single question. There were several questions presented and I think the question of fraud was the fraudulent connivance by the Judge and by the district attorney and by the court reporter in presenting a spurious and false record were used on appeal. William O. Douglas: That was later -- that was later I think. I think this -- this question is presented in the summer of 1950 to this Court? George T. Davis: Well, that may be. I was not his counsel at that time and it could be. William O. Douglas: Yes. George T. Davis: It could be. William O. Douglas: It was on a petition for a certiorari to denial I think of the writ of habeas corpus which got to the -- George T. Davis: That was the -- William O. Douglas: -- question of jurisdiction. George T. Davis: -- that was the matter before the Court at that time. William J. Brennan, Jr.: Do you say Mr. Davis that he was denied the right to have counsel at the -- present at time with the settlement proceeding? George T. Davis: Yes, Your Honor. That's our contention and we will go on. William J. Brennan, Jr.: Meaning as a -- as a fact? George T. Davis: As a fact, he did not have counsel at those proceedings. William J. Brennan, Jr.: No, but was he offered an opportunity to have counsel? George T. Davis: He was not offered an opportunity to have counsel. His repeated request that he'd be represented or that he'd be present at said proceedings were ignored or denied. William O. Douglas: But he -- he expressly waived counsel at the trial, didn't he? George T. Davis: At the trial itself. At the original trial at Los Angeles, he waived counsel. William O. Douglas: He conducted his own defense? George T. Davis: He conducted his own defense. But he did not waive counsel subsequently in the light of the unusual and unprecedented circumstance that took place with the death of the court reporter. William O. Douglas: Did he ask that counsel be appointed to represent him in -- in this matter of the record? George T. Davis: He did not ask that counsel be appointed. He asked that he be allowed to represent himself and he acted in making such request on representations which had been conveyed to him at the prison at San Quentin, representations of both the Judge and the district attorney that he would be allowed to be present in Court at the settlement proceedings. It was not until the proceedings were terminated that he discovered that he was not allowed to be present for himself. (Voice Overlap) -- Felix Frankfurter: If you were to read and if you understand it accurately the exact term in which this Court granted certiorari, there wouldn't be need of all these discussions. Because the terms of certiorari were whether there was a violation of the Fourteenth Amendment in that, he was not represented in person or by counsel designated by the state court in his behalf. George T. Davis: That is correct, sir. William O. Douglas: It is a very different thing that he was refused the presence of counsel of his selection. George T. Davis: Yes, Your Honor. William J. Brennan, Jr.: But I was interested in knowing whether he had requested counsel to represent him. George T. Davis: He -- no. He did not specifically request counsel. He filed an affidavit or filed a motion, rather, with the trial court asking that he'd be allowed to be present so that he could participate in the discussions and contribute his memory of what had happened to the memories of all the others who were being asked for their memories. Felix Frankfurter: And that's the only question that was determined by the Court of Appeals. George T. Davis: That's right. That question -- Felix Frankfurter: And therefore, I call attention to the exact terms in which we asked audience or allowed audience because that brings out plainly enough. It wasn't his presence or his designation or his selection of counsel but whether implied he'd have the duty on the part of the court to designate counsel. That's why it was framed that way, plainly enough. George T. Davis: Now, may I just discuss what I deem are the pertinent circumstances that relate to that particular question as to -- as phrased by the judge and as, of course, presented by the Court. This man was arrested and tried in 1948 just about exactly nine years ago. On May the 21st of 1948, the jury rendered its verdict. There were two death sentences among the others. He was charged, he was tried on -- before the jury on 18 counts of various and miscellaneous crimes, not the same but at different times and different places, all 18 before the same jury. Acquitted on one, convicted on 17, sentenced to death on two. He was sentenced to death for the kidnap-robbery, under the kidnap-robbery statute. He did not kill anyone in connection with these offenses. There was a bodily harm aspect to one of the statutes which if the jury found there was bodily harm in the kidnap-robbery, allowed them to sentence to death. I might say parenthetically that statute was amended in 1951 and is no longer the same as it was at that time. Now, the verdict of the jury came in on May the 21st of 1948. Subsequently, on June, notices of motions for appeal and so forth were filed. But on June the 23rd of 1948, the court reporter who had reported the trial died of a heart attack. It was discovered almost immediately that he had not completely transcribed the notes of the trial. That approximately two thirds of the notes of the trial had not been dictated by the reporter and remained in his original notes. A -- a motion was made by the defendant who was still representing himself in propria persona for a new trial under a civil statute which -- which applied to this type of case and provided that the Court would have the power where the -- a court reporter died to grant a new trial. There was no such statute in existence in California nor is there today applicable to the case wherein a criminal proceeding, the court reporter should die before the notes are transcribed. Under California law, just to pass it because it's one -- another of the circumstances, the appeal is mandatory. It is not a matter of right in the sense that we sometimes think of it, but it is mandatory in death sentence cases. And the appeal, the mandatory appeal is required to be taken on all the entire record of the proceedings in the court below. According to the rules of the Judicial Council in California, there are several methods of perfecting a record. One method of perfecting the record and the method which was adopted in this case was a method which could not be adopted as it is stated in the rule because of the death of the court reporter. Because the rule provides that under that method, the court reporter shall transcribe the entire record and the court reporter shall certify to the accuracy of the record and shall file it. Of course -- Felix Frankfurter: May I -- may I make that explicit? George T. Davis: Yes, Your Honor. Felix Frankfurter: Am I right to infer from that that under your procedure in California, the trial proceedings could not be cast in narrative form? George T. Davis: That is correct, Your Honor. There is a proceeding which is the choice of -- Felix Frankfurter: I mean in -- in murder cases. George T. Davis: That is right, Your Honor. Felix Frankfurter: The deal is automatic and that has to go to the Supreme Court of California, a stenographic account of what took place in the trial court. George T. Davis: Certified, too, by the reporter, under the rules of the Judicial Council. Felix Frankfurter: I mean you have the agreement is between counsel of omitting anything or putting it classic, in narrative form? George T. Davis: There is a statute 36, section 36 of the rules of the Judicial Council allows the -- the convicted person to choose a form of settlement similar to that which you are speaking about. But this is entirely a choice of the appellant under the rule. Felix Frankfurter: But if he stands and said, I want every word of what took place from the time the jury who examined on the (Inaudible) is entitled to that. George T. Davis: That is our position, Your Honor. And that is the law. Felix Frankfurter: (Voice Overlap) -- I'm asking if that ought to be susceptive of all the -- of a --- a categorical answer. George T. Davis: It is. And that is the law. Now, in this connection, the judge practically, immediately recognized that the circumstances that had developed by reason of the death of the reporter created the situation where it was -- under which it was impossible under California law to perfect the appeal in accordance with the rules of the Judicial Council. And at the -- at a hearing on the 25th of June, two days after the death of the court reporter, Judge Fricke, the trial judge said in effect that an appeal would be perfected within the limits or to the best extent of human ingenuity. He indicated that he saw no reason at that time why the report couldn't be transcribed and then stated in so many words that he would order an appeal to be perfected, an appeal record to be perfected to the extent of human ingenuity, and recognized in so many words in that order that an appeal could not be perfected in accordance with the mandatory requirements of California law. Felix Frankfurter: Now, may we assume, Mr. Davis, that in everything you will say regarding the circumstances of the kind of record that were adopted in the Supreme Court, whatever you will be laying before the Court will be derived from the record before Judge Goodman in the District Court? George T. Davis: Yes, sir. Felix Frankfurter: And such other documents regarding the case of which the Court may take judicial notice. George T. Davis: You may assume that. I will not deviate one iota that from that record. Felix Frankfurter: (Voice Overlap) -- And when you -- on some these things that they become essential not to paraphrase what was said in Judge Goodman's thought, the thought was actually in the record. George T. Davis: Yes, Your Honor. I'm prepared to do that, I think. Now, to pass over this space a bit, the next thing that happened was that some steps were taken. I'm speaking, now, of those things which took place before the hearings in Judge Goodman's Court and which are a matter of record before this Court. The Judge then called the attention of the district -- the assistant district attorney, Mr. Leavy to the situation since they were both in open court and instructed Mr. Leavy to take some steps, to see whether the record could be put together within the limits of human ingenuity. This was in June of 1948. Some proceedings were then begun by Mr. Leavy to obtain a contract or to obtain permission to employ a court reporter who could -- who would be able to transcribe Mr. Perry, the deceased reporter's notes. The proceedings to employ a reporter are -- are pretty well set forth in the hearings before the District Court or the -- that is the circumstances of what happened. However, I wish to call Your Honor's attention to the fact that in September of 1948, a Mr. Persons (ph) who was the head of the Court Reporter's Association in Los Angeles County wrote a letter which appears in this record and which was forwarded to the Court and brought to the attention of the Court and the district attorney that court reporters in Los Angeles Country had attempted to decipher the deceased reporter's notes. And that in his opinion, those notes were undecipherable and that as a result, the making of a contract for some third party reporter to decipher these notes was not a very proper thing to do because in the opinion of the Court Reporter's Association, it was not a practical or feasible thing from the point of view of actually deciphering the notes. Now, that letter which was sent by Mr. Persons (ph) is in the files and the records of these proceedings was brought to the attention of the Court who stated in the District Court that he had familiarity with that letter. Now -- Speaker: Was that letter before Judge Fricke? George T. Davis: Yes, Your Honor. Speaker: (Voice Overlap) -- George T. Davis: I'm speaking or that. That was sent to the Superior Court. Subsequently, this is now -- we're up now to -- to September of 1948. Subsequently, Mr. Leavy obtained the services of a Mr. Fraser, a Stanley Fraser, who was a court reporter. Mr. Leavy obtained the contract from the City of -- from Los Angeles; to employ Mr. Stanley Fraser at what has been estimated at three or more times what would be paid to an ordinary court reporter doing this particular kind of work. Mr. Leavy instructed or apparently instructed Mr. Fraser to go ahead and gave him the notebooks. And he was instructed to proceed with the transcription of these notes. Now -- Felix Frankfurter: Was the -- was the consent of Judge Fricke required for that? George T. Davis: Yes, it was, Your Honor. And it was obtained. But Judge Fricke was never told that Mr. Leavy was a -- Mr. Fraser was a relative by marriage of District Attorney Leavy. Judge Fricke testified in the District Court proceedings that he did not know that there was any relationship between these two people and that it had never been brought to his attention either by Mr. Leavy or by Mr. Fraser. Now, the two gentlemen proceeded to go to work on the notes by a -- a method which Mr. Fraser testified, was one that he had never used before, and by a method which, by merely the stating of it, must undoubtedly appear as one of the most unique methods imaginable for the preparation of a record of this type. Mr. Leavy told Mr. Fraser to prepare a rough draft of everything that he was going to transcribe. So that Mr. Leavy and Mr. Fraser could look over the rough draft and to quote Mr. Fraser in the District Court hearings so that he could get Mr. Leavy's cooperation or corroboration, and so that he could have the benefit of Mr. Leavy's memory in connection with the preparation of the final draft. Mr. Fraser testified in the District Court proceedings that this kind of conduct went on between himself and Mr. Leavy. That they also obtained a -- a -- some notes from Judge Fricke which were turned over to them so that they might also use these notes in order to refresh their respective memories and in order to perfect in the final analysis what they submitted as a trial transcript. Harold Burton: Do you claim any unfairness on what they did? George T. Davis: We certainly do, Your Honor. We had claimed it was unfair I would -- I'm going to discuss that. Now one of the -- William J. Brennan, Jr.: Did Chessman know any of these things whether or not -- George T. Davis: Sir? William J. Brennan, Jr.: Did Chessman know any of these things whether or not -- George T. Davis: Well, Chessman had been informed indirectly. Now, he -- he was removed to San Quentin Prison in July of 1948. Now, he had been informed in the prison that there was some procedure going to be used by which what they called a -- a raw transcript was going to be prepared before a final transcript was prepared and he sent a note or a letter. I believe it's in the form of a sworn statement to the -- to the Superior Court asking in connection with such raw transcript as -- as he put it asking that he be furnished a copy of that raw transcript. We have -- I have here and it's in the files of this case, it was filed September 13th, 1948 in the Superior Court of the State of California. It's a handwritten, hand-printed document. It's an affidavit in support of a request for prompt delivery of the trial record and meet, therefore, and it's by Mr. Caryl Chessman who says in effect, I -- I won't read it all, that he wants the -- the reporter's transcript delivered to him. And he wants a copy of the trial record. He gives his mailing address. He says he wishes the reporter's transcript be delivered properly after completion by the reporter. So that if necessary, he can make, edit corrections. Speaker: Well, that -- that inference that's been drawn from that language as you refer to is that he didn't know that the reporter was dead. George T. Davis: Oh, he knew the reporter was dead, sir. He was in Court on the 25th of June, two days after the death of the reporter at which time he made a motion to vacate the judgment on the grounds that in view of the death of the reporter, it would be impossible to perfect an appeal under the California law applicable to mandatory appeals. Felix Frankfurter: When was he sentenced, Mr. Davis? George T. Davis: He was sentenced on the 25th of June. Felix Frankfurter: This is on a sentencing day? George T. Davis: This was on -- at -- at that very same time. Felix Frankfurter: Now, would you be enough to answer and declare what I refer to be the implications of Justice Brennan's question? Will you state in detail, how, what knowledge and how the knowledge of -- he knew that the official reporter or the court reporter was dead. How -- what knowledge and how that knowledge was brought to the attention of Chessman, namely, the selection of Fraser, the -- the recommendation of Fraser to Judge Fricke, Judge Fraser -- Judge Fricke's action thereon and the subsequent events relating to the final deposit of the free-derived record before the Supreme Court. I take it that was behind that question. And I think that he claimed the report. George T. Davis: I -- I -- Speaker: That was -- George T. Davis: All right, sir. I'll try to do that. The -- the situation was this. Of course, Mr. Chessman was in Court on the 25th of June, two days after the death of Perry and was present at the -- that's the first reporter and was present at the time that Judge Fricke made the statements in open court that a transcript would have to be put together to the -- within the limits of human ingenuity. Mr. Chessman, at that time and continuously thereafter, called the attention of the Court by affidavit and by motion and by various documents of the fact that first, he protested that such a record could not be put together within California law. Under the law, he denied that such a record was a --a permissible record, under California law. Speaker: Well apart from that, what are the facts as to what he knew about what the Judge and Fraser and Leavy were doing -- George T. Davis: He didn't -- Speaker: -- to compare this to our record? George T. Davis: Most of what he knew about that, he didn't actually know about until the District Court proceedings in San Francisco when these things were brought out on the cross examination of these particular witnesses. Felix Frankfurter: You mean last year? George T. Davis: Last year. For instance, Judge, if I may answer you very specifically. Mr. Chessman didn't know until last year that in the course of preparing the record, that Mr. Leavy and Mr. Fraser not -- went to the homes and the offices of two police officers who testified in the original trial and consulted with the police officers about their testimony in the trial which was vital testimony, which had to do with an alleged confession by Mr. Chessman. William J. Brennan, Jr.: Well, when did he first learn that Fraser's employ and appointment? George T. Davis: He learned of Fraser's appointment at or about the time that Fraser was appointed. William J. Brennan, Jr.: And that date is when? George T. Davis: That was back in 1948. Felix Frankfurter: Now, by grapevine or by court notice? George T. Davis: This was by grapevine. He was not notified about this. Then of course, he was aware of Fraser's appointment from time to time as proceedings went on because Mr. Fraser and Mr. Leavy filed successive applications for extensions of time within which to file this report. It -- it took them something like 18 months before they were able to file a transcript. William J. Brennan, Jr.: Well, did he have copies of these applications for extension of time, for example? George T. Davis: The applications for extensions of time, he was furnished copies of those applications. William J. Brennan, Jr.: But you're telling us that he never received any official or formal notice of Fraser's employment? George T. Davis: Well, if I said that, I didn't mean it in that way. He received these applications. It was not -- William J. Brennan, Jr.: So, when did he learn of Fraser's employment, and how? George T. Davis: Well, I'm -- I will say this. That I am sure that he learned of Fraser's appointment sometime in 1948. And I will certainly concede that it was brought to his attention in some official manner. William O. Douglas: When did he write the letter about him getting a copy of those records? George T. Davis: This letter was written -- Speaker: Does he say that? George T. Davis: No. This document that we're referring to here is dated September the 13th, 1948. And I have called your attention for the fact that there was a letter written in the same month by the head of the Court Reporter's Association but not written to Chessman. That was written to the Court. That's not Harry (Inaudible) letter stating the notes were undecipherable. Felix Frankfurter: But was that a spontaneous letter from the Reporter's Association? What do you (Voice Overlap) -- George T. Davis: Well, apparently yes. It apparently was because -- Felix Frankfurter: Apparently, I'm -- I'm trying to stay close to the records. George T. Davis: Yes. Felix Frankfurter: Does the record show whether this case sua sponte of their report or were they invited to make some (Inaudible) George T. Davis: This came of their own accord. Felix Frankfurter: Did Chessman take the stand at the main trial? George T. Davis: At the main trial, yes, he did. Felix Frankfurter: Now, how much was he up on the stand, how long? Do you happen to know? George T. Davis: I don't' know the exact number of days that he was on the stand. Felix Frankfurter: And that's in the examination and cross examination? With what's on the record, is it? George T. Davis: Yes, that's right. And I would say that he was extensively examined. Felix Frankfurter: Now, can you tell whether -- what was the day with the original reporter? George T. Davis: Perry? Felix Frankfurter: Perry. Did Perry transcribe the -- the examination and cross examination of Chessman himself? George T. Davis: Yes, he did. Felix Frankfurter: (Voice Overlap) -- of the portion that Perry -- George T. Davis: Yes, that is right. And -- Felix Frankfurter: (Voice Overlap) (Inaudible) George T. Davis: Yes, that is correct. Felix Frankfurter: So that's -- that was not disputed. That that was transliterated by the -- transcribed by the courtroom, is that right? George T. Davis: It was transcribed by him. Yes, sir. Felix Frankfurter: Now, any other of -- George T. Davis: Excuse me, Judge. So, let me be sure I'm correct saying the same thing. It was transcribed subsequently by Mr. Fraser. Felix Frankfurter: That is not what I meant. I didn't make myself clear. This is Perry, the stenographer who took down the examination and cross examination of Chessman, did he transcribe? George T. Davis: Yes. No, he did not transcribe it. He took it down in the notebooks. Felix Frankfurter: So, Fraser has done it? George T. Davis: That is right, Your Honor. Felix Frankfurter: Yes. Did -- did Chessman have a chance to go over his testimony to see where the phrase is correctly transcribed? George T. Davis: Yes, he did. William O. Douglas: But he had the chance to go to the whole testimony. George T. Davis: He had a chance to go over the whole testimony and sent in something like 180 corrections and he did. In answer to your question, he did. Felix Frankfurter: Is there any correction as to his own testimony? George T. Davis: He complains and contends from the beginning. Felix Frankfurter: I'm not -- I'm talking about his testimony -- George T. Davis: Yes. Felix Frankfurter: -- not the rest of that. I know all about that. But I do not know whether Chessman found, claimed they were inaccurate. George T. Davis: He did, sir. Felix Frankfurter: It was transferred to -- as of his (Inaudible) George T. Davis: He did, sir. Felix Frankfurter: And as to his cross examination. George T. Davis: He did, sir. And his claim was that the prejudicial remarks of the district attorney which were also combined in by the judge all during that period of his testimony were omitted completely or glossed over in the report that was finally submitted by Fraser. So that his contention that he had been prejudiced by snide and nasty and indirect remarks all the way through by both -- by the district attorney and by apparently the approval of the judge was completely missing. Felix Frankfurter: So that he claimed imperfections in the transcriptions by the posthumous and before the stenographer as to his own testimony, is that correct? He claimed that there were imperfections in what they -- George T. Davis: No. Felix Frankfurter: -- in the words they put into his mouth or what they omitted, what took place -- George T. Davis: He claims there were imperfections in the Fraser -- Felix Frankfurter: Version -- George T. Davis: -- version of what -- Felix Frankfurter: That's the -- George T. Davis: -- Perry allegedly put down or presumably put down. Felix Frankfurter: Did he have what the defense witnesses apart Chessman? George T. Davis: Yes, there were. Felix Frankfurter: How many? George T. Davis: I don't remember the number. Felix Frankfurter: If (Inaudible) once with the defense appointed? George T. Davis: There were. Felix Frankfurter: Now, after they claimed the imperfection, did any of those relate to the defense witnesses other than Chessman? George T. Davis: I can't say that. I can't say yes or no as to that specifically because this situation reached the point were Chessman in San Quentin Prison, now a year and a year and a half after the trial was incapable, we claim and contend, was incapable sitting up there of recalling everything that had taken place with reference to everybody in exact detail. He was doing the best he could. Felix Frankfurter: I'm not -- I'm going beyond him. I'm going as to other witnesses. You stated that the -- the district attorney and the new Fraser personally examined witnesses for the prosecution in order with the view to checking up or completing it over there as they examined witnesses to the prosecution to perfect transcriptions of Perry's notes. George T. Davis: That is correct. That is correct, Your Honor. Felix Frankfurter: Did they go to any of the defendant's witnesses? George T. Davis: They did not. William O. Douglas: Well, now, all that is held against him though, isn't it? George T. Davis: Sir? William O. Douglas: What they're finding against Chessman, on those things? On the discrepancies as to his own testimony that that all came out at the trial did it not? I mean it's here. George T. Davis: At the -- in the District Court proceeding? Well, Your Honor, when we got to that subject in the District Court proceeding before Judge Goodman, we were told practically from the beginning that there was only one issue that Judge Goodman cared to hear about and that was the issue of fraudulent connivance. William O. Douglas: Well that's -- that was what we sent to him to hear. George T. Davis: That is -- that is correct. That was the nature of the order that came down. Now, when we tried to get into the question of the inaccuracies, even to the extent of one inaccuracy, the Judge shut it off and said that it was not an issue before him, that he would not consider the matter, would not allow any discussion or any interrogation on it and then took the position that he didn't think the Supreme Court had ordered him to do it. But if it had, he wouldn't do it anyhow and said that if there were 75% inaccuracy in the actual record, he wouldn't consider it a matter of due process. Now our position, I must -- I'd like to say this -- William O. Douglas: Can this be all -- can this counsel by the Supreme Court of California back in 1950? George T. Davis: Well, this was in the -- you're -- you're -- that this matter has been up before the Courts many times in many forms. But our position -- William O. Douglas: What I mean is to what actually happened in the report in 35 Federal California second, page 455. George T. Davis: That's right and that of course -- Felix Frankfurter: Does that foreclose you here? George T. Davis: We do not think it does. William O. Douglas: But we can look to that to see what happened, can't we? George T. Davis: You can to a certain extent because at that time -- William O. Douglas: According to that report, the transcript as reconstructed was sent to Chessman. Chessman objected, made objections. George T. Davis: That is right. William O. Douglas: Is that right? George T. Davis: That is correct. William O. Douglas: Some of his objections were sustained, is that right? George T. Davis: That is right. William O. Douglas: And some were not? George T. Davis: That is right, sir. And he asked that he be brought to the Superior Court. He specifically requested that he be brought personally to Court so that he might contribute his thinking and his memory and he might participate in the page-by-page discussion of the transcript because he allegedly stated that he could not, at that distance and at that time, without that further help be expected to remember everything that had happened at the trial as to which he complained insofar as the transcript was concerned. Speaker: Did the California Supreme Court have before it the relationship between the stenographer Fraser and the district attorney? George T. Davis: It did not. Speaker: Did it have before it the interviewing of witnesses by the stenographer and the district attorney in Chessman's absence? George T. Davis: It's definitely not and not the interviewing of the police officers. Speaker: Did Chessman know it that at time? George T. Davis: He did not. Felix Frankfurter: You said a minute ago that those facts had not appeared and not become a matter and not and put into evidence on the (Inaudible) George T. Davis: That is right Your Honor. Now -- Felix Frankfurter: The record would bear you out on this? George T. Davis: Let me just limit this. Chessman knew before that of the relationship between Fraser and Leavy. He had heard that before that and had investigated and had attempted to bring that matter up. But he did not know about the going out of Mr. Fraser to see these police officers in order to obtain their memory of what their testimony was before he transcribed their particular portion of the notes. That was brought up in the District Court hearing for the first time and it was known to Chessman then for the first time. Now there's another -- Hugo L. Black: What did Judge Goodman say about that? George T. Davis: Judge Goodman didn't consider that that was within the issues that he was called upon to decide. And of course, we took a strong position otherwise because it certainly seemed that if you're going to prove fraudulent connivance, you'd have to prove it by facts and by circumstances, and that this certainly was the most aggravating type of fact and circumstance that could come forward in a hearing but he did not consider that that was a matter within his purview. And therefore, he passed it over and as the appellate court said in the Court of Appeals, he made no findings whatsoever on one of the subjects here, of course, which is the subject and issue before this Court. That is the -- whether or not Chessman was denied due process by not being allowed to be there. But on this matter, the Judge merely -- I would say this respectfully. The Judge effectuate -- effectively hamstrung counsel insofar as extending the inquiry on this subject is concerned because he did not consider that it was within the issues. Speaker: Well, now do you really think that that's a fair characterization of that record? I have read this record and I recognize what you say that he didn't -- Judge Goodman did make these remarks that even 75% was wrong, and so forth? George T. Davis: Yes. Speaker: But I fail to find in the record anything that is a practical matter, slapped you off or prevented you from proving almost anything that you have to prove. George T. Davis: Well, here was -- Speaker: Am I wrong about it? George T. Davis: I think you are, Your Honor. And I'd like to state to Your Honor that where and how I think you're wrong. Never in proceeding in the trial court before Judge Fricke, never was a question asked of Fraser or attempt made by anyone to determine out of Fraser's mouth whether he could transcribe or decipher these notes. Now, when an attempt was made before Judge Goodman to find out from Mr. Fraser if he could read even one page of these notes, if he could read even one line of these notes, decipher Perry's notes, Fraser began by stating that he couldn't and then when the inquiry was sought to be prosecuted to the extent possibly of developing and demonstrating to the judge that Mr. Fraser was incapable of deciphering these notes, it was shut off. And the judge said it had absolutely nothing to do with these proceedings or the issue and we were not allowed to ask that question which would go into that subject. Now, I believe -- Speaker: I thought -- I thought the record on that was that Fraser said that he couldn't sit down and read them in the presence of the judge. He had to study them. George T. Davis: That's right, he did say that. Speaker: And he'd offered to take them home with him and do come back -- George T. Davis: Right. Speaker: -- with whatever portion you wanted deciphered and come back in the morning and testify what it was and you said you weren't interested? George T. Davis: Well, that is substantially -- Speaker: Am I not right? George T. Davis: That's correct and when it reached that point. But the -- the point is that prior to coming to that point, Mr. Fraser was asked to go through these notes. He was pointed -- he was shown in these notes in certain of the books in these notes pencils, interlineations which were not -- which were his and which were not the original reporter's, they're penciled short-hand interlineations, they're interlarded with those interlineations as one can see from looking at them and an attempt was made and the charge was made that Mr. Fraser was incapable of transcribing and deciphering certain portions of these notes. Now, we got into quite a hassle with the judge. It -- it developed into a -- a pretty sharp situation and then it reached the point where we were talking about whether he could transcribe two or three lines and he would take all the rest of the -- he had to take them home with him and spend the night in order to be able transcribe those lines. And that is the point where we came to the situation you have described. Now -- Hugo L. Black: May I ask you a question? George T. Davis: Yes, Your Honor. Hugo L. Black: I didn't quite understand when you replied to Justice Frankfurter. George T. Davis: Yes, sir. Hugo L. Black: And he asked you if Chessman proclaimed that his questions and answers had been improperly transcribed. I understood you to answer that he proclaimed very much that the -- the statement was made with the prosecuting attorney there that's been left out? George T. Davis: That is right, sir. Hugo L. Black: Did he complain that the questions and answers had been improperly transcribed? He complains on that. George T. Davis: I'll – I'll have to answer it this way. He complained that the meaning behind the questions and the answers and the prejudice that crept in from these remarks had been glossed over in such a manner. Hugo L. Black: From the remarks. But did he complain that there was an improper transcription of the questions that were asked and the answers that he gave? George T. Davis: I can't say -- I can't say as to that and I won't answer. Hugo L. Black: (Voice Overlap) -- George T. Davis: I'd rather not answer to that. I know that his basic complaint was as I have indicated. And that it had been glossed over and smoothed over in such a way as to take all the barbs and all the stings out of the things that had taken place in between. William J. Brennan, Jr.: Now, you said that he knew of the relation between Leavy and Fraser? George T. Davis: He had heard that they were related. William J. Brennan, Jr.: Did he know that before the case got before the California Supreme Court? George T. Davis: I don't think he did, sir. I think that is a subject that came to his attention subsequently. William J. Brennan, Jr.: Does the record show us? George T. Davis: The record shows and I believe that we have -- we have perhaps covered that in our brief but I'm sure that the record will show where he first learned of that relationship. And as a matter of fact, it was -- I'm sure that it was afterwards because I recall that he hired an investigator at some later time to make inquiries about that subject and also to make inquiries about the alleged inebriation of Mr. Fraser and that came sometime after the California Supreme Court hearings. William J. Brennan, Jr.: So that the California Supreme Court has never officially had from him any complaint based upon the alleged relations between Fraser and Leavy. George T. Davis: I do not believe so. Felix Frankfurter: But you -- and you -- you can't be certain as I gather from your answer that you ask him that after the private consultation of witnesses for the prosecution to find out of so many years later or whatever (Inaudible) to find out their recollection of what they testified with the trial. You are unqualified in taking on the use of the Court that that fact had not become a matter of knowledge, proof or knowledge (Inaudible) George T. Davis: I state that unqualifiedly. I'm positive on that. Hugo L. Black: No state courts are passing on that one, do they? George T. Davis: No state court has passed on it. Hugo L. Black: No state courts are passing on the relationship between the (Inaudible) and district attorney? George T. Davis: They have not. Now, we have the feeling, of course, in view of that situation that a very damaging thing took place here insofar as this man's rights are concerned. Now, when this matter came up before the District Court, of course, I -- obviously Your Honors are familiar with this District Court record. And it was I think the cast that overlays the record, of course, is the fact that Judge Goodman felt that he was constrained within limits which as he put it had to do with fraud and connivance and that unless the testimony to be abduced was particularly aimed at some actual fraud or actual connivance, he did not feel that he wanted to hear, spend any time on it. Then he said it many, many times. Felix Frankfurter: As I recall you really (Inaudible) was that of a fair construction by Judge Goodman of our -- the terms of our (Inaudible) George T. Davis: Well I would -- I would want to say this. That I think that he -- that he construed it within limitations that were not necessarily the limitations even as to the investigation of fraud and connivance, because as I see it in this type of case where that Leavy and the -- and the reporter conducted themselves in the manner that is indicated clearly in this record and where some parts of it were brought to the attention of the judge and other parts weren't. I think that the -- there -- there should have been a little more liberality in construing what amounted to fraud and connivance. However, that would be a matter that would -- it's a matter that was argued out between myself and the judge. And I have to stand, of course, on what he did insofar as the record here is concerned. Speaker: I'd like to ask you another question. George T. Davis: Yes, Your Honor. Speaker: Under the California practice, is there any other case between their (Inaudible) George T. Davis: We know of -- we know of no other case. We are convinced that this is a case of first impression. We have found no cases in the books where this situation is -- is handled. We feel that it's -- it's without precedent insofar as our research is concerned and certainly insofar as California is concerned. It is a case of first impression, insofar as these facts are concerned. And as you have asked the question. Felix Frankfurter: Mr Davis -- George T. Davis: Yes, sir. Felix Frankfurter: I'm asking you and most about -- I hope he recovers, the Attorney General had come to these terms. You said there were two witnesses, two prosecution witness who were privately consulted by Fraser, the -- the substitute and later (Inaudible) in company with the district attorney in order to -- as a result of such private entity to enable Fraser to put down what it is they testified here in Court. Is that right? George T. Davis: That is correct. Felix Frankfurter: Now, what I would like to ask you and what I hope the attorney general could (Inaudible) were these from your point of view if you were to take from this Court, were these two witnesses not merely a witness for the prosecution but they -- have they -- were they significant witnesses? Were they important witnesses to the issues at the trial? George T. Davis: They were, Your Honor because they were witnesses as to an alleged confession by Chessman which he denied at the trial and which he claimed that the trial had been extorted from him by force. These were the very witnesses to the alleged confession. And, of course, from that point of view, they were extremely important witnesses from Mr. Chessman's decision on this case. Felix Frankfurter: You alleged the confession that the questioning issue came how soon after he was arrested? George T. Davis: The night afterwards. And allegedly after a terrific beating had been imposed upon him. Now, our -- we -- that perhaps for the purposes of this phase of the proceedings, I must say that although I was warned by everyone to watch that clock and not ask questions, I've completely forgotten the existence of the clock. But our position is such that I think at this stage that we have -- perhaps this sets forth the -- the general -- these facts and circumstances. Let me say that which we think are basically of importance in connection with this contention that we have made here. Now, we feel that -- that our situation as such that Mr. Chessman under these circumstances certainly had a right -- had a right to give to the Court and to give to the preparation of this record his own memory and his own contribution insofar as trying to recall and remember what had taken place. We feel that he had certainly had a right to be allowed to do that. We have that strange situation here in this record where he was -- where we contend that he was misled on that subject by the district attorney who filed an application in the -- or filed an application in the Supreme Court at a time that Mr. Chessman had filed a petition for writ of prohibition. Mr. Chessman was extremely concerned about this matter from the very beginning, and as I say, not only because it didn't conform or couldn't conform with mandatory California law but because he was in -- of the -- the opinion that these notes were indecipherable and could not be deciphered. And in this affidavit which we think played a very important part in this situation, we have by Mr. Leavy, the district attorney an affidavit on file before the California Supreme Court. And if I might say, this affidavit was one of the things before the Court, when they finally came to making the decision in 35 Cal.2d to which you have referred. Here's the affidavit where Mr. Leavy says and it was delivered to Mr. Chessman in the prison. It says that at a time to be later determined the petitioner will have delivered to him in Court the reporter's transcript to be used as a basis of the settlement of the record. At said time, the trial court, the Honorable Judge Fricke will permit the petitioner to make corrections or to correct any inaccuracies and so forth that he may claim in the reporter's transcript. Now, in this -- this had some relevancy, I believe, to two or three questions that were asked. He didn't ask to be represented by counsel because on the basis of this affidavit and he was never told otherwise until after the settlement of the transcript. He assumed that he would be brought into Court. This was a sworn affidavit by Mr. Leavy. At now, and to go back, we take the -- Felix Frankfurter: Mr. Davis, I'm sorry to interrupt you. George T. Davis: Yes, Your Honor. Felix Frankfurter: That affidavit preceded the determination of the denial of the prohibition by the Supreme Court of California? George T. Davis: Yes it did, this -- Felix Frankfurter: That was in – in the proceedings which led to the denial. George T. Davis: Yes and we -- Felix Frankfurter: (Voice Overlap) -- has to involved now. George T. Davis: This -- where's this -- Felix Frankfurter: Is that before Judge Goodman? Is that -- George T. Davis: Well, yes, it was. Yes, Your Honor. It's in petitioner's -- its Exhibit 1, petitioner's Exhibit number 1, Jacket number 11. It seems that this Exhibit 1 was broken up into a large number of jackets, and this is Jacket number 11. And it's the -- the affidavit. It's -- it's in connection with the document entitled, respondent's points and authorities and opposition to petition for writ of prohibition, exhibits attached. And that is one of the -- the exhibits that is attached. It's the last exhibit in that jacket. Felix Frankfurter: Now, if you -- if in fact -- if in fact, the record that's finally considered by -- by Mr. Fraser and Judge Fricke, if in fact the accuracy of that record, that transcription is from the very notes are incontestably accurate, I'm making that assumption. George T. Davis: Yes. Felix Frankfurter: You wouldn't be here presenting it as a denial of due process (Inaudible) instead of in Los Angeles, would you? George T. Davis: Before I answer that Judge, if I'm -- if you'll allow me. May I -- will you please state that question again? Felix Frankfurter: Assuming that the record was -- was unassailably accurate as Fraser reconstructed it. Assuming it was fully, absolutely accurate, you can't complain of the accuracy of the transcription from the -- from Perry's -- George T. Davis: I understand that. Felix Frankfurter: -- hieroglyphics. George T. Davis: I understand that. Felix Frankfurter: You wouldn't be here, would you merely because the district attorney (Inaudible) to be delivered to Chessman in Court instead of having delivered that as before in prison. George T. Davis: Probably not. But there is another side to that which I think I must mention. We would -- we would certainly be here if we were allowed to come here to protest whether or not such a record could be provided and could be used under the mandatory provisions of the California law. Felix Frankfurter: But you -- that's on the assumption that the record is not a true transcript of what took place. That it couldn't be truthfully or accurately be constructed. But when I say you wouldn't be here, I don't think we'd listen long to you to contest that under California law, it must be made up one way rather than another provided there wasn't what you claimed to be an inherent defect. George T. Davis: That is -- Felix Frankfurter: You're claiming an inherent defect, don't you? George T. Davis: I -- I agree with that. That is correct. Such a -- as such in the inherent effect as to the -- this -- Felix Frankfurter: Defect. George T. Davis: -- defect as to destroy its validity. That is correct. That is our contention. William O. Douglas: That is the fact that he wasn't allowed to be there in person. George T. Davis: No. That -- that's -- that's on top of it. We claim that he -- that first of all, we claim in answer to the Judge's question or with line – in line of the Judge's position, we claim that this -- Felix Frankfurter: And that's the position I'm trying to barely understand. George T. Davis: Well, I beg your pardon. In line with the Judge's statements, in order to clarify this, we claim that there was -- that there was and is in connection with this record an inherent defect that it is not a true record. It's spurious, false record as it is -- William J. Brennan, Jr.: Well the -- the -- George T. Davis: -- that it was put together. William O. Douglas: -- the Supreme -- Supreme Court of California considered that and said that there maybe inaccuracies, but none of them were prejudicial. George T. Davis: Well, that is right. But we have taken the position. And we have been confronted with that, of course, every way along the line in a proceeding which had nothing to do with the appeal but was -- which was a -- a proceeding prior to the appeal so to speak. The Court made that decision. And, of course, they took the position also that he had no right to be present to participate in the activity. That it was the appellate in nature. And as I recall 35 Cal, they just took the general position that due process did not apply. Speaker: Who argued -- who argued and represented Chessman on the California, the state court appeal that involved the accuracy of the record? George T. Davis: On the 35 Cal, I believe that that was done by a written argument by Mr. Chessman. Speaker: And he had no lawyer? George T. Davis: He had no lawyer before the Court at that time. Felix Frankfurter: And he didn't have the facts which you now say is this. George T. Davis: He did not. William O. Douglas: And those facts again, are those new startling facts or what? George T. Davis: Well, basically, the -- the undisclosed relationship between Mr. Fraser that reporter who was obtained and between Mr. -- and this between Mr. Fraser and between the district attorney. And secondly, the complete story of the method by rough draft and by rough draft on top of rough draft between Mr. Leavy and Mr. Fraser before a final transcript was made. And then thirdly, the fact that Mr. Fraser is now revealed to have gone to prosecution witnesses outside of any courtroom or any activity known to any court and had taken up with them their memory of what they had testified to, so that he might perfect and prepare a transcript of their testimony. Felix Frankfurter: Were there minutes made of the conversation between the district attorney and Mr. Fraser and these prosecution witnesses? Are there memoranda of what they said? Where -- where did he visit, their houses? George T. Davis: He said that he couldn't -- he, Mr. Fraser was very -- Felix Frankfurter: Where -- where was -- where was the locale? George T. Davis: It was in Los Angeles. Felix Frankfurter: Yes, but it wasn't in (Inaudible) George T. Davis: He said that he went -- first of all, he said he went to the policeman's offices. He -- he was sure that he went to Colin Forbes' office which is one of them -- no, to Lieutenant Jones' office. He thought he met the other one in his office also. Then he got very vague about the subject and said that Leavy had been along and then he became very vague about where it was. Felix Frankfurter: But there is no doubt that there were these -- that were these interviews or an interview between Leavy and Fraser and two officers. George T. Davis: There is no possible questionable doubt about that. Felix Frankfurter: Now, what I want to know is was there minutes made? Was any memorandum either -- of either a stenographer impression or were some minutes made -- lawyers make minutes of interviews with people. Was any minutes made which is now on the record of what these officers told for instance to enable and then to put in the record of their testimony months, previously? George T. Davis: I don't know of any such minute or any such record that was made. This came to our attention. I'd like to say with almost a startling suddenness. In the course of the hearings before Judge Goodman when Mr. -- Mr. Bennett who was questioning Mr. Fraser and who undoubtedly anticipated that this might develop, Mr. Bennett asked Mr. Fraser if he had spoken to anybody else. He said, "Who did you talk to outside of Mr. Leavy and outside of the fact that Mr. Fraser said that he'd left the notes -- these original notes with his brother and his wife. Who did you talk to, he said. And Mr. Fraser answered that he talked to a Mr. Collins and Mr. Forbes and then he proceeded along without asking him who they were or what they were or what he talked about. Hugo L. Black: Suppose we proceed then tonight? George T. Davis: Yes, Your Honor.

Warren E. Burger: We will hear arguments next in 78-1874, Massachusetts v. Meehan. I think you may proceed whenever you are ready, Miss Smith. Barbara A. H. Smith: Mr. Chief Justice, and may it please the Court. I am Barbara A. H. Smith. I am Assistant Attorney General for the Commonwealth of Massachusetts, and I represent the commonwealth seeking review of an order of the Supreme Judicial Court of Massachusetts which required -- Warren E. Burger: I'm not sure that the amplifying system is working here, Miss Smith. If you will just desist for a moment. Are we functioning now? Very well, you may proceed. Barbara A. H. Smith: The commonwealth seeks review of an order of the Supreme Judicial Court requiring suppression of a confession of certain real evidence which was obtained pursuant to a search warrant based upon that confession and a subsequent and culpatory statement by the defendant to his mother. The basic issue is whether the Fifth Amendment requires such suppression. I shall limit discussion of the facts to those surrounding the confession since the legality of the arrest is not at issue. The body of the victim was discovered in the early morning hours of June 11, 1976. After being informed by neighbors that they heard a scream and seen a young man, approximately five-foot-ten, wearing dungarees and with his shirtsleeves rolled up, leaving the scene, the police conducted general inquiries as to young men who were known to frequent that particular area. These inquiries took place at the police station. One young man said that he knew the victim and that he had seen her sitting on some church steps with a young man in his teens, with dark hair, who was at that time shirtless. Another young man came to the station, one John Carroll, who told the police that he knew the victim and that he had seen her on those church steps with Joseph Meehan. As he was telling the police this, he looked out the window and saw Joseph Meehan hitch-hiking on the street outside. He told the police this, they immediately exited the station, went to Mr. Meehan, told him of their general investigations and asked him to accompany them to the police station. He agreed after first noting that he was on his way to the unemployment office either to pick up his check or to appeal the denial of benefits. He accompanied the police to the station and a Detective Solari began asking him general questions when he noticed what appeared to him was blood on the defendant's sneakers. He mentioned this to the defendant who stated, no, it was mud, but that if it were blood in any event he had gotten the blood in a fight with one George Quish the previous Tuesday. The detective asked Mr. Meehan for the sneaker and he gave it to the detective who left the room. As it happened, Frank Quish was also being questioned at the station at this time and he denied having the fight with Joseph Meehan. Another officer looked at the sneaker and he concluded that it was blood. This was later confirmed by the police chemist that afternoon. Detective Solari returned to the defendant, advised him of his rights under Miranda and advised him that he was under arrest. At 11:20, Officer Kelley commenced an interrogation of the defendant. This interrogation was recorded. The interrogation began with the full recitation of the Miranda rights again, and the defendant responded that he understood them. He did respond, "right," "yes," one word responses, and he agreed to speak about the victim. The defendant first denied he knew her and then agreed that he knew her generally, had seen her around town but that he had last seen her on the previous Tuesday. This is a Friday morning. The officer mentioned the blood on his sneakers and the defendant respond that it had come from a fight on Tuesday. The officer said it was too fresh to have gotten there on Tuesday and the defendant suggested the freshness was due to the fact that he was swimming the day before but that he had last seen her on Tuesday. The officer then advised him that witnesses had seen them together last night. He suggested that this was serious and said, "I think truth is the best thing at this time, the victim is dead and you are under arrest." The defendant said, "Under arrest for what?" And the officer said, "For the death, for the murder, and we have witnesses who saw you together." The defendant then asked if he could see those witnesses and the officer declined to do that at that time. He then admitted that he had in fact been with the victim the previous night, that they had met in a bar, that they had two beers, that they discussed getting some pot or marihuana and that they left the bar around 11:30 or so and had proceeded to the church steps where they sat for fifteen or twenty minutes but then that he had left and the victim had gone in one direction and he had gone in another. After some discussion about what the victim had been wearing at this time, the defendant blurted out, "I was whacked out last night." He then talked about having taken pills, some 15 Valiums of 5 milligrams each, he specified the milligrams, and that they had been drinking beer, but he continued to deny that anything had happened between he and the victim. At this point there is a pause in the interrogation and another detective suggests that the defendant had asked him what bearing it would have if he told them what had happened, what degree it would be. The police responded that they had no control over that, and Sgt. Kelley responded, "I can't promise you anything, I have no jurisdiction over anything like that," that he would inform the District Attorney and the court and defense counsel of cooperation, but said, "I can't say you are going to get a break." He continued, "All I can promise you is that I will make your cooperation known, but again I can't promise you anything." He then continued, "If you wish to tell the truth of what happened, then I can say in all fairness it will probably help your defense. Is there anything else you want to know?" The defendant asked if he could go home and get some clothes and the officer said that he would get them, that the police would get them, and then referring to the drinking of the night before, asked the defendant if he were still high. The defendant responded, "A little jiggy," but then said that he could understand what was going on. The officer again said -- Potter Stewart: The defendant responded what? I didn't hear you. Barbara A. H. Smith: His words are "A little jiggy" Your Honor. The officer again asked if he wanted to tell him what the story was and the defendant said, "Yes. But if I tell you, is it going to come out in court?" The officer said it will anyway, we have a good case and my suggestion is that the truth is going to make a good defense in this particular case. The defendant responded, "I don't know." The officer asked, "You don't know what? Do you want to tell us about it?" And then said, "Did you say she provoked you? Is that my understanding?" The defendant responded, "Yes." And the officer advised him to tell the story in his own words and the defendant, stating that he had been high on Valium and drunk, stated he flipped out when she made fun of him and then proceeded to confess and describe the events surrounding the killing. Warren E. Burger: Now this all comes from the tape recording -- Barbara A. H. Smith: It is all on the tape record, Your Honor. While the interrogation -- Byron R. White: How old was this man? Barbara A. H. Smith: 18 years old. Potter Stewart: And the victim? Barbara A. H. Smith: She was somewhat older, I believe. I don't think that came out in the probable cause hearing. Somewhere between 18 and 20 years old I think would be fair to say. Potter Stewart: Is the transcript from which you have been quoting in the appendix? Barbara A. H. Smith: Yes, Your Honor, it is, and it is tape recorded. Byron R. White: How long did this whole process take? Barbara A. H. Smith: An hour or somewhat less than an hour. Byron R. White: What is your position with when the duty, the statutory duty to tell him about his right to telephone arose? There was a duty that did -- Barbara A. H. Smith: Yes, there is a duty under Massachusetts law to tell him of the right to use the telephone. I don't think the failure -- and it would appear on the record there was no such advice -- renders the statement involuntary. I also would suggest -- Byron R. White: But my question is under the statute when were the police supposed to have told him? Barbara A. H. Smith: The police under the statute should have told him -- Byron R. White: At the same time -- Barbara A. H. Smith: -- after he was taken into custody and he had the right to make a phone call I believe within one hour after that time. So that would be -- I would say they should have told him at the initiation -- Byron R. White: When they started to question him. Barbara A. H. Smith: -- of the questioning. Byron R. White: Do you mean after he was arrested? Barbara A. H. Smith: Yes. Byron R. White: Or taken into custody? Barbara A. H. Smith: After he was arrested, Your Honor. Byron R. White: Is that the -- Barbara A. H. Smith: It was found that he voluntarily went to the police station. Byron R. White: It was only after some questions that he was arrested? Barbara A. H. Smith: That's correct, Your Honor. William H. Rehnquist: And that is a state statutory -- Barbara A. H. Smith: That's correct. Byron R. White: And when did the duty to notify about the telephone -- Barbara A. H. Smith: After the formal -- Byron R. White: -- after the arrest? Barbara A. H. Smith: After the formal arrest. While this interrogation was in progress, Officer Solari who had received the sneaker from the defendant went to court in order to secure a search warrant. While he was there, he was advised by telephone of the confession and included the fact of the confession in the affidavit to support probable cause for the search warrant, admitting the reference to the bloody sneakers and the other identification of the defendant, a pair of blood-stained dungarees recovered from the defendant's home. At approximately 4:00 p.m., the defendant's mother and brother arrived at the police station and were escorted to the defendant's cell. As they approached he blurted out, "Ma, I didn't mean to hit her so hard." The defendant filed a motion to suppress and in an affidavit stated his grounds, his prior ingestion of alcohol and drugs and that he did not know that he had a right or a need of a lawyer and he was frightened. The Supreme Judicial Court held that the confession must be suppressed as involuntary and that the dungarees must be suppressed on the grounds that the confession was involuntary and therefore directly offensive to the Fifth Amendment, and that the afternoon statement must also be suppressed under the "cat out of the bag" theory. The common law submits that the lower court has misconstrued what is constitutionally permissible police interrogation and it has based its decision on a misconstruction of the scope and applicability of the Fifth Amendment privilege to the context of police interrogation. Warren E. Burger: We will resume there at 1:00 o'clock, counsel. Barbara A. H. Smith: Oh, thank you, Your Honor.

Warren E. Burger: So first this morning in number 71-32 Curtis C. Flood against Kuhn and others. Mr. Goldberg. Arthur J. Goldberg: Mr. Chief Justice and may it please the court. The issue in this case is the legality under federal antitrust and state statutory and Commonwealth organized baseballs through reserved system. To paraphrase Judge Waterman's opinion in the Court of Appeals, this is a scheme which binds every American professional baseball player to one team or it's assignee for life. And which compels team owners to boycott the player or property of another team owner, and to boycott any fellow owner, and to boycott the player himself and blacklist him, who fails to abide by the agreement among the owners to eliminate competition in recruitment and retention of personnel. The reach of the reserve system extends beyond the continental United States and even our new states. Beyond the 24 Major League Clubs which are defendants in this law suit, to 155 Minor League clubs organized in 21 Minor Leagues, to the Mexican League and even to Japan. An American player boycotted by organized baseball today is boycotted by Japanese employers as well. Perhaps it maybe helpful to the court, if I having stated the issue now review a few of the pertinent facts. On October 8, 1969 Curtis C. Flood then a major professional ball player for the St. Louis Cardinals was traded, his contract transferred and assigned to another National League baseball club, the Philadelphia Phillies as part of the multi-player transaction between the two clubs. As Judge Cooper found in the District Court and I paraphrase him at the time of the trade, he was 22 years old, a veteran of 12 years of service with the Cardinals. Co-captain of the team by the election of his teammates. And acknowledged to be a player of exceptional and proven ability. About that the record is very clear, in his active service with the St. Louis Cardinals, he batted around 300, won several Golden Gloves competition, which is the competition for excellent fielding. And was regarded to be a great asset for that team, and as evidenced by the fact that he was being paid $90,000 a year. Not a salary as we know from reading the newspapers that baseball owners throw away very lightly. The circumstances surrounding his assignment or as Judge Waterman said in the Court of Appeals to use baseball (Inaudible) sale are rather interesting as part of the background of this litigation. Now perhaps that explains why he chose to use the Courts to vindicate his rights, although he had deep routes in St. Louis Missouri, not only with the ball club which he had served faithfully for 12 years. He was also an artist who had an artist studio. He had two photographic studios and franchises else where. And he had many friends and family in St. Louis. He was not consulted about the training. At the contrary he received a form notice and then a telephone call. The form notice was a very cryptic one. Record itself does not really display what it actually is, it's a printed form. And in that printed form, there is a checkbox. Your contract is renewed, your contract code has been transferred, you have been released from the service. Perhaps, I would like to suggest Your Honors you might want to look at the exhibits rather than the cold record, to see how this form is filled out. I should say at all fairness to my distinguished brothers on the opposite side, he also received a telephone call. After the transaction was completed not before presumably, he had relinquished all of his rights to any consultation or disposition of his destiny. When at the age of 15, he signed a contract with the Cincinnati Reds that without the without the assistance of an attorney which was the practice in those days and until very recently, until the 1970 contract. He signed his first professional baseball contract for an average salary of $4000, which of course worked his way up the ladder, but he was playing last. He enjoyed this very generous salary. The fact that he was an exceptional player as Judge Cooper found in the District Court and Judge Waterman speaking for the Court of Appeals confirmed that finding. It was illustrated by his batting averages. After he started to play full time in 1962 he had been there since 1958 with St. Louis Cardinals his batting averages were 1962 296, 1963 302, 1964 311, 1965 310, 1965 267, 1967 335, 1968 301, 1969 285. I am not a great mathematician Mr. Chief Justice and associate justices, but this seems to me to be a batting average around 300. He was also the winner of several Golden Gloves awards. These are awards given to players for excellent in fielding. He got this notice, this form notice without advance consultation, and he got the telephone call telling him that he had to uproot himself, his family, his business connections and move to Philadelphia. On December 24, 1969 Mr. Flood wrote to the Commissioner of Baseball, respondent to Mr. Bowie Kuhn, the Commissioner of Baseball asserting his rights to negotiate with team other than Philadelphia and State. And it's a rather interesting exchange, this was his letter in part, the relevant part, “Dear Mr. Khun after 12 years in the Major Leagues, I do not feel that I am a piece of property to be brought and sold, irrespective of my wishes. I believe that any system which produces that vital result violates my basic rights as a citizen, and is inconsistent with the laws of the United States and of the law of Federal States.” The Commissioner of Baseball Mr. Khun replied, Dear Curt this is frankly reminiscent to me of a unanimous decision of the Supreme Court, which reverse the Hamilton case because a witness was addressed by her first name while other witnesses were addressed by their last names. Putting that aside the letter read, “Dear Curt, while we agreed with the contention that as a human being you are not a piece of property to be bought and sold. And this is fundamental to our society and could not see its applicability of the situation on him.” Faced with the sale which he deemed to be an impairment of his legal rights and denial of his request that he be made a free agent of liberty to seek employment with other teams and without subjecting the new employer to boycott by the team owners, he had no recourse in his opinion, other than to mount this law suit. And this law suit challenges the reserve system which permits this to be done. Mr. Flood adhered to his refusal to play for Philadelphia during the 1970 season. Well, then Philadelphia sold its exclusive right to negotiate with Flood, to the Washington Senators after 1970 season concluded, and until the necessity compelled him to acquiescence. So we have the reserve system, not unfamiliar to this Court, because this Court has passed upon it. I think wrongly in two cases and particularly Toolson. I think a very accurate description of the reserve clause as contained both in the District Court opinion and in Judge Waterman's opinion for the majority of the Court of Appeals for the whole Court of Appeals, Judge Moore filed a concurring opinion. Judge Waterman in the Court of Appeals described the reserve system as a system and I quote him, “which pursuant to a nationwide agreement” and I shall say a word about that, clubs, baseball clubs effectively restrict a baseball player, if he desires to play professional baseball at all, contract negotiations with that club that organized baseball which firstly employs or reserves it, or with that clubs, assignee club. Now in the subsequent assignee clubs to which in the (Inaudible) and I am quoting Judge Waterman, “he has been sold or traded, there is a more expensive treatment of how the reserve system operates citing the rules which govern the baseball rules in Judge Cooper's opinion in the District Court.” Now while I disagree with his conclusion, I do not disagree that Judge Cooper correctly describes how the reserve system operates. Briefly, in addition to Judge Waterman's pungent and succinct description it goes beyond that. No other club may bid for his services, once he signs. He is not permitted to approach any other club. That's called the No Tampering Rule. A club which violates this rule is subject to boycott by the other clubs. In fact, any player that plays for another club which violates this rule, is subject to discipline, by the Commissioner of Baseball. And it also extends beyond, Judge Waterman did not deal with clubs, the Major League clubs that extends the Minor League club, that extends to the Mexican League, that extends even to Japan. This is un-contradicted in the record. Now Mr. Flood stated out in 1970 and pursues this law suit, challenging the reserve system on several grounds. First, that it violates the Antitrust laws of the United States, second that it violates the Antitrust laws and Common law of the several states, and third that it violates the Thirteenth Amendment of the Constitution, of the United States prescribing that indentured service as well as slavery should not be permitted. Now, as he stayed out in 1970 as I have said, he was confronted with 1971, and at that time Philadelphia the team that owned him, again I quote, paraphrased as Waterman’s opinion, “The team that owns him sold him to Washington. He agreed to play for Washington, he was there for a few months and we can all take judicial notice, I think of what occurred layman, lawyers and I believe this Court, he tried, he had been laid off for a year. After trying for a few months in Spring training and in the actual season he was best, he could not easily regain his skills which is not difficult to understand and he left”. Now, the transfer to Philadelphia, the transfer from Philadelphia to Washington was accompanied by stipulations between ourselves and opposing counsel that this was not connected to this lawsuit. I am well aware however that private people cannot stipulate a case for this court, but the transfer did not moot this case and Radovich, the football case, this court held that the success of a boycott did not moot the case and furthermore he had experienced damages in 1970, and he had suffered impairment of his career. Now, I turn to the reserve clause. Potter Stewart: He indicated in his letter, I noticed in the record in his letter in late 1969 to Mr. Kuhn that Philadelphia had offered him a contract, what were the terms of that contract, not all the details but in the (voice overlap) Arthur J. Goldberg: They offered him an increase to a $100,000 with salary and another benefits, but that was not what he was contesting, he was contesting being removed without his consent and as his letter states he didn't want to be treated as channel property, question of principle. Potter Stewart: I just wanted to ask to you, but you are now telling us about the lack of mootness and about his damages in 1970 He was moved off for $20,000 (voice overlap) Arthur J. Goldberg: It is not by the way new although I have seen articles about it which indicates that this high paid ball player did things as you know that, why did he do it when other ball players, by the way despite of all the stories in press in the five years previous had only averaged a little over $8,000 a year, why this high paid ball player did this? He did it as he simply said, out of principle. He no longer wanted to be treated as channel property, he made that decision on his own and although he has been supported in this litigation by the Players Association about which I shall later have reference. This was his decision, the record is very plain on that, in fact he was told by the Director Mr. Miller that he had a tough case, nevertheless he felt in good conscience he had to presume. Byron R. White: As a practical matter, he had no real chance remaining in St. Louis and negotiating another controversy with St. Louis, he would have had to go to one on the other teams even if he had been to the reserve -- Arthur J. Goldberg: Exactly, Mr. Justice provided this clause is legal and I shall say it is not. Byron R. White: Even if it's not legal, if St. Louis is trading him, regardless of the reserve clause they are not going to negotiate another contract? Arthur J. Goldberg: He said that what he wanted, what is the opportunity as a free agent to negotiate his own deal, not to be traded as this form that I have referred, indicates without his concern. Now the reserve clause has been in existence one hundred years long and today any Union that the ball players formed, which I shall talk about in the labor exemption, with one important modification. In 1965, the reserve system was extended for the first time to potential new players who had never signed an agreement with any team and typically these are teenagers just graduated from high school or who have dropped out of high school. This had never been done. This category not in the minor leagues they until 65 enjoyed the privilege of negotiating their first contract, that no longer exist. They have a semiannual draft. There is another factor which I shall advert to when I talk about the so called labor exemption. Judge Cooper found that the baseball’s reserve system is not presently, collectively agreed to. Citation is in my brief, I shall not burden you with the citation. Now when Flood decided to sue, he challenges as I have said on several grounds. William J. Brennan, Jr.: Mr. Justice may I ask you, suppose it had been collectively agreed to would your position be any different? Arthur J. Goldberg: No. And I shall discuss that when I come to the labor exemption. William J. Brennan, Jr.: I hope you are going to get to that. Arthur J. Goldberg: I will move fast, because of the shortness of time, we have these three of our positions. On the first the Anti-trust laws we are confronted obviously with two decisions in this court, Federal Baseball decided in 1942 and Toolson decided in 1953. William J. Brennan, Jr.: And as they would have to be overruled. Arthur J. Goldberg: They would have to overruled, they should be overruled, they should be overruled for very good reasons, they should be overruled because the first one Federal Baseball was not as Judge Friendly has said, “Justice Holmes happiest hour”, indeed. William J. Brennan, Jr.: But I take that Mr. Justice those both dealt with the issue of statutory constructions. Arthur J. Goldberg: Yes, but even then it showed, I doubt that Justice Holmes had never seen a ball game-- William J. Brennan, Jr.: The Court doesn’t readily overrule as a Statutory construction. Arthur J. Goldberg: Yes but it has and quite recently as I shall point out in a moment in reading throwing opinion written by Justice Stewart for a unanimous court in construing a statute. There is a case that put aside the Collins versus Hardyman, the Federal Baseball in fact was abandoned by Justice Holmes the very next term -- and Toolson was a percuriam which merely said that while we have done it even though we think it’s wrong because interstate commerce has changed, well, we rather leave it to Congress and the Court was troubled at that time with whether or not prospective rulings could be met, that problem of course has been settled by this court even quite recently and I shall mention that. Now, I say to you very simply, I shall not be elaborate that Federal Baseball was wrong. The development of law or what constitutes the commerce was considered the base and no one would doubt that baseball is engaged in the interstate commerce. This court in Radovich this court Shubert theaters, this court in the boxing area have all characterized sports, if they are so called as in interstate commerce baseball indeed is an interstate commerce in a very big way. That is a tremendous institution that sends people all over the company and in Canada. It realizes enormous revenues from television I think I saw the other day that in the National Contract Television Rights, they realized $41 million and then it supplemented their local contracts. Now we have here a question of stare decisis that I thought that this had been put to rest involving a statute-- Byron R. White: Mr. Justice said just before you start on that, do you think Federal Baseball and Toolson indicated that the baseball was not engaged in interstate commerce or is it that labor isn't an article of commerce, service is not article of commerce is a matter of statutory construction than the intent of Congress, would you just say that labor is an article of commerce? Arthur J. Goldberg: It depends on what way labor is treated, labor should not be an article of commerce. Clayton Act says it should not be a commodity. Byron R. White: Well is Flood different? Arthur J. Goldberg: Yes, because he is been treated as a commodity, as everybody is under the reserve rule. He is not treated his labor as we traditionally understand labor people to be treated, free American workers determining their own destiny. Byron R. White: But in anyways -- I gather Radovich settled that? Arthur J. Goldberg: Yes it did, the same issue was Radovich and decided against the football owners which brought Radovich, which were involved in Radovich's decision in this Court. It was argued in Radovich, and I do not know what prompted this Court to take certiorari, I had not assumed the purpose of the grant and this necessarily follows, if it is treated as a labor exemption which I shall talk about. If, it is decided that the labor exemptions so called applies, then that certainly applies to football they have a union, certainly applies to hockey and the consequences of a decision holding that the labor exemption applies to baseball may necessarily mean that it applies to all of the sports, so called sports. Otherwise it's very interesting when you read this record, as I know you have or will, Bowie Kuhn the Commissioner of Baseball does not refer to it as a sport. He refers to it as an entertainment, as entertainment it's governed by your decision in Shubert which says that subject to antitrust regulation. The decision Justice Stewart that I mentioned, in a statutory construction is your own in Griffin versus Breckenridge, perhaps I shall read only a few sentences. Whether or not Collins versus Hardyman construes the Civil Rights Act. Correctly decided at its own fact is a question with which we need not here be concerned, but it is clear in light of the evolution of decisional law, that had passed since the case was decided that many of the constitutional problems there, proceeds simply do not exist. Justice Holmes conceived there was a constitutional problem. The only reasons remains therefore not to accord to the words of the statute, their apparent meaning. I move quickly to the next point. I think that it ought to be overruled. It's anomaly in the law, every common theater has said it's anomaly in the law to adhere to Toolson and to Federal Baseball as improperly decided. Now I move quickly to the next point. And that is state law, peculiarly enough as Judge Waterman even says they were the we were in the horns of a dilemma. The federal law did not apply because it was not interstate commerce. Why should not state law apply? Judge Waterman said contrary to the District Court, which said it was preempted Judge Waterman says that it was interfering with interstate commerce. I take that this has no foundation whatsoever. The decisions of this court are plenty and ample. Well, the subject that state laws were to carry out for the purposes of the great federal statutes for Sherman Act which are not inconsistent ought to be applied. And then that is the law. Authoritatively the Sherman Act said that our law is designed to supplement, not disgrace federal law. There is no preemption here, expressed or implied, there is no conflict nor as any court found one. Judge Waterman says, there is a necessity for uniformity or there was no inquiry into the state statutes to determine whether there was. We have listed the state statutes and briefly summarized, they are the same as the Sherman Act. Those states that have adopted it. So the decision, for example, in the Continental Airlines case covers that. Finally -- William O. Douglas: Has the petitioner left baseball? Arthur J. Goldberg: Pardon. William O. Douglas: Has the petitioner left baseball? Arthur J. Goldberg: Yes, he left -- he left now. William O. Douglas: Is the case moot? Arthur J. Goldberg: No, it's not because the 70 season, is the season where he has right to recover damages because he returned later and he also has right to decide if he wants to go to Minor Leagues, or Japan which are subjected to the same rules. I will say one word, I should take a few more minutes of my time and comes off of rebuttal. Warren E. Burger: Your rebuttal time is used up. Arthur J. Goldberg: About, yes. About the -- Warren E. Burger: Excuse me. Your time is completely consumed but we'll extend it three minutes and enlarge yours three minutes Mr. Potter. Arthur J. Goldberg: There is nothing too bad to the baseball argument that a new found affection for the collective bargaining and the labor act. I share that affection, in fact, I shared it for many, many years. Under the decisions of this court, this is hardcore violation of the Antitrust law. This is a group boycott and blacklisting, all of this under the rules are obligated not to deal with a player, if he is on a reserve list, he is blacklisted not only here but in Mexico and in Japan. And this is the most obvious restraint of trait known to man. I'll put a simple illustration. As Your Honor is well know, I once represented the steelworkers. Let me put a proposition. Suppose the steelworkers union, they would never do this, agreed with US Steel, that if a man signed up, he had to work for US Steel all his life and if (Inaudible) employed him and he left. If (Inaudible) employed him, US Steel will not supply parts for their fabricating or steel for their fabricating operations. Is there any doubt in anybody's mind that would be a per se violation? Not at all. Finally, so there is nothing to this labor exemption. As the court said recently, Court said in Pennigton, Justice White's opinion. You cannot just say conditions of the employment wages, you have to interpret the terms. This is perplexed to be condition of employment, servitude is not a condition of employment nor a slavery. Can you conceive any union being charged with a failure to bargain because of this? I cannot conceive that. Furthermore, this goes beyond the bargaining union, the opinion, Justice Brennan, that you just wrote, affirming Pennigton because it covers the Minor Leagues and it goes beyond that. So it gets out of the bargaining union, and for all these reasons, I would say that none of the arguments have any basis. Mr. Flood was the victim of a reserve clause which in my view violates all of the Antitrust Statute. Warren E. Burger: Mr .Potter. Paul A. Porter: Mr. Chief Justice and may it please the court, I wish to take about five minutes, I represent the respondent Bowie Kuhn, Commissioner of Baseball who was the defendant below on the count of one, and that was the Antitrust law. Mr. Holmes then will discuss the issues in the case, and totally what we all agree is the central issue. Mainly, that this litigation involves basically a labor dispute. Now the Commissioner of Baseball serves for a term of seven years, for odd plenary powers, both in administrative and quasi-judicial nature to preside over the institution of professional baseball. His first point, fundamental function is to maintain the integrity of the sport on the playing field and public confidence and the honesty of the game. He has the authority under the rules of baseball, to take whatever action in his judgment is in the best interest of baseball, and he has acquired on frequent occasions to evaluate under that standard and way in the interest of players and perhaps their fans alike. Now baseball as it has been recognized by this court again and again, is a unique structure, primarily bottomed on responsible self-government. The Office of the Commissioner as we all recognized, beginning the (Inaudible) was established to police the honesty of this court. Since it is developed into institutional apparatus to reconcile many minor and major issues in appropriate administration and the structure as the whole. William J. Brennan, Jr.: Well, Mr. Porter is the structure of other sports different to that football, basketball? Paul A. Porter: Not presumably Mr. Justice Brennan. May have copied including the reserve systems, essentially the same as structure and the pattern as baseball. William J. Brennan, Jr.: Yet they come within the application of the Antitrust law? Paul A. Porter: Well it is never been challenged expect in Radovich. They have settled a number of cases as Mr. Hoynes will develop. The Spencer Haywood case is a notable exception. And they have been living on the brink, I think. They recognized it? William J. Brennan, Jr.: You are not making an argument for uniqueness of baseball and and respective instructions. Paul A. Porter: Indeed we are. William J. Brennan, Jr.: You are. Paul A. Porter: Indeed we are. Yes Sir, and I can develop that if time is permitted where we have spent 25 percent of our revenues for player development, major league revenues. Now the other sports have their forms as per the college and there are many other distinctions. Now, the Commissioner because of his neutral position has no participation in the bargaining that has gone along with respect to the reserve system. Now he testified in the District Court that this system was not a fossilized system, engraved in Habris (ph) v. Stone -- it was subject to changes and modifications and indeed it has been changed and modified. The commissioner also gave important testimony on two particular areas that I would direct your attention to. Number one; that without some continuity of employment between clubs and players, the relative equality of competition and the honesty of the sport would be seriously impairing. I would respectfully direct Your Honors attention to the Commissioner’s testimony which is summarized in our Appendix. Byron R. White: Does this go to whether there would be a violation of the antitrust laws rather than to coverage? Paul A. Porter: Well, I think that Mr. Justice White this is a labor dispute. It's a bargainable issue has Judge Cooper found as I think the Second Circuit and Judge Cooper said that all evidence have not been fully exhausted in the bargaining process and indeed as Mr. Hoynes will develop this issue was on the bargaining table while in the Toolson, while this litigation was brought by the players union. Also I would direct your attention finally to the Commissioner’s testimony exhibiting (Inaudible) which is Exhibit A found in Page 407 of the appendix. Byron R. White: I beg your pardon you just said this litigation was brought by the players union? Paul A. Porter: Oh, it was really financed by the players union and indeed that's conceded in this record. One final point I would like to make inspite of -- Byron R. White: Are they really saying this is their law suit not -- Paul A. Porter: Absolutely. Yes sir. And inspite of all the record that we hear here about this being a per se violation, and the trial record below with exception of the petitioner Mr. Flood all the witnesses in support of Mr. Flood's case, testify that some form of reserve system was essential. And I will not consume my time as consumed Mr. Chief Justice. Warren E. Burger: Mr. Hoynes. Louis F. Hoynes Jr.: Mr. Chief Justice and may it please the court. I am counsel for the National League and I here represent the 24 Major League Clubs and the two Major Leagues. The issues presented here are-- Byron R. White: Is your position that baseball is not commerce? Louis F. Hoynes Jr.: No, it's not my position that baseball is not commerce Your Honor. I think that has been well recognized. Indeed it is recognized by the Toolson decision. The issues are here much broader than Curt Flood’s particular situation which has been described by Mr. Justice Goldberg. This is fundamentally in our view institutional litigation concerting the normal operation of baseball’s basic fundamental and historic rules. And the real protagonists here are suggested by Mr. Justice Brennan's question few moments ago. The real protagonists are the players union, the Major League baseball Players Association and the Major League clubs that I represent-- Potter Stewart: Does the record show us anything about the union? Louis F. Hoynes Jr.: The record shows in very great detail Your Honor as does the opinion of Judge Cooper devoted a good portion of his opinion to tracing the effectiveness of bargaining, the effectiveness of the union-- Byron R. White: It's extent numbers of players or -- Louis F. Hoynes Jr.: Yes all of the players in Major League baseball really are members of Players Association. They have been association that has been recognized by the clubs as the formal collective bargaining agent for the football players. And all of the terms and condition of employment of a Major League Baseball player are in fact on the table on a more or less constant basis -- Potter Stewart: There are many NLRB proceedings involving the relationships between the clubs and this -- Louis F. Hoynes Jr.: Well. There has been no dispute over the propriety of their representation. However there have been a couple of unfair labor practice charges that have been brought and processed by the NLRB, and the NLRB of course asserted jurisdiction and that point is not debated by either side. It's part of the workings of Major League Baseball as we know it today have known it for sometime. William H. Rehnquist: Your both proceedings you're referring to are the ones that are by the umpires. Louis F. Hoynes Jr.: No, I was referring to proceedings involved in the Major League Baseball players association. Some of the dispute at the beginning of this year on the question of the relationship between television revenues and bargain on the pension plan. There was a disputes as to the extent to which we were required to disclose certain information. NLRB involved itself in working that matter out, complaint was issued and so forth. Byron R. White: Would you be taking the same position that the plaintiff here were a minor league player? Louis F. Hoynes Jr.: It's a player for Minor league player? Your Honor, I would not be able to say to you that bargaining directly representing the Minor League Players was being carried on, but the Major League Baseball Players Association certainly has bargained with the interest of the minor league players in mind. Indeed many of the grievances that have been brought before. Byron R. White: The players aren't -- the Minor League Players at terms aren't settled by the bargaining between them? Louis F. Hoynes Jr.: Bargaining with the Minor League players directly? No, there is no direct formal representation by the Minor League Players. That does not mean they are unrepresented however, I suggest that their interest as part of the -- Byron R. White: So then your position would not be the same if this is a point on the plaintiff. Louis F. Hoynes Jr.: Well at my position would be the same Your Honor. I simply would not be able to point to the direct one to one relationship between a formal bargaining representative and with that particular players I can with the Mr. Flood, it was clearly represented and a member of the organization but I would still argue Your Honor even if the Minor League player -- Thurgood Marshall: Mr. Hoynes, how far is this representation of Flood Curt. For example, did the owner consult with players association about this movement? Louis F. Hoynes Jr.: I mean, as far as the assignment of Flood's contract? Thurgood Marshall: Yes. Louis F. Hoynes Jr.: No that contract assignment took place under the rules which themselves were the subject to bargaining. Thurgood Marshall: Well, how much representation Flood get from this outfit? Louis F. Hoynes Jr.: Well, no one--. Thurgood Marshall: As to this trade which is the basis of this suit, now what position did the union take on that? Do you call it a union? Louis F. Hoynes Jr.: I call it union Your Honor. Thurgood Marshall: Well what position did the union take on that? Did they object? Louis F. Hoynes Jr.: The Union after the transaction took place, conferred with Mr. Flood as I understand it and ultimately agreed with him to finance the cost of his litigation and as I was about to point out, it is quite transparent I believe from the reading of the record that the Players Association, the Players Union has in fact controlled this litigation from beginning to end. Thurgood Marshall: I understood that, the union and management what they were interested in is non-litigate, is that right? Louis F. Hoynes Jr.: We certainly are interested in not litigating Your Honor, we believe that-- Thurgood Marshall: What if negotiation was done between this union that protected Flood? Louis F. Hoynes Jr.: Well, when the law suit -- Thurgood Marshall: What if anything before the law suit? Louis F. Hoynes Jr.: No representations by the union were made to us -- Thurgood Marshall: That’s normal? Louis F. Hoynes Jr.: Seeking any -- Thurgood Marshall: Is that normal in union management relationship? Louis F. Hoynes Jr.: Your Honor, I believe it is during the pendency of the collective bargaining agreement. These rules were part of an arrangement and bargaining was not to take place until a subsequent period. The transfer was entirely in accord because of arrangements. Thurgood Marshall: Now the union, which says the management, you can pick up a man and throw him out the door without any recourse. That's a union? Louis F. Hoynes Jr.: Your Honor I don't believe the unions ever agreed to that. I don't think that what happened with Mr. Flood. Thurgood Marshall: Well, did the union agreed to the bargaining -- to that paragraph which is under attack here, the reserve clause? Louis F. Hoynes Jr.: The reserve system is not simply a paragraph but a number of inter-related rules-- Thurgood Marshall: Agreed to by the union? Louis F. Hoynes Jr.: I believe that's right Your Honor – I beg your pardon, with the management. Thurgood Marshall: Is there anything in the record that shows that? Louis F. Hoynes Jr.: Well, your honor there are the collective bargain agreements in the record. Thurgood Marshall: Is there anything that shows that the union which you call a union agree to these provisions? Louis F. Hoynes Jr.: Your Honor, a collectively bargained agreement is an agreement signed obviously by the union and by management and all of the major league rules where encompassed by that agreement. I can't think of a plainer way to demonstrate it. Thurgood Marshall: As far as the union. Louis F. Hoynes Jr.: Well, the union Your Honor is I think having participated in the bargaining on management side for the last several years, has made remarkable gains with respect to player club relationships. Thurgood Marshall: What has it done concerning individual players’ relationships? Louis F. Hoynes Jr.: Well the union is -- Thurgood Marshall: Well, I say nothing. Louis F. Hoynes Jr.: No, I would not say nothing. Thurgood Marshall: Then wouldn’t you say under reserve clause there was no room for bargaining? Louis F. Hoynes Jr.: No, I certainly would not say that. I would say that the Reserve Clause itself, the very core of the Reserve Clause is a subject admitted by both sides, a mandatory subject of bargaining and something about which bargaining was going on when interrupted by the pendency the filing of this lawsuit. And it is back to that form Your Honor that we believe this matter should be remitted. Thurgood Marshall: You mean back to the union? Louis F. Hoynes Jr.: Back to the collective bargaining table. Your Honor, yes. Thurgood Marshall: Well even though the union is not protecting the individuals? Louis F. Hoynes Jr.: Well the union is protecting the individual. Your Honor, this union is very well. Thurgood Marshall: How the union is protecting this individual whose name who is the petitioner Curtis C. Flood? Louis F. Hoynes Jr.: Your Honor, the union bargains obviously for future benefits and what's at stake here is the shape of baseball and its employee relations really for the future. Mr. Flood is -- I think there is no question about that. He is retired from Baseball now. He is through with Baseball he -- Thurgood Marshall: Would you call it voluntary, would you? Louis F. Hoynes Jr.: Well, I would call it voluntarily retired at this point, Your Honor. He was playing for Washington and felt that he no longer could play satisfactory to his standards and he had other problems as well and he left the country. We were most eager to have the employee during the pendency of this lawsuit. We told his counsel repeatedly that we would make no argument whatsoever that the case had been mooted and that we wanted to see Curt Flood playing and living his normal life and litigation could go forward. If they would not hear one word from us that there was something inconsistent about him playing and litigating. We made no threats. It was suggested constantly that this be done and in 1971 Curt Flood decided he would return to baseball. His play was of the caliber that as a proud man, his play was of the caliber that was not satisfactory to him. He had other financial business problems which caused him to leave to both the Washington area and the United States. We regretted that very much. We would have been delighted to see Mr. Flood continue a long and prosperous career. Thurgood Marshall: This isn't in the record? Louis F. Hoynes Jr.: None of which is in the record Your Honor. Thurgood Marshall: He is playing with Washington or any of his other business? Louis F. Hoynes Jr.: Well, the record was closed before he began to play for Washington Your Honor, yes. I think that Justice Goldberg adverted to it and I am sure you could take notice of that fact. As I had mentioned before, it is our position that the players union is entirely in control of this litigation, and that it is concerned less with remedying any alleged wrong that may have been performed on Mr. Flood, that it is trying to reorganize the employment relationships in professional baseball. In other words, the union is after a larger game here. Mr. Flood's testimony itself was isolated from the rest of the case presented, on behalf of petitioner. He testified that he would like the entire system to be torn apart, and like every ball player to be free to negotiate with any club of his choice. While all of the other witnesses testified on behalf of petitioner, limited their testimony to certain modifications, that they suggested in a reserve system. All assuming that some continuity of player control, some form of player reserve system would in fact be necessary. This testimony represented a repudiation of really Mr. Flood's position, and left him a forgotten him for the reminder of the case. In fact no evidence at all was offered on the damages, which Mr. Flood's complaint indicated he had suffered to his outside business interest in St. Louis, not a shred of it was ever offered on that matter. That's the union as I have said, was after a larger game. It intended to subvert the collective bargaining process in baseball to obtain games which it had not yet achieved at the bargaining table, outside of the bargaining table, and to unravel the very fabric of past collecting bargaining, all of which interwoven intimately with the reserve system. In order to accomplish this purpose, the petitioner has attempted to persuade this court to move radically in two new directions. First to change the law abruptly and totally, by overruling the narrow and well confined precedents of long standing, which now indicate that baseball is not subjected to the Antitrust laws. And second to declare illegal, per se illegal, I believe according to their briefs, baseball's historical reserve system as the trial court found the corner stone of the game, and to act in effect as a compulsory arbitrator in an employee-employer dispute, about the terms and conditions of employment in baseball, in fashioning a new system. A trial was demanded to -- Byron R. White: I would say at this point would you comment as to why baseball moved to extend the -- why did it move into the draft system in 1965, to the new player? Louis F. Hoynes Jr.: Your Honor, the adaption of the draft system is simply one more step, and a number of steps that baseball had taken over a period of years to try to equalize competition on a playing field, preceding the draft rule there were rules about bonus issue, you may remember this. If a bonus of a certain size was awarded to a player, that player must serve immediately on a major league roster. All of these were efforts to prevent the clubs with the largest accumulations of wealth in being able to attract the most skillful young ball player, and none of those system soon -- Byron R. White: The bonus system itself didn't come into effect until fairly recently? Louis F. Hoynes Jr.: I beg your pardon? Byron R. White: When are the first bonuses paid? Louis F. Hoynes Jr.: Well I think the first bonuses were probably of large amount were paid in 50s. Sometime before the rule or the 65 free agent draft, I might note on the free agent draft subject that all of the other sports have free agent drafts. In fact, in the other sports the rights to negotiate with a player are perpetual. Once he is -- an amateur is drafted, he can negotiate only during his lifetime, with the club that drafted him, and in baseball the negotiating rights are only of 6 months duration, and if a player doesn't sign with the club that drafted him, he maybe reselected by another club. Lewis F. Powell, Jr.: Mr. Hoynes what are the principle differences between the standard National Football League contract, and the type of contract which Mr. Flood had? Louis F. Hoynes Jr.: Well, Your Honor, there are number of differences in the employment relationship between football, and baseball, and a number of differences in the sport, the character of the sport themselves. An obvious difference that receives much publicity is the option rule in professional football. A system by which a player can declare at the beginning of the season that he desires to move to another pastures at the end of that season, he then plays an option -- they call like it the (Inaudible) option. At the end of that additional year, he is technically free to seek employment by another club. The rule has another provision that says that any other club that signs that player must compensate to the club from which the player came, either in the amount measured by money players, draft choices, what have you, satisfactory to that former club or if a new agreement can be reached, that the commissioner will establish compensation. The Major League Baseball Players Association is announced this arrangement as essentially a fraudulent one, and in fact there's been a little mobility historically in football, and if one examines the collective bargaining process going on in football, one will see that the football players themselves denounced the arrangement as being essentially a cosmetic one, and not one affords them any real freedom of choice and then seeking their employment. Other differences in employment relationship in football, and baseball, rather than football, the management may establish the rules of the game. In baseball our collective bargaining agreement expressly recognizes the duty of the major league clubs before enacting any rule or involving in any way, player benefits or player rights to negotiate that rule with the players. Also in baseball, there is an grievance procedure which has been agreed to with the players association, one that’s un-parallel by any other sport which places all grievances about club and player matters except those involve the integrity, which are reserved for the commissioner but the garden-variety grievance goes before, an arbitrator external to the game, a man now named Lewis Gill former President of the American Academy of Arbitrators jointly selected by the union and by the clubs. He has handled dozens of grievances in baseball, makes final and un-appealable decisions with respect to them. And finally with respect to the differences in the character of the game, games themselves football for example, and baseball, football is able to reach out and plug from the college campuses players are ready to play professional football, already nationally known and skilled. Baseball has no such alternative, baseball has an elaborate minor league system, in which it develop its own players, and to which it devotes approximately 25% of the major league gross revenues. Something over a million dollars per year per club, poured into the minor leagues to keep the flow of players, to keep this player development flow operating. There isn't any sport, any professional sport, that has anything that even proximates that sort of an arrangement, or those sort of expenses and difficulties of player development. For all these reasons, we believe and the Players Association recognizes and they're bargaining with us, that the experience in other sports is, well not dissimilar from baseball's really, nevertheless neither is it a good guide for the baseball world. There are important differences in the businesses and we feel and as I've said the players union feels too that we must work out our own relationships in the light of realities of the baseball business, not in the light of what some other sport may do, or some arid principles, but on the practical level, at the bargaining table, by the people who must live with results of their labors, the players and the club owners. Thurgood Marshall: Why they came to this lawsuit? I'm using your word. You said -- Louis F. Hoynes Jr.: You're expressing a fact Your Honor. Your Honor bargaining had just begun in the core of the reserve system and like any labor union they think they see an easy way to achieve a position of predominance, a better position, more clogged at the bargaining table, they seize the opportunity. I think there is little doubt, but what the owner's position here would be in something of the shambles. If this Court would rule that the reserve system is per se illegal. As a matter of fact, I don't know how bargaining could proceed at all. I don't know what what we would do at the bargaining table because presumably, not only the present system but every modification there too, everything that we might have work out in this area with the Union would be forbidden by the Antitrust laws. And even if only our present system, not speaking of other systems were to be declared illegal, still there would be a third party at the bargaining table and that would be the court and the Players Union I think would be able to use that extremely effectively. We would been buying a new reserve system every time we bargained and that the option would be that we would be faced with more litigation and wrapped with certainty, that probability that the arrangements would be illegal without their acquiescence. I think this kind of intrusion into a collective bargaining process is not something that the courts commonly do. It's something that's quite inconsistent. Byron R. White: Do you think this issue here whether the Reserve Clause violates the antitrust laws. I didn't know that. The issue here was whether you're exempt. Louis F. Hoynes Jr.: Well, Your Honor, I think the only factual issues presented here, obviously the broader issue is Toolson exemption which we believe reaches to the entire structure of the game, not only reserve system. But Mr. Flood and the union here are complaining only about the reserve system and -- Potter Stewart: The merits of the controversy were never reached either in the District Court or the Court of Appeals. They declined it -- both courts declined to reason the merits because they held that organized baseball is not subject to the -- neither the federal or the state Antitrust laws and it's that issue that's now before this Court is it not? And if we should decide that the Court of Appeals and the District Court were wrong in that view, then the normal practice be for this Court to remand the case to the District Court for trial of the case on the merits. Louis F. Hoynes Jr.: It's quite right Your Honor, but I think there are other levels of decision here too, the labor matter that we're discussing that I'm now arguing, that's not -- Potter Stewart: Well that's -- but that just is a -- that bolsters your argument I gather that this is not a matter for the Antitrust law. Louis F. Hoynes Jr.: That's right Your Honor. It's a separate distinct reason for the use of result as well. I might also comment as in -- Byron R. White: I believe that you could lose the issue here, that is here on coverage and still win on the reasonableness of the Reserve System under the Antitrust law. Louis F. Hoynes Jr.: Yes, I presume we could also lose the issue here on broad coverage and prevail on the issue that no suit can appropriately be brought by member of the collective bargaining organization and matter which is essentially a matter of collective bargaining. Byron R. White: Do you think there is something unique in the union representing the great range of baseball players, all of them being neglected bargaining agent for all of the players in a unit? Louis F. Hoynes Jr.: No Your Honor I don't. Byron R. White: But you don't report to reach the question of salary? Louis F. Hoynes Jr.: No, the union has expressed in its dealing to the best that it does not wish to bargain except to set minimums and other parameters. It is suggested that we would like to bargain perhaps not only by minimums -- at flow, but but perhaps the minimums that relate to some very seniority levels as well, but it does not wish to intrude in the individual negotiations in the contract-- Byron R. White: The unions usually do. Louis F. Hoynes Jr.: That's right Your Honor, but the range of -- Byron R. White: And why it doesn't adhere? Louis F. Hoynes Jr.: It certainly could Your Honor. That would be a mandatory subject if the union were to raise -- put that issue on the bargaining table, we would have no choice but to deal with it. Byron R. White: And the same with you? You put it on the bargaining table. Louis F. Hoynes Jr.: We would have put it on the bargaining table as well. I think both sides today have felt that it is not in the interest of the individual players or off the process to -- Byron R. White: That's just because players are too different one from another for one union to represent. Louis F. Hoynes Jr.: I think that that is part of the answer Your Honor, yes. It's part of the answer. Byron R. White: What's the rest of the answer? Louis F. Hoynes Jr.: Well, I think that rest of the answer is that now we know the players are different but their relationships with their clubs maybe different as well. Byron R. White: You're saying the same thing. Louis F. Hoynes Jr.: It's feature of the same thing, an aspect of the same. There is a wide range obviously of talent, of desire and that's felt -– that's expressed more appropriately realized in individual bargaining. Byron R. White: And while the union feels that if in a new field apparently, that you and the union really shouldn't set salaries which is usually the subject of collective bargaining. You should be able to agree on a reserve system that applies the same to everybody. Louis F. Hoynes Jr.: Well, Your Honor-- Byron R. White: Even though the players are different one from another and their relationships are collaborative-- Louis F. Hoynes Jr.: We don't think it will be practical to have a different Reserve System for each individual player, such as you can't differentiate salaries. But that does not mean that a Reserve System must necessarily, monolithically apply to all players. There could be a small number of variations in the reserve system, again depending upon seniority or some other factor. Those kinds of suggestions have been made and they certainly will continue to be on the table. But an individual Reserve System for each player having not negotiated out separately is little difficult to understand. I think that would not be workable. That's not to say that individual players and clubs can not negotiate such things as long term contracts and so on which go a long way toward modifying the reserve system. That can be done and has been done. And that any player is free to do with his club. There is certain precedent for that one. Your Honor I'd like to briefly refer you to Jewel Tea and Pennington decisions which Mr. Justice Goldberg referred to. As I -- Byron R. White: Let's assume that for the moment that both players and management as they do say pay out as a collective bargaining issue. That's going to be left to individual bargaining. And then the owners among themselves agree on a range, on some maximums. We will not pay anybody, no matter who it is, more than a $100,000 a year. Louis F. Hoynes Jr.: But we certainly would not do that Your Honor. Byron R. White: Let's just assume you did. Let's assume you did. Because that's one of the suggested alternatives of course to a reserve system. There going to have to be some maximums. Louis F. Hoynes Jr.: Not one that we have suggested Your Honor. That would be something that we would have to, I believe state a maximum, like state a minimum. There is something that we have taken up with the Players Association and bargain. If the association were to say, no we don't care to bargain-- Byron R. White: Well, I take it then you wouldn't do that because you think that would be improper. Louis F. Hoynes Jr.: I think it would improper Your Honor. Byron R. White: Such as violating the Antitrust laws. Louis F. Hoynes Jr.: No, not all Your Honor, improper in terms of the labor laws. Byron R. White: Alright let's pursue that. I just want to get your position clear. If the owners agree on a max $100,000 a year, against the background where both labor and management had put it aside as a bargaining issue that, you say that would not violate the Antitrust laws. If they (Inaudible) among the owners as to what they would pay their players. Louis F. Hoynes Jr.: If this were put aside as a bargaining issue, you can't make something that is not a bargaining issue, which you can agree not to bargain about it. Byron R. White: Alright let's assume, put it the way you want. You had agreed not to bargain about it. Louis F. Hoynes Jr.: We had agreed not to bargain about it and the union thereby would have acquiesced in our setting such maximums. And I believe we will be permitted to do so. Byron R. White: Only because of the labor exemption. Louis F. Hoynes Jr.: Because of the labor exemption, because of the union acquiescence. But the union could challenge that, put it on the bargaining table and at any time if disputed. Byron R. White: Because of the labor exemption, because of the basic exemption to baseball Antitrust laws. Of course right? Louis F. Hoynes Jr.: That goes without saying Your Honor. That goes without saying. I'd like to call the Court's attention if I may briefly to a matter not mentioned in our briefs simply because it has not been published by that time, that is a Yale Law journal article by Professor Wiener and Mr. Jacob's title Antitrust Principles and Collective Bargaining by Athletes in 81 Yale Law Journal number one, which agrees completely I believe with the analysis which we've advanced in our brief and suggests that the Antitrust issues are perhaps even irrelevant here. The labor policy and its supervening. Byron R. White: You are suggesting that this judgment below would be upheld on the grounds not reached below? Louis F. Hoynes Jr.: Your Honor I'm suggesting that the judgment ; number one, that the judgment below be upheld on the grounds reached below, but alternatively that there is an additional, powerful and we think quite correct ground, which the courts below felt that not necessary to reach to a labor policy which offers an alternative reason for -- Byron R. White: Do you think the record is adequate for that ground? Louis F. Hoynes Jr.: I think the record is quite adequate. Byron R. White: You would oppose the remand. I presumably disagreed with you on the assumption of the -- initial issue on which it was decided below, you would – would you prefer that it would be remanded, the labor exemption issue to be dealt with by the courts below per se? Louis F. Hoynes Jr.: Your Honor I think it would not be inappropriate to remand that for such findings as you might feel that would be appropriate or not inconsistent with your opinion. I do believe the record has been fully developed on that point however. I would mention only briefly that the law which Congress has decided is one which I'm sure you're aware and I will elaborate the point. Congress has accepted the invitation of this Court repeatedly given as examined the baseball system repeatedly. Many bills have been introduced, many hearings held. The conclusions of those committee reports universally within the effect that the baseballs reserve system was something that was of that substance of the game and it was needed to be preserved. Whenever Congress has acted, it has extended an Antitrust exemption. It has never in any way limited one in professional sports. The matter is now under active consideration by Congress which has flexible legislative power. It's not limited to applying only the garden-variety antitrust laws. It can root out evils as it sees them with its flexible legislative power and deal with them quite precisely. And if there is any regulatory policy governmental regulatory policy of baseball should be adopted and Congress as this Court has repeatedly observed is the proper body for adopting that. I would like to mention as well that the talk of stare decisis, as this Court has said the last word on stare decisis in the Toolson and Radovich opinions, again I need not repeat what this Court had said, except the note that the baseball community has continued to operate under those rules, grown and invested more and that others reliance interest recognized in the 50s or have multiplied or even greater weight now. Thank you Your Honor. Warren E. Burger: Thank you gentlemen. The case is submitted.

Warren E. Burger: We'll hear arguments next in 74-456, Hill against Printing Industries. Mr. Odam? John W. Odam Jr.: Mr. Chief Justice and may it please the Court. I'm the Executive Assistant of the Attorney General of Texas and I'm here today representing appellants, Attorney General John Hill, Texas Secretary of State Mark White, and Mr. 0059 the District Attorney of Harris County Texas. This appeal was taken from a judgment of three-judge United States District Court of the Southern District of Texas. It was entered on August 20, 1974. This was an action brought by several printers seeking to prevent disclosure of their names on certain political advertising that they were employed to prepare. They challenge the constitutionality of a portion of Article 1410 (b) of the Texas Election Code which states, “All printed or published political advertising shall also have printed on it the name and address of the printer or publisher and the person paying for the advertising.” William H. Rehnquist: When was that law enacted in its present form? John W. Odam Jr.: The law was enacted Your Honor in its present form on -- the amendment became effective on June 14, 1973. William H. Rehnquist: When was this lawsuit brought? John W. Odam Jr.: The suit was filed on September 11th 1973 of which time local political races were being conducted in Houston, Texas. William H. Rehnquist: Had the secretary of state made any determination or have made any public announcement is to how he construed it or how he proposed to enforce it? John W. Odam Jr.: No Your Honor, the Texas Secretary of State had not done so, nor had there been any prosecutions initiated or even attempted or even considered to that time as evidence and the record will demonstrate. Harry A. Blackmun: Haven't statutes of this kind been in effect in other states for many years? John W. Odam Jr.: Yes Your Honor, there are approximately 33 to 36 states that have similar statutes to the one under consideration by the Court today. The statute we have under consideration however is unique in that only a very small number of states, I believe three have statutes that require that the printer also be identified. The statute is generally similar however to 18 U.S.C Section 612 as I will refer to later. Potter Stewart: As requiring a sponsor to be identified? John W. Odam Jr.: That's correct Your Honor. Potter Stewart: But only three require the identification of the printer? John W. Odam Jr.: Yes, Your Honor. The three-judge court held -- Warren E. Burger: This side I suppose among other things enables the reader trace back the material to its source even if the names of the sponsors are either fictitious or meaningless for the readers that part of it? John W. Odam Jr.: Yes Your Honor. We would reach this point I believe in the compelling state interest, one of them being as Chief Justice points out. The ability of the voter or the candidate or any interested citizen to be able to determine by looking at the piece of political advertising who printed it and then go to the printer whose address and name is indicated on the piece of political advertising and find out exactly who submitted it for printing and that is one of the very main reasons why the statute was enacted. Warren E. Burger: Some of the statutes require the costs also to be indicated, do they not? John W. Odam Jr.: Yes sir, yes. If they do not in the Texas statute, but in other states, that's correct Your Honor. William J. Brennan, Jr.: Some other -- I don't know what these statutes include them. Are other types of statutes which require for example, an indication by an insignia whether or not the printing is done by a so called Union Printer if that's an organized printer? John W. Odam Jr.: Yes Your Honor. William J. Brennan, Jr.: Does Texas have such a statute? John W. Odam Jr.: I don't believe so Your Honor. William J. Brennan, Jr.: But then in any event, if there are, they're independent or separately from the -- John W. Odam Jr.: That's correct, that's correct. The three-judge court held the foregoing language requiring the identification of the printer to be unconstitutional and that it infringed on appellees' First Amendment freedoms of speech, freedom of press and the right to assembly and said that there was no compelling state interest. Also, the Court held that the statute was void in that the phrase person paying for the advertising is so vague that man of common intelligence would differ as to its meaning and application. We present basically four fundamental court -- points to the Court today. First, that the commercial printer's actions do not constitute speech that is protected by the First Amendment and even if it is protected, the First Amendment rights or freedom of speech and freedom to press do not guarantee to them the right to print political advertising anonymously. Second, the portion of the statute in question does not substantially infringe upon the commercial printers and publisher's rights to association of privacy and to the extent that there maybe infringement which we denied that there is or were shown in the record in the court below, the state's interest in disclosure is sufficient to justify any infringement. Third, assuming arguendo that the printers possess such rights and they are in fact infringed upon. The purposes that are served by the reasonable disclosure requirements of Article 1410 (b), further the compelling state interest of protecting electoral process. And fourth, the term person paying for the advertising is not unconstitutionally void because when you consider the statute in its entirety, any reasonable person exercising common sense can sufficiently understand and comply with the requirements. Now, before expanding on these four basic points, I believe will benefit the Court if I very briefly comment more on the background of the statute being challenged. From 1967 until 1973, a period of six years, Texas law required a political advertising as defined in Article 1410 (b), reflect the name and address of either the person paying for the advertising or the printer or publisher of the advertising. I might note at this point for the benefit of Court that in the appendix which is supplied to the Court at page 65 is a full copy of the article as appears at the present time. Significantly, not during the period of six years, not once during that time was challenge made to the term person paying for the advertising as being unconstitutionally vague. In 1973, as a result of the experiences of the officers and the people of the State of Texas in which unethical and illegal conduct and political campaigns could not be effectively traced and thus not immediately prevented or prosecuted, the Texas Campaign Reporting and Disclosure Act was passed, designed to inform the public about the financing behind communications intended to influence their votes. Among other reforms, the legislature changed the disclosure requirement from the disjunctive person paying or publisher or printer to the conjunctive, that being disclosure to the public of the name and address of the printer or publisher and the person paying for the advertising. It's the change by our legislature of only just one word from “or to and” that brings as before you today. As previously pointed out in response the question from Mr. Justice Rehnquist, the amendment as we see before us today was enacted on June 4, 1973 and a suit was filed on September 11, 1973. There's no evidence presented to the court below that the candidates or political organizations had declined to use plaintiff appellees' commercial services nor that as a result with compliance with the statute that the printers had been harassed or had been intimated or had declined to undertake any commercial, political advertising for fear of reprisal or loss of other business. No political candidates appeared before the court below as parties or as amici. In fact, the only evidence before the Court was affidavits of individual printers swearing to their fears of a possibility of a reaction if they were to comply with the disclosure requirement. No evidence was presented, the prosecutions have been initiated or even considered, nor evidence of how the act would be interpreted nor enforced by the appellant, Secretary of state, Mark White who is charged with the responsibility of enforcing the uniform application of the Texas election laws. Parenthetically, a reading to the testimony of appellees' only to the live witnesses at the hearing of which a temporary restraining order was denied by Judge Singleton reveals that the testimony falls far short of establishing any likelihood of a chilling effect upon First Amendment rights. To use Mr. Justice Marshall's phrase from this morning, the plaintiff's counsel supports their allegations out of the clear blue sky. They are not supported by the evidences in the record in the case we have before us. In sum, the plaintiffs have failed to meet their burden of proving to the court below or to this Court to declare the disclosure provision unconstitutional. Our first point is that the Commercial Printer's actions do not constitute speech as protected by the First Amendment. And even as such speech is protected, the First Amendment, freedoms of speech and freedom to press do not guarantee to them the right to print political advertising anonymously. The First Amendment protects not the written or spoken word itself but the expression of ideas concerning social policy, political views and religious beliefs. Speech or conduct however that expresses nothing of political or social importance is not subject to First Amendment protection. As Judge Bue points out in his specially concurring opinion below. these printers by their actions express nothing. They do not argue that they are denied the right to print anonymously their own views in support of or in opposition to a particular candidate. To the contrary, they seek the right to print anonymously that for which they have no feeling one way or the other. Indeed, they seek to avoid expressing any type of conviction. They seek constitutional protection to avoid expressing only their name. Nor did the printer seek to distribute ideas. They merely received orders from their clientèle and return the finished product to the person that has hired their services. The appellees rely very heavily in the Tally versus California case to support their position. We submit that the Tally decision does not in fact support them and is distinguishable from instant case in several very important aspects. First, the Los Angeles ordinance requiring identification on all handbills were struck down because of over breadth as to time, as to place and as to circumstance and the lack of any relation to any ongoing governmental interest or responsibility. The challenged language of Article 1410 applies only in very limited times, that being during a campaign and only to certain groups. Those printing material for such campaign is for profit. It clearly does not eliminate anonymous discussions of public matters of importance at all the times or even during an election campaign. The purposes articulated by Mr. Justice Black from prohibiting an absolute ban on anonymous printing are far from applicable in the case at bar. Now appellee printers have no such lofty purpose for seeking anonymity. Rather, basic only to profit in private even if this were speech that were protected under the First Amendment, as Mr. Justice Clark pointed out in his dissenting opinion in Tally, the Constitution says nothing about freedom of anonymous speech nor there's freedom to press as illustrated in the Lewis Publishing Company case provide any such anonymity. The Brandsberg decision also illustrates that freedom of press does not guarantee an absolute anonymity especially where substantial, compelling, public interests are shown and demonstrated. As will be discussed in a later point here the state's interests are compelling and when weighed in the scales of justice against any possible infringement, may tilt in favor of the voting rights which our state so fervently attempts to protect. The appellants contend that the case more properly fits within the rationale of the Insco case and the Scott case discussed in our brief dealing with the similar federal statute 18 U.S.C. Section 612 which requires identification a person responsible for distribution or publication of political advertising. Our second point deals with the asserted right of associational privacy. The portion of a statute in question does not substantially infringe upon the commercial printers and publishers’ rights to associational privacy. The Printer's main reliance on this point is NAACP versus Alabama and the Bates versus City of Little Rock cases. Now this relies as misplaced for at least two reasons. First, the rationale in support to the right of associational privacy as they point out in their brief is to protect the right to associate, to advocate and promote political, social and economic actions. The right to freely associate for the purpose of advancing ideas and erring grievances. Ironically, the commercial printers do not seek to protect the rights to associate with the political candidate for any such reasons and has made the base of NAACP versus Alabama and Bates, but to the contrary they seek to conceal their identity for fear that someone might think that they do associate with their customers and thus damage their commercial enterprises. Secondly and more importantly, the holding both the NAACP versus Alabama and in the Bates decision was that in each instance, the law in question imposing some burden on the First Amendment right was not shown to have a relevant or substantial correlation to the state interest sought to be furthered. In the case at Bar, the substantial and compelling interests are shown by the state in a limited disclosure requirement of Article 1410. The NAACP versus Alabama and the Tally case both recognized that disclosure maybe required when as here the state show good faith efforts to protect a fundamental interest. Thurgood Marshall: Why does the state need the name of the printer? John W. Odam Jr.: Why does the state need to know the name of the printer? We feel Your Honor that there are about five reasons why the state needs to know the name of the printer, all of which go to protect the voting rights of the public. First of all, we'd say that they need to know the names of the printer in order to give a candidate or any other citizen a right to fairly reply to what the political advertising is, not as prohibited by the Miami Herald case, the access to the press. Thurgood Marshall: The man says “my name Joe Doe,” I put Joe Doe on the bottom, that doesn't mean I got a print of what you bring, what somebody else bring, does it? John W. Odam Jr.: You mean when you -- Thurgood Marshall: You put the name of the printer that's all I'm talking about, why do you need the name of the printer? John W. Odam Jr.: Your Honor, if the candidate or any person has the name of the printer on the piece of political advertising, he can look to see who made such statement. He can look at the piece of political advertising and say who made the statement, who calls this to be -- Thurgood Marshall: You mean it's primitive make the statement? John W. Odam Jr.: No, Your Honor, but the requirements of the statute are that the printer keep at his shop the name of a bent individual that came to him and submitted it for publication. Thurgood Marshall: Which his name is printed too? John W. Odam Jr.: That's correct Your Honor but the name that is printed -- Thurgood Marshall: So you get both, you come to them and say is this the name? John W. Odam Jr.: No, Your Honor, the printer would publish; number one, the name of the person that's paying. That name might not necessarily be the same name as the individual who submitted to him. For example, the name that he might put on the piece of political advertising might be the citizens for the election of John Doe, the name submitted to him by the individual. If you person out and the community wanted to see who submitted that on behalf of the citizen for John Doe, knowing who the printer is, you could go to the printer and he would have on the record who submitted it. He would have the name of the individual. Thurgood Marshall: Be there as the name of the man who's name is on that. That’s the only name he would have? John W. Odam Jr.: No, Your Honor, under the statute, he's required to have the name of the individual which might not necessarily be the name of the person paying. Thurgood Marshall: Where is that in the statute? John W. Odam Jr.: It's in the portion in Article 1410 (b) -- Thurgood Marshall: What page? John W. Odam Jr.: -- which is at page 66 of the appendix. Thurgood Marshall: Of the jurisdiction? John W. Odam Jr.: Appendix to the jurisdictional statement at page 66. Thurgood Marshall: Is this it? This is, now what page is? John W. Odam Jr.: Page 66, Your Honor. Potter Stewart: First sentence of the -- John W. Odam Jr.: Yes Your Honor. It would be starting about -- Potter Stewart: And then the sign -- John W. Odam Jr.: Signed by the individual contract and therefore in showing his full address and if his agent name of the candidate political committee within this enterprise. In other words, the name is printed on the piece of political advertising might be the political committee versus citizen for John Doe and if you want to find out who submitted it. Thurgood Marshall: But it then to prove to have objection of doing the Government's business for them. What the statute said before you file a political advertising, you shall file with the secretary of state something. That would be one thing but this is getting the printer to do it. John W. Odam Jr.: Well, Your Honor, by having the printer do it, it allows the entire public during a political campaign to know who distributed it by knowing who submitted it to the printer. Thurgood Marshall: Did the printer require to show that anybody wants to see it? John W. Odam Jr.: Yes, Your Honor. Thurgood Marshall: [Inaudible] Potter Stewart: You said there were five reasons and that's the first one, what are others? John W. Odam Jr.: The second reason Your Honor is that it allows the voter to be better informed in casting his ballot. Potter Stewart: Now how in the world would the name of the printer do that anymore than the name of the secretary who typed the manuscript? John W. Odam Jr.: Your Honor, if you know who the printer is, it allows by knowing who the printer is which ties very closely into the other point to know who submitted the material to be printed. Potter Stewart: Well that's the point. John W. Odam Jr.: Well, the first point allows a candidate to reply to whatever it is. My second point is to allow any individual voting in the campaign to know who submitted it. In other words, under the first point, the candidate would know who submitted it and be able to reply more directly by knowing where the piece of political advertising came from. The second point is that any candidate would be better informed by knowing exactly who submitted it to the printer. They are more or less one the same but the first as protected candidate or any other citizen who might be discussed in the piece of political advertising. The second is to allow the voter when looking at the piece of political advertising to be able to evaluate accordingly. In other words -- Potter Stewart: Not just by looking at, he has to go to the printer's office and get that? John W. Odam Jr.: That's correct Your Honor, but absent that, he is not able to totally evaluate. Potter Stewart: Alright, so you say those are two points, but a little difficulty, what are the other three then? John W. Odam Jr.: The third point Your Honor is that this disclosure will greatly deter one from attempting a falsely attributed smear as in the Dallas Grady case or in the Insco cases that are discussed in our brief. The reason for this, I would submit is that if a candidate or political committee or business entity is required and knows there will state on a piece of political advertising who printed it, it would deter them from putting out a smear sheet in the first place because they know it can be tracked down or at least the first line of defense is allowed by going to the printer and finding out who put out. Thurgood Marshall: It would be track down if they don't put anything they want. Potter Stewart: Well it can't be, that's the point. John W. Odam Jr.: That's correct and I'm saying that both names. Thurgood Marshall: This is automatic, you know. John W. Odam Jr.: No, Your Honor but it allows at least to know who the printer is to go with to find in the first place, not necessarily where the -- Thurgood Marshall: To know these printers and that will print anything for money. John W. Odam Jr.: Well, the point Your Honor -- Thurgood Marshall: Well the answer is you're not going after them, you'll go after them criminally, and that's your answer, isn't it? John W. Odam Jr.: Well, other methods would be available. We're not talking about going after the -- Thurgood Marshall: [Inaudible] John W. Odam Jr.: We're talking about going after the candidate or the political committee who intended to have it distributed in the first place. Thurgood Marshall: Alright. Potter Stewart: Alright. Well, then your needs one, two, and three are that they allow anybody interested to go to the printer's office and find these names that are required to be kept there as matter of record by the printer. John W. Odam Jr.: That's correct Your Honor. Potter Stewart: And whether it be a member of the public or a candidate or somebody who suspects dirty tricks, that’s really all are the same need in which I fully understand your point and then now what are your -- John W. Odam Jr.: The fourth point Your Honor is that it'll greatly assist the officials in checking the accuracy of expenditure required to be reported under other provisions of the Texas Campaign and Disclosure Act. By these candidates in Texas must is in many states submit in Austin or at the District level of the county exactly what expenditures they made. Well, there's no way to check that out. They registered in Austin as to what they are and they say they made these expenditures or you have to take their word for it unless you have some other way of checking it out. This is not only available to state official but to any public official whether it be a candidate or anyone else to determine exactly how much was expended and to verify whether or not that is correct. And the fifth point Your Honor is that before the 1973 Amendment, the printer was required to retain the name of the contracting party. That requirement was virtually meaningless because until this point you wouldn't know who the printer who is required to make the disclosure or retain the information in the first place. Now, taking or assuming that that is a valid consideration, that is that the printer be required to keep the name of who submitted to him, it is meaningless unless you're able to find out who the printer is in the first place. Potter Stewart: So, that the name of the printer is important only because it is tied with the requirements of subsection (b) here on page 26 in that through the printer you can get the sponsors? John W. Odam Jr.: That's correct Your Honor. Potter Stewart: And that if it's only important? William H. Rehnquist: I suppose to the -- under Texas libel and slander law, the printer might be liable in some circumstances for printing something that was grossly and maliciously false, might they not? John W. Odam Jr.: That's correct Your Honor but our purpose in passing the statute is not to enhance necessarily our libel or slander laws. We're concerned by informing the public at the time that political election is going on not to -- William J. Brennan, Jr.: Nobody but others could turn to the publication of libel or slander -- John W. Odam Jr.: Well, I believed Mr. Justice that simply because that there is -- William J. Brennan, Jr.: Well, no but the idea would be would the printer want to be cautious about whether he agrees to print with his name on it. John W. Odam Jr.: I don't believe that is correct Your Honor because we're not only concerned about items would fall as far as being libelous or slanderous but we're talking about in a campaign where a slight difference. William J. Brennan, Jr.: And I think you don't argue that to deter the publication of libelous and slanderous, the requirement of printing the printer's name on the publication that may assist them, you don't argue with that? John W. Odam Jr.: No Your Honor. Potter Stewart: Very wisely. John W. Odam Jr.: Your Honor these we submit are the five reasons which all go to the compelling state interest which we feel is indicated here. In other words, if you have the freedom of speech to say that it exists or this speech is protected, to say that it is been infringed upon for all of these reasons which we have just discussed. We in Texas are attempting to protect the public’s voting rights, to have a fair and honest and open election. We care nothing about trying to help someone later on have a civil libel suit against someone but to help with the election at the time that is going on. The states of the union are vested with a primary responsibility for the regulation of election processes within our boundaries for both federal and state congressional elections. The importance of the responsibilities underlying Article 1, Section 4 of the United States Constitution that the states have the compelling interest in preserving the integrity and the orderliness of election process cannot be a matter of dispute. The interest has its foundation in the right of all citizens, voters and candidates to choose their Governmental representatives in an orderly, fair, and democratic process. William J. Brennan, Jr.: Incidentally, the Texas have on the statutes required comfortable identification of television or commercials, political commercials or radio -- John W. Odam Jr.: Yes, Your Honor but I think that the point on that is that the -- by identifying on a piece of political advertising exactly who the printer is, they are put in actual practical parity with the television station. This particular statute would require -- William J. Brennan, Jr.: How about newspapers advertisements? Do they -- what has to appear on that? John W. Odam Jr.: Your Honor, as I recall there is an exemption as put out and this one exception to what Mr. Justice Rehnquist asked me earlier about newspapers that they would not be required since it obviously speaks from slays who is putting it out. With the newspapers you can look at the newspaper and go to the source, you can look to the television set and go to the source. William J. Brennan, Jr.: Well, whether it simply says committee for John Jones, that's all what the newspapers varies and carries, that doesn't tell who paid for the advertisement, does it? John W. Odam Jr.: No Your Honor but the newspaper. William J. Brennan, Jr.: The newspaper have to keep comparable information? John W. Odam Jr.: Yes Your Honor. What I mean by an exception is they're not required at the bottom of political advertising. William J. Brennan, Jr.: No, but they have to keep the same kinds of records the printer has. John W. Odam Jr.: That's correct Your Honor. William J. Brennan, Jr.: And I gather that's supposed to monitor as you suggested earlier with compliance with whatever the expenditure laws of the state maybe and also it's possible to find out who in fact is behind the advertising. John W. Odam Jr.: That's correct Your Honor and they're covered in Article 1410 (b) under publishers or printers referred to there. I don't have time to go into our last point that deals with the board for vagueness but I'm sure they will cover that and perhaps I have a little bit of time left to respond the questions. Thank you Your Honor. Warren E. Burger: Mr. Birnberg? Gerald M. Birnberg: Mr. Chief Justice and may it please the Court. To respond generally to the statements which have been made and some of the questions which would be asked, I'd like to start with the overall concept of what is the purpose of Article 1410 (b). Why do you need the name of the printer? You need the name of the printer so the state of Texas tells us printed on the surface of political advertising so that individuals receiving that political advertising can go to the printer's place and receive a copy, a signed copy of the statement required also by Article 1410 although not in this particular challenged provision. I want the Court to understand very distinctly that the printers have not in any way challenged the record keeping provisions of the act. All that the printers have challenged and attacked is that provision of the Texas Election Code which requires the printers to print their name and address for public dissemination, for public dissemination on the printed material. Now, with regard to what information the public and then get once they get to the printers, they get the information on the form provided by Article 1410. That information requires that the printer keep a signed copy of the ad signed by the person contracting therefore, the person contracting therefore. Now in answer to the question posed by the plaintiffs below, what does the phrase, the person paying for the advertising mean? The defendants, the Secretary of State and the Attorney General of Texas answered in their brief below at page four of the brief that it was very easy to tell who is the person paying for the advertising. The person paying for the advertising is the individual contracting therefore and such individual's full name and address must appear in so forth and so on. So, in other words, the only information that you can get by going to the printer is the information which the state maintains must be on the face of the political advertising itself apart from the printer's name, namely the name of the person paying for the advertising. Thurgood Marshall: Why does the printer object to free advertising? Gerald M. Birnberg: The printers object because as you'll note on the record in this case, Mr. Justice Marshall, their experience has been that when individuals see their name and address associated with particular political positions, particular political advertising that that has dire reprisal affects to them, that they have been exposed to various forms of -- as we've got in the record, physical reprisal, property, damage, economic reprisals, and various forms of harassment and so forth, when people identify the printers with supporting by at a very lease not refusing to undertake political advertising. Thurgood Marshall: 9 out of 10 of these briefs here, the printer always puts his name down and he loves to advertise? Gerald M. Birnberg: Absolutely, Mr. Justice Marshall. However, the chances of the members of this Court or any other Court reacting in a manner as some Texas voters do [Laughter] is not really substantial and indeed that is in fact the problem. The identification of the printer during the heat of a political campaign particularly is calculated to cause tempers to fly, hard feelings to be felt and those sorts of things to take place. Now, there's no evidence -- Thurgood Marshall: Did that happen to any newspapers in Texas? Gerald M. Birnberg: I assume that yes Your Honor. I don't know that we have any evidence of that in the record and I wouldn't suggest to the Court any particular factual case but indeed for example, the named plaintiff, Mary Ann Coleman experienced in becoming publicly affiliated, publicly associated, publicly known as a republican in the self Texas areas. She was beaten up and had various other forms of reprisals directed against her. As a result of all of that, she undertook to formulate -- once Article 1410 (b) was announced, she undertook to formulate for her company a policy; “Our company will not undertake political advertising so long as we must publicly identify ourselves and publicly disclose that we support particular political candidates because it's dangerous, it causes all sorts of problems and we're not going to do it anymore.” Now, that meant that with the advent of Article 1410 (b) -- Thurgood Marshall: Now, we've got to cutout special rules affecting? Gerald M. Birnberg: I'm sorry, I don't understand your point Mr. Justice. Thurgood Marshall: [Inaudible] Gerald M. Birnberg: Well, in addition of course to republicans Mr. Justice Marshall. No, of course not, but if you consider in even the more disunite political situations, the individual who prints for the Socialist Workers Party or the American-Nazi Party or the Communist Party or the John Burkes Society or any of the more dissident political groups that the more dissident the political expression, the less likely the printer is going to be to undertake that advertising in the first instance if he must associate himself openly and publicly. Now, all we've asked is through this suit, aren't their means less restrictive on the printer's rights to associational privacy, aren't there ways to accomplish each and everyone of these admittedly, legitimate state interests without imposing upon the printer's rights to political privacy, associational privacy, at least to as severe and extent as Article 1410 (b) does. Thus -- William J. Brennan, Jr.: Meaning some code [Inaudible] Gerald M. Birnberg: For precisely, for example that Mr. Justice Brennan, we suggested the coded -- William J. Brennan, Jr.: But what they have to do then, they'd be required to register or take it with some -- Gerald M. Birnberg: They could be required, they could choose to register and receive -- William J. Brennan, Jr.: Get number or a button or something? Gerald M. Birnberg: Right and if they chose not to register, not to get that number, they could in that circumstance print the name and address. Another thing on the political advertising, but that would be no more restrictive or no more of a licensing or a registration statute than requiring printers in the printing business to get employer identification numbers for internal revenue purposes. So, just get a number and use a coded bug so that there is not this widespread public dissemination of the identity of the printer doing political work for particular individual. Warren E. Burger: Does Texas have a Freedom of Information Act? Gerald M. Birnberg: Texas does have a public record statute and -- Warren E. Burger: One might went off the street and say to the Secretary of the State, we want to know what printer has code number 2341? Gerald M. Birnberg: Certainly, and there are two alternatives that I think -- Warren E. Burger: Why is that any less intrusive? Gerald M. Birnberg: It's less intrusive for two reasons Mr. Chief Justice. First of all, Texas in designing such a coded bug system could very well put in some sort of safeguards, I'm thinking in terms of the Bank Secrecy Act case for example where such information would not be available except on the showing of it being in furtherance of or necessary to achieve one of these legitimate state interests which has been expressed. Second reason is, because in that situation you would have only the person who was legitimately interested in ascertaining that information for whatever purpose or reason to track down a scurrilous piece of campaign literature or what have you instead of every single person who receives any piece of political advertising. Now, -- Warren E. Burger: Do you concede that it's a proper state interest to track down as you put it a piece of scurrilous campaign literature? Gerald M. Birnberg: Oh, I certainly think that that's legitimate state interest. Now, I think the state can pursue that with legitimate state interest only with imbalance which do not transgress First Amendment Rights of the printers or anyone else for that matter. And -- William J. Brennan, Jr.: Your argument is fully on behalf of the printer -- Gerald M. Birnberg: Yes. William J. Brennan, Jr.: Do you suggest if there's anything wrong about the Texas requirement that there appear on the advertisement on itself, the name of the person who paid for it? Gerald M. Birnberg: Except for the vagueness argument Mr. Justice Brennan, we're only assorting the rights of the printers in this particular case. Now, we are not suggesting necessarily that leaving the name of the person paying for the advertising is constitutional. William J. Brennan, Jr.: Does anyone here representing originally party to this? Gerald M. Birnberg: There is no such party in this particular lawsuit Mr. Justice Brennan. This is the lawsuit that is used not before the Court in this particular case, but another less restrictive thing that Texas could do it seems to us would be to pass a law, making it the illegal, making it a crime to put out falsely attributed campaign literature or scurrilous campaign literature or libelous campaign literature or otherwise to prohibit that. Thurgood Marshall: Are there such laws? Gerald M. Birnberg: No Mr. Justice Marshall, Texas does not, Texas did have a criminal libel law until January 1, 1974 at which time it was effectively repealed and at this time Texas has no law making it a crime to put out a piece of so called campaign dirty tricks in any form or fashion. William H. Rehnquist: How would one know where it came from, if you simply got it and it was falsely attributed unless there was some requirement like this? Gerald M. Birnberg: Well, there are at least two things that I can think of Mr. Justice Rehnquist. One of them is some form of a less restrictive printer identification requirement such as the coded bug systems, such as requiring that the printers and again I come back to the Bank Secrecy Act Case present copies of their political advertising to the Secretary of State who has a copy of each piece of political advertising there in his office, in the central repository sort of scheme. William J. Brennan, Jr.: Whether if it showing who the printer was? Gerald M. Birnberg: Certainly what the record showing who the printer was and -- William J. Brennan, Jr.: Without coded bug or anything else on the material itself? Gerald M. Birnberg: Without any coded bug or anything else on the material itself. Another thing is presumably if the piece of campaign material is false, libelous or otherwise a subject of controversy in the context of a political campaign and if the printer knows that he has been identified, appropriately the state officials then presumably that printer may well come forward and say this was done by me. I was the person who printed it and I was paid for -- it was paid for by John Doe or whoever else happened to be the person paying for it. But notice Mr. Justice Rehnquist -- William H. Rehnquist: [Voice Overlap] subject to the same reprisals that you say your client would be? Gerald M. Birnberg: I'm sorry I didn't understand. William H. Rehnquist: If he comes forward voluntarily under the pressure of this alternative system that you urge won't it be subject to the same sort of reprisals that you say your client is under the existing law? Gerald M. Birnberg: Probably that one printer and that one case would be but all of the other printers who had undertaken to do political advertising for various individuals would not be exposed to the great extent, to the devastating extent that we have under the present law. All the printers are desirous of doing is isolating the infringement on their constitutional rights if you will, is trying to tone down the devastating effect of this 1973 Amendment. I might point out or through -- Harry A. Blackmun: Well, I'm a little disturbed by your approach on less restrictiveness. Is this all was a constitutional measure that something might have been done a little less restrictively? Gerald M. Birnberg: Mr. Justice Blackmun, whenever the legislature has sought to achieve a legitimate state interest in a manner which infringes upon the exercise of First Amendment Rights then the legislature may do that only in the way which is the least restrictive on those rights only in a way which is absolutely necessary in the furtherance of the achievement of that legitimate state interest. Harry A. Blackmun: Of course any imaginative lawyer can always come up with something that's a little less restrictive, would he not? Gerald M. Birnberg: I'm not sure that's necessarily the case because obviously Texas had a lot of imaginative lawyers working on this particular case and I do not suggest -- Harry A. Blackmun: Isn't that the impossible to achieve standard when you take this position? Gerald M. Birnberg: Is it possible to achieve what? Harry A. Blackmun: Impossible to achieve. Gerald M. Birnberg: Oh I certainly don't think so Mr. Justice Blackmun. It seems to me that if the present -- Warren E. Burger: There's never a better way to do it? Gerald M. Birnberg: There may always be a better way to do it. In each case the Court must consider and balance whether or not the rights which have been infringed upon have been so substantially infringed upon that some less restrictive means must be adopted to accomplish the legitimate state interest. That's what we're urging so easily the State of Texas could have done and could do in this very case. Potter Stewart: The only thing I guess is that if there were no other possible way of furthering this state end you would have a much weaker case than you now have because there are many other possible ways? Gerald M. Birnberg: Certainly, I would go further than that Mr. Justice Stewart and say if there were no other reasonable way to do it then certainly our position would not be as strong as it is. But there are several other reasonable ways to accomplish each of these legitimate state interests without burdening the printer's rights to political element. Potter Stewart: Would you argue with the much less intrusive upon your -- Gerald M. Birnberg: Absolutely Mr. Justice Stewart. Warren E. Burger: How would you like to address your friend's argument that the act of printing is if I understood it correctly, the act of printing these documents is conduct since it doesn’t express any ideas of any kind of printer? Gerald M. Birnberg: Yes, well yes Mr. Chief Justice, there are two ways. First of all, I will address the Court to the very lengthy and I think scholarly dissertation Judge Singleton on that precise issue with all of his citations in the opinion for the court below on which the three judges unanimously declared the law unconstitutional. Secondly, -- William J. Brennan, Jr.: I gather a judge view didn't think with First Amendment Rights in printers as much as First Amendment Rights of those who were responsible for having the -- Gerald M. Birnberg: That's certainly true and the result of course Mr. Justice Brennan is still the same that in Mr. Justice Bue's opinion, this law is an unconstitutional infringement on -- William J. Brennan, Jr.: Yes, but he didn't think the one with First Amendment Rights of the printer? Gerald M. Birnberg: Of the printers, he certainly did not. We disagree with that view. Understand also that there are two First Amendment Rights that we're talking about here. One of them is the right to print anonymously and I think that is the issue to which my colleague is addressing himself and suggesting that the printers have no such right that they are merely commercial conduits and we point out that as a practical matter and as an historical matter, if the printer, if the person who operates the printing press does not have First Amendment protection co-existent with that enjoyed by the author that the whole purpose and scheme of the First Amendment is frustrated. Secondly, however and the issue is -- William H. Rehnquist: It really is nonetheless the right to print someone else's views anonymously that you're claiming? Gerald M. Birnberg: We are claiming the -- yes Mr. Justice Rehnquist, the right to undertake to print what we choose to print and not to choose what we don’t want to print. That is a statement of our name and address. That is the printer's name and address. That raises of course a Tornillo type issue where the state has told the printers you must print your name and address on political advertising. I would point out to the Court by the way -- William H. Rehnquist: Well what about the newspaper, what about the federal statute that requires a newspaper, every newspaper, they print the name of the publisher and so forth. Gerald M. Birnberg: Mr. Justice Rehnquist, that's only to the extent that the newspaper desires and chooses to avail itself of second class mailing rights and -- William H. Rehnquist: No, but Justice Holmes long ago said the government has the right to run a mail service but it doesn't have a right to run in violation of the First Amendment. I wouldn't think that’s any distinction? Gerald M. Birnberg: I believe the case that upheld that law is Lewis Publishing Company versus Morgan 1913 case and that's precisely the problem is that Mr. Justice Holme's position was not accepted in that case. That the Court said in that case that Congress has under Article 1, Section 8, plenary power to control the postal service and therefore anyone choosing or desiring to avail himself of lower postal rights, lower postal rights maybe required to forgo some extent First Amendment Rights. Now, I think -- Warren E. Burger: Doesn't that been as followed up by the obscenity cases on the mailing problem? Gerald M. Birnberg: I certainly think it has Mr. Chief Justice -- Warren E. Burger: Then your point vanishes? Gerald M. Birnberg: Well, whether the point vanishes, the point is that there's no constitutional, there is no judicial pronouncement of the efficacy of that law that exists and is viable today. Lamont versus Postmaster also seems to suggested that that 1913 ruling is no longer viable law. I would ask the Court, I would direct the Court's attention to the fact that political advertising in Texas is very broadly construed. It’s saying anything that it's any form of expression, anything published in a newspaper magazine or journal or any pamphlet, handbill or other printed matter or anything broadcast over a radio or television station or displayed on a billboard in favor of or in opposition to any candidate for public office or office of a political party or in favor of or in opposition to the success of any public office holder or in favor of or in opposition to any proposition submitted to the vote of the people whether it's been previously submitted, whether it’s to be submitted sometime in the future, whether it's been propose to be submitted. So, virtually any discussion about political matters which is reduced to printed or published form must carry a printer identification requirement. I would suggest to the Court that Mr. Hamilton -- Alexander Hamilton would have to have had the name and address of his printer printed on the federalist papers. I would suggest to the Court that John Jay would similarly have had to. I would therefore urge the Court to affirm the ruling below of the three-judge-district court. Warren E. Burger: Thank you Mr. Birnberg. You have three minutes left Mr. Odam. John W. Odam Jr.: Thank you Your Honor. Mr. Chief Justice may it please the Court. William J. Brennan, Jr.: What about the alternative methods. John W. Odam Jr.: Your Honor as far as alternative methods are concerned, I believe that -- William J. Brennan, Jr.: Would the state's interest all piled over and be as well served by coded -- John W. Odam Jr.: Your Honor I would appear to hear what Mr. Birnberg's suggestion would be if the State of Texas will require printers to come and identify themselves before they undertake any type of registration. I believe that you have more serious constitutional problems as far as prior registration if a coded bug system were to come into play. Another alternative that they suggest is some type of central repository where every type of political advertising from the entire State of Texas a copy of such a sense somewhere that legislature certainly has a right in considering alternative methods if they want to have such central repository are allowed to have to the voter which we are most concerned with or compelling state interest to protect the voter's rights, let the voter know when he looks at a piece of political advertising who printed it. Now, that's what we're concerned about. The alternative means therefore to answer your question would not accompany this purpose. Warren E. Burger: I suspect that they have this coding system that we'd be confronted with an argument that this was in affect a disguised licensing of printers? John W. Odam Jr.: I'm sure that that would be the case Your Honor. It would -- again the bug system, the coded system would not avail to the voters to know and as the Chief Justice points out would come into the licensing -- prior licensing before they could even go into effect. There are only two closing points I would make Your Honor would be number one, that the evidence before this Court such as opposing counsel has referred to was not for the record that the three-judge-court, the references made to the problems that the lady have with regard to her feelings about supporting a republican candidate. That was at the temporary restraining order but was not a part of the record that the TRO or excuse me at the three-judge-court hearing. Again, this record is void of law to support the position as well as the facts as developed in this record when considering the record as a whole and therefore we're respectfully pray that this Court reverse the decision of the three-judge-court below. Thank you. Warren E. Burger: Thank you gentlemen. The case is submitted.

William H. Rehnquist: We'll hear argument now in Number 91-2054, the United States Department of Justice v. Vincent James Landano. Mr. Daly. John F. Daly: Mr. Chief Justice, and may it please the Court: This case involves exemption 7(D) of the Freedom of Information Act, which permits the FBI and other Federal law enforcement agencies to protect the identities of confidential sources and also, in the case of criminal law investigations, the information provided by those sources. The specific question presented here is what exactly the FBI must do in district court to establish that a particular source may be treated as a confidential one. Seven of the U.S. circuit courts of appeals have adopted the approach that we urge on the Court today. That is, to allow the FBI to carry its burden by means of a categorical showing in which the FBI shows that each of the documents at issue falls within a category of sources... for example, State and local law enforcement agencies, for which an assurance of confidentiality is inherently implicit in the normal course of events. On the other hand, the court of appeals in the present case has set down a rigid rule that the FBI cannot invoke exemption 7(D) unless it can provide "detailed explanations relating to each alleged confidential source. " We submit that the FBI should indeed be able to proceed on the basis of a categorical showing presuming confidentiality for these types of sources in the absence of an indication otherwise. There are two essential reasons-- William H. Rehnquist: What types of sources are you referring to again, Mr. Daly? John F. Daly: --The categories are indeed broad, Your Honor. For example, in this case the FBI has contended that the individuals who provide information to the FBI in the course of a criminal investigation normally do so with an inherent understanding, an implied understanding of confidentiality. William H. Rehnquist: So your contention is that it should be enough to invoke exemption 7 if the FBI shows that the statement made by a particular individual was made to an FBI agent investigating a crime. John F. Daly: That's correct, Mr. Chief Justice. Sandra Day O'Connor: And that would be true even, for example, if the FBI were contacting some State authority in another State to determine somebody's whereabouts, or their criminal record, or anything of that kind. John F. Daly: Very much so, Justice O'Connor, because as the-- Sandra Day O'Connor: Even though you wouldn't normally think that would be considered confidential. John F. Daly: --I would beg to disagree, Justice O'Connor, because as the declaration in the present case indicates, there is a particular tradition of confidentiality in the sort of information exchanged between law enforcement agencies. When the law enforcement agencies and the FBI exchange information, there is a tacit understanding, which I believe the declaration in the present case said, for example, is reinforced in the daily contacts that FBI special agents have with local law enforcement agencies. Sandra Day O'Connor: Even as to routine information that's a matter of public record in that State. John F. Daly: Well, something like arrest records-- Sandra Day O'Connor: It just strikes me that there could well be people who talk to the FBI who don't have that expectation. John F. Daly: --Well, I think, Justice O'Connor, what's important is not necessarily the subjective expectation of each individual, and the problem, as we've pointed out, is that to base the rule on the content of the information raises very problematic issues, because certainly when people are contacted, they... what they know for sure is they're talking to an FBI agent about a matter of criminal law. That's the entire premise for our presentation. An individual, or even a local police department, may not necessarily know what information will be particularly salient, and certainly in many investigations... after all, the present one involves the murder of a police officer. Even the... what may seem on the surface to be routine-- Sandra Day O'Connor: Well, perhaps the circumstances of a particular investigation would certainly justify the assumption in some cases. For instance, a witness of a gang-related killing or something, I think most people would think those circumstances would give rise to a presumption of constitutionality, but I'm not sure it applies across the board. John F. Daly: --Well, I think the important point, Justice O'Connor, is that we need a starting point for this analysis. The problem, as we point out, both in terms of the statutory language and the underlying policies of exemption 7(D) is that you need a realistic starting point because, if one has to rely on the content of the information, of the particular crime that's at stake, the protection that's going to be provided is going to be very unreliable, and that's one of the keys to this case, I think. Sandra Day O'Connor: Well, I mean if you can determine from the particular circumstances that there is a likelihood of the presumption of confidentiality, that's one thing, but I wonder if it should be applied across the board? John F. Daly: Well, Your Honor, I think the main circumstance that we do know is that we know that someone... say, an individual... has provided information to the FBI in the course of a criminal investigation. That very fact is very important, because the FBI has a decades-long tradition of maintaining the confidentiality of its records. Sandra Day O'Connor: Does the... is it a practice at the FBI for any kind of notation to be put in the file in connection with each witness interview as to whether it's confidential or not-- John F. Daly: No, Justice O'Connor. Sandra Day O'Connor: --Or whether there's been any assurance? John F. Daly: No, Justice O'Connor, and that is one of the key problems here. Sandra Day O'Connor: But I guess you could do that. John F. Daly: It potentially could be done prospectively. We would submit that Congress hasn't imposed such a requirement on the FBI, and that in itself would be a very dramatic departure from the way the FBI is doing business now, and on a practical level as well, this... the respondent has tried to characterize our position as something new, some change. In fact, this is the way the FBI has been proceeding throughout the history of exemption 7(D) since it was enacted in 1974. Even if one were to say that oh, the FBI could change the way it does business in the future, (a) that in itself would be a change that should come from Congress and not the courts, and (b) that would do nothing for the enormous storehouse of information which exists right now. I mean, if the Court were to say, well, it's all well and good, but the FBI has to show us specific circumstances, for most of what's there it simply doesn't exist. Sandra Day O'Connor: Well, how about having to show just the general circumstances surrounding the situation? That's-- John F. Daly: I think part of the problem that we have with the respondent's view and with the view of the court of appeals is that they've never told us exactly what circumstances they want to hear, and frankly we have to question how useful the information would be, if one is talking about the physical circumstances... there was no one else in the room. The door was closed. Sandra Day O'Connor: --Well, how about the nature of the crime-- John F. Daly: The nature-- Sandra Day O'Connor: --And the witness' relation to it? John F. Daly: --That is something that we will sometimes be able to tell from the face of the documents, but there again, I think one of the keys which we discuss in our brief is the fact that Congress was aware that... what needs reliable protection for sources, and in our view the language of the statute gives great flexibility in this regard. After all-- Antonin Scalia: Well, on that point-- --It could have said that so easily and so explicitly. Congress had the opportunity to say, "All investigatory records of law enforcement agencies. " It didn't. It would be so easy to say that, and you say that by simply saying, "all investigatory records of law enforcement agencies provided by confidential sources. " You're saying essentially, "provided by confidential sources" means nothing... virtually nothing. John F. Daly: --No, not really, Justice Scalia. You must recall that there are a number of sources that the FBI deals with that wouldn't qualify as confidential at all. There are many published sources... for example, books and magazines. Wiretaps can be very important source of law information; also, unwitting witnesses who provide information to, for example, an FBI agent operating under cover. Now, those are all sources, in the normal sense of that term, and-- Antonin Scalia: You do not treat them as privileged. John F. Daly: --No, we do not, because the rationale that we're talking about here just doesn't apply to those kinds of sources. The... in... this Court, in CIA v. Sims-- Antonin Scalia: Wiretaps... wiretaps is not provided in confidence, so if you wiretap me that becomes public-- John F. Daly: --It wouldn't nec-- Speaker: --But if you come up-- John F. Daly: --There may be other exemptions. Antonin Scalia: --Above board and ask me a question, that doesn't. John F. Daly: There-- Antonin Scalia: That's extraordinary. John F. Daly: --I don't think so, Justice Scalia, because when you think... if we wiretap you, obviously without your knowledge, there is nothing in those circumstances from which a reasonable person could assume that there was an assurance of confidentiality. When... in 1974, when Congress enacted exemption 7(D), the language that Congress used in the background was to say that a confidential source is one who provides information under an express assurance of confidentiality, or in circumstances from which such an assurance could reasonably be inferred. You certainly can make no reasonable inference about confidentiality when you're just talking on your phone. Antonin Scalia: --communicating. How could I possibly have that-- John F. Daly: Of course. Speaker: --Exactly. John F. Daly: But that's key, and that's a key limitation. Byron R. White: That might be exempt under some other provision. John F. Daly: It certainly might, Justice White, and I certainly wouldn't want to say that wiretaps are something which we generally would give out, but the rationale that we're talking about today would not apply to that at all. Antonin Scalia: What would you generally give out, outside of newspaper clippings? What vast amount of information would be saved by this carefully crafted exemption. John F. Daly: Well, the kinds of information I've just talked about, and also anything-- Antonin Scalia: What kind, newspaper clippings and things obtained from-- John F. Daly: --Things that came-- Antonin Scalia: --Magazine clippings. John F. Daly: --If it weren't subject to some other exemption, something such as information provided by unwitting sources who talked to an undercover agent. Also, anything that the FBI agents themselves do. If they're... there are plenty of documents that were given out in this case that refer to what the agents themselves were doing. As long as that is the subject of the document and it doesn't relay information that was given to the FBI by a source, then certainly that could go out. David H. Souter: Mr. Daly, even on your theory of sort of the implicit understanding that you find inherent in just the relationship between the investigator who identifies himself as such and the subject, aren't there two possible implicit understandings in the absence of anything explicit to the contrary? One may be that yeah, I'm talking to the FBI about a matter which it would be very dangerous to talk about, and I may assume that if they talk with them they're not going to spill the beans on me, but the other understand proceeds, doesn't it, from the fact that most people realize that the Government prosecutes crime in open courtrooms. And if you give evidence to the FBI which tends to incriminate, isn't it reasonable to suppose that you are quite likely going to be called to give that same kind of evidence in a courtroom, and how... on your theory we ignore the second category, and I don't see how we can ignore that-- John F. Daly: I don't-- David H. Souter: --Even on your theory of implicit understanding. John F. Daly: --I don't think we ignore it, Justice Souter. Even the court of appeals in the present case recognized that there were degrees of confidentiality. There's also a very good discussion of that point by Judge Silbeiman in the Mary Jones case. David H. Souter: Well, there are, but they're never... on your... maybe I misunderstand your position, but as I understand it, on your position the possibility of there being a lesser degree of confidentiality implicit with respect to a given witness is in all probability never going to be known or investigated. I mean, how are... if the burden is on the claimant for the information to say well, I ought to know who this is, because this is probably a person who would have understand that he might have to testify, how is that person going to make that case, on your view? John F. Daly: Well, I think we have two answers there, Justice Souter, and first of all I would have to take issue with the notion that a person who thought that he might have to testify, or even that he would probably have to testify, such a person could still have an implied assurance of confidentiality to an important degree. This case doesn't expressly pose the issue of waiver, but several of the lower courts-- David H. Souter: Well, he could have, but if he doesn't say... if he says something, then you're not resting on implication. He says, I don't want to get involved, and the agent says, don't worry, you won't have to be, just tell me what you know, then you're not resting on your implication, but if the person says nothing, I suppose it's reasonable to expect that the individual knew that he might have to give evidence. John F. Daly: --I don't think that's so at all, and I think it's important to remember that when Congress was enacting 7(D) it specifically stated that confidentiality was not to be limited to express confidentiality, and that, I think, is one of the key problems with respondent's view. Essentially, what they're asking for is that if you... if the FBI is required to make this fact-specific showing, and not even knowing what circumstances are going to satisfy most district courts, what we're probably going to be left with as the only way that we can reliably protect confidentiality is expressed confidentiality, but Congress didn't say that. Congress said that they wanted to protect sources who receive express assurances of confidentiality, or who provided information under circumstances in which an implication of confidentiality would naturally follow. Antonin Scalia: Well, how about my-- --You said Congress said that. Where did Congress say that? John F. Daly: That's in the legislative history, Judge... Justice Scalia. Antonin Scalia: Well, specifically who said it? John F. Daly: That was in the conference committee report-- Antonin Scalia: How many people are on that committee, do you know? John F. Daly: --I can't give you the exact number. As we've pointed out, that conference committee report was a fairly key juncture of the legislation because there were changes made in the conference committee before it was finally enacted by Congress, but to return-- David H. Souter: I think I'm still left with the problem that I raised, and that is, on your theory I'm not quite sure how the claimant for the information is ever going to be in a very good position to say, oh, well, this is a person... we offer to prove, for example, that this is a person who would not have reasonably expected confidentiality. John F. Daly: --We acknowledge, Justice Souter, that it's going to be very difficult for them to make such a showing. I'd like to get to that. I want to answer, actually, the other part of your question that I don't think I got to yet, which is the notion that a person who thinks that he might be called upon the testify later would necessarily not have an implication of confidentiality, and we would take strong issue with that. This case doesn't expressly involve the issue of waiver, but that's another issue that the courts have dealt with extensively. One of the leading cases is the en banc decision of the First Circuit in the Irons case. In that case, that court recognized that there are degrees of confidentiality, and merely because someone is called upon the testify, there may be much about that person's involvement with the FBI that remains confidential. We don't always know, even after a person testifies, everything about what he told the FBI. There may be important things left. As Judge Bryer concluded for the court there, that residuum of confidentiality is itself extremely important, and so therefore I'd say to you first of all that a person who talks to the FBI merely knowing that he might eventually be called upon to testify could indeed still have a very strong implied assurance of confidentiality because his normal expectation, and the normal expectations I think of all citizens based on the FBI's long practice of maintaining its record so carefully and so confidentially, is that that information is not going to be made generally available to the public, as it is under FOIA. No. Instead, the FBI's going to treat the information with care, use it for certain purposes, it may wind up involving testimony, but that does not mean that there's no legitimate expectation of confidentiality within-- Antonin Scalia: Indeed, even if there were... even if you required an assurance of confidentiality, an explicit assurance, you couldn't give an assurance of confidentiality that would tell the person he wouldn't have to testify. John F. Daly: --That's correct. Speaker: It would be impossible. John F. Daly: That's correct, Justice Scalia. Antonin Scalia: Which would make the provision a dead letter. John F. Daly: Exactly. David H. Souter: But at least in that case you would have a perfectly good argument for your degree of confidentiality. You would say, well, the confidentiality at least extends beyond that point which came out in testimony, so you would have an easy way of applying your criterion that there are degrees of confidentiality, and that degree would be determined by the extent to which the confidentiality was invaded by public testimony. John F. Daly: Yes, but far more typically this issue is raised by plaintiffs saying hypothetically someone might testify, or might think that they might have to testify, and therefore there's no confidentiality, and that, we think, is simply not the case. The problem is that on a practical level the proof that would necessarily be needed under the court of appeals ruling usually isn't there. What we have is the fact that someone provided information to the FBI, we know that it was in the course of a criminal investigation. We think that the proper starting point is that there is an implied assurance of confidentiality in that sort of encounter. And I'd also remind the court that I think the language of the statute itself gives us a very important point here, and that particularly involves the 1986 amendment to exemption 7(D). Prior to that time, the FBI would have to show that the release of a record at issue would result in the disclosure of a confidential source, or information from a confidential source. Congress changed that in 1986 to say that we need only show that the release could reasonably be expected to have such a result. 4 years ago in a Reporters Committee, this Court recognized the significance of that language, and in particular its relationship to the notion that the Government may frequently make its showing by means of categorical showings and not by item-by-item, or as in this case, source-by-source showings. Think, for example, of what is, I'm afraid, a typical document in question, an FBI interview report with a witness. That report may begin that special agent Mary Jones spoke to John Smith of 123 Main Street on February 24th. Smith related the following information. And the document may then go on to give the information, giving nothing about the circumstances of the interview, but also giving nothing that would indicate that the normal presumption of confidentiality shouldn't apply, and the question is, what is the FBI to do with that? Certainly we seem not to be able to meet the court of appeals test requiring specific circumstances regarding the interview, but as a practical starting point we submit that, yes, based on common sense and based on the FBI's tradition of confidentiality there should be the starting point that should be used by both the FBI and a reviewing court that yes, there is an implication of confidentiality there. Byron R. White: When was this policy first challenged, in what court of appeals or in what-- John F. Daly: Well, it certainly goes back to the Lame decision in the Third Circuit which we discussed. Byron R. White: --When was that? John F. Daly: That was 1981, I believe. Unfortunately, the Lame decision was followed by further Third Circuit decisions which seemed to create some confusion, at least in our view, even early on. Byron R. White: So how many circuits have dealt with it? John F. Daly: Eight circuits have dealt with it expressly. Seven come in our favor. The Third Circuit stands alone as coming out squarely against us on this issue. The Ninth Circuit in the Wiener case that we have discussed-- Byron R. White: Do you remember what the earliest district court's decisions were that upheld your view of exemption 7? John F. Daly: --I'm not sure, Justice White, when the early district court decisions were. I know the case that we all now look to as being the seminal case in the area is the Seventh Circuit's ruling in Miller v. Bell, and that came in 1981, fairly shortly after the amendment went into effect. The FBI has taken a consistent position on this. Of course, before 1974 the issue didn't arise because of the very broad exemption that they had under exemption 7, but after the amendment was passed in 1974, you can see, for example, we cite the 1975 memorandum by Attorney General Levy which recites that confident... that we would normally be able to withhold identities in this-- Byron R. White: So before '74 there was no question about-- John F. Daly: --No, and-- Speaker: --None at all. John F. Daly: --And since 1974, the FBI has consistently taken the position that this presumption of confidentiality has to be the starting point. Byron R. White: And every court up until now has agreed with you. John F. Daly: Well, as I said, you can go back to the earlier Third Circuit decisions. We think there was some reason for doubt even within the Third Circuit because of different decisions, but apart from the Third Circuit, yes, we've been prevailing all along. I think it's important also-- Antonin Scalia: Mr. Daly, you say as a first step at least they should... what's the second step? What does the person who wants information, what does he do when the FBI says well, presumptively in the absence of other indication, as you put it, this is confidential? What do I then do as the requester? John F. Daly: --We readily acknowledge, Justice Scalia, that it's a very difficult point, and there would be very, very few cases in which the presumption can be rebutted. We think that's appropriate, because indeed, this sort of implied confidentiality is the norm. There may be a few cases-- Antonin Scalia: Well then don't describe it as a first step. I mean, you're really just closing the door, as a practical matter. John F. Daly: --As we've noted in our brief, there may be some rare cases, and we admit that they're rare, in which the presumption may be rebutted. This happened in Miller v. Bell itself. The Seventh Circuit found an unusual circumstance in which a particular witness was known of and disavowed from the start any notion of confidentiality. We admit that it's going to be rare, Your Honor, but we also think it's important to recognize that the policies of exemption 7(D) require protection of confidential sources, and if we are to use the approach of the Third Circuit, we won't be able to do that. Antonin Scalia: I don't mind if the result is rare. I... it strikes me as rare that the requester even has the tools to challenge. How do I know what the circumstances are? I just have to trust you to say that the circumstances are such that it was provided under an assurance of confidentiality, don't I? John F. Daly: That, unfortunately, is often the way things wind up working under FOIA, because the plaintiff never has the documents to begin with. Certainly, if there's any particular reason to think that the circumstances are unusual, if the plaintiff could articulate something, then perhaps that would justify in camera review. That's always available, and as we mentioned in our reply brief there was a recent Tenth Circuit case in which we invoked this theory and the Tenth Circuit deemed it appropriate to look at the documents and they said, yes, we've determined that's right. I think in the absence of some articulable reason to think that there was something unusual going on, then yes, you should keep to the presumption that there is an implied confidentiality here. John Paul Stevens: Mr. Daly, you gave some examples earlier of, say, an undercover agent talking to people, and there you would agree that there's no presumption of confidentiality. Can we tell from the materials you filed in this case that that is not what happened in this case, that some of these people whose interviews are not being disclosed were simply undercover agents talking to people who had no idea they were even FBI agents? John F. Daly: If one looks at the files in this case one can tell that we have not withheld in that circumstance. One can look at the documents and tell that information is from a source, and-- John Paul Stevens: Do you have to look at the documents to tell that? John F. Daly: --Oh, I think so, yes. We would have to look at the documents. John Paul Stevens: Well then, how would the requester know whether it was an undercover agent or just a regular interview? John F. Daly: Certainly, the requester wouldn't know initially. John Paul Stevens: Do you identify those cases in which it is a regular interview as opposed to an undercover agent? I couldn't find it right here, but I remember when I read the briefs I had the impression that I couldn't tell whether this might have been somebody who just was... had a discussion with an FBI agent who was not even known to be an FBI agent. John F. Daly: The entire theory that we are advancing in this case would simply not apply, and we would not-- John Paul Stevens: I know the theory wouldn't apply, but the documents that you file in the district court supporting your refusal to produce don't tell the judge whether he might not have been an undercover agent, as I read them. Am I wrong on that? John F. Daly: --I'm not sure that we specifically addressed in the affidavit the notion of-- John Paul Stevens: I don't think you do. John F. Daly: --No, but the entire theory that we presented simply wouldn't apply, and we would not-- Speaker: I understand your theory would not have-- John F. Daly: --We would not have used it-- John Paul Stevens: --But it seems to me-- John F. Daly: --In that particular-- John Paul Stevens: --The papers that you are arguing are sufficient would prevent disclosure of the cases which you say... in cases where you say there should be disclosure. John F. Daly: --That presupposes that we would be misrepresenting-- John Paul Stevens: No, you're not misrepresenting, you just file something to say you should presume everybody's... basically, you've said everybody we talk to should be presumed to be a confidential informant. John F. Daly: --No, we've said more than that. We said that these are people we talk to in the course of a criminal investigation-- Speaker: Right. John F. Daly: --And that those people have a legitimate expectation of confidentiality because of those... that circumstance. John Paul Stevens: You didn't say that as to the particular, you said that's our general practice. As I understood the paper, you were basically describing a general practice which would generally support... when the practice applies, would generally support confidentiality, but under that umbrella it seems to me you're going to pick up all these cases in which you think there should be disclosure. John F. Daly: Well, I can represent to you, Justice Stevens, that we would not be doing that, and we view that as inconsistent with the representation that we made in the court. John Paul Stevens: But my problem is... I'm not questioning your good faith, of course, but my problem is, how... I can't tell whether a requester could tell whether you'd done that or not, and requesters tend to be suspicious, of course. Maybe I'm not making my point clear. John F. Daly: Perhaps we could... we could make a specific recitation that we would not invoke this theory in the circumstance where the information was given to an undercover agent, but we think that is there in what we said, because our theory that we do expound just simply wouldn't apply in a case like that. John Paul Stevens: Well, I understand your theory in this Court wouldn't, and so forth, but I'm concerned about the particular case where you file this boilerplate affidavit which seems to me is so broad that it would cover every interview. John F. Daly: We don't view this affidavit as covering those instances, Justice Stevens. John Paul Stevens: But my problem is, I don't know how the district judge or the requester could tell by reading the affidavit that maybe some zealous FBI agent had used it inappropriately-- John F. Daly: I still-- John Paul Stevens: --Without saying anything false, because there's no false representation in it. John F. Daly: --I think there would be something inherently false in that, because the theory that we discuss in that affidavit would simply not be applicable to an undercover source. I'd like to reserve the remainder-- Anthony M. Kennedy: If you have an ongoing undercover source, someone who is still undercover, and the request is for the production of that statement, is there another exception in section 7 that you could and likely would invoke in order to maintain the confidentiality of the record? John F. Daly: --Certainly, if there were an ongoing investigation, exemption 7(A) of the FOIA would apply, and as to the identity but not the content of the information, exemption 7(C). Thank you, Mr. Chief Justice. William H. Rehnquist: Very well, Mr. Daly. Mr. Mullin, we'll hear from you. Neil Marc Mullin: Mr. Chief Justice and may it please the Court: The FBI offers essentially three arguments in support of its nearly irrebuttable presumption. One is its claim that as a factual matter the FBI's presumption mirrors the relationship between itself as an agency and its sources. That is, what my adversary just said holds. In the context of a criminal investigation, sources expect confidentiality, typically, and typically the FBI assures it. I call that the setting argument. The second argument is a pragmatic argument. William H. Rehnquist: Call it the what? Neil Marc Mullin: The setting. That is, in the setting of a criminal investigation, confidentiality is inherent. The second argument is that... is what I'm calling a pragmatic argument, which is that the FBI... that if the presumption that the FBI seeks here today is not granted there will be some sort of administrative or adjudicative havoc, that the FBI is not prepared to come forward with case-specific proofs in the event this Court affirms the Third Circuit, that the FBI doesn't maintain records of confidentiality. Even though confidentiality is so important, the FBI tells us, they maintain no records, so that an agent in 1952 doesn't know whether in 1946 a source was assured confidentiality... no records. Third is a textual claim that the 1986 amendments and their history provide a statutory basis for the presumption. This argument is somewhat of a moving target. In their reply brief the FBI seems to shift from the affirmative posture of its main brief that the 1986 language provides a textual basis for its presumption to a claim... a more cautious claim that FOIA simply doesn't preclude a presumption. The FBI's claim that in the setting of a criminal investigation virtually all witnesses typically require confidentiality doesn't ring true in the context, for example, of this case. Before the criminal trial of the matter underlying this case, numerous FBI investigative reports prepared by the FBI were turned over to my client. I was not the trial lawyer. In those discovery documents, the names of 41 law enforcement personnel were revealed, 31 witnesses were revealed by name, and 16 of them by address. The fact that some of these witnesses testified at trial appears in press clippings in the disclosures that the FBI made to me. Indeed, the Hudson County Prosecutor's Office that worked-- Antonin Scalia: And your point is that that shows that there was no assurance of... but they couldn't give an assurance of confidentiality that they wouldn't be compelled to disclose some matters in the course of-- Neil Marc Mullin: --Exactly. Antonin Scalia: --Well then, there's no such thing as an assurance of confidentiality if you insist that it be absolute. Neil Marc Mullin: No, I don't insist that it be absolute, Your Honor. Antonin Scalia: Well, this is in the course of litigation that they turned it over. They just didn't say, hey, you want these names... here. It was in the course of a discovery request filed with them, is that right? Neil Marc Mullin: I think... yes, that's right. Well, if confidentially means even people who get up in front of public... in front of trials, in front of juries, in front of cameras and newspapers, then I'm wrong and the FBI's right. That's what confidentiality means. Antonin Scalia: Well, I mean, people tell me things sometimes, and say keep it confidential, and I often tell my wife. I don't feel I'm breaking a... I mean-- Neil Marc Mullin: Exactly. Antonin Scalia: --You know, but I don't blab it around. Neil Marc Mullin: And if I... Your Honor, and if I'm a source, and I tell the FBI to maintain confidentiality, what I mean is, you can tell law enforcement people as needed, but please, don't tell the people over there that want to kill me or harass me. I want anonymity. In the case of an entity, Your Honor, which is also covered by 7(D), it may not mean anonymity, it may mean, I need secrecy. Sure, everybody knows that the New York Police Department is a source of the FBI, but don't reveal my operational secrets. And in the parlance of the congressional discussion of 7(D) and 7 broadly, in that parlance, in that usage, it became clear that what Congress was talking about was anonymity, confidentiality in the sense I'm talking about. Director Webster, Director Casey appeared there... they were worried about people who feared that detriment would come to them. William H. Rehnquist: Why couldn't they use the word, anonymous, then, rather than confidential? Neil Marc Mullin: They used the word, "confidential" in order to broaden the category from "informer", which was in the original draft. They used the word "confidential" to show they weren't just considering paid informants or cloak-and-dagger informants in the traditional sense, so they chose the word, "confidential". Would that they had used a phrase such as they used in the debate interchangeably with confidential source. You know, would that they had used the phrase, anonymous or some element of secret, and we wouldn't be here today. I agree to you there is some element of ambiguity in the phrase, "confidential source", that requires us to look at the congressional debate, just as this Court in Abramsom looked at the usage of the word, "record" in the congressional discussion in order to determine its meaning. In the real world, as in this case... this case involved a police killing, and what I'm telling the Court is people came forward freely, openly, wanting to help. Those that didn't want to get involved, to use an expression, didn't get involved. They didn't give statements at all. But those that chose to get involved in this very serious crime as witnesses came forward, provided their names and addresses, testified at trial... in the real world there is no invariable setting. This is the point I'm trying to make. While sources will require anonymity or degree of secrecy of information, the average witness to some discrete aspect of a crime, having made the difficult threshold decision to get involved, does not thereafter typically require some sweeping confidentiality. William H. Rehnquist: Well, we're talking, I guess, about two different suppositions. One is the supposition that you advanced to us just now based on your own experience. The FBI says something different. How do we evaluate that? Neil Marc Mullin: Well, there's great difficulty in evaluating, because the FBI has not provided this Court, or Congress for that matter, with a record. The FBI hasn't told us what percentage of sources want confidentiality in the narrow sense, what percentage of sources need some kind of anonymity, which entities require some level of secrecy. Mr. Daly stands up and tells... in response to, I believe it was Justice O'Connor's question, no, we keep no records of confidentiality, we make no notation. That's not in the record. That's not here, and it's not in the Congressional Record, because Congress was not grappling with the problem Mr. Daly brings to this Court in 1981, '82, '83, '84. Congress was not confronted by a law enforcement community that said, gee, it's going to be difficult, if not impossible, to prove a source confidential. In all those pages of Congressional Record, the FBI has not cited to this Court one phrase suggesting that problem was what Congress was grappling with when it drafted exemption, redrafted it in 1986. No, Your Honor, there is no evidentiary basis, and no basis in the Congressional Record, for justifying, supporting this sweeping presumption. There is no basis for this Court to conclude that that presumption nears reality. Sandra Day O'Connor: Well, Mr. Mullin, it seems to me the Third Circuit went pretty far in requiring case-specific proof here, and I'm just wondering if a considerably lesser evidentiary showing wouldn't suffice. For instance, what's investigated here is a gang crime, and it's logical that witnesses are going to be nervous about exposing their identity. Neil Marc Mullin: Sure. If a witness-- Sandra Day O'Connor: Do you defend the precise holding of the Third Circuit here on its requirements? Neil Marc Mullin: --I am burdened by the formulation used by the Third Circuit. It's a difficult burden to defend it in that precise formulation, but-- Sandra Day O'Connor: Yes. I just wonder if they haven't gone too far, and whether some much lesser showing might not suffice and still be case-by-case. Neil Marc Mullin: --I think what's happened here, Your Honor, is that because this presumption took hold throughout the circuits actually much later than might have been suggested in the brief of the FBI, the development of the common law, if you will, of exemption 7, has been truncated. The courts have not been struggling with the issue you speak of and trying to devise methods of proof. I think that if this Court will condemn, disapprove this sweeping presumption, it will necessarily open up a practical process of developing workable rules. Your Honor suggested what might be a factually based or grounded presumption. Suppose someone knowingly gives inculpatory information about a known organized crime figure? Certainly in those circumstances, where there is a known, substantial threat of detriment, there should be a presumption of confidentiality, arguably. William H. Rehnquist: But how would one know all that just from a record of the interview? Neil Marc Mullin: Well, I think the FBI should tell us, or tell Congress what is in its records. I suspect the FBI takes detailed notes, Your Honor-- William H. Rehnquist: Well, you say tell Congress. Now you're talking about, what, amending the statute again? Neil Marc Mullin: --Your Honor, I hope it doesn't come to that. What I'm suggesting is that the FBI probably has a higher level of detail in its files than it suggests here. Why? When Director Webster testified before Congress, he provided hundreds of detailed examples of the circumstances surrounding interviews with sources where in they requested anonymity or secrecy, or expressed those fears. Where did the director get those literally hundreds of detailed examples, if not from the FBI's records? I suggest that it is not worthy of credence when the FBI tells us here that they don't have records that can satisfy a more... a higher level of specificity. The law has been unsettled in this area. Certainly one reading Vaughn v. Rosen in 1974 would not predict the Dow case some years later. Vaughn seemed to suggest that the agencies would be required to submit a high level of specification in defending exemptions. And then there was Lame in 1981, and there was Keeney in 1980, a Second Circuit case that seemed to echo the Third Circuit's rule, and there was the Dearing Milliken case in 1977 that said, whether or not a source is confidential is a question of fact. Is it possible that the FBI, in the face of an unsettled body of law, took the most aggressive approach and said we'll follow the majority rule even before it was a majority rule and didn't keep records in the event this Court should some day resolve this unsettled body of law by saying no, this presumption has no basis in this statute, this presumption has no factual basis? That proposition is not worthy of credence. I submit that the FBI obeyed the law in the Third Circuit, as they had to, and that the FBI made case-specific determinations, at least within that circuit and that, given the unsettled nature of the law, the FBI kept accurate records such as the director relied on, such as the DEA relied on when it submitted numerous detailed examples of circumstances surrounding interviews. Speaker: Mr. Mullin-- Neil Marc Mullin: Yes. Antonin Scalia: --I take it that... there are two parts to the exemption. The first part is you can keep out information that could reasonably be expected to disclose the identity of a confidential source. The second part is, in the case of information compiled by a criminal law enforcement agency you can keep out not only the information that will disclose the identity, but all of the information. Neil Marc Mullin: That's right. Antonin Scalia: Now, it's pretty clear what the reason-- Neil Marc Mullin: Yes, sir. Antonin Scalia: --For that, isn't it? We don't want to take a chance-- Neil Marc Mullin: That's right. Antonin Scalia: --That any snippet of information you might provide might enable the requester who, in some cases is a very dangerous person-- Neil Marc Mullin: That's right. Antonin Scalia: --Behind bars in prison who files a FOIA request. Neil Marc Mullin: That's right. Antonin Scalia: We don't want to take the chance-- Neil Marc Mullin: That's correct. Antonin Scalia: --Of some piece of information that means nothing to us meaning a lot to him and enabling him to identify a victim. Neil Marc Mullin: That's correct. Antonin Scalia: Now, is it in accord with that prophylactic approach to this statute to handle it the way that you're suggesting, to require the FBI in each case... and in some case they can't come up with the necessary... well, we made a mistake, somebody dies. Too bad. Neil Marc Mullin: Your Honor, a number of answers. I think that's a very, very weighty question, and when I make the argument here I'm not unaware of the dangers that exist for informants. Fortunately, 7(D) is not the only way Congress dealt with that problem. 7(F), as you know, was expanded. if an informant's, or confidential source's, or anybody's life or safety is threatened in any way, it could reasonably be expected to be threatened, all the FBI has to do is check off 7(F) and there's no danger to life or safety. Antonin Scalia: Make them prove that just the way you're making them prove this. I mean, can they adopt a categorical rule in the case of any request from violent people in prison? We're going to assume that any names we give them, or any information we give them might help them to get somebody. You wouldn't let them do that. Neil Marc Mullin: No. I think you're raising a weakness in the text of this statute. I think it's important that courts remain very sensitive to the dangers here. Whatever this Court rules, it must remind them of the dangers here. Workable rules that are based in fact have to be developed so that groups of witnesses, groups of sources can be analyzed, so that presumptions that are factually based can be utilized. Well, that's exactly right. The FBI didn't present this problem to the legislature. They presented the mosaic problem but not this problem, and now they are presenting a problem they sat silently about. In 1981, '83, '84, they didn't mention this problem to Congress, not once, even though they brought the Lame decision to the attention of Congress. Antonin Scalia: Because they thought it meant... maybe it's because they thought it meant what they now say it means. They thought it enabled them to say categorically of course this information was proven. Isn't that a possible explanation of why they said nothing? Neil Marc Mullin: Respectfully no, Your Honor, because the FBI premises its categorical argument on case law that arose after Lame, especially Reporters Committee, the '86 case, so I don't think that the categorical approach to the... I don't think the exemptions that were in jurisprudence had developed to a point in 1981 when Lame came down to where the FBI would have anticipated a categorical-- Byron R. White: --circuit case that-- Neil Marc Mullin: --Miller v. Bell. Byron R. White: --Was that 1980? Neil Marc Mullin: That was 1981, I believe. Byron R. White: 1981. Well, that was... that sustained the view of the FBI. Neil Marc Mullin: That's correct. Byron R. White: And so why should it think it had a problem? Neil Marc Mullin: Well, I should think they'd have a very great problem, Your Honor, with such a deep split in the circuits. The Seventh Circuit adopted the approach they urge here in '81, and in '81 the Third Circuit explicitly adopted the approach it took in my case, the Landano case. It would seem to me that in those circumstances if the FBI really thought this was a problem they would have brought that split in the circuits to the attention of Congress. In a Congressional Research Report that was put into the record by the sponsors of the 1986 amendments, which I've cited in my brief, the research group says that "this amendment to exemption 7 is not intended to overrule any specific case, or any specific line of authority. " and I've quoted that in my brief. That means Lame, according to that-- Speaker: Who said that? Neil Marc Mullin: --That was the CRS, Your Honor, the Congressional Research Service. William H. Rehnquist: Did it speak as to the intent of Congress? Neil Marc Mullin: No, but it was put into the record by one of the sponsors, Your Honor. Excuse me. On page 38 in my brief, Senator Leahy, a codrafter and co-sponsor of the '86 amendments to exemption 7, referring to the proposed substitution of "could reasonably be expected" for the language "would", put into the record the Congressional Research analysis which said, "The proposed amendment does not appear to be prompted by any particular case or line of cases that have enunciated a contrary standard of the degree of risk of harm that must be shown to justify assertion of exemption 7(A)(D) or (F). " Antonin Scalia: I think it's fair to conclude from that that Senator Leahy agreed with the Congressional Research Service, don't you think-- Neil Marc Mullin: That's often the case-- Antonin Scalia: --And probably not much else. Neil Marc Mullin: --Well, one thing we can say, that not once did Congress consider this problem, and I'm talking about all the Senators and all the Congressmen. They didn't hear about this proof problem or this administrative problem, and because they didn't hear about it, they didn't address it. The language in exemption 7 that was as modified in 1986 was not directed at this problem. The FBI therefore has a very difficult textual problem. Even when this Court adopted a categorical approach to exemption 7(C), still it sought a textual basis in the "could reasonably be expected" language, as it did in Grolier, as it did in Robbins. This Court has always sought a textual basis. William H. Rehnquist: The Seventh Circuit in Miller presumably ruled for the FBI on the basis of the statute as it existed before 1986. Neil Marc Mullin: Of course. William H. Rehnquist: So I mean, are you suggesting that unless the Government can make its case through the 1986 amendments, it must fail completely? Neil Marc Mullin: I'm suggesting that the Government must show this Court a textual basis in FOIA as amended in '86. Why? Because this Court has held that unless exemptions are clearly delineated in the statute, then they will not be honored. Can anyone... I'm sure the FBI would not contend before you today that... would not deny that their presumption expands the exemption 7(D), gives it a much broader impact, but this Court has said that if an exemption is not clearly delineated, it doesn't exist, and this Court has said-- Speaker: Well, then the-- Neil Marc Mullin: --The exemption should be narrowly construed. William H. Rehnquist: --The courts of appeals such as the Seventh Circuit and the ones that followed were simply wrong, then, in your view. Neil Marc Mullin: Yes. I feel a little bit like the guy who said the emperor has no clothes on. I'm saying it. The emperor has no clothes on. Speaker: We-- Neil Marc Mullin: All these circuits are wrong. [Laughter] Antonin Scalia: --We have in fact said that, Mr. Mullin. We haven't always behaved that way, though, you must admit that. Neil Marc Mullin: Yes, I do. Antonin Scalia: That our cases-- Neil Marc Mullin: Yes, I do. Antonin Scalia: --Don't always square with that noble sentiment that we've expressed. Neil Marc Mullin: Well, I think I've covered most everything. I suppose I should close on-- Byron R. White: --overruled a majority of the courts of appeals. Neil Marc Mullin: --I know it wouldn't, and my inclination is to stop while I have the illusion that I'm ahead. [Laughter] Thank you very much for your time. William H. Rehnquist: Thank you, Mr. Mullin. Mr. Daly, you have 2 minutes remaining. John F. Daly: Thank you, Mr. Chief Justice. I think it's important to keep in mind, as this Court has frequently noted, that the Congress intended for it to be governed by workable rules. That is not simply a matter of administrative convenience or burden. It really goes to the heart of what the policy of exemption 7(D) is all about. What's at stake here is very important. It's the FBI's practical ability to protect confidential sources, and contrary to what respondent says, it is altogether very frequently the case that we simply do not have the sort of detailed information about circumstances of particular interviews, and even beyond that, I think it's important to remember that Congress recognized that the public needs to have some certainty, some real assurance that the FBI is able to protect a confidential source. That won't exist if this issue winds up being decided on an ad hoc basis by judges who are frequently approaching the issue years after the fact, if we have to rely on showing the physical circumstances such as whether the door was shut or not, and also if we have to rely on the content of the information, if we have to say district judges saying, well, a murder investigation is sensitive, but some other Federal crimes and Federal criminal... Federal financial crime isn't. That's not going to give us a sort of workable rule. Byron R. White: Could I ask you, let's just assume that all that was involved here was how you should operate in the future. Would it really be any burden to you to tell every witness that, even if he didn't ask for it, you'd say, this is confidential. John F. Daly: I think that could be a significant burden, because it would change the way the FBI does business, and-- Byron R. White: Well, it may be, but what would be burdensome about it? John F. Daly: --The... to be honest, Justice White, I'm not prepared today to talk about how that would involve day-to-day law enforcement activities, because that's an issue... that's... it's a legislative issue. If Congress wants to change the way the FBI does business, then it may do so. I can only tell you-- Byron R. White: Well, that's hardly an answer to my question. You just don't know what the answer is, I guess. John F. Daly: --Well, the FBI has assured me that it would indeed change the way that they do business. It would not only impose a practical burden, but could also change the interaction between witnesses and the FBI, and of course, Congress hasn't done that, and of course-- Byron R. White: It might make the witness shut up if you told him what he said was confidential. John F. Daly: --It's possible, and it would do nothing for our concerns about existing records. Thank you, Mr. Chief Justice. William H. Rehnquist: Thank you, Mr. Daly. the case is submitted. Speaker: The honorable Court is now adjourned until Monday next at ten o'clock.

Earl Warren: Number 13 and Number 15, the Baltimore and Ohio Railroad Company et al., appellants, versus Aberdeen and Rockfish Railroad Company et al., and Interstate Commerce Commission, appellant versus Aberdeen and Rockfish Railroad Company et al. Mr. Kaier, you may proceed with your argument. Edward A. Kaier: Mr. Chief Justice and may it please the Court. This is an appeal from a decree of a three-judge court for the Eastern District of Louisiana setting aside an order of the Interstate Commerce Commission which prescribe the joint -- the divisions of joint rates to be received by Northern and Southern Railroads respectively from freight traffic moving between official territory and southern territory in both directions. Official territory may generally be described as that part as the northeastern part of the United States and the southern territory the southeastern part. More particularly, official territory would be the territory east to the Mississippi river north of the Ohio and certain cities in Virginia such as Richmond. Southern territory is east of the Mississippi and south of official territory. The appellants are the Interstate Commerce Commission and the Northern Railroads and the appellees are the Southern Railroads and two associations, one the southern governor's conference and the other Southeastern Association of Railroad and Utility Commissioners. Your Honors will recall I believe that a joint rate is one which applies over two or more railroads but is stated in a single sum. The divisions in issue in this case were primary divisions. That is to say divisions which applied to and from the certain gateways between Northern and Southern railroads and if there was more than railroad north to the gateway those two railroads over three railroads would get their share of the revenue from subdivisions of the primary division and likewise south of the gateways. Those subdivisions were not in issue in this case only the primary divisions. The railroad's evidence both that submitted by the Southern lines and that's submitted by the Northern lines was on a group basis in which all the Northern lines were grouped together and there figures submitted by on the group basis and likewise for the Southern lines. And it was decided by the Commission on a group basis except that the Norfolk Southern Railroad one of the Southern group, was awarded division higher than that granted to the Southern lines generally. This was in recognition of its greater revenue needs and there is no issue about that before the Court. The Commission is empowered by paragraph 6 of Section 15 of the Interstate Commerce Act to prescribe just and reasonable divisions whenever after hearing in its opinion it finds that the existing divisions are unjust unreasonable or inequitable. The case before the Commission was one that was originally decided in 1953. Before that decision, the divisional factors prescribed for Southern lines were generally 25% higher mile per mile than those prescribed for Northern lines. And on the very important item of citrus fruit which moves in great larger in South to the North, the -- an earlier case had fixed the divisions as high as 85% higher than the Northern lines factors. Now, I should correct that. The Northern lines -- the Southern lines didn't get divisions 85% higher but the factors which go into make that were 85% higher so that the Southern line got something a lesser percentage than the 85% but very substantially more than the Northern lines. In the 1953 decision, which is in a decision in the same docket of the Commission as the order here under review -- in the 1953 decision, the Commission concluded that if it were to give controlling weight to the Northern lines cost studies, it would have to give them higher divisions than the Southern lines. But it regarded the sum elements of the cost as being transient in nature and it's found that it would be the safest assumption for the future that neither group of railroads would have a substantially lower basis of operating expenses than the other. So, it prescribed equal fact to divisions for both groups of lines. In 1959, that same proceeding was reopened upon petition of the Northern Railroads. They alleged in the petition that the experience of the intervening years had confirmed their contention that their cost were higher than those of the Southern lines. The Commission reopened the case; evidence was taken between 1959 and 1961 resulting in what the lower court called a massive record. There were extensive briefs proposed report by two examiners recommending increase divisions for the Northern lines, exceptions, replies and oral argument. The Southern lines contended before the Commission that the relative costs of performing the service involved constitute the decisive measure in determining just and reasonable divisions. They urged the Commission to find such cost on the basis of the average territorial costs as shown by the Commission's Rail Form A formula for official territorial lines and for Southern territorial lines respectively but subject to 12 adjustments in those territorial average cost which Southern lines proposed. The Commission accepted five of the adjustments and rejected seven. The result in unit costs, cost per ton for certain services per ton mile for certain for train mile for others, those unit costs were then applied to the Southern lines traffic study which those lines stated and the Commission agreed accurately measured the transportation characteristics of the precise traffic to which the divisions involved applied. The Commission found that the cost that which it thus arrived that is the Form A territorial cost with five adjustments that were permitted were reasonably accurate and reliable for determining the relative contribution by the groups on a cost of service basis. It found that both groups of carriers are being efficiently operated. It examined each of the other factors specified by Section 15, paragraph 6 and on all the other facts of record and it concluded that everything was equal except the cost of performing the service. It found also -- Earl Warren: Except the cost for what did you say -- Edward A. Kaier: The cost of performing the service involved. Earl Warren: Yes. Edward A. Kaier: As to which it found the Northern lines cost higher than those of the Southern lines. And it concluded therefore that the relative cost of the parties in performing the service but properly serve as a guide for the determination of just reasonable and equitable divisions. That then was the end of everything except to translate its cost findings into division scales. The Southern lines asked the Commission to base the divisional scales to be prescribed on their cost evidence as modified to the extent that any of their proposed adjustments might be rejected and the Commission did precisely that. Its formal finding of course was at the present divisions were unjust and unreasonable and inequitable. It prescribed the new divisional scales from the Southern lines cost as adjusted. Ten of the 11 Commissioners concurred in the majority opinion. One Commissioner thought that the Northern line should have increased divisions but not as rate in increase as had been prescribed in the majority opinion. Overall, the divisions of the Southern lines were reduced by 3% that's a stipulated figure. Upon suit by the Southern lines and the two conferences that I have mentioned the southeastern association and the southern governors, the District Court held that the cost evidence should have been more refined than the territorial averages that the Commission itself was obliged to see the evidence of the cost of performing the specific traffic was of record and that the order should therefore be set aside for lack of substantial evidence and adequate findings. The District Court's order was stayed pending disposition of this appeal. The Northern lines have been receiving revenues based upon the higher divisions since April of 1965. But subject to a refund provision under which if the Commission's order is permanently set aside, the Northern lines would have to refund the difference and amount now approximately $30 million. Earl Warren: We'll recess. Mr. Kaier, you may continue your argument. Edward A. Kaier: Thank you Mr. Chief Justice. I would like now to discuss the question whether the use of official and Southern territorial costs is supported by substantial evidence and adequate findings of the Commission or whether in truth, the District Court's opinion represents a substitution of its judgment without of the Commission as to the weight to be given evidence and the degree of refinement necessary with respect to the complex question of railroad cost evidence. Then I plan to discuss the passenger deficit issue. The Commission having included in the freight service costs a portion of passenger deficits on a pro rata basis for both Northern and Southern lines. Byron R. White: Did you just before you started -- just straighten me out. What's the difference between cost and revenue? Edward A. Kaier: Well, cost if Your Honor please -- Byron R. White: Is that fully distributed? Edward A. Kaier: It is fully distributed cost and revenue need -- Byron R. White: But that excludes any need for profit? Edward A. Kaier: No, there's a return element in that -- Byron R. White: In fully distributed? Edward A. Kaier: In fully distributed cost, there's a return of 4% on value of property. Byron R. White: Well then, what would the revenue need? Edward A. Kaier: Revenue need then is something over and above that kind of cost. If a Railroad -- Byron R. White: For investments? Edward A. Kaier: -- is -- no, it's just to continue it on operation for Railroad is in badly need of revenue and divisions based upon relative cost alone even fully distributed are not sufficient then the Commission has the power to award higher divisions to keep that railroad in operation. Byron R. White: The railroads need revenues except to pay its loss for the return. Edward A. Kaier: Well, the cost involved, Your Honor, would be just the cost of performing the particular service involved but it would have all the cost of performing the other service not involved in a given case. Here, you see the cost related only to the cost of performing the North-South freight service but the Commission does have that power to grant something over and above the cost of performing the service on the basis -- Byron R. White: For what, for example? Edward A. Kaier: For nothing. I mean to say it doesn't relate to anything. The Railroad needs the money and therefore, -- Byron R. White: It does? Edward A. Kaier: Pardon me? Byron R. White: It does? Edward A. Kaier: Yes. Byron R. White: What's it needed for? Edward A. Kaier: It needs it to continue operation. It's not getting enough money to continue operation and therefore it has to have something over and above its fully distributed cost. Now, the classic case on that is the New England division's case decided back in 20th by Justice Brandies, in which that kind of revenue need -- was used by the Commission. It was not here. Now, first as to the Commission's findings I believe, Your Honors, that a review of appendix B to the Commission's report which contains 42 pages of discussion of the adjustments proposed by the Southern lines in the Form A territorial costs will convince -- will be convincing that the Commission has with unusual thoroughness set forth the reasons why it disposed of these cost issues in the manner which it did. And I will not at this point have anything further to say about findings in general. As to the factual support for the use of territorial average costs, I'd like to point out these things to the Court. First, the investigation brought in issue the divisions of rates on virtually all articles moving between the North and the South from every station in the North to every station in the South over every Northern Railroad and every Southern Railroad. It was territory wide both of the Northern end and on the Southern end. The fact that the proceeding was of such great scope a territory wide proceeding itself I submit established a strong case for the use of territorial cost. Both generally, and with respect to such factors as car costs, switching, empty return ratios and other large factors of that nature as to which the Southern lines said, “Our higher costs” that is they said that the high cost of the Northern lines were attributable to these factors. Now, in the class rate case, which was affirmed by this Court in New York versus United States back in 1947, the Commission said, “There are different degrees of cost of refinement in costs depending upon the purposes for which they are intended. The ascertainment of the cost of transporting a particular commodity over a single railroad or group of railroads obviously requires more refinement in procedure and the calculation of relative cost for transporting all traffic or important and well define segments of traffic by territorial groups of carriers.” The present case was clearly one involving relative costs for transporting important segments of traffic by territorial groups of carriers. Next, in the 1953 decision in this same case, -- Abe Fortas: Well, do the Northern roads and the Southern roads devote the same percentage of their cars and their property and so on to the North-South traffic? Edward A. Kaier: No, I don't think they do, Your Honor. Abe Fortas: What are those percentages, give me an illustration in some respect? Edward A. Kaier: Well, the only illustration I can give you Your Honor is that the traffic involved in the North-South traffic involved for Southern lines is very much greater than for Northern lines. I believe that it's about 20% for Southern lines and about 6% for Northern. Abe Fortas: Well, that's just offhand and matter of first impression that's would make some kind surprising offhand that the Commission would use a totality of cost of any of these items as the basis instead of correcting it for the particular traffic involved. Edward A. Kaier: Well, if Your Honor please in that -- Abe Fortas: That is what it did, isn't it? Edward A. Kaier: It did that except to the extent that it allowed five of the adjustments that were submitted by the Southern lines and declined seven. So do you see Your Honor on the great body of this cost evidence the territorial cost evidence; the Southern lines themselves used the territorial costs. It amount to almost 90% of all the cost that they submitted where the territorial averages. Abe Fortas: I know, but however that might be, it did strike me is being rather odd that the Commission would use this aggregate basis in considering such a relatively small factor of the business of the Northern roads particularly and of the Southern roads and especially in view of the fact that the percentage of -- was different in the case of the North and the South and radically different. Edward A. Kaier: Now, if Your Honor please, in the class rate case which was the first case in which the Commission used cost evidence under this formula and before this formula was devised, they had no reliable way of getting service cost. In that case, the percentage that class rate traffic was of total traffic of the railroads involved was an even lower percentage than that involved here for either Northern or Southern lines. And then, there was the Mountain Pacific class rate case in which it was lower than this, very substantially lower. And in the transcontinental divisions case which Your Honors decided very recently in Chicago and North Western versus Santa Fe Railway Company. In that case, the Commission made a number of adjustments and it concluded that in a case dealing with territorial wide application of rates or divisions that the territorial costs and the refine costs are substantially the same. I don't mean to suggest that there was more refinement there than there was here. Abe Fortas: Well, was there such finding here? Edward A. Kaier: No, Your Honor. Abe Fortas: That's what I missed in this -- Edward A. Kaier: There was not a finding in those words. Abe Fortas: Was there anything like it, that's what I've been finding. Edward A. Kaier: Yes, there was a finding that the costs as adjusted accurately and reliably represented the cost of performing the North-South service. Abe Fortas: I know, but that's not quite pinpointed to the problem that I have in mind, is it? Well, I think you're going to get to the commuter problem. Edward A. Kaier: Yes, Your Honor. Abe Fortas: And to my mind, that perhaps most vividly presents the issue that has troubled me. Edward A. Kaier: Very well, Your Honor. Potter Stewart: There wasn't a commuter problem isolated as such in the Chicago and North-Western railroad? Edward A. Kaier: No, there was not Your Honor. But I just like to say in pursuance for a moment of the point that I have been arguing that the present record establishes that the North-South traffic has handled as an indiscriminate part of the whole with all the other traffic of the Northern railroads, and our witness said in view of the fact the way a railroads are operated, he was sure the same thing was true in the South. And this related to all the upper -- all the large operations switching in origin terminal, line whole service in road trains or freight or weight trains, empty return ratios and all of those various large categories of traffic. Now, if Your Honors please, I will go now -- I was going to say more in this first point, but I think I better get to the passenger deficit point. And at the outset, I want to point out that when the Northern lines brought forth their cost study, they predicated it upon the freight service costs alone. They have nothing in it for any kind of passenger service. The Southern lines complained that contrary to the practice of the cost finding section of the Commission, we have not included the passenger deficit, and they said and I quote their words, “The Northern line study is defective in computing constant costs without consideration of passenger deficits.” Now, although it was to the disadvantage of the Northern lines that the Commission consider passenger deficits because we would have done better just on freight service cost alone, we stated that we would have no objection to their -- in their inclusion. But that we did object to the Southern line's proposal that there be called out of the passenger deficits so much thereof as might be attributable to commutation service, which was the proposal of the Southern lines. They sought to justify that proposal, proposal to exclude commutation deficits upon the theory that -- Hugo L. Black: Exclude what? Commutation deficits. Upon the theory that commutation service is frequently performed over facilities that are used for that purpose alone, and not used for freight or other passenger service. Whereas they said, it is generally true that the kind of passenger service other than commutation incurs a deficit principally or almost wholly because of the allocation of expenses to the service, for the passenger service which are common with freight. They say that in the case of the regular passenger service, intercity passenger service, if the freight -- if the passenger service were discontinued, the cost would go on and have to be born by freight service. Now, the Commission analyzed the Southern lines contention in the context of the distinction which the Southern lines thus urged between commutation deficits as being direct deficits and the others as being allocated. Commission found that although many individual items of expense could be regarded as solely related to suburban service that this was not true of the services as a whole. And it found that it could not be treated entirely apart from the freight service. And in concluding its analysis, the Commission said that because the suburban service deficit includes common cost which must be incurred to provide freight service and intercity passenger service, the deficits from commutation service should not be excluded from the constant cost allocated to the North-South traffic. Hugo L. Black: Was either side challenge that finding? It could not be computed? Edward A. Kaier: Well Your Honor, I didn't intend to say that they could not be computed. I wouldn't say one way or another about that. The Commission's finding was that the cost, the suburban service deficit includes common cost with freight service. The deficits from commutation service should not be excluded from the constant costs. Hugo L. Black: I asked you that question because I've been wondering here, how much, how strongly one can say that the Commission can accurately figure cost passenger service and the cost of freight service, the whole system of railroads, North and South? Edward A. Kaier: Your Honor, it imposes very great problems. Hugo L. Black: How much of its judgment, how much of it is finding and how much of it is guessed worth? Edward A. Kaier: If Your Honor please, in a case called rail passenger train deficit, in 306 ICC at 714 decided in 1959, I believe that you will find there an expression of the Commission to the extent to the effect that in deciding how much of the common cost should be allocated is largely a question of judgment, and a rather speculative factor. Hugo L. Black: 306 ICC, what page? Edward A. Kaier: 306 at 417. Hugo L. Black: Well now, you started off as I recall it by saying that they found that the cost of carriage for the Northern railroad was more in the cost of the Southern railroad? Edward A. Kaier: Yes Your Honor. Hugo L. Black: Is that accurate? Can they make that finding? Edward A. Kaier: Oh yes. Hugo L. Black: How? Edward A. Kaier: Well, they make that on the basis of the application of a cost formula, which they used day in and day out. This is a formula used by the Commission and by all the parties before including the Southern lines, we can and we got -- Hugo L. Black: I understand that so far. Edward A. Kaier: Oh this, and I'm speaking now of the formula for determining -- Hugo L. Black: Is that the that was whole formula that takes sample? Edward A. Kaier: Oh, there are some sampling in it Your Honor, but by and large it's an analysis of the accounts of the railroads which are kept in accordance with the Commission's uniform system of accounts, and they'll get a unit cost of performing this service or that, and then a traffic study is made to find out how many units of the cost -- how many units of that service are involved in the service your studying. They'll apply the unit cost to that. This is done day in and day out before -- Hugo L. Black: I understand it's done, but how much of it must we consider to really as you read that from that 306 Illinois is a question of judgment? Edward A. Kaier: Well Your Honor, I did -- Hugo L. Black: How much is a question of accurate findings of facts. Edward A. Kaier: It might reference to it being a matter of judgment had to do with the passenger service and only those expenses of the passenger that are common with freight. I didn't mean to say that this formula of the Commission for determining freight service cost was dependent upon judgment. Hugo L. Black: Do they have to get it from the books of the railroad? Edward A. Kaier: They get it from annual reports of the railroads which account by the account are submitted to the Commission. Hugo L. Black: Do they analyze it in any way to see if it is correct? Edward A. Kaier: Well, the Commission regularly has investigators going checking books of railroads. Hugo L. Black: Kind of an over supervision. Edward A. Kaier: Yes Your Honor. Hugo L. Black: But do they ever investigate those cost to see if they are put down on the books accurately? Or do they just kind of accept it and add them all up? Edward A. Kaier: Your Honor, I don't know the extent to which that audit how deep it goes. William J. Brennan, Jr.: Mr. Kaier, may I ask -- Edward A. Kaier: Yes sir. William J. Brennan, Jr.: Do I get this correctly. The initial Northern lines position as I understood you was that all these cost status should be limited to freight? Edward A. Kaier: Yes Your Honor. William J. Brennan, Jr.: And the Southern line insisted that no, they should also be taken under consideration, passenger to the extent of intercity, but not commuter? Edward A. Kaier: Correct. William J. Brennan, Jr.: That's what it is? Edward A. Kaier: Yes Your Honor. William J. Brennan, Jr.: I gather intercity uses the same facilities for freight and passenger? Edward A. Kaier: Well, sometimes it does. Other times, there's enough of it that there has to be an extra track, and certainly, there has to be stations, and then you got direct expenses you are such as a train true wages, locomotives, cars, couch yards, you've own these facilities which are attributable only to passenger service on the intercity side as well as the commuters. Byron R. White: But anyway, this was the purported justification of distinguishing between intercity -- Edward A. Kaier: It was. Byron R. White: And commuter service. Edward A. Kaier: Yes Your Honor, it was. Byron R. White: Because the South I gather does not have the commuter problem as Northern line? Edward A. Kaier: That is correct. There's one Southern line that has a big commuter operation, the Illinois Central, but by and large, they do not. Now, I would like to develop that point that the non-commutation passenger service has a great deal of expenses that are solely related to that service. The kind of service that's rendered down South, a local train service, intercity passenger train service, they have these solely related expenses, and the Commission didn't exclude those when it made it's calculation of the commuter -- passenger deficit to the allocated to this North-South freight service. I believe it to be of great importance in connection with this point Your Honors to point out to you that the Commission allocated the overall deficit; that is from all passenger operations to the North-South service, both for Northern and Southern lines. The Northern lines passenger revenues exceeded the solely related passenger costs. We had a deficit only when common costs were added. Now, the Southern lines on the other hand, their direct passenger costs, their solely related passenger costs exceeded their passenger revenues. The District Court found that it was proper in the North-South traffic, North-South service in costing it out to include common expenses, but not solely related. On -- we are the ones therefore who satisfy that standard. The Commission's allocation of costs included for us only common expenses which the Court said could be allocated, but for the Southern lines, it included not only common, but the solely related expenses too. Hugo L. Black: What do you mean by common? Edward A. Kaier: Common is between freight and passenger. Now, I should like to call attention to the fact that there's not question of the Commission's power to consider passenger deficits in making freight rates and I submit in the divisions. You held in the King case that it was proper for the Commission to consider passenger deficit and fixing freight rates, and the Court did not distinguish there between solely related cost and the other kind of cost. Hugo L. Black: Is any question of freight rates involved here or just -- Edward A. Kaier: Well, this is just -- Hugo L. Black: Limited to division? Edward A. Kaier: This is limited to the divisions Your Honor. Of course, the Commission has considered the passenger deficits in fixing the general level of freight rates, and it seems fare therefore to consider the passenger deficits in dividing the freight rates. But if they do it ought to be the overall deficits. I like to take just a minute from my rebuttal if I -- it's that's proper Your Honor? I would like to say that -- in the CNNW case which you decided very recently, fixing divisions between transcontinental lines that called Mountain Pacific and the Mid-western lines; you have substantially the same cost questions involved here, except that you didn't have this passenger deficit matter. Hugo L. Black: Are they the most expensive to operate? Edward A. Kaier: Oh, I don't think so Your Honor and I really don't know. I haven't compared those. Hugo L. Black: Over the mountains, I believe? Edward A. Kaier: Over the mountains. Well, for that factor that they would be surely, but that they're not involved here. I just cite that case as a precedent. In that case Your Honors, the two conferences which are here aligned with the Southern railways filed a petition for leave to file an amici brief. They made the point that if this Court where to decide the cost issues in that case, it would prejudice the decision and it would control the decision in our case in the lower court. They said that to all intents and purposes, the cost issues in that case where exactly the same as the cost issues in the present case. And I submit to Your Honors that that decision is a very important precedent in the decision of this case. Thank you. Arthur J. Cerra: If it please the Court, my name is Arthur Cerra and I'm an Assistant Associate General Counsel of the Interstate Commerce Commission. These appeals present a question of major importance to the Interstate Commerce Commission's Section 156 duty to ensure just reasonable and equal divisions as between connecting rail carriers. Now, as Mr. Kaier's indicated, District Court held that Rail Form A territorial cost not a proper yardstick for measuring North-South traffic, and that the Commission was required to produce more refine data to ascertain the actual cost of that service. In reaching that conclusion, the court below disregarded key determinations made by the Commission. First, they disregarded first in rejecting the Commission's comprehences of analysis of Rail Form A, and its application to all the units of service that were rendered in North-South traffic, and these units are service being the ones that comprise what is being measured. The District Court paid little attention to these findings and analysis of the Commission. And secondly, the Court disregarded the findings made by the Commission after its review of all the evidence submitted by the parties that this cost reliably and accurately reflect the traffic in question. Now, those findings were based on evidence that the traffic moves over all railroads and between all stations in both territories, and it's not handled as a distinct entity at all, but rather, it's average traffic handled as an indiscriminate part of all traffic and it possesses no distinguishing characteristics. Now, this Court observed in the CNNW case that the ascertainment of cost and the treatment of accounting problems concern factual matters relating entirely to the -- and directly pertaining -- excuse me, relating entirely to the special and complex matters of the railroad industry. The court had no familiar -- the court below had no familiarity with these problems and either sought here to obtain more accuracy or to restrict the consideration that the Commission could give to these matters solely to the cost directly pertaining to the traffic in question. We believe that such an effort to achieve a theoretically perfect cost formula really does constitute an unwarranted incursion into the administrative domain. And for this reason, railroads are multi-purpose facilities. They produce a number of transportation services for the common use of physical facilities and employee services. Now, how do we obtain the cost for these services? When there are direct cost, we can allocate them to the traffic. When there are not direct cost, they are common cost, there have to be some kind of judgment, empirical judgments made on determining how to allocate this, or how is it done. It's done on the revenue basis. Hugo L. Black: (Inaudible) Arthur J. Cerra: Between different kinds of traffic of railroads Mr. Justice Black, for example, a car of North-South traffic might travel in the train with traffic from various other areas of the country when it reaches the border. The same engine is used. The same fuel is used. The same switching crews. How do you allocate the cost running that train between the traffics? Well, you allocate it on the basis of the revenue used that it produces. You find out what the costs are, and each traffic bears that portion of those cost. That's what the Commission did in this case. As I was saying, where a railroad -- as all these railroads are a multi-purpose facilities and they produce a number of transportation services. When we try to ascertain whereas here, if any given body a traffic uses physical facilities in common and employee services in common with other traffic, and it's been shown that it has not distinguishing characteristics from any other type of traffic, it would appear to us that the application of Rail Form A cost is plainly proper. Abe Fortas: Well, that really cuts very deep doesn't it? Would you apply that principle to all problems under the Act? Arthur J. Cerra: I didn't quite understand your question, Your Honor. Abe Fortas: Well, suppose you had a particular plain ascertainment cost of kind particular types of commodities, you do that don't you? Arthur J. Cerra: We do, Your Honor. Abe Fortas: And that most to those cost are a part of a joint cost that involved many other operations. But somehow rather by the wizardry of accounting techniques we do disentangle them and do make the segregation. I'm not saying that it always makes sense and to do that or it's always worthwhile if that's a duty that always should be imposed on the ICC. But certainly, you do it in some instances for some purposes. And what I have not got clear in my mind is, what are the special reasons here why you did not do it? Particularly in view of the relatively small amount of the overall cost or an overall traffic represented by the North-South traffic and especially on the Northern roads? That's what I haven't heard yet or read, so far as I recall. Arthur J. Cerra: Mr. Justice Fortas, this is precisely what the Commission did here. This traffic we shown to be not distinguishable in any characteristic from any other traffic that the railroad handles. Now, that being solely -- Abe Fortas: Well, it's distinguishable. It's got a different point of origin, different point of destination. It's North-South through traffic and I don't suppose you're going to say that it would be impossible or even impractical as a matter of accountancy to breakout cost for that segment of the traffic. You wouldn't say that, would you? Arthur J. Cerra: Well, the question I would have to ask in that, how do we get these cost Your Honor? We would have to get this cost by starting out with Rail Form A. Starting out with Rail Form A and trying to make a segregation of all the services that were performed on North-South traffic. Abe Fortas: I just think that'd be a very sensible way of going about it. Arthur J. Cerra: And that's precisely what happened in this case. Abe Fortas: But you did not break it down. What you relied on was Rail Form A aggregate cost as I understand it without making any segregation whatever. Arthur J. Cerra: But the aggregate cost Your Honor are all the services that are performed by the railroad to provide all the work units in expenses that takes to provide any amount of traffic that the railroads handle. And when you throw this all in one pool and they're using common facilities, a unit cost for each type of service, then you go to the railroad's traffic study for a year which shows all the services units that were rendered in performing North-South traffic, and you multiply those unit cost of service against the revenue units, and you come out with the cost for the traffic. That is what the Commission did here. Abe Fortas: Yes, but a further or refinement beyond that would be possible, would it not? For example, don't we have -- isn't it necessary to decide here whether it was or was not appropriate just to take an illustration to use these commuter costs? Now, I understand you're -- I think I understand the Commission's reason for it. The Commission says that there are no separate facilities that are used for the commuter-passenger traffic. And therefore, the Commission says “We did not break out those cost and eliminate them for this particular purpose.” But that presents a problem. Wouldn't you agree that that presents a problem of standards? Arthur J. Cerra: The standards that it would present arise from the problem that here, the Commission used fully distributed cost. Now in the CNNW case, they used out of pocket cost. They didn't consider any of these overhead items and distributed as to that traffic. So the distinguishing feature here is that the Commission used fully distributed cost. Now -- Abe Fortas: I know, but you get the question of should it. Arthur J. Cerra: Should it? Abe Fortas: Of course you did, but should it? Arthur J. Cerra: And this is the determination of cost which depends on policy. The Commission has formulated a policy of saying following this Court's decision in North Dakota in 1915, the North Dakota case we cited in our brief that when cost are being considered, the Commission must not only ascertain the cost directly pertaining to the service, but it also must ascertain in a portion those causes which are joint or not directly pertaining to it. And every railroad has certain overhead expenses. Now, if we have these overhead expenses and we're going to say that it should not be portioned on a revenue unit basis between all given bodies of traffic, we're going to find out that sooner or later, the railroads are not being able to recouped this overhead expenses from anybody of traffic. So as a policy matter, the Commission has said here fully distributed cost, meaning an apportionment of all overhead burdens must be divided and that part will be divided here in accordance that this North-South traffic bears to the total traffic of both groups of railroads. Abe Fortas: Well, I'm not going to pursue any further beyond suggesting to you that basic problem here is as I understand it, arises from the fact that the Commission said, “We're going to make the -- we're going to review these divisions on the basis of comparative cost.” Isn't that right? Arthur J. Cerra: That is correct Your Honor. Abe Fortas: Not of the factors cost, not what the railroad's need, but cost. Then, the Commission I should think would have a duty if any standards are to be applicable here to show that it has -- and reasonable limits applied cost standards. Namely that it has ascertained cost on some proper sensible basis. I'm very much in favor of latitude to the ICC and this -- its terrible jobs as I have expressed in various times, but they have to be some standards here. And instead of that, what the ICC did here was to take a gross figure, cost of a total operations, including some rather elements that offhand, there of surprising, such as computed charges and the unsegregated kind charges or whatever that item is. And -- then you have arrived at your conclusion on that basis and that's what's bothers some here, and it's not because you could not make a further refinement of these costs, is it? Arthur J. Cerra: Your Honor, the refinement we made based on the Rail Form A computations and based on the fact that parties who seek to show that there are differences in one given body of traffic as compared to average traffic were shown here. The Commission reviewed the attempts by the Southern lines to show these bodies of traffic do distinguishing from average traffic, and they rejected seven and accepted five. So, -- that means I'm through. I'm sorry Your Honors. I did want to cover just quickly the point of the Southern Governor's Conference. They parrot the arguments of the Southern lines, but they claim as a matter of law that even if the Northern lines experience higher cost of service, the Commission must find that such higher cost reflect inherent territorial disadvantages before it may give effect to such cost and then territorial division's case. And this contention is based on the premise that the Commission made no adequate findings to dispose of their claim and therefore, its order is going to produce dire consequences and upon the economy of the South and effectively nullify the present and future economic gains that the South was scheduled to receive as by virtue of the New York case. Well, we ask the Court only to consider the findings that the Commission did make in response to each one of these contentions, and the findings that rejected these contentions or explain why the Commission couldn't accept them or clearly expressed in its report. We don't think any further findings are required. Carl E. Sanders: May it please the Court. My name is Carl Sanders. I represent the Southern Governor's Conference. I represent the Southeastern Association of Railroad and Utility Commissioners. I come to the Court with a little different version, a little different view of what this case is all about. Of course, I have two. We've been in this case since the very beginning, and we've had to listen to the arguments between the Northern and Southern railroads, and we've heard all of these evidence about the question of cost. But we contend and we respectfully insist today that this not just a private dispute over revenue between Northern and Southern railroads, but that this case involves a much bigger question, and that this case really involves the fact that the Commission has abandoned the territorial relationship of equality between the North and the South. And they've done this without any explanation whatsoever so far as we've been able to ascertain. This is -- sir? Hugo L. Black: The equality of cost? Carl E. Sanders: Equality of -- that they are differences this Court in 1947 in New York versus Unites States determined that they were no differences between the official territory of the North and the Southern territory, and by virtue of that, you established the uniformity of rates and then subsequent to that, the uniformity of divisions. We have been in this case. It's been our observation that there has been no determination, no reasons given. No adequate reasons given why the decision in the New York versus United States case is not just as sound today as it was in 1947. And that this business about it being costing more money to run the railroads in the North as compared with running a railroad in the South is not based on any inherent difference, which is the words that this Court used when it became necessary to just divisions or just rates that they should be some inherent difference. And so, you put us on an equal basis, and we've been on that equal basis and we see no reason under the evidence that was submitted before the Commission. We see no reason to change this basis and give the North now a preference in divisions for operating railroads in the North when they have not proven to anybody satisfaction that it cost any more money to operate a railroad in the North and it does in the South today. If Your Honor please, it's of course, it is inflation matter, and what it amounts to is this, it simply amounts to the fact that under this order of the Commission, they are going to give them an average of 17% more, up to a maximum of 34% more, but carrying the same amount of freight over the same distance in the North as it relates to the South. And that's what it amounts to. Now, -- Potter Stewart: I'd understood that the net average change in the divisions with 3%. Carl E. Sanders: 17%, that's a net average change in the amount of money we cost the Southern railroads. I think is what -- Potter Stewart: Yes. Carl E. Sanders: -- Mr. Kaier said, but the division preference that they are giving in this case is an average of 17% more to the Northern railroad for carrying -- if you got a whole of 50 miles in the North and we've got an identical whole of 50 miles in the South, they are going to give them an average of 17% more in the North for carrying that same amount of traffic over that same distance as we would get for carrying the same amount of traffic over the same distance in the South. And it does go as high as 34% in the record. And so, this is not something new from -- Potter Stewart: And now, tell me what is the 3%? Carl E. Sanders: The 3% that they're talking about is the amount of money that is going to take away from the Southern railroads operating revenues. I believe it's the correct interpretation of that. Hugo L. Black: What's the theory on which they based the finding, if they even have a finding can you argue with that -- Carl E. Sanders: All right sir. Hugo L. Black: -- with the increased cost of operating in the North? Carl E. Sanders: The theory, if there is a theory, is that they say that there is a difference. They say there's -- it cost more money to operate a railroad in the North. Hugo L. Black: Why? Carl E. Sanders: They don't give any reasons. This is our point. This is what the Southern Governor's Conference and the Southeast Railroad Commissions are complaining about. We say that if they made a finding that under the Administrative Procedure Act, they've got to give the reason for the finding. And we say that if there is a finding, they've got to have evidence to support that finding. Now, I can quote what they have said in this case. The ICC said this, this is from the record, “Other factors being equal, the cost differences between the North and the South are the product of and reflect inherent advantages and disadvantages in the two territories.” Now, this is what they said. We contend it of course -- Hugo L. Black: Which one do they claim has the most advantages? Carl E. Sanders: Sir? Hugo L. Black: Which one do they claim as the most inherent advantages or disadvantages? Carl E. Sanders: Well, they claim that the North has the greatest disadvantage may it please Mr. Justice and -- Hugo L. Black: What is that disadvantage they point out? Carl E. Sanders: The only disadvantage that we can ascertain from this record is one, perhaps an over capacity of railroad facility in the North. We think that if there's any cost difference between operating a railroad in the North today as compared with this operating one in the South from this record, it would be because they've got more capacity in the North than we have in the South. And of course, they did not -- they recognize -- Hugo L. Black: Do you mean the competition was keen? Carl E. Sanders: No sir, I mean that back in the day and times when the Northern Railroad System was first built, to be perfectly candid about it, all industry in this country was located in the Northern part of the country. And at that time of course, there was a great deal of railroads that were built. Since that time, of course, much of the industry in this country, some of it thank goodness, has come to the south. And now the fact that we do have industry in the south, we have an overcapacity of railroads in the north. And so they say, well as a result of that they've got maybe more wages. They've got perhaps some of these transitory costs that are tendered to operating an oversized railroad. Now, since that time, since this decision and they recognize this in the Commission but they didn't do anything about it. They said “We raise the question what's going to happen when they have these merges?” And they said, “We can't go into merges. We can't consider that other than to recognize that there are going to be merges.” And since that time in the Pan Central Merger case, the Commission found that the Pan Central merger would save $80 million a year. And yet there's not any recognition given whatsoever in this proceeding for these savings that are taking place in the north. What we are trying to do, Mr. Justice Douglas in his opinion in New York versus United States said that of all things that we don't want to happen is that we don't want to create a manmade trade barrier. And if we are going to have a manmade trade barrier as the rate structure then existed, and so we're going to equalize the rates and at the same time they equalize the divisions. Now what this northern railroads' are asking this Court to do now in a subtle fashion is to re-impose in another manner the same manmade trade barrier between the north and the south, except instead of doing it through the structure of rates. They are now asking you to do it through preferences and divisions. And it creates the same problem that we had 25 years ago. Thurgood Marshall: What's the difference in consequences? Carl E. Sanders: The difference in consequences is that if you allow this situation to stand as it stands now with the preference in division, the difference in consequence is this. First of all, we are going to have to pay for this inflation. It's going to come out of the hide of the southern shipper. It's going to come out of the hide of the southern economy. It's going to come out at one fashion or another. We can't operate railroads in the south and give the north 17% more for that same traffic. So we either going to have to raise the rates in the south. That means that the southern rate goes back up and we have a rate in the south that's greater than the north. O, if we don't raise the rate in the south, we're going to have to reduce the service. And that means that instead of being able to provide the same service that you can get in the north that instead of being able to buy say with the amount of money that's involved in this case, we can buy several hundred freight cars in the south for these railroads that are operating in the south. But if this Commission order is allowed to stand, that means that these freight cars that we could buy and be using in the south, they're going to be using them in the north. Abe Fortas: But Governor, what percentage of the total revenues of the southern railroads are we talking about here? Carl E. Sanders: We're talking about 3%, I believe. Abe Fortas: No, I mean overall? What's the -- how much of their revenues, what percentage of their total revenues to the southern roads does the southern division derive from these does-- Carl E. Sanders: 20%. Abe Fortas: -- the southern roads derive from the division then? Carl E. Sanders: 20%, Mr. Justice. Abe Fortas: 20% from all of their revenues? Carl E. Sanders: Yes sir. Abe Fortas: Now the next thing I want to ask you is this. As I understand it, what you're seeking is an affirmance of the District Court order? Carl E. Sanders: Yes sir, I sure am. Abe Fortas: And the question before us is whether we'll affirm the District Court order not whether we -- Carl E. Sanders: Yes sir. Abe Fortas: -- like what's happening or we don't like it. Carl E. Sanders: Yes sir. And I think if may it please Mr. Justice Fortas, that if this Court will affirm the other point that I'm seeking. And I want to conclude my argument, but this Court will affirm the district judge's decision. All we want and all we've ever asked for, and we've raised the question at every level from the beginning up, is to ask the Commission to go in to all of the economic facets and all of the economic factors in the northern territory and in the south. And if they go in to all of those factors, which they did not do in this case, then we are perfectly willing to stand by whatever the decision might be. But we have never been -- Abe Fortas: Well provided it comes out right. Carl E. Sanders: No sir. We would like -- we believe it will come out right. The other point I want to make before I sit down, if might. And this is the other thing that the Commission is doing in this case that I think is very significant is that for 30 odd years, they have followed the principle of primary local responsibility. And that is that the territory where the cost factor is involved should bear the course to that territory, not super impose it on some other territory. And what they're asking us to do in the south is subsidize the northern railroads. And one other factor and I will sit down because my time is up and I know Mr. Trienens is a much better lawyer than I ever hope to argue this case. But the other factor is these commuter deficits. Now, you gentlemen know, may it please the Court, that the south has come a long way in the last 20 years. You also know that according to every economic indicator in this country today, we are still below any other section of the country regardless of the progress that we have made. They have settled us, the Commission has in this case, with commuter deficits in the north, which have no relationship whatsoever to us in the south at this time. However, I happen to have the privilege this month of heading up a committee in Atlanta, Georgia to go to the people in metropolitan Atlanta for a $433 million bond issue, nothing to do with the railroads now, $433 million bond issue for rapid transit. And we are coming to grips with that problem because we know we have to come to grips with that problem, and we don't think that we should have to subsidize the commuter deficits in the north, and at the same time come to grips with the problem ourselves in the south and pay that ourselves. We simply, in conclusion, we simply feel this way. We want equal treatment with all sections of the country. We want a free economy unhampered by any manmade trade barriers. And certainly if we think we are entitled to equality of equal treatment with any other section of the country, and certainly if we are going to receive less than that, we think that the Commission should at least give us some explanation while we are going to have to be relegated to a second class status. Thank you very much. Howard J. Trienens: May it please the Court. I'm Howard Trienens, I represent the Southern Railroads. When we started out this case, we were equal partners with the Northern Railroads and we were dividing uniform and equal basis of rates. As Governor Sanders has pointed out, this case has changed that relationship. We are now not -- unequal. This case was tried on the expressive mission of the Northern Railroads. They were seeking a disproportionate division of a uniformed structure of rates. They wanted a disproportionate share. And they got it, for performing exactly the same service on the same car moving between the territories. They have given a 17% inflation, 17% more for performing the same service on the same car. I'll show where that came from and why that's not supported by any evidence. Hugo L. Black: You mean about per mile? Howard J. Trienens: Per mile, yes sir. 300 miles on the south, same car, 300 in the north they get 17% more compensation for doing that same work on that same car under this order. Hugo L. Black: You say before the Commission acted the amount was equal? Howard J. Trienens: 50-50. We split it equally when there were -- we each perform half the service with an equal haul. We split it 50-50, and we were splitting it equally and we were splitting a uniformed system of rates which were -- Hugo L. Black: Who filed the petition? Howard J. Trienens: Northern Railroads. Byron R. White: Mr. Trienens, do you on your side of the case, question the principle that if were so that the cost of the northern road in handling this class -- Howard J. Trienens: This train. Byron R. White: -- was (Inaudible) and the southern (Inaudible) can make this kind of effect. Do you question the division based on profit? Howard J. Trienens: We would question it unless they carry through, and did two more things. First found that these differences in cost, just because a fellow spends more money shouldn't get a medal for that. But these differences in cost were inherent, inherent in the difficulty of the territory. They couldn't cure it by consolidations. They couldn't cure it by becoming more modern. They couldn't cure it, it was inherent. Now if it wasn't inherent difference like that amount in the Goldberg that'd be something else. And also -- Hugo L. Black: You mean necessary? Howard J. Trienens: Necessary. That's right, a necessary difference in the cost. Not just they happen to spend the more money -- Potter Stewart: Or do you mean just they had to make a finding as to efficiency? Howard J. Trienens: Well, efficiency in this case is a somewhat slippery word. Now, I think they found they were equally efficient. But that meant they found that they were -- Potter Stewart: Well you know they found that then. Howard J. Trienens: They were operating the systems as they then existed with equal efficiency. They didn't say, because obviously they merged Pan and Central, and they merged a new haven to create efficiencies that these separate railroad managements could not achieve by themselves. There's quite a difference in there. Well now, this situation of unequality puts the south in a uniquely different position. Throughout the country, east of the Rockies, the rates are uniform. The east and the west, Midwest, the east and the southwest, the divisions relate to the rates and they're uniform. Even out in Mount Pacific territory where there is an inflation, it's related directly to the higher level of rates and the Commission related them on a basis of consistency as was pointed out in this Court's opinion in the Transcontinental case. This is the only case, the first case where inter-territorial rates have been divided so that one railroad gets a disproportionate division of uniform rates. This is the only case. Now how'd it get that way? Here's how it happened. They used Rail Form A as to which there is no quarrel. Rail Form A is a formula that chops these railroads costs into various elements. We have no quarrel with how it divides the cost as between elements vital, terminal or otherwise. What we did was we analyzed this Rail Form A cost, and we said “How come these Form A averages are 17% higher? How does it happen?” Well, we looked at that sort of thing we would all think of as railroad cost first. The sort of thing Mr. Cerra indeed talked about. Running a train, paying the crew, buying the locomotive, fuel, maintaining the roadway, stations, all the sort of things you first think of in railroad costs. Are they higher in the north on an average basis? No, it doesn't cost anymore to run a train in the north. And that's true whether you use these Form A averages or you don't. The Rail Form A and these averages have nothing to do with this inflation when it's the items that you think of is running trains, maintaining the roadway and that sort. So, where did this inflation come from? Here's where it came from. It came from a handful of items. Commuter deficits, border point interchanges, car cost, empty return ratios and just a handful of items that we discussed in our briefs. Now, it's not surprising and shouldn't be surprising that the cost for some items are higher in the north. After all, the north is a very different place. It's a highly industrialized territory. Of course they got a lot of commuter service in the south as of now. It hasn't anything to do with north-south freight traffic. And indeed the Commission found as a finding of fact that many items, many items of suburban service are solely related to suburban service. Meaning the finding that these cost haven't anything to do with north-south freight traffic. Abe Fortas: Well may I interrupt you there -- Howard J. Trienens: Surely. Abe Fortas: -- if you don't mind? In fixing freight rates, the Commission does take into account deficits on passenger service, am I right on that? Howard J. Trienens: In so far as fixing relationships between north and south. Abe Fortas: No, no. I'm not talking about that. Just in fixing freight rate. Freight rates, does the Commission take into account deficits on passenger service? Howard J. Trienens: The Commission has in the past, and I can't say -- I can't look behind what they think of it, has in the past said that it did consider deficits from passenger service. It has also said -- Abe Fortas: Pardon, go ahead and finish that sentence then. Howard J. Trienens: It has also said that they've treated commuter deficits as a separate problem which should not be dealt with by the freight shipper subsidizing the service, but rather should be dealt with by the local community. Excuse me. Abe Fortas: The answer to my answer to my question yes? Howard J. Trienens: The answer is yes. It's the passenger deficits, but no as to commuter service. Abe Fortas: And you say there are Commission rulings to the effect that commuter service will -- deficits on commuter service as distinguished from passengers other intercity passenger service, will not be considered. Howard J. Trienens: As a matter of Commission policy. Abe Fortas: In fixing freight rates? Howard J. Trienens: Yes sir. And that -- Abe Fortas: But here, your point is that they have considered deficits on commuter service in fixing these divisions? Howard J. Trienens: That's right. And I want to draw another line here though. Because in these rate cases, the reason they consider passenger deficit at all was to meet the revenue needs of these carriers. They needed more money so they raised the rates to give them these -- give them these money including -- and they took into consideration passenger deficits. In this case, they have expressly disclaimed revenue needs as a basis for decision. They say that their order is based on the cost of north-south freight traffic, freight traffic. And they have found that the commuter deficits are based at least many items of the cost are -- Abe Fortas: And you're saying that they have not used -- let me see if I can be precise about this. If I correctly understand your last statement, you're telling us that the Commission has not used the cost of passenger service, intercity passenger service, except for the cost of common facilities for the purpose of arriving at the cost for purposes of fixing freight rates? Howard J. Trienens: Not quite sir. Not quite. Abe Fortas: Let me hear you state it. Howard J. Trienens: They picked as their standard of this whole case the cost of north-south freight traffic. They further found that many items of commuter cost solely and then -- Abe Fortas: I know that as to this case. Howard J. Trienens: -- or then as to this case, they nevertheless went in and put the whole passenger deficit into this -- Abe Fortas: I understand as to this case. I'm asking you generally, when the Commission figures cost for purposes of a freight rate case, not a division case, a freight rate case. Does the Commission take into account the cost of passenger service or does it not? Howard J. Trienens: I can't answer that Your Honor. And the reason I can't is that in the early 50's, they did say they would reflect the passenger deficits in a rate increase. In 1959, they went to Congress and have been finished this passenger deficit investigation, they said that as to commuter, commuter deficit should not be subsidized by freight shippers. And they have acted consistent with that since that time. There were no freight rate increases from about '59 to '67. And in the latest decision, I just can't answer your question. I just don't know. I do know in their last decision, they said this. And this bears upon the argument that we got to use Form A cost and these averages because it's essential to our rate cases. In that case, they had among other freight commodities not merely citrus fruit, but all perishables from north-south, territory wide, and somebody put in Rail Form A unadjusted cost with respect to these rates that they were increased. And the Commission said “Territorial average cost are entitled to little weight in determining the cost of handling particular movements. And by that they mean a territorial wide movement of this very traffic. So the idea of anything you do here about Rail Form A is going to embarrass them and all in their administration rate cases. That's how by their own state -- Hugo L. Black: Does it mean how to pocket cost? Howard J. Trienens: In that case, they were showing both. Hugo L. Black: When you've been referred to cost, the Commission had been referred to cost, has it been out of pocket cost? Howard J. Trienens: No sir. Hugo L. Black: What does it include? Howard J. Trienens: It includes -- what I regard as a -- Hugo L. Black: Value of the property used? Howard J. Trienens: The full cost of performing this north-south service. It would include a return on the value of the property. For example, return of the value of the car used to all this traffic. That's right sir, all of full cost of handling this north-south carrier. That's what I understood the Commission to mean, and I don't quarrel with that feature of it. Hugo L. Black: What you claim is that they take a shipment of oranges in Florida that the south now will get -- hardly going through the south. Those railroads will get 17.5% less of the division of the cost? Howard J. Trienens: Yes sir, 17% less than the north for doing the same service. Now let's see how it got this way. I've already said that it wasn't operating the trains and it wasn't the roadway. It was a handful of items. And I think I can illustrate how this inflation came to be by giving an example as to one of these items. I will take again a car coming from the south that moves across over (Inaudible) Potomac area, right across 14th St.Bridge. That's an interchange point. That's where the Southern Railway comes in into Pan Central and the B&O goes north. And there is a service performed there. It's the cost of interchanging these cars. These same cars come in, same car go out and there is a cost involved in interchanging them. Now when you look at the Commission's order in this case and see how they construct it, there's a separate factor which they call cost of interchanging gateways. This is a separate factor. It's isolated and we can think about just how this works. The railroad operate this joint yard and the record makes it perfectly clear uncontroverted that the cost for each railroad coming in that yard and going out of that yard is exactly the same. Exactly the same and you'd know that'd be the same. They're in the same yard dealing with the same cars through the same joint facility. The record is uncontroverted that the costs are exactly the same. The record also shows the same thing at these other interchange points, Cincinnati, Evansville, Louisville. We're all in the same yards interchanging the same cars. Alright, now how did they get the inflation? Well, they said, “Here is an element of cost of interchange. We will use the territorial average. The territorial average per car interchange throughout the south is used and the territorial average throughout the north is used.” And it happens that those averages are 58% higher than the north. Now I don't question that on the average for all the traffic, the average cost is 58% higher than the north. After all, as was pointed out earlier, 94% of the northern total traffic is something else. It's not this traffic, it's something else. It's interchanging with western lines in the expense of Chicago district, its lots of other things. It's -- Hugo L. Black: Does the increase cost of the depot, the station and the tracks and the land of the railroad of the north and south enter into the competition? Howard J. Trienens: They do enter, Your Honor. And as to those items, stations, land there was no difference in the averages or -- there's no quarrel about it. There's just wasn't -- that doesn't where this inflation came from. It came from just a handful of items like this border interchange which was 58% higher, these car costs for the same car which are 32% higher and throwing in the commuter deficits. It's that kind of thing that counted for this whole inflation. Hugo L. Black: You say the car cost was 32% of it? Howard J. Trienens: You take the average car cost, meaning all the cars of all different kinds throughout the south and all the cars of all different kinds throughout north, and the average cost is 32% higher per mile than the north. Hugo L. Black: Is that suppose to be due to the fact that they have better cars? Howard J. Trienens: Well -- William O. Douglas: Some of it is due to a specialized equipment, isn't it? Howard J. Trienens: Some of it is due to more specialized equipment. The north after all is the manufacturing center. They have more specialized equipment. Some of it is due to the fact that the north uses more coal, and it rents coal cars and coal rentals enter into all this. But when we're talking about a boxcar handling north-south traffic and it's the same car moving from the south through an interchange into the north. The same car, there's no rational explanation or even an effort to explain why for that car, it could be 32% higher than the north. That's the whole question here. We're talking about north-south freight traffic. And the question is, whether there is any evidence to support these higher costs for the items where the whole inflation comes from and show they in fact happen on this north-south freight traffic. Hugo L. Black: Would you deny if they actually had shown in the evidence that the cost is 35% more on the north that they would be entitled to a bigger division? Howard J. Trienens: Well I would deny it because I can't conceive of it being so. The northern lines didn't really try to show it was so as to these cars. They just -- Hugo L. Black: That's it. Suppose they did? Howard J. Trienens: If they did and if it was inherent, and I'm not making to do to avoid it. Hugo L. Black: You mean natural? Howard J. Trienens: Natural, and the result of efficient operations as to these cars. And the northern -- and this was something peculiar of the north-south freight traffic, then they would, under the Commission's standard here, they would be entitled to it. Hugo L. Black: Well is the main challenge then due to the findings? Howard J. Trienens: It's due part -- Hugo L. Black: Or of increased cost in the north? Howard J. Trienens: Partly to the findings which go to the -- where they don't go to the questions of how the cost could be higher on these cars in north-south traffic, partly the findings which don't respond to that and in large part to the evidence. There is no substantial evidence that the cost of these items, these items that account for the whole inflation. There's no substantial evidence or any evidence that these costs are in fact higher in the north on these cars. So it's both findings which don't really address themselves to this question and the lack -- complete lack of evidence. Hugo L. Black: Is that what the court found? Howard J. Trienens: Yes sir. And I would -- I think it's important here at this stage to say exactly what this Court found in three or four sentences here, and also say what they didn't found, because just what this court below found is critical here. The Court analyzed the facts as follows. They pointed out that only a few, relatively few elements of the cost are higher. And it's uncontroverted that many items of cost are no higher on northern railroads and southern railroads. The inflation is attributable to relatively few cost items, and they list -- the court lists, commuter, interchanging cars, cost of freight cars and a few others. As to these controverted items, the court below said, and they're all denying this, “The Commission relied exclusively on territorial average cost.” Now, here's the holding of the court. Judge -- Hugo L. Black: What does that mean precisely? Howard J. Trienens: It means that as to such things as the interchange work out here at Potomac Yard, they used territorial average cost of all traffic in the north and all traffic in the south, bulk of which had nothing to do with this north-south freight traffic. And the average was 58% higher. So they divided these rates just as though it cost us 58% more to do the same work in the same yard in the same car. They used these averages. And it's like, in that point Your Honor, it's like the -- like this Court said in the Mechling Barge case, this was a barge rail relationship. The Court said, “The un-sifted averages put forward by the Commission do not measure the allegedly greater cost of the carriers nor indeed show they exist.” These territorial average don't show that the cost are 58% higher in doing this workout in Potomac Yard nor indeed show that there's any difference at all. And the record shows that's causing the same -- Byron R. White: You don't -- you don't really deny the fact that on some segments of this traffic -- of their traffic in northern roads have higher cost. Howard J. Trienens: Yes I do. Byron R. White: Like for example car cost, on segments of traffic they really do have the substantially higher car cost. Howard J. Trienens: No sir. Byron R. White: Your point is that -- no? Howard J. Trienens: No. If you -- if your question was on this traffic they have -- Byron R. White: No, I said on some segments of their traffic. And your point is that you ought to look at this north-south traffic to determine car cost. Howard J. Trienens: Alright. Byron R. White: It's maybe to between New York and Buffalo carrying some kind of the traffic car cost or two or three times this high? Howard J. Trienens: Or different cars on a different something else. Byron R. White: But your point is that that cost shouldn't be used major north-south traffic cost. Howard J. Trienens: That's right. Not only shouldn't be used as a matter of principle, but shouldn't be used under the very standard selected by the Commission itself, which was the cost of north-south freight traffic. Byron R. White: Yes. Howard J. Trienens: And it isn't that I say that somewhere else they spend more on these cars. It's different cars, I mean, 94% of their traffic is different, commodity is different, traffic or specialized cars. They're just different things apparent light with light. Well, I was about to give the basis of the decision below, and I'd like to read slowly if I may, just exactly what the court below held. Potter Stewart: But can you tell us what page of the -- Howard J. Trienens: It's on 349 of the appendix, volume 1 of the appendix. Potter Stewart: Thank you. Howard J. Trienens: The Commission stated its exclusive standard to be the relative cost of handling the specific freight traffic to which the divisions apply. We are persuaded that the order is not based on substantial evidence nor supported by recent findings within the meaning of Sections 8 (b) and 10 (e) of the Administrative Procedure Act, because the use of territorial averages accounting for the northern inflation has not been supported with findings or evidence relating any such inflation to the north-south freight traffic. That is the holding below. Now, let me also quote from the Court to make it plain what the holding below is not, because this morning, it was suggested that the Court had substituted its view of the case, that the court below had rewaived the evidence, that's not so. Here's what the Court said, “With the Commission's expertise in mind, it is our duty to review the record and the conclusions reached as required by the provisions of the Administrative Procedure Act. As to the sufficiency of the evidence to support the order, it is not the proper function of this Court to substitute its judgment or to weigh evidence. On the other hand, it is our duty to ascertain whether or not the findings and conclusion are supported by substantial evidence.” Couldn't find a clearer statement of what the court's function is, and what the court's function is not. And I want to emphasize again, it was not the District Court that substituted any view of its own that the test here ought to be north-south freight traffic cost, that was the Commission's own announced standard. This Court took that standard as it had to, and determine whether there was substantial evidence to support this inflation with respect to those several cost items that accounted for the entire inflation. Abe Fortas: How old is the cost material in this record? Howard J. Trienens: 1956 cost. Abe Fortas: And I suppose if this case goes back, the whole thing left be done over again, won't it? Howard J. Trienens: It took the southern line six months between the time the north completed their case to we completed our case. The rest of this time was taken in the northern lines deciding to use ‘56 cost in 1959 in another procedure in which we played no part. I don't -- I know it's a great problem for this Court to have one of these old stale cases come up here. I don't think we should be penalized and we should have to forego uniform division, because other people and other agencies took an inordinate amount of time. We were not accountable for any delay before the Commission. Abe Fortas: This case was in the Commission nine years? Howard J. Trienens: Oh, 1959 was when the north got around to starting this really, to 1965. Six years, something like that. Abe Fortas: Six years, and then in the courts since then? Howard J. Trienens: Yes sir. Then we'd be back trying it out now if the Commission, I presume, would not decide to appeal this. But to that, we have no control over that. Abe Fortas: Well, they say the whole proceeding would've been over if you haven't decided before the Court. Howard J. Trienens: That's right. Now, I think I will emphasize that the District Court not only use the standard that the Commission itself had selected, north-south freight cost. But the District Court did its duty under the Administrative Procedure Act. This is in a matter where that court had any choice. Administrative Procedure Act directs the reviewing court shall set aside Commission action, found to be unsupported by substantial evidence. That's the part of a District Court's job to the reviewing court to look into these records and see whether there is substantial evidence. That's all this District Court did and found none to support these inflations and the items that they actually occurred. I also realized that this Court is very busy with many constitutional issues and it can't take upon itself the job of reviewing these administrative records. But I do submit that the District Court is the initial responsibility and it was fulfilled in this case in a well reasoned opinion, and using precisely the standards that the statute required. Now, there was statement this morning that this Court had somehow immunized from judicial review, cost findings and anything as complicated as the Railroad Divisions case and citing the so called Transcontinental case of two terms ago. Now that just didn't so. At the time that case was tried, there were common issues. The east was involved in that case when the Transcontinental case was first brought, and there were common issues. Some of these car costs and other issues were involved. Commuter never was. By the time it got to this Court, the eastern roads, the northern roads it settled up. And this Court observed that many of these issues just didn't have to be reached and weren't reached. And when this Court itself reviewed, because the District Court hadn't even reached the question, when this Court itself reviewed the cost determinations of the Commission, it didn't say, “You're immune from judicial review.” It looked as to whether there was substantial evidence. And on the only item where there -- which is common to the two cases that there was evidence, there was a study of the specific traffic in that case. There is no study in this case and the north refused to make a study. Now there is a feature of the Transcontinental case. Hugo L. Black: How long would it take for the Commission to make its study and use it through with the case? Howard J. Trienens: Well, Your Honor, the way I look at it this way. The -- it would be very easy for the Commission to get through with this case correctly. The northern lines wanted an inflation in their divisions. Commission says, “All right, the test is cost of north-south freight traffic.” On this record, and in any record we've seen yet, there is no evidence that as to these items that make up the inflation has any evidence that cost more on the north on this traffic. Now what the Commission ought to do is say “Dismissed, you haven't proved your inflation.” That's easy, dismissed. Hugo L. Black: But I say, how long would it take for them to have a full interview and make the kind of finding which you think should be made? Howard J. Trienens: I didn't find -- I think should be made right now until the northern lines or anybody presents some evidence that the costs are in fact higher on this traffic. The findings ought to be they haven't proved their case and ought to be dismissed. Abe Fortas: So, your direct answer is somewhere between five minutes and 15 years, isn't it? Howard J. Trienens: The lower court recognized, Your Honor that in saying that there wasn't substantial evidence. It didn't mean that the Commission was the captive of the Northern Railroad's failure to present evidence. That the Commission had the right and the power to go out and make any kind of comprehensive cost that it wanted. Now, if it did that, that would take time. But the Commission has no duty to do that. The Commission's duty is to decide the case on the record, and if there's no evidence to support an inflation, their duty is not to give it. Abe Fortas: Well, that didn't quite it, is it? Because Commission's made a finding that the existing divisions are not fair and reasonable. And that finding is not being presented for decision here. The District Court didn't make a judgment on it as I read it, isn't that right? Howard J. Trienens: District Court said that the -- that the -- Abe Fortas: The District Court said the Commission's result was an error in making these adjustments. It did not find that the existing divisions were fair and reasonable, did it? Howard J. Trienens: Well I -- Abe Fortas: Alright, so that the -- Howard J. Trienens: No, I don't think it did either. Abe Fortas: -- the parties here, the northern roads or whoever wants to do it has a right to obtain a Commission determination as to what adjustments would be necessary to make the rates fair and reasonable. So that if the decision of the ICC is set aside here, it will necessarily follow, will it not, that there'll have to be further Commission proceedings. And that those proceedings will be on the track record will be quite lengthy, it's just a fact of life. Howard J. Trienens: I don't agree with that in this situation for this reason. This isn't the case like southern case was 15 years ago, like the Transcontinental case was a couple of years ago, where the divisions were a big scattered mess that everybody agreed were wrong. This is a case where they had found a uniform scale of divisions to fit the uniform rates that are now in existence. If this case is sent back to the Commission, the present order set aside, you don't go back to some chaos that everybody recognize it has to be changed. You go back to the uniform equal partner divisions of rates. Now, if they want to persist, if the northern lines wish to persist in obtaining an inflation, let them start by presenting some evidence that the cost -- Hugo L. Black: You keep saying obtaining inflation. What do you mean by that? Howard J. Trienens: I mean Your Honor that has contrasted with the way it was before this order where we were equal partners. And we each -- Hugo L. Black: You mean if they want to insist on getting more than the south gets? Howard J. Trienens: If they want more than equal share, they ought to prove it. That's right Your Honor. Byron R. White: You see the way this works out probably if they get a dollar you just get $0.50, is that right? Howard J. Trienens: Up until this order. Byron R. White: That's right. And under this order, what is it? Something like 58-42 or something, 58 or? Howard J. Trienens: Well, specifically the way it's worked is that there are two scales, a northern scale and a southern scale. Under this order of the northern scale is 17% higher at 300 miles. You run these scales through -- Byron R. White: How do you get -- Howard J. Trienens: $0.56 and $0.44. 56-44 instead of being equal partners. Byron R. White: Yes. Howard J. Trienens: That's the way it works. Byron R. White: Well I suppose the same finding why the Commission looks for the increased rate with an increased joint rate? Howard J. Trienens: It didn't so indicate. They -- Byron R. White: I mean that's normal (Inaudible). Howard J. Trienens: No, I don't believe so Your Honor. Ability to move the traffic, ability to meet truck and barge competition, revenue needs of the railroads. The cost -- Byron R. White: The cost is -- Howard J. Trienens: Well, they have a very low -- Byron R. White: They thought, for example and said “Right, we are thinking it has to do this.” Howard J. Trienens: Well they used to 15 years ago, yes sir. But you can read these last few rate cases, and I'm just not able to recite as to what they based it on it, except the revenue needs of the railroads not cost as -- not -- certainly not cost of specific 6% of the traffic. Byron R. White: How it represents -- certainly some of the part of the revenue needs that the -- or -- Howard J. Trienens: Well, some part of it yes. But of course the northern revenue needs are dominated by the 94% of their freight traffic that's not this segment. So it's a larger more commingle we'd miss. Now, I'd like to turn to the last illustration. And I think all these are merely illustrations of the use of these averages to inject something into the cost that really have nothing to do with cost of north-south freight traffic. And this is this passenger deficit problem. Now it's -- in the Transcontinental case, this Court noted in an argument in which the western worlds were urging that their passenger deficits be reflected. This Commission -- this Court said “While the Commission has sometimes acted to offset passenger deficits and freight rate cases, the issues are quite different. When in a division's case, it is argued that carriers in one part of the country should subsidize the passenger operations of carriers elsewhere.” The Court didn't get into that matter in the prior case because the east was out of it, and they held that they -- it should really dropped out of the case. Now here, the Commission has included the total passenger deficits, and I think we're all entitled to ask how come and why. Should any passenger deficits be included when we're talking about north-south freight cost? Well the southern lines theory and this was brought out earlier. The southern lines theory is that there are common costs. Taken again as a bridge across the 14th St.-- right next to the 14th St. Bridge is a railroad bridge, and it's got be painted. It's got to be repaired and it's used by passenger trains and it's used by freight trains. And if we just cut out all the passenger trains, we're still going to have to paint it and we're still going to repair it. It's a common cost and it's proper if the passenger revenues can't pay for the pay. It's proper to charge that common cost against the freight. Now, I don't quarrel with the Commission on that concept. Commission adopted that concept. They said that common cost should be reflected. I don't quarrel that. The northern lines, and indeed Commission counsel have some quarrels with that in their brief. They have quite a number of theories of how this passenger deficit ought to be treated. They were not accepted by the Commission and many of them are inconsistent with what the Commission did. What the Commission did was say that where there are common costs that must be incurred to provide freight service, such costs are properly chargeable to freight service, so far so good. The problem here is that these commuter lines up north contain many items of cost, many items of cost. Tracks, yards, stations, separate facilities that can be considered solely related to suburban service, solely and exclusively related to suburban passenger service. Those aren't my words. Those are the findings of the Commission in this case. Byron R. White: Just about a generalization that -- Howard J. Trienens: Many individual items of suburban service can be considered solely related as suburban. Abe Fortas: Well the same thing is true of intercity passenger cars, isn't it? The fact of the matter is that isn't that southern roads have cery large cost for intercity passenger servicing and deficits. And the northern roads have great cost and deficits with respect to commuter service. And the impact of those two things held very differently. But if you're going to talk about segregating common cost and then making an allocation, are you really arguing for a difference between passenger cost on the one hand and commuter cost on the other hand, or are you -- how can you do that? Except on the basis that it's better for the south to do it on that basis, but logically you can't argue that way, can you? Howard J. Trienens: When this -- Abe Fortas: Don't you have to say that the right thing to do to make your argument, right thing to do is to take your common cost as between passenger or commuter and -- on the one hand, and freight on the other hand and then allocate it. Howard J. Trienens: That's right. That's exactly -- Abe Fortas: And as between freight on the one hand and passenger plus commuter on the other hand. Howard J. Trienens: That's exactly what we argue. Exactly what we argued and what we did was go in and say that there is a large body of cost that aren't common and shouldn't be allocated, because this large body of cost are solely related to these northern commuters. They have nothing to do with the cost of north-south freight traffic. We got our evidence on that from a presentation of the Northern Railroads. Mr. Justice Black asked the question “How do you find our these things?” We got from a presentation of the Northern Railroads to Congress at the time that they were going to Congress as they still are and saying that local communities ought to support this commuter service. Byron R. White: Mr. Trienens, didn't the Commission say that even if there are a lot of cost in the commuter service that are not common but solely related to commuter service, nevertheless they should be included and allocated? Howard J. Trienens: That isn't the way I read it. They say because the commuter deficit includes common cost which should be incurred to provide -- which must be incurred to provide freight service. Such costs are properly chartered. Byron R. White: Well, but they also conceded there were some solely related costs? Howard J. Trienens: That's right. Byron R. White: But they nevertheless included them. Howard J. Trienens: Yes, and that's the point -- exactly the point on which the District Court said “You've given no reason of why you should flip in the solely related cost.” Yet they did. Now the other side of this question is, well if that so, why don't you throw out any solely related passenger cost in the south? Now that's exactly what we suggested to the Commission when this point was first made by the examiner. We said, “If you think there are solely related costs in the south, and we can mention those for you, throw them both out. Under your standard of the cost of freight traffic, throw them both out.” And we would still -- the south would still be better off from the way you did it. And the Commission never even mentioned that exception, and the northern lines keep saying “Well, the south has all these.” Sure we do. Sure it ought to be out. If south and north and ought to be out in the south. And the Commission should exclude them in both territories. We don't question that. We've urged it. We've gotten brushed off from that one. Now, I've given two illustrations. I've given the border interchange situation. I've given the commuter. I've briefly addressed myself to this car cost feature. All these items are essentially the same situation. It's an inclusion in north-south freight cost of things that have not been shown to have anything to do with this inflation. I want to simply summarize by saying that the District Court did exactly what the Administrative Procedure Act required it do. Reviewed the Commission's findings and it reviewed the record to determine whether this inflation which is granted the north was supported by reason finding and substantial evidence. Without invading in any way the province of the Commission to set the policy standards upon which division should be made. The court below found as it had to find on this record that the inflation was not supported by substantial evidence relating the higher averages to this source -- Abe Fortas: Excuse me sir. This is what bothered me. It's on page 31 in your brief. This is what I recall. You say it is generally agreed that the intercity passenger deficits must be considered as part of the cost of providing freight service. For such deficits are usually the result of cost allocated in the passenger operations from common facilities, which must be maintained in order to provide freight service. Howard J. Trienens: Yes sir. Abe Fortas: Suburban passenger deficits however, required another matter. Now do I understand what you have just said in the colloquy with me to supersede this statement and that you do agree that the solely -- that the cost solely allocable to passenger -- intercity passenger operations on the one hand and to commuter operations on the other hand, should be treated the same way and they should both be eliminated? Howard J. Trienens: Yes sir. And I don't regard this as superseding it because the testimony I refer to says that the great bulk of the passenger deficit is -- Abe Fortas: Well I haven't checked the testimony. I'm checking what you said in your brief. Howard J. Trienens: I'm saying that to the extent that you have to qualify this by the existence of solely related deficits. To that extent, they ought to go out in both territories. I noted that the District Court had not intruded in any way on the policy decisions of the Commission. It's not like the barge railing at Mole case last year where a District Court had decided that it, the District Court would decide what the standard ought to be. Here the Commission fixed the standard. The District Court did not touch it at all. It simply found whether there was substantial evidence to support the Commission's decision under that standard. Now we believe that the District Court having performed its duty as required by the Administrative Procedure Act that its judgment remanding the case of the Commission should be affirmed. Thank you sir. Edward A. Kaier: May it please the Court. Earl Warren: Mr. Kaier. Edward A. Kaier: Mr. Trienens agreed that the Form A cost formula is a good cost formula. The territorial cost as developed by that cost formula were applied to the precise elements of service incurred in performing this north-south traffic as revealed by the southern lines cost study. The southern lines know where to look for situations in which territorial average costs may not proper -- accurately reflect the cost of this service. They looked for those places. They presented to the Commission their reasons why they thought that territorial average cost were not good. The Commission minutely examined each one of those reasons in appendix B to its report, and showed that these adjustments of southern lines were based upon assumptions and wholly invalid evidence. And they showed why they thought the territorial average cost were good. I commend to Your Honors a reading of Section (b) to the Commission's report. And I believe you will be satisfied about that. Mr. Trienens talked about car costs. They said that they wanted to get the cost closer to the north-south traffic. And what do you suppose they offered in substitution for the northern and southern lines cost, on car cost? They used the average car cost of all the railroads in the United States. And the Commission minutely examined that and said no that that wasn't representative. That the northern and southern lines own cost were more representative of the car cost than the U.S.car cost. The southern line said, “The car cost of the northern and southern lines are not representative here because mostly in this service boxcars are use, whereas the northern and southern lines have more open hopper cars.” The Commission analyzed that, and it found that it cost more to own and maintain open hoppers than boxcars. So to that extent, the territorial cost would over -- would be an overstatement, rather than an understatement. Now, if Your Honors please, they also said that there was a difference in utilization. The Commission analyzed that and found that that wasn't a factor. The Commission said, “It is known what the facts -- what factors caused the northern lines to have higher car cost than southern.” In the first place, northern lines have more -- have higher wages, pay higher wage rates than southern lines. They said the northern lines pay higher taxes than southern lines and that overall there is a greater utilization in the south than in the north. I think we pretty adequately covered that on our brief. Your Honors, in the Transcontinental case -- Hugo L. Black: Is it true that the railroad rates in the north are higher than those in the south for the regular employees? Edward A. Kaier: If Your Honor please -- Hugo L. Black: -- to the unions? Edward A. Kaier: Let me answer by reference to a decision of the Commission. I wanted to get to that point. Our friends on the other side have said that the rates are equal. They're talking only about class rates. Class rates boom only 1% of the traffic. The Commission said in the cases cited on page 14 of our reply brief, “Rate levels within the north have become higher than within the south.” And they said that in a case back in '56, and we've shown that since that time in general freight rate increase cases, the Commission has allowed even greater increases within the north and from and to the north that -- Hugo L. Black: The north in weight, as I had an idea that the rates of the employees that belong to the general and the national union are the same, is that it? Edward A. Kaier: No Your Honor. The increases are generally the same, but they are imposed on higher base wages than the south. I submit Your Honors that this case really could be controlled by the CNNW case. To all intents and purposes, the questions on these costs issues are the same. Thank you. Earl Warren: I think we'll adjourn now.

Warren E. Burger: We will hear arguments next in 76-5382 Darden against Florida. Mr. Kalmus you may proceed when you are ready. Geoffrey M. Kalmus: Mr. Chief Justice, may it please court. My name is Geoffrey Kalmus; I am a partner in a private firm in New York City. I am here representing Willie Jasper Darden. We ask in this case that the court set aside Mr. Darden’s conviction the first-degree murder and his sentence to death cause of gross prosecutorial misconduct during summation. The court has not heard afore in reviewing the state conviction, a held to the prosecutors closing argument, so far transcended the bounds of legitimacy and decency as to constituted deprivation of a dependence Fourteen Amendment rights. Nonetheless it did recognize and Justice Rehnquist’s opinion in DeCristoforo, that prosecution is remarks to the jury, may so infect to trial with unfairness as to make the resulting conviction a denial of due process. Moreover, it is ruled in many other contexts that circumstances of a criminal trial or other sorts of misconduct during it. A may so impair the fundamental integrity of the jury’s determination and deliberations as to constituted denial of due process. We ask therefore in this case that the court apply settle doctrine to vacate a conviction and a jury recommended death sentence infected by willful righteous prosecutorial misconduct. As we see it, if ever a prosecutor’s misconduct in summation can constitute a denial of a fair trial this is such case. I would like first to focus a little bit on the evidence because it is crucial here, it is crucial if the court understand that this was not a case in which the evidence was overwhelming, this was a case in which the jury might rationally and reasonably go either way at the end of the evidence. We think the case was doubtful, we think that the evidence plainly shows that not withstanding the respondents used to the contrary. Now what was the evidence here? Speaker: What stage of the argument was the challenger objection made for the argument? Geoffrey M. Kalmus: Your honor there was only one objection taken in the course of the prosecutor McDaniel’s argument and that was rather far along in it and at that point defense counsel stood up and objected to one of McDaniel’s statements that he wished the defendant had been maimed, that his head has been blown off or he had been cut his own throat of which there were a good many such statements. That was the only objection taken the trial judge simply without any discussion said overruled, proceed Mr. McDaniel. Returning to the question of the evidence as it stood at the close of the defense case, there were only three significant items of evidence supporting the prosecutions claimed that Mr. Darden had committed this robbery murder of the man name Terman. Two of the items of evidence were identifications, those by Mrs. Terman who was working in the furniture store when the assailant came in and that of a young man name Mr. Arnold the 16 year old boy who kind of happened in the backdoor while the crime was in progress and was also shot and injured by the assailant. Both of those identifications were shortly challenged at the trial, and both of them I think would put insubstantial doubt. That subject was one in which we dealt at lenghts in our brief because at the time we submitted our brief the identification issue was also one upon which the court had granted cert, I may recall that in early January, so it was limited to the first question presented that at the prosecutorial misconduct. One can judge Mrs. Terman’s identification of the assailant in a few fashions. Number one, she gave a description to the Deputy Sherif right after the crime that bore no resemblance to the petitioner. Number two, she described the assailant is wearing clothing that different markedly from that what petitioner was described is wearing by somebody who had seen him at the seen him scene of his automobile accident which according to the prosecution happened as he was fleeing the crime. Number three, Mrs. Terman never was asked to or in fact identify the petitioner of any kind of a formal line up be it photo or live. Number four, her only pretrial identification in this came into evidence on the direct testimony at trial occurred at the preliminary hearing when the petitioner was the only black man in the court room seated with counsel of the defense table and was -- Mrs. Thurman was asked to point him out and she did and one can judge the reliability of that identification by what she said when she was asked by the court in effect are you sure? And she responded why when I walked into the court room and was seated in the back and I saw him from the rear I knew this was the man who had killed my husband, this was somebody she had seen for a few minutes during the robbery and she claimed of knowing him since she walked in from his back. Mr. Arnold’s identification, this is the 16 year old boy, he was subject to substantial infirmity as well. First of all he testified a trial that he had seen the assailant for only 20 to 25 seconds and in part of that time he was looking down at Mr. Terman who had been shot and laid in the doorway and was trying to give aid to him. Number two, he said his mind went blank during that 20-25 seconds. Number three, he was never, the subject of a lying up be it photo or otherwise. He did while in the hospital identify the petitioner’s photo in the group shown to him but his testimony was at the trial that four or the six photos shown to him which looked nothing like the petitioner and that the one that he did see and identify lo and behold petitioner’s name across it Darden across the chest and the date 09/09/73 of the date of the crime, and Mr. Arnold testified that he had read about the crime before he was asked to make this photo identification. The final piece of evidence that the state had that amounted to anything was a gun and the gun was indisputably of the caliber used in the crime a 38 and it was found some 40 feet from the highway and a roughly the same distance from the place at which the petitioner had his automobile accident, no dispute that he had the accident a few miles from the scene of the crime at around the same time and that gun was found a day later, not very far from the automobile accident and not very far from the highway and indeed there was no dispute that anybody might tossed it out passing the car. So, that was the states case as the case went to the jury. On the defendant side the defendant had taken the stand in his own behalf, he was the only witness in his own behalf. He had told what I believe the record demonstrates to be a coherent and plausible story not in consistent with the prosecution story but to the identifications, not in itself inherently and implausible story and that was the case for the defense. So, in sum the case as it reached the summations stage was a close one and we think the prosecution summation itself impart demonstrates that. I think one can ask rhetorical question quite appropriately, would any sensible prosecutor have carried on when McDaniel did hear if he though he had an easy winner. Is this the kind of thing that any experience and this was not experience prosecutor would do, if he was comfortable with his case and we think the answer to that is an obvious one and did McDaniel’s conduct itself demonstrates that he thought his case was shaky one. As to the merits of the summation the demerits of the summation, the character of the McDaniel’s conduct I do not think the one need past beyond the brief of the respondent and the opinion of the Supreme Court of Florida to know how it should be characterized. The respondent’s brief what is it called the summation by McDaniel here. Utterly irrelevant is one phrase, without rational relationships that question of quilt or innocence is a second, inflammatory and irrelevancy state says, improper appeals to the jury’s emotion. Finally, the ravings of the prosecution that is the state’s characterization, not ours of the summation by McDaniel. I think if you read the state’s brief, it is only real argument in the defense of the summation depart from the procedural points that has raised is that the summation was so bad that no sensible juries would have paid any attention to anything that McDaniel said. Now the majority in the Supreme Court of Florida this was the conviction and death sentence were affirmed by 5-to-2. The majority opinion also recognized we think that the closing argument was not improper one. What have they said? They said although the prosecutions remarks under ordinary circumstances would constitute a violation of the code of professional responsibility. In this particular case they amounted to harmless era when the totality of the record is considered. Again the language used by the prosecution Justice Boyd wrote for the majority would possibly have been reversal error if it had been used regarding a less heinous set of crimes. Illogically however the Supreme Court of Florida said this crime was such a shocking one that all of this inflammatory irrelevant nonsense was proper. Speaker: They say proper or they said that it would not have any greater impact on than the evidence itself. Geoffrey M. Kalmus: I do not think they quite said that Mr. Chief Justice. Speaker: They surely did not say it was proper, you certainly misspoke to yourself there considerably. Geoffrey M. Kalmus: I think your comment certainly a fair one your honor. Speaker: Mr. Kalmus the majority of the Supreme Court Florida I think that did disagree with you as to the closeness of the evidence and that second last paragraph at Page 163 of your Appendix. They say that there was a fair pretty much of an overwhelming. Geoffrey M. Kalmus: I quite agree with you, they do say that I have read the record a few times and have tried to summarize it as we see the case as balancing it on the both sides and we do not read at that way at all and I might say that in terms of our description of the evidence as it went to the jury, the states brief does not disagree with this in any substantial way, the state takes the same facts and says we think those were overwhelming but they are not far linked at all the presentation of the facts and I agree. Speaker: Mr. Kalmus, Florida Supreme Court said that it did not approve with prosecutors argument but what it found, I read it that it was the harmless era of the overwhelming character of the evidence. Geoffrey M. Kalmus: They did use the phrase amounted to harmless this ever, era at one point in their opinion. If that is quite true. Speaker: You think it would have been stronger, if they used it more than once. Geoffrey M. Kalmus: No, I think it would have been stronger if they have said more accurately this kind of conduct cannot amount to harmless era, that there is some conduct so outrageous, willful for conduct, no questions about that state can see it, that this goes so far beyond the bounds that it cannot be harmless era. We cannot say that the jury was either so smart that as to disregarded entirely or so detached as to ignore the many statements from the prosecutor that grew into issue all kinds of matters having nothing to do with the quilt or innocence of the defendant. Speaker: Would you not agree that a completely dispassionate objective description of what had taken place; the actions of the petitioner would have in itself amounted to a shocking kind of statement just saying exactly what can happen. Geoffrey M. Kalmus: I agree Mr. Chief Justice that the crime was a shocking one and the conduct of the assailant… Speaker: That is not quite my question; the question is if you objectively, uncommonly, and quietly describe precisely what had happened would that not shock the listener? Geoffrey M. Kalmus: I think that it might have that effect Mr. Chief Justice but it would be in effect based upon the evidence. Our quarrel here is that the prosecution summation for Mr. McDaniel summation had nothing whatever to do with the evidence and the state does not quarrel with that brief, they say yes it is quite right, most of what he said had nothing to do with the evidence. Speaker: But at some part the defense even talked about the animal that committed the crime. Geoffrey M. Kalmus: Justice Marshall. Speaker: So, I think you want to separate the two. Geoffrey M. Kalmus: At one point, one of the defense counsel in summation and there were two one each sides summing up, said that the assailant would do these kinds of acts would be an animal. Of course he did not attach that label to the petitioner who he said had not committed the act which was in accordance to the petitioner’s testimony. The prosecution picked up on that and… Speaker: You are very quickly about that are you? Geoffrey M. Kalmus: No Your Honor, that is one of the many items in the summation which we have derelegated to footnote somewhere in our brief. We complain much more rigorously about the some of the other conduct in summation. I think just to get a little of the flavor of it, I do not think you can get entirely without reading summation in full text. If one can get a sense of it from just a few quotations from one of McDaniel’s themes, it is the one that he began with, it is one that he ended with and it is threaded throughout his argument. As far as I am concerned he said, there should be another defendant in this court room that is the division of corrections, the prisons, that had let him out on a weekend for a while, that was the reason the issue came up. As far as I am concerned he went on, this animal was on the public for one reason because of the division of corrections turned him lose, let him out, lets him on the public. Can not we expect them to stay in prison when they go there, can not we expect them to stay looked up once they go there, do we know that they are going to be out on the public with guns drinking? Mr. Terman is dead because that are unknown defendant we do not have in the court room allowed, he is criminally negligent. Many went on, tie us into it significant to the case and he said the only way I know that he is not going to get out on the public is to put him to death, convict him first degree-murder. It is the only way I know, it is the only way I can be sure of it, it is the only way that anybody can be sure of it now because… Speaker: Is that by itself an improper argument when you are dealing with a statute that constitutionally authorizes the imposition of a death penalty for a prosecutor to say, the only way you can be sure this man will not repeat this kind of offence is to impose the death penalty. Geoffrey M. Kalmus: This was in the punishment determining stage of the trial Your Honor, this was in the guilt determining stage and I think… Speaker: You would say it was not wrong in the punishment determining stage but it is wrong in the guilt. Geoffrey M. Kalmus: I am not certain that it would be appropriate in the punishment determining stage, but I am confident it is not appropriate when the court has not reached that stage of the case and the passage that I have partially quoted goes on in much of the same theme. Again if one looks at some of these other themes, he talks about the defendant and his McDaniel’s wish that the defendant had been maimed or killed or shot themselves, or blown his head off over and over again he comes back to that theme. Obviously for no purpose then to rouse up the jury to get them to decide this case without regard to the evidence. Again there is the theme of putting the prosecutor’s credibility itself in issue, something that every court for long, long many, many years has condemned and yet it was done here over and over again by the prosecution, both by prosecutor’s wife and by prosecutor McDaniel saying, I know sure as I am standing here that this man is guilty. McDaniel again saying, why if I were in the petitioner shoes I would have lied like till my teeth out also, remarked over and over again of that kind. I think one can fairly conclude only that the prosecution’s misconduct was willful the state does not dispute that, and I think that is one of the key reasons here why there must be a reversal. I would like to turn to some comparison of this situation with that in DeCristoforo in which Mr. Justice Rehnquist said a number of guidelines for dealing with this kind of an issue. Before I do that I would like to ask whether there are any questions that the court would like to put with respect to the procedural points that the state has raised and what we have dealt in our reply brief. Turning to the merits than and the comparison with DeCristoforo, there were I think three criteria that the Court thought crucial in DeCristoforo, crucial there in finding that there was no denial of due process through with the prosecutors statement. There you will remember what court was concerned with was a one sentence rather ambiguous mark that according to the First Circuit at least the majority in the First Circuit had indicated to the jury perhaps that the defendant had sought to plead guilty to some lesser crime in first-degree murder and the prosecution had turned him down. So, it was semi-implication of guilt and it was a single sentence which this court found rather uncertain and ambiguous in its meaning and of little probable impact in the context of the entire case. Three criteria that Mr. Justice Rehnquist spoke about, one was how larger role did the prosecutor's misconduct if one may call that in DeCristoforo occupy and in the context to the whole summation indeed in the context of the trial and the answer there was it was one sentence out of what the court characterizes a lengthy summation. Here one has the 35 type written pages of summation by prosecutor McDaniel and I had try to measure it and I think you come down around 10-12 pages if you cut out the you irrelevancies, the ravings, the carryings on about all crimes and murders that had nothing to do with the case. Secondly, Mr. Justice Rehnquist focused in DeCristoforo, on whether the prosecution’s conduct was willful or was it a mistaken in the heat of the argument. There it was fair to infer from the fact that a single sentence was involved and the judges in the Massachusetts Supreme Court, Federal District Court, the Courts of Appeals and here all disagreed about what that one sentence probably conveyed to the jury, it was fair that conclude that misstatement was accidental or just poor phrasing by the prosecutor in the context of something that came out without prior planning. Our case no doubt about it, the state does not contest it. This was a calculated willful effort to rouse up to jury to distract them from the evidence to tell them that what I am telling you Mr. McDaniel was saying is relevant to your consideration. Speaker: You do not mean that in its full sweep what you just said that, supposing the prosecutor in the midst of a 30 minutes summary goes off on a 10 minute total irrelevancy about how the weather is been in the last few days, but it’s not at all prejudicial to the defendant, do not you have to combine the two to make your argument. Geoffrey M. Kalmus: I agree Mr. Justice Rehnquist that if it had been of such palpable irrelevancy as what a nice weather we have been having, then one would say without any hesitation that maybe prosecutor is little crazy, but it had nothing to do with the case and the juries could not have been move by it or rational juries would not have been move by it. Our case does not fit that mould at all. The comments, the many, many comments that McDaniel were not off to one side, they were cut through from the beginning to the end, number one. Number two, that they were not of such of palpable irrelevance that sensible juries unsophisticated but people of average intelligence would say, gee obviously that has got nothing to do with this case, I am going to disregard it, they would not say that to themselves about the kinds of things McDaniel was going on about. They would say, as this court said way back in Berger v. United States, Justice Sutherland’s opinion that the prosecutor comes here with not merely official backing, but presumably to do justice and therefore I think juries would say themselves, we can take it, the things that he says have some relevance to our consideration of this man guilt or innocence. I think that if you read these remarks in context, one must suppose, one can avoid supposing that any average group of juries would have so understood the remarks and would have taken them into account in deciding whatever they decide. Speaker: If you have just read, the prosecutor had just got the transcripts of the testimony, prosecution’s testimony of the survivors and in effect read that to the jury, would you be complaining about his the outrageous character of his argument? Geoffrey M. Kalmus: I do not think that I can complain if the prosecution had confined itself to the evidence that evidence in this case was terrible and the evidence was a legitimate consideration for the jury in deciding whether to convict or to quit. I think when the prosecutor willfully departed into matters that were obviously not evidence, were not related to the evidence. That then indeed there is a right to complain and there is a right to have a trial free of that emotional kind of (Inaudible). I think just enclosing that, Justice Stevens made the point just last week in gardener and the statement was quoted this morning to the effect that community as well as the defendant are entitled to have a trial conducted in a intelligent equitable non-emotional fashion and to have a jury decide the case without the interjection of improper emotional factors. Thank you. Speaker: Very well Mr. Kalmus, Mr. Prospect. Richard W. Prospect: Mr. Chief Justice it may please the court. My name is Richard Prospect and I am appearing here on behalf of the respondent State of Florida. I have just sat here for the last 15 minutes and listened to the number of times with which Mr. Kalmus has attributed the state, the respondent is caused with admitting, conceiving and otherwise not contesting the fact that the statements that appear in this record that were arguing the closing argument of the state’s case are irrelevant, outrageous, ridiculous and otherwise having no place in any trial in our state or any other. I replied to him by saying what else could I do, the statements are there, I am not about to tell the court that they are not, I am not about to tell the court that it means something other than the plain meaning of their words are. My question is or my position is, of those portions other remarks that absolutely are irrelevant to any business at hand there is nothing that ca not be said except were they prejudicial to this defendant. The other portions that were more or less listed in the petitioners dissection of the argument are at least in part in response to certain things that the jury heard first by defense counsel. Now the mention about, the only way I know this man is not going to get back out on the public is to sentence him to death. Now, that came in response to something defense counsel started off in the first argument the jury heard. If you will read that you will find that, Mr. Maloney the first defense counsel stated that ladies and gentlemen on the evidence the state has presented today, they are asking you to kill my client. Now, McDaniel quickly corrected that misimpression, he very clearly and substantially told the jury that ladies and gentlemen we are not here to do that right now, we are here to determine guilt or innocence and nothing else. We have a second stage of the proceeding in which I will ask for the death penalty and I'm going to ask for it because it is the only way I know to keep this man off the street. Now that is something that we can justify because it is not response to what occur. The other matter – let us not nitpick over any of them, let’s not reread them or anything else, I know they are there, you know they are there. Let us decide whether they deprive this man of a fair trial. Now, anybody and probably everybody who is familiar with his record will quickly agree that these arguments had no place there. Everybody except defense counsel, it is not until the last page, as it appears in the appendix, does that objection occur. Why is this, they were either asleep, they did not think anything was wrong with the remarks or and I believe this comes into the rationale of the Estelle and Francis case. They thought perhaps we just got reversible error. Does it take a legal wizard to see there or to sit there and to listen to man take off and in a rent and know that something is not right. Speaker: Can you conceive of a lawyer not objecting. Richard W. Prospect: No I cannot. Speaker: Defense can also. Richard W. Prospect: No I cannot. Speaker: Or can you… Richard W. Prospect: Well I can, I can if as I was about to say, if they think they have got reversible era. Because that’s on the back side upfront they have got the shot at the verdict. Speaker: You did not make an objection that an average lawyer would? Why is it that, petitioner doesn’t the raise the question with effect of assistance to counsel that’s what I don’t, and he doesn’t... Richard W. Prospect: Perhaps Mr. Kalmus can answer that when he gets back, I don’t know. Speaker: But he doesn’t raised. Richard W. Prospect: Well is it ineffective. If he doesn’t object thinking that he got to shot the verdict. I mean if he is right today when he says that the evidence was close I do not happen to agree, but if is right and you got a close case you got to shot at that verdict because you could always walk out that day but if you are wrong you have got guilt in there. Speaker: I just do not… Richard W. Prospect: Exactly that is why I think the rationale of Francis and Estelle applies. If something is occurring that you don’t like get on your feet and say so. Speaker: Mr. Prospect your opponent also made the point in objection during the end of the argument but there wasn’t objection on the second page of the argument Page 122. Of course it is to an argument not being supported by the evidence in the record but that is the substance of much of the criticism there. Richard W. Prospect: Well no it is really a very pointed and specific objection. Speaker: He says now I object there is been no testimony of this. Richard W. Prospect: Exactly, I am sorry I believe Mr. Darden. Speaker: That is on the second page of the argument. So he did start to object right away. Richard W. Prospect: But not on the basis of being anything being inflammatory or prejudicial. Apparently McDaniel misstated something, something of no consequence and Mr. Goodwill says there is been no testimony and McDaniel replies I'm sorry I believe Mr. Darden testified to it. I do not believe so says Goodwill and the court reinstructs the jury. Ladies and gentlemen it is recollection of the evidence is what is important. Now if something that trivial… Speaker: This kind of indicated his attitude toward the objection, no he was very sympathetic to right at the outset. Richard W. Prospect: I beg your pardon sir. Speaker: The Court’s disposition of the objection was well Juries heard the objection, it can decide for itself. Richard W. Prospect: Well I do not think it indicates any prejudice towards the defendant, it is the fact. Speaker: That’s the way the judge handle the second objection. Richard W. Prospect: No, that second objection as I pointed out in brief is really nothing more that I request to the man stick to what evidence he had. Now, apparently got to remember you want to go to the beginning of things. Go to the very beginning and we see that Mr. Maloney says, ladies and gentlemen we have been here five days, we got a long trial and after or in response for the statement, the only thing he has not done that I know of his cut his throat. Alright Maloney gets on his feet and says, Your Honor it is about the fifth time that he has come and that he wish someone would shoot this man or that he would kill himself. I wish the court would instruct Mr. McDaniel and stick with what little evidence he has and then is perhaps and less than professional response McDaniel comes back with, you don’t have any evidence yourself Mr. Maloney. Now, we can’t get the feel of this on the printed page but apparently the court was fed up with that and replied alright gentleman proceed with your argument. Speaker: The judge apparently wasn’t defended by the argument either, he overruled that objection too. He said go ahead with your argument. Richard W. Prospect: Well he overruled a request for an instruction that McDaniel stick with what little evidence he has, that is the only form of a quote on objection I quote. He did not say I object Your Honor on the basis that, it is prejudicial inflammatory or unconstitutional and I want to mistrial or I want at least a curative instruction. Have he done that, he would have given the trial court the opportunity to rectify any error that was happening. Speaker: Your view is the trial judge would not recognize there was anything improper about this argument without the counsel explaining it to him. Richard W. Prospect: No I'm not going to say he could not recognize it, I am sure he did. Speaker: Than the objection did not prompt any curative instruction at all. Well, wouldn’t you have thought the trial judge would have had some -- Richard W. Prospect: He did not asked for it. Speaker: But you are saying that, that the judge had to have that explain to him and the judge didn’t realize it was necessary? Richard W. Prospect: No I think there are two different things, what the judge realized and what he was asked to do. Speaker: Do we have any and there is also discussion after record about in Page 127, Mrs. Goodwill said in one of the examinations I believe, Mrs. Hill (ph) probably was another interruption there. It seems to me that Perhaps three interruptions of closing the argument, counsel during the argument. Richard W. Prospect: I cannot and do not read it that way, so I don’t know what that indicates. That only indicates to me, that McDaniel stopped his argument, there was a discussion of the record between whom we do not know and he continued. Speaker: Is it (Inaudible) in Florida when one objects the closing argument all is to do so already in the presence of the jury or is it sometimes done that you try to have a sidebar and not make such a fuss, it is rather rude to interrupt counsels you know and you try to avoid that sort of things at times. Richard W. Prospect: I would say that based on my experience, objections are made in front of the jury and generally I really do not recall the necessity for having them taken out of the court room in order to discuss something. I believe the objection and whatever the grounds that it is based on is here before the jury. Speaker: you would not think it is fair to infer and I just -- the discussion of the record on page 127 might have related to the content of the closing argument. Richard W. Prospect: No sir, it may just as well have related to a conference between McDaniel and his co-counselors as to what he was going to say next. I mean just as you show that one way or the other. Now we have taken into position of course that it is one thing for a prosecuting attorney to prejudice a defended by as closing arguments. There is another thing to inflame them and it is quite another thing but the same to go out side the evidence when he does the other two, that is why we propose that three full test and we have submitted it to the court for the courts consideration in determining proper guidelines to let all concerned know what it is that is proper and what is not proper closing argument at least on behalf of a prosecutor. We do not seem to have that restriction on defense. Now, as we stated, without an objection there was no chance to straighten out the jury. Now, in a nutshell and in a paragraph in the brief we stated that, that petitioner has claimed that by engaging all this irrelevant matter and this ridiculous argument the jury and we referred them to as in his brief and in reply as rural, coming from rural Florida, is implied that they were so malleable and receptive to this type of argument that they automatically more or less and necessarily went back in their jury room and based their verdict on what McDaniel said. They disregard of the evidence and they were so moved by the man’s tirades that they came in with guilty based on that. However he fails to mention either today or in reply, the fact that Goodwill got up after all of this nonsense. He says ladies and gentlemen, “We are not here to listen to this man pound the table, to yell to run around and throw papers. Do not let him embarrass you into a verdict. You can convict him on what that man says and by the same token you can not equate them on what I say. We are only to help you.” That’s what the judge told them in the very beginning. He neutralizes any effect and I dispute, that these people were so receptive to being improperly influenced. Now, I personally take dispute with the rural Floridian aspect of this case, that has appeared twice but it wasn’t mention today, but the none the less it was not to reply brief. The case was trial in Citrus county Florida. It is not like Jacksonville or Miami. Apparently petitioners of the opinion that anybody who comes from that area and who would sit on the jury in a murder case, would be the rural type. Now to me rural means farms and our country and it is very interesting because we Floridians who are from that state no one thing and that is there are very few natives. Most of us are transplanted. If we look at the jury selection on the whole. Speaker: Now, what is this rural area in Florida? Richard W. Prospect: Citrus County Florida. Speaker: And the town? Richard W. Prospect: Crystal River is the closet to any sides, very pretty but not large. So, if we look at the jury selection as a whole and we examine the jurist who sat, we see that that Mrs. Massie is a native of Ohio. Her husband is retired army. Mr. Dormany has been in Crystal River since 1971 and had jury service in Georgia. Mr. Karhof is from New Jersey. He has been in Florida for two years. Mr. Schneider is from Illinois. He lived in Florida for six years. Mrs. Lucker had been in Florida since 1968. She was the wife of retired aviation inspector. Mr. Parker has been in the area for three years. He is a Nuclear Operator, Florida Power Corporation. Mr. Emback has been in Citrus County since 1970, Shift Supervisor for the Nuclear Plant at Ford Power. Mr. Hudson maybe a native, he doesn’t say. All that his questioning reveals that, he works as an construction labor. Mr. Mulroy is someone perhaps more to petitioner’s liking. She happens come from Queens, New York City. Speaker: (Inaudible) Richard W. Prospect: Exactly sir. Her husband was a 30 year F.B.I. Regional Director before he retired and he lived in as many as 14 different places from Nebraska, this city here today, Virginia and West Chester. I believe that either in state of New York or Connecticut, I am not sure. Mr. Pettilat (ph) is a retired Firemen from Sarasota, Florida. He has lived in Citrus County since 1971. We have Mrs. Hann, H-A-N-N who lives in Crystal River but she was a retired Supervisor from the security of First National Bank Los Angeles, California. Finally Mr. Wall nine years with them living in Citrus County with the County Road Department Maintenance Crew. So, we have got two people who maybe natives, who may possibly represent rural people from rural Florida whatever that means. We look at the other people who were not selected for the jury and we have everyone coming -- we have people coming everywhere from California to New Hampshire. We have a Marine biologist from Texas, Indiana, Orlando. A school teacher from Orlando from Indiana and two other people who have been in the area from five to two years. So we simply just don’t have whatever is supposed to mean by a rural jury. I think that jury and its composition and its possible effect, the effect of the argument on this jury has to be considered very closely tied with the necessity and the rationale behind an objection. If these people are going to be swayed then we have got to stop it as soon as it begins. But if they are not then, they can be rehabilitated by what counsel said in his response in his rebutting closing argument or he repeated, listen ladies and gentlemen only to the evidence forget this wild man over here, we are not here to do anything by decide guilt or innocence and we of course concluded our discussion of the jury with based on this profile. Now this is just only reflects the questions and answers which would indicate where the people and from and what they do. Now this doesn’t reflect their responses to other questions. Standard jury questions which are asked in all cases relative to predisposition to guilt innocence, notoriety of the case and so forth. You will see some very intelligent answers especially those relating to Weatherspoon, you will see some very intelligent people. We submit that these people were sophisticated enough to know that when McDaniel took off that is all he was doing, taking off and it was perhaps – they viewed him with legal egg on his face, if that’s possible phrase to use. We just don’t think that they were persuaded to rush to judgment, put that verdict as guilty and comeback out and say, we were based on our or being inflamed, we reacted from our heart and not our head. I just do not believe that, and I have got an idea that they did not believe it either or else they would have objected and they would have at least gotten up there and said, Your Honor would you please tell this man or I object on the grounds of this, let us stop it, but perhaps they did try to take a shot of the verdict knowing that they have reversible error because you got to remember is not it always good if you are on the defense side to get a new trial especially in a capital case. Now if they were convinced of reversible error they know they have got to go Florida Supreme Court, that court hears was capital cases. It takes time; we conceivably could have had a reversal occur, have to try this man within five years or more from the offense. The second trial is always fine, where you got the possibility of missing witnesses. You have always got the possibility of even with available witnesses dimming memories and every witness you have got against you, you can automatically ask, you mean to tell me you can remember something that clearly that happens four or five or six years ago. It is a good shot to try and get that reversal in the second trial and it is even better shot to try for the acquital because then you can go home that day and I think that the issue involved here considering the lack of objection, considering the very thing, they are yelling about the most, the content of the argument. Consider all of that and in light of the entire record and I think you really have to conclude that all though McDaniel – even I represent the state, I feel like I am representing one man and his conduct. Even though he heard himself, and but not the case, I think you have got to say that, viewed in his totality Willie Jasper Darden may not received a perfect trial, not the antiseptic one and Darden merely as, as you suggested Mr. Chief Justice dispassionately read something or summarize the evidence but he got a fair one and that is what we are here about. Speaker: If in Florida one makes an objection to the trial judge on the particular ground and the trial overrules the objection, is it generally presumed that if another similar instance arises, the lawyer is not required to make the objection again that the trial judges ruling would be the same on a subsequent case. Richard W. Prospect: Yes sir. As a matter of fact I believe we have case law to the effect that once you know it would be useless in light of previous ruling, you don’t have to do it, it still preserved properly. But using that I will still ask for one objection in this record which is not there. Thank you very much. Warren E. Burger: Do you have anything further Mr. Kalmus. Geoffrey M. Kalmus: if I may, just a moment. I think that what the state is asking here is the prosecutor be given license to proceed willingly and whatever fashion he may, and on whatever ground he may wish to, and to put the defendants counsel in the box of standing up and objecting every time something you said, or if letting it go by. We all know that, that is a difficult lawyer’s decision to make in context. Like here the state is saying, even though the prosecutor willfully makes outrageous arguments that he has no business making and he knows he has no business making. Still the defense coun is going to be kept in that box and that seems to us that’s not a tactical choice that can fairly be imposed against willful misconduct by prosecution. As to your question Mr. Justice Marshall as to why there was no in effect to the systems of counsel issue here. The issue was not raised in the courts below and we did not feel that could be raised here for the first time, perhaps it is raised upon habeas I do not know. Although I know that from past experience it is a very difficult one to win. Thank you. Warren E. Burger: Thank you gentlemen the case is submitted.

William H. Rehnquist: We will hear argument first this morning in Number 85-1208, Fall River Dyeing & Finishing Corporation versus National Labor Relations Board. Mr. Drogin, you may proceed whenever you are ready. Ira Drogin: Mr. Chief Justice, and say it please the Court: This case involves the issue of whether and under what circumstances an employer, purchasing the assets of a defunct business enterprise, must recognize a labor union which represented the employees of its predecessor, the former assets owner. It is to be distinguished immediately from those cases in which a going business was purchased, substantially intact and operational, and in which the new owner retained or quickly employed a majority of the employees of the former assets owner. This Court must decide-- Byron R. White: --heard enough of the employees of the former owner, that a majority of his present employees are those? Ira Drogin: --That is correct, Your Honor. Eventually that occurred. That occurred at two different time periods and I am going to get to that if I may. This Court must decide whether Fall River should be considered a successor for the purposes of collective bargaining when the employees of its predecessor constituted a minority of all of the employees of Fall River at the full complement date, but also when the employees of the predecessor constituted a majority at an earlier date, the substantial complement date. We have some guidance from this Court in how to approach this particular issue, and if I may quote very briefly from the opinion of this Court in howard Johnson: this Court held that the real question in each of these successorship cases is on the particular facts, what are the legal obligations of the new employer to the employees of the former owner or their representative. The answer to this, according to this Court, requires an analysis of the interests of the new employer and the employees, and of the policies of the labor laws in light of the facts of each case and the particular legal obligation which is at issue, whether it be the duty to recognize and bargain with the union, the duty to remedy unfair labor practices, et cetera. Sandra Day O'Connor: Mr. Drogin, I take it that in general we have concluded that NLRB findings of fact are going to be treated as conclusive unless they are not supported by substantial evidence. Do you agree with that as a general principle? Ira Drogin: I certainly do, Your Honor. Sandra Day O'Connor: All right. Now, what are the legal issues if any that you think are in this case? Are you asking us to change some legal standard that the Board employs, the substantial and representative complement test or anything of that kind? Ira Drogin: I am, indeed, Your Honor. I think that the substantial and-- Sandra Day O'Connor: It isn't clear to me from your petition and the statement of questions whether we are being asked to review the case to find out if there is substantial evidence, or if you are asking us to employ a new legal test or standard in these cases. Ira Drogin: --I think the answer is both. I think that there is no rational basis for the decision of the Board here, and I am also-- Sandra Day O'Connor: You mean, there is no substantial evidence? Ira Drogin: --That is right. I think that there is-- Sandra Day O'Connor: So, you are asking us to make a factual determination? Ira Drogin: --Yes, I am, Your Honor. I am asking that. I think that the legal issues deal with the interplay of three specific propositions. They are the fact that the Board here has applied the substantial and representative complement test, completely ignoring what this Court said in Burns, that there may be situations at which the time for determining the majority status of the employees involved in the successor may not be available, or may not be appropriate until a full complement of employees has been hired. In this situation, we had-- Sandra Day O'Connor: Well you think we should adopt a rule that you only... you time the inquiry when there is a full complement of employees rather than a substantial and representative complement? Ira Drogin: --Yes, in a slow build-up situation. Most of the cases that this Court has had before it, Wiley, Burns, Howard Johnson, involve situations where the unit was taken over virtually intact with virtually all of the employees, and there was no hiatus involved. This case differs substantially, factually-- John Paul Stevens: May I ask, just so I understand your position, assume you have a takeover of the assets and no employees, and you add 20 employees a month until you get up to the full complement. And when you've got, say 75 percent of the employees, say it's perfectly clear that they're all union members and they're all former employees, would you say there is no duty to bargain until you have the full complement? Ira Drogin: --I would think that you have to determine at the outset what the employer's plans are and when the full complement-- John Paul Stevens: Well, I would assume the plans are to keep hiring until you get the full complement, but you won't have that done for another three or four months. Are you saying there is no duty to bargain until that three or four month period? Ira Drogin: --In a situation where there is a slow buildup, and particularly, Your honor, in a situation such as here where there is no rational or factual basis for the underlying presumption that the-- John Paul Stevens: Well, but that's a separate question. I was just trying to isolate the question about the point at which you measure the right to have... the union's right to have the employer bargain with it. And you say, you just done, even begin to have a duty to bargain until there is a full complement, even if they are all former union employees and former employees of the prior owner? Ira Drogin: --Unless, Your Honor, the takeover is a takeover of a going business-- John Paul Stevens: Right. I understand. Ira Drogin: --virtually intact, virtually the entire labor force, but not in a slow buildup situation where there is an assets purchase. Byron R. White: Yes, but if he's 75 percent... he has 75 percent of his complement and all of them are prior employees, when he gets to be a full complement there is still going to be a majority of the former employees. Ira Drogin: Well, that's an assumption. That assumes that if that 75 percent-- Byron R. White: You mean, he's not going to fire anybody? He's not going to fire anybody? Ira Drogin: --Certainly not. But you have to accept an assumption-- Byron R. White: But in this case, in this case it was possible but not in the example I just gave. In this case it was possible that when it reached the full complement there would not be a majority. Ira Drogin: --That is correct. It is possible. The problem in this case is that there is an underlying assumption here that at the time of the demand, at the time that the demand was made at this case, and the time that the measuring period was applied, in this case by the Board, the substantial complement date which was seven months at least from the time of the closing of this plant and the laying off of 150 employees, that representation wishes of the former employees of Sterlingwale had not changed and that is completely unsupported by the record. This Court has always been concerned with the paramount principle of the National Labor Relations Act, and that is the policy of majority representation. It has been concerned that employees are not bound by a representative, a majority of them, by a representative not of their own choosing. And in this situation, quite different than Burns, there was no recent certification. In the Burns case there was a certification of the bargaining representative only three months before the takeover. Here, not only was there no certification but over a bargaining history of more than 20 years, there is no evidence in the record that there was recognition based on any showing of majority support. The assumption, or presumption that we start with a majority in this time carryover rests entirely on a collective bargaining agreement which has a union security provision which requires all employees to be members of the union 30 days after their employment. Harry A. Blackmun: Mr. Drogin, I take it from your remarks that you do not expect... you are not asking us to overrule Burns? Ira Drogin: Certainly not. I think, however, that one of the concerns of Burns was the implicit assumption with regard to representation. That there is a carryover that every employee in the predecessor employer's employ who was a member of the union still wants to be represented by that union seven months, ten months, 11 months, however many months afterwards in this type at situation that person is employed? Antonin Scalia: What's the cutoff mate for... you would abandon this argument if there had been a union certification election within a year, within a year before what-- Ira Drogin: Within a year before-- Antonin Scalia: --A year before the transfer of ownership, or-- Ira Drogin: --Not the transfer. Antonin Scalia: --within a year before the full complement? Ira Drogin: Before the full complement, Your Honor. I would think that the full complement date in a slow buildup situation is the appropriate date. I think that's what this Court had in mind in Burns when it said that there may be situations and circumstances in which it's not evident until a full complement has been employed, that the union does have majority-- Thurgood Marshall: Is there any way that a union can protect itself under your theory without holding an election every year? Ira Drogin: --Well, certainly, Your Honor. The union is protected by certain presumptions that, for example, one year... there are no representation petitions to be filed one year after its certification. Its contract protects it for a period of time afterwards, and there is a continuing presumption-- Thurgood Marshall: They had a contract here? Ira Drogin: --Yes, and that is quite interesting, Your Honor. Thurgood Marshall: I thought you said they had to have had, within a year, a certification. Ira Drogin: That is what this Court said in Burns. Thurgood Marshall: Is that what you say? Ira Drogin: I think that that's the proper rule. Thurgood Marshall: That in this case they should have had an election every year? Ira Drogin: No, not every year, Your Honor. Thurgood Marshall: How could they have protected themselves? Ira Drogin: Well, it's not a question of the union protecting itself. That's not the interest that we are seeking to protect. The interest that the statute has us protect is the right of employees to be represented by a union of their choice. Thurgood Marshall: Well, how can employees do it, other than to every year challenge the union? Ira Drogin: Well, here, Your Honor, we have a very unusual situation. Thurgood Marshall: You sure do. Ira Drogin: Because the union, for all intents and purposes, was gone from the picture. After its contract expired in April of 1982-- Thurgood Marshall: You're going behind the contract, then. Ira Drogin: --Pardon me, Your Honor? Thurgood Marshall: You're going behind the contract, then. Ira Drogin: I'm not going behind-- Thurgood Marshall: Are you telling me that the contract doesn't exist? Ira Drogin: --That is a factual statement. That is correct. The contract expired on April 1st, 1982 and there was no attempt to renew it by the union because the employer, Sterlingwale, was being liquidated. It was defunct. It was selling off its assets. It was a dead, moribund company and that is the distinguishing point between this case and Burns and Wiley and Howard Johnson and Golden State. In those situations there was at least an expectation, an immediate expectation on the part of the employees of the former employer that there would be some kind of carryover of bargaining representative. Antonin Scalia: Mr. Drogin, I have been thinking about your answer to my previous question. I don't see how it can work. You want the year to be measured from the full complement date, but you don't know when the employer is going to reach a full complement until he finally reaches it. So, what do you do in the interim? You are in absolute indecision. You don't know whether you have to deal with the union or not. It can't be... it surely can't be the full complement date. You must mean the anticipated full complement date. Ira Drogin: That is correct, Your honor, correct, and in this particular case that was not hard to determine because the employer had immediate plans. His plans worked. He stuck with those plans. The job required that two shifts be put on as the business increased. The employer projected an April full complement date. That is exactly the way that it worked, with a slow and gradual buildup. Now, it is argued that the union doesn't know, or how can the union know. The answer to that is, all they have to do is ask and there is nothing that prevents the employer from giving this information to the union. If they refuse, if the employer refuses, which would not be the case in this situation, then certainly the union can file a representation petition with the National Labor Relations Board and in the Board's Investigation and procedures, that information is going to be forthcoming. So, there is no prejudice to the union. Lewis F. Powell, Jr.: Mr. Drogin, to change the subject little bit, what percentage of the business of the new company is with customers of the old company? Ira Drogin: Including the parent company of Fall River, slightly more than 50 percent. Excluding the parent company, it is about 30 percent. However, there is no real way of determining how much of that was finishing customers and how much of that was converting customers. Lewis F. Powell, Jr.: Did the new company carry forward both aspects of the old company's business? Ira Drogin: Absolutely not, Your Honor. The new company is strictly a finishing company, does no converting work at all. The old company was doing approximately 70 percent converting work, approximately 30 percent finishing work. The new company made no attempt to acquire any of the customers, the finishing customers, that 30 percent of the old employer, didn't ask for any customers list, didn't take over any trade name, did nothing other than purchase the physical plant and machinery. It made no attempt whatsoever to continue the business of Sterlingwale. Lewis F. Powell, Jr.: May I ask you a question about the bankruptcy sale. Was the new company the only bidder? Ira Drogin: I don't know the answer to that, Your Honor, I have to tell you. Lewis F. Powell, Jr.: If would have to be the high bidder under your law, would it not? Ira Drogin: Under the Massachusetts law, I would assume that it was. However, your question poses a very interesting secondary question. In addition to the sale of the secured interests, which was the real estate, the plant and the equipment, there was also a sale of the remaining unencumbered assets of Sterlingwale and in that situation there were outside bidders, and as a matter of fact Fall River acquired only about one-third of those assets. Antonin Scalia: If I recall correctly, Fall River was formed for the very purpose of buying these assets, wasn't it? Ira Drogin: I disagree with that, Your Honor. That is what the Board argues, that it was formed for that-- Antonin Scalia: The Board found. Ira Drogin: --Pardon me? Antonin Scalia: The Board found. Did the Board argue that, or did the Board find that? Ira Drogin: The Board argued it, that it was formed. They argued it in their briefs. I don't believe-- Antonin Scalia: That was not part of the findings of the Board below? Ira Drogin: --That's not my recollection, that it was formed for that purpose. Antonin Scalia: If it was part of the findings, of course we'd have to defer to it unless there was no substantial evidence. Ira Drogin: That's correct. What happened is uncontroverted, and that is that the principal, Mr. Friedman of Fall River, had nothing to do with Sterlingwale other than being a customer himself until the end of August 1982 when he was approached by the attorneys and other persons who held the security interest in the assets. Antonin Scalia: I thought there was an officer of the defunct company, who also went in it with him, isn't that-- Ira Drogin: That is correct. Antonin Scalia: --The vice president? Ira Drogin: He did, but at the time in late August 1982-- Antonin Scalia: And the two of them formed this new company, is the way the Board describes it. Ira Drogin: --Well, I think that's a bit of an overstatement, when you say that they formed the company. Mr. Friedman actually formed the company. He is the sole shareholder. Mr. Chase at that time had been working in New York for a competitor, a competitor of Sterlingwale. Sterlingwale was defunct. The record shows that the company was formed, I believe on August 31st. That is when the Certificate of Incorporation was filed. All of these things happened simultaneously, and the documents in the record indicate... It's a rather complex situation there... that Fall River had the right to acquire these assets at a particular price. And what we have here, really, is an assets purchaser, not interested in the employees as employees. Fall River made no attempt to go after the employees of Sterlingwale. It didn't obtain their personnel records. It didn't obtain any lists of where to locate them. When it needed employees it advertised in the newspaper and that's where it got its employees. It also hired employees of other finishing companies In the Fall River area. And this distinguishes this case very, very much from cases such as Howard Johnson and Burns. Here, after employees, 150 production employees being out of work With no real anticipation of ever being rehired, they see a newspaper ad from a completely new employer and that's how they became part of the personnel of Fall River. I think I would like to make a point here about the representation wishes of the former Sterlingwale employees, because again this lies at the heart of the Act. What happened in this situation was that when Sterlingwale went out of business it owed premiums for life insurance and health insurance for the bargaining unit employees. It hadn't paid them, and any of those employees who wanted to continue that coverage had to pay it for themselves. It also didn't pay severance pay. It also didn't pay vacation pay. In the interim, in the several months while Fall River was... excuse me, while Sterlingwale was in control, money came in. The Sterlingwale Company was undergoing a slow liquidation and the money was used to pay taxes and other creditors, and even when the assets were sold at the end, the unencumbered assets at the end of August of 1982, none of that money went towards paying the employee benefits. So, in the following year when the National Labor Relations Board hearings were coming up the employees, the former employees of Sterlingwale heard about this and they repudiated the union. Factually, without any presumptions being used, they repudiated the union one they had the former secretary... I shouldn't say the former... the secretary of the union circulate two petitions, one to former Sterlingwale employees and one to new employees who were non-Sterlingwale employees. Those petitions are part of the record, and they say clearly that those employees do not want to be represented by Sterlingwale... pardon me, by the union. And the reason is very clear from the record. The reason is that the union did not get the employees the benefits that be longed to them under the contract. That is a very good reason for repudiating a union, and that right is guaranteed. That's the policy of the statute, that employees have the right-- John Paul Stevens: How did the Labor Board deal with this argument? Ira Drogin: --Well, the Labor Board-apparently unfair labor practice charges were filed with regard to these defaults in payment, and those charges were dismissed because it was not a repudiation, I think is the test that the National Labor Relations Board uses. Unless there is a repudiation of the contract, the Labor Board won't issue a complaint with regard to failure to pay insurance benefits or contributions to employee benefit funds. That's their present policy. So, they were dismissed but they were never pursued to arbitration and there was money there. There would have been money available had the union acted promptly and the employees-- John Paul Stevens: I'm just a little puzzled as to what the proposition this argument is directed to... what proposition of the law does this support? Ira Drogin: --The proposition that I am addressing this to, Your Honor, is that the fundamental policy of the Act is the protection of employees' rights to be represented by a union of their choice. In this situation we have a noncertified union. We have no showing-- John Paul Stevens: But they had been recognized for 20 or 30 years, hadn't they, as the bargaining agent of these employees? Ira Drogin: --That is correct. John Paul Stevens: Does that give them a different a lesser right to bargain on behalf of the employees than if they had been certified Just more recently? Ira Drogin: Well, that's the whole question, whether Fall River is required under these circumstances to bargain with this union under the successorship theory. Their bargaining demands, the union's bargaining demands, is concededly an unlawful demand, because it was based on the old contract. This Court clearly said in Burns that even if there is a successorship finding, that the successor employer is not bound by the old contract. Nevertheless, that's what happened here. Antonin Scalia: Mr. Drogin, didn't the Board consider the expression of displeasure with the union that you are referring to, and didn't the Board think that that could be explained on a quite different basis; to wit, that these people weren't approached until quite late on and they thought that if the old union were certified and went ahead with its unfair labor practice complaint, they wouldn't be able to get a wage increase for the next few months? Didn't the Board consider that and didn't it make that factual finding? Ira Drogin: I don't know if they made that as a factual finding. Antonin Scalia: Well, this is a credibility point, isn't it? How can we second-guess the Board on credibility? Ira Drogin: Well, Your Honor, I don't think it's second-guessing them on a credibility finding. I think it's evidence, and there was record evidence from the Secretary of the Union at the hearing with regard to the changed sentiments of the members of that bargaining unit. Antonin Scalia: But they chose not to believe them, and they thought that the explanation for all the signatures disapproving the union that they got was was simply that the people thought if they approved the union they wouldn't get a wage increase because an unfair labor practice complaint would be in the works. Ira Drogin: I think the reason that was applied, Your Honor, and this was approved by the Court of Appeals, was that the timing of the petition would not allow... or the petitions, rejection petitions, would not allow... was improper because the Board and the Court said that the petitions had to have come to the attention of the employer before the substantial complement date and because they arrived after that, yet before the full complement date, that they were irrelevant and had no bearing on the issue. I think that was the basis for rejection of that evidence. Antonin Scalia: You made the point in your main brief that it's very important to have some certitude for the employer as to when the test of majority favoring the union or not is to be applied. The Board responded, you don't need certainty because there is really no harm done. If the employer makes a mistake he won't get hit with a penalty anyway. What harm is done? Ira Drogin: Well, I think that, Your Honor, the harm that's done is that the employer is found to have violated the National Labor Relations Act, which we consider a violation to be a very serious thing. Antonin Scalia: If there is no penalty imposed, are there any other legal effects of that finding? Ira Drogin: Well, there is no monetary fine, of course, that can be considered by the Board in further unfair labor practice proceedings with regard to the remedy that may be applied. Should Fall River be found to be a violator of the Act, again the prior record is important. Your Honor, we don't want a suspended sentence, so to speak. It is our contention that we didn't violate the law and we shouldn't be placed in a position where because of the uncertainty of the substantial complement test we don't know what to do on a day to day basis. The Board itself says that there are no hard and fast rules for determining when a substantial complement has been employed. The Board admits this in its brief. How is an employer to organize its business affairs under these circumstances? This imposes a very unfair burden on an employer, particularly one who is an assets purchaser simply trying to operate a new business. I would like to reserve some time for rebuttal, if there are no further questions at this time. William H. Rehnquist: Thank you, Mr. Drogin. We will hear now from you, Mr. Cohen. Louis R. Cohen: Thank you, Mr. Chief Justice, and may it please the Court: The union selected by the members of an appropriate bargaining unit is ordinarily presumed to continue to represent the unit unless and until there is either an employee petition to the Board for a change or the employer can demonstrate by objective considerations that it has some reasonable grounds for believing that the union has last its majority status. The reason for this indefinitely continuing presumption, as the Court re-emphasized last term in the Financial Institution Employees case, is that after the initial selection the law greatly prefers stable and continuous collective bargaining to management electioneering, and that it therefore generally bars re-visiting the representation issue unless and until there is affirmative reason to believe that the union no longer commands majority support. The question, whether changes in ownership of the employing enterprise affect the presumption of continuing representation was answered in general terms a long time ago. Under a well-established Board rule approved by this Court in Burns, a change of ownership does not affect the presumption if there is substantial continuity in the employing enterprise and the definition of the bargaining unit remains substantially the same, and a majority of the successor's employees in the unit came from the predecessor. The opinion in Burns does refer more than once to the fact that there had recently been an election in the predecessor unit, but I think that none of the weight of the Burns decision can rest on that fact. Sandra Day O'Connor: Mr. Cohen, isn't the expectation of an imminent expansion in the number of employees a factor to be taken into consideration in applying the Board's substantial and representative complement approach? Louis R. Cohen: Yes. Sandra Day O'Connor: And shouldn't it be a factor, if it is known that there is going to be a significant expansion in the number of employees? Isn't that something the Board should take into consideration in applying the test, when you have one of these successor employer situations? Louis R. Cohen: Yes. The Board's test for substantial and representative complement is whether the operation is in substantially normal... the enterprise is in substantially normal operation and the positions have been filled, and the Board says that it also takes into account the number of employees-- Sandra Day O'Connor: All right. Louis R. Cohen: --and the likelihood at expansion. Sandra Day O'Connor: All right. Let me tell you what troubles me about the Board's action in this case, because I would appreciate your discussion of it. Fall River expected, and it was known that it expected to double the number of its employees from about January until April, it planned to go to a double shift. Now, the Board seemed to look at this situation as though it were frozen in time about the end of January, and given the fact that it is known that within quite a short time they expected to double it, do you think the Board really took that factor into consideration the way it should have? Louis R. Cohen: Yes, I do. Sandra Day O'Connor: I think these are troublesome cases, and the reason they are troublesome is because the employer is in a dilemma here about the timing of when he is forced... or when the employing unit is forced to look at the situation of a representative and substantial complement. Louis R. Cohen: First, I think the Board did properly take the facts into account here. Let me start with the numbers. On January 15, 1983 when the Board determined that there was a substantial and representative complement, 36 out of 55 employees had come from Sterlingwale. As of April 22 when the petitioner says that it had completed its hiring, by my count based on Exhibit GC-8, 52 or 53 out of 107 employees in the unit had come from Sterlingwale. The Board concluded that petitioner, having started up in September and having had at all times thereafter until late in March an absolute majority of employees who had come from Sterlingwale, and being... and this is a finding of fact... in normal operation of a full shift, and saying that it was starting a second, but here is Mr. Chase's direct testimony on that point. He says at page 208 of the Joint Appendix: "Our plan was to have one full shift operation of 55 to 60 employees and after we reached that goal then we'd see how business would be and then we had planned that by the end of March, April, we should be in a full two... shift operation. " The Board said: "Looking at the problem from the perspective of January 15, the employees were entitled to be represented on that date when the business was up and running. " Sandra Day O'Connor: Well, are you just saying the Board didn't have to give credence to the fact that they planned a second shift, that the Board's decision can be supported on the ground that they didn't have to accord credibility to the plan of a double shift? Louis R. Cohen: No. I'm saying that the Board didn't have to treat the plan as firmer than Mr. Chase testified that it was. The notion that there is a neat objective, defined in advance, that the petitioner was always aiming at and which it had only achieved part of in January, is largely an afterthought, rather, as in most of these situations in real time, the employer is-- Sandra Day O'Connor: Yes, but when was the Board looking at... the Board wasn't looking at it. In fact, they held a hearing when, long after this had happened? Louis R. Cohen: --No. The hearing was at the beginning of May. Sandra Day O'Connor: Well, by then they knew that a shift, a second shift had been added, so why weren't they interested in looking at what really happened? Louis R. Cohen: They were looking at, first, the fact that there was at all times very substantial continuity in the bargaining unit... even as of May 2nd there was, as I say by my count they were only a half a Sterlingwale employee short... but also at the fact that as a successor employer starts up, its ultimate objection, and whether it will get there may not be clear and the operative rule for employers and for unions ought to be that when the enterprise has reached substantially normal operation the employees are entitled at that point to a determination of their right to be represented. Sandra Day O'Connor: If the Board had looked at the situation as of mid or late April, would it have still been able to find at that time that this union should have been recognized? Louis R. Cohen: The Board's rule is that it looks for a majority of a substantial and representative complement and on April 22, as I says there was slightly less than a majority. But let me also-- Antonin Scalia: I agree with you, Mr. Cohen, that there ought to be a clear rule, that the employer ought to know and the Board ought to know. Aren't there consequences beyond the were moral opprobrium of being cited for an unfair labor practice if the employer doesn't know whether he yet has a substantial and representative complement? For one thing, isn't it the case that if he fails to bargain with the union wrongfully at that ineffable moment, whatever it is, he won't be able to have an election for the next... what is it, the next year, because he will be deemed to have interfered with the normal process? Louis R. Cohen: --That may be. I'm not sure that that is true, that that is true in this case. But I also think that this is-- Antonin Scalia: If we're not sure about it, then you know, your brief says no big deal, if the employer makes a mistake as to when that magic moment of a substantial and representative complement arrives, nothing happens except he is cited for an unfair labor practice. Now, you say it may well be that in addition to that he will not be able to have an election in that year, for another year because of his good faith failure to realize when the magic moment has come. That's pretty substantial. Louis R. Cohen: --I don't think that the employer is, in fact, in any such puzzlement. He knows that he has taken over a predecessor employer and he knows that he has so far hired a substantial... a majority of his employees from the predecessor's rank and file, and he knows that he is in-- Antonin Scalia: Do you know as of what time that is being measured? Louis R. Cohen: --And he knows that he is in substantially normal operation and he knows that he has filled-- Antonin Scalia: What is substantially normal operation... what does "substantial" ad "representative complement" mean? Representative of what? Representative of-- Louis R. Cohen: --I was going to say, he knows that he has filled the various positions, staff positions that he has. "Representative" means having some employees in each... or substantially all employee categories. Antonin Scalia: --Such categories as what, supervisor versus non-supervisor, or-- Louis R. Cohen: Such as cutter versus finisher versus... not supervisor versus non-supervisor, but the categories of rank and file employees here, people who work on different machines, work on different parts of the process. Antonin Scalia: --You mean, if it wasn't just a separate... another shift of the same operation that was going to be added here but rather a whole separate operation? Louis R. Cohen: Yes. This is-- Antonin Scalia: Then you wouldn't have had a substantial representative complement? Louis R. Cohen: --You might not. You might-- Antonin Scalia: Maybe? Louis R. Cohen: --This is-- Antonin Scalia: Yes or no, would that alone have been enough to make it clear that it was not a representative complement? The fact that the other half of the business he was going to add was a totally different element of the business, it wasn't finishing... what was the opposite of finishing, finishing and whatever the other one was. Louis R. Cohen: --Converting. Antonin Scalia: Converting, whatever it is, would that have prevented it from being a representative complement? The thing is, I have no idea what the Board means by a representative complement, and if I don't, I don't know how an employer does. If he doesn't, I think he is put at a very unfair risk. Louis R. Cohen: This was an employer who, but mid-January, was engaged in one full shift of what he wanted to do, a finishing and dyeing operation. He had hired employees in all the categories of work that needed to be done in that shift, and the employer had reason to knew that he was in business. It is true that he was going to see how business would be, and had plans to add a second shift. But it this had been an initial representation situation, I think the Board under well and long established Board cases, would have said it is appropriate for the employees who are working on this first shift to be entitled to have a representation determination now and not wait until the employer says that he has hired-- Byron R. White: Well, would you say that either in this case or in an initial representation case, if no one disputed that the employer was going to add a second shift? Let's assume the Board found he was going to add a second shift but nevertheless we order bargaining because a majority of the first shift are old employees. Louis R. Cohen: --I think that might depend on how long it would take and how certain it was, which isn't-- Byron R. White: All right. I'll just add another fact. By April there is going to be a second shifty or by March there is going to be a second shift. Louis R. Cohen: --I think that the Board, in weighing the right of employees to be represented during a critical point, in staffing up against whatever considerations favor waiting for the ultimate electorate to be formed, might well say employees have the right to be represented on the way up, even it it clear-- Byron R. White: If that is your position, the Board's position, I can't imagine that if it so turns out, when the second shift is completed, that these old employees are a distinct minority, can't imagine that the employer would be foreclosed from asking for an election. Louis R. Cohen: --In this case-- Byron R. White: Just take my case. Louis R. Cohen: --I think that the employer may, in your case or in this case, when presented with concrete evidence that the union no longer commands majority support, seek to have the-- Byron R. White: No bar, no bar, no time bar on it. When he gets his second shift completed it's perfectly clear that, to him at least, that a majority of the employees are not from the old employer and a majority of the employees, as far as he can tell, don't want a union. Now, can he then, right then, even though he has... even though the Board has ordered him to bargain with the union at that earlier stage, can he then immediately ask for an election? Louis R. Cohen: --Yes, if he bargained with the union.... Byron R. White: Will he he get it? Louis R. Cohen: --at an earlier stage, and he will get it if he can present to the Board concrete evidence of a loss of support. William H. Rehnquist: Well, you say loss of support. Would the facts of Justice White's hypothesis amount to a loss of support? Louis R. Cohen: Our position is that there is a presumption, and that the presumption carries over to the new employer in a situation like this, but that where there is no recent election as there had been in Burns the employer may immediately rebut the presumption after... whenever it appears that there is no longer majority support in the bargaining unit for the union. Lewis F. Powell, Jr.: May I ask this question, a hypothetical before you carry on? Let's assume, for example that when the old company went out of business, there were some entrepreneurs not connected with the old company who thought, "Well, there are some customers out there who need to be served. " "The old company had old equipment. " "We can buy new equipment and perhaps serve them more economically. " The new company then advertised in the newspaper for employees. It made no particular pitch for the employees of the bankrupt company. What would be the situation then with respect to the duty of the new company to bargain with the old, defunct union? Let's assume further that in response to the advertisement, the new company ended up with a majority of its employees who were members of the old union and had worked for the old company. Louis R. Cohen: I think-- Lewis F. Powell, Jr.: If all you had was continuity of employees that resulted from public advertising? Louis R. Cohen: --Well, I think that under the Burns case, that is essentially... that the Burns case covers that and that the Burns case tells us that there is sufficient continuity there. But that is not this case. Lewis F. Powell, Jr.: But is all you need continuity of employees without regard to any other facts? Louis R. Cohen: No, the Board has a seven-factor test and as to each of the seven factors which have been endorsed by this Court, there was either total or very substantial continuity here. Here the continuity was deliberate. Fall River was founded by a major customer and a vice president of Sterlingwale. They bought the production facility and the machinery in it in a single contract and not on the open market and not via foreclosure, except that there was a foreclosure sale to see whether there would be a higher bidder for the equipment. But there is a contract which appears at page 238 of the Joint Appendix among the founders of Fall River Dyeing and Mrs. Anson, the widow of the founder of Sterlingwale and the creditor who held the mortgage on the production building and the creditor who held the mortgage on the machinery and equipment in that building, and by contract they bought it all. Then they hired 12 supervisors, 11 of whom had been Sterlingwale employees, and they hired them by calling them on the telephone, according to Mr. Chase. Those supervisors then selected rank and file, and Mr. Chase said each department supervisor basically knew the workers or knew the operation, and on their recommendation we did the employing. This was a deliberate replacement of the Sterlingwale commission finishing operation, not its converting goods for its own account operation, but everyone including Mr. Anson testified that as far as production was concerned there was no difference between the two. It was a deliberate continuation of the earlier operation with employees-- John Paul Stevens: Mr. Cohen, I understand you are saying this case is not the same as Justice Powell's hypothetical, but how did you answer his hypothetical if the employees had come in, in response to newspaper ads but you got 60 percent of them, were former employees? Would the result be different? Louis R. Cohen: --I think that the result is not different if you end up with all the pieces together the way they are here, even if it is by accident, in part because the theory is not that the successor employer inherits obligations of its predecessor because of some relationship it has to the predecessor. John Paul Stevens: So, for this purpose we can just look at the numbers and we don't have to get into the details of how they happened to get hired? Louis R. Cohen: Or the Board could and the Court of Appeals could determine that the Board's finding of continuity here was supported by substantial evidence. John Paul Stevens: Let me ask you one other question about the fact that in... I get the dates a little mixed up... in January they knew they were going to the full complement in April. Did you answer Just ice Scalia's hypothetical about, instead of just having more people doing the same thing, they were going to add... instead of finishing and dyeing they wanted to go to converting or whatever the other... go from one kind of fabric to corduroy, but the addition was of a different character than what they had at the time. Would that be a different case? Louis R. Cohen: I think that it could well be a different case because it might not be a representative complement of employees. If, on the other hand... if on the other hand it was agreed as it was agreed here that the operation-- John Paul Stevens: Just more of the same? Louis R. Cohen: --Was more of the same and that the same bargaining unit definition stipulated that the same bargaining unit definition was appropriate for the successor employer here as for the predecessor-- Antonin Scalia: Is that what "representative" means, representative of the various bargaining... see, "representative" means nothing to me unless I know what it's representative of, representative of the age that all the employees are going to be, or their races or of their skills, or what? Louis R. Cohen: --I am sorry, I tried to answer before. It means representative of the various jobs that are within the bargaining unit definition, so that you have some employees who are doing each of the things that the bargaining unit will... is expected to do. Antonin Scalia: Whether or not the jobs are all in the same classification as far as representational obligations are concerned? Louis R. Cohen: Well, I am not sure I understand your question. Well, you might have a number of quite different jobs in the same bargaining unit, may you not? Yes. Antonin Scalia: Okay, So, it doesn't hinge on, representative of the various-- Louis R. Cohen: This case would be quite different if there were any question whatever about the appropriateness of the definition of the bargaining unit, but there isn't. In this case it's agreed that it's the same definition as had applied before, and the question question is, do we have enough people in the unit and are they sufficiently representative, and is the operation in sufficiently normal status on January 15th so that it becomes appropriate to say, are the employees entitled to representation today or not. The question would be essentially the same, whether the determination is made by counting the number of employees who carry over from the predecessor, or is made by an election, and the importance of ordering bargaining to begin at about that point is that the employees' rights to be represented at all would otherwise be postponed through what is a critical period in the enterprise until the employer says, yes, indeed, I have now finally hired my last employee, now let's count. Let me say just a word on the issue of the continuing demand. Actually, before I do that I want to say a word about the employee petitions here. The petitions which were put together on April 29, three days before this hearing, were quite clearly identified in the testimony as having been produced by a fear that this very proceeding would take three years and that the employees would not get a raise until it was over. In addition the ALJ properly rejected those petitions on the ground that petitions signed on April 29 did not have a bearing on the issue that was before him, which was the obligation to bargain as of January 15th. The Board's treatment of the union's demand as a continuing one, and as therefore outstanding on January 15 was, I think, correct as a matter of fact in law. There is no doubt in anyone's mind, was no doubt on January 15th that the union was in fact still demanding recognition. There is no reason to require a union to keep sending demands as the employer staffs up. And there is nothing wrong with the Board's sanctioning a procedure under which the union makes a demand when the employer starts operations, and that demand, if not ripe at the outset, attaches whenever the employer who is in the best position to determine the facts has achieved the requisite complement of employees, if the requisite continuity of both the enterprise and the bargaining unit are then present. The employer can, I repeat, and is in the best position to determine when he is in substantially normal operation and has a representative complement as it has been defined. The suggestion in the briefs that he has to worry about jumping the gun in that situation seems to me to be... and suffering an 8-A-2 violation seems to me to be farfetched and there never has been an 8-A-2 charge in any such situation, recognizing the union that had represented the employees of his predecessor and there is a majority in the unit at that time. And there is, with the tolerable certainty that is the best we can expect in any such situation, I think, a workable ability to determine when a substantial and representative complement has been achieved. Antonin Scalia: --Mr. Cohen, why shouldn't we give some weight to the dictum in Burns where we did stress the fact that there had been an election within the prior year? I mean, what we have here is one hypothesis heaped upon another until the result you get is quite unrealistic. That is to say, we are assuming that it's the same employment unit, and there are a lot of factors that go into that so we give the Board the benefit of the doubt. We also assume if you hire a majority of the employees of the former company you will happen to hire the same majority who favor the union in that company, that is that-- Louis R. Cohen: No, if I may, we are not assuming that. Antonin Scalia: --Why not? Louis R. Cohen: Because the rule of law here is that there is a presumption of continuity until there is a contrary showing, and the dissent in Burns was obviously correct, that you couldn't tell from the arithmetic in Burns whether any of the employees had in fact voted in favor of the union. Nevertheless, It didn't trouble the Court because the Court wasn't making a new affirmative determination by proxy of actual union sentiment. It was applying a continuing presumption-- Byron R. White: That is different than an assumption? Louis R. Cohen: --Yes. Thank you. William H. Rehnquist: Thank you, Mr. Cohen. Mr. Drogin, you have three minutes remaining. Ira Drogin: Thank you, Your Honor. Mr. Justice Scalla has put his finger on the problem from the employer's interests in this case, and that is that we come to a completely unrealistic approach and result, particularly with regard to the continuing demand situation. We find a demand initially made which would have been unlawful for the employer to accept because at the time that it was made, the employer did not have in its employ a substantial and representative complement, whatever that may mean. The demand continued to be an illegal demand at the time that the union filed unfair labor practice charges. It also continued to be an illegal demand at the time that the National Labor Relations Board issued its complaint in December of 1982. The only time that the demand became legal, according to the continuing demand theory, was a year and a half afterwards when the Administrative Law Judge decided that in January 1983 the employer had reached representative complement. Now, this-- Antonin Scalia: No, it began... a fair description, they said it became legal when it reached a representative complement, Now, you didn't know that until a year and a half later. Louis R. Cohen: That's correct. We didn't know until the Administrative Law Judge a year and a half later, in 1984, told us that we should have recognized the union and bargained with them in January of-- Antonin Scalia: But it became a legal demand when it became a legal demand whether or not you knew it at the time. Louis R. Cohen: --That's correct, but how are we supposed to comply with the law under those circumstances, and how-- Antonin Scalia: Is that any different from what an employer who is starting up a new business confronts? Let's assume that you hadn't bought this business from anybody and you were just beginning to build up your worker force, and a union came in when you were just... the same things happened as here. Wouldn't you have confronted the same problems? Isn't that problem unavoidable? Louis R. Cohen: --That it was a continuing demand? Antonin Scalia: No, no. Never mind the continuing demand. Wouldn't you be at risk when a union asked to be represented to determine whether you yet have a representative working force? Wouldn't you be at your own risk? Louis R. Cohen: Not because under Linden Lumber, under those circumstances if the employer refuses to recognize the union... excuse me, if the employer refuses to recognize the union, the employer has no obligation to go to the National Labor Relations Board to file a representation petition. The next step is up to the union. If it thinks it has the 30 percent showing of interest that's necessary to get its foot in the door, then it's the union's obligation to go... and there is no finding of violation, there's no finding of violation of the law on the part of the employer, and we are not talking about a successor situation now, Your honor. We are talking about an ordinary situation where the union comes in and makes a demand, and here to compound the situation the demand was based not on the claim that they were a successor under the law but they were a successor under the terms of an expired contract that Fall River had nothing to do with. William H. Rehnquist: Thank you, Mr. Drogin. The case is submitted.

Warren E. Burger: We'll hear arguments next in 77-926, Cannon against the University of Chicago. Mr. Cannon. John M. Cannon: Mr. Chief Justice, may it please the Court. This case presents as a matter of first impression the issue of whether Title IX of the Education Amendments 1972 maybe enforced in a federal civil action the particular case involves in the application to medical school which allegedly was denied on the basis of sex. Title IX provides impertinent part no person in the United States shall on the basis of sex be excluded from any education program receiving federal financial assistance. At Bedrock, this case asked the question in words of this Court from Allen versus the State Board of Elections whether that sweeping promise of Congress is to be merely an empty promise. The current operating plan of the Department of Health, Education and Welfare's office for civil rights contemplates a predicted backlog of 3570 civil rights complaints including 889 which includes allegations of sex discrimination. Title IX applies to approximately 97,000 institutions, a number of participants according to HEW is approximately 55 million. As of September 30, 1976, HEW had asked 20,318 school districts and colleges to file compliance statements. By the following March, 1977, only 6742 had done so. The enforcement task is enormous, much more enormous than that faced by the Attorney General with respect to election laws and considered by this Court in the Allen case. In fact, HEW has declared itself it has no hope of making a complete enforcement job for this spread of concern. Now HEW in its brief to me, made the most significant point of any other briefs including our own and that is that Congress clearly contemplated that voluntary compliance would be the primary means for enforcements not only of Title IX but of its predecessor legislation Title VI subsequent legislation dealing with handicap and age discrimination. Warren E. Burger: If HEW sees a violation here do you have any hypothesis to suggest why HEW has not proceeded to enforce the statute as you construe the statute? John M. Cannon: Yes, I -- two things, I -- obviously, there was some confusion between the District 5 office in Chicago and the National Office. The National Office in the opinion which is attached to the petition for certiorari has long maintained the position and particularly with respect to Title IX since September of 1974 that there is a private right of action to enforce Title IX whereas the District office went into the Federal District Court and denied the existence of the private right of action and said they were proceeding. And indeed there is in the appendix a copy of my correspondence with the United States attorney in Chicago that indicated the regional director plan to conduct this particular investigation during the first half of January 1976. Warren E. Burger: Would you agree that the Congress has given HEW a lethal weapon to deal with these problems? John M. Cannon: Quite frankly Your Honor, the Carnegie Foundation characterized it as the atomic bomb and I think it's perhaps too lethal in the sense that we referred in our reply brief to -- going through the fund-cutoff procedures with HEW as playing Russian roulette with an institution. Too many of our wonderful institutions of higher learning and other federally assisted organizations are dependent for anything like their current mode of operation on federal funds. Putting the federal funds at risk is one thing that can be avoided by judicial action and HEW pointed that out in the -- Warren E. Burger: Well, Congress -- you're making a very good argument that the Congress should have affirmatively, clearly and unequivocally provided for a private action as an alternative but is that an argument that we should weigh? John M. Cannon: Well, in considering why they may not have done that, I would point out that legislating in that particular area gets very touchy particularly with the background being Title VI. And consider the fact that this Court probably would not have tolerated and Congress was quite well aware that it would not tolerate a reverse of that provision. And historically, there has not been an expressed authorization for federal jurisdiction to remedy what is at Bedrock constitutional violations by federal authorities and in this case as well as Title VI, it's the utilization of federal funds to support discriminatory activity which may well be and in many cases clearly was recognized as constitutional violations so that the absence of a provision is not really new. In fact, the greatest powers of this Court tracing back in the private right of action to some recent cases with Bivens and Bell versus Hood but more deeply through Marbury and all the way back to the King's bench that where there is a legal right provided unless there is a legal remedy, that it's not much of a right and that of course is our basic question. Is this an empty promise or will it be enforced and for the present, it simply must be enforced by the courts or it's not going to be enforced at all. HEW, the one to do the enforcing has told us so and the facts are quite clear. Moreover, even if HEW could conceivably somehow get around to this enormous number of cases, the regulations that they have promulgated and by the time Title IX came along and followed with the other legislation, these regulations were in existence and known to counties. William J. Brennan, Jr.: How many of them are there do you suppose? How many cases are you talking about? John M. Cannon: Cases, the current predicted backlog on the civil rights area for office of civil rights is the 3570 predicted as of this October with 889 involving allegations of sex discrimination. William J. Brennan, Jr.: So if you're talking about private enforcement, I suppose you're talking about the possibilities of that many cases plus a lot others that would -- which would never get into the HEW at all. John M. Cannon: Right. 55 million participants is the figure of the extreme potential and hopefully -- William J. Brennan, Jr.: We could easily handle those. John M. Cannon: Not at all. It is the immediacy of the judicial action as HEW pointed out. Many institutions like all of us would like to go on our own way and not consider something, be accused of a violation of civil rights. It's not a pleasant thing to contemplate. But to take it seriously and provide meaningful internal procedures, immediate outside enforcement by an independent agency be it a Court or HEW is necessary. But at least for this time, unless the courts can step in and provide immediate supervision, there cannot be enforcement of the sweeping language of Congress. And when the Court considers the fundamental rights that are covered by that promise, I would suggest to the Court that neither the judiciary nor the executive or the Congress itself has anymore important business than enforcing of social justice among our own citizens. Warren E. Burger: Now, you've spoken of these numbers, that 55 million figure of course is pretty staggering but 3500 isn't all that staggering. That's roughly a hundred cases per districts, federal district although they would not be evenly spread of course. Did I say a hundred, I meant to say 300, about 300 cases per district. That's just a little bit over the case load for one district judge on average case load figures. So it isn't quite staggering as the 55 million potential, is it? John M. Cannon: Absolutely and it's really, as HEW pointed out in their brief, the availability of the judicial remedy that is going to lead to meaningful internal compliance procedures. And whether one views the procedure as primarily aimed at providing outside judgement on the internal affairs. And any judicial review being de novo or under a standard of clearly wrong or some other such standard, the importance is its immediacy. A district judge just like an agency is going to be influenced by the quality of the internal investigation, the internal record that's made on considering the matters at issue. Thank you. Warren E. Burger: Mr. Solicitor General. Speaker: Mr. Chief Justice, may it please the Court. The Government's position in this matter is essentially that presented by my Brother just a few moments ago that we have a statute that requires the construction of this Court to determine whether it was -- whether it affords a private remedy against a private party that is a recipient of federal funds in the education area. We argue that three years before the statute was enacted, namely in 1969 in Allen versus the State Board of Election, this Court was confronted with the necessity of construing a similar statute. That statute provided no person shall be denied the right to vote for failure to comply with a newly covered enactment that the statute consisted of. That of course required the preclearance of changes in election laws. And there was an elaborate scheme of enforcement which ultimately required the Attorney General to bring an action in -- with the restricted venue to the District of Columbia to see whether the election change required preclearance to see that it didn't offend the objectives of the statute. Now in a case with as complicated, an administrative procedure for enforcement even requiring the bringing of the action by the attorney general in a particular venue, this Court nevertheless looking at the language, no person shall be denied the right to vote for failure to comply found an intent on the part of the Congress not only to create a private right in an individual but also to afford him a remedy in the federal courts. William H. Rehnquist: General McCree, what do you suppose would be the basis of federal jurisdiction in the case such as this against the University of Chicago where you don't have any state action? Speaker: The funding, the federal funding of the agency, I believe the Federal Government has the authority -- the Congress has the authority to determine how its funding will be expanded by a recipient. William H. Rehnquist: No doubt of that but what statutory provision would confer jurisdiction on the federal courts. I would suppose 1343 would do it in the case of a federal -- of a state university but what about a private university? Speaker: Well, 1343 Section 4 which isn't restricted to a state, the action -- our action under the color of a state right would be the jurisdictional basis for it. And if Title IX was found to create a private cause of action, 13434 would afford jurisdiction for federal court to entertain it. And that's the crux of our argument that Section 9 does create a private cause of action against a private recipient of federal funds. And if it does jurisdiction lies and the Court should've heard the matter. Potter Stewart: How about 1331? Speaker: Well, 1331 is a general federal question statute and 1331 would -- Potter Stewart: $10,000 or more (Voice Overlap) -- Speaker: -- require a monet -- jurisdictional amount and 13434 is -- has been construed as not requiring it. Potter Stewart: Has that jurisdiction -- Speaker: And so we would look to that of whether Mrs. Cannon would have -- could show the jurisdictional amount is problematic. She didn't attempt to. Her action is clearly under 13434. Byron R. White: Would you think -- do you think Title IX would be construed to be a civil rights statute? Speaker: I would say that Title IX should clearly be construed to be a civil right statute. As a matter of fact, the legislative history indicates that Title IX was originally contemplated as an amendment to the Civil Rights Act of 1964. But later was enacted as part of the Education Amendments of 1972 but its clear language that no person shall on the basis of sex be denied participation in or be -- or deny the benefits of or be discriminated against in any federally financed education program clearly is the kind of language the Congress has used when it has intended to confer a private right of action to remedy a deprivation of civil rights. Senator Birch Bayh who was the sponsor of Title IX in the Senate, clearly stated that the purpose of Title IX was to eradicate the years of discrimination against particularly women but it wasn't limited to women against persons on the basis of sex. So I think 13433 would certainly -- its requirement of it being a civil rights statute would certainly be satisfied in that respect. Speaker: You make enforce through -- Speaker: 634, I beg your pardon and thank you for correcting me. We submit that the Congress on the basis of the construction given to language which commences no person shall be denied a specific right has reason to and does in fact utilize that language when it intends to create a private right and to create a private remedy. We suggest that because in a series of Civil Rights Acts whenever the Congress has intended they're not to be a private right of action, it is expressly stated that the administrative remedy will be exclusive and -- Byron R. White: (Voice Overlap) some other sections of the Civil Rights Act when they wanted a private cause of action, they provided for it. Speaker: That is correct if the Court please but it is done so for a specific purpose of showing a limitation on the private cause of action that was created. For example in Title II of the Civil Rights Act of 1964 concerned with public accommodations, there was the expressed grant of a private action but it was specifically limited and restricted similarly in Title VII which was the employment, the qual employment opportunities part of the Civil Rights Act of 1964. There was the express grant of a private act but specifically limited to require the utilization of state facilities for processing claims of this sort and then subsequently the federal agency that was set up and requiring certain time limits to be followed. Byron R. White: And you think that if Congress had expressly provided for a private cause of action under this section, it wouldn't have limited it or conditioned it upon exhausting administrative remedies or anything like that? Speaker: I can only suggest that the Congress did not do so and when it enacted Title VI of the Civil Rights Act of 1964, it also did not do so. And of course, Title VI -- Byron R. White: Well, that's a -- that is somewhat of a bootstrap. Speaker: It may very well be but the Congress has a clear pattern here of using the language -- Byron R. White: Yes, it's maybe clear one way or the other. Speaker: I think that so. I think that explains why we're here this morning. Byron R. White: Exactly, I know. Speaker: But Congress apparently has relied upon this language formula to create a private cause of action when it intends to do this. Now on the other hand, the Congress has used other kinds of language formulae when it has intended to do it. For example, the Congress should have said -- could have said that no educational institution shall -- or any educational institution that discriminates on the basis of sex will not receive federal funding. And in such an instance, I would be hard put to argue that someone who felt discriminated against could find from that a private right created in him and a federal remedy to vindicate that right. But here, the language consistently runs through the series of civil rights actions which are intended to remedy against discrimination on the basis of race, on the basis of sex, on the basis of age, on the basis of physical handicaps. This language no person shall be discriminated against. And when it intended to give a restricted right of action, it so expressed itself as it did in Title II and in Title VII, when it intended to have no private cause of action despite the use of that language. It has expressly stated that the administrative remedy will be exclusive as it did in Title III of the Older American Amendments of 1975 but when it did neither, it appears that the Congress intended then for the recipient of this right to be afforded a federal remedy. Lewis F. Powell, Jr.: Mr. Solicitor General, what import if any do you attach to Senator Keating's inability to get a private right of action included in the original Title VI? Speaker: Well, I think that's the most difficult part of my argument here and all I can suggest was that the -- he knew too, however, that if this language formula was used that he need not win his effort for an expression but an expressed grant. And the Congress did use this linguistic formula even though he was unable to get there. If the Congress had intended not to grant a private remedy then it would not have concluded nearly with rebuffing Senator Keating it would seem to me but it would've expressed the contrary or would've utilized contrary language as we can see it did in this other statutes. This Court of course address the -- this whole matter of determining when a -- when there should be an extension of a civil remedy to a person injured by another's breach of a right granted in the case of Cort versus Ash in 1975 and suggested for questions that must be answered and I would like to consider those for a few minutes. The first one of course is whether the plaintiff is one of the class for whose special benefit the statute was created. I think its irrefutable here that Mrs. Cannon is one of the class for whose special benefit the statute was created. I think we can conclude without argument that she was a person who was to have received a federal right and that she did indeed receive it. I argued as I we do on our brief on page 46 in the following pages that the use of the language has been consistent in this respect. The second question of course is whether there is any indication of legislative intent to create a private remedy or not. Now of course if there was convincing evidence of intent, we wouldn't even apply the Cort versus Ash formula if there was unmistakable evidence that there was no intent that would conclude our discussion and if there was unmistakable evidence, there was intent, it would as well. Here, we have to conclude that the evidence is ambivalent. Nevertheless, we suggest that such evidence does exist, does favor the finding that the legislature intended to do it. I suggested before the consistency of the language and I direct the Court's attention also to the fact that there were lower court cases granting a private remedy in Title VI after which Title IX was adopted at the time the Congress adopted Title IX. Now, whether the Congress was acutely and actually aware of those decisions, I can't argue but I certainly can suggest that they were there for the Congress' direction. But even if we concede that the second point that of legislative intent is ambivalent, we proceed to the third point, is it consistent with the underlying purpose to imply a remedy. I suggest that the answer here is a compelling yes. My Brother has indicated the problem of the -- of numbers that would make it difficult for persons whose rights were offended to get a private remedy. I would also add that the cutoff isn't a remedy for Mrs. Cannon and if the Government should cutoff the funds, she and many persons like here would still be without a remedy. Also in the case of a single grant, single federal grant with nothing in the way of sustaining funds contemplated, there would be no need for a cutoff. And yet she would be without any administrative remedy at all because there isn't anything the administrative agency could do for her. And finally, whether this is a right traditionally relegated to state law, I suggest that this is uniquely federal because federal funds are involved and the Federal Government has a right to be free from discrimination or to see that its funds are not employed to discriminate. I would conclude by saying that private litigation is an indispensable compliment of the Government action if the goals of Title IX, freedom from discrimination on the basis of sex are to be achieved. Thank you. Lewis F. Powell, Jr.: Mr. Solicitor General, may I come back a moment to the distinction you make between Title VII and Title IX with respect to Congress in Title VII having impose limitations on the use of the private remedy. Speaker: Yes sir. Lewis F. Powell, Jr.: What puzzles me is why Congress should have taken a different view if it did in Title IX in view of the capacity of the private remedy to disrupt education and the freedom of faculties to choose student bodies. In this case for example, there were some 2,000 applicants whose academic credential were superior to the plaintiff in this case so that I suppose if they had chosen to bring individual suits, there could have been 2000 additional suits. The disruption to the colleges would be vastly greater one would think than the disruption to private industry as result of claims under Title VII. What policy considerations could've motivated Congress to make the distinction you draw? Speaker: Mr. Justice Powell, I believe there are two answers to the question. The first one is Title VII, the employment case was an area under which the Congress has not ventured before and the basis for its jurisdiction there was the Commerce Clause. And it was extending some previously understood concepts of the Commerce Clause and therefore I thought it should closely restrict their private remedy as it explored this new area of extending federal power. Here under Title IX, there is absolutely no question about the power of the Congress to control the spending of federal funds. And so it need not have felt as queasy about proceeding -- about forwarding a private remedy there. I think the second answer is -- Lewis F. Powell, Jr.: Mr. -- may I comment on your first answer. In view of the decisions of this Court under the Fair Labor Standards Act, how could Congress had been queasy about its power under the Commerce Clause to enact Title VII? Speaker: Well -- Lewis F. Powell, Jr.: Window washers had been held to be engaged in interstate commerce. Speaker: But the Congress had not done so in the -- in any discrimination areas. This was his first venture in that field. Lewis F. Powell, Jr.: Does that make a difference? Speaker: Well, I would think it would. I would think the Fair Labor Standards Act rationale was the impact of just economic factors on the commerce and here, the nation at the time Title VII was enacted was finally addressing some unfinished business of eliminating discrimination based on race and there were reservations about it. And -- Lewis F. Powell, Jr.: You had a second reason and I interrupted you. Speaker: I would suggest that the second reason is unawareness that although Title VI had been lost since 1964, there had been no disruption of educational programs across the nation as the question suggested might result if 2000 students who ranked below the particular applicant brought a case. My experience -- my observation has been that Title VI has not resulted in an inundation of the courts by -- on the basis of persons who believe themselves aggrieved because of race. And I don't think the same thing would happen under Title IX on the basis of sex and I think the Congress was probably aware of that. If -- William J. Brennan, Jr.: General McCree before you sit down. I'm curios about one thing. In the Government's brief on page 21, there's a reference to the Lau case and to my concurring opinion in it, the brief reads the relevant portion of that opinion not joined by any other member of the court states. I don't know who wrote the brief but I think that statement is incorrect. There was another member of the court who joined me. Speaker: I apologize for the -- I apologize for the error and I appreciate the Courts going into my brief. William J. Brennan, Jr.: I read it twice to be sure what I was saying was correct. Speaker: I'll try not to have that happen again Mr. Justice. Thank you. Warren E. Burger: Thank you Mr. Solicitor General. Mr. Bernstein. Stuart Bernstein: Mr. Chief Justice, may it please the Court. The -- it's been applied in the arguments of petitioner and the Solicitor General that Title VI and Title IX are to be interpreted together. We may recall that Title VI was a subject to some consideration by the Court in the Bakke case. It is our position that Section 1 of each of these Titles states a policy and that Section 2 creates a very elaborate enforcement procedure and that that enforcement procedure is exclusive. We think that examining the terms of the statute on their face reveals this. We think the setting of Title VI in the Civil Rights Act of 1964 where other Titles did contain specific provision for private remedy confirms the intent which appears from the face of it. But most important we think the legislative debates which gave flesh to what appears on the face of the statute confirm the assertions that we have made in our brief. Now, throughout this litigation, we have constantly referred to the legislative debates, what was said, what exchanges we have on the floor of the Senate and the House and up until last Thursday, we have had no response to this from the petitioner. Last Thursday a brief was filed, a reply brief which sets out some excerpts from the legislative debates which purport to make a point that the first section of Title VI and by implication Title IX is independent of the enforcement procedure under Section 2 of each of these Titles and that therefore the implication is that a part of that right of action could be implied even though there was no expressed provision. Since I could not anticipate these references nor will I have a further opportunity to respond, I would like to start my argument with the reference to these arguments by -- in the petitioner's reply brief and show that they completely is -- or misstated when I say that advisably, it certainly do not support the position asserted. The first exchange described in the reply brief is one between Senator Talmadge and Senator Humphrey. Byron R. White: You're speaking -- the reply brief of the -- Stuart Bernstein: Yes sir I am. Byron R. White: -- of the federal respondents? Stuart Bernstein: No, of the petitioner -- Byron R. White: Okay. Stuart Bernstein: -- Mr. Justice White. Potter Stewart: Filed January 4th? Stuart Bernstein: Yes sir. No, filed last Thursday, whatever date that was -- Potter Stewart: (Voice Overlap) it was January 4th -- Stuart Bernstein: -- and I'll refer to page 14 of that brief. Potter Stewart: Alright. Stuart Bernstein: By the exchange between Senator Talmadge and Senator Humphrey has described and it concludes with the following quotation which is set out in the brief. And it says Senator Talmadge continued, the people have the authority to go to courts -- John Paul Stevens: Mr. Bernstein I'm sorry -- Stuart Bernstein: Yes sir. John Paul Stevens: -- what page of the reply brief on the -- Stuart Bernstein: I'm sorry. Page 14 Mr. Justice Stevens. It says that Senator Talmadge continued, I'm quoting, "The people have the authority to go to Court, in the Senator admits they have that right". And Senator Humphrey is quoted as responding, "Yes". Now the implication of this is that they have the right to go to Court under Section 1, Title VI and Title IX. Well, not so. This was the culmination of a long statement by Senator Talmadge opposing the Civil Rights Act in its entirety in Title VI in particular. And the point he was making that there was a preexisting right under 1983 for a right of action against the state action where discrimination was alleged whether there was or was not federal funding and his point was that the -- this Act which gave the power to the executive to cut off federal funding was totally unnecessary. It was very oppressive and had the seeds for destruction of local government “that I quote where he said just about that. When enhanced to the extent there was a legitimate governmental interest in this matter, it was already covered under 1983. And it was in this context that he made the point, the people have the authority to go to court and the Senator admits they have that right. He was speaking of the then existing state of the law not with the bill which was being considered and Senator Humphrey responded, "Yes, they do". And then Senator Talmadge which sort of sums up the point he was trying to make said, "Why does not the Senator relying on the Court's authority instead of giving arbitrary capricious wholesale punitive power to some federal bureaucrat to starve entire cities, towns, states and regions at one fell swoop". He simply didn't like Title VI at all and he was simply urging on the Senate that they not adopt it in its entirety. Senator Humphrey responded and I'm reading now from the Congressional Record 110, page 5246 which is not included on the reply brief. Senator Humphrey replied, but we develop here what I call the legislative history. I wish to make it clear that Section 602, second section is a limitation on the enforcement of the law set out in Section 601 of Title VI to those agencies affected by Title VI. Now that exchange disturbed Senator Case because he thought that that statement could be implied as limiting the preexisting rights under 1983. So Senator Case got into the Act and he said to Senator Humphrey, I'm disturbed about that limitation language. I don't want this statute to take away preexisting rights. And that's when the exchange culminated in the two quotations you find in the bottom of page 14. Now, you'll see that there are dots indicating omissions from those quotations. Now, the dots are very significant, to the heart of this case but they have been omitted. I'd like to fill the dots in if I may. Senator Case says and I'm quoting from what's in the brief, “For myself, I would not be satisfied if this language in Section 602 is intended to limit existing rights of individuals under the constitution or to limit the rights expressed in Section 601 in any substantial sense…” alright, here is what the dots say. Federal departments or agencies with authority to disperse loans, grants or to make contracts in order to eliminate discrimination in programs in which those contracts, loans or grants are involved must proceed in the fashion stated. With that I agree and then he goes on. “That is the intent. However, it is not intended to limit the rights of individuals if they have any way of enforcing their rights apart from the provisions of the bill. Apart from the provisions of the bill by way of suit or any other procedure, the provision of the bill is not intended to cut down any rights that exist”. That was the thrust of the discussion which is set out here on page 14. And then Senator Humphrey responded as it was set out here. "I thoroughly agree with the Senator insofar as the individual is concerned…” Then you see dots again. Now, here's what the dots say, “As a citizen of the United States, he has his full constitutional rights. He has his full -- he has his right to go to court and institute suit and whatever may be provided in the law and in the constitution". They were talking about existing law not what the bill would do and the implication of the reply brief that somehow this was intended to enlarge these rights or the change of existing law is completely foreclosed by the discussion I have alluded to. Now, there was one more -- William J. Brennan, Jr.: Doesn't that boil down Mr. Bernstein to suggesting that they were not opposed to a private right of action though. Stuart Bernstein: Well, sir if you anticipate me because Senator Keating then immediately chimed in. That he said -- William J. Brennan, Jr.: Talking about his own bill. Stuart Bernstein: Pardon? William J. Brennan, Jr.: Talked about his own bill. Stuart Bernstein: Well, no, he's -- he comes right along and he said that he understood the point that Senator Case was making and he was glad he got it cleared up but he had another problem. His problem was that the bill did not provide a private right of action for the individual and here is what he says under Sections -- under Section 603, that's the judicial review section. A state or political subdivision of a state or an agency of either which has denied funds because of discrimination -- because discrimination is taking place is given the right of action in Court but there is no correlative right in the citizen. He is not talking about his bill, he's talking about this bill. It's before them for consideration. If funds are granted to discriminatory projects by public officials, the citizen who is denied the benefits of the project has no correlative right to bring a suit in Court and he should have. And that's why he find the bill objectionable but they never did change the bill Your Honor. Now, clearly, he would like to have had a private right of action but what he said it isn't in there and I don't like it and he never got it in. Now three weeks -- Warren E. Burger: You say that negates any idea that Congress submitted it because they thought it was unnecessary and already in there. Stuart Bernstein: Yes sir. Sir, I submit there is no other conclusion to be drawn but that they wanted to get it in, it wasn't in there and he didn't like the fact that it was in there. Thurgood Marshall: Did Senator Case introduced -- Stuart Bernstein: Pardon? Thurgood Marshall: -- an amendment -- did Senator Case introduce an amendment along that line? Stuart Bernstein: Well, if he did sir, I'm not aware of it. Warren E. Burger: Senator Keating did, did he not? Stuart Bernstein: Senator Keat -- well, what Senator Keating did was ask the Department of Justice of drafting the bills to include such a provision and they did not. John Paul Stevens: But was that earlier Mr. Bernstein? Stuart Bernstein: That was earlier. John Paul Stevens: Yes. Stuart Bernstein: But three weeks later then the -- I'm -- what I quoted occurred on March 13, 1964, three weeks later. I believe was on April 1st, Senator Keating again took the floor and it was during the course of Senator Ribicoff's analysis of Title VI and it was there Justice Stevens that you find a quotation which was set out in your concurring opinion. And during the course of that, Senator Keating got the floor from Senator Ribicoff and he said, and I have to read this because I think this is also quite critical. As Senator Ribicoff has pointed out, both he and I felt that the original Title -- this incidentally is quoted on page 24 of our brief, may it please the Court. As Senator Ribicoff has pointed out, both he and I felt the original Title VI proposal was objectionable and that it emphasized the cutting off of federal funds rather than the ending of discrimination. We favor a provision allowing the administrator to institute a civil action to eliminate the discrimination and we favored judicial review of the determination to withhold federal funds. Parenthetically, while we favor the inclusion of the right to sue on the part of the agency, the state or the facility which has deprived the federal funds, we also favored the inclusion of a provision granting the right to sue to the person suffering from discrimination. This was not included in the bill. Now I submit sir -- John Paul Stevens: So he says, this was not included in the bill, he means the Department of Justice didn't include it in its bill. Stuart Bernstein: That's correct. Well, the bill -- it's hard to describe it, that whose bill it was by this time but this was the bill now before -- under consideration. It was asked that a provision be included. The provision was not included and as Mr. Justice White has pointed out in his concurring opinion in Bakke, there were other references by other Senators to the same failure to have a provisional (Voice Overlap) -- John Paul Stevens: Yes, but the request by Senator Keating was to Department of Justice. There was no formal amendment introduced by Senator Keating or any bill proposed. Stuart Bernstein: That's correct. But clearly the Senate knew by this exchange that they try to get one in and that it wasn't in and he was decrying it, the lack of it. Thurgood Marshall: I don't see how you can consistently say they had try to get it in when they didn't propose an amendment. Stuart Bernstein: Well, certainly if (Voice Overlap) -- Thurgood Marshall: They assumed that they -- Stuart Bernstein: Yes sir. Thurgood Marshall: -- knew they could propose an amendment or why didn't they just talk? Stuart Bernstein: Well, I suppose all of the congressional debates are just talk sir and that's -- Thurgood Marshall: On -- but when they put an amendment, it's no longer talk. Stuart Bernstein: Well, what he is saying is he tried to get it and he didn't get it and I don't see how we could -- Thurgood Marshall: Well, why didn't he -- why did he -- did he ever make an explanation as to why he didn't offer an amendment? Stuart Bernstein: I don't know except his concluding statement which I didn't read where he said both the Senator from Connecticut -- Warren E. Burger: What page? Stuart Bernstein: Pardon? Warren E. Burger: What page? Stuart Bernstein: Oh, I'm reading in -- on page 24 of our brief where he completes the statement before the Senate where he says, however, both the Senator from Connecticut and I are grateful that our other suggestions were adopted by the Justice Department. I assume that he felt that he wasn't going to get it and he abided at that point. But clearly, he expressed the point of view that he wanted it in and he wasn't in there. And what -- William J. Brennan, Jr.: May I ask Mr. -- Stuart Bernstein: Yes sir. William J. Brennan, Jr.: Your comments go to Title VI only or to Title VI or to Title IX. Stuart Bernstein: No sir -- and Title IX sir because -- William J. Brennan, Jr.: But I gather -- your comments to the extent they address Title VI disagree with Mr. Justice Stevens' conclusions in Bakke? Stuart Bernstein: Yes sir. William J. Brennan, Jr.: I see. You think that was wrong? Stuart Bernstein: Yes. You have -- make it difficult for me to be (Voice Overlap) to my response -- William J. Brennan, Jr.: Lest you must (Inaudible) Stuart Bernstein: Yes, I think it was wrong. William J. Brennan, Jr.: Of course you do. And you think Mr. Justice White's concurring opinion had the better of it. Stuart Bernstein: I think so. I think that -- Byron R. White: But even if that were true that -- if the Congress came along and enacted Title IX, there could be a different provision in Title IX. Stuart Bernstein: It could be. Byron R. White: There could be a different legislative history in Title IX or there could be the existing legal environment could be such that you had to assume Congress knew what the law was or what the lower courts set the law was. Stuart Bernstein: That's correct. That's correct and we've addressed that of course in our briefs Your Honor. I think all of us have agreed -- all the petitioners, Solicitor General all the amici in this case. There are many of them. We all agree that the legislative history of Title VI carries over to Title IX and Senator Bayh so said when he introduced Title IX. He says, “We're doing the same thing we did under Title IX provides the same procedures, the same regulations that have worked so well under Title VI”. Byron R. White: (Voice Overlap) the courts had already sent what they thought that Title VI did even if you might disagree with what some lower court said. What if the lower courts had held this and the Senator when he was talking had those cases specifically in line? Stuart Bernstein: Well, as the Court of Appeals pointed out below, there was no indication that any Senator or any legislator was aware of anyone of these cases that had been referred to in their briefs. Further as we have repeatedly asserted here, these cases at most were equivocal on the point because the jurisdictional basis was not necessarily Title VI itself. Byron R. White: And I take it that it also in the legislature viewed Title IX, there were some Senators who expressly addressed the question and said, it should -- this shouldn't be -- we are not indicating that there is a private cause of action. Stuart Bernstein: There is an implication that there is such a thing but I haven't found. We have a rather carefully calm and I'll -- in all candor. I must say we haven't found that reference (Voice Overlap) -- William J. Brennan, Jr.: Isn't it more accurate to say what they said was we don't intend to change the law whatever it is now? Stuart Bernstein: That's -- this is the thrust of the law. Whatever the law -- it was -- whatever they did in 1964 in Title VI, that was the thrust of what Senator Bayh said when he introduced the bill. I haven't set out -- William J. Brennan, Jr.: Nothing of the colloquy that Congressman Railsback in that Judge Bauer referred to. Stuart Bernstein: Oh, that referred not to the adoption of Title IX but to the Civil Rights attorney's award -- William J. Brennan, Jr.: Oh, that's -- Stuart Bernstein: -- which occurred just last year while this case was in the Court of Appeals on a hearing. It was an entirely different matter. What we submit is that apart from the clearer construction of the statute and apart from its setting in the Civil Rights Act of ‘64 that the legislative history which I have referred to here clearly supports our side if you apply the second test of Cort v. Ash namely, was there an attempt of Congress to deny or create? And Senator Keating says there was an intent to deny and he decried the -- that (Voice Overlap) William J. Brennan, Jr.: Well, is that fair Mr. Bernstein. He said there was a failure to create and he was unhappy that there was a failure to create. Is that quite the same as the statute that says there shall be no other remedy except the one we've expressly provided? Stuart Bernstein: Well Your Honor, I -- William J. Brennan, Jr.: There's no exclusivity provision in the statute. Stuart Bernstein: I suppose we have trouble on how we read the words but what he says that the citizen who denies the benefits has no right to bring the suit in Court. I think he is saying that there is no right to bring a suit in court. He is not -- William J. Brennan, Jr.: Under the bill. No right expressly provided upon the -- Stuart Bernstein: On the bill of their passing. That's the bill they ultimately passed. Now if he says that, I -- you know we can play with the words just to putting it positively or negatively but I think he says there is no right. I think he says it almost in high (Inaudible). I think to conclude this part of my presentation, I think that this clearly --thoroughly sets out that with respect to the second test and we accept the first and fourth as set out by Solicitor General. But the second test namely what is the intent of the Congress. I think it could be -- it could hardly be clearer. That really has nothing to do whether I think the University of Chicago would be overburdened if every disappointed applicant would run to the court or if Mrs. Cannon thinks it's unfair that she doesn't have her day in the Court. It's what the Congress say and I think they spoke fairly clear and I like to -- Warren E. Burger: You haven't mentioned --before you leave that, you haven mention the Congressman Celler, attorney, the Chairman of the Judiciary Committee of the House and certainly on top of this problem but he said over on page 25 of their brief -- Stuart Bernstein: Well sir, I -- Warren E. Burger: Now was he -- it was he bearing on six -- Title VI? Stuart Bernstein: Excuse me sir. Speaker: Yes. Stuart Bernstein: Page 25. Warren E. Burger: Page 25 of your brief, yes. Stuart Bernstein: Yes, this is Titles -- Title VI. The difficulty is that there was a very little legislative history on Title IX other than its introduction by Senator Bayh and that's why all the legislative history referred to in the briefs here goes back to Title VI. And everybody agrees, in fact its claim that one was a photocopy of the other and we don't dispute that. We think that's quite right. If there is a private action under Title VI, there's one under your Title IX. But this was all under Title VI. I'd like to get to the third test of the Court we asked namely whether it's consistent with the underlying legislative scheme. And here, I'd like to pick up the reply brief of the -- the brief of the Solicitor General. You may recall Mr. Justice White made the point in his concurring opinion in Bakke that to permit a private right of action under the first section who had been affect to be -- to bypass the elaborate administrative procedure under Section 2. Byron R. White: Yes, the difficulty as in this case, I was the only one who filed that -- Stuart Bernstein: Well sir, I recognize that I have that burden. I -- but I'm glad to have your support. I trust (Inaudible) -- I'm hoping that my eloquence can convince some other members of the Court. The Justice Department took issue with Mr. Justice White's statement that represented a bypass -- would represent a bypass of the administrative procedure and they said there's no inconsistency. Yet they said or let me point the fact out. Mrs. Cannon's complaint was filed with them in April of 1975 and they still haven't done, acted on it. They completed their on-sight investigations, University of Chicago, Northwestern University in June of 1976. At least they so advised here in June ‘76 on-sight investigations have been completed. The question she raises concerning age raises issues national in scope. They have to have national policy on it and they assure her they will act expeditiously as possible. That letter from HEW set was in appendix for the petition for certiorari. It's from HEW to Mrs. Cannon. That was 1976 and nothing has happened yet. What they said in their original brief to this Court was that if the Court should decide there is no private right of action then they will complete their investigation. Or if there is no inconsistency between the administrative and judicial procedure why wait until this Court acts. It should be irrelevant. They should have gone ahead and completed it. They explained in their reply brief something else. They say that, and I think I can quote the words exactly. They say that since the District Court, the Courts have decided there was no private right of action and since HEW couldn't itself resolve that question, it was going to defer further action pending the outcome of this case. Nobody asked HEW to decide that. That's not their function. Their function is not to decide whether there is a private right of action. Their function is to act on administrative complaints under Section 2. It is clear that what HEW was saying that if you decide there is a private right of action, we'll just wash your hands for this matter, we won't go any further. If they don't mean that, why have they waited? Warren E. Burger: Is it reasonable to assume -- Stuart Bernstein: Why have they waited -- Warren E. Burger: Is it reasonable to assume Mr. Bernstein that had the HEW acted in 1976 that there could have been by this time judicial review of that administrative determination? Stuart Bernstein: Yes of course Your Honor, that is of course true and I must express some concern and sympathy with Mrs. Cannon's place. I think it's unfair that she's had to wait this long. But its -- I think it's a doing of HEW and I say that in all candor and perhaps with a little anger. I think HEW has pulled itself on by its bootstraps. It has enacted and it says, you see, we can't act and therefore, we wanted -- Warren E. Burger: Are you suggesting that they're undertaking to compel this Court to decide the scope of their responsibility instead of deciding it themselves? Stuart Bernstein: Well, I think the responsibility is clear. They -- nobody can say they haven't suggested that they have no authority under Section 2 to proceed. I don't think they need this Court to tell them that. That's clear. I think what they're saying is that if this Court says you can go to Court then we don't proceed and that's the bypass that Justice White was talking about. It's inevitable. We got another dilemma. Let's suppose they do proceed two ways, administratively and judicially. It comes up in court under one standard of review. It comes up through the administrative agency and judicial review under the APA standard review which is entirely different so you can -- the conception of it at least, the same court can decide the same question under different standards and come out different ways. The dilemma is simply unavoidable. It seems to me if the Court please that there is no way you can give credit to the elaborate scheme under Section 2 of each of the statutes if you allow an independent private right of action. Judicial review is another matter. So I submit that this clearly sets forth the answer to the third Cort v. Ash test. Now the Government makes one other point in its reply brief. It -- I think it was lecturing me but I'm not quite sure about my failure to perceive the difference between primary jurisdiction and exhaustion of remedies. And they are -- they go to great detail to explain that in circumstances like this where they are in court on our Title VI case. They may under the appropriate circumstance ask the Court to defer action while they complete the administrative process and they say that's the doctrine of primary jurisdiction. That's what they're talking about in the -- it seem particularly upset by my statement that I was confused about their course of conduct in various cases that we cited in our brief. The unfortunate part of the Government's position is that they in fact in the Terry versus Methodist Hospital of Gary case which we refer to in our brief, they themselves filed the motion to dismiss for failure to -- for lack of subject matter jurisdiction because of lack of exhaustion. The very point we're trying to make they themselves made but now they denied that. Well, they withdrew that motion subsequently but they withdrew it not because they felt the exhaustion doctrine was improper but because they wanted as they explained in the later document, they wanted to facilitate settlement. So they themselves had adopted the exhaustion argument if the Court please. So we're not doing anything noble here that seems to me it's inevitable that you do that if you're to make any sense out of the statute, otherwise you will have a shamus. Well under -- I think this is the essence of my case because what I'm really talking about is what Congress intended and not what Mr. Cannon wants or what I want. It's ultimately what the Congress said. A few minor things, I -- they weren't touched upon but I've -- they are in the briefs and that is the reason of managements to the age discrimination act which now provides for a specific right of action with exhaustion. And we made the point in our brief that this manifested an attempt that when Congress means they have a right of action under these kinds of statutes, it knows how to say so clearly. William H. Rehnquist: But that's a different Congress than the one that enacted Title IX. Stuart Bernstein: I understand sir. If you forget, I'm dong this in the defensive posture. They said that I can't read the amendment that way because the amendment implies a preexisting right. I simply wanted to call to your attention of the conference report which we haven't had a chance to do before because there was a difference between the House and the Senate on that issue where the conference report says as follows. The House Bill amended the Age Discrimination Act of 1975 by specifically providing for a private right of action for a violation of the Act. I'm responding to the point I make that that really wasn't what was done and I point to the conference report to say that that was done. I agree that actions of subsequent legislatures are not very significant in trying to shed light on what proceeded. William H. Rehnquist: That really only proves that this particular Congress knew how to create a prior cause of action not necessarily that the proceeding it wanted. Stuart Bernstein: Alright sir. I accept that. I -- I've -- If it please the Court, I think that is the essence of our position. In summary, it is again not -- oh, I'm sorry but I want to think I have to refer to. Solicitor General said in his reply brief that if -- going to court is really not a very serious problem. All you have to do is have the judge ask the question, for example Mrs. Cannon, was she kept out because of her age or for some other reason? And once you answer that question, that's easy. I have the impression that whoever wrote that brief for the Solicitor had never tried a case. If it was that easy, we would not be here. We would have done just that. It's a little more complicated than that. What our concern is you see, is the date -- they put -- the posing of the admissions committee. Mr. Cannon already filed a notice in the District Court to take the deposition of Dean Ceithaml who is the chairman of the admissions committee at the University of Chicago Medical School. Well, what will lead the (Inaudible) about? Well, why wasn't -- why wasn't Mrs. Cannon acceptable? How about these other 2000 that you say would better be heard and were turned down? How about the 104 you accepted. We have 5500 people that we can have a discovery about. He has full discovery available. He's already served the notice to discover all that we have unheard including any references that we've got through her applications that is references from third parties. All of that's available and that is what's involved. It isn't simply a matter of the university coming in and saying, “Mr. Judge, we didn't admit this lady because of her grades”. Mr. Cannon wouldn't be satisfied with that and he'd be a bad lawyer if he was. He wants to know why and we're subject to that and I submit to you. You put an admissions committee to that once and you're not going to do this again. They're going to make their decisions on strict grades and nothing else because then you can't get at them. And that's what they're worried about and that's what we're worried about and that's why we say in our brief that at the bottom, this is an academic freedom issue because this Court has said, you've cited the Harvard admissions program where diversity is a desirable factor in student bodies. We set out our admissions program which is aimed to the same end -- William H. Rehnquist: Well -- Stuart Bernstein: -- but if you submit us to this kind of Court proceeding, its -- you were not going to have any. William H. Rehnquist: Well, how do you get academic freedom? Are you suggesting that there is some sort of constitutional right that favors you because “academic freedom” is involved? Stuart Bernstein: No sir, I really don't. I'm picking up the point that was made repeatedly in Bakke by -- with great concern. William H. Rehnquist: By Justice Powell's opinion. Stuart Bernstein: By Justice Powell and I believe by Justice Blackmun Justice Blackmun. Harry A. Blackmun: Mr. Bernstein, I'm a little puzzled by the argument. Stuart Bernstein: Yes sir. Harry A. Blackmun: The burden remains on the plaintiff does it not and if the members of the admissions committee each testified that they relied on neutral factors such as grades and judgment the like, how does she sustain her burden, she doesn't sustain it just because she's female? Stuart Bernstein: Yes, that's when the case is over Your Honor. Harry A. Blackmun: Pardon me? Stuart Bernstein: That's when the case -- that's how the case ends but it's getting from the beginning -- from the complaint of that stage -- Harry A. Blackmun: It's to see -- if you say she has a -- Stuart Bernstein: -- that's the discovery -- yes sir. Harry A. Blackmun: If you say she has a cause of action, has the right to take a half a dozen deposition. Stuart Bernstein: Oh sure. But that begs the question. Harry A. Blackmun: But does that bankrupt the university? Stuart Bernstein: What it does, it exposes the university to this kind of thing by any number of disappointed applicants -- Harry A. Blackmun: Well, but first (Voice Overlap) -- Stuart Bernstein: Bankruptcy Your Honor is not the point. Harry A. Blackmun: But does each disappointed applicant necessarily file a lawsuit after a whole string of other disappointed applicants to file lawsuits and lost. I mean is it probable just looking at it in a kind of an -- at large. Is it probable that all of these universities really are discriminating on the account of sex? Stuart Bernstein: Well Your Honor, maybe I should have stayed out of this thicket to -- when they had the opportunity but having gotten into it, let me see if I can get out of it. What we are concerned about sir is that if you shift the arena, no matter how it comes out as I stated in our brief. We're not concerned about the ultimate merits of the case. We have not conceded the -- but for the question at all. But if you start the discovery route, if you start that route, you're going to have a chilling effect on the independence of the admissions committee. I think that's inevitable and Your Honors had sufficient trial experience I know. It's to know the problem of clients and the deposition procedure. It does have a chilling effect and this is our concern. William H. Rehnquist: What do you mean by -- Stuart Bernstein: It's a multi (Voice Overlap) -- William H. Rehnquist: -- chilling effect? Stuart Bernstein: Well, I really -- William H. Rehnquist: Granted you can say what do we mean by a chilling effect? Stuart Bernstein: I think I was doing pretty well. I -- by chilling effect I mean is this, is that the concern of academics that they will have to justify their decisions in a court of law. William H. Rehnquist: Well, but the -- if the petitioner is right, the Congress intended to chill admissions committee decisions based on sex. Stuart Bernstein: Yes sir, I am sorry. I'm not -- I'm proceeding on the assumption now that in terms of the policies involved here that to the extent that that enters into that. There is a strong policy which would militate against the private right of action and that if this issue is going to be exported or to be explored fully -- William H. Rehnquist: Where does that policy come from? Stuart Bernstein: The policy that I have enunciated about -- William H. Rehnquist: Yes. Stuart Bernstein: Well, the policy comes from the fact that I think that if you implicate the judiciary in admissions decisions then you have a threatened academic freedom. William H. Rehnquist: But you said a moment ago in response to my question that you didn't assert any constitutional claim based on academic freedom. Stuart Bernstein: I'm speaking of academic freedom sir in the same sense that it was used by Justice Powell in Bakke. It -- I think it was a quasi constitutional right. I forget the (Voice Overlap) -- William H. Rehnquist: But what is a quasi constitutional right? Stuart Bernstein: I'm waiting for the red light. Warren E. Burger: I think perhaps we're asking you to define our terms with us. Stuart Bernstein: Yes, well I enjoy this so I'd like to take a stand on -- William J. Brennan, Jr.: As I understand your argument Mr. Bernstein, you're saying that these people on the admissions committee are going to be chilled or more afraid of the suit by someone like the plaintiff in this case and they are afraid of having their funds cut off by the Federal Government -- Stuart Bernstein: No sir, (Inaudible) -- William J. Brennan, Jr.: -- if they engage in dubious discriminatory policy. Stuart Bernstein: Yes sir, I have -- William J. Brennan, Jr.: Which is the more serious remedy? Stuart Bernstein: I have the -- the fact of the matter is there has been no discrimination. William J. Brennan, Jr.: Well, then -- Stuart Bernstein: The question is where do you establish that fact? That's (Inaudible) that's the issue. William J. Brennan, Jr.: Well, they don't have to establish it, the plaintiff has to prove the contrary. And I just -- Stuart Bernstein: When we're -- William J. Brennan, Jr.: -- doesn't seem to me -- Stuart Bernstein: When we're (Voice Overlap) -- William J. Brennan, Jr.: -- that you're going to be scared to death of -- Stuart Bernstein: Sir? William J. Brennan, Jr.: -- Mrs. Cannon but not worry at all about HEW cut off all your funds. Stuart Bernstein: We're -- well, I can only repeat what I've said Your Honor that this case, we think -- we'll open the floodgates to a multiplicity of suits or the description of some 3500 things pending before HEW all of which could be shifted to the courts -- Speaker: How? Stuart Bernstein: Certainly it's afraid of (Inaudible) I agree that not all of these -- John Paul Stevens: But your rule if it applies doesn't apply just the schools, it applies to hospitals and all sorts of other things, do they? Stuart Bernstein: That's correct, that's correct of course. John Paul Stevens: So this isn't the same -- its just an academic freedom issues, the question of what -- how to construe this statute? Stuart Bernstein: Well, we're picking up academic freedom again Your Honor because academic freedom seemed to be a concern of this Court or at least the two of its members in the Bakke case. We are an academic institution, Northwestern University is an academic institution and we are concerned about the same matters of this Act about academic freedom. Harry A. Blackmun: Let me say I am concerned about academic freedom now I'll speak to my Brothers in private a bit. Warren E. Burger: Well, Mr. Bernstein -- Stuart Bernstein: Thank you. Warren E. Burger: -- I took your reference. We've been making you skitter all over the lot here but going back to that colloquy that Mr. Justice Rehnquist. I took your suggestion about policy to mean that the legislative history you we're discussing earlier and which is reproduced in the briefs here indicates that as a matter of policy, Congress did not grant a private cause of action. This is the policy we're talking about. Stuart Bernstein: That's right, that's correct. Warren E. Burger: Yes. Stuart Bernstein: Yes Your Honor. That's our -- the second Cort v. Ash test as to what the Congress would have. Yes sir. Thank you. Warren E. Burger: Thank you gentlemen. The case is submitted.

Earl Warren: Number 781 -- no, that one is -- number 876, Eddie M. Harrison, Petitioner, versus United States. Mr. Prather. Alfred V. J. Prather: Mr. Chief Justice, may it please the Court. This is a felony murder case brought in form of proffers and certiorari to the United States Court of Appeals for the District of Columbia Circuit. The petitioner, Eddie McArthur Harrison is in the D.C. jail serving a life sentence imposed following his third conviction in the United States District Court for the District of Columbia. Affirmance of that conviction by the United States Court of Appeals for the District of Columbia Circuit and a denial of rehearing on en banc by that court, six members of that court over the dissent of Chief Judge Bazelon and Circuit Judge Wright. In this Court, the petitioner raises two questions. First, whether testimony given by him at a former trial to rebut confessions erroneously admitted and illegally obtained could be used against him at the retrial as part of the Government's direct case on the question of guilt. And second, whether he has been denied a speedy trial. The record giving lies to these questions is long and unusual but the facts are fairly simple and not really on dispute. The petitioner and two other boys, Joseph Samson and Orson White, were indicted on April 1, 1960 for the felony murder of one Syder George Brown, a fence and gambler. At the trial, the principal evidence against them was a set of confessions which admitted that Syder George Brown had been killed during the course of an attempted robbery. At the trial, the boys took the stand and testified that the confessions were false and had been obtained by threats and abuse. The truth was, the petitioner explained, that Syder Brown had been killed accidentally during an innocent attempt to pawn a shotgun with him. Now the jury convicted, the boys, were sentenced to death which was the mandatory sentence for felony murder in the District of Columbia at that time. Thereafter shortly, it was discovered that one of the counsel who had participated in the case was not a lawyer at all but an imposter, one Daniel Oliver Wendellholmes Morgan who had substituted himself for one L.A. Harris, a real lawyer who had left the jurisdiction. The Court of Appeals immediately sent the case back to the District Court with instructions to receive and grant motions for a new trial. But the boys sitting down in the district jail on death row refused to file such motions and repudiated them when they were filed on their behalf by the court appointed counsel because the boys did not want to waive their right to be tried but once for the same crime. There the matter sat for a number of months until the Court of Appeals eventually ordered a new trial for the boys despite their refusal to ask for it. At the second trial, again, the confessions were introduced. Again, the boys took the stand. Again, they were convicted, only this time they were sentenced to life imprisonment, the mandatory death sentence in the District of Columbia having meanwhile been abolished. There followed an appeal and the case was argued challenging -- basically challenging the admission of the confessions that have been used against him in some other points. It was argued in December of 1963. There the matter sat for some 18 months until the Court of Appeals on its own motion ordered rehearing en banc sua sponte on the question of the admission of one of the petitioner's confessions. Case was reargued and some six months later or two years after the original argument, the Court of Appeals issued a decision holding all of the confessions inadmissible because they had been illegally obtained. Speaker: What was the reason for that long delay, appellant's concept? Alfred V. J. Prather: There was no reason that I know of, Your Honor. Abe Fortas: Then Judge Robinson recites some when he tried the case? Alfred V. J. Prather: He said that the -- he said that the lengthy opinions and the amount of deliberation that went into them spoke for themselves. Earl Warren: Both of them what? Alfred V. J. Prather: Spoke for themselves. He said that the Court was accustomed to take in great pains with difficult cases like this. Now, there followed the third trial which was very brief. At the third trial with the confessions gone, there was no real evidence of felony murder, but the prosecutor supplied that lack by reading the testimony given by the boys to rebut the illegally obtained and inadmissible confessions at the second trial. He also had three live witnesses and he read some other testimony from the second trial, but this other testimony didn't really make out a case of felony murder and if that had been all there was to it, the case might have been dismissed. Certainly, it should have been. It was as to one of the defendants, Samson. But Orson White and Eddie Harrison were reconvicted on the basis of their testimony given at the second trial to rebut the illegally obtained and inadmissible confessions. William J. Brennan, Jr.: But they didn't take the stand at the third trial. Alfred V. J. Prather: They did not take the stand and objected vigorously to the use of their testimony from the former trial. Thurgood Marshall: Mr. Prather, where is that vagueness objection? As I read the record, he said “I object”, the lawyer. Alfred V. J. Prather: Well, actually, there were more than one objection and there was some discussion to this actually in the -- Thurgood Marshall: Another objection was reading certain words. He didn't want certain things read. Whereas to the statement itself, I thought all I saw was “I object.” Alfred V. J. Prather: Well, that was at the outside -- at the outset of the testimony, that's true, Your Honor. There were two objections, one objection when the Government started to read White's testimony then again when they started to read Harrison's testimony, then again during the reading of Harrison's testimony and then again at the end. Thurgood Marshall: On page 48, Mr. Thomas, “I object to the reading of this testimony.” The Court, “Overruled.” End of that sentence. Alfred V. J. Prather: Yes, and if Your Honor will turn to page 65 -- Thurgood Marshall: Well, this is after. Alfred V. J. Prather: Yes. Judge Kern wasn't listening to argument on that objection, Your Honor. Thurgood Marshall: Sorry? Alfred V. J. Prather: Judge Kern wasn't listening to argument on that objection. We had raised that before at the outset when Mr. White -- when his testimony was being read, too. Thurgood Marshall: Where is that in the record? Alfred V. J. Prather: Now, that is not in this joint appendix. It is in the transcript however. Thurgood Marshall: Well, Oh! I'll find them. Alfred V. J. Prather: If I don't stand on the word “vigor”, Your Honor, in the objection, there was objection to the reading of the testimony and the court understood. Thurgood Marshall: This could be rather the material if the judge had known exactly what the objection was. He might have kept it out. Alfred V. J. Prather: Your Honor, he certainly knew what it was before that was -- after it had been read, there's no question about that if you turn to page 65. He said specifically the Fifth Amendment has nothing to do with it. Has been given judicially before it's available to the Government. Thurgood Marshall: But Mr. Prather, then you would've had to declare mistrial, right, because he's sworn before the jury. But before it went before the jury, if Mr. Thomas had explained his constitutional objections, the judge would have at least had an opportunity to consider the constitutional objections. Alfred V. J. Prather: When he did have an opportunity to consider the precise constitutional question, he promptly overruled it and he could have at that time ruled the testimony out if he had been overviewed to entertain an objection on that ground, but he wasn't at all. He said it had nothing to do with it. Thurgood Marshall: And if he'd file at the second course, he would have been here saying that it was before the jury and he had to have this trial. Alfred V. J. Prather: No. Then, he would have dismissed the case as he did against Samson because then, there wouldn't have been any case because the case was the testimony of the boys and precious little else. Now, the Government defends the use of this testimony on the grounds that it was voluntarily given, but I don't see how they can really contend that consider the circumstances under which it was given. The confessions -- here were these confessions that admitted guilt clearly. The boys had objected that they were false and should not be and had been obtained by threats and abuse. The judge had ruled that they were to go to the jury. The boys had already been convicted once and spent 22 months on death row on account of those confessions. They knew they were going to be convicted. If they got on the stand, they might not have a very good chance but if they didn't get on the stand, they had no chance at all. They were faced with certain conviction and possible death and they knew it. Speaker: How old are these boys? Alfred V. J. Prather: Well, at the time of the arrest, the petitioner was 18. By the time of this trial, he was about 21. Now, there was only one chance and that was to go before that jury and try to persuade them that the confessions were false and to give them the boys' own story, incriminating as that was. And so, he took the stand but I don't see how by any stretch of the imagination that could be considered voluntary. He testified but only under great and improper pressure, improper because it stemmed from illegally obtained evidence erroneously admitted. And I think to use testimony obtained in those circumstances is fundamentally wrong. When Eddie Harrison was awarded a new trial almost five and a half years after he had first been imprisoned for this offense, the least he was entitled to was a fair trial and he didn't get it. What he got instead was a trial at which he was made the government star witness against his will with words extracted from him by the use of illegally obtained evidence. I don't see how a conviction so obtained can be squared with either the Fifth Amendment or the fruit of the poisonous tree doctrine under the decision cited in the petitioner's brief, and so I think the conviction must be reversed, but that is not enough. The indictment against him should also be dismissed because of the long delay in this case. It is now more than eight years since the original indictment in this case and Eddie Harrison has been in jail all that time. Eight years is a long time to anyone. It's particularly long to someone as young as Eddie Harrison that's almost a third of his life. It is all of his adult life. An examination of the record shows that this great delay was occasioned largely by the failure of the judicial machinery to function well and expeditiously, and the failure was greatest in the Court of Appeals. Five of those eight years nearly have been spent on appeals, four of them on court deliberations alone, and two years on that one occasion between the original argument and final decision and at that starting some three and a half years after the case, it already begun and when speedy trial had been argued to them already. Now, I understand and I would not dispute that the right of a speedy trial is necessarily relative that it must depend someone on the circumstances that it's consistent with due deliberation and an undue haste is not required. But when all that has been said, sometime, somewhere, somehow the right and the guarantee of a speedy trial has to be given meaning and effect. The word speedy can only be stretched so far and I think that the Court of Appeals stretched it way beyond the breaking point when it justified the long delays in this case. At least the guarantee of a speedy trial must guard against delays that are unreasonable or unnecessary, and the delays in this case were both. Hugo L. Black: What about a habeas corpus? Alfred V. J. Prather: Well -- Hugo L. Black: Why would not that be a better way to raise a quick and speedy trial than to have cases dismissed because of delays by the judges? Alfred V. J. Prather: Well, I'm not sure that there's any way for this to have been raised by habeas corpus. Hugo L. Black: I would think it could. Alfred V. J. Prather: It was pending at all times that the Court of Appeals were sitting down there to decide it. I suppose habeas corpus might lie and it would be a little difficult when they might be coming out with a decision any day. The case has been argued, submitted. All it needs is the judge to make up his mind. Hugo L. Black: The habeas corpus is a broad remedy and it seemed to me that it would lie if the man didn't make any difference. Where spending keep staying and staying and staying, I should take a man and have a right to raise it. Alfred V. J. Prather: I think he does have, Your Honor. Hugo L. Black: By habeas corpus, haven't they? Alfred V. J. Prather: Yes. I don't know of a stage of this particular proceeding where it would have been appropriate, but certainly habeas corpus is an appropriate way to raise a question. Hugo L. Black: It would be pretty drastic for the government to have this case dismissed on the ground that these judges had not acted with sufficient entity, wouldn't it? Alfred V. J. Prather: Yes, Your Honor. The Court of Appeals wouldn't hesitate to do the same thing in the District Court cases and any number of cases raising precisely that question in the United States Court of Appeals for the District of Columbia Circuit and on much shorter periods of time than we're talking about here and there cited in the petitioner's brief. Now, the Government on brief contends that there is another standard here that it is an essential element of a claim to denial of a speedy trial that the petitioner show that his actual trial, his defense was prejudice in some way. That it seems to me almost changes the word “speedy” to “fair”. What they're saying in effect is that as long as he ultimately got a fair trial, never mind the delay. Now, I don't think that the cases that the government has cited stand for that proposition and I don't think that the word “speedy” can be stretched or the Sixth Amendment can be stretched to mean that, but even if it could, I think that there was definite prejudice to the defense in this case. Because of the long delay, many of the witnesses were no longer available. Somewhere -- Hugo L. Black: The government? Alfred V. J. Prather: The government witnesses. As a result, the defendants did not have an opportunity to cross-examine these witnesses. Now, the government said that doesn't matter because they had the opportunity at the second trial, but I don't think that's the same thing at all. And when the U.S. attorney stood up there reading in a very authoritative fashion all this old testimony about this old crime and when the jury found out from that reading that these defendants had already been tried at least twice and had spent several years in jail on account of this very killing, they were almost found the same, that the defendants were guilty. William J. Brennan, Jr.: Mr. Prather, may I ask, what reference is the government making in its plea to page 29 when it says that delays for the most part arrived at the consequence of his own or his attorney's actions which he is responsible. Alfred V. J. Prather: Well, Your Honor, there were two things that were held to be their own fault. First, the government contended and the court below held that when these boys -- that the whole delay that was occasioned by their refusal to seek the second trial that the Court of Appeals is willing to give them was their own fault because they should have asked for that. And my answer to that is that they shouldn't be required to waive their double jeopardy claim in order to get the speedy trial that everybody knew they had coming. Now, the government here says in answer to that that they could have had both, that there is no reason why they couldn't move for a new trial and maintain their double jeopardy claim, but the government argued exactly the opposite when they were down there on death row faced with that choice. At that time, the Government was saying that you shouldn't give them a new trial unless they ask for it because they'll have a substantial double jeopardy claim. So that's one of the delays that these folks fall. Other delays that are attributed to these people and were by the Court of Appeals in its first opinion erroneously involves the time after the Court of Appeals finally made up its mind to go ahead and give them another trial anyway even though they wouldn't ask for it and the time when that trial was actually held. Now, that period of time on page 8 of the petitioner's brief, we have all the dates pretty well laid out, that period of time was between June 12, 1962 when the first conviction was vacated and the case was remanded until the trial, which took place in April 22. Now, that period of time, there was one month that we're willing to say might be attributable to the petitioner has counsel. He asked for a 30-day delay in order to obtain a transcript to the first trial. Now, whether the need to get a transcript in the form of proffers case is properly attributable or accounted against the prisoner, I don't know. But we have -- but that's all of the time that was really attributable to him. And actually in our discussion of this point and particularly the reply brief, we have dealt rather fully with that period of time. It begins on page 7 of the petitioner's reply brief. Thurgood Marshall: How many -- how many witnesses did the defendant have in the first -- second trial? Alfred V. J. Prather: In the second trial? At the second trial, each of the defendants testified -- one other witness testified that I know of in connection with the petitioner, Harrison, and I believe that petitioner Samson may also have has some testimony by his relatives considering -- concerning his appearance. Thurgood Marshall: Well, how were they prejudiced by the delay? So far, his witnesses and availability of witnesses is a concern. Alfred V. J. Prather: I'm sorry -- Thurgood Marshall: How were the petitioners injured in so far as availability of witnesses concerned by the delay? Alfred V. J. Prather: They were not. Thurgood Marshall: So how did the delay prejudice them? Alfred V. J. Prather: Well, first they were kept in jail for eight years without yet having a fair trial. The sheer incarceration for eight years is a bit of time and they were under considerable duress. Then beyond that, I think -- Thurgood Marshall: Did that affect that trial? Did it delay the trial? Alfred V. J. Prather: No, it only affected the prisoners. Now, it related to the trial in this way. When the thing actually got around to being tried the last time, the prosecuting witnesses were even gone. And when the -- Thurgood Marshall: How did that prejudices them? If all the prosecuting witnesses had gone they wouldn't be prejudiced at all, wouldn't it? Alfred V. J. Prather: It wouldn't have made a bit of difference. He just read their testimony right out of the transcript of the last trial and that -- Thurgood Marshall: That's a different point. I'm talking about the speedy trial point by itself. Alfred V. J. Prather: Oh, well, I think that the effect -- well, any prejudice that stemmed from the delay is part of the speedy trial in question, and this prejudice stemmed from the delay. But for the delay, the witnesses would have been there. We would have people cross-examined, not some U.S. attorney standing up there reading in a very -- it carried the force and the weight of the U.S. attorney when he read it. He read it very well. And not only that, but the mere fact of the reading and from the actual words read, it became known to the jury that these boys had been in jail for several years. Let me give you an example. Let me give you an example of what he did. This is a kind of prejudice that came from the delay. Thurgood Marshall: I read all of the included -- they raised a question and the prosecutor was raising his voice and all of those things. I read them. Alfred V. J. Prather: Look at page 48, Your Honor, here that Mr. Epstein starts reading. Question: “Will you state your name?” Answer: “Eddie McArthur Harrison.” Question: “You have been at the DC jail for several years, is the correct?” Answer: “Yes, sir.” Then he interrupts the reading and he says, “This testimony was given on May 3, 1963.” The jury didn't miss the point that as early as May 3, 1963, he was given testimony in this case and he had already been in jail for several years. I think there was a substantial prejudice to the defense, but I don't think that's an essential element of a crime of a speedy trial. I think he was entitled to a speedy trial without regard -- I can imagine a case in which there would be no defense, there would be no harm to the defense if it was surely a documentary case. Obviously it could go on forever, but that doesn't mean that the person wouldn't be entitled to a speedy trial and it certainly wouldn't change the Sixth Amendment command. So in sum then, I would like to save some time for rebuttal. I just want to urge that the conviction be reversed and that the indictment be dismissed because the petitioner has been illegally convicted and wrongfully held for far too long. Thank you. Earl Warren: Mr. Beytagh. Francis X. Beytagh, Jr.: Mr. Chief Justice, may it please the Court. I think if we accept the premises that petitioner's counsel operates on, he states a pretty convincing case. But I think we have to step back and look at really what he is saying and what his position is. He makes basically two constitutional claims, one under the Fifth Amendment and one under the Sixth. His Fifth Amendment claim essentially as we understand it is that petitioner was compelled to take the stand at a second trial. That violated his Fifth Amendment right to remain silent, and then the introduction by the government at his third trial of that testimony which had been compelled violated his constitutional right. And he also says that his right to a speedy trial was denied. As we understand it, principally because of delay in the Court of Appeals but as well because of the cumulative effect of the long period of time that has gone on here. I'd like to treat first the Fifth Amendment of the claim. Petitioner of course concedes that if the testimony that he gave at his second trial was voluntarily given in a legal sense that it was admissible against him in his third trial, that so because it's an admission against interest under accepted legal rules what would be probably used by the government. But he says that that testimony was not freely given. He says it was not freely given because it was given to rebut certain confessions that had been introduced and were later held to have been improperly introduced against him at that second trial. He states that a little bit differently when he talks about the fruit of the poisonous tree. He says that this testimony flowed from or was the result of these statements that later were held to have been improperly admitted and that therefore his testimony was the fruit of that illegality. William J. Brennan, Jr.: Do you think, Mr. Beytagh that's -- would that be phrased differently if it were said that the government's use of illegally obtained admissions coerced and in that sense compelled him to take a stand? Is that phrased any differently than the fruits argument? Francis X. Beytagh, Jr.: I don't think there's any substantial difference. I think it's mainly one of terminology. You do have some different cases you can throw in and different analogies you can draw, but I think in substance, the claim is the same. But we start at a somewhat different point than petitioner does. It has been the accepted rule that, except in very rare instances when a witness takes a stand, testifies under oath that what he says is accountable for and it can be used against him in any appropriate way in a later proceeding. Now, he had a Fifth Amendment right not to testify at all at his second trial. He could remain silent but he didn't do that. Under ordinary circumstances, it seems to us that the case is quite clear that that testimony would have been usable and admissible for any relevant purpose. But he says that that's not so, that this is a different kind of case. He says it's a different kind of case as we understand it because statements had been introduced against him, which were later held had been improperly introduced and that that triggered his taking the stand and therefore, all of that has to be wiped out. The Government can't use it. The matter isn't that simple, I don't think, and we don't maintain that it is. We do think that the Court of Appeals that gave extended consideration of the difficult questions involved in this case and I will come to that later in the context of the speedy trial claim. I think that their analysis is as pertinent as anything that I could say. They said our federal system bestows upon -- this is at the appendix, page 75 -- our federal system bestows upon accused the choice of testifying or not, and permits what he says in the witness stand to be used against him coercively. The record contains no suggestion that the use of the statements of the second trial was a maneuver to ring evidence from appellant. From what it appears, the government's sole objective was to supply missing elements in its case. Here on like situations were duress of some sort has been found, the government exerted no pressure or put no undisciplined and imposed no improper condition on appellant's right to mootness. There was uninhibited access to counsel and so far as we can perceive, complete awareness of legal rights. We have been referred in no case and our own intensive research is located not holding that the strength of the government's case is itself officiating a form of testimonial compulsion. Now, petitioner says that the Court of Appeals -- yes? Thurgood Marshall: Do you agree that the second trial, without the confessions and without the testimony of the defendants, they couldn't have been convicted in the second trial? Francis X. Beytagh, Jr.: I think that -- I think it would have been very difficult to get a conviction. The rest of the evidence was very slim. Thurgood Marshall: Well doesn't that give you a problem as to coercion? It was admittedly the coerced confessions that brought about them taking the stand. Francis X. Beytagh, Jr.: I don't know who admits that, Your Honor. We don't. Thurgood Marshall: I think what you said first comes close to saying it. My first one whether they didn't take the stand at all, they were more likely to have been acquitted. And so, the judgment has taken the stand or the judgment was still brought about by it. And as I understand, the petitioner, he says that's coercion or close to it. Francis X. Beytagh, Jr.: Well, that's -- that's his argument. It seems to us that it's quite clear that the introduction of the statements certainly had something to do with his taking the stand. Whether they produced his taking the stand in a direct causal sense I think is another and a difficult question -- Thurgood Marshall: And whether or not -- there's no question here that the prosecutor did this deliberately to get him on the stand. There's nothing here to show that. Francis X. Beytagh, Jr.: No, I don't think there's anything at all to show that. The Court of Appeals concluded that that was not so. The -- I might say this about these confessions. I think this is quite pertinent. Petitioner, and I think properly, refers to them as having been illegally obtained. But I think we better take a look at how they were held to have been illegally obtained. Petitioner made essentially three statements that were introduced. The first statement was taken from him at the jail where he's being held on another charge, larceny or some sort of charge. It was taken in this context. White and Samson, the other alleged co-defendants have made statements to the police admitting their activity in regard of the murder of Syder Brown and implicating petitioner. Those statements of course were ultimately held to have been improperly obtained in violation of Mallory because they had not properly been brought to a magistrate. The next morning after the statements have been given, White and Samson were brought down -- William J. Brennan, Jr.: Excuse me Mr. Beytagh, that's only White and Samson's statements were thrown out of Mallory grounds? Francis X. Beytagh, Jr.: Yes. There was another statement of petitioner that came after this oral statement that was also thrown out on Mallory but that was a substantial restatement of what he'd said at the jail. William J. Brennan, Jr.: So all of these then went out initially on Mallory grounds? Francis X. Beytagh, Jr.: No. William J. Brennan, Jr.: No? Francis X. Beytagh, Jr.: No. That's the point I'm coming to this. William J. Brennan, Jr.: I see. Francis X. Beytagh, Jr.: His oral statement given at the jail was given -- he was apprised of what White and Samson had said, and asked if he had anything to say. And he said, “Yes,” -- it's something like this. I don't remember the exact statement, “I might as well tell you,” and then he told his story. Now, subsequently that story was reduced to a written statement and the story was also given to a jail classification officer. Those other two written statements were held inadmissible under Mallory and Killough. But this first statement was the one that precipitated the en banc reconsideration by the Court of Appeals after the second trial. That statement was held inadmissible eventually by a six to four vote on the Court of Appeals on the ground that its introduction would violate the rule of case of Harling versus United States. That case essentially had held that where juvenile court jurisdiction had not yet been waived, a mistake that made by an individual being held on a charge to which juvenile court jurisdiction would originally attach could not be used against him. Now, on these circumstances, the petitioner had been 10 days short of 18 years old when the alleged felony murder occurred. William J. Brennan, Jr.: Now at the second trial, was that a ground of objection to the use of the statement? Francis X. Beytagh, Jr.: Yes. William J. Brennan, Jr.: It was? Francis X. Beytagh, Jr.: Yes, as I understand it, and -- William J. Brennan, Jr.: Which is to say then I've got -- defense had real confidence as events turned out. In that ground, they might have rested on their objection without putting the defendant on the stand at all. Francis X. Beytagh, Jr.: I think that's probably so. I -- William J. Brennan, Jr.: But it took an en banc hearing. Six to four finally had to decide that the objection was well-taken, didn't it? Francis X. Beytagh, Jr.: That's right, and I think that cuts both ways. I think you're quite right. But for whatever it is worth, these illegally obtained statements were not held inadmissible on the ground that they've been beaten or -- William J. Brennan, Jr.: Coerced in any way. Francis X. Beytagh, Jr.: Like that. William J. Brennan, Jr.: Does not on any ground that they were even coerced, was it? Francis X. Beytagh, Jr.: No, no. Speaker: Do you think that the Simmons case was decided on -- suppose that -- Francis X. Beytagh, Jr.: Well, I'd like to discuss Simmons right now. We think that the issue involved here is significantly different than the one in the Simmons case. I think it is better to say that had Simmons been decided differently, the question here would be easier for the government, but it was not. However, it seems to me that there are two very pertinent distinctions between the situation in Simmons, as you may recall. Simmons involved a testimony given at a motion to suppress a hearing. The motion to suppress was unsuccessful and that testimony was introduced against the -- against Garret actually at the trial and was quite a pertinent evidence of his connection with the suitcase and its contents. Now there, as the court pointed out in its opinion, there were two constitutional rights involved, one of the Fourth Amendment, the right to be free of unreasonable searches and seizures, and one under the Fifth, not to be compelled to testify against one's self. Here as we see it, there's one right under the Fifth Amendment. The court pointed out in Simmons that defendants might be deterred from taking the stand at a motion to suppress hearing and -- William J. Brennan, Jr.: Excuse me, Mr. Beytagh, that's what I want to get to. Then the government's position is that these confessions were not found inadmissible on any Fifth Amendment ground, that is a coerced confession ground, but solely on Mallory or in the case of the -- Francis X. Beytagh, Jr.: The Harling. William J. Brennan, Jr.: -- of Harling because he had not been, what? Francis X. Beytagh, Jr.: Well -- William J. Brennan, Jr.: What should have happened? He was -- Francis X. Beytagh, Jr.: He was -- they -- William J. Brennan, Jr.: He was some days under 18. Francis X. Beytagh, Jr.: Yeah. They can -- the Court of Appeals in fact construed Harling to this effect that even if juvenile court jurisdiction had not yet initially attached to an individual being held and they had not had the opportunity to waive it, the fact that he was under 18 at the time he committed the alleged offense was sufficient to make that doctrine applicable. William J. Brennan, Jr.: Well, now -- and that doctrine was not a constitutional doctrine. Francis X. Beytagh, Jr.: No, it's a doctrine that's derived from the construction of the juvenile court statutes in the District of Columbia, as I understand it. Now, getting back to Simmons as I said, the court there pointed out, and we think quite significantly, that defendants might be deterred from taking the stand to support a motion to suppress if they knew that the motion to suppress was unsuccessful. His testimony could be used against him. The court pointed out that while the Jones case had taken care of a large number of these kinds of situations that it still remained that there were marginal cases in which this choice would be a difficult one to make. Now, it seems to us that here, there's no question of a surrender of one constitutional right in order to assert another. That's what the court said in Simmons. It was something it found intolerable. It said that the practical effect in the Simmons situation was to require an individual if the only way he could show standing and therefore an ability to raise his Fourth Amendment claim was to take the stand. But he either had to take the stand and run the risk of waiving his right not to incriminate if he wanted to assert his Fourth Amendment right. We think there's another important distinction and perhaps the most important one between the Simmons situation and this one. In our view, the compulsion which petitioner might have felt to testify here was simply not dictated by any requirement that made his testifying the only way it would raise a legal issue. In Simmons, that was so. If -- if he didn't take the stand, if he accepted the premise on which the court offered in Simmons, there simply wasn't any way that the individual could make this claim. He had a show of standing under our laws as it presently stands and if he didn't take the stand, by definition he couldn't show that and therefore, his Fourth Amendment right went out of the window. This isn't so here. It's quite clear that in order to protect his rights, he had a clear and available way to raise them and that was simply by objecting as he did to the introduction of these statements and if he was vindicated upon appeal as he indeed was. Now, he said -- petitioner says, “Well, that's all well and good but that's simply no real alternative to me.” William J. Brennan, Jr.: Would you be arguing differently if these confessions indeed were the allegation was ultimately sustained, that these were coerced confessions and in that sense violative of the Fifth Amendment privilege? Would you give that same argument? Francis X. Beytagh, Jr.: I think we would make the same argument. I think it would be somewhat more difficult to make because the next is in the continuity of alleged violations of the Fifth Amendment would be very -- I'd like to also -- in conclusion on Simmons, it just seems to us that this case is not Simmons and it's not controlled by Simmons. I'd like to mention Griffin versus California in passing because that case was relied upon by Judges Bazelon and Wright in descending from a rehearing en banc, petition denial in this last appeal. It seems to us that Griffin is a different situation. Griffin, as I'm sure you recall, involved a question of whether it was unconstitutional to make adverse comment on the failure to take a stand. Now, it seems to us that there, the court said that a price was placed upon remaining silent. The invocation of privilege was made plausibly. The only way of course to remedy an adverse comment, as the court pointed out, is simply to take the stand because that's the only way you could avoid again those states in which the rule applied prior to Griffin. Well, here it's quite plain that the petitioner did in fact testified at the second trial and -- so there's no question about adverse comment of that trial on his failure to testify. The question is simply whether his election to testify was voluntary or not. The advice that was found in Griffin it seems to us was that there simply wasn't any way to avoid this. The petitioner had a way to avoid it. In fact, he exercised it by testifying. Abe Fortas: Well, I suppose the petitioner here and one of the other men were in a room together and they police got a confession from the other man which was used against the petitioner. And the petitioner was the only person who could testify that the police got that by force. And then, petitioner took the stand and he testified to that and on cross-examination there is fact to have brought up, which were very damaging to the petitioner. Francis X. Beytagh, Jr.: I don't quite understand how that would happen. That -- that's one of the claims that is made here, Your Honor. Under the Federal Court, it says that the scope of cross is limited to direct. He says -- he says -- Abe Fortas: I suppose -- no, no. Suppose the prior convictions were brought out. Just take -- Francis X. Beytagh, Jr.: Yeah. Abe Fortas: -- that simple example which can be done -- Francis X. Beytagh, Jr.: Right. Abe Fortas: -- in a Federal Court or anywhere else that I know of. Francis X. Beytagh, Jr.: That's correct. Abe Fortas: Could that be used against him in a said trial? Francis X. Beytagh, Jr.: If that relates to -- but the reason I understand it where prior convictions could be introduced is to impeach his credibility -- Abe Fortas: I understand. What I'm saying to you is -- the critical point that I'm putting to you is that this was a situation in which the confession of an alleged accomplice was being used against the man in order to show that that -- to attack that confession, he took the stand and I'm assuming --I'm asking here to assume that the only person who could have testified that the confession was compelled and not voluntary was the petitioner. Francis X. Beytagh, Jr.: I think -- Abe Fortas: Would you nevertheless say that the confession could be used against him in a subsequent trial? I mean -- I don't mean the confession. Could his testimony be used against him in the status before the trial? Francis X. Beytagh, Jr.: I think the situation you posed is a closer one to the Simmons situation. I think the argument would be more difficult. The same argument that we make here could be made, of course. Abe Fortas: Why isn't that this situation? Francis X. Beytagh, Jr.: Why isn't it this situation? Abe Fortas: Yes. Francis X. Beytagh, Jr.: Because the charge -- Abe Fortas: What's the distinguishing factor in your mind between the case that I've put to you and the present case with respect to the use of petitioner's testimony on the subsequent trial? Francis X. Beytagh, Jr.: Well, it seems to me that one you have to differentiate the reasons why he says he took a stand. In that situation that you posed, you said that he had to take the stand because that was the only way that he could show that those confessions were involuntary. In the first place -- Abe Fortas: Whereas in the present case, what happened? Francis X. Beytagh, Jr.: Well, in the first place here, we don't have a serious question about voluntariness. It is asserted by petitioner and he said that was one of the reasons he had to take the stand. But it seems to me on that point, my original answer is it remains pertinent that while his prior convictions could be brought out to impeach him, that's so as to anyone who takes the stand. But the scope of cross-examination would have been limited, if that was his problem, to matters that he raised non-direct. And if he testified only about threats and abuse and whatever and didn't affirmatively testify about a rather different subject matter, what went on in his view at the critical time, it seems to me that could not be -- Abe Fortas: Oh, wait a minute let's see if I understand you then. What you're saying is that in the case that I put to you, the petitioner's testimony could properly have been used in the subsequent trial despite the fact that evidence, as to prior convictions, was brought out on cause for the purposes of impeachment. And that evidence as to prior convictions is also used in the subsequent trial. You're saying despite that, the evidence could properly be used in the subsequent trial. Francis X. Beytagh, Jr.: I think that's right. I don't -- Abe Fortas: And despite the fact that this was the only way -- this is the assumption I'm asking you to make -- this was the only way in which the voluntariness of the confession of the accomplice could be attacked. Francis X. Beytagh, Jr.: No. I didn't mean to -- I thought I said that if you accept the premise that it was the only way, the question of voluntariness, you had it seems to me a different situation than you have here and -- Abe Fortas: What I'm asking you is how different? Is it different enough to make a difference in result -- Francis X. Beytagh, Jr.: Because the basic claim here is not one of involuntariness with respect to the statements that were later held. It have been legally obtained that the claim was a -- as I've discussed the Mallory claim and this Harling rationale. One thing that is significant to us is that petitioner really doesn't attempt to deal with the scope of the doctrine that he sticks to have the Court adopt here in the Fifth Amendment context. We think it's quite clear that a criminal defendant's decision, whether to take the stand or not, is always one that's under some strain and some stress and that only one of the risks that is taken is that the testimony might be used against him at retrial. It seems to us that if petitioner is correct in his basic contention, that is that a second trial testimony was compelled involuntary, then it's a little difficult to see as a logical matter why that sort of testimony could be used against him in any respect, not just on the question of guilt in a subsequent trial. Now, I suppose petitioner would say, “Well, that's not right. All that I'm contending for here is that it can't be used affirmatively against me and it's a different situation if the government tries to use it to impeach if I do take the stand. And it's a different situation if I'm later prosecuted for perjury and the government tries to use this testimony. And it's a different situation if the government uses it as a link or a lead or whatever.” Well, maybe so, but you have to work a little bit at it, it seems to me, to destroy the consistency that seems to us to be there. I would like in the remaining moments to mention just one more thing, first on the Fifth Amendment claim. It seems to us the petitioner really wants to have it both ways. He wants to be able to take the stand and he wants to try to convince the jury that they should acquit him. In which case, he couldn't be retried at all, of course. But if he fails on that but prevails on his objections to the introduction of these statements, he wants it to be assumed that he never took the stand and he never said anything. He wants the slate totally wiped clean. It seems to us that if the situation were analogous to Simmons, in other words, he couldn't assert a right to have these inadmissible statements excluded at trial and if he couldn't preserve that right for appellate review without taking the stand, then I think he should prevail under Simmons. I think Simmons would require it. Abe Fortas: Well, if these were statements made by somebody else in prior proceeding and that person was in the courtroom, could the prosecuting attorney have gotten up and read the Q&A to the jury? Francis X. Beytagh, Jr.: I'm not sure I understand. If the individual was in the courtroom, would it be necessary to call him rather than -- Abe Fortas: That's exactly my question. I beg your pardon? Francis X. Beytagh, Jr.: I think he should call -- Abe Fortas: You have to call him, not should, isn't it? Well, now what's the difference here? Petitioner was in the courtroom, he was a prisoner but he wasn't given an opportunity to take a stand or not taking a stand but his testimony was read. Francis X. Beytagh, Jr.: Well, he had all the opportunity in the world to do whatever he wanted to do, to take the stand and that the Government could not call him. Abe Fortas: The government couldn't call him but in the case of a person other than the defendant if the government wanted his testimony in and he were available, the government would have to call on him. They couldn't read his prior trial testimony. Francis X. Beytagh, Jr.: That's right. That's the accepted rule but some people have questioned that rule. But it seems to me that -- Thurgood Marshall: But suppose he'd made a confession that's a valid confession, can you put it up? Francis X. Beytagh, Jr.: That's right. It seems to me that the Court of Appeals there said the analogy that they saw was that of any extrajudicial confession or statement, that if it was voluntarily made, you can say the same thing. You can say -- Thurgood Marshall: Was this a confession? Francis X. Beytagh, Jr.: How can use that? William O. Douglas: That's the advantage of -- Abe Fortas: Or an admission? Francis X. Beytagh, Jr.: Of his testimony? Abe Fortas: Yes. Francis X. Beytagh, Jr.: I think his testimony was whatever you want to call it. It admitted -- it admitted very damaging elements. Abe Fortas: But it was an attempt to exculpate himself. It wasn't an exculpatory statement. Francis X. Beytagh, Jr.: Yes, but we don't stick to really on that because this court has said that when -- that's a terminology. If they want to use it -- Abe Fortas: I know you can't rely on it but I wonder if this is an admission or if this can be called an admission or a confession on the prior testimony. Francis X. Beytagh, Jr.: He said that -- he said that he was -- he placed himself at the scene and he said he had a loaded gun. You know, I think that's pretty damaging. The jury obviously thought it was, too, coupled with the other evidence and circumstances. Thurgood Marshall: Wasn't the story that he was trying to sell a loaded, cocked, sawed off shotgun pointed at the potential buyer. Francis X. Beytagh, Jr.: Yes. Thurgood Marshall: Was that his testimony? Francis X. Beytagh, Jr.: He was trying to pawn it, he said. He'd done that frequently before with this individual. We -- we don't accept petitioner's statement that -- and I should mention this that there was simply no other evidence. There was other evidence here. He made an admission against interest that said that he'd done it to somebody else. There was other circumstantial evidence against him, the trajectory of the shot, the fact that the man had a lot of money, they were seen in a black Buick just previous the -- it just seems to us that the question presented is the Fifth Amendment issue and I haven't sought to go into all those details. I just like to touch on this Sixth Amendment argument. Petitioner spent a good bit of time on it. I think it's unfortunate that I don't have a little more time, but I just like to say this. First, we understand that he says two things basically. One, this is just too long and you can't try me anymore. Well, it seems to me you have to look at the facts and the circumstances. The Court -- this Court has never held that through the exercise of legal rights through appellate review and obtaining reversals and other relief that the individual can't be tried again. In conclusion, I'd like to say that what petitioner really tries to do is to the Court of Appeals to second-guess the reasons why they had problems with the case. I think that as we point out if one thinks about and looks at the problems, it's a very complicated matter and the time was substantial. We don't deny that and I don't know why it took them so long, but it seems to me that it was not intolerable. In short, we submit that the Court of Appeals would write on both Fifth and Sixth Amendment points and the judgment should be confirmed. Earl Warren: Mr. Prather. Alfred V. J. Prather: Mr. Chief Justice, may it please the Court. I think that this is an even stronger case than the Simmons case. In that case, the court held that the testimony given in support of an unsuccessful motion to suppress could not be used against the defendant. Now, here the testimony was given to rebut admittedly inadmissible evidence illegally obtained, whereas there it was just given in an effort to show that it was inadmissible evidence, and an unsuccessful effort at that. Now, it seems to me far wrong for the government 5617 and far worse for the government to be able to use the testimony in this case and for the government to be able to use the testimony in the Simmons case -- Speaker: Supposed the Simmons case was not to put on that on the grounds? Alfred V. J. Prather: Well, it was the tension -- I'm not going to debate with you, Your Honor. I thought -- opinion says. Speaker: Well isn't just -- Alfred V. J. Prather: Yes, I have, sir. I agree with that. It's certainly a distinction, but here there's a little tension between the Fifth Amendment and the Fifth Amendment. Now, the principal contention of the petitioners at the second trial was that these confessions were obtained in violation of their Fifth Amendment rights. They testified that they were obtained by threats and by abuse, and that the only point in which there was a conflict in the testimony between Eddie Harrison and the police office who investigated -- the police officer who testified to the contrary and obtained the confession, the testimony of the police officer turned out to be wrong and Eddie Harrison turned out to be telling the truth. Now, there's no use arguing that those aren't voluntary confessions anymore because the jury resolved that question against him. But the point is that they were getting on the stand to say that to claim a Fifth Amendment right, to say that these were compelled confessions and they were false. And I don't think that this argument -- it sounds to me as if the government was saying, “Well look, these fellows were lucky to win in the Court of Appeals on that juvenile court blanc because that really wasn't much of a point.” But there was a clear violation of Escobedo there, too. William J. Brennan, Jr.: Well, I take it you might just to rest around your objection, confident that you would succeed as you finally did, and then this thing could never have happened, could it? Had you just rested on your objection -- Alfred V. J. Prather: That boy wouldn't sit still to rest on the objection to those confessions sitting there. William J. Brennan, Jr.: This was his choice? Alfred V. J. Prather: Well, I'm not going to say that he wasn't advised by counsel, but that boy was under strong compulsion to testify. He was fresh off death row, 22 months there. William J. Brennan, Jr.: Yes, but the fact is had you -- had here just been the objection, you would not be in this difficulty since the Court of Appeals did sustain the -- Alfred V. J. Prather: That's right if those confessions didn't -- are held not to have caused him in any way to take the stand, or if his testimony can be said to be completely independent of it and not the fruit of the introduction of those confessions, then of course we have no case. But I don't see how they can be separated, and neither did the Supreme Court of California in the Pope case which was identically this case. And they said that the testimony was compelled by the confessions that couldn't be used and it could never be used. I don't see -- we can look some more at the circumstances or the taking of those confessions. It wasn't just -- this was not some little minor technical point. This wasn't the most innocent of errors. Those police knew they were violating Mallory, at least the U.S. attorney did when it got time to arguing in the Court of Appeals. He confessed error. It shouldn't have. They shouldn't have held Samson for two years. The U.S. attorney confessed error in his case, but it sat up there for two years, too. And Orson White was so clear that the -- that there was no problem at all in the Court of Appeals. The only problem was this one little confession and that was clearly obtained in violation of Escobedo. Earl Warren: Mr. Prather, we understand that you've accepted the assignment of the Court of Appeals below to represent this indigent defendant, and you also accepted our invitation to represent him here and we consider that a real public service. And that we're always comforted when lawyers will accept such appointments and we thank you for your representation of this man. And of course, Mr. Beytagh, we appreciate likewise your representation of the Government in this case.

Earl Warren: Number 20, Joyce C. Thorpe, petitioner, versus Housing Authority of the City of Durham. Mr. Nabrit. James M. Nabrit, III,: Mr. Chief Justice and may it please the Court. This case is here on certiorari for the second time to review a judgment of the Supreme Court of the State of North Carolina affirming an order that petitioner and her four children be evicted from a low-income public housing project in Durham, North Carolina. The question for decision is whether tenants in federally financed projects, operated under the United States Housing Act of 1937 as amended, may be evicted from their homes and their federal benefits terminated without being told any reason or given any opportunity to be heard in their own defense before the decision to evict is made by the Housing Authorities. Now, let me emphasize at the outset that, in our view, the fundamental underlying question here is whether poor people who depend on the government for the necessities of life, for shelter, whether poor people will get the same kind of procedural rights and protections that our citizen -- that our system has long given to more fortunate citizens and their contacts with government administrators. Abe Fortas: Is that really the issue or an underlying issue here? Do people who have leases with private landlords have the, as a constitutional matter, the right to for which you're contending here? James M. Nabrit, III,: No, Your Honor. I wouldn't contend that. I said -- Abe Fortas: Well, where do you get -- James M. Nabrit, III,: I said more fortunate citizens and their contacts with the government. Abe Fortas: That -- well, tell me about that. Where do you get that flavor in -- on the constitutional aspects of this case? James M. Nabrit, III,: It's our position, may it please the Court, that it's a common place of administrative law when, in all sorts of situations, when a professional man's license is threatened to with revocation, when a security, as in the Goldsmith case or in the Willner case last year, if -- to get a notice in a hearing, it -- Abe Fortas: Well, let's take a comparable case if we can think of one. Let's suppose that the Department of the Interior has a -- lent a lease with a concessionaire to occupy premises in a park area, and the lease says that it's terminable, that this is a month-to-month lease and it's terminable upon 30 days notice, and there's no provision for notice or a hearing or a statement of the reason why the lease isn't being renewed. Now, does the concessionaire have a constitutional right to be heard? James M. Nabrit, III,: Well, the thing that I -- the difference I perceive is the difference in the purpose of the program because the purpose of this program under the Housing Act is to provide housing for poor people. It's a government benefit program. So that, to the extent that there's -- that there are differences between government benefit programs and incidental programs to the management of connected with inc -- Abe Fortas: I know -- James M. Nabrit, III,: Programs could -- incidental to the management of government buildings. You may have different principles to apply. So, my argument is not addressed to that, Mr. -- Abe Fortas: Well, I don't think that's important, Mr. Nabrit and this is a terrible important and new area of Constitutional Law to which you're addressing yourself now. And, whether it is appropriate to analyze it in terms of giving the poor people rights that are given to their more fortunate fellow citizens or not is a problem of the utmost consequence, I think. It's a matter of developing cons -- the developing application of constitutional principle. And I, myself, believe that it's one that, and I'm sure you agree with me, that requires the most prayerful and careful analysis on the part of us and, perhaps, the game is not advanced when we merely refer it -- when we present a case like this in terms of equalizing the rights of the poor, vice versa the government, with the rights of the rich because you first have to establish, if I may respectfully suggest it to you, you first have to establish that there is a cognate or analogous right given to more fortunate citizens, vice versa their government. James M. Nabrit, III,: Well, I agree that these issues about the rights of the poor are a challenge to us all, but there are none without difficulties. Let's look at the position of the Housing Authority in this case. They claim, after all that's transpired, after three years of this litigation, they still maintain that they don't even have to have a reason, they don't have to have any cause to evict a low-income family from its home. They claim that they have no duty to tell the town anything or listen to anything that the tenant has to say. Their position is, in some, is that these destitute people who pend on -- who depend on the government for shelter don't have any rights, that the auth -- procedural rights that authority is bound to respect. Say I think it is relevant. The point is not lost on poor people and that they do understand what's going on when the legal system treats them this way. Abe Fortas: Well, what -- James M. Nabrit, III,: Now, let's look at the -- Abe Fortas: Mr. Nabrit, I'm going to leave you alone after this, but it's a problem of fundamental consequence in this and other cases, many other cases, and I suggest to you that perhaps two possible lines of approach. One is, it's sort of a Gideon line of the discrimination between the poor and the rich with respect to essential governmental rights. The other, and it may be, and this is for you to argue and not for me. If -- and, it may be the one that's applicable to this case. The other is that in this kind of governmental activity, that is to say the rental of residential property whether it's middle-income, high-income, or low-income, the government takes on certain responsibilities as a constitutional matter which a private landlord does not have. I don't know whether that's right or wrong, but what I'm suggesting to you is the possibility that that may be the basic premise to which one must address for himself. James M. Nabrit, III,: Mr. Justice Fortas, I think I agree with that. I don't contend that there's a major equal protection component to the case. I think it's a problem. Of the principal problem in the case is what sort of procedures due process requires. When the government is landlord, it deals with people. I don't disagree with that at all. Let's begin with a few words about this Federal Law, the Housing Act of 1937, so that we have a statutory frame of reference for the consti -- to discuss the constitutional questions. The Congress has declared that the policy of using federal funds and credit to remedy the unsafe and unsanitary housing conditions and their acute shortage of decent, safe, and sanitary dwellings for families of low-income. Now, Housing in this particular program is provided only for families “who are in the lowest income group and cannot afford to pay enough to cause private enterprise to build an adequate supply of decent, safe, and sanitary dwellings for their use. Now, the subsidies in this program, although it's operated by Local Housing Authorities, the subsidies are almost entirely 100% federal. The permanent financing of these projects is done by bonds sold by the local authorities. And if the Federal Law subsidizes these bonds in several ways. First, they make the interest n the bonds federally tax-exempt which has the effect of lowering the interest rate. Then, the Government of the United States places its credit, the credit of the United States, to assure the payment of the bonds and under an annual contributions contract with the local authorities, the United States agrees to pay up to 100% on the debt service on the bonds. The local authorities apply their net receipts to the payment of the debt service and any difference the United States makes up. With some projects, the United States does pay 100% of the debt service. In addition, the United States makes ca -- additional cash contributions for elderly families and on account on displaced families, families displaced by federal projects and, finally, the United States pays the administrative cost of the Housing Assistance Administration, a part of HAA itself. Now, the State and Local Governments, rather than subsidizing the projects, in some case actually gain revenue from there by receiving payments in lieu of local real estate taxes from these housing authorities which, under the statute, may amount to up to 10% of the rental income of the projects. There are now 2.6 million people in the United States living in these federally assisted projects. Perhaps a quarter of a million of them have moved in these projects since this case was last argued here a year-and-a half ago. The program is rapidly expanding. About half of these people are Black, about a third of them are elderly, their medium-family income is little over $2,700, and the average rent they pay is about $50 and those figures are for 1967. Of The petitioner was found eligible as she moved into her apartment at $29 a month in November of 1964. Her lease gave -- her lease was a month-to-month tenancy. It gave both the tenant and the Authority the right to terminate by giving 15 days notice before the end of any month, and she lived in the project without any incident for 8-9 months. In August -- on August 10, to be precise, of 1965, Mrs. Thorpe was elected president of a tenant's organization that was being organized in the project. And, the very next day, the authority sent her a notice that her lease was terminated at the end of that month. Several times she asked for a hearing, she was told only that the authority was not required to give a reason for -- or a hearing. And, when she did not move out, this present suit for summary eviction was brought in the State Courts which ordered her eviction. The State Supreme Court ruled on the first appeal that the lease was terminated the ter -- because the term had expired that the auth -- that the reason the Authority terminated was immaterial and this Court granted review during the October term 1966. After argument here in this Court, a year-and-a half ago, the case was remanded to the Court below to reconsider it in view of a supervening event in administrative direction directive circular issued by the Department of Housing and Urban Development, which directed that tenants not be given notices to vacate without being told the reasons and an opportunity to reply or explain. On remand, the Court below again affirmed stating that its prior judgme -- its prior opinion stood. It stood by it and ruling that the circular was inapplicable because issued after the lease, the termination notice, and the Court orders. So, Mrs. Thorpe remains in her apartment under stay orders issued throughout these appeals. Now -- Earl Warren: Could you tell us how the Housing Authority is constituted? James M. Nabrit, III,: Yes, Mr. Chief Justice. Earl Warren: Would you do that briefly please? James M. Nabrit, III,: Yes, Mr. Chief Justice. The Authority is created under a North Carolina statute called the North Carolina Housing Authorities Law. It's general statutes of North Carolina Section 157.1. The -- it's the -- well, actually, Section 157.4 describes in some detail the process. Petition there could be filed by petition by taxpayers. They have to have hearings to determine whether or not there's a housing shortage in the community. They have to pay certain specific findings made. Then, the authority is incorporated under state law as a governmental agency -- under state law. Earl Warren: How did the Commissioners select -- James M. Nabrit, III,: How are they chosen? I'm -- my -- Mr. Edwards has indicated they're appointed by the mayor of the municipality. I can't find the statutory reference to that. Earl Warren: Alright. Just pass it then. Go right ahead. James M. Nabrit, III,: The mayor of the council here. I'm sure it's in -- Earl Warren: What page -- James M. Nabrit, III,: 157-4 which is the statute. Earl Warren: Yes, what page is that in? James M. Nabrit, III,: It's page 9 (a) in the petitioner's brief. Earl Warren: Yes. James M. Nabrit, III,: 9 (a) appendix. Now, as I said at the beginning, it seems to us that it's a common place in Administrative Law that governmental agencies grant notice and hearings before taking actions which significantly disadvantage a citizen. Particularly, this is true where the action is based on what amounts to adjudication that a citizen is guilty of misconduct, in effect. Our tradition of due process rejects the idea of ex parte kind of missions. Mr. Justice Frankfurter once put it that fairness can rarely be obtained by secret one-sided determinations of facts decisive of rights, and the Court has applied that view. The Court has applied that principle in numerous cases. As recently as a few terms ago, a case called Willner against the Committee on Character and Fitness, the principle was applied to a lawyer who was -- whose profess -- whose right to practice law was at stake. It was applied as long ago -- it was applied to Meat Packers, as long as -- ago as the famous Morgan cases. The same principle was true to the engineer that was denied a security clearance and, therefore, whose right to earn a living was at stake in Greene against McElroy. So, I emphasize here that the issue in this case is primarily, I think, a question of procedural due process, to use Mr. Justice Brandeis' phrase, “due process in the primary sense of an opportunity to be heard and to defend.” I think the case does not involve whether there's a right to public housing for all -- for all the poor. Think it does not necessarily involve even what grounds might justify evictions but, rather, only what procedures due process of law requires if benefits are to be terminated. Abe Fortas: But that assumes that there's something -- some sort of right other than the rights conferred by the lease here. James M. Nabrit, III,: It's -- Abe Fortas: And that is a proposition, if you're -- until you get to the other phase of your case, that's a proposition that, I suggest, you got to face up to. Is there some right other than the right conferred by the lease here and -- James M. Nabrit, III,: Yes. I would submit that the right is the right to be treated fairly -- Abe Fortas: Well, that's all -- James M. Nabrit, III,: By the governmental agency when it's determining whether or not to terminate your benefits under a federal benefit program is the right -- Abe Fortas: Well -- James M. Nabrit, III,: It's the right -- the right to fair procedures. Abe Fortas: Here, the parties entered into a lease and the -- so far as the lease is concerned, Mrs. Thorpe may have been -- her lease may have been allowed, it may have terminated just because they were tired of having her there, no reason at all. In this record, we can't really assume, can we, that there was a determination that she was -- that her lease was terminated because she was the leader of this tenants group or that she was guilty of any sort of misconduct or even if that was considered. James M. Nabrit, III,: Well, to address myself, if I may, Mr. Justice Fortas, to the first part of your question as to whether or not they can terminate just because they were tired of having her here -- or having here there. It seems to me that you have to focus on the statutory framework and the permissible kinds of things the authority can do under the statute. A pri -- In deed, a private landlord could evict someone because he wants to make more profit or he wants the apartment for his brother-in-law or because he wants to tear a building down or anyone of the reasons you could think. Abe Fortas: Right. James M. Nabrit, III,: But, the Housing Authority can't have these reasons. Abe Fortas: No, that's -- James M. Nabrit, III,: The purpose of the program -- Abe Fortas: That's exactly what they want. James M. Nabrit, III,: Yes, the purpose of the program is to house poor people, and they can't leave it vacant and obey their duty under the statute. Abe Fortas: Well, what you're saying is that, from the fact of that, the purpose of the program is to provide housing for poor people. There derives a procedural right, that procedural right being that before the lease is terminated or allowed to expire by its terms, there has to be a statement of charges or a statement of reasons and an opportunity for a hearing which assumes, too, that there's got to be a reason -- a good reason. James M. Nabrit, III,: That's right. There has to be a reason under the statute. Abe Fortas: Well, the statute -- James M. Nabrit, III,: There would have to be a -- Abe Fortas: What statute say about it? Statute doesn't say anything about it, does it? James M. Nabrit, III,: Well, the statute does give us some guidelines, Section 1410 (g) which is in our brief at 14 -- page 3 (a) of the appendix, 1410 (g) (2), does layout the general considerations that the government once considered in this program. Let me read it. It says that it refers to admission policies, but I take it that the admission policies and the right to remain, that Congress would want the same policy, general principles, filed. So, as the Public Housing Agency shall adopt and promulgate regulations, establishing admission policies which they'll give full consideration to its responsibility for the re-housing of displaced families to the applicant status as a serviceman or veteran or relationship to a serviceman or veteran or disabled serviceman or veteran to the applicants age or disability, housing conditions, urgency of housing need, and source of income, provided that in establishing such admission policies, public housing agencies shall accord families of low income such priority over single persons, as it determines to be necessary to avoid undue hardship. So, for example, if a hearing developed that a housing agency was evicting a family in order to put single persons in or not giving preference to the veterans, they would be doing something that was quite opposed to this after cost. Thurgood Marshall: Mr. Nabrit, when I assume that if Mrs. Thorpe is -- what happens, she'll be replaced with another for a family exactly the same position that she's in? James M. Nabrit, III,: Yes, that's correct. That's, roughly, yes. Thurgood Marshall: Well, exactly what constitutional provision do you rely on for your due process argument? James M. Nabrit, III,: Mr. Justice Marshall, your question suggests to me that it's relevant to analyze what the tenant has at stake in this, what the Authority has at stake in determining what procedures fairness requires. Our position -- what we rely on is the Due Process Clause. Now, it seems to me it's useful to look at the interest of a tenant who was in a low-rent federal housing project. In the first place, it -- the general framework of it is pretty well-defined by the state and federal statutes. We know merely from looking at the statutes that the housing project wouldn't be built in the first place without specific finding that there's a shortage of housing in the community. Thurgood Marshall: Maybe I have not made myself clear. Let me try again. But for the fact that she was elected president of this Tenants Union, would you be here? James M. Nabrit, III,: I think that the issue we're -- the First Amendment component is a part of our case, but my answer is yes because these authorities contend that they have the right to kick people out without telling time any reason why and I think that, alone, raises the due process question, the question of procedural facts. Thurgood Marshall: It's -- James M. Nabrit, III,: Why wouldn't it be? Thurgood Marshall: Only because it's federal money. James M. Nabrit, III,: Because it's federal -- yes. Thurgood Marshall: So that a member of the Authority who has a private building to put somebody out without a hearing, but he could not vote to put somebody out in a public effect without a hearing? James M. Nabrit, III,: I can assume that that's so and I can assume that argument. I don't address myself to that question. Thurgood Marshall: Well, you don't recognize the fact that when a private citizen makes a contract with another private citizen for a rental of an apartment in which he agrees that he can be thrown out without notice, that that can't be enforced? James M. Nabrit, III,: I agreed with that. Agreed with that. I said I assume that this case doesn't implicate the rights of non-governmental agencies, in terms of their leases. This case depends on the fact that this is a govern -- that this is a government of the landlord. That's -- I was about to address myself to what the tenant has at stake. It seems to me, just looking at the statute alone that, obviously, if tenants who are eligible to get in these projects are evicted, they stand to lose the only chance they have to homes which they can afford which are decent, safe, and sanitary. So that, what the tenant has at stake is of great value, whether you call it a right, a privilege, or what not. Abe Fortas: Your time -- James M. Nabrit, III,: What's at stake is the right to have -- I'm sorry, Mr. Justice Fortas. Abe Fortas: I'm sorry. Your time is about up. Can we dispose of this case on the circular, the HEW direction? As I -- am I correct in remembering, it's quite a while since I read the briefs and record in this case but, am I correct in recalling that the local authority held that circular direction by HEW was not retroactive? James M. Nabrit, III,: It's what the Court below held, yes. Abe Fortas: And the Court below held that and can't we dispose of the case if we should conclude that the, as we read this re-construed direction of HEW, it is retroactive. Wouldn't that dispose of the case? James M. Nabrit, III,: I believe that would be open to the Court. However, I would urge that the Court dispose of the case on the constitutional grounds that the Court first agreed to review the case. I think that there are many other cases pending which involve these same issues. The housing program is growing everyday and the issue needs to be decided. Speaker: Do you think -- James M. Nabrit, III,: And that the decision on the circular -- I'm sorry, Mr. Justice Harlan. Speaker: I'm going to ask you, do you think the circular can be retried, do you think the terms of the circular go as far as your arguments that the due process rights go? James M. Nabrit, III,: Well I -- not entirely. I think the c -- that the circular would have to be construed in order to give meaning, give content to this general provision that you should have -- that they'll have a conference that the circular is not very specific. It seems to me -- Speaker: -- required notice opportunity to respond and drop them out of there? James M. Nabrit, III,: Well, it's a little more specific. It indicates, for example, some details about what the notice has to contain, but it's not very clear, you're correct. It's not very clear. Speaker: Isn't that in the jury hearing? James M. Nabrit, III,: No. Speaker: You're contending your due process argument is that's what you have? James M. Nabrit, III,: No, we -- Mr. Justice Harlan, we do not contend for a full-fledged evidentiary hearing. We think that the Department of Housing and Urban Development can work out something that's practical in the circumstances, but what they do need to be told is that these tenant evictions that these housing authorities have an obligation of fairness and to pay some attention to procedural fairness. Hugo L. Black: Where would the hearing be held? James M. Nabrit, III,: It seems to me that it's open -- Hugo L. Black: Before the agency? James M. Nabrit, III,: Before the agency. It seems to me that it's -- Hugo L. Black: Do you mean that they're the representative of the Housing Authority? Is that what you mean? James M. Nabrit, III,: Yes. Abe Fortas: But you mean the local Housing Authorities -- James M. Nabrit, III,: Yes. Abe Fortas: Locally. Hugo L. Black: Would she be entitled to a lawyer? James M. Nabrit, III,: I don't believe the Authority could exclude a lawyer or another personal representative or a social worker or some -- Hugo L. Black: In other words -- James M. Nabrit, III,: Family friend. Hugo L. Black: Now that of course wouldn't apply to a private person or group on the department. James M. Nabrit, III,: That would not. Hugo L. Black: You're saying if the government makes a pondering whether -- even if it sets up rules and says you've got to obey them, cannot, like a private apartment, oust someone for failing to have been without giving them a hearing. Now, could that be taken to Court then that hearing is inadequate? James M. Nabrit, III,: Well, Mr. Justice Black, I think it's a single -- it's a process, the administrative process and the judicial process in these cases have to be looked at together and that, perhaps, if you get more rights at an earlier stage, that effects the necessary scope of judicial review. In other words, if you have a very perfunctory administrative proceeding, then you need a full and fair judicial proceeding. Byron R. White: Well, isn't there one here, in any event, a full fair hearing on the -- in the -- let's assume there's an eviction proceeding brought. There's a tenant stays in and doesn't obey the notice to quit and there's an eviction proceeding brought. Can the tenant, at some point in that process, enjoy full due process hearing and urge any defenses to the eviction? Doesn't state law provide a opportunity for the tenant to challenge that eviction? James M. Nabrit, III,: I think not. It seems to me that, under this particular statute -- Byron R. White: Well, that's the way the case got here. James M. Nabrit, III,: Let me -- the reason I think not -- Byron R. White: That's the way the case got here and there were full findings on what -- on the question of whether this -- whether the alleged reason was the reason or not. James M. Nabrit, III,: Mr. Justice White, I think not, and for this reason. It seems to me that the North Carolina law is very clear that the only question open to the Court to decide in the summary vision -- eviction proceeding under this statute is, number one, whether the person is a tenant and, number two, whether they're holding over after the term is over That's been the law in North Carolina, under this statute as long as the statute has been there. Byron R. White: Yes, but let's assume -- James M. Nabrit, III,: And then it's entirely consistent. Byron R. White: Yes, but let's assume for the moment that, in the eviction hearing, the tenant attempts to urge that she was evicted because of -- she exercised some constitutional rights, and North Carolina said “Sorry, we won't listen to this reason, but it was established as a matter of Constitutional Law that North Carolina had to listen to this sort of a reason. Now, what's wrong with that? James M. Nabrit, III,: Well -- Byron R. White: You just don't think -- you just don't think that the North Carolina hearing in the North Carolina Courts that a tenant gets is the equivalent of a full due process hearing. James M. Nabrit, III,: I have -- I really have several answers to that. The last thing you mentioned is one of them. That, in fact, in North Carolina, it's not open to you to do this. Now, I don't deny, for a moment, it's possible to device a judicial proceeding that could give you a hearing on the relevant issues, but I suggest that that's not available now. The second thing that hasn't been said and I should say, Mr. Justice White, is this, that -- Byron R. White: Well what can it -- James M. Nabrit, III,: There are not any re -- there are not any reasons for which you must evict someone form housing. Byron R. White: Well, I understand that. James M. Nabrit, III,: So -- and, finally, it's a discretionary decision -- Byron R. White: I understand that. James M. Nabrit, III,: By the housing manager. This -- no one suggested the Court is ever going to make that kind of discretionary judgment. It's that decision which ought to be made fairly, which ought to be made in accordance with fair procedures and it's that s -- Byron R. White: Tell me the problem with the North Carolina due -- hearing when the landlord brings an eviction notice. You say the owner brings an eviction case. The only question that's open is, is the term over and is he still there? Is that it? James M. Nabrit, III,: That's it, and there is a -- that's what the statute says. Byron R. White: When the term is ended because of some right of re-entry based on some act of the tenant. Isn't there any room for the tenant to challenge? Let's assume the landlord says “We terminate because you scratched up the walls of the apartment,” and the tenant says “I haven't either.” James M. Nabrit, III,: That proceeding would be brought under another subsection of the law. If I could refer the Court to the statute, the North Carolina summary evictions statute, if I had myself, it's at page 21 (a) of petitioner's appendix. And, it provides for an eviction under subsection 1, when a tenant in possession of real estate holds over after his term has expired. That's what's involved here. And, under subsection 2, when the tenant has breached the lease after alleged cause and they proceed under subsection 2, then they allege that the tenant didn't pay rent or the tenants scratched up the walls in breach of the lease, then they have to prove it. But, if they allege that the term is over, that he's holding over after the lease expired under subsection 1, then that's all they have to prove. And if the -- Byron R. White: Yes, but the lease -- James M. Nabrit, III,: But, he first page of the reco -- Byron R. White: But the lease expired only because the landlord gave a notice. James M. Nabrit, III,: That's right. That's all they have to prove, as I gave the statutory notice. That's all I have to prove and the lease. Byron R. White: And, for no -- that doesn't make any difference for what reason. James M. Nabrit, III,: That's right, and the Supreme Court of North Carolina held that that reason is immaterial. Byron R. White: Well, I know, but -- James M. Nabrit, III,: And that's entirely in accord with North Carolina practice of it. Byron R. White: But, why did the Trial Court make some findings on this question? Because the Trial Court made findings on it and the North Carolina Court didn't -- resided this fact of finding. James M. Nabrit, III,: I suppose that the Court was being careful, but the Trial Court also said that there was no obligation to give a release. Trial Court also held that. Byron R. White: Let's assume for the moment though that there was a full due -- that the tenant -- that could've -- bring to bear all the questions that you think he ought to be able to bring to bear in the administrative hearing. Just suppose that North Carolina eviction proceeding permitted him to do that. Would you say there would have to be a constitutional -- maybe the constitutional right to administrative hearing prior to that time? James M. Nabrit, III,: My position, Mr. Justice White, is that this constitutional right to certain elements of fairness, at some stage of this procedure, anything from the beginning of the administrative procedure to the end of the judicial procedure. I don't have any rigid notion of where you have to get your rights but, it seems to me, some place in that proceeding, the tenant ought to be -- where the government is the landlord, the tenant ought to be told why he's being terminated, why his benefits are being terminated, and have an opportunity to address himself to that. In Additionally, it seems to me that, at least on the question of notice of the reasons and some minimal opportunity to address himself to, the tenant ought to have that at the administrative stage. I say that, particularly where we have low-income tenants who are unlikely to be able to afford lawyers and afford to go to Court, and they certainly can't afford to go to Court to fight an eviction if they don't know why they're being evicted. It seems to me, the Housing Authority also -- Potter Stewart: Well, that really marks my point. Do you think this HEW regulation could be read to be re-tried? James M. Nabrit, III,: Well, I -- yes, I think it can be read to apply to this pending case, and the reason I think that is that it's entirely conventional, it seems to me, to apply new procedural rules to cases where the judgment is not yet final. I think, further, that's entirely artificial to view this case, as the authority does, as one where they're being deprived of some property because, as we said earlier, they're going to rent the same apartment to somebody else at the same rent. So that by requiring them to go back and give the tenant the reason she's being evicted, it seems to me, doesn't deprive them of anything. It just makes them be fair to the tenant. I wanted to complete an answer to the prior question and say, also, it seems to me, important that the authority to be made to state a reason at the administrative level so that they will have a reason, and so that the reason they later present in Court is not a post factor justification for something that they decide earlier. It seems to me that the person who makes the decision to terminate government benefits like this ought to be able to be required, if we are to -- if he's to operate under law, he ought to be required to say why he's out. Earl Warren: Mr. Edwards. Daniel K. Edwards: Mr. Chief Justice and, if the Court please. If -- as Mr. Justice Fortas has suggested, we're at the threshold here of developing some new constitutional concept about the relationship of the poor with the government. I don't know whether I can supply much thought that's worthwhile, except this, that the philosophy that has been developed in the brief for the petitioner here, at least by quoting certain individuals such as Professor Jones and Professor Rich on the subject, on page 36 and 37 of the brief seems to have followed the line of thought that what we're doing is to give the poor the same rights and their contact with government that is possessed by other people, that is, we equate the thing. And, that we haven't arrived yet in any case that I know of where they are given some different rights. Now, when you supply them with a lawyer, because they're poor and can't afford one, you're not giving them additional rights in a sense. All you're doing is equating them with a fellow who can afford a lawyer. In this case, you have a lease that is a standard procedure between landlord and tenant. Now, the question arises, do the Common Law procedures, these Common Law concepts, Common Law or the Statutory Laws that are applicable to everybody in a landlord and tenant relationship, do not they supply reasonable standards of fairness? Abe Fortas: Well, I'm sure, Mr. Edwards, you understood my questioning of Mr. Nabrit. My -- what I was trying to find out from him was whether the principle of putting the poor on an equivalent basis with the people who are better off in terms of legal rights, constitutional rights, whether that principle really got him anywhere in this case. That was my question. Daniel K. Edwards: And, I'm sure that it does not because they are placed on an equal basis here. Now, the only question then is whether he wants to go further than that, and I say not. That perhaps that is a matter that the Congress should consider as to whether or not they want to make the relationship different and or the state legislature. Abe Fortas: Or HEW. HEW pursuant to its -- presumably pursuant to its statutory authority issued a circular here, and that does provide a right, for what it's worth. Daniel K. Edwards: The heard circular is the thing that I would like to take up next then, if I may. Thurgood Marshall: Mr. Edwards, before you get to it -- Daniel K. Edwards: Yes. Thurgood Marshall: You do recognize the difference between a housing authority operating under state and federal auspices and a private apartment of its own. Daniel K. Edwards: There are differences. I don't know. For one, the difference would be that I assume that a Housing Authority could not say “We will require you to sign a statement that you never belong to certain organizations found by the Attorney General to be subversive that has a condition to occupy these apartments.” You can't do that, or you can't say that “You can't occupy these apartments if you decide to vote or, if you decide to make a speech somewhere, you can't occupy.” In other words, I think that, to that extent, the Housing Authority is, and perhaps in a different situation, the private landlord, although I wouldn't be adamant in saying that a private landlord might not be constitutionally -- Thurgood Marshall: Well, are you familiar with the Wilmington Bus case? Daniel K. Edwards: Sir? Thurgood Marshall: The Wilmington Bus situation? Daniel K. Edwards: Wilmington -- Thurgood Marshall: Well, obviously you don't, but I mean that, once the state takes over, it's not a private business any longer. Daniel K. Edwards: That's -- Thurgood Marshall: And, you do recognize the right of HUD to set rules and regulations or not? Daniel K. Edwards: No, sir. Thurgood Marshall: You don't recognize that? Daniel K. Edwards: Within the limits of their annual contributions contracts, they do have that right and privilege. HUD itself recognizes this. Thurgood Marshall: Well, that's why I wanted to get this preliminary to this circular, because it want to know whether you say this circular is binding or not. Daniel K. Edwards: I say it's not. Thurgood Marshall: It's not, why? Daniel K. Edwards: And, the reasons for that are these. The statute, the Housing -- United States Housing Act of 1937 did provide that HUD could issue certain general rules and regulations to implement the chapter -- the provisions of the chapter, but it also provided in there, just as clear as it could be, that it should deal with Housing Authority stet up -- set up under the state law, as this one was under the state statute, by entering into a contract with them, which is called an annual contributions contract. It wasn't given the power by any statute to run the Housing Authority setup under the State Law by idict or by rule or by regulation, absent a contract with that agency, that hou -- local Housing Authority. Had to have a contract, annual contributions contract, and that's in their general power to make rules and regulations was within the framework of the concept that their sole control over this local Housing Authority was by virtue of the contract for annual contributions that it entered into. And, they had to put the provisions in that contract. As I say HUD recognizes this. The petitioner, in preparing this case, directed certain inquiries to her with reference to the s -- the February 7, 1967 circular, and received some answers from HUD in response to their inquiry. And, you will find those in the petitioner's brief on page 48 (a) of appendix 5. Back in the back part of the brief is the pertinent one that I would like to call the Court's attention to. There, HUD says, HUD policy over the years has been to treat the local Housing Authorities as contracting parties under the annual contributions contract not covered by the term “public.” Material issued from time to time for the guidance of local Housing Authorities in the implementation of the annual contributions contract. Has, therefore, not been published in federal registry, but local authorities are given actual notice of these matters by supplying the material, manuals, bulletins, circulations, and similar publications directly to the local authorities. And, the Housing Act didn't require that there'd be inserted in the annual contributions contract any controlling features about eviction or what sort of lease should given to the tenants, and the annual contributions contract itself contain no such provisions. Thurgood Marshall: Is the Durham Housing Authority abiding by that -- Daniel K. Edwards: It is -- Thurgood Marshall: Or not? Daniel K. Edwards: It is right now. Thurgood Marshall: It is abiding by it? Daniel K. Edwards: It is, yes, sir. Thurgood Marshall: But it doesn't consider it to be retroactive? Daniel K. Edwards: It does not consider to be retroactive and -- Thurgood Marshall: Well, as of tomorrow, a person -- Mrs. Thorpe, if she's put back on a regular stay, that she couldn't be put out without a due process hearing? Daniel K. Edwards: We -- I think, as a matter of policy, what the housing authority would do as they're now doing would be to follow the procedures set out in the HUD. Thurgood Marshall: Well since this case is still being litigated, wouldn't the best way to be is just to get about this? Daniel K. Edwards: To forget about the conviction -- Thurgood Marshall: About this one woman, Mrs. Thorpe. Daniel K. Edwards: I think that, as a practical matter, the -- unless the Court wants to establish some new concept and make some pronouncements as to constitutional law about the thing, why, that won't be true. Thurgood Marshall: But couldn't your clients, without any Constitutional Law, pronounce if there's anything else, moot the states? Daniel K. Edwards: They could. Thurgood Marshall: But it hasn't? Daniel K. Edwards: They haven't done so, that's correct. Abe Fortas: Mr. Edwards, perhaps I don't understand you. Do you -- I assume that everything that was -- all the directions in the HUD manual and in the very circular that's at issue from time to time were binding as a matter of law on the local Housing Authorities. Do you contest that? Daniel K. Edwards: I do, sir. I don't think that's -- I don't that's correct. Abe Fortas: On page 31 (a) of the petitioner's brief is an excerpt from the low-rent housing manual. It says it has a -- HUD has a, or PHA at that time, has established minimum requirements for local authorities, but you take the position that that is -- that it has exceeded its statutory authority in doing so? Daniel K. Edwards: Not necessarily, the -- I think that the annual contributions contract, that HUD rights -- Abe Fortas: That exhausts its authority? Daniel K. Edwards: That -- the HUD rights, the annual contributions contract and the authority enters into that contract with them. Abe Fortas: And that exhausts the HUD's authority? Daniel K. Edwards: That does, unless the contract provides that it shall be -- that certain things shall be done pursuant to HUD's, from time to time, directive and advice. Abe Fortas: Does the contract contain any reference to the manual or to circulars or regulations to be issued by -- Daniel K. Edwards: No, sir. Abe Fortas: By HUD? Abe Fortas: No sir, it does not provide that HUD be given the authority to -- Abe Fortas: It says, you note in the same page, the PHA manuals, which are now HUD I guess, contain the requirements which supplement the provisions of the contracts between the local authority and the PHA. That doesn't change your view, I take it? Daniel K. Edwards: I tell you, no, sir, because I think that what they're talking about are those areas where there needs to be some rulemaking and there's, for example, with respect to keeping the records. Abe Fortas: That didn't so -- I suggest if you look at page 32 (a) subparagraph 4, it seems to be just as broad as it could be with respect to the operation of the projects after initial occupancy. Daniel K. Edwards: That's the PHA requirements. But there, again, you have the -- this is the Housing manual has issued and the contract -- annual contributions contract under the statute is the connecting link between the two. And, we say that this hasn't been shown to be anything in that contract which is the only -- really the only link between this Housing Authority setup under the state statute and HUD -- Abe Fortas: Well, to pursue my brother Marshall questions, if you assume, contrary to your present argument, if you assume that this circular is binding on the local Housing Authority, there's no question that it would require notice, etcetera, to Mrs. -- to a tenant upon termination of her tenancy. Daniel K. Edwards: I don't think it would, sir but necessarily as a matter of law and, for this reason, you analyze the circular itself. The first paragraph makes an announcement of fact that there's been a lot of evictions around the country and that there's public dissatisfaction about it. The second paragraph says we -- that is HUD, we believe that it's essential to advice with the tenant before the eviction action is taken. Then, the third paragraph says that, in addition to advising with the tenant, from this date, the local authority shall keep certain records. And now, in analyzing what they meant by the circular, it is significant, I think, that HUD does have the authority under the annual contributions contract and under the statute to require the local authority to keep records, and the only directive part, the mandatory part, of this circular related to the keeping of the records says, from time -- from this date forward, you shall keep certain records. Now, the statute set forth on page 7 (a) of the petitioner's brief set out that the -- that HUD does have authority to require the local authority to keep records. So, when they wrote this circular, they gave one paragraph of information about what was going on, a second paragraph about what they believe and then a third paragraph which directed them following -- pursuant to their authority to acquire records of these things. Abe Fortas: So, you think we really have to decide the constitutional question here because the circular -- you think this circular is just a statement of the belief which may or may not be regarded by the local authorities praise-worthy, but certainly is not binding on it. Daniel K. Edwards: I think that's correct. Earl Warren: Mr. Edwards, let me ask you this question. Assume -- putting the question of retroactivity aside for a moment and taking it as it was when this woman was first ejected from her premises, suppose this Housing Authority which is appointed by the mayor of the city was following the practices of many cities in the South of resisting integration of any kind, and it took the authori -- took the process of throwing out every Negro who came into the apartment house on 15-days of notice without any mention at all of why it was done, and absolutely defeated the purpose of this Act was to -- which is to give all poor people an opportunity to have decent housing in the community in which they live. Would you say if the commissioners appointed by the mayor and the manager that they appointed took that kind of a position and ejected every Negro who was -- had to be admitted to the apartment house was regular and that the Negro could not -- no Negro could complain in the Courts because no reason was assigned for his ejection? Daniel K. Edwards: No, sir. Certainly would not. I would say that they would be violating the Constitution of the United States and probably the Constitution of North Carolina if they acted in such a fashion. I take it -- Earl Warren: Well, then, why shouldn't he be entitled to know if that was the reason for his ejection or if it wasn't? Daniel K. Edwards: In Court, I think he would be entitled to inquire into the matter, and that's where -- Byron R. White: In your eviction process? Daniel K. Edwards: In the eviction process. That's why, at one point, I disagree with my friend on the effect of going into Court on -- in an eviction process and proceed. I think constitutional issues are relevant there and can be raised in any Court in any stage of the proceeding if their constitutional issue, requirements of the constitution, the statute. Eviction statue couldn't say “You cannot raise a constitutional issue before the Court.” Byron R. White: Then, the Supremacy Clause would also require consideration of any binding rules of the Federal Authority. Daniel K. Edwards: Exactly so, and so you have to consider in this course, it's no -- there's no question about it. The trial judge before whom the matter is brought, if you raise and say that “They're violating my constitutional rights here,” you'd have to consider. Earl Warren: Well -- Daniel K. Edwards: And, in fact -- excuse me sir. Earl Warren: I understood that you thought that, because that made a contract in connection with this tenancy, that there was no substantial difference between the case where the government is the landlo -- is the owner and the case where the land owner is a private individual. Daniel K. Edwards: I'm think -- Earl Warren: That all he'd have to show would be that “my contract with this tenant is to the effect that on 15-days notice, I can terminate the tenancy and I don't have to give any reason at all for it.” Daniel K. Edwards: No, sir. We don't take that position. We take the position that the constitutional issues would be relevant as they were ruled on here in this very case. The Court below, when she raised the point “my First Amendment rights are being violated,” the Court didn't say “that is irrelevant. You will not be heard on that." The Court heard evidence on that very issue, not ruling it irrelevant but making a decision and making a finding of fact based on competent evidence that her First Amendment rights had not been violated. Earl Warren: It isn't true then that the Courts of North Carolina held that all they had to show was that the 15-days notice had been given. Daniel K. Edwards: No, sir. They haven't -- they did not hold that in this case because the finding was, when she raised the issue and said that My First Amendment rights had been violated, the Court did not deny her hearing on that but, instead, held a hearing on it and permitted evidence to be introduced, and there was no denial of any request by the petitioner to cross-examine anyone, no denial of the petitioner of her right to introduce any evidence that she saw fit on this or any other issue. There's nothing in the record that indicates there was any such denial. Hugo L. Black: Is the difference between you and your adversary that you claim that these rights should be raised in the Court and they claim a right under the constitution, we can say that the constitution requires that they be given -- they give no -- the agent of the Authority give notice to them before they go to Court? Daniel K. Edwards: That is our difference, yes, sir. Hugo L. Black: And the statute required that, as it does in these states, you would of course have to prove that notice had been given or you couldn't evict. Daniel K. Edwards: Well, we did give notice. Hugo L. Black: Well, I don't understand that. That's what you did. Daniel K. Edwards: Yes, sir. Hugo L. Black: Claiming that you ought to have a right to try it in the Court whether or not you give them notice and, if you didn't, if the contract required it, or the policy of the Act required it, then you think that she would win in the Court because she hadn't been given notice. Daniel K. Edwards: That's correct. Earl Warren: Where do we find that articulated in your brief? Daniel K. Edwards: The -- on page 8, we talk about the adequacy of the trial below, sir, in which adequate hearing was provided in the trial below, if that's the point that you were referring to. Earl Warren: But is there a concession in your brief that that they are entitled to? Daniel K. Edwards: Yes, sir. We say that, during the trial, this matter in the Superior Court, defended not to quarrel with the nature of the scope of the judicial inquiry. That's the petition, but contended only that due process required the Housing Authority to give the tenant notice of its reason and a hearing before it instituted that. And, we do go on and we say that we do not contend that we could violate this petition as First Amendment rights in -- as a condition to her remaining in the apartment, that we couldn't place a denial of some constitutional right such as a right to vote or any other rights, free speech, as a condition precedent to her remaining in there. And, we say -- Byron R. White: You could utilize her by throwing her out, but you haven't done that. Daniel K. Edwards: That's correct, and we concede that and we say that that is a -- it was found to be relevant by the Trial Court and passed upon by the Trial Court and when it -- of course, when it was here before, there were some language in the opinion of the Supreme Court that indicated that it might be considering it irrelevant that such an issue be raised, but when it went back for re-hearing, the Court reviewed them out and said, in effect, that the Trial Court had before it whether her First Amendment rights have been violated and so on, and that the Court -- the Trial Court decided issue on competent evidence and it should be sustained. Abe Fortas: Mr. -- Thurgood Marshall: What's -- Abe Fortas: Mr. Edwards, would you take the same position if this were -- housing project were privately owned and you have exactly the same facts, or let's take the more ex -- dramatic illustration that the Chief Justice put to you. You have a privately owned Housing Authority and every Negro tenant in it is terminated all at once under the same kind of release. Would you say that the tenants can challenge the termination on the ground -- on the constitutional grounds and that they wouldn't have a valid constitutional basis for challenge if they could demonstrate that the termination was because they were Negros? Daniel K. Edwards: If I were representing the tenants or if I were a judge considering the matter, I would say they would have a valid right under Shelley versus Kraemer or the cases of that sort in which they go into the State Court and ask the Court to enforce something such as a trespass criminal case or an eviction proceeding and say that you -- and would say that the constitution forbids the State Courts from taking this kind of governmental action to implement that kind of denial of constitutions. Abe Fortas: So that, this is a qualification of the property owner's right in his property, that is, the qualification being that he cannot discriminate on the grounds of race -- Daniel K. Edwards: Certainly -- Abe Fortas: Stand terminating the tenancy of pers -- of tenants because they are Negros. Daniel K. Edwards: It would certainly be arguable and, of course, the -- Abe Fortas: Well, I wouldn't argue anything. I'm asking for your -- is that the principle upon which your brief is based when you say that the Public Housing Authority of Durham could not terminate -- could not lawfully terminate the tenancy of Mrs. Thorpe if it did for a reason that -- for the reason that she organized this Tenants Union? You say, then you're assuming that she has a constitutional right and my question to you is whether she has that constitutional right because this is a public agency or would she have that constitutional right even if it were a private agency? Daniel K. Edwards: And, the only answer I can give is that some of these -- most of the cases in the past have said that the fact that it is a governmental agency is relevant to that issue, that the restrictions of the constitution were framed to restrain government because it had unusual powers. Potter Stewart: The only reason that this is a constitutional right is because this is government. The First Amendment doesn't say “no person shall abridge any other person's right of free speech,” does it? Daniel K. Edwards: That's correct and the -- but, I'm saying, too, that in the Shelley versus Kraemer situation where you go into the Courts and just say -- Potter Stewart: Well, that would also be covered. That would be a statutory right under this Court's decision in Jones against Mayer, would it not? Daniel K. Edwards: Right. Potter Stewart: And under the Supremacy Clause of the Constitution, that would probably -- Byron R. White: Can I ask you if in the -- you say that the eviction hearing -- in the eviction hearing, federal issues may be raised and litigated and disposed of, and you seem to say that it would be required. I agree with you but, now, let's assume that the -- let's assume that in the eviction hearing the lessee that's being evicted says “I am being evicted because I organize the tenants or I made a speech,” and the Administrative Housing Authority goes on the stand, as he did in this case, in the eviction hearing, I take it, and said “No, that isn't the reason at all.” And, the lawyer for the tenant says “What reason was there?” And he says “None of your business.” Now can he get away with that? Potter Stewart: No, sir. Byron R. White: Does he have to answer the question? Daniel K. Edwards: I think you'd have to answer the question -- Byron R. White: And, what if he said -- Daniel K. Edwards: In the cross-examination. Byron R. White: What if he says “No reason at all I just didn't like you.”? Daniel K. Edwards: Then he would've answered the question. If he had said “No reason at all,” we just -- Byron R. White: But then, how does the eviction hearing come out? Daniel K. Edwards: I think that the Housing Authority would succeed that, if there was no reason at all, her con -- there was no constitutional -- Byron R. White: Unless there were some federal rule that says some reasons, there has to be some good reason. Daniel K. Edwards: That's correct, and then we're saying that, as the matter now stands and has in the past -- Byron R. White: Well, there aren't any sp -- un -- there aren't any banned reason except constitutional right. Daniel K. Edwards: The bad reasonings are the constitutional ones and we can't -- the statute doesn't say there has to be any other kind of reasons and we don't think that the constitution says that you have to have other kind of reasons. As long as you say that the standard is applicable in this little Housing Authority, which has no governmental powers other than that given to ordinary landlords so that the mandates and restrictions of the constitutions which apply to government generally and were designed to restrict government generally, wouldn't necessarily apply because they have to go into eviction proceedings to get their property back, they have to sign a lease, though I can hear the landlord. They don't, as agency of government, they've not a single power that an ordinary landlord have that -- Thurgood Marshall: Can I ask you, why is -- why are they appointed by the mayor? Daniel K. Edwards: Sir? Thurgood Marshall: If it's just like a private organization, renting company, why is it appointed by the mayor? Daniel K. Edwards: Because it's handling public funds. Now, when I say -- Thurgood Marshall: Well, when it's handling public funds, it's different. That's the point, isn't it? Daniel K. Edwards: That is one point but, I take it, the -- Thurgood Marshall: It's the point as the constitution, is it not? Daniel K. Edwards: I was -- my position was, sir, that some of at least he restrictions of the constitution between this -- between an individual and the government, they were designed to prevent government through its greater thought, its greater power, and so forth, from imposing on the individual. Therefore, the constitutional prohibitions against government taken certain actions, vice versa, an individual which -- that wouldn't make that -- that reasoning would not give rise to any constitutional prohibitions as against this Housing Authority because it didn't have any power or authority greater than that, but when it comes to the theory, “well, you're administering funds, therefore, a morality founded on constitutional principles needs to be applied to you.” Example, Mr. Edwards, if a private Housing Authority could say that “None of my tenants shall be permitted to speak in any way that I disliked,” there's nothing wrong with that, is there? Daniel K. Edwards: I just -- there's something wrong but, I think, legally, no, there's nothing wrong with it. Thurgood Marshall: But you could do it, the Durham Housing Authority couldn't make such a rule. Daniel K. Edwards: That is correct, I'm sure. Thurgood Marshall: Well, that's another difference, isn't it? Daniel K. Edwards: That's correct, sir. Thurgood Marshall: And, isn't that what's involved in this case? Daniel K. Edwards: That is involved in this case and it was decided in this case because of the prese -- the petitioner presented her contention of what right was being violated, the Court listened on the evidence on it and decided against the petition. That is this case. Earl Warren: Let me read to you from the findings of the Court that I get from the transcript. That, by giving the defendant written notice of termination of her lease on the August 12, 1965, the plaintiff effectively terminated the tenancy of the lease of the defendants as of August 31, 1965. Then, she appealed to the Superior Court, and this is the judgment of the Superior Court, the per curiam judgment. It says “The defendant, having gone into position as tenant of the plaintiff and having held over without the right to do so after the termination of her tenancy, the plaintiff was entitled to bring summary ejectment proceedings against her to restore the plaintiff to the position of that which belongs to it. Citing Murrill versus Palmer, 164 North Carolina 50 it is immaterial what may have been the reason for the lessor's unwillingness to continue the relationship with landlord and tenant after the expiration of the term as provided by the lease,” and that's the end of the judgment. Daniel K. Edwards: Yes, that's right. That's the first judgment of the Court in North Carolina. Earl Warren: No that's on appeal to the Superior Court. Daniel K. Edwards: That was the judgment of the Supreme Court in North Carolina, what you just read, per curiam opinion in the first case. See, this has been to the Court -- Earl Warren: Yes. Daniel K. Edwards: Supreme Court of North Carolina twice. Earl Warren: Yes, that's true. Daniel K. Edwards: That's the first time. Earl Warren: But where do they ever -- where did they ever say that she had a constitutional right to test these other matters? Daniel K. Edwards: On their -- when it went back on re-hearing, they considered that matter and the Supreme Court of North Carolina -- Earl Warren: Where do we find that? Daniel K. Edwards: On re-hearing -- it's page 39 -- wait a minute. Earl Warren: Yes? Daniel K. Edwards: The -- wherever the opinion is of the Court, I believe it's -- Earl Warren: Yes. 39, you say? Daniel K. Edwards: Find it. Earl Warren: Whether -- Daniel K. Edwards: The Court on re-hearing said this. “She refused to vacate, charging her lease was being vacated because of her having been elected president of the parent's club. No evidence was offered as to the purposes of the club, nor that its activities conflicted with interest to their authority. The manager of the authority stated unequivocally, under oath, that the termination of the lease had no connection whatever with the tenant's activities and get back to the parents club, Judge Picket so found. That was the Trial Court. Earl Warren: Now, where did Judge Picket so find? Daniel K. Edwards: In the Superior Court judgment which -- in this appendix here, that was upon -- Earl Warren: Is that language that I just read? Daniel K. Edwards: No, sir. Earl Warren: Is that page 28? Daniel K. Edwards: The language that you just read was one of the findings it is true. Byron R. White: On page 21? Daniel K. Edwards: 21, finding number 10 says this is the finding of the Court below that the plaintiff, Housing Authority to the City of Durham, acting through C.S. Oldham, its Manager and Executive Director, gave notice to the defendant to vacate said premises, not because she had engaged in efforts to organize the tenants of McDougald Terrace nor because she was elected president of a group organizing McDougald Terrace on August 10, 1965 that these were not the reason the said notice was given and eviction undertaken. That was the finding of the Court. Earl Warren: That's the finding, but the judgment says that's immaterial. Daniel K. Edwards: The -- Earl Warren: It makes no difference. It makes no difference if the term has expired. She's there illegally. It is immaterial, and I'm reading from page 28, it is immaterial what may have been the reason for the lessor's unwillingness to continue the relationship of landlord and tenant after the expiration of the term that's provided in the lease. Daniel K. Edwards: That, of course, if Your Honor please, is not the opinion or not the judgment in the Trial Court. That is the per curiam opinion of the Supreme Court of North Carolina as it -- Earl Warren: Well -- Daniel K. Edwards: As it appeared when the case was first heard in that Supreme Court, but what I'm saying is that when it went back to the Supreme Court of North Carolina, they added -- Earl Warren: Do you mean on our remand? Daniel K. Edwards: On your remand, yes, sir. They said a different -- or not necessarily a different thing, but they amplified what their meaning was. I -- when we're here before, my contention was that this language in this per curiam decision, not only that it was immaterial, under the showing in the evidence that was presented there, what their reason might have been because there was no showing of any constitutional violation by the petitioner. For that reason, it became immaterial but there was no holding even then that she could not have the opportunity to show that any constitutional right was violated. Then, when it went back to the Supreme Court of Carolina on re-hearing, the Court went further into that particular point of the finding -- on the finding that her First Amendment rights had not been violated by the Trial Court and then said that since they were based on competent evidence, those findings by the trial judge which appear in finding number 10 should be sustained. Speaker: Could I ask you a question? Earl Warren: Well, could I finish this just once? What is the finding in Murrill versus Palmer, 164 North Carolina, which is cited by the Supreme Court for its statement that I just read about the immateriality for the reason for the ejection? Earl Warren: That was just ordinary landlord-tenant situation in which notice was -- Earl Warren: And what did they hold there? Daniel K. Edwards: That the -- that no constitutional issue was raised in that case. They just gave them notice and the -- it was a normal eviction proceeding. No governmental agency was involved in that case. Earl Warren: And on the authority of that case, they said here that it is immaterial what the reason was. Daniel K. Edwards: Well, I don't think that when they say it's immaterial in that first per curiam decision, they are really staking out what the Court's view of the matter was. This was not the Trial Court. It'd be the Supreme Court of North Carolina per curiam decision in one summons says that, “Under the findings that have come to us.” Earl Warren: No, it doesn't say that. Daniel K. Edwards: Well, I'm saying just what it means. Earl Warren: Your -- well, I know That's different. Daniel K. Edwards: All it says is that it's immaterial, but I think that you have to construe what they're talking about in terms of the case that was then before, which was a case that had come before them with a finding of fact by the trial judge that First Amendment rights had not been violated and that there'd been no request by the petitioner for further exploration by the Trial Court into any reasons and there'd been no objection or exception taken to any action by the Trial Court, vice versa, any further exploration or what the reasons might have been. And, in that context, I take it that, on appeal to the Supreme Court of North Carolina, it really was immaterial what the reasons were. Earl Warren: I thought that the petitioners did take exception to those things? There relate it here on page -- Daniel K. Edwards: They didn't take exceptions -- Earl Warren: Exception 1 on page 21 and exception 2 on page 22, and 3 and 4 and 5, I think they -- Daniel K. Edwards: The exceptions are on page 25, I think, of the appendix, grouping of exceptions and assignments of error. And, what I'm saying is that there were no exceptions taken to the scope of the Trial Court's inquiry and the reasons because there was no request made upon the Trial Court to broaden the scope of its inquiry. Therefore, there would -- could be no exception taken to the Trial Court just confining itself to the evidence presented by the petitioner. And, her contentions, she said they were in the trial. There was no request to the judge and the trial of the action say “Make them come in and give us additional reasons.” They didn't ask that, and the fact that he didn't do it on his own motion was not accepted, too, either there. When it went from the Trial Court to the Supreme Court, they didn't take exceptions to the failure of the Trial Court on its own motion to make further inquiry and broaden the scope of its inquiry and the reasons for the eviction. Byron R. White: But if the North Carolina Court did have that attitude that it's immaterial, I suppose you would concede they may be in error. Daniel K. Edwards: I think this language at least -- Byron R. White: Or you would say that -- Daniel K. Edwards: Is an error. If that language is literal -- Byron R. White: Or at least if the state refuses to make some form available to enforce constitutional rights, there's bound to be some form somewhere then. Daniel K. Edwards: That is correct, but I think that what you're confronted with here is, you have the same thing, as far as evidence and findings are concerned, is that before the Supreme Court of Carolina and you say that, on the basis of those findings and on that evidence, she had a fair trial in the Trial Court there. Byron R. White: Well, what if you -- what if the Court here didn't agree with you that the circular was maybe we call it retroactive or not, at least here, here came a circular from HUD before this case was finally disposed of. It was on appeal here or somewhere when the circular came out. Now, why shouldn't the circular apply the law announced by that circular if it is the law and binding? Let's just assume that it is. Why shouldn't that law determine the appeal? Daniel K. Edwards: If It's -- Byron R. White: Or why shouldn't the appeal be determined in Court? Daniel K. Edwards: If it's in terms -- Byron R. White: What would be the normal rule, wouldn't it? Daniel K. Edwards: It would be within the context of the generally applicable rules. I think this Court has applied to other situations in which you have a procedural rule that has entered into the picture between the trial and the final determination you apply whatever. Byron R. White: Do you -- if the Court thought this circular was to be applied to pending cases, then what? Daniel K. Edwards: We just lost the lawsuit, I gather. Byron R. White: But do you think it's binding? Daniel K. Edwards: I don't think it's binding. I think it's -- Byron R. White: Do we have to determine that here? Daniel K. Edwards: I think you have here a contractual situation. You have a state agency to be sure, but it's not a federal agency. The local Housing Authority is created under a state statute, and HUD doesn't have a vestige of authority over it granted by any statute except by virtue of entering into an annual contributions contract with it and the sign on the dotted line, HUD and the local Authority. Byron R. White: Well, I take it then, you must get down to this really because you seem to concede the general rule would be that if this is a binding rule of some kind, it really ought to apply to pending cases. Daniel K. Edwards: I think so. Byron R. White: And so, your real last resort is whether it's really binding on it, on a local agency, whether this kind of circular really determines -- is supposed to determine your conduct. Daniel K. Edwards: That's correct. Byron R. White: And you suggest that you can -- may depart from it now, although you're complying with it now, you can depart from it without violating any kind of Federal Law. Daniel K. Edwards: I think so. I think that because you'd have to be very careful about reviewing the content of the annual contributions contract, which we have done and can find nothing in it that gives HUD the prerogative under the terms of that contract to say what kind of lease we're going to have, whether it should be for six months, one month, one year, or anything like that and it doesn't give them any prerogative to say that you must have an administrative hearing in advance of -- Hugo L. Black: Isn't that the real issue between you and Mr. Nabris? Daniel K. Edwards: That's correct. It's whether the constitution of this country requires that there'd be an administrative hearing or administrative giving of reasons before the eviction proceedings -- Hugo L. Black: Before you go to Court. Daniel K. Edwards: Before we go to Court. Speaker: Mr. could I follow up one question? Assuming that your view is deceptive on that problem, what -- I'm not quite sure that I understand your view as to what would be your position if, in an administrative -- in any summary eviction proceedings that I cannot be evicted because I have received no reasons for my eviction period, what would happen on that part? Daniel K. Edwards: I would say that would not be a sufficient defense on the -- Speaker: Not a sufficient defense? Daniel K. Edwards: That's right. I cannot be evicted because I received no reason. Speaker: Right, and then, suppose that she said “I want to prove my answer to the questions of the majority that I was evicted because I was a Negro.” Daniel K. Edwards: I think she would've been entitled to do so. Speaker: But she has to make that assertion as a matter of speculation or suspicion, however we feel about her, knew well about her, she cannot explore as to what the reasons have been? Daniel K. Edwards: I think she could. I think she could insist upon her right to examine the agen -- the executive director of the authority. If he got up on the stand and ask “What reason did you have?” He might say “I had no reason at all, I just wanted a vacant apartment there,” but we say, constitutionally, he would be entitled -- that would be a constitutionally acceptable answer and said “I had no reason at all, I just wanted a vacant apartment.” Speaker: And, as Justice White suggested, the language in here must have been that North Carolina was a little overbroad. Daniel K. Edwards: That was the first -- the first opinion was overbroad and I concede that it was, and I don't think that the language accurately portrayed what the Court was thinking and what it was holding. I know it didn't portray what it was actually holding on the basis of the record before it. And then, when it went back on re-hearing, I think it clarified that point. Speaker: So, she would get a chance. She would have a right to get the reasons for the eviction? Daniel K. Edwards: Yes. Speaker: A case that much? Daniel K. Edwards: Yes, sir. Abe Fortas: Mr. Ed -- Potter Stewart: No, I didn't understand that. Byron R. White: Where? Potter Stewart: You -- Byron R. White: Where? In the Courts? Daniel K. Edwards: In the Courts. Hugo L. Black: That's right. Speaker: Well, what if -- Hugo L. Black: That is the issue between you. William O. Douglas: Well, that has been denied up to now. Abe Fortas: Well, that's right. Daniel K. Edwards: She never -- she has never asked in the Trial Court, if Your Honor please, what the reasons were. William O. Douglas: Now, you're being technical. In North Carolina she's asked. Daniel K. Edwards: No, sir. She did not ask in the trial of this action. William O. Douglas: She asked in the Supreme Court of North Carolina. Daniel K. Edwards: They should -- There was no evidence, of course, in the Supreme Court, but when an opportunity during the trial -- William O. Douglas: The tenant -- the point is a point to be decided. Daniel K. Edwards: But when the action was tried, when the matter was before the Trial Court on finding the issues, the Trial Court found on her and she contended that her First Amendment right had been violated. Evidence was introduced on that point. The Court found against her. There was no additional question asked about what the reasons were in that trial of that action. William J. Brennan, Jr.: On the discover proceedings in these procedures? Daniel K. Edwards: There -- William J. Brennan, Jr.: This procedure and let's see, this is the kind of case that goes -- Daniel K. Edwards: Discover procee -- William J. Brennan, Jr.: The summary eviction proceeding is in what Court? Daniel K. Edwards: Superior Court. William J. Brennan, Jr.: And, in that Court, are there discovery proceedings? Daniel K. Edwards: There are indeed. William J. Brennan, Jr.: And when she was served, it was possible to have asked the question what was the reason, was there any reason, and so forth? Daniel K. Edwards: She could've had pre-trial discovery by interrogatories, written interrogatories or by pre-trial examinations of -- Byron R. White: Doesn't this start before the Justice of the Peace really? Daniel K. Edwards: Sorry? Byron R. White: This starts really before the Justice of the Peace. Daniel K. Edwards: It starts before the Justice of the Peace. Byron R. White: And then it's -- Daniel K. Edwards: It's de novo. Byron R. White: And then it's de novo in the Superior Court. Daniel K. Edwards: Completely de novo. It's just like starting all over again. She filed in lieu of pleadings and affidavits setting out what her contentions were about why she was being -- William J. Brennan, Jr.: Is there a pre-trial proceeding, as well as pre-trial discovery available under your thrust? Daniel K. Edwards: Pre-trial discovery, yes. But, in an eviction proceeding, the normal course is before a justice and then it goes to -- William J. Brennan, Jr.: So you don't really get to discovery proceedings, I guess. Daniel K. Edwards: You can't. William J. Brennan, Jr.: You get to the Superior Court? Daniel K. Edwards: Until she appeals from the justice -- William J. Brennan, Jr.: Yes. Daniel K. Edwards: And then she gets into it, but it's de novo, completely new in the Superior Court and, before you get to that stage, she does have the discovery proceedings available. Byron R. White: Well I take it that the -- somewhere, I remember reading in here, that the -- one of the officials of the Housing Authority actually appears in Court before the Justice of the Peace. Daniel K. Edwards: Right. Byron R. White: And then there was a stipulation about what his testimony would be -- Daniel K. Edwards: That's correct. Byron R. White: In the Superior Court. Daniel K. Edwards: That's right. Byron R. White: And, although they didn't need to sign that stipulation, they could've had him there. Daniel K. Edwards: They could've had him there and they could've cross-examined him and ask him any number of questions, at least as far as this record is concerned they could've, because there was no question that they asked that was denied by the Court, there's no ruling of irrelevancy anywhere along the line by the Trial Court, and they made no exception. They didn't ask the Trial Court, “now, will you expand this hearing in this Trial Court to require into other reasons that might have existed?” They didn't ask that. Earl Warren: The Court said it was immaterial, didn't it? Daniel K. Edwards: No, sir. The Trial Court did not. It was never said in the Trial Court that it was immaterial at any stage because the question was never asked in the Trial Court, never. It was only the language, that Your Honor was referring to, appears for the first time in the per curiam deci -- opinion of the Supreme Court of North Carolina. That's the only place that that sentence has ever appeared in this whole lawsuit, from the beginning to the end. That's the one place it's appeared. William J. Brennan, Jr.: Well, the sentence at least has created a confusion. Daniel K. Edwards: It has created a confusion, yes, sir. Earl Warren: We'll recess now.

Warren E. Burger: We will hear arguments next in number 70-7, Sarno against the Illinois Crime Investigating Commissioner. Mr. Whalen, you may proceed whenever you are ready? Frank G. Whalen: Mr. Chief Justice and may it please this Court. Two questions are presented here for the Court’s consideration. First question is considering the implication of the questions, the circumstances, and setting under which they were asked, where the petitioner is justified in pleading the Fifth Amendment under a State Immunity Statute according to the -- to afford transactional immunity. And the second question, must the State affirmatively demonstrate to respondents when testifying and pursuant to the Illinois Immunity Act, that an immunity is brought in scope as the Fifth Amendment privilege is available and applicable to them. In 1963, the Illinois legislature created the Illinois Crime Investigating Commission. The sole purpose of which was to investigate organized crime in the State of Illinois. In 1968, petitioners, Sarno and McCarty, where ordered to appear and give testimony before this Commission. They appeared and refused to testify, pleading the Fifth Amendment. Now, as to the circumstances and the studying that were found at the time they appeared, the first would be that Illinois at this time had a double standard of Immunity Act. There was the Grand Jury Act, which applied to proceedings before Grand Juries and to -- and before Trial Courts. Under this the Grand Jury Act, a witness was given immunity from prosecution for any offense shown in whole or in part by such testimony. Further, this Act, the Grand Jury Act had been interpreted by the Illinois State Supreme Court in People versus Walker, 28 Illinois 2nd 585 and there the Supreme Court in very strong language upheld the constitutionality of that Act. In fact, the Court there said that the statue eliminates the constitutional privilege against self incrimination. Now, the State of Illinois Immunity Act which we are concerned here with, provided a witness shall not be prosecuted or an account of any transaction, matter or thing concerning which he gave answer. The Act further contained this provision. The Court shall not order any such person to testify or produce evidence if it reasonably appeared to the Court that such testimony or evidence would subject such witness to an indictment, information or prosecution under the laws of another State or of the United States. This statute had never been interpreted by the State Supreme Court and was first interpreted on this offensive appeal. This was a public hearing without the privacy in terms of Grand Jury proceeding, and it became obvious to the petitioners that the questions asked were based upon records that had been at a prior time, illegally seized from the home of the petitioner McCarty. Warren E. Burger: Is this Commission a Legislative Commission, Mr. Whalen? Frank G. Whalen: Yes, it is. Warren E. Burger: It is much like I suppose arisen now, but it is not much like a Congressional Committee conducting an inquiry into this particular subject? Frank G. Whalen: I would like commit to -- Potter Stewart: What are duties in the event that does as -- it does has what it is before that do answer questions, what does it do with him? Frank G. Whalen: Well, I can only assume Mr. Justice that it is to report as to the various prosecuting agents. Potter Stewart: Not just to the State Legislature? Frank G. Whalen: No and then, I am really not sure of my answer, but it is my understanding that that would be the function. Potter Stewart: So, it appeared correctly, you are understanding that this agency is a kin to the New Jersey Commission from which we have just heard? Frank G. Whalen: Oh, I believe very much so. Potter Stewart: Rather than just a legislative? Frank G. Whalen: Yes sir, yes indeed. Potter Stewart: (Inaudible) Frank G. Whalen: That is my understanding, Sir. Warren E. Burger: If there is nothing that will prevent, if the committee of the Congress conducted an investigation, it is traditional, is it not, that all those reports are made available to the Attorney General of the United States, if they seem to disclose violations of law? Frank G. Whalen: I believe so. Warren E. Burger: It is routine? Frank G. Whalen: Yes sir. Yes Mr. Chief Justice? Warren E. Burger: In the first instance does this Commission report back to the legislature, do you know? Frank G. Whalen: It is my understanding that it does for the purpose of the legislature enacting further laws. Warren E. Burger: Is its report made public? Frank G. Whalen: Its report is made public, its hearings are public, in every sense of the word public, that is advertised in other words, its -- It is a very public proceeding and under these conditions, to petitioners it became apparent that the questions were based on records that had been illegally seized from the home of the petitioner McCarty on a previous occasion. These records had been ordered suppressed in the Trial Court and returned to the petitioners. However, they latter at this time found -- brought it to them. Further, at this time, Illinois had six statutes of carried immunity provisions and contained the phrase “or subjected to penalty or forfeiture.” State of Illinois at this time had a malice is the just of the action statute, providing six months imprisonment in the County Jail and had at this time enacted a law making criminal usury a felony. Further as to the sudden circumstances, the State of Illinois at this had more provision for discovery in criminal cases. In the same and under these to circumstances then, the petitioners where examine concerning more than 200 transactions. And, it was apparent that in the event of future prosecutions it would be impossible to ascertain whether or not the prosecution was based upon evidence independently obtained or upon the fruit or the links of the compelled testimony. The questions that were oppose to the petitioner’s fell into five separate categories. They have been abstracted in our brief and I would refer to one that question at abstract 42, question 12 and ask, suppose in the petitioners had been asked only this question. The question, at what places in Cook County have your dues customers met you to make their weekly payments and petitioners gave answers to the question. Assume then that the State went to these places interviewed all those found there and learned from them that petitioners had committed anyone of the offenses, punishable under the criminal code. Whether committed against the particular persons that they interviewed or against some persons known to them. Well, petitioners then would be in a position where they have no asked, they had not been asked to give answer to any act of violence. Nevertheless, the answer to the question would be the link, necessarily to prosecute them for offense of violence. They further believed that the Illinois State Legislature when creating this commission did not intent to afford or did not intent for it to afford an immunity as broad in scope as the Fifth Amendment privilege. The Courts two years after the opinion of the Illinois Supreme Court in People versus Walker in which they upheld the constitutionality of the Grand Jury Act, this Immunity Act was amended, but the pertinent language to which I have referred remain untouched, which indicates to me certainly and to the petitioners that the legislature under this act, the Immunity Act did not intend. Certainly, they did not afford an immunity as broad, but petitioners believed that was not even intended. Warren E. Burger: Well, what has the Supreme Court of Illinois held with respect to whether the statute is co-extensive with Fifth Amendment? Frank G. Whalen: This -- it was first interpreted upon this instant appeal and there the Supreme Court held that under this statute, the Court did not have power to grant express immunity, but that Murphy Work versus The Waterfront supplied the necessary compliment and held it constitutional. Now -- Warren E. Burger: Now, how did, co-extensive with the Fifth Amendment? Frank G. Whalen: Co-extensive, yes. Warren E. Burger: Well then, let us pursue a particular case. You are concern about this client that you represent here. Suppose he should be prosecuted in the future, assuming hypothetical this Court it will then take same position as the Supreme Court of Illinois and then he was prosecuted for something, and you claim that it was derivative from the questions and answers and not to inquiry. Would not the Supreme Court of Illinois be bound under its holding to afford him whatever protection the Fifth Amendment would have afforded him? Frank G. Whalen: Provided Mr. Chief Justice that he could establish that that evidence was independently obtained. We -- I do not believe that it was intended nor do I believe that under the language of the statute, this Fifth Amendment privilege was extended and certainly not an immunity as broad as a privilege. Warren E. Burger: From the States, the Supreme Court of the State of Illinois treating the question has said that it is co-extensive with the Fifth Amendment. Now, that is clear is not it? Frank G. Whalen: Yes. Warren E. Burger: But, whether they are not being obliged in reviewing any future conviction, would they not be bound to see to it that he got that degree of protection by whatever steps? Frank G. Whalen: Illinois has never decided that the burden is upon the prosecution or who upon whom the burden was placed. I could only answer that there would be no way for the petitioner to bring it to the attention because could not tell. He could not tell. Because you see, they are only asked, they are referring to any answer -- 20 question he gave answer, and that leads, leads and leads to others that he did not give answer. I cannot conceive Mr. Chief Justice how as the Defense Attorney, how the petitioners in a subsequent prosecution could ever determine whether or not this prosecution was based on independently obtained evidence or was the fruit of the links. And in addition, in Illinois at that time, we do now have by rule of the Supreme Court, not by statute, not by any Act, we do have a limited discovery, but at this time, there was not discovery in the State of Illinois, in criminal cases and, I do know how counsel could of be of assistance to a petitioner faced with the subsequent prosecution and ascertaining that fact. Byron R. White: Did you present the Supreme Court of Illinois the issue or the claim that this statute was unconstitutional because it did not grant absolute immunity, but only use immunity? Frank G. Whalen: I did Mr. Justice White. Byron R. White: And it decided that the statute granted as much as Murphy required, and that that was enough? Frank G. Whalen: We were concerned there with the provision that where the Court -- recently approve the Court. Byron R. White: I understand that that is a different issue? Frank G. Whalen: Yes. Byron R. White: That is a different issue? Frank G. Whalen: Yes. Byron R. White: And I ask you, did you also present the issue of absolute as against use immunity to the Supreme Court of Illinois? Frank G. Whalen: No, it was not raised in that manner Mr. Justice White. Byron R. White: And the Supreme Court of Illinois did not pass on that? Frank G. Whalen: I would say they did not. Byron R. White: What is the issue doing here? Frank G. Whalen: Whether or not the statute affords an immunity, as brought in Fifth precede -- Byron R. White: Yes. Frank G. Whalen: It is our contention that under these circumstances, it does not and that it was not intended to. Warren E. Burger: Would you disagree with the Supreme Court of Illinois then? Frank G. Whalen: I certainly do Mr. Chief Justice. Warren E. Burger: Well, would that and I repeat would that Court not be found in the future case against your particular client which you claim was derivative from this investigation? Would they not be bound to give them all the protection that the Fifth Amendment gives him as it is construed -- Frank G. Whalen: Yes, sir, provided -- Warren E. Burger: -- defined in the Murphy among other cases? Frank G. Whalen: Provided Mr. Chief Justice that he could establish that this was the fruit or the links and he alleges that under these circumstances, he could not and of course when you rely on Murphy -- Byron R. White: You say, I take it that they must got absolute immunity? Potter Stewart: Transactional Immunity? Byron R. White: Transactional Immunity? Frank G. Whalen: Yes. I say that while statute -- while the statute purports to grant transactional immunity it does not. Potter Stewart: Well, the Illinois Supreme Court did not toll one way or the other on it -- Frank G. Whalen: It did not, sir Potter Stewart: -- question as I read their answers and you said that you say constitutionally, you are entitled to transactional immunity of your client? Frank G. Whalen: Yes Mr. Justice. Potter Stewart: And, I would suggest off hand that at least a casual reading of the first part of 203-14 seems to grant your client transactional immunity, does is not? Using the very word, transaction? Frank G. Whalen: It does use the word transaction, but it also uses the language to which he gave answer and we do not believe that that affords them Transactional Immunity. Potter Stewart: To which he gave answer or produced evidence? Frank G. Whalen: Yes, because the example that I have given and which is abstracted and the question, where in Cook County do your costumers need you to make your dues payments. Now, he is not asked for anything, any question, he gives no answer with regarding the crime of violence. However, if he answers this question and the State Authorities go to these places and interview whoever is there and learn of a crime of violence, he would be absolutely unable -- in other words what we believe is that if this statute be only is designed to represent an exchange for the privilege, it is a poor exchange because the petitioner winds up much the worst for it. Potter Stewart: Well, the fact is that the Illinois Supreme Court really has not been construed (Voice Overlap)? Frank G. Whalen: That is true Mr. Justice. Potter Stewart: I have the idea that you are also objecting in this case to the second part of the 203-14 that part of it that purports to give some kind of immunity against the released or at least required -- at least directs the commission not to require with a witness to answer with respect to prosecuted, could lead to the danger of prosecution in another jurisdiction, are you objecting to that? Frank G. Whalen: I am objecting to that sir. It not -- it directs the commission, it directs the Court who enters the order. Potter Stewart: Right, it has actually had the information. Frank G. Whalen: Not to -- not to grant immunity if it reasonably appeared to that Court that the answer could involve prosecution in another State or under the law -- Potter Stewart: Right. Frank G. Whalen: -- of and we say that a witness confronted with this situation is misled or at least he does not know, they will be doubt in his mind because he cannot tell -- he cannot tell under those circumstances just to extent of the immunity is being granted. And, which leads to the second question of -- Potter Stewart: Well, He really is not being granted any immunity, is he, in the second part against the prosecution by another sovereign because it is just the direction to the Court and it is -- Frank G. Whalen: It is a direction to the Court. Potter Stewart: And the Court tells him to answer, that is it. And then -- Frank G. Whalen: Yes, except that the petitioner faced with the statute does not know. Certainly, he could not be in contempt for refusing to obey a void order and he does not know now under these circumstances, under these questions had been asked, whether or not, it should reasonably appear to the Judge that the answers might involve him with a prosecution in another State or -- Potter Stewart: Or is that already that he contests on that against citation for refuse to answer? Frank G. Whalen: Yes Sir. Potter Stewart: Can he? Frank G. Whalen: Yes. He can do that and he does that at his peril. Thurgood Marshall: Mr. Whalen, way or way back, you said that these questions came from material that was illegally seized from of the defendant? Frank G. Whalen: Yes, Mr. Justice. Thurgood Marshall: And, if the Government used that information to go to each one of these dues joints, what could you do about it? Frank G. Whalen: This of course was a -- at the time of these were seized, this was at the indictment level. They were suppressed and ordered return in the Trial Court. Now, had the Government -- the petitioners here would have no way of -- they would assume and believe that the Govern -- that the Local Officials did go to the places. Thurgood Marshall: But what is the difference? Frank G. Whalen: What would be the difference? Only served at -- if they placed a future prosecution, they would have known and certainly there, the difference is that they were not granted any immunity. There was not even any question about immunity being granted. That was a strictly a Fourth Amendment question. Thurgood Marshall: I still do not understand why they had asked him the question if they already had the information? Frank G. Whalen: Perhaps, I do not make myself clear. Mr. Justice, these records were seized by the City of Chicago Police Department. Now, this is prior to this commission -- those orders where ordered -- those records were suppressed at trial and ordered to be turned and were returned. We assume of course that they recall the standard one jurisdiction gave up to the inquiring commission. That is we cannot prove that, it is only logical conclusion. In fact, this is never been denied by the State in any of the proceedings. Warren E. Burger: Let me get clear if I can. Your view of what the Illinois Supreme Court held, in your brief you say, the Illinois Supreme Court held with the certain omissions, that the immunity referred to in Section 203-14 was co-extensive with the Fifth Amendment? Frank G. Whalen: Yes. Warren E. Burger: That is your position as to what Illinois has held? Frank G. Whalen: Yes and Illinois then referred to Murphy versus -- the Illinois Supreme Court referred to Murphy versus Waterfront Commission, but it is our position that that applies only where in the State proceeding, a State witness hears Federal Prosecution and here we are talking about further State Prosecution. It is not argued by the petitioners here that the Fifth Amendment privilege embraces civil suits or punitive damages, but in conjunction with a analysis with the gist of the statute where they can be imprisoned for six months on a great number of judgments, that is then it becomes penal in nature of penal and character. What they are simply contending here is that under these circumstances and the setting, the State of Illinois denied them their Federal Privilege. The Federal Privilege being that they should have received an immunity in exchange for their testimony, they should have received an immunity as broad and scope as the privilege and it is supplanted. They did not. Warren E. Burger: How do you really test that in the case like this Mr. Whalen? That is my -- it is my problem. Do not you have to test the scope with this immunity by a prosecution for a subsequent crime in light of the Supreme Court -- Illinois Supreme Court’s view of the matter? Frank G. Whalen: I would say Mr. Chief Justice that it would be impossible to do so, even at the trail of other subsequent crime. I know of no matter in which it could be tested. Warren E. Burger: But first, you have a number of alternatives that he may never be prosecuted in which case, there will be no problem is assuming he went on and answered or if he prosecuted, you could assert that the Supreme Court of Illinois has said that his immunity is freedom from prosecution and was co-extensive with Fifth Amendment protection and that issue would be presented by that case, would it not? Frank G. Whalen: Except that the -- he would still be, and I do not know how to answer otherwise, he would still be absolutely unable to ascertain this or to establish this fact. Warren E. Burger: Or what if hypothetically the burden is on the prosecution to establish that the case rested on information from an independent source? Would that give you the protection that you need? Frank G. Whalen: No, Mr. Chief Justice it would not. While that burden -- while that burden would be upon the prosecution to show that it was independently obtained, I know of no manner in which the petitioners could controvert it because they have not an immunity as to the subsequent, as to the fruits under this Act. Potter Stewart: As I understand, your argument is simply this Mr. Whalen if your client is entitled under the Fifth and Fourteenth Amendment and he continued to refuse to answer these questions until or unless the State makes clear to him that he is given transactional immunity, is it not? Frank G. Whalen: It could be stated -- formally Potter Stewart: And it should probably in that right here in this case? Frank G. Whalen: Yes Sir. Potter Stewart: And so far the State has not tolled any (Inaudible)? Frank G. Whalen: Yes, sir. I believe that and I believe that the State must, duty is upon the State to affirmatively demonstrate at the time petitioners wherein that that -- Potter Stewart: Now, if the Supreme Court of Illinois had said in this litigation that this immunity statute extends transactional immunity to your client, the Councilman against Hitchcock Immunity, that is -- you would be satisfied, you could have won your case, and you concede then that your client’s would have the ability to answer, do you not? Frank G. Whalen: Certainly Mr. Justice. However, of course as I said, this was interpreted on this appeal for the first time, that we do not have the benefit of any such holding, a lot of time. Potter Stewart: The answer is -- the Illinois Supreme Court did not give you an answer in this case? Frank G. Whalen: That is right Sir. Potter Stewart: So you still have an area there -- Frank G. Whalen: I am still -- Potter Stewart: Got an assurance of transactional immunity and assured your point that the constitution accords you that. In exchange for the answers to the questions asked by your client, is that your point? Frank G. Whalen: That is exactly the point Mr. Justice. We believe that the -- that any supplants to privilege or bridges the privilege must give. In that camp, it must give immunity then it is brought with the privilege taken. That is our. Potter Stewart: Yes, but for a Court to say the immunity given is as broad as the constitutional protection is double talk, is not it? Frank G. Whalen: I believe so. I believe so Mr. Justice. Potter Stewart: You got me that to say what the immunity is and you are entitled in answer to your -- the issue you present, it that your point? Frank G. Whalen: That is our point. Point to the point of whether a state must affirmatively demonstrate to the respondents, the respondents would not testify, we have a situation here now where a -- an Immunity Act contains the provision that the Court shall not grant immunity if it reasonably appears that the witness may fear prosecution by another State or the United States, we come to the situation where it somewhat like the situation in Reilly versus Ohio where a witness maybe misled, and we have the language used by this Court in Steven versus Marks in which they said until at such time, the witness has a right to stand on his Fifth Amendment privilege. Certainly in this instance, it was never demonstrated. How can the State of Illinois argue that they ever demonstrated to the petitioners that a privilege was available to them, where they engaged in, were part of the very act, it contains the language of complainant. This is no longer in the Illinois Immunity Act. This has been amended and has been removed. However at that time, it was a pertinent part of it. Potter Stewart: Right, this act before us has now been amended? Frank G. Whalen: Yes, Mr. Justice. Potter Stewart: In what respect? Frank G. Whalen: The provision of -- the provision that the Court, if the reason it appeared to the Court that -- Potter Stewart: That part of it? Frank G. Whalen: That has been eliminated. Potter Stewart: Eliminated entirely? Frank G. Whalen: No, it has been eliminated. Yes, sir. Potter Stewart: And there no substitute to this? Frank G. Whalen: No. I believe they would say that if -- now, it would be department or to the decisions in the later cases. What we urge the Court to consider is that when a witness appeared before an investigative committee under such Immunity Act, there should be no doubt in the minds of the witness as to what immunity he is getting. We believe that the State of Illinois has that duty, we believe that State failed. In throughout their briefs, in all these proceedings and here in this Court, the State argues that they manifested -- the State manifested its intent not to prosecute further. And, we do not believe that answers supply this. It is not the intent, the present intent of the State not to prosecute further. The assurance that a petitioner should receive and what is guaranteed by the Federal Constitution is that the State be unable to prosecute him further. Thank you. Warren E. Burger: Very well, thank you Mr. Whalen. Mr. Flaum? Joel M. Flaum: Mr. Chief Justice and may I please the Court. There is no double standard in Illinois. Illinois is a transaction State. It has been so for at least to half the century and some of the strongest language contains in the State Court cases. Potter Stewart: You characterize the Illinois Supreme Court’s opinion in this case as being containing you strong or an ambiguous language with respect to the question of whether or not this statute gives transactional immunity? Joel M. Flaum: Frankly Mr. Justice Stewart, it is not as strong at some of the language contained in the cases preceded. Potter Stewart: It does not even address itself to the question, does it? Joel M. Flaum: Well, I would submit it Justice Stewart that it does say that Section speaking of the specific Section involved here grants immunity to defendants from further prosecution. Potter Stewart: Well, that does not answer the question. Joel M. Flaum: No, I appreciate it does not carry that kind of language. If I might just amplify on it a little bit. Illinois in cases starting in 1924 right up until 1963 constantly referred to Federal precedent, the Councilman cases, the Barnes (ph) cases. It spoke in terms of complete substitute protection against all future prosecutions. Our State is never had a history of a use statute. Potter Stewart: Of course, that was under a different statute? Joel M. Flaum: Yes. Potter Stewart: And, that was at the time when it was not clear that the Federal Constitution guarantee against compulsory self incrimination without the approval of State because it is prior in the law, against them? Joel M. Flaum: Well, Your Honor, in 1953, the Illinois Supreme Court had occasion to consider the identical language in the Cigarette Tax Act, the Immunity Section of it, the identical language. As has this Court, in Norman and in Brown in 1956 and 1959, the language in the 1953 case from Illinois (Inaudible) in 415 Illinois said and this identical to that holding, in order to hold valid a statute requiring a person to give evidence which might tend to incriminate him, the immunity afforded must brought enough to protect him against all future punishment for any offenses to which the evidence relate. That is on identical language. I wish it would found -- Potter Stewart: That was identical language or statutory language? Joel M. Flaum: Statutory language, interpreting statutory language. Potter Stewart: Not the same statute? Joel M. Flaum: Not the same statute. Potter Stewart: Okay, but some of the statute from which the statute borrows the language? Joel M. Flaum: Exactly, and I just to reiterate again, this going to stand in the Immunity Act of 1954 which is Court Upheld as granting complete immunity. Potter Stewart: You are talking about 1953-54, that was prior to law against Hogan (ph) and it was any business with this Court would be, was it, what kind of immunity Illinois gave because Illinois did not have any Federal Constitutional obligation to -- Joel M. Flaum: No, but we follow -- Potter Stewart: Protect somebody from compulsory self incrimination because that was the regime of Twining against New Jersey, was not it? Joel M. Flaum: Right, but we follow Mr. Justice Stewart, all the Federal precedent is involved and while it was not binding prior to 1964, it is found, we -- our language speaks of that as being complete as to the type of immunity grant within (Voice Overlap) Potter Stewart: (Inaudible) it is not a state constitution law? Joel M. Flaum: Yes, we do. It is identical in effect in the United States Constitution. I am not just to make one mention with regard to the structure of Illinios Crime Investigating Commission. At the time of its creation and in the time when these questions went on, it was mixed Commission. It had four from the House, four from the Senate and four private members appointed by the Governor. It is now totally legislative Commission and reports directly to that body, but that is the question arose as to with -- as to its competition. Warren E. Burger: But everything it does is open to the news media and therefore to all prosecutors? Joel M. Flaum: Yes, it is. Warren E. Burger: That there will be no secret to the reports here? Joel M. Flaum: No. no, there are not. In fact it as required Mr. Chief Justice, to submit in the annual report to the State Legislature and that is required in the public. If our argument prevails that we have full transactional immunity, Fifth Amendment was never aimed towards avoiding social appropriance (ph) or the acknowledgment of one’s right. It just is the guarantee that no criminal process would be brought against him, the State of Illinios shall ensure, we believe. Byron R. White: Well, I think you argument is based on the Illinois -- is rather compelling except for the fact that the court in this case did sight Murphy against Waterfront and said that the immunity statute, that is all that Murphy against Waterfront requires which is use immunity? Joel M. Flaum: Mr. Justice White, I would suggest that upon a reading of the cases prior (Inaudible) Illinois Supreme Court that if a meaningful deviation -- Byron R. White: Yes. Joel M. Flaum: -- were to occur? Byron R. White: It would never occur like this. Joel M. Flaum: Never occur like this. Its language and it is not as expensive. I would like to be here, but I frankly think any deviation from a history that we have had would not be much more significant. Speaking specific on that, I want to dwell on it that for and account of, we feel -- there should be no question on it. If this Court would have forget about how Illinois has interpreted, just changes mind on -- Speaker: Well, it is time. It seems to be a (Inaudible) Joel M. Flaum: That is our position. On the affirmative showing, frankly, we feel a complete affirmative showing, maybe a fact from possibility short of Appellant review and every time they grant the immunity is conferred. However, the references and the petitioner’s brief to Marks and Reilly have no analogy to this case at all. There is actually no evidence of intentional misleading of any citizen when called before the Commission. The requirement as we read in Reilly is that the affirmative showing in the State may not mislead the witnesses as to the consequences of his answer or his refusal to answer. The State cannot be required to meet him a possible substantive argument which later maybe promulgate by the witness is on appeal, and which intents conviction which we feel the case here. Illinios met that test that we feel in this case. Unlike Marks for example, petitions were represented at all times by counsel. After the first refusal, the commission, first reviewed and testified by the petition, the Commission filed verbatim transcripts with the Court requesting an order to grant the immunity. Both men filed responsive pleading and I might point up to the Court if I may, that at no time really has this Act ever been challenged as being a use plus fruit. It is just been charged with being a defective transaction. There was always an acknowledgment by the petitioners below that the state was attempting to confer transactional immunity, only that if had a defective statute in which he was working. Both men filed responsive pleading then accepted that basic premise. After the grant of immunity, both men again appeared and refused to testify. Thirdly, really fourthly, after the second questioning of both parties, counsel for the Commission read the order of immunity, gave an opportunity, a third opportunity, spelled out specifically what the counsel would do if and by, that I mean recommending to the Commission that they go to Court and seek contempt, so that if this is not constitute the affirmative showing. The willingness to confer transaction immunity is -- has spoken through both the order of the Court which granted the immunity, and the counsel for the Commissions, frankly, I see no collateral remedy that would suffice you order an instant review on appeal and then I will return to that. We fill that there are -- this in not at all a case where there is any misleading. They were suggesting in the opinions in Reilly and Marks that the defendant did not even know of the existence of the immunity statute. That just did not occur here. This has been a contested with counsel type litigations for several years. I can only say that there is no evidence on any statute in the State of Illinois where there has been a subsequent prosecution which would lead one to the believe that there has been an attempt to use the use plus fruits approach with any of its immunity statute from our State, and we feel that clearly reading of the Illinios history would indicate, if that is the case. Potter Stewart: I say, yours is the Picarello case that even though they -- even know it maybe determined in the companion cases today, that the Constitution of the United States does not require of the State of Illinois to grant transactional immunity but nonetheless, you do so? Joel M. Flaum: Yes. The State of Illinois has adapted for that higher standard. If this Court be stepped to adopt the use plus fruits, Illinois apparently -- Potter Stewart: It may re-consider -- Joel M. Flaum: May re-consider but it has committed itself to transaction. If this statute falls it falls within effectiveness in structuring. It does not fall through the intent that we believe of the legislative. Warren E. Burger: I think your time is up, Mr. Whalen? Frank G. Whalen: Thank you Mr. Chief Justice. Warren E. Burger: Thank you gentlemen. The case is submitted.

John G. Roberts, Jr.: We'll hear argument first this morning in Case 14-8358, Lockhart v. United States. Mr. Zas. Edward Scott Zas: Mr. Chief Justice, and may it please the Court: This case concerns the ten-year mandatory minimum prison sentence that Section 2252(b)(2) sometimes requires Federal judges to impose. The statutory language in dispute reserves the severe punishment for a defendant with a prior State conviction for an offense relating to any kind of sexual abuse involving a minor or ward. Because Petitioner's prior offense did not involve a minor or ward, the statute's mandatory minimum penalty does not apply to him. Ruth Bader Ginsburg: Suppose the conviction had been, under Federal law, the -- the conviction for sexual abuse of an adult and we have the same question: Does the mandatory minimum apply? I take it if it had been under Federal law, then the mandatory minimum would apply. Edward Scott Zas: That's correct. If the conviction had been under Chapter 109A of Title XVIII, which covers sexual abuse offenses, then it would trigger the mandatory penalty. But Congress, in this statute, since the time it was first enacted in 1978, has never sought to create symmetry or parity between the Federal predicates and the State predicates. This may be most clear now in Subsection 2252(b)(1), where you can see that a prior Federal conviction for sex trafficking of anyone, which is a violation of Section 1591, the corresponding State analogue, is textually limited to sex trafficking of children. So this decision to treat prior State and Federal predicates differently is inescapable, and it's been true ever since the first statute. So from 1970 -- Anthony M. Kennedy: I -- I don't -- why -- why is it in this case -- it -- it does seem to me that Congress, eight years later, when it wrote the -- the second statute, used the -- the -- the same style and that this very much favors the government. But then you say that that's inapplicable, because? Edward Scott Zas: Because when this language was first added -- first, it was added in 1994. Anthony M. Kennedy: Yes. Edward Scott Zas: The Federal predicates. At that time there were still no State law predicates at all. In 1996, when the language was first introduced, and it was then introduced in Section -- Subsection (b)(1), which applies to the distribution and receipt offenses, even then the penalty for simple possession of child pornography was the only Federal predicate. So someone in Mr. Lockhart's position at that time would not have faced the mandatory minimum penalty even if people who -- who committed the distribution offenses would or even if -- even if he had a conviction for -- under Chapter 109A. So -- and then in 1998, when this language in dispute was then added at the government's urging to Subsection (b)(2), even at that time Congress clearly wasn't aiming for parity because then they added a new Federal predicate, Chapter 117 offenses, which are violations of the Man Act: Transportation for illegal sexual activity. But at that time it didn't add any State law -- State offense analogue for that offense. This has continued up to the present day. So in 2003, there were amendments to add the obscenity offenses, the Federal obscenity offenses in Chapter 71 to the list of Federal predicates, but no corresponding State crime for obscenity offenses. The -- Ruth Bader Ginsburg: How do you say it works now for the manufacturing and distribution offenses? We have your position on the possession -- well, you said there's a disparity between a Federal conviction and a State conviction. How about a conviction, either the manufacturing or distribution? Edward Scott Zas: Yes. So -- so that offense is covered by the different provision of Section 2251(e). That's the penalty provision for the much more serious crime of actually using minors or children to produce this material. The language in 2251(e) as amended in 2006 is -- it does seem to track, to qualify the predicates to include State-law abuse offenses that involve adults as well as children. But that's because there's an important textual difference between Section 2251(e) and the statute we're talking about. So if you go back to Section 2252(b)(2), you'll see an important textual point here, which is the word "or." This may be easier to follow if you actually look at the statute if you don't have it open in the statutory appendix to the blue brief at pages -- at page 10A. You'll see that the list is written as aggravated sexual abuse, sexual abuse, abuse of sexual -- I'm sorry, or abusive sexual conduct involving a minor or ward or a bunch of other offenses. The "or" before abusive sexual conduct would not be there on the government's reading. That is, if abusive sexual conduct involving a minor or ward were an independent stand-alone offense, the "or" does no work. It's unnatural to be. Then the list would just read, aggravated sexual abuse, sexual abuse, abusive sexual conduct involving a minor or ward, or -- and it would continue. Samuel A. Alito, Jr.: Well, there's another possible explanation for that, because the last item in the list itself involves a great many -- itself involves a list. So the second "or" could be a substitute for a semicolon. But let me ask you another question about the language that you just read. As I understand your argument, this provision would apply to sexual abuse involving a minor and also abusive sexual conduct involving a minor. Is there any difference between those two things? Edward Scott Zas: No, Your Honor. We -- Samuel A. Alito, Jr.: So why did Congress put them both in? Edward Scott Zas: Well, because I think the first point here is it must be for the same reason it used aggravated sexual abuse at the beginning of the list, which -- which I think both sides agree does no independent work. It's already covered. Samuel A. Alito, Jr.: Well, there's something that jumps out. It's a strange list, aggravated sexual abuse, sexual abuse. Sexual abuse would include aggravated sexual abuse. So that seems to be -- the reference to aggravated sexual abuse seems to be redundant. And abusive sexual conduct, if understood in ordinary -- in the terms of ordinary language, does seem to duplicate sexual abuse. But there's an explanation that jumps out, and that is that this -- almost this precise terminology appears in Sections 2241, 2242, and 2243. And in those provisions, all those terms are defined so that they mean something different. So it seems to jump out at the reader that that's what Congress was doing in this list. Why is -- what is wrong with that? Edward Scott Zas: Well, first, if you go back to the time this -- this language we're talking about was first added in 1996, that Congress not only knew how to -- how to do what Your Honor is suggesting, that is, to be tracking the Federal predicates exactly. Because in a different provision, the provision that became 2241(c), it did exactly that. It -- it describes State offenses whose conduct would constitute a Federal crime if committed within Federal jurisdiction. So they didn't do that here, and they didn't do it again when they added the particular language in 1998 to (b)(2)again. John G. Roberts, Jr.: I'm sorry, I don't follow that. I -- Edward Scott Zas: Yes. John G. Roberts, Jr.: As I see it, they did, as Justice Alito said, track pretty much exactly 2241, 42, and 43 in developing the list that they -- they add -- that's before us today. I didn't understand your response. Edward Scott Zas: Mr. Chief Justice, there are really two responses. One, the one I gave to Justice Alito is that this Congress, in 1996 and '98, knew how to track when they wanted to track. They did so explicitly in other provisions of the same legislation. In 1996, the other provision was 2241(c) In 1998, the other provision was 2426(b) So it knew -- it knew how to do it, and didn't do it, and has never done it. Samuel A. Alito, Jr.: Well, it could have done it more clearly. That's certainly the answer to this whole case. They could have handled this issue a lot more clearly. But that is the -- the idea that they were picking up the definitions in the Federal provisions is one explanation for this rather -- this list. The other makes the list terribly redundant, and I haven't heard your explanation as to why they would do that. Why include both sexual abuse and aggravated sexual abuse? Why include sexual abuse and abusive sexual conduct? Edward Scott Zas: Two responses, Your Honor. First -- and this goes to the Chief Justice's question as well -- this list does not track the Federal predicates as precisely, I think, as some have suggested. The Federal list of predicates has four crimes, sexual -- aggravated sexual abuse, sexual abuse, sexual abuse of a minor or ward, and abusive sexual contact. If Congress had meant to track those, they surely would have used the same four-prong list. They didn't do that. Instead, they used a different term, "abusive sexual conduct." Anthony M. Kennedy: I don't understand how that answers the redundancy question. There's redundancy in both interpretations, but much more in yours than in the government's. Edward Scott Zas: Well, I -- I disagree with that. I think the government reads the modifying clause out of this statute in terms of doing any operative work at all. But -- but let me respond -- Anthony M. Kennedy: I'm not sure how your answer was responsive to Justice Alito's redundancy question. Edward Scott Zas: It wasn't. But that's the second part of the answer. The redundancy here was meant to go very broadly, to pick up, not the Federal predicates, but any terms or crimes that the States might create. So we cited this in the yellow brief in reply. You'll see that the States call sexual abuse a variety of different things, including aggravated sexual abuse of a minor, sexual abuse of a minor, abusive sexual misconduct. So Congress is using these redundant terms as it sometimes does to emphasize inclusiveness. Whatever the label is, Congress wanted to protect children by picking those up. But it limited. It limited the reach of the terms by setting a bright line floor. And that floor was at children. The statute, after all, its principal purpose as its title, as the title of Chapter 110 suggests, is about protecting against sexual exploitation and other abuse of children. Elena Kagan: Mr. Zas, is it possible when you read these three terms, as you say, Congress might have meant to be just trying to pick up every conceivable State statute it could think of. But it's possible also to think of these as the aggravated sexual abuse is the worst offense; the sexual abuse is the medium offense; and the abusive sexual conduct is actually somewhat a more minor offense, in other words, might include things that are not sexual abuse themselves. Let's say indecent exposure or something like that. And if you understand the provisions in that way as sort of going from the top to the bottom and meant to pick up everything, then it would seem that the involving a minor or ward really ought to refer to all of them. Right? That there's no reason why the involving a minor or ward would -- would refer only to the most minor offenses as the others. Edward Scott Zas: Well, I think -- I think Your Honor makes a good point. We have not been able to -- Elena Kagan: Maybe I said that wrong. I think I said the exact opposite of what I meant. (Laughter.) Antonin Scalia: It makes sense to me, though. (Laughter.) Elena Kagan: What? If you read -- if you read them going -- going down, right -- well, what do you think would follow? (Laughter.) What do you think would follow from that understanding of this list? Edward Scott Zas: Well, Your Honor, we have tried to figure out what -- what in the world the difference is between sexual abuse and abusive sexual conduct when you give these terms their ordinary meaning. There is no meaningful difference. Sexual abuse, as ordinarily defined, is just the misuse, physical or nonphysical, of another -- Elena Kagan: But just presume with me that abusive sexual conduct is supposed to be -- is supposed to include some things that sexual abuse would not. What do you think follows from that? Edward Scott Zas: Well, again, first, even with that assumption, you have this prefatory language to the list here, "relating to," which this Court has -- has defined, has interpreted to be very broad. It only means "to stand in some relation to." Antonin Scalia: When I think -- what I think you would say is that if it's in descending order like that, you don't have to make the third one, which is already less than the second, which is less than the first. You don't have to make the third one a teeny, teeny, teeny third one by tagging on children only to the third and not to the other two. It seems to me much more regular to assume, as you do, that the limitation to children applies to all three of these descending crimes. And -- and isn't that the answer? Edward Scott Zas: Yes, Your Honor. Antonin Scalia: Your answer. Edward Scott Zas: It -- it is the answer. And -- and it is essentially an instance of the principle that has -- that has come to be known as the series qualifier. Antonin Scalia: But -- but the -- the problem with that is -- maybe I'm wrong, but I think you have conceded that there is no difference between the last two, that it -- it's -- it's not descending. I mean, it's -- it's Justice Kagan who's suggested that abusive sexual conduct could mean exposure, for example, indecent exposure, which would probably not fit the second -- the second term. Haven't you conceded that the two are the same? Edward Scott Zas: Yes, we have, but we don't view it -- Antonin Scalia: What did you do that for? Edward Scott Zas: We do not view it as -- we don't view it as a concession. We have allowed for the possibility, as -- as Justice Kagan, I think, is trying to do, of trying to come up with some fine distinction in meaning between the last two terms, but whether there is or isn't a little bit of daylight between those terms, it's all overcome by the terms "relating to." Anything relating to one is going to relate to the other. And pity the poor district judge who would have to decide in cases around the country, does this offense relate to sexual abuse, in which case on the government's reading, it doesn't matter whether a minor or ward was involved; or does it relate to this other category of abusive sexual conduct, which as far as we can -- John G. Roberts, Jr.: But just to be clear, it's abusive sexual contact, right? Edward Scott Zas: Not in our list. That's the language from -- John G. Roberts, Jr.: (e)? Edward Scott Zas: -- the Federal predicates. The separate crime in 2244 is abusive sexual contact. John G. Roberts, Jr.: I see. Edward Scott Zas: Our list is abusive sexual conduct. As far as we can tell, no one has ever explained what in the world the difference is. Stephen G. Breyer: Well, we might be -- when did they write? We're looking at, call it "your section," which is (a)(4); is that right? Or what is it? It's -- for the three things in it. The one you're interested in is -- let's -- I don't want a name for it. Edward Scott Zas: Yes. It's -- Stephen G. Breyer: I call it "your section." Edward Scott Zas: It's the penalty provision. Stephen G. Breyer: All right. I'm going to call it "your section." Edward Scott Zas: You can, Your Honor. Stephen G. Breyer: Your section. Then think of several other sections, which are the one I hadn't thought about which Justice Alito raised. That's really suspicious the way that looks there. 41, 42, 43. Now, when you pull up 41, 42, 43, law or written before the relevant parts of your section were written. Edward Scott Zas: They were, Federal predicates prior to -- Stephen G. Breyer: Okay. If that's so -- and I don't know if this helps you or hurts you, but it seems to me that there is a ready-made right there for a drafter explanation of why he uses these words. Because we first look to 41, and that's aggravated. And then we look to 42, and that's sexual abuse without aggravated. And conduct is just the same as contact, but the drafter is thinking maybe we should go a little bit bigger. Now, the difficulty is in each of the sections I've mentioned, there is a special related section for children. So the difference between the two for adults is the nature of the force requiring a person to perform a sexual act. A threat of violence, et cetera. That's one. Right? And then the next section, abuse, it can be some other kind of threat. Then we get to the way it deals with children, and it deals with children under the 12 -- under 12. That's one. And it deals 12 to 16. That's the next. And then we have a section called contact, and that has to do with sex acts basically that really weren't sex acts but for a certain kind of conduct which is defined. All right. So I read this, I say, hey, that's what they picked up. They just -- a drafter just picked it up and changed a little bit, but that's what he had in mind. Then the question is: Your question. And in your favor, I think, is the fact that each of these earlier sections does have a special section dealing with children under the same number. Now, don't tell me I'm right if I'm not right, but that's what I suddenly saw when Justice Alito asked his question. Just tell me your reaction. Edward Scott Zas: Well -- Antonin Scalia: You're not going to tell him he's right. (Laughter.) Edward Scott Zas: I wouldn't do that, Your Honor. The courts of appeals that have addressed this precise question, just -- just so it's clear, none of them -- they've all rejected the idea that I -- that I think starts the premise here, which is that Congress meant to -- meant for courts to interpret these terms by reference to the Federal predicates. In fact, that's the government's position here as well. So the parties are on common ground in saying that these weren't meant to track the Federal predicates. And as I pointed out earlier, Congress not only knew how to do it when they wanted to, they did it in these two pieces of legislation in '96 and '98. Now, it's true that these terms existed in the Federal predicates before they were added to this section. But they also exist all around the country in the 50 States. So Congress wasn't -- wasn't trying to track them. It could have just said, any State offense that would be a violation of Federal law if -- if in Federal jurisdiction. It -- it -- it didn't do that. It was recognizing that States do all kinds of things. And it's using these terms to say, anything relating to it. It doesn't have to even be sexual abuse; it just has to relate to sexual abuse. But because that could pick up misdemeanor sex offenses around the country, committed only against an adult. Public lewdness would be an example. That -- that crime, we cited one statute in the briefs. That's -- the statutory maximum is 30 days in jail. But if that were picked up, suddenly someone who is in Federal court with their first offense, the first Federal offense of possessing child pornography, is suddenly going to have their sentence go -- Samuel A. Alito, Jr.: But your -- your argument is that it is just a coincidence that Congress came up with this list of three terms that are redundant and that just so happen to be almost exactly the same three terms in the same order that appear in the Federal provisions. Edward Scott Zas: No, I -- I -- I don't mean to say that. It's -- it's not a coincidence. Congress would naturally use terms that it is familiar with, that are in the Federal -- the Federal -- Federal chapter, but that's very different. Antonin Scalia: They didn't use the same terms. Edward Scott Zas: That's -- that's right. Antonin Scalia: The third term is different. Samuel A. Alito, Jr.: But they used -- they used -- Antonin Scalia: Do you think it was an accident that the third term was different? Edward Scott Zas: No. I think the court presumes that when Congress uses a different term, it -- it acts deliberately -- and I -- I think -- Samuel A. Alito, Jr.: When they use "sexual abuse" and "sexually abusive conduct," they were not -- they -- they had in mind the Federal provisions, but they didn't want those terms in this provision to mean the same thing as they mean in the Federal provision, even though, according to you, there is no generally accepted understanding of the difference between sexual abuse and abusive sexual conduct. Edward Scott Zas: That's right. That's right. They -- they didn't. Sex -- I'm sorry. Chapter 110, the chapter that contains the statute, has its own definitional section. There is no definition there of any of these terms. The only potentially pertinent term that's defined is the term "minor," which is defined differently in this chapter than it's defined or used -- Samuel A. Alito, Jr.: Sexual abuse is defined, and abusive sexual contact is defined, are they not? Edward Scott Zas: They are -- they are defined in Chapter 109A. But as Justice -- as Justice Scalia pointed out, they didn't use abusive sexual contact. They used abusive sexual conduct. So it -- it could be viewed as, that's going broader, but with a floor. We want to brightline it. If you commit any kind of sexual abuse, not -- not only sexual abuse, but anything relating to sexual abuse, you're going to face these severe penalties, so long as it involves a minor or ward. That's the focus. Congress was trying to protect children, and to punish and deter those who would harm them. There is nothing in the history or the understanding of these provisions at the time of enactment to suggest that they were also focused on sexual abuse -- State sexual-abuse crimes against adults. Now, that's a serious crime. No one disputes that. But it wasn't the focus of this legislation. Elena Kagan: But why would they be focused on Federal sexual abuse involving adults but not State sexual abuse involving adults? Edward Scott Zas: Because the 1996 Congress was focused on a very specific problem that they identify. And that's the link, the connection between child pornography and other sex offenses against children. So that was their focus. And given that focus and given that the other State law predicates in this statute are also limited to -- to crimes against children, they naturally limited these offenses as well to children. Elena Kagan: No, but the -- the Federal predicate, the Section 109, I believe it is, does apply to adults as well. So why would they be focused on adults with respect to Federal offenses but not with respect to State offenses? Edward Scott Zas: Because, I think most importantly, Congress controls the Federal -- Federal crime. It creates them, it knows what they are, they're a finite set, and it knows that those predicates are not going to change without congressional action. Once the national legislature has to consider 50 penal codes around the country which can change at any time and can cover things that may relate to sexual abuse or abusive sexual conduct, Congress reasonably may have decided that it didn't want to sweep that broadly, so it, again, created this floor. "Involving a minor or ward" was the key phrase. And our reading is the only one proposed that gives it some operative work to do. I'd like to reserve the balance of my time for rebuttal. Thank you. John G. Roberts, Jr.: Thank you, counsel. Ms. O'Connell. Ann O'Connell: Mr. Chief Justice, and may it please the Court: This case involves two competing canons of statutory interpretation, and there are four basic reasons why we think the government's interpretation is correct. First, Petitioner's interpretation creates an unexplained redundancy where the Court would have to conclude that Congress created a list of three things, two of which are the same. Second, our interpretation is consistent with the only possible reading of Section -- Antonin Scalia: Excuse me. Let's do them one by one. On the first one, even under your interpretation, two of the three are the same, aren't they? Ann O'Connell: Under our interpretation, what -- what we've said is that the first category and the third category are logically subsets of the more general category of sexual abuse. Antonin Scalia: Right. Ann O'Connell: But there's a couple of explanations for why Congress may have done that. The first is that, when they added these State law predicates to the Section 2252(b)(1) for the first time in 1996, there already were Federal predicates on the list that included aggravated sexual abuse, sexual abuse, and sexual abuse of a minor or ward. So even though it may be true that Congress could have covered everything it wanted to cover in the State law crimes by just saying "sexual abuse," it would have opened itself up to arguments if it had just said all of those Federal crimes and then any State law relating to sexual abuse, that those other types of sexual abuse under State law were not covered. Especially with respect to the third category, sexual abuse or abusive sexual conduct involving a minor or ward, Congress made clear when it included that third category that it was picking up State law offenses where a person is deemed incapable of consenting to sexual contact or sexual conduct, because of their status as either a minor or a ward. So our interpretation can be explained. There is redundancy, and we're not asking for just an -- a straight invocation of the canon against surplusage. Both interpretations contain surplusage. But it's a reason why it doesn't make sense to apply the series-qualifier canon here, because it -- Samuel A. Alito, Jr.: Why do you resist -- why -- why do you resist the argument that what Congress was doing was picking up basically the definitions of the Federal offenses that are worded almost identically? If that's what they are doing, then it's understandable what is meant by all three terms. If that's not what they were doing, it's a strange coincidence. And not only is there redundancy, but there's ambiguity about what is meant by sexual abuse as opposed to abusive sexual conduct, and why they had to put in aggravated sexual abuse in addition to sexual abuse. Ann O'Connell: Justice Alito, we -- we don't think that Congress was trying to pick up the exact definitions of the three Federal statutes. And we think that's most clear, as Petitioner pointed out, by the fact that there are other provision in this chapter where Congress used different language when it wanted to do so. The most clear example is the recidivist provision for the sexual abuse offenses. Samuel A. Alito, Jr.: Yes, they could have done it more clearly, of course. The -- the statute is -- is poorly drafted. You know, we give them a "D" for their drafting of this statute. But what is the difference between sexual abuse and abusive sexual conduct? Putting aside the definitions of those -- of those terms or similar terms in Chapter 109. Ann O'Connell: I don't think there is any difference between those two terms. And -- and Petitioner agrees, which is why -- Samuel A. Alito, Jr.: So why did they put -- why did they do that? Ann O'Connell: I think because the -- Samuel A. Alito, Jr.: Just catchy phrases that came to their mind? Ann O'Connell: No. I think the last category, "sexual abusive conduct involving a minor or ward," was meant to -- to indicate and make clear that Congress was picking up State offenses where a person is deemed incapable of giving consent because they are a minor or a ward. They are deemed incapable by the law even though, under a generic definition of "sexual abuse" that may apply to everyone -- Antonin Scalia: Ward -- a ward can't -- why -- why would you say a -- why would you add "ward" if -- if that was the reason for it? Why wouldn't you just say of "a minor"? Ann O'Connell: Well, Congress added "ward." And -- Antonin Scalia: I know. Why? That's what I'm asking. Ann O'Connell: Right. Well, we think the most -- Antonin Scalia: To achieve what -- what you say they were achieving, it would -- it would have sufficed to say "minor." Ann O'Connell: No, I don't think so. Antonin Scalia: No? Ann O'Connell: A minor -- a ward is not just a person who is a minor or a foster child, or a person who's been placed under a guardianship because of mental incompetence or something like that. Those people are all wards, but as we've explained in our brief, a ward also very clearly includes a prisoner, and Congress would have known that. And the -- the Federal sexual abuse of a ward provision refers basically to -- Antonin Scalia: But that -- that's not somebody who could not -- who could not give consent. Ann O'Connell: Under -- Antonin Scalia: You're -- you're saying the reason for it was they wanted to pick up people who could not consent to the thing. But to do that, all they had to say was "minor." Ann O'Connell: No -- no. I think that a -- a ward is also basically deemed incapable of giving consent -- Antonin Scalia: Prisoners -- prisoners are deemed incapable of giving consent? Ann O'Connell: The law has the same sort of operation, yes. It -- it deems the conduct abusive even if it's consensual. The Section 2243 does that, the Federal sexual abuse of a ward statute. And we've cited in footnote 14 a lot of State laws that prohibit the same thing. Ruth Bader Ginsburg: And "concrete" would mean that, if it was a prison guard and a prisoner -- Ann O'Connell: Right. Ruth Bader Ginsburg: -- even if the prisoner said, "Yes." Ann O'Connell: Exactly. That that would be deemed abusive sexual conduct. It would be -- Anthony M. Kennedy: But a ward -- a ward could also be a 40-year-old person who is incompetent. Ann O'Connell: Correct. A ward could certainly be an adult. And I think this is a -- a key point that Petitioner has never really answered is that Petitioner is trying to say that there is this clear pattern that Congress had when it was creating the -- these lists, and that the Federal crimes can involve both adults and minors, but it was always limiting the State law crimes to crimes against children. And it just isn't the case. And even under his interpretation, because "wards" are included, there is at least some adult sexual-abuse crimes against adults that are being swept up even if it applies to all three categories. And also in Section 2251(e), the -- the enhancement for child pornography production offenses, the only way that you could read that provision is to include sexual abuse offenses against adults. And so it's not the case that there is this very clear pattern where Congress was only including child victim counterparts to all of the Federal offenses that it was putting on the list. Elena Kagan: Ms. O'Connell -- Ruth Bader Ginsburg: Is Petitioner right when Petitioner says that it was the Department of Justice's original view that involving a minor or ward, it modified all three categories? That that was -- the first position that the government took and then the government changed? Ann O'Connell: No. I -- I -- I don't think that that is an official position that the government took. We never took that position in a brief. Any time we were confronted with actually interpreting the statute as a legal matter, we have contended that involving a minor or ward applies only to the last category. Antonin Scalia: Where did you get that idea from, then? Where did he get that idea? What -- what had the Department said that -- that suggested the opposite? Ann O'Connell: There was the -- this letter submitted in 1998 that the Petitioner cites where, when the -- the author of the letter -- the -- the point of the paragraph is to say, look, Congress, in the -- the sexual abuse provision or the recidivist provision for -- for receipt and distribution offenses in 2252(b)(1), you have all these State law crimes that you didn't include on the -- on the list of predicate offenses for 2252(b)(2), the possession offenses, and we think you should line them up. In summarizing that argument, the drafter of the letter referred to them as "child molestation crimes" or "child abuse crimes." It was an -- it was an underinclusive, inaccurate, short -- it -- it wasn't inaccurate. They do involve child molestation crimes. But it was just a useful way of summarizing what was there and what would have been most -- Antonin Scalia: Surely it shows -- Ann O'Connell: -- for Congress. Antonin Scalia: -- that -- that an intelligent person could think that that's what this involved. Antonin Scalia: I assume that the person read this and -- and thought that that's what it meant. Ann O'Connell: And -- and, Justice Scalia, I think that's why the canons of interpretation don't get anybody a hundred percent of the way there. Antonin Scalia: I agree. And what I worry about is the rule of lenity. You have these dueling canons, and you have a rule that when the government sends somebody to jail for ten years, it has to turn sharp corners. It has to dot every I and cross every T. It has to be clear. And, you know, I -- we've been discussing this dueling canons and so forth. My goodness, I have no -- I have no assurance what the right answer is. But I know that somebody could read this and think that it means what the petitioner says it means. And if that's the case, it seems to me the rule of lenity comes into play. That's -- that's what concerns me most about this case, not the dueling canons. Ann O'Connell: Justice Scalia, I think if you read the text of the statute once, you may think, I don't know what this means. It could go either way. But if you just read the rest of the list of things that Congress included and take a look at it, we think there are four things that jump out that make clear that involving a minor or ward only is modifying the last category. The first is the -- the redundancy problem that Petitioner's interpretation creates. Elena Kagan: Well, could I ask about your -- your basic theory as to that, which, if I understand it, says the reason why we shouldn't worry about redundancy you create is because Congress just wanted to make absolutely clear that the sexual abuse was also sexual abuse involving somebody who couldn't consent. That's basically your theory. And there is a very easy way to do that, and it would have completely made this -- I mean, made this a hundred percent clear. Congress would just have said aggravated sexual abuse, sexual abuse, or sexual abuse involving a minor or ward. And just by using the exact same language, it would have been clear, but the distinction was between sexual abuse and sexual abuse involving a minor or ward. But Congress doesn't do that, right? Congress changes the language of the third noun. And that's what creates the puzzlement. And -- and so it seems to me that your theory doesn't really cohere with the fact that this third term -- although, nobody can say exactly what it means that is different -- the third term is linguistically dissimilar from the second one. Ann O'Connell: It is, but -- but under a generic interpretation of sexual abuse, any generic definition that a court has come up with, I think one that is a typical one is sexual conduct that uses or misuses or injures a victim so as to cause harm or damage. They all include sexual conduct. And so regardless of whether sexual conduct is -- you know, under the Federal law, sexual conduct could be both a sexual act or a sexual contact, anything that's defined within the Federal provision. But the term "sexual abuse" was already broad enough to cover abusive sexual conduct. I can't say that I know why Congress didn't say "sexual abuse of a minor or ward" as opposed to "abusive sexual conduct involving a minor or ward." But I think the key part of it to focus on is the fact that they use the term "involving a minor or ward." It's the same category or category of people that they are trying to pick up that's reflected in the prohibitions on sexual -- Sonia Sotomayor: Well, why not just say -- drop the "abusive"? Just say "sexual conduct with a minor or a ward"? Because now you have to deal with the adjective "abusive." So how does that get you to consent or no consent? Ann O'Connell: I think Congress could have done this without saying abusive, but, you know, the Federal sexual-abuse statute of -- of a minor or ward is called sexual abuse of a minor or ward. They also include the word "abusive." I think it's just -- the ambiguity really is that abuse could mean different things depending on who the victim is. Something could be abusive because it's done to or in front of a child but not an adult. And so that may be -- it's not a reason why Congress wouldn't -- needed to use the word "abusive," but there -- there is a reason -- it is a reason why there could be some daylight between the two categories. Stephen G. Breyer: What were the -- what were the other three? You said there were four reasons. I started where I think Justice Scalia did. Of course, I might more often than he think that the canons don't help us all that much. And this -- this is a poster child, I think, for that proposition. And so you said, no, there are four things here that show that this isn't ambiguous. You shouldn't end up that way. Now, one was a redundancy, which I'm not sure what it was, and then you didn't get to the other three, which I'd like to hear. Ann O'Connell: Okay. Antonin Scalia: I apologize for that. I jumped in on it. Ann O'Connell: No apology necessary. Stephen G. Breyer: No, it wasn't. Ann O'Connell: The second reason why we think the Petitioner's interpretation doesn't make sense is because in the penalty provision for production offenses Section 2251(e), Petitioner agrees that the only way you can read that penalty provision is to include State sexual abuse offenses against adults, because Congress worded it slightly differently. They included all the same crimes, but the way that provision is -- reads, it says, "State laws relating to aggravated sexual abuse, sexual abuse, abusive sexual contact involving a minor or a ward or sex trafficking of children." So it's no longer -- involving a minor or ward is no longer a modifier that appears at the end of a list. This is at page 13A of the appendix to the gray brief. And so there's only one possible interpretation of the list of State sexual-abuse offenses in Section 2251(e), and there's two possible interpretations of the -- the same three crimes in the next provision. And so the Court would have a choice between saying that those -- the State sexual abuse offenses have different scopes in the two provisions. Third is that it ignores -- Petitioner's interpretation ignores the clear parallel between the -- the three main categories of sexual abuse offenses in Chapter 109A, the Federal offenses. Stephen G. Breyer: Yeah. And the other? Ann O'Connell: That's the -- and the three categories that it created for State sexual offenses. Stephen G. Breyer: Right. And the fourth. Antonin Scalia: Which is not a parallel if -- if you read the word, right? Ann O'Connell: It's not exactly parallel. Antonin Scalia: Contact is not conduct. Ann O'Connell: I -- I think that's -- that is debatable. I mean, there's -- there's sexual conduct -- Antonin Scalia: It's debatable that contact and conduct are different words? That's not debatable. Ann O'Connell: Not that they're different words. But I think even Petitioner points out that in the abusive sexual contact provision, sexual contact is -- they start out by calling it sexual conduct in circumstances where it didn't amount to a sexual act. It's all -- Elena Kagan: You're not suggesting this is just a scrivener's error, are you? That it was meant to be contact? Ann O'Connell: I think the -- they both do the same job. So I don't -- I don't know why it was changed, but I don't think there is a reason why it's -- Stephen G. Breyer: Fourth, fourth. Ann O'Connell: The fourth is that Petitioner's interpretation would frustrate the purpose of the statute because under the categorical approach, it would exclude as predicates any sexual abuse crimes that were committed against children if the defendant was convicted under a generally applicable sexual-abuse statute. Stephen G. Breyer: Okay. So he'll say "or" is in this one and it's not in the other one for a reason. He'll say they're superfluous reading both ways. He'll say that -- I can't remember the third -- but the fourth he's going to say, yeah, it's underinclusive versus overinclusive. Yours is it would be somewhat under-inclusive for the reason you say, and you take your reading, it will be overinclusive for the reason he says. So if we're at -- this is the only place that -- if we are absolutely at equipoise, which I can't say we are now, but I think it through -- if we are absolutely at equipoise, before turning to the rule of lenity, I would like your comment on my temptation to say at least here, the legislative history helps. And indeed -- Antonin Scalia: I knew you were going to say that. (Laughter.) Stephen G. Breyer: Indeed -- Antonin Scalia: I knew it. Stephen G. Breyer: -- it isn't just a letter from the Justice Department. It is that the report, the way these are actually written is that a general idea is given to a person whose job it is to draft. And that drafter tries to put in words the general intention that's been described, and the report is used to describe what the general intention was. I'm not saying a hundred percent, but very often with technical statutes, that's how it works. So I read that report, and what do I discover? A repeat offender with a prior conviction under da-ta-da, or under any State child abuse law, or law relating to the production receipt or distribution of child pornography. And it is only two years later after they pass that that the Justice Department writes its letter noting that the provision they just passed involved individuals with prior convictions for child abuse. And recommending an enhanced penalty as well if they had a prior conviction for sexual abuse of a minor. Okay. So I read that and said, short, but clear. And that's what the drafter would have been looking at when -- the first one, anyway -- working with the staff of the committee when trying to translate general intentions of senators and representatives into actual language. And I think it's not contrary to popular belief to say that senators and representatives do hire staff to do such things and do not sit there with pen and pencil thinking, where does the "or" go? Okay? So what is -- what is the Justice Department's response to that? Ann O'Connell: I think there are two things. The first is the response I gave before, which is just that this may have been a useful shorthand way to describe the conduct that Congress would have been most concerned about, for the person writing the report and for the Department of Justice trying to convince Congress to add these State law crimes to the child pornography possession recidivist enhancement. And I think the other response is just that, even if you think the letter is against us, you look at what Congress actually did. And they created a -- a provision that basically parallels the three Federal offenses. They included many Federal offenses that can involve adult victims. And then eight years later, when they added State law predicates to Section 2251(e), they made very clear they understood the modifier to apply only to the last category. Antonin Scalia: Ms. O'Connell, you -- you don't think Congress can leave it to its staff to decide what a statute means, do you? Ann O'Connell: No. Antonin Scalia: Isn't legislative power nondelegable? Ann O'Connell: Right. We think the -- the most important thing here is to look at the text of the -- Stephen G. Breyer: You asked a really quite broad -- I don't know what the 4,000 people over there are doing, if -- if they're not entrusted by their principals to write words on paper that would reflect the general idea. You think they can't do that? Ann O'Connell: Justice Breyer, I think it -- as we explained in the brief, it -- it may have just been a useful shorthand way to describe the most serious conducts included in that provision. Ruth Bader Ginsburg: Who is -- who is the author of this? John G. Roberts, Jr.: I don't know what the hundred people -- Ruth Bader Ginsburg: Who is the author? John G. Roberts, Jr.: -- are doing over there if they're delegating everything to the staff. Ruth Bader Ginsburg: This -- this -- this letter that so much discussion has revolved around, who was it in the Department of Justice that wrote? Ann O'Connell: It was the Acting Assistant Attorney General Ann Harkins. Anthony M. Kennedy: Could you talk about the rule of lenity? Does the rule of lenity apply with the same force when the question is the substantive definition of a crime as distinct from the penalty that's attached? Ann O'Connell: The Court -- Anthony M. Kennedy: It seems to me there's an argument that it should apply equally, but have we talked about that? Ann O'Connell: I think the Court has typically applied the same-strength rule of lenity to both substantive provisions and penalty provisions. Anthony M. Kennedy: That -- that makes a great deal of sense. It -- other than that rule of lenity to the extent it's based on notice, it seems to have somewhat more force when it applies to the substantive definition of the offense as opposed to the punishment. But I -- you could argue it either -- either way. But have we -- have we talked about any distinction? Ann O'Connell: There has not been a distinction in the Court's cases. There have been a few times where criminal defendants have tried to say that there should be a supercharged rule of lenity in a case that's talking about mandatory minimums or maximums or consecutive sentence. And the Court has resisted that. And I think this would be not a -- not a good case for the Court to go down that path because the -- the guidelines range for this particular criminal defendant was 78 to 97 months. His minimum was 120. It's not actually a huge difference. And under -- under current law, the statutory maximum would have been the same, regardless of -- of whether this enhancement applied. Justice Breyer has helpfully walked me through all of my points; so if the Court has no further questions. Elena Kagan: Well, can I go back to the -- to the language? You know, it's confusing language. And I showed it to all my clerks and -- and basically said how would you read it. And two came out on one side, and two came out on the other side. But -- but I'm sort of left with this feeling that it -- we're not in -- in a situation where there are dueling canons. We actually might be in a situation where one canon trumps the other. I mean, you have this last-antecedent rule, and it's an important rule. But it gives way when a certain -- when there is a certain quality to all the antecedents when they're all parallel and when the last modifier equally sensibly refers to them all, right? And that that's a situation, so that series-qualifier rule is in some sense a rule about when the last-antecedent rule doesn't apply. So I guess I would ask you to comment on that. Ann O'Connell: There -- I have a couple of different responses. The first one is that the context is the most important thing. And it's not the case that the Court hasn't applied the last-antecedent rule in cases where the statute involves a list of parallel terms. I think the FTC v. Mandel Brothers is the best example of that. There's a list of a purchaser, consignee, factor, bailee, correspondent or agent, or any other person who is engaged in dealing commercially in fur products or fur. And the Court said it didn't make sense to only apply this to a purchaser who is also dealing in the -- in the fur products, and so we're going to apply it only to the last antecedent. The series-qualifier principle, you know, petitioner relies quite heavily on the explanation in -- in Justice Scalia's book that goes through all of the canons. And the book even says that the series qualifier principle more so than others is highly dependent on context and can be overcome if something doesn't feel right about the way that it -- the statute reads when you apply it. And we think the clearest indication here that it doesn't make sense for the qualifier to apply to all three of the categories is that it -- it literally renders categories B and C the same. I'll -- I'll point out just one other thing. Justice Breyer, you mentioned during the Petitioner's argument that you noticed that each of the Federal predicates, 2241, 2242, 2243, have a provision that applies to minors and wards. Section 2242 does not. Stephen G. Breyer: No. But it's followed by what could be taken as. They just gave it a different number; isn't that right? 2243 does, in fact, deal with minors? Ann O'Connell: 2243 is the sexual abuse of a minor or ward provision. Stephen G. Breyer: Right. Ann O'Connell: 2241, aggravated sexual abuse, has a special subsection dealing with very young children. Section 2242, the general sexual abuse crime, does not include any specific for minors or wards. Stephen G. Breyer: Yes, yes, yes, yes. I -- I saw that. Ann O'Connell: All right. Thank you. John G. Roberts, Jr.: Thank you, counsel. Mr. Zas, you have four minutes. Edward Scott Zas: Justice Alito, Justice Scalia, and Justice Breyer I think all echoed the same theme, which is, at the very least, this statute is not unambiguously correct, which is the standard language this Court used in Granderson for when the rule of lenity must apply. So under that rule -- Samuel A. Alito, Jr.: I don't think I actually said anything about the rule of lenity. Edward Scott Zas: No, no. Your -- Your Honor did say -- Antonin Scalia: I don't think he ever mentioned the rule of lenity. Edward Scott Zas: But he did say -- he did use the word "ambiguity," and he did say that the statute was poorly drafted. And I think -- I think we certainly would agree that this is -- this is not a model of the drafter's art, by any means. But -- Samuel A. Alito, Jr.: Well, you -- you are making an argument that an awful lot of this big book is -- is subject to the rule of lenity because a lot of it is very poorly drafted. Edward Scott Zas: Well, this is -- this is -- this is not just poorly drafted. We -- both sides have gone through all the canons, all the tools, legislative history. And at the end of the day, as Justice Kagan pointed out, you can read it reasonably both ways. But we think as a matter of text we actually have the better reading. My colleague from the Solicitor General's office conceded when she was up here that there is no difference between sexual abuse and abusive sexual conduct. So the parties agree on that, and yet we draw radically different conclusions. The government says the solution is to just limit the modifier to the second term, but that doesn't eliminate surplusage. It causes the entire modifying phrase, the entire category, abusive sexual conduct involving a minor or ward, to effectively drop out of the statute. Our solution is to say, give the nonredundant portion of the statute involving a minor or ward some meaning. Congress used those words for a reason. And the reason was the problem they were focused on, which is the danger to children. So the way to preserve effect for the -- that modifying phrase is to apply it to all three terms, which makes perfect sense. If two of them mean exactly the same thing, why in the world would Congress limit only one to minors and children? They're synonyms. It makes sense -- Sonia Sotomayor: My problem is, why would they include adults as a predicate for the minimum in Federal crimes but not in straight State crimes. Edward Scott Zas: Because -- Sonia Sotomayor: I know they have done it in other situations. Edward Scott Zas: Yes. Sonia Sotomayor: But why here? If they're worried about the abuse of children, why would they not capture every conceivable person or every conceivable abusive act towards kids? Edward Scott Zas: Well, in -- in addition to the fairness and admissibility problems we've identified, Congress reasonably could have determined that people who commit abuse offenses against adults, as bad as that is, don't pose the same level of danger to children. Stephen G. Breyer: Well, she's saying why -- but they -- they do include the sexual abuse adult when you're talking about prior conviction of a Federal crime. Edward Scott Zas: Yes. Stephen G. Breyer: And the answer, I guess, has to be that you -- the drafters know what they're getting into with the Federal crimes, and they have no idea what they're getting into when they're dealing with 50 State crimes. Is that your response? Edward Scott Zas: That's -- Stephen G. Breyer: I'm not trying to put words in your mouth. I want to know what -- that's what I read in the -- Edward Scott Zas: Your Honor, that's one answer. Samuel A. Alito, Jr.: Let's take a -- an offense as to which there isn't much ambiguity: Rape. All right? Under the -- the ordinary meaning, why would rape in a Federal enclave qualify; rape a few yards away, perhaps, in State territory, not -- not qualify? Edward Scott Zas: Because Congress was not focused on symmetry in that way. The -- the Federal predicates were added by the 1994 Congress. They were -- they were -- yes. They were made Federal predicates. The later Congress, 1996 Congress, was the one that added the State law predicates. So it's not as if the same legislators are making this decision at the same time: Should we cover Federal and -- and -- Mr. Chief Justice, I'm sorry. I see my light is on. John G. Roberts, Jr.: Thank you, counsel. The case is submitted. Edward Scott Zas: Thank you.

John Paul Stevens: We'll now hear argument in Spector against the Norwegian Cruise Line. Mr. Goldstein. Thomas C. Goldstein: Justice Stevens, and may it please the Court: The petitioners in this case are American citizens who took cruises to and from this country on tickets bought here that call for the application of U.S. law. They were subject to discrimination by respondent, a U.S. based company on the land, in the ports, and in the waters of the United States. The question presented is whether the Americans With Disabilities Act applies or instead whether respondent's conduct is lawful because the case is controlled by Bahamian law, which freely permits cruise lines to discriminate against persons with disabilities. Sandra Day O'Connor: Mr. Goldstein, may I inquire of you whether other countries, for instance, in the EU area, have applied their own disability laws to some of the cruise ships that touch base in their courts? Thomas C. Goldstein: Justice O'Connor, our research does not reveal that the question has arisen in the EU. I can, however, provide you some information, and that is that... two points I think. The first is they subscribe... the members of the EU subscribe to the same conventions and to UNCLOS just the way we do, which gives the port state plenary authority within its ports and internal waters. And I have a couple of case citations for you on this issue. In the ECJ, the Diva Navigation case, 1992, ECR I-6019. It has not arisen in the EU, but it has arisen in Australia. Australia has a disability law. It applies that law to cruise ships, and the rule in Australia is that the port state law applies rather than the flag state law. And the citation for that is the Union Shipping case, 2002, NSWCA 124 CA 40379/01. I don't know what those numbers mean. Sandra Day O'Connor: Thank you. And would you also address at some point how the treaty on Safety of Life at Sea would affect the resolution here? For example, it has, as I understand it, requirements that there be watertight doors and those doors have to be set above the level of the floor so you couldn't roll a handicapped wheelchair or something over it. Now, do you anticipate that there would have to be structural changes if you were to prevail that would conflict with the treaty on Safety of Life at Sea? Thomas C. Goldstein: No, and you have put your finger on the point, and that is that there are no conflicts. We know that for a couple of reasons. The first is that there has been a detailed rule making underway in which the regulatory authorities charged by Congress with implementing the ADA have spent quite some time. They have produced this single spaced, half inch thick document that is dedicated to making-- Sandra Day O'Connor: Are they in effect yet? Thomas C. Goldstein: --They are not, but in terms of whether or not the statute, when it's applied, would conflict, you would look to this document and they took as their regulatory mission to make sure there were no such conflicts. What they did... let me take your example specifically and then put... place it within the statutory framework. Within the ADA and a question of the combings, what they said is, that's right. In certain cases SOLAS requires that the coamings be a certain height. If the coamings are below the bulkhead level, where you would be worried about water coming in below, that is not an accessible route, and so you don't have to worry about it at all. Above there, you ramp up to the coaming and ramp down, unless that's structurally infeasible. So they... what they did is they... and this is the broader point. they applied the rule of the ADA that a change to the structure of the vessel only has to be implemented if it's readily achievable. And what the regulatory authorities determined is that if there is any conflict with SOLAS at all, that change need not be made. Now, you... Justice O'Connor, you also focused on the fact that there are some of our claims that implicate the structure of the ship. They are, however, a distinct minority, and we ought not lose sight of this because I don't think the other side has any good argument at all, under international law or anything else, that would explain why they can charge a person with a disability double. Anthony M. Kennedy: Can you tell me just a little bit about that, how it works? Suppose that you prevail in this case... and it does seem to me that the... the charging the double doesn't involve modification of the ship, obviously. How does it work if you have, oh, say, an English passenger who buys an English ticket and is charged double... I don't know if that's the English law, but let's assume... then he comes on a cruise ship and he goes to New York and Miami and... and New Orleans? Can he... does he... could he then sue, if... if we rule for you in this case? Thomas C. Goldstein: I would think on the question of the charging double, the answer to that question would be no because it would present a traditional, not unique to the ADA, choice of law question, and that is, if you're in England and you buy a ticket in England, your ticket is going to be subject to English common... in that case, the English disability law. There is an English disability law. It doesn't discuss cruise ships. It's... but it's broadly written. But with respect to the structure of the ship, I think that English passenger with a disability... say that you come across to the United States and you want to get off in New York. I think that Congress clearly intended that that person would be able to come off a... off the dock in a wheelchair, back onto the dock on the wheelchair; while you were in U.S. ports and you're staying in your cabin, that you would be able to, in your accessible... your accessible rest room, have grab bars. We are... and... and let me not pass too quickly by the fact that even when we talk about some structural changes in the ship, by and large we're talking about things that have nothing to do with... Justice O'Connor, you focused the name of the treaty is the Safety of Life at Sea. Whether the bathroom doors swing in and out has nothing to do with that. Whether there is-- Ruth Bader Ginsburg: Mr. Goldstein, may... may I take it from your answer that it doesn't make any difference in your view, your answer to the question about the... the ship leaving from a port in England and going many places and touching base in New York, that kind of a voyage, or what this case seems to be where the vast majority of the passengers are from the United States, the port of departure is in the United States, the port of return is in the United States. You don't seem to distinguish those cases because you say in the New York port, it doesn't matter if it's really a U.S. centered cruise or a cruise centered in Italy or any place else. Is that correct? Thomas C. Goldstein: --I think your formulation is exactly right, Justice Ginsburg. It doesn't matter to us where the cruise is centered. We do, however, and this Court's precedents do, however, leave room for a highly unusual cruise that I'm not aware exists. Take, for example, a situation in which a cruise comes from England to the United States. It doesn't pick up any passengers here. They just visit. They stop in 15 other countries. They stop here. The same passengers get up on the ship and leave. This Court's precedents involving maritime choice of law leave room for the conclusion that says, look, we just don't think-- Ruth Bader Ginsburg: But if we go back to what is the more usual situation-- Thomas C. Goldstein: --Yes. Ruth Bader Ginsburg: --Then you are, in effect, saying that the U.S. rules the world. Even if the home port, the place where this vessel is usually berthed, says we... we don't require our ships to take care of the handicapped, you are, in effect, saying no matter what the other ports say, what the U.S. law is is going to govern because practically if you're going to design the ship to meet the U.S. requirements, you're not going to rip those out when the ship goes elsewhere. Thomas C. Goldstein: Justice Ginsburg, we disagree with the characterization that the U.S. rules the world, of course. We're talking about the fact Congress exercised its sovereign authority to control vessels in its ports and internal waters, just as in... take the Cunard example. In the Cunard case, there were countries... and I understand it didn't involve the structure of the ship, but the principle is the same. There were countries that required alcoholic beverages to be on those vessels, and-- Antonin Scalia: We... we could... we could require ships that are docked in the United States to pay their crews according to United States Jones Act requirements or United States minimum wage laws and so forth. We don't do that. We could do it, but we don't because it conflicts with... with the law of the flag and... and that's the usual... it's not a matter of our power to do it. We could do it, of course, but it's just not something we ordinarily do. Thomas C. Goldstein: --Well, Justice Scalia, I actually disagree with your characterization and would like to point you to a couple of precedents. The Benz and McCulloch cases, which are very important to the respondents, were very important to the Fifth Circuit, embody the principle that you just described, to some extent, and that is that when you have a foreign ship in our waters, we will not apply the NLRA to the labor contract between the foreign crew and the foreign vessel. But when Americans are involved, we do apply the NLRA, and that's the Ariadne precedent that the... and... and in fact, Ariadne is the most on point case because it-- Antonin Scalia: Was... was that the ship or was it longshoremen? Thomas C. Goldstein: --It was longshoremen working on the ship complaining about safety conditions on the ship. Antonin Scalia: Longshoremen. Longshoremen based... based on shore. Right? Thomas C. Goldstein: Based on shore, but so are the passengers. Antonin Scalia: That's a different-- Thomas C. Goldstein: But it is a different situation, but I think it's more analogous. Not only were the... the protests in Ariadne directed at the safety conditions on the foreign flagged vessel, but they were directed at the passengers. If I could-- Stephen G. Breyer: What's... what's the scope of what you're talking about here? I mean, are... it says cruise ships. So I had assumed those are those big ships that carry people mostly around the Mediterranean from Florida. But based on what you're saying, now I think you're talking about something more. Are you talking, for example, about a merchant vessel that comes from, say, Saudi Arabia and has a few passengers? What's the... what's the scope of the definition? Thomas C. Goldstein: --The... well, that... the definition... we would have to return to the ADA. If a merchant ship has a few passengers, it would not be a specified form of public transportation or a public accommodation. Stephen G. Breyer: Because? It... what it does is it carries oil, but a certain number of people like to be on a ship with oil, I guess. And so every... every month they take 12 people and they put them in a cabin somewhere and they love it. Antonin Scalia: --It's cheaper. It's cheaper too. [Laughter] Thomas C. Goldstein: I'm not aware of... of-- Stephen G. Breyer: No, no. I... but all right. Now, I'm... I'm being facetious. Thomas C. Goldstein: --Yes. Stephen G. Breyer: But I am aware of... of people who have certainly gone on cruises on what is a primarily merchant ship. Now that... that I think is a common thing. Thomas C. Goldstein: If... let me-- Stephen G. Breyer: Are you talking... because I think that makes a difference for the reason that once you talk about those, you're talking about primarily foreign flagged vessels that are rarely but sometimes in the United States where the costs would be very high probably to change the ship and the benefit to Americans would be tiny. All right. So I... I want to know what you're talking about. Thomas C. Goldstein: --Okay. Let me first say... and just to... to lock the point down in that cost is accounted for in the definition of what is readily achievable. But let's go to the definition of specified public transportation because this will tell us what's going to be covered by the ADA. And just for the transcript, the citation is... this is section 12181(110). It's... it's very short, but it's at the middle of page 12 of the blue brief. Specified public transportation means transportation by bus, rail, or any other conveyance other than by aircraft, which has its own statute, that provides the general public with general or special service on a regular and continuing basis. That too would be covered. And only the public places on the ship would be covered by it. Can I just return briefly to my Ariadne point? Because I just wanted... that's a case where the... the NLRA was applied. And let me just read to you what the protest was that the NLRA was applied to because it fits perfectly with this case. And again, for the transcript, this is in the lower court opinion at 215 So. 2d 53. This was the handbill. Warning. Is your cruise ship a floating death trap? Can a substandard foreign flagged cruise ship turn your holiday into a Holocaust? They were very illiterate. If thousands of unsuspecting Americans continue to place their lives in jeopardy every day on cruises aboard foreign flagged floating fire traps. And that... that was a foreign flagged ship. They we're concerned about the passengers. Justice Scalia, you also gave the example of the Jones Act, but remember that the Rhoditis case and the Uravic case, which involved injuries in the United States, then the Jones Act did apply. And that was... and Rhoditis was a case in which someone was on the ship and a chain broke and they were injured as a result of it, and U.S. law applied. This is a situation in which millions of people in the United States are spending billions of dollars on cruises, and it seems-- John Paul Stevens: Yes, but I... if I understand you correctly, your case really isn't limited to cruise ships. It's limited to ships that come into... passenger ships, which would include the Queen Mary and Queen Elizabeth, all the rest of them. Wouldn't it? Thomas C. Goldstein: --Yes, but I... I take it that the... you know-- John Paul Stevens: And the fact that it's based in Miami or it had mostly American customers really is not relevant to the legal issue. Is it? Thomas C. Goldstein: --It... it is in the sense that it makes this the recurring scenario that Congress would have been aware of when it enacted the ADA in-- John Paul Stevens: But, of course, they would have been aware of those that are also less American in their patronage and so forth. Thomas C. Goldstein: --That's true. In the very rare case, which I am not aware of, in which a cruise ship comes to the United States, doesn't pick up passengers, then it's possible that the... that the ADA would not apply. John Paul Stevens: No, but we're not necessarily thinking of a cruise ship, just the transatlantic liner that goes from Liverpool to Miami or something. That would be covered. Thomas C. Goldstein: It would in... in U.S. territory. That's right. Stephen G. Breyer: But there's no way they can change the ship structurally when it's in New York and not have it changed structurally when it's in Europe. So the mystery to me at this moment is what is the universe of ships that I would not say fit the ordinary word cruise. What they are are ships that go between Asia and San Francisco, Los Angeles, or New York and Europe, or maybe through the Suez Canal. They're only here a little bit of the time. Their passengers are mostly not American. Now, is that something I should worry about? If that were your case, I would be very worried. If that's just a little bit of... of added significance, then I want to know what to do about it. Thomas C. Goldstein: Let me tell you what I know, and that is that the other side has not identified any problems of this... this type. My research has not revealed some situation where we have a lot of these ships. I did carefully study the... the itineraries of the major cruise lines, and 95 percent plus of all of their trips go out from the United States and come back to the United States. Ruth Bader Ginsburg: But you told me... and I want to make sure this is your answer... that it doesn't matter, that as long as the ship comes to a U.S. port as part of this overall journey, you... you answered that question and I thought that was your candid answer, that it doesn't matter that these... these particular cruise ships ply mostly U.S. waters and U.S. trade and are centered, even have their principal place of business in the United States. You're not concentrating on that category. You are saying that the ADA applies so long as the ship puts in at... at a U.S. port, picks up passengers. It applies not only while it's in the port, but practically for every other place the ship goes. That's why I asked isn't this the United States rules the world on what... your argument you made. Thomas C. Goldstein: Justice Ginsburg, here I think is the difference, and that is, that while U.S. law may have an extraterritorial consequence, just like our maritime tort law and the like, you cannot in Europe enforce the ADA. The fact that the structural changes-- David H. Souter: Well, you can enforce the... the discrimination provisions, but the structural provisions don't have to be enforced. Once the step is changed, they're not going to change it when they get 3 miles out. Thomas C. Goldstein: --That's right. But Justice... Justice Ginsburg's point... I take it to be a more particular one. It's true that our law will have consequences abroad, but it is not the case that the U.S. rules the world. David H. Souter: Well, it rules the world unless the world does not want to use the United States ports as ports of call. Thomas C. Goldstein: Justice... Justice Souter, I... I simply disagree, and that is, when you talk about the U.S. ruling the world, in a... in the context, say, of ARAMCO, we talked about the enforceability of U.S. law abroad. When the United States has tort standards or vehicle manufacturing standards and the like, all of those have consequences abroad for how devices are made and brought into the country. But that doesn't mean that... what's going on is the plenary authority of the United States to enforce its laws in its ports and in its internal waters. That very rule always will have extraterritorial consequences. Antonin Scalia: We're not questioning the authority. We're questioning whether Congress intended that to be the case. We have a rule that... that requires a clear statement when it has effects of this sort. Thomas C. Goldstein: Justice Scalia, we disagree, and let me just take you to your cases. I did that, I think, in the Jones Act and the NLRA context. But let's just state the rule, and that is, from the Wildenhus's Case and that's at page 12. Foreign law governs matters of discipline and all things done on board which affected only the vessel and those belonging to her and did not involve the peace or dignity of the country or the tranquility of the port. And what we're talking-- John Paul Stevens: But, Mr. Goldstein, there's another aspect that troubles me. Your view, as I understand, only applies while the ship is in American waters so that if, for example, you complain about the training for a safety drill, if they conducted those after they'd gone out 20 miles to sea, there would be... there would be no violation of the... the statue. Would there? Thomas C. Goldstein: --That is... that is a difficult question. We have not... we have not pleaded such a claim. John Paul Stevens: In other words, I'm trying to understand. You don't know what your position is-- Thomas C. Goldstein: No. John Paul Stevens: --with respect to what would otherwise be violations of the statute that occur on the high seas. Thomas C. Goldstein: We do believe it would be covered because the accommodation was purchased here, although we haven't raised the claim in this Court. If I could reserve the remainder-- John Paul Stevens: Yes, but I think we should... the cruise ships are entitled to know whether they may freely discriminate against people in the casinos and so forth when they're on the high seas. Thomas C. Goldstein: --We-- John Paul Stevens: You don't know the answer to that. Thomas C. Goldstein: --Justice Stevens, our position is that because of the definition of commerce in the ADA, when you purchase a public accommodation in the United States, that is an agreement to provide a public accommodation and it doesn't-- John Paul Stevens: So your view is not limited to what happens in the territorial waters. Thomas C. Goldstein: --That is right, although we have... we would win the case on the internal waters and the territorial waters, and we haven't asserted in this Court a claim relating to the high seas. If I could reserve the remainder of my time. John Paul Stevens: Mr. Salmons, may I ask before you begin whether the United States agrees that the statute would apply to the activities of these ships when they're on the high seas? David B. Salmons: Justice Stevens, and may it please the Court: We do not think that title III of the ADA was intended to apply extraterritorially. That said, we think there is a question that would need to be resolved as to whether applying the ADA to a public accommodation that was entered into in the United States, that began in the United States, a necessary term of which we believe would be nondiscrimination, would in fact be an extraterritorial application of U.S. law. Antonin Scalia: When... when the ship is out on the high seas? David B. Salmons: That's correct, Justice Scalia. Antonin Scalia: You think that's a hard question-- David B. Salmons: No. We think the better view-- Antonin Scalia: --whether that's an extraterritorial application of U.S. law? David B. Salmons: --No. We think the better view, in fact, Justice Scalia, is that that would not be an extraterritorial application of U.S. law. But if the Court were to disagree, then we would say title III does not apply at that time. Ruth Bader Ginsburg: Do you-- Antonin Scalia: I don't know what extraterritorial application means if it doesn't mean that, that a ship that is not in the United States is bound by United States law. What... why isn't that extraterritorial application? David B. Salmons: The reason, Justice Scalia, would be because the accommodation that was offered, that was entered into, and that began in the United States... and... and I would point out... I think this is important to keep in mind-- David H. Souter: What you're saying is it would... I thought you were saying that it would be the enforcement of the domestic contract of which the... the statutory provisions would be an implied term. Isn't that it? David B. Salmons: --Yes. Yes, that's correct. David H. Souter: It does not apply of its own force. It applies because two parties in the United States contracted that it would apply. Is that it? David B. Salmons: That's correct. Now... now, I... I would just add that I think it... you could characterize a public accommodation, you know, five nights lodging, for example. If that's entered into in the United States and... and that begins in the United States, that a necessary term of that is nondiscrimination, and-- John Paul Stevens: Well, then if you-- David B. Salmons: --if you have an ADA claim that governs that even if the discrimination occurred abroad, that would only relate to those things tied into the accommodation. John Paul Stevens: --But if you're on a round trip ticket from Liverpool to Miami and back, it would depend on where you bought the ticket. David B. Salmons: Well, again, we... we think that if accommodation begins here in the United States, that... that a necessary term of that is nondiscrimination. Now, whether you characterize that as a contract claim or as a substantive application of the ADA, I'm not sure there's much of a difference. David H. Souter: Yes, but Justice Stevens' question is you buy the ticket in Liverpool. Is the ADA... an... an American buys the ticket in Liverpool to come to the United States. David B. Salmons: To come to the United States. David H. Souter: Is the ADA an applied term of that contract? David B. Salmons: I would... I would assume not, although the question then would be whether or not it's a public accommodation that's been offered in the United States. Antonin Scalia: Don't... don't all-- Anthony M. Kennedy: Even in U.S. waters? That wouldn't make sense. An American buys a ticket in... in Liverpool. He's disabled. He goes to New York, Miami, New Orleans, and he's discriminated at... at each step. No... no coverage just because of where he bought the ticket? David B. Salmons: No, no, Justice Kennedy, that's not our position. Let me... let me try and be clear. We think that any vessel that comes into the internal waters and ports of the United States and offers a public accommodation or a specified public transportation service to our residents is subject to the ADA. Ruth Bader Ginsburg: --Do you-- Stephen G. Breyer: Well, that means-- David B. Salmons: If... if you had a situation... I'm sorry. Stephen G. Breyer: --No, go ahead. David B. Salmons: If you had a situation where you had a ship that... let's say, that began in... in Great Britain and came here, it didn't pick up passengers here in the United States, I think that the better view would be, sure, United States law could apply to it because it's in our internal waters, but that as a substantive matter, with regard to the ADA, I don't know why that would be a public accommodation within the meaning of the ADA because it's not an accommodation that's offered-- Ruth Bader Ginsburg: --But do you-- David B. Salmons: --or available to United States residents. Ruth Bader Ginsburg: --Do you agree with Mr. Goldstein that nothing turns on... one might characterize this kind of cruise as U.S. centered, but his answer was as long as they put in, a regular cruise stop, they pick up, unload passengers, they take them back again on the ship, so long as they touch base at a U.S. port, letting off and picking up passengers, the ADA applies? Do you agree with that interpretation? David B. Salmons: As I understand what Your Honor just said, I think that I would. Let me just clarify, though. We think the relevant question is whether that ship would... has offered a public accommodation or a specified public transportation service-- Ruth Bader Ginsburg: This is my-- David B. Salmons: --in the United States, and if the answer is yes-- Ruth Bader Ginsburg: --Let... let me ask you the same question that I asked Mr. Goldstein. Even in the Cunard case, the prohibition case, they couldn't have liquor in the U.S. port, but when they leave and they go to Jamaica, they could pick up rum there. They could have liquor all the rest of the time so long as, when they enter and leave the U.S. port, they didn't have the liquor aboard. Here what you're saying is what goes in the... for the New York port goes for every other place where this ship puts in. David B. Salmons: --Well, again, I... not as a matter of... not as a matter of extraterritorial application of U.S. law, but that is our position with regard to a public accommodation that begins in the United States. I... I think the... the important-- Ruth Bader Ginsburg: Suppose it doesn't begin in the United States in that it... it starts in, say, The Bahamas, and stops at-- David B. Salmons: --I should probably should not have said begin, Your Honor. What I mean is if it... if the public accommodation is provided for in the United States, that would be covered by the terms of the ADA, we think the ADA applies. Stephen G. Breyer: Then you're saying exactly what everybody is worried about. I take it there is no way really for a ship to... they either have the right door or they don't have the right door. And we're interested in the set of cases in which they're going to have to change their doors. And what I came in here thinking was we're talking about ships that pick up people and sail in Florida and sail around the Caribbean. That's the... now, I've heard nothing but we're not talking just about those. We are talking about ships like I'm the last human being alive that went on a Swiss ship to Europe. Okay? [Laughter] 50 years ago. And... and we're talking about those ships, or we're talking about merchant ships that also say to the public, come as a passenger. Now, I would like to... not what you're arguing. You're going to say, yes, we are arguing it. I want to know... say something to relieve my concern about that set, which was Justice Ginsburg's concern. We are trying to rule the world in respect to those ships that only come here occasionally or it isn't a big part of their business, but they want to come to pick up American passengers. David B. Salmons: Sure. And what I would say with regard to that is that you're right that our broad view is that the ADA applies if that... if they're offering public accommodation here in the United States. But if you reject that, I think there are several ways you could approach that. One would be to apply traditional choice of law factors that are... that are applicable in maritime, and you could conclude, you know, based on sort of whether or not there are sufficient contacts here and whether or not-- Anthony M. Kennedy: Well, you're saying that this is your position, but don't worry about it because we'll reject your position? David B. Salmons: --No, no. He asked me to say something that... that would... would help his concerns. What I'm trying to say-- Stephen G. Breyer: One thing might be true, what you're not saying, is there really aren't very many of those ships, or another thing you might say, which you're not saying because maybe isn't true, is almost all of those ships that there are are already subject to tougher... tougher rules, say, in Europe. But you don't say either of those. David B. Salmons: --No. No-- Stephen G. Breyer: Since you don't you say either of those, I think neither may be true. David B. Salmons: --Well, I don't know the specific number. I would think that there are not many that the... that this... what you're concerned with primarily here are cruise ships that are in the business of providing public accommodations. But I would add as well... and I think this is very important that the Court keep in mind... that the clear statement rule, as it's... as it's posited by respondent here, would not just apply to the ADA. It would apply to all U.S. laws, and that would include title II of the Civil Rights Act of 1964 in its prohibition of racial discrimination, and I would find that that would be a remarkable construction. Antonin Scalia: --It depends on what... what kind of laws you're talking about. Laws that require the crew to be treated differently are... are quite different from law... laws that... that require a passenger to be treated a certain way in the United States. David B. Salmons: Justice Scalia, you're correct, and that's precisely why they have-- Antonin Scalia: And laws... laws that require structural alteration of a ship are quite different from laws that say while you're in United States waters, you won't discriminate on the basis of race. David B. Salmons: --If... two... two responses, if I may, Your Honor. And that is, if you... if that is the conclusion you reach, then you still need to remand this case because there are an awful number of claims that are precisely those kinds of claims that the Fifth Circuit would not allow. Secondly, I think you're wrong with regard to the scope of the clear statement requirement. There is no requirement that you have to have a clear statement to apply a U.S. law to a foreign vessel. There is only a requirement that you need a clear statement if the conduct at issue would relate only to the internal matters of that vessel. And here you're dealing with public accommodation-- Antonin Scalia: If we haven't expressed it yet, we ought to express it then. David B. Salmons: --Well, I disagree, Your Honor. And what I would point you to is... is that the long... every time this Court has spoken with regard to the clear statement requirement relating to foreign flagged ships, it has referred to the internal order doctrine. And that is embodied in a number of bilateral agreements that go back for centuries. The... the treaty that was at issue in the Wildenhus's Case expressly said that if the... if the conduct did not relate to members of the crew but to passengers or other members of the port state or otherwise affected the interests of the port state, that the port state law would apply. And that is the general rule. The international regime that governs this area by its terms provide minimum standards and leaves it available to port states and to flag states to add additional requirements. That would mean-- David H. Souter: Mr. Salmons, one of the alternatives you threw out, not as a response to clear statement, but as a... a response to the issue that was being raised by it, was the provision of the statute that it was intended to exercise the... the fullest extent of the... of the commerce power. And The... The Bahamas respond to that by saying you could have said exactly... or argued exactly the same thing in McCulloch. What is your response to that? David B. Salmons: --Well, I... I would disagree with that on... on a couple of respects. The first is that the definition of commerce here is broader than it was and specifically refers to travel between the United States and foreign countries. The only other statute we're aware of that says that is title II of the Civil Rights Act of 1964. In addition-- David H. Souter: Well, may I just ask you a... a factual question? I didn't go back to the text to check this. Does the text of this statute say in these words basically we are exercising the fullest possible extent of the commerce power? David B. Salmons: --Absolutely, Justice Souter. What... what the text of the statute says-- David H. Souter: And it's not in McCulloch. David B. Salmons: --That's correct. What the text of this statute says is that... in fact, this is the definition of commerce that relates only to title III of ADA. And it says precisely that it includes travel between foreign countries and the United States and that Congress was intending to... to reach the full sweep of its... its constitutional authority. John Paul Stevens: Thank you, Mr. Salmons. Mr. Frederick. David C. Frederick: Thank you, Justice Stevens, and may it please the Court: This case is about congressional intent not congressional power. Congress undoubtedly has the power-- Sandra Day O'Connor: Could you address the last point? David C. Frederick: --Yes. It was not the fullest extent of the commerce power. That statute was at issue in this Court's case concerning the Lanham Act where the Court said that a violation of the Lanham Act that occurred in Mexico but had an effect in the United States was intended to be covered by Congress because that commerce clause, Justice Souter, did state to the fullest extent of Congress' power under the Commerce Clause of the Constitution. This statute does not say that. This statute talks about commerce in and between States and territories, and it is much closer to the statute language that this Court addressed in the ARAMCO case where-- David H. Souter: So it... it doesn't have the fullest extent language then. David C. Frederick: --That's correct. That's correct. Ruth Bader Ginsburg: How does it compare to title II of the Civil Rights Act of 1964? David C. Frederick: Well, there are slight differences in the language, but I don't think that's dispositive because title VII of the Civil Rights Act, which this Court addressed in the ARAMCO case, the Court... the Chief Justice's opinion there said that that language was not enough to express the intent. Ruth Bader Ginsburg: So that would be the same for title II, which is the public accommodations part of the Civil Rights Act of 1964. So I take it that you are saying that on these foreign flagged vessels, just as the ADA would be inapplicable, so title II, the public accommodations part of the Civil Rights Act of 1964, would be inapplicable. David C. Frederick: It's all a question of congressional intent, Justice Ginsburg, and there's no indication of an intent that Congress needed to address any problem that arose with respect to that form of discrimination. Ruth Bader Ginsburg: So your... but your answer is, there being no such indication, that a ship putting in at a U.S. port was free to discriminate among its passengers on the basis of race. David C. Frederick: Well, there would be no U.S. congressional statute that would address that, Justice Ginsburg. There would be a violation of the Bahamian constitution which prohibits-- Ruth Bader Ginsburg: I'm asking about the U.S. law and policy which says no segregation, no discrimination in places of public accommodation. David C. Frederick: --As I said, I'm not aware that there has ever been an instance of that in the cruise industry. Congress has not addressed that. We're talking about foreign ships here. And I want to get back to the structural features of the ship because the ADA fundamentally-- Sandra Day O'Connor: Well, but this is a good question, and what is your position? That the ship could engage in racial discrimination while in U.S. ports on the selling of tickets and the provision of accommodations while in U.S. ports and within the 3-- David C. Frederick: --Justice O'Connor, our position is that Congress has not spoken to the question, and so there is no congressional statute that is on point. David H. Souter: Then your answer, I take it, is yes, it can discriminate and it can discriminate because Congress has not told it not to. Is that it? David C. Frederick: No. Our position is that it can't discriminate because a different law proscribes that-- David H. Souter: So far as United States law is concerned, it could. David C. Frederick: --Yes. Ruth Bader Ginsburg: And the same answer for 1981? David C. Frederick: Justice Ginsburg, as I said, Congress has not extended its laws to the full reach of U.S. territorial power, and this Court has maintained that position ever since the Charming Betsy case 200 years ago, The Schooner Exchange case, and Brown v. Duchesne. Anthony M. Kennedy: Well, let's put it this way. So my understanding of your answer is that we could write an opinion ruling for you but leaving these other questions open? I don't see how we can do that. David C. Frederick: What you say, Justice Kennedy, is that the clear statement canon requires Congress to say when it intends to apply a law to a foreign vessel. Congress didn't do that. Anthony M. Kennedy: But if I'm writing the opinion and I put that down and rule for you, it seems to me that I then answered necessarily Justice Ginsburg's question in the negative. David C. Frederick: You do, Justice Kennedy. And just as this Court in the ARAMCO case said that title VII doesn't apply to the foreign... work in a foreign land by an American company of an American-- Anthony M. Kennedy: But these-- David C. Frederick: --Justice Kennedy, Congress hasn't extended criminal laws of the United States to the full reach of U.S. power. It is only proscribed 15 offenses that will apply in the special maritime jurisdiction. Ruth Bader Ginsburg: Mr. Frederick, this is... this is what concerns me about your answer. I know that Mr. Goldstein took the position that it doesn't matter what kind of operation this is, but the operation that we're dealing with, it sells tickets mainly to... what percentage of its passengers are from the U.S.A.? David C. Frederick: Approximately two thirds to three quarters in any given year. Ruth Bader Ginsburg: And does it normally start the voyage and end it in U.S. ports? David C. Frederick: The majority of them do. Ruth Bader Ginsburg: And how much of its advertising budget is pitched at U.S. customers? David C. Frederick: Justice Ginsburg, there... all of those questions are going to be answered as a predominant marketing effort, et cetera is directed to the U.S. market. Ruth Bader Ginsburg: Well, this is the anomaly. You're asking us to buy an interpretation. An enterprise is U.S. centered in terms of where it gets its business and that enterprise, nonetheless, is not bound by what is our bedrock anti discrimination law both with regard to customers, passengers, and employment. David C. Frederick: And the reason, Justice Ginsburg, is that that law imposes structural changes on vessels that go to other ports. Antonin Scalia: Why don't you... why don't you try to draw that line? Why don't you say that just as the applicability or not may depend upon whether you're dealing with a crew of a foreign ship or whether you're dealing with an American who happens to be injured on board that ship, so also it may depend upon whether the antidiscrimination law in question is one that at least in some of its applications requires structural changes or not? That would enable you to say the ADA doesn't apply, but would not compel you to say that title II doesn't apply. David C. Frederick: We are talking-- Antonin Scalia: You're not willing to take such a limited position. David C. Frederick: --Well, Justice Scalia, I think the Court could certainly carve out in its clear... articulation of the clear statement principle some of these lines. It becomes very-- Sandra Day O'Connor: --Well, the ADA itself makes an exception for things that aren't readily achievable. I mean, you could certainly lean on that because a structural change probably isn't readily achievable. David C. Frederick: --Justice O'Connor, Congress, when it talked about readily achievable, did so in terms of cost. It didn't do so in terms of conflict with the laws of other nations or-- Stephen G. Breyer: Well, is there... is there... I mean, you're giving me the answer I thought the other side would give me. All right? And I appreciate it actually. [Laughter] You say that two thirds of these people, the customers, are American. So we're dealing with a business that is primarily American, not a business like the Swiss ship except in exceptional cases. Then you say, all right, still it's a problem because of structural changes we'll have to make. What changes? That is to say, I would have thought I could have read, but I haven't, that other countries like Europe also have discrimination laws against disabled people, and therefore, given that fact and given the document that Mr. Goldstein produced, it is highly unlikely that your clients will have to make any significant structural change that they wouldn't have had to make anyway. David C. Frederick: --That's-- Stephen G. Breyer: Now, what's the response to that? David C. Frederick: --Well, that's completely false. In... in the year 2000, the United States Government issued a report that contained an extensive appendix, which we've cited in our brief, that details in laborious detail the conflicts between land based ADA standards and SOLAS. Now, I can give you some specifics, if you would... that are fairly practical, such as the ADA requires under the interpretation advanced by the petitioners that there be a disabled access cabin on every level of the ship, but SOLAS requires that passengers with disabilities be placed near evacuation points. Anthony M. Kennedy: --Why... why can't you just fight that battle by battle on what's reasonably achievable? Because in order to avoid that problem, what you're telling us is that a cruise line can charge a... a disabled person double the price-- David C. Frederick: As a matter of fact-- Anthony M. Kennedy: --because they're a nuisance. And that's your position. David C. Frederick: --Justice Kennedy, as a matter of fact, we categorically deny the claims of discrimination here. We're having to fight this on the basis of assuming the... the allegations are true, but they are categorically false. And-- Ruth Bader Ginsburg: But it doesn't matter what you want to do as a matter of good will. The question is what the law requires you to do, and you're saying it's up to us, we govern. You're not governed by U.S. antidiscrimination law. David C. Frederick: --Justice Ginsburg, what the other side wants is a case by case method of decision making in which a district judge becomes the special master of the cruise industry so that each claim of discrimination that would require some modification to the ship-- Anthony M. Kennedy: That happens to every employer under... in the United States under the reasonably achievable standard. David C. Frederick: --And that's why, Justice Kennedy, it's a question of congressional intent. The very same Congress debated extensively about whether to impose design requirements on foreign ships in the Oil Pollution Act of 1990, and it decided to buck the international system knowingly by imposing a design requirement that double hulls be imposed on oil tankers, foreign oil tankers. John Paul Stevens: Mr. Frederick, that brings up a question I've been meaning to ask you. To what extent was this whole problem of the application of this statute to the foreign vessels discussed in the legislative history of these statutes? David C. Frederick: Zero. There is not one word about vessel-- Stephen G. Breyer: All right. If... if that's so and if you look at the earlier cases... but all I could get out it is that those earlier cases... the Court tries to do what it really would have thought Congress would have intended in the circumstances. And if that's so, why wouldn't Congress really have intended that a business that's two thirds American has to abide by American law? David C. Frederick: --Because it was encroaching on an area of foreign sovereignty. Foreign ships are governed by foreign laws. Stephen G. Breyer: Does... does Britain... or does Britain or does the European Union, for example, forbid you to charge this double price? David C. Frederick: I don't-- Stephen G. Breyer: Does European law... I'd be surprised if it doesn't forbid it, but do you know? David C. Frederick: --I... I don't know the answer to European law on charging of an additional price, but I would point out that pricing, like evacuation procedures, do go to the structure of the vessel. And we're talking here fundamentally in the ADA about structural changes that they want to impose that go... when ships travel, they can't dismantle those structural changes when they leave U.S. waters. John Paul Stevens: Mr.... may I ask this question to you? What about a... an American-flagged ship? Does the statute apply or not? David C. Frederick: Well, the Fifth Circuit reserved that question. John Paul Stevens: What is your view? David C. Frederick: Our view is that there are arguments that can be made that it does not because Congress didn't-- John Paul Stevens: What is your view? Not what arguments can be made. David C. Frederick: --Well, I think-- [Laughter] No. I think our view is that it doesn't. John Paul Stevens: It does not apply. David C. Frederick: It does not apply because Congress didn't express the intent. John Paul Stevens: So really, we're not concerned with the fact this is a foreign flagged ship. You're concerned with the fact it's a ship. David C. Frederick: The... there's a difference and... and there are about 1,000 U.S. flagged ships that carry passengers, so that if Congress had given any thought to the question, it is reasonable to suppose it might have distinguished between U.S. ships for which U.S. law directly governs and foreign ships that are governed by a different law. The fact-- Antonin Scalia: Do we need... do we need a clear statement for United States ships? I thought your case rested on a clear statement requirement. Is there any clear statement requirement for U.S. ships? David C. Frederick: --No, no, Justice Scalia. Antonin Scalia: So why... why isn't there a clear difference between the two? David C. Frederick: Because there aren't any words in the statute that go to ships. The best they can do is a catchall phrase at the end of bus, rail, and any other means of conveyance. Antonin Scalia: Well, that's pretty good. David C. Frederick: Well, it's not-- [Laughter] Antonin Scalia: If you don't require a clear statement, that's... that's good enough, it seems to me. David C. Frederick: Well-- Antonin Scalia: Your... your case hangs on the fact that, you know, when Congress wants to... to rule the world and say all ships in the... in the world that touch at our ports have to have this kind of a thing, it says so clearly. It doesn't have to say so with perfect clarity with respect to American ships. David C. Frederick: --With respect to foreign ships, there is a clear statement rule and that clear statement rule is embodied in the fact that a foreign ship is governed by the law of the flag state where it is registered. That's been the rule for 200 years. And the other side's position-- Sandra Day O'Connor: Well, is that limited, though, just to things that affect the internal order of the ship? Is that the context in which we've articulated that rule? David C. Frederick: --Well, it's been articulated in several different contexts. In the Brown v. Duchesne case, the Court 150 years ago articulated in a patent case where the Court said that a patented device on the ship, which was the French ship in Boston Harbor infringing an American patentholder, would not apply U.S. patent law. And the Court said, because we can't conceive that Congress would have imagined this general language to encroach on the sovereignty of a foreign ship. Now, the other side has exactly two sentences to say about that case, but that is the case that is directly on point because that case says that when you are dealing with American laws that are generally written, you would not ordinarily apply them to a foreign ship unless Congress said so specifically. David H. Souter: But... but in that case, there was... as I understand it, there was no legal relationship of any sort between the supplier of the patent infringing object and the ship in the United States. So it at least made sense to classify that with internal order as opposed to external relationships arguably involving... or implicating American law. You've got exactly the opposite situation here. You've got contracts made in the United States with the foreign cruise line. You didn't have that in your patent case. David C. Frederick: Well, Justice Souter, you have a foreign ship owned by a foreign corporation built in a foreign country under foreign engineering standards-- Ruth Bader Ginsburg: With its principal place of business in the United States. David C. Frederick: --For a time before that ship moves into another market. David H. Souter: Its significant external... its significant commercial relationships are in the United States with people in the United States performed partially in the United States. David C. Frederick: In just the same way that McCulloch the Court said that labor standards for a course of business that is regular between Honduras and the United States is not going to be sufficient to apply-- Ruth Bader Ginsburg: The crew members were Honduran in that case. David C. Frederick: --They were. Ruth Bader Ginsburg: This... if you just look at it, suppose you were not a lawyer and you look at this operation. You'd say that's got U.S.A. written all over it. The passengers are from the U.S.A.. The company is centered in Florida. And then you have this flag of convenience that it flies which can legitimately govern the relationship with its crew. But to say that it governs the relationship with passengers, it seems to me very strange. And also the ticket says, passenger, if you're going to sue us, it's got to be in the United States and under U.S. law to boot. David C. Frederick: But a choice of law clause, Justice Ginsburg, has never been held to incorporate law in the sense that laws that don't apply are going to be incorporated. I'm not aware of any choice of law clause that... that simply takes in every domestic statute. Ruth Bader Ginsburg: Just... it's just one other indicia that one looks at this operation and says this belongs to the U.S.A.. A practical judgment, I think, would come down there. David C. Frederick: And... and you would have... under their theory, you would have the Consumer Products Safety Act, the Food and Drug Act, OSHA, all sorts of other statutes of general application that are now going to be imposed on foreign vessels simply because they do a lot of business in the United States. The problem here, as a matter of congressional intent, is we don't know what Congress thought about this, and because Congress-- Anthony M. Kennedy: Well, we... we do... we do have the rule if it... if it applies to the internal operations of the ship, and so far as the crew is concerned, the Jones Act and OSHA, it seems to me, may well be governed by the law of the flag. David C. Frederick: --And the internal operations of the ship, Justice Kennedy, is part and parcel of how it is designed, what are the evacuation points, how are the cabins laid out, what ramps are placed where, how... everything about the ship's design-- Anthony M. Kennedy: That's a part of the case I'm not sure about, and it seems to me, again, it can be fought out under the reasonably achievable-- David C. Frederick: --It doesn't... Justice Kennedy, the problem with that theory is it just doesn't comport with the language of... of the statute. Congress didn't think in terms of... as it did in the Oil Pollution Act, it said, if there's a conflict with international law, work it out. Get the Coast Guard with the foreign nations and work out the conflict. It didn't put anything like that in this statute, which is a further indication that if Congress wants to extend this kind of disability protection, it can do that, but it ought to do so willingly. And the Government has had 13 years to come up with rules that would govern cruise ships, and the best they've done, a few days before the top side briefs in this case were filed, is to issue proposed draft guidelines for ferries, not cruise ships. Most of the regulations that they are pointing to wouldn't have an application to a large passenger cruise ship. If Congress wants to change this, it certainly has the power, but this Court need not open up a Pandora's box of domestic legislation to apply to foreign ships where Congress has not expressed the intent to do that. David H. Souter: Could you go back to Justice Breyer's question about the number of foreign ships? Once we get beyond cruise lines, does it... would... would the... the application on your view cover the... the dozen passengers who decide they want to take a trip on a... on a cargo boat? David C. Frederick: Yes. I don't perceive a limiting principle to the other side's position. In fact, there's an amicus brief written where there's only one or two stops in the United States a year, and under their view, that ship would be governed by the ADA as well. If... if Congress wants to enact these limits, it's certainly free to do so, but this is a highly complex area and ships are different from land based accommodations because you have to be able to evacuate people within 30 minutes. And so when we train people, we have-- John Paul Stevens: But doesn't it... on the other... on the other side of the coin, apart from the structural problem... and I understand the arguments on both sides there. With respect to things like safety drills and access to gambling tables and all that, it seems to me that your answer to that would be, well, we'll just do that once we're on the high seas so there's no conflict with the statute when we're out there. David C. Frederick: --As a matter of fact, Justice Stevens, we give evacuation drills to the disabled in a different way. We have special access and assistance squads that go to persons with physical challenges to get them off the vessel in an event of a... a need for evacuation. That's a different procedure than most passengers, but it's... it is one that is in place. John Paul Stevens: Thank you, Mr. Frederick. Mr. Garre. Gregory G. Garre: Thank you, Justice Stevens, and may it please the Court: Applying title III of the Americans With Disabilities Act to foreign flagged vessels would invite precisely the sort of international discord, conflict, and confusion that Congress presumably seeks to avoid when it writes American laws. Ruth Bader Ginsburg: Do you agree with Mr. Frederick's answer about title II of the Civil Rights Act of 1964? I mean, a lot of countries don't prohibit discrimination. Gregory G. Garre: Justice Ginsburg, first let me make clear that the Bahamian Government does and all of its cruise vessels are governed by that prohibition. Ruth Bader Ginsburg: I'm asking about the application of U.S. law. Gregory G. Garre: We think that that question can be resolved along the lines that Justice Scalia suggested, which is that when you're dealing with a matter that goes to the internal affairs of the ship... and there... we would suggest that there is more central to the internal affairs of the ship than its construction and design. Under international law, article 94 of the Law of... Law of the Sea Convention, which the Bahamian Government has ratified... and by the way, the United States has not, and that's an important principle for this Court to keep in mind... foreign flagged states may be bound by different international treaties than the United States. Simply trying to draw some conflict resolution device that would deal with treaties that the United States has entered into, international nations have not will not address that problem. Ruth Bader Ginsburg: So before you go on to that, I want to be clear on your answer to title II of the Civil Rights Act of '64. There's... you say, well, that's easier to comply with. But that's not the principle under which you're operating. Gregory G. Garre: No. With respect, Justice Ginsburg, our principle is that when it comes to the matters that under international law have been traditionally governed by the flag state, then when Congress writes its laws, we presume that unless Congress clearly indicates an affirmative intention to address those matters, it did not intend to. When Congress wrote the ADA, not a word of the statute indicates that it considered the international repercussions of applying that law to foreign flagged vessels. Not a word-- David H. Souter: What about the... what about the full sweep argument? Let's sort of come full circle on that. You... you say the full sweep argument is no good because the same thing could have been made in McCulloch. The response was there is-- Antonin Scalia: What's... what's the full sweep argument? I don't-- David H. Souter: --Full sweep of the commerce power. Gregory G. Garre: --Justice Souter, first of all, it's... it... the statute doesn't say full sweep. It says sweep, and that's in the findings of the ADA. It's reprinted on page 32 of petitioners' brief. And second of all, the definition of Congress, which doesn't contain that sweep language, is almost identical to the definition of commerce in McCulloch, which is on page 15, note 3 of that decision, and that definition, the United States argued in the McCulloch case, was not sufficient to extend U.S. labor laws to foreign flagged vessels. It's important to understand the... the potential international conflicts that extending the ADA to foreign flagged vessels could create. There are more than 40 nations that have adopted anti discrimination laws for the disabled. Three nations have... have adopted laws for domestic vessels: Britain, Canada, and Australia. If a country like the United States extended its laws to foreign vessels that entered its ports, then other nations may well follow suit. And if you take a simple hypothetical example, the Queen Mary II traveling from South Hampton to New York, if you look at the guidelines that Britain has adopted for domestic vessels, those guidelines contain different structural and design requirements than the draft guidelines that the United States have promulgated. There are different requirements for door widths. There are different requirements for sloping. There's different requirements for the watertight compartments. There are different requirements about whether vessels have to be... have accessible cabins all throughout the ship. Antonin Scalia: --When you say different, you mean you cannot comply with both. Gregory G. Garre: Well-- Antonin Scalia: Is that what you mean? Or... or are those just minimums and... and the United States would... would comply with those minimums? Gregory G. Garre: --Justice Scalia, I think in some you could and in others you couldn't. And... and that's an important... important point. Anthony M. Kennedy: And incidentally just for the... are... this ship has... these are regulations that help the disabled? Gregory G. Garre: Yes, Your... yes, Your Honor. And... and in many cases, it's not going to be clear which regulation is going to be more accommodating to the disabled and which is not. Stephen G. Breyer: Could they work that out? That is, if two thirds of our universe really is American-based, in terms of customers, and we're now only talking about conflicts in... real conflicts that... that affect, say, one third of the universe, that's also true in areas like antitrust or others where the enforcement authorities get together and they try to write memoranda that... that work this out in a reasonable way. Could... could the same thing happen here if such real conflicts did emerge? Gregory G. Garre: We don't think so, Justice Breyer. Stephen G. Breyer: Because? Gregory G. Garre: We would take the same approach that this Court emphasized in... in the McCulloch case, which is that kind of ad hoc balancing analysis would wreak havoc for the question whether a significant regulation like the ADA would apply to a vessel. How would foreign vessels know, when they enter U.S. ports, whether they have to undertake the extraordinary changes-- Stephen G. Breyer: The answer would be yes, you do. You do have to, and then if there's some other authority that wants to get involved in this, the two authorities would work it out. Gregory G. Garre: --Justice Breyer, the way that those issues are worked out in the international shipping context is through the International Maritime Organization. This organization has been responsible for crafting scores of conventions, hundreds of shipping codes, and it's already begun to address the issue of accessibility on ships for the disabled and the elderly. We cite the 1996 guidelines in our brief. Those guidelines right now are... are not binding guidelines, but they could well become binding guidelines. And when an organization like the IMO addresses this question, it resolves-- Stephen G. Breyer: That's perfect because then the Government says that once it becomes a matter of binding international rule, anything that conflicts with that will be viewed as not reasonably achievable. So all you have to do is that and then there's no longer a problem with American law, according to them. Gregory G. Garre: --Well, we don't think the readily achievable language in the first case in any way contemplates conflicts with international law. This Court has a separate canon that's almost as old as the country that it presumes Congress doesn't intend to interfere with international obligations or international laws, including customary international law, as you wrote for the Court last term in... in the Empagran case. We presume that American legislatures give respect to the interests of sovereign nations when they write their laws, and we don't assume that Congress intends to intrude on the sovereign interests of other nations. And that's what extending the ADA to foreign flagged ships would do. The Bahamian Government has a solemn responsibility under international law and under its own law to govern the construction and design of all flags of all ships that fly... fly its flags. Article 10 of the Geneva Convention on the High Seas recognizes that flag states have responsibility for the construction and design of ships. Article 94 of the Law of the Sea Conventions specifies that flag states have responsibility over administrative, technical, and labor matters, including construction and design matters. These are precisely the sorts of matters that for centuries the flag state has been responsible for. And in the Brown v. Duchesne case, this Court recognized that, a case that dealt with the application of patent laws to the construction and design of a foreign flagged vessels. There are going to be conflicts within... between international law and the requirements of the ADA, but first of all, there's going to be confusion. It's been more than a decade since the ADA was passed, and we don't even have final regulations as to what rules apply. And in the meantime, foreign flagged vessels are going to have to be reviewing the case law in the United States courts, determining on a vessel by vessel, design specification by design specification as to what standards apply. That's only going to create additional international discord and confusion. Petitioners proposed solution to this problem we think is telling. They urge this Court in their reply brief if there is a problem after the ADA is extended to foreign flagged ships and other nations begin to follow suit and you have a crazy made... maze of different regulations applying to construction and design, then at that point, the United States can go to the IMO and ask it to clean up the mess. With respect, we think they have it backwards. The purpose of the IMO and the international framework that exists for governing regulation of shipping is to establish a uniform set of rules in the first instance. The IMO has already begun to address the problem at issue in this case, accessibility for the disabled. They are available to address that in a multilateral fashion. And Congress, in enacting the ADA, gave no indication that it weighed any of the international repercussions of the action that petitioners urges the case... petitioners urge the Court to take in this case. And we would urge this Court to return this matter to Congress. Congress is in the position to weigh the risk of international confusion, to weigh the potential for international discord and to address those matters as it sees... sees fit. If there are no further questions. John Paul Stevens: Thank you, Mr. Garre. Mr. Goldstein, you have about 40 seconds. Thomas C. Goldstein: Justice Breyer and Justice Ginsburg, our position is the one that can accommodate your concerns. Theirs cannot. Just like in Empagran, where this Court built in comity considerations, relying on cases like Lauritzen that involved foreign flagged ships, it said, look, even if the text of the Sherman Act or the FTAIA could literally reach it, in these cases that we don't think Congress could have conceived of, we're not going to apply the statute. But here, we have a situation in which this company has 95 percent of its cruises going in and out from the United States. Millions of people, and billions of dollars in commerce are affected by this statute and Americans that Congress had to have in mind. John Paul Stevens: Thank you, Mr. Goldstein. The case is submitted.

Warren E. Burger: We hear arguments next in 1619, Federal Power Commission against the NAACP and 1608, NAACP against the Federal Power Commission. Mr. Journey. Drexel D. Journey: Mr. Chief Justice and may it please the Court. This proceeding comes before you with a history of 6 years in which the EEOC, the FPC, the Justice Department, the Civil Service Commission and others have been seeking an answer to a question. That question is the proper interrelation of the Equal Employment Opportunity Laws and Economic Regulatory Laws. We have tried three approaches to get a definitive answer. We have tried administrative procedures. We have tried the legislative route and we have tried the judicial route, in all of them we have failed. What we now require is for this Court to set defenses by which Economic Regulatory Agencies, Equal Employment Opportunity Agencies like the EEOC, the Regulated Gas and the Electric Utility Industry and others may function. William H. Rehnquist: Mr. Journey, your statement at what you now require from this Court is such and such raises a question in my mind that bothered me while reading the briefs and bothering the Court of Appeals opinion. It seems to me that there is a certain abstractness about the question that is presented here. I do not know whether it is standing or a case or controversy or rightness. But obviously this Court does not just respond to the request of both parties to tell us, to tell you what you can do and what cannot do. You have got to show that you have got a concrete controversy. And I am somewhat disturbed by the fact that this was not any specific attack on a rate hearing or license application but simply a request for a rule and the FPC turned it down because it had no jurisdiction. Drexel D. Journey: You Honor, if you look at the history of this, the PG&E case which is quoted in the Commission’s Declaratory Order Number 623. You will see that this controversy started out in a FPC Hydro Licensing case raised initially by the California Rural Legal Assistance Inc. The matter in that case was whether economic – the issue – the precise issue there and here is whether economic regulatory statutes are an alternative enforcement strategy for the Equal Employment Opportunity Laws. The PG&E case, 44 FPC, that is quoted in the Declaratory Order 623 did not go to Court. The Commission when it faced the issue in the PG&E case invited the NAACP in. They invited others in to hear the points of whether there was jurisdiction and whether economic regulatory laws could be used as an enforcement strategy. The commission concluded in the PG&E case that it could not. The NAACP then brought a general proceeding which culminated in opinion 623 which was directed basically to the gas and electric utility industry throughout the United States. We think that the question is important and should be resolved by this Court. We think it is right for judicial review. NAACP argues that there is a constitutional requirement that the Power Commission have affirmative action employment regulatory programs. They argue also that under the public interest concept, there is enfolded within the umbrella of the public interest notion, a requirement in the Power Commission to resolve these questions. The Court of Appeals said, no, said, when you look at the function of a regulatory agency such as the FPC you must look at its delegated authority. It found that we had under the Power and Gas Act, three things to do basically, we were to look at the conservation of natural resources, we were to look adequacy of supply of electric energy and natural gas and that we were to protect the consumer from exploitation. The Court went on after making that finding and holding that we had no jurisdiction to determine what employment practices should be to reach into the operation of the economic regulatory function and it found in our ability to disallow costs. What I call an ancillary jurisdiction in the commission, which seems to say by reason of the things the Court of Appeals would have us do, namely get the EEOC forms and let people intervene who claim they were victims of discrimination and unequal employment hearings and opportunity to be heard. Well, we think what this comes down is an endless procession of litigation for us in terms of, why would we hear these questions, if we are not being told by the Court of Appeals that we can do indirectly that thing which they said we could not do directly. They said we could not regulate employment practices per se. Now when we discussed this matter with the Solicitor General, the Solicitor General said that he thought the case had been properly decided by the Court of Appeals holding that we do not have a regulatory jurisdiction per se. We think that in looking at the additional findings of the Court, they posed a most difficult situation for the commission to administer— Byron R. White: Do you mean the Court Appeals is saying that in an individual proceeding, you could look into employment practices as such or only in connection with the cost?M Drexel D. Journey: The ladder -- but we— Byron R. White: And if you thought that, you concluded that if they had the legal employment practices their cost might be lower. It might make some difference. Drexel D. Journey: Your Honor, we think that the Court of Appeals decision suggests that we can, one, either deny rate relief or deny a certificate because of what might be our independent views of what should be their employment practices. Byron R. White: But, yes, but only because of its impact on cost. Drexel D. Journey: Cost impact and service impact but the way the equal employment opportunity laws are structured and the way the regulatory laws are structured. There is now in being under the Employment Act of 1972, a comprehensive control mechanism administered by the EEOC. Byron R. White: I understand that but let me get your position clear. Suppose that the FPC on its own, now in a rate proceeding was asked to give rate relief to a company and it thought that the company was engaged in illegal employment practices, which if cured would lower their costs. Would you have the power under your present statute to tell the company that you would not give them rate relief because they have – because the legal cost would not justify it? Drexel D. Journey: If the legality question had been determined in the forum -- Byron R. White: I am not asking you that. I asked you do you have the power to determine it in your own proceeding. Drexel D. Journey: I believe not in the first instance. We apply the doctrines of prudence, of just and reasonableness and we disallow costs for rate purposes which do not meet the standards of the Gas and the Power Act. Byron R. White: What if somebody comes in to one of your rate proceedings and one of the customers of the utility and complains that the utility – that some of the cost claimed by the utility are forbidden by law? Drexel D. Journey: If they are forbidden by law there is— Byron R. White: Would you inquire into that? Drexel D. Journey: Yes, sir, but we think your Honor that is not what this case is about and in historical context -- Byron R. White: But only because there is another mechanism for determining, whether there are legal costs? Drexel D. Journey: We think that that is the orderly way to relate the equal employment opportunity control machinery versus the economic regulatory machinery. Potter Stewart: Pursuing my Brother White’s inquiry a little bit, let us say a costumer comes in and says some of this cause are forbidden by law because they were bribes, they were bribes of municipal officials. Are you suggesting that you – your commission would not and could not consider that until or unless the Courts had convicted somebody of bribery? Drexel D. Journey: I am saying your Honor that for cost purposes Account 426.5 would disallow that for FPC rate purposes upon a showing of substantial evidence and relating it to the questions of rate making under the Power and the Gas Acts. But I am suggesting also to you that when you read the Court of Appeals opinion and the arguments that were made before the Court of Appeals and the arguments that are made to you that is not the question that is being put to you. You are being asked to – because of the administrative workload of the EEOC, the 100,000 plus cases in the backlog to have us through the economic rate making procedure determine what the employment conditions should be of the utilities whose services we regulate. William H. Rehnquist: What if a customer comes in a rate proceeding Mr. Journey and says the utility defended a lawsuit and then paid $350,000.00 in lawyer’s fee and we do not think it should have defended that lawsuit. We think it should have just capitulated. Now would the FPC inquire in that case as to whether or not the utility should have defended the action on the merits. Drexel D. Journey: Yes sir, there has been a litigation on that question on legal fees and we have determined that the commission makes a determination on a cost basis supplying the just and reasonable standards whether it should be allowed for rate purposes or disallowed. But it is up to the utility management in the first instance to engage the lawyer and the lawyer then determines with management what they do or do not do. William H. Rehnquist: But supposing the utility shows that it followed the advice of a lawyer in deciding to defend the action and there is no question about the size of the fee. The customer’s complaint is that the lawyer's advice was wrong, you should not have defended the action, you really had no defense, you should have settled it and avoid this cost and therefore take the cost out of the rate base. Drexel D. Journey: We have had that question Your Honor and we have disallowed some of the costs and that has gone up through the Fourth Circuit. But that question has been litigated. William H. Rehnquist: What standard do you apply in disallowing those -- . Drexel D. Journey: That just and reasonable standard and the prudency test. Speaker: (Inaudible) Drexel D. Journey: prudency test for— Warren E. Burger: (Inaudible) Justice Rehnquist was just raising, with a variation, suppose the claim was that the president of the company had caused the employment of a law firm and a retainer of a quarter of a million dollars a year. The law firm being headed up by the son of the president of the company and that these payments refer unnecessary services. You would inquire into that kind of claim? Drexel D. Journey: And disallow that. Yes. Warren E. Burger: Just as though the president had a yacht or an airplane that he did not need that was charging it off to the utility, you are inquiring to that too? Drexel D. Journey: Yes, sir, that has all been litigated in the early history of the Power Commission after the passage of the Holding Company Act. You will find the cases that related to the cost disallowance and rate disallowance coming up in the early Supreme Court history. What, but I submit to you that that is not what is being asked here and that was not what was involved. John Paul Stevens: Mr. Journey, can I ask you a follow-up question? Drexel D. Journey: Yes. John Paul Stevens: Supposing it was proposed that there be a rule defining when the attorney’s fees and like cost would be allowed in litigation involving charges of discrimination against the power company. Would you have jurisdiction to adopt the rule that would say in certain circumstances those costs would be allowable and then others they would not? Drexel D. Journey: I think for purposes of fixing the regulated utilities cost, we would. John Paul Stevens: Then you do not – that Judge McGowan (ph) in his opinion said they did not know whether your holding of no jurisdiction was that no jurisdiction to adopt the specific proposed rule that the petitioners had submitted or any rule relating to employment discrimination. The one you have said you could adopt would be a rule relating to employment discrimination. Drexel D. Journey: No. I think Your Honor that, as I understood the question you put to me was whether we could disallow the costs of the utility whose rates we were fixing. When Judge McGawan (ph) opinion, what he is really suggesting that we do is permit people to intervene and we believe by indirection fix the employment practices of utilities. We regulate the services and the cost of utilities in the interstate commerce. What this is all about is the commission is being asked to grapple with the economic conditions of admittedly disadvantaged portions of the society. Byron R. White: But McGowan (ph) did not require you to make any rules. He permitted you as I understand it or the Court of Appeals would permit you to go at it on just a case-to-case basis— Drexel D. Journey: But if there is -- Byron R. White: And only in connection with cost. Drexel D. Journey: But if there is jurisdiction Your Honor whether it is rule making or ad hoc, it really means that -- that opinions means one of two things. We can do by indirection that which he said we cannot do directly or it means that we have an ancillary investigatory review authority to consider facts. Byron R. White: Have you ever considered in a rate proceeding whether a company has unneeded employees? Drexel D. Journey: We have looked at – the answer to that is yes. Byron R. White: Yes, you do look in the charges of featherbedding? Drexel D. Journey: Yes sir. Byron R. White: So you do look in the labor questions. Drexel D. Journey: Yes, they relate to costs. But here what we are talking about is using the economic regulatory process not to in effect control service or rates or costs but to reach back in and cure things which are socially and legally undesirable. The employment practices of utilities which may be on a discriminatory basis. Now, it seems to me -- John Paul Stevens: Mr. Journey, may I just interrupt you and how is that different from disallowing the cost to – a bribe to a public official for example, does that cost associate with a violation of law, why is discrimination any different than any other kind of violation? Drexel D. Journey: When the official is bribed presumably there is a determination that he has been bribed and there is -- John Paul Stevens: You said you would act on substantial evidence as I understood it without a— Drexel D. Journey: We would act on substantial evidence— John Paul Stevens: But supposing you had substantial evidence of unnecessary costs incurred in connection with racial discrimination. Drexel D. Journey: If there were— John Paul Stevens: How was that different? Drexel D. Journey: If there was a question of -- if I may answer on the context of your bribery question. If there was a proceeding to determine the bribe question, I would recommend to the Power Commission that it defer processing of that until the bribed trial question had been resolved because under -- John Paul Stevens: (Inaudible) one of power would it be essential as a matter of jurisdiction that you would defer until after there had been an adjudication. Drexel D. Journey: It is not essential to defer for a cost allowance purposes Your Honor. But what it does require is if the other proceeding is going forward and if it is determined that there was not a bribe and indeed those costs should be disallowed and we had kicked them out under Account 426.5 then we would be in the process of needing to put them back in again. We do not operate in a vacuum -- John Paul Stevens: You concede as I understand you that you do have jurisdiction to consider the significance of costly illegal conduct in the bribe area, do you make the same concession with respect to costly illegal conduct in the discrimination area and if not why not? Drexel D. Journey: If it is for cost incidence purposes, we could review it and we could disallow it. John Paul Stevens: If you could review it, could you also make a rule in advance indicating the circumstances under which you would disallow it? Drexel D. Journey: Not if it went to the question of saying that we could prescribe what would be the labor requirements of the regulated utility. See, the rule that was proposed to us is that we undertake and determine an affirmative action program like the Philadelphia plan or one of the other plans to determine the overall employment conduct and practices of the electric and gas utility industry. Speaker: (Inaudible) Drexel D. Journey: We do not as a matter of course get to that question we – for this reason. The commission regulates 10% of the revenues of the electric utility industry. We regulate about 90% of the revenues of the interstate gas and electric utility industry. But a good part of the employment of the gas and the electric utility industry is covered by State Fair Employment Practice Laws. It is covered by the Equal Employment Opportunity Laws, it is covered by the Federal Office of Contract Compliance and the General Services Administration is the one that fixes the standards and criteria by which utilities must comport themselves. We take account of their requirements just as we take account of the IRS requirements or any other requirement. We might want to disallow an income tax thing or something of that nature but we would not in the first instance make the determination of whether someone had violated the income tax laws. Lewis F. Powell, Jr.: Mr. Journey, assume you had a situation in which a utility had been found guilty of discriminatory practices in order to pay back pay, you know, fixed amount, would you as of today on the practices presently prevailing disallow the back pay ordered by say, a Court? Drexel D. Journey: Yes, sir that would be question of putting it in to the cost of service and having determined that it was not a just and reasonable item if in fact it was not just and reasonable then disallow it. Lewis F. Powell, Jr.: In that situation, you would have a quantified cost. Drexel D. Journey: Right. Lewis F. Powell, Jr.: And I suppose in many situations involving alleged discrimination there would be no quantification. Drexel D. Journey: That is right. Lewis F. Powell, Jr.: Do you want to pursue that topic of -- Drexel D. Journey: Well, there are areas of penalties of back pay and other things where items can be liquidated and we can handle them through the economic regulatory process. We find it most difficult however to speculate as what might be the loss of morale. What might be the inefficiency, what might be a lot of the other factors associated with this? We submit that under their end result test of natural gas pipeline in the case law progeny wherefrom1940 on you have reviewed our cases on a functional appraisal basis. You should not find that we have this jurisdiction. Byron R. White: Well, if you -- do you think you would be acting contrary that Court of Appeals opinion if in a specific case you came to these very conclusions that you have just now stated that you have looked at this and you really cannot arrive at anything substantial or definite. And that it is wholly speculative and you just put the issue aside. Drexel D. Journey: We think what would happen there is we would then get into a question of interpreting the opinion if I advise the commission we could not— Byron R. White: I do not want to think about it right now, But -- Drexel D. Journey: I think that probably that Court of Appeals opinion means that we could go in and regulate the employment practices of the utilities. Byron R. White: Yes, but suppose, you did not— Drexel D. Journey: Then it would be – Byron R. White: I think you would be required to inquire the Court of Appeals opinion. Drexel D. Journey: Then it would be a question to whether we abused our power. See, if you have the power then— Byron R. White: Well, I am asking you whether or not under the Court of Appeals opinion would permit you to conclude just what you said a moment ago. That you just – now you have looked into it but it does not a quantifiable manner. Drexel D. Journey: We -- I certainly would take that position that the commission should not be forced to do this but— Byron R. White: But what about the Court of Appeals opinion now? Is that what it permits you to do that or would it require you nevertheless to regulate the employment practice? Drexel D. Journey: The Court of Appeals opinion would have us back up here again after I have so advised the commission because the people would not be satisfied that the proof of the putting in this was until we— Byron R. White: Well, I know that somebody might bring you up here but all I want to know is what your opinion was that of the Court of Appeals opinion. Drexel D. Journey: I think that the Court of Appeals opinion means that there is an ancillary authority in the commission to determine employment practices. Byron R. White: I know that is what you say, but that is not my question. My question is if you exercised that authority and found that you just could do not quantify and so there was no relief given. Would that be contrary to the Court of Appeals opinion in your view? Drexel D. Journey: If we could defend successfully against the challenge that we abused our discretion and not acting, I would— William H. Rehnquist: That is Mr. Justice White is asking you, yes or no? Drexel D. Journey: I think that we would have difficulty in maintaining that position. Lewis F. Powell, Jr.: Is not the problem that you confront not the one you have been articulating but the fact that in every rate case, on a every request for the licensing of an applicant, this issue would be raised and you have to try it and it might take you 6 week or 6 months to litigate it. Drexel D. Journey: That is the burden, the administrative burden question. Lewis F. Powell, Jr.: (Inaudible) Drexel D. Journey: Well, we have that in our brief your Honor. And we think that this would be an unmanageable workload for us. We think that under the end result test of natural there are three reasons why you should not find this. One, we are not equipped to do it. Two, we are otherwise busily occupied with gas and electric matters. Three, there already is in place in functioning a mechanism under the Equal Employment Opportunity Laws by which equal employment practices are regulated. The 1972 Amendments did not give us that authority. The basic 64 Act did not, our Act does not give it to us. You are being asked to read it into our statute and you are being asked to have us ask answer in each case, substantial questions of relevance and materiality. We think we would be in a hopeless morass. We would like the fences fixed. Either the economic regulatory process is an alternate enforcement strategy for the Equal Employment Laws or it is not. We think it is not. John Paul Stevens: Mr. Journey, you were asked a question about the possible example of quantified cost in a back pay award and you expressed the opinion, those might well be disallowed by the commission. Has there ever been an issue such as that actually presented to the commission, or are you just giving an opinion based on your judgment as what they do. Drexel D. Journey: In terms of disallowing— John Paul Stevens: A utility which might have been found guilty of employment discrimination having assessed against it a back pay award. You suggested that such an amount might well be disallowed as a proper cost. Is that issue actually been passed on by the commission? Drexel D. Journey: It has not been passed on in the employment context but it has been passed on in the context of other things as litigation ensued out of the holding company in the divestiture proceedings and as the gas and electric industry was unscrambled in terms of its financial control. William J. Brennan, Jr.: (Inaudible) was unfair labor practices. Drexel D. Journey: It is – to the best of my knowledge. It is not come up in terms of a decision that the commission rendered. How this actually happens is when the auditors go in and check the books. They in effect kick out as a matter of course duplicate labor cost. You see the gas and the electric utility industry, the labor costs are all handled by in-place and functioning accounting requirements and it is broken down by the functions of production transmission, distribution in general. So that when the auditors go in and look at the books of the gas and the electric companies they kick out these duplicate costs. William J. Brennan, Jr.: (Inaudible)I take it then, the procedure that would be followed in connection with an EEOC back pay, (voice overlap). Drexel D. Journey: Same thing, and if there was a penalty question it would be kicked out under Account 426.3, if it was an unreasonable charge it would be kicked out under 426.5 -- William J. Brennan, Jr.: Some of these back pay awards handle a lot of money, a million more dollars, many millions, some of them, are they handled just administratively this way? Drexel D. Journey: They would be kicked out by the auditors, yes, in the accounts if they were duplicate costs or penalties. So they are not left without a remedy, they have one. Warren E. Burger: Mr. Glickstein. Howard A. Glickstein: Mr. Chief Justice, may it please the Court. The FPC’s position in this case appears to be that it has jurisdiction to do what is easy and lacks jurisdiction to undertake what is difficult. The FPC seems to have converted and alleged burden into a jurisdictional barrier. But the FPC appears to contend is that after employment discrimination has produced costly consequences after the costs of the employment discrimination have been assessed by some other agency, then and only then is it proper for the FPC to disallow such cost in a ratemaking proceeding. This is the limited extent to which the FPC recognizes any relationship between a duty to eliminate employment discrimination— Warren E. Burger: (Inaudible) in your view should prevail in the Federal Power Commission undertakes these evaluations and the EEOC and the complaining parties all disagree with it. In other words, suppose they had a rather fixed pattern of rejecting all such plans, have you exhausted your remedies when you have gone to the Federal Power Commission or do you get another bite at the apple over in the EEOC? Howard A. Glickstein: Well, Mr. Chief Justice, if the Federal Power Commission refused to disallow a specific cost and against the utility in a ratemaking proceeding for example— Warren E. Burger: Now what you want them pass on, namely to get in the substantive of aspect forbidden employment? Howard A. Glickstein: We concede Mr. Chief Justice that there are remedies before the equal employment commission. There are remedies under 1981. We do contend however that the costs of employment discrimination are a very relevant factor for the FPC to consider and not to consider it merely after the costs have been assessed by some other -- Warren E. Burger: Let me make my question clear, they do just what you ask them to do. They go into the subject of employment practices with respect to minorities. But you do not like their decision assuming that you were bringing such a case, do you think the Federal Power Commission has not followed EEOC guidelines and a number of other things. What do you do about that, just routinely take it as you would any other, federal power determination in the Court of Appeal. Howard A. Glickstein: If the Court were to hold that, the FPC had jurisdiction in this area and a particular rate was challenged as including cost that related to employment discrimination. If a particular license was challenged as being applied for by a company that had a record of employment discrimination. And the FPC refused to take that into account or discounted it then that would be an additional proceeding in which an appeal would be taken from the FPC’s conclusion on that score. Warren E. Burger: Just as you would in any other – in a rate case or any other issue, is that it? Howard A. Glickstein: That is right. William H. Rehnquist: But I do not think you have answered at least what I understood that Chief Justice question to be and that is, if the Federal Power Commission does what you asked it to investigate discrimination and employment on the practice of the utility and concludes there was no discriminatory practice here. May you then or may people who claim they were discriminated again to a parties to the FPC proceedings, go the EEOC and start all over again? Howard A. Glickstein: Yes, they may, they certainly may. I think it is clear from the decisions of this Court that there are multiple remedies available for victims of discrimination. Byron R. White: (Inaudible) that the FPC would have the power to enjoin certain employment practice or order reinstatement or back pay or things like that? Howard A. Glickstein: I think they would have the power to disallow cost related to the fact, -- in addition to that Mr. Justice White, it is not merely in the ratemaking proceeding where the Court of Appeals said that the Federal Power Commission has jurisdiction to consider this question. It is also in licensing and certificating proceedings. And there if a company is shown to be a known discriminator and that perhaps is a competing company for the license that is not, that is a factor we contend that Federal Power Commission could into account. Byron R. White: Well, you are not -- do you think that you are barred from raising those issues in licensing proceedings now? Howard A. Glickstein: Well, we are barred your Honor because the FPC has prohibited the raising of such an issue in the licensing proceeding. Yes, we cite the case on page 47, I believe of our brief. Byron R. White: (Inaudible) Howard A. Glickstein: In both the Federal Power Commission has barred the raising of such issues. Harry A. Blackmun: Would the same argument apply to the Nuclear Regulatory Commission, is it not? Howard A. Glickstein: Well, I think the factors that the Nuclear Regulatory Commission would be considering in granting a license for a nuclear regulatory plant would be somewhat different than the factors of the Federal Power Commission considers when it grants licenses of set rates, to the extent that the Nuclear Regulatory Commission has the authority to consider whether or not consumers are being exploited, whether or not unjust and unreasonable costs are being passed on then I suspect it would apply. Warren E. Burger: (Inaudible) or have you raised it with the ICC for example in the Certificates of Public Convenience and Necessity. Howard A. Glickstein: Mr. Chief Justice, the ICC has published a notice of rulemaking and we have the same problem. They have not done anything about this. Speaker: Do they have a rule? Howard A. Glickstein: No. They do not have a rule against us. Byron R. White: What about the FCC? Howard A. Glickstein: The FCC is the only one of the two Federal Regulatory Agencies that has issued a rule prohibiting employment discrimination by its regualitives. The FCC does have such a rule. The FCC, Federal Communications Commission. I think the Federal Home Loan Bank Board, I believe has issued a similar rule. William H. Rehnquist: How about the SEC? Howard A. Glickstein: No, the SEC has not issued such a rule. As the Solicitor General indicated in his amicus brief in this case, the number of the Federal Regulatory Agencies apparently are awaiting the outcome of this proceeding before they determine what they should do. William J. Brennan, Jr.: It has been in the records -- how would you determine the cost which were to be disallowed? Howard A. Glickstein: One cost Mr. Justice Brennan that I guess is readily assessable is of course the back pay award. And Mr. Journey told you that under the uniform systems of accounts, this would be treated as penalties. First of all I am somewhat puzzled by that because the uniform system of accounts is just that. It is a system of accounts that tells utilities how to keep their books. Byron R. White: You are talking about a back pay award but you would want the – I thought you are at – going to be asking the Commission to disallow certain costs that were invalid because of discrimination. That is what could be asked them to do. Howard A. Glickstein: And one such cost would be a back pay award. Byron R. White: Would it disallow? Warren E. Burger: After you have persuaded them to do it? Howard A. Glickstein: We would not – that we would not allow or we would urge to the FPC not to take the back pay award that the utility had to payout into account in setting its rate. John Paul Stevens: What interest do you have in whether – after the back pay award has been made, what difference does it make to your clients whether that is considered in the utilities rates or not? Howard A. Glickstein: Well, the interest that our clients have is in the overall question of the discrimination by— John Paul Stevens: (Inaudible) question I should think your position would be one that would aided by encouraging back pay awards rather than penalizing them. I am just wondering if you are representing the best interest of your client. Howard A. Glickstein: Mr. Justice Stevens, we have looked forward to the day when it is no longer necessary to award back pay under Title VII because the problem of that statute is directed to what is eliminated. And one of the purposes of our request in this case is that if the labor force is used more efficiently, if persons regardless of sex or race are permitted just to obtain employment it will not be necessary for that to be back pay awards. John Paul Stevens: The irony of this case as it strikes me is that so often in the employment discrimination field, it is the company that is defending on the ground that if we were to comply it would be very costly. And here we are suggesting that compliance, we are just suggesting just the opposite. Howard A. Glickstein: I certainly concede Mr. Justice Stevens that some companies make that contention. I believe that is a rather short-ranged point of view. I think that the testimony of economist is quite clear that in the long run the elimination of employment discrimination is economically efficient. For that very purpose that Congress passed Title VII. It concluded that employment discrimination raised a great cost and burden to the state commerce. Byron R. White: Now, with the FPC ever get at this in a case. You certainly do not suggest the FPC itself is going to award back pay, that is going to ensure you to do that. Howard A. Glickstein: Mr. Justice White, we are urging that the FPC and now the purpose of our rulemaking proceeding was to have the FPC to take preventive steps to issue a prophylactic rule to prevent these cost from arising. To prevent it being necessary to— Byron R. White: But you lost on that issue in the Court of Appeals. I take it in the sense that FPC was not ordered to adopt the rule. Howard A. Glickstein: It was not ordered to undertake a rulemaking proceeding but Judge McGowan (ph) indicated some aspects of the rule that we were proposing that it might be appropriate for the FPC to adopt. Speaker: It might be, they were not required. Howard A. Glickstein: They were not required to hold the rulemaking proceeding, correct. Byron R. White: Tell me again -- tell me a cost in a rulemaking proceeding, this is Justice Brennan’s question. Tell me a cost in a rulemaking. Proceeding that you would ask to be disallowed because of— Howard A. Glickstein: In addition to back pay. Byron R. White: In addition to back pay, I mean. Howard A. Glickstein: Well— Byron R. White: (Inaudible) make a guess as to how much this discriminatory conduct is costing the company in the long run and disallow that one. Howard A. Glickstein: There are litigation costs that would be disallowed. In addition to that there are as Judge McGowan (ph) indicated some unquantifiable costs. And it might well be that the FPC could conclude that a company that engages in employment discrimination is operating less efficiently than another company. And it might take that into account in setting the rate. We quote in our brief, a letter from the Administrator of the General Services Administration that deals with ratemaking – with the utilities that the Federal Government deals with. And he says it on page 27 of our brief was, since such practices most certainly effect the utilities overall deficiency the rate of return granted to the utility would be established at the lower end of the zone of reasonableness. So we do say if the Federal Power Commission were to find that a company was a repeated discriminator that it could take that— Byron R. White: (Inaudible) Howard A. Glickstein: Yes, sir. Speaker: Is that it? Howard A. Glickstein: Something of that sort, yes sir. Speaker: (Inaudible) Howard A. Glickstein: Well, would be a factor that taken to account in determining the rate of return that the— William H. Rehnquist: But if was taken by the rate base, you would simply lower the percentage of return or you would ask them to? Howard A. Glickstein: That would be one method of proceeding when there are unquantifiable costs. Warren E. Burger: But the suggested question, which may have an element of heresy in it, Mr. Glickstein suppose you have a utility down the southwestern part of the country, and EEOC makes some preliminary determination that they have none but they have no people employed in the company or practically none with Spanish surnames. And so as a result of the negotiation not litigation, negotiation with EEOC, the company agrees to appoint three out of every four employees thereafter with a Spanish surname. And then some years go by and some objection is made to the rates and the proof is in the hypothetical and you must accept this as being the proof that the cost of this affirmative action program has been enormous. That it is taking three Spanish speaking surnamed people, and do the work that two people did before, partly because their lack of command of English and perhaps their lack of education or whatnot. Any reason you want to ascribe but the conclusion is that it is a wasteful, expensive program. Now then, what about disallowing that cost? Howard A. Glickstein: Well, that -- Mr. Chief Justice, I think would be a cost that was incurred in furthering a very basic national policy. I think that would be very similar to a utility arguing that what it had to do to eliminate some environmental dangers was very costly and that expense was challenged. I think that -- Warren E. Burger: But my question is directed as to who decides this? You are going to say that the Federal Power Commission would have to respond to this kind of a challenge to wasteful expenditure. Because on my hypothesis, there is a determination that this affirmative action program is costly and will become more costly over a period of years. So you say the Federal Power Commission then must say well, it is true that this is wasteful and unnecessary in terms of operating the company. But because it furthers a desirable social policy, then the rate makers must – the rate payers must bear that burden. Howard A. Glickstein: Mr. Chief Justice, if I were writing the opinion for the Federal Power Commission, I would say that this cost is a necessary element in overcoming the effects of past discrimination, it is a short-range expenditure. Once the effects of past discrimination are overcome, this company will ultimately operate much more efficiently and whatever costs were incurred as a result of the affirmative action plan. Warren E. Burger: You did not have any evidentiary basis for that projection? Howard A. Glickstein: Well I— Warren E. Burger: So that should be your opinion. Howard A. Glickstein: I would not be speculating Mr. Chief Justice. Again, I think that the factors that go into the economics of discrimination have been studied and the counsel of economic advisers for example estimated some years ago that if employment discrimination were eliminated from our economy the gross national product would increase by $20 Billion. Discrimination is inefficient. It might cost something to eliminate it initially but in the long run, when it is eliminated, there will be benefits as a result of it. Warren E. Burger: But the question in this case is whether the Federal Power Commission now leaving these very pleasant figures about the gross national product or that the Federal Power Commission which has a very narrow limited mission, presumably, if we read the act is equipped to deal with these broad national highly desirable social objectives. That is really one of the underlying questions in this case, is it not, if not the underlying question? Howard A. Glickstein: And the Federal Power Commission has acted on jurisdictional grounds in rejecting that instead of holding some sort of proceeding and asking the question of what sort of costs are feasible t deal with and what sort of cost are not feasible to deal with. Perhaps there are some costs that are so difficult to quantify that they could not deal with. On the other hand there are not probably some costs that they can deal with. They have not considered that. They have not given us a reasoned response to why this is not the feasible function for the Federal Power Commission. William H. Rehnquist: Would you be satisfied with the reasoned response on an ad hoc case-by-case basis as the Court of Appeals intimated would be permissible or would you insist that it would be an actual rule making legislative type hearing. Howard A. Glickstein: Well, Mr. Justice Rehnquist, I would prefer a rulemaking proceeding and I think that would be in the best interest of the Federal Power Commission. One of the concerns, it has is that what we have proposed would present the great burden because they would have to consider these questions in a case-by-case basis. But they do not want to that, they have a rulemaking proceeding and state what their policy is. In addition, Mr. Journey today says that back pay awards are penalties. That is the first time I ever heard back pay award as defined as a penalty. Back pay awards are equitable remedies. So this Court is, they said they are and for the gas and electric utility industry to be suddenly told in a brief to the Supreme Court that in the future back pay awards are going to be treated as penalties is a rather unusual way to make new policy. Warren E. Burger: Have they not been -- back pay awards are sometime has been held to be penalty? Howard A. Glickstein: Mr. Chief Justice, in the Albemarle case, you refered to the back pay awards, equitable remedies. I am not familiar with any Federal Power Commission case where it held back pay awards would be a penalty. Potter Stewart: We were told that at least they are disallowed that double payments for the same employment were disallowed that one of the payments was disallowed, that sort of back pay would be, would it not? Howard A. Glickstein: Well, it is certainly not clear from their system of accounts Mr. Justice Stewart. Potter Stewart: (Inaudible) Howard A. Glickstein: Pardon me. Potter Stewart: We were told by that counsel as I understood him, that standard operating procedure for their accounts when they go into a utilities office. And you take issue over there? Howard A. Glickstein: Well, I do not know whether that has been the practice, whether I— Potter Stewart: Whatever you call them, penalties or whatever they are disallowed as the cost -- Howard A. Glickstein: Well, in the un-uniformed system of accounts it indicates that something that is listed as a penalty might be treated otherwise in a ratemaking proceeding. And I assume that a company would be able to argue that the reason that incurred this back pay award was because it was conducting itself in good faith in some particular situation and it should not be disallowed. I do not believe that under the uniformed system of accounts is that clear. The uniform system of account is analogous to your tax return where the Internal Revenue Service tells where to list something. And merely because you list something under contributions does not necessary mean that that is the way they are going to treat it when they review your return. William H. Rehnquist: Well, supposing that it were found in a back pay proceeding like the one that the Court -- this court said in the Albermarle, last year that the employer had been acting in good faith but that was not sufficient to award off a back pay award. Now, would you say that that kind of back pay award should be subtracted from the rate base? Howard A. Glickstein: Yes, I would. I would say that kind of back pay should be subtracted from the rate base. Lewis F. Powell, Jr.: I have a hypothetical, let us assume that a utility with a rate case pending before the commission was charged with having pursued a policy persistently say over 10 to 15 years, a discrimination in promotion, with all let us say 200 or 300 individuals. What sort of relief would you asked of the commission? Howard A. Glickstein: In that particular case, we would ask the commission to perhaps, condition the rate increase on the utility undertaking a program to eliminate the effects of discriminatory practices and its promotion procedures. Lewis F. Powell, Jr.: You have to litigate before the commission, first of all the issue of alleged discrimination in promotions. Would you take them out one by one, how else would you deal with them? Howard A. Glickstein: Well, I think that there is an instance where it would be desirable for the Power Commission to have some rules in advance. So they might indicate in the rules under what circumstances they will take allegations of discriminatory practices into account. For example, if the practice was raised for the first time in a proceeding before the Federal Power Commission, the Federal Power Commission might suggest that we would like to have the expertise of the Equal Employment Commission on this issue. The Federal Power Commission might decide that if reasonable cause findings have been made by the Equal Employment Commission in cases then it will consider charges of discrimination in proceedings before it. It might decide that if there has been a judicial finding in some instance then it will consider these issues when the proceeding is before it. Lewis F. Powell, Jr.: No authority to order directly any conduct on the part of the utility, would it? It could as you say perhaps say, we will grant you the requested rate increase provided you satisfy us within a specified period of time that these practices have been eliminated. Howard A. Glickstein: I think it could condition the rate increases and condition the granting of licenses and certificates on certain types of performance. I think that under circumstances the Federal Power Commission could order something directly. For example, if it desired that every regulatee submit periodic reports indicating what his employment practices were. It could order something like that directly. Lewis F. Powell, Jr.: Let us assume that the charge was that in the employment of people over a long period of time, discriminatory practices had been pursued and there were a substantial number of people who claimed that they were entitled to employment and to be put in to their rightful place in the union structure. What would you request the commission to do in that case? Howard A. Glickstein: I would say that the company that you are referring to was faced with the possibility of substantial cost as a result of putting people in their rightful place. And therefore the power commission should definitely condition the rate increase on the curing of that situation and not allow the cost that are incurred by making up for the effects of past discrimination to be taken into account in the rate. Lewis F. Powell, Jr.: If you were the counsel for the utility company, you would have to be told, you would want to be told which of the 150 people who said they have discriminated against would have to be employed, would you not? Howard A. Glickstein: Yes. And the FPC would do not that. Lewis F. Powell, Jr.: The FCF, who would do it? Howard A. Glickstein: The FPC would not have the power to order a particular employee to be promoted or reinstated. The Equal Employment Commission would or the Federal Court would or a State – the Human Rights Commission would— Lewis F. Powell, Jr.: If the FPC conditioned a rate increases on the utility doing this, would it not the commission have to identify that people who said they have been discriminated against so that the utility would know how to comply with that condition. Howard A. Glickstein: I think the Federal Power Commission could await the resolution of the problem you suggest by another agency if they were -- Lewis F. Powell, Jr.: It might take two years. Howard A. Glickstein: It might. And the— Lewis F. Powell, Jr.: Well, what did the utility do for a public financing -- Howard A. Glickstein: The rate increases, there is a lot to go into effect and the rate increase would be in effect subject to refund. And if it turned out that there were no cost to related to this so there would not be any refunds involved. If there were costs related to this, there would be some refunds. The FPC can only suspend a rate increase for five months and generally it does it for just a few days. And the cost – and the new rates are allowed to go into effect. So the utility would be able to get its increased rate. Lewis F. Powell, Jr.: I thought there were dual proceedings pending involving precisely the same charges before the EEOC and the Federal Power Commission, what would be the situation then? Howard A. Glickstein: Again, I think that because of the greater expertise of the Equal Employment Commission the Federal Power Commission might defer to their expertise and condition whatever a question was before it on the outcome of EEOC proceeding. If it were a licensing question they would grant the license on condition that whatever remedy is ordered by the EEOC be expeditiously complied with. William H. Rehnquist: Well then, what do you do by way of implementing that condition? You see you have a license to build a dam which you have applied for one now presumably, and you say when the EEOC provision, proceeding is terminated which I take it could be some months or years down the road. You then will have a conditional license to build the dam if you comply with the order of the EEOC. Now, that is a pretty tough road a whole for dam (ph) applicant, is it not? Howard A. Glickstein: Well, Mr. Justice Rehnquist, the FPC has suggested that a lot of these fears that it would have to cut off the licenses, the dams and shut off power plants and so forth. That is not the only remedy at their disposal. If appropriate rules are issued and a utility does not comply, they can seek Court relief. They do not have to take the license away from the hydroelectric plant if they fail to comply. There are other remedies under the Federal Power Act that would be available. William H. Rehnquist: But if the EEOC has ordered them to do something, the dam applicant to do something and he is not doing it, the EEOC can seek Court relief, you would not have the Federal Power Commission, would you? Howard A. Glickstein: The Federal Power Commission would perhaps be the ultimate weapon that the Federal Power Commission, if it conditioned the license of this hydroelectric dam on the accomplishment of whatever was ordered by the EEOC. I think that would impose on the hydroelectric dam, a sufficient degree of pressure that it would comply with the EEOC order. William H. Rehnquist: The ultimate remedy would be revoking a license perhaps after the dam had been built? Howard A. Glickstein: Well, I think the FPC could undertake a civil action and get an injunction requiring the company to comply and for example that we cite in our brief for some cases where utilities at a government contractors fail to comply with the Government Contract Provisions and the Federal Government is not going to terminate its contract with the utility, it needs a power. And it went to Court and sued to get the compliance with that provision. More is involved in this case than the FPC’s responsibility however to protect consumers and to ensure the health of the gas and electric utility industry. Ten years before this Court decided the Brown case and Steele v. Louisville & Nashville Railroad, the 1926 Railway Labor Act was interpreted to prohibit their railroad employees from being subjected to racial discrimination. Repeatedly, this Court has recognized the critical importance of employment and has endorsed the most effective remedies with dealing employment discrimination. We contend that in this case, that it is a highly consistent with the Federal Power Commission’s proper regulatory role that it too be required to take steps to deal with illegal employment discrimination. Thank you. Warren E. Burger: Mr. Journey, do you have anything further? You have about three minutes left. Drexel D. Journey: I would just say Mr. Chief Justice and members of the Court that the commissions’ briefs, I believe have covered the constitution points. I think they have covered the legislative history points. I think that they have covered the reference to the 1972 Equal Employment Laws and the fact that the procedure there for the EEOC seeking cease and desist orders in Court review were all setup and created in 1972 to correct what the EEOC said it needed enforcement authority to implement what you have said in the Johnson case is a comprehensive regulatory mechanism for dealing with the Equal Employment questions. We do not think there is anything in the power of the Gas Act that speaks to the question that Mr. Glickstein and NAACP want us to undertake. Byron R. White: I take it that Judge McGowan (ph) writing for the Court of Appeals indicated that your task and I am reading, in protecting the consumer against exploitation can be alternatively described as a task of saying that no necessary or illegitimate cost are passed along with the consumer, to the costumer, that is the way he described your job. Drexel D. Journey: Yes, sir. Byron R. White: And then he went and said without attempting the exhaustive enumeration we identified at least the following as indicative of those arguably within the commissions’ range of concern. Now I take it that some of these you already indicate that commission regularly considers at least in other kinds of cases. One, duplicative labor cost incurred in the form of back pay recoveries by employees, who have proven that they were discriminatorily denied employment or advancement. Drexel D. Journey: I spoke about that question earlier and said that for whatever reason if back pay and duplicate labor was involved the auditors would pick that up. Byron R. White: So this issue – this is just not an issue, do you not think—? Drexel D. Journey: Not for ratemaking purposes in terms of cost that is lost. Byron R. White: Even though it is back pay with respect to this – a discriminatory practice that has been adjudicated by somebody else. Drexel D. Journey: It has been resolved, just as Mr. Chief Justice said somebody’s relative on the payroll. Byron R. White: All right, how about the – three, the cost of legal proceedings in either of these two categories? Drexel D. Journey: The cost of legal proceedings has been the subject of litigation and the— Byron R. White: But you do not contend, you do not – you would not have jurisdiction or that you should not consider those. Drexel D. Journey: We do not for cost purposes, no. Byron R. White: It seems to me that several of these things he enlists, there is no real question about either your power or your order desirability of considering them. Drexel D. Journey: If you are looking at the rate regulatory process is the mechanism by which you adjust the economic relation between the producer of gas and energy and the consumer. We go through and on a cost to service prudent investment basis with a just and reasonable standard, we go ahead and disallow these things. We are not talking about that. I think the issue here, you are being asked to have the regulatory process as a concept be an alternate enforcement strategy for Equal Employment Laws. Byron R. White: But the Court of Appeals said that it was way beyond your power or authority to adjudicate individual instances of discrimination that is what the Court said. Drexel D. Journey: Yes, sir. Potter Stewart: But it has been suggested. It has been suggested here today, on oral argument for example that the Court of Appeals opinion means or can be read to mean that you not only can but should say to a utility, you cannot have any increase, rate increase at all, regardless of your legitimate increase in cost, you cannot have any rate increase at all until or unless you clean up your discriminatory employment practices. Drexel D. Journey: That is what I am— Potter Stewart: And that is what you object to. Drexel D. Journey: That is what I understood to be the argument. Thank you, sir. Warren E. Burger: Thank you gentlemen. The case is submitted.

Mr. Attorney General: (Inaudible) the case of North American Cold Storage Company. I'd like to point out to the Court that in that case, the ordinance involved specifically accepted private dwelling houses from the effect of the provisions of that ordinance pertaining to food, which was in -- an improper condition for human consumption. There was no effort there to reach the problem that we're dealing with here. On the issue of the -- the nature of the proceedings as being criminal, vel non, I'd like to make this remark. As pointed out by Judge Prettyman in the opinion in the middle case in the Circuit Court of Appeals, if this doctrine is the basis of a decision that the Fourth Amendment has no application and therefore, in this case that the Fourteenth has no application, one is faced with the anomalous situation that when government officials attempt to search or inspect the house of someone who is suspected of crime, they need a warrant. If they are searching for evidence of crime, it is said they must get a warrant.But if they are just searching or searching for something else other than evidence of crime, they need no warrant. And the -- the inescapable logic seems to be that a man who is suspected of crime therefore, has a greater right than a man who is not suspected of crime. And this defeats the argument, in my submission. Now, as to the point of the availability of search warrants for heath purposes in the City of Baltimore, it's pointed out in appellant's brief, and I like to call to the Court's attention here that under Section 208 of the very Baltimore City Health Code which is here, in issue, and it's at page 82 of the pamphlet, which is in the record, portfolio 132. "A provision is made as follows, whenever the Commissioner of Health may have just caused to suspect, it's a little stronger in the requirement of cause that any baggage, clothing, bedding or goods of any character found in the city are infected with any contagious or infectious diseases which may be dangerous to the public health, he shall proceed to the nearest magistrate and obtain a warrant and have said goods removed to such places as he may deem best." Here is clear basis. Here is clear authorization for warrants to be obtained in connection with proceedings under the Baltimore City Health Code. And I submit to Your Honors that the prevention of contagious diseases which are referred to in this Code, in a prior section, and which includes such onerous things as yellow fever and cholera, and typhoid, and typhus, and diseases of that nature is certainly as important as cleaning up rodents. And in that situation, the Commissioner of Health must obtain a warrant. Why should he not here be held to the same requirement? I submit to Your Honors that it has always been the -- the philosophy, the tradition, the spirit in this country that the State -- that the State exists for the individual, not the individual for the State. That the right of the individual is the paramount right. That we live under a rule of law and not under a rule of men. That houses are today, close together, is all the more reason why the essential right of privacy, the little bit that remains to a man of his privacy should be protected by this Court against any incursion. And I submit to Your Honors that this Court should not permit a situation to grow up where we are more clean or more healthy at the cause of being less free. Thank you.

William H. Rehnquist: We'll hear argument next in No. 88-1353, United States v. Rene Martin Verdugo-Orquidez. Mr. Robbins, you may proceed. Lawrence S. Robbins: Mr. Chief Justice, and may it please the Court: This case involves the overseas search of a foreign national's residence conducted by American agents with the full permission and participation-- William H. Rehnquist: Overseas is a little strong for Mexicali, isn't it? [Laughter] Lawrence S. Robbins: --Indeed it is. Antonin Scalia: --exaggerate in your first statement, your first sentence, for pete's sake. Lawrence S. Robbins: Well, it's extraterritorial. It's outside the United States and perhaps two or three other adjectives, and overseas is not probably one of them. In any event, the search was conducted, as I say, with the full permission and participation of the host country's officials. In its judgment below, the Court of Appeals for the Ninth Circuit imposed two sweeping constraints on such extraterritorial searches. First, the court held that respondent was entitled to invoke the protections of the Fourth Amendment to the United States Constitution. And, second, the court held that under that amendment the agents were required to secure a search warrant from an American court before they could conduct the search of respondent's premises. That broad, potentially far-reaching and in our view mistaken decision, arises from a not uncommon set of facts. On January 24th, federal marshals took respondent, a Mexican national, into custody in the United States believing that his two houses in Mexico would contain evidence of narcotics trafficking as well as his complicity in the assassination of a federal narcotics agent. DEA agents made arrangements to search his houses. After attempting first, without success, to reach the second Deputy Attorney General of the State of Mexico, the agents contacted the Director General of the Mexican Federal Judicial Police, thereafter spoke with more local police authorities, and from those persons secured permission to conduct the searches. Thereafter the agents, together with members of the Mexican police force, proceeded to respondent's Mexicali and San Felipe residences. Once there, the police and the agents conducted the searches. At the direction of the Mexican police commander who substantially dictated the scope, duration, and the actual operation of-- John Paul Stevens: Mr. Robbins, may I just ask this question? Did that Mexican official have the authority to authorize a search like this? Lawrence S. Robbins: --As far as we know, he did, Your Honor. The record reflects that before giving his final okay, and before the actual search took place, he conferred with what the record shows is in Mexico called a delegado, who is an attorney present at the local MFJP station house, and who represents the Attorney General of the Republic of Mexico and supervises that-- John Paul Stevens: In other words, in Mexico the executive branch of the government has full authority to conduct whatever searches it thinks necessary. It doesn't have to have any warrant or judicial participation in-- Lawrence S. Robbins: --Well-- John Paul Stevens: --Is that your submission? Lawrence S. Robbins: --No... well, our submission, Justice Stevens, of course,-- John Paul Stevens: Well, you said with the full authority of the Mexican official... I take it you're meaning it was clearly in compliance with Mexican law. Lawrence S. Robbins: --No, as-- John Paul Stevens: I mean, would it matter if they asked the corner policeman, do you mind if we go in and search this house? Or, would that do... be any different? Lawrence S. Robbins: --Well, I think it's possible that if the facts were very different from the ones we have here, it could be that asking someone who obviously has no authority or apparent authority would present a different case. This is not such a case. I can't-- John Paul Stevens: I mean, we don't know whether Mexican law requires anything like a warrant procedure or judicial participation-- Lawrence S. Robbins: --Well-- John Paul Stevens: --in the authority to conduct the search of a private home. Lawrence S. Robbins: --We do know that Article 16 of the Mexican constitution purports to require a warrant under certain circumstances. We've indicated in our reply brief in response to an argument made by respondents that it is not at all clear whether under these circumstances a warrant would, in fact, had been required if this were a search governed by Mexican constitutional law. We, of course... it's our submission that Mexican constitutional law does not control this case and, in any event, it's our view that for all appearances sake, the Mexican officials that authorized this search had every authority that they were conveying to the American agents who did conduct it. John Paul Stevens: What I'm really asking... you emphasized in your presentation that it was done with the permission of the Mexican authorities. Lawrence S. Robbins: Correct. John Paul Stevens: And I'm wondering if that is essential to your position. And, if so, do they have to be Mexican authorities who had the authority to grant the permission? That's-- Lawrence S. Robbins: I don't-- John Paul Stevens: --I just wonder how relevant it is to the analysis. Lawrence S. Robbins: --Well, I think that the fact that there was permission-- John Paul Stevens: By somebody. Lawrence S. Robbins: --Well, by someone who it was reasonable to suppose... reasonable to suppose... had the authority that they were conveying is relevant in our view to whether the search was reasonable, if you assume that the Fourth Amendment governs that search. Speaker: Right. Lawrence S. Robbins: We, of course, make no such assumption. I state that as a background fact because it bears on the second half of my argument, which will be addressed to the assumption arguendo that the Fourth Amendment does apply. Sandra Day O'Connor: Well, Mr. Robbins, I take it your fallback position is that it doesn't matter whether Mexican law was followed in making this search. And you also make the argument that it doesn't matter whether the United States constitutional... you say that the U.S. Constitution doesn't apply here... at least the Fourth Amendment doesn't. Lawrence S. Robbins: That's correct. Sandra Day O'Connor: Does anything at all limit searches by U.S. officials beyond our borders of people that we're going to then prosecute, and, if so, what? Lawrence S. Robbins: What limits our ability to exercise law enforcement jurisdiction overseas is in the typical case, our ability to secure the cooperation of the host country which is sovereign within its borders. Sandra Day O'Connor: Well, under your argument, I guess, if our officials could get away with it, they could just not ask anybody and break into the house in Mexicali and do what they wanted. Lawrence S. Robbins: Well, I think-- Sandra Day O'Connor: And your position, I take it, would be the same. That that evidence could be used? Lawrence S. Robbins: --Well, our position is that the Fourth Amendment doesn't control the analysis of that question. And Your Honor's question asks, of course, about a regime that's not presented in this case, in which we have no cooperation, in which in fact we are flouting the sovereign jurisdiction that we're entering and behaving, I gather, with a form of, sort of random violence. Antonin Scalia: But that's fair. That's on your own assumption. That is on your own assumption. That you didn't really need the permission of the Mexican authorities. I think your answer to Justice O'Connor's question has to be yes, that if these people are living in a regime that lets people break into their houses and do anything they want, we should benefit from that regime as well as anybody else. Isn't that your... isn't that essentially your position? Lawrence S. Robbins: Well, I think there comes a point... and we've indicated that there is, as it were, a safety net to this argument provided by the Due Process Clause which operates in a very different way from the Fourth Amendment. That is to say, in the hypothetical presented by Justice O'Connor's question, if the agents went in there and behaved in a fashion that just bespoke utterly no limitations at all as it were, to choose a-- Sandra Day O'Connor: Well, they just entered the house without any authority from anybody and took the evidence? Does that shock your conscience? Lawrence S. Robbins: --No, it doesn't. And I think-- Antonin Scalia: Why does the Due Process Clause apply abroad and not the Fourth Amendment? Lawrence S. Robbins: --Because it's not applying abroad, and that's one of the important differences. Antonin Scalia: It's not? Lawrence S. Robbins: No. It applies-- Antonin Scalia: What shocks the conscience unless it's the breaking into the house abroad? Lawrence S. Robbins: --I take it that the shock the conscience cases are talking about what shocks the conscience of courts that are asked to introduce evidence. And so that the Due Process Clause attaches to the introduction of evidence obtained in a way that a judge, a court, a reviewing court believes to shock the conscience. The Fourth Amendment doesn't operate that way. The admission of evidence in an American court is not a separate violation of the Fourth Amendment. The Fourth Amendment violation occurs, if it occurs at all, extraterritorially and the separate introduction of that evidence triggers no constitutional question at all. Antonin Scalia: So, as long as you had such a break-in for intelligence purposes only and never tried to prosecute the individual, then at least in that situation you could... you could do it with impunity? Lawrence S. Robbins: Well, impunity may make a greater claim that we wish to make here. The fact that the Fourth Amendment doesn't control that question doesn't mean, for example, that treaties that the United States and foreign countries have entered into has no bearing. It does not mean that statues passed by Congress such as 22 U.S.C. 2291(c) which imposes certain limited restrictions on law enforcement agents bears not at all. It simply means that the Fourth Amendment by it nature and in this context, does not supply the substantive restraints on that activity. And yet that is indeed our submission. Anthony M. Kennedy: Does the Constitution control what United States officials do when they're abroad generally? Or never? Or sometimes? Lawrence S. Robbins: Well, I think the answer is sometimes, and the answer is it depends. And, of course, it's the very fact that it depends-- Anthony M. Kennedy: When and what does it depend on? Lawrence S. Robbins: --Well, if I might, Justice Kennedy, I'd like to turn to that directly because the central failing, we believe, of the court of appeals, is that they thought it never depends. They thought that the Constitution, as it were, provides a sort of universal declaration of rights of man. It applies whenever, wherever and against whomever government authority acts. And we don't believe that. We believe, as Justice Harlan suggested in his separate opinion in Reid against Covert that questions of extraterritoriality are ones of judgment and not compulsion. And from this Court's cases, we isolate, Justice Kennedy, three factors on which the question of judgment ultimately turns. The first of these is, what is the nature of the right that's being applied? What is the nature of the constitutional claim that the person seeks the benefit of? And in this respect it's our view that some constitutional rights do not attach to all persons by their very nature and do not apply in all settings by their very nature. And I think the Fourth Amendment in some ways is a paradigm case of a constitutional provision that makes next to no sense in most overseas settings. Byron R. White: Well, you mean even if the house happens to be owned by a citizen of the United States? Lawrence S. Robbins: Justice White, we think that is a very different case and one-- Byron R. White: Well, the way you put it, it wouldn't be. Lawrence S. Robbins: --Well, no. I think... in any event, what I meant to say is that the Fourth Amendment presents, in our view, a constitutional provision whose overseas application ought to be by its very nature limited. And it may very well be, and we would not contest the point that it may be limited to citizens or persons with connections to the United States close to citizenship. And I base that on a couple of different features of the Fourth Amendment which give us the sense that it was not intended, as it were, to be a universal declaration of rights. We start with the text. The Fourth Amendment to the Constitution reserves its rights to a class of persons called "the people". We have tried to indicate in our brief a variety of reasons why we firmly believe this is not mere happenstance. It's not mere... it's not words that were chosen haphazardly. It was in fact... the language was in fact chosen precisely to confine the reach of the protections conferred. Like the preamble to the Constitution, it suggests a compact relationship between the claimants, the ones entitled to the benefits of that right, and-- John Paul Stevens: Yes, but, Mr. Robbins, there's a big difference between the preamble which says, "We, the people", and "the people" used in the Fourth Amendment which speaks in the third person, which may suggest that there third party beneficiaries to the compact that you described. Lawrence S. Robbins: --Well, I think, for that matter, Justice Stevens, there were... there were third party beneficiaries to the preamble as well. Persons who were not the ratifiers are clearly entitled to the benefits. But I think-- John Paul Stevens: And so how does the word people tell us who the third party beneficiaries are? Lawrence S. Robbins: --Well, the word... it's not just the word people, it's "the people". And I think this is not accidental. Let me suggest two reasons why I think so. First of all, if you go back and take a look at what the contemporary versions of the... that were available for the Fourth Amendment to choose from... for example, Your Honor's dissenting opinion in New York Telephone suggested that the Fourth Amendment derives... that the closest precursor was the Massachusetts Bill of Rights. Well, the Massachusetts Bill of Rights was phrased "every subject". When... when Richard Henry Lee, for example, tried to append a Bill of Rights to the Constitution before it was submitted to the ratifying conventions, he phrased it as "the citizens". When Patrick Henry, in the ratification convention in Virginia came up with a version of the Fourth Amendment, he limited it to "every freeman". So, there was a sense, I think, at the time of the framing of the Fourth Amendment, of confining the scope of its protections, a point I think-- John Paul Stevens: Except they rejected those drafts. Lawrence S. Robbins: --I'm sorry? John Paul Stevens: They rejected those drafts. Lawrence S. Robbins: Well, it's... it's... they didn't choose any of those. But nor did they choose the Fifth Amendment's "no person". Nor did they choose the Sixth Amendment's, the "right of the accused in all criminal cases. " And what's more-- Antonin Scalia: And they couldn't have used "every subject", or they wouldn't have been likely to use "every subject", would they? In fact, "the people" is probably the best equivalent in democratic terms of every subject. Lawrence S. Robbins: --Well, I think, at a minimum, it conveys the sense that the court of appeals, which viewed the Fourth Amendment as a universal declaration of rights, was considerably off base. The last point I want to make and then I'll move to the other two factors, Justice Kennedy, that I think inform the analysis is... it's worth comparing the other provisions in the Bill of Rights that also use the phrase "the people" because they cannot be understood unless you recognize that "the people" was a limiting concept. The other provisions that use that phrase are the Ninth and Tenth Amendments which make utterly no sense except in terms of this compact that I'm describing; the Second Amendment, which refers to the right to bear arms, which can't plausibly be assumed to be a right of persons overseas to have arms; and finally, a portion of the First Amendment which speaks of the right to peaceably assemble and petition the government. Again, the notion that one comes back to is the sense of a compact relationship with the government that receives some of the power but in which the people reserve the balance that is not extended. Anthony M. Kennedy: Well, of course, in order to make this complete, the Third Amendment says no soldier shall in time of peace be quartered in any house. And I assume that under your semantic analysis it does apply overseas. Lawrence S. Robbins: Well, I'm not... I'm not sure that it does. But, Justice Kennedy, let me hasten to add that I do not rely on... I don't know if I would call it semantics... but at least purely a textual argument because I believe that the purpose of the Fourth Amendment is one that makes it awfully difficult to suppose it was intended to provide rights in every quarter of the globe. After all, the Fourth Amendment, as this Court and every other court has said more than once, is designed to protect expectations of privacy. And that concept, I suggest, is unusually sensitive to local tradition and culture. It's difficult for courts to adjudicate. And what's more, it seems to us that adjudication of what is a reasonable expectation of privacy in an American court in a contested criminal litigation or any other kind is perhaps unseemly, perhaps even improper, raising, I suppose, even act of state doctrine questions. Now, that's just the first inquiry. What is the nature of the right? But from this Court's cases, we think that there are two other factors that again move us away from this universalist view taken by the court of appeals. The second is what is the relationship between the United States and the place in which the constitutional claim arises? The fact that the search or seizure takes place in a foreign country, in a separate sovereignty, makes the case, I think, for overseas application of a constitutional right a very difficult one to win on. And that's true for any number of reasons. The fact that this is a separate sovereignty, Mexico, indicates that it's their laws and not ours that ought to presumptively control disputes. Our Constitution, by its nature, does not seem designed to have widespread overseas application. The preamble which Justice Stevens adverted to before uses language that just doesn't sound like it was written for Mexico, France, The Netherlands, and the rest of the world. And finally,-- Antonin Scalia: Well, that's all true, but all it takes to accommodate that is to say that unreasonable... I mean, the only governing word it has is "unreasonable". Everything is okay if it's reasonable, right? And all you have to say is that it's not unreasonable if it complies with local law, wherever that is. Lawrence S. Robbins: --Well,-- Antonin Scalia: And that would mean everything would be just the way you would like it. Lawrence S. Robbins: --Well, I think if what Your Honor is saying is that we can build into the reasonableness investigation the context, the fact that this is an overseas search, I couldn't agree more. I think that's yet a separate and entirely independent fallacy of the court of appeals decision. Antonin Scalia: It also eliminates the argument you just made that if we acknowledge that the Fourth Amendment applies abroad, we're letting ourselves into a lot of silly results. That obviously you have to take foreign manners and customs into effect. I'm saying you can read the Fourth Amendment to apply abroad and still take them into effect. Lawrence S. Robbins: Well, I think you can. I guess our view is that that feature of the Fourth Amendment makes it seem inapplicable overseas. But we freely concede it also bears on how you would analyze it should you conclude that it does apply overseas. I mean, it seems to me these defects, the inapplicability and the inappropriateness of applying the doctrine, weigh in both at the threshold... does it apply +/? and at what Justice O'Connor referred to as our fallback position... how does it apply? Finally, the last factor that we think is relevant is what is the relationship of the claimant to the United States? This is a familiar inquiry, one raised in Johnson against Eisentrager, more recently in Landon against Plasencia and the basic notion is that, "aliens are accorded a generous and ascending scale of rights as he increases his identity with our society. " This is a point that comes up in a great many of the immigration cases. And the notion is, again, the closer the connection to the United States of citizenship or naturalization or permanent residence, the greater the claim for the protections of the social compact. Now, viewing these three factors as a whole in this case I suggest that the solution is not difficult to find because respondent is at the wrong end of each of the three spectrums that I've suggested. The Fourth Amendment, first of all, is, we think, peculiarly out of place in an overseas context and peculiarly unwarranted for overseas application. Second, this is a completely separate sovereignty. Mexico is independent of the United States. It's a wholly extraterritorial search unlike, say, searches on the high seas or in the Customs waters or in territories in which the United States exercises substantial sovereignty. And, finally, this is a claimant with little or no ongoing connection to the United States, little or no membership, if any, in the United States community. Those factors, we think, taken as a whole, confirm our view that the court of appeals' approach and its result in this case was wrong... that the Fourth Amendment simply doesn't apply. Now, let me hasten to add... I mentioned this... I adverted to it before, I believe, Justice Stevens, in answer to one of your questions. The fact that the Fourth Amendment doesn't provide the controlling restraints on conduct does not mean that all foreign nationals are out of luck when there is some kind of activity of American agents that is thought to be out of bounds. Congress has, and has in fact exercised the power to impose restraints on agents. I referred before to 22 U.S.C. 2291(c) which restricts law enforcement officers in U.S. persons abroad. As I said before, also there can be treaties that restrain the exercise of American power overseas and I suppose as a fallback position as well the Due Process Clause, which again regulates the admission of evidence internally... a domestic restraint... may also exercise a protection of last resort. But even if the Fourth Amendment generally applies, we believe that the court of appeals erred in-- John Paul Stevens: Mr. Robbins, may I just ask one other question? Isn't there also an intermediate position that even if it does not generally apply... you say this gentleman had no ongoign relationship with the United States, but if you're ultimately successful, he will have an ongoign relationship with the United States-- [Laughter] Lawrence S. Robbins: --Well-- John Paul Stevens: --and he certainly has some relationship and was physically present in the United States at the time of the search. Lawrence S. Robbins: --Well, for that matter, Justice Stevens, if the indictment is correct, he's also had... he's made periodic trips here for narcotics trafficking; he's sent shipments of marijuana to the United States. He may well, for all we know, have cash saved in bank accounts in the United States. John Paul Stevens: No, but the point I really am making is that your argument perhaps is less strong in a case in which the search took place after the owner of the premises was physically in custody and under indictment in the United States. Lawrence S. Robbins: It is undoubtedly the case that had he never been here our argument would be that much stronger. Speaker: Yeah. Lawrence S. Robbins: But his presence as an involuntary criminal defendant is not the kind of presence that Johnson against-- Speaker: No, but it's the kind of-- Lawrence S. Robbins: --It's not Johnson against Eisentrager presence. John Paul Stevens: --No, but it's the kind of presence that gives rise to certain constitutional rights, such as the right to counsel. Lawrence S. Robbins: No question about it. But those are domestic rights, rights that apply in the United States at trial or prior to trial. They are not restraints on the overseas application of American power. John Paul Stevens: Well, the right to object to the introduction of illegally-seized evidence is a trial right, I suppose. Lawrence S. Robbins: But it... but, again, the Fourth Amendment is not-- Speaker: I understand your point. Lawrence S. Robbins: --separately violated in the United States. It is, again, an extraterritorial application. Let me quickly address the Warrant Clause issue because it's our submission that even if the Fourth Amendment applies, surely the Warrant Clause does not. The court of appeals reasoned that to relieve the government of the warrant requirement... quote... would be to treat foreign searches differently from domestic searches just because they are foreign. But, of course, foreign searches are different, and that's just the point. They call for different treatment under the Fourth Amendment. There are in this setting special needs beyond the normal need for law enforcement, and a warrant requirement is therefore inappropriate, and I say that for two reasons. First, as this Court suggested in its Skinner decision, a warrant would do little to further the aims of the Warrant Clause. It would not empower the agents to go forward. It would give them no authority in Mexico, or, to use the court of appeals', I think, elegant characterization, it would be a dead letter in Mexico. It would not provide meaningful protection on the scope of the search. And this case indicates just why that's so. Because the actual operation is apt to be in the control of the host country's officials. And just as the Mexican commander ordered the agents to gather up the remaining documents and look at them later, so too can it not be expected that a warrant would have that confining force. Apart from the fact that a warrant could not fulfill its traditional missions, in this setting the burden of obtaining a warrant is likely to frustrate the governmental purpose behind this search. There is no U.S. magistrate who is authorized to issue one. We've still not been told by anybody who the agents were supposed to go to see in order to get this warrant that they were supposedly supposed to execute. A warrant would certainly interfere with their ability to do their job which requires them to obey the restrictions imposed by the host officials and not follow the competing agenda set by the United States magistrate. In this case we believe the proper approach is one of reasonableness, the basic requirement of the Fourth Amendment. And here the agents' behavior was evidently reasonable. They sought approval at the highest levels of the Mexican government available. They secured that approval. They participated with the Mexicans in the conduct of the search, and they obeyed the dictates imposed by the host during the search. We believe, in short, that questions of extraterritoriality are not on/off switches, as the court of appeals supposed. There is and must be considerable room for judgment. It this a territory in which constitutional protections makes sense? Is this claimant within the constitutional zone of interest? Do the rights asserted lend themselves to overseas application and even if a right applies, must it apply in exactly the same way as it does domestically? These are complicated questions to be sure, but the court of appeals never asked them. It believed, instead, that the Constitution applies everywhere, to everyone, regardless of circumstance. Had the court of appeals asked the right questions, it would not have suppressed the tally sheets in this case. This judgment should be reversed. If I may reserve the balance of my time. William H. Rehnquist: Very well, Mr. Robbins. Mr. Pancer, we'll hear now from you. Michael Pancer: Mr. Chief Justice, may it please the Court: The exact question presented to this Court is whether or not a person who is incarcerated in the United States, facing charges in the United States, has a Fourth Amendment interest in their residence outside the United States when a decision to search that residence is made by a United States agent in the United States and he is hunting for evidence to be used for the very charges that the person incarcerated is facing in the United States. That is the specific question and we are mindful of the rule of this Court enunciated by Justice Frankfurter in Reid versus Covert that says that this Court will not formulate a rule of constitutional law broader than required by the precise facts to which it is to be applied. William H. Rehnquist: Do you think the Ninth Circuit was mindful of that rule? Michael Pancer: I think that the precise rule that we could draw from the case... yes, my answer would be yes, that the precise rule we could draw from that case is that since, in this case, there was no exigency to prevent the officers from getting a warrant, they should have got a warrant. That's how I understand the rule. I don't understand it to be as broad as counsel for the government. Antonin Scalia: Who do you think they should have gotten that warrant from, in particular? Michael Pancer: I don't think-- Antonin Scalia: Puerto Rico? Michael Pancer: --I don't think it's a difficult question. The defendant, Mr. Verdugo, was in custody in the Southern District of California. The agent, when he made his decision to search, was present in the Southern District of California. There was a magistrate present. The Assistant United States Attorney assigned to prosecute Mr. Verdugo was also in the Southern District of California. I think-- William H. Rehnquist: It's the defendant's presence in the Southern District... you don't give notice to him of a motion to file a search warrant. Michael Pancer: --No, but if you want to go to a magistrate... and that's how I understood the question... what magistrate would you logically go to or which judge... I would think that since the agent, the defendant, and the prosecuting authority were all in the Southern District of California, it would certainly make sense to go there. Now, there could be-- Antonin Scalia: Well, it's as good as any. Michael Pancer: --Well, also, I think-- Antonin Scalia: You don't think the Mexican authorities would be a little bit annoyed with an American official issuing a document that authorizes an American law enforcement officer to search their territory? You don't think that Mexico might be annoyed at that? Michael Pancer: --I think they would be very annoyed if that document was presented to them by the agents as something that said this gives us the right vis-a-vis the Government of the Republic of Mexico to take action in Mexico. They'd have every right to be outraged. No. All we're saying that the warrant does is create a relationship between the evidence and the court in the United States. It can't authorize the agents to search if the Mexican authorities don't want them to or don't give them permission. But it can say that this search is legal according to the laws of the United States. And that's all we're saying that the warrant accomplishes. Clearly, it can't force the Mexicans to let the agents search. Antonin Scalia: Well, that's an unusual warrant then, isn't it? Because, I mean, a normal warrant is something that is presented to the person in control of the premises which shows the legal authority. And the person, if he resists the execution of that warrant, is subject to punishment. So you're talking about a very... I mean, you could call it a warrant if you like. But it's... it's a strange form of warrant, isn't it? Michael Pancer: In that sense it is different, but requiring a warrant fulfills the same purposes-- Antonin Scalia: No, it-- Michael Pancer: --as having a warrant in the United States. Clearly because-- Antonin Scalia: --It may be but it's not a warrant as we have generally known warrants, what you're talking about. Michael Pancer: --It certainly has the difference that the Justice has mentioned. Anthony M. Kennedy: In fact, Counsel, it would be rather odd, wouldn't it, for this Court to require the issuance of a warrant that's not permitted by the rules? Michael Pancer: No, I think it is permitted pursuant to Rule 41. Rule-- Anthony M. Kennedy: Is the... well let's look at that. Doesn't the property have to be located in the district where the magistrate or the state court sits? Michael Pancer: --That would be true if we just looked at Rule 41(a). But that rule... I think in the New York Telephone case... has been held to have a broader application and the court has been deemed to have inherent powers to issue orders that will accomplish a rational aim of the court. For example, there was no specific provision, as I understand the New York Telephone Company case, that permitted the court to issue a warrant for a pen register and to require the phone company to help out and lend equipment so that a pen register could be affixed to pay telephones. But, yet, Rule 41 was read not to limit what the courts may do but to spell out some of the kinds of warrants that a magistrate could issue or a district court could issue, but not to limit it, and that the court certainly would have inherent power to issue such an order. The same I think was true in the Torres case, which was cited by the district court in this case, in which the law enforcement wished to have an order for indoor surveillance and there was just no specific provision but it was held to be encompassed by Rule 41 and by the inherent power of the court to issue orders to accomplish irrational aims. Antonin Scalia: Do you have cases that say they have authority to issue it beyond their jurisdiction? That in that particular respect they can exceed what the rule says? Michael Pancer: There is no case that says that they can or cannot. But the reading of the language, I think, in the New York Telephone Company case and the reading of the language in Torres seems... they didn't seem to be concerned with a problem of territorial in this because it didn't come up in those instances. But the language of the case seems to say that it wouldn't matter that the territorial limitation mentioned in Rule 41(a) wouldn't prevent the court, due to its inherent power, to issue an order outside of the territory. Byron R. White: No, but, you know, if you want to... if you are trying a person in the Southern District of California and you want to search his house in Tucson, you don't get a warrant from... who do you get the warrant from? Michael Pancer: It would be the magistrate in Tucson or the court in Tucson? Byron R. White: Why? Michael Pancer: I think because Rule 41(a) talks about specifically-- Byron R. White: Well, it is territorial then, isn't it? Michael Pancer: --Pardon me? Byron R. White: It is territorial. Michael Pancer: Rule 41(a) is. I only mentioned the other case to say that I don't think it restricts the court... Rule 41(a) restricts the court in issuing orders or else-- Byron R. White: Well, it restricts it in the sense that a warrant issued in Southern California wouldn't authorize a search in Tucson. Michael Pancer: --That's correct, but I don't think it would restrict a court from issuing a warrant to search or a finding of probable cause to search a residence in Mexicali in Mexico. And there is nothing in the rule that says that it would, and I think the holding of New York Telephone indicates that the court would have that power. But I think I should hasten to add, if this Court finds that the warrant requirement applies, the fact that the United States Congress has not set up a system whereby a warrant could be obtained, is certainly not a defense for the government in obtaining a warrant. If a warrant is required, then the government must get a warrant or they must not search. I am suggesting there is a way they could have done that. Thurgood Marshall: Is a warrant in this record? Michael Pancer: There is no warrant. Thurgood Marshall: I mean, what... whatever papers that the United States officers used, are they... copies of them in this record? Michael Pancer: Justice Marshall, there were no papers. They used no papers. Agent Bowen, the agent who decided to search, sat in his office and said, I'm-- Thurgood Marshall: What are we talking about a warrant for? Michael Pancer: --Whether or not they should be required to get a warrant, and we're saying that they should have been required to obtain a warrant. But there was no warrant in this case. Thurgood Marshall: They should have been required to obtain a warrant? Michael Pancer: Yes. Thurgood Marshall: And what would the warrant say? Michael Pancer: That the... it would specifically identify the places to be searched, list specifically the items that could be seized, and specifically set-- Thurgood Marshall: Would that have any relation to the laws of Mexico? Michael Pancer: --Well, in fact it would, because the Article 16 of the Constitution of the Republic of Mexico is very similar to our own warrant requirement and specifically requires that a search warrant be obtained. I disagree with counsel when they say that this search was authorized in Mexico. It was not because no warrant was obtained, and we submitted an affidavit that is part of the record in this case-- Thurgood Marshall: Well, I thought he said that they checked with some assistant attorney general or somebody. Michael Pancer: --Well, they checked with another law enforcement official and they said we'd like to search and this fellow police officer said, sure, we'll help you out. That's basically what happened. But nobody told them that this was legal. It's just another police officer that says, sure, we'll help you out and we'll do the search. According to the Constitution of Mexico, the search was not legal and the agents were guilty of the crime of excess, according to the laws of Mexico. Thurgood Marshall: Then I assume the agents are guilty of violating your client's rights. Michael Pancer: That's correct. Thurgood Marshall: And subject-- --Did you ever seek-- --to suit. Did he ever bring any suit against them in Mexico? That was my question. Michael Pancer: No civil suit was ever filed in Mexico that I know about. Thurgood Marshall: Or any place? Michael Pancer: No... no... I know of no civil suit. William H. Rehnquist: So he did not seek to vindicate the rights you say were denied under Mexican law? Michael Pancer: He did not seek to sue U.S. agents. Of course, he was incar-- William H. Rehnquist: Did he seek to sue the Mexican agents whom you say violated his rights? Michael Pancer: --I don't believe that he did. He has an attorney in Mexico. But I don't believe that he did. Of course, he was here incarcerated in the United States well before the search. Sandra Day O'Connor: Suppose we think the warrant requirement does not extend to searches beyond our borders, would we then have to... if the Fourth Amendment applies... look to a reasonableness test? Michael Pancer: Well-- Sandra Day O'Connor: And how would you measure that? It wouldn't necessarily be measured by the law of a foreign country. Michael Pancer: --No. No, it... well, in the Peterson case that was... the Ninth Circuit case... that was one of the things looked at to determine whether or not the search complied with the Fourth Amendment. But if we're looking... and I'm clearly urging this Court to say that a warrant must be obtained when the sanctity of a home is being violated, that there has never been a broad rule from this Court saying that homes can be entered without a warrant. Sandra Day O'Connor: Well, we understand your argument. Now, how about getting to my question. Michael Pancer: Yes. Well, this search we are saying for many reasons was not a reasonable search if we are not going to apply the warrant requirement. It was not reasonable, we are saying, because of law enforcement official Agent Bowen made that decision on his own, without contacting anybody from the Department of Justice, without contacting the Assistant United States Attorney who was assigned to prosecute Mr. Verdugo in the Southern District. He even said that he didn't contact his own supervisor, but had he contacted his supervisor and his supervisor said no, he still might have conducted the search. He never contacted any-- Antonin Scalia: I don't understand that. There's a... do you have to consult with a certain number of people before the search can be reasonable? What difference does it make whether he contacted the supervisor or not? Michael Pancer: --Well, it was considered by the district court in that had he contacted some official, he might have realized, one, that there was a warrant requirement in Mexico that he could have complied with; he might have learned that as far as the Department of Justice is concerned maybe a warrant or an order of probable cause should be obtained here. And it doesn't seem that we just want a law enforcement official to be able on his own to put together a raiding party and go into Mexico, ask for help and search. But that-- William H. Rehnquist: The traditional rule... an objective test... you know, if you're right objectively, I thought it didn't make any difference how many people you consulted. And if you're wrong objectively, consulting a number of people beforehand shouldn't validate the thing. Michael Pancer: --Well, we are saying that he was wrong objectively in that he didn't comply at least with the warrant requirements-- William H. Rehnquist: But the failure to consult adds nothing to the objective. Michael Pancer: --We urge that had he consulted, he might have learned that there was a warrant requirement in Mexico. So in that sense we think it's on point. He never contacted-- Antonin Scalia: --to know if his supervisors were smarter than he was. Maybe, you know, he may have been smarter than his supervisors, in which case the consulting would be counterproductive. We just don't have any such rule. Michael Pancer: --Okay. He never contacted any judicial officer in the Republic of Mexico, only other law enforcement officials. These are all reasons why we think that the search was unreasonable. He enlisted the aid of a corrupt Mexican Federal Judicial Police officer to go on this raiding party that-- Speaker: How do you know that? Michael Pancer: --We presented evidence at the district court from two other agents who were also there that this agent was corrupt, this MFJP commandante. We attempted to present more evidence-- Byron R. White: Is that what the district court found? Michael Pancer: --No, it's what the agents testified to. The district court would not let us pursue that any further, saying that this went to an issue of good faith and good faith was not an issue in the case. On this raiding party that went to search in Mexico was a fugitive. Byron R. White: Why... what do you mean good faith isn't an issue in the case? Michael Pancer: I say the district court found that good faith was not an issue so we weren't-- Byron R. White: You mean there was good faith? Michael Pancer: --No. The court found that, one, there was not good faith, but that good faith was not relevant because we don't have the situation as we do in Leon where the agents were relying on a neutral and detached magistrate. We have a far different situation. So the court found, one, that good faith was not relevant but if it were-- Byron R. White: Do you think Leon is limited to those situations where you have a warrant that was issued by a magistrate? Michael Pancer: --No. Clearly it is not, but the court found that the reasoning in Leon would not apply when the officers, as they were in this case, relied on the word of this Mexican commandante. He felt that they did not have a good faith... the court found-- Byron R. White: You mean they found that... they thought that... the court thought that the agents knew this man was corrupt? Michael Pancer: --Two of the agents testified that they knew that he was corrupt. We were getting into when they learned of his corruption when the court cut off that inquiry because the government objected to it. Byron R. White: Did they know he didn't have any authority to do what he was doing? Michael Pancer: No, just that he was corrupt. William H. Rehnquist: What does the term corrupt mean when you use it? Michael Pancer: A person who was willing to take, in this context, bribes to do illegal activities is the way it was presented. William H. Rehnquist: Well, supposing a policeman serves a warrant... can the defendant defend against the search and claim it's illegal on the grounds that the policeman had taken a bribe in an unrelated situation? Michael Pancer: No, no, this... no, we are only... this was only discussed in the district court in the context of a good faith argument by the agent. William H. Rehnquist: Well, was it suggested that the American agents who participated in this particular search in Mexico had themselves tried to bribe this agent? Michael Pancer: It was suggested that prior to the search that U.S. law enforcement officials who were involved in this search were involved with getting police officers in Mexico to engage in the illegal action of kidnapping Mr. Verdugo and sending him back to the United States from which-- William H. Rehnquist: Well, that's a lot different than being very directly tied into this particular search. Michael Pancer: --It relates to the kinds of activities in which the U.S. law enforcement agents were engaged and when did those activities in connection with the search, i.e., the apprehension of Mr. Verdugo, was to get the law enforcement there to commit an act illegal in Mexico for which charges were issued in Mexico. Those officials then came to the United States... those Mexican police officials, where they're being protected. That's part of the record of the district court. Speaker: What does it prove? Michael Pancer: It proves that it is one thing to say that officers could rely in good faith on a neutral and detached magistrate, but it is far another thing to say that they have some good faith reliance on a person they know to be corrupt. In addition, as I say, on this raiding party that went to search was a fugitive from justice in the United States. And he was a fugitive from a companion case to the case in which the defendant in this case was charged. Byron R. White: Of course, that wasn't the basis for the Ninth Circuit's holding. Michael Pancer: No. I am trying to list all of the things that came out that we think made this search unreasonable, responding to Justice O'Connor's question. One of the houses searched in Mexico was the wrong house. It wasn't the home of Mr. Verdugo. Our agents went inside the residence of a family named Tofoya. In that home, Mrs. Tofoya was intimidated by Mexican officials when she first said she did not know who Mr. Verdugo was and that he didn't live here. And after a search of that residence, which was the wrong residence, and some intimidation, they found... Mr. Tofoya was able to lead the agents to where Mr. Verdugo's residence in San Felipe was. The-- Byron R. White: Do you think your rule would apply to an arrest or a detention in Mexico of an alien by United States police which would be illegal in the United States... would they have to have probable cause in United States terms to detain him? Michael Pancer: --We would have no remedy if that were to happen. Byron R. White: Well-- Michael Pancer: I think that's clear. Byron R. White: --let's assume they detain him, not only detain him but they bring him to the United States. In the meanwhile, they get some admissions from him. Michael Pancer: Well, I think we'd have some remedy as to the admissions. As to him being in the United States-- Byron R. White: As to the admissions obtained from him in Mexico? Michael Pancer: --Yes, I think that there... and I don't have the case before me, but there are cases that say the Fifth Amendment would apply to the questioning of a person, whether it took place in this country or not. But there would be no remedy as to his being here in the United States. William H. Rehnquist: Do you think the Fourth Amendment applied to American forces in Mexico during the Mexican War? Michael Pancer: I think that there have been cases that distinguished times of war enemy alienage from a situation in which we-- William H. Rehnquist: To say that the Fourth Amendment didn't apply in those situations? Michael Pancer: --I would not-- William H. Rehnquist: Well, but I thought you were talking about cases? Michael Pancer: --No, I'm sorry... I would not say that. But I believe that the Johnson case, which was cited by counsel, turns on the issue of enemy alienage. And that we're not disputing that... those cases. William H. Rehnquist: So you don't agree with the Ninth Circuit that the Constitution or the Bill of Rights applies equally everywhere in the world that the United States is acting? Michael Pancer: Well, I... as a general proposition, I would agree with that... however, I will recognize there are cases that are to the contrary and I'm thankful that we need a much more limited rule to prevail in this case. Antonin Scalia: Well, but when you say it's a Fourth Amendment it doesn't... you know, it can no longer be controlled by Congress. It's an absolute. Suppose the drug problem is so severe that with the full authorization of Congress the executive sends a battalion of troops to a foreign country that has been absolutely uncooperative in our efforts to prevent the exportation of drugs to this country? It's not a war. Just sends a battalion and the object is to search and destroy any heroin production facilities. And they have authority to go and search and destroy. Michael Pancer: Well, to the extent they would try to come back with evidence from that raid and use it in the United States, I think Reid versus Covert in addition-- Antonin Scalia: Oh, no, but wait. They shouldn't be doing it at all. I mean, I'm advising the President... I'm counsel to the President. He says, you know, Congress has passed this statute, I think we should do it. But if you tell me it's a violation of the Fourth Amendment, I don't care whether I'm introducing evidence or not. I certainly shouldn't do it if it violates the Fourth Amendment. Michael Pancer: --Well, I think it does violate the Fourth Amendment. Antonin Scalia: Right. So it can't be done then? Michael Pancer: I would say it certainly viola-- Antonin Scalia: Absolutely. There's no way, right? Michael Pancer: --I would agree. Byron R. White: But with a treaty... they make a treaty with Mexico and they agree that searches can be made of properties in Mexico pursuant to procedures that wouldn't even come close to complying with the Fourth Amendment. Do you think that treaty is valid? Michael Pancer: No, I don't think the treaty would be valid if it contradicts the Fourth Amendment. But, again, I don't need to go that far to prevail here. There is... there is no such treaty. In fact, there is the Mexican Constitution, which is akin to our own in terms of what it requires from searching officers. This... for the first time during-- Anthony M. Kennedy: I take it that if foreign police officials ask American DEA agents to cooperate with them in a search, under your view the American agent has to get a warrant before he does that? Michael Pancer: --A search in this country? Anthony M. Kennedy: No. A search in a foreign country. Michael Pancer: If he intends to use the evidence in the United States... we're talking about a situation-- Anthony M. Kennedy: Well, suppose they don't know. Again, would you advise that officer that he's acting illegally if he cooperated with foreign police in search of a foreign residence without... and he has no warrant? Michael Pancer: --Not necessarily because I think the Fourth Amendment, by case law, and by its terms applies when officers... most specifically when officers are seeking to get evidence to introduce in the United States against a defendant in the United States. Many cases have mentioned that that is the specific protection that-- Anthony M. Kennedy: So the violation is the introduction of the evidence? Michael Pancer: --No, the violation... well, the remedy for the violation is to prevent-- Anthony M. Kennedy: I'm asking whether there is a violation. If you are a law enforcement official who is conscientious about his constitutional obligations, you would not assist foreign police unless you had a warrant from a United States court? Michael Pancer: --Or unless I did not intend to obtain evidence to bring back to the United States, I think that I would have to say-- Anthony M. Kennedy: So, in your view, the Fourth Amendment is limited to those instances where there is a search and the evidence is brought to a United States court... there is no violation? Michael Pancer: --In a foreign-- Anthony M. Kennedy: There is-- --Well, what if a plaintiff-- Michael Pancer: --In a foreign country-- William H. Rehnquist: --What if a plaintiff brings a suit under 1983... the same hypothesis as Justice Kennedy's. No evidence was introduced to him but he's been the victim of a seizure of property that he says violates the Fourth Amendment because, as you say, the Fourth Amendment applies in that situation. How does the court rule? Michael Pancer: --I would think that if there has been a violation of the defendant's rights, then he would have the right to sue. I hope I have properly answered Justice Kennedy's question. I think that the joint venture doctrine determines when there is sufficient involvement of U.S. officials to call the Fourth Amendment into play. And if it is a joint venture which is ordinarily the situation when U.S. agents are seeking evidence to bring back to the United States, then there is a violation if the search is unreasonable or if no warrant is obtained. Byron R. White: Well, of course, you don't need to be seizing evidence to violate the Fourth Amendment by entering a house. Michael Pancer: No. Byron R. White: You enter a house illegally and you're there wrongfully and you tip over a television and break it and you get sued. Michael Pancer: If I said to the contrary, then I misspoke myself. Clearly, there is a violation when the illegal search takes place or when the joint venture takes place without a warrant or without probable cause. Anthony M. Kennedy: So the way we have the case now is that there can be no cooperation with foreign police officials by American police officials unless they have a warrant. That's your position? Michael Pancer: No joint venture. That would be correct. Absent exigency. Now, if our agents are up in the mountains of Columbia and there's no telephone handy and they have to make a decision to search very quickly, then clearly it would be reasonable for them not to get a warrant. And that may be true in many situations. Antonin Scalia: What court do they seek a warrant from? Michael Pancer: I think that they could call-- Antonin Scalia: Having no prisoner back in any particular jurisdiction, who should they call? Michael Pancer: --Well, as I say, in that situation if they could call, then I would think that they would call a magistrate in the jurisdiction in which they intend to bring the evidence, the reason for the joint venture, or in Washington, D.C. or contact some judge. I don't think it's key where. If they're required to get a warrant, they can get the... they must-- Antonin Scalia: It's called Warrant Central. [Laughter] Michael Pancer: --I think that the government would concede that Mr. Verdugo, here in the United States at the time this search took place, had the benefit of every other one of the Bill of Rights. He had the First Amendment protection, he had the Fifth Amendment protection, the Sixth Amendment. But, Mr. Verdugo, they would say to him, you don't have the benefit of the Fourth Amendment. And yet, though the burden is on them to justify warrantless searches, they have presented no reason, no exigency to this Court as to why they should be permitted to go into a residence without a warrant. Sandra Day O'Connor: Mr. Pancer, in your brief there is some argument to the effect that this evidence was taken after the respondent was in the United States and it was taken from a briefcase, something to that effect. Were those arguments raised below? Michael Pancer: No, they were not. Speaker: Okay. Michael Pancer: And we would submit those arguments. When counsel argued previously, for the first time we were able to determine that the government held that if this were a U.S. citizen in custody, then the Fourth Amendment would apply and possibly the government would have to get a warrant. But many cases have held that this kind of discrimination between aliens and U.S. citizens is inherently suspect and clearly in this case there would be no reason under the government's reasoning for a different rule as to aliens versus U.S. citizens whose property is being searched outside of the country. In addition, there is no rational reason why the Fifth Amendment or the Due Process Clause would apply as opposed to the Fourth Amendment in these situations, and the government has presented no theory. Mr. Verdugo's connection to this country was that he was forced to be here. He was arrested and forced to be in this country. He has been tried and convicted in another case and is serving 240 years. He will be here for a long time. He has as strong a connection to this country and did at the time of the search as any United States citizen had, and we think that given no offer by the government as to why the warrant requirement shouldn't apply, where is the exigency that allows agents to just go into a person's home, that this Court should find a warrant was required. If there are no further questions, thank you. William H. Rehnquist: Thank you, Mr. Pancer. Mr. Robbins, do you have rebuttal? You have three minutes remaining. Lawrence S. Robbins: Very briefly. Thank you, Mr. Chief Justice. On the assumption for now that the Fourth Amendment does apply, let me just say a couple of words about reasonableness. The first thing I want to say about that is that it does not turn on whether the agents have complied with Article 16 of the Mexican Constitution. I have tried myself to read Article 16 of the Mexican Constitution several times. I've quoted it at pages 11 and 12 of our Reply Brief in footnote 10 and our office has not been able to get a definitive sense of whether it applies here. It is very different from the Warrant Clause of the United States Constitution. It does not, for example, require probable cause. It has, for example, an exception for searches for sanitary... to enforce the sanitary and police regulations, which under Mexican law, as we understand it, includes the narcotics laws. The fact is, it's a different constitutional provision and what that really tells you is not so much does it apply or doesn't it apply. But it's simply not plausible to suppose that agents executing law enforcement activities overseas should be conversant with the niceties of constitutional law of 150 different countries. What counts is whether their activities, as the Chief Justice suggested in one of his questions, are objectively reasonable. And under any test, the activities of these agents was. They sought out approval at the highest levels of the government. They secured approval. Let me just quickly say that these allegations of corruption are based on, for the most part, questions that didn't elicit the answers that counsel... defense counsel had hoped at the suppression hearing, and in any event are not the subject of any finding in the lower courts. They secured the authorization. They secured the cooperation and the participation, and they followed the dictates that were imposed. John Paul Stevens: And didn't one of the officers secure an automobile? Lawrence S. Robbins: I'm sorry? John Paul Stevens: And didn't one of the officers secure an automobile? Lawrence S. Robbins: Well, not one of the American officers. John Paul Stevens: I mean one of the Mexican officers. Lawrence S. Robbins: Well, but what that points out, among other things, is the... I think the zaniness of seeking a search warrant. I mean, the purpose of the search warrant is supposed to confine the scope of the search. You cannot in the host country tell the host country's officials how to behave. You're there at their sufferance. And it's precisely that kind of example that tells you how far off base the court of appeals was. William H. Rehnquist: Thank you, Mr. Robbins. The case is submitted.

Warren E. Burger: Mr. Rosenwein. Sam Rosenwein: Mr. Chief Justice and may it please the Court. The issue that I'm devoting myself to is the issue of scienter, a question of guilty knowledge. And what is the mental element requisite for the constitutionally permissible prosecution. Now, the record is brought down below something like this -- and on a motion for bill of particulars with respect to the indictment would charge that the petition is knowingly mailed and used the mails to mail this obscene brochure. On that, in an answer to our motion for bill of particulars, the Government stated it was not claiming that these defendants knew in fact that the material was obscene. All it was claiming was that they knew the contents of the brochure and that that was sufficient to satisfy scienter requirement. Warren E. Burger: Would you suggest, Mr. Rosenwein, that in order to make our case, the -- the handler of the material must take knowledge that it's obscene before he exposes it or distributes it? Sam Rosenwein: My -- my contention is simply this. That one has to prove beyond a reasonable doubt that he knew the contents, and that he knew the obscene nature in character of the contents, and with that knowledge, intentionally disseminated the material with a specific intent to appeal to a prurient interest. That, I think, is a burden that is upon the prosecution in an obscenity prosecution. And we asked the court below, that to instruct generally along those lines. In answer to that, the Court constructed a jury and said to us that it would say no more that -- that the knowledge of contents of the envelope which the brochure was contained was all that was required in this case. He would charge, said the Trial Court, that the defendants are required that you should -- that the Government has to prove -- it has to be shown that the defendants knew the nature in character of material. The trial counsel said to the Trial Court, “What do you mean by nature and character of the material? Will you tell us, does that mean dealing with sex or sexually oriented or does it mean obscene nature in character?” The Trial Court said, “I'm going to instruct the nature and character and it means what it says.” And that's all he ever instructed the jury. So what this jury found was that the petition as in this case, knew the contents or the nature in character of the contents in the sense that, and one can only suppose, since obscenity was ruled out of the instructions. The -- the knowledge of obscenity of the material, or the non-obscenity of the material, was told to the jury as being irrelevant. It followed, therefore, that the jury found as -- that they knew that the contents of this brochure dealt with sex. And that was enough to establish the guilty knowledge that resulted in the imposition of these sentences. Now, what we have contended simply is this. The indictment charged us with knowingly mailing an obscene brochure. What is an obscene brochure? What are the qualities that go into a brochure that makes it obscene? At the time, when we were tried, there were three elements. One, that it exceeded contemporary community standards. It appealed to a prurient interest. It was utterly without social value. Those were the qualities that made it obscene. Obviously, if those are the elements of the offense, and this is true in any criminal case, it must be shown that the particular accused, knew those elements, knew those facts and knew the quality of that material exceeded in contemporary standards appealed to prurient interest, which was without value. But we have never contended that the Government is required to show that the accused knew what the law was. We have never contended it was required to show they knew what the standard were that were enunciated by this Court. We have not contended that there's any necessity for direct proof of the awareness. It can be by circumstantial evidence, but whatever the proof is that is necessary, we have contended that it must be shown by direct or circumstantial evidence that the accused was in some way aware that this material went beyond contemporary standards, appealed to a prurient interest and had no value. And it was up to the jury to decide without improvised presumptions, without judicial notice. It was for them to decide, whether or not, under those circumstances, the accused knew. We contend that is illogical. It -- it offends empirical evidence that one could point to, to say that today, one can look at some material dealing with sex and simply say, from knowing that these contents deal with sex or it's sexually oriented, that he knows that that material is obscene. That he knows that the material necessarily goes beyond standards that appeals to a prurient interest and has no value. Time after time, juries, judges have said “Why this is hardcore pornography, this is dirt for dirt's sake”, only to find the Appellate Courts, the Upper Courts, and this Court itself upheld “No, this material is not obscene. It's constitutionally protected.” Now, the lawyers who are asked for advice today, whether it's films or -- or motion pictures or books, or magazines may have difficulty in saying to a client that this matter dealing with sex is necessarily is or isn't obscene. Or offend some jury in opening Georgia. Prosecutors and judges and -- and juries have difficulty in determining this. A whole period has passed since the 1896 decision in Rosen, in which the -- a -- a virtual sexual revolution has occurred. And for anyone to say today, logically, or any other way that one looks at a book or a magazine or a film and by looking at its contents is saying, “Well this deals with sex.” I know one can tell just from that that he knows it's obscene would seem to us to be irrational and illogical. And so we have contended that under the circumstances, the standard for judging scienter. And I think one has to keep in mind that this is a federal offense. It is a statute that punishes with five years, $10,000 fine or $5,000 fine. Second offense is 10 years $10,000. Anyone who's convicted, Your Honors know, is immediately dubbed with the stigma of smut lover. Now, that's a serious thing both from a criminal charge and from the viewpoint of reputation. Therefore, the need before you put somebody in jail of proving the guilty mind is important. It's essential, and it seems to us not too much of a burden. We have not placed too much of a burden on the prosecutor to prove a case if by direct or circumstantial evidence, he merely establishes that the accused knew the obscene nature in character of the contents before he's found guilty. Now, the next point that I want to direct myself to is the Government has consistently argued that knowledge of contents is sufficient. We contend that the proof in the record here is absolutely barren of any proof that these petitioners knew the contents of this particular brochure. We have analyzed it and record I can't -- within the time limit, go too far but enough to say this. That if you take petitioner right, you will find that she is absolutely described even by the Government as the evidence against her is very attenuated, admittedly. All it -- an office manager and so forth. The material here, the brochure here, was mailed from 250 miles away from Los Angeles in North Hollywood. It was put in the mail that was inserted that the brochures were inserted envelopes by two people who knew nothing about these petitioners and never heard from them. They received the -- the brochures from someone called Regent House who are named as unindicted conspirators, never called by the Government as witnesses. They -- the -- the brochure was printed in North Hollywood, named by -- and the printer was named as unindicted -- be called conspirator, never called by the Government. As a result, there is nothing in this record to show that these petitioners Kemp, or Wright, or Thomas, or Hamling had anything to do with the preparation or mailing of this particular brochure. And that was the only charge that was made against these petitioners. They were not charged with being, as described the Government, pivotal characters flocked together. The Government talks about conspiracy here and what is the conspiracy? Well, they all were in business together. They were concerted. Well, if a conspiracy is made out by simply people working together in a publishing house, then all motion picture studios, all corporate bodies are in danger. A newspaper establishment is in danger, if some president signs a check in payment for a bill and the Government says “You can't hide behind this thing. There is nothing in the record to show any hiding behind anything. The fact of the matter is that this case was tried under the theory and with the purpose of doing away with scienter all together. That's the point of this case. The Government does not want to prove any guilty knowledge. It wants to try it like a traffic offense. All you have to do is put in the publication, give it to the jury and let them return a verdict. And that, with respect to a criminal trial in a Federal Court, the administration of criminal justice is, we submit essentially unfair. I think I -- thank you. Warren E. Burger: Very well. Mr. Tuttle. Speaker: Mr. Chief Justice and may it please the Court. Petitioners have raised a number of issues in their petition and here in oral argument. We believe the central issue in this case is the impact of this Court's this decision in Miller versus California and companion cases, decided last term, upon federal obscenity convictions which occurred before Miller was decided. In assessing this impact, I invite the Court to consider the material which is here for review. In the first place, it is not the book, not the illustrated version of the president's -- report of the president's commission on obscenity and pornography which the jury found obscene. The jury didn't return a verdict on that issue. What the petitioners were convicted of was mailing out an obscene advertisement. Now, the evidence shows that some 55,000 of these brochures were mailed indiscriminately around the country to various unsuspecting recipients. Many of them found the brochure to be quite offensive. The brochure consists of a single page. On one side, is a photograph of the cover of the illustrated report, together with the coupon indicating where copies can be obtained. The other side consists entirely of a collage of photographs showing a variety of sexual scenes, including group sex scenes, heterosexual and homosexual intercourse, sodomy, bestiality and masturbation. This is hardcore pornography by any definition and judged by the standards of any community. The petitioners nonetheless say that their conviction should be reversed. That they argue that Miller teaches us, that the federal obscenity statutes were unconstitutionally vague, at least until Miller was decided and those statutes were authoritatively construed and narrowed by 12 200-ft. Reels of Film. Now, we find no such implication in the Miller decision or in the companion cases. Miller reshaped the standards for judging obscenity in a number of ways, some of which arguably broadened the class of punishable pornography and some of which arguably narrowed that class. For example, when the Court substituted the requirement of lack of serious literary, artistic, political, or scientific, or artistic purpose for the Roth definition of obscenity as utterly lacking in social value. It's arguable that the Court expanded the class of punishable obscenity, because it's at least conceivable that something could be not utterly without redeeming social value and still lack a serious artistic or literary purpose. Now, at the time these brochures were mailed, Roth-Memoirs was the prevailing definition of obscenity. And the petitioners were tried and convicted and their convictions were affirmed under the Roth-Memoirs' definition. It's our feeling that to the extent, if at all, which Miller expanded the class of punishable pornography, it might be unfair to review their convictions under that expanded definition. And it's therefore our suggestion and our belief that these convictions should be reviewed under the stricter definition of obscenity contained in Roth versus United States and Memoirs versus Massachusetts. Of course, as I have indicated, they were convicted under those standards and their convictions were reviewed under those standards and their convictions were affirmed under those standards. We are only suggesting that this Court should do the same. Now, on the other hand, there are aspects -- Potter Stewart: I don't -- I want to be sure I understand that in the last June's decision in this Court. As I understood them, it was how that that the Roth standards were constitutionally deficient isn't that incorrect? Speaker: That's not my understanding of the Miller decision. As I read Miller, the Court found that the Roth definition or some aspects of the Roth definition. For instance, the utterly without redeeming social value test was a constitutionally unnecessary and difficult to prove, if not impossible to prove, burden on the Government. And the Court formulated a different formulation. But I don't take it -- I don't take the Court to be saying when it decided that Miller would be the standards for judging obscenity in the future, that all the prior convictions using the -- using the Roth's definition were unconstitutional or unconstitutionally obtained, or that the formulation under which they were obtained made the convictions void. Now, there are other aspects -- Potter Stewart: In the -- and those cases went on to say that in order to be -- in order not to be deficient constitutionally, statutes had to be very specific, don't you think? Speaker: Yes. Mr. Justice, I was going to say that on -- on the other hand, there is an aspect of Miller which arguably enhances the First Amendment protections available for defendants in obscenity cases, and that is precisely, as you mentioned, Mr. Justice. The requirement in Miller that the obscenity statutes be limited to depictions of sexual conduct, specifically described inapplicable state law. Now, it's our position that to the extent that Miller created new First Amendment protections for defendants in obscenity cases that this should be made available to petitioners or to any defendants whose conviction are non-final. In 12 200-ft Reels of Film, the federal obscenity statutes were given delimiting construction, which was required in Miller. And it was said that those statutes would be construed as applying to those depictions of hard-core sexual conduct which were given as examples in Miller versus California. Potter Stewart: I don't have the language in front of me or even precisely in my mind, but I think you are referring to a footnote in that -- Speaker: Footnote 7 on page -- Potter Stewart: -- or in the original case -- Speaker: Yes. Potter Stewart: -- which said, something along the lines, that we are prepared to construe or some such language as that. Am I mis-recollecting? Speaker: That -- that -- it -- it says -- I could probably quote it to you. It says, “If and when a serious doubt is raised as to the vagueness of the federal statutes, we are prepared to construe them as limited to the examples of hardcore sexual conduct.” And the point of fact the statute -- Potter Stewart: One can't -- that can't very well be done after the -- after a conviction can it? Speaker: Well -- Potter Stewart: I mean you run in all the concepts of the Blee against Blee -- (voice overlap) Speaker: Well, I -- it's-- it's our filling of course. We -- we -- we are precisely trying to consider the Bouie kind of fair notice problem in our suggestion that the defendant should not be subjected to a definition of obscenity which was more inclusive than the one obtained -- in other words -- Potter Stewart: No, we are not talking about the requirement of the explicitness of the statute. Speaker: Well, and -- and I am trying to make, Mr. Justice, a distinction between the aspects of Miller which arguably make a more inclusive category of obscenity and those aspects which narrow a statute. Because it seems to us that when the statute is authoritatively narrowed, you are not faced with fair notice problems that are faced in Bouie, when a statute is after the fact, broadened to include what the defendants did because it's our contention that this conduct, in this publication, fall so clearly within the statute as authoritatively narrow or falls so clearly, if you will, within the Miller examples of hardcore pornography. That has applied to them, the statute was constitutional. Now, we argue this because on the one hand, you have a concession -- indeed a stipulation that the material here is sexual conduct, sexual activities. Now, the Miller examples referred to patently offensive depictions of sexual activities. But here, we have a jury finding, that these depictions which were concededly of explicit sexual conduct depicted that activity in a patently offensive way. Therefore we say, there is a finding here in the court below that this particular publication fell within the statute, as is it suggested that it should be narrowed in Miller versus California. And therefore, we say as applied, it was clearly constitutional. Now, to say that it is vague as applied -- to say -- to say that it's not vague as applied, and to say that the defendant's conduct fell within the specificity -- specificity requirement in the examples of -- of Miller, is in no way to imply that the statute was vague on its face prior to the decision in Miller versus California. And we think that there have been a number of decisions of this Court, beginning with Roth and as recently as three years ago in Reidel, where the Court held that the statute prior to Miller was not vague on its face. And as, Mr. Justice Stewart mentioned a moment ago in speaking of the footnote in 2012 200-ft Reels of Film. There, the Court said, if and when a serious question as to vagueness is raised with respect to the statute, then we will be prepared to construe them in this narrowing fashion. And we suggest that the Court's use of the term “if and when” suggests that such a doubt as to the facial validity of the statute has not yet been raised. And the examples themselves, the Miller examples which the Court said that it was prepared to read into the statute were themselves taken from this Court's experience under the statute and its regular and settled application. And therefore, we believe that this Miller -- these examples in Miller don't change the sweep of the statute but are simply in accord with a settled meaning of the statute. We contend therefore, that the statute was neither void on its face prior to Miller, nor was it unconstitutional as applied to these defendants, because their conduct fell clearly within the statute, as it has now authoritatively been construed. And it fell within that -- within those examples because the material was conceded to be explicit sexual material. William J. Brennan, Jr.: Mr. Tuttle, I -- I expect that may not be significant in your submission but that footnote didn't deal with the statute under -- which these conditions -- Speaker: That is quite correct and -- William J. Brennan, Jr.: -- (voice overlap) Speaker: -- we don't it's significant because it dealt with the Forfeiture Statute 1305 and the -- Interstate Commerce Statute 1462, which used the language obscene and lewd which is exactly the same language which you will find in 1461. William J. Brennan, Jr.: Explicitly, we haven't dealt with 1461 yet and -- Speaker: Well, of course, explicitly you haven't dealt with those statutes either because that's --that's a -- that's an, if and when proposition. But I take it that it's perfectly clear. The only reason that I can see that those -- that the Court mentioned only those two statutes was because those were the statutes before the court on Orito and 12 200-ft.Reels of Film. I haven't any doubt that if you had a 1461 case, that that would have been part of the -- of the Court's footnote and I believe that it is -- to me, anyhow, perfectly clear that the Court would encompass, that interpretation would encompass Section 1461 with that -- within that interpretation. Now, the trial judge charged the jury that it was to apply a national community standard in judging the obscenity of these materials. It seems to us that it was clearly proper for the Judge to have done so at the time because this case occurred and was tried prior to Miller. And in fact in Miller, this Court spoke of a national standard of First Amendment protections, as being correctly regarded as limiting prosecutions under controlling case law. And in fact, petitioners here today have agreed with us that the Court was correct in applying a national standard. But they go further and they say, the application of that national standard, the concededly correction application of that national standard made the statute unconstitutionally vague as applied to them. They seem to be saying that no pre-Miller conduct, no pre-Miller obscenity could possibly be convicted, could be possibly be the subject of a valid conviction because they say the national standards should be applied but the national standard made the statute vague. And therefore, there can be no constitutionally valid obscenity prosecution prior to Miller. Potter Stewart: You understand Mr. Tuttle, that the Court held in the cases last June that even under a federal statute of national application, that the test to be applied is one of local? Speaker: I think -- I think to say that it was a holding -- might be -- go too far.I think the Court made it clear that if found that a test of obscenity judged by contemporary community standards; was as the Court said constitutionally adequate. And since the First Amendment, would seem to us to apply equally to state and the federal prosecutions. That at least, it would be constitutionally permissible for the federal prosecutions to proceed on the basis of a local standard and the Court, of course, went further in Miller. The Court -- Potter Stewart: And -- and even -- and under a statute, worded as 1461 is -- which is quite contrary of what I read in Miller of what statutes have to say. Speaker: I'm -- I'm sorry, Mr. Justice Stewart. Potter Stewart: -- (voice overlap). As I read it and I haven't re-read it. It said that state statutes -- Miller was a state case -- state statute -- Speaker: Miller was a state -- Potter Stewart: -- had to be very specific in what they -- in what they have prohibited. Speaker: Well -- Potter Stewart: Do you agree with that? Speaker: I -- of course, I agree with that. That's what the case said. Potter Stewart: That is what I thought. Speaker: And in 12 200-ft. Reels of Film, the Court indicated that it was prepared to find that specificity in the federal statutes and that was the footnote example that we spoke -- Potter Stewart: Was prepared to. That was a when or whatever it was. Speaker: It has -- when Vegas was founded and -- Potter Stewart: In other similar statutes, but not in this one that it was prepared to. But now, then you're saying that -- even of federal statutes -- you understand the Court held that it should have different meanings in -- in different federal judicial districts? Speaker: The Court said in Miller, we -- we do believe that the clear implication of Miller is that the federal -- that a federal jury trying a -- a case under a Federal Law of 1461 or -- or one of the other laws would apply or should apply or would be constitutionally privileged to apply contemporary community standards because the Court's discussions of national standards in Miller seemed to us to be as forceful in regard to a federal prosecution as a state prosecution. Potter Stewart: Well, Miller -- Miller was dealing with a state law which had -- have no -- no wider scope than statewide. But here, we're dealing with a Federal Law. This would be -- if -- if -- if isomebody in the Solicitor General's office stood up and told us of the internal revenue code that would -- was to have different meanings and different judicial districts, it would be absolutely irrational but you're telling me that the Court held that a federal statute is to have a different meaning depending upon what judicial district -- Speaker: There -- there are off course many federal statutes which -- or at least some federal statutes which do have a different impingement depending on the geographical area were the conduct is undertaken. The Travel Act for instance, keys its concept of illegality to the jurisdiction in which the unlawful activity is undertaken are our reason for feeling that what the Court said in Miller or the clear implication of Miller is that local community standards, not local -- the community standards, whatever the appropriate geographical boundaries of that community might be, should be applied, is the Court's, to our mind, holding that in discussing the state statute where the said -- that the nation was too big and too diverse for the formulation of a single standard. Potter Stewart: It would follow from that then that the Congress shouldn't pass any laws in this area if the nation is too big to have one law for the whole nation. Speaker: Well, Congress passed a law forbidding the mailing of obscene material and I don't think that one can find in the congressional background of the case, any attempt or any suggestion that the Court had in mind a national standard such as - such as a -- a few members of this Court spoke of in Jacobellis and in Manual Enterprises. Congress was concerned with the mailing of obscenity and I -- and I would imagine they expected that to be tried in a -- in whatever jurisdiction the material was mailed in or wherever it was received or wherever it found its way into the public domain. When the Court says the quest for a national standard has been unrealistic and that national standards are hypothetical and the Court said unascertainable, those considerations, it seems to us, apply equally to a federal statute and a state statute and I believe that the reason why the Court returned to contemporary community standards in a state case was because it found that the jury's effort to articulate and grasp the national standard had not been wholly successful. If that's true, it's equally true with respect to a jury attempting to judge a federal obscenity prosecution. Conversely, if there had been no difficulty in articulating a national standard, I submit, the Court, very likely, would have followed the teachings of Jacobellis and applied a national standard in state cases. William H. Rehnquist: Well, I suppose, when Congress enacted the Assimilative Crimes Act, it chose to incorporate the law of various states into the federal criminal statutes. Perhaps for the same reason, it was difficult to find a national standard. Speaker: I -- I think that's probably a better example Mr. Justice, than -- than the Travel Act example. It seems to me that the Federal Government can -- Thurgood Marshall: (voice overlap) -- that wasn't done when this statute was passed was it? Speaker: What wasn't done, Mr. Justice? Thurgood Marshall: Intended to apply on a local basis. Speaker: I don't think Congress -- Thurgood Marshall: Even though -- even though assimilating in that -- would -- Speaker: Yes, and I -- I -- Thurgood Marshall: But one thing (Inaudible) They didn't know about Miller did they? Speaker: They didn't know about Jacobellis either and it was the Court that -- that imported the concept of a national standard into the to the obscenity laws -- Thurgood Marshall: Well all of these statutes -- William O. Douglas: This amendment had something to do with the national standards? Speaker: Well I mean, Mr. Justice Douglas of course, the Court construing the First Amendment developed a requirement of a national standard. All I'm saying is, in response to Mr. Justice Douglas -- Mr. Justice Marshall's question was, that Congress -- I don't think had in mind either a local or a national standard. They had in mind obscene material as a jury would find it and that again is the lesson of Miller. That that -- Warren E. Burger: I suppose it's true that running a non-licensed still in Kentucky or some of the other States might give a different reaction from jurors than it would in yet other States.where it is not so much a way of life; yet the statute would be the same statute, would it not? Speaker: Yes, there are a number -- there are a number of -- of crimes. In fact, I would say in -- in most instances, where the crime is -- is subject -- it is analyzable in terms of concrete and readily demonstrable, objectively and scientifically provable elements, where --where the federal statute would have absolutely equal application in all places. Thurgood Marshall: Well, could you say that in the State of New York, a still is not a still? It's either still or it's not still. That is the same still in New York than is it in Kentucky. Speaker: I -- I quite agree, Mr. Justice Marshall, and that was why I said in those instances -- Thurgood Marshall: But in this, you can have carnal knowledge as still in Kentucky and not in New York. Speaker: Carnal knowledge is -- may -- may be -- exceed the limits of candor of Albany, Georgia and carnal knowledge may in fact be found to appeal to the prurient interest of the average person in Albany, Georgia. But it still lies with this Court -- Thurgood Marshall: My -- my only -- Speaker: -- to determine whether or not it has redeeming social value. Thurgood Marshall: Mr. Tuttle my only quarrel is I -- I thought you were referring that this statute was intended. I'm saying that what you are trying to say is that Miller changed the statute's determination. Speaker: I -- I don't think -- Miller was simply a -- if you will -- Thurgood Marshall: Let me ask you. What did Miller do to the statute? Speaker: Miller -- the statute speaks only of obscene material. Thurgood Marshall: Right. Speaker: The Court has, since Roth, undertaken to give content to what that means and in each of these cases, the -- the Court's formulation has been a slightly different formulation. Miller gave a formulation which has been recited today and Miller said that with respect to the community standards element, reference should be had to the contemporary community standards of the foreign community. William O. Douglas: Would you be able to advise the plan -- particularly or not to explain to him whether this particular book of article is sufficiently cleared so that -- or is so -- so obscure that it's -- it's open just to -- to guess words? Speaker: I think -- I think that -- that it's quite evident Mr. Justice, that the -- the concept of obscenity does not lend itself to the precise kinds of measurement that many other elements of criminal statutes do and -- William O. Douglas: Under this federal statute you could be innocent but the act of mailing it from New York could -- could be innocent and the act of receiving and selling it in California could be a crime, is that right? Speaker: It's conceivable that -- that a jury -- it's conceivable. I -- we -- we would be speculating to know but -- it but -- it but it is conceivable. Yes, the -- the judgment of criminality would turn on the place in which the matter is disseminated and the crime is committed. Warren E. Burger: Mr. Tuttle, the Court over the period of the last 15 years has had what? At least three different definitions but nothing new about altering these definitions is there?Going back from Roth to Jacobellis, to the other cases down the line. It's been a -- (voice overlap) Speaker: It's been a continuing effort to -- to attempt to formulate manageable standards. No, there's nothing new but every time if it happens we are faced with a question of how -- what is the impact of that? That's why this case is here for the Court to determine what the relation of that definition is going to be to conduct which antedated -- Byron R. White: Mr. Tuttle you suggested that according to Miller, there was a third requirement that the material be utterly without redeeming social value. What cases do you rely on for that? Speaker: I would rely on Memoirs versus the Massachusetts. Byron R. White: How many votes did that test have there? Speaker: That test had three votes. But our -- our reason for saying -- Byron R. White: Well, what case had -- under what case did it ever have five? Speaker: Miller, excuse me, Memoirs is the case -- Byron R. White: (Inaudible) Speaker: And -- and the reason -- and the reason why I think that there were five votes is, that you had two members of the Court who would -- who would not have punished the -- who would not -- who would have found the publication constitutionally protected under any circumstances. And you had three members of the Court who would have found it constitutionally protected unless, it was shown to be utterly without redeeming social value. Thus, it's a practical matter. Any person who kept his conduct within the Memoirs' definition could not -- could not be connected. Byron R. White: Five members no -- no -- at no time did five members of the Court subscribe to that test. Speaker: That's quite true. Only three members of the Court, but it became in -- in our view and I think in the view of -- of the public and the bar an operating definition. It let us know or let members of the bar advising publishers know what it was -- what was --what was the limit that could not be transgressed -- Byron R. White: Are there members of the Court that have any clear definition than the three? Warren E. Burger: In what case Mr. Tuttle -- Speaker: Clearly said Mr. Justice. Warren E. Burger: In what case was it that Chief Justice Warren said that there could not be no national standard in -- (voice overlap) Speaker: There was -- there was the Chief Justice dissent in Jacobellis. Warren E. Burger: No. William J. Brennan, Jr.: Please tell us Mr. Tuttle, that all of this discussion suggests that maybe even Miller isn't the last word in this very troubled area? Speaker: Miller -- Miller gave us -- William J. Brennan, Jr.: Well, I just -- that's not my question. My question is, whether you think Miller is necessary as the last word as I was saying. Speaker: Miller of course is not the last word because even if we're here today and we're here today with some problems but our problems relate to the application of Miller. We are not here to question the standards of obscenity articulated in -- in Miller but we're -- we are merely attempting to determine whether a pre-Miller conviction can be sustained under that definition. Now, we don't believe that the criticism of local standards which is contained in Miller versus California necessarily applies that all federal obscenity prosecutions antedating Miller have to be voided. And we don't think the Court had any such idea in mind.In the first place, there -- there have been, since Miller, a large number of cases which have been remanded to Courts of Appeals for reconsideration in the light of Miller. These are federal cases where the jury was charged to use a national standard, as was the jury here. And we believe that if -- if the use of a national standard had made the statute unconstitutionally vague prior to Miller, we would have had reversals and not remands. And to say that that -- that it -- that the standard is hypothetical is not to say that it can't be ascertained that is say, the national standard. It's to say that it is to some extent, supposititious and speculative and they were asking the jury to engage in a kind of generalizing which the Court found generally speaking, unfruitful, and not wholly successful. But it doesn't follow that it was constitutionally deficient when it was done as required by decisions of this Court. Indeed, as one Federal Court has suggested since Miller, the effort to identify a national standard seems to differ only in degree from the effort which was authorized and required in Miller to determine a statewide standard of a State as large and variegated and populous as the State of California. I would finally say that if there is a question of applicable standards, and if there is any question that the defendant was incorrectly tried under a national standard, we would say it was harmless error because this material is obscene under any standard and there is no community whose limits of candor are not exceeded by the petitioner's publication. Thank you. Warren E. Burger: Mr. Fleishman. Stanley Fleishman: Chief Justice. I'd like to start with the last and that is, the brochure simply is not obscene. It's not obscene under national standards. It's not obscene under local standards and in any event. We were not tried indeed, under any local standards. And I assume from all that has been said that at a minimum, petitioners are entitled to a trial by a jury. The prosecution says it's obscene by any standards, I would remind the Court that a film, Deep Throat which was thought to be obscene by any standards being found not obscene continuously throughout the country by local jurors. I'd like to focus, if I may, on the indictment. Because I think the discussion we've had here demonstrates the inadequacy of this indictment in this case which is merely in statutory language. Now, it's true, of course, that where the -- a statute has a clear, well-defined meaning, one can incorporate that by using statutory language but as every justice on the Court has mentioned here, we have -- do not have one single clearer definition of obscenity. There are three, four or five. In Orito, this Court sent the case back for a - - an investigation as to the sufficiency of the indictment. The Government in its brief states that since Miller and 12 Reels of Film had incorporated new specificity requirements into the statute, it would be necessary to consider the sufficiency of the indictment in light of those cases. Okay. Look at the indictment. Is the specificity there? No, it is not. The Government then says that the words obscene, lewd, lascivious, indecent, filthy and vile simply means the materials come within the legal definition of obscenity. Well, isn't that begging the issue? What was the legal definition of obscenity at the time that the indictment came down? Justice White suggests that utterly without redeeming social value was not part of it. For the present purpose, I don't care whether it was or was not part of the definition. I don't care whether it was a local standard or a national standard. I don't care whether you measure prurient interest by national or local standards or no standards. I do say, that where you have a statute which is so up in the air as this one is, absolutely the irreducible minimum is, that we're entitled to have in our indictment what the charge is. And not have these -- these vague words, lewd, lascivious and the like and say everybody knows what that is, of course. We have always known what that is. Now, we do have other points and I have a moment and I would like to emphasize, if I may, some of the vices that came from the infirmity of indictment. For example, we were charged in statutory language only, in response to a Bill of Particulars, we were told that the material was offensive because it -- it was -- appealed to the prurient interest of the average person and yet, we were tried with regard to a Michigan theory. The jury was told that the -- they could convict if it appealed to the prurient interest of the average person or a clearly-defined sexually deviant group.When we complained to the Court of Appeals, the Court of Appeals said we were right that it should have been solely measured by the average person, but it was harmless error. Now, the Government says, “No, the Court of Appeals was wrong. That it should have been charged -- tried on a clearly-defined sexually deviant group.” Again, my point here is, first, that it had to be in the indictment and secondly, on the merits. There wasn't the slightest basis for the use of a Michigan instruction. Pandering also, there isn't a word of pandering in the indictment. Nothing in the Bill of Particulars and yet, the jury was instructed that they convict -- that they could convict on a pandering doctrine without the slightest evidence of any pandering. There isn't a case that I know of which holds that an advertisement can pander itself and yet that's what -- Warren E. Burger: What about -- what was the situation in the Ginsberg case Mr. Fleishman? Was there anything? Stanley Fleishman: No. In -- in Ginsberg, Your Honor, as I read Ginsberg, the Court held that the books involved were rendered obscene because the brochure advertising them in effect said that they were obscene and therefore, that could be taken into account. But Ginsberg did not at all suggest that the advertisement could pander itself. It's -- it's logically inconsistent because in this case that the brochure was made, either it's obscene or it's not obscene. It doesn't, in any way, lend itself to a pandering instruction and we did, as a matter of fact, called the Court's attention to the fact that there were cases which held that at a minimum, one would have to plead that in the indictment and it was not so pleaded. Thank you very much. William J. Brennan, Jr.: Mr. Fleishman, does the record show has a mailing list of 55,000 people was compiled? Stanley Fleishman: It does not, Your Honor.What we do have is a brochure that 12 people were offended. That's all we know. That 55 to 58 thousand who were mailed and that 12 people were offended. That's all the record shows. William J. Brennan, Jr.: Does the record show whether any of the 55 to 58,000 people had requested the brochure? Stanley Fleishman: The record is silent on that point, Your Honor. William J. Brennan, Jr.: Does the record show whether it was received by any minors? Stanley Fleishman: The record does show that it was not received by any minors, at all. The record also shows that there was total 100% compliance with Section 300 -- 3008 which is the pandering law. That is to say, that in every single instance, that there was a -- that is in -- ever since the instance of the 12 persons, the addressees had gone to the post office and said that they had received a brochure which they thought was sexually arousing for them. And they didn't want to receive any more mail of -- from the Library Service. In every instance, they testified that they never received another piece of mail from the Library Service. So, that was total complete, 100% compliance with the only statute that Congress had passed which was on this issue at the time, because it should be remembered that after Ginsberg, Congress passed two laws. First, there was Section 3008 which was found to be constitutional in Rowan, and secondly, they passed the next year the sexually-oriented ad section, which we find in 39 U.S.Code Section 3010. Now, that law was not yet in effect at the time that we mailed. That law was going into effect.About a month later, it would -- became effective on February 12, 1971. And the last mailing that we had was January 12, 1971. Had that law been in effect -- 3010 then -- then there was a -- a charge under that. We would have an entirely different situation but as it stands now, we have the situation where there was full compliance with the only specific Congressional Act that had been enacted dealing with the mailing of sexual material and that was Section 3008 which was the section involved in Rowan. William J. Brennan, Jr.: But suppose there was no way to tell the number of children in the 55,000 homes into which this brochure was mailed? Stanley Fleishman: No, but I would say this instance, we are supposing Your Honor. I know that the -- the list was purportedly a list of persons who had previously indicated the desire to receive sexually explicit material. Those are the only mailing lists that are worth anything because one tries to mail to those persons who are interested. If you want to sell cat food, you want to mail material to people who have cats. So, the truth of the matter is, that the brochure was mailed as fully as one could to those adults who had indicated that they did want it. Now, that's not in the record. I don't want to mislead the Court. But I think that is the -- the true answer as to who was in fact the recipient of the ads. We have -- they say 12 people who were offended. There are 12 people who are offended by receiving many political brochures, too, Your Honor. Warren E. Burger: Thank you Mr. Fleishman. Stanley Fleishman: Thank you very much, Your Honor. Warren E. Burger: Thank you, gentlemen. The case is submitted.

Earl Warren: Securities and Exchange Commission, Petitioner versus National Securities, Inc. Mr. Solicitor General. Erwin N. Griswold: Mr. Chief Justice and may it please the Court. This case is here on a writ of certiorari to the Ninth Circuit Court of Appeals. It involves the construction and application of the McCarran-Ferguson Act and its interrelation with Section 10 (b) of the Securities Exchange Act of 1934. The text of those two statutes is given on pages 33 and 34 of the Government's brief and this case. I would call attention to the provision in Section 10 (b) which makes it unlawful for any person to use or employ any connection with the purchase or sale of any security registered on the National Securities Exchange or any security not so registered. The net result of those two phrases is simply to apply to any security any fraudulent device as defined by the rules of the Securities and Exchange Commission and the relevant Rule 10b-5 is set out at the bottom of page 34 and on page 35. The text of the McCarran-Ferguson Act is on page 33 of our brief and the relevant portion there although it's all relevant but the part that comes closest is Section 2 (b), no Act of Congress shall be construed to invalidate, impair or supersede any law enacted by any state for the purpose of regulating the business of insurance or which imposes a fee or tax upon such business unless such acts specifically relates to the business of insurance and I would suggest that the keywords in that provision of the McCarran-Ferguson Act are the business of insurance. The present case began in March 1965 when the Securities and Exchange Commission filed its petition in the District Court for Arizona. It sought to have that court enjoin the respondent here, the National Securities, Inc. and it subsidiary and certain officers and employees from violating Section 10 (b) and Rule 10b-5 on the ground of asserted fraud in connection with purchase or sale of securities. In due course the defendants filed a motion for judgment on the pleadings or in the alternative for summary judgment, the motion for judgment on the pleadings was granted by the District Court and this was affirmed by the Court of Appeals. As the Court of Appeals stated in its opinion in this situation, the allegations and the amended complaint must be presumed to be true. And these allegations may be summarized this way. It is alleged that the respondent, National Securities, Inc. is a holding company which owned two-thirds of the slightly more than a million shares outstanding of National Life which was in Arizona insurance company. Producers Life Insurance Company was another Arizona company. It had some 881,000 outstanding shares held by approximately 14,000 stockholders in many states. In other words, it was quite widely distributed. The allegation is that the defendants formed an illegal scheme contrary to Section 10 (b) under which National Securities would acquire control of Producers Life, National Life, and Producers Life would be consolidated and the consolidated company would pay a large part of National Securities cost of acquiring control of Producers Life. In carrying out the scheme, National Securities purchased the stock in Producers which was held by four of Producers' directors and agreed to pay them a very large sum for there agreement not to compete with Producers Life or any successor company. The National Securities also purchased from Producers Life more than 50,000 shares of its treasury stock and assumed some $600,000.00 of liabilities of Producers Life arising out of previous agreements which had been made with other persons not to compete with it. It was further alleged that National Securities did not disclose to Producers Life or its stockholders that it intended to impose both of this liabilities with respect to agreements not to compete upon the corporation which would result from the plan consolidation of Producers Life and National Life. After obtaining control, the Producers Life according to the allegations again, National Securities cause the latter to mail to its stockholders materials soliciting them to approve the propose consolidation with National Life. And it was then alleged that this material was false and misleading on four grounds: (a) That it did not disclose the liability on the agreements not to compete. (b) That it predicted substantial consolidated earnings without disclosing that Producers Life and National Life had each had losses in the prior year. (c) It set forth on the pro forma balance sheet for the consolidated company and asset shown as treasury stock in the amount of more than a million dollars that was alleged to be illusory and finally that it did not disclose in its report to the -- that in its report to the Arizona Insurance Commission, the National Life had written down the value of its investment in Producers Life by more than a million dollars. The court allowed the defendants to submit the proposal to the Arizona Insurance Commission and to the stockholders. Both approved the plan and that was carried out. It was then that the Securities and Exchange Commission filed the amended complaint which is now before the Court seeking such relief as might be appropriate under the circumstances. In its answer to the amended complaint and in its motion for judgment on the pleadings, the defendant contended that the District Court has no jurisdiction because the matters complained of are entirely within state jurisdiction as provided in the McCarran Act, thus, raising the issue which is here. The District Court accepted this contention as one of its grounds of decision and the Court of Appeals affirmed the District Court's judgment on this ground alone. The opinion of the Court of Appeals is in rather sweeping terms. The relevant portion for this part of my argument appears on pages 156 and 157 of the appendix near the bottom of page 156, we are left then with a general intention to set the insurance business outside the scope of all existing and future legislation regulating interstate commerce without any more direct evidence that Congress had in mind in the Securities Exchange Act. However, Congress was apparently seeking to define an exemption for insurance and then the word is conterminous but I supposed we usually say co-terminus with its power to regulate interstate commerce. The Court is there saying that with respect to insurance in so far as Congress would have power to regulate any aspect of it under its commerce power, the effect of the McCarran Act is to say that that power is not being exercised. And over on page 157, just above the middle, the court said and equally vital purpose of the McCarran Act was to preserve intact from any federal intrusion based on the Commerce Clause existing and future state regulation of the insurance industry. Thus the sole issue is here whether this construction of the McCarran-Ferguson Act and determination of its effect are correct. Or whether the facts alleged are sufficient state of cause of action under Section 10 (b) of the Securities Exchange Act of 1934 despite the provisions of the McCarran-Ferguson Act which was passed in 1946. I will now turn to the legal questions involved in the case. It maybe that I have a somewhat narrow alleged stand on but I think the footing is firm. When Section10 (b) was enacted in 1934, there was no doubt that it applied to fraud and the purchase and sale of all securities, you'll recall the phrase in the statute is any security including those in insurance companies. This was true despite the fact that it was the common understanding at that time that the federal government had no power to regulate “the business of insurance.” A clear distinction was evident between the business of insurance on the one hand and securities of a company which is engaged in conducting the insurance business. In 1944, the South-Eastern Underwriters case was decided followed in 1946 part of the enactment of the McCarran-Ferguson Act. The South-Eastern Underwriters case undoubtedly involved the conduct of the business of insurance the way in which insurance companies operate together in fixing their rates and had nothing to do with transactions in securities of an insurance company. The distinction was explicitly made in the McCarran-Ferguson Act itself for it said that no Act of Congress should supersede any law enacted by any state for the purpose of regulating the business of insurance. Now these was emphasized in the report of the House Committee set forth on page 24 of our brief where the Committee said, it is not the intention of Congress in the enactment of this legislation the closest states with any power to regulate or tax the business of insurance beyond that which they had been held to possess prior to the decision of the United States Supreme Court in the South-Eastern Underwriters Association case. In short, the function of the McCarran-Ferguson Act was to restore the status quo to put things back where they were before the South-Eastern Underwriters case was decided except that it was made explicit that the Sherman Act, the Clayton Act, and the Federal Trade Commission Act should apply to the business of insurance to the extent that such business is not regulated by state law. It was only with respect to these three statutes that there is any indication that federal law should apply only if there was not an applicable provision in state law. Throughout their history, both before and after the enactment of the McCarran-Ferguson Act, the provisions of the securities law relating to securities and the security's law don't relate to the business of insurance. The provisions of the securities law is relating to securities have been regarded as applicable to securities and insurance companies. We have listed many of these instances in the footnotes on pages 16 and 17 of our brief. Thus, issues of insurance company securities have been registered under Section 6 of the Securities Act of 1933. Securities of insurance companies listed on National Exchanges have been registered with the Commission under Section 12 of the Securities Exchange Act of 1934. Persons who buy and sell insurance company securities have been registered under Sections 15 (b) of the Securities Exchange Act. Investment companies with portfolios consisting of insurance company securities have been registered under Section 8 of the Investment Company Act and persons selling insurance company securities and a fraudulent manner have been enjoined and convicted in a considerable number of cases. The decision of the court below which fails to recognize the distinction between the business of insurance to which the McCarran-Ferguson Act applies and dealings in securities which happen to be stocks and insurance companies would sweep all these away and broadly exempt all dealings and insurance securities from application of the federal laws. This is the effect of the decision below where the court said Congress was apparently seeking to define an exemption for insurance conterminous with its power to regulate interstate commerce. If Congress was intending to do that, obviously it swept away all applications of the insurance -- of the securities laws to dealings and insurance securities. Potter Stewart: Mr. Solicitor General, one of my difficulties in reading the briefs and advanced argument in this case which continues now is that you and your adversary don't really seem to argue as to what this case is about. Is that fair to say? Erwin N. Griswold: Well, I think there is something about that. Mr. Frank weighs a lot of other questions which present some difficulties which were not decided by the -- Potter Stewart: Well, I'm not referring to the purchase and sale difficulties. I'm talking really about the if not the broad question to which you are now addressing yourself and you are quoting to us some very broad language of the Ninth Circuit Court of Appeals but the decision was not part of the District Court as affirm by the Court of Appeals simply that the McCarran Act foreclosed the undoing of a merger that had been approved by the Arizona Commission. That's the holding in these cases, isn't it? Erwin N. Griswold: Not exactly Mr. Justice Stewart. Potter Stewart: Tell me why. Erwin N. Griswold: We didn't ask for the undoing of the merger in the exclusively as our only relief in the amended complaint. We ask for such relief as would be appropriated under the circumstances and it may well be that the merger should be left merged. But that individuals who have profited by the transaction should be required in some way to account either by disgorging to the merged company or by making payments to the shareholders who did not participate from it, all the questions of relief are left undecided both by the District Court and the Court of Appeals because they didn't get to them having held that the McCarran-Ferguson Act eliminated the whole matter. Potter Stewart: I didn't understand the District Court or the Court of Appeals really to have held that the neither the 1933 Act or the 1934 Act was completely inapplicable, or completely inapplicable to the dealings and securities of insurance companies. Erwin N. Griswold: Well Mr. Justice, I can't read that language on page 157 or the Court of Appeals in any other way, and equally by it on purpose of the McCarran Act was to preserve intact from any federal intrusion based on the Commerce Clause existing and future state regulation of the insurance industry. And that would apply to any fraudulent sale of insurance stocks. Now it is true that this case does involve a merger of an insurance company and Mr. Frank argues that approving a merger is in some way analogous to the question of chartering and insurance company. I find it difficult even with that is fine anything in the McCarran-Ferguson Act which says that when this is done in a fraudulent way, that the provisions of the Securities and Exchange Act are superseded, are written off, are in effect repealed. I pointed out that the practice has been consistently to the contrary. Both before the McCarran-Ferguson Act was passed and I think that is very relevant before the South-Eastern Underwriters case was decided. It was then regarded as the appropriate construction of the Securities Acts that they were applicable to transactions of purchases and sales as the language of the statute with respect to insurance companies as to any other securities and we think that the effect of the decision of the Ninth Circuit is to make the insurance -- is to make the security statutes inapplicable to transactions to dealings, to actions with respect to securities in insurance companies and it is our contention that that is not the proper construction of the McCarran-Ferguson Act which relates to the business of insurance to the things done by insurance companies with respect to their policyholders but not to transactions done by other persons with respect to securities in insurance companies. There are obviously other federal statutes of general application which were applicable to insurance before the McCarran-Ferguson Act was passed and which continued to be applicable to insurance thereafter. This includes the copyright and patent laws and insurance company is not exempt from the telephone tax or the social security tax. It's not free to issue counterfeit money if it doesn't have enough to meet its legitimate claims. It's subject to the postal laws including those making at a crime to use the mails for the purposes of fraud. And I would point out that Section 10 (b) is based on the postal laws as well as on interstate commerce and that the mails were so used. And that there are a sizeable number of prosecutions both before and after the McCarran-Ferguson Act for using the mails to defraud with respect to the sale of insurance securities. These matters are not referred to in the McCarran-Ferguson Act but it cannot be supposed that Congress contemplated any change in the law with respect to them. As I've said, we're dealing here with the statute which is based in part on the postal power. There's no reason to think that Congress in passing the McCarran-Ferguson Act intended to allow an insurance company to use the mails to defraud stockholders. Byron R. White: Mr. Solicitor General, I take it then you would say because this is a -- this is not a matter of regulating insurance but neglecting stock transactions that if there are federal regulations as to which should be in a proxy statement in connection with the merger conflict between the federal regulation, the state regulation. The state regulation approves a proxy statement and the federal authorities disapprove that Federal Act govern. Erwin N. Griswold: At this particular time, there was no -- Byron R. White: Yes. Erwin N. Griswold: -- federal provision with respect to -- Byron R. White: But you would say that the federal law would? Erwin N. Griswold: The federal law would govern to the extent that the fraud was proved and found by the court. Byron R. White: That it was a stock formed by the insurance. Erwin N. Griswold: Yes, Mr. Justice. Hugo L. Black: Oh! There had been no northeast -- southeastern case? None at all? Is it your belief that under the law there's a then existent Congress could have passed bill regulating this very thing under the Commerce Clause? Erwin N. Griswold: Yes, Mr. Justice. It is our view that that's just what Congress did do in 1933 and 1934, that it passed a law regulating transactions of purchase and sale of any security and that that included securities in insurance companies and was so construed by the Commission and in a very few cases by the courts between 1933, 1934, and 1944 when the South-Eastern Underwriters case was decided. Hugo L. Black: I asked you that question because I have been under the impression having some little addresses in South-Eastern Underwriters case that was the purpose of Congress to do away and time they would expect so long as relying on the Commerce Clause's concern and in insurance business, I admit that I agree with that, and would you not have to if that was the case. Would you not have to show that even without that will, if that case had never been decided would not change the rule. That Congress could have and would have passed this Act. Erwin N. Griswold: Yes, Mr. Justice that's exactly the argument we do make that Congress had this power and exercise it before 1944 and that for that reason, the enactment of the McCarran-Ferguson Act which was intended to restore the status quo did not and was not intended to take away the effect of the statute which Congress had previously passed with respect to securities. Hugo L. Black: Had there been any cases before the South-Eastern which so held? Erwin N. Griswold: No cases in this Court. Certainly, there was a modestly considerable amount of practical experience in the Securities and Exchange Commission including registration of securities and things of that sort. Hugo L. Black: It had not been challenged on that ground? Erwin N. Griswold: Never had been challenged on that ground that I'm aware of. Now, -- Abe Fortas: But Mr. Solicitor General, I'd like to direct your attention again in this line of thought. As I understand your adversary, it says that the merger, the merger itself of these companies was proved by the insurance commissions. Now, arguably I supposed he would say that the merger is certainly insurance company talking about the merger of two insurance companies here. Now then along comes the SEC and says that this aspect of that merger is subject to federal law namely the terms of the offer of exchange the solicitation of the stockholders. It says that therefore it's in conflict with the McCarran Act because this is something, the merger that is insurance business. It's a merger of two insurance companies. I don't profess to state -- Erwin N. Griswold: Mr. Justice, I think you stated -- Abe Fortas: -- that's my understanding of it? Erwin N. Griswold: I think you stated the issue and very clearly and very precisely. There is of course some overlap here. I think a considerable part of our concern is with the sweeping nature of the opinion of the Court of Appeals which says that the McCarran-Ferguson Act wiped out completely all aspects of the securities regulation with respect to insurance. When you come to the question of a merger, I think it is a nice question as to what is meant by the business of insurance and I think an argument can be made which is the one we stand on that the business of insurance relates to the internal operations of insurance and not to dealings in securities which Congress has so clearly taken over for a federal authority. Abe Fortas: Let me see if I understand it because I do believe that this is where the argument of the two parties comes in collision. What you're saying is perhaps a merger of two insurance companies is the business of insurance for signs in some respects. But to the extent that it involves a solicitation of stockholders consent that a security holder's consent said that that is not. That aspect of it is not the business of insurance. Erwin N. Griswold: The dealing with the security holders we would contend is not “the business of insurance” as was meant by Congress when it used those words in the McCarran-Ferguson Act. Let me -- there is one decision of this Court which is pretty close in many ways which is the United Benefit Life Insurance Company case decided only a short while ago. There the company was undoubtedly an insurance company and the decision of the Court that it could not sell variable annuity policies without registering them with the SEC is directly that the securities of an insurance company are subject to the securities laws and are not taken out of the provisions of the securities laws by the McCarran-Ferguson Act. In that case the -- Potter Stewart: But the holding of that case was that that company was engaging in selling securities not insurance policies. Suppose, if an insurance company went to the telephone business, they have to pay the tax on telephones. Erwin N. Griswold: Mr. Justice that would be applicable to the Variable Annuity Life Insurance Company which sold nothing but variable annuities. But the United Benefit Life Insurance Company was undoubtedly an insurance company. It sold large quantities of what everybody would agree was insurance. It also sought to sell variable annuities. And this Court held that it couldn't do it without registering them with the SEC and that it seems to me is inevitably a direct decision that the securities of an insurance company are subject to the registration provisions of the securities laws despite the fact that Congress has passed the McCarran-Ferguson Act or to put it in other way that dealings in the securities of an insurance company are not “the business of insurance” within in the McCarran-Ferguson Act. That there are other cases which are close but I think that the United Benefit case comes very close to supporting our position. The decision of the court below would wipe out every application of the securities laws to securities and insurance companies. This is contrary to the long continued understanding in this area. It's not required by the language of the McCarran-Ferguson Act and it's inconsistent with that Act's purposes. Accordingly, the judgment below should be reversed and the case remanded for consideration there of the other questions involved in the case. Potter Stewart: Good many insurance companies particularly life insurance companies these days are owned not by stockholders not by shareholders but are owned by the policyholders. I suppose the merger of two mutual companies would be I suppose these policyholders as owners would happen there. I guess there specifically _ on the -- Erwin N. Griswold: We would have to find something Mr. Justice if we constitute securities in such companies before Section 10 (b) would apply because it applies only to purchases and sales of any security. Now, conceivably in a mutual company, you could say that the policyholders are security holders -- Potter Stewart: Except I believe they are expressed exemptions in the Securities Acts, aren't they? Erwin N. Griswold: With respect to mutual companies? There may be, I'm not sure. Potter Stewart: There may be I'm not sure either. Earl Warren: You may start your argument tomorrow Mr. Frank. We'll adjourn now. John P. Frank: Thank you Mr. Chief Justice.

Warren E. Burger: We will hear arguments in Ford Motor Company, et al. v. Dennis Milhollin, et al. Mr. Burke, are you ready. William M. Burke: Mr. Chief Justice, and may it please the Court. The issue in these cases is whether or not the contractual right of acceleration in a consumer' credit contract must be disclosed under the Truth In Lending Act, or Regulation Z, promulgated by the Federal Reserve Board. The right of acceleration is not mentioned anywhere in the specific disclosure requirement of the Act or the regulation. In fact, acceleration isn't mentioned anywhere in any provision of the Act or the regulation. Respondents have relied on two different sections of the regulation in an effort to gleam a requirement on the part of the Petitioners to disclose the acceleration clause. In the District Court the Respondents relied upon Section 226.8(b)(4) dealing with default charges and I will come to that section in more detail in a moment. In the Court of Appeals, the Ninth Circuit, the Respondents focused heavily upon 226.8(b) (7), which was not raised in the District Court, which deals with the creditor's rebate policy upon pre-payment of the pre-computed consumer credit contract. The facts in the case are simple and for the most part are undisputed. The Milhollin's and Mrs. Baton entered into conditional sale contracts with the Petitioners for the purchase of motor vehicles. The contracts were immediately assigned to Ford Motor Credit Company. The contracts had provisions on both the front and the back side, with the front side serving as the Petitioner's disclosure statement required by the Truth In Landing Act and Regulation Z. The front side clearly disclosed all default charges imposed by the Petitioners in Paragraph 12. Paragraph 24 advised the Respondents that in the event they prepaid the consumer credit contract for any reason at any time, whether or not there was a default in acceleration, the consumer would receive a rebate in full of all unearned finances charges. This is consistent, by the way, with the Oregon rebate statute which requires such a rebate and was followed by the creditors as [ILLEGIBLE WORD] as the record indicates, at all times relevant. The contract contained a default clause which contained the usual creditor remedies, including the right acceleration. This clause was set forth clearly in paragraph 19 of the contract on the reverse side, but was not separately repeated on the front side of the contract, the disclosure provisions of the Truth in Lending Act. The District Court could find no provision of the Act or the regulation requiring disclosure of acceleration clauses. However, it held that the acceleration clause should be disclosed under the spirit of the Act, henceforth all creditors are required to do so. Warren E. Burger: When you say "disclosed," just what do you embrace in that? Is it the manner in which it is made known or is it the matter of making it known or not making it? William M. Burke: Well, the provisions of the Truth In Lending Act require certain types of disclosures of contractual provisions in consumer credit contracts; as an example the pre-payment disclosure semantically what the Act and regulation require is that the creditor provide on the front side and on one page a disclosure of his pre-payment rebate policy. So when we talk about the disclosure we are talking about certain specific enumerated provisions of the Act and the regulation that must be put together on one side and on, one piece of paper of the contract. Potter Stewart: Is it the regulation that requires that one side -- William M. Burke: Yes, 226.6 (a), Mr. Justice Stewart. Potter Stewart: That is not in the statute, is it? William M. Burke: It is in Section 226.6(a). Now the Respondents fell into default under the contracts. After efforts by Ford Motor Credit to bring the contracts current failed, the vehicles were repossessed and these Truth In Lending actions followed by the Respondents against the Petitioners. The Ninth Circuit in its decision held that disclosures of acceleration clauses are never required under Section 226.8(b) (4), the default charge provisions of Regulation Z. The court held that when a creditor accelerates payments, it accelerates the contract, it exercises the right of acceleration, that demand for payment in itself a pre-payment. And therefore was able to hold under 226.8(b),(7) the creditor must disclose whether it rebates finance charges upon acceleration, and not pre-payment. In the process, the Ninth Circuit rejected of the Federal Reserve Board's official staff interpretation of its own regulations. I might point out here that Section 226.8(b)(7) dealing with pre-payment, which is the basis of the Ninth Circuit decision below, has no counterpart in the Act. This is a provision only in the regulation and has been interpreted by the Federal Reserve Board through its official staff interpretation. We submit that a careful analysis of the applicable sections of the regulation, an application of the Federal Reserve Board's official staff interpretation, and substantial policy consideration dictate that the court's decision below should be reversed. The Federal Reserve Board has issued an official staff interpretation saying the disclosure requirements incident to an acceleration clause, with respect to Ford, which is printed in full in our opening brief, that requires that the creditor disclose the amount or method of computing the amount of any default, delinquency, or similar changes that are payable in the event of late payment. The language in the Act is very similar. The Federal Reserve Board has include in its official staff interpretations that the right of acceleration is a creditor remedy, it is a contract right; it is not an amount that can be disclosed, nor it is payable with late payments of contract installments. What the Board concluded in its OSI is that the right of acceleration need not be disclosed that is what is referred to in (b)(4) is specific pecuniary charges that are payable with late payments of the disclosed fully by the Petitioners in this case in paragraph 12 or their contract. I might note right here that this issue has been considered by seven Circuit Courts and virtually every Circuit has unanimously agreed with the Board on this issue, that the right of acceleration need not be disclosed under Section (b) (4). There is no conflict on that point. The Board has also concluded in its OSI that as long as the creditor rebates under its finance charges, upon pre-payment after acceleration in the same manner that it rebates upon voluntary pre-payment, no default charges are required. And it is clear from the record in this case that practice is followed in these cases. Potter Stewart: In the same manner, or in no less burdensome manner. William M. Burke: No less burdensome manner; you are right, Mr. Justice Stewart. We submit. Therefore that the Petitioner's forms in these cases comply with the provisions of the Act and the regulation as interpreted by the Federal Reserve Board in its official staff interpretation. This, incidentally, is the position that the United States has been taken in its brief filed by the invitation of the Court. I would like to point out on (b)(7) that the official staff interpretation with respect to (b)(7) is that a creditor need only disclose its rebate practices in general; it need not disclose what its rebate practice is. And by specifically spelling out acceleration, as long as it makes a general rebate disclosure of its rebate agreement with respect to pre-payment, that is sufficient. Potter Stewart: Sum of the digits, or some of -- William M. Burke: Rule 78, the sum of the digits are interchangeable. Potter Stewart: S-u-m of the digits. William M. Burke: Yes, s-u-m. Potter Stewart: Not s-o-m-e. William M. Burke: We submit that the Board's official staff interpretation should be followed. The decisions of this Court have consistently held that an agency interpretation of its own regulation which is what is involved here, should be deferred to as long as it is not plainly erroneous, or as long as there are no compelling indications there. The agency's interpretation of its own regulation did not give the only possible construction of the legislation, nor what even a court might consider to be the principal construction, as long as it is plainly erroneous. We also submit that acceptance of the OSI in this case will further substantial policy considerations and will promote and facilitate the single most important purpose of the Truth In Lending Act, and that is to facilitate comparison shopping by consumers. How will it do this? It will do it because it will facilitate comparison shopping for credit because disclosures can at last be uniform. If responsibility here is placed with a central agency, here the Federal Reserve Board, rather than among scattered among appellate trial courts across the land, it will also facilitate comparison shopping to credit because disclosures can be made simple and shorter and uniform and more understandable to the consumers. Once creditors realize that they can place a high degree of reliance upon the board and staff interpretations of their own regulations, they will no longer feel compelled to provide the lengthy and complex disclosure forms that are now provided in an effort to anticipate and fend off litigation of this type. Respondents in their brief have urged this Court to amend the staff interpretation and to equate acceleration with pre-payment. That this amendments implies, they claim that under (b)(7) the creditor must disclosure whether it rebates finance charged upon acceleration. The first problem in this argument is that acceleration and pre-payment are distinct concepts, they are not the same. They are logically and legally antithetical and so raises a demand for payment. It is not in any senses of the word a pre-payment as claimed by the Respondents. Respondents have not cited any provision of the Act or the regulation or any other authority, for that matter, to support their argument that acceleration and pre-payment are identical. Potter Stewart: Well, when a demand is complied with, it is a pre-payment. William M. Burke: If there is a pre-payment following acceleration, that the Board has said is essentially a pre-payment. That is correct. Potter Stewart: It is a grievance, compulsory perhaps. William M. Burke: A payment following acceleration is a pre-payment -- Potter Stewart: In response to a demand. William M. Burke: That is right. Potter Stewart: Voluntary. William M. Burke: Mr. Justice Stewart, the exercise of a right of acceleration may lead to a pre-payment but itself is not a pre-payment. The Respondents have failed to demonstrate or really attempt to demonstrate in their briefs that the board's official staff interpretation is plainly erroneous. Petitioners submit that the OSI is a reasonable construction of the Federal Reserve Board of its own regulation and should be followed. In response to the alternative disclosure rule that the Respondents have asked this Court to accept, I can't put it any better than this Court did in the Mourning case, a case also dealing with Regulation Z, and I quote. "That some other remedial provision might be preferable is irrelevant. We have consistently held that where reasonable minds may differ as to which of several remedial measures should be chosen, courts should defer to the informed experience and judgement of the agency to whom Congress delegated appropriate authority." The Solicitor General will now present the view of the United States for ten minutes, and I would like to reserve five minutes for rebuttal. Thank you. Warren E. Burger: Mr. Smith. Stone A. Smith: Mr. Chief Justice, and may it please the Court. I don't want to repeat what Mr. Burke has said. I think that he [ILLEGIBLE WORDS] case on the statute under Regulation 3 for the correctness of the Board's official staff interpretation FC-0054 which is set forth at pages 52 through 56 of the Appendix to the petition. If, as we submit, the Board concludes that this official staff interpretation of the Board has correctly construed the Act and Regulation Z with respect to the disclosure of acceleration clauses and the rebate policy on payment of unearned finance charges upon payment after acceleration, I think it is clear that the judgment below has to be reversed. What I would like to describe briefly for the Court, it is set forth in greater detail in Petitioners' reply brief in the Appendix to his reply brief, is the process pursuant to which official staff interpretations are issued. The Court in the Mourning case has indicated that where reasonable minds may differ as to which of several remedial methods should be chosen, the Court should defer to the informed judgement of the agency. And here the agency that Congress has vested authority to promulgate rules and regulations is the Federal Reserve Board. The part of the Federal Reserve Board that deals with the Truth In Lending Act is the office of Consumer Affairs of the Federal Reserve Board. And these official staff interpretations are the product of a specialized group of people within the staff of the Board which are expert in the area of consumer credit. We think that is why they ought to be entitled to great deference. To begin with, let me say at the outset before I begin to describe the process, that Congress itself has recognized that official staff interpretations of the Board are such that they ought to be given deference. In 1974 Congress amended the Truth In Lending Act to provide for civil and criminal immunity if a person acts in good faith, relies upon the Board's interpretation. But two years later Congress determined that good faith reliance on the Board's interpretation was insufficient and they extended the immunity to good faith conformity with any interpretation or approval by a duly authorized official or employee of the Federal Reserve System. In our view, this 1976 amendment demonstrates a congressional vote of confidence in the quality and reliability these official staff interpretations. And the process which is set forth in the appendix to the Petitioner's reply brief we think confirms the correctness of this congressional vote of confidence. Official staff interpretation are issued in response to inquires by private parties, either debtors or creditors, to the Federal Reserve Board. And when the inquiry comes in the matter is assigned to a staff attorney to prepare a draft. And the reason I am going into this in great detail is because the other side has characterized these official staff interpretations as the work of a lone attorney or a lone Board employee. And really nothing could be further from the truth, because the draft is prepared by a lone person but then the process involves a very deep and detailed consultation with other staff attorneys, section chiefs and officials of the Consumer Affairs Office of the Federal Reserve System. After the matter is then discussed with various officials who have demonstrated familiarity with the particular problem and the official staff interpretation is only issued after further review by a section chief and approval by two officials of the Consumer Affairs Office of the Federal Reserve Board. Now, this is not the end of the matter, because then the official staff interpretation is sent to the Federal Register for publication. And in 1977, when this official staff interpretation -- the one at issue here -- was promulgated, the Board then had a practice of issuing some OSI's with immediately effective dates and some with delayed effective dates. But the implication was the same and that is the public was entitled to make comments. By "the public," I mean not only the community of consumers but the banking community and the people who lend in the consumer credit area. This particular OSI was issued with an immediate effective date but there was a provision, as I said, for reconsideration upon request. There was no request for reconsideration of this OSI. Now, all OSI's were then and now reviewed quarterly by a Consumer Affairs Committee which is a committee of members of the Federal Reserve Board itself who have been assigned oversight responsibility over the work of the Office of Consumer Affairs -- I think it is called Community Consumer Affairs now -- of the Federal Reserve Board. Now, as of April 19, 1978 the Board amended its procedure to provide for a delayed effective date of 30 days with respect to all official staff interpretations and a period of public comment. And the period of public comment useful to provide the Board with input from people who are affected by these technical interpretations. Between August 1976 and April 1978, 147 OSO's were issued under Regulation Z. Six were reconsidered pursuant to request and none were changed. Under the new procedure where everything gets a delayed effective date, 20 official staff interpretations have been issued, nine have been considered, and again, none have been changed. The point that we think is important here for the Court is that this entire process is marked by very careful consideration and it is the product of the special expertise of a group of highly trained people who have demonstrated deep familiarity with the consumer credit field. And it is important that these official staff interpretations receive deference, because as counsel for the Petitioner has properly pointed out, these technical questions require authoritative answers by a central authority. And indeed the disarray in this case is indicative of the problems that arise. We now have five or six different circuits who have expressed themselves on the question of pre-payment under the finance disclosure charge policy and each have indicated slightly different ways that they would go about providing for this disclosure. Byron R. White: At this point, with all this is disarray, the Board hasn't really done very much by way of rule-making to straighten out the disarray, have they? Stone A. Smith: Well, the Board has spoken in OSI FC-0054 which it believes is the -- Byron R. White: But nothing by formal, rule-making. Stone A. Smith: Nothing by formal rule-making although, Mr. Justice Blackmun, I would think that once the litigation commenced on this issue the Board might have -- it might have been inappropriate for the Board then -- Byron R. White: The less the agency is going to do. Stone A. Smith: Well, yes. But I think that if this Court holds as we submit it should that official staff interpretations are entitled to deference, I think a lot of kind of litigation over very small questions under the Act, small disclosure questions will cease because I think the statistics in the briefs have indicated that the volume of Truth In Lending litigations has mushroomed enormously as people have challenged the propriety of a variety questions of disclosure under the Act. Potter Stewart: The courts rather typically and frequently have simply disregarded the OSI's, haven't they. Stone A. Smith: Yes, although -- no, no, I think not. I think not. My understanding is they generally have followed them and this case I think is an unusual instance where there has been a wide variety of judicial rule-making in this area. But I think, as our brief points out, generally they have been give the deference that we think they deserve. And what I want to say in closing is simply that this judicial disarray has in our view hampered enforcement by the various agencies that are given the enforcement powers under the Act. Because while private debtors or consumers can bring actions under the Act, a variety of agencies such as the Federal Trade Commission, the Comptroller of the Currency -- they are all set forth in 15 U.S.C. 1507 -- have been given responsibility by Congress according to the kind of creditor to enforce the Act. Now, these agencies necessarily have to look to and rely upon the official staff interpretations of the Board. And if they can't do that, then I think that the uniformity Congress sought to impose in this area will be severely hampered. Warren E. Burger: Thank you, Mr. Smith. Mr. Slottee. Richard A. Slottee: Mr. Chief Justice, and may is please the Court. I respondent the Respondents in this case, Dennis and Michelle Milhollin and Miss Donna Eaton who were the consumers -- Byron R. White: May I ask you a relevant question at this point - Is your client's name misspelled all the way through on court records? Richard A. Slottee: The Milhollin's spell it with two L's and we have spelled it with one L throughout the litigation, from the District Court, to the Ninth Circuit, up to and including all the briefs. Byron R. White: They haven't discharged you yet. Richard A. Slottee: They haven't discharged me yet. Byron R. White: It isn't M-u-l. Richard A. Slottee: It is M-i-l. It is Milhollin. Byron R. White: So it' is all right with you to stay with misspelling. Richard A. Slottee: That is correct. -- and Nine Donna Barren -- these were two separate transactions -- who purchased, their automobiles from Ford Near Credit Company. I would like to add just one additional fact that was not brought out by the Petitioner and that is the Milhollin's were payments late on their contract, when without prior notice Ford Motor Credit repossessed their automobile. On the sane day as the repossession, the Milhollin's offered to pay Ford Motor the exact amount of the delinquent payments. In fact Ford Motor denied this and indicated that they accelerated the unpaid balance and they demanded the entire unpaid balance of the contract. There are three points which I would like to make to the Court this afternoon. First, all the parties concerned, the Federal Reserve Board staff, the Solicitor General, the consumers and Ford Motor Credit agree that in a contract like the one signed by the consumers in this case, the effect on the finance charge of the process of acceleration is important information to be disclosed to the consumers under the provisions of the Truth In Lending Act and Regulation Z. Second, the consumers could prevail in this case under either the views expressed by the Federal Reserve Board staff or the rationale of the court below. We think that the lower court's opinion is the better rule since, unlike the views of the Federal Reserve Board staff, it consistently guarantees the disclosure of meaningful information to the consumer in all credit transactions. And third, the Federal Reserve Board itself has not made known its position on this matter. William H. Rehnquist: Mr. Slottee, I don't mean to get anecdotal about this but supposing you have the most consumer-oriented court or Board in the world and it is trying to figure out what has to be disclosed and what hasn't. I can remember a committee I served on drafting a Truth in Land Sales Act and we were following a model of a State which had a three-page list of requirements that had to be disclosed. One of them, a particular disclosure was that during periods of high water all or parts of this lot may be under water. It didn't prevent the lot from selling at all. Whereas, had it been limited to just a few very important things it might have prevented the lot from selling. I would think that from a consumer's point of view you would want a limited, but important, category of information disclosed; and not just every conceivable thing you can think of. Richard A. Slottee: I certainly agree with Your Honor and, in fact, it has been raised by some people that what in fact the Truth In Lending Act is doing is making disclosure statements more confusing rather than simpler. And I have several answers to that remark. The first is -- and if you will look at the Joint Appendix pages 9 and 10 -- the majority of the provisions on a contract are not those required by the Truth In Lending Act and Regulation Z. Rather, there are terms that are inserted by the creditors themselves, and is those extra terms that are the terms that are causing the contracts to become longer and more confusing. William H. Rehnquist: But isn't it from fear of litigation like this that they insert them? Richard A. Slottee: No, Your Honor. The disclosures that are on the face of the contract or on a separate document -- they don't necessarily have to be on the contract -- are fairly limited in their scope. In this case the Petitioners could have remedied the violation by simply adding two words to their disclosure which would have given the meaningful information to the consumer that they needed prior to entering the contract to be able to judge the effect on the credit and the cost of credit, should default to the contract be accelerated. The Solicitor General has stated several times in his brief that the Federal Reserve Board has in fact issued an official interpretation on this. And to this extent the Solicitor General is mistaken. The only interpretation that has been issued is an official staff interpretation and there have been three unofficial staff opinions that have been issued. But there has been no award interpretation. And this is in fact the reason that the confusion among the circuits and the various disarray in the circuits has been created, is the Federal Reserve Board, granted as the agency authorized by Congress to implement the Truth In Lending Act, has failed to issue an interpretation which will solve the confusion which will answer the questions which will tell consumers and creditors alike what disclosures have to be made. In that situation, it is natural that the courts have stepped in, taken over for the Federal Reserve Board itself, and tried to remedy the situation; and they have come up with six or seven different theories. William H. Rehnquist: Why don't they follow the OSI? Richard A. Slottee: There has been one OSI official staff interpretation that was issued. And that was FC-54. William H. Rehnquist: Have the Courts of Appeal followed that? Richard A. Slottee: We have had basically three different positions. You have got the Ninth Circuit position, which didn't follow it. You had several other circuits which followed it completely and several others which said disclosures never have to be made about acceleration. I will explain the problem to you with the OSI. The Ninth Circuit and the Federal Reserve Board official interpretations basically agree that the process of acceleration can affect the cost of credit and that an early termination of the contract will affect the amount of the finance charge that is going to be rebated and that is information to be disclosed to the consumer. That is the basis of the official staff interpretation and that is the basis of the Ninth Circuit opinion. Where the two part company is on the situations when that disclosure has to be made to the consumer. The Federal Reserve Board staff is concerned with the affect on the consumer of acceleration, whereas the Ninth Circuit is concerned with the information that will be given to the consumer about acceleration and its affect on the finance charge. And I think a good example is represented by 54. One of the purposes of the Truth In Lending Act -- and it was indicated by the Petitioner -- is to promote comparative credit shopping by consumers. Now, if you take official staff interpretation 54 and apply it to a common situation with two creditors. The consumer is going out and trying to shop for credit, to decide which is going to be the best credit deal for that consumer. If these two creditors rebate upon acceleration by exactly the same method, but they differ as to pre-payment since that one creditor rebates by the same method in both situations and the other creditor differs, the first creditor will only have to disclose the pre-payment method. The second creditor will have to disclose both the pre-payment method and the method for acceleration. The consumer will look at those contracts and, despite the fact that both creditors rebate upon acceleration by the same method, will see only one rebate disclosure for acceleration. The consumer would reasonably believe that the first creditor has a better deal for him, or her, because there is no indication about any finance charge rebate or lack thereof on acceleration, and there is no way the consumer could reasonably meaningfully comparative shop in that situation. William H. Rehnquist: Well, he could by reading paragraph 19, I suppose. Richard A. Slottee: On the reverse of the contract, and that is one of the things that Regulation Z says, that is that if you are going to have meaningful disclosure, the disclosure has to be on the face of the contract. And there is a very practical reason for that. Pardon? William H. Rehnquist: If there is room. Where do you draw the line with all these details? Richard A. Slottee: It is very easy to have, for instance, a separate disclosure statement separate from the contract. In that case -- William H. Rehnquist: Have a bigger front page. Richard A. Slottee: Pardon? William H. Rehnquist: Have a larger and longer front page. Richard A. Slottee: You can have a larger and longer front page. Or in this situation -- this is Ford Motor's contract -- simply an additional two words would have provided that consumer with the information on that they needed. Byron R. White: Two words -- you mentioned that before. Where would you put the two words in? Richard A. Slottee: I would put the two words, Your Honor -- in paragraph 14, it says buyer may pre-pay his obligations, etc., upon pre-payment or acceleration buyer will receive a rebate of the unearned portion of the finance charge. "Or acceleration" would be the adequate disclosure. Lewis F. Powell, Jr.: Do you really think the automobile purchasers would be motivated to go ahead and compare contracts on the basis of these two words being added? Do you really think so? Richard A. Slottee: I think in fact they will, Your Honor, and -- Lewis F. Powell, Jr.: Have you ever known a purchaser of an automobile to read all the fine print in one of these contracts? Maybe a fleet purchaser, but I don't know about a little, ordinary -- Richard A. Slottee: Reading the fine print on a contract is exactly the problem. Most purchasers do not read the fine print on a contract, which was the entire rationale for the Truth in Lending Act, put it on the front. As Mr. Chief Justice -- Byron R. White: Well, it is just as fine on the front. You don't call that big print that you just showed us. Richard A. Slottee: Well this is slightly reduced down for the purpose of the appendix. Byron R. White: It still looks like a lot of fine print to me. Richard A. Slottee: Compared to the back of the contract it is very large. William H. Rehnquist: Well, if it is bigger print, it is a longer page too. Byron R. White: I think the size of the print is the same; there is a little more space between the lines. Richard A. Slottee: I don't think the size of the print is the issue. The issue is to put the required disclosures, that credit information which is important for the consumer in one location at a certain time before the contract is entered so that it can be easily road and understood. You obviously can't legislate why he is credit shopping but what you can legislate is the information to give the consumer the ability to make the wise credit shopping. Now, when you bury an acceleration clause and its effect on the finance charge on the reverse of the contract, you are taking away that ability for the majority of the consumers. John Paul Stevens: Counsel, you just said something about it being easily understood. I read you paragraph 14, which is the one you are centering on. "Borrower may pre-pay his obligations under this contract in full at any time prior to maturity of the final instalment hereunder. And if he does so, shall receive a rebate of the unearned portion of the finance charge computed under the sum of the digits method, after first deducting an acquisition fee of $15." Do you think that is readily understood by the average -- Richard A. Slottee: I think it is understood except for "the sum of the digits method," which if you read in most State statutes is really confusing. In fact that issue has been litigated in several circuits and the rationale behind upholding that disclosure is that the alternative to saying rule of 78, the sum of the digit method, is a disclosure which is just as complicated and much, much more lengthy. Putting out the mathematical formula or explanation of the rule of 78 is not going to provide meaningful information to anybody, lawyers, judges, mathematicians, accountants. The alternative in this case is simply a two or three word disclosure on a contract, but certainly no [ILLEGIBLE WORD] h adverse consequences. John Paul Stevens: What ordinary buyer would know what the word "acceleration" means, except in connection with a car, you put your foot on the foot feed. Warren E. Burger: That is one of the principal advertising factors, of cars that will accelerate from zero to 40 miles an hour in 18-1/2 feet. John Paul Stevens: It might be a person might eventually learn what "acceleration" is on a note; but it isn't an article of nature, is it? Richard A. Slottee: I agree but putting "acceleration" or some term other than acceleration, it explains the consequences of default. It certainly has to be better, it has to give more information to the consumer than simply having pre-pay and assuming that the consumer is going to understand that the term "pre-pay" also encompasses the concept of acceleration after default. More consumers are going to think that "pre-pay" means a voluntary payment prior to the maturity of the contract as, indeed, the contract indicates pre-payment has to be made before maturity of the final instalment. And you have acceleration or payment after acceleration or payment of the entire unpaid balance in conjunction with an explanation to rebate, that is information that a consumer is going to have a better chance of understanding. Byron R. White: I hate to be slow on this but frankly I am. You have said to us two or three times, you only have to add two or three words. And you said you add them somewhere in paragraph 14. I can't figure out where you add them. I think you really have to rewrite the whole paragraph and make it much longer. Richard A. Slottee: Well, in fact you may have to change the words around in the paragraph. Byron R. White: So it isn't just a matter of adding two words, then. Richard A. Slottee: Well, in a number of contracts it would be a matter of simply adding -- Byron R. White: Well, in this contract. You know we have to start somewhere. It would have to be rewritten with an additional contingency described, namely acceleration. You can't just throw the words "or accelerate" in the thing as it is written now -- at least I can't; and I don't think you can. Richard A. Slottee: I could change the words around in the paragraph very slightly to make it -- put "or acceleration" or "payment after acceleration." Potter Stewart: Well, you can just add a sentence saying the same terms shall be applicable to repayment after a demand after an acceleration demand. Richard A. Slottee: Exactly, Your Honor. The second problem with staff interpretation 54 is it doesn't answer the question of what to do when the contract has a pre-payment disclosure on the front and an acceleration clause on the back that says that the creditor has the right to accelerate the unpaid balance but does not disclose the method by which that rebate for the finance charge will remain. And what the staff has said in this situation is you look to undisclosed non-binding creditor policy to determine what in fact the creditor will do. You basically say what is the policy of the creditor; if the policy of the creditor, regardless of the contract term, is to rebate the same as for pre-payment, then no disclosure has to be made. If the policy of the creditor is to rebate for other than pre-payment, then they have to make a separate disclosure. And there are numerous problems of this. The first is - How is the consumer, the person whom the Act is intended to protect, going to be able to determine what the undisclosed policy of the creditor is. Second, that policy is not binding. It is a non-written, undisclosed policy, it is not binding on the creditor and it is not binding on the creditor's assignee. And that in fact frustrates the enforcement mechanism of the Act. It was indicated by the Solicitor General private consumers are in fact a primary enforcement mechanism of the Act. Since acceleration or rebate of the finance charge is not going to occur until there is a default, and that is when the policy of the creditor will in fact become known, that default may incur after a year; and the Act has a one-year statute of limitations. And if it occurs after the year, the consumer is simply not going to have any remedy. The creditor, who has a non-binding policy, in fact is going to be able to change that policy however they want. The record in this case indicates that Ford Motor changed their policy twice, in the Milhollin case and in the Eaton case. But the contract disclosures state exactly the same. In the first case, the affidavit indicated that upon the act of acceleration they rebated according to pre-payment. Lewis F. Powell, Jr.: Does the record show how long the Ford Motor Company has been using this form? Richard A. Slottee: I don't think it does, Your Honor, unless you look at the bottom of the contract which will say -- Potter Stewart: Give a date? Richard A. Slottee: -- a certain addition, and I think it is 1973. Lewis F. Powell, Jr.: Any idea of how many contracts are out-standing? Richard A. Slottee: How many contracts are outstanding, I assume that they number in probably the millions. Lewis F. Powell, Jr.: Is it a contract that is fairly general in the industry or is this unique to Ford Motor? Richard A. Slottee: In the early 1970's acceleration clauses were normally on the back of the contract rather than on the front, and that is in fact what fostered most of the litigation that has worked its way up to the circuits. It is not in the record now, but we deal with a lot of these contracts and I think the normal rule now is to have the acceleration clause on the front of the contract rather than on the back. Creditors simply have not found that too much of a burden to change. And you raise an interesting point, because one of the suggestions that has been made is that if this Court affirms the ruling in the Ninth Circuit or requires the disclosure of acceleration and its affect on the finance charge, it is instantly going to throw millions and millions of consumer contracts in default and it is going to cost the credit industry untold millions of dollars. And it is simply not the case. There are two protection for the creditors in the Act. One protection is a one-year, very short statute of limitations. You file your suit within one year from the date the contract is signed or you are out of luck. For all those creditors that have violated Milhollin or St. Germaine, the year has run and they have no -- Byron R. White: There are still millions within the year. Richard A. Slottee: There are still millions within the year but -- Byron R. White: Well, that is all you need, then. I mean that would satisfy the complaint, because there would be millions. Richard A. Slottee: But there is a second protection to cover those millions. And that is the Act provides an absolute protection to the creditor who in good faith relies on any official staff interpretation issued by the Federal Reserve Board, despite the fact that that official staff interpretation is later revoked or rescinded by a court. So if this Court affirms the Ninth Circuit, rejects the rationale of the official staff interpretation, those creditors who in good faith -- Byron R. White: Was there a conflicting case in this; there was, wasn't there? Richard A. Slottee: I am sorry, Your Honor. Byron R. White: Wasn't there a conflicting decision with the Ninth Circuit? Hasn't there been a Court of Appeals who decided this case another way? Richard A. Slottee: There are several Courts of Appeals who have interpreted the official staff interpretation different than the Ninth Circuit. Byron R. White: Well, what about in those circuits? Richard A. Slottee: The rule would state the same. Byron R. White: Why would it? The court has struck it down in those circuits. Richard A. Slottee: Well, they haven't struck down the section of the Act. Byron R. White: How could you rely on those circuits upon any staff interpretation that has been invalidate by a court? Richard A. Slottee: Because the statute specifically says that a creditor who in good faith relies on an official staff interpretation -- Byron R. White: How can you be in good faith if the Court has told you that a staff interpretation is not worth a nickel? Richard A. Slottee: For those creditors who relied on the staff interpretation after the Circuit Court opinion came down, I think I agree with you. Byron R. White: I know, but that has been quite a while. Richard A. Slottee: I am sorry. Byron R. White: Well, there has been a long time go by since those cases have decided that the staff interpretation was wrong. There have been a lot of creditors who certainly since then wouldn't be able to rely. Richard A. Slottee: The official staff interpretation in this case was in 1977. Byron R. White: Well -- Richard A. Slottee: Now, any person -- Byron R. White: Well, how many millions have bought automobiles since then, or even Fords? Richard A. Slottee: Any creditor who relied on that staff interpretation would be protected regardless of a subsequent Circuit Court opinion. Byron R. White: I didn't say subsequent. How about relying on it after those cases; how about the ones who relied on it since those courts have struck it down? Richard A. Slottee: And before the official staff interpretation. Byron R. White: No. Lewis F. Powell, Jr.: How does the average purchase of an automobile even go back to a staff interpretation? Richard A. Slottee: It don't. They get their disclosures from the face of the contract. Lewis F. Powell, Jr.: But does your point have any significance that this is an out for the companies who have these contracts outstanding? Richard A. Slottee: Well, I am not sure what -- Lewis F. Powell, Jr.: All right, forget it. Potter Stewart: My question may be off the mark. If what you tell us is true, why didn't that provision protect the creditor in this case, who is relying on a staff interpretation, not prior to the -- Richard A. Slottee: The Milhollin contract was signed before the Act was amended to allow for that type of credit to be made. Potter Stewart: I see. Richard A. Slottee: So there is no interpretation to rely upon, Your Honor. Potter Stewart: I see. Lewis F. Powell, Jr.: Let's try again. Suppose you had a client and you want to prove reliance, what would you have to show; that he had read the Federal Register? Richard A. Slottee: As a creditor -- I had a client who was a creditor? Lewis F. Powell, Jr.: Yes. Richard A. Slottee: If I could put myself in that situation -- Lewis F. Powell, Jr.: It would be difficult, would it. Richard A. Slottee: Probably. -- I would show that in fact I had a department of my company that reviewed Truth in Lending official staff interpretations and compared them with the contracts. And in a suit I would simply put on an affidavit or the testimony that says I in fact read this and I relied upon that when I drafted my contract. Whether that is going to be sufficient or not, I am not sure. But I think that is what Congress intended when they in fact passed the Act. The Ninth Circuit has avoided these two particular problems, the one of undisclosed creditor policy for reliance and the one for comparative credit shopping by having a rule that consistently guarantees meaningful information to the consumer. And that is basically you always have to disclose the effect of the finance charge, the effect of acceleration on the finance charge rebate; whether or not it is the same for acceleration and/or pre-payment. That is the one way which the consumer will always be able to get the information they need. William H. Rehnquist: But then there is no rule of law I have ever heard of that doesn't have close cases and that sort of thing, that breed litigation. And I would suspect the Ninth Circuit's rule is the same. Are you suggesting that we adopt the Ninth Circuit's rule or that we leave the circuits free to interpret -- each circuit free to interpret for itself what deference it will give to Regulation Z Richard A. Slottee: I think that is the heart of the matter, Your Honor. I think we have the same interest in this case as Ford Motor does, and that is the Federal Reserve Board has not made known their position on this matter. And we want to get a uniform decision, something that everybody can rely upon. We think that the decision should be that in accordance with the Federal Reserve Board's staff interpretation the effect of acceleration on the finance charge rebate is credit information that has to be disclosed to the consumer, and Second, the rationale or the disclosure method that should be used is not that as the Federal Reserve Board staff indicates, but that which the Ninth Circuit indicates. William H. Rehnquist: To uphold a part of the staff interpretation but not all of it. Richard A. Slottee: Exactly, Exactly. William H. Rehnquist: Well, how do you reach that result? How does one justify reaching that result? Richard A. Slottee: The deference that is to be accorded to a Federal Reserve -- to an agency interpretation, or the opinions of an agency, it would depend on a number of factors, the evidence in consideration, the validity of its reasoning, its consistency with prior and future pronouncements. Warren E. Burger: Did we put all those conditions on the Mourning opinion? Richard A. Slottee: It wasn't in the Mourning opinion, it was in another case, the Skidmore case. The Mourning opinion had to do with the authority of the Federal Reserve Board to issue a regulation and whether they had that authority under the Act. And that is not the case here, we are talking about something different. We are not attacking the authority of the Federal Reserve Board to issue 226.8(b)(7) or 226.8(a). We think that 8(b)(7) is perfectly proper. What we are questioning is the details of the application of the staff's interpretation of that particular regulation. I would just like to say one other thing in closing, and that is it has been indicated that there have been a lot of Truth in Lending suits filed in the United States and that the number is significantly increasing. And the implication, though it hasn't been said directly, is that a number of these suits are frivolous. I have several comments to that. First, there is nothing in the record and there is no citation in any cases that I know of that says anything that these increased Truth in Lending suits are in fact frivolous. In fact, I think what they may represent is the increase in consumer credit in the United States and the lack of creditor compliance with the terms of Truth in Lending. And I would also mention something that this Court stated just several months ago in Ryder v. Sonotone which authorized private class actions under the Antitrust Act. That same concern was raised by Sonotone in that case and the Court said basically that is not an unimportant consideration but District Courts should be aware and vigilant for frivolous suits, but it is up to Congress to provide adequate funds for judges to handle the Truth in Lending suits or to handle the suits that may arise under the Anti-trust Act. I think the heart of the situation is not the deference to be accorded to the staff opinions but whether or not in the application of these opinions the consumer is going to receive the meaningful information that they are entitled to under the terms of the Act and under the statements of this Court in Mourning. Thank you. Warren E. Burger: Do you have anything further, Mr. Burke? William M. Burke: Mr. Chief Justice, and may it please the Court. I won't take much more of the Court's time to respond. I would like to address a couple of points that were raised by Mr. Slottee in his presentation. First of all, I do not want the Court left with the impression that the Respondents were mistreated in this case. The Joint Appendix at pages 23 to 25 indicate the substantial efforts made by Ford to cause the Milhollin's to bring their contract current, which failed. Mrs. Eaton advised Ford that she could no longer continue to make payments on the contract, so Ford accepted the vehicle in full discharge of the indebtedness and did not seek a deficiency judgment. In response to the questions by Mr. Justice Stevens, Mr. Slottee has said that the simple addition of two words would solve this problem. The words were that you disclose that you will rebate upon pre-payment or acceleration. Had we added those two simple words that Mr. Slottee says would have solved all the problems, we would be here today with Mr. Slottee arguing that you don't rebate upon acceleration. You have mis-advised the consumer. You say you will rebate upon pre-payment or acceleration, your own affidavits show that you don't rebate on acceleration. You rebate upon payment following acceleration. And we would be litigating that question here today. There has been no change in Ford Credit's policy on rebate, as the Joint Appendix shows at pages 22 and 68. I would like to conclude by emphasizing the terrible dilemma facing the credit industry today. The dilemma is the central theme of the three amicus curiae briefs filed by the Consumer Bankers Association, the California Bankers Association, the National Consumer Finance Association, joined by General Motors Acceptance Corporation. And that dilemma is the consumer credit industry wants to comply with the Truth in Lending Act and Regulation Z and it is conscientiously attempting to do so. However, the problem is the industry can't place any substantial degree of reliance upon the Board and staff interpretations if courts such as the court below refuse to pay deference to those interpretations. The industry can't afford to change their contract forms each time a new case comes down with an additional disclosure that that particular judge thought should be provided. And at the same time they can't afford not to change their forms because of the punitive liability aspects of the Act which could be ruinous to small creditors. As a result, what they are doing is the logical thing. They are over-disclosing in an attempt to anticipate and fond off legal challenges of the type raised here. The result is that the disclosure forms are long -- I have seen forms that are two or three feet long -- they are confusing, they are non-uniform, and that itself is a violation, or could be a violation of the Act and the regulation. We submit that there is a simple way out. And that is if the official staff interpretation is followed and applied in this case, it will have two healthy effects. First, the Board will be encouraged to continue to use its interpretive powers to attempt to bring some semblance of uniformity and simplicity into this area. This will benefit creditors, to be sure; but it will also benefit consumers, because the forms can be shorter and simpler and easier to understand, if creditors know that they can place reliance upon the Board's interpretive guidelines. The second beneficial effect of following the OSI in this case is it will permit the system to operate the way Congress and the Board intended it to operate, and that is when the Board or the staff publishes an OSI for comment in the Federal Register, creditors, consumers, any interested person will make their views known to the Board at that time rather than to wait until subsequent litigation to attack the Board's views. The Board and staff can then assess the views and positions of all interested parties at that time, which will vastly improve its decision-making process. In short, it will no longer be possible for an interest group or a person to sit back, allow an OSI to be published for comment, allow it to become final, allow the industry to rely upon it, and then attack it in a trial court action, attempting to convince a trial judge that the Board could have done better, as was done in this case. We submit therefore, for all of these reasons, that the decision of the court below should be reversed. Thank you very much. Warren E. Burger: Thank you, gentleman. The case is submitted.

John G. Roberts, Jr.: We'll hear argument-- next in Wallace versus Kato and Roy. Mr. Flaxman. Kenneth N. Flaxman: Thank you, Mr. Chief Justice, and may it please the Court: This case presents the Court with the question it addressed in Heck versus Humphrey raised in a slightly different context. The context in Heck was of a prisoner whose conviction had been affirmed who was in prison, who had filed a civil rights case that would have had the practical effect of collaterally challenging his criminal conviction. The context in this case is of a civil rights plaintiff who has prevailed in his criminal case, who was imprisoned for 8-1/2 years fighting the criminal case and comes to Federal court with a Section 1983 action saying, I now seek a remedy for my unconstitutional incarceration, and files his lawsuit. The court in Heck held that this action, an action to recover damages for unconstitutional conviction or imprisonment, accrues when the conviction is set aside. That's the principle that we asked the court of appeals to apply and the court of appeals said: We're not going to apply that because we will adopt a categorical rule without any implied exceptions whatsoever that says when you're arrested you have 2 years, which is the statute of limitations in 1983 cases in Illinois, to file your claim for damages. Ruth Bader Ginsburg: Mr. Flaxman, one starting point. You say that this case should be just like Heck, but in Heck the core problem was the line between 1983 and habeas, right? Kenneth N. Flaxman: Well, that was one view of the core problem. Ruth Bader Ginsburg: But at least this case involves no such concern about habeas. Kenneth N. Flaxman: That's correct. In Heck the Court solves the core problem by concluding... by denying the existence of a cause of action for damages until the criminal case had been resolved in favor of the civil rights claimant, which is the rule, the common law rule for malicious prosecution. That's the solution that the Court came up with in Heck, which is the solution that the petitioner believes should be applied in this case. Antonin Scalia: But only if, only if the challenged evidence, the challenge to the evidence, if sustained, would necessarily... and this is the crucial language... invalidate the criminal conviction. Kenneth N. Flaxman: That's what would have happened in this case, as the dissenting judge in the petition for rehearing-- Antonin Scalia: Would necessarily have? You could have said that ex ante? Kenneth N. Flaxman: --Absolutely. In criminal cases there's discovery and the criminal defendant knows what the prosecution-- Antonin Scalia: You don't know what other evidence there might have been in the criminal case. Ex ante you can't tell. Kenneth N. Flaxman: --You do know because it's disclosed in discovery. We don't do trial by ambush any more in criminal cases. The defendant knew that all the evidence against him was the alleged-- John G. Roberts, Jr.: Well, but he did not know that for years later. I mean, they don't have to bring a prosecution immediately. They can wait until the day before the statute of limitations runs. Kenneth N. Flaxman: --Well, there is no statute of limitations for murder in Illinois. John G. Roberts, Jr.: Well, then they can wait a long time. [Laughter] Kenneth N. Flaxman: If he's incarcerated that whole time awaiting the filing of charges, then his cause of action would not have accrued. But the more likely scenario is that he would be arrested-- David H. Souter: Well, is that... I mean, your friend on the other side says that the cause of action would have accrued at the moment at which he was bound over by the decision of an independent magistrate. At that point the false arrest and the incarceration incident to the false arrest is over and if there is ever going to be a claim for what happens next, I gather it'ss going to be a common law action for false imprisonment, and that, I guess, would not accrue until the imprisonment is over. But so far as the arrest is concerned, whatever whatever wrong is done, that wrong is completed at the point at which an independent magistrate takes over. Kenneth N. Flaxman: --If the claim was solely directed at the arrest, then Your Honor would be absolutely correct. The claim in this case, the cause of action, is not that he was taken off the street without probable cause. The core of the cause of action is that the respondent police officers exploited that arrest to get this untruthful confession that was used to hold Mr. Wallace in custody for 8-1/2 years, to seize him for 8-1/2 years. It's not just the arrest. It's the arrest plus exploiting it. David H. Souter: But all of that occurred, as I... correct me if I'm wrong on the facts, but I thought all of that occurred prior to... I don't know what they call it in Illinois, but prior to a bind-over hearing or prior to the point at which the judiciary steps in, breaking the, as it were, the chain of causation between what the police do and the subsequent incarceration. Kenneth N. Flaxman: Under Malley versus Briggs, it doesn't break the chain of causation if we adhere-- David H. Souter: No, but just as a factual matter is it correct... is it correct as a factual matter that the confession that was given was a confession that was given before there was any judicial intervention, before he was brought before a magistrate? Kenneth N. Flaxman: --That's correct. David H. Souter: Okay. Kenneth N. Flaxman: There was no other evidence presented to the magistrate or that could have been presented to the magistrate other than the confession to show-- Samuel A. Alito, Jr.: Well, Mr. Flaxman, is your argument limited to that situation, where there is no evidence whatsoever against the criminal defendant other than the illegally seized evidence? Or would it apply in some situations in which there is some additional evidence? Kenneth N. Flaxman: --If there's some additional evidence, we could not say was necessarily... would necessarily imply the invalidity of the conviction. And would be... that's not our situation. Samuel A. Alito, Jr.: Any additional evidence, even if it would be insufficient to support a conviction, takes... makes make this... would make this a different case. Kenneth N. Flaxman: I would not say... well, it would make it a different case. But if I was arguing in a case where there was a little bit of evidence, but not enough to say there's probable cause to accuse him of a crime, I would say that suppressing or eliminating the confession would necessarily imply the invalidity of any conviction. Samuel A. Alito, Jr.: What, what does necessarily mean? Does it mean no additional evidence? Does it mean no additional evidence that is insufficient to support a conviction? Does it mean no additional evidence that would be likely to persuade a trier of fact? Kenneth N. Flaxman: What I think it means is that there's no conviction... what I think it should mean... and I'm not trying to debate the dictionary, what I think it should mean is that if there is no evidence other than after... that is excluded, to base a prosecution on, as in this case where the man is let go, because there is no evidence to prosecute him, that that does imply the invalidity of the conviction. Samuel A. Alito, Jr.: Well, in this case, let me just me more question on it. In this case, suppose there had been a witness who said at about the time when this murder took place, I saw somebody who was between, I would judge as between the age of 15 and 25, average height, average build, running away. And let's say that your client fits that description. Now would that be enough to take this case out of the rule that you're arguing for? Kenneth N. Flaxman: No. Unless that witness could say and the man who I saw then is the defendant in this... is the criminal defendant, Mr. Wallace. There was an eyewitness in this case. And he could not make an in-court identification of Mr. Wallace. And the prosecutor realized that that wasn't enough evidence on which to base a criminal prosecution, and gave up. Antonin Scalia: Again, you didn't, you didn't know that at the time the arrest was made, or at the time the confession was extorted, or at the time he was bound over. You really didn't know that until the trial. For all you knew, they might have found in addition to the confession, they might have found eyewitnesss who would have identified your client. You couldn't tell that until the trial. Kenneth N. Flaxman: Well, that would have been very unfair if they withheld... they ambushed the defendant with-- Samuel A. Alito, Jr.: No, well... until the trial-- Antonin Scalia: Until the trial, until the process of trial began. Kenneth N. Flaxman: --Well, we didn't know that because there weren't any, because this man didn't commit that crime. We are talking... in the hypothetical, I think we should set, start with Mr. Wallace being an innocent man, who was arrested unlawfully, who gives an involuntarily... an involuntary false confession. And on the basis of that is held for eight and a half years, finally wins the case, is set free, and then sues the-- Anthony M. Kennedy: But, but you presume in your last answer that other than that, there is an absolutely fair prosecution. Kenneth N. Flaxman: --Other than the fact-- Anthony M. Kennedy: I mean, why do we make that assumption when we start out with the allegation of a tort and a violation of the Constitution? I don't understand. Kenneth N. Flaxman: --Well, the tort is against the police officers who made an unlawful arrest and exploited it to get the evidence that was used to hold Mr. Wallace. The, the problem with saying that Mr. Wallace has to sue, as soon as he files his motion to suppress, he should have filed his Section 1983 action, would produce a multitude of 1983 actions. Anthony M. Kennedy: What about the fact... suppose that there were even a more serious battery here, a broken limb or something. Would you have to sue for the damages for the battery right away? The police officers injured-- Kenneth N. Flaxman: No. If excessive force was used against somebody when they're being arrested, that's a claim that everyone agrees accrues at the time of the injury. Anthony M. Kennedy: --Well, what about this case? Kenneth N. Flaxman: This case would necessarily impair the validity of the conviction. If-- Antonin Scalia: But the conviction in Heck existed at the time of the alleged tort. And what Heck said is where you have an outstanding conviction, and you have a constitutional tort, you can't sue on that constitutional... and where... you cannot sue on that constitutional tort if the decision on the tort would effectively contradict your conviction. Until the conviction has been set aside. Well, this is not that situation. There was no outstanding conviction involved. So why did you have to wait? Kenneth N. Flaxman: --Well, you had to wait because it would... it would be a fruitless act to file the case while the case... file a Federal case while the state criminal case was pending. But-- Anthony M. Kennedy: I'm still, I'm still puzzled about my question. Suppose there's a battery resulting in a serious injury to the defendant. Kenneth N. Flaxman: --That claim would-- Anthony M. Kennedy: But there's other evidence and so forth. Can you sue for the battery at once? Kenneth N. Flaxman: --You can sue and you have to sue for the battery immediately. Anthony M. Kennedy: Why is that the situation? Kenneth N. Flaxman: Why is that different? Because this-- Anthony M. Kennedy: And... or is it just because of the assumption that the conviction might stand anyway. Kenneth N. Flaxman: --Well the conviction generally does stand with... the battery generally has nothing to with the conviction. Anthony M. Kennedy: But if does, then you wait? Kenneth N. Flaxman: If it is an element of the offense, you wait. Or if it is an element of what could be the defense in a criminal case. But getting back to the Heck question, in Heck the court looked to the common law for the appropriate rule to apply to the cause of action that Mr. Heck was applying. If we look to the common law for the appropriate rule for Mr. Wallace, we don't come up with the Seventh Circuit's rule of immediate accrual. We come up with the rule-- John G. Roberts, Jr.: But the point, the whole point of Heck was to avoid 1983 becoming an end run around habeas. But here you don't have that problem because you don't have any available relief under habeas under Stone versus Powell. Kenneth N. Flaxman: --Well, we don't know before the criminal case starts whether Mr. Wallace will receive a full and fair hearing on his Fourth Amendment claim. And until we know that we don't say Stone versus Powell would bar a Fourth Amendment claim. We don't know that the state will give Mr. Wallace an attorney who can stay awake, who can file a motion, who knows that there is a Fourth Amendment, and Mr. Wallace might end up not getting a full and fair hearing and might have a valid claim cognizable with Federal habeas corpus that-- Anthony M. Kennedy: Are there many cases in which the rule of Stone versus Powell is inapplicable for that reason? Kenneth N. Flaxman: --No. But there are some. It is not a non-existent occurrence in. Stephen G. Breyer: What happens... I'm trying to think of what the problem is for you. On January 1, your client's arrested unlawfully. Now suppose the rule was you have two years to file it, starting now. What is the problem for you? The problem is maybe in a year, or maybe less, the police start to prosecute him. In the meantime, your trial is going forward because you filed it on time. So when they start to prosecute him, you don't yet know what's going to happen. And it could happen that he's convicted and you think it's illegal because of the arrest and necessarily so. And therefore you have to stop the trial, I guess, because of Heck. Kenneth N. Flaxman: The civil trial will be stayed pending the-- Stephen G. Breyer: That would work, I guess. They'd stop it and then they'd have to bring it... you'd have to stop it and then you'd have to go through these other remedies and they you'd have to go back to it. Kenneth N. Flaxman: --It would be on the district court's docket for ten years waiting the final-- Stephen G. Breyer: But that would work. Kenneth N. Flaxman: --It would, well, it would be a horrible-- Stephen G. Breyer: A mess. Kenneth N. Flaxman: --a horrible mess for the district court. It would not work because-- Stephen G. Breyer: Suppose I modify it. David H. Souter: Why would it be a mess? I mean, it seems to me that the district court, once it is filed... something is filed within the two year statute, the district court can tell virtually immediately whether there are criminal proceedings that are yet to be held, and the district court can simply, it can simply stay further proceedings until those criminal proceedings are over. If there's a possibility of collateral attacks, the district court can simply say hey, are you going to file a collateral attack? And if the answer is yes, stay it further. If the answer is no, go ahead with it then. What's tough about that? Kenneth N. Flaxman: --Well, the district judge will not allow a civil case to go forward because it would allow the criminal defendant-- David H. Souter: That's the premise of my question. But I mean it seems to me to be fairly easily administered. Kenneth N. Flaxman: --Well, I mean, I, I shudder to think of 20,000 cases on district court dockets being stayed while criminal cases are being resolved. David H. Souter: 20,000 might make me shudder. But we got one. [Laughter] Kenneth N. Flaxman: We have one. The criminal defendant will be disinclined to file his civil rights case on time because it will be used against him in his criminal case to impeach his bias. David H. Souter: Well... explain that. Kenneth N. Flaxman: It will impeach his bias. If he, when he testifies in the criminal case, he will be cross-examined, aren't you seeking money damage from the police officers? Don't you want to make money from this case? And the jury will consider that when they weigh the truthfulness of the-- David H. Souter: And don't you think that a civil action which necessarily has to be stayed, might be a basis for, for the court in the criminal case to limit that kind of cross-examination? Kenneth N. Flaxman: --Not in the Circuit Court of Cook County. That cross-examination will occur every time a civil-- David H. Souter: Are there appeals from the Circuit Court of Cook County? Kenneth N. Flaxman: --There are appeals and. David H. Souter: Okay, don't you... don't you think ultimately you could get that issue resolved? Kenneth N. Flaxman: No. I am absolutely confident the Illinois courts at the highest level will say that is proper cross-examination. David H. Souter: Come... come back here. [Laughter] Stephen G. Breyer: Suppose it is complicated. I want to suggest a modification with this suit here. You say you have to file within two years. But wait, you have... we tolled the statute. If the person is arrested and charged, and convicted, for all the time that is going on, it is just tolled, equitably. And after the conviction, if he's acquitted, by the way, or he isn't arrested, the statute starts to run again. Now if he's convicted, as long as you have filed, proceeding to challenge the conviction, it is tolled. Now, would that... that it seems to me would help every problem you have, and it would be called equitable tolling. And that's been suggested by judges in different forums and many states have it. And what's the problem? That just solves the problem, doesn't it? Kenneth N. Flaxman: Well, I have four answers. I hope I can get them out. If Heck instead of adopting a rule of accrual and denying existence of a cause of action had established the Federal tolling rule, saying that these causes of action are tolled while you're in custody, that would have solved the problem. Stephen G. Breyer: All right, well, we could do it in this case. Kenneth N. Flaxman: Well, I, I... the Court certainly can do it. It would require carving a hole into, into Tomiano with this-- John G. Roberts, Jr.: Yeah, it would require overruling our cases that say for tolling, your borrow state law-- Stephen G. Breyer: What cases require overruling? Kenneth N. Flaxman: --Unless state law is inconsistent with Federal Board of Regents versus Tomiano, I think the Court could say that. The other thing that the Court should be aware of is that the Seventh Circuit, and I think four other circuits follow the common law rule that you can't have a 1983 action about a false arrest if you have been convicted of the charge on which you were arrested. So these cases would not be brought in the Seventh Circuit and the-- Stephen G. Breyer: Well, it seems to me identical to the rule you are advocating but with one difference. The difference with the rule you are advocating is a judge who is going to be judge at time A with your first case, is going to have to guess whether it is in this case or not in this case necessarily related to some kind of challenge to conviction you're going to bring later if you happen to get convicted. Kenneth N. Flaxman: --I think-- Stephen G. Breyer: There is no way to guess that. Kenneth N. Flaxman: --I think tolling, a Federal tolling rule for this cause of action, while someone in custody although a criminal conviction is, has not been resolved in favor of the defendant, criminal defendant, would be an excellent solution. Stephen G. Breyer: And is there anything that you are aware of that it would be contrary to? I know there are cases that say you look to states but you only look to states where the state law is, in fact, consistent with the Federal right. Kenneth N. Flaxman: No, I think the Court could say without overruling anything that there, in this the state law does not fully reflect or protect the Federal rights at stake here. John G. Roberts, Jr.: --So then you deny the officers the purpose you have for the reason you have statutes of limitation, which is repose. They are going to wait ten years instead of the two years to find out if they are going to have to answer any claim for damages. Kenneth N. Flaxman: Well, but the officers will also get the benefit of not being sued if there is a conviction based on the charge for which the person was arrested. That case would not be brought, especially in the Seventh Circuit where there is no cause of action... and it wouldn't be brought anywhere because there's no damages if you are arrested and properly convicted and serving sentence. Those cases just are not going to exist; the officers would have that benefit. Ruth Bader Ginsburg: I thought the Seventh Circuit said in... quickly in passing that the damages would run only from the time of the allegedly unlawful arrest until the time of arraignment. That would, that would be the... be all of your damages. If there wasn't an arraignment, whatever happens is not attributed to the seizure. Kenneth N. Flaxman: That's the Seventh Circuit's view about what the cause of action is, which goes back to what is the cause of action and when does it accrue? In the Seventh Circuit the cause of action starts when you're arrested and... either at the time of arraignment of, as they said in a subsequent case, when there's a Gerstein probable cause hearing. In I think every other circuit, the cause of action doesn't end at the time of arraignment. It continues until the time that you're released from being in custody. Ruth Bader Ginsburg: You asked us to take that case and we didn't. Kenneth N. Flaxman: Well, I asked you to consider damages but I think... as a question of damages, and there are many issues related to damages that would have been presented in question to-- Ruth Bader Ginsburg: But if that's the boundaries of the false arrest claim, then why does one happen later matter? Kenneth N. Flaxman: --Well, the common law false arrest claim would allow damages up until the time you were released from the imprisonment, which is not at the time of-- David H. Souter: Even on the basis of innocence? Kenneth N. Flaxman: --Not for a false arrest. As long as you're not convicted. So malicious prosecution, you would-- David H. Souter: The common law would give damages in a case like this in which the release was basically governed by a suppression which has nothing to do one way or the other with the innocence of that person? Kenneth N. Flaxman: --That's correct. The common law element... malicious prosecution requires that the innocence or grounds not consistent with guilt, but there's no such element in the common law false imprisonment, which would accrue when you are released from being in prison, which would benefit Mr. Wallace in this case. When the Seventh Circuit talked about there are three alternatives that we have to choose from, the proof immediately, the case by case of when it accrues, or it only accrues at the end of the case, they didn't consider the fourth possibility of the common law rule that it occurs when the imprisonment ends. Samuel A. Alito, Jr.: --What does somebody like Mr. Wallace do under your rule if he's in a jurisdiction where there's not a lot of discovery in criminal cases. He isn't going to know until trial whether his cause of action accrued sometime earlier or whether it waited. Kenneth N. Flaxman: But he's not going to file his civil rights claim until his criminal case is over, because he knows and his lawyer will tell him, that's going to hurt you in winning the criminal case, and you should be concerned about that. John G. Roberts, Jr.: But he's never going to know, in the case where there's no statute of limitations, he's never going to know when his criminal case is going to be over because he may never know when it's going to start. Kenneth N. Flaxman: Well, if Mr. Wallace had been arrested and released, he would have had two years from when he was released to bring a civil rights action, that being false imprisonment-- John G. Roberts, Jr.: So what happens if he files a suit after one year and then after one year and 350 days he's prosecuted? His action accrued but then it didn't accrue? Kenneth N. Flaxman: --Well, I would suggest that it would be the same as when someone is convicted of battery, and then 10 years later, the victim of the battery dies from the injury caused by the battery. There would be a second prosecution for murder that would not be barred from double jeopardy. I think that's Diaz versus United States. I think-- John G. Roberts, Jr.: So his action accrued and maybe it's even over, but then it turns out when they bring the prosecution, it should have never have been brought because it never accrued. Kenneth N. Flaxman: --No, I think he would have two actions. He'd have the action for being arrested and then he'd have the action later when the... when he was seized because of the unlawful... the fruits of the unlawful arrest. As a practical matter, though, those cases are going to arise even less frequently than the Stone versus Powell cases that are brought properly in Federal habeas corpus. Stephen G. Breyer: That problem is solved too if you simply say bring it, day one, you are arrested, and if in fact before the statute of limitations expires, your client is brought to the court and is going to be prosecuted. Tolled. They don't need two actions. Kenneth N. Flaxman: A Federal tolling rule would solve these problems. Stephen G. Breyer: I want to be sure I understood your position with regard to Justice Kennedy's hypothetical where the defendant is arrested and excessive force is used by the police, they beat him up or something like that. When does that cause of action accrue? Kenneth N. Flaxman: At the time they beat him up, unless the beating up relates to an element of the offense. John Paul Stevens: Suppose that they had beat him up two or three times. The first time it didn't relate to it, but then they took him into the interrogation room and they beat him up again. What about that case? Kenneth N. Flaxman: If the beating up is... if the beating up is related to, used to extort a confession and the confession is used against him, then there would be a cause of action when the confession is used. John Paul Stevens: So there would be two causes of action? Kenneth N. Flaxman: Multiple causes, yes. There could be at least two. Antonin Scalia: Would he have to sue on the first one right away? Kenneth N. Flaxman: If you want to get damages for being beaten up, I would tell my client to sue right away. I would also tell my client if he's being charged with a serious criminal crime offense, to wait until the criminal case is over, because it will hurt you. Antonin Scalia: Mr. Flaxman, before you save your time, I didn't understand why you're content with Justice Breyer's tolling situation, bearing in mind that the way he put it is, so long as the... as the criminal case is commenced within the two-year statute of limitations, how does that help you when the statute of limitations has passed? Then there's no tolling. Kenneth N. Flaxman: But criminal cases are not commenced many, many years after the unlawful arrest, as a practical matter. Antonin Scalia: And two years doesn't seem to be unheard of. Kenneth N. Flaxman: Well, if we're talking about complicated financial crimes, that's not unusual. Antonin Scalia: You're willing to let those people go? Kenneth N. Flaxman: If we're talking about the kinds of crimes that are involved with this kind of, with street crime, with murder, armed robbery, rape, the defendant is not allowed to let them run over two years. Antonin Scalia: Those are the only defendants you are concerned about? Kenneth N. Flaxman: Those are the defendants who get unlawfully arrested and are forced to give confessions. If I may reserve my time? John G. Roberts, Jr.: Thank you, Mr. Flaxman. Ms. Solomon. Benna Ruth Solomon: Thank you, Mr. Chief Justice, and may it please the Court: Our submission this morning rests on the proposition that the victim of an unreasonable search or seizure has the right to sue as soon as that Fourth Amendment violation occurs. For purposes of accrual of that claim, it does not matter whether the victim is subsequently prosecuted or whether he is subsequently convicted. Accordingly, petitioner's Fourth Amendment claim accrued for purposes of the two-year statute of limitations as soon as his unlawful arrest and detention occurred, and his lawsuit filed some nine years later is time barred. The claim accrued-- John Paul Stevens: May I ask, just to get it straight at the beginning, what if the claim includes a Fifth Amendment claim for extorting a conviction and it's mixed up with a Fourth Amendment claim? What about that claim? Benna Ruth Solomon: --I believe that the rule for the Fifth Amendment claim, I believe the Court's view in Chavez is that a coerced confession claim has as an element of the claim, the use of that claim at trial. So it would be our view if that is an element of the claim, that that claim would not accrue until trial. A claim-- Anthony M. Kennedy: What about the beating of the defendant? Benna Ruth Solomon: --Exactly. A claim for conscience shocking techniques to obtain the confession or the excessive force to obtain the confession, both of those claims, and use of the confession at trial is not an element of those claims, and those claims would accrue at the time of those acts, just like the Fourth Amendment rule that we urge in this case. Only where there is a trial right and use of some evidence at trial, suppression of evidence at trial, something of that order, if the trial right is implicated, that claim would not accrue until at trial. That is different from the Fourth Amendment claim, of course, because-- Ruth Bader Ginsburg: Miss Solomon, do I gather from your response to Justice Stevens about the Fifth Amendment claim, that under Chavez it wouldn't accrue until it is used at trial, is this case therefore a pleading slip on petitioner's part? That is, if he had alleged a Fifth Amendment claim based on the coerced confession, then he wouldn't have a statute of limitations problem? Benna Ruth Solomon: --He brought two claims in his criminal case. He lost them both in the Illinois Circuit Court at the time of his suppression motion. He pursued only one of those on appeal to the Illinois Appellate Court, and the circuit court made findings that the confession was voluntary. So at the outset, there were problems with that claim going into Federal court. Ruth Bader Ginsburg: That's a puzzling feature of it, too, because I thought at the end the second time around, the Court of Appeals held that the confession was no good. Benna Ruth Solomon: The Illinois Appellate Court overturned the conviction on the basis that it was obtained through use of a confession in violation of the Fourth Amendment only. The only findings that have ever been made regarding Mr. Wallace's confession, the voluntariness of the confession, were made in the Illinois Circuit Court, and the finding was that the confession was voluntary, that it was not coerced. That finding has never been reviewed. Petitioner did file both Fourth and Fifth Amendment claims in this civil case, but we did not assert statute of limitations to the Fifth Amendment claim for precisely the reasons that I indicated to Justice Stevens. And for that reason, although the question was presented in the petition, we did not acquiesce in the Fifth Amendment portion of question 1 of the petition, and the court did not grant the Fifth Amendment claim. So I do not believe... a short answer, sorry... I do not believe it was a pleading error. It is simply that that claim as the litigation developed is not before this Court now, but not through a simple pleading error. It is a far more weighty problem than that. David H. Souter: But if the Fifth Amendment claim were before us, do I understand you to have said before that the Fourth Amendment claim of false arrest would also be subject to litigation as part of the Fifth Amendment claim or under the umbrella of the Fifth Amendment claim, so that the statute would not have run on that? Benna Ruth Solomon: I'm sorry. If I indicated that, I definitely misspoke. In our view, all Fourth Amendment claims except for those that do negate an element of the offense, and those are described in footnote 6 of Heck, with that exception, all Fourth Amendment claims should be regarded as accruing at the time that the act that actually violates the Fourth Amendment occurs. Anthony M. Kennedy: Well then, my question is going to be along the same lines. Suppose... I assume this is a rather frequent case... the confession is alleged to be the product of a beating. The two are merged. If we have to wait for the Fifth Amendment claim anyway, then as a matter of policy, matter of convenience, why don't we wait for the Fourth Amendment as well? Benna Ruth Solomon: Because the rule of accrual is that the act... the claim accrues when the plaintiff experiences an injury. Anthony M. Kennedy: Well, we're making up the rule of accrual, Ms. Solomon. I'm asking, if we have to wait for one, why not wait for the other? Benna Ruth Solomon: Well, with respect, Justice Kennedy, I don't believe the Court is making up a rule of accrual. I think those rules are quite well settled. Cases like Ricks and Chardon make clear, and the Fourth Amendment cases make clear that a Fourth Amendment violation, unlike the Fifth, where evidence is used at trial, the Fourth Amendment claim violation is fully accomplished at the time of the illegal search or seizure. Anything-- Antonin Scalia: Who is the defendant in a Fifth Amendment claim? Is it the policemen who extracted the confession or is it the prosecutor who introduced it at trial, since that is the offense? Benna Ruth Solomon: --Well, the prosecutor would be absolutely immune, of course. Antonin Scalia: Right. Benna Ruth Solomon: And some of those cases are brought against the police officers. But, the reasons that would suggest a certain accrual date for the Fifth Amendment claim are very different from the reasons that dictate the accrual of the Fourth Amendment claim at the time... the only action the petitioner alleges violated the Fourth Amendment in this case was when his detention at the police station, which was consensual at the outset, became unconsensual, became involuntary at some point before he confessed. David H. Souter: But if he had also brought a Fifth Amendment claim, your view as I take it would be as follows: Number one, his Fourth Amendment claim, the running of the statute, the Fourth Amendment claim would be unaffected by that, so that would have to have been brought within the two-year period. Benna Ruth Solomon: That's correct. David H. Souter: Number two, I'm assuming, and this is what I want you to tell me whether my assumption is right... I am assuming that if a Fifth Amendment claim were brought by... no, strike the assumption. You, I take it, would... let me ask a different question. I take it you would agree that so long as a criminal case was pending, that it would be sensible and maybe required for the court simply to abstain from any proceedings on the Fourth Amendment claim. Benna Ruth Solomon: We do... our position is that they do occur when they happen and they must be filed within the limitations, yes. David H. Souter: But you would agree that the court, if there's a criminal case going on, I take it you would agree that the court should not proceed to trial in the 1983 action. Benna Ruth Solomon: If there is a Fourth Amendment claim being raised in the criminal case, and of course, it might not be, but that is a very easy-- Stephen G. Breyer: But that's the problem. I don't know if it is easy. It seems to me if you take your point of view, now, on January 1, some, let's call it an unconstitutional action allegedly. So, I don't want to distinguish for the moment between Fourth and Fifth. On January 1 the event occurs. Then you say you have two years to file your claim in the Federal court of a violation of 1983, for example. Then that happens. Let's say two months later they file it. The defendant files it. A month after that, there is a state criminal proceeding. Now, you're the Federal judge. What's supposed to happen? It sounds to me as if the judge sitting there, under your theory, is going to have to make a decision. He's going to have to say now, is the kind of claim that's being argued in my court that the policemen did something unconstitutional, if I say that's correct, that the plaintiff wins, I have to go on to say does the correctness of that, there was a violation, mean that the conviction if there is a conviction in the state court later, will necessarily be vitiated. If the answer to that question is yes, he shouldn't go ahead; is that right? Benna Ruth Solomon: --Justice Breyer, that is correct. Stephen G. Breyer: All right. If that's correct, we're getting to exactly the same problem, whether we do it through a set of abstention rules, which we have to have Federal abstention rules or it won't be worked out properly, or we have to have Federal tolling rules. I don't see any way to get to a sensible result here without either having clear abstention rules, just as you say, having clear tolling rules, as I suggested before. Am I right? If I'm wrong, let me know why; and if I'm right, which do you prefer? Benna Ruth Solomon: I think those are essentially the two choices, with one caveat. We would call it an accrual rule as opposed to a tolling rule, for the reason that this court has always respected the tolling rules that states have whereas accrual is a Federal question. But with that slight caveat, I do believe that those are the two main options. But I don't believe the Court should be indifferent as between them. There are very serious practical reasons weighing down on our rule, which is a rule of immediate accrual and filing not immediately, of course... the case need only be filed within the period of the statute of limitations. Thereafter it might well be that some cases, maybe many cases, maybe nearly all cases, would need a stay of some sort while the Federal... excuse me... while the criminal case is ongoing. But that question, figuring out whether a stay is warranted in order to avoid interference with a ongoing state prosecution, is far easier to figure out than whether the evidence is the only evidence, whether it's critical evidence, whether there was other evidence. Anthony M. Kennedy: I suppose... correct me if I'm wrong... when the district court wants to determine if he should hold something in abeyance, this is not necessarily abstention; this is what courts always do when there are multiple actions. Other action pending is a general ground for a court to stay its hand. Benna Ruth Solomon: That's exactly right, Justice Kennedy, and it's also-- John G. Roberts, Jr.: I suppose it would make a difference to the officers, a principle of equitable tolling. They don't know if they're going to be sued for 10 years, 12 years, however long. Under an accrual rule with a stay, they know whether they're going to be facing a civil action or not. Benna Ruth Solomon: --That is the second major advantage that we see to our rule, Chief Justice Roberts. Stephen G. Breyer: If you do it with a stay, I mean, I see that disadvantage. If you do it with a stay, the Federal judge is going to have to sit there with the papers in front of him, look at that evidence, think what's going to happen in the trial at the criminal case which I'm not quite certain yet, and then make a determination. It sounds like a very difficult decision and it sounds like sometimes they'll get it wrong, sometimes they'll get it right. The defendant might be arguing two different things, you know, one in the state court to try to get them to go ahead, and the other to try to get them to go ahead in the Federal court. What do you-- Benna Ruth Solomon: Accepting your earlier construct where there really are essentially two rules, we either delay accrual or we-- Stephen G. Breyer: --If you delay accrual by tolling, you do have the disadvantage that in some instances the policemen won't know for quite a while whether the case is being brought. That's true; and in the other instance, he won't know for quite a while how the case is going to come out, which may be worse. But you don't have any uncertainty. You have no uncertainty. You would know once the man is released. It's no tolling. Once he's convicted, it's tolled. Then the conviction comes in. Not tolled until they bring a proceeding. Benna Ruth Solomon: --The rule that we propose, which is immediate accrual coupled with a stay of some sort if the Fourth Amendment claim is being actively litigated in the state court at that time, has two advantages. The first is that it does serve the purposes that all statutes of limitations serve, which is it puts the defendant on notice you are now the defendant in a lawsuit, you should be marshalling your evidence, you should be preserving your records, and you are not in repose. This Court has respected those as very important interests. They are absolutely not served by a rule of delayed accrual. At the same time, the rule to allow a stay where necessary... as I indicated, it's not going to be all of the cases, and it's far easier to figure it out. The Federal district court figures it out by having the defendant, the criminal defendant, who is a plaintiff in his court, come in and is asked a question: Are you currently-- John G. Roberts, Jr.: They're not going to waste a lot of time figuring out whether to grant a stay or not when you have a criminal prosecution pending in state court. I think in most cases... I mean, it's not like they're looking for cases. They're going to say in most cases: Stay granted, come back when this is over. They don't have to be... unlike perhaps the situation with an equitable tolling rule, it doesn't matter whether they're precisely right or wrong. I mean, if it's close enough just stay it, and it doesn't seem to me there's much prejudice from that. Benna Ruth Solomon: --Well, that's correct, Your Honor, and we wouldn't have any objection to a rule that-- John Paul Stevens: But isn't there this practical problem? I think what you say fits together beautifully with regard to the law, but isn't it true that this will give an incentive in every criminal case for the defendant to file a 1983 action. So we may multiply the number of Federal cases that are filed and then sit there while a criminal case proceeds. Benna Ruth Solomon: --I think the assumption, Your Honor, should be that the number of cases is going to be the same either way. It's just a question of when are they filed and, moreover-- John Paul Stevens: Well, if your opponent's rule is adopted, they wouldn't file unless... if they get convicted and the conviction stands up, the case would never be filed. Benna Ruth Solomon: --Well, it's curious that they make that argument, because of course every victim of a Fourth Amendment violation has the right to damages for at least the invasion of their privacy, for the antecedent conduct between the time of arrest and charging. At a minimum, Mr. Wallace had that coming to him because he was, according to the Illinois appellate court, illegally seized. John Paul Stevens: The thing I just want you to comment on is, my thought is every person arrested has a potential, and something follows and so forth, has a potential Fourth Amendment claim, even though he may not have one on the merits. It just seems to me that there's a potential here of an awful lot of what may turn out to be frivolous claims filed, but it would seem to be routine procedure for defense lawyers who want to make a suppression motion to say, well, I better file my 1983 case at the same time. So you might get literally hundreds and hundreds of cases. Benna Ruth Solomon: With respect, Your Honor, we'll take that chance for the benefits that the statute of limitations does bring to the officer. And as far as the burden on the court, whether all cases are stayed or some cases are stayed, of course, we're content to have this Court or the district court handling the case figure that out. But the main point that I would make is that a rule of delayed accrual wholly undermines the purposes of the statute of limitations, and where the plaintiff's interest, the claimant's interests, can be served, as I indicated, at a minimum every victim of a Fourth Amendment violation has the right to some damages. That is actually precisely why we say that Fourth Amendment claims do not necessarily imply the invalidity of the conviction. Anthony M. Kennedy: I had missed Mr. Flaxman's point that this would an advantage to the prosecutor to say, aren't you going to make a lot of money about this case? My initial reaction as the defense counsel, I would love that comment. I would tell the jury: Of course, it's our duty as counsel to point out that my client was beaten, he was terrified, he was beaten again, he had a false confession, and the damages we're not interested in; we'll get much more damages if you convict and we show this 15 years later because the policemen lied as they always do. You know, you hear it. Benna Ruth Solomon: It may be not in a-- Anthony M. Kennedy: But he has tried more of these cases than I have and he indicates this is a serious concern. Benna Ruth Solomon: --He has tried way more of them than I have as well, and I can't speak to that specifically. It's not an argument that was ever made in the briefs. But again, I have no reason to believe that the Federal district court can't take account of whatever it needs to take account of in order to avoid-- Anthony M. Kennedy: No, no. This is the Cook County. This is the Cook County court. Benna Ruth Solomon: --Yes. Yes, I understand. But all that has to happen, of course, is that the complaint be put on file in the Federal court. It's notice pleading. It can be a very, very long complaint. Anthony M. Kennedy: No, but he says the fact of the complaint the prosecutor's going to use in order to show that they're trying to profit from a false claim of a beating. Benna Ruth Solomon: Well, but as I indicated, every victim of a Fourth Amendment rights, even those who are guilty, even those who are convicted... that's the Herring case. Herring exactly shows-- Anthony M. Kennedy: No, but the point is if the complaint is filed then the prosecution can makes that point. Benna Ruth Solomon: --I would imagine that it would cut both ways in many cases, Your Honor. I'm sorry, I can't speak to it more specifically than that. Ruth Bader Ginsburg: Does your position in this case leave any reason at all for equitable tolling? Benna Ruth Solomon: It does, Your Honor, absolutely. Equitable tolling is always available in an extraordinary case when the plaintiff could not put a complaint on file within the period of the statute of limitations. And unlike the accrual question, as indicated a moment ago, the tolling is governed by the states. In this case, for example, because Mr. Wallace was only 15 years old at the time of the arrest, his claim was tolled. He actually had nearly four years beyond the two-year statute of limitations to put a complaint on file and it still would have been toll... would have been timely. He filed outside even that time. Illinois does not toll for prisoners, but many states do, as the Court indicated in the Hardin case. So there's all sorts of tolling available, or could be under state law. Mr. Wallace has actually never urged tolling in this case and I assume that that's because there is no basis for that under state law. He did get the advantage already of the time when he was a minor and there is no other basis under Illinois law that would allow him any basis for tolling. But of course, tolling is proper when the plaintiff does not know and could not know that his rights were violated. If Mr. Wallace was illegally seized, he was right there when it happened. He might not have known that a court would ultimately accept his argument on that, but of course the plaintiff never has a right to be told that he has a successful claim before he brings that claim. Ruth Bader Ginsburg: Is there any remedy that Illinois law provides for a case like this where a person spends, what was it, eight years in prison and is ultimately released because the state never had enough evidence to try him in the first place? Benna Ruth Solomon: In many cases, the state law of malicious prosecution will provide a remedy. Of course, in Illinois and in all states, it requires favorable termination. In this case, of course, petitioner conceded long ago that he cannot show favorable termination because the circumstances under which the criminal case ended did not... were not consistent with a favorable termination. But, of course, he would have had a Fourth Amendment claim if he had filed it timely. He would have had a state law malicious prosecution claim if he had been able to show favorable termination. In states that don't have malicious prosecution, perhaps there would be a due process claim as well. The result that there are no damages available to somebody when the conviction is overturned solely by operation of the exclusionary rule, however, should not be troubling because the conviction itself, of course, was not an independent violation of the Constitution. Petitioner did receive the benefit of the exclusionary rule. His conviction was overturned. We're not aware of any case indicating that deterrence purposes would require both the exclusion of evidence and a damages claim. Anthony M. Kennedy: Would it ever be proper for a district court to insist on proceeding to the merits of the claim, to dispose of the merits of the claim, while the prosecution was pending? Suppose the district court thought that it was seeing too many of these claims and it wanted to get to the bottom of them? Benna Ruth Solomon: Well, in our experience the district courts don't tend to want to go ahead. But I would suppose that if the... if the court did, rules of comity are sufficient to allow the state courts to have the first crack at issues that are arising in the criminal cases, to be the ones that-- Anthony M. Kennedy: We haven't written about that other than in Heck explicitly and implicitly, and in Younger? That's about it? Benna Ruth Solomon: --In Heck and in Younger. There's the concurrence in Deacons against Monahan indicates that a claim for damages should be stayed and not dismissed or gone forward with. Justice White's concurrence specifically addressed the difference between dismissing and going forward with the claim. Of course, the footnotes 8 and 9 in the Heck opinion are very powerful indications of the weighty reasons. We have no reason to think that the district court would want to charge ahead with a claim that would... with a case that will only get simpler if it waits for the state court proceedings to conclude, as well as of course the comity and respect for the state courts. In this case, of course, as I mentioned, the... Mr. Wallace always had a claim available to him for his initial seizure regardless of the outcome of his criminal prosecution. If he wanted to seek damages for that prosecution and our primary submission, part one of our brief is even assuming those damage might be available on a Fourth Amendment claim, he was nevertheless obligated to bring that claim within the period of the statute of limitations, because otherwise it would be time barred. In our view, petitioner does not have one claim for that arrest and another claim for his trial and prosecution. He has one claim for a Fourth Amendment violation with two elements of damages. But mounting future or delayed damages do not delay accrual. Even where the plaintiff does not know the full extent of his injuries, he still must sue within the period of the statute of limitations. In fact, petitioner does not cite a single case including the ones newly arrived in the reply brief that uses either his accrual rule or his damages rule to award damages for the entire time of a lengthy period of incarceration. And as I indicated petitioner conceded long ago that he cannot show favorable termination. And although he could have obtained some damages had he brought his claim timely, his claim did accrue he was seized and not when the charges-- Ruth Bader Ginsburg: Do you agree with Judge Wood that the limitation on damages would be from the period, from the time of the arrest until the arraignment? That would be the measure and nothing after? Benna Ruth Solomon: --A number of courts have reached that result, Your Honor. Footnote 25 recites five court of appeals decisions to that effect. But our primary submission in this Court is that regardless of the damages that are available on a Fourth Amendment claim, that the mounting of damages did not delay accrual, and without a timely claim, it doesn't matter what damages the plaintiff is seeking. The reference in Heck to a claim for damages for unconstitutional conviction, we take to be a shorthand for a claim of some sort of constitutional violation that can be brought through the vehicle of Section 1983 that would enable the plaintiff to recover damages for the incarceration. 1983 of course itself does not create any substantive rights. The plaintiff needs an underlying claim and in this case of course the plaintiff only has the Fourth Amendment claim. We do have, in our brief and argument why the Fourth Amendment should not be regarded as allowing those damages, but our primary submission and we do think the Court can decide the case without... without reaching that issue. The only date to delay an accrual in this case was the date that the charges were nol prossed. But that date is meaningless for the Fourth Amendment and it is therefore meaningless for accrual. We would the judgment be affirmed. John G. Roberts, Jr.: Thank you, Ms. Solomon. Mr. Flaxman, you have four minutes remaining. Kenneth N. Flaxman: The issue that has been sitting in this case like the elephant in the room is what is Mr. Wallace's cause of action? Is it a cause of action for being seized until he was arraigned? Or is it a cause of action for being seized for the eight and a half years that he was locked up until he was, the criminal case was resolved in his favor? My sister argues that it was just, the Federal remedy is only until you're being arraigned, and that the state remedy for malicious prosecution doesn't exist if the Seventh Circuit has construed Illinois law to say that there is no malicious prosecution when you win the Federal case, when you win the criminal case, because the evidence has been suppressed. The false imprisonment, state false imprisonment was dismissed by the district court, under his reading of Illinois law that the cause of action accrued at the time of the arrest. Not at the time he was released. And the Seventh Circuit when that issue was raised on appeal to them in a brief by both sides chose to reject it without discussion. What, the cause of action that respondent proposes is none, for the eight and a half year seizure. There is no state cause of action in Illinois. And there is no Federal cause of action. It is just tough. You are seized for eight and a half years, and you can't go to state court, you can't go to Federal court. You should have sued immediately after you were arrested to get a little bit of damages, but that's all you can get. And have a nice day; we're sorry. That, I don't think is consistent with Heck. I don't think it is consistent with this Court's jurisprudence about the meaning of Section 1983. I don't think it is consistent with the Fourth Amendment and it should not be the rule that the Court adopts. The statute of limitations problem isn't really a problem because all of the evidence that's material to the legality of the arrest, to the legality and the... whether the confession was the proximate... was proximately caused by the arrest or proximately caused by the incarceration, has been developed in the criminal case. When there's very strong interest in seeing that the facts are fully determined and fairly determined for both sides. It is not that the police officer who sued eight... eight and a half years later is much less is much less prejudiced than Mr. Wallace is, who comes out of prison after eight and a half years with no remedy. The questions about the multiple causes of action that can arise: if you're beaten, you have to sue immediately after you're beaten; if you're beaten but a confession is extorted from you, your right to sue starts with the confession is used against you at trial... and if there's some constitutional violation which necessarily impairs the conviction, then you can sue after you successfully defended a criminal case... is really an administrative nightmare that really could be solved by a Federal tolling rule that all Section 1983 cases are tolled; the statute does not start to run until the criminal case has been resolved. In most cases, then, instead of being filed in district court-- Anthony M. Kennedy: That in effect is saying we can't have a statute of limitations rule; we're just going to laches, we're just going to an equitable rule. Kenneth N. Flaxman: --Well-- Anthony M. Kennedy: We're just throwing up our hands and saying there is statute of limitations statute of limitations. Kenneth N. Flaxman: --No, there is a statute of limitations. It starts to run when the criminal case is over. That will weed out all of the really nonsensical cases that would otherwise be filed under respondent's rule, when you file the 1983 action the same day you file the motion to suppress and the district judge says well, this goes on my state calendar of 5,000 cases and the clerk's office is troubled with collecting the $350 filing fee in installments, and the jails are troubled by paying those installments every time there's $10 in the prisoner's account. It's... it would... there are more important things for the courts, the prisons to do. Thank you. John G. Roberts, Jr.: Thank you, Counsel. The case is submitted.

Earl Warren: Number 15, Original State of Illinois, Plaintiff, versus States of Michigan, Ohio, Pennsylvania, Minnesota, New York and Wisconsin. Mr. Forer. I -- are you -- oh, I beg your pardon. They gave me -- oh, Mrs. Forer, I beg your pardon. Lois G. Forer: Mr. Chief Justice, may it please the Court. I'm here on behalf of the Commonwealth of Pennsylvania. We protested the proposed diversion of Great Lakes' water by the Elmhurst-Villa Park-Lombard Water Commission because as we stated in our letter which is attached to the complaint, the diversion added the Great Lakes and the Basin and into another watershed would constitute an infringement of the rights of Pennsylvania as a riparian sovereign. The lowering of the levels of Lake Erie constitutes immeasurable damage to Pennsylvania. But beyond this very real question of damages Pennsylvania is concerned with the theory of law upon which this proposed diversion is predicated. A theory of far reaching implications, we believe startling and without precedent. And Mr. Justice Brennan observed yesterday, if this corporation is entitled to take and divert Great Lakes Water then a precedent is established for innumerable users and commercial suppliers of water in the United States and Canada to divert without control or limitation. The complaint seeks to restrain the defendant state but it places no limitation on the plaintiffs. There were -- Felix Frankfurter: Mrs. Forer, I take it -- if I may say so, you're objecting to what Illinois is asking this Court to do -- Lois G. Forer: That is right. Felix Frankfurter: -- and not worrying if this Court may pronounce a wrong legal theory. Lois G. Forer: We are concerned -- first, if you have no jurisdiction to hear this. Felix Frankfurter: That is -- that's conclusive on what you can do with it. Lois G. Forer: Thank you. Several matters were discussed yesterday namely that there was no other community interested in taking Great Lakes' waters. And we have information from published newspaper accounts that other Illinois community such as Arlington, Barrington and Mt. Prospect are at this very moment considering going to Lake Michigan for water. In addition -- Earl Warren: There are no cities located on the -- Lois G. Forer: They are not riparian and most of them I believe are outside of the watershed, as is this complex of communities. They -- Earl Warren: They're in Illinois, are they? Lois G. Forer: In Illinois, but not riparian and not within the Great Lakes watershed. In addition some question was raised yesterday with respect to Canada's position. Now of course obviously Canada is not before this Court. But we would like to call the Court's attention to a letter of April 9th, 1959 from the Canadian embassy to the United States and if I may I would quote this just as one sentence. Every diversion of water within Great Lakes watershed at Chicago inevitably decreases the volume of water remaining in the basin for all purposes. The Government of Canada is opposed to any action which will have the effect of reducing the volume of water in the Great Lakes Basin. Hugo L. Black: Where is the full text of that, (Inaudible) Lois G. Forer: This -- I am reading from the House of Commons Debate, Volume 103, Number 59, the Second Session, 24th Parliament, Official Report dated Thursday April 16th, 1959. In cases such as this involving natural resources, one who objects to a taking or a wasting of a resource is always placed in a dilemma articulated in the Old English Chancery case of Goldsmith against Tunbridge Wells Improvement Commission. Either, we are accused object -- objecting too early or because the taking or wasting is of a small amount or waiting too late until we are faced with a (Inaudible) plea, as we were in the Chicago Sanitary District case which, of course, you are all very familiar. The applicable law to this taking as we view it is well settled. All of the Great Lakes States including Illinois and also Canada adhere to the riparian doctrine of water law. This Commission is an Illinois corporation authorized to sell water to communities and industries, and there are plans for further expansion of the industries in this area. It is undisputed that these are none riparian users and indeed are outside of the Great Lakes Watershed. Whether they are 20 miles from the Great Lakes or 200 miles is in our opinion wholly irrelevant because if the State of Illinois can come in and claim that a non-riparian has a right to take and divert, then they make their claim with respect to any community within the entire state. Thus we say any analogy to what is being done in Milwaukee, Cleveland, and Chicago which are riparian municipalities entitled to use Great Lakes Water is implicit. All of the riparian communities along the Great Lakes with which are familiar use that water and return it to the basin in accordance with riparian law of reasonable use, all except Chicago of course. This corporation, the Elmhurst-Villa Park-Lombard Commission asserts a unilateral right as a non-riparian outside the watershed to take an unlimited quantity of interstate and international waters without regulation by any governmental agency and without the consent of the riparian sovereigns. While Illinois asserts that the amount of water to be taken is relatively small, the complaint itself seeks an unlimited right to take without any interference. In seeking to negotiate with Illinois, the thrust of the defendant states has been to require a return of the effluent which would constitute about 93% of the water taken. But while seeking such a return of that purified effluent will substantially reduce the damages, the right to take water at all is hereby challenged. The plaintiff's justification for taking, as alleged in paragraph 3 of the complaint is the urgent need of these communities. Mr. Bane in his argument adverted at some length to the engineering studies upon which the plan for this taking was based and this study is mentioned in paragraph 9 of the complaint although of course it is not in evidence. But like the affidavits, I attached to the motion to advance. This engineering study does not bear scrutiny. It sets forth exports two reasons for the plan on page 13. One is that the use of lake water instead of well water which save each household $16 a year for soap. Mr. Justice Brennan asked why these communities did not choose to purchase water from the sanitary district. And in answering that question, Mr. Bane again referred to the engineering report and stated that this was the recommendation of the engineers and of course this is true. But the reason for this recommendation is very interesting. If I may, I would like to read just one sentence there, one paragraph. Two practical methods of obtaining Lake Michigan water are available to the Commission. They are: one, negotiation for purchase of filtered water from the City of Chicago, or two, construction and operation of new supply and treatment facilities to be owned and operated by the Commission. A course analysis of the alternate methods indicates that the estimated unit course for filtered Lake Michigan water will be less if the Commission builds and operates its own independent system. This is the need of which has been asserted. Earl Warren: Mrs. Forer, would you have any objection if they did buy their water from the sanitary district? Lois G. Forer: Well, our objection might be different. We say that the sanitary district is a riparian authority which has the right and power to use Lake Michigan water. Since the taking of water by the sanitary district is subject to the opening decree of this Court we feel that we as defendant states would not be harmed by any additional servicing of other communities since any diversion of the water would be subject to the control of this Court. And therefore we say that any taking additional taking must of course be considered in original cases two, three, and four before this Court to determine to what extent any diversion at all out of the lakes is permissible and to what extent it damages all of us as defendant states. This would not involve a new principle of law that a non-riparian community could simply purchase one -- my new portion of land along the lake and put in a pumping station and divert waters down the State uninterruptedly. If the Metropolitan sanitary district does it, we say it is subject to the control of this Court entirely. Earl Warren: Well, if those -- the thing that I -- I've been thinking about is this, if -- if they could by the water from the sanitary district so far as the effect on the lake is concerned wouldn't make any difference, would it? Lois G. Forer: We think it would make a considerable difference. Earl Warren: What -- what -- in what manner? That's what's bothering me. Lois G. Forer: If the border is purchased from the sanitary district, we claim that the sanitary district is required to return the purified effluent to the Great Lakes Basin. This water commission, this corporation is established to sell water to pump and supply and sell water. It has no authority according to Illinois to purify the sewage and to return it. The plan of this corporation is to take the water from the Great Lakes, take it over the watershed, service these communities and industries at a profit or a certainly charging for it, and then simply let gravity and nature take its scores and the water will be -- go down the Mississippi Waterway. Now, I'd like to point out that we have heard at great length that only a small amount of water is involved.Under the decree of this Court, the sanitary district is taking 1500 cubic feet per second for the purpose of flushing out the canal. In addition, they are taking an unlimited quantity as domestic pumpage. And according to the figures of the sanitary district this is some 1700 cubic feet per second. Totalled together, this constitutes more water then flows through the Delaware River, so we are not talking about small amounts. And as I say, if this amount of water is added, every other community may also add and we see it is a very serious question. Earl Warren: Well, I was thinking this that the -- the -- this new district does not propose to return the effluent -- Lois G. Forer: No. Earl Warren: -- but neither does Chicago, does it? Lois G. Forer: Well, we claim and that will be decided in the other case. Earl Warren: In the other case, that it -- Lois G. Forer: That -- Earl Warren: Yes. Because -- Lois G. Forer: They are required to. Earl Warren: -- of your advance in there. You -- Lois G. Forer: Yes. Earl Warren: -- maintain that that position, I understand. Lois G. Forer: That's right. Earl Warren: I understand that now. William J. Brennan, Jr.: Mrs. Forer, you're suggestion is with the -- they are the riparian. I think you -- the question using riparian communities and that -- is that -- and I gather that as a matter of law, it could be a community which is not within that definition. That should have no right to take in any event from the lake, is that it? Lois G. Forer: We believe that that is the law and that the doctrine of equitable apportionment which was discussed at some length yesterday has in effect been misconstrued or misapplied. If we turn to those cases in which a non-riparian community was allowed to take waters, we find that it was not a case in which a non-riparian having no right to the waters simply was granted a division of these waters because it needed water. There was in effect a quid pro quo. Now, in the case of Connecticut against Massachusetts which was quite different, we work -- the Court was concerned with two wholly intrastate non-navigable rivers. Massachusetts, under a permit from the Secretary of the Army captured a limited amount of flood waters and the amount was limited by the permit. Flood waters within the State and withheld them from going down into Connecticut. Connecticut protested on the ground that it was losing a power potential. Now of course, there were no laws to navigation because these were non-navigable streams whereas of course we are contending that any loss to the Great Lakes very seriously affects navigation, the ports, and the shipping as General Reynolds pointed out. The loss of power potential was not deemed adequate grounds for damage because Connecticut not only had -- had no power installations but had no plans for any. Now, as we all know New York has extensive power installations and that any water taken out of the Great Lakes of Chicago reduces the flow there. This is not only a loss to New York but to Pennsylvania, a large portion of which is served by this tower. William J. Brennan, Jr.: Well, what -- what -- I'm not quite clear about it, the argument. If this complex of community were to be annexed, I understand as the fact of the matter that's not in the Court, but if they were to be annexed in Chicago, if Chicago holds a riparian community, would not that annexation qualify? This complex also as the (Inaudible) Lois G. Forer: To receive water as a part of a riparian community but we also say that this being a riparian water state and an inter -- interstate and international waterway, the doctrine of reasonable use of course requires that the water be treated and returned to the basin and therefore that if -- William J. Brennan, Jr.: Well, that would be true. Lois G. Forer: -- it is taken -- William J. Brennan, Jr.: That I -- as I understand your position, that would be true whether or not this complex of the riparian community because you suggest that should preclude as to Chicago? Lois G. Forer: Yes. We suggest that should be true as to Chicago and after these communities we suggest further that they have no initial right. Felix Frankfurter: But your difficulty would be met if the effluents flow returned. Lois G. Forer: Not entirely. Felix Frankfurter: Well, expand that Mrs. Forter. Lois G. Forer: All right. The damage would be substantially reduced by some 90% but the principle of law which would require if, for example, this Court were to permit the Board the complaint and were to enjoin the defendants from objecting to what the Commission proposed to do, this would be precedent which would authorize any non-riparian community to go to a water source and simply take without leave of any governmental agency or without negotiating with -- with the sovereigns and community which have a legal right to the water. Felix Frankfurter: But Mrs. Forer, as I understood Mr. Bane, he isn't asking this Court to announce an abstract legal proposition but on riparian claimant or applicant has the right to tap lake waters. Illinois comes here and says there is a health emergency situation and the way to meet that is to get some of the lake waters. And if there's no basis for that and there is no basis for the suit, so isn't that in fact a legal question if they'd be asking us to announce? I follow you in saying that if you grant this there'll be pressure precedent or episode, if you will, have a way of multiplying and therefore there is that danger or all the consideration for circumscribing and carefully scrutinizing the claim that there is an emergency. But the starting point is not an abstract theory or a desire to establish a precedent but a desire or a compulsion within the meaning. Lois G. Forer: Well, in answer to that Mr. Justice Frankfurter, we say that no need has been shown to date and we further say that Illinois has no standing here parens patriae. We, defendant states are in this Court to preserve a great natural resource which we believe rightfully belongs to the states and all their inhabitants. Illinois is here in quite a different capacity. Illinois is here in order that a corporation may sell revenue bonds. We think this case -- this situation is ruled by the case of Louisiana against Texas. In that case, Louisiana brought suit against the Governor of Texas and the health authorities because in the application of the quarantine laws, Texas had in effect put an embargo on Commerce from New Orleans. And Louisiana came to this Court and asked parens patriae that relief be granted and this Court sustained the demurrer saying that a financial loss to certain individuals within a State does not give rise to the kind of action which this Court can hear in its original jurisdiction. Felix Frankfurter: Are you suggesting that this Commission is a commercial enterprise and no more, are not different? Lois G. Forer: I'm suggesting that this Commission has no authority to do what it chooses to do. The Solicitor General in his brief, I believe its page 20, suggest that this Commission is authorized to divert this interstate waters and he cites the Illinois Act of 1957, page 20 of the Solicitor's brief. The pertinent part of that statute says that the Department of Public Works and Buildings may grant subject to the forgoing provisions of this Section a permit to any person, firm or corporation, not a riparian owner to use the water from any of the public bodies of water within the State of Illinois. That statute, we maintain, does not give this Commission, this corporation, the authority to take water from an interstate body or to divert water. It says that a corporation may use water when it is non-riparian. Felix Frankfurter: Would your -- would your position be different if instead of operating through especially for ad hoc Commission seeking to accomplish this water need, to serve these water needs to these (Inaudible) the thing has been done through the joint arrangement of the Health Department, whatever they're called, of the three political units apparently. No intervening Commission, no intervening anything except the regular and municipal authorities of the three communities, would that -- would that makes the case different? Lois G. Forer: I think the case might be different if the State itself were involved and because we are met with this answer as General Adams said, when we attempt to deal with this Commission and suggest that they in negotiation that they make arrangements to purify and return the effluent, we are met by the answer that this is a corporation of limited powers that it has no authority to deal with sewage and disposal. And therefore, all it has, the authority to do is to take the water. Felix Frankfurter: But if -- Lois G. Forer: Therefore we are not dealing with a sovereign who has unlimited power to comply with a decree which would compel it to do these things. Felix Frankfurter: (Inaudible) would ask that? Does that mean that if this Court conditioned the relief asked by Illinois with the duty to return the effluent that Illinois could -- if that decree, water could be taken and that qualification of the decree could be disobeyed and on citation for an intent upon it and it's action for contempt, would it be a good answer to say all but for the limited corporation would be ultra vires for us to obey this Court's decree? Lois G. Forer: This is the answer that they have given us so far. I think -- Felix Frankfurter: The ultra vires, that's potentiality but I want to finish that part. Lois G. Forer: Well, this is the answer that they have made in the course of conversations. So that we feel that this is not an appropriate way and indeed that this Court does not have jurisdiction to hear such a matter. I would like to point out that in the case of New Jersey against New York which is relied on so heavily by Illinois and the Solicitor General. That was a proper case of equitable apportionment of the Delaware River. There, New York City at its own expense built reservoirs and dams to capture the floodwaters of the Delaware. These floodwaters would have gone unused and wasted out to the sea. And this dam, these constructions were in effect a great help to the flood control on -- of the riparian states along the way and also to navigation. But in addition, this Court conditioned its decree upon the duty of New York to maintain a minimum flow of a certain number of cubic feet per second in the Delaware. And during this past summer which was a time of drought, New York City released from its reservoirs water which managed more than half of the flow of the Delaware all summer and in effect was deprived of the water which it had captured at its own expense. Now, this is a proper case of equitable apportionment where there is a division of benefits and burdens. New York did not take water belonging to the other states without giving them some compensating return. I'd like -- William O. Douglas: The -- is that the water case, the only case we've had where the Board has permitted the diversion from water -- from one watershed to another watershed? Lois G. Forer: Well, there had been cases in the west were both States adhere to the doctrine of prior appropriation. There we think these cases are not of course applicable. In the case of Colorado against Kansas, Kansas at that time or at least for the waters involved adhered to the riparian doctrine, Colorado did not. The river there was a broken river. Its flow was interrupted. In effect it was two streams. And this Court raised the question as to whether a non-riparian user had a right to divert water and said this was a very serious question but under the fact of that case or other water was used for irrigation, it was returned to the stream and therefore in an arid region, the whole regimen of the stream and the area was improved by the use of the water. Now, in this case, it is difficult to see that there is any improvement or benefit conferred upon the Great Lakes space and as a whole or anyone else. All that is happening is that you save this particular small community money, the water is being taken to the detriment however large or small, of all of the other Great Lakes States. For this reason, we believe that the motion at least to file a complaint should be denied. And we point out that this does not leave these communities without relief. In the first place, they can buy water from the sanitary district if in fact there is a real shortage of well water. Illinois can negotiate for an agreement with the other states for a limited amount of non-riparian taking with the return of the effluent and if the sovereign make such a negotiation, the sovereign state will have to, of course carry out the undertaking. Felix Frankfurter: I hope you wouldn't leave Canada's interest to all of it except in the arrangement among the State? Lois G. Forer: Well, I should think that Canada's interest would have to be considered possibly on a diplomatic level. Hugo L. Black: What do you think about the other states that are not what you would call riparian? Do they have any of them? Lois G. Forer: The States outside of the Great Lakes water basin, we think that the States downstream along the Mississippi River have an interest and we have received any number of communications from communities down the way asking us to proceed most urgently with the other case because they feel that they are being harmed by the flushing of the sewerage down the Mississippi River. But with respect to taking water out of the Great Lakes, we do not see that the other states which do not -- water on the Great Lakes and are not part of the watershed have any particular interest. Hugo L. Black: You mean the -- could the States that border on it divide it up and dry up the lake, apportioning, equitable apportionment? Lois G. Forer: We feel that they could not. Hugo L. Black: Why, if no other State has the interest? Lois G. Forer: Well, we feel that that equitable apportionment does not mean a division of the waters but a -- the best and most beneficial use of this interstate water system is great resource that the Great Lakes States could not themselves get together under any kind of an interstate compact and apportion the waters out and deplete the natural resource. We believe that though we have a right to enter into compact, we are naturally (Voice Overlap). Hugo L. Black: Your time is up and you have emphasized so much the rights of riparian owners that I'm wondering is it possible to define who the riparian owners are at Great Lakes? If -- if the people within 10-mile are, are they? Are riparian owners -- while the people within 20-mile of that are not riparian, who are riparian? How can you -- how can you define, put a label of the law and say that under the law, they have certain specific definite right because they are riparian? Lois G. Forer: Right. And Mr. Justice Black, we believe that the municipalities which actually apply on a body of water are of course riparian and since the municipality -- Hugo L. Black: The municipality. Lois G. Forer: Municipalities and of course individual communities. Hugo L. Black: What about the county? Lois G. Forer: Well, I think it might well depend upon local law what the -- Hugo L. Black: Well, that's the local law so far as the distribution is concerned that the State can control fully apart. What about a State if it's on the border of that? Lois G. Forer: Well, this is the argument that Illinois is making. That in effect under the Supreme Court 1930 Decree, the entire State of Illinois has a right to divert out of the Great Lakes water for the benefit of all the communities in the State. This -- oh, we simply do not accept because -- it -- there, it seems to us that there were two rather well defined theories of water law in -- that are recognized in the United States, either riparian with a -- the modification of reasonable use and the doctrine of prior appropriation. William O. Douglas: I thought in your supplemental brief, you would find using non-riparian in the sense of those who were occupying a geographical area that was in different watershed. Lois G. Forer: Yes. William O. Douglas: Is that right? Lois G. Forer: Yes. Not only noncontiguous but they are in a different watershed and the watershed here is undisputed that these communities are outside of the watershed of the Great Lakes even though they are geographically rather close. And therefore that unless the water is -- actually comes back into the lakes, of course, it will not return. Hugo L. Black: Well, if the stream is navigated, how can it be said that in effect that those within the particular space by the water would run out, taken out, are the only ones that have an interest and it's in the United States. Lois G. Forer: We don't say they're the only ones who have an interest. We say that those people who abut in those communities which abut along a waterway have the right under existing law reasonably to use the water that flows pass them. They do not have a right to take it out of the watershed and remove it from the stream. Hugo L. Black: You are drawing a distinction fairly true and on the basis of taking it out for use and putting it back. Lois G. Forer: That's right. We say that if they used it and returned it to the stream even though of course there is some rule, but nevertheless that is a reasonable use that is quite proper. But if they take it out of the stream and divert it to some other areas so that it is never returned to the people downstream that that is not permissible. Earl Warren: Mrs. Forer, from an engineering standpoint, do you know whether it would be (Inaudible) or not -- for these people to return the effluent if they took it (Inaudible) Lois G. Forer: I do not know that because the engineering studies to which we have all adverted which of course they're not part of the record did not discuss the cause of making such a return. And of course we believe that that would be a matter of record. In conclusion, I would just like to say that we feel that this entire matter can properly be handled by this Court if the State of Illinois chooses any other action to ask leave to have this additional taking or diversion considered along with the others. And thus, this Court could make an appropriate order with respect to this great interstate and international resource which could be effectuated and carried out by sovereigns having a complete power to do so. Earl Warren: Before you sit down, do you -- do you believe that this matter could be determined without a master? Lois G. Forer: This particular -- Earl Warren: Proceeding. Yes. Lois G. Forer: This particular proceeding -- Earl Warren: Yes. Lois G. Forer: -- no indeed, because we do not feel that any of the facts are alleged with such particularity that we can accept them at all. We think all the questions of need and the feasibility of return and everything else would have to be explored in a factual manner by a master. Felix Frankfurter: Could you add to the -- everything else? In addition, to mean the feasibility, could you particularize what you call everything else? Lois G. Forer: Well, I think that the need of a community of course is one thing. The availability of other sources of water to which under our view of the law, they are rightfully entitled. That has not been explored in the engineering study by Illinois which I have seen. In other words, the only sources of water which were considered by these engineering studies were well water and the statement about the $16 per soap, and Lake Michigan water. Now, as we all know, there are many streams, the Fox and the Des Planes among them which run through this area. We do not know at this time whether those sources of supply would be adequate or appropriate. We think that should be considered too. Earl Warren: Mr. Solicitor General. J. Lee Rankin: Mr. Chief Justice, may it please the Court. United States of America has a great interest in this controversy. It has an interest by reason of the navigational facilities in the Great Lakes and the Saint Lawrence Seaway. It has an interest because of the hydroelectric projects that had been developed in the Saint Lawrence Seaway and the effect of any diversion of water on that hydroelectric development. It also has an interest because of the factor of pollution. The Federal Government through the Department of Health, Education and Welfare has a great interest in that regard. It has an interest because of these States and the fact that this matter has become a source of controversy and irritation between them and the United States thinks that it is an interest of the country that these great States having a common interest in this great resource should have this problem resolved and should be working on their common interest and problems and not be involved in this area of dispute which is making trouble between them. It also has a great interest in the matter because of the international situation and the fact that our great neighbor on the north has a common interest with this -- in this great resource, our common activities in the Saint Lawrence Seaway, and the whole navigational problem, the use of the water for the cities and communities on it. We have carefully examined Original 15 and we believe that this Court has jurisdiction that the complaint should be allowed to be filed, that the case should be considered along with two, three and four together so that the whole problem could be properly resolved. But there is no question of what this Court has the power to enter a declaratory judgment as in the original action. And we think the decisions we have cited in our brief well support that. The basic problem in this case involves the rights of the riparian. We think there is no question to what the State of Illinois properly represents these communities as water users within the State in this litigation and that any decree this Court would enter would bind the State of Illinois. And if they want to divert water from the Lake of Michigan, and this Court would say they would have to return the effluent to that lake as a condition. The State of Illinois would have to abide by that condition and every water user within the State that was -- and that the State was acting on behalf of and it would bind it. And these, the decisions of this Court make that very clear. In fact this Court has acted in the past to say that water users themselves were not proper parties in the litigation of this character. And that the States as quasi sovereigns would properly before in trying to resolve the interest of their water users. The problem we have is the question of the diversion of water out of the watershed by riparian interest. And the basic theory of riparian water has always been if you take water out and you put it back less the consumptive use. And therefore the common interest in the use of that pool of water is injured only to the extent of the actual consumptive use and no more. Now this problem presents the question of diverting it out of the watershed and not returning it. This Court has approved that type of action in two different matters involving riparian waters or waters where the riparian doctrines were recognized by the laws of the States that were involved. One was the case of the City of Boston where it was clearly taken out of the watershed, several rivers, and devoted to the use of the City of Boston because of its needs. The other one was the City of New York, New Jersey against New York, where a similar provision was made. And we think that the decisions of this Court have made it very clear that the principle equitable apportionment governs in these conflicts or disputes between States involving matters of this kind. The Court throughout the -- its history in the consideration of the litigation between States has said that it is not going to be bound by special rules of law that it is just going to devote itself to resolving those problems by the law of what is fair, just, and equitable between these great sovereigns that make up these United States. And that is the consideration that we think the Court must turn to in resolving this particular question. If the needs are found upon proper trial to be such that this community for its life has to have this water, and it can be fairly and just to be done under equitable principles, then we think this Court has the power to say that it can be diverted even out of the watershed and it will not return to the lake. That is a problem that will have to be resolved in the case upon a hearing, but it's not involved in our opinion in this question of whether the complaint is properly filed or should be allowed to be filed at this time. Now, I don't want to argue 2, 3 and 4 before you, but I think I need to touch upon it briefly in order to show you how it's related. The Court -- the Court, Members of Court have asked questions about whether or not this problem could be solved by allowing Chicago to furnish the water. The United States does not think that solves the problem because this is out of the watershed and there isn't as we read the decree of this Court in Wisconsin against Illinois, there is not anything involving the supplying of water as domestic pumpage to cities or communities outside of the watershed to be -- and diverted for that purpose. So that it appears to us that the decree in those cases contemplates domestic pumpage entirely as water that would be used within the watershed. Now, it does provide for diversion of the water after use outside of the watershed. And that's why I think I need to deal very briefly with the -- what the Court decided in the earlier decree in Wisconsin against Illinois. The Court will recall there were two different decisions. One was by Chief Justice Taft and the later one by Justice Holmes. And the basic principle that was involved was that the City of Chicago over a term of years had been engaged in withdrawing or diverting large amounts of water from Lake Michigan down through the complex of the Chicago Ship Canal and Des Planes River into the Illinois River. And it was a question of what authority legally there could be for such a diversion. On the first opinion the Court recognized that the diversion was basically made because Chicago did not have a proper sewage system. And instead of providing such as system it just proceeded to dump all its sewage right down this Chicago Ship Canal and leave it as a problem. And it got so bad that something had to be used to flash it out. And so they wanted to use the water from the lake in very large quantities as much as 8500 cubic feet per second to flash out this canal that was serving as a sewage disposal for the City of Chicago. The Court appointed the Master and the Master reported that Chicago must have some kind of adequate sewage disposal system but there is no properly legal grounds for using this water in that manner. And that the only real basis would be for the purposes of navigation. Then the matter was considered later and the final decree was entered. And you recall that first provided for a use of 6500 cubic feet per second. And in 1935 that was to be reduced to 5000 cubic feet per second and then it was later to be reduced to 1500 cubic feet per second. And that is what is being -- is allowed now under the decree and there were these certain reports. Now, the Court didn't find that there was any legal grounds under water law for the use of that amount of water for this sanitary condition. And they didn't find that it was necessary to have all of that water for purposes of navigation. But the Court did find that under equitable principles the conditions were so bad in this situation, had grown so bad, that something had to be done about it and that Court under equity did not have to injure or destroy this community but could provide for the correction of the situation as rapidly as it could be achieved under any reasonable prospects. So that was the scheme that was provided. And it was -- as we see it, not contemplated, that the City of Chicago would have the right to use as domestic pumpage of more than what was described in the decree as the water that it would pump through its mains, and within -- probably for the communities that Chicago then had and its reasonable developments as a part of Chicago. William J. Brennan, Jr.: Well, Mr. Solicitor what about the sales? We understand they're now making to these other municipalities intervening to this complex in Chicago? J. Lee Rankin: I can't say from that decree whether the Court ever contemplated that that kind of sales would be made. The Court carefully described in paragraph 3 of the decree that it would be such water as was pumped through the mains of the City of Chicago. And I think in order to interpret that properly you have to back to the situation at that time and see what was being done in the Chicago area in handling the water. And I think that could be established in -- by proper proof. But I don't see any sign that anybody contemplated at that time that the water would be used outside of the watershed of the Lake Michigan as far as the use was concern. Now, it was that -- it was contemplated to be diverted by -- after it passed through the sanitary system and then go down the Illinois River. William J. Brennan, Jr.: Do we know whether any of these communities now getting water from Chicago are outside the watershed? J. Lee Rankin: I assume that they're not although I don't know. William J. Brennan, Jr.: All right. J. Lee Rankin: We then get down to the problem after examining those decisions of the Court in 2, 3 and 4 of what was contemplated by the Court. The Court provided the 1500 cubic feet per second for this function of taking care of navigation and flashing out whatever is necessary. And then in -- on the top of that, it provided the domestic pumpage that Chicago would require. Well that is a figure of about 1700 and that would be added on to the 1500 cubic feet per second that's specifically provided for. The difficulty that the United States has had in 2, 3 and 4 particularly and we think it has a bearing directly upon 15 here is that we now have in the record, the information that was given us and we have tendered to the Court in our brief in 2, 3 and 4. The statement of the Corps of Engineers that all that is required for navigational purposes in the Illinois River in the canal is 1500 cubic feet per second. So, with the domestic pumpage being over 1700 cubic feet per second, that domestic pumpage itself would take all -- take care of all the navigational requirements of this canal and the Illinois River without water. Now, the claims made that because of the pollution that's involved, because Chicago was not able to produce more than 95% purity with its treatment of the sewage that there is still a need for this additional water to produce -- to provide additional oxygen so that they can handle and take care of the needs of this canal and Illinois River because if the stream is -- if that is too greatly polluted, it can't be used properly for navigation. Now, the difficulty we have with that is that in the decisions of the Court both the first and second, it seems very clear to us that the Court contemplated that there would be a complete treatment of sewage by Chicago. That the Court provided a detailed plan for the sewage treatment and that plan contemplated that they would use this facility to treat all of the sewage. Now, it was never -- I want to make it clear, it was never contemplated that the treatment would be perfect that it would be 100%. It was contemplated that that treatment would be satisfactory to extent of 85% to 95% and they have come within that range. In fact there is good showing that was made to me that they might really obtain the 95% they had recently because of some changes in their plant and additions and improvements that made it less satisfactory at the moment. But there's a good prospect they might obtain 95%. But there is also clear indication that there is a substantial portion as much as 3% annually of the sewage that they don't try to create at all. They just open the gates and let it run down the river in the canal. And consequently they have a condition of pollution by reason of that that would not occur at all if they would treat the sewage. Now, it isn't a simple problem and that's why we suggest that it would be in the interest of these cases and the handling of this whole matter in this proper disposition to have a special master. Because they say if we treat all the sewage and just -- don't just open up the gates when the flood times and let run down the canal, so we have all these raw sewage and pollution there, then we've got to have sewage plants that will be so large to take care of the flood waters that is entirely impractical. On the other side, there is the contention that that isn't necessary that there are all kinds of reservoirs and receptacles that can be developed under proper methods of engineering known to sanitary engineers at this time whereby you hold this material, the sewage in these reservoirs and properly taken care of until you can process and through your sewage plants. And then you don't throw all these raw sewage in and just ask these other bordering lake states to furnish the water to take care of it. Now, the basic problem it seems to me deals in the area of equity and fairness between these states board -- bordering found the Great Lakes. And that is if the city -- first, we have to start that the legitimate needs of the City of Chicago, one of the great cities of this country must be taken care of. And I think there is no difficulty between the States in agreeing to that proposition. But secondly that what ours of legitimate means? Can it call upon the other states to accept or take upon themselves burdens that within reasonable limits are not necessary. And I think that's the second part that has to be worked out and it would be best worked out by a special master in examination of the whole problem. Because if -- Hugo L. Black: I don't quite get what you mean by any burden on other States. J. Lee Rankin: Well, if there is -- and a withdrawal of waters that reduces the amount of navigation that can be conducted in the Great Lakes and the St. Lawrence seaway which would not be necessary if they would properly treat this sewage or if they would avoid, if they would furnish the facilities to see that this raw sewage was not thrown into this canal. And therefore, they would not all the water they say they now in need to go in to canal because of the impurities they put in it themselves unnecessarily. The burden is placed upon these other states. If Chicago and Illinois take from -- divert from Lake Michigan water that is not really needed because to the extent of at least it's conceded at least five-eighths of an inch for each thousand cubic second feet of water that is diverted unnecessarily. There is a direct bearing upon the amount of navigation traffic that can be handled in the Great Lakes and therefore each of the States as well as the United States generally loses by that effect upon navigation. Hugo L. Black: Another thing, the word loses, I didn't quite get the burden. I thought you meant there was some burden on that to have Illinois lose that. J. Lee Rankin: No, no. I didn't mean in that sense. I meant that in the interest of trying to weigh the equities of what's fair in this situation it is unfair or inequitable to have Illinois ask to have more water than it needs to solve its situation. And that is the position -- Hugo L. Black: Do I understand -- I don't quite understand your basic premise. J. Lee Rankin: Yes. Hugo L. Black: Suppose it be true that there is some need of water at this time -- J. Lee Rankin: Yes. Hugo L. Black: -- that is proven beyond any shadow of doubt that they need it, and they could get it from this lake. Is it your position, they have a right as a matter of law to get that water merely because they need it? Without taking into consideration the effect, the withdrawal of that water might have in the long run on a growing country, with an ever increasing population? And then the likelihood, if that what's -- it might destroy not merely a great source of navigation where people could make money, or a great source of recreation and use here, something that the country needs. J. Lee Rankin: No Mr. -- Hugo L. Black: I don't quite get why it would be enough for them to show that a particular community needs something at a particular moment. J. Lee Rankin: Oh, Mr. -- Hugo L. Black: That's true in the west were they have droughts. J. Lee Rankin: Mr. Justice Black, I would not at all say that that was the principle involved. I think the need is a factor that this Court will have to consider. But they have no legal right that's why the equitable apportionment comes in to the question. Hugo L. Black: Suppose they needed enough to where they -- to be shown within the next five years they needed enough water below that lake two inches and that that would seriously affect navigation and I believe it that a State where it seems to have the -- if I'm not be as pure as it is and so forth. Suppose they could show that, does that mean that they could on some basis of apportionment among the States around and get the water to the extent where they destroyed the great national value and the part of the international value that it have as a -- as a lake. J. Lee Rankin: No, not at all. This Court would have to weigh that need and what it would involved as far as the rest of the lakes and the United States and Canada as well in accordance with our treaty obligations were involved and decide whether that need weighed against that and I think the Court would conclude in the case the due but of course that if need couldn't justify that injury to the rest of the country. Hugo L. Black: How can it be done without having a long range of view of the situation as it is now as distinguished from a situation which existed when the original decree was rendered with the knowledge that not merely Chicago and other areas there increasing in population and necessity for water, both for industry and domestic purposes but all over the nation. How can it be decided? I'm a little frightened about that -- of a problem that arises, the purpose important as it is to these communities, how can it possibly be treated in isolation? J. Lee Rankin: Well, the United States does not think it can be treated in isolation. We think that the whole problem -- the value of this great resource is too great for the entire United States as well as all of these lake states and these great cities to treat it in isolation. And that the whole matter should be carefully examined with the idea of providing legitimate needs where they can be but seeing that the country's interests are fully protected in doing so. And we think that by treating the cases together and having a Special Master that will examine this whole situation -- William J. Brennan, Jr.: When you say treating them, the government, the system, you mean treat them as if they were just one case and not independent? J. Lee Rankin: Yes. And having a Special Master that will examine the whole situation and bring in to the Court an up-to-date presentation of a factual situation and the various equities and considerations that should be properly taken into account that this matter could then be determined by the Court in such a way as to protect all of the interest involved and resolve this sore that is being -- is making trouble for these great states. Earl Warren: You do not think General then that this -- this particular issue in this case could be handled in a -- in a short -- very short period of time to think that that would have to await the larger problem. J. Lee Rankin: Mr. Chief Justice, I think it would be unfair to the Court and the country try to resolve it too quickly because I'm fearful that the whole history of this litigation has shown a tendency, well, we're in such a bad situation because of what's developed that we've got to do something and everybody is prejudiced by the situation that has occurred and I don't think that's the best way to resolve a matter of this seriousness to our country. Earl Warren: Mr. Solicitor -- Felix Frankfurter: (Voice Overlap) -- Earl Warren: Finish your question. Felix Frankfurter: Go on. Earl Warren: No. Felix Frankfurter: No, no. Earl Warren: I was going -- I'm just going to ask you one thing about -- about Canada in this position. I suppose, if we were to authorize the taking of water for this purpose, it would be very difficult for us to complain that Canada might do the -- might be doing the same thing, wouldn't it? J. Lee Rankin: Well, Canada has made a protest at some length. We didn't think it was proper to develop it here because we didn't think that was the merits. Earl Warren: Yes. J. Lee Rankin: But we would develop that for the Court in any case on the merits. Earl Warren: Yes. J. Lee Rankin: It has claimed that because of two things, the Boundary of Waters Treaty and the Niagara Agreement, there is no right to divert any additional water from the Great Lakes system without the common action under those agreements. There are questions as to whether they are entitled to what was brought a claim that they've made and we'd have to present those properly to the Court and the position of our country in regard to it. But it is taking the position now and it was not done in regard to this litigation, I want to make it clear, but in regard to the legislation, that inquiry was made about yesterday, that any diversion was not permitted in light of those treaties. Now, we would -- we think that on the hearing on the merits, we should develop that whole problem fully to the Court and what the legal rights are regarding. But certainly, we have to measure whatever we have agreed to with Canada, what their rights properly are under those agreements against whatever we want to do as a nation. Earl Warren: May I ask just one more question if I may. If -- if the situation were to evolve so that this district would take this water for this purpose and then return the effluent, do you think that that would -- it would be unwise to proceed on the theory of that kind as being destructive of the other interest that are involved? J. Lee Rankin: Well, I don't believe that the States would have any objections if that was done. The United States thinks there's a -- the problem isn't quite that simple. We would still feel that the Court would have to decide whether the equities justified the Court in allowing that to be done taking it outside of the watershed even though it was moved back because under ordinary principles, that is isn't allowed even to -- even though they do return it to take it outside of the watershed. William O. Douglas: You -- you have all the watershed -- you have ultimately a question of pollution I suppose even with the -- with effluent because it's a -- J. Lee Rankin: If you had enough of it, of course -- William O. Douglas: (Voice Overlap) -- J. Lee Rankin: -- the proof is pretty clear in the inquiry that I had that Milwaukee -- everybody is pretty busy putting effluent back. Now how much the pollution is, I would like to see properly developed before a Master. Felix Frankfurter: Mr. Solicitor, on the -- since you've opened the light of each of this problem as -- I'd like to ask would it make some questions dealing with the (Inaudible) J. Lee Rankin: Yes. Felix Frankfurter: This problem and all its complexity and it's evolutionary weakness, is almost half century old -- J. Lee Rankin: Yes. Felix Frankfurter: -- but it certainly began before the government, from my knowledge in 1912. J. Lee Rankin: I think it goes back 1900 Your Honor there. Felix Frankfurter: 1912 (Inaudible) J. Lee Rankin: Yes. Felix Frankfurter: -- when it came very active. That's giving about half a century. This Court on more than one occasion rather -- in rather implicit terms indicated that while of course access may be had and must be responded to by this Court under it's original jurisdiction this is not the best way to deal with this problem. It has indicated the desirability of having a standing body of -- standing agency which will reflect the changing need and also the changing and growing and different methods of responding to this means. A minute ago, you referred to the interest of Canada in a protest. Thanks to my Brother Douglas, I have read the full text of that note of April 9th. The very stiff note joined in as the debate showed by all the leaders of the various parties in Canada. But, I want to know is this, with this long preempt. What steps if any have been taken through the urging or the nagging or the stimulation of the Government of having such a standing body established among the States, between the States including also the presence of Canada whether if these -- these things will be brought out in their entirety instead of the almost necessary, limited, and sometimes mutilated way in which a litigation decide a conference controversy. J. Lee Rankin: Well, as the -- Mr. Justice Frankfurter, as the briefs of the States indicate here, they have a compact involving the States of the Great Lakes Basin and they are able to resolve many questions. Felix Frankfurter: Is there a standing, administrative mechanism under that contract? J. Lee Rankin: Yes. Felix Frankfurter: And is that operating the way the Canadian-American Joint Commission has been operating? J. Lee Rankin: Well, it's different but when they get involved in the controversy that properly involves the Boundary Commission, it's been the practice to submit that and there are certain areas that the Boundary Commission does not have any jurisdiction or try to act in. But I think they have -- been able to handle things generally in that area. But here, they need badly to have some facts developed and also some law developed as to what their rights are because they are -- Felix Frankfurter: I'm just wondering whether the development of the fact wouldn't come more appropriately or more effectively with inner -- or oversight by such a joint body than by this appeal to litigation. J. Lee Rankin: Well, I thought -- Felix Frankfurter: Of course, if it breaks down, it breaks down (Inaudible) a litigation, the pathology of social relations and where the Court is. J. Lee Rankin: I thought maybe I had the illusion that maybe I could help with that function and did try to do some work on it and had several days that I'd put in and the States were very helpful in answering questions and cooperative, each one furnishing information. But when I got down to some further information that seem necessary, it seemed and I suggest to that -- maybe the States could work this out by them -- between themselves. It seemed that it was impossible to get it done on that basis and there's a feeling I think on the part of the Illinois that they're entitled as a matter of right to do this and that they don't have to furnish such information or that a State -- Felix Frankfurter: Does -- does Canada sit in on this compact -- J. Lee Rankin: No. Felix Frankfurter: -- arrangements? J. Lee Rankin: Not on that part. And I would question whether they would care to -- Felix Frankfurter: (Inaudible) J. Lee Rankin: -- at that point. Felix Frankfurter: Well, it's one thing whether they can't, another thing to give them a chance -- J. Lee Rankin: Yes. Felix Frankfurter: -- otherwise, you wouldn't get to rather shop and know that, I mean to take as a discredit, it wasn't at all. J. Lee Rankin: No. Felix Frankfurter: But they've been increasingly feeling it as you've indicated it. J. Lee Rankin: Yes. Felix Frankfurter: And of course, the thing is you want to be less -- less troublesome in the future, trying to be more troublesome, isn't it? J. Lee Rankin: That's right. Felix Frankfurter: You'll be -- J. Lee Rankin: Growth population. Felix Frankfurter: The growth of population and a new seaway. J. Lee Rankin: That's right. Hugo L. Black: Mr. Rankin, I'd like to add one word of what Justice Frankfurter said. I agree fully of that, the idea of it, (Inaudible) the Court has urged the States to get together. Speaking for myself, in any such agreement of that kind, I'd work that out, I would think that the United States should have a representative by reason of the fact that the lake is a national asset certainly in some of its aspects. It could not be properly treated without it when state compacts of course have to go to Congress. But I -- I certainly want to back up what he said as to the great help that can come from having an effort by the States and those who handle it to get together rather than to try to submit it, it's difficulties on the lawsuit. J. Lee Rankin: I want -- I would like before I leave to make it very clear that the United States agrees with the remarks of Mr. Justice Black about the fact that nobody could dry up these lakes or even injure them without us being there to fight about it and insist that the lakes are a great resource not only of these area but of the United States. Earl Warren: Mr. Wines. William C. Wines: Mr. Chief Justice, may it please the Court. In brief reply to the arguments on behalf of the other states and the observations of the Solicitor General, may I return the Court's mind to the imperious exigency that is confronting these communities comprising some 90,000 inhabitants or more. Your Honors, they are on the verge of extinction unless water is worth coming from Lake Michigan. Our brief and the materials submitted to the Court do demonstrate notwithstanding deprecation of those brief by opposing counsel that there is no source of water except Lake Michigan for these communities. Now, in the 1930 decree, if Your Honors please, this Court recognized the right of Illinois to take water for domestic pumpage without any odd measurement by the terms of that decree in cubic feet per second or gallons per second. Chicago sanitary district in the means Illinois permitted to take the water to this necessary to sustain the life of her inhabitants and sustain the necessities of drinking, bathing, and industrial use. The authority cited in our brief all testified to the fact that the use of water for domestic consumption is paramount, is primary that other uses such as contemplated uses for power even for navigation have to await the use for drinking daily, living itself. There has been discussion as to whether any problems would arise for this Court's justification if Elmhurst Villa Park and Lombard would purchase water from Chicago. We say with all the earnestness at our command that legally, the situation is precisely the same whether the water is taken directly by these municipalities or whether it's obtained through the intermediacy of the City of Chicago. A gallon of water taken from Lake Michigan is a gallon of water taken from Lake Michigan whether it flows through Chicago's conduits or aqueducts built by some other instrumentality of the State of Illinois. I'm not too clear and I certainly don't want to misrepresent the arguments of counsel for the other states but I didn't hear a serious challenge to the issue of need. They do say they don't know. No effort apparently has been made to ascertain the point in those sources of water rather than Lake Michigan and we assure the Court that they're right on such source. I'm every anxious to impress on the Court this vital consideration. Your Honors, we need that water and we need it in the very immediate future. The suggestion has been made that a master be appointed. Mr. Solicitor General Rankin suggested in his briefs in Numbers 2, 3 and 4 that such a supervisory functionary ought to be installed. He does not say like he says that the complainant states in that case have not made any cause for relief and that there is no occasion to grant the relief at this time. He suggests that a Master be appointed that have supervisory functions for reasons that we have submitted in our brief in response to that suggestion. We don't think that there is any occasion for the appointment of a Master but be that as it may with respect to these three communities, there isn't -- the amount of water that we seek to take is imperceptively small. It can't affect tonnage by a fraction of an ounce nothing that can be measured. Now, practically however, there is a great difference between buying water from Chicago and obtaining it in the manner that is contemplated by these communities. And one has only to have a general knowledge of Chicago and its environs to realize that for water to be taken through Chicago we'd have to tear up some of the most miles and miles and miles of the most highly developed, valuable real estate in the world. The -- the consideration is impaired impractical whereas the solution that we propose is immanently feasible. Much has been said about who is a riparian proprietor but there has been some suggestion that the periphery of the concept of the riparian interest depends on the contours of the watershed. Well most of Chicago lies outside the Great Lakes watershed. In some places, that -- that watershed is only a mile in width. It's our submission, if Your Honors please, that the need here is urgent. The amount to be taken is small. We needn't fear these vague threats of vast depredations on the lake front. There -- I won't say there'll never be another municipality that may need a little but there is -- there is no -- there are no municipalities that are going to take any -- any huge amounts from the lake and not put it back. The economics of the region wouldn't support it. What we're asking for is this. We've been stopped from raising the revenues needed to build this vitally necessary plant by intimations from our sister states that if we sell those bonds, trouble will be made for someone. We have no place to come but this Court for recourse. And we are asking leave to fail this application and that its merits be considered as promptly as possible. I am implying -- Speaker: Can I ask you a question before you sit down? William C. Wines: Please Your Honor. Speaker: What's the position of Illinois as you've been stated or are these communities on the return of the effluent? William C. Wines: We say that it is not feasible, not practical, will do no good or be of no -- no particular help, the amount involved is that -- it can't be measured and the expenses enormous and that is our position. However, we are most insistent on our right to take the water and use it. We don't think that we have to return it. Some of the suggestions here is that we don't even have a right to take it because we're not riparian. That, Your Honors means, that these communities have to wither and perish. And we can't believe that anything in the jurisprudence that should govern sovereign states in their relation requires any such result of that. Thank you Your Honor.

Warren E. Burger: We will hear arguments next in Federal Communications Commission against ITT World Communications, Incorporated. Mr. Lauber, I think you may proceed whenever you're ready. Albert G. Lauber, Jr.: Mr. Chief Justice and may it please the Court: This case arose out of a multinational telecommunications conference held in Dublin, Ireland, in 1979. That conference was attended by representatives of six European nations, of Canada, and by three members of our Federal Communications Commission. Respondent ITT believes that the three attending Commissioners had engaged at Dublin in certain discussions that were hurtful to ITT's financial interest. In particular, ITT suspected that the three attending Commissioners had tried to encourage their European counterparts to enter into operating agreements with two American companies that the FCC had recently authorized to compete with ITT in the Atlantic market. Accordingly, ITT launched a three-pronged attack designed to prevent such discussions from happening again. First, it filed a rulemaking petition with the FCC challenging the authority of the attending Commissioners to take part in the kind of discussion held in Dublin and seeking the promulgation of rules to govern any future multinational conferences if any were in fact held. Secondly, ITT filed a complaint in the district court which also challenged the authority of the Commissioners to take part in the kinds of discussions held in Dublin and which sought declaratory and injunctive relief against such asserted ultra vires conduct in the future. And third, in a different count of the district court complaint, ITT contended that the Dublin gathering and other European gatherings were meetings of the FCC within the meaning of the Sunshine Act and that those gatherings therefore had to be open to the European public and be governed by all of the other procedural requirements that the Sunshine Act imposes. The case as it comes here presents two questions. The first concerns the jurisdiction of the district court to entertain ITT's charge that the Commission had engaged in ultra vires conduct. The second question concerns the proper construction of the Sunshine Act. Sandra Day O'Connor: May I raise a preliminary inquiry, I understand now from the reply brief that your office filed that the Telecommunications Committee has now been eliminated? Albert G. Lauber, Jr.: It's been disbanded, that's correct. Sandra Day O'Connor: And also, the number of Commissioners has been reduced from seven to five? Albert G. Lauber, Jr.: From seven to five, right. Sandra Day O'Connor: Is there any question of movement now on the Sunshine Act issue? Albert G. Lauber, Jr.: I don't think there is, Justice O'Connor, because the FCC has scheduled additional conferences. There is one meant to be held in Toronto next month, and they plan to attend. Sandra Day O'Connor: At least three of the Commissioners plan to attend? Albert G. Lauber, Jr.: Well, that may depend on what the Court decides, who goes. But since the Commission intends to have future consultations, I think the problem is likely to arise again. I would like to address the jurisdictional question very briefly first. Our position here is that the district court had no jurisdiction to consider ITT's charges of ultra vires conduct by the Commission, because ITT had already submitted that same ultra vires argument to the Commission in its petition for rulemaking. The Commission considered that ultra vires charge in denying the petition for rulemaking. That denial was a final order of the FCC and under Section 402(a) of the Communications Act exclusive jurisdiction to review that final order lay in the Court of Appeals. William H. Rehnquist: Do you say the district court would have had no jurisdiction, Mr. Lauber, even had the ITT not submitted the matter to the Commission? Albert G. Lauber, Jr.: Well, I guess I have two answers to that. ITT claims both that there is enough difference between the two causes of action to give the district court jurisdiction. We disagree with that because, even if there is some difference, they are similar enough that under this Court's reasoning in Whitney National Bank the district court would still lack jurisdiction. But as a third position we say that, even if they had failed to make the ultra vines claim before the Commission, under the doctrine of primary jurisdiction the district court would have been required to stay its hand until the-- William H. Rehnquist: That's not quite the same thing as saying they have no jurisdiction. Albert G. Lauber, Jr.: --That's correct, that's absolutely correct. We contend, therefore, that because the claim was pending before the FCC the district court lacked jurisdiction to consider what was in effect a collateral attack on the FCC decision and an attempt to evade the statutory review procedures that Congress has mandated. We think that reversal of the Court of Appeals on this issue is required by this Court's decision in Whitney National Bank, a case that ITT has not cited or discussed in either of its briefs in this Court. If there are no further questions, I will now turn to the Sunshine Act issue. The Sunshine Act's open meeting rules apply only to meetings of an agency, as defined in the Act. Under the Act's definitions, a gathering that is attended by members of an agency is a meeting of the agency only if four distinct elements are present-- Harry A. Blackmun: Incidentally, Mr. Lauber, at whose instigation was the Dublin meeting closed? The American Commissioners? Albert G. Lauber, Jr.: --I am informed that the way... these date back to 1974, and I understand at the close of every multinational session, as the last item on the agenda, the various foreign participants and the Americans would decide when to have the next meeting and what might usefully be discussed there. Then the staff level people would arrange the detailed agenda, the place to have it, and so forth. So that all the meetings were called by consensus, as it were, and the Dublin session I think was no exception to that rule. The four requirements of a meeting of the agency under the Act are: First, that the members who attend must be a quorum of the full agency or a quorum of a subdivision authorized to act on behalf of the agency;-- Second, the attending members must engage in deliberations;-- Third, those deliberations must determine or result in joint conduct or disposition of official agency business;-- And finally, if those three things are met, the meeting, if such it is, must be a meeting of the agency. If any one of these four definitional components is absent, the Sunshine Act can have no application. We contend that, with respect to the multinational gatherings involved here, all four elements were missing. But today I'd like to focus on just two of the definitional components: the first component, that is, a requirement of authorization to act on behalf of the agency; and the fourth element, that is, the requirement that the meeting be a meeting of the agency. In our view, upon a proper construction of the Sunshine Act the district court was required as a matter of law to award summary judgment to the FCC on either of these two independently sufficient grounds. First, then, as to the authorization to act requirement. All parties here agree that the members who attended these European gatherings were not a quorum of the full Commission. At all relevant times, the Commission had seven members, so a quorum was four. However, at no time did more than three members of the Commission attend the consultative process. However, those three attending members were members and a quorum of a subdivision of the Commission, that is, the Telecommunications Committee. The question therefore is whether that committee, those three attending members, were authorized to act on behalf of the Commission at the European sessions. Warren E. Burger: So as to bind all seven, or a majority of seven, is that what you mean? Albert G. Lauber, Jr.: Well, whatever the term "authorization" means, and I will now explain what we think it means. We think it must be interpreted to involve some kind of power to bind the others. We think that was absent here. Now, in order to define whether or not the three attending members were in fact authorized to act on behalf of the entire body in Europe, one must turn to the organic statute that created the FCC, the Communications Act. That statute, like most such statutes, has a provision which empowers the FCC to delegate its authority, either to panels of Commissioners, to individual Commissioners, to boards of employees, or to single employees. The Communications Act provides that such a delegation of authority can be made only by published rule or by order. It further provides that such a rule or order can be adopted, modified, or rescinded only by a majority vote of the full Commission. Now, in fact the FCC by rule has delegated a great deal of authority to various groups and individuals within the Commission. Those delegation orders occupy some 20 pages in 47 CFR Subpart F. Now, among these many delegation orders, only one delegates authority to the Telecommunications Committee as it formerly was. That delegation order formerly authorized the committee to act upon applications for certificates of public convenience and necessity filed by common carriers under Section 214 of the Act above a certain dollar range. Now, Section 214 applications are required to be filed by common carriers before they can acquire facilities to initiate new service. Section 214 applications are handled in a relatively formal proceeding where the applicant submits a brief in support of his application, opponents, typically competitors, file opposing briefs, called petitions to deny, and the applicant then submits a reply brief. On the basis of the pleadings, the committee or the full Commission will then either grant or deny the application. Neither court below found or even suggested that the three attending Commissioners were acting on Section 214 applications in Europe. Moreover, those three attending Commissioners of that committee had received no other delegation of authority from the FCC to act on behalf of the Commission in Europe or anywhere else. Accordingly, in our view it's perfectly plain that those European... because the Commissioners had not been authorized to act on behalf of the FCC, those gatherings were not meetings of the FCC as a matter of law, and that's the end of the case. Now, the Court of Appeals agreed that the three attending Commissioners had received no formal delegation of authority from the full FCC. Rather, the D.C. Circuit hypothesized that the FCC, in violation of the Communications Act, had made a sub rosa delegation of authority, not evidenced by a published rule or order, to the three attending Commissioners. The court below based this hypothesis entirely upon inference, an inference it drew from the facts that the attending Commissioners went to Europe in their official roles and that they there discussed matters that were important to the FCC. In our view, this reasoning is just plain wrong. First of all, we know of no authority for the proposition that an agency, in the face of an explicit delegations of powers provision in its statute, can somehow delegate authority in any other way. Warren E. Burger: Is there any authority to hold meetings outside of the continental limits of the United States? Is there anything, as with courts, that fixes the place that they must meet? Albert G. Lauber, Jr.: I'm not sure, Mr. Chief Justice. I believe that there is something in the statute of the FCC which requires that it normally meet in Washington, D.C. I'm not aware if panels could conduct activities elsewhere. Warren E. Burger: It would be somewhat unusual, would it not, for a regulatory agency to hold meetings to take action in Dublin or Paris or Rome? Albert G. Lauber, Jr.: I think it would be unusual, but I am not sure whether there is any express provision mandating that they hold meetings in the continental U.S. But we will try and find out before the reply. Secondly, the second reason the unofficial delegation theory will not work, is that the assumption of an illegal delegation by the court below was wholly contrary to the presumption of regularity that normally is accorded administrative action. Thirdly, the Court of Appeals' theory we think proves too much. It has no limiting principle. If unofficial delegation can be inferred in the absence of an explicit delegation, a meeting could be held to be held whenever members of an agency go somewhere in their official roles and talk about important business. It would apply to seminars, lectures, trade group meetings, and all the rest of it. William H. Rehnquist: Mr. Lauber, what does it mean when you use the term "go somewhere in their official role? " Does that mean they're getting paid for transportation and per diem? Albert G. Lauber, Jr.: Well, I think that's what the Court of Appeals must have meant, that they were going on Government time; they were being invited because of who they were, i.e., Commissioners, not tourists or the like; and that they were there because they were Commissioners. The Europeans wanted them there as Commissioners. The whole process grew out of misunderstanding by the Europeans, who are accustomed to-- William H. Rehnquist: Well, what does it mean to be somewhere as a Commissioner? Albert G. Lauber, Jr.: --I guess it means to be somewhere and be able to speak with some authority about the Commission's interests and objectives, what it hopes to accomplish. The Court of Appeals... we agreed below that they were attending in their official roles. No one said what that meant. William H. Rehnquist: Well then, why did you agree to it? Albert G. Lauber, Jr.: Well, because we agreed-- William H. Rehnquist: If you didn't know what it meant? Albert G. Lauber, Jr.: --that the whole... it wasn't down there, but-- [Laughter] Because it was clear that the Europeans wanted the Commissioners there because they were Commissioners and because they had some kind of authority to speak about what was important. They weren't just commentators or lecturers or scholars. They were part of the American Government bureaucracy. And the Europeans in the past have been frustrated because they would cut a deal with a carrier and the Commission would come in and veto it, and they didn't like not knowing what was going on. They wanted to meet the Commissioners and talk to them personally. William H. Rehnquist: And cut a deal with them, too. [Laughter] Albert G. Lauber, Jr.: A fourth problem with the Court of Appeals' theory we think is that it will make it impossible to administer the Sunshine Act as Congress intended. The Act's rules operate generally prospectively. That is, if an agency plans to hold a meeting it must announce the time of the meeting, the place, agenda, in advance of the meeting. It must also announce in advance whether or not the meeting will be open or closed to the public. Congress therefore, we think, must clearly have presumed that-- Harry A. Blackmun: Mr. Lauber, that's the question I really wanted to get at. Who makes that determination as to whether it will be open or closed to the public? Albert G. Lauber, Jr.: --Well, under the Sunshine Act it requires the agency to vote by a majority vote whether or not to close the meeting under one of the ten exceptions under the Sunshine Act, and they must record those votes, publish who voted how on the record within a week, I think, after the votes are taken. Harry A. Blackmun: But in these European meetings, who makes the determination? Albert G. Lauber, Jr.: Well, they've never really been forced to face the issue until this lawsuit began. I assume it would have to be done by some kind of consensus. There were people from seven or eight European nations and from the United States, and if it were simply a majority vote-- Harry A. Blackmun: At least the record, then, does not show that the American representatives requested and obtained the closed-- Albert G. Lauber, Jr.: --Oh, no, I'm sorry. That's not correct. I think the record does show that it was the FCC that requested that the Dublin session be closed when discussion came around to the issue of new carriers and services, and that the Europeans went along with that. But what I'm talking about is the power to effect this. Congress clearly presumed that an agency would be able to know ahead of time whether it was going to have a meeting or not, and if the status of a gathering as a meeting depends not on an objective indicia of a delegation of authority by statute, but on some appellate court's inference about whether delegation had been illegally conferred, the agency can never know ahead of time whether a gathering will be a meeting or not. Finally, we think that the Court of Appeals theory would facilitate a great deal of harassment of regulatory bodies by those who wish to frustrate the administrative process. If authority to act can be inferred in the absence of an explicit delegation of power, people can go around filing lawsuits challenging almost any discussions members have as putative meetings under the Sunshine Act. Such litigants would typically demand the right to have discovery as to all items, all information that might bear upon the existence vel non of a sub rosa illegal delegation. And we think this would convert the Sunshine Act into just another weapon that litigants can use to stifle administrative action they don't want to see happen. So for all these reasons, it is our contention that the Court of Appeals was wrong in believing that authorization to act on behalf of an agency can be inferred in the absence of an explicit delegation of authority made pursuant to statute. Accordingly, because there was no official delegation made here, summary judgment was dictated in favor of the Commission. I would like to pass over the next two components of the definition and go to the fourth one, that is, the requirement that the meeting be a meeting of the agency. It is our position that even if one could infer authorization to act here, the European gatherings would not be covered by the Act, because even if meetings, they were not meetings of the FCC. Now, requiring that a meeting be an agency meeting, Congress we think clearly intended that the meeting must be run by and under the control of the agency in question. John Paul Stevens: --May I interrupt just to ask, what statutory language do you rely on for this fourth requirement? I don't see this requirement there in so many words. Albert G. Lauber, Jr.: Well, it's the prepositional phrase (b) of "agency meeting". John Paul Stevens: But it's "take action on behalf of the agency. " That's where the "of" appears. Albert G. Lauber, Jr.: Right, but I think there's a section-- John Paul Stevens: I thought you relied on the joint conduct. You don't rely on the joint conduct language? Albert G. Lauber, Jr.: --Well, we do rely upon that, but only on the briefs. I'm not going to address that orally now. We do rely upon the other two, the deliberations requirement and the joint conduct requirement. John Paul Stevens: But I'm still... I must confess, I have the statute in front of me: I don't know what language you say requires that it be a meeting of the agency. I guess it would be helpful to me to be able to know. We're talking about, I take it, 552(b)(A)(2), the definition of the term "meeting"? Albert G. Lauber, Jr.: I think what I'm talking about is subsection 552(b)(B). It says at the end there, the bottom of page 1A of the appendix: "Except as provided, every portion of every meeting of an agency shall be open to public observation. " That's where the public observation requirement comes in. John Paul Stevens: Thank you. Okay, I was lost. I'm sorry. Albert G. Lauber, Jr.: So that's our fourth test, that the meeting must be a meeting of the agency, and we think that Congress meant that that implied the meeting be run by, under the control of, the agency. Otherwise, clearly the agency could not ensure that the Act's various rules were complied with. In fact, the statute uniformly presupposes that the agency will be in control of the meeting. For example, it presumes that the agency can set the time, place and agenda of the meeting unilaterally. The Act presumes that the agency can issue rules that will govern the meeting and bind all concerned. And the Act assumes that the presiding officer of the meeting will be a member of the agency. Here we think the multinational gatherings held in Europe were plainly not under the control of or run by the members of the FCC who attended. Byron R. White: Would you say there was no meeting that took place if there had been an explicit delegation to the people who attended this international meeting with authority to vote in favor of a certain resolution in a way that would bind, would purport to bind the agency? Albert G. Lauber, Jr.: We would contend that, because even then-- Byron R. White: It still wouldn't be a meeting? Albert G. Lauber, Jr.: --It would not be a meeting of the agency. Byron R. White: Even if that action was within the scope of the authority and would bind the agency? Albert G. Lauber, Jr.: That's our position, because even if they had authority to take action, they could not control the meeting so as to ensure the Act was complied with. Byron R. White: Well, there were just two meetings going on at the same time. They certainly were in control of their part of the meeting. They voted. Albert G. Lauber, Jr.: But all they could do would be to leave. Byron R. White: They voted in accordance with their instructions. Albert G. Lauber, Jr.: And our position-- Byron R. White: They were in complete charge of their part of the meeting. Albert G. Lauber, Jr.: --They were, but they could not force the other attendees to let the public come in and see them vote. All they could do would be to walk out of the meeting. And our position is that-- Sandra Day O'Connor: Well, couldn't it be kind of like a caucus within the meeting? I mean, the three of them caucusing among themselves to react to whatever was going on at the larger meeting, and it's a meeting within the meeting sort of thing. Albert G. Lauber, Jr.: --Well, I don't know how that would... how you could administer that in the real world. I guess it's possible in some way to excise the-- Byron R. White: Well, in the real world that happens all the time in big meetings. [Laughter] Is it correct... may I ask this, just as I am sorting it out... that you don't deny that it's a meeting for this argument? You're just saying it's not a meeting that must be open to the public? Albert G. Lauber, Jr.: --Right. The delegation argument is entirely separate. John Paul Stevens: I understand. Albert G. Lauber, Jr.: We're now saying that, even if you say it's a meeting, they have authority to do something, still it would not be a meeting of the FCC that they could control and open up to the public if they didn't run it. John Paul Stevens: Well, the statute doesn't require that it be open to the public unless it's a meeting of the agency. Albert G. Lauber, Jr.: Right, that's correct. William H. Rehnquist: Even though it is a meeting. Albert G. Lauber, Jr.: Now, here the meetings, if such they were, were held on foreign soil, they were hosted by foreign governments, they were chaired by foreign officials, they were attended by foreign representatives of foreign governments who outnumbered the attending Commissioners and equaled them in rank. We think it is quite clear here that the attending Commissioners were in no position to decree that the meetings be governed by U.S. law or be open to the public. And if the Europeans objected to having the meetings open to the public and governed by U.S. law, as well they might, the Commissioners would be forced to have in effect a Hobson's choice: Either not to go to the meeting or to go and violate the Sunshine Act. William H. Rehnquist: What are the sanctions for a violation of the Sunshine Act? Albert G. Lauber, Jr.: I believe, Justice Rehnquist, they're all prospective. The Act provides that you cannot invalidate something that was done at an improperly closed meeting. Byron R. White: But you have to appear before the Supreme Court. [Laughter] Albert G. Lauber, Jr.: What the remedies are, in district court you can get an injunction enjoining compliance with the Act in the future, and you can get release of a transcript which would be required to be made of a closed meeting if the Act were applicable. And we think that to require the Commissioners to either forego the meeting or go and violate the law was not what Congress would have intended when it enacted the statute, because the Act was meant to impose procedural restraints on existing meetings, not to impose substantive restrictions on agency action. Therefore, again, even if one were to assume these were meetings, they were not meetings of the agency because they were not controlled by the agency, and therefore on that separate ground summary judgment was dictated in favor of the Commission. If there are no further questions, I'll reserve the balance of my time. Warren E. Burger: Mr. Lewis. Grant S. Lewis: Mr. Chief Justice, may it please the Court: Before addressing the FCC's legal arguments, there are a number of additional facts that I think should be called to the Court's attention to put this litigation in its proper context. In the mid-1970's there was a significant disagreement between the FCC and representatives of European governments as to the nature of the facilities that should be constructed to handle the increasing trans-Atlantic communications traffic. Basically, the FCC favored use of satellites, the European governments favored the use of cable. As a result of the give and take of the consultative process, meetings which had been going on, the FCC basically agreed to defer to the Europeans and authorized the construction of so-called TAT, for trans-Atlantic, 7, the TAT-7 cable. Now, at about the same time the FCC, which of course for many years has sought to foster domestic competition in the provision of communications services, also sought to apply these policies to the international arena and, in a significant departure from prior practice, it authorized a number of new companies to provide international service, even though they had never entered into agreements with the European governments with which they would have to deal. At about the time... and this is about the same time. At the time of the TAT-7 decision, authorizing TAT-7, Commissioner Fogerty, a key member of the Telecommunications Committee of the Commission, the committee charged with its express delegation of authority with authorizing construction of major new facilities, issued a concurring opinion. He stated that the FCC was deferring to the European governments even though he didn't believe that a new cable was appropriate. But he went on to say, we expect the tit for the TAT, and specifically threatened that unless the European governments agreed to deal with the new American carriers the FCC would not listen to them in the future. This is October 1978. The text is set forth in paragraph 8 of our complaint. In March '79 at a consultative process meeting, Commissioner Fogerty again made a speech seeing the tit for TAT, the quid pro quo, and making it clear he is not just speaking for himself but for the full FCC. In May of 1979, Chairman Ferris of the Commission, and of course a member of the Telecommunications Committee, testified before Congress that the Commission was in the process of trying to apply leverage on the European governments. But despite all this, when it came time for the October 1979 consultative process meeting in Dublin, not a single European government had backed down, not a single European government had acceded to the FCC demands. It's at this point that the FCC convened the closed meeting from which representatives of the American carriers were excluded. This was a basic departure from past consultative process meetings, which were open to all interested parties. There's no question that this was done at the instance of the FCC. The FCC so admitted in its answer to interrogatories that we served, which are contained in joint appendix page 116. They also admitted so in their brief to the Court of Appeals, as the Court of Appeals' decision memorializes on page 6 of that decision. The FCC then called this special meeting. I would also point out that there were nine representatives of the FCC, three Commissioners, six members of Commission staff, at the meeting, as compared to single representatives of six of the foreign governments. That's in an interrogatory answer at joint appendix 108, 109. ITT, being excluded from this meeting for the first time, it's correct, tried to find out what happened. It served a Freedom of Information Act request asking for documents about the meeting. And it also filed a petition for rulemaking, basically questioning the wisdom and propriety of what the FCC was doing, but saying that at the very least the Commission should define what its representatives would be doing and establish some procedural safeguards for the future. The Commission took no action. The FOIA request was denied in principal part by the Common Carrier Bureau. We appealed to the full Commission. The Commission did not act within the time required by statute. The Commission took no action on the petition for rulemaking that we filed. They did, however, announce that there was going to be another closed meeting in England, this time in Ascot. And at this point ITT filed the lawsuit that gives rise to the argument today. Unlike ITT's petition for rulemaking, which focused on the future, basically calling on the FCC to establish some rules for the future, ITT basically bit the bullet and challenged the past propriety of what the Commission had been doing. We specifically quoted what Commissioner Fogerty had said about threatening the European governments. We urged and alleged that such conduct on behalf of an American administrative agency is ultra vines, that negotiations with foreign governments is the province of the State Department, not a regulatory agency, and we asked that that conduct be enjoined. We also stated that the conduct involving the joint conduct of agency business was subject to the Sunshine Act. There was some preliminary discovery and a motion to dismiss was filed by the Commission. We cross-moved for summary judgment. Pursuant to the local rule, we identified eight statements of the Commission, of its... of Commissioners and of its general counsel, which described what the Commission was doing at consultative process meetings, what it proposed to do. William H. Rehnquist: Mr. Lewis, let me go back just a minute with you if I may. Grant S. Lewis: Certainly, sir. William H. Rehnquist: The general provision for review of actions of the Federal Communications Commission provides that review lies with the Court of Appeals, doesn't it? Grant S. Lewis: Justice Rehnquist, review of FCC orders lies with the Court of Appeals. Review of administrative agency action would lie in the district court. We did take an appeal when they denied our petition... they ultimately, after the lawsuit was filed, they denied our petition for rulemaking, and we did take an appeal from that. But that order dealt with whether the Commission would establish rules for the future. It did not involve in any way an adjudication of the propriety of its past conduct. William H. Rehnquist: Well, did you get into the district court under the Administrative Procedure Act? Grant S. Lewis: We get into the district court... the Administrative Procedure Act provides for review of agency action that's not otherwise subject to review, which would be the basis for going to the district court rather than the Court of Appeals where we're challenging an action rather than an agency order. William H. Rehnquist: And is that distinction well established in the cases? Grant S. Lewis: We believe it is, sir, yes. I will return to that in a moment, but basically there are many doctrines that narrow the jurisdiction of the district court where there will subsequently be a remedy if you just wait and abide the administrative proceeding. But the district court jurisdiction is residual. The FCC basically elected not to join issue with us on our statement of undisputed facts. They specifically represented to the court that there were no material facts in dispute in the case, and that's the posture then in which the case arose and in which summary judgment was granted. The statements that we called to the court's attention, the district court and Court of Appeals, did not show general informal discussions, as the Commission states in the question that it presented to this Court when it asked that certiorari be granted. Rather, the statements clearly establish, to quote them, that the Commission was in a negotiating stance, was seeking a tit for TAT or a quid pro quo, that the Commission was applying leverage on the European governments. And basically, at one point Commission Fogerty said: Well, we're going to go overseas and show we really mean business. These are simply not informal discussions involving general exchange of information. With that background, I'd like to respond, then, obviously, to the FCC's arguments as to why the Sunshine Act they claim should not apply. We of course urge that it has been correctly applied, recognizing that the legislative history shows that there is to be a presumption of openness in government and that the burden of proof is on the administrative agency to justify departure from those principles. The first point the FCC argues is that, and we all admit, no question, that there was not a quorum of the FCC as it then existed, although in all likelihood there will now... any future meeting involving the same three Commissioners will of course involve a quorum of the Commission as it now exists. The Sunshine Act is clear that the FCC applies... excuse me, the Act applies, not only to meetings of an agency, but to subdivisions of an agency that are authorized to act on behalf of the agency. Now, the Commission's argument before this Court is that because the Telecommunications Committee was not expressly authorized to participate in consultative process meetings and because its authority was limited to passing on applications for construction of major new facilities, whatever it did was unauthorized and therefore the Sunshine Act can't be applicable. Now, we'd submit there can be no serious question as to the applicability of the Act. We alleged in paragraph 10 of our complaint, joint appendix page 64, for several years representatives of the FCC, through its Telephone and Telegraph Committee and staff, as it was then called, have met with the Canadian and European telecommunications administrations to discuss facility planning. The FCC's answer to our complaint, set forth at joint appendix 73: "Defendant admits that meetings of the type described in paragraph 10 have occurred. " In its order denying our petition for rulemaking, one of the statements on which we relied in support of our motion for summary judgment, set forth at page 165 of the joint appendix, this was the Commission's statement, the Commission: "We have undertaken to have Commission representatives meet face to face with them. " --that is, representatives of the foreign governments... "to discuss mutual present and future telecommunications needs. " I might add, to the extent there is any question, Commissioner Fogerty had no doubt about his authority when he addressed the consultative process meeting in Montreal. At joint appendix page 165: "I think the Commission", he said... "I can speak for myself and I'm sure for the Chairman and Mr. Lee. " --he's the third member of the committee... "and for the other Commissioners who are not present. " "We want to meet you halfway, but we do request, I think, that the quid pro quo would be. " He clearly advises the European representatives he is speaking for the entire Commission. Warren E. Burger: Do you say that's decisionmaking? Grant S. Lewis: That speech obviously is not decisionmaking. Warren E. Burger: My question is, do you say that is decisionmaking or not? Grant S. Lewis: We are saying that he is participating in a meeting. When he delivered the speech he was not involved in decisionmaking. I am really simply addressing the fact that he recognized his authority, and the Commission has consistently recognized the authority of the Telecommunications Committee: that as indicated, they represented to the Court of Appeals, they stated that Commissioners were participating in their official capacity, in their official role and qua the Telecommunications Committee. Warren E. Burger: But are you going to at some point tell us what decisions were made in Dublin? Grant S. Lewis: We don't know what decisions were made in Dublin. We were excluded from the meeting. We do know, and we have set forth in our statement of undisputed facts, what the Commission said it would be trying to do in Dublin. It would be seeking a tit for tat. Commissioner Fogerty was planning to go and show we really mean business, to basically engage in the conduct of the business of the agency. Sandra Day O'Connor: Mr. Lewis, do you think that simply implementing a decision previously reached by an agency would constitute... would fall under the Sunshine Act, and that the deliberations or the actions resulting in joint conduct? I mean, if you have a situation, maybe apart from yours, where a decision has already been made and the agency just sends somebody out to implement it, does that invoke, the implementation part, invoke the Sunshine Act? Grant S. Lewis: Justice O'Connor, when the agency sends someone out the answer is no. When they send a group of Commissioners out to see to it that the decision is implemented, they are then involved in the joint conduct of agency business. Sandra Day O'Connor: But perhaps not deliberations. If they're just sent out to implement something, I'm not sure that it meets all the requirements of the Sunshine Act, if that's the fact. Grant S. Lewis: This is basically... where the Court of Appeals went is exactly where I believe Your Honor is going. Namely, it concluded its analysis on the question of authority, whatever the scope of the Commission's endeavors, which is what I think you're addressing, there's no question that they're undertaken on behalf of the Commission. Let's then go to the question, what were they doing at these meetings, something that the FCC is avoiding mentioning today before this Court. That's something they've said they'd rather not argue, which we can understand given the undisputed statements that were made below as to the scope of the activities. Thurgood Marshall: Explain to me just simply, what authority does Congress have over Dublin? Grant S. Lewis: Your Honor, Congress is not seeking to subject Dublin or any foreign administration to the scope of the Sunshine Act. All that Congress has done is said that when the FCC engages in agency business that it doesn't matter where they do it. The policies favoring openness in government are as applicable in Dublin, if that's where the Commission goes to do its business and to get its business done. I agree, we're dealing with a very unusual situation. Thurgood Marshall: But I mean, how can the Commission or anybody else in the United States make Dublin do anything? Grant S. Lewis: Nobody... the only thing Congress is doing is telling the Commission what to do. Normally, of course, dealings with foreign governments-- Thurgood Marshall: Well, what could the Commission do to make the meeting in Dublin public? Grant S. Lewis: --Your Honor, the Commission closed the meeting. It's undisputed that the only reason the American carriers were excluded from the meeting was because the FCC asked that that be done. There's no question that this was totally the doing of the Commission. Interested American parties have been participating in open meetings for five years, and it's only when the Commission, unable to persuade the Europeans to do what it wanted to have done in the open, that they then sought to go into the dark and to exclude the Americans. This is precisely the kind of conduct that Congress sought to expose to the sunlight when it enacted the Sunshine Act. Thurgood Marshall: I agree fully with what you say. But my point is, I am as certain as I am sitting here that Congress didn't intend to move in a situation like this in a foreign country. Grant S. Lewis: Your Honor, I'm equally sure that Congress didn't intend for representatives-- Thurgood Marshall: Yes, but I mean, you agree with that, don't you? Grant S. Lewis: --Congress certainly did not intend... the legislative history is clear that the question is what is the agency doing, not where is it being done? Thurgood Marshall: I mean, when we're negotiating the arms agreement, has he got to be public? Grant S. Lewis: No, Your Honor. That's exactly... that's not the province of a regulatory agency. That's going to be done by agencies that are not subject to the Sunshine Act. Dealings with foreign governments is not the province of an administrative agency. That's our ultra vires count, and we ultimately expect to establish that the FCC has done what we've alleged, namely engaged in ultra vires negotiations. But if they're not, if what they're doing is proper, then they're still engaged in agency business which is subject to the Sunshine Act. Sandra Day O'Connor: But the use of the word "business" troubles me a little bit, in view of the precise requirements of the statute. And to try to bring you back to the question which still isn't answered, how does implementation of a prior decision constitute a deliberation? Grant S. Lewis: Justice O'Connor, the word "deliberation"... I think the legislative history on this is clear that deliberations simply meant, that phrase was used simply to exclude totally informal contacts. And the examples that are given in the legislative history are casual conversations on the golf course or at the lunch table. The key phrase is the joint conduct or disposition of agency business, and if the agency is involved in decisionmaking... I don't believe the Commission disagrees with this. If the agency is actually involved in decisionmaking, then it should be done in the public or not at all. The FCC's proposed-- Sandra Day O'Connor: Well, if the decision has already been made and they are just implementing it, then does that fall within the Sunshine Act? Grant S. Lewis: --The FCC... agencies normally don't implement decisions. I mean, agencies write decisions, they publish them, and the decisions speak for themselves. When the FCC goes overseas to try to bang heads-- Sandra Day O'Connor: Well, but you are saying that in this instance the agency was trying to implement its decision-- Grant S. Lewis: --Yes, it was trying-- Sandra Day O'Connor: --as I understand your claim. Grant S. Lewis: --The only thing the agency authorized was Grafnet and Telenet to engage in international operations. Now, the policies underlying that were policies that the agency sought to foster. We believe the history is clear that any time an agency is engaged in action in furtherance of the business that it's to be done in the sunshine. The only things to be excluded are casual conversations and the like. When they went... as I say, the fact that they went overseas is unusual, because regulatory agencies typically don't get involved trying to negotiate with foreign governments. But when they do that, then it's agency business subject to the Act. We don't understand the FCC to deny that if the commission is... and I think their brief is clear on this... if they're doing what they said they're doing in the undisputed statements of fact, that that conduct is subject, is within the definition of "meeting"... the joint deliberations involving the joint conduct or disposition of agency business. They do reserve their point in the reply brief, which I think is what they're saying here, that even if they are involved in the joint conduct or disposition of agency business, the Sunshine Act is not applicable, either on the one hand because whatever they did was unauthorized or on the other because whatever they did they didn't do at meetings of the FCC in Washington. But we don't understand them to deny that if in fact they were in a negotiating stance, as they admitted, if they were seeking a quid pro quo, that the Act would be applicable. We point out that they proposed... when you get away from decision, formal decision making itself, they've proposed a standard based on Bergen Klitzman's Interpretive Guide to the Sunshine Act. As we indicate in our brief, we fully accept that standard and we believe that on the undisputed facts we come within it. With respect to the question, the final question which is put, their final point, which is the question, are these meetings of the FCC? The Senate report with respect to what is a meeting makes it clear, and I quote from page 19: "The test is what the discussion involves, not where or how it is conducted. " Now, yes, it's unusual, as we say, to have the Sunshine Act applied overseas, but that's only because of the wholly unusual nature of the conduct. When the agency is involved, as seems admitted virtually here, in the joint conduct of agency business, then the fact that the Act is being applied in some place other than the United States simply is not relevant. The meetings here were called by the FCC, there's no question of that. The closed meeting in Dublin was called by the Commission. The American carriers were excluded by the Commission. Again, the question as to whether, Justice Stevens, are these meetings of the FCC. We'd invite the Court's attention to joint appendix page 171, our statement of material facts not in dispute: "On February 20-21, 1980, the Telecommunications Committee of the FCC and other FCC representatives again conducted a closed and off the record meeting in Ascot. " The FCC replied on joint appendix page 173: "No objection". In the Court of Appeals the FCC-- John Paul Stevens: Read the full sentence: conducted a meeting with representatives of these European-- Grant S. Lewis: --Yes, that they conducted the meeting-- John Paul Stevens: --Does the FCC normally conduct meetings within the meaning of this provision with representatives of other-- Grant S. Lewis: --The Sunshine Act is clear that the fact that representatives even of the public are there does not affect the question of whether these are in fact meetings of the Commission. If joint conduct of business is involved, the fact that others are there still makes it subject to the coverage of the Act. John Paul Stevens: --It still makes it subject to the coverage, but his point is that the requirement that it be open doesn't apply unless it's a meeting of a agency. Grant S. Lewis: What he is citing from, sir, is not the definition either of meeting or the definition of agency-- John Paul Stevens: No, it's not the definition. It's the requirement that the meeting be open. Grant S. Lewis: --And we think it's clear that if there is a meeting as defined of the agency as defined, that the use of the preposition "of" and argument about that does not excuse compliance. If it's an agency involved and if there's a meeting involved, we think that's-- John Paul Stevens: So you say there are really only three requirements? Grant S. Lewis: --We would actually say that there are two. There are two definitions at issue here, sir. One is the meaning of the word "agency"; the other is the meaning of the word "meeting". We invite the Court's attention to an affidavit submitted by the FCC in the Court of Appeals. Now, it's an affidavit that's entitled to very little weight. They offered it to support an application for a stay. We asked to take the deposition of the affiant. The FCC refused to produce the affiant, and then the Court of Appeals denied the stay. So but even there, when he's explaining his expertise... this is joint appendix 177, Mr. Demerie. This is speaking now about the closed meetings. Mr. Demerie is Assistant Bureau Chief of the Commission. "I organize and coordinate these meetings, and have also overseen the Commission's efforts to expand the consultative process dialogue to include discussions of non-facilities communications issues. " We believe this is a kind of conduct that Congress sought to expose to the sunshine. Now, with respect to the question of the Court's jurisdiction. As you recognized, Justice Rehnquist, it's generally recognized that appeals from agency orders go to the Court of Appeals. William H. Rehnquist: And it's also generally recognized, isn't it, Mr. Lewis, under cases like Myers against Bethlehem Shipbuilding, that the appellate court or any sort of reviewing court just doesn't step right into the middle of an agency proceeding? You wait 'til the agency's done what it's going to do. Grant S. Lewis: That's precisely correct, sir, and therefore there are many doctrines... exhaustion as articulated in Myers, finality, ripeness... which all stand for the proposition that premature interruption of an ongoing agency proceeding is inappropriate, assuming the plaintiff is not prejudiced by the delay. Now, we believe that even those doctrines have a very important exception, namely the Litem v. Kine exception for patently ultra vires conduct such as we allege here. But this isn't that kind of a case. We're not waiting for some future FCC order that will then be appealable. If the FCC achieves everything it sets out to do, if it persuades the French to deal with Graphnet or Telenet, to give it the quid pro quo or the tit for tat, then there's nothing more for the Commission to do. That action's going to be taken in Europe, in France, and all that will happen is that Graphnet or Telenet will be authorized by the French Government. This is not a case-- William H. Rehnquist: Well, why isn't that damnum absque inuria so far as you're concerned? Grant S. Lewis: --We believe we have a right to challenge ultra... the standing issue is... they argued that-- William H. Rehnquist: Well, what right do you have to challenge ultra vires, if it isn't going to result in any Commission order that would affect you? Grant S. Lewis: --It's the Commission action. We have a right to challenge ultra vires Commission action. William H. Rehnquist: Why do you say that? Grant S. Lewis: That's I believe set forth in the Administrative Procedure Act. That's not disputed by the Commission. They didn't raise that argument here. The Court of Appeals addresses standing. William H. Rehnquist: Yes, but you can't just walk in off the street and say that the Commission is about to do something in the future that might affect my client. You've got to point to an order of the Commission. Grant S. Lewis: No, the Commission is taking action. It's really the question-- William H. Rehnquist: Not official action. Grant S. Lewis: --When it goes overseas and urges the French Government to grant an operating agreement to our competitors, and when the French Government only wishes to deal with a limited number of American carriers... I think all that is undisputed... we are threatened with immediate danger if the Commission enters... if the French Government acts. Our right to standing was litigated by the Commission below. They lost in the Court of Appeals. The Court of Appeals decision on this I think establishes our standing. William H. Rehnquist: Well, unless it's wrong. Grant S. Lewis: As a competitor of the company that they've authorized, we believe we've got standing. The Commission's not... that's not dispositive, I recognize, before this Court. But the residual jurisdiction of the Court to review wrongful administrative agency action is something that I think is generally recognized. Now, the only question... and as I say, the standing of a competitor to complain. We will be hurt very definitely if the French Government knuckles under to the Commission. That's why we're in court. The cases that say that a competitor has standing to challenge ultra vires action-- Thurgood Marshall: Are you in court for that? I thought you were in court because you weren't allowed at the meeting? Grant S. Lewis: --Your Honor, we've got two complaints. We're in court because we were excluded from the meeting. Thurgood Marshall: As you answered the Chief Justice's question, you don't know what was decided. Grant S. Lewis: Pardon me? Thurgood Marshall: You don't know what the decision was. At least that's what you said. Grant S. Lewis: We know what the Government set out to do, because they've stated that. Thurgood Marshall: Well, didn't you tell the Chief Justice you didn't know what the decisions were? Grant S. Lewis: That's correct. We do not know. Thurgood Marshall: Well, why don't you find out? Grant S. Lewis: That's why we're... the Government in the Sunshine Act-- Thurgood Marshall: If we say the Sunshine Act should have been, that won't tell you what the decisions are. Grant S. Lewis: --Well, that will give us perspective of-- Thurgood Marshall: Is there some form of action where you can get the decisions? Grant S. Lewis: --The only way to find out what happened is in discovery in the district court. I mean, I think it's recognized-- Thurgood Marshall: Well, you have to have a case before you can get discovery, don't you? Grant S. Lewis: --We filed one, sir. Thurgood Marshall: Yes, but you want a case to have an open hearing. Grant S. Lewis: No, we have two claims for relief. One is that in the future the meetings should be subject to the Sunshine Act. Thurgood Marshall: I guess I know, nowadays you can file conflicting causes of action. But this is the biggest conflict I've seen in a long time. Grant S. Lewis: Justice Marshall, that's not... I'd like to change your mind about that, because the Sunshine Act claim looks to the future and wants to get these meetings open for the future. The first claim for relief, challenging ultra vires conduct, is looking to the past. We're seeking an adjudication after discovery of the Commission, what they've done in Dublin... that's the only way for us to find out... and then such relief as is appropriate. Thank you. Warren E. Burger: Do you have anything further, Mr. Lauber? Albert G. Lauber, Jr.: I have two brief points. On the authorization to act requirement, ITT would interpret the words "authorization to act on behalf of the agency. " to mean something like "allowed to be there". We're not contending that the three Commissioners were acting illegally or improperly in going to Europe. Our contention is they were not authorized to act on behalf of the FCC in Europe because they had no official delegation of authority. Secondly, apropos of Justice Marshall's question, if it were held that the Act applied to these European gatherings, that would require the FCC not only to dictate the open or closed nature of the meeting, but also to dictate the time, the place, the agenda, and all the rest of it. Congress could not possibly have intended that. Thurgood Marshall: But the fact that you won't tell them what the decisions were does lend credit to his position that you shouldn't have had a closed meeting. Albert G. Lauber, Jr.: Justice Marshall-- Thurgood Marshall: Am I right on that? Albert G. Lauber, Jr.: --I think the way that ITT should have dealt with that is... they presented their argument to the FCC in a rulemaking petition that the Commissioners were doing bad stuff over in Dublin. Now, if they had wanted to get the fullest possible evidentiary investigation of the ultra vires charges, what they should have done was file a motion for a declaratory ruling with the Commission. That's an adjudicatory proceeding. There would have been an ALJ appointed by the Commission. He could have investigated the entire question. He could have taken evidence, heard witnesses, and all the rest of it. They went into a notice and comment proceeding instead. That was their fault. They had within the FCC a mechanism to have a full flushing out of what happened at those European meetings. Thurgood Marshall: It's sort of one-sided, though, isn't it? Albert G. Lauber, Jr.: Well, no more one-sided than a contested radio broadcast-- Thurgood Marshall: It's more one-sided than a courtroom. Albert G. Lauber, Jr.: --Well, I wouldn't agree with that, Justice Marshall. I mean-- Thurgood Marshall: Well, which one-sided court are you talking about? [Laughter] Albert G. Lauber, Jr.: --What I'm saying is, in any kind of contested-- Thurgood Marshall: I don't think you realize what you said. Albert G. Lauber, Jr.: --True, the opponent in the proceeding would be the FCC, not a competitor. But I think they could have hoped to get fair relief within the Commission, subject to review by the Court of Appeals. Thank you. Warren E. Burger: Thank you, gentlemen. The case is submitted.

Earl Warren: Number 214, the Fleischmann Distilling Corporation et al., Petitioners, versus Maier Brewing Company, et al. Mr. Lasky. Moses Lasky: Mr. Chief Justice, may it please the Court. It was nearly nine years ago that the makers and American distributors of the famous ‘Black & White' whiskey sought to have the respondents discontinue an infringement of the ‘Black & White' label on alcoholic beverages. As the District Court has said in the record, “We used every reasonable effort to obtain some reasonable accord about that without bringing a suit. But we were defied.” The suit was brought for trademark infringement. And as a result of the decision of the Ninth Circuit about three years ago to which this Court then denied review in 1963, we obtained an injunction against the respondents pirating the ‘Black & White' trademark on alcoholic beverages. Upon concurrent findings of both courts below, it is the law of this case that the respondents' conduct was not only an infringement but that it was willful, fraudulent, and bad faith. And that the only rational explanation of respondents' conduct in adopting the name ‘Black & White' in the first place and then in persistently defying the petitioners when asked to cease and even of carrying the case or attempting to carry it up to this Court was that they were trying to trade on the real ‘Black & White's goodwill, in other words if this was a case of a careless and recalcitrant attitude, a willful and persistent defiance. Now, if the Court please, for years, it has been accepted indeed as harmful blow that in trademark infringement suits in the federal courts in equity, federal courts have the power in appropriate and proper circumstances to assess against the infringing defendants, the litigation expenses including attorney's fees which their conduct has imposed upon the plaintiff. The circumstance on which that power could be and should be exercised has been variously expressed. But I think they can all be summed up in terms of willful conduct -- willful misconduct where the infringer has acted knowingly and with deliberate purpose to fill the goodwill of the trademark owner and in persistent defiance of the owner's rights. Now, until this case now before the Court came to the court below, every Federal Court of Appeals had to dealt with this matter, every -- at least every Court of Appeals in which there is any report of the matter, and numerous District Courts have upheld the power. And it has been repeatedly been exercised below and above where awards of fees have been affirmed and additional awards have been granted. Our briefs cites to the Court decisions of the First, Second, Third and Seventh Circuits in trademark cases indeed from the First -- from the Second Circuit, a decision on which this Court denied review just last term. We cite decisions on unfair competition cases from the Sixth and the Seventh Circuit. And one from the Second Circuit handed down just two months ago, a week or two after the petitioner's opening brief was filed in this Court where an award of attorney's fees was justified by the Court because defendant's conduct was described as intentional, vexatious, and fraudulent. We cited decisions from the Fourth Circuit which relies on these very trademark decisions. And until this case, that had also been the settled law in the whole series of decisions in the Ninth Circuit. There were no cases to the contrary. And so after the remand from the Court of Appeals several years ago, we applied to the District Court to enter judgment accordingly and we got our injunction against infringement. And proceeding upon this solid and unanimous chain of authority, the District Court then appraised the circumstances and determined in the exercise of its discretion and its appraisal of the facts that an award of fees and litigation expenses should be made and an award was entered. An interlocutory appeal was taken to the Ninth Circuit, from that order it allowed and the Ninth Circuit reversed. It overruled its prior decisions. In so many words, it said they were bad law. And it looked at the decisions from the other Courts of Appeals. And it said as to them, they are not well considered. It said it would not follow them and its conclusion was this, “We hold that attorney's fees are not recoverable in trademark infringement cases under the Lanham Act primarily because the Congress has not provided for them”. In other words, the case as it now comes before this Court for consideration presents about as fundamental question in the administration of justice as you could find, namely, a question of the power, of an equity court because the Court of Appeals has held that in no circumstances whatever, has the federal court the power to award attorney's fees. Byron R. White: In the Lanham Act? Moses Lasky: If the case comes here in regard of the Lanham Act case. But what they have said, if the Court please, what the Court says is so broad that it extends to all kinds, any kind of equity case unless you can turn specifically to an Act of Congress that says in this kind of case, you may award fees. William J. Brennan, Jr.: So you mean whether fund from which the -- Moses Lasky: Short of the fund case. William J. Brennan, Jr.: Yes. Moses Lasky: Yes, Your Honor. William J. Brennan, Jr.: Yes, that's Sprague -- Sprague is the funding. Moses Lasky: They -- that's right. They tried to distinguish the prior cases as being fund cases only. William J. Brennan, Jr.: Yes. Byron R. White: What if we don't -- what if -- what if -- what if we don't read the opinion as broadly, what you said is that in -- sort of -- that they did say clearly that never remand on that case. Moses Lasky: Well, then it's still an important question. Byron R. White: Yes. Would you still have the same argument? Moses Lasky: I have the same argument. Byron R. White: (Inaudible) Moses Lasky: Exactly, exactly. Abe Fortas: Well, you -- you're not arguing, are you, that the Lanham Act authorizes attorney's fees in any case? Moses Lasky: Yes, I do. Abe Fortas: You do argue that? Moses Lasky: Yes I do. Abe Fortas: And then you argue that if the Lanham Act does not authorize that the Court nevertheless has equity power. Moses Lasky: I say -- Abe Fortas: Is that correct? Moses Lasky: -- that the Lanham Act does authorize it, but if it doesn't, it does not subtract from a power already present. My submission Mr. Justice Fortas is in the simplest possible terms that a federal equity court has this power because it has been granted by Congress and it was granted by Congress in the year this republic was born in 1789 -- Abe Fortas: I understand that -- Moses Lasky: -- the first Judiciary Act. Abe Fortas: But are you relying, -- so far as your Lanham Act argument is concerned, are you relying on Section 35 or are you relying on any specific -- Moses Lasky: No never. Abe Fortas: -- language of the Lanham Act? Moses Lasky: Your Honor, there is no expression in the Lanham Act which have those words. Ipsissima verba says, the Court may award attorney's fees. Abe Fortas: I see. Moses Lasky: There is no such. Abe Fortas: So you're saying that -- William J. Brennan, Jr.: What is -- Abe Fortas: -- it's implicit in the Lanham Act or if it's not implicit in the Lanham Act, then the power resides in the courts of general equity jurisdiction? Moses Lasky: Yes, the power -- the Lanham Act Section 35 says that a registrant whose rights have been violated is entitled -- is entitled to injunction or injunctions of previous section, to the defendant's profits, to the plaintiff's damages, and the cause of action and it prefixes all by saying subject to the principles of equity. William J. Brennan, Jr.: Well, Mr. Lasky, do you bring this within any of those three as example cause of action or you say -- Moses Lasky: Yes. William J. Brennan, Jr.: -- independently at all? Moses Lasky: No. It's my submission that the term cause of actions covers this question. William J. Brennan, Jr.: Well, does it ordinarily? On -- Moses Lasky: Yes. William J. Brennan, Jr.: It does in England of course, but does it in the United States? Moses Lasky: Yes, yes. It does. And we get back then to -- to this very question. This question first came to this Court in 19 -- Abe Fortas: But I -- excuse me -- Moses Lasky: Yes sir. Abe Fortas: -- but -- I -- this is important point to me. Are you saying that these specific words in the Lanham Act, the course of the action support your request for attorney's fees? Moses Lasky: I think they do. Now -- Abe Fortas: -- and then you are relying on the system as therapies? Moses Lasky: No. I say that if the Lanham Act had nothing in it, we would -- the Court would have the power. But it happens to have these words in here which reaffirm the power already existing. Now, I go back to Sprague. It was, of course in 1928, that this Court first had the question before it whether the term cost, the power to award costs is included within it, the power to award attorney's fees. William J. Brennan, Jr.: But it -- in the United States, generally do we get that, that's the cost? Moses Lasky: Well in 1928, this Court said we do not have to pass on it now. Then that question came back to this Court in Sprague in ‘39. And my submission is that in the historical review, this Court traced the power back to the first Judiciary Act and said that a federal court has all the power to -- William J. Brennan, Jr.: Except -- except with those, because that really was in the context of the fund, wasn't it? Moses Lasky: It was -- William J. Brennan, Jr.: -- and that is ordinarily (Voice Overlap) -- Moses Lasky: Not exactly. It was in the context of something approaching a fund -- William J. Brennan, Jr.: And subject to it. Moses Lasky: Yes, I think so. But the Court took pains to point out that their decision was not so limited. And it said we – a discre – that this chancellor has a broad discretion. And I submit that what this Court said in Sprague and the other lower courts, since it was so construed it, that the power to award attorney's fees was not confined to a fund case. Now -- William J. Brennan, Jr.: Is that -- were all five Circuit Court cases think I haven't read them, that you cite are -- they were -- this has been sustained? Are they all Lanham Act cases or are they -- Moses Lasky: Yes. I think -- William J. Brennan, Jr.: The First, Second, Third, and Seventh? Moses Lasky: Yes, they're Lanham. The -- and one of the best of course is the most recent one from the Second Circuit, the Monsanto case was a Lanham Act case. William J. Brennan, Jr.: But in all of these are in the Lanham Act? Moses Lasky: All are Lanham Act case except the first one, the Aladdin case which was decided in 1941, five years before the Lanham Act was passed. And I think that's significant. Now, in 1939 this Court in the Sprague case held and what it held I think is -- is best summed up in this Court's own language in Vaughan versus Atkinson a couple of years ago or about three years ago in these words. And I quote, “As we said in Sprague versus Ticonic Bank, 307 U.S. and so forth, allowance of counsel fees and other expenses entailed by litigation, but not included in the ordinary taxable costs regulated by statute is part of the historic equity jurisdiction of the federal courts." And that was not a fund case. And this Court was summing up what was held. Now, two years later after this decision came the Aladdin decision in the Seventh Circuit. And in the Aladdin case, this is what the Court said, “Counsel fees necessitated by the tort”, this was a trademark case under the Act of 1905, “It had been sent in some instances to be recoverable as part of the compensatory damages in another cases as part of exemplary damages. Now, it's five years later after this, the Lanham Act was passed. The Lanham Act was passed. It has in it the words, the Court allows the cause of the action subject to the principles of equity and my submission is that having -- if we accomplished -- let me put it this way. Under the Bell and the Sprague case and that it was part of the historic power of the federal court and equity to award cost in an appropriate case. Having the Aladdin case which says that traditionally, a cost on attorney's fees were allowed in trademark cases, along comes the Lanham Act, uses the term subject to the principles of equity. And that's why I submit that in that sense, the Lanham Act affirmed the doctrine. Now, let's suppose the Lanham Act have been totally silent and had nothing on it. The Lanham Act did not confer a jurisdiction on federal courts in trademark cases. Under the diversity of jurisdiction, the federal courts could have had jurisdiction of common law state trademark demands. It is true the Act of 1905 in the Lanham Act put aside the necessity of diversity by giving a jurisdiction based on the Commerce Clause. But unless -- now, I have no doubt at all that Congress by an act would extract -- subtract away from a District Court's power in any particular kind of case. And so I submit that if the Lanham Act did wanted to subtract that power, it would have to say so expressly and had it said nothing on the subject, the power would still be there, but it went further and said subject to the principles of equity. Now, let me go further and make this submission. We submit the trademark cases are peculiarly warranting the exercise of this power. Perhaps I should say at this point, I am not urging the English rule. The English rule -- even though this power derives from traditional equity practice, the English rule comes pretty close to being ‘the prevailing party always gets his attorney's fees'. This is not the rule that I know of, that any American court has laid down. It's not the rule I have urged. The rule I have urged stands out by way contrast to the -- to the English rules. And the English rule in trademark cases has been beautifully set forth in the leading English textbook on trademark litigation. I'd like to read this because the contrast is appealing. An unsuccessful defendant must usually pay costs. Although he has only defended the mark which he honestly adopted without being aware of its true great resemblance to the plaintiff's mark and though he has acted without fraud and an ignorance of the plaintiff's rights and the actions has been commenced against him without notice”. Now notice, the author of that statement assumes it to be too obvious to need demonstration that from a standpoint of justice and fairness of equity, the trademark infringer ought to pay the attorney's fees where he adopted the trademark in full awareness of the plaintiff's rights, acting fraudulently to profit from plaintiff's goodwill, and defiantly after a notice to cease, none of those elements are necessary in England. We have all those elements necessary here. Now, my submission is that there is the power. And the next question is “What are the outer boundaries of the power beyond which a District Court in the exercise of its discretion would be guilty of an abuse of discretion?” Abe Fortas: Well, is your position that this power exists with respect to trademark infringement cases but not for example with respect to unfair competition kind of like other than by trademark? Moses Lasky: No, no. I think it would exist in an unfair competition case -- Abe Fortas: Now, how about any other kind of tort, how about business secrets torn or whatever? Moses Lasky: It has been applied on business secret cases. Abe Fortas: Well, what -- what is your -- what's the position you're urging on us that -- Moses Lasky: Well, I think -- Abe Fortas: -- that's something -- something special about handling cases? Moses Lasky: Let me explain Your Honor. In fact, it was just where I want to comment. Originally, we had in this country the pioneer notion that a lawsuit was a kind sporting event. And in that event, a situation everybody based it on costs of that sport. Now, as times -- as we become more sophisticated to decide, if I may use the term, it has come to be recognized more and more that in some kind of situations, it's fair that the party who causes the expense should pay for it. Now, we know that we have many actions in the law. And if I may generalize, if I just try a generalization, I would say that whenever a public interest is to be protected as well as a private right to be vindicated and where particularly in addition otherwise, there would be little deterrent to willful misconduct, there is a strong policy in allowing a court to impose this assessment. Byron R. White: Are you -- are you asking us that we have to have (Inaudible)? Moses Lasky: No. I -- I submit to the Court in law cases where you don't have the historic equity power as this Court has announced, Congress has had and frequently does make specific provision in that kind of case as in the Sherman Act cases, as in securities regulation. Now, I submit in equity matters where the power already exists, it would be anachronistic to withdraw that equity power. Abe Fortas: Mr. Lasky, perhaps I -- I seem to having difficulty in getting my question to you. What I want to know is, are you suggesting to us that there is something peculiar about trademark cases and that there ought to be in trademark cases and circumstances where you have willfulness and all these other elements that you're talking about? That in trademark cases, as distinguished from other types of equity cases or the law cases, there ought to be a rule permitting the trial court to award attorney's fees? Moses Lasky: Yes. Abe Fortas: That's what I'm trying to get to. Moses Lasky: Yes, Your Honor. I'm not saying that there are not other kinds of equity cases where the power ought to be or ought not to be. Abe Fortas: Well, now why -- what is there about the trademark cases -- Moses Lasky: A fair question -- Abe Fortas: -- that distinguishes it? Moses Lasky: -- which I'll attempt to answer right now. The trademark right is recognized and protected under the Lanham Act because it protects not merely the private right but the public interest. When the Lanham Act was enacted in 1946, the Senate Report which -- upon which the enactment was based contains very pertinent statements. It said the purpose underlying any trademark statute is twofold. One is to protect the public so it may be confident that in purchasing a product bearing a particular trademark which is favorably knows, it will get the product that is asked for and wants to get. To protect trademarks, therefore, is to protect the public from deceit, foster fair competition, and to secure to the business community advantages of reputation and goodwill. The emphasis then is that it's not merely the private right. It's the protection of the public. That's the element number one why trademark cases peculiarly had been recognized by the lower courts who's justifying this. Element number two is that the right being protected in the trademark case while tremendously valuable is intangible. It's a case of goodwill. And a defendant doesn't have to pay attorney's fees. He feels that he doesn't have to, it's a kind of “heads I win, tails I don't lose” proposition. I'll go ahead, I'll defy it. You'll get your injunction, I'll stop. It's a slap on the wrist. These are the two major considerations that you find over and over again in these cases. Byron R. White: Now, but what remedy -- what remedy is allowed under the Lanham Act? Doesn't it -- isn't it rather broad range of remedies? Moses Lasky: The Lanham Act provides of course, you may recover damages if you can control them. Unfortunately, as this Court in several cases like the Nishiwaki case has said from the nature of a trademark violation, it's almost impossible ever to prove actual confusion, you can't get the proof to prove the damages which is why trademarks infringements suits are hardly ever brought at law. It also provides for an accounting of profits. But unless you can prove that the defendant has made some profits, there is nothing there either. The defendant gaily goes along, diluting your trademark. If he puts an inferior product on the market, it dilutes the distinctiveness of your mark. It erodes it away and you'll end with an injunction after he has been defiantly trying to pirate. These -- this is why I think all the Courts which heretofore have approached this matter and felt that a trademark case peculiarly wanted -- Byron R. White: This is judging -- isn't the judging have entitled to allow some additional sum as he think is -- is just under the Lanham Act? Moses Lasky: I think Section 36 confines that statement to the assessment of damages, damages owned.I have Section 35 rather, in assessing damages, the Court may enter judgment according to the circumstances of the case where any sum above the amount found is actual damages, not exceedingly to that. Byron R. White: There have to be some actual damage before he can use this provision? Moses Lasky: Well, that's what bothers me. Now, some of the courts as Your Honors have seen from these cases have said that the award of attorney's fees in this kind of case is to be justified as a kind of damages. And it's never seemed to me to be important whether you brought it under that rubric of costs or damages, it's part of the equity power. Abe Fortas: Except, you're really suggesting it seems to me that the criterion for attorney's fees or one of the criteria should be a kind of a punitive damage consideration? Moses Lasky: It is -- I wouldn't agree with that Mr. Justice Fortas because punitive damages imposes a penalty which it has no relation to compensation and we do not claim here that the plaintiff should have get an award more -- Abe Fortas: That's what -- Moses Lasky: -- than its own attorney's fees (Voice Overlap) -- Abe Fortas: Yes, but that -- that's measuring it. But the factors that give rise to attorney's fees as you say, I don't know if I'm correct in understanding, it sounds to me very much like the fact doesn't or give rise to a claim of punitive damages and say willfulness etcetera, etcetera. Moses Lasky: The cases, the Aladdin case I cited, said that these are -- it had never been justified as punitive damages. It says that they've always been allowed as compensatory. And the only -- when the District Court here made its award, the question put to them is what would be the reasonable amount that the petitioners should pay their counsel? And we said, “No more than that is what should be awarded”. So that it isn't -- it isn't punitive damages because when this case is over, and if we prevail here, all that the petitioners will be able to have is the reimbursement of what this litigation has cost. So I don't think it is the -- it can't be said to be punitive. Now, with the -- Hugo L. Black: When the Lanham Act was passed -- Moses Lasky: Pardon? Hugo L. Black: When the Lanham Act was passed, did the report say anything about lawyer's fees? Moses Lasky: Not a word. Hugo L. Black: Was anything said about lawyer's fees in the hearing? Moses Lasky: The legislative -- Hugo L. Black: -- in the hearing, the legislative -- Moses Lasky: There appears to be not a word on it. Hugo L. Black: Not a word? Moses Lasky: Not a word on it. And -- Hugo L. Black: But why does the Congress had wanted to give attorney's fee when they have nothing to do in the number of other cases? Moses Lasky: Well, I -- I think the answer is -- Hugo L. Black: I think -- Moses Lasky: -- it was necessary. Hugo L. Black: -- quite frankly, I have to test it if I see it, but I think you give a little too much omniscious to pertinent committee when you think that they would have understood from the cryptic words of equity that that meant they were going to get lawyer's fees. Moses Lasky: Well, this very question of what the Lanham Act did and did not do has been thoroughly set forth in an opinion in the A. Smith Bowman case by Chief Judge Leahy in the District of Delaware, case I cite. The reason I refer to that is that just the Uniform Deceptive Trade Practices Act which had viewed the Uniform Law Commissioners approved of in 1964, the American Bar Association approved of in 1964 and which has since been adopted by a number of states, provides for attorney's fees and says what they are doing is kind of model it upon the power exercised by the federal courts in trademark cases and they cite the A. Smith Bowman case as an exposition. Hugo L. Black: What committee is that? Moses Lasky: This was the Uniform -- Hugo L. Black: Committee of lawyers? Moses Lasky: Commissioners on Uniform State Law. Hugo L. Black: Were they lawyers? Moses Lasky: I believe they are, yes. It supposed to be -- Hugo L. Black: They -- they suggested that they get lawyers too? Moses Lasky: If -- Your Honor, it isn't a question from whether a lawyer gets his fees or not. I'm going to be paid for the work, my firm and I, one way or the other. They -- we're going to be paid by our client. The question is whether the client is going to be reimbursed. I don't think it's a question of lawyer's fees at all. Hugo L. Black: It's not a question of lawyer's fees? Moses Lasky: I don't think it's a question of whether a lawyer is going to get his compensation for his services or not. Hugo L. Black: Would that be a pretty good way to get it, wouldn't it? Likely, it's pretty liberal? Moses Lasky: It depends on who's more solved; your own client or the other party. I see I have the white light here and -- Hugo L. Black: But you have five more minutes. Moses Lasky: I would -- yes, I know. I would be glad to answer your question, otherwise I would reserve -- Hugo L. Black: That's all. Moses Lasky: -- for a reply. Hugo L. Black: Alright. Moses Lasky: I'll simply make this submission that the power -- the power as such does exist. The next question is what are the outer limits of that power? And once you've circumscribed the outer limits, there's a wide range of discretion in the District Judge. That was exercised and the concurrent findings of both courts below showed that it was appropriate degree of exercise. Hugo L. Black: Mr. Hutchinson. J. Albert Hutchinson: Mr. Justice Black, may it please the Court. Respondents submit, if I may first outline our view of the matter, that first, we have eliminated all state issues of unfair competition. It was eliminated by earlier opinions in the case which are now final and binding on all parties. There is no question of misrepresentation coming on advertising, discouragement, or injury. There are no damages. And at the time this was made, there was no accounting. The first appeal the Court of Appeals particularly held that they were going to decide the case and did so entirely on the Lanham Act dealing with what appears to be the delusion theory as I read some of the cases and comments, but they spelled it out in that opinion as anticipation of future confusion. It is a -- an unqualified and unreversed, uncriticized finding of the District Court in the trial. There was only evidence that there was in fact no confusion. We therefore have the case limited strictly within the confines of the Lanham Act. Hugo L. Black: May I ask you the statement of your understanding of what can be assessed against a defendant in the Lanham Act case? J. Albert Hutchinson: As I understand the Lanham Act provision which is Section 1117 of the U.S. Code 36 as I believe is the Lanham Act Section, the Court may award compensation, actual damages which can be measured by either one or perhaps and I'm not certain about this, a combination of two measures. The actual damages and those are the words used in the section separated by the trademark plaintiff, and an accounting of the profits of the infringer and accounting on the -- Hugo L. Black: In other words -- in other words all the profits? J. Albert Hutchinson: -- that can get one or both or perhaps its one recovery. The Act then provides that the Court may allow additional amounts up to three times the amount of actual damages. Hugo L. Black: So that the Act itself provides that a defendant can be held out also three times the amount of the damages he suffered? J. Albert Hutchinson: Up to three times the actual damages as determined by either one of these methods or a combination of them. The Act, however, has a very specific provision in the same section which says that all such awards must be -- shall constitute and I think I'm quoting exactly, “Shall constitute compensation and not a penalty”. Now, there's another factor which I think is raised by the question. All of these damages must come from the Act of the infringer that is described as actionable in the earlier section, which is in the Code 1114, and it there provides that this use must be in commerce. In other words, as we read it, no damages of any kind or nature can be recovered unless the acts that are complained of occurred in interstate of foreign commerce by the use of the mark which is registered. If that is so then, attorney's fees obviously is not the use of the mark in commerce and I don't see how the wording of the Act must be stretched to cover attorney's fees at any kind of damages. William J. Brennan, Jr.: What was the result on the merits here, Mr. Hutchinson? J. Albert Hutchinson: On the merits, in the first trial, the trial judge -- District Judge, Chief Justice incidentally of this district ruled in favor of the defendants without qualification or limitation -- Byron R. White: That's your client? J. Albert Hutchinson: Yes, Maier and Ralphs -- Maier and Ralphs. Byron R. White: Yes. J. Albert Hutchinson: On appeal, the Court of Appeals stated that the -- that that Court was not to be bound by the District Court's finding as to the likelihood of confusion. It didn't disturb the finding that there was no confusion, no damage and so on, but it did say that it could independently determine the likelihood of future confusion by the use of the mark. And that that was, if not a mix question, probably a question of law. It then determined that because the products sold by our parties, the respondents here was beer and the trademark registrant, had registered his mark in connection with scotch whiskey that because they both dealt with beverages in the alcoholic fields, they were so closely related that likelihood and confusion would result. And they mandated an injunction and reserved expressly only one issue toward the District Court namely to have an accounting or to determine the issues of an accounting. Hugo L. Black: Accounting which was inclusive to cover for damages and so on? J. Albert Hutchinson: Yes, as I understand the accounting, it's another way of determining the plaintiff's damages. Some of the cases seemed to say it's an independent avenue to recovery. But since the controlling section in the last sentence of the section says there must be an award only of compensation, it would seem that it's just another way of determining the financial or economic loss to the plaintiff whether it's done by proving loss of sales, that's conceded not the case here, or injured the goodwill which is apparently also conceded, there would be only the recovery of what would be compensatory damages. Hugo L. Black: That accounting has not been held? J. Albert Hutchinson: No. And this order was made immediately, I say, immediately was the first step in the case after the mandate and the entry of a responsive judgment of the District Court enjoining future use and then the parties clearing up the odd quantities that were left and reporting back to the Court. So this was the first thing that was done, to determine attorney's fees. Therefore, as it now stands -- William J. Brennan, Jr.: Well, let's see if I understand your point. On the original judgment of the District Court, there would have been no attorney's fees, weren't there? J. Albert Hutchinson: There would be no recovery of any kind, even -- William J. Brennan, Jr.: Because your clients prevailed. J. Albert Hutchinson: Yes. William J. Brennan, Jr.: But then, there was an injunction mandated that held it? J. Albert Hutchinson: Yes. William J. Brennan, Jr.: And this then brought on one motion to assess attorney's fees or something? J. Albert Hutchinson: Yes sir. At the time the -- shortly after the remand came down, the plaintiffs noticed a motion for judgment to conform to the mandate. And the form of judgment, without any further hearing, any taking of evidence, it was then entered and there were no further evidences taken and no additional findings of the true sort may -- William J. Brennan, Jr.: They based it on the merits but what -- in other words, the $60,000 counsel fee allowed? J. Albert Hutchinson: Yes, attorney's fees were $60,000 and the -- William J. Brennan, Jr.: But why is it -- how was that it arrived -- arrived at? J. Albert Hutchinson: It was arrived at by the testimony of the -- William J. Brennan, Jr.: Then there was a hearing on this thing? J. Albert Hutchinson: Yes, on the amount, yes sir. William J. Brennan, Jr.: I see. J. Albert Hutchinson: The order for attorney's fees was made without any additional evidence. And the actual determination was heard and there were experts on both sides as well as factual witnesses and that's the record we have here. Hugo L. Black: But there has been no accounting? J. Albert Hutchinson: No, and it was -- Hugo L. Black: How did it -- how was it subject to appeal? J. Albert Hutchinson: We felt we could not take a chance on it as being treated as the final order, so we appealed. The Court of Appeals held that it was premature because there was no judgment, no final judgment. However, they undertook to consider the case if the District Court made a certificate that it was a matter of general interests on which there will be a -- William J. Brennan, Jr.: Under the interlocutory appeal? J. Albert Hutchinson: Yes, Section 1292 of the -- of 28 U.S.C. Such a certificate was made on the application of our parties, the respondents here. The District Judge made the certificate, the Court then received the case on the then existing record and the argument that had been made. And I might point out that this Court's probably noticed it already, this was an en banc hearing in the unanimous decision. And the case, the opinion I feel deals with the issues we have here so fully and analyzes the cases so fully that would be -- and a threat almost for me to attempt to further back up the Court. I think the Court analyzed the case thoroughly. As we see it, this is simply a question of legislative purpose. Now, the Congress, as the Court of Appeals points out, knows how to do this and it's quite interestingly I think, it compares the copyright and patent laws where there are some augmented provisions for the award of attorney's fees. And in the patent situation, this Court, a good number of years ago, held that attorney's fees could not be recovered in this situation of a patent infringement in the absence of any statutory authority in the acts of Congress relating to patents. Following that, the Congress did then amend those acts to provide for attorney's fees in exceptional extreme cases. It did not do so at anytime in connection with this Act. Now, the legislative history according to Court of Appeals is not significant. We're inclined to think that it does have some significance because subsequent to the passage of the immediate Act which has only been amended in regard to the section on damages and other recoveries than injunction, in a technical respect just to correctly site two other sections rather than the one originally cited. But there had been at least two proposals to amend the Act to provide for attorney's fees. And neither of the proposals has succeeded and it would look to us, and though the Congress had recognized that the Act did not provide for attorney's fees. And some of the proponents of the legislation thought it should be considered by the Congress and resulted in no action. Granted that that is negative, it is nevertheless, we feel, significant. It shows an awareness of the fact the Act does not now provide in the opinion of the proponents of such bills and the fact that the matter should be subject to congressional review. Byron R. White: What would you say absent the Lanham Act, would you say that -- that you would -- I gather your suggestion of the provision of the Lanham Act itself indicate there should be no attorney's fee? J. Albert Hutchinson: Yes, as we see it -- Byron R. White: But now what – absence of the Act-- in the absence of the Act. J. Albert Hutchinson: Well, the facts of this case -- there could be no recovery because all these state-generated issues had been eliminated. No, pending jurisdiction -- Byron R. White: Do you think -- do you think Aladdin was in rule? J. Albert Hutchinson: I believe insofar as it dealt with -- sure Lanham Act was used, yes sir. Byron R. White: Yes, but that was before the Lanham Act? J. Albert Hutchinson: Yes. Under the old Act, that -- that case involved unfair competition and other things which we do not have here. There was no -- William J. Brennan, Jr.: Well I doubt, didn't it -- didn't that opinion deal with this subject anyway. I think as Aladdin suggested too in terms of a form of compensation that the violation -- J. Albert Hutchinson: As I recall Aladdin treated the award of attorney's fees as compensatory damages rather than exemplary. William J. Brennan, Jr.: Yes. J. Albert Hutchinson: This sort of thing doesn't fit, in my idea at least, as damages, any -- unless we adopt the English system or some modification of it, attorney's fees either way are not what we call damages. If they are to be awarded in the -- it's the antitrust statutes, of course they're awarded because the private plaintiff is -- the private attorney general sometimes said. William J. Brennan, Jr.: But that was something in the antitrust law has provided for. J. Albert Hutchinson: Yes, they're all -- they are very expressed -- William J. Brennan, Jr.: (Voice Overlap) J. Albert Hutchinson: -- very expressed. Now, I would say that when the Court has concluded in its review of this record, it will agree with this proposition, that if an award is to be upheld here, there would be no other Lanham Act case in which the Court would properly deny them. Byron R. White: Well, I take that the position of the other side is that even -- even in the Lanham Act case were damages where a jury trial is required that attorney's fees would be awarded. J. Albert Hutchinson: Well, they seem to take the view that the inherent powers of the courts, the federal courts in equity matters somehow throws a cloak over as purely statutory proceeding in such ways to augment or assimilate some unstated power. Our view is that when you have a purely legislative jurisdiction and I don't see how that can be fairly disputed, then you look to the -- to the Act and since this is a matter on which the Congress has -- Byron R. White: Yes, but once, they traded mark actions before they were statutes? J. Albert Hutchinson: I doubt that there were any in the federal jurisdiction other than on diversity grounds. I don't recall any historical examples. As a matter of fact, that some questions whether there would be any federal common law in this area. Absent the constitutional authority to pass laws and then an enactment by the Congress whether there would be any substantive right within the federal jurisdiction. The common law of course was approved -- was adopted by the states and many of the states have further adopted the statutes. Now, I hope the Court will not be concerned with what I hesitate to characterize as hyperbole and I particularly on the other side and I think they refer to what I consider something that Court should disregard altogether. I was served on the 6th of February with the petitioner's reply brief and contained in it particularly at the passage on page -- page 14 and turning over to 15, it's quite a bit of material that is both irrelevant and immaterial, I think fairly might be considered scandalous. This is not in this record. It was not submitted to the Court of Appeals. It's under review here and I think it abuses the privilege of advocacy and it's unfair to these respondents. And then conserves the late and otherwise it made a motion. I hope the Court will disregard those remarks by -- Hugo L. Black: What are the remarks? J. Albert Hutchinson: They referred to a deposition of a witness prior to the first trial and state that they are quoting from their brief in the first appeal and apparently, trying to make our people because though they were named pirates or something of the sort. That is not in this record. And if it were properly here, it would be here and we would have met it. Also, these statements are contrary to the existing record, the testimony that's reproduced. In that regard, this record was prepared on stipulation of counsel. I believe the Court has a copy of our stipulation. I think we should be able to come here with the records as both so made up. If there's any further question, I would be happy to respond, otherwise, I believe the subject has been covered from our side. The Court of Appeals I believe has done a very thorough job of analysis. It should be of real assistance to the Court. As we see it, we're dealing with the statute and the Congress can, if it wishes, make any reasonable provision in this area. And this legislative gratefully as we see it did not intend to provide for recovery of non-taxable cost about $4000 allowed here for that and attorney's fees in the present form of the statute. Speaker: Your -- your view in this if I understand your argument, the Lanham Act wipes out the equity power of the Court too? J. Albert Hutchinson: I -- I don't think it impinges on equity powers of the Court. The -- Speaker: Or could the Court in this case, who said, “Well, we're not going to -- we think we've got no right under the Lanham Act to award mention allowance but we'll now exercise our equity power on that allowance.” J. Albert Hutchinson: Well, I don't think that the Court could do it when it's a pure Lanham Act case as we have here. I don't think -- Speaker: But as you -- J. Albert Hutchinson: -- I wasn't trying to wiping out any -- Speaker: You said the Lanham Act is exclusive. Its -- or as the Lanham Act cases are concerned. J. Albert Hutchinson: Yes, being a comprehensive, all inclusive statute -- Speaker: So there is no residual equity power in the Court in the Lanham Act case? J. Albert Hutchinson: Well, there are of course certain residual powers because among other things, an injunction is expressly provided for in -- once the proceeding sections for this one. Speaker: No, I meant as far as fees are concerned, the award of fees. J. Albert Hutchinson: I see no way in which to support it, because I don't think that the awarding of attorney's fees is a specific reserved equity power. It applies in equity cases such as the Sprague versus Ticonic Bank where you have the common fund case there. You have a two-case of unjust enrichment if certain people take advantage of the expense and efforts of others and share equally with them. But as I see it, that -- an equitable remedy is just something that the court can utilize if it otherwise has authority to Act. In other words, as I see it, equity does not create substantive rights but it deals with remedies and always had originally to catch the conscience of the king when he have the final say later to temper the harshness of the common law. Speaker: Well, the reason I asked you that question, I wasn't clear from the Court of Appeals' opinion with whether or not on the candor of equitable powers of the Court, they said there were no such powers available under the Lanham Act, or whether they said, yes there was power to this but this is not an appropriate case where they're exercised. J. Albert Hutchinson: Well, the Court, I believe, determined that first there was no such power in equity or elsewhere under a pure Lanham Act case to award attorney's fees and that's what we have with the pure Lanham Act case. They didn't go into the other phases of it and I think that's the meaning when they said primarily because the Act does not provide for them. Now, all of the arguments that didn't made here in the briefs were made through the Court of Appeals in respect to why whether the Act is applied or not, award is correct. So those things were rather exhaustibly presented by the respondent -- the appellees there and the petitioners here. Well, at least the Court of Appeals had those points before them. We have, of course, argued as we do here that we're dealing with the statutory matter and that these other matters were only secondarily involved in the event that was to -- to the contrary of our intention. We did attempt there as we have briefly attempted to do in our brief here to point out that there were none of the things in this case which would normally invoke any extraordinary equity remedy even if the other theory were adopted. I might say that as we see it, the request of the petitioners here should not be granted as to requiring even if we're entirely wrong that the Court carry out its judgment because we've reserved all of the issues as to the proper amount as well as all of the evidentiary support issues. They were not passed to form by the Court of Appeals. And as we see it if -- if we are mistaken about the Lanham Act and general principles, the case would have to be remanded before the proceedings in any event, and this is the question I'll refer to in my associate. Hugo L. Black: Mr. Lasky. Moses Lasky: Yes, if the Court please. I think it comes necessary for me to straighten out the narration of what happened in this case particularly in view of the fact that I say we've been accused of some impropriety here. When this case was first tried, the trial judge decided for the defendants and on appeal, he was reversed and the Court pointed that he had gone off on a complete misconception of the rule of law, namely that the goods has to be of the same descriptive properties which was the test under the old Act. That was a mistake of a legal application. The Court of Appeals examined it and had no doubt at all that apart from that, the defendants had been guilty of bad faith. And in their opinion, they stated and when the case came back down with the trial court advice of the true rule of law, he made a finding. And I had assumed that that finding was behind us and we come into the Court upon the basis of that finding which is this. Without seeking legal advise and for the purpose of capitalizing upon the popularity of the name thus chosen, defendant Maier did deliberately adopted the name ‘Black & White' knowing that ‘Black & White' was the name and trademark of the plaintiff Buchanan, and knowing that this popularity would extend to its product because the public would associate the name ‘Black & White' with a long established reliability and meritoriousness of Buchanan's product. Defendants intended to adopt plaintiff Buchanan's ‘Black & White' name or mark for the purpose of taking advantage of the aura of goodwill which surrounded the name. And they deliberately adopted the name with a view to obtaining advantage from the goodwill, good name and good trade, which Buchanan had build up, and expecting that there would be confusion and result in profit. Defendants refused to discontinue their use on beer of the name ‘Black & White' upon request made before a suit filed and they have knowingly, willfully, and deliberately infringed the said marked ‘Black & White' complainant's rights thereto. And the Court of Appeals said that this was bad faith. Now, in their brief here, counsel said that the Court of Appeals finding was without evidence to support it. It was in that connection that in the footnote in my reply brief I quoted some of the evidence in which was before the Court of Appeals. It hadn't been put into the record that brought out there because I thought the finding was behind us. But if it becomes important, it's in the record of the case and the Court could take judicial notice. Now, when the case went back down, if the Court remanded it for all purposes consistent with its opinion and I made a motion to enter judgment in accordance with the opinion of the Court of Appeal. As for the injunction, attorney's fees, accounting of profits, counsel have its predecessors. This counsel was not in the case that every opportunity introduced any further evidence they wanted. And the matter was submitted in the Court, in due course, entered its order that were entitled to injunction, to an accounting, to a reasonable attorney's fees and set down a time for hearing each one of these. Following it through the procedures of this calendar, it heard the amount of the reasonable attorney's fees first, entered an order while we were still fussing with the accounting. An appeal ought not to have been taken at that time. This interlocutory appeal was improper and an appeal should have been taken only when the accounting was completed. It has since been completed. And there is now an appeal pending from a judgment for the profits too. When it got up under the Court of Appeals, they properly dismissed this interlocutory appeal. And then over my opposition, the District Court certified that it was an appropriate interlocutory appeal. Again, another appeal was taken and that's how we happen to be here. But now, Your Honor suggested that I was arguing that there should be attorney's fees allowable on a jury tried case. No, not at all. That's an action of law. The equity power would not extend it to it but in an action of law where damages are recovered and proved, we come in under the other section of three times the damages allowed. And most trademark cases are in equity as this was in equity because of the impossibility of getting the evidence to prove confusion. It was never admitted there was not confusion. It was simply the impossibility that the courts have always referred to about getting the evidence of confusion. Reference has been made to the patent history in which it has been said that this Court, years ago, held that attorney's fees could not be recovered in the patent case. On the contrary, what this Court had held in two or three cases a hundred years ago was something rather different. Counsel fees are not a proper element for the consideration of the jury in the estimation of damages and actions for the infringement of a patent right. Many patent cases are jury actions because there, you prove the damages because the plaintiff has a monopoly of the product in any sale is a violation. Byron R. White: Do you have any cases regarding attorney's fees in equity in the past cases? Moses Lasky: Had there been? This provision has been on the books for long -- the courts relate to the -- referred to the statute. Byron R. White: Well, I know, but that's -- you don't have any cases of attorney's fees was not allowed in patent case or equity or law. Moses Lasky: No. Attorney's fees are frequently allowed in patent cases. Byron R. White: When was the statute -- Moses Lasky: When was the statute -- Byron R. White: Under the statute, the statute permits it? Moses Lasky: Yes, I would think so. Byron R. White: Is that the only case that's been known? Moses Lasky: Very well, probably the statute has been there so long that the people would actually refer to the statute. I had hoped to have one more remark but I see my red light is up. Thank you.

William H. Rehnquist: We'll hear argument now in number oh oh nine seventy-three, the United States versus Alphonso Vonn. Mr. Dreeben. [Inaudible] Michael R. Dreeben: Mr. Chief Justice, and may it please the Court. Respondent pleaded guilty with counsel by his side after having been advised at least twice earlier in the proceedings of his right to the assistance of counsel at all stages of the proceedings. The court of appeals, nevertheless, set aside his guilty plea on the ground that the district court, during the guilty plea colloquy, had failed to advise respondent of his right to the assistance of counsel as required by rule eleven C three of the Federal Rules of Criminal Procedure. The court of appeals decision is wrong for three reasons. First, the court of appeals erred by applying a harmless error rather than a plain error standard of review to the district court's violation of rule eleven. Respondent had not objected in the trial court to the rule eleven error, and therefore the standard of review is that for claims which were not preserved below, rather than claims that were. Second, the Ninth Circuit applied an incorrect standard for determining whether a rule eleven error affects substantial rights within the meaning of the harmless error and plain error rules. The Ninth Circuit was of the view that unless the defendant could be shown to have knowledge of the precise aspect of rule eleven, that the district court had failed to inform the defendant about the guilty plea must be set aside. The correct standard under this Court's cases is whether the error had an effect on the outcome of the proceeding, which in this case means whether the error had an effect on respondent's willingness to enter a knowing and voluntary guilty plea. And finally, the Ninth Circuit erred by confining its analysis of whether the error in this case warranted reversal to the record of the guilty plea colloquy itself, failing to look at other portions of the official record that illuminated whether the defendant actually had knowledge of the information that the district judge had failed to provide to him. In this case, the district court, through its magistrate judges, had advised respondent, both at the initial appearance after respondent was arrested and at the arraignment after respondent was indicted, of his right to counsel at all stages of the proceeding. Respondent executed a waiver of rights form in which he acknowledged receiving and understanding these rights, and the district magistrate judge asked respondent at the arraignment whether he understood these rights. If the court of appeals had looked to the entire record to determine whether the rule eleven error in this case warranted reversal, it would have concluded, even under its own standards, applying harmless error review and asking whether the respondent knew the information that he had not been told during the rule eleven colloquy, that respondent, indeed, did have that information and, therefore, entered a valid guilty plea. Ruth Bader Ginsburg: Mr. Dreeben? I'm not sure how... Anthony M. Kennedy: your points two and three quite fit together. Michael R. Dreeben: Ou- our second argument is that the proper inquiry into whether an error affects substantial rights is whether there is an effect on the outcome of the proceeding. Anthony M. Kennedy: That that I understand. Michael R. Dreeben: Well, it is it's a difficult inquiry to make if there is no information in the record that sheds light on it, and in that instance, the party that bears the burden of proof will probably lose, which is why it matters whether the standard is plain error review, in which the defendant bears the burden of proof, or harmless error review, in which case the Government bears the burden of proof. Ruth Bader Ginsburg: Mr. Dreeben, if we answer what is your second question in your petition, not as outlined this morning, the second question being, do you look to the entire record or just the rule eleven colloquy, if we answer that question in your favor, look to the entire record, is it necessary to get into the two anterior questions that you outline, that is plain error versus harmless error, and then this one that troubled Justice Kennedy that you don't list as a question in your cert petition? Michael R. Dreeben: Justice Ginsburg, I believe the Court can reverse the judgment based solely on a favorable resolution for the Government of the third question presented that is, if the Court does look to the entire record in this case, then I believe that the Ninth Circuit's judgment is incorrect even if it were correct on the other two points that I've outlined. Ruth Bader Ginsburg: But if the if that is an academic question, that is, if you could argue, as I think you do, if you look at the whole record, then it doesn't matter what standard you apply, harmless error, plain error. Michael R. Dreeben: That is true, and the Court could resolve the case solely on that basis. Antonin Scalia: Alternatively we we could resolve it just on the basis of your third point. Michael R. Dreeben: That would be resolution on what I think is the first question that we present in the... Speaker: petition. But... Antonin Scalia: M- maybe I got your numbers wrong, but but but... Speaker: we we can... Antonin Scalia: certainly resolve it on several of the questions without resolving the other ones. Michael R. Dreeben: It's certainly possible to do that. Antonin Scalia: Which is more important? I mean, if if if we're going to be very parsimonious and and not decide any more issues than we have to, which which is does the Government think is the more important issue in the case? Michael R. Dreeben: The two that we presented I think are both equally important. Speaker: deciding this. Antonin Scalia: on the latter as well? Michael R. Dreeben: There is a conflict on the latter as well. Antonin Scalia: An- any court, other than this one, come out this way? Michael R. Dreeben: No. Speaker: substantial references. Stephen G. Breyer: make any difference? The the plain versus the harmless? My only problem is I foresee writing more words. Michael R. Dreeben: The Government doesn't ask the c- the Court to a- write new words. Speaker: cases. Stephen G. Breyer: So, the o- we don't have to talk about plain error or harmless error. Michael R. Dreeben: Well, there are two competing definitions that are proposed for the Court on what an effect on substantial rights is. Speaker: Justice Kennedy's... Michael R. Dreeben: question suggested that there may be some... Speaker: reason to question... Stephen G. Breyer: my i- that's ex- you've got exactly what I'm concerned about. Michael R. Dreeben: Justice Breyer, I certainly agree and I agreed with other questions that suggest that there is a very straightforward, simple resolution of this case that would involve making very little law. Speaker: of judicial proceedings. John Paul Stevens: advantages I don't know if it's a suffi- sufficient advantage of Judge Kozinski's position is a simple very sit- he very simple job for the court of appeals. Michael R. Dreeben: The court of appeals should affirm because there is ample evidence that the defendant had knowledge of the particular right in question that he claims was not given to him at the rule... Speaker: eleven colloquy. John Paul Stevens: presumption that he fully understood it three months later. Michael R. Dreeben: No. Speaker: indicated. Michael R. Dreeben: There is nothing else in the record, then I think that there's nothing to rebut the presumption. Ruth Bader Ginsburg: What about this record where the defendant said a couple times I don't understand what this lawyer is talking about a- and this is my first time in in the criminal process? B- i- he was, as you said, told twice and signed a piece of paper that said counsel at every stage of the proceeding, but the defendant also said that he didn't s- he didn't understand what was going on. Michael R. Dreeben: He said that the first time that he wanted to enter a guilty plea and the district judge recessed the proceedings for a week to give the lawyer an additional chance to explain to the defendant what was going on. Speaker: defendant... John Paul Stevens: the court did violate the rule... Speaker: at that point. Michael R. Dreeben: clearly violated the rule because rule eleven is a prophylactic rule that sweeps more broadly than the Constitution. Anthony M. Kennedy: the problem the problem with your solution as is suggested suggested by Justice Stevens' question. Michael R. Dreeben: I don't think that that's a necessary consequence of a ruling in our favor, Justice Kennedy. Speaker: detract... Sandra Day O'Connor: do you place any reliance on the amendment to the rule in nineteen eighty-three to add subsection H, which says any variance from the procedures required by this rule, meaning rule eleven, which does not affect substantial rights, shall be disregarded. Speaker: in your view? Michael R. Dreeben: it is applicable if the Court concludes that plain error review does not apply. Speaker: of... David H. Souter: ask you a question there? You pointed out I guess it's no question that subsection H was added, in effect, to negate the the automatic reversal rule that that had prevailed beforehand. Michael R. Dreeben: Justice Souter, I s- believe that the reason that the drafters picked just one is the drafters were addressing a specific holding of this Court that, as Justice O'Connor indicated, had suggested that there was automatic reversal in the case of a rule eleven violation. David H. Souter: But the cleanest way to negate it would be to simply say, you engage in some kind of an analysis of consequences. Michael R. Dreeben: The drafters weren't thinking of this issue. David H. Souter: But you could you could certainly accept the position that that there would not be a per se reversal under another rule without also accepting the position that fifty-two B would still apply. Michael R. Dreeben: You could. Speaker: this cou- Ruth Bader Ginsburg: eleven H is addressed to the district court too, and the plai- you're talking about what should the standard be in the court of appeals. Michael R. Dreeben: That's right, and rule fifty-two is also addressed to the district court. Antonin Scalia: Mr. Dreeben, I'm I have a perplexity. Michael R. Dreeben: Correct. Speaker: [Inaudible] Antonin Scalia: but but as the rule reads if the defendant is not represented by an attorney, that the defendant has the right to be represented by an attorney at every stage of the proceeding and, if necessary, one will be appointed to represent the defendant. Michael R. Dreeben: That's rule eleven C two. Speaker: The violation... Michael R. Dreeben: in this case was of rule eleven C three, which enumerates for the defendant the various rights, not a complete list, but a partial list of rights that the defendant has at the trial. Antonin Scalia: I see. Speaker: And those rights... Antonin Scalia: one is applicable whether or not he's represented. Michael R. Dreeben: Correct. Antonin Scalia: Fair enough. Michael R. Dreeben: That that rule is a response to this Court's decision in Boykin versus Alabama which held that if the record is entirely silent on whether the defendant entered a knowing and intelligent plea, a court of appeals on direct review cannot uphold it. Antonin Scalia: Would would would you be taking the same position regarding plain error review if what were at issue was C two rather than C three? Michael R. Dreeben: Yes, but it would be an almost impossible burden... Speaker: for the Government to satisfy. Antonin Scalia: C two envisions a situation in which there's nobody to make the objection. Michael R. Dreeben: That's right. Antonin Scalia: And C three, well, s- doesn't always envision a situation... Speaker: in which... Antonin Scalia: counsel is present, Speaker: does it? Michael R. Dreeben: actually I want to re- revise the answer. Speaker: u- Michael R. Dreeben: I think that it would be very hard for us to win if the advice required under C two were not given and the defendant were not represented by counsel. Antonin Scalia: Right. Michael R. Dreeben: But not because only counsel can make an objection. Speaker: May I ask this... Ruth Bader Ginsburg: back to Justice Kennedy's question? That is, taking your position, there is really no muscle behind the instruction to the district judge. Michael R. Dreeben: Well, I don't think, Justice Ginsburg, that the Court should frame a rule to provide a sanction. Speaker: [Inaudible] Antonin Scalia: much of a sanction on the judge anyway. Michael R. Dreeben: The ultimate sanction... Speaker: would fall... Michael R. Dreeben: on society if... Speaker: in fact... John Paul Stevens: this question, Mr. Ru-. Michael R. Dreeben: No, Justice Stevens, because whoever bore the bu- burden of proof on appeal is going to have to make that showing based on the existing record, and if the Government bears the burden and it can't establish harmlessness, then the court of appeals should vacate the plea. John Paul Stevens: Burden of proof you're talking about then is not ratio- actually an evidentiary burden. Speaker: case by... John Paul Stevens: and there never would be a case in your view for for more evidence. Michael R. Dreeben: I wouldn't say never and I wouldn't exclude the possibility that a district court that a court of appeals had discretion, but it sh- it's not the normal procedure. Speaker: around it's... John Paul Stevens: the rule are not the normal procedure either. Speaker: very... John Paul Stevens: quite rare. Michael R. Dreeben: with sixty thousand Federal criminal convictions each year, even a very low error rate is going to produce a large number of cases and there are a large number of rule eleven cases that come to the court of appeals where there really is no substantial doubt that the defendant had all the information and counsel to plead guilty. Speaker: what we'll... John Paul Stevens: jeviation [: deviation] This is not a minor deviation. Michael R. Dreeben: I think this is a minor deviation, Justice Stevens, because this defendant had been told about... Speaker: this right. John Paul Stevens: i- is assuming he hadn't been told, it would then it would be a major... Speaker: deviation. Michael R. Dreeben: counsel. Speaker: counsel's a- William H. Rehnquist: if he has counsel at arraignment and at a plea and so forth, surely he must realize he's going to get get counsel at the trial. Michael R. Dreeben: It's virtually inevitable that it will be. Speaker: about. David H. Souter: we can't we can't start I don't think, we can start making distinctions within the the the rule eleven list among the rights that are supposed to be advised. Michael R. Dreeben: He he he should know that, and rule eleven should be complied with, but I do not believe that there is a court of appeals case that reverses a conviction for failure to give this advice to a counseled defendant. William H. Rehnquist: Very well, Mr. Dreeben. Monica Knox: Mr. Chief Justice, and may it please the Court. William H. Rehnquist: Well, what is the reasoning behind you say your position is that plain error is never applicable. Monica Knox: Well, the initial starting place is what the advisory committee did. Speaker: It would be... Sandra Day O'Connor: in this in this case, if we do look to the entire record and if we do learn that this defendant was advised that he had a right to an attorney if he went to trial at the trial and had acknowledged that understanding, then why is it not oh one of these insubstantial errors contemplated by subsection H? Monica Knox: Well, it is a substantial error in that it is one of the core concerns of rule eleven. Speaker: If the record... Sandra Day O'Connor: shows that the defendant, in fact, knew, what's the problem? Monica Knox: If the record, in fact, shows that the defendant had the knowledge he needs to render an intelligent plea, I would agree that that would be harmless error. Speaker: Why didn't they say that? Why didn't they say that... Sandra Day O'Connor: in rule eleven itself that says you cannot look beyond the transcript of the plea hearing itself? Monica Knox: Specifically there is nothing... Speaker: in rule... Monica Knox: eleven that says you cannot do that. Speaker: time. William H. Rehnquist: speak as if it were a recipe, you know. Monica Knox: No. Speaker: But this is the arraignment... Anthony M. Kennedy: or the sent- this just one moment. Speaker: the sentencing isn't a mass. Okay, thank you. Speaker: We're talking about the initial -- Ruth Bader Ginsburg: pre- p- two pre-guilty plea, the arraignment and when the initial complaint was made. Monica Knox: The record does not show how many defendants were being arraigned in this case, no. Ruth Bader Ginsburg: But and at the arraignment at least at that stage, a lawyer had already been appointed, and wasn't it true that the lawyer was with the client at the arraignment? Monica Knox: Yes. Ruth Bader Ginsburg: And that, in addition to the oral warning in the courtroom, there was a document that had a rather simple paragraph, unusually plain English for for lawyers and judges. Monica Knox: That's right, and we also have a client who repeatedly told the court that he wasn't understanding what his attorney was telling him. Speaker: has... David H. Souter: to the question of of what would will happen, if we get to that point, on on remand for consideration of a broader record if we rule against you on that. Monica Knox: Well, I think it means in many cases it may not be easy to decide. David H. Souter: Well, is is your b- is your your basic point is that Congress intended just to streamline these proceedings and it simply didn't want courts have to have to get into difficult evidentiary issues and that's why we should hold that they look no further than the four corners? Monica Knox: Well, that is always one of the advantage of prophylactic rules is to prevent that later... Speaker: type... Monica Knox: of fact finding. Antonin Scalia: This prophylactic rule doesn't say what you want us to do. Monica Knox: There was no reason, in nineteen seventy-four when the advisory committee added G to the rule, to say that... Speaker: specifically. Because it was... Antonin Scalia: whole record. Speaker: [Inaudible] Monica Knox: it was the rule of McCarthy. Antonin Scalia: Well what why wait what M- McCarthy didn't require looking to the record at all for any harmless error. Monica Knox: No, but McCarthy wha- determined the issue of whether there was rule eleven error by looking only at the rule eleven colloquy. Speaker: Boykin, Monica Knox: those have to be established... Antonin Scalia: I underst- Monica Knox: on the record... Speaker: at the... Monica Knox: time. Antonin Scalia: But the Government's not proposing to change that that McCarthy rule. Monica Knox: Other than the policy reason that we've discussed, as well as what m- my argument as to what the advisory committee meant when it put both G and H into the rule, I don't have another reason that the Court should do it. Speaker: I would suggest... Sandra Day O'Connor: as I read the advisory committee notes when they added subsection H, I thought the note stated that harmless error review should be resolved solely on the basis of the rule eleven transcript and the other portions of the limited record made in such cases. Monica Knox: I think it contemplated looking at the transcript with certain rule eleven violations. Speaker: Government talks about... Anthony M. Kennedy: in the language of the rule that su- supports your dichotomy here? Substantial rights in rule eleven H? Speaker: Well, the rule itself... Anthony M. Kennedy: textual basis? Speaker: I think the Court... Anthony M. Kennedy: there's some important rule eleven violations and unimportant ones. Monica Knox: I think the Court itself recognized in Hyde that all provisions of the rules are not... Speaker: the same. That C and D provision- Anthony M. Kennedy: textual basis in the rule for that? Monica Knox: Both the prov- C and D start out with language that says, a court may not accept a plea unless. Speaker: provisions of the rule. Anthony M. Kennedy: analysis is under C one. Monica Knox: That's true. Speaker: So, then that... Anthony M. Kennedy: so, then there is no textual basis for your distinction. Monica Knox: Well, at the time that rul- that H was added into rule eleven, the provisions of C one, two, and three m- w- excuse me C one, two, three, and four did not include the provisions about restitution. Speaker: of the defendant. William H. Rehnquist: you you said a moment ago I believe you referred to a case called Hyde. Monica Knox: Hyde. William H. Rehnquist: I- w- i- w- i- I don't see that in your brief. Monica Knox: Yes. Speaker: other... William H. Rehnquist: does I don't see how that really bears on the question of whether there can be harmless error or not. Monica Knox: The point I was trying to make, Mr. Chief Justice, is that there is a basis for distinguishing some of the rule eleven violations from other rule eleven violations, that they do not all stand on equal footing. William H. Rehnquist: But... Monica Knox: And I was only pointing out... William H. Rehnquist: But, y- you know, even if they don't all stand on equal footing, certainly the pro- the provisions added in seventy-four suggest that all of them are subject to harmless error rule. Monica Knox: The... William H. Rehnquist: I mean... Speaker: advisory... Monica Knox: committee notes that went... Speaker: along with the addition of H... William H. Rehnquist: I mean the rule the ru- the additions themselves don't make any effort to distinguish between the various parts of rule eleven. Monica Knox: The committee notes... William H. Rehnquist: I d- Monica Knox: that... William H. Rehnquist: I d- wa- I wasn't asking about the committee... Speaker: I was asking... William H. Rehnquist: about the provisions of the rule themselves. Monica Knox: No. Speaker: has drawn that distinction. W- Ruth Bader Ginsburg: I I'm looking... Speaker: at the... William H. Rehnquist: the notes? Ruth Bader Ginsburg: at the notes, the advisory committee notes, on the addition of H, and what particular part do you say makes it clear that... Speaker: that... Monica Knox: I first, that we should back up to the year before H was added in. William H. Rehnquist: Were those comments made in connection w- w- would are the are they placed in the record beside r- eleven H and eleven G? Mean... Monica Knox: They well, d- n- no. David H. Souter: In other words you're argument is that the that they have shown and I take it they have shown in this litany of examples that you referred to a moment ago a series of situations that they wanted to address. Speaker: Is is that... David H. Souter: your factual... Speaker: claim in a nutshell? Monica Knox: And it makes perfect sense that the committee would do that. Speaker: And therefore... Stephen G. Breyer: bit repetitive, but but assuming you're right that they did just import this and didn't discuss or intend to change, what you look to to decide if there is a harmless error, what about Justice O'Connor's question? Because in the note, they do say what you should look to is the transcript of the colloquy and also the other other what the exact words, but you we probably know the exact words the oth- the the other portions of the limited record made in such cases. Monica Knox: I can only answer what I answered to Justice O'Connor, which is that they were referring to the more technical aspects of rule eleven and not the core requirements. Stephen G. Breyer: Then from your point of view, it isn't a question of what we should look at. Monica Knox: Well, both of those. Speaker: the substantial rights. Ruth Bader Ginsburg: you are essentially asking us to restore the automatic reversal rule with respect to this piece of advice that is, if you plead guilty, you give up your right to counsel at trial. Monica Knox: No, I'm not actually advocating an automatic reversal rule. Speaker: actually where the Court has to go. Because... Monica Knox: in order to determine whether a plea is intelligent, it turns on what knowledge the defendant has. Speaker: right. Ruth Bader Ginsburg: what something? Monica Knox: For example, when the court gives him his right about confronting and cross examining witnesses, it could be given to him in the context of his attorney doing it. Speaker: And... John Paul Stevens: you this question? Do you agree with the Government that, assuming that you're right that it's harmless error review, assume the Go- burden is on the Government to establish harmlessness, but that they may look at the entire record, not just to the plea colloquy, that if we look at the retire record, we must conclude that the error was harmless? Monica Knox: Absolutely not. John Paul Stevens: Why not? Monica Knox: Because in this record we have two proceedings that occurred months before the taking of Mr. Vonn's pleas. Speaker: to make sure that he underst- Anthony M. Kennedy: the defendant was actually preparing for trial a week earlier? Is that in the colloquy? Or i- pardon me. Monica Knox: Well, it's in the... Speaker: record that there was... Anthony M. Kennedy: I'm wrong, but I thought this case was scheduled for trial and they were actually preparing for the trial. Monica Knox: It is in the record that it was scheduled for trial. Speaker: preparation... David H. Souter: on the record to the effect that his defense counsel had said to him, by the way, if we go to trial, I'm out of here? Monica Knox: No. David H. Souter: Okay. Monica Knox: No. Speaker: defendants who believe that kind of thing. Sandra Day O'Connor: I thought he originally entered a plea to one charge, but he was going to go on to trial on the other. Monica Knox: They Th- it is true that the kni- the gun use allegation had been set for trial. Speaker: Thank... William H. Rehnquist: you, Ms. Knox. Michael R. Dreeben: Unless the Court has any short questions the Government will submit. William H. Rehnquist: Very well, the case is submitted.

John G. Roberts, Jr.: We'll hear argument next in Global Crossing Telecommunications versus Metrophones Telecommunications. Mr. Fisher. Jeffrey L. Fisher: Thank you, Mr. Chief Justice, and may it please the Court: Complaints alleging violations of the FCC's pay phone compensation regulations allege just that, violations of regulations. The regulatory violations do not give rise to private cause of action under section 206 and 207 of the Communications Act. The proper point of departure in this case begins at section 276. There Congress directed the FCC to create a system guaranteeing pay phone providers compensation for the services that they provide to callers who make dial around calls. There can be little doubt that the FCC has ample authority to enforce the system it created administratively. But nothing in Section 276 or anywhere else in the Act contemplates that violations of the FCC's implementing regulations should give rise to a private cause of action for damages in Federal court. Accordingly, this Court should reverse the Ninth Circuit's decision allowing pay phone operators to bring through the back door the kinds of cases that Congress declined to allow through the front. There's nothing upsetting about reaching that result here. The Communications Act quite sensibly limits private damages actions in Federal court to those alleging violations of the Act itself. And claims that long distance providers... I'm sorry... claims that long distance providers have violated the pay phone compensation regulations require the parsing and the application of the extraordinarily complex and ever-changing FCC rules and regulations and orders. John Paul Stevens: Mr. Fisher, may I ask you this question? In your view, did the regulations create a legally enforceable obligation? Jeffrey L. Fisher: Yes, Justice Stevens. John Paul Stevens: And where may that obligation be enforced? Jeffrey L. Fisher: Our position is that can be fully enforced in the FCC. And in fact, the FCC is hearing complaints like this all the time. John Paul Stevens: By means of a private action before the FCC? Jeffrey L. Fisher: Yes, by means of an administrative action before the FCC. John Paul Stevens: Where the carrier... where they would file a complaint saying you owe us X dollars, and the agency could order them to pay X dollars. Jeffrey L. Fisher: That's right. And if you look at the Sprint amicus brief at page 23, the brief cites several cases just like this one that the FCC has fully adjudicated and in some cases awarded damages. John Paul Stevens: And is the obligation enforceable in State court? Jeffrey L. Fisher: No, we believe... of course, this Court did not grant certiorari-- John Paul Stevens: I understand that. I'm curious to know what your view is. Jeffrey L. Fisher: --If this Court holds there is no private cause of action in Federal court, then it is not enforceable in state court either. Our position is that there is only an administrative remedy that's available. Ruth Bader Ginsburg: But the administrative remedy that you just conceded is a counterpart to a private right of action, or isn't it? Would you get the same thing? I complained to the agency, and say, I didn't get... the pay phone provider wasn't paid, and X under the commission's regulations was supposed to pay it. So I complained against X. Could I get before the FCC exactly what I could get in court, so that we're only talking about which form is proper, or is there a difference in the remedy? Jeffrey L. Fisher: In terms of damages, we're talking about exactly the same thing, Justice Ginsburg. The only difference between being in Federal court as opposed to the agency is that if you're in Federal court, the Communications Act has a fee shifting provision. And we think that further underscores the Congress's scheme here, which is to reserve Federal court actions for serious violations of the Communications Act, and that's where fee shifting kicks in. Ordinary-- Ruth Bader Ginsburg: And before the agency, you don't get counsel fees? Jeffrey L. Fisher: --That's right. David H. Souter: Mr. Fisher, I realize you don't concede, in fact, quite to the contrary, you deny that the failure to pay the full rate is... could be considered a practice here. But let's assume for the sake of argument that it is a practice within the meaning of the text. If the... if the agency had explicitly said, what we are doing here in defining this practice as unlawful or unjust, is to define it as such within the meaning of, what is it, 201(b), so they make explicit reference to the statute and they say, we are fleshing out the statute, would your position be the same? Jeffrey L. Fisher: I think that's very much what the Commission is contending here Justice Souter. David H. Souter: But it wasn't textually as nice as that? Jeffrey L. Fisher: Right. Antonin Scalia: But they have made it that, haven't they, in a later regulation? Haven't they said just that. Jeffrey L. Fisher: In a later order, Justice Scalia. Antonin Scalia: In a later order, yes. David H. Souter: Let's assume in the reg itself, they were that precise. Would your position be exactly the same? Jeffrey L. Fisher: Yes. The result would be the same. And I think you're asking me to put aside for the moment whether the FCC was correct in saying it was a covered practice. David H. Souter: Sure. Jeffrey L. Fisher: And in terms of the FCC calling this unjust and unreasonable, the problem with that is that the only reason the FCC has ever given that this is unjust and unreasonable is because it violates its regulations. And if there's one thing we know from the structure of the Communications Act, it's that for something to be remedial in Federal court, in other words... and if we know something violates 201, it is remediable. David H. Souter: Okay. Jeffrey L. Fisher: It has to be. David H. Souter: You invite me to change the hypothetical, then, by jacking it up in this respect. The FCC gives the reason. And it says, the reason it's unjust and unreasonable is that the carriers are getting a free ride on the pay phones, et cetera. So they fill in the gap that you claim. They have a reason. Would your answer or your position still be the same? Jeffrey L. Fisher: Yes, because the reasoning the FCC would give simply would not be a permissible construction of the terms unjust and unreasonable in 201(b). David H. Souter: Are there any times under any circumstances that you can think of in which the FCC can adequately and validly define a practice as unjust and unreasonable within the meaning of the statute so that, in fact, in applying the statute, we would follow... be bound to follow the regs? Jeffrey L. Fisher: Of course, in the vast majority. Let me give you some examples, and then I'll distinguish it from this case. The easiest example is rate of return regulations that the FCC can pronounce. So the FCC can say how much long distance companies are able to charge for certain services. Fleshing out the amount that they can charge so that they're not in effect gouging consumers is a regulation that this Court could look to, but-- David H. Souter: Okay. But why can't they pass a regulation that says don't gouge pay phone operators? Jeffrey L. Fisher: --Well, that goes to the heart of this case, Justice Souter, in the kind of regulations that we have. What we have here is not the FCC telling long distance providers to give pay phone operators money that long distance operators ought to owe pay phone operators. The money that's at issue here, the 24 cents per call is the money that callers owe the pay phone operators. If you look back at the D.C. Circuit's decision-- David H. Souter: Well, do they? I mean, the statute of the United States says that... I think I'm correct... the statute of the United States says they can't be required, the caller cannot be required to put in the quarter in order to get the 800 number and so on. So as a matter of law, don't we have to say that the, in practical terms, the caller doesn't owe? Somebody owes. Somebody ought to pay for the use of this facility. But Congress has said it is not the end user. Jeffrey L. Fisher: --You are right, Justice Souter, insofar as we're trying to capture the money here for essentially the equipment rental or the access fee that the caller is availing himself of. But Congress has not said that money cannot rest on the caller's shoulders. All Congress says in Section 226 is that the caller cannot be required to pay in advance. The FCC during its rulemaking proceedings actually considered two alternatives where the caller would have paid in full compliance with Section 226. One would be the caller paying with a later billing device like a credit card, billing it to their home phone number. Another option the FCC considered would have been where the long distance providers would have billed customers on behalf of the pay phone operators. Either way, the customer would have paid. Even the respondent in his brief openly-- David H. Souter: Well, the customer is going to pay if, in fact, the long distance carrier is the one who has to make the immediate payment, because that payment is going to be figured in the long distance rate. So that ultimately, the end user is going to pay for the service he gets, and Congress is simply saying, the way to make this thing work in a sensible and simple way is to require the long distance carrier to make the reimbursement. The economic end result is exactly the same as it would have been if they had said, well, you can send a bill for 25 cents to the end user. Jeffrey L. Fisher: --The economic result may be the same, but with all due respect, Congress has not decreed that the administrative system work this way. David H. Souter: It hasn't decreed otherwise. Jeffrey L. Fisher: It hasn't decreed otherwise. Congress essentially-- David H. Souter: Isn't that the classic situation in which agencies are supposed to figure out what to do? Jeffrey L. Fisher: --Congress gave the FCC power in 276 to come up with a plan. But this case, as the Ninth Circuit decided it is not under 276, it is under 201, so the question is whether failing to comply with the administrative plan-- David H. Souter: Well, as I understand it, it came to the conclusion not that they were not acting under 276, but that, in fact, the cause of action has to refer back to 201. Jeffrey L. Fisher: --That's right. I'm sorry. It brings us back to the question that you asked: Whether the Ninth Circuit, or the FCC for that matter, can shoehorn this into 201 as an unjust and unreasonable practice. John G. Roberts, Jr.: In your answer for why they can't, Justice Souter's comment is a classic, this is what administrative agencies do all the time in typical rate regulations. They make a determination that utility shareholders have to bear this cost. The rate payers can bear this cost. And at the end of the day, it is a determination that a rate is reasonable or unreasonable. And it seems to me that that is just what is involved here. I don't know why their determination about how to allocate who has to collect the rates, and whether they can pass them on or not makes it an impermissible interpretation of what's unjust or unreasonable under 201. Jeffrey L. Fisher: Well, Chief Justice Roberts, the FCC was unquestionably acting under 276 when it did this. So the question is whether you can go back to 201. And as I said, you need to start with section 206 and 207 because we're in Federal court. And that says that violations of the Act are remediable but not of regulations, in contrast to numerous other sections. So the question in asking whether it violates 201, it has to be something more than simply the FCC's regulation wasn't followed. And we need to ask ourselves what kind of regulation is it. Antonin Scalia: Are rate making regulations issued under 201, do they purport to be the FCC's definition of what is just and reasonable compensation? Jeffrey L. Fisher: That's right. That's what I conceded to Justice Souter earlier. Antonin Scalia: They are issued under 201. Jeffrey L. Fisher: I think largely they are. Antonin Scalia: So they are an interpretation of the statutory language in 201. Jeffrey L. Fisher: That's right. Antonin Scalia: And you say this one is not. Jeffrey L. Fisher: That's right. And this Court can look several places, but it can first look to these... this regulatory regime that was created, which was always thought of as being triggered by section 276. And then asking-- John G. Roberts, Jr.: When you say it was always thought of as being triggered by 276, did the FCC reference 201 in issuing its determination that a failure to follow these regulations was unjust and unreasonable? Jeffrey L. Fisher: --In its order, it references 276 and-- 201. In the regulations... I thought I was being asked about the regulations... it leads with 276. Anthony M. Kennedy: Suppose it issued the regulation after notice and comment, and said... violation of the pay phone order is an unjust and unreasonable practice, would the case be different? Jeffrey L. Fisher: No, it wouldn't be. And I think I want to flesh out and make sure I've gotten across the distinction between the rate making-- Stephen G. Breyer: You haven't. Maybe... if this doesn't clarify it. I think everyone has about the same question. You have a bunch of pay phone operators. And if the AT&T were charging them too much, I think everybody would say that the FCC can say, hey, that's too much. You owe them 2 cents a call refund, and everybody would agree that the people who are hurt could go into court and bring a lawsuit and get the 2 cents. Right under 47 U.S.C. 201(b). Now, the only difference here seems to be that it wasn't AT&T that was charging, in my example, too much. They weren't paying what they owed. They should have paid what they owed. And that, says the FCC, is, under 201(b), an unreasonable practice. And, therefore, go in and collect it in court. Now, what is the answer to that? So far I have heard nothing that suggests that this couldn't be an unreasonable practice under 201(b), which is just what the FCC said it was. Now, what's wrong with what I said? I'm simply trying to focus you upon what I think is the question that's bothering some of us. Jeffrey L. Fisher: --There are two things that are wrong with that, Justice Breyer. The first thing is that in contrast to ordinary rate making regulations, here, in the absence of regulations, long distance providers would owe pay phone operators zero. There's no reason why long distance providers would give money to pay phone operators. The 24 cents here is to capture what callers owe the pay phone operators. And so the FCC has come up with an administrative system. But there's nothing unjust or unreasonable about long distance providers not giving money to pay phone operators before the regulatory regime drops into place, whereas there is plenty that is unjust and unreasonable about overcharging, for example-- Stephen G. Breyer: So, my answer... not answer, but my characterization of what you have just said is that the FCC did say it was an unreasonable practice. But in your view, it was not an unreasonable practice not to pay. And you want us to go back and second-guess, which we could, if their view of unreasonable practice is unreasonable itself. And I guess you would have to overturn it. I didn't know that was what the case was about, but are you saying now that that's the issue? They said it was an unreasonable practice not to pay this money, you think it is a reasonable practice not to pay the money. There is a dispute. That's what we should do. Jeffrey L. Fisher: --No. Stephen G. Breyer: Okay. Then what should we do? Jeffrey L. Fisher: Well, what you should do is reverse the Ninth Circuit. Antonin Scalia: You say it would be a reasonable practice not to pay the money, but for the existence of the regulation. Jeffrey L. Fisher: That's exactly right. Stephen G. Breyer: Just like AT&T when, in fact... or any other utility that, in fact, runs into situations every day of the week, where but for an FCC regulation, they would not be overcharging, because they have a way of doing it that isn't on its face unjust. But the FCC writes some regulations and now it is unjust. So I guess to take that argument would overturn, I guess, about a hundred years of rate making law. Wouldn't it? Jeffrey L. Fisher: No, it wouldn't. Justice Scalia, I think, has captained that position. And what we're saying is the FCC can pick a fair rate once it is something that long distance providers or any common carrier ought to be compensating somebody for. But what we are saying here is, this is a purely administrative creature. And then it gets to the second reason why-- Stephen G. Breyer: So in other words, you are saying... I think it is common that the FCC might write some accounting rules, for example. And they might say, before these accounting rules, Mr. Bell's system in San Francisco, you could charge people 8 cents a call. But given the way we set up the accounting rules, we think this month you have to do 7 cents in the first six months, 7 cents, in the next six months, 9 cents. And any deviation from that is unreasonable. And the company does deviate. I would have always thought when they do deviate, they are behaving unreasonably, and someone who pays too much could go into court and get money back. Am I wrong about that? Jeffrey L. Fisher: --No, you would have been right, Justice Breyer. We're not asking... even the Louisiana Public Service Commission is another example of something. And that brings me... I think I should go back to what-- Antonin Scalia: Before you go back, let's hear about the accounting rules. What would they be issued under? Would they be issued under 201? Jeffrey L. Fisher: --They might. The question that we would ask is whether it affects carriers' relationships to their customers. Now, under Justice Breyer's hypothetical, and this is the Louisiana Public Service Commission-- Antonin Scalia: It seems to me accounting rules... in order to decide what is just and reasonable, you have to have accounting rules. So the accounting rules fit very comfortably under 201. Jeffrey L. Fisher: --I don't think we're disagreeing. What I want to do is distinguish those from the case we have here, and go back to Justice Souter's-- David H. Souter: May I focus your return to me? Because I want to take up with where your answer to Justice Scalia left off. As I understand it, you were saying that the rate in this case is unreasonable because the party or the person who is responsible for the use of the pay phone facilities is the person who's making the call, not the long distance carrier. My question to you is, isn't that simply a choice of characterization? Because another way of looking at it would be that the person who makes the call wants to use long distance facilities to get to the person he wants to talk to. And, therefore, the long distance facility in every pay phone case is using the pay phone in order to get the customer to what the long distance facility provides. Why then isn't it just as fair to characterize the use of the pay phone here as for the benefit of the carrier as for the benefit of the customer? And if that is just as fair, doesn't that end the distinction that you drew with Justice Scalia saying that it is not fair in this case. Jeffrey L. Fisher: --No, for two reasons. The first is... I just want to be clear, we are not challenging the FCC's authority to have created the regulatory regime it did under 276. So the FCC could well have picked, as it did, long distance providers to be on the ultimate hook here. But the reason... but the problem with saying that... I'm sorry. I lost the train of thought in your question. David H. Souter: My question is simply, you can say... one way of looking at this transaction is, it is the guy making the call who's using it. Another way is to say the long distance facilities carrier is using it to get the call to the long distance facility. If you look at it in way B, doesn't your argument for unreasonableness disappear? Jeffrey L. Fisher: Thank you. That would be an entirely different case than the one we have here, Justice Souter. The 24 cents that the respondent is seeking to recoup here, if you go back and look at the regulatory system... and that's what they are asking for, is the 24 cents that the FCC regulations entitle us to... was calculated... in fact, the D.C. Circuit made the FCC go through this exercise three times to get it right. So to calculate that 24 cents, it is purely a function of the amount of money that the caller owes the pay phone operator. David H. Souter: What difference does that make? The use of the phone is of a value of 24 cents. But the value of using the phone is a value not only to the caller, but to the long distance provider who couldn't provide anything to the caller without the pay phone? Why isn't the alternative characterization just as easy, regardless of how they get to 24 cents? Jeffrey L. Fisher: I think another way to perhaps characterize your position is, why is this like a commission that they are seeking. And the reason why is because that number may be very different than 24 cents. If there was such a commission that could exist, it would be far less. And the respondents are not seeking that amount of money. David H. Souter: Excuse me, but aren't you arguing with the 24 cents, as opposed to creating an argument about what is the proper characterization of the transaction? Jeffrey L. Fisher: I don't think so. All I'm saying is if you started with trying to compensate pay phone operators for the service they provide... that you're characterizing as the service they provide to long distance carriers, you end up with a far different number. Who knows what you would end up with. Probably end up with zero. Because take an example of somebody who rents a cell phone for the weekend. They might make lots of long distance calls on the cell phone, but nobody has ever thought that a long distance carrier ought to be kicking back money, for example, to the store that rented the cell phone to the customer over the weekend. And I want to return, I think in Justice Breyer's question-- David H. Souter: The reason is that the store that rents the cell phone is getting rental income from the cell phone. And in the case of the pay phone, the pay phone operator is going to get zero, unless there is some such scheme as this. Jeffrey L. Fisher: --Right, but then we're back to the rental income question, and the question of whether it would be unjust or unreasonable for long distance providers, absent the regulations, to be the ones paying that rental income. And the answer, we submit, is no. And the problem that I think we've gotten off on a couple times brings us back, I think, to the assumption you asked me to make at the beginning of the argument, that something is a covered practice under the Act. And so another way to understand the distinction between the accounting rules, the rate making exercises and all the rest in this case is that section 201(b) of the Act doesn't cover everything in connection with a communications service. It only covers certain practices in connection. And the history, as well as the text and structure, shows that it regulates common carriers acting as such. John G. Roberts, Jr.: It doesn't cover certain practices in connection. It covers all practices in connection. Jeffrey L. Fisher: I think we agree with respondent, Mr. Chief Justice, that in looking at 201(b), you have the word such communication practices. And to understand what that is referring to, you look back up at 201(a) and see the universe. Now, the beginning of 201(a) is what we colloquially call the carrier customer section of the Act. And that's the core of 201(b), which says that when a common carrier is providing service, it needs to act justly and reasonably. Here... and with accounting and rate making and all the rest, those are things that affect rates and service to customers. What we have in this case is something very different. This is a carrier-carrier relationship. So you need to look somewhere else. And what respondent says is you look to the end of 201(a), which talks about physical interconnections between carriers. But the problem with that argument, and the reason why this falls outside 201(b), even if it is somehow unjust and unreasonable, is that the carrier-carrier relationships are governed only when the FCC has ordered physical interconnection. John G. Roberts, Jr.: So you are saying that, putting aside 276, it would clearly be impermissible for the FCC to say one way that long distance carriers provide service to their customers is when those customers use pay phones; and, therefore, we're setting up this rate regime in connection with that service. You would say that would be outside the scope of 201(a)? Jeffrey L. Fisher: As we're still talking generically, I don't think it necessarily would be. Because it could regulate the relationship between long distance providers and their customers. I mean, that's the core of what 201 is about. It's about how much they can charge, what kind of practices they can have in relationship to their customers. But here we're not talking about a long distance provider that is a common carrier in relationship to its customers or in relation to its rates and practices. Stephen G. Breyer: That's actually... that's, I think, your strong... to me that was the strongest argument. When I finished reading it, I thought, well, so what. You know, I mean, can you see why I thought that? I mean, today's world is different. It is true that you don't have simply a single telephone company providing service ultimately directly to the customer. You have everything mixed up. And there are a lot of inter-carrier things. Language covers it. Purpose covers it. Facts and circumstances change. Jeffrey L. Fisher: We submit it is a not a "so what", Justice Breyer. Because section 201(b) is broad, but it's not all-encompassing. And Congress plenty of times in section 276, and in lots of other sections of the Communications Act, has responded to modern necessity by giving the FCC expanded jurisdiction, just as it did, as I said here, in section 276. But our core position here is that when Congress expands the FCC's authority, and it doesn't create a concomitant Federal right of action along with it, it is telling the FCC to handle these things administratively, use its expertise, craft regulations and enforce them accordingly. John Paul Stevens: Mr. Fisher, can I go back to the first question I asked you? Would the FCC have had authority to create an administrative remedy that had a fee shifting provision in it? Jeffrey L. Fisher: The FCC might have that authority. Section 154(i), as well as other sections in the Act, give the Commission broad authority in crafting its administrative enforcement regimes. I haven't focused on that exact question, but it might well be able to say that in order to have this properly enforced, we need to have fee shifting. John Paul Stevens: It could certainly impose penalties of some kind. Jeffrey L. Fisher: Yes, it could, and the FCC could double fine... the FCC could do lots of things. That's our very purpose, is that the FCC ought to be the single forum deciding what kind of an enforcement mechanism is best, not leaving it to Federal courts across the country. And as Ninth Circuit invites, state court rulings across the country with varying rules. If there are no more questions I'll reserve the remainder of my time. John G. Roberts, Jr.: Thank you, Mr. Fisher. Mr. Englert? Roy T. Englert, Jr.: Thank you, Mr. Chief Justice, and may it please the Court: It is not particularly unusual for the grants of authority in the FCC... to the FCC throughout the Communications Act to be enforceable through the provisions of section 201(b) barring unjust or unreasonable charges, classifications, rates, or practices. Justice Scalia asked a question during Mr. Fisher's argument about, what about the accounting rules? Would they be prescribed under section 201? They would be prescribed under section 220, which is the provision of the Act that governs accounting. And they would also be prescribed under the last sentence of section 201, which is the general authority given to the FCC to promulgate all of its rules. But nothing in those facts would keep a violation of those rules from being enforced as an unjust or unreasonable practice under Section 201(b). Antonin Scalia: What can't... what can't be-- sucked in under section 201? I mean, once the FCC issues a regulation, it's easy to say that any violation of that regulation is unjust. And that's what's happened here. And this just makes a farce of the provision that says the only private causes of action are for violations of the statute and not for violations of the regulation. It seems to me if this thing, 276, can get sucked into 201 simply by reason of the fact that failing to obey an FCC regulation is unjust, that provision is a nullity. Roy T. Englert, Jr.: Well, Your Honor, first of all, the FCC has never argued, and we have never argued that all FCC regulations are enforceable through a private right of action. I mean, to give an example, as-- Antonin Scalia: No, I'm saying you'd have to argue that if the theory you're propounding for this case is correct. Violation of an FCC regulation is unjust. Failing to comply with an FCC regulation is unjust. Roy T. Englert, Jr.: --No, no, Your Honor. The phrase unjust or unreasonable is a classic phrase delegating to the administrative agency the authority to make the determinations in the first instance of what's just and reasonable. If, for example, there were a violation of the regulation forbidding giving credits to political candidates, the FCC could decide in the first instance whether the violation of that regulation rises to the order of unjust or unreasonable. Antonin Scalia: So can... every FCC regulation can be enforceable by private action? All the FCC has to say is that violation of this regulation is unjust. Roy T. Englert, Jr.: No, Your Honor. Antonin Scalia: No? Roy T. Englert, Jr.: There are also examples of things that fall outside of charges, classification, rates or practices. There are examples in the case law. There are old ICC cases in which providing a particular type of boxcar was deemed not to be a charge, classification, rate... held not to be a charge, classification, rate or practice. There is a recent D.C. Circuit case involving an attempt to dictate, in the FERC context, to an energy company who can be on its board of directors. Antonin Scalia: But at least... at least any FCC regulations relating to charges, practices... and you want to interpret practices very broadly... classifications, and regulations for and in connection with communication service, all of those regulations can be sued upon in Federal court with all the diverse and contradictory rulings that that will produce, so long as the FCC says that the failure to obey this regulation is, in our view, unjust. Roy T. Englert, Jr.: Well, Your Honor, let's start with statutory text. Section 206 says that there is a damages action for anything in this Act declared to be unlawful. Section 201(b) says unjust or unreasonable classifications, practices, et cetera, are declared to be unlawful. So we have a very precise match in statutory text between 201(b) and 206. Now, what Mr. Fisher's argument amounts to is to say that if it is covered in a regulation, it is exempted from being called an unjust or unreasonable charge, classification, practice, et cetera, because that would allow the FCC to enforce too much. But if we start with the text Congress enacted, there is a precise match between 201(b) and 206. And to say that that which the FCC hasn't regulated is more subject to judicial review-- Antonin Scalia: I don't think he's saying that. I don't think he's saying that if it is covered under regulation, it can't be unjust. Some regulations do relate to justness and reasonableness, but not 276. I think what he's saying is 276 established a scheme. It didn't have to be this scheme. It could have been some other scheme. Nothing in the nature of things says that the long distance carrier has to be the one liable for this. It rather was simply imposed by the FCC. That's fine. But to say that it would be unjust for them not to do that is just unreal, unless you're going to allow any violation of any FCC regulation to be unjust. Roy T. Englert, Jr.: --Your Honor, our position doesn't require us to argue that it would have been unjust for the FCC to adopt some other scheme. Our position is that once the scheme is in place, it is unjust to depart from that scheme in the way Global Crossing did, just as once a scheme of rate regulation is in place, even though there could be many different schemes of rate regulation, it may be unjust or unreasonable to charge a higher rate than that. Antonin Scalia: But the rate regulation is... is established in order to determine what reasonableness and justness requires. And 276 is something quite different. Roy T. Englert, Jr.: I respectfully disagree, Your Honor. 276 is, asks... was a delegation by Congress to the agency to fill in the details of a plan to make sure that pay phone service providers were fairly compensated, a phrase not very different from just and reasonable, for each and every completed interstate and intrastate pay phone call. They really fit quite nicely together as opposed to being in tension with one another. Stephen G. Breyer: Is it possible... I was worried somewhat about, I think, the problem Justice Scalia raised, that old regulations become unjust and unreasonable. And then I thought, no, but tell me if this is right. That they're going to fall within 201(b) only if a violation is unjust and unreasonable. Now, we could say, and moreover, the FCC has to find that a violation of these regs is unjust and unreasonable, that is, it has to focus on it, make that determination. And then, of course, that determination has to be a reasonable interpretation. In other words, it can't just call anything unjust and unreasonable-- Roy T. Englert, Jr.: That's right. The usual-- Stephen G. Breyer: --And it has to focus on the fact that their doing so will create this private remedy in the courts. Roy T. Englert, Jr.: --Well, Your Honor-- Stephen G. Breyer: That that... if you have that tough... which I haven't seen anywhere, but I mean, if you had that tough a requirement, so they actually have to focus on it, it would tend to minimize the problem of a thousand different actions in ten thousand different courts and a big mess. But I mean, how much is written into those words unjust and unreasonable? I'm certain you can't squeeze any rate... it is not the case that any and every regulation can be... fall within. Roy T. Englert, Jr.: --No, that's right. The usual Chevron limitations apply. And in your question, Justice Breyer, you added to the usual Chevron limitations that the FCC has to focus on-- Stephen G. Breyer: Yeah-- Roy T. Englert, Jr.: --Well, that's fine. Here the FCC did focus on it and is criticized for having focused on the consequences for judicial action. John G. Roberts, Jr.: Well, but reasonably criticized for it. I would have thought your answer would be unjust or unreasonable has, for generations, been given a very expansive reading. And you don't need to say that the FCC has to do what typically I would have thought was a job for a court, which is to determine whether there's a private right of action to bring its action within a boilerplate term like unjust or unreasonable. I would have thought the contact point was what I was talking about with Mr. Fisher earlier, which is whether or not this is such communication service under 201(a), which is... which is, again, I suppose, something that the agency gets deference on. But it would seem to me, that's where the limitation would come. Roy T. Englert, Jr.: Mr. Chief Justice, let me address the interplay between 201(b) and 201(a), because Mr. Fisher has simply misunderstood our position. We cited the second half of section 201(a) not to say it applies of its own force here, but to say that it disproves the contention that the communications services referred to in the phrase such communications service in 201(b) have to be limited to carrier-customer relations, because 201(a) isn't limited to carrier-customer relations. Yes, all 201(a) does of its own force is allow the prescribing of through routes and interconnections. But there is no possible way to read 201(b) as limited to carrier-carrier communications in light of the full breadth of practices covered by 201(b). So that's the reason to cite 201(a) is simply to disprove Mr. Fisher's contention about the limits on 201(b). The phrase such communications service is actually used in 201(a) and in 201(b), and the antecedent in the first few words of 201(a), the such communications service, is interstate or foreign communication by wire or radio. So 201(b) isn't necessarily restricted to either carrier-carrier or carrier-customer relations, but such communication service relates back to all communication by wire or radio, which is what we have here. Antonin Scalia: Well, but wait. Wait. It says to furnish such communications service, is what (a) says. And they don't furnish such communications service to your client. Roy T. Englert, Jr.: No, but... well, that's debatable, but what 201(b) refers to, in any event, is in connection with-- Antonin Scalia: Such communications service. Roy T. Englert, Jr.: --Right. Antonin Scalia: And I would think that would mean such communications service that was furnished. Roy T. Englert, Jr.: Well, they have furnished a communications service to a customer, not to us, but to a customer. So again, this is connected with that communications service. And as the colloquy with Justice Souter earlier touched on, the caller pays sooner or later. Under the FCC's regulatory scheme, and in part because of the prohibition on advanced caller payment in 226(e)(2), what happens is the long distance carrier gets the money, and they're saying there's no private right of action to make them give it back. In other words, the world would look quite different without a regulatory scheme, but it would not be a regulatory scheme in which they get all the money they are currently purporting to keep. Now, Mr. Chief Justice, you also asked a question about the flash point on whether the FCC was improperly or suspiciously commenting on the scope of the private right of action as opposed to interpreting a substantive provision. The private right of action provisions are 206 through 208, the provisions that let the complainant go to either court or the Commission. The FCC said nothing controversial about the scope of 206 through 208. The controversy is over the scope of 201(b), which is a substantive provision. But once you have something brought within the scope of 201(b), after the application of traditional tools of statutory construction with Chevron deference, the private right of action follows automatically under 206 and 207. It is not a matter of the FCC reaching out to say, we are going to create a private right of action. It is a matter of the FCC construing a substantive term with consequences for a private right of action. John G. Roberts, Jr.: Well, I think that's right, but that's also why I guess I don't regard it as particularly helpful that the FCC opines on what the consequences of its determination that something is unjust or unreasonable under the statute are, with respect to a private right of action. Roy T. Englert, Jr.: Well, it may not be particularly helpful, but it is surely not particularly harmful. And they did have a reason-- Antonin Scalia: Well, except that it is none of their business. Roy T. Englert, Jr.: --If they were trying to construe-- Antonin Scalia: We-- Roy T. Englert, Jr.: --206 through 208, Your Honor, I might agree. But they construed 201(b) and commented on the consequence. And this is quite important, that it is their business, because 208 is the provision under which each and every one of those Commission proceedings cited in the Sprint brief, which Mr. Fisher alluded to, has proceeded before the agency. 208, just like 206, requires a violation of the Act, so it is very much their business to decide whether these pay phone controversies state violations of the Act. If they don't, the Commission has absolutely no power to proceed under 208, which is the only provision under which any administrative proceeding has ever gone forward. There are some arguments made here that they clearly have the authority to proceed administratively even if you can't go to court, but Mr. Fisher hasn't identified the source of that authority. And the sources identified in the brief are section 4(i), which has been problematic, and others... and other sections on which the FCC has never relied on in this setting, and some kind of divination of an action within Section 276 itself. The question was put at one point to Mr. Fisher, could the FCC mandate fee-shifting as part of this administrative remedy it's going to create. Well, if you read 276 broadly, it's giving the Commission great powers to create administrative remedies, notwithstanding 208, which was supposed to be the administrative provision, then maybe anything goes. But we're getting awfully far from the statute that Congress wrote and giving the FCC awfully expansive powers to construe 276, while also denying the FCC rather mundane powers to construe rather ordinary phrases of administrative law, 201(b). Now, with respect to the question of whether this is a practice in connection with a communications service, Mr. Fisher argues strenuously that it is not. John Paul Stevens: Let me just be sure I understand your argument on 208. You're saying that 208, like the earlier provision of the statute, requires a violation of the statute, not just regulations, in order for there to be an administrative remedy. Roy T. Englert, Jr.: Yes, Justice Stevens, and section 207 expressly gives the complainant a choice of forums. John Paul Stevens: So the same statutory requirement for the remedy that your opponent challenges is the one he acknowledges is available. Roy T. Englert, Jr.: That's correct, and in fact, Global Crossing... Global Crossing went so far as to argue before the Ninth Circuit that there is no administrative remedy, that there's simply nothing to do except get fines under sections 502 and 503, and has reversed its position before this Court. Antonin Scalia: --Well, you should be arguing, then, that we should give Chevron deference to the Commission's interpretation of Section 208. And once we do that, if 208 governs this thing, then so does 206. Roy T. Englert, Jr.: I'm happy to make that argument. Antonin Scalia: I thought you should be. Roy T. Englert, Jr.: With respect to the question whether practices are limited to carrier-customer relations, I've already touched on that by talking about the interplay between 201(a) and 201(b). But there's another angle of approach for that issue, which is that in the Louisiana Service... Louisiana Public Service Commission case, this Court was asked to draw the inference, just as it has been in this Court, from other provisions in the Communications Act, that those phrases always refer to carrier-customer relations. And the Court said, no, that phrase can also refer to depreciation rules, so it's not limited to carrier-customer relations, the inference from other provisions of the Act doesn't flow. And the reason is there are words of limitation when those words, "charges, classifications, rates or practices. " are used in those other sections that make it clear that they apply only to tariffed services. You find no such words of limitation in 201(a) and 201(b)... or in 201(b), excuse me. Now, there remains the argument that there's a mismatch between section 201 and the relevant regulations because the regulations apply to intrastate as well as interstate calls, and section 201 applies to interstate or foreign communications. That argument appears for the very first time in merits briefing in this Court. It wasn't made below. It wasn't made in the cert petition. It wasn't made to the agency. And that's a problem, because the limits of the FCC's ability to regulate jurisdictionally mixed communications depend on factual determinations, factual determinations neither the agency nor even the lower courts have ever been given a chance to make. But had this issue been raised in a timely fashion, I suggest that it would have been appropriate for the FCC to reach intrastate as well as interstate communications because long distance... dial-around calls are overwhelmingly long distance, overwhelmingly interstate, and it is difficult to sort out which calls are which. In fact, the seven years of rulemaking the FCC underwent in this case largely were because of the difficulties of keeping track of particular pay phone calls. John G. Roberts, Jr.: I saw that argument. I have to say I don't understand it. Why is it so difficult? I get a bill every month that easily sorts out which are interstate and which are intrastate. Roy T. Englert, Jr.: Sorting one call from one carrier that has a relationship with you is not difficult, or sorting 100 calls from a carrier that has a relationship with you is not difficult. But when you go from a PSP to an inter-exchange carrier to a switch-based reseller, matching up the information of all three is... has proven, in practice, to be quite difficult. And it's especially difficult in an era in which you can't just tell by area codes, for example, whether something is interstate. If I dial 202 to 202, I may be dialing someone's cell phone out of state. Now, the judgment below could be explained on the alternative ground that a violation of the regulations constitutes a violation of section 276. Before I even get to the substantive discussion, let me respond to the absolutely groundless claim that that argument has been abandoned. Global Crossing cites a bunch of cases involving section 1291 appeals in which people didn't appeal a particular order after final judgment, and says that's an abandonment of the claim. That's both correct and irrelevant. This is a 1292(b) appeal and there is no final judgment on any claim in this case, certainly not on the 276 claim, so my client certainly hasn't abandoned it. My client was also a party to Greene and lost Greene and has argued the merits of the section 276 position all along. On the merits, section 276 contains rights-creating language that creates a concrete monetary entitlement, focuses on the party benefitted, and does not have an aggregate focus. Global Closing doesn't even try to defend the Ninth and D.C. Circuits' reasoning that the statute does not contain rights-creating language. That leaves the tricky question whether a violation of the regs can be deemed a violation of the Act itself when Congress specified only the right, but didn't specify what fair compensation was, and didn't specify who had to pay the compensation. In that respect, I think Alexander v. Sandoval, though it's been cited against us repeatedly, is actually helpful to our position. That case says it's meaningless talk about a violation of the regs separate from a violation of the Act, and that a Congress that intends an Act to be enforced intends the regulations filling out the Act to be enforced. I think the theory of Chevron itself is also helpful to our position in this regard, because the point of Chevron is that the use of broad language constitutes an administrative... a delegation of authority to the administrative agency, not just to fill in details, but to give definitive content to a statute whose direct content is less than definitive. So it is perfectly appropriate to talk about this statute, section 276, and its rights-creating language as ordering the FCC not just to create a plan, but ordering the FCC to create a plan that has a particular goal such that violation of that goal can be deemed a violation of section 276 itself. Thank you. John G. Roberts, Jr.: Thank you, Mr. Englert. Mr. Feldman? James A. Feldman: Mr. Chief Justice, and may it please the Court: There is no dispute in this case that under sections 206 through 208 of the Communications Act, a party damaged by any violation of the Communications Act may bring an action either in Federal court or before the Commission to obtain damages. The scope of the remedies before the Commission under the kind of standard primary provision of the Act that deals with damages, 208, and 207 mentions it as well, the scope of the action before the Commission and before the court is exactly the same. Now, because petitioner's... therefore, if... well, because petitioner's failure to pay fair compensation to respondent was an unjust or unreasonable practice-- John Paul Stevens: Let me just ask this. Is it the same with respect to fee-shifting? James A. Feldman: --No. The Act in 207... I believe it's 207... specifically says that you may, the court may award attorneys' fees in an action in court. It doesn't provide that... there's no similar provision for actions before the Commission. But the scope of the kind of thing that Congress decided that a complainant could bring either to the Commission or to court is exactly the same. There's no way to drive a wedge between them. There are other provisions of the Act, as Mr. Fisher said, where Congress specifically authorized the Commission... an action before the Commission for damages. But those are... those provisions which Mr. Fisher cited are in section 226, which do not have to do with common carriers. They have to do with automatic dialing, with do-not-call lists, with things like that, where the person who's violating it is definitely not the... never going to be a common carrier. In those provisions, Congress found it necessary to say, okay, we have to now give you the authority to create a damage action. But in other provisions, where you are dealing with common carrier, 206 through 208 provides Congress's determination of what the scope of a damage action should be either before the Commission or before a court. John G. Roberts, Jr.: Do you have a position on whether or not Chevron deference is owed to the Commission's determination of whether or not their action creates or gives rise to a right of action? James A. Feldman: I think that-- John G. Roberts, Jr.: There are two different, it seems to me, two different Chevron questions. The one is the deference on its interpretation of what's unjust and unreasonable. The other is the question of whether or not they have anything to say about whether that means there is a private right of action in court. James A. Feldman: --I think that... I guess we don't have a position on whether 276, independent of 201, would be sufficient to have a prior right of action under 206 through 208. But as for 201(b), once... the FCC does certainly gets deference, has gotten deference for a hundred years for its determination of what is an unjust and unreasonable practice. John G. Roberts, Jr.: But it's never gotten deference, at least I guess from this Court, on whether or not there is or is not a right... whether there is a right of action to enforce its regulations. James A. Feldman: No, and I don't think the FCC here is claiming that there's a right of action to enforce its regulations. Antonin Scalia: Well, but they're certainly entitled to deference as to whether an administrative action can be brought under 208. James A. Feldman: That's correct, and that's why under-- Antonin Scalia: Once you say that it can, then a court action can be brought under 206. James A. Feldman: --That's correct. That's correct. Antonin Scalia: So you think we don't owe them deference for 206, but we do for 208. And if you give deference for 208, 206 automatically decides itself. James A. Feldman: Right. But 208, like 206... maybe I'm not understanding the question. Both provisions address only violations of the statute. Antonin Scalia: Yes. James A. Feldman: So in order for the FCC to decide that there's an action either before the agency or the court, it has to identify a violation of the statute. Here it's identified 201(b) as being the provision that's violated. It's absolutely standard for a hundred years that... I mean, Mr. Fisher says, well, you can't look at 201(b) and decide who is supposed to pay and how much they're supposed to pay. That is absolutely standard from the very beginning of the Interstate Commerce Act, that you can't look at the words "just and reasonable" and decide whether a rate was just and reasonable or the practices that a carrier is using are just and reasonable. In fact, the whole-- John Paul Stevens: Is your position... I want to be sure I understand you. Your position on the two different questions that the Chief asked you is, they get deference on question one. And with respect to question two, it follows from the plain text of the statute. James A. Feldman: --That's correct, that's correct. I would add also, with respect to the Commission's determination about what is just and reasonable, it was not just a question of saying that a violation of the regulations is just and reasonable. The Commission was charged here with the responsibility for adopting a compensation scheme that would provide for fair compensation for each pay phone operator for each and every call. And it spent a number of years and a number of different attempts working out what is a fair compensation. I would submit that all of that reasoning about what is a fair compensation scheme is also reasoning why it's unjust and unreasonable for a carrier not to pay the compensation. It's not just simply a question of an ipse dixit, it's a question of years of rulemaking and working out what the scheme should be, so it's fair. Once it did that, it didn't require a lot of explanation for why a failure to pay fair compensation that had been worked out over this period of time, a failure to pay that was unjust and unreasonable. Ruth Bader Ginsburg: Are you making the point that Chief Judge Ginsburg made in the D.C. Circuit that it is necessarily unjust and unreasonable to refuse to pay a charge that is fair and reasonable? James A. Feldman: Yes. I'm really expanding on that point, that it didn't... the FCC has always gotten deference for what... determining what is unjust and unreasonable under the Act. And it didn't require a great deal of explanation. The FCC's explanation here was more than adequate in light of its years of explanation about why this... this scheme with these rates and these carriers and the primary economic beneficiary being the one who pays. All of that were reasons why this was fair compensation. Once it decided all of that, it didn't take much to say that a failure to pay fair compensation is unjust and unreasonable. That was adequately explained and didn't require a huge additional amount of explanation. John Paul Stevens: What... sorry, go ahead. John G. Roberts, Jr.: So you would have a different position here if 276 said something like, we think there ought to be more pay phones; in order to promote investment in pay phones, we're going to have this scheme. In other words, it has nothing to do with whether it's fair or not, it's a subsidy. Then you'd say that could be something that's not covered by the "just and reasonable" provision? James A. Feldman: I think in that case also, I would probably be here arguing that maybe if the FCC had determined that it's necessary, for whatever regulations they came up with under that scheme, in order for the Act to function correctly, that they have to be complied with. I think I would also argue that that was unjust and unreasonable. But this case, if the question is, did the FCC adequately explain what it did here, I think that all of the years of explanation of why something is fair are also reasons why it was unjust and unreasonable not to pay the compensation. Ruth Bader Ginsburg: Are there regulations, FCC regulations, the violation of which would not be unfair and unreasonable? James A. Feldman: I think there probably are. Mr. Englert mentioned a couple. I mean, there's probably numerous ones that wouldn't be. And in fact, the question about most FCC action, or at least a lot of FCC action, regulations, adjudications, and so on, most of them have to do with carriers' obligations, and most of them are things that have to do with what's unjust and unreasonable under the Act. And they've been enforced for years, in the... you know, from the very early cases under the Interstate Commerce Act. Mr. Fisher also suggested that there's a difficulty with numerous district courts deciding these issues as opposed to the FCC. Well, I would suggest that Congress decided that these kinds of actions can go either to district court or to the FCC. And in fact, by making damages actions, the scope of damages actions, as opposed to other remedies, co-extensive, did anticipate that there would be that result. The primary jurisdiction-- Antonin Scalia: Depending upon how broadly you think Congress intends regulations to be sucked into the terms of this statute. I mean, your interpretation means Sandoval really didn't say a heck of a lot. James A. Feldman: --I don't think that that's correct. It means that in the context of a statute that gives the agency authority... that prohibits unjust and unreasonable action, which was not the case in Sandoval-- Antonin Scalia: Yeah, but you could say any violation of a regulation is unjust. James A. Feldman: --No. I think it is possible that the FCC could determine that any violation of a regulation is unjust, and the FCC is entitled to deference for its determinations about what is unjust and unreasonable, that's been-- Antonin Scalia: So Sandoval doesn't mean a heck of a lot. All the FCC has to say is, we think violation of this regulation is unjust. James A. Feldman: --No. I think the FCC's determination has to be reasonable under the ordinary types of Chevron standards. But, in fact, when you look at questions of what's just and unreasonable over the years, it is... it has always been the case that the agency entrusted with determining that and getting the communications system working or getting common carrier systems... common carriers to fulfill their obligations, does have a lot of leeway in determining what is unjust and unreasonable in that context. Thank you. John G. Roberts, Jr.: Thank you, Mr. Feldman. Mr. Fisher, you have three minutes remaining. Jeffrey L. Fisher: Thank you. Let me begin, Mr. Chief Justice, with your question about whether the FCC can opine on remedies. All you need to do is look to what the FCC was telling everybody it was deciding in these order proceedings. It was deciding, and asked for notice and comment, on whether PSPs have a remedy for violations of the pay phone regulations. That is cited everywhere in the briefs. It never asked for notice and comments, or considered whether failure to pay under the regulations is a violation of 201(b). So the question this Court needs to ask itself is when the FCC, by its own acknowledgment, until now, is simply opining on the presence of a Federal court remedy, whether it gets deference simply because it hangs the hook on a substantive provision of the statute. Now, there are three problems with what the FCC has done in construing section 201. The first is that this is not a covered practice, because I want to make clear our position, it's that the FCC has plenty of authority with respect to carrier-customer relationships, but not with respect to carrier-supplier relationships. And that's what we have here. On unjust and unreasonable, I think we need to unpack two separate questions. One is whether the rate the FCC chose is reasonable, whether the amount of money that it said needs to be put into pay phone operators' pockets is a fair and reasonable choice. We have no dispute about that. And we think that in and of itself could generate deference. But the FCC's determination to put the payment obligation on long distance carriers simply can't be shoehorned into the unjust and unreasonable phrase in 201(b), because if that's... the only reason why anything, us failing to pay the money, would be because of the regulations. And you hear it again and again in their argument, the FCC having concluded that long distance companies are the ones that pay, the failure to pay is unjust and unreasonable. There's no way to get there without the regulations, and that's what distinguishes-- John G. Roberts, Jr.: That's not true. You can say that this is a way you make a lot of money from your customers that you wouldn't otherwise make, because if there wasn't a pay phone there, they wouldn't be able to use your service. Jeffrey L. Fisher: --The FCC might have said that, but as I said to Justice Souter, that would be a very different proceeding and a very different scheme than we have here, and a very different dollar figure or cent figure that the FCC might have come up with when it was trying to encapsulate that figure, which we think is zero, but under your reasoning may be something very small. But that would be a very different case. Two more things. One is, on the jurisdictional mismatch question, Mr. Chief Justice, you are exactly right. It is not hard... there are plenty of hard things in this case, but figuring out whether a call is interstate or intrastate is not one of them. All you need to know is where the call originated from, and the number that was dialed, and pay phone operators have that information. John G. Roberts, Jr.: What about the cell phone example? Jeffrey L. Fisher: This is a pay phone case. So all you need to know is the cell phone number and that-- John G. Roberts, Jr.: But you don't know, the cell phone holder may be right next to the pay phone or he may be across the country. Jeffrey L. Fisher: --I think it still constitutes a long distance call, depending on where the cell phone owner lives. And that's still an easy thing to figure out, where the area code is. Finally, Justice Stevens, you asked a question about the co-extensive nature of the remedies under 206 and 208. We don't dispute that the statute itself is co-extensive. What we're saying is that 276 gives the FCC more than ample authority to do what it's doing. Nobody has denied that, and so we think that that's the place to look for the FCC to craft the arrangement under Southwestern Cable. Combined with section 154(i), the FCC would have ample authority to do that. John G. Roberts, Jr.: Thank you, Mr. Fisher. The case is submitted.

Earl Warren: Number 32, the United States of America, appellant, versus A & P Trucking Company and Hopla Trucking Company. Mr. Spritzer, you may proceed. Ralph S. Spritzer: Mr. Chief Justice, Your Honors. These two companion cases involve two motor carriers, both doing business as partnerships, both of them sued as partnerships. Both were charged with misdemeanors in that they had violated certain regulations of the Interstate Commerce Commission. The informations were dismissed in both cases on the same day by the same judge on the ground, and this is a quotation from their respective orders, “On the ground that a partnership as an entity, is not subject to liability under the Section set forth.” Since that holding of Court involved a determination as to the scope or coverage of the statute this case is hereon direct appeal. There is no dispute between the parties, let me say at the outset, that the informations here run only against partnership entity. No partners were charged as individuals with that. Thus the ultimate question, a question of course on which the Court below ruled against the Government, is whether the partnership's defendant charged as such, could be penalized under the regulatory statutes involved. The statutes under which they were charged are two in number. And the first of these is Section 222 (a) of the Interstate Commerce Act which is set forth at page two of the Government's brief and that as, Your Honors will note, is the comprehensive misdemeanor Section of the motor carrier part of the Interstate Commerce Act. It provides in substance that any person knowingly violating any provision of that statute or any rule or regulation promulgated under the motor carrier provisions, or any condition of operating authority, is subject to fine as prescribed, the fines under that Section running from one through $500. 222 (a) should be read in conjunction with 203 (a) printed immediately below it in our brief, which is the definition Section appearing of course in the same part of the Interstate Commerce Act and that defines person to mean any individual, firm, co-partnership, corporation, company, association, et cetera. The other statute which is involved in these informations is 18 U.S.C. 835 in provision of the Criminal Code, which relates exclusively to the subject of carriage of explosives or other dangerous articles and that is set out at page 4 in the Government's brief. It provides, as Your Honors will note, that the commission shall promulgate explosives regulations, which shall be binding upon all common carriers. It then provides in the penalty Section that whoever knowingly violates is subject to fine or imprisonment. In a case such as this where no death or bodily injury is involved, the fine maybe as much as a thousand dollars or imprisonment for as long as one year. There is a definition Section to be examined in connection with that statute. There is the general definition Section of the United States Code in 1 U.S.C. 1. It says that the word, “whoever” includes corporations, companies, associations, firms, partnerships, and so forth, unless the context of the particular Act indicates otherwise. This statute to which I've last referred, 18 U.S.C 835, is the same statute, Your Honors, will recall, which was involved in the case of United States against American Freightways which was here in the 1956 term. In that case, a District Court had similarly dismissed an information in that instance laid exclusively under 18 U.S.C. 835 on the ground adopted here by the District Court in New Jersey, that the partnership was not liable. The dismissal in that case was affirmed by this Court by an equally divided Court. So, the issue under 18 U.S.C. 835, as to the amenability of the partnership entity is one as to which this Court has not definitively spoken. So far as the other statute which is here today is concerned, 222, that issue has not been before this Court at all. I'd like to attempt to deal with the problem raised by this case, if I may, in three steps. First, as we see it, there is the question which I think need not to detain one long whether Congress has the power, the broad power, to treat a partnership as a distinct entity to personify them for purposes of a particular regulatory statute. The second question, assuming there is that power is whether Congress in enacting the statues here involved, had the requisite purpose and has adequately expressed it. And third, there is the question which is stressed by appellees, whether the fact that the statutes here involved call for proof of knowledge or of willfulness creates an obstacle to the result of the Government is urging, namely, holding the partnership entity perhaps on the basis of the acts of its agents. William O. Douglas: Failure to (Inaudible) Ralph S. Spritzer: I'm sorry, I didn't hear you on this question. William O. Douglas: What was your reservation? You just said, I didn't -- Ralph S. Spritzer: I said, appellees draw comfort in arguing that a partnership is not amenable to this statute from the fact -- to these statutes from the facts that the statute used -- statute used the words, “knowingly” and “willfully”. Now, our position as to that -- William O. Douglas: And no -- no charge in these cases that the partners had -- were culpable? Ralph S. Spritzer: No. We did not allege that the individual partners personally knew. In other words, our theory is, that when we charge a partnership as an entity, then we can make out the offense in the same way that we could when a corporation is charged as to the defendant namely, by proving the knowing, conscious violation of anybody, agent or employee of the company acting in the course of the company's business. William O. Douglas: You go -- you go all out for the -- for the entity theory in that that has been incorporated in these statutes? Ralph S. Spritzer: That's right. Speaker: And then limit I gather the penalty to apply. Ralph S. Spritzer: Necessarily limited because we say to the Court, a partnership organization, a partnership entity can't be put in jail any more than a corporate personnel. In other words, we can say the only penalty that is applicable when the business organization as such is the defendant is defined. Now, of course, Section 222 only provides for a fine and the imprisonment aspect is limited to the other statute, the explosives statute. Felix Frankfurter: So that, from a (Inaudible) legally speaking, there would be no incongruity. I'm saying legally. Not exactly for policy or -- but legally speaking, there would be no incongruity in saying in Section 2 or 3, Congress in effect said, they adopt the entity theory for Section 222, but Congress didn't do it, but 18-835. Ralph S. Spritzer: Well, I -- I would -- Felix Frankfurter: Legally speaking. I'm not -- I'm not saying argumentative the -- the implication, isn't that right? Ralph S. Spritzer: Well, I think it would depend on Congress -- Felix Frankfurter: Exactly. But -- Ralph S. Spritzer: So, I don't think there would be any incongruity. Our argument -- Felix Frankfurter: What you're saying is that when Congress does define a person to include a partnership, that is mitigating your act against the Government's perspective (Inaudible) the opposite the entity theory. Ralph S. Spritzer: Yes. It permits us to proceed in the same way with what ends in corporate offense. William J. Brennan, Jr.: The same, Mr. Spritzer, the 222 was not before us in the Freightways case -- Ralph S. Spritzer: That is correct. The information in -- in the Freightways case involved only 835. Now, in this case, we have as one (Voice overlap) Hugo L. Black: That's one of the same rules would apply to unincorporated association of persons. Ralph S. Spritzer: Unincorporated associations, yes, sir, the same rule is invloved. Hugo L. Black: Criminal liability? Ralph S. Spritzer: Under a commercial offense of this kind, yes, Your Honor with the punishment restricted to a fine of the entity (Inaudible) Felix Frankfurter: It leads us to a much easier problem in view of the State and such a corporation on the particular state law (Inaudible) Ralph S. Spritzer: Yes. Well, of course, associations would vary I suppose in the -- Felix Frankfurter: Yes, that's right. It depends on -- the state law may -- may have really assimilated them to a corporation. Ralph S. Spritzer: Yes in some instances (Inaudible) so. Now, as to the first of these three (Inaudible) namely, all power of Congress, our position is simply that a State may adopt if it chooses the civil law or entity theory of the partnership on the grounds of varying degrees or varying purposes and Congress similarly, if it chooses and may do so for purposes of a particular regulation or statute within the federal power. Potter Stewart: Well, the opposing counsel doesn't quarrel with you on that basis of proposition. So far as constitutional power, if you call it broad power of Congress, there's no constitutional issue here. Ralph S. Spritzer: I would – no, certainly no constitutional issue there. Our opponent does seem to say that -- suggests that Congress has never gone the -- under the common law theory because we point these numerous regulatory statutes which we didn't (Inaudible) under which quite specifically, Congress has defined persons who embrace various types of business organizations. And I -- I won't carry any longer on this point except to say one word about the Adams Express case because that is opposed to the situation we had here. It involved regulation of a carrier and that is -- it's a railroad carrier under the Interstate Commerce Act Part I. And in that case, Adams made the defense when it was charged with a regulatory violation that it couldn't be fined because it was not a corporation. It was an unincorporated association and Justice Holmes speaking for the Court said in that case that there could be no question of Congress' power, these are his words, “To charge the partnership assets with the liability, and to personify the company so far as to collect a fine by proceeding against it by the company name.“ Well, going on then to the question of Congress of the purpose in these acts, I've already referred to the passing with me referring to the brief. Section 222, of course, covers the whole gamut of regulatory offenses in Part II of the Interstate Commerce Act and where one to go through the various Sections which imposed the multiple requirements to which motor carriers are subject, one would find that invariably, these Sections impose the obligation upon carriers. That is true similarly of the implementing regulations promulgated by the commission. The whole function of this statutory scheme is to require all carriers to live up to the prescribed and acceptable standards of performance and we think it would be anomalous if the statutes were interpreted, particularly in the case like this where there is a fine for a business offense, we think it would be anomalous if one could proceed against the corporate defendants, but not against the carriers as such doing business in other forms. Speaker: Do you have any idea as to whether (Inaudible) Ralph S. Spritzer: It's very unusual in the case of rail carriers but quite common among motor carriers. We have listed in an appendix to this brief beginning at page 38. “Prosecution is a partnership under Part II for a two plus year period.” These are all unrecorded cases in which there were successful prosecutions of motor carrier partnerships. There are very few reported cases which raised this issue because nobody raised it until after the information was dismissed in the American Freightways case. Up until that time, there has been countless prosecutions in the District Court in which it had been either assumed or has been overlooked the point. We've also listed in that appendix many other unreported cases under other regulatory statutes in which the Government has proceeded against partnership. Some of those statutes that do not require a proof of willfulness or knowledge if you're looked into. Speaker: (Inaudible) Ralph S. Spritzer: I understand that it had. There is no opinion (Inaudible). I understand there had been cases under Section 222 in which a sole proprietorship was stood by the company name. I believe they were terminated either by a no-law plea or by guilty plea and upon so, there is no opinion of which I'm aware discussing that issue. Speaker: (Inaudible) Ralph S. Spritzer: I don't think so. Felix Frankfurter: In those cases, there -- was it been on the (Inaudible) that some theory of the decision? Ralph S. Spritzer: Well, as I -- as I say, the only cases we have are unreported cases, cases which did not result in an appeal. So, there's no opinion to -- there is no basis for an answer. Felix Frankfurter: Well, there might be in the District Court. There might be in the District Court. Ralph S. Spritzer: Yes, but then not (Inaudible) opinion on that. Now, I've already mentioned so far as 835, 18 U.S.C 835 is concerned, that we place heavy emphasis upon the declaration in the statute itself that these regulations shall be binding upon all common carriers. Felix Frankfurter: What was the initial date of 18 U.S.C. 835? Ralph S. Spritzer: Its predecessors go all the way back to 1866, which accounts I think for the fact that it is a provision of the Criminal Code and never has been brought into the Commerce Act. In 1866 after some disasters involving the carriage of nitroglycerin, Congress provided regulation of itself and the offenses remained incorporated in the Criminal Code ever since. So, some time after the enactment of the Commerce Act, Commerce -- Congress delegated to the Commission the function of promulgating regulations and it's made the penalty attached to those commission regulations for violation of them. Hugo L. Black: Do you know, Mr. Spritzer whether there has been any effort to get Congress to clarify these provisions of the law since the American Freightways case decided here by an equally divided Court? Ralph S. Spritzer: I do not know of any, Your Honor, but I will. I have not made any exhaustive check of that, and if I should find that there has been any bill introduced, I will inform -- introduce -- I'll inform the Court. I would be very much surprised if there has been any hearing or committee report on that that I don't know (Inaudible) Earl Warren: We'll recess --

Warren E. Burger: We will hear arguments next in Nachman Corporation v. Pension Benefit Guaranty Corporation. Robert W. Gettleman: Mr. Chief Justice, and may it please the Court. My name is Robert Gettleman and I am the attorney for the petitioner, Nachman Corporation. This case presents one of the first opportunities for this Court to examine the Employee Retirement Income Security Act of 1974, known by its acronym ERISA, and the first occasion directly involving interpretation of specific exceptions to that statute. Significantly, it involves the operation of ERISA at its initial stages. The Nachman Corporation was an employer which terminated a pension plan in December of 1975, and which under the terms of that plan was not required to continue to fund any more payments under the terminated plan. Prior to ERISA, Nachman was governed by the Internal Revenue Code and the common law of contracts, and those laws allowed an employer to do just what Nachman did, terminate a plan and under its terms not be liable for further contributions. The issue in the case is whether ERISA prior to 1976 changed the rules to require an employer such as Nachman to continue to fund the plan. The case requires an examination both of the terms of ERISA itself and of the various provisions of the plan. And first I would like to just briefly describe ERISA. That statute was enacted in September of 1974 as an attempt by Congress to cure many of the problems which were plaguing private pensions in this country at that time. Among those problems was the issue involved when a plan terminated with insufficient funds to pay all the benefits under the plan. In Titles I and II of ERISA, and it was a four-title Act, the statute prescribes for the first time that a plan must provide a certain minimum level of benefits and that these benefits have to be what was defined in the Act as non-forfeitable benefits. That means unconditional and legally enforceable benefits. It also provided that the employer must undertake to fund those benefits. In Title IV of the Act, ERISA established a termination insurance program to be operated by the Pension Benefit Guaranty Corporation, the respondent in this case today. Warren E. Burger: Do you equate that statutory language legally enforceable to mean legally collectable? Robert W. Gettleman: Under the facts of this case, I think that they are synonymous because the rights under the particular plan that Nachman had with its employees were not enforceable or collectable because of the various provisions of the plan which made -- which precluded further employer liability, which allocated benefits on termination in a particular type of order, and benefits that are at issue in this litigation, Mr. Chief Justice, are those benefits which were not funded. There were benefits which were funded under the Nachman plan and to that extent we are not in litigation. We are only talking about the unfunded benefits. They were neither collectable nor enforceable nor unconditional and they did not meet the statutory term of non-forfeitable or the statutory definition of that term. And it is important to remember that the PBGC guarantees under Title IV only non-forfeitable benefits under the terms of a plan. And it is also important to recognize, as this Court has done, that Congress when it enacted ERISA paid great attention to the types of problems which would be created by the new requirements of this statute. It did not make the entire statute effective immediately but provided grace periods during which certain provisions would be phased on before compliance was required. Among those provisions was the minimum benefit provisions of Titles I and II and the non-forfeitability requirement of Titles I and II. Those provisions did not take effect until plan years beginning in January 1976. William H. Rehnquist: Mr. Gettleman, is it your position that after January 1, 1976, an employer and a union could not negotiate a plan in which disclaimed personal liability on the part of the employer -- Robert W. Gettleman: Basically, yes. The Internal Revenue Service has dealt with types of limitation clauses which might be permissible even after 1976. There is no question that the type of clauses in the Nachman plan would not have been permitted after 1976. William H. Rehnquist: But how about a specific disclaimer of liability on the part of the employer as opposed to the plan? Robert W. Gettleman: No, that would not have been, that would not have been allowed. William H. Rehnquist: You say after January 1, 1976, that is not permissible? Robert W. Gettleman: That is not permitted, that's right. The General Motors Plan -- they are an amicus on behalf of the respondent -- and some other plans apparently have limited liability to the assets of the plan or to the PBGC guarantee, which means basically that all of the protections of Title IV are incorporated by reference into the plan. But the type of limitation clause or disclaimer clause that we had would not have been permitted, which was basically a general disclaimer. We are obligated to pay a certain amount into the plan and after that we have no further liability. That is no longer allowed. This case arises because the non-forfeitability requirements were effected in 1976, but the termination insurance program went into effect upon enactment in 1974. The difference between those two dates really raises the issues which are presented in this case. I would like just briefly to discuss the plan. I have already discussed it somewhat, but I would like to go back a bit and discuss the type of plan we have here before the Court. It was established in 1960 for certain employees of Nachman's North Chicago plant as a part of the collective bargaining agreement between Nachman and United Auto Workers which represented those employees. United Auto Workers is an intervening party in this case. It was part of a package of wages and non-wage compensation bargained collectively between the parties to this plan. It was what was known as a combined benefit plan and it provided various normal retirement benefits, that is benefits that would be payable upon the reaching of normal retirement age, in this case 65, as well as certain early benefits and disability benefits. It required the employer to make contributions annually into the plan based upon an actuarial table which contemplated that if the plan remained in existence thirty years and if that level of benefits was maintained, all benefits in the plan would be fully funded, and the reason that all benefits in this type of plan were not fully funded immediately is because the contributions were based on hours worked. Contributions based upon current service were paid currently; contributions based upon services rendered before the establishment of the plan were based upon a thirty-year amortization schedule. This is still permissible under ERISA. Unfortunately, however, Nachman was compelled to close its plant for economic reasons in 1975, after only fifteen years, and therefore terminated the plan. It did so lawfully. There is no question or contest that it did anything improper in terminating the plan. It obeyed the terms of the plan which governed the rights of the parties upon termination. One of them is a term I mentioned in response to Mr. Justice Rehnquist's question and that is it was a normal type of what was called a disclaimer clause, but it said more than just we disclaim any further liability. Article V of the plan told the employees that they could not look any further than the assets in the plan at the time it terminated to get their benefits. William H. Rehnquist: Well, those two are the same, to say we disclaim any personal liability and to say you couldn't look any further than the assets in the plan. There is no difference between those two. Robert W. Gettleman: I think it goes a little further than just saying that, than just saying we disclaim any more liability. It says to the employee, your benefits will be paid from the assets, and part of the issue and part of the Seventh Circuit's dissertation on the definition of non-forfeitable contained in the statute was that these were not claims that could be asserted against the plan. We say that that clause says both that you cannot assert a claim against the employer or the plan, but there are other provisions in the plan, Mr. Justice Rehnquist, which govern the rights of the parties upon termination. Article IX of the plan provides that it was allowed to be amended to comply with changes in the law but that no such amendment would affect the level of contributions required of the employer under the terms of the plan. This was obviously for the benefit of both the employer and the employees, and it protected the integrity of the bargain between those parties. Article X of the plan governed termination and allowed either side to terminate upon 60 days' notice but not during the term of a collective bargaining agreement, again an effort to protect the integrity of the collective bargaining agreement and the collective bargaining process. Byron R. White: Mr. Gettleman, could I ask you a question while you are going through the plan here because it may bear on what you are saying. Supposing the termination occurred a year later, in January of 1977, and at that time I would suppose there would still be the same provisions in the trust agreement to the pension plan and it would still be unfunded, some of the benefits would not be funded. Would the insurance coverage apply then? Robert W. Gettleman: To answer the question directly, yes, but the plan would have been amended in 1976. Byron R. White: The statute would have required it? Robert W. Gettleman: Yes, because at that time all plans were required to provide a non-forfeiture benefit. These types of provisions would have been amended out and plans all over the country employed many lawyers amending these provisions during that period of time. William H. Rehnquist: And they would have been amended out whether the collective bargaining agreement provided for such amendment or not, wouldn't they, simply by force of Congress' action? Robert W. Gettleman: That's right. At that time the congressional direction overrode the contract between the parties, but not until that time, and our plan terminated before that time and that is really the point of this whole case. Our plan and obviously some others terminated prior to 1976. There is just one other provision of the plan that I would like to mention briefly and that is that when the plan terminated, an allocation schedule was set up in Article X which divided the assets according to six categories of employees, basically the oldest first, those getting benefits at the time of termination, those eligible to receive normal retirement benefits, and on down. When a category was reached for which there were insufficient assets, the assets were distributed pro rata to that category and there were no further rights to receive any other benefits under the plan. I think it is important to emphasize that this was a legal, lawful tax qualified IRS approved pension plan at the time it terminated. It met all of the provisions of the governing law. Byron R. White: So you would be making your same argument between two plans if one is terminated the day before the deadline and one is terminated the day after, but things are just different? Robert W. Gettleman: That's right, and that is exactly what Congress intended. That is precisely what Congress intended. Byron R. White: Even though the relative burden on the company is exactly the same? Robert W. Gettleman: But the company had the opportunity to adjust to the new requirements. Byron R. White: You only had a day. Robert W. Gettleman: No, no. Your Honor, this is a 16-month period between enactment and the effective date of these requirements and during that time our collective bargaining agreement expired and we were allowed to terminate the plan. It is important to keep in mind that our plan was terminated practically at the earliest date we could have because on September 2, 1974, when ERISA was enacted, we were right in the middle of a three-year collective bargaining agreement which expired in October of 1975. Byron R. White: And when did this plan expire, during the grace period? Robert W. Gettleman: Yes. Byron R. White: So you are still saying there is a difference between the day before the grace period is over and the day after? Robert W. Gettleman: Yes. We could have picked November 1st. We picked the last day of the grace period for administrative convenience and to make our lives easier, I suppose. But it was in 1975 and that was the operative fact. I think it is also important to emphasize once again that this was a collectively bargained plan. The employees were represented by a major union in this country and certainly had no right or no reason to expect anything other than what the plan provided. They certainly had no reason to expect prior to ERISA that the employer would be liable to continue to fund this plan after termination. That is what they bargained for, that is what they got. When the plan terminated, which was not a particularly happy event for anybody because the plant closed down, when the plant terminated there were approximately $575,000 which had been contributed by Nachman over the fifteen years. This sum was enough to pay everybody who was receiving benefits and everybody who had worked for Nachman ten years who was over the age of 60. Below that category, however, there is no question that there were insufficient assets to pay the remaining benefits. And again, there is no question that had this plan survived that other day, it would have been required to provide a truly non-forfeitable benefit, but it is just as clear that prior to 1976 it was not required to provide a non-forfeitable benefit. And since the Pension Benefit Guaranty Corporation insures only non-forfeitable benefits and the employer is liable to the PBGC to reimburse them for any benefits so insured and actually paid by them, the issue then is whether these benefits were non-forfeitable under the terms of the Nachman plan. The District Court held that they were not, that they were forfeitable and properly forfeited. The Court of Appeals disagreed, and this Court granted certiorari limited to the interpretive issue. We also raised a constitutional question but the grant of certiorari was limited only to the interpretive issue. As I mentioned, a term is defined in the statute itself as unconditional and legally enforceable against the plan. Our position really is very simple. We contend that a benefit which was conditioned upon the sufficiency of assets at termination was by definition conditional and therefore for that reason alone not non-forfeitable. We also claim that under the provisions of the plan which I have described, the rights at issue in this case could not be enforced against either the plan or the employer. To be unforfeitable, a benefit must be both unconditional and legally enforceable. We are neither. If we were not just one of those, we would be forfeitable and therefore not insured by the PBGC and therefore the employer would not be liable to the PBGC. The respondents in this case would rather look instead to the statutory definition to PBGC's own definition contained in a regulation promulgated about a year after ERISA was enacted, in September 1975. The definition provides in effect that a benefit becomes non-forfeitable when the employee satisfies all the conditions imposed upon him. It makes no mention whatever, however, of the statutory requirement that the benefit be unconditional and legally enforceable. We claim that that definition is invalid because it contradicts the statutory definition. We claim it is invalid because it is unnecessary because Congress provided its own definition of this term in very clear and unambiguous language. And even more important, we claim that their definition and in fact their whole position in this case is improper and would result in the immediate imposition of liability on Nachman Corporation and employers like Nachman Corporation on the date of enactment of ERISA in September 1974. I think that it is very clear that, although Congress certainly intended to prohibit types of limitation of clauses we had, they just as clearly intended to provide prospective, effective dates and not to impose immediate and retroactive liability. Yet the Court of Appeals in its opinion concedes that its ruling does result in a retroactive effect on Nachman Corporation. This Court has, although not dealt with ERISA directly as in this case, it has compared ERISA to certain other situations which resulted in retroactive changes to pension plans. The first such case was City of Los Angeles v. Manhart, at 435 U.S., in which Justice Stevens, writing for a unanimous Court, found that although a Title VII violation had occurred by compelling women to pay more into a pension plan than men because they lived longer, that a retroactive remedy was inappropriate in that case for several reasons. One of those reasons was the drastic effect that retroactively imposed rules or remedies would have on pension plans, because pension plans were for the future, they look to the future. They make contributions and obligations based upon future expectations. To impose retroactively a burden or a remedy on them had drastic effects, and I quote from page 721 of that opinion -- after going through that, Justice Stevens wrote "Consequently, the rules that apply to these funds should not be applied retroactively unless the legislature has plainly commanded that result." And at that point the opinion cites to ERISA as an example of an instance where Congress did not want retroactive application to a pension plan. And I quote again. "In 1974, Congress underlined the importance of making only gradual and prospective changes in the rules that govern pension plans. The bill" -- citing ERISA -- "The bill paid careful attention to the problem of retroactivity and set a wide variety of effective dates for the different provisions and cites to the exact sections of ERISA which we rely upon in this case, namely that sections which are in 29 U.S.C., section 1061 and 1086, those are the sections that provide the 1976 effective dates. Byron R. White: Mr. Gettleman, do you suppose when I wrote that footnote I contemplated the issue that is before us now? Robert W. Gettleman: No, Your Honor, but you recognize the congressional intent that we rely upon in this case. That was Title VII. Byron R. White: That wasn't the proposition, that there are staggered dates in ERISA, of course there are a lot of other staggered dates in ERISA. Robert W. Gettleman: That's right, but that is precisely the point. Congress didn't make the act effective immediately. They didn't make the more burdensome provisions of that act -- Byron R. White: They did make one thing effective immediately, Mr. Gettleman, and that is the insurance program. Robert W. Gettleman: Yes. Byron R. White: What does that insure during the period prior to the date of your termination of the plan? Robert W. Gettleman: It insures by definition the same thing it insures after that date, non-forfeitable benefits under the terms of the plan. Byron R. White: Is the purpose just to insure against the possibility that the money contributed to the fund will have been dissipated or stolen by the trustees? Robert W. Gettleman: No, most funds, you must assume -- and I think it is true -- are operated honestly and the reason that there was insufficient funding was because of this past service liability, the contributions for the years before the establishment of a plan were substantial. Byron R. White: You are not talking about the risk of dissipation of funds or maybe poor investments. What did the insurance program insure? Robert W. Gettleman: Okay. During that period of time, we know from an affidavit filed in the District Court by the PBGC itself that there were -- I am trying to get the exact number -- 136 plans which terminated during the grace period which had insufficient assets upon termination. Forty-three percent of those plans had non-forfeitable benefits, even though they weren't required to at that time they provided them. They did not have the limitation clauses which we had in our plan and which the remaining 57 percent had in their plans. There is $20 million worth of benefits insured under that program during the grace period. We think it was a significant role that the PBGC played during the grace period. After the grace period, all plans were required to provide non-forfeitable benefits and all plans and all benefits which were non-forfeitable as they were required to be were therefore insured. The PBGC during the grace period also had to set premiums. It was a brand new agency. It had to get established and set its housekeeping regulations. So when you put Title IV and Titles I and II together, it demonstrates a cohesive scheme to get this program rolling to give people time to adjust, not to impose retroactive liability, not to impose immediate and substantial liability on employers which had never bargained for and never expected to and perhaps could not pay that type of price. Harry A. Blackmun: Let me ask one other question, if I may, on the plans that were terminated during the interval before the date here and after the enactment of the act. You say about half of them or whatever the figure was had non-forfeitable benefits. Robert W. Gettleman: Yes. Harry A. Blackmun: Did they also have provisions in them that the employer was liable for the full amount of the benefits -- Robert W. Gettleman: They did not limit the employer's liability. Harry A. Blackmun: Then if that were true, I still don't see why you needed insurance, because -- Robert W. Gettleman: Because they terminated with insufficient assets. Those plans terminated -- Harry A. Blackmun: If they terminated, wouldn't there be liability on the part of the employer? Robert W. Gettleman: There would but the employer, one, could be insolvent; two, there was a 30 percent limitation -- Harry A. Blackmun: The risk being insured against was the insolvency of employers whose plans would terminate when there would be an obligation to pay the full amount of the benefits? Robert W. Gettleman: More than just that, Your Honor. The termination insurance program provides an easily accessible uncostly efficient administrative scheme to pay pension benefits to the average employee of a plan. If a plan were to terminate and the employer for one reason or another denied liability or didn't have the money or wanted to stall, they could go to the PBGC and get their pension benefit, and it was up to the PBGC to go after the employer under the statutory subjugation. That is the case today. That is the case today, because even though the plan must provide a non-forfeited benefit it still needs to fully fund the plan on a current basis. And even today an employer can go out of business -- not go out of business -- an employer could terminate a plan if he has a right to do so, and if he goes out of business and is insolvent, the employees go to the PBGC. Even if he is not, the employees can go to the PBGC. Harry A. Blackmun: Let me ask you one other -- maybe I -- I don't mean to be unfair, but there is reference in the legislative history to the termination of the Studebaker plan in South Bend, I think. Robert W. Gettleman: Yes. Harry A. Blackmun: I think there is some evidence of intent that that situation have been covered. Would you agree that your reading of the statute would cover that plan? Robert W. Gettleman: I have never read the Studebaker plan. It occurred in 1963, I believe, and a large number of -- Harry A. Blackmun: That was a case of insolvency of the employer, I think. Robert W. Gettleman: I don't believe so. I believe it had a limitation -- I believe that plan had a limitation clause similar to ours and the legislature said to both employers and employees or at least employees unions, because we have to assume that they were represented by the unions as well, we are not going to let you limit liability to the employer any more. But they didn't say we are not going to let you do that upon enactment. They said we are not going to let you do that after 1976. William H. Rehnquist: Well, why are unions so critical in your analysis? I mean, couldn't a private individual, simply an employee who was not represented by a union have a contract for a pension plan that would be affected by ERISA? Robert W. Gettleman: Certainly. Today they are all affected by it equally. There are different rules for proprietorships and partnerships which do not relate to this case. With respect to corporate plans, there are even some different rules for collective bargaining plans. Some dates are extended even beyond the 1976 date for collectively bargained plans. But we think the fact that this was collectively bargained really relates to the basic thrust I think of our opponents' argument and much of the congressional concern that these may have been either unilaterally imposed or that they promised illusory benefits. We don't think our plan promised anything that wasn't the subject of arms length bargaining between the employer and employee, and to the extent that there is an equitable argument on the other side we think it doesn't apply to a collectively bargained plan such as the Nachman plan. I would just like to take one more minute and reserve the rest of my time for rebuttal, and that is to mention that the language of the Manhart which I have quoted was also quoted in the Allied Structural Steel case also in 1978 at 438 U. S., where this Court struck down a statute, a state pension statute which imposed immediate liability for all employees of ten years or more, and compared once again the prospective not immediate effect of ERISA in so striking down the state statute, and we are asking really for nothing more than the continued recognition of that congressional intent and purpose which appears on the face of the statute itself. We really don't have to look to legislate debate or committee report. It is right on the face of the statute, and this Court I submit has recognized that very strong intent and the result that should be reached in this case in both the Manhart and the Allied case. William H. Rehnquist: Well, there is no impairment of contract clause applicable against the federal government, is there? Robert W. Gettleman: No, but there would be a very analogous due process argument, Justice Rehnquist, which we did raise in the lower courts. The District Court did not reach that point because it interpreted the statute our way. The Court of Appeals did reach the constitutional question. The grant of certiorari was limited only to the interpretive issue and not the constitutional question. But we think that there could be a very serious constitutional question if the statute is interpreted the way the respondents contend. Thank you. Warren E. Burger: Mr. Rose. Henry Rose: Mr. Chief Justice, and may it please the Court. The Pension Benefit Guaranty Corporation submits that the construction of the Act urged by the petitioner defeats the purpose of Title IV of ERISA. It would effectively destroy a major part of the program. The Title IV program, as has been indicated, is traceable directly to the closing of the Studebaker plant in 1964, where two-thirds of the participants lost almost all of their pension benefits. And after a long study, the Congress decided to create an insurance system to guaranteed certain benefits to which the employees would have been entitled but for the termination of the plan. The guarantee program is administered by a new agency, the Pension Benefit Guaranty Corporation. Its board of directors is made up of the Secretaries of Labor, Commerce and Treasury. The program is financed primarily by premiums paid by all of the plans that are covered by the program. And in order to share the program costs and to discourage unrealistic pension promises by employers, there is a statutory liability on employers who terminate plans. William H. Rehnquist: Mr. Rose, what is PBGC's position as to whether after January 1, 1976 there could be a disclaimer of personal liability on the part of the employer? Henry Rose: There is no question that there could be such a disclaimer. In fact, there always has been and they continue to be almost universal. William H. Rehnquist: So you disagree with your opponent on that? Henry Rose: Yes, Mr. Justice Rehnquist, I certainly do. The statutory liability is less severe than if Congress had made the employers liable to the plans or to the participants for the benefits which the participants had already become entitled to under the plan terms. This liability is measured by the unfunded benefits that the PBGC guarantees, and that liability is to the PBGC and it is limited to 30 percent of the employer's net worth. The Title IV program is one of three distinct programs under ERISA. Lewis F. Powell, Jr.: It is less severe, you said, and it is less severe only by reason of that 30 percent limitation? Henry Rose: No, there are other reasons. There are certain benefits that must be phased in when a benefit increase occurs. And if it hasn't been phased in for the appropriate amount of years, it would not be guaranteed. Lewis F. Powell, Jr.: Is that applicable here? Henry Rose: No, it is not. It is not applicable in this case. Lewis F. Powell, Jr.: And the 30 percent allocation doesn't come into play here, does it? Henry Rose: Not as far as I know. We don't have those facts. Lewis F. Powell, Jr.: So in this case it is neither more nor less severe. Henry Rose: As far as I know, that is true, yes. But we are construing the statute for a universe of 80,000 plans. This is one of three distinct programs under the umbrella ERISA and there are three different agencies with three different effective dates. In general, the Title IV program administered by the PBGC was made effective immediately, that is September 2, 1974. The Title I and Title II programs administered by the Labor and Treasury Departments respectively had deferred effective dates. Now, the congressional sense of urgency about getting the Title IV program under way was so great that they even provided for the coverage of participants in plans that terminated in the two months preceding the date of enactment and for that preenactment coverage the Congress completely waived employer liability. For plan terminations that took place within a nine-month period immediately following the date of enactment, the Congress made a special rule, that is they authorized the PBGC to waive or reduce the employer liability upon a showing of hardship. Now, Congress knew that Title IV had to go into effect immediately in order to provide prompt and effective protection to the employees concerned. And since the termination insurance program operates by statutory rule without the need of plan amendments, there was no reason for delay. In contrast, the vesting standards and related provisions in Titles I and II required plans to make complex amendments. For example, there are three permissible vesting rules permitted by the statute and plans must conform with at least one of them. Congress deferred the effective date of these provisions for 16 months so that employers would have an opportunity to study them and make their choice and to effect the amendments. The reasons for deferring these Title I provisions simply don't apply to Title IV. The guarantee which is the heart of Title IV provides that the corporation shall guarantee the payment of all non-forfeitable benefits subject to the limitations we have discussed. The controversy here turns on the meaning of non-forfeitable. The PBGC adopted a definition in a regulation which fulfills the congressional objective to guarantee benefits for which employees had attained eligibility and would have received but for the termination of the plan. The Court of Appeals accepted the substance of the PBGC definition but it read it into the definition of non-forfeitable found in Title I. That reasoning works in this case in order to reach the right result, because there is no condition here on the participants entitled to a benefit, but that approach might tragically deprive participants in other situations of needed benefits. William H. Rehnquist: So that is apart from the reasoning of the Seventh Circuit at that point? Henry Rose: To this extent, yes, sir. Let me illustrate. Disability benefits are normally conditional on continued disability. There is always the -- William H. Rehnquist: Although it doesn't affect your client. Henry Rose: I'm sorry, sir? William H. Rehnquist: Although it doesn't make any difference in this case which approach you -- Henry Rose: That's correct, it does not make a difference in this case, but we are construing a statute that has to be applied to 80,000 other plans. Byron R. White: I understand but as applied to this one it will reach the same result with either approach. Henry Rose: That is correct. In case of disability benefits there is always the possibility and hope of recovery, and if Title I definition were applied there would be a serious question as to whether any disability benefits could be guaranteeable under Title IV; whereas, the PBGC definition guarantees such benefits as we think the Congress intended. William H. Rehnquist: Do you think that Congress used the terms "vested" and "non-forfeitable" interchangeably throughout the Act? Henry Rose: Yes, I think that is clear, Justice Rehnquist. They did throughout the debates and you will even notice that where the statute says unforfeitable frequently in the conference report or the committee report also used the term "vested." It is not necessary to take the risk that benefits such as disability benefits will have that result. It is clear from the scheme of the statute that it does not call for a rigid uniformity of definition. The Congress itself established three separate definition sections in Titles I, II and IV. All of the definitions in Title I including non-forfeitable are expressly restricted to Title I by the statutory language. Were Congress wanted in Title I definition to apply in Title IV, it would have said so explicitly. For example, Title IV defines the word "administrator" by explicit reference to the Title I definition of "administrator." In contrast, Title IV does not define the fundamental word "participant." There is such a definition in Title I. Title I defines "participant" in very broad terms. That is so that an individual who has a claim under a plan will have ready access to the plan documents, as Title I would give him, and it gives him standing to pursue that claim under Title I. Now, that definition applied to Title IV simply doesn't work. I have already made reference to the fact that the program is financed by premiums paid by the plans. That premium is a function of the number of participants in the plan. And in a number of plans, the administrator has no way of knowing how many people might have claims against that plan. Congress did not define "non-forfeitable" for Title IV purposes and accordingly the PBGC supplied its own. Now, under the Title I definition, a benefit as the petitioner has argued here just a moment ago, a benefit is not forfeitable only when the claims of the benefit is unconditional. Referring to its own plan at page 28 of its brief, petitioner says that the invested benefits were not non-forfeitable since they were conditioned on full funding and were not in fact fully funded and therefore not guaranteed. Well, what benefits could be guaranteed under this theory of fully funded benefits? But that doesn't make any sense. There is no need to establish a new social program through insurance in order to pay benefits that the plan already has the funds to pay. The petitioner argues that the Congress intended the guarantee to apply only in plans that were not conditioned on full funding and by that the petitioner means plans without a limitation of liability clause. But virtually all plans have such provisions. The Congress knew that they did and clearly stated its intent to soften the impact of those clauses on employees through termination insurance. John Paul Stevens: Mr. Rose, your opponent said about half the plans terminated during this period did not have such clauses. Do you disagree as a matter of fact? Henry Rose: Yes, sir. John Paul Stevens: How do we resolve this? Do we have to look at all of these plans? Henry Rose: The fact of the matter is there was an affidavit filed to the effect that 78 out of 136 plans had limitation of liability clauses like the one in the petitioner's plan, but that does not mean that, as the petitioner would have it, that the other plans did not have other language which was just as effective and accomplished the same purpose. It is just that the -- William H. Rehnquist: Why would you file that affidavit? Henry Rose: Well, at that time, Justice Rehnquist, we thought it was enough to show that a majority of the plans had practically identical language, but the fact of the matter is that practically all plans have similar language with the same legal effect. In fact, the proposition that virtually all of the pension plans have had and continue to have limitation of liability clauses is supported by the standard literature in the field. It is a finding of the Court of Appeals below, and it is a premise on which the Congress acted. The Studebaker plan had such a class in 1964 and the Internal Revenue Service includes such a clause in a prototype plan that it issued in 1977, and thousands of plans have been established on the basis of that prototype. Therefore, it is true, as the Court of Appeals observed below, that the petitioner's view would make the enactment of Title IV almost meaningless. Now, reference is made to retroactivity here. The Congress was very clear as to when Title IV was to be effective, and it was immediately. And the Congress specified which portions of the program should have retroactive effect and which not. For example, Title IV certainly had retroactive impact upon participants in plans that terminated in the two months preceding enactment because it made them eligible for benefits under the program. As to the imposition of employer liability, the Congress was careful. It applied -- it imposed employer liability only on employers that terminated plans after the date of enactment. Now, it is true that that liability is measured in part by service of employment that took place prior to the date of enactment, but in that sense it has a retroactive impact. But that kind of retroactive impact would be here whether the effective date of the employer liability was 1974, 1976, 1980, or even later. Let me correct for the Court a couple of impressions that have been left by the petitioner. Reference has been made that the act requires after 1976 a minimum level of benefits. There is nothing in the act that requires any minimum level of benefits. It is not relevant to this case, but I thought it was misleading to the Court. There are minimum standards for vesting, funding, participation and such things, but there are no minimum level of benefits. There certainly is no limitation as the petition suggests on liability clauses after 1976, none whatsoever. I suggest you look at the General Motor clause that is presently in existence, and clearly that is a legal clause. The point has been made that this plan is a collectively bargained plan, and certainly that is true. However, I think it is important for the Court to have in mind the fact that we are construing a statute applicable to a universe on which almost 90 percent of the plans are not collectively bargained. Reference has also been made -- Lewis F. Powell, Jr.: Mr. Rose, let me just clarify one thing in my mind. Your opponent, in response to a question I asked, said that if this plan had been terminated a year later, in that interval between '76 and '77 they would have been required by the statute to amend the plan to make what are now vested benefits also non-forfeitable. Do you agree with that? Henry Rose: No. This plan had non-forfeitable benefits in it already. Lewis F. Powell, Jr.: I understand, but would they have been required to make any change in the plan? Henry Rose: All plans were required to amend themselves to comply with Titles I and II. Yes, if the vesting standards in the plan did not meet the minimum standards for investing, funding and participation, they had to be amended, but that would not affect in any way whatsoever the employer liability or the relationship to Title IV except insofar as the guarantee is related to the plan terms, as the plan terms became improved the guarantee would improve also. Lewis F. Powell, Jr.: I see. Henry Rose: Reference has been made to statutory subjugation. There is no subjugation under this statute, none whatsoever. The liability of the employer under Title IV is a statutory liability to the PBGC. We have no subjugated right against the employer derivative from the participants at all. In closing, let me say that before the enactment of ERISA, the defined -- when a defined benefit pension plan terminated without sufficient funds to pay the accrued benefits that the participants had already accrued, the entire burden of that insufficiency fell on the shoulders of the participants. By enacting Title IV, Congress has made a decision that no longer should that burden of insufficiency be borne by the participants alone. Congress decided that that burden should be shared by their employer and by the premium payers to the PBGC. Warren E. Burger: Mr. Whitman. M. Jay Whitman: Mr. Chief Justice, and may it please the Court. When you are dealing with any statutory issue as we are here, it really makes sense to begin with understanding the problem that Congress was trying to solve. The problem here as Congress saw it was that people who had worked for employers for a good long piece of time were losing their expected pension benefits. Congress wanted to stop that. Congress knew that very often, as a matter of contract, law, these expectations couldn't be met as a matter of contract law. But this isn't a contractual case, it isn't a contractual issue. In fact, the fact that the contractual arrangements were not adequate is what made Congress seek a legislative solution. That is what required a legislative solution. Now, in coming to that solution, Congress was trying to solve a difficult problem and obviously it had to make judgments, to strike a balance at the economic hardships and the economic benefits in them, but that is nothing novel. That is the function of the Legislative Branch. They do it every day. The petitioner disagrees with the burden that was struck in this situation because Nachman voluntarily chose to terminate its plan rather than say freeze the plan. They are now facing the consequence of that termination. But the solution has really nothing to do with the contractual arrangements other than, as Mr. Rose said, they take their measure in some degree from the contractual arrangements. The loss that Congress was trying to prevent, loss of these expectations occurred in a couple of different ways. In on-going pension plans, it occurred because of overly restrictive vesting requirements, the sort of provision we had in the Daniels case, the 20 years, if you don't work 20 continuous years you lose your pension. Or it could have occurred because of lax funding and the money wasn't there or because some fiduciary embezzled the money. Those were problems where the loss occurred in on-going plan situations.Congress was well aware from the Studebaker example, which was a very painful example, and from the Department of Labor and Treasury study which it relied on, the '72 study, that it was entirely possible and indeed generally the case that in plans where you had exemplary vesting requirements and where the funding was not questioned, it was actuarial sound, you could still have a loss, you could still have that human tragedy because of a plan termination short of the full amortization cycle so that the money wasn't there. Now, Title I and Title II, the vesting requirements which petitioner wants to bring into this case, obviously couldn't solve that problem. They couldn't solve the Studebaker problem. You needed Title IV. You needed an insurance arrangement to solve that problem. If you understand the two different sources of the loss and the functions of the different titles, you see, then it is clear why the effective dates of Title I and it really have nothing to do with the method chosen by Congress to solve the problem in Title IV. Now, the legislative history is plain in terms of Congress' intent to make Title IV effective immediately, indeed retroactively. It is also plain that Congress realized that the bulk of the losses occurred because of these limitation liability clauses. That 1972 joint departmental study I think said some 72 percent of the cases, the loss of benefit expectations was 1/1000th of the net worth of the employer that terminated the plan, and only 3 percent of the cases where the loss was occasioned by some insolvency problem because the employer's net worth was down to about the level of the benefits that were lost. Now, turning to the -- Mr. Rose has already spoken about the fact that you really can't square a 16-month delay which follows from Nachman's position with the two-month retroactivity and the none-month post act possibility of a waives. But let me turn to the language of Title IV itself. Throughout Title IV, the language presumes a logical ability to distinguish between the existence of non-forfeitable claims and claims which are not fully funded, and that is not at all odd because it is claims that are non-forfeitable but not fully funded that need a guarantee. Yet, of course, Nachman's position doesn't admit that there can be such a beast. The clearest example of that is in the provisions in 4044(d) the distribution of assets. There is a fifth category which says other non-forfeitable benefits. Well, of course, the existence of that category makes absolutely no sense on Nachman's reading, assuming arguendo we apply 319, and we have good reasons not to. And throughout the other parts of Title IV we have the trustee being charged to do a calculation as to what the non-forfeitable benefits are and what the funds available are. The PBGC becomes trustee in some situation and it is charged with doing that calculation. The trustees have to make reports under Title I as to what non-forfeitable benefits exist that aren't fully funded. Those things are either trivial or nonsensical on Nachman's reading. In conclusion, I would like to address this problem of limitation of liability clause that Mr. Justice Rehnquist raised. Those limitation of liability clauses were lawful before ERISA. They are lawful now. Westinghouse, GM, Studebaker, and others are indistinguishable in result. They serve a real purpose, and General Motors is right to have some trepidations there. They provide that a participant cannot bring a direct action against the assets of, say, the General Motors Corporation for his benefit entitlement. They regulate dealings between the participant and the employer. They have nothing to do with Title IV. Indeed, if anything, it was Congress' purpose in Title IV to make those limitation of liability clauses irrelevant because what they were doing was preventing people from actually coming into possession of their benefits. Thank you, Your Honor. Byron R. White: I'm sorry, could I ask you one question. If they are irrelevant, isn't there an action on the part of the PBGC against the company? I mean I just didn't quite follow that last argument. You said that those limitation of liability clauses protect the company and the plan from direct action by the beneficiary. M. Jay Whitman: By the beneficiary. Byron R. White: But the beneficiary may collect from PBGC or whatever the name of it is -- M. Jay Whitman: PBGC, right. Byron R. White: -- who in turn may collect from the company. M. Jay Whitman: Excuse me, Your Honor. PBGC provides its benefit guarantee by virtue of federal statute 4022. It doesn't stand in the shoes of the company in operating the plan. Byron R. White: I understand. We are addressing the question of what good do these limitation of liability clauses do the company. You say the good is it protects them from a suit by the employee, and my question is what difference does that make if they are going to have to pay to the insurance corporation anyway. M. Jay Whitman: I can illustrate with a simple example. Suppose you have a plan where the level of benefits exceeds the guarantee level, where because of the phase-in rules PBGC's guarantee is substantially lower, which is, by the way, the case in the General Auto Industry plan. In that situation, the limitation liability clause would operate to prevent PBGC from going any further to collect for those benefits above the level. Byron R. White: In other words, the insurance isn't for the full amount of the non-forfeitable benefit, it is only for the amount that the statute prescribes that it must be. M. Jay Whitman: That's right, which in many cases is substantially less because PBGC doesn't guarantee the full sum. Byron R. White: Is there any difference between the benefit level and the statutory mandated level? M. Jay Whitman: In this situation, Your Honor, the benefit levels in the plan were very low. It was a low wage enterprise in the inner City of Chicago and it happens that the PBGC guarantees are essentially the same, perhaps identical. I am not sure the exact figures. Byron R. White: So there are two differences then. One is that the limitation is only 30 percent of the assets, the net worth of the company; and, secondly, it is a different benefit level. M. Jay Whitman: Yes. Byron R. White: And the guarantee is different than the plan level. M. Jay Whitman: Yes. Byron R. White: I understand that. William H. Rehnquist: Mr. Whitman, if the company disclaims liability in its agreements with the employees as to the company itself, you say that Title IV nonetheless entitles PBGC to come after the company under the circumstances specified by Justice Stevens? M. Jay Whitman: No, the limitation of liability clause in the plan would prevent PBGC from pursuing the company on its own assets. PBGC can only pursue the company when its does so under 4062 of the act and then only under the conditions specified. Among those are that 4062 claimed liability can only arise from the fact that PBGC guarantees benefits and only to the extent that it does guarantee benefits. If it doesn't guarantee benefits because of the phase-in rule or because you hit the 30 percent pay, the 4062 liability drops correspondingly. William H. Rehnquist: Okay. But after January 1, 1976, General Motors flatly provided in a contract that there shall be no liability on the part of the company for pension benefits. Now, under ERISA can PBGC come after General Motors if the plan defaults? M. Jay Whitman: If today for some reason that I can't imagine General Motors would -- William H. Rehnquist: Let's say General something or other then. M. Jay Whitman: We should all go home if General Motors terminated its pension plan. If General Motors were to terminate and as a result PBGC had to pay benefits under 4022, which would be the case because there is an unfunded past service liability in the General Motors pension plan, indeed an immense one. Then PBGC would have a 4062 employer liability claim against General Motors for that amount but only that amount. William H. Rehnquist: So then an employer cannot completely disclaim liability and figure that he is home free? M. Jay Whitman: You cannot, an employer cannot by prospective contract get immunity from a legislative enactment, yes, sir, Your Honor. Warren E. Burger: Mr. Gettleman, you have about three minutes. Robert W. Gettleman: Fine. I shouldn't need more than that, Your Honor. Mr. Justice Rehnquist, let me read the clause from the GM contract. It is on page 9 of their amicus brief. "No liability for the payment of pension benefits or supplements under the plan shall be imposed upon the corporation, officers, directors or stockholders except as otherwise may be required by the Employee Retirement Income Security Act of 1974." It is an exercise in tail-chasing but an exercise which is permitted by the Internal Revenue Service. We have cited I think in both of our briefs -- I am reading from page 9 of our reply brief -- the I.R.C. Regulation 1.411(a), which says, "Rights which are conditioned upon sufficiency of plan assets in the event of termination or partial termination are considered to be forfeitable because of such condition." Therefore, it would violate section 203 which requires non-forfeitable benefits. But it goes on to say that the GM-type clause will not be considered to be forfeitable and will be tax qualified. Whether that is a correct provision maybe will have to wait until the day GM does terminate its plan or Chrysler or somebody else. That is not the provision that was in our plan, apparently not the provision in a lot of other plans which had a general disclaimer clause in it. And as far as the affidavit Mr. Rose and Justice Rehnquist referred to, rather than read it, I will just refer the Court. It begins at page 70 and it goes through page 74, and if it doesn't say what I said it said, then I am just not reading the English language correctly either. As far as Mr. Whitman's argument goes, for him to say that the contract is not important is rather odd when the Title IV guarantee by the PBGC is to guarantee non-forfeitable benefits, not period, but it goes on, "under the terms of a plan." You must always look to the terms of the plan to determine whether a benefit is non-forfeitable. And I think it is an odd day when the U.A.W. is before this Court arguing that employees or employers should get something other than they bargained for across the collective bargaining table. To the extent that ERISA changed the rules of that plan, it did so after 1976. The statute holds together when you read Titles I and II, and read them separately -- to read Title I and Title II with Title IV -- to read them separately results in a fragmented nonsensical congressional purpose which I think this Court once again, referring to Justice Stevens' comments in the Manhart case, has found to be very coherent, very clear, and that is the only thing we are seeking today, is the recognition of that congressional intent. Thank you. Warren E. Burger: Thank you, gentlemen. The case is submitted.

Earl Warren: -- et al, petitioners versus Lincoln W. Mulkey et al. Mr Wirin. A. L. Wirin: Chief Justice, may it please Your Honors. I address myself first to answer an inquiry put to Mr. Pruitt by the Chief Justice and by Justice Fortas as to whether or not the provision which we are challenging that we challenged below, Section 26 of the California Constitution, includes or encompasses persons who determine to discriminate in the sale or rental of housing because of race based upon agreement with others, particularly agreements in the nature of restrictive covenants. My answer to the question of Your Honors is different from that given to you by Mr. Pruitt. The text of Section 26 appears as an appendix to the brief for the petitioners as do the valid arguments which were submitted to the voters in California. The first sheet or page in the appendix, right after the blue sheet from the brief for the petitioners contains the text of Section 26. Your Honors will find that the brief for the petitioners and the brief for respondents may carry the similar colors but they're quite different in thrust and in import so far as the arguments presented are concerned. This is called brief for petitioners and it has an appendix following a little blue sheet and the critical or significant provisions of this -- of this entire section is in the first paragraph and I merely refer to the last sentence in the first paragraph and to the phrase, “In his absolute discretion.” And it seems to me that a reading of that phrase stated as broadly as I think the English language permits in his absolute discretion, would certainly include an individual who in his own absolute discretion undertakes voluntarily to arrive in the -- to arrive an agreement with others. All of whom voluntarily agree to discriminate in housing because of race and thus the restrictive covenant. So, it seems to me that a reading of a provision on its face, moreover Your Honors, we challenged below and the court below was of the view that Section 26 is unconstitutional on its face. Therefore, it seems to me what the provision says on its face is -- it is the first consideration. Additionally Your Honors, this section, Section 26 in the fourth paragraph which is the last paragraph on the same sheet, undertakes with precision to carve out certain exemptions. These exemptions are with respect to the obtaining of property by eminent domain and with respect to accommodations for transients. So, when the writers of this provision intended to make exemptions, they were able to and succeeded in setting forth those exemptions with precision, no exemption so far as the unlimited, unrestrained, uncontrolled by the courts, authority of the individual to exercise his absolute discretion no matter the circumstances or the considerations which entered into his -- his own discretion. No such limitation appears on the face of the -- of the section. Moreover Your Honors, I've stated Your Honors that the valid arguments are contained in this -- in this appendix. Your Honors will find nothing in the valid -- valid arguments which suggest any such exemption for persons who determine to discriminate in their absolute discretion based upon such agreements. And finally as to this narrow point, narrow or broad, in addition to the formal arguments which were submitted to the voters on -- to the voters, valid arguments and distributed by the Secretary of State which are attached as part of the appendix to the brief for the petitioners. There is an extended brief by one of amici, namely the United Auto Workers Union and I -- I state simply quickly for Your Honors' guidance, if it is, that attached as appendices to that brief, it is the gray brief, motion for -- by the United Auto Workers. There are arguments made to the voters perhaps informally, but nonetheless circulated by the California Real Estate Association and its subordinate organizations, distributed and circulated by that organization to the voters stating the purpose and the meaning of Section 26. And nowhere in any of the arguments presented to the voters, even informally is there any suggestion that the limitation suggested by Mr. Pruitt maybe -- maybe read into this section. Potter Stewart: Mr. Wirin? A. L. Wirin: Yes sir. Potter Stewart: Under California law, who prepares these valid arguments? A. L. Wirin: They're prepared by persons who are prominent on each -- on each side of the controversy. The decision as to who's prominent is made by the Secretary of State. Potter Stewart: The Secretary of State designates the -- A. L. Wirin: Yes. Potter Stewart: Or perhaps the drafters of the arguments on both sides? A. L. Wirin: That is correct. Potter Stewart: And then they're subject to any editorial supervision by the state? A. L. Wirin: Oh no. We do not have, Your Honor, I mean, (Inaudible) -- Potter Stewart: So anybody can say anything? A. L. Wirin: We have no censorship. Potter Stewart: So once designated by the Secretary of State, the drafter of these arguments can say anything he wants -- he'd want -- A. L. Wirin: That's right. Potter Stewart: -- even though it's a -- A. L. Wirin: I think so. Potter Stewart: Even though it takes liberties with the -- what the -- A. L. Wirin: I think so. Potter Stewart: -- (Voice Overlap) actually does. A. L. Wirin: All I'm saying is that some evidence that this Court may consider as to the legislative history. And after what the proponents thought that the measurement. That's all I'm saying. Potter Stewart: As to what the voters were told? A. L. Wirin: And as to what the voters were told. I should say to you although it's utterly irrelevant that the -- those who oppose the proposition included Bishop Donahue, Dr. Cole, the President of the Council of Churches and a man named Stanley Mosk who happened to be the Attorney General of the State of California and on the other side with the Real Estate Association and its (Inaudible) Now, I -- I deal with another -- Byron R. White: Well, did I -- before you leave this point -- A. L. Wirin: Yes Your Honor, yes indeed. Byron R. White: Let's assume there is a restrictive agreement between property owner and his neighbor that he won't sell to Negroes? A. L. Wirin: Yes. Byron R. White: And then he wants to sell his house, he decides he doesn't want to sell to a Negro? You wouldn't suggest that this -- or do you suggest that the Proposition 14 or Section 26 purports to give the courts authority to enforce that agreement? A. L. Wirin: I think if he changed his mind or he'd have a right to change his mind, but I do say Your Honor -- Byron R. White: And furthermore Section 26 would seem to me that at least you can make an argument that Section 26 itself would bar the courts, would bar the courts from enforcing the remedy, again enforcing the contract against him because now it's not in his unfettered will. I mean to enforce it would interfere with his right to sell as he saw fit. A. L. Wirin: Well, in the example which Your Honor gave, I -- I would agree, but I suggest a converse example that is assuming he enters -- Byron R. White: Well let's -- let's finish this one first. A. L. Wirin: Yes, I agree with Your Honor. That is -- Byron R. White: And the -- and the -- A. L. Wirin: If he changed his mind I think -- I think that would be the end of it. Byron R. White: So this doesn't purport to run -- run upstream against Shelley against Kraemer? A. L. Wirin: I think it does though. Byron R. White: Do you? A. L. Wirin: Now in this way. If he changes his mind and decides not to remain a member of this -- not abide by the agreement which he made, he has a right to do that under this. But if he decides to adhere to the provisions of the agreement, it seems to me because Section 26 broadsidedly prohibits any agency of the State of California which includes a judge thereon from inquiring into the nature of or the basis for the exercise of absolute discretion by the individual. It seems to me that in such a circumstance, a court under this -- this provision is foreclosed from inquiring into the existence of an agreement or the nature of the agreement or whether or not the individual discriminates because of the agreement. Byron R. White: The courts foreclosed from either -- and foresee it or -- or the contrary? A. L. Wirin: Yes, yes, and of course my -- my complaint is that it is foreclosed in the contrary. Now in additionally Your Honors, Mr. Pruitt stated to you to the Court yesterday that it was his view that this provision applies to what he called individual action, the exercise of discretion by the individual and does not apply to action in -- by individuals acting in concert, kind of a corollary to the problem of persons agreeing in connection to -- to have restrictive covenants. Now here again Your Honors, there is nothing on the face of Section 26 since on the face of it, it provides that an individual may exercise his absolute discretion in determining whether or not to discriminate because of race. There is nothing in that section which bars an individual from cooperating with others, in concert or otherwise, in effectuating racial discrimination. And there is not -- there is no such exception in the -- in the Section 26 and no such exception is suggested in the valid arguments and no such exception is suggested by the California Real Estate Association to sponsor for this proposal in the arguments made which were distributed to the voters which as I have indicated are next to the brief of the Auto Workers Union. Now moreover, if I may say so to Your Honors, if it is true, if Mr. Pruitt is correct in his statement to this Court, that this provision, Section 26, does not affect persons engaging in discrimination or -- as a result of acting in concert, then Your Honors are confronted with the following situation. The judgment of the Supreme Court of California and Your Honor, this Court reviews judgments. That judgment merely ordered reverse the judgment of the Superior Court of Orange County. That judgment barred the plaintiff from having a trial on his complaint on the ground that the courts of California by Section 26 were barred from -- from permitting any relief in connection with alleged racial discrimination. Now Your Honors will find in the record at page 4, the complaint which the trial court ruled, stated no cause of action and accorded no right to power, the Court to grant relief and particularly paragraph 8 of the complaint. And Your Honors will find that in paragraph 8 at page 4 of the Reitman, of the multi-complaint against Reitman. He alleges not only acts of discrimination by the owners and by the -- by the Reitman. He alleges that the discrimination which the defendants participated in is also practiced by other real estate brokers and home and landowners and so forth and owners -- in Orange County and throughout California. Now it may be this complaint does -- certainly this complaint doesn't use the word concert, but it certainly undertakes to allege the actions of others as constituting a practice. That means that a practice often is engaged in -- when persons act in concert. So, therefore, if Your Honors accept the view of counsel for the petitioners that Section 26 does not apply to action in concert and since the cases here merely as a result of a sustaining of a motion to dismiss as it were by the trial court, minimally, it is my argument, this Court should affirm the judgment of the Supreme Court of California or dismiss the petition as -- as a -- I guess the phrase is improvidently granted or whatever it is. But now I turn to -- Speaker: (Inaudible) A. L. Wirin: Oh, one further matter that I want to mention quickly in that connection. Mr. Pruitt has gone off the record.I make no criticism on it. That the apartment building involved in the Reitman case had 10 units. In fact I have checked on it and he is correct, but moreover, the complaint alleges that the Reitmans owned -- well, he didn't say this exactly -- virtually says it, have owned other apartment buildings and I am informed and I say this for what it is worth in the Court that the Reitmans, the petitioners here and defendants below are a large institution owning and managing numerous apartment houses in Orange County and constitute one of the largest apartment house owners and operators in Orange County. Now I say this to you Your Honors simply to say that if Your Honors were to follow my argument and affirm the judgment of the -- of the Supreme Court of California, the effect would be merely to permit the plaintiffs to proceed with proof of their complaint including paragraph 8 in the complaint and maybe they can prove what I have just said to Your Honors, I believe are the facts. Now I turn however to what I think is the critical issue in this case and that is whether or not Section 26, both on its face and in terms of its legislative history is no more than a repeal of earlier provisions of state law, whether or not in adopting Section 26, California played the role of neutrality, I think the phrase this Court has used, Mr Justice White has used is the role of strict neutrality. Potter Stewart: May I ask Wirin -- A. L. Wirin: Certainly. Potter Stewart: -- if 26, if you agreed that it did nothing more than repeal the provisions of the Unruh and Rumford Acts actions you've been talking about, would you be here? A. L. Wirin: I am prepared to say I would not because in my view that is not this case. Hugo L. Black: Why? A. L. Wirin: Sir? Hugo L. Black: Why? A. L. Wirin: All right then. I'm going to answer Your Honor's question now in -- in -- with some -- with some detail if I may. Indeed, I was going to say now and I will state that I want to discuss the -- the phrase which you used Mr. Justice Black, namely whether or not a state is barred by the Fourteenth Amendment from remaining (Inaudible), from doing nothing, from hitting his hands off of and playing no role in the matter of racial discrimination. Now my answer to Your Honor is that a state is not barred by the Fourteenth Amendment from playing that role assuming the point, if that is -- if that is strictly the role which it placed. Potter Stewart: How about Shelley and Kraemer? A. L. Wirin: Well in Shelley versus Kraemer, there was affirmative action. There was affirmative action by the courts which was considered to be a violation of the Fourteenth Amendment. Of course I don't -- I don't argue with that case at all, but what I'm saying is -- I'm not discussing whether or not private action or whether they may be relieved from private action or against private action of the courts. I'm merely stating that if a state does not put its thumb on the scales, that it in actual realistic fact it plays the role of strict neutrality. Potter Stewart: Which it did in Shelley and Kraemer because it didn't -- any of the policy or one way or the other. A. L. Wirin: It -- Potter Stewart: Which is a private contract? A. L. Wirin: Yes. But if, namely, the State of California through its courts undertook to enforce that private contract, and to that extent, there was state involvement and I -- so I'm trying not to reach that question until -- until a little bit later because I want to -- if I can and I can agree with Mr. Justice Black and that others -- members of the Court -- Potter Stewart: Mr. Wirin, I was trying to help you in that -- A. L. Wirin: I know you are. Potter Stewart: -- this argument. A. L. Wirin: I know you are. But I'm trying to convince Mr. Justice Black and I -- this will be the first time that I think I'm having difficulty in doing so, but there's always a first time Your Honor. And so I'm saying and I'm willing to rest with the statement that if a state is strictly neutral in fact and in reality that then discrimination by a private person, no matter his motive, no matter how venal his motive, no matter how racist or bigoted he is, it is no concern of the Fourteenth Amendment. Let me say that arguendo or -- or otherwise, but it is our position that California has done more than that in this case. Now I'm trying to begin to answer Mr. Justice Black's question. Now quickly it is arguable and we might be willing to concede. But prior to 1959, a person in California could refuse to sell property, including residential property which he operated as a business and this was no violation of the -- of anything under the Fourteenth Amendment. Concededly also, the State of California entered upon the scene in connection with housing in 1959 where it is up to the law which prohibited discrimination in business establishments which included the business of rental of premises and in -- Potter Stewart: (Inaudible) in the Fourteenth Amendment? A. L. Wirin: No, not at all, not at all. This was something that the State of California could do and it did do, not under compulsion of Fourteenth Amendment and then not under compulsion of Fourteenth Amendment, the Legislature of California determined to do something more than did the 1959 Act, known as the Unruh Act and specifically protect persons from other persons so far as discrimination in housing, in residential housing is concerned and it did that in the other way. All right, this is 19 -- 1963. Now California through its legislature, either the legislature convening in Sacramento or the so-called super legislature, the people of California which under the California Constitution have a right to exercise the power, the equivalent of a legislature, so-called a super legislature. California had a choice Your Honors. There was Unruh, there was Rumford and the California Legislature might have repealed those provisions, if it had, we wouldn't be here. In California, the people didn't have to wait on the legislature because there is a provision for the initiative and referendum and so dissatisfied with the action of the legislature, the people of California had some choices. The people of California by referendum could have repealed Unruh and Rumford. Had the people of California merely repealed Unruh and Rumford, we wouldn't be here and this isn't that case. Potter Stewart: Well Mr. Wirin, what if the -- A. L. Wirin: Yes sir. Potter Stewart: -- Supreme Court of California say that the people of California as a super legislature had done when it enacted 26? In other words, how did it construe 26? A. L. Wirin: The -- the California Supreme Court and this appears more particularly on the record at 27, which is the opinion of the Court, construed Section 26 as an affirmative act by the high legislature of California which encouraged -- that's record 27, which encourage racial discrimination. That phrase appears about halfway down of the first new paragraph. Here, the state has affirmatively acted. Shall I direct Your Honors to it? Potter Stewart: Yes please. A. L. Wirin: All right. I'm looking at page 27. Potter Stewart: I have it. A. L. Wirin: I'm looking at the first new paragraph and then -- one, two, three, the third, the third, the third sentence maybe. Here, the state -- here, the state. Your Honors I'm looking at the record which is a -- which is a -- Potter Stewart: We have it. A. L. Wirin: Well, I don't know whether Justice White have it. Potter Stewart: All right. A. L. Wirin: It's a Manila brown up on page 27 and I'm referring to the sentence, here, the state has affirmatively acted to change its existing laws from a situation wherein the discrimination practice was legally restricted to one where it is encouraged. Hugo L. Black: Now I -- we certainly are concluding by the interpretation of 26, given 26 by the California Supreme Court, are we not? A. L. Wirin: I would -- I would certainly so assume. I certainly so urge. Byron R. White: Does it explain how it's encouraged -- how this action taken in passing 26 encourage discrimination over and above what ordinary repeal would have done? A. L. Wirin: Yes. William J. Brennan, Jr.: Does the Court explain -- A. L. Wirin: It can be Your Honor. That court does not. William J. Brennan, Jr.: Yes. A. L. Wirin: But I have an explanation -- William J. Brennan, Jr.: Well -- A. L. Wirin: -- which I made to that court which the court didn't -- William J. Brennan, Jr.: Well I know Mr. Wirin, but certainly it can either side can expect us. I would suppose, independently to construe 26. A. L. Wirin: Well, I -- William J. Brennan, Jr.: You take -- you take the view that it goes beyond just to repeal Rumford and Unruh. A. L. Wirin: Yes. William J. Brennan, Jr.: Mr. Pruitt takes the position it doesn't go beyond and each of you argues that the -- that the opinion of the California Supreme Court supports your position. A. L. Wirin: Yes. Well -- William J. Brennan, Jr.: Now, if it doesn't, what are we suppose to do? A. L. Wirin: If it doesn't -- Byron R. White: If we can't -- we can't tell which it is what we are supposed to do. A. L. Wirin: I think Your Honors after I state to the Court what is in our briefs with respect to this matter. The Court will see that the Supreme Court of California had a sufficient showing before it, so that it's use of the phrase that this provision encourages discrimination is -- is first supported and then supportable. Moreover -- Byron R. White: Mr. Wirin, why isn't -- why -- why isn't -- maybe the construction of 26 isn't open here, you put it that way, but why isn't the impact of it, the constitutional fact that's opened for review here? A. L. Wirin: I would think -- I would think it is Your Honors. Byron R. White: Is that what you're suggesting? A. L. Wirin: Yes, it's I'm saying. Byron R. White: Even if the California courts that -- don't really explain how and in what respect this encourages discrimination. A. L. Wirin: I think so and this Court has -- now I agree with you Mr. Justice White. I'm agreeing that this Court -- when do the constitutional question always looks at the matter closely, considers the position of the findings of a state court with a great freedom. Hugo L. Black: But Mr. Wirin, (Inaudible) A. L. Wirin: Does it? I was hoping I wouldn't -- Hugo L. Black: (Voice Overlap) -- A. L. Wirin: -- but then (Inaudible) to you Your Honor. William J. Brennan, Jr.: You concede that if this is nothing but a repealer then you wouldn't be here. A. L. Wirin: Yes. William J. Brennan, Jr.: Because there would no constitutional question. A. L. Wirin: Yes William J. Brennan, Jr.: But it is important to know whether 26 is. A. L. Wirin: Yes. William J. Brennan, Jr.: Anything beyond that and we can't tell from the opinion of the California Supreme -- you know, we've had this trouble with your court before in the last couple of years. A. L. Wirin: I thought we have the best court. William J. Brennan, Jr.: You may have but we've had -- only two terms ago we have to send a case back and say, “We don't know what you mean.” A. L. Wirin: Well -- William J. Brennan, Jr.: And now you tell us. A. L. Wirin: But Mr. Justice Brennan I -- I want to say -- I want to argue to the Court that our -- that the legislative history of this proposal which -- which is called to your attention in our briefs as well as the face of this proposal demonstrates that it is affirmative action and not merely a repeal. And I also want to state Your Honors having -- I indicated to you Your Honors that the Supreme Court of California used -- was of the view that this provision encouraged discrimination. In the Snyder case, the record is to the effect. Mr. and Mrs. Prendergast were Caucasian and Negro. The record is to the effect, it is alleged in the complaint by them. There is no denial by the defendant that the effort to oust them from the premises which they had theretofore lawfully -- lawfully possessed came after the adoption of Proposition 14 of Section 26. So there's something in the record from which the Supreme Court of California could have inferred that the effect of the adoption of Section 26 was to encourage even in -- even in that very case the taking of the measures which were taken by the parties in that case, but more than that and additionally, I was saying to Your Honors that had California and the voters of California and the California Real Estate Association wanted merely a repeal. They could have achieved their repeal by the voters of California under the provision in the California Constitution which is Article 4 which provides for the initiative and referendum by a referendum. This is how a repeal is achieved, an initiative in California is more than a referendum. It is more than a repeal. It is an effort affirmatively to enact some -- some new provision of law. Speaker: Is there anything in Section 26 (Inaudible) initiative, the referendum in the opinion? A. L. Wirin: No Your Honor. Speaker: You said it could be repealed. A. L. Wirin: It could be repealed. Speaker: Yes. Speaker: Mr. Wirin, may (Voice Overlap) -- A. L. Wirin: It could be repealed. It could be repealed to the -- Speaker: There's no difference in that respect is there -- this is a legislative act of the constitution (Inaudible). A. L. Wirin: There are -- there are two differences in what -- Speaker: On the constitution (Inaudible) A. L. Wirin: Yes, yes but because it is on the constitution -- because it is on the -- now, California could have put the same provision Mr. Justice Black into a statute. If it were in a statute, it would have the effect of law, but it could -- it would not require a vote of the people in order to repeal it. Potter Stewart: I thought it would as I read the briefs. A. L. Wirin: No. Potter Stewart: If by referendum, they put it into a statute. A. L. Wirin: I think not Your Honor. I think it is -- Potter Stewart: I thought if the people put it into a statute only the people could change it (Inaudible) A. L. Wirin: No, if the people put it into an initiative, only the people can change it. If they put it into a referendum, either the legislature or the people can change it. But let me conclude this point with this further observation. Had this been an initiative which was written into a statute of California, they still would be required another initiative in order to get rid of it. Why then Your Honors and I ask this in parallel to the questions, was this provision written into the Constitution of California? Why was it put into Article 1 of the Constitution of California which is the Declaration of Rights of California? Because it was intended by those who wanted it to elevate the right of discrimination into a constitutional right. Now when a matter becomes one of constitutional right as for example when the right of freedom of speech is provided for in a constitution, it is intended and expected that it will encourage persons to exercise freedom of speech.And when a provision is enshrined in a state constitution, it is intended and in my opinion has the inevitably effect of encouraging persons to engage in the discrimination which is affirmatively sanctioned. Now one final word -- Abe Fortas: Well by this -- excuse me Mr. Wirin, but by this action the people of California, I suppose it's arguable, have removed from the ordinary legislative process, this subject of legislation in the field of discrimination with respect to rental, lease, or sale of property. And they have similarly, if I understand the argument, have removed that subject from the jurisdiction of their courts. Now the question is, whether that removal of this subject from the ordinary state processes is state action within the meaning of the Fourteenth Amendment. It seemed -- it seemed to me that that is one of the questions here now. Now, perhaps similarly I suppose that if the Federal Government passed a statute on this subject with respect to discrimination in housing and the area of this section that the effect of this constitutional provision would mean that regardless of what the legislature of California might want to do, that California could not -- the California courts could not cooperate in the enforcement of the federal statute by virtue of their jurisdiction without saying that the resolution is pro tanto and valid as in conflict with the federal law. I don't know where they come out on that. A. L. Wirin: Well my response to Your Honor is this, certainly that provision in the first paragraph of this -- of this -- of Section 26 is written in the broadest of terms in the most comprehensive of language and bars the state or any of its agencies and of course part of an agency of a state from ever under any circumstances interfering with the exercise of absolute discretion brought by an individual. And to that extent, I have to -- as additional string to our bow, the point which had just been discussed. Potter Stewart: Mr. Wirin. A. L. Wirin: Yes. Potter Stewart: My question was prompted by what I read in the reply brief with petitioners, the bottom of page 6 and the top of page 7 and I understand the answer to your question, you tell me that that -- that they -- A. L. Wirin: No. Potter Stewart: -- misrepresented this to the Court? A. L. Wirin: No, would you Your Honor tell me again what that page that was? Potter Stewart: The reply brief of the petitioners, the bottom of page 6 and the top of page 7 which says that -- it's quotes -- it quotes -- it quotes Article 4, Section 1 of the California Constitution and it receives to say, “Accordingly had to measure -- propose a statute rather than amendments in the California Constitution.” It could still be repealed or modified only by both or the people. A. L. Wirin: Yes, but Mr. Justice of course -- Potter Stewart: Well, that was my question. A. L. Wirin: But Your Honor -- my answer to Your Honor's question is this statement is 100% correct and I have said nothing. I think I said nothing, to contradict it. Here's what I'm saying. Potter Stewart: I understood your answer. A. L. Wirin: Well, let me -- (Inaudible) If Unruh and Rumford were dealt with by a referendum of the people, that referendum would be merely a repeal, but if -- but if -- Potter Stewart: This is an initiative, isn't it? A. L. Wirin: But if it's an issue -- whether or not the initiative amends the statutes of California or changes the constitutions -- Potter Stewart: -- or change. A. L. Wirin: And one -- and one of my arguments is precisely because the right to discriminate it is enshrined to the constitutional right in the Constitution of California when it maybe have been because it could have been made a statute and still be the legislature couldn't touch it. Potter Stewart: I don't see what possible difference that makes to the federal constitutional issue that's before this Court. A. L. Wirin: Mr. Justice Stewart. Potter Stewart: Whether the -- whether California has acted through its legislature, through initiative of its people, through its courts, through some political subdivision, if that action violates Federal Constitution, it violates it, and if it doesn't, it doesn't. I don't see what possible difference it makes, what instrumentality of the state that it is acting through. A. L. Wirin: May I just state to Your Honor why I think there may be a difference. If the claim of a claimant is that private discriminatory action is encouraged by state action. And hence that state action violates the Fourteenth Amendment, it seems to me it is arguable, if the state action is in the constitution, that the power of encouragement of the practice which is enshrined in the constitution, the power of encouragement is the greater if it is in the constitution rather than the statute. Now that is all I'm arguing, and I -- I need to get back my argument. Earl Warren: Very well. Mr. Solicitor General. Thurgood Marshall: Mr. Chief Justice, may it please the Court.We appeared today as amicus in these cases because we believe that the two of them represents serious and far-reaching questions regarding the extent to which states may by indirect means substantially contribute to invidious discrimination of a kind which if practiced directly would certainly clearly violate the Fourteenth Amendment. Now, the subject matter of the state constitutional provision involved here against the discrimination in the sales and rental of housing is an addition of subsequent concern to the executive branch of our government as is indicated by present proposals for legislation on the federal level. These cases concerned the validity of formal legal action taken by the State of California with respect to discrimination in housing. And in our view, the action so taken goes beyond constitutional bounds.The provision of the state constitution which I would prefer to just call “Proposition 14” because that's the way it's commonly accepted and designated throughout the State of California, is we believe demonstrably an exercise of state power in support of racial discrimination as such. In support of this conclusion, we have urged three lines of argument. One I proposed to deal very briefly because it's already been discussed by -- a long time. The rest is essentially on the principle set forth in Mr. Justice Stewart's concurring opinion in the Burton case -- the Wilmington case. And although they had believed he and Mr. Justice Frankfurter and Mr. Justice Harlan believed it was not applicable to the facts of the case they still agreed with this principle. And that principle, as I understand it is that a state may not solemnly enact into law an explicit official authorization of racial exclusion or racial discrimination. That is true because such an enactment by its very nature puts the state on the side of racial distinctions and racial discriminations. Aside to which the state simply may not, under the Fourteenth Amendment tip the scales even by a hair's breadth, that's what Burton tells me. The proposition that a state must maintain the strictest neutrality with respect to private racial discrimination has of course been firmly established and is recently in Anderson against Martin. And in light of its history, this history of pro -- Proposition 14 which was so fully discussed in the opinion of the Supreme Court of California, and the briefs here, there can be little doubt that it actually enshrines as it carefully secured and preferred right of California citizens, a preferred right because it was deliberately put in the section with rights of free speech, free exercise of religion, et cetera. And for that reason, we come to the second line in this argument. And that emphasizes that Proposition 14 is not merely a state statute. It's not a statute which is subject to the ordinary interplay of political pressures within the jurisdiction of what remains the law. And I say in the question as to the difference between this being a constitutional provision or a statute, the important point is it can only be removed by a vote of the people of California. And the people we are arguing about here are the underprivileged people in the State of California and I don't think anybody denied that you don't get referendum by any place without hard earned cash and plenty of it. The whole level of political acumen in California as in any other places makes it possible that a minority group may have some political strength in an area here or an area there. But in no state that I know of do the minority groups have statewide power. And that's the reason it's important to recognize that this provision was deliberately put into the constitution, it was no accident. And I agree that if it just had been a repeal, we would not be here. The permanence it has as a constitutional provision and the sweeping effect which it must be given its all inclusive prohibition by local governmental agencies distinguishes it from a simple statute, declaring the state's neutrality. I -- I don't understand this argument that all it does is to say, “Well, everybody's free.” But incorporating Proposition 14 in the constitution, California said that legislation of governmental action of any sort may not be taken to eliminate or reduce private racial discrimination in housing unless one, either two-thirds of the legislature move or the issue is put up to vote by the majority of the people. Racial and other minorities and classes which are the likely victims of discrimination in housing are virtue -- by virtue of their minority status itself, placed in an obvious disadvantage. Abe Fortas: Mr. General, are you saying that the effect of putting this in the constitution, the state action, putting this in the constitution as state action, and the reason why it's state action is that it has removed the subject matter from the reach of the ordinary governmental processes in the State of California, namely the legislature and the courts? Thurgood Marshall: And the Executive Branch. Abe Fortas: And the Executive. Thurgood Marshall: And insofar as the courts are concerned, it's an absolute bar to a legal action. The -- as I understand Proposition 14, if someone sues on a common law theory, that he cannot be refused the rental of that building, the Court itself can dismiss it without requiring the defendant to even answer. And the only answer the defendant would be required to make is to “Section 26” and you're out of Court. It's an absolute bar. Hugo L. Black: Are you attacking the constitutionality of that constitutional provision? Thurgood Marshall: The constitutionality of it? Yes sir. Hugo L. Black: Under the Federal Constitution? Thurgood Marshall: Under the Federal Constitution, I say it violates the Fourteenth Amendment. Hugo L. Black: But it didn't affect the race? Thurgood Marshall: It didn't affect race. Hugo L. Black: Yes. Thurgood Marshall: It absolutely -- Hugo L. Black: Are -- are you attacking the right of California to allow its people to have a vote, one person one vote, to declare a state policy? Thurgood Marshall: No sir. It's according to what the state policy is. Hugo L. Black: Well, that's right. Thurgood Marshall: If it is a state policy is to -- Hugo L. Black: You are not attacking -- you are not attacking the constitutionality of that as the -- within -- within the power of state to do -- to declare its policy, are you? Thurgood Marshall: No sir. I am only saying that the State of California by -- cannot by any action (Inaudible) by vote, or by legislative act, or by the courts encourage racial discrimination. Hugo L. Black: You get back -- Thurgood Marshall: That's what I say. Hugo L. Black: You get back to the point, do you not that everybody has to in this case as to whether the Federal Constitution prevents California from doing what it's done here? Federal Constitution -- Thurgood Marshall: The Fourteenth Amendment -- Hugo L. Black: It does depend on the method that it's done. Thurgood Marshall: No sir. We say that -- I'm not abandoning the method. I'm merely saying that that's a part of the picture, that's additional reason to understand what Proposition 14 means. Abe Fortas: But you're arguing the same whether the -- under the Unruh law, prior or not? Thurgood Marshall: If there was no Unruh law and no Rumford Act ever passed and Proposition 14 was the first legislation passed involved in housing, I would take the exact same position I take now, the exact same position, because the state has moved from its neutral position. Hugo L. Black: And I was asking you that question because so you seem to be impliedly attacking California's right to adopt this method of establishing its policy if it wish to do so without regard to its federal constitutionality. Thurgood Marshall: Oh I -- I'm not attacking the method as such. I'm just -- the result is -- I think if the Court had taken this position, would be one thing, the legislature would be one thing, the executive would be one thing. But here, California did not say that anybody can discriminate if they want to on the grounds of race. California, by adopting Proposition 14 and in the breadths of its language, encourages it. It's far from being neutral. Potter Stewart: Well, wouldn't you have exactly the same argument, the -- the Federal Constitutional argument if the -- if Section 26 had been enacted by the California legislature. Thurgood Marshall: Been enacted? Surely, I'd have the same argument. Potter Stewart: Exactly. Thurgood Marshall: Same argument. Potter Stewart: That was what I thought. Thurgood Marshall: I -- I just have more force with (Inaudible) Potter Stewart: I don't quite see why, but if you think you have, why? [Laughter] Thurgood Marshall: I -- I -- well, I -- I -- well, let's -- let's -- let's be reasonable (Voice Overlap) -- Hugo L. Black: It seems to me you would have less because here, moving in the direction of letting the people of the state, the voters of the state establish their policy, the nearest to a democracy you can get. Thurgood Marshall: I do not agree, Mr. Justice Black, with all due respect, that a movement in 19 -- in these years toward perpetuating racial prejudice is progress by anybody. Hugo L. Black: I wasn't talking about progress. Thurgood Marshall: Oh. Hugo L. Black: I was talking about movement towards democracy, to the -- get as near as you can to letting the people vote. I'm not attacking your basic argument -- Thurgood Marshall: Yes sir. Hugo L. Black: -- that you're making. Thurgood Marshall: Yes sir. Hugo L. Black: But it does seem to me that you've gotten off on the (Inaudible) Thurgood Marshall: Well, I do not know if I -- Hugo L. Black: At that point -- Thurgood Marshall: Yes sir. Hugo L. Black: When you're impliedly attacking California's method of letting its people vote to establish policies. Thurgood Marshall: Well, I think if I answer Mr. Justice Stewart's point, I might get a little -- Hugo L. Black: All right. Thurgood Marshall: The facts show that the argument of people in minority groups, and with help of others were able to get the Unruh Act through and were able to get the Rumford Act through. And now that it's in the constitution that was the reason it was put in the constitution, because everybody knows that the minorities do not have that much strength on a statewide basis. Those are facts. I mean I'm sure you will agree with me Mr. Justice that the Real Estate Board didn't put Unruh and Rumford through, that we can be sure of. Abe Fortas: General, is it clear that California legislature could deprive its courts a jurisdiction in obtaining common law action? I -- I don't know the answer to that. Thurgood Marshall: I don't. Abe Fortas: I'm asking you about that. Thurgood Marshall: I don't either sir. And -- Abe Fortas: And that require a constitutional amendment? Thurgood Marshall: I don't know the California law. But I do know this that we have had courts, at least a court that did rule in a Civil Rights case in 1890 in Michigan, and said he did need the Civil Rights law to maintain the common law right of a Negro to be served. That case was cited in Mr. Justice Goldberg's concurring opinion in the Maryland case. I do say that in our brief, we set forth the large number of municipalities and local units in this country that have adopted fair housing provisions. And they couldn't now in California if in County Z in California, all of the people decide that open housing is good and that 20 -- the 20% of the group said, “No, we don't want it.” And the 80% say, “We want it and we are in favor of adopting a resolution in our county requiring fair housing,” they can do it under this Act and that's the point I've been trying to get through Mr. Justice Black that the vote of the small unit is gone, you can't use any local pressure. The governor -- I mean the -- that was a mistake. The Attorney General of the state of California has filed a brief amicus in this case. Certainly, he doesn't agree with it. But his hands are tied. The whole executive branch of the government is tied. Hugo L. Black: (Voice Overlap) is a constitutional provision. Are you against constitutional provision? Thurgood Marshall: Not at all. Hugo L. Black: What's -- what's the Bill of Rights or the constitutional provision to limit the local power or party unit to pass laws? Thurgood Marshall: I think it would be a beautiful -- I think that, really, our differences -- if this were the Unruh or the Rumford Act had been a constitutional provision, I'd be all for it. Hugo L. Black: That's right. (Voice Overlap) -- Thurgood Marshall: I would say that -- I would say that the -- two, the constitutional provision has the same validity regardless of which side it takes. But this one is a wrong one. And it makes no difference where it is, it's wrong. Hugo L. Black: I agree with you, if it violates the Federal Constitution, it's wrong. Thurgood Marshall: That's what I think. Hugo L. Black: If it violates the Federal Constitution. Thurgood Marshall: I'm sure it does. Hugo L. Black: Not because it's conducted in a constitutional measure, the chief measure of protecting the liberties of the people of any country. Thurgood Marshall: I would be far from doing anything to interfere with the right of the people to adopt their laws and their constitution, subject only to the Fourteenth Amendment. That's -- that's my own theory. Earl Warren: I wonder -- I wonder if this section might not even prevent the courts or agencies of the state from cooperating with the Federal Government in the event of an open housing statute because it says neither the state nor any subdivision or agency thereof shall deny, limit, or abridge directly or indirectly the right of any person who is willing and decides to sell and so forth. Now, that looks to me like a pretty strong -- Thurgood Marshall: Well, we -- Earl Warren: -- an all-inclusive statement and I just wonder if they could -- under that constitutional section, if they could even cooperate with the Federal Government or the -- the Courts enforce federal rights. Thurgood Marshall: Well, I think the Courts would be obliged to because under Article VI, the judges have to take the oath to -- Earl Warren: Well, I -- Thurgood Marshall: -- apply both (Voice Overlap) Earl Warren: Well, I think so, but that wouldn't save the constitutionality of this Act. Thurgood Marshall: Not at all. Earl Warren: The mere fact that they have to do it, the Supremacy Clause probably would compel them to do it but isn't this an attempt to even to go that far. Thurgood Marshall: I say that this provision is an absolute bar to a court taking any action against racial discrimination in housing. Earl Warren: And it would at least, it seems to me, be a discouragement to any -- any agency of the State of California from even cooperating with the Federal Government in any such statute. Thurgood Marshall: That's right. I think in support of that is the Attorney General himself to file his brief here. And I think that that brief would be speaking for the entire executive side of the State of California. And the -- the real difficulty here is that we all know there is considerable movement toward voluntarily working out open housing problems. And the movement is much accentuated on the local level. I don't know whether it's true in California or not, but I am talking about the reports that we filed in our brief. All of those, I mean, we right here, we know up in Montgomery County. There's a big movement there. It's all over the country. But here, you can't do it. The other point is that even if somebody -- the people that reads this and there despite the fact that it's not directly material, the literature in all of it was set up. It's in the UAW's brief and all. There's some people that now whose conscience is telling them they should open their houses up. They should open their apartments up. They get the idea that the State says “Don't do it!” It gives the -- the person whose conscience is working on him a block that says, “You don't have to do this.” And it's the opposite of the neutral position that the State should take in these matters. And I say the neutral position because I don't want it understood that I would object to the State taking the other position like the -- the Rumford Act or what have you. Hugo L. Black: You said they can have that law but they can't repeal it. Thurgood Marshall: No sir, they can repeal. They could have repealed Rumford. Hugo L. Black: But that's drawing a distinction between what was done by the State and what they actually did. Thurgood Marshall: Mr. Justice Black, my point is, if they -- they repealed Unruh and Rumford, the courts could -- could move in if they were (Inaudible), and say that the common law is not what you say it is. The local county units could move in. Maybe the -- I don't know the powers of the Governor but I mean maybe some executive branch could move in. There are lot of ways that this problem with racial discrimination in housing could be solved, if -- even if Unruh and Rumford were repealed. But instead of just repealing them, they'd put in this positive provision the bars anybody, bars anybody from interfering. Hugo L. Black: Perhaps through a constitutional method (Inaudible), isn't it? Thurgood Marshall: It's perfectly legitimate -- we don't quarrel that it was not properly adopted. But when it was adopted, it was about to its subject to this Court's determination as to whether it was constitutional or not. Hugo L. Black: Subject to the Federal Constitution of course. Thurgood Marshall: And subject to its own State Court. And I'm not abandoning the fact that -- Hugo L. Black: (Voice Overlap) -- Thurgood Marshall: -- that its own State Supreme Courts said it was. Hugo L. Black: You mean the State Supreme Court can do away with this constitution? Thurgood Marshall: It -- it can declare a provision. The Supreme Court deliberately said that we don't use that right. But we moved purely on federal grounds. I think that's the reason the Court did it. It was because they were worried about that point. I think it's what it was. But the -- the ultimate decision would have to be made by this Court. Potter Stewart: Mr. Solicitor General. Thurgood Marshall: Yes sir. Potter Stewart: If I -- if I understand your argument correctly, and you tell me if I'm mistaken, it would be substantially the same argument even if there had been -- never been a Rumford or an Unruh Act, wouldn't it? Thurgood Marshall: Yes sir. Potter Stewart: That no state could do this -- Thurgood Marshall: (Inaudible) Potter Stewart: -- regardless of its prior legislative enactments. And if this -- that the enactment of this constitutional provision in and of itself quite apart for many previous history of what the state had or had not enacted in this area would violate the Fourteenth Amendment -- Thurgood Marshall: I would say -- Potter Stewart: (Inaudible) Thurgood Marshall: I would say that that is our position. And the reason is that the state has shifted from its neutral position on race. And when you shift from your neutral position, the thumb is on the scales. And I used that the line of cases of -- ending up with burden. Potter Stewart: Well, I -- I thought that your argument would be substantially the same argument if the -- if there had never been any statutes weren't passed in this area by a state and if the common law had been the way -- the conventional common law has been with the exception of your (Inaudible) case and a couple others. Thurgood Marshall: This (Voice Overlap) -- Potter Stewart: So that the common law generally had been (Inaudible) that it would still -- that the affirmative adoption by a state of Section 26 would nonetheless violate the Fourteenth Amendment (Inaudible) Thurgood Marshall: That is -- Potter Stewart: I believe I was correct in understanding if that is your basic argument -- Thurgood Marshall: That is -- Potter Stewart: -- point apart from any -- the prior history of any Rumford Act or Unruh Act or anything else. Thurgood Marshall: We just say that that helps our basic position. Potter Stewart: Yes, but I -- Thurgood Marshall: We don't need it. Potter Stewart: But I think on analysis and you tell me if I'm wrong, your basic position is that whether this 26 had been adopted by California with its particular history or by North Dakota, or by Ohio, or by Mississippi, or by any other state it would be violative of the Fourteenth Amendment. Thurgood Marshall: I would say so because it's giving encouragement to racial discrimination and it is shackling handcuffing all state agencies from doing anything to eliminate it. Potter Stewart: That's what I understood. And I -- I want you to -- these are not rhetorical questions. I'm asking for information so I'd -- Thurgood Marshall: I know that sir. (Inaudible) thank you sir. Hugo L. Black: Well Mr. Solicitor General, these suits were brought in Orange County, weren't they? Thurgood Marshall: One was in Orange County and one was in Los Angeles. Hugo L. Black: All right, let's take the Orange County. Thurgood Marshall: Yes sir. Hugo L. Black: Let us suppose that the California legislature after this suit was instituted, passed a statute saying that the courts of Orange Country shall not entertain any lawsuits or where there was a claim of -- for relief based upon the refusal of a property owner to sell or rent housing to the plaintiff, would that be in conflict with Federal Constitution? Thurgood Marshall: I think so. I think there's no question about it. It's also this case. Hugo L. Black: And that would be in con -- well, I would say -- I was kind of thinking about this case. [Laughter] Was that -- would that be a conflict with the Fourteenth Amendment? Thurgood Marshall: I think definitely yes. This case was filed before 14, and it laid around when 14 came out, the defendant came in it says, 14 dismissed, it's dismissed. That's what happened. Oh, I'm not saying it was passed discretionary for this person but with all due respect it did. It's our position that in both of these cases, the situation as it exists cannot be put within the four corners of the Fourteenth Amendment for the three reasons set out. The one we urged the strongest is the overbreadth and the extent to which it was done, the encouragement point is a secondary point to our argument. But on any basis, we believe that the judgment of the Supreme Court of California should be affirmed and back to the question we asked yesterday, we don't necessarily urge that beyond the exact same grounds as the Supreme Court of California but we think our three points do stand up and require the affirmance. Earl Warren: Mr. Pruitt. Samuel O. Pruitt, Jr.: Mr. Chief Justice, may it please the Court. First in response to several questions from the Court, it seems to be clear that the risk of being presumptuous that is the duty of this Court to read this measure in a way to say that's validity not in a -- with unfriendly way in an effort to read in -- into it some provision that is not reasonably implied. For example, I think there is nothing in this measure that can reasonably be read that says that the State Courts in California are prohibited by this measure from performing their Constitutional duty to enforce Federal Rights, whether they arise under a federal statute or under the Federal Constitution. Nor indeed as evidenced by the exercise of jurisdiction by the State Courts in these cases, does it deprive the State Courts of the obligation to entertain claims which might involve the rule of law set forth in Section 26 to interpret that rule of law and to apply it to the effects of the case before it. And I think it's quite ironic. Abe Fortas: How -- how can you read that exception under the statute? Is there any language in here or -- because the language seems to be about as broad as it can be phrased. Samuel O. Pruitt, Jr.: Mr. Justice Fortas, the language I think establishes a rule of law in California. Rules of law are applied by courts all the time. Abe Fortas: Well, this -- this one is (Voice Overlap). Samuel O. Pruitt, Jr.: Restatement -- pardon me, sir. Abe Fortas: This is a constitutional provision. Samuel O. Pruitt, Jr.: That is correct. Abe Fortas: And it says that, “Neither the State nor any subdivision or agency.” And would you construe that to mean to -- not to apply to the courts? Samuel O. Pruitt, Jr.: It's binding -- it's binding on the courts in the sense that the courts ought to apply the rule law that's provided for on this measure. Abe Fortas: But it is -- and your argument then compared to what has been said by the counsel that this -- that the phrase, “Neither the State nor any subdivision or agency” does not include courts in the exercise of their own jurisdiction as we say is from enforcing State action. Samuel O. Pruitt, Jr.: It prohibits the -- it tries to prohibit the court from applying a rule of law different than the one recited in the provision, that's true, but that's true of any statute held the Court that under particular circumstances this is what the law is. And a court is obligated to apply that rule of law unless it violates some constitutional provisions. Potter Stewart: I -- I think you -- as I had understood your argument, Mr. Pruitt, it was that nothing in here and obviously nothing in here does and quite obviously nothing in here could take away from the courts their duty to apply the Federal Constitution. I think that is (Voice Overlap) -- Samuel O. Pruitt, Jr.: That is correct. Potter Stewart: -- between you and my Brother Fortas which -- that you were talking about, the Federal Constitution and he -- he thought you're talking about the State Constitution. Samuel O. Pruitt, Jr.: Yes. Potter Stewart: Obviously there's a change in this -- in this (Inaudible) -- this is an addition to the State Constitution and insofar as its provisions, do not violate the Federal Constitution the State Courts are bound by it. But you're quite right insofar as this does violate the Federal Constitution under the Supremacy Clause, the State judges have the duty of following the Federal Constitution (Inaudible) Samuel O. Pruitt, Jr.: Certainly, and that's what -- that's what the court below attempted to deal in this case we think erroneously but it certainly attempted to do what it thought it would require to do by the Federal Government. Abe Fortas: And to the extent that the Supremacy Clause is not involved. This Constitutional Provision does remove in the California court common law jurisdiction. Samuel O. Pruitt, Jr.: I would disagree, Mr. Justice Fortas. It tells them what the rule of law is, that the facts that -- that rule of law (Inaudible) Abe Fortas: Well, I think -- (Inaudible) -- that is a meaningful distinction and maybe I'll contend that it's not. Samuel O. Pruitt, Jr.: I might also say Mr. Justice Fortas that with respect to this method being an -- a departure from the ordinary processes of government in California or to placing this measure in the California Constitution has a significance that would be similar to an amendment to Federal Constitution, for example, just isn't so. This is a normal procedure in California. Our Constitution has been amended about 300 times since 1879 by initiative and other procedures. I don't say it isn't necessarily good but on the other hand, it isn't necessarily bad either. Now, it's quite ironic, I think that the respondents in this case supported by the United States and the Attorney General of California say, “They would be perfectly valid for the people of California to repeal the entire Unruh Act, the entire Rumford Act,” presumably to repeal all of our antidiscrimination laws which I think it's been conceded the State had no obligation to enact in the first place. Here, where the people are trying to affect a very limited repeal of only one tiny portion of conduct and place it within the discretion and live it to the conscience of the individuals, that they say violates Federal Constitution. Speaker: I noticed you don't cite in your brief Truax versus Corrigan. Have you considered that? Samuel O. Pruitt, Jr.: I have considered it and I believe I did cite the -- Speaker: I don't find it in your index. But don't bother now, but -- Samuel O. Pruitt, Jr.: I'll say that I've -- Speaker: How do you distinguish Taft's opinion in Truax v. Corrigan from this case, where the State of Arizona had withheld a remedy for a denial by private people of equal protection, equal treatment? Samuel O. Pruitt, Jr.: I would prefer to rely on the dissenting opinion in that case, You Honor, which I think reflects to the current. And I'm proud to rely on it, I might say because -- Speaker: But you see, the dissenting opinion, it doesn't help you. There were three of them and I just refreshed my recollection on them. They don't help you much because they went off on the grounds if there was no lack of equal protection. And here we have -- any line drawn between race is a suspect line in this country. That's true isn't it, by the reason of the 13th, 14th, and 15th (Voice Overlap) -- Samuel O. Pruitt, Jr.: Oh, certainly, yes. I -- I believe -- Speaker: I don't think the dissenting opinion address themselves to State action. Samuel O. Pruitt, Jr.: I believe they address themselves to this point and I believe that the current opinions of this Court fully support the dissenting opinion of Mr. Justice Brandeis and Mr. Justice Holmes -- Speaker: I don't think (Voice Overlap) -- Samuel O. Pruitt, Jr.: -- that the legislative power includes the right of the State to decide what its law is going to be in an area where Constitutional Rights are not affected. Speaker: That's on the grounds of what is -- with classifications, yes, making a classification. Samuel O. Pruitt, Jr.: That is correct. But in that case the -- Speaker: (Voice Overlap) we don't have that problem here but we do have problem as to whether or not the State can turn over its -- the municipal function of zoning to a real estate (Inaudible) Samuel O. Pruitt, Jr.: Well, I regret that, Your Honor thinks that that's what this measure means because I don't think that -- William J. Brennan, Jr.: Well, that's a -- Samuel O. Pruitt, Jr.: -- it's a fair reading of it, if I may say so. And further, as I understand the holding and Truax v. Corrigan, it was that the Federal Constitution prohibited Arizona from adopting a law that would bar the remedy of injunctions and labor disputes. This is back in 1924 and if -- if that's presently the constitutional law of the decisions in this Court it would surprise me because the Norris–La Guardia Act in the Federal level does just that and no one, I think -- William J. Brennan, Jr.: But that's been (Voice Overlap) -- Samuel O. Pruitt, Jr.: -- has challenged -- William J. Brennan, Jr.: Yes, that's been removed by Congressional power. Samuel O. Pruitt, Jr.: That -- that is -- William J. Brennan, Jr.: The constitutional theory of Taft is -- is something that I don't your brief has addressed itself to. Samuel O. Pruitt, Jr.: No, as I say the reason I didn't cite the majority opinion is because of my opinion it's not currently of the law. Now with respect to whether the California court made any factual determination of encouragement, Mr. Wirin read a portion of a sentence from the opinion but he left out the phrase which I think establishes that really the California Supreme Court was making a statement of a legal conclusion. There is the Statement Mr. Wirin read, “Here, the State has affirmatively acted to change its existing law from a situation where in a discrimination practice was legally restricted to one where in it is encouraged,” and this is the part that was omitted, “within the meaning of the cited decisions.” But I think that's clearly a legal conclusion as to what this Court meant by encouragement in such decisions as Burton v. Wilmington Parking Authority, the Robinson v. Florida, and another cases cited in the opinion. William J. Brennan, Jr.: Mr. Pruitt, is this an argument that this -- 26 can be read as nothing more than a mere repealer of the provisions of Rumford and Unruh? Is that your basic position, isn't it? Samuel O. Pruitt, Jr.: That -- it is a -- William J. Brennan, Jr.: If I understand your -- everyone who has argued on the other side instead of, that's all it means, it wouldn't even be here. They've been -- Samuel O. Pruitt, Jr.: That is correct and that's all it means with this exception, Mr. Justice Brennan. And that is it's in our constitution that it reserves to the people the power to enact the statute in the future. Now if that aspect of it is valid and we think it clearly is then it is nothing more than a repealer. William J. Brennan, Jr.: Well, how -- I still come back to what I asked then. You -- you certainly don't agree and let the Supreme Court of California interpret the Section 26 to do, do you? Samuel O. Pruitt, Jr.: My analysis indicates that its interpretation was that the -- William J. Brennan, Jr.: (Voice Overlap) -- Samuel O. Pruitt, Jr.: -- nullification of this statute -- William J. Brennan, Jr.: But the other side doesn't agree with you. You -- you're not in agreement as to what the -- on the interpretations that the California Supreme Court gave to 26. You say it's only a mere repealer. And they say if that's all it is, they wouldn't be here. They say it's much more than that. You say it's not any more than that, is that right? Samuel O. Pruitt, Jr.: Yes. The only thing -- William J. Brennan, Jr.: And -- what are we suppose to do in that -- in that circumstance? Samuel O. Pruitt, Jr.: Well, I assume the Court will have to decide whether I'm right or they're right as to what the California Supreme Court held. And I think, an analysis of that decision -- William J. Brennan, Jr.: (Inaudible) the California Supreme Court didn't really tell us, isn't it? Samuel O. Pruitt, Jr.: Well I think they did, Your Honor. If you read their decision in the light of Hill v. Miller where they say in California there is no right of action under these circumstances unless there's a statute. Even though in that case the landlord was very obliging in putting his notice termination that he was relying specifically on the right given to him by Section 26 to terminate for this tenancy. William J. Brennan, Jr.: Well, Mr. Pruitt, isn't it consistent with what -- would it be consistent with what the Supreme Court of California said -- to say that whether or not this is a mere repealer that Proposition 14 encourages discrimination within the meaning of the cited cases. They didn't focus on whether or not it is mere repealer or it isn't -- or they didn't -- that they didn't really put it in those words, did they? Samuel O. Pruitt, Jr.: No. That is correct. William J. Brennan, Jr.: But they said whatever it is, we think it encourages discrimination. That's about as far as they went.Was it (Voice Overlap) -- Samuel O. Pruitt, Jr.: Well -- William J. Brennan, Jr.: -- many of the cited case? Samuel O. Pruitt, Jr.: They described what happened as the sequence of legislative activity and they say this change of policy constitutes encouragement of racial discrimination. They said that. Hugo L. Black: Would you -- I think I asked you the other day, I'm not sure yesterday, if the -- if Proposition 14 had said that Rumford and Unruh are hereby repealed and private parties are authorized to discriminate. Would you -- what would you say about that? Samuel O. Pruitt, Jr.: I think the singling out of discrimination in any official statute might raise a serious constitutional problem, just as Your Honor thought there was a serious problem in the Georgia statute in Evans v. Newton because it singled out in Your Honor's opinion, racial discrimination as permissible conduct brought at the same time living in doubt whether you can discriminate on any other grounds but race. Hugo L. Black: For example, I didn't single out racial discrimination. I just said that people are authorized to discriminate in the selling of their house. Samuel O. Pruitt, Jr.: That would be perfectly valid. I -- I misunderstood your question. Hugo L. Black: And do you think you have to take that position? Samuel O. Pruitt, Jr.: No. Hugo L. Black: Do you think if it -- do you think if -- if that statute -- if that kind of a proposition was invalid, you could still win here. Samuel O. Pruitt, Jr.: Certainly. Hugo L. Black: Why? Samuel O. Pruitt, Jr.: Because I think the constitutional issue here -- Hugo L. Black: Don't you think that this is an authorization to discriminate, Proposition 14? Samuel O. Pruitt, Jr.: It's an authorization to act without the compulsion of government. Now, that's an authorization to discriminate, that maybe a way of putting it but it's not an encouragement to discriminate. It's an encouragement to act on accordance with the dictates of your conscience, which is true of all areas of conduct which the government either commands, not be -- neither commands to be done nor prohibits from being done. This broad middle ground where the government does nothing so to speak, neither prohibits it nor does it command it. In those areas, freedom means that people are supposed to act in accordance with their consciences and it is to be hoped that they don't discriminate. But it includes, that's one of curse of freedom is that some people will. Hugo L. Black: So authorization as such is not necessarily invalid as argued. Samuel O. Pruitt, Jr.: That -- that is correct. Earl Warren: I don't -- I don't think you have to say that and I think it's perfectly legitimate, some acts where a state authorizes something to be done to say that it's made it legal. But it's not, and it says we're not going to have any law on this subject. Samuel O. Pruitt, Jr.: That's what -- Earl Warren: That's quite different. Samuel O. Pruitt, Jr.: That's what this measure says. Earl Warren: And what's -- what's done is here is a play on the words encourage and discourage. Samuel O. Pruitt, Jr.: That is correct. Earl Warren: But we have -- we have this situation and I wonder if you've found any -- any analogies to it in other constitutions that have been sustained, well recognized of the Thirteenth, Fourteenth, and Fifteenth Amendments were -- were designed to prevent discrimination of the Negro. Now, do you know of any other analogies where -- where the courts have sustained a statute or a constitutional provision that is designed to circumvent that right? Samuel O. Pruitt, Jr.: Well in the form of Your Honor's question, I don't believe there would be such a case of a statute -- Earl Warren: Well -- well (Voice Overlap) -- Samuel O. Pruitt, Jr.: -- that was designed to circumvent the right not to be discriminated? Earl Warren: Circumvent the purpose of the Fourteenth Amendment. The purpose of the Fourteenth Amendment is to prevent discrimination against Negroes. It is true that it only operates against the State not just against the individuals. But do you know of any other constitutional provision or statute which is to stand by this Court or higher courts, where the purpose was -- where the statute itself said that the people, affirmatively, that the people should not be interfered with in their right of discrimination. And isn't that what we have here? Samuel O. Pruitt, Jr.: I know -- I know of such case that holds it on this -- Hugo L. Black: What about the Civil Right cases? Samuel O. Pruitt, Jr.: But then I was going to say Mr. Justice Black that the whole -- the whole line of authorities from the Civil Rights cases down to the Guest Case last term, in making the distinction between State and private actions seems to make crystal clear that a state has an absolute right consistent with the Fourteenth Amendment to say this is the kind of conduct we can prevent if we think it's necessary or desirable. We don't have to do it in the Federal Constitution. And if we decide not to take a position on this kind of field -- in this field, there's nothing in the Federal Constitution that says we cannot. Now let's -- Earl Warren: I -- I don't -- I don't disagree with you on the fact that they can -- can do nothing about it?But can they encourage -- encourage it by a provision of this kind? Samuel O. Pruitt, Jr.: I think the central, the core question in this case, Chief Justice please, is whether this rule of law is consistent with the Fourteenth Amendment. Now in 1959, everybody says that California just had the Common Law Rule and it wasn't printed in the statute so it wasn't in the constitution. There would be no Federal Constitutional question if the Court rendered judgment for the property owners in this case. Now in 1967, all of sudden that same rule of law raises a serious constitutional question. Now, why is that so? Why should it make a difference that California has experimented in this field by adopting a statute to see whether or not it would assist in the situation, the people say we don't want the statute and they repealed it. Why should that conduct of the legislative groups in California make it any different constitutional question than it would have been in 1959? Or for that matter, any difference in the constitutional question should these cases come up from Illinois or Texas or Mississippi? Why should there be a different rule of Constitutional Law applicable to California? Earl Warren: I don't think there is but couldn't they -- couldn't they simply have repealed the Rumford and the Unruh Amendments here and let it go with that and then the State would be neutral? Samuel O. Pruitt, Jr.: As I said at the beginning, Mr. Chief Justice, it seems to me it's very ironic to suggest that a repeal of these measures, which is a much more drastic step, from the step that people took here. They didn't repeal the Unruh Act. It prohibits discrimination on racial or religious grounds in business establishments of every kind whatsoever. My opponents here say that California can repeal that whole law, consistent with the Federal Constitution. But what they can't do is the (Inaudible) of that law, this narrow area of conduct for a private property on. I find that very ironic and unacceptable under the Federal Constitution. Earl Warren: I think it's a legislative process for -- for the legislature to pass and repeal laws. That's what the legislature is there for. But does that follow? The State has the right to say that it no longer can pass a law that is in furtherance of the Fourteenth Amendment so far as discrimination is concerned. Samuel O. Pruitt, Jr.: Again, that's not what this measure says. It says it can pass such a law when the people pass it in that part of the process of the Democratic Government in California. I know nothing in the Federal Constitution that says that kind of a democratic process is prohibited. Byron R. White: But in any event Proposition 14 ends up like creating a constitutional right to discriminate? Samuel O. Pruitt, Jr.: I disagree with the -- Byron R. White: I mean -- Samuel O. Pruitt, Jr.: It doesn't create any right of any kind, Your Honor. It recognizes a rule of law which was created many years ago by -- and it's reported in Black Stones Commentary and approved by this Court. Byron R. White: (Voice Overlap) -- yes, but let's just say that before Rumford and Unruh, was there a constitutional right to discriminate in California? Samuel O. Pruitt, Jr.: Constitutional right in the sense of -- Byron R. White: There was not because -- Samuel O. Pruitt, Jr.: No, no. Byron R. White: -- Unruh and -- Unruh and Rumford did away with the right to discriminate. But now, there is a Constitutional Right to discriminate in the State of California in the sense that no legislature -- no legislative act or ordinance is valid in that State, but isn't a Constitutional right, it's nothing, is it? People have the constitutional right to discriminate much have the (Inaudible) the right to free to speech. Samuel O. Pruitt, Jr.: They have a State Constitutional Right in the sense that they may -- they act in that manner until and unless a valid statute prohibits them from doing so. Byron R. White: That's right. Hugo L. Black: They have the say when they have -- by the due process (Inaudible) Samuel O. Pruitt, Jr.: That is correct. Hugo L. Black: That they have a right to be free, conduct themselves as they please so long as they do not violate some law enacted to prevent or -- or aid something. (Inaudible) not to have a life, liberty, or property taken away without due process except by due process of law which means the law of the land. Samuel O. Pruitt, Jr.: That is certainly my understanding, Mr Justice Black, and I think it was stated by this Court long ago as Buchanan v. Warley in about 1917 insofar as I know has not been changed. William J. Brennan, Jr.: Do you have the initiative in California or legislative acts? Samuel O. Pruitt, Jr.: Yes, the initiative applied both to -- William J. Brennan, Jr.: Yes. Samuel O. Pruitt, Jr.: -- Constitutional Amendments and the legislative acts, but either one is modifiable in the future only by further action of the people. For the fact that this is in the California Constitution by initiative as distinguished from the California statute by initiative has no bearing on who has the right repeal it. Effect in short, if the Court pleased that the court below exercised the judicial power of the United States to strike down a rule of law which the people of California adopted in the orderly manner of democracy which we practice there. We asked the Court not to exercise that power to overrule the judgment of the people here. The people are the only sorts for the ultimate and abiding solution of the kind of problem that's been raised by my opposition. And if these arguments that they are addressing to this Court or addressed to the legislative bodies in California for the people, they are the ones that have to be convinced that their method of approach to this problem is preferable to the one adopted by the people. We ask that the judgments be reversed.

Earl Warren: Number 59, Suzanne Thomas Richards, etcetera, Petitioners, versus United States. Mr. Rucker. Truman B. Rucker: Mr. Chief Justice and may it please the Court. This case involves an interpretation of the Federal Tort Claim Act and the particular area of collision is between the Government on one hand and the American Airlines takes a slightly different position and that we represent the people here, is with reference to Section 1346 (b). It's really a very narrow point, a very narrow issue and it is simply where the negligent act of the Government occurs, in this instance, in the State of Oklahoma the accident and injury or in this instance the death occurred in the State of Missouri which law applies. Felix Frankfurter: Maybe narrow but it's pertinent, isn't it? Truman B. Rucker: Yes, sir. I think it is and if in my argument, Mr. Justice Frankfurter, I followed too closely the argument of the Government in the Union Trust case, it's only because of the fact that they were more persuasive than we have been today in maintaining their position in that case and the fact that we consider their position in that case quite logical and a common sense interpretation of the meaning of the statute. In 1955 and as I say, I'll make this very brief, an American Airlines plane crashed in the State of Missouri, killing everyone aboard. Now, I only want to mention this because I want to get away from it. In other words, it's not here involved. During a period of time of a year or so, the American Airlines settled with or had hindered into court as I understand it, the amount of their responsibility to the widows and the dependants whom we are here representing. Charles E. Whittaker: Under the Missouri law -- Truman B. Rucker: Yes, sir. Charles E. Whittaker: -- which is $15,000. Truman B. Rucker: Yes, sir, that is correct. Charles E. Whittaker: But there's no limit in the Oklahoma law. Truman B. Rucker: Yes, that is correct. Charles E. Whittaker: Am I right? Truman B. Rucker: Now, within the time limitation set by the Federal Tort Claim Act, there were lawsuits filed in the District Court, United States District Court for the Northern District of Oklahoma, alleging that under the Oklahoma Wrongful Death Act that the people that we represented were entitled to damages against the Government, we made no records to the law of Missouri, against the Government because of an alleged and for this argument admitted, negligent act of the Government in the State of Oklahoma. Now, as I say, I only mentioned American Airlines because I want to get away from it. It's not here involved in this appeal. The Government interplead the American Airlines and we've gone along up to the Circuit Court. Charles E. Whittaker: I wonder if you don't have to (Inaudible) involved. Suppose that there was a joint liability, the American Airlines and the Government, the Government would be liable only under the circumstances and the same law as the private party, isn't that true? Truman B. Rucker: With this very notable exception which was decided in the Union Trust case and which really gets to the crux of the argument because it reads, the Section reads where the United States, if a private person, would be liable to the claimant in accordance with the law or the place where the act or omission occurred and our problem here, as Mr. Justice Frankfurter said, is basically to determine what those words, if anything, mean. And we are adopting the argument of the Government in the Union Trust case, we're adopting the dissent of Chief Judge Murrah in our Circuit case, in which substantially he takes the position that if they intended to bring into meaning the conflict of rules law and they meant to restrict it to the liability of a private person. They could have very well put a period after that, and therefore, all of the conflicts of rule-law would have come in to effect. The district judge sustained the decision of the, I will call them the defendants, first that Oklahoma Wrongful Death Act did not have an extraterritorial provision and second assuming that we did have any rights that they had received or had been tendered the $15,000 and for that prior practical reason had been extinguished. We appealed it to the Circuit Court of Appeals and the majority of the Circuit Court did not adopt one phase of the Government's argument which appears in the second -- in the concluding paragraph, in which they take the position that since under the Oklahoma Wrongful Death Act, there is no extra -- extraterritorial provision. Then in effect, the people that we represent have no remedy against the Government because under those circumstances, a private person would not have. The majority rejected that and in substance more or less amended our complaint and said, “We will then look to the Missouri law because if a private person under Oklahoma law had been involved in an accident in Missouri, in which they've caused the death of a person and proper service could have been obtained on them in Oklahoma then the law of Missouri would have applied.” Now, Chief Judge Murrah, in his dissent took the position which gets, as I say Mr. Justice Whittaker, it gets to the crux of the matter. It says they are liable, that's true, as a private person, but in accordance with the law of the place where the negligent act or omission occurred. Now, what does that mean? Does that mean we're going to take into consideration the ordinary conflicts of law rule? The majority of our Tenth Circuit said this, “And this court is committed to the rule that where wrongful death occurs in one state and an action for damages is instituted in another, the law of the state in which the wrongful death occurred, not that in which the action was instituted, controls in respect the maximum amount of damages that can be recovered,” with that we would agree. Charles E. Whittaker: That's not your question. Truman B. Rucker: If that -- that's just exactly the point Judge and we -- for some reason, for which I assume our inability that you must confess our lack of success up to this point and that's the reason I'm following -- ultimately, we'll follow the Government's argument in the Union Trust case, for some reason, we have been unable to get pass the mental block of -- when the act is read, where the United States, if a private person would be liable to the claimant and for some reason, we can't get by that. In other words, we can't keep the district judge, learned though he may be and the majority, though, we were able or at least Judge Murrah felt differently to place an interpretation. In other words, basically we're down to this. I may not be quite logical, but I'm at least trying to follow this idea down. The Federal Tort Claim Act was for many, many years under consideration by the Government. If I get my months wrong, it's not too important but I think that basically it seems to me it was passed in the 79th Congress and in the 77th which held the last hearings on it. And there was after these years of study, placed along towards the very last, this phrase in accordance with the law of the place where the act or omission occurred. Now, that gets down to this. What if anything does that mean? We can only believe that Congress, at all the times I assume, I know at least in this instance, had the benefit of the largest and probably the finest law firm in the country. We must assume that they, as well as Congress, was aware of the general conflicts rule. John M. Harlan II: Is there any indication in the legislative history that the phrase that you rely on so heavily here, the Congress was advertent to this what you call the conflicts of laws probably? Truman B. Rucker: There are two things, of course one which is unfavorable and one which is favorable. One which is testimony of Mr. Shea in which he referred to the locale where the damage occurred, however, it's interesting that in the written memorandum and we operate on the third, it won't be right to write it more carefully than one who speaks, more particularly, he spoke right after this particular phrase was placed on and after to the claimant. So as to that, I think that our argument could be a bit more sounder, but be that as it may the -- we must assume that the Congress and the Attorney General's office were aware of the general conflicts of law rule first and they were likewise aware as Chief Justice Murrah pointed out that there are few if any states that have an extraterritorial clause in the Wrongful Death Act. Felix Frankfurter: Do you think -- do you think it helps analyzing or understanding the problem when we talk about extraterritorial effects? Do you think that really helps to elucidate the problem? Truman B. Rucker: Well, it is of course involved here. Felix Frankfurter: I know that is involved. Truman B. Rucker: Well, of course, Mr. Justice Frankfurter if -- Felix Frankfurter: I know it's used in these cases but -- Truman B. Rucker: Well, I would be -- Felix Frankfurter: (Voice Overlap) it confuses me instead of helping me. Truman B. Rucker: Well, I think that -- Felix Frankfurter: The statute doesn't say anything about extraterritorial. Truman B. Rucker: No, sir, and it likewise confuses me. Now, the point I make is that when Congress placed in this law giving this remedy, they intended that the law of Oklahoma was going to apply. Potter Stewart: Now, does that mean all the law of Oklahoma or just some of it? Truman B. Rucker: Well, in other words that means the law of Oklahoma except the general conflicts rule. Felix Frankfurter: So where do you get that -- Potter Stewart: Why -- why do you accept that? Truman B. Rucker: Because of this fact. We must assume that Congress was aware of the general conflicts rule and if they intended the general conflicts rule to come into play, then they could have very easily said, where the United States if a private person would be liable to the claim because then they're putting the United States in the position of a private person. In other words, that's all that need to be said. We must remember this. Now, basically -- unfortunately for the Government, fortunately for them in the Union Trust case, this Act not only gives remedy, but basically it has a great number of limitations if I may say so. In other words, the United States Government just didn't turn people loose. This, we believe, is one of the limitations, one of the conditions and as to apply -- Felix Frankfurter: That is because -- because Congress didn't write out and say, it would be liable to say in accordance of the law of the place where the acts or omission occurred, but not to the extent that the laws of the place deals with conflicts of the law problems. You say this is an implied limitation. Truman B. Rucker: It is -- Felix Frankfurter: Isn't that right? Truman B. Rucker: Yes. Felix Frankfurter: That's our argument. Truman B. Rucker: (Voice Overlap) condition or limitation. Felix Frankfurter: But wasn't the -- wasn't the central -- the central rationale, the long driving force behind that was originally became to Federal Tort Act, that it's fundamentally immoral with the United States as an employer not to be subject to the kind of responsibility for which a comparable employer in the same state is liable. Truman B. Rucker: Yes. Felix Frankfurter: Isn't that the heart of that statute? Truman B. Rucker: Yes sir. Yes, with -- with certain limitation -- Felix Frankfurter: In other words -- Truman B. Rucker: -- and conditions. Felix Frankfurter: -- Uncle Sam was less liable than the ordinary employer. Truman B. Rucker: Yes. Felix Frankfurter: That's an exemption. Truman B. Rucker: Alright, let's just name some of them. I'll just take the number. It's needless for me to tell you but at least one of the greatest to my mind was that they eliminate the trial of a jury. They say that we're not liable for cost, for interest under certain circumstances not liable for assault not liable for battery and not liable for number of things. In other words, they wish to place conditions on that. I -- and if there be some question as to why which has been raised in the past as to why they decide they want the law of the state where the negligent act or omission occurred to govern. The Government in the Union Trust case and their memorandum filed in this Court in opposition to the writ has probably stated better than I. More -- moreover adherence to the liberal mandate and natural meaning of the clause has the sensible advantage of adopting the law of the State, (a) in which the federal employee is located and it's controlled by his superiors; (b) which determines the applicable standard of care governing the federal employee; (c) which fixes the rights and privileges of the actor and (d) which results in greater simplicity and certainty. Now, whether they are now of course take the position and if it will be well argued that it would be more simple to do it the other way and follow the law of where the accident occurred, we can only assume this is more logical and more accurate as this was the position of the department which was advisory to Congress at the time that this phrase was placed on this Act. John M. Harlan II: Well, the Government says -- agrees it is that the law of the place should govern. They say, they want all the law applied, you say (Voice Overlap) should apply. Truman B. Rucker: Yes. In other words, their -- I think if I may at this time which is more or less in answer to your question, although it maybe a somewhat lengthy one but to try to answer that question. I think we should -- first let me -- before I get to it if I may because -- before I get into this other point why my time may have expired, we have, and as to whether or not this Court has spoken in the Dalehite case and still I'm not answering your question in and I hope you don't think I'm avoiding it. I'm really putting it off, but as to the interpretation of this particular clause which was added on to after the claimant. In the Dalehite case, though it'd be an extent a -- and dissent, it was said the law which by statute determines the Government's liability is that of the place where the negligent act or omission occurred. This fertilizer was manufactured in our way in Missouri then shipped to Texas and speculation is to where the negligence occurred is unnecessary since each of these jurisdictions recognize the general proposition that a manufacturer is liable for defects in his products which could have been avoided by ordinary care. So then at least we could say that some members of this Court started off with the premise that the law by which the statute determines the Government's liability is that where the place of the negligent act or omission occurred. Now, we have two or three other cases, the Hess case which was reversed on other grounds, the only reference that is made to it at this Court, where the Ninth Circuit disagreed with the Union Trust case. And they said this case does not involve -- this Court said, “This case does not involve the question that would be presented if wrongful conduct occurring within the territory of one political entity caused injury or death within a different political entity and see the Union Trust or the Eastern Air Lines case which is rather closely intermingled. Potter Stewart: Hess came from the Supreme Court of Oregon? Truman B. Rucker: Yes, sir. Potter Stewart: Not the Ninth Circuit. Truman B. Rucker: I beg your pardon, you're right. The -- the Marshall case which I was thinking about did come from the Ninth Circuit which came awfully close to the same point, but as the Government pointed out in their brief and as we agree in that particular instance, there was a question of this ammonia, a terrible explosive being mislabeled in Utah and shipped to Idaho and which law would apply and the fact that the omission to use care occurred in Idaho as well as Utah. So basically, we're down to what might be called a conflict as between the Tenth Circuit with Chief Judge Murrah dissenting and the Court of Appeals of the District of Columbia with Justice Miller dissenting. I -- now, let me just outline the facts as to so-called Eastern Air Lines and Union Trust case, which I think will probably bring me up to the noon hour and then I will try to at that time answer the question that has been propounded -- the best I can. The Eastern Air Lines or the Union Trust case was simply this. The Union Trust case was an executor of the man who was killed on an Eastern Air Lines plane. The plane crashed in the District of Columbia. There was a suit instituted against Eastern Airlines and against the United States Government, alleging negligence on the part of both. It developed that the negligence of the Government was in the State of Virginia, which by Oklahoma had no extraterritorial clause in their Death Act, but which like Missouri and this is the only difference between the cases as we have seen them, Virginia had the limitation which helped the Government and Missouri in this instance has the limitation which helped the Government. In the District of Columbia, there was no limit as to Death action. A judgment was rendered in the amount of $50,000 against both. Without going up or down with Eastern Air Lines, except -- let me say this, that the Eastern Air Lines, it seems to me that it was reversed with the ultimate analysis, they finally paid the $50,000 and the judgment was rendered against them in that amount because there was no death limitation in the District of Columbia and there is where their negligence and where the damage and the injury occurred in the District of Columbia. As far as the Government is concerned, although it was conceded that the accident, injury, the death occurred in the District of Columbia, the act or -- the negligent act or commission occurred in the State of Virginia. So then there was raised squarely at this point. In other words, what if anything, do these words mean that were placed on 1346 (b) which were used in other places, in accordance with the law of the place where the act or omission occurred. In other words, it's difficult for me I assumed maybe those more learned than I can answer them to get away from the argument or opinion of Judge Murrah when he says “Why?” In other words, by nearly stopping there and putting a period where the United States, if a private person would be liable to the claimant, then you don't have the conditions, you don't have the limitations. You are, as far as this particular part of the law is concerned, placing the Government in the position of a private person. But although it was -- as Justice -- Mr. Justice Frankfurter said the basic intent of the Act took place in the position of a private person, yet that is not what they did because they put on it limitations and they put on it conditions and this is one of them. Now, as I say, we are willing to accept the “why” as advanced for the Government in the Eastern Air Lines or rather the Union Trust case operating on the theory as I do, that they -- as advisory to Congress probably knew more about it than anybody else. Whether that is more logical or more sensible approach for somebody to determine other than myself, but at least that was placed there and can't we assume it was placed there for a reason? In other words this Court said -- Earl Warren: We'll recess now Mr. -- Truman B. Rucker: After the District Court of -- the District of Columbia had rendered this judgment for $50,000 against the Government, the Government appealed to the Court, which has to do with our conflicts of law problem. And in the brief which we have largely copied, they say that the trial judge having found that the collision occurred in the District of Columbia applied the district law in measuring the Government's liability. In doing so, he purported to follow the general conflicts rule which in most instances disregards the place of the negligent act or omission and instead uses the place for the harmful force takes effect upon the body. This appeal, nevertheless, permits no occasion for examining into the difficult problem, and I want to get into this business which I really don't understand too well except it is a serious problem of the application of the general rule nor does the case have to be remanded for additional factual findings because Congress has foreclosed the matter by prescribing a different rule in the Act. The Act requires application of the place “where the act or omission occurred, this provision is clear and without ambiguity.” Then as to the reasons which they had previously given as to why the Government is in a better position because of this where they would have control of the employee, the act and so forth. They say, “The act and omissions to the federal employees having and occurred in Virginia, the law of that State must be applied under the Virginia law applicable as to the date of the accident, they're limited to $15,000.” The Court of Appeals with one judge dissenting, held, they, the majority, hold that Congress does provide an explicit terms for the Government's liability to be measured under the law of the place where its negligent employees after omission occurred and therefore the Act requires the law to be applied in this case. Potter Stewart: Where were you reading from earlier, the Government's brief? Truman B. Rucker: First, the Government's brief and this second was page -- Potter Stewart: -- from the opinion of the law. Truman B. Rucker: -- 80 of 221 F.2d. John M. Harlan II: (Inaudible) Truman B. Rucker: In this instance sir -- John M. Harlan II: (Inaudible) Truman B. Rucker: Our Eastern -- the fact as I say briefly, the Government's negligent act occurred in Virginia. The act -- negligent act and the collision occurred in the District of Columbia. So the liability of the Eastern Air Lines was fixed under the laws of the District of Columbia and the Government, were able to persuade this Court that their liability was placed upon the -- it was fixed by the laws of Virginia. Now, the precise question was raised by the Attorneys representing the deceased in the petition for rehearing where he says, “Even if the majority adhered to the liberal interpretation of the Tort Claims Act requiring that Virginia must govern the extent of the Government's liability,” it is the entire law, entire Virginia law, including its conflicts rule which must be applied. The Virginia conflicts rule requires Virginia to recognize the law of the place where the collision occurred, hence, the District of Columbia law must be applied. Now, the Government, in response to that petition for rehearing says, “In construing the statute, we must start with the presumption that the ordinary meaning of the word used in the act expresses the intent of Congress.” This is from the Government's brief again which I say we've largely copied. Here, the ordinary meaning dictates a rule which differs from the general conflicts rule. Then, again on page 15, they say, which gets to the crux of the matter in which we adopt and which we have in our brief, appellees argued that if Virginia law is applicable then its conflicts rule must be accepted. And that they say would refer us to the place of injury which appellees assume as the District of Columbia, the argument if accepted would in effect increase the renvoi doctrine which has little support in this country side. In any event, here again the explicit language of the Tort Claims Act given its ordinary meaning precludes abandoning the law of the place where the act or omission occurred. The act's point of reference is the internal law of that State, not its conflicts rule, which may carry us to the law of another state, which in turn may invoke the law still another state, coming to rest family in a situs other than the place where the act or omission occurred. The losing party, the Attorneys for the deceased in their attempt to get into this Court, raised the precise question, we have that it would alter the long established conflict of rules law, applying the law of the District of Columbia and the Government in their successful response, not only cite the reasons which -- and actually adopt because they're favorable but I think there's a logical person that we can adopt when they say that they want these things determined, where they know the law of that state and where the actor is and where they have control of them, we must operate on the assumption that the Attorney General's office had some purpose in saying that was included. Felix Frankfurter: You regard the Department of Justice as infallible? Truman B. Rucker: Well, in this particular instance, if Your Honor please, they are -- may I say to -- back home, we'd say they're somewhat ingenious. Felix Frankfurter: Like other lawyers, they try to win a case. Truman B. Rucker: Yes, sir. Felix Frankfurter: As long as conscience doesn't stand in the way? Truman B. Rucker: Well, I guess so Judge, but as I say, I can only adopt their argument for two reasons. First, I think its sound; they were in on this bill. They knew more about the legislative history than anybody in the world when he's arguing this Union Trust case. We operate on the assumption. They're honest which we know they aren't. Felix Frankfurter: Mr. Rucker, one of the great English judges of the 19th Century, who introduces measures for the Government, of course, in the House of Lords, they said the man who grabs the measure is about the worst person to tell you subsequently what he intended. Truman B. Rucker: Well, I will -- I follow that in this case but in the Union Trust case Judge, I would disagree because I consider them to be honest and when they knew the meaning of this phrase which they were responsible and had something to do at least given the Government legal -- I mean the Congress legal advice, they certainly knew what he was doing at that time and certainly knew what he's doing when they took the position that they did. Hugo L. Black: And besides they're on your side. Truman B. Rucker: Sir? Hugo L. Black: And besides of all that, they're on your side at this time, aren't they at that point? Truman B. Rucker: Yes, sir. I mean to me as Judge -- in response to Judge Frankfurter, I -- I didn't want to really say what I thought [Laughter] but how -- well, I don't know. It probably explains it. Charles E. Whittaker: Well -- Truman B. Rucker: But basically, we're down to this Judge with seriousness. In other words, here in -- their memorandum, in our position to the writ, they say here, the ordinary meaning of the clause dictates a rule which differs from the general conflicts rule and I think that is the sensible construction of the Act. Now, excuse me if I interrupted you. I am not sure that -- Charles E. Whittaker: What you're really saying is conceding the honesty they had the change of heart between the time they wrote in the Union Trust case and in this case. Truman B. Rucker: Judge, let me say this, Mr. Chief -- I mean Mr. Justice, may I say this in all seriousness? As a lawyer who studies these opinions, if this accident would have occurred in Oklahoma and the negligence of the Government would have occurred in Missouri. Charles E. Whittaker: Now, you mean that -- Truman B. Rucker: Yes. Charles E. Whittaker: -- not the death but the negligence had occurred in Missouri. Truman B. Rucker: Yes. Charles E. Whittaker: Alright. Truman B. Rucker: Then we would have an identical situation. Charles E. Whittaker: Well, I wouldn't -- we would -- Truman B. Rucker: As we had in the Union Trust. In other words, the accident occurring in Oklahoma, there has no death limitation, the negligent act of the Government in Missouri. Charles E. Whittaker: Well, if the negligence here had happened in Missouri, the same state as in which the death occurred, there would be that. Truman B. Rucker: Yes, sir. Charles E. Whittaker: No doubt with that, the Missouri Act would control. Truman B. Rucker: Yes, sir. Charles E. Whittaker: But we have this question because the negligence occurred in Oklahoma and its effect was brought about in Missouri. Truman B. Rucker: Yes, sir. Charles E. Whittaker: Now, you sue in Oklahoma. Truman B. Rucker: Yes sir. Charles E. Whittaker: And you are required under this Act to rely upon the law of the place where the act or omission occurred. Truman B. Rucker: Yes sir. Charles E. Whittaker: That you say was Oklahoma. Truman B. Rucker: Yes sir. That's all we allege. Charles E. Whittaker: Yes. Now -- Truman B. Rucker: Because that's where it all was. Charles E. Whittaker: Now, Oklahoma says giving effect, I mean the Tenth Circuit, giving effect to this Act, this language of this Act, we apply the Oklahoma law, but we apply all of the Oklahoma law, not just part of it and the Oklahoma rule of conflicts requires us to apply the limitations of the death statute of Missouri, but we apply it not as Missouri law but as Oklahoma law under our rule of conflicts, isn't that what they say? Truman B. Rucker: Yes, sir. And here is the answer to it. In other words, if it was the intension of Congress that we would have the normal conflicts of rule of law then it would have been completely unnecessary to have added these words, which are a condition or a liability or restriction. Now, you asked me earlier if I recall about history and there's one thing I wanted to point out with reference to that. They had originally in the Act which is indicative of their thinking, if such be necessary, any claim arising in a foreign country in behalf of an alien. It was deleted with this phrase claims arising in a foreign country have been exempted from cost resolution whether or not the claimant is an alien. Since liability is to be determined by the law of the situs of the wrongful act or omission, it is wise to restrict the bill to claims arising in this country because here in other words, if we did not, if the general conflicts of rule law was in full force in effect then you could have a negligent act in this country and an accident in another country and the end result, you would have a situation that that Government didn't want or you could assume that the situs of the negligent act was in a foreign country and therefore, the Government would have been exposed to the Act -- to the law of some foreign country. Felix Frankfurter: Mr. Rucker, may I put this -- Truman B. Rucker: Yes sir. Felix Frankfurter: -- may I put the other converse case. Suppose the negligent act or wrongful act or omission had taken place in Missouri -- Truman B. Rucker: Yes, sir. Felix Frankfurter: And the death had occurred in Oklahoma and Missouri law was such a situation but Oklahoma law is with reference to ordinary litigants (Inaudible) to place of death and Oklahoma law is much more favorable than Missouri law, I take it you would feel bound not to take that client's case and say that Oklahoma law governs because it's -- Oklahoma rule govern because it's part of Missouri law. I take it in view of what you say here that lawyers are bound by whatever view they've taken in the courts in all subsequent conduct, is that right? Truman B. Rucker: Well, if I can understand Your Honor's question, I'll answer it as fairly as I can. Felix Frankfurter: I want to leave no doubt about it. Truman B. Rucker: Yes, sir. Felix Frankfurter: The negligent act or omission is in Missouri and the death in Oklahoma. Missouri law is that where death occurs for wrongful act in Missouri, you look for the -- for the determination of legal rights, the state of the law -- state of the place of death which was Oklahoma and (Inaudible) case and I ask further that Oklahoma law is much more favorable in the damage to the basis of recovery. Do you feel you couldn't fairly represent a client? Truman B. Rucker: Oh, yes, yes. Felix Frankfurter: But you'd be enforcing Missouri law. Truman B. Rucker: But here, that would involve a situation other than Federal Tort Claims Act. Felix Frankfurter: I'm assuming the Government. Truman B. Rucker: Yes, sir. Felix Frankfurter: The Government. I'm assuming the same situation somebody in the guiding tower or whatever you call it, was negligent in (Inaudible) Truman B. Rucker: Well, yes, sir. Felix Frankfurter: And I'm supposing everything the same except the states relationship reversed. Truman B. Rucker: Well, then I see that we would have no choice under the reading of this act. It's not what I would like -- or not like to do but under the reading of the Act and -- Felix Frankfurter: But the reading of the Act has to be construed namely whether you'd merely take Missouri law in both negligence and death occurred in Missouri or Missouri law if negligence began in Missouri but the consequences resulting death in Oklahoma and Missouri says the reverse of what Oklahoma says. Truman B. Rucker: Of course, that's the same situation we had in Union Trust. In other words, I feel that -- that under the -- the reading of the Act, the natural meaning of the words and history of the Act as well as the interpretation of the Act put upon by the Court of Appeals for the District of Columbia that where the act or the negligent act of the Government occurs in Missouri that that is the law that governs and -- and -- Felix Frankfurter: And so you would -- so you would tell your client that you restricted to the penurious basis of recovery of Missouri although Missouri says, “Since your client has died in Oklahoma, you have the benefit of a more favorable, a more generous Oklahoma law.” Truman B. Rucker: Yes. Felix Frankfurter: You would that? Truman B. Rucker: I – Felix Frankfurter: I hope not. Truman B. Rucker: If -- if I was being intellectually honest and in following what I determine the law and -- Felix Frankfurter: I think no lawyers did that except for partisan purposes. Truman B. Rucker: Well -- Charles E. Whittaker: Mr. Rucker. May I ask you, please? Isn't -- is it true that if the Government is liable as with tort for failing to make American Airlines comply with the safety regulations in Oklahoma, would not American Airlines also be liable for that breach of safety regulations? Truman B. Rucker: Yes. Charles E. Whittaker: Alright, now does not this Tort Claims Act require the same judgment against the Government as it would against the private party? Truman B. Rucker: Yes, sir, to a point. Charles E. Whittaker: Alright. Now -- Truman B. Rucker: -- here -- excuse me. Charles E. Whittaker: If I may go just one step further. They are sued jointly -- Truman B. Rucker: Yes sir. Charles E. Whittaker: -- in Oklahoma for this very thing, this death in Missouri for negligence occurring in Oklahoma. Truman B. Rucker: Yes sir. Charles E. Whittaker: What law then would Oklahoma apply to American Airlines? Truman B. Rucker: Alright sir, now, I think that is an appropriate illustration and I will answer to the best I can. In other words, if Congress had stopped when they said private person then you would have no problem as between the Government and American Airlines because under the law of Oklahoma, a private person, the general conflicts of rule law come into force and effect. Basically, that's what we have to determine. So, you would have the law of Oklahoma and no jury, if I may say so, and few other things. Let me say that the injured or the deceased representatives don't get against the Government. Charles E. Whittaker: Yes, we're talking about what law applies? Truman B. Rucker: Yes, alright, the law of Oklahoma as far as the Government is concerned, the law of Missouri as far as the Government is concerned, the identical situation, except in reverse, that you had in the Union Trust case. In other words, you have for example a trial, a jury determining the issues as far as American Airlines is concerned, the Judge determining the issues as far as the United States Government is concerned, the law of Oklahoma would apply to the United States Government and the general conflicts of rule law coming into effect would apply to the American Airlines. Now, as I've said -- Charles E. Whittaker: Then you'd have a different result, would you, as to one over the other? Truman B. Rucker: You did in Union Trust. In other words, you had -- in Union Trust, they were able to recover 50,000 against the Eastern Air Lines and 15 against the Government or it was 50 and reduced to 50. Hugo L. Black: It's rather difficult to get to anyone rule (Inaudible). Suppose the negligence of -- besides here negligence of a (Inaudible) and the negligence of the power when it got over into Missouri, both of them contributed -- Truman B. Rucker: Yes. Hugo L. Black: -- what law was governed. Truman B. Rucker: Yes sir. Mr. Justice Black -- Hugo L. Black: What was governed (Voice Overlap) Truman B. Rucker: -- as you say, when you're in to the hypothetical -- it was -- after answering this, I would like to save the time which I apparently -- Hugo L. Black: That's alright. I will not -- you need not to answer. Truman B. Rucker: Alright, thank you very much. Hugo L. Black: I can't read the complication -- the illustration -- complications we have at this point. Earl Warren: Mr. Medalie. Richard J. Medalie : Mr. Chief Justice, if it please the Court. The issue in the present case is a constantly recurring issue which in any case under the Federal Tort Claims Act in which the act or omission takes place in one state and the injury leading to death in another. (Inaudible) at the present time, there are close to 100 cases now pending out of recent air crashes in which this issue has been presented. It's for this reason that the Government's interest today is more than a pecuniary one. We are interested in arriving at a satisfactory solution and propounding a reasonable and workable rule by which our liability may be determined under that Act in cases of multistate tort. Now, as the petitioners have stated -- the Government and petitioners are in agreement that Section 1346 (b) states in clear and unequivocal terms that the liability of the United States shall be determined in accordance with the law of the place where the act or omission occurred. We defer, however, as to what the content of that law shall be unless the Government says that we should refer to the whole law of the place where the act or omission occurred including the conflict of laws principles. In this case, it would be the court law of Oklahoma. Petitioners on the other hand would have this Court interpret 1346 (b) as referring to the internal law of Oklahoma. And American Airlines, our fellow respondents, although agreeing with the Government make -- makes an alternative argument that 1346 (b) should be interpreted to refer to the law of the place of the injury. I'd like to turn to each one of these positions in turn. The Government believes that its interpretation of 1346 (b) as referring to the whole law, not only complies with the spontaneous and literal meaning of the language employed in that Act, but it also complies with the purposes of the Act as embodied in Section 2674 which states that the United States shall be liable in the same manner and to the same extent as a private individual under like circumstances. Thus, since a private individual being sued in a District Court pursuant to diversity jurisdiction, since his liability would be determined according the whole law of the State in which that Court is sitting including the conflict of laws principles, according to the rule laid down by this Court in Klaxon v. Stentor so too the Government would have the Tort Claims Act, Sections 1346 (b) and 2674 requiring the Court to look to the whole law of that place where the Act occurred including the conflicts of laws principles when the liability of the Government is to be determined under the Federal Tort Claims Act. It is our contention that these Sections, Section 2674 and 1346 (b) far from being exceptions to one another, not as far for having 1346 (b) as an exception to 2674, it is our contention that these two Sections should be read together in pair material that they should be given equal effect. In fact, just on an ordinary statutory interpretation, ordinary rule of construction when two sections of a statute refer to the same subject matter, they should be given equal effect unless they are completely contradictory. And indeed, the Government's position shows quite clearly that these two can be read together so that one may evolve a reasonable rule to govern the liability of the United States. Further, when this -- when the 1946 Act was passed, these two sections, these two provisions, now embodied in 1346 (b) and 2674 were included within the same section of the Federal Tort Claims Act which was then Title IV of the Legislative Reorganization Act of 1946. And each was preceded by the proviso that it was to be subject to provisions of this Act. In fact, the two provisions had been included in the same section with the same proviso in many of the bills which preceded the passage of the Federal Tort Claims Act and in fact, even when these two provisions were put into separate sections after the revision of the judicial code in 40 (a), nevertheless, they were still preceded by language saying that they were to be subject to provisions of this Act. And therefore, for this reason, we believe that two should be read together in harmony so that the liability of the United States would be determined in accordance with the law of the place where the act occurred in the same manner and to the same extent as a private individual under like circumstances. In contrast, petitioner would have this Court interpret 1346 (b) as referring to the internal law of the State where the act occurred. The fact, under our interpretation, of course, it would violate the clear requirements of 2674. Indeed, petitioners themselves at page 25 of their brief, admit that under their interpretation, the liability of the United States would not be the same as a private individual in like circumstances. It would not be in the same manner and to the same extent. And in fact, in the court below, Chief Judge Murrah, when he stated that the -- he would have had the United States be held liable under the Federal Tort Claims Act, under the law of Oklahoma. He stated at page 45 of the record that the Government would be held liable even though a private person would not be liable according to Oklahoma law under the same circumstances. Petitioners, however, say that when this Act was passed in 1946, we must assume that Congress was cognizant of the normal conflicts of laws rules which referred to the law of the place of the injury as well as being cognizant of the minority rule which -- which referred to the law of the place of the Act. And that when it embodied in Section 1346 (b), this clear and unambiguous language law of the place of the act or omission, it in effect selected the minority rule, the minority conflicts rule. Well of course, the problem with this interpretation is, first of all, that the section does not say in accordance with the internal law. It only says in accordance with the law of the place. Moreover, there is no indication in the entire 28 years of legislative history of the Federal Tort Claims Act that Congress even gave a second thought to the problems of conflict of laws. It may well be that they were cognizant of conflict of laws rules, but with respect to the Federal Tort Claims Act, they never consider -- they concerned themselves. Charles E. Whittaker: Well if they were, Mr. Medalie. Richard J. Medalie : Yes. Charles E. Whittaker: What are the -- what if they were not. What are the presumptions here? Did they not use a phrase that is broad enough to comprehend and embrace the rule of conflicts when they said -- well, the law of the place where the act or omission takes place, does that mean some or all the law of that place? Richard J. Medalie : Well, Government interprets it to mean the whole law. It -- it's quite true that it might -- it may very well encompass a particular choice of conflict of laws just as it might encompass an embracing of the whole law and then looking to the States for its own conflicts of law, but we must interpret, that would seem, this Section not in vacuum but in context of the whole Act. I think, for example, that petitioners might have had a better case had Section 1346 (b) been the only provision in this Federal Tort Claims Act dealing with liability of the Unites States. When, however, we concern -- we look to Section 2674 which says that the United States must be liable in the same manner and to the same extent as a private individual under like circumstances, I can only draw the conclusion that Congress then meant what it said and that when one analyzes how a private individual is held liable whenever he's brought into court and when one realizes that a court in effect looks to the whole law and to determine where the ultimate substantive law reference will be, I can only conclude that Congress also intended that the liability of the United States should be determined in the same manner and to that same extent as a private individual and this is our essential position here. Indeed, one of the problems in this case is that -- is this -- the use of the language. In fact, this Court in the Dalehite case which we cite at page 16 of our brief, pointed out that uppermost in the collective mind of Congress was the ordinary common law tort and that the -- and that the example which was constantly reiterated was that of negligence from the driving of a motor vehicle. And when one considers what happens when a motor vehicle has a collision, one realizes that the act -- the accident, the injury, the death all occur in a single jurisdiction. Therefore, there is no conflict of laws provision. It is for this reason that we believe that Congress did not really intend or rather it didn't even consider that 1346 (b) would, in effect, be an indication of a choice of conflicts of law. The -- what Congress was interested in and it is, I think, clear from what it did in the 76th Congress, which we discuss at page 14 of our brief, Congress was interested in establishing principles of tort liability which would not be based on a uniform federal system of tort liability, but rather that it would have courts look to the laws of the State, look to the local law, look to the state law in order to determine liability in the same manner and to the same extent as a private individual. Felix Frankfurter: Mr. Medalie -- Richard J. Medalie : Yes. Felix Frankfurter: -- throughout the years that this legislation was being urged on Congress except for committees that the board just fighting, et cetera -- Richard J. Medalie : Yes, sir. Felix Frankfurter: -- et cetera, et cetera, was there ever a thought of having an independent tort law in which the Government would be responsible over the idea throughout that the Government has been employer on the same basis of the local employer? Richard J. Medalie : No. In the original -- some of the early tort claims bills, there were -- there was a thought that a system of compensation for personal injury and death would be set up and administered by an Employees' Compensation Commission. This would have been a uniform system of liability. Felix Frankfurter: That was very early. Richard J. Medalie : The very early, yes. In the 76th Congress, first session, for the first time in Senate 2619, H.R. 7236, which we discuss at page 14, Congress decided that the -- that the Government could be brought before the District Courts or the Court of Claims in order to have its liability determined. Once it did that, it began to change its approach. It then began to look to what local law was. For example, in -- in those first bills, they still had certain elements of the negligence, specifically provided for in the particular section, but later on, namely in the 77th Congress, first session and certainly in the second section, Congress established a means by which the District Courts will have exclusive jurisdiction. And it said and we quote -- and I quote from page 16 of our brief that in vesting exclusive jurisdiction in the District Courts, Congress did it because the District Courts sits in only one State and is familiar with the local laws and decisions that are made pertinent to the determination of tort claims against the United States. From this, again, I can only draw the conclusion that Congress' interest was to look to local and state law. And when one looks to local and state law, one has to take into effect or take into consideration the problem -- the actual conflict of law provisions. Therefore, when a multistate court occurs as it did in this case, little comfort can really be gotten from the -- any hypothesis or speculation as to what Congress must have thought or what Congress must have considered when it passed the Tort Claims Act. The only thing one can do is ask what Congress actually did in the situation. It's clear that Congress did not consider conflicts of law but how does the Act operate when we have a -- an accident which involves a multistate tort? Well, in the first place, as we mentioned before, you look to the law of the place of the Act and you look into the same manner and to the same extent as a private individual under like circumstances. And when those two provisions are read together, the only conclusion can be that the whole law of the State where the act or omission occurred is the only law which can govern the liability of United States under the Federal Tort Claims Act. Charles E. Whittaker: That would mean in your view that -- in answer to the question that I asked Mr. Rucker that if American Airlines and the Government were sued jointly, the same result, the same judgment -- Richard J. Medalie : Precisely this. As a matter of fact, much has been discussed about the Union Trust case and it might be interesting to see just what did happen in Union Trust because the Government has never really recovered from the confusion which Union Trust let us. Virginia -- the Eastern Air Lines was held liable in accordance with the law of the District of Columbia in which there was no maximum liability -- limitation. United States, on the other hand, was held liable according to the internal law of Virginia which there was this maximum limitation of $15,000. Moreover, and rather interestingly, the District of Columbia law only satisfied and only gave recovery for pecuniary loss to the -- to the particular beneficiaries of the decedents whereas the Virginia law gave recovery for loss of deceased cares as well as pecuniary loss. Loss of his attention in society as well as some which may be deemed, fair and just as solatium to the beneficiaries for the sorrow and mental anguish caused by the death so that when it finally came time for the United States and Eastern Air Lines to sit down and workout a compromise as to how would we split the costs of our liability, we found that in certain instances, Eastern Air Lines, even though being held liable under the District of Columbia law would actually not have to pay a cent because the beneficiaries were not -- did not have any pecuniary loss. They were distantly removed from the deceased and therefore did not have to rely on the deceased for any pecuniary loss whereas the Government would have had to pay up to the $15,000 limit of Virginia since Virginia's law covered so many other factors. It is I think at this point that the Government began to reassess its basic position, not on the basis of whether the Government may win more or lose more in a particular case, but rather what can be the most flexible and reasonable and workable rule in the situation. And then sitting down and going over the legislative history again, and tying to make sense out of the Federal Tort Claims Act, we arrived at a conclusion that it really should be according to the whole law of the place where the act or omission occurred in order to at least have a standardized rule so that time and time again when these situations occur in which there would be -- there was multistate torts, we wouldn't get into these very difficult questions of how we measure liability according to different acts -- according to different states. In fact, one other problem may be mentioned here, at the present time there are -- Potter Stewart: Would that -- would this really avoid the kind of trouble that you very interestingly just told us about that you ran into in Eastern Air Lines case. What if in that very case the facts had been reversed -- the states have been reserved, the jurisdiction so that the Government's negligent act occurred in the District of Columbia and the Airlines' negligence and the injuries occurred in Virginia? Richard J. Medalie : That's right. Well, we would (Voice Overlap) no. There would have been a problem under our present rule because when the Eastern Air Lines and the United States were sued as joint tortfeasors. They would -- their liability would have been determined according to -- well, Eastern Air Lines liability would be determined according to the whole law of state where the Court was sitting and the Government would have determined according to the whole law of the place of the act which in turn would have in most instances refer to the law of the place of the injury so that the measure of liability would have been the law of the place of injury and we would have had a feasible solution to the problem. In other words, each -- each defendant in that case, United States and Eastern Air Lines would have had the same type of liability. Take for example this -- this particular problem and it has risen for example in the Staten Island crash that occurred some time ago. There are now 24 suits pending in that case. Two suits have been brought in the District of Columbia, 16 in the Eastern District of New York, six in the Southern District and one in Southern District of California. The negligent -- the crash occurred in New York, the accident occurred in New York. Negligence in the suits in District Columbia are alleged in both New York and in the District of Columbia. Negligence in the New York cases are alleged not only in New York, but also in New Jersey where there were a radio contact with the plane as well as every single State in which the plane had passed over and had ground to radio communication before the crash occurred, so that we have at least a half a dozen if not more states in which there's an allegation that negligence occurred in these states. Now, supposing it is determined that indeed the negligence did occur in each of these states, how do we arrive at the rule? Shall we choose New York's rule or should -- if we use the interpretation of petitioner, should we use New York's rule or should we use New Jersey's or perhaps California‘s or Iowa's? But the thing that is the same in each one of these -- in the laws of each one of these states is that they have a conflict of laws rule which refers most of the time to the law of the place of the injury so that we may take these half a dozen states, not have to decide where the most negligence occurred, but in fact, refer to the law of the place of the injury and therefore have a satisfactory solution. Felix Frankfurter: But in any event -- in any event, if you have -- if the locale of the negligent act is in a different state, then you have no problem with confusion for this harmony so far as the federal statute is concerned. Richard J. Medalie : No, that -- Felix Frankfurter: Because the federal statute makes the equation between the Government and a private employer in the same territory. Richard J. Medalie : Precisely the point, that's right. That's why we tend so much importance to that phrase, the phraseology in Section 2674. Potter Stewart: There are some of the states, are they not or I am mistaken which under their own wrongful death statutes provide that if death has occurred -- death is inflicted somewhere else by negligence -- by negligent act occurring within the State then the law of the home state should prevail. Are there any such statutes? Richard J. Medalie : Well, certain elements (Voice Overlap). Well, for example, take the case of Wells v. Simonds Abrasive Company. Remember when the accident took place in Alabama and under the Alabama wrongful death statute, you have a two-year statute of limitations, but the -- but the actual forum was Pennsylvania Federal District Court. When Pennsylvania referred to the whole law of Oklahoma -- whole law of Pennsylvania to determine what liability should be, discovered that Pennsylvania would have applied its own statute of limitations which was only one year and therefore it dismissed the case. And this Court stated that this was perfectly legitimate because it was not a violation of full faith and credit cost to give effect to its own statute under certain circumstances. And indeed, you have other problems such as burden of proof may evolve on either the plaintiff or defendant depending on the State with respect to contributory negligence. So, the Government isn't saying that we are establishing a perfect interpretation. I think that the very essence of our federalism is that we have such a variety of solutions to the different states that it would be impossible to well out of this a single, all inclusive formula. I think Dean Griswold in his discussion in the article renvoi revisited said that the states are not like a checkerboard which a black states and white states each which a perfect conflict of laws rule. The thing -- what we're trying to do and I think the thing that we're -- we think would be the best interpretation is at least to try and arrive at the most practicable solution to this problem so that in -- in the majority of instances, in most cases, we could have a satisfactory solution. There's no question that at the present time, there isn't a satisfactory solution especially with some states going off in different directions or some courts saying that you should look into the internal law of one State or the other or look into the whole law one State or the other. Potter Stewart: I don't -- I -- I certainly agree with what you've just implied that the desirable thing is to have these questions settled. Richard J. Medalie : Yes. Potter Stewart: There seemed three points of view at least. Richard J. Medalie : That's right. Potter Stewart: But I don't quite understand why just in the abstract quite apart from the -- Richard J. Medalie : Yes. Potter Stewart: -- matter in this lawsuit. Why in the abstract, one of these three rules is philosophically or symmetrically or jurisprudentially superior to the other two as contrasted with the desirability of -- of making the rule whatever it is certain? Richard J. Medalie : Well, I think that -- well, I think this -- this raises two questions. One question is whether we philosophically think that one rule is better than the other and the other question is whether Congress when passing the statute ever considered what was better or what -- or in effect what Congress actually wanted to do in this case and it seems to me that Congress at least was clear on one point namely that the liability should be similar when the United States is an employer and when the private employer -- Felix Frankfurter: When you say similar, that's a loose term for me in reading the statute. Richard J. Medalie : Well, I've seen that -- Felix Frankfurter: (Voice Overlap) the one thing you could say is that Congress didn't want the United States to be liable when the private owner isn't or vice versa, the United States to go free when the private owner has to pay. Richard J. Medalie : Well, that's right. Felix Frankfurter: I should think it as one thing clear about the whole pressure and momentum in history of this legislation, that's clear. Richard J. Medalie : That's right. What I was doing was addressing myself to the problem raised by Mr. Justice Stewart that even though Congress wanted this, it may happen that the laws of the particular states are different so that regardless of which rule we accept, you will have a disparity in recovery. Felix Frankfurter: Well, in the language of the -- of the statute doesn't leave us free -- Richard J. Medalie : No. Felix Frankfurter: -- to exercise our preference, does it? Richard J. Medalie : In our view, it doesn't. Potter Stewart: Well, some fairly respectable judges have deferred about this. Richard J. Medalie : That's -- that's quite true. That's quite true. For example, American Airlines says that in its alternative argument that we -- we should refer to the law of the place of the injury because this is the normal conflict of laws rule and in fact, in some instances, I suppose it would solve the problem that you, Mr. Justice Stewart raise. Charles E. Whittaker: The only trouble with that is it would require us to rewrite the statute. Richard J. Medalie : That's right. The only trouble is that it doesn't comply with the literal language of the statute. And moreover, one other problem, in those cases in which a State would give effect to its own internal law when deciding and determining the private liability of a person, the inflexible rule which the American Airlines proposes would put us in a situation in which the United States' liability would be determined by the law of the place of the injury so that -- then the liability of the United States would not be in the same manner and to the same extent as a private individual under like circumstances. I think what the Government really is trying to say, what I am trying to say is that our interpretation at least gives us a more flexible rule, a rule which will be governed solely by what the local and state law -- how the local and state law determines liability and that if perchance the -- there should be changes in the local and state law, if perchance they switch from one reference to the law of the place of the injury and in certain instances may refer to the law of the place of the act so too the federal rule will follow those changes and so that the United States liability will be in most instances coextensive with the liability of the private individual. Felix Frankfurter: Mr. Medalie. Richard J. Medalie : Yes. Felix Frankfurter: I don't mean to suggest that there is no problem of statutory construction. Richard J. Medalie : No. Felix Frankfurter: I did mean to suggest that we're confined within what Congress has told us and not our own philosophic preferences and they're particularly confined by the underlying basis of this legislation. Richard J. Medalie : I agree wholeheartedly. Felix Frankfurter: And I can -- I say again that I should imagine Congress would be startled to be told that in the same Court, in the District Court, one sitting with the jury and one sitting not with the jury, a different law applies under the Federal Tort Act as against the relevant federal -- state law to be enforced depending on what the Government or a private person. I think one can be awfully dogmatic about that. Potter Stewart: Well, except to the case like defamation then the law will be quite different, wouldn't it? Richard J. Medalie : Yes, but that's because there is a specific exception in Section 2680. Felix Frankfurter: That's because the statute doesn't deal with it. Richard J. Medalie : That's right. Felix Frankfurter: And it causes the doubt. Richard J. Medalie : That's right. Felix Frankfurter: But as to the torts with which it does deal, the thing you can be completely dogmatic about is that Congress didn't mean to impose a liability from which the private employer is free or withdraw liability to which the private employer is subjected. Richard J. Medalie : Yes. The Government is in wholehearted agreement with that statement. Felix Frankfurter: That made no rule for flexibility. Richard J. Medalie : That's right. So, the practical -- now turning from theory to practice at this particular time, the practical effect of the Government's position is that we would refer to the whole law of the State of Oklahoma in determining the liability of the United States. Now, Oklahoma does not have a conflict of law -- conflict of laws principle which says that the state courts will look to the internal law of that State in determining the liability of a private individual in cases in which the act occurs in that State but the injury occurs in the other. The Oklahoma wrongful death statute is only operative when the injury occurs within the borders of Oklahoma. The conflict of laws rule which is operative in Oklahoma is one which refers to the law of the place of the injury. And that law would be the Missouri wrongful death statute and the -- and this would govern the liability of the United States, but since that statute has a $15,000 limitation and since -- since each one of the petitioners has received $15,000 from American Airlines in full settlement of its claim be -- under the Missouri wrongful death statute, we conclude that the -- and we believe that the District Court was correct in dismissing the complaint for failure to state a claim upon which relief could be granted. Charles E. Whittaker: (Inaudible) please. Richard J. Medalie : Yes sir. Charles E. Whittaker: You said that each of these parties settled with American Airlines in full and received $15,000. Richard J. Medalie : That's right. Charles E. Whittaker: Did that extinguish the whole cause of action? Is this a moot case? Richard J. Medalie : Well, I -- it's a moot case as far as the Government is concerned under the Missouri wrongful death statute or -- well, by way of the whole law of Oklahoma. Perhaps what you're driving at Mr. Justice Whittaker is the problem of release of one -- of all joint -- Charles E. Whittaker: Did it expressly reserve the cause of action against the Government in the release assigned? Richard J. Medalie : I believe in some instances they did and some instances they didn't, but the fact is that Missouri goes -- Missouri law and Oklahoma law are one on this problem that when you release one tortfeasor, you nevertheless have a claim against the other tortfeasor so that -- Charles E. Whittaker: (Inaudible) Richard J. Medalie : Yes? Charles E. Whittaker: (Inaudible) Richard J. Medalie : Oh, I'm sorry. They have to -- I'm sorry, they have to include it specifically in the release. Charles E. Whittaker: (Inaudible) Richard J. Medalie : That's right. Under Oklahoma law, they do not have to include it within the release -- what they do have to do is if they want to release all tortfeasors, they must include that within the release, but regardless of that, the question here is not, what is the effectiveness of the release. The question here is, how the plaintiffs may -- or the question is may the plaintiffs, may the petitioners recover under the Missouri wrongful death statute to which there's a reference by way of Oklahoma law? And because there is this $15,000 limitation, that precludes the question because there is no more recovery under any other law in this particular case. Felix Frankfurter: But not if your -- if the petitioner is right. Richard J. Medalie : Not -- Felix Frankfurter: And if the petitioner is right, I should think -- Richard J. Medalie : Quite true. Felix Frankfurter: -- Oklahoma release to apply. Richard J. Medalie : Quite true. Felix Frankfurter: He can -- he can appeal to that. Richard J. Medalie : I should think so. Felix Frankfurter: So that we got more problems (Voice Overlap) Richard J. Medalie : Well, we do have more -- Felix Frankfurter: You're not going for finding out what the release law of every state are. Richard J. Medalie : That's right. The -- if this Court accepts petitioner's interpretation of 1346 (b) then, of course, there is a possibility of more recovery because at least -- and American Airlines will clarify this, at least in regard to several of the petitioners, there was no release of the Government in this case. That's precisely why they brought the Act -- they brought their cause of action, their claims in Oklahoma and a suit for $300,000, sued the United States for $300,000 each. But under the normal rule, if this Court were to accept our rule, our interpretation of the Act, that would preclude the matter and there would be no recovery in the present case and in those -- in that instance, the District Court was correct in dismissing the complaint and that, therefore, the judgment of the court below should be affirmed. Earl Warren: Mr. Patterson. W. B. Patterson: Mr. Chief Justice, members of the Court. Let me start out by this question you just asked. It's our impression that the law of Oklahoma and the law of the State of Missouri are identical and that is a release of one joint tortfeasor or one tortfeasor releases all tortfeasors unless it's specifically excluded from the release. Charles E. Whittaker: (Inaudible) W. B. Patterson: That's right. We contend, of course, there has been satisfaction. We don't think that is the precise problem before this Court in this instance, but it certainly -- well, I am sort of -- in representing my client in an anomalous position here. I -- I don't want my client to have pay $15,000 or $300,000 when we've already paid and discharged our liability under the State of Missouri. I think, as has been suggested here, that the (Inaudible) problem in the Federal Tort Claims Act was to waive the Government's immunity where they theretofore had an immunity and make them liable just like a private individual would be under the same circumstances. I think that is the clear purpose of the Act. Our position in this regard, we do not question the position of the Government. We think their position is logical and we think if you stick to the tenant advanced by petitioners here that you must look at the strict language and follow that, then the position of the Government is the only position which the Court logically takes. In other words, if you look to this phrase where the act or omission occurred and say now that is clear, it's unequivocal, we won't look any further, we won't look to any other phrase in the act, we'll just pick out that one phrase and we must do this. But then, by the same token of words to say the liability is the same as that of a private individual under the law of the place, you wouldn't under that rule of strict interpretation write in the internal law or the substantive law. You would look to the entire law under your rule of strict construction. Felix Frankfurter: But why do you say strict construction? This Court had to face this problem in Klaxon and we decided under the year Erie-Tompkins Rule, we have to decide there what is the law of the State and the law of the State is the body of the law of the State. W. B. Patterson: That's true, Your Honor. Well I -- I mean -- Felix Frankfurter: I'm not suggesting that -- that all the scholars think and agreed to the wisdom of that decision -- W. B. Patterson: Well, we -- we're certain at all -- Felix Frankfurter: There it is and we've acted on it. It settled law I assume so far as anything is settled and applied again and again the rest of the country, the states have adjusted themselves to it, federal courts, there wasn't any thought. The argument was made in Klaxon that that's alright for -- the phrases weren't used as my memory serves me, internal law as against the law that -- that takes into account of existence of other states, that's what extraterritoriality means. But they really get to the notion that there are two kinds of state law. W. B. Patterson: Well, that's precisely what I was trying to say. Maybe, I wasn't saying it very good but that's exactly what -- what -- Felix Frankfurter: As I understand you, you are shearing off from there -- W. B. Patterson: No. When I say that when they said law, they may at law and they didn't mean to divide it to half into groups of the internal law or extraterritorial law. When we say the law, well we mean the ordinance is in the case laws and the statutes would mean the law. Felix Frankfurter: And that which -- and that which they absorb is there -- what maybe the pronouncement of another state to which they wouldn't have to yield but in fact do. W. B. Patterson: That's right. That's precisely our position. Now, as I say, we have no quarrel or whatever -- Potter Stewart: MWell, that's precisely the Government's position and -- and you're saying you have no quarrel with it. W. B. Patterson: That's right. Potter Stewart: But you have an alternative position? W. B. Patterson: I have an alternative position because I say I want to present my clients from having stayed here and as my (Inaudible) have been here, I have no altruistic motives really in that regard. [Laughter] My alternative position, I think, is equally as logical. In fact, it may clear a little difference to me in which the Court accepts the result will be the same. But my alternative position is when you say that the Government that shall be liable to the same extent as a private individual would be, when you read that language, the only way you can do that is to send them to the place where the injury occurred because -- Speaker: (Inaudible) W. B. Patterson: -- where their injury or the death occurred. American Airline is sued in the courts of Oklahoma for this very act. The Oklahoma courts would have interpreted the rights of American under the Missouri statute because the deaths occurred in Missouri. Speaker: (Inaudible) W. B. Patterson: Let me discuss that just a moment, by just reading from some questions asked before the Congressional Committee. I -- it's our theory that Congress wasn't dealing with the conflicts problem. They were designated that instead of having a local law and -- and still having a body of federal law, we are going to have to apply the local laws and that is the distinction they were making by the use of the phrase, act or omission. Now, here is the question -- Speaker: (Inaudible) by the local law? W. B. Patterson: That's right. And as I say, I'm not questioning the Government's position if you want to take that additional step. You get to the same place if you accept either of these rules of constructions. What you have said originally, you're going to determine it by the law of the place where the death occurred or while you say you're going to look to the conflicts rule which in turn will send you there. You get to the same spot in this case and I think almost every case Judge. I believe that -- I believe -- Felix Frankfurter: I don't follow that. If Oklahoma -- if Missouri where the -- where the act or omission occurred, where the negligence occurred had a rule that you -- that it doesn't care about Oklahoma -- W. B. Patterson: But they don't Judge. But they don't. Felix Frankfurter: But suppose they did? W. B. Patterson: Well -- Felix Frankfurter: Then you would -- W. B. Patterson: Would you expose that and if that's true then we wouldn't raise this result, but I think you'll find the rule in 48 or 49 states to be just exactly the same. Felix Frankfurter: But that means -- are you telling me, I'm asking you -- W. B. Patterson: Yes. Felix Frankfurter: -- that the law of the 48 -- this is governed by a lot of statutory enactments in relation to this, aren't they? W. B. Patterson: With reflect -- with respect to the conflicts problem Your Honor? Felix Frankfurter: Well, the problems are tied up which you bundle up on the conflicts. I don't mean the general conflict law that the -- that the basis of liabilities where the -- the locality of the occurrence of the complaint of negligence, that's the general rule, isn't it? W. B. Patterson: No, sir. I think the general rule and almost the universal rule is that the liability as determined by the law of the place where the injury occurred where the tort became a tort. I think that is an almost universal rule, for instance, a death in the State of Missouri, it applies to Missouri law no matter what state court tries. Felix Frankfurter: You're instructing me. That's the law -- W. B. Patterson: Yes sir. Felix Frankfurter: -- and I've learned something. I suppose that the general law was that -- that the cause of action arises where the injury -- where the -- where the negligence takes place and then variations on that because of the significance of death. W. B. Patterson: Your Honor, I think you are in error in that thinking -- Felix Frankfurter: Well, you've looked into this thing much more recently than I have. W. B. Patterson: I think -- Felix Frankfurter: And if you're telling that there's no legislation on this subject, you're also telling me something I didn't know. W. B. Patterson: I know -- Felix Frankfurter: I thought you could tell me a lot of things I don't know. Charles E. Whittaker: (Inaudible) W. B. Patterson: That in effect is what I do but it is not what I'm saying that you should do. What I am saying is that Congress never intended the word act or omission to have a thing in the world to do with this particular problem. Let me -- let me read you Judge -- Charles E. Whittaker: (Inaudible) W. B. Patterson: Yes, alright. Judge, let me read you this -- this one. Here's from the hearing on page 9 in this thing, “Where does the claimant file a suit? The suit is to be brought in the District Court in several districts where the claimant resides -- either where the claimant resides or in the locale of the injury or death.” Now, that is in the hearings before Congress on that thing. Charles E. Whittaker: (Inaudible) W. B. Patterson: That's true. But I -- Charles E. Whittaker: (Inaudible) W. B. Patterson: That -- that's true, Your Honor. You are certainly right about it but I say that this does lend some credence to the argument. That -- Felix Frankfurter: Mr. Patterson, I agree with you entirely that Congress never concerned itself with this problem. And the reason that I agree with you, with some familiarity with the legislative history of this business, is that they didn't have to bother about it because they wanted to put the Government of the United States with reference to those categories of torts for which the Government was to held liable on the same footing as a private employer. So, when they said -- what they did say about the same manner and extent in the law of the place, they dealt with all the problems that were before them from the theory -- on the basis of the theory from which this is the language that concludes the present time as my Brother Whittaker says germinated, is that right? W. B. Patterson: That's right, Your Honor. And -- Felix Frankfurter: So, they never -- all these lawyers thought all problems was in their mind because they didn't have to be. W. B. Patterson: That -- that is true, Your Honor. And I agree with it thoroughly and I say that the only way that you can give effect to that is to make the Government liable in the same manner as a private individual would be. Potter Stewart: But that would have to meet out of the statutes some words that are now in it, wouldn't it? W. B. Patterson: That's correct, Your Honor. They are in there for -- I don't think (Voice Overlap) but they're in there. Potter Stewart: Yes. W. B. Patterson: But to me if -- William J. Brennan, Jr.: Well, how do you ignore them? I don't quite follow. W. B. Patterson: I ignore them by saying that they say that the Government is to be liable to the same extent as a private individual would be. To place -- and I think that is what they meant to do, is to make the Government liable just like a private individual. William J. Brennan, Jr.: I know but it would carry that out just to (Voice Overlap) W. B. Patterson: Alright, a private -- a private individual would be liable not for negligence under the place where it occurred or where the accident occurred. William J. Brennan, Jr.: I follow all that, but this all comes down so that we have to ignore these set of words. W. B. Patterson: Yes, you would. Well, you wouldn't have to ignore which you'd have to say that they had a different meaning from what they are (Inaudible) place of death. William J. Brennan, Jr.: You put them in lower case and not in (Voice Overlap) W. B. Patterson: In other words, Your Honor, I sort of believe what you can say or what I tell you that sort of argument but it's not quite yet at large and when you reached the same result in any event. Felix Frankfurter: Mr. Patterson, enlighten me on this point. If this suit was brought in Oklahoma, with this injury under a diversity of citizenship case, go on from there under litigation. What -- what would the District Court with the jury before him, what would be the governing principles of law? W. B. Patterson: Against the American Airlines? Felix Frankfurter: Yes. In an Oklaho -- suppose it was brought there, leave out the question of release and settlement in Missouri, let's begin to assume in the -- they assume they've got jurisdiction over you et cetera, et cetera and they satisfy the diversity of the requirement. Go on from there. W. B. Patterson: You're expecting over American Airlines alone? Felix Frankfurter: That's right. W. B. Patterson: They would apply that law of the place -- of the place where the death has occurred and the law of Missouri would be applicable as to American Airlines. William O. Douglas: Unless the -- a federal act could supply a different standing. W. B. Patterson: Yes sir, but federal act doesn't apply to American Airlines. Tort Claims Act applies throughout the Government as I understand. Felix Frankfurter: Well then in -- in this case -- and in this case, if you are representing the Government, you would -- you'd say the same thing because you would apply -- and this case wouldn't make any difference because the local law, the law of -- if one reads the way the Government reads the section, the law of the place would be Oklahoma and Oklahoma would refer you to Missouri so you'd get the same result. W. B. Patterson: Same result. Felix Frankfurter: In this case. W. B. Patterson: In this case, that's right. And I think you'll get that same result, Your Honor in about 48 or 49 (Voice Overlap) John M. Harlan II: Well, just a minute, you wouldn't do that with the diversity rule surely because the Government would be -- the Government's liability would be based on diversity. Felix Frankfurter: No, no, you get it through (Voice Overlap) John M. Harlan II: You get it through the local law. W. B. Patterson: (Voice Overlap) I'm sorry if I did, that was -- Felix Frankfurter: No, no, you didn't. No. All I'm saying -- I'll put to you first the diversity and you -- you stated what you said and (Voice Overlap) W. B. Patterson: The jurisdiction (Inaudible) gets me on diversity. Felix Frankfurter: Yes. And if the Government (Voice Overlap) under the Federal Tort Act would reach the same result because that's Oklahoma law if you read it the way the Government reads it. W. B. Patterson: That's right. Felix Frankfurter: And what you're saying is that as to 48 states should get the same result. W. B. Patterson: I think I'm probably correct in that. Now, there has been some -- Felix Frankfurter: And some -- W. B. Patterson: -- languages in some of their opinions where they say that minority view exists. I -- I just don't find any of those cases that sustain any minority of view. So -- and as I say -- Potter Stewart: But the point is -- the point is that the under the common law, wherever the negligent act or omission occurred, wherever that occurred, you apply the law of the jurisdiction where the injury or death occurred is that right? W. B. Patterson: Or it became answerable where there was a tort. There is no tort. Potter Stewart: In those cases, the -- the jurisdiction is the same place. W. B. Patterson: That's right. Potter Stewart: And this difference only arises where the negligent act occurs in one jurisdiction and the resulting injury or death in another jurisdiction. W. B. Patterson: That's right. Now, a great deal of talk has been here about the Eastern Air Lines case and in that connection I'm sure Your Honors are familiar that we don't know what the majority of the Court held in the Eastern Air Lines case. The dissenting judge -- William O. Douglas: Well, they said that the -- they thought that the federal act raised a different -- a separate standard of liability. W. B. Patterson: No, they didn't say that, Your Honor. They held that. They didn't say anything. The dissenting judge wrote the opinion in the Eastern Air Lines case. William O. Douglas: That's right. W. B. Patterson: And he said that my brother has been indicated so and so and then he went on (Inaudible) they weren't right. So, as to what the majority of the Court in the Eastern Air Lines case, I actually thought by reason of taking it from the opinion, we can't do that because there is no -- William O. Douglas: Your -- your view is substantially that of Judge Miller, I gather. W. B. Patterson: Oh, yes. It is substantially that as Judge Miller. It is exactly said by Judge Miller who wrote the opinion in the Eastern case. The counsel has talked about certain limitations and conditions on the part of the Government, imposed by the Federal Tort Claims Act. Well, certainly, there are these limitations or conditions. But how in the world that the words ‘act or omission' constitute a limitation or a restriction or how could it take anything from the Government or give it to a private indivi -- I just -- I cannot myself follow the logic in there. In a particular case, if you interpret it the way they want to do it, it might be to the benefit of the plaintiff in one case and the Government in another. In another state it might not be that this will be dependent on where he was. So, I cannot see that those words place law of the place where the act or omission occurred, constitute any restriction or limitation on the Government's liability. They simply say that regarding -- as the Government liable just like a private individual and we're going to do that by applying the law of the State where the act or omission occurred. I think that's all. Truman B. Rucker: Few minutes I have left Mr. -- Earl Warren: Yes, Mr. Rucker. Truman B. Rucker: -- Chief Justice Warren, and may it please the Court. The effect of the reasoning which they are trying to argue and enforce here is that the end result is that the law of the State where the accident occurred is going to be applied. Now, whether you did or as it has been suggested by a rewording of the statute or otherwise, they are getting the same result when they bring into play the conflicts of law rule of the State of Oklahoma. In other words, it is making meaningless these words “where the act or omission occurred”. Now, then we get to involved in this situation as has been suggested that if these suits were commenced in Missouri, the Missouri law under their reasoning would look to the law of Oklahoma where the negligent act occurred. And Oklahoma conflicts rule would apply the law of Missouri as to the place where the accident and death occurred. Then we're in to the renvoi theory and doctrine and that it was obviously the intent of Congress to avoid this statute of conflicts on conflicts which you do not have in the case of a normal private individual. Basically, we're down to the feeling in the statement as it was expressed in this Steal-in case that we should make Congress to respect of not assuming likely that it indulges in inconsistencies of speech which makes the English language meaningless. In all respects, the Government didn't expose themselves to the liability of a private individual and in the most basic or the fact, they did not give them the right of a trial to jury and eliminated many of the other rights that you have as individuals. So, basically, if you follow their reason by applying the Oklahoma conflicts of law rule, then you're for practical purposes, eliminating the words “the act or omission occurred” because you're right back there. We respectfully submit that the words were put in there for some reason and that it was a good reason and for that reason, they should be given full force and attack. Thank you.

Earl Warren: No. 1016, Wayne Darnell Bumper, petitioner, versus North Carolina. Speaker: Mr. Chief Justice -- Earl Warren: Mr. Smith. Speaker: My gather -- I want to make a motion. Earl Warren: Oh, yes, very well. Speaker: I would like to move that Mr. Norman B. Smith of the North Carolina bar be admitted to appear for the petitioner in this case pro hac vice. He is qualified, have experience and ability. Earl Warren: Your motion is granted, Mr.-- Norman B. Smith: Thank you, Mr. -- Your Honor. Earl Warren: Mr. Smith. Norman B. Smith: Mr. Chief Justice, may it please the Court. I represent the petitioner in this case of Bumper versus the State of North Carolina. It comes on writ of certiorari to the Supreme Court of North Carolina. It originated there or came there as a direct appeal from a conviction in one of our superior courts of one of our counties in North Carolina. The petitioner was convicted on October of 1966 on a Capital Bill of rape. The jury recommended mercy, however, and so he was not given the death sentence. He was also convicted in the same proceeding on two indictments of aggravated assault. He was sentenced to serve two-year -- two ten-year sentences, plus a life sentence in the State Prison. The questions which are before the Court are two. One of the questions is almost identical to the one involved in the Witherspoon case. That is namely the constitutionality of the exclusion of jurors who have conscientious scruples against the death penalty, on due process, equal protection and impartial jury grounds. The second question involves a search and seizure matter. The state searched the premises where the defendant live with his grandmother and there seized a riffle, they did so purporting to act under a warrant. At the trial of the petitioner however, the solicitor or prosecuting officer chose to rely solely on what he said was the voluntary consent of the petitioner's grandmother to the seizure of this rifle. Supreme Court of North Carolina affirmed on that ground both of the questions at bar in this Court were presented to the Supreme Court of North Carolina and there's no question about the petitioner's having raised this questions in apt time both at the trial in the appellate levels. Now, the matter involving the first question of the conscientious scruples against the death penalty has been of course very thoroughly and ably explored by counsel in the preceding case. And I would like to reserve most of my time to argue on the search and seizure question but I have a few matters of impression on the conscientious scruples issue which I would like to discuss with the court if the court pleases. Now, to begin with, this case differs from the Witherspoon case in that my client, his trial was permitted to ask plenty of questions to the prospective jurors. The judge himself asked lots of questions. And I think there's only really the case of maybe one or two prospective jurors on the voir dire who were not quite thoroughly gone over on this question of whether they had conscientious scruples against the death penalty. I think quite clearly from the record that the jurors understood what it was and they were asked if they could impose in any case and if they said they could impose it in any case or a proper case, ordinarily the court permitted them to sit on the jury. So, in the Bumper case, we face the question head on and we present the broader question which the Fourth Circuit Court of Appeals in the case of Crawford v. Brown, the four justices who represented the majority position of the court chose to use in setting aside the conviction of Crawford in that case, namely the -- Hugo L. Black: Do you have it all, the question which has been mainly argued in the Illinois case? Norman B. Smith: Well, sir, it's a different side of the same question. As I understand it, Mr.-- Hugo L. Black: You're talking about the part that it's argued that they should have known further and asked him further questions to bring out clearly that he was not under any circumstances on the death case. Norman B. Smith: I -- Hugo L. Black: It gets (Inaudible). Norman B. Smith: Well, there are two -- I guess two subdivisions there. One is whether under any of the circumstances, he would award the death penalty. And two -- Hugo L. Black: Was that asked? Norman B. Smith: -- whether under any circumstances, you would convict. And yes, sir, I'm -- it appears to me from the record that the defendant was permitted to find out if the jurors would ever give the death penalty. Hugo L. Black: You don't have to -- have that question then in this case? Norman B. Smith: No, sir, I do not. Hugo L. Black: Are you reaching the question of whether that court -- a State has a death sentence it's unconstitutional to qualify the juror in connection with their belief that they are against the death sentence? Norman B. Smith: Yes, sir. In this respect Your Honor, a second question should be asked. Once they say they have conscientious scruples against the death penalty and will not return a death verdict, they should then be asked, "Can you, under these circumstances, give the state and the defendant a fair trial on the issue of guilt or innocence?" If they will reply on the affirmative on that, that is if they say they can give a fair trial on the primary question at bar, then they should be allowed to sit on the jury. Potter Stewart: Who imposes the penalty in North Carolina? Norman B. Smith: Well, it's done by the jury, Your Honor. Incidentally, the U.S. v. Jackson case will probably have rather profound effect on our practice because a guilty plea automatically gives you a license to plead not guilty, risk your life on the jury in its discretion imposes either -- Potter Stewart: And the judge -- Norman B. Smith: -- death or life. Potter Stewart: If the jury comes in with the death penalty, the judge must impose it? Norman B. Smith: The judge is bound, yes, Your Honor. Tom C. Clark: It is -- does a jury have discretion to impose a lesser penalty? Norman B. Smith: Yes, I think in all -- virtually all of our capital offenses, we have well, four primary -- we have burglary, rape, arson and murder. This is a rape case. I think we have some minor ones which are not used very much, insurrection or something like that. But -- in these cases, I think almost all of them have lesser included offenses. Here, the jury, I think was charged with or 4 or 5 lesser included non-capital offenses. Potter Stewart: But suppose they come in with the first degree and whatever the felony may be, do they then have an option to give life or death? Norman B. Smith: Yes, Your Honor. Potter Stewart: They do. And then they may also bring in a lesser -- a verdict of -- for lesser included offense and then what, impose the term of years? Norman B. Smith: Well, it's up to the judge on what terms of years would be imposed. If they bring in recommendation of mercy after having convicted of the first degree offense -- Potter Stewart: Yes. Norman B. Smith: -- then the judge is bound to give a life sentence. In all other cases, the judge has discretion within the statutory limit, usually it's just a plain old common law felony and he could give anything from any amount of time up to ten years in the state's prison. Earl Warren: Mr. Smith, we've arrived at our adjournment time but before we do adjourn, I would like to say to you as I should have said to in the prior case, to Mr. Jetter (ph), which I say to him now, that this Court appreciates very much the fact that you in this case and he and his associates in the prior case have served an innocent and an indigent defendant, a matter in which you have. We consider that a great public service and consider that it is a credit to the bar which you represent so we thank you. Norman B. Smith: Thank you Your Honor. Earl Warren: We thank you all for what you've done. We'll now adjourn.

Earl Warren: Number 489, Hudson Distributors, Inc., versus the Upjohn Company. Mr. Krotinger. Myron N. Krotinger: If the Court please? This case arises out of the declaration of unconstitutionality by the Ohio Supreme Court of the nonsigner clause of the 1936 Ohio Fair Trade Law. In January of 1958, the Supreme Court of the United -- rather, of the State of Ohio, in the Bargain Fair case, declared the nonsigner clause as null and void on the ground that it was a deprivation of due process of law, it was an unlawful delegation of legislative authority, it was unrelated to the police power of the State. The Court, however, left unprepared the doctrine that a contract, a resale price maintenance contract, directly between a manufacturer or other authorized person and a vendor, would continue to be lawful. Hudson established its business in the City of Cleveland, downtown Cleveland in the summer of 1958. Hudson is on the business of buying and selling trademark and other commodities at a price which renders it a profit, however, below the fair traded prices. Hudson acquires all of its merchandise from a wholesaler in the State of Michigan, on the other side of Lake Erie, so that, for example, Upjohn products would first be bought by the wholesaler, then resold to Hudson, then resold to the consuming public. In the summer of 1959, the State of Ohio passed a new fair trade law, June 29th, 1959, to take effect on October 22nd, 1959 and on July 31st, 1959, Hudson got a letter from Upjohn calling attention to the new law and stating that Upjohn was in light of its passage, calling attention of contracts that had been made under it and Hudson came to our firm and asked what was the situation and so we checked this new statute. In this new statute, Your Honors, defines a contract as a contract arising either by agreement or by the act of the parties. And the act of the parties which brings this contract into effect is the acquisition of a trademarked item with notice. Well, if the Court please, the -- we've never seen anything quite like that in any other fair trade law. We subsequently found something like it in the Virginia statute but prior to that time, there was nothing like it. And then we looked at that statute a little further and we found it did other odd things. It, for example, provided that a proprietor might also fair trade at the wholesale level, although it competed with its wholesalers, provided that the proprietor did not sell at a price different or other than the wholesaler. We also found that there are various provisions that a buyer could be required to sell only to persons with whom it made a resale price agreement and demand to the buyer that it too get a comparable contract from its sub-vendee. We found another provision that the seller could agree to bind itself on making a sale to -- that it would demand of the next buyer that it, too, observed the resale price maintenance agreement and make a contract of a sub-vendee. We also found a provision for the first time in any State fair trade law that it was a full defense to the action, that on the removal of a trademark, this would be a defense to the resale price maintenance contract. John M. Harlan II: Is the full scope of this statute been authoritatively construed by the Ohio courts? Myron N. Krotinger: Mr. Justice Harlan, we raised these constitutional questions. The questions must have been passed upon in accordance with the Ohio statute which requires the appellate courts to pass upon all questions raised either by assignments of their -- or by brief. What -- what the Supreme Court of Ohio did was to apply the premise in a minority -- in a minority ruling, in a 3-to-4 ruling -- John M. Harlan II: I beg your pardon, excuse me. Myron N. Krotinger: Sorry, Mr. Justice. What the Supreme Court of Ohio did in its minority ruling, a 3-to-4 decision, was to apply the premise that such a statute achieved validity and authenticity solely as a matter of state law that the -- the Court also noted the completely novel nature of the statute, that for the first time, the conception of proprietary interest was established. In other words, that a trademark holder or trade name owner must, as the statute says, retain a proprietary interest in his product and that upon giving notice, a contract eventually, the doctrine of implied contract, therefore, once the Supreme Court of Ohio started with the premise that this was wholly a matter of state law, it must necessarily, by the statute of Ohio, have overruled our contentions and I respectfully submit, Your Honor, that the judgment which was put on the books by the minority of the Court could not have been arrived at unless the very clear arguments as to conflict with the Supremacy Clause of the United States Constitution have been overruled by the minority. So, not to leave your question, Your Honor, as to whether there had been a construction, my answer is that there was an overruling of the contentions that we've made concerning the statute. So, Your Honor, then we looked a little further and we found that the only comparable statute, length and breadth that we could find was the Harris Bill, the first Harris Bill of 1958 which had been proposed in the Congress of the United States and where the Ohio statute followed most of the provisions of the Harris Act in the conception of proprietary interest, in the conception of notice, in the conception of the abnegation of the McKesson & Robbins Doctrine, in the conception that a good merchandizing practice at all levels of commerce required the overruling of Section 5 (a) (5) of the McGuire Act and in the conception that a cooperative enforcement to avoid intra-brand competition was most desirable because I think that some of the literature has shown that following the decision of this Court in McKesson & Robbins in 1956, wholesalers were discounting goods in commerce, particularly to change which thereby achieved a competitive advantage over the individual retailer. And so, with these propositions, we advised the client that we should obtain a declaratory judgment action in accordance with a time-honored practice that in a situation of this kind where injunctions might be obtained pursuant to the words of the statute, the client might well be put out of business before it constitutionality could be determined, this action was so filed. The action specified both state grounds of unconstitutionality, federal grounds of unconstitutionality and Your Honors, in the Spring in 1958, on the second amended petition, followed by an answer in cross-petition by Upjohn in which enforcement was sought and where the Upjohn answer admitted and the policy and the practice of establishing and enforcing fair trade, the matter came on by motion for immediate trial into a courtroom with Upjohn having filed a motion for summary judgment, accompanied by 18 affidavits and Judge McNeil in that courtroom said, “Now, gentlemen, we have had one declaration of unconstitutionality by Judge Gusweiler in Cincinnati, we've had the Bargain Fair case. My suggestion is that you'll sever this litigation so that you determine constitutionality on the petition and the responsive pleadings and leave the cross-petition for one side" and, may it please the Court, we also have another peculiar quirk in Ohio practice whereby we have no mandatory counterclaim procedure whatsoever. There is nothing like Federal Rule 13 of the FRCP. In fact, the Ohio statute say that at any time prior to trial, a defendant may move to either discontinue his cross-petition or cross-claim when there is no difference under the Ohio practice, he may, thereby, achieve a separate docketing if the trial court so directs. He may, upon direction of the trial court, thereby avoid special supplementary service or he may even start the case later on as a separate proceeding altogether. Perhaps, a very old-fashioned sort of practice rule, but one firmly embedded in the practice of the State of Ohio. And so, Your Honors, the parties in this proceeding proceeded accordingly. We did just that and we proceeded to go to trial upon a stipulation of evidence, and this stipulation of evidence included affidavits filed by the appellant, a deposition filed by the local manager of Upjohn, counter-affidavits as to whether or not the Upjohn method of wholesaling disclosed actual competition between the wholesalers and Upjohn and in fact, Your Honors, the evidence disclosed the del credere agency pursuant to which many wholesalers in the State of Ohio and Northern Ohio did actually go after the business of retailers with whom Upjohn sold. And we took the position back in 1958 and continuously down to the present time that within the teaching of Masonite and the more recent pronouncements of this Honorable Court, the del credere agency clearly can establish a competitive relationship between a manufacturer and an agent. Now, within the clear intent of the parties, Your Honors, every constitutional issue was thrown wide open. Therefore, the briefs -- the briefs in -- from the Court of Common Pleas on raised the issue of whether, within the meaning of 5 (a) (2) of the McGuire Act, this kind of contract could be a “contract or agreement” within the sense which the history of the McGuire Act taught us, in other words, that 0it had to be in the nature of something consensual, something consensual. As this Court held in Schwegmann, contracts and agreements follow a congressional intendment, not to be decided by the States. We checked very carefully the history of that statute and we found that there isn't a word in the legislative history whereby the term "contract and agreement" might be given a different meaning. In fact, in the section-by-section analysis of the statute, Section 5 (a) (2) is described as referring solely to contracts. The amendment of 5 (a) (2) describes a permissible vertical contract manufacturer to wholesaler to retailer, they're not in so many words, but whereby the fair trade contract might require the contractee to enter into another contract. The section-by-section analysis further made perfectly plain and clear that the reversal of Schwegmann by the Congress took place in terms of Section 5 (a) (3), dealing with nonsigner clauses, nonsigners. In other words, that where a policy of the State provided that a remedy of unfair competition might be given equally against both signers and nonsigners who are not parties to the agreement. Such policy might be enforced. Well, now, in the State of Ohio, we no longer have signers and nonsigners. Signers and -- we didn't have those at all. We only had contractors and we wondered about that, and so we got the reading about the Harris Bill and we found that as the State Supreme Courts continued to knock out the nonsigner clauses. On the suggestion of Professor MacLachlan in the December 1957 Vanderbilt Law Review on a new method of fair trade, Representative Harris had introduced this bill whereby a mechanism would be established, whereby, upon giving notice of a proprietary interest, everyone would now be bound. There wouldn't be -- there just wouldn't be anymore nonsigner problem. And this proprietary interest, by shifting the basis of fair trading throughout the United States would create a method, the rationale and a new basis of interstate commerce for being better able to have an orderly marketing of goods within the fair trade laws free of rulings like Vessel, like the -- like the Master of Discount House of Washington D.C. cases which held that goods might be shipped from a nonsigner state into -- rather, into an non fair trade area into a fair trade area, but if the contract were closed outside the fair trade area, then the discounting by means of catalogue shipments was perfectly good. It would also give a rationale basis for overcoming the ruling of this Court in McKesson & Robbins. It would also give a basis for the cooperative enforcement of fair trade where, if this Court please, any cooperative enforcement of price maintenance in commerce would be suspect and interdicted as a boycott, none of which the McGuire Act permits, but which was sought by the proponents of fair trade. All this was in the Ohio statute. This was argued, Your Honors, in the Court of Common Pleas. These issues were raised. These issues were carried up to the Court of Appeals. The judge in the Court of Common Pleas agreed with us. He thought there was an unlawful delegation of the Ohio Constitution. The Court of Appeals of Cuyahoga County reversed. And in its extended ruling, specifically mentioned that there were no federal issues with which it found difficulty. Then, we went to the Supreme Court of the State of Ohio and I might add, Your Honors, that we filed a -- an application for rehearing with the Court of Appeals of Cuyahoga County in which we raised federal issues. And the Upjohn brief, a certified copy of which has been filed with this Court, in opposition to our petition for rehearing in the Court of Appeals of Cuyahoga County on the ground, perhaps, that Court had really now encompassed the federal issues. We were told by Upjohn that our position was ludicrous and in fact, the Court of Appeals had considered such issues. Then, we filed our motion to certify to the Supreme Court of Ohio on the grounds of great and general public interest -- Speaker: (Inaudible) Myron N. Krotinger: Upjohn, Your Honor. Speaker: (Inaudible) Myron N. Krotinger: No, Upjohn's brief to the Court of Appeals. We then filed our motion to certify. Our motion to certify included a broad-gauged statement of federal issues as well as some detail of the federal issues now before the Court and Upjohn joined in our motion to certify on the ground that all these issues should be disposed of by the Supreme Court of the State of Ohio and Your Honors, our briefs in the Supreme Court raised these issues. Raised the issues which have appeared in our jurisdictional statement and which have appeared in our briefs before this Honorable Court. Now, under the law of Ohio, where as stated the law requires the appellate court to pass on all errors and briefs, the minority of the Supreme Court of -- of our State sustained the statute in a 4-to-3 decision. In other words, we won the battle and lost the war in the Supreme Court of Ohio and upon our notice to certify, rather our motion, our notice of appeal to this Court, we asked the Clerk, please, to send to the Clerk of the Supreme Court of the United States all documents upon which the Supreme Court of Ohio had passed, all briefs before the Supreme Court of Ohio were lodged in this Court by the Clerk of the Supreme Court of Ohio and these briefs show all of these contentions. In other words, we first contend, Your Honors, that there is no contract within the meaning of Section 5 (a) (2) created by the State of Ohio. In other words, the congressional history of the McGuire Act must show some sort of consensual agreement. It is not enough that on the facts of this case, Upjohn gave Hudson notice of a third party's contract. Speaker: (Inaudible) Myron N. Krotinger: Paragraph 2. Speaker: (Inaudible) Myron N. Krotinger: 5 (a) (3)? Well, 5 (a) (3), Your Honor, is the nonsigner clause. Speaker: Yes, that's right. Myron N. Krotinger: Right. Now, the nonsigner clause was meant to accommodate the nonsigner provisions of state statutes. Speaker: (Inaudible) Myron N. Krotinger: No, Your Honor. It does so but on the theory that this was a direct contract and there is no state policy which makes other than contractual obligations effective, direct -- direct contract. Speaker: (Inaudible) Myron N. Krotinger: Yes. Speaker: (Inaudible) Myron N. Krotinger: Yes, Your Honor. Speaker: (Inaudible) Myron N. Krotinger: It does not apply it. In other words, the basic policy of the statute and may I read from the legislative history, in a colloquy, it's the record at page 226, where Mr. Sweeny is talking to Mr. James Gorrell, the legislative exponent. “Apparently, from your House Bill 318, you have attempted to get around the provision or to write in the law a corrective feature whereby notice to anyone by mail or otherwise or perhaps markings on the package would be sufficient to bind a nonsigner and the very acceptance of his product for sale by him would be deemed to be a contract with the manufacturer. Am I correct on that? ” Mr. Gorrell: “That's our theory. ” Mr. Sweeny: “One or two observations, then there's no need for a formal written contract with any distributor now. ” Mr. Gorrell: “Not under this law, true. ” Mr. Sweeny: “And one further thought arising from my ignorance, under what theory of law would you bind the third party to a contract where he had no communication whatsoever with the manufacturer? Perhaps, some of your implied warranty features are along that theory? ” Mr. Gorrell: “That is correct, sir. For example, a recent Supreme Court decisions in our State which have, in effect, knocked out the old idea of privity of contract, we are suing on a breach of warranty where it is said you had no direct contractual dealings. " The Court has said that is a pretty adequate, the doctrine has refused to apply it. I think the same thing would apply here. This Court knows the implied warranty theory is a theory of tort recovery. It's tort recovery, a means of facilitating recovery by an injured party. In fact, Mr. Gorrell also recognized that if this weren't recognized in contract theory, there would be a constitutional amendment required in the State of Ohio. And at page 269 of legislative record, and Mr. Robinson, one of the sponsors, said to Mr. Gorrell, “If the Supreme Court would deny fair trade, as you set it forth here, you have the feeling or is it your opinion, we're dealing with opinions this afternoon, in your opinion, there is only one other answer and that would be to have a fair trade amendment of the Constitution. ” Mr. Gorrell, “That's our feeling. I say, it's not only my feeling but it is the canvassed opinion of lawyers far better than I am across the country. ” In other words, Your Honors, this is the new problem of fair trade arising out of the -- the declaration of unconstitutionality by now 23 or 24 state courts around the United States of their respective nonsigner clauses. Now -- Potter Stewart: (Voice Overlap) their -- under their State Constitution? Myron N. Krotinger: Yes, Your Honor. Now, the basic problem that now comes to all of us is here, we now have a fundamental shift in the basis and policy of fair trade law around the United States, fundamental shift. The Miller-Tydings Act proceeded on the theory of contract or agreement. In the ruling by this Court in Schwegmann, the Court discussed the requirements of contract or agreement. In the 1952 McGuire Act, the Congress of the United States discussed contract or agreement, it never -- never discussed proprietary interest or another. Not until the Harris Bill and the new and novel theory of 1958 and Professor MacLachlan's suggestion was this new basic notion of a new method of handling a fair trade broached before the Congress and the American public. I'm reserving 10 minutes of my time. May I answer your question, Mr. Justice Harlan? John M. Harlan II: (Inaudible) Ralph M. Carson: Mr. Chief -- Earl Warren: Mr. Carson. Ralph M. Carson: Mr. Chief Justice, may it please the Court. In presenting this case on behalf of the appellee, Upjohn Company, I beg to call the Court's attention to the parallel and, yet, slightly different position of these two appellees in 489 and 490 where Mr. Krotinger will argue for appellant in each and Mr. Willis will follow me in speaking for the appellee, Lilly. These cases are essentially similar and yet, there are differences in details which may be important on the two appeals. I refer for a definition of what I've just said and a definition of the jurisdictional point, Mr. Krotinger has just talked about, to the record and may I say in passing that what I've heard in the appellant's presentation is not very familiar to me from the record. At page 380 of the large brown record in the Upjohn case, we have the statement of the Court of Appeals of Cuyahoga County. In the two cases, Lilly and Upjohn, in the fifth line of Justice Skeel's opinion, both cases involved some of the facts and with the questions to be determined by this Court the same in each case, the appeals will be considered together. The assignment of error is identical in both cases. Now, what is that assignment? You've heard Mr. Krotinger paint at large the numerous constitutional points he raised. The quotation by the Ohio court is “For its assignment of error, defendant-appellant asserts that the Court of Common Pleas, the trial court, of Cuyahoga County erred in declaring, I interpolate the statute, to be in violation of the Constitution of the State of Ohio. Now, I, therefore, deem it our duty as appellees to present to Your Honors the facts of the record bearing on the settled doctrine of this Court, that the Court will not act under Section -- of the section of the code where the judgment of the state court to be reviewed lacks the requisite finality and that this Court has jurisdiction or takes jurisdiction only of federal questions passed on by the highest court of the State being reviewed. I will spend relatively little of my short time on the substance dealing and passing only with the so-called McKesson & Robins point which affects Upjohn peculiarly. John M. Harlan II: Mr. Carson. Ralph M. Carson: Yes, Your Honor? John M. Harlan II: At page (Inaudible) this case and -- Ralph M. Carson: Yes. John M. Harlan II: (Inaudible) Ralph M. Carson: I'd be glad to do so. It's been remanded by the Supreme Court of Ohio to the trial court for trial of the remaining issues which were issues severed on May 2, 1960 in the trial court. I intended to come to that later and, on which, the so-called McKesson & Robbins point, previously reserved by stipulation, will be tried on which other defenses of Mr. Krotinger's client will be tried and any defenses he adds by amendment, our right to an injunction and damages will be tried. Therefore, we say, and I'm sketching it very rapidly, that we lack finality here, not that we, as he implies, lack of confidence in the merits, Mr. Willis will deal with them, but it's fair to say that the degree of finality which Your Honors have sketched in the Republic National Gas case and others, and they're all in our brief, is not here at all. The answer to your question, sir, is back on the trial court on the severed questions. John M. Harlan II: (Inaudible) Ralph M. Carson: Yes, Your Honor. John M. Harlan II: (Inaudible) Ralph M. Carson: That's an exact statement with two possible additions that, in Mr. Krotinger's favor, I should add to be entirely candid. There is a possible inferential decision by the Supreme Court of Ohio to the effect that the so-called notice point in Mr. Krotinger's appeal is consistent with the Federal Constitution. That's a matter of construction of the Ohio statute within the framework of the congressional exemptions in the McGuire Act and the Miller-Tydings Act. He says that's been construed in our favor against him by the Ohio Supreme Court. It's not to be found in the language but that's an inferential construction, as they are told. Nothing else, I think, comes out of the Ohio Supreme Court except the final determination as to the Ohio Constitution and its impact on this new statute of 1959. Your Honors will appreciate how that is so. If you gather from Mr. Krotinger's history that in Ohio, the prior nonsigner statute and the Bargain Fair case so-called of the decision of the Ohio Supreme Court, declaring the prior statute unconstitutional as an undue delegation of legislative power, how those preempted the entire foreground of the -- of the litigation. Therefore, it became important to the parties, as I gather from the record, and I was not in the Ohio litigation but I'm confined by the record as I take it the Court is, as I gather, it was important to the parties to have a determination of the Ohio constitutional point. Now, since that part is raised by the question, may I at once go to that and refer Your Honors to the place in this comprehensive record where the Supreme Court dealt with it. It's at page 413, and I skip any further references to the prior decisions below. Your Honors will find, beginning at 414, the long opinion of the Supreme Court starting with the case I mentioned, the Bargain Fair case, where they declared that the prior statute in Ohio was unconstitutional. It goes on to discuss the Ohio Constitution. He goes on to quote on page 416, from the new 1959 statute, the definition of the proprietor's proprietary interest in the trademarked commodity which is to be fair traded and then he goes on, on page 417, to say this brings us to a consideration of the second -- of the new concepts incorporated in the new Act. He quotes the definition of contract in the new Act. Then, he says, at page 417, "This provision is the core of the Act, the definition of contract. " Now, at that point, Mr. Krotinger has said and he's appealed the legislative history somewhere else, that is, in Congress of another bill which he says is the progenitor of this Ohio statute. Mr. Krotinger has said that those words mean a consensual contract. "Contract means any agreement, written or verbal or arising from the acts of the parties," says the Ohio statute and Mr. Krotinger says that the -- the permissive federal legislation contract or agreement is limited to something consensual. The Ohio court has not had an opportunity to pass on that with respect to the federal problem, although it has construed the Ohio statute. Arthur J. Goldberg: Mr. Carson. Ralph M. Carson: Yes, sir? Yes, Your Honor? Arthur J. Goldberg: (Inaudible) Ralph M. Carson: Yes. Arthur J. Goldberg: (Inaudible) Ralph M. Carson: Yes. Arthur J. Goldberg: (Inaudible) Ralph M. Carson: Yes. Arthur J. Goldberg: (Inaudible) Ralph M. Carson: Yes. Arthur J. Goldberg: (Inaudible) Ralph M. Carson: Yes. Arthur J. Goldberg: (Inaudible) Ralph M. Carson: Yes. Arthur J. Goldberg: (Inaudible) Ralph M. Carson: Well, I can only say that it was raised. You will find no discussion of it in the Court of Appeals and in the Supreme Court, where Mr. Krotinger says and has filed the briefs that it was also raised, you would find the only reference on page 424, Your Honor, after discussing the Ohio constitutional attack on the Ohio statute, in the third line of 424, the presiding -- the prevailing group and the Court says, "None of the constitutional attacks on this new Act have merit." Arthur J. Goldberg: (Inaudible) Ralph M. Carson: I assume that. Arthur J. Goldberg: (Inaudible) Ralph M. Carson: Yes. Arthur J. Goldberg: (Inaudible) Ralph M. Carson: You could say. Arthur J. Goldberg: (Inaudible) Ralph M. Carson: You -- you -- Arthur J. Goldberg: (Inaudible) about the state law and federal law? Ralph M. Carson: I think he could, Your Honor, on two grounds. I think this Court ought to hear the Ohio Supreme Court's ruling on the federal statutory point and above all, in relation to that, this -- this Court, I think, would consider itself bound by what the Ohio court said its statute meant. Now, we must bear in mind that on this record, in the -- both cases, I think, certainly in my case, there are written contracts. The record is replete with the fact that Upjohn entered into written fair trade price maintenance contract as permitted by the statute with numerous pharmacists. It has 70,000 retail outlets. This appellant did not sign a contract but he admits that he had notice, and the notice is in the record at page 4, of the existence of the contracts and of the price maintenance requirement. Now, what is the effect of those facts on the construction of the Ohio statute? I think Your Honors would want to hear from the Ohio Supreme Court as to what they thought, in regard to Mr. Krotinger's contention, applied to the Ohio statute because they will construe that statute. Byron R. White: Well, let's assume for the moment -- let's assume for the moment that the Ohio court -- that these points had been raised -- Ralph M. Carson: Yes, sir. Byron R. White: -- before the Ohio court and they just ignored them. Ralph M. Carson: Yes, sir. Byron R. White: You would still -- Ralph M. Carson: I would, sir. I think I would. Byron R. White: -- think that we ought to send it back to the Ohio court. Ralph M. Carson: I think -- I think, Your Honors, that -- that case, we want to send it back. Byron R. White: But the real question is, this -- if they were raised in the -- in the Ohio Supreme Court and urged there in briefs or otherwise or it -- or it consists with the rule and then the Court said none of the constitutional attack have merit, what about that? Ralph M. Carson: I believe that refers to the statement on the preceding page, 423, which begins with at the top of the page, “Two other matters are urged as to the constitutionality of this legislation,” and he goes on “First, delegation of power -- Byron R. White: I see. Ralph M. Carson: -- Second is final contention is sale of his own property.” Byron R. White: But the -- were -- were the other federal points raised? Do you designate the points on appeal or -- or just brief them (Voice Overlap)? Ralph M. Carson: You -- you certify questions and you brief them both. Byron R. White: And were the federal questions in that? Ralph M. Carson: I -- yes, I believe they were, Your Honor, but I believe also, and I have not had the time and opportunity since receiving the reply brief to check the Ohio practice but I am told the Ohio rules quoted by my adversary, with dots or asterisks at that point, leave it in the discretion of the Ohio court whether to rule on these points that have been raised. Now -- Byron R. White: Because they were not raised in the lower court -- Ralph M. Carson: Yes. Byron R. White: -- is that it? Ralph M. Carson: Or because that might be so. I can't conceive what would move their discretion. They may have something to tribute. Byron R. White: You -- you agree that they were presented to the -- Ralph M. Carson: They where in the briefs. Byron R. White: -- Supreme Court of Ohio. Ralph M. Carson: They were in the briefs. Byron R. White: They were presented. Ralph M. Carson: Yes. Tom C. Clark: They were presented in the Court of Appeals, also in the complaint of (Voice Overlap) -- Ralph M. Carson: Well, I've read, Your Honor, what the Court of Appeals said as to the certification -- Tom C. Clark: It may now -- Ralph M. Carson: Limited -- Tom C. Clark: (Voice Overlap) -- Ralph M. Carson: Sir? Tom C. Clark: -- the rehearing petition of the (Voice Overlap) -- Ralph M. Carson: Yes, the rehearing petition did -- did mention. Now -- Potter Stewart: The Court of Appeals opinion at page 394 talks about the McGuire Act. Ralph M. Carson: 394? Potter Stewart: In the record, unless I'm reading another thing here. Ralph M. Carson: Yes, the Court of Appeals opinion discusses the McGuire Act. This is a part of legislative history. I don't know whether it purports to rule on Mr. Krotinger's contention. I do want to make, since I'm confusing my argument to answer the Court's questions, I do want to make a clear exception to what I've been saying. What Mr. Krotinger calls to the McKesson & Robbins point that is the contention that we sold to wholesalers, with whom we were in competition at the resale level, was expressly carved out of the case by a stipulation which I can best state to the Court by reading it from Mr. Krotinger's brief at page 23 of the appellants brief and this is referred to in our brief. Speaker: (Inaudible) Ralph M. Carson: 10? Speaker: (Inaudible) Ralph M. Carson: Well, I'll refer to page 10 of our brief which gives the substance of the stipulation as quoted by him from the jurisdictional statement. “Both Upjohn and Lilly filed answers and so on in order to narrow and thereby, to expedite the determination of the issues before the Court. The parties agreed the cases should be heard by the Court of Common Pleas on the issues raised by plaintiff-appellants' petitions for declaratory judgments and defendant-appellees entered thereto. The litigation was, therefore, narrowed to the basic issue of the constitutionality of the new fair trade law. " And we say that means the Ohio constitutionality. "The parties reserved for future determination," and thus relates to the McKesson & Robbins point, the parties reserved for future determination. The issue is raised by defendant-appellees' cross-petitions and plaintiff-appellants replies. Now, the essential thing, Your Honors, in the chronology here is that this McKesson & Robbins point came later in the litigation and was, therefore, carved out in the reserved and to refer to the chronology, Your Honors might want to look at the record. I refer to the docket entries at page -- at record, page 367 and -- to 370. Now, these show that, as shown at page -- the docket entries are into 367 to 370 and the amended answer of Hudson in which it, for the first time, raised what I call the McKesson & Robbins issue, was filed April 25, 1960, as shown at page 368 of the docket and the substance containing the McKesson & Robbins defense is at pages 27 and 29 or rather 29 of this record, so that when we talk about what went to the Ohio appellate courts, we must carve that out. And when you come to analyze out what went to those courts, I think you will find that they survived only for determination inferentially this so-called notice point in the analysis of the McGuire Act. Now, Your Honors might want to look in that connection, page 23 of Mr. Krotinger's brief and I apologize for the confusion of the record, but that's what we have brought here. Page 23, at the middle of the page, the opinion of the Supreme Court did not discuss the permissible scope of either state fair trade legislation or fair trade contract under the federal enabling legislation. At page 27, the controlling of the minority opinion of the Supreme Court never adverted to any issues concerning federal state relationships in price fixing by private persons in interstate commerce. William O. Douglas: (Inaudible) were present? Ralph M. Carson: I believe that they were adverted to in a vague way in appellant's briefs, yes, sir. Tom C. Clark: Would -- Ralph M. Carson: But not the McKesson & Robbins point that I've just mentioned as an exception. Excuse me, Justice Clark? Tom C. Clark: Would that be in paragraph on 424 wherein they say the -- the same passed on any constitutional questions because they don't have enough votes to -- in the opinion. I think (Inaudible) Ralph M. Carson: Because they don't have enough votes, so this refers to a limitation in the Ohio Constitution that -- which has been accepted by a ruling in this Court cited in one of the amicus briefs that it requires six members of the Court -- Tom C. Clark: As I understand it -- Ralph M. Carson: -- to declare. Tom C. Clark: -- I don't think that's the reason why they did not win. Ralph M. Carson: It could well be, sir. Tom C. Clark: Otherwise, it wouldn't -- why would they put that in here? Ralph M. Carson: Well, perhaps, just to explain how the 4-to-3 vote operates for the purposes of the public reading of this decision. John M. Harlan II: That has nothing to do with the Federal Constitution. Ralph M. Carson: No, sir. It has nothing to do with the Federal Constitution but it -- it might well be, sir. John M. Harlan II: (Voice Overlap) Ohio Constitution. Ralph M. Carson: An Ohio Constitution. William O. Douglas: Well, it might be unconstitutional because it didn't comply with the McGuire Act. Ralph M. Carson: The Supreme Court didn't think so and didn't say so. William O. Douglas: Well, I -- Ralph M. Carson: The Supreme Court denied the appeal in which Mr. Krotinger says this point was raised and all I say, Your Honor, is the Supreme Court did not discuss the points that the Court's questions have been raising. And I refer to the matter of certificate from the Court would -- which this Court frequently, at requests, as to what was actually decided below but we don't have that here. We have only the jurisdictional statement which is excessively (Inaudible) Hugo L. Black: Is it your argument that the case did not pass on the question of (Inaudible) Ralph M. Carson: Yes, sir, I believe so. Hugo L. Black: Why isn't that -- Ralph M. Carson: Because -- Hugo L. Black: -- objection -- Ralph M. Carson: Sir? Hugo L. Black: -- if it's raised? Ralph M. Carson: If it's raised? I believe this Court, according to its practice, has required an expression of the -- of the opinion of the highest court on all questions raised before it will review them. Certainly, I would say that was so as to the meaning of the Ohio statute. Now, I'm less positive as to federal constitutional questions. But I do make it clear, Your Honor, again, I trust that the so-called McKesson & Robbins question, the competition with the wholesaler at the retail level was reserved like other matters in the case by express stipulation -- Byron R. White: That was never -- Ralph M. Carson: -- for trial in the cases remanded. Byron R. White: -- that was never raised in the Supreme Court. Ralph M. Carson: Never raised in the Supreme Court. Tom C. Clark: But the -- Ralph M. Carson: Now -- Tom C. Clark: -- the notice was, isn't it? Ralph M. Carson: The notice was. Now, I'm sorry this is so laborious, Your Honors, but Mr. Krotinger has favored us all by filing with the Court copies of all the briefs below and he has said that we accepted or implied that we accepted the argument that he made that the McKesson & Robbins case was up on appeal. Now, I have here the -- two of the briefs of the appellee, Upjohn. One in the Court of Common Pleas at page 28, where we say the McKesson & Robbins argument is completely out of place and irrelevant to the case at bar, so we ask the Court not to discuss it. The same -- the same argument is a statement that's made by us in the briefs in the Supreme Court and in the trial court. Now -- Byron R. White: Why would he even have to say that in the Supreme Court when he hasn't urged the point on the -- upon (Inaudible)? Ralph M. Carson: Because Mr. Krotinger urged it. Byron R. White: So he did raise it. Ralph M. Carson: He did raise it, yes. Byron R. White: He raised it in the Supreme Court. Ralph M. Carson: Yes, exactly. Byron R. White: He presented it to the Court. Ralph M. Carson: And we call attention, again, the fact, as admitted by his own briefs, that there was a stipulation taking out and reserving for future trial this issue with others, pleading damages and injunction on the remand which the courts have now ordered. Now, I had hoped to leave the Court in a more orderly way through what I apologize for as a very confused record but I trust, I've said enough with the references in the brief to show that there is -- here, no finality of the kind requisite for this Court's jurisdiction under the statute and that almost none of the constitutional questions asserted here, except perhaps one, the no – so called notice question has been passed on even inferentially by the Ohio court. Now, Mr. Krotinger said orally that there was something about a del credere agency in this case and he claimed that there -- thus, involved, I think he said, horizontal price fixing. The del credere agency, which existed in a very few cases, in the case of Upjohn, contained no provisions which authorized the distributor or required it to make a similar agreement with other distributors. Section 6 of the del credere agency agreement, which is in this record, excuse me, Section 6, which is at page 107 specifically says, “The agent shall not control or attempt to control prices. ” The difficulty one has in presenting this cause in a partial record is emphasized by the fact that I'm informed, but is not in the record, that the del credere agencies have all been terminated as of the date after the first proceedings below, that is, as of December 1961 but you won't find that in this record because this point, with other points, is going back on the remand from the Supreme Court. Now, may I then pass to the allegation, which is also in Mr. Krotinger's brief, that due process of law, federal due process of law -- could I have their -- their reply brief? Federal -- John M. Harlan II: (Inaudible) Ralph M. Carson: -- federal -- John M. Harlan II: (Inaudible) Ralph M. Carson: Yes, sir? John M. Harlan II: (Inaudible) jurisdiction had -- excuse me. If the Supreme Court of Ohio (Inaudible) comes to the question that's been raised, what was the purpose of the remand? Ralph M. Carson: The purpose of the remand was for trial on the remaining issues including the reserved, the severed cross-petition of the defendant, Upjohn and the amended reply of Hudson thereto, also for injunctive relief and damages. The case is still on trial. Nothing has been done, as stated in our brief, pending the hearing by this Court but it's now in the lower courts of Ohio. Do I answer Your Honor's question? John M. Harlan II: Well, I think so (Voice Overlap) -- Ralph M. Carson: You asked what was the purpose of the remand? John M. Harlan II: What I'm trying to get at is, if this case is ripe for decision up here, I don't see what the remand is for if the Supreme Court (Inaudible) Ralph M. Carson: Well, I -- my -- John M. Harlan II: -- purpose of the remand. Ralph M. Carson: My submission had been that this is not ripe for decision here. My submission had been that we are now in the middle of an Ohio litigation in which the constitutionality of the statute had been decided and the remaining issues, including any new ones that Mr. Krotinger asserts, are to go back to trial. John M. Harlan II: Right, but this is all part of your briefs and this appeared very clearly (Inaudible) the State made. Ralph M. Carson: Well, I -- I must admit that the record is not clear and the allegations concerning the record are not clear. Now, as to remand, may I refer Your Honor -- Your Honors to the action of the Court of Appeals which did remand the cause at page -- at page 412. It remanded to the Court of Common Pleas of the Cuyahoga County to carry this judgment into effect and for execution and for further proceedings. At the end of the Court of -- in the Supreme Court's opinion, you'll find simply an affirmance. Now, as to the due process point, I'm going to find their brief, as to the possibility of federal due process having been passed on by the Supreme Court, I find that in their reply brief -- in their brief in the Supreme Court at page 30, they say only State of Ohio due process is involved and they discuss only that form of due process. And the reason they do show, they're showing it elsewhere in their briefs because in Ohio, they were confronted with this Court's decision in the Old Dearborn case that upheld the enforcement of a state non -- nonsigner law. Therefore, they discussed, in Ohio, only state due process. Going to the notice point, which approaches the substance and which I feel will be further developed by Mr. -- Mr. Willis. I merely mentioned that we have in this case, as I've said before, series of express contracts by the appellee, Upjohn, which as to the appellant is conveyed to him by notice. Now, the Court in -- the Supreme Court of Ohio says that this is a valid application or protection of trademarked property, which is all that's involved here, where the producers are in competition as they are here. And it construes the Ohio statute, we say, authoritatively in that regard. We're not confined to notice. We have the concept of implied contract discussed in the Supreme Court and as to Mr. Krotinger's suggestion that this is a mere fecal mask, I happened to have taken with me Jenks' Old History of English Law from which it's clear that implied contract is one of the oldest hits of the common law jurisdiction in Anglo-American law. I think that we should say, therefore, that on the implied contract construction which this Ohio legislature and Supreme Court have (Inaudible), we are here as regard to the McGuire Act with full authority of Congress which enacted that Act to deal with this special situation. I apologize, Mr. Chief Justice, for the hasty manner which I've been obliged to present a complicated record. Earl Warren: No problem. Mr. Krotinger, I think you have very few moments to -- Myron N. Krotinger: Your Honor -- Earl Warren: -- pose. Myron N. Krotinger: -- if the Court please, I would like to lay to rest this ghost that the issues were not raised. I am reading from the brief of defendant-appellant in opposition to petition for rehearing in the Court of Appeals and on page 2, a certified copy of this brief is in this Court. None of the plans raised by the applicant for reconsideration in the instant case are moot. All were treated far more extensively in the original briefs submitted to the Court. All were argued orally by counsel for the applicant at the hearing before this Court. Applicant's first contention was at the Court, does not appear to have considered the Supremacy Clause of the Constitution, which applicant asserts, requires the observance by this Court of the McGuire Act. Applicant's argument does not include a single authority not brought to the Court's attention initially. Starting on page 1 and continuing on page 22 of applicant's initial answer brief in the Upjohn Company case, counsel for the applicant opened up the very same attack he is now asserting. More importantly, the majority, in its opinion, clearly considered the question raised by federal statutes, so that applicant's assertion that this Court missed the “impact of the Supremacy Clause of the Federal Constitution” boarders on a ludicrous. This Court in its majority opinion discussed the evolution of federal statutory law and the significant federal decisions regarding fair trade and paying state in detail. The Court properly concluded that the implied contract provision of the new Act did not offend constitutional provisions. I might add, I omitted one sentence in which the Court's attention was also pointed out, that in the initial answer brief in the Eli Lilly case in the Court of Appeals, 12 pages are devoted to development of the same point, namely, the Supremacy Clause. We then go to our brief in support of motion to certify where the broad gauge second issue is stated in accordance with sound Ohio practice to “Is the Ohio fair trade law inclusive violative of the Constitution of the United States or of any law of the United States?” The Court of Appeals for Cuyahoga County answered, “No.” Plaintiff-appellant contends the answer should be yes. Page 18 of our brief, brave questions exists as to whether the new Ohio Fair Trade Act violates the Supremacy Clause of the United States Constitution by exceeding the bounds set for fair trade legislation by the McGuire Act. Federal enabling legislation requires there be an actual contract under state fair trade laws not mere contracts by notice and so we go on. Upjohn joined in this motion to certify upon these grounds. We have, as an appendix to our reply brief in this Court, Your Honor, we have added the table of contents of each of our briefs in each of the courts. We also, again, respectfully direct the Court's attention to Section 2505.21 of the Ohio Code which commands appeals taken on questions of law shall be heard upon assignments of (Inaudible) in the clause or set out in the briefs of the appellant before hearing. The suggestion of Mr. Carson that we have omitted part of the statute, which would leave such passage discretionary with the Court, is I don't think well-taken. I have 2505.21 with sentence which was left out and as to which, afterwards, were out. In its decision, the reviewing court shall specify such reassigned errors as it finds or shown by the record and the reasons for the decision, this has been construed as referring to reversal, was settled Ohio appellate law, these were contrary.

William H. Rehnquist: We will hear argument first this morning in No. 87-821, Pittston Coal Group against Sebben; No. 87-827, Ann McLaughlin versus Sebben; and No. 87-1095, Director versus Broyles. Mr. Ayer, you may proceed whenever you're ready. Donald B. Ayer: Thank you, Mr. Chief Justice, and may it please the Court. The respondents in these cases applied between 1973 and 1980 for Black Lung Benefits under Part C of the Black Lung Benefits Act. The claims in all instances were denied. Some of them were in fact denied for the second time, but all of them were denied under the Department of Labor's so-called interim regulation which was adopted in response to the 1977 Amendments to the Black Lung Benefits Act. The Courts of Appeals below the Eighth Circuit and the Fourth Circuit struck down the denials of these claims on the ground that the interim regulation was incompatible with the 1977 amendments under the provision which is no codified at 30 U.S.C. 902(f)(2), which requires that the criteria under those interim standards be "not more restrictive than criteria applied by HEW to Part (b) claims filed before July 1, 1973. " The Department of Labor interim regulation is similar to the HEW rule in many respects. It is a presumption, and I will talk more later if I get the chance about the details of it. It also however has some major differences. One of the differences is a difference that is an issue in this case, and that is the question of how you can invoke what I will now call the causation prong of the two-prong test necessary to invoke the presumption which exists under both the HEW interim rule and the Department of Labor interim rule. Under the HEW rule, you were required to show that your pneumoconiosis was caused by coal mine employment, and you were allowed an inference, indeed, a presumption to be drawn from the fact that you had ten years of coal mine experience, a presumption that it was in fact caused by coal mine employment. The difference in this case which is relevant is that under the Department of Labor interim regulation, you simply must have ten years of coal mine employment, and there is no opportunity to prove causation in any other way in order to trigger the presumption. I should note and I think it is clear from the briefs, that in any event if the presumption is not invoked, there is still an opportunity to prove entitlement to benefits by going back to permanent regulations in effect, allowing you to prove all the elements, that is, total disability, pneumoconiosis, and causation by coal mine employment. Our position in this case-- William J. Brennan, Jr.: True as for both B and C? Donald B. Ayer: --That is true as to both B and C. There is some confusion now in the Courts of Appeals as to precisely which set of permanent regulations you go back to, but you have an opportunity under both to go back and prove that-- William J. Brennan, Jr.: The same kinds of proofs under either? Donald B. Ayer: --Well, the permanent regulations are different in some significant respects, and it would take a good long time to go through all the ways in which they are different. And it's enough off the point here that I would like to pass over that if I can. The position of the Government in this case is that they are not... this difference is not a more restrictive criteria because the appropriate reading of criteria within the meaning of Section 902(f)(2), looking to the legislative context and trying to make sense out of the amendments passed in 1977 is to read it as essentially medical test criteria. Now, in that regard, and in order to come to that conclusion, it is important and necessary I think to look to the background of the amendments in 1977 which were in fact... it's clear from the hearings and the debate... a political compromise which like many political compromises had an ambiguous result. The main focus, if you can say that, of the debate throughout the mid 1970s was that there were different results reached under the HEW interim rules which applied to claims filed prior to 1973 and under the so-called Part B program, and the results reached under the permanent regulations which the Department of Labor was required to apply to Part C claims where the claims were filed after mid-1973. That was the main focus. There are different views that were taken in the legislature and in the testimony that was given of that difference. One view was the view... I can encapsulate in the notion that the Department of Labor approval rate was unreasonably low, and something had to be done about it. Its approval rate at that time was something under 10 percent. One of the main focuses of that criticism was the fact that medical test criteria, specifically, the ventilatory study scores, that were applied under the HEW permanent regulations that the Department of Labor had to apply were tougher, significantly tougher, than the ventilatory study scores applied under the HEW interim presumption. That was one of the major focuses of the criticism, and a major explanation of the difference, not the only explanation, but a major one. This general view that the Department of Labor approval rate was too low and something had to be done about it was embodied in the House bill which was passed in 1977, and especially, although not again solely, embodied in the language which said that they were to apply criteria "not more restrictive than the criteria applied under the HEW interim presumption under Part B.. " A second view, again not mutually exclusive with this first one, but certainly a very different emphasis, was a view that saw... that expressed significant doubts about the accuracy of the standards and the process that was being applied in general, and particularly, that was being applied by HEW under the interim regulation. That is to say, the extent to which... doubts about the extent to which they were really identifying cases of people who were disabled with pneumoconiosis from coal mine employment as opposed to simply paying benefits to people who were coal miners of middle or advanced years who were able to meet certain criteria that really didn't demonstrate that they had the conditions that the statute was aimed at. This general view, I think it's fair to say, was embodied in the Senate bill which was passed in 1977 which called for the re-promulgation of standards, permanent standards, by the Department of Labor taking a different approach really. Not so much treating it as an entitlement program as treating it as a workers' compensation program and specifically trying to identify medical tests necessary to establish whether someone is or is not totally disabled with pneumoconiosis from coal mine employment. And specifically, they enacted in the Senate bill a provision that says the Department of Labor shall promulgate criteria for all appropriate medical tests which accurately reflect total disability in coal miners. The conference committee put together essentially, in what really I think has to be described as an uneasy compromise, both the provisions of the House bill and the provisions of the Senate bill, and to a significant degree, tried to serve both purposes. On the one hand, they called for the promulgation of new permanent regulations in the words of the Senate bill, criteria for all appropriate medical tests to be promulgated with the consultation of the National Institute of Occupational Safety and health and to be done permanently, and they realized it would take some period of time to do that. As to the interim period, before the promulgation of those permanent regulations, I must say I think the signals were somewhat mixed as to precisely what was supposed to be done. On the one hand, the House bill's language talking about criteria not more restrictive than the HEW provision, the HEW interim regulation, was included. And there's no question that they intended to move a good deal closer to approximating what the HEW administration was doing than had been done by the Department of Labor previously. Sandra Day O'Connor: Well, Mr. Ayer, one does get the impression at least that the over-arching purpose of Congress was to make sure that miners who would have been entitled to benefits under HEW's interim Part B regulations would be entitled to benefits under Labor's interim Part C regulations. Donald B. Ayer: Well, I think that that is certainly... I think there is a good deal of evidence for that in various parts of, if you pick and choose and you don't have to pick and choose too carefully, you can certainly find people who said things that indicated that with regard to the enactment of the House bill. I think it is a good deal harder to find that supported with regard to the Senate bill because they simply didn't take any such step. And I think what we need to do is to try analyze what was the intent in enacting the compromise, which was the conference bill, because that actually is what was enacted. And in that regard, I would not suggest that the words are wholly unambiguous, but there are indications that they intended something which is quite a lot different than simply whatever HEW was doing. They did not want the same results that HEW achieved, and that is indicated by a number of different sources that we can turn to. One is the conference report itself where they indicated, and I quote: "The conference substitute conforms to the Senate amendment with the proviso that the so-called interim Part B medical standards are to be applied to all reviewed and pending claims. " "Such regulations, that is, the interim regulations shall not provide more restrictive criteria than those applicable to a claim filed on June 30, 1973, except that in determining claims under such criteria, all relevant medical evidence shall be considered in accordance with the standards prescribed by the Secretary of Labor. " They did not say in any of the bills and certainly not in the final act as passed that they were trying to mirror precisely what HEW had done. They did not indicate as they could easily have done had they wanted to that the Department of Labor was simply to re-promulgate the HEW interim regulation in exact terms. It's quite clear they didn't intend that at all. Anthony M. Kennedy: It is not clear to me, Mr. Ayer, why if you prevail in your argument that criteria means medical criteria. That we are not confronted here with the medical criteria anyway. This was raised in the briefs. Isn't disability ultimately, significantly a medical judgment? Donald B. Ayer: Well, I think the words medical criteria, as has been indicated in the briefs, is not itself wholly unambiguous. But I think when you look to the specific focus of much of the tension which was a very concrete difference in ventilatory study scores that you had to have in order to qualify for the presumption under Part B under the interim regulation as opposed to a table that looked very much the same except it had different numbers on it that applied under the so-called permanent regulations the Department of Labor had to apply. And it was very clear that that particular difference made a significant difference simply turning on the day on which you applied as to whether you qualified or not. Anthony M. Kennedy: But in any number of Social Security cases, especially in the circuit courts, the courts look at medical evidence to determine disability. And then you're telling us that oh, we have to read this regulation to that it means medical criteria, and then respondents point out, what difference does it make, you lose anyway. Well, isn't disability significantly a medical judgment? Donald B. Ayer: I don't think, we are not advocating a reading that indicates simply there's a medical judgment involved. Anthony M. Kennedy: You're advocating that it says medical criteria. Donald B. Ayer: Medical test criteria. Anthony M. Kennedy: All right. Medical test criteria. Donald B. Ayer: Okay. Anthony M. Kennedy: And my question is why isn't that a large part of the judgment on disability anyway? Donald B. Ayer: Well, it certainly can be. But we do think it is not dispositive, and it does not... those kind of criteria do not include the decision by the Department of Labor whether or not to allow proof of causation, that is, proof of causation by coal mine employment by means other than the fact that you had ten years of coal mine employment. That is a judgment about how the case will be adjudicated and what kinds of evidence will be allowed in. The-- Antonin Scalia: Mr. Ayer, the problem I have is I find the intent that you ask us to attribute to this statute a very implausible one. You're telling us that Congress was very concerned that you use medical criteria in your sense, test criteria, that are no more strict than what HEW had been using. But so long as you do that you can import all other sorts of qualifications that will reduce the number of successful claimants, including if you haven't been a coal miner for ten years, you don't get the benefit of the presumption at all. I suppose you could have said 20 years or 30 years. That's a weird intent. You have to be no more strict on the medical criteria, but as for everything else, you can tighten it up as much as you like. Why would they have that kind of an intent? Donald B. Ayer: --Well, I think what has to be kept in mind is that the Department of Labor was operating in the face of what were indeed competing signals. And one of the ways they tried to deal with that problem was to go back to Congress and present to the leadership in the legislature what it was they were doing. The presented one set of regulations which were found to be quite inappropriate. They presented another set which were found to be by and large acceptable, including this provision which no one challenged at all. The one thing that I think needs to be gotten cut is that somehow we have to read the statute in a way that allows the existence of additional rebuttal criteria under the DOL regulation which do exist which I think clearly are appropriate and which all parties here agree are appropriate. And somehow it has to be found that the statute's prohibition against more restrictive criteria doesn't bar that. I think it's a difficult thing to do, and the most sensible way to do it is to go back to the compromise that was entered into, where on the one hand they wanted to come a good deal closer to what HEW was doing under the interim regulation while at the same time not mirroring the results which they reached. I would like to just address briefly, if I could, the second issue which the Court will have to reach should it decide that in fact the merits issue was properly decided against the position of the Government. And that is essentially the question of whether parties, claimants who have had their claims finally decided against them can come in in 1985, where the date for filing claims closed in 1980, and all of them had had exercised whatever opportunity they wanted to and had available to seek review of their claim denials, to come in with a mandamus action in order to direct that the claims be reopened. The main point I want to make with regard to that is that that is simply not a reasonable reading of the statutory provision with which we're dealing here. Section 945(b)of Title 30 U.S.C. says that the Secretary is to review each claim... that is, each claim which is pending or has previously been decided at the time these amendments go into effect... "taking into account the 1977 amendments. " The Department of Labor did this. The Department of Labor adopted these interim regulations, which were not an easy thing to enact, but they adopted them. They considered these cases under them. They reopened many cases. There's nothing in 945(b) that suggests that these cases were to essentially be reopened for all time. And that any time anyone should come in at whatever year in the future and raise a question about the interim regulation, that these people could come back and their claims would spring back into existence. It's contrary to the notion of res judicata. It has frightening practical implications. Twenty-eight hundred cases alone in the Eighth Circuit, and that's a tiny fraction of the total in the country, would have to be reopened. And furthermore, mandamus is not the avenue to pursue such relief even if the statute were to properly read as is indicated. Mandamus is a remedy available where there is essentially a clear and indisputable right. I think it's fair to say that neither the right claimed under 945 nor the right claimed on the merits issue is what you describe as clear and indisputable, and on that basis, we would urge strongly that in any event, the relief given to the seven claimants is inappropriate. I would like to save the remaining time if I may for rebuttal. William H. Rehnquist: Thank you, Mr. Ayer. We will hear now from you, Mr. Solomons. Mark E. Solomons: Thank you, Mr. Chief Justice, and may it please the Court, for the U.S. coal and insurance industries, the two central questions that are presented here are matters of fundamental fairness and economic stability. The Secretary of Labor in drafting his own version of the interim presumption could not replicate the Social Security Administration rule. The validity of the Secretary's action in this regard in drafting his own interim presumption presents obviously complex questions of interpretation. But we think that those questions become far less difficult it the language to be interpreted is reviewed and analyzed with an appreciation for the special dynamics of the six-year long process that ultimately produced the Department of Labor rule. From the very beginning in 1969, the Social Security Administration program was a distinct and different phenomenon from that that was entrusted to the Department of Labor. It was different intent and it was different in its design. If the Social Security program had this monolithic purpose to simply pay as many claims as it possibly could, that was not the intent that Congress had for the Department of Labor program. No one expected that this same one dimensional approach would be adequate at a time when the coal industry was called upon rather than the federal general revenues to pay the benefits that were to be awarded. The Labor Department's program is a workers' compensation program. It is financed by employees, and employers have the right to litigate cases and to contest non-meritorious claims. Employers also have a right to have rules and regulations under which these cases are to be adjudicated that are fair and valid both from a statutory point of view and from the point of view of what their contents provide. The Department of Labor's 10 year rule and its rebuttal provisions, which still remain in this case and it was decided I think in the Fourth Circuit's decision below, should be sustained by this Court unless they were prohibited or irrational. It cannot be argued that the Department of Labor's presumption is irrational or in any way unfair to claimants. That is an argument that cannot be made. The presumption that the Secretary of Labor wrote is probably the most plaintiff-favorable rule that has ever been written by a federal agency, and has delivered billions of dollars in benefits to hundreds of thousands of claimants, many of whom do not have Black Lung Disease or any disability that's related to Black Lung Disease. And this is well documented by successor reports of the Comptroller General. This is a program, the Department of Labor program, which has never been criticized by Congress. Congress from 1969, 1970 through 1972, through 1978 strongly criticized the programs of the Social Security Administration as being too restrictive, and criticized the programs of the Department of Labor as being too restrictive. That has never happened here. This presumption that the Labor Department wrote, and particularly, we will focus on its 10 year provision, should be analyzed in the sense that it was not unreasonable for the Secretary of Labor to limit access to this extraordinarily powerful presumption, where the undisputed scientific evidence that was presented to the Congress demonstrated that short-term coal miners are quite unlikely to contract Black Lung Disease, and that even if they did contract Black Lung Disease, the likelihood of it manifesting in a disabling stage is almost nill. It simply doesn't happen. There is no scientific evidence to support that approach. It was not unreasonable for the Secretary of Labor to begin from that premise and to apply a 10 year screening provision. Of course, this does not as the Solicitor General pointed cut, prohibit these people from getting benefits. Any one of them who can come forward with direct proof of totally disabling pneumoconiosis under criteria, which in a report to Congress in 1983 prepared for the Department of Labor at the request of Congress demonstrated we're still extraordinarily liberal. Speaker: No matter how long he has been in the coal mining industry? Mark E. Solomons: The other criteria? Speaker: Yes. Mark E. Solomons: The other criteria also contain presumptions which require a certain period of coal mine employment, but if a miner worked for one day-- Speaker: What's the period? Mark E. Solomons: --Ten years, or 15 years in certain circumstances. If a miner worked for one day and contracted Black Lung, which is in fact impossible, but if that were to happen, that miner can get benefits under this statute on direct proof presented by his physicians that he's disabled by the disease. It can happen. It happens many times. Byron R. White: He would still have to prove causation, wouldn't he? Mark E. Solomons: He would have to prove causation and he would have to-- Byron R. White: He would not just have to prove his disability from that disease. Mark E. Solomons: --Well, it would be as in any other civil litigation, there are elements-- Byron R. White: All right. So he has to prove causation. Mark E. Solomons: --He would have to prove causation, yes. And that's really the only... other than with respect to the rebuttal provisions, that's really the only difference here between the Secretary of Labor's rule and the SSA rule. Under the Secretary of Labor's rule, claimant must go back and establish causation and establish his disability if he is a short-term miner. It was a line drawing process, and as a matter of fact, it is... what the Secretary of Labor did is perfectly consistent with what Congress did in writing the statute. When Congress wrote the statute, it did not provide any presumptions to anybody who is a short-term miner. This legislative history which is vast, and this statute contains absolutely not one word of concern about restrictive provisions or anything else having to do with the unfair treatment of short-term coal miners. And the reason for that is that this is not a disease which is likely to afflict short-term coal miners. If it does, they can get benefits. But if it does not, it is not unreasonable for the Secretary to require them to prove the elements of their case. John Paul Stevens: May I interrupt. You say it's a disease not likely to afflict short-term coal miners. I thought it was a progressive disease, and in the simple stages it might well be found in short-term coal miners, but it's highly improbable that that simple disease would be totally disabling. Mark E. Solomons: Well, the materials that we've cited in our brief show that the disease is not manifest, period, in short-term coal miners, and those with fewer than 10 years of coal mine employment. John Paul Stevens: And is it not true that there is a period before ten years where simply pneumoconiosis will appear but it is highly likely that it's totally disabling. Mark E. Solomons: Well, the fact is that the information that we have presented and that was presented to Congress showed that they didn't get the disease at all. It is true that once the disease manifests, it may but does not necessarily progress to more advanced stages. But let me point out something else. John Paul Stevens: Well, isn't it also true that there are times when the disease has manifested itself, but it's highly unlikely that it's totally disabling in its early stages. Mark E. Solomons: If that was the case, then these individuals are never precluded from coming back and filing a claim. They can... everyone is-- John Paul Stevens: I understand. I am asking a question of fact. Isn't that a fact that there are many times when a very simple stage of the disease that occurs, but it's highly unlikely that it's totally disabling. Mark E. Solomons: --That's true. John Paul Stevens: Yes. Mark E. Solomons: And as the Court so found in Turner Alcourt. I think it's also critical here in terms of analyzing this that there is really no definitive guidance from this statute that cuts with surgical precision. Clearly the word "criteria" does not do so. The word "criteria" in the statute, criteria for total disability, it does not say criteria for causation of disease. These are words that by their very nature call out for some interpretation. We also have a setting here where the Secretary of Labor was directed to write his own regulations and to consider all relevant evidence in writing those regulations. We have a situation in which the Secretary of Labor was directed to also apply the statutory presumptions which require ten years of coal mine employment. This forms... these various directions form a package which the Secretary of Labor put together in a regulation which is still extraordinarily fair to claimants, extraordinarily fair to claimants. And we think there is certainly sufficient ambiguity in the specific statements that Congress made, and clearly there is from this process. I think it's undeniable. That the Secretary of Labor had flexibility in designing a rule which would meet with Congressional expectations. But even perhaps more importantly here, this rule, the rule that the Secretary of Labor wrote, was subject to a de facto veto, not by Congress, but by the three people with the most, a proprietary interest in this provision. Three members of the conference committee, the officers of the substantive committee in which the statute was designed. And the Secretary of Labor, through the regulatory process, took those regulations up there to the Hill and asked is this okay. And once they said, no. This is contemporary with the process during the same session of Congress during the same year, went back and redid it. Brought them back up there and then with specific reference to these particular provisions, with specific reference to the 10 year requirement that the Secretary could put in his regulations, these same three members of Congress. Antonin Scalia: Maybe they changed their minds. Maybe it wasn't an election year. They didn't care as much. A whole lot of things could explain that. Mark E. Solomons: I doubt it, sir. William H. Rehnquist: Thank you, Mr. Solomons. We'll near now from you, Mr. Smith. Paul March Smith: Mr. Chief Justice, and may it please the Court. Our position in this case is essentially two-fold. First, we believe that the Labor interim presumption regulation is clearly in conflict with the governing statute. Under the 1977 amendments, it is our position that the Secretary was required to make available the interim presumption of disability to all Black Lung claimants who filed prior to a certain date. The Secretary's rule however as has been discussed flatly bars any claimant from invoking the interim presumption if he does not have ten years of mine employment in his background. For this reason it was fully appropriate in our view for the Fourth Circuit in Broyles to have granted relief to two claimants who had individually pursued their claims through more than a decade of administrative appeals. And the second, we believe that the Eighth Circuit in Sebben was also correct in granting mandamus relief to the affected class of claimants who were denied the interim presumption and did not pursue these individual appeals. Our argument here is primarily based on a separate section of the statute which specifically directed the Secretary to review the files of all pending and denied claims, applying the revised statutory standards, and to grant immediate retroactive benefits to any claimant who under those revised standards would have already demonstrated entitlement. These reviews, however, were conducted without applying the revised statutory standards where there was less than ten years of mine employment. William H. Rehnquist: Mr. Smith, do you contend that if the Secretary did follow what you say was the statutory mandate and did review a claim under the guidelines, do you agree that that becomes final? If the administrative review isn't pursued, that that's not everlastingly open? Paul March Smith: Mr. Chief Justice, it the reviews had been conducted under the appropriate standards, and at that point the claimant had been notified that there had been a determination made that they didn't qualify, at that point I would certainly concede that their only appropriate relief would be an appeal. But whereas here the reviews were meaningless in that they applied the same standards that Congress had just thrown out. Our contention is that the will of Congress certainly requires that they be allowed the opportunity to enforce this right and have a meaningful first level review as Congress mandated. William H. Rehnquist: Well, when you say meaningful, does that mean if the Secretary says I'm reviewing your case under the applicable law, but the Secretary makes a mistake as to the law, then they can start all over again say five years later? Paul March Smith: Mr. Chief Justice, what you have here is a situation where they applied precisely the same standards from 1972 which Congress had just identified as being illegal and inappropriate. The same standards which had led to this less than 10 percent approval rate were being applied. The statute was passed for the precise purpose of throwing cut those standards, but when you had a claimant with less than 10 years, they didn't have any revised standards applied. Indeed, if they had been denied previously, when they were reviewed, they were reviewed under precisely the same standards that they had previously applied. William H. Rehnquist: So you say in effect that the Secretary makes an error of law in reviewing, it's everlastingly open? Paul March Smith: Well, where it goes to the fundamental value of the review mechanism created by Congress. William H. Rehnquist: How can we tell that? Paul March Smith: Well, certainly, you can look at the legislative history and the intent of Congress in the section. Or maybe I should turn first to the issue of the validity of the regulation and try to demonstrate the centrality of what was going on here. Byron R. White: So you say in effect in your answer that Congress said do it over. Paul March Smith: Well, that's right, your Honor. In the sense that Congress said we want to reopen these claims. Byron R. White: That had been closed, if Congress hadn't said that. Paul March Smith: If Congress hadn't said reopen it? Speaker: Yes. Paul March Smith: Well, we would have a different case here than when you have a specific provision that says these people have been abused in this process for the past five years. They've had inappropriate denials. They've had huge backlogs. And we know as a matter of fact, that if they are forced to do anything, even refile their claims in order to take advantage of these 1977 amendments, they will not do so in mass numbers. The Secretary's action in effect said we're going to eliminate this whole protective mechanism. We're going to review them under the very same standards which Congress through out. And then we're not only going to require them to refile, we're going to require them to go through four levels of administrative review before they get their first opportunity to have this interim presumption applied to their case. John Paul Stevens: You say the very same standard. Are they the very same medical standards too, or is it just the ten year presumption that was different? Paul March Smith: No. What happened, Justice Stevens, is that when the interim presumption was found inapplicable by virtue of the ten year exclusion, the claim was then reviewed under the old 1972 Labor Part C standards. Those standards required proof of all three elements of a claim. The most important feature of those standards was that they required direct proof of disability by the claimant. So when they reviewed them, and they again found the interim presumption inapplicable, they just went ahead and applied the same regulations which had been in effect before the 1977 amendments. Let me just start with the-- Antonin Scalia: Mr. Smith, could I ask this about your theory on the liability part. You acknowledge as I recall that the difference in the rebuttal criteria including medical portions of the rebuttal criteria are okay. You're not challenging that. Well, once you give that away, how can you say that criteria means everything? You're drawing a line it seems to be that appears as little in the text of the statute as does the Government's. Paul March Smith: --The line we draw, Justice Scalia, is based precisely on the statute. There's a separate section of the statute, section 923(b) which says in every adjudication make sure that all relevant medical evidence is considered. Now, in 1977 in the revised statute, they incorporate that provision into the definition of total disability which is what we're talking about here, 902(f)(2). And the conference report specifically says apply the SSA, the HEW criteria except be sure you follow this other statutory requirement which is to make sure that all relevant medical evidence is considered in each adjudication. There was concern that SSA had not been allowing all of the relevant medical evidence to come in on rebuttal. And they drew specific attention to this other statutory requirement which they had incorporated into the Secretary's duties in that bill and said make sure that you follow all the SSA criteria except make sure that all the relevant medical evidence can come into the process at some point. And then when the Secretary promulgates the broader rebuttal criteria under the revised rule, the Secretary specifically based those broader rebuttal criteria on this other statutory section and on the conference report's reference to it. So what you have here is you have a general requirement, equivalent disability criteria from the SSA rule and the Labor rule. A specific exception to that general requirement pointed out by Congress and then pointed out by the Secretary. That exception doesn't in any way suggest that the general requirement is itself in any way soft or loose. It is a specific exception which doesn't support their position here. Certainly, they can't say that by excluding people with less than ten years they've facilitated the consideration of all relevant medical evidence. So in the end I think the fact that Congress crew a specific exception supports our position. It doesn't support theirs. It shows that Congress knew how to make an exception to the requirement. Anthony M. Kennedy: Well, you call it an exception. It was in a different section of the statute. It wasn't listed as an exception. It just stated that all relevant medical evidence is admissible. Paul March Smith: If you read the conference report-- Anthony M. Kennedy: You concede in your brief that under the existing regulation, there are four methods of rebuttal. Previously, there are two. And it seems to me that that is not... doesn't meet the restrictive criteria standard as you interpret it. Paul March Smith: --Well, it meets it because there was a specific exception to the not more restrictive criteria requirement. The conference report says we have adopted the House bill. The criteria must be not more restrictive. And then it says except that we want the Secretary to assure that all relevant medical evidence is considered in the process. So this was a specific exception drawn from another statutory section which they had incorporated into 902(f)(2) in the same bill. And it doesn't in any way suggest that-- Anthony M. Kennedy: Well, the House report may call it an exception. The statute isn't drafted that way. Paul March Smith: --No, the statute's not. The conference report certainly says it's an exception, and that's how they understood it. Sandra Day O'Connor: Mr. Smith, Section 402(f) uses the words (1) in referring to total disability. And then in subsection (2), the context in which we consider it here. I take it under your view, the words mean something different in each of these subsections then. Paul March Smith: No, your Honor, they don't. In each of those two contexts, they mean criteria for determining disability. And if you look at the Solicitor General's brief, they concede in their reply brief that criteria in the former reference which is a reference to the Social Security Act includes both medical criteria and vocational criteria, anything that would ordinarily go toward determining disability. We don't read the word 902(f)(2). What we're saying is-- Sandra Day O'Connor: Well, it means a little something different in both places which certainly indicates to me there may be some room here for agency interpretation of what's included. Paul March Smith: --Your Honor, if I could explain exactly how these people were treated, I think it would be clear that there was no question that the Secretary was acting within whatever range of discretion was left. It's important to understand that if you had less than ten years, you were assessed under precisely the same old 1972 permanent regulations which Congress had specifically found to be illegal. These were the ones that were producing a less than 10 percent approval rate, and they were-- John Paul Stevens: Yes, but Mr. Smith... I hate to interrupt in your answer, but it's quite important at this point. Isn't it highly improbable based on the empirical data that people who had less than ten years underground were totally disabled as a result of pneumoconiosis is even though it was fairly likely that they might have had a very simple beginning stage of the disease? Paul March Smith: --Well, two answers. First of all, your Honor, it is quite likely that many of them did have simple pneumoconiosis. The studies presented to Congress in 1977, the autopsy studies, showed that 60 percent would have simple pneumoconiosis. John Paul Stevens: But how many of those under ten years had permanent disability as a result of that simple disease? Paul March Smith: Well, it depends on what you mean-- John Paul Stevens: According to the empirical data that Congress looked at? Paul March Smith: --Well, it depends on what you mean. If you take what Congress meant by total disability, what Congress said is we will give compensation where simple pneumoconiosis in combination with other medical conditions prevents a person from mining coal. And the Congress repeatedly found under this statute, that simple pneumoniosis can be and often is totally disabling. It said so flatly in the House report. John Paul Stevens: But after two or three years of coal mine employment? Paul March Smith: Exactly the same level of pneumoconiosis as these people had to demonstrate to achieve the interim presumption is what Congress said can be totally disabling. It often happens where it is in combination with other medical conditions that produces the disability. And the effect of simple pneumoconiosis will vary from person to person depending on their other characteristics, but Congress was certainly of the view that simple pneumoconiosis of this level is totally disabling in a large number of cases. It said so flatly in the House report, and that finding of Congress is implicit in the whole structure of the statute. The statute from the beginning in 1969 has irrebuttably presumed total disability in a person with complicated pneumoconiosis. All of the old stuff in the statute that has to do with the adjudications of disability refers only to people that have simple pneumoconiosis, which is what these people had to prove in order to invoke the presumption. And there's no question that Congress thought these people can be totally disabling. If there are cases, and there certainly are, there they're not, then it's up to the Government and the coal operator to show that on rebuttal. There's no problem with rebuttal of that presumption. Congress though certainly came to the conclusion that we don't the coal miner to bear the burden of uncertainty here where it's difficult to establish disability and a causal link between that disability and the pneumoconiosis. So it's up to the... you put that into the rebuttal section of the process deliberately. Now-- Anthony M. Kennedy: Well, while you're there. Just one moment before you leave that point. The rebuttal mechanisms are phrased in terms other than medical. They are talking about the ability to work, et cetera. And so it seems to me that that's quite inconsistent with your justification of the rebuttals as being under the statutory section for all relevant medical evidence. Paul March Smith: --The two rebuttal provisions which were added by the Secretary in 1978, one is rebuttal based on a showing that the claimant does not in fact have pneumoconiosis. And the other is rebuttal on the basis of the showing that while he has pneumoconiosis, the total disability is not caused by the pneumoconiosis. In other words that the pneumoconiosis is not severe enough to be contributing to his disability. Those are two certainly very highly medical issues. They're precisely the issues which was... there was concern that SSA wasn't considering, and that's why they had this statutory exception. Sandra Day O'Connor: Well, Mr. Smith, these amendments had the effect, did they not, of shifting the financial responsibility to the coal mine operator or employer. And isn't it logical that Congress would have been concerned in making that massive shift of economic responsibility to permit the operator to show that the disease was not caused by coal mine employment? Paul March Smith: Well, your Honor, they did allow... in no way does the Secretary's rule serve that. The claimant has to prove causation of the disease by coal mine employment in order to invoke the presumption. So we have no concern about that. That is an issue where the burden of proof under the statute remains on the claimant. Sandra Day O'Connor: Well, but the presumption affects that of course. Paul March Smith: Well, the presumption does not affect the issue of causation of the disease. It shifts the burden of proof on the issue of whether disease is sufficiently severe to be contributing to the disability. That's the issue that it shifted the burden of proof on. And I would point out in terms of who's bearing the burden here that the vast majority of these claims are going to be paid out of the trust fund, not cut of individual miner's funds. Congress specifically mandated that any claim that was denied before 1977 and granted afterwards would come from the trust fund not from a miner. And for that and several other reasons, it's clear that there will not be a large number of coal mine operators held individually liable under this presumption. Antonin Scalia: Mr. Smith, if seems to me that if we accept your explanation of those two new rebuttal elements as both being medical, then everything is medical. I mean if you can say whether it's severe enough to cause the disability, that's a medical judgment. I suppose it's also a medical judgment whether you're totally disabled because of... Every single element of the thing, the causation, the total disability, there's nothing that can't be called a medical judgment in the broad sense that you're using that term. Paul March Smith: But Justice Scalia, if you look at the legislative history, the one thing that is clear is that they wanted the interim presumption to be available to everybody based on a showing of causation in pneumoconiosis. That was the only feature of the SSA rules that was in any way different from the labor rules prevailing before 1977. When they passed the statute that says, criteria not more restricted than those used by SSA, they can have had no other purpose than to extend the interim presumption to everyone. Now at that point they did say, "We want to make sure before you give the benefits, once this shift in the burden of proof has been given, that all of the evidence is considered. " "We want to reject the SSA practice of excluding some relevant rebuttals. " But that doesn't mean that the Congress' purpose was nothing, that they left the Secretary total discretion to leave people under the same rules that it had rejected, or to say some people can't get the presumption merely be virtue of a time in the mines. The presumption was the heart of what they were giving people. John Paul Stevens: But wasn't there a major change with respect to everyone who had at least 10 years of coal mine employment, either under, under either view? Paul March Smith: A major change in the sense that... sure, absolutely. If you had more than 10 years you had an interim presumption available-- John Paul Stevens: Which was different than it was before. Paul March Smith: --Yeah, but with respect to anybody-- John Paul Stevens: And that's most of the people, wasn't it? Paul March Smith: --Well, it's a large number of people, sure. But there are, certainly the numbers we hear thrown around, there's a large number of people in the other group as well. And for them the statutory change was essentially meaningless. And there's no indication, not one word in the legislative history have they cited to suggest that Congress could have anticipated this. Now, I think in terms of the arguments-- John Paul Stevens: But was it meaningless? Because if they could prove pneumoconiosis they then did get the presumption of total disability and that it was caused by that disease. Paul March Smith: --Not if they had less than 10 years in the mines, Justice Stevens. They didn't get any presumption at all. John Paul Stevens: If they proved they had the disease, in a simple form, they got the other two prongs, didn't they? Paul March Smith: No, they got no presumption at all. If they didn't have 10 years in the mines, they're categorically excluded from the presumption-- John Paul Stevens: Oh, that's right, I'm sorry. Paul March Smith: --These people had to prove everything. And that was the, under standards that had a less than 10 percent approval rate before the statute was passed. Now, as Justice Scalia pointed out, you can't separate out causation from disability here and say they had complete discretion to tinker around with the causation criteria at the same time that they were supposed to promulgate equivalent disability criteria. Under the Social Security interim presumption regulation, which Congress incorporated, causation was part and parcel of the disability determination. It was one of the elements you proved in order to get the presumption of disability. So the Secretary's position amounts to the proposition that the Secretary was required to give everybody a presumption of disability and at the same time retain the discretion to prevent some people from attempting to prove one of the two elements which led to that presumption. Sort of giving with the right hand and taking away with the left. And then just a final point on the validity of the regulation. When you actually look at what they say about what the Secretary was really thinking, they abandoned their own theory. They don't talk about causation of the disease at all. They say, well, the Secretary thought there was less likelihood they would have severely disabling levels of pneumoconiosis if they had less than 10 years in the mines. And whatever's clear, if they were trying to screen out people because they were less likely to be disabled, that's a disability criterion, not a causation criterion at all. And on that issue, Congress had spoken, said, give people the presumption of disability because we, we, we have incorporated the SSA approach, and we're not going to allow the Secretary then to just come in and say, well, I just think it's, I disagree with Congress, I think these people are less likely to be disabled and I'm going to not give them exactly the benefit that Congress wanted. Again just a final, a second final point on this point. The notion that Congress in some way ratified this when they sent over this pile of regulations and they didn't notice this problem is, is ridiculous. There's no indication whatever in the letter that Congress, these three Congressman had any awareness at all that the two interim presumption regulations were different. Indeed, Mr. Solomons, in previous briefs, has asserted that nobody in Congress was aware of it and nobody in the Department was even aware of it until 1981 when it was raised in the Benefits Review Board. Now, assuming that the court determines that the regulation did violate the statute, that these people were supposed to get an interim presumption of disability, the next question is the scope of relief available to the class in Sebben, those who did not pursue their administrative appeals. Now, our position as I explained a little bit at the outset is that exhaustion is not required here because of Section 945, which was a special mechanism created by Congress which mandated an absolute right to an autocratic reassessment-- William H. Rehnquist: Mr. Smith, I don't think the government is defending on the grounds of exhaustion. Exhaustion says in effect, you can't yet bring your, the doctrine of exhaustion is you can't yet bring your claim into court because you should have sought more administrative remedies. Here the government is saying, you had your review; the case became final. That's not exhaustion. Paul March Smith: --Well, Your Honor, the case is similar to a City of New York case a couple of years ago where the claim was being raised well after the time when the administrative remedies could have been invoked. And the doctrine that applies in that situation is quite similar to the doctrine that applies where you're trying to skip it, as in Mathews v. Eldridge. In either case, what you have to look for is whether there's a collateral right separate from the issue of substantive eligibility for benefits in the statute, and whether requiring people to go through administrative proceedings to enforce that right would make sense, would be consistent with the enforcement of the right. Antonin Scalia: I don't understand the distinction you draw between this statute that you say requires that we let the Secretary, make the Secretary do it over again. And any statute which requires an agency head to make a certain decision, pursuant to certain criteria. And the agency head purports to do that, but he makes a mistake, and the applicant doesn't appeal, and we say the case is final. And the lawyer doesn't come before us and say, well, it can't be final because what the statute says is that the Secretary had to do this and he didn't do it. I mean, that's not a very persuasive argument. Everybody... assuming he didn't do it, still in all the time has passed. Paul March Smith: The difference is that here you have a specific mechanism created based on findings by Congress, that these people had been treated so poorly by the process over a period of years that the vast majority would not even take the step of refiling an application after the 1977 amendments. Congress specifically rejected the Senate bill's version of this which said they have to come in and refile. Antonin Scalia: But that argument could be made with any statute. You can say, you know, you can say to the court, Congress wanted this to be done. It cared very much about this statute. And the Secretary made a mistake. We would still say, that's too bad, you should have told us at the time you made the mistake and not come around 10 years later. Paul March Smith: Sure, You know, that's the argument that's raised. But when you have these specific findings and you have a specific mechanism that said, go back, don't make them do anything. And the automatic nature of this was emphasized repeatedly in the legislative history, based on the fact that we know they won't do anything. And be sure that you apply the correct standards, apply them immediately, sua sponte, give retroactive relief where it's appropriate, if they've already made their case. In that situation for the Secretary to conduct these reviews, applying exactly the standards that Congress-- Antonin Scalia: It's a really bad mistake. Is that going to be the criterion when the Secretary makes a really bad mistake, there's no statute of limitations? Paul March Smith: --What you have in effect is that Section 945 no longer exists in the statute. William H. Rehnquist: But Congress said to the Secretary, do this again in these cases. The Secretary promulgated these interim regulations and did them under the regulations. Now you say the regulations were invalid and therefore these people got nothing. But they did get something. They got a review which the Secretary thought consistent with the statute. You now say it didn't. But surely to say that it can be done over is just an attack on the whole doctrine of res judicata. Paul March Smith: But what they got, Mr. Chief Justice, was a review applying exactly the same standards which had been misapplied to them in the past, so that there was no potential for them to gain anything from this. And the one glaring figure that's been omitted from all the filings in the government in this case is any suggestion that anybody who had less than 10 years of mining employment got their benefits given to them after they were reviewed after the statute. They couldn't have because they didn't get anything new applied to their case. Antonin Scalia: Of course they didn't... you say there was no potential for them to get anything from it, they could have gotten everything from it if they had come before the courts then, when it was wrongfully denied, instead of coming around 10 years later. They were able to go to court to appeal the Secretary's determination, weren't they? Paul March Smith: Your Honor, in fact, in order to get to court, even if you follow the administrative process, it still would have taken 10 years. Mr. Broyles and Mr. Colley have been trying to get here and they are finally here. Antonin Scalia: Well, whatever, they could appeal the wrongful denial, at the time it was wrongfully denied. Paul March Smith: There's no question about it. Antonin Scalia: So you can't say they didn't have an opportunity to get anything. They did have the opportunity. Paul March Smith: But, but the requirement that they do that, that they exhaust, produced exactly the harm that Congress was trying to avoid when it set up this mechanism. It didn't have to set up this mechanism. It could have just said, re-adjudicate claims where people ask you to, and then give them an appeal. Instead it said, go out, give them retroactive benefits, we know they won't refile if we require them to do anything. When the Secretary then doesn't change his conduct, applies precisely the same old inappropriate standards, and then says exhaust or I won't give you anything, what you have is the massive abandonment of claims by at least 90 percent of the affected people that were intended to benefit, precisely the harm that Congress tried to avoid. And to say that exhaustion is required here is to say that Congress can't do anything to rectify past errors, and where the Secretary has to do it themselves. In a situation like this it makes Congress powerless to deal with the problem where the Secretary falls to comply with the will of Congress. Anthony M. Kennedy: Did each claimant get notice that his or her claim was being opened? Paul March Smith: What they got is notice that they had been reviewed and that they were again denied, because the interim presumptions still did not apply. Anthony M. Kennedy: And you say that so far as the class of persons who had worked under 10 years, you know not of a single case where the decision was favorable to the claimant? Paul March Smith: Well, Your Honor, I don't know of a case, but I, I can't claim to have studied the matter. I have merely pointed out that the Secretary has never suggested any figure of that sort. And there's an awful lot of figures being thrown around here. If they could demonstrate that there was in fact any substantial meaning to these reviews for the less-than-10-year group, I think they would have pointed that out. Just a moment on this mandamus point. We do rely on a different jurisdictional theory than under City of New and Eldridge, but that's simply a result of differences between the Social Security Act and the Black Lung Act. Under the Social Security Act, you can go to the District Court from any final order of the Secretary, and in City of New York this court determined that there was such a final order. Here you have, the only jurisdictional grant in the statute is under the Longshoreman's Act, which says you can go to a court of appeals from a final order of the Benefits Review Board. And if you're going to enforce a collateral right directly in court, you obviously can't go to the Benefits Review Board and get a final order first. So we had to go to a non-statutory jurisdictional approach. The approach that was selected was 1361 jurisdiction rather than the usual 1331 jurisdiction and APA review, because the Federal Coal Mine statute has a section that says the APA doesn't apply. And there was then some question of whether 1331 was available. We do think a mandamus is the appropriate statute here, if these other routes were not available, because it exists exactly to provide a fallback in situations where Federal officers are disobeying the law and there's no other method to enforce the law against them. And certainly I think the proposition that if we have shown the regulation to be invalid that somehow we haven't shown it clear enough, asks it to be cut too thinly. You have... if we can overcome the usual deference to administrative discretion here and have shown a flat inconsistency between the regulation and the statute, that's certainly enough for mandamus as well. Just one more point on the City of New York case, because I think it is an important case here. The government and the private petitioners attempt to distinguish this case from City of New York on the theory that there you had a secret policy which was not known to people at the time they could have filed their administrative appeals. The fact of the matter is, though, that the whole last section of that opinion dealt with people who did have time to file their administrative appeals at a time when the secret policy being applied in the Social Security Administration was publicly known. And the court held that even as to those people where you have a right to a valid first-level disability assessment, and it's clear that administrative review would be futile and that there be massive abandonment of claims if we require it, that the court would, allowed direct enforcement of the collateral right in that case. Our case is such easier, because you have this special provision in the statute, 945, that said, reopen these things under the 1977 amendments. That case is really one where you, which is much like the one hypothesized by Justice Scalia, one where they simply were told to apply the law in the adjudications and they weren't doing it. If there are no further questions-- Antonin Scalia: One very... well, never mind. Thank you, Mr. Smith. Mr. Ayer, you have one minute remaining. Donald B. Ayer: Thank you, Your honor. I would just like to make two points. One is that the 1977 amendments did indeed do some significant things to help miners with less than 10 years of experience. It expanded the definition of pneumoconiosis, it put a prohibition on rereading x-rays to disqualify people, it made clear that a worker's compensation concept of causation that allowed only partial causation to be enough was sufficient, and it gave a right to a full pulmonary exam in order to generate the evidence you needed. The other point I'd like too make is that this, these interim regulations rest on a solid foundation in the legislative record. The conference committee made clear in the report that the conferees also intended all standards are to incorporate presumptions contained in another section of the act. The presumptions include the presumption of causation from 10 years of coal mine experience, which this provision in these interim regulations essentially is identical with. Secondly, the scientific data which was appended to a number of reports throughout and to the final House report includes information that indicates that 10 years is sort of the presumptive beginning for serious black lung problems. William H. Rehnquist: Thank you, Mr. Ayer. The case is submitted.

William H. Rehnquist: We'll hear argument now in No. 02-1343, Engine Manufacturers Association and Western States Petroleum Association v. the South Coast Air Quality Management District. Mr. Phillips. Carter G. Phillips: Thank you, Mr. Chief Justice, and may it please the Court: In 1967, Congress enacted section 209(a) of the Clean Air Act, which is reproduced in the petitioners' brief at page 1. That statute prohibits States and their localities from adopting or attempting even to enforce, quote, any standard relating to the control of emissions from new motor vehicles or new motor vehicle engines. In this case, a political subdivision of the State of California has adopted fleet rules that prohibit the purchase by certain fleets of various classes of... of vehicles that are otherwise certified for purchase in the State of California and, indeed, have essentially precluded the purchase by those organizations of diesel-fueled vehicles in toto. Sandra Day O'Connor: Mr. Phillips, this is a facial challenge? Carter G. Phillips: Yes, Justice O'Connor, it is a facial challenge. Sandra Day O'Connor: Claiming total preemption. Carter G. Phillips: Yes, claiming total preemption. Sandra Day O'Connor: What if we were to think that at least as applied to the district's own purchases of vehicles, that it could limit itself to what kinds of vehicles it wanted to purchase and therefore is valid at least in part? Carter G. Phillips: Well, the... there are two answers to that. One, the district doesn't need a statute in order to purchase its own vehicles. There is no basis for adopting a standard that controls that particular situation. Sandra Day O'Connor: Well, but let's suppose it wants to establish a standard to apply now and in the future for itself and for any other jurisdiction, public jurisdiction, within its area? Carter G. Phillips: Well, if it goes beyond... Sandra Day O'Connor: If it's authorized to do that. Carter G. Phillips: Well, if it goes beyond what it wants to purchase itself and imposes requirements on others, then it seems to me that's a standard that falls within the ambit of the preemption. Anthony M. Kennedy: What if... what if the State... what if the State of California says that all of our officials, including the Governor, shall have a low emissions vehicle? Carter G. Phillips: I think that... that there is a serious question as to whether or not that would be preempted. I... I don't think it's presented, obviously, by the particulars of this case. I mean, it still look... sounds like a... Anthony M. Kennedy: Well, but it seems... it seems to me that... that it is from... from the standpoint of... of governmentally owned and operated vehicles. Carter G. Phillips: Well, I think the answer to the question at the end of the day, Justice Kennedy, would be that you would require a clearer statement from Congress than what you have in section 209(a) to interfere with the kind of purchasing decisions that localities are... are making in contrast to this. Antonin Scalia: Right, but... but it seems to me not... not an answer to Justice O'Connor's concern to say that it goes beyond the particulars of this case because when you make a facial challenge, you are going beyond the particulars of this case. Carter G. Phillips: Well, I understand that, Justice Scalia. Well, there are two answers to that, one that I was trying to answer before which is I don't think that this provision actually covers that particular situation because you don't need this provision in order to have authority as a local jurisdiction to make purchases on your own as to what you're going to buy. That's not, I don't think, a standard within the meaning of the statute. But second of all, I also don't think that the... it must be unconstitutional in all respects as the controlling standard of law in this particular context either. It is clear that there is a significant component of this... of these fleet rules that is preempted, and perhaps all of them are preempted. But we were dismissed out at the earliest stages of these proceedings without an opportunity to demonstrate the metes and bounds of the regulations as they would particularly apply at this... at... at this particular juncture. Stephen G. Breyer: No, but we may... Anthony M. Kennedy: I'm still not sure... sure where we are. It... it seemed to me that the regulation talks about some private vehicles, trash hauling and airport shuttles, but it also talks about exclusively governmentally owned vehicles. And it seemed to me that the State can do whatever it has... whatever standard it wants for its own vehicles. Carter G. Phillips: Well, our... our challenge is not intended, frankly, to interfere with the local jurisdiction's ability to purchase their own vehicles on their own behalf. Stephen G. Breyer: Local jurisdictions. I mean, you know, what's that? Are you saying that it is a standard if the City of Los Angeles has a regulation through the city council that applies to the purchasing of every little local area? Or suppose the State of California has a general regulation respecting only governmental purchases. Are you saying right now that all those... in other words, rules, regulations, standards, practices by the State of California or some part thereof... that does nothing more than control purchasing by governmental units of that State is fine? Antonin Scalia: They can do that. Carter G. Phillips: Yes. That's what we're saying. Anthony M. Kennedy: All right. Carter G. Phillips: We don't... we don't have any challenge to that. Stephen G. Breyer: In that case we're now down to the possibility that we're talking about some garbage trucks, I think, and some airport vehicles because I think all the rest of it did just involve the State. Carter G. Phillips: Well, it's difficult to know precisely what the metes and bounds of it is, but the portion of this that offends us and the portion that we think does not require a clearer statement, which is that which goes directly to non-governmental entities. If... if you're talking about regulating the purchasing choices of pure governmental entities, then you expect Congress to speak with a... with a clearer voice. But the purpose of these fleet rules is not simply to restrict the purchases by governmental entities. It is quite clear that the purpose of these fleet rules is to regulate the purchasing choices that are made with respect to a much broader scope of purchasing entities, including private entities, and it is that portion of the regulation, frankly, that we are challenging and challenging on its face. Ruth Bader Ginsburg: Mr. Carter, if these regulations had been adopted by the State of California rather than a regional district as its 246, in... in lieu of the Federal plan, would that have been permissible? Carter G. Phillips: Assuming, Justice Ginsburg, that you... that California took... complied with all of the requirements of section 246, and there are specific requirements in order to get a... in the... in the State action plan that... State implementation plan that need to be satisfied. But to be sure, the Congress clearly envisioned that for States with nonattainment problems, that they would be able to use fleet restrictions as a mechanism for promoting their overall emissions quality. Ruth Bader Ginsburg: So your objection is to this on a regional basis. Statewide you say is permissible provided you follow... I guess you need EPA approval? Carter G. Phillips: Yes, providing you comply with the standards of section 246. Ruth Bader Ginsburg: But... so... but the substance of it would be okay statewide. So... so... Carter G. Phillips: Well, I don't know if the precise terms of this... of these rules would qualify under section 246 or not. Nobody has actually analyzed that point, but the truth is it's clear that you could have certain fleet rules implemented that are consistent with section 246. But realize, Justice Ginsburg, that what... by saying all our concern is is that every... every one of thousands of jurisdictions can impose purchase and sale requirements on vehicles... David H. Souter: Well, it's not sale requirements. It's a purchase requirement. Carter G. Phillips: Well, under the respondents' theory of this case which limits the term standards to production mandates imposed on manufacturers, then it seems to me that it clearly extends to all purchases and sales and whether it extends to fleets, it wouldn't... it's not limited to fleets at all. Under the respondents' theory of this case, the field that has been preempted here really is limited to the manufacturers. And to allow every local jurisdiction to come in and bring forth additional requirements is to make a hash out of a scheme that was clearly designed to create a unitary market for the manufacture, sale, purchase, and licensing of new motor vehicles. Anthony M. Kennedy: Well, if... if one local jurisdiction affects other governmental jurisdictions, but the latter don't care, then it's just as if, as the hypothetical just posed, the State had the... had... had the rule. Is there sort of an ultra vires component to your argument that this... that this district here is affecting what other governmental entities can do and that's the problem? Carter G. Phillips: Well, this Court has long recognized that you can't analyze a preemption case solely on the basis of the single action by a single actor, that in fact you have to consider the possibility that all 50 States or, in this case, every local jurisdiction could follow suit. And remember, it's not just follow suit with respect to this kind of fleet rules under the respondents' theory of this case, which is that all purchase and sale restrictions... William H. Rehnquist: Well, I... I had not understood your argument to be based on any conception that this particular district would be treated differently than the State as a whole, but I... I... am I wrong in that? Carter G. Phillips: Well, the State of California would have certain prerogatives, obviously, under the entire scheme that are different, but even if California had simply done what the district did here, which is to just announce a set of fleet rules, not made any effort to comply with 246, not made any effort to comply with section 209(b)... William H. Rehnquist: Well, what... what does... what does 246 provide? Carter G. Phillips: Section 246 provides that in certain nonattainment States, one of the options they have available in order to eliminate the overall... or to... to improve the overall ambient air quality is to adopt certain types of fleet rules. And the provision is very lengthy. It's very detailed about... and you have to include that in your State implementation plan. What California did was it used the substitute route and adopted its LEV rules saying that those would be equally effective. William H. Rehnquist: So it didn't comply in your view with 246. Carter G. Phillips: Oh, it clearly didn't comply. I don't think there's any question that California has made no effort to satisfy the Clean Air Act with respect to this. But this Court... David H. Souter: Your... your argument, as I understand it, going back to your answer to Justice Ginsburg, is that although there is an avenue for the State, as it were, to get where... where it might want to go on a... on a fleet policy under 246, the district simply does not have that avenue open to it. Carter G. Phillips: Yes, that's absolutely clear. Sandra Day O'Connor: Yes. Carter G. Phillips: And that's... and that's part of the way this entire scheme operates. Sandra Day O'Connor: But that gets me back to my question. If we disagree with you, to the extent we think some application of the district's fleet rules are not preempted, then how does that leave your challenge, which is a facial one? Carter G. Phillips: Well, I... I think the answer is that there are various components of the fleet rules, and I think unlike if you're... if you're seeking pre-enforcement of a statute, where you'd have to find every application of it, the question is are there subcomponents of these rules that are properly challengeable and therefore properly enjoinable rather than being allowed to go in. I don't... I don't understand... Antonin Scalia: That eliminates the doctrine entirely, I mean, the doctrine that facial challenge has to show the statute is... is invalid in all its applications. You could always say, well, we're not challenging all of its applications. We're... we're just challenging this particular set of applications. I mean, that... that... Carter G. Phillips: Well, no, Justice Scalia, I think it's a little more complicated than that because what you're really talking about is a... is a host of rules. And if you look at the appendix to the respondents' brief with all of the rules that are laid out there, there are literally dozens of rules. And in order to challenge the, quote, fleet rules in the sense of recognizing that there are clearly areas of those rules that intrude into preempted Federal activities, it doesn't seem to me that you have to challenge the entirety of the rules. You should be entitled to pick those rules that you're going after and a complaint and go forward. And that's... Antonin Scalia: But... Carter G. Phillips: that's what we've done. I understand if you have a simple unitary statute that you're challenging, the Salerno rule may suggest that the statute has to be unconstitutional in all its respects, but if you adopted a rule that if part A is good and part B is not good, you should be allowed to... to challenge part B facially without worrying about part A. David H. Souter: But I thought... I thought this was the case in... in which part A applies both to the district, as in Justice O'Connor's question, and to non-governmental entities so that it's not that A applies to... to one kind of buyer and B to another. There's a... there's a rule that applies to buyers. And Justice... and correct me if I'm wrong. Justice O'Connor's question in effect says, if there is a substantial... if there is an application of that rule that in a substantial number of cases at least would not be preempted, then isn't that the end of the facial challenge? Carter G. Phillips: And my answer to you is I don't think that's the proper application of Salerno and I don't... I mean, I recognize... David H. Souter: I'm not applying Salerno. I'm... I'm applying a substantial application rather than a one-instance kind of rule. And... and your answer to that was, well, we don't have to challenge all rules. We could challenge A but not B. David H. Souter: And my response is the rule that covers the governmental situation and the private situation is the same rule, and if that rule has a substantial number of constitutional applications or... or non-preempted applications, doesn't that, in... in effect, defeat the facial challenge? Carter G. Phillips: Well, except for the fact that if... if we don't get past the ruling of the court below at this stage, which is that none of this is preempted, that... whether it's a facial challenge or a non-facial challenge, we're going to have rules that are out there that are being implemented at this stage and will be upheld as constitutional under the Ninth Circuit's ruling as the... as the controlling rule of law, and we won't be in a position even to get at any portion of those rules that are clearly unconstitutional because they... Stephen G. Breyer: You can, can you not... I'm just trying to draw this back because it seems to me you're not challenging the public part. So if you're not challenging the public part, then... I've looked at pages 7 and 8 of the SG's brief where he's listed these rules. Carter G. Phillips: Right. Stephen G. Breyer: And I take it what you're challenging is rule 1194 insofar as it applies to private operators. Carter G. Phillips: Right. Stephen G. Breyer: Rule 1193, the same, and rule 1186.1, the same, and nothing else. Carter G. Phillips: I think that... Stephen G. Breyer: In each of those rules, having looked at them, it does say at the beginning, these apply to public and private. So I take it it's those two words, and private, written in the text of those rules that you're challenging. Carter G. Phillips: That... that is our... I mean, our primary concern. The... the problem here is... Stephen G. Breyer: Well, but that's what you're challenging, nothing else. Carter G. Phillips: Right. Well, I mean, the question is whether or not... I mean, I'm not sure that is precisely what we're challenging. It seems to me there is a difference between a public entity deciding on its own... William H. Rehnquist: Yes. Carter G. Phillips: that it will make a certain purchasing decision as a purchasing decision. There is a fundamentally different proposition when another entity demands that it must make a purchasing decision based on emissions control. Stephen G. Breyer: What do you mean? Another public or private? Carter G. Phillips: A public entity. Stephen G. Breyer: Oh. Carter G. Phillips: What I was saying is... what... what I meant to answer your question earlier, Justice Breyer, was to say if you're asking me can public entities make purchasing decisions free of the restrictions of the Clean Air Act, I think the answer is yes because I don't think Congress spoke to that. But if what you're saying is can a... can one governmental entity demand that another governmental entity make a decision for purely environmental reasons and not as a... as a contracting matter, no. That seems to me is still a standard... Stephen G. Breyer: Well, now just let's think... Carter G. Phillips: that controls emissions and is unconstitutional. Stephen G. Breyer: of the complexity of State and central government in light of what you just said. You're saying that the State of California board A couldn't say all the... I mean, I don't know where to go with this. Do you see... do you see the problem? Carter G. Phillips: No, but the... the problem is much simpler than that, Justice Breyer, because there's a scheme in place where if you don't like the way the regulatory arrangements are worked out, you can take the issue to California and California can take it to the EPA. I mean, the whole purpose of this enterprise was to devise a unitary market and make it very simple. And there's nothing in the... in the suggestion that... Anthony M. Kennedy: the merits. Stephen G. Breyer: My problem is to try to figure out what's being challenged. Carter G. Phillips: Well, we're challenging the effort by the district to impose these kinds of requirements, these standards which control emissions. Stephen G. Breyer: On its... Anthony M. Kennedy: But if California... Carter G. Phillips: On everyone. Anthony M. Kennedy: if California accepts that as a matter of its domestic law, who are we to say otherwise? Carter G. Phillips: Well, because that's what the Clean Air Act is all about. California is free to do that if it complies with section 209(b) which says you can obtain a waiver. You can make these the Federal standards. I mean, there's no question that these fleet rules could have been adopted by the State of California and be approved by the EPA and be operating completely tomorrow if they want to go through that process. That's the specific process Congress had in mind, a process that the district has abandoned. And all we're suggesting is that's what they ought to do. Mr. Phillips, I don't want to intrude into your time, but I... I hope you have time to comment on your adversary's argument that the word standards just refers to numerical figures and so forth and that you... you have a... it means the same thing when the government is... Federal Government is implementing its own issues and it is in this provision. Do you... do you have a response to that basic argument? So there... there are two answers to that. One, section 202 is not limited to production mandates, those kinds of numerical standards, even... even within 202. And second, the language that... that Congress used about standards relating to the control of emissions is inherently broader than 202 in any event, and if you expected 209 and 202 to be read in para materia, you would have expected Congress to cross reference. John Paul Stevens: Because they were enacted at different times, I think, the two sections. Carter G. Phillips: They were enacted at different times. Anthony M. Kennedy: Yes. David H. Souter: What about the distinction between standard and requirement? Carter G. Phillips: Well, the use of requirement in the second sentence is simply a recognition that there could be standardless requirements imposed by States requiring a certification or some other kind of documentation that don't have standards. So the first sentence deals with standards and the second one deals with standardless obstacles to implementation. If I could reserve the balance of my time. William H. Rehnquist: Very well, Mr. Phillips. General Olson, we'll hear from you. Theodore B. Olson: Mr. Chief Justice, and may it please the Court: The South Coast rules prohibit the purchase of certain motor vehicles and require the purchase of others based on explicit emission standards. Under respondents' reasoning, every other State and local government agency in the United States could adopt its own individual and unique blend of prohibited and permitted motor vehicles. But... Antonin Scalia: General Olson, does... does the Government take the position that petitioner has just taken, that these rules are invalid even insofar as they apply to governmental subdivisions in California? Theodore B. Olson: I think the answer is... is no, but let me explain, that to the extent that agencies of government, the State or subdivisions, are purchasing their own vehicles, we do not contend that that is unconstitutional. They can purchase... Sandra Day O'Connor: No, no. Antonin Scalia: I'm not talking about whether their doing of it is unconstitutional. Whether the State's... whether the State's prescribing that they do it violates the statute. Theodore B. Olson: Our... our position... I don't... I'm not sure I know the answer to that because I don't know what authority this agency has with respect to requiring different units of... of the government of the State of California to purchase or not purchase vehicles. And it hasn't... it's not a subject that was briefed, if at all, extensively in the briefs. But the... the force... the force of the preemption provision here is that Congress determined that there should be a uniform standard with respect to controls on the emissions of motor vehicles. California was given an exception provided that certain requirements were met. This is in section 209(b) that these provisions be submitted to the EPA and approved under a process that's open and transparent and allows the national agency to make sure that there are uniform standards that can be met that also comply with the requirement that the national economy not be disrupted, so that there would be different... by different standards in every little community of the United States. That's the thrust... Ruth Bader Ginsburg: Has it happened, General Olson? One pier that you raise is if... that... if this district can have these fleet rules, so can every district in the country, and these... these rules have been in operation now for some years. Have other districts in other States copied what this one has done? Theodore B. Olson: Not that I know of. They've... they've only been in existence since the year 2000. The... the district was given the authority to adopt these rules in 1987, if I'm correct, did not adopt them until the year 2000. The arguments... the principal arguments that are made by respondents that standards are production mandates finds no basis in the statute. The language of section 202 or section 209 is not so limited. The... what... what section 202 and 209 do, talk about emission levels or emission standards. And there should be no mistake about it. These fleet rules are directly related to emission standards. One of them, for example, rule 1194, uses the phrase, emission standards, 12 times and it requires all purchasers to be vehicles that meet certain emission standards, adopting by reference the State of California CARB rules. It picked out a subset, as the respondents put it, of one in column A, two in column B, no diesel. There must be some clean fuel. It's another... it's a totally different package. And Palm Beach County or... or Waco... the City of Waco could do something exactly like what the respondents are contending because they say the controls with respect to emissions don't apply if they're purchasing requirements. EPA, in fact, enforces the standards that it adopts under section 202 pursuant to the provisions of 203 by restricting the sale or introduction into commerce of motor vehicles and under section 219, under certain circumstances, the purchasers of fleets, bus fleets. So the implementation of the limitations that... that... the standards that EPA adopts are through purchase restrictions or purchasing restrictions. They're not production mandates. It's my understanding and I'm informed that the EPA has never implemented the Clean Air Act with respect to production mandates. They say what can be sold or what can be purchased. Sandra Day O'Connor: But... but, Mr. Olson, why can't a local agency or community decide it's going to buy vehicles and will buy no diesel vehicles? And why is that the imposition of a standard? Theodore B. Olson: Well, it is not... we... we are not contending, Justice O'Connor... I want to make it very clear that local agencies, San Francisco or Los Angeles, can put for their own vehicles anything they want. This district... I... the... the... Sandra Day O'Connor: Well, does this district have the authority to so provide for its own purchases? Theodore B. Olson: For its own purchases. If it... I don't know whether it does or not. This is a quality control district. I don't know how many vehicles they have. Sandra Day O'Connor: Does it have authority to... to make that requirement for cities within its jurisdiction? Theodore B. Olson: We don't think that it has the authority to require other governmental agencies based upon emission standards to do something. William H. Rehnquist: Well, that's a matter of State law. Theodore B. Olson: That is a matter of State law, and it's... and... and what we're talking about here is the requirement by particular agencies to pick out different types of motor vehicles that may or may not be sold. Anthony M. Kennedy: Well, I suppose the separate States could do that for its own purchases. Theodore B. Olson: For their own... for their own purchases, Justice Kennedy. Anthony M. Kennedy: All right. William H. Rehnquist: they can't... Anthony M. Kennedy: And could they also do that for all their governmental subdivisions? The State of Nebraska says that the State and all of its subdivisions will have some very strict standards... Theodore B. Olson: I agree with the... with the way that the Chief Justice put it, that that's their own purchasing decisions, and it's a matter of State law as to whether they can... but that is not what this case is about. This case is about whether the South Coast district can impose those standards, including Federal Government vehicles, postal vehicles, FBI vehicles, private vehicles that go to the airports and so forth. And the justification that they say is that we can control the sale of motor vehicles willy-nilly by... by controlling the purchase. By controlling the purchase, you control what can be sold and thus can what be manufactured. They are claiming an authority in southern California that they... that they claim the EPA doesn't even have. Antonin Scalia: Maybe, but most of what it covers is simply the... the purchase by governmental units. If you acknowledge that the State can require its subdivisions to... to purchase only certain kinds of vehicles, as you've just acknowledged, why can't the State create a district as here and allow that district to require... Theodore B. Olson: Justice... Antonin Scalia: subdivisions to purchase only... Theodore B. Olson: From the standpoint of the United States Government, we're not contending that the State or an individual can choose whatever vehicle he or she or it wants to purchase. What we're contending is that the whole scheme of the EPA and the Clean Air Act and the... and the preemption provisions prevent different agencies by using the... the mechanism. The entire argument that respondents advanced here, by using the word... by... by prescribing what can be purchased, they can... they can control what vehicles will exist and what vehicles will be run. It isn't limited. The authority that they're claiming isn't limited to their own vehicles. This same authority... they would make the same arguments if the South Coast District said all persons or all persons that have more than one vehicle or all persons that live in a certain portion of southern California. The authority that they claim by using the word purchase, which is not in the statute, is not in the preemption provision, and is an authority that the... the EPA specifically uses to a certain extent under section 219... Ruth Bader Ginsburg: General Olson, you mentioned that there are Federal vehicles involved, postal vehicles, but you also are stressing purchase. Suppose the Federal Government buys its vehicles that it's going to operate in California in Nevada. These rules wouldn't apply. So the... the United States is not inhibited in any way in its purchases, is it? Theodore B. Olson: Well, A, I think that is an inhibition. B, I think the respondents will say that these... these purchasing requirements are imposed upon fleet owners that... that requires them to make purchases of certain vehicles. So I think the premise of your question is not correct. If southern California or if the State of California wishes to impose fleet requirements, there is a mechanism. It's a logical, consistent, transparent, open mechanism under... that was thoughtfully put out by Congress. The whole mechanism is thoughtfully calibrated by Congress to allow the EPA to make judgments. Does this make sense from a national standpoint? Will this make sense from other States' standpoints? Is it... will it impose a dislocation on the marketplace for motor vehicles? The twin objectives of the Clean Air Act are, one, to produce cleaner air, but two, to do it in a way that does not disrupt the national economy and the marketing of motor vehicles, which is an important part of the economy of this Nation. Antonin Scalia: Just so I have it clear, because it... this is very important to me. It's your position that the State may require municipalities only to buy certain kinds of cars. Theodore B. Olson: To the extent that... yes. I'm... because I don't know the answer to the State law question that the Chief Justice alluded to. Assuming that the State of California was one and the same and decided that it owned or had the authority under State law to purchase those vehicles, the answer would be yes. William H. Rehnquist: Thank you, General Olson. Mr. Waxman, we'll hear from you. Seth P. Waxman: Mr. Chief Justice, and may it please the Court: The question in this case is whether section 209(a) of the Clean Air Act, which is reproduced at page 36a of our brief, preempts very modest fleet purchase rules which apply only to vehicles that are already commercially available, that is, that cannot have an effect on manufacture... cannot require manufacturers to produce or sell anything, and which were adopted by a unique airshed in which 90 percent of all toxic air pollution derives from motor vehicles. And the answer to that question is no because the text and the context of the Clean Air Act, title II of the Clean Air Act that deals with motor vehicles, show that Congress intended the word standard in section 209 to be used in the same way that it is used in section 202 and, indeed, throughout the entirety of title II... title II. It's used 100 times, I'm told by an amicus, in section 202 alone, and every single time that it is used there, it is used to refer to an obligation placed on manufacturers, that the vehicles they produce and sell meet specified emissions characteristics. No one contends that that definition, the way the word is used in section 202, covers the rules in this case. Now, express preemption... it requires discerning Congress' intent. It's not an exercise in definitional possibilities, this Court has reminded us many times. Now, you can read every brief from our opponents. Every different brief offers up some other definition, and their briefs in related cases have done the same. And we've heard no definition this morning. They look to the dictionary definition of standard or criteria or test, and they're reproduced in their briefs. But they... they concede that there is no dictionary definition that they offer that coincides with the rule that they seek because they concede that Congress did not intend to cover incentive programs or tax programs even though, like purchase rules, they operate through the market on manufacturers and not directly on manufacturers. Stephen G. Breyer: Suppose that California passes a law and says no one can sell a diesel bus in California. Seth P. Waxman: Well... Stephen G. Breyer: Clearly you'd have to go get permission if you want a rule like that. Right? Seth P. Waxman: A... a rule that... Stephen G. Breyer: The rule is exactly what I said: no one can sell a diesel bus in California Seth P. Waxman: A... one could... I believe that a good argument could be made that that rule is preempted because it conflicts with the overall purposes of the Clean Air Act. But... Anthony M. Kennedy: Yes. William H. Rehnquist: I mean, you'd have to go to EPA. Seth P. Waxman: But, Justice Breyer, please let me finish. Anthony M. Kennedy: Yes. Seth P. Waxman: This is a very important point. The challenge here is that these rules are expressly preempted... it's in the question presented in the petitioners' brief... expressly preempted by the first sentence of section 209(a), and it is expressly preempted because these are standards. And our submission is... Stephen G. Breyer: I'm... for purposes of my question, I'm rejecting that argument. I'm trying to figure out what is the correct way of dealing with the statute. Seth P. Waxman: Yes, and... Stephen G. Breyer: And where I was going, if you want to see, I'll show you because then you... it... it seems to me clearly you'd have to ask question... nobody can sell a diesel bus in California. You have to get permission from EPA. Second, they change it. No one can buy a diesel bus. All right? It's the same. Third, they say no governmental unit can buy a diesel bus, but it turns out that the only buses anyone has ever bought or sold in California are diesel units. And it's at that third point that's bothering me because it seems to me whether it's preempted or not turns upon the effects. Have you, in effect, required the manufacturer to change its assembly line or not? And I don't know where to go with that. That's what I'm posing. Seth P. Waxman: Here is my... here is my first effort at an answer. The word standard, as it is used in 202 and in the other provisions of title II that deal with different types of standards, the standards with respect to fuel, standards with respect to buses, standards... standards in section 243 that deal with the Federal clean fuel purchase program, are all obligations that are placed directly on manufacturers. The Congress and the EPA recognized when section 246 was enacted, which is the Federal fleet purchase program... John Paul Stevens: Mr. Waxman, can I interrupt you just a moment? You say there are obligations that are placed on the... which is also true. But the word standard as used in the statute over and over again refers to things that are express in terms of so many units per mile and so many... so forth and so on. The term standard, it seems to me, refers to the... the numerical definitions rather than to how they're enforced or implied. Seth P. Waxman: Well... John Paul Stevens: I think it may well be they're... and... and we don't have to worry about the enforced or implied in the terms that a statute because all it has to be that... the only prohibition is against anything relating to a standard. Seth P. Waxman: No, it's... John Paul Stevens: And if the standard is limited to the numerical term... I don't find in the text of the... of any part of the statute here your... your point about enforcement against. That's... that's what... what is done with the standard. It's not what the standard itself is. Seth P. Waxman: Justice... Antonin Scalia: I have the same problem, if I could second it. It seems to me the fact that you use standard 99 times in discussing manufacturing standards doesn't mean that when you use it a 100th time to refer to some other aspect of the whole thing, it must refer to manufacturing. It just doesn't follow. Seth P. Waxman: I'll try... I'll be efficient and try and answer two questions at once then. First of all, 209 doesn't refer... doesn't prohibit anything relating to a standard. It prohibits standards relating to motor vehicle emissions just as section 202 in the very first sentence authorizes the Federal Government to promulgate standards applicable to the emission of motor vehicles. Now, standards, as the word is used in 202 and throughout title II, refers to emission characteristics or the obligation of manufacturers to sell and produce cars. If you look at section 202(g) or 202(h) and 202(i), for example, those are instances of subsections where it is used not just to refer to the emissions characteristics themselves, but also the obligation on manufacturers and sellers. And in fact, if you look at section 203 of the act, which is called Prohibited Acts... it's the enforcement provisions... it is directed at manufacturers and sellers. John Paul Stevens: I agree with you completely that the statute imposes these obligations on the manufacturers to comply with the standards. But the word standard is... is a different concept from the obligation to comply with the standard. Seth P. Waxman: Well, I think the... the word standard... I'll... I'll say this one more time and then retreat to another... another argument. The word standard, as it is used, for example, in 202(g), is used both to refer to the emissions characteristics, numerical or otherwise, and an obligation placed on manufacturers and sellers to do something about that. And the... let me... let me give you my second line of argument here... Anthony M. Kennedy: Excuse me. Antonin Scalia: Now you say it's not just manufacturers. It's manufacturers and sellers. I thought it was just manufacturers. Seth P. Waxman: Well, there are provisions in section 203, which is the Prohibited Acts, that it... it is imposed on the people who make cars and requires them or limits them in what those people can make. Antonin Scalia: I mean, it... it's hard enough to say that the word standards on its own is automatically limited to manufacturers, but it's doubly hard to say it is limited not to just to manufacturers, but to manufacturers and sellers, but not to manufacturers, sellers, and purchasers. Seth P. Waxman: It... it is... Justice Scalia, there is a provision in section 203 of the act, the Prohibited Acts, that deals with the instance in which a manufacturer, for example, produces cars overseas and then tries to sell noncompliant cars through a distributor or some other entity. Those people are covered. But when Congress considered in 1990 its own fleet purchase rules, we're talking here about very limited fleet purchase rules that... talking about my rules... have a commercial availability exception. They do not... they cannot be read to require manufacturers to make anything they don't make or sellers to sell anything they don't sell. William H. Rehnquist: Yes, but as soon as there's... as soon as there's one commercial vehicle available, that's going to have effect on the manufacturing. Seth P. Waxman: Well, there may be... the... the vehicle has to be... the rules make quite clear that the vehicles have to be available and able to be used by that user in the locality, the fuel... William H. Rehnquist: And you... and you have to get... apply for an exemption which the petitioner says is very difficult to get. Seth P. Waxman: There... the petitioner does not say it's very difficult to get, and that footnote 7 on page 8 of their brief is truly the 13th chime of the clock in their argument. The... if we had to establish a factual record in this case... and there is none... I am told by my client that these exemptions are sought for some of these rules never because the vehicles are... are readily available, for example, with respect to street sweepers, and on other vehicles, they are readily given. If somebody... Antonin Scalia: What's... what's that 13th chime? I lost you. I thought you said... Speaker: [Laughter] Seth P. Waxman: The 13th chime of the clock is... Antonin Scalia: Yes, I know. I know what it is. Where is it? At page... Seth P. Waxman: It's on page 8, footnote 7 of their reply brief. Antonin Scalia: The reply, all right. Seth P. Waxman: They say that, oh, well, about commercial availability, it's just not true. The district that promulgated these rules said it only applies when it's commercially available. The State that enacted a provision that authorized these rules has filed a brief in this case saying it applies only when it's commercially available. No one in this case or any other case has ever argued that that commercial availability exemption doesn't exist until footnote 7 of their reply brief, and it is simply wrong. But my point generally about the... the meaning of the word standard in the Federal act, title II, is in 1990 Congress enacted its own fleet purchasing rules, and they are codified in... William H. Rehnquist: When you say its own, you mean fleets that were going to serve Congress? Seth P. Waxman: No, no. Congress put into... amended the Clean Air Act to require certain States that have nonattainment areas to include within their State implementation plans either a fleet... a set of fleet purchase rules or some alternative that they would propose that would be equally efficacious in cleaning the air. Sandra Day O'Connor: Just to be clear on your position, do you think that California as a State could enact a law saying that no purchaser of a motor vehicle in California can purchase a gasoline-powered vehicle? Seth P. Waxman: I... Sandra Day O'Connor: Is that... is that preempted or not? Seth P. Waxman: It is not expressly preempted by section 209(a). It would be subject to conflict preemption principles, as this Court went through in Geier v. American Honda, if it could be shown that... Sandra Day O'Connor: Well, by any theory. Is that preempted or not in your view? Seth P. Waxman: I think... I think it may well be preempted by... under conflict preemption principles, not express preemption, if it could be shown that this is really a sales or production... this is really an obligation that is masquerading as a purchase requirement. That would be the analysis... Stephen G. Breyer: Nobody can buy a gasoline-powered vehicle in California would require the manufacturers totally to dramatically change the kinds of vehicles they produce. Seth P. Waxman: To be sure... Stephen G. Breyer: So why wouldn't it fall right within the word standard relating to the control of emissions for motor vehicles? Seth P. Waxman: Because standards, as I said... Stephen G. Breyer: That isn't a standard? What it says is... Seth P. Waxman: Yes. Stephen G. Breyer: It's not a standard? Seth P. Waxman: That is correct. Antonin Scalia: Because? Seth P. Waxman: A standard is... is a requirement that is imposed on manufacturers and that distinction is drawn throughout title II... Antonin Scalia: Well, it is a... what... what do you do with 209(b) which says... it... it authorizes EPA to waive application of 209(a) in the case of, quote, any State which has adopted standards, other than crank case emission standards, for the control of emissions from new motor vehicles or new motor vehicle engines? Now, most of the States do not have automobile manufacturers located within the States. How could they possibly impose a requirement on automobile manufacturers? It is obviously referring to State standards that deal with the operators of... of cars... you have to go in and... and have your... your emissions checked... or the... or the purchases of cars. Seth P. Waxman: Justice Scalia, it's... I actually think that 209(b) is important proof for our premise that section 209(a), the word standard, has to be read... it has to be read to be used in the same way as section 202. And clearly the way that... when I... when we talk about production mandates, I... it's... it's actually the Congress in section 249(h) used the word production or sales mandates. The EPA in its rules and in its letter that was submitted under a primary jurisdiction referral to the First Circuit talks about production requirements. It's shorthand. But I readily agree that when 209(b) or 209(a) or 202 apply... when I'm talking about production mandates, I'm talking about an obligation that's placed on the manufacturers about what they produce and can sell. It's one and the same. There was a presumption that they would try and sell what they produced and they would produce the things that they want to sell. The point is that in... when Congress enacted the Federal fleet purchase program, it drew a... the same distinction that is shot through title II between standards, which has a very limited meaning, and requirements. It's a distinction that exists in section 116 of the act, which is on page 3a of our appendix, that preserves State authorities. And what Congress said and what the EPA said and what Senator Levin, who was very ably representing the interests of Detroit in 1990, said is these fleet purchase rules, because they are directed at purchasers may very well have a tremendous impact on manufacturers. They may cause a race to the top. But they are different than production standards, production mandates, or requirements placed directly on manufacturers. Antonin Scalia: I... I don't understand your response to my question. My question is... you just said again, that standards always refer to manufacturing standards. But in 209(b), they clearly do not refer to manufacturing standards. Any State which has adopted standards for the control of emissions from new motor vehicles or new motor vehicle engines. Those standards are... are just not applied to the manufacturer. Most States don't have manufacturers that they can control. Seth P. Waxman: Justice... Antonin Scalia: Those standards are imposed at the purchase... or at the operations stage. Seth P. Waxman: They are imposed on the people who make the cars when they sell them. That's because, Justice Scalia... David H. Souter: Why don't you just say they are imposed upon the sellers? And that's the way they get imposed upon the manufacturers. Seth P. Waxman: I... I wish that I could have said it that concisely, but that's the point that I'm making. Antonin Scalia: They're not imposed upon the users? Seth P. Waxman: They are... Antonin Scalia: Virginia cannot impose them upon the users of cars in Virginia? Seth P. Waxman: My submission to the Court, Your Honor, is that standards, as the term is used throughout title II, refers to the supply side of motor vehicles, the people who make them and the people who sell them, and that when Congress wanted to make a rule that dealt with purchasers, which applies only indirectly against manufacturers, it used the word requirement. And that's because... Antonin Scalia: So that this provision in 209(b) does not authorize a State to conduct emissions tests of old vehicles that have already been sold. It has nothing to do with manufacturers, nothing to do with sellers at this point. It has to do with whether the user is keeping the emissions system in... in proper operation. You say that is not covered by 209(b) because 209(b) does... does not say requirements. It says standards. Anthony M. Kennedy: No. Stephen G. Breyer: It's not... Seth P. Waxman: Both 209(a)... John Paul Stevens: covered by 209(b) because 209(b) is a limitation on (a) and (a) only talks about new vehicles. So you could get around this whole thing if California adopted a rule that said any vehicle 6 years... 6 months old has to meet certain standards. The whole statute wouldn't apply. Seth P. Waxman: Look, section... subsection (d) of 209 applies to vehicles that are not new. 209(a) and 209(b) apply to new vehicles. What... 209(b) is the presumptive waiver for California alone of the preemption provision in 209(a). I... I don't want to be pedantic, but let's... we... we started talking about 1965 and 1967, and I think it's tremendously revealing, in terms of the purposes, what Congress intended by standard in 209, to understand that in 1963 Congress enacted the first version of the Clean Air Act. And it basically didn't authorize the Federal Government to do anything other than help States do their part in cleaning up the air. That didn't work very well, and in 1965 Congress enacted the provision that is now 202 that says we are going to take from the realm of a traditional State authority this much for the Federal Government. They can and will set standards applicable to motor vehicle emissions. Now, for the intervening 2 years, the manufacturers came to Congress and said this doesn't make things better, it makes things worse because there are a number of States that are promulgating their own mandates on how we build engines and what kind of equipment we have. And in footnote 7 of our brief, we cite a report by HEW that categorizes what each State was doing. It's a 1976 report. And what they were doing was not putting requirements on purchasers. They were saying to manufacturers, if you want to sell a car in our State, it's got to have a whiz-bang or a doodad, or it has to meet the following characteristics. And the manufacturers said, we can only engineer and manufacture to one standard. So in 1967, Congress responded to that by enacting what is now section 209, and it compromised. It said, well, we're not going to make you manufacture and engineer only to one standard. We're going to make an exception for California, which was there before the Federal Government was there. But other than California, which is subsection (b), no State can do what it is that the EPA is doing in section 202. And there are a number of rules of statutory interpretation, leaving aside the presumption against preemption in this area of historic police... State police power, that require you to read for an express preemption point, not a general, broad conflict preemption argument that is not advanced here, that the word standard is to be read as narrowly as reasonable to preserve as much for the States as possible. Stephen G. Breyer: Is... Seth P. Waxman: And it has to be... it's only coherent if it means that the States are precluded from doing what EPA was mandated to do, which is to tell manufacturers, if you've got a vehicle over 6,000 pounds, it can't emit more than X, Y, and Z grams per mile. What the manufacturers cared about was that they not have to make what is... was subsequently called a third car. They didn't want to have to build different cars and engines for different parts of the country. And that's why a rule that is directed only at purchasers and has built within it an exception for anything that is not commercially available or can't be used for the purpose that the user wants to use it for is not a standard. Stephen G. Breyer: All right. David H. Souter: Maybe that's... Seth P. Waxman: It's a difficult question that... Stephen G. Breyer: Justice Breyer. Seth P. Waxman: I'm sorry. Stephen G. Breyer: I want you to finish what you're doing, but I want at some point to get back to this effectiveness... the effect thing. I don't want to cut you off. Seth P. Waxman: Well... Stephen G. Breyer: Maybe I'll... do it in the order you want. Seth P. Waxman: I'm here to answer questions, and I apologize. Stephen G. Breyer: Do it in the order you want and you can just that I've just been off base, and I'll put out the three propositions that... that I'm thinking. Now, you'll see it in a second. I'm thinking, one, this case isn't a big deal because all California has to do is go ask EPA and EPA is almost bound to approve whatever they want. Two, that you can't do it on language, that you have to figure out the purpose. The purpose is to stop the manufacturers from having to make different cars, and therefore, why don't you, in these circumstances, look to the effect? And... and if in fact the effect is that they're going to have to make some different cars, it's no good. But all the examples you give in your brief, all those things are fine. They don't... they don't involve this and... and they're not commands. You have to go the command and have an effect. This is a command. And I don't think it does have an effect, nor do you, but they think it might. Seth P. Waxman: I think it's... Antonin Scalia: Well, so try it out. Stephen G. Breyer: That... that's... that's the kind of thing that's going through my mind. Seth P. Waxman: I... Stephen G. Breyer: And now you've sort of said, no, no, you're way off base, and I want to know why I'm way off base. Seth P. Waxman: Justice Breyer, you are not way off base. [Laughter] You're slightly off base, but not way off. Antonin Scalia: There, there, Justice Breyer. Seth P. Waxman: You've raised... you've raised three points, and I'll try and address them in turn. They're... the... they're... what they're saying is, look, there's no big deal because... because this airshed, one of 33 in California, could take the concerns of its citizens... even though it's mandated by the State to promulgate these rules, it could go to the bureaucracy in Sacramento and try and get that bureaucracy to include in its list of what it sends to the centralized command and control bureaucracy in Washington permission to enact rules that scientific studies show cause 9,000 premature deaths in the district a year. Now, it's true, but it would not avail, that is, particulate emissions from motor... toxic emissions from motor vehicles and diesel vehicles. Now, what about Houston? Houston... right now the South Coast is the only extreme nonattainment zone in the country, but Houston has been knocking at the door for several years. The... the waiver provision that they're referring to in 209(b) would not avail Houston. It wouldn't avail Phoenix which has its own unique airshed problems with particulate emissions. And therefore, our submission is if it's a standard, yes. If you say this is a standard, we will go to the State of California and say please sponsor this rule and please ask the EPA to give permission for us to be able to impose these fleet purchasing rules. William H. Rehnquist: The district could not apply directly to EPA. It would have to go through Sacramento? Seth P. Waxman: I believe so. There is a provision in the California Health and Safety Code that says that the California Air Resources Board is the relevant State agency for purposes of 209(b). But more generally, if the... the point here is do you determine what Congress' purpose is by the effect. That's fine. Stephen G. Breyer: It's not determined what Congress' purpose is by the effect. You have things that you're talking about, standards telling the... the manufacturers what to do, and then you have close-to things, things not quite that, but close to that, selling, purchasing. So there, where it's a command in this slightly different form, we look to see whether it really has the effect that the statute is aimed at preventing. And if so, go to the EPA and ask them. If not, don't. Seth P. Waxman: No. If... if it is a command to manufacturers with respect to emissions characteristics of the vehicles they make, it is a standard, as that term is used throughout title II. If it is directed at purchasers and, as Senator Levin and the EPA explained in 1990, only affect manufacturers and sellers through the marketplace, even though it may have a substantial effect, it is no different than the many incentives and differential tax programs that they say aren't covered. Look, California... David H. Souter: Mr. Waxman, I think... maybe I'm wrong, but I think the effect that Justice Breyer is thinking about is the effect of... of being forced to manufacture the third car. Seth P. Waxman: Yes, indeed. Sandra Day O'Connor: Yes. Seth P. Waxman: And... and these... David H. Souter: And... and I thought your answer to that was because you don't have to buy anything that is not commercially available, that nixes the third car effect argument, and therefore there isn't preemption. Seth P. Waxman: That is absolutely correct. Stephen G. Breyer: No, but that's completely wrong in principle for the reason that the rules don't talk about commercial availability but in averages. Seth P. Waxman: No. Stephen G. Breyer: So, in fact, if they're only supposed to make three ZEV's... see, they're only supposed to make three ZEV's. ZEV is commercially available. But you could have a rule say buy only ZEV's and that would be a major change in the EPA rule. Seth P. Waxman: With respect, Justice Breyer... Anthony M. Kennedy: Yes. Seth P. Waxman: Here you are completely off base. [Laughter] The rules each... I'm not talking about CARB's statewide standards, but the rules challenged here have an exception for anytime somebody can show that the vehicle they want is either not commercially available or can't be used. Look at page 50a of the joint appendix. The rules are all in the joint appendix. That happens to be the rule that deals with the one that my book opened up to. It's buses. And it says on page 50 of the joint appendix that this... an exception... an exemption to these fleet purchase rules where no alternative-fuel engine and chassis configuration is available commercially or could be used. And so this is the situation that... our submission is that these things can't possibly have... impose a mandate on manufacturers. And in fact, look... we... we discuss in our brief a little bit that California has a program where it provides, I think, a 75 or 90 percent rebate to school districts if they buy buses that are fueled by alternative-fuel vehicles. Now, is that going to have an effect on the kinds of buses that school districts buy? Of course. And is it going to have a big effect on manufacturers? Sure. And therefore, when we're talking about something that is mandatory, as opposed to something that is voluntary, they... on page 7 of their reply brief, they make a distinction between voluntary standards and mandatory standards. From the relevant perspective, that is the perspective of the manufacturer, they are the same, as Senator Levin and the EPA explained. They operate on the manufacturers through the market. Now, to be sure, there... you can come up and I think Justice O'Connor came up with the extreme example of no one in our State can buy a diesel vehicle. And what I'm saying is that one could argue and one might make a very good argument that if it is a mandate that's imposed on manufacturers or sellers that is masquerading as a purchase rule, where it really has that effect, you may find that substance will prevail over form, or you may find... I think it would be more appropriate... that this simply conflicts with the fundamental objective of the Clean Air Act under the Hines v. Davidovitz test. But that's not the challenge that was brought here, and that's... David H. Souter: It would be conflict preemption, not express preemption. Seth P. Waxman: Conflict preemption and not express preemption. And that will... that analysis and that mode of analysis will allow the courts to deal with this parade of horribles that has never come true and may never come true if the political branches don't. But if you look at the history of what was going on in 1965 or 1967... this is Congress' purpose... no one was talking about... no manufacturers were concerned about purchase rules. They were concerned about having to engineer and manufacture a third vehicle. Anthony M. Kennedy: But if you need... if you need conflict preemption to answer such a basic hypothetical as that put by Justice O'Connor, the statute doesn't mean very much. Seth P. Waxman: Oh, I think... no, no, no. With... with respect, this... this statute shut down cold, Justice Kennedy, precisely what was going on in 1967. William H. Rehnquist: Thank you, Mr. Waxman. Seth P. Waxman: Thank you, Your Honor. William H. Rehnquist: Mr. Phillips, you have 2 minutes remaining. Carter G. Phillips: Thank you, Mr. Chief Justice. Let me start with Justice O'Connor's hypothetical. We are told in language that I think a 6-year-old would have a hard time understanding that a flat ban on all gasoline-fueled engines in the State of California is not a standard relating to the control of emissions from new motor vehicles or new motor vehicle engines. Justice Kennedy is absolutely right. It has rendered the scope of preemption. There is no field of preemption. There is not even a divot of dirt of preemption that is created under that interpretation. It's not consistent with the language of the word standard. Standard means more than what manufacturers do. It's not simply how it gets enforced. It's broader, and Justice Stevens is clearly correct in that regard. The one provision that seems to have gotten lost in the... in all of this, which I think is terribly important, is section 177 which states that State... and this is at the... the respondents' brief's appendix at 4a... 4a. The States are not authorized to prohibit or limit directly or indirectly the manufacture or sale of a new motor vehicle or motor vehicle engine that is certified in California. That is precisely what is being done here, is that vehicles that are certified in California are prohibited by a subagency. The State can't even do this, which is why I submit the answer to your question, Justice Scalia, is the State wouldn't have the authority to place the kind of restriction on its own subentities without running afoul of section 177. And the only way California could get approval for that would be to go to the EPA in the way that Justice Breyer has already described. Ruth Bader Ginsburg: Mr. Carter, Mr. Waxman said in his brief that the position he's taking is the position that EPA takes, and EPA is not with us this morning. Carter G. Phillips: Oh, I believe EPA is very much with us this morning because the Solicitor General speaks for the United States, and EPA is clearly a part of the United States Government. And... and the EPA has made it absolutely clear, Justice Ginsburg... Ruth Bader Ginsburg: So you... you say that's just wrong when... Carter G. Phillips: Oh, absolutely that's just wrong. There is no... there is no way... I have seen nothing to justify departing from what the Government's brief says. William H. Rehnquist: Thank you, Mr. Phillips. The case is submitted.

Warren E. Burger: We’ll hear arguments next in United States against Kahn, number 1328. Mr. Frey. Mr. Andrew L. Frey: Mr. Chief Justice and may it please the Court. This case is here on writ of certiorari to review a judgment of a divided panel of the United States Court of Appeals for the Seventh Circuit, suppressing certain telephone conversations which were recorded during the course of a Court authorized wire interception of respondents’ telephone pursuit to Title III of the Omnibus Crime Control and Safe Streets Act of 1968. After a thorough investigation, the results of which are detailed in an affidavit that was submitted in support of the wire interception application and that’s set forth at pages 9 through 20 of the appendix, federal law enforcement agencies developed probable cause to believe that Irving Kahn and an associate, one Jacobs were involved in conducting illegal gambling enterprises in violation of Illinois and a federal law. This information included detail statements of three reliable informants which were checked and verified in various ways, including examinations of telephone records. Since it was concluded that sufficient evidence to prove the offense and to illuminate its full nature and extent, including the identity of any confederates, could not be procured by conventional investigative techniques, an application was made to Judge Campbell of the District Court from the Northern District of Illinois, for an order authorizing interception of wire communications on the Kahn and Jacobs’ home telephones. This order was issued by Judge Campbell on March 20, 1970. In the order, he made the following findings, this is at page 21 of the appendix. He found first that there is probable cause to believe that Irving Kahn, Jake Jacobs, and others as yet unknown have committed and are committing offenses involving the use of interstate telephone communication facilities to the transmission of bets and betting offenses. He secondly found that there was probable cause to believe that particular wire communications of Irving Kahn, Jake Jacobs, and unknown others concerning these offenses will be obtained through the interception authorization for which is applied for. He found that normal investigative procedures reasonably appeared unlikely to succeed. Finally, he found that there was probable cause to believe that the telephones in the Kahn household have been and are being used by Irving Kahn and others as yet unknown in connection with the commission of the above described offenses. Therefore, he issued an order which authorized the Federal Bureau of Investigation to intercept wire communications of Irving Kahn and others as yet unknown concerning the above described offenses to and from the Kahn household telephones. Now, he provided that such interception would not automatically terminate with the first conversation that was intercepted, but that it shall continue and this is on page 23 of the appendix, until communications are intercepted which revealed the manner in which Irving Kahn, Jake Jacobs and others as yet unknown participate in the illegal use of interstate telephone facilities for the transmission of bets and betting information in an aid of racketeering enterprise, and which revealed the identities of there confederates, their places of operation and the nature of the conspiracy involved therein. Judge Campbell authorized this interception to continue for a period of 15 days. He directed as a statute requires that efforts be made to minimize the interception of conversations not relating to the offenses under investigation and he provided for five-day status reports by the attorney applying for the order. Now, pursuant to this authorization, conversations over the Kahn household telephones were intercepted for five days beginning on the evening of March 20th. The results are spelled out in the interim status report at page 26 of the appendix. They included on Saturday, March 21st, the first full day of the interception 50 telephone calls approximately involving the placing of bets amounting to about $15,000.00. They involved conversations between Irving Kahn in Arizona and Minnie Kahn at the Kahn home in Chicago in which gambling activities and losses where discussed. These conversations provided the interstate component of the charge under 18 U.S.C. 1952. They involved also in that the same day, conversations between Mrs. Kahn and unknown gambling figures advising of the number of bets placed the amounts of these bets, the identities of the betters. Two days later on -- Potter Stewart: The conversations, the interstate conversations between Mr. Kahn and Mrs. Kahn were -- these are related to wagering? Mr. Andrew L. Frey: Related to wagering. Potter Stewart: Was one a better and the other the bookmaker or what? Mr. Andrew L. Frey: You mean Mr. and Mrs. Kahn? Potter Stewart: Yes. For what? Mr. Andrew L. Frey: They were related to the conduct of the -- what turned out to be the Kahn family gambling enterprise. And I’ve -- I don’t know if I'm in a position to disclose here the actual content of the conversations beyond what's in the record. Potter Stewart: And the record shows what? What's the content? Mr. Andrew L. Frey: The records shows -- Potter Stewart: Just relating to wagering? Is that all it says? Mr. Andrew L. Frey: That it was relating to wagering. I think if there was some problem, whether these were sufficient to establish the jurisdiction along with the -- Potter Stewart: -- or were simply related to wagering. It’s not -- the record doesn’t show that the -- there was an offense committed during these conversations. Mr. Andrew L. Frey: Well, it is an offense to use -- Potter Stewart: [Voice Overlap] that wagering interstate? Mr. Andrew L. Frey: Well, it isn’t. It is an offense to -- under 1084 which they were not charged under to transmit wagering information over interstate law and such as the latest Las Vegas line on a game or something like that. It is an offense under 1952 which the Kahns were charged under to use any facility in interstate commerce with the intent to and then one of the things as otherwise promote manage, establish, carry on or facilitate the promotion, management, establishment, or carrying on of any unlawful activity which is defined as gambling. Potter Stewart: Well, and does the record show that these conversations purely came within that statutory language? Mr. Andrew L. Frey: Well, there has been no challenge to date that these conversations didn’t come. I assume that a motion could be made to dismiss the indictment at some subsequent point. But then -- Potter Stewart: We are not at that stage. Mr. Andrew L. Frey: We are not that stage now. Potter Stewart: I see. Harry A. Blackmun: Mr. Frey, were there conversations between Mrs. Kahn and the, I think you referred them as gambling figures, were those intrastate? Does the record show? Mr. Andrew L. Frey: As far as I know those were intrastate. Harry A. Blackmun: Alright. Mr. Andrew L. Frey: Now, when Mr. Kahn returned from Arizona to Chicago on Monday, he had further conversations with known gambling figures regarding the results of the weekend's wagering activities. In view of the success of the interception and achieving the purposes for which it was sought, it was discontinued after five days rather than to continuing for the 15 days for which Judge Campbell had authorized it. With the evidence thus, procured Irving and Minnie Kahn were both indicted for violation of 18 U.S.C. 1952. They moved to suppress the evidence procured by the wire interception and the District Court granted the suppression motion. First of all, as to conversations between Irving and Minnie on marital privilege grounds; secondly, as to all conversations of Minnie because the interception was not authorized by Judge Campbell’s order in the view of the District Court; thirdly, as to all conversations in which Irving did not participate on the same grounds. On the Government’s appeal, the Court of Appeals reverse on the marital privilege holding but it affirmed the suppression of all conversations of Minnie Kahn on the ground that she was not a person unknown within the meaning of Judge Campbell’s order. In so doing the Court construed the statutory requirement for identification of a person if known in the application and in the order to require the naming of any known user of the phone whose complicity in the offense might have been discoverable by careful investigation. It found that the Government had not prove that Minnie Kahn was not such a person. This evidentiary finding by the Court of Appeals was made without any record having been developed on the subject and indeed I suggest that the affidavit of the FBI agent, at top page 11 of the appendix, indicates that the belief of the investigating officials at the time was that if Irving Kahn was not there, the bets would be routed through Jake Jacobs. So, there are some question about the correctness of the Court of Appeals conclusion on this regard. The Court of Appeals also construed Judge Campbell’s order to authorize only the interception of conversations of the Irving Kahn, in other words, he had to participate in all the conversations and the other party had to be a person unknown. It considered this construction of the statute in order to comport with a policy of protecting individual privacy and to avoid making interception authorizations a virtual general warrant as it put it, Judge Stevens dissented. Now, we submit the Minnie Kahn was a person unknown within the meaning of both the statute and the order. And that the interception of her conversations regarding the illegal gambling enterprise was lawful and proper and produced evidence fully usable in the criminal prosecutions. In order to remove any possible confusion, I’d like to begin by indicating what this case does not involve. It does not involve the general facial constitutionality of Title III, the wire interception provisions of the Omnibus Crime Control Act. These by the way have been uniformly upheld by the lower courts were challenged with the exception of one subsequently reversed District Court’s opinion in Philadelphia. Secondly, it does not involve any finding that the Government in fact knew that Minnie Kahn was involved in the illegal enterprise and that she was in fact a target of this Government investigation, but the Government failed to name her in the application. No such finding was involved. Potter Stewart: But I -- I think I missed that, would you repeat that? Mr. Andrew L. Frey: Yes, there is no finding in this case, there is no contention to this point that the Government actually knew Minnie Kahn to be involved in this gambling enterprise and for reasons that the escape me as far as motive, declined to name her in the application for the wire interception. It is not like the situation that you spoke of in Coolidge where they knew perfectly well they are going to intercept criminal conversations of hers and didn’t name her in the authorization. Byron R. White: But you suggested, the Government had probable cause to know that two people A and B were using a phone for illegal activities, and they got a warrant for A to intercept A’s conversations. They could not intercept B’s conversations except those with A, is that what you are suggesting? Mr. Andrew L. Frey: Well, I'm not suggesting that. If a case arose where that was a problem, I would be prepared to argue that the -- although, I think that is analogous to the position that the plain view of discussion of Coolidge which was joined then by four Justices took. That is, if the Government knew and had as a target A and B, and it only named A, and it didn’t name B, although B was a target of the investigation and they have probable cause. Byron R. White: Do the Government in these cases just doesn’t get authorizations as to listen to conversations on a phone? Just because it knows that phone is being used for illegal purposes doesn’t mean it can listen to all the conversations on that phone? Mr. Andrew L. Frey: Oh, absolutely it can. If it has a court order authorizing it to intercept conversations over that phone, if it’s met the probable cause requirements of the statute. It doesn’t have to name a soul if it doesn’t know anyone. Byron R. White: Well, if it doesn’t, what difference does it make if it does? Mr. Andrew L. Frey: Well, that’s an interesting question and I might -- Byron R. White: But that’s involved in this case. Mr. Andrew L. Frey: Well, [Voice Overlap] no I don’t believe it is involved in this case Justice White because here, there was not a situation where the Government knew that Minnie Kahn was involved. Byron R. White: Well, I know but even if it did? Mr. Andrew L. Frey: Well, it would be our contention that even if the Government did, it could still at least intercept Irving’s conversation with her. Potter Stewart: But you might have a more difficult case that’s all you’re saying, isn’t it? Mr. Andrew L. Frey: It might be a more difficult case, although I would be prepared to argue that the interceptions was involved -- Potter Stewart: But you don’t need to argue it here, that’s your only point. Mr. Andrew L. Frey: I don’t need to Justice Stewart. Now, finally there is no allegation that there was failure to minimize here. That is, there is no claim made to date that the Government improperly listened to innocent conversations. We are talking here about the interception of conversations about a criminal enterprise. I’d like first to dispose of Judge Campbell’s order. Warren E. Burger: We’ll resume at that point at 10 o’clock. Mr. Andrew L. Frey: Thank you.

Earl Warren: Number 440, Clive Michael Boutilier, Petitioner, versus the Immigration and Naturalization Service. Miss Freedman? Blanch Freedman: If it please the Court. The petitioner is an alien of Canadian nationality. He is 33 years old, was duly admitted to the United States for permanent residence in June 1955 when he was 21. He has lived in the United States ever since, working -- and working here, always self-supporting. By occupation, he is a building maintenance operator. He resides in New York City with his mother, who was a naturalized citizen and stepfather, also a citizen. His father is dead. And in addition, he has a large family of married brothers and sisters who lived in this country with their respective spouses and children. Petitioner appeals from an order of deportation that was upheld by the court below that is the Second Circuit. The order is predicated upon the combined operation of two provisions of the Immigration and Nationality Law. Section 241 (a) (1) of the 1952 Act, which renders an alien deportable if at the time of admission he was excludable. And to Section 212 (a) (4) of the Act which makes excludable an alien who at the time of entry is “afflicted with a psychopathic personality, epilepsy or mental defect.” Now, the responding charges that the petitioner at the time of entry in 1955 was afflicted with a psychopathic personality namely sexual deviant to which homosexual. The finding of psychopathic personality rests solely and exclusively upon admissions by petitioner of having engaged in homosexual acts before but principally, after entry. The evidence of record is, that prior entry in between the ages of 16 and 21, he had have about three to four experiences a year during which time he also engaged in heterosexual experiences. After entry and up to the time he was directed to appear before the Immigration Service some nine years later, his homosexual activities averaged about four or three times a year. These admissions were made by the petitioner at the Immigration Service upon interrogation by an immigrant inspector in January 1964 and it is in the form of a question and answer statement. On this statement of admissions of homosexual activity before but largely after entry, and of no medical evidence of any kind, the United States Public Health Service forthwith certified that at the time of entry, almost ten years prior, petitioner was excludable as an alien afflicted with psychopathic personality namely, homosexual. At the deportation hearing, petitioner submitted into evidence two medical reports of two imminent psychiatrists, who had examined him personally each a year apart and independently of the other. The medical evidence of the record establishes that the petitioner is not psychotic; that the petitioner is not afflicted with psychopathic personality. There is no counter-medical evidence in the case. On the contrary, respondent admits that it has not proved to furnish evidence that petitioner is psychopathic. Instead, respondent claims that such medical evidence is not required of it because it construes and applies the language of the statute that is afflicted with psychopathic personality to mean, an alien who indulges in homosexual conduct, even though such conduct is medically unassociated with psychopathic personality or any other medical condition. The respondent claims that its construction of the law is based upon it speedily that that was the intent of the Congress that enacted the 1952 Immigration Act. In short, the position of the respondent is that regardless of what the term psychopathic personality may mean to the whole world, to the Congress that enacted it, it was merely a rubric, a rubric by which homosexuals were to be excluded from the country. Now, petitioners submit that it is this interpretation and application of the statute to him that engenders constitutional infirmity. As construed and applied, the statute is vague, indefinite and denied petitioner due process of law. Because one, it contains no boundaries, no standards, no guide for its enforcement. And two, because it failed to give petitioner adequate notice that his homosexual behavior after entry could be used to establish the alleged excludable condition, psychopathic personality at entry. The constitutional deficiencies that stemmed from respondent's interpretation and administration of the statute led the Court of Appeals for the Ninth Circuit in the case of Fleuti against Rosenberg to hold the statute unconstitutional. And thereafter that -- that Court affirmed its decision in the very recent case of Lavoie against the Immigration Service that is now pending before this Court on the Government's petition for certiorari. The facts and issues in the Fleuti, Lavoie and the instant case are the same. The major problem that underlies the respondent's construction of the statute is that the actual language of Section 212 (a) (4) is medical terminology and in design and purpose relates to the exclusions of aliens afflicted with a condition that medically can be diagnosed a psychopathic personality whereas homosexuality or homosexual -- or homosexual relates to conduct, to behavior. There is no homosexual condition per se, thereof homosexual acts. Of course, a person who engages in homosexual practices may be a psychopathic personality but psychopathology cannot be inferred automatically from homosexual practices. Abe Fortas: But why is -- Blanch Freedman: Alone. Abe Fortas: I beg your pardon? Blanch Freedman: Yes, sir. Abe Fortas: Are you relinquishing the possibility that we might decide this just on the basis of an incorrect construction and application of the statute? Blanch Freedman: Oh, no, sir. I come to that. I believe the -- we do believe and we so state in our second point. Abe Fortas: In other words, it's possible that this case could be decided without reaching a constitutional issue here? Blanch Freedman: That is correct, sir. That is correct. Abe Fortas: Because it's not your argument, is it, that the phrase “psychopathic personality” is a phrase that is so at large that there's -- there has no medical -- no discernible medical meaning? Blanch Freedman: On the contrary, sir. We say psychopathic personality as it appears in that statute has a describable and ascertainable -- Abe Fortas: That's what I thought your argument was -- Blanch Freedman: Yes. Abe Fortas: Let us say that it has a reasonably definite meaning and that the Service in the court below went contrary to that reasonably as attainable and that with meaning in this particular case. Blanch Freedman: That is correct, sir. If I'm doing -- Abe Fortas: But if that were -- but if it that were clear from the legislative history that Congress itself gave a particular meaning to that word, to those words, then I suppose you would reach the constitutional -- Blanch Freedman: Then we would have to reach the constitutional question. However, sir, as I will come to it, I do not believe that the respondent has interpreted the constitutional history correctly. I mean, that that is the legislative history. Now, that -- you cannot deduce from homosexual activity alone. A psychopathic condition or psychopathic personality is not only the opinion of the enumerable side -- authority cited in counsel's brief and in the amicus brief of the homosexual lower form society, which is before this Court. It is also the opinion of Doctor Paul G. Smith, the Senior Service Surgeon of the United States Public Health Service and Chief in Psychiatry at the Public Health Service Hospital at New York. Now, Dr. Smith testified in the matter of (Inaudible). He had also testified so -- that is certified the alien in that case to be a psychopathic personality under facts that are similar to his certification of the petitioner in this case. Yet in the (Inaudible) case, he testified that he was in accord with medical opinion that sex deviate is not ipso facto, a psychopathic personality. He agreed that to arrive at such a medical finding, there must be something more than sexual deviation. The doctor was then asked how we reconciled his certification of the alien of the psychopathic personality with his professional opinion and to this he replied and I quote, “That as a qualified physician, he was fully in accord with modern psychiatric theory but that as an employee of the United States Public Health Service, he was bound by any instruction of the organization addressed to his employees. Thus, it is evident from knowledgeable sources than in the given situation whether the homosexual conduct denotes an excludable pathologic condition is a matter to be established only by competent examination of the alien by qualified physicians and not merely upon admissions of homosexual practices that have been extracted by an immigrant inspec -- inspector upon interrogation with the view to possible deportation.” The administrative interpretation of the statute actually substitutes homosexual behavior for the psychopathic condition stated in the law and it is this very substitution that creates the vagueness in which the law is left without enforcement of the admi -- of the administrato -- of administrative interpretation without guidelines, without boundaries, without tests of any kind. William J. Brennan, Jr.: Am I right it made the Congress -- Congress since have it expressly the words “sexual deviation” on the statute now? Blanch Freedman: That is correct. William J. Brennan, Jr.: They have both psychopathic personality and sexual deviation in the statute here. Blanch Freedman: That is correct, sir. That was done in October of 1965. That was several years after -- many years after the situation that relates to this case. William J. Brennan, Jr.: Well, I gather the report said that was done only to make clear that that's what they meant by psychopathic personality in the first place? Blanch Freedman: Well, clearly, they're expressing then I would say doubts that prevailed in the section -- that prevailed in the statute, if that is what they are clarifying. But of course, it's a little difficult to accept a clarification of this Congress to what the 1952 Congress really had in mind. William J. Brennan, Jr.: Well, I didn't say including sexual deviation? Blanch Freedman: They never said that. William J. Brennan, Jr.: They said, “Psychopathic personality or sexual abuse”. Blanch Freedman: That's right. That is correct. It is enumerated as a separate category. Potter Stewart: I suppose that was in response to the Fleuti decision in the Ninth Circuit, wasn't it? Blanch Freedman: That is correct, sir. They say that is in response to -- that is the reaction of the 1965 Congress -- Potter Stewart: To the Fleuti decision. Blanch Freedman: To the Fleuti decision. Potter Stewart: Yes. Blanch Freedman: Counsel for the Government is not wholly unmindful that there are no boundaries and there are no real test/criteria and so they say in their brief on page 36, “There may indeed be cases where it is difficult to determine whether and in precisely what sense an individual should be deemed homosexual within the intent of the statute”. Now, we submit, one may rightfully ask by what standard or test the Government determined that the petitioner in this case should be deemed a homosexual within the intent of the statute as construed by respondent. Now, there is no answer disclosed and their brief is significantly silent. Now, assuming as respondent contends and Congress intended to bar homosexuals from to for from immigration, we are still left without an adequate standard or criteria to determine whom the label “homosexual” covers because the term “homosexual” does not described an ascertainable condition. At best it denotes a category and that category is also undefined and lacking insufficient specificity to withstand the constitutional challenge of vagueness. But this difficulty, this lack of standard does not exist when the statute is enforced as agrees and as we believe Congress mandated. Within the homosexual behavior that is reached for exclusion under the law, is that which is medically ascertainable and found to be pathologic, namely, that denotes a psychopathic personality. The second aspect of the statute's vagueness that results from respondent's construction and application is that it fails to apprise petitioner of what respondent now claims made him excludable in 1955 and further failed to advice him that post-entry homosexual behavior could be made the basis for his expulsion from the United States. There is nothing on the face of the statute to indicate to petitioner at entry that psychopathic personality meant homosexual or sex deviant. The words homosexual or sex deviant or sexual perversion, do not appear either in the exclusion statute or in the deportation statute. Furthermore, there was nothing in the visa application that petitioner was obliged to execute in Montreal, Canada that in anyway gave him any warning. The visa application lists all the excludable classes but it makes no mention homosexual, sex deviants. In fact, it does not even list the term psychopathic personality. The law may attribute to petitioner knowledge that the statute excluded from admission psych -- first aliens with psychopathic personality. But how can he be charged with knowing what is not a fact. That indulgence in homosexual practices means that one is so afflicted. To urge now as respondent does that notice and warning can be found in the legislative history and in the particular committee report, I submit, strict as a legal presumption of knowledge beyond legality. We submit, where forfeiture of residence is predicated upon conduct held to be proscribed or utilized as the basis of depriving an alien of the right to remain here. Due process requires that that statute be clear on its face. This is supported by the United States against Harris, as supported by Jordan against De George. It's supported by this Court by the application and rationale of the recent case by this Court in Giacco against the State of Pennsylvania. In theory, petitioner's post-entry conduct is not the ground for his deportation. However, it was the persuasive evidence to establish that -- to establish the alleged excludable condition and entry and that the bottoms the finding of deportability against petitioner. The Government's odd disclaimer of the use and reliance upon post-entry conduct in this case I submit, it's truly errant and non-sense. Permit me to cite that one example -- Abe Fortas: So there really any issue about that. Is there any issue as to that that is -- as I read the record, I don't -- I gather there is no dispute that this man was homosexual prior to entry? When is that issue was not made, I don't want to assert that it was or was not. But there's no issue presented at the time of this litigation as to whether he was or was not a homosexual at the time of the initial entry into this country, '51 was it or '52? Blanch Freedman: His entry was in '55. Abe Fortas: Is that the first one? Blanch Freedman: Yes, his entry in '55. Abe Fortas: ‘55. Blanch Freedman: To that, may I submit the following thoughts for this Court. The medical evidence and it is supported in the brief by our -- Abe Fortas: I'm not talking about medical evidence, I'm talking about the legal issue, is that the legal issue presented? Was there any contest as to whether -- Blanch Freedman: There's no contest that he admitted certain acts. There was no contest -- contest that he described himself when he was asked, “Do you consider yourself a homosexual? ” Abe Fortas: And there was no issue tendered? Blanch Freedman: No. There was no issue. Abe Fortas: Does he -- Blanch Freedman: There really was no issue tendered because whether or not someone is a homosexual is something that can only be -- even that issue can only be described medically and that has never been done in this case. Potter Stewart: I thought that your claim was -- perhaps something at the amicus brief with that word is an adjective and not a noun. Blanch Freedman: That is correct. Potter Stewart: And that it's inaccurate to use it as a noun and that there's no issue in this case as to his having engaged in some homosexual acts -- Blanch Freedman: That is correct. Potter Stewart: -- on that or activity but it doesn't necessarily follow that he even medically, insofar as this statutory language has a medical meaning, it falls under that definition within that meaning, is that it? Blanch Freedman: That is absolutely correct, sir. The Government -- I want to quote from the respondent's brief page 50, the last paragraph because the Government says, they did not use, they've made no reliance upon post-entry conduct and this is just one example of how -- of how it operates, “The evidence was in fact overwhelming and undisputed. The Government established that the hearing through petitioner's own admission under oath that beginning about 1949, six years prior to his entry actually it was only five years prior, and continuing on uninterruptedly to the date of the sworn statement, January 1964, petitioner had regularly engaged on an average of three or four times a year of homosexual behavior.” This pattern of activity extended over an instable of 14 and one-half years, expands the date of entry. Potter Stewart: And there is no question about that as a factual statement, is there? Blanch Freedman: That is a factual statement. But clearly, it was not petitioner's admission of three to four homosexual experiences a year over the five year period prior his entry. That really motivated the deportation proceedings against him rather it was his post-entry conduct over the ensuing nine-and-a-half years. Now, the constitutional significance of this, of this use to post-entry homosexual act is that in this case, they may well have been avoided. Had petitioner been informed by the statute that they could be used to establish a pre-entry condition of psychopathic personality for there is nothing in this record to show that petitioner's experiences were compulsive and not of choice. Petitioner could have and in all probability would have refrained from such practices from the time of entry as he has since these proceedings first gave him notice of the administrative interpretation of this statute. Potter Stewart: These practices he lived -- he's lived in New York, hasn't he? Blanch Freedman: That's right. Potter Stewart: And these practices are criminal under the law of New York, aren't they? Blanch Freedman: That is correct. And certainly -- William J. Brennan, Jr.: And suppose that -- there's no reason I suppose that the criminal laws there any -- any lesser deterrent is there than the threat of a deportation? I mean, if you're right -- Blanch Freedman: They have it -- I'm not too sure on the criminal law whether -- or whether just to what extent it is. I know we do have a law of sodomy in New York but the fact that he has never been convicted. Dr. Montague Ullman, who was the Director of Psychiatric Services in Minority Hospital in Brooklyn and Professor of Psychiatry at the State University of New York, examined the petitioner in March of 1964. And in his report, he states and I'm now quoting to what appears in the record on page 15 and 16, “The patient has sexual interest in girls and has had intercourse with them on a number of occasions.” Then skipping in taking the next sentence, “He has abandoned all sexual practices within the past several months because of his annoyance and disgusts with the problems these activities have brought about. His sexual structure still appears fluid and immature so that he moves from homosexual to heterosexual interest as well as abstinence with almost equal facility.” As I said before, the span of 14 years of homosexual activity that the respondent talks about, nine-and-a-half years had been post-entry. And as the Court in the Fleuti case recent whether a finding of deportability would have been entered against petitioner in 1965 based on the pre-entry conduct prior to 1955 or even whether on such facts the charge could have -- would have been brought is a matter of high speculation. The facts, however, that post-entry behavior is relied upon is some indication that the charge might not have been filed or a finding entered on free entry behavior alone. Respondent proffers to answers to petitioner's charge that he has been deprived of adequate notice. First, respondent says, petitioner is not entitled to fair warning because that doctrine is aimed at regulating conduct, and now I quote from their brief on page 42, “That the fair warning doctrine is not a device to enable an individual afflicted with a condition that if discovered would have barred his admission to this country and to so conducthimself as to avoid this condition becoming known to administrative authorities”. And that, we submit, completely reveals the failure or the emptiness of the Government's argument. Surely, the respondent in this case cannot have it both ways because it is precisely that there was a lack of proof of condition -- of conditions, psychopathic personality. Either before or after entry that this petitioner has been urging throughout and it is the respondent who has been insisting that it is not concerned about petitioner's condition, it knows how he is behaved and that that is sufficient. The point is that, where petitioner's condition is involved here it could not be hidden. But if behavior is involved, then it could have been controlled by him that in fact he does not suffer from any condition. Had respondent applied the statute to petitioner as it reads and as we contend it should be, namely, whether petitioner was afflicted with psychopathic personality that would be addressed to condition? But as to condition, respondent has offered no proof and so admits. But the fact is that, respondent has administered the statute as applying to petitioner's condition to beha -- the petitioner's behavior. And thus, the failure of the statute as construed and applied denied him the opportunity of knowingly refraining from engaging in certain conduct. This is not to hide a condition. Petitioner has concealed nothing because he has no condition. This is really to regulate behavior if the impact of the statute demanded it. Respondent's other answer to the issue of fair warning is that since Congress could retroactively make homosexual conduct a ground for deportation, it could also make future homosexual conduct in this country by an alien, a cause for his deportation whether or not its intentions were expressed clearly though Congress may but the fact is that Congress hasn't. It has not made post-entry sexual deviation of ground for deportation, at least not at the time that this case -- that the matter pertain to the petitioner. This Court has repeatedly held that deportation may be had only for grounds specifically expressed in the statute. The Immigration Amendment of 1965 added to the exclusion statute the phrase “sexual deviation”. It added nothing to the deportation section if the effect of the Government's order is to deport petitioner for something which the statute gave him no notice at the time of entry. Respondent's obvious that the use of legislative history is permissible to clarify statutory language. And thus, with the aid of relevant legislative history, the term psychopathic personality is embracing homosexual conduct becomes clear and definite. Now, resort to legislative history is meaningful and at times necessary but only when the statute on its face is not sufficiently clear. The term psychopathic personality, however, is not ambiguous. It is not -- it is known and established medical nomenclature denoting a medical condition and it is fully defined in medical literature. When courts have looked to legislative history, it has been to clarify statutory construction, not to rewrite the statute and create new and different provisions. For example, in the very recent case of the Immigration and Naturalization against -- Service against Errico. The Court, in the current term, examined the legislative history at Section 241 of the Immigration -- 241 (f) of the Immigration and Nationality Act. That section bars the deportation of an alien who gain permanent admission to the United States to the perpetuation of a fraud provided the alien is an immediate relative of a United State citizen. Now, the Court reviewed legislative history, not to make the term “fraud” means something that intrinsically is not fraudulent, but to determine whether the proved acts of fraud in that case were the kind that were contemplated and wherein the word -- within the intent of the legislative history. In the case at bar, the respondent resorts to legislative history, not to determine whether a proved medical condition of psychopathic personality was intended to be included under the statute. On the contrary, legislative intent is being used here by the respondent to escape proving its burden that the homosexual acts by the petitioner constituted a psychopathic personality. And it is this rewriting of the history that makes this constitu -- this statute as interpreted by Congress unconstitutional. Earl Warren: Mr. Lewin? Nathan Lewin: Mr. Chief Justice, may it please the Court. We believe that two questions are presented for decision in this case. The first is whether by providing in Section 212 (a) (4) of the Immigration and Nationality Act of 1952 for the exclusion from the United States of aliens who are “afflicted with psychopathic personality”. Congress intended to encompass within those terms an individual-like petitioner, who had engaged between the ages of 16 and 21 in homosexual relations on an average of three or four times a year and who was found by a Public Health Service physicians and psychiatrists to be a “sexual deviate” at the time of his entry into the United States in 1955. The second question is whether if Congress did so intend, its use of the words “afflicted with psychopathic personality” rather than more specific words directed to homosexual propensities or other deviations from normal sexual practice, make it constitutionally impermissible to apply that statute to the facts of this case. Potter Stewart: But if the claim is not only that the -- that the statutory phrases not sufficiently specific, it's -- that it's not sufficiently accurate. It doesn't say what Congress -- what you say Congress intended to say? Nathan Lewin: Well, to that extend, Mr. Justice Stewart, we think that that's really something that prevailed petitioner's basic argument. We think that his dispute is really with Congress and not -- and not with the courts as it were because the legislative history, we submit, is entirely clear that no matter what psychiatrists or the way to view among psychiatrists may be today as to whether homosexuality is a condition or can merely be used as an adjective to describe a practice. The legislative history, we think is entirely clear that Congress did consider the condition and that Congress intended to encompass that condition within the words it used in the statute. So that if in fact petitioner is contending that Congress mislabeled whatever it was trying or whomever it was trying to exclude, that's because -- that would be true no matter what the statute said. In other words, if Congress had retained its original proposed language in the statute and excluded specifically homosexuals or sex perverts, we assume petitioner would still be here saying that that's an inaccurate description of whatever it is that -- that he is afflicted with. But we just think that that's exactly what Congress sits for, to determine disputes among psychiatrists and among experts in this kind of an area. And that if there are disputes among the psychiatrists as to what proper way of labeling somebody who regularly engaged in homosexual activity is? Congress decided on the basis of recommendations by the Public Health Service that it was a condition, a pathological condition, and that it want to exclude the people who had that conditions from the United States as immigrants. Abe Fortas: Well, what makes you say that so clear on the legislative history? Nathan Lewin: Well -- Abe Fortas: I read your brief on some care and it seems to me that what you do is to -- in substance, to rely upon the report that was submitted by the Public Health Service in which is extracted on pages 23 and following of your brief. And as I read that, it's certainly is arguable that what the Service said was that ordinarily or frequently, people who engage in sexual deviation are psychopathic personalities. And I -- I really had a little trouble finding in unequivocal statement in that report, if that's what you're -- if I'm -- and that is significant if I am correct and it may not be that your reliance is ultimately on that report. Now, I'm excluding subsequent legislative history. Earl Warren: How did the bill -- how did the bill read when it was introduced? Nathan Lewin: When it first introduced in the Congress, Mr. Chief Justice, the Senate had specific provision which read that, aliens excludable include homosexuals and sex perverts. It was on the basis of that Public Health Service recommendation that the specific provision for homosexuals and sex perverts was dropped, and just the words referring to “afflicted with psychopathic personality” retained in the Act as it was ultimately passed. Abe Fortas: And there are two possibilities. There are two possible inferences from that -- arguably anyway. One, is that Congress wanted to include all sexual deviate -- all persons who had engage in sexual deviation or that they wanted to include persons, who had engaged in sexual deviation, and -- and, who where psychopathic personalities. That there are those two possible inferences, I suggest for purposes of your discussion. Nathan Lewin: Right. We relied on, Mr. Justice Fortas, not merely on the Public Health Service recommendation and I'd like to point to the sentence following the one that you've just read because we think that's really more clear. But we also rely, on how the Senate construed the Public Health Service recommendation. Let me first turn to that first thing of the following sentence. The Public Health Service did say that ordinarily persons suffering from disturbances are included within the classification of psychopathic personality with pathologic sexuality. It went on to say, this classification will specify such types of pathologic behavior as homosexuality or sexual perversion etcetera. It does that following sentence is an effect the statement by the Public Health Service that homosexuality is pathologic behavior, a proposition which petitioner basically contests. Abe Fortas: Well, that -- that that problem you said is as clear as mud to me. I also call your attention top of page 24 where it says that, “the latter or sociopathic”, this is from your own brief. “The latter or sociopathic reactions are frequent symptomatic of a severe underlying neurosis or psychosis and frequently include those groups of individual suffering from addiction or sexual deviation.” Nathan Lewin: Right. Abe Fortas: Which is not the same as saying that persons suffering, you remember your rules of logic? Because I'm sure you do, that person suffering from addiction or sexual deviation are always included in the group. Nathan Lewin: Now, we don't -- I agree with you, Mr. Justice Fortas. We don't read that sentence as meaning that they are all included in the group. We think that what the Public Health Service was saying was, if you use the word “psychopathic personality”, you will cover everyone who is -- whom you intended to cover by the words homosexuals or sex perverts. Abe Fortas: Yes, but I -- Nathan Lewin: There may be people -- Abe Fortas: explained to you that that is arguable. Nathan Lewin: Well -- Abe Fortas: It's also possible to read this to mean something that I take it from the briefs here as more consonant with medical science. Which is that some persons engaged in homosexual activities may be in the category of psychopathic personalities, some may not. Nathan Lewin: Right. Abe Fortas: And that's your -- that seems to be the medical authority. And in order to offset that, I take that your adversary's position is that it's got to be quite clear that Congress intended to use the phrase “psychopathic personality” in a sense that is to this extent artificial. Nathan Lewin: Right but we even -- accepting certainly as I do that the Public Health Service recommendation is subject to differing constructions. More relevant, we think is what Senate -- the Senate or the congressional committees understood the Public Health Service to mean. Now, the Senate report, which we quoted pages 21 to 22 of our brief, which accompanied the revised legislation which succeeded that upon which the Public Health Service had submitted its recommendation, specifically noted, that existing law did not provide for the exclusions of homosexuals or sex perverts. That the prior statute that had been introduced in the Senate had so provided that the Public Health Service has advised that the provisions for aliens afflicted with psychopathic personality or a mental defect is sufficiently broad to provide for the exclusion of homosexuals and sex perverts, not some homosexuals or not the majority homosexuals but for the exclusion of homosexuals and sex perverts. And what we think is the really clenching evidence is the concluding sentence of that particular passage in the Senate report which says, “Quite specifically, this change of nomenclature is not to be construed in anyway as modifying the intent to exclude all aliens who were sexual deviates. Not merely aliens who were sexual deviates were also psychopathic personalities but all aliens who were sexual deviates.” Abe Fortas: And you think sexual deviates and persons who have engaged in homosexual acts are synonymous? Nathan Lewin: No. No, we don't think so and we don't think that that the Immigration and Naturalization Service thinks so, Mr. Justice Fortas. It's quite clear we think from the reported cases and from all the cases that we know of that Immigration Services acted upon that that they don't consider one or any sporadic acts of homosexuality's being sufficient to bring a particular alien within the class. As a matter of fact, in -- in an appendix to its reported decision in matter of P in 7 I&N decisions which is cited in our brief. The Board of Immigration Appeals quite clearly noted that the fact that an individual performs a homosexual act does not immediately classify him as a homosexual. Abe Fortas: But was there a finding in this case that this man is a sexual deviate? Nathan Lewin: He is based upon -- yes, he was. There was. Abe Fortas: There was such finding. Nathan Lewin: There was -- yes, sir. There's -- Abe Fortas: So many words. Nathan Lewin: Yes, there's a Public Health Service finding on the basis of the Public Health Service psychiatrist and doctors examining the statements of the petitioner. And very specifically, on page 11 of the record, that that certification appears that on the basis of the information contained in the statement which is petitioner's own statement of -- his own history, it is our opinion that the alien was afflicted with a Class A condition namely, psychopathic personality, sexual deviate at the time of his admission to the United States. So that the standards that the Immigration Service is applying is not the one that switch across the board to anybody who is committed a single or very sporadic homosexual acts in his lifetime but to one who, as this petitioner did, engaged in as a -- as a regular practice. And indeed, we think that the evidence, as Mr. Justice Fortas noted in petitioner's argument, it wasn't even contested as to whether he really was a “homosexual” to the extent that that word has meaning to the extent that Congress, we submit, wanted it to have meaning that he was a homosexual at the time of entry. Indeed, he admitted as much. He said as much in his -- Potter Stewart: In the extent of that word it has meaning but it may have no meaning. He'd engaged in heterosexual acts and he'd engaged in homosexual acts, both, and as -- Nathan Lewin: Right. Far more of the former, Mr. Justice. Potter Stewart: And then there's no argument about those facts? Nathan Lewin: There's no argument about those facts but there's also no argument that he himself said in -- as a matter of fact, it was Selective Service Board that he was homosexual and that he received a correct classification on that basis, so that the petitioner himself is not attempting in anyway to challenge that kind of a finding. True, it may to be sure, we don't dispute the fact that the very word “homosexual” has vague -- certain vague meanings as it paraphrased. All that we argue is that Congress made it clear that that to the extent that that word does have meaning, it wished to have aliens who were -- who didn't meet that condition excluded from entry into the United States. Going -- now, if I may to the constitutional issue, which is whether Section 212 (a) (4) is unconstitutionally vague as applied to this situation because the words afflicted with psychopathic personality are too indefinite to provide a warning to aliens or a guide to administrators in courts. We submit that there's no constitutional defect to this language. First, because warning in the sense that it's usually thought of in the constitutional sense which is necessary for criminal and certain kinds of civil statute is irrelevant to the kind of determination that has to be made here. And second, because we think that the legislative histories provide sufficient content to the word “psychopathic personality”, to ensure a fair and even-handed administration by those who were responsible for administering the act and by the courts. I say warning is irrelevant because the statute does not on its face or in the manner of its administration purport to regulate how an alien is to act after he enters the United States. All that it does is that it excludes aliens, who fit certain statutory descriptions at the time that they seek to enter. The question before the immigration officer and the Boards of Appeal and the courts was whether petitioner was “homosexual” at the time he entered the United States in 1955. Now with all the warning in the world, assuming that that statute have been as clear as it could have been, petitioner could not have changed that statute. Now, of course its true, petitioner might as Judge Moore pointed out in a dissenting opinion below, have acted differently after his arrival in the United States and thereby not provided evidence which would corroborate the conclusion that that would have been arrived at in any event from his own history of his conduct before he entered the United States. William J. Brennan, Jr.: Are you suggesting from this proceeding would never have been brought or rather would have been brought as it's never been in the evidence of post-entry? Nathan Lewin: No, as a practical fact, of course, Mr. Justice Brennan the only way that -- William J. Brennan, Jr.: Well, I had -- had some considerable relevance to it -- Nathan Lewin: Oh! It did. It definitely did have considerable relevance. But we think that the notion of fair warning has never been thought to apply to evidence as it were. It's -- people subject to a statute are entitled to be warned as to whether they conduct they engaged in is lawful or is not lawful. Not to whether the conduct they engaged and may, in some way, provide evidence of unlawful activity or something that may redound to their detriment. Assume for example, a man prepares to commit a crime before or prepares to commit certain acts which were made criminal after he begins his preparations. I think there'd be no question but that the beginning acts of preparation would be admissible in evidence even though at the time that he did them he had no reason to know that the conduct he ultimately performed was criminal. In other words, you don't have warning. You're not entitled to warning in order to conceal from government official's evidence, conduct which may in some way show that either you're guilty of an offense or that something would result that would be to your detriment. Abe Fortas: Mr. Lewin, let me be clear about one thing. I take it that the Government does not argue that as a matter of so to speak of medical dictionary definition, the term “psychopathic personality” includes the phenomenon which is involved here. You do not make that argument, do you? You make the argument on the contrary that Congress intended to use that phrase in a way that is, shall I say, arbitrary in the sense that it is not the dictionary definition. Now, am I wrong -- right or wrong about that? Nathan Lewin: If I could qualify that, I think it would be right. We're not making that argument but we also -- we also -- we don't necessarily believe that it's wrong. We say it's a matter of dispute among psychiatrist. In other words, Congress did not, we think fly in the face of psychiatric testimony when it said, “this is conduct which could be classified under afflicted with a psychopathic personality”. Indeed, some of the responses in the amicus brief, the homosexual were formerly. We think indicate that those who responded believe that that may be it could be characterized. Abe Fortas: You don't make -- you don't make that point in your brief, did you? I don't remember. Nathan Lewin: What we did in our brief I think is that we disclaimed any reliance on any absolute medical knowledge which would today make it entirely clear that homosexuality is a form of psychopathic personality. But I don't think that we intended to say that Congress was acting -- Abe Fortas: Are you sure you're sufficiently cautious in that last pages? Nathan Lewin: Well, I try to be. We're not -- in other words, all that I'm saying is -- or all that we're trying to say here is that Congress had before it or could have had before it various psychiatric opinions. It apparently chose one and that's perfectly within the domain of the legislature. If today it turns out that that's wrong or if the weight the psychiatric opinion to the contrary, that is not we think invalidate the statute or make it totally inapplicable. We just think its Congress' choices among expert opinion as to which view it wants to pay. William J. Brennan, Jr.: Which is to say that that Congress had said in psychopathic personality that aliens afflicted with dandruff, a legislative history show they must to include homosexual as among those inflicted with dandruff. You wouldn't be making that argument? Nathan Lewin: No, we would not be making that argument. But we think that in effect, the statute and its legislative history is certainly to be construed -- it's certainly to be applied no less and that the statute has itself said of aliens afflicted with homosexuality. Now, I understand petitioner's counsel to be arguing, that is a totally inappropriate characterization in any event because homosexuality could not be a condition. We submit if the legislature had that Congress had so stated, it would be the duty of -- we think the administrators and the courts to get content to the extent that it's possible to that policy. William J. Brennan, Jr.: What about the change in the statute approved? It didn't say psychopathic personality including homosexuality but -- or including sexual deviations. It says homo -- homo -- Nathan Lewin: Psychopathic. William J. Brennan, Jr.: -- psychopathic person or -- and/or sexual deviate. Nathan Lewin: Right. The legislative history -- William J. Brennan, Jr.: Is that the change? Nathan Lewin: -- the legislative history certainly isn't explicit on that. I can only guess and one -- one guess certainly could be precisely what we were discussing here. Which is that by that time statute was amended, Congress may or those who suggested the amendment may reasonably if had some doubt as to whether scientifically, homosexuality or sexual deviation could be considered a form of psychopathic personality. William J. Brennan, Jr.: So that if you think it may now be that all over -- original psychopathic personality has been retained. If Congress did not buy that, those words now include homosexuality. That those who are included are only in sexual deviation. Nathan Lewin: I think, sir. I think that to the extent that the statute announces or I think Congress has said disjunctive, “If you now proceed against the man who is homosexual, you should know that -- William J. Brennan, Jr.: Well, it's now narrowed -- if that could -- Nathan Lewin: That's right. William J. Brennan, Jr.: -- now, it means that psychopathic personality be read more narrowly than in initial virtue. Nathan Lewin: That's right. But we think that the quotations from the Senate report which accompany that, which appear in pages 28 and 29 of our brief, we think do make it clear that Congress was not intending by that in anyway to indicate that they meant anything less one when a person in active statute in 52. Potter Stewart: I suppose -- do you understand the present statute, sexual deviation to refer to condition or to conduct? Nathan Lewin: We think that it refers to a condition. But I don't think it can be afflicted. Potter Stewart: Should be ready to wait. Nathan Lewin: Well, it does say “afflicted” and I think afflicted -- Potter Stewart: Now, I see. Nathan Lewin: -- as one can hardly be afflicted with -- Potter Stewart: I see. Nathan Lewin: -- what he has done in the past. Potter Stewart: That -- it's whether or not meaning of that. Nathan Lewin: Yes. Potter Stewart: That also, of course, I presume would include that sexual deviation other than and in addition to homosexual sexual deviation, wouldn't it? Nathan Lewin: That's right. And to that extent, it's also similar to what the initial draft of the 1952 legislation were saying that because that covers homosexuals and sex perverts, and presumably Congress says somebody other than homosexuals when specified the latter. Let me just note in addition a point which the -- Mr. Justice Stewart referred to during the petitioner's argument, which is that so far as the fair warning point is concerned, it's quite bizarre to think of fair warning in the context of conduct which is unlawful under the laws of 50 states and it was unlawful under the law of New York at the time that petitioner engaged in. It's hardly likely that if the statute had been far more explicit in stating that deportation would follow a showing of homosexuality at the time of entry in the United States, the petitioner in this case would be anymore deterred from this kind of conduct and by the mere fact that they were criminal statutes on the books. Abe Fortas: So, it might not have tried then if the United States would know and actually know. Nathan Lewin: That's true, Mr. Justice Fortas. Abe Fortas: It can infer that Canadian would know the laws of the New York State. I believe it's chargeable with that. Nathan Lewin: That's true, Mr. Justice Fortas. Abe Fortas: If the law of that. Nathan Lewin: But we think that to that extent, to the extent that there's any suggestion in the -- a void for vagueness argument that somebody in petitioner's position has a right to rely on what he knows at the time he enters the United States. We submit that flies on the face of many, many decisions of this Court which have held, affirmed, and reaffirmed the proposition that Congress may retrospectively legislate with regard to the deportation of aliens in the United States. Abe Fortas: Now, the other aspect of vagueness here is that made a good idea for Congress to be quite specific and when it tells the Immigration and Naturalization Service, do you think so? Nathan Lewin: Yes. We think Congress should be but we think that -- to that extent, we think the gap can be filled by legislative history because it's true. As so far as the petitioner as an individual is concerned, he can't be expected to go beyond the words of the statute if he can't even be expected to read the statute at all. What we think that the administrators have available legislative history. And there's no suggestion here, that the administrators have gone beyond the homosexuals and sex perverts which Congress by its legislative history indicated it wanted to cover by this language. In other words, if these were a case, Mr. Justice Fortas, we're -- if we were on the boarder line of something which Congress may or may not have wanted, then we think that the decisions which say that a statute has to be precise and specific in order to ensure that it be given a fair and even handed administration would apply. But this is not such a case. This is a case where the words in the statute are general but the legislative history indicates that there is a very core of conditions that that were intended to be covered and the administrators in this case are acting within that core of conditions intended to be covered. Abe Fortas: Why that's what you are? Nathan Lewin: Yes. William J. Brennan, Jr.: Except Mr. Lewin, is this -- this is only the Court have ordered that this apply on -- the most excluded, seriously -- excluded from admission in them. Nathan Lewin: Excluded from initial -- William J. Brennan, Jr.: Now, I only question to ask an applicant like this which might elicit in response. Nathan Lewin: They were none at the time of petitioner's entry. William J. Brennan, Jr.: So are that now, since they've added -- Nathan Lewin: Since they've added sexual deviation. They specifically ask whether the applicant is a sexual deviant. They don't specifically refer to homosexuality even now. They just say sexual deviant. Let me -- Potter Stewart: Administratively, not talking about the new amendment but the statute as we have it here. What other people have ever been excluded under this? Nathan Lewin: I don't know. Potter Stewart: Really, this is -- this is that -- these are the only people excluded frankly speaking, aren't they? Or it had been deported? Nathan Lewin: You mean un -- yes. All you think -- under the psychopathic personality already? Potter Stewart: Yes. Isn't it -- only homosexuals and people who'd been -- who have engaged in homosexual conduct and only such people who have been thought to be covered by this, am I right about that or mistaken? Nathan Lewin: I really couldn't give you an answer to that offense. Potter Stewart: It might be of some importance. I mean the question, does this mean -- is this a code word -- is it your position that this is a code word? Meaning, people who have engaged in homosexual conduct or is this a broad class within which broad and definable class within which falls such people? Nathan Lewin: We think it's a broad and definable class. Potter Stewart: Yes. But then if we find that only homosexual that had people engaged in homosexual conduct had been excluded, then it isn't a broad class and it's a code word for something else, isn't it? Nathan Lewin: Well, they may have been the only ones who were in fact excluded but I think -- Potter Stewart: Or deported? Nathan Lewin: Or deported. Let me point out one fact which is that prior to the enactment of 1952 Act, as far back in 1917 Immigration Act. There was a provision in the statute applying to con -- persons of constitutional psychopathic inferiority. Now, that was not intended to apply to homosexuals or sexual deviants in anyway and it didn't cover that. And that the Senate report, which accompanied the original draft of the ‘52 legislation, pointed that out. I've just been referred to the manual for medical examination of aliens which the Public Health Service has and they do define psychopathic personality as covering any personality disorder and then have a definition, to put a long sentence which covers certainly more than sexual deviates. It says, these disorders are characterized by developmental defect or pathological trends in the personality structure with minimal subjective anxiety and little or no distress and so on. So -- Potter Stewart: What did you read? Nathan Lewin: With minimal subjective anxiety and little or no distress. Potter Stewart: With minimal subjective anxiety and little or no distress. I should think they are covered by anybody, who was well. Nathan Lewin: Well, that's all -- that's all of course qualified by the Introductory Clause which says developmental defects or pathological trends in personality. I don't know how you show a pathological trend -- Potter Stewart: But I -- there is a suggestion in the briefs that's the reason I asked you that. In fact, in administrative fact, it's only such people as this petitioner who have been thought to be -- who have actually been deported under this statutory language and you can't tell me what was -- Nathan Lewin: I can't say but I will supply an answer and I will find that out, Mr. Justice Stewart. Potter Stewart: I'd be -- I'd be very interested. Nathan Lewin: I will set up an answer on it. If I might just return for a minute to the -- again to the question of fair warning and I say this Court has said as recently in the 1956 term in the Lehman and Carson case and Mulcahey and Catalanotte in 353 U.S. with only two dissents that Congress may legislate retrospectively with regards to deportation of aliens who are in the United States. In other words, an alien in the United States who enters has in effect a revocable license here. Congress may but act reasonably legislate retrospectively to provide first deportation. William J. Brennan, Jr.: Let's see, is this an argument that in any event under the 65 statute, he should be deported? Nathan Lewin: No. We don't read that. We don't read the 65 statute as being retrospective. But we're just saying, this is an answer to the argument which petitioner makes and which Mr. Justice Fortas raised, which is, that this man relied on the absence of any clear exclusionary provision in the statute. We think he has no constitutional right to rely on that. That if he entered the United States and did not know of this but later it was point out to him that by reason of the legislative history and the construction and application of the statute homosexuality was a ground for excludability, then, he could be excluded. Although, he thought at the time he entered and at the time he committed his homosexual acts even in the United States that it was not a ground for deportation. Indeed in those cases, in Galvan and Press and Harisiades v. Shaughnessy, the Court sustained the deportation of aliens who had no reason to believe that they would be deported. Either at the time they entered the United States or at the time they committed acts, which under a subsequent statute became the basis for their deportation. And we think that applies in these circumstances as well. Earl Warren: Very well.

Warren E. Burger: We'll hear arguments first this morning in Number 349, United States against Helstoski and the consolidated case. Mr. Stavis, you may proceed whenever you're ready. Morton Stavis: Mr. Chief Justice and may it please the Court. There are two cases here and the 546, our petition, Number 349 of the Solicitor General's petition, the facts in both cases are quite simple. 546 which I will deal with first involve the jurisdiction of the District Court to try this indictment. And the facts there obviously the indictment itself which charges a member of Congress with taking money and conspiring to take money by introducing bills in Congress, bills which the indictment charges were in fact introduced, and the bills as specifically identified in the indictment. It is plain from the face of the indictment that the grand jury which found it heard, considered and relied upon proof of the performance of legislative acts. And while it is not clear from the face of the indictment, it is established in the opinion of Judge Meanor and undisputed that's the indicting grand jury, as the grand jury which handed down this indictment received proofs of the performance of legislative act from the United States attorney not from Mr. Helstoski. It is also clear and undisputed that while Mr. Helstoski gave legislative materials to earlier grand juries, not the indicting grand jury, he had no reason to believe at the time that he gave such materials that he was the target of the grand jury, and in fact somebody else was thereafter indicted, tried and convicted. Byron R. White: Of course it wouldn't make any difference for your theory if he had, would it? Morton Stavis: If he was a target? Byron R. White: If he was aware that he was a -- Potter Stewart: I knew he was. Morton Stavis: It -- to our fundamental theory, it doesn't. Potter Stewart: Might have something to do with the waiver. Morton Stavis: I don't think it has anything to do with waiver either, but I agree that if our theory is correct that this is a jurisdictional allocation then it wouldn't make any difference at all. Warren E. Burger: Who was the other person under inquiry, another member of Congress? Morton Stavis: No, no somebody who had been employed by the Congressmen some eight years previously, was not then employed and hadn't been employed for many, many years. Now, our position in 546 is, and you put your finger right on it, that the Court had no jurisdiction to try this indictment. And if the Court agrees with us and that of course, it doesn't have to reach the evidentiary issues which were involved in 349. Now, I'm not going to attempt to match the eloquence of this Court and its eight opinions dealing with the Speech and the Debate Clause and review or recant the history of that clause in its meaning in England and in United States. William H. Rehnquist: Mr. Stavis, are you going to get it all to the appealability of Judge Meanor's order by the Government? I noticed that you attacked it in the Third Circuit but neither party apparently contest it here. It would seem to me that it is not open and shut that that was an appealable order. Morton Stavis: Well, I -- we -- in the Third Circuit, we certainly didn't believe that it was an appealable order. We moved to dismiss before the Third Circuit on those grounds. The Third Circuit denied our motion. I must confess that we did not cross-petition on that particular issue, but it may very well be appropriate for the Court to address that question on its own motion because -- William H. Rehnquist: Well, we have jurisdiction of the Court of Appeals opinion -- judgment only if it was properly in the Court of Appeals. Morton Stavis: I don't think this matter is properly in the Court of Appeals. Candidly, I don't think the issue which the Government presented in its petition or even properly before this Court, because the entire factual foundation for the Government's petition in 349 is a series of proposed profers of proof which they asked the District Court to rule upon three times. And the District Court refused to do so. So there are no facts before this Court. And 349 is a wholly and an entirely supposititious case. And in that respect, I guess I don't have to call to your attention, the attention of the Court, the dissenting opinion by Mr. Justice Blackmun concurred in by the Chief Justice only last week in the (Inaudible) case, which you addressed the question of the proposition that this Court ought -- to be handling supposititious cases. You get enough business handling concrete issues, and while the other seven members of the Court didn't agree that that principle applied to that case. There's no question that this Court ordinarily tries and adjudicates only concrete cases. William J. Brennan, Jr.: Well that I get -- that's a case in controversy argument, but did I understand Mr. Stavis, you're suggesting that even though you did not cross-petition on the question of the appealability of the order to the Third Circuit that it's jurisdictional and therefore that we can reach and decide it? Morton Stavis: I accepted the suggestion of Mr. Justice Rehnquist in that respect. William J. Brennan, Jr.: I just want to be clear, that's -- now the arguments you're now making is really a case of controversy, are you (Voice Overlap)? Morton Stavis: That's correct. William J. Brennan, Jr.: And that's a separate argument is it? Morton Stavis: That's correct Your Honor. William J. Brennan, Jr.: All right. Morton Stavis: May I get back to the issues in 546 which is the jurisdiction of this Court to try -- of the District Court of an Article III Court to try this indictment. That the Speech or Debate Clause establishes jurisdictional allocation comes all through the decisions of this Court including its latest, and there of course is the Chief Justice's opinion in Eastland against Servicemen's Union. Warren E. Burger: For the Court? Morton Stavis: I'm sorry. Warren E. Burger: Opinion for the Court? Morton Stavis: Of course, the opinion for the Court. And what you addressed there was the fact that the Speech or Debate Clause affects the availability of judicial power. Now, the corollary to approaching this matter from the point of view of jurisdiction or the availability of judicial power is that no one says that members of Congress are super citizens and Speech or Debate Clause isn't free license to take bribes and commit crimes and introduce bills that are paid for. That the only question is, which is the proper courthouse? Is it an Article III Court or is it the Congress of the United States under both the Speech or Debate Clause and the Punishment Clause and so that there is no question about it. My client never has, does not now nor will he contest the jurisdiction of the Congress of the United States to try the charges which we're involved with here. Because not exactly looking to be charged by any -- Warren E. Burger: Can they try these charges now? Morton Stavis: I believe so. Warren E. Burger: And what sanction could Congress impose? Morton Stavis: By way of Kilbourn against Thompson that Congress has complete power to impose any sanctions it chooses including -- if I read Kilbourn against Thompson correctly, imprisonment. That's what you said in Kilbourn. Potter Stewart: I suppose under the constitution that wouldn't be authorized to impose a cruel or unusual punishment, would it not? Morton Stavis: Oh, I think there are constitutional limitations upon the exercise of its power. That's Powell against McCormack. We expect that if we act right on this by Congress, we expect to insist upon the due process hearing. And the whole panoply of rights, that would be applied to any judicial hearing and that would be a judicial hearing. It's just an exception to Article III jurisdiction, but -- Potter Stewart: You going to insist on a jury trial? Morton Stavis: No. No we don't expect to, a jury trial. Potter Stewart: Although the constitution guarantees that, isn't it? Morton Stavis: Guarantees it, an Article III trial. I do not believe that it would be -- Potter Stewart: I didn't say anything about an Article III trial, does it? Morton Stavis: Well, I would guess however that we would accept the fact that would not be a jury trial. If we would -- if we were entitled a jury trial, we would waive it. I think the essence of the Punishment Clause is that the Congress itself has that power. Potter Stewart: Subject to what constitutional limitations? Morton Stavis: Subject to due process limitations. Potter Stewart: But not a jury trial? Morton Stavis: That's correct, subject to cruel and unusual punishment limitation. Potter Stewart: Presumption of innocence? Morton Stavis: Presumption of innocence. Potter Stewart: Necessity of proof beyond a reasonable doubt? Morton Stavis: I believe so, right of confrontation, right of cross-examination, right of counsel or -- Potter Stewart: Mr. Stavis, is it clear that their clause applies to a former congressman? Morton Stavis: Congress in the past has so asserted, we do not dispute that and besides as of the time that this indictment was found as to Helstoski was a member of Congress. Potter Stewart: Yes but he's not now, any punishment by a Congressman -- by Congress would be from now on. Morton Stavis: That is correct and we do not dispute the jurisdiction of Congress but the point that I'm making is -- Potter Stewart: Well, you do it here because you don't have to. Morton Stavis: That is correct, and all -- all we have to dispute here is the jurisdiction of the Article III Court. Potter Stewart: And Courts don't have any jurisdiction. Morton Stavis: And at the time this indictment was found, Congress clearly had jurisdiction. Thurgood Marshall: What would it -- does it -- is there a statute of limitations on this? Morton Stavis: I don't know that there is any. William J. Brennan, Jr.: Well Mr. Stavis, what took -- you said Congress has asserted authority to try after his defeat which I gather is what happened to this congressman. Morton Stavis: That's correct. In -- William J. Brennan, Jr.: Has that ever happened? Morton Stavis: Yes it has. William J. Brennan, Jr.: Against whom? Morton Stavis: Well, Mr. Brand speaking for the speaker -- William J. Brennan, Jr.: Oh, I see -- Morton Stavis: -- will address that particular question.Historically, it has occurred. I think in fact it occurred in the most famous corruption investigation by the Congress in the Crédit Mobilier transaction where Congressman Oakes Ames was charged, tried and convicted but it has -- after he was no longer sitting. And I think there are a number of other examples of that sort. William H. Rehnquist: Mr. Stavis, would the net result of accepting your theory mean that Congress could not enact and the President sign a law making it a criminal offense for a Congressman to take a bribe? Morton Stavis: Congress has enacted such a law, and such a law is on -- to that books and has been enforced and is valid, but not in respect to the performance of legislative acts. In other words, the Johnson case which wasn't in fact tried under that section is a perfect example. A Congressman takes a bribe to try to influence the Department of Justice, the normal conflict of interest situation or to take in bribe for an act which is not a legislative act in nature. What the Speech or Debate Clause is driving at is that if you want to try a legislative act for the connection with legislative act if you want to try the legislative process that belongs in the Congress. If you want to try just the question of bribery, not implicating the legislative process that you may do in an Article III Court. Warren E. Burger: But when -- Mr. Stavis, when the charge is for taking money in exchange for a promise of a future act, hasn't the Court held that it's not necessary to show the legislative act or the legislative activity? Morton Stavis: And of course that's your opinion in the Brewster case. That's exactly what the Court held. And the whole point of the Government's taking this case is that they want to get around that decision, because in that decision, you said at least eight times, we counted them, that under the Brewster indictment you could not show the actual performance of a legislative act. Warren E. Burger: Well, how will we know whether the Government is going to try to prove that until the case is tried? Morton Stavis: Well, that's what we thought accepting that the Government and that's why we don't think you would even consider this case but the Government says, “Please look at our profers of proof, this is really what we want to prove.” We say, “Those people aren't going to testify that way let alone the fact that if they did testify it wouldn't be true.” Where the Government is asking you to make -- asking the District Court and asking you to make rulings on advanced evidentiary proof. Thurgood Marshall: I understand you say you didn't want us to hear this case? Morton Stavis: We want you to hear the Government's petition. Thurgood Marshall: Oh, I see. Morton Stavis: We want you to hear the Government's petition as -- Thurgood Marshall: I see, I see. Morton Stavis: Sure, I want you to hear my petition. Thurgood Marshall: I see. Morton Stavis: Because my petition -- Thurgood Marshall: I just marvel at your fairness. Morton Stavis: Well, I don't think it's not -- I think its not any fair but correct. But let me get back Mr. Chief Justice to your question, because you said that in Brewster and you looked at an indictment that did not charge the performance of legislative acts. Look at this indictment, on its face it charges the specific performance of designated and named legislative acts. Now if this case goes to trial, and if you prove -- if the Government is permitted to prove the facts as alleged in this indictment, I'm talking about what would've happened if they came up with a Brewster indictment, but if they proved the facts alleged in this indictment that jury is going to be asked to decide questions as to the functioning of the legislative process specifically. Warren E. Burger: What if the trial court excludes any evidence about the legislative acts? Morton Stavis: Well that's what Mr.-- that's what Judge Meanor said he was going to do and that's why the Government took this case up. They weren't unsatisfied with Judge Meanor's decision which said, “I read the Brewster opinion and I intend to enforce it and not permit the introduction of legislative acts.” The Government took it up that's why this case have been going on now for over two and a half years without a trial. Now, but I want to emphasize that our position is that in the light of this indictment, the issues just does not end with the fact that the Government would not be permitted to introduce that evidence at trial. And that's what my petition is about. I say that the grand jury released and found an indictment which on its face is beyond the jurisdiction of this Court. And what the Government is saying is, “Well, let's fix up the indictment a little bit.” Well, maybe they shouldn't have charged and alleged these legislative acts which they designate in that indictment. “Well, we'll just strike it out. Fix it up and make it like the Brewster type indictment and forget that it ever happened.” John Paul Stevens: Mr. Stavis, do you agree that if they strike the allegations of the specific overt acts describing legislative acts that the indictment would then be comparable to the indictment in the Brewster case? Morton Stavis: Before, the morals in this specific legislative act, it's also the allegations in counts 2 (a) and 4 of the indictment which also include allegations of specific legislative acts. Yes, the answer is if all those words were taken out then you'd have an indictment that read like the Brewster indictment. But the trouble about doing that is that by the issuance of the indictment the executive branch of the government, the Executive Branch of the Government has implicated -- Judge (Inaudible) and the grand jury has implicated and impugned the functioning of Congress. Now the point that we make is that when the Speech or Debate Clause is set up to protect this delicate tripartite separation of powers, it means that the -- John Paul Stevens: But Mr. Stavis, would you say then that if before the defendant is put in jeopardy, the def -- the Government can come in and voluntarily dismiss the indictment, that permission to dismiss the indictment then reindict it leaving out all the references to legislative acts? Morton Stavis: No problem about that. John Paul Stevens: Well, if they still -- Morton Stavis: The (Voice Overlap) -- John Paul Stevens: -- would've done what you just said. Morton Stavis: No, provided that now this is the difference, provided that it had not presented the legislative acts to the grand jury. John Paul Stevens: So that having presented the legislative acts to the grand jury that he have given him permanent immunity? Morton Stavis: No, they haven't. There's nothing in the world that says that they can't (Voice Overlap) the grand jury and present a case to another grand jury that's exactly what happened in the Long case. In the Long case decided by this Court -- John Paul Stevens: Well your position then just so I get is that having told a particular grand jury about a legislative act by a Congressman, that grand jury may never return an indictment against that Congressman? Morton Stavis: Indictment which charges legislative acts. John Paul Stevens: Well, -- Morton Stavis: I mean -- of course they (Voice Overlap) -- John Paul Stevens: I thought you said that in a moment ago if they dismissed the indictment and brought a new one would -- didn't make reference, its still be bad? Morton Stavis: Oh no! No, what I mean is that they can't -- I mean obviously they can indict him for bank robbery, something having -- they may be able to indict him for bank robbery having -- John Paul Stevens: No, they just excised from the new indictment any reference to the legislative acts and they merely follow the pattern of the Brewster indictment. Morton Stavis: That would be invalid because the grand jury, the grand jury has violated the Speech or Debate Clause but this is not to say that the Government cannot convene another grand jury, present the case which does not involve proof of legislative acts and come out with the Brewster type indictment. William H. Rehnquist: Well but that's like Calandra. Once the information has been presented to the grand jury there's nothing more that can be done to salvage the Speech or Debate Clause. The question is whether the indictment it returns is constitutional or not. The idea that if you present a different information to another grand jury, somehow you could call it back to -- call the earlier proceedings back just isn't possible. Morton Stavis: It is not like Calandra. Calandra is a very different kind of a case. In Calandra you decided that under the Fourth Amendment -- the exclusionary clause which is your making that you would allow a grand jury to hear evidence unlawfully seized by somebody else. William H. Rehnquist: And we also said in Calandra that the right of privacy protected by the Fourth Amendment had already been breached and there was nothing that -- Morton Stavis: I understand that. But here you have an explicit provision of the speech -- in the constitution which says that speech or debate, which I wish would mean legislative acts, shall not be questioned in any other place. In Gravel you said that includes a grand jury. Warren E. Burger: Did it say he may not be questioned or he may not be required to answer? Morton Stavis: Says he may not be questioned. William H. Rehnquist: And, he may not -- Morton Stavis: I think it says may not be questioned. William H. Rehnquist: No. Now, did he have to respond to anything in the grand jury? Morton Stavis: I think he did at the point when he wasn't the target. Speaker: I read -- as I read Gravel --Well, a lot of non-targets, witnesses before a grand jury has claimed immunity from responding for various reasons, do they not? Morton Stavis: On the Fifth Amendment ground. Warren E. Burger: Yes, but there might be another reason here then, wouldn't there? Morton Stavis: It might be but if I read the Gravel case accurately and I think I do, there is no speech or debate protection from questioning when the grand jury is investigating third party crime. Thurgood Marshall: Well Mr. Stavis, am I right that your client voluntarily gave the legislative count to the grand jury? Morton Stavis: Has laid it to them voluntarily and -- Thurgood Marshall: So is that -- do you take position that if a Congressman is up for anything and he voluntarily gives a legislative thing, he can't be indicted from then on. Morton Stavis: --He must -- Thurgood Marshall: -- he is immunized forever? Morton Stavis: He wasn't up for anything. Thurgood Marshall: Yes, but he voluntarily didn't he, he did? Morton Stavis: He was subpoenaed to testify. Thurgood Marshall: Did he? But didn't he bring these bills there? Morton Stavis: He was subpoenaed to testify -- Thurgood Marshall: And didn't he bring the bills there? Morton Stavis: That is correct. Thurgood Marshall: Didn't he bring the legislative matters there? Morton Stavis: That is correct. Thurgood Marshall: And now he complains about bringing them there? Morton Stavis: Because he believes -- Thurgood Marshall: And now he complains about bringing them there? Morton Stavis: He doesn't complain about bringing them there -- Thurgood Marshall: Oh, what is he complaining about? Morton Stavis: -- he thinks he was acquired to bring them there. He doesn't complain about that at all. What he complains about is some grand jury that he never brought them before and which turned the wheel and targeted him. Thurgood Marshall: He would be immunized and we're all going to bank in to the State of Alaska. Morton Stavis: Your Honor, I've said exactly the contrary. Thurgood Marshall: I'm not too sure you wouldn't go so far to say he'd be immunized from robbing a bank in Great Britain. Morton Stavis: Your Honor I said exactly the contrary. I say that quite the contrary, he is subject to prosecution in an Article III Court by a grand jury which doesn't have this material. He is subject to prosecution before Congress where this material may properly be the subject of inquiry by the Court which has jurisdiction. So I do not accept the suggestion Your Honor because I think I've said exactly the contrary. May I reserve some of my time -- Warren E. Burger: Does it not sometimes happen, Mr. Stavis that the prosecution fails to prove all of what is alleged in an indictment and yet a conviction nevertheless results? Morton Stavis: Of course it -- of course that happens but that those are not cases where you're dealing with an expressed constitutional prescription -- Warren E. Burger: Well now this trial judge has indicated that he will in advance have the advantage of his statement that he would not admit any testimony on that score -- Morton Stavis: That he intends to comply with Brewster. Warren E. Burger: Well -- Morton Stavis: -- but I just -- our position is that the indictment is already a violation of the Speech or Debate Clause. William J. Brennan, Jr.: And therefore he can never be tried under this indictment. Morton Stavis: Under this indictment. William J. Brennan, Jr.: And that what -- this indictment has to be dismissed is your opinion? Morton Stavis: That's correct. William J. Brennan, Jr.: And if he's to be indicted, he has to be indicted by a new grand jury which does not hear the evidence that you say violates the Speech and Debate Clause. Morton Stavis: And that's not any different than what you did in -- William J. Brennan, Jr.: Well, but that is your position? Morton Stavis: That is correct, it's precisely this position. Thurgood Marshall: What about the statute of limitation? Morton Stavis: I'm sorry? Thurgood Marshall: What about the statute of limitation? Morton Stavis: I think there's an expressed provision of the statutes which provides that where an indictment is voided for some reason not having to do with the merits of the offense that the statute of limitations is told I think there's an expressed provision in the United States Code. Thurgood Marshall: Well, (Voice Overlap) where it is? Morton Stavis: No, but I'll be glad to furnish it to -- Thurgood Marshall: If you give me an idea, I can find it, can you give me an idea. Morton Stavis: It's in the United States Code. Thurgood Marshall: Good. Morton Stavis: But there's an expressed provision -- I'll looked that up thinking about this case and I did look it up. Thurgood Marshall: In fact you can't -- didn't remember it, makes me think it might not help you (Inaudible). Morton Stavis: Well, it doesn't help me in the sense that in an indictment, a new indictment can be brought as I have suggested.In that sense it doesn't help me, but also makes clear that the suggestion I've made as to the potentialities of a new indictment is entirely feasible. And I just want to say in reference to Mr. Justice Brennan's question, that of course is exactly what you do in an immunity case. You forbid the use of immunized testimony. You impose upon the prosecutor an obligation to establish that he didn't use immunized testimony when he got the indictment. If he can't make it he can go to another grand jury. He can go to another grand jury and get an indictment without the use of the immunized testimony, does that all the time. William H. Rehnquist: Is there any case from this Court saying that an indictment returned where that the Government didn't show was not based on immunized testimony is invalid? Morton Stavis: I think Warren comes close to that. In Warren what you said was -- William H. Rehnquist: Well, I -- could you ask -- answer yes or no? Morton Stavis: I'm not sure I could put my fingers on a case at the moment. May I reserve some time? Warren E. Burger: Very well -- John Paul Stevens: May I ask you -- Warren E. Burger: -- Mr. Stavis. John Paul Stevens: -- one question before you do. You mentioned the jurisdictional for former members would be covered in your colleague's argument, but as I look at his brief, he gives us some example of five former members over whom Congress say they did not have jurisdiction? Maybe he will cover it, but I would like to be advised on that if it's incorrect. Morton Stavis: I think he's given an example of cases in which former members of Congress were covered. John Paul Stevens: You don't happen to know such a case yourself? Morton Stavis: Other than the Oakes Ames case which I mentioned. Warren E. Burger: What was the bank in Grand City -- John Paul Stevens: Could you give me that again, the -- Morton Stavis: Oakes Ames, Congressman -- John Paul Stevens: Congressman Ames? Morton Stavis: Congressman Ames involved in the Crédit Mobilier controversy around the 1870's I think. That was the biggest scandal case in Congress at the time. Thank you very much. Warren E. Burger: Mr. Brand. Stanley M.Brand: Mr. Chief Justice, and may it please the Court. I'm here representing the Honorable Thomas P.O'Neil, Speaker, the Honorable Frank Thompson, Chairman and the Honorable William Dickenson, ranking minority member Committee on House Administration of the U.S. House of Representatives as amici curiae.T he interest of the speaker and his colleagues in this case is apparent. It presents serious questions in our minds as to the continued viability of the Speech or Debate Clause. At the outset, I would like to make one point clear. The Congress has read Johnson and Brewster and that Congress accepts Johnson and Brewster. When we saw the Solicitor's petition however, and what we viewed as an attempt to relitigate Brewster, we were concerned, and that's why we are here. To paraphrase Thomas Jefferson's characterization of the clause which he wrote shortly after the adoption of the constitution, “The clause is intended to protect the substance rather than the shadow of representative government, and for that reason it states for any speech or debate they shall not be questioned in any other place.” We believe that this clause operates as an institutional protection as well as a personalized privilege. And to affect this high principle of an unfettered legislative branch, the framers concluded that a jurisdictional allocation was necessary. And we read this jurisdictional allocation from the Speech or Debate Clause read together with the Punishment Clause. Like other jurisdictional requirements, the trial of legislative acts must occur in a proper forum. It is not subject to waiver, Congressman Helstoski cannot waive himself into an Article III Court for the trial of legislative acts. William J. Brennan, Jr.: That is even if he had voluntarily submitted all this material -- Stanley M.Brand: That's right. William J. Brennan, Jr.: -- regarding his legislative act. Stanley M.Brand: That's our position. William J. Brennan, Jr.: And even that -- Potter Stewart: Even if he admit an unequivocal explicit waiver, knowing waiver voluntarily? William J. Brennan, Jr.: Yes, any more than two -- Potter Stewart: He was just -- William J. Brennan, Jr.: -- any more than two litigants -- Potter Stewart: -- not empowered to waive. Stanley M.Brand: -- any more than two litigants could present themselves to an Article III Court -- Potter Stewart: And (Voice Overlap) -- Stanley M.Brand: -- without a case of controversy and say, “We would like the Court nevertheless to try this case.” Warren E. Burger: In other words, the Speech or Debate Clause doesn't belong to an individual, it belongs to an institution, is that your point? Stanley M.Brand: Yes. Thurgood Marshall: Well couldn't -- Byron R. White: Well if it does, why can't that institution provide for its waiver? Stanley M.Brand: Because the clause is a protection for the member as well even as against -- Byron R. White: So it's both? Stanley M.Brand: -- a hostile Congress. Byron R. White: So it's both? Stanley M.Brand: That's correct. Byron R. White: Neither one can waiver -- Stanley M.Brand: It protects unpopular members as well as popular members -- Byron R. White: So that -- Stanley M.Brand: -- Democrats as well as Republicans. Byron R. White: So Congress cannot by however narrow a piece of legislation -- Stanley M.Brand: That's right. Byron R. White: -- provide for the -- Stanley M.Brand: Any -- Byron R. White: -- for the executive prosecution of a legislative act. Stanley M.Brand: That's right, any more than we could delegate impeachment for instance. Thurgood Marshall: Mr. Brand, Congress I assume could amend the 201 and the other bribery statute and say, “They do not apply to Congressmen.” Stanley M.Brand: They could do that. Our position would be -- Thurgood Marshall: Well, aren't you now doing that? Stanley M.Brand: No sir, we don't believe we are. Thurgood Marshall: Well, aren't you trying to get us to do that? Stanley M.Brand: I don't think so. What we're saying is as you said in Brewster, these cases can go forward without impugning legislative acts, and that's what we are saying here. The residuent -- William J. Brennan, Jr.: Do you challenge the indictments Mr. Brand or just the evidentiary problem? Stanley M.Brand: We do. William J. Brennan, Jr.: You agree with Mr. Stavis -- Stanley M.Brand: We do in this case. William J. Brennan, Jr.: Yes. Stanley M.Brand: Although we agree also that there is nothing to prevent the U.S. attorney from taking the non-legislative material presenting it to a new grand jury and indicting and going forward to trial. Potter Stewart: Except maybe the statute of limitations. Stanley M.Brand: If that in fact is a problem. Byron R. White: But you would -- in that new indictment or in those new grand jury proceedings or in the subsequent trial, the evidence the Government now proposes to use you would say would be unusable? Stanley M.Brand: Correct. Warren E. Burger: Hasn't Congress or didn't Congress take quite a long step in relation to the Speech or Debate Clause when they enacted these provisions? Stanley M.Brand: I don't think so Your Honor, 201 like a plethora of other statutes regulating non-legislative behavior has been passed by Congress in that context. We have statutes for instance, 18 U.S.C. 431 says that a member may not enter into a contract in which the United States is a party. That's not a legislative act, we regulate that by statute. We regulate campaign financing, because we say that when a member takes a political contribution or campaigns for office, he is not engaging in the legislative process and we regulate that through the United States Code. I don't believe you can read 201 in the context of the U.S. Code in the other ways in which we regulate members Congress -- conduct as the one example where we have attempted to put into Article III Courts the trial of legislative acts. I don't believe that's consistent with the design of the Code at this time. At this point we come to the question of the indictment. We would say that there having been neither a waiver nor a delegation under 201. The indictment at issue here which charges legislative acts on the basis of what the grand jury heard is fatally defective. And we say this for several reasons. This is not Calandra and the Fourth Amendment. This is not Costello and the Fifth Amendment. This is the Speech or Debate Clause which is part of the constitution, which the framers placed in the constitution to protect questioning at the earliest possible juncture, not after indictment when the death blow has been dealt as in this case. Potter Stewart: Well, to prevent question anywhere in any other place? Stanley M.Brand: Correct. William H. Rehnquist: But why wouldn't your interest be served by according to Congressman a right to assert before the grand jury the privilege that you're talking about now? Stanley M.Brand: Our position would not -- denying that. The -- William H. Rehnquist: But -- Stanley M.Brand: -- grand jury which indicted him -- William H. Rehnquist: Why wouldn't it be fully served and if he chooses not to assert it, then there is some form of waiver. Stanley M.Brand: Well, if it's never asserted it never becomes an issue, but in this case the grand jury which ultimately indicted him was one which there could be no waiver because he never appeared before that grand jury. What we're saying on the indictment issue is that the indictment is defective because the design of the Speech or Debate Clause is to present -- prevent questioning. If the questioning has already occurred and you are willing to say that we will only at trial put on some evidentiary prescriptions then you have not remedied the potential abuse which exists. William H. Rehnquist: But what was the questioning before the grand jury which violated the Speech and Debate Clause? Stanley M.Brand: The legislative acts. It -- William H. Rehnquist: To whom were the questions addressed? Stanley M.Brand: I believe they were directed to the defendant. William H. Rehnquist: Well, but why couldn't he then assert the speech and debate privilege and fully vindicate it by asserting it at that point, and not having done so, he has waived it. Stanley M.Brand: Well, under Mr. Stavis' formulation and I think we would agree with most of that. A member must answer as to third party crime before a grand jury. Warren E. Burger: But as soon as it reached him, is it not implied in both Johnson and the Brewster case that he not only need not answer, he may assert the proposition that he cannot be questioned. To give an example, if he were sued in a complaint in a civil case for a libel and the complaint alleged that the libel was committed on the floor of the House, could not the member of Congress simply informally tell the Court by letter or any other way, that he was not going to answer because the Speech or Debate Clause protected him. And he was not going to appear and that any judgment entered on the basis of that complaint would be a nullity under the Speech or Debate Clause? Stanley M.Brand: Well as I -- Warren E. Burger: So that he -- it is more than a quite matter of not being questioned or not answering, he can't even be questioned, isn't that so? Stanley M.Brand: That's correct. Warren E. Burger: Well, but he then submitted to the questioning here. Stanley M.Brand: Well, wouldn't he be -- would the same situation occur where he never appeared and the U.S. attorney went to the Library of Congress and took the legislative material out off there, is that a questioning? He would never have appeared to assert the privilege yet we would assert that that's prohibited. William J. Brennan, Jr.: Well, indeed you look -- Stanley M.Brand: That the grand jury can't hear -- William J. Brennan, Jr.: I thought you would assert that even if he appeared and answered freely, nevertheless. Stanley M.Brand: That's correct, he as a claimant in a Article III Court could come in and claim that he should get a remedy from the Court. Byron R. White: Well Mr. Brand, he certainly don't need to -- I know you say that he -- the evidence should never have even been presented to the grand jury, but even if there was -- even if it was properly presented or even if it could be said that he waived in some matter the presentation of the evidence, you still say that he never consented to be indicted. Never consented to be threatened with indictment and that would of course solve a lot of your problems if you win on that. Stanley M.Brand: Well again, I believe that the heart of the clause is protection of the Congress from coordinate branches. William J. Brennan, Jr.: And I gather -- I thought your position was so far does that principle go that nothing that he does before the grand jury can support an indictment. Stanley M.Brand: Correct. William J. Brennan, Jr.: Nothing, isn't that true? John Paul Stevens: Well Mr. Brand, he -- Potter Stewart: But can he support a waiver? John Paul Stevens: -- he didn't testify before this grand jury, did he? Stanley M.Brand: The one that he was indicted by? John Paul Stevens: Yes. Stanley M.Brand: No, he did not. John Paul Stevens: He didn't testify before that grand jury. Stanley M.Brand: He did not. John Paul Stevens: So your position has to be that evidence of legislative acts is inadmissible before the grand jury even though the man itself is -- Stanley M.Brand: Yes. John Paul Stevens: But the clause doesn't read that way. It says that the Congressman shall not be questioned in any other place, it doesn't say the evidence of legislative act shall not be admissible before a grand jury. Stanley M.Brand: Of course the -- John Paul Stevens: That if he -- mentioned even acknowledged with third party crime evidence of legislative act shall be -- Stanley M.Brand: Well of course the Court -- the clause doesn't say either that, it is merely that evidence shall not be presented. We would read “shall not be questioned” to include the questioning of his legislative acts whether or not he is the authoror or not. Thurgood Marshall: Well, he wasn't questioned in the grand jury, was he? Stanley M.Brand: That at time and the grand jury he was not. William J. Brennan, Jr.: But at the time and grand jury is conducting its investigation, it presumably doesn't have its mind made up what its going to do at the end of the inquiry. Does it have to stop every time somebody propose and introduced in the -- before it a legislative act and decide whether or not it can be received based on what its ultimately going to decide with respect to whom it may indict? Stanley M.Brand: But in this case there was the -- a mechanism for calling out the legislative acts by presenting -- the U.S. attorney by presenting them to the -- by not presenting them to the indicting grand jury. There was a mechanism but it wasn't used. John Paul Stevens: May I ask you one other question? Is it your view that the Congress retains jurisdiction to punish former members? Stanley M.Brand: Yes. John Paul Stevens: And what is your authority for that? Stanley M.Brand: Well, our authority would be the residual -- the inherent power of the body is punished, contempts committed by its members at the time they were members for conduct which occurred when they were members. John Paul Stevens: Has the Congress -- is it not true that your brief recites an example of three members or it did not have former members of whom did not have jurisdiction. Stanley M.Brand: Well, that report raised doubts as to whether there was jurisdiction and those cases against those former members were dropped for other reasons. Potter Stewart: The military once asserted jurisdiction to punish its foreign members too, but it got a negative answer from this Court, didn't it? Stanley M.Brand: I believe it did. We're talking again about what we would say is the inherent power of the body to punish members not as private citizens but for conduct which occurred in the body when they were -- Potter Stewart: When they were members. Stanley M.Brand: -- when they were members. Potter Stewart: And that was the military's theory too. Warren E. Burger: Mr. Stavis indicated that you were going to tell us about the number of Congressmen, former Congressmen punished by the House or the Senate. Potter Stewart: Yes. The House has doubted its authority, it's true as this Court cited in Powell v. McCormack, its authority to expel a member for conduct which occurred before he became a member of Congress. But it has not doubted its power to punish conduct occurring in a prior Congress. As was indicated by Mr. Stavis, Oakes Ames -- Byron R. White: By a man who is no longer a member? Stanley M.Brand: No, in that case he was a member of the 42nd Congress, although -- Byron R. White: So did you say that -- has Congress doubted its power to punish conduct occurring in a former Congress by a man who is no longer a member? Stanley M.Brand: I'm not sure if there's ever expressed any view on that.Our view of the self disciplinary process as it is evolving at this stage would be that we would have the power to -- William J. Brennan, Jr.: Well Mr. Brand is there any instance of a former Congressman tried by the Congress or the House or Senate for a conduct (Voice Overlap) -- Stanley M.Brand: There is none that I can get to. William J. Brennan, Jr.: There are some? Stanley M.Brand: See that -- I can cite to none. Byron R. White: Well, what about -- I thought Mr. Stavis indicated there was an instance, is that right or not? Stanley M.Brand: Well he talked about the Crédit Mobilierscandal. Byron R. White: Well, what about that? Stanley M.Brand: And that was disciplined in the 42nd Congress for what occurred in the 40th. William J. Brennan, Jr.: Of an incumbent Congressman. Stanley M.Brand: Of an -- sitting member of Congress. Byron R. White: I see. Stanley M.Brand: I see that my time is up. If the Chief Justice would indulge me for one minute I would simply state -- Warren E. Burger: You may. Stanley M.Brand: -- that the self-disciplinary process is an evolving process. To say that the legislative acts will go unpunished is not correct. Legislative misbehavior and misconduct is not immunized. The House has taken cognizance of acts committed by its members which impugn the integrity of a process. It's an evolving process. It is not static. We are currently considering proposals for instance, to impanel grand juries of members on a random basis. We are proceeding a pace with a self disciplinary process. William J. Brennan, Jr.: Does the record, Mr. Brand, tell us whether the Congress has given any consideration to whether any action should be taken against former congressman Helstoski? Stanley M.Brand: No sir. And I would leave with this thought that the Solicitor has indicated in his brief that the Congress can't do both, they can't discipline appropriately and also legislate. I believe the record is clear that we can discipline with justice through law that we can do it with due process that we can do it with the full panoply of protections and shields that apply in a criminal case, witness the material we've submitted for the record on that. Thank you. Warren E. Burger: Very well Mr. Brand. Mr. Solicitor General. Wade H. McCree, Jr.: Mr. Chief Justice, and may it please the Court. In June 1976, respondent was indicted in the United States District Court for the District of New Jersey on several charges arising out of grand jury investigations into alleged corruption in connection with private immigration legislation. Count one charged him as a member of Congress with conspiracy to violate the official bribery statute, that's 18 U.S.C. Section 201 (c) (1), by acting with Albert Defalco, his former administrative aid and others, to solicit and to receive bribes in return for being influenced to introduce private bills in the House of Representatives. 13 overt acts in furtherance to the conspiracy were alleged. These overt acts consisted of charges that respondent and his administrative aid met with attorneys who specialize in immigration litigation and from whom they received cash payments in return for being influenced to introduce private bills for named aliens. The other three overt acts with which we're concerned here, 2, 3 and 4 also allege the actual introduction of such bills. Warren E. Burger: In your view Mr. Solicitor General, for the Government to sustain a case needn't prove anymore than that the money was taken and the promise to do a future act was made? Wade H. McCree, Jr.: That's -- Warren E. Burger: Does -- in other words, does it need to prove that the bargain was fulfilled? Wade H. McCree, Jr.: That's precisely the Government's position, if the Court please. The offense was to solicit bribes to perform an official act and the offense is complete once the bribe is solicited and it is unnecessary to show that an official act was in fact done in response to it. Warren E. Burger: Would the crime be consummated if the solicitation were shown but no payment were shown? Suppose the person solicited refused to pay. Wade H. McCree, Jr.: The act, if the Court please, it would be under 201 (c) the act is in fact completed when the solicitation is made for the purpose of being influenced. William J. Brennan, Jr.: But Mr. Solicitor General, I gather -- Judge Meanor said you could not be -- use the evidence of bills, private bills actually being introduced, did he not? Wade H. McCree, Jr.: That's exactly that -- William J. Brennan, Jr.: And you disagree, don't you? Wade H. McCree, Jr.: I do not -- we do not disagree with Judge Meanor if a waiver took place. We agree that Judge Meanor is correct that we could not show the introduction of the bills which is the showing of legislative acts unless a valid waiver occurred. But we contend -- William J. Brennan, Jr.: Heard when and how? Wade H. McCree, Jr.: We submit that a valid waiver occurred when Mr. Helstoski voluntarily presented voluminous correspondents including copies of the very bills that he introduced after he was told that he needn't -- that he was not required to do that. And he did it voluntarily and as Judge Meanor found, he knew of his speech or debate privilege when he did it. Although it was not called directly to his attention, he had raised this privilege in other litigation involving the alleged abuse of the franking privilege. And in fact in his penultimate appearance before the grand jury, he also invoked the Speech or Debate privilege, and so Judge Meanor's finding that he knew it is amply supported and the U.S. attorney told him that he did not have to submit these matters. Byron R. White: Well, the -- but -- just so I had it clear, but absent the waiver you agree that under Brewster in irrelevant cases and under the clause, you could not introduce the evidence that you proposed to introduce? Wade H. McCree, Jr.: We do. We concede this. As a matter of fact the -- I'd like to move perhaps right on to the nature of the evidence that is involved here. We think that this evidence falls into three categories. First, the bills themselves which as I've just responded are clearly legislative acts, evidence of legislative acts and absent a waiver, we agree that we could not introduce those. There's a second category of evidence and this consists of correspondence between Helstoski, Defalco, some of the attorneys who represented some of the aliens and some of the aliens themselves. Now we submit that these evidence has to be examined by the District Court on an item by item basis to see whether it -- William J. Brennan, Jr.: I suppose it refers -- Byron R. White: Pardon me? William J. Brennan, Jr.: -- it corresponds -- suppose -- as I read some of this, some of these correspondents says, “I did this” or “I didn't do that” in connection with the given private bill. Stanley M.Brand: Well, William J. Brennan, Jr.: Would that be within this category? Wade H. McCree, Jr.: No, we believe that that is not barred from evidence because -- William J. Brennan, Jr.: Even though it refers to something he did or didn't do -- Wade H. McCree, Jr.: Even though it refers -- William J. Brennan, Jr.: -- that could be -- Wade H. McCree, Jr.: -- to something he did or didn't do because -- William J. Brennan, Jr.: Even though while he says he did or didn't do would've been a legislative act. Wade H. McCree, Jr.: Exactly, but he may not have done it. If there's a letter saying, “If you give me a certain sum of money, I will cause a private bill to be introduced for you.” This is clearly not a legislative act. Byron R. White: So you say that under -- that Brewster it would not require exclusion of a promise to introduce a bill in return for money? Wade H. McCree, Jr.: As I read Brewster, Brewster would not require its exclusion because it relates -- William J. Brennan, Jr.: Well what if -- Mr. Solicitor General, the exclusion, I introduced the private bill on your behalf on such and such a date? Wade H. McCree, Jr.: Well, I assume that as -- let us assume that that's a false statement that he did not in fact introduce a private bill, but he said this for the purpose of eliciting a payment. William J. Brennan, Jr.: And suppose he did though? Potter Stewart: Suppose he didn't -- Wade H. McCree, Jr.: Well, -- Potter Stewart: -- introduce the -- John Paul Stevens: If it were introduced for the purpose of showing that he did in fact introduce the bill, I would agree with the Court. William J. Brennan, Jr.: Well, -- John Paul Stevens: Could that -- William J. Brennan, Jr.: Will be excluded then but -- Speaker: No, but suppose -- Wade H. McCree, Jr.: I would agree that they would be excluded, yes. Byron R. White: Suppose was introduced to prove the case that he took money for doing -- for a legislative act or for an official act? Wade H. McCree, Jr.: We submit that it's admissible that the Court should find that it's admissible for that purpose because soliciting a bribe is clearly and concededly not in a legislative act. And whatever inducement he may employ for the purpose of soliciting the bribe can not therefore a legislative act and that that is not forbidden by the Speech or Debate Clause. John Paul Stevens: But Mr. Solicitor General it isn't forbidden by the District Court order either is it, if it's a future -- if you're talking about the future? Wade H. McCree, Jr.: If the Court please, that is the way I read that and we would suggest that the past-future dichotomy is not a valid one. We submit that the Court is -- the District Court was too restrictive because under the old Hillman case for example, a statement of a present intention to do something in the future can be the basis for a finding that it was in fact done. And so we think logically, the Court should've -- should not even have made the past-future dichotomy and should've said that in both instances, evidence would be admissible. John Paul Stevens: But as I understood your comment a moment ago you said a letter assumed by the Congressman he wrote to someone said, “If you give me X dollars, I will introduce such and such a bill.” And you said, “That would be reference to a future act that may or may not ever be performed.” Wade H. McCree, Jr.: Exactly. John Paul Stevens: And would therefore be admissible or should be admissible and as I understand it, that's admissible under the District Court's -- Wade H. McCree, Jr.: This is also my understanding and -- John Paul Stevens: And -- Wade H. McCree, Jr.: -- but the district judge -- John Paul Stevens: But then you said -- Wade H. McCree, Jr.: -- said that the reference to the past -- John Paul Stevens: Right, that a question is -- Wade H. McCree, Jr.: -- is not. John Paul Stevens: Could such a letter be admissible if it said, “You will recall that two months ago you gave me $500.00 and I introduced such and such a bill in exchange for that.” Now would that -- Wade H. McCree, Jr.: If -- John Paul Stevens: -- letter be admissible? Wade H. McCree, Jr.: We submit that it would because that statement might be false, and if he said that for the purpose of eliciting a further payment and he had not in fact introduced a bill, he wouldn't be (Voice Overlap) -- John Paul Stevens: I see, do not offer -- or the truth of the matter asserted in the letter? Wade H. McCree, Jr.: Exactly. William H. Rehnquist: General McCree, I suggest you that my earlier colloquy with Mr. Stavis is not entirely irrelevant to some of the questions that my Brother have been asking you. This is a very hypothetical situation we're presented with and I take it you agree that the jurisdiction of this Court exist by virtue of 28 U.S.C. 1254 that the case was in the Court of Appeals and we therefore have jurisdiction to review it. Wade H. McCree, Jr.: We do and we concede however that unless the Court of Appeals had jurisdiction that this Court does not have jurisdiction. William H. Rehnquist: And the only way the Court of Appeals had jurisdiction was pursuant to 18 U.S.C.3731? Wade H. McCree, Jr.: Exactly and we contend that this is an order suppressing evidence under 3731, and as such it's appealable if the appeal were taken before the defendant was placed in jeopardy. And we submit that the provision itself admonishes us to give it a liberal construction to effectuate its purposes that is to allow the Government to have a ruling before a defendant is placed in jeopardy. William H. Rehnquist: Do you think the Government could come in and on its own without the defendant making any motion to say, “This is the evidence we're going to present at trial, we'd like the trial court to rule on whether it will be admissible or not.” And the trial court divides it into categories and said, “This will be admissible, this isn't.” And the Government can then appeal, say that Court's determination that certain evidence is hearsay and were therefore be inadmissible? Wade H. McCree, Jr.: That's a difficult question, if the Court please. An order in (Inaudible) which is really what it is, indicating what evidence might or might not be introduce is admissible under some systems or procedure. Now whether the federal rules or criminal procedure permit it, I can't direct the Court's attention to a specific provision. But in this case the Court did and the Court had the matter properly before it on the -- on Mr. Helstoski's motion to dismiss. Then Mr. Helstoski raised several questions about the evidence and the Court in its ruling, in fact in its first ruling, its our ruling, it said that we would have to redact the indictment. But in a subsequent written opinion it indicated that we didn't have to redact the indictment but that as the Court has already pointed out, we could show evidence of promises to perform future legislative acts, but not past ones. And so we submit that the Court did in fact suppress evidence, and we suggest that although this Court hasn't decided the question, there are a number of decisions in the Courts of Appeals which have done exactly this. One case that I recall is Batiste versus the United States, in which the Sixth Circuit decided that. And another one in which the -- this Court denied certiorari, that's United States versus Craig from the Seventh Circuit. We suggest that the Speech or Debate Clause creates immunity for a Congressman from civil or criminal liability for his legislative acts and we concede that it shouldn't be construed as narrowly as just a speech or a debate in the Congress, but that it's the kind of act that's generally done in furtherance of a legislative process which certainly doesn't include soliciting a bribe. And so we say that there is an immunity for prosecution for a legislative act. We further submit that the Court has developed an evidentiary privilege, an implementation of this immunity. And as the Court has done with the other privileges, evidentiary privileges that it has created, that we suggest that the shield should not be any roader than is necessary to protect the interest for which it was established. William J. Brennan, Jr.: And all was waivable I gather? Wade H. McCree, Jr.: I beg your pardon? William J. Brennan, Jr.: All was waivable? Wade H. McCree, Jr.: And we suggest too that it is waivable. And in this respect of course there isn't any question but that Mr. Helstoski made a gesture before the grand jury of a clean breast of everything. “I want the grand jury to know that I have nothing to hide” and he brought in all of these materials although he was told that he was not required to do this. And to permit him to do this and then to assert a privilege would be to make a mockery our off the privilege because he would just have it one way and not both ways. And the Court does not permit that in other matters and we see no reason why it should in this matter. We'd also like to suggest that there's another reason why the district -- why this indictment is good and why the District Court's restriction on evidence should be reversed. We advanced the theory in Brewster that was suggested in Johnson that if there were a narrowly statute, narrowly drawn to achieve the end of regulating the conduct of its business, that the Congress could then involve the executive branch and the judicial branch in it's -- in the discipline of its members. And we suggest that in Section 201 the Congress has done exactly that in its definition of who is an official. For the purpose of Section 201, it specifically provides that a member of the Congress is, and then it specifically sets forth the offenses which the defined officials cannot -- I'm -- may, of which they may be found guilty. So clearly, this is a statute narrowly drawn to achieve the end of regulating the conduct of its members. And we suggest that there's a good reason for it too. And my brother who was arguing here a few moments ago suggested or stated in response to a question from the Court that a jury wouldn't be available if a member of the Congress was called on for trial. The Congress has decided that for this purpose with the third branch involvement there will be a jury, there can be confrontation, right of counsel. Warren E. Burger: Not only that there can, there must be. Wade H. McCree, Jr.: There must be, I thank the Court for the correction. There must be. And we submit that the Congress has indeed done this with a carefully drawn statute which distinguishes it from Johnson. This Court didn't address this question in Brewster although the Government briefed it. But we suggest that this is another basis for arriving at the result that we request. William J. Brennan, Jr.: Mr. Solicitor General, may I be sure I understand your -- you're suggesting in substance, as I understand it that Congress can waive the privilege in certain limited areas, is that right? Wade H. McCree, Jr.: We do. William J. Brennan, Jr.: Could they pass a statute that says members may be questioned about banking legislation or members may be questioned about legislation dealing with any other specific subject in which perhaps a minority of the Congress might be vitally interested and the majority might not be interested? Wade H. McCree, Jr.: I think these are clearly legislative acts and I would have difficulty with that, my -- William J. Brennan, Jr.: If they can't waive in that situation how can they waive here? Wade H. McCree, Jr.: Well there -- what they are doing is asserting that members may be tried for non-legislative acts, which is what we have here, the soliciting of a bribe. William J. Brennan, Jr.: Then if you -- they'd have a non-legislative act, you don't need the waiver, as I understand -- Wade H. McCree, Jr.: Well this is really in response to the argument that the Congress has exclusive jurisdiction of the disciplining of its members. And we don't think that we have to labor that because we think if the Court is to agree with his argument there, it would have to reverse Brewster. Byron R. White: Well, --(Voice Overlap) -- Wade H. McCree, Jr.: -- we don't understand -- Byron R. White: I thought your position was that with a narrowly drawn statute, Congress could authorize the prosecution of Congressman for the performance of legislative acts. Wade H. McCree, Jr.: No. If the Court please, I did not mean to give that impression, if I did I stand corrected. Byron R. White: Well, then what relevance is your argument in this case then -- Wade H. McCree, Jr.: Well, this is just -- Byron R. White: -- at this point. Wade H. McCree, Jr.: -- this is just a second argument why the Congress with a narrowly drawn statute could involve the executive branch and the judicial branch in the disciplining of its members. In addition to the argument that prevailed in Brewster, identifying the act is a non-legislative act, the taking of the bribes. Byron R. White: So you're just saying that Congress with a narrowly drawn statute could authorize the executive to end -- to punish a Congressman for conduct falling outside the Speech or Debate Clause? Wade H. McCree, Jr.: Exactly. Byron R. White: That's as far as you -- Wade H. McCree, Jr.: That is as far as that argument goes. Byron R. White: And this argument -- and it also -- so that this argument doesn't affect whether or not this evidence is admissible? Wade H. McCree, Jr.: Only in this sense that since this is a non-legislative act, evidence -- Byron R. White: Well, -- Wade H. McCree, Jr.: -- soliciting a bribe, evidence can be introduced in support of it. Byron R. White: Yes, as long as if you're right on that, if you're right on that maybe. But if the Court thought that this involved evidence or conduct protected by Speech or Debate Clause, your argument then would fall by the wayside? Wade H. McCree, Jr.: We would have to go to our waiver argument. It would fall by the wayside and only a waiver would permit a prosecution for that. Byron R. White: And so you at least say then that the privilege or the immunity belongs to the member individually? Wade H. McCree, Jr.: On in -- it was referred -- with respect to the waiver we do. And we suggest that we it would be -- Byron R. White: Yes but it also is -- it's something that Congress can't waive for him? Wade H. McCree, Jr.: We suggest -- that the entire Congress? Byron R. White: Yes. Wade H. McCree, Jr.: Well, superficial -- Byron R. White: I just asked you if Congress could by a narrowly drawn statute authorize the prosecution for a legislative act, and you said no. Wade H. McCree, Jr.: Yes, that's correct and I will not retreat from that position. Byron R. White: So that the -- Wade H. McCree, Jr.: And I'm suggesting that -- Byron R. White: -- privilege does belong to the individual. Wade H. McCree, Jr.: It belongs to the individual. Byron R. White: Yes. Wade H. McCree, Jr.: It does indeed. And I suggest that to allow an individual to have it both ways is contrary to our whole system of jurisprudence that if he doesn't claim, if he does expressly waive, clearly we think he can be prosecuted. Byron R. White: But he -- but in this case, I don't see -- is there some evidence that he consented to be prosecuted for a legislative act? Wade H. McCree, Jr.: No he did not expressly waive, but we have this -- Byron R. White: Not, no did he ever consent to be prosecuted for a legislative act? Wade H. McCree, Jr.: He did not consent to be prosecuted for a legislative act. Warren E. Burger: Do we need to decide in this case whether Congress could by a very statute more narrowly drawn perhaps than Section 201 submit to the trial for a legislative acts, do we need to decide that here? Wade H. McCree, Jr.: We need not because the act here, soliciting for a bribe is clearly and concededly not a legislative act. Warren E. Burger: But the case could be decided narrowly on the basis of Brewster and Johnson? Wade H. McCree, Jr.: We believe that it can, but we believe that -- Warren E. Burger: Either way apparently, if I -- you listen to the other side. Wade H. McCree, Jr.: Well, we believe however that Judge -- that the Court of Appeals was too restrictive and that Judge Meanor was too restricted -- restrictive and this Court should reverse that decision of the Third Circuit to -- Warren E. Burger: Well, there's another alternative, isn't there and that is to let them go their way and see what happens? Wade H. McCree, Jr.: That is another course that's available to the Court too. But we think that the district judge could benefit from the guidance of this Court in indicating what was referred to in Brewster as Acts relating to legislative acts and not legislative acts themselves. William J. Brennan, Jr.: Well I gather Mr. Solicitor General that the Government thinks it has a case even without the materials that Judge Meanor sought that it would exclude it. Wade H. McCree, Jr.: We believe that -- William J. Brennan, Jr.: (Voice Overlap) enough to get to the jury. Wade H. McCree, Jr.: We believe the Government has such a case and we have filed with the Court a sealed appendix that I think contains sufficient evidence to go to the jury, but we would like to take the strongest case we can. My Brother didn't speak about his mandamus action and at least that aspect of it there was a basis for the Court of Appeals denial of his petition and we think that the Court of Appeals was clearly right there. And unless the Court has any questions about that, I would not discuss that in argument here. If the Court please, then that concludes the argument of the Government in this manner. Warren E. Burger: Thank you Mr. Solicitor General.Do you have anything further Mr. Stavis? Morton Stavis: Yes I do. Warren E. Burger: You have about three minutes left. Morton Stavis: Alright, thank you very much. Picking up the colloquy between the -- Mr. Justice White and Solicitor General, it seems now to be conceded that the Congress cannot waive into an Article III Court trial of a legislative act. Warren E. Burger: Well, I didn't -- it could -- Morton Stavis: I cannot believe -- Warren E. Burger: If you understood it that way, I didn't. Morton Stavis: I think that was what the Solicitor General -- Warren E. Burger: He -- I thought he has said Congress has not done that up to now. Morton Stavis: I thought he went further. Byron R. White: I asked him that, whatever is -- that you have to -- that was my question anyway whether if -- Morton Stavis: I thought -- Byron R. White: -- his answer was that it's another matter. Warren E. Burger: Do we need to decide whether what Congress could do in the future? Morton Stavis: I understand that. I understand that you don't have to decide this question, but I thought I heard the Solicitor General conceding that. If I'm wrong, I'd respectfully request to be excused for this error, but if I am right then what the Solicitor General is saying is that while the whole body of Congress can't waive into an Article III Court one member can. And it just seems to me that that falls of its own way. Warren E. Burger: Could there -- Speaker: Why didn't (Voice Overlap) -- Warren E. Burger: -- (Voice Overlap) anything that Congress could not do to waive your rights or my rights which you or I individually might well do. Morton Stavis: But not when the rights relate to the jurisdiction of a Court. I can't waive myself into this Court, that's one of the points that Mr. Justice Rehnquist suggested. We can't, by the fact that I may not even cross-petition. I can't waive the objection to the jurisdiction of the Third Circuit. And if this is jurisdictional then the waiver argument doesn't apply either with respect to Congress as a whole or with respect to an individual member of the Congress. Now, I would like if I may to approach for a moment -- John Paul Stevens: Well, then let's test that Mr. Stavis. Morton Stavis: Sir. John Paul Stevens: Supposing the Congressman is called before a grand jury. He's alone in the grand jury room and a bunch of questions are asked of him, but that all of which pertain to legislative acts, he could answer those couldn't he? Morton Stavis: He not only could answer them, but if he is not the target I believe he is required to answer. John Paul Stevens: Assume he's the target? Morton Stavis: Well, if he's -- John Paul Stevens: He still could answer them if he decides I think I'll answer these questions. Morton Stavis: If he is the target and if he answers then he is probably subject to discipline by the House. But he of course, he can -- John Paul Stevens: I mean, for waiving his cons -- his privilege, you say, that (Voice Overlap) -- Morton Stavis: I respectfully suggest to you that you look at Jefferson's manual which is recorded in our brief in which he says, “Yes, he may not waive that privilege of the House of speech or debate. But even if the House should overlook that and he has waived it then he has testified -- he has testified. The next question is, what's the consequence of that testimony? Does that waive him into an Article III Court when the constitution says the Article III Court has no jurisdiction? I've never been able to go to a courthouse and say, “Please take this case even though you don't have jurisdiction.” Thurgood Marshall: But isn't the grand jury in an Article III Court? Morton Stavis: The grand jury is partially in an Article III Court that -- Thurgood Marshall: Partially? Morton Stavis: Partially, as it's also I think something else too. I think it's an honor of the executive. Byron R. White: Well Mr. Stavis, there's no evidence here that -- Morton Stavis: I've been lit up but if I -- Byron R. White: Yes. Morton Stavis: -- I'd like to add (Voice Overlap) -- Byron R. White: There's no evidence here that he -- that even if a Congressman appear before the grand jury and freely talked about legislative acts, made no objection whatsoever, if he didn't go on and say, “I also waive my immunity from prosecution for a legislative act”, he wouldn't have waived his immunity from prosecution. Morton Stavis: Of course not, and he never even said -- Byron R. White: There isn't any evidence like that here. Morton Stavis: Not in the slightest, not in the slightest. May I have 30 seconds? And then he -- Warren E. Burger: We'll give you 60. Morton Stavis: Thank you very much Your Honor. I want to focus on my case in just a moment and that is the indictment. And particularly on what may be attractive to some of the members of the Court which is, “Well let's just fix up this indictment.” And I simply want to say that the consequence of that is that you remove the effective operation of the Speech and Debate Clause at the point where it's most important namely where it is accusatory. Now in Kilbourn against Thompson that used the meaning of the term questioning was not Mr. Justice Stevens' in terms of do you ask a question. It is rather, may you make a charge.And I respectfully refer you to Mr. Justice Miller's opinion in which he equates the Speech or Debate Clause the term questioning to the language of the Massachusetts constitution which refers to accusation. If you take that concept and then move over to Mr. Justice Rehnquist's question and say, “Is there any case where you set aside an indictment because there's something that happened in the grand jury?” And I say that that's exactly what you do in the immunity type case where a grand jury heard testimony that was barred from him, they shouldn't have heard him. And you say to that prosecutor, “Well if you did it, we cancel that indictment. If you want to go ahead and not use that prohibited testimony, you're free to do so.” And that's all we've ever said here, and if the prosecutor should decide not to do that, in any event we said that the Congress has jurisdiction. And I'm very grateful to you, Your Honor, for indulging me to that extent. Warren E. Burger: Thank you gentlemen. The case is submitted.

Warren E. Burger: We'll hear arguments first this morning in Number 74-452, Twentieth Century Music Corporation against Aiken. Simion H. Rifkind: Mr. Chief Justice -- Warren E. Burger: Mr. Rifkind. Simion H. Rifkind: And may it please the Court. This case comes here on the petition for certiorari to review of decision of the Court of Appeals for the Third Circuit. The petitioners have brought this suit to enforce their copyright claims against the respondent Aiken, who they alleged had infringed their rights by a public performance for profit of two songs, one the copyrighter which belonged to each of the petitioners respectively. The district judge granted the statutory damages in favor of the plaintiff below of $250.00 for each infringement, the Court of Appeals reversed. Its asserted ground for reversal was that Aiken's conduct did not amount to a performance though it was public and it was for profit. The facts are simple. Respondent Aiken owns and operates a chain of fast food restaurants in the City of Pittsburgh. He decided to entertain his costumers and to improve the efficiency of his employees by furnishing them with popular musical performances throughout the business day. There were, as I believe we can take judicial notice, available to him several methods by which his purposes could be accomplished. One, he could hire one or more musicians to play such compositions as he or his agent selected from the cheap music generally available to the public. Secondly, he could if he chose equipt the premises with one or more machines that reproduce music mechanically when supplied with either records or tapes or piano roles, depending upon the nature of the particular machine that he decided to use, and these too are generally available for purchase by members of the public. Or he could subscribe to a service like Muzak which provides musical compositions for use in premises by machinery equipped for that purpose. And finally, he could if he wished, equipt his premises with a radio receiving set connected to an electric source of energy, install a sufficient number of loudspeakers so as to disseminate the sound agreeably throughout the premises that he wished to serve, and cause the radio receiving set to be oriented by his selection to any kind of music that he preferred from among the many that were being broadcast within the Pittsburgh area by the several stations doing business there. Aiken in fact chose the last mentioned method. I don't think I need to argue the point that it was the least costly method. The district judge after trial found that on the 11th of March 1972, Aiken had caused the costumers and employees in one of his restaurants to be entertained by two compositions of which the petitioners were respectively the copyright owners These compositions were received over Aiken's radio and were distributed through his restaurant and employment spaces through five loudspeakers which he had installed in the premises. These two compositions which he so played were broadcast that day by a FM station located in Pittsburgh and licensed to broadcast those compositions. Aiken however had no license for the public performance for profit of these compositions and the radio station had no authority to confer such permission upon Aiken. William H. Rehnquist: There was no possibility of any implied license then, as that was referred to in the Jewell-LaSalle. Simion H. Rifkind: That is Precisely, Mr. Justice Rehnquist. The possibility of an applied license had been expressly and explicitly withdrawn in the license issued by the copyright owners to this particular station as to all stations, and that had been true since 1932. So this -- Warren E. Burger: Mr. Rifkind, I'm not sure it's terribly important but I could not find in the record the aggregate number of loudspeaker outlets in all of his establishments. Simion H. Rifkind: My understanding of the record is that there were five. Warren E. Burger: Just five? Simion H. Rifkind: Some in the public spaces where costumers were entertained and some in the workspaces where the employees were -- Warren E. Burger: But that's just in one restaurant, is it not? Simion H. Rifkind: It's all in one restaurant. Warren E. Burger: And he has only one? Simion H. Rifkind: Oh no, he has other restaurants, but this particular infringement was of course brought as a test situation for the particular two songs that we are talking about. The District Court granted the plaintiff below the monetary damages requested which was $250.00 for each composition at the statutory rate. As I've already stated, the Court of Appeals reversed that and I submit that I can state with confidence that the business purpose behind the selection of any one of the methods by which Aiken could have supplied musical entertainment to his guests and employees was identical. It was to entertain guests and it was to improve the efficiency of his employees. This much I believe is clear on the record, and all of these methods which ever one he selected would have to have recourse to music created by composers and made available to the public by means of either cheap music, records, tapes,piano roles or broadcast of electrical impulses. And I suggest that until the Third Circuit had spoken, it was firmly established that no matter by which method Aiken entertained his guests and employees, he was bound to abstain unless he had a license from the copyright owner, such as ASCAP of course. And of course such licenses were universally available under the compulsion of a decree which is enforced with respect to ASCAP. I believe that it is still unquestioned that live performances in the restaurant by live musicians would be subject to the copyright laws and subject to Section 1 thereof, and that has been true certainly since Mr. Justice Holmes wrote Herbert against Shanley way back in 1917. I believe it is still unquestioned that the record, tape, piano role method or electronic method of music is a public performance for profit, and indeed so the Third Circuit itself had held on a number of times. And now the Third Circuit has decided that the last method, namely the radio plus loudspeaker method, although realistically and functionally indistinguishable from any of the other methods of furnishing the music, is for some reason beyond the reach of Section 1 of the Copyright Act although it is public, although it is for profit, but the Circuit Court said it is not a performance, and at arriving at that conclusion that it was not a performance, it said that it acted under the composure of this Court's mandate as expressed in the two CATV cases, the Fortnightly case and the Teleprompter case and it is that determination of the Court of Appeals that I most distinctly want to challenge. We challenge it and we challenge that decision on several grounds. We assert first that the old landmark decision rendered in 1931 entitled Buck against Jewell-LaSalle and reported in 283 U.S. by a majority court in an opinion written by Mr. Justice Brandeis, controls this case and that the judgment therefore should have gone for the petitioner. We also assert that Buck against Jewell-LaSalle can coexist in the same legal universe as Fortnightly and Teleprompter and that there is no incompatibility between them because Fortnightly and Teleprompter unlike this case, were concerned with a new technological development, never prior thereto with -- brought within the copyright system and never subjected to copyright royalty burdens and respect of which Congress had been quite silent. And thirdly, that in any event, private arrangements have for over 40 years been made between the creators and consumers of mucic in reliance on Jewell-LaSalle and that Jewell-LaSalle therefore ought to be allowed to survive until Congress directs otherwise. As far as the congressional voice is concerned, if I can read the incomplete compositions of that -- of those body, I can say that it seems to be targeted towards the continued viability of the doctrines of Jewell-LaSalle. Now, to develop some of those points a little more explicitly, in a sense, this case is of course concerned with the construction of a section of the Copyright Law, Section 1 thereof. And that is of primary interest to the authors, composers and publishers of music whom the founding fathers expressed the desire to encourage in the Copyright and Patent Clause of the Constitution. But from the point of view of the development of our jurisprudence, I believe that more is involved than whether respondent Aiken has to pay $5.00 a month for the privilege of entertaining his business guests and improving the morale of his employees with music created by the copyright owners. I suppose that the statute means exactly what this course declares it means. And as I've stated a little while ago, ever since 1931, which is 44 years ago, the meaning of that statute was made plain in the case that I have cited Buck against Jewell-LaSalle. It declared that Section 1 meant that one situated exactly like Aiken in this case and who did exactly what Aiken did in this case subjected himself to liability as an infringer of copyright, unless he was licensed to do what he did. The Court of Appeals in its analysis acknowledged that the case here under review is an all force with the facts of the case in Jewell-LaSalle. Over 5000 contracts are now extent that we know of which have been entered into in reliance and in observance of Jewell-LaSalle, and in that case Mr. Justice Brandeis for a unanimous court said “There is no difference” -- we give you the exact language if I may. “There is no difference in substance between the case where a hotel engages an orchestra to furnish the music, and that where by means of the radio set and loudspeakers here employed, it furnishes the same music for the same purpose.” Warren E. Burger: Is not there one difference, Mr. Rifkind, in this sense possibly, to the question, do you think there's a difference since the radio station is selling advertising, presumably, and I would assume that as a matter of economics, the advertising rate is based upon the coverage of the radio station that it differs from the orchestra in the sense that the orchestra has no advertising, and the radio station is getting -- radio station having paid the royalty is getting a larger income because of the standard audience of restaurants, hotels, business establishments, etcetera. Simion H. Rifkind: Let me explain that most explicitly. The rates established between the licensing organization, in this case ASCAP, which speaks for the owners of these compositions and the radio industry is determined under a system which is subject to judicial surveillance under the decree in United States against ASCAP, which has been administered in the Southern District of New York since 1940 and amended in 1950. If my history, if my recollection of the dates is correct and I believe it is. Those terms are negotiated in terms of what rights are conferred upon the broadcaster. In this particular situation, broadcasters are expressly excluded from the right of conferring any authority upon people in Aiken's position, and consequently the rate that they pay takes into account the fact that ASCAP will collect another fee from the Aikens of this country, and therefore the fee paid by the broadcasters does not overlap the fee paid by the Aikens. The District Court and the Court of Appeals both agreed that the circumstance that the radio station in Jewell-LaSalle was unlicensed and that here it was licensed was a difference without significance. The -- I've explained why the suggestion that Mr. Justice Brandeis made in the footnote, as I believe Mr. Justice Rehnquist called attention that there might conceivably be -- the argument might be made that there's an implied license is no longer valid because in 1932 that was explicitly excluded. Logically, I should say, the suggestion of an implied license underscores the conclusion that the hotel or Aiken was performing and performing publicly for profit, because if it was not performing or not performing publicly for profit, there'd be no point in talking about a license. It's only public performance for profit that requires a license, so Mr. Justice Brandeis' discussion of a possible implied license necessarily emphasizes his view that there was a performance and of course a performance for profit. Now, the Third Circuit seemed to be under the impression that Jewell-LaSalle had been overruled by this Court. And I believe that therein, again I find myself in sharp disagreement with that Court. I suppose it can not be challenged that this Court has never yet uttered the talismanic phrase which actually would decanonize Jewell-LaSalle. This Court had said in Fortnightly that Jewell-LaSalle should be understood as limited to its own facts. The facts here are the very facts to which the Court said it should be limited to, and that is the very converse of treating it as overruled. Words of limitation to facts, a phrase not unusual in the opinions of this Court, I've always thought meant that the principle of the case may no longer be regarded as an axiom from which new theorems and new propositions might logically be deduced. The Court of Appeals went much further than that. It has acted in reliance on the anticipation that this Court will overrule Jewell, and we entertain the hope that that prophecy is not a valid one. Be contend that the Court should not overrule Jewell. Indeed we assert that this case presents a conspicuous example of the salutary purposes of the rule of stare decisis. For instance, I've already mentioned, very many people have shaped their business conduct in observance of and in reliance on that case. Moreover, the rule offends no moral principle. It does not offend good judgment as is evidenced by the fact that all over the world, Jewell-LaSalle is in fact lived by and if it should appear that this Court thinks that some different policy should now prevail, it seems to me that the proper agency to grapple with that is the Congress, and indeed the Congress is grappling with that problem at this very moment. As Your Honors know, the Copyright Act has been under active consideration by the Congress for some time, and the delay in the new bill has been not Jewell-LaSalle, but the delay has been caused by the inability of the Congress to decide what to do about CATV. Fortnightly, the first CATV case, was the first occasion on which the Jewell decision was ever questioned in this Court. In that case, there were a number -- there was one dissent and three nonparticipants. In that case the Court confronted a brand new industry which had never been subjected to the copyright system, a new technology. And then in 1974, the Court encountered another further development of that same technology in Fortnightly which brought signals beyond the realm of the original antennae. But neither of the majority nor the minority in either of those cases suggested that Jewell should be overruled. The majority never even mentioned Jewell in the last Teleprompter case, and no justice to express the thought that hotel keepers and restaurateurs were free to entertain guests and stimulate employees by the free use of their music. Aiken's behavior belongs to the unsophisticated realm of what we are fully familiar with, and it wouldn't be a bad idea therefore to see how the world regards that kind of behavior. I shall be brief and say that Great Britain, Canada, New Zealand, Australia, France, Germany and every other country I could find any evidence of treats Aiken's performance as a breach of the copyright privilege. In the functional sense which is the idea introduced into this field by the decisions in Fortnightly and Teleprompter, comparison was made to the viewer erecting a giant antennae. And I would like to suggest that another way to look at it would be as if it was a giant ear trumpet which made it possible for the listener to get signals which otherwise he couldn't hear. And here's the point I want to make the distinction between those two kinds of cases. The purveyor of ear trumpets doesn't exploit music even though he sells them on the lobby of the opera house, but the furnisher of music to his costumers does exploit music no matter by what means as long as they're within his control that he brings it to bear upon business guests and his business employees. Potter Stewart: Go to a barbershop and the radio is turned on, a three-chair barbershop, does the barber have to -- Simion H. Rifkind: That's a -- Potter Stewart: Pay ASCAP license? Simion H. Rifkind: Fair question. I think the real question is, is the barber playing that music for his own entertainment or is he doing it for business purpose? Potter Stewart: Let's say the facts are stipulated that he's doing it for the -- Simion H. Rifkind: And I will only report the practice. Potter Stewart: Pleasant reaction of his costumers. Simion H. Rifkind: The practice has been to impose no royalty charge on the one set type of operation. Potter Stewart: Why not? Simion H. Rifkind: Because it is impossible to draw the line on a nationwide basis -- Potter Stewart: But you're drawing the line. Simion H. Rifkind: I beg your pardon? Potter Stewart: What do you mean impossible? You've just told us you've drawn a line. Simion H. Rifkind: I draw a line between the self-entertainment and the business entertainment. Potter Stewart: No, no this is a barbershop -- Simion H. Rifkind: This is the barbershop and the barber of course can entertain himself as well as his costumers. Potter Stewart: So the restauranteur in this case? Simion H. Rifkind: Not when he puts in 5 or 50 or 100 loudspeakers. Potter Stewart: Now, this is four or you say five, the record seems to indicate four. But what is the difference? Why do you draw the line? Simion H. Rifkind: It is to some extent, a practical accommodation to the facts of life that you go in to a small grocer who has a little set on his counter which he amuses himself, papa and mama are running an establishment, we say that's for their personal entertainment and only incidentally if at all for business purposes. When you take a restaurant and install 3, 4 or 5 or 50 loudspeakers, we say that's a business exploitation of the music. Now, all questions of this kind involve -- Potter Stewart: But if this one is a performance, so is the other, is it not? Each is a performance and that's a critical word under the statute, is it not? Simion H. Rifkind: Each is a performance, but it is hard to see that you can say with assurance in any particular occasion, Your Honor suggest to me one way stipulated that he's doing it for business purposes. I think if it was stipulated for business purposes, then technically speaking he would be performing publicly for profit and be subject to a charge. But as a practical matter, no licensing organization that I know of has ever pursued such a course of conduct. Potter Stewart: How about a dentist's office? Simion H. Rifkind: Same thing. No one set type that is usually used in the home has ever been subjected to a royalty or to a license requirement. Potter Stewart: No, no we're not talking about a home, we're talking about public performance. Simion H. Rifkind: No, I say if the home type of radio has ever been subjected, the kind of thing that the man would have in his home, and the Congress recognizes the distinction in all of the new bills that have been introduced. Potter Stewart: Well, Congress hasn't enacted any? Simion H. Rifkind: Not yet. Potter Stewart: So it hasn't recognized any of these things? Simion H. Rifkind: The House has passed a bill in '67. The Senate passed a bill in '74. They are substantially the same on this. The Senate's Bill was passed I think by a majority of 70 to 1. They recognized the principle of Jewell-LaSalle, both bills do. And the thing that has slowed down the enactment is been the problem with the CATV stations. I will suspend if I may and I would like to reserve the balance of my time for response. Warren E. Burger: Very well Mr. Rifkind. Mr. Cohen. Harold David Cohen: Mr. Chief Justice, members of the Court. The argument of my distinguished adversary has a captivating sound, but essentially I believe it begs the very question in dispute. I think Mr. Justice Stewart has put his finger on the point. The question is whether the Court of Appeals erred in deciding that when Mr. Aiken in his fast food shop where he has people in for not more than 15 minutes at the most, 60% of the costumers come in to pickup the delicatessen and take it out within two or three minutes, if they decide to consume it on the premises, then they can take it on disposable paper over to a counter. No waitresses are supplied and they can stay there and eat it, and it's usually about 10 minutes, a maximum of 15 minutes. I would agree with my learned brother that if Mr. Aiken hired the Pittsburgh Symphony Orchestra to perform in his fast food establishment, or a trio of musicians, or he put in complicated equipment whereby he could go out and buy tapes, select tapes and decide when they should be run without commercials, and perhaps with some advertisements for Aiken's that he might well be chargeable with infringing the copyrights of the music he performed, but that is not this case. We are concerned with the simple question whether on this particular day on this one store and the record deals only with one store, and I think it is a euphemism to call it a restaurant. Whether on this day he engaged in a performance of ASCAP's two musical compositions when he turned his radio to an FM station in Pittsburgh and the radio broadcast came through the air to his store and were heard by his three employees and such costumers as happened incidentally to be on the premises. Warren E. Burger: To see, if I understood your illustration, Mr. Cohen. If the restaurant or store or factory took a typical tape recording machine which many people now use to preserve good programs, and copied all the good programs that he thought his costumers would like and eliminated the advertising, and then had those running by five loudspeakers or three or ten within his establishment, do I understand you to say that might run afoul -- Harold David Cohen: Yes there is -- Warren E. Burger: Or a Buck case? Harold David Cohen: No, not at the Buck case. The Buck case had to do with radio broadcast. I think it might run afoul of another provision or section apart of Section 1 (e) of the Copyright Act. That is, there is an exclusive right to record performances and I think if there were tapes or records, that might be an infringement. Warren E. Burger: This would be like copying recordings -- Harold David Cohen: That's right. Warren E. Burger: But they have to pay a royalty. Harold David Cohen: But in this instance, he has no control over what comes in. The broadcasters as this Court has stated in the Fortnightly case and repeated in the Teleprompter case, are performing. They are the ones who go out and select the programs. They're the ones who make the arrangements with the talent sources, with the record companies, with ASCAP and other performing rights organizations. Potter Stewart: And they pay for the licenses? Harold David Cohen: They pay ASCAP for their royalties. Potter Stewart: And they charge their own costumers -- Harold David Cohen: They charge their costumers -- Potter Stewart: On the basis of how large listening audience they have? Harold David Cohen: Exactly. And I'm sure that when this FM station goes out and makes the pitch to the advertiser, he says “We can reach people whether they're at their home, or in their cars driving to from their homes, or whether they're in stores, or whether they're waiting in doctors' offices, or whether they're sitting on a barber's chair, or wherever.” In other words, he tries to maximize his audience so that his revenues will be greater, and in turn ASCAP profits because the amount which it receives from the broadcaster is the percentage of the broadcaster's revenues. So what in effect they are trying to do here stripped of some of the language is to exact the double payment. There's nothing in the record that indicates that when they go to the broadcaster they say, “Well, we're not going to charge you as much as we otherwise might because we're going to get Mr. Aiken to give us $60.00 a year. So we're going to take or deduct that from the amount that you are going to have to pay.” William H. Rehnquist: Well, Mr. Rifkind says they've been doing that for 40 years and they've been doing it on the authority of Jewell-LaSalle. Harold David Cohen: It's curious indeed that if for 40 years they have been doing it, they have 5,150 licenses. I think we can take notice of the fact that there are hundreds of thousands of establishments in this country like Mr. Aiken's. Barbershops, beauty salons, doctors' offices if you will, restaurants and if they have 5000 licenses and these are hotels and motels and large supermarkets and the like, it does not show that they have vigorously relied upon Jewell-LaSalle as a basis for -- William H. Rehnquist: Well, does that include Muzak, the 5000 figure? Harold David Cohen: No the 5000 figure does not include Muzak. Muzak is a performer. That is the Muzak franchisee which supplies or actually performs a Muzak to the business establishment, does perform, does pay a royalty to ASCAP and that is separate, and that will continue to be paid in whatever amount the Court may deem reasonable and nondiscriminatory. That will continue to be paid regardless of the outcome of this case. William H. Rehnquist: Do you think this case is factually distinguishable from Jewell-LaSalle? Harold David Cohen: It's factually distinguishable -- William H. Rehnquist: In any -- Harold David Cohen: On two grounds. William H. Rehnquist: Rational manner. Harold David Cohen: Well, certainly the ground that you indicated namely, the license implied in this case -- which may be implied in this case by virtue of the fact that the broadcasting station was authorized in Pittsburgh, whereas the broadcasting station in Kansas City in the Jewell-LaSalle case was not authorized by the copyright owners, is a significant point of distinction. William H. Rehnquist: But I thought the terms of the license of the broadcasting station negated any authority on its part to license anyone else? Harold David Cohen: We are not saying that there is necessarily a license implied in fact, but there's certainly is a license implied in law. I do not believe that ASCAP can contrive language whereby they can say this, a broadcaster “We are going to license you to broadcast that is disseminate to the public our compositions, and we want you to pay us a royalty.” These are to go over the air to all members to the public and then say that Mr. Aiken or his costumers who are members to the public can not receive those broadcast without payment of the fee. Another point of distinction of course is that if we got into the quantitative test, which of course has since been discarded by this Court. Obviously, what Mr. Aiken has done in his store, which is a small room with two outfits on the ceiling of the public area or two speakers are located, and three other speakers, one on the washroom, the girl's washroom, one in the kitchen and one at the office for his employees is vastly different from the complicated mechanism of the large master radio receiving set in Jewell-LaSalle which piped Muzak to 200 rooms throughout the hotel. Or in the Statler Hotel case in New York where they had a radio engineer and two assistants on top of the building and they piped music through the ducts to 1900 rooms, and there they held it was a performance upon the authority of Jewell-LaSalle. That is not this case. However, I am not relying upon that because I think this Court has clearly stated in the Teleprompter case and on the Fortnightly case before, that viewers of television and by a parody of reasoning, listeners to radio broadcast do not perform, the broadcasters perform. It's difficult to conceive functionally how Mr. Aiken can be said to be performing music in his establishment when he has no control over what is being broadcast, when it is being broadcast. He has no dealings with advertisers. He has no idea of the tempo of the music or the kind of the music that is going, coming over, except as Mr. -- Judge Rifkind pointed out. Of course he may select one station because he thinks it may be more pleasing to him or people in his store, particularly his employees than another station. But the fact is, he does not attempt to edit anything that comes over. He gets the commercial announcements. He gets the station identifications, the public service announcements, the news, as well as the music. I'm sure that it would put an unbearable strain upon the ordinary meaning of performance. Perhaps someone sitting in Mr. Aiken's shop consuming a hamburger regard Mr. Aiken as a performer of the music. This music is coming to you from station WKJF FM, and there is nothing that Mr. Aiken does to intervene between that broadcast and the listening by the people primarily his employees. Incidentally -- Thurgood Marshall: Mr. Cohen? Harold David Cohen: Yup? Thurgood Marshall: If you know, what about a record player that's hooked up through an amplifying system. Harold David Cohen: Well, the record player I would say -- Thurgood Marshall: Or tape player. Harold David Cohen: I would be inclined to say that that would be a performance because of the special provision on the statute, but if he has a record player or tape machine, he goes out and buys the tapes or rents the tapes. Thurgood Marshall: And selects them, selects what he wants. Harold David Cohen: Selects what he wants, has control over what is being sent out. And presumably, he can intersperse his own commercial announcements. He may say “From the next five minutes you can get Aiken's chicken at 10% off.” He could not do it here, he -- Potter Stewart: But even if he doesn't, that's a performance, isn't it? That's clearly a performance. Harold David Cohen: Yes. Potter Stewart: A jukebox, so called. Harold David Cohen: Well, the jukebox there's a special exemption for jukebox in the law which Congress is trying to modify to have an $8.00 jukebox charge imposed. So far as the legislation is concerned upon which Mr. Rifkind depends, I think it's pretty hard to find in the silence of Congress over these last 10, 15 years any indication that Jewell-LaSalle must be adhered to, otherwise this entire complex of business relationships is going to fall. William H. Rehnquist: Would you think this Court in Jewell, in Teleprompter rather, intended to overrule Jewell-LaSalle which was a unanimous statutory decision on which presumably property rights have been established? Harold David Cohen: Well, obviously this Court did not use the word overrule and I think the Supreme Court generally is reluctant to state explicitly that a former decision of the Court is overruled. But to say that Jewell-LaSalle must be understood to be limited to its own factual context and to undermine the basic rationale of Jewell-LaSalle, the basic premise on which Jewell-LaSalle was decided, namely that there is a performance because of this -- of what the hotel did by having this elaborate equipment and substitute the functional analysis test of Fortnightly and Teleprompter, obviously in effect emasculates Jewell-LaSalle. The vitality of Jewell-LaSalle is not what it was prior to the Fortnightly decision. Potter Stewart: Well Mr. Cohen it's -- I think the phrase was its limited -- must be limited to its own facts. Harold David Cohen: Right. Potter Stewart: And one of the facts on Jewell-LaSalle was that the broadcasting station was unlicensed to sell. Harold David Cohen: That was an important fact as I pointed out previously. Potter Stewart: That's one of its own facts. Harold David Cohen: That is right. Now -- Warren E. Burger: From what you said Mr. Cohen -- Harold David Cohen: Yes sir. Warren E. Burger: I take it that all of your arguments would apply equally to the factual situation we have here, and a hypothetical restaurant let us say sits a thousand people as there are such with 20 different rooms, and in each room there was one outlet. Harold David Cohen: Yes. If it used radio broadcast, I think it would logically. The difference comes of course a restaurant of that kind as the restaurant in the Herbert v. Shanley case to which my adversary eluded, may go in for a much different type of entertainment. To say that the business motivation of Mr. Aiken is like that of a hotel owner in Herbert v. Shanley, it seems to me to be fictional. The Vanderbilt Hotel in New York was concerned with the ambiance of its hotel restaurant so it had an orchestra play, and it had undoubtedly liveried waiters, and it had fine napkins and tablecloths. That is not true of an establishment of this kind which is willing to have just the radio come in and have two speakers in the public area where the sound can be audible evenly throughout the premises. The point is that my adversary is attempting to draw a line which I think is an arbitrary one -- artificial one between having a radio behind the counter encased in one cabinet that is it might have one speaker or two speakers, and that would not be a performance. But he did have that in this particular shop, but he found it to be blared if you were close to it if you heard it too loudly, if you were a little further away you might not hear it as well. And that blare did interfere with conversations with costumers, so instead he had speakers. I was not unusual, these days I'm told, in fact it's quite common when you buy a radio to have speakers outside of the tuning device and you might put them ten feet away, you may have them the other part of the room, you may put it in another room. But so far as Mr. Aiken's “performance” is concerned, he did nothing more than install this equipment. He did not manipulate it once it was installed and is no different than if he had just one unit with the speakers incased in a cabinet so far as his function relative to the broadcast were concerned -- was concerned. I think the reasoning of this Court in the Fortnightly and Teleprompter cases is dispositive of ASCAP's claim. I think the Court of Appeals correctly perceive it to be. It's certainly illogical, I would think to be clear that the function of a cable system has little in common with the function of a broadcaster, because like viewers and unlike broadcasters, they do not perform the programs they receive and carry, and then turn around and hold Mr. Aiken to be engaged in a performance. Mr. Aiken is obviously on the listening side of the line. As a matter of fact in the Fortnightly case and Teleprompter, many CATV systems serve commercial establishments as well as subscribers in there homes, to say on the one hand that the CATV system is on the listening side or the viewing side of the line, but Mr. Aiken who is a subscriber jumps over to the performing side of the line, seems to me to be arbitrary. William J. Brennan, Jr.: Well, what's the situation of the Aikens if the new proposed new statute comes along? Harold David Cohen: Well, the proposed new statute is rather complicated. I must take issue with my friend Judge Rifkind. Byron R. White: Do you mean you're ought to be here even under the new statute making the same argument? Harold David Cohen: I think the new statute attempts and the legislative history indicates that establishments such as Aiken's, small establishment or barbershops or so forth, would not be subject to liability. And also, I may point out that the statute provides that there maybe transmissions even by a hotel to guest rooms without incurring any copyright liability. As a matter of fact the legislative history will disclose that even ASCAP, Judge Rifkind's client did not attempt to enforce Jewell-LaSalle against hotels which piped music to guest rooms. After the Statler case in New York was a victory for SCSACZAK which is a counterpart of ASCAP, there apparently was some question whether this was a performance for profit. At any rate, the legislative history discloses that there was very little attempt to enforce the rights of the performing rights organization against hotels which transmitted programs to private rooms in hotel even though Jewell-LaSalle presumably gave them that right under the Jewell-LaSalle construction of the 1909 Act. So, the answer to the question Mr. Justice Brennan is that I would be foolhardy if I attempted to prognosticate the effect of pending legislation. As you know, there has been -- they have been studying the revision of the copyright law since 1955. There was an authorization from Congress to the copyright office, extensive studies were made, there was, I refer to a report in 1961 as being the culmination of studies, but my opponent's reply brief says it was not the culmination but of course the foreword, though the report said, it is the culmination of studies. At any rate, there were a lot of comments and discussions and compromises and they came out with a statute. It passed one House, as Judge Rifkind pointed out, did not pass the other. I do not know what may eventually come out of this. But certainly, we are concerned here with the construction of an existing statute, and if this Court in 1931 decided a case on a premise or a doctrine which has been found not to be sound, not to be logical, it should be the responsibility of this Court to correct that decision not to wait for Congress to correct it. Thank you. Simion H. Rifkind: May I take advantage of the few minutes that I have. Warren E. Burger: for rebuttal, Mr. Rifkind. Simion H. Rifkind: I gathered as I listened to my learned friend that there might be a distinction drawn between Jewell-LaSalle in this case and that the station in Jewell-LaSalle, the broadcast station was unlicensed and here it is licensed. I think the argument advanced by one of the dissenting justices in Fortnightly, Mr. Justice Fortas. Warren E. Burger: The only dissenting justice, is it not? Simion H. Rifkind: The only, excuse me, of course you are right. I was thinking for a moment of Teleprompter. In Fortnightly, he pointed out that the interpretation of the term performed cannot logically turn on the question on whether the material that is used is licensed or not licensed. And I don't think there's any way of meeting that logical proposition. More importantly, we have the distinction of a non-licensed station was a judicially first noticed and abandoned back in 1937 when Judge Woolsey in the southern district decided the Hotel Statler case, and since then and before then never once in all the literature of this subject, in all the discussions of the copyright office, in all the legislative discussion has there been so much of a trace of a distinction attributable to this coincidental fact. I can see how logically it can play the role. I heard the argument advanced that perhaps Aiken's performance was not for profit. You heard a suggestion that the costumers only spent a little bit of time there and so on and so forth. Well, on the merits of course that issue has been resolved by Herbert against Shanley where Mr. Justice Holmes made a cogent remark “It is true that music is not the sole object and neither is the food” he said. If music didn't pay, it would be given up. Mr. Aiken spent money to furnish music to his costumers. He must have regarded it as money well spent. I say, the issue below was treated as established. Indeed it was not challenged seriously as the Court of Appeals pointed out, so that the issue is not really in this Court. The petition for cert didn't mention it or neither did the answer to the petition for cert. To suggest now at this late stage of this case that this Court should consider whether only music which is offered for sale by a ticket at the door is within the copyright statutes, I think that that's to extend the implications of this case far beyond what we are now confronting. There was a question as to how many licenses of this kind were outstanding and the figure was given correctly, over 5000, But what was not stated that there are 75,000 establishments which used music, so I do not know and have no evidence of any information that there are lots of Aikens around this country. But even if there were, that wouldn't change the fact if the copyright owners have a right against Aiken, they have a right to enforce it. The suggestion was made that even though the implication of an -- the suggestion of an implied license is no longer tenable, in fact because the license to the radio station expressly excluded it that there was some kind of a doctrine by which ASCAP was prohibited from entering to that kind of an arrangement with the broadcast station. Well, all I can say is that that's a startling notion. Every time a piece of cheap music is installed at the corner store, it is -- gives confers authority upon the buyer to play it on his home. That doesn't mean that he may give a performance for profit on that cheap music and escape royalty obligations. Warren E. Burger: Thank you gentlemen. The case is submitted.

Earl Warren: Number 461, Herbert Aptheker et al., Appellants, versus the Secretary of State. Mr. Abt. John J. Abt: Thank you Mr. Chief Justice, may I please the Court. This is an appeal from a final order of three judge court sitting in the District of Columbia denying appellants' motion for summary judgment granting the government's cross motion for summary judgment and dismissing the complaints. The complaints sought judgments declaring Section 6 of the Subversive Activities Control Act unconstitutional enjoining the Secretary of State from continuing, in effect, his revocation of the appellants' passports and ordering him to reissue passports to them. The single question that the case presents is whether Section 6 of Subversive Activities Control Act is unconstitutional on its face or as applied. Section 6 (a) of the act provides that when a final order has been issued requiring an organization to register under Section 7 of the act as a communist-action or a communist-front organization, it shall be unlawful for any member of the organization, who has knowledge or notice of this order, to apply for use or attempt to use a passport. Section 6 (b) provides that when a final order is in effect requiring an organization to register as a communist-action organization, Section 6(b) doesn't apply to fronts, a communist-action organization, it shall then be unlawful for any employee of the federal government to issue a passport to any person who he knows or has reason to believe is a member of the organization. Violations of Section 6 are punishable by fine and imprisonment under Section 15. Now there's no dispute about the facts. In April of 1953, the Subversive Activities Control Board ordered the Communist Party of United States to register as a communist-action organization. That order became final in October of 1961 after this Court denied a rehearing in Communist Party versus the SACB in which it had affirmed the board's order. Speaker: May I ask you question, is there any statutory restriction, any statutory restriction (Inaudible)? John J. Abt: The government claims that there is, Mr. Justice Harlan, we disagree. There is a provision in the regulations adopted by the Secretary of State pursuant to the authority given in the presidential proclamation, which put into effect the section of the law, which makes travel abroad without a passport unlawful. A provision of the regulation that the Secretary may, in his complete discretion when he thinks the national interest so requires, that he may authorize travel without a passport. Now that authorization while it might relieve the traveler of criminal prosecution for leaving or reentering the country without a passport but by no means assure him of entry into a foreign country because at least out of the western hemisphere most countries require the traveler to have the passport. And unless the foreign country waive this provision, the secretary's waiver wouldn't permit travel, in addition to which of course that would – the whole – this whole provision of the regulation is simply a matter of grace on the part of the Secretary, it's not a matter of right on the part of the applicant. Potter Stewart: Insofar as the actual issuance of the passport goes, the Secretary apparently has no discretionary latitude at all. In fact he can, under the terms of 15 (c), he is sentenced to five years in prison. John J. Abt: He can get five years in jail for issuing a passport if he has any reason to believe that the applicant was a member of the Communist Party. In January 1962, following of the denial of the rehearing in the Party case, the passport office notified the appellants that their passports have been revoked on the ground that use of them would violate Section 6. The appellants sought and secured administrative review of this -- of these relocations pursuant to the Department of Regulations. At the administrative hearings, the department offered evidence that each of the appellants was a member of the Communist Party and had notice of the final registration order by virtue of the fact that it had been published in the federal register. The appellants offered no evidence at the administrative hearing. The administrative proceedings culminated in a decision by the Secretary, in which he found that the appellants were members of the Communist Party with knowledge or notice of the existence of this final registration order, and hence that their use of passports would violate Section 6 and accordingly he confirmed his revocation, the revocation order. Now, I may say that the secretary made no finding and, of course, Section 6 requires none as to the character of appellant's membership in the organization as to their knowledge and attempt their activity, any other factor beyond the bare fact of their membership. Speaker: (Inaudible) John J. Abt: The Court below found Mr. Justice Harlan that Dr. Aptheker is the or was at the time the editor of political affairs, which is the theoretical journal of the Communist Party and that Ms. Flynn was the Chairman of the Communist Party. It found that from evidence introduced at the hearing and in the administrative record, but the Secretary's finding was based solely on his finding of the bare fact of membership, and under the statute, the fact, if it is fact that the appellants are leading members of the Communist Party, plays a role in the issue, the question of their right to passport. Speaker: Is Mrs Flynn the individual victim? John J. Abt: Mrs. Flynn is the individual, under the Smith Act, in the case that you decided in the Second Circuit Mr. Justice Harlan. But again, there was no such, no finding in the administrative record to that effect and under Section 6 it's utterly immaterial as to who she was other than the fact that she is a member of the Communist Party. Now, it appears to me from the record in the proceedings in the three-judge court, that Dr. Aptheker is a professional historian, is the author of many books and studies in his field. The revocation of his passport has prevented him from tendering gatherings of historians in Europe and Africa, denied him access which he desires to overseas his archives and depositories which he needs to -- for the purpose of pursuing his historical studies and has prevented him from accepting invitations to lecture on historical subject at universities abroad. Ms. Flynn has for many years written a column for the newspaper, The Worker, she is the author of several books and a speaker, and a lecturer, and she desires to travel to Europe as she has done in the past both for rest and recreation and to gather material for writing and speaking in this country. Now I shall say -- Potter Stewart: Both of these -- both of these appellants are native born citizens? John J. Abt: Both are native born citizens, yes. I should say that appellants' passports would have expired by their terms while the case was pending below but as the government agrees, this fact doesn't moot the case obviously because their applications from new passports were not only have been futile but would, as Mr. Justice Stewart suggested, have subjected them to a criminal prosecution from the bare act of making the application. Turning then first to the substantive due process question which this case presents. As I noted existing United States law and the laws of most foreign states prevent citizens from travelling at least outside of the western hemisphere without passports. The denial of the passport therefore is a prohibition of foreign travel. As the Court held in Kent versus Dulles, foreign travel is a part of the liberty of the citizen which protected by due process. Section 6 must therefore satisfy the due process requirement that a depravation of liberty may not be arbitrary and that it must bare some substantial and reasonable relation to a legitimate legislative objective. Now, the object of Congress, the legislative objective and the enactment of Section 6, is stated in the Section 2 (8) of the act, which appears at Page 54 of our brief. That object was to protect the national security by closing of a means of communication between American and foreign communists, that is to say by preventing their face-to-face contact at least in Europe, which form of communication Congress found, and I quote now from Section 2 (8) ‘is a prerequisite for the carrying on of activities to further the purposes of the Communist Movement.' And elsewhere as the Court knows in Section 2, Congress found that these purposes of the Communist Movement are a threat to the national security. Thus, Section 6 was enacted by Congress as a security measure. The government defends it here as a security measure and it must be adjudged therefore, and it must stand or fall as a security measure. So judged, I submit, Section 6 must fall as an arbitrary depravation of a personal liberty which finds no justification in any genuine security need. This is so in the first place because as I've already pointed out the depravation of Section 6 is based on nothing but the bare fact of membership in an organization which is found to be an action or a front organization. Thus, the section bars travel by a member who has and who if you were given the opportunity could establish that he has a perfectly legitimate and even a vitally necessary reason for travelling aboard. Again, the section prohibits travel by members who have never engaged and who do not intend to engage and who could have established that fact if they were given an opportunity to do so an unlawful activity of any kind, either this in country or abroad, and for whom to use Mr. Justice Harlan's phrase in the Scales case, the organization is a vehicle for legitimate political activity. Similarly, it's completely irrelevant under Section 6 that the member does not know or believe that the organization engages in any illegitimate activity of any kind or that it has any of the sinister characteristic that the act and the board's order attributed to it. Potter Stewart: Mr. Abt is it open to your appellants to assert the claims on behalf of these hypothetical people? Your appellants, not having introduced any such evidence as to their lack of belief or their -- to put them in the position of people who have a reason to travel to Europe to see a sick wife or so on. Those are hypothetical people who are not before us, do they? John J. Abt: They are not hypothetical people, they are the real people that are before this Court Mr. Justice Stewart, these appellants because they had no opportunity to make such a showing and if they had offered such a showing it would have been held irrelevant and it is completely irrelevant under the statute. Potter Stewart: They declined to offer any evidence at all, didn't they, at the administrative hearing? John J. Abt: Yes, but the only issue before the -- the only issue at the administrative hearing was whether or not they were member of the Communist Party. They had no opportunity and the statute afforded them no opportunity to show that they were people of the category I've just described, and indeed their affidavits in the three-judge court which are un-contradicted and must be accepted here as fact state that their purpose in travelling was not only perfectly legitimate, but as Mr. Forer will point out, it was for protective purposes, that's the same purposes protected by the First Amendment. And that's -- so that we're not talking about hypothetical people, we're talking about the two appellants who are here. Potter Stewart: Well you are referring to people who could have established by evidence that they had no knowledge at all as to the purposes of the Communist Party, they still lack -- John J. Abt: As to any illegitimate purposes of the Communist Party. Potter Stewart: Right, and that certainly does not cover these appellants. John J. Abt: I think it may well cover these appellants. Potter Stewart: You don't know. They didn't offer any evidence, you don't know what they might have been permitted to offer. They didn't offer anything. John J. Abt: Well under the statute -- I don't know what the Secretary or the Hearing Officer might said, well go ahead and offer it, you may offer this evidence. But under the statute none of that evidence was available for consideration by the Secretary. The Secretary had found that these were very, very nice people who had never committed an unlawful act in their lives, had no knowledge of any unlawful activity by the Communist Party, and intended to go abroad for the best of purposes, and -- but yet found they were members of the Communist Party and he'd issue the passport to them, as you pointed out Mr. Justice Stewart, you can face five years in jail for that. Potter Stewart: Under the literally terms of the statute. John J. Abt: Correct. Potter Stewart: But I'm not only pointing out that you don't have that particular kind of case here, because there was no such evidence properly. John J. Abt: But the question is who has the burden? Who under a constitutional statute would have the burden? And beyond that is the question that the act is written makes such evidence completely irrelevant. Arthur J. Goldberg: (Inaudible) John J. Abt: But that Mr. Justice Goldberg, that kind of membership was a different question, that was a meaningful membership in Rowoldt was not a question of membership with knowledge of the character, with the alleged illicit character, of the organization. It was something more than the bare fact of having joined the organization, that was all was an issue there. Now we're not -- we don't for moment say this is a Rowoldt case. And -- Arthur J. Goldberg: (Inaudible) John J. Abt: Well I did make in a record in the District Court. But let me say to clarify the matter, we're not from -- and if that was what you meant by your question Mr. Justice Stewart, then I misunderstood it, misinterpreted it. We're not for a moment calming that this is a Rowoldt case. But we are saying that the statute is invalid because it doesn't require anything, any showing by the Secretary except the bare fact of membership. And in this respect the section differs very radically from security measures like, for example, the Federal Employees Security Program, which makes membership at an organization that has been officially found to be or listed as subversive, simply one piece of evidence to be considered in determining a person's -- or evaluating a person's loyalty. Arthur J. Goldberg: Are you saying (Inaudible)? John J. Abt: No sir I would not. I would say that -- I would say that the statue would be a valid statute and that's going to be the burden of my part of the argument. If it said that -- or let me restate that, I'm making too much of a concession. I would say that my -- the point I'm now making would wash out, if the statute said, that the fact a person was a functionary or a garden verity of member is one fact that the Secretary of State should take into consideration in determining whether his travel abroad was inimical to the national security. Then the statue would be equated with the ordinary loyalty or security of programs such as the Employees Security Program. And the Department of Justice itself in 1950 when the act was under consideration in Congress, pointed out the vital distinction between those two approaches, that is to say the approach that makes members -- the bare fact of membership conclusive evidence of disloyalty, and which -- and the approach which makes that fact of membership simply one factor to be considered. The department in this -- in the letter that it sent to the House Committee that was considering the legislation that eventuated in the act, opposed a provision that's now incorporated in Section 5 of the act, which parallels the passport provision in terms of defense and federal employment. The letters is quoted in our -- page 23 of our brief. That provision made it unlawful or makes it unlawful for a member of the Communist Party to hold federal employment or employment at any defense facility. And the department in its letter pointed out that there is a world of difference between a statute of that kind and one which, in the words of the letter from the department to the House Committee, and I quote it, “enables a member to respond to charges against him. And to show in a manner consistent with American concepts of justice and fairness that his membership is innocent and does not reflect upon his loyalty”, and that would go for a functionary as well as for an ordinary member Mr. Justice Goldberg. Three decisions of the Court subsequent to the passage of the act confirmed the view that the department expressed in this letter and established that individual guilt or disqualification may not be conclusively presumed from the bare of fact of membership in the Communist Party. First case to which I refer is the Scales case, which the Court upheld the membership clause of the Smith Act, but only by construing it to require not only membership in an organization that insights the violence, but knowledge by the accused of the -- the fact of the insightments, active membership by the accused, and a personal intent on the part of the accused to overthrow the Government of the United States. Now Scales of course was a criminal case, but the Court has applied the same principle in at least two cases of statutes which impose civil disabilities. The First was Adler versus The Board of Education, which involved a New York statute that made knowing membership in an organization found by the New York Board of Regents to advocate the violent overthrow of the government, prima facie evidence of disqualification to teach in the public schools. Again, the Court sustained the statute, but only because it required two things. First proof, not only is the organization had been listed by the Board of Regents, but that the teacher knew the character of the organization. And second, because it required or accorded rather, the teacher a hearing, at which he could offer evidence to overcome the prima facie presumption of disqualification that flowed from his membership with knowledge of the character of the organization. And in Wieman versus Updegraff, the Oklahoma -- the Court stuck down an Oklahoma statute which lacked these protective provisions. A statute which made the bare fact of membership present or past disqualifying and the Court there stated that -- such a statute violated due process because of its indiscriminate classifications of knowing and with innocent activity, and Section 6 we submit is invalid for same reason. The fact of the matter is that both the executive and Congress have recognized that this kind of indiscriminate classification of all of the members of the Communist Party as security risks isn't required for any legitimate security purpose. I've already mentioned the letter from the Department of Justice which took this position and the State Department itself seems to have held the same view with reference to passports. Because as the government's brief reviles, the department in 1948 adopted the practice of issuing or denying of passports to people that were found to be members of the Communist Party on an individual basis, depending on its appraisal of the qualification of the particular applicant. Then after the passage of the Subversive Activities Control Act in 1950, the department inaugurated the practice of denying passports to all suspected communists indiscriminately. But this change was not occasioned by any observed inadequacy of the previous practice for security purposes, it was adopted and this is clear from the record which we cite in our brief. In deference to what was thought to be the policy of Congress is expressed in Section 6. Then in 1958 when the Kent decision came down and invalidated the practice, which the State Department had adopted, the administration had bills introduced in Congress to give the Secretary the authority, which Kent held that he lacked. The administration bill however didn't make membership in the Communist Party alone disqualify, didn't establish this kind of conclusive presumption of disqualification. Instead that bill followed the pattern of the Federal Employee Security Program, as well as the 1948 practice of the Department of State itself. And by making such membership, that is to say membership in the Communist Party or other prescribed organizations, only one factor to be considered in determining whether the issuances of a passport would be inimical to the national security. Number of other bills introduced in Congress after the Kent decision took the same approach and two of the bills, which embodied this approach and one of which specifically said that no person should be denied a passport merely because of the fact of his membership in any organization, two of such bills were passed in the House in the 85th and 86th Congresses, the Senate never acted on the legislation. Matter of fact even in 1957 report of the Commission on Government Security, which antedated the decision in Kent and on which the government relies very heavily in its brief as evidence of the necessity of a legislation even this report -- along the lines of the question that you asked Mr. Justice Harlan, even this report found that the inflexibility of Section 6 is, may well be and is a prejudicial to the national interest. And accordingly this report, which again I emphasize antedated Kent, recommended an amendment to Section 6 that would give the Secretary discretionary authority to issue passports to communists. Now it seems to me plain from this history that neither the Executive nor Congress believed that the conclusive presumption of Section 6, that is the conclusive presumption of disqualification which it establishes, isn't even necessary or desirable as a matter of policy. And we think that the enactment of Section 6 doesn't indicate any considerate congressional judgment to the contrary. Speaker: (Inaudible) John J. Abt: Pardon. Speaker: (Inaudible) John J. Abt: Well let me explain to you why I think it's on the books Mr. Justice Harlan. It's on the books first of all because it was a product of what now appear I think to most of us who have been -- the exaggerated fears of our national security that were engendered by the outbreak of the Korean War. And second it's likewise a product and the legislative history that we cite in our brief shows that of the prevailing misapprehension prior to the decision in Kent that the issuance or denial of a passport was a matter of grace with the government, something that the government could withhold, give or withhold with pleasure uninhibited by any constitutional limitations, and I think that those two considerations are what account for Section 6. Potter Stewart: This statute was not on the books at all, would the secretary have any power under existing other regulations and statutes to consider withholding and to withhold the passports from -- John J. Abt: Kent says not. Potter Stewart: Well Kent was not under then existing regulations -- John J. Abt: There is nothing since -- no legislation since that time Mr. Justice. Arthur J. Goldberg: If your argument seems to suggest the words of this statute are, of course (Inaudible) John J. Abt: Well, if you want to get around -- that if the Congress wanted to get around the point that I am now making, all it has to do is to enact the bill that the Secretary of State send up to the Hill after the Kent decision, which made membership in the Communist Party simple one factor to be considered in a total evaluation of the applicant as a security risk. And our brief -- if you want the language Mr. Justice Goldberg, it's in our brief and we quote the bills that were pending in the Congress. The government's defense of Section 6 comes down to the proposition that it's a reasonable measure for the prevention of espionage. But I submit that on the face of the matter, it's absurd to suppose that known members of the Communist Party, let alone party leaders against whom the government says that the act was particularly directed would be selected for some foreign espionage in its submission. And there is no evidence that gives the slightest credence to any such supposition either in the very lengthy record before the board, the Subversive Activities Control Board in the registration proceeding or anywhere else. Furthermore no genuine anti-espionage law would prevent suspects from travelling to Monte Carlo or to Rome by permitting them to make trips to Mexico City or Rio, nor can the prevention of face-to-face contact in Europe be seriously defended as a security measure while all other means of communication are left wide open. Speaker: (Inaudible) John J. Abt: You are getting into a -- or you maybe approaching a different another area Mr. Justice Harlan, which is not involved in this case. There might be considerations of foreign relations, which would -- which might justify that kind of a regulation. Speaker: I know this was (Inaudible) -- John J. Abt: But -- Speaker: -- yet by far under the security provisions. John J. Abt: That's the only justification that Congress gave, that's the only justification that the government advances, and that's the only justification I can conceive of. Nobody suggested that this legislation can be supported on any concept of necessity for not embarrassing our foreign relations in some fashion. Finally, Section 6 would violate due process even I submit if it were reasonable to classify all members of the Communist Party a security risks ipso facto. This is so because the right to travel is a part of a liberty of every citizen and a person may not be deprived of his liberty merely upon the suspicion, no matter how well founded that suspicion may be, that he will abuse it. The practice of preventive detention, and that's what Section 6 is, has no place I submit in our constitutional system. With us, the presumption of innocence is so fundamental that even persons convicted of crime may not be deprived of their liberty pending appeal as a means of preventing them from committing other crimes, but only to the extent necessary to secure their presence and their submission to the orders of the court. Arthur J. Goldberg: (Inaudible) including everybody involved in the security matters (Inaudible). John J. Abt: I am -- Arthur J. Goldberg: You are trying to (Inaudible) John J. Abt: I am saying that we should – we got to proceed in security matters Mr. Justice Goldberg just as we proceed elsewhere. We can charge a man with the fact -- with crime after he -- the crime that has been committed, you can try him, you can put him in jail, punish him. But you can't punish a man because you suspect that if you don't punish him he is going to commit a crime. That's -- that Mr. Justice Goldberg to me is a throwback to the writs of ne exeat regnum that the British crown used to suppress defenders by confining -- sent by confining the defenders. Arthur J. Goldberg: At this stage, are you arguing that the (Inaudible)? John J. Abt: That's correct, and I would argue that that bill is not invalid -- is invalid because it's a form of preventive detention. Potter Stewart: Your hypothesis of the argument that you are now making is that the refusal to issue a passport to a would-be traveler aboard is punishment. John J. Abt: No I am not saying it is a punishment, but it's -- Potter Stewart: Well, what are you the? You say you can't punish the man. John J. Abt: It's a deprivation of liberty based not upon a past act which -- on past conduct, but a deprivation of liberty based on a suspicion of future misconduct, and as I say to me that is preventive detention. That's what the British used, the British kings used when they issued writs of ne exeat regnum, and it's particularly obnoxious where the descent or the where the suspected activity is activity of a political nature. Let me point out only in conclusion, concluding my portion of the argument, that no other western democracy confines its communists within its borders, and if to do so would be a suicide pact Mr. Justice Goldberg and France, England, Italy all of them have much larger and more powerful communists parties than we have -- have entered into the suicide pacts. Arthur J. Goldberg: Would that be very unwise (Inaudible)? John J. Abt: Yes Your Honor and I say that under the constitution Congress does not have the power to deprive a man of liberty because it thinks that if he is given his liberty he may abuse it. He's got to abuse it first and then you can punish him for the abuse but you can't deprive him of liberty in anticipation of an abuse. And I want to submit that the, that the government's fervor in defending what to me is the – an odious practice of preventive detention is a symptom of what Senator Fulbright recently called and I quote him, “a morbid preoccupation with the dangers of communist subversion and a flexion for which we Americans continue to pay so dearly in terms of our personal liberty and equally in terms of our national dignity.” Mr. Forer will continue. Earl Warren: Mr. Forer. Joseph Forer: Mr. Chief Justice may it please the court. I will take up our contention that Section 6 on its face and as applied violates the First Amendment. And first I would like take up and explain our position as to the various ways in which Section 6 interferes with speech and association. And I think that this is desirable because of the position taken by the government in its brief. The government argues that Section 6 is just a travel control statute, that all it controls is the conduct of travelling, and that any restrictions on speech and association are only incidental or byproducts. The fact is however that Section 6 is and was meant to be both a direct and indirect restraint of First Amendment rights. Now on the first place this appears from Section 2 (8) of the Act, which, as Mr. Abt pointed out, states the purpose of Section 6. And that purpose, as Mr. Abt has already stated, is to prevent American communist from communication with foreign communist because it was felt that out of such communication something might happen to facilitate the coming of revolution in this country. So the theory of Section 6 isn't that communist create a danger by the fact of their travel or by the mode of their travel, the way speeding automobile drivers do. The theory of Section 6 is that the danger arose from what communist who travelled would do after they arrived at their destination. And that danger was speaking to and associating with foreign communists, which of course is speech and association. And in fact Section 6 does prevent American communist from meeting and speaking with foreign communist. So, Section 6 is a direct and intended restraint on the speech and association of American communists and what is incidental is the section's effect on travel. Now, of course Section 6 doesn't just restraint communist from talking to other communists, not everybody in Europe is a communist. It therefore restraints American communist from talking to non-communist, and Section 6 also imposes like restraints on non-communists who happened to be members of organizations down by the Subversive Activities Control Board to be communist-front organizations or who are people who aren't members of anything, but who are people concerning whom the passport office has or thinks it has reason to believe that they are members of prescribed organization, but it further affects on First Amendment rights indeed, as illustrated by the situation here that the appellants want to go to Europe to study and to observe. So, Section 6 is preventing them not only from exercising their First Amendment right to speak and to associate but also their First Amendment right to learn. The situation is no different as far as appellants is concerned if they were confronted with law that prohibited them from going to libraries or universities or lecture halls or bookstores. In addition to that, appellants -- Potter Stewart: It's a good rhetoric but it is quite different, because there are good many libraries, and lecture halls, and bookstores here in the United States which are available. Joseph Forer: No, but you see Dr. Aptheker who wants to go to the British museum to look at source material that is not available in this country. Potter Stewart: Well, what if he wanted to go over to some secret installation in the CIA to do its research? Joseph Forer: That would be different. CIA could keep anybody out that it is chose too, but that doesn't enable, I mean it's a clear interference with First Amendment rights to say that you can't go, not only to any library but to a specific library. Now may I say this, at the moment I am not even arguing whether or not these interferences violate the principles of the First Amendment and I'll come to that in a moment. All I am trying to do now is to show that there is a First Amendment problem here because there are these various aspects of the First Amendment -- First Amendment interest which Section 6 invades. And what I was trying to show is that Section 6 doesn't just prevent people from traveling, it prevents them from learning as well as from talking and as well as from associating, and of course it doesn't just prevent -- Arthur J. Goldberg: (Inaudible) Joseph Forer: Of course it does, in the sense people are entitled to learn. Now, the people that started the revolution, the American Revolution -- Arthur J. Goldberg: (Inaudible) Joseph Forer: That the British Museum isn't subject to our constitution, but this is the United States government that's preventing Dr. Aptheker from going to the British museum, and it is preventing him from going to the British museum while allowing other people to go. And by preventing Dr. Aptheker, and Ms. Flynn from going to Europe and learning, it is also preventing them from coming back and teaching to people in this country what they have learned and both of them are in the business of teaching people what they learn, both of them are writers and lecturers. So it is a fact that Section 6 is interfering with the First Amendment right to hear and the First Amendment right to learn of the potential readers and listeners, communists and non-communists or like who might be interested in reading or listening to Dr. Aptheker and Mrs. Flynn. Now in addition to these restraints which I prescribe and which we consider to be direct, Section 6 also deters the First Amendment Right of association within the United States, and this is so of course because the disability to travel arises from Section 6 solely out of an exercise of the Right of Association, that is membership in a prescribed organization. And this deterrence not only discourages people from joining organizations, which Subversive Activities Control Board has actually found to be a communist-action or a communist-front organization. It also operates to deter them from organizations against which proceedings are pending or against which some proceeding might conceivably be instituted. And it also discourages people from cooperating with or participating in the activities of suspected organizations or organizations which might be suspected, or participating in their activities in ways short of membership, because of the possibility that such cooperation or participation might be interpreted by the passport office as giving the office reason to believe that in fact they are them. And finally, the Section also intrudes on interests of conscience and privacy. It makes the association of every would be traveler a matter of public business and a subject of government surveillance, and it subjects every would be traveler to the possible indignity of a loyalty test or a political test before he can qualify to travel. Arthur J. Goldberg: (Inaudible) Joseph Forer: I think -- Arthur J. Goldberg: What can you suggest to hereabouts (Inaudible)? Joseph Forer: You mean that's all the statute said? Yes I certainly would, by all mean. It would be a -- it would violate the Fifth Amendment as an indiscriminate and purposeless restriction on its liberty and I also think it would interfere the First Amendment. It would involve a great many of these things that I have mentioned including the necessity for the government to determine whether every traveler is or is not a communist. Now I have mentioned the several different ways both direct and indirect in which we think that Section 6 interferes very substantially with the First Amendment interests of both communist and non-communists, and now I want to come to the theoretical bases on which we think those interferences violate the First Amendment. Now one principle which is clear under the First Amendment and which is a common place, whatever else maybe obscure about the First Amendment, is the principle of precision of regulation. As I say, this Court has stated again and again that where the First Amendment area is concerned, the government must regulate narrowly and that it may not as might in cases of regulation subject only to due process for reasons of administrative efficiency, control or burden the exercise protected rights in order to aid the regulation of unprotected conduct, nor may it, in the First Amendment area, ignore the availability of less drastic means for achieving the same basic purposes. Now Section 6 is so broad that it obviously violates this principle. It bars the travel not only of people who are going abroad for criminal or dangerous purposes, but also of people who wish to go abroad, as here, for innocuous and protected purposes. If the government could not make it a crime consistent with the First Amendment and I am sure it could not, it couldn't make it a crime for Dr. Aptheker to study at the British Museum and it couldn't make it a crime for Ms. Flynn to look at the paintings at the Louvre, by the same token the government cannot impose a prior restraint on Dr. Aptheker and Ms. Flynn from going to the museum or going to the Louvre for those purposes. Now this excessive breadth of Section 6 is the inevitable result of the indirect, and I may say, even perverse manner in which Congress chose to legislation. On the one hand Congress said its purpose is to prevent conspiratorial communication. But Section 6 doesn't prohibit or punish conspiratorial communication. There is nothing to stop, so far as Section 6 is concerned, any number of individuals from traveling aboard for the purposes of the conspiring to engage in dangerous activities or to bring revolution to this country. Arthur J. Goldberg: Supposing Ms. Flynn has handed a resignation from (Inaudible)? Joseph Forer: Theoretically she would, she'd have an awful time getting one, and as a matter of fact -- Arthur J. Goldberg: (Inaudible) Joseph Forer: No, no that's right so far as the statute is concerned you can get your due process constitutional liberty to travel provided you surrender your First Amendment right to be a member of the Communist Party. Arthur J. Goldberg: (Inaudible) Joseph Forer: Well certainly, people have the First Amendment right to be members of political parties. Now you don't have a right to be a member of a party with knowledge and intent that this party is going to engage in dangerous activity. But as I understand from the Scales case all the -- even the cases which upheld convictions of Communist, from the Douds case, now of course there is a First Amendment right to be a member of the Communist Party in order to engage in its peaceable political activities which nobody doubts that it does engage. Now, so by this perverse mechanism, the statute instead of prohibiting what it said it was after, that is going abroad for conspiratorial communication, all it did is prohibit people from going abroad merely because they are members of certain organizations. Now even the government recognizes in its brief that it is inconceivable and unreasonable to suppose that every communist will, every time he goes abroad, engage in dangerous talk or activity. Therefore, it automatically follows that Section 6 inevitably suppresses a great volume of protected speech and association along with whatever slight amount of unprotected communication it might speculatively prevent. Now the government and some of the questions from the bench appear to justify this approach on the ground that Congress could reasonably believe that the Communist Party is a bad organization. But even if it were true, that would not permit Congress constitutionally to prevent communist from engaging in peaceable speech and association or to punish them for doing so, because it is unconstitutional to abridge the protected speech and association, not because of the nature of the speech or the association, but because of the identity of the speaker and even more so because of the identity of the organization to which he belongs. And I thought this was settled as far back as 1937 in De Jonge against Oregon. And there the Court held that even assuming that the Communist Party was guilty of criminal syndicalism, the state could not, consistent with the First Amendment, punish persons, members of the Communist Party for conducting peaceable party meetings. Now in fact Section 6 goes beyond the Oregon statute that De Jonge invalidated. After all, Mr. De Jonge in this meeting that he was conducted and which was held to be beyond the state's reach, Mr. De Jonge was carrying on Communist Party business when he conducted this protected meeting. He was running a meeting to protest anti-strike activity which was sponsored by the party and he urged the audience to join the party. But Section 6 is broader, because it applies to members of the Communist Party even when they desire to travel abroad for reasons unconnected with party business. Furthermore, the statute in De Jonge required the state to prove that the Communist Party advocated criminal syndicalism. But Section 6 doesn't require any proof that the Communist Party engages in any criminal conduct or that it engages in any advocacy which is of an unprotected nature. And the fact is that the Subversive Activities Control Board, which is no friend of the Communist Party, after lengthy hearings was unable to find and did not find that the Communist Party engages in criminal activities or in incitement for violent overthrow. Now these defects to Section 6, including that it's too broad because it also applies as Mr. Abt pointed to members who are innocent, as well as guilty, are magnified by the fact that it is a prior as well as indiscriminate restraint. In Near against Minnesota, the Court struck down as a prior restraint, a statute which prohibited the circulation of future issues of a newspaper which had published previous scandalous issues. Now Section 6 is more extreme. It prohibits the circulation of persons, not because of any past misconduct of theirs, but because of suspected misconduct by other people in their organization. Now I think perhaps the most fundamental reason why Section 6 violates the First Amendment is that it is simply incompatible with the amendment that people should have to pass loyalty or political tests as a condition to their engaging in peacetime in the elementary human right of freedom of locomotion. Now the Court has upheld loyalty screening and persons holding public office or for what it considered quasi public jobs such as labor union offices. But here the loyalty screening is being applied for the purpose of determining who could engage in purely private pursuits. If I can borrow the language of the economists, here the loyalty purge or loyalty test is being -- and the loyalty apparatus is being extended from the public sector to the private sector. Speaker: Is it you're arguing that the defendant (Inaudible)? Joseph Forer: I wouldn't consider that a loyalty or a political test. If they -- you would there get into the problem of preventive detention, but leaving that aside, if you could punish -- and you have the problem of prior restraint, it may be that the Secretary of State could be given authority to prevent people from going abroad to engage in physical violence, espionage, and so forth. But just to prevent people from going abroad because of that politics is something different. And the fact is if Congress can impose these political tests on people seeking to travel abroad, because it doesn't like communists or think they're dangerous or communist-front organization, then it can also impose loyalty or political tests as a condition to people engaging in the pursuits of driving automobiles or to people travelling in the subways or to people buying food. Now I'm sure it is just as important to the Communist Movement that officials of the Communist Party be able to drive automobiles, travel in subways, or buy food as it is for them to travel abroad. And yet if Congress can impose these kind of political and loyalty test which has nothing to do with what the person is doing or going to do, but just political considerations, if it can transport the government loyalty test to all these private everyday activities, then we just have to stop pretending that we have a free society because everybody is subject to a loyalty test for everything he does. Potter Stewart: Well, let's stop pretending that this case is about buying food or travelling in subways too, because it isn't. Joseph Forer: No it's about travelling, which is a fundamental human right. Potter Stewart: Outside North America. Joseph Forer: Well if the Secretary of State tomorrow should decide to require passports to Canada, Mexico, and so forth then automatically Section 6 would be applicable to the rest of the country. So it's preventing people from going to -- Potter Stewart: That has nothing to do with going to the grocery store and buying food and that's -- Joseph Forer: No but the person -- Potter Stewart: And let's just say, case is before us, which is difficult enough. Joseph Forer: Now the principle is the same, the principle is of imposing loyalty tests on people who are going abroad, travelling for private purposes, on the justification that people going abroad might do harm. What I was pointing out that the justification for controlling them from travelling on the subway is even stronger. It's a much more factless thing just to prevent them from going to Europe, if you really want to stop them from being dangerous, you just stop them from doing anything, yes. Speaker: (Inaudible) Joseph Forer: I suspect that some of the justices are joined in the Japanese relocation cases may have second thoughts about it at this late stage, but in any event those cases were upheld purely as an extraordinary exercise of the war power because of war condition. We will reserve the rest of our time for rebuttal. Earl Warren: Mr. Chayes. Abram Chayes: Mr. Chief Justice, may I please the Court. As Justice Goldberg has just said, the Court is again called upon in these cases before us today to deal with another of the difficult almost agonizing problems that have emerged from the efforts of Congress in this statute and others to deal with what all must recognize was a reasonably judged threat to our national security. What was that threat? The existence as Congress found of an International Communist Movement dominated by a foreign power, dedicated to the purpose and object of imposing in this country a communist totalitarian dictatorship. Operating through organizations of disciplined members acting to further those purposes in countries outsides of the center and found of the world movement. Those findings of which this Court, as Justice Douglas said in the Communist Party case, have often -- has often taken judicial notice, are also before the Court now as findings of a legislature, of a coordinate branch of the government acting in the exercise of its constitutional duty, and those findings also have been held by this Court in the Communist Party case to be findings which Congress could make on the record before it. That is the problem that Congress was trying to deal with. Hugo L. Black: Did Congress have to make the findings of fact in order to draft the bill? Abram Chayes: Mr. Justice Black it is clear that the situation with respect to which Congress acts is always one of the elements in determining whether its action is reasonable or is within constitutional limits. As Justice Goldberg said a moment ago, this Court sustained the confinement of persons based only on their race in relocation camps during the war, because the circumstances then prevailing and as then appeared to the Congress were of such magnitude as to justify it. Hugo L. Black: Are you depending on that case for justifying this position? Abram Chayes: No sir I'm saying only that as this Court has often said, emergency does not create power, but it may create the occasion for its exercise. As Mr. Justice Goldberg said, we are not now at war. But we are in a cold war, that cold war has certain characteristics and certainly those characteristics create the occasion for Congress to seek to deal with them, and this Court has so held time and time again. Now appellants here are members of the Communist Party of the United States, indeed Mrs. Flynn is the Chairman of that party and Mr. Aptheker is Editor of its theoretical journal. This was established on the record in a full administrative hearing in the Department of State, and indeed I take it this much is admitted by appellants for the purposes of this case. The Communist Party is one of those organizations which Congress said existed, dominated by a foreign power, the Soviet Union, dedicated to imposing a communist dictatorship in this country, prepared to use any necessary means to that end, whether a force or a fraud. And this too was established in a full administrative hearing after which the party was ordered to register. That is the character of this particular organization was established in a proceeding at which it had full opportunity to present evidence and to make argument that it was not this kind of organization which was dedicated to these purposes and furthering these ends. And it was found by the Board that it was such an organization. And on review in this Court, the registration order of the Board was sustained by a vote of 5:4. But the findings of fact about the character of this organization were accepted by seven of the justices on this Court. None, I might say, more succinctly or emphatically than by Mr. Justice Douglas who dissented from the registration order on another ground. He said, the Board found that the Communist Party of the United States is a disciplined organization, operating in this nation under Soviet control to install a Soviet style dictatorship in the United States. Those findings are based I think on facts and I would not disturb them. Now Congress found also in this statute and on the record before it, it could so find that travel abroad by members of the Communist Party was an important means, indeed it said a prerequisite for advancing the purposes of that party. The record before it showed travel by United States members of the party abroad not only to visit the British museum. But for instruction and training to transmit and receive orders, to report to establish face-to-face contact among leaders and members. And I think it's almost self-evident that a world wide conspiratorial organization of the kind which Congress found this world communist movement to be, acting through a variety of discrete and semi covert organizations throughout the world, as Congress found this movement to act, must depend on travel and face to face contact to bind it together and to transmit impulses for action to its constituent parts. And so Congress, on this record and on these findings before it, a legislative record as we know that extended over ten years of investigation and analysis, during which as my friend for the appellants pointed out, events happened to the Korean War, the fall of Czechoslovakia, the Berlin Blockade, all of which were seen before Congress as a part of the world movement with which it was trying to deal. But as part of a comprehensive statutory scheme designed to frustrate the purposes of this World Communist Movement, Congress enacted that members of American organizations controlled by that movement and acting predominantly to further its interests should be denied passports, a prerequisite in most cases to travel abroad. Now it's pursuant to that enactment that the passports of these two appellants were withdrawn and the question before the Court is, can this be done within the constitution. Now as appellants have pointed out, there are two fundamental grounds of constitutional attack here, one under the Fifth Amendment and one under the First Amendment, and both them ought to be dealt with separately, because different standards and different tests are applicable under each. As is often the case, both parties here are agreed as to the words in which those tests are expressed and the question becomes how those test are to be applied in a particular case. For the Fifth Amendment, our starting point is Kent and Dulles. That case, as the Court knows, says that travel is part of the liberty of which the citizen cannot be deprived without due process of law under the Fifth Amendment. In other words, when speaking of travel generally, generically one might say, the Court was careful to say that the protection was the protection afforded by the Fifth Amendment, and as the appellants have said, the test under the Fifth Amendment is essentially what is fair, what is reasonable. Is this measure a rational means to an end that Congress could entertain under the constitution or is it arbitrary? Does it bear so little rational relation to a proper congressional purpose that we must put it down to whim or passion or prejudice rather than the action of reasonable men in pursuit of the great ends of government? The second question is under the First Amendment, and there, as my friend pointed out, it is clear in this case as it was in the Douds case that the operation of this statute acts to inhibit the exercise of certain rights of speech and association by certain people. That is what makes a First Amendment question. There were no inhibition on those rights of associations and they are particularly in this case association rather than belief or speech as Mr. Justice Goldberg pointed out when he -- or I guess it was Mr. Justice Harlan when he talked about the power to resign and continue to speak and believe everything else that you may speak or believe. In this case, as I say as in Douds, the government concedes that there is inhibition in the statute on the rights of association and that is the beginning of analysis of the First Amendment problem. Potter Stewart: What impediment upon freedom of association do you concede the freedom to associate in the Communist Party of the United States or the freedom to associate abroad with other communists or both? Abram Chayes: Well, I think you have to look at both -- at both the categories that the appellants have advanced somewhat differently. It is clear that as to American citizens joining the Communist Party, this exercise is the same kind of inhibition as the Douds requirement did or as to person within the United States joining the Communist Party, it exercise the same kind of inhibition as to aliens within the United States as the deportation cases do. In other words, it makes a disability, some disability, not a prohibition of speech but a disability, depend upon an association and therefore inhibits to that extent the association. Now as to the other part of the argument, it is true of course that if Dr. Aptheker or Mrs. Flynn can't go abroad, they can't go to the British museum. But if we take the view that that by itself raises a First Amendment problem and an insoluble First Amendment problem, because it's a direct prohibition of speech, then the whole analysis in Kent and Dulles is gone. Then the restraint on travel or the restriction of travel is not a deprival of Fifth Amendment liberty but of First Amendment rights, and if that's so we ought -- the Court ought never to have come to the conclusion that it did in Dulles that the Amendment which protects travel, qua travel is the Fifth Amendment. Here we are dealing, and as Mr. Justice Goldberg pointed out, if the appellants' arguments is correct, we could not prohibit a person from going abroad if we knew he was going to commit espionage because he might also be going to visit the British Museum.

Earl Warren: Number 276, General Electric Company versus Local 205, United Electrical, Radio and Machine Workers of America. Mr. Farr. Warren F. Farr: May it please the Court. The basic issue in this case is the same as in the other two cases. Namely, may a federal court compel performance of an agreement to arbitrate future disputes in a labor contract? And the answer to that question seems to me must turn on whether the 1925 United States Arbitration Act requires such a result. Because as the court below held, as the Fifth Circuit held in the Lincoln Mills case, as the Seventh Circuit held in the Galland-Henning case, as every other Circuit Courts that I know of which has faced this question has held, unless you find the right to compel arbitration in the United States Arbitration Act, you can't find it in Section 301. Mr. Feller has demonstrated the difficulty, the confusion that inevitably arise from trying to rest and find in 301 the power to compel arbitration of a labor dispute. So, I think they must first consider the United States Arbitration Act. First, I might point out briefly the facts in this case. Felix Frankfurter: Did I understand you to say that -- that all those who sustained the enforceability of the arbitration provision have rested it under the Arbitration Act? Warren F. Farr: As far as I know, every Circuit Court which has enforced it has done so by virtue of the Arbitration Act, like the First Circuit and the Fifth Circuit rejected 301 as itself being the source of power to do so. The present case like the other two cases rose on a complaint under 301 of the Labor Management Relations Act, and the -- the union sought to compel specific enforcement of two grievances. Those grievances are set out in the amended complaint at page 44 and 45 of the record. The grievances were two. One, that an employee named Boiardi was not being paid the rate of pay which he was entitled to under his job classification. And secondly, that an employee named Armstrong had been improperly discharged and not for cuase. Arbitration was demanded. The company refused the arbitration on the ground that the issues were not arbitrable under the collective-bargaining agreement. The union brought suit seeking specific performance and damages on a motion to strike the claim for specific performance. The District Court held that it lacked power to enforce arbitration because of the provisions of the Norris-LaGuardia Act. After that decision the complainant, the union, then amended its complaint to strikeout the claim for damages so that its cause of action would ask only specific performance. It did so that it might have an immediate appeal. The Court of Appeals reversed, holding first that the Norris-LaGuardia Act was not at bar. Then it said, but it isn't enough to say that the Norris-LaGuardia Act is not at bar. We must find some affirmative basis on which compulsion of arbitration can be rested. Now, they said we can't find it in the common law because it was long settled common law that enforcement of executory agreements to arbitrate would not be compelled in the federal courts or in a state court. They turned then to section 301 and they say no, we can't find in 301 such a power. But we do find a statute which authorizes it and that is the United States Arbitration Act. And they held that this contract was a contract evidencing a transaction involving commerce within the meaning of section 2 of the Act. They held that it was not excluded from the operation of the Act by virtue of the exception contained in section 1 of the Act, which excludes contracts of employment of seamen, railroad workers, or other workers engaged in commerce. And then they said this being covered by the Act is not excluded from it. We have the power -- or the District Court has the power under section 4 of the Act to compel arbitration. Section 4 providing that a court of the United States which has jurisdiction of the controversy between the parties apart from the agreement to arbitrate may compel specific performance. So in the -- you might have heard that in the Court of Appeals and after argument the union made a motion to amend its complaint to set up as a basis of jurisdiction diversity of citizenship. The Court of Appeals denied that motion. And whether the denial was correct or otherwise, I think it's not at this time before this Court. Now, we turn then to the United States Arbitration Act to determine whether this case is within it. The United States Arbitration Act was proposed in 1922, 1923 shortly after New York had enacted its Arbitration Act. We've traced the history of that Act on pages 13 to 22 of our brief. Shown there it was sponsored by commercial interest. It was -- it was -- the proponents were commercial trade association. But there's not a word in the committee reports or in the argument on the House floor and the Senate floor showing this was anything other than the Commercial Arbitration Bill. But that's not all, because Congress didn't merely not consider, the applicability of the Act to labor. It specifically did consider it and specifically rejected it. Mr. Feller pointed out that (Inaudible) found that the provision with respect to compelling arbitration was objectionable. That it would -- it -- it met -- it was the same -- it met the objection that labor had always had up to that time through compulsion on arbitration. So, the provision excluding contracts of employment was written into the Bill. The -- that exclusion was put in reflecting at that time the general hostility and fear of labor to the equity courts. We have to consider this was 1923. At that time labor unions were bothered about the equity powers of the federal court. But then the yellow dog contract, the extension of the Sherman Act, the other matters which this Court referred to in its opinion of yesterday with respect to the enactment of the Norris-LaGuardia Act. Labor was afraid and it would not have met -- it would not have satisfied labor had this agreement of the statute applied to their agreement. Now, it is said, the Court of Appeals said this does -- covers only individual contracts of hire with contracts of employment means only individual hiring. I might say that the Court of Appeals, First Circuit with the exception of the Court of Appeals for the Sixth Circuit is the only court that should've taken that position. Now, what is this contract, if it is not a contract of employment? To be sure, a collective-bargaining agreement does in hierarchy? It's not the hierarchy. But what is a man's contract of employment? It's not merely the fact of being hired. It's the terms on which he's hired. It's his compensation. How long he has to work. What are his rights? That's what anyone would normally think of as meaning -- as being a contract of employment and it's well accepted, perfectly well accepted that the provisions of the collective-bargaining agreement are read into the contract of hire of every single employee under it. This Court said so in the cases. As a matter of fact, this Court itself in the Sand case, 306 United States, which it quoted in the Senate report on 301 which Mr. Feller read you this morning. This Court said that the legislative history of the Act, referring to the National Labor Relations Act, those hardly indicate that the purpose of the statute was to compel employers to bargain collectively with their employees to the end that employment contracts binding on both parties should be made. This Court in 1939 was satisfied that that was an appropriate characterization. And we submit that, of course, it is. Now, it won't do to say that all Mr. (Inaudible) was bothered about was the individual hiring. He specifically adverted to what would happen if a union made a contract. And in the very analysis of the bill referred to in the -- the same as union convention, in his analysis of the bill he points out and I refer to the extracts from his analysis printed at page 46 of the respondent's brief in this case. He said, “What about those who seek to protect themselves through mutual aid?” Some organizations are very strong and a union may enter a contract. If they show into an -- into an agreement containing an arbitration clause there can be little doubt that the organization will be bound, but would such action bind the members?" And he concludes that it would. And indeed that was argued this morning and as I think I must fully agree with him. And as the courts have consistently held the provisions in a collective-bargaining agreement with respect to grievance procedure and arbitration are binding on the individual employee. What good would it have done -- have done therefore? Would Mr. Feller's set purpose have been accomplished if all that was excluded from the Act was an arbitration clause in the rare end where there was an individual contract of hire, but it was not excluded when it was included in the terms of the collective-bargaining agreement. It seems to me perfectly plain, therefore, that to give any effect to that proviso it must apply to the arbitration clause whether in a collective-bargaining agreement or in the rare case of an individual contract it had such as in the Shipping Act. Now then, it maybe said that although the collective bargaining agreement is a contract of employment, it is not a contract of employment of a seaman, a worker engaged in commerce in this case. In our case, we have production and maintenance employees. And some courts have said that the only collective-bargaining agreements which are excluded -- arbitration clause which are excluded are those relating to transportation workers, persons engaged in commerce. That is to say, therefore, that what Congress intended to do was to provide for the nonarbitrability of collective-bargaining agreements with respect to workers engaged in commerce but to leave open and subject to arbitrability the collective-bargaining agreements of workers who are engaged in industries affecting commerce or producing goods for commerce. There is not the slightest suggestion in the legislative history or any place else or as to why that distinction should be done. So that we submit that clearly this agreement is a contract of employment and a contract of employment which is therefore excluded from the Arbitration Act. Now then, Congress, therefore, in the Arbitration Act made up its mind that it was not going to provide for the enforcement of labor contracts -- enforcement of arbitration in labor contracts. Commercial arbitration, yes, but for reasons of policy it decided against making specifically enforceable provisions in a labor contract, a contract relating to the employment of individuals. That was the position it took in 1925. It is said that it reversed that position, in 1947, in enacting the Taft-Hartley Act. And that it did so. Although it used no words to that effect and although we submit a fair reading of the legislative history shows that it had no such intention. Now, Congress knew how to provide for arbitration, how to provide for methods of compelling arbitration if it wanted to. The 1925 Arbitration Act shows that it knew how to do it if it wanted to. The amendments to the Railway Labor Act which this Court considered in its opinion of yesterday in the Brotherhood case showed that Congress knew how to do it when it wanted to. In that Act, for example, with respect to minor disputes it set up a procedure under which both parties had to go to arbitration. When it came to major disputes on the other hand, it was very careful to say that this shall remain voluntary and neither party is obligated to do so. It knew how to deal with an arbitration question if it wanted to. So, we come then to the provisions of the Labor Management Relations Act. And do they change the situation? Now, you certainly don't find anything in the language of the Act that suggests, in anyway, that Congress was now for the first time deciding as a matter of policy that arbitration under labor agreements should be enforced when it had decided in 1925 that they should not be enforced. What is the language? Suits for violation of contract between an employer and the labor organization may be brought in any District Court of the United States without regard to the amount in controversy or diversity of citizenship. Does that sound in anyway like a policy declaration that arbitration agreement should be enforceable and that the federal court should have the power to enforce it? It certainly does.Now, they sought to draw out -- to draw out of a few phrases in the Senate report a contrary -- a contrary policy to that Congress had adopted before. Mr. Feller said that the purpose -- the purpose of 301 was to create a substantive right to the enforcement, collective-bargaining agreement. And then that necessarily embraced a substantive right to the enforcement of arbitration clause. I think the fair reading of the majority report and the minority report shows clearly that there was no such intention on the part of Congress. What was Congress faced with in conjunction with section 301? It was faced with the -- as the reports say again and again, it was faced with the procedural difficulties of employers suing unions. There was no procedural difficulty to unions suing employers that's been sued time and time again. It was not faced with the lack of any substantive right to enforce. Employers had been sued on collective-bargaining agreements long prior to the Taft-Hartley Act. And employers had sued unions. The minority report of the Senate and the House both referred to a case as one example of it in 265 F.397, where an employer sued a union for breach of a no-strike clause and recovered a 1920 case, a suit brought on the basis of diversity of citizenship. There's no doubt that there was a contract which was enforceable. The difficulty was purely procedural. Now, Congress -- how did Congress go about correcting that difficulty? But it did -- it could not, of course, make the State change their methods of procedure with respect to suing an unincorporated association. So, it said the remedy is to make a labor union an entity for purposes of suit in the federal court. And they did that. They -- and that's all they did. What they wanted to do was to bring the union up to the level of the employer with respect to suability so far as procedure went and not so far as substance went because they didn't have to create a substantive right. And as the committee reports point out, there is no doubt that under state law collective agreements are enforceable. They are state contracts and they're governed by state law. Indeed, if Congress had wanted to create a substantive federal right to enforcement of a collective-bargaining agreement in the very language of section 301 in Congress was such a result. If what Congress was doing was saying a collective-bargaining agreement is a valid and enforceable and binding contract, and the mind of the statute doesn't say that, that's just one phrase in the Senate majority report. If they have done that, why provide in section 301 without regard to the citizenship of the party? Because if you have created a federal substantive right, then you don't need diversity jurisdiction to get into the federal court, you come into the federal court on the basis that this is a cause of action arising under the laws of the United States. The very fact of what they chose to remove was the diversity requirement shows that they were not intending to create a substantive federal right. Felix Frankfurter: If they were removing the diversity requirement, what do they leave in its place? Warren F. Farr: They left nothing in its place, I submit. We think that it is -- we think that it is perfectly clear that certainly the minority reports indicate that they thought of it that it was clear but you have to apply state law. And I submit that that is what must be applied. That's all they intended to do. Now, do we say that under section 301 -- Felix Frankfurter: Are you -- are you saying Mr. Farr that without regard to diversity that Congress consciously said here we leave -- we open the door, if I may use that striking figure of speech, so that you may then apply state law and at the same time strike out diversity? Warren F. Farr: That -- that's exactly what the minority said to the majority again and again. William J. Brennan, Jr.: They were the ones -- they were the ones that were opposing it. Warren F. Farr: They were opposing it but they were pointing out the problem. It was certainly brought to the attention of the majority that that was the case. And there's not a word, I submit, in the majority report that answered that it said it isn't so. Felix Frankfurter: The fact that they were opposed may not -- it doesn't disprove their wisdom doe it? Warren F. Farr: It -- as to their wisdom, it doesn't -- Felix Frankfurter: I mean doesn't prove that that's what -- that's what really the legislation does. Warren F. Farr: All I'm saying is that Congress knew what it was doing when it did it because the minority said this is what you're going to have to face. Harold Burton: Well, you usually find out what the -- the body does by what the majority say they're doing from what the opposition said. Warren F. Farr: I -- I think that's correct. Now, I say that the majority doesn't say -- doesn't say we are creating a federal substantive right at all. The majority doesn't say that. It doesn't say so in the -- in the language of the section, and it doesn't say so in its report. All I'm saying is that when it doesn't say that it knew -- it knew what it was doing. Knew what it was doing. It wasn't just by inadvertence that it removed the diversity requirement and then thought somehow rather there was something to be applied. William J. Brennan, Jr.: It doesn't strike you as a strange way to -- to establish suability getting to this long phraseology of 301? Warren F. Farr: I don't -- I don't think that the phraseology is -- is very simple. It's very long and difficult. It says suits for violations of contract may be brought in the District Court without regard to diversity of citizenship. I think that on its face finally show. All we're doing is removing the diversity requirement in this kind of a case, just as you removed the diversity requirement in cases perhaps involving federal instrumentalities or federal corporations which -- which the United States don't have to stop. It's a purely procedural kind of section, it seems to me. And now, if Congress was trying to create a substantive right -- if it is trying to create a substantive right, what was it doing? Was it taking over from State the rights on the collective-bargaining agreements which the State had always had? Prior to section 301, I submit, there was no doubt that if -- that a collective-bargaining agreement was a state agreement. Of course, it was. If it was an agreement at all it arose under state law. Under the -- under the original National Labor Relations Act there were collective-bargaining agreements. The Court referred to it in fact in the Sand case. The purpose was to make them binding.If they were binding by virtue of what law were they binding them -- bound, binding by virtue of federal. The same thing is true with respect to the Railway Labor Act. This Court held in the Travel case in 345 United States, where a contract made by a union representing airline employees of a carrier subject to the Railway Labor Act. In that case an individual employee was discharged and brought suit. The question as to whether he had the right to bring suit before first exhausting his remedies under the collective bargaining agreement, the grievance and arbitration procedure was held by this Court to be a question of state law. Mr. Justice Burton said this is a Missouri contract to be governed by Missouri law unless we find it inconsistent with the provisions of the Railway Labor Act. There was nothing inconsistent and therefore this Court held you've got to exhaust your remedies because Missouri says you must. Felix Frankfurter: Mr. Farr, in your -- in your investigation of the legislative history, did you encounter any proposal either a statement, formal document, testimony in hearing indicating that any representative of labor wanted -- proposed anything like this in order to be able to get after employers when they refuses to arbitrate? Warren F. Farr: In the legislative history of the Taft-Hartley? Felix Frankfurter: Yes. Warren F. Farr: I can't say I have but I can say that my investigation of that has been as exhaustive as it should have been -- I have not read all the hearing by any manner or means.I find nothing in any of the report or of -- in the legislative considerations before the House and the Senate to (Voice Overlap) -- Felix Frankfurter: Probably you've read all the opinions of the lower court dealing with them not all of them. The Courts of Appeals (Voice Overlap) -- Warren F. Farr: I have read -- I have read many opinions -- Felix Frankfurter: Yes. Warren F. Farr: -- of the lower courts dealing with it. Felix Frankfurter: I assumed you've read all of the Courts of Appeals on this, maybe not the District Court. Warren F. Farr: (Voice Overlap) -- Felix Frankfurter: Have you encountered any opinion which makes any reference to -- any suggestions secondhand that -- that labor wanted to have a strengthened position in enforcing arbitration agreement? Warren F. Farr: I have -- I have not. As a matter of fact, I think Mr. Feller pointed out in his brief and suggested yesterday. Of course, we didn't want this. We don't like it. We would prefer the other rule with collective-bargaining agreements not be enforceable but it's too late to argue that now. And he says I think in his brief that that fairly reflect the position of -- of labor. Felix Frankfurter: Well, they're entitled to the windfall if they have it. Warren F. Farr: Certainly, they're entitled to a windfall if they have it. The question is did they get it? Now, so I said that if as it seems clear that all Congress was doing in section 301 was opening the doors in the federal courts regardless of diversity to the enforcement of collective agreements which were valid under state law. You don't find in that the creation of a substantive right, the right to compel arbitration which didn't exist up to that time in which Congress had specifically determined in 1925 shouldn't exist. You don't have that situation at all. Now, is it -- is it a bad thing that you don't have it? Is it essential that somehow or other collective -- by -- arbitration clause is in collective-bargaining agreement should be enforced? Must we try to dig out of language in the Taft-Hartley Act not applicable to the situation some means of doing it because the need is so urgent and the end is so desirable and justifiable? And I submit that we need not. Mr. Goldberg pointed out yesterday that in his long experience with labor arbitration it was the very, very rare case where you ever got to the point when you had to go to court. And other students of the problem have arrived with the same conclusion. Much consideration to the question of enforcement of arbitration under labor contract is recently being given because of the proposal of the Commission of the newly formed state laws or Uniform Arbitration Act. The committee of the -- Labor Committee of the American Bar Association in 1955 in a report signed by Professor Howard who's one of the commissioners by Professor (Inaudible) Howard, Charles Gregory and others, waived the arguments back and forth as to whether such legislation is necessary. Professor Howard wrote a long article in the January 1956 Missouri Law Review presiding Missouri's consideration of the necessity for such legislation. He refers and the Bar Association refers to the reports of the Governor of Pennsylvania's Committee which studied the problem. And the conclusion saying that the, first, that if the rare case that gets to arbitration at all, by and large most problems are worked out in the grievance procedure. But when you get to arbitration it maybe in 1% or 2% of the cases that you have a refusal to go to arbitration. And that refusal as exemplified in these cases isn't just the casual some of you know that the arbitration clause has been saying we don't want to enforce them. We don't want it to be enforced. The reason for it is the parties had a dispute as to whether the particular grievance is or is not covered by the arbitration clause. Employers don't and can't likely say, no we don't like arbitration clauses and we won't -- we won't abide by them when -- when the situation comes that we -- well, we're bothered by it, we'll just disregard it. And there's a built-in protection. Unions have given no-strike clauses. Mr. Feller says in return to some extent for arbitration clauses, the employer willfully and callously refuses to obey the arbitration clause that the union has clearly resolved from its no-strike clause. There's no -- no incentive for anyone to be arbitrated willful about it. But the occasions do arise when both parties have a difference of opinion as to whether or not an issue is arbitrable and then you may have a disagreement. And there's the -- the -- well there are no precise statistics on it, students of the problem said it's about in 1% or 2% of the cases that that occur. Now, is the need great? Because agreements to arbitrate on -- in labor contracts are not specifically enforceable, is that harmful? Well, the statistics cited by Judge Brown in his dissenting opinion in the Lincoln Mills case show that agreements -- the percentage of labor contract which have agreements to arbitrate in them increased from 73% in 1944 to 91% in 1952. And during that period were -- were arbitration clauses enforceable? They certainly weren't enforceable in the federal court, not until 1950 that any federal court suggest that the Arbitration Act applied not until Judge Wyzanski's opinion in the American Thread case in 1953 were there are many cases if the -- any other cases which held that this kind of agreement could be enforced. They weren't -- were they enforceable in the state courts? In some States and a few States but in other States not. But without machinery for enforcement, what happened? Labor unions increasingly adopted. And they adopted them because -- an employer did because by -- by and large you don't need judicial compulsion. The same students of the problem who say -- who point out the lack of necessity for judicial compulsion, point out that labor and many others well-versed in the field feel that the intrusion of the judicial process itself may in the long run destroy the voluntary nature of arbitration and do more harm than good. The philosophy of the Taft-Hartley Act is that if you get people to sit down across the table and talk to each other, they can usually work out their grievance. Now, they do work out their grievance. You get to up -- if they don't work them out in arbitration -- in the grievance procedure, you get up to arbitration. Union may say we think this is arbitrable. The company says we don't think it's arbitrable. In most instances there is an accommodation of one party to the other. The union will say, well, maybe you're right in this case. We won't fret if you won't go to arbitration or the company says, well, in this case we -- while we don't think it's arbitrable, it's not going to set a great precedence then we'll go to arbitration. So, in most instances it's worked -- it's worked out. But to introduce into the picture the right of either party to go to court and what happened? I think what happened is illustrated by the fact that since the opinion in -- in American Thread in 1953, there's been a flood, a rush of cases involving arbitration agreement. There weren't any before obviously the parties were not dissatisfied with the situation before because more and more of them adopted the arbitration agreement in their labor contract. So that once you introduced the (Inaudible) then you've changed the situation. It encourages the union to push as far as it can. After all a union business agent owe some obligation to his fellow unionist. Everybody wants him to play, and head far and to go as far as you can. So, you carry it for the grievance procedure and then you take it to arbitration. And if, however, the company refuses arbitration then you can't go any further, all right, you go further. You then carry it to court whereas to have -- without that you'd have to stop and the company said no, similarly the company. Company takes the position that the grievance is not arbitrable. Usually you -- they can work it out with the union. But if they get to court that's going to decide the question, all right, let's go to court. Felix Frankfurter: There are always the lawyers to stimulate the client company. Warren F. Farr: Well, sometimes lawyers are -- are pushed by their clients. In one case I had recently involving this question of the arbitrability of enforcement of a labor -- provision to arbitrate in a labor contract. We tried the matter -- the matter was tried and that it was the case -- companions of this -- this case was in the First Circuit, the case of Boston Herald-Traveler. In that case after the decision of the Court of Appeals, the question came up before the District Court as to whether the matter was arbitrable or not. District court held that it was not arbitrable. The union appealed. The union lawyer was saying, “Well, look we -- we really don't think we're going to win on this.” And they didn't because the First Circuit affirmed Judge Sweeney. We don't really think they're going to win on this. But after all the union boys feel that you ought to go as far as you can and the representative has to satisfy their constituents. So, now, I don't say -- I'm surely not taking the position that as a matter of policy you shouldn't have judicial enforcement of arbitration agreements. I simply say that there are weighty considerations and that those who have -- who entered in the field feel that it's a debatable matter. Now, that -- William J. Brennan, Jr.: Well, is this an argument -- it's perhaps at least, in light of the certainties that have been argued here the last couple of days there may be policy considerations which ought to have the consideration of the Congress? Warren F. Farr: That's exactly -- that is exactly the point just as the states are now considering whether or not they are to adopt a uniform Arbitration Act. As a matter of policy is it a good thing? And as I say the Missouri experience shows the Bar Association there considered the time -- time from 1949 to 1955 included. On the whole we don't think it's a good thing. So, we're going to oppose it. Felix Frankfurter: Well, but the question is still more restrictive as I think to inquire Justice Brennan implied isn't the question with arbitration should be legally enforceable? There's the still further quality question which certainly was right in many aspects not incomparable to this. Well, it should be enforced to the federal court. Warren F. Farr: Oh, yes. Felix Frankfurter: It's a very different question again. Warren F. Farr: I -- I agree. The State can adopt one view. Congress may conclude that that's enough. Congress may conclude that it's not enough. That in addition to state enforcement the federal court thought to get into the field. But you have first that question. Should there be or shouldn't be and I say that's the quality of the question. And then you have a second question once you've done that. What -- what should be the procedure? Under what should be the safeguard if you decide that these clauses should be enforced? Now, the Arbitration Act is laid down. They set a number of standards or provisions for subpoena, provisions as to methods of review, confirmation and so on. Are those provisions desirable in a labor arbitration? Maybe they are, maybe they aren't. Those who oppose the Uniform Arbitration Act is applied to labor arbitration there have made objections to certain of the provisions, thinking somewhat to strengthen that they aren't enough. What are you going to do if you decide to enforce agreements to arbitrate in a labor contract when the contract provides that you'll arbitrate the terms of a future contract or you'll arbitrate the terms in which the contract will be renewed? Should that or should that not be subject to arbitration? Judge Wyzanski held recently in the Potter Press case in Massachusetts in 143 Federal Supplement that it shouldn't be and the Court of Appeals for the First Circuit which in this case held that agreement to arbitrate are enforceable said, "Well, not that kind of an agreement because that's not a judicial kind of a dispute." Now, there's a line to be drawn. And I submit that you get a lot of questions of policy which have to be considered -- appropriately should be considered. And in the mean time if the Court is not enforcing them, who's apparently no one's been heard up to now because the use of arbitration (Inaudible). Moreover -- moreover the employees have their right. A fellow would have you believe that you have either arbitration or a strike because you don't have either arbitration or a strike. The union has two rights. It has the right to strike and the right to go to law. Whereas as in the Westinghouse case it decided to go to law. The employees have the right to go to law if they aren't paid, if their seniority provisions are -- are being disregarded. If they aren't getting the pension that they're entitled. In all those instances you have recourse to the Court. Now, one -- one further (Inaudible) In this particular case here -- William J. Brennan, Jr.: Well, may I ask Mr. Farr, that may be so on the issues in your case. Was that quite the case in the Lincoln Mills and the issues involved there? Warren F. Farr: I think it is in the present posture of the Lincoln Mills case. The Lincoln Mills case is moot, it seems to me, unless you have -- unless the effect of the arbitration is going to have something to do with the (Voice Overlap) -- William J. Brennan, Jr.: Well, that's -- that's because it's gone out of business. (Voice Overlap) -- Warren F. Farr: That -- that's true. William J. Brennan, Jr.: If that -- if that fact has not been introduced, would it be -- correct the case? Warren F. Farr: There may be. I won't say, of course, that there may not be some disputes under a contract -- labor contract, which are not the stuff from which judicial disputes are ordinarily made, which the Court deny. Usually they are. Now, of course, the questions of discharge that's the thing the courts deal with every day. There are questions of the rate of pay, the courts deal with that all the time. It may be that to determine a rate of pay, a court would have to -- have to first determine methods of whether the workload has properly been established on that. The courts often have to determine difficult questions before they get to the simple question as to whether a man is who is not entitled to pay or not. William J. Brennan, Jr.: Well, how about the application of the seniority clause -- Warren F. Farr: Well -- William J. Brennan, Jr.: -- as relates to assignments, say, to a night shift as against the day shift? Warren F. Farr: If you get -- if a man who claims that he shouldn't have been -- he shouldn't have that -- when you say it makes no difference to his pay? William J. Brennan, Jr.: No, I think not. Warren F. Farr: Assuming it makes no difference to his pay, I don't know but what he would have a -- a right to a determination of a court. Assuming that he's not compelled to go through grievance and arbitration provision, he can't arbitrate if the arbitration here was not enforceable. Why doesn't he have an individual right to a determination by the Court by way of declaratory judgment for example as to whether he can or cannot do it. I don't say that in -- in such instances in every case that kind of thing will be completely satisfactory. All I'm saying is that in the bulk of the cases it isn't essential and if ultimately Congress should decide that it is one kind control, provide it in the meantime, nobody is being very much heard. Now, one further -- though I -- I -- I'm saying that so far as the United States Arbitration Act is concerned, this contract can't be enforced under it. That you can't find in section 301 the means of enforcing it and therefore it's not important. There's one further basis that I haven't discussed on which we submit that the Court of Appeals is wrong in holding that this contract is enforceable under the United States arbitration, and that is section 4 of that Act. Section 4 of the Act provides the machinery under which the Court can specifically enforce the agreement to arbitrate if the agreement is covered by the Act. We say this agreement isn't, but assuming we're wrong. We'll still say it can't be enforced. That section provides that the District Court -- the District Court which saved for such agreement would have jurisdiction under title 28 in a civil action of the subject matter of a suit arising out of the controversy between the parties may order arbitration. And what that means is this. We've got to look to the District -- the District Court, put aside based on the agreement to arbitrate. Put aside the agreement to arbitrate, look what the controversy is between the parties and then see whether a District Court would have jurisdiction of that controversy under title 28 or as section 4 formally read under the judicial code at law or in equity. Now, what's the dispute here? The dispute here is whether Mr. Boiardi was improperly paid and Mr. Armstrong was improperly fired. Did the District Court have jurisdiction under title 28 of the -- that controversy between the parties? We submit it did not. It did not on the basis of diversity of citizenship because there's no diversity. It did not on the basis of the case being one arising under the laws of the United States because what's sought to be enforced here are the provisions of a collective-bargaining agreement, and the cases I think make it perfectly plain that simply because you have a collective-bargaining agreement you don't have a case arising under the laws of the United States. The agreement may have been made apart from 301, apart from the construction of 301 and adopted and is followed. The agreement may have been made by virtue of -- because with a bargaining representative is authorized under the National Labor Relations Act. That doesn't make the case of one arising under the laws of the United States, because to arise under the laws of the United States, the controversy must be one which involve the construction of validity of the laws of the United States. And this involves simply the construction of a contract provision. So, we say the Federal District Court here had no jurisdiction under title 28. Now, the Court of Appeals completely ignores the requirement that it be under title 28 and says well, it's enough -- it's enough notwithstanding, the provisions of section 4. It's enough if the Court has jurisdiction under Section 301. Did the Court have jurisdiction under Section 301, save for the agreement to arbitrate? Did it have jurisdiction of the controversy between the parties apart the agreement to arbitrate? The controversy between the parties was Mr. Boiardi's pay and Mr. Armstrong's discharge. Perfectly obvious, had Mr. Armstrong or Mr. Boiardi sued, had the union sued for them. Under Westinghouse, the Court had no jurisdiction under section 301 because the controversy was one involving the uniquely personal right of two employees. Felix Frankfurter: I could look up, but you can tell me quickly. Did Judge Magruder consider the Gully case in connection with the point you're now making? Warren F. Farr: Judge Magruder did not mention the Gully case in this case. He did refer to the Gully case in his opinion in the second Mead case, where he sustained the constitutionality of section 301 (a). I may say with (Voice Overlap) -- Felix Frankfurter: That's a different problem. Warren F. Farr: That's a different problem. I may say with respect to section 4 and I think it ought to be said in fairness to the Court of Appeals. This question was not argued before them nor indeed was there much given to the Court of Appeals by way of legislative history which we've included in our brief. Mr. Rosenberg has in his and Mr. Feller has in his. And it wasn't for this reason. The District Court -- the decision turned in the Norris-LaGuardia Act. When we got to the Court of Appeals, the union did suggest that maybe in addition to 301 you could get rights under the United States Arbitration Act. At that time all the cases, practically all the cases that held the United States Arbitration Act didn't apply. The union didn't push the point very hard. We didn't consider it very strong and nobody paid much attention to it. But the Court of Appeals having apparently been persuaded by our argument that 301 didn't give any such right have then turned to the Arbitration Act and for the first time had to spend some time working out the Arbitration Act. So, this section 4 point wasn't argued before them and far as I know it's never been argued before any other Court of Appeals which is considered today. So we say, therefore that you can't arbitrate -- force arbitration under the Arbitration Act (1) because this collective-bargaining agreement is excluded from the Act by virtue of the provisions of section 1.(2) -- Felix Frankfurter: (Inaudible) if you forgive me. And I don't put it that the Arbitration Act came on -- came into law, came on the statute books in 1925. Warren F. Farr: Yes, sir. Felix Frankfurter: In 1925, there was no title 28. Warren F. Farr: That's correct and the -- and -- Felix Frankfurter: And therefore, title 28 -- therefore, the Arbitration Act is now written, part of U.S.C 9, they then restricted this -- this one -- knows no more than I do which is next to nothing. In order to reach section 4, it must satisfy a right arising as you argue under title 28. Warren F. Farr: Well -- Felix Frankfurter: Is that right? Warren F. Farr: Well, what -- Felix Frankfurter: That's you're argument? Warren F. Farr: Not -- what -- in 1925 it said -- Felix Frankfurter: And there was no 301 in 1925. Warren F. Farr: No, and that's right. In 1925, what section 4 said that having jurisdiction under the judicial code at law or in equity or admiralty under the judicial code. And the judicial code, of course, embraced the diversity cases -- cases arising in the laws of the United States and that's all. And that's all that Congress contemplated. Felix Frankfurter: Now, that's title 28, still contains (Voice Overlap) -- Warren F. Farr: And that's all that title 28 still contains. William O. Douglas: I don't follow your argument because this section 1 of the Arbitration Act comes from the same authority as 28 U.S.Code. Warren F. Farr: Section 1? William O. Douglas: Yes. Warren F. Farr: Well, my point is this -- William O. Douglas: A transaction that's involving commerce? Warren F. Farr: Yes. William O. Douglas: I don't get -- I don't follow you. Warren F. Farr: This section 4 point? Section 4 says, put aside the agreement to arbitrate and see if the District Court has jurisdiction of the controversy under the judicial code or under title 28. You've got to look at the basic controversy. Now, obviously, if for example, you have a commercial arbitration. The seller agrees to sell some potatoes and the buyer says they're bad potatoes. And the seller wants to enforce an arbitration clause in the sales agreement. Where did he go to enforce it? Section 4 tells you where he goes. He goes to the Court which, had there been no arbitration clause, would have had jurisdiction over this controversy. What's this controversy? This controversy is whether there's a breach of the sales agreement or not. Felix Frankfurter: We'd have jurisdiction for some other remedy, damages or specific -- Warren F. Farr: Or -- or for any remedy. Felix Frankfurter: For any remedy. Warren F. Farr: For any remedy other than arbitration. That's right. Now then, the Court has got to have it. The Act then said the judicial code, not title 28. And what's the basis? Diversity of citizenship or it's a case arising under the laws of the United States. And we submit that the Court -- the District Court in this case didn't have it. But even if you adopt Judge Magruder's view and you say well, it's enough that this jurisdiction under 301, the basic controversy in this case is one over which the District Court had no jurisdiction under 301 because the basic controversy is whether Mr. Boiardi was being paid too little and Mr. Armstrong was improperly fired. Felix Frankfurter: (Voice Overlap) -- Warren F. Farr: And if that isn't a unique -- with personal right under the Westinghouse (Voice Overlap) -- Felix Frankfurter: I'll put it to you that you're up against the Gully. I mean an adjudication on the point you're making on that analysis brings you right up to the Gully case the mere fact that ultimately you may reach a federal statute doesn't mean the case arises under it. Warren F. Farr: Yes, I -- I think the Gully case entirely supports my position. It's simply because you have a question as to a -- a violation of the collective-bargaining agreement, you don't have a case arising under the laws of the United States. Because to arise under the laws of the United States, what has got to be involved is the construction or application of a statute which will determine the plaintiff's case one or the other. Now, there's no statute in the United States which will determine one way or the other whether Mr. Boiardi gets paid more or not. So, I submit the Court has no jurisdiction under section 4. Now, finally, the Norris-LaGuardia Mr. Goldberg told Your Honors yesterday that every Court of Appeals which had considered the application of the Norris-LaGuardia Act to a case like this was against it (Inaudible) against our position on it. And so on accounting of (Inaudible) we're entirely wrong. But every Court of Appeals which has considered the problem has I think done it in a very summary fashion. The Lincoln Mills case certainly did and the Seventh Circuit recently did and I don't believe with the exception of the court below, I don't believe anyone has ever really seriously considered the problem. Now, our point with respect to the Norris-LaGuardia Act is this. Here is a labor dispute. There's no doubt about that at all. Controversy involving services, conditions of employment and the Court of Appeals said the Norris-LaGuardia Act, as everybody admits, is still in existence notwithstanding, Taft-Hartley. Therefore, it applies. Now, what does the Norris-LaGuardia Act say? Section 7 of the Norris-LaGuardia Act says, "No court shall have jurisdiction to issue a temporary or permanent injunction in any case involving a growing out of a labor dispute except if certain conditions are met." Certain allegations made, certain findings made by the Court. Those allegations were not made here. Those findings weren't made and we say section 7 therefore is clearly barred. Now, in the first place, appellate argues to you that section 7 merely qualifies for section 4. Section 4 sets out a number of instances in which the Court under no circumstances can ever grant an injunction in the case involving a labor dispute. You can't enjoin anyone from striking. You can't enjoin them for becoming a member of another union. And he says that all section 7 does is to qualify the one or two instances in section 4 where an injunction may be granted if the means are unlawful or -- or there's coercion. I submit that section 7 is intended to go further than that. The purpose of the Norris-LaGuardia Act was to take the Court out of the business of dealing with labor disputes. Maybe Congress went too far. If you remember that at the time it was enacted labor and others were seriously concerned that the federal courts were getting too mixed up in the labor field. So that Congress decided to take them out entirely except -- except to have a case of unlawfulness or violence. Then they may come in. In every other instance they're out. Now, says the court below well that's -- if you've got to make the allegation from the finding of section 7 requirements then those findings would be totally in apposite here and therefore you don't have to make it, because they don't have any relation to the enforcement of an agreement to arbitrate. That assumes it seems to me that assumes that Congress intended that the Court should have jurisdiction in this kind of appeal. The fact that you can't come within the exception to a statute doesn't mean that the -- the exception is to be disregarded. And it seems to me that's exactly what the court below has done. It has sought to evade and get out of the plain words of section 7 of the Norris-LaGuardia Act and we submit that the Act was (Inaudible). We submit that the way -- what the court below has done is this. It twisted and turned its way in order to reach a result. It construed contracts of employment one way in section 1 of the Act and agreements evidencing a transaction in interstate commerce in another way. Using a rigid construction here and a broad construction there, reads out certain provisions of section 7 to reach a result. What's the result? In order to compel enforcement of arbitration provisions in labor agreement. Now, I submit that there is no such clear policy that any such tortuous course is required. That if there is to be such a policy, the policy for Congress to make, it can make it and when it has there, then there's no question but that the -- the Court can tolerate it. But that -- but that the Court should not make it and that it set off on an unchartered sea which Congress itself has said was not to be embarked upon in related matters.

William H. Rehnquist: We'll hear argument next in Number 105 Original, Kansas v. Colorado. Mr. Draper. John B. Draper: Mr. Chief Justice, and may it please the Court: The State of Kansas is here this morning in support of the report of the special master in this case in all respects except for three points. This is a compact enforcement case. It seeks enforcement of the Arkansas River Compact between Colorado and Kansas. It is a Federal statute approved by Congress and signed by the President in 1949. Kansas is the downstream State, Colorado is the upstream State. The United States intervened in the case after it was filed as Federal agencies physically perform some of the reservoir functions involved in the Kansas claims. Physically, Colorado diverts ten times as much water as Kansas diverts in this basin. Colorado normally diverts all of the inflows to the basin at least once, and in most cases many times, before those... the return flows from those diversions reach Kansas. Kansas depends on those return flows and on the benefits of John Martin Reservoir, which was conducted in the 1940's about 60 miles above the State line, and whose benefits are apportioned by the compact. The rights of Kansas under the compact are protected by Article IV-D of the compact which forbids material depletions of the waters of the Arkansas River in usable quantity or availability. Kansas claims three violations of the compact have occurred. The special master has agreed with Kansas on its largest claim based on increased post-compact pumping in Colorado. That violation amounts to some 400,000 to 500,000 acre feet of water. As the volume of this courtroom is about 3-1/3 acre feet, that amounts to about 140,000 volumes of this courtroom, inside the pillars. Although the special master approved that-- William H. Rehnquist: Over what period of time is that? John B. Draper: --This is over the study period of 1950 through 1985, Mr. Chief Justice. The second claim asserted a violation based on the Colorado winter water storage program. The study period for that claim is 1976 through 1985, a shorter period. Kansas' evidence showed a depletion over that period of 40,000 acre feet, or about 12,000 volumes of this courtroom. The third claim is based on the operations of Trinidad Reservoir on the Purgatoire River, a major tributary of the Arkansas River in Colorado. The amount of that claim was 11,000 acre feet over a period 1979 through 1984, which amounts to approximately 3,300 volumes of this courtroom. Kansas has filed three exceptions to the master's report. John Paul Stevens: I'm just curious, when you talk about the courtroom, are you assuming it's full to the ceiling, or just a foot? [Laughter] John B. Draper: I'm assuming it's full right to the ceiling, Your Honor. John Paul Stevens: I see. That's the first time I've seen that comparison before. [Laughter] John B. Draper: The State of Kansas has filed three exceptions. It has excepted to the denial of the winter water storage program claim and the Trinidad claim by the special master. Sandra Day O'Connor: Well, on those two claims, Mr. Draper, the special master concluded, as I understand his report and recommendation, that Kansas just failed to demonstrate adequately those depletions, and if that factual finding is valid, why doesn't that end the matter on those claims? John B. Draper: Your Honor, the two claims are quite different with respect to the answer to your question. With respect to the Trinidad Reservoir claim, he did dismiss the Kansas case at the end of its evidence for failure of proof, but the reason was that he believed as a matter of law that Kansas had proved the wrong thing. We proved that Colorado had violated the operating principles adopted by the Arkansas River Compact Administration for the operation of this reservoir. We believe that the adoption by the compact administration of principles for the operations of the reservoir which were proposed by the United States Bureau of Reclamation set the standard for compliance with respect to that project under the compact. Sandra Day O'Connor: Well, presumably the parties to that special operating program can sue in district court to enforce any rights under that separate agreement, isn't that so? John B. Draper: We don't believe that's true, Your Honor. We believe that this is the only forum, certainly the only meaningful forum, in which we can press a claim for violation of the operating principles. William H. Rehnquist: But the master found that there was no damage in effect to Kansas because there was no proof that the flow at State line was any different, isn't that right? John B. Draper: We believe, Your Honor, that the State of Kansas received some benefits from the adoption of the operating principles that correspond to the allowance of the project in the first place, which was being held up until-- Speaker: Well-- John B. Draper: --Kansas gave its approval. William H. Rehnquist: --could you answer my question? John B. Draper: The answer is that it is sufficient, in our view, to prove-- William H. Rehnquist: Well, my question was, didn't the master find that there was no appreciable change in volume of flow at State line? John B. Draper: --He did at least suggest that strongly, Your Honor. He was looking at evidence which was developed on a study period of 1925 to 1957, however, and not for the operation period that we're talking about in this case, which is 1979 through 1984. There is no evidence as to what the effect of the departure from the operating principles was for that period. William H. Rehnquist: Well, then... but then if the master is right, and it's up to Kansas to show some depletion of flow at the State line, Kansas still fails, it seems to me, even if there's no showing one way or the other, if the burden of proof is on Kansas, and this is Kansas' lawsuit. John B. Draper: Your Honor, the evidence showed that the departure from the operating principles, which we believe is the compliance standard for this project, did cause depletions of waters that otherwise would have gone to Kansas. The inflows to John Martin Reservoir-- Sandra Day O'Connor: Well, but now this is what the master said, and I think I have the quote right: Kansas did not attempt to establish that the flows of the Arkansas River at the State line were less than they would have been if the Trinidad project had not been constructed or operated at all. John B. Draper: --That is technically correct, Your Honor. Sandra Day O'Connor: And Article IV-D of the compact allows developments such as Trinidad, subject only to the proviso that they don't materially deplete usable flows at the State line. John B. Draper: It does not mention the State line, Your Honor, just flows available for use to Kansas users, and during the study period, the inflows to John Martin Reservoir were divided 40 percent and 60 percent between the two States, and delivered to the State line with the help of a trans-loss account to be sure that the flows actually reached Kansas. This was also the standard that the Bureau of Reclamation used when it devised the operating principles in 1964 and proposed those to the compacting States. Antonin Scalia: Well, is it correct, however, that you made no effort to show that in fact it reduced the flow from what it would have been had there been no project at all? Is that an accurate enough statement? John B. Draper: That is an accurate statement, Your Honor. We show that there was a depletion of flows to Kansas, usable flows to Kansas as a result of the departure from the operating principles. Ruth Bader Ginsburg: And the master... you're not contesting that he said... your theory ultimately was that a violation of the separate operating principles per se constituted a compact violation, and that was a theory that he rejected. John B. Draper: That's correct, Your Honor. Ruth Bader Ginsburg: And what was wrong with his observation that there were other remedies, assuming that the operating principles were violated, that there were remedies appropriate to that? John B. Draper: We don't believe that is correct, Your Honor. We believe that this forum is the only meaningful forum that we have, that the State of Kansas has to enforce the operating principles. It is basically an interstate dispute, and interstate disputes, whether they're under a compact or not, must be brought in this forum. Stephen G. Breyer: What is the... what do you rely... as I understand it, though I didn't quite understand your answer to Justice Scalia, that you say that they violated the procedures, these procedures. John B. Draper: Yes, Your Honor. Stephen G. Breyer: All right, and then the issue... and if they violated the procedures, then they violated the compact. John B. Draper: Yes. Stephen G. Breyer: But the other side says, you're right, as long as there was a material depletion of the water available to Kansas, and you think that's shown automatically by the fact they violated the procedures, and they don't. So that's my understanding of it. John B. Draper: That's correct, Your Honor. Stephen G. Breyer: All right. Now, if that's correct, then what is it that shows that automatically violating these procedures would violate the compact, without some further showing of what physically happened in terms of availability of water to Kansas? What is it that shows it automatically? The best think that I thought you pointed to is this thing about a letter to the Governor of Kansas from Mr. Dugan. Is that the best thing for you? John B. Draper: Yes. That is the letter that immediately preceded the adoption of the operating principles by the compact administration. It appears in our brief at page A-85. Stephen G. Breyer: The problem I had with that letter, which is what I'm getting to, is it says that if they don't violate the... if they don't violate the procedures, they won't materially deplete the flow. Isn't that what it says? If you don't violate the procedures... what I have is, the proposed project will not materially deplete the water if it's operated under the guidelines. John B. Draper: That letter indicated that strict compliance with the operating principles-- Stephen G. Breyer: Would not deplete-- John B. Draper: --would achieve compliance with the compact. Stephen G. Breyer: --Right, but it doesn't say what will happen if you don't comply with the procedures. It leaves it up in the air. John B. Draper: Literally, that's true, Your Honor. Stephen G. Breyer: All right, so then if that's true, then what is it that you have to prove that if you do violate the procedures, that automatically depletes the flow, or at least the parties thereby agreed to that, and I couldn't find anything in here that said that they did agree to that automatic-- John B. Draper: Your Honor, we believe that the statement by the Bureau of Reclamation and the operating principles themselves, the mandatory language that is contained in those, in the preamble and in every operative section of the operating principles, indicates that these are intended to be binding in nature, and that they form the standard of compact compliance for that particular project. Sandra Day O'Connor: --Well, isn't Kansas' suit a suit for violation of the compact? John B. Draper: That's correct. Sandra Day O'Connor: The SG takes the position that the compact does not even empower the compact administrators to amend the compact to create a new, enforceable right under the compact. John B. Draper: Your Honor, Article VIII-B(2) of the compact, which appears on page 3 of our blue brief, accords the administration... that's the compact administration... the power to prescribe procedures for the administration of this compact, and by the proviso of that provision, it makes very clear that those are proceedings-- Sandra Day O'Connor: Yes, but how does VIII-B authorize the compact administrators to establish a compact violation that differs from that set out in Article IV-D? I mean, that's what the standard is. That's what your suit was brought under. That's what the master said Kansas didn't prove. I just don't see how you get where you want to go. John B. Draper: --The answer, Your Honor, is that the... there is no difference between compliance with the operating principles and the compact itself with respect to this project. It was studied by the U.S. Bureau of Reclamation, it was determined what was necessary in order to comply with the compact... this is a reservoir, incidentally, which is 220 miles above the State line, and the compact administration was looking at the question, how do we operate this project on a day-to-day basis? Do we have the gates of the reservoir open today, or not, or how long do we keep them open? We have down, or in the compact itself the general proviso that there shall be no depletion of usable flows. What does that mean in terms of the daily operations, and that's what the compact administration was adopting here, were the exact daily operations so that the dam tender who is employed by the Federal Government will know when the open the gates and when to close them at this project. John Paul Stevens: May I ask, are these violations of the procedures ongoing, or have they been terminated? John B. Draper: They have been terminated for the moment by a letter from the Colorado State engineer, the highest water official for domestic water use in Colorado, that until the violations were either determined, or the practices which form the basis for the violations were determined not to be a violation, or the principles were amended, that the reservoir would be so-- John Paul Stevens: Well, has it not been determined that there were violations, so doesn't that mean they will cease in the future, then? John B. Draper: --I'm sorry? John Paul Stevens: There has been a determination, has there not, that there were violations of the procedures, and does it therefore not follow that they will be discontinued in the future? John B. Draper: There is an assumption for purposes of the motion to dismiss this claim that the procedures have been violated. John Paul Stevens: And also that they've been terminated, is that correct? John B. Draper: They are terminated for the moment, but that is only by letter of the Colorado State water official, and that letter could be revoked. Antonin Scalia: Mr. Draper, what has the practice of the parties been under the agreement? Has it, in fact, been the Arkansas River Compact Administration that has prescribed procedures for the administration of this project? John B. Draper: These are the only operating procedures for this project, Your Honor. Antonin Scalia: And are they given authority to prescribe those procedures by some document other than this compact? John B. Draper: No, Your Honor. The compact itself is the basis of that authority. Antonin Scalia: The statute that sets up the project does not authorize them to prescribe procedures? John B. Draper: The statute that sets up the project requires that the project be operated in compliance with the Arkansas River Compact. Antonin Scalia: That's all it says. John B. Draper: That's correct. Antonin Scalia: And in fact, it would seem the parties have behaved as though Article VIII-A and VIII-B does consider these procedures part of the compact. John B. Draper: Yes, we believe so. Kansas agreed to those procedures and required that they be adopted, and gave its approval, which was essential for the funding to construct the project. Once it got into... was built and began to operate, the State of Colorado immediately stored more water than is allowed under the-- Stephen G. Breyer: That's true, that may be true... assume it's true. They had procedures, the procedures bind them, it's all part of a deal, but don't you have to show that they also agreed that's part of this deal that if we violate the procedures, that fact in and of itself demonstrates a material depletion? It's that part that I thought the special master didn't agree with you about. Maybe you did violate the procedures. Then go work out some deal for that, but have you automatically shown a material depletion without showing what happened physically, and where is the agreement to that, that the violation of the procedures automatically shows a material depletion? John B. Draper: --I would suggest, Your Honor, that it is inherent in the principles themselves, and it is-- Stephen G. Breyer: Is there anything you could read to me that would suggest it was inherent in the principles? I read that letter... or I mean, I don't want you to... if something comes immediately to mind, or something. John B. Draper: --No. We base our position on the compact and the preamble and the text of the operating principles themselves, and the precedent-- John Paul Stevens: But where do you go from that... supposing you're right, and we agree with you. What remedy would be appropriate? Assuming there's been no material loss of water, what's the remedy, just stop violating? John B. Draper: --The first remedy would be an injunction to discontinue the violation. John Paul Stevens: And if the master thought that this letter that says we're not going to do it any more is sufficient, would you then... do you still want the injunction? But it's... the only question is whether you should have an injunction or not. There's no... they're not going to get more water, or anything like that. John B. Draper: Well, we have shown that we were deprived of 11,000 acre feet by the failure to abide by the operating principles. William H. Rehnquist: If there was no change in the flow at the State line, how do you know there was such a deprivation, and where did it take place? John B. Draper: The assumption of your question, Mr. Chief Justice, does not exist. There is no showing that there was no change at the State line. William H. Rehnquist: Well, but there was no showing there was a change at the State line. John B. Draper: That's correct. There was a showing that water that otherwise would have been available to Kansas users in John Martin Reservoir was depleted by 11,000 acre feet. John Paul Stevens: Isn't what you're in fact saying that had they followed the procedures, you would have gotten more water than the original compact contemplated? You sort of didn't get the full benefit that you're seeking. Is that what it boils down to? John B. Draper: Well, there is a certain amount of tradeoff that's inherent in the principles. There are depletions during certain periods, and you end up with a slight accretion, but there is no indication that Kansas is getting any benefit beyond compliance with the compact by enforcement of the operating principles. John Paul Stevens: But you would if you got this 11,500 feet, wouldn't you? John B. Draper: No, Your Honor. John Paul Stevens: Then it wouldn't be a benefit. John B. Draper: No, Your Honor. David H. Souter: Well, you're saying that if they had followed the principles there would have been another 11,000 acre feet in the river, it had to go somewhere, and Kansas is where it would have gone, is that what you're saying? John B. Draper: We're saying-- David H. Souter: Even though the record is agnostic with respect to measurements at the State line, you're saying there would have been another 11,000 that went into the river, and it had to go to us, and so therefore we must have lost it. Is that your argument? John B. Draper: --Well, the evidence is that a total of-- David H. Souter: No, but is that your argument? John B. Draper: --That is our argument. Speaker: Okay. John B. Draper: That water would have come to Kansas. Antonin Scalia: And I... as I... but as I understand, the difficulty is it's 11,000 square feet more than would have been... it's the difference between complying with the procedures for this reservoir and not complying with the procedures. John B. Draper: Yes. Antonin Scalia: It's not the difference between what the flow would have been without the reservoir and complying with the procedures. John B. Draper: That's correct. Antonin Scalia: And that's the nub of the disagreement. John B. Draper: That's correct. William H. Rehnquist: It's also... there's a stretch of the river below John Martin Reservoir in Colorado. Couldn't it just as easily have come from additional pumping there? John B. Draper: The water we're talking about, the 11,000 acre feet, would be routed down the river with extra water added to cover transit losses to arrive at the State line intact. William H. Rehnquist: Why does it necessarily follow that if 11,000 acre feet leaves John Martin Reservoir, an additional 11, that 11,000 necessarily shows up at the State line when the river flows in Colorado for a number of miles above the State line, and there surely could have been either pumping or diversion there? John B. Draper: Much of what you say, Mr. Chief Justice, is correct. However, the Kansas deliveries are measured at the State line. Stephen G. Breyer: I think what people... am I right that it's the Trinidad project operating principles, is that right? John B. Draper: These are the Trinidad-- Stephen G. Breyer: Right, and then if the water leaves Trinidad, it goes to the John Martin Reservoir, is that right? John B. Draper: --Yes. Stephen G. Breyer: All right, so maybe this 11,000 feet, or I don't know what that number came from, but it would go down to the John Martin Reservoir, and maybe people had enough water anyway in the John Martin Reservoir, so whether they had 11,000 or not 11,000 didn't make any difference to Kansas in terms of what happened in the past. I mean, is all this explored in the record? I had the impression that you were virtually conceding that the issue is whether or not these operating principles automatically show a violation thereof is a violation of the compact. John B. Draper: That is essentially correct, Your Honor, and those flows are flows into John Martin Reservoir which typically empties every season. It's not a large pool of water that's sitting there year after year. It typically empties within a few weeks at the beginning of the irrigation season, except under very unusual circumstances. David H. Souter: Then you don't depend on the argument that you said was your argument in response to my question? John B. Draper: If you could-- David H. Souter: Technically, you don't care, for the sake of the argument, what happened to the 11,000 gallons. What you care about is the proposition that if the principles are violated, that, as a matter of law, is tantamount to a measurable depletion. That's what you really care about. John B. Draper: --That is the nub of our argument. Speaker: Yes. John B. Draper: Yes. Ruth Bader Ginsburg: Thank you. And do you take issue with the special master's example that if the operating principles are followed meticulously and nonetheless there is a substantial depletion, there is nothing that Kansas can complain about? John B. Draper: We take issue with that, Your Honor. That is for a different period, 1925 to 1957. This project did not exist then. Our claim is based on actual operations, 1979 through 1984. Thank you. William H. Rehnquist: Thank you, Mr. Draper. Mr. Robbins, we'll hear from you. David W. Robbins: Mr. Chief Justice, and may it please the Court: Colorado similarly supports the master's report, but has taken four exceptions to the report. I would first like to address some comments to the Court concerning the Kansas argument. I wish to make it clear that the master did not make a finding on the amount of actionable depletion as to the post compact wells in Colorado. Counsel's description of the amounts of depletion when he was discussing how full the courtroom might be, or how many times it might fill, were strictly Kansas' allegations at the close of the evidence in this case. Second, with regard to Trinidad, Kansas sought to use Article IV-D to show a material depletion. However, it admittedly did not show that there was a material depletion to State line flows. Remember, Article IV-D is designed to permit additional beneficial development in both States of the unused water, and it is Colorado's position, and it was the master's determination, that Kansas had to show that there was, in fact, a material depletion to the water that would otherwise be available to Kansas. Simply showing that operating principles had been violated... and I wish to point out, operating principles that were negotiated not between the State of Colorado and the State of Kansas but between the Purgatoire River Water Conservancy District, a governmental entity within Colorado, the Bureau of Reclamation, and the State of Kansas, principles which were then subsequently submitted to the administration for their imprimatur, or approval. David H. Souter: May I ask you a question about definition, and it didn't occur to me that I had this question before, but when you speak... when you use the term, material depletion, does that term refer solely to volume of water, without any reference to the capacity of the recipient of that water to use it beneficially? David W. Robbins: There are two... there are... if I may, there are two concepts that are important here. The first one is material depletion, which refers to a depletion as a volume of water. Speaker: Okay. David W. Robbins: The compact negotiators in the compact negotiations discuss this, and they wanted to be sure that a change in Colorado that was not terribly significant did not trigger litigation. David H. Souter: But that's merely a change in acre feet. David W. Robbins: That's correct. Speaker: Yes. David W. Robbins: It was a... what they were concerned about was, if you simply use the term, depletion, Kansas and Colorado might be here every year arguing about some small glitch, and you must remember that this is a river that has average... that has flow conditions that on the average are a number of, you know, 600,000 or 800,000 acre feet, but rise into the millions and drop into the 200,000 and 300,000 each year, so you have this huge variability in the system, and they didn't want us here all the time arguing about little numbers, so material depletion was intended to cover that. Secondly, there is the concept of usability. It was important to the framers of the compact that waters be usable in each of the States if there was to be a call, or if there was going to be a demand on John Martin Reservoir. The idea was that there was water, as the compact was negotiated, passing Garden City, Kansas, unused, and they wanted to be certain that that water was developable in each State. They didn't want to have a situation where Kansas was making insistence upon Colorado for water when in fact they had supplies within Kansas passing unusable out of the area covered by the compact. The procedures... I want to make it clear, the procedures that were approved, that were included within this agreement among the district, the Bureau, and Kansas, approved by the compact, not pursuant to rules and regs authority inherent in the compact but simply approved as a resolution, those procedures did not prescribe daily operation for Trinidad Reservoir. They were based upon Bureau of Reclamation studies that dealt with averages. Next. The State engineer of Colorado did, in fact, terminate by order the aggrieved use of the operating principles, the allegation that those principles weren't being followed. That order is in effect today. There is absolutely no reason to assume that it will not remain in effect. Colorado is not in the business of seeking to violate its agreements. In response to Justice Scalia, the parties did not treat the procedures as being part of the compact. In fact, as far as the State of Colorado was concerned, they were in agreement among three parties that it was brought to the compact in Colorado because Kansas requested approval by the Commission, voted aye that those procedures should, in fact, be approved by the compact and utilized. David H. Souter: Where do you go to enforce them? David W. Robbins: My judgment would be that you would go to enforce them in the district court, bringing in the parties to the agreement, namely, the Purgatoire district, the Bureau, and the entities which are, in fact, operating the project. Speaker: No-- David W. Robbins: They also joined the Colorado State engineer, who was the appropriate water official. Antonin Scalia: --But no... you have no administrative appeal. You go right to the court. David W. Robbins: That would be my interpretation. That's correct, sir. There's no administrative agency that really is involved in this. You have a Federal agency that built and manages the project, you have a Colorado entity, the district, whose water rights were the rights, the interests that were brought into the reservoir that are being managed, you have the State of Kansas, that sought the operating principles-- Antonin Scalia: The compact administration, as I understand you, simply approved these procedures at the outset and has had nothing more to do with them. David W. Robbins: --Well, the compact administration received a complaint from Kansas under Article VIII-H, which was the investigation section of the compact, seeking to obtain an investigation by the administration of those procedures, and that investigation was, in fact, approved. Antonin Scalia: Well, that's sort of inconsistent with saying that they're out of the picture. They not only approved the procedures at the outset, but they have been exercising some supervisory authority over the implementation of those procedures, is what you're telling me. David W. Robbins: Mr. Justice Scalia, I jumped over myself. There is an administrative procedure before the compact. However, if you had been dissatisfied with how those procedures were operated, you were entitled, in my opinion, to take the matter to a district court. Antonin Scalia: I understand, but what's the authority of the administration to do anything with regard to those procedures? Where do they get any authority? Why do people go to them at all? David W. Robbins: They've no authority to do anything about the procedures unless it is there... unless they find that there is a material depletion, and their authority comes in through material depletion, not through those operating principles. Antonin Scalia: So if somebody says it's being operated out of compliance with the procedures, you don't go the administration. David W. Robbins: I do not believe that the administration has authority to order the change in those procedures. John Paul Stevens: Even if you're right that they could go to the district court, assuming that there was an ongoing violation, why couldn't that be addressed in an original jurisdiction case? I don't quite understand why it can't be. David W. Robbins: Well, the parties to the agreement, one of the major parties to the agreement is not here before you, and that's the Purgatoire district, one of the entities that gave up its members, agreed to the subordination or use of its water rights within this, pool and made that agreement in part through these operating principles. John Paul Stevens: But the violation, if they're right, is one committed by Colorado, isn't it? David W. Robbins: The violation needs to be a material depletion under Article IV-D. I do not want the Court to assume for one minute that simply by not... you have to wrap these procedures, Mr. Justice Stevens, into the compact. They don't just-- John Paul Stevens: I understand. Let's assume there's no violation of IV-D, would you, but assume there is a violation of VIII-B. They set out procedures and all the rest. You're saying they have no remedy in this proceeding, even if they were... that you just said... you told us Colorado doesn't disobey its, or violate its promise. Supposing Colorado took a position, there's nothing you can do about it. We're going to follow our own procedures and forget about what we've agreed to. You'd say there'd be no remedy in this proceeding. David W. Robbins: --Had those procedures been adopted pursuant to VIII-B, you're exactly correct, Your Honor. John Paul Stevens: But they were not adopted pursuant to the agreement between the two States? David W. Robbins: They were simply approved by the two States. They were not adopted pursuant to an agreement by the two States. The principles were adopted by the Purgatoire District, the Bureau, and the State of Kansas. David H. Souter: If they had been adopted by the States, would it be operative without ratification by Congress? Would it have taken separate ratification if it was a State agreement? David W. Robbins: If the purpose was to modify the way in which the compact's no material depletion standard was applied, yes, it would. I'd like to move on, if I might, to Colorado's exception, which involves the defense of laches. Colorado does not argue, and I want to make this clear, that Kansas should be estopped from obtaining prospective relief under the Arkansas compact. However, Colorado believes that this Court should consider laches for any well-pumping occurred... that occurred prior to 1985. In response to the position stated in the Kansas-- William H. Rehnquist: What's the difference there, Mr. Robbins? What sort of relief might the master give if he didn't apply laches to the well-pumping that occurred before 1985? David W. Robbins: --As far as prospective relief, Your Honor? William H. Rehnquist: No. So what is the kind of relief you think should be barred by laches? David W. Robbins: Damages in money or water for past... any past depletions that are found to violate usable flow, and I want to make it clear, the master did not find a quantity of water. He simply said that from all of the evidence he believed that there was, in fact, a violation of Article IV-D of the compact based upon first compact well-pumping in Colorado. He did not quantify that amount. That is left for a subsequent phase of this proceeding. Antonin Scalia: You would say that any wells that went up with knowledge of Kansas can be closed down. That's future relief, right? David W. Robbins: Prospectively? Antonin Scalia: Yes. David W. Robbins: Well, I think the prospective relief would have to wait, but that would be one facet of the relief. Kansas is entitled to one-- Antonin Scalia: You don't think laches would extend to that? David W. Robbins: --Well, laches would cover past relief. We are not arguing for estoppel, which would seek to prevent Kansas from enforcing the compact in the future based upon their acquiescence in the past activity. We're simply-- Antonin Scalia: This is new to me. I've never heard that laches is limited that way. I would normally think that when somebody has done something for a long time and you haven't made any complaint about it... is that the normal operation of laches, that it operates only as to past damages, not as to future? David W. Robbins: --I believe that there are cases, Your Honor, that are in the patent area in particular where that is exactly how laches is applied, and there is the analysis in those cases... they are cited in our brief... in which a patent holder fails to enforce his patent over a period of time, then identifies the problem, and very often, in at least the Circuit Court decisions, there is language to the effect that the enforcement can occur prospectively, but as to claims for damages or recovery for past activities, they are barred. Antonin Scalia: And even if I have built up a whole business upon that misuse of the patent, which is a very small part of my entire business, but nonetheless essential to it, in the future I'd have to close down the business. David W. Robbins: It depends-- Speaker: Is that the way it works? I don't-- David W. Robbins: --on the facts of the case. Now, the point I'd like to make with regard to the Kansas position is that in its reply brief to the Court at pages 8, and again at 19, it states that it had no knowledge or reason to know, before 1984, that pumping in Colorado was violating the terms of the compact, and I would... however, I would direct the Court to an earlier position taken by Kansas. I refer to the March 4, 1986 reply brief filed by Kansas with this Court in support of the bill of complaint at page 10, and I would like to quote: "The implication Colorado offers the Court is that Kansas has sat on its hands, idly watching the State line flows decline over the years. " "The actual history is quite the contrary. " "As early as its meeting on December 11, 1956, the administration held considerable discussion concerning the activity of well-drilling and its effect on conditions. " "Since then, well depletion has been discussed, both formally and informally, at numerous meetings of the compact administration. " William H. Rehnquist: --This is a witness? David W. Robbins: No, sir, this is a statement of counsel in the brief supporting the bill of complaint in this case. William H. Rehnquist: Well, the master canvassed all these facts, the arguments pro and con about inexcusable delay on the part of Kansas, and found against Colorado on that, did he not? David W. Robbins: The master... yes. The master found-- William H. Rehnquist: So why should we overturn that finding? David W. Robbins: --The master acknowledged that laches was an appropriate remedy in proceedings of this sort. Kansas introduced no evidence to suggest why the delay occurred. They relied solely upon the position that laches did not apply to a sovereign, period. The master in part speculated that Kansas was relying upon Colorado's efforts, which are replete in the record, to deal with the issue of well-pumping depletion, but there is no evidence to that effect. It is just that, speculation, because Kansas did not introduce any evidence at all. Stephen G. Breyer: But there is also, you have... to prevail on laches you have to show you're prejudiced and there, I take it, there was evidence, and the master went through it, and he said, well, even if Kansas should have complained sooner, it didn't hurt Colorado, because Colorado would have had to collect, I guess, this data of what was being pumped out of wells very early, years and years and years ago, and you'd have to speculate that if they had complained sooner, Colorado would, in fact, have collected this data sooner, and I can't tell, says the master, and I don't find any prejudice. So there was a finding on that prejudice part-- David W. Robbins: Justice Breyer-- Speaker: --and evidence. David W. Robbins: --that is correct, but the master's finding is again based upon speculation, because-- Stephen G. Breyer: No, he said you'd have to speculate in order to support you. He has... he lists the two witnesses who died, he lists the hydrological survey, he lists all kinds of stuff. Didn't sound like speculation. David W. Robbins: --He says Colorado would not have collected the data... would not have collected the data had it been given the opportunity to do so. Stephen G. Breyer: He said it's highly speculative that they would have done. David W. Robbins: That's correct, but that flies in the face of all of the studies that were done in the State of Colorado during this period seeking to collect that very sort of data, and it suggests, without any opportunity for Colorado to respond, suggests that somehow Colorado would not have intensified its efforts to collect data if it knew it was on the griddle, but Colorado didn't know it was on the griddle. Kansas knew throughout this period, as the two witnesses, one Kansas and one Colorado, suggest. One Kansas witness said in 1956 I was sent into Colorado to look at wells because of depletions in State line flows for the... counsel says, we operated, throughout this period we were continually talking about this problem but no complaint was filed. The master says that he speculates that Colorado wouldn't have done it anyway, but the facts to my mind suggest quite to the contrary. The State of Colorado consistently worked with the GS throughout this period trying to get a handle on this very problem, and there's no reason to speculate that if the State in this compact had said, we wish an investigation under the compact into the impacts of wells, that it would not have redoubled its efforts. Without that complaint, it was already trying to do that. So in our view you have the State of Kansas at the commencement of this proceeding acknowledging that it knew and that it talked about this issue as it went along. It also acknowledged in its reply brief that it in fact did nothing until 1984-1985 about it. So you have, by Kansas, admissions on both of the important issues here, and the next issue is only prejudice, and to our view, the fact that we lost the opportunity to inquire of the USGS person who did the important study in the 1960's and who came up with the estimates of 1940 pumping, which had an adverse consequence to us when it came time to deal with post compact or precompact pumping. We weren't able to defend ourselves in that regard because we couldn't get an explanation of how the 1940 through 1949 numbers were derived. We were unable to get power coefficients or power records. All of the witnesses in the case, Kansas and Colorado and the United States, acknowledge that in these early periods there was effectively no hard data. Sandra Day O'Connor: Mr. Robbins, does Colorado concede that although it isn't quantified, there has been some material depletion of usable State line flows as a result of groundwater depletion? David W. Robbins: Colorado's witnesses, Justice O'Connor, said that-- Sandra Day O'Connor: I think you could say yes or no. David W. Robbins: --Yes, ma'am. Speaker: Thank you. David W. Robbins: The answer is yes. Now, I'd like to explain that Colorado has conceded that there were reductions in State line flow, but I want to go back to my response about usable flow. My answer, yes, is qualified that we have not had a quantification of depletion to usable State line flow, which is-- David H. Souter: But does that go to the violation or simply to damages? Isn't there a violation if there is, in fact, a material depletion? There may be no damage remedy unless there is a further showing that usable... that the usable quantities were reduced, too, isn't that correct? David W. Robbins: --That's not correct-- Speaker: Okay. David W. Robbins: --in my interpretation, Justice Souter. I believe that the violation is a material depletion to usable flows, because excess flows could be fully depleted in one State or the other without there being a violation. David H. Souter: Well then, I want to get this straight. I misunderstood your earlier answer, because I thought your earlier answer was that material depletion referred simply to quantity, not to usable quantity, and I think you're now saying the opposite, and I want to know which it is. David W. Robbins: I... what I tried to do earlier-- David H. Souter: You were too subtle for me. Help me out. [Laughter] David W. Robbins: --Material depletion relates to depletions to usable flow, and I tried to explain the two concepts. David H. Souter: Okay. So it's not just quantity. David W. Robbins: That's correct. It's quantity... it's depletion to usable quantity. William H. Rehnquist: Thank you, Mr. Robbins. David W. Robbins: Thank you, Mr. Chief Justice. William H. Rehnquist: Mr. Minear. Jeffrey P. Minear: Thank you, Mr. Chief Justice, and may it please the Court: I would like to address the issues in the order that they are presented in our brief. First, the master correctly resolved the Trinidad claim. Kansas has predicated that claim on the theory that Trinidad operations have breached the compact, but the only relevant limitation that the compact imposes on new projects like Trinidad is that they cannot materially deplete usable flows. Kansas has made no showing that Trinidad has had that effect. Instead, Kansas has attempted to show that Colorado has allowed a local irrigation district to violate reservoir operating principles, but those operating principles are not a part of the compact, and hence their violation cannot establish a violation of the compact. Simply put, Kansas cannot predicate its compact action based on conduct that the compact does not forbid. David H. Souter: Do you agree-- --Now-- --that all of this can be litigated in the district court if somebody wants to litigate it? Jeffrey P. Minear: We believe an action could conceivably be brought based on the operating principles in another forum. Whether it would be the district court or a State court would depend on the parties that are bringing the suit. Antonin Scalia: Brought by the State? Jeffrey P. Minear: The State has a problem here. I do think that the State's best argument here is a compact violation based on a material depletion of the usable flows. If there's been no material depletion of usable flows, they're going to encounter a standing objection wherever they raise the claim later on. Sandra Day O'Connor: The operating principles, were they because of the approval of them by the compact administrators? Did that become a rule and regulation of the compact administration? Jeffrey P. Minear: We agree with the special master it did not. The special master canvassed the records and he concluded that there was no showing that the parties, or the compact administration itself, viewed this as a regulation of the compact. Instead, what had happened here was the Bureau of Reclamation had formulated these operating principles in anticipation of the completion of construction of the Trinidad project. They circulated the operating principles to interested parties to see if they agreed with the operating principles. The compact administration was included among those parties that they consulted, but that was simply a consultation method... measure, and nothing more. The master also correctly concluded that Kansas had failed to prove its winter water storage claim. The master carefully examined the evidence, he discerned numerous serious problems with the Kansas water model, and he concluded that Kansas had failed to show that the winter water storage program had caused material State line depletions. The record fully supports that conclusion. Kansas seeks to overcome the master's finding by arguing that Colorado should bear the burden of disproving Kansas' allegations. That argument, however, is inconsistent with the Hornbook rule that the plaintiff, the party that seeks to alter the status quo, bears the risk of nonpersuasion. Sandra Day O'Connor: What is Kansas' burden of proof here? Is it by clear and convincing evidence, or by a preponderance-- Jeffrey P. Minear: It would be our view-- Sandra Day O'Connor: --of the compact violation? Jeffrey P. Minear: --It is our view that it would make sense to employ the clear and convincing standard in this situation. The reason we reach that conclusion is because this Court has recognized that the clear and convincing standard applies in actions between the States in other interstate disputes, most frequently in actual apportionment measures, and the factors that lead to the application of the clear and convincing standard, namely the sensitive nature of litigation between States, and also the disruptive effect of disturbing settled water uses, both call for a clear and convincing standard to make sure that there is not a mistake. Sandra Day O'Connor: Although we have suggested that a preponderance standard is appropriate for violations of a decree, is it? Jeffrey P. Minear: I think that the Court... this... I think you're speaking to the 1993 decision in Nebraska v. Wyoming, and in that case the Court noted that a party does not need to prove injury in order to enforce a decree. You need only show that there was a violation of the decree itself, but the Court did not speak to the question of the burden of proof, or the standard of proof in that situation. David H. Souter: Well, do you take the position that the standard of proof would be clear and convincing even when there has been a decree and the issue is whether it's been violated? Jeffrey P. Minear: We take the position that it should be the same, because otherwise you're going to encounter difficulties in litigating-- Speaker: Well, why-- Jeffrey P. Minear: --these cases and determining which standard would apply. Often-- David H. Souter: --No, but isn't... is that going to be a difficult question? I mean, I understand the argument. I guess I agree with it with respect to the burden of proof prior to the establishment of a... of liability, but after there has been a decree, the truth is the sovereignty of the State or States, in fact, bound by the decree has already been compromised. I mean, they have already, subject to this higher burden, been made subject to the jurisdiction of a court and a degree entered, and once the sovereignty is no longer pristine, if you will, why should the burden of proof be different from what it would be for any normal litigant who has lost and who is charged with having violated a decree? Jeffrey P. Minear: --Again, we're looking to what the Court's precedents say, and the other factor that the Court looked at was the disruptive effect of disrupting settled water uses. David H. Souter: Yes, but the disruption theoretically has occurred by the decree. The only question is the enforcement of the decree, and it seems to me that that does not implicate the same sort of disruption in settled usage. The assumption is a different one, that the usage ought to be according to the decree. Jeffrey P. Minear: Well, I respectfully disagree with that, because the problem here is really one of the question of the level of confidence you have with respect to the factual findings that are made, and this case nicely illustrates that. The Kansas model here had numerous serious problems. There's no doubt that everyone was concerned through the course of travel about the accuracy of its predictions, and nevertheless, the results of relying on that model could be very serious for the State of Colorado. Antonin Scalia: Oh, but that doesn't have to do with the burden of proof. I mean, if a study is not reliable, it's not reliable. Jeffrey P. Minear: Well, this does go to the standard of proof, though, whether or not, to what degree of confidence the Court has in its staff findings. David H. Souter: No, I... you're that there is certain evidence which does not carry with it a high probative value, and it seems to me you can make out a perfectly good case for that, whether you're talking about a preponderance standard or a clear and convincing standard. You're saying, this isn't good enough to get you across the line for preponderance. Just because you have an overall preponderance standard, I don't think it means that you let in a study if, you know, its 51 percent chance is that it's accurate. Jeffrey P. Minear: Well, that-- Antonin Scalia: I mean, the overall case is a preponderance standard, but each individual item of evidence, including whether you've showed, you know, a particular study is valid or not, you don't let it in if the chances are 51-49 that it's valid. Jeffrey P. Minear: --Well, I think as the Court said in Colorado v. New Mexico that the question of the standard of proof does go to the level of confidence the Court brings to bear-- Speaker: To the whole case. Jeffrey P. Minear: --with respect to the whole case. To the whole-- Antonin Scalia: To the whole case, and why should we favor downs... upstream States all the time? I mean, that's what happens with adopting something other than a preponderance standard. Jeffrey P. Minear: --Why would this case settle-- Antonin Scalia: So long as you're upstream, the downstream State has to show, you know, beyond a reasonable... let's use beyond a reasonable doubt. Jeffrey P. Minear: --In fact in the Colorado v. New Mexico case, it was just the opposite. It was the upstream State that was burdened by the clear and convincing standard. It was Colorado with respect to the Navajo River that was burdened in that case. Speaker: That's very rare. Jeffrey P. Minear: But in any event, I think that the question here really is a question of consistency, whether or not you think the clear and convincing standard, one single standard should apply when there are actions between the States, or whether you wish to switch back and forth between the standards. David H. Souter: Let me ask you a different question, if I may. If we assume for the sake of argument that once there has been a decree the burden of proof for someone claiming a violation is a preponderance, not clear and convincing... we're going to make that distinction. Clear and convincing in order to get a decree. After a decree, proof of violation may be made by a preponderance. Assuming that, would it make good consistent sense to say, preponderance should also be the standard when there is a claim of violation of a compact? Jeffrey P. Minear: I would think that the enforcement... the principle that you apply to the enforcement of a decree should apply to the enforcement of the compact as well. Those two... the compact operates very similar to a decree in terms of-- William H. Rehnquist: Well, we really don't have to decide this question of the burden of proof in this case, do we? Jeffrey P. Minear: --That is absolutely right. The special master noted that the... under any standard of proof his conclusions would have been the same. Ruth Bader Ginsburg: You say ultimately this question of burden of proof, clear and convincing, preponderance, is academic, but that is not so, as I understand it, of your position on laches. You are supporting Colorado on that. Jeffrey P. Minear: We are not actually supporting Colorado directly on laches. We have simply made the observation that this Court in the past has taken into account equitable considerations such as laches, waiver, and acquiescence, in resolving claims. Ruth Bader Ginsburg: Would you say the same would apply against the United States? Here you are saying yes, it can apply against a State. Jeffrey P. Minear: We would say that the different principles have been recognized with respect to litigation involving the United States. Generally, laches has not been recognized in suits between a private party against the United States, because of the nature of a private sovereign dispute. Here, where you have a dispute where there are sovereigns on each side, the Court has shown a willingness to consider laches and acquiescence and those such factors at least as respect to the remedy that would be provided. Antonin Scalia: And there is such a doctrine in international law, isn't there, in public international law? Jeffrey P. Minear: I believe that is correct. I believe the special master cited to that. Ruth Bader Ginsburg: But now you've made an important qualification, at least as to remedy. It may not preclude a claim, but it may affect the character of the remedy. Jeffrey P. Minear: Yes. Our belief is that it would not foreclose a claim completely, but nevertheless, it would affect the remedy that would be involved. William H. Rehnquist: Thank you, Mr. Minear. Mr. Draper, you have 5 minutes remaining. John B. Draper: Thank you, Mr. Chief Justice. I'd like to respond to the United States initially. With respect to the winter water storage program claim, I believe that there is some confusion here as to the appropriate question that the Court needs to address, and that is, while there may be dispute about the quantification of the depletions of usable flow caused by the Colorado winter water storage program, we would assert for your review that there is no meaningful dispute with regard to the existence of depletions. We showed 40,000 acre feet of depletions of usable flow. Colorado did not take it to the usable ultimate answer, but when it analyzed the 27 years of our general study period in which the program didn't operate, it still found depletions. In addition, their expert took our model and made modifications, made it better for him. He still said it wasn't what he would do, but he could not make those depletions go away. It's a very robust result as to whether there are depletions or not, and before you now is not what is the exact quantification of those usable depletions, but whether there has been a violation of Article IV-D at all. David H. Souter: What's the utility of recognizing a... let's say a proof of vague violation when it's simply going to lead to damages and the vagueness there is going to preclude a reliable damage remedy? John B. Draper: Because there are both retrospective and prospective remedies potentially available, and the prospective remedy is very important to the State of Kansas. With respect to the burden of proof, we believe that by relatively clear implication the Court in Nebraska v. Wyoming has indicated that the appropriate burden is preponderance of the evidence. We believe that if you tilt the playing field by adopting a clear and convincing standard for enforcing compact rights, that you are favoring the defendant State, which in most cases will be the upstream State. With respect to Mr. Robbins' comments on the Trinidad operating principles, that they were not adopted under VIII, Article VIII-B of the compact, we would assert that they are just exactly the kind of procedures that are laid out in Article VIII-B(2), and that it is very clear that the compact administration was acting in compliance with that provision. He also asserted that there was no agreement between the States. On the contrary, when this interstate compact entity makes a decision, it is an agreement between the States pursuant to the terms of the compact. We believe also that the Court's ruling in Texas v. New Mexico in 1983 is very instructive with respect to the utility of observing and honoring and giving effect to operating procedures such as those that were adopted for the Trinidad project. It would save this Court from micromanaging the operation of Trinidad Reservoir as to when those gates should be open and when they shouldn't, it would solve other problems that are before the Court on these exceptions such as burden of proof, the question of laches. It's immediately clear when someone fails to follow a procedure. There is a baseline conduct that is agreed to, and where it has been approved by it, even proposed by the United States, the owner of the project, we believe that it makes good sense to honor that set of procedures. I would simply point out with respect to the laches argument that Mr. Robbins made that Colorado does have the burden of proof on its affirmative defense and that the key difference which the special master recognized in his report is the type of knowledge that they are accusing Kansas of having, and the knowledge has to be of a compact violation or sufficient to lead to an investigation of the existence of a compact violation, and not simply the existence of wells upstream. That is a much more complicated and less direct piece of knowledge, and the assertion over the years in the reports that Mr. Robbins has referred to was that the primary if not only effect of pumping in Colorado was on the downstream surface diverters who had less water to divert in their canals. Thank you. William H. Rehnquist: Thank you, Mr. Draper. The case is submitted.

Warren E. Burger: We will hear arguments next in 76-864, City of Lafayette against Louisiana Power & Light. Mr. Hochberg, I think you can proceed when you are ready. Jerome A. Hochberg: Mr. Chief Justice and may it please the Court. The question presented by this case is whether cities, political sub-divisions of states are subject to causes of action in trouble-damage liability under the Federal Antitrust Laws. We are here on a writ of certiorari and the case arises out of a complaint filed by the petitioners, the City of Lafayette and Plaquemine charging the respondent, the Louisiana Power & Light Company, two other investor owned utilities and a parent of LP&L with violations of the Antitrust Laws in the generation, transmission and distribution of electric power and energy. LP&L in turn filed a counter claim charging the cities with antitrust violations in the conduct of the city electric utility systems. Cities moved to dismiss in the district court on the grounds of Parker v. Brown barred any action under the Federal Antitrust Laws against them and the district court relying on Parker dismissed the grant of the motion and entered judgment pursuant to Rule 54 (b) of the Federal Rules of Civil Procedure against LP&L. LP&L then appealed to the Fifth Circuit and during the dependency of that appeal this Court came down with the Goldfarb ruling. The Fifth Circuit then reversed the district court relying on Goldfarb and said that the cities were not automatically outside the scope of antitrust laws and that in order to come within the state action doctrine, they would have to have had legislative approval for this specific conduct under challenge. Certiorari was granted by this Court after a petition by the cities. The cities operate their electric utility systems, they own and operate and pursuant to broad statutory authority from the Louisiana legislature. What is involved here is not whether cities are beyond the law, but simply whether cities as governmental bodies, wholly governmental bodies are subject to the antitrust laws and they travel down to the judgments that come with them for conduct engaged in by city officials in the official performance of their duties. In addition, we are not here just talking about electric utility service for the city, we are talking about the myriad of services in operation that the cities engage in. In order to make this determination it seems to me, this Court has said in Parker v. Brown that because the statute itself does not answer the question in specific words that we must look to the statutory purpose to legislative history, the subject matter and the context of the statute. I think we should also look to the adverse effects, a weird adverse effects from enforcement of these laws against city officials and city governments and the impingement that it will create on a fundamental policy in this country, the policy of local choice in ordering social and economic needs, in providing local choice on matters, on governmental matters closest to the people. In Parker, this Court unequivocally stated in broad language that the statutory purpose in the passage of the Sherman Act was to curb concentrations of private economic power. The Court stated that it was clear through pages of legislative history that the Congress was aiming at private individuals and business corporations and of course at that time there were the Great Sugar Trust, the Oil Trust and the railroads running rampant and that was the basis for the legislation. The Court further said that there was not a hint in the legislative history of the purpose or effect to apply these laws to state government, state officials or agents of states. 34 years have gone by since that decision and that clear message, and Congress has not seen fit to alter the decision or the principles that underlie. I submit that cities as well as state agents and state officials come within the purview of that decision, for cities are but political subdivisions of states to whom the state delegates power, its power that it gets from the people as a state for the more convenient and effective governance of the people at a level closer to them. In addition, cities like states only act for public purposes, not for private gang. Warren E. Burger: Well, suppose a city or make it more comprehensive a state, the state of Louisiana organized an airline with 50 or 75 airplanes, the usual pattern of airline operations and then engaged in monopolistic or price fixing or other statutory violations, what would be your view of that? Jerome A. Hochberg: I would say that that would not be subject to antitrust attack. However, it might be subject to other remedies under the constitution and the commerce power and Congress of course to the commerce power could enact the legislation to perhaps deal with it. Warren E. Burger: If it was entirely intrastate, do you think they could do? Jerome A. Hochberg: If it effected intrastate commerce, I believe they could yes. Harry A. Blackmun: Let me change the question a little bit. Suppose a city conspired with a private entity, is not there a language Parker itself that suggests that a city is then liable under antitrust Laws? Jerome A. Hochberg: I know the language you refer to Mr. Justice Blackmun and I think just the opposite. I think that that language appears in a list of three kinds of conduct in which the Court in Parker was saying the state could not immunize persons from -- they could not authorize illegal activity by individuals and corporations. They could not endorse it and a private person who conspires with a governmental body would not be immune from antitrust prosecution. And I say that because those three items are mentioned in a discussion in the opinion dealing with the defendants who are private members, who are private individuals, the growers and the handlers who were operating the raising program under the supervision of the State Prorate Commission. The defendants who were the Prorate Committee, I suppose the commission were private persons and those comments by the Court were made in the context of what was being described that the private parties were engaging in under State supervision. So I think it is just the opposite. I might add that at that point the Court in Parker also seem to equate a state with a city in that statement. Now, there are severe consequences it seems to me from applying laws which were aimed at private enterprise to governments. Harry A. Blackmun: Are you going; is your submission that there may be, there is absolute antitrust immunity for all municipal governments in respect of municipal conduct by the officials in the municipality? Jerome A. Hochberg: Well, my position is that there is – that the law absolutely does not apply to cities. It is not a question of immunity, but the Congress never intended to apply to. Harry A. Blackmun: Alright, in any event that the Parker v. Brown principle applies to municipalities as it would to state governments, is that it? Jerome A. Hochberg: That is correct Your Honor. Harry A. Blackmun: And no exceptions of any kind? Jerome A. Hochberg: No exceptions unless Congress sees fit to change that. Applying these laws would have -- William J. Brennan, Jr.: Well, may I just ask? For example I know in my – the city in which I was born a very substantial public parking operation, under ground parking areas and around cities and much complained by competitors, private parking operations framed in as antitrust charges, you do not suppose is any exception for that sort of thing? Jerome A. Hochberg: There is a remedy for those private parkings. William J. Brennan, Jr.: Well, though – you still think Parker v. Brown applies to -- Jerome A. Hochberg: I believe it does, that is correct Your Honor and rather then use the antitrust laws, there are political remedies and state law remedies, if the public feels that what the city is doing, what government is doing at their behest is not appropriate, not consistent with public -- Speaker: And you would not inspire whether what the city did is authorized by a state statute or by the state constitution or anything else, just as long as the city is doing it? Jerome A. Hochberg: That is correct, but of course if they were not doing it pursuant to constitution or state statute, there would be a remedy at state law. Speaker: I know, I understand that, but your answer still goes whether legal or illegal under state laws it is the antitrust law does not apply? Jerome A. Hochberg: That is right, but right here we have authorization to public -- Speaker: Well, I know, but your position is whether it is legal or illegal under state law, the antitrust law does not apply? William H. Rehnquist: Well, that is a rather hypothetical question, is not it, whether it is legal or illegal under state law because if you were to say that Parker against Brown did not operate in that situation, what you have is a Federal District Court in a antitrust suit, deciding a matter of state municipal corporation law? Jerome A. Hochberg: Well, I am not sure whether he would be deciding that, but he would certainly be intruding on the operation of municipal government, make and second guessing the city and thereby also second guessing the state legislature which could certainly do something about it. William H. Rehnquist: Well, but I suppose the argument would be that the state legislature did not give the city the authority to do that? Jerome A. Hochberg: Well, then it seems to me, if you are talking about antitrust prosecution it would not matter under our position. For the trouble-damage liability to be hanging over the heads of city officials and city government would have the effect of making every city official fearful and timid in conducting the business of the city and precisely what we need right now in city government and in any local government is decisiveness and not inhibition and timidity. Indeed, if judgments were rendered it could bankrupt some cities and most important of all whether it bankrupted them or not, it would have to be paid, the judgment would have to be paid by the tax paying citizens of the city, not from risk bearing equity owners as the case in private corporations. Thurgood Marshall: How many of the cities are running institutions like this? Jerome A. Hochberg: Somewhere between 1700 and 2000 Your Honor. It is a very prevalent mode of delivering electric service through municipal owned systems. In addition, of course cities own many other things in operation -- Thurgood Marshall: There are 1700? Jerome A. Hochberg: Somewhere close to 2000, between 1700 and 2000 is my understanding. Thurgood Marshall: Any big cities? Jerome A. Hochberg: Los Angeles for one, San Antonio I believe, part of Cleveland, many small towns, however too. Thurgood Marshall: Yeah, I thought it was most of smaller towns? Jerome A. Hochberg: Cities engage in a wide range of activities and deliver a wider array of services in this day and age. Cities do not just deliver electric service. They operate hospitals. They collect garbage. They deliver water. They provide police protection. They provide schools. They operate sports authorities and public parks and their creation. They do numerous things and in all of these things, they operate being governments in a, often in a non-competitive model. They do not structure their operations and their services along competitive models as private enterprise as required to do and that has long been the case. By it is nature, government acts in a non-competitive matter. For example, they issue zoning rules and variances which could effect the competitive ability of businesses to function properly in their location. They grant franchisees for delivery of some services and may grant more then one or they may choose to grant one and exclude all other competitors or they may choose -- John Paul Stevens: Talk about franchisees, how about athletic franchisees? When a city tries to get a ball club to move to its community, is it acting in a competitive way a non-competitive way? Jerome A. Hochberg: Well, I do not believe a city owns or franchises that ball club. John Paul Stevens: But suppose it did, sometimes I think they do? Jerome A. Hochberg: Well, I would suppose if they actually franchise it like they franchise a garbage collection company to collect garbage in the city then my principle would apply equally. John Paul Stevens: I realize your principle would apply, but would you still say they are not engage in any kind of competitive activity when they seek to persuade a ball club to move to one city rather then another, as an example? Jerome A. Hochberg: Well, they may be competing with sister cities, but I do not think that subject to antitrust laws. If they choose to deliver the services themselves instead of franchising it, they may exclude all competition if they so desire or they may leave some competition in the city, perhaps mass transit competition rather then just the exclusive operation by the governmental authority or for example cities can combine with their brother cities to induce lower prices from suppliers and indeed that was precisely what was charged in New Mexico v, American Petrofina, the Ninth Circuit case which supports my position completely and there may be public purposes for all of these things and indeed in New Mexico it was. All of these approaches differ from antitrust concepts. William H. Rehnquist: What if the states sets up a power district which is a municipal corporation, but does not have any of the governing power that a city ordinarily has, would your principle exempt it too? Jerome A. Hochberg: My principle is Mr. Justice Rehnquist that it if it is a wholly governmental body as opposed to a private party or a private party given some self regulatory functions, but private primarily because it is engaged in operations for a pecuniary benefit, for example, the Virginia State Bar. Those lawyers had private interest at stake and they were just delegated limited functions by the state of a self-regulatory nature. So I would draw the line at exclusively governmental bodies. If antitrust laws were to apply, given the way in which city operates in franchising, in delivering services I just described, there could be a flood of new litigations in the courts, particularly a flood of anti trouble-damage litigation by every disgruntled franchisee applicant who thought he was the victim of a conspiracy between the city and the winning franchise owner. Potter Stewart: It is not only a franchise owner, the winning vendor of any commodity such as parking meters, would that not be true? Jerome A. Hochberg: That is correct or as in the Duke case in the Third Circuit which went against us, it was a beer company who wanted to sell beer in Three River Stadium and apparently did not get the franchise, someone else did. Byron R. White: Well, suppose in one city there is a municipal electric company supplying the power, in the neighboring city there is a city franchise who is a private company and it is the only company they franchise, let into the city, though it is not effecting the monopoly and then the private company in the one city and the adjoining city conspired together to exclude competition. They are doing something that everybody would conceive would violate the antitrust laws and they get sued for. One of them you would say would not be exempt and the other one is? Jerome A. Hochberg: That is correct Mr. Justice White. If as I say every disgruntled franchise applicant is going to be a potential trouble-damage plaintiff and indeed every private business that covets the market, that the city now occupies in delivering services would also be a potential trouble-damage plaintiff and it would not matter whether their claim was valid or not, the threat of the litigation or the actual filing and then having to fight it would be severe and all done by the lure of trouble-damages I would suspect. Now, even the respondent here and the various amici, in particular the Justice Department's amici have recognized it seems that there are some problems when you are talking about city government and applying laws like the antitrust laws to them for they all try and draw lines to exclude certain conduct from the reach of the antitrust laws and include others. For example, all of them seem to want to draw a line between proprietary and governmental functions, a line that has been discredited in the past and rejected by this Court in numerous cases, most recently in the Indian Towing case in 1950 I believe and a line which the lower court, the court below the Fifth Circuit equally rejected. The problem there is well described by Mr. Justice Frankfurter in his opinion in the Indian Towing. In addition, the Justice Department proposes a regulatory non-regulatory line and that line seems to me just like proprietary and governmental (Inaudible) wash because to give you an example, if the city has franchised someone else to deliver a service and instructed it, the private entity to conduct itself anti competitively. The city would not be under the Justice Department test, the city would not be subject to prosecution under the antitrust laws, but if the citizens of the city decide they would rather deliver the service themselves because they feel it is more effective that way, more responsive to their needs and did the same thing they had told the private entity to do, the Justice Department would want to sue the city for that and I submit that makes no sense in the long run. Thurgood Marshall: But you still could go against a franchise in your first prompt, would you not? Jerome A. Hochberg: That might or might not be. It would depend on whether it came within the test in Cantor or in Goldfarb, that is correct Your Honor. Potter Stewart: Would you run that bias again, give an example of what your point -- Jerome A. Hochberg: If the city instruct -- had a private franchisee -- Potter Stewart: What would be an example of what you are talking about? Jerome A. Hochberg: Transit. Potter Stewart: Alright. Jerome A. Hochberg: And instructed the transit company, the bus company to operate in a manner inconsistent with the antitrust laws. Potter Stewart: i.e. as a monopoly within the city? John Paul Stevens: Why is that inconsistent with the antitrust laws, to that one transit company operate in the city? Jerome A. Hochberg: Well, whether that would be or not, perhaps they would instruct the city, the bus company to conduct itself, to do certain things that would be considered a violation of Section 2. John Paul Stevens: And I submit that for a example to be persuasive, you have to think of something that would violate the antitrust laws and you have not done that yet? Jerome A. Hochberg: Well, if they instructed the bus company to make arrangements with a another bus company on the border for that served the city, metropolitan area to come up with the same price for bus service, so that citizens in the adjoining suburb would not howl at the higher price in the city for example. John Paul Stevens: Your example is the city says that each of you to agree on the price, we do not care what it is, but you agree on a price and charge the same price as opposed to saying the price in this city for bus fair shall be 10 cents, we are talking about the first example? Jerome A. Hochberg: If the city -- John Paul Stevens: And you think that should be okay? Jerome A. Hochberg: No, not for the -- I think the city under the government's test would not be subject to prosecution, but if the city did that, the government rather than have a private bus system, the city would be subject to antitrust prosecution. John Paul Stevens: Your example is if the city operates a bus company and agrees with the private bus company in a neighboring community that we will both charge a dollar a ride, then the city should be immune and the other company should be subject to -- Jerome A. Hochberg: That is correct. John Paul Stevens: That is your example? Jerome A. Hochberg: That is correct. Potter Stewart: Or if the city says to outlying suburbs, if you do not ride our bus as you cannot get city water, that sort of candors the facts of this case? Jerome A. Hochberg: Well, one of the charges, there are other charges in the counter claim, that is just one of them. Potter Stewart: (Voice Overlap) arrangement? Jerome A. Hochberg: Right, that is right. If under the government's test the city told the private entity to engage in that type the government would not be subject to suit, but if the government did it then it would be subject to suit. Speaker: You mean the company that did it would be subject to suit? Jerome A. Hochberg: Right, something like Cantor. In Cantor the Public Service Commission was not going to be sued or was not sued and I doubt that this -- my feeling is that I do not think this Court would hold that Public Service Commission is subject to the antitrust laws for endorsing that tie. All of these lines that the city and the respond -- the Justice Department and the respondent in the various amici proposed are it seems to me totally inconsistent with the Parker language, with the statutory purpose of the Sherman Act and with the legislative history of Congress in enacting that Act. The only line I submit that is consistent with that legislative history and statutory purpose is when wholly governmental bodies are excluded from the antitrust laws and private parties or private parties with self regulatory functions granted by the state would be subject to those antitrust laws. And the reason I say that is that there is not a hint in the legislative history that Congress intended to apply the antitrust laws to some levels of government and not to other levels of government or to some conduct of government and not to other conduct of government. In point of fact Congress said, we are passing these antitrust laws to aim them and curb private economic power and there was not a hint that they were aiming them at government at any level. William H. Rehnquist: Is there as bright a line as you suggest between governmental bodies and non-governmental bodies? Let me go back to my example of a power district that is authorized to be formed by the land owners within a particular geographic area and to govern itself and to supply power itself by the state legislature and it is a non-profit type of thing. Now, I would think of that as a governmental function in many senses and your answer was I think that, that would probably be subject to the antitrust laws? Jerome A. Hochberg: I think that would -- that is not the issue here today because there is no question but these are cities and they are totally governmental. In that situation it seems to me this Court would have or any federal court would have to make a determination whether it was truly, a wholly governmental body just as this court did and in NLRB v. Natural Gas Utility District where it had to determine whether the district was a political sub-division of the state so that it came within the exemption of the labor laws and there the Court rejecting of course local law, state law as a means of governing whether a federal statute applies decided that, that district was indeed a political sub-division by looking through various factors like was it responsible to an elected official or to the legislature ultimately and things like that. Again, I say that in order to hold city subject to the antitrust laws here and after all they are criminal statutes and I doubt that, it seems to me very doubtful that the Congress would have enacted the Sherman Law to apply the city governments in criminal as they were, without some indication in the legislative history that was what they were intending. In order to subject cities to antitrust laws, I think this Court would have to repudiate the message of Parker and impute the Congress and intention it never expressed and to then go about rationalizing the important public policy of local choice and local governance with the antitrust policy and throw into that nix in addition a weighing of the severe consequences that might occur from application of these laws and put them altogether and try and divine a line or several lines with caveats and sub caveats for holding antitrust -- city subject to antitrust laws. I submit that -- Thurgood Marshall: On the hand you might win on the trial of this case? Jerome A. Hochberg: Well, of course, we certainly hope we will and we think that we very well might, but that is not really why we are here today.[Laughter] Thurgood Marshall: All these hobbles you are talking about, this case would just sit back, would it not? Jerome A. Hochberg: A number of cases Your Honor had just come up through the Courts, since Goldfarb, misapplying Goldfarb, we have about Five Circuit Courts going against this now. Thurgood Marshall: But the point is that this has been sent back? Jerome A. Hochberg: My feeling is that if this Court were to put together that mix of rationalizing the various policy conflicts that exist here and the consequences that that is the kind of a procedure which Court requires careful investigation and review and analysis most appropriate to a legislature and not to this Court. Thank you, I would like reserve my -- Lewis F. Powell, Jr.: May I ask you a question before you sit down? What do we the language in Cantor and Goldfarb that requires a command or a direction from the state? Jerome A. Hochberg: That language is perfectly appropriate Mr. Justice Powell when a private entity is being sued as that was the case in Goldfarb and in Cantor because the antitrust laws were clearly aimed at private enterprise and private economic power, therefore, a careful scrutiny is necessary it seems to me to make sure that the state has indeed instructed those private entities to do what they are doing and absent that state instruction it seems to me the antitrust laws apply across the board. Byron R. White: But then you say that here it is just as all the city as the state had done it because the city is the state? Jerome A. Hochberg: The equivalent of the state in terms of the fact that they are a political sub-division to which the state grants its powers and in addition because there is no legislative history that the Congress intended to treat them differently. Byron R. White: Of course there had been and there are instances in the federal law where cities were treated differently than the states? Jerome A. Hochberg: There are in the Eleventh Amendment they are treated differently and in the Fourteenth Amendment they have treated the same in terms of state action. The fact of the matter is in each situation, constitutional or statutory, they have to look at the statutory purpose or the constitutional purpose and the context as Parker said and when you examine that it seems to me that the statutory purpose here was aimed at private economic power and not government of any sort and I will treat them the same here. Byron R. White: What do you suppose Congress' purpose was, as you interpret the statute what do you suppose Congress' purpose was? Jerome A. Hochberg: To curb private economic power, that was what was going on in 1890 when the Sherman Law was passed. Byron R. White: What was -- what do you suppose the intention was in excluding, implicitly excluding states and cities? Jerome A. Hochberg: I think they probably never even thought of it Justice White, but because they were not even thinking about going after governments, they were concerned with private entities and given the fact that they were so definitely concerned with private economic power and that was the purpose of their law, with absent a clear intention to include government, it seems to me it is up to Congress to remedy that after the Parker case and given the situation in 1890. Byron R. White: So, you just say it was an example of ordinary rule of construction, you just do not apply statutes to a sovereign unless there is some clear indication of it, is that it? Jerome A. Hochberg: That is correct. Thurgood Marshall: Well, in the Louisiana would this apply to the police juries of the parishes? Jerome A. Hochberg: I believe so Your Honor. Parishes of course are governmental bodies, wholly governmental bodies. Thurgood Marshall: Well, I said the police jury of the parish? Jerome A. Hochberg: I am not really familiar with the full details of it, but it might be or might not, I just do not know. William H. Rehnquist: Well, back in the 1890 was it not the municipal ownership thought of as one of the safeguards against monopoly Jerome A. Hochberg: I believe electric utilities got started in many ways when municipalities provided it for their citizens before private power got into the picture. Warren E. Burger: Was it not the philosophy that was thought to (Inaudible) development? Jerome A. Hochberg: That is correct. Government is always got to be eventually answerable to the people and they can -- the check of the political process is available and that is a remedy which is far preferable than applying antitrust laws aimed at private parties to the cities, thank Your Honor. Warren E. Burger: Mr. Carter? Andrew P. Carter: Mr. Chief Justice and may it please the Court. I am Andrew Carter from New Orleans, Louisiana here representing Louisiana Power & Light Company, often referred to as LP&L. I have deeded five minutes of time to one of the amicus and hope I will not regret it with my slow talk. I will try my best to make it through own time. If it pleases the court, the city's counsel here has glossed over the four allegations of antitrust conduct and I believe that taking up one of those examples might furnish the Court a little understanding with why LP&L is bothered here. LP&L is primarily a rural electric utility company, engaged in furnishing service in 46 of the 64 county areas which we call parishes. In those parish areas, there are some cities and towns and in some of those cities and towns they have electric, gas and water systems. In recent years they have been going into the outlying areas with their water and gas and electric service and we run into the proposition now more often increasingly where the cities will tell customers or potential customers that in order for them to get water and gas, they will have to take their electricity. This is done sometimes with a new customer just moving into the area, sometimes with one that LP&L is already serving or a rural electric co-op, like our friends here on our side of the case. So this is a practice it seems to us to be a classic tie and arrangement and it is one of the things we are after here to see if we can stop it. Now, I have read the city's briefs of course and I have listened the counsel today and it seems to me that counsel is in due deference to an adding a great deal to what he is advancing to call it a principle, what he is saying here is simply a superficial preposition that if the courts look at the actor involved and they find out that the actor is a state agency or political sub-division then the inquiry stops right there and you are through right at that point. Now, that makes it quite obvious why counsel did not talk about any of the full pertinent cases in this line of jurisprudence. It started with Parker because every last one of them shoot down that preposition. Byron R. White: I think he did not talk about this case? Andrew P. Carter: Well, he mentioned [Laughter] Your Honor. He gave them his blessing as he passed, but he did not analyze them and of course since they are on my side I want to analyze them and -- Byron R. White: He analyzed them his way and now you will analyze it your way? Andrew P. Carter: [Laughter] Well, you could look at it that way. I think mine is actually an analysis, however, because what I want to do is go into each one with the basic content of what happened in that case. Now, the first one I am sure this Court has heard so much about it, it is (Inaudible) and Parker v. Brown, but in that case you will recall that the actors there were your state officials and some private individuals who had been made state agents for the purpose of this Raisin Proration program. And the activity there was the administration of that Raisin Proration program and what did this Court do? This Court looked right at what was going on as to the activity. It found out that the activity had been mandated, had been compelled by the state through its sovereign exercise of the legislature and so it held that there was a state exemption and I think one sentence is the key to the holding in Parker v. Brown and it reads this way. The state in adopting and enforcing the Prorate program made no contract or agreement and ended into no conspiracy and restrain of trade or to establish monopoly, but as sovereign, as sovereign imposed the restraint as an act of government which the Sherman Act did not undertake to prohibit. So what did they do? They looked at the activity and they said that is a sovereign act mandated activity. Now, we would go along for a number of years and we come on to 1975 in Goldfarb and in Goldfarb what did we have? We had the state bar and a county bar that were the actors, and the activity was a minimum fee schedule for lawyers and what did this Court do there? It did not just stop with the actor. The state bar which was found by the Court to be a state agency by law. It went beyond that and looked at the activity and it found that the activity was not state compelled. Warren E. Burger: You get an implication out of the Goldfarb case that if the Supreme Court of Virginia had ordered that action, it would have been exempt? Andrew P. Carter: Mr. Chief Justice, I think we would have a Bates case in that situation, probably. I do not know all of the underlying circumstances in either case, but it would very likely have been a Bates case and you would have had a Sovereign Act of one of the three sovereign branches of government in the Bates case of Supreme Court. So it could have worked that way, but the fact is that Your Honor, as I recall was the organ of the Court and wrote the very words that we rely on principle here, and we think really they resolve this whole matter and I believe that the Court stood firmly behind those words and I would just take the liberty of one sentence sir, actually is two sentences. “To threshold the inquiry in determining if an anti competitive activity, a state action of the type the Sherman Act was not meant to proscribe is whether the activity, the activity is required by the State acting as sovereig. William H. Rehnquist: Well, in Parker against Brown, the legislature did not mandate the imposition of these Raisin Quarters, the Quota Board did, did it not, and the legislature simply authorized it? Andrew P. Carter: Your Honor, I think that the legislature mandated the whole program and it in fact I believe went into a pretty good detail with it, naturally they could not go under detail as to the particular price on a given day or anything like that, but they -- William H. Rehnquist: But they had to be approved by the growers, did they not? Andrew P. Carter: Had to be approved by the growers, I do not think that program had to be Your Honor. I think that perhaps prices at one point and another would have to be -- William H. Rehnquist: Well, I thought the very existence of, in other words, if a majority Raisin growers voted against that sort of a thing, there would not be any prorating? Andrew P. Carter: Oh! No, I do not believe. [Laughter] You must be right Your Honor, but that is not my recollection of it, but the Chief Justice went on in Goldfarb to say one more thing. “Here we need not inquire further in to the state action question because it cannot fairly be said that the State of Virginia through its Supreme Court rules require the anti competitive activities to be the respondent,” and to us that is so plain and so clear that if it is really a bright line rule. And we come to Cantor which happened shortly after that and what do we see in Cantor? We see what I believe was a State action, but not a State action case. Now, what do I mean by that? I mean that as the Court pointed out, you did not have a State agency or political sub-division that was a party so to that extent it was not a State action case. On the other hand, the Court reaffirmed Goldfarb and applied the rule that I just read and determined that the activity and by the way the actors there if you recall, the actor was a private utility company, Detroit Edison and the activity was a light bulb replacement program. This Court looked at that and it determined that was an activity that was not State compelled, and therefore, even though there was no State body involved as authority, it applied the Goldfarb, Parker rule and said Detroit Edison is responsible under the Sherman Act. Potter Stewart: Of course all of your analysis so far is based up on the premise that the city here, the municipality here is the equivalent of the bar association in the Goldfarb case of the utility in the Michigan case and of the marketing association of the California (Voice Overlap). If on the other hand, one takes the view of your brother that the city is the equivalent of the State itself, then your analysis collapses? Andrew P. Carter: Well, it surely would Your Honor, but so would a whole bunch of law cases, all standing for the proposition that the city is not be equated with the States. Potter Stewart: Well, there are a whole bunch of law cases if I may induce your phrase the other way to all the cases under the Fourteenth Amendment Rights? Andrew P. Carter: Well, that is right Your Honor, but I have in mind the commerce clause and antitrust cases and I think that the State and the city are not to be equated, at least that is our position. Potter Stewart: Well, that is the important part of your argument, you have to begin with that hypothesis? Andrew P. Carter: Indeed, you are entirely correct. If you say that the city is the sovereign then you do not have to get any further than that, under the very rules of that I have been talking. Potter Stewart: In other words, in other words Mr. Carter, if the defendant in this case had been the state of Louisiana which was in the electric power business, you would concede that they would not be within the coverage and that if the State would not be within the coverage at all of the antitrust law? Andrew P. Carter: If it was in that business as a result of exercise of its sovereign power and yes -- Potter Stewart: Well, if it was in that business, that is a sovereign State to the extent the States are sovereign and if it was in the electric business then you would concede that you could not make any defendant in your antitrust law suit? Andrew P. Carter: I would as an antitrust matter, yes, I would say they would get grabbed on the U.S. v. California under the commerce clause. William J. Brennan, Jr.: Well, Mr. Carter, do I get your submission is that unless the particular municipal activity has been what compelled by State legislation, the Parker and Brown does not apply to that activity when performed by the municipality? Andrew P. Carter: Mr. Justice Brennan, I would not restrict it to just legislative mandate. I think -- William J. Brennan, Jr.: But in any event there has to be some state mandate, you used the word mandate -- Andrew P. Carter: Correct. William J. Brennan, Jr.: A particular activity has to be mandated -- Andrew P. Carter: Correct. William J. Brennan, Jr.: Carried on by the municipality, it has to be mandate by the state -- Andrew P. Carter: That is right. William J. Brennan, Jr.: Tell me about this, my home state is a home rule state. It has broadest kind of governmental powers. Now, it carries on great a many of the – O mentioned one earlier the parking lot activity, that sort of thing. Andrew P. Carter: Yes sir. William J. Brennan, Jr.: That is not mandated by any state legislation or by -- except that it has home rule powers which gives it the broadest possible governmental power. Now, what about that? Andrew P. Carter: Your Honor I think that -- William J. Brennan, Jr.: Suppose for example that city entered into an agreement with the private parking lot operators to fix the price uniformly at both municipally operated and privately operated parking lots? Andrew P. Carter: Your Honor as I read Parker, Goldfarb, Cantor and Bates, the answer is that if that parking lot were not the result of some mandate of the sovereign -- William J. Brennan, Jr.: Well, it is not more than what I told you. It is just that it is home rule city and has a broadest possible home rule power? Andrew P. Carter: Then Your Honor they would have to abide by the Anti Trust Law in my opinion. William H. Rehnquist: Mr. Carter, let me read you this sentence out of Parker against Brown, at Page 347 of 317 U.S. and it says if the proposed program is approved by the commission is consented to by 65% in number of producers in the zone owning 51% of the acreage devoted to production of the regulated crops, the director is required to declare the program instituted. Now, do you consider that to be a state mandated program or requires the consent of private individuals? Andrew P. Carter: Yes sir because I think that the state directed him on that 65%, legislative act. I think what you just read, that if they got the 65% under the legislation he was directed not to act. William H. Rehnquist: Well, so if -- in other words, authorizing legislation really can be mandatory in your view, so long as the terms of the authorization are complied? Andrew P. Carter: Oh! I think authorizing legislation Your Honor, could contain a mandate, but I think on the other hand you can have authorizing legislation that does not contain a mandate and I think that you have to look at what the legislative act did. I do not think in every instance, for example in Louisiana, our legislative Acts permit and authorize municipalities to engage in the electric business and they can run their own systems either within the city limits or without. So they are authorized, but the question here and I think it will be the question on remand if this Court favors us is going to be whether that the operation of the electric business in the manner we have charged them with was a State compelled activity. William H. Rehnquist: Then if the State statute said in any city in Louisiana where by referendum 60% of the voters of the city vote in favor of a municipal electric company, the city shall establish one, that would meet your definition of mandate? Andrew P. Carter: Yes it would. I think the legislature can act and -- Potter Stewart: But you would demand that the legislature go further than that, would you not, under my brother Rehnquist's example, then that authorizes the city to, when 65% electric solo to go under the electric power business. You would require as I understand your argument, that the State legislature also authorize them to engage in conduct which except for this authorization would violate the Antitrust laws? Andrew P. Carter: Your Honor, that -- Potter Stewart: Would you not? Andrew P. Carter: Those two things -- Potter Stewart: They are not clearly authorized to be in the electric business, are not they, by the State legislature? Andrew P. Carter: Exactly, so -- Potter Stewart: So you would demand something more than that? Andrew P. Carter: Oh! Indeed, to violate the Antitrust laws that means they are exempt -- Potter Stewart: Specific authorization to violate the Antitrust laws, to engage in conduct which otherwise would violate the Antitrust laws? Andrew P. Carter: Absolutely, I do not think they should just go around making tie in arrangements. Potter Stewart: But that is your test, is it not? Andrew P. Carter: My test is the Goldfarb test Your Honor. I think you look at the activity and then you determine whether the State as sovereign compelled or directed that activity. That is not my test. It is the Goldfarb test that I believe is sound as a dollar. It follows Parker. It accommodates the Tenth Amendment argument that was made by Attorney General Warren, later Chief Justice. It does all that is necessary to have a fair and sound rule under which we can live with the Antitrust statute. Lewis F. Powell, Jr.: Mr. Carter, in Cantor a public utility commission in Michigan was an agency of estate, was it not? Andrew P. Carter: The public service commission was an agent of the State, yes sir. Lewis F. Powell, Jr.: And it was argued in that case that by virtue of that fact that was State action that argument was rejected by the court? Andrew P. Carter: Detroit Edison argued that Your Honor and I think it was obvious from the decision of the Court that the Court considered that the mere filing of a great tariff of that time was not State compelled action by the Public Service Commission. Lewis F. Powell, Jr.: The city in this case has authority to make rates to enter contract or in general operated utility or independently, the Public Service Commission of the State, does it not? Andrew P. Carter: Your Honor, if I caught your question correctly you are asking about the city’s authority? Lewis F. Powell, Jr.: I am asking about the city’s authority to operate an electric under the State law? Andrew P. Carter: They can set their own rates. They are not regulated by the State Public Service commission. Lewis F. Powell, Jr.: That they are independent of the State utility commission, because the city has authority to operate the utility that is substantially consistent with the authority conveyed to the Public Service Commission to operate or to supervise the operation of private utilities. I am trying to see whether there is analogy between the power conferred on the Public Service Commission of the State, than that is conferred on the city? Andrew P. Carter: Mr. Justice Powell, in the Louisiana the power of the Public Service Commission to regulate, invest on utility companies and co-opt is what is known as plainary. Our power about commission is plainary, so without trying to be semantical I would say would say that the cities would have certainly no more power than that and possibly less. Lewis F. Powell, Jr.: (Inaudible) Andrew P. Carter: Yes that is right. I see a time signal that causes me to desist from going further with the Bates case. I think the Court has already absorbed my point about these four cases. The Bates case just stands right on the same ground with the others. The Court looked at the act of being the State bar and the activity restraining law, your advertising in the holding was found to be mandated by the sovereign, the Supreme Court of Arizona. So I think that what you have here and I want to state it my own way though it is really the Goldfarb rule. Speaker: (Voice Overlap) five minutes for your colleague. Andrew P. Carter: Am I into his time? Warren E. Burger: You are not quite into it yet, you are going close. Andrew P. Carter: I think I can do something about a minute here Your Honor that I would like to do very much because city’s counsel has pitched the whole case on policy and I want to throw some policy considerations out to the Court. What does a consumer outside the City of Plaquemine do when he could get his electrics the cheaper from LP&L or a co-op then he could from the city, but he is forced to take it from the city because that is only way he can get water and gas. So -- John Paul Stevens: Mr. Carter on that point. Andrew P. Carter: That does not seem to me a good policy. John Paul Stevens: Mr. Carter does your counter claim allege this practice? I did not find -- Andrew P. Carter: Oh yes! John Paul Stevens: It does. Andrew P. Carter: Yes sir, we allege a tie in and we have -- John Paul Stevens: Of the water, so they get the water and the electricity and the gas? Andrew P. Carter: Yes sir, the affidavit reflects -- John Paul Stevens: It is not in the counter claim itself, is it? Andrew P. Carter: Oh! Yeah, it is in the counter claim, in the second amended counter claim. Now, for another policy question, what happens to the utility facilities that the power company has placed there to serve a customer, cost to merge and long terms this city and takes the customers. Your Honors all know that the facilities or what goes in to the rate base and that is the basic proposition for setting rates until – to make this brief, you know that the rate payers are customers end up picking up useless facilities in a rate base. I do not think that is a very good consideration and I think I will finalize this by saying that when you look at the policy considerations that counsel has been talking about today, he is giving a bunch of dire consequences that would derive from violations of the Antitrust Act, but he has not address a bit of what would be the dire consequences of a body right like all the rest of us have to do. Thank you Your Honors. Warren E. Burger: Thank you Mr. Carter. Mr. Chrisp? William T. Crisp: Mr. Chief Justice and may it please the Court. First I want to thank you for indulging me this time as well as Mr. Carter. I know you do not look with favor on friends of yours coming up and arguing before you. This will be my first time and I would not respond to begin with to the question put by Mr. Justice Marshall. I alluded to Volume 1 of the first federal power of survey in my brief and the answer to your question about the number of different types of entities in the industry, in 1962 according to that Volume 1 and I am referring to page 17 of it, there were 480 investor owned companies. There were 2001 in 24 cities and PUDs. There were 969 cooperatives and 44 federal distributors of power. Since that time there has been some diminution of the municipalities and some addition to the electric cooperatives. Warren E. Burger: In terms of the volume to the 485 it is – you have about half of the total or three quarters or one quarter? William T. Crisp: There are about 200, I have used Chief Justice Burger, who distributed about 90% of the power that is attributable to the investor owned part of that segment. I hope I am being responsive to your question. An event took place in 1890 without which we would not be here in this case today. This Court of course is familiar with one of them which was the enactment of Sherman. The other is one that at that time foretold or perhaps foretold easily some of the facts that have emerged to give rise to this proceeding. For in that year, a line, an electric line, operating on alternating current was opened to carry 480 kilo watts of single phase power at 4000 volts and a 125 cycles per second, 14 miles from Klamath Falls, Oregon to the city of Portland and it was the first time when it was demonstrated that there would be economic feasibility for large unit central station power in this nation. It was over 50 years, however, before the rural segment of our society became accessible to that great technology and that came about in the years immediately after World War II. As a result of the fact, that the Congress in 1936 enacted the Rural Electrification Act. Its purpose was to make feasible, electric power accessible to every rural American and for all practical purposes, that objective has been accomplished. I bring you in the name of those co-operatives, what I think is a unique situation both legally and factually that has a bearing upon how this Court should rule in this case. In fact, I say to you and perhaps this is too strong to start with, that unless you resolve the issue in our favor, there will remain an untenable, legal dichotomy because of these particular facts and this particular law that I want to talk about. Throughout this country in most states, the municipalities have the power to expropriate, going electric business properties in most cases co-operatives and in some states of electric power company's, in Louisiana they may do it with respect to both the co-operatives and the power companies and they have done so many times. This of course affords a due process, just compensation proceeding whereby there is remuneration for resulting damage. On the other hand, not even in states, where such powers maybe statutorily exercised by either a municipality or a public utility district, may that power be exercised lawfully is do so is to substantially impair the national objective of rural electrification because to do so would be to frustrate federal's premise of power. Now, what I am praying for you here is this dichotomy, if Louisiana city is permitted to prevail in this case. On the one hand, even having the power to expropriate our properties through due process and pursuant to the Fifth Amendment, they cannot go so far as to destroy our properties if the result is to impair the remainder of what we do. Under that theory in this case, they may piecemeal and in certain instances (Inaudible) and large spread for sub division purposes, come out and commit acts which we would be held not only civilly, but criminally accountable for piecemeal or large spread and accomplish precisely the same result without being redressable under the Sherman Act. Now, we say just this to you in conclusion, that is dirty ball. That is unfair and one tenant, I think all of us would agree is a fundamental attempt of construction is separate is that you do not construe a statute if the result is to be probably injust, absurd and unfair and that is what we say to you will be the case if you rule as the cities have asked you to here. In part may I say whether we can agree that this is a statutory construction or not, if what the cities are doing in there tie in arrangements which is a per se violation of Sherman and Clayton for us is it is not Marilyn in say, surely if its not, it ought to be Marilyn prohibitin. Warren E. Burger: Thank you gentlemen, the case is submitted. Excuse me. You do have one minute left, I am sorry. Andrew P. Carter: I have nothing further, unless the Court has a question. Warren E. Burger: No. Thank you gentlemen.

William H. Rehnquist: We'll hear argument next in Number 98-1993, Florida v. J.L.-- Spectators are admonished, do not talk until you leave the courtroom. The Court remains in session. Mr. Neimand. Is it Neimand, or Neimand? Michael J. Neimand: Neimand, Your Honor. William H. Rehnquist: Neimand. Mr. Neimand. Michael J. Neimand: Mr. Chief Justice, and may it please the Court: The issue before the Court today is whether an anonymous tip that provides a specific location and a specific description of individuals, and one of the individuals is carrying a gun, provides a reasonable suspicion to make a Terry stop and frisk when only the innocent details, that is, the location and the identity of the individuals, are immediately verified. The Florida supreme court held that under such facts that would never provide reasonable suspicion to allow for the stop. The Florida supreme court requires further verification of either future predictive behavior or observation of criminal activity in order for the stop to be effectuated. Sandra Day O'Connor: What's the closest case in this Court, in your view, that you think supports your position? Michael J. Neimand: Well, the closest case that we have is Alabama v. White, where on facts similar to this the Court held that it was a close call, but in fact there was a reasonable suspicion. In that case, it was a drug case, the police officers acted upon a little more than we had here. Some of the predictive activity did not occur, and a small amount of the predictive activity did occur, but that predictive activity was innocent. Sandra Day O'Connor: Well, I thought the court there said that standing alone the tip in the Alabama case would not warrant someone of reasonable caution in the belief that a stop was appropriate, but in this case, there is more than the tip, and it went on to articulate other factors. Michael J. Neimand: Yes, Your Honor, that is the closest case, but also, if you... when we read Alabama v. White, this Court said that that question of the anonymous tip, in and of itself, was left open and would be left to be decided another day. Sandra Day O'Connor: Well, it may have said that elsewhere, but it also said what I read to you, that standing alone, it wouldn't be enough, so to accept your view we would have to move a step beyond Alabama. Michael J. Neimand: I believe so, Your Honor, and I believe under the facts and circumstances in this case, where we're dealing with a dangerous weapon, a firearm, the public/officer safety concerns come into effect. Sandra Day O'Connor: Are you arguing, then, for a firearm exception on the anonymous tip doctrine? Michael J. Neimand: No, not at all, Your Honor. A firearm exception would basically say any time a tip says a firearm, that's all that's needed. What the State is arguing here is that when there is a firearm involved, then that is one of the circumstances that we look at under the totality of the circumstances to determine whether the anonymous tip is valid. Sandra Day O'Connor: Is it even illegal in Florida to carry a concealed firearm, or can people-- Michael J. Neimand: It is a-- Sandra Day O'Connor: --legally have one? Michael J. Neimand: --It's a regulated privilege, not a right in the State of Florida, and that allows for a-- Sandra Day O'Connor: But one does not assume in Florida that in every instance possession of a firearm concealed is unlawful? Michael J. Neimand: --No. William H. Rehnquist: Well, but it's unlawful for a minor, isn't it? Michael J. Neimand: Correct. William H. Rehnquist: And this person was a minor? Michael J. Neimand: Correct, 10 days shy of his 16th birth date. John Paul Stevens: The red brief says that you in effect are arguing for a gun exception to the anonymous tip rule, and it seems to me that the red brief is in essence fair when it characterizes your argument that way, because I think what you're telling us that the nature of the tip, i.e., that there is a gun, somehow makes the tip more reliable. Michael J. Neimand: It... that would depend-- Speaker: And I... that doesn't seem to me logical. Michael J. Neimand: --That would depend-- Speaker: It seems to me there may be good arguments for your position, but it's not because it makes the tip somehow more reliable. Michael J. Neimand: --Your Honor, that would depend upon the circumstances. We-- Stephen G. Breyer: It doesn't make it any more reliable here, does it? I thought... I mean, does it make it more reliable? It certainly doesn't. Michael J. Neimand: --Well, it's a fact that we're looking at reliability that someone who had seen what was going on made a phone call to the police, that they described the individuals, and that information contained a description, a location, and the fact that one of the individuals was carrying a firearm. William H. Rehnquist: But that could be true of a tip that the person was carrying drugs. Your argument here is that it's much more dangerous to society if this person is not picked up, he could do more harm with a gun than he could with a cache of drugs, isn't it? Michael J. Neimand: Correct, Your Honor. Antonin Scalia: And therefore you don't need as much reliability. Isn't that your argument? Michael J. Neimand: Correct. Antonin Scalia: Your argument is not that the tip is more reliable. It's that you don't... we will not insist upon the same degree of reliability when the argument is that the guy has a gun. Maybe even less for an atomic bomb? Speaker: [Laughter] Antonin Scalia: Now, my question is, why do we apply this principle just to stop and frisk? If the principle is a valid one, shouldn't it apply to search and seizure as well, so that we shouldn't really insist upon the same degree of probable cause if it is said that someone has an arsenal in his basement. Michael J. Neimand: Well, I-- Antonin Scalia: Because I mean, the degree of public harm is enormous, or, you know, is making bombs... now, we don't do that for search and seizures. I don't see why there's any more justification for doing it for stop and frisk than there is for doing it for search and seizure. Michael J. Neimand: --Well, in the search and seizure area the State has cited numerous cases where we do look at officer safety in extending searches and frisks. We look at the New York v. Belton, where we have an ability to search the car for weapons after the individual is already in the police car. Antonin Scalia: Well, that's fine, but not to conduct a search on the basis of less probable cause than would normally be necessary. We don't say, if there's a really serious threat to the public involved you don't need the same degree of probable cause. We haven't said that. Michael J. Neimand: Well, the intrusions between probable cause and a reasonable-suspicion Terry frisk are a little bit different. Antonin Scalia: Oh, I understand that. Michael J. Neimand: And that-- Antonin Scalia: But if the principle is valid I don't know why it wouldn't apply to one as to the other. Michael J. Neimand: --Well, because the intrusions are different, and you would need more for a full-scale arrest and search when there's probable cause, because you have to establish probable cause, and probable cause I don't believe is as fluid a situation as reasonable suspicion, because in a reasonable suspicion situation we are in fact looking at a totality of the circumstances. Antonin Scalia: But in all events-- --You're getting back on the notion that I thought we put that to rest and don't have to go over the same ground again. You acknowledge that it has nothing to do with whether the suspicion is reasonable or not. Michael J. Neimand: No, I don't acknowledge that. Antonin Scalia: Well we've-- Michael J. Neimand: If I did, I misspoke, Your Honor. I think that the fact of the matter is that when there is that firearm in that situation, and in a particularly described situation, not in a situation where you would, say, get a tip that there is 100 people on the corner all wearing plaid shirts, and one of those individuals has a firearm. That would be the firearm exception, if the officer then could go and search each and every one of the individuals. Sandra Day O'Connor: --Well, if in this very same case the tip were, there is a man in a plaid shirt who's in possession of a marijuana cigarette standing on the corner. Michael J. Neimand: I do not believe at that point in time the public safety, or the officer's safety would be affected, and therefore we would have to wait to see whether or not there was-- Sandra Day O'Connor: Well, the tip here is, there's a weapon, and the officer is nowhere near it, but you say that that's enough to assume that the officer's safety is in jeopardy? Michael J. Neimand: --Well, the-- Sandra Day O'Connor: He's taking his car to drive over to check it out. Michael J. Neimand: --Well-- Sandra Day O'Connor: He's not there. Michael J. Neimand: --Correct, but once he goes there, what is the officer supposed to do at that point in time, and that's where the-- Sandra Day O'Connor: Well, one would have thought nothing, unless we extend the anonymous tip doctrine to cover it. I mean, I would have though that... our cases would suggest the anonymous tip, with nothing more than somebody in a plaid shirt on a street corner has a concealed weapon, I wouldn't have though that was enough, unless we somehow extend the doctrine. Michael J. Neimand: --Well, in that situation what would be proper police... it might not be what is under the case law, but what would be proper police investigation in that situation, and you would have to give the officer's experience, and the... based upon the neighborhood, the area-- Ruth Bader Ginsburg: Counsel, the officer's experience is that guns are often mixed up with drugs, so the anonymous tip is, three guys standing on a street corner, and one of them in a plaid-like shirt has crack, and the police officer knows from his experience that people who engage in selling crack often have guns, so does it follow, from what you say, the police having an anonymous tip about crack can therefore frisk for a weapon? Michael J. Neimand: --No. In that situation, once again the tip is the knowledge that there are drugs, or the idea that there might be drugs present, and I believe that the requirement there is to wait until there is actual sale or use of the drugs, and then you have the probable cause-- Ruth Bader Ginsburg: But he's not... the officer's concern, in this case she, her concern is not the drugs but the gun. She knows from her experience that those two very often go together, so why, on the same safety rationale for the police officer, once she gets there, couldn't she say, well, the tip was about drugs, but I know from experience that he's probably carrying a gun, so I'm going to, for my safety, frisk him? Michael J. Neimand: --Well, the first thing is that the tip would have come in, and an officer getting a tip of that nature would have surmised that the person had seen the individuals, where they were located, described them, and had seen the gun, and therefore, without the drugs being involved... and the tip would have said the gun, and that's the difference. In the other situation Your Honor gives us, we don't know that there are drugs. We're using the basic surmise of the officer that there could be a gun, but the information that was gotten was the drugs, and that is part of the totality of the circumstances-- William H. Rehnquist: Well, in your public safety argument, as I understand it you're not arguing just for the safety of the policeman, but that more damage can result to some member of the public in a confrontation with somebody with a gun than a confrontation with somebody who has a cache of drugs, isn't that correct? Michael J. Neimand: --Correct, Your Honor. In that situation, that's why we say the officer/public safety, because if the officer does not act, then the individual-- John Paul Stevens: But there's one thing I don't understand. At the very beginning I think you said that it's perfectly all right in Florida, unless you're a juvenile... and I don't know how this officer knew this young person was a juvenile based on the tip, but except for juveniles, is it not lawful for persons in Florida to carry concealed weapons? Michael J. Neimand: --There is a privilege that if they go through the permitting-- John Paul Stevens: But the mere fact that you suspect someone of having a gun doesn't mean he doesn't have that privilege, he doesn't have a permit. Michael J. Neimand: --No, but we can-- John Paul Stevens: I would think that it's more jeopardy if you say they're a drug dealer, because that's definitely illegal, but if you just say he's got a gun, well, you presume that the person obeys the law. Michael J. Neimand: --It's a presumption that they legally got the gun, but not a presumption that they will legally use the gun. William H. Rehnquist: Well, we reached a different result in Adams v. Williams, did we not? Michael J. Neimand: Yes. William H. Rehnquist: Where they said, Connecticut you could carry with a permit-- Michael J. Neimand: Right. William H. Rehnquist: --and we said that a frisk was nonetheless justified. Michael J. Neimand: Uh-huh. Antonin Scalia: Mr. Neimand, I thought a frisk in stop and frisk, a frisk is incidental to the stop. What we said is, when you see somebody behaving suspiciously, what the policeman is authorized to do is to stop the person and make inquiry... Why are you hanging around on this street corner? Where do you come from? Why are you here? What's your name +/? make inquiries like that. Now, in this case, by contrast... and incidental to those inquiries he has to protect himself, so he can pat the person down before making the inquiry. That's how it developed. In this case, by contrast, the whole reason for the policeman going up to this person is to frisk him. What possible question was he going to ask the fellow that would satisfy him that in fact he is not the suspicious character that he had reason to believe? What's he going to ask him? Do you have a gun in your pocket? Is that going to be very helpful? Michael J. Neimand: Well, that's what the Florida supreme court said would be helpful, and you put the officer-- Antonin Scalia: It wouldn't be helpful at all. The whole purpose of his going up is to frisk. Michael J. Neimand: --Correct. Antonin Scalia: And that's quite different from the rationale behind our stop-and-frisk jurisprudence. Michael J. Neimand: Terry normally... Terry holds exactly that. You have to have evidence of criminal activity, and then during that stop, if you are afraid of safety-- Antonin Scalia: During the stop in order-- Michael J. Neimand: --Yes. Antonin Scalia: --to interrogate the person. Michael J. Neimand: Exactly. Antonin Scalia: And I don't see what possible benefit interrogation would have had in this case. Michael J. Neimand: Well, that's what makes it a different situation in terms of the totality of the circumstances. The officer is going to investigate this alleged crime of carrying a concealed firearm, and he goes up and speaks to the individual. There is a distinct possibility that when he says, do you have a gun, the gun will be exhibited and used, and therefore this is different. Therefore, there is a concomitant need to both stop and frisk immediately. It is an unusual circumstance. It is not the rule. Ruth Bader Ginsburg: Mr. Neimand, do you concede... there were three people standing at that street corner, and the officer frisked them all. As to the other two... the anonymous tip related only to the one with the plaid-like shirt. As to the other two, was that wrongful conduct on the part of the police to frisk the other two? Michael J. Neimand: The record was not... if I'm... I'm not sure how clear the record is on the sequence of events. I would say that if those frisks occurred first, they probably were not proper, because they were not the ones who were said to have the gun. I think once they found the gun, I believe it was proper. Ruth Bader Ginsburg: Guilt by association. Michael J. Neimand: Well, public safety exception, Your Honor. I-- Antonin Scalia: It seems to me that's absolutely the wrong answer, that if, indeed... if, indeed he was frisking for the proper purpose, that is, to protect himself, he had just as much reason to frisk the two that were next to this fellow while he was conducting the interrogation, just as when the police stop a car on reasonable suspicion they can frisk not just the driver, but other people in the car, to be sure that they are not endangered. I don't see any reason why he shouldn't frisk all three, unless I believed, as you apparently do, that really what he went there for was not to interrogate, but to frisk. Michael J. Neimand: --Well, no-- Antonin Scalia: And he only had a reason to frisk the person against whom the anonymous tip was made. Michael J. Neimand: --I believe that the reason was to interrogate, but because of the evidence of the criminality, was he carrying a concealed firearm, we are put in a different situation, that to interrogate before you ascertain whether a crime has been committed puts the police officer in harm's way at that time, and if you fail to do the interrogation you place the public safety in harm's way, because you do not know when that individual might take out the gun and start using it. I would like to save the remainder of my time. William H. Rehnquist: Very well, Mr. Neimand. Mr. Gornstein, we'll hear from you. Irving L. Gornstein: Mr. Chief Justice, and may it please the Court: An officer may conduct a stop and frisk when, under the totality of the circumstances, there is reasonable suspicion that a crime is occurring and that the suspect is armed and dangerous. Sandra Day O'Connor: Well, you don't say that was met here, do you, reasonable suspicion? Irving L. Gornstein: Yes. Reasonable suspicion is, under the totality of the circumstances, met in this case. Sandra Day O'Connor: What facts were there, other than the anonymous tip, and someone who, in fact, was on a street corner in a plaid shirt? Irving L. Gornstein: The totality of the circumstances consists of the following four things: the tip, the confirmation of the verifiable details of the tip, the absence of any observations that led the officer to conclude that there was... that his suspicions should not be aroused when he got to the scene, and the fact that this tip concerned a gun that was unlawful for a child to possess, and therefore the level of suspicion that you need in-- Sandra Day O'Connor: Was it readily apparent that it was a juvenile? Irving L. Gornstein: --Well, the-- Sandra Day O'Connor: Would somebody know whether the person were 18 or 17 on appearance? Irving L. Gornstein: --This... the law of Florida is that anyone under 21 cannot carry a gun, and this person was under 16 years of age, so any officer who came to the scene and observed that person would have had reasonable suspicion that that was a child there. John Paul Stevens: Can you tell me about the tips for a moment? Do you have any information that we can consult as to whether or not the great majority of tips in gun cases are correct or incorrect? Our jurisprudence is such that we fear tips because of pranks and people who have vendettas, and the assumption is, is that they are usually unreliable. Can you tell us anything to bear on this? Are tips about guns generally reliable, or not? Irving L. Gornstein: We don't have any empirical evidence on this, and when you're presented with a tip like this, I think what you resort to is a common sense judgment that if there's nothing on the face of the tip that is unreliable, the officer is going to go out to the scene. Once he's at the scene, and he confirms the observable details, and nothing decreases his suspicion, then the alternatives to a stop-and-frisk pose an unreasonable risk of danger to the police and the public. John Paul Stevens: If the police have the name of the... the capacity to check the number from which the call originated, does that make the tip perhaps more reliable? Irving L. Gornstein: It does... it does-- John Paul Stevens: Because it's a crime to violate... to have a false report under 911, so-- Irving L. Gornstein: --It would. It would make the tip more reliable, and that would be a factor in the totality of the circumstances if it could be shown that it was a 911 call that you could record, that you knew where the call came from. Sandra Day O'Connor: --What do we know here? Did the tip say it was a youngster? Irving L. Gornstein: It said, I believe... the testimony is at A-41, and this is the only thing on it, and the officer says, I believe they stated they were young, referring to the tipster. Antonin Scalia: Can I go back to your earlier answer? Why is it... the fact that you have caller ID makes the tip more reliable? Irving L. Gornstein: It's because-- Antonin Scalia: Even though the caller doesn't know that you have caller ID? Irving L. Gornstein: --Well, it would have to be combined with general knowledge that-- Antonin Scalia: Oh. Irving L. Gornstein: --Of... Justice Scalia, of the public, that they could potentially-- Antonin Scalia: And combined with a very stupid caller who tries to be anonymous when he knows that he can't be anonymous-- Irving L. Gornstein: --Well-- Antonin Scalia: --because he's calling from his own phone and you have caller ID. It seems to me that the very mere fact that he remains anonymous and doesn't tell you his name indicates that he believes he can be unknown and doesn't want to be known. Irving L. Gornstein: --Justice Scalia, there are varying degrees of anonymity, but I would accept your basic point that unless the person... it's generally known that caller ID is out there, that it doesn't weigh into the calculus that much. Stephen G. Breyer: Keep everything else the same, and only vary the gun and change it to a book that's copyrighted unlawfully, or drugs, marijuana, or some other thing. Then I take it you'd say there wasn't reasonable suspicion. Irving L. Gornstein: That's correct, because Alabama-- Stephen G. Breyer: All right. Now, how do we get the fact, since it's supposed to be reasonable suspicion, that criminal activity is afoot? How do we say that that changes? That doesn't change. What changes is the degree of reasonable suspicion that will justify the stop, or this frisk. Irving L. Gornstein: --I would say that it would be the degree of suspicion that we call reasonable under the circumstances. Stephen G. Breyer: I thought maybe you could say that, then... but the way the term has been used in the cases, it hasn't been said suspicion that is sufficiently reasonable to justify the search. Rather, it said, reasonable suspicion that criminal activity is afoot. Irving L. Gornstein: Well, I would agree with you that the cases haven't specifically addressed this particular factor, but that's because the issue hasn't been put to the Court. This is the first time the case is... the issue is being put to the Court that the degree of danger weighs into whether it constitutes reasonable suspicion under the circumstances. Antonin Scalia: What about probable cause? Would you adopt a similar sliding scale for probable cause, and if not, why not? Irving L. Gornstein: Justice Scalia, no, and the reason is that probable cause is constitutional text that has a meaning that must be drawn from its history and from its early application, and that kind of sliding scale approach does not apply in a probable cause, but what we are-- Antonin Scalia: And since we made up reasonable suspicion it's totally-- Irving L. Gornstein: --Justice Scalia-- Antonin Scalia: --unconnected to the Constitution, right? Irving L. Gornstein: --No. What it is interpreting is the general reasonableness requirement, and the way the Court formulated that reasonableness requirement in Terry is that you look at what a reasonable and prudent person would consider appropriate under the totality of the circumstances, and a reasonable and prudent person would necessarily take into account the fact that the tip concerns something that poses an immediate danger of violence. If the tip is about somebody at a courthouse with a bomb, or somebody at a school with an automatic weapon, a reasonable and prudent person is going to operate on somewhat less suspicion than otherwise in deciding whether to make a stop and frisk. Sandra Day O'Connor: How about not an automatic weapon, just a weapon at school, anonymous tip? Irving L. Gornstein: Well, it depends on whether the carrying of the weapon is... you would have reasonable suspicion that it was illegal to carry the weapon, and in Florida, if somebody is-- Sandra Day O'Connor: Well, sure. The school has policy. Irving L. Gornstein: --Yes. Sandra Day O'Connor: No weapons in school. Irving L. Gornstein: That's correct. Sandra Day O'Connor: Anonymous tip, weapon. Irving L. Gornstein: Then if you-- Sandra Day O'Connor: Is that enough? Irving L. Gornstein: --If you identify the person with sufficient specificity so that when the officer comes to the scene and confirms the observable details of the tip, and there's nothing else in his observations that decreases his level of suspicion, then the reasonable and prudent course is to stop and frisk, because the alternatives to the stop and frisk are... create real danger to the police and the public. If the police approaches the person, he runs a risk of getting shot. If he waits and see if the gun is pulled out, that person might shoot somebody, and it's that real risk of danger-- John Paul Stevens: But is it therefore critical to your position that they realize this was a young person? Irving L. Gornstein: --It is... well, I would say that it is critical in this case that there be reasonable suspicion that the person does not have a license, and that's furnished in this case by the fact that there's reasonable suspicion that he's under 21 years of age. Ruth Bader Ginsburg: Not in the-- John Paul Stevens: --If he had not been under 21, you would agree that the stop would have been impermissible? Irving L. Gornstein: You would need reasonable suspicion-- John Paul Stevens: Well, no, on the facts of this... say precisely the same facts, except he called him and said, my cousin who is 22 is over there. Irving L. Gornstein: --The-- John Paul Stevens: Could he have made the stop? Irving L. Gornstein: --My only hesitation in saying no, he couldn't Justice Stevens, is there are places like New York City and the District of-- John Paul Stevens: No, we've got... we've got a place in this particular case, a bus stop, three young... three men, 22 years old, one of them wearing a plaid shirt. Irving L. Gornstein: --I would say no, except... and if I could just finish the answer, the difference is that there are some places where there are many guns and very few licenses, and if Florida was such a place, or this particular area were such a place, like the District of Columbia or New York City, where there are an extraordinary number of guns and an extremely limited number of licenses... only, say, private detectives really have them... then there would still be reasonable suspicion. John Paul Stevens: Right. Irving L. Gornstein: Otherwise, no. John Paul Stevens: But I'm still asking about Florida, and you would agree, in Florida he could not have-- Irving L. Gornstein: I don't have... I don't know enough about the facts in Florida. Antonin Scalia: --Mr. Gornstein, isn't the reasonable implication of the tip that he is carrying a gun illegally? Do you call up the cops to tell them that somebody is carrying a gun legally? Surely-- Speaker: [Laughter] Antonin Scalia: Surely, the reasonable implication of the tip is that this person is behaving against the law. Irving L. Gornstein: Justice Scalia, that is a possible inference to draw, but-- Antonin Scalia: Possible. I can't imagine-- Irving L. Gornstein: --Well, because in places where guns are widely carried and legally so, some people may not know about that, and so the tip may just be that the person observed a gun and it was frightening to them, but I take your point that that is one possible reasonable inference that an officer could draw, and based on... if the officer's experience was that this was so, then that would figure into the totally of the circumstances. Ruth Bader Ginsburg: --Mr. Gornstein, there was nothing in this tip to convey that. The officer reported she was told that there were several black males standing at a bus stop, a description given of each one. The male with the gun had a plaid-looking shirt and was a black male. That's... I don't recall other information. Irving L. Gornstein: On A-41, in the middle, I believe they stated they were young, and so the tip alerted the officer to the possibility that this was somebody under 21 years of age, and when the officer got to the scene and saw somebody shy of 16 years old, they certainly had reasonable suspicion that the person was carrying a concealed weapon in violation of Florida law. William H. Rehnquist: Thank you, Mr. Gornstein. Mr. Sepler, we'll hear from you. Harvey J. Sepler: Mr. Chief Justice, may it please the Court: I think the... one of the first questions that was asked is the most critical. This is Alabama v. White, but without the predictive features. The State conceded it, the Solicitor General conceded it. The only justification that I can see in the State's argument for upholding the stop and frisk is that an anonymous tipster alleged the presence of a firearm, but that, of course, doesn't make the tip any more reliable, and it doesn't lower the reasonable suspicion standard. In Terry v. Ohio, this Court said that where there is a reasonable suspicion that the individual is engaged in criminality, the officers can stop, and that where there is a reasonable belief that the individual is armed and presently dangerous... and presently dangerous... then the officer can conduct a frisk. There were three... as I understand it, there were three components to the Terry holding that I think are very, very relevant to this case: first of all, that a pat-down is not a minimal intrusion. Second of all, that the limitation placed on Terry is, where there's a reasonable belief that the threat is of an individual that is armed and presently dangerous. This is to an actual and immediate threat, not a possible or a potential one. And the third is... and this I think is very, very important. I'm not sure it's been touched on adequately to this point... is that before the officer may begin the pat-down, the officer must give the individual an opportunity to dispel any safety concerns. In this case, of course, there was no opportunity given. The officer came up and didn't ask any questions, didn't conduct any type of investigation, just went right to the frisk. William H. Rehnquist: If the petitioner's position is correct, that would follow, would it not, that with a gun in the guy's pocket, as they believed, to ask a bunch of questions is not going to obviate any public safety concern. Harvey J. Sepler: It is correct, Your... Mr. Chief Justice, that if the State's proposal were adopted, yes, at that point the officers would be entitled to move directly to the frisk, and they wouldn't have to do anything else, but of course, that proposal depends, number 1, on the tip being a reliable tip, which, of course, there is no showing here, that also-- Sandra Day O'Connor: Does it matter if the tipster said, these are young people, and under Florida law someone under 21 may not have a weapon? Does that alter the equation here? Harvey J. Sepler: --I don't believe it does, Your Honor, and-- Speaker: Why not? Harvey J. Sepler: --And this is why. If the statute were to say-- Sandra Day O'Connor: It is an additional factor. Harvey J. Sepler: --If the statute, Your Honor, were to say that young people couldn't possess guns, then I think it would make all the difference in the world. Sandra Day O'Connor: Well, does Florida law prohibit people under age 21 from carrying concealed weapons? Harvey J. Sepler: No. Under Florida law, individuals may possess weapons for a limited purpose, but in terms of having a license to carry a concealed firearm, 21 is the limit. However, in this case, of course, there was no tip that said-- Sandra Day O'Connor: Just a minute, so I'm clear. It is... is it lawful or not in Florida for someone under 21 to have a concealed weapon? Harvey J. Sepler: --No, not-- Sandra Day O'Connor: It is not? Harvey J. Sepler: --It is not lawful. In order to have a-- Sandra Day O'Connor: Now... then if the tipster says it is a young person who has a concealed weapon, he's standing on a street corner in a plaid shirt, the officer goes there and says, hmm, plaid shirt, street corner, yep, looks young, that's an additional factor, isn't it? Harvey J. Sepler: --Your Honor, if I may answer you this way. If the officer were to have gone to the street corner, with a tip that said young, and said... and testified to this, and I must tell you, as you have no doubt noticed, that the transcript in this case is very, very small. If the officer would have gone and said, I have a tip of a young individual on a corner, and went there, and the officer had testified, I looked at this individual and he looked less than 21, he looked younger than 21, our position might be different. But of course, that didn't happen. Young is a variable term. I think Webster's Third World Dictionary defines young as more... as... well... I'm sorry, I was-- John Paul Stevens: You don't need to belabor that point to this bench. Harvey J. Sepler: --Okay. [Laughter] Antonin Scalia: Excuse me. Can I ask you an obvious-- --May I say that I don't understand why it would make any difference in the world? All it would show is that if he had a gun it would be unlawful. It would make no difference whatever to the reliability of the tip that he had a gun. It would just go to whether, if he did have it, he had it unlawfully. I don't see how it affects it. Harvey J. Sepler: Well-- Antonin Scalia: The basis of your case is that the tip was not reliable enough, isn't it? Harvey J. Sepler: --I think that's correct. Antonin Scalia: And this doesn't go at all to the reliability of the tip. Harvey J. Sepler: It may go, if I may, to... as I understood the Court's question, it may go to whether there was a reasonable suspicion, independent of the tip, and the tip may have provided a... arguably may have provided a context for what the officer sees at the scene. Stephen G. Breyer: There's no doubt that, I think, in the cases reasonable suspicion has been used to date to refer to reasonable suspicion that crime is afoot, and they have a number of circumstances here that give that suspicion, but they concede that on the ordinary standard I think it wouldn't meet it, as so far. But suppose that it was a bomb at a school. I mean, I'm testing the proposition of whether that word reasonableness varies, at least sometimes, in light just not of the suspicion about whether the person has the bomb, but the very fact that it's a bomb. Harvey J. Sepler: I understand you. Stephen G. Breyer: Yeah. I mean, that's the obvious question, and of course, that's something that disturbs me the most. I just can't believe that if somebody called up, described the person in detail, said he has a bag, and moreover he has thousands of pounds of bomb material in that bag outside the courthouse or the school, I can't believe that the police shouldn't go and find out. But I mean, maybe I'm wrong. Harvey J. Sepler: Well, I agree with Your Honor. One could envision situations that are increasingly more difficult to analyze. Stephen G. Breyer: All right. Well, once you say that, then the question becomes whether a gun is or is not enough like a bomb to warrant the variance. Harvey J. Sepler: Let me see if I can clarify it, Your Honor. In no sense did I concede that a bomb is different. Stephen G. Breyer: Well, what do you think about the bomb? Speaker: I mean, I put it as dramatically as I could-- Harvey J. Sepler: Well-- Stephen G. Breyer: --because I wanted you to see the point of the question. If it's a bomb about... and they call up, you know, big bomb, in a bag, same amount of... in fact, less belief, really, because people don't normally carry bombs in bags, but they say that... you see the point. Clear description of the person. Clear description of the bag. Within 5 minutes they go to the place, and there somebody who meets a detailed description is standing there with precisely the bag. Can the police open the bag? Harvey J. Sepler: --No. The answer's a difficult question, Your Honor, and I would say that in general terms the answer is no, and what I'm suggesting... of course, I understand that these are difficult questions, and-- Sandra Day O'Connor: Well, what if it's in a school, and the school is very nervous about danger to the students, and they get the tip about someone in the school, either with a weapon or a bomb? Harvey J. Sepler: --Let me suggest both questions... I understand that one can conceive of very difficult questions that-- Speaker: What is your answer? Harvey J. Sepler: --Well, my answer, Your Honor-- Speaker: --the answer as well as the question. Harvey J. Sepler: --Yes, thank you, Your Honor. My answer is is that in very limited circumstances, where there is an actual and immediate danger, and where the danger is so extreme that it constitutes an extreme public emergency, in those situations I would suggest that in those situations reasonable suspicion might bend, but those are in a very, very limited and narrow set of circumstances. Antonin Scalia: And the same for probable cause. I mean, suppose they say the bomb is... it's a big bomb, and it's in his locker, it's not on his person, so even if you did a stop-and-frisk you wouldn't discover it, but they say, this guy has an enormous bomb. It's in the school building in his locker. Now, could you go... a stop-and-frisk won't disclose it. Do you have probable cause, on the basis of this anonymous tip, to go and conduct a search and seizure of a locker? Harvey J. Sepler: I believe you do not, and here is why. Here is the analysis at least that seems to be at least most comfortable to me, and I would... in preparing for the bomb question, because it is a very obvious question one might answer. I might say that first of all, if the tip were based... I'm sorry, if the belief of a bomb is based on a tip, my first... the first thing that an officer needs to do is, is this a reliable tip? Does it meet all the other requirements? Sandra Day O'Connor: Our assumption is, it's anonymous. Harvey J. Sepler: All right. Sandra Day O'Connor: If it's-- We don't know if it's reliable. It came out of the blue. It's a phone call. That's the tip. Harvey J. Sepler: --Yes, Your Honor. Sandra Day O'Connor: You don't know anything else. Harvey J. Sepler: Yes, Your Honor. If it is a reliable... if it is not... if it's an anonymous tip, then the next thing that I believe a police officer ought to do is, is there any kind of independent police work that I can do to either corroborate what I've heard in this tip, or find something other than that that's suspicious? If there's not any other corroborating information that I can... I need to make an on-the-spot determination whether this is an actual and immediate threat. There are a lot of bomb tips that come into police stations. Police have... they do need to make distinctions, discriminations as to which tips present an actual and immediate one, versus where is there a potential-- David H. Souter: Well, I think we can follow this-- Sandra Day O'Connor: --How can you know? How can you possibly make that assessment as a police officer when you're in a place like a school or a public building with many people, potentially in great danger? How do you make that assessment? Harvey J. Sepler: --I think under a totality of circumstances approach. It's what's in the tip. If the tip were that there's a bomb here and it's going to go off at some time before 12:00, well, then there's an opportunity to make this investigation. Our case, of course, asks whether there's-- Stephen G. Breyer: All right, but-- --I think what you're doing is, you're saying that a gun is not as serious as a bomb. Harvey J. Sepler: --What I'm suggesting to the Court is that the nature of the offense in general terms ought not to reduce the reasonable suspicion standard. David H. Souter: Okay. Then let's assume that with all the efforts the police may make in the bomb case, or with no efforts because there is no time, the police have nothing more than they have in this case, except instead of a gun, the tip talks about a bomb. Is it lawful for the police to go into the school locker in Justice O'Connor's example? Harvey J. Sepler: In general terms, I would say no, unless the officers make an on-the-spot determination that based on their experience there is an actual and immediate threat. David H. Souter: No, but they don't know that. All they know is the tip. Harvey J. Sepler: Then if there's not... if they cannot make a determination that there's an actual and immediate threat there, then I would answer your question no. David H. Souter: Do you think it would be a proper answer to say, there are times when the police ought to commit trespass and just go in anyway, Fourth Amendment or no Fourth Amendment? Harvey J. Sepler: Again, I think that the answer to that is generally no. If the police have... believe that there's an actual and immediate threat, they may be entitled to do that. That's not the situation here, of course. Here, what we have is, we have individuals who were doing absolutely nothing. Absolutely nothing. The officer testified at the suppression hearing that the... in so many words that the only reason that she stopped these boys were because they were standing next to a bus stop. For all we know, they could have been waiting for a bus. And the argument that's made by the State is not limited to juveniles, and I don't think it would make a difference even if it was limited to juveniles, because we don't have enough here to even suggest that a reasonable officer would have believed these were juveniles. William H. Rehnquist: But if you accept the proposition that there was suspicion that this juvenile was carrying the gun illegally because juveniles aren't allowed to carry concealed weapons in Florida, there is a difference, then, between this case and someone who was, say, 35 years old. Harvey J. Sepler: The only... Mr. Chief Justice, the only difference would be if the officer were to have testified, I looked at this individual, I could tell that this individual was a juvenile, and I could tell that this individual-- William H. Rehnquist: Well-- Harvey J. Sepler: --didn't fit within one of the exceptions for a juvenile. William H. Rehnquist: --Okay. You say the transcript is very sparse, and I agree with you, but here the individual turns out to be under 16, and I think it's a fair inference that a person, a police officer looking at someone under 16, without knowing it, can say this person is under 21. Harvey J. Sepler: With all respect, I would not be as readily to make that inference. We don't know what this respondent looked like. Again, the officer could have easily testified to that, and she didn't, and I don't know... I don't believe that we can fairly read into the record that by looking at this individual she could tell that he was a juvenile. I think we are bound by what we are given, and what we are given is Alabama v. White, with no predictive elements. William H. Rehnquist: Well, it was your suppression hearing, too. I mean, in a sense, you had the burden of proof to show that the evidence should be suppressed, and if you want to cross-examine her and say, did you really think this... make any determination about this person's age, you could have done so. Harvey J. Sepler: Our responsibility, as I understand it, under a motion to suppress is to bring forth the arguments that this was not a lawful stop and frisk. The State at that point had every opportunity to show that it was a lawful one. This is not a mere matter of semantics. I believe that this is a very important case, because-- Stephen G. Breyer: All right. Now, yes, but I'm still disturbed about the bomb and the reason is, you vacillated a little, or... I think between... one, I could saying, well, there's an across-the-board public safety exception from probable cause and the other things. Of course if there's an atomic bomb they're going to look, and they should, so there's an exception, rarely invoked, for public safety of extreme sorts. You take that tack, then you've got to at least say, well, what about guns in schools. If you don't take that tack, and just say you can vary the reasonable suspicion for bombs, then you've got to explain why at least guns in schools is somehow different from a bomb in a school. I mean, and it seems to me you have to do one or the other, or you have to take the absolute position, no, no even a bomb, not even the atomic bomb, et cetera. I don't see how you can avoid taking one of those three positions. Harvey J. Sepler: --And Your Honor, that's why I preface this with, there are hypotheticals that one could come up which make-- Stephen G. Breyer: It's not purely hypothetical. What's disturbing me about the case is, I don't know exactly what to analogize guns to. Should I try to distinguish between guns at a bus stop and guns at a school? Should I try to start distinguishing between guns and bombs in the latter case? How do I deal with it? That's a real problem I'm having, not some hypothetical one. Harvey J. Sepler: --And I believe the answer was in Terry. The answer is, whether there is an actual and immediate threat. Where there's an actual and immediate threat, this Court under Terry and the cases that have relied upon Terry have said that at that point, the officers are authorized to do what they need to do. Sandra Day O'Connor: Well, that may not be enough. We're in a time after we've seen tragedies like at the Columbine High School in Colorado, and if I'm correct, a number of high schools around the country are now putting out guidelines and asking fellow students to please alert the school authorities any time the student thinks there might be someone in the school with a gun, and so I think we're going to see lots of anonymous tips coming along in the setting of public schools and in the aftermath of some real tragedies. Now, what's our analysis supposed to be? Does it bend a little, or does it not? Harvey J. Sepler: No, I do not believe that your analysis changes at all from where it is now. Sandra Day O'Connor: On that same question, we have any number of countless cases of Terry stops where there was a furtive movement, it was a high crime neighborhood and so forth. Anthony M. Kennedy: In a sense, it seems to me a tip from an outside source made to a police dispatcher has somewhat more authenticity than perhaps our earlier cases have indicated. Harvey J. Sepler: I would suggest, Justice Kennedy, that it has even less, and the reason I say that is this. This Court has said in Adams that where there's a tip from a known informant who is subject to State laws for filing false complaints, it adds a degree, a special degree of reliability. This Court has also held that where there is sufficient meaningful corroboration to the tip, that also adds a special... lends a special degree of familiarity. Here, we have none of that. This is an anonymous tipster. There is no way for an individual to trace the tipster, or no way for the police to trace the tipster. There's nothing about the details that were in this tip, other than a bald allegation of the presence of a gun, that would in any way allow for the police officer, or a court reviewing this, to make a determination of a meaningful corroboration. Stephen G. Breyer: Well, that's true, but what do you do about, say, students have guns in schools, you know, and it's quite possible some other kid knows that the gun, and can describe everything in utmost detail, but just doesn't want to get involved, so he phones up, describes it in absolute detail, but doesn't give his name, and then it checks out immediately, but for the name. So I mean, it isn't just an absurd tip. It isn't great reliability, but it isn't terrible. Harvey J. Sepler: In general, Your Honor, I believe that the analysis has been established if the tip is not inherently reliable, it must give enough information to allow for a meaningful corroboration. Now, I would suggest also that-- Anthony M. Kennedy: Is that based on the assumption that most anonymous tips are unfounded? Harvey J. Sepler: --Certainly that is one of the concerns. We-- Anthony M. Kennedy: There's no evidence of that either way. Harvey J. Sepler: --We have cited in our brief one estimate that shows that 90 percent of the tips are unreliable, anonymous tips. Let me suggest to the Court, whether the figure is 90 percent or 80 percent, or 70-- Anthony M. Kennedy: That was anecdotal and quite-- Harvey J. Sepler: --I understand that, Your Honor. Anthony M. Kennedy: --On the other hand, I agree with you. I see nothing on the other side. Harvey J. Sepler: There is nothing on the other... and this is... this is a, I believe, Your Honors, is a very fundamental case, because it's going... it goes to the heart of the relationship between police and citizens in a free society. Ruth Bader Ginsburg: Mr. Sepler, may I ask you in the school setting, I just... this just occurred to me, so tell me if I'm wrong in thinking this way, that there's a custodial kind of relationship between the school and the student, so if there's a tip about a student gun, maybe the principal has some authority which the principal can give to the police that doesn't exist when you have an anonymous tip about somebody standing at a bus stop. Harvey J. Sepler: I believe that's absolutely correct, Your Honor, and that's why I answered Judge... Justice Breyer's question in general. I think that that's absolutely correct. One could envision that if the State's proposal were adopted you're going to have situations, or we are all going to have situations where in a child custody case an embittered spouse seeks to seek an advantage over the other spouse and calls in a tip. Employees who have a grudge against employers are going to call in a tip. You're going to have even... you're going to even have lawyers who get an adverse ruling call in a tip. There is nothing about this tip that distinguishes not only these individuals, but distinguishes the tipster to show that the tipster bears a particular familiarity with the individuals. Generally, as this Court knows, the law is that the tipster has to know something. He's got to know something about the suspect, or about the crime, that would allow the police officer to believe, well, he knows something more. But here what you have is, you have an individual, we don't know... the individual could have been another child. There's nothing to say who this person is, and to adopt a rule that says the bald assertion that somebody's got a gun is going to allow police, unhampered, to stop and frisk anybody, anywhere, at any time, is just too much. We need to hold tipsters accountable. You need to hold police accountable. This is a very important case, Your Honor. Antonin Scalia: Indeed, we distrust policemen enough that we have the exclusionary rule in order to deter them from conducting unreasonable searches and seizures, but I guess it would be pretty neat for the tipster to be another policeman. All you have to do is allege that the person has a gun, and it will permit a search-- Harvey J. Sepler: That's-- Antonin Scalia: --a body search, which may not uncover a gun, but may well uncover marijuana, cocaine, or some other unlawful contraband. Harvey J. Sepler: --That's certainly one of the more troubling implications. Stephen G. Breyer: Why would that be? I mean, they haven't said that. Harvey J. Sepler: I'm not-- Stephen G. Breyer: This is an instance where the tipster calls up, gives... we could imagine... I don't know how much detail you have to have, but they say there's a description. The description we can imagine is in detail. Imagine that it is, you know. The issue is the anonymity, not just calling up and saying somebody has a gun. He has to describe the person in some detail. It has to check out. It's not that there are no checks. It's just, there isn't enough of a check. --It is true that in White this Court held that the same type of details absent a tip would not have been sufficient. Harvey J. Sepler: I think it's absolutely true, I mean, there are certainly problems, and we're not relying on this, but it is an implication of the case. Certainly we've cited to instances in Los Angeles, New York, Detroit, Philadelphia, where police fabrication has now been called into serious question. I'm not suggesting that this is going to happen, but it is also true from a common sense perspective that if this proposal were adopted, tips that now come into police stations and you want immediate action, all you've got to say is, he's got a gun, and the police are going to be right there, and they're going to be authorized to make a stop and make a frisk, on the same basis. And it's rather ironic, Your Honors, that if the same information, if the police officer had have been on the street corner, and seen the respondent looking exactly the way the tipster said he was going to look, and saw him and said, based on my 30 years experience, that person looks like he's up to no good. He looks like he's going to commit a crime, and he looks like he's armed and dangerous, that under this Court's law that officer would not be entitled to move in on that hunch. William H. Rehnquist: But that's the Alabama v. White-- Harvey J. Sepler: That's-- William H. Rehnquist: --that says the other circumstances, other than the anonymous tip were not enough, but coupled with the anonymous tip, it was. Harvey J. Sepler: --In Alabama v. White, as I understand it, the critical factor in making the determination was that there was corroboration of predictive features of the tip, and that absent those predictive features, and absent the corroboration of those predictive features, the tip in Alabama v. White would not have been sufficient. But again, if the officer had a hunch, based on his or her 30 years experience, and seen the very same things that were in... that were named in the tip, the officer would not be entitled to make that stop and frisk. William H. Rehnquist: Yes, but perhaps you missed my point with respect to Alabama. That was exactly the analysis of the Court in Alabama v. White, that without the tip, what the officer did and saw would not be sufficient. With the tip, it was, so the fact that an officer standing on the street corner here could have seen, without the tip, and still couldn't have done anything, really is not any inconsistency at all. It's quite consistent with our doctrine. Harvey J. Sepler: Your Honor, again, as I... and I hope I'm answering your question directly... as I understand White, it was yes, that there was a tip, but it was the corroboration of the predictive features in the tip that made all the difference. If the tip didn't have any predictive features, then even though there was a tip, and even though there was corroboration of details of identification, this Court in White found that to be insufficient. That-- Antonin Scalia: I don't under... do you really understand this predictive features fillip on the doctrine? I mean, suppose the tipsters here had said, there's a fellow in a plaid shirt standing on the corner, and he's going to continue to stand on the corner for 2 more hours, would that be enough? I don't really see-- Harvey J. Sepler: --I don't believe-- Antonin Scalia: --how the predictive feature, unless it's, there's something suspicious in the predictive feature-- Harvey J. Sepler: --I agree, Your Honor-- Antonin Scalia: --I've never understood that about the case. Harvey J. Sepler: --As I understand the predictive features, you predict conduct. As... well, of course, Wardlow didn't have conduct, but if... but it's the conduct that is the most critical. If the person said he's going to... on the street corner and he's going to catch the number 4 bus, well, that would be all the difference. If he's standing there and he's not doing anything, you have no predictive features of anything to corroborate, and absent those predictive features, I think what you have in all seriousness is, you do have a situation where anybody, anywhere, could be stopped for nothing more than casual observation. This Court said in White that in order to allow for meaningful corroboration, there has to be that something more. The tip has to be as to facts or events of things that are not occurring at the time that the tip was made, as to things that are not available by casual observation or rumor or reputation. And then, of course, the Court went on to the meaningful corroboration, and it used the predictive elements to provide that meaningful corroboration. In this sense, everything that was in that tip were things that were occurring at the time that the tip was made, everything in that tip were things that were available by casual observation, by somebody who just saw these guys and didn't like them, just didn't like them. I don't want these gentlemen in my neighborhood so I'm going to call in a tip. There's nothing in the record to show or even suggest that this was a high crime area. There's absolutely nothing to show that these gentlemen made any furtive movements, that they ran from police. The typical situation again is that the police come up and they confront somebody, and if they sweat, if they gave evasive answers, if they make furtive movements, if they run, that's the typical situation where a tip which has only details of identification might be sufficient. In this case, there wasn't any of that, and the State's not even suggesting that there ought to be. What the State is saying is that if there is a bald tip with a naked assertion, that's enough, and we would suggest to the Court that under White and under Adams v. Williams, Illinois v. Gates, the answer to that is no. There has to be a meaningful corroboration. Thank you, Your Honors. William H. Rehnquist: Thank you, Mr. Sepler. Mr. Neimand, you have 4 minutes remaining. Michael J. Neimand: Thank you. The questions concerning the bomb really underscore the duality of the issues in front of the Court. The first issue is that the Florida supreme court said an anonymous tip could never be enough, and clearly, with the bomb situation it would have to be enough. There's too much public safety involved. The second question then becomes, under the facts of this case, were the facts sufficient to allow the stop and frisk under the situation? In this situation, because it was a juvenile... there is a problem in Florida with juveniles and hand guns... the tip was immediately corroborated, these individuals were at the exact location, dressed accordingly, within 6 minutes. Then what were the officers supposed to do under those circumstances? The officer could have waited and put the public safety in jeopardy, or could have gone to investigate. If he investigated he would have put his life in jeopardy by not immediately frisking the individual, and that is why in this case, on the factual situation the State submits that the Florida supreme court was wrong, if, in fact, on the law they were wrong as well. As to the question of the 22-year-old in Florida, because an individual has only a privilege to carry a concealed firearm, there really is no problem with an officer if there is a tip that an individual is carrying a concealed firearm who is 22, or even older, to come up to that individual and ask for the permit. But before you ask for the permit, if you ask somebody for a gun, just because they're legally carrying the gun, that doesn't mean they're going to legally use the gun and therefore, again, even in that situation the public safety, the officer's safety in ascertaining whether or not the individual has a permit to carry that gun would allow the immediate frisk upon the stop, and then the interrogation occurs. And upon the interrogation, do you have a permit, yes, I do, here it is, thank you very much, here's your gun, and the stop as a Terry stop should be as limited because the criminal activity, suspicion of criminal activity was dispelled, and that's the dispelling point of it in this type of situation. William H. Rehnquist: Thank you, Mr. Neimand. The case is submitted.

John Paul Stevens: We will now hear argument in Brown against Payton. Ms. Cortina. Andrea N. Cortina: Justice Stevens, and may it please the Court: In this case, the Ninth Circuit violated AEDPA by reversing the California Supreme Court's decision affirming Payton's 1982 death sentence. The California Supreme Court applied the exact right case, namely Boyde v. California, in the very manner contemplated that... by that decision when assessing Payton's claim that his jury misunderstood the court's instructions and, in particular, factor (k) so as to unconstitutionally preclude consideration of his mitigating evidence. The California Supreme Court's application of Boyde is precisely the type of good faith application of Federal constitutional law to which AEDPA demands deference. It is manifestly not objectively unreasonable, and this can be demonstrated in three aspects of the decision. The first is that the California Supreme Court recognized Boyde's specific holding that factor (k) facially comported with the Eighth Amendment. The second is-- David H. Souter: Well, I thought the holding was that factor (k), standing alone, does... does not raise a... does... does not, standing alone, raise a question of reasonable probability of... of misunderstanding or misapplication of the law. And that's not what they're claiming here. They're claiming here that there was something much more than (k) standing alone. As I understand it, they're claiming that the difference between this and Boyde and why this is not a standalone kind of case is that the prosecutor deliberately argued or argued law that was in fact wrong and... and continued to do so even after the court interrupted the argument and that the court never gave an instruction that corrected the erroneous statements of law that the prosecutor had made. So that's... that's why they're... they're saying this is not a Boyde situation. Andrea N. Cortina: --Your Honor, Boyde has two specific components to its decision, which is, first, what factor (k) means standing alone, and you need to resolve that issue, which California did, in deciding the impact of the prosecutor's misstatements concerning factor (k). So that, first, you start from the premise, as the California Supreme Court did, in following Boyde, that factor (k) facially directed for consideration of Payton's mitigating evidence. David H. Souter: Well, no, no. The... the mitigating evidence that Boyde held could be considered without a... (k) being a bar, was mitigating evidence about the... the character of the individual prior to or at least up to the moment of the crime. So this is... this is different kind of evidence, and I... I mean, this is post-crime evidence. And... and I don't see that... that Boyde's holding is so broad as obviously to cover this at all. It might be a... it would be a... a closer question if it hadn't been for the prosecutor's argument and the judge's failure to correct it. But even... even without those elements, there would be a serious question whether Boyde covered this at all. Andrea N. Cortina: Your Honor, the... respectfully I disagree. I believe that the California Supreme Court correctly and... and reasonably determined that Boyde's holding encompassed Payton's character mitigating... Payton's mitigating character evidence because the holding in Boyde... or the issue directly presented by Boyde was whether factor (k) limited consideration to circumstances related to the crime or allowed for non-crime related mitigating evidence in deciding the appropriate penalty. Ruth Bader Ginsburg: What do we make of the Chief Justice's fear statement, not once but twice, in Boyde? The prosecutor never suggested that background and character evidence could not be considered. So mustn't we take Boyde with that qualification when we have a case where the prosecutor, indeed, suggested that this information could not be taken into consideration as a mitigating factor? Andrea N. Cortina: No, Justice Ginsburg. First, you must assess factor (k) facially and that's what Boyde did. Then the next question is did the prosecutor's misstatements concerning factor (k) mislead the jury to believe that they could no longer consider Payton's mitigating character evidence. And that would be the second component of Boyde which is a general test for assessing the reasonable likelihood a jury misunderstood the instructions in the context of the proceedings. And the particularly relevant and important inquiry in this case is the California Supreme Court's application of Boyde's reasonable likelihood test in the context of the proceedings. Anthony M. Kennedy: Well, do we take... do we take the case on the assumption that the trial court erred in not giving a curative instruction and in saying, well, this is a matter for the attorneys to argue? You... you don't argue about what a statute means. That's a question of law. You don't argue that. You can argue the facts, that it's mitigating or not mitigating or that it's extenuating or not extenuating, which is I think how you can interpret a lot of this. But it... it seems to me that the trial judge does make a mistake when he says, well, well, this is for the... this is for them to argue when the... the point of the objection was that there was a misinterpretation of the instruction. That's a legal point. Andrea N. Cortina: And that is a fact that was expressly considered by the California Supreme Court in appropriately applying Boyde's general test for whether the jury misunderstood the court's instructions and an instruction that facially called for consideration-- Ruth Bader Ginsburg: Not that... that the jury misunderstood the judge's instruction, that there was no instruction. I mean, the... the picture that's given here is the defense attorney says, I can use this to mitigate. The prosecutor says this is not legitimate mitigating evidence, and he said that several times. And the judge said, well, you could both argue it, and the judge never instructed the jury. He left it to the prosecutors to argue the law to the jury and for the jury to make that legal determination. It... it seems to me that that... that is surely an error. Now, you could still say, well, even so, it was harmless. But... but I don't think... can there be any doubt when the judge tells the attorneys, you argue the law to the jury and let the jury decide what the law is? Andrea N. Cortina: --Yes. There... there is a reasonable likelihood that the jury did not take the prosecutor's statements so as to preclude consideration of Payton's mitigating evidence because the prosecutor's statements cannot-- David H. Souter: Well, even... even if... even if that's argument is... is on point, just taking your... your response on its own terms, where do you get a reasonable likelihood? Andrea N. Cortina: --Because the prosecutor's statements cannot be construed in a vacuum. You have to look, as Boyde required and as California did, at the context of the entire proceedings. What we're here... what the jury was doing in Payton was deciding whether Payton should live or die, the sentencing determination. David H. Souter: Yes, but let's get specific. You... you said there isn't a reasonable possibility. Why? Get... get down to facts. Why isn't there a reasonable possibility? Andrea N. Cortina: Why there is not a reasonable likelihood the jury misunderstood? David H. Souter: Yes. The prosecutor stands there and twice says, before the judge interrupts him and after the judge interrupts him... says, you cannot legally consider this evidence. It does not fall within (k), and the judge never corrects it. Why is there not a... a reasonable likelihood of... of jury mistake? Andrea N. Cortina: One, Your Honor, the judge admonished the jury that the prosecutor's statements were that of an advocate, and that-- David H. Souter: No. Precisely, if I recall... and you correct me if I'm wrong, but I thought what the judge said was that the prosecutor's statements were... were not evidence. Of course, they're not evidence. The issue isn't whether they were evidence. They were statements of the law. The judge didn't say anything about whether they were correct or incorrect statements of the law. It seems to me that the judge's response to the objection was totally beside the point. Andrea N. Cortina: --The... nevertheless, the judge's response relegated the prosecutor's statements as to his personal opinion as to that of a... some... as... as... of... of... to argument, which is a statement of an advocate. And the jury, from the time it was empaneled, guilt phase, and through the penalty phase, and at the concluding instructions was repeatedly instructed that they would be getting the instruction on the law from the court. And here-- David H. Souter: And the court didn't give them an instruction on this contested point. Andrea N. Cortina: --I respectfully disagree. David H. Souter: He didn't come out and say, yes, you can consider this under (k). He never said that. Andrea N. Cortina: No, but (k) says you can consider it under (k). David H. Souter: (k) says you can consider evidence that... that goes to the gravity of the crime. I will be candid to say I think you're stretching things about as far as you can stretch, as Boyde held, that... that character evidence pre and up to the time of crime can be considered reasonably under that factor. But certainly evidence of what an individual did after the crime is committed does not naturally fall within (k) at all, and I don't know why any juror would consider it unless a judge came out and said flatly you can. Andrea N. Cortina: Your Honor, the California Supreme Court reasonably applied Boyde's holding, that factor (k) did call for consideration of character evidence, and that's precisely what Payton presented-- Sandra Day O'Connor: Well, what if we conclude that there was an error here? Is there a harmless error argument that you fall back on? Andrea N. Cortina: --Yes, Your Honor, there is a harmless error, but before we even get to harmless error, the fact that you disagree with the ultimate conclusion of the California Supreme Court under AEDPA is not sufficient. John Paul Stevens: May I ask-- Andrea N. Cortina: The California Supreme Court's decision-- John Paul Stevens: --May I ask a question that goes sort of to the beginning? What is your position on whether or not the prosecutor correctly stated the law? Andrea N. Cortina: --The State concedes, and as the California Supreme Court recognized, the prosecutor misstated the law, but the jury would not-- John Paul Stevens: Do you also concede he did so deliberately? Do you concede there was prosecutorial misconduct is what I'm really asking. Andrea N. Cortina: --Absolutely not, Your Honor. The prosecutor did not commit misconduct. The prosecutor made a mistake, and the misconduct analysis, which is similar to what Boyde contemplated when they set forth the general standard for assessing whether a jury would misunderstood... misunderstand an instruction is... is almost the same when... when you're analyzing whether the question is prosecutorial misconduct. Boyde sets forth the test for how to assess a misstatement by the prosecutor, and Boyde said that at the first instance, a statement of the prosecutor is not to be considered as having the same force as instructions from the court. And that principle was recognized by the California Supreme Court and reinforced-- John Paul Stevens: Of course, that... that statement went to whether the jury was apt to accept it, not to the question of whether the prosecutor acted improperly. Andrea N. Cortina: --I'm sorry, Your Honor. The... in this case, the prosecutor made a mistake. I don't think that there's any evidence to support the conclusion that the prosecutor committed misconduct in this case, particularly-- Anthony M. Kennedy: Well, I... I can see that a... a prosecutor could say, you know, this isn't factor (k) evidence, as a way of saying that this evidence is of little weight. He did say at... at one... at one time, you have not heard any legal evidence of mitigation, and... and that... that's the troublesome part. Andrea N. Cortina: --Your Honor, the... the State concedes that the... the prosecutor did make misstatements, but I think that the bulk... as you pointed out, the bulk of the prosecutor's argument went to the weight to be attributed to Payton's mitigating evidence, and actually most of the argument by the prosecutor indicating that Payton's evidence didn't mitigate the seriousness of his rape and murder is... there were arguments that were made by the prosecutor in Boyde and which Boyde found were not objectionable. But again, the important scrutiny is that the California Supreme Court evaluated the prosecutor's statements within the correct analytical framework matrix established by Boyde. They considered all the correct principles, the... the effect of argument of counsel. They considered the instructions, and like Boyde, they found that factor (k) facially directed the consideration-- Ruth Bader Ginsburg: Suppose... suppose I were to take the view that it is a violation of clearly established law for a court to allow a prosecutor repeatedly to misstate the law, misinform the jury about what the law is on a life or death question without correcting that misstatement, without saying to the jury, jury, it's not for the prosecutor to argue what the law is. I tell you what the law. If the judge doesn't do that, then that meets any standard of violating clearly established law about which there should be no doubt that when the prosecutor makes a misstatement on a life or death question, it is the judge's obligation to say, jury, he is wrong. You take your instruction from me and here's my instruction. Suppose that's my view of this case. I don't... Boyde and all these other cases... it just strikes me that that's clearly wrong. What do I do with that? Andrea N. Cortina: --Well, you can find that the court was wrong and not like what you did... what the court did, but the inquiry is whether the jury misunderstood the instructions as a result of the court's conduct. And that requires an analysis of the context of the proceedings, and that is precisely what the California Supreme Court did. They-- Ruth Bader Ginsburg: Well, now you're getting to the question I think that Justice O'Connor raised a few minutes ago about are you urging, yes, this is error, but it was harmless? Andrea N. Cortina: --No, I am not agreeing that this was error at all. I agree that the prosecutor made a misstatement and that the California Supreme Court thoroughly and properly evaluated that statement-- Anthony M. Kennedy: Well, but just on that point, if the prosecutor makes a misstatement, doesn't the trial judge have an obligation to correct it if it's significant? Andrea N. Cortina: --The... in this case-- Anthony M. Kennedy: Or am I wrong? Or am I wrong about that? The judge just kind of watches the ship sail over the waterfall? Andrea N. Cortina: --The... I mean, the... the trial court did correct it. It may not be the sufficient correction in this Court's eye, but the court did give an admonition that relegated the prosecutor's statements to that of the advocate and not to the instructions of the court. Sandra Day O'Connor: Well, what if the prosecutor had said several times to the jury during the course of his arguments that the burden of proof by the State is by a preponderance, not beyond a reasonable doubt? And the judge just says the prosecutor's arguments are just that, they're not the law. I'll instruct you. But he never says anything. Is that okay? Andrea N. Cortina: It's not what we'd optimally want the court to do, but that's not the inquiry that's presented and answered by Boyde. The question is as a result of what happened. Trials are not error-free. We wish that they were, but they're not. The question is how do you respond to when a... when a prosecutor makes a misstatement of law. And Boyde addresses that question. Boyde-- Sandra Day O'Connor: Well, normally we would think the trial judge would correct a misstatement of the law by counsel. We would normally think that, wouldn't we? Andrea N. Cortina: --Yes. Sandra Day O'Connor: And it wasn't clearly done here. I mean, the... the jury was reminded that arguments of counsel are just that. But there was no attempt to correct what appeared to be a misstatement. Andrea N. Cortina: The court's admonition was sufficient. But we're... we... we have to respond to the case that's before you. Ruth Bader Ginsburg: What... what admonition was sufficient? The court said something about evidence and everybody... I mean, there's no question what the prosecutor said isn't evidence. But he didn't tell them he has misstated the law. We're not talking about evidence is not at issue all. Neither side suggests that it is. It's a question is what is the law that governs this controversy, what is the law that the jury must apply to make a life or death decision. Andrea N. Cortina: Right, and what was-- Ruth Bader Ginsburg: And... and you-- Andrea N. Cortina: --Sorry. Ruth Bader Ginsburg: --you said the judge corrected it, and I read this joint appendix. I could not find any correction. Andrea N. Cortina: The court's admonition that the prosecutor's argument was not evidence but argument of counsel relegated the statements of the prosecutor to that of an advocate and did not take the prosecutor's arguments and elevate it in place of the instructions given-- Ruth Bader Ginsburg: Then... then it... then it has another problem with it because then the judge is saying that's an argument. Jury, you've heard arguments on both sides. You decide. But it isn't for the jury to decide what the law is. Andrea N. Cortina: --But the analysis is whether there was a reasonable likelihood the jury misunderstood the court's instructions so as to preclude consideration of Payton's mitigating evidence, and that-- Anthony M. Kennedy: Did the judge instruct the jury that you are to consider all of the evidence which has been received during any part of the trial? Andrea N. Cortina: --Yes, Your Honor, and actually that's one of the inquiries that Boyde required, is that you look at the instruction itself, the other instructions, and that's an inquiry the California Supreme Court did, in fact, conduct. And that is, the jury was presented with... with a instruction that said, you shall consider all the evidence unless otherwise instructed, and nothing out of any of the factors (a) through (k) limited the jury's consideration of Payton's mitigating evidence or precluded... pardon me-- Anthony M. Kennedy: Oh, are you taking the position that as a matter of California procedure, the jury was entitled to consider matters that... matter that was not within (a) through (k)? Andrea N. Cortina: --I think that the instructions encompassed the jury considering something not specifically in (a) through (k) for purposes of mitigating evidence because the instructions say, you shall consider the evidence presented, and that was Payton's evidence-- Anthony M. Kennedy: Have the California courts said that? Andrea N. Cortina: --That? Anthony M. Kennedy: Have the California courts said that (a) through (k) are... is not intended to be exhaustive at the pre-Payton... pardon me. Yes. Have they said that pre-Payton? Andrea N. Cortina: I don't think that that issue has been presented and decided by the California Supreme Court specifically-- Anthony M. Kennedy: I... I thought the case was being argued to us... correct me if I'm wrong... on... on the theory that this was factor (k) evidence. Andrea N. Cortina: --It is our position that it... it does fall within factor (k) evidence, but in deciding whether the... whether Payton's jury was unconstitutionally precluded from considering the evidence, you look to the... all the instructions. And when you consider the direction to consider all... that you shall consider all the evidence and then the concluding instruction-- John Paul Stevens: But Ms. Cortina, the... the red brief... maybe it's not accurate. They say the instruction was all the evidence received during any part of the trial in this case, except as you may hereafter be instructed, and then that followed what... the factor (k) discussion came after that. So would it not have been possible that the jury would have thought except for the following things? Or is there something more that I missed? Andrea N. Cortina: --No. The written instruction followed the arguments of counsels. And what... and so no, there was no instruction after that. John Paul Stevens: So if they misunderstood the factor (k) instruction, they would have thought they could not consider all the evidence. Andrea N. Cortina: There was no reasonable likelihood that they felt that they could not consider Payton's evidence under factor (k), and the California Supreme Court-- John Paul Stevens: Well, if they believed the prosecutor, they would have thought they couldn't. Andrea N. Cortina: --But there... but as analyzed by the California Supreme Court, it is not reasonably likely that the jury would have accepted the prosecutor's first few misstatements. And as I was saying, to do so, the jury would have had to-- John Paul Stevens: But all... all I'm directing my inquiry to is to the significance of the instruction to consider all the evidence. I think it's they could consider all the evidence, except that which may not be admissible, as I now... or may not be relevant as I shall hereafter instruct you. Andrea N. Cortina: --However, nothing in the following instruction says you shall not consider Payton's mitigating evidence. John Paul Stevens: No, but the prosecutor said that if you interpret the last instruction properly, you shall not do so. Andrea N. Cortina: He said that it didn't fall within factor (k). However, the... the jury would... there is no reasonable likelihood and the California Supreme Court was not objectively unreasonable, including... in concluding that the... that the jury would have accepted the prosecutor's first few misstatements and chosen to disregard Payton's mitigating evidence because the jury just sat through eight witnesses testifying to Payton's post-crime remorse and rehabilitation. They sat through that without any misstatements by the prosecutor. So they recognized that they had heard this evidence and that it was relevant and that it was subject to consideration. Then they heard the arguments of counsel concerning the weight to be attributed to Payton's mitigating evidence. And although the prosecutor did make the misstatements, his statements were relegated to that of an advocate. And to conclude that the jury would disregard the repeated instructions to follow the... to take the law from the court and their inevitable, long-held societal beliefs that remorse and rehabilitation are relevant to making an appropriate moral reasoned response in deciding the life or death sentence is not a reasonable conclusion. And we know that the fact... in fact, that the jury did consider Payton's mitigating evidence by virtue of the questions that the juries... the jury asked the court during deliberations. The jury asked whether Payton would be eligible for parole and whether any change in the law could retroactively make him eligible for parole. You only get to a consideration of whether... what the effect is of saving Payton's life, under the California sentencing scheme that was... existed at that time, if you believe that there's mitigation evidence to consider because California, at the time of Payton's sentencing, instructed the jury that if the aggravating circumstances outweigh the mitigating circumstances, you shall impose death. Their... pardon me. David H. Souter: They... they might have thought that the aggravating circumstances were entitled to... to great weight. I mean, we don't know how they evaluated the aggravating circumstances. Andrea N. Cortina: That might be one reasonable conclusion, but the other reasonable conclusion-- David H. Souter: But I mean, that... that is a possible conclusion, and therefore, it doesn't follow from the fact that they raised the question about life without parole that they necessarily had found... that they were necessarily considering the mitigating evidence. Andrea N. Cortina: --It's a reasonable inference to be made from the questions asked, and that's what you're looking at. David H. Souter: It's... it's one possibility. Isn't that all? Andrea N. Cortina: It's one reasonable inference, and that's what's the important inquiry, is that the trial... the California Supreme Court reasonably considered the relevant, pertinent facts and all the applicable law in reaching a decision that Payton's jury was not unconstitutionally precluded from considering his mitigating character evidence. And I think that... that the California Supreme Court's decision demonstrates that it applied Boyde to the letter faithfully and methodically, and that it... it considered all the relevant facts and that its decision under these circumstances is manifestly not objectively unreasonable. And that is the requirement, and that is the inquiry that we're here today to resolve. The... the Ninth Circuit failed to give the appropriate deference to the California Supreme Court's decision in deciding that the penalty should be... Payton's penalty should be reversed. And the Ninth Circuit instead conflated objectively unreasonable with a determination that it personally felt that there was constitutional error and doesn't respect the distinction recognized in AEDPA between a incorrect decision... or a correct decision, incorrect decision, unreasonable decision, and the higher threshold of objectively unreasonable. And unless this Court has any further questions, Justice Stevens, I would like to reserve the remainder of my time. Stephen G. Breyer: How long did the penalty phase take? Andrea N. Cortina: The penalty phase took about a day with eight witnesses. John Paul Stevens: Thank you. Mr. Gits. Dean R. Gits: Thank you, Justice Stevens, and may it please the Court: I'd like to start off, if I may, by addressing some of the points that were brought up just earlier, and I'd like to indicate to this Court that the California Supreme Court has held that factors (a) through (k) are the exclusive considerations that the jury must encompass in deciding whether or not to impose death or life. Anthony M. Kennedy: Has factor (k) been supplemented with a CALJIC instruction since Payton? Dean R. Gits: It has. In 1983, 2 years after Payton's trial, it was supplemented to include all of the mitigating evidence that this Court has indicated the jury is entitled to consider. But what is important-- Anthony M. Kennedy: Excuse me. Do they still call it factor (k) or do they just have a supplemental instruction that follows factor (k)? Dean R. Gits: --It's been a couple of years since I've done a death penalty trial, but I think it's still called factor (k). It's just supplemented and changed that way. The second thing is that this Court has indicated some concern over the jury question that was raised first in... in the State's reply argument. And I need to put the Court, I think, in... in proper context as to what occurred in... in that jury question. The case was given to the jury at 11:55 on the date of... of the determination, and the jury was told to select a foreman. 5 minutes... they went into the deliberations room. 5 minutes later they came out and went to lunch. They didn't commence their deliberations thereafter until 1 o'clock. At 1:10, they came out with a... the question that is now before the Court. And I want to suggest to this Court that it is not reasonable to believe that during that 10-minute span of time the jury considered the... whether or not factor (k) was applied. Anthony M. Kennedy: And what was the question? Dean R. Gits: The question... there were really two questions. One... and I'm paraphrasing... is there any possibility Mr. Payton could be released on parole if we give him life, and the second one is if the law is amended, could that be construed to be retroactively applicable to Mr. Payton. Those were the two questions. Stephen G. Breyer: Those don't sound as if they thought his conversion to Christianity made a difference. Dean R. Gits: I think, Your Honor, what the jury articulated is what this Court has seen on many occasions, the jury's concern about does life without possibility mean life without. Stephen G. Breyer: Yes. Dean R. Gits: They never went beyond that at this point in time. So what I'm suggesting to this Court is that the short span that they had to write that question, which I agree, given enough time, might permit an inference that they did consider factor (k), isn't applicable in this case. Anthony M. Kennedy: Well, an equal inference is they just felt that it was entitled to no weight at all given the horrific nature of this... of this crime. Dean R. Gits: Yes, I agree. And my position isn't that... that the short span of... you know, assists our position. Our position is that this won't assist this Court in arriving at a decision about whether the jury considered it. Anthony M. Kennedy: And you have to show there's a reasonable likelihood that the jury might have come to an opposite conclusion. Dean R. Gits: Yes. And Boyde teaches that the way to do that is to look at the context of the entire case in conjunction with the... the instruction that was given in this case. And I want to start out that I... I agree with the State that the first thing this Court should do is look at the instruction standing alone. And I want to indicate that without reference to the context of the case, the instruction standing alone does not support the inference that Payton's post-crime evidence could be considered. Now, I agree that in the context of the case, the context of the case could change that consideration. For instance, if the court, as this... some member of this Court already indicated, told the jury that factor (k) is to encompass Payton's evidence, or even if the prosecutor may have said to the jury during his argument, ladies and gentlemen, although it might not seem like Payton's evidence could be considered by you under factor (k), in fact it can, then we would be left with a situation very similar to Boyde where there really is no argument among counsel as to whether or not the evidence could be subsumed under (k). And that, in the context of that case, would permit it. Anthony M. Kennedy: Well, on... on that point... and I... I recognize it's... it's not nearly as clean as the hypothetical you present... he did say... this is the prosecutor. The law in its simplicity is that if the aggravating factors outweigh the mitigating factors, the sentence should be death, and so let's just line these up, and then he talks about the... the conversion. So there were other parts of his argument that indicated by one interpretation this is not mitigating under special (k)... under factor (k). But here he does say that you line that up and you weigh one against the other. Dean R. Gits: I... I would respond to that by saying two things. He does say that, but after he says, ladies and gentlemen, I want to address some of... of Payton's evidence. I'm not suggesting and I'm... and I don't believe that it applies under factor (k). But then he went on to discuss that evidence. And I agree he did. I certainly can't say he didn't. But... but the real issue here is what effect likely did that have on the jury, and I... I'm indicating that... that given the preliminary... his preliminary part about it still doesn't apply but I will address it, that is unlikely to give the jury any confidence that that evidence could be considered. So it's not at all a concession that occurred in this case whatsoever. Ruth Bader Ginsburg: Well, why wouldn't the jury conclude... why isn't it the most logical conclusion that, gee, the judge had us sit here through eight witnesses and listen to all that and he didn't exclude any part of it, so of course we must consider it because otherwise we wouldn't have been exposed to all of it? Dean R. Gits: That was a relevant consideration in Boyde and I think a powerful consideration in Boyde and in California v. Brown. Because of the context of this case, it's not relevant here. Once the judge permits both counsel... one counsel to argue one way and the other counsel to argue the other way, the jury is now being relegated as the... the finder of the law. In order to evaluate whether or not they could consider that evidence, they had to look at the evidence that was presented. Anthony M. Kennedy: Well, they... they always have to say whether or not we're going to really weigh this or is it just too tangential, and that's one way of saying, well, this really isn't mitigating. And we know as lawyers that it is mitigating in a sense that is... that is relevant and that it's there for the jury to give it the weight that it chooses. But jurors say, well, you know, this... this just is not important is what they're saying. Dean R. Gits: Well, when the prosecutor says this doesn't fall under (k) and the defense attorney says it does fall under (k), all I'm indicating is that the argument that this would be viewed as a charade no longer has any effect. It is now a preliminary thing that the court... that the jury must look to. Anthony M. Kennedy: Well, it's a shorthand for saying it doesn't fall under (k) because it just is of so little weight. Now, that's I think how the jury might have interpreted it. Dean R. Gits: Yes, Your Honor, they might. But the issue here is whether or not there's a reasonable likelihood that the jury did not consider that, and... and that's-- Stephen G. Breyer: Actually that isn't really the issue. I think... I find that easy. The harder issue is... is whether the... a person who thought about it differently than me, a judge, would have... be objectively unreasonable. At least for me, that's the hard question. The question you're arguing is not hard. Dean R. Gits: --Yes. I don't think I understand Your Honor. Stephen G. Breyer: I mean, I would perhaps have come to a different conclusion than California Supreme Court on that question, but we can overturn them only if they're objectively unreasonable. And that's... that's the hard thing because... for me. Dean R. Gits: Yes. I... there is very... relatively little guidance that we have so far on the AEDPA. I think the... the cases that do have some relevance are both Wiggins v. Smith and Taylor v. Williams. Wiggins v. Smith dealt with the failure of the State court to actually evaluate evidence that occurred in this case. The California Supreme Court opinion on the issue of whether or not the... the court properly conducted itself has one sentence, and the sentence says... and I'm paraphrasing... something to the effect of the fact that the court refused to adorn factor (k) is not in itself a... an error. Well, we all, I think, would... would concur that that's true, but that doesn't address what happened here. It's a complete failure to address an all-encompassing event that happened, something close... and I have to be careful here... something close to structural error where the judge gives over the obligation to decide what the law is to the jury. The California Supreme Court not once ever considered that, and there is no reference to them doing anything other than making that one-- Stephen G. Breyer: Well, no, but I mean, that's... that's really wrong what the judge did. But... but the... that... that's tangential to the question. The question is, is it reasonably likely, if that hadn't occurred, that the jury would have considered the evidence that he was converted? But since it did occur, you know, they... they didn't consider it. Is it reasonably likely they never considered it? That's... that's the question. And then I can imagine, for what reason that Justice Ginsburg said, myself sitting in the California Supreme Court and saying, well, they heard the evidence for 2 days or a day, six witnesses, eight witnesses. They're not technicians, the jury. And... and of course, they considered it. I can imagine that and that's why I'm having... even though I don't agree with it. Dean R. Gits: --Yes. Considered I agree. They certainly considered the evidence, but they also, if they were following their obligation under the law, they considered whether or not they were entitled to give that any weight under factor (k). That was the primary function that was given to them. So certainly they discussed the evidence, but then did they arrive... did they go in that room and arrive at a decision that maybe we can't by law consider this evidence? And I think that's the focal point here and that's the thing this Court doesn't know what happened in that jury room. Sandra Day O'Connor: Except if they heard so much of the evidence, isn't it unlikely that the jury thought they couldn't consider what they heard? Dean R. Gits: The more evidence they hear, the more likely it is I think that human beings are going to consider the evidence. The evidence... the... the penalty evidence took place over a 2-day period of time, but I want to indicate that it took place over two half-day periods of time, and that if you put the time together, I think it comes to around 70 pages, which should be substantially less than a half-day altogether. Now, it encompassed eight witnesses, and there was a lot of evidence brought out about post-crime conduct. But it... it wasn't a massive amount such as there was in Boyde, 400 pages and weeks of testimony. So I think that that's a... a... an important consideration too. The... the Court's concern about whether or not the jury would likely consider that, it seems to me, starts with the... an examination of... of factor (k) itself. And... and I want to indicate that Mr. Payton really didn't start out at the same mark as... as the State did in its case. The language of factor (k) just doesn't on its face appear to permit consideration of that evidence. And... and so, therefore, something had to have happened in the trial, we assert, to change that, to make the ambiguous, at least as applied to Payton, evidence of factor (k) applicable so that the jury would reasonably likely consider it. The events that could have happened during the context of that trial didn't happen. In fact, everything happened against the defendant. He starts off with an instruction that's against him that supports, under any natural reading, the prosecutor's language, and then he's buttressed with a prosecutor that given the plain and natural meaning of the language, is going to have a far more compelling position with the jury about whether or not it could be considered. And the... and the defense attorney's position is really nothing more than an assertion, when he looks at the language itself... an assertion that it was awkwardly worded. Now... now, the defense attorney made reference to if this was the kind of evidence... if I was a juror and I was considering this, I would think this would be important evidence. And the answer to that is of course, it is important evidence, but that's not the question. The question is whether or not it could be considered under (k). He gives... he, the defense attorney, gives his position that... that (k) was meant to be a catchall factor and it was meant to consume and take into effect Payton's evidence, but he had nothing to support that. He had no legal position to support it. He was faced with the plain language of the statute that didn't permit him to do that. Stephen G. Breyer: Doesn't it? I mean, it... it says that... what's... what's the exact language of that statute? I just had it here. It's... it's gravity. It's the-- Dean R. Gits: It is any other circumstance which extenuates the gravity of the crime. Stephen G. Breyer: --Of the crime. You could say it. Yes, his... his later conversion extenuated the gravity of the crime, not the... not the... when I try to think of this person, who is not me, thinking of that, I say, well, plausible. Plausible, not perhaps the best, but plausible, isn't it? Dean R. Gits: Well, as we pointed out in our brief, this Court in... in Skipper... some Justices in... in that decision indicated that... well, in fact, the majority indicated that the post-crime evidence of rehabilitation in prison is, in fact, not anything that relates to culpability. Factor (k), however way you look at it... and I agree that it's sufficiently ambiguous to where, given the right context, the right events happening at trial, a jury would reasonably likely look at it as covering that. But not under this case, though, because there wasn't anything that happened in Payton's trial which permitted a reasonable inference that in fact that evidence should be considered. And as to harmless error, I... as we pointed out in our brief, it... under the California statute, which in effect requires that if the aggravating evidence outweighs the mitigating evidence, the jury shall return a verdict of death, if there's no reasonable likelihood that the jury considered factor (k), then in effect Bill Payton was left without any mitigating evidence to be considered by the jury at all. And that means that the jury had to come back with a verdict of death. Now, that brings this Court, once the Court... if the Court becomes satisfied as to constitutional error, that brings the Court, I think, very closely to... to this case... this Court's case in Penry v. Johnson because there the jury will not have had a vehicle in order to give effect to Payton's mitigating evidence. In Penry v. Johnson, in fact, in discussing at least the Eighth Amendment issue, this Court never really even discussed harmless error. It was reversed without any discussion. Now, I don't want to suggest the Court didn't engage in a harmless error-- Anthony M. Kennedy: I... I see where you're going, and I... I see that there's some parallel. The problem in Penry was that the jury... the jurors had to actually violate their instructions, and you have to escalate your argument a bit before you get to that point. Dean R. Gits: --Yes, I... I agree. It's not exactly identical, but we're very close to... to that point in Penry. Beyond that, the prosecutor did argue vociferously that the jury should... in its determination, should be concerned about whether or not Bill Payton is going to stab the prison guards in the back, in effect, argued dangerousness, which was appropriate. But if the jury... he also argued that the jury couldn't consider evidence which plainly pointed to his lack of dangerousness, his good adjustment in prison, his conversion to Christianity. So, in effect, the prosecutor was able to argue its side and... and the jury wasn't able, when you get to the harmless error analysis, to argue its side. And that's what makes this, it seems to me, a very strong showing that... that harmless error... that the error in this case is not harmless. It had a clearly important effect. Stephen G. Breyer: Is it relevant at all? This happened 24 years ago. We're sitting here trying to think of what a jury would have been thinking in a state of the law that's a quarter of a century old and facts... I don't know what to think. I guess that's just irrelevant? Dean R. Gits: Well, it's certainly relevant to Bill Payton, and... and I don't demean the position of the Court. It's not relevant in terms of its impact as to future cases. There are some cases left that are still dealing... out there, dealing with factor (k). The best of our knowledge, we've... we've done a search and we believe there is about 70 cases dealing with the old, unadorned factor (k), but of those 70 cases, none of them from... and we haven't reviewed all of them, but of the ones we've reviewed, none of them deal both with Payton's pure post-crime evidence, coupled with the prosecutor's unrelenting position to the government that they cannot consider that evidence. Stephen G. Breyer: So all this was at a time before Penry was decided. Dean R. Gits: It is the time before Penry v. Johnson was decided. Stephen G. Breyer: Yes. Dean R. Gits: It is not the time before Penry v. Lynaugh was decided. And when I say-- Stephen G. Breyer: Which is the Texas... the Texas... you know, the ones-- Dean R. Gits: --Both are the Texas case. Both deal with Mr. Penry. Stephen G. Breyer: --Yes, one and two. Dean R. Gits: Yes. Sandra Day O'Connor: Is that-- Dean R. Gits: Yes. And when I say it was not before that, I'm talking about on the date of the California Supreme Court's decision. At the time of the jury determination, this Court only had... or that court only had Lockett to make a determination as to whether the evidence could be... could be considered. And the court made the decision that he thought the... it could be considered, but then refused to make any adjustments once it became clear that both counsel were going to argue their respective positions on the law. The... the Court earlier talked about other instructions as impacting upon the... the context of the case, and those were important considerations in Boyde, especially the observation that the jury was to consider any other evidence presented at either time in the trial. But in the context of this case, Your Honor, it means nothing. As I've indicated, the jury was required to ignore any evidence it heard at either phase of the trial unless it fit within factors (a) through (k). If it didn't fit within there, even though they heard that evidence, they were instructed to ignore it. Beyond that, they were also instructed that the... that they were to consider the arguments of counsel. Now, being that there was no clear instruction to the jury that they had to consider factor (k) as being relevant evidence, the jury then likely put greater weight on counsel's argument, and that's why it becomes important. So the other instructions, when you put them all together, rather than putting in proper context what did occur in this case, in effect make it even harder for Bill Payton's position that the jury should consider factor (k) to be relevant. Ruth Bader Ginsburg: The... the prosecutor, at the very end of his closing to the jury, did seem, even if grudgingly with it, to recognize that... that this evidence was mitigating. I'm looking at page 76 of the joint appendix at the top of the page. He makes the statement, the law is simple. It says aggravating factors outweigh mitigating, and then how do those factors line up? Well, the facts of the case showing the violence, et cetera... that's on the aggravating side. And then against that, defendant really has nothing except newborn Christianity and the fact that he's 28 years old. So that... in that final word to the jury, the prosecutor seems to be saying, yes, they have mitigating factors, but they're insubstantial, 28 years old and the claim that he's a newborn Christian. Dean R. Gits: It'll be up to this Court to make a determination as to where the prosecutor was going and whether or not this constitutes a concession that... that the jury could consider the evidence. I... our position is that viewed as a whole, he did not go to that. Certainly he permitted the jury, and he did address the issue of if the jury does consider that. He premised it by saying, I don't think this is relevant, but if... and I'm paraphrasing here. But if you think it's relevant, it's still not entitled to weight. If the issue before this Court is whether or not there's a reasonable likelihood that the jury considered that evidence, then given the context of that statement, I don't think the jury can hardly be satisfied that the prosecutor in fact gave in and agreed that Payton's evidence-- Stephen G. Breyer: Do... do we have a transcript of that hearing here? Dean R. Gits: --Of what hearing, Your Honor? Stephen G. Breyer: Well, the penalty phase. I mean-- Dean R. Gits: Yes. Stephen G. Breyer: --one way... if I'm having trouble, I'll just read it. Dean R. Gits: It is in the... in the joint appendix, the entire-- Stephen G. Breyer: The whole thing. Dean R. Gits: --Yes, the entire penalty evidence and all argument and the instructions is in there. And that's... unless the Court has any additional questions, I have nothing further. Thank you. John Paul Stevens: Thank you, Mr. Gits. Ms. Cortina, you have a little over 5 minutes left. Andrea N. Cortina: Justice Stevens, the real inquiry is whether the California Supreme Court's decision was objectively unreasonable. It is not whether there was a reasonable likelihood. And Payton, like the Ninth Circuit... Payton's counsel-- Anthony M. Kennedy: Could you help me on that? I thought it was two steps. I thought the question is whether there's a reasonable likelihood that the jury was misled, and then you have to ask whether it was unreasonable for the State supreme court to conclude that there was that reasonable likelihood. Or correct me if I'm wrong. Andrea N. Cortina: --That is one way of approaching the case, but I think under AEDPA, what you'd look at, which would be the more appropriate way, is how the California Supreme Court analyzed the claim and not first conduct a de novo review about whether there was a reasonable likelihood. I don't think that in the end that there's much difference-- Anthony M. Kennedy: But you can't overturn it on habeas unless there's a reasonable likelihood. Andrea N. Cortina: --Right. That would be... right. You would have to find that the... you would have to find an error and one that was objectively... and then the California Supreme Court objectively unreasonable in not finding the error. This is true. So obviously the reasonable likelihood test is a... is a relevant inquiry, but it is not the inquiry. And I think that... that that's what Payton's argument demonstrates and the Ninth Circuit's analysis demonstrates, is that they are effectively equating a decision that the California Supreme Court's conclusion was incorrect with their personal... in their subjective opinion with a... with the standard that the decision must be objectively unreasonable. And in this case, the California Supreme Court's decision was manifesting not objectively unreasonable. We know... we... we know that objectively unreasonable doesn't have a clear definition. We do have an example of what is objectively unreasonable, and that was cited in Payton's brief and that is a failure to consider particular facts or relevant law. And we know that that didn't occur in this case. The very argument and facts that Payton insists were not considered by the California Supreme Court in applying Boyde... it's not in the majority opinion... are found within Justice Kennard's dissent. So we have no question that the California Supreme Court identified the correct case and the correct principles within the case and considered all the necessary facts. And that should make this decision subject to deference under AEDPA. This Court last term provided additional guidance on how to assess the range of reasonable judgment through the lens of AEDPA in Yarborough v. Alvarado. And one of the things that the Ninth Circuit and Payton's analysis keeps overlooking is the... Boyde's specific holding concerning factor (k). And when you analyze the... the range of reasonable judgment of the California Supreme Court concerning factor (k), the specific rule of factor (k), the... the range of reasonable judgment was less. The California Supreme Court had little to no leeway to conclude otherwise. Boyde's holding is broad. Boyde held that factor (k) was a broad, catchall mitigation instruction that allowed for any other circumstance that counseled a sentence less than death and specifically found that background and character fell within the ambit of factor (k). And no decision of this Court or the California Supreme Court in analyzing character has ever drawn a distinction between post-crime and pre-crime character evidence-- Stephen G. Breyer: There's a footnote in Boyde that seems to draw that distinction. Andrea N. Cortina: --The footnote in Boyde actually supports more California's position that factor (k) encompasses any other circumstance that would counsel a sentence less than death as opposed to the Ninth Circuit and Payton's interpretation that factor (k) is limited to the crime. In both the first part of footnote 5, the... the... Chief Justice Rehnquist rejects the dissent's argument that the gravity of the crime focused the consideration to the circumstances of the crime. Rather, it allowed the jury to assess the seriousness of what the defendant has done in light of what's the appropriate punishment, and that involves a consideration of the defendant's background and character. And then the last part of footnote 5 expressly recognizes that factor (k) allows for consideration of good character evidence, and good character evidence is only relevant to a decision about whether the person should live or die, not to circumstances related to the crime. And good character evidence under Payton and the Ninth Circuit's interpretation of factor (k) would not and could not, whether it existed pre or post-crime, fall under the meaning of factor (k). So the footnote 5 actually bolsters the ultimate broad interpretation that the California Supreme Court adopted when it applied Boyde... Boyde's specific holding concerning factor (k) to the analysis of Payton's claim. And although they did, in footnote 5, distinguish the fact that it did not involve post-crime evidence in mitigation, it didn't decide the question. It was simply noting a fact that distinguished the case from Skipper. And... and AEDPA requires that we follow the holdings of the Court and not dicta. So when we start-- John Paul Stevens: Thank you, Ms.... go ahead and make one more sentence. Andrea N. Cortina: --The California Supreme Court's decision was a reasonable application of Boyde and the Ninth Circuit's reversal of it is... and this Court should-- John Paul Stevens: I think we understand you. Andrea N. Cortina: --Exactly. Thank you. [Laughter] John Paul Stevens: Thank you. The case is submitted. Speaker: The honorable court is now adjourned until Monday next at ten o'clock.

Warren E. Burger: We will hear arguments next in Seattle Times v. Rhinehart. Mr. Schwab, you may proceed whenever you are ready. Evan L. Schwab: Thank you. Mr. Chief Justice, and may it please the Court: This is an action for defamation and invasion of privacy. The trial court, the Superior Court of King County, entered a protective order which bars the defendant newspapers and reporters from publishing certain types of information acquired during discovery. The Washington Supreme-- Warren E. Burger: Where were these papers filed at the time they were sought, Mr. Schwab? Evan L. Schwab: --Most of the discovery had not been completed at that point. Some of the discovery-- Warren E. Burger: Well, was it on file or not? Evan L. Schwab: --Yes. The discovery we had received to that point had been filed. Rhinehart, Mr. Rhinehart had furnished his income tax returns, and they had been filed with the public file in the King County Clerk's Office. The Washington Supreme Court upheld the order, and we are asking this Court to reverse and remand because the order violates our clients' First Amendment rights of free expression. The practical effect of the order below, we submit, is to enjoin-- Byron R. White: Well, how about the rest of the answer to the Chief Justice's question? Evan L. Schwab: --I'm sorry. Byron R. White: The only things that you sought had been already been filed in the public record? Evan L. Schwab: Oh, I'm sorry, sir. The information we had received at that point had been filed. The protective order came up in connection with our motions to compel further discovery, and after long motions over their efforts to resist discovery and our efforts to get discovery, the trial court entered a broad order compelling significant discovery and at the same time entered the protective order in question. We have not received that discovery because the trial court order provided that they did not have to comply with it until judicial review concerning the protective order was finished. So at this point in time we don't have most of it. Warren E. Burger: Well, I'm afraid my question wasn't really clear enough. Ordinarily, the returns on pretrial proceedings, discoveries, interrogatories, are not on file in the clerk's office. They remain in the custody of the lawyers until they are offered in evidence. Now, were these things that you were seeking in the possession of the clerk or still in the possession of the lawyers? Evan L. Schwab: Some of what we were seeking was in the possession of the clerk. Most of what we were seeking hadn't been turned over yet and is still with the Respondents. William H. Rehnquist: So that... so far as that stuff is concerned, your right of access to it really depends on the court order, doesn't it? Evan L. Schwab: On this court order, that's right, sir. Byron R. White: On the-- Evan L. Schwab: The court below reserved its final judgment on discovery until we completed this. William H. Rehnquist: --Well, but your original right of access to it under the discovery rules depended on the decision of the Superior Court in Washington to grant your discovery. Evan L. Schwab: Yes, it did. And it granted our motion, and it ordered the discovery, and that discovery was deemed relevant by the State Supreme Court. Both orders went to the State Supreme Court, and it affirmed the order compelling discovery and ruled that the material we sought was relevant to their claim in our defenses. William H. Rehnquist: Well, in a sense, the order that conditions your access to the discovery is of the same parcel with the order that granted you discovery, isn't it? Evan L. Schwab: I think that's right, yes. Sandra Day O'Connor: If the court had denied you discovery altogether in this order and just said no, you can't have it, would you be here with this argument? Evan L. Schwab: I think the argument would be quite different. We would be arguing that we should have the discovery, that we needed to defend ourselves. We-- Sandra Day O'Connor: But no First Amendment right to discovery. Evan L. Schwab: --Well, I think that in the context of a defamation action, Your Honor, in which we are being sued on allegations that we have defamed the Respondents, there may be some constitutional overtones to discovery. This Court has erected certain tests for the defense of these actions in cases like New York Times and Gertz, and in order to defend ourselves, we would need that discovery. That might get closer to the Herbert v. Landau kind of-- Byron R. White: Well, could we take just a little... let's take a specific example. Suppose that you had noticed a deposition, and you wanted it, and the deposition was taken, or the other side had. Now, do you say that even if the deposition was never filed, never used at court, that you would have the right to publish it? Evan L. Schwab: --The question involves two elements. In a pretrial setting, if we had taken the deposition, yes, we do assert that we have a constitutional right to publish the contents of that deposition. Now, in the-- Byron R. White: Even if it is just in the possession of the lawyers and both lawyers say it is none of your business? Evan L. Schwab: --Yes, sir. Byron R. White: And I would think... that position, I take it, that isn't dependent upon your being a defendant in the libel suit. Evan L. Schwab: Oh, access might be dependent. There are access cases going on around the country right now in which the media is seeking access. Byron R. White: What if you weren't a party to this case and it was just any civil case in which a deposition had been taken and the results were in the possession of the lawyers? I thought your argument was that the press has the right to have access to those depositions? Evan L. Schwab: No, sir, I don't argue that. Byron R. White: But it is... but you certainly would say that if a deposition was filed in court, that you had the right of access to it. Evan L. Schwab: Well, the access questions are different. I think I would argue that the right of access might depend on whether or not the deposition was used on a motion or a trial by the court, and that's how the access cases around the country are going. And similarly with interrogatories? Frequently they are filed as public records in most courts. The answers are filed and placed in the clerk's office, and of course, then they are open to the public and can be published. Byron R. White: Yes, yes. Evan L. Schwab: In our state that's the practice. Byron R. White: Yes. Evan L. Schwab: Now, normally, documents aren't filed with the clerk. This case was unique because the Respondents not only gave us the tax returns but immediately filed them with the clerk's office. Subsequently, that order was sealed. The court entered an order sealing the clerk's file in the Superior Court, but the Respondents did not seek an order to seal it in the State Supreme Court or here, and those tax returns are now public records with the clerk of this court. Warren E. Burger: Let me see if I have got this... the picture is a little confused because your client is a litigant and is also seeking some information not as a litigant but as a representative of the media. Evan L. Schwab: Oh, we are seeking it as a litigant, sir. Warren E. Burger: What about two private parties who have a lawsuit and they are taking depositions pretrial and they are having interrogatories, and none of them are filed; they remain in the possession of the lawyers? Are you suggesting that those are part of the public record until and unless they are offered in evidence? Evan L. Schwab: I would... again, I would like to say the access question, but we are not seeking this under rights of access but rather as a litigant, but I think the access questions are different, and I think that the depositions that are in the files of the lawyers that have never been submitted to a court in connection with a summary judgment motion or any other kind of dispositive motion would probably be treated differently. And that's how the lower courts are coming out. Byron R. White: Well, that's what you answered to me before, isn't it? Evan L. Schwab: I believe so. But we are seeking this material as a litigant, to defend ourselves, not-- William H. Rehnquist: Well, Mr. Schwab, in both your answers to the Chief Justice's question and to Justice Blackmun, you refer to access cases and then intimate this is not an access case. Evan L. Schwab: --Correct. William H. Rehnquist: How do you define an access case? Evan L. Schwab: The access cases are the cases in which the press as a nonlitigant is seeking access to the discovered information, and that is not this case. I think different tests may well apply, and that has not been dealt with by this Court in the context of civil discovery and civil proceedings. But we do think it is a different case. Byron R. White: And of course, I suppose if you were just... if the press were just a litigant in a tax case in which there were depositions, you wouldn't be making the same arguments that you are making here. I suppose the reason you are making these arguments is that you are a defendant in a libel suit. Evan L. Schwab: We think the argument receives... is worthy of additional weight in a libel suit, but there would also be situations in other kinds of litigation. Byron R. White: You would not, what... in a tax case you have a First Amendment right to access? Evan L. Schwab: Well, not to access, sir. If we have obtained it through discovery... if we are a litigant in a tax case and we put out interrogatories-- Byron R. White: You have First Amendment right to publish it. Evan L. Schwab: --To publish. We are arguing that once we receive the information, the First Amendment affects our right to publish that information. William J. Brennan, Jr.: Well, Mr. Schwab, you are not making that argument as a litigant. Evan L. Schwab: Yes, sir, we are. William J. Brennan, Jr.: Your right to publish, you are making that argument as a litigant? Evan L. Schwab: We are arguing... yes, we are arguing that as a litigant we have First Amendment rights in the judicial process and First Amendment rights in-- William J. Brennan, Jr.: Well, you mean as a news media litigant? Suppose you were not? Evan L. Schwab: --The same argument would be made. William J. Brennan, Jr.: It would? Evan L. Schwab: Although I think the argument has greater force for members of the media and for public interest advocates such as consumer groups, the NAACP, the ACLU and organizations like that. Byron R. White: You have no cases to support you on that from around here, giving the press superior rights to another litigant, do you? Evan L. Schwab: Well, I'm not asking for superior rights. I think there are a broad category of litigants who have First Amendment interests at stake in litigation. William J. Brennan, Jr.: Well, how does publication further your interests as a litigant? Evan L. Schwab: There are several ways publication can further our interest. We are being accused of writing false stories. If we obtain information through discovery that corroborates our stories, we have an interest in bringing that to the public's attention. A, it improves public-- Warren E. Burger: Before the trial has been held? Evan L. Schwab: --Before the trial has been held, sir, and that's what we're asking. Warren E. Burger: Well, then you are asserting right as media, not as a litigant. Evan L. Schwab: But I think the same right would exist in a nonmedia defendant. If, for example, a consumer group is suing over a polluted stream, chemical wastes, toxic wastes and so on, and they learn through discovery that their claims are true, that that stream is polluted, I think they have the same First Amendment interest in being free from a judicial order that prevents them from publicizing what they have learned. William J. Brennan, Jr.: Publish in what, in their journal? Evan L. Schwab: I'm sorry, sir? William J. Brennan, Jr.: To publish it where, in their journal? Evan L. Schwab: Well, I don't think where is as much the test as whether they have a right to disseminate it. The trial court order in this case gags us from either disseminating it ourselves or giving it to other media or using it in any other way. We are gagged. We are told that once we get this information, we cannot use it for any purposes other than preparation for trial. Warren E. Burger: You can use it as a litigant, of course, can't you? Evan L. Schwab: Yes, that's the only... the only way we can use it. Warren E. Burger: And you are, I repeat, asking for a special right because your client happens to be a newspaper. Evan L. Schwab: We are asking for a right on behalf of anyone who has First Amendment interests at stake in a litigation, and that would apply equally to, and particularly, the public interest advocates. William H. Rehnquist: Well, how can you tell whether someone has First Amendment rights at stake in the litigation? Evan L. Schwab: I think on a case-by-case basis, depending upon the function of the litigation. I am just arguing that they have a stronger right, but the argument I am making would apply equally to all members. Byron R. White: I thought you just were arguing that any litigant, when he gets discovery, has a First Amendment interest in being able to publish the results of the discovery. Evan L. Schwab: Exactly. That's our argument. Byron R. White: And just anybody in any kind of a case. But that isn't the same argument you made two minutes ago. In any kind of a case. Evan L. Schwab: Well, I'm trying to say that the public interest litigants might have a stronger argument, Your Honor, but basically I am arguing that any litigant has a protected First Amendment interest in being able to disseminate or use for any purpose-- Byron R. White: In any kind of a case, whether it is libel or tax or science or environmental or whatever? Evan L. Schwab: --I think lines can be drawn. We advocate-- William J. Brennan, Jr.: Well, does a defamation litigant have a greater First Amendment right than any other kind? Evan L. Schwab: --Well, it's hard to say people have a greater First Amendment right. I think they all have First Amendment interests. We are suggesting a balancing test in our brief-- William J. Brennan, Jr.: Well, this is independently, then, of this being a defamation suit in your argument for a First Amendment right to publish. Evan L. Schwab: --I'm arguing, yes, whenever a trial court presumes to freeze discussion, I'm arguing that the court should be required to weigh the First Amendment interests at stake, much like you did in Nebraska Press v. Stuart, that the First Amendment considerations are entitled to a place on the scale. Now, sometimes they may not carry the balance, but at least they should be taken into account, and the trial court and the Supreme Court didn't do this. This is the thrust of our argument. They gave our First Amendment rights virtually-- Byron R. White: And yet you are talking only about a litigant's right, and you are not talking about a litigant's right who just happens to be the defendant in a libel suit, or you are not talking about a litigant's right just because he's a member of the press. Evan L. Schwab: --That's right, Your Honor. Warren E. Burger: Then it would be your view, if you postulate this hypothetical question, proposition, an individual sues a bank, his own banker for any reason you can conceive of. They take a lot of pretrial discovery by way of testimony an interrogatories, and each lawyer for each side keeps them in his own office, none of them are filed. Do you say that there is some First Amendment right of someone to publish that information before it is ever offered in evidence? Evan L. Schwab: I'm saying the litigants themselves are protected by the First Amendment. If they choose to make it available to the press-- Warren E. Burger: Well, then, could one of the litigants take a page ad, let's say, in the Seattle Times, and... or two pages, even better, and publish all these pretrial depositions over the objection of the other party? Evan L. Schwab: --Yes, Your Honor, that's exactly our argument, and that's happening around the country right now. I am involved in a case like that on the west coast in which the other side did, as soon as the depositions were taken, give them to the press. Thurgood Marshall: Do we have to go that far? Evan L. Schwab: No, Your Honor, you don't. I'm not arguing for an absolute rule. I am arguing instead for a balancing test which balances the First Amendment considerations. There will be cases in which an order like the one below can be sustained under constitutional analysis. Trademark cases might be a good example, other instances of commercial inclination. There was a recent decision from the D. C. Circuit in the Tavoulareas case in which the court turned down the Washington Post's request to publish thousands of pages of depositions and documents after the trial was over. Mobil was the party that had obtained the protective order, and they were a nonlitigant. They had been forced to turn over a tremendous amount of discovery for that libel action between their president and the Washington Post. After the trial was... and they had done so under a protective order. After the trial was over, the Post sought to unseal all that material. At this points you are dealing with a nonlitigant and a tremendous mass of material that was not relevant to the issues in the case. It was never offered and used in the Tavoulareas court, and the D. C. Circuit said that that material could not be published. I think that is a different case than the one we had here-- John Paul Stevens: What difference does it make that it was not relevant? What difference does it make that it was not relevant to the issues if it is material that the public is interested in? If relevance to the issues is the determining factor, then you might as well just wait until the case is tried. Evan L. Schwab: --I think that is a factor, Your Honor. Interest to the public is another factor. The First Amendment interest of the one who wants to publish it is a factor. And we are only arguing again for something that weighs all of these various considerations. I was using that as an example. John Paul Stevens: Would you say that a lawyer who is a free-lance writer on the side would have the same First Amendment right? Evan L. Schwab: I think in many cases he would. John Paul Stevens: He would? Evan L. Schwab: I think the First Amendment applies equally, and one of the cornerstones of our jurisprudence has been that the First Amendment rights should not be restrained in advance. We... the courts and your decisions have leaned more towards subsequent punishment. In this case it is more akin to a prior restraint. William H. Rehnquist: Well, I don't see how you can argue that, Mr. Schwab, because the Superior Court should have... could have said no, we are not going to give you any discovery in this case. We follow this rule that when you get into very private subjects, we just don't allow discovery. Why can't the Superior Court equally well say that we will allow discovery here, but as a condition to this access that we are granting you to this information, you are not to publish it? I don't see how you could call that a prior restraint. Evan L. Schwab: We submit, Your Honor-- William H. Rehnquist: When the access that you get is made conditional in the very granting of the access. Evan L. Schwab: --That's correct, and that was part of the reasoning that the D.C. Court went through in Tavoulareas. We submit that that is not sound First Amendment analysis because there are a long line of cases which say that the government cannot both confer a benefit when it is conditioned upon giving up constitutional rights. Sandra Day O'Connor: Well, how about the Snepp case? Evan L. Schwab: Well, I think Snepp is distinguishable. Snepp involved a government employee and matters of national security, and I think the government as an employer has a much different interest in the fiduciary responsibilities of its employees than a judge has in the behavior of litigants before it. The Seattle Times in this case is an involuntary litigant. It has been dragged into a case against its will, and we submit, by a plaintiff who uses defamation suits to stifle discussion of his affairs, and by getting this order, he in essence has gagged us and enjoined a libel. I think that is quite different than the power of government to impose reasonable restrictions on its employees. Now, Snepp had signed a contract that he would submit-- Warren E. Burger: Suppose you have two lawyers in some heavy litigation of the kind we are talking about who are dismayed at the prospect of the excessive cost of pretrial discovery and interrogatories, and they agree informally that plaintiff's lawyer will submit a series of informal questions by letter to the defendant's lawyer, and they will reciprocate, and these will be answered informally, and yet with a stipulation both ways that to the extent relevant to the case, if it ever goes to trial, these may be used in evidence as admissions. Now, this is all in the lawyers' offices. You say someone has a First Amendment right to publish that? Evan L. Schwab: --The First... yes, Your Honor, I think so. Warren E. Burger: Who would have that right? Evan L. Schwab: Either, either side. In the absence of a protective order-- Warren E. Burger: Either side. Evan L. Schwab: --Either one of them would have a right-- Warren E. Burger: Now, what about, what about demand of the local newspaper to get at those things? Evan L. Schwab: --I think they would have a right to say we don't want to give it to you, and then if the newspaper sought a court order, we would be under the different line of reasoning of the access cases. Warren E. Burger: But either litigant could take a coupe of pages in the local newspaper and put it all there? Evan L. Schwab: Yes, Your Honor, again, subject to the laws of defamation, right of privacy, subsequent punishment and so on if he utters falsehoods. But if he has obtained true information and believes that it's important to publish that, I believe he has a First Amendment right to do so. But more importantly, we're submitting that a court cannot restrain him, should not restrain him in advance from doing so without giving due consideration to his First Amendment rights on the one hand and all of the other reasons for banning publication on the other hand. And that's really what this case is about, is whether or not some standards need to be laid down. The courts below used tests and standards which gave virtually no weight to our First Amendment considerations. The trial court basically-- Warren E. Burger: When you say our First Amendment, now, are you speaking-- Evan L. Schwab: --I'm sorry, my clients'. Warren E. Burger: --as a representative of... well, are you speaking of your client as the press or as a litigant? Evan L. Schwab: Both, Your Honor. Warren E. Burger: Well-- Evan L. Schwab: The press does have a special function. Warren E. Burger: --Are they they same? Evan L. Schwab: I think they are different. The press has a special function which this Court has recognized to convey newsworthy information. It is in the business on a daily basis of conveying information. It has been covering the Rhinehart story for eleven years. It started in 1973 and has gone through 1981. The effect of the orders below are to curtail the publication of the story in midstream. The Times has been muzzled. If it publishes anything more now about Rhinehart, it runs the risk that he will hail it into court on a contempt citation and make it prove independent sources. This is the very nature of censorship. Consequently, there have not been further articles because the long arm of the court may fall down on the newspaper. So I think that both as a litigant and as a newspaper, it has an interest in advancing these considerations. Evidence was submitted to the lower courts that the Respondents have made a practice of suing former members and the media whenever they are criticized. They have used litigation very effectively, and there is information in the record that they brought over 20 suits to silence the kind of criticism they have been receiving, the kind of public scrutiny they have been receiving. This is an organization which appeals to the public for funds. Rhinehart himself goes out of his way to bill himself as one of the most significant gurus on this planet. He has conducted nationwide exhibitions of his powers, his powers as a medium, his powers to communicate with the dead. He claims that he has the power to bestow special powers on colored stones in a way, and then members are allowed to contribute certain sums of money, several thousands of dollars in many cases, to acquire these stones that carry special powers. The Times has been covering these articles, trying to bring this information to the public, and the effect of the order below is to stop that. I have got the articles, and I was going to read the titles, but my time is getting short, but I would summarize the articles by saying that they do draw into question the bona fides of the Aquarian Foundation, the question of whether or not Rhinehart has the powers he claims. They question whether or not he is a charlatan, whether or not people are being victimized, whether or not this is a con game. And as as result of that, he brought this suit. Now, in the trial court he obtained this order restraining publication, and it says in advance, you may not publish what you learn. And the test used by the trial court was simply this: parties may be chilled from coming to court if they know that what they say in discovery might be published. And I would contrast that with your decision in Globe Newspapers in which the state argued that minor victims might he chilled from coming forward because they might be chilled, and that was deemed an insufficient reason. The court speculated about this. It did not make the kind of findings you required in the Press Enterprise decision on the exclusion of the press from voir dire. There are virtually no findings in the trial court and in the State Supreme Court to justify this restraint. The State Supreme Court approached it on a prior restraint analysis under your decision in Nebraska Press and then concluded that the interest of the judiciary in the integrity of its discovery process is sufficient to overcome the strong presumption against prior restraints enunciated in cases since Near, New York Times, Nebraska Press and so on. And the Supreme Court said if any of the harms mentioned in the rule... and that is Rule 26, which is the same as the federal rule... they said if any of the harms mentioned in Rule 26 can be avoided, and the major concern... and since the major concern is the facilitation and protection of the discovery process and the parties' privacy rights, then the order can issue. And in the ordinary case, this balancing does not require or condone publicity. The court distinguished all contrary authority around the country-- John Paul Stevens: Mr. Schwab, may I ask you this question? Would you concede that any of the information that is gong to be obtained through discovery could be made subject to a protective order if it was properly drafted and made a lot of findings? Evan L. Schwab: --Well, the test... we are asking for a test, and I can't imagine that some information might meet that test. John Paul Stevens: Well, as long as some is, isn't it a virtual certainty that we are going to have a federal question in every case in which there is such information? Evan L. Schwab: Yes. I think-- John Paul Stevens: That we're going to have to we're the last court of resort for discovery all over the country if you-- Evan L. Schwab: --Whenever parties are seeking orders to gag litigants, because that runs right into their First Amendment right to access. John Paul Stevens: --So every good cause for a protective order raises a First Amendment issue. Evan L. Schwab: We believe it does because the First Amendment protects freedom of expression and freedom of the press. John Paul Stevens: Let me ask you this, too. How soon will this case be tried? How close are you to a trial date? Evan L. Schwab: We're not because everything has stopped since this protective order in June 1981. It has been in appellate courts on this issue. We have had no discovery. John Paul Stevens: Had there not been an appeal from the protective order, how soon do you suppose you would have been ready for trial? Evan L. Schwab: Oh, probably six months or a year after the protective order had been issued. John Paul Stevens: And if that had happened, then you could have gone in and asked for all the information to be released. There's no longer any need for secrecy. Evan L. Schwab: It would have come out at trial. That's another one of the vices of this protective order. The test we advocate in our briefs asks the Court to consider whether or not the order is effective, and all this is is a temporary prior restraint, which wasn't acceptable in New York Times, in the Pentagon Papers case. They want to silence it until trial. They don't argue that it won't come out at trial. The lower courts have held that it will be relevant and public at trial. So we have got a temporary restraint to gag us until trial, to stop us from writing articles about them, to stop us from bringing to the attention of the public, from whom they solicit funds, what we have learned about the nature of their organizations. The courts below were careful to say we can publish what we don't learn in discovery, but this really puts us in a pickle. We... it's hard to draw that line. How does a reporter decide he can safely publish this and not that when the lawyers have amassed a great deal of information through the discovery process? There is a significant risk that what you have is a stifling effect, that the stories aren't written because of the chilling effect on that order. John Paul Stevens: What if you just adopted a policy of not having the lawyers turn anything over to their client? Sometimes a discovery order just restricts the access to the information to the lawyers. Then by definition, whatever the newspaper published would be gotten elsewhere. I suppose you couldn't prepare for trial. I suppose that's your problem. Evan L. Schwab: I think in most cases... I think in most cases, Your Honor, that really gets in the way of one's ability to prepare for trial. I have always resisted order like that. John Paul Stevens: This is that tough a case. Evan L. Schwab: I need to talk to my client. I've got to show him what's going on. It's his lawsuit, not mine. He's got the interest in the case. Sandra Day O'Connor: Now, to be sure I understand, are we dealing with two different types of materials here, some which haven't yet been produced and some which have been produced before there was any protective order issued. Evan L. Schwab: That's right, Your Honor. Sandra Day O'Connor: Okay. Warren E. Burger: Is there any risk in this process of making it very difficult or even impossible to get a jury that hasn't heard a lot about the evidence before the case comes to trial? Evan L. Schwab: I think it is a minimal risk. Certainly not... doesn't rise to the standard of the kinds of fears expressed in Nebraska Press and some of the other cases that this Court has decided. Most civil cases aren't worth much publicity. Warren E. Burger: Well, but the other cases you're referring to didn't always have that. Nebraska and Stuart did, but you say that's no risk here. Evan L. Schwab: I think... I don't think it's a significant risk. It's something the trial court should take into account, but there are many other ways to deal with possible jury prejudice such as effective examination by the court. There are a variety of things the court can do, and that's one of the things we think a court should do under the tests we ask for, which is consider are there other viable alternatives. If I can briefly summarize the test we would like the Court to adopt in this, it would be to enunciate that First Amendment considerations cannot be abridged for conjectural reasons and without detailed findings. That happened in this case. Neither of those were entered, and there's really no way for an appellate court to come to grips with the basis for the lower court decisions. Lewis F. Powell, Jr.: Mr. Schwab, it would help me if you could tell me whether the issue that is primarily involved in this case is limited to names and amounts of contributors to the defendant... to the plaintiff organization, names and amounts of money contributed. Evan L. Schwab: That's the essence of their damage-- Lewis F. Powell, Jr.: That's the essence of what you are interested in. Evan L. Schwab: --Financial affairs and information about the contributors. Lewis F. Powell, Jr.: Well, if they are tax returns, you are not-- Evan L. Schwab: Well, there would be more. We haven't got the balance sheets or other financial information, but yes. Lewis F. Powell, Jr.: --Well, suppose instead of the party who claimed it had been libeled were one of the nationally known ministries, Protestant, Catholic, Mohammedan, whatever, with millions of subscribers, members and donors, your position would have to be the same, wouldn't it? Evan L. Schwab: I think it would depend on whether they injected that issue into the lawsuit. If they are making an issue-- Lewis F. Powell, Jr.: Well, let's suppose a newspaper made the sort of claims that have been made according to the pleadings here in this case, they were sued for libel-- Evan L. Schwab: --We would... if it was something we needed to pursue discovery in to defend, yes, then I am arguing that we have a right also to disseminate that information. Lewis F. Powell, Jr.: --So the fact that this particular sect, Rhinehart's organization, is as you characterize it something of a charlatan really doesn't make any difference, does it, in terms of your theory? Evan L. Schwab: No. No, Your Honor. Lewis F. Powell, Jr.: None whatever. Evan L. Schwab: We would argue that at least a court should balance the First Amendment rights of expression that are at stake, and then it should closely examine and scrutinize the alleged harm. Why is the party seeking a protective order? What harm is it trying to avoid? Detailed findings are required because you do have First Amendment considerations on the other side. The court should ask whether the order is effective. If it is going to come out at trial anyway, then the order will not be effective; it is merely a temporary or prior restraint. If one says my privacy rights are being trod upon and yet he has chosen to bring suit on that information which will become public at trial, he necessarily has already decided to let that go public. Litigants make that choice every day in deciding whether to bring suit. Warren E. Burger: In what you postulate, he means to have it go public when, as, and if it gets into the courtroom but not before, necessarily, isn't that so? Evan L. Schwab: Well, he means... puts it at issue. Discovery will ensue. Warren E. Burger: You are not suggesting that all of the material that is covered by pretrial discovery goes in evidence in a lawsuit? Evan L. Schwab: No, of course it doesn't. Warren E. Burger: A fraction of it goes in. Evan L. Schwab: That's right, Your Honor. I would like to save the balance of my time for rebuttal, if I may. John Paul Stevens: May I just ask one question? I am sorry, I hate to use... is it perfectly clear we have a final judgment here? This case hasn't been tried has it? Evan L. Schwab: No, I think we do have final judgment, Your Honor, because the order, restraining order is final and effective. It restrains us from publishing what we have already learned or may learn through discovery. We sought interlocutory review, which was granted, and the State Supreme Court dealt with it as a final order and has affirmed the protective order. We are not restrained, and we are asking this court to lift the restraint. We are operating under a form of an injunction right now. Warren E. Burger: You will not be charged with that time, counsel. Mr. Edwards? Malcolm L. Edwards: Chief Justice Burger, members of the Court, I would like to address a few of the concerns that were discussed in opening argument, namely, what kind of information are we dealing with here to which this protective order will apply. It does apply to some information that is a matter of... that was filed in a court file, and let me explain how that happened. A deposition of Reverend Rhinehart was taken by the Seattle Times. In that deposition questions were asked about financial matters relating to the foundation and to Reverend Rhinehart. There was in that deposition a promise that this information, financial information, would not be disclosed, it would not be used for any purpose other than for the lawsuit. As a result of that-- William H. Rehnquist: A promise made by whom? Malcolm L. Edwards: --By counsel for the Seattle Times. As a result of that promise, the income tax returns of Reverend Rhinehart were turned over to the Seattle Times. Reverend Rhinehart at that time was represented by a different counsel who thought he had to also file them, and he did file them. Once it was discovered that the income tax returns were filed by this counsel, we moved to have those income tax returns removed from the public record so that the policy and the theory behind the production of those income tax returns, namely, that they are to be used only for the purposes of this lawsuit, would be implemented. William H. Rehnquist: The preceding counsel thought he was obligated as a result of discovery to file-- Malcolm L. Edwards: Yes. William H. Rehnquist: --Mr. Rhinehart's income tax returns with the clerk of the court? Malcolm L. Edwards: With the clerk of the court, which obviously he wasn't. Okay. Thereafter, the Seattle Times sent out a substantial number of interrogatories and requests for production. We then resisted the disclosure of some of the information that they requested, and we asked if that information was compelled to be disclosed, that a protective order be entered on it. The trial court entered a protective order after directing us to provide this information in answer to the interrogatories. Now, what kind of information does this protective order apply to? It applies to a very limited class of information. It applies only to the names of the members and donors to the Aquarian Foundation and its spiritual leaders, and financial information relating to the foundation and its spiritual leaders. The order... and I think this is critical... does not gag the Seattle Times in any way. The Seattle Times is free to publish anything it cares to publish as long as it has a source that is independent of court-compelled discovery. So all we are dealing with is whether the court can, when it orders a party to reveal or disclose information, make that a limited disclosure of information, and that's exactly what the trial court did. The Aquarian Foundation, Reverend Rhinehart, other plaintiffs, you are required to provide this information, but your disclosure will be limited, limited to the purpose of this lawsuit. And that's what we're dealing with here. This order also applies only to parties. This order does not purport to gag any member of the press or the public about anything. It simply says that as a party to this process, you used your rank as a party to get access to this information; you must limit your use to the purpose for... that you used to obtain it. Now, that's all we're talking about. There are no cases of this Court which relate to that kind of a problem. The Landmark case in which a newspaper acquired information about a judicial discipline proceeding involved a nonparty to that judicial discipline proceeding, and the Court held that that party could not be restrained from publishing. The Court went to great lengths to note that it was not deciding that a party to the proceeding could not be compelled to maintain the secrecy of the proceeding. What we have here in this particular case is an order which applies to normally private information. Indeed, the information to which this order applies is ordinarily constitutionally protected. This Court has held in NAACP v. Alabama, in Brown v. Socialist Workers Party, in Detroit Edison v. NLRB, and in Shelton v. Tucker that certain private kinds of information about members and donors of minority faiths or minority associations is entitled to constitutional protection. The party is not required to disclose it because to do so would subject the party to reprisal or oppression. And that is what we are dealing with here. We have a minority faith who wishes to protect the names of its donors and of its members. They have rights of free exercise of religion, rights of free association, rights of privacy that are guaranteed by the Constitution just as is freedom of the press. And these rights need to be protected by the courts to the same extent as do the press rights, and the trial court held that the way to do that was to enter a protective order. William H. Rehnquist: Of course, your clients were plaintiffs in this lawsuit, weren't they, Mr. Edwards, and to a certain extent they do give up rights of... to a very large extent they give up rights of privacy when you bring a lawsuit for libel. Malcolm L. Edwards: They give up rights of privacy when they are plaintiffs only for the purposes of that lawsuit, and the fact that they are plaintiffs I think is something that you can make too much of, Your Honor. A party has a right of access to the courts. They aren't worse than a defendant because they go to court. They are not worse than a plaintiff because they are a defendant. William H. Rehnquist: Well, now, just a minute. You say a party has a right of access to the courts. Malcolm L. Edwards: Mm-hmm. William H. Rehnquist: Now, are you saying that is some kind of an independent, federal, constitutional right to go into the Superior Court of King County and plead a case? Malcolm L. Edwards: I am saying that perhaps the most fundamental right that anyone has in our society is to go into court and redress a grievance. William H. Rehnquist: Well, okay, now. Where does one... from what source does one get a right to go into the Superior Court of King County and sue a newspaper for libel or sue anybody for anything else? Malcolm L. Edwards: Okay. I think it is a part of the due process rights that every citizen of this nation has, and it is not just my idea. In Marbury v. Madison in 1803 the Chief Justice noted that that was the most fundamental civil liberty that anybody had, was the right to seek redress for grievances in the courts. William H. Rehnquist: Well, did he say that was a... did the Chief Justice say that was a federal constitutional right? Malcolm L. Edwards: The Chief Justice was not talking in terms of a libel case in the King County Superior Court. The Chief Justice was talking in terms of-- William H. Rehnquist: He was talking natural law. Malcolm L. Edwards: --Yes. He could have even been talking natural law. He had very few precedents on this case. Warren E. Burger: Well, isn't one answer to the question posed to you that the legislature of the State of Washington at least gave that right to all the people in Washington? Malcolm L. Edwards: That is right. Warren E. Burger: And that's... you don't need to go beyond that to find it in the federal constitution, do you? Malcolm L. Edwards: I don't think so, but I-- Byron R. White: You wouldn't, you wouldn't, you wouldn't say that... you wouldn't say that as a plaintiff furnishing discovery under this protective order that if information was actually relevant and was introduced at trial that the protective order would prevent publication? Malcolm L. Edwards: --No, Your Honor, and the opinion of our State Supreme Court-- Byron R. White: Even though, even though, even though technically you could say the information would be... if it were published, would be used for something besides litigation. Malcolm L. Edwards: --That is correct. Byron R. White: But you say once it is actually legitimately filed in court or used in the litigation, it is open to the public then. Malcolm L. Edwards: I think the public interest in-- Byron R. White: Unless there is something special. I suppose in trade secret cases and whatnot there's a lot of things that remain sealed forever. Malcolm L. Edwards: --That's possible. There are juvenile court-- Byron R. White: But you don't claim any of this information would be sealed forever if it were used in defense, legitimately used in defense or in prosecution of that. Malcolm L. Edwards: --That is correct. We have another petition for certiorari pending in which we assert that the trial court was in error in compelling us to disclose the lists of names and donors. That petition was filed at approximately the same time as the one that is now being argued, and it hasn't been acted on, and it's our position that the order compelling the Respondents here to provide this information was erroneous because it infringed upon their rights of free exercise. Byron R. White: Even subject to the... even subject to the secrecy order? Malcolm L. Edwards: Yes. That is our position. William H. Rehnquist: Well, Mr. Edwards, if your position in your petition for certiorari is correct that all these constitutional privacy interests are invaded by a discovery order, and Mr. Schwab's position that his clients' and all sorts of other clients' First Amendment interests are invaded if there is a protective order, then isn't Justice Stevens' earlier question to Mr. Schwab brought about in double, so to speak, that every single discovery order that a court makes is now a matter of federal constitutional import? Malcolm L. Edwards: I think there is not any question but that the position being advanced here by the petitioner is that the rule this Court should announce should apply to all litigation and all parties without regard to whether they are newspapers or pamphleteers or anyone, and that if the rule advanced by Petitioner is supported, that you will constitutionalize all protective order questions. Byron R. White: Well, let me... suppose the newspaper had published a story that the main supporters to this sect or this group are the following people, and you sued them and said that's a lie, that's libelous. And the newspaper then said, well, gee, we at least, in order to prove truth or falsity, we need your membership, your contribution list. Malcolm L. Edwards: Mm-hmm. Byron R. White: Now, would you say that they weren't entitled to get the contribution list? Malcolm L. Edwards: That isn't the context in which this case arises, but-- Byron R. White: I know, but. Malcolm L. Edwards: --Under those circumstances, they would have a more compelling reason to get the contribution lists than they do here. Byron R. White: You might still be... you might still win on a protective order, though, and say that we have to furnish it if we want to be a plaintiff in this case, but it should be furnished under a protective order. Malcolm L. Edwards: That is the position we took at trial. If you are going to make us give this information, then at least let's limit its use for the reason you are ordering us to produce it, namely, the litigation itself. Warren E. Burger: Well, then, once the deposition or the interrogatory is offered in evidence, it would lose any right of privacy, would it not? Malcolm L. Edwards: That's what the State Supreme Court opinion says, and we are not arguing that. Warren E. Burger: Unless, as suggested, it was a patent case or a national defense case, something of that type. Byron R. White: You just agreed that your position is that if it were used at the trial legitimately, then it is open to the public. Malcolm L. Edwards: That is correct. That's not the issue here. The State Supreme Court in adopting the rule that one, in order to have a protective order entered, must show good cause under Civil Rule 26, I am sure had some of the same concerns that have been expressed here about constitutionalizing the process of discovery. It is already sufficiently complex and protracted that to make every protective order a matter of constitutional rights certainly is not going to help. The State Supreme Court held essentially that if you subject a party as the price of going to court with the cost of publication of private information obtained through court-compelled discovery, that you are going to chill a party's access to the courts, and that is a real concern when you are dealing with a party that is a minority religion, as is the Aquarian Foundation, or a party that may be a minority political party, or a group such as the NAACP that may be operating in an area where its objectives are ones that would subject people to scorn. William H. Rehnquist: Well, you don't have to find a federal right of access to courts to sustain the position of the Supreme Court of Washington in this case because they found as a matter of state policy that the access to courts was all-important. Malcolm L. Edwards: That the access to the court was what? William H. Rehnquist: Was all-important, or very important. Malcolm L. Edwards: Yes, that the access to the court was a fundamental concern of theirs, and essentially what they said is the only alternative the Seattle Times has really presented that is realistic is denial of discovery altogether, and obviously if you deny discovery, they don't have anything to publish, so they don't have any reason to have a protective order, and we would all be happy and could go home, because that's what we'd like, too, is that they not be able to give this information. But the court said that is not a realistic alternative because of the importance of the discovery process in the just resolution of disputes. Given that, the State Supreme Court said that whatever limited interest there may be in the right to publish this material obtained through court-compelled disclosure is far outweighed by the need of the state to have a system to resolve disputes, and it is very easy when we read the briefs, particularly of the petitioner here, to forget the central fact, and that is that we are in that court right now and we have been here in this court and other courts trying to vindicate rights. And without an effective, functioning court system, none of these rights are going to be very meaningful. And the Washington Supreme Court held, as I think this Court should, that that interest is paramount to any right of anyone to publish court-compelled discovery. Warren E. Burger: Do you have anything further, Mr. Schwab? You have three minutes remaining. Evan L. Schwab: Thank you, sir. I think that the question of whether or not we are going to constitutionalize pretrial discovery if this Court adopts the balancing test we are advocating, and if it requires lower courts to enter findings and give justifications for these restraints on speech, is a question that was really decided by the framers of our Constitution and the drafters of the First Amendment. The First Amendment has been expanded by this Court already to in essence constitutionalize or make federal questions out of courtroom closure cases, out of the ability of the press to publish information that the judicial system is trying to keep secret, such as the judicial probe in the Landmark case, the names of minor victims in the Globe case. The Court has constitutionalized the question of whether or not the fair trial interests of the press... excuse me, the fair trial interests of a defendant, in Globe... in Nebraska Press, justify protective orders against the press like the one that was entered there. In Smith v. Daily Mail this Court held that a newspaper could not be punished for violating a state statute and publishing the names of minor offenders. There are a whole range of cases in which these issues have come up. And yes, we do argue that whenever government, by whatever form, attempts to suppress speech, particularly in advance of that speech, then the First Amendment is called into question, federal questions are present, and we believe that in most cases orders that suppress speech in advance cannot pass muster under the First Amendment. Mr. Chief Justice Hughes started us down this line in Near v. Minnesota. The exceptions there to prior restraints were basically obscenity, fighting words and national security cases. After the Pentagon Papers case it appears that there is not a lot left of the national security exception. When one reads this Court's opinion dealing with the public administration of justice, the right of the public to know how its courts are administered, how justice is administered and the protections it has afforded those who disseminate information about the administration of justice, then we submit that one can only conclude that there are significant First Amendment interests at stake here, and they need to be balanced. We are not arguing for an absolute test. We are arguing for a balancing test that gives First Amendment considerations a place on the scale. The lower court didn't do that, and basically said protective orders are per se constitutional so long as they avoid embarrassment and the other things listed in Rule 26. Warren E. Burger: Do you think the public is entitled to be present at the hearings, at pretrial discovery depositions? Evan L. Schwab: I'm a trial litigator most of the time, and I would say no. I don't want the public and the press in most of these depositions. Now, that is taken care of in the antitrust field because there is a statute that government prosecutions involve right of open depositions. But short of that, I think not. Warren E. Burger: Why does... if you concede, as you seem to, that there is no public right of access to the actual taking of the deposition, what's the difference between that and access to the record of that deposition hearing? Evan L. Schwab: I think the difference, sir, is that when a litigant comes into possession of it rightfully, he has a right to disseminate it, and he has come into it rightfully. He was there. The party was in the room and heard the deposition. Warren E. Burger: Thank you, gentlemen. The case is submitted. We will hear arguments next in Capital Cities Cable v. Crisp.

Earl Warren: Number 46, Everett D. Green versus United States of America. Mr. Blow. George Blow: May it please the Court, this case is here upon writ of certiorari to the United States Court of Appeals for the District of Columbia Circuit. It began over four years ago when a fire was discovered at the petitioner's residence on Massachusetts Avenue. Now it was May 26, 1953. Upon their arrival at the burning house, the fireman found two people present in the house. One was the petitioner who was found evidently unconscious, lying in the basement bathtub of his house and the other was the deceased Ms. Bettie Brown, who was pronounced dead on being taken out of the house. The petitioner was taken out of the house, was administered oxygen, was taken to emergency hospital and was there laid upon an examining table. That was approximately 9 a.m. on the morning of May 26, 1953. Now between that period and 10 o'clock on the morning of May 28, the defendant was questioned intermittently by two officers of the homicide squad of the Metropolitan Police Department and by the inspector of the Fire Department in-charge of the investigating causes of arson. And since this house was locked and all windows secured when the firemen arrived, and since there were evidently five or six separate fires, the evidence or the information of any officer investigating this fire was that arson had been committed. At any rate, on May 28th at approximately 10 -- 11 o'clock in the morning, the defendant was taken before the Deputy Coroner and advised in accordance with Rule 5(b) of the Federal Rules of Criminal Procedure that he had a right not to make a statement, that any statement he used might be used against him, that he had a right to counsel. Soon after this, the Grand Jury met and returned an indictment against the petitioner in two counts. Now the first -- this indictment is on pages two and three of the record and it's vitally important, because the first count read, “on or about May 26, 1953 within the District of Columbia, Everett D. Green maliciously did burn and cause to be burnt a building known as 1115 Massachusetts Avenue North West property of Gerald Green” and the second count incorporated that language, and it read, “on or about May 26, 1953 within the District of Columbia, Everett D. Green committed the offense of arson, that is to say, he maliciously did burn or caused to be burnt a certain building known as 1115 Massachusetts Avenue North West, property of Gerald Green; and in perpetration of the offense of arson aforesaid caused Bettie Brown to inhale certain gas, the inhalation of which resulted in her death within the District of Columbia on or about May 26, 1953.” Thus, while the first count charged the petitioner with the offense of arson under Section 401 of the District of Columbia Code, the second count charged him with two offenses, one the same arson and two the offense of arson killing as defined in Section 2401 of the District Code which provides, whoever being of sound memory or discretion without purpose so to do, kills another in perpetrating or in attempting to perpetrate any arson, as defined in Section 401 of this code is guilty of murder in the first degree. Now the petitioner was tried upon this two count indictment and the jury was instructed on the law of arson and they were instructed that if they found in the perpetration of this arson the deceased died through the inhalation of certain gases produced by fumes, they were to return a verdict of first degree murder under the District of Columbia Code. The judge, on his own motion, instructed the jury on second degree murder. Now the jury retired and they came back and they found, “we find the defendant Everett D. Green guilty of arson, we find the defendant guilty of second degree murder on the second count.” The arson stand, it was never appealed and the sentence one the arson now has been served. But he did appeal his conviction of second degree murder and in his appeal he urged that there was no evidence in the record of his trial that would sustain a conviction of second degree murder and he urged that the giving of that instruction permitted the government, permitted the jury rather to resolve any doubt that they may have had as to the cause of the death of the deceased in the favor of the United States. And the Court of Appeals in reversing said one, the giving of the second degree murder instruction where there is no evidence to warrant it, is technically erroneous; two it was prejudicial because here and I quote, “Here had the erroneous instruction under which he was convicted not been given, Green might have been found not guilty under the second count.” The case was remanded to the District Court and once it became evident that the government was going to proceed the second time, under first degree murder charge, the defendant interposed a plea a former jeopardy. That plea being overruled he was tried the second time and convicted this time of first degree murder as originally charged. Now, we contend that the government was not privileged to prove a second time what it had been unable to prove before the first jury and to support this contention we have briefed four arguments, two of these are constitutional. The first proceeds from the fact that the petitioner was in undoubted jeopardy of his life on the offense of first degree arson and murder at his first trial, and this argument concerned the extent of the waiver of the defense of former jeopardy that is going to be presumed to attach to the exercise of an appeal. Felix Frankfurter: Mr. Blow may I ask you just this question just as practical matter that from your point of view the Court of Appeals having found the charge of error, it could then have directed a dismissal of the indictment, is that right? George Blow: That is correct Your Honor. Felix Frankfurter: Because on your point of view (Inaudible), he couldn't possibly have been convicted again for second degree and trial under first degree was foreclosed the only alternative rightly was for them to direct a dismissal of indictment? George Blow: That is correct Your Honor. I understand that -- Felix Frankfurter: I don't draw an inference from it, I just don't know. George Blow: Yeah, the law is a little unsettled whether or not the government would be permitted to come back and say we have evidence now of second degree murder and try him again for second, we don't know about that. Felix Frankfurter: Yes, the government could say we got some evidence – it would be hard to say on the state of this record. George Blow: Well Your Honor -- Felix Frankfurter: Never mind. Charles E. Whittaker: Was that possibility foreclosed by the Court of Appeals decision? George Blow: Which possibility Your Honor? Charles E. Whittaker: Possibility that the government might on the retrial have sufficient evidence to support the lesser included offense of second degree murder? George Blow: I don't believe that would have been Your Honor. Possible yes and no, but we have not investigated that, because that again would be a question which we would determine in the trial court, before the trial justice by a motion. I think the Court of Appeals might have either directed an acquittal being satisfied that there was no evidence whatsoever of second degree, or it might have said, we'll send it back and let the court, the trial court determine whether or not there is evidence of (Inaudible). Our second jeopardy argument Your Honor speaking of what in this case is the necessarily lesser included offense in that indictment which we've just read, proceeds on the assumption or on the evident response to this -- to reading this indictment, that incorporated in the second count is the lesser, necessarily lesser included event of arson. Charles E. Whittaker: But sir does it make it any difference to your position, that whether the -- a second degree murder charge was embraced within the indictment or not? George Blow: No, Your Honor, it does in the sense that we think we have a stronger case by virtue of the fact that second degree was not in our opinion a lesser included offence in this indictment, because we are in the position of a totally unrelated event. We're not even covered by the indictment as the government admits. The government admits that second degree would not be covered by the indictment in this case. Felix Frankfurter: And you think that's a stronger case, do you? George Blow: Yes Your Honor definitely. Felix Frankfurter: I'm not knowing it, I'm just (Inaudible) George Blow: Because it puts the man -- say the man was convicted of arson and adultery and he said I'm not guilty of adultery whatever else, and he -- and what I would I do, I would go to him and say you're taking your chance on your life by appealing this offense. Charles E. Whittaker: But in any event he was under this indictment charged with first degree murder and he was not convicted of first degree murder, that's your position. George Blow: That is correct Your Honor. Charles E. Whittaker: And you follow that by saying that necessary instance is or the necessary legal result is to acquit him of first degree murder. George Blow: Yes Your Honor, and that was the result which the -- as pointed in -- by dissenting justices in Trono represented the overwhelming ways of American decided opinions, court opinions certainly up to -- certainly through the 19th Century and even today represent the overwhelming court opinion. Felix Frankfurter: I don't think that is correct Mr. Blow. George Blow: Your Honor? Felix Frankfurter: I believe that is not a correct statement. George Blow: Well, Your Honor with -- Felix Frankfurter: I'm not saying that the lower courts shouldn't indicate that, I'm saying, that that is not a correct statement of the results of an investigation of (Inaudible) George Blow: Your Honor we have investigated them in our appendix A. Felix Frankfurter: Every state? George Blow: Every state in the union, and we found six we couldn't find Your Honor, that we found -- Felix Frankfurter: I think it might count now 19 the other way, 16 your way and 13 had no (Inaudible) George Blow: Well Your Honor in our appendix, on appendix A, we have set them out in tables those courts which found the result, absent any statute or constitutional amendment, and 13 are in our table, which have never departed from what we call the limited waiver doctrine, that is the doctrine that in permitting a new trial out of the constitutional prohibition against second jeopardy or the waiver if there was to be one, would be presumed to extend no further than the need of the present, that in construing your constitutional right, you don't construe it any further than its benefit to the defendant, you don't (Inaudible) Charles E. Whittaker: (Inaudible) George Blow: Sir? Charles E. Whittaker: That is you don't construe the waiver (Inaudible) George Blow: No. Well we have 13 Your Honor at page 45 of our brief that have never departed from this limited waiver doctrine. We have five that have adhered to the limited waiver doctrine even though the statute in this day tried to change it and we have five which followed it prior to the enactment of some statute, prior to some constitutional amendment. Now Kring versus Missouri is an example of that. There was -- the state followed the limited waiver rule up to 1880 or slightly before when by constitutional amendment they made a new trial, one, a completely new proceeding, they maybe effect of a new trial, a complete washing out of the earlier trial, including the washing out of the earlier implied acquittal and this Court in Kring versus Missouri said all right Missouri you can do that, and you can do that by attorney -- because you are now covered by the Fifth Amendment, you can do that even by a statute, as well as a constitutional amendment, that it's a matter of substance, you can't do it retroactively. You can't do it for someone who was tried for an offense committed during the time when the limited waiver rule was in effect. Felix Frankfurter: Mr. Blow I don't want to lead you to use time on this subject. I simply state myself, I do not think this question could be determined by deciding -- by counting the number of states one way or the other, I'm not suggesting they could be relevant, I'm suggesting that if there is anything to be decided by that and if your figures are what you say and the (Inaudible) my statement, then all I can say is that it wouldn't be the first time two different lawyers read the same material (Inaudible) George Blow: Your Honor we come back to these cases in connection with a third argument which -- Felix Frankfurter: And I want to ask one more thing which Justice Whittaker asked you, and you answered yes, that a necessary inference or he said the necessary legal consequence and I suggest those are two very different things. Inference means what may rationally follow from some case, a legal consequence need not depend on that. We may have a legal consequence without it being a necessary factual inference. George Blow: Well Your Honor we are going to discuss in connection and mention these cases again perhaps in connection with our third argument which we briefed in our supplemental brief. Felix Frankfurter: And I didn't mean to shut you off, I wasn't arguing, that all I meant to say, I didn't want to look – (Inaudible) anything I have said to lead you to make a use of your time that you otherwise wouldn't have made. George Blow: I see Your Honor. Well, we have our third point which we are going to discuss and that relates to the principles of collateral estoppel as set forth in recent decisions of this Court. It leaves aside constitutional concerns. We are going to make the argument that the government was barred from -- by collateral estoppel, from attempting a second time to prove what they couldn't prove the first time, and finally we are going to talk about jurisdiction. We are going to say that when the Court was granted appellate power over criminal cases, then at that time we look to the state of the law in the common law of court, and that time it was 1889. And was then -- of course these arguments all rejected we come to question of whether or not if there was to be a second trial, it was a fair trial and in that connection we mentioned statements admitted, statements that the police and fire department inspectors in the case admitted which we think are properly excludable under the McNabb Rule and we call to this Court's attention, certain remarks which were made by the prosecutor in rebuttal. Now turning to the first point, we have to mention and this is in connection with our effort to find some sort of intent on the part of the framers of the Constitution. We have to say that at the time of the Constitution, new trials so far as our research discloses were not granted in England in capital cases and probably not in felony cases generally. So -- and this explains the decision in United States versus Gibert, as many years as 36 or more, after the Constitution that there could be no new trial because such a new trial would place a man twice in jeopardy and the Constitution said he couldn't be placed twice in jeopardy. In England as we understand it, the prisoners' remedy was to call the error of the lack of evidence to the attention of the crown and in this sometimes he would evidently be carefully insisted by the Trial Court, but there is no question of a new trial if he was right then that was the end of it. We said or the Court said in the Gibert case that there couldn't be a new trial at all, but in the Federal Courts, we have no appellate procedures in these criminal cases. And we had no real understanding perhaps of what problems would be involved if the new trial were granted and yet the defendant had been convicted at the first trial of an offense lesser in degree than that with which he was charged in the indictment. And we say in that connection that is where we looked to our states Your Honor and we look to the states for an interpretation of the Constitution or the -- the common law prohibition against second jeopardy because they had some sort of appellate procedure and they have this problem. And they said we are going to expand the constitutional right, but we are not, we are not going to leave it in its contracted form, we are going to expand it for the benefit of the person. But we are not going to go so far as to say that an appeal will waive what the protection that the guy had by virtue of his not having been found guilty of the higher charge on the first time around. In other words, we are not going to make a man barter, or gamble when he appeals or when he decides to appeal. We, in our brief, have distinguished the rule that obtained or could obtain in Territorial Courts. And we have distinguished, we have attempted to distinguish the rule that obtained and was applied by this Court in Trono versus the United States where we had a system of law that developed not from the common law, but from the Spanish law where there was no trial by jury and where as Trono was -- he was tried by magistrate, a trial magistrate without a jury. The case was appealed in accordance with procedures established by Congress to the Supreme Court of the (Inaudible) and his conviction was reversed. Without remanding the case at all, a new determination of facts was made by the appellate court, a new offense was found to have been committed and a new sentence was imposed. Well this is an entirely foreign procedure to us. And one of the justices, Justice Brown who concurred in the opinion of this Court of Mr. Justice Peckham in affirming those convictions said, one year earlier in Kepner he made it clear and he wasn't going to trust a trial magistrate in the Philippines with a final power of acquitting a defendant charged with a serious offence such as murder. And he said, again, it's logical I think to assume that he conferred in Trono for the same reason. He felt this was a proper procedure and the contracts and the history of Philippine law of territorial, of a territorial court established by act of Congress, the government of Philippine. But given the logic of Trono in the Philippines, you have four dissenters. And those dissenters found as did the majority, as did the four in the majority, there were four in them all found some sort of acquittal, inherent in the finding of the lower offense. Now they have admitted as all eight of them proceeding on the assumption that the question was one of waiver of a right, in that case a legislative right that it was regarded as the constitutional right. The court below, the Court of Appeals in this case has approached the entire case from a standpoint of waiver. Perhaps with the exception of Mr. Justice, of Judge Prettyman you could say safely that that eight of the Court of Appeals below were attacking this present case on the ground of waiver. And we have applied here by the majority of the Court of Appeals a presumptive absolute waiver. The man has been presumed to have surrendered the protection of the Constitution in exchange for the exercise of a statutory right through appeal what he regarded as an unjust verdict. Now we have our question of the lesser included offense. We take a look at Rule 31(c). We say that a man maybe convicted of any offense lesser than necessarily included in that charge. We take a look at this indictment and we take a look at ours and we see that count one is reproduced word for word in count two and that count two adds on a one element to the events described, the consequent there -- that that's consequent upon the offense. Now this Court, the government in its brief, the court below, everyone recognized that the test that has been applied consistently by this Court is that in Murray versus Commonwealth which – wherein it was stated if each statute requires proof of a fact which the other does not, an acquittal or conviction under either statute does not exempt the defendant from prosecution and punishment of the guilt. But of course here only one did, you can't say the count one required anything more than count two, it was a lesser included offense in the count two. The trouble with this whole thing was pointed out in the Trial Court where the judge handed the indictment of the jury and said you will disregard count one, charged in count two. Speaker: Now supposing -- supposing you now approach this case in the point of view of waiver, that you approach it from a standpoint that Mr. Justice Holmes' dissent (Inaudible) how clear the basis of (Inaudible)? George Blow: Well you -- Mr. Justice Holmes we believe concurred in Trono because he felt that jeopardy was one long piece of strength from the very moment the case started until very moment that the sentence was executed or those defendants put on the street. He was not sympathetic to waiver. He said it was wrong to assume that any man would consciously waive something like a fundamental constitutional right. Well we say that Justice Holmes was tackling this problem in a way that would permit a new trial continually no matter who was prejudiced. The object being to get a trial free from error, it made no difference we understand from Justice Holmes' position of waiver whether it was the government was hurt or the prisoner, if one was hurt there should be a new trial. Now our answer to Justice Holmes' argument has to be that that is not the law that the government is not permitted an appeal -- Speaker: You recognize that is the law that he said – that Congress won't change the law (Inaudible)? George Blow: Well he did say that Congress could -- he did suggest that Congress might be able to change the law and I suppose that's been suggested even in Palko versus Connecticut that no one has ever been quite sure whether Congress could or not. Felix Frankfurter: Mr. Blow if you are going to examine individual statements of the justices in Kepner and Trono rather than it takes to defeat them in Trono what the Court had cited and I suggest to you that Mr. Justice White and Mr. Justice McKenna dissented in Trono because the Court didn't far enough. George Blow: That is correct Your Honor. Felix Frankfurter: So they dissented in Kepner, on the ground that double jeopardy doesn't prevent you from -- doesn't prevent even the government from appeal. They went on in continuous proceeding stream. I don't see where we get if you were going to be off the ground because he dissented unfairly -- George Blow: We take him out because he was a swing man -- Felix Frankfurter: But why did McKenna -- I know he was a swing man but why did McKenna dissented, it may fairly be said because the Court didn't go far enough and I do not see how you can possibly say that these decisions rested on any question of Spanish law, when in the whole of the opinion there isn't a reference of Spanish law and a complete (Inaudible) and the Court said, we must decide this case and I believe rightly, if anyone knows the whole issue that is front of these governments rightly, follow the instructions as to -- instruction, they have been giving instructions did embrace statutory the bill of rights intended to be operated in the bill of rights for the Philippine, and that's what the Court said in Trono, didn't it? George Blow: Yes except that it didn't come to the point of saying that a man could be tried for -- could not tried for a capital offense without a jury. Felix Frankfurter: Well that's -- George Blow: We have that question too, yes. Felix Frankfurter: So that question is decided in other case. That was Doe, the other Philippine case. I am suggesting that Trono and Kepner cannot possible be explained on the grounds that they were deciding according to the Spanish law instead of deciding as a fit they were deciding the provision of double jeopardy in the American, our Constitution. They said in explicit terms, isn't it? George Blow: Well they did Your Honor. The four justices did and five justices didn't and the other four were little bit afraid by the expression in the majority opinion that that this was law that was going to be applied in the Federal Courts. Felix Frankfurter: But I am suggesting to you and I urge it, why McKenna dissented because they said if you are not going to allow this to the government, they dissented in turn, didn't they in Kepner on the ground that the construction which the majority placed rounded by themselves but White and McKenna joined Holmes in dissenting because in Kepner the majority gave what they thought a true restrictive meaning of the constitutional provision. Hugo L. Black: Have you in your investigation found any challenge in this Court other than that for the whole Kepner holding, has this Court emphasized on the way it decided -- George Blow: That the government has no appeal. Hugo L. Black: If the government could appeal (Inaudible) and do you know of any such case this Court has ever dealt. George Blow: No, no Your Honor. Felix Frankfurter: Has the case -- question come up ever? George Blow: That the government should try to appeal -- Felix Frankfurter: The question that's just been put to you, ever come up except in Trono? George Blow: The question whether a government would be permitted -- Felix Frankfurter: But you answered the question and I am asking you whether the question to which you said no, it's never come up, never been decided, I'm then asking you has that question ever come up? George Blow: Well that I don't know, Your Honor. Felix Frankfurter: All right and you can't say no to the answer. George Blow: Well it came up in Kepner in Philippine connection and it came up again in the Palko versus Connecticut connection where Connecticut does allow an appeal by the government for error in trial. Hugo L. Black: Under the Fourteenth Amendment. George Blow: That was a Fourteenth Amendment case and at first they decided that. Hugo L. Black: What was the Kepner case where Mr. Justice Holmes wanted that the government could be and that it hasn't-- George Blow: Well justice, Mr. Justice Holmes quoted, he said by rationale he said, we should follow the well reasoned decisions of the Connecticut Supreme Court in the State versus Lee that he was lonely in saying that, because State versus Lee was the -- was one of the earliest Connecticut cases approving the right of the government to appeal. Felix Frankfurter: I think I may ask – I also apologize if I misunderstood the question. Justice Black question was has this Court ever decided whether the government may appeal, (Inaudible) if that was (Inaudible) whether this Court has ever decided may the government in a criminal case appeal an adverse ruling and I suggest your answer should be yes, the government have decided that, this Court have decided that and has decided it very clearly that the government cannot appeal and nobody has ever questioned that, you were to get (Inaudible) in 144 US -- George Blow: Yes. Leaving aside for a very quick moment, the constitutional concern, we refer to the rule which this Court had occasion to examine in Yates versus United States that and I quote, “a party may be precluded under the doctrine of collateral estoppel from attempting a second time to prove a fact that he sought unsuccessfully to prove in a prior action.” Now this Court has agreed that the non-existence of a fact as well as its existence can constitute -- can be established by a judgment and in the instant case it must be kept in mind throughout that the government had a clear crack at the defendants the first time before 12 competent jurors and it didn't succeed in proving the (Inaudible). And I think it's fair to say from that that the first verdict which was silent on the subject of arson killing required as a determination of mixed fact and law, those magic words, essential to be the decision, the finding that death had not been caused in the manner alleged. Now that is true even -- at the same time you can say that the conviction of second degree meant by looking at the jury's reaction is one properly interpreting its instruction as a specific finding that he committed that he killed her in some other way, but we don't press that as hard as we do the silence of the jury of the fact that the government couldn't prove its case once and did the second time. Now the government had a little better case the second time. They found the doctor who examined the deceased and they found the chemist who looked at the blood and they prepared their testimony and together brought up all the ammunition on the second time round it was quite good enough with this convict -- the defendant -- Felix Frankfurter: I follow your legal argument with interest and anxiety because it is (Inaudible), difficult question, but I suggest that you begin to speculate what juries imply or do not imply or what they do or don't do, you one up again a fixed rule of this Court that no matter how contradictory finding is, verdicts are on different times, this Court will pay no attention to that unlike the English court. This Court has said again and again that we don't care how contradictory, how irrationally conflicting verdicts maybe (Inaudible) different times because nobody can pursue the mind of a jury and know why they did, what they did. George Blow: That is correct Your Honor, and we subscribe wholeheartedly to that. Now finally so far as propriety of a second trial is concerned we look to the statute which granted jurisdiction to this Court to review capital cases and we see that that statute was passed in 1889. That statute provided that a case might be remanded under the direction from this Court but in looking at the statute and interpreting a jurisdictional statute, we have to look to the state of the law at the time we have. And we may differ but we think that, that reference to the cases in our opinion will show that the state of the law at the time certainly the State Court law, followed the limited waiver and would not require the gamble, the desperate chance which the Court of Appeals said here was in inherent in the exercise of the statutory right to appeal. And we think that after that statute of 1889 there was no further authority given to this Court, indeed absent any congressional intent, we look to the uniform code of military justice, we find out that Green if he has been in the military service couldn't have been retried for first degree, couldn't have been sentenced to death, and we see that, that was passed in 1950. It certainly is other than a congressional approval of a jurisdictional power to remand for retrial on an offence greater than that embodied in the conviction appeal. Very quickly we want to review our alternative argument that if a new trial was proper, this one wasn't fair. We note in our brief on page 31 the assertions which were testified to by government witnesses, which we felt very damaging, the rights of the accused. The government contends that there were some of these that were not confirmed that denied by the prisoner at his trial. We cite, in addition we cite particularly the fact that the defendant told Sergeant Future that he had written a letter advertising suicide just before they smelt smoke. We note that the defendant said he mailed that letter at 12:30 at night. We note that Judge Bazelon dissenting in the Court below pointed out that if the jury believed that the defendant has said what Sergeant Future said he said, it's whole story became incredible and ridiculous. We note these remarks about blowing up the house, on May 28th before (Inaudible). We note in our introduction to this McNabb section of our brief, the fact that officers and the fire inspector testified that he had left the top floor had gone directly to the basement. We note that the defendant testified and had to testify that he stopped on the first floor, made a telephone call, it was unsuccessful, he notified people (Inaudible). We have throughout this record as shown by the assertion from page 31 of our brief, tremendous prejudice. The conclusion is innocent, but that the government knew what the defendant was going to say and had to say at his second trial, set the testimony of the officers and the inspectors out to make Green look like a liar before it ever (Inaudible), maybe that's what they did. Now this Court, at that time, of course the Timeless case was tried. You have a 5(a) McNabb Rule. It's been suggested and it's suggested very clearly in this Court's decision in Mallory that there is such a thing as 5(b) McNabb Rule we call it that because we recognize the purpose after all of a 5(a) McNabb Rule is to get a man judicial caution or some sort of caution before he puts his head in the noose. Here he put his head in the noose before he was committed two-and-a-half days after he was under surveillance, under custody of the police department. This result, I believe was contemplated by this -- this problem I believe was in the Court's mind, has been in this Court's mind. The purpose of Rule 5 is twofold. There must be probable cause determined. The defendant must be advised of his rights. The government admits that there was opportunity for the extortion of confession here. They say the police didn't create it. We say that's irrelevant. At least they can do as Judge Bazelon below suggested as the British invariably do is once they put him into custody, advised him of his right to silence, of his right to counsel, of the fact that the statements he made would be used against him. Finally we have remarks which we urge as prejudicially unfair to the defendant at the conclusion of his trial. The government urges these remarks were provoked by -- are mentioned on -- are limited in part pages from a transcript of 35 of the final items, that these remarks of the government were provoked, by our mention of the electric chair. I don't -- I'm not experienced in criminal law, but it appears to us that any counsel for a man under a capital charge would be delinquent in his duty to the client if he did not mention the consequence of a verdict and that certainly when the Court instructed the jury that the penalty for the crime is death, and impressed on jurors on voir dire as shown by the supplemental briefs to a member of the jury, that the consequence of their verdict would be death. Your Honor we would like to save a few minutes for rebuttal. Earl Warren: You may. Mr. Sand. Leonard B. Sand: Mr. Chief Justice may it please the Court. No federal court has ever accepted the limited waiver doctrine which petitioner now urges. On the contrary that doctrine has been specifically rejected by the federal courts as early as 1846 in United States against Harding, a decision by Mr. Justice Grier then sitting in the Circuit Court and which he indicated that upon retrial after conviction for the lesser included offence, a defendant could be retried for the greater offence. With respect to the early history of the Fifth Amendment, I have cited in the government's supplemental briefs, when first proposed the Fifth Amendment read, “no person shall be subject to more than one punishment or one trial for the same offence.” Objection was made to that in the debates in Congress on the grounds that, that would preclude a defendant from securing a reversal of his conviction and a retrial, and of course we know that subsequently when the Fifth Amendment was enacted that provision was omitted. The early history of the double jeopardy provisions in the United States are summarized in an article in Eleven (Inaudible) Law Review by Judge Bigelow, the reference is contained in the government's supplemental brief. It is of course clear that a defendant may after a second trial receive a sentence greater than that initially imposed at his first trial. Thus every defendant who receives less than the maximum sentence at his first trial runs the risk of ultimately receiving a greater sentenced if he succeeds in having his first conviction reversed. I check that because I believe in essence that is all that is involved in this aspect of this case. The government submits that this case is controlled by Trono, but it is for many reasons an a fortiori case, after Trono and I suggest now that the case is very analogous to Stroud against United States in 251 US. There the defendant was tried three times for murder in the first degree. The first time he was found guilty and the death sentence was imposed. This conviction was reversed. Upon his second trial the jury finding him guilty recommended that capital punishment be dispensed with, which was permissible under that statute, and the defendant received a sentence of life imprisonment. This conviction was reversed and upon the third trial he was found guilty of murder in the first degree, the jury making no recommendation dispensing the capital punishment. He was there upon sentenced to death. This Court found that there was no violation of Fifth Amendment in the subsequent imposition of the death sentence and wrote that the only thing that the appellate court could do when he secured the reversal was to remand the case for a new trial and that in such cases the defendant was not placed in second jeopardy, within the meaning of the Constitution, the Court citing Trono. I would like to state if I may the reasons why the government feels that this case follows a fortiori from the Trono decision. First the basis for the reversal of the conviction of second degree murder was petitioners' assertion that if he were guilty of any crime it was murder in the first degree. Because this was petitioners theory accepted by the Court of Appeals it was apparent that the only crime for which he could be retried was the crime of first degree murder. Under these, under these facts in the theory of the reversal there could be trial for no other crime. Indeed the Court of Appeals specifically remanded the case for retrial. And while petitioner had on the first appeal asked the Court of Appeals for a reversal of his conviction, he had not asked for a dismissal of the indictment or a judgment of acquittal or any other relief. The remand to the District Court for retrial offers to be made what was the natural consequence of the theory which petitioner had urged upon the Court of Appeals. First it was impossible to retry the defendant for any crime other than first degree murder. If as Trono holds even where it is possible to retry a defendant for a lesser included offense, it is permissible to retry him for the greater offense. Surely here when retrial could only be for first degree murder such retrial is possible. Were this is not so, the consequence of the error committed by the trial judge at the first trial would be to confer upon the defendant an absolute immunity from retrial for the crime of murder. This Court wrote in the (Inaudible) case that the Constitution does not require that sentencing should be again and which a wrong move by the judge means immunity for the prisoner and that case and that language of the court we think applies here. Felix Frankfurter: Well that maybe a good argument that's undesirable but that is not logic outcome, the denial of that isn't a logical compulsion, that if he has been tried, that if he has been tried and the jury brings in the verdict and that verdict has a fatal error and therefore calls for reversal or nullification of that verdict to a sentence under it, but that's an end of the matter, that means it maybe an undesirable result but it isn't necessarily in conflict with reason, because that's the state of today's English law as you well know. Leonard B. Sand: But we feel that the government -- it is not only an undesirable result but is a result which in no way compelled by the decisions of this Court. Felix Frankfurter: I agree to that, other way around it isn't compelled -- the contrary is also not compelled by reason. Leonard B. Sand: Not by reason by policy they got in here. The American Law Institute after studying the conflicting state decisions, some of which are relied upon so heavily by petitioner recommended that the law of the Federal Courts be adopted and that a finding of guilty of a lesser included offense which is subsequently set aside is not the acquittal of the great offence. The American Law Institute comment, it's very pertinent to this case. It is that when he, the defendant, procures the reversal on the ground that his conduct or what constitutes the great offense does not constitute the lesser offense, subsequent prosecution for the great offense is certainly warranted, that's precisely the government's position. Earl Warren: Mr. Sand may I ask this question. In this case there were three verdicts submitted by the judge. One for guilty or not guilty of arson, one guilty or not guilty of first degree murder and one guilty or not guilty of second degree murder. Suppose in this case that the jury had specifically found the defendant not guilty of first degree murder but he did as it did here finding guilty of both second degree murder and arson. He took the appeal. The case was reversed for the same reason it was reversed here. Would your situation be changed legally? Leonard B. Sand: Under the Trono case the result would be the same. I -- Earl Warren: No I am asking your position, would you be arguing here as you are arguing now to retry this man? Leonard B. Sand: Well I would, I would -- following the language and reasoning of the Supreme Court in the Trono case, I would be arguing that such a retrial was possible, but I emphasis the fact that that is clearly not in this case and I think that the, the other two reasons to which I would like now to direct myself why that does not in this case are significant. I believe that for the Court to hold that this case -- that retrial here violates double jeopardy the Court would have to overrule the Trono case, but I do not believe that to affirm here the Court would have to accept the full ramifications of the Trono case because of the facts peculiar to this case that to which I am now directing. Felix Frankfurter: I want to be sure, I, I mean taking Chief Justice's questions, it must be very important, I want to be sure whether I understand, that you understand your questions you (Inaudible) your answers. Let me put my question, out it in my language, if the jury having been charged by the judge in a way that enabled (Inaudible) there, suppose the judges charge under this indictment, charges the defendants with murder you may bring in a verdict of conviction or acquittal for murder, but you may also find it is the law that charges that under this indictment, under this count for murder it includes murder in the second degree or manslaughter even though you may find as your line under the appropriate charge of what constitutes premeditated murder in the District of Columbia, you may bring in a verdict of manslaughter or murder in the second degree, explicitly, as explicitly as I have tried to elicit. Have I put my question clearly so I could then – I've put the facts so I can then answer – ask my question. Leonard B. Sand: Yes. Felix Frankfurter: The jury then says in clear and unambiguous words (Inaudible) their foreman; we are all agreed in finding that the defendant is not guilty of murder. We are agreed in finding that he is innocent of charge of murder but we find that the defendant is guilty of manslaughter. And he then appeals for one reason or another, one alleged there or another conviction, a sentence following the verdict for manslaughter. My question is and that alleged – and the error claimed by and is sustained by the Court of Appeals and they said a new trial must be granted, may the government then prosecute him -- the government then pursued on the new trial of charge resulting in a conviction for murder, you want to give an answer to that? Leonard B. Sand: My answer to that is that I think Mr. Justice Frankfurter you have stated in your -- in your question to me the facts in Trono in that I in Trono there was agreed a specific finding of acquittal of the great offense. And throughout the majority and the minority opinion there is reference to the fact that there was an acquittal. And so if one were to accept the full ramifications of the Trono decision, one would have to say that new trial for murder would be permitted. But this, the second factor which is peculiar to this case is that here the nature of the error was such that a prejudice both, both the government and the defendant, one can only speculate and it's ideal speculation whether had the jury at the first trial been properly instructed that they must find first degree murder or acquit, they would have acquitted, or would have done what the jury did at the second trial on substantially on some same evidence, but properly instructed, find the defendant guilty of first degree, and a third factor which is peculiar to this case is that looking at the verdict returned by the jury at the first case, at the first trial, one cannot fairly say that, that jury acquitted the defendant of the crime (Inaudible) Hugo L. Black: Suppose they had and would as you would charge them the defendant guilty of murder in the first degree (Inaudible) find the defendant not guilty of murder in the first degree, re-review find the guilty of murder in the second degree. Can you think there is any difference in the Constitution (Inaudible) Leonard B. Sand: I think not. As the Trono case holds -- Hugo L. Black: (Inaudible) where a jury had chance to convict of two, but convicts of one but does not convict of the other -- Leonard B. Sand: But the reason it convicts of one and not the other is because there is an error in that proceeding, the very -- Hugo L. Black: You mean by that if they had – if that conviction of second degree murder, the Court was wrong in submitting second degree murder to him, but he wasn't wrong in submitting first degree murder and they did what I would suppose on the constitutional level (Inaudible). Then the Court comes along and grants him a rebuttal on the second degree murder charge. What's the difference in this case and one (Inaudible) they returned the verdict they we the jury find the defendant not guilty of murder in the first degree? Leonard B. Sand: We get this somewhat paradoxical situation. The petitioner is urging that because it was error to instruct the first jury that they might find the defendant guilty of second degree murder, then at a second trial the jury must be instructed that the only crime for which they can find the defendant guilty is second degree murder. Hugo L. Black: But you're doing this on the basis that it would have to be equivalent of verdict of acquittal for murder in the first degree, what's wrong with that (Inaudible) Leonard B. Sand: Well, I think what is wrong with it Mr. Justice Black is that the Supreme Court in Trono has held that, that is not a violation of double jeopardy. Hugo L. Black: In other words what you go back to (Inaudible) they find murder in first degree, second degree, manslaughter (Inaudible) they can try him and use the murder in the first degree. Leonard B. Sand: Trono says that. Hugo L. Black: You're saying is we ought to accept Trono as holding in part (Inaudible) Felix Frankfurter: Are you on behalf of the government admitting that if a jury says nothing it is the same thing as when he says something? Are you saying that a jury says (Inaudible) that's the same, that's exactly the same thing as when they say nothing about it, but bring in a verdict for a lesser offense, is that what you're saying for the government? Leonard B. Sand: No I'm not. Where the jury -- Earl Warren: What is the difference? Tell us the precise difference between the two, will you please, where a man is charged with murder and he is given two murders, one for first degree murder, one of second degree murder. What is the difference if those are submitted to him and the court receives the verdict, one of them is blank and the other is a conviction? What is the difference between that case (Inaudible) Leonard B. Sand: I come back to saying that in the view taken by this Court in Trono, if we are dealing with lesser included offenses, and there is a reversal -- not only a reversal of the conviction for the lesser included offenses, but as a first proceeding there is a specific finding acquittal which were the facts in Trono, but there is no difference, that the second trial is permissible. Earl Warren: Is this an included offense? Leonard B. Sand: Arson the government submits is in no way a lesser included offense, but second degree murder is a lesser included offense as the District of Columbia Court of Appeals has held where the facts permit it to be such, in the felony and murder case -- Earl Warren: It is another kind of a crime but not here. You don't contend do you that the second degree murder is an included offence under this indictment? Leonard B. Sand: No. We state that the reversal of -- Earl Warren: You answered me one way, you said to me that you would be in the same legal position if those two situations that I pointed out to you where here, whichever one was here, you answered the opposite to Justice Frankfurter. Now just which is that I would like to know, I would like to know, if there is any -- would be any difference in your position here, if instead of returning a blank verdict, on the first degree issue, the jury specifically said we the jury find the defendant not guilty of first degree murder. Felix Frankfurter: May I state -- Earl Warren: May I ask my question and then -- Felix Frankfurter: (Inaudible) Earl Warren: No, but I would like to have my question, then please you can answer your question any way you want, but you've got him confused with now I think, I would like to have him answer my question. Leonard B. Sand: I don't mean to be (Inaudible) Earl Warren: I'm sure you don't. You are confused by the questions. Felix Frankfurter: You are confused by Mr. Justice Frankfurter's suggestion. Earl Warren: I think so. Felix Frankfurter: (Inaudible) Earl Warren: But we weren't helping him, we were confusing him. Felix Frankfurter: Yes. Leonard B. Sand: I think that where there has been a conviction for a lesser included offence, that the -- and the conviction is reversed, that the government may then retry the defendant for the greater offence. I think that this follows regardless of whether informed, the jury says we acquit the defendant of first degree murder, but find him guilty of second degree murder or whether the jury says merely we find the defendant guilty of second degree murder. Earl Warren: Now I would just like to ask you one more question and then I'm going to leave it. Is second degree murder an included offense under this indictment? Leonard B. Sand: Under the laws that has been found by the Court of Appeals for the District of Columbia interpreting a District of Columbia statue, where the facts are such that there may have been committed another form of murder other than the felony murder, then second degree murder would be a lesser included offense, for example, where and I'm stating the facts in the Goodall case, in the District of Columbia. Earl Warren: But let's take the indictment and the facts of this case, I don't care about the Goodall case right now. Under the indictment and the facts of this case, is second degree murder an included offense? Leonard B. Sand: No Your Honor, it would have been -- it was error to charge the jury that they could find second degree murder and the jury could not have found. Earl Warren: Right and now excuse me for taking for much -- Leonard B. Sand: No, I welcome the Court -- Felix Frankfurter: Let's see if can I put my question as clearly as I can and protect your innocence (Inaudible). My question is and what I was speaking to (Inaudible) Chief Justice's question and agree with it, my question as I understand that his question (Inaudible) don't give an answer to me whatever you have given to them, don't answer on the basis of Trono, Trono doesn't exist, wipe it out from your mind, and I'd like to pursue this question. Are you on behalf of a government claim that in fact in human experience, in the experience of everybody who has tried cases, when a jury brings in, in turn a verdict saying we acquit this man of battery with malice or any other serious offense, grand larceny, we acquit him of grand larceny, you send him to jail for ten years. Well a jury comes in and uses those explicit words of determination of finding of acquittal. Is that in your view not legal consequence, I'm not now talking about legal consequence, prepare that for legal consequences, until you get with reality first with experience, with what takes place in life. I want know whether you say on behalf of the government that when a jury says we acquit him, but we find him guilty first of manslaughter or petty larceny that that is the same thing when they say nothing and just bring in a verdict for the lesser offence, are you saying that for the government? Leonard B. Sand: In terms of reality and not in legal consequences, of course we know that the reason that the jury is of course different and the jury did not in fact -- Felix Frankfurter: I'm not talking about this case, I'm talking about the generality, well anybody would tried cases, who is saying that when a jury says we acquit that's the same thing as when they say nothing but just give the verdict for a lesser offense. I suggest before you answer on the facts, the experience, the workings of the mind of the jury, the consequences, of what that means in fact, not legal consequences, I'm not taking about that at the moment, before you answer that affirmatively you got to consult (Inaudible) whether they think when the jury says nothing it means the opposite to this, they say something. Leonard B. Sand: Now from the verdict of this jury, what in fact they found, they found that the defendant was guilty of arson, they found that the victim died as a result of the actions by the defendant, and so in essence we know that in fact that first jury found that the defendant was guilty of all the elements of felony murder and so in those sense, in fact all legal consequences did that first jury acquit the defendant of murder. The government provides not only on the Trono case which is -- and it is not the only holding by the Court on this point, but also on Brantley against the State of Georgia in 217 US, which came under writ of error from the state court, there the defendant was convicted of voluntary manslaughter and obtained a reversal of that conviction. On retrial he claimed that he could not be tried for the greater of offence, for murder, either under the Fifth Amendment or the Fourteenth Amendment. The question not having then been resolved by this Court, whether the Fifth Amendment and its prohibition against double jeopardy applied to the states whether directly or whether it was an aspect of due process under the Fourteenth Amendment. The Supreme Court in a unanimous per curiam decision stated that the contention that retrial for the greater offense was a violation of double jeopardy, it is absolutely without matter, it was not a case of questioning jeopardy under any view of the Constitution of the United States. The reasoning supports the Trono decisions. As I've said, the consequence of a contrary view is that the error which is committed at the first trial, is not eradicated by a reversal of a conviction that is perpetuated. Moreover, what occurs is this. There is no valid finding that the act ever occurred, that the defendant ever caused the death of the victim, but there is a finding that if he did cause the death of the victim, it was not by premeditation or under such other circumstances as with need to the greater offense, the aggravated offense, if the contrary rule binds the hands of the second jury regardless of the evidence presented at the second trial. I would now like to direct myself to the prior un-appealed conviction for arson and say briefly that arson is in no sense a lesser included offense of a crime of murder. The jury could not have returned a verdict of guilty of arson on the murder count of the indictment. Arson of course is a crime against property that the gist of the felony murder -- of the murder count is a homicide. Such cases as States against Cooper which hold that out of one transaction there can be only be one crime. That of course has been rejected by this Court. Nor does res judicata as applied to the prior un-appealed conviction, a petitioner, for that judgment -- where the only judgment reflected in the arson conviction is a finding by the jury that the defendant did set the fire. This is unlike those cases where there is a prior acquittal with respect to a base of underlying facts such as the (Inaudible) where it has been said that the government is precluded from seeking to reestablish a fact which a prior jury has found could not exist. With respect to the argument that the Court of Appeals lacked the jurisdiction to remand for a retrial under Section 2106, the Court of Appeals is specifically empowered to remand a case for such further proceedings as maybe just under the circumstances. Since the only theory of the reversal was that this crime could be first degree murder and no other crime, obviously the only course open to the Court of Appeals was to remand for retrial for the greater offense. Collateral estoppel of course was not applied to a prior reversed verdict in the same proceeding and moreover there is no basic evidentiary fact found by the jury in the first case, at the first trial which in anyway exculpates the defendant. I would like turn now to alleged errors at the trial itself, and with respect to petitioner's contention that prejudicial error resulted from the admission into evidence of a prearranged basis, and in this respect I think it maybe helpful to briefly sketch in chronological sequence, the events which led to the taking of those statements. On the morning of May 26, 1953, at 7:40 that morning, firemen arrived at the scene and broke into this house on Massachusetts Avenue, the doors and windows of which were locked. They found on entering that the victim had perished, and that the petitioner was suffering from superficial stab wounds and from exposure to smoke. He was immediately taken to emergency hospital. At about 8:45 that same morning, Sergeant Kocher after he introduced himself as a member of the homicide squad, questioned petitioner for about 15 minutes in examining room of the emergency hospital while doctors and nurses were coming and going. Petitioner at this time was neither under arrest nor in police custody. In fact Sergeant Kocher did not even know at that time that the fire was the result of arson, and he did not even know in other words that there was any crime that had been committed. He only knew as he testified that someone had perished in the file. At the time of the questioning petitioner's answers were clear and coherent. He stated that he awoke at 7:40 that morning, that he smelled smoke, that he was attacked, that he went down the basement, that he was attacked and there. This was the same basic story that petitioner told in later interviews and at the trial. Between the time of the arrival on the scene and 10 o'clock of the fire and 10 o'clock that morning, back at the scene it was ascertained that the fire was the result of arson, in that there were five separate and independent fires which were started by the use of turpentine, and that the gas lights had been opened. Thereupon Sergeant Kocher returned to the hospital, it's now 10 o'clock on the morning of the fire. Petitioner is still in the examining room and he is asked these five separate fires and the gas blast and he says that they must have been started by this man who attacked him. But stationary was also found on the scene and petitioner was asked whether he had been writing any letters and he denied it. At about 2:10 the same day petitioner was taken to the District of Columbia Hospital. He was at this time placed in a locked ward with a dozen other patients and a police guard. This is the earliest time that it can be said that petitioner was in police custody. In this respect the opinion of Judge Bazelon dissenting below is significant. Because Judge Bazelon states that on Tuesday afternoon to Thursday, he petitioner was under arrest and the statements here in question are those obtained from him during that period in interrogations by two policemen and two fire inspectors. But from Tuesday afternoon Judge Bazelon says, and it would appear from this that he does not address himself to the question of the admissibility of the testimony with respect to the questioning on Tuesday morning at a time when petitioner was really not under any form of police detention. Since the story which petitioner told on Tuesday morning was in all substantial assessment, the identical story as he told on later occasions it is clear that that no right (Inaudible) was prejudiced by the admission of this evidence into testimony. Under the Mitchell case a confession made immediately after arrest is not invalidated ab initio by virtue of a subsequent unlawful detention. Therefore even if it was assumed arguendo that there was such a subsequent unlawful detention, petitioner has not contested it by the testimony adduced by the government at this stage. The questioning on the afternoon at the time when petitioner was in the locked ward, (Inaudible) previously as told to the investigating officer and there was no questioning on the 27th, the Wednesday without following the file. The petitioner was again questioned on Thursday the 28th. At the trial there was held voir dire to determine the admissibility of these prearrangement statements and at that voir dire defense counsel (Inaudible) evidence which the government could have easily put to trial because this is after all a second trial, a retrial specifically waived any objection to the introduction of testimony with respect to the questioning on the 28th. This case is entirely unlike the Mallory case where there was a situation created by the investigating officer designedly or otherwise during which there was the opportunity to extract the confession. This is not the case. Even as the dissenting judge concedes the delay in arraigning the petitioner was an unavoidable delay and not created by the government. I would like then to direct myself to the question of the remarks made by the government attorney in summation. And the claim of these remarks prejudiced petitioner because they minimize the responsibility of the trial judge. We content that the remarks of the government's attorney in the context of this trial did not constitute prejudicial error. We know at the outset that no objection was made to these remarks prior to the verdict. There was or hasn't been claimed that the trial judge's instructions to the jury were in any way improper. Although the defense counsel was specifically given an opportunity to submit any kind of instructions to the jury subsequently to these remarks, he did not avail himself of that opportunity. Under the felony murder statute imposition of the death sentence by the trial judge is mandatory. This fact emphasizes that the role of the jury in this case is simply a fact finding function. There was -- it was not open to the jury in this case to make any recommendation with respect to sentencing and so there was no occasion for the jury to get into that area of the case. Its functions were simply a fact finding functions and although the imposition of the death sentence by the trial judge was mandatory, it was not of course inevitable that that sentence to be ultimately be carried out. Defense counsel, however, sought to create the impression that the function of the jury was not merely to find the facts, but also to impose sentence or as you put it to send the defendant to the electric chair and the death sentence was not only mandatory, but that its exposition was inevitable. Earl Warren: We'll recess now Mr. –

Warren E. Burger: We'll hear arguments first this morning in Sosna against Iowa. Mr. Reynolds, you may proceed whenever you're ready. James H. Reynolds: Mr. Chief Justice, may it please the Court. First of all, this is the durational -- durational residency requirement case. It is a developing area of the law that the Court is aware. We are raising the constitutional question of the Iowa durational residency requirement for access to the domestic courts of Iowa. It's an Iowa statute requiring one year residency before you have access to the courts basing it -- Harry A. Blackmun: Mr. Reynolds, is that precisely true with the -- straighten me out because I have a misapprehension here perhaps. Does the one year residential durational requirement apply if the defendant is also a resident of Iowa? James H. Reynolds: No, if both of the parties moved in to Iowa together, then it does not apply, it only if one of the parties moves in. Harry A. Blackmun: Well then -- James H. Reynolds: The other party is not a resident. Harry A. Blackmun: This is rather unusual as compared to most statutes, is it not? James H. Reynolds: I believe it is. Harry A. Blackmun: Would the statute be easier -- be harder for you to attack if it applied across the board -- James H. Reynolds: Well, a -- Harry A. Blackmun: -- to a situation where a defendant was a resident? James H. Reynolds: Well, I think the narrower the classification, the easier it is to argue on an equal protection question if there's no rational relationship to the narrow group that is excluded and I think that ours because it is a more narrow restriction, it's probably easier to argue because of the fact that it applies only to non-residence where there's a non-resident out of the State other party, whereas both has moved into the State -- Harry A. Blackmun: Even for a week? James H. Reynolds: Even for a week -- Harry A. Blackmun: Actual residence even for as long -- James H. Reynolds: Right. Harry A. Blackmun: -- only as long as a week? James H. Reynolds: Right. For some reason, the State feels it has some compelling interest over parties which are one of -- one of them isn't in the State. Warren E. Burger: Well, isn't that an obvious background, the divorce mill state problems that we had for a number of years when there were only about three states, Florida, Nevada I guess? James H. Reynolds: I think that's probably true but I think that's probably the reason for there's a durational residency requirement has cause divorce mills to occur and I think that striking down on such a durational residency requirements will take care of that problem and that the States can litigate the proper status of those parties in the state where the real interest lies. Warren E. Burger: But isn't there quite a difference? Isn't the state different -- quite different when both the husband and the wife come into the State and are subject to its jurisdiction giving the indications that they're going to make up the family home as distinguished from your case? James H. Reynolds: No, I think that in the instance that if we use the criterion that we have advocate as the real jurisdictional question once the court has said in the past to be the jurisdictional question which is domicile that the domicile of the party is the real interest to which the State has and the fact that the domicile of the other party is only peripheral to the interest that they have because of the many concomitant things that go with the marital situations such as a severance, such as a custody, support, division of property and the attend and other things that go with it. Such as in Iowa, we have requirement of reconciliation, the injunctions that would be necessary or proper to preserve the peace or property and these things we feel are the real issue and that the citizen has in the divorce court, the non-resident or a resident domiciliary of the State who cannot overcome the jurisdictional one year requirement. He cannot have for instance a -- the severance of the relationship which is possible to a non-resident who moves in with his spouse and then the other spouse would for instance move out after the action has been commenced. If there is a severe reason for an immediate severance, we don't have to wait the 90 days that are normally required for divorce but if it was a one party was from out of the state, it had wait a full year and 90 days possibly or at least a year before they get an access to the court. The custody of the offspring and I feel this is very important and why many times access to the court is quite urgent because of the fact that the ramifications of the separate families if we don't make the ties cutoff that the ramifications and the effect upon children and the offspring of the marriage can be affected to a great extent and that therefore you should be able to get in at least as far as the parties are concerned and that the custody questions can be litigated so you don't have this situation, the parties running from state to state with children trying to get the other state to give them custody that we could get this matters litigated and that the offspring could be better protected if they let a chance to get to the court and the support of those persons, the division of the properties so that there could be certain injunctory orders entered to preserve the status quo so that disposition of the properties that the parties that they're leaving in another state, don't dispose of the properties or do something with them so that when it comes time to take care of the offspring that there are things available. For instance, there are statute to counseling, there's no counseling. The State of Iowa has maintained that one of the purposes of the one year residency requirement is this got somehow going to preserve the union that we feel that however immediate access to the courts would allow the order for some type of word of counseling which may be more beneficial than having two parties in opposite -- in separate state sitting and wondering about their situation for a year. Harry A. Blackmun: You did present these questions to the Ohio likely the Iowa Court, I get it? James H. Reynolds: We try to but -- Harry A. Blackmun: What did you present then in your pleadings? James H. Reynolds: We presented it in the pleadings and the fact that we are required under the statute in question to plead the fact of one year residency requirement is to be pled. Harry A. Blackmun: And you -- and it was rejected, your claim was rejected? James H. Reynolds: The claim was rejected by Judge Keck and he rejected not on the basis that he passed on the question and as he said that he felt he was in the position to pass upon the constitutional question when the statute upon his facing to be quite certain and that he didn't want to go the constitutional issue. Harry A. Blackmun: Or he didn't want to believe, rejected your claim you presented before, why didn't you appeal to that -- in the Iowa Court, carried the constitutional issue to the Iowa Court? James H. Reynolds: We'll, because of the status of the case is at the time it appeared that only preservation under a situation where there was little or no dispute to write the statute itself that the state courts have been very reluctant to get into the constitutional issue. They would always avoid it has been the habit of -- Harry A. Blackmun: Presented to him and they can reject it? James H. Reynolds: We could present it to him again and reject it but the court system then was in fact depriving the -- under 1983 was depriving the citizens of his civil rights which had been by history the prerogative or had been the place that had been litigated was in the federal court and therefore the federal court would be their proper forum to litigate this one. In fact, the state law which was depriving a citizen of the United States of a constitutional right was being deprived. Harry A. Blackmun: You talk that in your pleadings in the state court, you challenged the constitutionality presented? James H. Reynolds: No, the constitutionality of the statute was raised by the special appearance of the -- Mr. Sosna who came in and raised the special appearance and then it was litigated not by us but by them because the question had been raised as to his right to be litigated. Harry A. Blackmun: It was then litigated? James H. Reynolds: He was then litigated but I don't like term litigate, I don't feel it was litigated. We tried to present the case and Judge Keck says, that he was not -- did not want make pass upon that and he didn't, I don't think he ever intended to make a judicial decision on the constitutional issue. William H. Rehnquist: What did he do to your complaint? James H. Reynolds: Dismissed it. William H. Rehnquist: Well then certainly he decides that you have no claim, doesn't he? James H. Reynolds: No, he didn't decide that we had no claim. He just said that the statute says that you cannot have access to our courts period. William H. Rehnquist: Well, why aren't you bound by that under law res judicata? Why are you free to go into federal court and re-litigate that? James H. Reynolds: Well, because we're going back in the federal court in litigating really the state as you -- as the party, the original party was Mr. Sosna, we have no different parties. And we're talking about the State, the State under color of law, is trying to deprive us of a constitutional right, the right of access to the courts to litigate a very essential and necessary right to which is that of a marriage relationship and all of the concomitant things that arise from it, the very basic, we feel very basic right. Harry A. Blackmun: But here was a pending case stated in the State and state court system, it wasn't by law. I mean you have appellate opportunity, it's very constitutional question through the state court system. Why should a federal court get into and defend for it? James H. Reynolds: Well, because of -- I think because of the fact of the status of the law at the time, the law was very certain they put to the question of durational residency requirement had been struck down in the past by other federal courts and I think if we should look from our brief, you can see that when you split up the cases between those that have sustained the durational residency requirement and those that have struck them down, it has been almost the majority of the state courts in the federal court however is always vindicated the rights, the constitutional rights because that had been the proper forum. And that when it was a very, as the court said, a very certain statute on its face, there wasn't any way normally that you say, okay we're going to litigate it further in the state court, if there's any chance that you might have a chance of changing the opinion or having the matter at least under 1983 case that there could be some construction of the statute which would in fact give you a vindication of those rights and that there would be no such vindication and its superfluous to -- Thurgood Marshall: How can you -- James H. Reynolds: -- require them to proceed. Thurgood Marshall: How can you assume that the Supreme Court of Iowa will not apply the United States Constitution properly? How can you assume that when they took a note to support the Constitution of the United States and the State of Iowa? James H. Reynolds: That's true they did. Thurgood Marshall: Now, how can you -- you say that they won't follow the federal constitution? James H. Reynolds: No, what I was taking was as a lawyer looking at the -- Thurgood Marshall: What you said that they wouldn't decide in your favor? James H. Reynolds: Well, I think that it has been historically true that they confine the decision or reason more compelling which would justify the durational residency requirement. We feel -- Warren E. Burger: When you say they, who do you mean? James H. Reynolds: The Supreme Court -- Warren E. Burger: Which -- James H. Reynolds: -- that find a more sufficient reason as the -- as in our particular case two of the three federal judges found that the interest is somehow was going to preserve, that this was somehow going to preserve the marital situation and that if you look at the decisions which have sustained the state court decision which has sustained these durational residency requirements, they've gone from filler to post under reasons that they felt that somehow was going to sustain these -- for some reason we're going to help the marriage or we're going to preserve a compelling state interest which -- Thurgood Marshall: Has evidence shown -- is it the Iowa Supreme Court? James H. Reynolds: The durational remedy -- Thurgood Marshall: On federal constitutional grounds? James H. Reynolds: That is the best of our research, it hasn't. The Iowa Court spoken (Voice Overlap) however over, over again in the past. Thurgood Marshall: How can you imagine what they're going to do? James H. Reynolds: Well, I suppose you just have to as a lawyer. Look at what the history has been -- Thurgood Marshall: Of Iowa? James H. Reynolds: Well, the history of state court decisions in regards -- Thurgood Marshall: Well, this is Iowa you're talking about. James H. Reynolds: Well, anyway we all have an Iowa right. Warren E. Burger: And you have a unique statute in Iowa you indicated to Justice Blackmun? James H. Reynolds: Well, it's unique in regards to durational residency requirement but I don't think it therefore makes it anymore easy for the Supreme Court of Iowa to decide it. Warren E. Burger: Well then, how are the actions of other state courts with different statutes relevant to this issue? James H. Reynolds: Well, because of the fact that they have always found that there was some compelling state interest which we have felt that there was no such compelling state interest and that the federal courts whenever were presented with the case always found that there was not a compelling state interest that the history of the federal decisions in regards to marital relationship was it was one of the most basic of the relationships and therefore that to deprive someone under color of law whether by a court or some jury, some residency requirement was in fact one of the very basic things that was at issue and that therefore the line of cases of Shapiro in welfare cases, and Dunn in the voting cases, and Memorial Hospital in the non-emergency medical care that these were all the same type of situations. Harry A. Blackmun: So what you're saying is that you felt there was a more favorable atmosphere for your cause in the federal side? James H. Reynolds: I felt more favorable atmosphere because of the fact that that is -- Harry A. Blackmun: I know why but -- James H. Reynolds: -- recently been the forum of -- Harry A. Blackmun: On the other hand, you started your action on the state side and chose not to appeal? James H. Reynolds: Well, if we didn't start it on the state action, we would be on a rather moot position to go on and say that we would like to have a divorce, start a divorce but we can't because of the residency requirement. If you don't start it you could then turn on and say well, how do you know you really have broken marriage? Harry A. Blackmun: Isn't there a federal declaratory judgment on that? James H. Reynolds: I think there is a -- sure there's a declaratory judgment statute but the question was whether or not it's really at issue then. Is it a justiciable situation or controversy if you have in fact a larger divorce action? How do you know for sure that you really have a divorce? Harry A. Blackmun: You have a separate maintenance statute in Iowa? James H. Reynolds: There is a separate maintenance statute in Iowa. Harry A. Blackmun: You chose not to follow that one either? James H. Reynolds: That also has a requirement. William J. Brennan, Jr.: Mr. Reynolds, may I ask you, I notice that the defendants and the federal suit that's the state and Judge Keck expressly pleaded, I'm looking at page 23 now of the appendix paragraph (d), the suit involves primarily state laws of constitution and this Court should abstain until Iowa courts have ruled on such issue. I don't see any reference in either the district court opinion, either of the district court opinion to that issue, was that brief been argued before the district court? James H. Reynolds: The issue of the -- William J. Brennan, Jr.: Whether -- whether or not the district court should have abstained pending resolution of this constitutional question by the Iowa court? James H. Reynolds: No. William J. Brennan, Jr.: It wasn't briefed either? James H. Reynolds: No. William J. Brennan, Jr.: By either side? James H. Reynolds: I don't believe it was. The matter solely turned -- Byron R. White: Excuse me, the question is that arguably the question is whether or not the Younger against Harris kind of approach to a pending criminal case when one seeks to go to a federal court, it should be applied with civil proceedings depending on the state you're in? James H. Reynolds: Well then, the criminal part of it, I've -- you know as an old prosecutor, I know how important it is to keep your prosecution going once you've got the machinery going and that therefore that interest is far different than that of a civil litigation where you're alleging that the civil litigation and the judge in the under color of the state law is in fact depriving a citizen of his basic federal constitutional right and I think that's quite different because of the nature of the criminal process which is different than the civil process and therefore has rises above and maybe is a more compelling state interest in the prosecution of criminals. Byron R. White: I suppose that you have, at least after this trial court judgment which you did appeal, if you have filed a declaratory judgment action against the same -- against the other party to this marriage in a state court of Iowa seeking they have a statute declared unconstitutional, you -- and the defense of res judicata had been raised than you did not sustain under Iowa law or any other law, isn't it? James H. Reynolds: On res judicata as to issue or claim or as to parties or -- Byron R. White: No, with the same parties, same -- it was same parties here. You could have brought another declaratory judgment action or on other decrees in litigation in the Iowa court without facing res judicata claims, would you? James H. Reynolds: I think that if we had brought the case against Iowa -- Byron R. White: Well, -- James H. Reynolds: -- as against to Mr. Sosna I think we could. Byron R. White: I'm talking about the other party to the marriage? James H. Reynolds: I don't know how we could bring a declaratory judgment action against another party to the marriage. Byron R. White: Well, especially after it has already been -- your claim has already been decided. James H. Reynolds: No, I -- but the marriage situation is you're certainly litigating the marriage situation and you can't get a declaratory judgment out of it. Byron R. White: You brought a declaratory judgment action on the constitutionality of the statute? James H. Reynolds: Right. Without first -- Byron R. White: That claim had already been decided in your divorce action. James H. Reynolds: Right. Byron R. White: Well, but you think the real thing that save you is that you were litigating with Iowa rather than with the other party to a divorce action? James H. Reynolds: Right, that's a 1983 case. We're saying that the State by enacting a statute is in fact depriving us of our constitutional rights that we've judge -- we've joined Judge Keck in it because the fact that he under color of law is in fact depriving us of a basic constitutional right. Otherwise, you might as well throw 1983 out the window if you're going to say that if you bring a state court action and the judges use the state court law and to deprive you of your constitutional right, you can't raise the declaratory judgment question as to whether or not that state law is in fact -- Byron R. White: You can appeal it and then you can file for certiorari. James H. Reynolds: That is an alternate proceeding, yes. Thurgood Marshall: What you really did was instead of appealing to the state court you're appealing to the federal district court? James H. Reynolds: No, we're not really appealing (Voice Overlap) to the federal district court, we're asking the -- Thurgood Marshall: Well, what is the difference? James H. Reynolds: Well, because what we are litigating -- we started out for a divorce action. We say we wanted a divorce. We wind up having the defense being frost upon us that the fact that you haven't been there for a year and litigating our constitutional rights in the state court. Now, we then now would turn around to the federal court and said we have been deprived by the state court under the defense of no jurisdiction and therefore we would like to have this Court declare and enjoining the court from using that defense and to throwing us out of court so we can have access to the state court. Thurgood Marshall: If you've gone to the Supreme Court of Iowa, what would you ask for? The same thing, wouldn't you? Would you ask for -- James H. Reynolds: We would ask for an injunction against the maybe mandamus or something like that and then you're into -- I mean that the -- Thurgood Marshall: Well, couldn't you appeal that way, direct appeal? James H. Reynolds: Direct appeal to the Iowa Supreme Court? Thurgood Marshall: Yes, sir. James H. Reynolds: Yes, we could have appealed that. Thurgood Marshall: And instead of that you appealed to the federal court? James H. Reynolds: We went and ask the federal court to declare and enjoin the state court -- Thurgood Marshall: Would you have (Inaudible) that way? James H. Reynolds: No, I don't think so. I think that the, at least had been my experience with three-judge federal panels that if you've got a civil rights that are being deprived under color of law by a state, the quickest way you can do it and was thought to be that by the Constitution -- by the Congress was to enact 1983 and that to me I know is the quickest way to vindicate your rights if you're being abused by the State. Warren E. Burger: That brings up another related matter. Your client has now been a resident and viable for much more than a year, is that not so? James H. Reynolds: I believe so. Warren E. Burger: And now she satisfies the requirement, does she? James H. Reynolds: She has, yes. Warren E. Burger: Can she get jurisdiction of the husband, the defendant by publication? James H. Reynolds: He could probably litigate the status in Iowa but not the questions of personal jurisdiction as to none Iowa in rem type of things. I mean the status is in Iowa but anything else is still in New York, so, yes, you can probably get it terminated if she's willing to give up everything, the questions would delete it. Thurgood Marshall: Wouldn't she get this thing (Inaudible) now is if we -- as if we would knock the statute out? James H. Reynolds: Well, that's the whole point, you have to wait a year and there are important -- Thurgood Marshall: Where did the -- James H. Reynolds: Yes, but there were important things that, the laws over the -- Thurgood Marshall: So she can get the divorce right now? James H. Reynolds: But there were important things that should have been litigated that never were, for instance the right and support of those children should have been litigated than not having to wait a year or well maybe Mr. Sosna might take up other relationship. Thurgood Marshall: Could it be done now? James H. Reynolds: Pardon? Thurgood Marshall: Can it be done now? James H. Reynolds: It can be done now, yes but the question -- Thurgood Marshall: All of it? What is there that relief in this Court will give you that you don't have as of right now? James H. Reynolds: Declaratory judgment, declaratory of the constitutional right of the -- Thurgood Marshall: That she could have had the divorce before? James H. Reynolds: Right, as -- Thurgood Marshall: And what good does that do her? James H. Reynolds: This particular case -- this particular plaintiff in the class action? Well, as for this particular plaintiff, her situation has been resolved by time but the length it takes to litigate the matter but there are other situations which is -- Thurgood Marshall: That didn't give you any problem? James H. Reynolds: What doesn't give me any problem? Thurgood Marshall: The fact that it's moot so far as she's concerned? James H. Reynolds: No because as the court -- Thurgood Marshall: Is there any other name brought? James H. Reynolds: As Judge Stephenson said in his -- Thurgood Marshall: Is there any other named party in the class? James H. Reynolds: No, I believe not but at least the class was acknowledged and never challenged by anyone up to this point. Thurgood Marshall: Has anybody else intervened? James H. Reynolds: No, but we had plenty of calls about people that wanted to. Thurgood Marshall: (Voice Overlap) as to the name of the father, would happens to the class? James H. Reynolds: I believe that there is a president for the class, we have nothing else as to remand it to the court again and let other members of the class join in if -- Thurgood Marshall: What case is that? James H. Reynolds: I think it was the Babcock versus Wilson, I don't have the -- Thurgood Marshall: That's alright, Mr. Reynolds. You admit the main party is -- does not need any relief from this Court? James H. Reynolds: She herself? Thurgood Marshall: Yes. James H. Reynolds: Not as far as the Iowa court is. She in fact has gone and got a divorce and had to go back and litigate the matter, take a bus back to New York and had a litigator -- Thurgood Marshall: You said she's gotten a divorce? James H. Reynolds: Yes, in fact in New York. She had to go back to New York in litigation -- Thurgood Marshall: Will she get a divorce in Iowa if she's already gotten one in New York? James H. Reynolds: Well, that's a good question. Cooper versus Cooper -- Thurgood Marshall: To me, there's no problem for me at all? James H. Reynolds: Well, Cooper versus Cooper raises the question which is an Iowa decision about a doctor from Iowa that went out to Nevada and get a Nevada divorce and the Iowa court says we can still -- our support judgments and personal judgments in regards to support. So far there's nobody going to stand who will acknowledge the divorce in Nevada. Now, under Iowa law, I have to question as to whether or not she can get a New York divorce and might have a different question as why is the State of Iowa under the present status of Iowa law in 19 -- I believe in 19 Cooper versus Cooper was a 74 -- William O. Douglas: So far as the support of the children go? James H. Reynolds: Pardon? William O. Douglas: So far as the support of the children go? James H. Reynolds: Right. Now, it's the grade of the divorce and the court there, I mean, used their powers of determining domicile of the doctor who left on October and went to Nevada, got his divorce and came back in January and they went through the question as to whether or not it was domicile or not and they said yes it was domicile in Nevada sufficient for the Nevada Court to have jurisdiction or grant -- acknowledges divorce -- Thurgood Marshall: Is there anything that she can get from us that she can't get from the Iowa court right now? From this very same judge you went before? James H. Reynolds: No, that she herself, no, but the class to which she is member I think still can because I think that as the State has admitted in their stipulation of facts that it is a group so and its so numerous that -- were numerous than has able to be counted and I think that there are numbers and numbers of people who have marital relations which are at question and needed access -- William H. Rehnquist: We set up several occasions Mr. Reynolds that a person can't represent a class of which he's not a member and I think that would probably be true of your client now whatever the class might be of people awaiting Iowa divorce requirement, your client certainly is no longer a member of it? James H. Reynolds: No, I would -- at this present status, yes she would not be but the class itself and I would urge that if the court was to adopt the question that they would send it back so that other members of the class who would be members would in fact be able to join in the matter and to bring the matter back before the court. I'd like to reserve five minutes for rebuttal if possible? Thurgood Marshall: Why couldn't it be (Inaudible) supposed to be? James H. Reynolds: I suppose they can but as we've indicated that it's a matter of urgency and a necessity and that's the basic question about the marital relation, its not a matter of waiting a year because by that time the damages are done as to the children, the property, the relationship itself has deteriorated and that these are matters of that need work instanter, that in a year, that's the whole projection of the question. Warren E. Burger: Very well. Ms. Nolan. Elizabeth A. Nolan: Mr. Chief Justice, may it please the Court. I'm here on behalf of the State of Iowa to urge the affirmance of the Court below. The federal district court there did take on this civil rights action and as its opinion clearly states it was convinced -- Warren E. Burger: Would you raise your voice a lit bit Ms. Nolan. Elizabeth A. Nolan: Yes certainly. It was convinced that the compelling interest test had been satisfied and that the State of Iowa did meet all of the requirements that have been set a standards in the recent cases determining whether or not when a person is newly arrived in the State it has access to its courts and access to its order -- rights given to citizens. The matter below was at one time pled with a view toward the abstention doctrine. William O. Douglas: And did you argue it, Ms. Nolan? Elizabeth A. Nolan: We didn't -- I did not take part in the hearings below but its my understanding it was not argued and as a matter of fact when the research was done on the cases and the various standards that might come into play, it was decided that abstention was probably not the proper thing in this particular case that the State could meet its burden that it would be of some value in this area to have a federal court ruling on the case being litigated. In this connection, Mr. Justice White, you asked if there was a reason for the federal court to come in and hear cases of this nature when its is perfectly possible for the state courts to determine the constitutionality of their own statute and I can only say to that that it appears to be a current practice and that the name of one case I can't pronounce but it's a Hawaiian case, its been decided since Whitehead versus Whitehead and in that instance, both the federal courts and the state courts have looked at this very same question, and so for that reason we abandoned our position of abstention in this case. Byron R. White: And did you argue in any event collateral estoppel based on the conclusion of the proceeding before Judge Keck in the state court? Elizabeth A. Nolan: No, I don't believe that was argued as a matter of collateral estoppel. Judge Keck's decision there was one which we believe was thoroughly grounded in a lie. It was a well-reasoned decision and that thereto all of the requirements of the federal constitutional protections for the rights of individuals had been met. Byron R. White: No, but what I was getting at Ms. Nolan was whether you relied on that conclusion of Judge Keck's disposing adversely to this petitioner? Elizabeth A. Nolan: To this plaintiff? Byron R. White: Yes, the constitutional question whether you relied on that as collateral estoppel in this federal court suit? Elizabeth A. Nolan: Well, I would say that (Voice Overlap) representing Judge Keck in his position that he had acted under color of state law, yes, I guess we did. Thurgood Marshall: Ms. Nolan, did you acquiesce in bypassing your own state court? Do you think that's a problem for an Attorney General? Elizabeth A. Nolan: I don't Mr. Justice Marshall, I think that here however, as statement was made just previously to my arising and that is that the plaintiffs have the right to go to the Supreme Court of Iowa in this matter. Actually their time for appeal has expired, I don't that is any longer available to them. Warren E. Burger: But all of our questions were directed to their right to go to the Supreme Court of Iowa at that time, not now. Elizabeth A. Nolan: At that time, yes sir, I think they did certainly have that right. Warren E. Burger: And is your answer to Justice Marshall that the State of Iowa is perfectly willing to bypass the State Supreme Court and go into federal court? Elizabeth A. Nolan: The State of Iowa since in the last 10 years has done a great deal to liberalize its divorce laws. We also would like to know where we stand. We believe that our Supreme Court would affirm Judge Keck's decision in this particular case. We don't have any reason to appeal that decision. On the other hand, if the plaintiffs in that case chose to abandon their appeal why -- and they bring their action in another forum or we did come to that forum with the hope that this might serve some benefit both in the State of Iowa and in general in resolving these particular requirements for the protection of civil rights. This Court is well aware that since Pennoyer versus Neff and the Williams versus North Carolina, there has been a great deal of controversy about divorce actions and when the Iowa legislature in the -- starting about 1967 undertook a study of the divorce laws with the purpose of reforming them in the State of Iowa. They were well aware of the conference work on the Uniform Divorce Act and also they were aware of the decisions of this Court particularly Estin versus Estin and the Vanderbilt versus Vanderbilt cases which talked in terms of divisible divorce and accommodation of the parties and all of this matters and it was for this purpose that we abandon our abstention doctrine in the lower court and attempted to meet what the Fifth Circuit now has seemingly in the Makres versus Askew case coming Florida. What seems to be a unitary standard showing compelling interest and overwriting significance in all matters whether they arise from due process or from some other incident of equal protection of the law. In the case of Iowa, we feel that our statute is tailored to minimize overbreadth by applying the durational residency rules only in those cases where the respondent is not a resident and cannot be served personally in the State and for this reason we feel that we have in reenacting a requirement that has long been on the books of Iowa help to formulate a valuable standard and we have them pointed out in the Uniform Marriage and Divorce Act as being one of the original states to take part in this kind of uniformity in this area of the law and for this reason, the federal district court action was argued by the State. Potter Stewart: Ms. Nolan, has the Supreme Court of Iowa in any other case dealt with the constitutional validity of this statute? I think Mr. Reynolds was asked that question but I didn't get any -- Elizabeth A. Nolan: Well, in Judge Keck's decision which is sent out in the jurisdictional statement, there's a reference to Korsrud versus Korsrud that's in 242 Iowa I believe and 45 N.W.2d, I think it is. In any event, that case involved a petitioner who originally was a resident of the State of Iowa. He took up residence in Hawaii and attempted to obtain a divorce there. Then he came back to the State of Iowa on being advised at Hawaii that Iowa is the proper place to bring his action and obtained a divorce without informing his spouse who later came back and contested the validity of that divorce on the basis that the court had not had jurisdictional -- the fact of jurisdictional basis for giving the divorce and that order was invalidated and we find this in our own -- from our own experience in Iowa. So it is possible -- Potter Stewart: So the Supreme Court applied the statute, you don't know if it's the validity of the statute itself was attacked on that case? Elizabeth A. Nolan: The Supreme Court did test the validity of that statute at that time and held that there was a sham domicile pled and that it was a victim of fraud and that the court was a victim of fraud. Potter Stewart: So the court applied the statute? Elizabeth A. Nolan: And the court applied the statute, yes. Potter Stewart: But you don't -- do you know whether or not the constitutional validity of the statute was attacked in that case? Does it appear from the opinion or for anything else? Elizabeth A. Nolan: In my recollection, it was attacked only on the basis of whether or not the court had jurisdiction but I think that is essential to the constitutional validity of that particular section of the code. Potter Stewart: Well then the facts were litigated I guess -- Elizabeth A. Nolan: That's right. Potter Stewart: -- it were an issue in that case but -- Elizabeth A. Nolan: That's right. I think it should be mentioned here also that in the District Court, this petitioner came in and the court found that not only did the petitioner failed to alleged the one year residence which is mandatory under the circumstances of that particular action but that also the plaintiff failed to plead that her residence in the State had been in good faith and not for the purpose of obtaining marriage dissolution. This is not an issue in this particular case but both of these requirements are mandatory under the Iowa dissolution of marriage statute. Potter Stewart: How long has the statute been on the book? You said that Iowa has recently been on the process of changing its divorce law, domestic relations law? Our dissolution statute was enacted in 1970 and it has reenacted this particular provision for the protection of the absent spouse so that due process will be accorded which was in the law previously and I don't know how far back that it goes, it appears to go back at least into the 50s and I'm sorry I didn't research that. William H. Rehnquist: Is Iowa statute basically the uniform law? Elizabeth A. Nolan: Well, I would say that as close as uniform laws are uniform, Iowa statute is the uniform law, yes. It contains requirements that there be an allegation of a breakdown of the marriage relationship. This is also one of the reasons that we were interested in pursuing this in the federal court because we felt that it was necessary to determine that the State of Iowa did have jurisdiction over the marital status. In this particular instance, it appears from the allegations in the federal action that the plaintiff and from the answers to the interrogatories also that the plaintiff's marital relationship with her husband had broken down somewhere outside the State of Iowa and some several months prior to her relocation in the State of Iowa. So, it may and we felt it was questionable as to whether or not there actually was a jurisdiction over the marital status in the State of Iowa although one of the parties alleged to be domiciled there. Thurgood Marshall: But that was an individual court, was it? Elizabeth A. Nolan: I believe it was sir. Thurgood Marshall: What happened? Elizabeth A. Nolan: In -- Thurgood Marshall: I thought the federal court was just on the statute not on the divorce. The federal court couldn't give a divorce, could it? Elizabeth A. Nolan: There were interrogatories propounded and answered in the federal court action and I believe this information is contained clearly in the answers of the individual counsel. Thurgood Marshall: What you merely wanted was that the federal court to put the stamp of approval on this case? Elizabeth A. Nolan: We appeared in that action as defendants. Thurgood Marshall: But that's what you wanted? Elizabeth A. Nolan: We would be happy if the court would put a -- Thurgood Marshall: What you really want -- Elizabeth A. Nolan: -- stamp of approval on our state statute. Thurgood Marshall: is an advisory opinion, don't you? Elizabeth A. Nolan: Pardon me? Thurgood Marshall: You want an advisory opinion from the federal court, don't you? Elizabeth A. Nolan: The action that was brought was for a declaratory action for declaratory judgment. Thurgood Marshall: It could mean an action of the State of Iowa in abandoning abstention and everything else, what you really wanted was a stamp of approval, didn't you? Elizabeth A. Nolan: I would say yes that that is true. The State of Iowa had no con -- Thurgood Marshall: I didn't know that federal courts were here to grant advisory opinion, I didn't know that? Potter Stewart: You were the defendant? Elizabeth A. Nolan: That's correct. Potter Stewart: You didn't go to another court? Thurgood Marshall: But she agreed. Potter Stewart: Not so very long ago as time goes, the prevailing law was that a wife could not acquire a separate domicile, that was the prevailing domestic relations law would be that the marital domicile was the husband's domicile, and that so long as there was a marriage between the two, the wife was incapable of acquiring a separate domicile anywhere. Do you know of any states still have that rule? Elizabeth A. Nolan: I don't know, I don't think that's been the rule in Iowa for sometime because our statutes do permit the court to take jurisdiction if one of the parties is domicile. Potter Stewart: But I say the rule that I just summarized used to be the prevailing rule in domestic relations law, you don't know of that. Elizabeth A. Nolan: I have no knowledge of other states in that particular regard. William O. Douglas: Ms. Nolan, you had the discussion of the mootness issue. Mrs. Sosna has now been divorced. There is no other party with class action, what is your position on the mootness question? Elizabeth A. Nolan: Well, my position on this question before this Court is that there appears to have been a proper appeal from a district court order and that this Court does have authority and power to affirm that lower court decision which is what we asked. With respect to the class action as such, I think that that entire matter has now been made moot. William O. Douglas: You say -- you think it has been mooted? Elizabeth A. Nolan: I think so but I think that the appeal is preserved or was properly preserved. William O. Douglas: You think the class action is moot but the appeal is preserved? Elizabeth A. Nolan: I believe so. Warren E. Burger: So what is the case or controversy between these two party -- between the husband and the wife? Elizabeth A. Nolan: Well, -- Warren E. Burger: Or between the husband rather the wife and the State of Iowa? Elizabeth A. Nolan: The controversy was that -- Warren E. Burger: Is -- Elizabeth A. Nolan: What is -- Warren E. Burger: Today, right this minute at quarter to 11, what controversy exists now? Elizabeth A. Nolan: I feel that the petitioner in the original action although now divorced and I assume removed from the State of Iowa would have only the controversy grounds that existed at the time that the action was originally brought and that is to have the question determined under the civil rights sections of the code and then to pursue any decision through appeal to the highest court in the land. William O. Douglas: We held here that the decisions say that New York court on a divorce matter would not bind the say Iowa on the question of support of the children that that is not the res judicata? Elizabeth A. Nolan: Are you referring to the divisible divorce here? William O. Douglas: I'm just trying to get you over these little hedges. Elizabeth A. Nolan: Thank you, I appreciate it. I don't have the answer really to the question. I assume that this appeal was brought in good faith and that the court took jurisdiction of it in good faith. Thurgood Marshall: Are the children in Iowa, now? Elizabeth A. Nolan: Pardon me? Thurgood Marshall: Are the children in Iowa or New York? Elizabeth A. Nolan: I do not know. Warren E. Burger: Are any of the parties in Iowa, now? Elizabeth A. Nolan: As of this morning it sounds like they aren't other than Judge Keck and the State of Iowa. Warren E. Burger: I'm not very clear whether the State of Iowa is urging or not urging federal jurisdiction here, you lose me in a state of confusion on it? The State of Iowa's position on the federal jurisdiction question is that the State, that the United State statutes appear to give to the federal courts the power under the civil rights law to determine questions of violations of constitutionally protected rights of individuals where the violations occur under color of state law and this is the way this case was originated and this is the way this case was argued in the lower court. William O. Douglas: In many of the lower federal courts on class actions for the named party has dropped out of the case remand that case to the District Court where the case started to see of any but not can be for others to join -- other class to join, you haven't briefed that, didn't you? Elizabeth A. Nolan: I have not brief that and -- William O. Douglas: Are you familiar with our decision? Warren E. Burger: I think it was last term in the Burney case? William O. Douglas: Burney. Potter Stewart: Burney against Indiana. Elizabeth A. Nolan: No I'm not. Potter Stewart: Two terms ago. Elizabeth A. Nolan: I'm not but in all of this time no other party has come forth to join this class. William O. Douglas: Well, I know that, as I recall the Burney situation was not unlike this one. I think what we did was sent it back to give others of the class an opportunity to intervene? The -- so far as the main party was concerned as I recalled Burney like this one could appear. The case was no longer a case at all, no case or controversy, you don't ask us to do that? Elizabeth A. Nolan: I don't ask you to do that. Byron R. White: You won below and you want to hang out to that? We'd be happy with that decision. Byron R. White: Ms. Nolan, do you know when the divorce took place? Elizabeth A. Nolan: When the divorce took place? I didn't hear about it until this morning, evidently it has taken place in New York State. Byron R. White: Since we noted probable jurisdiction? The answer is yes? Speaker: Yes. Warren E. Burger: Yes, but we have a special request that the parties addressed themselves to the Younger versus Harris problem, it was that not so? Speaker: That was true. Elizabeth A. Nolan: In Younger versus Harris, had the -- we would contend that had the court or had they pursue this appeal to the state court, that Younger versus Harris would be applicable here but on the other hand, there seems to be an overriding interest in getting some kind of certainty append to these types of jurisdictional questions and -- Byron R. White: Well, if the federal court had sustained the statute against the federal claim the one constitutional by litigant? Who just like to deal -- Speaker: Correct. Byron R. White: And the suggestion is that if there's a pending statement in which the issue may litigate, that it should be reserved to the state courts than brought here. Now –- but the Younger used in court based on some notion of protected state interest expressly copied the state court system. And if the state doesn't want it, (Inaudible) then you have will have to plead the res judicata and collateral estoppel which is normally done. Elizabeth A. Nolan: That's correct we did not. William H. Rehnquist: Why -- Why didn't you plead it? Harry A. Blackmun: Ms. Nolan, (Voice Overlap) why you pleaded, the Younger from that provision has paragraph (d) that I read? You've abandoned it. Elizabeth A. Nolan: Yes. Harry A. Blackmun: You abandoned it below and you abandon it here? Elizabeth A. Nolan: That's correct. Harry A. Blackmun: As Justice White said as in fact doctrine that protects state interest of the State doesn't want to be protected, I guess we don't apply the doctrine? Elizabeth A. Nolan: We did abandon it below. William H. Rehnquist: Why from the point of view the State, isn't the decision of the Supreme Court of Iowa just as good as source of certainty as a decision of a three-judge federal court? Harry A. Blackmun: You mean if not better? Elizabeth A. Nolan: It is but we did not have the opportunity of taking this case to the Iowa Supreme Court. William H. Rehnquist: That's right, you weren't able to go? Elizabeth A. Nolan: That's right. Byron R. White: But you could have hanged under your Younger? Potter Stewart: It really isn't Younger is it? There was no pending -- there was no pending litigation in the state courts. The State Trial Court had decided the case, it had not been appealed, the time for appeal had expired, there was nothing pending in the state court, it's not of the Younger case. Even assuming Younger applies to civil litigation? Thurgood Marshall: Ms. Nolan, you can't abandon the moot point, can you? I mean you abandon everything else but you can't abandon that can you? I mean the case is moot. It's moot. Elizabeth A. Nolan: The case is moot but in order to present the other side of this argument before this Court we appear. Thank you. Warren E. Burger: Do you have anything further Mr. Reynolds, you have two minutes. James H. Reynolds: Yes, I do Your Honor. I believe I do have that case of Babcock -- Cox versus Babcock and Wilson 471 F.2d 13, page 15 in which they did refer the case back to the court -- to the lower court where -- Speaker: (Inaudible) James H. Reynolds: Right. But I would like to point out to the Court that at first Boddie versus Connecticut which is the other similar case to this in which the was divorce was terminated or was never started was because of the fact of or was allowed to proceed was because of the failing to pay the fee which is similar to the situation here, and it was never raised by this Court when they determined Boddie versus Connecticut that kind of catches us here after the jurisdictional statement and the matters already been litigated with the whole new case when we come up before the Court that the whole thrust of our argument and that the argument now is that somehow that federalism or committee or judicial husbandry is going to be affected by you not making a decision on this matter is not the case when you look at the fact that there seven or eight state courts decisions all one way and the federal court decisions are the other way with two of the most recent ones, Alaska and I believe Massachusetts finally going -- coming our way and in fact the Fiorentino case in Massachusetts even refer to the fact that the federal court had made a three-judge federal panel had made a decision and that they were very intelligent men and that may have to even give some deference to their opinion. Byron R. White: But do you think that circuit go against your reasoning? James H. Reynolds: If it did they didn't catch it. Speaker: As far as (Inaudible). James H. Reynolds: Is that the Schiffman or Askew in Florida? I believe so. That one decision and the Iowa decision or the two federal decisions which are against us and I believe they had been decided at the time and we would urge that in light of the decision in-- we see here of England versus Louisiana Medical Examiners in 1964 case that if you're going to apply this doctrine to 1983 cases that you at least accept our case and maybe apply it to future cases but that at least as far as ours is concern since it was never raised at the lower level, that we not be barred from the decision by the Court at this time and that if the injunction is not to be granted, at least to the declaratory judgment part is to be granted. And that there may be questions as far as committee is concerned but at least as far as the question of the declaratory judgment part of it that the Court rule on the matter since the states have barely have differed to the question at least the State of Iowa has and that there's a request and that the class does still exist that the -- its my understanding that the question about name party or party in interest is simply because the fact that the party in interest will in fact argue the constitutional question and I believe that we have done that and that the fact that the matter may have become moot as to this particular named party that the other members of the class still exist in Iowa. And for -- of course information, Mrs. Sosna is back in Island, lives in Green Island, Iowa and has this or with the children but there are still in Iowa the class of the other people who are deprived who had most recently moved into Iowa and that the class does still exist and there is still a case in controversy. That there are still people that are being affected by the in their civil rights by the state court action in the -- under 1983 and therefore -- William H. Rehnquist: If the class may exist but she's not a member of it? Thurgood Marshall: (Voice Overlap) James H. Reynolds: Excuse me? William H. Rehnquist: The class may exist but she is not a member of it? James H. Reynolds: The class still exists and we're arguing on behalf of the class and on behalf of the appellant which -- Speaker: (Inaudible) James H. Reynolds: And I think that is only irrelevant as to whether or not her -- as far as the issue on the question of case and controversy is concerned, it is only relevant as far as whether or not we're going to adequately represent the class' interest and I think we are, I think we're trying to argue them and doing I hopefully a good job. And that the fact that as to one member of the class becomes moot whether it's the named one or any other members, this could be constantly changing group because of the fact that it is in fact a durational period and people are moving in and people will fall out of the class but the class will continue to exist no matter what this Court does. Thurgood Marshall: Would you make the same argument if the only named plaintiff in the class action has drop dead? James H. Reynolds: I would think so or -- Thurgood Marshall: Are you? James H. Reynolds: You know had been elected official and had somebody else had taken his place as substitution. Thurgood Marshall: (Inaudible) James H. Reynolds: Yes that the class still exists. Thank you. Warren E. Burger: Thank you. The case is submitted.

Warren E. Burger: We will hear arguments first this morning in Northwest Wholesale Stationers against Pacific Stationery and Printing Co.-- Mr. Sweeney, you may proceed whenever you are ready. David J. Sweeney: Mr. Chief Justice, and may it please the Court, the petitioner Northwest Wholesale Stationers is a non-profit purchasing cooperative. It pools the collective buying ability of its members to achieve larger aggregate purchases, thus lowering prices to its members. At year end, what would be profits are distributed to its members as rebates, which are exempt from being categorized as price discrimination under the Robinson-Patman Act. The members of the cooperative are retail stationery stores located throughout the five western states. There is nothing in the record which demonstrates what market impact or power the cooperative had or in fact the definition of what the market is. The respondent Pacific Stationery is a wholesaler-retailer combination, and used its cooperative membership for purchases of odd lot and round out items when it could not stock them in its own wholesale inventory. It had additional sources of supply from manufacturers and other suppliers. After Pacific's ownership changed, it filed another membership application. That application was denied, although they were informed that they could continue to purchase from the cooperative. Pacific then filed a Sherman One antitrust lawsuit alleging that a group boycott had occurred, that its denial of cooperative membership in the absence of a due process hearing constituted a per se violation under liability theory based on Silver versus the New York Stock Exchange. At the District Court level on cross motions for summary judgment, the District Court dismissed plaintiff's claim, reasoning that Pacific failed to submit any evidence showing a restraint on competition as distinguished from alleged unilateral harm to itself. The Ninth Circuit, in a divided opinion, reversed, finding per se liability for the cooperative's actions. It stated that termination in the absence of a hearing made the practice so likely to be anticompetitive that it was per se unreasonable. Our petition followed. The recent decisions of this Court make it clear that under either a rule of reason or a per se analysis, the goal is to form a judgment about the competitive significance of conduct, that courts must view the purpose and effect on competition. The Ninth Circuit should be reversed because it found per se liability under a simplistic analysis which simply characterized the conduct instead of viewing what actual effect, if any, the conduct had. In recent cases, this Court has authorized the use of an analysis of competitive impact: What is the economic reality which occurred as a result of the conduct? Sandra Day O'Connor: Mr. Sweeney, I take it there is nothing in the record to support the District Court's observation that the exclusion of Pacific didn't affect competition. David J. Sweeney: The District Court in its oral opinion made no specific findings of fact or-- Sandra Day O'Connor: Well, I know that. Is there anything in the record that would support it? David J. Sweeney: --Your Honor, yes, there is. The only factual impact in the record is the loss of rebate, which amounted to approximately $9,800. That was the $9,800 in its last year with the cooperative. So the record would reflect that in fact a rebate had been lost. There is nothing in the record that would indicate what effect the loss of that rebate had on Pacific unilaterally as a competitor. There is nothing in the record to demonstrate-- Sandra Day O'Connor: Would there be enough then in the record to even apply the kind of quick look analysis the SG is suggesting should be applied? David J. Sweeney: --I believe that there would be, because we submit that it must be the plaintiff's burden to show in fact what competitive impact has occurred. If they fail to set forward any evidence as to an impact on competition itself, then that absence of material from the record would allow the Court, faced with a summary judgment motion, to conclude that there had been no meaning of the burden of proof on-- Sandra Day O'Connor: But if a per se rule is applied, that burden doesn't exist, I suppose. David J. Sweeney: --I would... arguably, although I would submit that there must be a showing of an impact on competition to act as a predicate for any antitrust injury, so that if in fact there was no showing of anticompetitive injury, then antitrust liability would not follow from that. Facing liability, as we submit the Ninth Circuit did, on rank characterization ignores the competitive impact, and in terms of economic policy will deter pro-competitive conduct by cooperatives. Here the plaintiff made no showing that membership in the cooperative was a prerequisite or necessary to compete in the marketplace. The plaintiff was not foreclosed from any supply... it had multiple sources of supply from manufacturers and other wholesalers... nor was it foreclosed from any markets in the competition. Nothing in the record indicates that the cooperative Northwest possesses any significant market power in an industry which in fact has been characterized as fragmented. It is in a retail industry. Because there was no showing by the plaintiff of an impact on competition as distinguished from an impact on itself, the District Court correctly dismissed the suit and correctly, we submit, utilized the rule of reason. We believe it is now appropriate for this Court to clarify the method for appropriately analyzing concerted refusals to deal. We submit that lower court decisions reflect a continuing uncertainty regarding how they approach a group boycott case. Lower courts realize that when they engage in a strict characterization of conduct, it may thrust a defendant into the maw of a per se violation when it may be obvious that the purpose and intent of the conduct was not a naked restraint. John Paul Stevens: Mr. Sweeney, do you agree that this is a concerted refusal to deal? David J. Sweeney: I believe that there are a number of factors which would take it at least out of the traditional paradigm of consorted refusal to deal. Certainly we have joint... we have a joint grouping of competitors. John Paul Stevens: Do you think you could answer my question yes or no? David J. Sweeney: Traditionally yes. I think the answer is yes, Your Honor. John Paul Stevens: You think it is a concerted refusal to deal? David J. Sweeney: Well, I guess... let me back up. No, Your Honor. I will change my mind, because there are a number of factors involved. This is a cooperative that has membership scattered throughout five western states. I believe... it is hard for me to conceive that-- John Paul Stevens: Well, if it is not a concerted refusal to deal, isn't that the end of the case? David J. Sweeney: --It may very well be. Our point-- John Paul Stevens: Maybe it is really a very easy case. David J. Sweeney: --I hope so. We believe that simply because you have an aggregation of economic units that may be classified as a joint grouping, that that is not the end of the analysis, and in fact you must show some competitive impact. The effect of the cooperative was really more of a singular acting as a wholesaler. It was really in essence a vertical relationship between Northwest acting in its capacity as a wholesaler. There certainly can be no showing that a small retailer in Montana competed with Pacific, which operated in downtown Portland. So we would in essence, Your Honor, characterize the basic nature of the case, although it certainly was analyzed as a concerted refusal to deal, although the District Court stated that he didn't believe it was appropriate to consider it as a group boycott. We believe the lower courts, in line with the Court's recent decision, should now be given the tools of analysis for a joint venture or joint actions, so that a trial court can deter truly anticompetitive conduct without risking harm to joint conduct which is procompetitive. The courts already recognize that boycotts are not a unitary phenomenon. As a starting point, this Court could confirm that not all conduct which definitionally could be called a concerted refusal to deal, is deserving of per se treatment. This will free lower courts from the shackles of characterization so that they can roll up their sleeves and really get down to the job at hand, and that is seeing what conduct is truly anticompetitive. How do they do that? We would submit that in line with the Court's opinion in GT Sylvania, followed up last term by Jefferson Parish and NCAA, the trial court could make a threshold analysis of competitive impact, which may likely require a market definition before characterizing the conduct as rule of reason or that which would merit per se condemnation. William H. Rehnquist: Mr. Sweeney, procedurally, there are motions to dismiss, there are motions for summary judgment, there are motions for partial summary judgment, there are trials, there are judgments after trials. Where does this threshold analysis... what category procedurally does it fit under? Is it a motion for partial summary judgment? David J. Sweeney: It could fit nicely there, under a motion for partial summary judgment. It could in fact be utilized as a tool at a pretrial level for narrowing the issues that the trial court has to deal with. This may aid the District Court or the trial judge in focusing on whether or not a rule of reason trial is appropriate. It could be done on a partial summary judgment basis. Conceivably, a motion to dismiss. In fact, there was absolutely no showing of anticompetitive impact. The trial court could in fact call a conference at some stage and request that the issue of anticompetitive impact be briefed. William H. Rehnquist: You see it as simply a motion on a question of law that is involved in the case, that the trial judge could decide that question of law at any stage of the trial just like he might decide any other question of law. David J. Sweeney: I see it can be utilized in that function and at that level so that he could funnel down this important issue. It could also be, if the issues were not focused, if the litigants for some reason did not want to file motions, it could be used... the trial court could indicate that the first portion of the trial should be devoted to some showing. And if in fact there was a showing of anticompetitive impact, the burden of going forward would then shift to the defendant to explain what his reason is, if there is some plausible efficiency-enhancing argument that exists, and if there is, then it would be appropriate to analyze it under a rule of reason basis. If he can't come forward with any plausible efficiency-enhancing argument, then in fact per se condemnation may be appropriate, but at that point when the plaintiff meets his burden of going forward and showing that there is some anticompetitive impact, then the defendant should be given the opportunity to say why he engaged in this conduct, and if in fact there is a plausible argument for it, then a rule of reason trial should ensue so that whatever restraint exists can be balanced against the pro-competitive arguments that the defendant may have. If you apply that test here, we submit that the only evidence in the record is a nominal loss of year-end rebates by the plaintiff Pacific. A threshold analysis would demonstrate that no pernicious market effects did or were likely to occur. It was not foreclosed from any source of supply, including the cooperative. On the record, the loss of rebates were the only damage element the president of Pacific knew of, and stated that it was impossible to give any specific examples of how the loss of those rebates would affect it pricing policy or damage it. All this was in the context of a fragmented industry spread over five different states, where there has been no showing that the cooperative possessed any market power or leverage to enforce its will or to preclude the plaintiff from any markets. We submit that even if you saw anticompetitive impact, that it was the function of vital self-regulation by cooperatives. Cooperatives must engage in some self-regulation in order to become more efficient. We had a rule, the cooperative had a rule which required notification of change of ownership within 15 days after that ownership changed. Now, this is a basic and an important rule for a cooperative. The cooperative simply must know who in fact its owners are. A change in ownership could signal a change in credit history, could signal a change in buying patterns. The cooperative's efficiencies would be sacrificed if its credit and buying policies had to be made in the absence of actual knowledge of who was doing the paying and who was doing the buying. Now, the Ninth Circuit applied Silver versus New York Stock Exchange, and really went off on a due process theory that held that it required self-regulation. Now, Silver requires self-regulation as a result of the Securities and Exchange Act. The Robinson-Patman Act does not hint that the cooperatives of this country should engage in self-regulation. Absent self-regulation, there is absolutely no reason even under Silver that a due process hearing should occur. The lower court's ruling should be reversed, and this Court can now make it clear that group boycotts or any joint economic action should be analyzed on the basis of its competitive impact rather than its label. Based on the record in this case, no impact has been shown, and the District Court's order of dismissal should be reinstated. Alternatively-- Byron R. White: Don't you think the Court of Appeals said that there was a competitive impact, adverse competitive impact because of denial of a rebate? Didn't it say that? David J. Sweeney: --They said that, Your Honor, but there is no reasoning behind that statement. Byron R. White: It is a fact, though, that they were denied a rebate. David J. Sweeney: They were denied the ability-- Byron R. White: And you think that it is just really an unsupported inference that denial of a rebate that competitors are getting would hurt the competitive position? David J. Sweeney: --I believe it is an unsupported inference, Your Honor. The loss of a rebate is something that-- Byron R. White: Well, you may argue what the significance of the evidence is, but that is what the Court of Appeals relied on, and said that absent the Robinson-Patman Act exemption, there would be a per se liability. That is what it held, isn't it? David J. Sweeney: --They held that, but-- Byron R. White: And then said they couldn't take advantage of this so-called exemption because of procedural default. David J. Sweeney: --In essence, where we submit the Ninth Circuit went afoul, Your Honor, is that they made no competitive impact analysis, and we believe it is-- Byron R. White: You mean beyond saying that-- David J. Sweeney: --Beyond simply-- Byron R. White: --Beyond saying that there was a denial of a rebate which had an anticompetitive impact. David J. Sweeney: --Really, beyond saying that there was a lack of-- Byron R. White: That is what they relied on. David J. Sweeney: --Well, we submit that they also relied on-- Byron R. White: How much more analysis do you want? David J. Sweeney: --We want an analysis, Your Honor, of what in fact happened on competition, how the loss of a rebate affected Pacific, and there was no discussion of that. We believe it was a conclusory opinion. We submit that the decision of the Ninth Circuit should be reversed. Warren E. Burger: Mrs. O'Sullivan. Catherine G. O'Sullivan: Mr. Chief Justice, and may it please the Court, the fundamental reason for concern in this case from the government's perspective is that an overly literal application of the per se group boycott label to conduct of joint ventures threatens to substantially undercut their procompetitive potential. This Court has often observed that group boycotts are per se illegal, but is has only characterized conduct as a group boycott in cases involving an attempt to eliminate rivalry in the sense of an attempt to exclude a competitor from the market or to eliminate a form of competition such as price discounting. The group boycott or concerted refusal to deal label, however, literally covers a wide variety of conduct, and that conduct can range from the seriously anticompetitive to the substantially procompetitive. John Paul Stevens: Mrs. O'Sullivan, do you think it covers the conduct in this case? Catherine G. O'Sullivan: I think that is a question of characterization. In our view, the essential issue in the case is whether this conduct should be categorized as a concerted refusal to deal, because that category-- John Paul Stevens: Do you think it should be? Catherine G. O'Sullivan: --Our view is that from the record that stands before the Court, it is not possible to say whether the net result of this conduct is procompetitive or anticompetitive. John Paul Stevens: Surely it is possible to say whether it is a concerted refusal to deal or not. You know what they did. You don't know the consequences of what they did. Is it in the first instance a concerted refusal to deal? Catherine G. O'Sullivan: It is possible to characterize it that way, but if that characterization-- Speaker: I know that. Catherine G. O'Sullivan: --implies per se illegality, if concerted refusal to deal is understood as a term which means not merely concerted action by competitors but concerted action by competitors ought to be per se illegal, then we say it is not possible to characterize it that way on this record. John Paul Stevens: Is there any case you can cite in which this Court has called something like this a concerted refusal to deal? Catherine G. O'Sullivan: No. Precisely, or at least as we understand the facts on this record, and part of our concern is that we don't know enough about what was actually happening here in terms of the purpose or effect, but we believe-- John Paul Stevens: Why do you need that information to know whether it is a concerted refusal... what is a concerted refusal? Isn't it an agreement among competitors not to do business with a certain person? Catherine G. O'Sullivan: --If one characterizes it that way, then yes, this would be a concerted refusal to deal. John Paul Stevens: Why? They did agree to do business with them. They will sell to them. Catherine G. O'Sullivan: They agreed not to do business on a particular basis. John Paul Stevens: But is that a total refusal to deal? Catherine G. O'Sullivan: That is not a total refusal to deal, and it is not necessarily anticompetitive, but that is precisely our point, that if one says that any time one refuses to do business on a particular basis, that that is necessarily per se illegal, that leads to the results that we are concerned about, and this Court's decisions have very carefully limited that characterization. They have used that term, which implies per se illegality, only in cases that involved some effect on the competitive marketplace. John Paul Stevens: They have also only used it in cases in which there was a refusal to deal, haven't they, which isn't true here. Catherine G. O'Sullivan: That is, I think, basically accurate. One can dispute whether in cases such as Associated Press, whether the restrictive membership requirements. John Paul Stevens: That was a total refusal to deal, wasn't it? All the members agreed they wouldn't do business with people who didn't belong to the Associated Press. You don't have that here, do you? Catherine G. O'Sullivan: There was a possibility of membership on very restrictive terms, but I certainly agree with your point, which is that the effect in those cases has been to exclude someone from the market, and we think that that is the essential characteristic. We think that it is important that before characterizing something as a per se illegal concerted refusal to deal, there be a determination that it is the kind of conduct that-- John Paul Stevens: It certainly can't be a per se refusal to deal unless it is a refusal to deal. Catherine G. O'Sullivan: --I think that is fair enough. John Paul Stevens: And I have been trying to figure out whether it is a refusal to deal or not, and everybody is kind of wishy-washy on that point. Catherine G. O'Sullivan: That is fair enough, and I think that this illustrates precisely the problem, that there has been a tendency to use per se labels as just that, a label. If it is literally possible to include something within a label, then the courts have tended to assume that the inquiry was ended. And I think as your questions point out, that is simply the beginning of the inquiry. Even if one can put certain words on the conduct, that does not necessarily tell one very much about their competitive status under the Sherman Act. Sandra Day O'Connor: Mrs. O'Sullivan, when does the so-called quick look that you espouse shade into the closer look of a rule of reason? It seems to me that there is a shading there that is a little difficult to understand or apply for courts. Catherine G. O'Sullivan: As the Court noted in the NCAA opinion, sometimes the distinction between the rule of reason and the per se approach becomes a little blurred. In our view, the quick look is a method of analysis. It refers to the questions that one must ask before deciding what evidence one needs to determine that something is anticompetitive and thus a violation of the Sherman Act. It is an analysis that could be applied, I think, at virtually any stage of the proceedings. It could well be used-- Sandra Day O'Connor: Well, but presumably here you would suggest that the trial court has to have certain facts before it before it can determine whether a per se rule is appropriate, or whether a trial on the rule of reason is appropriate, and the question is, how much does it have to have, and are you going to have a mini-rule of reason trial to determine whether to apply the rule of reason? How do you approach it in a case like this? How much do you need to establish? Catherine G. O'Sullivan: --In this case, for example, where there were summary judgment motions, it would be appropriate for a court that was confronted with a motion claiming that the offense was per se illegal to apply the quick look and determine whether the offense... whether the conduct that is alleged in fact meets the Broadcast Music standards, that it is plainly anticompetitive, it is the kind of conduct that by its very nature-- William H. Rehnquist: How do you decide that on summary judgment if there are factual disputes? Catherine G. O'Sullivan: --If there are factual disputes, then summary judgment may not be appropriate. I think the question of what has been proven is not necessarily the same question as the quick look, what one needs to know. Sandra Day O'Connor: If summary judgment isn't appropriate, how does the Court know whether to go to trial on a rule of reason or apply a per se rule? I mean, you are just looked in this endless cycle, it seems to me, and I want to know how you break out of it, and what a poor trial court judge is supposed to do as applied to a case like this. Catherine G. O'Sullivan: The quick look is a tool that I think can help a trial court faced with a case where there are conflicts in the facts, and therefore summary judgment is not appropriate to shape the issues for trial. It can help to determine what issues would be relevant at trial and what-- Sandra Day O'Connor: Well, I suppose you don't go to trial if you apply a per se rule. Catherine G. O'Sullivan: --It may be necessary to go to trial even if one applies a per se rule. It may be necessary to prove that what is alleged was in fact committed. That may be a separate issue. But it would help the court, for example, if there were a dispute of fact as to what was done, it would help the court to narrow the issues in advance to say that if it is proved at trial that this conduct, which is facially anticompetitive and for which there are no plausible deficiency defenses, is proven at trial, then that will be per se illegal. That kind of analysis could be done-- Sandra Day O'Connor: Is there enough on the record in this case, in the cross motions for summary judgment, for a court to have applied your so-called quick look? Catherine G. O'Sullivan: --In our view, there is not enough to determine... there is not enough to justify a conclusion that the conduct was per se illegal. We took the position that it was inappropriate to grant summary judgment to the defendant because we think that the plaintiff did place in issue the question of the effect on its ability to compete, and the purpose, the competitive effect of a purpose with respect to excluding dual distributors. We think that there was enough of a conflict in the evidence that it was inappropriate to grant summary judgment. Byron R. White: You just think the look was a little too quick? Catherine G. O'Sullivan: We think the District Court was certainly justified in concluding that on the evidence before it at that time, plaintiff was not entitled to judgment or a per se theory. We think it was therefore for the same reason inappropriate for the Court of Appeals to-- Byron R. White: Well, the Court of Appeals purported to find an anticompetitive effect. You just disagree with that conclusion based on whatever there was in the record. Catherine G. O'Sullivan: --Your Honor, I think our disagreement with the Court of Appeals goes to more than just the amount of evidence in the record. The Court of Appeals did in fact talk about impairing the ability to compete, but their reasoning was that rebates had been denied, but those were an economic benefit. The court did not purport to determine the significance of that economic benefit, did not purport to determine that denying that economic benefit would have the effect of excluding a competitor from the market or excluding some sort of competitive practice. It simply noted the obvious, that they are an economic benefit, said that denying an economic benefit necessarily impedes to some degree, necessarily impairs to some degree the ability to compete, and that therefore this was a per se illegal group boycott. In our view, that was not sufficient. Byron R. White: Why wouldn't you be willing to say that if there really are good faith arguments on either side as to what the possible effects on competition might be, that that in itself is enough to say that you cannot apply a per se rule? It just isn't so plainly anticompetitive that there can't be any argument about it. Catherine G. O'Sullivan: I think certainly on the record if there were no more than we have in this case, it would be accurate to say that there is no way one could determine-- Byron R. White: If the so-called quick look review is that there really are good faith differences of opinion about it, how can you ever say that this conduct is so plainly anticompetitive it should be per se illegal? Catherine G. O'Sullivan: --Indeed, if one could not get to the point where the record showed that it was facially anticompetitive and by its nature would tend to-- Byron R. White: By that time you have tried it out, like a rule of reason case. Catherine G. O'Sullivan: --Certainly, Your Honor, that is a possibility, and if one cannot determine at any earlier stage, such as summary judgment, that the conduct is or is not facially anticompetitive, one would indeed need to move on to a more extensive inquiry at trial. Thank you. Warren E. Burger: Very well. Mr. Bauer. Joseph P. Bauer: Good morning, Mr. Chief Justice, and may it please the Court, I would like to begin with a brief summary of our position. The essence of our argument is that the record reveals a classic concerted refusal to deal, the classic group boycott, characterized by anticompetitive intent. John Paul Stevens: You say classic. What is the closest case to this in our cases? Joseph P. Bauer: Mr. Justice Stevens, there are a number of cases which are like this case. The Associated Press case, for example, involved a group of competitors who had combined into creating a joint venture there in the newspaper industry and who refused to admit potential new entrants, and this Court held that considering-- John Paul Stevens: Not just a refusal to admit. They also refused to sell news to nonmembers, didn't they? Joseph P. Bauer: --Precisely, Your Honor. John Paul Stevens: And this co-op does not refuse to sell goods to your client, did it? Joseph P. Bauer: I was listening to your questions to petitioner, Your Honor. I was struck by that, and we recognize in our brief that this is not a complete refusal to deal. The refusal to deal here consists of a denial of rebates, but there is a willingness to sell. There are several responses to that. One, in this Court's opinion in Silver, and we mentioned that in Footnote 15 of our brief, this Court said, and if I might just read very briefly from the Court's opinion, "Nor does any excuse derive from the fact that the collective refusal to deal is only with reference to private wires. " "The members remaining are willing to deal with petitioners for the purchase and sale of securities. " That is, a partial concerted refusal to deal was unlawful just as a complete concerted refusal to deal was, and the Court went on to say, "A valuable service germane to petitioner's business and important to their effective competition with others was withheld from them by collective action. " That was enough to create a violation of the Sherman Act. Here what you have in the record is-- John Paul Stevens: This is a partial refusal to deal in your view because it is a refusal to sell at the same price that they sell to everyone else, in effect? The net price is not the same. Joseph P. Bauer: --No, Your Honor, I think we would characterize it differently. As a practical matter, this is a refusal to deal. The purpose of forming a cooperative-- John Paul Stevens: Refusal to deal, but what did they refuse to sell to your opponent? Not warehouse space. Not pencils and paper. What did they refuse to sell? Joseph P. Bauer: --They refused to sell the same goods that they were selling to every one of Pacific's competitors at the same price. John Paul Stevens: It is a price discrimination case. Joseph P. Bauer: No, it is more than a price discrimination case, Your Honor. This is not a Robinson-Patman case. This is a Sherman Act claim. What happened in this case was that a group of competitors created a cooperative organization to allow them better to compete with their larger rivals. The function of a cooperative organization is to use joint buying power of individuals to obtain goods at lower prices, to confer a competitive benefit on every one of the members. John Paul Stevens: Is it your view that such a group has a duty to admit anyone who applies? Joseph P. Bauer: Your Honor, that raises different problems. This case does not raise that issue. Now, in fact, in both the Associated Press case-- John Paul Stevens: Do you have a view on my question? Joseph P. Bauer: --I would think in this case there might be reasons that the defendant cooperative might not have had to admit the plaintiff in 1978. When the cooperative was founded in 1953 and the defendant chose not to apply-- John Paul Stevens: Specifically, could they have had a rule that we will not admit combination wholesalers and resalers, we will just admit retailers? Would that have been unlawful? Joseph P. Bauer: --I am not prepared to answer that question, Your Honor. That is not the question presented by this case. It seems to me that in this case we were talking about an organization formed to confer a competitive benefit on all the members of the organization, which then arbitrarily, without any due process, without any notification, without any hearing, arbitrarily expels one of the members of that organization for anticompetitive purposes, that that is a classic concerted refusal to deal. And the mere fact that the defendant remained prepared to sell goods to Pacific at elevated prices, at a different price than every other member of the cooperative had to pay, is not a real honest willingness to sell. William H. Rehnquist: What does the absence of due process, as you put it, add to the concerted refusal to deal? What if they had had elaborate hearings and all sorts of evidence had been admitted before the board of governors, and they had reached exactly the same result? Would that make it any less a concerted refusal to deal if it was a concerted refusal to deal to start out with? Joseph P. Bauer: Well, Justice Rehnquist, one response might be, if they had gone through that elaborate procedure, and if in fact the facts which are suggested in the record, which suggested that the expulsion of the plaintiff Pacific was inappropriate, had that hearing been held, our suggestion is that the plaintiff would never have been expelled from the organization. William H. Rehnquist: Yes, but my question was, what if after such a hearing the board reached exactly the result that it reached here as you claim without due process? Joseph P. Bauer: Well, the Silver case talks to that. William H. Rehnquist: Does the Silver case make much sense in this context? Joseph P. Bauer: Your Honor, Silver addresses two very-- William H. Rehnquist: Well, do you think it makes much sense in this context? Joseph P. Bauer: --Short answer, yes. Maybe I can-- William H. Rehnquist: Go ahead. Joseph P. Bauer: --so into a little more detail, Justice Rehnquist. Silver talks to a particular issue. That is, the antitrust laws made the conduct of the New York Stock Exchange unlawful, and this Court said that conduct would have been a per se unlawful concerted refusal to deal absent the possibility that the self-regulation duty imposed on the New York Stock Exchange by the Securities and Exchange Act might have conferred an exemption. John Paul Stevens: But now where is your correlative self-regulation function in the case of cooperatives? Joseph P. Bauer: Your Honor, that is not necessary, because I am going to suggest that Silver stands for two very separate propositions. The first proposition, and the one that has been talked to before, is the possibility that if self-regulation exists, the conduct which might otherwise be... excuse me, the conduct which might otherwise be unlawful might in fact now be subject to a rule of reason analysis instead. That is, the presence of a self-regulation duty, in that case imposed by the Securities Exchange Act, might have converted what was otherwise unlawful into lawful conduct. This case involves precisely the opposite, and so self-regulation is not an issue. In fact, what is involved in this case is that you have already a concerted refusal to deal which is arguably ambiguous. That is, it may be difficult to characterize the conduct. We allege that this conduct is characterized clearly by anticompetitive intent. We assert that this conduct was done with anticompetitive purposes. But arguably that is ambiguous. In this case, where there is a complete absence of due process, no notice, no hearing, no explanation offered, in that case, what that absence of due process does is help us to characterize the conduct and make-- Sandra Day O'Connor: I had thought due process applied to state action. I don't understand your trying to import it into purely private action. That seems to me both unnecessary and unwise to your argument. Joseph P. Bauer: --Justice O'Connor, in fact, in the Silver case, where the Court suggested-- Sandra Day O'Connor: Oh, but that was the Securities and Exchange Act, which had certain provisions that certainly aren't applicable here, and I can't imagine that we would want to extend that on, nor do I think it is necessary to your Sherman Act argument. Joseph P. Bauer: --Well, I was merely addressing myself to your state action question, Your Honor. Clearly the New York Stock Exchange is not a state, although some might think it rises to that level. Sandra Day O'Connor: That is why the decision may be one that relies particularly on provisions of the Securities and Exchange Act and isn't really relevant to this situation. Joseph P. Bauer: But in the Silver case, what the Court recognized was the importance of due process even in those kinds of private transactions to ensure that persons did not engage in anticompetitive conduct, and so to return to Justice Rehnquist's question, our suggestion here is-- Sandra Day O'Connor: Why don't we return to whether it is anticompetitive conduct, because it seems to me that is the fundamental inquiry that is at issue here, whether it is anticompetitive. Is there anything in the way of harm to Pacific other than the loss of rebates? Joseph P. Bauer: --Well, Your Honor, there is more, and I would like to amplify on-- Sandra Day O'Connor: Well, what? Joseph P. Bauer: --What happened was that-- Sandra Day O'Connor: Just spell out in brief form what harm occurred other than the loss of rebates. Joseph P. Bauer: --Well, in addition to the loss of rebates, since Pacific was no longer a member of... excuse me, was no longer a member of the cooperative, and as a practical matter then was precluded from buying, not that it could not, but that as a practical matter, given the elevated prices, it would not buy, what happened was, Pacific then had to engage in greater inventory, had to expand what went on in their own warehouses. Sandra Day O'Connor: Well, let's see. Pacific was a much larger entity in terms of volume of business than all of Northwest co-op combined? Is that right? Joseph P. Bauer: No, it is not quite right, Your Honor. In fact, what you have is that in terms of total sales, as the brief suggests, Northwest's total sales were somewhat less than Pacific's total sales. On the other hand, when you compare apples and apples, that is, the particular supply lines that Northwest engaged in, and then the particular supply lines that Pacific engaged in, and then compared them at the wholesale level, my recollection was that Pacific was of the order of $1.9 million and Northwest was approximately $5 million. So in fact on a comparable apples to apples level, Pacific was somewhat smaller than Northwest. Your Honors, we suggest that in this case what you have is the arbitrary expulsion of a member of the cooperative for anticompetitive purposes with an anticompetitive effect. Let me talk for a moment to the anticompetitive purposes, and if I could do that, I would like briefly to talk a little bit about the facts of this case. What happened was that in 1972, the present owner of Pacific, Mr. John Stirek, began purchasing stock in Pacific. In 1974, Northwest adopted bylaws which did two things. One, it made membership in the cooperative by so-called dual operators, companies which were both wholesalers and retailers, unavailable, but that new bylaw contained a grandfather clause which exempted Pacific. John Paul Stevens: Do you think that would have violated the Sherman Act without the grandfather clause? Joseph P. Bauer: If they had adopted the new bylaw in 1974, Your Honor, and then because of the-- John Paul Stevens: And not grandfathered, so this of course means that you have to get out because you have a dual operation. Joseph P. Bauer: --We would maintain absolutely. In fact, our position, Justice Stevens, is that that in fact is precisely what happened. John Paul Stevens: And that is the anticompetitive purpose you are talking about? Joseph P. Bauer: Absolutely. In fact, our-- John Paul Stevens: Could they have organized in the first instance having that anticompetitive rule in the bylaws? You don't want to answer that, I guess. Joseph P. Bauer: --I didn't want to answer you before, and I am not sure I-- John Paul Stevens: Even though it is the heart of your case when they make the change. Joseph P. Bauer: --Excuse me? John Paul Stevens: Even though it is the heart of your case when they make a change in the bylaws to impose that requirement. Joseph P. Bauer: Well, our proposition, Justice Stevens, is the following, that what you have here is an organization composed of members designed to confer competitive advantages on one another by coming together and amalgamating their joint buying power. And what they have done is arbitrarily decided, but we don't like one of our members. We don't like him because-- John Paul Stevens: Well, you say arbitrarily. Supposing they said, we will have one member from each market area, and no more than one member from any given market area. Would that be per se illegal? Joseph P. Bauer: --Now we are talking about a concerted refusal to deal, and we are getting closer to the Topco case, and I guess if this is like Topco-- John Paul Stevens: You are getting closer to a concerted refusal to deal. Joseph P. Bauer: --I would say absolutely. In fact, in Topco you will recall, Justice Stevens, this Court said one of the things that was unlawful about that conduct was the unwillingness to admit perspective members. What the members of Topco did, you will recall, is, they got together because they wanted to confer a competitive advantage on one another, the so-called private brand labels, so they could compete better with A&P and Kroeger and National. And they were leaving all the mom and pops out of the organization, and they applied and wouldn't be admitted. The District Court said that is okay because it confers a competitive benefit on the members of Topco, allowing them better to compete with A&P, and this Court reversed, and this Court said, it is not for those members to make that decision as to whether or not to benefit themselves to the disadvantages of prospective members. That is precisely what we would have here under your hypothetical. Now, what we have here, however, arguably the facts are more ambiguous. If in 1974 they had simply amended the bylaws and kicked Pacific out, it seems to me that would clearly evidence anticompetitive intent. What you have here is arguably more ambiguous, because what you have is a bylaw adopted which is designed to impact only on Pacific. There is also this notification provision, but they go along without any problem. In 1977, the sale of stock from the former owner of Pacific to Mr. Stirek was completed, and Mr. Stirek doesn't notify Northwest, and one of the reasons he may not have notified Northwest is because he didn't even think the provision applied to him. He started buying this stock in 1972. He was already a shareholder. This goes to Justice Rehnquist's question. The reason I suggested due process was important is, if that hearing had been held, that fact would have come out. It would have come out that we shouldn't kick this guy out because he is entitled to stay in here. They had a hearing... excuse me. They had a meeting where they decided to throw him out, and never gave him any notice. Never gave him any warning. William H. Rehnquist: That is a matter of Oregon law, isn't it, whether they are entitled to throw him out under the rules of the cooperative? Joseph P. Bauer: Well, it is clear that under Oregon law cooperatives can adopt bylaws, and it is clear that under Oregon law a coop can regulate itself, but I would have thought that the antitrust laws supersede the Oregon laws under the supremacy clause. William H. Rehnquist: But what in the antitrust laws, the Sherman Act or the Robinson-Patman Act talks about applying due process to private corporations other than the very unusual facts of the Silver case? Joseph P. Bauer: As I suggest, we do not assert that the conduct is unlawful because of the absence of due process, and so I want to make that clear. Our assertion, Your Honor, is that this is a classic concerted refusal to deal. The reason it is a classic concerted refusal to deal is because the defendants threw the plaintiff out of the cooperative for anticompetitive intent with an anticompetitive effect. How do we know that they had an anticompetitive intent in an arguably ambiguous record, arguably ambiguous? I would suggest the facts leave absolutely no ambiguity. But one of the ways we resolve the ambiguity is because of the procedure, so it is not that due process is necessary, and I think that would be my response to Justice O'Connor's question, it is not that due process is necessary, it is that due process is relevant to characterization. When we throw him out of the cooperative without any due process, we have a better handle on what went on, we have a better way of knowing that it was with anticompetitive intent. We have a better way of knowing that the reason they didn't want him in there is because he was a more efficient competitor. They wanted to get rid of him because he was maybe working a little bit better, and that is precisely-- William H. Rehnquist: Isn't a necessary element of your argument there that they threw him out in a way that they didn't throw other people out? Joseph P. Bauer: --Well, in fact, Justice Rehnquist, they did not throw anybody else out. Now, in fact, there is some evidence in the record which suggests that other members of the cooperative may... now, I say may... may have violated some bylaws, just as I say we may have violated some bylaws. It seems to me that an examination of the record would suggest that since the purchase of stock began in 1972, and the bylaw didn't even go into effect until 1974, the plaintiff itself did not violate the bylaw, and had that come forward, the plaintiff would not have been thrown out of the organization. Byron R. White: Are you defending the Court of Appeals' judgment, I take it, that if there had been a hearing, and it had come out exactly the same way, that then there wouldn't have been a per se... it wouldn't be a per se case, but a rule of reason case, because of the Robinson-Patman Act? Do you agree with that part of the judgment? Joseph P. Bauer: Absolutely not, Justice White. Byron R. White: I didn't think... you are not defending the Court of Appeals across the board. Joseph P. Bauer: No, we are not. That is, our position is that this is-- Byron R. White: Well, it also sounds to me as though you are saying that this whole cooperative, this joint venture of competitors is itself in violation of the Sherman Act, and suppose some supplier that the cooperative refused to deal with because it could get a cheaper price from somebody else, suppose some supplier sued them under the Sherman Act. This is a joint buying effort by competitors that hurts me. Isn't that what you are saying? Joseph P. Bauer: --No, Justice White, that it not what we are saying. What we are saying is... and by the way, the argument is made that this Court ought to be reluctant to affirm the judgment of the Court of Appeals because of some perceived adverse impact that this might have on cooperatives, and I say quite the opposite. Indeed, not only do we agree that cooperatives have procompetitive efficiency-enhancing characteristics. Cooperatives are desirable. That is why we want to be back in the cooperative. So we are not challenging the cooperative generally. Indeed, we are not even challenging the possible requirement that notification has to be given. Byron R. White: I can't imagine why you would make a serious argument that the per se rule ought to apply in this case. Joseph P. Bauer: Because what we are challenging is very limited conduct. What we are challenging is the arbitrary expulsion-- Byron R. White: Well, that just sounds like that on the facts of this case, there ought to be antitrust liability under the rule of reason. Joseph P. Bauer: --No, Your Honor. We are saying that this is a classic group boycott, a classic concerted refusal to deal, but that this Court can write a very narrow opinion holding that we are only talking about very specific conduct, what is a classic concerted refusal to deal-- Byron R. White: Did you cross-appeal here? Joseph P. Bauer: --No, we did not, Your Honor. Byron R. White: Well, you want more relief than the Court of Appeals would give you. Joseph P. Bauer: No, in fact, the Court of Appeals decision... let's-- Byron R. White: You say that this is a classic refusal to deal and it wouldn't have made any difference whatsoever whether there was a hearing or not. Joseph P. Bauer: --Let's go back to the trial court for a moment, Justice White. Byron R. White: Let's go back to the Court of Appeals. That is the judgment that is under attack here. Joseph P. Bauer: Well, the reason I wanted to start at the trial court was, at the trial court level there are cross motions for summary judgment, but in the District Court all that the plaintiff sought, all that we sought was partial summary judgment with respect to liability and no determination with respect to the damages or injunctive relief. In fact, what we are principally asking for is injunctive relief. Now, what the Court of Appeals held was that not only did the District Court err in granting summary judgment for the defendant, but it should have granted summary judgment for the plaintiff, and in fact entered that judgment. Now, it is that judgment with respect to... excuse me, that partial summary judgment with respect to liability that we are asking this Court to uphold, but our position is that what we have-- Byron R. White: Do you want us just to affirm the Court of Appeals? Is that what you want? Joseph P. Bauer: --Absolutely. Byron R. White: And then say that the reason that the per se rule applies here is that there was not due process? Joseph P. Bauer: No. Byron R. White: Well, that is what the Court of Appeals said. Joseph P. Bauer: I would ask you to affirm the judgment of the court but not necessarily its reasoning. Byron R. White: Well, that is giving you more than you would get under the Court of Appeals judgment. Joseph P. Bauer: Well, I think the relief we are asking, Your Honor, is precisely the same. That is, the relief we are asking is that if you remand it to the District Court for a determination of the proper remedy, the proper remedy, we suggest, is principally one of injunctive relief, that the plaintiff be readmitted to the cooperative. I come back to your earlier question, Justice White-- Byron R. White: Well, yes, but if it goes back under the Court of Appeals position, with a hearing they could keep you out. Joseph P. Bauer: --No, as I was saying, because-- Byron R. White: You don't want that. Joseph P. Bauer: --I don't think that the Court of Appeals has... I don't think the Court of Appeals decision is, give these guys a hearing and try over again. That is not what the Court of Appeals said. What the Court of Appeals said is, this is a classic concerted refusal to deal. Then the Court of Appeals went on to examine the possibility that because of the duty of self-regulation imposed under the Silver line of cases, that what would otherwise be a classic group boycott might nonetheless be subject to rule of reason analysis, and then because it found that the Denver Rockets exception didn't exist, came back to where it started and said, yes, this is a classic concerted refusal to deal subject to per se liability. And that is exactly what we are asking this Court to hold, that what you have here is... again, I think it is important to focus on what we are complaining about and the very narrow aspect of this case that we are asking this Court to look at, that is, the arbitrary expulsion of a member of the cooperative, a cooperative which was formed for competitive benefits, designed to confer competitive benefits on all the members, which threw one member of the cooperative out for anticompetitive purposes, and with adverse effects not only on a competitor but on competition. Maybe it would be useful to address that question. What kind of effect was there on competition? The plaintiff, Pacific, was denied rebates. The rebates were the very reason for creating this cooperative. If there were no rebates, there wouldn't have been any need to have the cooperative. The plaintiff was thrown out of the cooperative. The plaintiff was denied the rebates. And so when the plaintiff was competing with all of the other members of the cooperative it competed at a price disadvantage. John Paul Stevens: Is it not true that its business has flourished? Joseph P. Bauer: It is true that its business has prospered. However-- John Paul Stevens: More relatively than others. Joseph P. Bauer: --We have no evidence whatsoever in the record about the others. John Paul Stevens: I see. Joseph P. Bauer: There is evidence in the record as to the percentage increase that the plaintiff's business. John Paul Stevens: And the dollars are much larger than the dollar amount of the rebates, aren't they? Joseph P. Bauer: The actual dollar increase of sales is larger than the amount of rebates. We have no information, again, on the profit margin, but there are several responses, Justice Stevens. One, even if it is true that the plaintiff has prospered, the fact of the matter is, it may have prospered even more had that conduct not taken place. This Court addressed that question in the Standard Stations case. There is a second response, and it seems to me an important response. John Paul Stevens: But if you make that argument, isn't Justice White right that you will always have that kind of competitive impact, and if that is enough, why then that is a per se rule? Joseph P. Bauer: Well, in fact-- John Paul Stevens: That is what you are arguing for, I suppose. Joseph P. Bauer: --That may well be a part of our argument, Justice Stevens, but I would make a different argument as well. What you have here is conduct which is characterized clearly by anticompetitive effect. A review of the scenario here reveals that what the defendant did was throw the plaintiff out of the cooperative because the plaintiff was undesirable, it was more efficient, it was bigger, for whatever reason. The plaintiff... excuse me, the defendant wanted to get rid of the plaintiff for those anticompetitive reasons. Perhaps it didn't have quite the anticompetitive effect that they desired. John Paul Stevens: Let me stop you right there for a moment. Can a co-op... could a co-op, like Topco, for example, say, we won't let A&B in, we won't let his companies in to join our co-op? Joseph P. Bauer: Well, but this case perhaps raises a different kind of question. What if 30 years ago-- John Paul Stevens: Let me just ask, could a co-op put a size limit on and say, we won't have big members who exceed a certain sales volume? Joseph P. Bauer: --The answer, Your Honor, yes, if there is a reasonable procompetitive justification for doing it. John Paul Stevens: Why do you have to have a procompetitive justification for that? What in the law says that... say they just want to have people whose names begin with X as members. The Sherman Act would forbid them from having some kind of an arbitrary limitation on membership. Is that what you are saying? Joseph P. Bauer: Again, you are asking a third time a question I haven't answered... I recognized the first two... which is, is there a difference between admitting members and expelling members? The case that we would have here is, if they impede-- John Paul Stevens: And does the Sherman Act require open membership in co-ops? I think you said no to that. Joseph P. Bauer: --I think... the answer is that they do not, and I will stand by that. In fact, in two cases in this Court, both the Associated Press case and the Terminal Railroad case, this Court required admission to membership when that was an essential function of competition. No, we do not assert that this is an essential function. That is, Pacific can indeed compete even if it is not a member. But go back to Topco. The mom and pops-- John Paul Stevens: In Topco, of course, there were agreements restricting where the members could sell, the territories in which they could sell, and the like, which you don't have here, and that is why you don't rely heavily on it, as I understand it. Joseph P. Bauer: --That's right. That's right. But I would like to give another illustration, Justice Stevens, to the inquiry to what extent is a competitive effect necessary, and the assertion that here the plaintiff has prospered, so no foul, no harm. Let me give an analogy. Let's assume that we have a marathon race, and one member of that group that is going to be in the race is a little bit faster or a little bit more determined, or has a little bit more stamina than all the rest, and so they all get together with the exception of this one individual and say, hey, let's push him off the track somewhere down into the race. And they do that. But this man is so determined, he dusts himself off and gets back on the track and runs, and maybe he even wins. He does well. Now, he has been pushed off the track in the same way that the plaintiff here has been pushed out of this organization, and the conduct-- John Paul Stevens: Well, they just said to him, we will sell to you like everybody else on the track, but we are just not going to invite you to dinner. 0 [Generallaughter.] Joseph P. Bauer: --I would suggest, Your Honor, that the analogy is a little closer to saying, we will let you run, but we will put three-pound weights in your shoes, because what they are doing is, they are saying, we will sell to you, but we will sell to you at a substantial competitive disadvantage, and we are selling to you at such a disadvantage that no rational business person would do that. John Paul Stevens: Sounds like a price discrimination case. Joseph P. Bauer: If it were not for the exemption, Section 13B of the Robinson-Patman Act, it would be, and we would have added that count, too. But the fact that it nails something post-discrimination does not make it nor a Sherman Act violation. See, in my example, Your Honor, what you have is an attempt to injure. Now, they may not have succeeded, but they sure as heck intended to injure. What they did was unfair. What they did was unlawful. And the fact that it wasn't successful doesn't make it any the less unfair or unlawful. What you have here is an attempt by members of an organization who have a competitive advantage among themselves, and they finally decide, hey, we don't like one of our members, he is a little too efficient, he is a little bit too much of a threat, let's get rid of him so we can compete more, so we will hobble him. And that is precisely what the Sherman Act prohibits. It prohibits conduct which is designed to injure competition. It is, as I suggest, a classic concerted refusal to deal. And even though it may be true that they have not absolutely refused to deal with him, they have refused to deal with him in any meaningful sense. I see my time is up, Your Honor. If there are no further questions, thank you very much. Warren E. Burger: Very well. Do you have anything further, Mr. Sweeney? David J. Sweeney: Briefly, Your Honor. I believe that the respondent is trying to characterize and try a case before this Court that was never tried below. They are trying to attempt to argue and try a classic group boycott case when it was clear that below the liability theory was based on Silver versus New York Stock Exchange and a due process theory. The record simply does not support an inference of increased inventory, of expanded warehousing, anticompetitive animus, reasoning for the action, and in fact if there is any inference or any equivocation on the record, what the Ninth Circuit did was grant summary judgment on the basis of liability against Northwest, so before this Court, any-- John Paul Stevens: Mr. Sweeney, don't you think the record does raise an inference that the reason this man was excluded was because he was a partial wholesaler? Isn't that at least a permissible inference, that he had a dual operation? David J. Sweeney: --The record reflects that that was discussed. That is correct, Your Honor. John Paul Stevens: And we are on summary judgment. David J. Sweeney: We are on summary judgment. John Paul Stevens: So conceivably that... but it seems to me that nobody really argues about it, but is that permissible or not, to exclude somebody for that reason? Your opponent says it clearly is not, because that is an anticompetitive purpose, and you haven't talked much about it. David J. Sweeney: No, we would... it is not on this case, Your Honor, whether-- John Paul Stevens: Well, if it is in the record, and there is an inference there that would raise a question of fact of summary judgment, I would submit it is in the case. David J. Sweeney: --Well, if there is an inference there on a summary judgment record, those inferences at this Court have to be weighed most favorably with Northwest, since summary judgment was rendered against Northwest-- John Paul Stevens: Yes, but are you asking... what are you asking for? Are you asking for a trial, or for summary judgment in your favor? David J. Sweeney: --What we are saying for-- John Paul Stevens: You don't take the same position the government does as I read it. David J. Sweeney: --No. What we take is a fallback position, Your Honor, that if the Court-- John Paul Stevens: You would rather try the case and lose. David J. Sweeney: --if the Court feels that the record is equivocal or not strong enough, we submit the inferences, if there are, should be accorded to Northwest, and that the case should be reversed and remanded for decision by the trial judge. We submit that the Sherman Act, if there is no showing of necessity, would not require a blanket open admission to a cooperative. There are a number of different reasons. A cooperative, just in terms of economic size, may not be able to handle an open admission basis. John Paul Stevens: What about an admission policy excluding dual distributors? Do you think that is lawful? David J. Sweeney: Just in the abstract, Your Honor? John Paul Stevens: In this case, that they had an out and out... this very bylaw they have got in this case. Do you think that is permissible? David J. Sweeney: The exclusion of a wholesaler-retailer combination I think can be justified economically on a number of different grounds. A wholesaler will always have the ability to purchase because of its wholesaling ability at the same level that the cooperative would, so that the the wholesaler-retailer combination, it can feed that retailer through its wholesaling arm, whereas going through the cooperative will simply increase any transaction's cost. What that does, and the record does show this, that the wholesaler-retailer combination here bought in odd lot, small quantity items. Now, a cooperative really lives and dies by getting bulk aggregate purchases. It relies on its members who traditionally buy through the cooperative, day in and day out, high prices, low prices. What a wholesaler-retailer combination will do is simply take those small items that it happens to run out of, increasing the transaction cost from the cooperative, because they have to engage in more stocking and other kinds of things, and not improve its efficiencies. Thank you. Warren E. Burger: Thank you, gentlemen. The case is submitted.

Earl Warren: Number 42, John Lee, Petitioner, versus Paul J. Madigan. Mr. Davis, you may continue. John F . Davis: Mr. Chief Justice, if the Court please. I shall turn my attention now to the issue with respect to the jurisdiction of courts-martial. All the soldiers who have been adjudged guilty by previous court-martials dishonorably discharged and imprisoned and who commit offenses while they are in the custody of the Army in the disciplinary barracks. Now, this issue is purely constitutional. No argument has been advanced that the Article of War, which is presently involved, number -- Article 2 (e) of the 1920 articles does not specifically and intentionally apply to this petitioner. There is no -- there is no doubt the Congress intended to give the military the power to exercise court-martial jurisdiction of this type of prisoner. The only question is whether or not it constitutionally could give the Army this power. Not only does the present article clearly attempt to give jurisdiction to the court-martials but this has been so for a good many years. The first provision providing for this type of jurisdiction was in 1863 when the first military prisons were established. It's present in the Uniform Code, the present Uniform Code which is in effect today with respect to all of the armed forces. The same type of jurisdiction is -- is given to courts-martial if it can be given. When the -- when the Army discontinued, and I don't know why, but when they discontinued their -- their prisons and began to send the men who are under the court-martials sentence back to the guardhouses back in 1898, the Secretary of War wrote a letter to Congress saying that this terminated the jurisdiction which the Army had previously had which was particularized with respect to army prisons and that he felt the Congress should enact legislation to give the Army general jurisdiction of discharged soldiers while they were still in custody whether in prisons or in guardhouses or anywhere else within the Army's jurisdiction. He said that it was difficult to maintain discipline unless the Army had authority to enlarge the sentences through court-martial of prisoners who were subject to their control, and it was then that the Congress enacted the Code of 1898 which provided that, and I quote, it's on page 30 of our brief, the first general provision in the court -- in the Articles of War dealing with this question of jurisdiction and it said, "Soldiers sentenced by court-martial to dishonorable discharged and confinement shall, until discharged from such confinement, remain subject to the Articles of War and other laws relating to the administration of military justice." And this law remained on the books in this form and go, I think it was 1916 when the Congress enacted the same provision in its present form which provide simply that it shall extend to -- the military jurisdiction shall extend to "all persons under sentence adjudged by courts-martial". William J. Brennan, Jr.: Well, do you mean that might apply even if you're confined to a (Inaudible) because that's not the case here. John F . Davis: That's not the case. This language doesn't -- I -- it would be a different case and this language would seem to include it but I'm not sure about what the legislative history behind it and what's happened second. William J. Brennan, Jr.: Well, now, how -- how was it -- is it Lee now confined at Alcatraz? John F . Davis: He is now confined in -- in Alcatraz. And under the present Articles of War, Uniform Code, he would not be subject to military jurisdiction because the present article say under -- under -- and I don't quote exactly but they feel with confinement by the military authorities themselves. William J. Brennan, Jr.: There is no question that at the time of this offense -- Camp Cooke, is that what it was? John F . Davis: The Camp Cooke. William J. Brennan, Jr.: That was exclusively military. John F . Davis: That's right. It was run by the military. It was -- William J. Brennan, Jr.: Well, the army only or -- John F . Davis: It was army only. It was a branch -- branch of the disciplinary barracks at Fort Lauderdale. Earl Warren: But if he committed the same crime now, he would be tried in a District Court. John F . Davis: That's right. He would not be subjected -- Earl Warren: Yes. John F . Davis: -- to military discipline at that time. Potter Stewart: Were there any other military activities going on at Camp Cooke at the time of this offense? John F . Davis: I'm not fully familiar with the activities at that place. I -- as far as this man is concern, the -- there were disciplinary barracks there which were exclusively disciplinary barracks and whether there were other activities in the camp, I -- I don't know. But as far as this man was concerned, he was -- he was only subject to disciplinary barracks. William J. Brennan, Jr.: Were the personnel charged with the administration and operation of -- of these disciplinary barracks? Were they all military personnel? John F . Davis: They are all military personnel. That is right. By law, the -- the provisions with respect to the disciplinary barracks is set up in Article 10 of the -- of the Code in -- in Chapter 10 of the Code. And they provide that it shall be run by the Army. And the -- although it is a -- is a detention place, there is a good deal of the -- of the color of army life attached to it. The -- there is an attempt to rehabilitate prisoners and make them fit for the Army again with some military training. Actually, some of the prisoners are organized as infantry would be and they have their own non-commission officers in the prison. They call them upside-down and upside-down corporals and that kind of thing. I don't mean that they are non-commissioned officers but their -- their operations are run along that line. Potter Stewart: Does the record show anything of -- as to whether this petitioner was in that kind of an activity? John F . Davis: Well, there is attached -- there is a part of the record, the court-martial record of the thing, and it shows that this -- this particular petitioner was actually locked up in a cell because it would be difficult -- he was a danger, he was dangerous to other -- other prisoners. There had been many disciplinary problems with respect to him, and he was actually very closely confined. Potter Stewart: So the record affirmatively shows that he -- he was not in any of this quasi-military activity that you've been -- John F . Davis: Well, I -- Potter Stewart: -- talking about. John F . Davis: I -- I can't say that it -- I cannot say that it is (Voice Overlap) -- Potter Stewart: Certainly if you're locked up in a cell you can -- John F . Davis: -- at least that he was locked up -- Potter Stewart: Yes. John F . Davis: -- considerably. Speaker: Mr. Davis, I wasn't quite I understood your answer to the Chief Justice. You say that if he committed the crime now, he could not be tried by court-martial, that's by a virtue of the fact that he is confined in Alcatraz, a civilian prisoner and not because the statute has been changed in respect to military -- John F . Davis: Well -- Speaker: -- establishments, is it not? John F . Davis: Well -- Speaker: Or -- John F . Davis: -- I -- I evaded the question about what would have happened if the statute hadn't been changed. This -- the -- the statute has been changed -- Speaker: Yes. John F . Davis: -- then he is in Alcatraz so there's -- Speaker: Yes. John F . Davis: -- no question at the present time that he would have to go to a civilian court. If the statute had not been changed, the language of the statute says all persons under sentence are judged by courts-martial and -- Speaker: Now, that -- that -- John F . Davis: -- it would appear to be broad enough perhaps to cover a civilian (Voice Overlap) -- Speaker: That isn't my question. If a soldier is confined to an exclusively military prison at the present time, he's still would be subject to court-martial jurisdiction? John F . Davis: Oh, absolutely. Oh, yes. Speaker: That's all I -- John F . Davis: That is -- that is also provided in the -- in the -- Speaker: Yes. John F . Davis: -- Uniform Code. Speaker: The present statute. John F . Davis: That's right. Earl Warren: Mr. Davis, may I pursue that just one step farther. Now, let's say in 1949 at the time the second offense happened, the one for which he is prosecuted here, he had been confined in the -- in Alcatraz. John F . Davis: If he had been -- Earl Warren: If he had been confined in Alcatraz and had committed the same crime at the same time, would -- would the Army have had jurisdiction over him to try him or would have been essential for him to be tried in the District Court in San Francisco? John F . Davis: I don't know the answer to that question, Mr. Chief Justice. I don't know of any authority on it. The law, the law would read all persons under sentence adjudged by court-martial would be subject to military discipline, would be separate -- subject to court-martial. And it would seem to include a man that was in a civilian prison. But whether it would receive a construction because of the law that went before that said clearly dealt with situations while they were under military control and that is clearly the intent of the statute whether there will be a limitation that into it, I do not know. There's no authority on it so far as I know. William J. Brennan, Jr.: Do we know, Mr. Davis, whether in 1949, it was sometimes the practice to confine men like this to civilian prison? John F . Davis: Oh, yes. There were specific provisions and regulations with respect to permitting them to be confined in -- in ordinary prisons when they were the type -- at that time, the statute provided that they could be confined in prisons, the -- the federal prison system or even state prison systems where federal prisoners could be confined there, when they were guilty of the type of crime and for a period of years which made it appropriate for them to be confined in -- in an ordinary prison. They tried to distinguish between people that were felons with criminals in the ordinary sense and people that they would -- could rehabilitate to make soldiers out of them. Earl Warren: Well, is the statute any different now or -- or the same? John F . Davis: Well, I think the practice isn't different, the statute is different. Now, the statute gives authority without direction so that they can be defined either in military disciplinary barracks, all federal prisons depending upon regulations by the -- by the armed forces. And I think the policy is the same but the statute isn't as explicit as it used to be. Hugo L. Black: You have the statutes that were changed printed in your brief? John F . Davis: On where they should be -- in -- Hugo L. Black: Yes. John F . Davis: -- confined? Hugo L. Black: Now. John F . Davis: No, I don't have that. Hugo L. Black: (Voice Overlap) to be in -- when they should -- can be tried by court-martial. John F . Davis: Oh, when they can be -- yes, that appears, I think, at page 1 of our arguments. It's not page 1 of the brief, but page 1 of the argument. Hugo L. Black: You don't have it two together as it was and is (Voice Overlap) -- John F . Davis: No, but -- but it's very easy. The -- the way it is -- the way it was, the way it's before this Court, it appears in page 2 of the brief which says “all persons under sentence adjudged by courts-martial”. That appears at page 2 down at the bottom. The way it is now in the Uniform Code of Military Justice appears at page 8 of our brief and it's now Section 2 (7) of the Uniform Code of Military Justice and it provides for jurisdiction of persons in custody of the armed forces serving a sentence imposed by a court-martial. Hugo L. Black: Is there any history connected to that thing? What's the -- John F . Davis: Not that I know of. I think that's what the -- I think that's what the -- the previous section meant. And that because the 1898 statute, which I read to the Court a minute ago and which appears at page 30 of our brief, carries that same thought of the -- in the custody of the Army but precedes and succeeds this 1916 provision or 1920, the one that's before us now, all speak of custody of the -- of the Army. And in fact, whaty Secretary of War Alger asked for was why they were in custody of -- of the armies that the whole purpose of it is -- is about. Hugo L. Black: What's the difference -- what -- what's explained to be the difference in power when the -- the -- in a state -- confined in a state prison, confined in a military prison? John F . Davis: Well, the military just have ceded jurisdiction off with the custody of a man they no longer have the problems of -- of maintaining discipline. Then they've handed it -- Hugo L. Black: (Voice Overlap) Tied all together with the idea of discipline. John F . Davis: That -- that was the basic reason for having the statute -- to having -- giving this jurisdiction as Secretary of -- of War Alger requested it, yes. And Alger controlled prisoners under their -- under their custody. They felt they needed to have the power of the court-martial. Hugo L. Black: What reason did he give why the -- it can be better disciplinary action for court-martial and signed in the Court? John F . Davis: Well, he didn't -- he didn't draw any comparison. The statement which he made and it was sent to the House Committee involved in this matter is printed in our brief at page 28. And he merely stated that he felt that it was necessary in order to prevent insubordination in order not to impair the effect of military imprisonment to give this power to the Army. And he drew no comparisons with the -- with civilians. Hugo L. Black: That's the -- this is -- you quoted here practically everything that's relevant to you? Have you? John F . Davis: Yes, I think so. I -- I've read -- Hugo L. Black: Well, I -- John F . Davis: -- the entire letter. It's a short letter but it's -- Hugo L. Black: That's the only thing that you -- that you -- John F . Davis: That's right, that's right. There is no comparison drawn. I mean, it -- he didn't draw any comparison here anymore than he would have as to the difference between military jurisdiction, court-martial jurisdiction and -- and civilian jurisdiction with respect to other members of the Army. I mean, he felt that the Army should be given disciplinary powers if it becomes necessary but -- but -- Hugo L. Black: But if -- but if it's based on the fact that discipline requires the -- that jurisdiction to be exercised, that's not a question then of how he felt about the general power, it's -- he -- John F . Davis: No, he was dealing -- Hugo L. Black: -- he based it on that side. John F . Davis: -- he was dealing with this particular aspect of it. There is no question of it. Now -- Earl Warren: Well, do you -- Mr. Davis, do you think that the law could be -- respecting an individual, could be changed by the policy of the Department as to whether he should be retained in a -- in a military prison for 35 years in a case like this or whether he -- he should be sent to Alcatraz or -- or San Quentin Prison, the state prison in California. Do you believe that it should be left to -- to the Army to decide whether it should retain jurisdiction over a man all his life depending on whether they kept him in a military establishment or whether they send him to -- to prison of that kind? John F . Davis: Well, I think that gets back to the question of whether it is reasonable for Congress to give the armed forces the discretion as to whether to keep the man in a disciplinary barrack or send him on to a federal prison. If they are going to give the Army that authority, as they did and as they still do, why, then, it would seem appropriate to give the -- the authorities who are going to maintain -- who are going to be responsible for maintaining the order in response to the powers to maintain it, and the Army doesn't need that power with respect to prisoners who are in the federal prison. Earl Warren: May I ask what the policy was so far as sending him to civilian prisons?Was it to -- to send those who were less dangerous or those who were more dangerous to state penitentiary? John F . Davis: I don't think it does so much with -- with -- it may be that it was more dangerous but it dealt more with the nature of their crime. If they were people who were -- I hesitate to use this kind of term, but were bad people who would corrupt other prisoners, who were delinquent in the sense that they were -- would be locked up in a civilian light and -- and kept from contaminating other people, the idea of one is -- if they were felons, real felons, they should be sent to federal prisons. This is spelled out in some detail in -- in the statute. I don't think I -- I don't think I cite that statute in the -- in my brief but it's readily available in the -- it appears in the Articles of War, and I can find it in a minute. Earl Warren: The reason I asked the question, this man got a pretty severe sentence for -- for his crime. The first time was 35 years. Pretty bad crime that he committed, wasn't it or was it? John F . Davis: That's right. Earl Warren: So I'm wondering on -- on what basis they would -- they would keep him in -- John F . Davis: Reading -- reading -- Earl Warren: -- military prison or send him -- send him to a state prison? John F . Davis: -- reading the record in this case, I wondered the same thing. I mean, it seems as though this -- if they did send people to -- to civilian prisons as though this was the type of case they might well have done. But they -- they found the judgment. He was court-martialed in -- the first time in Europe and -- and France, I believe. And they may have had a policy. There may have been so many, I don't know. But anyway, they -- they did decide to -- to -- at that time, they make a determination that can't be changed afterwards. They can't change the place of imprisonment after it is designated by the officer making the executing sentence. Earl Warren: They can't transfer him back to a -- to a military prison? John F . Davis: They couldn't at that time under the law as it read at that time. What they can do under the present regulations, I don't know. But as far as this man is concerned, a case before this Court, the executing authority stated prior to the imprisonment. And there was no authority thereafter that changed as imprisonment for putting in a federal prison. He had to stay in the military barrack. He could be shift from one -- shifted from one military barrack, detention barrack to another disciplinary barracks to another but he couldn't be sent to a federal prison after that. Earl Warren: Well, when this man was sentenced done on this second charge then he was sentenced to Alcatraz, was he? John F . Davis: That's -- well, no, he was -- he was actually sentenced to death by the -- by the court-martial and it was commuted by the President and at that time, he was sent to Alcatraz. Earl Warren: By -- by the order of the -- John F . Davis: By the order of the execution of offense. Right. But that was on the second -- on the second -- Earl Warren: Yes, yes. John F . Davis: -- offense. William J. Brennan, Jr.: Mr. Davis, I'm not sure it's highly relevant but if there were no court-martial jurisdiction for this offense of murder and there had to be trial on the civil court, what would be the substantive offense of murder? Not the provision of Article 92, I take it, as to punishment and such but something else would have -- John F . Davis: Well -- well, I think he would be punished in federal courts as -- for under the assimilative crimes statute -- William J. Brennan, Jr.: (Voice Overlap) California. John F . Davis: I -- I think that is so. There may be a -- I -- I couldn't answer your question because I don't know the answer to it but I am guessing that it would either be under the assimilative crimes statute or else, there would be, and I haven't looked at it, some specific federal regulation dealing with homicide on -- in this type of government establishment. William J. Brennan, Jr.: This Assimilative Crimes Act in a State like Michigan made quite a difference, wouldn't it, whether it's tried by court-martial or by civil court? Where -- John F . Davis: Well, it would -- William J. Brennan, Jr.: -- Michigan has no death penalty. John F . Davis: Well, that's right. In many States, I thought, they wouldn't have a death penalty. It'd make a great deal of difference in many ways whether he is tried in --in the court-martial of the civil -- civilian court, criminal courts. Hugo L. Black: That's -- I don't quite get the -- if this is the only reason they give, I'm -- I can't quite understand the premise on which he says that this was encouraged insubordination, if you're going to have to look at the reasonableness of it. What he says is to announce to the prisoner that no matter what he may do, he cannot have the term of it in confinement extended as a direct encouragement insubordination and must impair the effect of military imprisonment as an exemplary punishment but he could be punished and could be sentenced to death. Why? Why would that -- encouraged him to insubordination to be tried? On -- what is the basis for that? John F . Davis: Oh, I -- I think what -- what Secretary Alger was saying is this, and he wasn't dealing of course specifically with capital -- capital crimes, he was dealing generally with problems of jurisdiction with respect to the behavior of military prisoners. And I think what he was -- meant that he is saying was if we have no authority to court-martial with these prisoners, all that we can do in order to maintain discipline is to make them uncomfortable, do solitary confinement, labor, things like that. There is no way that we can -- under our system, under our powers, there is no way that we can hold any larger cover with their heads so as to keep them in order. And he said we have had it in the military prisons because in the previous law that had been given, we have -- we no longer have it because they're sending them to the guardhouses. Now, in -- in order to maintain our discipline, we -- we need to continue this power. Now -- Hugo L. Black: (Voice Overlap) -- John F . Davis: -- it is quite true, it's quite true, Your Honor, that with respect to -- with respect to capital crimes, murder, things that would be crimes in the jurisdiction that they would be subject to civilian criminal trials and he doesn't address himself to whether or not that would be an appropriate way to deal with this situation. He -- he merely felt that the army needed this authority. Hugo L. Black: But the minor things that you are speaking about, they -- they would have anyhow. John F . Davis: For they would have -- they would have the ordinary jailers' jurisdiction to maintain order, yes. Hugo L. Black: But a source? John F . Davis: But they would have no power to extend the sentence. Hugo L. Black: Well, they couldn't extend it -- John F . Davis: That's right. Hugo L. Black: --but the courts would have power to extend it. John F . Davis: Yes, but he felt it's -- Hugo L. Black: They will be (Inaudible) to be punished. John F . Davis: -- he felt it's necessary for -- Hugo L. Black: What -- what he -- virtue would there be in a or deter would there be that you can imagine the man knowing that he is going -- if he's going to be sentenced for 10 years, that in one instance, he's going to be sentenced under military judgment, in another instance, by conviction for a jury. John F . Davis: Well, I -- I don't know that there would be any great difference. The -- the Secretary of War Alger felt that the military having jurisdiction of soldiers, the military should have this jurisdiction of these people. Hugo L. Black: No, there -- there's no doubt about that. He felt they should have -- John F . Davis: And whether that's -- I'm not sure that he -- Hugo L. Black: But his reason was this. John F . Davis: I'm not sure that the question of constitutionality depends upon whether this is absolutely necessary. I mean they come to this question of constitutionality and -- and I want to discuss that. Hugo L. Black: Well, I thought you're discussing it now (Voice Overlap) -- John F . Davis: Yes, I was but I didn't get to this -- but you have assumed in your -- in your question, I believe, that in order to uphold this power, it is necessary for this Court to find that there's no other way of handling this problem. Hugo L. Black: I took your -- I took your words, reasonably related to the extension of the jurisdiction. John F . Davis: Well, I -- Hugo L. Black: And if the reasonable -- if you have to depend on the idea that somehow, it's a greater punishment for a man to have a military judgment over him than a -- than a civil judgment, I don't quite get it. John F . Davis: Well, I -- I wouldn't base my argument on that -- on that necessity, Mr. Justice Black. I -- I think that's -- I think this background is necessary to understand why they asked for it but I -- I think that the authority, the authority of Congress to pass this law is and under its laws to make rules for the Government in regulation of the land and naval forces, and that looked at fairly and squarely, this man is a -- is in the land and naval forces of the United States and therefore, this is the military authority to exercise this type of jurisdiction. Hugo L. Black: Could they call him to fight? John F . Davis: No, they could not call him to fight. Hugo L. Black: Could they call on to participate in any way, in any military activity? John F . Davis: Yes, they could. They could put in under the -- under the system there. They can have the military training in these -- in these camps. It's one of the -- one of the statutory purposes of the camp. Hugo L. Black: Could he that as a prisoner or as a soldier? John F . Davis: Well, he is -- he is not -- he'd do it as a prisoner or as -- he'd do it in this capacity which he is in, in this -- in this disciplinary barrack. I don't -- I don't want to make a conclusion one way or the other. That is my -- my argument is that he is a member of the armed forces. Now, this Court has had this very question, this precise question under this precise Article of War before it before in Kahn against Anderson after the First World War. And the facts in that case are almost precisely the same as -- as the facts in this case with respect to the question of jurisdiction. And in that case, the same arguments as to lack of -- of constitutional power will presented to this Court, and the Court found that this did fall within the powers of Congress with respect to the -- to the government of the land and naval forces. And that finding of the Court was buttressed by Court of Appeals' decisions which preceded it, dicta of the Supreme Court itself which preceded it and it has been followed thereafter in the Courts of Appeals. The only authority to the contrary so far as I know on this question of jurisdiction is Colonel Winthrop. Colonel Winthrop, in his -- in his book, definitely says that there is no jurisdiction in this type of case. Now, undoubtedly, undoubtedly, the reason that we have troubled with this case today is because of the decisions of this Court in the Toth case and in Reid against Covert. And I don't have to tell the Court that these -- on the facts, those cases are -- are clearly distinguishable from this.Our question is whether in theory, they cover it. The -- the Reid against Covert case, of course, dealt with the wife -- the wife of an officer -- of an -- of an officer who had never -- the wife had never been in the army services and the question was whether because she was -- along with the army services whether she was closely enough connected to be within the military power. And the Toth case on the other hand dealt with a -- with a soldier who had been retuned to civilian life. The -- the Army had -- not only discharged him but had released any authority over in McCulloch and they attempted to regain their authority. In the Toth case, as a matter of fact, there is a footnote which refers to the type of jurisdiction which is involved in this case. It refers to the case of Kahn against Anderson, which I mentioned a minute ago, and without, in any way, testing any question upon its authority, recognizes that that is a decision of -- of this Court. I think that it really advances our argument very little for the petitioner to rely on Colonel Winthrop's assertion that a dishonorable -- dishonorably discharged prisoner is a civilian and therefore not subject to jurisdiction. I think that this is really only a -- a way of stating a conclusion. There's no question that a dishonorable discharge terminates military benefits generally but whether it ends the power to impose discipline as such is the very question which is before this Court, and we could turn this argument around and say that since one of the -- one of the vital test of membership might well be whether a person is subject to discipline at the very fact that there is an imposition of discipline over these prisoners makes them members of the armed forces. The -- the Army as -- has, as a matter of fact, has coupled dishonorable discharges with the discipline of imprisonment for -- for many years. And this Court is specifically recognized that the coupling of a dishonorable discharge and an imprisonment is -- is not an inconsistent act and that the military forces have authority to do this. So that I think it is clear beyond any question that there is no intent. There is no intent on the part of the armed forces to sever the disciplinary relationship between the soldier and the armed forces when they sentenced him to dishonorable discharge and imprisonment for a period of years. They specifically wished to maintain the -- the disciplinary relationship over him. Speaker: Where those two aspects of a sentence part of the same physical document? John F . Davis: Well -- Speaker: Part of the judgment of the court-martial? John F . Davis: Yes. Well, I won't be sure I answer your question correctly. The sentence has these two elements in it. There is a separate dishonorable -- then the man is in prison then a dishonorable discharge of a document which is called a dishonorable discharge, I haven't seen it but I -- I think this is so, a document is filled out in proper places and forwarded to his fine. Speaker: The judgment of the court-martial included in it imprisonment and dishonorable discharge. John F . Davis: That is right. Speaker: And what you are suggesting, I take it, from your argument now is that the point of substance looking at this thing, the discharge should be reviewed just as if it had written into it, “Your discharge is honorably,” and at the same time served 20 years for -- John F . Davis: Yes. Speaker: -- whatever it is, for this for this crime. John F . Davis: Yes, and I'm suggesting that when these are coupled together in this way, it shows an intent that the dishonorable discharge shall not terminate the disciplinary powers terminate the relationship between the member of the armed forces and the armed forces by being executed, otherwise, the -- he would presumably be released from -- from prisons and said have no authority even to hold him in that prison. Earl Warren: What? Hugo L. Black: I noticed you recognize in your correction of your sentence that there is probably a difference between determination of all relationship as to the man who has been in the Army and a termination of his relationship as a member of the Army. John F . Davis: Well, the reason I think I phrased made -- changed my phraseology is -- Hugo L. Black: I thought it was wise. John F . Davis: -- that there is not question that a dishonorable discharge ends a great many of the aspects of a man's military career. The very purpose of a dishonorable discharge is to make this man no longer subject to getting pay, pension rights, the honorable status of a member of going to defend, going to fight for the -- for the people. I mean -- Hugo L. Black: Or any other service. John F . Davis: Except there is -- I suggest to Your Honor that there is no intention to release this man from the custody from the jurisdiction of the Army. Hugo L. Black: Well, that's -- it's -- supposing that's true, that seems to be the only thing the Court said in the Kahn case. I can find no reason except that. John F . Davis: There is a little more. Hugo L. Black: And was there a discharge there? John F . Davis: Well, the Court said it made no difference. Hugo L. Black: I understand that, but was there any? John F . Davis: I don't know. Hugo L. Black: I think not. John F . Davis: I don't know whether there was (Voice Overlap) -- Hugo L. Black: And I understand that -- John F . Davis: -- it was -- the Court didn't determine. Hugo L. Black: -- that -- that the Court just brightly admit from the fact that they had -- they charged, that he was a military prisoner to the statement and that settled it and which was frequently the case in the -- some of the opinions. And that is settled, its being a military prisoner, they had jurisdiction. John F . Davis: Well, whether or not a man is still a member or in the armed forces, it's -- it's sometimes not easy to determine. This is one aspect of the case which we have before us. But there are -- there are many situations where the man can't be sent to -- to fight overseas, can't be ought to do this, can't be ought to do that. I think one of the prime examples, one of the things that strikes me is the question with respect to prisoners of war who are also subject under the law to -- to army court-martial. Now, prisoners of war, of course, guilty of no crime whatsoever, I mean, they kept in, enemy soldiers who have been captured.And under -- in the national convention, they are entitled to many rights and -- and privileges as prisoners of war but they are also subject to military court-martial. Hugo L. Black: (Inaudible) John F . Davis: They -- yes, of course, they'd -- Hugo L. Black: So he had not been part of the army (Inaudible) John F . Davis: But they -- but -- but these are not punished under the war power, Your Honor. These are power -- these -- these people are subject to the -- the military disciplines under the power to -- to govern the -- the land and naval forces of the United States. And -- Hugo L. Black: But that's (Inaudible) John F . Davis: I -- I don't mean to (Inaudible) war angled through thoroughly but I (Inaudible) prisoner of war in this country (Inaudible) with respect to the Constitution. He has a -- he has a -- if -- if he is in the -- just as any alien in this country is, he is entitled to the protection of the Constitution. And in order to have authority to try these men by court-martial with the -- with the methods, the procedures which are followed there and are not applicable to civilian, I think it is necessary to find that pro tanto and to a certain extent, a prisoner of war too is part of our -- of our own land and naval forces. Hugo L. Black: (Inaudible) that says a prisoner of war who has never been here taking in fight, fighting against this country who haven't come here and never has been a part of the armed forces, they can try him, I understand, but a soldier who has been a part of the armed forces but they put out and who has been in this country all his life can be tried by them too on that ground. John F . Davis: You mean like in the Toth situation? Hugo L. Black: Like a man -- this -- this man here who's been discharged and not a part of it merely because they decide to keep him in prison for a crime that he has committed when he was under their jurisdiction. John F . Davis: I think -- I must -- I must say that -- I think we mustn't assume that he is no longer a part. I think that is our question whether he is so -- he is so -- he is now so intimately connected so closely associated to the aspects of military life impinged on him so thoroughly that he is still in the armed forces. In my argument is based on the fact that he is still in the armed forces while is in the -- Hugo L. Black: Is any statute that's ever been passed in the country and draft law or anywhere else that says that a -- and that's I presumed settled the status as a folio, I'm not talking about now as a prisoner, that indicates that the Army can take a man in and keep him there beyond the term of service of other people who get in as a soldier and after he's been discharged? John F . Davis: After he has been discharged? Hugo L. Black: Yes, after he's been discharged. John F . Davis: Well, I -- Hugo L. Black: Can he put -- can the Army project the term of his service over his objection or even with his objection? John F . Davis: You mean aside from the -- this particular issue which is before us, which is precisely -- Hugo L. Black: This issue -- this issue to me is quite a difference because it's the power over prisoner. So which kind of trial a prisoner will have who is no longer a soldier? John F . Davis: Well, I -- I think there is no question that the terms of service frequently changed with respect to officers as far as I know with respect to enlisted men in time of war as I -- and that one subject to military discipline if it's necessary for the protection of the -- the country. And this, I haven't checked again but I would -- my recollection is that during World War II, the question of when one would be released was in the hands of the armed forces rather than a matter of contract between the individual and the -- certainly with respect to officers applies. Hugo L. Black: As officers who volunteered their services and went in and the statute provided they should be there for some term or some fixed -- something fixed by the statute. John F . Davis: That's -- Hugo L. Black: What I'm asking is if there's any of the statute that ever been passed that indicates that the Army can keep an enlisted man. John F . Davis: Oh, I would have to check whether there was any (Inaudible) of -- of enlistment during the war. I don't know whether an enlisted man -- how -- how that applies (Inaudible) Earl Warren: Mr. Davis, was there a uniform policy at the time this man was -- was sentenced concerning the issuance of dishonorable discharge? And if so, was that policy consistent with what they did here? Did they -- did they always issue the -- the dishonorable discharge transmitted to the -- to the defendant and then put it in his files? John F . Davis: That was the customary way to handle this type of situation there. But to give you a little full answer, I want to say that in certain cases, there was a suspension of the execution of the discharge in order to determine whether or not the soldier could be rehabilitated and returned to the armed forces. Earl Warren: Was that in the judgment against him or was that in the -- in the -- John F . Davis: That's in the execution, I believe. I think that was not in the -- I think that wasn't in the -- I'm sure it wasn't in the sentence. That was in the execution of the sentence that they would suspend it and -- and try to get the man back into the service. Actually what -- Earl Warren: Were -- and were not stated in the -- is that stated in the execution or -- or was it -- John F . Davis: Yes, the execution in -- in the -- the officer who would execute the sentence was -- withhold this development and tell -- who would determine whether or not the man could be rehabilitated. Earl Warren: As a matter of discretion within? John F . Davis: As a matter of discretion under regulations, I presume. Earl Warren: Then we take this particular case if the officer who executed this judgment against this defendant was to hold this thing in his hands throughout the 35 years if the man was serving his percent that he could determine. He could determine if and when or at all this man was to -- to get his -- his dishonorable discharge and -- and be detached from the service or whether he should have remained in. John F . Davis: Well, in this -- in this type of case where the long term of imprisonment, the provision would -- would rather be that the discharged would be executed and then if the term of imprisonment for a good behavior because the man proved that he was going to be a good soldier, if the term of imprisonment was -- was reduced as the armed forces had -- had the right to do, by then, he would be reenlisted and the reenlistment would take effect for the unexpired portion of this prior enlistment. There'd be a -- actual reenlistment in that so -- Earl Warren: Well, now -- John F . Davis: And that's provided, I may say, in the statute itself. I mean, that's -- that's what the law contemplated. Earl Warren: As to the withholding or the immediate issuance of his discharge -- John F . Davis: Oh -- Earl Warren: -- that's in the statute? John F . Davis: No, this -- this procedure for reenlisting a man, a -- a prisoner who has -- who has proved that he has rehabilitated. Earl Warren: Yes, but is anything said in that statute or in any of the regulations concerning the time that his dishonorable discharge shall be issued and served upon? John F . Davis: Not that I know of. Earl Warren: That becomes a matter of policy with the executing officers. John F . Davis: Yes, I'm sure there were directions with respect to it, but I don't -- I don't know. Earl Warren: Directions coming from where? John F . Davis: From the army -- from the barrack officers (Inaudible) of the Secretary of the Army. I may say that in one side of these cases is -- as -- as I analyze the basis, it's very different from the Reid case, Reid against Covert case or Toth in that here, we have, I believe, no attempt by Congress to expand -- expand the area of its jurisdiction. It's -- it's rather a matter of carrying through jurisdiction which is specifically and -- and concededly granted to it with -- with respect to armed members of the armed forces to carry this thing -- to carry that very jurisdiction through until determination of their imprisonment. Now, I think when I was talking about whether Congress intended to -- I'm turning now to the point I was discussing last night about Article 92 which limits the military jurisdiction of a murder to -- so that it excludes “in time of peace”, and I think I neglected to mention one thing which I think is -- is rather important and that is that when Congress amended the Articles of War in 1948, it specifically recognized that with respect to the Articles of War, the war was still in progress, and it did this in connection with Article 53 providing for applications for new trials. And there was a thought that maybe during hostilities, many court-martials have been hurriedly conducted and that it was appropriate to give soldiers who had gone through those court-martials a chance to have them looked at in more calm -- in a -- in a more calm atmosphere. And so in Article 53, they gave soldiers opportunity to petition for new trials under Article 53, and they limited the time there. And they limited it to -- within one year after the termination of the war sometime in the future. They recognize the war was still in existence and they were giving this right in the future until one year after determination of the war. And again in 1950, when the Uniform Code of Military Justice was -- was adopted, again, Congress, in dealing with applications for new trials, specifically recognized that with respect to the Articles of War, peace had not been achieved. Earl Warren: Mr. Hannon. Robert Edward Hannon: Mr. Chief Justice, members of the Court, may it please the Court. First, I'll deal with the question of time of peace and time of war.I think in this regard, we're based, of course, with the Kahn decision. However, I'd like to call the Court's attention to Justice Black's dissent in the Ludecke case. That is found in our brief on page 30. Hugo L. Black: Well, unfortunately, that doesn't question the law. Robert Edward Hannon: Well, I think -- I think the idea expressed -- Hugo L. Black: (Inaudible) Robert Edward Hannon: [Laughs] Well, I think, Justice Black, in -- in regards to this particular issue, that is the crux of it, and I think that is the law that has been since that time adopted. It says that in interpreting any statue as to when we have time of peace and when we have time of war, you can't just blandly say that such and such a date will always terminate a war. I think that you have to look to the -- the intent behind the statute. The reason for the statute that Congress had in mind as it just is said in such cases we are called upon -- in such cases, we are called on to interpret the statute as best as we can so as to carry out the purpose of Congress in connection with particular right the statute was intended to protect. I think that decision -- that idea has also been followed by the -- the Court of Military Appeals and the -- William J. Brennan, Jr.: Well, Mr. Hannon, I don't understand (Inaudible) Robert Edward Hannon: Well, I think the Kahn case disagrees with that. The Kahn case says that it means peace in the complete sense officially declared and then the Kahn case goes on to say or imply that nothing but a peace treaty can terminate war. And I think that various things can terminate local war for various statutes. I don't think you can't point in advance that anyone thing and say, “Well, in all cases, a peace treaty must necessarily terminates the war.” William J. Brennan, Jr.: I -- I didn't understand. I -- Mr. Davis' argument may -- Robert Edward Hannon: Well, my -- William J. Brennan, Jr.: (Voice Overlap) but I thought what he was suggesting was that for the purpose of this statute, Congress had in mind that in any event, the story is not -- the war had not ended, not necessarily that it was the date of -- as of official termination. Robert Edward Hannon: Well, I think that if we can assume that well, I -- William J. Brennan, Jr.: I don't want -- Robert Edward Hannon: [Laughs] William J. Brennan, Jr.: I don't assume -- Robert Edward Hannon: (Voice Overlap) -- William J. Brennan, Jr.: (Voice Overlap) that's why I understood, Mr. Davis. Robert Edward Hannon: Well, in this -- I think in any event, that that is now the law or appears to be the law that you must look at the particular purpose Congress had in mind in enacting the statute or the right that they sought to protect. Well, under this 92nd Article of War, we can look at it and has -- well, what did -- what right was Congress trying to protect by saying that the military could not try a person for murder in time of peace but right where they're trying to protect. Well, they were obviously saying if it's a murder case, a very important capital offense turn him over to the civilians to try where he'll have his constitutional rights. I think that's the obvious purpose that Congress had in this statute. So that boils down to the question -- well, of course, conversely, by stating that, the Congress had in mind that there would be certain times when it wouldn't be expedient to turn murder cases over to the civilian courts where the constitutional guarantees prevail. Certain times, when it wouldn't work, those certain times are mentioned in the Article, number one, if it's outside the continental United States. Well, if it's outside the continental United States, your alternatives there are either try him by court-martial or turn him over to the foreign jurisdiction. Now, the other occasion is in time of war. We won't turn a murder case over to civilians. Well, obviously in time of war, they mean, I think, like this Court is held, when the courts are closed, the idea of the Milligan case and the Hawaiian cases, it's -- when the courts are closed, there is no civilian court where the man could be tried for murder so therefore, try him by court-martial. Now, taking one step further from that, what was the condition in California in 1949 that precluded him from having his constitutional guarantees by a trial in civilian court? It would -- could it be said that Congress, in setting up this statute, contemplated that a situation like 1949 would be time of war or would you say that Congress in enacting Article of War 92 thought that it was a technical state of war that would control? I don't think so. I think that Congress was dealing with actualities when they talked the time of peace and time of war. And the actualities in California in 1949 certainly were a time of peace. That has been the decision of the Court of Military Appeals in the Shell and Bussmann cases. The lower court -- the Bussmann case which is a recent Court of Military Appeals' decision says that in Korea, we arrived at a time of war in purposes of the Articles of the Code when they stop shooting, when the armies -- this was signed. The lower court attempts to distinguish this by saying, “Well, in Korea, there was no declaration of war. Therefore, there does not have to be a treaty to terminate this war.” But -- and the answer for that, “For one thing, you could say there was no treaty after World War II for six years. What's to say, there won't be a treaty after Korea within six years.” And secondarily, I don't think from reading the Bussmann case, you can get such a narrow meaning from it. I'm quoting from page 37 of the brief where the Court of Military Appeals says, “And that Congress, when it used the phrase ‘in time of war' in the Military Code intended that phrase to apply to that state regardless of whether or not it was initiated or continued or -- with or without formal declaration.” I think the Court of Military Appeals is squarely held that incidentally, there is a further case from the Court of Military Appeals which just came down and it's not cited in our brief, it's United States versus Carr, and it's 23 CMR 273. In that case, the Court of Military -- Potter Stewart: Can you give us the citation again? Robert Edward Hannon: Yes, Your Honor. It's 23 CMR 273. Potter Stewart: Thank you. Robert Edward Hannon: That case, the Court of Military Appeals says, “In those cases, this Court concluded that upon the cessation of hostilities in Korea on July 27, 1953, pursuant to the armistice a state of war no longer exists for purposes of military law. Thus, it is crystal clear that the inception of the accused absence occurred in time of peace.” The accused went on unauthorized absence on August 3rd, 1953 less than a month after the armistice. They said that he went on unauthorized absence in time of peace. Quickly carrying over to the second portion of the argument, that is as to the constitutionality of Article 2 (e). Here, we are speaking of 2 (e) under the 1920 Code.We are not speaking under the present Uniform Code of Military Justice but the 2 (e) under the existing code. Number one, it should be pointed out that the first enactment of that 2 (e) in 1898, the bill was entitled an amendment to the Summary Court Act. A summary court is a court that can give up to three months jurisdiction. Obviously, what they intended was to give to the military prison warden jurisdiction similar to what a -- any prison warden has. Now, I think that this -- Earl Warren: Did the article remain that way? Robert Edward Hannon: No, Your honor, I don't think that it was subsequently went into the Code. And in the code, it's just another article under the jurisdictional aspects of it. But initially, it was and these letters back and forth that counsel quoted were under that heading, amendment to the Summary Court Act. I think that the argument boils at to two parts.Number one, and this was the same problem I had problems with yesterday, on reflection, I think it because to the constitutionality, it boils it to two parts. I'm running over, Your Honor. It's -- Earl Warren: No, no, you have three to four minutes more until the red light comes in. Robert Edward Hannon: Right. I think first of all, we can determine was he in the armed forces or was he a member of the armed forces? Now, if -- on that particular argument, if he -- the -- he has no contract, he wears no uniform, he receives no pay, he performs no services, he can't be sent to war, he has none of the incidence of a member in the status or a person of the status of a member of the military. The Army itself, as I pointed out yesterday, has said he is not a soldier, and Winthrop said he is not a soldier. But there is some indication or perhaps there is a third class, a class that is not entirely in the service yet. He is subject to jurisdiction. I think then that even if there is such a class, if the Court is not prepared to say that you're either in or out, if there is a third class, this man wouldn't fall on that third class because that third class apparently is predicated on the idea that his control over him is absolutely essential to the maintenance of military discipline. Now, what is the -- what is the absolute necessity for having court-martial jurisdiction for a capital offense over a man confined in California in 1949? The need isn't there. This third class, if it exists, is a class that is based on need apparently. That's the only reason for it in any event. And if there is no -- in this case, there is no need nor in the case of a dishonorably discharged prisoner confined in the United States. There is no need to set up a third class which is part military and part civil. But I think, in my opinion, there is no such third class that the person is either in the status of a member of the armed services or he is in the status of a civilian. Hugo L. Black: You have to take on that part and say that there is no third class? Robert Edward Hannon: No, Your Honor, I don't think he -- Hugo L. Black: (Voice Overlap) what's called the CB and not a --not a soldier though or somebody who just doesn't work under the Army? Robert Edward Hannon: Well, I think a CB would be -- he is enlisted. He has a contract with the -- Hugo L. Black: Well, suppose he is not in the -- suppose there's no paper enlisted, but he take (Inaudible)8 he goes to the Army and he is part of it. Suppose they decide not to have him enlisted and not use those papers. Robert Edward Hannon: In my opinion, Your Honor, he is a civilian. Hugo L. Black: Civilian? Robert Edward Hannon: However, it isn't essential -- John F . Davis: Well -- Robert Edward Hannon: -- for our case to go that far. Hugo L. Black: -- is that -- is that a part of your case here? Robert Edward Hannon: No, Your Honor, we don't have to go that far. We could say that there is a third class that is -- that is not in that -- this man is not in that third class. I thank you, Your Honor.

Warren E. Burger: Mr. Horowitz, I think you may proceed whenever you are ready. Alan I. Horowitz: Thank you Mr. Chief Justice, and may it please the Court: This case is here on direct appeal under 28 U.S.C. 1252 from the United States District Court for the District of North Dakota. Under review is the District Court's decision holding unconstitutional the investigative provisions of the Fair Labor Standards Act, specifically the Court's holding that the Fourth Amendment prohibits the use of an administrative subpoena for the inspection of documents and rather requires that a search warrant be obtained before any documents may be examined. Because some of the briefs here have generated some confusion about the issue presented I think it would be useful to summarize briefly the background of this litigation. On January 6, 1982 Al Godes, the Wage Hour compliance officer, telephoned Appellee, a restaurant-motel, located in Steele, North Dakota to schedule an inspection for the following day and to ask that certain wage and payroll records be made available for inspection at that time. When Appellee's manager informed Godes that the time was not convenient he rescheduled the inspection for the following week. In the interim Appellee's counsel wrote to Mr. Godes stating that Appellee would not consider the request for an inspection until it was informed of either the nature of the complaint that triggered the investigation or the scope of the investigation. The government responded with a letter outlining the general scope of a fair labor standards investigation and declining to give the reason for this particular investigation. In this letter the government rescheduled the inspection for two weeks hence. The letter also requested Appellee to inform the government whether it would decline to permit the inspection so that an administrative subpoena could be obtained in that event. Appellee responded that permission would be refused under the authority of Marshall v. Barlow's and thereafter Appellee was served with a subpoena duces tecum requiring production of specified payroll records at the Department of Labor's Wage Hour Offices in Bismarck, North Dakota. Appellee's counsel informed the Department of Labor that it would not comply with the subpoena on the ground that it was invalid under Barlow's, and to date it has not produced the subpoena documents. Sandra Day O'Connor: Mr. Horowitz, do the Appellees suggest that maybe this was really an attempt by the government to get unauthorized entry into the premises? Would you comment on that? Alan I. Horowitz: I just do not think there is any support for that in the record. All we know is that they phoned and... The government phoned and said that it wanted to conduct an inspection the next day. Appellee obviously did not feel compelled to comply with this. It simply first stated that it wasn't convenient and then later declined to permit the government to enter. In the brief-- Sandra Day O'Connor: The question is not really before us here, of course, but do you think the statutory authority under the Act to enter and inspect the premises is possibly invalid under Barlow's? Alan I. Horowitz: --Well, it has never come up because the general practice of the Labor Department is not to conduct these entries without consent so they did not try to do it here. They have never tried to do it. If they did-- Sandra Day O'Connor: Do you think it is possibly invalid? Alan I. Horowitz: --If they did I think unlike this case Barlow's would be quite relevant and there would be a serious question under Barlow's, but the question would be whether Barlow's was distinguishable or not. It might be difficult to distinguish. Barlow's itself was careful to confine itself to the OSHA context so arguably it might be distinguishable, but it would certainly be a close case. Speaker: Well, did the subpoena here actually request entry? Alan I. Horowitz: No. The subpoena specifically said that it was returnable off the premises, that the documents were to be produced at the Labor Department's office in Bismarck, North Dakota. I should say also in response to Justice O'Connor's original question the Appellee has said and the briefs in this Court have characterized the Department of Labor's initial phone call as sort of a demand for entry and tried to paint the picture that we were trying to force our way in. That's something that's come up in the course of litigation. I think if you look at the more contemporaneous discussion of what was going on the letter that I just referred to that Appellee sent to the government that is reproduced at page 13 of the Joint Appendix Mr. Peterson stated "I represent Lone Steer Cafe. " "Before we consider your request to conduct an inspection we would like the following information. " So I think at least at the time everyone understood that this was just a request to enter the premises. It was only later that this has been characterized more as a demand. John Paul Stevens: May I ask was the subpoena ever served? Alan I. Horowitz: Yes, the subpoena was served. John Paul Stevens: Did you ever file a motion for contempt for failing-- Alan I. Horowitz: We filed as I was about to say we filed a petition with the District Court to compel Appellees to comply with this subpoena. John Paul Stevens: --The judge's order does not rule on that though does it? Alan I. Horowitz: Well, the cases were consolidated so the order does rule on it. It is a little cryptic. John Paul Stevens: But he does not mention it? Alan I. Horowitz: He does not mention it, no. John Paul Stevens: All he denies... Really all he says you have no right to enter the premises. Alan I. Horowitz: Well, that is what the order says. In the course of the court's opinion he states that the Appellee's contention is that they are not required to turn over these documents in response to this subpoena so the court seems to have understood that what this case was about was a subpoena, but then when it gets to drafting the order it just says that government can't enter on the premises. At that point the government filed a motion to amend the judgment pointing out to the court that all we wanted was for the documents to be turned over at our offices. The court did not really address that very well either so perhaps the District Court did not exactly focus on what was going on here, but I think it is made clear enough in all the papers that have been filed. When Appellee declined to permit the inspection originally the government responded with a letter that outlined the general scope of the investigation of a fair labor standards general investigation but declined to give the reason for this particular investigation, and as I said we requested that Appellee inform the government whether it would consent... decline to permit the inspection so the subpoena could be obtained. When Appellee declined to permit the inspection a Department of Labor officer went to the premises on February the 2nd and served him with the subpoena. The Appellee brought this law suit seeking declaratory and injunctive relief on the grounds that the Fair Labor Standards Act was unconstitutional and quoting from the complaint "insofar as it purports to authorize a warrantless inspection of records by way of administrative subpoena after entry to inspect has been denied. " This action was consolidated with the government's action as discussed earlier petitioning the District Court to compel Appellee to comply with the subpoena, and the District Court found for the Appellee without really explaining why. The court's opinion relied exclusively on Marshall v. Barlow's and accepted the Appellee's contention that the subpoena was invalid under Barlow's. Speaker: I did not find that the court referred to Oklahoma Press at all. Alan I. Horowitz: No. The court-- Speaker: Was this pressed upon the court by the United States Attorney? Alan I. Horowitz: --It certainly was featured quite heavily in the government's motion for summary judgment, the Oklahoma Press case, but it was not really discussed by the Appellee and the court did not see fit to discuss it either. Speaker: Judge Van Sickle had Oklahoma Press. Alan I. Horowitz: Yes, he did. As we've stated in our briefs we view this as a straightforward case governed by principles that have been well settled by this Court. John Paul Stevens: Mr. Horowitz, maybe I've already asked it but I just want to be sure. Not only in his judgment but also in his opinion all he mentions is the right to enter. He did not write another opinion that somehow did not get in the papers did he because the strangest thing to me about this case is the judge's total failure to mention anything about complying with the subpoena. Alan I. Horowitz: Well, it is certainly strange. At the beginning of the court's opinion or at least at the beginning of discussing the issues at the bottom of page 6A in framing the issue the court says in the last paragraph there on page 6A "Lone Steer asserts that the statutory scheme is constitutionally impermissible and that the records described in the administrative subpoena issued in this case need not be produced except in response to a warrant. " So the court certainly took cognizance there of the fact that there had been a subpoena issued, and that's what was involved. But then the court just goes on to discuss Barlow's and then kind of falls back onto this discussion of entry onto the premises. Speaker: You thought it was so strange that you suggested summary reversal. Alan I. Horowitz: We did suggest summary reversal, but the court did not see fit to act on that suggestion. The case is here today because of the direct appeal provisions of Section 1252 in light of the District Court's finding of unconstitutionality. It is not because this case presents an unsettled constitutional question. I would like if I might briefly to emphasize just a few points in this connection. At the outset let me emphasize again that the only issue presented in this case is the constitutionality of the subpoena duces tecum served upon Appellee, that is, requiring the production of documents off premises without resort to a search warrant. Perhaps because the validity of such subpoena is so clearly established by this Court's precedent Appellee and the amicae supporting it have sought to cloud this issue by suggesting that this case involves an attempted nonconsensual entry onto private premises. This is simply not so. There is no question here of an entry onto private premises without consent as there was in Barlow's. The government never made any attempt to enter and the Department of Labor's general policy is not to make such entries. From the time the subpoena was served almost every document in the record perhaps with the exception of the District Court's opinion confirms that this litigation has focused on the validity of the subpoena. Only one week after the subpoena was served Appellee wrote the government, sent a copy of this letter to the District Court stating that it would not comply with the subpoena because it was invalid under Barlow's. Appellee's complaint, the government's petition to enforce this subpoena, the District Court's own description of the issue presented in its opinion and the motions for summary judgment all focus on the issue of the validity of the subpoena. On this issue Appellee's contention is foreclosed by a long line of precedent of this Court. In Oklahoma Press this Court unequivocally held that an administrative subpoena, indeed in that case a subpoena issued under the very statute involved here, the Fair Labor Standards Act, a subpoena is not governed by the requirements of the warrant clause. That is, neither a warrant nor probable cause is required for the issuance of a subpoena. The Court explained that a subpoena does not involve any actual search of private matters. It is a search only in a theoretical sense, what the Court termed a constructive search. The Court concluded, therefore, that a subpoena is reasonable within the meaning of the Fourth Amendment if the request is authorized by law, is not indefinite or unduly burdensome and seeks documents that are relevant to the investigation. This rule has been reaffirmed by this Court in Morton Salt and several other subsequent cases and has been routinely and uniformly applied to administrative subpoenas for the last 40 years. Neither Appellee or the District Court discusses Oklahoma Press and its progeny. No defect in the reasoning of the Court in those cases nor any reason for concluding that those cases were wrongly decided has been suggested. The sole basis for the decision below and for Appellee's argument is the assumption that this long line of cases has been wiped off the books overruled sub silentio by Barlow's. There is absolutely no basis for this assumption. Barlow's has nothing to do with this case or with Oklahoma Press. Barlow's involved an actual search, an entry onto a manufacturer's private business premises and a search of those premises for evidence of safety and health violations. This is the precise sort of investigative tool with which the Court in Oklahoma Press contrasted a subpoena and drew a distinction. Barlow's did not suggest any erosion of the traditional distinction between subpoenas and actual searches. Indeed Barlow's relied heavily on See v. City of Seattle an earlier case where the Court had established a warrant requirement for fire inspections, inspections that required an entry onto private premises. In the course of that decision, however, the Court expressly reaffirmed the distinction drawn in Oklahoma Press between subpoenas and actual searches and reaffirmed the standards set forth there under which such subpoenas are to be judged. Barlow's and following See did not interfere with these standards. Morever, the problems with OSHA inspections primarily concerned the Court in Barlow's. That is, the unbridled expression of officers in the field to conduct inspections and the unlimited nature of the search involved do not exist with subpoenas. The subpoena is not open ended. It specifically identifies the documents sought. The subpoena is not left to the unbridled discretion of the officer in the field. It may be issued only by the Wage Hour administrator and enforced only by resort to adversary court proceedings. In short, nothing in Barlow's casts any doubt on the continued validity of Oklahoma Press or on the validity of the subpoena returnable off premises that was issued in this case. Thus, to repeat we believe that well settled Supreme Court precedent clearly controls the disposition of this case and requires reversal of the judgment below. Unless there are any questions, I will reserve the remainder of my time. Sandra Day O'Connor: I have one, Mr. Horowitz. Again, I do not think it is really raised here but do you think there are any limits in addition to those spelled out in Oklahoma Press on the government's subpoena power? Could a person whose records are being subpoenaed, for example, seek a protective order from the court on the grounds that he'd been singled out or was being harassed and, therefore, the subpoena wouldn't issue? Are there any limits? Alan I. Horowitz: I am not sure whether the Fourth Amendment would give any protection or not against sort of being singled out. It might be that the due process clause or something could have some sort of selective prosecution kind, but I think it would be a difficult standard to meet certainly. Warren E. Burger: Mr. Peterson. Richard G. Peterson: Mr. Chief Justice, and may it please the Court: First of all, this is not a simple subpoena case. Such characterization is misleading and erroneous. It is somewhat glib, and it is made by government appellate attorneys from afar. Those who have been directly involved with this case including the District Court judge were intimately aware of the facts. The issues basically involved entry, and if you look at the facts and the facts were stipulated there were at the outset unilateral scheduling of an inspection appointment date. William H. Rehnquist: Mr. Peterson. Richard G. Peterson: Yes. William H. Rehnquist: Where do we find the stipulation? In the briefs or the appendix? Richard G. Peterson: I believe it is in the-- William H. Rehnquist: Is it in the appendix somewhere? Richard G. Peterson: --Yes, it is in the appendix, Justice Rehnquist. Speaker: Page 11. Richard G. Peterson: Right. The Labor Department basically was informing Lone Steer that it was about to enter and inspect the premises, question employees and generally conduct its normal investigation. Thurgood Marshall: Did they enter? Richard G. Peterson: Yes, they did ultimately. The issue became-- Thurgood Marshall: When did they enter? Richard G. Peterson: --They entered I believe it was February 2nd of 1981. Thurgood Marshall: What is that in relation to this case? Richard G. Peterson: Excuse me? Thurgood Marshall: Was that when the hearing was had? Richard G. Peterson: They entered following the institution of a law suit by Lone Steer to get a declaratory judgment on Section 11. Thurgood Marshall: Well, does that apply to this case? Richard G. Peterson: Yes, it does, Your Honor. Thurgood Marshall: Is it in the record? Richard G. Peterson: Yes, it is, Your Honor. The Labor Department, a compliance officer, Mr. Godes from Bismarck together with some high ranking Labor Department official flown in from Denver entered the Lone Steer to attempt to conduct the investigation on the premises showing, attempting to show that Section 11-- Thurgood Marshall: Well, did they enter? You now said they attempted to enter. Richard G. Peterson: --Well, they entered and attempted to conduct the investigation. Thurgood Marshall: Isn't there a difference between entering and attempting to enter? Richard G. Peterson: They entered the Lone Steer Cafe in Steele, North Dakota and sought to conduct an investigation there. Thurgood Marshall: A cafe? They entered it? Richard G. Peterson: They did enter it. Thurgood Marshall: And they were excluded. Richard G. Peterson: They were turned away, right. Thurgood Marshall: They were turned away. Richard G. Peterson: Right. William H. Rehnquist: Mr. Peterson, you used the word "enter" as if to give almost a feeling of breaking down the door. Your paragraph 10 of the stipulation says that at approximately 10:30 a.m. Godes and Hill entered the Lone Steer establishment to attempt to conduct an investigation. They asked for Ms. White and were told she was not available but expected shortly. They were offered some coffee and waited in the lobby area. After 20 to 30 minutes when Ms. White had not appeared Mr. Godes served an administrative subpoena on employee Karen Arnold. Do you mean by the use of the word "entered" kind of entered against the will of the parties? Richard G. Peterson: No, Your Honor, and I certainly did not seek to give the Court that impression. If I could give you a short scenario of what exactly happened-- Warren E. Burger: Well, is it something different from the stipulation in paragraph 10? Richard G. Peterson: --Only from a... No, it is not, Your Honor. It is basically in the stipulated facts. We had two instances where Lone Steer's attorney told the Labor Department that they did not have authority or consent to conduct its investigation on the premises of Lone Steer. Warren E. Burger: Are you suggesting they had no authority to enter to serve the subpoena? Richard G. Peterson: No, Your Honor, definitely not. Warren E. Burger: You are not arguing that? Richard G. Peterson: No. We're saying-- Warren E. Burger: That is a public place. Anyone could enter it, could they not? Richard G. Peterson: --Yes, it is, Your Honor. Warren E. Burger: How else would they serve the subpoena except to enter it? Richard G. Peterson: Your Honor, in the first instance what they sought to do was to conduct the investigation. Warren E. Burger: We are not concerned about what they thought to do. What did they do? Richard G. Peterson: They informed us by way of a letter that they were going to attempt to conduct the investigation and if they were prohibited... That was the word used... if they were prohibited from conducting the investigation they were going to leave an administrative subpoena. John Paul Stevens: Mr. Peterson, the stipulation goes on and says they did properly serve the subpoena. Richard G. Peterson: Yes, Your Honor. John Paul Stevens: The subpoena commands the production of a person to testify and to bring with him certain records to the Federal Building in Bismarck. Richard G. Peterson: Yes, Your Honor. John Paul Stevens: Why did you not do that? Richard G. Peterson: Your Honor, at that point prior to that the issue was under Section 11 whether or not the inspection powers of the Labor Department were limited by the Fourth Amendment as interpreted by Barlow's, and the issue before the Court as the Court perceived it and as we perceived it we wanted a declaratory judgment as to whether or not the Labor Department did have the right to conduct the investigation without the consent of the owner. John Paul Stevens: Do you understand the District Court to have ruled that you did not have to comply with the subpoena. Richard G. Peterson: Yes, Your Honor. John Paul Stevens: What reason did he give for that ruling? Richard G. Peterson: He did not really give a reason for that ruling other than to say that the inspection power under Section 11 of the Fair Labor Standards Act was clearly in his mind at least subject to the warrant clause under the Fourth Amendment as interpreted in Barlow's. John Paul Stevens: He talked only of entries onto the premises. Richard G. Peterson: Yes, Your Honor. John Paul Stevens: The subpoena asks for production elsewhere. Is there any reason why you should not comply with a subpoena to produce elsewhere? Richard G. Peterson: The subpoena as we understand the subpoena is an enforcement device as a part of Section 11's conferring of inspection powers to enter and inspect the premises. Thurgood Marshall: Had they not first tried to get in would you be making the same argument? Richard G. Peterson: I believe, Your Honor, that either Section 11 is subject to the warrant clause or it isn't. I believe that it is subject to Section 11, and the Labor Department did not or left undisturbed the judgment with respect to entry. The judgement with respect to entry right now stands that Section 11 is subject to the warrant clause. Thurgood Marshall: Well, let me give you a hypothetical. The same type of subpoena is issued to another corporation which has only been in business a week. Would you be arguing the same thing? Richard G. Peterson: I would argue-- Thurgood Marshall: I said only been a week because I do not want anything in the past to have anything to do with it. Richard G. Peterson: --I would argue there, Your Honor, that a subpoena is subject to Barlow principles. A subpoena can be enforced under Barlow principles, and it would be subject to the-- Thurgood Marshall: So they have no subpoena power. Richard G. Peterson: --Yes, they have subpoena power which I believe was limited by Barlow's-- Thurgood Marshall: How would they exercise the subpoena power? Richard G. Peterson: --I think what this Court has to do consistent with Barlow's is to look at the entire investigatory scheme and see that a subpoena is being used and enforced in Federal District Court, and the test there would be whether or not the subpoena and an enforcement would be the functional equivalent of a warrant. Thurgood Marshall: And every subpoena would have to have court approval? Richard G. Peterson: Ultimately in an enforcement action. It could have in this case. Thurgood Marshall: Why does this type of subpoena need court action, others do not? Richard G. Peterson: Because of the particular way the statute is postured in terms of entry. Thurgood Marshall: When it involves this particular statute? Richard G. Peterson: Yes, Your Honor. Sandra Day O'Connor: Mr. Peterson, does not Oklahoma Press clearly say that subject to the requirements spelled out there administrative subpoenas can issue without the concerns expressed in Barlow's? Richard G. Peterson: Your Honor, I believe that-- Sandra Day O'Connor: Barlow's did not overrule Oklahoma Press. Richard G. Peterson: --No, I do not believe so, Your Honor. I believe that Oklahoma Press Publishing was perhaps altered to a certain extent and perhaps certain grey areas were filled in in that a subpoena could issue but the test of reasonableness would involve Barlow substantive principles, for example, the issue of probable cause limiting properly the scope of the investigation to the purpose of the investigation. Sandra Day O'Connor: Well, you have to read a lot into Barlow's to think that do you not? Richard G. Peterson: No, Your Honor. Speaker: To what extent did Barlow's deal with papers and records? Richard G. Peterson: To the extent that the Labor Department there sought certain I believe it was health accident reports and so forth that are required by the OSHA law. An inspection was sought of those documents. Speaker: Did Barlow's even cite Oklahoma Press? Richard G. Peterson: No, it did not, Your Honor. However, in footnote 22 you pointed out that delineating the scope of a search with some care is particularly important where documents are involved. At a certain point you indicated it is the secretary's position which we reject that an inspection of documents of this scope may be effective without a warrant. Speaker: Well, you can get relief with respect to the scope of the subpoena under Oklahoma Press, under Walling. Richard G. Peterson: We believe, Your Honor, that because of the entry provisions of this particular statute, Section 11, which there is no question in my mind, there is no question in the District Court's mind and apparently there is no question in the Labor Department's mind, is subject to the warrant clause on Barlow's. It is very difficult for me to then say Section 11 is subject to the warrant clause; however, the subpoena is not which is the enforcement device. I believe that essentially the cases are the same, Barlow's and Lone Steer. The only difference occurred when entry was denied and an enforcement mechanism under a particular statute was utilized. In the Barlow's case it involved a compulsory process to enter, and as I read Barlow's the Labor Department did not contend that that compulsory process was the equivalent of a warrant. You did indicate that it could be viewed as such in one of your footnotes. The same is true in this particular case. We have to look at the enforcement mechanism of Section 11, and in this case it is the subpoena, a subpoena that is issued by the Labor Department itself without regard to probable cause and without properly limiting the scope of the investigation to the purpose or the probable cause involved. Again, I would have to iterate and reiterate that the case involved a declaratory judgment at a particular time. On February 1, 1981 there was a dispute as to whether or not the Labor Department had a right to come in and conduct an investigation over the objection of an owner. When Lone Steer objected twice through its attorney that you cannot come in without a warrant or its functional equivalent, the Labor Department then cited in its letter its inspection powers under Section 11 to enter and conduct an inspection. At that point there was a dispute as far as the District Court was concerned as to whether or not the Labor Department did in fact have a right to enter and inspect. Following the initiation of that law suit the Labor Department despite all these protestations through the legal counsel and through the court system the Labor Department still sought to conduct that inspection on the premises of Lone Steer. It is-- Speaker: So what you say is basically you are entitled to a declaratory judgment that would say the Labor Department does not have the authority to enter and inspect notwithstanding-- Richard G. Peterson: --Without the consent of-- Speaker: --Without the consent of the owner notwithstanding that we might resolve the subpoena question in favor of the government. You see them as two distinct issues I take it. Richard G. Peterson: --Yes, they are two distinct issues, but if Section 11 is subject to the warrant clause under a Barlow's test type of analysis it seems clear to me that you have to also apply that analysis to the enforcement mechanism of that right under Section 11. In fact the Labor Department is saying that it is seeking to inspect the documents under the subpoena under Section 11. They are citing Section 11 and Section 9. I seriously question whether or not the Labor Department can conduct its investigation without utilizing the authority of Section 11 which is a right to enter provision. Thank you, Mr. Chief Justice. Warren E. Burger: Thank you. Do you have anything further, Mr. Horowitz? Alan I. Horowitz: I have nothing further unless there are any questions. Warren E. Burger: Thank you, gentlemen. The case is submitted. Speaker: The Honorable Court is now adjourned until tomorrow at 10:00.

Warren E. Burger: We’ll hear arguments next in 71-1005, Michigan against Payne. Mr. Smietanka, you may proceed whenever you’re ready. John A. Smietanka: Thank you. Mr. Chief Justice and may it please the Court. The facts in this criminal case are a bit complex. Essentially, they arise from an incident which occurred in Benton Harbor, Michigan on November 5, 1962. Two police officers were driving in their patrol car, stopped a Pontiac automobile, got out of their automobile and, as they were walking up to the Pontiac, the driver and passenger of that vehicle jumped out and began firing at them striking both officers, critically wounding both. Both did survive. Later that day, incidentally, it might be noted at this point that after the officers have been hit, they did fire their guns at the retreating vehicle, Pontiac. Later that day, Leroy Payne, the defendant in this case was arrested, a confession was obtained from him illegally, and before Judge Phil Hadsol, the Byron County Circuit Court, he pled guilty on December 14, 1962. In February 1963, he gave testimony against his co-defendant, Lionel Bradford. In March 8, 1963, he was sentenced to 19-40 years by Judge Hadsol. Warren E. Burger: Well before you passed that, when he gave the testimony against him as co-defendant, did he acknowledge at all the facts that you presented to us? John A. Smietanka: He did. Warren E. Burger: Was that testimony used against him in any way thereafter? John A. Smietanka: It was not. Subsequently, in 1967, Mr. Payne appealed to the Michigan Court of Appeals and in May 12th of that year, 1967, the remand order was entered by that Court to the Byron County Circuit Court for an evidentiary hearing on the question of the voluntariness of his confession and the voluntariness of his plea. Then, Circuit Judge Chester Burns conducted that evidentiary hearing in 1967, suppressed the confession, vacated the plea, and set the case down for preliminary examination, whereupon, it proceeded normally to trial. Prior to trial, the same circuit judge, upon motion of the defendant, granted the change of venue to Grand Rapids which is Kent County, Michigan. At the trial, certain evidence was entered by the people and by the defense. I will get to that evidence later in my argument, if it please the Court. He was convicted by a jury selected from Kent County. He was sentenced on August 30, 1967 to a term of 25-50 years. Warren E. Burger: Now, in this trial, was his testimony against Bradford available to the jury? John A. Smietanka: It was not, Your Honor. Warren E. Burger: Does some rule or law of Michigan prohibit that? John A. Smietanka: The confession was not entered because Judge Burns specifically suppressed it and-- Warren E. Burger: Well, the confession. I’m speaking of his affirmative testimony, on the record in open Court in Bradford’s trial. John A. Smietanka: No mention as to be made of any-- there is an agreement prior to trial, it’s my understanding, and order of the Court that no mention was to be made either of his confession or his plea or the testimony before Judge Hadsol in the Bradford trial, and none was made. In fact, there was great deal of cross-examination in the second trial which led up to, but did not come-- did not even in the remote sense mentioned, the fact that he had testified in the prior trial or of any prior proceedings. There was no notification, no notice of any prior proceedings given to the jury or anything that have happened in those prior proceedings. Warren E. Burger: But this was by virtue of an agreement, not by a-- John A. Smietanka: By virtue of an order of the Court, I recall. William O. Douglas: By an order of the Court? John A. Smietanka: It-- I’m not sure how the-- exactly the order was formulated, whether it was by stipulation of counsel, which I believe was the case, and the Court ordered-- made an order based on that understanding. Warren E. Burger: I see. John A. Smietanka: It may have been recorded-- it may have been done in chambers and it may not have been formally filed, but that was the case. Warren E. Burger: So that neither the jury nor the judge, this trial you’re speaking of now, were aware of his testimony which amounted to a judicial confession in the Bradford case. John A. Smietanka: The judge was, Your Honor, because the-- he was the one who had vacated the prior conviction. He has-- he was, as I said, sentenced to 25-50 years in Michigan Department of Corrections. On June 23-- pardon me, he did appeal that conviction, raising as one of the grounds an excessive sentence the second time around. On June 23, 1969, this Court delivered the decision in North Carolina versus Pearce. Two days later, June 25, 1969, the Michigan Court of Appeals affirmed both the conviction and the sentence, that is, a sentence of Judge Burns. The Michigan Supreme Court granted leave and, apparently, unanimously affirmed the conviction, but in a 4-3 decision and reversed the sentence based on an-- their interpretation, the Michigan Supreme Court’s interpretation, of the requirements of North Carolina versus Pearce. This Court granted certiorari in October 16, 1972. The primary issue, which is actually the last issue that I’ve raised in my brief, is that of the retroactivity of North Carolina versus Pearce. First of all, I think we can agree that the sentence was properly imposed technically. The-- it was well within the statutory maximum, that is the statutory maximum in Michigan for assault with intent to murder is life imprisoned. There are two issues dealt with by the Court in North Carolina versus Pearce, first is that of sentencing. Pardon me, first is that of credit to be given to a person who has appealed a conviction and been resentenced. He must be given credit. This was posited and based on the ex parte Lang on the Double Jeopardy Clause, but the second issue-- Potter Stewart: And that issue is not here, is it? John A. Smietanka: That issue is not here, Your Honor. Potter Stewart: No? John A. Smietanka: No question of that. Potter Stewart: Okay. John A. Smietanka: The second issue is that of whether or not a higher sentence could be imposed on the second sentence after a successful appeal. The Court in Pearce, of course, specifically eliminated the question of Double Jeopardy and Equal Protection Clauses as being a bar to that sentence, that increased sentence, but this say that due process requires that certain-- that these sentences be protected or be governed by certain rules, a certain rule, namely that, first of all, it’d be based on objective identifiable conduct occurring after the first sentence and, secondly, that that conduct must appear on the record. On January 16 of this year, this Court delivered an opinion in the case of Robinson versus Neil, in which it cited Pearce without mentioning exactly the-- specifically defining how it cited, but it note that Pearce indicated that Benton versus Maryland should be applied retroactively. The mentioning of North Carolina versus Pearce, we fee, by Mr. Justice Rehnquist, was intended to deal with the double jeopardy aspect of Pearce, that is the sent-- the creditor time served. Further in that decision in Robinson, this Court noted that there is some conflict or a difficulty of understanding the retroactivity and prospectivity rulings of this Court, and referred the readers and the-- to the thrust of the Desist versus United States as summarizing the Linkletter type criteria and said that, first of all, we must look to determine whether the Linkletter criteria apply to the question of what right are we dealing with? What right or what privilege newly defined are we dealing with? Then, we must look to the purpose of the rule. Desist also emphasized the fact that the purpose of the rule, newly defined, is the most important aspect. Looking at the particular right that we have, that is the Fourteenth Amendment Due Process Clause, this Court has not held that, in it of itself, solely by citing and by using-- having a right affected by the Due Process Clause does not, in it of itself, require retroactivity. A particular rule or particular-- the purpose to be served by a particular rule may indicate that retroactivity should take place, but it does not require it. It is the contention of the State of Michigan that the Linkletter criteria should be applied here for the following reasons. First of all, that, as I said, the Due Process Clause does not, in it of itself, require retroactivity, as would, as Mr. Justice Rehnquist noted, as it would with the Double Jeopardy Clause in Waller versus Florida. Essentially, the Due Process Clause, in the way it was applied in this case, assures fairness, basic simple fairness, in the imposition of a second sentence. We then move to the purpose of the rule. Essentially, there are two purposes for the North Carolina versus Pearce decision. There are two things that the Court wanted to protect. First of all, that is the appellate process, that is, there should not be any unreasonable impediment to the exercise of a right to appeal granted in this case by a state. The Court, as I recall, has not stated that there is a constitutional right to appeal but, when it is applied, it must be applied-- there must be equal access to the Courts, there must be no unreasonable distinctions. And, the unreasonable distinction here is a reasonable fear that a second sentencing judge will act indicatively against a particular defendant. The second purpose is to prevent, to deter, improper vindictive sentences upon defendants solely because they have appealed and want a new trial. Now, how do we apply the Pearce case and how does it fit within this question of retroactivity? Thurgood Marshall: Well, first of all, did the same Judge evoke the trial? John A. Smietanka: No, sir. No, Judge Philip Hadsol was-- imposed the first sentence, Your Honor. Thurgood Marshall: Right. John A. Smietanka: And Judge Chester Burns imposed the second sentence. Thurgood Marshall: That’s what I thought, yes. John A. Smietanka: There are certain factors-- Potter Stewart: It was Judge Burns who, in fact, had set aside the original judgment and granted a new trial, wasn’t it? John A. Smietanka: That’s correct, Your Honor. Potter Stewart: What was that, just on-- he wasn’t an appellate judge. He was-- John A. Smietanka: No, he was-- their case was remanded from the Michigan Court of Appeals for an evidentiary hearing and, at that evidentiary hearing or after it, he decided, first, that the order-- that the confession should be suppressed, the plea vacated, and it was set for a new preliminary examination which was held and proceeded to trial. Warren E. Burger: Yes, and so that was, they allowed him to withdraw his guilty plea. John A. Smietanka: That’s correct. Warren E. Burger: That was the thrust of that holding, wasn’t it? John A. Smietanka: That’s correct. The second thing which we are trying to prevent or the Court is trying to prevent in Pearce is the vindictive sentencing. How do we go about handling it? First of all, the Court said that the type of material, the factors to be considered by a judge imposing a second sentence should be limited to objective identifiable conduct occurring after the first sentence. Actually it didn’t say “limited to it,” it said “based upon.” And, secondly, there’s a record making requirement, that is, this material must be placed on the record so that a higher Court can review that the bases for sufficiency. Now, retroactivity, it’s our contention, will not further either of these goals. First of all, those who have been, in the past, deterred from appealing are not going to be-- have their wrongs righted by the retroactivity of Pearce to those cases where those who did appeal had their-- had a higher sentence imposed, that is, the actual wrong that the Court is dealing with is the reasonable fear of those-- the deterrence of those who want to appeal but are afraid to appeal. These are the people who have suffered the appellate wrong that Pearce was trying to avoid. Now, making these cases retroactive, making this case retroactive to handle those-- where the defendant did appeal obviously, those who were afraid will never have justice done to them. Secondly, the prospective application of Pearce will satisfy each of the-- satisfy this appellate and of Pearce, that is, from now on we know, we being-- we convicted of crimes, we know that we will not be subject to a vindictive sentence the second time around and we now can prosecute our appeals. It should also be noted that if that case-- if Pearce were to be retroactively applied, it would have to be logically a question of each person who was sentenced would then have a right to say-- come in and say, “well, I was deterred because of the fear of reasonable-- unreasonable increase in sentence and, therefore, hear my appeal,” thus, reopening or opening for the first time each sentence at least and each conviction that has ever taken place, in which the defendant presumably is still alive. Thus, the proof problems would be immense and, furthermore, Pearce-- Thurgood Marshall: Do you have-- John A. Smietanka: I’m sorry-- Thurgood Marshall: Do you have any figure as to how many people convicted, successful on appeal, who had their sentences enhanced? John A. Smietanka: I have no figures, Your Honor, except for figures which were cited in the appendix to Walsh versus Commonwealth dealing there, not with the type of review we have here, the type of sentence we have here, but appellate review of sentencing. This came about in the-- under the Massachusetts rule and, in that, there are many, many statistics. Thurgood Marshall: I’m talking about Ju-- this big flood you’re talking about. John A. Smietanka: Well, in Minneap-- Thurgood Marshall: I don’t know how big this flood is. John A. Smietanka: Well, the flood, Your Honor, would come from every single conviction. Thurgood Marshall: Every single conviction? John A. Smietanka: If a person could conceivably-- for example, a person is convicted, 100 people are convicted-- Thurgood Marshall: Like a few people in the penitentiary today were convicted and didn’t appeal at all? John A. Smietanka: I don’t know how many there are. Thurgood Marshall: Well, there are some. John A. Smietanka: There are some. Thurgood Marshall: Well, they wouldn’t be covered. John A. Smietanka: I think they would be, Your Honor, because-- Thurgood Marshall: How? John A. Smietanka: Because the appellate purpose of Pearce is to avoid the fear of a higher sentence. If a person in jail, in prison, does not appeal, it may be for a number of reasons. For example, he might be satisfied with his conviction, satisfied to justice done, but one reason-- Thurgood Marshall: Well, I’m already quarreling with your word “all,” and I still say that a man in the penitentiary who serves life imprisonment wouldn’t be worried about enhancement of his sentence. Am I right or wrong? John A. Smietanka: That could be, Your Honor. Furthermore, the sentencing process is to be protected by Pearce and there were-- the real bugaboo, the real evil, is a question of actual vindictiveness. Now, that is actual vindictiveness for having taken an appeal, and the way the Court handled that was to formulate a rule of, basically, constructive vindictiveness. The Court said “alright, if these criteria which we’re laying down are not met then, in effect, we are construing, we are saying that this sentence is reversible because it is not-- it is technically, it is based on a vindictive type of sentencing. It is constructive vindictiveness, but we are actually trying to avoid actual vindictiveness and like actual police misconduct, the type of conduct we had in Mapp versus Ohio. We’re talking here about deterrence of that behavior, and retroactive application of Pearce is not going to enhance the deterrent effect of Pearce. Warren E. Burger: After lunch, you will have only 10 minutes left and I hope you are saving a substantial amount of that time to emphasize the differences in a situation when the second sentence was imposed as compared with the first. John A. Smietanka: I will. [Luncheon Break] Warren E. Burger: You may continue. You have about 10 minutes all together. John A. Smietanka: Thank you, Mr. Chief Justice. May it please the Court. The questions that I was requested to confine my remarks to, basically, what type of behavior was indicated as-- Warren E. Burger: I don’t mean to limit you to that, but that’s a matter of very great interest to me. John A. Smietanka: Yes, it is but, primarily, I’d like to deal with the two items. There is an affidavit, two affidavits, in the petitioner’s appendix found on pages 17 through 21. These are from Judge Burns. One was supplied to the request of the Michigan Supreme Court, the other he submitted to clarify one matter in this Court. Basically, they could be boiled down to two things. First of all, the-- he felt that the behavior of Mr. Payne at the trial warranted an increase in sentence, namely after receiving a new trial, he came in and the judge concluded and, we believe the jury must have concluded, he did not tell the truth because of the following reasons. The evidence presented by the people was as follows. First of all, Vick Yost, the victim, made an incorrect identification of the defendant as the one who shot him. He had known him before and saw him, recognized him when the shots were being fired, and testified that way in court. Furthermore, when he was laying on the street and the first officers came up to the scene and asked “who shot you?” And it was testified that Vick said “Leroy Payne.” “The license number?” Then, he gave the license number of the car, “RB2599.” That car, when it drove away, had been fired at by the officers, bullet hole-- pardon me, fired at the returning vehicle. They found the car later, the same license number, four bullet holes in the trunk of the car, and that car was Leroy Payne’s. Next, the assault weapon was found, and Leroy Payne’s fingerprint was found on it. Against this, defendant testified to an alibi, namely, “I was at home during the time-- at all time-- I was home in bed during the time the shooting took place. I did not shoot Vick Yost. I did not drive my car that night.” The jury, in finding the man guilty beyond a reasonable doubt, must have found that the testimony of Mr. Payne was untrue. That, in many case, in insanity defenses, and many other types of defenses, this is not the case, but when there’s an alibi defense and especially in this case where it is so clearly-- the positions of the two parties are so clearly defined, the verdict of the jury was that he was guilty beyond a reasonable doubt and it must’ve included the fact finding that he did not tell the truth at the trial. Warren E. Burger: Well now, the important thing perhaps or one of the important things is the impact of this as compared with the posture of the case when it was before the original sentencing judge. At that time, it was different judge wasn’t it? John A. Smietanka: That’s correct. Warren E. Burger: That judge had the impression somewhere, I get it, out of the record-- John A. Smietanka: Yes. Warren E. Burger: That since he fully confessed and re-- expressed regret and sorrow for the shooting of these officers, that he was reasonable candidate for rehabilitation and, did not the second judge give some indication that he thought that this was a-- John A. Smietanka: Yes, sir. That is-- Warren E. Burger: Very much in marked contrast? John A. Smietanka: Yes, Your Honor, that is my second point. Taking this type of behavior at the second trial together with the completely different approach that Mr. Payne took at the first trial and that-- you’ll notice in the appendix on pages 6 through 8, the sentencing transcript of Judge Hadsol. He specifically notes the type-- the approach that this defendant had taken, confessing his crime, made him a very appli-- appt candidate for rehabilitation. Byron R. White: Well, is it your-- state’s position that the state may impose a heavier sentence in any case if they plead guilty. John A. Smietanka: No. Byron R. White: For the victim. John A. Smietanka: No, that’s not the case, Your Honor. My position here-- Byron R. White: What else is there here? The man maintained his innocence in the second trial after having confessed to it? Of course, that’s true. John A. Smietanka: Yes. Byron R. White: But, you’re saying the heavier sentence was justified by his behavior, namely denying the crime and maintaining his innocence. John A. Smietanka: In-- there’s a difference, Your Honor, we believe, between maintaining a person’s innocence. That is a legal conclusion. As I can say I’m innocent, but not come in and testify to facts which are-- specific facts which are not true. Byron R. White: You do say that, but a man comes up the stand and denies that he shot the weapon, that he shot the gun and then the jury finds him guilty, that the state justified imposing a heavier sentence on him than his co-defendant who plead guilty. John A. Smietanka: If the case-- I know, we’re not dealing with a co-defendant, Your Honor, because-- Byron R. White: I know, but you would say that, I suppose. John A. Smietanka: No, because I’m dealing with a question of the same person. We’re dealing with the same person. At one time in 1963, having one attitude and an-- Byron R. White: Well, if he loses then, he loses his game when the jury finds him innocent. He-- they’ll have to punish him more heavily than if he had-- John A. Smietanka: For behavior-- Byron R. White: Than if he had pleaded guilty. John A. Smietanka: For behavior which he had exhibited after that first sentence, yes, Your Honor. Thurgood Marshall: Well, what’s the sense-- this man was pleaded guilty. He was convicted and he appealed. John A. Smietanka: Yes, sir. Thurgood Marshall: Well, was the purpose of the appeal so he could go back and plead guilty again? John A. Smietanka: No, the purpose was not that he’d go back and plead guilty again. It was to have a fair trial, which he received. In the course of that trial, he exhibited conduct which we contend is detrimental conduct, that is-- Thurgood Marshall: What’s that? John A. Smietanka: That is, testifying falsely. We believe that this Court is-- Thurgood Marshall: How do you know it was falsely? John A. Smietanka: Your Honor, the-- a determination-- Thurgood Marshall: Well, do you have perjury as an issue? John A. Smietanka: Yes, we do. We do not charge him with perjury because of the-- Thurgood Marshall: All you can say is the jury didn’t agree with him. Is the case any more than that? John A. Smietanka: The case? Thurgood Marshall: The jury agreed with the state and did not agree with the defendant. John A. Smietanka: That’s correct. Thurgood Marshall: That’s all. John A. Smietanka: But, in finding that they agree with the state, they have to completely disregard the testimony of the defendant in this case. Thurgood Marshall: Well, what other convic-- how else do you get a conviction? John A. Smietanka: Well-- Thurgood Marshall: If you plead one side, you vote that way. If you plead the other side, you vote that way. John A. Smietanka: That’s correct, Your Honor. However-- Thurgood Marshall: Is that this case? John A. Smietanka: We should note-- Thurgood Marshall: What makes it so different from the (Inaudible) criminal case? Warren E. Burger: Isn’t the essence of it that the verdict in the second trial cannot be read any other way than a finding that he testified falsely under oath and that they reach that finding beyond a reasonable doubt? But, is that as important, really, as the fact that the judge said, in sentencing after the trial, that his man was a different person in terms of his probability of his rehabilitation and that that was the basis for his giving the heavier sentence? John A. Smietanka: Yes, sir, and all the testimony has to do is to lead to that conclusion. Basically, the sentence is-- Thurgood Marshall: Well, what is it that’s so different? John A. Smietanka: The difference, I believe, Your Honor, is-- Thurgood Marshall: One time, he says “I did it, I shot it and I’m sorry,” which he has a perfect right to do, and then he gets a new trial and he says “I didn’t shoot it.” Is that horrible? John A. Smietanka: Your Honor-- Thurgood Marshall: Is that enough to increase a sentence on him? John A. Smietanka: I believe, Your Honor, it’s his conduct which would indicate a certain something about his character which the judge could take into consideration in imposing a higher sentence, yes. Thurgood Marshall: Well, what did the judge take in the consideration except that he didn’t believe him? John A. Smietanka: He took into consideration that the jury found he was not telling the truth, and this indicated something about his character, a change in his character which had to do with the length of the sentence which had been imposed. Thurgood Marshall: The change in his character that he wasn’t now and then a scraper. Is that the change? John A. Smietanka: That is not what we require defendants, Your Honor. Thurgood Marshall: Well, what else is there, other than that? William H. Rehnquist: I take it, you’ve already explained at some length what you think is different, haven’t you? John A. Smietanka: Yes, Your Honor. Warren E. Burger: And did he not, not once but twice, make a full confession? When he testified in, was it Bradford’s trial? John A. Smietanka: Yes, sir. Warren E. Burger: When he testified in Bradford’s trial leading to the conviction of his co-defendant, he fully described in every detail his participation in the card. John A. Smietanka: That’s correct. Warren E. Burger: And none of this information was, of course-- could’ve been known to the judge who sentenced him on the guilty plea in the first instance. John A. Smietanka: No. In this case, Your Honor, the facts were slightly different and that is that, and this is something that Michigan Supreme Court did not notice and that was that, Judge Hadsol had presided at the trial of Bradford before he sentenced Payne. So, he heard Payne testifying. That’s-- we don’t dispute that. He did-- was available-- was aware of the facts of Bradford and Payne during the Payne trial or at the Payne sentence. Thurgood Marshall: Did he also take consideration of the fact that he testified for the state to convict the other man? John A. Smietanka: He may have. I don’t know. Thurgood Marshall: You don’t know that. John A. Smietanka: He didn’t specifically state that. Thurgood Marshall: Well, I don’t know he took it into consideration at all, do I? John A. Smietanka: You don’t, Your Honor. Thurgood Marshall: He only took one side into consideration. John A. Smietanka: That’s correct. Your Honor, I would like to reserve the rest of my time for rebuttal. Warren E. Burger: Mr. Neuhard. James R. Neuhard: Mr. Chief Justice and may it please the Court. I’d like to step into the conduct area of the argument at this time. However, I feel there are a few responsive notes I’d like to make on the issue of retroactivities. I agree with the prosecutor when he states this is a very complex problem. This case had been in the Courts now for over 10 years on various aspects. In fact, there’s a collateral matter pending on the Sixth Circuit which is the companion case to this case. The co-defendant Lionel Bradford’s case is on appeal in the Sixth Circuit, again, by the people because Lionel Bradford’s conviction was vacated by the District Court of the Eastern District of Michigan. The basis for the vacation was on the-- that Leroy Payne’s testimony was used to convict Lionel Bradford and Judge Cornelius Kennedy, in vacating the conviction, held that because his confession was brutally beaten out of him, it was as though the state had knowingly used purged testimony to obtain the conviction of Bradford. This also would get into the conduct argument, but-- Warren E. Burger: Well, you mean there’s some spillover effect when he testified against Bradford? James R. Neuhard: That’s correct, Your Honor. The reason was that-- Warren E. Burger: How long a time was that? James R. Neuhard: Pardon? Warren E. Burger: How long a time was that between the two trials? James R. Neuhard: That’s almost a period now of 10 years. Warren E. Burger: Yes. So that there’s some spillover effect of the original confession when the man’s in open Court in the presence of a judge? James R. Neuhard: That’s correct, Your Honor, in this particular case because of the unusual fact situation. The answer to that basically is that when Leroy Payne was picked up by the police officers he was in the custody of three various police departments, and there’s no dispute that the reason for vacating his guilty plea in this particular case was because the confession was beaten out of him. As a matter of fact, at Lionel Bradford’s trial, they wanted to introduce pictures taken of Leroy Payne after his confessions and they were excluded because they were inflammatory, that he was in such a brutally beaten condition. His thumbs were sprained, his face was swollen, his genitals were squeezed until he was brought into a state where he confessed. All of the activities from the moment he was picked up until he testified in Lionel Bradford’s trial and was sentenced were while he was in the custody of the police department of a space of over five months, four-and-a half months. And, because of that fact, when he finally did testify at Lionel Bradford’s trial, and he did go to sentencing, he initially intended to sue the police departments for the condition in which the manner which they treated him and he decided not to do so, and-- William J. Brennan, Jr.: What was the holding would set aside Bradford’s conviction? James R. Neuhard: Because-- William J. Brennan, Jr.: Based on what? James R. Neuhard: Because the confession that was introduced was the testimony of Lionel Bradford. William J. Brennan, Jr.: Whose confession is it? James R. Neuhard: That is Leroy Payne’s. William J. Brennan, Jr.: It was introduced at the-- James R. Neuhard: In Lionel Bradford’s trial, that is, he took the stand and testified. Warren E. Burger: Well, was it a confession or was he testifying-- James R. Neuhard: It was his testimony. Warren E. Burger: He testified in person? James R. Neuhard: That’s correct, Your Honor. Warren E. Burger: Not a confession? James R. Neuhard: That’s correct, Your Honor. William J. Brennan, Jr.: And it was said that that was the fruit of these beatings? James R. Neuhard: That’s correct, Your Honor. William J. Brennan, Jr.: That’s the holding of the District Court? James R. Neuhard: That’s correct. William J. Brennan, Jr.: That’s now on appeal in the Sixth Circuit? James R. Neuhard: That’s the-- people are appealing that case to the Sixth Circuit. That-- our appendix in this particular case has extensive quotations from the Bradford transcript that show the manner of testimony of Leroy Payne plus all the testimony of the police officers both had Payne’s second trial or his first trial, as it was, after his plea and at Lionel Bradford’s trial, and it sat on that length, for purposes of comparison to show that Judge Hadsol knew as much as the second sentencing judge, Judge Burns, when he sentenced him. As a matter of fact, at the second sentencing, Judge Burns said that-- I’m sorry, at the first sentencing, Judge Hadsol said that when he gave him 19-40 years in prison that, “I’m taking into account your remorseful condition now, and if it continues, you might get released early.” Because Michigan has indeterminate sentencing, it takes into account these vagaries of personality changes which can occur, and Judge Hadsol was well-aware of this. He was well-aware of what Payne had said at his first trial and he was grateful that Payne had decided not to sue the police officers, which he has not done. If I may, I’d like to get into the-- Byron R. White: But he has-- he did plead guilty. James R. Neuhard: That’s correct, Your Honor. It was while he was with that-- the reason for the vacation of the guilty plea was because it was beaten out of him. Byron R. White: I understand that, but at the sentencing he was found guilty. James R. Neuhard: That’s correct, Your Honor, the first sentencing. It also followed Lionel Bradford’s trial. Byron R. White: Which Michigan needs to perform the actual charge. James R. Neuhard: That’s correct, Your Honor, the same as a confession which was beaten out of you as an admission. Byron R. White: Yes. James R. Neuhard: The point is the same. William H. Rehnquist: Well, is there any contention that the guilty plea was beaten out of him? James R. Neuhard: That-- yes, Your Honor, that the guilty plea was the product of the coercion of the Byron County police officers. William H. Rehnquist: Well-- But what I asked you was, was there any contention that the guilty plea itself was beaten out of him. James R. Neuhard: You mean, while he was in Court, was he being coerced at that particular time? William H. Rehnquist: Well, I think-- James R. Neuhard: Well, the implication is-- that’s our implic-- William H. Rehnquist: I’m not-- I didn’t ask you over the implication. Do you contend that the plea itself was beaten out of him? James R. Neuhard: Directly, Your Honor, I’m without knowledge on that point. Whether Mr. Payne would contend that-- William J. Brennan, Jr.: What did the Judge hold when he set aside the guilty plea? James R. Neuhard: That it was the product of the coerced confessions and that it directly led to the guilty plea. William J. Brennan, Jr.: And that has nothing to do with whether or not he did or did not say he conformed with the act or the relevance of the fact that he said he conformed with the act in what sentence he might give. James R. Neuhard: I’m not sure I understand your question. William J. Brennan, Jr.: It is completely different from the second case where he plead defecto. James R. Neuhard: Well, it is in the sense that after the first convictions and the guilty plea-- William J. Brennan, Jr.: No, setting aside the plea the product of a coerced confession. It has very little relevance, if any, to the accuracy of the plaintive. James R. Neuhard: Well, I think it has some direct bearing on whether or not a man would plead guilty knowing that he had three confessions. William J. Brennan, Jr.: No, I can see. I didn’t-- what I said, I said it had very little relevance to the plea in a sense that it would’ve been set aside when it was actually not. James R. Neuhard: That’s correct, Your Honor. That’s correct. It may in the abstract or it may in fact have been a true plea, although Mr. Payne, once he was out of the custody of the Byron County police officers, did begin the appellate process and then, when he came back to trial, he testified he had nothing to do with it. Warren E. Burger: How long after the original plea of guilty and sentencing did he move for a new trial and, well, move to withdraw his plea of guilty? James R. Neuhard: Well, there was-- the initial four months would be, I’d say, about three months bef-- after he plead guilty until the Bradford trial, and then it would be a period of about two years, I would imagine, before the first plea-- motion for a new trial was sen-- was made and that was in front of Judge Hadsol. Following that, there was a renewed motion for a new trial in front of Judge Burns, at which, Judge Burns, the second sentencing judge, granted it. In between those two motions for new trial, there was the appeal to the Court of Appeals with the remand for an evidentiary hearing for determination of the circumstances under which the plea was made. So, it would be-- Harry A. Blackmun: Did-- in this recent Bradford proceeding, Judge Kennedy make any finding that the story Payne told at Bradford’s trial was coerced out of him and was not true in fact? James R. Neuhard: Well, she didn’t go so far as to say it was not true in fact. She did say it was a product of a coercion of the worst circumstances and should not have been injected into the trial by the people, knowing these facts to be true. If I may, there are a few points I’d like to make on the issue of retroactivity. The-- I-- we feel our brief is adequate on this point, but there are several points that should be brought out. This issue was pending on appeal. When the Pearce decision was released, it was based on prior Michigan authority. The case in the Michigan Court of Appeals, when it was released two days subsequent to the release of Pearce, took into account peripherally the Pearce decision, but the majority was a 2-1 decision rule that because the second sentencing judge knew more about the defendant than the first judge, because he had taken a plea, they affirmed the conviction. Prior Michigan law says, very much like Pearce, that if the situation is such that the sentence might have been the product of vindictiveness and no reason can be put forth for the sentence increase, then the plea-- the sentence should be set aside. Byron R. White: What year was his first sentence? James R. Neuhard: He’s first sentence, Your Honor, or first conviction? Byron R. White: He’s first conviction. James R. Neuhard: His first conviction was set aside. I believe it would’ve been in 1967. I believe, 1967, and the subsequent-- Byron R. White: And they’re still setting it? Is there still a procedure to set aside guilty pleas based on allegedly coerced confessions? James R. Neuhard: Well, there is, Your Honor, the very basic procedure we have for challenging the validity of a guilty plea itself. That is a voluntary-- Byron R. White: You may appeal-- after a guilty plea, you may appeal the admissibility, say, of a appeal procedure? James R. Neuhard: Well, you can, Your Honor. You can appeal anything you want and challenge the voluntariness of the confession itself because Michigan has a statute since 1875. Byron R. White: No, but you can’t-- you don’t have a system in New York where if you make a motion to suppress certain evidence and is denied, plead guilty, and have him appeal the suppression of it? James R. Neuhard: Well, Your Honor, it’s sort of yes, you can do it, but there’s no set up procedure to do that specifically. Byron R. White: But then you have in your case what happened was the guilty plea was claimed to be an expressed conduct. James R. Neuhard: That’s correct, Your Honor. Likewise, that’s the contention that the defendant made at Lionel Bradford, that his testimony at the trial was a direct product of the coercion he was under during the time he was in the custody of the Byron County police officers. Warren E. Burger: Does Michigan have any statute allowing some particular time limitation on withdrawing a guilty plea after sentence? James R. Neuhard: No, Your Honor. There is-- this is an area of high dispute in Michigan right now. There is some authority for the proposition that between the time of the plea and before sentencing, that there-- the defendant has the-- almost a right to withdraw the plea, but he had to set forth good reasons and, after the plea, the burden then is on the defendant to show why the plea itself was invalid, but-- William H. Rehnquist: You mean after sentence? James R. Neuhard: That’s correct, Your Honor. There’s-- because that time period between the plea and the sentence where he has more of a right to withdraw than after the sentencing. After sentencing, Michigan has a very definite date by which it’s the normal appellate process for showing that the plea itself was invalid. William H. Rehnquist: Among the reasons given, is it required that he assert inst-- innocence of the crime? James R. Neuhard: Not in the State of Michigan, Your Honor. I would like to get to the issue of-- Warren E. Burger: In any event, he could’ve-- in view of his subsequent conduct, that wouldn’t have been a barrier to him because he did-- James R. Neuhard: That’s correct, and he did assert innocence once he got back to trial. On that point, I think one of the underlying premises and difficulties of this particular case, that you have two unique elements of this particular case. You have a plea trial situation and you also have the situation where a man who vacates a plea goes to trial, takes the stand, and testifies in his own defense. Both of these were the main product which Judge Burns used in increasing the sentence. We contend that the first issue, that is that he knew more about the defendant than the first judge in the matter of the crime itself, is not factually true and not factually correct. Judge Hadsol knew much about it, if not more, because both police officers testified at Bradford’s trial. He knew more about the crime when he sentenced Payne and, in fact, he said that at the sentencing itself. “I know all there is to know about this particular case when I imposed this sentence.” Then, the second judge did, Judge Burns. It also leads up to the question of remorse and the question of perjury. Byron R. White: Would your position be different if he had, in fact, Bradford? James R. Neuhard: No, Your Honor, it would not. We do not see any reason whatsoever in increasing a man’s sentence from 19-40 years to 25-50 years that the state has put forth as a valid reason for doing so. Michigan has indeterminate sentencing which takes into account all the vagaries of personality and character differences when they have a man in the prison itself. They have a psychiatric department at the prison to take these things into account. Also, in the subsequent conduct scheme-- Byron R. White: Well subs-- absently, Bradford had pried. The second judge very likely might know more about the defendant. If he’s tried, then the judge will just let him plead guilty. James R. Neuhard: Well, in Michigan also, we have this-- Byron R. White: This is the kind of information that Pearce had probably. James R. Neuhard: No, it isn’t. It’s-- we would contend it’s not conduct occurring, first of all, after the first sentence. It’s nothing over which a defendant has any control. Byron R. White: But it may be information that the first judge had. James R. Neuhard: There may, in fact, be a situation where the judge doesn’t have the same information the second judge has. We do not contend-- we contend it’s just not the kind of information that Pearce contemplated that when the-- Michigan has a presentence report procedure whereby a probation officer investigates a total crime and then reports to the judge for purposes of sentencing. It’s a very exact kind of thing and goes beyond even analyzing the crime and goes out to the neighborhood and talks the neighbors of the particular defendant, any kinds of information. Harry A. Blackmun: I know there’s reference to that in Judge Burns’ second affidavit that he says he did receive and studied, prior to sentencing Mr. Payne, a supplemental plea sentence report which it cannot, under the present Michigan law, make public, but which a higher Court than this one can order produced. Did that-- was that ever called for? James R. Neuhard: Yes, Your Honor. As soon as we-- we did not get into this case until November 29 of last year and, as soon as we got into the case, we made a motion for production of that presentence report. We also included in appendix to our brief the rule in Judge Burns made on our motion for production of that report. He denied us access to it, and we also quoted him to Michigan authority. Two cases in Michigan now that had been on the books for over two years which allow the sentencing judge to release it. It’s within his discretion. It’s not mandatory that it’d be release, but he has the right to release it. He denied us access to that. So, it puts Mr. Payne in the position of challenging information that he has no way of knowing what’s in there. That it’s a very difficult procedure, at best, to put a defendant in when he’s contemplating an appeal. He has no control over the-- Warren E. Burger: But didn’t this Court settle that issue in Williams against New York? James R. Neuhard: Your Honor, we agree with the basic premise of Williams v. New York that you should have-- that the judge knows much about the individual as he possibly can when he sentence him, but what we’re talking about here is the second sentencing when you have other constitutional rights which are at stake. It’s the constitutional right to not only the defendant, I should make clear, but of the Court’s system itself that there’s a very good chance that Mr. Payne knew his sentence was going to be increased. He might not ever have appealed, and the kind of activity that went on in this case with these confessions and the plea was a product of the confession for being out of him would never be apparent to a supervising Court. Like we have in Michigan, one Court of Justice, and it’s their duty to supervise the lower Courts and if they are prevented of this road of access to showing the Appellate Courts what’s going in their lower Courts is denied, then you’re really perverting the system of justice that our state has established and we can’t see those presentence reports and-- Warren E. Burger: I can understand your emphasizing the fact-- the circumstances of this first confession right after the commission of the crime after Payne was taken into custody, but we can’t avoid looking, can we, at the record which shows that police officer identified Payne by sight and that bullet holes were found at the back of his car and that the pistol-- Payne’s pistol was found to be the pistol that had been used to shoot the officers? Are those factors not part of the whole mosaic here? James R. Neuhard: Yes, they are, Your Honor, and they are necessarily so in many criminal convictions where a defendant takes a stand and asserts his reasons for or his explanation of the charges against him, and we contend that’s what the charge of perjury is to take into account. And, what you’re allowing here, after a man has appealed, a man has a right to exercise his right to appeal, is that if he comes back to Court, they’re going to allow to increase his sentence on perjury seven years, seven years he’d already served. He can now have his sentence increased by seven years because of alleged perjury without any kind of a hearing without the ability to see the presentence report, upon which, allegedly, this sentence-- Warren E. Burger: Well, are you suggesting that the judge in the trial, the judge whose sentence is under consideration now, was not entitled to conclude that this man was a less probable prospect for a successful rehabilitation than the first sentencing judge had concluded when he had expressed great sorrow over his conduct? James R. Neuhard: Well, I can-- there’s many answers I can give to that, Your Honor, but one of the primary answers I think that’s important to recognize is this man had a 19-year minimum at this time, the 40 years in prison. That, most reports done in prisons and precluding the prison’s report on crime and correction indicate that sentencing is not an exact science at all, and this kind of-- Warren E. Burger: What’s that got to do with the question I just put to you? James R. Neuhard: Because what you’re allowing because of this idea that because one judge-- the impact before him on one judge is different than the impact it has on the second judge necessarily on his candidate for rehabilitation allows him to increase his sentence at seven years, and the impact on this is that a man is now serving in prison. Warren E. Burger: But don’t you think his conduct, in the meantime, should-- is something that Judge may take into account? James R. Neuhard: I do, Your Honor, and this man, the judge said at the second sentencing that his conduct in prison was exemplary and that’s the only thing that prevented him-- Warren E. Burger: I’m not talking about his conduct in prison. I’m talking about his conduct outside the prison. James R. Neuhard: Well, if it’s conduct outside the prison, as we’re into this case, the only conduct which has occurred after the first sentencing which is alleged perjury that occurred inside the second trial. Now, the judge never, in any of his affidavits, alleged that the perjury occurred inside the second trial. He was referring to between the first instance, those plea trials in the first instance, and the second trial, that the allegation that there was internal perjury which occurred is because he asserted an alibi defense. His alibi defense was that his car was stolen, the gun was in the car, and it was used unbeknownst to him. Now, if there’s an allegation of perjury here, I think this Court settled many years ago in in re Murchison that-- which dealt with a grand jury proceeding, that a grand jury proceeding that a judge can’t be at one time the prosecutor, the judge, and the sentencer in a given case. Byron R. White: Well, let’s assume at the-- let’s assume that at the sentencing, after the second trial, there’s no-- the defendant doesn’t say anything but “I’m innocent” and maintains his innocence. Now, are you suggesting that, invariably, that it’s an invalid factor for a judge to take into account in sentencing? James R. Neuhard: At the second sentencing, Your Honor, I think-- Byron R. White: No, I don’t-- let’s just say first sentence, second sentence, third sentence, any sentencing, a judge may not take into consideration the fact that the defendant denies his guilt and shows no remorse whatsoever. I’m not arguing one side or the other of that. I just want to know what your positions are. James R. Neuhard: Well, I think there was one comment that was made, although it’s a very difficult line to draw, that we’ve cited in our brief. It was quoted in People versus Button, a Michigan Court of Appeals case, which talks about the lack of remorse which has the line that was drawn which says you can take into account the positive aspect of remorse, but you can’t penalize the man who stands adamantly before the Court and protests his innocence because he may indeed innocent or he may be-- Byron R. White: So your answer is that it’s unconstitutional to take that factor into account? James R. Neuhard: That’s correct. You can’t punish him for-- Byron R. White: And, if you’re wrong on that, you don’t have as good a case here, do you? James R. Neuhard: If I’m wrong in the fact that you can’t take into account remorse? No, Your Honor. I contend that the situation, the comparison aspect of, first of all, that you can’t use the comparison aspect between the first incidence and the second incidence on the issue of remorse because it’s highly questionable why he was remorseful in the first place and, internally, that is whether the it’s first, second, third, or fourth sentencing is important when you talk about considering it in this particular case. That is because you have a competing right to appeal on this particular case, and any man who appeals is thinking about going to trial and it will be put in that position of claiming his innocence at the trial itself and that-- which are necessarily saying is that the sentence can be increased. We think it is important that there’s a difference between the first and the second sentencing on this remorse issue and, necessarily, a judge-- Byron R. White: I take it the state’s position is very close to saying that Pearce would never apply where there’s a-- where, in the first proceeding, there’s a plea of guilty which is said aside then there’s a retrial and conviction. James R. Neuhard: Well, I wouldn’t chose to speak for what the state-- Byron R. White: And the judge as well. Arguably, in any one of those situations, the judge-- as long as the judge said I have seen something-- I have made an assessment of the-- reassessment of the defendant’s character that the first judge didn’t have. James R. Neuhard: I’m not quite sure I understand the points you’re getting at, Your Honor. As far as the different-- the vagaries of having a man who plead guilty then appealing and having the plea set aside, there are multitude of reasons why that plea might be set aside. In this particular case-- Byron R. White: Well, the other side of the coin is that your position is that you should-- a defendant’s conduct in the second trial, in the Courtroom, should never be sufficient to abate Pearce. James R. Neuhard: No-- yes, that’s precisely our points, Your Honor, because, necessarily, in the process of an appeal of a guilty plea that was improper would be the contemplation by the defendant that he’s going to trial and that if he only sits there and does nothing, so simply as his lawyer asserts his innocence by saying “prove my guilt at this particular time.” There are so many reasons why might be sitting there that it’s very difficult to predict just to what-- William H. Rehnquist: That’s quite different, really, isn’t it, if the man simply pleads innocent and says to the state “prove my case” or even if he takes the stand and testifies on issues that he could be believed on consistently with an overall verdict of guilty and compare it to the getting on the stand and saying that I was in such and such a place and not where the crime is committed. That there are all different ways in which he could legally assert his innocence. James R. Neuhard: That’s correct, Your Honor. We agree with that and, because of that very factor, we think that there should be a due process hearing on the nature of his changed testimony which might necessarily exist in all cases where a plea has been vacated in the trial of Pearce. He’s entitled to be heard as to why it occurred in this particular way. Byron R. White: Wasn’t there a second hearing? James R. Neuhard: There-- well, in Michigan, Your Honor, you have a right to elocution which the lawyer exercised and which the judge recognized. Byron R. White: The defendant was there, wasn’t he? James R. Neuhard: That’s correct, Your Honor. Byron R. White: And didn’t the defendant-- didn’t the judge say that-- why he took it into account? James R. Neuhard: Your Honor, at the first sentencing, he stated the main reason why he was increasing the sentence was because he now knows more about the crime than the first judge knew about the crime, and we’re contending that that is just factually incorrect and, because that’s the major factor he took into account, that the worst for Mr. Payne that can happen in this is that it should be remanded for resentencing at that particular time. Warren E. Burger: Well, inevitably, just as a matter of time, of sequence, he was bound to know more because he knew about the intervening Bradford trial which the first judge couldn’t have known about because it hadn’t happened. James R. Neuhard: Well, the first judge did know about the intervening-- Warren E. Burger: He didn’t know about it when he sentenced him. James R. Neuhard: Yes, he did. He sat at the Bradford trial. Warren E. Burger: No, but in the first trial when he sentenced this man. Had the sentence not been announced? James R. Neuhard: No, Your Honor. They held off sentencing until he ha testified. Warren E. Burger: After the Bradford trial? James R. Neuhard: After the Bradford trial. Warren E. Burger: I see. James R. Neuhard: So, the first judge knew necessarily all there was to know about this particular crime itself. Now, our basic contention is that if there are occurrences within the second trial itself which might or might not amount to perjury, that because of this Court’s statements in cases like Morrissey v. Brewer and Humphrey v. Cady, the recent cases, that you should be entitled to some due process hearing whenever the sentence is going to be increased or the terms of your confinement are going to be changed to give the defendant to come forth and respond to those claims. In Michigan right now, this is so close. What happened in this particular case is very close to in re Murchison. You have a judge sitting up there, without any kind of any opportunity to approach the judge, have the defendant take the stand and testify. You have an increase of 7 years on the minimum and 20, I believe it was 10 years on the maximum, and you can-- that kind of a procedure where the terms of confinement, the length of confinement can be changed without any kind of a hearing, I feel, is just reprehensible under these fact situations. William H. Rehnquist: But, in Williams, we said the original sentence could be imposed. James R. Neuhard: Pardon? William H. Rehnquist: In Williams, we said the original sentence could be imposed on that basis, didn’t we? James R. Neuhard: Well, we have no qualms with the original sentence being re-imposed in this particular case. Warren E. Burger: Including the death sentence, a choice between life and death was made in Williams, wasn’t it? James R. Neuhard: Yes, Your Honor, but the-- in this particular case, what we’re concerned with is the actual increase in the punishment or the potential for rehabilitation as you will, of this particular individual of seven years. He had served at this particular time seven years of imprisonment. He went back to Court and got almost basically all that time over again to do, with no time given for that seven years to sue. Warren E. Burger: I can understand his discomfiture over that. We can all understand that. But, as a practical matter, your experience as a public defender, it would-- isn’t it a fair statement that at the end of a trial or at the end of a guilty plea, the guilty plea sessions, a judge frequently may have a certain impression about what he’s going to do. He may indicate to counsel that he is-- will very likely grant probation, but sentence is deferred until he gets the presentence report and then he gets the presentence report, and then he will not consider probation because, at the time of a guilty plea and the right of elocution occurs, the defendant or the man is putting his best foot forward, but when the presentence report comes in, as in Williams, a whole new panorama is opened to the judge. Isn’t that-- as a practical matter, doesn’t that happen? James R. Neuhard: Yes, Your Honor, it does. Warren E. Burger: So that the situation can change by a virtue of different impressions about the prospects of rehabilitation. James R. Neuhard: That’s correct, Your Honor, and it’s that very danger that we’re talking about in this particular case, and when you have-- Warren E. Burger: And you’re supposing it takes a due process hearing to evaluate that second process? James R. Neuhard: That’s correct, Your Honor, because what they’re alleging here is a separate crime and they’re giving him no opportunity to be heard on that particular crime. Warren E. Burger: Well, in Williams-- going back to Williams. In Williams, the district-- the sentencing judge actually, as I recall it, went around the neighborhood and talked to people and got information about him, and then had a presentence report, perhaps in addition. James R. Neuhard: Well, we don’t know-- Warren E. Burger: It was on the basis of that ex parte information in which the defendant couldn’t have any possibility of challenging any of the information. He said “this man is going to be sentenced to death". Wasn’t that the hole issue, that there was no due process question involved in Williams? James R. Neuhard: We do not relent for a minute on the position that we should have access to that presentence report and have some control over the information being generated by that particular report. Those cases-- we have over 500 cases in Michigan right now pending in our office, and that’s one of the major case-- issues we are bringing to the Court’s continually is the right to see that particular presentence report and the right to respond to the information within it, but accepting the fact that a presentence officer will do his job properly, which we do not know whether it occurred in this case or not. They had all the opportunity to do that at the first sentencing. Now in this particular case, after that first sentencing, his conduct was exemplary and the judge noted that on the record. That’s what prevented him, he said, from giving the man life imprisonment. Byron R. White: His conduct in prison? James R. Neuhard: That’s-- well, where else would he be, Your Honor, with the 19-- William J. Brennan, Jr.: He was being tried at the second trial. James R. Neuhard: In the course of the second trial, when the con-- when the potential charge is one of-- that amounts to perjury, which at this particular case it was. William J. Brennan, Jr.: Well-- James R. Neuhard: If this were any other individual, he’d have a right at that particular time to have-- William J. Brennan, Jr.: Mr. Neuhard, is it clear in this case that the second judge, when he-- when the second sentence was imposed, took into account in assessing the defendant’s character and his conduct since the first trial, compared his conduct with his conduct at his guilty plea? James R. Neuhard: Yes, Your Honor, they did. William J. Brennan, Jr.: Now, so he is saying that while he had read the transcript at the first sent-- at the first guilty plea, is that right or not? James R. Neuhard: He read the transcript of the first guilty plea? I would assume so, from his conducts. William J. Brennan, Jr.: Well, did he say that while he had confessed his guilt at the first guilty plea, he denies it now? James R. Neuhard: Yes, Your Honor. He talked about the lack of remorse. William J. Brennan, Jr.: Now, isn’t this using a guilty plea that has been set aside as invalid as the product of coerced confession, isn’t it using that guilty plea in some way a subsequent proceeding? James R. Neuhard: Yes, it is, Your Honor. William J. Brennan, Jr.: Do you make that point or not? James R. Neuhard: We do inferentially, Your Honor, in that we consider any content-- any consideration of a lack of remorse was improper, and that’-- gets to the point where he said “you confessed in the first trial and now you’re not.” William J. Brennan, Jr.: Well, I know. But, that would be the same even if he didn’t-- even if he never knew have pleaded guilty the first time. James R. Neuhard: Well, he didn’t state it that way though, Your Honor, that “because you plead not guilty in this trial, I’m taking into account your lack of remorse.” He referred back to the original proceedings in this particular case because, as his first affidavit stated in this particular case, of the many points he made, about 8 of them dealt with his increased knowledge of the defendant and also his apparent lack of remorse that he had one time had expressed for the shooting of the two police officers, and it was directly related to the product of his first pleas. There’s no contention that it was an internal to the second trial in the sentencing that he was entirely consistent. Warren E. Burger: You’re not attacking the basic conviction, just the increase in the sentence. James R. Neuhard: That’s correct, Your Honor. Warren E. Burger: So, that means that in this Court, here and now, today, it must be accepted that the verdict was correct and the judgment of conviction was correct, namely that he did shoot these police officers. James R. Neuhard: Well, the verdict, as it stands, that the jury found that he in fact had shot the police officers is, at this time, a valid verdict. Warren E. Burger: At this time? Well, are you suggesting a challenge to it? James R. Neuhard: I won’t speak for what Mr. Payne intends to do with that particular conviction as far as collateral re-attacking it but, at this time, this Court can approach the conviction as being valid, the conviction itself. In that particular proceedings, Mr. Payne has indicated, took the stand, testified as to why he didn’t have the car and the gun. The jury chose to believe the state’s evidence and you can-- whatever inferences are permissible to draw from that, this Court, I think, is engaging in speculation compared to the right he was attempting to assert which was his right to appeal, his right to have a higher Court review what occurred in the lower Courts and that, primarily, is the thrust we’re making. That, if this particular Court is-- will allow lower Courts to take into account internally the lack of remorse that he shows at the second trial or compare it between the plea and the trial. That it is highly speculative to compare it to the rights which are being asserted and, also, that Michigan’s present sentencing scheme takes those factors into account that the indeterminate sentencing, by its very nature, is taking into account the character and the makeup of the individual. Further, I’d like to point out to this Court that Judge Hadsol, the first sentencing judge, on the issue of remorse said that you may get out early if your present condition continues. He was implying directly in there what the Department of Corrections can do, which is hold a man longer if he’s recalcitrant, if he is not showing positive signs to being able to return to the community. That, Judge Hadsol was very aware of this particular problem, and to allow perjury to be-- and I think it’s very important to state here, to allow perjury and increase a sentence in a second trial is a very dangerous precedent because anybody who appeals from a guilty plea and then goes to trial and states his reasons and is convicted would necessarily, under that implication, be guilty of perjury. It does away completely with the requirements of trying a man for perjury, and that’s a very dangerous precedence whether you’re talking about appellate matters or whether you’re talking about simply the first sentencing matter. That, it’s very important that an individual feel that he can take the stand and state what he wants to state and that he has the due process rights following that particular statement if he’s going to be charged with perjury. Thurgood Marshall: What’s perjury in Michigan, five years? James R. Neuhard: In this particular case, it would’ve been life imprisonment. Thurgood Marshall: For perjury? James R. Neuhard: That’s correct, Your Honor. There is a-- the perjury statute in Michigan states that the maximum 15 years imprisoned, unless the charge-- the crime of which you were charged was life imprisonment. In this particular case, the crime was life imprisonment potentially and he carried a life imprisonment. Warren E. Burger: So that there wasn’t much percentage in the prosecution prosecuting him for perjury with-- in light of the heavy sentence he already have. James R. Neuhard: Well, Your Honor, if they wanted to increase the sentence, if they felt that it was important for his sentence to be increased because of the nature of his perjury, then I feel they could’ve gone to trial and the judge certainly, at that time, was free to give him up to life, but he would’ve at least had the opportunity to appear in Court and test-- and attempt to justify why he said what he did, and he would have all the concomitant rights that go with it. He would have had at least a hearing which, in this particular case, he didn’t even get a hearing, let alone a trial on the matter and to be in front of a jury because, as I indicated-- Warren E. Burger: Did he not have a trial before a jury? James R. Neuhard: Not on the issue of perjury, Your Honor. Warren E. Burger: Well, when a defendant takes the stand and testifies, does he not tender the truth or falsity of his own testimony? James R. Neuhard: That’s correct, Your Honor. That’s why he takes the oath, and the whole point behind the-- if the oath itself is not followed, that’s why we have a perjury statute in Michigan that is so severe, because of the collateral consequences of it. Potter Stewart: Mr. Neuhard, referring to Judge Burns’ affidavit executed last November 29th and appearing on page 21 (a) of the affidavit-- of the appendix, the paragraph 4 there seems to be an open invitation for this Court to order the production of the supplemental presentence report. At least that’s how I read it. It’s an affidavit filed in this Court and he says he can’t make it public but which a higher Court than this one can order it produced. I read that as an open invitation. Would you have any objection if we accepted that invitation? James R. Neuhard: No, I would not, Your honor, but I think it would point out to the Court that in our appendix A, we have the motion where we made-- which we made for the production of the presentence report and, in that particular motion itself-- Potter Stewart: Now, appendix, what page? James R. Neuhard: It’s at page 1 (a) of our appendix. Potter Stewart: Thank you. James R. Neuhard: Of our brief. Potter Stewart: Of your-- James R. Neuhard: Of our brief on appeal. It’s the white copy, Your Honor. Potter Stewart: Okay. James R. Neuhard: On page 3 (a) of that particular appendix, Judge Burns states this Court has followed a general-- a policy, generally, in sentencing, to tell the defendant exactly what it is and the presentence report that has influenced him and to give the defendant to explain or to correct it. In this particular case, we are relying on Judge Burns’ statement that he has stated all the reasons why he increased the sentence, and there’s nothing in that particular presentence report. Warren E. Burger: In what page was that on? Potter Stewart: Well, he says that it is. James R. Neuhard: It’s on page 3 (a) of our appendix, Your Honor. Warren E. Burger: I think it’s 3-- James R. Neuhard: In the bottom page. Potter Stewart: He implies at least, I thought, that there was something here, an addition here-- James R. Neuhard: I think it’s clear, Your Honor, he-- there is a clear implication that there might be something in there but, assuming he filed his general policy which he stated here, then he would’ve stated all his reasons. Potter Stewart: Well-- James R. Neuhard: We assume there is nothing. Potter Stewart: One of who sought could-- James R. Neuhard: That’s-- Potter Stewart: Could determine or could resolve the ambiguity. James R. Neuhard: That’s correct, Your Honor. William J. Brennan, Jr.: Are you familiar with the case of Giles and Maryland? James R. Neuhard: Not directly, Your Honor. William J. Brennan, Jr.: That’s a case where this Court called a presentence report, turned to resolve on what we founded on. James R. Neuhard: We are-- I’d like to point out one factor in this particular case which I mentioned at the outset, which is this is a very complex case. Judge Burns has now have four opportunities to state why he sentenced this particular man. At the first sentencing, he stated “I’m not sentencing you because of your appeal.” Then, he had the second affidavit. He had the affidavit in this Court and at the opportunity on our motion for production of the presentence report, and we feel that-- I don’t know how many more opportunities a man should be given to state why he sentenced a man, but that it should be within the confines of these particular affidavits. Potter Stewart: Well, this would be within the confine of the affidavit on November 29th, paragraph 4, wouldn’t it? James R. Neuhard: Well, yes, Your Honor, but I feel that there shouldn’t-- according to how I read his implications, there should not be anything there. But, again it makes it difficult for counsel to approach the affidavit if this is the method it is to be employed. Potter Stewart: Certainly, it does. That’s the reason I asked the question if you would have any objection. James R. Neuhard: Well, Your Honor, I-- in that, I don’t expect there’s anything in there. If there is, I would be very surprised by his comments and I would object too if there is something in there or this Court feels there’s something in there, not having the opportunity to respond to it because we made the good faith effort to get it and told Judge Burns that he had the power to release it to us, and it was denied to us. So, I assume there is nothing in there that we have before us on the affidavits which the Michigan Supreme Court, by the way, requested from him, his reasons for the increase. And, in that affi-- in the affidavit he gave to them, whatever he stated, they found wasn’t enough. Potter Stewart: I know. James R. Neuhard: In which he stated the subsequent conduct and they also-- he also stated the lack of remorse and the contrary testimony. They found, as a matter of fact in law, that it was not enough. Potter Stewart: But this new one is filed, as you know, in this Court and he does make this reference in paragraph 4 and does point out that a higher Court, presumably this one, can order it to be produced. James R. Neuhard: That’s-- I know he said that, Your Honor, and I’m at a loss as to-- we did everything we could do to obtain that in time to come to this Court, and we have not been able to obtain it. I would assume that in-- Thurgood Marshall: He didn’t offer to give it to you. James R. Neuhard: Pardon? Thurgood Marshall: In his affidavit, he didn’t offer to give it to you. James R. Neuhard: That’s correct, Your Honor, he did not. Warren E. Burger: I suppose there’s nothing in the record that would show how long a hearing was held at the time of the original guilty plea and sentence, but I suppose also that that’s a relatively brief procedure. James R. Neuhard: In Michigan, as a matter of fact, it is a very brief procedure. Warren E. Burger: And the judge says in his affidavit that, without going into what is already part of the record, and now I’m ensurging because there’s an antecedent I, was greatly influenced by the brutal details of the crime which, over three days plus-- which, over a period of three days, plus its-- the judge’s owns impressions of the defendant during these days, plus the impression of his testimony during those trials. So, the judge has a great deal more, in that sense, a better opportunity to observe and make-- draw inferences from the conduct of the defendant than the sentencing judge on a guilty plea, wouldn’t you agree? James R. Neuhard: No, I would not. Not in this case, Your Honor, because the first judge had sat on the trial of Lionel Bradford and heard all the testimonies. In fact, both police officers testified there, not just the one as they did at his second trial. Warren E. Burger: Then you’re saying that when he said that, this is not true. James R. Neuhard: That’s correct, Your Honor. I’m suggesting that he was unaware at the time or just didn’t take into account the fact that Judge Hadsol had known all the facts. William J. Brennan, Jr.: As a matter of fact, what he said at the second sentencing, in effect, retracted in the affidavit that he’s filed in this Court because he now acknowledges what he said was not the case at the second sentencing, namely that Judge Hadsol did have the opportunity to know all about the case because he presided at the de facto trial. James R. Neuhard: That’s correct, Your Honor. William J. Brennan, Jr.: And we don’t-- and that first comes to the record when we get the affidavit here in this Court. James R. Neuhard: That’s correct, Your Honor. Are there any other questions? Warren E. Burger: Very well, Mr. Neuhard. James R. Neuhard: Thank you. Warren E. Burger: We’ll enlarge your time in due of the enlargement here. You can have about four minutes. You were down to one. John A. Smietanka: Thank you, Mr. Justice. With regards to the case of the presentence report, in the argument before Judge Burns and prior to it, in the formal argument, the actual argument before him, before the final ruling was put in the record and included in the appendix, it was suggested to Mr. Benson by myself and also, I believe, by the judge that we would have no objection and we suggested that he come up to this Court and say-- request the Court to free this-- to bring this presentence report to this Court, and so it’s not a question of exhausting all alternatives because that alternative was suggested to him. Thurgood Marshall: Giving them a copy of it? John A. Smietanka: This would then put the burden on this Court. If the Court wanted the defendant to have a copy of it, the judge would have no objection-- could have no objection. Thurgood Marshall: The only way that the defendant can see it is for us to order. That’s the only way in the world? John A. Smietanka: That’s the way the ruling was made, yes, Your Honor, and the reason for it was that because of Judge Burns’ feelings on the matter of disclosure of presentence reports which eh included in his ruling, the reasons why he feels they should be confidential and to-- namely to protect the sources of the information and not to have these sources dry up and to give the judges as much latitude as possible to consider information, both favorable and unfavorable, to the defendant. With regards to the time between the original plea and the original-- pardon me, the original sentence and the original appeal, there was some doubt as to how long that was.The record will indicate it was three years. The case of Murchison was cited several times and we feel that it’s not applicable at all. In that case, we’re dealing with the determination by the same judge and only by that judge of whether or not perjury had been committed. When the first determination was made or the perjured statement or the alleged perjured statement was made in a one-man grand juror situation, there was only one person there to hear the perjury, and that was the one-man grand juror himself and the Court required that that type of proceeding required a full hearing by another judge for the contempt citation to stand. And furthermore, with regard to the issue of perjury, I’m not absolutely sure, but I believe that the law in Michigan as it stood at the time of the second trial or the trial was not because it was punishable by life but rather by 15 years and that it was subsequently amended to make it life. I believe there’s some question in that area, but the-- I do not know the citation of that. I can’t give it to the Court. Thank you. Warren E. Burger: Very well. Mr. Neuhard, you were not appointed by the Court in the usual procedure but you came here at our request, indirectly at least, and on behalf of the Court, I want to thank you for your assistance not only to your client, but your assistance to the Court. Thank you, Gentlemen. The case is submitted.

Earl Warren: [Inaudible] Louis Eisenstein: Mr. Chief Justice, may it please the Court. This case is an income tax case, which is here on a writ of certiorari to the Court of Appeals for the Second Circuit. There are three tax payers involved and the taxable year is 1950. The asserted deficiencies come to about $500,000. The resolution of the dispute before the Court turns on the meaning and application of Section 117(m) of the Internal Revenue Code of 1939. Section 117(m) deals with tax avoidance through so called collapsible corporations. This avoidance consists of realizing the everyday ordinary income from property as a capital gain through the device of incorporation and a disposition of stock. In other words, the device is designed to take unfair advantage, as President Truman put it, of the difference between the ordinary income tax rates and the capital gain rate. I will now briefly summarize the relevant facts, which I gather are not in dispute, and then I will turn to the statute. The three tax payers are Benjamin Braunstein, Benjamin Neisloss, and Harry Neisloss. For many years starting in 1919, the Neisloss’s and then the Neisloss’s and Braunstein were engaged in holding and managing investments in real estate. In the 1920’s, the Neisloss’s through corporation acquired an improved commercial properties, and they also purchased parcels of land for development. Then between 1930 and 1948, the Neisloss’s and then the Neisloss’s and Braunstein built, held, and operated multiple dwelling apartments and commercial properties all through corporations. In every case, the stock as well as the underlying property was held as a long-term investment. In a number of instances the holdings were retained for as long as nine, ten, and 15 years. Five of the projects were multiple dwelling developments financed under Section 608 of the National Housing Act. Now this case involves another FHA rental development. In March 1948, the taxpayers organized two corporations to build and operate a development known as Oakland Gardens. Each taxpayer owned a third of the common stock in each corporation. Construction started in April, 1948 and the buildings were completed and ready for occupancy between September 1948 and June 1949. In May 1950, the taxpayers were approached by brokers on behalf of certain prospective purchasers. In June 1950, the taxpayers agreed to sell their stock and the sale was eventually consummated through a sale of stock in November 1950. After the sale, the taxpayers remained active in the construction and operation of rental properties held as long-term investments. They continued to own and operate four FHA developments, which had been built before Oakland Gardens. They built a shopping center, a number of stores, and a large apartment house, and they also remodeled apartments all as a source of rental income. They have never held rental property for sale to customers in the ordinary course of business. It is clear, if they had owned the development as individuals their profit on its disposition would have clearly been a capital gain and it is equally clear that the corporations did not hold the development for sale. Potter Stewart: The Government agree with you on both of those, you mentioned? Louis Eisenstein: We notice that in its brief in the Supreme Court the government has suggested that if we are right on the main issues then case should be remanded and I would gather that they mean a remanding with respect to this point. But the Court of Appeals below very clearly assumed that the taxpayers would have been entitled to capital gain treatment if they had held the development as individuals. As a matter of fact, the whole opinion otherwise is an academic exercise. In short, the incorporation of the enterprise and the sale of stock did not enable the taxpayers to convert ordinary income into capital gain. Each tax payer reported his profit on the sale as a long-term capital gain. The commissioner determined that the profit was taxable as ordinary income under Section 117(m). Judge Kern, the trial judge dissented, I regret to say that the Court of Appeals affirmed the judgment of the tax court. Speaker: [Inaudible] Louis Eisenstein: They had only paid capital gains tax and the government has never questioned the payment. There has been no assertion of deficiency with respect to the other developments. Speaker: [Inaudible] Louis Eisenstein: Well, I think there are two explanations that can be given and I'm -- there is nothing in the record. One explanation is that the government regarded them as bona fide capital gain dispositions. Secondly, 117(m) does not apply if the sale of stock occurs more than three years after construction is completed, and it maybe that in some of the other developments that is why the government did not pursue its present tax. This Court granted certiorari limited to the question whether Section 117(m) applies where the stockholders would have been entitled to capital gain treatment if they had conducted the enterprise as individuals instead of through a corporation and I should add that the question is so limited is the question as it was precisely phrased by the government for the consideration of this court. The Fifth Circuit has resolved the same question in favor of the taxpayer in the Ivey case, in an opinion by Judge Wisdom concurred in by Judges Reeves and Cameron. On the petition for certiorari, the Commissioner agreed that there is no essential difference between this case and the Ivey case that the two cases are squarely in conflict. I now turn to the statute, Section 117(m) which the Commissioner would apply here. This Statute is a segment of a comprehensive legislative scheme on capital gains. It creates a special exception to the general long settled rule that a sale of stock is a conversion of a capital asset subject to the distinctive treatment of capital gains. It provides that profit realized on a sale or exchange of stock in a collapsible corporation is taxable as ordinary income rather than capital gain. A collapsible corporation is a very special kind of entity defined in paragraph two of the statute. It is a corporation formed or availed off principally for the construction of property with a view to achieving two particular objectives. The first result that must be intended is the shareholders sale or exchange of stock in the corporation before the corporation itself realizes a substantial part of the net income to be derived from the property. The second result that must be intended is the shareholders realization now, “gain attributable to such property.” The question in this case comes down to this. A collapsible corporation is a corporation used principally for constructing property with a view to the shareholder's realization of gain attributable to such property before the corporation itself realizes a substantial part of the net income to be derived from the property. Was the profit realized by the taxpayers on the sale of their stock gain attributable to such property within the meaning of the statute? It is our position that the profit realized here was not the gain contemplated by the statute. We contend that gain attributable to the property within the meaning of the statute is gain which would be ordinary income from the property if the stockholders as individuals or the corporations had realized it in a normal course of business. Here the profit would have clearly been a capital gain, not ordinary income, if the taxpayers had directly owned and sold the development or if the corporation itself had sold it. There was no conversion of ordinary income here to incorporation and a sale of stock. Now the Court of Appeals fully agreed with us in that there was no such avoidance here. However, it then went on to hold that the critical language, “gain attributable to such property” means any kind of profit regardless of the nature of the profit and its relation to the enterprise. This interpretation is directly contrary to the purpose of Congress as fully illuminated and spelled out by the legislative history. In fact, the Court of Appeals frankly indicated that its conclusion is not in accord with the stated purpose and policy of Congress. As the legislative history plainly shows, this statute is solely concerned with profit which is a conversion of ordinary income from the property into capital gain through the deliberate use of a corporation of that purpose. Speaker: [Inaudible] Louis Eisenstein: The movie situation was one and as a matter of fact, the construction industry was another and I'm about to come to that. I have indicated that the statute is solely concerned with gain which is a conversion of ordinary income. That is why the definition of a collapsible corporation is specifically geared to whether or not the corporation itself has realized a substantial part of the net income from the property before the sale of the stock, and that is why the definition is also geared to the specific purpose or motive which prompted the stockholders to construct the property. As the expensive legislative history shows, before 1950, various taxpayers in the movie industry and the construction industry were converting ordinary income into capital gain through the calculated abuse of the corporate forum. For example, if motion picture producer made a movie as an individual and rented the picture under the usual arrangement, his rental income was taxable as ordinary income. If he did the same through a corporation, the rental income was also taxable as ordinary income. In order to avoid such unpleasant results, a producer would setup a corporation to make a film. Upon completing the film, he would liquidate the corporation and distribute the film to himself. He would report the difference between the cost of his stock and the value of the film as a long-term capital gain. He would then license the film as the corporation would have done and amortize the reported value of the film against the rental income. In this way, the usual ordinary income from the property, that is the rental income, was converted into capital gain. The same kind of practice developed in the construction industry where houses were built for sale to customers in the ordinary course of business. If a builder constructed and sold the houses himself, the profit on the sale was ordinary income. If he made the sale through a corporation, the profit was also ordinary income. Builders would convert this ordinary income into capital gain in one of two ways; they would sell the stock in the corporation or they would liquidate the corporation, report a capital gain based on the difference between the cost of their stock and the value of the houses and then sell the houses at the same price. In either case, the content of the gain was profit normally realized as ordinary income. Congress enacted Section 117(m) to tax all such converted income from the constructed property in terms of its true economic content as ordinary income. The gain attributable to the property with which the statute is concerned is such converted ordinary income. That is why the statute treats the corporation as a mere contrivance to avoid tax, and that is why it treats the stockholder's profit as the ordinary income it essentially is. The tax payer in this way is prevented from avoiding the tax that he should otherwise pay and rightfully pay. Here as I have said, we do not have any such situation. The profit was not a contrived substitute for ordinary income from the property. The government has not been deprived of any revenue to which it would otherwise be entitled. In short, it is our position that a statute which is directed against avoidance should be carefully confined to those against whom it was directed. It should not be applied indiscriminately as if it were a massacre. Indeed as we pointed out in our brief, here the treasury is even better off than it would otherwise have been if the taxpayers had built and owned the property as individuals, because if they had done that then the assets would have been sold directly to the purchaser and the purchaser would have used as his basis for depreciation, his higher cost, which was not available to the purchaser here, because a corporation continued to own the development. I should add that the Commissioner fully agrees with our understanding of Congress' purpose and then he pays no attention to what he says. He fully agrees that the admitted and “basic purpose of the statute is to prevent the conversion of ordinary income into capital gain,” and he emphasizes, “that statutory language should be read, indeed even strained to some degree to avoid absurd results to carry out the discovered purposes of Congress and in general in an effort to produce a rational, sensible structure.” But having said all this, he nevertheless argues, as the Court of Appeals held that the statute applies regardless of whether the taxpayers realize the gain contemplated by Congress or regardless to put in another way of whether the result is absurd. However, even the Commissioner is unhappy with the Court of Appeals opinion. And so, he has tried to remedy the situation by arguing that any gain realized on a sale of constructed property as distinguished from purchased property is ordinary income. We cannot say frankly, we have studied the Commissioners brief, we cannot say how the Commissioner came to this conclusion. It seems to be a well kept secret. However, even the Commissioner finally realizes that this strange argument will not do. Therefore in the end, all he can say is that the statute taxes a gain as ordinary income whether or not it is a contrived conversion of ordinary income. We say that what the government has done is to make a travesty of the statute. Potter Stewart: Commissioner makes an additional argument, does he not, that many personal services were contributed free to the construction of this apartment building, and had they been compensated that would have clearly been ordinary income and that the increment in the value reflected the fact that they were not compensated and therefore this -- that in this very case ordinary income has attempted to be converted into capital gain. That argument is made; whether it's good or not -- Louis Eisenstein: Well, I would like to address myself to that argument. That argument of course was not made by the Court of Appeals, which was fully aware of all these facts, because they are set forth in the opinion. The Commissioner's argument in that area is this; he argues that the proceeds realized on a sale of the stock represent a conversion of ordinary income attributable to their services to the corporations. As he puts it, by waiving the compensation for their services, the taxpayers were able to realize an amount over and above the cost of the development and a mortgage indebtedness, that's pretty much his language. Now this is a brand new argument, which has suddenly shown up here for the first time, it has never been made before and I should add that after he makes the argument, he dismisses it and says it is unessential and then he goes onto summarize what he considers is essential. Now in making this new argument, the Commissioner overlooks a good many things, which are in the record, as well as things in the legislative history. In the first place, Section 117(m) is concerned with a conversion of ordinary income from the constructed property not with the adequacy of compensation that may or may not have been paid to stockholders while the hearings indicate, that is the congressional hearings indicate that at times actors were receiving stock in collapsible corporations as compensation for their services, it is merely noted as an incidental byproduct. In other words, they were being wrung in on what is otherwise a collapsible corporation. That does not relate however to the nature of a collapsible corporation itself, which is the conversion of ordinary income from the property. The statute itself, I would like to emphasize, is expressly geared to the corporation's failure to realize the net income from the property. At any rate, I want to add here no stock was received as compensation as is true in the actor's case and moreover the tax avoidance of actors has been separately dealt with in Section 117(a)(1)(c) which was enacted at the very same time that the collapsible statute was enacted. The next point I would like to make is this; in any event the Corporations did not enable the taxpayers to avoid taxes that would otherwise have been due with respect to their services. If the taxpayers as individuals construct rental property, the profit realized on a later sale is a capital gain. It is completely immaterial that the success of the enterprise maybe largely due to their personal efforts. Congress has made only one exception to that rule and as a matter of fact that was the rule that came in when the collapsible statute was enacted and that one exception relates to sales of copyrights, artistic compositions and similar property and even the proceeds realized on a sale of such assets are not taxed as compensation. They are taxed as the proceeds of a sale of property. The next point overlooked by the Commissioner is this; that the proceeds realized on a sale of property are not determined by the services that happen to be contributed to the property or the value of those services or how much has been paid. The amount received depends on market conditions at a particular time, which fluctuate from time to time. Potter Stewart: But certainly, certainly, if the services had been compensated, the cost of the building would have been higher? Louis Eisenstein: The cost of the building would have been higher. Potter Stewart: And the compensation to the individuals would have been ordinary income? Louis Eisenstein: If there had been compensation paid to the corporation, that is correct, but I say again if they had built the houses as individuals and contributed the same services, the gain realized would have been a capital gain. And the point I am making is that the use of the corporation did not enable them to realize a capital gain, which they would not otherwise have realized in constructing this development as individuals, but there is also something else that I would like to point out in this connection. Potter Stewart: But that's not – that's not the test though. That's not the test of 117(m), is it? Louis Eisenstein: That is the test as we understand it whether or not the use of a corporation and a sale of stock enables you to realize what you would otherwise realize as ordinary income as capital gain. Potter Stewart: It's what the corporation would have realized as ordinary income? Louis Eisenstein: Well there is -- Potter Stewart: It is then capitalized, the future income is capitalized, but it's not what the individuals had they not incorporated it would have realized as ordinary income, is it or am I mistaken? Louis Eisenstein: I think Mr. Justice that you are mistaken. Potter Stewart: I might well be. Louis Eisenstein: That we as the examples given in the committee reports, for example, with respect to the motion picture Industry, point out that if a producer made a picture as an individual, he would get ordinary income from the property. There is not the least concern with whether or not he has paid for his services. Then they go on to indicate that if he did the same through a corporation, the rental income from the property would be taxed as ordinary income, and that is the tax that he is trying to avoid, but I'm willing to accept the Justice's premise for the moment because even on that premise, even on that premise the government has overlooked something. The Commissioner has completely misunderstood the waiver of the builder's and architect's fees under the rules and regulations of the FHA. The proceeds realized on the sale would have been exactly the same even if they had not waived the fees. They could not charge themselves or pay themselves for their services unless they paid themselves out of their own moneys. In other words, in order for them to pay themselves the builder's and architect's fees, they had to contribute $600,000 to pay to themselves, and if they had done that the proceeds realized on the sale of the development would have been exactly the same. Now what the Commissioner is complaining about is that they didn't convert their own capital into compensation, which is a totally different thing. Speaker: [Inaudible] Louis Eisenstein: If they had paid him $600,000 to pay themselves, the result would have been exactly the same as it is here. Speaker: [Inaudible] Louis Eisenstein: That is correct. Speaker: [Inaudible] Louis Eisenstein: I'm not entirely clear as to who they are. Speaker: [Inaudible] Louis Eisenstein: Oh, they received out -- Speaker: [Inaudible] Louis Eisenstein: We are including it because both parties have agreed that, that is part of the sale and that is the way the Court of Appeals handled the matter. The 550 -- Speaker: [Inaudible] Louis Eisenstein: Because they would have -- Speaker: [Inaudible] Louis Eisenstein: And that would have been paid out to them. Speaker: [Inaudible] Louis Eisenstein: That is correct. Speaker: [Inaudible] Louis Eisenstein: No there was an intervening event. They operated the development and the moneys that accrued within the corporation, were moneys that accrued through deprecation deductions offset against the rental income and also deductions of other costs of constructing a development which are permitted to be deducted against operating income. They had nothing to do with the builder's and architect's fees. Speaker: [Inaudible] Louis Eisenstein: The FHA mortgage would have been exactly the same amount but they would -- Speaker: [Inaudible] Louis Eisenstein: No, I think one has to go one step further. They would have had to deposit, they would actually have had to raise $600,000 of their own, to put into the corporation and then pay themselves. Speaker: [Inaudible] Louis Eisenstein: They would still have had the same -- Speaker: [Inaudible] Louis Eisenstein: Well actually it was more Your Honor, I don't want to say it was 410, I want to emphasize that the -- Speaker: [Inaudible] Louis Eisenstein: They paid to themselves 555. Speaker: [Inaudible] Louis Eisenstein: That is correct, yes. I notice that my time is pretty much up and with the Court's permission I would like to save a few minutes for rebuttal. Speaker: [Inaudible] Louis Eisenstein: No, I couldn't go that far, if they kept it a year, it wouldn't be enough. The answer to your question Your Honor would turn on whether or not the income realized before the sale was a substantial part of the net income to be realized from the property and I have no doubt the Commissioner's position would be that realizing only one year's income would not be a substantial amount of income and therefore assuming that your motive is otherwise present, they would treat it as a collapsible corporation. Speaker: [Inaudible] Louis Eisenstein: Time is an element. If what is otherwise being converted, we say is ordinary income, but as I understood your question Mr. Justice, I assume that the property was not held for sale to customers and in that case even if they had built it as individuals and assuming they hadn't held it for sale to customers, they could have sold it and realized the capital gain and the corporation could have done the same thing. Earl Warren: [Inaudible] Wayne G. Barnett: Chief Justice may it please the Court. Before I turn to my main argument, I would like to clear up the confusion about the architect's fees and how that transaction might have been conducted. It is true Mr. Justice White that the -- had they paid the -- contributed money to pay the Architects & Builders fees, ultimately the proceeds and the stock sale would have been the same. The difference is the -- Byron R. White: [Inaudible] Wayne G. Barnett: That's right. The difference is, the gain would be different. The proceeds are the same, but they would have a different basis. They would have already realized $400,000 of ordinary income and that would become the basis in their stock and so, the gain on the sale of the stock would have been different. Also, the suggestion on the same point was made that to pay themselves they would have had to contribute the money; that was not the arrangement. What they assured the FHA was, not that they wouldn't pay themselves for their Architects & Builders Services, they would pay themselves by means other than cash, namely they would give themselves stock in payment of the architectural and building services. Had they done that, the stock would have been taxable compensation, that they had to pay themselves for their services of construction has nothing to do with the financial problems of raising cash. They don't have to pay themselves cash. Now, I would like to start I think is always useful to start in a tax case with the statute to see what we can learn about the problem from the statute itself. It's at page 39 of the government's brief. This is the statute by the way, in the form it's stood during the transactions in question, it's been changed later, but I would talk about it as it then stood. Speaker: [Inaudible] Wayne G. Barnett: It was amended first in 1951 and in the 54 Code made substantial changes and the relative amendments, I hope to get to those, but paragraph one says that the gain from the sale or exchange or the liquidation of a collapsible corporation should be taxed as ordinary income. Paragraph 2A defined a collapsible corporation. It is defined as a corporation which is formed or availed of principally for the manufacture, construction or production of property with a view to the sale or exchange of the stock by the stockholders or the liquidation of the corporation prior to the realization by the corporation of a substantial part of the net income to be derived from the property and by that means the realization by the stockholders directly through the stock sale of gain attributable to such property. Now first, I would like to note that statute applies only to a certain kind of corporations, corporations that are engaged in the manufacture, construction or production of property and that to me says a great deal of the purpose of the statute. It is limited to corporations engaged in creative processes, production, manufacture or construction or processes by which value is created and so, its concern is with the way in which the values created by those processes is realized and taxed. What it is concerned with is attempts by stockholders to realize upon those values directly before the corporation has realized and then taxed. Speaker: [Inaudible] Wayne G. Barnett: That question is now conceded, but there is no doubt there was -- well, there was never any doubt that was availed principally for construction. There was a dispute at one time whether they had the view during construction to quick sale of the stock, that is now closed, that's the question that was foreclosed by the limitation of this grant of cert. We are now concerned only with the question of whether a claim that the gain would have been capital gain, have they done it as individuals bears upon the application of Section 117(m). Potter Stewart: [Inaudible] Wayne G. Barnett: I might say in response to Mr. Justice Stewart's question that we do not concede, we definitely do not concede, but have they done this as individuals it would have been capital gain. Potter Stewart: I should think if that second question is foreclosed and if it's now -- if we now take it as assumed that the corporation which had been formed was avail of with the view to the prompt sale, then that would have been almost necessarily as sale in the ordinary course. Wayne G. Barnett: Well, that would be our contention. The exceptions from the capital gains definition is for property held primarily for sales for customers in the ordinary course of trader business. Now, what it really comes down to this whether -- Potter Stewart: Is a little -- Wayne G. Barnett: The anticipation that the quality of anticipation of sale is different for purposes of 117(m) and for purposes of that definition of capital assets. We would argue that it isn't, and that in fact if during construction or you are building it, you're engaged in the business of building property, you contemplate a sale, as at least one of the possible alternative ways of realizing the value of your construction profits that it is not a capital asset. But you do not have to decide that question, we have not argued in our brief other than to note its existence in the foot note. I think it's on page 30. We suggest that if that should ever become relevant, proper course would be to remand it to the tax court to consider that question. Potter Stewart: But didn't they – didn't -- Byron R. White: [Inaudible] Wayne G. Barnett: It is not. Byron R. White: [Inaudible] Wayne G. Barnett: No sir, it is not, it's not. We do not consider -- Byron R. White: [Inaudible] Wayne G. Barnett: That's right, that's right. If so, I would agree and I'll show that there might be anomaly and perhaps that difference shouldn't exist, but that doesn't tell us which result is the wrong one, and I would think that the individual case would be the unintended loophole and not what Congress specifically tried to foreclose in 117(m). Byron R. White: [Inaudible] Wayne G. Barnett: That's right, that's right. Now -- Potter Stewart: Didn't our grant of certiorari are limited grant assume that this would have been capital gains. Wayne G. Barnett: That's right the state -- the question presented, the assumption state of question we're now talking about is that it would be capital gain, had they done it as individuals. I'm perfectly prepared arguendo to make that assumption orders the deal with the specific question before the Court, that's not the same as a concession that in fact that is true. Potter Stewart: But the way we limited the grant of certiorari we assume so? Wayne G. Barnett: That's right, for purposes of this case, no for purposes of the decision in this Court, but I'd suggest that the purpose of the statute is -- Speaker: [Inaudible] Wayne G. Barnett: That is correct. I think the same assumption would carry over to the corporation. The statute directed to corporation is used to produce or create property with a view by the stockholders to realize on those values by a stock sale or liquidation of the corporation before the corporation has realized on it. Now, the definition uses the phrase with a view of their stock sale, with a view to realizing gain attributable to the property. Now, I'd like to first go and show whether their argument is pitched on that phrase, but the phrase appears later on the statute, I want to cover that and then come back to the phrase. Paragraph three has limitations on the application of paragraph one and it provides -- well, there are three limitations, very briefly. The first one which isn't important here is, you have to own more than 10% of the stock and the third one limits these application to realization of gains on property within three years after completion of the property, which likewise is not involved here, but here is explanation I would suppose why the other corporations avoided this provision. The one we're concerned with is B, now that provides in the case of a gain realized by a shareholder upon his stock in a collapsible corporation, this subsection should not apply to the gain recognized during taxable year, unless more than 70% of such gain is attributable to the property so manufactured constructed or produced. Now the relationship of that reference to the gain being the attributable property and that in the definition is simply that between they're anticipating the gain and their actual realization. The latter provision talks about their actual realization, they in fact have to realize gain which is at least 70% attributable to the property that was constructed. Now their argument -- first of all, the phrase gain attributable to the property admittedly performs the function of confining this to gain that was caused or generated by the construction or creation of the property. There is no dispute about that, it serves that function, distinguishes gain that was so generated from gain that was created by various other factors, purchased property or in the case of manufacturing corporation simply the enhancement of value of its fixed assets or the existence of an antitrust claim, anything at all is distinguished by that phrase. And that phrase limits the statute to the gain, which is specifically attributable to the created property, the property constructed, manufactured or produced. Potter Stewart: I still don't quite get your thought as to what that means? Is that -- the statute is confined to a corporation which produces or creates property? Wayne G. Barnett: Principally, principally, he may have other activities and a manufacturing incorporation would also have fixed assets. If the gain were attributable to enhancement of the value of a manufacturing company's fixed assets simply because of a change in the character of the neighborhood comes a better site, the gains attributable to that would not be the kind of gain that tax -- that's taxed. Potter Stewart: The gain of the stock in the corporation. Wayne G. Barnett: That's right, the gain of the stock, which reflects that added asset value in the corporation. Potter Stewart: Well how about a rise in the market value, just because of market conditions. Wayne G. Barnett: That's right. Potter Stewart: All of the property created or produced -- Wayne G. Barnett: That is a difficult question, I think the regulations -- Potter Stewart: [Inaudible] because I don't -- Wayne G. Barnett: The regulations would say that the created property, we don't break it down into what caused the created property to be worth the increased value, whether the creation process or a subsequent change of market values and I think that's right. Potter Stewart: Market value itself will be a reflection of capitalization of future earnings. Wayne G. Barnett: Well that's quite right, quite right, and -- Speaker: [Inaudible] Wayne G. Barnett: Oh that's right, that's right, and -- Speaker: [Inaudible] Wayne G. Barnett: Right, right. No I would think that it would be fruitless to even to attempt to distinguish the value of the produced property, the manufactured property attributable to changes in market values and to the process of creation. I'm not sure that the policy would really want to make that distinction in terms of inventory items, but that isn't our problem here nor I would like to address that. Now, what they say is that the word gain also serves another function. It doesn't simply identify the source, the causal relationships, but is meant to limit the application of the statute to a certain kind of gain, one that reflects a converted ordinary income. Now first I would like to point out, that the statutes cannot be read that way. And starting with paragraph one, which speaks of the gain in the sale or exchange of stock clearly refers simply to the excess of the proceeds over basis, simply the quantum of profit nothing else, nothing is about its character. And the provision, we're just looking at page 3B starts out that in case of the gain realized by a stockholder, i.e. on the sale of exchange of a stock, again that gain is necessarily to the excess of proceeds over basis. The subsection are applied to the gain recognized during the -- unless more than 70% of such gain is attributable to the property. Now the gain there necessarily is a reference to the gain otherwise used in the same sentence to mean simply the excess of proceeds over basis and they refer only to the fraction of that gain, which is attributable to the property. So you cannot read into gain any qualification about the kind of gain that it represents. Now more than that, I would like to suggest that the -- and even more serious problem with their suggested method of construing the statute. They would have you believe that it's not you simply substituted for the word gain something like converted ordinary income that is not enough. A great deal of baggage would have to go with that to spell out the test by which you decide whether a particular gain is a conversion of ordinary income. Now for one thing, I think in their brief they seem to acknowledge that it wouldn't be enough simply to ask whether the corporation would have had capital gain had it sold the property. We've referred that occasionally, but generally to the emphasis on the stockholders and the reason the emphasis is on the stockholders is that at least one of the purpose is admittedly was to prevent stockholders who were themselves dealers in property from avoiding ordinary income treatment by putting each transaction into separate corporate shell. And, so necessarily it is not enough simply to look to how the corporation would treat the gain had it sold the property. So, you have to go back and see how the stockholders would have treated it. Now the question as to each stockholder I take it would be, if he had held the property would he have held it as primarily for sale in the ordinary course of traded business. Now, there is no more litigated question in the tax field when you hold property in the ordinary course of trader business hold it for sale. Byron R. White: [Inaudible] Wayne G. Barnett: That's right, that's right. Byron R. White: [Inaudible] Wayne G. Barnett: Well, that's right but there, I'm assuming that you would answer that question to hold that it would be capital gain. I'm assuming that would be the answer, but I would still like to point to the complexity of the question, that you make the application of this statute turn upon. Now simply stating a hypothetical question that you are going to answer is enough of an undertaking, but I'd like to emphasize particularly two further specific different problems that would be faced. First of all, all the stockholders need not to be in the same status, some of them might be dealers and others not. Now in this case all three stockholders have always joined together in all their ventures so they all can be viewed as one, but that would not always be true. So what would you do? Would you have a separate treatment for the individual stockholder depending upon his status or would you say that if anyone of the stockholders was a dealer, the part would be tainted for all the stockholders? Now when Congress granted this kind of relief in 1958 what it did is it acknowledged this problem and said that if any stockholder owning more than 20% was a dealer or trader when the corporation is collapsible as to all stockholders. It did not grant individualized treatment, as to -- if there was a 20% stockholder in that category. For the second problem of the same kind is what do you do in making that, cited in that hypothetical question about other corporate ventures that the stockholders have engaged in of the same type. You cannot ignore them because that would permit a dealer to avoid it simply by incorporating all of his ventures. Now again the 1958 amendments, when they granted this relief dealt with that problem and provide very complex formula how you take into account in deciding how property would have been characterized in the hands of an individual stockholder that stockholders, other corporate ventures. Very briefly if he is a 20% stockholder in this corporation, in the other corporation within the -- during which -- in which he held more than 20% of the stock during the past three years and the assets of which are the same kind you treat as though he conducted individually, but necessarily you would have to deal with that problem to articulate the test that the petitioners ask. So I do not believe that even if there were mirror to their underlying argument on policy that it would be possible to read the statute the way they want you to read it, but I do want to deal with the questions of policies that they say are involved, specifically to show that this case does involve a conversion of ordinary income. I've shown that the statute by its terms is limited to corporations engaged in construction, manufacturing or production and all you have to do is make the policy judgment that the fruits of productive activity should be taxed as ordinary income to have a full explanation of the statute as concerned only with conversions of ordinary income. But this case in particular shows I think an extreme example of how we do covert ordinary income through construction efforts. Byron R. White: [Inaudible] Wayne G. Barnett: This is an illustrative argument that you don't need to rewrite the statute to confine it to its proper scope and to limit it to foreclosing conversions of ordinary income. Byron R. White: [Inaudible] Wayne G. Barnett: Well, no -- I use a different reference to decide whether its conversion of ordinary income, it depends upon the sense in which you define that phrase. He would ask you to look -- Byron R. White: [Inaudible] Wayne G. Barnett: That's right, that's right. Byron R. White: [Inaudible] Wayne G. Barnett: That's right and I think this is illustrative of all cases that will fall within this category. It's simply that, he insinuates in the phrase conversion of ordinary income, a very specific reference to how stockholders would be taxed if they've done it individually. And when I say conversion of ordinary income, I don't mean that. I mean a conversion of underlying elements of the gain that were generated by personnel services. Speaker: [Inaudible] Wayne G. Barnett: I'm sorry, you did that. Speaker: [Inaudible] Wayne G. Barnett: Well I think it would, I think all the gain here actually was really attributable to the construction efforts. They [Inaudible] about $700,000 not simply the architect's fees and builder's fees, but the subcontracting services they performed. I'd like to go through that. Speaker: [Inaudible] Wayne G. Barnett: Oh yes. Actually they entered contracts. They entered paper contracts with the corporation to perform the construction work for $700,000 more than they ultimately charged. And all they had to do was to the charge the price that the contracts called for and every bit of their gain would have been taxed to them as construction profits. In answer to you Mr. Justice Harlan, we go onto consider the underlying nature of the transaction, although it is never entirely satisfactory to stop simply with the words of the statute. We would like to show that the statute does not produce absurd results. Now in this case, the -- I will use the figures related only to the Springfield Corporation, both corporations are identical really. The Federal Housing Administration in agreeing to guarantee the Mortgage loan, estimated that the total cost of construction, I will exclude the carrying charges and the finance charges and deal with the construction costs, would be $4.5 million. That's the estimated reproduction cost of this project; that included $4,100,000 of cost to the builder, the direct construction cost, plus $400,000 of builder's fees and architect's fees. Now the three petitioners formed a construction partnership to perform the construction work. The partnership entered into paper contracts with the corporation calling for payment of $4,100,000 in cash, that's the direct construction cost, plus $200,000 of builder's fees in the form of stock, not in cash and an architectural contract called for the payment of $200,000 of architect's fees in stock, not in cash. In fact they were never intended to be performed. I take it they were window dressing having something to do with the financing aspects of the case. The work was – they waived the architect's fees, the builder's fees, they waived their right to $4,100,000 in cash and performed the contract at their direct out of pocket cost, which turned out to be $3,800,000, that is to say, $300,000 less than the estimated direct cost apart from the architect's and builder's fees. Now those additional savings were attributable to fact that the estimates assume that they would use subcontractors to perform the work. In fact the partnership performed itself the carpentry and plumbing and heating work without using subcontractors and thereby eliminated also the subcontractors market. That's the main source of the additional savings. Well whatever the source of the savings that normally the construction company would realize and not the owner of the building. Now by that means they ended up, the corporation ended up with a building with a estimated reproduction cost and presumably value of $4.5 million for which it had to pay only $3,800,000, that is to say $700,000 less, and it is not surprising that a year later the stockholders were able to dispose of their stock for an amount closely approximating that $683,000. Now the way they actually disposed of the stock, the buyer insisted that they drain off from the corporation all of its cash first so that they would have to pay less. So the corporation first wrote up the value of the buildings by $750,000 to create a capital surplus. Out of the capital surplus they then distributed to the stockholders $410,000. The stockholders then turned their stock over to the buyers for an additional $273,000 so they netted in the end $683,000. Now we agree that for purposes of this case, the distribution to the corporation can basically be ignored and would be the same question, if they had simply sold it to the buyers for $683,000. Now, I might suggest that what their gain represented, what generated their gain was simply the uncompensated services, that they contributed to the corporation in constructing the building by not charging for their services, they were able to create an equity in the corporation worth $700,000 and they cashed in on that equity by selling the stock, and I say that is precisely the kind of thing that Section 117(m), is designed to prevent. Now they say that isn't the purpose, they don't really deny that, that element is involved, but they say well we could have gotten away with that had we done it as individuals and that wasn't therefore the purpose of 117(m). I think the history shows that 117(m) was not focused simply upon the alternative ways that they might have done it and to prevent them doing something by corporations they couldn't have done without it, but rather was focused upon the basic nature of the transaction and how it should be taxed. I think that's demonstrated by the movie example that prompted the statute. Now in the movie case Mr. Eisenstein has told you that if an individual producer produced a movie and leased it, he would have received ordinary income, well that's quite right, an individual builder built a house and leased that he would receive ordinary income. He doesn't tell you what would happen if the individual producer made the movie purportedly for purposes of leasing, but then sold it and that producer would have exactly the same argument, I'm not saying that he would win, would have exactly the same argument for capital gains treatment on his sale, that these stockholders would have on their sale individually of the buildings. So the movie case is an exact parallel, at least prior to the 1950 Act. Now in 1950 Act as we pointed out in our brief, another change was also made at the statute, which accepted from the capital assets definition copyrights and artistic works in the hand of the person whose personal efforts created. Maybe we acknowledge that, that might reach movies in the hands of an individual producer after 1950. My first answer is that there is nothing to suggest that Congress when it was looking to 117(m) related its judgment there to what was going on in its amendment to the other section. And in fact they never brought together in their development. President's message just talks about the movie problem, the hearing they weren't brought together, and the capital asset definition exclusion doesn't refer to movies, the history doesn't refer to movies. There are serious problems in bringing movies within that category. This revenue ruling, in 1955 that a movie produced by a corporation is not within that exception, because it wasn't produced by the corporation's personal efforts, but more than that it took the combined efforts of a large number of people, and a large investment, quite different from the writings of both. I would also say that these two provisions were responses to very different inducements. What prompted the amendment to the capital asset definition was the Eisenhower ruling, ruling in 1958 that Eisenhower's book then General Eisenhower, “Crusade in Europe,” his proceeds from some of that received ordinary -- received capital gains treatment. Now I myself had questioned ruling, but what Congress did in this provision was to describe all of these things as loopholes. It doesn't detract at all from our notion that the products of personal efforts ought to be taxed as ordinary income and something that allowed them to be taxed otherwise is a loophole, they were described as loopholes in the history of that provision. Granted they didn't deal with the problem of builders constructing property with the personal efforts and then selling the property, but that's because I don't believe there was anything to bring that to Congress's attention, they were all done through corporations. Over that finally that the difference between a corporation and an individual, if there is a difference in the tax treatment and I don't agree -- I don't admit that there is, isn't entirely a fortuitous in it's application, because most of these things when they are done in large sizes can in fact only be done through corporations, and do a great deal more through corporation than you can in individual assets. That doesn't deny that there is still some anomaly, if we can't correlate the treatment in the two cases and I would think one should strive to correlate them, but it doesn't mean that there is nothing of substance to the distinction. Speaker: [Inaudible] Wayne G. Barnett: That is correct. The petitioners I should say point out that prior to the adoption of regulations they found three rulings that they said private rulings are inconsistent. Actually we -- private rulings, I suggest simply are not authoritative of anything, and in fact those were not cleared with the Chief Counsel's Office, when it was cleared they stopped granting them, and they didn't grant them to other units of the same builders. Louis Eisenstein: With the Court's indulgence at -- time at my disposal, I would merely like to address myself to two or three questions. The argument has been made that gain attributable to self constructed property, that is where you put your own talents and efforts into property, and constructing it is inherently ordinary income, and that is not the law. And there are number of cases cited in our brief which have held over and over again that whether or not constructed property is rise to ordinary income or capital gain depends upon the purpose for which the property is held. Secondly in 1950 at the very time when 117(m) was enacted, Congress enacted 117(a)(1)(c), which specifically deals with a certain kind of property to which personal efforts are devoted. And the committee report that time very clearly indicated that if you don't fall within that specific provision then the gain that you otherwise realize on the sale of your property gets capital gain treatment if it otherwise qualifies, regardless of how significant your services were. They specifically give an example of a photographic studio, and it's well settled in the light of the 1950 Act that the invention of a patent, which reflects the most unique ability that an individual can bring to property gives rise to capital gain if it is not held for sale to customers in the ordinary course of business. There is one other point I would like to make, and that is, that an impression seems to have been left by the government that because you have some intention to sell property if a purchaser comes along, therefore you are holding it for sale to customers in the ordinary course of business, there again that is not correct. There is a difference between selling rental property and actually actively being engaged in holding property for sale to customers. And as a matter of fact in this particular case the evidence clearly indicates that no rental property was held for sale and it is specifically stipulated that the stock in this particular case was not held for sale to customers in the ordinary course of business.

John Paul Stevens: We'll hear argument in Number 01-1289, State Farm Mutual v. Campbell and others. Ms. Birnbaum, you may proceed whenever you're ready. Sheila L. Birnbaum: Thank you, Justice Stevens, and may it please the Court: This case arose from a single failure by State Farm to settle a third party automobile case in the State of Utah within the policy limits of its insured in Utah. There was evidence in the record, uncontroverted evidence, that this was the only case in the State of Utah where a policyholder of State Farm had been subject to potentially a threat of execution on a judgment. All of the other judgments that were in excess of policy limits, which there were seven of in the State of Utah over a 14-year period, including both before and after Mr. Campbell's case-- John Paul Stevens: Ms. Birnbaum, may I ask you a question about the record? Sheila L. Birnbaum: --Yes, Your Honor. John Paul Stevens: As I understand the other side, what is at issue is a policy that your company had over the years, I forget the name of it, BP and something or other, and I looked for that policy in the record, and I couldn't find it. Is it in the record? Is there a written-- Sheila L. Birnbaum: It's in the lodging, Your Honor. John Paul Stevens: --It's a lodging? Sheila L. Birnbaum: It's at 1506 to 1531 in the lodging, and if you look at the B, so-called PP&R... it's called the Performance Planning and Review Manual... it is a guide. It is a personnel evaluation guide on how to evaluate personnel, and it applies to all, all the personnel of State Farm, all thousands of personnel, and what the plaintiff did was to cherry-pick from this long manual which is in the lodging, as I said, one or two points that didn't even apply to claims adjustors or claims representatives, but to supervisors, to try to create this pervasive nationwide scheme that there was an attempt by State Farm over 20 years to lessen the claims that they were paying and not pay the fair value of claims. Ruth Bader Ginsburg: Nonetheless, if the jury found such a policy, that there was a policy as alleged by the plaintiff, that's not... we have to take that as a given, don't we, Ms. Birnbaum? Sheila L. Birnbaum: You may have to take that as a given, Your Honor, but the question becomes, how is that policy related in any way to this decision to try a case in the State of Utah, and how can State Farm be punished for its nationwide conduct, when all this case was about, and should have been about-- Anthony M. Kennedy: Do you say the evidence of conduct in other jurisdictions should have been excluded, it was inadmissible? Sheila L. Birnbaum: --Your Honor, some evidence could have come in under this Court's determination in BMW to show reprehensibility, but evidence that could have come in to show reprehensibility had to be comparable to the conduct that was at stake here. David H. Souter: Well, what do you say to the argument on the other side that the instances of conduct involving facts having nothing to do with settlement within policy limits, all came in, in effect as rebuttal, as admissible rebuttal evidence in response to issues that State Farm raised? Sheila L. Birnbaum: Your Honor, the record is replete in our opening brief. We cite to the many times all of this evidence came in on direct, of the plaintiff's experts and the plaintiff's so-called fact experts. That's a makeshift argument. This didn't just come in. This was a 2 and month trial on... and most of that trial was geared to this nationwide scheme. And more importantly, if you look at what the Utah Supreme Court said in reinstating this incredibly excessive verdict, 145 to 1, when you look at that, it is very clear that the Utah Supreme Court was looking at a national scheme. David H. Souter: Well, yes, that may be. I mean, I think there's no question it was looking at a national scheme. The question is whether our gripe, or your gripe is with the Utah Supreme Court or with the case as it was tried, and I take it your answer to my question is, there was evidence going to practices having nothing to do with settlement within policy limits that did come in without any relationship to rebuttal at all. Sheila L. Birnbaum: That's exactly right, Your Honor. David H. Souter: Okay. Sheila L. Birnbaum: And it's all cited in our brief, in our opening brief, many, many times. Antonin Scalia: And why doesn't-- Sandra Day O'Connor: --And were objections made each time? Sheila L. Birnbaum: Your Honor, there was not, because that wasn't necessary in the State of Utah. If a litigant objects in limine to the introduction of this evidence, which was done-- Sandra Day O'Connor: That was done. Sheila L. Birnbaum: --That was many times done, and Your Honor, when this court came down with the case of BMW v. Gore, there was an oral argument made that that kind of evidence was unconstitutional under Gore, because it was dissimilar and extraterritorial. Antonin Scalia: Ms. Birnbaum, why doesn't it go to reprehensibility if it were true that this failure to settle claims that were quite valid was simply part of a nationwide pattern to pay out less than was due, not just in this context but in every context? Why doesn't that go to reprehensibility? Sheila L. Birnbaum: Because, Your Honor, if we are... if we permit litigants to create this overriding scheme that you are engaged in fraud in all your business practices, and that you can be punished for that, it is as if in Gore-- Anthony M. Kennedy: Well, I think it does go to reprehensibility if we're giving some kind of an ethical report card to State Farm. Sheila L. Birnbaum: --Your Honor-- Anthony M. Kennedy: It does not go to reprehensibility, I would think would be your point, as to the harm suffered by this plaintiff. Sheila L. Birnbaum: --Absolutely. Anthony M. Kennedy: And that seems to me the difference. Sheila L. Birnbaum: Absolutely. Your Honor-- Antonin Scalia: You say it would go to reprehensibility, and it would go to the harm suffered by this plaintiff, if they introduced evidence of doing the same thing to other plaintiffs in other States, the same thing to other plaintiffs. How does that go to the harm to this plaintiff? Sheila L. Birnbaum: --Well, Your Honor-- Antonin Scalia: You know, I don't understand how you can possibly say you cannot introduce evidence from other States, and at the same time say, unless it's introduced to show reprehensibility. Once you say you're allowed to introduce it for reprehensibility, I don't know why all of this doesn't go to show that State Farm is more reprehensible. Sheila L. Birnbaum: --Your Honor, because in Gore v. BMW this Court, the majority of this Court held that you can introduce on the reprehensibility question similar conduct that compares to the conduct that occurred to the particular plaintiff in the underlying case. Anthony M. Kennedy: Of course, that's all that was offered in Gore, of course. Sheila L. Birnbaum: But that... but Your Honor, it would be like-- Anthony M. Kennedy: So we didn't really have to reach your question in that case. Sheila L. Birnbaum: --Your Honor, but it would be like in Gore saying that there was a plan to maximize profits, and that not only could you introduce and consider the repair issues that occurred in Gore, but you could also show that there was discrimination against minority customers, that there was-- Stephen G. Breyer: But the answer is that all that does go to reprehensibility. It does. A person who commits this conduct and is part of a company that engages in all kinds of bad action is a person who is somewhat more reprehensible than if you worked for a company that doesn't engage in all this bad action, but I thought your point was that that's true, but unless you draw a line like the line that was drawn in Gore, you are inviting a jury to punish the company for all kinds of things that truly do make them more reprehensible, but without standards, without a legislature telling them how reprehensible, et cetera. Sheila L. Birnbaum: --I couldn't have said it any better, Your Honor. [Laughter] Antonin Scalia: Well then, maybe... maybe you can tell me how one defines reprehensibility so that it only includes what you call the same acts. Maybe you can tell me. That's what gives me the trauma, and you say not different acts. What is different acts? It has to be something-- Sheila L. Birnbaum: Well, I think-- Antonin Scalia: --other than a policyholder who... you know, who passed five, six cars on the highway? Sheila L. Birnbaum: --No. No, you have-- Antonin Scalia: Why isn't cheating all policyholders in all contexts, paying less than they're entitled to, why isn't that similar to what happened here? Sheila L. Birnbaum: --Because it had nothing to do with what happened here, and I'd like to explain to you. Maybe it's a little... but what happens in third party and first party cases, in this particular case there was a decision to go to trial. Why was that decision made to go to trial? Because at least the lawyers for State Farm in some of the claims represented felt this was a no liability case. Mr. and Mrs. Campbell said that they were not liable, that they didn't cause this accident. This wasn't a no-brainer. There was evidence. The jury decided on other evidence. But when you bring into this equation 20 years of conduct that, some of it that is lawful, this wasn't only fraudulent conduct. This jury heard and was instructed... not instructed, but in the summation there was references to the payment of non-OEM, the specification of non-OEM parts, was perfectly legal in almost every jurisdiction. Anthony M. Kennedy: How would you formulate the standard that you want us to adopt, the standard which confines the reprehensibility evidence to what you deem to be appropriate in a case such as this? Sheila L. Birnbaum: I think-- Anthony M. Kennedy: What rule do we have? Sheila L. Birnbaum: --I think, Your Honor, the proper reprehensibility inquiry is limited to an examination of a defendant's specific misconduct toward the plaintiff and similar conduct by the defendant toward others, but it has to be similar. This was not similar conduct requiring-- Ruth Bader Ginsburg: And here you're not drawing a line... one of the lines was similar conduct and in the same State, but in the automobile, automobiles, we're a very mobile society, so I don't think... well, perhaps you are, but you said this is, we draw a line around Utah, but suppose the driver who was insured by State Farm was from California, or from New York, where you get more than seven incidents out of 14 years? Sheila L. Birnbaum: --But the question here was, was there a bad faith failure to settle? That is the conduct. If there was evidence of bad faith failure to settle in other States, that could come in on reprehensibility. That could inform the jury in some way, and under BMW v. Gore, you said that that kind of conduct, similar conduct in BMW was identical conduct. Anthony M. Kennedy: Well then, then you have no concern with punishing for acts that took place out of State? Sheila L. Birnbaum: No, I-- Anthony M. Kennedy: You're abandoning that, or-- Sheila L. Birnbaum: --We have not gotten to the ratio of the comparable penalties questions under BMW. We were just focusing on reprehensibility. Antonin Scalia: --What is similar conduct in BMW, to give some feel for what you mean by similar conduct? Sheila L. Birnbaum: Exactly what the Court-- Antonin Scalia: Selling cars with scratches on them, or is it selling... what about, you sell cars with defective, knowingly, with defective clutches? Would that be similar? Sheila L. Birnbaum: --No, it would not. Antonin Scalia: It would... it has to be cars with scratches, it has to be the same thing? Sheila L. Birnbaum: It's the conduct-- Antonin Scalia: Wow. Sheila L. Birnbaum: --It was the conduct that occurred in that case. In that case there was a failure to tell consumers-- Antonin Scalia: The car had a scratch. Sheila L. Birnbaum: --that the car had a-- Antonin Scalia: So the only cases that are relevant are other cases where BMW pawned off cars that had scratches? It could pawn off all sorts of other defects, but not scratches? Sheila L. Birnbaum: --If you open it up to all kinds of other defects, then you're opening it up-- Antonin Scalia: You lose, right. Sheila L. Birnbaum: --You're opening it up-- [Laughter] --to the kind of thing that can happen here, especially if it gets punished. In this case there was a million dollars' worth of compensatory damages, a substantial number, and this verdict was 145 times that. That could only be considered because it was punishing all of this extraterritorial, dissimilar, and in many instances, lawful conduct. Ruth Bader Ginsburg: I thought we had just gotten off the extraterritorial... where you said it wouldn't make any difference if the insured was from California or from Utah. Sheila L. Birnbaum: That's exactly right, Your Honor. The really important thing here is that the Utah Supreme Court-- Anthony M. Kennedy: Excuse me. I don't understand where we are on the out of State. You say you're going to get to that under another-- Sheila L. Birnbaum: --Yes. Anthony M. Kennedy: --prong? Sheila L. Birnbaum: Under ratio and comparable penalties, Your Honor. Because this Court has said that you could introduce extraterritorial conduct, similar, past conduct with regard to reprehensibility, but there are three guideposts in Gore, and the Utah Supreme Court ignored the other two guideposts. Of course, when it came to the ratio guidepost, this Court has repeatedly said there has to be a reasonable relationship, reasonable ratio between the penalty, the punishment, and the harm to the plaintiff: not the harm to others, not the harm to the community at large, not the harm to all of the consumers that dealt with State Farm, as the Utah Supreme Court held and found, and-- Sandra Day O'Connor: So how do we measure that? How do we measure the ratio, the reasonable relationship of the penalty? Sheila L. Birnbaum: --Here, Your Honor, there was a compensatory damage award of a million dollars. That was a substantial compensatory award. The ratio that would be reasonable with regard to a million dollars could not be 145 to 1. Antonin Scalia: Except that, you know, we say that you can't take into account harm to others, but you can take into account harm to others so long as that is done under the rubric of reprehensibility. Sheila L. Birnbaum: As long-- Antonin Scalia: If you've done the same thing to other people, you can be punished more. Now, you may find a significant difference between punishing you for what you did to the other people, and punishing you more for what you did to this person, because it is rendered more reprehensible because of what you did to other people, but I don't see a whole lot of difference between the two. Sheila L. Birnbaum: --But even if there is a ratio, what reprehensibility does is put you on the continuum of blameworthiness, and this Court has said previously that 4 to 1 is close to the line. In TXO it permitted 10 to 1 because economic damages was small, and you looked at potential harm as well as the realized harm to the litigant there. Here, he had substantial compensatory damages. In addition, if you look at the third guidepost in Gore, you have comparable penalties and sanctions for comparable conduct. That's how that is defined. What was the conduct here? It was a failure to settle within policy limits. It wasn't intentional tort; it was-- John Paul Stevens: May I just suggest an analogy? This, in a way this reminds me of the argument we heard last week... maybe it was last session... about the three strikes law in California; that you're not necessarily punished for the other things you did, but you can take into account your prior crimes even in other States in order to justify a more severe penalty for what you've done here. And isn't it... part of the argument the other side makes is that this is a very large company, and the board of directors doesn't hear about a $100 million punitive damage award down in Texas, and therefore you've got to at least give them enough money so the board of directors will know they ought to take corrective steps. Sheila L. Birnbaum: --Could I just first answer this $100 million punitive damage award, because I think that really shows where the Utah Supreme Court is going. There was no judgment. This had nothing to do with bad faith failure to settle. It had to do with an uninsured motorist coverage. The case was settled for pennies on the dollar. There was no-- Anthony M. Kennedy: 99 cents? Speaker: [Laughter] Sheila L. Birnbaum: --Pennies. Pennies. Unfortunately I couldn't put into evidence the amount because there as a confidentiality agreement, but that case had nothing to do with the kind of conduct here. You cannot-- Anthony M. Kennedy: No, but I suppose to the extent it's relevant it is, that you need an awfully big award against an awfully big company, because you want the company itself to take corrective steps, and if this $100 million award isn't even called to the attention of the board of directors, maybe that says you needed a larger award than would otherwise be justified. Sheila L. Birnbaum: --Your Honor, I think if you look at this, this was a jury award that was never made into a judgment. Why would anybody... it was settled. It was a runaway verdict in a place. Why would anybody go to the board of directors with something like that? David H. Souter: Okay, let's assume the $100 million had never happened. Sheila L. Birnbaum: Okay. David H. Souter: The argument as made is, this is a company with a surplus in, literally measured in the billions. You've got to have a really big judgment to get their attention. What's your response? Sheila L. Birnbaum: The answer to that is, first of all, surplus was the wrong number to ever focus on. That money is accounted for, and there are some very good briefs, amicus briefs that talk about surplus. There was never a profit from underwriting in this particular instance, and the fact that the company has surpluses, that's to pay out claims. Stephen G. Breyer: That's just saying how rich they are. I mean, the question... whether they're rich or not, they seem quite rich, but maybe they're not, but the harm here was what? That is he had a $50,000 policy. Sheila L. Birnbaum: Yes. Stephen G. Breyer: And he for a period of time the client thought that he'd have to pay $136,000 out of his own pocket, for how long a period of time? Sheila L. Birnbaum: There is a question in the record. The trial court said that it was for a short period of time. The Utah Supreme Court said it was for 18 months. Stephen G. Breyer: All right, so for 18 months he's frightened that he'll have to pay $136,000 out of his own pocket, all right. Now, because of that fright, he was given a million dollars in compensation and another $145 million... I don't know, how much went to him? How much went to the lawyers? Sheila L. Birnbaum: Well, Your Honor, there would be 40 percent that would go to the lawyers-- Stephen G. Breyer: So-- Sheila L. Birnbaum: --and under the agreement the-- Stephen G. Breyer: --$56 million goes to the lawyers. Sheila L. Birnbaum: --Right. Stephen G. Breyer: And how much went to him? How much went to him? Sheila L. Birnbaum: 10 percent of the award was-- Stephen G. Breyer: All right, so $14 million went to him, and where did the rest go? Sheila L. Birnbaum: --It went to the two other plaintiffs in the original case. Stephen G. Breyer: Okay. Now, that's all necessary for the follow... or at least not necessary, reasonable for the following reason. This is a very big company, and unless you really make them pay they might do this again, or if not this, something equally bad, okay? Now, what's your response? Sheila L. Birnbaum: The response to that, Your Honor, is there's nothing in this record... first of all, that kind of ratio is totally unreasonable and out of proportion to the harm to the plaintiff. Stephen G. Breyer: That's not my question. My question is, there is a claim. Even if it's out of proportion to the harm, we've got to wake these people up at State Farm. Now, they get wakened up by this 145 million judgment, believe me, and-- Sheila L. Birnbaum: Yes. There's no question of that. Stephen G. Breyer: --All right. Now... all right. Now, what's your response to that, that's a very desirable and necessary thing, or they might do it again? Sheila L. Birnbaum: It's not a necessary thing on this record, it is not a desirable thing. There was no-- Stephen G. Breyer: Because? Sheila L. Birnbaum: --There was no evidence in this record that there was any other case in which there had been a failure to settle within policy limits that jeopardized an insuree-- Stephen G. Breyer: All right, suppose there had been 10 cases in which 10 other people were frightened of having to pay $136,000 for a period of 18 months. Then, in your opinion, would it have been justified to enter this judgment of $145 million to wake them up? Indeed, at 4 month intervals they kept doing this over and over. Sheila L. Birnbaum: --Your Honor, if that happened, then each one of those plaintiffs could have a bad faith failure to settle claim in which they could have gotten punitive damages in their own States. There is no... this whole concept that this is a clandestine scheme, every-- Antonin Scalia: Maybe no amount of money will suffice. Maybe we have to send them to jail. Sheila L. Birnbaum: --Well, that's what-- [Laughter] That's what the Supreme Court of Utah said, even though it's not in their statute. Can you imagine, on fair notice, when we talked about fair notice, that you could go to jail for a failure to settle one case in the State of Utah? Anthony M. Kennedy: Did this jury-- Antonin Scalia: --It didn't have authority to send them to jail though, did it? Sheila L. Birnbaum: No, they didn't. David H. Souter: You know, but you're making... I think you're making two arguments. First, you're making the argument that you started with, and that is, evidence was improperly admitted, acts in other States were improperly considered, acts unlike failure to settle were improperly considered. Let's assume, for the sake of argument, that you lose... I mean, if you win on that, I presume we're not going to get to the point you're arguing now. Let's assume you lose on that. You get to the point that you're arguing now and you say, okay, 4 times the amount of actual damage would be okay, 145 is not. What do we put in an opinion to indicate what is the proper point in between 4 and 145? Sheila L. Birnbaum: I think you've already put that in your opinions in this Court already, and that is that there has to be a relationship between the amount of the punitive damages and the compensatory harm to the plaintiff. David H. Souter: Yes, I know that, and the question is, is 4 times the relationship appropriate, and 145 is not? And how about 80, and 60, and 20? How do we grapple with that? Sheila L. Birnbaum: Well, I think you grapple with that only by looking at the three guideposts that you've already put forth, and it could be 4, it could be 5, and some courts have even held 10, but most of the courts that have followed your jurisprudence have held that 3, or 4, or 5 is close to the line. David H. Souter: Is the point of your argument ultimately... you're not saying this, but I mean, if we accept the way you're going, are we really going down the road to saying, look, at some point we've got to leave this in a less protean state, and we've got to pick a number, and is that our business to do? Sheila L. Birnbaum: Now, we're not asking you to put a bright line. It would be helpful, but I don't think this Court is prepared to do that. Anthony M. Kennedy: Well, would the bright line be helpful if we said, up to... pick a number... 10 times will be usually accepted unless that is not adequate enough to compensate the plaintiff for the wrong that was done to him? Sheila L. Birnbaum: That would be an excellent way of drawing the line, Your Honor. Antonin Scalia: You get this out of what provision of our Bill of Rights? Sheila L. Birnbaum: Your Honor, we get it out of due process, the two bedrock provisions called due process and federalism. Federalism, comity, States' rights. Ruth Bader Ginsburg: But as far as-- Antonin Scalia: --It's not specific, is it? 10 times is what it says. Sheila L. Birnbaum: No, we're not suggesting that. I thought it was a good idea, however. [Laughter] Ruth Bader Ginsburg: Ms. Birnbaum, I'd like you to clarify your position on what has been called extraterritoriality-- Sheila L. Birnbaum: Yes, Your Honor. Ruth Bader Ginsburg: --because I thought today that you were very forthright with the Court. You said no, you're not going to make a distinction whether the plaintiff comes from California or New York rather than Utah. Sheila L. Birnbaum: Right. Ruth Bader Ginsburg: So you can't just draw a line around the State of Utah and say, that's the relevant State. But you tell us a supplemental brief was calling attention to a case where there was a specific request to make that kind of charge. You made no such, State Farm made no such request in this case, as far as I can tell. Sheila L. Birnbaum: Yes, they did, Your Honor. Ruth Bader Ginsburg: Yes? Where? Sheila L. Birnbaum: Well, it might not have been totally the same that-- Ruth Bader Ginsburg: Which one? Sheila L. Birnbaum: --It's in the lodging at 394. It was instruction number 46. Ruth Bader Ginsburg: Yes, and instruction number 46, which I looked for, was the closest thing. Sheila L. Birnbaum: That's right-- Ruth Bader Ginsburg: That talks about both compensatory and punitive damages, that you should base it on State Farm's conduct in handling of the case against Curtis Campbell. Sheila L. Birnbaum: --Right. Ruth Bader Ginsburg: Only. Sheila L. Birnbaum: Right. Ruth Bader Ginsburg: Now, that's not even saying other people within Utah. So that's... and it's alike for compensatory and punitive. That is nothing like the charge that said, look in the State of Nevada. But I just wanted to make sure that you are saying, you don't look only to Utah, because this particular plaintiff happened to come to Utah. It would be the same thing if the plaintiff came from California. Sheila L. Birnbaum: Absolutely, Your Honor. Let me just mention one other part of the guideposts which I think are very relevant here, and that is comparable penalties for comparable misconduct, and here it is uncontroverted that the penalty that the Utah courts or the Utah system could have placed on State Farm for an act, for a single act of bad faith failure to settle, which was at stake here, was $10,000. Yet when the Utah Supreme Court examined that guidepost from the Court, it looked at the scheme. It looked at all of the nationwide conduct to determine that 1) you could be... you would have to disgorge all your profits or you could be imprisoned, which was not correct anyhow under the Utah statute. But if you restate the guideposts that you have already come down with, and you make it clear that we're talking about conduct that was permitted to the plaintiffs, that we're talking about reasonable ratios that had to do with the plaintiff's wrong, not harm to others, not harm to all of those in Utah... in fact, if you look at the bad faith failure to settle issue, there was no one in the State of Utah that was harmed by that kind of conduct. There was nobody that was even subject, Justice Breyer, for a short time with execution, and that... and there was no reason, there was no reason to deter that kind of conduct because there was no conduct in the future, after the Campbell case, that that even came close to. So I think that if you focus on those factors, those guideposts that you elucidated to in Gore, and make them stronger, that would be sufficient for the lower courts to do their job in doing a meaningful... meaningful appellate review, not the kind of review here that was based on questionable conclusions and improper predicates. Thank you. John Paul Stevens: Thank you, Ms. Birnbaum. Mr. Tribe, we'll hear from you. Laurence H. Tribe: Justice Stevens, and may it please the Court: I think I might begin by saying that I barely recognize the case that, though I didn't try, I read the transcript in, from hearing Ms. Birnbaum's description. She says that the conduct involved in this case was simply the failure to settle. It wasn't, she says, even an intentional tort. Well, the Court's-- Anthony M. Kennedy: Well, that was the sole ground of liability, was it not? Laurence H. Tribe: --The sole ground of original liability was objectively unreasonable failure to settle, but phase 2, which was held at the insistence of plaintiffs, who wanted... of the defendants who wanted to bifurcate, phase 2 focused on the question of whether there was an intentional tort, and there was found to be fraud; and the court, the trial court affirmed the judgment partly on the ground of intentional fraud; and the fraud, and it's not a surprise really to the lawyers for the defendants, because they made it clear in their opening statement that they understood the whole theory of this case to be that the insurance policies that were being sold by State Farm, which led people to think that in first and in third party cases the claims adjuster would try to do a reasonably objective job of satisfying the claim if possible, in fact weren't bad at all. There was a clandestine cap that was imposed by this innocuous-looking bureaucratic PP&R program that was thoroughly documented and that was imposed from headquarters, documented elaborately by hundreds of examples; and it's true, some of them came from other States, and I will get to that; but they were all just illustrative, because it came from headquarters in Bloomington, and it was a directive-- Stephen G. Breyer: I take it the policy is, pay as little as possible, even if fraud is necessary? Laurence H. Tribe: --And, in fact, it was necessary here. That is, they made up things. They doctored the file. Stephen G. Breyer: All right, I see that, but what's-- Laurence H. Tribe: They made up the fact that... they defamed this dead person and said that he was speeding to meet a pregnant girlfriend, who didn't exist. There were findings that they systematically shredded, and destroyed, and fabricated documents for two decades in order to cover up the fact that they were not selling what they were pretending to sell. And it was found in this case clearly, and then again de novo by the Utah Supreme Court, that this policy, which was clandestine and then covered up, was a policy that had persisted for two decades, which they even now seem unwilling to acknowledge. John Paul Stevens: --Can I interrupt with a question? Laurence H. Tribe: Sure. John Paul Stevens: I'm sure you're going to get to it, but one can infer... maybe it's not entirely clear... that all of this was established, and there are very, very many, many bad, bad deeds done in all parts of the United States, but that the $145 million is in large part punishment for what was done outside of Utah. Laurence H. Tribe: Oh, I don't think so, Justice Stevens. I do plan to get to that. John Paul Stevens: The second point that relates to that is that when the Supreme Court of Utah made the comparison to what the criminal penalty might have been, they had to be referring to more than what could have been imposed in Utah. Laurence H. Tribe: No, Justice Stevens, what they said was this. They referred among other things to the Utah Unfair Claims Practices Act, which said $10,000 fine per violation; and there were in their view thousands of individual instances of wrongfully denied benefits. John Paul Stevens: In Utah? Laurence H. Tribe: In Utah, yes, because they didn't draw this fancy distinction between first and third party claims that is being drawn for the convenience of State Farm. The wrong is not-- Anthony M. Kennedy: That's the basis of the underlying tort, which was the failure... which was the excess. Laurence H. Tribe: --That was the example-- Anthony M. Kennedy: Which was the excess. Laurence H. Tribe: --Justice Kennedy. That was the tip of the iceberg. Justice Kennedy, this is very important. In this particular case, it was the failure to settle a case, and it was a fraudulent failure to settle a case, not just a random accident, but it was pursuant to exactly the same policy, capping the average amount that a given claims agents puts out in terms of State Farm money, that is used in these other instances. It was exactly the same policy. In this case, it was because this fellow named Bill Brown wanted to move to Colorado, and because he did, and because he was close to his quota, and this is all in the record, and it is found... and it's not disputed any longer. Because he wanted to move to Colorado, he puts pressure on somebody underneath him to make sure that that year's numbers look better. Stephen G. Breyer: Of course, companies would have a policy of trying to make as much money as possible. Laurence H. Tribe: It's not just making as much money-- Stephen G. Breyer: Well, some companies could add-- Laurence H. Tribe: --it's stealing. Stephen G. Breyer: --could add to that, by the way, one way we make money is, we pay out as little as possible and we charge as much as possible. I remember an airline that had the policy, charge the customer the highest price he will pay for the service that he wants, all right? Laurence H. Tribe: But Justice Breyer-- Stephen G. Breyer: There could be such a policy. Laurence H. Tribe: --Right-- Stephen G. Breyer: Now-- Laurence H. Tribe: --and if the policy is sell him a ticket and then turn him away at the door-- Stephen G. Breyer: --Oh, no, no, but by the way-- Laurence H. Tribe: --pretending to sell him a place-- Stephen G. Breyer: --it might be that such a policy would even condone doing a lot of bad things to do that, and what's worrying me about permitting that kind of policy to serve as a justification for a $145 million judgment is precisely what I wrote in my concurrence in the BMW case, that the Constitution, indeed the Magna Carta says that you should not take life, liberty, or property without law; and to take 12 people, call them a jury, selected at random, and tell them that they are free to go through the business practices of a company-- Laurence H. Tribe: --Justice Breyer-- Stephen G. Breyer: --to unite them under the name of a policy and then assess $145 million for every bad thing that this jury thinks-- Laurence H. Tribe: --Justice Breyer, please... I believe in the Magna Carta as much as you do. It was not arbitrary. There were criteria. The criteria were pursuant to an instruction proposed by State Farm, and in this case it was not every bad thing. All of the specifics, including these seemingly trivial things like appearance allowances, were all introduced in particular cases to show how they were being used by someone who was up against his monthly quota, and because he was up against the monthly quota... you read the testimony of Gary Fye at page 1375 and 1387 of the joint appendix. Because they were up against the monthly quota, the people at the receiving end who thought they had a claims agent who was, as they call him, a good neighbor, in fact had someone who was selling them a place in the airline, and it wasn't there, deliberately. Anthony M. Kennedy: --Nothing you have said, Mr. Tribe, Professor, persuades me that the jury didn't punish this company for being a bad company quite without reference-- Laurence H. Tribe: Because of the-- Anthony M. Kennedy: --to the harm this plaintiff suffered. Laurence H. Tribe: --Well, first of all, as to the harm suffered, proposed instruction 40 by State Farm would have told the jury, I think consistent with this Court's jurisprudence and with the history of punitive damages, that they could consider the effect of State Farm's behavior, quote, "on the lives of plaintiffs and of other policyholders. " and it's because, Justice Breyer, of what you said in BMW that a lot of other people who are harmed by these practices are not likely to be able to sue. That is, they're not going to make it. Mr. Fye testified at 30 and 44, for everyone like Campbell, who will take on a company this size and with the resources of State Farm, there are hundreds, if not thousands, who will simply go away, because State Farm-- Ruth Bader Ginsburg: Mr. Tribe, maybe fewer, maybe fewer now after a verdict of that size, and isn't that one of the problems? Laurence H. Tribe: --Well, that's the hope. That-- Ruth Bader Ginsburg: Isn't that... now there's an incentive for lawyers to pursue such claims. Before they might have thought them too small to be worthwhile. Laurence H. Tribe: --One of the advantages... there may be down sides, but if we prevail, Justice Ginsburg, we're prevailing on a theory that the practice we've identified, which is quite specific, for 20 years of putting these invisible caps that cheat the insured in all kinds of cases throughout the State of Utah, there will no longer be anyone who can recover for those harms, beyond compensatory damages, because the penalty will have been extracted. Stephen G. Breyer: The question that's bothering me-- Ruth Bader Ginsburg: --Is that true in New York or Vermont? I mean, you said in Utah there would be no one who can get another $145 million-- Laurence H. Tribe: I think if they've done this in every State, then they should be exposed to the possibility of punitive damages in other States. Ruth Bader Ginsburg: --So you could multiple that by 50. Laurence H. Tribe: Well, you know, it seems to me, if you look at the opinion that was delivered from the bench by the district court after 2 months, in his own words... they accuse us of writing his opinion. In his own words, what he said was that absent a punitive award, the problem of recurrence of their misconduct is extremely high, the probability of recurrence; because he saw the evidence that they never stopped; and he said that even the $25 million award that he felt constrained by State law, mistakenly, to give, he thought would not suffice because... and I'm now reading from his December 19 opinion... because the $25 million may not be enough to offset the profit that they're likely to have earned. That is, every time they cheat the insured by-- John Paul Stevens: Mr. Tribe, you've told me that this is all based on what happened in Utah. I haven't read this massive record, and you tell me you have. In the second phase of the punitive damages trial, not the first one-- Laurence H. Tribe: --Yes. John Paul Stevens: --when they did get into out of State evidence, what proportion, in your judgment, of that evidence related to Utah, and what proportion related to other States? Laurence H. Tribe: I think the overwhelming majority related to Utah, and every time it came in dealing with another State, contrary to what we heard, it was because the door had been opened, and it was specifically found by the trial court that they waived any objection to the testimony in question, despite what we heard about-- John Paul Stevens: But you're telling me that over half of the evidence related to Utah itself? Laurence H. Tribe: --Yes, but let me tell you, Justice Stevens, it was so uniform that the particular examples were picked because they so nicely illustrated the way a particular device like the use of non-OPM parts would interact with the cap that was imposed. It was nothing about-- John Paul Stevens: Are they correct in telling us that this... there's only one example of a failure to settle-- Laurence H. Tribe: --We have no way of knowing, Justice Stevens, because they have erected... the record also shows that since the 1970s, part of their policy of destroying records has included-- John Paul Stevens: --Yes, but there must have been a lot of records-- Laurence H. Tribe: --getting rid of all those records. John Paul Stevens: --But they didn't destroy all the evidence to have a trial go on this long. Laurence H. Tribe: Well, it's because... part of what was said by the trial court was that it took the persistence of a David to bring this particular Goliath to his knees. Much of the evidence certainly wasn't produced through discovery. The key evidence, including the May 1979 PP&R report, was obtained indirectly through other cases, not with any cooperation on the part of State Farm. State Farm kept saying, we don't have a PP&R policy. Oh, and then we got rid of it in 1992; and we got rid of it again in 1994; and yes, there's a PP&R policy, but it doesn't actually set the cap on any particular claim. Well, that's a nicely and artfully put point. It doesn't. What it does is, it imposes a ceiling which averages things out and forces whoever is unlucky enough to come in when somebody is about to hit his ceiling to get cheated. It seems to me that we... it's true that it all began by looking at this, as it happened, failure to settle. That's a happenstance. It could have begun in some other way. Because it happened to a couple that was rather vulnerable, and yet tenacious: this fellow had had one wife who had been murdered in his home, another wife who had died of cancer. He himself had Parkinson's disease. They were part of the weakest of the herd, as State Farm's policies put it, that they're picked on, because they're less likely to fight back. But it happened that these people did fight back, and it seems to me it's not a matter of rewarding them. They get a relatively small piece of this. The family of the dead young man gets part of it. The State may get part of it. The key point is that it is a critical disincentive, and Justice Kennedy, any notion-- Anthony M. Kennedy: Well, some people get part of it that weren't hurt at all. Laurence H. Tribe: --Some lawyers will certainly get part of it. I don't-- Anthony M. Kennedy: I wasn't referring to the lawyers. Laurence H. Tribe: --I-- [Laughter] What made me think you might have been? No, but it seems-- Anthony M. Kennedy: Well, I was referring to the other people that took an assignment of the claim together with-- Laurence H. Tribe: --That could be, but-- Stephen G. Breyer: --I was referring to them, and my problem is that in fact what you have is a system where if you take, let's call it the most evil corporation in the world, and I'm sure there are some such, and they commit a very minor tort in respect to someone, pursuant to their policy of being evil-- Speaker: [Laughter] Stephen G. Breyer: --and it seems to me that there are criminal laws, there are regulatory authorities, there are statutes-- Laurence H. Tribe: --Right. Stephen G. Breyer: --there is common law, there are many, many sources of law; and it's disturbing in terms of the picture of the law to have 12 people picked at random to assess an enormous fine without standards other than, "this defendant is evil", and I'm assuming he is evil. Laurence H. Tribe: Justice Breyer, first, it's not fair to say that was the only standard. Stephen G. Breyer: Oh, no, I'm trying-- Laurence H. Tribe: Second... second-- Stephen G. Breyer: --to get you to say what the standard was, if it is not that. Laurence H. Tribe: --I thought this Court did a rather good job in BMW. Reprehensibility could hardly be higher when one has a repeat offender who even now mischaracterizes its intentional tort, when one has a repeat offender that obstructs justice-- Anthony M. Kennedy: But again, you're defining reprehensibility quite without regard to the specific injury imposed on the plaintiff. Laurence H. Tribe: --Well-- Anthony M. Kennedy: You're defining... you're giving a report card to the entire company. Laurence H. Tribe: --No, but Justice Kennedy, in TXO this Court talked about the ratio not just of the harm that actually befell the particular plaintiff, but of the punitive damages to the harm that might have befallen that plaintiff if the tortious plan had been carried to completion. Here, if it had been carried to completion the home would have been taken, because a deal would not have been struck in December of '84... of '84, and also in TXO, and in other cases, you've spoken of the harm to the larger community. You've also spoken of the importance of extracting the profit from tortious behavior. Anthony M. Kennedy: I think... Justice Breyer touched on this. Part of the harm to the larger community here is the image that this does to the judicial system when corporations, businesses, people of substance want to use the courts and they're deterred from doing it by the threat of runaway punitive damages, and that is not good for the legal system. Laurence H. Tribe: Justice Kennedy, I certainly agree in principle; but to pick a case in which a corporation has defied the legal system, has shredded documents, has covered up its deliberate wrongdoing, has not even bothered to pay attention to a $100 million award... yes, of course it wasn't reduced to a judgment, but the evidence in this case is that that's not relevant. What was critical is that they had built a wall of deniability so that no one in a decisionmaking capacity is informed of punitive judgments. Mr. Muskowski testified in this case that he would not let anyone know, in a position of authority, even of the punitive judgment in this case; and in their reply brief they say, well, Mr. Mendoza had decisionmaking authority, but if you look at the relevant pages in the joint appendix, you'll see that that's not true. In the colloquy it's clear that he did not. What that means is that a company can surround itself with an impregnable wall and in effect spit at the legal system. How good is that for its image? Now, it may be that an ideal legal system might not use juries for this purpose, but is it the mission of this Court to redesign the legal systems of the 50 States? 15 States have signed an amicus brief here saying it's important to them to be able to use punitive damages when the regulatory and criminal justice systems haven't quite caught up with whatever latest axis of evil is afoot in the corporate world. Is it really helpful to any of us to have a corporation be able to defraud all of the people who rely on it, who depend on it, and get away with paying simply what harm they happened to cause in the one case when they get caught? It seems to me especially bizarre, especially bizarre for State Farm to speak here proudly of the fact that this is the worst case in history. John Paul Stevens: Can I ask one other question just about the proceedings here? Laurence H. Tribe: Yes. John Paul Stevens: The record is so large I didn't have the whole thing completely in mind. After the trial judge reduced the jury's award of $145 million to... what was it, $20 million? Laurence H. Tribe: 25. John Paul Stevens: --$25 million, State Farm still appealed. Laurence H. Tribe: There was a cross-appeal by State Farm. John Paul Stevens: Well, did both sides appeal that? Laurence H. Tribe: Yes. John Paul Stevens: I see. It wasn't clear to me. Laurence H. Tribe: That's right. State Farm appealed because it thought there should be no punitives. It seems even now they think it did nothing wrong. John Paul Stevens: Yes. Laurence H. Tribe: And there was a cross-appeal by the Campbells on the grounds that they thought it was a mistake of State law to have reduced the punitives. John Paul Stevens: I was thinking it would have been quite a shock if State Farm had been the only appellant here and that was the result of that appeal. Laurence H. Tribe: Yes. John Paul Stevens: It's sort of dramatic, yes. Laurence H. Tribe: Yes, well-- John Paul Stevens: Both sides appealed. Laurence H. Tribe: --Yes, that's correct. Ruth Bader Ginsburg: And isn't there a certain irony in that it was chopped down to $25 million, and then the Utah Supreme Court, using this Court's case law, saying we don't give the ordinary deference that we would give to that judgment of the trial court, because the Supreme Court had told us we must engage in de novo review, and engaging in de novo review, we don't chop it down, we put it back to where it was originally. Laurence H. Tribe: Well, Justice Ginsburg, I think in a sense that looks ironic. It looks as though Cooper v. Leatherman came back in a boomerang, but I think really the way I read the opinion of the Utah Supreme Court, they applied Cooper in an even more vigorous way in general. That is, they didn't just engage in de novo review of the question of excessiveness. They engaged in de novo review of all the facts, so you have not just a jury, but a jury and a trial court and a full appellate court. The only fact on which they said they weren't going to defer was a technical issue about the wealth of State Farm, and the real reason they actually gave for increasing the 25 to 145 was their conviction that the trial court believed that 25 would not stop State Farm from persisting in its practices, and that it was only their own earlier suggestion that the ratio should matter a great deal that had misled the trial court. Antonin Scalia: What do you think the ratio should... I mean, we did say something in BMW about ratio between compensatory damages and punitives. What do you think the ratio should be? No limit, 10 to, 145... whatever it takes to stop them? I mean, what if nothing will stop them but sending them to jail? Laurence H. Tribe: Well, in this case, sending them to jail was an option that the Supreme Court of Utah mentioned, and that State Farm doesn't seem to take very seriously. They think the State Supreme Court of Utah doesn't understand its own law. There are provisions of Utah law that make deliberate fraud of the sort they committed an imprisonable offense, and maybe that's an option, but that suggests-- Stephen G. Breyer: You mean, you could right in this case put people in prison for-- Laurence H. Tribe: --Well, I haven't... I have no contact with the Attorney General of Utah, but they-- Stephen G. Breyer: --No, no, I mean, you'd have to bring another trial, wouldn't you? Laurence H. Tribe: --Well, of course you... yes. Yes, but the comparability standard asks, how serious an offense is this, and I submit it's extremely serious. But to your question, Justice Scalia, on ratio, I think that instead of trying to come up with a number... because I think suggesting any number would be so arbitrary that it would do more damage to this Court than good to the legal system. It's not like 6 months for the idea of a serious crime. I mean, it would just be a number plucked from the air, and it would backfire, because as the law and economics people are fond of pointing out, any number you pick will then lead people to sort of modify their behavior accordingly, and just internalize the costs on a kind of bad man theory, and what you really are trying to do is stop the behavior. We're not talking about negligence here. We're talking about something of which the optimal level is zero. The optimal level of deliberate fraud and deception covered up in this way is zero. The relevance of the ratio, I think, is simply as one thing to look at. If the ratio looks very high, you ask why is it so high? In this case, the answer comes back, it's so high because the ratio of the number of people they hurt to the number who are going to be motivated to sue and able to sue is very low. I mean, is very... you know, a number... a huge number will be hurt. A very small number are going to be able to make it through that filter. Sandra Day O'Connor: Well, with verdicts like this, we might see an increase, don't you think? Laurence H. Tribe: Well, I suppose. I suppose, but there are ways of getting rid of frivolous lawsuits. The point also is, it's hard... if you see an increase, Justice O'Connor, and if it is an increase that gets anywhere, it might be because they stopped destroying the evidence, because they stopped fabricating... they've so doctored the files, like the file in this case, to make it look in any given case as though the report that they give corresponds to the history of the case, and it's awfully hard to sue successfully when the file has been massaged and doctored. The result in a case like this is of course it looks like a very large award, but-- Anthony M. Kennedy: What if there were in Utah a second Campbell, a second excess carrier, and the case was tried 6 months later. Would they get the same punitive damages? Laurence H. Tribe: --No. If it was for any activity that occurred during the period from May 1979 to the time of this trial-- Anthony M. Kennedy: Both hypothetical plaintiffs are injured around the time Campbell is, and they both bring the same kind of suit and they have the same evidence; they each get the 145? Laurence H. Tribe: --No. I think that it's a penalty that is like... there ought to be some double jeopardy like doctrine that if they can show that they've already been punished for this course of conduct, they ought not to have to pay the penalty a second time. Now, the Double Jeopardy Clause-- Ruth Bader Ginsburg: Mr. Tribe, I thought you answered-- John Paul Stevens: --What's the authority for that proposition? Laurence H. Tribe: --I would... I just made it up. [Laughter] John Paul Stevens: Professor Tribe. Laurence H. Tribe: I just made it up. I said there ought to be such a doctrine. Ruth Bader Ginsburg: Mr. Tribe, you're talking about a second Utah plaintiff. I thought you answered-- Laurence H. Tribe: Yes, a second-- Ruth Bader Ginsburg: --Several questions ago you said this could be multiplied at least 50 times. That is, one big winner in each State. Laurence H. Tribe: --Well, if they commit 50 big offenses, it's part of our jurisprudence of 50 States that they might be subject to 50 penalties. That-- John Paul Stevens: Your argument is that this is all Utah damages, so there are-- Laurence H. Tribe: --That's right. That's-- John Paul Stevens: --49 other claims out there that must be at least as valuable. Laurence H. Tribe: --Well, that's right. John Paul Stevens: Yes. Antonin Scalia: And even in Utah, I thought our case says you're punishing them for the harm done to this plaintiff. Laurence H. Tribe: Ultimately, you are. Antonin Scalia: If you can take reprehensibility into account, but it's for the harm done to... well, what about the harm done to all the other plaintiffs in Utah? Laurence H. Tribe: Justice Scalia, there's no pretense that this is compensatory damages. The compensatory damage compensates them for the harm done to them. Antonin Scalia: Then you shouldn't have said that. Laurence H. Tribe: Then the reprehensibility of what was done to them is affected by, as this Court has said, whether it was an isolated event, as they claimed, or whether it was done as part of a schematic, systematic form of predation. Now, it was of that sort. That was shown. The fact that it was predation that was launched from Bloomington and therefore spread throughout the country is State Farm's problem. It shouldn't be the problem of the plaintiff who collects punitive damages in a given case. David H. Souter: Mr. Tribe, I can't remember... I assume it's in the briefs, I just don't remember, what was the instruction to the jury on any limits on their consideration of the out-of-State evidence? Was the jury told, look, you can only punish them for what they did here, this only goes to intent, or something like that? Laurence H. Tribe: There was no request here, as there was, for example, in the recent Ninth Circuit case against Ford, no request whatsoever by State Farm for such an instruction. What they did request, and were not entitled to, was that under BMW they preserved an objection that the out-of-State evidence be completely disregarded, even though it came in in response to the doors that they had opened, but they did not-- David H. Souter: But the objection never eventuated in a request for an instruction-- Laurence H. Tribe: --Not at all. David H. Souter: --or in instruction addressing specifically that point? Laurence H. Tribe: No, and they were fully aware... I mean, the day after BMW came down, there was a bench conference. There was an extended colloquy. It was fully-- John Paul Stevens: But wasn't that after the trial? I thought that was in the petition for reconsideration? Laurence H. Tribe: --No. The... May 21, 1996 was before the full-blown 2-month period of the phase 2 trial. John Paul Stevens: I see. Laurence H. Tribe: And it was known very clearly the day after BMW that a good bit of the evidence in this case, because many of the examples of how this policy worked, would come from other places, would not be Utah-based. The $100 million verdict which would illustrate the wall they built would come from Texas. They never once asked for an instruction limiting matters to Utah, and I don't fault them for it. It would have been rather bizarre to do so, because they knew full well that we were not asking the Utah jury or the Utah courts to punish them for what they did elsewhere. We were simply using what was done elsewhere first to rebut their commissioners... they brought in commissioners from various States to testify that State Farm never did anything wrong. The trial court said, now you know, if you do that, you're going to open the door... Justice Stevens, I wanted to just... if you do that, you're going to open the door to proof of what happened elsewhere. They didn't mind, and they insisted that the sequence of proof be rebuttal first, actually, through depositions, and then the principal arguments, which made it look as though it was part of the direct case. I think that-- John Paul Stevens: Thank you, Mr. Tribe. Laurence H. Tribe: --this judgment should be affirmed. Thank you. Sheila L. Birnbaum: Do I have a little time, can I just... left to respond? John Paul Stevens: You have about-- Sheila L. Birnbaum: Two minutes? John Paul Stevens: --You have, I think, a minute and a half... but let's make it two and a half. Sheila L. Birnbaum: Thank you, Your Honor, I appreciate that, because there are certain things that Mr. Tribe said that I think we have to clarify. First of all, this case, on the openings of the plaintiff, the plaintiff said to the jury, this case transcends the Campbells' file. It involves a nationwide practice. He went on to say, you're going to be evaluating and assessing and hopefully requiring State Farm to stand accountable for what it is doing across the country. That is the purpose of punitive damages. On the summation, they asked this jury to act as a national regulator, because none of the regulators had acted against State Farm. Can you imagine, in a 14... in a 20-year period, State Farm handled approximately 280 million claims. David H. Souter: What limiting instruction did you ask for? Sheila L. Birnbaum: The only instruction, Your Honor, was the instruction that I previously read to Justice Ginsburg that they should look to the conduct toward the Campbells, and that was the instruction. There was no other instruction. But whether there was an instruction or not, I think as the Ninth Circuit just said in White v. Ford, you have to look at the evidence, the openings, the closings, and what was punished here. It was a scheme, and the scheme had no causal relationship with the decision to try this case. You asked, Justice Stevens, how much of the evidence was extraterritorial? Huge amounts, and it came in on direct, and we have it cited in our brief, and it wasn't only-- John Paul Stevens: Do you disagree with Mr. Tribe's suggestion that over half the evidence related to Utah? Sheila L. Birnbaum: --No, Your Honor. It related to Mr. Campbell's underlying case, not to actions in Utah that harmed Utah policyholders. That was all inferred from this large national scheme. In fact, the evidence is contrary. John Paul Stevens: You're saying the Utah evidence was evidence relating to this particular case-- Sheila L. Birnbaum: Absolutely. John Paul Stevens: --rather than to other Utah policyholders. Sheila L. Birnbaum: And if you look at the footnote in their brief, and look at our reply brief, we point out all of that evidence had to do with the underlying case. The lawyers from the underlying case, Mr. Campbell, Mrs. Campbell, Ospital, Slusher et cetera, and this issue of whether there was one, whether this... Mr. Campbell was vulnerable, Mr. Campbell was the only person in this whole trial that wasn't vulnerable. He was a 60-year-old white man and who had a B.A. and an M.A. He sat through the entire trial and he said he was not liable, and the decision was made that this was a no liability case. Mr. Tribe says Ospital was not speeding-- John Paul Stevens: Thank you, Ms. Birnbaum. Sheila L. Birnbaum: --Thank you so much. John Paul Stevens: I think we've got your position. The case is submitted.

Earl Warren: William Malloy, versus Patrick J. Hogan, Sheriff of Hartford County. Harold Strauch: Mr. Chief Justice. Earl Warren: May I ask sir, just how you pronounce your name? Harold Strauch: You think of grouch, it's easy Strauch. Earl Warren: Grouch, Strauch, very well Mr. Strauch you may proceed. Harold Strauch: This -- Mr. Chief Justice and members -- and may it please the Court. This I believe is an uncomplicated case, which modestly requests of this Court a ruling that the Fifth Amendment applies to the individual states. I think that the facts in the case, which are very brief, should be annunciated. In September of 1959, in the state and local police officials in concert conducted a raid throughout the Hartford County Community and caught a number of individuals including the petitioner and two others. Incidentally, the case that will be decided here, the decision of this Court will be binding upon the other two as well as on the particular petitioner that's mentioned in this case. These three gentlemen were caught in an apartment, in one of the large apartment houses in Hartford, where presumably they were manning telephones, collecting bets and relaying the bets to a central source. The petitioner was found guilty of pool selling. Speaker: What is that, is that a potential crime? Harold Strauch: Pool selling it's what is known as -- Speaker: Pool? Harold Strauch: Pool selling, it's a misdemeanor, it's a gambling. It's booking. He was -- the petitioner was found guilty of pool selling, which is a misdemeanor in Connecticut, given a one year sentence in the county jail, which was audit suspended after 90 days but then he was put on probation for a period of two years. Subsequently, in January of 1961, a special -- the equivalent of a grand jury investigation was brought about and the former Chief Justice of State of Connecticut was the Grand Juror. And the -- these three people were called before the Grand Jury and Malloy, in particular, was asked a series of six questions, which he refused to answer, basing his refusal upon the Fifth Amendment as supplemented by the Fourteenth. The questions that were asked of the petitioner were as follows For whom he worked on September 11, 1959, which happened to be the day of the raid? Who selected and paid his counsel in connection with his arrest on September 11, 1959 and paid for his subsequent appearances in Court due to that arrest? Who selected and paid his bondsman, who paid his fine, the name of the tenant of the apartment in which he was arrested, and whether or not he knew one John Bergoti? As a result of his refusal to answer these questions, he was found guilty of contempt, which was confirmed by our Supreme Court of Errors, and as a result of that we are before this Court. Speaker: (Inaudible) a civil contempt, criminal contempt -- Harold Strauch: I would think it's criminal contempt sir. Speaker: Does it get a sentence of which term? Harold Strauch: He was fined -- he was sent to the county jail until he purges himself of his contempt or until the court releases him. In other words, the threat that was over him was that he remains incarcerated until he releases himself from prison by confessing or answering the questions that were asked of him and that could possibly incriminate him. Speaker: Is he still in prison? Harold Strauch: No, he is out on bail. A habeas corpus action was brought and he was out -- and he is out on bail. Speaker: Did you say there was a fine too? Harold Strauch: No there was no fine sir. Well -- Speaker: (Inaudible) Harold Strauch: That would be by interpretation of it under what I think is the Jackson case that we have in Connecticut. Speaker: Is it adequate? Harold Strauch: Yes, I think it is. Speaker: Ordinarily, when the fellow has the keys, who was on release, it's a civil contempt isn't it? Harold Strauch: I maybe wrong about that, but in any event this sort of action is considered a criminal proceeding. Cases have held -- Cases have held that -- Speaker: And they treated it for the purposes of habeas I gather. Harold Strauch: That's right. Speaker: As a criminal procedure. Harold Strauch: That's right. Potter Stewart: You mean the underlying the investigation by Judge Inglis. Harold Strauch: Oh, the purpose of the investigation was to -- let me see, I'd like to get that specifically. It was to investigate -- purpose of the Grand Jury was to investigate crimes in Hartford County including gambling activities. So that -- Potter Stewart: This was the Grand Jury. I thought it was the -- Harold Strauch: Well, it was a special investigation. Potter Stewart: Judge Inglis. Harold Strauch: Judge Inglis sat as a special investigator in a Grand Jury atmosphere. Potter Stewart: There was no grand jury, was there? Harold Strauch: Other than he was the equivalent of a Grand Jury in my opinion because -- Potter Stewart: Well he was the equivalent, but there wasn't a Grand Jury? Harold Strauch: No, no but he was acting as the equivalent of a Grand Jury. Counsel was not permitted to be there. Only the state's attorney, the stenographer, and the witnesses as they were called in, one at a time. Speaker: What it is that you -- Harold Strauch: He was appointed I believe by the courts. Speaker: By the courts? Harold Strauch: Yes, I believe that was true, under a statute -- under a statute, which permits that to be done. Speaker: You don't have this one man Grand Jury procedure, do you? Harold Strauch: No, I don't think so. Speaker: Well with whom does he file -- with whom does he file his report? Harold Strauch: He filed it with the superior court, which has jurisdiction of this sort of matter. Speaker: And they found (Inaudible)? Harold Strauch: That's right sir. Speaker: But then they have to go through the ordinary formalities, do they, or how do you prosecute for information or indictment? Harold Strauch: Information. Speaker: So there might be a prosecution for information -- Harold Strauch: That's right sir. Speaker: -- that's on the report, is that it? Harold Strauch: Right, sir. Byron R. White: And that was provided by the authority of the -- Harold Strauch: A state statute. Potter Stewart: A statute. Harold Strauch: That's right. Potter Stewart: 54-47, which appears on page A4 of the appendix to the -- of page three, is that right? Harold Strauch: Absolutely, that's right. I think that a reasonable point to start this case is to go back to that famous case of Barron versus Baltimore, where Chief Justice Marshall held for the first time that the parastate amendments apply to the federal courts only. Of course thereafter in 1866 when the Fourteenth Amendment was applied or was adopted, we believe a different situation was created. And as a result of the adoption of the Fourteenth Amendment, a series of provisions of the Bill of Rights was taken over or incorporated as part of the fundamental law of the land. And those amendments were the First Amendment, the holding of free speech, freedom of religion and so forth; the Sixteenth Amendment giving the accused the right to counsel in Powell as decided in Powell versus Alabama and recently in Gideon versus Wainwright; the Eighth Amendment, relating to the banning of cruel and unusual punishment as set forth in the Robinson and California case, also a portion of the Fifth Amendment relating to the taking of property for public purposes without just compensation, as set forth in the Chicago, Baltimore & Q. Railroad versus the City of Chicago case. Speaker: (Inaudible). Harold Strauch: Yes sir. Speaker: You are putting a very large question to the Court obviously. Now, are you going to address yourself to the question as to whether we have to reach this question in this case? My understanding is that the decision of the Connecticut Court went on two grounds, number one that without giving some explanation as to how testifying about bet holds might affect this man. They couldn't say that he had a valid plea of self-incrimination. Number two that as far as his prior conviction was concerned, there was no ground for asserting his privilege, because the statute of limitations is run. And the question I am putting to you is assuming the broader premises that you are now arguing to the Court, which present us with frankly with overruling a host of decisions from this Court. Harold Strauch: That's right. Speaker: Assuming your premises, as a matter of federal law, would this be a -- would this be an invalid conviction -- Harold Strauch: Yeah. Speaker: -- to the federal stand. Harold Strauch: Yes. Under the -- first of all we deny that at least that the petitioner had limited himself only to the commission of misdemeanors for which there was only a one year statute of limitations and which statute had told by the time that Judge Inglis (ph) had entered the picture. Secondly, we assert that he could have been readily involved in a series of felonies for which there is a five-year statute of limitations. And if he were engaged in a conspiracy to commit felonies, there is a 15-year statute of limitations. And our contention is that the court erred, our State Court erred, when it said that he could not possibly incriminate himself because the statute of limitations had intervened. It hadn't in our judgment. Further that this being a constitutional question that if the Fifth -- sort of the Fourteenth is held to apply so that our court -- so that the State Court had to conform to the Due Process Clause of the Fourteenth, then the standard of constitutionality had to be the federal standards, as set forth in the Ker case and also perhaps in the Fahy versus Connecticut case, which was heard last December It's the federal standards when you reach a constitutional question that apply and those federal standards as they are demonstrated through the decisions of this Court. In Connecticut, the Court used a standard that the judge in determining whether or not the questions were harmful could exercise reasonable judgment and that -- and he had to act as a reasonable person and reasonably conclude that the questions would be damaging to the witness. Whereas in the federal cases such as in the Hoffman case, the Singleton case, the IUPA case and Mathy case and so forth, it's held that the standard that must be used is not the heavy strong standard of reasonableness, as whether or not in the context of the situation the width that can be concluded that the witness would incriminate himself by his testimony. There is a substantially lesser standard that was to demonstrated that I think is early as in the Burt trials. When Chief Justice Marshall said in effect that if the witness testifies, swears under oath, that the questions are incriminating, that is enough. And it's also in cases -- in the Hoffman case. It says that if the witness is to try to explain why the questions will be damaging to him, he is exposing himself to the hazard that he is seeking to avoid, and that has been repeated, I think even in the Mathy case, which I think said that even the mere possibility that the questions, the answers to the questions will be incriminating, is sufficient to permit the witness the immunity of silence. There is also of course, which I hadn't mentioned up to this point, the application of the Fourth Amendment through the Fourteenth to the states through the Wolf case, and Mapp case and the Ker case. This is a case upon which, to be perfectly candid, we hope the premise our hope for a reversal of what is the common practice of the (Inaudible) with reference to the application of the Fifth Amendment to the states. In arriving at the conclusion that various aspects of the Bill of Rights do become applicable to the states through the Fourteenth Amendment, various formulas were devised and cited saying that the constitutional question that -- amendment that is in question applies to the states if it is implicit in the concept of ordered liberty, if it is of the very essence of a scheme of ordered liberty, if it is a principle of justice so rooted in the tradition and conscience of our people as to be ranked to be fundamental, if it is -- and it applied this amendment in the Palko case or it mentioned this amendment, this formula in the Palko case as a policy of absorption that has its source and the belief that neither liberty nor justice could exist if they were sacrificed. Another formula was that the constitutional provision is a fundamental principle of liberty and justice which lie at the base of our civil and political institutions. It is fundamental and essential to a fair trial. It is natural law or a natural right and also it is an absolute right, the latter however has not got beyond the stage of a descending opinion. Now -- Speaker: (Inaudible) Adamson, Snyder against Massachusetts and -- Harold Strauch: That would not be to -- that is something that -- Speaker: A couple of those and other cases. Harold Strauch: Well, it isn't that the Supreme Court has never reversed itself; sometimes it does it at a slower pace and sometimes at a faster pace. Speaker: (Inaudible) Harold Strauch: I beg your pardon Speaker: You start with four members of this court have already indicated those cases that have ruled. Harold Strauch: That's right, but now unless there comes a point when there must be a determination so that there will be one uniform set of laws, it seems to me, throughout the country. If these formulas are valid, and I assume that they are, I have never been able to determine why the members of the court, which have ruled that the Fifth Amendment does not apply to the states, have conceived that the -- that the right not to incriminate oneself is not as basic and as fundamental and as essential to justice in a fair trail, and is as firmly rooted in our traditions as say the right to counsel as in the Sixth Amendment, or the right to be protected against illegal searches and seizures as in the Fourth Amendment. It seems to me that the right to have -- the right to be protected against this unreasonable searches and seizures is an indirect way perhaps of self-incrimination. The Court has been willing to say that one need not incriminate oneself indirectly in the case of search – unreasonable searches and seizures. If that is true, it seems to me that the Court should be equally willing to say that one should not directly incriminate oneself by the words from his own mouth. It strikes me that the Fifth Amendment is as essential in all of these formulae as were the basis for permitting other sections of the Bill of Rights to be made applicable to the states. Now if, as I say, searches and seizures are considered to be a part of the law of the land applying the Fourth Amendment to the -- through the Fourteenth to the states, there is no valid logical reason why the Fifth Amendment can't be equally applied. Now in trying to read the history -- Speaker: (Inaudible) Harold Strauch: Well, that reminds of Fairman and Morrison on the Fourteenth Amendment, who I think are in opposition to Justice Black. In the two Stanford Law Reviews -- Professor Fairman has his historical record of what happened in connection with the adoption of the Fourteenth Amendment which incidentally is refuted somewhat by Flack in 1908 on his interpretation of the Fourteenth Amendment. And Morrison who was also a professor at the Stanford Law University has a supplementary article and oddly enough he says in that article in effect that once the Court ruled that the First Amendment became applicable to the states, there is no logical reason why the remaining amendments shouldn't be applied to the states, and I'm willing on that point to take him as an authority. Potter Stewart: What are the remaining amendments? Harold Strauch: I beg your pardon? Potter Stewart: What remaining amendments there have been now what 23, 24 Amendments. Harold Strauch: No I'm talking up to the Bill of Rights. I mentioned the eight amendments to the Bill of Right. Potter Stewart: First eight eh. Harold Strauch: I beg your pardon. Potter Stewart: The first eight amendments? Harold Strauch: Yes sir. And that is what Professor Morrison said. I beg your pardon. Speaker: (Inaudible) case. Harold Strauch: I want you to go as far as my particular case is concerned and worry about the other cases in the future as they come up sir. Speaker: You just want to clear. Harold Strauch: I ben your pardon. I'm not willing to be a pioneer beyond reasonable grounds, distances. Now if I may refer to the respondent's brief -- Potter Stewart: Before you get to that, I would -- I just reread the opinion of the Supreme Court of, where was it, Connecticut, Justice King's opinion, and it seems to me that, he cites good many more federal cases and he does state cases. Harold Strauch: Oh yes. Potter Stewart: He cites the Hoffman case four, five times, that's the one you're relying on. Harold Strauch: But I think incorrectly sir. Potter Stewart: And he seems to equate the privilege that you've guaranteed under the Connecticut constitution to the privilege which is guaranteed under federal constitution, he seems to be applying a federal test all the way through here. Harold Strauch: No I just -- Potter Stewart: Maybe incorrectly but -- Harold Strauch: The Court said -- Potter Stewart: I don't really see, I have difficulty in seeing that the -- this big question to which you are addressing yourself is before us at all. Harold Strauch: Well -- Potter Stewart: He cites cases in this court and cases in the United States Courts of Appeal, all the way through in the -- Harold Strauch: I am reasonable. Potter Stewart: (Inaudible) and text be questioned which this witness refused to answer, under those federal tests all the way through the opinion. Harold Strauch: I am reasonable sure that every time a state court is, most of the times the state court is reversed by this Court, the state court has cited federal decisions and nevertheless been overruled. I don't think that's binding on this Court. My impression of that decision is that it's erroneous that it applied rigid state standards which were far greater than the standards that are required in connection with the application of constitutional provisions as set forth in the Ker case, and I think the Ker case is binding more so than the Supreme Court decision of the State of Connecticut that you are referring to at the moment. Speaker: (Inaudible) Harold Strauch: It said the Fifth Amendment was not absorbed by the Fourteenth. It says the Fifth Amendment does not apply as such to state court. Potter Stewart: Well you don't quarrel that, do you? Do you quarrel with that? Harold Strauch: I say it does, that's -- Potter Stewart: Fifth Amendment applies to the state -- Harold Strauch: -- through the Fourteenth that's my whole point -- Potter Stewart: Then read the next sentence. Harold Strauch: However, the Fourteenth Amendment probably, probably does prohibit a state court from so ruling. But they say they are applying constitutional standards and the constitutional decisions and the decisions of this court in applying constitutional standards. And I don't agree with that, because as I said before, and this is my whole point, they -- they applied a rigid high standard as to -- as to whether or not the person was required to testify because on the ground that the testimony couldn't be incriminatory. We say that testimony could be incriminatory and the court should have applied the federal standards in Hoffman and so forth, mainly that if it's merely possible that it will be incriminatory that's sufficient to exclude the answers. Speaker: (Inaudible) Harold Strauch: Well I differ where -- I differ where it says the Fourth Amendment does not apply. I think it applies through the Fourteenth. Now the Fourteenth, in its guarantee of due process, does prohibit from so ruling on the claim as to violate the fundamental concepts of the justice. I agree with it. I merely say it wasn't applied. Speaker: (Inaudible) Harold Strauch: Right, yes and I also -- Speaker: (Inaudible) Harold Strauch: That's right, and I also say that this Court has the power under Ker again, in determining whether or not constitutional standards were properly applied to review the entire case and make its decision based upon its review. Speaker: (Inaudible) Harold Strauch: Yes, but again as I say I disagree with the court because it had no basis at all for concluding that this party was involved purely in this particular misdemeanor and is limiting himself to this particular misdemeanor. He might have committed a misdemeanor up until the day that he was heard before Judge Inglis, at which point the statute of limitation had not told. If I can get in a few minutes I have left to the respondent's brief and if I read it correctly and despite -- was that to stop me sir? No, and despite what, might be said by -- here this morning, it seems to acknowledge the probability that this Court will concede or conclude that the Fifth Amendment applies to the states through the Fourteenth. And this fear was sensed in the amicus brief from the State of California where on Page 2 in the first paragraph, it sort of criticized the Connecticut brief for making this seeming concession. Basically, I think that the, the state of the respondent will argue that if the Fifth Amendment should be held to apply to the states, the state courts apply the constitutional standards in its findings of contempt, and that's the question that you raised Mr. Justice on the ground that the questions were harmless and couldn't incriminate and in any event that he had paid his penalty couldn't be put in double jeopardy and the statute of limitations had to intervene. We don't, we don't concede that the questions were harmless. The investigation was not limited to gambling. It was an investigation of the crime in general. We don't know what crimes the petitioner is less engaged in or whether or not he was engaged in crime at the time the Judge Inglis was taking (Inaudible) The fact is he was a convicted criminal. He was probably like the shoemaker sticking to his last. There is nothing in the record to indicate to the contrary, and there was no obligation upon us to explain whether or not he was involved in any such, in any crime. And I think that the cases that hold -- we don't have to give any -- explain why we don't have to testify as set forth, as I said in the Burt case, in the Mathy case, and in the IUPA case, it says, where it was pointed out that the witness alone would know whether an answer to a particular question might or might not incriminate him and accordingly if the witness should say under oath that his answer would incriminate him, the court can command no other testimonies to the facts. That's a federal standard, that's a standard that should have been applied it seems to me in Connecticut. Now if I have a few minutes left I think I would like to reserve it for a possible rebuttal. Earl Warren: Mr. LaBelle. John D. Labelle: Mr. Chief justice may it please the Court. I would like to talk about the facts for just a moment before we get on with some of these other issues. Chief Justice, former Chief Justice Inglis, was appointed what we call a one man grand jury for purposes of conducting this investigation. That's under the statute 54-47. He is an experienced judge, trial judge for many years, a former Chief Justice who had just been retired and was then State Referee, a man of extreme and very wide experience. This investigation with respect to this case involved a booking operation. When the petitioner was arrested along with two others, they were in an apartment house in Hartford operating what is known in the bookie business as an office. And I know the court is familiar with the booking operation in the office, and in this office they keep the records. They have to have a writer. Speaker: (Inaudible) John D. Labelle: In this instance Malloy was one of the writers along with the two others. They were simply employees of this bookie operations. That's the extent of their involvement. And when they were arrested all of the records of the office were there. He was convicted, Malloy was, and after his conviction and after the statute of limitations of one year had run, he was called before this Grant Jury and asked these questions. Now Malloy had no prior criminal record of any extent, one or two misdemeanor charges involving motor vehicles and one or two involving intoxication. Other than that, no record. He was an old racketeer, he wasn't a gambler in the sense that he was the object of this investigation. He wasn't known as a racketeer or had a reputation as such. He was simply an employee of this operation that was running the booking game. Now when he got before this Judge Inglis, he refused to answer the questions put in the record. Now when he asserted his privilege, the first thing that he did here was not tell Judge Inglis, why he thought he would be incriminated. And to this day, there has not been any indication of what fear of incrimination he had. There has been vague talk here about conspiracies or conspiracy to commit some felony, but not once either in this Court or in the lower court or in the Supreme Court of Connecticut and in argument this morning has anyone said what crimes he was concerned about incriminating himself with. Now that is the first -- Speaker: (Inaudible) you said with regard for the Court? John D. Labelle: Counsel at least or somebody should have informed the Court in some manner and if they worrying about a link in the chain of circumstances counsel could have done it. They could have told Judge Inglis or had his man tell Judge Inglis and the Grand Jury, or he himself in the Court when the contempt was brought had notified the Court what crime that they were concerned about or given the Court some inkling of why he had some fear of incrimination. William J. Brennan, Jr.: Well, (Inaudible), would he have that burden? John D. Labelle: He would had to do the same thing under the Hoffman Rule, of course he would, of course he would. There isn't any Court that's held yet that I know of, that says that he can simply say, I will not answer because I fear incrimination and that's it. That's what's happened here. I don't think there is any rule that I know of been annunciated that says that he doesn't have to give the Court at least some inkling. As Mr. Justice Brennan wrote some years ago, he must given him at least a sense. William J. Brennan, Jr.: You're throwing pillow back at me? John D. Labelle: No, the word was good though [Laughing attempt]. He must at least give the Court some sense of what he fears. William J. Brennan, Jr.: I was a state judge when I wrote that. John D. Labelle: Yes, that's correct Your Honor. Now that's what happened in this case factually. Now the questions are not questions that we're trying to snare this man, it's obvious from the questions that we were trying to find out, who ran this booking operation and who was the one behind this office. Who was he working for, whom he was working for? Now Malloy was not anyone that we needed or wanted or had any reason to try to snare him and his record doesn't indicate any such thing. So that he simply, after he has -- his incrimination had been expurgated by conviction, by the statute of limitations running, said I'm going to answer. And the first time he went into the Grant Jury, by the way he didn't answer anything, he didn't answer any questions. Then Judge Inglis, in his wisdom, said you go out and discuss this with counsel and he continued the case for ten days, and he came back in the second time and he did answer a couple of questions, but other than that he took the same position with respect to these basic questions that were presented the second time. Now counsel had suggested that this Court apply the Fifth Amendment to the states in all its suite, and I don't concede that that is the issue. In our brief, we have said that the pronouncements of this Court make us realize that no state is free to compel incrimination under the Due Process Clause. I think that's a fair statement. 40 -- I beg your pardon Your Honor. Speaker: (Inaudible) John D. Labelle: It's said in your confession cases, it's said in I think all -- Speaker: (Inaudible) John D. Labelle: They are Fourteenth Amendment cases and we're talking about Fourteenth Amendment today, I say that the Fourteenth Amendment requires the states not to incriminate. That doesn't mean necessarily that the Court has to incorporate the Fifth Amendment. I think due process, as required by the states, means that one of the things that the state cannot do any longer, if they ever could, is compel a witness to criminate himself. Speaker: (Inaudible) John D. Labelle: I don't know -- I don't either accept the -- well in Rogers and Richmond case for example where -- Speaker: Coerced confession cases. John D. Labelle: That's correct I think that the coerced confession cases are Fourteenth Amendment cases where the Court has been involved in a fiction. Speaker: (Inaudible) coerced confession cases to the Fifth or -- John D. Labelle: No. Speaker: -- compel it to the states, compelling testimony, absent the employee's confession. John D. Labelle: I'm not saying Your Honor that the Fifth Amendment applies to the states. I am saying that the Due Process Clause of the Fourteenth Amendment requires states not to incriminate witnesses. And I say that because all of us, 48 states have got constitutional provisions with respect to -- Potter Stewart: That's a different reason; that's an entirely different reason. John D. Labelle: Well also, with respect to the Due Process Clause of the Fourteenth Amendment, my position is that that's procedural due process which this Court can look at. I don't claim that this Court doesn't have any jurisdiction here to look at this question. I think that under the Fourteenth Amendment, this Court has the right to examine what we did, with respect to incrimination and to see whether or not due process was given. Now that is the position I take, and I think that basically due process prohibits states to compel a witness to criminate himself. Now we have applied all of those requirements of due process in this case, every one of them. We've followed even, if you will, the Federal standards as set froth in Hoffman, but we're not required to do that as long as we have pro-- as long as we have complied with what is I can consider or what has been called procedural due process that is due under the Fourteenth Amendment that the states are charged with in and off itself. Potter Stewart: Whether or not your Supreme Court of Errors is required to do so, don't you read their opinion as having -- John D. Labelle: Yes. Potter Stewart: -- having -- having tried to follow federal standards? I've just counted it up and they cited the Hoffman case in that opinion more often than any other single case. John D. Labelle: I certainly do and our brief certainly covers that. I think that we did follow the Hoffman rule. Potter Stewart: Whether or not you'd follow it at least they seem to be feel -- bound by those precedents or at least divided by them. John D. Labelle: Judge King in the reference Your Honor made to the last page of the opinion, the last paragraph I believe it is where he said that the question could be looked at as to whether or not he had a fair trial. Again, procedural due process, and in this case our court did follow this procedural due process. Now I don't say that this is an incorporation of the Fifth Amendment into the Fourteenth. You start off with the states being bound by the Fourteenth to give due process in criminal proceedings, and in this instance, the state has done just that. I see no basis for the claim that whatever standard has to be applied that the standard that this Connecticut court applied was any different or lesser than the standards that federal court would have applied under the Hoffman Rule. I think that we have complied with that, take it that. I would have the rest of my time after the luncheon recess. Speaker: (Inaudible) John D. Labelle: Yes, all right. The petitioner has suggested that all of this Court's many cases be overruled because the Fifth Amendment automatically applies to the states, I of course do not agree with that whatsoever, and I see no reason in this case for instance to have anything to do with Twining and New Jersey or the Adamson case. The only thing that in those cases that this Court might need to consider at all is some of the sweeping language which seems say that a state can compel incrimination. It has nothing to do with overruling them, it has nothing to do with this, whether or not the Fifth Amendment is incorporated into the Fourteenth. Insofar states are concerned, the only thing that's in there that could be question whatsoever and that -- by any structure, the imagination might need clarifying is the question of this broad language that a state might compel incrimination. I don't think that that is so under the Fourteenth Amendment. However, there is no reason to overrule any of those decisions. Now with respect to Adamson and Twining, for example, this Court has never said that the issues raised in those cases were issues -- never had to decide those issues because it isn't -- the question has never come up. May it please the Court. The question was raised earlier as to what kind of a contempt this was, and I meant to say that in my initial remarks about the facts that this was a civil contempt. They are held as a civil prisoner and, as Your Honor has remarked, they hold the key to getting out, so that it is not a criminal contempt. Speaker: (Inaudible) John D. Labelle: Yes, he brought a habeas corpus action here, you see what happened was the Judge Inglis, the investigating Grand Juror, didn't have any right to hold him in contempt. It required the state's attorney to bring a proceeding in the Superior Court, a complaint asking that he'd be held in contempt. He then was brought into the Superior Court where a hearing was held on these questions. Then he was held in contempt, put in jail, and he brought a habeas corpus that afternoon. Then on the habeas corpus hearing on the civil side of the court, the same question was gone over as to whether or not he was being properly held as a civil prisoner. Speaker: (Inaudible) John D. Labelle: Habeas corpus is still a proceeding in our state. It's handled on the civil side of the Court. the presentment by the state's attorney for failure to answer the questions was a proceeding in the criminal side of the Superior Court, who was the superior -- criminal side is the one who appointed chief, ex Chief Justice Inglis as the Grand Juror. Speaker: (Inaudible) case rose as an appeal, did it from the -- John D. Labelle: From the habeas corpus, that's correct. So it comes up under the civil side. But again in the habeas corpus and in the contempt proceedings themselves the same questions were gone into so that he had an opportunity here before Judge Inglis to state why he was -- what his fear of incrimination was. He had the opportunity before the criminal side of the court on the complaint for contempt, and he had the opportunity in the habeas corpus hearing, and yet to this day we haven't found out what he was fearing. Now, I would suggest that in this instance it is not a question here as to the nature of a state being free to compel incrimination that is. I think all of the states must abide by their own constitutional requirements and with respect to self-incrimination. The question here is the dimension of that privilege. That is what is involved here. And so far as states are concerned that dimension only applies to their own jurisdiction. In the next case that's going to follow, that issue will be expanded because you get into the question of the immunity that's granted in these different states. I might say right here that in Connecticut we haven't any general immunity statute. We have some immunity statutes that apply to some administrative agencies but insofar as the criminal side the court is concerned, we don't have a general immunity statute. Therefore the test that our court applied here with respect to the burden on the petitioner to tell the court something about his fear is certainly understandable, because we haven't any way of getting any place in Connecticut in an investigating nature, if all he can do is say I assert my privilege and that's it. Now that's conceivable -- it is conceivable for instance in another state where the immunity is granted and granted freely, all they have to do is if he asserts his privilege to grant him the immunity, then I -- how they do it in these other states I'm not certain, my understanding is that they are not concerned so much with any explanation under those circumstances as we might be in Connecticut. But in Connecticut at least we ought to be told certainly by argument at least of counsel because that doesn't incriminate anyone, what the fear is and what crimes that he is worried about being prosecuted for. Speaker: (Inaudible) say that the argument of counsel in determining (Inaudible). John D. Labelle: Yes. Speaker: (Inaudible) John D. Labelle: He doesn't have to tell what the offence is, but I think that there is some burden here on the petitioner to say to the court, I fear incrimination because and give us something that, well, the Court in its judgment and its wisdom can apply. Speaker: (Inaudible) John D. Labelle: No. Speaker: (Inaudible) John D. Labelle: No, he should not of course not, but he cannot remain silent and simply say, I assert the privilege. It requires more than that, and in this instance nothing has been done about that except to say, I fear incrimination and I refuse to answer. And in this case he refused to answer all questions the first time he was there, and then the ones he did answer were very innocuous questions that had nothing to do with the investigation particularly. Speaker: (Inaudible) John D. Labelle: No Your Honor, our conspiracy statute requires us -- of course, you have to conspire to do something, and in this conspiracy, his conspiracy would have been pool selling conspiracy, at least that's all we can find from the circumstances. Speaker: (Inaudible) John D. Labelle: Well, if it was any other conspiracy certainly some inclination ought to have been given, but under the studying of the case all of the facts before the Court, there was nothing to indicate any involvement in anything other than this pool selling employment. Speaker: Well suppose, suppose they have an opportunity to (Inaudible). John D. Labelle: I think under those circumstances if Your Honor please, and this is one of the questions that the Connecticut Supreme Court raised that he made the argument and has made it of this date conspiracy that he was concerned with, but this -- under the circumstances of the case and all of the facts before the Court, this man was not involved in anything only pool selling. Now if the conspiracy was to violate the pool selling statute, that -- statute of limitations for that conspiracy is a misdemeanor also. And there is nothing in this case anyplace to give the Court any inkling that this conspiracy he has been talking about is any conspiracy other than involves a conspiracy to violate the pool selling statute and that is a misdemeanor under the statute of limitations. Speaker: May I ask you what perhaps (Inaudible)? John D. Labelle: That's correct. I recognize that in that type of an investigation that there is more leeway that has to be given to a witness. Insofar as this witness was concerned, he was not interrogated about anything other than this one pool selling operation. In other words this -- the mandate to the Grand Juror to investigate crime covered a lot of areas, but with respect to this defendant, the petitioner in this case, he was only questioned and only involved in this one pool selling matter. Speaker: (Inaudible) John D. Labelle: Yes. Speaker: (Inaudible) John D. Labelle: Yes. Speaker: (Inaudible) John D. Labelle: We have a waiver doctrine and I would say that our doctrine of waiver isn't one that that you can insert at anytime that you want. If you open the door, then you are subject to answering the questions. In this instance, the waiver never came into effect and he -- again, if he had ever told the Court what he feared, any inkling of it, the Court would have certainly taken that into consideration under the circumstances. But here was a man who had absolutely no background of any criminality whatsoever. Speaker: (Inaudible) John D. Labelle: Other than this one instance that we were questioning him about. In other words he hadn't had any prior pool selling record, he didn't have any prior felony convictions, he was not known to be involved in any syndicate or any operation of a bookie nature other than this one for which he had just been convicted. Speaker: (Inaudible) John D. Labelle: He was on probation at that time and had been convicted, it was a little over a year, he had served his sentence. But we never went outside that one conviction and the questions were limited to the day that was arrested. Speaker: (Inaudible) John D. Labelle: Because we were looking to see who he was employed -- whom he was employed by. Speaker: (Inaudible) John D. Labelle: It might have been, but again for information purposes, we might have been glad to know it. Well they may have still been in operation too. We -- Speaker: (Inaudible) John D. Labelle: He was on probation at the time. Presumably not involved in any other illegal activities. Speaker: (Inaudible) John D. Labelle: No, I don't claim that. This question was asked about the single day of his arrest. That's, on the day of his arrest for whom was he working. That's what we wanted to know. And here he was using his privilege to protect a third party. Speaker: (Inaudible) John D. Labelle: Yes, they all had to do with the same arrest, the same day, and I happen to be the one asking the questions and I tried to hold him to the same day for which he had been arrested. Speaker: (Inaudible) John D. Labelle: Yes. It's in the record on page 20. I ask you again Mr. Malloy now, so there will be no misunderstanding of what I want to know, when you were arrested on September 11, 1959 at 600, Asylum Street in Hartford, and the same arrest for which you were convicted in superior court on November 5, 1959 for whom were you working. Speaker: (Inaudible) John D. Labelle: I don't think so specifically Your Honor. Speaker: (Inaudible) John D. Labelle: I would say not. Speaker: (Inaudible) John D. Labelle: I would say not. Speaker: (Inaudible) John D. Labelle: Well I only asked him about a half a dozen, I wasn't getting any place. I asked him all -- there are perhaps 10 or 12 questions here and the second time he answered one or two. For instance, I asked him while he was serving his sentence in jail did he continue to receive his salary or get paid by his employer. He said no, and I asked him if his family had received any help from his employer or anyone while he was in jail. This is on his sentence now for the pool selling conviction we were talking about, and he said no to that. But -- Speaker: (Inaudible) John D. Labelle: No I never claimed that. That isn't in this case. Speaker: (Inaudible) John D. Labelle: Yes. Speaker: (Inaudible) John D. Labelle: Yes, I never claim that in this case and I don't know; it isn't in the case, the waiver is not in. Speaker: (Inaudible) John D. Labelle: Oh yes. Speaker: (Inaudible) John D. Labelle: I asked these questions that are set forth in the record. This is all -- by the way this is all of the testimony with respect to this witness, it's all right here. There wasn't any other and everything is right there. This is the complete transcript of what went on when he was in the -- before Judge Inglis both times. So that we weren't away from this particular one issue, we stayed right on it. Speaker: (Inaudible) John D. Labelle: No I do not. Speaker: I suspect, you are saying (Inaudible). John D. Labelle: That was simply Your Honor to show that in the setting which Judge Inglis was hearing, this man was not a man that there was any publicity about of being in the rackets or being a gambler, there was no information before the Court or the Grand Jury that this man was involved in anything other than his employment as a writer in the office. Speaker: (Inaudible) John D. Labelle: Well I don't care to put it in quite that -- from that point of view, but I think it's a fact that the -- Speaker: But that so far is true. John D. Labelle: It's a circumstance that the Court can take into consideration and I certainly wouldn't say that a man has any less privilege because he has been a good citizen. Speaker: (Inaudible) John D. Labelle: No I simply -- my -- Speaker: (Inaudible) John D. Labelle: I just wanted to say to the Court that it appears from this record that this man was refusing to answer because he was trying to protect third parties, and that is not a matter that the privilege can be used for. Harold Strauch: I think I have only a few minutes and I have several -- I think I have only a few minutes and I have several points I would like to get over very rapidly. In connection with the question that was asked as to whether or not this was criminal or a civil contempt, I would like to point out that in the Boyd versus US case, the phrase -- it said that the phrase in the Fifth Amendment, "In any criminal case", includes civil matters and I think that's implied also in the Mapp case. In connection, one thing I would like to emphasize as an important point of our case is that the lower court, the state court did not use the federal standards and perhaps this might help in explaining why I say that. The lower court which heard the case before it went to Supreme Court said that the questions propounded to the petitioner do not indicate a danger to the petitioner of criminal liability, which is real and appreciable. That is the test in the McCarthy case in Connecticut, in 110 Connecticut 482. And our Supreme Court on page 21 I think it is of the record. No, our Supreme Court in its decision upheld the lower court and it upheld the lower court on the basis of the McCarthy case, and the McCarthy case is predicated upon an old English case known as Regina versus Boyes, Regina versus Boyes in B. & S. 311 of 350, that the danger to the witness must be "real and appreciable", and the Regina and Boyes test was disavowed in Emspak versus United States case in 349 U.S. 190. So that the State Court was not applying the federal constitutional standards as set forth in the Hoffman case and the cases that follow the Hoffman which set up what the federal standards are in instances of this sort. With respect to Malloy, I can't help saying that insofar as his activity is concerned, the only thing that appears in the record is that it was a criminal. There was nothing in the record to indicate that he had any legitimate enterprise of any sort, as a matter of fact there is nothing in the record about what he did except that he was convicted of crime on one occasion. And the other point that -- oh and in connection with the Hoffman case, I would also like to cite the Singleton case, which came at about that year or shortly after it. In the Singleton case, there was no showing by either the defendant or the counsel as to what the crimes are, to which the petitioner was objecting revealing any information about. The defendant remained quiet and the Supreme Court held he was entitled to do so, that was within his privilege. And as to whether or not a witness should say anything at all, is a matter of judgment. You can take the case of Rogers versus U.S. in 340 U.S. 367 decided 1951, where a woman secretary I think of some communist group did reveal that she was the secretary and that she had certain records, and I think that was all that was necessary for the Court to hold that she had waived her immunity. So that Malloy was faced with very a real problem, and the matter of judgment was that you don't say anything because we don't know when we cross the threshold, when answering questions become very dangerous. And one other point that I would like to emphasize that I forgot in my original argument was the basis for my hope that the Mapp and the Ker cases, which applied the Fourth to the state, is a reason for us to believe that the Fifth Amendment should also be applied, is that in connection with the Boyd case, the Bram case, the Weeks case, and even the Feldman case, there was language which said, and in the Ker case, the Mapp cases, there was language which said that the Fourth and Fifth are so intertwined. They supplement one another, that it's utterly illogical to say that the Fourth applies and the Fifth does not apply. So that our argument basically is twofold, one the Fifth applies to the states under the Fourteenth, and secondly that even though the State of Connecticut recognizes that fact, the State of Connecticut did not apply the constitutional standards that it was obliged to apply under the cases of this Court.

Earl Warren: Number 650, John Nicholas, Trustee, the Estate of Beachcomber Motel, Incorporated, Petitioner, versus United States. Mr. Gunn. John H. Gunn: Mr. Chief Justice and members of the Honorable Court. The importance of the matter that we have before you today is reflected by an analysis in the Government's brief with which we hardly concur showing the increase nationally in debtor's relief proceedings. Now, the Government also points out that in, what I compute to be about 60% of those instances, we're referring to the Chapter XI analysis, the arrangement proceedings. The proceeding results or the proceeding has failed and there is a resulting adjudication in bankruptcy with the replacement by the debtor of a creditors and the trustee. The question, therefore, of the case at hand is to what extent is the trustee or stated even more directly, to what extent is the general estate responsible for income taxes withholding taxes that is to say and other taxes, federal taxes which have been collected by the Debtor in Possession dissipated prior to the adjudication not handed over to the creditor's representative. And must the trustee respond on a claim and pay interest on those funds which he did not receive as well as paying the principal of the funds which we concede. And is he subject to penalties if he fails to return? Those are the problems of with which we're faced today. Problem receives a little added emphasis from the fact that in 1952, presumably because of this increase in debtor's reli -- debtors relief provisions and compositions of creditors, Congress changed Section 64 of the Bankruptcy Act. And in changing it, they subordinated the costs and expenses of the abortive debtor's relief provision to those of the liquidating bankruptcy. When the debtor was taken out after adjudication and the creditor's representative, the trustee replaced him. And in essence, these are the facts of the case of John Nicholas versus the United States that were before Your Honors on today decided coincidentally only ten days apart from an opposite decision on a virtually the same set of facts in the Eighth Circuit. In this case there was a voluntary petition by a motel in Miami for an arrangement with its unsecured creditors. For 40 days under court order, this debtor in possession managed its affairs. And then on a petition drawn by creditors, it was adjudicated as its plan could not succeed. It had in fact been dispossessed of the hotel premises. And a trustee was elected. The Government filed its tax claims subsequently. They claimed not only pre-petitioned interest or pre-petitioned taxes. They claimed as well certain taxes which had been withheld, had been collected as cabaret taxes and as unemployment and social security taxes by the Debtor in Possession but never handed over to the trustee. And presumably, used in the operations of the business or otherwise dissipated. Accordingly, when the Trustee in Bankruptcy took over as the record shows, he received nothing in the way of transferred assets. He subsequently was able by certain proceedings to gather together in the State. And now the Government in its tax claim as the principal of these taxes, as to assess the interest to the date that it filed its claim, as accrued interest thereafter up until the date of payment, and as to penalties against this trustee for his failure to make returns as to the Debtor in Possession's tax collection. William J. Brennan, Jr.: Are there any of these come out of the trustees' own pocket or --? John H. Gunn: No sir. William J. Brennan, Jr.: Thank you. John H. Gunn: The point that I first made, this is a fight between the general state and the United States rather than the trustee and the United States. Now sir, our briefs I believe contained more history than we can cover in on your summary calendar. They point out that for about 150 years under the English bankruptcy practice; there was a firm rule that there would be no grant of post-petition interest. That in 1911, Justice Holmes recognized that in Sexton versus Dreyfus and those cases are set out. That there was some confusion in the lower cases which we've discussed, which the Government has cited. But that, the principal of no post-petition interest was memorialized as the word we used in the Saper decision in 1949 where this Court said that for a variety of reasons spelled out in that decision, they were not going to allow on award of post-petition interest on pre-petition tax obligations. We believe that the reasons for the denial of this post-petition interest may merit the Court's attention for a few moments because we believe they are as applicable in the situation at hand as they are in the situation where the Government taxes are not incurred by debtor in possession but were incurred prior to the filing of the arrangement petition. We take strong issue with the Government on this point. First place, these decisions say that delay of distribution in bankruptcy is an act of law. It's not attributable to the fault of a court officer if there's a delay in distribution to the Government of its claim that these delays occur as necessary under the Bankruptcy Act. They say further that for the very practical reason, we must have a cut-off date. There's an 1893 decision by this Court, the Thomas case cited in our brief where it says that the cut-off date as to interest is a necessary incident to the settlement of estates. At some point, we must stop, compute all the obligations and pay them. Now obviously, and for a third reason, if the obligations bear different rates of interest, it's unfair to let that interest accumulate after the petitioner's file. It's unfair to the creditors whose claims bear a smaller rate of interest contractually. If they do not bear a rate of interest but you award a rate of interest under some statute as the Government here appraised then the fellow who suffers is the general creditor who finds that where he thought he had some dividend, where he thought he'd received some return on the money he's lost, in fact he receives nothing because that money is consumed in post-petition interest paid the Government. We do not believe either the Government or the entire class of creditors of which the Government is only one party should receive that advantage over the unsecured creditors, and indeed Justice Black, in the Vanston Bondholders case which we've quoted at some length at various places on our brief says that interest itself is a penalty on creditors. And it's a penalty we submit to the Court without any fault on the creditor's part. They suffered the burden as the question has just indicated, not the trustee from this delay. And then alluding again to the Saper case, the 1949 decision which must constitute the backbone of my argument to Your Honors today, the Saper case pointed out that the Bankruptcy Act sought to equate the Government as a participant in Bankruptcy proceedings with other creditors in the bankruptcy proceedings. That since the Government was a party to them, the Government must abide by the same rules and I submit that the Government, since Your Honors' pronouncement on the Spears case, I believe to be a warning that the Government must protect itself and avail itself from the statutory procedures at its command. And I hope by the time I reserve for closing, I can emphasize that point again if it requires emphasis. At any rate the Saper case said that tax claims were the same as other claims and that there was a pattern of distribution prescribed by the Bankruptcy Act that that pattern of distribution should not be varied by other federal legislation in other fields. Where there was a tendency in all the cases as we have cited them, a great many of the cases to find independent internal revenue regulations and to try to give those equality with or priority over a bankruptcy petition or Bankruptcy Act provision. Now, we submit to Your Honors that since the Saper case which did set up the rule that there'd be no post-petition interest, there has been a constant effort on the part of secured creditors and the Government to emasculate the Saper rule, to try to carve out exceptions to it which should have the effect of eating it up without belaboring those points, they're treated in the brief, but they're the type of situations where the estate proves to be solved then obviously interest should be given, the situation where the security itself produces substantial income. Then in that situation, the creditor who has that security should receive its benefit because the unsecured creditor behind him suffers no loss. We believe that each of those arguments is equally applicable here where the interest that is sought is against the general estate because of the failure of the debtor, its antagonist, we submit, to withhold the monies or return over the monies that it was required by statute to withhold and account for. We believe that the Government in the case at hand and were successful before the Fifth Circuit is attempting to create an exception in which it visits the vicarious liability on an innocent party, the unsecured creditor that stands behind the Government or the tax creditor who stands in the same -- on the same plane with the Government. And we believe that the Government by attempting to create a vicarious liability on that trustee which is the door into the general estate threatens to secure to itself an unwanted advantage, an advantage that it does not need if it tends to its own bankruptcy affairs. And that by doing so, it threatens seriously the whole fabric of bankruptcy administration; a fabric which the Saper case says provides an orderly rule of administration which should not be ordered because of internal revenue statutes which might be held. And we must say to Your Honors, we find nothing that would directly conflict -- Byron R. White: Well, why do you concede the principal there? John H. Gunn: Sir, I -- what principal? Byron R. White: Of the tax. John H. Gunn: Well, we concede the principal of the tax because we believe that -- Byron R. White: I mean as an expense for administration. John H. Gunn: Because sir -- Byron R. White: Why do you concede that the bankruptcy trustee must treat taxes incurred by his predecessors namely the debtor Chapter XI as an expense of his administration? John H. Gunn: Because that bankruptcy statute requires it sir. Byron R. White: And what -- what does it say? John H. Gunn: Section 64(a) in setting up the first priority says there should be first paid out of bankruptcy estates, the costs and expenses of administration. The 1952 Amendment recognizing that we had a case -- that we could have a case in which the debtor relief action would use up all the costs and expenses of administration, there wouldn't be any funds available for anyone who administered a liquidating bankruptcy subordinated the costs and expenses of the abortive debtor relief position to those of the succeeding liquidating bankruptcy, so I'm conceding only what Congress has prescribed in the statute. Byron R. White: Well, I know but you're conceding that -- that your bankruptcy trustee must treat -- must pay as an expense of his administration. John H. Gunn: No sir. Byron R. White: Taxes -- taxes incurred by Chapter XI. John H. Gunn: No sir, I think the word there is his. I can see that he must pay as an expense of administration, as a post-petition administration expense. He must pay the principal of the taxes incurred by the Debtor in Possession. Byron R. White: In a prior -- in a prior Chapter XI -- John H. Gunn: That's right sir because they occur after the filing of the bankruptcy petition. Byron R. White: Well now, you wouldn't -- you wouldn't think for a minute that after there had been a difference here, if the debtor had himself filed that -- if the time for filing a tax return had occurred during the time the debtor has been in possession. And the debtor had filed his return without paying the tax, you would still say that bankruptcy trustee would have to pay that principal, wouldn't you? John H. Gunn: Yes sir, I think either case he has to pay the principal.Our basic argument is the interest which is -- Byron R. White: Well, I understand that but I'm -- John H. Gunn: Because after the election of the trustee, the continuing interest to the date of payment and the penalties against the trustee for not returning it. Byron R. White: Well, do you think the -- well then do you think if the -- do you think that the Trustee in Bankruptcy had an obligation to file a return? John H. Gunn: No sir. I'll deal with that in just a moment when I get to the question of penalties.I too very strongly didn't know sir. Byron R. White: You just -- you mean you only had -- he didn't even have an obligation to pay the tax on time. John H. Gunn: No sir, he never had an obligation to pay the tax until he (Voice Overlap) until all the expenses -- until we knew where all the expenses of administration were. I think he fell in the trap that Your Honor has discerned quite clearly in the King case. He's paying subordinated taxes under 60 -- he's being asked to pay subordinated taxes under Section 64(a) before he pays those which the statute says are prior thereto. I think if he did do that, he might find himself in the same situation as Mr. King, the trustee in the case that I just mentioned Your Honor, which is in the briefs before Your Honor and which held him responsible for failing to pay the Government and when he had paid subordinate creditors. Byron R. White: Well, what's the -- what's to keep you though from -- I know you've already conceded it but what's -- what's really -- would prevent a bankruptcy trustee in position of this trustee from arguing that Chapter XI taxes should be paid in a subsequent straight bankruptcy proceeding only if other pre-petition taxes are paid. John H. Gunn: Well, I think sir that -- Byron R. White: What is that? What provisions of bankruptcy -- John H. Gunn: I believe it might well be argued. I think -- you mean what requires the immediate payment? Byron R. White: No. What requires you're treating this -- the principal of this tax as an administrative expense instead of -- instead of as a pre-petitioned accrued tax obligation? John H. Gunn: Section 64(a) of the Bankruptcy Act, sir. Byron R. White: What does that say? John H. Gunn: It says that -- it's under decisions understated that any expenses incurred subsequent to the filing of the petition in bankruptcy. Byron R. White: Well, I agreed but this -- this was not incurred. This was not incurred after the petition in bankruptcy. Yes, it was. John H. Gunn: It was -- it was incurred subsequent to the filing of the petition for the arrangement which is the petition -- Byron R. White: Well, do you concede then that we have to -- that you have to go back to the -- that the bankruptcy trustee himself has to go back to the original filing date? John H. Gunn: Yes sir, for purposes of paying those subordinated administrative point. What my argument sir and we have -- Byron R. White: And you picked up -- do you pick up all the obligations then that the -- that the Chapter XI trustee or debtor possession had? John H. Gunn: Insofar as the assets are sufficient to pay them after the payment of the expenses in the liquidating bankruptcy, Justice White. William J. Brennan, Jr.: Well, let's see if I understand that you're turning these all into the 64(a) petition of the Chapter XI for that purpose. John H. Gunn: Well sir, I'm saying that since 1952, when this Act was amended, it is our position that there are three classes of creditors rather than two with whom we're dealing this afternoon because we're not talking about wage claims or any of the other classes. We're saying that those claims which arise prior to a petition of any sort for relief under the Bankruptcy Act whether it'd be liquidation, reorganization, or arrangement, are entitled to certain estates. They're entitled to be paid under the fourth priority under Section 64. But insofar as other taxes are incurred subsequent to the filing of the petition where federal jurisdiction attach any petition -- William J. Brennan, Jr.: In this instance of Chapter XI -- John H. Gunn: That's right sir. William J. Brennan, Jr.: Alright. John H. Gunn: Because of the relation back part of Section 378 of the Bankruptcy Act, they are administrative expenses. The question is, since 1952 and we believe the Government overlooked in this situation and the Fifth Circuit overlooked it back that there are two -- there are priority -- there are two priorities within Section 64(a), a priority within a priority as it were by statute. And that is, one, the liq -- the expenses of the liquidating bankruptcy which comes first and this is unequivocally set out. And secondly, insofar as there's money left, then the administrative expenses of the abortive arrangement preceding the adjudication, preceding the liquidating bankruptcy are paid. Now, our position simply is this. We talk about this being an obligation of the trustee but as Your Honors have discerned from this question, it isn't an attempt to fix this on the trustee. This is an attempt to fix this on the general estate and subordinate general creditors take dividends away from them to pay the Government a tax claim that's running. And a tax claim that's running during a period of time when the cases have all said, tax claims cannot run because it's necessary to put a cut-off date to stop -- stop all obligations running so we can (Voice Overlap) distribution. Byron R. White: One of the -- one of the Chapter XI proceeding had lasted long enough for the -- for the debtor to file but not pay the tax and to accrue some interest. And then the tap -- then the -- then the bankruptcy petition had been filed. Then I suppose the interest up to the date of the bankruptcy petition at least would be -- would go along with the principal. John H. Gunn: Sir, with that I have no dispute and I do not dispute you -- that with you here this afternoon nor do I dispute that with the Government this afternoon. I think the interest right up until the date of adjudication should be paid. Our complaint is against interest after the date of adjudication, interest after the election of the trustee, and penalties against this trustee for his failure to report. Now, in this general connection, the Government has, in our judgment, ignored the three-time periods that I've told Your Honor about which are respectively pre-adjudication that that is -- forgive me -- pre-petition and then post-petition but pre-adjudication and then liquidating bankruptcy. They have ignored that and they have been in effect said everything must be pre-petitioned or it must be post-petitioned. And we say to Your Honors simply that this is not the case. We believe that this is the basis of the Fifth Circuit's decision. We believe it to be in serious error because we believe that the effect of this is to put -- to face a trustee in a liquidating bankruptcy within an insoluble dilemma. The first thing, he must stop now when the Government's claim is filed and he must pay it. And if he pays it, without ascertaining that they are liquidating bankruptcy expenses, he's subject to the surcharge we've mentioned. If he fails to pass and delays paying it, he pays interest which comes out of the pocket of his general estate. Now, let me say with respect to the penalties that Your Honors have asked about. In the first place, I consider and I believe that there were several decisions of this Court which say that interest is itself a penalty. The trustee has been penalized because he did not return these taxes. We find the only obligation in the statutes for our trustee to make a tax return to relate to income taxes. We do not find any statutory duty for him to return any taxes on behalf of this defaulting debtor in possession who is, we submit to Your Honors, a violent antagonist of the creditor's man of trustee. And we don't believe that the creditor should be visited in this particular case with these defalcations. We find that the only case which the Government seems to rely on is the Boteler case, a decision of this case. But we find that the Boteler case simply took a trustee who hadn't himself paid some California estate taxes on his own operation. And because he didn't pay them, they penalized him. But this is not our case. The Government seeks to penalize our general estate, our trustee for the shortcomings of his predecessor, debtor in possession. This, we submit, cannot be done. We further submit that the Government's other basis for this is judicial code Section 960 set out in the briefs and that particular section says only that an operating trustee must pay federal and estate taxes. I have held a few moments for rebuttal. Earl Warren: Alright. Mr. Featherston. C. Moxley Featherston: Mr. Chief Justice, may it please the Court. Before answering directly the argument which counsel has made that the Government's position is unfair and clearly inequitable, I think it's important to make very clear the period with which we're dealing the nature and character of the tax since which formed the basis of this dispute and to consider some of the tax collection statutes which are applicable in this circumstance. Now, the Debtor in Possession here operated the business from August 5th, 1958, the date on which the petition was filed, that is the petition for an arrangement to September 17, 1958 when he was adjudicated as bankrupt. The taxes which formed the basis of this dispute were incurred during this period while the Debtor in Possession was operating the business under the provision of the Court. We think this is important because what counsel is actually asking this Court to do is to extend the rule relating to penalties and interests incurred during the prebankruptcy with respect to prebankruptcy claims. He is asking the Court to extend that rule to penalties and interests which are incurred after the bankruptcy occurs, after the business has been placed under the supervision of the Court. Now, the taxes which formed the basis of this dispute fall into four general categories. First, the income tax withholding. The Debtor in Possession employed certain employees and subtracted from their wages, wages which he would otherwise and have to pay them, the amount of the tax -- the income tax which he was supposed to hold. Now, as a result of that withholding, the employees received the credit for the income tax and could in fact have received a refund even though that money never found its way to the treasury department. The same thing is true with respect to the social security taxes. Now as to the cabaret tax, the tax worked like this. The customer went into the cabaret and had a bill, let's say for $20. The statute laid a tax of 20% which meant that $4 was then added to the bill. Now, this $4 never really became any asset of the operator of the cabaret because it was always, if it fell in the place to which it was truly destined, it was always earmarked for the Government. These are the bulk of the taxes which are here in dispute. In addition, there were the employer share of the social security taxes and the unemployment compensation tax. Now, substantial part of the revenue which is collected by the federal government comes from withholding. And very substantial sums are in the hands of men who operate business. Congress accordingly has adopted extraordinary measures to see that these taxes are collected. Now, the basic theory of the collection of these taxes is that the employer or the operator of the business simply serves as a conduit of those taxes to the federal government. Even though he has a conduit, he has made personally liable however and becomes subjected to penalties and interest in appropriate circumstances. The purpose of imposing the personal liability as to permit the use of the summary collection procedures which are applicable with respect to other taxes, but more important, with respect to this controversy which is before the Court. Section 7501 of the Internal Revenue Code provides that any person who collects or withholds a tax and that money has to be paid over to the federal government, the amount of the tax so collected and these were the words of the statute, the amount of the tax so collected or withheld shall be a special fund in trust for the United States. Byron R. White: Well then, why did you file a statement of expenses? Why didn't you file a petition for a turnover where there is a declamation particularly or something like that? C. Moxley Featherston: There is the possibility, Mr. Justice White, that there were no funds available to be turned over at that particular time. They had filed the -- there were prebankruptcy taxes of course. Byron R. White: But you don't mean to tell me that your -- that your trust there disappears because there's commingling. C. Moxley Featherston: It does not. During the period of bankruptcy there is a distinction between the period that the business has operated under the supervision of the Court and the period in which it is not. The cases upheld that where the business is in the hands of the private individual, is not operated under the supervision of the Court, it is necessary to trace the trustee -- Byron R. White: This means you're bringing us here though under your own administration expense theory. C. Moxley Featherston: Yes. Byron R. White: And that's what it's up here on and I don't see how you can -- if you wanted to litigate it on another basis, you ought to go ahead and litigate it on then. C. Moxley Featherston: Your Honors we're not contending that we're entitled to the -- to the interest and penalties here as a trust fund. That is not our position. I point this trust fund out to you to point it out that the -- that the Debtor in Possession was actually using money which belonged to the United States during this period. Byron R. White: Well, what's that -- what does that have to do with priority here though? C. Moxley Featherston: It has -- it has to do with priority because borrowed funds during the period that a debtor is in possession are funds on which the Debtor in Possession ordinarily has to pay interest. And if those directed to his -- to the contention which counsel has advanced to the effect that there should be no post-petition interest because during the -- the statute specifically provides that the Court, the Bankruptcy Court may authorize the borrowing of money and when the money is borrowed, it's necessary of course to pay interest. And so the idea of paying interest following a petition in bankruptcy is not as far as his counsel would have us -- have us believe. Now we believe that the answer to the question which is before the Court has been given by Congress in very explicit terms. Section 960 of the Judicial Code provides that any officers or agents conducting any business under authority of the United States Court shall be subject to our federal state and local taxes applicable to such business to the same extent as if it were conducted by an individual or corporation. Now, this statute was a subject to the decision written by this Court in 1941 in the case of Boteler versus Ingels which came out of California. In this case, the State of California claimed a 100% penalty against the Trustee in Bankruptcy who is engaged in liquidating the assets of a bankrupt corporation. The bankrupt corporation had been engaged in the operating of a dairy. It operated trucks. The state license fee was due on January 1st, 1937. It was not paid. The trucks were sold on February 27th, 1937. The State of California claimed a 100% penalty because those license fees had not been paid on time. The trustee offered the State the amount of the registration fees at the time the trucks were sold. The State insisted upon the penalty and this Court upheld the imposition of the penalty. The trustee there made precisely the same argument which the trustee is making here, namely, that penalties against prebankrupt claims were not allowable. Therefore, these claims were not allowable. This Court rejected that contention and held at Section 57(j) of the Bankruptcy Act did not prevent the imposition of penalties against the Trustee in Bankruptcy. The Court with respect to Section 960 says that Congress has here declared with vigor and clarity that a trustee who operates a business must do so subject to the state tax the same as it had business who were owned by an individual or corporation. Now, this -- this has been a landmark decision in the bankruptcy area. It has never been questioned. We feel that it controls here. The standard is this. If a private individual or corporation is subject to the tax, then the trustee operating the business would be subject to the tax. Now, counsel says that the trustee here did not operate the business, but the Debtor in Possession did operate the business and the Debtor in Possession is an officer of the Court. The debtor in possession is an agent of the Court, he files clearly within this statute. Byron R. White: Well, nobody did really disputes you that if -- if the debtor had gone on operating the business and hadn't paid his taxes -- paid these taxes that it would have to pay interest. The real question is the -- that there is a straight bankruptcy that intervenes at some point. C. Moxley Featherston: Yes, Your Honor and with respect to that -- Byron R. White: Well, by the way, could you tell me the provision in the Code, are there any, or the Bankruptcy Act which imposes on the bankruptcy trustee. The obligation to file a tax return for a debtor in possession -- C. Moxley Featherston: Your Honor -- Byron R. White: -- and incurred the taxes but which were not due or payable until after a bankruptcy petition had intervened. C. Moxley Featherston: Your Honor please, there is no provision in the Bankruptcy Act specifically on that point. Byron R. White: Well, how about -- C. Moxley Featherston: We -- Byron R. White: -- the internal revenue law? C. Moxley Featherston: In the Internal Revenue Code, it say -- it's our position that Section 6011 which specifically provides that a person who is liable for a tax shall file a return. And as we understand the Bankruptcy Act, it makes the trustee who succeeds a debtor in possession liable for the tax. Section 342 of the Bankruptcy Act for example, says that the Debtor in Possession has title and exercises the power of a trustee, and is subject to all times of the control of the Court and Section 302 provides that when a bankruptcy proceeding follows an arrangement proceeding or a debtor in possession, the date of the adjudication is related back to the date of the filing of the petition. So you must view it from the time that the petition is filed in the Bankruptcy Act. Byron R. White: So you say that the -- C. Moxley Featherston: Bankruptcy proceeding. Byron R. White: You say the bankruptcy trustee inherited the obligation to pay the tax and to file a return. C. Moxley Featherston: That is correct, Your Honor. That is correct. William J. Brennan, Jr.: Well, I'm very explicit though with -- C. Moxley Featherston: It -- by adding one more section of the Bankruptcy Act, if I may, to this presentation, Section 3782 provide that upon the entry of an order that the bankruptcy shall be proceeded with, the proceedings shall be conducted so far as possible in the same manner and with the light effect as if a voluntary petition for adjudication had been filed and a decree of adjudication had been entered on the date when the bankruptcy petition was filed. So -- Hugo L. Black: Is that published in your brief? C. Moxley Featherston: Yes, sir, I -- Hugo L. Black: Is that under your brief? C. Moxley Featherston: 3782, yes sir. It's -- it's on page 30 of the appendix, sir. Now, the text writers and the decisions of the Court emphasized over and over again that where you have a bankruptcy trustee exceeding -- and a debtor in possession arrangement that there is no break in the continuity -- Byron R. White: Well, I might that even that just gets you though, that just gets you to the point to ensure the bankruptcy trustee owes the tax. He owes that principal of the tax then he has to pay it. And that's conceded by the other side. And -- but what's really an issue here is -- was when do they have to pay it and in what circumstance?Do you -- do you agree that -- do you agree that there are two categories of administration expenses under 64(a) or not? C. Moxley Featherston: Your Honor, this is a -- that Section 64(a) sets up a sub-priority as we understand you to cover liquidation expenses. But that has nothing whatever to do with the question as we see it as to whether there is a liability for interest. This went in to the -- Byron R. White: Well, just a minute. Now, let's just assume for the moment that if you were the -- bankruptcy trustee has to pay the tax, the principal of the tax, but he only has to pay it as an administration of expense when in as administration expenses are normally paid. And he finds when he takes over as trustee, sure, I owe a tax. And under 64(a), I am liable to pay it as an expense of administration. When as and if, administrative expenses are allowed and paid, and that doesn't mean, and that this principal of this tax would be subordinate to my own administration expenses, and hence, I cannot pay it on January 20 or whatever date it was, because if I pay it now, I could never pay the priority administrative -- administration expenses. C. Moxley Featherston: Well, Mr. Justice White, I think that that approach does violence to the concept that this is one continuous administration. Byron R. White: Well, I don't think it does violence to it at all. It serves it. C. Moxley Featherston: Well I -- if the claim which was in question -- Byron R. White: He accepts the claim, the trustee says I've -- we're all then proceeding here, I accept and I -- and I have to pay as an expense for administration the tax that is already approved. C. Moxley Featherston: Suppose that the -- Byron R. White: And you want to go and say -- and not only that but you have to pay it on January 20 and file a return or else. C. Moxley Featherston: Certainly there is no problem with filing the return. That creates no obligation, no problem for the Trustee in Bankruptcy. The law says that the return shall be filed -- Byron R. White: But it doesn't unless you don't. C. Moxley Featherston: And -- Byron R. White: But it doesn't unless you don't file it. C. Moxley Featherston: And so if -- the return can be filed without creating a hardship to anyone. Byron R. White: Yes, but you wouldn't -- if he doesn't -- if he isn't liable to pay the tax on that date, you really wouldn't care whether he filed a return on it. C. Moxley Featherston: Well, it's our view that you -- Byron R. White: That you want to go to the next step, don't you? C. Moxley Featherston: It's our view that he must pay the tax. Now, of course there are situations where he doesn't have assets to pay the tax. Byron R. White: Well, how about the situation where there's -- where there is only X dollars in the estate and the prebankruptcy petition, the Chapter XI tax obligation equals the amount of the assets. Now, what should the bankruptcy trustee should do to -- trustee do? Pay it on January 20 and then have no funds for priority administration service? C. Moxley Featherston: For the immediate term about the liquidation expenses, in those circumstances, he is in exactly the same position as he would be with respect to any other liability incurred by the Debtor in Possession which bears interest. If he didn't have the money to pay it, he wouldn't pay it, of course, except that (Voice Overlap) except with respect to the trust fund. Byron R. White: That doesn't -- that doesn't get you by the penalty, does it? C. Moxley Featherston: Except with respect to the trust fund. The penalty is attributable or the penalty is due only if he fails to file a return. Now, he doesn't have to pay the tax when he files a return. And so -- Byron R. White: Oh no, or only at the expense of that same interest. C. Moxley Featherston: That's right. That's correct. But he can -- that the penalty is laid for failing to file the return. The interest is applicable if he does not pay the tax on time. Now, bear in mind that these are -- these are trust funds also. These are -- these are monies which belong to the United States. Byron R. White: When you say he had been on position that he would be involved with respect to any other obligation of the Chapter XI proceeding which bears interest. C. Moxley Featherston: Yes sir. Byron R. White: Well, I'm not so -- if he were, what he would do is subordinate. He would subordinate the Chapter XI administrative expenses to the expenses of the bankruptcy petition -- proceeding. C. Moxley Featherston: If we're correct, of course -- Byron R. White: If there's not enough to pay both, who gets paid first? C. Moxley Featherston: If there's not enough to pay them both, if we're correct with respect to the trust fund theory, then those money has never been -- Byron R. White: Well -- wait a minute now, you can't go back on that now. Let's talk about just administrative expenses. C. Moxley Featherston: Alright. Then the expenses of liquidation would have to come first. If -- the trust fund, it doesn't apply. Byron R. White: They wouldn't come first though if he had already paid them out on January 20 when they were due according to you. You would just reverse the priorities that were set up in 64(a). C. Moxley Featherston: Well, if he have paid them out, if he -- if the Trustee in Bankruptcy had paid more, then the share in which the Government was entitled under the first priority -- Byron R. White: Yes. C. Moxley Featherston: -- it would be possible for him to apply for a return to the Internal Revenue Service. And it's my understanding that this is a practice of the Internal Revenue Service to return money where more than the amount when it is received more than the amount to which it is entitled under the first priority. Certainly, if any creditor or any debtor can rely upon anybody, returning money, it should be possible to get it back from the United States. It doesn't -- you don't run the risk of bankruptcy in these circumstances and the inability to get it back on account of the inability to pay. We think that Your Honor if you -- I think that the approach that you're taking completely overlooks the continuing -- continuity which exists between the Debtor in Possession and the trustee. Byron R. White: I find -- I just don't agree with you. I think if it accepts it, he walks right up to you and says, “I know that Chapter XI proceeding owe some taxes and I'm going to pay him as an expense of the administration according to the priority that they're given.” That's what he says and I don't know -- now how do you -- what do you mean that ignores the continuity? C. Moxley Featherston: Well, if you -- if that is the position then I think that I've answered your question if there is and not enough, if we're correct with respect to the trust funds and the Government is entitled with the trust funds, if we're incorrect with respect to that and it is not in fact a trust, then the liquidation expense in the succeeding bankruptcy would come first. I think that that is quite clear. Abe Fortas: Well, the cabaret -- C. Moxley Featherston: But that's not what we have here if, Your Honor please. Here, the record shows that there's $8,000 in the bank. Abe Fortas: Yes. C. Moxley Featherston: And I suppose that it's in a deposit in drawing money, drawing interest itself which eventually will increase the amount which may be distributed to the general creditors or which may -- Byron R. White: What if you were a bankruptcy trustee, and that you had the basic problem of it, what is the effect to pay the tax now and perhaps run out of money before you pay the priority administrative expenses and have to rely on getting the money back to the United States.And do you think you might be subject to some surcharge yourself as trustee? C. Moxley Featherston: If -- Byron R. White: If I were a creditor for other administrative expenses, I wouldn't like that much because you'd already spend my money on somebody that I have priority over. C. Moxley Featherston: One way to -- one way to do that, of course, would be to have a condition specifically stated in the order authorizing the payment to the effect that it is paid to the Internal Revenue Service on condition that it will be returned. The revenue service maintains the expense accounts in many circumstances where there have been conditional payments of taxes. So I think that the -- the risk of paying the Government would be just about as little as it would be possible to have any situation like that. We think that if you look at the Boteler versus Ingels that you have here a standard which has been laid down by this Court, by Congress to the effect that in determining whether or not a liability is to be paid and when it is to be paid, you treat a trustee in bankruptcy even though he succeeds a debtor in possession in exactly the same light as you would that if it were a private individual or corporation. Now, as to the Saper case relied upon so heavily by counsel, let me point out that this case involved claims which were incurred prior to the adjudication of bankruptcy. An interest was claimed by the Government on that. The Court there pointed out that it was historical. That there was a cut-off point and that after the cut-off point interest it was not paid on any claims which were outstanding against a bankrupt. And the Court explained that it would be unfair because of the varying rates of interest to allow interest against creditors in these circumstances. The Court was concerned with the effect of the 1926 and 1938 Acts amending the Bankruptcy Act. Under the Bankruptcy Act of 1898, taxes were given an absolute priority and they carried interest until they were paid. Under the 1926 Act, the taxes were concerned to a fourth priority. The Chandler Act of 1938 provided in Section 57(n) that the Government should be required to file a proof of claim just like other debtors. The Court concluded that the purpose of this legislation was to assimilate tax debts to other debts, and prebankruptcy interest was not allowable on other debts therefore it was not allowable on tax debts. But it's interesting to note that the opinion says nothing about Section 960. It says nothing about Boteler versus Ingels. It says nothing about the administration expense either. We believe that it has absolutely no applicability when you start dealing with the administration expenses. The reasoning of the opinion simply doesn't apply. We contend that it would be inequitable and unfair to allow a trustee in bankruptcy as this one has apparently done, to keep the money which under the trust fund theory actually belongs to the United States if -- Byron R. White: Mr. Featherston, you ask me this, let's assume that in Chapter XI proceeding, the Debtor in Possession incurs an obligation for this body under an invoice that says that this is not paid when due, it will draw 6% interest and it's due 30 days after the invoice. And before the 30 days is up, there is a straight bankruptcy if there's adjudication. And the bankruptcy trustee says, “Well, here I owed for this lumber,” or whatever it was, then that, “as a second class administration expense.” And he treats this as such but the claimant filed a statement of expenses and he wants interest. He wants that at 6% interest on that post-bankruptcy petition interest. First sought to the terms of the invoice, what's the answer? C. Moxley Featherston: It depends upon whether he has obtained the authority of the Court to carry on the business at this time. Byron R. White: Well, this was at Chapter XI. C. Moxley Featherston: Well he had -- if the Court outlines the circumstances in which the -- Byron R. White: Alright. C. Moxley Featherston: And the conditions under which the Debtor in Possession may carry on his business, he's under the supervision or -- Byron R. White: Alright, let's just -- let's just assume that the obligations to pay that the -- the lumber -- the purchasing of the lumber was authorized, and the terms were authorized by the Court, namely, if not paid when due it would draws 6% interest? C. Moxley Featherston: It withdraws 6% interest. Byron R. White: Right on -- right on through the bankruptcy. C. Moxley Featherston: Yes sir. You say that -- Byron R. White: Well, you have to say that I suppose. C. Moxley Featherston: Yes, well -- Byron R. White: Don't you? C. Moxley Featherston: I think it's undoubtedly true. How else -- who would bar -- who would lend money to a trustee in bankruptcy or debtor in possession unless he's going to draw interest? The interest is tremendously important if the -- if the man is to be rehabilitated. And the interest is not at all far into the concept of a debtor in possession or a trustee in bankruptcy. Byron R. White: But you -- what you're really getting at is you're not -- there's no basis for distinguishing the private claim from the Government's tax claims in this regard. C. Moxley Featherston: No sir, we're not -- we're not making any special claim whatever on behalf of the Government. We're saying that the Government is entitled to equal treatment that -- that the money which has been used really belongs to the Government. Byron R. White: What if the -- now just remember that the -- that this straight bankruptcy intervenes in this 30-day invoice. And the Trustee in Bankruptcy pays the invoice when it's due. Well, how about -- is he entitled to do that? C. Moxley Featherston: Here again, it would depend upon the terms and conditions specified on the report. Assuming that they are not -- Byron R. White: Excuse me, you can't get me this time with that because all the Court did was -- all the Court did was approve the terms of the contract which was payment 30 days hence with 6% interest afterwards. C. Moxley Featherston: Then it -- Byron R. White: That's all there is. C. Moxley Featherston: Then it would be an administration expense on the Debtor in Possession. Byron R. White: That's right. C. Moxley Featherston: The liquidation expenses would come ahead of that. Byron R. White: Well I know but I just want to ask you that. Can he pay it when it comes due? C. Moxley Featherston: Yes, I would think so. Byron R. White: And then why are you getting it back in that private creditor? C. Moxley Featherston: Well, there are proceedings which are brought in connection with the recovery of excessive funds. I'm sure that the risk is far greater in connection with the private creditor. Byron R. White: Could you think the Trustee in Bankruptcy would be entitled to pay that on and would have to do these the payment and indeed they have to do these payments. C. Moxley Featherston: Well, I think that preterm would require him to wait and see whether or not -- whether or not, there would be sufficient assets that you continue to accrue (Voice Overlap) yes sir, interest would continue to accrue. William J. Brennan, Jr.: There's really a dilemma. Byron R. White: This really is a -- really a -- William J. Brennan, Jr.: It's barred. C. Moxley Featherston: This is their product. It is having barred with funds in the first place. Byron R. White: He didn't. C. Moxley Featherston: So it's our conclusion that the Fifth Circuit was correct in the decision which it made. Earl Warren: Mr. Gunn. John H. Gunn: Sir, I'll be very brief. I do not believe that this trustee could safely pay the money on the administrative long that had been made with the Debtor in Possession period. I do not believe that in the conventional situation absent some untested expressed priority increasing language, the lender in a debtor in possession situation can consider himself protected on parity with liquidating creditors in the liquidating bankruptcy. Further, I say to Mr. Justice White who I believe asked the question on Mr. Featherston whether or not a turnover order could have been brought and a proof of claim framed along the line of this were trust fund to have the funds turned over. Mr. Featherston's answer, as I recall it, was that it may very well have been possible that there was no money there at that time. And I think if Your Honors will look at the record you will see that the government claim was filed in 1963 and that from 1961 on the trustee had in his possession the $8,842.13 that Mr. Featherston spoke to Your Honors about. That's at page 18. Byron R. White: Yes. But what's you're answer to Mr. Featherston of this question, what banker or what lender in his right mind would ever lend a dollar to an operating trustee under Chapter X or Chapter XI situation if all that has to happen was a bankruptcy to intervene and can have a -- and he would never reflect another dollar of interest, who would ever done that? John H. Gunn: None sir, I believe -- Byron R. White: You wouldn't, would you? John H. Gunn: No sir. And I'm going to say so that I have advised lenders who have done so with disasters consequences. I would not do it. Byron R. White: What you've been saying is that -- or what you're really saying is that you're just not going to have chapter -- effective Chapter X and Chapter XI borrowing that for -- John H. Gunn: No sir, I believe it can be done in one of two ways. And I certainly (Voice Overlap) it's even the point at hand. It can be done by a collateralizing instrument with the Court approving and so that the creditor has security to face the liquidating bankruptcy. Byron R. White: But that doesn't solve the interest. John H. Gunn: Well sir -- Byron R. White: Just giving collateral doesn't solve the interest. John H. Gunn: They will safeguard him on his principal. And I have -- Byron R. White: Well, it's on the list, it's on the other. I don't -- now talking about his principal. I'm talking about if he'd be able to earn something from his money. John H. Gunn: I doubt seriously that there is an effective way to do it. Secondly, I will say to Your Honor that -- I understand a little bit quite clear that these loans, these pre -- this debtor possession loans must be confirmed, must be covered and approved in the order of confirmation to enable them to stand up in subsequent proceedings. I believe the Bankruptcy Act were firmly ample. That is not in the briefs either. Byron R. White: Yes, but the court approval of a -- of any of these transactions wouldn't be an answer to you -- wouldn't give you any answer of -- that's all you have to have you move this case. John H. Gunn: No sir, I don't say that. I say that this man is not -- I'm apprehensive that this man jeopardizes the loan itself in a debtor in possession situation because he can only recover back in aliquot portion of what remained after the liquidating bankruptcy expenses are paid. I say the very loan itself is peerless. Then I say that interest is a matter of second regard there. And yes indeed, I believe that unless there's a court order collateralizing this man and certainly assuring that if he's interested up until the date of adjudication or confirmation whichever occurs and after working the case of confirmation, that the loan is very risky. Now, may I say so that I didn't believe that the trust fund argument was going to come up because I understood the Government to say that they were abandoning. Clearly, the trust fund argument has no application or whatsoever to interest collection. And it has no application whatsoever to penalty funds. And I don't think if there's no raise involved or if the raise has been dissipated, that there's any possibility of it applying to the situations that we're concerned with here. I want -- but my last point to say that the Boteler case clearly involves the case where the trustee himself operated the vehicles on the highway of California. It did not involve a situation where the trustee had to respond for the Debtor in Possessions operating the vehicles on the California highways. I think in fact this California statute has contrasted with the federal statute makes no difference. Now lastly, may I say that it is my hope or our hope in presenting this case that we can encourage the Government which is deriving considerable revenue from bankruptcy situations to be in and to start in this situation so that they are participants when the question of loans or advances or payments on tax accounts can be made so that they can ask the referee to compel the trust -- to compel the Debtor in Possession to post an adequate indemnity bond to prevent just what has occurred here. They can ask the trustee for payment and if he refuses and there's money available ask the referee for an order directing his payments then and seek the relief at that time. I do not believe the Government having great statutory privileges in this situation can sit back, rest on their position, and subsequently seek to penalize the general estate. And we submit to those reasons the Fifth Circuit should be reversed.

Warren E. Burger: We will hear arguments next in Number 128, Diaz against Carter. Mr. Morehead, you may proceed. John F. Morehead: Mr. Chief Justice and may it please the Court. My name is John Morehead, and I am here on behalf of the Democratic Party of the State of Texas. This case involves a constitutionality of political party filing fees as an absolute prerequisite to getting on the primary ballot. This is an appeal from a duly constituted three-judged Court. The Court below held that filing fees violate the First Amendment, the Due Process Clause and the Equal Protection Clause of the Fourteenth Amendment. When used either as a revenue collecting device or when made an absolute requirement in order to get on the ballot. There were intervenors in this case who desired to vote for the candidates who did not have the filing fee. Judge Taylor writing for the three-judge Court decided that since the intervenors wanted to vote for these particular candidates that this was really a voter’s rights case, and that therefore, in order for the State to sustain its laws, we had to meet the burden of showing a compelling State interest. Our position is that the primary question before this Court, is whether or not the traditional rational relation test of the Fourteenth Amendment applies to this factual situation or whether or not the State must show a compelling State interest in order to sustain its laws. To begin with, let me say that I consider the issues involved in a nominating primary or political party, to be different from those issues which are involved in a general election. The reasoning of Mr. Justice Stewart in Turner against Fouche, I think that is the correct pronunciation, seems to me to indicate that a filing fee is an absolute prerequisite to stand for office in a general election would amount to invidious discrimination. The first question to be decided here today is whether or not the primary should be treated exactly like a general election. There is language in the 1944 case, Smith against Allwright with which Mr. Justice Marshall is very familiar, which indicates that the answer to my question is yes, and Smith, Mr. Justice Reed said, when primaries became a part of the machinery for choosing officials, State and National as they have here, the same test to determine the character of discrimination as a abridgment should be applied to the primary as are applied to the general election. The Court in Smith was talking about a State statute which fenced off the rights of otherwise qualified black voters to participate in the democratic primary. Since the decision of this Court in Smith, many cases have came before this Court which involved both voter rights and candidate rights. The issues and problems have been definitionally refined to the extent that I think that if Smith were to come before this Court today, I believe that this Court would probably, would obviously reach the same result, but would probably use a little bit different wording than it was used in Smith. I feel like that it would be much more similar to, for example the case of Kramer versus the Union Free School District. In order to get an accurate perspective of the issues in this case, a brief sketch of how Texas election systems work will be helpful to the Court. Primaries are held in May, and under the laws as it exists today, the payment of the fee is an absolute requirement to get on the ballot, no write-ins at all are permitted on the primary ballot. In November, the election is free, no fees are charged at all in the State of Texas. Warren E. Burger: Who is eligible to vote on the primary election? John F. Morehead: Everyone. You can only vote, and either there is a law which says you can only vote in a Democratic primary or in Republican primary, but all qualified voters are eligible to vote in a primary election. Warren E. Burger: In one way or the other? John F. Morehead: That is right. Warren E. Burger: They do not have to show anything about their party affiliation. John F. Morehead: No sir, they do not. At the top of the ballot is printed the words which say that I pledge to support the nominees, but of course no way that could ever be imposed. And also in our November election, we have a much, much easier method for independent candidates or independent parties to get on the ballot then the Court was faced with in the recent case of Jenness against Fortson, there, this Court held that 5% was alright. In Texas, it is 1% of the people for State wide election, and for local elections, it is also 1% except there is an absolute maximum, it cannot ever have to have more than 500 signatures in order to get on the November ballot. And so, as the Court is aware, this is a consolidated case involving three different candidates who desire to get on the election. The two local candidates, the one for County Judge in Fort Worth and the one for County Commissioner out in El Paso, both of which counties have populations in excess of 300,000 people only needed 500 people on a petition in order to get on the November ballot. We think that a primary -- Speaker: Excuse me. Any other substantial limitations or requirements with respect to the getting out of ballot by petition. Do the signers have to be people who have not voted in either primary for example? John F. Morehead: No. You just get 1% of the people that want to support an independent candidate. Speaker: And by 1% of the people, you mean 1% of the eligible voters? John F. Morehead: 1% of eligible voters, not 1% of the people that voted in the last election, but 1% of the eligible voters. Now, the state thinks that a political primary is an extension of the right to vote, similar to which this Court was faced in the McDonald case involving the absentee ballot for the inmates of the Cook County prison. In a primary, you get to vote a second time, not only do you get to vote in November, but you also get an opportunity to vote in May. And we therefore submit that this is an extension as also you can see that a candidate gets the right to run twice. For example, Mary Lindsay lost in the Republican Primary for the Mayor of New York and was able to come back as an independent in November and still win the election. We submit that the footnote in Kramer by Mr. Chief Justice Warren, which points out the distinction between fencing off case as happened in Kramer, where the man was not eligible to vote at all, and the type of case that you have in McDonald, which is an extension of the voting rights is a distinction which this Court should apply in this case, and that the three-judge Court when they applied the rational relation test, I mean, when they applied the compelling State interest test to the laws of the State of Texas, just simply used the wrong test and that therefore, if it were not for the press of the fact that we have new primaries coming up in 1972 and new deadlines to meet that the proper disposition of this case is really a remand to the three-judge Court to apply the proper test to the Texas laws. We submit of course that the rational relation test is the one which this Court should use. Now, even applying a rational relation test, we are still faced with the problem of does this filing fee as an absolute requirement to get on a primary ballot, which is a part of the election process constitute invidious discrimination. If the rational relation test applies, then we submit that the Court could look, should look to the other side of the question, and what purposes does the fee serve. The fee serves two purposes to the State of Texas. First, it serves the purpose of regulating the ballot and secondly, it serves the purpose of financing the actual cost of the election itself. In other words, the candidates pay all the cost of printing of the ballots, paying the voting officials, all of the other incidental things, renting a place for use of the public schools, most of the time to hold the elections in, getting the pencils, renting the voting machines from the county and all of these matters. This is taxed to the candidates, and not to the states. On the face of this, both of these reasons would appear legitimate, but we still must look to the question of whether they have the effect of classifying an effectually excluding from the electoral process, people who are unable to pay for the fee. Speaker: Mr. Morehead, why would you not do that on a general election too? John F. Morehead: I am sorry, I do not understand the question. Speaker: Why would you not split the cost of the general election among the candidates who are on the ballot of the general election? John F. Morehead: To me, inherent in our constitution, both the United States Constitution and the State Constitution, we have an elective process, that is the way we select. Our public officials is through election. The ultimate election since that is the way we are going to run our Government; it seems to me must be borne, the cost of that must be borne by the state. And that someone who is unable to pay the fee there Mr. Justice, obviously must have the opportunity to stand for ultimate election, and it might be a legitimate purpose to have finance it that way, but you certainly could not exclude someone from a general election in November because of his inability to pay this fee. Speaker: All I am saying is, is not your argument equally applicable to the primary? How do you differentiate to the primary and the general election? When you argue this way and in addition you say that the primary is an extension of the general. John F. Morehead: Well, it seems to me that, first we need to look historically at the problem of the primaries. Primaries worked there when we first started holding elections in this country and as I understand it, some states still nominate through, through convention as opposed to through primary, and the fact that someone is unable to get on the ballot in the primary election, does not necessarily mean that he cannot get elected, whereas if he is unable to get on the ballot in November, the door is closed, he is foreclosed of any possibility for election. Does that respond sir? That is the response I have. Speaker: Well, that is the only one I can think of too. John F. Morehead: I have been thinking on the problem instead of the attack. Warren E. Burger: If the costs were a great concern, I suppose the cost of the general election is substantially more than the cost of the primary in terms of? John F. Morehead: In terms of total cost, it is not sir. The reason being that in Texas we hold two primary elections, and only one general election and therefore you got to have two sets of officials, and if you are going to hold them in different places, and two sets of ballot boxes for example or two sets of voting machines, where as in the general election, you do not have to hold one of these. One of the problems which I think needs to be considered if the rational relation test does apply, what are the alternatives? Speaker: What was the District Court’s excuse for applying a more strict test, that it is the base it is holding on the first Amendment? John F. Morehead: Yes sir. Speaker: Do you challenge the holding that the First Amendment is relevant, it protects the right to run for a State office? John F. Morehead: Not the ultimate right to run, no sir, I do not think. I mean, I do think the First Amendment does protect the ultimate right to run for a State office. Speaker: Are there cases like that here? John F. Morehead: Not that I have seen, but it does an abstract proposition. I would think that that the Privileges and Immunities Clause would get the First Amendment back in and apply into the states on that, I am saying that correctly. What the three-judge Court based their reasoning on sir, was this, they said -- Speaker: Well, I did not understand that, if I understand what it is, if they tell you about the First Amendment, was it not. John F. Morehead: Right, they said that this was a voter right question, since voters wanted to vote for a particular candidate that therefore this was a voter question and not a candidate question, and that therefore the right to speak as vote. Speaker: Well, the right to vote on state election protected by the First Amendment? John F. Morehead: I would have thought that it probably was. Speaker: The Federal right to vote under the First Amendment in State election? John F. Morehead: I just have to be frank and say that I do not know the answer to that question. On the first question, I would think so, but I must plead ignorance to that. If we want to find this another way to regulate the size of our primary ballot other than fees, we are reduced ultimately I think to a petition which to me, in other words you have to show some sort of modicrum of support in order to get on the primary ballot because otherwise, you face the very real problem of 500 people filing for the office of Governor of the State of Texas, that it is not quite the same problem as Mr. Justice Black said in Williams against Rhodes, there he talked about the theoretical possibility of the proliferation, if I can get all those words, either political parties and I think that the theoretical possibility of proliferation of candidates is a much more real problem than the possibility of having a whole lot of political parties. Potter Stewart: Other States handled this problem without requiring the strong and large fees, do they not? John F. Morehead: Yes sir, they do. Potter Stewart: By requiring a certain number of signatures on a petition or by -- John F. Morehead: Some do it by petition, others have just not ever met the problem. The most serious situation I think arose in the State of Michigan one time where they did end up with 700 people on a primary ballot. Potter Stewart: These fees can go up to close to $9,000. John F. Morehead: Yes sir, it certainly can. It is expensive to hold an election. Potter Stewart: This is just for county office, $9,000 fee to -- John F. Morehead: Well, for the District Judge's office which is a county office in the larger Metropolitan areas. Potter Stewart: And, I notice the Statute 1308(1) says that the cost of the election are to be apportioned by, what is this, the committee or the chairman? John F. Morehead: Yes, it is the county committee. Potter Stewart: Yes, and that is the county party committee, the Democratic Committee or the Republican Committee? John F. Morehead: Yes, the particular party committee. Potter Stewart: The committee shall apportion such cost in such manner as in their judgment it is just an inequitable among the various candidates for nomination for District County in precinct offices as here and after defining the zone. And in making the assessment upon any candidate, the committee shall give due consideration to the importance, the emolument and term of office for which the nomination is to be made. Are there any rules, some developed as to the amount of these fees or each year does the committee use them? John F. Morehead: Each year they set them on their own original basis and this particular case, this $9,000 fee to file for District Judge, what they do is try to collect enough money to pay for the election and after it is over, they rebate the excess proportionately depending on what fee you pay. In this particular case, they rebated 57%. In other words, if you look at it from the bottom up, they invested more than 100% on the amount that and there I think that if a candidate come in to the State Court and said that this particular County Chairman or this particular County Committee abused their discretion and the amount of this fee they set, I think you have got some redress in the Court of the State of Texas in that matter. Potter Stewart: Ultimately they just paid for the actual cost. John F. Morehead: That is right, ultimately they just paid for the actual cost, and ultimately all of them divided on the amount of payment. Warren E. Burger: When you are up against the filing date, you do not really know whether you are going to get a refund, so you have got to put up $9,000. John F. Morehead: That is correct sir. They always try to get more because for a losing candidate they have particular amount of trouble collecting money from him. Speaker: How many candidates were there for District Judge? John F. Morehead: A better way to ask that would be how many were unopposed, and in Tarrant County I think there are eight. The people from Tarrant County can answer that question. I think all, but one of them was actually unopposed in the democratic primary. Speaker: With each unopposed? John F. Morehead: Two. Speaker: Had still to oppose, 9,000. John F. Morehead: Yes. The unopposed candidates. Speaker: What is the salary of the District Judge? John F. Morehead: The District Judge’s salary would be about, there is two different ways you pay for it, one, the State pays a basic amount which is now 21,000 and many counties vote an additional emolument, most of them rounding up to about 25,000. Speaker: What is the term? John F. Morehead: The term is four years. Speaker: Did the fees ever exceed the salary of the officer, any officer? John F. Morehead: I think there is one example of that where there is a County, where there was a $50 fee and he do not get paid any dime. But that is the basic fee that each person has to pay $50 filling fee and then later on after you find out how many contested races you have and how many candidates you have, then after the filing deadline is when there is additional assessment is leveled. Warren E. Burger: Do you suppose the filing fee had something to do with the fact that seven or eight of the Judges were not opposed? John F. Morehead: Yes sir, I do. Warren E. Burger: Is there a fee used if one runs for statewide office? John F. Morehead: Yes sir, but these fees are different. The legislator or is the one that passes these laws, and so therefore, the cost to run for a statewide office somehow seems to be less than it does to run for the others and the counsel for Mr. Pate (ph) have said that this is a discrimination in itself. They charge $150 to run for the State Legislator, $1,000 to run for Governor, that is the maximum for statewide office -- Potter Stewart: Not to the State. John F. Morehead: Not to the state. Potter Stewart: Is there any accounting required by the party to the state? John F. Morehead: Yes. To the Secretary of State, yes sir. Potter Stewart: Public accounting. John F. Morehead: Right. Potter Stewart: The receipts and expenditures. John F. Morehead: Right. The other alternative that I would like to pose before I sit down is, if the candidates do not finance these party primaries, who must finance it? The other alternative is that of course, you need to make the counties and State itself finance these particular elections. And to say that the States must themselves finance it, and that that is part of Equal Protection under the Fourteenth Amendment, is quite a different thing as saying that the legislator can finance it itself, if it so desires. In other words, to say that the State must finance it, is to say that somewhere in the Equal Protection clause, there is some sort of affirmative language which says that the state must act, that the state must hold this primary election and finance it themselves. Because I think that ultimately that whether it is $50 filing fee or $0.05 filing fee or $9,000 filing fee, that the filing fee itself, because you are always going to run into that one person or that group of people that the $50 is just as important to as or the $5 would be just as important or as Mr. Justice Douglas said in Harper that, that the $1.75 on Virginia, poll tax does not really have any valid relation to the man’s ability and right and qualifications to stand for all this or to vote for that particular matter. Speaker: Do you understand Mr. Morehead that the District Court held that these -- first of all that these fees are unconstitutional only as applied to people who could not afford to pay them. John F. Morehead: No sir. In their opinion, the Court said that it is unconstitutional on two respects. Number one, it cannot be used, they used the word revenue raising device. It is not a revenue-raising device in the sense that it goes into the state conference like the school, the poll tax is used just to pay the cost. Speaker: Is to pay the cost. John F. Morehead: If they said you could not use filing fees to pay the cost of the election and number two, they said it could not be made an absolute requirement to get on the ballot. Speaker: Well, by the use of the word absolute, do you think they apply that a person who could afford this fee could be required to pay it. But somebody who filed an affidavit of indigency, could not pay. John F. Morehead: I read it that way, yes. But, on the other hand, when you see the requirement that our state legislator put on the affidavit of indigency in their last legislation, that is obviously got to be bad, I mean that -- Speaker: Mr. Morehead, I have typically with your answer to Mr. Justice Stewart that you said to Mr. Justice White earlier, the concluding paragraph of the opinion, seems to rest this squarely on First Amendment grounds without reference to an Equal Protection or other basis for the decision, am I wrong about that? John F. Morehead: I always had reference sir to looking at, I am looking at the jurisdictional statement, which is where the opinion is printed at the page 10A in the back. The top sentence, the Court. Now he says, in the second sentence, we have limited our decision here to say that a filing fee violates the First Amendment and the Due Process Clause, and the Equal Protection Clause of the Fourteenth Amendment when it is used as a revenue collecting device, that is what I thought the Court really held. Speaker: This last paragraph, it says in granting declaratory relief, is there a difference? Certainly, the last paragraph, the rest of that, was not squarely on the First Amendment? John F. Morehead: Yes sir, and squarely on the voting rights problem as opposed to the candidate right problem. Speaker: And it is rested on page 10a on the First Amendment and Equal Protection, it does not help very much that the Equal Protection is also added if payment of a fee violates the First Amendment, does that make any difference between --. John F. Morehead: That is correct, I see, if we have a First Amendment problem and a compelling state interest problem, then these statutes ultimately must fall, I think that is the really proper -- Speaker: You do not know of any cases where the First Amendment has been applied to guarantee someone except this one relates to that in the state in an election for state office. John F. Morehead: No sir, I do not. I will research this problem and -- Speaker: You understand then that the Court is holding at least its reasoning in its final paragraph of its opinion would hold unconstitutional, any file fees of any kind, the $10 fee. John F. Morehead: $0.10 fee,that is the way I read it. Potter Stewart: And required of anybody, no matter if you are a multi millionaire candidate. John F. Morehead: That is right. That is what I really ultimately -- I did not think that, that is what they are really resting it on since they had set it back at first and it is just a guess there to answer that question. Thank you very much. Warren E. Burger: Thank you Mr. Moorhead. Now, is Mr. Bailey going to be in rebuttal? Pat Bailey: Yes. Warren E. Burger: Very well. And you Mr. Crouch? A. L. Crouch: Yes. Warren E. Burger: Mr. Crouch, you have 20 minutes. A. L. Crouch: Mr. Chief Justice, may it please the Court. I would like to point out that the background of the filling fee is that it was designed along with the Poll Tax to exclude blacks from the party primaries in Texas. The Poll Tax was adopted into the State Constitution in 1902, and the filling fee was adopted by the legislature in 1911. In United States versus Texas, Judge Thornberry said that one of the main purposes of the Poll tax was to disenfranchise the Negro voter, and we maintain that the purpose of the filling fee was to finance these five primaries, which have been to the Supreme Court of the United States five different times. Now, the very fact that words indicating race are not mentioned in the statute does not mean that race can not be a picture because the very act of adopting an economic status standard for a person who seeks elective office is automatically placing a race standard in effect. Speaker: Are you arguing a different basis for sustaining the judges below that the Court used? A. L. Crouch: No Your Honor. Speaker: I am not saying you should not do that, but I just wondered if. A. L. Crouch: I pointed out in my brief that the filling fees stand to keep indigents from filling. Speaker: Now, this is an Equal Protection argument. A. L. Crouch: Yes. But it also -- when you talk about indigents, you are talking more about minority parties than you are whites, and you are talking more about women than you are men. I have some tables in my brief to illustrate that. Now, in Texas in addition to the blacks, we have the browns, and Mr. Morehead pointed out that it is fairly easy to get on the election ballot in the general election as a write-in candidate. Well, in the brief filed from El Paso, there is a table over in the back showing write-in candidates in the November 1970, general election, the last page 86, and there were 398 write-in votes. So that is an exercise in futility to attempt to get on the general election ballot as a write-in candidate. Speaker: Well, I think Mr. Morehead was not talking about the write-in vote to the general election, but getting a name on the ballot at the general election by nominating petition of 1%. A. L. Crouch: This is a third party, and a group attempted that last year called Latassa Univa (ph) and the Supreme Court of Texas turned them down over technicality. Speaker: What was the technicality, what do you mean? A. L. Crouch: Yes. Speaker: What was the technicality, that they had less than 1%? A. L. Crouch: No. They apparently had enough percentages in at least one or two counties. They were trying to get on in five counties as I remember correctly. There was a dissenting opinion which indicated that this group was acting in good faith, but they had the conflicting opinions of what statute meant from two to three different state officials, and nobody understood what the statute was and so they were not allowed on the ballot. Speaker: But in any event that Mr. Morehead was not talking about write-in votes at the general election, but talking about a man's ability or as you say inability to get his name on the ballot at the general election so -- A. L. Crouch: Right, in the third party column, alright. Now bringing that down to county level, he mentioned the figure 500 signatures as a maximum, that is true. But since, this case has been decided, the legislature of Texas has done a remarkable plastic surgery job on the face of the statute. They have enacted what is called House Bill Five and I am not sure when the bandages come off, but I think January the 1st. Now, in that particular House Bill Five, the requirement to get on as a write-in candidate is 10% of the people who voted for governor in your party at the last general election, which in Tarrant County would be 6,211 signatures and they have to be sworn too before a notary, and the notary in Texas is entitled to a $0.50 statutory fee which would mean over $3,000 just a notary fees to get the signatures. Now that is not $500 which is all that requires to get on as a third party candidate. But over 6000 to get into the democratic primary as a write-in candidate, and in addition to that, you have to sign and swear to your popazao and humiliate and degrade yourself by helping to establish and perpetuate a cash system. I do not see any need for that, but there it is. Speaker: There is a legislation, so conditional legislation enacted by the state legislature which comes into effect depending upon the result of this. A. L. Crouch: Yes, Your Honor. Speaker: Decision by this Court. A. L. Crouch: Yes. Speaker: Is that set out in full somewhere, I saw you, no reference. A. L. Crouch: Yes, the test does not exhibit in the State’s brief. Speaker: In the State’s brief? A. L. Crouch: Yes. Speaker: Thank you. A. L. Crouch: Now, it is also a temporary measure that expires at the end of 1972, so nobody really knows what it means. Now, with the reference to Mr. Morehead’s statement about two sets of voting officials, the secretary of State himself who is a Chief Election officer for the State of Texas has recommended in a message to the last legislature that a unitary primary system be established and that it be paid for out of tax bonds by the County and by the State and so we would eliminate some of the cost of having the duplicating primaries, if that recommendation is followed. Now, I maintain and I have all throughout that the filling fee is a Poll Tax imposed on a citizen who wants to run for office and vote for himself. Now in Texas, you have what is called a cost deposit of $50 for a person who wants to run for County office. He pays that at the same time that he files his application to run. Then, after the Executive Committee has had a chance to meet and make the party assessments, at that time, he has to add up additional sums of money running up in several thousand dollars. This last year in Tarrant County, the filling fee assessed by the executive committee of the party was 32% of the annual salary which is a very large sum of money, and as Mr. Morehead pointed out, of the 25 Tarrant County officials on the primary ballot in the democratic primary last year, only two of them had opponents because of these high filling fees. And of the total of over $200,000 received by the Chairman of Tarrant County democratic party in 1970, 77% of that money came from the incomes themselves. There was nobody else who could afford to pay and it is outside of the record but of course, many of them found difficulty in paying it to. Speaker: Do you understand the holding of the District Court in this case to have been -- that these fees are unconstitutional only as applied to those who cannot afford to pay them? A. L. Crouch: I think not, I think they are unconstitutional to everybody, even as the poll tax is unconstitutional to everybody, and with reference to the poll tax once more, I would like to remind the Court of Harman versus Forssenius in that case it was the Virginia case, the Twenty-Fourth Amendment had been adopted outlawing the poll tax in Federal Elections, in the State of Virginia to get around this ruling fairly passed a statute that made it possible for anybody who wanted to avoid the payment of poll tax to file an affidavit instead, and the affidavit testified that the person had been a resident for so many months and that he intended to remain a resident throughout until the election was over. But you see in our case, we have Harman versus Forssenius all over again except instead of one affidavit we have to file 6,100 affidavits and I think that 6,100 times is as bad as Harman versus Forssenius of course, prejudice did not matter. Of course I have represented these people who just flat have not been able to pay the filling fees that have been demanded. Speaker: Well, so your clients, you just as I understood here, our people cannot afford to pay it. A. L. Crouch: That is right! And it was so stipulated by the other side. Speaker: And the -- A. L. Crouch: There were three different plaintiffs in the case. Speaker: And all applies in this case. A. L. Crouch: Right. Speaker: At least three consolidated cases were people who alleged that they could not afford to pay the fees. Is that correct? A. L. Crouch: That is right. Two of them were lawsuits incidentally. Speaker: I wondered, how you understood the Court’s decision just that the fees are unconstitutional only as applied to those in your client’s position? A. L. Crouch: No sir, it is applied to all. Speaker: It is applied to everybody. A. L. Crouch: That is my understanding. Yes. Speaker: Do you further understand that the Court to have held that all fees would be unconstitutional even on $1 fee? A. L. Crouch: Well, there is the question of the low and narrow fee, there is some sort of hesitation on the part of Judge Thornberry, if I remember correctly and he was concern about Wetherington case over in Florida, which held that reasonable filling fees maybe constitutional. Speaker: Right. A. L. Crouch: And I think he was trying to take that really into account when he said possibly a low and narrow fee might be constitutional, he did not say it was. Speaker: He is in the right opinion did he? A. L. Crouch: Sir he wrote conquering opinion. Speaker: But the Court's opinion does not talk about that, does it? A. L. Crouch: No sir and the Court asked a while ago about was there any First Amendment case other than ours and the Duncantell case which was decided in Houston on October the 27th, specifically says that the right to run for elective office is inextricably woven into the fabric of the First Amendment and one of my co-counsel here has pointed out to me that Williams v. Rhodes also was decided on the basis of the First Amendment. But it would seem to me that the First Amendment is much more important in this particular part. Speaker: (Inaudible) talk about the right to associate. A. L. Crouch: Right. Speaker: But they did not have the right to vote. A. L. Crouch: Well, the right to associate is a part of the First Amendment. Speaker: Right, it is definitely, I know that this is page 161 of the record, the judgment of the three-judge court makes it explicit that the section is declared unconstitutional and that is enforcement enjoined, I gather it is everybody and that the declaration of unconstitutionality is rested only on because they had infringed upon First Amendment Rights without any compelling justification and violation to the First and the Fourth Amendments. Is that right? A. L. Crouch: Yes sir. Speaker: So I gather at least on the face of the judgment that was over here, it rested on the First Amendment, right? A. L. Crouch: Yes sir. Speaker: And secondly, it has enjoins its enforcement as to everybody, not merely as to your impecunious crime. A. L. Crouch: That is right, the whole state of Texas and the political parties are all enjoined. Now with reference to the standard to be employed, as I understand it, there are three different standards that can be employed, the first is whether or not the articulated state goal can be accomplished in some less drastic means than the one employed by the state. And under Crammer, that question needs to be answered first before you go into the question of whether you apply the compelling justification test or the rational interest test. And I take the position that there is another less drastic way of regulating the ballot in nominating petitions and there are 34 offices included on the Tarrant County ballot in 1970 which is given in one of the exhibits in my brief and 21 of those offices could come off the ballot if we have legislation permitting single member legislative districts and single member judicial districts for Tarrant County. That trouble with the nominating petition I think would be a less drastic means than a filling fee to regulate the ballot. But coming back to Harper, Harper plainly says that any fee is per se unconstitutional because it is irrelevant, the man's economic status has no relevancy whatsoever to his qualifications as a voter and Mr. Morehead pointed out the case from Georgia, the Turner versus Fouche case, he mistakenly said that that involved a filling fee when actually it did not, it required an ownership of real property. But I think that the ownership of real property is equivalent to the ownership of personal property except in Texas, the state takes the personal property and the state of Georgia allows the man to keep his one square inch of real property. Shelton versus Tucker, the breadth of legislative abridgment must be reviewed in the light of less drastic means for achieving the same basic purpose. Williams versus Illinois, Mr. Justice Harlan in a separate opinion conquering the matrix of recent Equal Protection Analysis is that the rule of statutory classifications which either are based upon certain suspect criteria or affect fundamental right will be held to the Equal Protection unless justified by a compelling government entries citing Sheparo, Harper and Williams and in this case, we not only have the fundamental constitutional right to run for elective office, but it is concomitant, the fundamental constitutional right to vote for the candidate who wants to run and in addition to those two fundamental constitutional rights which were involved, we have also this suspect legislative criterion of poverty. We have the filling fee limits the place on the ballot to the man with money and this means that his economic status has become a qualification for office and all of the three offices involved here are offices for the qualifications are set by the constitution of the state, and it is beyond the power of the state legislature to amend the constitution of the state and pass additional requirements. And economic status is absolutely irrelevant, the Edward’s case held this. Recently the Graham case has held it, and in the Graham case, as fas as I remember the case correctly, there was a case involving aliens and the Court said that an alien had this right, regardless of his nationality to welfare benefits and it was very important that he should have it and in our case, we are not representing aliens, we are representing American citizens and American citizens who are not asking for a handout, they are not asking to go on the welfare roles. They do not have any money but they are asking for a job. They are asking for a right to be considered for elective office, which under Turner versus Fouche, I think they have a basic fundamental right to be considered for elective office without these other qualifications, which are absolutely unconstitutional. Speaker: I noticed in Judge Thornberry's concurring opinion that he says one of the things voters are deprived of the opportunity to have their candidate considered for the democratic party nomination, if he cannot pose a filling fee and he goes on, since in the overwhelming majority of Texas political offices, nomination by the Democratic Party is tantamount to election. It is clearly the restriction on entry into the primary may significantly impair the right to cast on his vote effectively and so on, and they are precluded by the high filing fee from associating within the established party. A. L. Crouch: That is right. Speaker: Does this imply that this law is only applicable to the Democratic Party and not to the Republican Party? A. L. Crouch: No sir, the opinion there says that the political parties plural of the state are enjoined, but let me point that in my candidate’s particular race, there were no republican candidates stalled. If I remember correctly, there were only the candidates in Tarrant County, Texas only filled candidates in four races, four County races out of 30 somewhat. Speaker: That is for Republican Party did it. A. L. Crouch: That is right. Speaker: Do they hold a primary or do they do it by convention? A. L. Crouch: Well, they hold on if a party get a certain number of votes in the November election, they have to hold a primary. But the Republican Party is not able to collect these filling fees because their nomination really is not worth in all full lot and they have to use volunteers help at the post, whereas the workers in the democratic primaries are paid $2 an hour out of the filling fees. Speaker: So the republican parties does not require these fees. A. L. Crouch: Yes, they have fees but quite frequently, they return the fees and do not use them. But mostly, they try to use volunteer help and quite frequently, they do not use the voting machine because the paper ballots are cheaper. There is a newspaper clipping from the Dallas Morning News in El Paso brief which I would like to refer the Court to explaining the problems with reference to Republican Party. But if the Secretary of State's recommendation -- Thurgood Marshall: Mr. Crouch, is not there too much trouble did he? A. L. Crouch: Pardon? Thurgood Marshall: Senator Carvell (ph) did not have too much trouble, did he? A. L. Crouch: Well, no this was statewide race. The republicans are able to win statewide -- Thurgood Marshall: There is only one party down there. A. L. Crouch: Except in statewide races. But if the filing fees go out and the recommendations of the Secretary of State are followed by the legislature and we have a unitary primary, then we will have greater participation on part of all, because everybody will go to the same place to vote just as in November. The Republicans will go to this machine over here and the Democrats over here, and they will all be paid for out of tax funds. Speaker: And this will be done if what? A. L. Crouch: If the recommendations of the secretary of state who is here to decide this lawsuit are carried out. Warren E. Burger: Is that in the form of a bill now before the legislature? A. L. Crouch: It was a message, special message and it has included as an exhibit in the El Paso brief, and we hardly concur with this recommendations. Speaker: Mr. Crouch, I am a little confused, is there any division of opinion among the state office holders of Texas on this suit? A. L. Crouch: Well, certainly. Speaker: Some are on one side. Some are on the other, are they not? A. L. Crouch: Well, nobody has intervened on our side. To be perfectly frank about it, it is not politically expedient for an office holder to become involved in a controversy of this nature. He loses votes no matter what he does. It is a hot potato, and you will find that they are not here, unless they have been sued. Warren E. Burger: Now Mr. Crouch, your time is up. A. L. Crouch: Thank you sir. Warren E. Burger: Mr. John. John F. Morehead: Mr. Chief Justice, members of the Court, I believe that broadly stated the issue here is whether there should be the opportunity for equal participation in the electoral process by candidates, with or without money? Warren E. Burger: Go ahead counsel, situation is under control. John F. Morehead: I will restate it, I believe broadly that the issue here is whether there should be the opportunity for equal participation in the electoral process by candidates. Speaker: Can they suspend it for a moment? John F. Morehead: No. Should I continue or wait? Speaker: Well, hey! Listen back there, (Inaudible). Warren E. Burger: (Inaudible), counsel you may resume your argument. John F. Morehead: Alright. Broadly stated Your Honors, I believe the issue here is whether there should be the opportunity for equal participation in the electoral process by candidates with or without money or who refuse to pay. I do not believe that, and I do not fully concur with the opinion of the lower court. I think that opinion is too reserved and too conservative in our political way of life, in our democratic political way of life. Warren E. Burger: Well, did not all counsel up to now make it clear that it applies to everyone, whether he can afford to pay or not? John F. Morehead: The reason -- Warren E. Burger: No one can be required to pay a fee? John F. Morehead: Well, the reasoning, Mr. Chief Justices, what I disagree with and that it limited only on First Amendment rights, what I am saying. My position is that the right to run to office is as much a fundamental right as the right to vote, under the First Amendment of the United States constitution which guarantees political association and that that right should not be impinged upon. That is my position and I think that if that is followed, it would eliminate exactly what is happening in Texas under this system, and that is a monopoly in government itself is what exists down there. There is a monopoly because it is a government by the selected, for the selected and now the selected. And I submit to the Court that the crux of the issue is whether the classification here which limits the right to vote or seek public office as a candidate is per se unconstitutional under the First Amendment which is the rights of freedom of political association and Equal Protection. The candidate, I am speaking for the voter’s rights as well as of candidate’s rights. This was, like in Rhodes, there, there was discrimination between parties and in that case, as Justice White inquired, is there a case from this Court that talks about First Amendment rights in connection with the right to run to office, and it did. That is the case where they talked about First Amendment rights as a right to run to office. I agree that the Equal Protection Clause of the Fourteenth Amendment permits the states to make classifications and it does not require them to treat them uniformly. Nevertheless, it bans any invidious discrimination and that is exactly what is involved in this case, invidious discrimination, unfair discrimination. The primary election is an organ of the state and as stated in that case by in Allwright case, when primaries become a part of the machinery for choosing official state and national as they have here, the same task to determine the character of discrimination to be applied to the primaries as they are applied to the general election. The general election, Your Honors and Mr. Chief Justice merely confirm the discrimination that exists in the primaries. And the alternate about petitions for independent is not a reality in the political life. In fact, in checking that section of the law, those people that voted in the primary cannot sign those petitions for candidates, non-partisan candidates that run in the general election. Speaker: I understood Mr. Morehead to-- John F. Morehead: Make the opposite statement. Speaker: (Inaudible) differently. John F. Morehead: Differently, but we have checked and I was prepared for this and if you will check it, I believe I am correct. Speaker: Do you have the statutory statement? John F. Morehead: I do not have it with me, I have is 1305, I believe 13.50, so this is not like Georgia and Portison (ph), Justice Stewart where the election process was wide open. This is freezing in the status quo, the ins are ins and the outs are out. And that is why there is no opposition, and this country is based on the political fluidity I believe they say in the electoral process as what this Court is very concerned with, that it is maintained and that is just what this filing fee system prevents. Speaker: First, we go back to this country's beginnings, races. In the early days many of the states required people to own property before they were eligible to vote even much lesser on for office. John F. Morehead: Correct, and those concepts of course eroded. Just like Snowden versus Hughes, there is no longer the law in this Court, in the incorporation theory from the First Amendment into the Fourteenth Amendment, and that is why I say Snowden is not the controller in this case, what so ever. It is totally inapplicable to the fact situation and onto the brought principles of law that I have believed should apply to deciding this case. Speaker: B21. John F. Morehead: It would be truly a representative democratic type of government. These fundamental rights are involved here both under the First and Fourteenth Amendments. We say there is invidious discrimination, we say there is First Amendment rights violated, the right of political association from the voter's standpoint and from the candidate's standpoint and we also say that the classification is in that nature or neighborhood or criterion which is suspect money. It does not even say, wealth or property, it says money, cash, and when that is involved, when that is involved then they must, this Court must under its test give it a careful, scrutinizing examination and the state must show a necessary compelling interest for having such classification. I do not think they -- and I think they say in their brief; if that is true, the ball game is over. I say the ball game is over and it is time to change. And just briefly interjecting House Bill 5 in here which was not an issue. I am going to ask this Court if it will to, when it makes if and when makes its decision, to make it so broad if it is in favor of the appellees that we would not have to be coming up to this Court time and time and again for relief, like was done when they were trying to keep the black people from running in the democratic parties where five separate suits, one right after the other had to be brought because Texas does not give up that easy. I submit to the Court that this is a suspect classification that compelling interest test applies, I further submit that the excuses and reasons that they give for this legislation are wholly irrelevant to the achievement of the state's objective. That is of keeping the -- they say chaos will result. They say the ballot would be cluttered with a lot of non-serious and spurious candidates. That is speculative, that is remote, the other states have worked that out and the state can do it the same way. How? By a modicum of support petitions and not to couple it with alternatives, if one can pay, one candidate can pay a fee and the other one can get a petition to show modicum of support. That is again violating the Equal Protection Clause in the Fourteenth Amendment. So I respectfully submit to the Court that if we are to envision the true concept of government, of the people by and for the people that the opinion of the lower court be broadened, affirmed but broadened on the First Amendment rights and the Equal Protection rights. That is as to candidates, they have a right under the First Amendment to run for office. As long as they possess all other qualifications and there is shown a modicum of support for them. I believe that is all I have to say. Warren E. Burger: Very well, thank you. Mr. Bailey? Pat Bailey: Mr. Chief Justice, and may it please the Court. I would like to say initially for rebuttal. I will comment one statement made in one of the briefs filed by the appellees. Statement says, Texas you finance your great university, your school, your tremendous highway system, why do you fight the financing of the most essential duty of government, when you know that, the primary elections in the most part are tantamount to election. I think that this is one of the issues that comes up in this case because what in affect the trial court, the three-judge court below has done, is to completely do away with the financing system in Texas that we have for all of our election process with the exception of the general election. They have an effect said, Texas can raise a revenue or can take care of it in some source. But really what in effect the Court has done, is say that the State of Texas are some lesser political sub-division of the state, well now, I have to take over this function that the political parties that wish to submit nominees for election on the general ballot are now doing, is in fact forcing the state to extend moneys, to allocate their limited tax funds or the local tax and bodies limited to another project which I think as you can see by the statements to pay are rather expensive at times. Now, this case really started out. I think we kind of -- it is kind of moved around and jumbled around a little bit to work really hard to see what we really have. It really started out with some particular candidates who did not have, but they have got adequate funds to pay the filing fees, challenging the heights of these. During the course of this case, certain voters intervened that said that I would like to vote for a particular one of these candidates and actually what the court finally decided this case on was not the rights of the candidates here, is to whether or not, they had a right to be on about without paying some sort of filing fee. What they said is that you have infringed upon some voting right of the voters. Now, I think what you did here is, that when we start talking about the voting right principles, we start talking about compelling interest and this is again the court said that there is no compelling interest for the state to have allowed this type of situation in this particular case. Well, I submit in this connection that possibly the court has used the wrong path in this case, they have used one of this voting principle cases, to decide whether these fees, was there any compelling answers to the state for these filing fees. Thurgood Marshall: Mr. Bailey, could they charge for running in the general election? Pat Bailey: They do not, Your Honor. Thurgood Marshall: I said could the State of Texas constitutionally do it? Pat Bailey: I think that Your Honor, you would have a bigger problem, or would have one. If you just made a charge and I think this maybe is tied in with what the court below said. They said that having a filing-fee to pay -- Thurgood Marshall: But if they use exact same filing fee in the general election, would that be constitutionally permissible? Pat Bailey: I do not know Your Honor that I think -- well, I will go back to this. I think it possibly, maybe it would. I think that one that was based on cost of the election process would certainly be in a better situation than one as the court below mentioned. They said a small or reasonable, they talked about a reasonable type of filing fee. As if some lower filing fee would be constitutionally acceptable. They said it would be permissible. It would be illegitimate possibly even compelling function of the state. But I think what happens here is -- Thurgood Marshall: But is your answer that it might be. Pat Bailey: I think that if you put some type of filing fee on the, the ultimate general, on the general election. Thurgood Marshall: The same fee as in this case? Pat Bailey: I think you might have some constitutional questions there Your Honor but I think that -- Thurgood Marshall: Well, do not you have the same constitutional questions here? Pat Bailey: No Your Honor. Thurgood Marshall: Where the primary is “an intrical part” of the election machine near the State of Texas. Pat Bailey: Yes sir, but in another part of this intrical machinery is a fact that a candidate, if he wants to be only ballot, the general election, there is a process for getting only, will not cost him this filing fee. I granted, it is not a -- Thurgood Marshall: But will it not cost him something? Pat Bailey: No sir, it will not. Thurgood Marshall: Well, will it not cost him to pay for the petition? Pat Bailey: I presume, it would cost him this and possibly the stamp or some of the other expenses in this nature Your Honor. But I think that when we start talking, as the court below, they added some other type fee other than this high one would be acceptable. To me, this is incorrect, because I think is what more compelling are reasonable reason could the state have and to say we are going to set these filing fees to where they will cover the cost of the election. I think that to say it could be some other lower fee that had no basis of this nature then it would not be possibly either reasonable or compelling. Thurgood Marshall: Mr. Bailey, one more question aside from this, why did you give us exhibit A? What is the purpose of that, the operator? Pat Bailey: I am not sure which one Mr. Chief Justice. Thurgood Marshall: It said new statute. Pat Bailey: I do not know at the moment I think that we will just put it in so the Court could see what had been done in connection with the situation that the trial court had or the court below had put us into that the legislature had to take certain action and this was -- Thurgood Marshall: What did the legislature had to do? Pat Bailey: Well, I think Your Honor -- Thurgood Marshall: What the legislature did was to say, if we do not do something, they will have already done something. Pat Bailey: Yes sir. Thurgood Marshall: Is that the only purpose of it? Pat Bailey: I think in a -- Thurgood Marshall: I can understand why the legislature did it, but I was just wondering why you as an officer of this Court felt obliged to bring it to Court. Pat Bailey: Your Honor, I think it is nothing more than to show what the legislature had done because I think we are in this area of filing fees in the election process, for the Court to know what we are trying to do. I think sometimes we do not know what guidelines to do and if we are wrong in something and it does give the court opportunity to possibly see the way we are handling it, the way the legislature is possibly going to handle it to where, if we are incorrect that the legislature will know what next time possibly to do to correct any of these things, and this is my only explanation for this. Speaker: This decision of the District Court was apparently in December of 1970. Pat Bailey: Yes. Speaker: So have there been any elections since that time, were there any this past November? Pat Bailey: No, the primaries will be coming up this spring and then the general election -- Speaker: And have that in the primary elections since the court's decision. Pat Bailey: This is correct. But we submit that the payment of we think that, what we have got here in this particular case is that there are several methods that a person can reach of the office. They can do it under a banner of a particular political party, they can run in the general election on a write-in, I mean by getting on the ballot in the manner provided at the general election. I think that the court below said that some right of the voter had been infringed upon here. Actually, what the court has said that a voter has a right to vote for a particular candidate. And if the state by its statutes and regulating the election process does anything to keep a particular voter from voting for a particular candidate of his choice. If anything keeps him off the ballot, be it the filing fee or some other problem of having to do something, keeps him off the ballot. Then, it is constitutionally bad. We think that what has been done here is actually, the burden has not been put on the voter, by the law the way it is, it has been put there now because ultimately, by this statute being held invalid, the tax payer who is also the voter is going to now have to pick up the path for these elections rather than the camp. Thank you. Warren E. Burger: Thank you Mr. Bailey. Thank you gentlemen. The case is submitted.

Warren E. Burger: Mr. Elrod, I think you may proceed whenever you are ready. William Harvey Elrod, Jr.: Mr. Chief Justice, and may it please the Court: The petitioner in this case filed a complaint containing a Bivens-type complaint in a state court. The respondent, who like the petitioner is a civilian employee of the Federal Government, obtained the removal of the case to the United States District Court for the Northern District of Alabama. From that point forward, the government, for all intents and purposes, appears to have been cast in the role of defendant. I say appears to have been cast in the role of defendant. We are not suing the government. The petitioner's Bivens-type claim was that the respondent had violated the petitioner's First Amendment rights by participating as chief conspirator, if not principal procurer in the concocting and consummating of the petitioner's demotion under color of federal law and by virtue of the positions which the conspirators held. The avowed intent and purpose of the conspiracy is to punish the petitioner, to strike back, to retaliate, to pervert official power from its proper purpose for having publicly observed and spoken up about what he perceived to be rampant waste at George F. Marshall Space Flight Center in North Alabama. Warren E. Burger: Had he... does the record show to what extent, if any, he had passed these notions and ideas and his recommendations on up through channels before he went public? William Harvey Elrod, Jr.: The record reflects in a truncated fashion, since this comes up from summary judgment, the record reflects that the petitioner made some efforts within the organization through his representative in the manpower office to obtain some alleviation as to his personal problem. And at... as he observed that he was not alone in being misclassified or a round... or a square peg in a round hole, it ate on him. And he went public. After a series of proceedings, administrative proceedings, Mr. Bush's having gone public eventually was perceived to be within the protection of the First Amendment. I understand that the government from its-- William H. Rehnquist: It was perceived by... perceived by whom, Mr. Elrod? William Harvey Elrod, Jr.: --By the what was then called the Appeals Review Board of what was then called the Civil Service Commission. That happened in mid-passage. This lawsuit, the Bivens claim and all, was already pending, not before the administrative proceedings had begun but they were pending concurrently because an Alabama statute of limitations would, in my judgment, possibly have cut off one of the claims that is not present before the Court had the suit not been filed when it was filed. I say not present before the Court, it's not included within the petition. It's in the record. As I understand the government's brief in this case, the government concedes what it candidly describes as petitioner's well... the well-established constitutional right which the petitioner asserts. What the government disputes is the petitioner's right... or is whether the petitioner has a Bivens-type remedy for the impairment of that right. In effect, the government currently, in defense of an opinion rendered on remand by a Court of Appeals, currently espouses the second branch of the Carlson against Green formulation as to whether an alternative remedy or as to whether there is a basis for barring or defeating at the threshold a Bivens-type claim. And that second ground, of course, is that Congress had manifested its intent. I don't want to get into an area of semantics, but it specifically... explicitly states, but I will say clearly manifests its intent that an alternative remedy which it has adopted is intended as a substitute for a Bivens-type action and is viewed by Congress-- Sandra Day O'Connor: Mr. Elrod. William Harvey Elrod, Jr.: --Yes, ma'am. Sandra Day O'Connor: I suppose it's your position on behalf of Mr. Bush that what was lacking here was a right to obtain compensatory damages for embarrassment or anxiety resulting from the demotion, and the failure to have a means of getting punitive damages and attorney's fees. Is that right? William Harvey Elrod, Jr.: In damage terms-- Sandra Day O'Connor: Those are the elements that are lacking in the Civil Service remedies? William Harvey Elrod, Jr.: --It is-- Sandra Day O'Connor: And is it your position then that denying Mr. Bush the right to get those elements of damages violates the Constitution? William Harvey Elrod, Jr.: --It is my position that it would, although I am speaking to a judicial tribunal, that it would be an invidious kind of distinction. Sandra Day O'Connor: Well, would it violate the Constitution-- William Harvey Elrod, Jr.: Yes, ma'am, I think it would. Sandra Day O'Connor: --to... and what provision of the Constitution? William Harvey Elrod, Jr.: I did not... it would... it would, in my judgment, and I realize that I am venturing where in... rushing in where some people fear to tread... in my judgment, a decision that the denial of the dignitary elements of a government employee's claim in a Bivens-type suit otherwise well grounded, assuming that, of course, as we will upon summary judgment, that denying him that would be denying a discrete isolated group of people the same protection of the law that the citizenry at large has. Sandra Day O'Connor: An equal protection clause-- William Harvey Elrod, Jr.: Access of courts-- Sandra Day O'Connor: --violation? William Harvey Elrod, Jr.: --whether it be viewed as part of equal protection or as an extension of freedom of expression. Prisoners have access to court. Aliens have access to court on Bivens-type claims. Only, apparently, government employees, if the lower court is correct, so far as a class, as a discrete class, those who have had the benefits of Civil Service remedies which come down on the bottom line to reinstatement and back pay. William H. Rehnquist: Well, if a government... a government employee who was beat up or unreasonably searched by FBI people would certainly have a Bivens claim. William Harvey Elrod, Jr.: Yes, sir, he would, and he would not be covered by any Civil Service act that I know of. William H. Rehnquist: No, because the Civil Service doesn't purport to regulate... the Civil Service doesn't purport to regulate that relationship. But the Civil Service Act certainly can be argued, don't you think, to regulate the relationship between the government as employer and its employees from the Pendleton Act on? William Harvey Elrod, Jr.: That act... that argument has certainly served as plausibility. I am not sure that it applies in this case. I am sure that there... that the government as employer has been interested in civilian employees since even before the adoption of the Pendleton Act. I think the government does have other interests as an employer than it has... from those that it has in some other capacity. I suggest to this Court... I submit to this Court that the Civil Service remedies which the government postulates here as a bar to the maintenance of a Bivens suit in the premises of this case do not meet the test standard prescribed by this Court in Carlson against Green, for as Justice O'Connor pointed out, among other things, they afford no recompense whatever with respect to the dignitary elements of the petitioner's claim. And we consider that interest in personality, how it is shielded by the Bill of Rights. And we would consider the policy often enunciated by this Court, a policy of maximizing the vindication of constitutional rights. Warren E. Burger: Well, your position necessarily means, I take it, that in unlawful discharges or demotions or failure to get a promotion that was due, the Civil Service remedy enacted by Congress is not the exclusive remedy? William Harvey Elrod, Jr.: It is unless it's constitutional deprivation bar. Warren E. Burger: Unless what? William Harvey Elrod, Jr.: Unless the promotion... the adverse action, as they used to call it, I think we call it unwarranted or unjustified now... unless the adverse action is unconstitutional, the Bivens... there is no Bivens remedy, of course. The administrative remedies are excluded. Warren E. Burger: Bivens had nothing to do with an employee of the government, did it? William Harvey Elrod, Jr.: Sir? Warren E. Burger: The Bivens remedy, as defined in the Bivens case, was not a remedy for government employees, was it? William Harvey Elrod, Jr.: As... in the Bivens case it was a remedy for Webster Bivens, who as the Court perceived, or a majority of the Court, no other remedy that was made. In Carlson against Green, which expanded Bivens, as I perceive it, it was stated that Bivens established that a citizen, the victim of an unconstitutional... of unconstitutional deprivation had a right of action, sounding and damages... I am paraphrasing, of course... against-- Warren E. Burger: A citizen... a citizen who was not an employee, however. Is that not true? William Harvey Elrod, Jr.: --So far as I know, this is the... the first employee case to reach this Court with a... where a government employee was asserting a Bivens-type claim. Warren E. Burger: Well, he might... the government employee might, as Justice Rehnquist suggests, have a Bivens-type claim in some circumstances. The question is whether he has a Bivens-type claim arising out of government conduct or alleged government conduct for which other remedies have been provided. William Harvey Elrod, Jr.: Well, with some deference, I suggest that I have failed adequately to state what we are complaining about. Your perception probably is absolutely accurate on the basis of what I have said. I want to make it abundantly clear that what we complain of is something that took place before the wheels of the governmental machinery were engaged. It is a tort antecedent to the engagement of the wheels of that machinery. It is a tort by one in place of power where the other... in a place where the... the tortfeasors entering into the conspiracy would otherwise not have any meaning unless he were in that place of power. We are not complaining about the personnel action as qua personnel action. We are complaining about a tort by Doctor or Mr. Lucas in concocting and arranging and procuring what amounts by... by analogy to the malicious prosecution of administrative proceedings. Thurgood Marshall: Mr. Elrod, in the Bivens case, following up on the Chief Justice's question, there was no other remedy available to Bivens, was there? William Harvey Elrod, Jr.: There... arguably, the New York remedy as tort law remedies were rather meaningless, and of course, the-- Thurgood Marshall: Well, you realize that my next question is going to be that this one wasn't remedyless? William Harvey Elrod, Jr.: --He had... he had-- Thurgood Marshall: You had a remedy in your case. William Harvey Elrod, Jr.: --He had a remedy. He had a partial remedy just as-- Thurgood Marshall: Well, how do you say this is a Bivens case? The Bivens case didn't have but one remedy. William Harvey Elrod, Jr.: --Well, in Carlson-- Thurgood Marshall: Your case has two remedies. William Harvey Elrod, Jr.: --In Carlson, Mr. Justice Marshall, in Carlson against Green, the first issue assumed that the allegations of the complaint would support an action under the Federal Tort Claims Act. Notwithstanding that, this Court held that the remedies were cumulative and parallel and that the, as I... as I perceive Green, the ruling, and that the FTCA claim or remedy did not bar a Bivens remedy. Thurgood Marshall: Well, why do you say it's a Bivens-type case? William Harvey Elrod, Jr.: Because it's directly under the Constitution-- Thurgood Marshall: You're relying on another case, not Bivens. William Harvey Elrod, Jr.: --Well, Bivens is an extension of Carlson. It's a Bivens type. We would speak of Clifford Trust and Totten Trust and so forth. It's taken on a generic secondary meaning. An action brought directly under the Constitution without intervening enactment by Congress authorizing the federal courts to entertain such an action. Harry A. Blackmun: Mr. Elrod, I suppose one could say that there are some advantages in going the Bivens route, if you have it, over the administrative route. But there are other advantages in going the administrative route over the Bivens route. Am I correct in-- William Harvey Elrod, Jr.: Eminently so, sir. As a practical matter, I do not know why anybody other than a pioneer would start a Bivens-type suit, a crusader, a pioneer, or a Don Quixote. Warren E. Burger: --Now, did he recover some $30,000 in back pay before he was reinstated? William Harvey Elrod, Jr.: At the time of his reinstatement under the Back Pay Act, as amended, he received full pay. Warren E. Burger: And that amounted to some $30,000? William Harvey Elrod, Jr.: Some $30,000. It's not in this record, but it had to be true. Upon which he paid taxes and upon which his insurance was deducted. He has... his economic losses, while they embrace the matter of attorney's fees and of lost leave time, they are not of great moment in this case. The dignitary elements are: the right of the individual to... to be free from this type of tyrannical action by a middle-level martinet. Warren E. Burger: On your theory, is it not true that a great, great number of employee discharges or failures to get promotions or tenure or whatever in government might well be open to both the Civil Service remedy and the remedy that you are seeking here? That is, in many, many cases, the allegations... in 27 years I have seen hundreds of them now in the federal courts... many, many cases the allegation is that the boss was biased, that the hearing board was not impartial, that somebody was out to get him and that sort of thing. All those would add up to a Bivens tort claim, at least, too, would they not? William Harvey Elrod, Jr.: On paper. Particularly since Harlow against Nixon... or rather Fitzgerald against Harlow, I should think that they would be rather easily disposed of, if not on motion to dismiss, then by... on motion for summary judgment interposed by a government lawyer at no expense to the defendant. Warren E. Burger: Well, in 1883, if that was the year when Congress created what we now call the Civil Service System, was not the purpose of providing a remedy that would be inexpensive and fair and not put him... put the employee to going into the courts? William Harvey Elrod, Jr.: I don't read anything in the Pendleton Act that has anything to do with remedies. I may have misread it. It created a merit system, partially eliminated the spoils system, said that people who habitually used too much alcohol couldn't be employees, and created a Civil Service Commission. And then over the course of time we have the housekeeping details gradually developing until we have some remedies coming in with more to follow. Warren E. Burger: Prior to that... prior to that there was no real remedy at all, was there? William Harvey Elrod, Jr.: Initially, it was hard to tort, insofar as... in remedial terms. The government in this case, I don't believe, will make or has made any serious pretense of demonstrating that Congress explicitly has provided an alternative remedy. I said this was an alternative for a Bivens-type remedy, in effect. I do not read the several successive Civil Service statutes to which the government refers as occupying the field or as advancing an intention on the part of Congress to preclude this Court from inferring remedies. Bivens was decided in 1971. Congress has been in session several times since then. In 1974 it adopted the... amended the Federal Tort Claims Act by creating a remedy which it explicitly stated to be parallel... I suppose I could I get into the quagmire of the legislative history... for which there is some data to support the conclusion that it conceived it was creating a parallel remedy. In 1978, which... in an act which take effect... took effect after the effective date of Mr. Bush's reinstatement, Congress undertook to enact whistle-blower protection legislation. It did not in terms exclude Bivens, nor do I... I submit did it manifest an intent to occupy the field. But Congress has left Bivens in place for whatever the claimant. Now, we have then a civil servant who either has or doesn't have the... is entitled or is not entitled to the same measure of recovery for the same wrong as the citizenry at large. If he's not... I frankly do not perceive a viable reason why he shouldn't be... but if he's not, we all need to know it. The... we have a civil servant who is either entitled to full recovery... in full recovery against the federal functionary as he would be against a state functionary under 1983 28... 42 U.S.C. in 1983, the Civil Service Act. There is no question that recovery could be had, that they could carry out under the Civil Rights Act or under the Common Law analogues of malicious prosecution. This alternative, this postulated remedy does not make Mr. Bush whole, it does not deter like-minded bureaucrats from doing by some other means what we aver that Dr. Lucas did in this case. Sandra Day O'Connor: Mr. Elrod, do you suppose Congress could expressly adopt remedies saying that they intended to provide a cause of action here that would be a substitute for Bivens but a cause of action that would not grant punitive damages or attorney's fees? William Harvey Elrod, Jr.: Yes, ma'am. Sandra Day O'Connor: Would that be all right? William Harvey Elrod, Jr.: I have to-- Sandra Day O'Connor: So it isn't a constitutional requirement thing that these remedies be provided. William Harvey Elrod, Jr.: --It's a constitutional requirement that all litigant assemblies situated receive similar treatment. Sandra Day O'Connor: So Congress couldn't provide something otherwise even if it expressly intended to do so? William Harvey Elrod, Jr.: It could limit it to government employees, in my judgment. Sandra Day O'Connor: Congress could not-- William Harvey Elrod, Jr.: Without some demonstration-- Sandra Day O'Connor: --expressly limit a remedy to government employees, in your view, under the Constitution? William Harvey Elrod, Jr.: --Not... and not in view of the careful treatment which this Court has given similar problems in such cases as CSC against Letter Carriers and in BMW against Mitchell where it has searched and strained and required experiential empirical data to justify the restriction. Warren E. Burger: Mr. Geller. Kenneth Steven Geller: Thank you, Mr. Chief Justice, and may it please the Court: The fundamental flaw in petitioner's position is that it starts from the erroneous premise that a cause of action for damages based on an alleged constitutional violation is an essential ingredient of the constitutional right itself. Based on this faulty assumption which confuses rights and remedies, petitioner asks as he did a moment ago why should federal employees be deprived of this right when state employees, for example, in a comparable situation would be able to bring a personal damages action in federal court. And the answer is an obvious but nonetheless extremely important one. State employees can bring suit because Congress in Section 1983 has expressly legislated a cause of action for damages. Now, Congress has not done so with respect to federal employees such as petitioner. Instead, Congress has set up an elaborate and comprehensive administrative mechanism, followed by judicial review, as a means of remedying adverse personnel decisions in federal employment, including personnel decisions alleged to be based on some unconstitutional motivation. Now, this administrative scheme can provide adequate make-whole relief, and it represents the product of literally a century's worth of careful balancing of the rights of federal employees and the demands of the federal employment relationship. And we submit that it would be an unwarranted intrusion into an area plainly reserved to Congress if this Court were to create an additional damages remedy superimposed on top of the remedy Congress has provided, absent any statutory authority to do so. Now, this case is, of course, merely the latest in a series of constitutional damages actions that this Court has considered in the dozen years since Bivens was decided. But it's important to realize at the outset that this case is fundamentally different from any of the prior cases. This case is unlike Bivens itself because in Bivens Congress hadn't addressed the remedial question at all. The argument made in Bivens was that the claimant in that case should be relegated to his remedies under state tort law. And this case is also unlike Davis against Passman because in Davis the claimant was expressly included... excluded by Congress from a comprehensive statutory remedial scheme and would have been left entirely remedyless absent the Bivens action. Finally, it is unlike Carlson against Green because in Carlson Congress had set up a judicial remedy that was not designed with constitutional violations in mind and was plainly intended to serve as a complement to rather than as a replacement for a Bivens remedy. Now, in each of these cases, before allowing a Bivens remedy, the court ensured that Congress either had not addressed the question of what remedy to provide or had addressed it in a way that was not intended to occupy the field. The court, in effect, was legislating interstitially. It was carrying out Congress' intent by providing a remedy in a case properly within its jurisdiction, but in a way that didn't frustrate Congress' primary lawmaking power. Now, the question here is very different. Congress has provided an express statutory remedy. That remedy is in the Civil Service laws. And it's expressly designed to deal with, among other things, constitutional violations of the kind alleged by petitioner here. And Congress has done so in a comprehensive way that really leaves very little doubt that that remedy is intended to be exclusive. We believe that Congress' intent should be followed here as well as it was in Bivens, Davis, and Carlson. Now, the Court has organized uniquely into Congress' intent in the past by essentially asking two questions: First, does there exist another federal remedy equally effective in the view of Congress? Second, if there is no other available remedy, are there nonetheless special factors counseling hesitation such that Congress couldn't have intended the courts to intrude into a particular area simply based on the power of the jurisdictional ground? And we believe that both questions lead to the answer given by the Court of Appeals in this case. Byron R. White: What ground did the Court of Appeals go on? Kenneth Steven Geller: The Court of Appeals focused on the... on the second ground, the counseling hesitation, although in the course of it it described the very comprehensive Civil Service remedies that... that the... that federal employees have... have available to it. I think the court might have done that on remand after this Court decided Carlson against Green because there was a statement in Carlson about requiring an explicit statement by Congress. Byron R. White: So they didn't... they didn't come out with the ultimate conclusion that you suggest in your first argument that Congress intended the remedy provided to be exclusive? Kenneth Steven Geller: Well, they didn't in those terms, Justice White, but both questions are really designed to answer the same question, which is: What is the intent of Congress? Did Congress intend the courts to-- Byron R. White: So you are just presenting one ground, not-- Kenneth Steven Geller: --We rely on both grounds here, although we think that the... the way to analyze this case is to look and see as the court did in Bivens and Davis and in Carlson whether there was some other adequate remedy available to the claimant, and if there is, and if Congress intended that remedy to be exclusive, that's really the end of the judicial inquiry. Byron R. White: --Well, if we disagree with that, if we didn't embrace the Court of Appeals' rationale, you nevertheless suggest we affirm on-- Kenneth Steven Geller: Absolutely, yes. We argue-- Byron R. White: --the ground you present? Kenneth Steven Geller: --Yes. We argue both, we argue both of these points below. And as I say, there are really separate ways of answering the same question, which is: What was Congress' intent? Let me say that this is at bottom just a federal employment dispute. Petitioner was given a two-job grade demotion from GS-14 to GS-12 following a disagreement with officials in his agency about internal agency practices. Now, his superiors claim he was demoted for publicly making false and misleading statements about his job that disrupted his agency's activities and undermined employee morale. And petitioner claims on the other hand that he was in fact demoted simply for justifiably criticizing his superiors. This is the sort of dispute that in the private sector would be resolved internally or by contract or arbitration or something like that. And in the federal employment sphere as well, the court has been extremely deferential to the executive branch and to Congress in settling these courts of... these kinds of internal employment disagreements. So even in the absence of any guidance by Congress, we think that this is an area that counsels hesitation in the implication of a Bivens remedy. But here we don't have congressional silence at all. What we have is an extremely elaborate, comprehensive, adequate system of administrative and judicial remedies that Congress has set up precisely to deal with the sort of question that is raised in this case. Aggrieved employees can challenge adverse personnel actions, and including personnel actions claimed to violate their constitutional rights. They can pursue... pursue those remedies through two layers of administrative review, followed by judicial review. And if they eventually prevail, they are entitled to complete make-whole relief. They can get back pay, as Mr. Bush did, reinstatement, restoration of all employment benefits, correction of any personnel records. The Congress clearly thought when it was passing the Back Pay Act, it was passing complete perfecting legislation to make the employee whole. And this Court said much the same thing in Samson against Murray and Arnett against Kennedy. In fact, it's quite peculiar in a sense that the petitioners would argue that a Bivens action is more effective than... than what Congress has already provided for someone who claims... whose claim is based... basically an employment dispute. Someone who claims he was demoted or fired, it would seem that any remedy that didn't include something like reinstatement would be ineffective. And yet we're told here today that the only effective remedy is a constitutional damages action. Indeed, petitioner pursued these very remedies and, I said... as I said a moment ago, received reinstatement, back pay, and restoration of all benefits. Now, we submit that when Congress has spoken as clearly as it has here, there is simply no room left for the Court to legislate interstitially. There is no need for the Court to create a damages remedy to vindicate constitutional rights, because Congress has already announced the remedy it believes should be applied in that situation. And that remedy is plainly an adequate one. If the Court's statement in Bivens, Carlson and Davis about Congress' ability to substitute for a Bivens remedy with something that it believes to be equally effective means anything, it has to mean that Congress can do what it did in this case in the case of federal employees. And I think what the Court meant in Carlson when it talked about an explicit statement, requiring explicit statement by Congress, I don't think the Court meant anything more than Congress had to be legislating with the Constitution in mind, unlike, for example, in Carlson against Green, where the claim was that a tort claim remedy was a substitute for a Bivens action even though Congress in passing that tort claims remedy certainly wasn't legislating with the Constitution in mind. In fact, it wasn't even enough under the tort claims remedy to prove a constitutional violation, the plaintiff had to mold his claim into the form of a common law tort in order to recover. But here the Civil Service remedies are clearly addressed to, among other things, constitutional violations. In fact, as we point out, one of the early Civil Service laws, the Lloyd and Fallon Act, was passed to prevent the sort, the same sort of adverse personnel actions that petitioner Bush claims he suffered in this case, where Congress was concerned that Presidents Taft and Roosevelt had issued gag orders preventing executive branch employees from... from complaining to Congress about abuse or mismanagement in the Federal Government. So we think that what Congress has done here is in... it is to pass a remedy that certainly in its view, and the Court said in Carlson against Green that it has to be equally effective in the view of Congress, not in the view of plaintiffs or even in the view of this Court. And we think that that is what they have done here and that the Court of Appeals therefore properly affirmed the dismissal of petitioner's complaint for failure to state a cause of action directly under the Constitution. And we would ask that that judgment be affirmed. If there are no further questions? Warren E. Burger: Thank you. Do you have anything further, Mr. Elrod? You have 4 minutes remaining. William Harvey Elrod, Jr.: May I submit to the Court a close and careful collation of the legislative materials which the government itself cites in this case will not disclose that Congress has ever done more in the area of remedies for the type of grievance that Mr. Bush has than it did for the type of grievance that Mrs. Green had in Carlson against Green. I submit that it is erroneous to say that we complain of a personnel action. We complain of the procuring of this personnel action which resulted in our being punished for having exercised a constitutionally protected freedom. Warren E. Burger: Thank you, gentlemen. The case is submitted. Speaker: The Honorable Court is now adjourned until Monday next at 10:00.

Emanuel Redfield: -- I'm about to say that after a trial, sometime before Christmas of that year. And If you recall, the temporary injunction was granted in September and the trial took place shortly before Christmas. After deliberating over the question, despite the law of saying that judgments have to be made within two days. The court took until, I think subsequent June before he rendered a decision. The injunction restrained these appellants from distributing, selling or acquiring possession of these books. It held the volumes to be obscene. Speaker: I take it -- Emanuel Redfield: And -- Speaker: -- in your position, nothing turns on the degree of the obscenity that's at bar. Emanuel Redfield: No. Speaker: That it's hard -- what the Government calls in the next case hardcore obscenity, why your point would be still -- Emanuel Redfield: I'm -- I'm not touching that point at all. I'm -- I -- I did not contest it from the beginning. Speaker: (Inaudible) Emanuel Redfield: Yes, and in that action, of course, I raised the constitutional questions that I'm here raising. But the court held the law to be constitutional. It held that there was no prior restraint involved and the very voluminous opinion written seems to focus its attention on the fact that these books were so bad that it didn't appeal to this judge. He also held that the law will be constitutional because no prior restraint was involved in that by analogy to certain picketing cases. There could not be a prior restraint. Then we appealed to the Court of Appeals of New York, and the court there sustained the constitutionality of the statute with three judges siding with one opinion and three judges with another opinion. In my argument as I stated earlier, the only issue is would a prior restraint by this injunctive procedure. In attacking this problem, for the moment, I have to omit the feature of obscenity, I will come to that and if I don't have time to come to it, it's in my brief. And we have to start with this. What is the effect of this statute? Under the law of both the statute and the general equity procedures in New York, a stay was obtained, a temporary injunction was granted and seizure of the books follows. The statute therefore in effect, and that is the important element, in effect operates to prevent the publication from reaching the public. The injunction might well issue before the books are even bound, if they're merely being printed and held ready for distribution. And in that sense the advice goes to the very heart of protecting publications from suppression. It was established long ago in this Court, that distribution is protected as well as publication. The (Inaudible) case holds that. And if distribution is protected as well as publication, then I don't see that it makes any difference whether or not this book is directed against somebody who has a manuscript only or whether it's directed against distribution. In both cases the suppression is effectual. The books cannot reach the public.Only recently, this Court held in Butler against Michigan, that the public's interest to be able to read what is published is a right that must be affirmed. And if this injunction deprives the public of that right, it well comes within the scope of that Butler articulation. Now -- Speaker: What was (Inaudible) criminal conviction, under New York statute it provided that one duly convicted for disseminating obscene material, all the material of that class is to be destroyed (Voice Overlap) -- Emanuel Redfield: Yes, I'm -- I'm very happy you raised that because I thought of that many times. But I would say things should be reached when you have to dispose of them. This is not that case. I -- in other words, if I were defending a person convicted such as you mention, I might well raise at that time the question as to whether or not the Court make -- I mean that whoever is empowered, whichever public officer is empowered to destroy, may be violating the constitutional rights of -- the both, the public to read and also of the person who owns those books. But I say -- Earl Warren: (Voice Overlap) Emanuel Redfield: -- that's not involved here -- Earl Warren: No, please finish. I -- Emanuel Redfield: I'm sorry. Earl Warren: Excuse me. Emanuel Redfield: But -- but that's not involved here and I say we have enough difficulty with this case without taking on additional ones. Now, this brings me -- Earl Warren: Before you get to a new -- new subject, may I ask. It makes no difference to you then whether there had been a sale of one or more copies of this book before this action was brought or whether they were just held there for distribution. Emanuel Redfield: Well, the -- the question -- that question, however, is one of -- let me put it this way. The -- the sale of it is sort of evidentiary of the existence of these books for the purpose of sale. Earl Warren: Yes. Emanuel Redfield: But I don't think it will make any difference in principle, so long as you are suppressing the book. Earl Warren: Well, that's what I understood you to say -- Emanuel Redfield: Yes. Earl Warren: -- that the -- that the Constitution protects the distribution -- Emanuel Redfield: Yes. Earl Warren: -- as well as the publication. Emanuel Redfield: Yes, sir. That's exactly what I meant. Earl Warren: Yes. Emanuel Redfield: Now, in Near against Minnesota, this Court had before it a case which I think is not only a guide but as an authority for determination of this case. The facts are almost identical. The only difference being that in Near, you have a libel situation, whereas here one of obscenity. In Near, this person published a magazine -- a newspaper -- a weekly newspaper that was sought to be enjoined under the Minnesota statute, comparable in every way to this one. The statute enable public officer to go into Court and get an injunction against the distribution of any publication, present or future on the ground that such a publication was a public nuisance. And the public nuisance is that of being either libelous or else obscene. And this Court voided that Minnesota statute, so far as it applied to that particular issue. The issue there being that the newspapers were very libelous and they were certainly were very libelous. The Court held that the issue there was not punishment of Near but rather suppression. And Chief Justice Hughes for review, the history for the First Amendment -- Amendment, concluded that the First Amendment was enacted for just that situation. Speaker: But he also had a sentence in there that indicated they might be some difference whether it is an obscenity issue. Emanuel Redfield: I'm coming to that. Well, if I don't have a chance to come to that, I'd like to take the opportunity at this moment. What he said there, if you recall, was not well articulated. That is, he didn't treat it comprehensively. It was just one of those passing remarks. It was not based upon any authority under the Constitution. There were no decisions prior thereto. There were no statutory or constitutional provisions covering that point. He just made that remark in passing. It was pure dicta. Now, what he said there is obscure, too, because whether or not he referred to criminal prosecutions or referred to civil suits, is not made clear. Therefore, I say that the Near case, so far as obscenity is concerned, cannot be deemed the authoritative. All that was involved in that particular case were these libelous newspapers. And I dare say, that if one were given the choice between the fulminations of newspapers like Near's, in which he libeled race, people, innumerable public officials and did it continuously, if one were to give a choice between that and some of this stuff that is termed obscene, I'm sure that there are many people who would think that the obscene were a lesser evil, for the reason as we all know that some of the fulminations that appear in the Near magazines were comparable to the Hitler ranklings that resulted in about six million people dead. Now, whether obscene, books can produce six million dead, I don't know. But certainly when you have social conduct, such as involved in Near's newspapers, I give pause as to which social evil was greater. Now -- Felix Frankfurter: Is that pause -- if I may say so. That pause is just where legislation comes in. If we have to fall then we have to pause and the and the agency which on whole seeks to express what social policy should be paid its role. That's what they're for. Emanuel Redfield: Well, the question is this -- Felix Frankfurter: If you call that a pause it doesn't mean that they've transcended their powers. Emanuel Redfield: All right. But you come and let's -- let's -- it's off my path here but as long as the right that the (Inaudible) case in which you took particular interest -- Felix Frankfurter: I wrote the opinion in that case.[Laughter] Emanuel Redfield: Yes. Was one of criminal prosecution for libeling a race and you sustained it because of the criminal nature of it. The libel being criminal, whereas in Near, there was libel and yet the civil nature of it saves -- saved the Near from -- from the -- being condemned by injunction. Felix Frankfurter: You don't quite mean that. If you do not mind -- if I see what your words imply -- Emanuel Redfield: Well -- Felix Frankfurter: -- that the -- the power of a legislature to impose criminal penalty was greater than to deal with it civilly. Emanuel Redfield: Well, when it comes to expressions, yes. Felix Frankfurter: Really? Emanuel Redfield: Well -- Felix Frankfurter: You turn in advance, the man can -- Emanuel Redfield: No. Felix Frankfurter: -- public sampling. Emanuel Redfield: No, that's right. Felix Frankfurter: That's a very different thing -- Emanuel Redfield: Yes, that's right -- Felix Frankfurter: -- in subjecting him to jury trial after he's published it to see whether he's trying to vest the law. Emanuel Redfield: Well, for this reason that in criminal cases, you have a right to a jury trial, whereas, what do you have in a case like this? It's the -- it's the opinion -- Felix Frankfurter: But (Voice Overlap) jury trial's tomorrow if it wanted to as far as -- Emanuel Redfield: Very true. Felix Frankfurter: -- Federal Constitution is concerned. Emanuel Redfield: Very true. So, what aid would you have in deciding whether or not a -- a book is obscene? Felix Frankfurter: The responsibility of the judge. Emanuel Redfield: Well, with all due respect, I -- I might say this. Where does a judge get expert opinion that he knows more than, let's say, an administrator's official? Felix Frankfurter: But you're not -- you're not undertaking the burden that you very wisely injected of passing on whether Near would pass this obscenity statute. You're merely objecting in this case, who are -- the arrangement to an exercise of power, whereby a concededly obscene book is prohibited from being disseminated after it's found to be obscene. Emanuel Redfield: Yes. Felix Frankfurter: But if you afford any of the fine place between coming on to be heard and eventually determining if it is obscene and not disseminating it in the mean time. That's your posture, isn't it? Emanuel Redfield: Well -- Felix Frankfurter: It's obvious. Emanuel Redfield: From the beginning here. I mean, it's a series of suppression from the very minute that the order of show cause is served. Now, in -- in the dissent in Near case, the dissenting judges took the position that because there was a court that was rendering judgment and not an administrative official, that that did not make any difference. Whereas the majority did see the difference between a judge -- no, I'm sorry, I should say this that the -- the majority in Near, felt that there was no difference between a judge rendering a decision and an administrative official rendering a decision. That in both cases there was somebody who was hearing and determining what should be done with these publications. Felix Frankfurter: Mr. Redfield, this Court decided some years ago that it makes all the difference in the world to such an extent that it's unconstitutional to allow an administrative person to determine citizenship. That in deportation cases it requires the Court. That's reading given in that case by Mr. Justice Brandeis that somehow (Inaudible) is a matter of discipline, is a matter of lot of things there are protections through a judicial proceeding that are not afforded by the administrative proceedings. And now you should say it doesn't make any difference. Emanuel Redfield: Well, from my reading of the cases in this Court, I didn't see that there was any difference so far as -- as censorship is concerned between an administrative official and a judicial officer. The Near case made it clear. The Near case said a judge can't do it. And later on in Cantwell case there was a remark to that effect that censorship by a judiciary is a -- is as of noxious to the Constitution as censorship by an -- an administrative official -- Felix Frankfurter: That's your problem to establishing this case. This proceeding through the statute was carried out by the New York judges for censorship. Emanuel Redfield: That's right. Felix Frankfurter: That's your job. Emanuel Redfield: That's right. And that's what I have done. And it can't -- it can't be avoided. Felix Frankfurter: Censorship other than that the determination after judicial proceeding, satisfying all the requirements of the process a book is condemned for having been obscene. But that's not what we mean by censorship. All it meant in the Near case is prior censorship. If you can or that you can't show expressions of the mind in advance. Emanuel Redfield: Well, but may I -- also this in the -- in the second that I have that prior censorship in the mind cannot exist because you can't sense of something in a person's mind. You've got to have it in some tangible form. Felix Frankfurter: That was the advice of the Near case. That they said, “Hereafter, you can't publish your papers.” And that was the advice in -- what was that case we had here? (Inaudible) Emanuel Redfield: Yes, sir. Felix Frankfurter: That they said simply because you were -- unless she was the mayor of yesterday you can't be the mayor in the future. That's power. Earl Warren: Mr. Quel. Seymour B. Quel: If the Court pleases. In order that Your Honors may understand how narrow is the issue in this case I should like to tell you a little bit about the New York practice which is pertinent to this appeal. This case was tried before a judge without a jury in the New York Supreme Court, which is our Court of original jury -- of original jurisdiction. Now, after a judgment has entered in the Supreme Court, there are two methods of appeal open to an aggrieved party or a party who considers themselves aggrieved. He may, if he wishes, appeal to the Appellate Division of the Supreme Court. And thereafter, he may appeal to the Court of Appeals, provided that the appeal lies and it always does when it's a constitutional question. Now, if you take that kind of an appeal, you'll bring before the appellate division in a non-jury case every question which was before the judge below. They can review the weight of the evidence. They can reverse if the findings were against the weight of the evidence. They can consider any question which the judge below could have considered. They can render any judgment which the judge below should have rendered. Now, the defendants in this case did not follow that method. They went by another route, also allowed by our practice, but under which the issues are much more limited. They took a direct appeal to the Court of Appeals from the judgment of the Supreme Court. Now, you can only do that under the New York practice, where the only question involved is the constitutionality of a statute. And when you take that kind of an appeal you waive every other question. You waive every factual question. So that when they got to the Court of Appeals, for example, they could not say that the finding of obscenity was against the weight of the evidence. That question was not open to them. If they wanted to do that they should have gone to the appellate division and then to the Court of Appeals. So that they were left in the Court of Appeals by the method of the -- of procedure which they deliberately chose with one question and question only. Namely, that the statute was unconstitutional on its base. There can be no quarrel with the finding of obscenity as a factual finding by the court below. They didn't bring that up for review. Earl Warren: It wasn't open to them to have determined the constitutionality of the statute as applied? Seymour B. Quel: Oh, yes. That was open to them but -- but it was not open to them, for example, to say that the books were not obscene as a matter fact than if the finding of obscenity was against the weight of the evidence. Now, in addition to that, by that method which they chose -- Felix Frankfurter: But I take it -- I don't think -- Seymour B. Quel: Surely. Felix Frankfurter: -- so I ask -- Seymour B. Quel: Surely. Felix Frankfurter: -- if -- if the book on which they were convicted was Darwin's argument of species and they came up and the chief justice is just suggesting, them as applied, I suppose the Court of Appeals could take judicial notice of what the argument of the species was and say, that isn't what the statute, but the statute (a), doesn't mean that, if it did it would be unconstitutional. Seymour B. Quel: That is, the statute was not designed to cover that kind of a book. Felix Frankfurter: That would -- Seymour B. Quel: Yes. Felix Frankfurter: -- or wouldn't it? Seymour B. Quel: I think -- I think -- Felix Frankfurter: Not that (Voice Overlap) -- Seymour B. Quel: -- that was open to them. Felix Frankfurter: -- not contested questions of that. Seymour B. Quel: That -- that's correct. And I -- and I think it might -- I think it was open to them to argue on an appeal of that character. I think you can always argue that there was no evidence whatsoever to support a finding of fact. But so long as there is some evidence, you may not argue that the finding of fact was against the weight of the evidence. It's a much more limited and narrow type of appeal. And they -- they deliberately chose it. They could've gone by the other route. Felix Frankfurter: If there is -- if there is also a constitutional question, thus the question of evidence and they go to the appellate division and they didn't go to the Court of Appeals as a matter of course? Seymour B. Quel: As a matter of right. You can appeal -- Felix Frankfurter: If there is a constitution (Voice Overlap) -- Seymour B. Quel: That's -- that's correct, Your Honor. When there is not a constitutional question you need permission. Felix Frankfurter: All right. Seymour B. Quel: But assuming that -- assuming I should add one -- Felix Frankfurter: The others do not displace the matter of right, do they? Seymour B. Quel: That's correct. You -- I won't go into the -- Felix Frankfurter: I understand. Seymour B. Quel: -- circumstances under which you can appeal when there are others in constitutional question. But there's no gainsaying the fact that where there's a constitutional question, the appeal lies as of right. So that, for example, in this case they could have gone to the appellate division, raised any question they wanted to in the appellate division and then if there were a unanimous affirmance against them, appeal that as a right to the Court of Appeals. Felix Frankfurter: I don't know why you're arguing this because as I understood Mr. Redfield, he concedes -- he assumes that this is obscene. Did -- did I misunderstand it? Seymour B. Quel: No, I -- I think that's -- I think that's right, Your Honor. Now, more than that when they got to the Court of Appeals or under the limited method which they had chosen, they could, of course, have raised the question that the statute was so vague and -- so vague as to be unconstitutional. But they never raised that question. Now, those questions which are raised in the companion cases, which are being argued both before and after this case, were never raised by the defendants in this case. And for that reason I won't devote any more of my argument to that question. I'd like to get down to the only question in the case which is open to these defendants and that is the question of prior restraint. Now, their position is in essence that although it was perfectly all right to enact the criminal statute against the distribution of obscene literature, there's nothing you can do about enjoining it. You can put a man in jail. You can fine him, but he has a constitutional right according to their argument, to go on and carry the jail sentences. And there's nothing that can be done about it. Now, the prior restraint involved in our statute, if it can be fairly called any kind of a restraint at all, is about as narrow a restraint as you could possibly get. To begin with, the action is civil It is not criminal. Secondly, the statute specifically provides that after the joinder of issue, the defendants are entitled to a trial within one day thereafter and are entitled to a decision within two days after the completion of the trial. Now, in this particular case, that provision was waived and the record -- is specifically in the record that counsel waived that. Otherwise, the Court would have had to decide this matter under the statute within a -- within two days. Now, the only other -- Felix Frankfurter: What's the -- Seymour B. Quel: Surely. Felix Frankfurter: -- what is the normal cause which brings you up when the issues are joined? If it begins with -- what's the technical term of the papers that you give me? Seymour B. Quel: This -- this -- the summons -- Felix Frankfurter: Summons -- Seymour B. Quel: -- and the complaint. Felix Frankfurter: Now, between the summons -- well, this is a summons to which is annexed to decide to have this -- this enjoined, is that right? Seymour B. Quel: In an ordinary injunction action. Felix Frankfurter: No, I mean in this, an ordinary -- Seymour B. Quel: Oh. Felix Frankfurter: -- injunction case. Now, between the summons of this old fashioned bill and what you call the joining the issue, what is the normal procedural time? Seymour B. Quel: Well, under -- under our New York practice, you normally have 20 days in which to answer a complaint in the Supreme Court. But you don't have to wait for 20 days. You can put your answer in the next day. An issue was joined when the answer comes in. Felix Frankfurter: Now, are these -- these allegedly noxious books at once -- is their dissemination at once enjoined automatically on the party of the complaint? Seymour B. Quel: No, not automatically, Your Honor. But that comes in under -- not the provisions of section 22 (a) of the Code of Civil -- Civil Procedure which is here involved, but under our Civil Practice Act. Under section 877 of the Civil Practice Act. In any equity action you may make an application for an injunction pendente lite. And the granting of that injunction and whether a stay shall be granted, pending the hearing of the motion for that kind of an injunction are matters within the discretion of the trial court. Now -- Felix Frankfurter: Well, it's not ex parte, is it? Seymour B. Quel: The granting of the order to show cause. Felix Frankfurter: Yes, it was not the -- Seymour B. Quel: May it may -- it may be ex parte generally is. But the granting of the injunction pendente lite is not. Now, in this particular case -- Speaker: The stay is ex parte though. The order to show cause includes to stay that's (Inaudible) Seymour B. Quel: And if a judge signs it, he might strike it out and sometimes judges will not sign an ex parte but will -- will say they'll -- they'll have a hearing. That frequently happens. But nevertheless, a judge may sign it ex parte. And in this particular case, the order to show cause with the stay in it was presented on September 10th. And it was signed retainable on September 14th, and then apparently the motion was adjourned for three days until September 17th. And on September 17th, the motion was heard and the defendants consented to an injunction pendente lite. So, that that question, as far as I can see it, is out of the case at least as far as these particular defendants are concerned. Now, that it seems to me points up the very narrow issues here. Now, throughout his brief, counsel has spent a great deal of time on the Near case. And he pens almost all of his argument on what he says was the holding in the Near case. Because in the Near case the Minnesota statute, which was under attack, permitted the enjoining of future publications of the particular issues involved. And this Court held that that was unconstitutional. Now, counsel says that's true but also involved in the Near case were some issues of the particular magazine which -- which had already published. And the judgment enjoined the -- the judgment appeal from enjoining the sale or distribution of those particular issues. And therefore says, counsel that's just like our case. Now, actually, of course, the thrust of the Near case was against the publication of the future issues because the Near case which -- was one -- which were -- was brought against the publisher. It's true that incidentally involved in Near were some copies of the -- of the newspaper which had already been published. But nobody was particularly interested in those if it'd be just as though you were trying to get an injunction against the New York Times with reference to future publications. Now, of course, nobody would be very much interested in whether issues of the Times which were lying around at all and had already been printed and were a week or a month old were being circulated. It's the future issues of the magazine involved which were the main thing in the Near case. And these incidental matters were simply caught up in the sweep, so to speak, in the whole thrust of the Court's opinion, as I read it, was aimed at those future issues. Now, I -- Speaker: What's the practice under the statute? Do you go after criminal, answer at the same time or do you like to -- Seymour B. Quel: Well, Your Honor, that's a -- not an easy question to answer for this reason. We began this proceeding in 1954. That is as far New York City is concerned. Of course, this is a statewide statute and I'm not familiar with how it may operate in other cities. And then this case was tried and -- and the appeal was taken -- appeal taken to the Court of Appeals and has been pending in this Court for quite awhile. And -- and in the mean time, as I recall it, there's only one other case that we brought in New York City under this particular statute and everybody agreed to await further proceedings until the determination of this Court. So that in actually practice, as far as I know, they've only been these two cases at least in reason is -- Felix Frankfurter: You're of the statute, Mr. Quel? Seymour B. Quel: Well, the statute has been on the books since 1941. But in 1954, it was amended for the first time to provide that the corporation counsel was one of the persons authorized to bring the action -- Felix Frankfurter: No, I mean the substantive law. Is that not early? Is that date from 1941? Seymour B. Quel: The penal provisions about obscenity -- Felix Frankfurter: I understand. Seymour B. Quel: -- have been there for a long time. But this -- this law permitting an injunction dates from 1941 -- Felix Frankfurter: That's a very common statute, isn't it? In -- in the various states? Seymour B. Quel: I think not, Your Honor. I have not -- I have not been -- Felix Frankfurter: So, the English -- Seymour B. Quel: I have not found any -- Felix Frankfurter: The English statute's a parent to this statute is -- is 1857, isn't it? Seymour B. Quel: Yes. Felix Frankfurter: That's the one that came up (Inaudible) Seymour B. Quel: In -- in covering the decision. Felix Frankfurter: Yes. Seymour B. Quel: But as far as I know -- well, Your -- Your Honor, I -- I'm not certain now whether the statute involved in the Hickman case was a -- was a criminal or a -- Felix Frankfurter: No, no, it was this. Seymour B. Quel: It was this? Felix Frankfurter: The proceedings before magistrates claiming that the book is indecent and therefore -- Seymour B. Quel: I might say while we're on the subject, Your Honor, I -- I feel constrained to call Your Honor's attention to something which I do not believe affects the decision in this case. But think I should call it to your attention. A few days ago, to be exact on -- on March 26th, this statute was amended in several respects. The only one which is material to our present discussion is that it added a provision which enjoins among other things the publication of obscene matter. Now, what that means, I don't know. Felix Frankfurter: This is a separate section. Seymour B. Quel: It is not a separate section. It is an amendment of the statute of section 22 (a) of the Code of Criminal Procedure, which is now before Your Honors. The amendment of course was not in effect when this case was brought or when it was decided. And how that provision would be construed by the New York courts, the amended -- to reprovision -- Felix Frankfurter: Or construed out. Seymour B. Quel: Or -- yes. I think actually what they mean is republished. I don't think that they meant to imply that you can enjoin the publication of -- as yet unpublished obscene matter. If they did mean that, I can see that the statute would raise grave constitutional questions. But that is not involved in the instant case. Hugo L. Black: That would be Near -- Seymour B. Quel: I beg your pardon? Hugo L. Black: That would be Near, wouldn't it? That would be Near. Seymour B. Quel: I -- I think it would be if -- if it were actually meant to enjoin the -- the publication of matter as it -- as an -- as yet unpublished. And I might say in that connection, Your Honor, I forgot to mention the fact that in this very case, perhaps in an excessive order, in the trial court we tried to enjoin not only the 14 issues which had been published, but two other issues which had not yet been published because we said it's quite evident that they're going to be just like all the others. And the trial court refused to grant that injunction and we did not take any appeal from that, thereby, recognizing the correctness of that phase of the judgment. I think your -- I think Your Honors in view of the narrowness of the issues I can -- I can rest my argument there. Earl Warren: Number 582 -- Seymour B. Quel: Excuse me -- excuse me Your Honor. Shall I leave a copy of this amended bill? Earl Warren: You may -- you may leave it with the clerk. Seymour B. Quel: Thank you.

William H. Rehnquist: Mr. Nolan, you may proceed whenever you are ready. John E. Nolan, Jr.: Thank you, Mr. Chief Justice. May it please the Court: This case involves the issue of federal preemption of state common law claims of general application in the context of ERISA. The real significance of the case is whether or not the federal system of regulation of employee benefit plans, as governed by ERISA, will now be largely supplanted by the varying state laws that Congress intended ERISA to replace. Congress believed, and believes, that there are great advantages to ERISA, that those advantages admittedly do not include jury trials, punitive damages, consequential damages, de novo review of claims, decisions and other features that may be available from time to time under state law. If such state remedies are available, as the Court of Appeals opinion holds, then ERISA will effectively be nullified for all insured plans. Now, this is more than 80 percent of the health benefit plans in the United States, the vast majority of them. We argue that Congress could never have intended this result and expressly provided against it in ERISA. The focus of this case is an employee benefit plan governed by ERISA in its claims procedure as provided in Section 503 of ERISA. Pilot Life, the petitioner in this case, is the named fiduciary for that plan as provided in ERISA and as designated in the plan itself, and Pilot Life has full responsibility for all claims decisions and claims administration. Mr. Dedeaux, the respondent here is a participant in that plan and his claim for benefits was denied by Pilot Life. When it was denied, Mr. Dedeaux did not avail himself of the statutorily-mandated claims review procedure in ERISA, in Section 503. Instead, he filed suit in a Federal District Court in Mississippi, diversity jurisdiction. He claimed tortious breach of contract, fraud, and breach of fiduciary relationship. He sought disability benefits, consequential damages for mental and emotional distress in the amount of $250,000, and punitive damages in the amount of $500,000. There was a demand of jury trial, no mention of ERISA in the case. The District Court granted summary judgment for defendant. It held that ERISA provided the exclusive remedy. The Court of Appeals for the 5th Circuit reversed, holding that Mr. Dedeaux's state common law claims of general application were preserved by the so-called insurance saving clause of ERISA which keeps from preemption the state laws that regulate insurance. Now we say that that decision is wrong. The Congress in enacting ERISA sought to preempt all of the state law that came within the sphere of the statute, that the saving clause is not applicable to state laws like this because they don't regulate insurance and that, in any event, it was plain that Congress sought to prevent the direct application of any state law to an employee benefit plan. In cases like this which involve federal preemption of state law, this Court has said, as it did most recently in California Federal v. Garrett, decided last week, that its sole task is to ascertain the intent of Congress, and to do that it looks at the language and the legislative history, and the structure and purpose of the statute. The key language here is found in Section 514 of ERISA, it's entitled, "Effect on Other Laws". Section 514(a), is a sweeping, express provision for preemption. It says that ERISA supersedes any and all state laws that may now, or hereafter, relate to any employee benefit plans. It's followed in 514(b), by the so-called saving clause, which provides that nothing in ERISA shall exempt any person from any law of any state that regulates insurance. And that clause is immediately followed and modified by the so-called "deemer clause" which provides that no employee benefit plan shall be deemed to be an insurance company or engaged in insurance for purposes of any state law purporting to regulate insurance. Now there are two things to notice about the language in 514. The first is that when Congress uses the term, "state law that regulates insurance", it is using a term of art and in this instance one that has acquired very specific meaning through years of interpretation under the McCarran-Ferguson Act. The second is that Congress very plainly showed its purpose to prevent any direct regulation of employee benefit plans by state laws. That was the finding of this Court in the case of Metropolitan Life v. Massachusetts, decided a couple of years ago, where the Court said that the purpose of the deemer clause is to take out of the operation of the saving clause any state laws that apply directly to an employee benefit plan. These state common law claims not only apply directly to the employee benefit plan, but they clash directly with the key provision of ERISA with the provisions dealing with fiduciary responsibility, claims review, civil enforcement remedies. These are the core functions of ERISA. They go to the very heart of ERISA regulation and that's why Congress provided that they couldn't be regulated by state law. The legislative history of ERISA plainly confirms the intent of Congress, that the fiduciary standards of ERISA, govern the entire claims administration process. That was the finding of this Court in Mass. Mutual v. Russell, decided also a couple of years ago. It's in the opinion of the Court and it's very expressly in Justice Brennan's concurring opinion as well. Congress intended that ERISA provide a uniform source of law for evaluating fiduciary standards, that that law would apply all over the United States, and that it would provide standards for fiduciary and that the federal courts would be used exclusively for cases of-- Byron R. White: What was was the insurance company's fiduciary duty or position in this case? John E. Nolan, Jr.: --In this case, Justice White, the insurance company had the responsibility for claims administration. It also had the insurance policy on... it funded the plan. Byron R. White: It sold insurance, it sold insurance to the plan, I take it. John E. Nolan, Jr.: It sold insurance to Entex and-- Byron R. White: But, it wasn't a trustee of the plan? John E. Nolan, Jr.: --It was acting for the trustee and that's really the key to the case. It was performing the ERISA function that otherwise would have been provided by the trustee of the plan. It was acting in place of, and standing in the shoes of the trustee. It is the named fiduciary under ERISA and it was provided-- Byron R. White: It is the named fiduciary? John E. Nolan, Jr.: --It is the named fiduciary under ERISA. To it was delegated the authority to make the decisions involved in claims administration; to confirm or deny claims submitted to it. That's the discretion and that's the function of the named fiduciary. So, it's playing the key role. Byron R. White: And under ERISA how do you get at a claimed breach of fiduciary duty? John E. Nolan, Jr.: At ERISA... under ERISA you, if you have a case like this, first you go to the claims review procedure provided in 503. When you finish that you go to 502 which provides what this Court has referred to before as the six very carefully-- Byron R. White: If your claim is denied, why you can contest it? John E. Nolan, Jr.: --If your claims is denied, you can contest it through the procedures provided expressly in the statute. Byron R. White: And what if you think its just too slow? John E. Nolan, Jr.: Well, we... our position is that this is the law that Congress provided. I suppose that from time to time-- Byron R. White: Was the insurance company under this plan, or under the statute required to act within a certain time? John E. Nolan, Jr.: --Yes, it is. And if the claims review procedure, for example, is required to be finished in sixty days and then there may be an additional sixty days. If there has not been action at the end of that time then the claim is deemed to be denied under regulations provided by the Department of Labor, and then you go into the civil enforcement proceedings. It's a very carefully-- Byron R. White: And, and what is the civil enforcement proceeding in a court? John E. Nolan, Jr.: --The civil enforcement proceeding is in a court, yes. State or federal court; for some types of actions only federal court. Byron R. White: Well, let's assume you go to civil enforcement proceeding and you win and the insurance company has breached its fiduciary duty to act in time, or in some other way. Then what happens? John E. Nolan, Jr.: Then you get whatever-- Byron R. White: You get your claim paid. John E. Nolan, Jr.: --You get your claim paid. Byron R. White: With interest, I suppose. John E. Nolan, Jr.: Possibly. You get attorney's fees, you get other types of equitable relief. Byron R. White: But, you get no remedy against the trustee, against the insurance company. John E. Nolan, Jr.: Well, in this instance, Justice White, the insurance company, Pilot Life, is in effect the trustee. Byron R. White: All right, but you get no other remedy. You just make Pilot Life do what it should have done. John E. Nolan, Jr.: It is correct. Byron R. White: Plus attorneys' fees. John E. Nolan, Jr.: It is correct that you make Pilot Life do what it should have done. You are not necessarily limited to that remedy. Byron R. White: Well what can, what else can you get? John E. Nolan, Jr.: Well you can get all of the civil enforcement rights provided in Section 502. Byron R. White: Well, can you get any-- John E. Nolan, Jr.: You can recover benefits under the plan. You can enforce, or clarify your rights. Byron R. White: --But no consequential damages? John E. Nolan, Jr.: No consequential damages. Byron R. White: So even if your not getting your money on time has caused you to lose some money, or to cost you some money, you can't have any remedy for that? John E. Nolan, Jr.: Well, you can sue to obtain equitable relief specifically under the statute. You can sue to enjoin the fiduciary. Byron R. White: Well, I know, but can you get any money? John E. Nolan, Jr.: You can have the fiduciary removed. Byron R. White: But, can you get any money, Mr. Nolan? John E. Nolan, Jr.: Yes, you can get money. Byron R. White: In what form? John E. Nolan, Jr.: In whatever form the court to which the application for equitable relief is made finds appropriate. Byron R. White: But, if there's a cause of action that's applied to all insurance companies in the state that says that bad faith or refusal to honor a claim is remediable by some damages or by punitive damages, that state law is inapplicable in ERISA context? John E. Nolan, Jr.: That's correct, Your Honor. William H. Rehnquist: Mr. Nolan, you said that in the equitable side of the thing you could get money. Did I understand that correctly? John E. Nolan, Jr.: Well, I said that you could get money in the context of seeking to obtain equitable relief from the Court. William H. Rehnquist: Well, be more specific. John E. Nolan, Jr.: Well-- William H. Rehnquist: I mean you can get the amount of the claim plus attorney's fees on the law's side I take it. John E. Nolan, Jr.: --That's correct. William H. Rehnquist: And you say you could remove the trustee in equity. What sort of-- John E. Nolan, Jr.: You can enjoin the trustee, you can remove the trustee. William H. Rehnquist: --But now I want to know, because I thought you said that the equity side could award you some sort of money damages? John E. Nolan, Jr.: Well, I did not say damages, Mr. Chief Justice. William H. Rehnquist: Well, what did you mean? John E. Nolan, Jr.: I meant that an application for equitable relief to the Court, pursuant to the specific provisions of Section 502, can take whatever form the court, in that instance, might find appropriate. Byron R. White: Have you ever been-- John E. Nolan, Jr.: There have been a variety of-- Byron R. White: --Has there ever been a case where they, under ERISA... and it's been around for a while now... where some insurance company has had to pay a disappointed claimant some money on review? John E. Nolan, Jr.: --Well, I think that, generally speaking, punitive and consequential damages have not been allowed in ERISA cases by this Court or, by and large, by other courts. Byron R. White: That's really what this case is all about. John E. Nolan, Jr.: That is what this case is all about. William H. Rehnquist: And certainly a Court on equity never awards punitive damages. John E. Nolan, Jr.: That's correct. The court on equity never does. William H. Rehnquist: So, there is no prospect of recovery of punitive damages if the state law is preempted? Isn't that correct? John E. Nolan, Jr.: I think that's right and I think that's the key distinction between state law and federal law here. This was to be achieved by Section 514, the effect on other laws provision, the preemption of state law to allow the federal system to control employee benefit plan regulations. That section is referred to-- John Paul Stevens: But, Mr. Nolan, I really was puzzled, as the Chief Justice was, about your notion of some other money. Maybe there isn't all as much difference between the federal scheme and the state scheme, if there's some general equitable power to give money. I don't know about that myself. John E. Nolan, Jr.: --Well, I don't know-- John Paul Stevens: And what section are you referring to when you say that? John E. Nolan, Jr.: --I don't know of a general equitable power to give money. I know that... I know that this Court in Mass. Mutual v. Russell, the case that was before it two years ago, reserved its judgment about anything more than the specific sections that were involved in that case. And, that was the thrust of the concurring opinion. I know that-- Speaker: You argued that case? John E. Nolan, Jr.: --I argued that case, yes, Justice White. Speaker: Twice. John E. Nolan, Jr.: It, I know also that the, that the law provides for equitable relief and I just can't presume to say that that could never include the concept of making someone whole. I think it very plainly did not include damages. Sandra Day O'Connor: Well, what could it be other than restitution? I just think this argument strikes me as very strange and almost misleading. I understood that if the federal law preempts then there are no consequential damages available. There are no punitive damages available. There's no jury trial available and so on. John E. Nolan, Jr.: That is correct. But, there is equitable relief under Section 502. And I don't know what form that would take. I think it's pretty clear that it would not take the form of damages, punitive or consequential. Byron R. White: Punitive damages? John E. Nolan, Jr.: Yes. Byron R. White: Now, Mr. Nolan, why isn't it a regulation of insurance if there is a state law that says insurance companies must act promptly on claims and if they don't there's... then the insureds have remedies? Now, if an insurance company is stuck in violation of that law, if it has to pay some money, it comes out of its pocket, doesn't it? Why is that a regulation of a plan? John E. Nolan, Jr.: Well, I think that in, where a plan exists, as it does in this case, the claims administration is provided by the named fiduciary. Byron R. White: All right. John E. Nolan, Jr.: This Court has recognized that that whole function is controlled, governed by federal law under ERISA and the fiduciary standards of that law are applicable. Byron R. White: Well, that may be so, that may be so, but you think this, why should a state be preempted from providing a further remedy for a violation of a federal standard? John E. Nolan, Jr.: Well, I guess the... I guess the clearest answer to that, Justice White, is shown by the circumstances of this case. I believe that it is accurate to say, beyond question, that if punitive damages are available under state remedies, no participant, no beneficiary, not Mr. Dedeaux nor anyone else, will utilize the provisions of Section 503 of ERISA which provides for claims review. Byron R. White: Perhaps you could say he has to exhaust those remedies before he can have an independent action. John E. Nolan, Jr.: Well, you could, but his remedies there I guess would be viewed as never adequate if he had a shot at punitive damages in a state court. It isn't just that Mr. Dedeaux did this. I think it unmistakably clear that every litigant similarly situated would do it. If that happens, that reduces 503 to a dead letter. It repeals it in effect. Byron R. White: I suppose it would also raise insurance premiums substantially. John E. Nolan, Jr.: Well, I think that, I think that in ERISA Congress had that concern, Justice White. I think that it was... these plans are voluntary, nobody has to set them up. This is a law to provide for a voluntary system that companies will take on individually. So it was intended to be run efficiently and effectively, and at low cost. William H. Rehnquist: Does ERISA, Mr. Nolan, require that there be an independent trustee of some sort to administer the plan? Entex in this case couldn't do it itself? John E. Nolan, Jr.: It requires that there be a trustee. The trustee does not have to be independent. Entex could have done it. Entex is the plan's sponsor and administrator, but has delegated to Pilot Life this key fiduciary role. William H. Rehnquist: Do you have any, do you have any way of knowing what percentage of the administrators of ERISA plans are insurance companies? John E. Nolan, Jr.: I think that it varies quite a bit. Generally speaking, I think that larger companies do more of it themselves. I think that the insurance companies are most important for medium-sized and small companies where the kind of catastrophic losses that may be available in the plan would be too much for their resources. William H. Rehnquist: I suppose if an employer were a self-insurer there would be no question of the plan coming under the insurance savings clause. John E. Nolan, Jr.: That's correct. And there isn't. There are a myriad of variations. In other words, there are insurance companies that only insure, they fund the plan; but an independent agency, another insurance company, a claims administrator, the plan sponsor, someone else administers the claim and makes the claims decisions. There are other cases where the insurance company takes on all of the administration, including all of the claims part of it, but does not fund the plan. And so there are all of these varieties. Antonin Scalia: Mr. Nolan, what was the insurance exception meant to cover? I mean, you painted for us this picture of pristeen uniformity, but we have in the statute an exception that seems to indicate that there are some instances where the uniformity will be disrupted or otherwise you wouldn't need the exception. John E. Nolan, Jr.: Yes. Antonin Scalia: What does the exception cover where without it you'd get a different result? John E. Nolan, Jr.: That's the... that is actually the key question, Justice Scalia, and I think that the clearest, most concise statement of that is found in a report of the House Labor Committee, it's dated January, 1977. It was referred to and relied on by this Court in the Metropolitan Life case and it goes directly to that point and the report says on the one hand it was clear that the plans subject to ERISA needed to be freed of the possibility of state regulation. On the other, it was important to limit the effect of pre-emption in order to avoid disrupting state efforts to regulate the conduct of other financial entities not subject to the federal act. So, I think that that really says it about as clearly as it can be said. Congress-- Antonin Scalia: Do you need an exception for that? John E. Nolan, Jr.: --Excuse me? Antonin Scalia: Would you need an exception for that? I mean, what kind of thing that arguably would have been covered by the statute has been excepted from it by this provision, or is it just a, you know, better make doubly sure kind of an exception? John E. Nolan, Jr.: I guess it could have been-- Antonin Scalia: I tend to think exceptions are in there because without them something different would happen. John E. Nolan, Jr.: --Yes. Antonin Scalia: What different would happen if this exception weren't there? John E. Nolan, Jr.: I think you're right, Justice, that it could have been done either way and perhaps the reason that it was done this way in this instance is the McCarran-Ferguson Act and the tradition of insurance regulations that follows from it and Congress's awareness of that. But, as far as the purpose of Congress is concerned there isn't anything in the legislative history that is inconsistent with the paragraph that I just read from the report. Antonin Scalia: All I'm asking for is an example of a case that would come out differently had the exception not been in the statute. John E. Nolan, Jr.: Well, I guess the... I'm not sure Metropolitan Life satisfied, satisfies that, but I think it probably comes pretty close to it. Any of, any of those... Metropolitan Life was a case that involved a mandated benefits law of the state of Massachusetts and it's exemplary, I think, of the principle, what we're talking about here. Anything that the state says, you have to put that in your policy, all of the regulation of insurance companies. I've read several law review articles in this subject in the course of preparing for this case, and the emphasis on insurance regulation is a thousand different regulatory features having to do with financial soundness and licensing and the selling of insurance and what the content of the policy is, and so on. You don't get to a question like this until you get into the operation of ERISA, in this instance until you get into the claims approval procedure. So, all of those cases in point of time back of where we are would be regulated by state insurance law. Byron R. White: I think you think Metropolitan Life really supports you here. William C. Walker, Jr.: Yes, I think it very clearly does, Justice White, because it defines the deemer clause, not a clause which is necessarily self evident on its meaning on first reading. But the Court in Metropolitan said that the deemer clause takes out of the saving clause state insurance laws when they apply directly to employee benefit plans. Sandra Day O'Connor: Well, Mr. Nolan, don't you think we'd have to cut back a bit on some of the language in that Metropolitan Life case for you to prevail here? William C. Walker, Jr.: For us to prevail, no, Justice O'Connor, I don't. I think that the case is great for us because it does define the deemer clause. It says, the Court says, we aren't going to limit the deemer clause any further than Congress has limited it in the clause itself, and that's, the Court says, we're not going to limit the insurance saving clause any more than Congress has limited it in the clause itself and in the deemer clause, and that's good enough for us. I'd like to reserve the remainder of my time for rebuttal. William H. Rehnquist: Very well, Mr. Nolan. Now we'll hear from you, Mr. Walker. William C. Walker, Jr.: Mr. Chief Justice, may it please the Court: Petitioner says that this is a case in which Congressional intent is to be discerned, and I agree. Fortunately and rarely in this particular case, Congress has expressly stated in the saving clause itself, its intent, its intent to save from preemption state laws which regulate insurance. We don't have to look anywhere else. And, indeed, it says it in the language of statutory construction. It says, don't construe any other provision in this whole ERISA as exempting or relieving any person from state laws. Antonin Scalia: From the law of the state actually, right? William C. Walker, Jr.: From the law of any state, you're right, which regulates insurance. Now, the distinction between the law of any state and state laws, I think, is one that was made in petitioner's brief, but which was rejected as not significant in the brief of the United States. This Court used the term "state law" in describing the preemptive effect in the Metropolitan Life decision. Antonin Scalia: xxx. William C. Walker, Jr.: No, sir. But, the legislative history also says it, and it uses the term "state law", and indeed, of course, the presumption is against preemption. And indeed, Section 514(b)(2) says nothing in ERISA shall be construed. That includes 514(c), which has the definition and which the slight change in language is present. So-- Byron R. White: xxx... state law that said that insurance companies will act on a claim within a week, seven days, and that would end. The state said this includes insurance companies who insure ERISA plans; that that would be the controlling time limit. William C. Walker, Jr.: --Yes, sir. It certainly would be. And-- Byron R. White: Despite what the plan said? William C. Walker, Jr.: --Yes, sir. That's certainly true and the important thing about that is, that's the distinction that the deemer clause makes. If the, if that same regulation purported to regulate plans by calling plans insurance companies-- Byron R. White: No, no, no. William C. Walker, Jr.: --it wouldn't work. Byron R. White: No. On the state says the insurance company shall have thirty days to act and the plan says fifteen days. The state law would control. William C. Walker, Jr.: Absolutely, if it's an insured plan. Byron R. White: Yes, yes, yes. William C. Walker, Jr.: And, that's the distinction. The distinction is between insured and self-insured plans. And, the reason is-- Byron R. White: So, it wouldn't make a bit of difference what the plan said in terms of the time or the procedure. William C. Walker, Jr.: --Absolutely. Byron R. White: And, the state law could say, if you don't act within thirty days, you're in court? William C. Walker, Jr.: Yes, sir. Byron R. White: You don't, you can disregard all of the appellate procedures the plan might provide? William C. Walker, Jr.: Yes, sir. Sandra Day O'Connor: Well, Mr. Walker, I think that we have to focus on the deemer clause, because whatever is covered by the deemer clause is removed from the savings clause, if you will, that you're relying on. So, we have to know whether the deemer clause extends to a trust established under a plan, whether or not the trustee is the insurance company that happens to be serving to insure that ERISA plan. And if anything at all seems clear from the history, the congressional and legislative history, of ERISA, it would seem to be that remedies provided for employees covered by an ERISA plan, whether insured or not, are limited to those spelled out in the legislation. And so I think there a very logical argument can be made and is being made that the deemer clause backs out of the savings clause at least the remedies provided for an insured employee. William C. Walker, Jr.: Your Honor, that's certainly the argument the petitioner is making. In doing so, petitioner is failing to look at the precise language of the deemer clause which says expressly, that no plan or trustee shall be deemed to be an insurance company or in the business of insurance. In other words, the deemer clause comes in to limit the savings clause. The savings clause says-- Sandra Day O'Connor: Well, it says, "for purposes of any law of any state purporting to regulate insurance companies. " William C. Walker, Jr.: --Yes. Yes, Your Honor. But, the deemer clause only limits the savings clause and the distinction has been made by this Court in the Metropolitan Life decision between direct and indirect regulation of plans. This Court has said that regulating an insurance company and an insurance-funded plan may in fact cause some consequences on the plan. But, that's okay, because Congress has said so and we're not in the position to decide Congress was wrong. Sandra Day O'Connor: Well, that's why I asked Mr. Nolan if he didn't think you had to cut back on some of the language in that Russell case. He thought not, but I think there's some difficulties. William C. Walker, Jr.: Yes, Your Honor. In the Metropolitan Life case, I think you absolutely do have to cut back on the language if you don't find for us. What the insurance companies want in this case, of course, is no regulation at all. They choose state regulation in the McCarran-Ferguson Act, because federal regulation is serious on the antitrust laws. They now see that state regulation in the developing common law of bad faith is serious and they will have to do what they promised to do and pay claims that they owe and not cheat their insured's, so they say, wait a minute, ERISA's designed to take care of this. I submit that Congress has made this intent clear and if the insurance companies want to take this up with somebody they ought to take it up with Congress. Sandra Day O'Connor: Well, do you really think that Congress intended to allow the very detailed civil enforcement procedures for an employee covered by an ERISA plan to be completely bypassed at the plaintiff's option? William C. Walker, Jr.: In the case of insured plans, I do, because Congress says so in the saving clause. It saves insurance regulations. Sandra Day O'Connor: But, it may have backed out of that in the deemer clause, that's the problem. William C. Walker, Jr.: I don't think they backed out of it under the deemer clause. In the deemer clause, all that's said is you cannot sneakily regulate a plan by calling it insurance. We're not calling it insurance. Now, there's a difference that ought to be drawn and notice here between administrative services. An insurance company can wear two different hats. It can simply come in and perform administrative services and that's all it does. If it does that it's not an insured plan. And, if it's not an insured plan, all of ERISA, including the specific enforcement remedies, applies. If on the other hand, it wore only the hat of insurance company selling a policy to an insured then it would be clear. We wouldn't have that problem of civil enforcement. Antonin Scalia: Mr. Walker, if what you say is true, if that interpretation is correct, there is a severe disadvantage in having an insurance company act as trustee under the plan. Right? I mean,-- William C. Walker, Jr.: Your Honor-- Antonin Scalia: --an enormous disadvantage. Is there any indication in the legislative history or any reason why Congress would have wanted to create that disadvantage? William C. Walker, Jr.: --First of all, the insurance companies don't usually act as trustees; they act as plan administrators. But there's still a serious disadvantage on that point. Speaker: xxx. William C. Walker, Jr.: And the, but the disadvantage does not apply if that's all they act as. In other words, the only disadvantage applies if they sell insurance policies. And that's because state law controls that. Speaker: Only if they're insurance companies? William C. Walker, Jr.: xxx... control it. Speaker: Yes. What I'm saying, is there any indication that Congress for some reason didn't want insurance companies to act as administrators, because that's going to be the result of what you're saying. And, nobody in his right mind is going to have an insurance company act as administrator. The fees are going to go up so much that it will make it impossible. But, other companies are, just can't be self-insurers; they can't handle it. So the disadvantage is going to devolve on the smaller companies who either buy insurance or they won't have their plan. William C. Walker, Jr.: First of all, some of... if they only act as administrators there's no problem. It's only when they sell insurance. You're exactly right, Mr. Justice. Speaker: Why do you say that? They're not insurance companies if they don't sell insurance, right? William C. Walker, Jr.: Well, they may be insurance companies for other purposes, but plenty of them perform administrative services only now. Speaker: What about... I don't understand your position. If you have an insurance company that administers a plan for say, General Motors which self-insures the payments and liability-- William C. Walker, Jr.: Yes, sir. Speaker: --would not your... wouldn't you have your state law cause of action in that case? William C. Walker, Jr.: No, sir. And the reason is the Metropolitan Life case makes clear that in the case of self-insured plans, self-funded plans, the savings clause does not apply because the deemer clause eats it up. But in the case of insured plan-- Speaker: Even if the state law required an insurance company which administers all sorts of insurance to avoid bad faith denials of benefits and all the rest? William C. Walker, Jr.: --Would not apply. Speaker: Would not apply. William C. Walker, Jr.: The difference... and this distinction is made in the Metropolitan decision. Speaker: Well, Mr. Walker, do you happen to know what percentage of all employees covered by ERISA plans are covered by insurance company benefits as opposed to self-insured? William C. Walker, Jr.: No, ma'am. There are statistics that are offered by the petitioner in the United States in their brief. Obviously it's a lot of them because of the interest that's been drawn by the insurance industry. I do think that it will have a consequence. The consequence will be that the beneficiaries of these plans, the small plans, will get state law protection when that state has decided that it's important to have claims paid. ERISA after all was not drafted to protect insurance industries. Speaker: No, but it was partly drafted to encourage small companies to have such plans and maybe some will decide it's too expensive. And, also to have some uniformity in the administration of these plans, which a lot of them cross several state lines. And you have just a great confusion of state law. William C. Walker, Jr.: Yes, sir. The conflicting policies which this Court recognized in Metropolitan Life, it said, leave it to Congress. Congress drafted the statute in which these two policies go different directions. Speaker: Mr. Walker, do you know of any company that's big enough to be a self-insurer and yet calls in an insurance company just to administer the plan? William C. Walker, Jr.: Yes, sir. I will-- Speaker: Are there some that do that? William C. Walker, Jr.: --I have a bunch of cases like that. Penrod does it, for example. They use Life Insurance Company of the Southwest to perform administrative services only. Bordens uses Metropolitan to perform administrative services only, and I've experienced that. As to the cost, I don't understand exactly why insurance companies say, if we're forced to pay punitive damages when we cheat our insureds, we're going to have raise rates. That's what bad faith is about. That's like Las Vegas saying that if we, if we're going to have to have a square table-- Speaker: That's a great argument in theory, but if the insurance company has lost money on its ERISA business for the last two or three years, I can't believe that they aren't going to raise their rates. William C. Walker, Jr.: --Well, Your Honor, if they choose to do so, let them come to Congress and get an amendment to this statute and provide the information. Speaker: Well, that certainly is an argument. William C. Walker, Jr.: They refuse to do that. Across the Board they refuse to provide information about these losses they claim. If they want it, let them come to Congress instead of this Court, which is not a body that's specifically designed to take care of this. Speaker: Yes, but the question we're considering now is whether Congress, in enacting ERISA with the various preemption savings clause, contemplating the sort of system that you're urging it did. William C. Walker, Jr.: Well, I'm not sure what Congress contemplated, except I know what Congress said, and Congress said that insurance regulation is saved and said it broadly and this Court has agreed and read the statute and refused to limit it beyond what Congress has done. And Congress has had an opportunity to change that as this Court pointed out in Metropolitan, and yet it's not done so. Speaker: Well, do you have any reason to dispute the government's figures in the Department of Labor's study that 91 percent of health plans covering fewer than a hundred employees are insured plans and that 83 percent of those with over a hundred employees are insured plans? William C. Walker, Jr.: I'm sure those figures were accurate at the time. It was about 1980. And, my personal experience has been that insurance companies are already changing over to administrative services only, at least in the large companies and that may have changed somewhat. I don't know. Speaker: That would certainly be the trend. William C. Walker, Jr.: Yes, sir. Speaker: If you win. William C. Walker, Jr.: Yes, sir. And, of course, if this Court decided, which it has not clearly decided, the question of punitive damages under ERISA, in the Russell case, of course, it's been pointed out that that was reserved, and, while there's been a suggestion made that courts of equity may not award punitive damages, in Mississippi they may. And I think in, generally they may, although I'm not sure they would reward them for breach of trust quite in this context. But, if this Court decided to allow punitive damages to protect the plan beneficiaries, the people ERISA was designed to protect, then insurance companies would all of a sudden be reading the savings clause very differently. Because that's what this is about... the question of whether insurance companies are going to be made to pay what they've already promised to pay in the first place, or whether they're going to be able to be outside the law altogether. Speaker: Well, under ERISA you can sue an insurance company and make it pay what it promised to pay in the first place. What you want it to pay is a lot of consequential damages that might of resulted from its failure to pay what it promised to pay. xxx. William C. Walker, Jr.: Yes, sir. I want them to pay what they owe before somebody sues them. I want them to know that if they don't go ahead and pay and live up to their obligations they will have to pay more later. If the most they will have to pay is what they owed anyway, and if a litigant has got to hire an attorney... and by the way, attorney's fees are not automatic under ERISA; it's within the judge's discretion whether the plaintiff's attorney even gets attorney's fees... I want them to have to treat their insureds fairly from the beginning. Mississippi bad faith law-- Speaker: Mr. Walker,-- William C. Walker, Jr.: --Yes, sir. Speaker: --you say insurance companies are saved. Insurance companies were also saved in the McCarran-Ferguson Act. William C. Walker, Jr.: Yes, sir. Speaker: But, Congress did not save anything except legislation governing insurance companies there, right? William C. Walker, Jr.: Yes, sir. I agree with you. Speaker: Now, what-- William C. Walker, Jr.: Although that statute has... I think some of this Court's decisions have suggested that that includes at least administrative regulation in addition to legislation. And, of course, the ERISA provision very-- Speaker: --But not, but surely not decisional law. William C. Walker, Jr.: --The Court has not expressly said that. It hasn't expressly not said it. Speaker: Oh, you think the McCarran-Ferguson may cover decisional? William C. Walker, Jr.: It may cover decisional law, but I don't think that that's important for this case. I think this case has ERISA which very expressly deals with the problem and makes clear in the statute itself the decisional law is included. Speaker: Well, you think Congress's concern for state authority over insurance in one Act is totally unrelated to Congress's concern for state authority over insurance in another one? William C. Walker, Jr.: No, sir. I think in both cases Congress-- Speaker: Don't you think they both have the same scope? William C. Walker, Jr.: --I'm not sure they have exactly the same scope. I think in both cases Congress was trying its best to allow insurance companies to avoid federal regulation and to live where they were happy to live in the various states. Now the insurance companies aren't happy there because of bad faith and they're trying to come back under the umbrella of ERISA. Now, I do think that the McCarran-Ferguson Act and the saving, and the regulation of insurance question is certainly related, as this Court has said in Metropolitan Life, to the questions here in ERISA. But, I think it comes down the same way, as this Court said in the-- Speaker: But, the language here is ambiguous if you assume that the definition of a law of any state is not necessarily the same as the definition contained in the act of state laws. And it's not the same phrase, so in this Act, it's at least ambiguous and in McCarran-Ferguson it's pretty clear, it seems to me, that it doesn't cover decisional law, because it refers there to any law enacted by any state. And, it says, "unless such act specifically relates". William C. Walker, Jr.: --Well, there's a-- Speaker: xxx under McCarran-Ferguson that it relates to legislation and perhaps implementing regulations, so if the two have to be construed in pari materia, I think you're going to lose on that point. William C. Walker, Jr.: --Your Honor, I don't think so because there's a presumption against preemption. And, to use the strained distinction between any law of any state and state law then I believe there is a presumption against. You all said in Metropolitan Life that there was a presumption against preemption and apply, and use that language in interpreting the savings clause. And I think that if any presumption against preemption is applied certainly this kind of what I would view as restrained construction, this distinction should not be drawn. Speaker: Is this a negotiated plan? William C. Walker, Jr.: Your Honor, I don't know. This-- Speaker: Well, a lot of plans are in fact the result of collective bargaining? William C. Walker, Jr.: --As far as I know it was not. I don't know. I don't think that's part of the record anywhere. This case was brought at a time when nobody much knew ERISA was around, neither the plaintiff nor the defendant. The defendant found out about it a couple of years later and amended its answer, and I'm not sure about that. Well, Mississippi bad faith law and indeed any common law of general application, although Mississippi bad faith law specifically focuses on insurance and thus does not fall within that argument that's made, an argument that I don't accept by the petitioners. Certainly, it's designed to focus upon the insurance industry. Speaker: xxx. William C. Walker, Jr.: To force the insurance industry to do what it ought to do and to protect the people that ERISA is designed to protect. Happily it does that as well. Since it is a state law which regulates insurance, since this Court has said that that's where the inquiry stops, since in its reply brief the petitioner has almost admitted that even if it is a state law which regulates insurance they still win, the language in the Metropolitan case, correctly decided in my view, of course, is that that's where the inquiry stops. There's a state law which regulates insurance. It is therefore saved from preemption. This is an insured rather than a non-insured plan. Speaker: Well, any state law of general applicability regulates insurance, right? William C. Walker, Jr.: Yes, sir. Speaker: If we apply your first principle of presumption against preemption then I guess we would have to say that all state laws of general applicability continue to apply. William C. Walker, Jr.: Yes, sir. Speaker: So long as they're being applied to insurance companies. William C. Walker, Jr.: To regulate it. Of course, as Dean Keaton has said, and as his footnote in the U.S. Brief points out, that's the way insurance is basically regulated, through Court decision which interprets meanings of policies-- Speaker: What about the Mississippi Statute of Frauds; would that apply? Would that be something that wasn't pre-empted? William C. Walker, Jr.: --I think first of all, the Mississippi Statute of Frauds might not relate to the plan in the first place. In other words, it might not fit under 514(a) in the beginning. Speaker: Well, what, but what if it did? William C. Walker, Jr.: Since... if some special wrinkle developed to deal with insurance policies, I would say it did. Speaker: Well, supposing it's just a general statute of frauds that doesn't have any provision in it about insurance, but it just applies to all written contracts. The argument is, this is a written contract. In this case, it regulates an insurance company, because the insurance company is one of the parties. William C. Walker, Jr.: Well, you're asking me makes some assumptions that are not correct, but for purposes of argument I would say that a law of general application, first of all, if it's that general, is not going to be, is not going to relate to the plan. Secondly, assuming-- Speaker: Why? I don't understand why. William C. Walker, Jr.: --Because it's got to focus on the plan in some way, some manner to relate to the plan. I mean, I'm not really prepared-- Speaker: You mean, by its terms, about the law, by its terms has to refer to plans? William C. Walker, Jr.: --No, sir. To fit under 514(a) it doesn't take too much. And, of course, since that's not the issue in this case, since we've admitted that what we've got fits under 514(a), I can't point out the nuances to you. But, a law of general application that applies equally, then perhaps there's no reason to view it as insurance regulation. But, a law of general application, to simply use that phrase, "general application", when in fact it is applied to the insurance industry or insurance contracts, or insurance claims handling in a specific way, then that regulates insurance. And, all insurance teachers agree that it regulates insurance. And, all insurance industry agrees as well that it regulates insurance xxx-- Speaker: What if Mississippi law didn't focus particularly on an insurance company's duty to pay, but just say that any debtor's duty to pay, you could have a breach of good faith and recover punitive damages for the failure of a debt to pay the, debtor to pay the debt on time. William C. Walker, Jr.: --First of all, let me make clear that respondent's, I mean petitioner's argument in his reply brief that any intentional refusal to pay a contract justifies punitive damages, is clearly contrary to Mississippi law, contrary to Cliver Wendell Holmes, contrary to the Restatement Second of Contracts, Section 355, so that's not the general law. But, assuming that it were, the... if it is not applied directly or in any way more significantly toward insurance companies than anything else, then I don't think xxx-- Speaker: It applies to them more often than anybody else probably just because they happen to pay more claims than anybody else, or to be liable to pay more claims than anybody else. xxx Even though that were true, by terms the doctrine applied to any debtor. William C. Walker, Jr.: --Well, let's put it this way, we do have a rule that says any debtor is supposed to pay his debts. All right? And, if he doesn't he's got to pay damages. And that's the general contract rule that was modified in the Beall case in which the court applied it in Mississippi law for insurance companies. That's not a law which specifically focuses on insurance. It has not been applied more directly toward insurance than anything else as far as I can tell based on that narrow hypothesis. And, I don't think that it's, that it would be saved; frankly, I don't think it would be necessary for it to be saved. The-- Speaker: Where do you get that limitation out of the statute, that it has to relate more narrowly to insurance companies? William C. Walker, Jr.: --It says "insurance regulation". In other words, it says state laws which regulate insurance. The word "regulate" probably means something and the question is what precisely does it mean. It clearly includes a state law that's designed to force insurance companies to pay legitimate claims. The question is does it include-- Speaker: Sure, but a general state law saying everybody shall pay his debts applies to insurance companies. Surely that regulates insurance companies. William C. Walker, Jr.: --It certainly may xxx-- Speaker: It regulates them and everybody else. William C. Walker, Jr.: --It certainly may do that. Speaker: But, you're giving it a narrower interpretation because it would frankly seem somewhat absurd to give it a fuller-- William C. Walker, Jr.: No, sir. Absolutely not. It doesn't seem absurd to me. Speaker: --Well, then your general principle of construe everything to avoid preemption, I would have thought you would have answered the Chief Justice's question entirely differently saying, yes, it covers all state laws. I don't know how else your principle would play out in this case. Or otherwise you're not being loyal to your principle and, you know, once you acknowledge that then we have to start drawing lines and I don't know why we should draw the line where you want us to between somehow applying specially to insurance companies and not applying specially. Why we should draw it there rather than between, as McCarran-Ferguson did, between statutory regulation and non-statutory regulation or some other fashion? William C. Walker, Jr.: The reason I'm having difficulty, I believe, is because the hypothesis is one that I think will be taken care of by never even coming up because of it not relating sufficiently to the plan in the first place under 514(a). But assuming that it does, I agree with you, there is no reason in principle to draw a distinction if it has the effect of regulating and if that's the decision that this Court wants to... wants to make, if it has the effect of regulating, fine. Speaker: I think that's a more, what should I say, consistent position. William C. Walker, Jr.: This case involves state law regulating insurance. It involves state law that was expressly, clearly preserved by Congress in the statute itself. The 5th Circuit correctly construed this Court's opinion in Metropolitan Life and recognizing that such state law was safe from preemption, we request the Court to affirm the 5th Circuit. William H. Rehnquist: Thank you, Mr. Walker. William C. Walker, Jr.: No further questions? William H. Rehnquist: Mr. Nolan, you have three minutes remaining. John E. Nolan, Jr.: Just a few points, if the Court please. First, to respond to the Chief Justice's comment about what did Congress contemplate, I think that's very important. I think that's really what we're doing here. What Congress contemplated is repeated over and over and over again in the legislative history. They contemplated a uniform system of federal regulation of employee benefit plans. There is by stark contrast not a single reference anyplace in the legislative history to preservation of any kind of a state cause of action like this. That's very significant. The legislative history of ERISA runs 15 volumes. Speaker: Well, it might have; it also might be that silence may run the other way. John E. Nolan, Jr.: Well, I think the silence, Justice White, runs toward the uniformity that you commented on earlier and that's what Congress was thinking of. It's inconceivable that Congress, in a legislative history that extensive, could make a major exception to what it was providing in the statute and make no reference to it. Speaker: Well, you might have expected somebody to say that the state causes of action are preempted. John E. Nolan, Jr.: Well, there are references to state causes of action in a lot of other statutes as you know, Justice White, from the Silkwood case, as this Court knows, from Title VII and so on. There are a lot of different ways to do it, but none of those ways took place here. The definition of the employee benefit plan very specifically includes plans funded through the purchase of insurance or otherwise. That's definitional in the statute. It isn't that Congress provided one statute for insured plans and another for self-insured plans. Employee benefit plans are defined as plans that provide benefits through the purchase of insurance or otherwise. Speaker: Mr. Nolan, where do you draw the line that I was just discussing with Mr. Walker? You don't draw it between statute and non-statute. How do we know when its a law regulating insurance? John E. Nolan, Jr.: We would draw the line, Justice Scalia, on the function and we think what function is the actor, insurance company in this instance, performing? If it is performing a compulsorily, an ERISA-mandated function, in this instance claims administration, we would say that that was ERISA and preemption applied. Speaker: Well, then the insurance company doesn't have to keep a certain reserve? John E. Nolan, Jr.: All of that is regulated by state law. That doesn't really rise to the level of an ERISA. Speaker: No, but as far as, as far as his ERISA function is concerned, he's insuring under ERISA. Doesn't he have to comply with the state law requiring insurance companies-- John E. Nolan, Jr.: He does. Insurance companies for all of those kinds of considerations comply with state law. You don't get to an issue like this until you get into the administration of an employee benefit plan. And this function reaches into the very vitals of that administration. William H. Rehnquist: Thank you, Mr. Nolan. The case is submitted.

William H. Rehnquist: We will now here argument in Case No. 90-889, William Sky King v. St. Vincent's Hospital. Ms. Wax, you may proceed whenever you're ready. Amy L. Wax: Mr. Chief Justice, and my it please the Court: This case concerns the application of the Veteran's Reemployment Rights Act, which provides job protection for members of the armed forces. The question at issue which arise under Section 2024(d) of the act, is whether the right to a leave of absence upon request to perform active duty for training is conditioned on the reasonableness of the request, or more specifically, on the length of the leave requested. In 1987, petitioner, Mr. William King, who was employed as head of security at respondent hospital, requested a leave of absence to serve a 3-year tour of full-time duty in the Alabama National Guard, as a member of the Active Guard Reserve program, which provides full-time support personnel for armed forces Reserve units. This request was denied by the hospital, which filed this action for a declaratory judgment that they were not required to grant the leave. The courts below held that a request for leave under Section 2024(d) is subject to a three-factor test of reasonableness. In applying that test, the court of appeals focused on the length of a leave, and ruled that a 3-year leave was, per se, unreasonable. In any event, they held, petitioner's request was unreasonable under the circumstances, mainly because it was too long. The Government petitioned for certiorari to resolve a circuit split on the issue of the interpretation of Section 2024(d). It is our position that the Eleventh Circuit's reasonableness test has no basis whatsoever in the statute. There simply is not requirement that a request for leave be reasonable. Once it is established, and no one contests in this case, that Section 2024(d) covers petitioner's duty, and that if he enjoys any re-employment rights at all, it is under this section. The Government submits that the language of <twenty twenty-four d@l> [= 2024(d)] answers this case. Now on the question of coverage, the district court made the finding that petitioner received orders under Section 502 of 32 U.S.C. to perform full-time National Guard duty. And Section 2024(f) of the Reemployment Rights provision states that full-time National Guard duty under Section 502 is considered active duty for training for purposes of 2024(d), the provision at issue. That provision states in pertinent part that an employee shall, upon request, be granted a leave of absence by such person's employer for the period required to perform active duty for training. The provision says that the employee shall be granted leave. There is no option for the employer to refuse. The only condition placed on the grant of leave is that of a request, a condition that was complied with here. It's obvious, it's plain, that the word "reasonable" no where appears in this section. And as for the factor of which the court made so much, that of the duration of leave, the provision obviously places no fixed limitation on how long an individual can be away from their job. And to the extent that it can be said to address duration at all, it states that the employee is to be granted a leave for the period required to perform the pertinent duty. That language makes clear that the period of the leave is just the period required to complete the training program in which the reservist is enrolled. That requirement, it is assumed, will be fixed by statute or by the military, whose job it is, after all, to determine these sorts of requirements, and which is traditionally accorded a great deal of deference in fixing training requirements in the military. Now in this case, Army regulations require 3 years of service in the AGR program. And it follows that petitioner retains his leave of absence status and his right to return to his position for the full 3 years. To summarize then, Section 2024(d) creates a flexible, elastic protection that expands and contracts to fit the requirements of a particular tour of training duty. Antonin Scalia: No limit? There's no time limit whatever? Amy L. Wax: No, Your Honor, none. The open-ended language-- Antonin Scalia: You think... so you say... and he has to be permitted to return? I mean it could be as long as 12 years, I assume, if he takes two tours of duty under some of these things. And he has to be permitted to return with the same seniority he would have had if he had stayed, even though he's been away for 12 years. Amy L. Wax: --The longest tour of duty that is covered by this section at this time is the 3-year AGR program. In order to be away 12 years, he'd have to re-enroll four times. We are... the Government is aware of no cases in which someone has sought to return to his job after re-enrolling in AGR four times. What generally happens as a practical matter, Your Honor, in the very rare cases in which people re-enroll in AGR, is that the individuals choose to give up their jobs and make a career of this program. So the theoretical possibility, which we concede exists, because it is possible to re-enroll in the AGR, although it's totally at the discretion of the military... an individual can't do it on their own motion... that theoretical possibility hasn't really been a problem. Antonin Scalia: What if the employer has abolished the position when the person wants to come back, he just no longer has that? Amy L. Wax: Right. The individual will not have the right to come back to his job if the employer abolishes the position. And that flows from several aspects of the statute. Number one-- Antonin Scalia: I'd like you to tell me what that flows from because I no more see that in the text of this provision than I see any time limit, and I wonder why you're willing to imply the one but not imply the other? Amy L. Wax: --Well, it says that the employee shall be permitted to return to such employee's position. And it is the Department of Labor's view that the condition precedent to returning to your position is that the position still exists. Furthermore, this flows from-- Antonin Scalia: By implication. Amy L. Wax: --Yes, we think it's a tenable reading of that language. And the reason that it's more tenable than perhaps the alternative, is because 2024(d), and also other sections contain what this Court has called the escalator clause, which says that he shall... an individual shall return with such status and such seniority as he would have had had he remained on the job. Now, it's truism that if someone's position is abolished, they would not have had such a job even if they had stayed on the job. And we think that this section manifests Congress' intent not to make returning trainees better off than they would have been if they'd stayed. So the combination of those two sections, we think, answers that question. Sandra Day O'Connor: Ms. Wax, do you think we owe deference to the most recent Veterans' Reemployment Rights Handbook regulations in this area in light of the very dramatic shifts by the Department of Labor in their view of this statute and its requirements over the years? Amy L. Wax: Well, Your Honor, this Court has stated in Monroe v. Standard Oil, that the Veterans' Reemployment Handbook is an authoritative source of the interpretation of the act. We do think that deference is owed, but I think what we would say is that deference isn't needed here because this is not an issue in the statute where there's any ambiguity. There are other issues in this statute where there is some question about how it is to be applied, and this Court has dealt with them in a long line of cases, cases that deal with the terms and conditions upon which an individual returns to their job on which the statute may not be crystal clear. But the issue of whether the person gets their job back, we think that's crystal clear, and there need be no recourse to the Veterans' Handbook on that question. The open-ended language-- Anthony M. Kennedy: What... can you explain it to me why is it that the Government says this is not an initial period of active duty for training? This is something else? Amy L. Wax: --Yes. Anthony M. Kennedy: What is it? Amy L. Wax: It is active duty for training. Active duty for training is a term of art, Your Honor. Anthony M. Kennedy: And that's different from an initial period of active duty for training? Amy L. Wax: Yes, Your Honor, initial active-duty training, which by statute and regulation lasts 90 days or less... 30 to 90 days, that's covered by Section 2024(c), a separate provision of the act which provide reemployment rights for initial active-duty training. This is something else entirely. Anthony M. Kennedy: I don't understand that because that says for not less than <twelve> [= 12] consecutive weeks. Amy L. Wax: Excuse me, right, 90 days-- Anthony M. Kennedy: It has to be more than 90-- Amy L. Wax: --Excuse me, 3 to 6 months. That's my mistake. Initial active-duty training is training that all reservists are required to perform that runs from 3 to 6 months. So 2024(c) is structured to apply, and is intended to apply to that initial intensive period of training that all ready reservists are required to perform. All other training duty is covered by Section 2024(d). Anthony M. Kennedy: --This is a new job. It is not clear to me why this wasn't an initial period of active duty. It was an entirely new position for him. Amy L. Wax: Right. Anthony M. Kennedy: And it was longer than 12 weeks, so he's not covered by (c), so (d) clicks in. Amy L. Wax: Right. Well, the reason that this individual is covered by 2024(d), Your Honor, is to be found is 2024(f), which specifically addresses the question of the reemployment rights of members of the National Guard who serve on full-time duty under section 502 of 32 U.S.C. That's how they get their orders. Now, he received his orders under Section 502 of 32 U.S.C. Individuals who are serving so-called initial active-duty training, which is another term of art, receive their orders under another section of Title X, actually, I believe. And that is the kind of training that 2024(c) was meant to apply to. You're right that this is an initial tour of duty for him of 2024(d) is the provision that applies, by virtue of the orders that he got... the orders that he got, which are under Section 502, which is AGR duty. The open-ended language of Section 2024(d) is to be contrasted with the fixed temporal limits to be found in other subsections of 2024, which apply to reservists and others who perform active duty in the armed forces. Section 2024(a), for example, which governs those who enlist on active duty, provides at least 4 years of job protection, and in some cases, 5. The same applies to subsection (b). John Paul Stevens: Yes, but under that one, I guess it's under (b)(2), he's got to reapply, doesn't he, for a job? Amy L. Wax: Yes, Your Honor. John Paul Stevens: And here he just shows up and says I want to go to work. Amy L. Wax: Correct, Your Honor. John Paul Stevens: And also, isn't there a difference in their protection from discharge after they get back? Amy L. Wax: Correct. John Paul Stevens: How does it make sense to say you're protected from discharge under (a) and (b) and you get no protection under (d), when you might be away even longer, as you say? Amy L. Wax: Right. Well, the answer is that the reason for this disparity in features for active duty, for training on the one hand and active duty on the other, can be explained without reference at all to differences in duration. Individuals who are on active duty see combat, they're in harms way. They are subjected to... they are essentially members of the fighting force. Very often they are. And therefore, Congress could have made the judgment that those individuals need more protection in the form of a period to readjust to civilian life. John Paul Stevens: Yeah, but why should they have to reapply instead of just showing up like these people do? Amy L. Wax: Well-- John Paul Stevens: That cuts the other way on that part of it. Amy L. Wax: --On the other hand, probably in exchange for these greater protections, a post-discharge... a post-return discharge protection, a longer period to reapply, the Government... Congress decided to give employers a sort of quid pro quo of leeway to put the person in their old job or in another job, for example. And the reapplication process is a way of letting the employer decide whether he's going to return them to their old job or an equivalent job, which is what employers are committed to do for individuals returning from active duty. John Paul Stevens: I thought you were going to answer by saying when it was originally drafted, (d) really did just apply to short leaves for training, like not over about 3 months, or so. And then there was an amendment later on that picked up this <AGR> [= AGR] duty. Amy L. Wax: Your Honor, that's another answer to the question. I think the answer has two parts. One is that duration is not necessarily the explanation. The other is that Congress may have geared-- John Paul Stevens: As originally drafted, isn't it fair to assume that Congress thought these were all short-durational training leaves? Amy L. Wax: --Well, at the time it was drafted, the only leaves were the short leaves which are listed in the legislative history, Your Honor. That is correct. But Congress drafted the statute in an open-ended way. It didn't put the fixed limits on the statute that it could have put, and in fact, put in other sections like 2024(a), (b), and (g). So our position is that the fact that certain short training duties... tours were the only ones that existed at the time this statute was enacted, doesn't really prove anything because Congress did not do what it could have done, which is simply to limit the reach of 2024(d) and make it an inflexible statute, and make it an inflexible provision that put a ceiling on the leaves, essentially. David H. Souter: Were any of those short training leaves at the time the statute was first enacted wholly voluntary in the sense that this one was not? I mean, as I understand it, this particular individual applied for this 3-year duty. I mean, he put himself in a position of being ordered to be away 3 years. Were the short-term trainees to whom you referred in a different position whereby they would be subjected to it willy-nilly? Amy L. Wax: No, Your Honor. The provision that was enacted in 1960 was intended to cover reservists, and the Reserve forces were manned by volunteers. They always have been manned by volunteers. So one has to volunteer to be a member of the Reserve. The short training duty that applied to the reservists, the 1 weekend a month and 2 weeks a year training that existed in 1960, that was something that you had to do if you wanted to be a member of the Reserve. So the fact that this is voluntary-- David H. Souter: That was kind of essential to the status of being a reservist, whereas this particular training assignment is not. Isn't that fair to say? Amy L. Wax: --Well, it's not required of you in order to be in the Reserve, but Your Honor, we don't think anything turns on that. First of all, for what it's worth, no court of appeals that has looked at this, and some of them have actually looked at this particular issue, has ever found it relevant on the text of the statute, whether an individual volunteers or not. Because there's just no basis for distinguishing between the two. But beyond that, we would take the position that this sort of duty or other training duty that might be encompassed by this provision is in its own way just as vital to the proper performance of the Reserve forces as the standard required training duty. I mean, if neither of them existed, or if either of them didn't exist, the reservists simply would not be a ready fighting force. The training that is now required is just a result of the Reserve forces being a far more technical complicated fighting force. Now, the Eleventh Circuit's ruling is not just an untenable reading of the statute's terms, but it also has untenable consequences. Usually when a party comes before this Court and asks it to disregard the plain language of the statute, it suggests or its reason is that departing from the plain language would better serve the underlying purposes of this statute. But of course here, the very opposite is the case. First of all, the Eleventh Circuit's test, with its emphasis on duration and a per se rule, would in effect deprive all 35,000 members of the National Guard who serve in Active Guard Reserve status of any protection whatsoever. They would have no reemployment rights because they are required to serve for 3 years. And this is particularly anomalous in light of the protections afforded to members of the Federal Reserve components who server in AGR, those individuals are considered to be on active duty under Title X, and they are entitled to protection under the provisions that apply to active duty, which give at least 4 years of protection. So one would have a situation in which members of the National Guard who perform exactly the same functions as Federal reservists would have nothing, and the Federal reservists would have full protection. Sandra Day O'Connor: Ms. Wax, I know it's irrelevant to our decision in the case, but are there any pending efforts in Congress to sort of make these statutes a little more compatible than they are now in the fashion they ask they be interpreted? Amy L. Wax: Your Honor, to my knowledge, the Department of Labor and the Department of Defense in the wake of Operation Desert Shield and Storm has attempted to draft a new statute that would rationalize this scheme to some extent. The... as far as I know-- Sandra Day O'Connor: Because it just doesn't fit together the way you would think it would if somebody were looking at the whole problem and trying to draft legislation. Amy L. Wax: --Well, Your Honor, we don't really agree with that. We think that it actually works quite well. It certainly allows the military the flexibility that it needs and that time has shown it needs to respond to changing times, the demise of the draft, the ascending importance of the Reserve forces, and the concomitant technological complications of modern warfare. So we think that the provision really is quite well drafted to comport with changing times, so to speak. Now the features that respondent tries to point to, which somehow are supposed to show that this provision just can't be applied to long-term duty, we don't think show anything of the sort. For example, that these people are entitled to a leave of absence, a leave of absence for a term of years. Well, the fact is that it's possible to take a leave of absence that lasts years. There are individuals in our office who have taken a year's long leaves of absence to serve the Solicitor General. It's possible to return to your job at the next regularly scheduled working period. I know people, I've done it myself, who finish one job on Friday, travel to a far city, and start another job on Monday. I mean, these things certainly can be done. We agree that Congress may have geared the provision overall to shorter periods, but that doesn't mean that they can't be applied to longer periods. One doesn't follow from the other. Antonin Scalia: Ms. Wax, what you said earlier about how accepting the respondent's position would cause National Guard members to be at a disadvantage compared with Federal Reserve members, what provision governing members of the Federal Reserve did you have in mind? Amy L. Wax: Federal reservists who serve in the Active Guard Reserve are called under 10 U.S.C. 672(d), which governs active duty on a voluntary basis. That is cited in our brief, Your Honor, footnote 25. And those individuals receive... because they are considered to be on active duty... that's the classification that applies to them, under 10 U.S.C. in Federal status, they are covered by Section 2024(b), which gives reemployment rights to reservists who serve on active duty. The reason why these two different classifications exist is mainly because AGR personnel in the National Guard serve in State status. In order to serve in State status, they have to receive orders under Section 502. They're attached to their State National Guard unit. It's really just a classification scheme that the military has come up with, but it does have a rationale. Antonin Scalia: But is (b) that covers them. Amy L. Wax: Correct. The Federal. Antonin Scalia: Yes, the Federal. Amy L. Wax: Yes. Antonin Scalia: Which is what I suspected, although I didn't know how you got there. But (b) does at least have some limitation period, does it not? Amy L. Wax: Four years, Your Honor. Antonin Scalia: Yes. Amy L. Wax: But-- Antonin Scalia: And you're arguing... I mean, so you argue, gee, the... you know, if you accept the respondent's position, Federal reservists will be treated enormously more favorable than National Guard people. But he can make just the... a similar argument. He says, if he accepts you position, National Guard will be treated more favorable then the Federal Reserve, which seems even more absurd. There's no way to make it work. Amy L. Wax: --Well, actually, they won't in practice, Your Honor. Because Congress created an AGR tour knowing that the AGR tour was supposed to replace civilian military technicians who serve for 3 years. And this 4-year ceiling existed in the provision for Federal Reservists, so Congress knew it didn't have to worry. These people were protected for a full tour. But they also know that the National Guards people didn't have to worry either because 2024(d) didn't have any limitation. Now if at some future point they create a 6-year tour of duty, obviously the Federal Reservists have a problem, and Congress may have to fix it. But given the tours that existed, there was no problem to fix. I'd like to reserve the rest of my time. John Paul Stevens: Let me ask one quick question, just to help me out. In your long footnote toward the end of your brief where you say... it ends up the section would provide same reemployment rights as current law provides following duty under sections 503 through 505. And I could look that... what do 503 and 505... do they refer to active duty or do they refer to training? Amy L. Wax: No, they're training... provisions that govern training duty by National Guards people, I think, as far as I recall, Your Honor. William H. Rehnquist: Very well, Ms. Wax. Mr. Hopkins, we'll hear next from you. Harry L. Hopkins: Mr. Chief Justice, and may it please the Court: I would like to emphasize one particular point in reply, and that's regard to the claim that Congress enacted the AGR tour. And I have brought to Court today Army regulation, a AGR. It's an Army regulation. And I find no where that it has been adopted by Congress, except perhaps in an appropriations act. I would like to share with the Court a few of the provisions in interpreting this statute. William H. Rehnquist: Is this somewhere in your brief or in the record? Harry L. Hopkins: It is in the Government's brief. William H. Rehnquist: In the Government's brief. Harry L. Hopkins: It's cited as Army Regulation No. 135-18. It says, and I'm going to be brief, a program that offers career development and upward mobility that encourages retention. And I recite that to the Court because I'm expected to send my person on a mandatory leave of absence under a program that encourages retention by the new employer? William H. Rehnquist: Good point. Harry L. Hopkins: I also point this out to you, that AGR personnel will be ordered to active duty or full-time duty for 3 year periods. Now, that's what we've stated the issue to be here, and I'm the one that drafted the letter denying the 3 years. But the program goes on to say personnel may be extended at their current duty station or reassigned at the conclusion of each 3-year period, if ordered to a subsequent tour. And they are stabilized, which basically means they can't be moved during the first period, but they can during the subsequent periods. I will move on quickly to say that it says that there are provisions for retention up to 20 years, and it specifies the program... the pension program that would be eligible. Now I submit, Your Honor, and I take issue with the Government, and I think the Government misconceives my argument and misunderstands it when I say that a leave of absence of 3 years is unheard of. And I am not talking about the military. What I am talking about a labor council for 30 years, that would approve or negotiate a contract that would say my employee in my factory would be entitled to a 3-year leave of absence. And I say no, unequivocally. Now I look to be able to bring something to the Court on that issue. Leave of absence agreements are primarily private agreements, primarily negotiated, primarily in a labor contract, or in at-will employee policies. Antonin Scalia: Well, you'd have to do it, like it or not, under some of the other provisions of Section 2024. Harry L. Hopkins: Precisely. And we have to do it, Your Honor, also, as happened in Desert Storm. This person has no connection whatsoever with Desert Storm. But I had to do it this time under the other provisions for the other people as well, including the senior vice president of the hospital went away because he was called away, ordered pursuant to this statute. And I suppose that another point that would be important to the Court in interpreting this difficult statute, and I'm afraid, Justice Scalia, I must understand in the prior case when you say words don't mean anything anymore. And I'm afraid I'm asking that they oftentimes don't mean anything. Byron R. White: Or maybe have a different meaning. Harry L. Hopkins: Different meaning, yes, Justice Kennedy. What I'm trying to say is that in 1960, when this law was passed, someone... able, I suppose, legislator... sat down and they wrote out provisions for the sections that were involved and very carefully gave the inductees unlimited rights. And I hope no one claims that they should not be given virtually unlimited rights in terms of duration. They gave volunteer persons a 4-year limit. And they worked down the statute with what they had to work with until they got to the bottom of the statute, and in accordance with the Universal Military Training Act that gives birth to 2024(d), it provided initial duty... initial period. And that's when a person went off, a civilian for the first time, and went off and took a 3 to 6-month training program. No question but what Sky King did that long before this event occurred. Once a civilian went off and took that initial training period, that person had a Reserve obligation. And Justice Souter, I'll answer your question. If you stay in the Reserves, you must satisfy the Reserve obligation. And usually the Reserve obligation is to go to drills, weekend drills once a month, and also summer camp. And I would submit that those are required. But I also agree with the Government that the voluntary nature of these programs in the cases that have been decided, have said that that's not a proper point to distinguish these cases. If someone interpreted leave of absence and return in terms of the Perpich case, I pulled a quotation from that, that the Court decided in 1990. It doesn't have any bearing on this case except the hat analogy. And it says basically these people have three hats, they have a State militia hat, and they have a Federal National Guard hat, and a civilian hat. But Justice Stevens, I believe, authored those remarks. I would submit to say that someone under the AGR program, the civilian hat would get mighty dusty if they had a 3-year leave of absence, perhaps extended to 10 to 15 to 20. A common person writing this statute and interpreting it pursuant to 1960 standards, would automatically conjure up the idea that a Reservist or a National Guard is a part-time person. And if I grant a leave to part-time person, that's one thing for part-time object or policy. Where I draw support, quite frankly, for the 90-day limitation, and the way I would interpret the statute... and I'm afraid it's gotten beyond my ability to suggest an interpretation, but I would suggest that at no time did Congress intend that the 2024(d) durational rights or limits would exceed those of 2024(c), a minimum of 90 days, a maximum usually of 6 months. Legislative intent is clear. And I'll answer that question in terms of the reference to 502, 503, 504, and 505, those are National Guard Authorization statutes that define training of short duration. In 1960, 90 days would have probably have been the limitation. It covers everything from a 2-hour drill period to a weekend drill period to a school that ordinarily would last a month or two. And that's the way the statute is structured. You look at 2024(d), it talks about these unusual programs... they call them active duty for training. And then you look at 2024(f) and it says, oh, by the way, if you want a definition of that, you have to look at 502. I would also say in response to a comment that was made about a later amendment from the 1960 enactment, and I certainly speak not of the 1974... recodification, which didn't change anything. I would encourage the Court to carefully look, and hope they'll find support for my position that it has not been amended. There was an amendment in 1980, in 1980. The most curious amendment I think I could possibly see in the case. We have two different classes. You've got active duty for training and inactive duty for training, both referenced in 2024(d). Prior to the amendment, the Congress says you must look at 502, 503, 504, and 505 to find out what that is. And at the same time they're saying that they're saying these are short-term programs. And then in 1980, they simply moved 502(f) from... they didn't move it from inactive, they moved it to active duty, but left it in inactive. Did not tell us anything about durational limitations or frequency, but simply a recognition, in my humble opinion, that there was some active duty for training or other duties under 502(f). And if the Court would please go back to the enacting legislation, you will see there is a reference in that history to summer camps. And the Senate referred to summer camps as active duty for training. John Paul Stevens: May I interrupt, Mr. Hopkins, this is kind of a critical part of the whole problem, as I see it. Your opponent argues that this was... you started your argument pointing out the AGR program had been created by regulations of the Army or the Department of Defense. And... which I take had developed this concept of full-time service which is now a form of training for 2 or 3 years, like this man. And they say that this 1980 amendment was intended to give protection to those people who would otherwise been totally unprotected as I understand because they weren't on active duty within the meanings of the earlier subsection, and they weren't covered by (d) because that was a short-term limitation. In other words, that this section the 1980 amendment was specifically intended to pick up people in this rather small category. Is... what's the response to that? Harry L. Hopkins: Your Honor, I respectfully disagree. Now, Justice Scalia, if words don't mean anything, the intent of Congress probably doesn't mean anything in this context because it comes in so many different direction. It comes in authorization acts, in an appropriations acts. I'm talking about-- John Paul Stevens: Well, this is not an appropriation today. Harry L. Hopkins: --That's right. I'm talking about it does not say anything in 1980, about doing anything other than recognizing that there is active duty for training under 502(f). John Paul Stevens: Well, it says for the purposes of subsection (c) and (d) of this section, full-time training or other full-time duty performed by a member of the National Guard under section... several sections, including 502... is considered active duty for training. And that seems to bring it within 502(d). I mean, I still don't quite understand why... or you're just saying well, this is a mistake. That if you read it literally it would cover it, but it was not intended. Harry L. Hopkins: I'm saying, Your Honor, that certainly there was a recognition when 502, or when this 1980 amendment was made, that there was active duty for training under 502(f), and also under these other statutes. John Paul Stevens: Let me ask this question a little differently. Prior to 1980, if this amendment had not been adopted, and this man had gone on this 3-year program. Would he have had any reemployment rights at all under the statute in your view? Harry L. Hopkins: Yes. John Paul Stevens: Under what section? Harry L. Hopkins: Well, certainly under 2024(d), and then the way I interpret that, he would have been entitled to a leave to attend to summer camps, got to drills-- John Paul Stevens: No, no, no. That's not my question. My question is a person like this man who accepts a 3-year assignment like this, prior to 1980 amendment, would he have had any... and it was purely a training assignment as I understand it... would he have had any reemployment rights at all under any provision of the act? I don't think he would have. Harry L. Hopkins: --Justice Stevens, I think I understand that. There is a question in these cases about whether or not this was training or other duty. And in 1964, Congress added the other duty part to 502(f). And I put in my brief the congressional intent surrounding that enactment. And what I say quoting from the Senate reports in the history, is that that was designed to, for benefit purposes, in case someone had to go on another very short-term session to attend another drill that same week. So I suppose to get back, I don't know that I can answer the question that you propose because I don't believe today this person is entitled to this kind of leave... and certainly I don't believe he was then. Quite frankly, I see no difference in this person working for the Federal Deposit Insurance Corporation or the State of Alabama in the Attorney General office. Antonin Scalia: Then what was the purpose of the amendment that Justice Stevens has been talking about if it was not that? Harry L. Hopkins: The purpose of the amendment was to recognize that there was some active duty for training under 502(f). Now, I maintain that since there is not a definition or description of that, that it could just as easily be 2 weeks' summer camp, a recognition of a 2-week summer camp, as it could be for drill training which is comparably required under 503, or some other very minimal short-term school. John Paul Stevens: Is it possible to argue, because that... the 1980 amendment refers to both subsection (c) and (d), did they really intend that he have the rights that were provided for under subsection (c), which would then have a duration limit on it, active duty... and refers to active duty. Oh, that's if less than 12 months. I see. I'm sorry. Harry L. Hopkins: I think there some durational limitations, and that's where I draw the source of my argument from is the fact that a 2024(c) does in fact include those durational limitations. Antonin Scalia: Mr. Hopkins, I guess the only, for those of us who, you know, believe in words, what you're trying to invite us to hang the difference on, I guess, I think, is the phrase "leave"... "leave of absence". Is that included in any of the other provisions here? None of these other provisions use that term. Harry L. Hopkins: No. Le-- Antonin Scalia: They just say he must be rehired. And your argument is when they say leave of absence there, they're talking about something that you say must be... shall be... shall upon request be granted a leave of absence, they obviously mean, what in your view, a leave of absence always means... that is, a relatively brief permission for departure. Harry L. Hopkins: --Yes. Byron R. White: Because you never... a leave of absence, you never leave the employment status, do you? You just return to work. Harry L. Hopkins: That's my opinion. That's correct. And I would say this in further amplification, the return provision... the statute was written for some person in a factory and in a law office, hanging up his apron, going to summer camp or going to summer drill, someone filling in temporarily, while this person was gone, and coming back and taking his apron off of that hook, putting it on and resuming work. And the reason I argue that it won't fit in this case is 3 years is simply too long to let the apron hang there. Antonin Scalia: He doesn't even have to give notice before he comes back, right? He just shows up the day after the release... after he's released from the Army. There's a new supervisor, it's 12 years later, and he says, well, here I am. The supervisor says who are you. Harry L. Hopkins: And I say that's a clear signal of the intent that you must interpret this statute with the background of the common meaning that Reserves are part-time soldiers and they're full-time workers. And we need to strike that accommodation. Now, when we... I have covered in brief certain other amendments, authorization and appropriation and definitional changes, and I would submit to the Court that they don't make any difference. They don't amend or modify or tell me or this Court that someone under an AGR program is entitled to any leave of absence, much less 3 years. It's just the implications are that the Congress-- John Paul Stevens: Well, I understand all that about the leave of absence. But I must confess now, Mr. Hopkins, having read the statute again, I'm not sure why this man might not have rights under subsection (c). And they would then... he would have to follow the re-employment procedure, and he would be a person rather than an employee. All the language that you emphasize in your brief wouldn't apply. Harry L. Hopkins: --Your Honor, in my opinion, to answer that you would need to read the structure of intendment of the Universal Military Training Act, where the idea was so that we could return employees to the work place to create a system whereby we would allow civilians to have an initial period of training, and then we would ask that they participate in these short-term programs after that. So I simply say that it's clear in my mind-- John Paul Stevens: Well, that relates to (d), but (c) contemplates longer periods of service. Harry L. Hopkins: --Contemplates a minimum of 12 weeks. John Paul Stevens: Right. And this person satisfies that. He has 3 years. Harry L. Hopkins: I would respectfully say... and I don't have the citation here not anticipating that question... but I would respectfully say that that concerns a person who initially joins the Reserves who is initially involved in the Reserve program. And that person goes away for training that lasts a minimum of 12 weeks. Ordinarily not over 6 months. And that's the intendment, in my opinion, of (c). Antonin Scalia: Well, I don't know, maybe I'm reading these wrong. Is there a difference between being ordered to an initial period of active duty and volunteering? I mean, (c) applies to any member of Reserve component who is ordered to an initial period of active duty for training of not less than 12 consecutive weeks, whereas this fellow really said take me. Harry L. Hopkins: In my opinion, this person volunteers, but he's then ordered. He receives orders. Antonin Scalia: That doesn't make the difference? Harry L. Hopkins: That's-- Antonin Scalia: Well, then I don't see why he's not covered by (c) either. But you seem to concede he's not covered by (c)? Harry L. Hopkins: --Yes. I do not see any basis at all. Having been involved, and we have you know, I'm not going to say he couldn't be, but-- John Paul Stevens: But under (c), you wouldn't have to give any duty to give him a leave of absence, so your opinion would have been absolutely right. He's not entitled to a leave of absence. But he might have a right to reemployment at the end of the 3-year period if (c) applies. Harry L. Hopkins: --Yes. John Paul Stevens: And then all your language problems in your brief seem to me would be sound. Or maybe there's an answer to them. Ms. Wax will tell us, but-- Harry L. Hopkins: Your Honor, we have toyed the issue questions 2024(d), and I'm here to say that it may... I would not be troubled nearly as much if it were 2024(c) as it is 2024(d). But quite honestly, it doesn't cover that and the universal-- Sandra Day O'Connor: --Well, Mr. Hopkins, didn't Ms. Wax tell us that the term (c) is a term of art and doesn't cover this person? Harry L. Hopkins: --Yes. Sandra Day O'Connor: Now, I don't enough about Army regulations to know, but was that her explanation? Harry L. Hopkins: Yes. And I don't mean to say that I know anything about Army regulations, but I think the answer-- Byron R. White: Well, you sound like it. [Laughter] Harry L. Hopkins: --Quite honestly, the last time I saw any orders was when I was in the Korean conflict, and I hoped then that I never saw another one. And then I picked this one up, and still don't understand it. But in my opinion, 2024(c) would typically involve a high school graduate that goes to the Reserve office and signs up and goes off on an initial period of active duty for training. And when that person, ordinarily and usually a young person, finishes that initial period, that person then comes back to the work place and then begins the drills and the summer camps. John Paul Stevens: How long is that initial period typically for the young person you're referring to? Harry L. Hopkins: It's typically, based on my reading, 6 months. The statute protects down to at least 12 weeks, but it's ordinarily from 12 weeks to 6 months in duration. And I think that ambiguity will be resolved upon a study of the Universal Military Training Act, because that's the scheme of things that put all of this together. And the scheme was let's send these people, require them initially, to take this training. John Paul Stevens: And they wouldn't be covered if they'd been on a weekly program, or one of the regular programs of once a month weekend duty and two weeks, so forth. And then the following year took a longer period, they would be excluded because of the word "initial". Harry L. Hopkins: Yes. In my judgment, and as I report to you, the word-- John Paul Stevens: It is initial in the sense it's their first period of duty of longer than 12 weeks. So it may not be their first period of duty, but it's the first period of that duration. So you can handle the word "initial" if that's the only problem. At least I think you can. Harry L. Hopkins: --Well, I would simply say that I read "initial" in the sense that I think it was intended. And I would not be troubled under my situation if it were applicable, because I would not have to hold this job for this person. I would not have to insist that he come back at the next shift and take his apron after such an extended period of time. Anthony M. Kennedy: Well, we will see what we can do, but Ms. Wax tells us that that's not permissible. Harry L. Hopkins: I would also like to speak to the guidance that the Government claims should come from the handbook. And I would like to cite to the Court, Justice O'Connor has already alluded to the change in the handbook, and the Government has cited another case. I would like to cite what I think are the principal case of Skidmore. And the Skidmore case says that... certainly use it as guidance if it is guidance... the reviewing courts should not blindly defer to agency interpretation, and the amount of deference warranted in a particular case will depend upon a thoroughness evident in it's consideration, the validity of its reading... reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade if lacking power to control. And I would say that one of the arguments in this case has to do with a compromise agreement. I suppose that at some point... well, I know at some point in the history of the development there were some statutes, or it's court decisions that suggested that perhaps there is a 90-day limitation on this point. So in Montgomery, Congressman Montgomery passed a House bill that says instead of... he doesn't allude to the AGR and all this expansive period, he says let's give a Reserve person, or a National Guard person a total of 1 year out of 3. And that did not pass the Senate. William H. Rehnquist: Thank you, Mr. Hopkins. Ms. Wax, do you have rebuttal? You have 4 minutes remaining. Amy L. Wax: Yes, thank you. On this issue of 2024(c) versus 2024(d), it is true that initial active-duty training is a term of art and it's a term of art on an historical basis. On page 5 of our brief, we say that in 1955 Congress enacted the predecessor to 2024(c), which has really not substantially changed since that time, to protect reemployment rights for a period of full-time, intensive, initial active-duty training. John Paul Stevens: But it was changed in 1980, and you rely on the 1980 amendment. That amended 502(c) as well as (d). Amy L. Wax: That's correct, Your Honor. And to that extent, we are willing to have this Court find that this gentleman's reemployment rights are conferred by 2024(c). I mean, if this Court wants to interpret the term "initial" that way, we certainly have no objection to it from our point of view. Because it would give Mr. King the coverage he needs. Antonin Scalia: What way? Interpreted what way? As though it did not exist? Amy L. Wax: No. To be covered by 2024(c) as opposed to (d). It has been our-- Antonin Scalia: No, no. How do you interpret the word "initial" that it would cover this situation? Amy L. Wax: --Your Honor, we adhere to our position that "initial" is a term of art that refers to a prescribed period of training that everyone has to do. Antonin Scalia: So what you're saying is if we choose to ignore the word "initial" you don't mind. Amy L. Wax: If you choose to give another meaning to the word "initial" we don't mind. [Laughter] John Paul Stevens: No, it's neither of those. If you choose to read the amendment in 1980 when it says for those purposes full-time duty performed as a member pursuant to these things shall be considered active duty for training, a concept that concludes initial active duty for training as well as subsequent to initial active duty. It's a question of interpreting the language in the 1980 amendment which changes the meaning of the two earlier statutes. Amy L. Wax: I take it that you think that in fact 2024(f) amended both (c) and (d) essentially. John Paul Stevens: Well, it says so. For the purposes of subsection (c) and (d) and to treat them equally. It didn't say anything separate about (d). Your brief only talked about (d), and I didn't realize it until I looked at it this morning, that it applies equally to both. Amy L. Wax: Your Honor, we think that's one plausible interpretation. John Paul Stevens: The whole statute fits together very nicely if you do it that way, because then (d) refers to training of periods less than that specified year, and (c) refers to those longer. And therefore, the longer ones, the man has to reapply. The shorter periods, he just shows up for work and says give me my job back. Amy L. Wax: Your Honor, that's one plausible interpretation. We don't want to undercut our own position by pointing out that (d) doesn't say anything about periods less than 90 days, but-- John Paul Stevens: But it was clearly interpreted as... I mean, it was understood obviously from the text and the difference in language, the original draftsmen were dealing with the problem of shorter periods. Amy L. Wax: --That's all that existed at the time, yes. Byron R. White: Well, if you cover... if he's got some relief under (c), you don't even need to consider (d). Amy L. Wax: True. Well, we think under Justice Stevens'-- Byron R. White: Because (d) says if no relief under (c), you get it here. Amy L. Wax: --Your Honor, under Justice Stevens' theory, he'd have relief under (c) or (d). As to what happened in 1980, we think that even if the statute before that didn't cover anything but shorter tours, the amendment in 1980 surely not only expanded the category of individuals covered by (d) or (c) or both, but also the duration. There's no question about that because it's for the period required to perform duty. Now, I want to say one thing about respondent's position. I confess to being totally confused as to what respondent's position is. On the one hand, he ties his viewpoint to the legislative history, the fact that only certain prescribed periods of duty existed at the time the statute was enacted, up to 90 days. On the other hand, he endorses a free-wheeling reasonableness test, which has been applied by the court of appeals to permit leaves of absence for far longer than 90 days. William H. Rehnquist: Thank you, Ms. Wax. The case is submitted.

Earl Warren: Number 35, Nicholas A. Stirone, Petitioner, versus United States of America. Mr. Barnett, you may proceed with your argument. Wayne G. Barnett: Mr. Chief Justice, and may it please the Court. Before returning to the question of the effect to the variance, I would like to clarify the distinction I made yesterday in speaking of the steel commerce issue between the scope of the Hobbs Act and the scope of the Fair Labor Standards Act. I pointed out that the -- the dissenters in the lower court had relied upon Fair Labor Standards Act cases in support of the view that only in effect upon present commerce instead of future commerce would bring it within the act. I noted that the Fair Labor Standards Act cases are -- that these were the so-called new construction doctrine cases were based upon an interpretation and application of the specific standard of that Act, the application to persons engaged in commerce. And I noted that whatever the validity of the distinction for that purpose, it would not be applicable to an act which applied to activities affecting commerce. Now when I'm saying that, I don't mean to imply the distinction is valid under the Fair Labor Standards Act and in fact the Court has at least greatly limited if not over -- overruled the new construction doctrine there. In addition there's a second branch of coverage in the Fair Labor Standards Act to persons engaged in the production of goods for commerce? And in applying that, the Court has in fact applied it to those engaged in operations which lead towards the future production of goods. The case to which I refer is Warren-Bradshaw which is decided in our brief at -- at that page 34. There the Act was held applicable to an independent contractor engaged in preliminary drilling of oil well. With his equipment he could only go down to a stated depth, which would be short of the oil sand and the owner thereafter engaged other persons to bring in the well. Nevertheless, the employees of the contractor doing the first stage of drilling were held to be covered by the Fair Labor Standards Act because their operations were necessary to the future production of oil and we think the relationship of the construction of the steel plant's future production of steel is virtually the same and it may well be that the Fair Labor Standards Act would apply to Rider's employees. I don't argue that case here, but in relying on the broader scope of the Hobbs Act, I don't mean to imply that the -- the Labor Standards Act would not apply. Returning to the variant point, I would like -- if I may briefly to outline our position, I think there are really two questions. The first is whether he was in fact convicted for a crime for which he was not indicted, whether there are two crimes and if that is so, as I said yesterday, we would agree that the judgment should be reversed. In our view, there is very little question but that the extortion was one crime and the effect on commerce is simply of the jurisdictional element to make -- bring it within the federal jurisdiction. And in fact, we think the indictment would not be fatally defective if it did not allege at all the specific channels though which interstate commerce was affected. Now, it is true here as Mr. Justice Whittaker pointed out that we did allege one of the means by which that effect was felt and that might in a particular case work to the prejudice of the -- of the defendant by misleading him as to what he has to prepare for. Speaker: Do you think that in bringing this indictment (Inaudible) Wayne G. Barnett: Well, as I said yesterday, we do allege the fact that the concrete goes into the steel mill. But I have to concede that we do not allege the fact that the steel products would go into interstate commerce, and in that sense we have not alleged the full -- all of the elements that we have to prove on that. It may be that the act was noticed. Potter Stewart: Excuse me. Wayne G. Barnett: I'm sorry. Potter Stewart: I beg your pardon. The movement of the concrete itself was intrastate, wasn't it? Wayne G. Barnett: Oh yes, it was sir. His plant was located just a few miles from the -- Potter Stewart: And the charge in the indictment alleges that the -- that it was interstate in effect. Wayne G. Barnett: Yes, yes. Speaker: I notice in the Bill of Particulars, the one in Number 1(a) which inquires as to what the interstate commerce was that I can't find that that was -- an answer to that was given, the motion to develop particulars requires as to that the Bill of Particulars themselves doesn't seem to cover it. Wayne G. Barnett: I -- I -- as I remember the Bill of Particulars was directed -- I -- I think the questions were directed towards the sand commerce and I think you're quite right. Speaker: 1 (a) says, “State where the interstate commerce referred to in paragraph 2 originated and where it ended.” Wayne G. Barnett: Yes, yes. Well it doesn't say, “The interstate commerce it was referred to in an indictment was the sand commerce.” I -- I'm not denying that and that was -- that was true up until the trial. I don't think at anytime prior to the trial had we specifically spelled out the steel theory and it -- it brought us a -- a new theory introduced at that point and in that sense perhaps is -- was error, but I -- I think as rule 50 says the Court should notice only a prejudicial error. William J. Brennan, Jr.: I gather than it's as Justice Harlan did you say that question 1(a) was or was not answered? Wayne G. Barnett: It was answered only in terms of the sand commerce. William J. Brennan, Jr.: Well I see -- but the actual answer is not in the record, is it? Wayne G. Barnett: Oh, I'm sorry. William J. Brennan, Jr.: I've noticed -- Wayne G. Barnett: I think it was not in the -- William J. Brennan, Jr.: It seems to start with the answer to question six at page 112(a). Wayne G. Barnett: No, that was not required to be answered. I -- I -- I'm wrong on that. It was only question six on, I think it was, that were answered in the Bill of Particulars, but that issue has not been raised here. Speaker: I suppose you can read where it would say it's referring only to sand because it refers to paragraph 2 of the question. Wayne G. Barnett: Of the question, I think that's probably right because I say -- that the -- we were not directed to answer that. I know -- I don't know why the -- the motion was limited but that is not an issue here. But it -- but it is true that -- that we do not -- specifically raise the steel theory until the trial, other than alleging the fact of the destination -- the construction of the steel mill. William J. Brennan, Jr.: Or what about this -- it there any significance to show Mr. Barnett to be attached to the concluding words to paragraph 2 of the indictment and more particularly from outside the State of Pennsylvania into the State of Pennsylvania, that would not be pertinent to steel, would it? Wayne G. Barnett: Well, I can make it pertinent by the raw materials used in steel production, but I -- I think I have to agree that that alluded to the sand commerce and -- and not to the steel commerce. Earl Warren: Mr. Barnett, suppose there was not sufficient evidence for any of the jurors to find that the sand was in commerce, do you -- is it your contention that the man should still be convicted on the steel theory? Wayne G. Barnett: Yes, sir. Yes sir that as -- as -- we do not think that you have specify in the indictment. Earl Warren: Suppose six -- suppose six jurors were of the opinion that -- that the sand was not in commerce and six jurors were of the opinion that the steel was not in commerce but together they -- they found him -- found him guilty. Wayne G. Barnett: I -- I -- I'm not -- I'm not sure of the answer to that -- whether the jurors are supposed to be unanimous on alternative instructions whether the -- the jurors can divide on -- on alternative instructions. My guess would be that that they are to be unanimous on -- on the -- a single instruction. But in any event -- Earl Warren: Is there any way you can establish in this case that they were -- all agreed that the sand was the issue? Wayne G. Barnett: Oh, not at all, not at all. Earl Warren: Or that the steel was the issue? Wayne G. Barnett: No, no. We have to agree that we cannot tell from the jury's verdict which they found and they may have gone on the steel issue. Felix Frankfurter: They could have found with implied obedience or attempted obedience to the charge of the Court that the steel thing is -- or this is our objective but it's not in cause, couldn't they? Wayne G. Barnett: Yes, they -- they certainly could have and I would like to point out, on the sand commerce the only fact that had to be established was that these barge movements did take place and the barge movements were established by unconvertible records of the dredging company and also the slag company which corroborated with one another. There was no dispute that the sand movements did take place and we later argued that the conviction could be sustained simply on the ground, but there was no dispute about that issue. That's not the point I'm arguing now, however. But -- but we think that this is the kind of variance which is relevant only if it's prejudicial. That -- that it is not fatal per se and that there certainly was no prejudice in meeting the proof that the steel didn't move in interstate commerce. Hugo L. Black: You are in effect -- you in effect are arguing there, are you not, that this would be acceptable (Inaudible) Wayne G. Barnett: Well we could -- Hugo L. Black: (Inaudible) I suppose it's pretty well settled that the Government has to prove these allegations as being part of the charge? Wayne G. Barnett: Well, that -- that is right. I think the question is what degree of specificity is required in the indictment, whether it would be sufficient just to allege that the extortion delayed and obstructed interstate commerce without spelling out the ways in which that happened, but the Court said -- Hugo L. Black: The Court didn't have anything to say as it said it all, that it had appeared to be interstate commerce. Wayne G. Barnett: Oh, I think we do have to allege that and that is the center on -- Hugo L. Black: Did you allege that practice at all? Wayne G. Barnett: Yes, yes. Well -- Hugo L. Black: And that if you do allege more in fact it is not prejudicial at all? Wayne G. Barnett: Well no, it is fatal only if it's prejudicial. In fact we think you have to look at the whole trial to see if the man was prejudiced or surprised by this. Felix Frankfurter: How do you -- how do you determine -- how do you go about determining that -- Wayne G. Barnett: Well in -- Felix Frankfurter: Put to one side, if you put to one side, as I gather you do, the confusion that it's taking (Inaudible) in conflict with the defendant, in his conception was -- was irrelevant in the theory of issue. Wayne G. Barnett: Well, I -- I -- Felix Frankfurter: How do you determine whether it's prejudicial -- it was just a -- explicitly one thing and then -- and then it's saying explicitly on something else? Wayne G. Barnett: I don't think the counsel was confused. Felix Frankfurter: You mean you objected to the materiality. Wayne G. Barnett: Well I -- I -- there was a -- a colloquy that followed that and we explained the reason we were introducing it and he then answered that he did not think the effect on steel commerce was substantial enough to satisfy the statutory requirement, the legal argument that he's making here. And that is the only argument he has ever made during the whole course of the trial in about either sand commerce or steel commerce. Felix Frankfurter: But the effect of the admission of that contested author of evidence by the U.S. Attorney was, that it pertained to commerce as though the indictment had charged, it was implicit there that this obstructed interstate commerce. Now it doesn't follow because of indictment was is no simple term for which the Bill of Particulars was or was not asked, that that allegation is sufficient and broad enough to let in any phase of obstruction that if you do not rest on that kind of a broad indictment, or confine it that you're equally obliged. Wayne G. Barnett: Well -- well, I think that if it weren't -- if it were not essential to allege in a specific way in which interstate commerce is affect -- Felix Frankfurter: I don't think it is myself. Wayne G. Barnett: -- then I do not think -- see how we resolve because we specify one way except for the possibility of the prejudice and as I say, the evidence of the steel sales in interstate commerce was introduced in the second day of trial, no request for continuance was ever made and no suggestion at all that he was unable to meet that evidence of the single fact -- Felix Frankfurter: But the trial isn't merely what the lawyers do. A trial is also what the judge does and charges, but if the judge steps outside the scope and confinement of the indictment then he is from my point of view not capable of having really charging the jury. Wayne G. Barnett: Yes, I -- I would like to deal with that. I think it is the responsibility of the lawyer to call the matter to the judge's attention. I think that's the very purpose of rule 30 which provides that that no error may – may be assigned to an instruction unless it is specifically objected to for stated reasons. Felix Frankfurter: Do you think that applies even if you travel outside the scope of the indictment? I'm assuming -- Wayne G. Barnett: Yes, yes. Felix Frankfurter: -- for these questions that he did travel outside the scope of the indictment. Wayne G. Barnett: No, I think this is also with the plain error, under Rule 52(a) but I -- I think this was not done. Earl Warren: Mr. Von Moschzisker. Michael Von Moschzisker: Mr. Chief Justice, may it please the Court. When we asked for a Bill of Particulars, so we could find out among other things what commerce they meant to be talking about, the Government opposed the grant of the bill and that's why that paragraph hasn't been answered and then in the Government's opening in this case particularly the part at 520(a) and 521(a) and most particularly the top of 521(a) in their opening, they told us the commerce they were talking about was the sand. Speaker: But it is true that at the time this evidence was introduced as to the future potentialities of the steel mill that you were put on notice at that time that the Government rightly or wrongly was going to rely on that evidence as part of its -- the commerce phase if it's in that -- of its case. Michael Von Moschzisker: It is true that we were so put on notice after the trial began and it is also true that no grand jury ever made a prima facie case of such as felony or prima facie finding if it's a felony. Yes, sir. Speaker: Well the basic question on that is, on the indictment is whether the Government even though it didn't have to specify it at all what the commerce was that it was relying on by having specified sand, was thereafter precluded it from introducing any other elements of obstruction of commerce. Michael Von Moschzisker: I would so argue if necessary sir, I think they were obliged to show in their indictment what commerce they were talking about because this statute prohibits obstructing commerce by extortion. It's not like the Labor Management Relations Act which prohibits a labor leader from accepting money from an employer whose business affects commerce. Here the extortion has to affect the commerce and not as what I should have more truly answered Mr. Justice Whittaker yesterday. Sure, that sand on one barge may have been in commerce, sir or the record is somewhat ambiguous on that, but even if it was, the crime couldn't be made out. If I ran a corner cigar store and some of my cigars came from another State that would be commerce just like the sand on that one alleged barge. But if a holdup man came in and held up my cigar store, I say the effect on interstate commerce would be the same as that in this case and the effect is not enough for congressional jurisdiction. The extortion has to affect commerce. It's not enough for the business or the victim to which to affect commerce, you have to do something like hijacking a truck or stopping something from actually moving in commerce. Here, that was not done. What's that? Felix Frankfurter: In the statute, I don't suppose anybody would argue that the statute such as, every extortion of an owner of a business who might be subject, who would be subject to the Fair Labor Standards Act. Michael Von Moschzisker: I would not have supposed anybody would argue that, but when they come before Your Honors and cite the Sullivan case, in support of that position here, wonder. Good afternoon, Mr. Chief Justice.

John Paul Stevens: We'll now hear argument in Van Orden against Perry. Mr. Chemerinsky. Erwin Chemerinsky: Good morning, Justice Stevens, and may it please the Court: On the grounds of the Texas State Capitol, there is one evident religious symbol that conveys a powerful religious message that there is a theistic God and that God has commuted rules for behavior. Of course, the government may put religious symbols on its property, including the Ten Commandments, but must do so in a way that does not endorse religion or a particular religion, but does not have the purpose of advancing religion, but does not favor any particular religion. Antonin Scalia: Mr. Chemerinsky, I suppose that opening statement suggests that you think that Thanksgiving proclamations are also unconstitutional, which were recommended by the very first Congress, the same Congress that proposed the First Amendment. Erwin Chemerinsky: No, Your Honor, I would-- Antonin Scalia: They also refer to one God, to a theistic ruler of the universe. Erwin Chemerinsky: --No, Your Honor, I think the Thanksgiving proclamations would be constitutional. I think it's analogous to the legislative prayers that this Court upheld in Chambers v. Marsh. I think it's very different than this Ten Commandments monument. Antonin Scalia: All right. But then you have to narrow your opening statement and say that certainly the State can acknowledge the existence of a unitary God without offending the Establishment Clause. Erwin Chemerinsky: Yes, Your Honor, but it all depends on how it is done. Here the way in which it is done is the most powerful and profound religious message that this Court has ever considered on government property. Here you have a monument that proclaims not only there is a God, but God has dictated rules of behavior for those who follow him or her. Anthony M. Kennedy: I don't know whether that's any more profound or ultrareligious, super religious than the prayer that the chaplain gives every day in the House. Erwin Chemerinsky: Your Honor, there is a difference between a prayer that a chaplain gives... in Chambers v. Marsh, this Court emphasized that the prayer by the chaplain was a nonsectarian prayer. This is very much sectarian. This proclaims that there is a God. It proclaims-- Anthony M. Kennedy: Well, I mean, I haven't read the prayer. I would be surprised if I went through all the prayers and there was no mention, direct or indirect, of the Ten Commandments or a couple of them. Erwin Chemerinsky: --Your Honor, I would be surprised because here, if you look at these commandments, it's that God has claimed that he is the only God, prohibiting idolatry, prohibiting graven images, prohibiting taking the name of the Lord and God in vain. Requiring observing of the sabbath. This is God dictating to God's follower's rules for behavior. Stephen G. Breyer: Is there any other... I mean, you can continue if you want, but one difference which I've written down is you say that the difference between this and the prayer is that this is more profoundly religious. Is there any other difference, in your opinion? Erwin Chemerinsky: No. I think the key difference is-- Stephen G. Breyer: That's the difference? So if I happen to read these prayers in the Congress and I came to the conclusion that in terms of a religious message, I actually thought the prayers had the more religious message, then I should vote against you. Erwin Chemerinsky: --No, Your Honor. There are, of course, other differences. As I said to Justice Scalia earlier, with regard to legislative prayer in Chambers versus Marsh, this Court said that there was a history going back to the very first Congress that allowed there to be those kinds of religious invocations. Ten Commandments monuments standing by themselves, as they do here, certainly are not of that historic origin. Sandra Day O'Connor: How about if they're packaged in a museum like setting and there is some interest on the part of the State in preserving something. Erwin Chemerinsky: Yes, Your Honor. Sandra Day O'Connor: And displaying a whole variety of things? Erwin Chemerinsky: Of course, there can be Ten Commandments or any religious works as part of a museum setting. This isn't a museum setting, Your Honor. Every monument on the Texas-- Sandra Day O'Connor: Is this a kind of a park? What do we regard this space as? What is it? Is it a park like setting? Erwin Chemerinsky: --It is a park like setting. It is the acres of the State Capitol grounds. Every monument on the State Capitol grounds is there because the State legislature wanted to convey a particular message. It is a felony in Texas, an impeachable offense to put anything on the Capitol grounds without the approval of the legislature. Most of the monuments are there to honor war veterans. This is the only religious message anywhere on the Capitol grounds. And by itself-- Sandra Day O'Connor: Well, would it be all right, in your view, if they put several others up for different religions? Then is it going to be okay? Erwin Chemerinsky: --If the clear purpose and message was to honor the diversity of religions in Texas, it would then be permissible. If it were a series of displays like that frieze, the fifteen different-- Sandra Day O'Connor: You don't object to that? Erwin Chemerinsky: --Quite the contrary, I think it's a-- Sandra Day O'Connor: Or the depiction on the door of the Court? Erwin Chemerinsky: --Quite the contrary. This is exactly how the State may display the Ten Commandments. Antonin Scalia: But the prayers in Congress doesn't do that and our Thanksgiving proclamations don't do that. They invoke a God, a unitary God, and that's contrary to the dictates of some religions that believe that there are a lot of gods. Erwin Chemerinsky: Yes, Your Honor, there is-- Antonin Scalia: We don't pray to gods, the prayers are always to God. You know, I don't see why the one is good and the other is bad. It's no answer to say, well, you know, the former has been around for a long time. Well, it has but it suggests what the framers and what our society for several hundred years has believed the Establishment Clause means. And it does not... it is not too sectarian if it invokes a unitary God. Now, you're saying it becomes too sectarian when it invokes the Ten Commandments. Erwin Chemerinsky: --No, Your Honor. I'm saying several things. As I said earlier, first, this Court in Chambers v. Marsh said that there was a unique history to legislative prayers. There isn't a similar history here. Ruth Bader Ginsburg: Mr. Chemerinsky, too, doesn't the venue count? After all, we have had the question of prayer in schools, and the Court has said that that was not all right. Prayer in the legislature was distinguished. So it's not just prayer anywhere that the government wants to have it is okay. Erwin Chemerinsky: Of course, Justice Ginsburg, the venue counts. And here the venue is very important. It is the corner between the Texas State Capitol and the Texas Supreme Court. And in that way, this monument standing alone does convey the government's endorsement for religion. Sandra Day O'Connor: Okay. But if the legislature itself can have its sessions opened with a prayer, can the legislature itself want to have the Ten Commandments posted within the legislative halls? Erwin Chemerinsky: Your Honor, I think there is a very different message that's conveyed. Sandra Day O'Connor: Can it do that? Erwin Chemerinsky: No, Your Honor, it can't post the Ten Commandments by itself in its legislative halls because that would then be the government endorsing expression for support for that message. It cannot be, Your Honor, that just because there is a legislative prayer, that any religious message anywhere on government property would then be permissible. As Justice Kennedy has said in his opinion for-- Sandra Day O'Connor: But it's so hard to draw that line. If the legislature can open its own sessions attended by the public with a prayer, you say it cannot, in the same building, display the Ten Commandments. Erwin Chemerinsky: --That's right, because the message from the government is quite different. The message with legislative prayers, as this Court found in Chambers v. Marsh, is a recognition of a long historical practice. But when it comes to the Ten Commandments, it really is different than even a legislative prayer. This declares not only there is a God, but that God has proclaimed rules for behavior. The Ten Commandments come from sacred texts. As Justice Kennedy said in his opinion of County of Allegheny, certainly a city council could not put atop the city hall building a large Latin cross, even if that city council begins every day with a prayer. It cannot be, though, just because some religious messages are alllowed, like a prayer, that everything then becomes permissible. Anthony M. Kennedy: Well, you know, in the First Amendment speech area, we're very, very strict. A moment's delay in publication is a constitutional crisis. And I'm not sure that we should carry that over to this area, where there is this obsessive concern with any mention of religion. That seems to me to show a hostility to religion. I just don't see a balanced dialogue in our cases or in these kinds of arguments. Erwin Chemerinsky: Your Honor, I don't believe there should be an obsessive concern with religion. If the Ten Commandments are displayed as part of an overall display of law givers, like that frieze, it's permissible. But when you put sacred texts somewhere on government property, then the message is that the government is endorsing-- Anthony M. Kennedy: This is a classic avert your eyes. If an atheist walked by, he can avert his eyes, he can think about something else. Erwin Chemerinsky: --I don't think so, Your Honor. This Court has said the key is that the government can't endorse religion, in a way that makes some feel like insiders and some like outsiders. Imagine somebody who is Muslim or Buddhist or Hindu-- John Paul Stevens: May I ask you this question. Supposing... I recently read a case from the Seventh Circuit on what they did in Lacrosse, Wisconsin. And as we all know, this organization has donated Ten Commandments monuments all over the country. And what they did there is they sold the parcel back to the Eagles, their name, and put up a sign which read, this property is not owned or maintained by the City of Lacrosse, nor does the city endorse the religious expression thereon. Now, my question to you is, if there were a similar disclaimer on this monument, would that be an adequate remedy, in your view? Erwin Chemerinsky: --It would be a harder case, but I don't think it would be an adequate remedy. And the reason is the city cannot put a religious symbol standing alone on government property just through disclaimer. That's exactly what County of Allegheny was. There the nativity scene in the courthouse had a plaque saying it was donated by others, but that can't excuse it because otherwise the city could put the large Latin cross just with a disclaimer. John Paul Stevens: But if the test is whether the reasonable observer would think that the government is endorsing the religious message, wouldn't the disclaimer make it clear to the reasonable observer the government was not endorsing the message? Erwin Chemerinsky: I think the disclaimer would make it a harder case, but I think when you're dealing with the ground in a Texas State Capitol and the Texas Supreme Court, that placement, when you're dealing with the Ten Commandments, sacred texts, I still think that the message the reasonable observer would be that this is the government endorsing religion. Sandra Day O'Connor: At some point, would the State's interest in preserving old objects overcome the objection constitutionally? Erwin Chemerinsky: Yes, at some point, it could where it was clear to the reasonable observer that it was there because it was an old object. Sandra Day O'Connor: How did this monument get there? Was it in... is it true that it was put in as a result of promoting a movie about the Ten Commandments? Erwin Chemerinsky: The record is unclear as to that. There are certainly many indications in the popular press that Cecil B. DeMille together with his movie, The Ten Commandments, worked with the Friends of Eagles to have these monuments put around the country. But there is nothing in the legislative history that links this particular monument to that. Ruth Bader Ginsburg: Isn't the display on the tablets on the top before you get to the text, before you get to, I am the Lord, thy God. I thought that those were replicas of what was in the film. Erwin Chemerinsky: I don't know that, Your Honor. I've tried to find out what that text is. It is not in Hebrew. It is not in a script that anyone was able to recognize. But it is important to notice that if you look at the entire monument, in addition to the Ten Commandments, there is also a Latin symbol of Christ, there is also Jewish Stars of David. And as I was saying in response to Justice Kennedy's question, imagine the Muslim or the Buddhist who walks into the State Supreme Court to have his or her case heard. That person will see this monument and realize it's not his or her government. Antonin Scalia: I thought Muslims accept the Ten Commandments. Erwin Chemerinsky: No, Your Honor, the Muslims do not accept the sacred nature of the Ten Commandments, nor do Hindus, or those who believe in many gods, nor of course, do atheists. And for that matter, Your Honor, if a Jewish individual would walk by this Ten Commandments, and see that the first commandment isn't the Jewish version, I am the Lord, thy God, took you out of Egypt, out of slavery, would realize it's not his or her government either. Antonin Scalia: You know, I think probably 90 percent of the American people believe in the Ten Commandments, and I'll bet you that 85 percent of them couldn't tell you what the ten are. [Laughter] And when somebody goes by that monument, I don't think they're studying each one of the commandments. It's a symbol of the fact that government comes... derives its authority from God. And that is, it seems to me, an appropriate symbol to be on State grounds. Erwin Chemerinsky: I disagree, Your Honor. For the State to put that symbol between its State Capitol and the State Supreme Court is to convey a profound religious message. If you're just saying, now, this isn't there for its secular reason. If someone were to read this monument, one sees that it emphasizes its religious content. Antonin Scalia: It is a profound religious message, but it's a profound religious message believed in by the vast majority of the American people, just as belief in monotheism is shared by a vast majority of the American people. And our traditions show that there is nothing wrong with the government reflecting that. I mean, we're a tolerant society religiously, but just as the majority has to be tolerant of minority views in matters of religion, it seems to me the minority has to be tolerant of the majority's ability to express its belief that government comes from God, which is what this is about. As Justice Kennedy said, turn your eyes away if it's such a big deal to you. Erwin Chemerinsky: I disagree, Your Honor. Because this Court has said that above all, the government can't make some feel like they're insiders and some like outsiders. Even if they're the majority religion-- Anthony M. Kennedy: Well, suppose a non Christian, say a Muslim, comes before a judge who has very strong Christian beliefs, a very religious person. Does he feel like an outsider? And to require that we pretend that there is no religious motivation, no deep religious conviction on the part of many of our public officials seems to me to be a hostility toward religion. Erwin Chemerinsky: --No, Your Honor. Imagine that judge put the Ten Commandments right above his or her bench. That would make some individuals feel like outsiders. Of course, many judges have religious beliefs, but they can't have the religious beliefs above them. And Your Honor, that's not hostility to religion. As this Court said in County of Allegheny, excluding religious symbols like the nativity scene, when displayed by itself, is not hostility to religion. Last year in Locke v. Davie, this Court said that to deny funding through the State of Washington for scholarships was not hostility to religion. Enforcing the Establishment Clause is not about hostility to religion. It is about making sure that every person who walks into that courtroom can feel that it's his or her government. Stephen G. Breyer: That's an important point to me, but I don't see any way to get there in these difficult cases without making a practical judgment about whether that's really so. And the reason I say that, I start with Goldberg's opinion with Harlan in Schempp. And I know there are a lot of others, but I don't know if we've found a satisfactory test. And the point that they make is the government should be noninvolved with the religious, and it can't favor one over the other. But at the same time, we are a religious nation, where most people do believe in God and most of our institutions flow from the religious nature of our people. The City on the Hill, proclaim liberty throughout the land. All of those are religious. So how can the government, without what they call the pervasive and brooding commitment to secularism, which they think would be wrong, become necessarily involved because of our traditions, but not go too far? Now, I come to the conclusion very tentatively, there is no way to do it other than look at the divisive quality of the individual display case by case. And when I do that, I don't find much divisiveness here. Now, I'm exposing the whole thing not because I'm accepting it, but I would love to hear what you think. Erwin Chemerinsky: Yes, Your Honor, I think that the test that this Court has formulated do draw those lines. With regard to your point about divisiveness, the Ten Commandments is enormously divisive right now. I don't think we can ignore the social reality. The chief justice of the Alabama Supreme Court resigned, there are crowds outside today. I got hate messages this week, not because people care about the Ten Commandments as a secular document, but people care about the Ten Commandments because it's a profound religious message. And many want that religious message on government property. And I'm saying the government can put the Ten Commandments there as part of an overall display of law givers, because, Justice O'Connor, it's an overall display about diversity of religion. But when the Ten Commandments sits by itself it is, to use your word right now, enormously divisive. And that's why, from that criteria, it does violate the Establishment Clause. Antonin Scalia: What about the opening of this Court's session today, in a manner that has been used since John Marshall, is that divisive because there are a lot of people who don't believe in God. Erwin Chemerinsky: Because You Honor, I think that you have to distinguish between minimal religious content and maximum religious content. Ruth Bader Ginsburg: Mr. Chemerinsky, on that point, how much of the Ten Commandments... I mean, once we get to thou shalt not kill or murder, then there are tenets to govern a society, but how much are strictly about the obligation that man owes to God? Erwin Chemerinsky: The first of the two tablets, the first five commandments, Your Honor, and of course religions belief this was written in God's own hand and given to Moses. It's believed that the first five commandments that you were referring to are God's prescriptions for religious behavior. The latter five, the others that you're referring to, were God's commands for secular behavior. All of these are God's commands to God's people. And that's what makes a difference than the minimal religious content of God save this Honorable Court that Justice Scalia was referring to. The core of Texas's argument seems to be that it's there for secular purposes. But of course, if one looks at this monument, one sees that it's emphasizing the religious content and there is nothing that would lend the reasonable observer to see the secular content. It says in large letters, I am the Lord, thy God. Ruth Bader Ginsburg: Well, suppose, Mr. Chemerinsky, it was like Moses on that frieze where there are commandments showing, but there are only the sixth through tenth commandment. Would that be all right? Erwin Chemerinsky: Your Honor, if it was Moses on that frieze together with fourteen other symbols, absolutely okay, because it would clear to the reasonable observer-- Ruth Bader Ginsburg: But if we just had the Moses with the tablet that has the instructions for how people will conduct themselves in a civilized society versus worshipping. Erwin Chemerinsky: --I think that would still be unconstitutional between the Texas State Capitol and the Texas Supreme Court because it would still be the State of Texas expressing the message that there is a God and that God has dictated these rules for behavior. David H. Souter: Okay, what if you go one step further and there was simply a tablet without any embellishment about source saying, you know, thou shalt not kill, thou shalt not covet, et cetera, basically just the last five commandments, pure and simple. Would you have any objection on Establishment Clause grounds? Erwin Chemerinsky: If the tablets were by themselves in that way, between the Texas Supreme Court and the Texas State Capitol, it would be a harder case, but I believe it would still be unconstitutional because those tablets do convey a message that God-- David H. Souter: No, I'm just talking about when I... I don't know if I used the word tablet. I'm just talking about a piece of stone or a poster that says thou shalt not kill, thou shalt not covet, thou shalt not bear false witness, et cetera. Would there be any Establishment Clause objection simply because though it does not say so, those were quotations from the last six commandments. Erwin Chemerinsky: --No, Your Honor. If all it said was thou shalt not kill and thou shalt not steal, I don't think that that would be a problem because those are a reflection of law. Antonin Scalia: Who are you kidding? I mean, everybody knows that comes from the Ten Commandments. And what that message says is that these commands that are engraved on the human heart come from God. Why put it that way? You know, instead of that, just quote the State statute against murder. That's not what they're doing. They're saying these basic principles of human behavior that we're governed by come from God. And that message would be conveyed so long as you use the terminology of the Ten Commandments. That's what the Ten Commandments stand for. Erwin Chemerinsky: But Your Honor, this Court has emphasized that content and context matter enormously. And what I'm trying to do is to distinguish the situation where in Texas, it was clearly tablets with the words, I am the Lord, thy God, with five commandments for religious behavior and five for secular behavior. From Justice Souter's question, there are five others and especially those that are reflected in State law, like thou shalt not kill and thou shalt not steal. I think that the message is different there. It is the words, I am the Lord, thy God. Anthony M. Kennedy: I think you're telling us the State cannot accommodate religion. The only way they can do it is to put the Ten Commandments up and insist that it's always secular, whether it's predominantly for a secular purpose. It seems to me that's hypocritical and it's asking religious people to surrender their beliefs and that is not accommodation. Erwin Chemerinsky: No, Your Honor. I do think that it degrades religion to have to have the Ten Commandments defended for their secular purpose. I do think, though, that what's required of the government, when it puts religious symbols on government property, is to not be endorsing religion. That's why a nativity scene by itself in the County of Allegheny case was unconstitutional. On the other hand, that's why the nativity scene as part of a unified display in Lynch v. Donnelly was permissible. That's why, if the Ten Commandments are part of an overall display like this frieze, it's permissible. As part of an overall display about religious tolerance, and that's what the reasonable observer would see, it is permissible. But where it is the Ten Commandments themselves, placed as they are here, then it really is about the government endorsing religion, then it is the purpose of advancing religion and then it does violate the Establishment Clause. Anthony M. Kennedy: So the word accommodate should not be within our jurisprudence? Erwin Chemerinsky: Accommodate should very much be in the jurisprudence. And any time there is a Free Exercise Clause claim, then there has to be careful attention to accommodating religion. But there is no Free Exercise Clause claim in this case, Your Honor, so this isn't a case about accommodating anybody's religious beliefs. This is about the State expressing support for religion with sacred and solemn religious texts on government property. And my position is-- Antonin Scalia: Can the State express its support for religion generally? Erwin Chemerinsky: --Your Honor, it all depends-- Antonin Scalia: Suppose it didn't have the Ten Commandments, it just had a big thing that says religion is good. It said religion is the foundation of our institutions. Suppose there were something like that. Would that be bad? Erwin Chemerinsky: --I don't think that would be a problem under the Establishment Clause because it's minimal-- Antonin Scalia: But there are atheists who disagree with that intensely. Erwin Chemerinsky: --But Your Honor, I'm not arguing for a heckler's veto by atheists. What I am saying is that when the government puts sacred and solemn texts taken directly from the Bible at the core of its State government, it has to then do something to convey the message that it's not there for religious purposes, that it's there for secular purposes. Antonin Scalia: Doesn't it matter whether that text has acquired an independent meaning of its own? As I say, I don't think most people know what the text of the Ten Commandments are, but they do know that it stands for the fact that our laws are derived from God. That's what it stands for. Why isn't that symbolism sufficient to enable the State of Texas to use it? Erwin Chemerinsky: The Ten Commandments monument by itself conveys the message that the Ten Commandments are the source of law and it's that message the State can't convey. May I save the rest of the time for rebuttal? John Paul Stevens: Yes, you may save your time. Erwin Chemerinsky: Thank you. John Paul Stevens: General Abbott, we'll hear from you, please. Greg Abbott: Justice Stevens, and may it please the Court: Every court that has reviewed the specific facts of this case has agreed that the Texas monument is constitutional under this Court's well settled precedents in Lynch and Allegheny. This Court should agree that the Texas monument should not be torn down from its historical place for three reasons. First, the Ten Commandments is an historically recognized symbol of law. Second, this monument is one of the smallest of the 17 monuments on the Capitol grounds, and like most of the other monuments, was a gift to the State of Texas and is clearly recognized as such on the monument itself. And third, this monument has stood for more than 40 years without controversy on a national historic landmark. In fact, even the-- John Paul Stevens: May I ask you this question? Under your analysis of the reason this is justifiable. Would it equally be permissible to have a crucifix of the same size in the same location on the Capitol grounds? Greg Abbott: --Justice Stevens, I think that would pose a much greater problem. John Paul Stevens: That's not my question. Do you think it would be permissible... it seems to me your reasoning that you've given us would support that result. And maybe that's the correct result. I'm wondering what your view is. Greg Abbott: I seriously question whether or not a crucifix would be constitutionally acceptable in that same location, and for the very same reasons which I'm articulating why the Ten Commandments would be acceptable in this location. The crucifix is not like the Ten Commandments in that it's not an historically recognized symbol of law. It doesn't send a secular message to all the people, regardless of whether they are believers or not believers of the important role the Ten Commandments have played in the development of law. Antonin Scalia: It's not a secular message. I mean, if you're watering it down to say that the only reason it's okay is it sends nothing but a secular message, I can't agree with you. I think the message it sends is that law is... and our institutions come from God. And if you don't think it conveys that message, I just think you're kidding yourself. Greg Abbott: Well, Justice Scalia, the Ten Commandments send both a religious message and a secular message. When people-- Sandra Day O'Connor: But the district court, I think in this very case, found that commemorating the Ten Commandments' role in the development of secular law was not one of the State's purposes in accepting the monument. Don't we accept that finding as the case comes to us? That hasn't been challenged. We don't have any cross appeal. I assume we accept that finding of the district court. Greg Abbott: --The Court obviously is correct to accept that finding. As you know, from the district court's finding, the secular purpose that was accepted by the district court was to honor the Paternal Order of Eagles. But also there was an ongoing-- Sandra Day O'Connor: But you're arguing for something contrary to the district court's finding. Greg Abbott: --I'm actually, Justice O'Connor, arguing for purposes that are in addition to that district court's finding because there was an ongoing purpose to retain this now historical monument that has stood for more than 40 years without controversy on a national and historic landmark. Anthony M. Kennedy: So in another case, if a government official feels that the Ten Commandments have been very, very important in his or her life as a spiritual or religious matter and wants other people to know how important the Ten Commandments are, he cannot accept on behalf of the city the Ten Commandments. And so you can have no Ten Commandments in city A with the Ten Commandments in city B. General, that doesn't make a lot of sense to me. And again, you're just doing with purpose what you did in response to Justice Scalia's question. You're asking us to ignore the religious purpose that is the most manifest value of these symbols. Greg Abbott: Well, with regard to both purpose and effect in this particular setting, I don't think that religion was the driving force. I know that all of the evidence shows that religion was not a driving force in any respect. Sandra Day O'Connor: I suppose that every monument that's on the State Capitol grounds in Texas in a sense conveys a message of State endorsement, State endorsement of the role of servicemen in fighting earlier wars or in support of the Boy Scouts or whatever it might be, doesn't it? I mean, by placing them there with the legislative approval, is that not really some kind of a message of endorsement for each one? Greg Abbott: If I may clarify an important fact and that is clearly the state of Texas, by displaying 17 monuments in a museum like setting on Capitol grounds, is trying to acknowledge and commemorate certain events. It's important for the Court to remember, though, that the State of Texas has specifically endorsed nine of those monuments by putting the State seal or the Lone Star seal for the State of Texas on those nine monuments. This monument does not have that kind of endorsement on there. David H. Souter: Isn't it all the case, as has been pointed out, that no monument is going to be on the grounds of the Texas State Capitol without the approval of the legislature? You don't dispute that, do you? Greg Abbott: Not at all. That is very true. David H. Souter: And you don't dispute that anyone going on those grounds would assume that the State government approved it or it wouldn't be there? Greg Abbott: Justice Souter, of course the presumption would be that people on the Capitol grounds would assume the State of Texas wanted those monuments on the Capitol grounds. Anthony M. Kennedy: Well, I'm not sure that that endorsement... in England, there is a square where they have King Charles on one hand... on one end and he's looking at Oliver Cromwell, who beheaded him, on the other. I don't know if you have to endorse one or the other. Greg Abbott: Well, Justice Kennedy, I believe that there is a very meaningful difference between this Court's standards of an endorsement and what a State or the nation may do with regard to commemoration. As an easy example, on the National Mall, there is, of course, the Lincoln Memorial and in the Lincoln Memorial, there is text from the King James version of the Bible. The nation commemorates and acknowledges Lincoln and what he has said. But by that display, the United States is not trying to endorse the King James version of the Bible or a particular religious message in that. Instead what the state-- David H. Souter: But you have to contend with the fact that the district court found that this sort of commemoration of the commandments involved was not the objective in placing the monument there, so you're left basically with a religious text. And if anybody has any doubt about that, the religious text is surrounded by some religious symbols, the Chi Rho, the Star of David. So it seems to me that it's hard to find, if we accept the district court findings, that there's anything here but an expression of approval by the State of Texas for a religious expression, and only for the religious expression. Greg Abbott: --All other factors, though, Justice Souter, as a person who stands in front of that monument clearly recognizes, centered in a specialized scroll is an indication that this was a monument that was dedicated and presented to the people and the youth of the State of Texas by the Fraternal Order of Eagles. There is no stamp of approval on this by the State of Texas on that monument. David H. Souter: But you're not trying to withdraw the... I took it to be the concession that of course anyone would reasonably assume that the State of Texas approved this message, and thought it was appropriate to devote state property to its promulgation. Greg Abbott: Clearly the State of Texas approved the monument being on the grounds-- David H. Souter: But then the fact that the Eagles also approve it doesn't really get us very far, does it? Greg Abbott: --Well, where I believe it gets you, as this Court has recognized, there is a very meaningful difference between acknowledging something and endorsing something. For example, the creche in Lynch or the menorah in Allegheny. David H. Souter: Let me ask you this. If the Eagles' presentation statement weren't on there, would that make a difference to Establishment Clause analysis? Greg Abbott: I think the Eagles' disclaimer on there helps our case but if it were not on there, I think the monument could still stand just as the creche did in Lynch or the menorah in Allegheny. The city of Pawtucket was not endorsing the creche in the display, it was acknowledged as part of the overall holiday celebration. David H. Souter: What is the... that's one of the problems with the argument, it seems to me, that by putting the Ten Commandments monument on grounds that have lots of other monuments, that the religious message is somehow either diluted or changed. Contrast the situation in Texas with what we've got here. You've got Moses up there with at least the last five commandments showing. But Moses is in the company of a group of individuals who are nothing but law givers. You've got Menes and Hammurabi and John Marshall and the rest of them. There is an obvious theme. Anybody who looks at the identity... or knows the identity of these figures is saying they're getting at law givers. But if you look at the grounds of the Texas State Capitol, you see wars, pioneer women, children and so on. There is no one common theme. The only theme seems to be these are objects or symbols that are worthy of some kind of respect. And one of them is religious. Being mixed into a group that has no common theme does not eliminate the religious... the obvious religious message from this monument. Isn't that correct? Greg Abbott: Well, just as this Court may display in the courtroom itself, Moses with the Ten Commandments amongst law givers, doesn't mean that that is the only way the Ten Commandments-- David H. Souter: Maybe it doesn't, but I'm trying to find a rationale for the argument that's being made, and that I thought you were alluding to. The argument is that by mixing this in with a grab bag of other symbols, you have somehow diluted or changed the focus from a religious message to something else. And I can understand that in the Moses case in the frieze because there is a clear common theme. On the Texas grounds, at least insofar as I can tell, there is no common theme. There are a series of objects that say, these are worthy of veneration. One of them is religious. There is nothing that removes the religious message from its prominence in the display the way the religious message is removed from prominence in the Moses display, isn't that correct? Greg Abbott: --Your Honor, if I may explain with two points. One, there is a common theme on the Texas Capitol grounds, just as there are on most Capitol grounds and on the National Mall. And the common theme is to recognize historical influences in our country and in our State. David H. Souter: But what do you do with the district court finding? Greg Abbott: Well, the district court finding obviously chose to decide that the secular purpose for the display was to honor the Fraternal Order of Eagles for their commitment to combatting juvenile delinquency. But that is different... the purpose why the district court found why the display was constitutional is different than the message that is being sent to the reasonable observer. David H. Souter: You had a second point and I don't want to miss your second point. Greg Abbott: The second point is that there are other displays in this Court. As a person walks into this courtroom or exits the courtroom, they don't see the Ten Commandments in a display with a bunch of law givers. Instead, they see the Ten Commandments alone with an eagle above it. Ruth Bader Ginsburg: They see blank tablets. They don't see any writing. This is the only one that has script on it. It has numbers and in fact that's confusing because one of them, the people think is the Ten Commandments is the Bill of Rights. [Laughter] Greg Abbott: Justice Ginsburg, clearly the Ten Commandments that are reflected on the doorway into and out of this courtroom don't have words on them like the tablets do in the State of Texas. Antonin Scalia: But we know what they are, don't we? Greg Abbott: We do and that's the point. Even more importantly, the reasonable observer knows what-- John Paul Stevens: But do we know which version of the Ten Commandments it stands for? There are three different versions at least. Greg Abbott: --I happen to agree with the Petitioner. There is more than three versions of the Ten Commandments. And the purpose, if you go back to what the Eagles were trying to achieve here, was to come up with a version of the Ten Commandments that wasn't reflective of any particular religion. Antonin Scalia: And it doesn't matter what the version is, does it? If it just stands for the fact that laws... the foundation of our laws is God. If that's all it stands for, who cares what the text is. John Paul Stevens: General Abbott, would the Texas purpose be equally served if the monument had on it the kind of disclaimer that the city in Wisconsin put on its monument? Greg Abbott: Justice Stevens, I apologize, I'm not familiar with that disclaimer. John Paul Stevens: It reads this way. What they did is they sold the parcel of land that had the Eagles' donation on it back to the Eagles and then they put a fence around it and then they put this sign up, "This property is not owned or maintained by the City of Lacrosse, nor does the City endorse the religious expression thereon. " Maybe as long as it's still on the property, it couldn't be the same. But suppose you had a comparable disclaimer. Would that defeat any of the purposes on which you relied to justify having the statue there? Greg Abbott: A disclaimer like that would surely ensure that this display is constitutional. However, it's our contention-- John Paul Stevens: And would it undermine the message that you legitimately seek to convey? Greg Abbott: --I don't believe it would. Antonin Scalia: Why don't you do it and we wouldn't have this case? I really would consider it something of a Pyrrhic victory if you win on the ground that you're arguing. So that in all future cases, we're going to have to examine displays of the Ten Commandments to see whether there was ever any intent to say that our laws are ultimately dependent upon God. Is that what you want us to do case by case? Greg Abbott: Well, this Court obviously has decided Establishment Clause cases on a case by case basis, but in this particular instance, the Ten Commandments displayed in a museum like setting on the Capitol grounds arrayed among 17 other monuments, the message that is received by the viewer who is trekking through the Capitol grounds looking at monuments is clearly one not of the State of Texas. Stephen G. Breyer: I've got to get one question before you leave because you're the one who knows the record. And what I've had a hard time finding in the record is what I think there must be some material that the State or somebody in a tourist office or a guide or somebody tells people what the 17 different monuments are. And all I've found is the general brochure which doesn't tell them what they are. And I found something on the Internet. Well, which is in the record. But aside from this page from the Internet in the record and that, is there anything else in this record that if somebody wanders around, they're on the State grounds, they say, what is this, what are these things anyway? There must be something to tells them. And where is it? Greg Abbott: The state provides a walking tour guide. Stephen G. Breyer: And the brochure doesn't tell what they are. This thing, it says grounds? Greg Abbott: Your Honor, Justice Breyer, if I could refer you to page 205 of the joint appendix, it provides a description of each of the monuments on the walking tour. And if I could also refer the Court to page 117 of the joint appendix, it shows the actual walking tour where a person would go along the process of seeing the monuments. But clearly as they walk through the Capitol grounds, what any observer, not just the reasonable observer, what any observer would notice is that before they could even get to this particular monument, they will have passed in full view of countless other monuments and historical markers clearly indicating to them that they are not there for the purpose of seeing just the Ten Commandments but they are in a museum like setting cast amongst many different kinds of monuments. And so they appreciate the setting before they even arrive at the Ten Commandments monument. Also when they arrive at the Ten Commandments monument, they will notice it is one of the smallest of the monuments on the Texas Capitol grounds. It does have the disclaimer on it indicating that it was donated by the Fraternal Order of Eagles. It does not have the State seal on it like many of the other monuments, so it's not-- Ruth Bader Ginsburg: Is it like how many other monuments? This is not peculiar to Texas. The Order of the Eagles have given how many monuments just like this one, identical to this one? Greg Abbott: --Justice Ginsburg, it is actually not clear from the record. There have been some accounts of hundreds, maybe even into the thousands that the Fraternal Order of Eagles have given out. And I cannot tell you for a fact that they are all identical. Ruth Bader Ginsburg: When you said that every court that has considered this case has said it's compatible with the Establishment Clause, did you mean just this Texas case or other cases involving an Eagles Ten Commandments? Greg Abbott: Justice Ginsburg, my reference was to the fact that every case that has considered the specific... every court that has considered the specific facts of this case, meaning the Texas case-- Ruth Bader Ginsburg: So you didn't mean this particular depiction of the Ten Commandments? Greg Abbott: --No, Your Honor. What I meant is that both the district court and the Fifth Circuit Court of Appeals specifically reviewed the facts of this case and were all in complete agreement that the facts of this case render this monument constitutional under this Court's well settled precedents in Lynch and Allegheny. One other thing I would like to draw the Court's attention to that will give you a very well understanding of what the monument looks like and its setting is the videotape that is Exhibit 44, it's obviously not part of the joint appendix, but it demonstrates how this particular monument is set in a museum like setting amongst many other monuments and gives you the perspective of what the typical viewer would appreciate as they walk around the Capitol grounds. Ruth Bader Ginsburg: Kind of an eclectic museum. One message that you get is that the State is honoring the donor of the various-- John Paul Stevens: General Abbott, I want to thank you for your argument and also for demonstrating that it's not necessary to stand at the lectern in order to a fine job. Thank you. Greg Abbott: Thank you, Your Honor. John Paul Stevens: Mr. Clement. Paul D. Clement: Justice Stevens, and may it please the Court: The Ten Commandments have undeniable religious significance, but they also have secular significance as a code of law and as a well recognized historical symbol of the law. When a State decides to display a Ten Commandments display along with more than a dozen other monuments on its Capitol grounds in order to honor the donor, it is not endorsing the religious text of the Ten Commandments. And in the same way, when a state has that monument as part of such a collection, the Establishment Clause should not be interpreted to force them to send a message of hostility to religion by singling out that one monument for removal solely because of its religious content. John Paul Stevens: Can I ask you to address one thing that troubles me about the case? As I understand it, it's the Protestant version basically of the Ten Commandments we have before us, which has significant differences from the Catholic version and the Jewish version. And I understand it was the result of consultation and so forth. But I noticed in your brief, you list the States in which the Ten Commandments displays are listed, there is none for Rhode Island, which I often think of as primarily a Catholic state, and the only one from Massachusetts is a frieze on the north wall of the public library which apparently didn't have the text of the commandments in it. Is there any significance to the fact that this kind of display may be more popular in areas of the country where the Protestant religion is dominant as opposed to other versions of Christian religions? Paul D. Clement: Justice Stevens, I don't think so. I mean, we didn't purport to do an exhaustive survey, but I think there is a well represented group of displays throughout the country including, I think, in States that probably have relatively high Catholic populations. But I think we would steer this Court away from attributing too much significance to the fact that if a State is going to display the Ten Commandments at all, it will necessarily have to display a version that reflects one or another sect's preferences. In the Marsh case, for example, this Court upheld legislative prayer. It understood that they would necessarily have to choose a chaplain and that chaplain would necessarily be of one denomination or another. And this Court didn't doom the whole practice of legislative prayer because of the necessity of picking a chaplain of one denomination or another. In fact, in the Marsh case itself, this court upheld Nebraska's practice, even though they had chosen the same Presbyterian minister for 16 straight years. And so I don't think this Court in other Establishment Clause contexts has steered away from putting the States and municipalities in a catch 22. And given that this Court has suggested even in Stone against Graham that the Ten Commandments can be displayed, can be used in certain settings, it can't be that once the State in practice picks a particular version, it's all of a sudden guilty of a sectarian preference. John Paul Stevens: Of course, the other thing that's notable about your listing is most of the examples are examples of displays of the event itself rather than the text. And there is an argument made I think by Professor Laycock that when you display the entire text, it's kind of a different sort of symbol than when you just have a symbolic presentation. Paul D. Clement: Well, Justice Stevens, I think that quite a few... both types of displays and I think the very fact the Fraternal Order of Eagles put a lot of displays out suggests that a bunch of them are textual displays. I'm not sure, though, that a display that actually has Moses receiving the Ten Commandments from God is any less religious. I would suggest that's actually more religious than one that just displays the monument standing alone. If the monuments are standing alone, you can I think appreciate the fact that maybe they're being displayed for their secular significance as well as their religious significance. When Moses is there, it's hard to avoid the implication that they are the revealed law of God, as opposed to also a secular code. So in that sense, I'm not sure that the variations in the display take away from the fact that there is religious content-- John Paul Stevens: A symbolic display is less objectionable when quoting the text as this monument does? Paul D. Clement: --Well, Justice Stevens, I would say... my point is not that there are not other ways to display it. Certainly I think, as we point out in our brief, blank tablets or tablets with Roman numerals are less objectionable... certainly, I think they're beyond objection... than a textual display. My point was that I'm not quite sure how one would balance sort of four commandments and Moses versus all Ten Commandments in text. I think it's a close call. John Paul Stevens: Well, except the four commandments and Moses would avoid the differences between the three different versions of the Ten Commandments, whereas when you quote one, you must select one over the other two. Paul D. Clement: Well, I guess I'm not sure that's true. I mean, some of the displays that are out there in courthouses have Moses receiving the commandments and have text. And I guess, my point, though, would be, again-- John Paul Stevens: Most of them don't. Paul D. Clement: --To be sure, to be sure. But I would hope the constitutional line wouldn't be that you can't have text. I mean, the Ten Commandments have a role in our society and had an influence on the development of the law as text. I mean, they weren't influential with ten Roman numbers. They were influential as text. Ruth Bader Ginsburg: General Clement, there is a question I have about the government's position. And does place matter at all? I mean, here we're talking about the grounds surrounding a State Capitol. What about every school room, if that's the choice of the school board? Is it the same or do you make... or every courtroom up to the court to decide for itself? Paul D. Clement: Justice Ginsburg, I certainly think location and context matters. I think in almost every Establishment Clause context, the setting and context matters a great deal. The school case, for example, as you suggest, I mean, unless this Court is going to revisit Stone against Graham, it's certainly true that the school context at least raises much more difficult questions. In terms of where it can be displayed in the courthouse, I think there are certainly permissible displays in the courthouse, but it may be something all together different to have a display in a way that it actually looks like a religious sanctuary within the walls of the courthouse. Ruth Bader Ginsburg: It looks just like this monument. Let's take this monument and put it in the rotunda of the court because the judges of that court choose to have it there. Is that all right? Paul D. Clement: Justice Ginsburg, I think putting it in the rotunda of the court as a stand alone monument, giving it sort of pride of place, if you will, raises a much more difficult question, to be sure, and may well cross the constitutional line. As I was alluding to, the one case I'm familiar with, which is the case of the Alabama Supreme Court, there it was displayed in a way that the district court literally found it was like a religious sanctuary within the walls of the court. Anthony M. Kennedy: And do you think that it should cross the constitutional line under the interpretational theory of the First Amendment you wish us to adopt? Paul D. Clement: I think the display that I have in mind in the Alabama Supreme Court probably does cross the constitutional line even under our view. I think that a display of the Ten Commandments in some appropriate way in the courthouse certainly wouldn't cross the line that this Court... that we would have this Court draw. I mean, we think, for example, it cannot be that the very fact that moving it closer to the courthouse itself is a constitutional problem because as you yourself have pointed out, Justice Kennedy, the legislative prayers that were approved in Marsh v. Chambers were at the absolute epicenter of the government. And still those were a permissible acknowledgment of religion. So I think while context matters, I don't think solely the fact that it's moved closer to the seat of government does have a dispositive impact. And again, I would say in response to Justice Stevens' question, I do think it is important to remember that there is going to have to be a choice among the various documents if they are going to be displayed at all. And I don't think that the Constitution puts the municipalities and the States in the bind of being able to display the Ten Commandments in theory, but in fact, not being able to pick any one version-- John Paul Stevens: What would your comment be on requiring a disclaimer of some kind? Paul D. Clement: --Well, Justice Stevens, two points to make about that. One is certainly a disclaimer would make this an easier case. And I would point out that there is a disclaimer of sorts on the monument already because it clearly states that it was a gift from the Fraternal Order of Eagles. John Paul Stevens: It is kind of ambiguous. Paul D. Clement: It is, Justice Stevens, and I'm troubled frankly by the suggestion that they would have to go as far as you suggested they would go under the City of Lacrosse case. The idea that in order to have the Ten Commandments monument on the Capitol grounds, the State of Texas has to cordon that monument off, unlike any other of the 17 monuments, suggests a hostility to religion. I think the idea that there has to be a fence away from the Ten Commandments to make clear that the State has nothing to do with the Ten Commandments is bending over too far in the other direction. The State can have, as this Court has acknowledged many times, permissible acknowledgments of religion. And I don't think in this case that the State of Texas has gone too far. One other point I think that is important to put on the table, and it is consistent with the analysis of both the district court and the Fifth Circuit, is that whatever the original purpose is for Texas accepting the monument and displaying it in the first instance, they now have an additional secular purpose in retaining the monument. And I would point this Court to Judge Becker's analysis in the Chester County case for the Third Circuit. In that case, he had a display that was admittedly smaller, but it was actually a much more overtly sectarian version of the Ten Commandments. It had the Ten Commandments plus the summary of the Ten Commandments from the New Testament. And nonetheless, Judge Becker said that in that case, the monument had been there since 1920 and Chester County had a legitimate secular purpose in maintaining that document and maintaining the plaque on the courthouse. And I think he correctly understood that in these cases of displays that have stood for 40 years or longer, that the State is in something of a dilemma. Thank you, Your Honor. John Paul Stevens: Mr. Chereminsky, you have four minutes left. Erwin Chemerinsky: Thank you. This case comes down to two questions. First, is the Ten Commandments a highly religious message. And second, can the government place a single religious message on government property at the seat of its government. As to the first question, Stone v. Graham resolves this because this Court said that the Ten Commandments is an inherently religious message no matter what disclaimer accompanies it. The Ten Commandments is not on the Texas State Capitol grounds simply to recognize the role of religion in government. It is not simply an acknowledgment. It is sacred text taken directly from the Bible. It's not there about the history of religion in Texas. There is nothing to tell the reasonable observer that it is there for historical purposes. What about all the other religions that have played a role in Texas history? The Mojave religion, even Madeleine Murray O'Hare. Is Texas saying they would accept statues for all of these individuals there as part of the history of Texas? The second question is, can the government place a single religious message by itself on government property, especially at the seat of government. The County of Allegheny case resolves that. This is much like the nativity scene at the seat of the county government. What's important and hasn't gotten enough emphasis this morning, this is the sole religious message anywhere on the Texas State Capitol grounds. This isn't a museum. Every item that's there is there because the Texas legislature chose to put it there. Most are there to honor veterans of particular wars. Texas put this there precisely to express the religious message. Your Honors, what's left of the Establishment Clause if any item can be displayed with the most profound religious contents? Do we then say the observer can just avert his or her eyes? The observer could have averted his or her eyes in the County of Allegheny case. But this Court was clear in saying that a single religious message, a single religious symbol on government property is inherently an establishment of religion. For this reason, the Texas monument violates the Establishment Clause. John Paul Stevens: Thank you, Mr. Chereminsky. The case is submitted. We will now hear argument in the--

Earl Warren: Number 89, Knut Einar Heikkinen versus United States of America. Mr. Rein. David Rein: Court please, petitioner here was convicted on both counts of the two-count indictment charging a violation of Section 23 of the Internal Security Act of 1950. The offenses alleged in the indictment provided under statute in which he was convicted were one, a willful failure to depart; and two, the second count, a willful failure to make a timely application for travel documents necessary to his departure from the country. Both of these failures were alleged to have occurred during the six-month period following an order of deportation entered against the petitioner. In other words under the statute, under the statute the crime is for an alien against whom an order of deportation as been entered, willfully fails to depart or willfully fails to apply for travel documents. As I say the petitioner is convicted on both counts. He was sentenced to a five-year of prison term on the first account, and imposition of sentence on the second count was differed until completion of the sentence on count one. Petitioner is a 67-year old alien, a native of Finland. He was ordered to be deported by the immigration service on the basis of a finding that he had been a member of the Communist Party from 1922 to 1930 and he was therefore deportable in accordance with the provisions of Section 22 of the Internal Security Act of 1950. This order of deportation was affirmed by the Board of Immigration Appeals on April 9th 1952. Some nine or ten days after the order of deportation was affirmed by the Board of Immigration Appeals, the petitioner was visited by a representative of the immigration service, Mr. Maki. The purpose of this visit was to complete a service form, to prepare and complete a service form headed Passport Data for Alien Deportees. This was the form regularly utilized by the service to obtain the personal history of any deportees in order to procure in accordance with its usual practice, the necessary travel documents for aliens. Mr. Maki told the petitioner that the form would be used by the government for that purpose. The petitioner fully cooperated with Mr. Maki. He gave him all the necessary information and the form was duly forwarded to the Chicago office of the service for processing. The record does not indicate what happened to that form subsequently. The government introduced no evidence on the point. Petitioner's efforts at the trial to discover what had occurred with that form was blocked by the Trial Court, the Trial Court saying it was completely irrelevant since the government owed the petitioner, in the Trial Court's language owed the petitioner no duty to assist him in affecting his departure. On April 30th 1952, and this is about a week to ten days after the visit to the petitioner by Mr. Maki, the officer in charge of the Duluth service, Duluth office of the immigration service sent a form letter to petitioner. It was on a mimeograph form and that letter is set out in full at page 8 to 9 of our brief beginning, “Dear sir, an order of which you have been notified directing your deportation on the following grounds has been entered.” The crucial paragraph, we'll now deal with that letter, we have italicized, upright italics at page A and that paragraph reads as follows. “Arrangements to affect your deportation pursuant to search order are being made and when completed, you will be notified when and where to present yourself for deportation.” Earl Warren: Mr. Rein, was there any such language in that form, that original form that you mentioned a few moments ago, was a clause like that given? David Rein: No, the original form merely contained, it was not a form letter sent to -- it was a blank -- Earl Warren: A blank? David Rein: -- in which the petitioner -- all the information on the form was filled out by the petitioner, in which he gave his name, his birthplace, his residence, where he might have been a citizen and the purpose of that, sole purpose of that form was so that the service should have the necessary data to procure travel documents for him to be deported. The petitioner had in the deportation proceeding indicated, as he is entitled to under the statute, as it is granted the right on the statute, the choice of country to which he should be deported as Finland, his native country and this form is to get the necessary information so that the immigration service can go to Finland or the proper authorities in Finland to get travel documents for him to go to Finland and he did not keep that form, that form was then taken by the representative of service. William J. Brennan, Jr.: Well does the service take a labeling or – David Rein: Well it normally does so far as it is in this record as a matter of fact, within the service that is usual practice to take the labeling. As a matter of fact, we have the only testimony on this Court, in this record, the testimony given by the same Mr. Maki that so far as he knew, the petitioner could not have gotten a passport or travel documents except by going through the service. He did not know, well, let's put it this way, the question was asked could the petitioner have gotten travel documents on his own and he said, “I do not know if that would have been possible.” William J. Brennan, Jr.: Well, if it is the service's labeling or is that the consequence of any statute or just something the service does? David Rein: Just something that seems to be their normal practice, I can say that under the statute they are required to do it or they have the legal obligation, it just seems to be their normal procedure, procedure which -- that people get deported. As I understand the purpose of it and the purpose of the statute was in a case where they in some reason or rather didn't succeed they could call upon the petitioner or the alien to do whatever might be necessary to pull out whatever documents might be necessary or to assist them in any way. I don't say that statute puts that upon the service, but that does seems to be the normal practice at least far as appears from this case and is, that is my notion. Now perhaps the government might say otherwise. Speaker: Is this the first questionnaire that was excluded by the court indicate to which country this man was to be deported? David Rein: No questionnaires was not excluded I am sorry -- Speaker: Well I misunderstand -- David Rein: The questionnaire which he filled out is in evidence and that indicated that the choice of country is Finland. What was excluded by the court, was what was -- information as to what the service did with that questionnaire and that form. In other words, we know that he filled out the questionnaire, Mr. Maki took the questionnaire. It was sent from the Duluth office of service to Chicago, and then we have a blank as to what the service did with it, whether they sent it on to Finland, the Finnish Embassy or didn't or just what happened, I mean that aspect was excluded, but the actual questionnaire is an exhibit in evidence I think it's exhibit number nine. Hugo L. Black: Where is the question? David Rein: I am sorry. Hugo L. Black: In the record where do we find that question that you referred? David Rein: Questionnaire? Hugo L. Black: You say they excluded -- David Rein: Well, it was excluded by the fact -- it was done at the -- prior to the trial, a motion was made, for the documents which would show what the government did in order to process his application and at page -- the record at page 19, that motion was denied by the court on the ground, you'll find the colloquy from 19 to 21 in which the motion was made at pre-trial to get the correspondence that the government may have had with Finland, Canada or any other country on the basis of that questionnaire and the court there said, that it would not permit that to be brought into evidence, we were directed to be produced on the ground and I think it is set out on page 19. I don't care what correspondence the government had with Finland or Canada or anywhere else for the records to his deportation after that order was entered. They owe him no duty. It was his duty to obey that order. That is all to this and that's what the court's view point. We proceed then on the chronology of events here, this letter of April 30th which I have read the italicized paragraph informing the petitioner that the government was proceeding to make arrangements to effect his deportation and that he will then be notified when and where to present himself for deportation. The letter then set out the text of Section 23 of the Internal Security Act of 1950 and concluded at page 9 with a paragraph, “Therefore you will recognize the importance of making every effort in good faith to obtain passport or other travel documents so that you may effect your departure pursuant to the said order of deportation within the time prescribed by the quotation above in the Internal Security Act of 1950.” William J. Brennan, Jr.: Page 9. David Rein: I'm sorry. William J. Brennan, Jr.: Did you mean page 9 of the record? David Rein: No I am sorry I mean page 9 of my brief. It appears in the record at 74 to 75, but it is set out in our brief this particular letter at page 8 to 9. William O. Douglas: (Inaudible) David Rein: There was an evidence, what was excluded, if I may make that clear, is what the government did with that form. William O. Douglas: (Inaudible) David Rein: The record does not show what the counsel's arguments to the jury, and I don't know what -- what arguments were made to the jury. I don't think they were transcribed at all, and the record does not contain the jury arguments. I would indicate as I get to later that under the instructions, it would have been completely irrelevant as far as the court seem to think. Petitioner was again interviewed by representatives of the service on February 12th 1953 at which time he gave them a sworn statement that was introduced into evidence at the record and it is set out or the pertinent portions of them were set out in full at our brief from page 9 to 12. The gist of this statement was the petitioner's acknowledgment that subsequent to the interview, which he had with Mr. Maki in April of 1952, he had taken no steps and had done nothing to obtain travel documents. He gave as a reason for this failure that it was his impression as a result of his interview with Mr. Maki in April that the government was taking care of the matter and that if the government wished anything further from him, he would be so informed. Petitioner had in fact informed his counsel of his interview with Mr. Maki and he had been advised by his counsel that there was nothing further for him to do until he received further advice from the immigration authorities. The petitioner at this time, February 12, again stated that he was willing to cooperate, do anything necessary to obtain a passport and depart to Finland and he would do anything the Attorney General wished him to do. He did say that if the attorney general wished him to depart to some other country, he would wish first to consult with this attorney before stating his position. Even at this late date, February 12th after this interview which, on which the government so heavily relies in showing a failure of the petitioner to carry out his obligation, the question as to what the service wished the petitioner to do is left up in the air. The service officials still did not indicate to the petitioner that they thought he was delinquent in any respect, or that there was anything that they thought he should do at this time. Now this really in substance is the government's case. They have the letter of April 30th, they have his sworn statement of February 12th 1953. They have one other item of evidence and that consisted of the testimony of Mr. Maki who gave his version of the April interview with the petitioner. Maki's version of that April interview, upon which the petitioner stated, gave him the impression that he need do nothing, in all important respects fully corroborated the petitioner. Maki said he didn't recall the details of the interview. He denied when asked whether he had specifically instructed petitioner that he need do nothing on his own until he heard from the service, but this denial of course in no way conflicts with petitioner's statement because petitioner never said that he was specifically told by Maki that he need to do nothing. He stated only that that was impression had gained as a result of the interview and on the basis of Maki's testimony even if we don't credit the petitioner of his own statement, that was the only reasonable impression he could have gotten. Maki did testify that he informed petitioner that the purpose of the interview was to obtain information which will be forwarded to the Chicago office so that it might take the necessary steps to obtain travel documents. Maki acknowledged further that so far as he knew, there was no other method by which petitioner acting on his own could have obtained the necessary documents and there was no question under any version of the interview and Maki himself conceded that he did not tell petitioner that he had to proceed independently of the service to obtain travel documents. Speaker: Maki, he is the government's only witness? David Rein: Well they had two other witnesses who testified to really nothing, they had another witness who testified, the officer in charge identified the letter of April 30th which he had sent. They had another witness who is the one who took the interview, the sworn statement, a Mr. Bolden who took the sworn statement in the interview of February 12th 1953 which was then introduced in evidence. I mean there were two other witnesses but they testified to nothing of any consequence. And Maki was the only government official who spoke to the petitioner between the time of his deportation and the time of the February 12th 1953 interview. There was no other contact between him and the service except for the letter of April 30, which was sent to him. In other words there was no other conversation between the petitioner and any other official of the service other than Mr. Maki. So I say that there weren't other government witness to identify the documents so that this really is the government's case. William J. Brennan, Jr.: Does this all add in the -- you raising an issue of the sufficiency of the government's case you are in the jury is that it? David Rein: That's correct, I said the government will now get to it, government did not prove either the failure to apply for the travel documents and certainly did not prove whatever failure that might have been was local. Your Honor certainly to be local the petitioner must have had some knowledge of what was required and that -- I think on the basis of these facts the petitioner then only, the only reasonable thing to do, he took the government at its word, when they said they were taking care of the matter, when they sent him a letter saying arrangements to effect you deportation of being made we will notify you when and where to report, he took them at their word and waited to hear from them. William J. Brennan, Jr.: Was there a motion for acquittal at the closing? David Rein: Yes there was a motion for the judgment of acquittal? William J. Brennan, Jr.: Did he take the stand himself? David Rein: No he did not. William J. Brennan, Jr.: Is that all that there is in the case, the government's case? David Rein: That's right. There is no evidence presented on behalf of the defendant at all. He did not take the stand or did he present any evidence so that's the government's case, a complete picture to conquest. I should say this with regard to Mr. Maki's testimony and one real item that the government attempts to make something out it, out of. Mr. Maki in response to a leading question said that he did not make any statements to petitioner that would give petitioner the impression that he should wait until he heard from the service. We argue that that does not help the government at all because this was simply an inadmissible erroneous opinion characterization of the clear meaning of his words. The impression that petitioner could or would have gotten from his interview with Maki should be gotten from what Mr. Maki told him, not from Mr. Maki's characterization of what he told him, should not have given him that impression. I'd say short of that piece of evidence the government has nothing to indicate that -- Speaker: Petitioner was tried before a jury, wasn't he? David Rein: Yes, he was tried for a jury. To change our argument as I have indicated earlier the government, the petitioner here was convicted on two counts; one is failure to depart from the country, two a failure to apply for travel documents. However, as indicated by the instructions of the court and by the evidence both counts rest entirely on the government's position that there was a failure to apply to travel documents. I wanted to deal with it later with the fact that that in itself was an invalid position but I want to address myself now to the insufficiency of the evidence to show a failure to apply for travel documents. The indictment and the language of the statute charged the petitioner failed, “To make timely application in good faith for travel or other documents necessary to his departure.” The statute does not require an application in any way or indicate to whom the application must be made. The petitioner here did in fact make an application for travel documents within the meaning of the statute. He did fill out this passport data for alien deportees, which was a form supplied by the service and regularly used by the service to obtain travel documents for aliens under orders of deportation. If moreover was told that the documents would be used for that purpose and the evidence in this record as indicated by Mr. Maki's testimony shows that the government had in the past obtained travel documents on the basis of just such a form and indeed as I've already indicated, Mr. Maki indicated he didn't know of any other procedure for obtaining travel documents. The validity of this particular section of this statute was before this Court in Spector, at which time this Court sustained that provision of the statute against the charge that it was too vague, it would be impossible. But as I read Spector, we read Spector, it did it only on the ground and it could only upon the ground that in any particular case the passport visa requirements of a particular country were ascertainable, and that evidence would be shown in any particular case as to what was required. The government apparently assumes that the application which the alien here made to the service was not a proper application for travel documents, it was insufficient to satisfy the statute, but there is no evidence here to support such an assumption. There is no evidence here, the government introduced no evidence to show what would have been a proper application or what it apparently maintains or contends that the petitioner should have done in the way of making an application for travel documents. Thus on this record, petitioner was convicted for failing to take some undefined action, which was not shown to be the necessary, useful or appropriate for the obtaining of travel documents, but he did apply for travel documents which was the normal channel for such application through the service, and although it does not appear that any other application was needed or would have even been useful. In Spector, which I have indicated earlier, the Court sustained this provision of the statute against the charge of vagueness, the Court said, the statute might well be a trap, if for example if required the alien to know the visa requirements for one or more countries. I would say that the government's view of the statute, which it takes here and which says that petitioner could be guilty of a crime without defining exactly what it was he failed to do, would so convert the statute into a trap. Speaker: Excuse me, is that Exhibit 9 printed in the record the -- David Rein: The passport form? I have a record reference to 127. Speaker: 127? David Rein: I don't know if it's printed there or if it's just -- Speaker: (Inaudible) David Rein: No, the exhibit is not actually printed in the record, but here in the office it's part of the record here and it's been furnished to the Court. The government does concede, I wish now to turn to what the government does concede is a necessary element in this crime, but even if there was evidence that the petitioner had failed to apply for travel documents within the meaning of the statute that as I say under the government's concession, the petitioner would not be guilty unless that failure was a willful failure. That it was incumbent upon the government to prove that the petitioner's failure to take action was in-spite of his knowledge of what was required of him and with the intent of completing his obligation under the statute. In other words, because of the presence of the word willful in the statute, as a matter of fact under the doctrine of this Court in Morris Act we have to prove not only his failure to do something, but we have to prove his criminal intent. Now the evidence to support a finding of willfulness in this case, is not only total lacking, but on the contrary all of the evidence that there is here shows not only that the government did not prove willfulness, but it completely negates any possibility of willfulness. First there was petitioner's statement which was introduced by the government. Now that clearly negates willfulness. He explained his failure to take any action by the impression he obtained from the interview with Maki, that he need do nothing until he heard from the service. He indicated he checked with his counsel. His counsel told him that he need do nothing until he heard from the service. The government concedes that if that statement is taken on its face, that it does establish the petitioner's innocence. In other words if the facts as stated by the petitioner there were true, that was indeed his honest impression, the government concedes that a judgment of acquittal must have been entered. It argues however, that the jury could have disbelieved the petitioner's assertion of good faith on the basis of other evidence in the record, but as I have indicated earlier in my statement in that case, there is no other evidence that conflicts with petitioner's assertion of good faith. On the contrary all of the other evidence corroborates it. Now I'll go so far as to say quite apart from the petitioner's statement, as to why he took no action because he was relying on Mr. Maki, but even the evidence aside from that proves his good faith and what is this evidence? One, there is Maki's version of the interview with petitioner. I've already gone over that to show that it's fully collaborating the petitioner and he told him that he was going to use this form, it was going to be sent to Chicago, and he did not say to him that he need do anything on his own; secondly, the letter of April 3rd. Now the government makes the point in that letter, in which it says that, sure they did have this paragraph which I have italicized, in which it said arrangements to effect your deportation are being made and we will let you know when and where to present yourself for deportation. But says the government, the letter then did go on to set out the text of the statute and presumably according to the government, the petitioner should have read the text of the statute as nullifying the flat statement of the government, saying that they were taking care of the matter and they would let him know when they wished him to do something. Now I submit the text of the statute does not indicate to me, does not indicate to this Court in Spector and cannot possibly indicate to anyone, that there is a requirement, an unequivocal plain requirement on the petitioner to do something independently of his own. If they had sent him the text of the statute alone it would not have given him that notice, but to argue as the government does that he should read from the text of that statute, that nullification as clear language by the government, that they were taking care of the matter and he could wait until he heard from them, I say is simple nonsense. As a matter of fact, if the government had the burden of proof (Inaudible), even if we wind up with the conclusion that there was an ambiguity or confusion, then the petitioner here was innocent, because even if he failed to do something because he was confused, he is entitled to a judgment of acquittal. Speaker: (Inaudible) David Rein: It's mimeograph form, yes, presumably sent to all aliens in a similar position as the petitioner. In the absence of any evidence to prove willfulness, the government relies on the curios argument that the petitioner was mature and literate man and should not have misunderstood the service. But as I have indicated, I think on the basis of these facts, there really was no misunderstanding. He did what the service asked him to do, he gave the information, he took the service at their word. The real confusion if there is any in this case, is exactly what it was that the service was up to and why they not follow out the usual procedure, why they didn't process the documents and why after having mislead the petitioner in believing that he could rely up on their records to obtain travel documents, they then pounced up on him and brought this indictment. Now in its -- Earl Warren: Is this a common prosecution or is it a -- David Rein: All I know (Inaudible) one of them to my knowledge, that's all I know of. Earl Warren: In the entire country? David Rein: It was not in appeal. Earl Warren: For the entire country? David Rein: That's all I know of Your Honor. There was an indictment in Spector which came up before this Court, but the government has never proceeded to take that case to trail, even after this Court sustained the indictment that we've gone through. I've heard of one other prosecution which was not appealed, so far as I know this has been the only other case under this statute. Speaker: Was there any evidence in this case that this man had tried to conceal himself or (Inaudible) David Rein: No, as a matter of fact he was there when they went to see him in April, he was there when they went to see him on February 12, 1953 and he has been readily available at all times. No contention. I do want to deal with one aspect of this case, which the government I think tries to rely on in appeal although at the trial, no emphasis was placed upon it all. The petitioner, although a native of Finland, had been a citizen of Canada before he came to the United States and there was some question at the time as to whether or not he might be able to go into Canada. Now as I've indicated earlier, the statute gives him an absolute statutory right to pick the country of his choice and under the statute he must be deported to that country unless and until that country refuses to accept him, and there was no refusal here by Finland to accept him. The government attempts in its brief to say that in any event the petitioner could have gone to Canada during this period. Now obviously this makes no sense because he would have needed travel document to go to Canada, the same way he needed to go to Finland. It's indicated by the opinion in Spector, the statute when it says to depart from the country means to lawfully depart in accordance with the regulations of this country and the other country, and you would have had the same problem if he was still waiting to hear from the service. William J. Brennan, Jr.: (Inaudible) David Rein: Of the statute in question, parole, supervisory parole, yes he was. William J. Brennan, Jr.: (Inaudible) David Rein: Well I don't know. I'm just saying that speculating as to the fact that this apparently was the citizen of Canada, he could have gone to Canada, but he couldn't go to Canada anymore than he could go to Finland until he had the permission of Canada to enter, and so he could not go into Canada. He would be in the same position vis-à-vis Canada as he was in Finland, but he was waiting to hear from the service as to what further he should do. I make the added point that he could not be compelled to go to Canada under this statute unless Finland had first turned him down and Finland had not turned him down. One other aspect of this deals with the instructions of this case. Even if we assume for the moment that the government did prove a case on the failure to apply for documents and did prove the case on willfulness, certainly the instructions which the Court gave the jury here were totally inadequate to support any conviction. The government concedes that the factual issue for the jury to decide was whether the petitioner's failure to take any action subsequent to his interview with Mr. Maki was due to his honest belief that the matter was in the hands of the government, but whether the failure was done with the knowledge by the petitioner that he was obliged to take some independent action and in total disregard of that obligation. Now that could have been the only real factual issue present to the jury, but the jury was never informed in any manner, shape or form that, that was the issue before it. Consequently -- William J. Brennan, Jr.: There were exceptions taken to the charge? David Rein: I don't know that a specific exception was taken to that charge. Other instructions were given which were rejected, but I would say this Your Honor, that under that decisions of this Court, where there is a conviction in which a charge is so completely inadequate to define guilt or innocence in all, this Court has held that that's reversible error. William J. Brennan, Jr.: Plain error you mean? David Rein: Well, it should plain error, but it's so clearly error where the jury is given absolutely no guide and is not even informed of the nature of the crime, but I think this failure in the instructions in this particular case falls in that type of a category. In addition to that, the Court eliminated by its instruction the requirement to (Inaudible) and that he did affirmatively, not negatively. We have set out briefly in our reply brief at page seven, some of the language used by this Court, some of these leading questions as to the meaning of the word willful in the statute and what it means in terms of criminal intent. The leading case on that is Felton against United States in which this Court said that doing or omitting to do a thing knowingly and wilfully implies not only a knowledge of the trend, but it's determination with a bad intent do it or omit to do it. Now this is what the Court told the jury. Felix Frankfurter: Do you think that's the universal rule, do you in criminal cases? David Rein: (Inaudible) certainly with the word willful is broad in the statute. I think it's been definitely followed by this Court -- Felix Frankfurter: What is this that last phrase what intent? Evil what is it all that moralistic language? David Rein: Courts consistently adhere to the rule. Felix Frankfurter: Consistent is a big word in this field. David Rein: What is the language? Felix Frankfurter: What is this last phrase? David Rein: With a bad intent to do it or omit to do it. Perhaps the Court has used some other phraseology -- Felix Frankfurter: It relates -- it varies with statutes. I think the one generalization you can make is that you can't make a generalization about this statute (Inaudible) David Rein: But this Court has been generalization. Felix Frankfurter: It has. David Rein: In cases which I have set forth, and I don't know of any case in which it is not. Felix Frankfurter: And you swear that to being the big generalization and eat him away. David Rein: Well, in any event, let's look at what the Court did tell the jury here. He told them, and I'm reading now from page 32 of my brief, he told them that the petitioner can't remain idle. He must take the necessary steps to affect his departure from this country within that period of six months and if he fails to do so, he has violated the law and the statute involved in this case. He has also told them that wrongful acts knowingly or intentionally committed can be neither justified nor excused on the ground of innocent intent. Felix Frankfurter: That's very illuminating, isn't it? David Rein: Well, it indicates -- I think the clear meaning of that is in this context, in this case, particularly in view of the instructions given by the court to the jury, for further instruction, and it was not the government's duty to deport the witness, the petitioner, but his own duty, and once he has failed in that duty, and he was no longer -- had not departed from the country, he was guilty regardless of the circumstance and regardless of his intent. Felix Frankfurter: I was hoping to help you by suggesting it wasn't clear. David Rein: Well I say it was clear. Imagine that even though the jury found that he had failed to take action, because he honestly relied upon his belief that the government was taking care of the matter he was still guilty, that is the clear import, that instruction and the top of instructions given by the Court to that jury. I say it was unambiguous in that respect, perhaps if there had been some confusion the jury might have acquitted. But in effect – Felix Frankfurter: I didn't think if a charge was ambiguous that's pretty bad. David Rein: Well this far worse when it is very, very clear that on a set of facts, which would warrant a judgment of acquittal, the jury is told you should convict on that set of facts. I think that's even far more or far worse than an ambiguous construction. I wish now to turn to one another point before I reach the question of the constitutionality of the statute, in the remaining time left, and that is as I've indicated earlier, the petitioner was convicted both of a failure to depart and a failure to apply for travel documents. That on evidence and on instructions by the Court, that the gist of the failure to depart offence consistent of his failure to apply for travel documents. William J. Brennan, Jr.: Before you get to that, may I ask one thing? David Rein: Sure. William J. Brennan, Jr.: There was -- part of this charge which reads there is no duty on the part of the government to assist the defendant affecting his departure. The government will if requested assistance, but the duty evolves upon the defendant to comply with that order of deportation, and I know this that an express exception was taken to that charge. David Rein: That's correct. William J. Brennan, Jr.: But you are not making a point on your brief or on your argument, are you that, that was -- David Rein: Yes I am. William J. Brennan, Jr.: An improper charge? David Rein: Yes. William J. Brennan, Jr.: That independently and not as bearing on the issue of his willfulness or the sufficiency of the evidence, but just as an incorrect charge in law? David Rein: Well no, I am saying that it's an incorrect charge. I say that it makes no difference as a matter of law here and I'm not pressing the point as to whether the duty is on the government or on petitioner? I say it's an incorrect charge to give the jury in this particular case where the issue is whether he has willfully failed. William J. Brennan, Jr.: That's what I wanted to get clear. David Rein: Yes, I am making the appointment that there is -- the charge, that there is an absolute duty upon him and that he is not entitled to rely upon the government or the government office assistance is an incorrect statement. William J. Brennan, Jr.: Yes but not independent of that issue, are you challenging the sufficiency of this structure? David Rein: I am making no point to the sufficiency of that, independent as the appellant relates on the question of willfulness. As I say under the instructions and under the evidence, he was convicted of the offense of failure to depart solely upon evidence, which approved anything. It only proved a failure to apply for travel documents. We contend that these two crimes are not identical and that one cannot be convicted of a failure to depart where that value is due solely and entirely to a failure to apply to travel documents. Now the government tries to turn our contention around their brief to say that we are arguing that an individual cannot be guilty of both offenses in the same prosecution. I want to make it clear that that is not our contention, but we say that since the crimes are not identical, one cannot make out a failure to depart solely by showing a failure to apply for travel documents. One must also show something in addition and that may be either that despite his failure to apply to travel documents, travel documents were obtained and he still failed to depart, or that one reason or another he could have departed without obtaining any travel documents. Both those elements are absent in this case. As we show in our brief -- Hugo L. Black: Is there any proof here on which the court could have found that had he applied, he would have bound to go? I understand you say that they mount on the fact that he didn't apply the travel document that he willfully refused to depart. David Rein: That's correct. Hugo L. Black: Is there any proof here or anything which it did infer that if he had applied, it was inevitable that he would have gone? David Rein: That he would have gone? Hugo L. Black: That he could have gone? David Rein: He could have -- Hugo L. Black: Did the government offer any proof to show that he could have got, that he could have -- David Rein: No. The government presented no claim -- Hugo L. Black: You claim they had enough evidence to show maybe that he didn't apply, that he didn't apply -- David Rein: I say -- Hugo L. Black: -- but that it's not enough to show that he willfully failed to depart. David Rein: That's correct. Hugo L. Black: I presume your arguing that attempt to filing would not merely be an application but again it is sort of -- David Rein: That's correct. Hugo L. Black: -- failure to concern. David Rein: He would actually have to have -- before the crime of failure to depart came about, he would actually have to have travel documents. Now that principle of not multiplying offenses making two offenses, two crimes out of one offense, there is a line with the canons of interpretation which this Court has set out. We have set them out briefly on page 25 to 27. I think that I don't want to go into it any greater detail here and I think it's fully and adequately covered in our brief, the general principle and we have a number of grounds to that general principle as to why we do not normally make two offenses out of one. And in addition to that, it seems to me the government's position would conflict with the Fifth Amendment's probation against double jeopardy. On this particular point in issue there is no legislative history to indicate the congressional intent and that is contrary to the government's assertion. The government in their brief cite some legislative history which they say indicates that Congress desired to make two offenses out of the failure to apply for travel documents. We wish to comment only that the legislative history which they cite is not upon the statute which was passed but upon some previous proposals which were rejected by Congress and which had no reference whatsoever the question out of crime by virtue of a failure to apply for travel documents. We submit therefore that in the absence of any legislative history illuminating of any kind or character the court should follow its usual canons of interpretation and limit the failure to apply for travel documents evidenced to failure to apply for travel documents as being evidenced only of that offense and not of the offense of failure to depart and under that construction, certainly that -- there would be no proof of a failure to depart in any event. Speaker: That's failure to depart? David Rein: That's correct. He was sentenced on the failure to depart. That would mean necessary to reverse because of the fact that -- Speaker: (Inaudible) David Rein: Well except Your Honor I would say that the case does come to posture in which there is a finding of guilty on the other count and if there is, as we contend quickly insufficient evidence to show a -- to support the conviction on the other count I do think that it would not be helpful at this stage to send it back for a possible sentence on that count and let it come all the way back up here. Speaker: (Inaudible) David Rein: Oh yes. Speaker: (Inaudible) David Rein: Well I thought you weren't -- yes if all the other points were filed against this, he would still be entitled to reversal on that point alone, and re-sentence William J. Brennan, Jr.: Well there is no sentence at all in the second count, is there? David Rein: That's correct. There has been no sentence at all. The court deferred the imposition of the sentence until completion of the sentence. William J. Brennan, Jr.: But there is a judgment of conviction before us on that second count? David Rein: Yes there is a judgment of conviction and I think under the (Inaudible) case that is before Your Honors to review even though no sentencing was reversed. I think it was (Inaudible) and I think this Court cited on that. Turning to how -- my remaining time to the question of the constitutionality of the statute, the deportation order on which this proceeding is based was issued against the petitioner as a result of an administrative proceeding before the service. In the first trial, I should indicate at this stage Your Honor that this conviction which is coming up here as a result of a second trial on this indictment, the first trial was reversed by the Court of Appeals for the Seventh Circuit because the validity of that deportation order was not considered at all in the trial. In the second trial in which our present appeal was taken the trial judge reviewed the record of the deportation procedure. He made a finding on the basis of his review of the record that there was evidence to support the findings of the immigration officials and that the deportation order was valid. He ruled, however, that the validity of the order or of the facts underlined -- underlying facts justifying the order was not a jury issue and that would not be determined by the jury. We contend that the statute is unconstitutional on its face as applied. We relied principally for this argument on the dissenting opinion of Justice Jackson in the Spector case and on his reasoning there. I should note although I call it a dissent, it is not a dissent from majority views in that case because the majority in that case said with regard to the aspect of the case covered by Justice Jackson's opinion, the case did not reach the issue since it had not been briefed and argued before them and they were not going to consider it. So the view point is presented although a dissent, majority has not spoken upon the matter. It was left open specifically in Spector -- it was stated to be an open question for consideration by this Court at an appropriate time. Speaker: (Inaudible) David Rein: That's correct, whether the statute was valid on its face because as Justice Jackson put it, the statute in effect split up two elements of the crime, that there were two essential elements of the crime; one was the deportability of the alien and the second the willful failure to leave the country or to apply for travel documents. And that the first of these elements was submitted to an administrative proceeding, thus avoiding the constitutional guarantees for the trial of this portion of the crime. We have set out, and I want to make only very brief reference to it, the number of constitutional guarantees which would be available in a criminal trial, which is denied in an administrative proceeding on a deportation. They are briefly the right to trial by jury, the right not to be prosecuted against except by indictment, the right against double jeopardy, the right guaranteed by the Sixth Amendment to be confronted with witnesses, the right in accused failure to testify is not evidence of guilt guarantee by the Fifth Amendment, the right not to be tried by your accuser, and that your guilt must be proven beyond a reasonable doubt. Now all of these elements are not present in an administrative proceeding. The government latches on to one phrase in Justice Jackson's opinion. Mr. Jackson and at time of the Spector case had said in his opinion that the deportation order would be conclusive in the trial proceedings. The government says that therefore apparently Justice Jackson's objection was met, because here, the validity was not conclusive because the trial court made an independent review. We submit as a matter of fact, that Justice Jackson's reading of the statute is probably the correct one. There is nothing in the statute which justified what the trial court did here in making its own independent review, because the statute only refers to an outstanding deportation order. But even assuming that the statute can be so interpreted in order to save constitutionality, it does not meet the real basis of the objections made in the Spector case, because even if the matter is reviewed by the Court, we still have the problem as put by Justice Jackson, the adjudication that an alien has been guilty of conduct subjecting him to deportation is not made by procedures constitutional or judgment of crime. And even where there is review all that the judge reviews is that there is some evidence to support it, that there has not been a violation of some regulation. It does not, therefore substitute or give him the right that you would have in a criminal case of trial by jury. William J. Brennan, Jr.: Well there is an argument that, this if so would be true only if the statute involved here was invoked by the government to secure indictment for the failure of its part and so forth? David Rein: Yes -- William J. Brennan, Jr.: Only in respect to the -- David Rein: It's made only in respect to the statute. William J. Brennan, Jr.: Now generally that an administrative determination of affordability -- David Rein: It's perfectly (Inaudible). As a matter of fact that's just the point made in the dissent of Justice Jackson's opinion, that all of this procedure and this lack of procedure and differences between the administrative procedure and the criminal procedure, that we have sustained that, speaking of the Court throughout its history has sustained that in deportation procedures, on the government's continued insistence that a deportation proceeding is a purely civil matter, with absolutely no criminal consequences, and that is the reason why you have sustained it and sustained the validity of that procedure to support a deportation order. But when that deportation order is made to carry consequences, as it is here, resulting in an imprisonment of five years, then that procedure falls because the deportation order is now not purely civil in its aspect, but its criminal, because of the factors being employed criminal, no tax is being made on validity audit as an order, standing by itself. Speaker: That means does it -- it's kind of a case you would have a trial do novo before the jury as to the grounds, the original grounds of deportation. David Rein: That's correct. That would be the only way to sustain it as constitutional. Felix Frankfurter: Mr. Rein I don't have to tell you that I have a good deal of -- I have more than sympathies for that -- David Rein: You've joined in the opinion Your Honor. Felix Frankfurter: Dissent of Mr. Justice Jackson, by I like to have a constitutional question thoroughly argued instead of resting on a dissenting opinion, and I'm surprised that neither you nor the government make any reference either to Union Bridge or Monongahela in 216 in which that problem was reconsidered on a rehearing and thoroughly canvassed. This business of just pulling out a dissent opinion, and I'm thinking that's all you have to do isn't very helpful towards the determination of a statute which has stood all these years and I suggest you consider both of you, Union Bridge Company in 214, and Monongahela in 216, which on principal is decisive as kind of a situation, namely that's where the Secretary of War made a declaration and there was disobedience, criminal prosecution for disobedience, and the question was whether the administrative determination was conclusive in the criminal trial. David Rein: I can only say Your Honor that I'm delinquent in that respect, I'm not aware of the cases and I didn't want to rely on it. Felix Frankfurter: One doesn't get cases out of the sky, one has to look for them. David Rein: Well that in the remaining time and if the Court pleases, in the light of Justice Frankfurter's suggestion if the Court wishes, I'll be glad to examine those cases. William J. Brennan, Jr.: Did you discuss the Cox case? David Rein: We discussed Cox and Yakus, yes and I would like to ask in view of Justice Frankfurter's comments and ask leave of the Court to file a brief memorandum on the significance of the cases decided by Justice Frankfurter if I may? Felix Frankfurter: I'm not saying those are the only ones, but those that happen to be in my head, and this is a very serious question. David Rein: I agree with you. Felix Frankfurter: One was well aware of it when he joined in the dissent. David Rein: The distinction made, if I may turn to question of the Yakus case, or between this case and the Yakus case, is that the Yakus case was an administrative regulatory procedure setting out standards of conduct to guide people in the future, in contrast to the nature of a deportation order which is an adjudication of guilt in a particular case against a particular individual, and it is not a general regulatory matter. As a matter of fact this is significant, I think this point should be made clear, that this statute, that is this self deportation statute does not apply to any order of the deportation, it applies only to orders of deportation based upon certain grounds, and those grounds are grounds which apparently the Congress had some guilt attached to that, because they referred to some persons, criminals. This particular alien here was ordered deported on two grounds, one his entry into this country without a visa as well as his past membership in a Communist Party. The order of deportation so far as it rests on the first ground would not be a basis for application of the statute here. So that the very conduct of deportation, this very cause underlying the deportation is part and parcel of the crime in this particular case, and it's because of that the procedure adopted here of eliminating that portion of the crime, in the consideration of the jury runs into constitutional grounds. Speaker: What do you do with the Cox case? David Rein: We argue that the Cox case, really in this respect can prove and prove on my brief at all, the Cox case is unlike Yakus, in the sense that it is not a general regulatory procedure. But that case we say where you have an administrative classification for draft purposes is very different from a determination that an individual is guilty of some past misconduct. You had in Cox, an application by an individual to be exempt from a rule that applies in general to all people, and the determination made there by the Selective Service boards is not a finding of guilt, but simply that a person is not entitled to an exceptional privilege, and we here say as a matter of fact, the whole procedure which is employed in the Cox statute, seem to indicate by this Court's opinion also in the Nugent case show that was a type of procedure in which this Court thought because of the exigencies of the situation that the individual was entitled to very low in the nature of due process and as I said, that also underlie the aspect of the Nugent case. I would say that Cox a very special case limited it to the fact that here is an individual who is asking for a special privilege from an obligation imposed upon all citizens in the service, is not the same that's involved in this type of case where there is finding of guilt. I would like to indicate just one other portion of argument on constitutionality dealing with the nature of the cause for deportation that that is covered in our brief, my time has expired. Earl Warren: Mr. Bishop. J. F. Bishop: I would like to say one word about Monongahela before I go into the argument. There is a delicate question of the extent to which we should pledge in the Court with all of the authorities that Monongahela case was back in 216 US 177, I'm not excusing and explaining if I may. Felix Frankfurter: At what day -- the case is no longer respected. J. F. Bishop: That is not what I am getting at, what I am saying is that there were recent cases that followed the same line, we cited the most recent ones, the ones that had been cited by for comparison by Mr. Justice Douglas in the case of Spector and of course that doesn't absolve us, but we are always confronted with a problem of making a brief of unwieldy length and I apologize for not having thrown that in. Felix Frankfurter: This is how – I'm a believer of venial offense but the Monongahela case is case especially important because there the Court was asked in one of the most powerful briefs, in my recollection, in one of the most powerful arguments to reconsider a decision that it had taken several years before. J. F. Bishop: I think a very -- Felix Frankfurter: Exhibit some of the considerations with which as I have indicated I sympathize or urge there and reject it. So that case seems to me of a special reason -- J. F. Bishop: I think it's of great help to the government and I also -- we have not cited Wadley Southern Railways versus Georgia 235 US 561 and -- which we think is very significant. We did not cite East (Inaudible) or accumulate all of the decisions that have been based on -- Felix Frankfurter: I have looked at your brief except the index to find out whether you cited, does the government set forth --because when it comes to the responsibility of actually declaring something unconstitutional, I for one like to get an implication, the implication of such definition. Has the government cited the statute that would be -- that would equally have to fall if this argument prevails? I should think there must be -- J. F. Bishop: We have indicated -- Felix Frankfurter: I shall think there must be. J. F. Bishop: We have given examples -- Felix Frankfurter: Numerous statutes in which an administrative determination has made the basis of an indictment for disobedience. J. F. Bishop: We have cited those in the footnote to our brief. As additional examples we cited of course what we conceive to be the most pertinent that is the hundreds of thousands of men that were given the draft classifications and the numerous cases of which many of them before this Court in which they have been indicted. Felix Frankfurter: I mean merely volume of -- the number of persons affected, but the body of legislation if there be a body that presents this very serious problem namely to what extent can you administratively predetermine an element of the criminal case? J. F. Bishop: We, as I said we have cited some examples of that in the Federal Communications Commission, Civil Aeronautics Board, we also cited even a further field without belaboring the point we cited Maki in the bankruptcy field in which there is very pertinent language by Mr. Justice Frankfurter I believe of the dangers of retrying every administrative determination by the --. Felix Frankfurter: (Inaudible) controlling would mean than anybody else in this case? J. F. Bishop: No, I am stating that the examples that we did give and that is not only the administrative area, it is a terrific field and we thought that the thing had been very well decided more recently -- very well. Now this case has so many issues as to which various states of facts are pertinent that I am afraid that it will be necessary to summarize first what the government says rather than leaving to its presentation before as to what we contend and secondly to give some run down on these facts and their order. We think it's very important that when a certain interview happened, when a certain notice was served and I am going to try the rather difficult thing of at least presenting this whole picture so that we have the order because after all this is a very important request that this Court should go over a cold record and disbelieve the witnesses that the jury patently believed, get the impression that the instructions were not adequate without any view of the entirety of those instructions and without any view also on the facts that were in the case, so I am -- if I may I would like to give the chronology as quickly as possible with the, with two caveats to the court. One I expect to support everyone one of those items on the evidence point by going directly to the record later after I finish this brief summary and secondly the Court should have in mind that since there are some other questions that is the attack on the deportation proceedings, the innuendo that the government is holding out things and is entrapping him and the complaint that the judge shouldn't have sentenced this man severely, that the facts -- that other certain facts that were before the judge and were not before the jury are going to have to be told in this chronology. I want to warn the Court that when I get to discussing the evidence before the jury, then I will restrict myself to the evidence before the jury, but in this summary relating to these other questions at the outset, the facts up to the trial are in exhibits one and two that are lodged with this Court and did not go to the jury because this judge was scrupulously careful to keep from the jury, all the troublesome things that had been adduced to him in the assault on the deportation proceedings. He kept even the Board of Immigration Appeals' opinion from the jury and only allowed to be read in the facts that they had decided against petitioner and not the reasons. So in this chronology if the Court would bear with me, when I get to the evidence, I am going to be very careful of what was before the jury, that I don't want to misrepresent to the court within these earlier things. There is -- all of this went to the judge. Now petitioner was born in 1890. He came to Canada in 1910 and he became a Canadian citizen. He has been a Canadian citizen for anything that appears on the record all of the time, since that time and through the six months period that's critical in this criminal indictment and let me interrupt myself this is -- this evidence was before the jury as well as all the other cases. He has been a Canadian citizen for over 40 years. He came to the United States in 1916 and that entry was a legal entry, probably the last legal entry. He joined the Communist Party in 1922 or '23. There is a dispute about it, but there is no dispute that he was in it until 1930. The Court of Appeals below found that he had been Communist Party member after that. He went to Russia in 1932 without travel documents. He stayed there for three years in the Soviet Union. He came back in 1935 also got in without travel documents. Then in 19 -- I should say also that for 15 years he was editor of a newspaper, a Finnish language newspaper. Now, in 1949 the government began the process of trying to deport him. At that time there were two grounds, one because when he came back from Russia he came out -- came in without the proper documents. Two as a member of a subversive organization, and that was changed after the 1950 act, to the specific designation of the Communist Party membership. Now the length of time in which these proceedings were delayed I don't want the court to get an impression of any improper delay there, because it was -- the petitioner was entitled of course to pursue every remedy, but all things do come to an end that he was properly ordered deported in April 9 of 1952, that is one of the Board of Immigration Appeals finally included these deportation proceedings, after many -- after appeals to that board and the matter was completed. Then I would like to fix that date by repetition. We are now in 1952 and we are beginning that six months period in which the statute required that he do something. Now we will look at that statute, which was passed in 1950. That statute provided a penalty if the alien did not depart, if the alien did not get travel documents and three, not indicted here, but of significant contrast, if he connived to hamper the getting of documents for it, and four the completely differentiated thing, if he failed to show up when the Attorney General ordered him to show up for deportation. That's the statute and the statute of course is presented fully in our brief here and elsewhere. Well -- and the Court of Appeals below summarize in its opinion those four aspects of it, so that there is no doubt and I don't know that the petitioner has blankly stated that there is any doubt. I may explain about that statute, that it arose on legislative history, not concerning the separation of offences as has been stated to the Court, but to meet the single problem that there were hoards of aliens left in this country who just couldn't be deported and the legislative history that we have cited in our brief was the testimony before the Congress, before prior legislation which did become this legislation only with a more severe criminal penalty indeed. There was testimony that aliens whom the government could not deport by itself applying for papers, could get out when they chose to do so, the then Attorney General, now of this Court testifies as to nine specific cases in which that had happened, that is also cited in our brief and that is what is the object of this statute. So that in a sense the inquiry as to what the government did or did not do concurrently is not significant. Now, as to that statute let me state something else, we do not state, nor has there been any confusion whatsoever that the government could go ahead concurrently and as an ordinary matter, it did do so. It did not trust either the integrity or the competence of some of these aliens to get going. While this statute was specifically designed as reported from the congressional record to give an incentive to these aliens to do something themselves, nevertheless the government was not required to wait for them to do something. So that, I want to make it clear, we do not contend here that the government can't do anything or that the government doesn't do anything. William J. Brennan, Jr.: Well what is the practice, is there any --? J. F. Bishop: The ordinary practice as of this date -- William J. Brennan, Jr.: May I ask further before you get to that, I gather that this obligation part is only those who are deported for certain reasons, isn't it? J. F. Bishop: That is correct and that is not challenged here. He was of the group that was designated, except there is a statutory ploy question which I will try to reach later, in which they contend that under the language of this statute, he was not of that group, I don't want -- William J. Brennan, Jr.: Well assuming he was for the purpose of my -- J. F. Bishop: Let us assume that for this and our brief is very clear on that point. William J. Brennan, Jr.: Well for the purpose of my question, just what is that the service does in these case, where there is an obligation? J. F. Bishop: I will answer that in two ways, one on what was before the jury, in the record and then I will go further than that, if the Court wishes. There was definite and uncontested evidence by the immigration inspector that the government ordinarily tries to get the man out even while he is making his concurrent efforts, but there was a definite denial that the government does it in all cases and for that purpose, let me explain something about this form without reaching it yet. This data form Exhibit 9, I better refer to it that way, that the inspector goes out right after the deportation order and gets, is an information form on which the government tries to act, but on the back of that form, I'm sorry this is not reprinted, it is an exhibit, on the back of that form there is a paragraph in which it is asked that the alien disclose whether he has an expired passport, birth certificate and other certificates which has been used by the government. If he disclosed that he had papers already and could get out by himself, in those cases and now I'm speaking off the record, the government does nothing, and I think that those are the cases referred to in the testimony before the jury, where this man vigorously denied, I mean the immigration testimony, vigorously denied that in all cases they do it. Very diligent counsel for petitioner asked his man Maki over and over again, the immigration inspector, doesn't this mean that the government will do something, and he repeatedly said no they will consider it, that's what this form is for; this is not an application form. It was filled out by the immigration inspector, it is not signed, it's a data form, and there is, and I'm quoting the record here, the office in charge stated that this form is sometimes taken by a hearing officer. It is not a matter of application for documents at all, and of course it's differentiated from document because it refers to the documents right within the form asking whether he has it, that there be no confusion of this form, once it's examined. Now does that answer the -- Speaker: (Inaudible) J. F. Bishop: No, it's just -- the immigration inspector goes out after a deportation order and he tries to find out all of the data about this man. The object of course is for the government's purposes and not for his purposes, so that the government can get going on efforts, if those efforts are necessary. William J. Brennan, Jr.: Well all this -- of what you've now said, I think adds up for me to this, that what the government does is not going to help him, but rather to be sure that he is out, to effect the congressional intent that he shall be got out of the country within the time limit, either on his own or because the government gives him a push, is that right? J. F. Bishop: That seems so clear to me and I shall -- William J. Brennan, Jr.: Well, it may seem clear to you, but does it make clear -- J. F. Bishop: That is why -- that is clearly my understanding of it and that -- William J. Brennan, Jr.: Yes, but is that made clear to the deportee? J. F. Bishop: The deportee is not advised by the immigration service, the immigration service could submit documents if it chose to do so, and request him to sign it under the fourth paragraph of this statute assuredly, but under the first two aspects of this statute, that is his own duty to depart, his own to duty to get going with the documents, the government may or may not assist him, but it does not undertake to advise him and I might state going back to the actual record of this case -- William J. Brennan, Jr.: Well now you said may assist him. J. F. Bishop: It may assist him assuredly, if he should ask for it, I'm sure it would, but -- and let me point to two things in this record. There is affirmative clear evidence. The officer in charge definitely testified that he presented a Canadian passport, to this man, and that was after the six months period, so that there is no question of expiry. He was still a citizen through this whole six months as far as this record discloses, and he presented no evidence whatsoever that he had been -- had lost his Canadian citizenship until afterwards, and as the records says, a long time after. Speaker: Well what significance does the Canadian passport have until Finland turned him down? J. F. Bishop: It would have this. That after six months if he couldn't get into Finland by himself, the statute provides that then Attorney General shall deport him to where it can be gotten. He doesn't a clean bill of health to sit down and do nothing and make the government wait in that. Speaker: But he has a right, has he not to exert his efforts toward the country of his birth rather than to some other country which is a secondary option. J. F. Bishop: He does, he does, but I am stating this as evidence of what this particular petitioner was about in the matter of competence and clever heel dragging. The six months went by there is no slightest evidence that he did anything about Finland. And his only excuse which the jury frankly did not buy was that he that he was waiting for the government to do something in spite of the statute, in spite of the notice which I'll get to and in spite of his clear duty. He said that he got the impression from this man who was just set up to get information that now he can sit down and do nothing that's his picture. Speaker: (Inaudible) J. F. Bishop: I am tempted to deal with it rather emotionally I will just subside and say this, that I will request the Court in reading this form of notice by the government to read it as it's put in the footnote of the government's brief in its entirety and without italicizing. The jury took this form of notice into the jury room with it. And when it is read without prior emphasis, I think that the jury was well entitled not to rely on just one paragraph of it but recognize that form for what it was, a form that stated a variety of contingencies and what is more particularly, the last paragraph which could not have related to the government. In other words the first paragraph advised him, the government was going to try to act. He needed, he was properly warned of that. Then it stated the statute which showed the four different activities, his own duty to depart, his own duty to get documents, his own duty not to connive to hamper and his own duty, and then his duty not to refuse the documents if the Attorney General should present to it. And then comes the last paragraph of all which if we were italicizing, I would italicize, here is what it says. “Therefore you will recognize the importance of making every effort in good faith.” Let me stop there, if they have been talking about government efforts, they wouldn't have said in good faith, they were talking to him then. “To obtain passport or other travel documents so that you may affect your departure pursuant to the said order of deportation within the time prescribed by the quotation above from the Internal Security Act.” Now of course I know the argument on that and that is that he was a poor ignorant man that couldn't be expected to deduce all of those from this notice. But the answer to it is that this man didn't do anything without checking with his attorney, he had long experience in picking everything possible available to his case. What's that? Speaker: (Inaudible) J. F. Bishop: Very much so. Speaker: (Inaudible) J. F. Bishop: Yes, yes that is, that is affirmative letter indeed and I am getting ahead of my story a little bit, but let me just say as to this formal notice. When it was read without the italics that have been inserted by a jury which is perhaps better able, the judge what it means to a layman than I as a lawyer or then the trial judge did, that jury happily could have seen whether anyone would be confused by it and I want to add one more thing and then I will get on with the chronology of it. Earl Warren: Why do you object, why do object to italicizing this, don't you do the same thing in your briefs? J. F. Bishop: Well in argument -- Earl Warren: In a lot of ways -- J. F. Bishop: In argument yes, in argument yes. Not in the statement of facts. The entire thing is put here. In other words in any denotable -- Earl Warren: I didn't quite understand you when you said you were tempted to treat this thing emotionally, what did you mean by that? J. F. Bishop: Well I mean that that I feel that that bringing a form of this kind with italicizing in the statement of facts is liable to get a person off on the wrong start in the argument or if it were treated as a summary and then reporting it, well then, then I would say the first time you read that, you can read it in its entirety. But if it's the first time in the statement facts, it confronts you, you are bound to look more at that italicized portion than the exhibit which is reproduced. That is all, I have to say that is all. Earl Warren: It is all the emotion you have in it? J. F. Bishop: It is, and I -- I have no intent to say that there was anything intentional because as it was stated in the brief of course that it was italicized, but this is was a statement of facts. All I am arguing is that when the court looks at this, when it is asked to set aside this jury's finding on the whole record that it do so on the document that was before the jury and without prior warning, without prior standing out of this one thing out of a long list, that's all to that moment. Earl Warren: Mr. Bishop may I just pursue one important step further, don't you believe that if you are deportee or this time that the form was presented to you in circumstance of this kind that you might emphasis a paragraph of this kind where it says arrangements to effect your deportation pursuant to such order, the one that they are talking about here, are being made and when completed you will be notified when and where to present yourself with the petition. Don't you think that might strike a deportee as a rather foreseeable and rather expressing the intent of the government to do something? What would it mean if it didn't mean that? J. F. Bishop: If -- first of all I can't pose that -- you are asking of course what it would mean to me? The first thing I would do, would be to go to a lawyer and he'd tell me very quickly and I would rely on that, because he would know what that statute is for. Speaker: (Inaudible) J. F. Bishop: What's that -- Speaker: (Inaudible) J. F. Bishop: The second thing that I would do would be to at least enquire and the third thing I question whether my judgment on that is as good as the jury that have had that form before it and was told, and I have countered this in the record 17 times it appears in the record that was before, that was read to this jury that he thought that it meant something else. Earl Warren: Yes but my instruction -- J. F. Bishop: The jury -- Earl Warren: -- might not -- that instruction that counsel was talking about have something to do with that where the court told him or whether he believed that the government was going to do anything or not that he was still guilty if he didn't, if he didn't take the steps? J. F. Bishop: I don't believe that in the whole context of the instructions anything of that kind was said. I am going to review those instructions at great length at this time, but I can't pull one word on the instructions when the world ‘willfully' is hammered at the jury as often as it was here. I think that there was no doubt possible for this jury that a number of times it was emphasized in the evidence in petitioners' own words that he had been confused that this jury couldn't size up the man they had before them, very well indeed and better than I could on the whole record, because I didn't see the witness that told about this man. Now this notice of course comes in a chronology and I think I better get back to the order in which that notice appeared so that we'll have that as it appeared also before the jury in evidence. In other words I had gotten to the point where the deportation proceedings had finally resulted in an order of deportation and then the next thing that happened was not being noticed. The next thing that happened was the investigator came out to get data. Now petitioner, enough has been said about what petitioner says he got as an impression, I can only recommend that the court go very carefully to the testimony of this man Maki and also to the testimony of the officer in charge at Duluth, both of whom stated very specifically what -- what this man was to do. He was out there to get information. He was not out there to instruct the deportee as to his duties. He was not out there the least of all with any authority to waive what the Congress have enacted to, where the Congress had said it's your duty -- for him to go out and say well it's your duty until the -- after the government has done something. That wasn't in the statute, that wasn't in the notice. Now the testimony of Maki is very clear and I expect to get to that too if I can just get on to the dates. April 9 was the date of deportation, April 21 this man Maki came to get the information for this sheet and went his way. Petitioner didn't sign anything. He according to Maki, according to the only live testimony before this jury, Maki said nothing of the kind, he got his information and left, he remembered the interview very well. Then on the 30th of April this form notice came out and petitioner was advised of whatever that form meant, but the form as I've stated is in the exhibits left before the jury. It's not something that was in the side proceedings at all. Now, nothing was done by petitioner. There was no inquiry made by petitioner as to what it could mean or as to why the government was so long about speaking to him again about it if he had truly thought the government was getting him some papers, I don't think he would have quite weighed it that happened here, at least that's an item that the jury could well evaluate, especially when all he had to do was pick up the phone and ask about the matter, and -- Earl Warren: Who would he ask? J. F. Bishop: What's that? Earl Warren: Who would he ask? J. F. Bishop: The officer in charge at Duluth. Earl Warren: The immigration officer? J. F. Bishop: Yes. Earl Warren: This man who testified? J. F. Bishop: No, he would call up the office to find out what was happening. In fact there is affirmative testimony after the six months were over, and the matter began to get a little bit hot and he was being investigated as to why he hadn't done anything then he admitted that he had wondered a little bit about it himself. Well, so much for that six months period, and I think a great deal of light is cast upon what he was thinking about and what he was trying to do by the events immediately after that six months period. Under the law, if he hasn't left in six months, has not been deported by the government in six months, it comes under supervision as this Court knows from other cases. He was called in on October, in October and here we have the testimony of a man Bolton, who was an immigration inspector, who gave him his order of supervision and at that time it was affirmatively brought to his attention the matter of his own efforts to get travel documents and there was a specific clause put in to his supervision order to report his evidence. Earl Warren: When was that? J. F. Bishop: That was October 27th, right at the end of this period. Now, if the jury was to believe his protestations of innocence, they could not have lasted beyond that time, and yet he did nothing, from that time on for another quarter of a year. In February, Bolton went out to check up with him and that is when this statement came and then come these excuses, and among other things he was asked was, what he thought that clause was about, as to why he hadn't reported any efforts to get documents, and at that time, he didn't give the -- ask for that one, he didn't state that he had relied on that interview anymore, then he said he must have missed that, and that's in the record too, that went before the jury. So that what the -- what you have is the picture of a man and this is the government's view of it and we submit the jury's view of it, that was dragging his heals as long as he could, and then when he couldn't succeed any longer still did nothing. And here is the critical thing, after that six months period expired, the officer in charge was presented him with a Canadian -- presented a Canadian passport to him, and there is testimony before the jury of the additional documents that would have been required for getting into Canada and you may judge as the jury could judge from that testimony, whether there would have been a deal for him to get into Canada. He did nothing then either. As far as this record is concerned, he was planning to stay as long as he could and that was it. Now I have given a chronology here and I had said that I was going to back it up and now I want to go to the record of what was before this jury, and I think that the proper place to start, I am now exclusively in what was before this jury. Earl Warren: Mr. Bishop could I interrupt you just once more to ask you how would a man in Duluth go about getting this passport or getting this visa to go back to Finland? J. F. Bishop: Oh, that is in the record too. That question was posed to, it was asked and the immigration inspector was asked about the processes, while he didn't claim to know that this particular petitioner would have had to do, he would go to the consul or whoever or the lawyer with whom he was in touch in New York, go to the consulate, get the papers and fill them out and try to get in. Now -- Earl Warren: Now wait a minute. J. F. Bishop: Yes. Earl Warren: A man living in Duluth, would be obliged to go to New York. J. F. Bishop: I don't think so. I don't see that, that follows. I don't know whether there is a Finnish consulate in Duluth or a superior, where there are a great number of Finns, but in any event his attorney could have handled it for him or he could have written. There is no great mystery about applying to the consulate to which you are -- if you really sincerely want to go, you ask and get the documents and you fill them out. Earl Warren: Well apparently there is some mystery so far as the immigration inspector was concerned he didn't how to do it. J. F. Bishop: I don't think that is true, I said that he -- Earl Warren: I thought you just told us that -- J. F. Bishop: No. He didn't want to commit himself. He didn't state that he had seen any evidence of this man doing anything at the time, but he point to a certificate of identity and the normal documents. Hugo L. Black: Did he try to get it? J. F. Bishop: Who? Hugo L. Black: The immigration authority. J. F. Bishop: That is not on the record, and the reason it is not on the record is because the question of whether the government could get it is just what this statute was designed to obviate. Hugo L. Black: Well, was there was an effort made to get in the record? J. F. Bishop: Do you want me to go off the record? I mean -- Hugo L. Black: Was there an effort made shown by the record to prove what the government did in connection with trying to get this man (Inaudible)? J. F. Bishop: There is nothing in the record about what the government did, the complaint here is totally of what the petitioner (Inaudible) Hugo L. Black: Was there any effort made to get any evidence to show what it is? J. F. Bishop: I know of none, the petitioner didn't put in any testimony. He asked for the government records -- Hugo L. Black: As to what? J. F. Bishop: -- as to what the government did and that's what I've used as being impertinent to this enquiry, because the whole step -- Hugo L. Black: Would it be impertinent to the enquiry if the government trial couldn't get it, how could a jury find that he could have done it? J. F. Bishop: In this way. If you had proof that the government applied to Soviet Russia to take him back. Earl Warren: He didn't want to go to Russia, did he? J. F. Bishop: Well I'm giving an example, I'll get to that. Earl Warren: Why not take (Inaudible) he did want to go? J. F. Bishop: I would say the same thing, if the government sent papers to Finland and couldn't get action on them, that is no proof that he could not have, and I'll go to the record on that. The record shows in Exhibit 9 that this man had a sister who was married to a District Judge in Finland, I don't think it needs much savoir faire to know that he might have done a lot better job on it than the government if he had been so disposed. Hugo L. Black: I imagine a lot of District Judges in the United States couldn't get them. [Laughter] J. F. Bishop: I don't say that he could get them, but I say that the effort of the government, the success or failure of the government is not -- it gives no idea. Hugo L. Black: So this man is convicted of willful failing to depart. J. F. Bishop: But he was not restricted to Finland. Hugo L. Black: I suppose that by some evidence -- I suppose that would require some evidence to show he could depart and didn't do it. J. F. Bishop: That is supplied by the alternative that was given. Hugo L. Black: Where? J. F. Bishop: Canada, he was a Canadian citizen, in fact there is a very serious doubt which the jury could legitimately find from the record as to whether he wasn't indulging in the trick of naming Finland because that would be tough, whereas Canada was what he was a citizen of could of walked across the border with just numbers on him. Hugo L. Black: Was he convicted for willfully refusing to go to Finland or willfully refusing to go to Canada? J. F. Bishop: He was convicted for wilfully doing nothing. Hugo L. Black: Well what he convicted for willfully doing nothing about going to going to Canada or Finland? J. F. Bishop: There was no such distinction. He was convicted of a fact that he did not leave, and that he applied for new documents. That was (Inaudible), not that the government didn't -- that the government presented anything, it's admitted the government didn't get him out. Hugo L. Black: I presume that the government if it has to give a bill of particulars would have been required to say whether he has failed -- refused to go to Finland or Canada, which did he refuse, which was he convicted of? J. F. Bishop: He had asked for that bill of particulars; it would have shown only first on the affirmative testimony in the record that he was still around at the end of the six months. Hugo L. Black: He was still here and that hasn't gone and therefore (Inaudible) J. F. Bishop: No, that isn't all. Well, his duty was not restricted to going to the place where he chose, especially when he chose a country of which he hadn't been a citizen for 40 years and -- Charles E. Whittaker: (Inaudible) J. F. Bishop: He had a right to make the election in the first instance, but if he applied to Finland -- Charles E. Whittaker: (Inaudible) J. F. Bishop: It persists only to the time where he gets busy, files travel documents and is told no. Charles E. Whittaker: (Inaudible) J. F. Bishop: That's right. Charles E. Whittaker: And he (Inaudible) J. F. Bishop: Right, yes. Charles E. Whittaker: (Inaudible) J. F. Bishop: I don't believe so, if it -- Charles E. Whittaker: (Inaudible) J. F. Bishop: If you had a case in which he was turned down – Charles E. Whittaker: (Inaudible) J. F. Bishop: I don't concur that there is an absolute right to play around for six months if you know you can't go to Finland; you have to get busy, find your papers -- Charles E. Whittaker: (Inaudible) J. F. Bishop: I would say that the government makes its prima facie case by showing that he didn't go and that the evidence afterward showed us a great disposition not to go, and a failure on his part then to go forward with the evidence, to show what he did do. The government cannot negate that he applied to Finland or that he applied to anyone of a half a dozen other countries, the countries that he could have gone to. He was allowed to go to any country he wanted and he was also allowed the choice, but he was not allowed a choice to sit around and do nothing and then say prove (Inaudible) William J. Brennan, Jr.: (Inaudible) J. F. Bishop: He did. William J. Brennan, Jr.: (Inaudible) J. F. Bishop: No, any time that he could have disclosed another country under the regulations, the officer in charge could have permitted him to get out, he was not -- that was not binding him. His duty was to get out and the statutory duty is not couched in limiting him to making one effort. He gets the first choice and that is only the springboard for allowing the Attorney General to make a choice. William J. Brennan, Jr.: (Inaudible) J. F. Bishop: What's that? William J. Brennan, Jr.: (Inaudible) J. F. Bishop: If he proves that he made some efforts he does. If he does not, why we can't speculate after it's shown that he is still here, that he did anything. That is evidence that is so clearly within his own power to produce if he were actually in good faith that the government by having taken the laboring off, putting in evidence that he wasn't there, putting in evidence showing a clear disposition to drag his heels even when he could go after the six months, that I don't believe that the government has to disprove every possible explanation he could have made. He was still here at the end of the six months. He was doing nothing. He didn't say he was doing anything. He admits that he did nothing because he says the reasons he did nothing was he had an impression that he could nothing. This is not -- Hugo L. Black: The statute would require would it not, that the government proves beyond a reasonable doubt that he failed go to go to Finland or Canada or both, when he could have done so in order to convict him of a crime. J. F. Bishop: Right, now how does it go about proving? Hugo L. Black: And you claim that they have proven beyond a reasonable doubt, that he could have gone to Finland or Canada and didn't do so. J. F. Bishop: Right and here is the way it's proved. The government first put in testimony that he was still here, no question about his failure to depart. There is no quarrel about that. Two, it put in the testimony in which he had admitted he did nothing. There is no question about that. He admitted he did nothing. The only excuse -- Hugo L. Black: I pick you third element that he could have gone had he tried. J. F. Bishop: To where? Hugo L. Black: To either anywhere. J. F. Bishop: Canada, it did prove that, it had testament. Hugo L. Black: You then rely on the Canadian instead of the Finland. J. F. Bishop: That was after the six month period, he chose his disposition. But you're speaking now - Hugo L. Black: Where is your evidence that he could have gone to Finland had he tried? J. F. Bishop: The government only has to prove on this second count we are discussing that he did not apply for the documents. He admitted that, that's in the evidence. He did not make any application anywhere. Hugo L. Black: What was he convicted of? J. F. Bishop: Both, failure to get documents. Hugo L. Black: Failing, refusing to go when he could have gone. J. F. Bishop: That's right. Hugo L. Black: Where is your evidence that he could have gone to Finland? J. F. Bishop: I don't believe that the government has to prove that. It has made its prima facie case. Hugo L. Black: You mean you convict a man, give him ten years in a penitentiary -- J. F. Bishop: Five. Hugo L. Black: -- for refusing to go to a place without proving beyond a reasonable doubt that he could have gone there? J. F. Bishop: There is no way that the government can prove that because he has to apply for documents himself, to make that proof possible. The government cannot prove that he can't go here and he can't go there if he doesn't even take the first step. Hugo L. Black: You could have very easily proved if you were making the effort to get it and you could have shown that he could go to Finland. You could have had a lot of (Inaudible) he could go. J. F. Bishop: That's the -- that he supposes -- Hugo L. Black: That crime you convicted him of there is refusal to go, failure, willful failure and refusal to go which has to embrace that, the fact that he could have gone. J. F. Bishop: But the proof of that. Hugo L. Black: That's right. J. F. Bishop: Is amply made out -- Hugo L. Black: Is it on the government or the defendant? J. F. Bishop: What's that? Hugo L. Black: Is it on the government, it is the government's burden to prove that he is guilty or his burden to prove that he is innocent? J. F. Bishop: The government has the burden of going forward with the evidence, but after it has gone forward with the evidence of showing that he didn't do a thing, the government is no position to prove that if he had done something, in this sort of a case that they would have been successful, because there are so many efforts that are diligent he thought he can employ, that was why this statute was passed. Hugo L. Black: I can understand your argument with reference to a charge of a crime that a man had to file the papers, he didn't apply, but I do not understand your argument as made in connection with the criminal charge that he could have gone, he willfully failed and refused to go to a country, I do not understand how you say that the government is free from the burden of proving that he could have gone there. How could he have wilfully failed to do so? J. F. Bishop: In this respect, the government proves he is still here. It's common knowledge and I think that this much can be conceded that some people can get in to various countries. He is not restricted to Finland, he is not restrict to Finland. If the fact is that Finland would not take him, he could explore that fact if you just sat tight and done nothing. We're not quarreling here about how much he has to do, or what it would have disclosed, this is a case where he just did nothing at all, and his whole reliance is that he thought he didn't have to do anything at all now. Now the government has shown that he was still here. His -- there is the fact that was before the jury that he was able to get in and out of Russia on his own, that he was able to get in and out of Canada on his own. Now wait a second let me retract that. That business of the fact that he had gotten in and out of Canada on his own without difficulty is in Exhibit 1 here which was before the judge, not before the jury, but he had shown great facility in that respect and the fact and with those facts before the jury. Earl Warren: He got in without papers, didn't he? J. F. Bishop: What's that? Earl Warren: He didn't use papers at that time, did he? J. F. Bishop: On the Russian -- Earl Warren: To get him around to Canada. I thought the government didn't know how he came in, he came in surreptitiously, didn't he? J. F. Bishop: I'm speaking of the Soviet -- after his three years in the Soviet Union he came in, and without papers. To Canada, he went to Canada and it's not -- and Exhibit 1 doesn't indicate the means that he went in and out, but he did do that, but I don't want to bid, I don't want to go at it in that respect, but what I do want to show here is that the failure to prove that Finland would take him is not conclusive, because the government did show that even if Finland had not taken him, he could have gotten into Canada and the government cannot disprove that he couldn't have gotten into Russia or any one of 1,000 places. The government cannot just prove that if he had gotten going, that he wouldn't have been as successful as thousands of other people are successful. The government did prove to the jury that this man had no disposition to anything and then if he had failed in Finland he could have gotten into Canada, that's affirmative and that's there. Felix Frankfurter: Mr. Bishop you till now hoped to me that I wouldn't have to read the record, I'm not so sure after listening to this 9in colloquy and so I would like to ask you one or two questions. As I understand you, your position is that the conviction can rest on count two, is that right? J. F. Bishop: Are you saying that the conviction on count one can rest on count two? Felix Frankfurter: I'm asking you whether the sentence can be sustained if count two is sustained (Inaudible) J. F. Bishop: The sentence was on count one, the failure to apply, correct? Is this the -- is this directed to your question? The sentence was on count one -- Felix Frankfurter: You mean the judge specifically sentenced on count one? Earl Warren: Yes. J. F. Bishop: Yes and the sentence was deferred on count two failure to get documents. Felix Frankfurter: Yes but the jury brought in a verdict on both counts. J. F. Bishop: It did that, it found him guilty on both counts. Felix Frankfurter: Now, if the record sustains count two then there is raised the question that Justice Harlan put to you earlier, the problem of resentence, is that right? J. F. Bishop: Well that was -- Felix Frankfurter: (Inaudible) is that right? J. F. Bishop: That is a problem. Felix Frankfurter: That is a problem even for you. J. F. Bishop: I'm not prepared to answer that, but if the statement is that the -- Felix Frankfurter: What I want to know, what I want to know is -- J. F. Bishop: It has taken five years. Felix Frankfurter: What I want to know on this record is there is a sentence now or is there a sentence that would legally be imposed, which would sustain a conviction of a count two? J. F. Bishop: Yes sir. Felix Frankfurter: Yes. So directing myself to count two, I want to ask these questions. J. F. Bishop: Yes sir. Felix Frankfurter: If I read this whole record and I haven't read it at all, will I find that the issue under count two was the issue, not what could have been the issue, what might have been made the issue by a bill of particular or evidence or anything else, what was before the jury, what was contested, was sought to be proved, now as resistance, well I understand there was no evidence for the defendant, if the case had gone to the jury involved making, failure to make a timely application, in good faith of travel or other documents necessary to his departure from the United States and I'm going to add it was stupendous, was that the issue before that jury? Because if that was the issue before the jury then we can't tell whether they might have found it was sustainable as to Canada. And if that wasn't the issue, but if the issue was at large namely did he take no step whatever during six months to get a travel document somewhere either his choice or the Attorney General's designation, which it was within his power to obtain not foreclosed either because Finland announced they wouldn't give any visas of some other country, then we've got a different problem. Now can you answer that, what was the -- what was the issue with reference to which the court made the general charge to the jury? It doesn't have – well this to me, a good abstract charge at large if in fact the only evidence before the jury was whether or not he could get a piece of paper that would take him to Finland. J. F. Bishop: The issue before the jury was this -- Felix Frankfurter: On count two -- J. F. Bishop: On count two. Felix Frankfurter: Sustainable issue. J. F. Bishop: That the statute embodied a blanket command that he apply for the travel documents, and also within a reasonable time, time length etc. It did not specify and I don't think the statute indicates in any respect that he was restricted to any country or to the country that he designated -- Felix Frankfurter: The statute isn't the important thing if the statute was cut down to narrower limits in the proceedings before the jury, for the jury when it retires, retires to deliberate regarding the matter that was before it and not matter that wasn't before it. J. F. Bishop: Right, the jury retired to deliberate on the question as to whether he in good faith made timely application for documents, it had before it his own statement that he didn't do a thing. Felix Frankfurter: Well now that the jury was there before the jury -- in some form or other, in a legal form that he wasn't restricted to applying for travel to Finland. J. F. Bishop: I think that that was clearly before the jury in the affirmative testimony of the officer in charge that if they're presenting the Canada affidavit. I think it was also before the jury in this form 9, which disclosed that he had been a Canadian citizen for 40 years. It was before the jury in the testimony of the immigration officer as to what nominal documents you need in addition as a Canadian Citizen to go from the Superior, Wisconsin to Canada. Felix Frankfurter: I'm not challenging any of these things, I'm trying to find out, I must say I'm considerably confused from what has taken place back and forth. Now when they went for the jury -- when they retire, was there before them a reasonable basis for considering, A) whether he had a choice not restricted to Finland B) There's – that nothing to show that he didn't have the opportunity to get a piece of paper for some country get out of this country. J. F. Bishop: The answer is yes to both for those alternatives, yes. That was before the jury -- Felix Frankfurter: And not merely what you call prima facie. It must be whatever the tag, the Latin tag maybe, are there enough from which the jury could have found beyond a reasonable doubt that this person having a duty under the laws instructed by the court to get a piece of paper to get out, no matter what think of the whole business, to get a piece of paper to get out somewhere, there was no restriction upon him to get a piece of paper that would take him somewhere out of the confines of the United States. J. F. Bishop: I think that was clearly before the jury. That was clearly before the jury and the -- and he didn't even -- and that sort of thing was not raised at the trial. What was before the jury was his excuse that he was an innocent man. That was the – that was the only problem before that jury and they just didn't believe him. They believed the testimony that was before them. I have – I didn't get a chance to get to that record, I think that perhaps the best – the instructions I can only ask that the entirety of the instructions be read with a repetitious and careful separation of these two offenses in several readings and with the repeated emphasis on willfulness and in the light of the fact that this jury had a hammered into it, as I said, 17 times that the petitioner didn't say he tried to do anything but he just thought, he didn't have to and that was the issue and the instructions were very clearly as to that issue so forth, I do wanted to -- William J. Brennan, Jr.: (Inaudible) J. F. Bishop: Well it seem to me it was more than 4, 5 pages. I want to say this that on willfulness in spite of the fact that there had been some discussion with the judge before the instructions were framed and there had been some, even some quarreling about that one might say the – William J. Brennan, Jr.: (Inaudible) J. F. Bishop: Pardon? William J. Brennan, Jr.: (Inaudible) J. F. Bishop: That is right and there was no exception taken to that. In fact very diligent counsel accepted to everything and you'll find this in the record right up to the word ‘willfulness,' so that we must presume that to the counsel who was present at that hearing that that instruction did the job and posed fairly enough before the jury the question as to whether this man actually believed he could do nothing or whether was just dragging his heels and figuring on crying about it later. I think that this record as it is read will prove very definitely that the government proved that everything that it can prove and that it, that it made its case beyond a reasonable doubt. These matters in defense, and these speculations that he couldn't have gotten into Finland or into other countries are speculations that he frankly didn't back up by himself going forward with the evidence and showing that he filed some papers in Finland and was turned down. That didn't happen. Charles E. Whittaker: (Inaudible) J. F. Bishop: Assuredly this statute is not a trap. If he had gone in good faith anywhere and been turned down, he would not have been willful. Charles E. Whittaker: (Inaudible) J. F. Bishop: Correct. Charles E. Whittaker: (Inaudible) J. F. Bishop: Yes it was intended and he presented -- the only thing that he did present at the trial, an affirmative defense. He did not present the affirmative defense that he couldn't have gotten them if he had tried, he said he didn't do anything at all because he had gotten the impression from this limited officer that came to get questions answered that he didn't have to do anything. Well the statute said he did notice, we did and the jury had that notice too and the government cannot go and disprove all the defenses that might be contradictory. The government proved its case, and the jury believed it. Now we are supposed to go on a whole record and speculate that if he had gone, if he had really made energetic efforts to get into Finland, he couldn't have done it, well there is no proof of that. And the government did prove that he did nothing and the government in a case of this kind cannot undertake to disapprove every possible defense. The government has gone form over the evidence. It has the ultimate burden -- Charles E. Whittaker: (Inaudible) J. F. Bishop: That is the question of fact, may I answer -- Earl Warren: Yes of course. J. F. Bishop: That is question of fact which was put before the jury and it would not rest alone on the letter but on all of the facts which disclosed that this man was a very cynical man, who relied on his attorney and who could have enquired about this letter and who did nothing even when he had a chance to do it.

William H. Rehnquist: We'll hear argument first this morning in Number 94-431, James Ryder v. United States. Mr. Lotz. Allen Lotz: Mr. Chief Justice and may it please the Court: Petitioner, James D. Ryder, was convicted at a general court martial of several offenses pursuant to Article 66 of the Uniform Code of Military Justice. His case was then automatically appealed to the Coast Guard Court of Military Review. His case was heard there by three-judge panel consisting of two civilian military appellate judges and one active duty commissioned officer. During the course of that appeal, he raised as a contention that the judges of that court had not been appointed in accordance with the requirements of the Appointments Clause of the Constitution. The Court of Military Review rejected that contention. The case was then reviewed further on discretionary appeal to the United States Court of Military Appeals, and the appointments issue was raised again by that court. The Court of Military Appeals rejected that contention on the grounds, or on the basis of its recent decision in the Carpenter case. In Carpenter, the Court of Military Appeals found that the civilian judges of the Coast Guard Court of Military Review had been improperly or unconstitutionally appointed, but affirmed their decision there anyway, saying only that just as the acts of the Federal Election Commissioners were accorded de facto validity in Buckley v. Valeo, we hold that the judicial acts of the civilian judges are entitled to de facto validity. The case is now here to address the question of what the effect of the unconstitutional appointments of these military appellate judges is on the decision in the case. Everyone is in agreement, the Government has conceded, that the civilian judges of the Coast Guard court were unconstitutionally appointed, yet the Government then goes on to say nevertheless there should be no relief in this case under the de facto officer doctrine. John Paul Stevens: May I-- --Mr. Lotz-- --Go ahead. Go ahead. I was just going to ask you, what is your view as to the validity of the appointment made in 1993 in January? Allen Lotz: Your Honor, our view is that that appointment is not valid, but that question is not before the Court in this case because the decision at issue here was made before the Secretary's memorandum. John Paul Stevens: I understand that, but is it not correct that it was made... was that appointment made before the judgment in this case became final in the sense that all direct review was over? Allen Lotz: Well, Justice Stevens, direct review continues, but it was made before the case was decided by the Court of Military Appeals. John Paul Stevens: It's your view, I gather, then, that even if the valid appointment were made 20 minutes after the case was over it would be too late? Allen Lotz: Yes, Your Honor, that would be my view. Sandra Day O'Connor: I'd like to ask you how, under these circumstances, the petitioner was harmed. The subsequent appointment by the Secretary of Transportation put the very same people back on the court who made the decision, and it's hard to construct any kind of harm to the petitioner here. Allen Lotz: Justice O'Connor, the... this Court's cases in separation of powers cases have never indicated that a showing of direct harm is necessary. If you look at Buckley, Northern Pipeline, Morrison v. Olson, Freitag-- Sandra Day O'Connor: But you have a very different situation, for example, if it's an Article III court, and a non-Article III judge is participating. I can imagine some sort of harm. Here, with an Article I situation, where the very same people are reappointed, it's very hard to understand what the harm might be. Allen Lotz: --The Freitag decision, also while this Court found the appointments there to be proper, there was a... as it was put there, the decisions of the special trial judges of the tax court would have been invalid had they not been properly appointed. That was also an Article I court. The... this Court's decision in Mistretta defined the... or referred to the separation of powers as necessary to the preservation of liberty. A violation of the separation of powers is really an invitation to mischief, to prejudice arising, and furthermore, while this appeal to the Court of Military Review was automatic, it was by no means a pro forma appeal. There were significant issues raised dealing with the fairness of the underlying court martial. Sandra Day O'Connor: Well now, at common law, an appointment-related challenge of the kind you're trying to make here as defense to a prosecution would not have been considered justiciable, would it? It would have been limited to the bringing of quo warranto, or something of that kind, never allowed as a defense to a prosecution. Allen Lotz: Currently, under the very old common law, which viewed the holding of an office as akin to a property right, that's correct. That has not been the view recently in the decisions of this Court, and the decision of the D.C. Circuit Court in the Federal Election Commission v. NRA Political Victory Fund-- Sandra Day O'Connor: But that may be, in fact, what's behind the de facto officer doctrine as such, the notion that when raised as the petitioner did here, it just isn't going to produce an overturning of the conviction. Allen Lotz: --Well, Your Honor, I think that's the question we're deciding here, whether it will, and we're not talking about an overturning of the conviction, basically an overturning of the appeal where the unconstitutionally appointed judges sat. The de facto officer doctrine is really a rule of practicality designed to avoid chaos and mass disruption when a defect in an appointment is discovered long after the fact. Ruth Bader Ginsburg: Mr. Lotz, if we're concerned with practicality, then isn't this business about de facto at the middle tier kind of an academic exercise? After all, you have no complaint about the court of first instance, and then there was a review at the third tier, a fully competent court, and the conviction was affirmed, so even if there's an infirmity at the second tier, why should it matter? Allen Lotz: Well, Justice Ginsburg, the review at the Court of Military Appeals by no means corrected this. The Court of Military Appeals is limited to reviewing matters of law. The Court of Military Review, on the other hand, has much broader powers to review-- Ruth Bader Ginsburg: Well, can you tie it into this case and tell me what it was that was reviewed as the second tier that was not reviewed on final review? Allen Lotz: --The... I can't tell you specifically anything that was not reviewed. The-- Ruth Bader Ginsburg: It's conceivable that the issues were the same, and if they were, then this is kind of a moot case, isn't it? Allen Lotz: --Well, we don't... our position is that it's not moot. The Court of Military Review, by statute, may only affirm those findings that it finds correct in law and fact. The Court of Military Appeals takes the facts as they're found. The petitioner also... the case is not moot. He has a punitive discharge that's not been executed. Antonin Scalia: Were facts challenged at the intermediate stage? In other words, did the intermediate court have any fact-finding to do which would not have been reconsidered by the Court of Military Appeals? Allen Lotz: There was no fact-finding that was critical to the decisions of the issues. Antonin Scalia: So then what Justice Ginsburg says would seem to be correct, that if there are only issues of law, you've simply skipped the middle stage. Allen Lotz: Well, Your Honor, the statute provides the petitioner with the right to an appeal at the Court of Military Review. The Constitution requires that that appeal be heard by judges appointed in a manner designed to enhance their quality and their statute, and that wasn't done here, and-- Antonin Scalia: Let's put it in a context of Article III courts. If someone had, let's say, lost in the district court, and raised issues of law on appeal to the court of appeals, and the court of appeals affirmed, then he applied here for certiorari and we also affirmed, surely it would make no difference whether the court of appeals was properly constituted or not, because he got a full review of the same things that the court of appeals reviewed by us, so how could it possibly affect his status? Allen Lotz: --Justice Scalia, the... my understanding of the decisions in Glidden and in Freitag indicate that it's... you don't have to show direct harm. Ruth Bader Ginsburg: In Freitag it was in the first instance there was an infirmity. Allen Lotz: That's correct. Ruth Bader Ginsburg: In Glidden it was a question of an Article III judge at the second tier. Allen Lotz: Glidden involved two cases. One was at the trial level, one was at the court of appeals. Ruth Bader Ginsburg: But think of a case, let's say cases in the circuit, and a question is certified, so it comes right here. We have no middle tier. Or, in the old days, when we had three-judge courts more often than we do now... take a voting rights case nowadays, three-judge court, go right to the Supreme Court... the middle tier seems to be an unnecessary extra in this picture. Allen Lotz: Well, Justice Ginsburg, Congress didn't think it was an unnecessary extra and provided for it. The Court of Military Review traditionally is the petitioners or the appellant's best hope for relief. In addition, review of the court-- Ruth Bader Ginsburg: Well, there is no constitutional right to two reviews, no less than one, right? Allen Lotz: --That's correct, but it's a statutory right. But furthermore, the Court of Military Appeals is not an appeal as of right. That's done on petition only. William H. Rehnquist: Well, Mr. Lotz, did you petition for review by the Court of Military Appeals in this case? Allen Lotz: We did. William H. Rehnquist: And was it granted? Allen Lotz: It was. William H. Rehnquist: And what... do they grant on specific issues, or do they review the same things that you argued to the intermediate court? Allen Lotz: Normally they grant on specific issues. Occasionally, the court will specify. William H. Rehnquist: And what did they do in this case? Allen Lotz: They reviewed the issues specified by the petitioner, which in essence were the same issues reviewed by the court-- William H. Rehnquist: So you really did get a review by a correctly constituted court of the same issues that you raised in the first tier appellate court. Allen Lotz: --After denial of appropriate review in the Court of Military Review. John Paul Stevens: I suppose you would argue, though, that as is true with us, that the court of last resort is sometimes affected by the caliber of the judging in the intermediate court. It always has an impact. I know it does for me when we review cases. I think a lot about what the intermediate court said, even if I end up agreeing with them. Allen Lotz: I would absolutely agree with that, Justice Stevens. Ruth Bader Ginsburg: But your remedy would be going back perhaps to the same panel, or what would you remedy be? Allen Lotz: Remedy would be a review anew in the Court of Military Review by constitutionally appointed judges. Ruth Bader Ginsburg: How about these very same judges who are now constitutionally appointed? Allen Lotz: My position is that they should not review the same case again as they have already given an opinion on the merits of the case. Ruth Bader Ginsburg: Would it be unlawful for the... after all, they are already familiar with this, and it would be least expensive to have the same judges review what they did now that they have the proper appointment. Allen Lotz: It's our opinion that that would be unlawful, yes. William H. Rehnquist: Why would it be unlawful? There's no charge of bias or anything like that. It was just a defect in their appointment. Allen Lotz: Well, Chief Justice Rehnquist, the... in essence, at the earlier appeal they were not constitutionally appointed judges, and in that capacity they issued a decision expressing their opinion on the merits of the case. I'm sure this Court understands that that's normally inappropriate to then sit as a judge on that same case. William H. Rehnquist: Well, I certainly don't understand that. On what are you basing your contention? Allen Lotz: On a prejudgment of the merits of the case, Your Honor. William H. Rehnquist: Well, what if three, say, professors sat on a moot court and the question was presented to them and they decided it for the moot court and then later the exact... they were all appointed to a court of appeals, and later the exact same question comes up in the court of appeals, are they disqualified because they participated in the same thing in a moot court? Allen Lotz: No, I don't believe so, Your Honor, but a moot court is by definition an academic exercise, not a real dispute between live parties, so I think that would be a different situation. Ruth Bader Ginsburg: What about when this Court reverses an appellate panel and it has to go back to that same panel, and maybe there was an alternate ground to end up for the same party? Allen Lotz: I believe that there... that may be different in that the... I'm assuming that the appellate panel that's reversed was consti... or composed entirely of constitutionally appointed judges, and their opinion then is expressed only in their judicial capacity. Antonin Scalia: Mr. Lotz, I want to go back to whether there's any harm done in light of the fact that there was a later review anyway which would have been the same review. What if the... what if a Court of Military Review had found for the defendant in the case? What would have happened? Does the United States always appeal? Allen Lotz: The United States does not always appeal. The... and of course it depends on the grounds. Antonin Scalia: So you can't really tell. It might have come out differently with a different panel. Allen Lotz: It might have. Antonin Scalia: And the United States might not have appealed. Allen Lotz: That's correct, Your Honor. Antonin Scalia: They might also have... or might they. Was there any factual... I think you said before there was no factual issue even before them, was there? Allen Lotz: It was basically a legal issue regarding evidentiary issues. Antonin Scalia: Still and all, at least there's a chance they would have come out for the defendant and the United States would not have appealed. Allen Lotz: That's correct. There could have been a new trial. Stephen G. Breyer: I'm sorry, I'm just missing something. I may have just missed this, but in the... I'm just reading the appendix to the Government's brief, and in the appendix they said in the United States Coast Guard Court of Military Review... that's the one that was not properly constituted, right? Allen Lotz: That's correct. Stephen G. Breyer: There was an assignment of error that the appellant received a disproportionate sentence because the military judge unduly emphasized the deterrent function of sentencing, and then I didn't find the... I didn't find that referred to. I may have just missed it in the U.S. Court of Military Appeals. Allen Lotz: I appreciate your asking that, Justice Breyer. The... that issue was raised to the Court of Military Appeals and review was not granted on that issue, but that also is the kind of issue that the Court of Military Review has more leeway on approving only that portion of the sentence that they-- Stephen G. Breyer: Then it seemed to me there was an issue that they decided below in the improperly constituted court that the properly constituted court didn't decide. Allen Lotz: --That's correct. Stephen G. Breyer: So then we probably would have to reach the issue. Allen Lotz: That's correct, and I apologize for that misstatement. The Government is arguing here that this application of the de facto officer doctrine here is akin to pure prospectivity which it claims has never been expressly renounced by this Court, but whatever its application in a civil case seeking injunctive relief like Buckley, it's fairly clear from a reading of Justice Souter's plurality opinion in Beam that that implies or assumes that you can't have juris prospectivity in a criminal case. Griffith makes it clear that there's no selective prospectivity in a criminal case. Beam and Harper, there's no selective prospectivity in civil cases. John Paul Stevens: May I ask this: when you're getting into this distinction between direct review and collateral attack, this, I understand, is on direct review, but is it your position that your client, if he had not raised it during the proceeding but had waited until after the appellate process had run its course and then brought a habeas corpus petition, that relief would have been appropriate? Allen Lotz: Justice Stevens, I'm... that's not my client. I don't represent anyone who's here on habeas corpus. I think a habeas corpus petitioner with the same grounds would have an uphill struggle based on Teague v. Lane, the limits on relief in habeas cases. John Paul Stevens: Well, but I think Teague would no longer be a problem if we decided, and perhaps we'd... it may be in the first case, but somewhere along the line I would assume that the question could be raised. If it were not Teague-barred you would think... I understand you don't have to go that far, but do you think there might be a distinction between the two? Allen Lotz: I think that there may well be a distinction between a case on direct review and collateral review. Antonin Scalia: Mr. Lotz, before you waste more ammunition on prospectivity, why do we have to worry about prospectivity? This prospective decision did not come from an Article III tribunal anyway, and we don't have any case law that says that non-Article III tribunals can't even achieve selective prospectivity if they want to. Is there any restriction on-- Allen Lotz: Well, Justice Scalia, my reading of Griffith and Beam and Harper, all of those went back to State courts, which by definition are not Article III courts, plus, it would be ironic to say that it's okay for the Court of Military Appeals to issue a purely prospective decision that this Court could not do even when that case comes up here. David H. Souter: --Which we would have to do if we went the other way from yours in this case. Allen Lotz: That's correct. David H. Souter: Yes. Allen Lotz: The-- Antonin Scalia: I don't understand that. Say it again. Allen Lotz: --The-- Antonin Scalia: What would we be tied to? Allen Lotz: --In this case, if Petty Officer Ryder had not persuaded the Court of Military Appeals that the appointments of the Court of Military Review judges were unconstitutional, basically that he lost on the legal issue at the Court of Military Appeals but won on that issue at this Court... this is an Article III court that should not issue purely prospective decisions. It would be ironic if he could lose below and do better here than he does by winning below. Antonin Scalia: I don't know why it... it might be ironic, but I don't know why it would pose any problem from the standpoint of prospectivity juris. Allen Lotz: Well, and as I said earlier, Griffith and Beam and Harper all dealt with State courts, and forbidding them from applying prospective adjudication. The-- Ruth Bader Ginsburg: Could you clarify the issue that was raised before this tribunal that you say was improperly composed and therefore has to be redone, precisely what that issue was, and whether it would be appropriate then to say only as to the unreviewed issue does this have to go back to have what would be a first appeal? Allen Lotz: --The issue that was not granted review at the Court of Military Appeals dealt with a contention that the panel, which is the equivalent of the jury, imposed an unduly severe sentence because of the way the military judge, the military trial judge answered a question and that he may have overemphasized the general deterrent effect of a harsh sentence and led, then... which led the panel to impose that unduly harsh sentence. The Court of Military Review, their statutory authority indicates that they should approve only that part of the approved sentence that they find correct in law and fact. They have statutory authority simply to say, we find this sentence too severe, and reduce it. William H. Rehnquist: You petitioned the Court of Military Appeals to review that and they declined to? Allen Lotz: That's correct, Your Honor. Ruth Bader Ginsburg: So would it be appropriate to have just that issue-- Allen Lotz: I-- Ruth Bader Ginsburg: --since the other issues were reviewed? Allen Lotz: --I don't believe it would. It would still permit the review in the first instance of all the issues by unconstitutionally appointed judges, and the Appointments Clause requires the proper appointments. This whole prospectivity issue is contrary to the nature of the judicial process. By necessity, it looks backwards and tries to resolve disputes between real litigants. The value in purely prospective decisionmaking when it's been applied in civil cases has really been to protect the settled expectations, particularly large economic interests that have been arranged based on an erroneous but reasonable interpretation of what the law is. You really don't have those considerations in this case. There's not a large reliance interest. Petty Officer Ryder certainly didn't rely on the validity of these appointments. He challenged the appointments when he was before that court. William H. Rehnquist: Yes, but how about the prosecuting arm of the Coast Guard? Allen Lotz: Well, Mr. Chief Justice, the Government was on notice of the allegation of this appointments defect. It was raised in the briefs. The Government took no steps to correct it before the decision. The Government created the flawed process in the first place by-- William H. Rehnquist: But isn't that generally true in a lot of cases where you're talking about reliance interest? You simply rely on the existing state of the law, and you may have set up part of the existing, or lobbied for or drafted statutes that created the existing law that's later found to be flawed, but I don't think that dispenses with the concept of a reliance interest. Allen Lotz: --When there is reasonable reliance that may be a factor, but that's only really been applied in civil cases anyway. This is a criminal case. The Government created the problem in the first place, was on notice of it, and could have corrected it in a couple of fashions and did not do that. John Paul Stevens: But you could have cases, it seems to me... you say the Government was on notice, and in a perfect world we all know what the law is, but there are, potentially at least, some very close questions under the Appointments Clause in which the Government might reasonably think that there had been a proper appointment but later on, after years go by, somebody realizes there was a flaw in the procedure, and in the meantime hundreds of cases have been decided. Can't there... there is a legitimate reliance interest at some point. Allen Lotz: There is in some cases, Your Honor. The... this is not that close case, is our contention, plus reliance interests normally speak in terms of many, many people. There are only, by my count, ten appellants situated similarly to Petty Officer Ryder. We're not talking about the Republic collapsing under the weight of many, many reappeals. This case has often, and it's the nature of judicial review in itself, that if a decision below is reversed, it causes a certain amount of disruption. That's simply the nature of the process. Another problem with applying a purely prospective decision here is it reduces the incentive to litigate an issue like this. If an appellant sees that he's likely to get a decision in his favor on the law but no relief, there's really no incentive to litigate it, and it would permit these sorts of problems to continue uncorrected. If there aren't any other questions, I'd just like to conclude by asking that the Court remand the case for a new appeal by a properly appointed Court of Military Review judges and I'd like to reserve the remainder of my time. William H. Rehnquist: Very well, Mr. Lott. Mr. Wallace, we'll hear from you. Lawrence G. Wallace: Thank you, Mr. Chief Justice, and may it please the Court: This Court's 1993 decision in Harper v. The Virginia Department of Taxation recognized a distinction between retroactive application of a legal rule as a choice of law matter and remedial issues, a distinction previously discussed in opinions in the American Trucking and Jim Beam cases that were not subscribed to by a majority of the Court. In those cases, the distinction was important because they involved invalid schemes of State taxation, and the remedial issues implicated questions of State law. Here, the distinction is important because the remedial issues implicate questions of remedial discretion of a Federal appellate court. David H. Souter: But in effect you're... I think what you're saying is that there is remedial discretion to give no remedy whatsoever, and therefore I don't see how you draw the distinction between prospectivity of remedy and prospectivity of vindication of right. Lawrence G. Wallace: There... in particular circumstances there can be occasions when a remedy is not appropriate. I mean, the breadth of the remedial discretion of Federal appellate courts is actually something codified and recognized in a familiar provision of title 28 of the code, which was not cited heretofore in the case, but I would like to remind the Court of it, and I notified counsel of it yesterday when in preparation for this argument its relevance became apparent, and because it's not quoted in the papers I'll just read it briefly to the Court, title 21... section 2106 of title 28, and it's the ending that seems to us in context to have particular relevance. It says: "The Supreme Court or any other court of appellate jurisdiction. " --and that, presumably the Court of Military Appeals is any other court of appellate jurisdiction, but it codifies a principle whether that's true or not... "may affirm, modify, vacate, set aside, or reverse any judgment, decree or order of a court lawfully brought before it for review, and may remand the cause and direct the entry of such appropriate judgment, decree, or order, or require such further proceedings to be had as may be just under the circumstances. " And it seems to us that the rather clear implication is when there are reasons to conclude in the circumstances of a particular case that further proceedings would not be just under the circumstances, further proceedings need not as a remedial matter be ordered in that case. William H. Rehnquist: Well, the Court of Military Appeals isn't established under title 28, is it? Lawrence G. Wallace: Well, I understand that. I'm looking to this provision as a codification of remedial principles that are inherent in the exercise of appellate authority in any event, and as a guide, rather than as something that necessarily has to apply to the Court of Military Appeals. Antonin Scalia: Are you saying that this, even as applied to Article III courts this allows selective prospectivity? That is to say, in a particular case we think selectively we should... this renders Harper wrong, is that it? Lawrence G. Wallace: I would not say it renders Harper wrong at all. I would say that the circumstances to be looked to are not necessarily selective circumstances, but the circumstances that would warrant pure prospectivity such as the Court has ordered in some of its cases, including Northern Pipeline v. Marathon and Buckley v. Valeo. Antonin Scalia: I don't see how you get that out of that language. I mean, it seems to me if the language means what you say it means, it validates selective prospectivity as well as-- Lawrence G. Wallace: One could make that argument. Antonin Scalia: --One would have to make that argument. It's the only argument the language allows. Lawrence G. Wallace: Well, what is just under the circumstances can be looked at in a more generalized way than the selective prospectivity way of looking at it. The circumstances are not self-defining, that they necessarily mean selective. David H. Souter: One way to do that, for example, would be to recognize a harmless error doctrine as we do. Lawrence G. Wallace: That is correct. David H. Souter: But it's a very far step from that to say that to sort of deny the old slogan and say yes, irdeed, there can be rights absolutely without remedy, and that seems to me the consequence of your argument. Lawrence G. Wallace: Well, there may be rights without remedy in a particular circumstance, although there would be remedies in other circumstances, and what I would like to suggest here is that there were six factors, six considerations that were before the Court of Military Appeals and that apply to all nine or ten of the pending cases... this is not a selective matter... that warranted their conclusion that when there was no other defect in the proceedings there was no need to order relief in this case, and I would like-- David H. Souter: Well, one of the consequences of accepting that argument is that no one, I suppose, no party in interest, will ever have an incentive to challenge a valid appointment in these circumstances. Lawrence G. Wallace: --Well, that is in our view, Justice Souter, not the consequence, because anyone who raises an additional issue, as the petitioner here did, would have the incentive to also raise the Appointments Clause issue, because if there were another error or defect in the proceedings that required retrial or remand to the Court of Military Review, certainly then the Court of Military Appeals should say any further hearing should be conducted by a tribunal constituted in a-- David H. Souter: Why should it say that, on your theory? Lawrence G. Wallace: --Because-- David H. Souter: If they were good enough the first time, why aren't they good enough the second time? Lawrence G. Wallace: --Because there now has been a definitive ruling by the Court of Military Appeals that this defect had occurred. That happened to be a question of first impression in the Carpenter-- Ruth Bader Ginsburg: But it's a remediless one-- --Yes. --so why... Mr. Wallace, your distinction between choice of law and remedy has a familiar ring. We heard it in a case called Reynoldsville Casket not too long ago. Are you familiar with that case? I know that the Government wasn't a party. Lawrence G. Wallace: --We weren't a party. I have some familiarity with it. It's a case pending-- Ruth Bader Ginsburg: The identical argument was made... well, the statute of limitations, the service of process question there, that was a question of choice of law, and choice of law, that was fully retroactive, but remedy, applying it to this plaintiff, you didn't have to do that, because that was a question of remedy. Lawrence G. Wallace: --Well, that's a case in which the Government is not taking a position which is pending before the Court. I did not hear the argument, and I'm reluctant to comment about the case itself. I do think that we should look at the particular circumstances with which the Court of Military Appeals was faced when it determined under Buckley v. Valeo to accord the judicial acts of these two judges with de facto validity for purposes of the cases that were then before it, and there are six considerations that we think justified that in the situation that they were presented with, and it's a rather narrow situation that they were presented with. If I can just recount what these... the first is that they had already, by the time they rendered the decision, there was already a cure that had been effectuated. There can be debate about the validity of that cure, but the Secretary of Transportation had reappointed the same two judges. The second-- John Paul Stevens: It seems to me if you rely on that, you're really asking us to decide whether that was a valid cure or not. Lawrence G. Wallace: --Well, it was an effort to correct the defect that had been found, and to that extent the public interest consideration required-- John Paul Stevens: Supposing we were... we thought it was a perfectly obvious ineffective effort to correct it, would it still be satisfactory to you? I'm not saying that's the case, but it seems to me rather strange to rely on the fact that they tried to cure it if they didn't, in fact, do so. Lawrence G. Wallace: --Well, it's a cure for the future. The question is one of statutory authority. John Paul Stevens: Well, you say-- --It's arguably a cure for the future. Lawrence G. Wallace: Yes, but there's a very substantial argument that these statutes should be interpreted in conformity with the Appointments Clause rather than in a manner that would not enable the responsible officials to comply with the Appointments Clause while still conducting the proceedings that Congress has authorized. I think our argument is quite strong on that. In any event, to that extent the public interest had been addressed. Now, there... I've already mentioned the second factor, that there was no other error or defect. They found no error in the trial that occurred in the case, for example, or any error in the appellate proceedings to the extent they had been reviewed and they decided certain contentions were not worthy of their review. John Paul Stevens: But again, that seems to me if there were another error you'd reverse for that reason. You wouldn't worry about that. Lawrence G. Wallace: We'd reverse for that reason, and any further proceedings would be... they could order it would have to be before a tribunal constituted in accordance with the Appointments Clause. David H. Souter: Once again, the consequence of taking that as relevant is in effect to say that as long as the improperly appointed people are competent, there's nothing to worry about. There's no other value to be concerned with. As long as they get it right, who cares? Lawrence G. Wallace: Well, but... but the competence is quite important when you're talking about whether in the absence of other defect there's reason to upset the result of the particular proceeding and redo it. David H. Souter: Yes, but the... in effect you're saying there just is not an independent value in policing the Appointments Clause by providing the normal incentive for a party like this to raise the issue prospectively, and you're saying that, and implicitly it seems to me you're saying there just is not a value that outweighs the importance of getting a particular issue right on the merits. Lawrence G. Wallace: In light-- David H. Souter: As long as they get it right, who cares? Lawrence G. Wallace: --In light of the adequate incentive to raise the issue along with other issues which the defendant will have if for no other reason than because if he persuades an appellate court that there was more than one error, the appellate court is less likely to say that it's satisfied that the cumulative effect of the errors was harmless. David H. Souter: No, but I would suppose he has even the disincentive on your theory, because if he raises it, as I suppose he ought to do, at the trial level, he has to worry about making all those judges mad, and I suppose that if he knows that he gets nothing independently by raising the Appointments Clause issue, there is in fact an incentive not to raise it. Lawrence G. Wallace: I think we generally have to operate on the assumption that judges will rise above personal reactions to contentions and rule on their legal merits. Antonin Scalia: At least properly appointed judges. [Laughter] Lawrence G. Wallace: Yes. Well, this gets me to another one of the considerations that is relevant. What the Court of Military Appeals was faced with here was a situation involving only two individual judges in the entire military court system. Military trial judges all have to be active duty commissioned officers. It's only... and they don't need a second appointment from the President under this Court's decision in Weiss. It's only on the Courts of Military Review that civilians can be appointed, and it's only these two judges on the Coast Guard Court of Military Review who were appointed as-- John Paul Stevens: This argument sounds to me like you'd say you got tried before a judge who happened not to be a lawyer, not to be appointed or anything else. We have 100 other Federal judges who are great judges, but the one you got tried before just didn't happen to be one of those, and we'll rely on the other 100. I think the one that tries the litigant's case is the important one to him. Lawrence G. Wallace: --With respect, Justice Stevens, I have not yet made my point. John Paul Stevens: I'm sorry. [Laughter] Lawrence G. Wallace: Which is-- John Paul Stevens: I'm interested-- Lawrence G. Wallace: --that these two individuals happened both to be persons who had served while on active duty as commissioned officers as judges of Courts of Military Review, so while the analogy is not a perfect one, they are in many respects and important respects similar to judges on senior status. Antonin Scalia: --But the Appointments Clause does not assure quality. I mean, it is neither... it is neither not complied with when a person of no quality is appointed, nor is it complied with when a person of quality is appointed-- Lawrence G. Wallace: We are not contesting whether the Appointments Clause was violated. Antonin Scalia: --Well, then I don't see what the relevance is. Lawrence G. Wallace: We're talking about an exercise of remedial discretion in the circumstances. David H. Souter: Well, I don't see why your argument doesn't cut against you on that, because it seems to me what you've shown us is that this would be a defect which it would be very easy to remedy. There are only these two judges, and according to your brother there are only ten cases. As he said, no sky is going to fall to correct this defect. Lawrence G. Wallace: The defect has been remedied for future cases, in our view, and we do think that we are going to be able to resist collateral attack on habeas corpus efforts which may be made. There will be more than ten cases litigated, Mr. Justice, even though we think that it could be cured by rehearing ten cases. Ruth Bader Ginsburg: Wouldn't that be easier than have to face habeas later on? Lawrence G. Wallace: Well, we'll be facing the habeas anyway, unless we prevail in this case, and then the habeas cases would follow a fortiori from it. My point in comparing these two judges to judges on senior status is that there is no reason to question their qualifications that they could fully and fairly hear such cases. They've heard many such cases sitting pursuant to valid appointments prior to this particular problem. And when you combine that with the fact that ordinarily when a case is remanded to a court it's remanded to the same panel, and these judges have now been reappointed... two of the three judges on the panel were these same judges. No other error was committed by them... to send it back to the same panel would be a rather useless gesture under the circumstances. Ruth Bader Ginsburg: Mr. Wallace, what do you think of the argument about the issues that were reviewed by the court of final instance? I'd like your frank answer to the question that I raised. Lawrence G. Wallace: There were issues that the Court of Military Appeals denied review of. My point is that there is no reason to think that the judges who heard and passed on those issues were not fully qualified to do so. They had been doing so in the past pursuant to appointments that were proper under the Appointments Clause. Antonin Scalia: Other judges might have come out other ways. Lawrence G. Wallace: That is correct, but-- Antonin Scalia: Judges sometimes come out different ways-- Lawrence G. Wallace: --But-- Antonin Scalia: --and on the same question-- Lawrence G. Wallace: --But-- Antonin Scalia: --so you cannot assure us that this would have come out the same way. Lawrence G. Wallace: --Of course, but there's a question here, if you don't follow the normal practice of remanding it to the same panel, if you specify that there have to be different judges, which can occur here because the military judges have been rotated, although the same two civilian judges out of the five judges still sit there, you're really giving this particular criminal defendant something that most of the defendants don't have, which is two reviews, and these reviews are more extensive reviews in the military system factually than the-- Ruth Bader Ginsburg: Would they have to be-- Lawrence G. Wallace: --ordinary court of appeal reviews. Ruth Bader Ginsburg: --Since this is a unique situation, would they have to be? Why couldn't the review simply be on the written record, with no oral argument? Just have three judges who hold proper appointments. Lawrence G. Wallace: Whatever it is, it's something that other defendants don't get, two de novo reevaluations of the evidence. Whether there's briefing and argument or not, we're still dealing with the record from a court martial. William H. Rehnquist: Mr. Wallace-- --How is the first round appellate panel of the Coast Guard constituted? Do they sit... does the court sit in panels of three? Lawrence G. Wallace: It sits in panels of three, which is-- William H. Rehnquist: What's the total membership? Lawrence G. Wallace: --Five. William H. Rehnquist: So it would be possible, if you decided that the two who had sat previously should not review it, still to get a fully constituted panel. Lawrence G. Wallace: It would, because the military judge who was on this case has been rotated out of this service, and there are three new military judges on the court, and they... active duty judges, that is, and they could hear the case. It would be possible. William H. Rehnquist: Now, is it... in the ordinary course of business, would you ordinarily have the three military judges constituting a panel, or would there always be a civilian on the panel? Lawrence G. Wallace: It can... the panels rotate, and it can be the three military judges. In the Navy, Marine, or the Army or Air Force Court of Military Reviews there are no civilian judges, so you always have panels consisting entirely of active duty officers. That would-- John Paul Stevens: Is that true of the Coast Guard? I thought they always worked it out so they had at least one civilian judge. Lawrence G. Wallace: --I don't really know. I guess that is the answer, I'm told from a nod of the head, but I do know that their practice would ordinarily be to go back to the same panel, and in order for the Court of Military Appeals to order anything other than that the same judges reconsider the same matters without suggesting any error occurred-- John Paul Stevens: Mr. Wallace, can I ask you sort of a broader question? Your argument has been entirely sort of an appeal to discretion. You've got six factors. You've only... I only know what three of them are. I know you're going to give us three more when you get through, and that you rely on section 2106. You're not relying at all on anything, any legal doctrine, a de facto doctrine that would apply regardless of these particular equities of the case? Lawrence G. Wallace: --Well, we think that the de facto officer doctrine is the backdrop here against which this was a proper exercise of remedial discretion. That doctrine has been recognized over and over. Strictly speaking, we don't think that that was precisely what was applied in the de facto officer cases. The courts never reached the merits of whether there had been a defect in the appointment. Here, the reasoning was, as it was in Buckley v. Valeo, that there had been a defect in the appointment but that nonetheless the official acts that have been taken should be accorded de facto validity, which is more a question of remedial discretion than-- Antonin Scalia: Well-- --It seems to-- --can we ignore the de facto officer doctrine, then, in our consideration-- --That's what I-- --of this case? Because frankly, you know, I used it... as you know, I was in the Justice Department for several years, and used it often, but I never recall its being used except collaterally, as to something that's already happened and someone challenges it after it's happened, not in the case where someone is before... immediately before an officer whom he claims xx improperly appointed. He says, you have no right to xx in my case. Has the Government ever asserted the de facto officer doctrine in that case, in that kind of situation-- Lawrence G. Wallace: --I can't say that-- Antonin Scalia: --where it is raised immediately before the officer, before he rules. Lawrence G. Wallace: --I can't say whether we've ever asserted it. We're not-- Antonin Scalia: Do you know of any case where we've asserted it? Lawrence G. Wallace: --I don't know of a case where we have, and we're using it only as a backdrop to the exercise, what we believe is the proper exercise of remedial discretion in this case that-- John Paul Stevens: It seems to me it's critical to your position, then, that the subsequent attempt to cure the defect was valid. It seems to me your position would be totally unpersuasive if there was just a mere attempt later on to cure it, and nobody seems to want to argue whether the later appointment did, in fact, cure it. Lawrence G. Wallace: --Well, I would go so far as to say there has to be a substantial basis for believing that the cure was valid. I don't think that that question need be resolved in advance before it's been litigated in the lower courts or briefed and argued in this Court on the basis of that, and I think we certainly have a substantial basis for arguing that the cure was effective. Let-- Antonin Scalia: Mr. Wallace, before we... it seems to me there's a real risk for this Court in adopting this kind of an approach that you're urging on us, that we look upon the individual case, and before we apply the doctrine that the officer who rules on a case has to be one properly appointed, at least where the challenge is raised immediately. The problem with your approach is that in some situations it would lead us into confrontations with the executive, where the executive appoints someone who is a close friend, let's say, or one of the reasons for which you have an Appointments Clause, that there is indeed some problem, but you cannot say the individual appointed was incompetent. All you can say is that the individual was, perhaps, one more favorable to the appointing officer than the Appointments Clause would have provided. In order to protect the person in a case like that, we would have to make an affirmative finding that this person was an unsatisfactory individual, that he had judged the case improperly, was not as good as another judge. I don't want to have to do that. Lawrence G. Wallace: --Well, I don't say that this case should turn on an assessment by this Court of that kind of question. The question before the Court is whether the Court of Military Appeals, when it resolved a question of first impression that was before that court, namely, that the principle of Weiss that a second commission was not needed cannot be extended to retired military officers, that the question is whether the circumstances that they were dealing with justified their remedial decision that these particular cases need not be reheard because of the circumstances in which they had been heard. Stephen G. Breyer: The difficulty that I wanted to ask you about is in... I haven't read the whole Carpenter opinion, but in the part of it in your brief, the reason that they give for not extending it backwards, it says just as the acts of the FEC Commissioners were accorded de facto validity in Buckley v. Valeo, we hold that judicial acts of the chief judge are entitled to de facto validity. Now, if that's the reason that they gave, then how can we know whether they would have given some other reason if they'd adopted your theory that you're arguing now? Lawrence G. Wallace: I think that it is properly looked at as an exercise of remedial discretion in that use of the Buckley case. In 1984, in a case that petitioner cites in the D.C. Circuit, an opinion that was joined by then Judge Ginsburg, called Andrade v. Lauer, the court of appeals there described Buckley the following way: the court's discussion of remedies in Buckley did advert to the need on prudential grounds to avoid interfering with past actions of the commission. The court's discussion, however, gives no indication that this was a matter of anything other than ordinary remedial discretion in a case involving reform of an entire institution. The prospectivity that the Court adopted in Buckley for its relief, as it did in Cipriano v. City of Houma and in Northern Pipeline v. Marathon, was basically a remedial question rather similar in kind to other aspects of the Court's jurisprudence, where it has held that remedies are not rigid and mechanical, but are adaptable to the circumstances presented. That's true in harmless error jurisprudence in the criminal area. It's true with respect to the good faith exception to the exclusionary rule which otherwise applies-- Ruth Bader Ginsburg: Mr. Wallace, at least with respect to Buckley v. Valeo, wasn't that just a challenge head-on to the statute with no individual's case on the line? Lawrence G. Wallace: --Well, it arose in that context, that is correct, although there had been actions taken of an administrative nature that were not being undone. I mean-- Ruth Bader Ginsburg: But you didn't have somebody in the position of Ryder. Lawrence G. Wallace: --That is correct, but even in injunction jurisprudence the Court has said it's error to interfere with action in the future, that it doesn't comply with the statute until the statute has been complied with in cases like Weinberg v. Romero Barcello. William H. Rehnquist: Thank you, Mr. Wallace. Mr. Lotz, you have 3 minutes remaining. Allen Lotz: Just very briefly, at the risk of repeating what Justice Breyer and Justice Ginsburg said, this six-factor analysis that Mr. Wallace referred to is not apparent in the Court of Military Appeals decision in Carpenter. They took one sentence, took one case, Buckley, which was a case seeking only injunctive and declaratory relief. With respect to the argument about-- Antonin Scalia: We could remand to have them apply the six-factor test, I-- Allen Lotz: --Well, that... Justice Scalia, I believe that would generate much more litigation than sending Ryder back to the Court of Military Review, and the Court of Military Appeals specifically considered and rejected the Government's contention in Carpenter that the fact that these individuals were retired military officers somehow improved their position under the Appointments Clause. Thank you. William H. Rehnquist: Thank you, Mr. Lotz. The case is submitted.

Earl Warren: Number 94, Joseph D. Bibb, Director of the Department of Public Safety of the State of Illinois, et al., Appellants, versus Navajo Freight Lines, Incorporated, et al. Mr. Wines. William C. Wines: May it please the Court. Your Honors, the United States District Court for the Southern District of Illinois with a three-judge bench has held unconstitutional and enjoined the enforcement of an Illinois statute requiring the equipment of trucks and trailers travelling over Illinois highways with contour type mudguards meeting specifications enacted by the statute. The Court held only that the requirements of the statute imposed an unreasonable burden upon interstate commerce and enjoined the effect of the act with respect to that commerce. In two other cases cited in the brief, Rudolph Express Company case and a later case, the Supreme Court of Illinois has held the instant measure reasonable and not violative of due process on the ground of its unreasonable character. Your Honors have noted probable jurisdiction and the cause is here on direct appeal from the District Court for the Southern District of Illinois. The District Court has summarized the requirements of the statute and with the Chief Justice's permission, I should like to quote that summary since its precise terms are important and I am reading from page 6 of appellant's brief which quotes the language of the District Court. Specifications, the Court says, require that the splash guards, one, contour under the wheel, two, cover the top 90 degrees of the rear 180 degrees with an exception of vehicles of less than five inches counts from requiring a contour within 10 inches of the body. So they extend down within 10 inches of the ground that they have a lip or plunge of two inches upon the outside and retain general parallel condition under all operating conditions remotely required by the statute not more than six inches from the truck when fully loaded. The District Court premised its conclusion of unreasonable violation -- unreasonable burdening of interstate commerce upon that Court's finding that no other State has a similar requirement that Arkansas has a recent administrative regulation requiring a flap or -- or apron type mudguard which is in conflict with the Illinois type of mudguard upon a finding that it would unreasonably burden interstate commerce to equip entering vehicles with this mudguard when they're not required in other States and upon a declaration that -- based on conflicting evidence we say that there is some danger that this contour type of mudguard is likely to fall off and create a hazard to oncoming traffic in other lanes. It is the respectful but honest position of the Attorney General that the major -- major stricken down by the District Court embodies and enacts a reasonable exercise of Illinois' police power over her highways and with respect to vehicles moving within her borders. The District Court's opinion does not, in the findings, do not make mention of the evidence which I believe I can say is undisputed in the record that a contour splash guard that is the type required by the Illinois law unlike a flap or apron type mudguard will throw debris down instead of out. There is a testimony in the record that the contour type of mudguard provided by the Illinois statute does cause debris to be thrown down. The evidence shows that to plan an appreciating vehicle is equipped with inadequate mudguards, those mudguards don't prevent debris from flying into the -- a windshield of a following vehicle and that the driver of the following vehicle tends to lose control of this car. It tends to go off the road and accidents ensue. Now, it's significant that counsel for the plaintiffs don't cite a single decision of this Court and our own research indicate that they can't cite a decision of this Court in which this Court has ever stricken down a state law fixing the requirements for vehicles traveling upon state constructed highways. I mean automotive vehicles. The three leading cases sustaining such regulation -- Potter Stewart: Mr. Wines, excuse me. Before you get to your -- William C. Wines: Yes. Potter Stewart: -- these cases going back to the facts, you referred to what evidence there was in the record -- William C. Wines: Yes. Potter Stewart: -- in support of your position that these contour type mudguards were superior to the flap type and -- William C. Wines: Yes. Potter Stewart: -- so on. The -- the District Court, the three-judge District Court made on an expressed finding, did it not, that it was conclusively shown that the contour of mudflap possesses no advantages over the conventional (Voice Overlap) -- William C. Wines: Yes, they did, Your Honor. They made such a finding. Potter Stewart: And in that connection, my question is this, I think I know the answer but perhaps -- perhaps not. Does Rule 52 (a) of the Federal Rules of Civil Procedure govern this kind of a case, three-judge District Court with a direct appeal here? William C. Wines: I think that Your Honor -- Potter Stewart: So far as findings of fact -- William C. Wines: I -- I think that Your Honors should take the District Court's findings of fact as being entitled to great weight but I don't think that they must be given conclusive validity -- Potter Stewart: Well -- William C. Wines: -- because if Your Honors find -- Potter Stewart: Excuse me. Go ahead. William C. Wines: -- find on the consideration of the entire record as we submit that you should, that there is an advantage to this mudguard then the legislative determination should prevail. This case is a little different, Your Honors from the ordinary case that comes to this Court with findings of fact because it also comes to this Court with at least implicit declarations of fact by a states legislature. Potter Stewart: Well, it's that difference that prompted my question. William C. Wines: Yes, Your Honor. Potter Stewart: The normal application of Rule 52 (a) as we both know is an appeal to the Court of Appeals from findings of fact to the dis -- of a single district judge where there are normally no implicit findings of a state legislative body involved and I wondered if for that reason or for any other reason inherit in the particular procedure involved here of a direct appeal to this Court from a three member District Court. There was any question as to the applicability of Rule 52 (a) which -- which forbids a reviewing court to set aside findings of fact unless they are clearly erroneous. William C. Wines: Well, I would like to answer Your Honor's question in this way if I may. What are called findings of fact in this case? In reality embodies -- embodiments of judgment as to reasonableness. There are no "who has the lighter questions" in this case of which I am aware. There is no question of the credibility of witnesses. I don't understand that anybody is accused of perjury. Potter Stewart: It's the evaluation of expert testimony, is it not? William C. Wines: Expert and lay testimony against the judgment of Illinois' general assembly. Now, the interesting area of focus prompted by Your Honor's suggestion is this as this Court has many times declared. It isn't enough that a measure be fairly debatable if it's within the arena of debate as to its reasonableness. It's a matter for the state legislature in the case of a state act or Congress in the act in case of a federal act. So that the real question is whether there is any basis on which the lower court must say that the Illinois legislature acted so unreasonably that there it will be stricken down and I think that that means that Rule 52 (a) does not have the same scope in this type of case that it would in -- say a suit for specific performance or a tax case or some case where there weren't a question of the reasonableness of a sovereign legislature. I don't want to minimize the District Court's findings of fact in this case. I didn't mean to -- the District Court did find that this measure is likely to cause accidents and that it imposes an unreasonable burden on interstate commerce. The loss -- these facts are undisputed. The law applies not only to tractor -- trucks but to trailers that are attest to tractors and many times a tractor will start out with one trailer and the trailer will be shifted around to another tractor just as freight cars are shunted from one line to another in interstate commerce so that there is -- there is no doubt to the burden imposed upon these trailers and trucks that come in a substantial one but our evidence shows, I think I can say without dispute, that this type of mudguard can be installed by a man having no previous experience in about an hour and it can be installed for about, I believe certain hours. Earl Warren: Do all your Illinois trucks -- are they equipped with these -- William C. Wines: There is an exception for trucks traveling holy within the municipality where there isn't the -- the danger but this is not to aim discriminatorily at interstate commerce. No, Your Honor. Yes, Illinois -- Illinois trucking industry, in general, is required to comply with this law and it has assailed the law as unreasonable in the Supreme Court of Illinois that's twice held that measured to be reasonable exercise of the police power and not violative of due process. Earl Warren: How long does it been in existence? William C. Wines: Well -- now, Your Honor, it was first passed in 1955. In 1957, it was amended in ways that aren't challenged by the plaintiffs or relied upon by the defendant. Generally, they ameliorate its provisions a little bit but both the 1955 and the 1957 version of the enactment have been sustained by the Supreme Court of Illinois as against the contention that it denies due process. Charles E. Whittaker: (Inaudible) William C. Wines: Yes, yes, Your Honor. Now, the cases that we cite are not numerous, we've cite these Court's pleading decisions in the field of the regulation of motor vehicles by state legislatures or other authorities. The first case on which we rely is South Carolina Highway Department against Barnwell Brothers in 303 United States. In that case, the District -- three-judge District Court held invalid the provisions of the South Carolina statute that prohibited the use on state highways of motor trucks and semi-trailer motor trucks whose width exceeds 90 inches and whose weight including loads exceeds 20,000 pounds. The District Court held that that was an unreasonable burden on the interstate commerce. This Court reversed. In Maurer against Hamilton, 309 U.S., this Court sustained a Pennsylvania regulation briefly summarized in the language of this Court as "prohibiting the operation over its highways of any more vehicles carrying any other vehicle over the head of the operator of such vehicle." This Court held that the measure was a reasonable exercise of the State's police power. And in the case of Sproles against Binford in 286 United States, this Court upheld as to interstate commerce, a provision of the motor vehicle of after Texas prohibiting the operation on any highway of a vehicle to define exceeding stated limitations of size or any vehicle not constructed or equipped as required and also the transportation of load exceeding the dimensions in which prescribed. We think the -- Speaker: Were there comparable findings in the Barnwell case for the District Court? William C. Wines: I would say they were, Your Honor. There -- there was a finding of unreasonableness. Speaker: Was there a finding of hazard? The Court here went almost -- almost to that extent, did it, saying that these were dangerous to (Voice Overlap) -- William C. Wines: Yes. Speaker: -- utilize on the highway. William C. Wines: Yes, I meant to call Your Honor's attention to that. I think I did in opening my statement that they said that these were likely to become detached and create hazard. Now -- Felix Frankfurter: May I ask you Mr. Wines. What witnesses gave rise to the District Court's finding? I mean what type of witness -- William C. Wines: Well -- Felix Frankfurter: Did you put to the States a -- a testimony of each witnesses (Inaudible) William C. Wines: We called a state -- Felix Frankfurter: Would you tell us, if you'd be good enough, tell us what witnesses were called to show that this is absolutely pointless? There's no remote justification to make these requirements. William C. Wines: Most of them, I would say, were interested persons in the trucking industry. Employees of the trucking companies and Illinois called a state policeman and a witness who has installed these mudguards. Felix Frankfurter: When -- when the plaintiff, the appellee for witnesses to show the ruthlessness of this (Inaudible) requirement if the State object in the testimony and it's irrelevant? William C. Wines: Yes, the assistant then handling the case made an objection. Felix Frankfurter: On what grounds? The finding of the enactment is conclusive? William C. Wines: The -- the assistant -- I didn't handle this case in the trial court, if Your Honor please. Felix Frankfurter: (Inaudible) a man may read the record. William C. Wines: And the -- the assistant who handle this case in the trial court took the position that the question of reasonableness was conclusively one for the legislature and not for the Court. Felix Frankfurter: And that must be your position here that -- William C. Wines: No. Felix Frankfurter: Isn't it? William C. Wines: No, it is not. We say -- Felix Frankfurter: If it's open -- if it's open to consider the relevance of the testimony, then we got this finding. William C. Wines: But we say, if Your Honor please, that when all of the testimony is considered and the pronouncements of the District Court are conceded, this Court should hold that the question is one or within the ambit of the discretionary power of the legislature of Illinois. Felix Frankfurter: Now, let me translate that. Does that mean that considering the weight of which the legislation is held, carried itself -- William C. Wines: Yes. Felix Frankfurter: -- the testimony of non-reasonableness or unreasonableness, creates into unimportant, is that it, the weight of the evidence? Or do you say that the party of the legislature is conclusive? I don't see why you don't turn to the issue that it's immaterial with a lot of witnesses said on the subject when the legislature is (Inaudible) William C. Wines: Well, we do that, Your Honor. We do say this that -- that the question is one for the legislature. And that there -- Felix Frankfurter: It's not in the realm of evidence, is that what you're saying? That really, it's not in the realm of ordinary (Inaudible) ordinary conscience in the Court. Do you say that? William C. Wines: That point is made. Felix Frankfurter: (Voice Overlap) should beyond the hypothesis of (Voice Overlap) -- William C. Wines: I know you -- I know you don't, Your Honor. That point is made in the record and in the brief, but we also say that if you do consider it, you should come to the conclusion that the matter is when we didn't -- the -- the discretion of the legislature. Felix Frankfurter: That is in terms of the rule, clearly erroneous finding, is that it? William C. Wines: That's right. Felix Frankfurter: Because to me there's a great deal of difference in saying that being the record as I call upon the judges, I conclude -- I must conclude the District Court have no business to (Inaudible) to place the scale the way it did or that I don't care what the evidence was the legislature of Illinois is controlling. William C. Wines: There is a great difference, Your Honor. It's one that I perceive of course but I say no matter which approach is used, we are to prevail. Felix Frankfurter: -- (Voice Overlap) on the first ground, you say the evidence is defined as clearly erroneous -- William C. Wines: Yes. Felix Frankfurter: -- in view of the evidence on the one hand and the strong presumption of (Voice Overlap) -- William C. Wines: Yes, that's right. That's right. Felix Frankfurter: (Inaudible) this is not clearly out of facts to justiciable controversy. William C. Wines: That's -- that's right. That's correct. Potter Stewart: Aren't you really, Mr. Wines, asking us to imply a -- by analogy Rule 52 (a) to the findings of the legislature that we shouldn't set them aside unless they're clearly erroneous -- William C. Wines: Well, I -- Potter Stewart: -- unless the evidence wasn't that clearly erroneous. William C. Wines: That is a -- that is a figurative way of expressing. It no doubt suggests the result that we're requesting but we don't maintain that the rule has any -- Potter Stewart: Not of -- not of its own terms (Voice Overlap) -- William C. Wines: -- any -- any application to the legislature. Potter Stewart: But you're asking us to apply that kind of a test. William C. Wines: That's right, Your Honor. That's correct, Your Honor. Potter Stewart: And unless the evidence before the District Court show that those findings were clearly erroneous why they should -- those legislative findings explicit and implicit should -- should prevail, is that your point? William C. Wines: That's right. Potter Stewart: One of your positions (Inaudible). William C. Wines: Now, if Your Honors please, the appellees are unable to cite any cases where this Court has invalidated a state law or regulation applying to trucks or motor vehicles moving on highways constructed by the State at its expense. Their chief reliance is on the Southern Pacific Railroad Company case in which Your Honors did invalidate a car -- a requirement limiting the length of freight trains. We say that that case is distinguishable on many grounds for one thing after the violation of the statute by the railroad. The Interstate Commerce Commission had promulgated a regulation invalidating all such state statutes and while this Court was careful to point out that the regulation didn't apply because it wasn't enforced at the time of the violation. It was highly persuasive. In the second place, it wasn't a highway that the State had built in its own expense and we say that if railroad cases are to be invoked, far more nearly in point is the terminal railroad case against the Brotherhood of Railroad Trainmen in which this Court by unanimous opinion held valid a regulation of the Illinois Commerce Commission requiring the railroad to put cabooses on trains although these cabooses moved over to Mississippi River over bridges, the ids and other bridges in the Mississippi River and there was no practically feasible method of detaching the caboose at the margins of the State so that the effect of the order was to require them to translate -- to transport the cabooses into the City of St. Louis and from the City of St. Louis back into Illinois and this Court unanimously held that that was not an unreasonable burden on interstate commerce. Now, if the Court please, we say that the matter was one for the judgment of the legislature unless there was clear demonstration that the legislatures -- a determination was so errantly unreasonable. Felix Frankfurter: But not on that point, Mr. Wines, whether it does or doesn't burden commerce for the legislature of Illinois with all might, can affect the wisdom and (Inaudible) William C. Wines: I beg Your Honor's pardon? Felix Frankfurter: I say that the determination by the state legislature of Illinois that this does not burden commerce. That certainly doesn't carry the weight, if it carried any weight, the determination of a particular construction is necessary to say. Are you suggesting that -- that's slightly a question of whether this is a desirable gadget or whatever you call it? William C. Wines: No, Your Honor. Felix Frankfurter: The burden problem, I don't know if that comes with any particular validity or legitimacy because Illinois passed the statute. William C. Wines: Well, this Court has -- Felix Frankfurter: (Voice Overlap) on the way of meeting things in the end. William C. Wines: There is. I -- I've already conceded that the burden on interstate commerce in this case is a substantial one. It would -- Felix Frankfurter: Then -- then what is with the Southern Pacific? William C. Wines: We say that the legislative determination that the safety, the preservation of life embodies -- and property on Illinois highways, embodies a reasonable exercise of the police power and does not unduly burden interstate commerce. Felix Frankfurter: (Inaudible) I can go with you when you say what Illinois judges are necessary to the safety within its border that whether the burden of -- of its judgment, are -- to my point of view, is sufficient or remote (Inaudible) measured. I don't think you can also make it carry that thereby, it shows that it is in commerce (Inaudible), isn't that answer a little more than -- William C. Wines: I was going to come to the point that the appellants make. They say that if there is to be regulation of the type of mudguards to be use on trucks, it should be uniform and should be either enacted directly by Congress or Congress should authorize a promulgation of regulations by the Interstate Commerce Commission or some of the commission. We say that in this case, until Congress acts, the States may require reasonable equipment. Now there is in this case a matter of the Arkansas regulation. There was no evidence, whatever introduced, to show the reason for the Arkansas regulation which requires a flap type of mudguard and if it's necessary to comply with different types of mudguards and different types -- in different States that compliance can be affected at the States' borders. It's a respectful submission of the Attorney General of Illinois that the District Court erred in striking down this Act with respect to interstate commerce. Potter Stewart: Does the record show, Mr. Wines that -- that this Illinois type mudguard would conform to the laws of all the States except Arkansas? William C. Wines: I would say so far as -- I would -- I say it's assumed -- it was assumed by the District Court that it would. I don't think there is a detailed check of every regulation in every state. But the case has been argued on -- all the way through on the assumption that -- that it would. Potter Stewart: That it would and also on the further assumption that it would violate the regulation of Arkansas. William C. Wines: That's right. Potter Stewart: Is that it? William C. Wines: Yes. Potter Stewart: And -- William C. Wines: I'd like to reserve my time to reply. Felix Frankfurter: What did you say was the difference between the Southern Pacific -- William C. Wines: I say this in the first place. The Southern Pacific case was not dealing with roads built by a state. Felix Frankfurter: Did Illinois get no contribution from the federal government? William C. Wines: Oh, I think we do but we build those roads ourselves and primarily we say -- a state has greater power over their own roads than she does over railroads. Felix Frankfurter: In the -- in the -- what was it? Equality against somebody. Justice Brandeis made an important point as I recall it -- drew an important point when the very considerable appropriations of federal moneys to state built road. When you say, you fill in yourselves, does that mean you pay for them yourselves in order to (Voice Overlap) -- William C. Wines: Not entirely, no. Felix Frankfurter: (Inaudible) charged them?(Voice Overlap) -- William C. Wines: We have charged them and we -- and we design them. We -- Felix Frankfurter: (Voice Overlap) -- William C. Wines: -- we construct them. Felix Frankfurter: -- federal road. I mean federally completed road, does it? William C. Wines: That's right. Felix Frankfurter: So what's -- what's the point of that argument? William C. Wines: We say that when the state builds a street or a road -- Felix Frankfurter: But the State only (Inaudible) William C. Wines: Well, we say partly -- we say it builds it with partly state funds and partly federal funds that adheres more control over that highway than it does over a railroad that is subject to the jurisdiction of the Interstate Commerce Commission. Felix Frankfurter: That means that it could burden interstate commerce although it couldn't burden it if it didn't pay -- William C. Wines: No. It can -- Felix Frankfurter: (Inaudible) William C. Wines: There's -- there's a reasonable -- it can impose any burden on either a railroad or a public highway that is not unreasonable but the test of reasonableness is not the same with respect of the two types of highways. Felix Frankfurter: If that's unreasonable then you don't need to rely on that argument (Inaudible) on that argument. If it's not unreasonable then it comes within what we call the state police power. William C. Wines: I don't quite think -- I think the test of reasonableness is different, Your Honor. Felix Frankfurter: If it hardly puts up the money then it's going to be more unreasonable? William C. Wines: I think so. William O. Douglas: Has the Interstate Commerce Commission have any regulations? William C. Wines: No, no. If -- if there were any, they would displace -- William O. Douglas: I know but -- have non-regulating this -- the equipment of interstate trucks? William C. Wines: No, no. William O. Douglas: I suppose they all have interstate licenses or -- William C. Wines: Well, they -- they have licenses for revenue, yes. William O. Douglas: Under the Motor Carrier Act? William C. Wines: Yes. All of these plaintiffs operate under the Motor Carrier Act which has not -- and there are -- there are no regulations. William O. Douglas: But could do ICC tomorrow formulate regulation? Or does it require legislation? William C. Wines: I'm inclined to -- I don't know, Your Honor. To tell -- to tell you the truth, I don't know. And I'm inclined to think they could. Felix Frankfurter: They could. William C. Wines: I'm inclined to think so. Felix Frankfurter: Well, I didn't say it didn't apply (Inaudible) William C. Wines: We don't think so. We discussed that in our brief and the only cases that have reached this Court where that argument has been made as to motor trucks have not sustained. I'd like to reserve some time for reply. Earl Warren: Mr. Axelrod. David Axelrod: May it please the Court. Illinois and 25 other States in regard to this subject matter, prior to 1955 and beginning with 1955 covered the field of this particular kind of equipment with what is known as a straight mudflap requirement. In 1955, Illinois, for the first time, changed its mudflap requirement to that of a contour type of mudflap requirement. Illinois today is the only State in the union which stands out with a contour type mudflap requirement. The States adjoining Illinois today including Illinois, India -- including Indiana, Missouri, Kentucky and Iowa have no mudflap requirements whatsoever. The State of Wisconsin adjoining Illinois on the North had a mudflap requirement and it is of the so-called straight or conventional type which was enacted by 25 other States in 1951. The balance of the States, including the District of Columbia, has no kind of mudflap requirement whatsoever. Well, that's therefore with the position that States surrounding Illinois except Wisconsin have no requirement whatsoever. Wisconsin has the straight mudflap. Illinois for the first time in 1955 and subsequently in 1957 developed the specific kind of mudflap called the contour kind. The -- Potter Stewart: What does Arkansas have on your -- David Axelrod: Arkansas has the straight mudflap requirement which was a regulation passed by the Arkansas Commission in 1957 and which resulted in connection with this particular case with an arrest by Illinois of a vehicle carrying the contour -- carrying the straight mudflap requirement of Arkansas into Illinois. That is an Arkansas equipped vehicle with a straight mudflap which was the requirement for Arkansas was arrested in Illinois because it didn't have the contour. Conversely, had an Illinois contour flap vehicle come to Arkansas under the Arkansas statute, it would have been illegal in the State of Arkansas and so we have a clear conflict of the Arkansas and Illinois requirements in this respect. William J. Brennan, Jr.: Well, does the Arkansas requirement differ from the requirement of the 25 States you mentioned? David Axelrod: The Arkansas requirement is the same as all other States. Illinois standing alone in this contour feature. William J. Brennan, Jr.: Well, what I'm -- do I -- am I to infer to suggest that the same thing might happen that a truck using -- David Axelrod: The same thing might happen -- William J. Brennan, Jr.: -- using an Illinois contour guard might run a foul to the laws of 25 States -- David Axelrod: Exactly, Mr. Justice Brennan. This crazy quote pattern could develop in all 48 States. Potter Stewart: Well, as of now -- excuse me. David Axelrod: Yes. Potter Stewart: Just -- you clarify me if I'm mistaken. As of now, it's true, is it not that Arkansas alone among the 25 straight mudflap States has an interpretative regulation of some kind expressly holding this Illinois type not in conformity with Arkansas law. David Axelrod: That is correct. Potter Stewart: So far it appears, this special contour Illinois type, would be not violative of the other 24 States which simply proscribe a mudflap, is that true as -- David Axelrod: That would be correct. Potter Stewart: -- as of now (Voice Overlap) -- David Axelrod: That would be correct. That would be correct, yes. Except with the possible exception of two States of Idaho and Oregon which have a little bit of a question mark in the record there as to whether or not their statute prescribed what they call a fender guard. Now there's a little bit of a haze in the record on that question. We feel that perhaps the answer would be that the Illinois contour might not pass the fender guard requirement of Idaho and Oregon but I won't put a positive yes to that -- for that question, Your Honor. William J. Brennan, Jr.: (Inaudible) if it's wrong for Illinois to prescribe the contour, why is it also wrong for Arkansas to prescribe straight -- David Axelrod: I'm not suggesting that Arkansas is right. I'm suggesting that the problem created by the fact that Illinois has taken upon itself to require a particular piece of equipment with such specificness that nothing else can be used in connection with this particular purpose by a state, presents to this Court the question of conflict as between Arkansas and Illinois which now arises in this record and which can and will arise under any subsequent holding by this Court if this Court should hold the Illinois statute a valid one. We say that this focuses the question of conflict and we say that we're in an area where uniformity is required or else there'd be no regulation as it stands today. And a question was asked to Mr. Wines a few minutes ago with respect to the position of the ICC on this subject matter. The ICC does have the power to prescribe a uniform mudflap if it wants to in my opinion. However, it did enter upon an investigation of the subject matter for the purpose of determining whether or not such should be done. And in its report, in 54 M.C.C. 337 indicated as follows, “The proposed rule on wheel flaps has been eliminated after a study of further evidence which has been submitted". Now they dealt with whether or not there was a need for a mudflap or a wheel flap and did so and decided that from the standpoint of the ICC, there was no need for such a requirement. Felix Frankfurter: What's that (Inaudible) David Axelrod: Justice Frankfurter, I don't have at the moment. I believe it was 1952. I think it was April 1952. Potter Stewart: Is there any indication of what evidence was submitted? It occurs to me only the part of the evidence submitted was the fact that 25 States had acted in this area. David Axelrod: There is no indication in the ICC report as to what evidence was submitted. Potter Stewart: -- (Voice Overlap) ICC that was -- that was doing the job. David Axelrod: I beg your pardon. Potter Stewart: And it may speculatively had been the (Voice Overlap) -- David Axelrod: That's our position. Potter Stewart: -- to the (Voice Overlap) -- David Axelrod: That is our position. Potter Stewart: -- that the States were doing the job (Voice Overlap) -- David Axelrod: That is our position. And we say further in this particular respect that we're not arguing here with the right of the State to pass some safety legislation. We say that there is a place for state safety legislation but we say that the State can go too far in its attempt to state safety regulation and where it goes too far and burdens as Mr. Wines very agreeably concedes this does and then the state statute must fall. That's our position in this -- in this case exactly. Potter Stewart: Well, I still have difficulty with the -- well, I consider the very penetrating question that Mr. Justice Brennan asked you, certainly there is a conflict between Arkansas and Illinois. But -- I suppose nobody would suggest that this Court is qualified, there is all the conflict as to which has a better mudflap. David Axelrod: We're not asking this Court to resolve that conflict. We're asking this Court to strike down an Illinois statute which creates a conflict. And we say that it is the -- Potter Stewart: Well, it doesn't -- isn't it equally -- the Arkansas statute creates the conflict? David Axelrod: No, it's the Illinois statute which creates the conflict because the Illinois statute undertakes with specificity to describe only a particular kind of a piece of equipment that can be used. And in Kelly versus Washington, this Court held that where a state attempted to design specifically the structure of a tug or a vessel that it went too far because if Washington could do it, California could do it, Oregon could do it and the result would be the burden on interstate commerce which we say is the only issue on this proceeding. Felix Frankfurter: Does Arkansas give leeway or does much to conform -- David Axelrod: Arkansas gives no leeway, Mr. Justice Frankfurter and I have -- Felix Frankfurter: -- (Voice Overlap) coming in with an automobile not having these flaps -- David Axelrod: Arkansas -- Felix Frankfurter: -- (Voice Overlap) Arkansas would be in the same token. David Axelrod: Arkansas gives no leeway. As a matter of fact, Arkansas is specific in requiring the straight mudflap as Illinois is in requiring the contour mudflap. So we -- we present the conflict question just squarely as it can be. William J. Brennan, Jr.: Well, Mr. Axelrod (Voice Overlap) -- David Axelrod: I beg your pardon. William J. Brennan, Jr.: What concerns me is I think you relied, don't you, on your brief as I recall it as you have, I gather already in your argument on what's been done in 25 other States as demonstrating, am I -- David Axelrod: We do not -- William J. Brennan, Jr.: -- wrong about this? David Axelrod: We do not. We do not rely on that. I'm pointing that out simply as his -- history or as background. I do not rely on it. David Axelrod: We rely -- William J. Brennan, Jr.: We can -- we can forget what 25 States and Arkansas have done. David Axelrod: You can to the extent of this decision and of this proceeding. Yes, Your Honor, you can. I was pointing it out by way of historical background and information to the Court. William J. Brennan, Jr.: And -- and -- David Axelrod: And it's in our complaint. William J. Brennan, Jr.: You suggest that -- you suggest that based on the concession that Mr. Wines has made, namely, that this is a serious burden on interstate commerce. Is that sufficient for us to affirm the lower courts? David Axelrod: Yes, I do based upon the concession that this represent and undue an unreasonable burden and based upon the findings of fact by the three-judge court which go even further than representing it to be undue and -- and obstructive. As a matter of fact, the three-judge court and its opinion -- Earl Warren: Mr. Axelrod, did -- did Mr. Wines concede that it was an undue burden on interstate commerce? David Axelrod: I -- I -- Earl Warren: -- (Voice Overlap) what he said was -- Speaker: Heavy burden. Earl Warren: -- a rather heavy burden. David Axelrod: Well, I don't know what is the differences between undue or heavy but if he hasn't conceded it to be undue, it's our position here that this statute on -- is an undue burden and it is obstructive of interstate commerce. As a matter of fact, the three-judge court found it to be an insurmountable burden and found that the statute not only obstructed commerce but as between Arkansas and Illinois obliterated commerce. Now, you can't go much further than that from the standpoint of indicating the undue burden or the obstruction to commerce then -- the District Court in our case. But in -- Hugo L. Black: How is this mudflap -- how was this mudflap passed it on the government? David Axelrod: Well, the mudflap, the contour mudflap is -- Hugo L. Black: The what? David Axelrod: -- the contour -- the contour, the Illinois contour mudflap. Hugo L. Black: Is that a special brand or just -- David Axelrod: It's a special brand, Your Honor. It's a special brand of mudflap. Hugo L. Black: Manufactured by one company? David Axelrod: By several companies ostensively, but -- Hugo L. Black: What is the other? Is it a special brand too? David Axelrod: The other is not a special brand. The other is what we call a straight or a conventional mudflap which is manufactured by any number of companies. Hugo L. Black: How was it put on? David Axelrod: The contour mudflap has to be welded to the trailer and -- Hugo L. Black: You mean that's the -- David Axelrod: This is the Illinois statute. Hugo L. Black: Illinois. David Axelrod: The Illinois mudflap has to be welded to a trailer. And one of our problems in this case and we showed it in the evidence was that as suggested by Mr. Wines, the trailer is ought to be stop to the state line according to the State and the contour mudflap ought to be put on because of the Illinois requirement. We point out in the evidence that because this contour mudflap has to be welded under the trailer and because we with our trailers are carrying explosives for example in interstate commerce that it's a physical impossibility and would be contrary to the explosive rules and regulations for anyone to touch that trailer by a welding process and that the difficulty was not just that but it was a question of danger and safety. So we have instead of an attempt that safety feature to the contour flap, we have unsafe advantages that would -- would be created by this very kind of mechanism. As a matter of fact, the three-judge court opinion in our case repeatedly points out that not only does this appliance have no safety value to it at all over and above the straight mudflap which is what every one of these vehicles now carry and which is the kind that is good in all of the States. But as a matter of fact, it is shown that this introduce new hazards on the highway, create new dangers. And these are specific findings of fact which are contained in a three-judge court opinion accompanied by its findings of fact. Hugo L. Black: Have you cited in your brief the authority of the interstate commerce? Where -- where is it? David Axelrod: The authority of -- Hugo L. Black: -- (Voice Overlap) authority that they have to regulate it. David Axelrod: The authority of Interstate Commerce Commission, Mr. Justice Black is in Section 204 of the Interstate Commerce Act. It is not cited in our brief. However, the reference to Section 204 in the Interstate Commerce Act is disclosed in connection with this Court's decision in Maurer versus Hamilton where the question there and Mr. Wines adverts to Maurer versus Hamilton, the question there and the State relies on Maurer versus Hamilton was whether or not the State of Pennsylvania there have the right to prescribe a prohibition against the carrying of a passenger car in a trailer over the cab of the driver. And this Court held in that case, the State did have the right in that instance to enact such legislation on the specific ground that the question of weight and width of a motor vehicle was a question which was specifically reserved unto the State by Section 225 of the Interstate Commerce Act and this is the basis and this is the justification for this Court's holding in Maurer versus Hamilton that the problem of road regulation was one which is peculiarly within the province of a state because there in Maurer versus Hamilton the State was dealing with a local condition, a local problem. But more than that in Maurer versus Hamilton, if that wasn't enough, and I think it was enough to point out in that case that here was a specific reservations of the State. In Maurer versus Hamilton, there was a very, very extensive record, an extensive record with respect to the need for that kind of safety in the State of Pennsylvania. There is no, no testimony in our case with respect to the need for this kind of contour mudflap within the State of Illinois. Felix Frankfurter: I have -- I have Justice Black's curiosity of wanting to hear or see with my eyes the exact substantive power granted to the Commission which it could exercise tomorrow or next week and which it has withheld exercises as against Maurer against Hamilton where there was an expressed reservation to deal with this subject matter in the State. David Axelrod: Mr. Justice Frankfurter, I have the -- I have with me the -- Felix Frankfurter: You probably have it in your mind, what is it? David Axelrod: Well, it's the -- it's the reference of Section -- Felix Frankfurter: Yes, you gave me Section 2 but what's the (Inaudible) What does it say? David Axelrod: Section 225 of the ICC Act allows the Interstate Commerce Commission to investigate into the matter of the need for sizes and weights of motor vehicles and to report back that need to the Congress. And it gives no authority to prescribe any state regulations with respect -- it gives no authority to the ICC to prescribe any regulation covering sizes and weights. In other words, Section 225 says that the Commission may investigate and shall investigate -- Felix Frankfurter: -- (Voice Overlap) state. David Axelrod: I beg your pardon? Felix Frankfurter: It was left with the State. David Axelrod: Exactly. Felix Frankfurter: That was the basis of our decision. David Axelrod: That is correct. Felix Frankfurter: Now, what I want to know is here. You indicated that the State -- that the ICC does have power to make a uniform provisions for the country. What is the basis? David Axelrod: The basis of that is Section 204 of the Interstate Commerce Act which allows the Commission to establish reasonable regulations with respect to safety of operation and equipment. And that's the quote from Section 204. Now, under that Section, the ICC here, regulated with respect to the number of lights on vehicles, regulated with respect to the kind of -- regulated with respect to breaks on vehicles but they don't say what kind of a break shall be put on it. It doesn't say it shall be one kind of break versus another kind. They say a break for the purpose of accomplishing a breaking purpose. That is for the purpose of being able to stop the vehicle. In this case, our position is that the Illinois legislature went too far because they told us what kind of a contour flap we were required to have on our vehicles and they run contrary to the position of this Court in Kelley versus Washington and they developed this question of conflict and they developed as a result of this question of undue burden on interstate commerce. Felix Frankfurter: I supposed the record have showed that the casualty on your Illinois road was three times as high as the casualty on comfortable roads leading in and out of great metropolitan center. And that on the basis of such experience non-action by the ICC, the Illinois legislature then made a provision and the casualties were due to whatever specific or dominant cause. And the legislature then made a mandatory -- mandatory enactment requiring certain safeguards which in the fair judgment of the legislature would reduce that carnage. No other state had it. The Interstate Commerce Commission hasn't enacted. I take your word that it could. What would you say to that situation? David Axelrod: I would say that if that was the record in our case, we might be in trouble before this Court. I say, however, that that is not the record in this case and that's where this case is deficient from the standpoint of a record with respect to the contention of the State. Now, in this case the only testimony which the State put in was the fact, number one, that Illinois was a wet weather state, number two, that this contour guard precluded some splash or spray. We attempt to indicate in our testimony and we did and the District Court found that the splash and spray prevented by the contour guard was not defective as the splash and spray which we were able to cope with on the basis of our straight or conventional guards. The State took the position that that was not an issue because -- Felix Frankfurter: Are you arguing this that there -- there must be -- since commerce is -- is involved concededly. This affects trucks coming in and out of the State if the commerce is involved that in order to counteract (Inaudible) burden, meaning doing something you have to do before Illinois requires it while surrounding States don't or may not. In order to counteract burden, I'm not talking due or undue, you show that the State has a localize interest in the protection of its life of the safeguarding of living which overbears whatever maybe the consequences either of inconvenience of a cause upon -- upon the commerce. David Axelrod: Well, this Court has in this area resolved the questions on the basis of way and resolving the conflict as between the State and the national interest. And for example in the case of Terminal Railroad Association -- Terminal Railroad Association versus the Brotherhood which is the caboose case which Mr. Wines relies upon as being his case. This Court pointed out that in the caboose case there, there was no evidence with respect to cause in the record there as to how it would affect or burden interstate commerce. And so in the Terminal Railroad Association case, this Court because there. The burden question was not carried by the attackers of the law. This Court has found the law was good based upon the affirmative position and evidence of the State. The same was true with respect to Barnwell -- in the Barnwell case. Again, South Carolina prescribed the weight and length limits of South Carolina. And this Court found there that was an extensive record developed as to the need for the regulations in South Carolina because, there, South Carolina had cope with the problem and earlier had prescribed higher weight loss and found they were unsafe but that isn't this case. In our case, not only do we have no finding that the con -- that the straight mudflap which we now have and which we use is unsafe or not safe but we have a contrary finding that the contour mudflap is more dangerous than the straight conventional mudflap which we use and which we require and which would be reinstated if the contour mudflap law was not doubt because -- Potter Stewart: Do you think -- you think this Court is as bound by those findings of the three-judge District Court as would be a -- a Court of Appeals by findings of a single district judge and an ordinary contract to tort action under Rule 52 (a) of the federal rule? David Axelrod: I think so because I don't think this is a question where we do anything except to allow the State to legislate in an area. I think that there is a presumption of validity so to speak that goes with a state statute at the outset. But that presumption of validity wouldn't involve a specific -- a specific findings of facts such as we have in this case and the presumption of validity of the state statute, I think here is dissipated immediately when it runs smack into the principle of the Commerce Clause because I think Commerce Clause is a hurdle which any state statute must overcome before it can be declared good and where an attack is made on such a state statute under the Commerce Clause and where we have demonstrated -- William J. Brennan, Jr.: Now, where does the burden lie? David Axelrod: I beg your pardon? William J. Brennan, Jr.: Where does the burden lie? You have to prove the burden as the State have to prove its reason? David Axelrod: It would appear that both facts ought to be proved in this respect. I think that the first inquiry when one of these statutes is assailed is whether or not the statute contributes to safety. If it does contribute to safety, then I think there's a second question to be decided, whether or not the State has gone too far and in its safety program has run contrary to the burden clause. Now with respect to burden, I think it would be the obligation of the plaintiffs attacking the law such as we to show burden and I think we have demonstratively proved the question of undue burden in this case. We -- we've done I think much greater with all due respect than in Southern Pacific versus Arizona and much greater than in Morgan versus Virginia upon which we rely also. But even if we didn't prove our burden and I think we have, I think the State lawfully failed to prove what it should have proved namely that there was some safety need for this kind of an appliance. Potter Stewart: Well -- David Axelrod: That is -- Potter Stewart: -- excuse me. David Axelrod: -- completely lacking here. Potter Stewart: It's lacking because the State took the position of the District Court, did it not, that this was all irrelevant to the -- David Axelrod: That's correct. Potter Stewart: -- legislative findings were conclusive or at least -- or at least presumptively reasonable? David Axelrod: Well, the State -- Potter Stewart: And -- David Axelrod: -- took the position in the trial of the case, Mr. Justice Stewart, that it didn't make any difference because it was simply a question of legislative judgment and they took the position actually that all of this was irrelevant that so long as Illinois spoke that was sanctity. Felix Frankfurter: Suppose -- Potter Stewart: Result -- Speaker: Excuse me? Felix Frankfurter: Pardon me. Potter Stewart: As a result, the -- the State elected not really to put in a case on that issue, isn't that right? David Axelrod: I think that's right. Potter Stewart: And wouldn't -- would it follow from that that -- that we agreed with you as to what the State should have done and that we scream at it to the District Court? David Axelrod: No, I don't think so. I don't think so. I think that two things happened here. First, that we carried our burden of showing that this unduly burdened interstate commerce. But in addition to that I think the State fell down in its burden so to speak of attempting to show that this was a safety piece of equipment. William O. Douglas: What findings has the Commissioner -- Commission may deploy equipment (Voice Overlap) -- Speaker: 204. David Axelrod: With respect to 204 equipment, they have required certain lights. For example, they have specified that the vehicle should carry breaks which shall be -- which shall be of breaking qualities and there are a whole series of requirements with respect to that time, Mr. Justice Douglas. I have those here and I can -- William O. Douglas: I don't see them -- that it's cited your brief. David Axelrod: They are not, sir. They are not, Your Honor. William O. Douglas: Could you give us those citations? David Axelrod: Yes, I do have them. I -- I'm only -- at the moment, I -- Earl Warren: Would you submit them to us for the morning -- David Axelrod: Yes, I'll be very happy. Felix Frankfurter: May I ask you this question? Suppose this statute had been restricted, have been confined by Illinois to trucks doing exclusively local business, what would be your position? David Axelrod: Intrastate? Felix Frankfurter: Intrastate. David Axelrod: We wouldn't be here, Your Honor. Felix Frankfurter: You wouldn't be here. David Axelrod: We wouldn't be here because all of these carriers are exclusively interstate carrier. Felix Frankfurter: I understand they are. But -- but would that be on the basis that then the determination through the enactment of the legislation is -- by the legislatives conclusive as to its safety relevance? David Axelrod: That would be the case because there, the -- then the question would then be one of due process under the state constitution. This is not -- Felix Frankfurter: Well, on the federal -- suppose the State -- David Axelrod: And -- and the Federal Constitution. Felix Frankfurter: Suppose the state legislatures said they should -- they should have a rather fancy balloons floating in front -- David Axelrod: [Laughs] Felix Frankfurter: -- you'll be here to say that that has no relation to anything, wouldn't you? David Axelrod: The answer of that question, if I may, would be simply this. The State Supreme Court of Illinois has in the two cases, Warren and Rudolph versus Bibb, held the statute under the state due process question and under the federal due process question to be a reasonable exercise of state police power. But this is not our question here. Felix Frankfurter: As to local -- as to intrastate business. David Axelrod: That is -- that is correct. Felix Frankfurter: And you say that as to that, howsoever, find of the judgment of the legislature maybe on that question, when it comes to its effect upon -- into the national interest, it can't be valued. David Axelrod: That's correct. Earl Warren: We'll recess now.

Warren E. Burger: -- in number 71-237, Mancusi against Stubbs. Mrs. Marcus, we'll pause for a moment until Mr. Carpenter gets settled. Mrs. Marcus. Maria L. Marcus: Mr. Chief Justice and may it please the Court. This habeas corpus proceeding presents the question of whether New York is prohibited from using a 1964 Tennessee murder conviction as a predicate for increased punishment. This Tennessee conviction resulted from a retrial where the prior recorded testimony of a witness was read into the record because the witness had since moved to Sweden. To state briefly the history of the Tennessee and New York proceedings, the crime of which respondent Stubbs was convicted was a 1954 murder of Mrs. Alex Holm. Stubbs met Mr. and Mrs. Holm, an elderly Swedish couple who were strangers to him at a road side picnic table. He kidnapped them at gunpoint and ultimately murdered Mrs. Holm and seriously wounded her husband. At Stubbs' 1954 trial, defendant was represented by three appointed counsel. Alex Holm testified as did Stubbs himself and Stubbs was convicted of first degree murder, kidnapping and assault with intent to murder. Nine years later, Stubbs moved for a writ of habeas corpus in the District Court in Tennessee asking that his conviction be vacated on the grounds that his attorneys were appointed three days before trial. The District Court under a former Circuit Court rule, which required automatic reversal in cases of tardy appointment of counsel, vacated Stubbs' first trial and remanded him for possible retrial. At the second trial in 1964, the prosecutor sent a subpoena to Alex Holm's former address, a farm in in Texas, which was returned unsigned and he also contacted Holm's son, who advised the court that his father was now a permanent resident of Sweden. His son took the stand and so testified. The prior testimony of Holm was then read into the record over objections by counsel. Stubbs was among the witnesses who testified. He was convicted of first degree murder. The conviction was appealed to the Supreme Court of Tennessee and affirmed. After his release from the Tennessee prison, he went to Monroe County, New York, where he was arrested and convicted for first degree assault and possession of a firearm. Based upon the predicate of the Tennessee conviction, his sentence as second felony offender was 32-34 years. Warren E. Burger: How long did he serve in -- on the first sentence? Maria L. Marcus: Well, when he appealed his conviction to the Tennessee Supreme Court, they gave him credit for the 10-year period between trials and apparently he served only about two more years and it's not explained exactly why he was paroled at that point but that's apparently what happened. A petition for writ of habeas corpus challenging both convictions was filed in United States District Court for the western district of New York, which denied the petition. The Second Circuit, which had granted a certificate of probable cause solely on the grounds of the validity of the Tennessee conviction reverse the District Court. The Court below held that respondent had been deprived of his right of confrontation at the Tennessee retrial because due diligence had not been exercised to obtain the presence of the absent witness before the testimony of Alex Holm was read into the record and because counsel of the first trial had been tardily appointed and had not questioned Holm about whether after Stubbs had kidnapped the Holms at gunpoint, they had made him welcome as their Guest. This absence of questioning on the Guest theory; the majority held it could not be harmless error. The dissenting judge Leonard P. Moore called the majority decision an extraordinary example of justice dispensed by the federal courts. We urge reversal of the decision below on three grounds. First, that there was no lack of due diligence in obtaining presence of the witness. Second, that even assuming that due diligence was not exercised, the error in this case would have been harmless. And third, the tardy appointment of counsel at the first trial did not in fact, deprive respondent Stubbs of effective legal assistance. Barber versus Page was not violated by the use of testimony of the witness permanently domiciled in a foreign continent. This Court in Barber versus Page, ruled that a good faith effort must be made to have a witness present, prior to reading his testimony into the record at another trial. William J. Brennan, Jr.: Does it appear Mrs. Marcus whether any offer was made to pay the expense? Maria L. Marcus: Nothing in the record to indicate that. Of course, this was not only before this Court decided Barber, but even before this Court decided Pointer. However, it should be pointed out that it would have been greatly to the prosecutor's advantage to have this witness at the trial, simply because he was a victim to a very, very tragic circumstance; his wife had been murdered, he himself, was shot twice in the face, and of course the sympathetic effect of such testimony in the jury, would have been much greater than simply -- William J. Brennan, Jr.: What was the purpose of the Guest defense that it was not a felony murder? Maria L. Marcus: Yes, I think that's why the Court below seized on that. William J. Brennan, Jr.: Was he convicted of a felony murder or of a --? Maria L. Marcus: He was convicted of first degree murder. The judge charged both felony murder and common law murder. William J. Brennan, Jr.: So he may have been convicted under premeditated? Maria L. Marcus: Yes. William J. Brennan, Jr.: And what's the significant side of the Guest? Maria L. Marcus: Apparently, the Court below felt that since Stubbs himself testified to the ownership of the gun and the fact that he kidnapped the Holms and compelled them to drive to the spot where the shooting occurred, but he said that -- William J. Brennan, Jr.: But would the evidence have supported that the Tennessee Supreme Court said, the evidence that it didn't support a first degree common law premeditative? Maria L. Marcus: Oh, yes. William J. Brennan, Jr.: It did! Maria L. Marcus: Yes. William J. Brennan, Jr.: Well, then this -- you are arguing harmless error -- Guest in an event? Maria L. Marcus: Alright, we are arguing at any event that as far as harmless error is concerned that the Guest theory has no relation, because in fact for two reasons. First of all, in respect to the exercise of due diligence, 1964 counsel didn't indicate that if the witness had been there, they would have asked him any questions about the Guest theory at all. Second, the Guest theory was completely refuted by the record because -- William J. Brennan, Jr.: You said, he took the stand in the – in which the first or second trial? Maria L. Marcus: He took the stand in the first trial. William J. Brennan, Jr.: Did he -- does testimony indicate that he was a Guest? Maria L. Marcus: -- quite the contrary. What Holm was asked on rebuttal by the prosecutor, did relations ever become friendly between you and your kidnapper and he replied, “No sir, there was no friendly relation” so that the Court erroneously assumed that there was -- William J. Brennan, Jr.: In the cross examination of Stubbs? Maria L. Marcus: That no, this was -- and now I am speaking of Alex Holm, he made this reply. There was a -- William J. Brennan, Jr.: Well no, when Stubbs took the stand that he offered testimony, from which a Guest -- Maria L. Marcus: The testimony that he offered was that Mrs. Holm, when he was pointing the pistol in her face, asked him to put the pistol down, and that she would give him no trouble and I think there was an attempt by 1954 counsel to say that this was an expression of friendship. Thurgood Marshall: Mrs. Marcus -- Warren E. Burger: The subject of possible friendship was at least hinted at in the first trial? Maria L. Marcus: It was hinted at by virtue of his saying, they told me they would give me no trouble. Thurgood Marshall: Mrs. Marcus let me back up a minute. The first conviction was offset because of ineffective counsel? Maria L. Marcus: It was not any finding that on a record counsel was ineffective but because of a rule mandating automatic reversal in cases where counsel was tardily appointed. Now -- Thurgood Marshall: Don't you think that's different from the average case, because I would assume that if counsel had more time, he might have been able to ask more questions on cross-examination. Maria L. Marcus: In this case, in the first place the record shows that the cross-examination was capably handled as was the direct examination. Also, as the Tennessee Supreme Court pointed out, it's very difficult to -- Thurgood Marshall: Did the Court of Appeals find that to be true? Maria L. Marcus: The Court of Appeals, it made no reference whatsoever to lack of preparation time or the kind of questions that could have been asked except for the Guest theory. That was the only basis on which harmless error was rejected, but not only does the record show, that Stubbs was effectively represented by three counsel by the way, not only one. Thurgood Marshall: But if I remember correctly in Scottsboro (ph) trial, they had 27 counsels, and this Court offset that, so the number doesn't help? Maria L. Marcus: I think the record helps a great deal though because in reading it's clear that -- in fact, I think what makes it clear again -- Thurgood Marshall: You see I have great difficulty in looking at the record, and deciding as to what somebody would say on the second hearing? I assume that the second trial, the lawyer looks at the record of the first trial, and finds gee I should have asked that question and he then has the opportunity to ask him, but he didn't in this case? Maria L. Marcus: We were given a little assistance as to what would have happened because 1964 counsel read into the record the questions that they would have asked. It's first notable that they made no mention of the Guest theory whatsoever, and second notable that there was a lot of time to research into Holms' past life, they didn't discover anything about his background, which could have formed the basis for cross examination. Thurgood Marshall: Well how do you know what they might have wanted to ask him? Maria L. Marcus: They said, they read into the record and it is -- Thurgood Marshall: They read into the record and they couldn't think of another question they would have wanted to ask, if he had been there? Maria L. Marcus: No, but they listed the questions that they would have asked, and said and they further added there might have been other questions but these were the ones that on the basis -- William J. Brennan, Jr.: And those questions in this record Mrs. Marcus? Maria L. Marcus: They are indeed, yes. William J. Brennan, Jr.: Can you tell us what page? Maria L. Marcus: It's on page 73. William J. Brennan, Jr.: 73, thank you. Byron R. White: So what difference would it have made if he was a Guest, how would that have helped the defendant? Maria L. Marcus: Well, the Court below felt that it might have helped the defendant because if Stubbs' testimony, since he said on a stand that he kidnapped the Holms at gunpoint and compelled them to drive to the spot where the shooting occurred; this evidence was rather overwhelming, and the court below thought the Guest theory might show that if there was a felony which come to an end, that there might be more to say about the circumstances of a shooting, I think that's why they brought in the Guest theory. Potter Stewart: Well, was it a felony murder conviction? Maria L. Marcus: Well, it was a first degree murder conviction. The judge charged both felony murder and premeditated murder. Potter Stewart: I see. Byron R. White: But if he had been a guest then it could have been felony murder? Potter Stewart: Right, right. Maria L. Marcus: That was the idea I think that the Court below had. Byron R. White: How would have that helped him? Maria L. Marcus: Well, it would have helped him simply on a felony murder as had been on the first degree murder aspect. Byron R. White: And they didn't think it was first degree murder? Maria L. Marcus: It's apparently -- William H. Rehnquist: Well, I suppose as a matter of Tennessee's state law, if the judge charges the jury that they may find him guilty of first-degree murder on either theories. Maria L. Marcus: On either grounds, it could have included either one. William H. Rehnquist: And that it turns out that one of the theories might not have been supported evidentially, that would be reversible even though on the other theory were adequately supported? Maria L. Marcus: In Barber, this Court discussed the reading of preliminary hearing testimony of a witness who was in a federal prison across the state border. The Court pointed out that increased cooperation between the states and the federal government meant that state process could cross a state border, and that states could issue writs of habeas corpus ad testificandum that federal courts have the power to issue such writs at the request of state prosecutorial authorities. This Court has in fact never ruled on the question of what good faith means in the context of witness who is not in the United States or in a territory of the United States, but is beyond the reach of compulsory process, by a state prosecutor. However, a number of state court and lower court decisions, federal decisions, indicate that proof that a witness is living on a foreign continent at the time of trial is sufficient to establish unavailability and cases in which it has been found that due diligence was not exercised, have been those in which the witness might had been in the jurisdiction. We ask this Court not to extend Barber versus Page to overseas witnesses beyond the stage reached by compulsory process, but instead to a adopt the rationale already set out by many courts that good faith in an oversees witness is shown by establishing that he is resident there. Now respondent attempts two countervailing arguments here. First, that the -- William J. Brennan, Jr.: -- you mean mean that's a rule that doesn't require in any instance then that the state offer to pay his expenses to come? Maria L. Marcus: It wouldn't establish a constitutional duty to do so where the witness is beyond the reach of compulsory process. William J. Brennan, Jr.: Well is the suggestion that the no inquiry made up at all if it's discover that he is permanently resident of overseas? Maria L. Marcus: The suggestion is that it wouldn't be a part of the constitutional duty of the prosecutor to do so. William J. Brennan, Jr.: Where does the duty end, what's to be done by the prosecutor? Maria L. Marcus: Well, as far as -- well the prosecutor may in cases for example where the travel expenses are not too onerous, he may well feel that having the witness present would be to his advantage and he would pursue it regardless of what the -- William J. Brennan, Jr.: What -- I am Sorry Mrs. Marcus, I don't understand what you are suggesting should be the constitutional limit of the prosecution -- Maria L. Marcus: The establishment of his residence overseas as far as -- William J. Brennan, Jr.: And that once that's established, whether it's Mexico, Canada, no matter where it would be, that that's the end and then they use the prior testimony. Maria L. Marcus: As far as this constitutional duty is concerned, yes. Thurgood Marshall: It doesn't even require him to send a letter to say, if you don't mind, would you mind coming over to testify? Maria L. Marcus: I think that where there is no compulsory process to back this up, we ask this Court to say that the limit of the duty would be the establishment that the witness is living overseas, and that is the rationale that these other courts have adopted. Thurgood Marshall: That's even if the witness is willing to come over his own expense? Maria L. Marcus: Well, if he is willing to come and the prosecutor is aware of that -- Thurgood Marshall: But it would know unless – I am just saying that he wouldn't embarrassed if the prosecutor write a letter over to him and say this case is coming up and if you could come over then we welcome? Maria L. Marcus: Under the rule that these courts have established, that would be in the prosecutor's discretion rather than a constitutional duty. Warren E. Burger: Did the defense ask for an allowance to bring Mr. Holm from Sweden? Maria L. Marcus: No, they didn't. They objected to the witness out being there, but there was no reference to an allowance of any kind. Harry A. Blackmun: Did either side request the deposition? Maria L. Marcus: No, in other words the -- Harry A. Blackmun: You know whether under Tennessee practice the deposition may be employed in the current case? Maria L. Marcus: Well, the prior hearing testimony was taken at a trial where the witness Holm was confronted, was cross-examined so that this testimony I think would have been the most valid that they possibly could read into the record. It was taken at the first trial, under the usual circumstances. William H. Rehnquist: Ten years closer to the event I take it? Maria L. Marcus: It was directly after the event, yes. Now -- Potter Stewart: And the facts were that the state in that second trial served process on Holms at his last known address, which was in Texas in the United States of America -- Maria L. Marcus: Yes. Potter Stewart: -- and that was returned on moved -- Maria L. Marcus: Right. Potter Stewart: -- and then was there any notification to him at all in Sweden? Maria L. Marcus: They then have taken his son, who advised the Court as to his whereabouts and who testified on the stand as to his whereabouts. Potter Stewart: That he had moved to Sweden? Maria L. Marcus: Yes. Potter Stewart: And was Holms himself ever notified? Maria L. Marcus: There was a remark by 1964 defense counsel that the Court in referring to a newspaper interview where Holm's son was quoted to saying his father was not aware that the trial is taking place, but even if this process was excluded as hearsay by the judge, but it's interesting to note that 1964 defense counsel made no effort to cross-examine the son on a stand as to whether or not his father knew, so that there is nothing to record really, no proper evidence on that. Potter Stewart: After the unsuccessful attempt to service in Texas, that was the end of it as far as the -- Maria L. Marcus: As far, except for the establishment of where he was. Potter Stewart: Through the son? Maria L. Marcus: Right. Now respondent argues here that the Walsh Act which is 28 U.S.C. 1783 could somehow have been employed to subpoena this witness. That statute only empowered a federal court to bring a witness before itself, where the United States Attorney General or someone acting under his direction so desired. It could not authorize a state prosecutor to bring a witness to a state trail. Indeed our research and a call to the office of the Untied States Attorney for the southern district has never revealed any case and which has been used by state prosecutor to secure witness in a state trial. Thus it would have been more than due diligence, it would have been a height of ingenuity for the prosecutor to have thought of that and it would have been unusable. William H. Rehnquist: Mrs. Marcus I take it it's your position, the state of New York is not bound by Judge Miller's habeas corpus ruling? Maria L. Marcus: Right, and this -- there was an attempt by respondent to argue that New York is in privity with Tennessee and therefore, this ruling would prevent us from looking at the record at all to determine whether counsel was effective or not. Now this privity theory might have some interest if we are relying on the 1954 conviction as a predicate. That was what was vacated, but in point of fact we're relying on a 1964 conviction, which was appeal to the Supreme Court of Tennessee, and which included a ruling that the cross-examination was effective. Moreover, the District Court never even considered whether counsel in fact conducted a proper cross-examination because it was a operating on a per se rule that made that kind of inquiry unnecessary. So they never dealt with the question at all of whether the 1954 counsel's cross-examination was effective or not. It did it merely on a per se rule, which this Court in Chambers versus Maroney has since rejected. This Court in Chambers held that the mere fact that the counsel is tardily appointed doesn't even call for a hearing necessarily much less automatic reversal. It calls for inquiry into the record to find out whether in fact there was effective representation. I would like to point out that even assuming that the state should have sent a request to the witness prior to reading his testimony in the record, there in this case would have been harmless because the outcome of the trial would have been the same, whether the state had communicated with Holm or not. If the letter had been sent to Holm and he had refused to come to Tennessee, his prior testimony would have been read into the record at the second trial. Thurgood Marshall: Suppose he had agreed to come and pay his own expenses? Maria L. Marcus: If he had agreed to come, I believe that it's beyond a reasonable doubt that he would have testified the same way for several reasons. First of all, the facts -- Thurgood Marshall: Well, may I assume that the lawyer would have additional questions? Maria L. Marcus: Well, he -- as I said he did list what he would have had but I think there are other reasons to conclude that he would beyond a reasonable doubt have testified the same way. But first of all, the facts were -- Thurgood Marshall: My point is not on his testimony, my point is on cross-examination? Maria L. Marcus: Yes, I think that he would. Thurgood Marshall: And I don't think you can beyond a reasonable doubt, determine what a lawyer would say cross-examining the witness? Maria L. Marcus: I think though that looking at this record and this witness, what we can say is that the witness would have withstood cross-examination. Thurgood Marshall: Have you ever known every question you would ask on cross-examination before it started? Maria L. Marcus: No, no your honor. But. Thurgood Marshall: Thank you. Maria L. Marcus: The question would be how would the witness have reacted to this cross-examination and the testimony was uncomplicated. Stubbs was a strong witness to a tragic situation with no motive to lie. Stubbs -- Potter Stewart: You mean Holm? Maria L. Marcus: Holm, yes. Stubbs' identity, the ownership of the gun and the fact of the kidnapping were corroborated by Stubbs himself and moreover Holm could have refreshed his recollection by reading his prior testimony from the earlier trial. And 1964 counsel with plenty of time to research into Holm's background did not find anything upon which to base new questions. Potter Stewart: At the trial did Stubbs deny firing any shot? Maria L. Marcus: He testified at both trials and he reiterated that when he was released from the Texas prison, he tried for several days going toward Bristol, Tennessee, where he hoped to meet a truck route going to New York. He encountered Mr. and Mrs. Alex Holm, he had a gun, which he had been given by a friend, he had no money, no job prospects. He said that he kidnapped the Holms' at gunpoint. Potter Stewart: This is all his testimony -- ? Maria L. Marcus: This is his testimony at both trials. Potter Stewart: Right. Maria L. Marcus: Kidnapped the Holms' at gunpoint and with his left-hand holding the gun at intervals pointing into Mrs. Holm's face. They drove on until near Bristol, Tennessee, he testified that he saw a tree in a reddish haze. He heard a loud bang, he felt a pain, he thought that Holm must have gotten the gun away from him and then Stubbs fled from the car. Now Stubbs testimony about his subsequent flight, the blood on his clothes, the roadblock at which he was arrested and a hospital room identification in which Holm pointed to him in the presence of a number of police officers and said this is the man that killed my wife and shot me. That's subsequent -- Potter Stewart: Was Stubbs wounded when he was apprehended? Maria L. Marcus: Yes, he had head wounds because Holm had hit him several times with the gun on the head, once having seized it. Potter Stewart: No gunshot wounds ? Maria L. Marcus: There was some testimony that a bullet might have graced him, yes. William H. Rehnquist: Didn't Stubbs also offer the explanation when he is first apprehended that he had fallen off a cliff while he was fishing and that was how that happened? Maria L. Marcus: Yes, he told that -- it was the first story that he told the police officers that the blood was there only because he had an accident while fishing and he had slipped on a cliff. The disputed testimony of Alex Holm of course parallel that of Stubbs himself as to the fact that Stubbs had kidnapped them and compelled them to drive to the spot where the shooting occurred. Now the hospital room identification was not objected to and the police officers testified in court at both trials as to that identification. I have pointed -- William J. Brennan, Jr.: Mrs. Marcus, I gather -- in this instance, the only issue before us is whether the state did what it should have done to bring Mr. Holm back for the second trial? Maria L. Marcus: Well, even if not, it would have been harmless error in the context of the overwhelming evidence in this case. William J. Brennan, Jr.: But apart from that, on the basic issue, I just want to be clear. Your position is that as far as a state need go is, that is, satisfy itself that the witness permanently resides overseas and that satisfies any constitutional obligation it has? Maria L. Marcus: Insofar as a witness is resident beyond the reach of compulsory process. William J. Brennan, Jr.: Yes because he was living in some foreign country. Now we don't agree with you, I gather from Judge Friendly's opinion, he thought that it was not the proper test. He thought that the -- Maria L. Marcus: Judge Adams' opinion, Your Honor? William J. Brennan, Jr.: Adams, I am sorry, yes. The majority opinion. It's page 27, is where there is no showing that the witness beyond the effect of reach of court's subpoena will refuse to return voluntarily to testify if requested. So under that test there would have to be an inquiry made if the witness resident abroad -- and get from him a refusal to appear. Now there is nothing in that test I gather which suggests that there should also be an offer by the state to pay the expenses of the witness if you will. Maria L. Marcus: No, he made no mention of that and then he ultimately on our second point, which was that the evidence here is so overwhelming with the hospital identification. William J. Brennan, Jr.: Yes, but if I may, I would like to conclude. Maria L. Marcus: Sure. William J. Brennan, Jr.: Now if we don't agree with your test, but think that the test suggested by Judge Adams is the more appropriate one and then I gather there can be a reversal only if we agree with your second point namely on harmless error? Maria L. Marcus: Yes, that's right. I would like to reserve time for rebuttal. Warren E. Burger: Very well Mrs. Marcus. Mr. Carpenter. Bruce K. Carpenter: Mr. Chief Justice, may it please the Court. Perhaps in order to clarify the questions that are raised, I should address myself first to what happened, the facts of the case at the Tennessee trial a little bit. The un-controverted testimony was that some 55 miles away from the homicide, the place where the homicide took place, in another part of Tennessee, Stubbs approached Mr. and Mrs. Holm. Now Stubbs was hungry, he had been without food. His, this is Stubbs' testimony, for some time he was desperate. He wanted a ride to get up to New York where he had relations. As he approached the Holms, asked them for a ride, was refused, went away and then he said, he remembered he had the gun, he came back, forced his way in their car. He drove, they were in the back seat and away they went. Now, at this point, of course, we have a serious misconduct. Now the testimony of Stubbs was that very shortly, after this trip began friendly relations began to exist between him and the Holms. They began to express sympathy for his condition and said, if you had only asked us properly for a ride, we would have given you one, or food. So that this is Stubbs said happened about four miles after the trip began. Potter Stewart: You say Stubbs said as that he -- so testified at both trials? Bruce K. Carpenter: Yes, he did. Potter Stewart: He did. Bruce K. Carpenter: Yes. Now, the trip continues. They pass through towns. Stubbs says that pass a police officer. They continue on their way and all of a sudden -- Warren E. Burger: Didn't he also say right at that point that he put the gun down on the seat of the car? Bruce K. Carpenter: Yes. Warren E. Burger: And that was -- so that the police officers and others wouldn't see the gun? Bruce K. Carpenter: Yes. At the request of Mrs. Holm, put the gun down, he had had it, he said in his lap; then the testimony was he put it on the seat beside him. Warren E. Burger: He didn't throw the gun away though anytime or offered to give it to the Holms? Bruce K. Carpenter: No. No, he did not. But at any rate, according to the defense point of view, the gun was on the side of his seat, beside Mr. Stubbs. He feels that friendly relations have been developed. He feels at ease and then when they come across a place where there are some people nearby. According to Holm, Stubbs took the gun and turned around and started shooting while the car was still moving, and he shot the wife and shot Mr. Holm twice. William J. Brennan, Jr.: They were both in the back seat? Bruce K. Carpenter: They were both in the back seat. William J. Brennan, Jr.: Did they both agree on that; Stubbs and Holm agreed that the two were in the back seat? Bruce K. Carpenter: Oh yes! Yes, there is no question. Mrs. Holm was sitting whereas in the middle there was some luggage off to the left and Mr. Holm was on the far right. Now Stubbs testified that he did not shoot anyone. That as he was driving he was suddenly hit on the head presumably by the gun and the car crashed and he struggled out and got away and escaped. Now the trial judge in Tennessee -- William J. Brennan, Jr.: What about this? He says that he doesn’t know how they were shot? Bruce K. Carpenter: He doesn't know how they were shot. He presumes that -- he says Mr. Holm has the gun and he had to struggle to get it away and then -- William J. Brennan, Jr.: And who had to struggle to get it away? Bruce K. Carpenter: Stubbs had to struggle. William J. Brennan, Jr.: And did he get it away from Mr. Holm? Bruce K. Carpenter: No, because the gun was found in the car, the backseat of the car, backseat when the police officer (Inaudible) -- Now the trial judge-- William J. Brennan, Jr.: And did the car crash in fact? Bruce K. Carpenter: The car didn't crash. It went off the road and wound up in a ditch, pointing in the same direction that it had traveled. The trial judge charged and I quoted this portion in the Appendix to the brief, it’s not finally printed in the record, that if this theory were accepted by the jury, they should acquit. I think then that as to the question of whether or not, Mr. Holm’s testimony was crucial or devastating, there should be no questions in the case as to that. Certainly, there was no other witness. Potter Stewart: He was the only eye witness? Bruce K. Carpenter: He was the only eye witness – yes, Your Honor and he was the only witness if you include Stubbs’ testimony and Stubbs being present in the car, who was -- and he said that Stubbs had done the shooting. Well, certainly this is different from those cases where confrontation is considered in the context of a peripheral statement that may or may not have affected the outcome. Warren E. Burger: But this subject of the alleged friendly relation, a happy relationship that developed was explored at the first trial, was it not? Bruce K. Carpenter: It was not adequately explored at the first trial. Warren E. Burger: Yeah, but it was explored though? Bruce K. Carpenter: It was explored by reason of Mr. Stubbs’ testimony. Now I gather -- Warren E. Burger: And then they cross -- Mr. Holm was examined on the same subject and he said there were no friendly relations at all. Bruce K. Carpenter: Yes. The transcript of the first trial, I just had occasion to read it last week. It is not part of the record to this Court, I will leave the copy, the certified copy that I obtained from Tennessee, with the clerk, but Holm testified first, at the first Tennessee trial. He was the first witness, and my impression in reading that transcript is that the counsel, who cross-examined him om this part as we produced in the Appendix, were not aware of the defense that was to be offered. I mean, My feeling is that they didn't learn of this until Stubbs testified and told his story. I think there is clear indication, but of the fact that counsel were unprepared at this first trial. Warren E. Burger: In three days, couldn't three lawyers have found that out, if that were invalid notion? Bruce K. Carpenter: Well they might have, but this case involved the people who were from out of state, people that were not local people, both the Holms and Stubbs. The counsel perhaps might have learned, but they didn't. At any rate -- Warren E. Burger: May be it didn't occur to the defendant until he got on the stand? Bruce K. Carpenter: Well it’s possible, but his testimony was straightforward at both trials. To this there was no conflict over the years. William H. Rehnquist: I take it all they would have had to do to learn of the defense was to interview their own client. Bruce K. Carpenter: Yeah, I should think here they might have done so. I don't know the problems of a lawyer who is preparing a defense, that’s difficult. You really need to have time to mull over things. What’s apparent here, at the site when we had plenty of chance to consider the record and explore them often, these matters which seem so clear now, are not so clear when you first get a case. Byron R. White: When Holm came back on the stand on rebuttal (Inaudible) after the defendant’s testimony, that he was available then for cross examination? Bruce K. Carpenter: Yes, but no questions were asked. Well there -- three questions were asked as to story that an attempt was made to impeach Mr. Holm at this point, an abortive attempt, three questions were asked as to what whether he had told a conflicting story to an undertaker and it never really reached the point of impeaching. William J. Brennan, Jr.: It may not, but certainly confrontation of Holm was had when he took the stand on rebuttal, wasn't he? Bruce K. Carpenter: Yes. William J. Brennan, Jr.: So constitutionally, Stubbs can’t complain that he didn't have an opportunity for confrontation, but what you are suggesting is that it’s ineffective assistance of counsel, aren’t you? Bruce K. Carpenter: Yes, well of course it is. William J. Brennan, Jr.: What the Judge Miller lead into? Bruce K. Carpenter: What the Judge Miller say, Your Honor? William J. Brennan, Jr.: Yes. Well, he had gather -- Bruce K. Carpenter: Yes, Judge Miller said and his decision is appended as an Appendix to our brief. The Court is of the opinion that the evidence in the record show that the constitutional rights of petitioner Stubbs were violated at the time of his trial in the criminal court of Sullivan County, that’s the 1954 trial, in that his Court appointed counsel did not have adequate and sufficient time within which to prepare the necessary defense prior to going to the trial and as a result the petitioner was denied the effective representation by counsel. Now early on in his decision, he recites that he considered the testimony of Stubbs and the entire record, and to reach this determination. This determination was not apparently questioned by the Tennessee authorities. They acquiesced in this decision in promptly awarding a retrial in 1964. Byron R. White: Is it critical to your case whether or not representation was effective or ineffective? Bruce K. Carpenter: Well I -- Byron R. White: Let's assume for the moment that there was no question whatsoever as to the effectiveness of counsel at the first trial? Bruce K. Carpenter: Then as in Barber against Page, assume that there was effective cross-examination, there still was a denial of confrontation. There was a denial of confrontation because the prosecution needed to make a good faith effort to obtain the presence of this witness Holm at the second trial. Byron R. White: You are saying that just as though Holm was living ten miles away and they thought it would be more convenient to use his prior testimony than call him? Bruce K. Carpenter: Yes. In fact, there is an indication in the record as my sister pointed out, that Mr. Holm was not even apprised of the fact that there was a trial pending. He didn't even know about it, let alone be asked whether he wanted to come to the trial, let alone be asked whether he would be willing to come -- William J. Brennan, Jr.: Well, I gather New York doesn't deny this? There was no communication directly with him at all, at least on the part of any Tennessee official? Bruce K. Carpenter: Yes. William J. Brennan, Jr.: I take it New York does not deny -- I thought Mrs. Marcus didn't answer to some questions I asked and conceded as much? Bruce K. Carpenter: There is a further indication in the Tennessee record that counsel had been informed by the Tennessee prosecutor, that Mr. Holm would be produced. At least they -- one lawyer made a remark and it's cited in the page reference, it's cited in the brief that -- William J. Brennan, Jr.: With different lawyers at the second trial? Bruce K. Carpenter: Yes, different lawyers and different set. William H. Rehnquist: That wasn’t really admissible evidence though, was it, wasn't that a statement of counsel that trial judge refused to consider? Bruce K. Carpenter: Yes, It was a remark of counsel addressed I believe when the jury was not present. So that it isn’t in the evidence. In any event, it is not just -- Thurgood Marshall: But sometimes the petitioner asked the Court -- asked the prosecutor to produce the witness? Bruce K. Carpenter: No, but I think that they indicated most strenuously their desire to have the witness present in order to be questioned. Thurgood Marshall: No, I don't -- may be I misunderstood, but I understood your record you showed, that they didn't want the trial to go on without the witness, but they -- whether a particular the witness came or not? Bruce K. Carpenter: I don't recall the exact wording that counsel used. I got the impression from the statements of counsel that they wanted the witness there. Thurgood Marshall: Yeah, well couldn’t it be that what they wanted was the trial not to go on without the witness? Bruce K. Carpenter: I think so. Thurgood Marshall: It means no trial? Bruce K. Carpenter: Yes. Thurgood Marshall: Well, don't you think they should have asked what was going to be done about it? Bruce K. Carpenter: I think, they might have asked, but this remark that I have mentioned, which is an evidence may have been an explanation as to why they didn't. They expected Holm to be there. When in the middle of the trial -- Thurgood Marshall: But don't you think that they could have raised that point and told the Court that? Bruce K. Carpenter: Yes, the could have. Warren E. Burger: And don't you think they perhaps had an obligation to do that before trial so as not to have the second trial aborted by a mistrial? Bruce K. Carpenter: Yes, if they had known that the witness Holm was not going to be present. Warren E. Burger: You are assuming something on which there is nothing in the record on one way or the other? Bruce K. Carpenter: Well -- Warren E. Burger: You said if they had known. We don't know from this record whether they did or did not know. For all we know, they may have been very carefully making it a point not to make a demand. It's just as good speculation as yours that they avoided making a demand because they never wanted to see Mr. Holm in the courtroom? Bruce K. Carpenter: Well that, this of course would be the devious tactics by some counsel. Perhaps it might be suggested -- Warren E. Burger: You wouldn't. Bruce K. Carpenter: I never quoted the entire passage in the record, which is not printed in the appendix, where counsel before the testimony was offered, made their objections. Warren E. Burger: This is after the trial was once underway -- Bruce K. Carpenter: This is after the trial was once underway. Warren E. Burger: The only solution would have been a mistrial, if they were going to -- probably a mistrial, if they were going to wait for this man to be subpoenaed, and determine whether he would honor extraterritorial subpoena all the way to Sweden. And then, if a mistrial occurred, I suppose it would be open to the defense to claim that the mistrial was the fault of the prosecution and that he could therefore raise the double jeopardy defense. Bruce K. Carpenter: Yes, but I would say then, the passage -- the only passage that addresses in the record, that addresses itself to this point, is a statement by Mr. Mitchell, one of Stubbs' counsel at the second trial. And he says -- William J. Brennan, Jr.: At what page is that? Bruce K. Carpenter: Page 16a of the respondent's brief at the bottom. It's at page 162 of the transcript of the 1964 trial. Your Honor, please I think it is the law and it is the law until the Court speaks otherwise. Now as Your Honor recalls Mr. Wilton (ph) who was the prosecuting attorney, stated that he would have Mr. Holms, and a Holm and Holms are interchangeable spellings of the same were present and then there is a three dots to show a suspension, that's the only passage in the record that speaks of it. I think it explains, perhaps why counsel did not move for an adjournment or move or apply to have the witness brought over at the counsel's expense or since Stubbs was indigent at Court expense. They were, I think, if there is any question, the only indication in the record is that the counsel were surprised. Byron R. White: Was there another conviction besides the Tennessee conviction? Bruce K. Carpenter: I believe there was, yes. Byron R. White: The – in Texas (Inaudible) and New York specifically relied on the Tennessee? Bruce K. Carpenter: Yes, they relied on it so far as this case is concerned. Byron R. White: Yes. Bruce K. Carpenter: And on our, when opposing our certiorari -- Byron R. White: But they have gone through the same mileage out of the defense's (Inaudible) Bruce K. Carpenter: Yes, I thought that the case might be moot because of that and that the Court might not want to consider the case, but at any rate New York -- Byron R. White: Was that offered -- was the Texas conviction offered, how did they prove a prior conviction in New York? Bruce K. Carpenter: Well they would have, following a conviction by the fact finding. The prosecutor lays an information, and it is possible to have a jury trial on the question whether the defendant is the same person that was convicted and it's also permissible under the effective New York statute to raise the question as to whether the previous conviction was constitutionally obtained. Byron R. White: No, that went forward here? Bruce K. Carpenter: This went forward here, following his conviction in Monroe County and the only conviction that was used was the Tennessee murder conviction. Byron R. White: But how does anybody -- how did anybody know that was in Texas? Bruce K. Carpenter: Well, following the mandate of the of the Court below. Thurgood Marshall: What about his testimony, that he was on his way from the Texas penitentiary? If he was on his way from the Texas penitentiary, he was either God or a prisoner, didn't he testify that? Bruce K. Carpenter: Yes, I don't know whether that this would necessarily make him a felon, but my information is that he was in fact convicted of a felony in Texas for burglary. Whether or not it was a valid conviction, is still being litigated in the New York courts. William H. Rehnquist: His counsel is claiming, I suppose of that, that kind of conviction too was unconstitutional? Bruce K. Carpenter: Yes. William J. Brennan, Jr.: In what proceeding is the Texas conviction being litigated? Bruce K. Carpenter: Well, there was no stay of proceedings following the decision below. William J. Brennan, Jr.: In this case? Bruce K. Carpenter: Yes, in this case. William J. Brennan, Jr.: And this case was resulted in what, setting aside his sentence? Bruce K. Carpenter: Yes, that he was ordered released; if the New York courts did not resentence him, giving no effect -- Byron R. White: Now they are not going through the same proceeding based on the Texas? Bruce K. Carpenter: Yes, Your Honor. Byron R. White: So it could be that -- William J. Brennan, Jr.: This whole thing could washed out? Byron R. White: -- this whole thing, as you say may will be moot? Bruce K. Carpenter: Yeah, this is what I thought. It may not be moot because if Stubbs is correct in his contention that -- Byron R. White: Yes. William J. Brennan, Jr.: No, but if it's found against him, on the Texas, then all you will have is another appeal I take it? Byron R. White: Yes, so there is currently another proceeding in the New York courts based on the Texas conviction? Bruce K. Carpenter: Yes. I tried to ascertain exactly what had happened and may be my researches are not accurate. William J. Brennan, Jr.: You are not representing him in -- Bruce K. Carpenter: No, the Monroe County's public defender has been in communication with them. William J. Brennan, Jr.: I see. Bruce K. Carpenter: I checked -- William J. Brennan, Jr.: You were assigned in throughout this -- Bruce K. Carpenter: I've been assigned in the Court below and I realizing I had spent 1000 bucks, excuse me Your Honor, dollars, I asked the clerk to assign me here this morning, to proceed. I think to return to the analysis of the case, it's a complicated case and we have to go from here to here to discuss the parts of it, and not that the effect of one part on the other part. I think that you don't, this Court does not need to enter into the question, as to whether or not there was effective cross-examination or whether there was harmless error in the representation by the counsel at the Tennessee trials. If the Court determines that the prosecution in Tennessee had to make an effort, some kind of an effort to obtain the presence of the witness Holm. Harry A. Blackmun: Mr. Carpenter, at point enlighten me, what kind of an effort in your estimation would be sufficient? Bruce K. Carpenter: I think the only effort that is sufficient when you have an indigent defendant is an offer to pay the expenses aback and an application. I would suggest -- Harry A. Blackmun: Why not deposition, why not schedule deposition in Sweden? Bruce K. Carpenter: Well, this is possible. I suppose it would be -- if the witness refused to come but would attend a deposition, this might be an effective substitute. William J. Brennan, Jr.: Without the privilege -- Bruce K. Carpenter: In this you have to transport more people over to Sweden and you wouldn't -- Harry A. Blackmun: Isn't Justice Brennan's comment appropriate, wouldn't the defense then be complaining of expense either in going over to attend the deposition or hiring local counsel? Wouldn't we have another case here? Bruce K. Carpenter: Well, I don't know. I think if you are representing an indigent, counsel probably would be more prudent than I was and would go ahead and make the application before going over there and would apply for reimbursement. But may be all that's necessary is, as was suggested from the bench, just ask the witness if he is willing to come back at his own expense. Harry A. Blackmun: Well suppose the witness, instead of being in Sweden were in the front lines in Vietnam, would it make any difference? Bruce K. Carpenter: Question is -- I'm thinking of what is the -- a case arose in California, where exactly the same situation occurred. The application was made to the Marine Court and the legal officer told the investigator -- the police officer investigating that he was unavailable and it was determined that this was a satisfactory determination that the witness was unavailable. I think one of the California cases is cited in the brief. Byron R. White: California -- William J. Brennan, Jr.: California brief, isn't it? Bruce K. Carpenter: No, it wasn't -- Harry A. Blackmun: But at least you don't disagree with that determination? Bruce K. Carpenter: Well, I think there was an effort made to get the witness. An answer came back that the witness was unavailable. This is far cry from what was not done in this case. Warren E. Burger: And yet, the military authority could have ordered that man back into the United States, couldn't they? Bruce K. Carpenter: Yes, the case that I was mentioning or which is in the fact is the -- I think People against Benjamin, which is cited sited in 83 California Reporter 764, an intermediate Appellant Court decision. William H. Rehnquist: Mr. Carpenter, I take it you are relying on Barber against Page for your main proposition and there is at least a factual distinction between this case and Barber, isn't there, in that in Barber nobody cross-examined on behalf of the particular defendant who later raised the objection? Bruce K. Carpenter: Yes. William H. Rehnquist: Whereas here there was cross-examination on behalf of your client in the 1954 trial? Bruce K. Carpenter: Yes, there was cross-examination. Of course, the decision in Barber expressly made the effectiveness of the cross-examination not a factor in it, but so that the precise holding in Barber as I read the case is that assuming you have effective cross-examination or assuming cross-examination is not at issue, that is, whether or not the transcript that you are going to use of the absent witness' testimony is a good enough transcript to use. William H. Rehnquist: Well, isn't the holding though kind of limited to the fact; when you are speaking about holding, you are talking about the facts of the particular case? Bruce K. Carpenter: Yes, and another fact that distinguishes is Barber and Page distance was only 225 miles and it was just one straight line, but these facts, because I don't think that distance here, it's 4500 miles or so to Sweden make -- is a determining factor. William J. Brennan, Jr.: Well, Mr. Carpenter there had been the most vigorous cross-examination to Mr. Holm when he took the stand in rebuttal as to Stubbs had told this good relation story and that had been the most vigorous cross-examination of Mr. Holm, you say that here there was not. Had there been, would you be here? Bruce K. Carpenter: Yes, I would think that Barber against -- William J. Brennan, Jr.: You still think that an effort should have been made to have Mr. Holms appear at the second trial? Bruce K. Carpenter: Yes Your Honor, because the right of confrontation involves not merely cross-examination, but also the right of a defendant to have his fact-finder, deal with the witness, face to face, consider that the demeanor of the witness as he is giving his testimony and determine, you might have waive it or give it up, because of the necessities of some case, but it's something that you shouldn't give up easily -- Warren E. Burger: Suppose it appeared hypothetically now, that's not this case, but suppose hypothetically it appeared that a defense counsel in that posture consulted with his client and said you will be much better off to have this testimony read from the transcript than to have this man sitting in the courtroom, flesh and blood on the stand with the scars of the bullet wounds on his face and suppose he made that decision, would you think anyone could reasonably say that was ineffective, that tactic was ineffective assistance of the counsel or was it a permissible choice? Bruce K. Carpenter: I think it's perhaps possible for counsel to make that decision. I don't think it would be dishonest for counsel to advice a client to better let the testimony be read. In this case, there was no hope. Warren E. Burger: Well, I didn't suggest he was dishonest. I am simply suggesting that it might have been sounder defense tactics not to have Mr. Holm there? Bruce K. Carpenter: The only defense tactics that would have worked in this case in my opinion is to show Mr. Holm to have been a liar; that's the only way and counsel failed to do anything effective in the 1954 trial, they had no chance to do it in the 1964 trial. Thank you very much. Warren E. Burger: Thank you. You have few minutes left -- William J. Brennan, Jr.: Mrs. Marcus what's your status of this hearing on the Texas conviction? Maria L. Marcus: He has been resentenced as a second felony offender under the Texas predicate and he is appealing that Texas predicate. However, regardless of the outcome -- William J. Brennan, Jr.: An appeal where, in the state of New Jersey -- in New York State Courts? Maria L. Marcus: In New York State Courts, yes, first. Regardless of the outcome of that appeal, there still would be no mootness in this case because this Court held in Sibron -- William J. Brennan, Jr.: No but isn't the condition satisfied here? The condition was that he'd be resentenced? Maria L. Marcus: Yes, but -- William J. Brennan, Jr.: Well that satisfy the condition of this judgment? Maria L. Marcus: It does not for the considerations that this Court discussed in Sibron v. New York and the Morgan case. The fact of collateral disabilities and more important under New York law, upon a subsequent conviction, the Judge has a right to consider the whole history of this defendant and the kind of crimes which he has committed before and has a discretion to resentence him to a life-sentence and of course, any -- William J. Brennan, Jr.: Well, what could he sentence him to here? Is there any different sentence that he got? Maria L. Marcus: The sentence here is not different, but as this Court pointed out in both Sibron and Morgan, it must be considered what would happen on a subsequent conviction and what would happen is that the sentencing Court would undoubtedly regard as crucial in determining what kind of person this is, what sort of chances for rehabilitation and what sort of danger he poses to the public in being released. A brutal murder of this kind committed seven days after release from the Texas penitentiary, he would undoubtedly be central to the sentencing Court and so under the considerations of this Court set out in Sibron and Morgan, the case cannot be moot. Warren E. Burger: Thank you Mrs. Marcus, thank you Mr. Carpenter. The case is submitted.

William H. Rehnquist: We will hear argument next in Number 86-1602, United Savings Association of Texas versus Timbers of Inwood Forest Associates, Inc.-- Mr. Cohn, you may proceed whenever you are ready. H. Miles Cohn: Mr. Chief Justice, and may it please the Court: United Savings is a secured creditor of Timbers of Inwood Forest Associates, a debtor under Chapter 11 of the Bankruptcy Code. As a creditor, United Savings has a claim against this debtor. But as a secured creditor, United Savings has much more. United has an interest in property of the bankruptcy estate. Specifically, that interest is a first lien deed of trust, or real property mortgage, on property owned by the debtor, that property being an apartment project located in Houston, Texas. Pursuant to the provisions of that mortgage and under applicable laws of the State of Texas, United Savings has the right to have its security interest foreclosed at such time as the debtor may default, has the right to have the property sold at a foreclosure sale at that time, and then to take the proceeds of that sale, or the proceeds of its subsequent disposition of the property, and apply those proceeds to its debt, to take that money in effect and put it out in a new investment and to begin earning interest or other income on that new investment, and to take that money also and apply it to the payment of its debt. Sandra Day O'Connor: Mr. Cohn, were you representing the client in the proceedings below? H. Miles Cohn: Yes. Sandra Day O'Connor: And was a petition ever filed with the Bankruptcy Court for relief from the stay under Section 362(d)(2)? H. Miles Cohn: No, Your Honor. This action was originally brought under 362(d)(1) only. Sandra Day O'Connor: I just wondered why no petition was filed for relief from the stay. H. Miles Cohn: Well, it was a petition for relief from the stay, Your Honor. It was filed under 362(d)(1), rather than under 362(d)(2). And I suppose of hindsight were foresight and we were starting this all over again, we might have done it differently. But at this time, particularly in Texas, but I suspect elsewhere across the country, the practice in this sort of case was to focus very early on in the case on the question of whether the secured creditor's interest in property was adequately protected. That was the typical practice, and therefore, this motion was filed focusing on that issue. Sandra Day O'Connor: Did the debtor have any equity in the property here? H. Miles Cohn: No, Your Honor. Sandra Day O'Connor: No, I didn't think so. H. Miles Cohn: The debtor does not have equity in the property. Sandra Day O'Connor: Right. H. Miles Cohn: And that was one of the findings of the Bankruptcy Court. I think it is important in fact to emphasize what those findings were. Bankruptcy Code Section 362(a) imposes an automatic stay which stops the exercise of rights and property at such time as a bankruptcy case is commenced. The automatic stay imposes a very real cost on a secured creditor. That cost is measured by the income lost, the income that could have been earned had the creditor been allowed, but for the automatic stay, to exercise its rights and property. Antonin Scalia: How long can that cost continue to be extracted from the creditor? I mean, under (d)(2) there is a certain amount of time in which this thing has to be brought to an end or else it is not considered an effective reorganization. Isn't that true? H. Miles Cohn: No, Your Honor, (d)(2) does not set forth any kind of specific standard or time limit. Antonin Scalia: I'm sure nothing specific. But it can't be considered an effective reorganization if it drags on interminably, can it? H. Miles Cohn: At some point it has dragged on so long and there is no little hope of any kind of reorganization that the Bankruptcy Court might terminate the stay on other grounds. But that might be two or three years, it might be many months, it might be any period of time that causes injury and damage to the secured creditor. Antonin Scalia: Do you think it can go on for two years? H. Miles Cohn: I have seen cases that have, Your Honor. Antonin Scalia: Should they? H. Miles Cohn: Normally not, Your Honor, but they should, and I think it is important to focus, in answering the question posed by this case, not on the single asset case. This is a single asset case in which to some extent the issues are blended together, but the same issue arises in multiple asset cases. You might have a Continental Airlines in which a secured creditor holding a lien on one airplane comes in and says the stay ought to be terminated, and if there is no protection for the interest of that secured creditor in the sense of the time value of money, it is very difficult for that creditor to come in and argue that the proceedings have dragged on too long. In terms of a very complex case, the proceedings might last justifiably a very long period of time, but that should not take the place of the need to protect the individual secured creditors. Antonin Scalia: The only point I am making is that there is some outside limit that is introduced elsewhere in the Code upon how long the creditor has to eat the interest, in effect. H. Miles Cohn: I hate to be difficult, but I think the answer is yes and no. Yes, in that the Bankruptcy Court has discretion at some point to take action under some other provisions, but no, in the sense that there is no principal basis for measuring the damage done to the secured creditor and imposing some kind of protection as time goes on other than adequate protection under 362(d)(1) and 361. Yes, at some point the Court may conclude that this case has dragged on too long, but even if that is six months past what might be a reasonable limit, the secured creditor has incurred very serious costs. The seriousness of those costs I think is well illustrated by the facts of this case. The Bankruptcy Court found that but for the automatic stay, United Savings could have foreclosed on the property and liquidated its collateral within six months of the filing of the case, that United could have earned $4.25 million by selling the property, and could have reinvested that money at 12 percent interest per annum. John Paul Stevens: May I ask a question there? That is a higher return than they would have gotten if there had been no default, I take it? H. Miles Cohn: Yes, Your Honor. John Paul Stevens: One of the rights you seek to protect is the right to get the benefits out of a foreclosure to which you have a legal entitlement, which may be better than having the debt paid according to its original terms. If that right is to be protected, should it not also be protected for the oversecured creditor? H. Miles Cohn: Well, I believe the oversecured creditor is protected, because... and this is one of the confusing things about the Opinion of the Court below. We have never argued that all undersecured creditors are entitled to periodic cash payments. Creditors, secured creditors are entitled to some protection for the costs of delay. The oversecured creditor is protected because he in a sense has equity in the property and he knows that when he gets to the end of the proceeding there is value to cover the costs of delay. John Paul Stevens: But he doesn't get the same benefit that the undersecured creditor gets. H. Miles Cohn: He absolutely does. He gets it at a different point in time. In other words, interest continues to accrue on his debt. John Paul Stevens: Yes. H. Miles Cohn: And he is entitled to eventually-- John Paul Stevens: But he doesn't get the 12 percent rate. You are getting 12 percent, if I understand you. H. Miles Cohn: --We get 12 percent but not, if the debtor elects, under Section 1142, to reinstate the debt according to its terms. In essence, it is like there are two tracks going along. The secured creditors rights might be measured by default, in which case he gets in essence the money he could have earned in the event that there had been a default or he gets what would have happened if the debtor reinstates and lives up to the terms of the contract. The debtor has that election. The debtor doesn't have to pay 12 percent interest. The debtor can live up to the terms of the contract. John Paul Stevens: Not if he doesn't have the money. H. Miles Cohn: Well, if he doesn't have the money, then the debtor's interest and property is not being adequately protected. Antonin Scalia: So the other track disappears and you get 12.5 percent. H. Miles Cohn: That is correct, Your Honor, if the debtor can pay it. But there may be no reason to pay it. Antonin Scalia: Favoring you over the oversecured creditor, which is Justice Stevens' point. H. Miles Cohn: It doesn't favor us because at the end of the case, you are eventually going to have the same result. I suppose the oversecured creditor... let's say in both cases there is ultimately a default. That is, the debtor does not reinstate. The debtor has defaulted. He may default at different points in the proceeding depending on when the Judge forces him to make these payments. If he defaults later in the proceeding, the oversecured creditor will get his property back. In other words, he will at that point be allowed to foreclose and if he is really oversecured, he is going to get back even more than that particular amount of interest. He'll get back the whole property. And that conceivably could be more. John Paul Stevens: He does not get to keep the overage. He can sell it off and use the proceeds of sale to pay off the debt, but he can't keep a profit. H. Miles Cohn: At most real property foreclosure sales, and certainly in Texas, the lender bids it in, and it is very difficult to find other buyers, and the lender effectively ends up owning the property. John Paul Stevens: If the property is substantially oversecured, if the debt is substantially oversecured, presumably the property would sell for more than the obligation. H. Miles Cohn: If it is substantial enough. John Paul Stevens: Yes. H. Miles Cohn: It depends how much the gap is. Sandra Day O'Connor: And it is true, isn't it, that the oversecured creditor would, at the end of the line, get the contractual interest, not the amount of interest that you say the undersecured creditor might be entitled to get? H. Miles Cohn: Yes, Your Honor. At the end of the line, the oversecured creditor will get his contractual interest. But, if the debtor elects to keep the contract in force in a plan of reorganization, the debtor also will get the benefit of contractual interest. There is one case on record where a court has attempted to reconcile the sections, and I don't think there is any problem in the context of a plan of reorganization with the Bankruptcy Court saying to the undersecured creditor who has gotten perhaps more interest than he would have under the contract that we are going to rebate or count some payments against you to make up for that difference because the creditor is now going to reinstate. Also, I might add, this is an issue that almost never comes up. I can't see it really ever coming up. Here, it's 12 percent interest but it is calculated on what in this case higher, in fact, in this case it's lower than the contract amount because contract interest was 14 percent. But if you take as a hypothetical you're getting 12 percent interest when 10 percent was the contracted rate, you are typically getting it, if you are an undersecured creditor on a principal balance that is much less, so that the total you are getting is still less than you would be getting if you got your payments. And that stands to reason because the debtor always has the option of making the regular payments. I don't think there is any court that wouldn't allow a debtor to make the regular payments of interest called for and retain the property while the case is proceeding. I think this case involves a situation where a creditor has suffered a very real loss. No payments have been made in this case. And I think it is important to put this issue in the context of what the Bankruptcy Code did to it. If this case had been decided under the Bankruptcy Act there would be no Timbers of Inwood Forest Associates, because an undersecured creditor was almost invariably entitled to relief from the stay. William H. Rehnquist: He just took his security and foreclosed and thumbed his nose at the Bankruptcy Court. H. Miles Cohn: That is correct, Your Honor, because the cases under the Bankruptcy Act uniformly held that except in certain very limited circumstances where the secured creditor for some other reason was protected, the secured creditor was entitled to take back his property if the debtor had no equity in it. In other words, if he had no equity, what's the point of the debtor keeping the property? What the Bankruptcy Code did was to put something really dramatic into the Code. Instead of just saying that the Court must terminate the stay if there is inadequate protection or if some other standard is not met, the Code also allows the Bankruptcy Court to condition the automatic stay. And that allowed the Bankruptcy Court in this case to do something it could not have done under the Bankruptcy Act. Under the Bankruptcy Act the Court would had to have just terminated the stay when we filed our motion under 362(d)(1). Byron R. White: And then the secured creditor would have had whatever value there was in the security and used that money at whatever market rates? H. Miles Cohn: That is correct, Your Honor. Under the Bankruptcy Act, the stay would have been terminated because the debtor had no equity in the property. We would have taken the property back and would have been out of the bankruptcy case. Under the Bankruptcy Code, the Court has an additional alternative. The Court can say to the debtor, okay, even though you couldn't have kept this property before, we will let you keep the property. We will keep the stay in effect as long as it is conditioned on something that protects the secured creditor from the costs of delay. That something in this case was periodic post petition payments, but it doesn't have to be. It could be anything. 362(d)(1) is the statute that gives the Bankruptcy Court this authority. It provides that the Court may condition the stay. Antonin Scalia: Well, the Code, as opposed to the Act, has disadvantaged the secured creditor in one degree, anyway. And we are just arguing over whether it has disadvantaged him further still. Previously, he didn't have to worry about some judge assuring, in the judge's estimation, that he wasn't being prejudiced by the delay. Now, he does, under the Code. Before, he could take his property and go. H. Miles Cohn: I think it was a change in methodology. I don't think that Congress intended to disadvantage secured creditors at all in enacting the Bankruptcy Code. Antonin Scalia: Oh, but it is a disadvantage not to be able to take your property and leave. Even if they can get the judge to figure out that you're not being prejudiced, you don't consider that a disadvantage? H. Miles Cohn: Not if you are being compensated for the cost of delay. Because what bankruptcy does is substitute value for in kind treatment. You may not get the property. Antonin Scalia: Having your property is quite different from having some judge's estimation that you have gotten something as good as your property, isn't it? H. Miles Cohn: Yes. I agree. Antonin Scalia: My point is that we all agree that the secured creditor is being disadvantaged by the Code and the question is, in addition to disadvantaging him to this degree, did the Congress, moreover, want to deprive him of the ability to make use of the time value of his money? H. Miles Cohn: I think very clearly not. In response to that, Your Honor, I would like to point to really two broad things that are set forth in the legislative history. And I might say as an aside that there has been a lot of argument in the lower courts and many articles written on this subject that spends a lot of time on what adequate protection means, what indubitable equivalent means, various terms that may have some meaning in other contexts but aren't really defined in the Bankruptcy Code. And I think in getting mixed into that argument they sometimes miss the two really clear things that are stated in the legislative history. One is that Congress chose, consciously chose, not to define the meaning of value, and therefore I think it is unfair to latch onto examples in the legislative history or little bits and pieces or words. Congress, in both the House and Senate reports, in more than one place, made very clear that this was a matter to be left to judicial development. But on the other hand, and this is the second thing that is very important, Congress made very clear that it sought to protect the full value of the creditor's interest in property. In both the House and Senate reports, there is language that the full benefit of the creditor's bargain should be protected, and an interesting aside to that is that the House and Senate reports also say that this means something more than what the Constitution requires. The Constitution generally has been interpreted to require that the value of the collateral at least be protected. And the House and Senate Report said that adequate protection means more than that. It means that even though the creditor may not be allowed to foreclose exactly on default or exactly at the time when he might under state law, even though he might not get in kind what he is entitled to under state law, that nevertheless he would be entitled to the value of what he gets under state law. I think that if you begin with this thing, that Congress wanted to protect the value of the creditor's interest in property, in this case the value of a mortgage, it necessarily follows that the costs of delay must be protected, for several reasons. First of all, that is the essence of the secured creditor's rights. The secured creditor has a right under his mortgage to foreclose on default. The secured creditor, with all due respect to this apartment project, doesn't want the project. United Savings doesn't want to own this property. United Savings wants to use the property as a means to recover its loan, and it does that by having it sold at foreclosure sale as soon as it is entitled to under the mortgage, taking that money, putting it out at interest, and the quicker it can do that and the more interest it can earn, the quicker it can recover its debt. Moreover, and I think this is another very, very crucial thing that as overlooked by the Court below, this value, this time value of money, is something that is protected under non-bankruptcy law. No one would doubt that a fee simple interest in property is worth more than a future interest in property. I don't think anybody would doubt that. Surely it follows that a temporary deprivation of an interest in property decreases its value, and in fact, in another context, this Court held recently, in First English Evangelical Lutheran Church, that an owner's interest in property was decreased when, for a period of time, he was temporarily deprived of that interest. And I don't think there is any reason for treating security interests any differently. If the secured creditor is deprived of his property for a period of time, the value of that security interest is less. For example-- Antonin Scalia: Mr. Cohn, can I ask you about some of the structural problems with the other portions of the statute that the interpretation you are putting on this creates? H. Miles Cohn: --Certainly. Antonin Scalia: Subsection 362(b) provides for... you are moving under (d)(1). H. Miles Cohn: Yes. Antonin Scalia: Which says the automatic stay can be terminated for cause, including the lack of adequate protection of an interest in property. Now, you are saying that there is automatically inadequate protection when a less than fully secured creditor is not given the time value of his money, in effect, right? H. Miles Cohn: Yes, although the question is phrased a little bit differently. Antonin Scalia: Nonetheless, you are saying that that comes to the same thing. There is lack of adequate protection unless you are assured, unless the stay is modified to give you the time value of the money. If that is the case, then why isn't (d)(2) entirely superfluous? That is, with respect to a stay of an act against property under Subsection (a), you can move for modification if two conditions. Number one, the debtor does not have an equity in such property... but that is always going to be the case when you have an undersecured creditor... and, two, you need a second condition under (d)(2)... such property is not necessary for an effective reorganization. You wouldn't need that second condition under your theory of the case, because the first condition, the first part of (d)(2) would be the same as (d)(1), and you wouldn't need a second part to (d)(2). H. Miles Cohn: I think the mistake in that analysis is that adequate protection, the (d)(1) section, is not directed just to this. It could have been written a lot more specifically to set out, for example, in single asset cases, these are the rules. But instead the Code required adequate protection of an interest in property. And it could have been written differently. Antonin Scalia: Well, (d)(1) isn't written just for this. But (d)(2) is written just for this. H. Miles Cohn: (d)(2) is not necessarily limited to a single asset case. It would apply to any. Obviously, you are moving for relief from the stay with respect to a single asset. In (d)(2), one thing that enters into the analysis that I might add is that the second part of the test on (d)(2) which requires that there be a reasonable hope of reorganization, doesn't require rehabilitation because a reorganization can include a liquidating plan. There are many circumstances in which a debtor may have no equity in the property, yet, nonetheless believe that it could successfully reorganize, for example, by capital infusion or by a liquidating plan. There are all kinds of things. So there are circumstances where you wouldn't be entitled to relief under (d)(2), but you would still be entitled to some kind of relief, not necessarily termination of the stay, but some kind of relief under (d)(1). Antonin Scalia: Give me an example, specifically. H. Miles Cohn: I think an example would be... I can think of more than one. You might have a multiple asset case where the debtor has no equity in property and therefore there is some reason for relief under (d)(1), but nevertheless, it is necessary for an effective reorganization, because the debtor is using that property and cannot easily replace it. So the creditor may not be entitled to any relief under (d)(2) but may be entitled to relief under (d)(1). Another circumstance would be, in a single asset case, where the debtor has-- Antonin Scalia: No, I want the opposite. I want when you would be entitled to relief under (d)(2) that you couldn't get under (d)(1). H. Miles Cohn: --It might be a different kind of relief. I'm not sure what you mean. Antonin Scalia: A case where you would be entitled to relief under (d)(2), you wouldn't be entitled to relief under (d)(1) anyway. H. Miles Cohn: It would be the situation, I'll give you an example, where the creditor comes in and says we will offer you adequate protection by giving you a lien on other property or by paying adequate protection payments or doing something that meets the requirements of (d)(1). And the creditor says I don't want to fool around with this bankruptcy case. Even though you are going to offer me something that adequately protects my interest, under (d)(2), if there is no equity in the property and this property is not necessary to an effective reorganization, I get it back. In other words, (d)(1) allows the debtor to hold onto the property, possibly for a period of time beyond which he might reasonably reorganize, or beyond which there may be some reasonable hope of reorganization. So the debtor may not want to take advantage of it but he may want to, and the creditor may say no. With the Court's permission, if there are no more questions, I would like to reserve the balance of my time. William H. Rehnquist: Thank you, Mr. Cohn. We will hear now from you, Mr. Simon. Leonarad H. Simon: Mr. Chief Justice, and may it please the Court: I would just like to briefly respond to two points that have been raised by Petitioner. First, that the time value of foreclosure rights is protected by state law is a question that I can't answer. But it is a question that the Federal Bankruptcy Code has answered. The Federal Bankruptcy Code in Section 502(b)(2) and in Section 506(a) and (b) has legislated on the issue of interest. This Court, in Butner, specifically stated that in cases where the Legislature has spoken on issues, that Federal law will override the state law. I would just point out to the Court that that issue has been decided under the Bankruptcy Code. Secondly, both (d)(1) and (d)(2) were part of a law prior to the enactment of the Bankruptcy Code. It is simply not the case that either one or the other was not the law. William H. Rehnquist: But the dramatic change has been the automatic stay, really. Leonarad H. Simon: Not so, because there was an automatic stay pursuant to 1144, in prior law. William H. Rehnquist: I had a fair amount of experience representing creditors in bankruptcy under the Act and you just didn't have to put up with all this stuff. You could take your security, and they had to bring a plenary action against you in District Court in order to even question, and the only thing there was to defend that the security was improper. Leonarad H. Simon: Well, I beg to differ with the Court, but at some point there was a time when in order to get an automatic stay effected, a debtor had to take affirmative action to do so. Once it was effected, however, then we were under the same rules that we are under right now. But, for more than ten years prior to the enactment of the Bankruptcy Code, we had Bankruptcy Rules of Civil Procedure. And those rules provided for an automatic stay upon the filing of the Bankruptcy case. Your Honor may be referring to a time prior to that time. William H. Rehnquist: Well, my private practice ceased in 1969 so that perhaps I just missed the Bankruptcy Rules. Leonarad H. Simon: I think perhaps that may be the case. And to say that-- Byron R. White: At least there was an understanding on reorganization. Leonarad H. Simon: --Oh, yes, there was. Very clearly so. Byron R. White: But nevertheless, if a secured creditor was undersecured, what happened? Leonarad H. Simon: Oh, the case law is very clear from prior tot he enactment of the Bankruptcy Code under a steady stream of cases beginning with Sexton v. Dreyfus and ending with Nicholas, and then from the Second Circuit Court of Appeals, starting with In re Murel, Third Avenue Transit, followed by Yale Express and Bermec, that the undersecured creditor was entitled to protection against the depreciation in the physical value of the property, not for lost opportunity costs. That was the law and has been the law for a century. And to say that United, the Petitioner herein, was following the law at the time or the practice at the time and only proceeding under (d)(1) is in my mind an incredible argument. It was surprising to me that they did not proceed under (d)(2). If they had proceeded under (d)(2) they might have won. But they did not. Now, I would like to just go into my argument if I may. This is clearly a statutory construction case. This Court has had many occasions to construe Congressional enactments. We have reviewed many of the cases that have talked about the procedure that the Court follows. Ernst & Ernst v. Hochfelder, Touche Ross v. Reddington, and many others, including the Midlantic Bank v. New Jersey, both the majority and the dissenting Opinions, very well-written Opinions on both sides. What we glean, although this is not an area that is very clear, what we glean from all of these cases is that the Court goes through the following analysis. First, it looks to the actual words of the statute to see if the intent of Congress is clear from the face of the statute... that is, the plain meaning rule... and, whether such interpretation is harmonious with the entire statutory scheme. Second, the analysis goes through the Congressional policy of the underlying statute to see if the proper interpretation is consistent with the Congressional policy underlying the statute. Third, if, only if the intent of Congress cannot be gleaned from the first two elements, then the Court will go into the legislative history. And as this Court has been divided at times on the types of legislative history used or whether legislative history is appropriate to use, beginning in 1950 with a stream of cases, from that point, this Court has been more willing to look at legislative history because of the availability of the legislative history to both sides. Prior to 1950, the big argument was, it is not available and it wasn't very clear. Today, I am going to emphasize the first two elements of the analysis because it is my belief that nothing substantial can be added to Judge Randall's scholarly treatment and analysis of the legislative history behind the Bankruptcy Code contained in the Timbers Panel Opinion. Also, I would like to commend to the Court, for the arguments which I do not have time today to make, the well written briefs of amici Global Marine and National Association of Credit Managers. There are two phrases and one word which has been used to attempt to import into Section 361 this time value analysis. They are "indubitable equivalent", "interest in property", and "value". Petitioner argues that the phrase 361(3) imports a time value analysis into Section 361. Petitioner cites for authority Case v. Los Angeles Lumber Products Company, 308 U.S. at 115 where the Court stated that where words are employed in an Act which had at the time a well-known meaning in the law, they are used in that sense unless the context requires otherwise. And I would ask the Court to focus on that last phrase, "unless the context requires" to the contrary. The arguments against importing the time value analysis into 361 through this term or phrase "indubitable equivalent" are fivefold. First, the words are used in a different context in Section 361. "Indubitable equivalent" was used prior to the enactment of the Bankruptcy Code in the confirmation context, if in fact they were terms of art. Secondly, the phrase 1978 in the Bankruptcy Code, become a term of art with a well-defined meaning. Congress took the phrase from In re Murel Holding Corporation, 75 Fed. 2d 941, a Second Circuit Court of Appeals decision in 1935, where Judge Hand specifically used it in the confirmation context, and in 43 years between the date of Morel and the enactment of the Code, the term or phrase "indubitable equivalent" was only used nine times. Those Opinions did nothing to define 19. Antonin Scalia: Isn't that the way Hand used it? Leonarad H. Simon: No, clearly not. Very clearly not, for two reasons. First, and this is the... I was just about to get into this. First, the Opinion of Judge Hand in Murel was by its own terms limited to the confirmation context. Antonin Scalia: I didn't ask whether it was limited to the confirmation process. I asked whether in that context or in any context, it wasn't specifically directed to time value. Leonarad H. Simon: No, it was not. Antonin Scalia: It was not? Leonarad H. Simon: It was not. In re Murel, time value was referred to in In re Murel by Judge Hand as quote "completely compensatory". "Completely compensatory". That was the phrase that Judge Hand used in In re Murel to talk about the time value of money. What "indubitable equivalent" was referring to in that case, if the Court will review that case very carefully, it is a very well-written case, a very knowledgeable man wrote that case, because he understood bankruptcy. He understood it very clearly. What he was talking about was the fact that there was no principal repayment until the end of the ten-year term. The plan specifically provided for the time value of money. It provided for market interest rate on the principal. And the Judge said it is completely compensatory, it has to be completely compensatory. And then he went on to say that interest is the equalizing factor. What he was really referring to, I think, was feasibility. With "indubitable equivalent", what he was really referring to was the repayment of the principal and the fact that there was no principal repayment during the ten years of the plan, and that it was an interest-only obligation, and that there was big balloon payment ten years down the line. Nobody knew whether the property was going to have sufficient value to pay that balloon payment. There was no amortization. Yet another possibility, he was referring to the fairness of forcing a creditor to wait for ten years to receive any interest. But very, very clear, and this is a point which one needs to really review that case very carefully to understand, the time value of money was equated to the term "completely compensatory". "Indubitable equivalent" referred to something completely different. The importation of the time value analysis into Section 361 through "indubitable equivalent" is yet defended again by Judge Hand's Opinion in which he stated that no doubt less would be required during the interim until a plan could be filed and confirmed by the Court. It very clearly distinguished that. And finally, and perhaps most importantly, Sections 361, 1129(b)(2)(A) are similar in that each have two specific examples filed by general description, all in the disjunctive. One of the two examples in 1129(b)(2)(A) specifically provides for a time value element, in other words, the confirmation cram-down standard. There is a specific time value element in that statute, in that part of the statute that is not tied to "indubitable equivalent". Neither of the two examples in 361 specifically provide for a time value element. Each section of the Bankruptcy Code containing a specific time value element does so without utilizing the words "indubitable equivalent". Section 1129(a)(7)(A)(ii), Section 1129(a)(9)(B), Section 1129(b)(2)(A), Section 1225(A)(4), Section 1225(b)(1)(A) and Section 1325(b)(1)(A) are the sections in the Bankruptcy Code that utilize a time value element, and none of them used the words "indubitable equivalent". Thus, when Congress utilized a time value concept, it did so explicitly and it did so without utilizing the phrase "indubitable equivalent". Justice Blackmun, speaking for the Court, in Roussileau v. United States, 464 United States at 23, quoted with approval the following elements of statutory construction from the 1972 Fifth Circuit Opinion in United States v. Won Kim Bo, and I quote: "Where Congress includes particular language in one section of a statute but omits it in another section of the same act, it is generally presumed that Congress acts intentionally and purposefully in the disparate inclusion and exclusion. " Thus, if the phrase is not a term of art, and does not have a unique time value element, what is its meaning? And what is the meaning of "indubitable equivalent"? The answer is that the phrase must mean, quote: "without a doubt, an acceptable or equal substitute. " That's what the phrase means. And so now let's apply it in Section 361(3). It would mean, other adequate protection that would be, without a doubt, an acceptable or equal substitute for the examples of adequate protection described in Sections 361(1) and 361(2). And in Section 1129(b)(2)(A)(iii), the phrase would mean, other fair and equitable treatment that would be, without a doubt, an acceptable or equal substitute for the examples of fair and equitable treatment described in Sections 1129(b)(2)(A)(i) and 1129(b)(2)(A)(ii). William H. Rehnquist: Is United Savings getting any interest payments during the bankruptcy? Leonarad H. Simon: United Savings is not getting any interest, per se. It is receiving the net operating income from the property. It is not designated as interest. William H. Rehnquist: And the reason it is not getting any interest is because of the bankruptcy proceedings? Leonarad H. Simon: The reason why it is not getting any interest at this time is because of the stays that have been entered on the District Court level and then on the Fifth Circuit Court level, staying the effect of the Bankruptcy Court's Order. William H. Rehnquist: Yes, and of course, the Fifth Circuit has reversed the Bankruptcy Court's Order in effect. Leonarad H. Simon: Yes, that's correct, and so a stay is no longer necessary. William H. Rehnquist: If the Fifth Circuit's view prevailed, United Savings will continue through the proceeding without receiving any interest on its debt. Leonarad H. Simon: No question about that. I would like to make this point about that, and I was hoping that the Court would raise that. There is an answer to that question in the Continental decision, and I would like to just refer this to the Court, if I might. William H. Rehnquist: The question I asked was whether United States was receiving interest, and you have answered it by saying no, it isn't receiving interest. Leonarad H. Simon: It is not receiving interest. I would just like though to refer this to the Court. I understand that this proceeding has taken quite a long time, and I understand that United has not been receiving interest for a long time, and I understand that a plan of reorganization has not been filed or confirmed. But that is as a result of the fact that the issues that are determined by the Court today have to be decided before something can be done. And in the Continental case, which is, the full cite of the case is Continental Illinois National Bank and Trust Company v. Chase, at 296 U.S. 648, the Court held that if this long delay were without adequate excuse, the retention of the injunction for the long period which has intervened since it was granted could not be justified, but the delay is obviously due to the many doubts and uncertainties arising from the present litigation. With those doubts and uncertainties now removed, the proceedings should go forward to completion without further delay. And that will occur. William H. Rehnquist: This case may be an egregious example of extension, because of litigation of important issues, as you suggest. Leonarad H. Simon: Correct. William H. Rehnquist: But under the rule held by the Fifth Circuit, secured creditors such as United States Savings would not get interest pending the bankruptcy. Leonarad H. Simon: Correct. The proper remedy for the creditor in that particular instance, if the debtor cannot file a plan of reorganization, in the appropriate period of time, the proper remedy is a motion to dismiss. The Fifth Circuit Court of Appeals decision in the Fifth Circuit is working. This Court needs to know that it is working very well. The Bankruptcy Judges are beginning to follow 1112 more carefully. They are giving greater consideration to extending the exclusive period, and refusing to do so, and they are administering their cases and moving their cases forward. That is the proper remedy for these creditors. That is what, in the en banc decision, Judge Randall said that the Bankruptcy Court should do, and it is incredible, but that is exactly what they are doing. And I don't know any good debtor/bankruptcy lawyer today who is not filing a bankruptcy proceeding, and immediately thereafter pursuing a plan of reorganization with the idea of filing it within the exclusive period, within four months, because the Bankruptcy Courts will not allow a debtor to stay in bankruptcy indefinitely, any longer. And it is because of the Fifth Circuit. And that is the way that the Code was structured, and that is the way it should work, and, by God, that is the way it is working now, because Judge Randall has basically cleared it up with the Fifth Circuit. The phrase "interest in property". The phrase 361, when read in the context of Sections 362 through 364, clearly refers to the various types of ownership interest or lien interest for which a party may require adequate protection. For example, an entity may have an ownership interest as a tenant-in-common, a joint tenant or a tenant by the entireties. An entity may be, along with a debtor, a beneficiary in a trust or the holder of a deed of trust covering real or personal property to secure a jointly held note receivable. An entity may be the holder of a pledge. And the list goes on. While Congress used "interest in property" to describe many different property rights, the phrase refers neither to enforcement powers or remedies to realize the benefit of the "interest in property", nor to creditors' rights for remedies. Congress' use of the general and broad term "interest in property" therefore should not be read to require protection of state law contractual remedies that are not property rights, such as the ability to foreclose. I would like to make one point at this juncture. That is, Justice Scalia, you were absolutely correct. Oversecured creditors would be entitled to not only receive their lost opportunity costs but also to receive their interest in addition to that. Furthermore, it is true that if taken to its logical conclusion, that if the market rate is higher than the contract rate, then they would be getting a benefit over an oversecured creditor. Under Section 506(b) it is very clearly inconsistent. But what is even worse than that is that there is absolutely no reason why undersecured creditors would not be entitled to lost opportunity costs, for, were it not for the imposition of the automatic stay, they would have been entitled to go to judgment, they would have had a judgment lien on their property, and they would have had a right-in-property, a foreclosure right, that would have had measurable value. William H. Rehnquist: The bankruptcy law has always distinguished sharply between secured creditors and undersecured creditors, hasn't it? Leonarad H. Simon: In certain circumstances, yes, but the Bankruptcy Code has never distinguished secured creditors and undersecured creditors based on the ability to receive lost opportunity costs. Never. William H. Rehnquist: Well, supposing, though, that this bankruptcy is ultimately dismissed. Is United States, or what is the name of the creditor? Leonarad H. Simon: United Savings. William H. Rehnquist: United Savings, entitled to get accrued interest out of the security as well as principal? Leonarad H. Simon: At that time, it becomes moot, because it has the security, it has the collateral. It will have already foreclosed, and so it becomes a moot point at that time. William H. Rehnquist: Unless you're talking about how much it's bid in at. Leonarad H. Simon: The amount that it will bid in will not be affected by this case or by our interpretation of Section 361. It will bid in the amount of its note or, under Texas law, probably 70 to 80 percent of the amount of the indebtedness, at that time. Antonin Scalia: It will be a moot point. The fact is, it will be out the interest, during that whole period, right? Leonarad H. Simon: There is no question that it would be out that interest. Antonin Scalia: You may consider it moot. Leonarad H. Simon: There's no question about this. Antonin Scalia: The good people at United Savings won't. Leonarad H. Simon: This is a very unusual case. Antonin Scalia: Pardon? Leonarad H. Simon: This is a very unusual case, because it has taken so long. It should not have taken so long. Within six months after the filing of this bankruptcy proceeding, had it not been for this counsel's use of only Section 362(d)(1), and the imposition of the stays and the reluctance of the Bankruptcy Court to do anything pending the Fifth Circuit's determination, this case would have been determined years ago. William H. Rehnquist: But they still would have been out six months' interest, wouldn't they? Leonarad H. Simon: Questionable. William H. Rehnquist: They would have been out the interest for however long the proceeding was in bankruptcy. Leonarad H. Simon: That assumes they would have taken the property into their REO Department and immediately sold it, which may or may not be the case. There is no evidence in the lower Court to that effect. And in fact, this Court may take judicial notice of the fact that many lenders retain properties in the hopes that they will increase in value over the years and then sell them two and three years dow the line. So it is not an absolute, foregone conclusion that they would have been able to obtain interest. That issue has been decided by this Court many, many times. The undersecured creditor is not entitled to interest under Sexton, Nicholas and many more cases that have been decided by this Court, that the Bankruptcy Code and the power of Congress to legislate bankruptcy laws basically gives the right to Congress to stay the enforcement of lien rights. The Court has continuously said that only the value of the property is protected against decline, not the loss of interest during the bankruptcy proceedings. That has been very clear precedent. I am going to go into the next portion of my argument here very quickly. The language of Section 502(b)(2) is clear that a claim for unmatured interest as of the date of bankruptcy is disallowed. There is no question about that. Interest cannot accrue, under Section 502(b)(2). The word 502(b)(2) is defined in Section 101(4)(a) to include a secured or an unsecured claim. Section 506(a) defines the secured claim as being equal to the value of the creditor's interest and the estate's interest in the collateral. The question that I would pose to this Court is how could the estate's interest in collateral include foreclosure rights of a third party? If United's interest in the collateral is limited to the estate's interest in the collateral, how could it possibly include lost opportunity costs of a third party? That is one of the clearest deficiencies in that argument. There are only two exceptions to 502(b)(2) and that is 506(b) which allows interest in the case where the collateral is in excess of the value of the debt and also 726(a)(5) which provides that if the liquidation estate has enough assets to pay its allowed priority secured and unsecured claims, then it can also pay interest. John Paul Stevens: May I ask you one question? Leonarad H. Simon: Yes, sir. John Paul Stevens: I hesitate to interrupt. But I want to be sure about your position. One of the Amicus Briefs filed by a Professor Nimmer from Michigan concludes that, urges that there is neither a requirement of post-petition interest, which your opponent asks for, nor its absolute preclusion is warranted under the terms. Do you take the position that it is absolutely precluded? Leonarad H. Simon: Yes, sir. John Paul Stevens: You do. And there is no middle ground. So you disagree, I think you disagree with Judge Clark then in the Fifth Circuit. Leonarad H. Simon: No. Judge Clark, I believe you are talking about the concurring decision in the en banc? John Paul Stevens: Yes. Leonarad H. Simon: I don't believe that the concurring opinion adopted the idea that in some cases it was allowable and in some cases it was not. John Paul Stevens: I thought it did. I will read it again. But I thought he did. Leonarad H. Simon: I don't think that was the case that-- John Paul Stevens: I don't' think it is entirely clear in the majority Opinion whether they agree completely with your view either. But your view is it is absolutely prohibited? Leonarad H. Simon: --Right. The majority Opinion in the Tim case clearly adopts that approach. There is a case, called Briggs Transportation, and that is the case, and I believe that Briggs Transportation is out of the Eighth Circuit, that was decided after American Mariner, which basically says that yes, sometimes it is allowable and sometimes it is not. The problem with that case is that this is clearly a statutory construction case. I don't have time to go into all of that, but it is clearly a statutory construction case, and it is either permitted or it is not permitted. Harry A. Blackmun: Well, it took the Eighth Circuit and it also took Chief Judge Clark. Leonarad H. Simon: I am not certain that Chief Judge Clark, in his... I would have to read that concurring opinion again. But I do not believe that Judge Clark was adopting the Briggs Transportation ruling, that in some cases it would be and in some cases it would not. I'd have to read that again, but I do not believe that that is what Judge Clark was saying. Harry A. Blackmun: Well, I thought otherwise, and like Justice Stevens, I will have to read it again. Leonarad H. Simon: Finally, I would like to point out two things out of the legislative history that are amusing, if not interesting. There were two Amicus Briefs filed in this case, one by the National Commercial Finance Conference. In the legislative proceedings that preceded the enactment of the Code, the party speaking for National Commercial Finance Conference, during those Committee hearings, stated that the secured creditor should receive periodic payments during the pendency of the stay to cover depreciation of property or wear and tear. It is very interesting that they are now adopting a different approach, when in the Committee hearings they clearly adopted the approach that has been adopted by the Fifth Circuit. Secondly, the other amicus that has filed in this case, American Bankers Association, also stated that the automatic stay should remain in effect if it is clear that the value of the secured creditor's claim against the collateral will be preserved, and further said that the suggested standards set forth in the Commission's notes should be included in the statute. And the Commission's notes basically said that conditions which may be imposed by the Court when appropriate include, one, requiring other security of an equivalent or two, if there is no equity, or the equity is marginal, requiring additional security to the extent of the anticipated decrease in the value of collateral as a result of its use. I find that very interesting, that they are now jumping on the bandwagon and taking the position that this is what the law was at the time that the Code was enacted. I would also point out to the Court that there was only one comment in all of the legislative history that ended up with the Bankruptcy Code, that even talked about this issue, and it was a part of a law journal article from Mr. Murphy. The law journal article was 63 California Law Review 1483, and the cite was, if the interim-- William H. Rehnquist: Mr. Simon, your time has expired. Leonarad H. Simon: --Thank you. William H. Rehnquist: Mr. Cohn, you have seven minutes remaining. H. Miles Cohn: I would like to begin by responding to Justice Stevens' question and just make clear what our position is on the Briggs issue, also. First of all, United's position is that a secured creditor, as well as others with interest in property of the estate... that may be a co-owner, or a spouse with interest in community property, anyone with interest in property of the estate... is entitled to protection for the costs of delay imposed by the automatic stay. That does not necessarily require and it is not our position that that would necessarily require periodic post-petition payments. Adequate protection may take the form of an equity cushion in the property, it may take the form of an alternative lien, it may take the form of a reorganization proposal or rehabilitation that is going to increase the value of the property such as the completion of goods in process where a lender has a security interest in manufacturing goods. So that is going to depend on the facts of the case. Our position is that some protection ought to be required. Secondly, we agree with the Respondent that Briggs is not a very good response to this problem. I think what Briggs does is tell each individual Bankruptcy Court to answer a legal question. That legal question being whether the time value of the secured creditor's rights are entitled to protection. I think that is a legal question and it ought to be answered by the Appellate Courts. Byron R. White: Mr. Cohn, do you agree with your opposition as to the status of the secured creditor before the Code was adopted? Did the undersecured creditor in a reorganization ever get the time value of his interest in the property? H. Miles Cohn: No, I don't agree with the way he sees it. In fact, we may be looking at two different things. I think he is looking at cases that deal with reorganizations. I'm dealing with cases, and the briefs set forth the cases that have to do with motions for relief from stay. Byron R. White: I know. But this is a reorganization case. H. Miles Cohn: Yes. But the automatic stay-- Byron R. White: For which you made the motion. H. Miles Cohn: --There are two different periods of time. The automatic stay won't take effect until a plan of reorganization is confirmed. Byron R. White: Right. H. Miles Cohn: And there may be different standards or different rules of law involved at such point as the Plaintiff's reorganization is confirmed. Byron R. White: Before the Code, would your client have been entitled to recognition of the time value of his interest in the property? H. Miles Cohn: Yes. Byron R. White: In this very case, in a case exactly like this? H. Miles Cohn: Yes. But I have to answer it by saying that it's not a yes or no question. There would not have been an order conditioning the stay on periodic payments or something else to protect time value. Byron R. White: There wouldn't have been, no, because there was no provision like that. H. Miles Cohn: No, but I believed there would be protection for time value because the Court would have terminated the stay and given the creditor his property back. Byron R. White: With no equity? H. Miles Cohn: Yes, if the debtor had no equity in property. Byron R. White: It didn't have to. H. Miles Cohn: Yes, as I read the cases which are cited in the briefs, where the debtor had no equity in property. Byron R. White: In a reorganization? H. Miles Cohn: In a reorganization case. That is correct. In any kind of case where the debtor had no equity in the property and there is nothing to be saved for the estate, almost invariably the stay was terminated. And that is why this precise issue, payment of lost opportunity costs didn't really arise under the Bankruptcy Act. Byron R. White: So you just say the cases that he cites to the contrary, he just mis-cites them, or they didn't hold that, or what? H. Miles Cohn: I think they are inapposite. I think that they are read out of context. There is really a different issue. Under the Bankruptcy Code you have an ability to condition the stay and that raises the whole issue of what periodic payments or what other protection should be fashioned. Under the Bankruptcy Act, protection for the cost of delay was provided in a different way by simply terminating the stay. I would like to return finally to the language of the statute, to again make clear our position. The Petitioner does not rely so heavily on the phrases "adequate protection" and "indubitable equivalent" as the Respondent suggests. I do think that an analysis of those words supports our position and those arguments are set forth in the brief. But I think a better argument and one that perhaps goes more to the heart of the issue is found by looking at the wording of Sections 361(1) and (2) which describe the objects of adequate protection. Those sections are directed to decreases in the value of an interest in property... in this case a mortgage... so they are directed to decreases in the value of the mortgage that result from the automatic stay. I think there is no serious question in this case that the automatic stay and the delay that is caused by the automatic stay, does result in a decrease in the value of a mortgage. The Bankruptcy Court made specific findings as to what that damage was and how that value was decreased. Those findings have never been questioned by the Respondent and were not questioned by the Court below. It is clear that the value of that mortgage decreased as a result of the automatic stay. It is also clear that that value is protected under state law under analogous causes of actions that might be filed under state law. Now, if Congress sought to protect the full value of creditors' interest in property, to protect the benefit of their bargain, how could it be that this important element of value that is recognized by state courts is somehow omitted? That is not suggested in the legislative history and I think it is clear that that element of value should be protected. Otherwise, we're left in a very odd position, which is that a Congress, which has directed in the legislative history that the full value of rights and property should be protected, will somehow have enacted a statute that leaves secured creditors worse off than they were under the Bankruptcy Act. Byron R. White: Assume we come to the conclusion, erroneous, I'm sure you think, that the secured creditor, prior to the adoption of the Code, would not have had the time value of his money and would have been deprived of it. Do you think that nevertheless, the Code, the way it is worded, should give him something that he wasn't entitled to before? H. Miles Cohn: Absolutely. The only reason that I go into what the law was before enactment of the Code is to put in context some of the examples that were used in the legislative history. Byron R. White: So what the law was before doesn't govern what the law is now? H. Miles Cohn: No, absolutely not. I think it helps put in context some of the arguments that are made against our position, but the statute as written directs and defines the object of adequate protection as the value of the creditor's interest in property, the value of the mortgage, in particular directs that the secured creditor be protected to the extent that that value is decreased by the automatic stay. And I think it is clear, as the Bankruptcy Court found, that if the automatic stay keeps the creditor from foreclosing for a period of time, then the value of that mortgage is decreased. And that is what ought to be protected. If the Court has no further questions, I will conclude. William H. Rehnquist: Thank you, Mr. Cohn. The case is submitted. Speaker: The honorable court is now adjourned until tomorrow at ten o'clock.

Warren E. Burger: We’ll here arguments next in 72-1125 Allee against Medrano. Mr. York you may proceed whenever you’re ready. Larry F. York: Mr. Chief Justice and may it please the Court. I would like to briefly summarize the facts of this case and describe to the Court how the case got here in a very brief fashion. And then to discuss the constitutionality of the statute to which you discussed and then to discuss the intervention question of propriety or federal intervention -- federal court intervention in the case. In about June of 1966, intensive efforts begin by the AFL-CIO in Texas to organize and unionize for the farmworkers in the Rio Grande Valley of Southern Texas. Those efforts were marked by picketing in demonstrations which went on over a period about 13 months In June or so 1966 up until approximately June 1967. During that period, the Texas Rangers, five of whom were defendants in this case and who are the only defendants who have appealed, were called in first, I believe the record will show in about November in 1966 for the purpose apparently then of serving ten warrants on people who had already been charged with committing the violation of having a secondary strike by the local authorities. The ranger came in to serve those ten warrants. The rangers came in to the area again in May of 1967 at the request of local officers. And from that time until the picketing ended in June of 1967, about roughly six weeks, a two-month period. The rangers made several arrest in this area obstructing which covered the number of counties. It covered up a large number of structures and picketers. The arrest made by the defendant rangers during this approximately six week or perhaps shorter period in that, total amount 45 including 28 for mass picketing under Texas statute, 14 for unlawful assembly and one for no driver’s license, one for threatening the life of a ranger and one for brandishing a weapon on the public part. Other arrest were major -- Speaker: Did the record show what kind of a weapon? Larry F. York: I believe it’s described as a rifle by Mr. Dimas. He is one of the plaintiffs in the case. A total of -- if I read the record correctly about 70 arrests of the individual were made over this 13-month period. By both the rangers and the local law enforcement officials in this several county area in which the mass operation of organization was going on. Speaker: A total of how many arrests? Larry F. York: About 70, Your Honor. Its 70 individuals. Speaker: Arrest -- they made more arrest in that over the 13 months period I’m sure of various people but you mean 70 connected with this labor organizing activity? Larry F. York: I believe that as stated in the appellees’ brief. The total that they come up with is about 60 arrest made in all counties during this entire dispute. Speaker: You mean of anybody for anything? Larry F. York: That’s my understanding Your Honor because I believe that’s what the record show. Speaker: So these, many of these arrests weren’t at all connected with the activity involved in this case? Larry F. York: sWell, they were about all this 60 or 70 of sure arrest, they were all with one or two exceptions, the driver’s license and the brandishing of weapon that is all involved the statute which is before this Court and which before the three-judge court. Speaker: And were arrest of people, were they not? Or if I get it all wrong involved in this union organizing activity? Larry F. York: Yes sir, that’s correct. Speaker: You’re not talking about the total arrest in that county -- Larry F. York: Oh! I’m sorry. Speaker: That’s my question. Larry F. York: No, we’re not saying that that’s all of the arrest that they were ever during that county, during this -- Speaker: So all of this 60 to 70 arrests were connected with what’s that issue in this case? Larry F. York: Yes. Speaker: Mr. York? Larry F. York: Yes, sir. Speaker: I from my own glanced at the appendix developed the idea that is to Article 482, the section on abusive language that the District Court invalidated, none of the individual plaintiffs in this case have been prosecuted under that particular section or threaten with prosecution. Am I wrong? Larry F. York: I believe that they were arrest under that section. Speaker: But where they of the individual plaintiffs in this case? Larry F. York: Your Honor, I’m not sure that I can answer that question without referring to the record. Speaker: Don’t bother. Larry F. York: Alright. Speaker: I might say I share the same inquiry that Justice Rehnquist has expressed. Larry F. York: I will hope to touch that in rebuttal, if I may, Your Honor. The arrest we talked about ended in a period in about June of 1961. This period of 13 months or so was marked by actual vandalism as the record show directed toward farm owners in the sense of finding sugar in gas tanks, punctured tractor tires, stolen generator and that kind of thing. The three-judge court found that the law for including the ranger defendants had acted unlawful towards the strikers by harassing them and intimidating them for the purpose of ending the strike. In June of 1967, state civil injunctive proceeding was filed in the State District Court of Starr County; one of the counties involved in a case filed La Casita Farms versus AFL-CIO Organizing Committee. An injunction relating to La Casita Farm was rendered by the Court in July of 1967, enjoining all picketing against La Casita, which was one of the major employee in the area. On the basis that the picketing were shown to be so intertwine with violence and disruption that it passed any legitimate form of communications so that all picketers was enjoined of La Casita Farm. The Union appealed the injunction to the Court of Civil Appeal to Texas and Trial Court was affirmed in that reporting to 439 S. W. 2d 398. And that of course is not involved in this case, that is another injunction and that is what we say that the record shows ended the strike in the area. It was a fact that there was a state injunction in June of 1967. Then in July of 1967 thereby plaintiff filed this action with the result that we know of in the three-judge court were here today. I’d like -- Speaker: May I ask you Mr. York? Larry F. York: Yes, sir. Speaker: At that time, do i gather the state injunction proceeding was complete -- completed, no appeal was taken from the injunction? Larry F. York: It was appealed to the Texas Court of Civil Appeals which I -- Speaker: I’m thinking at as of the time this action was brought. Larry F. York: Your Honor, I can’t tell you precisely the injunction was entered on July 11, 1967. This case was filed, I don’t have the precise date but it was filed I believe in July of 1967. Ordinarily that would mean that the appeal could not have been completed by that time. Speaker: Well do we have the date when the affirmance of the appellate court was presented? Larry F. York: It was in 1968 and -- Speaker: Well that’s it then. Larry F. York: I’m sorry -- Speaker: The state injunctive proceeding then must do a contending when this action was filed. Larry F. York: Yes sir, it became the Court’s opinion with December 31, 1968 and there was -- Speaker: And let me ask again, it is still in effect? Larry F. York: Yes, sir. Speaker: Is that the highest court you could appeal to, the one that -- Larry F. York: No, sir. The Texas Court Civil Appeals desire an immediate court. The record does not reflect there was a reattempt made to appeal from that court by the Union to our Texas Supreme Court. Speaker: And that’s the discretion that you appeal, is it? Larry F. York: Yes, sir. It may or may not be taken but the record will reflect order an attempt that has been made. Section 5154d of our statute involving mass picketing. That’s what I would like to address myself to you this time. Texas is one of -- in support our research has been able to develop one of only three states all over -- perhaps all who have adopted a specific statute defining what mass picketing is. However, the equity courts of this land have recognized for a long time that the concept of picketing while that it involves speech, also involves conduct and that the conduct side of it may be regulated in the absence of statute so that the concept of mass picketing, picketing which transcends the speech elements of communication and moves into the conduct area may be by the courts and the variety of cases in many jurisdiction cited in our brief in New York and New Jersey and Ohio with a number of pickets has been specific and limited by the equity court in an injunctive process. Speaker: That would be in the circumstances of a particular case? Larry F. York: Yes, sir. Speaker: And then after a showing of violence, would it not -- or threatened violence growing out on the circumstance of the particular case shown to a court of equity? Larry F. York: Yes although we would say Your Honor that it would not be limited to violence. It might be and has been shown in it’s situation for that many showing of simple blockage of the reasonable right to ingress and egress. Or other forms of conduct, shorter violence which are thought to be violative of a valid state part. Speaker: How many other states did you say have a statute such as this that makes it applicable to every kind of situation involving on merit controversy? Larry F. York: Your Honor, but if our research is correct, in the State of Nebraska had a statute which is almost identical to the Texas statute to the point of talking in terms of 50 feet and it’s almost the twin of our Texas statute. State of South Dakota had a different sort of statute which talks in terms of the number of picketers being limited to 5% of the first 100 strikers and 1% thereafter. I believe it’s the South Dakota scheme. The cases from other jurisdictions are numerous on the point of the injunctive relief on a case by case basis. Speaker: Right. Larry F. York: We’re also aware of this court’s ruling in the Vogt case in 1957 which establishes the principle that picketing even peaceful picketing. Even clearly peaceful picketing may be regulated by the state recognizing that a part of picketing is conduct. I the picketing as in the Vogt case has added primary purpose, the violation of a particular state policy which is a valid state policy. So the background for regulation of picketing is found both in the common law notions and the various equity court notions of injunction and in this courts ruling in Vogt case and what Texas has done is simply to adopt a statutory scheme to in fact codify the doctrines of independent expressed in the other Courts of what mass picketing amounts to. The Texas statute is limited to the labor context. We don’t contend and the statute can’t be read, we submit just to apply any other kind of picketing. Indeed, the AFL-CIO in there amicus brief at page 2 concedes that was aimed at labor unions. The preamble to the statute states clearly that when the statute was passed in 1949, it was stated by the legislature that it was a matter of public knowledge that picketing is exercised by labor organizations. It’s not used only as a means of expressions of ideas to the public generally but likewise as a means of coercion to the mere present to the picket lines, etcetera. This appears in the preamble of the statute. Statute by it’s time is limited to picketing by organizations. The statute has never been applied otherwise in Texas except in the labor picketing context. It’s located in the labor section of our statute and applies to nothing else. The court below, the three-judge court stated that one need only look at the Davis versus Francois case out of the Fifth Circuit to determine that our statute was unconstitutional. But in the Davis case, the Louisiana ordinance that was attacked said that you cannot have more than two pickets, period, the end. Speaker: What’s this Mr. York that had -- how was Section 1 apply, two pickets that is in relation of picketing offenses? Larry F. York: Yes. Speaker: Apparently, you have -- the pickets have to be at least 50 feet away from the office? Larry F. York: Well they have -- there can’t be no more than twp pickets within 50 feet. Speaker: That’s what I -- does that mean and the pickets have to be 50 feet apart, is that it? Larry F. York: There can be two pickets if you can visualize those, there could be two pickets at that door but there could be no more than two within 50 feet of the door. Speaker: Nor, may they be within 50 feet of one another, is that right? Larry F. York: Yes sir. That’s correct. Speaker: The two compete within the two pickets from each other? Larry F. York: Well the two -- right. Two pickets may be (Voice Overlap). Speaker: The two can be right at the entrance? Two can be right at the entrance, not more than two? Larry F. York: And the next two – Yes, sir. Speaker: The next to have to be at least 50 feet away? That’s what I was trying to get at. It’s not then that there may be only two pickets 50 feet apart. Larry F. York: Yes, sir. Speaker: It’s not that that. They may be walking pairs. But the pairs have to be 50 feet apart. Is that it? Larry F. York: Yes, sir. That’s correct. You can envision a city block. We assume it to be 300 feet on the side 1200-foot parameter. It depends somewhat on where the doors are located but the number of pickets you much around that block under our statute would be somewhere between 40 and 50 and between 40 and 48. The object as we perceive it, a picketing is to communicate and it’s impossible for us to see under the cases and under our statute how there is any infringement on the right to communicate under our statute. There are no evidence submitted. It’s not even suggested in the brief or in the record by the appellees that their right to communicate their dispute in the Rio Grande Valley of Texas was in any fashion inhibited by the statute. Indeed, everybody in the valley knew the dispute and in the normal labor context, the simple -- one simple saying and it’s enough to advice the public or to advice other unions etcetera that there is labor dispute, Your Honor. After being further conduct about harassing type, the fairer brief which is one of the amicus brief filed indicates that their particular plant can have as many as a hundred pickets around it and follow within the coverage of the Texas statute and you can conceive a plant that might have hundred of pickets around them and still be entirely legal within the meaning of the Texas statute. Speaker: (Inaudible) before the (Inaudible) they have two pickets? Larry F. York: I don’t think Your Honor that it would be limited to frontage. If the building was 49 feet around, it might well be limited two pickets for that building. Speaker: Or is it valid was all liability going down to street? And this will be about 49 feet, that’s all is available. So can only have two pickets? Larry F. York: I think in that case that it would be limited to two pickets. The obstruction portion of the statute as the statute has two parts. One is to describe mass picketing in terms of the 50-feet rule. The second part is to talk in terms of forming an obstacle to free ingress and egress from any entrance either by obstructing said free ingress and egress about person or by placing a vehicle or other obstruction there. Our Texas code in the Geisler case which is mentioned both on the three-judge court opinion and then our brief, held that the obstruction talked about, meant only a physical obstruction not any other kind of obstruction. It was suggested in the Geisler case for instance that holding of a particular type sign or flag might well keep people out and the court said, no that won’t get it, it has to be a physical obstruction. If I can tell people to choose not to cross a picket line, it is just one of the accepted parallels of picketing that we are not going to enjoin that. The Cameron versus Johnson with Mr. Justice Brennan lately approved a Mississippi statute. We say is totally just positive of our case. Mississippi statute talked about picketing in such a manner as to obstruct or unreasonable interfere with being ingress and egress. It is in the subjunctive that is it is or so the Mississippi statute can be read to say that you may not obstruct pre ingress and egress. Our statute says you may not obstruct before you ingress and egress. The Court in Cameron stated that the time obstruct plainly required no guessing as to its meaning that we agree. The plaintiffs or the appellees here when they submitted there final proposed, revised judgment to the court below in this case did not include the obstruction portion, the second portion of 54d in their proposed finding and relief and did not in that context asked the Court below to find the obstruction portion of 54d unconstitutional. The three-judge court in a latter part of its opinion in finding article 784 of our Texas statutes to be constitutional and that statute says whoever shall willfully obstruct or injure our pose to be obstructed. The Court there construed the word obstruct to mean actual prevention or a substantial interference who track them. Speaker: Cameron against Johnson wasn’t that a very similar statute. That was an obstruction statute, wasn’t it? Larry F. York: Yes sir that’s correct. And we say that when you read the Cameron statute side by side with errors and read the meaning of the word obstruct in it with our conclusion then statement of ours is all right under Cameron versus Johnson. Speaker: Mr. York. Larry F. York: Yes, sir. Speaker: Did the final order of the District Court prevent the name of the defendants, the appellants here from going ahead with then pending criminal prosecutions under the statutes that were invalidated? Larry F. York: Your Honor, I don’t believe by reading it that it did not, it maybe said because some -- Speaker: Looking at the jurisdictional statement on page 101 paragraph 15 of the final judgment last few lines over on page 101. Did they enjoined from arresting, from imprisoning, from filing criminal charges, from threatening to arrest but would you say in effect that because it doesn’t use the word prosecuting the state officials were free to go ahead and prosecute? Larry F. York: Well, we would not suggest that to the federal officials Your Honor and wouldn’t suggest that that be done under the time of this judgment. As a matter of fact I don’t believe the prosecutions have been followed because of this case. Speaker: Have you treated it as enjoining you from prosecuting as well as -- Larry F. York: As a practical matter, it’s been so treated. Although I don’t think you can read the precise language of the judgment and find that in it. Speaker: It would be kind of a narrow line to walk though, isn’t it? Larry F. York: Yes sir, extremely. I’d like to touch very briefly on the question of equal protection under our 54d statute which applies to labor organizations and does not by its term applied to other organizations. Were where Mr. Justice Marshall’s decision to Moseley as the Courts aware there were statute in Chicago which held that they stated that had to be no demonstrations around a public school within a 150 feet of that public school except that labor disputes were not so enjoined or so restricted. This Court found that to be a violation of equal protection clause. We would submit Your Honors that our case differs from that and serve with important respects for one the restriction that is imposed by our statute as it intersects with First Amendment rights is a valid and legal restriction. I thank the court even though decided mostly on equal protection grounds, seem to have on its mind some what the concept that is was difficult or shouldn’t briefly allowed to enjoin the kind of public issue picketing that was prohibited by the statute in the Chicago case, the Moseley case. I urge as we stated before is a reasonable restriction on the rights. The other and perhaps more important station I think is that in Moseley the Court was confronted with the situation where of the entire universe of picketing. A small area that is labor picketing had been singled out and not regulated being the risk of the universe had been assumed to be bad and regulated by the statutes. In our situation we have the flip part of that, we have the entire universe picketing all unregulated by our statute except the narrow portion of the labor picketing which is regulated for the reason set out in the preamble of our statute. And we say that in that sense we have made a reasonable classification and that the equal protection statements made in the Moseley case do not apply to this case. Additionally, in that regard we’ve mentioned to the Court that there was no suggestion made, no proof made of any arbitrariness in this statute by the plaintiffs as they tried the case. I would if I may to reserve a few minutes for rebuttal. Warren E. Burger: Very well. Mr. Dixie. Chris Dixie: Mr. Chief Justice and if the Court please. We made it clear to the District Court and we file several briefs in which we stated that we do not intend to interdict any pending criminal prosecution. One of our observations in this case has been so many arrests and not one case set for trial. As far as we’re concerned under this order, these criminal cases could be tried. Other criminal cases could be filed under the statutes, any state official other than the name defendants and those acting in consort with them and successors and office can prosecute under this statutes. Speaker: What about enforcing the injunction under the 1967? Chris Dixie: That injunction runs against five Texas rangers and five peace officers down there. Speaker: Are any of them or any of them defendants in this suit? Chris Dixie: Yes, sir. That suit, there are defendant there. Speaker: Well how about enforcing that in the 67 injunction? Chris Dixie: In the 67 injunction. What are you referring to a State Court injunction? Speaker: Yes. Chris Dixie: I have a little correction to give you on that counsel was not with us on the ground or in the Trial Court. That State Court injunction was an application for temporary injunction which alleged that the picketing was illegal for many reasons and the Trial Court rendered that injunction. The Court of Civil Appeals reversed that and said that the picketing was legal in all respects insofar as its purposes must concern. But they said there is some circumstantial evidence of destruction of property, dropping of nails, putting gasoline in tanks and so forth and we will hold that that circumstantial evidence was sufficient to justify a temporary injunction only and we express no opinion as to what will be the situation when the case comes forward on the merits. Speaker: Is that -- is that where the case is now? Chris Dixie: That’s right. Speaker: It’s never come forward as still a temporary exemption of the -- Chris Dixie: That’s right. And it took the Texas Courts. Speaker: And the case is still pending? Chris Dixie: That’s right and it took the Texas Courts about three years to settle the question of a temporary injunction. Speaker: Where the defendants there, some to plaintiffs here? Chris Dixie: The union was a common -- was a common party, the United Farmworkers Organizing Committee. Speaker: Mr. Dixie, in paragraph 15 of the final decree on page 101 of the jurisdictional statement, the injunction does cover imprisoning. Would a proper construction of that be that although you could prosecute, you couldn’t imprison somebody or would that just mean imprisoning with the prior to the filing of charge? Chris Dixie: Your Honor, a proper construction of that I believe would be that these particular officers should not arrest people and put them in jail under these particular statutes. But it doesn’t say that the County Attorney or the District Attorney or the Attorney General can’t file charges and cause a law and to issue and arrest somebody and prosecute him all the way through. A very limited injunction because the essence of this case is the abuse of the police power in the manipulation of this statutes by this people who there findings of fact establish what acting and active consort with the private owners to break and strike through a period of one year. We were attempting to get relief from this wholesale arrests and mistreatments that we were subjected to and then as far as litigation is concerned we were and are prepared to defend ourselves anytime that these things are set for trial. Speaker: Yet the District Court certainly the thrust of its opinion. Isn’t that valid statutes were being abused in violation of your clients constitutional rights but that the statute themselves were invalid? Chris Dixie: Yes. Yes they held that they -- Speaker: They could have more – Furthermore, I wouldn’t think that the fact that they didn’t enjoin any pending criminal prosecutions would avoid the thrust of the Younger cases. Chris Dixie: Well, it seems to me that the Court would have and at least declare the statutes unconstitutional when at least to expect to some of the statute, they were pending state criminal prosecutions? Yes. Speaker: Now, what do you got to say about that? Chris Dixie: Well, we took the bull by the horns and we say that we are well within the doctrine of the Younger cases. As a matter of fact, if this fact situation is not strong enough to satisfy Younger, we doubt that you’ll ever find -- Speaker: Would you say that the harassment and bad faith would have to exist with respect to each of these statutes? Chris Dixie: Well, Your Honor, these statutes were interwoven in their use and they were used -- Speaker: So your answer apparently is no? Chris Dixie: That’s right, that’s right. It’s a whole course -- Speaker: So you could just find a general pattern and then pick out any statute you want and say there is bad faith in its enforcement. Chris Dixie: Well, no. Speaker: That’s what you did here apparently because with respect to some of the statutes, there -- concededly there is no bad face enforcement. Chris Dixie: Oh no! With respect with each and -- Speaker: Well then you say would they respect to each work. Chris Dixie: That’s right. Speaker: And you must feel that? Chris Dixie: That’s right, with respect to each one there was bad faith –- Speaker: (Voice Overlap) with the record then to say if you’ve satisfied that. Chris Dixie: That’s right. Speaker: Because I gather by looking at the page 50 of the jurisdictional statement, you have explicit finding by the three-judge court and that all of those prosecutions under each of the statute for instance in bad faith and for the purpose of harassment. Chris Dixie: Maybe it’s correct. Speaker: You say that’s what brings you again the Younger exception? Chris Dixie: That is correct. They -- Speaker: My brother White has said, I supposed that depends on the record. We have to go in to this record to see whether that is supported by what? By substantial evidence or what? Chris Dixie: Well, Your Honor, these fact findings are unchallenged. One of -- you have extensive District Court fact findings and you don’t have one mention of Rule 52 or any statement that they are clearly erroneous or anything like that in this case. This -- I’ve been so puzzled why the Attorney General has presented the case this way when he his jurisdictional statement appear. He made no issue of the findings of fact and we call the Court’s attention and then when he filed his brief on the merits, you give the same thing, they just ignore the fact findings of the District Court and this is a very remarkable case in its fact. Almost unduplicated and in fact it is unduplicated in any decided case that I know of. I suggest Your Honors that we start in this case with the findings of fact which have not yet been challenged. Now then including -- Warren E. Burger: Mr. Dixie, are you -- before you go on, you referred to wholesale arrests, am I correct? That the arrests were at the rate of about one a week here or not? Chris Dixie: And that’s not correct Your Honor. Warren E. Burger: If it’s 13 months, should it be not much more than one a week, would it? You say 60 and I think someone else said 70 in the briefs arrest. Are those figures wrong? Chris Dixie: Well, I’m afraid you do Your Honor, may I summarize it for you this way. I believe -- Warren E. Burger: Well particularly the number of arrests. Chris Dixie: I believe our arrest say that we have produced 55 cases of arrest while the arrestees were engaged in First Amendment protected activities. Warren E. Burger: Well, I am just interest now in the numbers, then you argue it later. Chris Dixie: That’s right. Warren E. Burger: This time. Chris Dixie: Well, it didn’t work that way. As a matter of fact these arrests built up to a crescendo and that’s probably one thing I should explain to you. On May 11, the Union developed important support on the Mexican side and the situation developed that the Mexican farmworkers were not coming across the bridge to work through these picket lines. On that day at 4 o’clock in the morning Captain Allee, the Texas Ranger got up out of bed and drove 1 or 200 miles forthwith to the scene. Then there, started a series of arrests, interspersed with brutality, beatings, terrorism, the works from May 11 until June 1 and on June 1, the Union threw up its hands and no one could get adherence under those conditions. So the average of one of week is a mechanical average but its not -- it doesn’t reflect the crescendo of activities. Warren E. Burger: You said they were concentrated in that area. Chris Dixie: Well of course. Warren E. Burger: What is the timing in terms of this business of putting sugar in the gas tanks and some violence that was suggested? When did that occur in relation to the period you’re talking about? Chris Dixie: Well it was unrelated to it. I can’t see it directly and I’m not even sure that that’s in this record but the -- I think that what they’re complaining about happened about a year before this May of 1967. Of course you’re aware of the fact that the District Court found that none of these things was brought forth to the union or any of its members in the proof. This District Court found that and they also found that in the entire year, the only case, a physical violence was when one of our people reached and touched the arm of a truck driver as he passed by taking him by the sleeve and the sleeve of course slipped out of the man’s hand and the truck went on and the District Court explicitly found that that was the only case of physical violence on the part that any Union adherent during the year. Now to go to your other question Your Honor, down in South Texas you get about four crops a year and there is a planting time and there is a harvesting time and these rise of arrests took place at the times when the Union would accelerate at its activities to reach the workers during the planting time, during the harvesting time. That’s when the workforce is large, that’s when the Union would make its effort to organize and that’s when the arrest would take place. So the arrest well timed to kill direct the potential effectiveness of the strike. Now, to move on, this case was found as a class action by the union and by several individuals and the Court found that it was a proper class action by this people and they are adequate representatives of the class and there has never been any question in the District Court from the defendant and not the propriety of that. The fact findings recite that there was a one year conspiracy of arrest without charges, dispersals, threats, bonding abuses, inducements by peace officers to the strikers to abandon there’s the union and go back to work and physical violence, all of it was mixed up with an interspersed with the institution of prosecutions in bad faith. Speaker: Mr. Dixie? Chris Dixie: Yes, sir. Speaker: The District Court opinion on page 41 relating to article 482 the abusive language statute says that five union members had been arrested on that day. It doesn’t indicate that they were named plaintiffs in this action. Was one of the named plaintiffs in this action at sometime according the record prosecuted under 482? Chris Dixie: I would have to check the record to determine that. I know union officers were. Speaker: I want to know about the name of the plaintiffs. Chris Dixie: And I will have to check to answer that. I’ll have to check to see who was there that day and was arrested. Now then, the judgment as I’ve told the Court does not interdict to any pending prosecutions. It’s a limited injunction and part of the injunction, is civil rights relief under 1983 or 1985 on the count of the conspiracy of this public officers to use the color of there officers. I’d like to tell the Court something about the legal background of this case. Texas law provides in a statute cited in our brief that any person may try to induce any other person to quit any employment enjoining the union for the purpose of bettering their conditions. Texas law gives the right to bargain collectively or individually. It provides that if a labor contract is signed. The contract is lawful and not -- may not be a violated, that’s similar to Section 301 of the Taft-Hartley Act so that everything that the plaintiffs did in this case in terms of their ultimate objective was lawful under the Texas statute and the Attorney General stipulated as much at the trial of the case. So in all of the application of the statutes, please bear in mind Your Honors that at no time we were, where we doing anything prohibited by Texas law, now Texas law also provides that an employer has no duty to recognize a union. He may contract with it or he may refuse. He may contract for all of them or some of them or one of them. And if he does want the union, he’s got a right to fight. In this case, the employers did elect to take to the economic contest and so the situation in this case is that the union was doing precisely what? The state law contemplates that you have to do in that situation. There is no question of the union’s violation of the ultimate public policy. Now, the economic background of this situation is that Starr County Texas according to the census figures as one of the poorest in the United States. The economic condition of this county and this farmworkers is the lowest in Texas substantially lower than our black population which God knows is low enough. The growers operate large farms, hundreds of acres, vast fields, we have pictures in here to show you and by stipulation, it is developed that they -- that they whole in the agricultural workers by vast loads from far distances. There is no such thing in this case as a congested traffic situation. Everything takes place on the open road or out in the woods and it is in that context that this Court is going to have to evaluate the application of the 50-foot law by the State of Texas. But we have brought cases here where the Texas rangers went out during the harvesting season in May and they have three pickets out in the woods on the side of the field who were calling to the strike to the workers to come out. Those three were arrested for past picketing that was more than two. Then there were ten other Mexican Americans under the shade of the tree under that hot day and the evidence shows that the ranger captain says run them into for mass picketing statute. Speaker: Well, Mr. Dixie. Am I right, the three-judge court did not hold these several statutes that it did hold unconstitutional? Unconstitutional as applied but facially unconstitutional of it? Chris Dixie: Facially unconstitutional is what I understand that they held, they say -- Speaker: Well, are you defending that holding aren’t you? Chris Dixie: Yes, indeed. Speaker: So we -- then we don’t have in occasion to look at the statute in the context that you say as applied to it. Chris Dixie: Well, it seems to me and I believe that the Chief Justice has written in one opinion that I took care for load up that one of the ways you can come to the conclusion of overbreadth the most easily is if it’s validated by the actual application of the statute to constitutionally protect -- Speaker: Well, that’s the issue defending him or a judgment both that facially the statutes are unconstitutional? Chris Dixie: Absolutely. Speaker: And that you’re wrong about that nevertheless we have to find that as applied? Chris Dixie: That is correct. Now then this 50-foot statute, you got no traffic problems, they apply it without reference to obstruction and they say that in every situation to every 50 feet is enough. Now let’s look at the position of the Union and the members in this case. They are trying to induce hundreds of farmworkers to join them and the state wants to have two pathetic-looking pickets out there in an economic contest or economic power is going to settle the issue and the state says that that’s constitutionally sufficient while any politician knows that when you have a rally and you have a good attendance, that makes you look like a winner and encourages people to support you enjoin with you and believe in your cause. The whole purpose of the statute, not the whole purpose but the whole effect of the statute is to make the Union look pathetic in a state mandated economic contest where they violate no public policy when they’re trying to get the others to join them. Warren E. Burger: Well, do you mean that’s the consequences applied to this situation because of the large area involved but that -- would you say that would be true on a factory in Houston or Dallas located on one City Park? Chris Dixie: The number of pickets would depend upon the situation, that’s what this Court has said many times. The physical surroundings -- Warren E. Burger: But the two factual settings are quite distinct in this respect, aren’t they? Chris Dixie: That’s right. Warren E. Burger: A thousand acre farm as against a city block factory? Chris Dixie: That is correct but you can also have a factory with 3000 workers. We have such factories in Texas while require two pickets. Incidentally, this statute prohibits observers, people who come there to see what will, how their welfare is being in handled and if they’re across the street standing in a group and not blocking anybody. They are guilty of mass picketing because they are more than two every 50 feet, Your Honor and because they are there to observe. Warren E. Burger: What’s the distance from the factory or the plant under this statute? Chris Dixie: It makes no difference. Warren E. Burger: 50 feet, isn’t it? Chris Dixie: No, it makes no difference. You can be 300 feet away but if you are there to observe or to induce people and you stand closer together than two every 50 feet you violate the statute. That’s an unbelievable statute but that’s what it does. It violates the statute to be that far away and it has been so applied. Now, I’m afraid my time is getting away from me here. One of the interesting features of this case is -- Speaker: Mr. Dixie, I know your time is running but this is a massive case? Warren E. Burger: It is a massive case. Speaker: We talk in all of that. If we were to disagree with the three-judge court as to some or all of these statute as to their facial -- the holding of their facially unconstitutional, are you suggesting that we ought then examine this enormous record and decide for ourselves whether as applied, they are also unconstitutional or should we remand this as long as three-judge court to do it? Chris Dixie: Well it would certainly be a shame to remand this case after all this many years of litigation. But we’re not asking for anything except our constitutional rights. Speaker: (Voice Overlap) But we have other things to do too. Chris Dixie: I believe the fact findings are adequate to take you Your Honor passed the question of examining the record. They’re all in the fact findings. All you have to do is line up debates and see how -- Warren E. Burger: Well but you’re -- were looking aren’t you the central thrust to Justice Brennan’s question that the holding of the three-judge court was the time to the statute is void on its phase? Chris Dixie: Yes. Warren E. Burger: And if we should say that’s not so. Then how could we sort out which of this acts, isn’t the District Court in much better position to do that? Chris Dixie: Well, that’s a question of your judgment in judicial administration and you might wish to remand the case in that situation. However, the facial unconstitutionality of these statutes other than the 50-foot statute seems to me to be well demonstrated by practically white horse cases from this Court. Several of them within the last few terms and participated in by the present personnel of the Court. I see no occasion to read seriously believe that the statutes are not facially unconstitutional. Speaker: I’m right that only 784 was held to be facially constitutional, wasn’t it? Chris Dixie: That’s another obstruction statute. Speaker: Yes. Where that was held to be constitutional? Chris Dixie: Then it was indeed. Speaker: And what we have as a picketing statute, the bad words statute -- Chris Dixie: And unlawful assembly statute. Speaker: And all of them would and secondary boycott. Chris Dixie: That’s right. Speaker: So that’s four that were held to be facially unconstitutional. Chris Dixie: That’s right. Speaker: And only the fifth with instructions statute held to be facially constitutional. Chris Dixie: That is correct and then a disturbing the peace statute was held unconstitutional and made an appeal on that one. That was also held by another three-judge court and the legislature has since amended that statute. Speaker: That’s one we had here in the Gunn case. Chris Dixie: Yes. Speaker: That was 474. Chris Dixie: Yes, of disturbing the peace statute, right. And I might say, I might -- Speaker: You make the point in your brief that the action of the court below does not prevent any state authorities other than the specific ten peace officers involved here from enforcing the statutes against any other people instead of Texas. Chris Dixie: That’s right. Speaker: How hard could that be so mostly unconstitutional if it’s held unconstitutional? Chris Dixie: Well, we took the heart of what you said in Younger versus Harris one of the important considerations is to exercise as much committee for the state processes as his consistent with the protection of first amendment rights. We come forward with something that our hope is in a main event in this case. We leave the door open for legitimate prosecution and clarification of the statutes to make up constitutional while at the same time obtaining the necessary relief here to keep the First Amendment alive in Starr County Texas. It’s a question of trying to confirm to Younger v. Harris teachings. Warren E. Burger: So that it’s unconstitutional facially as to ten people, why isn’t it unconstitutional for everybody in Texas? Chris Dixie: Well, that gets us to another question if the Chief Justice please. No one in Texas has been arrested under the mass picketing statute on the criminal side of the docket since that statute was passed in 1947 just this farmworkers. In fact I have never -- I have been practicing at the Texas by 35 years I have never known for this case one person arrested for peaceful picketing. They have injunction cases to regulate the picketing and even injunction to stop all picketing which might be illegal but it was reserved for this Latin Americans to face jail, six months in jail we make quite a point of the tricky ways in which of the complaints were drawn and the statutes were invoked in order to terrorize the people. We have -- Speaker: Mr. Dixie, I understood the Chief Justice ask you if it’s facially unconstitutional. It’s an -- you can’t apply it to anyone in the State of Texas regardless of the aggravated circumstances that might attend its application to your client. Isn’t that a correct statement? Chris Dixie: If that -- that is a correct statement but it’s still open to the State Court to construe these statutes with plastic surgery or something in ways that would bring them within constitutional standards and the door is open for them. Speaker: How can they construe a statute after this Court? If this Court agreed with the judge courts, then they are way across the books, aren’t they? Well is there anything left for the state courts to construe? Chris Dixie: Well, I never had understood, I never have understood. Let us say that a declaratory judgment would be res adjudicata as to the interpretation that a state court is going to give to a state statute. You can declare a statute unconstitutional on its face and the way I understand it, the state court can read your decision and comeback later with a decision and say their Honors in Washington were mistaken about the interpretation of this case that we construe it vast and so and if they construe it in the constitutional way. That is it, you are looking -- you are probably looking at a judicial declaration bound this court as a repeal. It might be that. I never have looked at it that way. Anyway -- Speaker: At least not an overbreadth. Chris Dixie: That’s right and I see my light is on here. I think that there is important area for the legislature and these state courts to deal with these overbreadth problems and even with these vagueness problems and this is one place where it seems to me that they have been a little slow in catching on in the First Amendment area. Your Honor ruled an opinion recently in which you said that the facial unconstitutionality declaration is from Madison. Well, that’s true but in another respect, it’s not strong Madison if the legislature will just sit down and amend the law as a non controversial problem to tie it up. First Amendment wise so that it cannot be misused as it has been misused in this case and I was thinking that perhaps this Court -- I hope it’s not an improper suggestion ought to consider saying so to the states because they’re a little bit slow on the uptake. This Court should tell them. They have a duty to enforce the constitution just like you do. They should respond to your decisions. Well, I haven’t been able within my time to cover the facts and so I will respectfully refer you to the brief. I’ll use the rest of my time to say this to you Your Honor. The facts in this case are so bad from the standpoint of official lowliness that this case calls out -- calls for something to be said by this Court to disabuse the minds of peace officers that this kind of conduct is tolerable. I respectfully say to you that your efforts up on the bench and our efforts down here in the pit to encourage respect for a law and order are going to fail. They’re going to be futile if this kind of conduct by peace officers is allowed to go unremitted in the Federal Court. Warren E. Burger: Well you just stand on the findings of fact of the District Court which are not challenged here, isn’t that your position? Chris Dixie: Yes and as I say is severity of the facts. It lasted for a year and the biddings were unspeakable and the terrorism was unspeakable. I will tell you frankly, I hated to go down there to try that case for my hometown of Houston where we think we are little bit more civilized but it was a duty and we’ve carry that to all this way and we ask this Court to do what’s right to let this law officers know that the Supreme Court does not tolerate this type of conduct. Warren E. Burger: Thank you Mr. Dixie. Mr. York, you have about 4 minutes left, do you have anything further? Larry F. York: Yes sir. I like just few moment. I would like to say that in answer to Justice Rehnquist question earlier and Mr. Justice Blackmun’s question and we find no one less than any of the names like were ever charged with violation under 418. The United Farm Worker versus La Casita case was affirmed by the Texas Court Civil Appeals. I would also like to suggest to the Court that the preamble that we discussed earlier in my remarks is not, I don’t believe in the briefs unless it appears preamble to 54d it does appear in the official reported version of the Texas statutes and its available there for the Court but I’m not certainly available in the briefs. We believe that there has to be a showing of a general pattern for each particular statute before the kind of Federal Court intervention talk to appear is proper. We don’t believe that a pattern which just talked generally of what happened under a lot of statutes is sufficient. For instance, under 54d the 54 under obstruction statute, evidence is that there were only about 25 arrests for that in the briefs spoken out by Mr. Dixie when the ranger was there after May 11. The first thing that Captain Allee did is shown in Mr. Dixie’s brief was to go out and tell the people to get 50 feet apart which they did. A week later, he came back and they were not 50 feet apart. They are bunched up in a bunch and arrests were made and arrests were made on couple of other occasions under circumstances which were clearly violative of the Texas act. There is no statement made in the briefs and in the record that there was any violence that I’m aware of it attached to those arrests under 54d. We say that there can’t be an injunction whether the statutes be held constitutional but the -- under the theory of saying perhaps that they might be enjoined because it was a bad faith prosecution with no reasonable hope of conviction. That’s clear enough to case here. These statutes are facially valid. Picket as we have discussed 54d and some detail with the Court, less the Court to so find it and to so find it facially valid. Warren E. Burger: Do you agree that we take the facts as found by the District Court here since state of Texas has have challenged the fact finding? Larry F. York: Your Honor, we don’t agree with all of some what we might call editorializing but as far as the findings of fact can say they were largely undisputed and we have no particularly quarrel with the facts. We may disagree with some of the conclusions or statements made by the Court about what the fact show that is their conclusions for more or less undisputed facts. But before as their conclusion about what the facts themselves were, we have a not particular disagreement with that and have not urged it upon this Court. Speaker: Well, what is it that you do challenge? There is an explicit finding of conduct that was in bad faith and harassment. Larry F. York: Well, that’s the part of it that we did challenge in the sense of talking about the conclusions that they raise it from. Speaker: So, they don’t add up to that? Larry F. York: Yes, sir. Speaker: What should be standard of review for us to apply? We have done this before. Larry F. York: The standard of review is far as -- Speaker: The findings of harassment in bad faith. Say you don’t challenge the historical facts. To say the historical facts as found don’t end up to harassment in bad faith. Now what standard of review should we apply? Larry F. York: I think in that area that is not a clearly erroneous standard in the sense of findings of fact but it’s an area of simply discussing the case isn’t trying to determine whether under the case is lift particular -- Speaker: Well, is that suggesting to me that’s a question of law? Larry F. York: I believe it is. I like the bad faith aspect covered in that sense is wrong question Your Honor. Speaker: Bad faith is unusually a wrong question or harassment? Larry F. York: Well, as a conclusion from these facts, whether it’s sufficient under the Younger cases. Speaker: You mean it’s like negligence? So that is not -- Larry F. York: Well it’s a mixed law and fact question. Warren E. Burger: Thank you gentlemen. The case is submitted.

William H. Rehnquist: We'll hear argument now in Louis W. Sullivan v. Elizabeth Stroop. Mr. Sloan. Clifford M. Sloan: Mr. Chief Justice, and may it please the Court: This case concerns the meaning of the term child support payments in a provision of the statute regarding the Aid to Families with Dependent Children, or AFDC program. Under that provision, the first $50 per month of child support is disregarded or not counted in AFDC eligibility and assistance determinations. The issue in this case is whether, as the Secretary of Health and Human Services has determined, the term child support payments refers to payments from absent parents, and does not include Social Security child's insurance benefits, or whether, as Respondents contend and as the court of appeals concluded, the term means not only payments from absent parents, but also Social Security child's insurance benefits. We believe that the Secretary's interpretation should be upheld for three reasons. First, the term child support is used repeatedly in the Social Security Act to refer to payments from absent parents. Indeed, the current version of the disregard, as it was amended in 1988, explicitly refers to payments by the absent parent. Second, the legislative history and background of the AFDC program reveal a consistent emphasis on the problem of obtaining payments from absent parents and the only prior instance of a child support disregard as part of that emphasis. It is reasonable to view this disregard in light of that long standing emphasis. Third, to the extent that the statute is ambiguous, the Secretary's interpretation is entitled to deference. Now, a few words of background. Byron R. White: The statute does say any child support payments. Clifford M. Sloan: Yes, it does, Justice White. Byron R. White: And these are payments to a child or for the child's benefit. Clifford M. Sloan: That is true. Byron R. White: So, what do you do? You say child support is a term of art, or-- Clifford M. Sloan: It... it is a term of art within the statute. If you look at Title IV of the Social Security Act, and the AFDC program is IV-A of the Social Security Act, there is an entire part of the Social Security Act, Title IV-D, that is addressed to child support. And throughout both Title IV-A, which has a close relationship to Title IV-D, and Title IV-D, child support refers to payments from absent parents. Now, the linchpin of the relationship between Title IV-A and Title IV-D is the requirement that has been in the AFDC program since 1975, that an AFDC recipient assign rights to child support to the state, and the state then collects them. The entire IV-D system, as it relates to the four... as it relates to AFDC recipients, hinges on that assignment of rights. And so it is reasonable to view the term child support payments, even though it says any child support payments, in view of its repeated meaning throughout the Act. That... it's important to understand why this assignment of rights developed in 1975, and why the Title IV-D program, insofar as it applies to AFDC recipients, was developed. And that is because repeatedly Congress has identified the problem of obtaining payments from absent parents as one of the chief reasons that people are on AFDC, and that problem is one of the chief obstacles to getting people off of AFDC and on the road to self-sufficiency. And it... it's a very particular defined problem. And Congress has tried a number of different ways, it has been a frustrating problem to get at that problem. And that is why child support is in Title IV to begin with. And so... and in no other context in Title IV of the Social Security Act is it applied to Social Security benefits. Let me give you some examples. Antonin Scalia: --Mr. Sloan, essentially your response to Justice White's question, the statute does say any child support payments, and your response is yes, it says any child support payments. I mean, that's really the argument that is going on, isn't it? I mean-- Clifford M. Sloan: Well, the word any modifies the term child support, and we believe that the-- Antonin Scalia: --So you either italicize the "any" or you italicize the "child support payments"-- Clifford M. Sloan: --Well, I think even if you italicize the "any", you still have the word "child support", and you have to interpret what that means. And I would suggest that the place to look for that is the meaning that it has elsewhere in the statute. Now, it's not an unusual phenomenon for two words to have a different meaning if you separate them than they have together. Child support: does it support children? Yes, it does. But there was a recent decision in the D.C. Circuit of Judge Ginsberg addressing the Freedom of Information Act that talked about this problem. And in that opinion Judge Ginsberg discussed the fact that the term parking ticket, for example, has a particular meaning. But if you separate it as a ticket for parking it could mean the ticket that you get to go into a garage that allows you to park your car there. And it's a similar situation here, that the term child support has a particular meaning in the statute, that to just ask well, does this support children does damage to that meaning that it has in the other provisions of the Social Security Act. Sandra Day O'Connor: --Mr. Sloan, what does the Secretary do if the payments come in as spousal maintenance? Is there a disregard applied? Clifford M. Sloan: There is a disregard in certain limited circumstances, Justice O'Connor. And let me back up and explain the Secretary's interpretation. Within weeks of the amendments that passed this disregard initially in 1984, the Secretary determined that they should apply to payments from absent parents, and enumerated the payments that go to the state that are also passed through to the family, also direct support payments which still go to the family and voluntary support payments. Subsequently, the Secretary has determined that in addition to those categories of payments from absent parents, spousal support payments in limited circumstances get the disregard. And those circumstances are basically when the spousal support payments are from an absent parent and are linked to child support payments. Three conditions have to be met for those spousal support payments to be collected and to get the disregard. First, there has to have been established support obligations from the absent parent to both the spouse and the child. Second, the spouse and the child have to be living in the same house. And third, the state has to be collecting the spouse's support along with the child support. Now, in the Secretary's determination that those spousal support payments were entitled to the disregard, he cited Section 12 of the Child Support Enforcement Amendments of 1984. That was the provision that said that the states should collect spousal support payments in those circumstances. And the legislative history of that provision is clear that the reason for that is because in those limited circumstances the spousal support can be seen as having a child support purpose. Sandra Day O'Connor: Although there they are not, strictly speaking, child support payments, I guess. Clifford M. Sloan: That is true, although they are linked so closely to child support that Congress has determined that they serve a child support purpose. Sandra Day O'Connor: Well, I guess that is the argument being made for the Title II benefit payments. Clifford M. Sloan: That is true, with this important difference, Justice O'Connor. Those spousal support payments are coming from the absent parent. The absent parent has repeatedly been identified in the AFDC program as the reason people are on AFDC. There is no similar history with Title II benefits, and it comes as part of a sustained congressional effort to get that absent parent to fulfil his obligations. Sandra Day O'Connor: Do any of the Secretary's regulations expressly exclude the Title II payments? Clifford M. Sloan: No, they don't, Justice O'Connor. What they do is they expressly include payments from absent parents. Now, Title II benefits would be included as unearned income, and there would be no authority to exclude... to give them the disregard. So, by the fact that the Secretary carefully limited the payments that were entitled to the disregard and didn't suggest that any other payments might be entitled to them, they are excluded from the disregard. And in some ways it is not surprising that the Secretary didn't, because in no other context has Social Security benefits ever been treated as child support, in the Secretary's administration of the AFDC program, of the child support program under Title IV-D and of the Title II child's insurance benefits programs. The Secretary is the official who has been charged by Congress with implementing all three of those programs, and this issue of treating Title II benefits as child support had simply not come up, because it was so different from the way that child support is treated in other provisions. Anthony M. Kennedy: I... I take it the term that you give to these payments are child insurance benefits? Clifford M. Sloan: That is the term the statute gives to them, Justice Kennedy. Anthony M. Kennedy: Well, is that the term that you give as well? Clifford M. Sloan: Yes, that is correct. Now, a few examples of the use of child support in other context-- Byron R. White: Where are these... where are these payments... particular payments identified as child insurance payments? Clifford M. Sloan: --In Title II, in 42 U.S.C., let me-- Anthony M. Kennedy: Section 402, is it not? Clifford M. Sloan: --Pardon? Anthony M. Kennedy: Section 42 U.S.C., Section 402? Clifford M. Sloan: Yes. Byron R. White: And what does it say? Does it, is it just a heading, or what? Clifford M. Sloan: Well, yes, I believe it is the heading, Justice White. Byron R. White: Thanks a lot. But it's also in the text, is it not? I think you'll find that it is. Clifford M. Sloan: Okay. I will accept that. [Laughter] But I don't think that the critical question in any case is whether they are called child's insurance benefits. The critical point is that they are not called child support, and they are not called that in Title II, and they are not called that in Title IV. And in Title IV, in the AFDC program since 1975, it has been a requirement for the state's participation in the AFDC program that the state administer a child support program in conformity with the directions of, at that time, the Secretary of Health, Education, and Welfare, and now the Secretary of Health and Human Services. And it has never been part of the state's obligation, under that child support program, to include Title II benefits. They are not treated as that under the state's program. And if you look at Title IV-D, under Section 651, for example, where it talks about the purposes of the section for which Federal funds are authorized, it refers to obtaining child support, and it refers to payments from absent parents. And similarly in Section 652, which talks about the requirements of state plans, it talks about child support and it talks about obtaining payments from absent parents. And in Section 658, which provides Federal incentive payments to the states based on the effectiveness of their child support program, it has never been the case that a state would receive incentives based on the payment of these Title II benefits. Instead, the state receives it on payments collected under the plan, under the child support plan. Now, Congress clearly knew the difference between Title II benefits and child support payments when it passed this disregard. In the legislative history when the family income requirement was proposed by the Senate, and that requirement required including siblings of an AFDC child in the household for the first time in the AFDC unit, the Senate report explicitly refers to Social Security or child support as the types, as among the types of income that would now be included that had been excluded in the past. And in the family income requirement itself, it talks about benefits provided under Title II. In contrast, in the disregard provision the language explicitly refers to child support payments. And so Congress clearly was drawing a distinction between the two, at least in its... at least in its usage. I would also suggest that the 1988 amendment is particularly helpful. The judgment here is prospective, and so the 1988 amendment is directly relevant to the judgment under review. In the 1988 amendment, first, the text of the provision explicitly refers to payments by the absent parent, and contains no indication that it is intended to refer to child support payments of any other kind. Now, the 1988 amendment is helpful not only in terms of the text of the provision, but it is also helpful in terms of the purpose of the provision, because there has been a discussion as to whether the purpose of the provision, of the disregard provision, should be viewed as having the same incentive purpose of obtaining payments from absent parents and trying to get families off of AFDC, or whether it should be viewed as having a purpose, either solely or principally, of mitigating the hardship of the family income requirement and the inclusion of siblings who had previously been excluded. Now what the amendment does in 1988 is it says that a payment will only get a disregard if it is paid when it is due by the absent parent, if it is paid in a timely fashion by the absent parent. Now that, the operation of that, the credit only to timely payments, doesn't make sense if the purpose of the provision is to mitigate the hardship of the family income requirement, because if the sibling had been excluded before the family income requirement and the payments came late, that sibling would still get the payments. But if the purpose is to add incentives to try to get the absent parent in the position of making regular, timely payments, then the timeliness requirement makes perfect sense. Antonin Scalia: Timeliness requirement in the '88 amendments? Clifford M. Sloan: Yes. Antonin Scalia: That also? Clifford M. Sloan: Yes, that is. And again, it is perfectly consistent with this problem that has been identified since 1950 by Congress, of trying somehow to get absent parents to fulfil their obligations. Now, there has been a suggestion that it is unfair to exclude Title II benefits when these other child support payments are getting the payment... are getting the disregard. And I think it's important-- Byron R. White: These other... these other child support payments? Clifford M. Sloan: --These child support payments. [Laughter] Yes. And when these, now the emphasis is on II child's insurance benefits are somehow arbitrarily being excluded. It is a relatively small percentage of people on AFDC who get any disregard, and the disregard does mitigate hardship. It is very important to these needy families. But the great majority of families on AFDC don't get a disregard, and they don't have any hope of developing a stream of outside income at all. I mean, the question really is do people who are getting the Title II benefits, do they get the disregard that goes to people when their parents make a payment, when their absent parents make a payment, or not. And in that situation they are much more like the great majority of people who are on AFDC who do not get the disregard. Now, there is another point which Respondents have raised which is that the plain meaning of the term... of the statute is inconsistent with the view that the payments only refer to payments from absent parents, because the statute refers to any child support payments, including those passed-through by the state under the pass-through provision. And Respondents contend that if the provision only refers to payments from absent parents, then it is only referring to those passed-through by the state under the pass-through provision, and it is not giving any meaning to the "any child support payment" part of the provision. And that simply isn't so. As early as 1981 the Secretary of Health and Human Services informed Congress that there was a kind of payment known as direct support payments that were going directly to the family, despite the assignment of child support rights to the state. And the Secretary has issued three regulations to deal with the treatment of those direct payments. And those are payments that are not passed-through by the state under the pass-through provision. So it is perfectly consistent with the plain meaning to interpret child support payments as referring to payments from absent parents. It refers to any child support payments, including those passed-through by the state. Now, as we discussed, the Secretary within weeks of the DEFRA amendment determined that payments from absent parents of various kinds were entitled to the disregard. And the Secretary at that time noted that payments that were passed-through, direct payments, and voluntary payments were entitled to the disregard. Now, Respondents have raised a number of objections to that interpretation as being unreasonable, because if the statute is susceptible to more than one reading, then the Secretary's interpretation should prevail. One of the objections that Respondents have raised is to the spousal... the inclusion of spousal support payments, the point that Justice O'Connor raised. We have discussed that the Secretary applied it to those in the limited circumstances in which they served a child support purpose. Respondents have also objected to the inclusion of voluntary support payments. It is important to distinguish between voluntary support payments and direct support payments. Voluntary support payments are those payments that are made in the absence of a legal order to do so by the court. They can either be made directly to the family and be a direct payment, or they can be made to the state and be a part of the payment that goes through the state system. Now, it is perfectly reasonable for the Secretary to apply the disregard to voluntary payments, because those payments are from absent parents. So there is nothing inconsistent with that. It is consistent with the Secretary's interpretation, and it is also consistent with the Secretary's general interpretation that the term child support in this provision should be construed first in light of the meaning that it is given in other provisions of Title IV-A and Title IV-D, which he is charged with administering, and second that it should be interpreted in light of the long-standing emphasis in the AFDC program and the problem of obtaining payments from absent parents. Now, there was one prior instance of a child support disregard, and that was in 1975 amendments as part of Congress' overhaul of the AFDC system. Congress did a number of very significant things in 1975 with respect to child support. First, the requirements that we discussed earlier that an AFDC recipient assign rights to child support to the state was passed in 1975. Second, the requirement that a state which participates in the AFDC program have a child support program was passed in 1975. And the entire creation of the child support system under Title IV-D was passed in 1975. And as one aspect of that systematic attempt to get at this problem of payments from absent parents, Congress passed for a 15-month period a child support pass-through and disregard provision. Under that provision, the first 40 percent of the first $50 per month of support payments collected from the absent parent were passed through to the family on whose behalf they were collected. The legislative history of that provision makes clear that the purpose of that pass-through and disregard was an incentive purpose. It was an incentive for the non, for the custodial parent to cooperate in obtaining child support payments from the absent parent, and it was an incentive also to ensure that the family would always be better off if the absent parent made a payment. The Secretary, in interpreting the disregard, has specifically referred to this prior example of the disregard, and just as it was reasonable for the Secretary to interpret the language and the emphasis in terms of the general long-standing emphasis, it was also reasonable for the Secretary to interpret this specific device in light of the history of the only prior example as well. Once again, I would just point out that the Secretary is the official charged by Congress with administering the Title IV-A AFDC program, the Title IV-D child support program, and the Title II child's insurance benefits program. His interpretation that child support payments mean payments from absent parents, not Social Security benefits, is reasonable and is consistent with the statute, and should be upheld. William H. Rehnquist: Thank you, Mr. Sloan. Mr. Aliperti. Jamie B. Aliperti: Mr. Chief Justice, and may it please the Court: We have heard how the Secretary wants to carefully limit the application of the disregard and narrowly construe its meaning. He has tried very hard to read the word "any" out of this statute. Congress intended the $50 disregard provision to broadly apply to any child support payments. William H. Rehnquist: Well, Mr. Aliperti, as one who practiced law for 16 years and practiced some domestic relations law, child support payments, to me, speaking only for myself, is almost a word of art. It means the payment coming from an absent parent for the support... it is used for the support of a child. Jamie B. Aliperti: But that is exactly what Title II benefits are. They are payments for the support of one's child. William H. Rehnquist: But it's not coming from an absent parent, it's coming from an insurance program. Jamie B. Aliperti: Well, Your Honor, I would submit that... that the Title II parents are absent. As the Solicitor General pointed out in his brief, two thirds of the parents of these children, of all the payments that are made under Title II, are from deceased parents. I would submit that you can't get much more absent than that. [Laughter] William H. Rehnquist: But the government is paying-- --The government is paying. The government writes the checks. Jamie B. Aliperti: Well, the government may write the checks, but the checks are drawn from wages which the parents, which working parents have paid into the trust fund. William H. Rehnquist: Well, that's the same as if you had a private insurance policy. You could say in a very theoretical sense that the insurance company's benefits are drawn from the premiums that were paid it, but it's not true in any literal sense. Jamie B. Aliperti: Well, the fact of the matter is that the parent paid into the fund, and that by virtue of the work credits and the payments which the parent had made... paid into the fund, the amount of the payments that is made to the child is calculated. It is a more indirect means of support than a living parent sending support payments to their child, but it's child support nonetheless. Congress, by the language it chose to enact, wanted all forms of child support to be afforded the disregard. Antonin Scalia: But if... what if an aunt of one of the families that is on AFDC gives, gives some money to the mother and says this... this is to support your child. Jamie B. Aliperti: That would not be child support, Your Honor. Antonin Scalia: Why not? Jamie B. Aliperti: Because it would not-- Antonin Scalia: Your definition is anything that supports the child. Jamie B. Aliperti: --It would not be coming from the parent. I think that's a key part of the ordinary understanding of child support, is that it generate from the parent. Antonin Scalia: Well, it seems to me you are either appealing to ordinary understanding, in which case I think the Chief Justice's description is... is what the ordinary understanding is, or you're appealing to the literal meaning of child support, in which case your answer to my question would be... would be the opposite. But you're trying to straddle the two, you're saying it isn't really ordinary understanding, but on the other hand we don't mean child support means any child support, not really. It's only child support coming from the parent. Jamie B. Aliperti: Well, Your Honor, that's part of the ordinary understanding of the term child support, is support by a parent to support one's child. Antonin Scalia: If you're appealing to ordinary understanding, I think it means-- Jamie B. Aliperti: That's what it says in the Random House Dictionary, Your Honor. It is money paid for the care of one's minor child, and that is exactly what Title II payments are. They are nothing less than that. William H. Rehnquist: --Certainly the intonation from that definition is that it is paid by the person who is responsible for the minor child. Jamie B. Aliperti: Well, whether or not the payment comes indirectly through Title II or directly through payments out of a parent's wages does not lessen the support character of the Title II payment. They are all forms of child support. And Congress made it clear that they wanted all forms of child support, any child support payments, to-- Byron R. White: xxx it seems to me, then, that you have to really meet the argument that we should defer to the Secretary's construction. Because if you say it really doesn't mean any-- Jamie B. Aliperti: --We're saying it does mean any. Byron R. White: --Well-- Jamie B. Aliperti: We're saying that Congress intended the disregard-- Byron R. White: --But you have to define child support in order to say it means any. Jamie B. Aliperti: --It is our position, Your Honor, that child support-- Byron R. White: And I would think if you say it has to be coming from a parent, I would think that would be proper, or at least within the ballpark to say well, that really means child support from a parent who is paying it, right now, that writes the checks. Jamie B. Aliperti: --We're... we are contending that the parent does pay it, it is just indirectly through the insurance fund. And we would also contend that, that under the broad meaning of child support, which Congress intended when it enacted this statutory language, that payments of that type, which are set up by a parent to pay for the support and maintenance of a child, are child support. This Court has always recognized the support character of Title II. It has no other purpose but to support children. That is the whole purpose in which the program was first set up in 1939. And in 50 years of legislative history, it made clear that Congress' intention in setting up these funds was to support children. Antonin Scalia: Suppose I am a parent that has no legal obligation to support the child; there has been a divorce and the wife hasn't gotten any child support payment as part of the decree. And the family falls on hard times and I give the wife some money, and I say this is for the support of my minor child. Would that be a child support payment? Jamie B. Aliperti: Well, under the Secretary's scenario, yes, it would be, because it would be a voluntary payment. The Secretary would allow voluntary payments to receive the disregard, even though no obligation has been established, even if paternity hasn't been established. Antonin Scalia: What about you? Jamie B. Aliperti: We would say that there is no question under Title II, because in order for a child to be eligible for Title II, that child must apply for the benefits and show that he was dependent upon the parent at the time the parent died, became disabled or retired. And the dependency tests which are set out in the statute all hark back either to a past legal obligation or to an obligation which could have been confirmed legally and was observed in fact. Anthony M. Kennedy: And they are all labeled in the statute as child insurance payments, I take it? Or insurance payments under 402. Jamie B. Aliperti: There is some discrimination between child insurance payments and other forms of child support, both in the Social Security Act-- Anthony M. Kennedy: Well, but all of... all of these payments that you have just described are called child insurance payments under the statute, are they not? Jamie B. Aliperti: --Voluntary payments aren't referred to as child insurance payments, Your Honor. They are just referred to as voluntary payments by the Secretary's regulations. Anthony M. Kennedy: But all of the disability payments, payments based on disability, or payments because of the death of a parent upon whom the child was dependent, are called child insurance payments, are they not? Jamie B. Aliperti: That is the term that's... that's used, Your Honor. Your Honor, we would submit, of course there are differences between Title II payments and other forms of child support. An apple is much different from a pear, but they are all fruit. And when you talk about a statute in which a disregard applies to any child support payments, all forms of child support were intended to be included in that. Also, if one looks at the legislative history of the sibling deeming enactment, which we contend that the Congress enacted the $50 disregard for the purpose of mitigating the very harsh effects of sibling deeming, which affected ADC families with Title II children every bit as much as families with children receiving other forms of child support. In looking at the legislative history, it is clear that Congress was concerned about the effects of sibling deeming on two specific classes of payments: Social Security Title II payments and child support paid by absent parents. And the language which Congress enacted, that the disregard applied to any child support payments, was to encompass both of those types of payments that they were most concerned about in enacting sibling deeming. Now, $50 may seem like an insignificant sum, but for a Virginia ADC family of three, receiving a maximum allotment of $265 a month, the additional $50 from the disregard represents a 20 percent increase in monthly income. And that can make the difference between a parent paying or not paying a utility bill, or being able to buy shoes for their children or not. The... which is exactly in the same situation as ADC parents whose only form of support coming in is payments from a living, absent parent. The Fourth Circuit, in... in affirming the position of the respondents, noted that it was irrational to... to apply the mitigating benefits of the disregard statute only to payments from living absent parents, and not to apply that to Title II recipients who suffered just as much. William H. Rehnquist: But what about the government's argument that the reason for the distinction is to encourage the absent living parents to keep making the payments? Jamie B. Aliperti: Well, that is what the government is saying now, Your Honor. That is not what the government-- William H. Rehnquist: Well, what about it? Jamie B. Aliperti: --We contend that that is not the purpose behind the statute. In the Gilliard case-- William H. Rehnquist: Well, what... what if it were the purpose behind the statute? Would you then feel it satisfied the rational basis test? Jamie B. Aliperti: --No, Your Honor, because an incentive rationale could also apply to Title II payments. Title II payments do not fall on a child automatically. The child must apply for the benefits. The child must qualify under the dependency test. Many times paternity must be established as a threshold before the parent can apply on behalf of the child for the Title II. If there is an incentive element lurking in this disregard, it would also encourage parents to establish paternity and to establish support obligations so that they can get the Title II benefits. The government told this Court three years ago, in the Gilliard case, that the reason for the enactment of the disregard was to mitigate the harmful effects of sibling deeming. Significantly, that case didn't even involve Title II. That case involved payments by living absent parents, yet the government did not even mention this incentive argument. Only after the disregard's applicability to Title II became an issue did the Secretary come forward with this incentive rationale. And we contend it is simply an ad hoc response to litigation. It is not why the disregard was enacted in the first place. And if one looks at the path of enactment of the disregard, and... it is clear that it was enacted as a compromise so that sibling deeming could pass. It was defeated in... in the House twice before it was finally enacted in 1984. And the conference report in 1984 was added by the Senate a third time as an amendment to the DEFRA statute which had been passed by the House. And the conference report stated, "The conference agreement follows the Senate amendment with the following modification, a monthly disregard of $50 of child support received by the family is established. " I... the sibling deeming provision and the disregard provision are chronologically and conceptually linked. John Paul Stevens: Is there any, Mr. Aliperti, is there any discussion in the legislative history in connection with the conference report of the fact, the specific fact that the sibling deeming provision would encompass children who were receiving Social Security benefits? Jamie B. Aliperti: No, Your Honor. The language that I just quoted to the Court is the only language that talks about the disregard at all. John Paul Stevens: It is really subject to-- Jamie B. Aliperti: We have to make an inference based on the path of enactment of the two statutes. But it's a strong... we contend it's a strong inference, and there is no inference that can be drawn whatsoever from the path of enactment that incentive was the rationale. Congress has addressed the question of incentive in other legislation. Just 40 days after it enacted DEFRA, Congress enacted the Child Support Act Amendments in which a large number of provisions relating to the collection of child support were enacted. It's... it-- John Paul Stevens: --What I am wondering is, is it possible, is it consistent with your understanding of the legislative history that Congress just didn't really think about this problem? And I don't know which way that cuts, but that they thought... of course the inevitable consequence of the statute was that it would require inclusion of the sibling who was getting Social Security benefits, but did anybody talk about that being one of the things that would happen under this amendment? Jamie B. Aliperti: --In conference reports in prior years, in '82 and '83, when the sibling deeming was passed by the Senate but defeated by the House, there was much discussion about sibling deeming being especially harsh on Social Security recipients-- John Paul Stevens: Oh, there was. Jamie B. Aliperti: --these Title II payments and child support by living non-custodial parents. John Paul Stevens: So your argument is that that indicates that the opposition in '84 was partially based on the effect on families that would the Social Security... have Social Security beneficiaries in them. Jamie B. Aliperti: Yes, Your Honor. It would appear from a fair reading of the legislative history that those were the two groups that Congress was most concerned about, and why sibling deeming did not pass the House in '82 and '83. And then there were no... there was no mention of the disregard in any prior bill before Congress. It appeared for the first time in the '84 House-Senate conference committee. And it is clear that it was a compromise in order to get sibling deeming passed. John Paul Stevens: Are there any other kinds of Social Security payments, other than those that can be characterized perhaps as child support, that would also have been covered by their concern? Jamie B. Aliperti: They were referring specifically to the child dependent payments, payments for dependent children. And by the language of the enactment, any child support payments... Congress wasn't looking to disregard any other kind of payments. Certainly Congress wasn't intending, from the plain language of the statute, to apply disregard to spousal support payments, which the Secretary does. We contend that it is highly irrational to deny the disregard to a payment that clearly has as its only purpose the support of children, and then apply the disregard to spousal support payments, which are not meant to support children at all. They are meant to support the spouse. And the Secretary misstates when he contends that the, that spousal support is granted the disregard only if it is inseparable from child support. In practice, if spousal support payments are received, and no child support payments are received, even if they are clearly differentiated, that spousal support payment will be granted the disregard. And that clearly is not what the statute plainly says. And it certainly doesn't comport with a professed narrow reading of the statute. This Court has always interpreted the word "any" to signal that a broad construction of... of a provision was intended. As this Court noted in the United States v. James, given the broad sweep of such language, it requires some ingenuity to create ambiguity. Yet, as shown by the Georgia Department of Social Services' administrative decision which the Secretary lodged along with his brief, he excludes Title II by a professed narrow reading of the statute. Now I would like to quote one sentence out of that administrative decision, because I think it gets to the nub of the problem. It says that while these benefits might be viewed generally as child support, the Family Support Administration reasonably determined that they did not fall within the narrower concept of the Act. One thing is, we contend, is quite clear. And that is that Congress intended a broad interpretation of this statute. They could not have used clearer language for that. John Paul Stevens: Well, they could have used clearer language. [Laughter] Jamie B. Aliperti: Well, Congress could have said-- John Paul Stevens: They could have said including Social Security benefits. Jamie B. Aliperti: --Congress could have said we intend this to apply to Social Security benefits as well as other forms of child support. Anthony M. Kennedy: Or they might have said payments in lieu of child support. Jamie B. Aliperti: But they said any child support payments. The Secretary's interpretation can only be found to be plausible and reasonable if this Court determines that Title II payments are not payments to support children at all. And that runs counter to the entire 50-year history of the disregard, of the Title II statutory scheme, and what this Court has said on numerous occasions in prior cases. Whether or not the payment came from a deceased parent or from a retired parent or from a disabled parent, in all three of those instances this Court has always recognized the support character of those payments. Antonin Scalia: But you yourself don't... don't argue that any payment to support children is a child support payment. I mean, you give some ordinary meaning to it. You are willing to acknowledge that the payment has to come from a parent, but I... why not go all the way and say that, as the Secretary does, and say that we usually mean by a child support payment is... is a payment that is imposed on the parent, a legal obligation. Jamie B. Aliperti: The reason for that, Your Honor, is that we contend that the ordinary meaning of child support does not include payments by someone other than the parent of the child, not from an uncle or from a friend or some other relative. And it-- Antonin Scalia: xxx include insurance payments, the ordinary meaning? Jamie B. Aliperti: --It includes insurance payments because we contend, Your Honor, that that is emanating from the parent. The parent either set up the insurance fund or the parent paid their wages into the fund. The government has made, has stated on numerous occasions in... in its brief that the government is paying these benefits, but the government is not paying these benefits. The central feature of Title II is that the parent pays into the trust fund, and that is a condition precedent for the payments to go out to the children. Antonin Scalia: That may be, but I still find it hard to believe that the ordinary meaning of child support payment is a payment from an insurance company. And that's... that's the argument that you are making, right? That that's the ordinary meaning. Jamie B. Aliperti: All it is is one step removed. The ordinary meaning doesn't focus on the source of the payment, Your Honor. The ordinary meaning focuses on the function of the payment and its purpose. And the only purpose of the Title II payments is to provide support to children. It has no other purpose. There is no secondary purpose or secondary function. William H. Rehnquist: The ordinary meaning certainly does focus on the source, I think, the source being the parent. Jamie B. Aliperti: The source being the parent, again the payment wouldn't exist if the parent hadn't been making payments into the trust fund, and if that child had not been dependent upon that parent at the time that the parent either became deceased or retired or disabled. If those two conditions don't exist, that child does not qualify for Title II. John Paul Stevens: Yes, but let me, may I just ask this. To the extent that you rely on the legislative compromise and the legislative history in 1984, wouldn't the purpose of mitigating the hardship of the, of including the income of the sibling and making him join the family group also apply to people who are receiving money from a grandparent or people... children... or even children who are working at some job where they earn a few dollars a week, or something like that? Wouldn't the purpose still apply to that whole category? Jamie B. Aliperti: Yes, Your Honor, and we can only speculate as to why Congress chose to apply the disregard to child support payments rather than to simply any income of the child. Again, the legislative history does show that there were two specific kinds of payments that Congress was most concerned about. Also, it would have been an administrative nightmare, I believe, if Department of Health and Human Services had been required to figure out which families had previously excluded children from the ADC assistance unit, and were therefore affected by sibling deeming and should receive the benefits of the disregard. Many families excluded children and then added them back, and then excluded them again, depending upon who had income coming in at the time. It was just a lot easier to apply a blanket disregard to any child support payments, which would encompass the two groups that Congress was most concerned about. Now, again, the Secretary, in his 1987 brief in the Gilliard case, offered as the reason for the disregard's enactment one reason: mitigation. And it is only after a challenge to that came up that he began talking about incentives. Also, the Secretary refers to other references to the term child support in other sections of the Social Security Act. In each case he takes that term out of context. Many times the reference is neutral; it doesn't give us any insight as to what they are referring to. And the other times, when it is referring to payments... specific payments from living, absent parents, it is in the context of the IV-D system. And clearly, if you are talking about IV-D payments, you can only be talking about living, absent parent payments, because that is the only kind of payments that can be funneled through the IV-D system. Again, in our own complaint in district court, we offered... we differentiated between Social Security Title II payments and other forms of child support. But that was in the context of talking about the effects of sibling deeming, and it would be natural to differentiate in that regard. Congress did not create classes of child support, some of which would get the mitigating effects of the disregard and others which would not. All child support payments, any child support payments are entitled to the disregard under the language which congress itself chose to enact. And we contend that the language means what it says, that if there is a payment for the support of children, coming from a parent, whatever the nature of that payment, that payment is entitled to the disregard. I would want to close by talking briefly about how sibling deeming operates vis-a-vis the disregard, and the best example for that is the family of Geneva Powers, which is one of the named plaintiffs. Ms. Powers had a family of four. She was receiving SSI payments of $336 a month for panic attacks. She in addition was receiving $207 a month in ADC for her daughters Nancy and Loretta Powers, who she had by her ex-husband Roy Powers. And for her third child, Crystal McClanahan, who was by her deceased husband Ralph McClanahan, she was receiving $254 a month in Title II. Now, after sibling deeming went into effect, the... and Crystal McClanahan was forced into the assistance unit, the $207 ADC check was reduced to $11. Now, if that $254 check had been from a living Ralph McClanahan who was making payments pursuant to a court order, the Powers family would have received an additional $50 a month to work with. But simply because Mr. McClanahan was deceased and the payments were coming through Title II, even though the function and the purpose of the payments were not merely similar in the two situations, they are absolutely identical, but no disregard for Ms. Powers. We contend that that is contrary to the plain language that Congress chose to enact. It is contrary to the purpose of the disregard statute. And it is contrary to 50 years of legislative history and opinions of this Court construing what is the nature of Title II. Thank you, Your Honor. William H. Rehnquist: Thank you, Mr. Aliperti. Mr. Sloan, do you have rebuttal? Clifford M. Sloan: Just a few brief points, Your Honor. First, in view of the question about whether the term child's insurance benefits is in the statute, at 37a and 38a of the petition you will see that the term is in the statute. Second, Respondents mentioned that there would be an incentive rationale with Title II benefits as well, in terms of trying to get somebody to apply for Title II benefits, and so forth. And I would just point that, unlike the problem of payments from absent parents, there is no long-standing emphasis of this problem, this incentive problem in the AFDC program, there is no sustained congressional effort to get at that problem. And third, just to clarify one point in Justice Stevens' questions, earned income does get its own disregard in many circumstances. It can be lost if somebody doesn't comply with certain requirements, but it does get its own disregard. However, there are many categories of unearned income that do not get any disregard at all. John Paul Stevens: May I ask you this question, Mr. Sloan, about his argument that if you look at the legislative history from '82 through '84, that you find in '82 and '83 there was concern about the sibling deeming program's effect on Title II recipients as well as support payments, and therefore if you read the whole legislative history as a package, it is fair to assume this mitigation purpose motivated his clients as well as the support people. What do you say about that argument? Clifford M. Sloan: Well, if you look at the legislative history you find Social Security payments and child support payments being identified, including in 1984, by the Senate as categories of income... principal categories of income, that they do want to include that had been excluded. It's... they are given as examples of those. Now... and it is true that the Senate had been pushing for it, the House had been resisting it, and it does come in conference without any explanation of the disregard provision. Now, Respondents suggest that that means, because it came as part of this compromise in conference, it must have a mitigation purpose. There is no conference report explanation to that effect, and it is possible to hypothesize other reasons. To give one example, it might be that the House thought that a child support disregard was a very good idea because of the incentive purpose and so on, but it is costly. It is turning out to be very costly to the program. And so it could only get into the program as part of horse trading when they were also doing a major cost-saving initiative that the Senate had wanted to do, and it was part of a kind of legislative compromise that comes out of conferences all the time. Whether the reason for that compromise was the reason that Respondents suggest, or this reason, there is nothing in the legislative history to-- John Paul Stevens: Of course, the disregard would add costs to the program. Clifford M. Sloan: --That's right. That is my point, is that the Senate, with the family income requirement, was going to be saving costs, and so then the House had been resisting that, and so it is perfectly plausible to think that the House said okay, if we are going to give you this savings, which is estimated to be $455 million over the next few years, we think this program is a good idea. It won't eat up all of that, and here is a way to fund it in part. And so you won't get your $455 million savings, but you'll still get savings, and we'll further this worthy purpose. There is no explanation in the reports one way or the other, but what there is is the statutory term IV and had a particular history in Congress' attention to that problem. Antonin Scalia: Mr. Sloan, why does the government... why does the government include voluntary payments, which I would not normally consider child support payments. I mean, if I am divorced and I am visiting and I say, you know, here is some money for the kid, that would be... that would come under the exclusion? Clifford M. Sloan: Yes, it would, Justice Scalia, and it would if it was acknowledged by one of the parents to be support payments. The reason for that is because the Secretary's interpretation has been tied to the assignment provision in 402(a)(26), which requires the assignment of rights to support from other persons. The legislative history in 1975 makes it clear that that is addressed to child support. The Secretary's interpretation really focuses on child support as that which can be assigned the right to support. And the Secretary has interpreted when somebody goes on AFDC and they assign any rights to support from their payment, from... excuse me, from their parent, when the parent then makes a payment, that is part of what has been assigned to the state. And actually the person, the recipient is under an obligation to turn that over to the state and get it into the IV-D system. That's where, the point that I was trying to make before, about there are two kinds of payments from absent parents. There is direct payments and there are those that go to the state. Voluntary payments can be either one, and if they are direct payments then they should either be returned to the state or there is another procedure to deal with it. But the reason that the Secretary has treated voluntary payments in that way is because they would be within the assignment of rights to the state under 602(a)(26). Thank you. Byron R. White: Suppose a... suppose an insured divorced person during his lifetime makes payments pursuant to a court order, but he has set up a trust fund, and he has gotten rid of it entirely. And he says upon my death, pay X dollars a month to my children. Clifford M. Sloan: The payments from that trust fund would not get the disregard. Byron R. White: Right. William H. Rehnquist: Thank you, Mr. Sloan. The case is submitted. Speaker: The honorable court is now adjourned until tomorrow at ten o'clock.

Earl Warren: -- versus Subversive Activities Control Board. Mr. Solicitor General. J. Lee Rankin: Mr. Chief Justice and may it please the Court. Returning to my argument, I tried to give some further consideration to this problem of separability and see if I couldn't draw upon the decisions of the Court to find a case that might elucidate, illuminate the questions better than I have been doing. And I thought that it would be helpful to the Court if I would call its particular attention to the case of Electric Bond Company versus the Commissioner, in 303 U.S. 419. You probably immediately recall that that's the Public Utility Holding Company Act and it provided for a number of things in the Act and one of them was of course registration and another was that they file a registration statement and then there were a long list of other provisions that were also included in the Act. And a very bitter controversy occurred before this Court, which the petitioners in that case, claim that the Act was inseparable and that you had to construe all of the various provisions together. I make my position clear in this case on behalf of the Government, in telling the Court yesterday that the Communist Party alone could register. I did not mean to indicate that I was giving up, on behalf of the Government, any of the other provisions. I was trying to make it clear that I thought the Court had the duty, under the law and under its decisions, to take each part of the statute step by step and examine each part since there was a separability provision and determine the validity of each provision as it became ripe because of its properly coming before this Court under its decisions for determination as to each of the various portions. And I did not mean to indicate, if anyone misunderstood me, that the Communist Party should not be required to register on a statement as the next step after registering as a Party. And that then various other provisions of the Act would still be applicable unless this Court determined that they were unconstitutional or invalid in a proper case. In such event, and each one that the Court would strike down, would disappear from the Act but the rest of it would be enforceable. I also tried to indicate that I thought that this Court only has before it, limited issues at this time because the other issues were premature and not ripe. Now, in the Electric Bond and Share case, we have a case that is exactly parallel on this element of separability. I'm not saying for a moment that it involved a First Amendment problem. In this case, it does not but it does involve the -- the problem of whether or not, an Act has numer -- numerous provisions and whether those provisions should be treated separately when the Congress says so in how this Court should Act in such a matter and treatment. Hugo L. Black: Did it involve the Fifth Amendment problem (Inaudible) J. Lee Rankin: Well, Mr. Justice Black, I think it could've been in this regard. It -- the registration statement, of course, required all the kinds of information as I'm sure you are familiar with and a part of that, for example on the Insul Holdings, there are all kinds of fraudulent transactions alleged with regard to (Inaudible) about stock transactions. Hugo L. Black: It doesn't mean setting up another action in fact? J. Lee Rankin: No, I mean that -- that that was a factual situation that came -- that was revealed to the public in connection with the Insul and if -- Hugo L. Black: It required for them to deal in the future and the present facts? J. Lee Rankin: Yes, but it also would probably give a lead to who the officers in the Insul Empire were in regard to all of these various transactions that were alleged to be fraudulent about the issue of the Insul stock, if you recall, at that time so that I think there was the problem of whether a registration statement would reveal, although it was not developed in the case as -- as decided by the Court. Hugo L. Black: Was there evidence to suggest (Inaudible) J. Lee Rankin: It was not suggested in this as far as the opinion of the Court rules, but it did deal with the question of separability and the duty of the Court to -- where there was such a provision like there is in this case to separate out a portion of the statute that was divisible and you said there was a presumption in that regard and it should be followed. And therefore, the statute was found to be enforceable and valid. Felix Frankfurter: Is that – the case dealt with it, the case turned on? J. Lee Rankin: Well, that's what I mean Mr. Justice Frankfurter. That was the heart of Chief Justice Hughes' opinion in regard to it and the contention was bitterly made that you couldn't consider a registration and the registration of statement as a separate matter, but you had to -- had to consider them altogether and the Court said, "That was not correct and that you should take those separately. Hugo L. Black: I understood they were raising and may be I am wrong about it, the place is in fact different, possibly a district case. The argument here that I can gather to each of the problems is, what is decided in the Act in Communist Party in fact, amounts -- well, not expressly declare it to a direct money unequivocal practical outlawry of the political party, which at least, in some of the evidences is (Inaudible) small political party. The plaintiffs argue -- argued outlawry and that cannot be done. Only way I see it is to determine that it does not invade the Party and its outlaws and the criminal fee of the Party (Inaudible). The only way perhaps, that it grieves death certificates to see whether taken as a whole, it does amount with the three outlawing of (Inaudible) when illegal Act relates to Justice Stewart's opinion to -- I recall the Mr. Justice Brandeis -- if he made a crime but you couldn't go all the way to the bridge between them of speak and express influence, simply because some of the activities were illegal. I assume that that is done. And assuming that you can only find that out by looking at the whole Act and all of its statutes, how could the Court and members of the Senate merely to registration as the other Parties. J. Lee Rankin: Well, Mr. Justice Black, in the Electric Bond case, it was claimed that that was a Death Sentence Act and all of these provisions were so extreme, including prohibition of use of mails for legitimate purposes that it would kill the Utility Holding Company. So the same parallel contention was being made and the Court said the examination should not be made on that basis. The question was to carry out the will of the Congress and deal with it on a separable basis and take each part and see whether that could be enforced in dealing with the problem. Hugo L. Black: Do you have any other cases, as I understood, of that case under the light -- that case which did not refer to freedom of speech, prayer and proximity as far as I recall it and (Inaudible). The mere registration is met to providing or to make any changes as for the -- the other members to bring about a conviction. J. Lee Rankin: Well, there were all kinds of Fifth Amendment claims in that case, but they were question of whether you take the property without due process but they were there and they were apparent that they were doing real damage. Hugo L. Black: You prevent that case in disposing of the case. J. Lee Rankin: Well, I think it is on the separability question. Felix Frankfurter: Would the Court subsequently, if he was -- do you claim that other Fifth Amendments -- J. Lee Rankin: Well, it the expressed -- Felix Frankfurter: I don't mean -- I don't mean in this -- I don't mean the Electric Bond and Share but later to just (Inaudible) it's under (Inaudible) clause. J. Lee Rankin: Yes, Mr. Justice and the Court said to all those questions to reserve -- Felix Frankfurter: I mean the -- those -- those were not privilege questions. They were -- being asked by this Court. J. Lee Rankin: Well, I don't contend that they shouldn't be in this matter. They're all there. Felix Frankfurter: And the plaintiff established what? What the issues were in the Electric Bond and Share or whether they weren't. J. Lee Rankin: Yes. Felix Frankfurter: I think it came out to affect, I don't know the cause and perhaps the validity of the death sentence which was refused to be passed on in Electric Bond and Share, is that correct? J. Lee Rankin: That's correct, Mr. Justice. John M. Harlan II: But I assume -- Felix Frankfurter: Unlike the -- I wish you could tell me what the metaphor of outlawing, what did any bearings that the Communist Control Act of 1954, in his statement, therefore, the Communist Party should be outlawed there if anything (Inaudible) J. Lee Rankin: We don't think it has any. Felix Frankfurter: What -- what does that -- what is -- what's the function? What purpose to that? J. Lee Rankin: None at all, as far as the Government is concerned. It's merely a -- a recital of the statement by Congress, but it didn't act to do that. Felix Frankfurter: And so instead the (Inaudible) is learning the fact. That's just the -- an exaltation or a belief, is that it? J. Lee Rankin: That's right, Mr. Justice -- Hugo L. Black: Well, you argue here that any party -- any party that operates as a party, rather than act like just the Smith Act, as I understand you. J. Lee Rankin: Well, let me try to -- Hugo L. Black: Incumbent practice as an outlawing. J. Lee Rankin: I make myself plain on that, Mr. Justice Black. The Government does not treat this or believe that this is just a party. It thinks that the -- Hugo L. Black: I understand that, I understand you. J. Lee Rankin: And that makes all of the difference in the world. Hugo L. Black: Well, then it changes but -- but you can't change it by giving it a different label, can you? J. Lee Rankin: No, we can by -- Hugo L. Black: And does -- does it -- does it or has it, or has it not and I'm not talking about in all of the claims. Has it or has it not as to provoked sought votes, sought members on public questions which -- which -- to some of which is said to be wholly illegal but has it or not, acted in that respects and that element was there as a party? J. Lee Rankin: Yes. Hugo L. Black: As a political party. J. Lee Rankin: And presumably, it has done lawful acts as well as unlawful act. Hugo L. Black: What I'm getting at is this. We've said that the reference to the littering in the streets that there are other ways to prevent littering in the streets that bars freedom of speech and press. You could go after the direct act to consider. Does this -- do these laws (Inaudible) make it legal or illegal (Inaudible) is not a punishment of what the Congress wanted to do, tried to do, to outlaw the parties which burdens on it that make it impossible to act in the Party to any of the things that the Party is doing. Do you believe that it could possibly act through the Party, with these things, these laws, I think. J. Lee Rankin: Well, I think it could do -- it could act as a party, yes. Hugo L. Black: How? J. Lee Rankin: But I think that it would have -- Hugo L. Black: How could they manage to check what's presented to your members? J. Lee Rankin: Well, he could continue to -- Hugo L. Black: Wouldn't it be better to meet the case in on to put on something down. Congress has intended to the Communist Party, it imposed sanctions that amount to outlaw (Inaudible). It is not singled out action which it has -- it has imposed, although it hasn't said so but in doing that it can place the burden as to the burden which would seem to bond from doing all of the -- to the business of the Party, would have to be the function. Tactics, no -- no tactics as that there is no (Inaudible). How could it function as a party? J. Lee Rankin: Well, the Congress was not trying that issue that it's just a party and I'm trying to -- Hugo L. Black: And I -- I understand that, I agree with that (Inaudible) My question is based on that assumption. Did it believe and said that was -- that they engaged in business of advocating some kind of reason at all, whatever it was to the old law of this Government by the Court upholds toward the staff and that's the reason that Congress had -- as I read the Act and sought to make it impossible to (Inaudible). Perhaps, someone may have thought, as was suggested by distinguished citizens that it would find the outlaws, would violate the Constitution. Whether it could be done, simply, by imposing the sanctions of the burden and they did impossibly and that is -- is the form of sanctions. I'm not criticizing it as to that but isn't that what we have to meet here in this case and taken as a whole that this Act, insofar the various threats hanging over to all these sanctions, but the operation of it is advised. J. Lee Rankin: Well, I think that you have to assume what Congress provided that it had to be a -- a party that was dominated and controlled. Hugo L. Black: I -- of -- of course. Of course -- J. Lee Rankin: -- by a foreign country. Hugo L. Black: Of course. J. Lee Rankin: And that it -- Hugo L. Black: And it maybe that that is what would save its constitutional analysis that allowed the foreign (Inaudible) and the outlaws. But what I'm saying is, why (Inaudible) -- why not meet the case or can say that this Congress has had, does it outlaw the party because insofar -- far (Inaudible) and because it's perfect eventually that this (Inaudible). Why not meet that constitutional issue which is plainly in it to mean -- J. Lee Rankin: I think you have to recognize the separability decision too which -- and ends by the Congress, so as to carry out whatever there is of the statute that you consider to be valid because that's a part of it. Earl Warren: But General, if we -- should -- if the Court should disagree with you on the question as to whether the First Amendment problems and the Fifth Amendment problems aren't before us at the present time. Suppose we should conclude that all of those problems are before us, would we then proceed with the -- with the -- your separability theory in accordance with the case you have cited and still do justice to the case. J. Lee Rankin: I think we could, Mr. Justice -- Mr. Chief Justice. I think that in the first place, I have not tried to indicate -- I thought the First Amendment problem was here but I thought it was in regard to each separate part of it, as there is a First Amendment case in a registration and the registration statement. I don't want this -- help you to understand that I don't think there's any First Amendment involved. John M. Harlan II: Could I ask you one question and -- and I -- as far as I'm concerned, I hope you cover the individual sanctions. Earl Warren: I wonder if I can -- I think you may have to, unless -- John M. Harlan II: I beg your pardon. Earl Warren: Unless you have to (Inaudible) please the Court. John M. Harlan II: Sorry. J. Lee Rankin: Well then, I think you would have to view it in each question when it becomes right. If the registration statement is answered and they sign in their names and don't raise any Fifth Amendment problems, I don't think you have any question or problem in it whatsoever. They have a right to come in and sign their names, say they're officers, say who the members are, what their finances are, and that's their legal right under the law and this Court has so held. Earl Warren: But General, my point is -- is this that suppose the Court disagrees with you on that and believes that both refers to the Fifth Amendment problems of the officers and members of the organization are before us as they were in NAACP then would you still say that -- that we could impose the separability clause in a manner that you have indicated what was done under the -- the case you cited. J. Lee Rankin: Well, of course the -- if you would determine that it couldn't considered that way, then I would think you would decide that Congress is dividing for separability, although they've tried to do it, could not lawfully do it. I think that's the way you would have to decide what you're asking me now. And that you know they said that it was separable but you couldn't find if they were separable as a matter of constitutional law. In that case, you would have to go further. What I'm trying to say is that in this case, exactly the same distinction was made and the Court rejected, and said it had to do if it could, what Congress said and take it piece by piece. Nor to that answer because I'm trying to -- Earl Warren: Well, I -- I didn't think there are any Fifth Amendment problems in that case. J. Lee Rankin: Well, there were claims -- Earl Warren: -- because I didn't -- I didn't -- J. Lee Rankin: A different kind of Fifth Amendment. Earl Warren: -- I didn't really believe there were any First Amendment problems -- J. Lee Rankin: No. Earl Warren: -- in the case either. J. Lee Rankin: No. Earl Warren: Now, and my point is specifically this. Suppose this Court was of the opinion that those problems are before us in this case, can we then adopt the reasoning of that case in this one, and determine separability. J. Lee Rankin: Well, I think you can as to certain phases of it. For instance, I think you might well think -- consider that First Amendment was in the provisions in regard to registration and the Fifth Amendment might be in regard to some. But then you got the problem of the registration statements and whether or not the Government can ask for the information and you have not said, as I read the case, that they can't ask for the information. And you say -- and you have said they can't compel the information. Therefore, until you know whether someone is going to invoke their privilege or give you the (Inaudible) the Government the information, you don't have the case ripe for decisions before the Court and I don't think you reached that particular point, although you reach others. Felix Frankfurter: Mr. (Inaudible), I think you and the Chief Justice understate there are (Inaudible) J. Lee Rankin: Sorry. Felix Frankfurter: -- in determining whether the Fifth Amendment was or wasn't involved in the Electric Bond and Share. The privilege against self-incrimination provision of the Fifth Amendment was not involved. The Due Process Clause of the Fifth Amendment was involved. J. Lee Rankin: I think I said that -- I tried to say and I -- Earl Warren: I so understood you, yes. Felix Frankfurter: Well, it -- it can't be subject if Fifth Amendment was not involved because it wasn't involved. J. Lee Rankin: Yes, Sir. Felix Frankfurter: In regard to the issue that came before it on the merits and you have the statute label, so the Fifth Amendment was as much involved there, in here or different portions. Earl Warren: We're talking about self-incrimination in this case throughout, not any other portion it has said. J. Lee Rankin: I think so. John M. Harlan II: I don't want to take up any much of your time but answer this question, putting aside the Fifth Amendment claims in a -- on a question of sanctioning, assuming if we were to accept your argument that we should not reach any of the sanction, would there be any other factors other than the factors which are present now that would -- present in the adjudication of the sanction (Inaudible) J. Lee Rankin: Well -- John M. Harlan II: Basically, your basis that aren't equally before us now. J. Lee Rankin: Well, on some of them, there wouldn't and in some there would -- John M. Harlan II: Which ones? J. Lee Rankin: On the registration, I think the facts would be very important. John M. Harlan II: Oh, registration, I'm talk -- I'm talking about sanctions distinguishing it -- J. Lee Rankin: Well, I think that many of those might be right for adjudication in a declaratory judgment, the action and -- John M. Harlan II: Well, aren't they equally ripe now? But why aren't they equally ripe now? J. Lee Rankin: Well, as to those who are members and apply for a passport for instance, you have the problem of whether or not there is a law outstanding at that time that then was -- was triable which is the constitutional right to having a passport and how you will interpret that provision and -- and how the application of the regulations to that provision might be made. I think that those questions, according to your holdings in the past and all you've reserved until they come before you with a Party who was asking for that particular relief. Well, then when some organization claims it on their behalf, I don't think that any of your cases would sustain your -- a passing upon that kind of question in this context. Now, time after time, people appeared before this Court asking you to pass on constitutional questions. You say we'll never reach that question because you have to and it seems to me, all of those sanctions would have to be treated under those holdings as you adhered to when they come up, depending upon on the context in which they're presented and not reaching out to get them decided in this case when they're not necessary. John M. Harlan II: Alright, this is the question originally. Now, they say this is the question, a part of the Constitution attack here (Inaudible) the -- that this (Inaudible), it's part of the Constitution in terms under registration provision. J. Lee Rankin: Yes, but it doesn't appear that it's necessary to a decision in this case that those sanctions be passed upon now until that particular case comes up, just like in the Holding Company Act when the death sentence provisions were passed upon when they came up by an independent procedure. Hugo L. Black: As I recall it (Inaudible) that -- that the -- as I recall it, the basic idea of inseparability is one of them. If we look to see, we'll have enough time. And we have certain things that apply to a part of the Act, as I see it, (Inaudible). You can't get to various parts of it (Inaudible), except there has to be one paragraph that may have stated, the Communist Party requirement, could stand up to something (Inaudible) or statement where you register under this Act. J. Lee Rankin: Yes, Mr. Justice -- Hugo L. Black: What if they would -- you thing that was a good decision for the no name, nor anyone would take somebody's statements (Inaudible) with the Communist Party's statement, now, with registration. If you're asking (Inaudible) orders for that, do you say that's one thing that's a bit of -- that that could -- if you make the standing alone, is that what you (Inaudible) J. Lee Rankin: Well, I think it's clear they did. Hugo L. Black: What would they get Mr. Solicitor General if they all have from the act of local -- of an action and say it's Communist Party (Inaudible) without any -- any officers (Inaudible) J. Lee Rankin: Well, you see the act provides for the registration without this kind of a hearing too, voluntary registration and the Congress was willing and happy to have that if they could get it. Hugo L. Black: To have what? J. Lee Rankin: A voluntary registration without any trial merely a -- a mere recognition by the Party. Hugo L. Black: To that effect, (Inaudible) J. Lee Rankin: Yes. Hugo L. Black: It's all they wanted. J. Lee Rankin: They -- they -- no, not at all. Hugo L. Black: Well, do you think -- do you think it's anybody that was (Inaudible), they have much confidence. As in that, provided nothing in the file in the paper by somebody and signed, maybe by (Inaudible), it has something to Communist Party to statement of registering. Is that what the argument you made just today (Inaudible), I think part of this. J. Lee Rankin: Well, I don't want to be misunderstood to say that they need a responsible act which -- Hugo L. Black: I'm not talking about being responsible. You just suggest it in a way that it would be a responsible action. You just -- if they just emphasized statements, pre registering. That does have -- under the act, you could include the statements insofar as the (Inaudible) one of them is that and the other was (Inaudible) J. Lee Rankin: All I can say is what Congress did say and it was -- it very -- it very clearly said that they could satisfy the requirements of registration by coming forward itself without a trial or hearing or anything else and say, "We do register." That was one particular section of it and they wanted that, and it meant a lot because it would be a recognition that this party -- Hugo L. Black: But on your -- on your argument before to this case, I assume that everything they say is standing -- that we consider nothing else in the world except one provision, it means no more than that pre registering. And we say it's best that the separable parties and that makes it -- we had the (Inaudible) and that would be the -- we can (Inaudible) it to that is fairly treatment, an act of Congress (Inaudible) J. Lee Rankin: Well, I didn't say it's -- Hugo L. Black: How about 10 years, in separate facts. J. Lee Rankin: I didn't mean to say that that is the only Party that the Government is contending as valid. Hugo L. Black: I understand that. J. Lee Rankin: The Government is contending for all of that but it does take the position that -- that with the separability clause, you take section by section and see what you can sustain under the law and that it was -- would satisfy one of the purposes of Congress. It's very important to have them just come forward and say, "We register with nothing more." Another purpose was to get information in the registration statement and I think you can properly and should consider that separately -- separately. And that the Government can ask questions and they don't have to answer, which this Court has said. They can say this will incriminate us, we don't answer or would tend to incriminate. Hugo L. Black: Your argument (Inaudible) that we should consider it all (Inaudible) on the question of (Inaudible), it's under attack. J. Lee Rankin: Well, I -- only make that argument and saying, if you find that they can't do more, you can say that much is valid, but I don't want to be misunderstood to say it that I -- I'm not urging that you find much more than that valid. But I say that Congress said and I can only resort to their words, and I think the history is plain and I think the Court in this case, Electric Bond and Share, said, "We turn to that language and it was contended by counsel that you look at the legislative history and Congress wouldn't have -- have urged any -- passed such a bill with just the registration." That same argument was made and they said, "Look at the legislative history," and the Court said, "Look at the language that Congress said." Hugo L. Black: And they have then resolved the question of whether or not that would confiscate their properties at a reasonable familiarity than the -- and I do not believe that it was impossible to say at that time under the Act (Inaudible) where they confiscated enough -- it confiscate, once they found out how they did it. Therefore, it was the Government but I understand that it was far more subject to the matter there. Felix Frankfurter: Could I ask you -- inappropriate -- William O. Douglas: (Voice Overlap) and put down ultimately to the question, I suppose and in these case, of whether any words of the Electric Bond and Share opinions I have used, the various parts are so interwoven that you -- you must know how to disposes of the one question of treatment or treat more than just that one (Inaudible) J. Lee Rankin: Yes, Mr. Justice. William O. Douglas: I think those words were interwoven. J. Lee Rankin: I guess but -- I think that if you read that opinion and you examine it again, I'm sure you would agree that it was expressly said -- said by the Court, that the duty of the Court was to try see if it wasn't separable and make it such because Congress said so. That's where you start. You don't start in the other presumption. So it seems to me, with that kind of a presumption, if you have duty to see if you can't make any portion of it standup alone. Now, you might find you couldn't and that's something else again. William O. Douglas: My difficulty is that once a registration statement of the form of -- prescribed by the Attorney General if filed with all the data, a lot of other things come into play. We know, state laws, loyalty boards, Boards of Education, state laws that disqualify people from holding though a certain jobs, would seem to come into play. There's a radiation from it that that is very pronounced, isn't that -- wouldn't that be true? J. Lee Rankin: I think there is -- the radiation that you describe is involved in the Act. I think you could say that certain portions are valid without allowing the -- the other to come into play and that's what I mean by taking step by step to see whether it's here and if it is here, whether it's necessary and if it's invalid, you leave what you can to itself. Felix Frankfurter: You see (Inaudible) as to these questions on the assumption that you will permit them that the legislative history of the Public Utility Holding Company has. Do you mean by that, the report doesn't -- submitting (Inaudible) Congress in the long, long debates in those (Inaudible) and I would like to ask you whether you think, and on reading those debates and those reports, you are prepared to say that Congress would've been satisfied that all Congress wanted to that elaborate process with which one is familiar in that particular legislation and that all that Congress wanted is to establish instant right, a letter saying I am the boss of this holding company. J. Lee Rankin: Well, Mr. Justice Frankfurter, I can't answer the question with the assumption because I'm only familiar with the newspaper accounts at the time and I haven't examined that history. But from the newspaper accounts, it was clear that Congress wanted more and that was the argument that was made in this particular case and the Court rejected it saying, "We'll turn to the language of the separability clause that governs our duty and we'll follow." Felix Frankfurter: Now, the next question I want to ask you, whether you think that with reference to the death sentence statute to the very main important which was involved in the death sentence statutes, whether you think there were no radiation with reference to that Act flowing from the fact of registration, whether the -- the opportunity to the -- in the national market, whether the relationship between either corporate bodies of the great Insul Empire, etcetera, etcetera. Whether no radiations in that situation? J. Lee Rankin: Well, there's no question that there were on the burden of the argument of the petitioners in that case, was that the radiation for such that -- that registration in itself was part of -- only a part of what the Congress wanted and these other steps were up -- attached to it and bound to do them such injury. And of course, the recitals in the legislation, the purpose of it were the terrible evils that the Public Utility Holding Companies were to indicate what the Congress was trying to do. I think that was clear that there were plenty that would flow from the mere registration and the filing of the registrations. Hugo L. Black: Plenty of what? J. Lee Rankin: Plenty of radiations as to other effects. Hugo L. Black: What injury? What constitutional injury (Inaudible) think can find it that's declared to them of that by confiscation of the property if -- if they meant to choose, provided in the Act to abolish the (Inaudible) J. Lee Rankin: Well, when you say except that, that's pretty involved in the Section. Hugo L. Black: But what if anything else but that? J. Lee Rankin: No, but they argued that they were taking their life away and taking their properties -- Hugo L. Black: Yes, that's right. That's right. J. Lee Rankin: -- in effect and all of these property would be destroyed of tremendous values. Hugo L. Black: Can you think of any way that their property would -- would be taken except by registration? Can you think -- would that have barred them from using the (Inaudible)? Would it have barred them from getting acted up? Would it have destroyed them, though financially to mere registration? J. Lee Rankin: The failure to register add a penalty that they couldn't use the mails and that was upheld, right in the same case. Hugo L. Black: Yes, but they -- they got -- they got around that by registering. J. Lee Rankin: Well, that was -- Hugo L. Black: What -- what would follow -- what would follow if they register, that would be dangerous to this? Would they lose the right if they registered? To a -- in fact there are so many things, I can't remember them all, but was there any, as to their restraint of possible (Inaudible), the kind that there is here. They would suffer from the mere acts of registration. J. Lee Rankin: Well, in the climate of those days, I'm sure that registration -- Hugo L. Black: I'm not talking about the climate. What did the Act provides -- J. Lee Rankin: Well, registration would -- Hugo L. Black: -- that we've done to them by merely registering? J. Lee Rankin: Registration in itself, Mr. Justice Black, would have all of the reflection and the bad effects of being a Public Utility Holding Company -- Hugo L. Black: Would it bar -- would it bar them from using mails? J. Lee Rankin: Well, if they fail to register -- Hugo L. Black: I'm talking about registration. J. Lee Rankin: Well, but I think you (Voice Overlap) seen in the others. Hugo L. Black: What would've happened to them -- what was the injury? Is it -- is it clear to them by registering under that Act by registering alone? What property would have been taken from them? Would they have lost the -- the various lives of tax deductions, or any of the things like that that have provided them this Act by registering? J. Lee Rankin: Well, I think the registration would be an acknowledgment that was involved in the -- in the other files. Hugo L. Black: Well, I -- I understood you to say the separate and that Court held that was separate. It wouldn't involve and they could attach that later. By registering, they did not injure themselves. According -- under the constitutional claims there, they didn't think it barred them from all these things. It's barred them from injury. Felix Frankfurter: Practically, what would have happened? The fact that -- Hugo L. Black: Yes, and I -- I'm not -- Felix Frankfurter: -- if anything have happened -- Hugo L. Black: I'm not speaking about the truth. Felix Frankfurter: -- administering into will be that. Would he -- nothing would have happened. J. Lee Rankin: No, (Inaudible) Felix Frankfurter: It's market is financing one of those and I'm just -- just saying that (Inaudible) will be call on just the same. The evaluation of it is changed, would've been just the same? J. Lee Rankin: Well, the claims were that as immediately as the one that registered, they would lose all the tremendous values. Hugo L. Black: I'm talking about is, what does the Act provide by law that could be done to them, the way they (Inaudible) from doing anything of any kind or any nature by registering. What did the act say, will be a legal consequences that will destroy your business by mere registration. J. Lee Rankin: I don't think the Act said in itself that by registration, there would be further consequences. Now, in the same case law, the Court said that the registration was statement is also valid separately. And they -- and that certainly would reveal all kinds of things that would have damaged them and adversely affected the values of their properties. It isn't personal rights but it is property rights that they were contending for. Hugo L. Black: As a matter of law. J. Lee Rankin: It's very real. Hugo L. Black: It is a constitutional right if they are (Inaudible) J. Lee Rankin: Yes. Hugo L. Black: I'm -- I'm -- It's not what I'm -- not what I'm talking about. I'm talking about the legal consequences of the registration. Here, you admit, I thought they would be barred from various things that you get practical (Inaudible) what other (Inaudible) J. Lee Rankin: Well, they would -- Hugo L. Black: When -- when -- why else would it be (Inaudible) registering? They would not register alone. J. Lee Rankin: They would be barred from getting the contributions from government employees and they would also have to make a disclosure on their -- their label, their publications that they were communist -action organization. That much they would also have. Hugo L. Black: Acted up to the (Inaudible) J. Lee Rankin: Yes and the tax deduction of course, were a matter of grace (Inaudible) and whether they were entitled to exemptions and on behalf to -- Hugo L. Black: So that's separation here, treating this as the only thing that we consider, these consequences don't come which are incomparably away from the legal -- legal consequences provided by the Act and those that were the form -- that would have (Inaudible) on the whole sense. J. Lee Rankin: I want to try to answer your question frankly, Mr. Justice Black. Hugo L. Black: If that's not correct, I'd like to know why. J. Lee Rankin: You're treating the registration as being -- as being a separate part when this case treats both the registration and the requirement of a registration statement as being separable parts that could be sustained separately. Hugo L. Black: I'm talking -- what I'm talking about here is, is it not – is it not true that if they had merely come up and say, "Sign a statement or somebody's going to pay for it because we probably have thought you appeared here by race." Would that -- are there any consequences such as acts of the Government and so forth that would have to be a part of (Inaudible) under the Act which would practically destroy their ability to continue what they're doing of the Party. That was not legal consequences under the wholly (Inaudible) of the Act on registration alone. J. Lee Rankin: I think there is left, the distance between the two. Hugo L. Black: Do you see this claim that, there's no relevance. J. Lee Rankin: No, I -- I do think, Mr. Justice Black, that it's unreal to say that these people weren't -- wouldn't be hurt under the Public Utility Holding Act by a registry, but it's not -- Hugo L. Black: Well, they're about to have certain by passing the Acts. J. Lee Rankin: Well, it is not the legal consequence that you're asking about but certainly, the mere fact that registering would have its impact upon the value of all their property. John M. Harlan II: In all of the questions, whether we decide the sanctions now or whether of the statute that he can build, whether values has a priority to impose the elements -- the elements of -- J. Lee Rankin: Well, the ultimate question of whether if you will abstain. John M. Harlan II: If the sanctions are good and Congress had the power to pass on the outlawry claim, has no dependable distance to that saying. J. Lee Rankin: hat's right, Mr. Justice. John M. Harlan II: So that the ultimate question whether we review the sanctions as it is viewed now or whether we view them piecemeal as they arise, ultimately, the question you have to decide in either instances whether the sanction is justifiable to -- to his constitutional (Inaudible) in this sense. J. Lee Rankin: That's right. John M. Harlan II: Isn't it? Hugo L. Black: And view all of the sanctions together, amounting to the outlawry, whether you call it so or not, if he had a question of outlawry. J. Lee Rankin: I don't think so, Mr. Justice. Hugo L. Black: Even if all of it amounts to that? J. Lee Rankin: No because -- because I'm saying you slice off one-half from another -- Hugo L. Black: Yes, yes, as I understood. J. Lee Rankin: -- you may not agree with that but I'm trying to make it clear, what I think the Congress said and if you think that out of eight sanctions, eight -- Hugo L. Black: Well, the reason I asked that before is, you answered the question which said the outlawry would have nothing to do with the -- all the claims and is a matter of -- you answered that here and as I understand you to make your -- make your claim. But -- the question would still remain if all the sanctions to that -- and as well as all of them amounts on outlawry of all the activities of a political party and whether that could be constitutionally be done. J. Lee Rankin: Well, I didn't understand the question in that way. I think that if you would say in -- in your question as I understand -- your question now that the accumulation of all of them makes it impossible for them to do any lawful acts. Hugo L. Black: That's right. J. Lee Rankin: Then you still have that problem. I agree that you would. Hugo L. Black: Would -- would -- J. Lee Rankin: But I don't agree that that problem is in the case because I -- I contend, on behalf of the Government that this is not lawful action and I say it's comparable to your situation in an antitrust case where there is a conspiracy, say, a group get together or by persons and they agree in writing to conspire to restrain trade and they put down the various acts they're going to take and amongst that are a number of acts that are lawful that no one could take offence to but they will contribute to the conspiracy and if they proceed to do any of those acts, this Court has said, "You can't proceed to do lawful acts to accomplish an unlawful purpose." Now, you might not agree that that is the -- what we have before the Court here, but that is the concept and I think it's a valid one. And I think that when they take peace for instance or when they say, "In Soviet Russia today we have a free press." They're not talking the same language that we are and when they say that kind of thing or when they say they're -- they have peace, they're for peace, they use that as a means to accomplish their -- their objective and their purpose to support this foreign power and you can't use lawful means for that illegal purpose. Now, that's the difference whether you agree with it or not, but I'm trying to point out and I don't think that you can use advocacy either for an unlawful purpose if you tie them together, trying to carry out that unlawful purpose. I think that's the problem in the case. Felix Frankfurter: That -- I meant to ask you just for clarification in view of your answer to Justice Harlan's question, namely, whether isn't it a fact that the question on this separability gets down to whether the Court decides the matter now or later. And use, if I may take them, if I correct it said, yes, it does get down with the Act. And I don't want to stop this but the fact that it may happen to decide it later, justify deciding it now. J. Lee Rankin: Well, all I know is what I read in your cases in this Court and constantly, those cases said, "You don't decide constitutional questions until you reached them." Hugo L. Black: Not as a matter of choice but as a matter of usage. J. Lee Rankin: That's right. In principle to have them before you in that form that you'll consider this. And I think time after time, you've said that not to instruct the lawyers but because it's basic to the function and to the duty that you perform on behalf of the country. John M. Harlan II: And Suppose the assumption to the that is here now, whether you carve it up or (Inaudible) up or you could package it that denies the distinguished constitutional question that the individual members, independently in the organization that were raised. It's a different problem. But the First Amendment question is right here whether you carve it up or whether you deal with it as a package in here. J. Lee Rankin: I think I can -- John M. Harlan II: So you're not postponing any First Amendment question. J. Lee Rankin: I said that a number of times, Mr. Justice Harlan but I wasn't saying the First Amendment question was not here. John M. Harlan II: Yes. J. Lee Rankin: But I did want to make it clear on the other constitutional questions if they're properly here. I'm not saying this Court shouldn't decide -- John M. Harlan II: Wouldn't you say -- wouldn't you say that their summary of this whole discussion is that either courts with a permissible cause for the Court to adopt, the Court of Appeals shows to regard this as a package and their -- their view can be expressed -- that judgment to be equally well postpone adjudication? And could adjudicate the sanctions if you wished to, but either course would be permissible. J. Lee Rankin: But the fact that the Court of Appeals adopted, shows that other people disagree but the Government does not think they're here now. Felix Frankfurter: But that isn't what was done when we said and ruled in the Electric Bond and Share. It is not a choice. It doesn't (Inaudible) to the whole Court to the legal instructions and said when -- when validity is in question, divisibility and not integration in the (Inaudible) and I don't know what it means to say the First Amendment to could (Inaudible) what you want. It's here after requiring it to registration by the Communist Parties. J. Lee Rankin: That's right. Felix Frankfurter: And everything that derived from that in relation to the First Amendment could (Inaudible) and to talk at large that the First Amendment could see it, it is not analyzing the problem as I see it. A First Amendment problem is here but not the First Amendment problem (Inaudible) J. Lee Rankin: Mr. Justice Frankfurter, I wanted to be clear that I was not saying to the Court there was no First Amendment problem before the Court. But I do say that it is limited, and should be taken step by step as to every single respect to it. Felix Frankfurter: That means, as I understand you that First Amendment claimed by individual on the separability clause not -- J. Lee Rankin: That's right. That's our position. Hugo L. Black: Do -- do the order require individual (Inaudible) J. Lee Rankin: Not at this point. Hugo L. Black: What would you say about an individual? J. Lee Rankin: It directs the Party to register. That's the effect of the -- Hugo L. Black: (Inaudible) can you think off? J. Lee Rankin: You -- you see the -- the whole Act that I was trying to describe is conceived of the idea of reserving the question of the individuals and the individuals, when the Party has to act, then are given a time in which to try to get out of the Party if they decide to do so. Earl Warren: Mr. Abt. John J. Abt: Thank you Mr. Chief Justice. May it please the Court. Yesterday, an answer to a question from Mr. Justice Harlan, I stated that the question of the privilege would drop out of the case if the Act could be construed as permitting the filing of an unsigned registration statement. I was wrong. The question would still remain on the case because Section 7 (d) requires a statement to list the names of all officers and members of the organization, and Section 15 (b) punishes omissions from the statement. Thus, if an officer or a member of petitioner prepared a statement, he would be obliged to incriminate himself by listing his name as such even if he didn't sign the statement. Again, that the state -- statement was submitted by a lawyer, as Mr. Rankin suggested, the lawyer would have to get the names of the officers and members from one of them and the latter would have to incriminate himself by furnishing his name to the lawyer for inclusion in the statement. Hence, there is no escape in this case from a question of the privileges. Hugo L. Black: (Inaudible) John J. Abt: Someone would have to give him the books and in doing so, identify himself as an officer or a member of the organization who had possession of the books and that in itself would be the findings. Felix Frankfurter: But to say this, would you say the parties hopes he hasn't surrendered them. John J. Abt: We do -- we will examine our brief on the question of wide services in the discussion length during Mr. Rankin's argument, I think you'll find that -- and distinguished by them -- let's. I'd like -- I only have a -- what? Felix Frankfurter: But how do you distinguish it? John J. Abt: I have only one moment, Mr. Justice Frankfurter and I'd like to come to the second point. Mr. Rankin urges that the Court should not pass upon the sanctions now but should await criminal prosecution for their violation. But once the order is affirmed, the sanctions have immediate and devastating consequences from the organization by writing that the way its members through making them ineligible for jobs, passports, making them subject denaturalization of what not, and drives away its contributors and supporters and that it even drives away its potential audience. Thus, if the sanctioned -- as that aren't passed upon now, the patient will die before the doctor arrives. The organization will be destroyed before the validity of the sanctions would have passed upon and in this aspect this case is entirely different from Bond and Share. The heart of the Public Utility Holding Company Act was the so-called death sentence of Section 11. Of that which required, under certain circumstances, public utility companies, when ordered to do so by the SEC to dispose off their operating companies. But that this sentence never came into operation without an administrative hearing before the Section, with all kinds of opportunity for judicial review. And when Mr. Justice Frankfurter used the Court in your time have finally got around to testing on the validity of a sentence. You were reviewing an administrative determination made after an administrative hearing and the judicial review in the Court of Appeals. Felix Frankfurter: Aren't we reviewing here? John J. Abt: Here -- I could -- Felix Frankfurter: Aren't we (Inaudible) here the determinations of the Board and men of the Court? John J. Abt: Yes, but they're quite different, Your Honor. Here, the sanctions of the Act automatically go to effect as a result of the registration order. In Electric Bond and Share, the registration order was a first step and the Court -- Mr. Justice Hughes discussed the so-called incidence of registration. What he didn't discuss and what he said were reserved for later, was a death sentence which didn't go into effect as a result of registration, didn't go into effect until there was a full hearing before the Section -- an order by the SEC and judicial review. That's the difference.

Warren E. Burger: We will hear arguments next in number 71-1069 Associated Enterprises against Toltec Watershed District. Mr, Burgess you may proceed whenever you are ready. Henry A. Burgess: Mr. Chief Justice, may it please the Court. This case is before this Court on appeal from the mandate of the Supreme Court of Wyoming affirming a judgment which was entered by the State District Court for Albany County, Wyoming. The mandate and the judgment of the State Court found that certain Wyoming statutes providing for the creation of a Watershed improvement district do not violate the Equal Protection clause, the Fourteenth Amendment United States Constitution. This action was commenced by the Toltec Watershed Improvement District which is organized under the provision of the Watershed Improvement District Law of Wyoming seeking the entry upon the lands belonging to the associated enterprises for the purpose of surveying and drilling a dam site. Preliminary to the construction of a dam. The lands involved are owned by Associated Enterprises that are under lease to the Johnston Fuel Liners. Johnston Fuel Liners as lessee was not allowed to vote in the election which created the district. William H. Rehnquist: Mr. Burgess where in the record is there a finding by either the Trial Court or Supreme Court of Wyoming that Johnston Fuel Liners was a lessee from Associated Enterprise. Henry A. Burgess: It is in the appendix Your Honor. William H. Rehnquist: Where about. The reason I asked is that I did not find in your stipulation of facts. I found it in questions and answers submitted in interrogatory form but I did not find any finding at least in my study either by the Trial Court of the Supreme Court of Wyoming that assumed it as a fact. Henry A. Burgess: On page 19 of the appendix, there is a stipulation of the facts, and Paragraph 3 says that Johnston Fuel Liners is not a land owner. As defined by WS 1957 so forth, and although given notice at the time and place to the referendum had no legal right to vote and did not vote. That was in the stipulation of the facts. This case was not actually tried. It was submitted. William H. Rehnquist: (Inaudible) At least the Johnston Fuel Liners almost having this based on the land. Henry A. Burgess: That is correct. They alleged that they are in possession of the land and then there was an order and judgment from which the appeal was taken and on page 24, in the interrogatory, and interrogatory number 3, has thus used, starting from bottom of the page 23 and we go down through the interrogatories, the second interrogatory says that they commenced using lands in 1959. The use was continuous since 1959 to the date of the answer of the interrogatories. Interrogatory number 4 says, Associated Enterprises had purchase some cattle in 1969, around the cattle and lands in Toltec District, then in entry or interrogatory number 5, it talks about the lease agreement between these two companies and the exchange of use of various lands. William H. Rehnquist: Okay this is Johnston Fuel Liners position I realize, but how are we to know that either the Trial Court or the Supreme Court of Wyoming accepted this position? Henry A. Burgess: Well, I believe then the Supreme Court -- the order of intervention of course, Johnston Fuel Liners is not rich as your party defendant and they were allowed to intervene and in the motion it says, that -- this is again on pages 14 and 15 of the motion, that they were a lessee and the entry of the lands upon Toltec, up the entry by Toltec upon the lands of Johnston Fuel Liners and their interference to move and strikes to its use and possession of the lands. That's on pages 14 in the appendix. William H. Rehnquist: Bunch of it I get, as to -- I was just concerned. Warren E. Burger: I noticed though, before you leave it on the top of page on 25, there is the request in the interrogatory, please attach all copies of leases between the Johnston and Associated Enterprises, and then the answer is that the agreement is reflected on the Journals of the company and that there is no single written lease document. Henry A. Burgess: Correct. Warren E. Burger: This is just an occupancy at sufferance. Henry A. Burgess: I would resume that you could term it that. Say two cooperations own lands which are intermingled and one of them uses lands in one area and one uses the other, there is a monthly payment, I would take it that it is a tenancywhich could be revoked at the end of any annual period of time. Warren E. Burger: Do you think that might bear if it's a tenancyof sufferance and occupancy at sufferance, and might be relevant consideration and with their interest in going on the matter. Henry A. Burgess: Yes I would think that the interest of any user of this land who occupies it, that his interest is as great as the interest of any person who owns a title to that land. Secondly, of course anything which affects the rent which would be charged upon that land would also affect a person who uses that land. Warren E. Burger: Would you think the right to vote might be different if it is a 99 year or occupancy at sufferance, terminable at will? Henry A. Burgess: No Your Honor I think that the right to vote is something that is granted by this particular case by this particular act. The act says that a land owner may vote, and all other parties were excluded. So it would seem to me that if you are not a land owner, it does not make any difference while your tenancyis wanted sufferance for a year or for 99 years, in any event you are excluded from voting. William H. Rehnquist: But in order to as maintain -- you have standard to maintain your constitutional issue, you got to show that if the constitution were applied in the way you say it be then your client would end up having right to vote. Henry A. Burgess: Correct I understand that and that is why in the interrogatories and the order of the Court, the Court did allow Johnston Fuel Liners to intervene finding perhaps not expressly but certainly by implication and as a general orders that all of the facts and legal conclusions necessary enter the order or embodies in that order. As I say, the case arises under the statutes of relating to the Watershed Improvement District and the purposes of that district of course, or to provide for the prevention and control of erosion, flood water, sediment damage is to provide for storage, conservation, development, utilization and disposal of water, there by to preserve and protect land and water resources. It is also designed as statutory purpose states, from all the health, safety and general welfare, the people they state. Now, this district is formed by the written petition being filed by land owners with the Board of Directors, what is called Water and Soil Conservation District which board then determines whether or not in their opinion the district would be feasible. Thereafter, if it is determined that it would be feasible a referendum has had. Our statute provides no qualifications for the boarders except that you have to be a land owner. The land owner is defined by the statute that as being one who holds the legal title or is acquiring title by a contract. There is no qualification as to residence, a non-resident land owner, one outside of the state may vote, a minor may vote by a guardian and deceased to state by an executive and there is no registration requirement. Now prior to the actual casting of the ballot, the land owner must make an affidavit in which he states the number of acres he owned. He then votes and as the ballots are counted and in order to pass the referendum must have voting in favor of it, a majority of the land owners who also represent a majority of the acres. So in effect the vote is weighted. Now, after the creation of the district, a Board of Directors is elected to operate a district, there are five of them and in order to be nominated you have to be nominated by ten land owners. Upon the creation of the district, the statute states it constitutes a governmental subdivision of the state and a public body corporate and politic, they have the authority to levy taxes, make assessments, build structures, accept grants, apportion benefits against irrigated lands. They also have the authority to submit to the land owners, a proposition for the issuance of the bonds. Now, once again, only the land owners vote on the bonds, the vote must carry by two-thirds of the land owners voting. And those two-thirds must own a majority of the acreage. So once again you have a waiting of the vote in comparison to number of acre zone. Now, in this particular case, it was argued of course, in the lower courts that the limiting of voter franchise to the land owners in the creation and maintenance of Watershed Improvement District violates the Fourteenth Amendment, Equal Protection clause and that it creates an unreasonable arbitrary and capricious voting classification. The second argument was that the weighting of these votes by requiring a majority of the acreage is at the basement of the votes and the people resident in the district and the owners of small acreages. Our Supreme Court held that while Wyoming is always recognized the distinction between governmental and proprietary functions of a legal subdivision and that this was a legal subdivision, that a Watershed Improvement District functions are primarily proprietary, and then they stated that the appellants in that case would fail to show that the statute was unconstitutional and that the classification of the burden showing this classification of orders was upon the appellant. Our court also made the observation that there is an overreaction to the decisions of this court, both by judges and lawyers, that the one man one vote rule has been extended to a local specialized unit of government, and Wyoming Supreme Court rejected the idea or extend the rules include such water a improvement district. William H. Rehnquist: What if under Wyoming law, that Watershed Improvement District must be or formed on the vote of all the registered voters within that proposed district? Henry A. Burgess: What if it were to be? It couldn't be under our statute. William H. Rehnquist: I know, but if the statute just provided that? Henry A. Burgess: Well, I think that would be constitutional. William H. Rehnquist: What if -- I don't know why your corporate lessee shouldn't demand on the same argument demand the right to vote? Henry A. Burgess: The corporate lessee in this case would not have a right to vote, if as the Justice says, it were upon the basis of an individual person voting. William H. Rehnquist: I know they wouldn't, I said that they wouldn't have the right according to the statute but would the statute be constitutional if, it like the present one excluded your corporate lessee from voting. Henry A. Burgess: My understanding, that is the law that it would be constitutional. Now, the corporate -- William H. Rehnquist: Well, why can't the state then exclude it under this statute? Henry A. Burgess: Sir. I didn't --. William H. Rehnquist: Why can't the state exclude your corporate lessee -- Henry A. Burgess: Because we contend that is a unreasonable and capricious exclusion. William H. Rehnquist: Well I don't know why it wouldn't under the other one, if you would have exactly the same interest. Henry A. Burgess: What we are talking about here as I understand it, in a sense is the purpose of an election and running counter and at the same time going along with that is a question of the qualification of a voter. Now I think that when you vote -- Potter Stewart: You mean you have a case here, you think you have case here only because they proceeded on the basis of land owners being voters? Henry A. Burgess: And voting the acreage. You wait the vote. What you are doing is you are voting the number of acres you own. Potter Stewart: So, you say therefore, it is just they proceed on the basis of the land owners, it's invidious to exclude lessee? Henry A. Burgess: Right. What we are talking about as I understand, in these previous decisions of this court, is people and certainly not acres, the corporations. In the Cipriano case, you are talking about striking down a statute that was provided for the passage of sewer bonds. Now there is really no difference between this case and that case, and one case of sewage is what you are talking about on a bond issue, in this case we are trying to get the water. Hugo L. Black: Mr. Burgess, who pays the bond that are issued by your district? Henry A. Burgess: The bonds are paid by the owner of the land who benefits from the improvements made in form of the dam, and canals and ditches. Now in the instance that is assessed against the land owner. He is the one who has the obligation to pay the tax that are collected by the county treasure, for failure to pay the tax as the land is sold under the regular laws relating to delinquency taxes. We contend that that payment and the case below, the lessee is passed over to the lessee, in increased breadths. Hugo L. Black: Is the assessment based on the number of acres-- Henry A. Burgess: It is based upon the value of benefits on certain acres, for instance, if a total project had cost $100,000 and there is 10,000 acres, it must be $10 per acres, would be the assessment. Hugo L. Black: If the general public has no obligation directly or indirectly to pay the bonds that are issued by the district. Henry A. Burgess: Correct. Hugo L. Black: You refer to a case involving the issuance of sewer bonds, who paid for interest and principal on those bonds? Henry A. Burgess: Property owners. Hugo L. Black: Only property owners? Henry A. Burgess: Only property owners. It is my understanding that's Cipriano v. City of Houma. In that case they are talking about paying for the bonds, for the sewage, in this case we are talking about paying for the bonds for the purpose of getting the water. Hugo L. Black: Is your position that one must have an interest in land by a lease or otherwise to be entitled to vote or would you suggest that anyone who lived in the district regardless of whether he had an interest in land also should be entitled to vote? Henry A. Burgess: I would respectfully suggest that anybody in the district has a right to vote. I think that in this day and age, with government being as complex as it is -- Potter Stewart: But you don't have to go that far. Henry A. Burgess: No, I don't have to go that far, but I think that the people have the right to vote. Now we are talking about an arid state and there are only three things that value in Wyoming, those years they had no water and the water is an illusory transitory thing and if you don't get the water when it's there and if you don't use it, is forever gone, or you have it and you have wealth, you have homes, you have an irrigated farms, you have towns, you have communities. It is our contention that everybody in the community whether it is an irrigated has a vital interest. Potter Stewart: What the priority of the used water in Wyoming to-- Henry A. Burgess: Doctrine of prior appropriations. Potter Stewart: And what got in to the conflict between the domestic consumption and irrigation? Henry A. Burgess: Well, we go on a doctrine of priority, if you have, we have four prime preferred uses, if you have a preferred use which is subsequent in time to an irrigation right, the irrigation right prevails, however the preferred right can Wyoming domain take the prior use or on the scale-- Potter Stewart: The water conserved by this district might be available or higher usage of -- Henry A. Burgess: Well, the contemplated use is used for agricultural purposes. Now Wyoming is growing, I suppose and in a sense it could be used, it would be kept in Wyoming-- Potter Stewart: It would have to be bought. Henry A. Burgess: It would have to be purchased by someone else. William H. Rehnquist: The improvement district doesn't acquire any water rights of its own as a result of constructing this facility. Henry A. Burgess: That's correct you have to file to the state engineer, make a beneficial use of the water and then you get a water right. But this is the facility and the structure. Now, pardon me, but under this the water district could file an application to construct a dam and get what they call a primary permit which would authorize them to then impound and store within the dam for the benefit of the members of the districts of water. William H. Rehnquist: So, but the water it does store is not for its own benefit as such but simply for the benefit of its members? Henry A. Burgess: Of the members and also be used for recreational purposes, fishing. We also submit that this is a case which probably was raised by the dissent of Justice Harlan, which he said that on this day, I pleaded the Hadley case, this principle which was handed down at a case applies to an irrigation district and for all of the reasons enunciated by this court in previous cases, we feel it's only logical that this press-school be applied to the watershed improvement district tax of the State of Wyoming. Warren E. Burger: Thank you Mr. Burgess, Mr. Phifer. Fred W. Phifer: Mr. Chief Justice and may it please the court. Possibly to give a little bit more background on this case, the question that was raised about tenancyat sufferance was raised in the Wyoming Supreme Court and was specifically not passed on. There is no written lease in this case as the interrogatory shows. This was a working arrangement between two corporations to use the land. Now what isn't shown in the record but I am sure Mr. Burgess would concede is that one man is the primary stockholder in these two corporations. They both belong to a man by the name of Elvin Johnston. He has several ranches, as indicated by the record, Johnston Fuel Liners is a trucking company. Potter Stewart: But the boards were the same. Fred W. Phifer: The boards are the same, yes, there is some differentiation in some of the minority stockholders but -- Potter Stewart: The stockholders are not the same. Fred W. Phifer: The stockholdings are not quite the same but almost the same Mr. Justice. Secondly, in Wyoming there is a statute which specifically provides that you are a tenant at sufferance unless you have a specific written lease. So in this case, there are a candidate sufferance although the Wyoming Supreme court passed over that question when I raised it in my brief. Secondly, with regard to the question on paying for this, the district is originally formed as an (Inaudible) would indicate on a watershed area, the drainage is all the same. Then after the district is formed and after they have decided that it is feasible to build a dam in a certain location, then only the lands that are benefited below that dam are assessed. In other words, not all of the lands that is in the watershed district, much of it is in the mountainous area, this area in particular is an outlying area, the lowest elevation I suppose in the district would be 6900 feet running from there to about 7200 feet. It's quite an arid area. The dam in on the North Wyoming River which is a very small river but normally in the middle of the summer, you could step across it in places. There is a large spring run off and it is the purpose of this type of law in Wyoming to catch this spring run off, so that it can be used later for irrigation. The meadows that are irrigated here will only grow in hay because of the altitude and the shortness of the growing season. There probably is 2000 acres involved belonging to about 12 different families. The production on these wells is very limited again because of the fragility of the soil, it's a very thin outlying soil mostly gravel. It will produce a half-a-ton to a ton of hay, with very good cultivation and some fertilizer. It might produce a ton-and-a half a hay, but here again it's not Alfalfa, as Mr. Justice quite would be familiar with from his background in Northern Colorado but primarily wild hay. It has no market this area is located about 60 miles from the nearest town. The hay is used primarily by the ranchers for cattle. Potter Stewart: Present in the vicinity of-- Fred W. Phifer: Well, the Wyoming Peak is right on the edge of this, so it's in the vicinity of Laramie, Wyoming it would be about 60 to 70 miles in north of Laramie Wyoming. William H. Rehnquist: Really it is just irrigated pasture there. Fred W. Phifer: Well, no it's irrigated meadows. Potter Stewart: Irrigated meadows. William H. Rehnquist: Because you harvest the hay. Fred W. Phifer: You harvested hay, you have to have it for winter. Potter Stewart: Do you bale it? Fred W. Phifer: All that most part they don't bale it here, primarily because the meadows are too rough. Potter Stewart: But do you keep the cattle there? Fred W. Phifer: Keep the cattle there and feed them there -- Potter Stewart: In the winter time. Fred W. Phifer: In the winter time. This would provide only supplemental water incidentally to existing water rights. It would not bring any new land under irrigation. Here again to go back to the question of who pays for this, once this question here is decided, if we are still constitutional, then appraisers are ordered by the court to go out and appraise the land that will be benefited, only the land that will be under ditch. Now the land will be classified, by these appraisers so that some of it will probably pay a little bit more than others. But where the total area of the Watershed district itself might be 15,000 or 20,000 acres. The area that will pay for it is only the area that's benefited that would come under, I would say under 2000 acres meadow. Now, in regard to the question on priority of water rights in Wyoming, domestic consumption does come first, and it can at any time condemn any other industrial or agricultural water, if it's necessary. In this case it's very unlikely, it's located in a remote area. There is under the provisions for setting up the Watershed law in the first place, Congress enacted specific legislation making grants in aid to Watershed districts to build these sort of things. In the interest of conservation and particularly in the interest of flood control, and we have a flood control problem here. Nothing that menaces life but that does cause damage, quite extensive damage down the river each year. They grant about 50% of the cost of these projects as an outright rent. Then the other half of it is loaned to the projects by the Farmers Home Administration. Potter Stewart: Well, how does this case get started? Fred W. Phifer: The case got started primarily right after the district was formed, we asked permission to go on to Johnston's land to make a survey to see if the foundation studies would be proper to build a dam in a particular location. Potter Stewart: I think Johnston must have gone against the formation? Fred W. Phifer: He allowed us to go on first. Well, he have already guessed the formation the district yes, then he allowed us to go in his land and check to see, then as it often happens with government projects, we had the inadequate data. Potter Stewart: So that the people of -- there were other owners who own more land that he did. Fred W. Phifer: Yes. Potter Stewart: So they outvoted him? Fred W. Phifer: Well, actually the vote -- there were only three land owners that voted against that there were about 12 that voted for it. There were two large land owners in the area and both of them voted for it. So the acreage -- Potter Stewart: So he got voted. Fred W. Phifer: He got out voted. Potter Stewart: Now if this lessee is entitled to vote, that isn't going to do any good because he would have been out voted also -- Fred W. Phifer: Well -- Potter Stewart: If set what, do you have to really strike down, do you have to get to the acreage limitations as well as-- Fred W. Phifer: As to the land owners. Potter Stewart: I think it goes down rather than -- Fred W. Phifer: I think that based on the decisions in this Court, all of which are concerned with so called popular elections. I am not exactly sure what a popular elections except that it's where we go into a voting booth and it's a secret ballot and whether we are voting on sewage bonds or anything else, it has a particular form to it. This and the decision of this court apply to popular elections, unless there is an -- they will stand unless there is invidious discrimination. In fact, I think there is some language in some cases of this Court, that says once the popular election process shows then you must do so and so. Potter Stewart: How would this election have come out in the first place if the rule had been (Inaudible)? Fred W. Phifer: It would still have passed. Both ways, but here is the thing this is not popular election. Potter Stewart: Well then let's assume this, let's assume you lose this suit? Fred W. Phifer: If we lose this suit, the entire Wyoming Watershed law I think is unconstitutional, then probably we have plans to go back and form a private ditch company-- Potter Stewart: No I was just asking just really a fair reliable law suit. Fred W. Phifer: I beg your pardon. Potter Stewart: And what interest would the other side have, and they would would still lose this, they would still lose the election. They still would have then lost the election? Fred W. Phifer: Well they wouldn't, in one particular instance, if lessees are allowed to vote, then what is to prevent the landowner who is against this, from leasing, ten acres out of 10,000 acres to 50 different people in a line to vote. Potter Stewart: That would be the situation for (Inaudible) -- Fred W. Phifer: Yeah. But I think the -- Potter Stewart: Well if you lose this lawsuit -- Fred W. Phifer: These are things that open to fraud. Potter Stewart: Well if you lose this lawsuit there will be a new vote that's the point and you don't know how that's going to come out. Fred W. Phifer: But we know how the new vote will come out because we not only have a majority in number, we have a majority in acreage both, either way we are -- Potter Stewart: Except that, if there is a new vote as you say one of the land owners that might lease an acre of piece to 200 people, of all them were -- Fred W. Phifer: That's right, and they will control the election. It leaves it open to fraud I think. I think that this is the compelling state interest that, the state of Wyoming had in setting up this proposition of landowners only, is that it does leave it open to fraud. If you do it on the basis of letting lessees also. Not only that but let's take this particular instance. Here is Johnston Fuel Liners and Associated Enterprises, are you going to say that only lessees can vote and the landowner can't if there is a lease or you are going to say both lessees and landlords can vote. If that's the case Mr. Johnson would be allowed to vote twice in this instance. Because he owns the land as one corporation he is a lessee as another. William H. Rehnquist: And he is lessor voted in the fist instance? Potter Stewart: He was his lessor. Fred W. Phifer: He was his own lessor -- William H. Rehnquist: He was his own -- Fred W. Phifer: Now going back to this popular election proposition, this is not a popular election, there is no secret ballot to start with. Because they have to write down how many acres they have so that we'll know when we look at their name at the counting of the ballots how many acres are involved. There is no age limit in this case. There is no residency requirement, in fact there isn't any citizenship requirement nor is a vote limited to persons. A Swiss corporation if it filed to do business in Wyoming could own land and vote in this. So it has no real comparison to a popular election, which to my mind distinguishes this from the whole line of cases on one man one vote. Potter Stewart: Well if you distinguish the cases where -- say there is really no difference between landowner and a lessee. I mean there is a not enough difference land owner and the lessee to warrant its duty for the lessee simply because the landowner has the formal obligation to pay the bill. Fred W. Phifer: That's the right because actually as you said in previous cases the renter or the lessee ends up paying bill and increased rent at least to next -- Potter Stewart: Do you accept that? Fred W. Phifer: I do accept that, except that I am afraid that the compelling state interest in this case is to exclude lessees because it would lead the elections open to fraud and that any landowner that was opposed to it could bring an enough so called lessees to entirely control the elections. William H. Rehnquist: But other than that you have no answer to give? Fred W. Phifer: No sir. William H. Rehnquist: Mr. Phifer, Justice Powell as Mr. Burgess about the case of Cipriano, do you read Cipriano the same way Mr. Burgess does as involving a obligation that was to be ultimately paid only by property owners? Fred W. Phifer: Well no, I read Cipriano and all the other cases once you get out of the -- once you get into the bond election sort of process. Everything at this court had passed on before, with regard to school district, sewer bonds and so forth, the benefit in those cases were things, were such that benefited the entire community, everybody in a sewer district is interested in sewers, whether they own land and have to pay for the -- Potter Stewart: Regardless of who pays the bill? Fred W. Phifer: Regardless of who pays the bill, everybody is directly affected by sewage disposal. It's a matter of again health of the whole community. So that and like schools whether you have children in school or whether you own property, everyone in the community is directly affected and directly interested in the benefits of the schools. Everyone in the community is not directly interested or directly benefited by a Watershed district. This is only concerned with irrigation water. Now I can't differentiate too much between lessees and landlords. But you can certainly differentiate between people who or several residents, for instance, that would cabin side in the Watershed district or employees on ranches, another way of broodingly controlling this election would be to bring up multitude of employees in, just prior to election and allowing them to vote because they are located on the ranches. Thurgood Marshall: But don't you have that same possibility with one man one vote, (Inaudible) to bring in a thousand people? Fred W. Phifer: Well -- Thurgood Marshall: Yes, yes, yes. Fred W. Phifer: You do Mr. Justice up to the point that they have to support them for about 30 days I believe now under your -- Thurgood Marshall: Well you could put a residence, what prevents them putting a residence requirement. Fred W. Phifer: A residency equirement in here? Thurgood Marshall: Yeah. Fred W. Phifer: Well I think that it would be unconstitutional to make a residency requirement here because here we go back to the matter of discrimination, is the class which is excluded more directly interested in the results than the class which is included. And in this case if you put a residency requirement in, all the corporations at a glance would be non-residents. Thurgood Marshall: All he says is let to lessee vote, he doesn't say that the lessee that comes in today, vote sort of thing? Fred W. Phifer: No but the only alternative I think to the present system where it limits the landowners, is a system that what put it back on the old residency requirement. Thurgood Marshall: Do you know of any lessor who pays taxes himself? Fred W. Phifer: lessor? Thurgood Marshall: Yeah. Fred W. Phifer: In our areas yes sir they all pay the taxes directly themselves generally speaking at least -- Thurgood Marshall: If you have got a lessor and a lessee, who pays the taxes? Fred W. Phifer: Well. Thurgood Marshall: I know who signs the check but who will pays -- Fred W. Phifer: Well, of course ultimately then it goes back to who is paying the bill. Thurgood Marshall: How many people are in this district? Fred W. Phifer: Probably 12 families. Thurgood Marshall: What's wrong if they let the 12 people vote? Fred W. Phifer: Not a thing except that they are not the people who are directly interested in the elections. The landowners are -- there are quite a few landowners that live in this area. For instances neither one of the corporations here actually headquarter here. They wouldn't be classed as residents. Thurgood Marshall: But you said, definitely this and other cases is for the benefit of all the people in the district. Fred W. Phifer: The other cases are at the benefit, I think sewer or bonds or -- Thurgood Marshall: Is this advantageous to all of the people in the district? Fred W. Phifer: No sir, No sir, it's only of interest to the people who own or lease irrigated land. It's not of any interest to summer people, except for the low possibility -- Thurgood Marshall: A sewer for 12 families, would that make difference? Fred W. Phifer: I beg your pardon. Thurgood Marshall: A sewer for 12 -- Fred W. Phifer: That would make a great deal of interest, because even if you are -- Thurgood Marshall: I notice a great trouble with letting twelve people full. Fred W. Phifer: Well, I think that if you limited it again, as I said to residence, then you will be excluding a great number of land owners who are directly interested in this. And I think then it would be unconstitutional. Thurgood Marshall: I am only saying that you want to protect it against fraud. You are here bringing thousand people in here with lease -- I mean, that's not in this case. Fred W. Phifer: Well, if lessees were allowed to vote and if Associated or Johnston Fuel Liners is classified as lessee which has no lease. Thurgood Marshall: Oh, you said bona fide lessee. Fred W. Phifer: Bona fide lessees again, you can make out 50 leases in an afternoon. I think that the lessee's interest is not different than the land owners. I think they both have a commonality of purpose in irrigation districts. So that they are not going to be voting at odds. I think also, that it's not fair for a lessee, who may be tenant at sufferance or at least for a term of years to be allowed to come in and push through a large expensive project -- the payoff on this is estimated as 50 years. And he may be there a year of two and pull out and leave the landlord with $3 ½ or $4 a year assessment to pay on this project. I agree that it doesn't seem on itself on the surface to be fair, except that you have to draw the line somewhere. And I think it is more fair to draw the line against the lessees that it would be to set up a residency requirement and draw the line against -- but non-resident landowners who have a very direct interest in both the benefits and the cost of this project. Secondly, I really believe that this isn't again a matter of government -- Thurgood Marshall: Do you think anybody could persuade to go up in the back woods of Wyoming and just stay there for the purpose of vote? Fred W. Phifer: They wouldn't, no, I don't think so. I am differentiating here again, Mr. Justice, between -- if the lessee is -- Potter Stewart: It so happened -- Fred W. Phifer: Here again the lessees would not have to come up here. If lessees were allowed to vote without a residency requirement. If there is a residency requirement, I am not worried about fraud, because I don't think they are going to move lessees into the area and make them stay there almost till they fill up the lessee, let's say a fractional residency requirement. It's a pretty remote and cold area. But I do think that then, you are probably excluding a great many people who are directly interested in the thing, and there are non-residents, or even non-citizens, non-persons as these corporations, who should be allowed to vote at. I don't think you could device a fair system. I don't believe there is any injustice here. No large landowner can force through a vote, on his small neighbors because it has to be pass by a majority of the people. Conversely, no group of small landowners could come in and force a project against one large landowner who would have the burden of pain for it. Because it must pass by a majority of the acreage. And limiting it to landowners here again is the only logical way that it can be done, I think. Here again, I think it should be differentiated from a governmental unit. It is a governmental entity, but it exercises no sovereign power over the people. None of the --- it's more in the nature of a quasi-private corporation or quasi-public. It has a power to levy and collect assessments, which almost any mutual company would have. It has the power to buy and sell real estate and personal property and the power to borrow money and sell bonds which any private corporation can do. It does have the power to receive government grants and loans, that I think, the (Inaudible) corporation has that power also. And it has the power of eminent domain. Now there seems to be in counsel's brief, a great distinction made because of this branding of the power of eminent domain. Every private or public utility has the power to eminent domain. So I think this thing has much more in common with private corporations than it does with any public governmental entity. Potter Stewart: Mr. Phifer, some little time ago, you were contrasting the situation here with what you called a popular election, and as you rightly said, in a popular election generally there is a vote in polling place by a secret ballot by individual voters. Since so many of these voters are corporation, how is the vote taken, is it public, is it just done by a letter or-- Fred W. Phifer: No, we have a meeting, and they come in and vote. Potter Stewart: Individual representatives of the corporation? Fred W. Phifer: Individual representatives of the corporation. Potter Stewart: Who in question show their authority to represent the corporation. Fred W. Phifer: Yes, in this instance, this is a small community and there is no question about who is the owner of the corporation and also the land. In the course only one man would be allowed. Here again -- Potter Stewart: Is it a public meeting? Fred W. Phifer: Yes, it is an open meeting and there is quite an involved due notice requirement here. Every time anything is done by this thing, by the Watershed district, due notice must be given in and it must be posted at four or five places prominent in the district which is kind of hard to do, when there ranches are ten miles are apart, they post them on the bridge post and it has to be advertised in the newspaper in the area for three weeks I think, prior to that time. So there is good notice given, not only that but because we anticipated that there will be problems in the first place, we always send certified letters to everyone of the voters, giving them due notice of any elections. Potter Stewart: Actual notice by them. Fred W. Phifer: Yes, sir. Hugo L. Black: Mr. Phifer, where are these bonds marketed? Fred W. Phifer: They only have one market and that's United States government, the bonds as such are merely security for the obligation under the FHA Rules. It'd be interesting to see how they were foreclosed on those bonds, if they had to since almost all of the land involved was privately mortgaged to insurance companies or to the state of Wyoming, prior to this time. So the bonds are an overriding obligation on the Watershed district, and they had quite a time collecting on them if they were to pay. Hugo L. Black: Are they subordinate to the private debt? Fred W. Phifer: Well, they are really not a private debt, there are debt of the Watershed district itself, and the land under assessment is of course subject to leans or assessments, but -- and it might be subject to foreclosure by these, but I think the government would have step in pay off, lot of insurance company loans before they can do it. It isn't spelled up very well. Potter Stewart: How do you know that if these assessments and the leans, the representatives -- subordinate with the private lease, does the statute say something? Fred W. Phifer: No, the statute does not say something. Potter Stewart: This hasn't been adjudicated? Fred W. Phifer: No, it hasn't been adjudicated. I don't know whether they're subordinate -- Potter Stewart: (Inaudible) Fred W. Phifer: I don't -- I am sorry, I think you are right, it wouldn't be subordinate but the assessments are not subordinate. But the assessments don't represent the bonds. The assessments are merely -- assessments made by the districts to help pay the bills of the districts, and it could not only be bonds but improvements and everything else. And the assessments are an obligation owing to the district from that landowner. There is no other obligation, from the District to the federal government for the loan except the bonds, and what their priority is, I have no idea. William H. Rehnquist: But occasionally, when one recalls at lease cases where the bond owner has sought an action against the issuer to make the issuer take such action as it can by marshaling of assets to collect funds that maybe available to it but not directly to the bond owner. I take it that, if a land owner fails to pay an assessment made by this district, the district has the power to have the property sold to pay the assessment under Wyoming bond. Fred W. Phifer: That's right. Here again I don't know what the priority is, that would be -- Potter Stewart: (Inaudible) Fred W. Phifer: That might be. Thank you gentleman. Warren E. Burger: Thank you Mr. Phifer, Mr. Burgess, you have got about nine minutes left. Henry A. Burgess: Mr. Chief Justice and the Court, several observations I make, but one of them is, and I think we got a little bit outside of the record here, discussing this district. The fact of the matter is, there is gerrymandering went on here, Johnston Fuel Liners does have a number of employees who do reside in the district of course, they were not allowed to vote. The site for their proposed dam, where take in and destroy much of the land of Associated Enterprises who in turn have upstream dams, and what we are talking about -- Potter Stewart: Does it involve (Inaudible) Henry A. Burgess: I will stop it Your Honor, if you don't believe, it shouldn't go on, but the point is that people did decide, it was said there was two big landowners and they voted the acreage and that's how we are here. Now, this business of voting, I can't visualize as one of the justices said, anybody moving to the Laramie Peak country, was at least just to vote, and I am sure that every election case, which is brought before this court has thrown out to it, this bug-a-boo about fraud in elections, and that's no problem. A small community like Wyoming, at first place we all think we are honest, secondly, the people come in and they are pretty well known to their neighbors and they are that. When you get all through looking at this case, I think that historically these cases started on a question of voting for Congress and then it got over to voting of a school trustee, and then the county commissioner, and you keep growing down and down and down into the spectrum of local self-government, and we contend that this principle should also be extended into the lower unit of this particular water improvement district. William H. Rehnquist: Your colleague said that the question of tenancy at sufferance would resemble the Wyoming Supreme court, was not decided to pass by them, which I take it means, it wouldn't make any difference to one on the Supreme Court in terms of its right, if this were a wholly independent lessee with a lease of 10 years. Henry A. Burgess: Correct, or you have an individual. And I would just like to point that up, the saying that this case -- Thurgood Marshall: Is this true that there were only 12 people involved? Henry A. Burgess: I think there maybe 12 families that voted for, I am not sure the exact vote, there were three who voted against as I understand, but there are more families involved above the upper limit which are interested in this, and of course, they were brought in. If this is a live issue in the community, it's a very live issue -- Thurgood Marshall: Are those families up there lessees or landowner. Henry A. Burgess: Both. Thurgood Marshall: Would the landowner be allowed to vote? Henry A. Burgess: Certainly they should be allowed to vote, but they weren't, they weren't even put into the proposed boundary. Thurgood Marshall: Does that raise the interest? Henry A. Burgess: No. Thurgood Marshall: In this case, there are 12 families involved. Henry A. Burgess: Correct. Thurgood Marshall: Why do you call this election made by who sits around the living room and tells about something. Henry A. Burgess: That's correct, that's probably it was. Thurgood Marshall: And that's an election? Henry A. Burgess: Well, that's for this court -- Thurgood Marshall: If it wasn't called an election, would you have any case? Henry A. Burgess: Well I suppose not, except it is a governmental, political subdivision of the state. Thank you. Warren E. Burger: Thank you gentleman, the case is submitted.

Warren E. Burger: We will hear arguments next in 74-6521, Aldinger against Howard. Mr. Rosenberg you may proceed whenever you are ready? Norman Rosenberg: Mr. Chief Justice may it please the Court. In 1966, this Court in the case of United Mine Worker versus Gibbs clarified and explained the doctrine of pendent jurisdiction. In this lengthy and comprehensive opinion, the Court referred to the joinder of claims. It did not refer to the joinder of parties specifically and that raises the issue that is before you today. And this issue is this. Whether the District Court has the power to assert pendent jurisdiction over claims, State Law Claims that are appropriately related to existing Federal claims against the party over whom there is no independent of basis of Federal jurisdiction. Now since Gibbs this issue— William H. Rehnquist: Against whom no other claim is pending, is that right? Norman Rosenberg: Yes your Honor that is correct. Now since Gibbs this issue has arisen on a number of occasions and in many different factual settings and context. Now, the very simple facts of this case raise the issue quite clearly and I would like to set them forth very briefly. The petitioner was fired from her public position in the County Treasurers Office. The County Treasurer fired her and then published in a letter that her work was excellent but that she had been living with her boyfriend, that this is un-true as of no importance to this situation. Obviously, though these facts raised both Federal and State law causes of action. Harry A. Blackmun: Would their clearly be a cause of action under State law in Washington? Norman Rosenberg: Yes there would your Honor. Warren E. Burger: Against the County? Norman Rosenberg: Against the County, yes sir. Because under Washington law the County is specifically liable for the torts of its officers, agents and employees. The complaint filed in the District Court asserted federal jurisdiction over the federal claims against both parties and State claim and asserted pendent jurisdiction over the State claims that existed as well. Potter Stewart: As you look at complaint where was a State cause of action stated? Norman Rosenberg: You Honor the – Potter Stewart: Where in the appendix? I could not find it? Norman Rosenberg: Your Honor that is one of the things I feel obligated to explain. This complaint is not well drafted. There are sufficient matters and sufficient allegations in it to raise the state claims under appropriate rules of federal procedure and pleading. Potter Stewart: I read this carefully and I just could not find a state claim cause of action stated? Norman Rosenberg: Okay. Potter Stewart: If there is not any, why then this question assertedly involved in this case does not exist, does it? Norman Rosenberg: If that is true, it does not exist, but it does exist, they are statements. Okay, first of all, the State claims are this, in the appendix the complaint is on page 12. First of all, the State claims are the intentional invasion of the petitioner’s privacy, the intentional infliction of emotional distress, the tort of libel perhaps slandered. Now, let me go through the complaint and show where the allegations are your Honor. First of all the county is named, that is in the caption. Secondly, the the treasurer is named as a County Official and the county is being sued and the Treasurer is being sued in his capacity as County Official. Fourth, in paragraph six on page 14, it says defendant Spokane County is a public corporation and an action may be maintained against it. And of course, the complaint asserts that pending jurisdictions made. Potter Stewart: This maybe maintained against it but where is any cause of action stated under State law? Norman Rosenberg: Well, the list of State claims is not there but sufficient facts are available Your Honor to show that a claim is available against that County. Potter Stewart: You are entitled to go back and file a complaint stating a cause of action under the State law but I cannot find any stated here. Norman Rosenberg: Your Honor under Civil Rule eight, under notice pleadings we have alleged enough facts. Let me a list the facts for you? Warren E. Burger: Can you identify the place we will find them as we go along so we can mark it up. Norman Rosenberg: Yes Your Honor. In the appendix on page 12, all facts in record are in the amended complaint. Now with that complaint reflects is that there was a firing, the stated reasons for firing, the committing of the reasons or the expression of the reasons. Warren E. Burger: But generally, ordinarily a complaint must do more than reflect, it must allege, is that not so? Norman Rosenberg: Yes sir. The issue in this case is whether the District Court has the power to deal with these. Now, the Court had the power to cause us to amend the pleadings. He could have dismissed under Rule 12 (b) (6). He could have entertained a motion to strike, a motion for a more specific statement. I submit that the power of question is the threshold question that this Court must deal with before the District Court has the opportunity to help us straighten out our complaint. Potter Stewart: The question that you said the Court must the preliminary deal with arises if and only if a cause of action is stated under State law. Norman Rosenberg: Yes sir. Potter Stewart: You would agree with that? Norman Rosenberg: Yes. Potter Stewart: And I just still have trouble seeing where if anywhere is one stated? Norman Rosenberg: Well your Honor the case of Conley v. Gibson would have to guide the Court in that determination. And of course Conley is concerned with the District Court’s dismissal under Rule 12 (b) (6). And if I could quote something very briefly from Conley, I think you will find that we have stated sufficient facts to apprise the county of the nature of the claim against it. Conley states on page 45, in appraising the sufficiency of the complaint, we follow of course the accepted rule that a complaint should not be dismissed for failure to the state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle to him to relief. William H. Rehnquist: Mr. Rosenberg, I noticed in paragraph 1 of your complaint on page 12 of the appendix and again in paragraph 20 on page 16, you say that in as much as the plaintiff’s dismissal was authorized by 36.16 of the Revised Code of Washington, that statute on its face is violated plaintiff’s rights on the First and Fourteenth Amendments, doesn't that kind of militate against your contention that there was a state law of claim. Norman Rosenberg: No sir. No State law, no Local Ordinance regulation can empower anyone, a state official, a county official or anyone else to violate someone’s civil rights. William H. Rehnquist: Well, but that, if the State of Washington has a statute that as you say in your complaint, specifically authorizes a dismissal, it may be totally unconstitutional but can you consistently with that statement statute maintain that the State Courts would grant you State relief? Norman Rosenberg: If a tort was involved and— Potter Stewart: In the State Court’s your cause of action would be a federal cause of action because your claim would be that the state law violates the federal constitution. Norman Rosenberg: No sir, your Honor. You are ignoring the state law claim of libel, slander, intentional infliction of emotional distress. Potter Stewart: It is not stated here, at least I cannot find it, I tell you, you have not pointed it out. Thurgood Marshall: That is what the statute said and not mentioned in here. Norman Rosenberg: Your Honor I admit that. I concede that point. But I also suggest very strongly that we can fix this complaint up so that it has suitable state law claims in a list. Potter Stewart: (Inaudible) Norman Rosenberg: Your Honor this actions is — Speaker: (Inaudible) Norman Rosenberg: Your Honor? Thurgood Marshall: Can you hear me? Norman Rosenberg: This case is staid in the District Court pending the outcome of the power question. If that Court has the power to consider the state claims I guarantee you that he will assist us to make them more clear to him. Thurgood Marshall: The Court would draw a complaint for you? Norman Rosenberg: No sir. We will draw the complaint. Speaker: (Inaudible) Norman Rosenberg: No sir, I would like you not to deal with this issue. I would like you to get to the power question that is before you. The District Court dismissed all the claims against this Spokane County. It dismissed the federal claims in light of Moor v. County of Alameda and then it dismissed the State Law claims simply by stating that it no longer had an independent basis of Federal jurisdiction, so it could entertain them. Now, the District Court recognized the problems that it had and it dismissed the State Law claims without getting to the merits of them in the way that it felt would be the clearest possible way to point out the incongruity that exists in the Federal System. The order of the dismissal states it very clearly that he did not get to the merits and that he dismissed solely because he has not the power and he included the Rule 54 (b) certificate and a certificate pursuant to 28 U.S. Code 1292. We went directly to the Court of Appeals for the Ninth Circuit who affirmed and certiorari by this Court was granted. Meanwhile, the proceedings are staid in the District Court. Now the incongruity that the Court tried to point out was that the Gibbs case is being misconstrued and misapplied in two clearly opposing and exclusive ways. The joinder of claims very easily could contemplate the joinder of parties in a number of cases. And the majority of the Circuits and District Courts have held that, inappropriate cases parties are accidentally joined. The Ninth Circuit however has ruled that there is absolutely no power to join parties and these claims cannot be joined, no matter what the circumstance, no matter how closely related to the Federal claims. The Ninth Circuit admits that support for its position is eroding and this Court pointed out in Moor v. County of Alameda that the Ninth Circuit stood virtually alone in its inflexible lack of power theory. Well, the answer to this question is a difficult one and it requires this Court to put itself in the place of the District Courts that contend daily with a very heavy docket and a very large trial case load. And what is the answer? The answer that the District Courts have found in many cases is to join all possible claims that are related to one another and try them all in one suit and dispose off them simultaneously and pendent jurisdiction allows them to do this, especially pendent jurisdiction with respect to the joinder of parties. William H. Rehnquist: Could you have sued of all the parties that you wanted to sue in the Superior Court of Spokane County? Norman Rosenberg: Yes. We could have your Honor. William H. Rehnquist: You could have gotten all the relief in the Washington State Court system and I take it that you could have gone in the Federal System? Norman Rosenberg: Sure, we could have your Honor.But the petitioner felt and I agree that it is unwise to sue Spokane County and an officer of Spokane County in Spokane County Superior Court. She was given a Federal cause of action and felt that it would be the wiser choice to make. Warren E. Burger: (Inaudible) by taxpayers and contractors suing in the State Courts and are you suggesting that some sort of conflict of interest or some lack of capacity on the State Courts to deal with this kind of a problem? Norman Rosenberg: No sir. I am suggesting simply that as a tactical matter it was felt wiser not to sue Spokane County in Spokane County Superior Court. Warren E. Burger: Tell me very much? Norman Rosenberg: I am afraid I cannot tell you more than that because I was not present at that the time. At this point, we will agree analysis. I would feel that I agree with a number of studies that have been made with regard to the distinction between Federal and State jurisdiction and I feel that in Federal question cases there is a strong Federal policy to keep the cases in Federal Court. I would refer this Court to page 51 of the opening brief. In the footnote there is quotations from an American Law Institute Study on the division of jurisdiction and it gives three very good reasons why Federal cases should be heard in Federal Court. William H. Rehnquist: But of course under Judge Neil’s through that ruling, your Federal case would be heard in Federal Court. It is just your state law claim that would not be heard there. Norman Rosenberg: Yes sir. And judicial economy convenience are the primary considerations that the Court should consider when electing to join or not join pendent claims or pendent parties. Pendent jurisdiction is a doctrine of discretion. The Court may or may not join as it sees fit and the reasons frequently cited are judicial economy, convenience to the parties, avoidance of piecemeal litigation. There are a number of very good reasons. William H. Rehnquist: Do you see any difference in the pendent claim issue that was passed on in Gibbs and the pendent party issue that is whether where you already have all the parties properly before the Federal Court to say will add a claim by one against the other because there are already existing Federal claims against them and the pendent party case situation that you have here or the party is not here in Federal Court by virtue of any other Federal claim, indeed by no Federal claim at all. Norman Rosenberg: That is correct but I see no significance in that distinction your Honor. Byron R. White: What about the party that you are talking about the deficiency in economy that party might make some sense, if he is already there to say you would also try up some other claims and rising out of the same transaction. Norman Rosenberg: Your Honor that party is there available to be sued and will be sued in one Court or the other. The question is whether we will have two trials or one of precisely and exactly the very same issue. By State Law, the county is liable for the torts of its officers. That means that the trials that we are going to have over the state claims against the treasurer are exactly the same trial that we will have over the state claims against the county identical in every way? Warren E. Burger: In Washington State Courts do you have intermediate Court of Appeal between your Trial Court and your Superior Court and the State Supreme Court? Norman Rosenberg: Yes sir. Warren E. Burger: And the Supreme Court sits down on Olympia? Norman Rosenberg: Yes sir. Warren E. Burger: Are you talking about judicial economy and convenience of the parties, I should think it is much more convenient to try a case up in Spokane until down in to Olympia on your appeal and come all the way here? Norman Rosenberg: Well, Your Honor we did not anticipate an appeal on this procedural issue we have been trying to get to Court for a long time. The Federal Court and the County Superior Court are within six blocks of one another. The county is -- it is just as convenient for the county to go to one as the other. Byron R. White: The State Court described both the Federal and the state claim together? Norman Rosenberg: That is true. There is no question about that. Byron R. White: And that is all you want to talk about one or two trials, there is one place at least, there is no question but what you can have is just one trial. That is the State Court. Norman Rosenberg: Yes sir. Keep in mind however that this doctrine arises not only in this particular case but it cuts across jurisdiction lines. It comes up with respect to virtually every jurisdiction granting basis of Federal jurisdiction and there are some that are exclusively Federal. What happens in those cases, when the party came up to the State Court? In this case we happen to be able to but we made a choice of forums that was open to us under the Federal and State law. Byron R. White: (Inaudible) brought to the state issued the Federal Court independently? Norman Rosenberg: That is true. At this point it is probably important for me to recite some of the considerations that the Courts have found in joining pendent parties not only claims but parties as well in virtually every basis of Federal jurisdiction, it is plaintiffs and defendants have been joined in Federal question cases, diversity cases, Taft-Hartley cases, Gibbs was a Labor Management Relations Act case, Federal Employers Liability Act cases, SEC cases, civil rights cases, patent-copyright cases, admiralty cases. No one could possibility foretell the combination of federal and state clams that will arise. And that is why pending jurisdiction is the appropriate vehicle to deal with this situation. While the Court has the power to join it does not have the obligation to join. It may join, if it feels it appropriate. Now the Gibbs Court set out an appropriate test that is as appropriate now as it was then. And that test is this. First of all, the Court must consider the substance of the claims. Obviously, if there is strong federal policy to keep it in Federal Court then the Court should do that. Are the state claims such that they would confuse the issue. John Paul Stevens: Mr. Rosenberg, let me just get me something sorted down my mind, how could there ever be a Federal Policy favoring keeping the state claim in the Federal Court because by hypothesis, is not your state claim always one that could not have been brought in Federal Court in first instance at least against the particular defendant that you are seeking to bring in the Federal Court. Norman Rosenberg: Yes Mr. Chief Justice Stevens. I think I made a slip, I meant of the Federal cause of action. There is strong Federal Policy to keep some in Federal Court and in others, there is no strong Federal Policy. For example, in a diversity basis of jurisdiction it makes no difference whether the Federal Court keeps it or not because they are applying state law. In some Federal question cases, there is exclusive jurisdiction in the Federal Court and it has sustained Federal Court. John Paul Stevens: Is it not correct that every situation with which your concerned would necessarily be the common law or state law claim and the kind that would be brought in the Federal Court only on diversity grounds if they were diversity? Norman Rosenberg: No sir, no sir, not all. This is raised in virtually every jurisdiction granting basis of jurisdiction. John Paul Stevens: Not against the defendant whom you cannot sue in Federal Court? Norman Rosenberg: That is true. But there is a claim against somebody who is appropriately and closely related to the other defendant. Now, we are in Federal Court already, there is an existing Federal claim. The question is simply, may we join the appropriately and closely related state claims. And have one trial of all the issues that are raised out of the set facts or two. William J. Brennan, Jr.: Would you prevail against the statute on the Federal claim that same record entitled you to prevail against the County, I think you told this on the state claim because under Washington law the county is responsible if it is treasurer is responsible, is that right? Norman Rosenberg: No sir. The county is not responsible, the county maybe liable. We would have to proceed against the county and sue them and try the case again. William J. Brennan, Jr.: I do not know I say if -- if you can join the county, that is pendant party then you would have only one record, would you not? Norman Rosenberg: Yes sir. If we can join the county we have to— William J. Brennan, Jr.: It is the same record you would rely on for a recovery against the treasurer on the Federal claim, is that right? Norman Rosenberg: No sir. There are different claims involved, there is a federal claim and they are a separate state claims. Now the state claim -- William J. Brennan, Jr.: I know but would the evidence on both be the same? Norman Rosenberg: Identical. William J. Brennan, Jr.: Alright and if the evidence satisfied your Federal claim against whom? Norman Rosenberg: The federal claim is against the treasurer. William J. Brennan, Jr.: Alright. And the state claim would be against the county, the (Inaudible), employer, no? Norman Rosenberg: No sir. There are state claims against the treasurer as well. William J. Brennan, Jr.: I see. Norman Rosenberg: And it is those state claims against the treasurer that are identical with the state claims against the county. There is a separate federal claim, there are separate elements. William J. Brennan, Jr.: Did you prevail on the state claims rather – if the same evidence would you entitle you to prevail on both the state and federal claims against treasurer, is that it? Norman Rosenberg: Very similar evidence. There is a few extra ingredients in the federal claim but virtually identical evidence. William J. Brennan, Jr.: But having a recovery against the treasurer on the state claim, does that also give you recovery against the county? Norman Rosenberg: Well, if the county was a party, yes, because it is identical issue. William J. Brennan, Jr.: Is that not why – and that you want to make the county a party? Norman Rosenberg: Yes. Potter Stewart: So you want to make -- say the county would be a pendent party to a state claim? Norman Rosenberg: Yes sir. The claim against the county is a pendent claim and by virtue of the being against the county, the county is pendent party. Potter Stewart: Mr. Rosenberg, you get to state issue in a Federal Court as a pendent issue under Gibbs? Norman Rosenberg: Yes sir, there is state— Byron R. White: And then you want something pendent to that state claim? Norman Rosenberg: No sir. The state claim is to be pendent to a federal claim. There are already state claims in the Federal Court, the state claims against the treasurer. Byron R. White: And they are pendent? Norman Rosenberg: And they are pendent to the federal claims against the treasurer. Now we also have state claims against the county and they too should be pendent to the federal claim. John Paul Stevens: How do we know that the evidence will be identical as you say, till we know what those state claims are? For example, you mentioned the libel claim which you have not actually alleged in the complaint which might require proof of publication at third parties which is not a part of federal claim. And each of your state claims might involve some fact not necessarily part of your federal claim, is that not true? Norman Rosenberg: That is true. And you would not know that. The District Court will know that. John Paul Stevens: If it is part of your burden to show that the evidence that the evidence would be substantially identical, you really have not done that until you pleaded your state claim, have you? Norman Rosenberg: On the District Court level, that is true because the District Court must make an inquiry and determine if the case, if the two claims are reasonably related and closely related, sufficient for him to assume jurisdiction over them and he will make an inquiry in this regard. John Paul Stevens: Can he do that on this particular pleadings? Norman Rosenberg: Certainly not. Well he cannot do it whether this pleading is good or bad because he does not have the power to do it, and that is what he said in his order of dismissal. He specifically refused to rule on the validity and whether our state claims were suitable or not. He cannot do it whether he wants to or not. Now, District Courts and all the other Circuits can do it but he cannot. And that is the problem with this case. How can a Court make a decision like this? The Court first of all, I submit has to have the power. Once it has the power, it has to make an inquiry and determine the nature of the claims and whether they are suitably related and the Gibbs Court sets forth an appropriate test for a relationships. Thurgood Marshall: (Inaudible) directions at all from the complaint? Norman Rosenberg: Yes sir. He would read the complaint to determine what the causes of action are. He would-- Thurgood Marshall: Can I ask you where would get the state action out of that complaint? Norman Rosenberg: Your Honor, I submit and I admit that this complaint is not very well drafted. I submit strongly however— Thurgood Marshall: It is dismissed? Norman Rosenberg: As a matter of fact your Honor – Thurgood Marshall: Was dismissed. Norman Rosenberg: As a matter of fact it was dismissed, it was dismissed— Thurgood Marshall: Well you said it was no good. So what are you doing confessing here? Norman Rosenberg: No sir. The case was dismissed in 1971. It went to the Ninth Circuit Court of Appeals. It was dismissed for failure to state a claim as well as abstention. Went to the Ninth Circuit Court of Appeals, was reversed or remanded because there was a state, there was a claim stated. Now that of course was referring to a Federal claim. They did not get to the validity of the state claims. But the District Court can straighten out this complaint. He can order us to amend it. He can dismiss it if he wishes. He can do anything he wants to do with it. But at this point, he does even have the power to consider it. Warren E. Burger: (Inaudible) even though a high probability that the Federal District Judge seating on the case would be a Judge familiar with Washington law, he might be a Judge from one of the other States and the Circuit they are very easily. Here you have been back and forth. I do not exactly how many times and I take it the same six blocks from the Federal Court to the State Court works the other way. And you could have put a new caption on this complaint. And improved the complaint as you suggest, walk down the street and your action probably would have long since it was over. Norman Rosenberg: We could have done that. Warren E. Burger: Meanwhile your have been a very large statistic on the Federal Court systems for quite a long time. Norman Rosenberg: Well, if the case was not dismissed in the initial rounds of pleadings, it would have been over four years ago. Yes, we could have filed it in the State Court. But in terms of election of remedies that are available to us, we selected the Federal Court. Warren E. Burger: The time when it appeared that your only claim was a state claimed and I submit to you that that is time you should have been in the State Courts ever since then -- Norman Rosenberg: Your Honor, with do all the respect there has never been a time that there was only a state claim. There is always been a Federal claim against the county treasurer. There has always been that claim, except when it was dismissed and reversed to remanded. Warren E. Burger: I did not say only a state claim, I said, a state claim because just as Mr. Justice White suggested, State Courts are enforcing federal claims everyday in the week. Norman Rosenberg: Your Honor, of course this issue was not before the Court. The fact is we are in Federal Court and the whether the Federal Court can pend state claims to it or not, whether they have the power to do that is the only issue. Let me be as clear as I can, we are not asking this Court to rule that the District Court must hear the state claims simply that the District Court has the power to hear them and if it wishes to in the exercise of its discretion it will do that. I feel confident that we can go back before the District Court and convince them that it is an important thing to do. I— Harry A. Blackmun: In the Moor case, that was not the outcome was it. Norman Rosenberg: No sir. This Court found— Harry A. Blackmun: You prevail here and still lose ultimately. Norman Rosenberg: Yes. That is true we could. Byron R. White: I believe that Courts of Appeals agree with you on pendent party. Norman Rosenberg: The District of Columbia, the First, Second, Third, Fourth, Fifth, Six and Eight. The Tenth— Byron R. White: It is ruled on it except the Ninth. Norman Rosenberg: No, the Ninth has ruled on it and disagrees very vehemently. The Seventh Circuit— Potter Stewart: Every court agrees with you except the Ninth? Norman Rosenberg: Yes -- Potter Stewart: But because that has ruled on it. Norman Rosenberg: No sir. The Seventh does not. The Seventh has ruled on it only once and really did not give it suitable treatment. Speaker: (Inaudible) Norman Rosenberg: Yes sir. And that is understandable, I think. Byron R. White: Would you -- the Court of the Appeals have ruled against you here? Norman Rosenberg: Yes, the Ninth Circuit of Appeals. Byron R. White: Yes, and so they are the only Circuit against you? Norman Rosenberg: Yes sir. And the Seventh as well but I— Alright, yes. Norman Rosenberg: Let me -- I would like to read something from a very recent First Circuit of Appeals opinion in conclusion. The First Circuit Court of Appeals was dealing with a case that had a virtually interminable history in the Federal Court System. It had been appealed a number of times. It was exceedingly complex, multiple parties, multiple issues and at the conclusion of the Court of Appeals treatment of it, they said this, this case is one where if there had not existed a doctrine allowing federal jurisdiction over pendent parties it would have had to be invented. There are a number of cases where this is very important. William H. Rehnquist: You can keep it going as long as at did the— Norman Rosenberg: I think in order to sort it all out, I think he was referring to the problems that would exist if the case was bifurcated in a number of different Courts. He would have a bigger problem than he had right then. I would like to reserve any time I have left. Warren E. Burger: Very well Mr. Norman Rosenberg. Mr. Brockett. Donald C. Brockett: Mr. Chief Justice and members of the Court. The difficulty that the Court is having with the complaint in this case and with the allegations contained their in are some of the problems that the county had with being joined as the party or the attempt to join the county as a party in the Federal District Court in Spokane County. And further it would be our contention as it has been in the brief that we filed with this Court that if this Court gets beyond the complaint to a realization that there is in fact the state claim which has been alleged that could be pendent to a federal claim under the Civil Rights Action. That it should then seriously reconsider the doctrines of the pendent and ancillary jurisdiction to determine whether or not this may not be part of the problem with the Federal Court Systems and with the numbers of cases that are filed in the Federal Court Systems at the present day. One of the admissions, I think by counsel here is that the case could well have been filed in the Superior Court of Spokane County on the basis of the state claims, if there were any and on the basis of the federal claim of the violation of Federal Civil Rights Act. Potter Stewart: Do you know of any case ever filed in a Trail Court of your State stating a cause of action under 42 United States Code before 1983? Donald C. Brockett: I do not think I know of any particular actions your Honor that has been filed in the State Courts. But I think it is because of the fact that counsel representing individuals in civil rights case, feel as counsel stated here that it is wiser to file those cases in Federal Courts. Potter Stewart: The jurisdictional statute 28, United States Code 1343 conferring Federal District Court jurisdiction over such cause of action, would a State Court in Washington as matter of its jurisdiction under the law of the State have jurisdiction over a cause of action stated under 42 United States Code 1983? Donald C. Brockett: I do not believe your Honor that that particular Section of United States Code gives exclusive jurisdiction. Potter Stewart: That section does not give any jurisdiction 42, volume 42, volume 28, 1343 gives jurisdiction to the Federal Courts not exclusively nor un-exclusively, it just gives federal jurisdiction. Donald C. Brockett: Federal jurisdiction, that is correct. Potter Stewart: And I just wanted if your State Courts, Trial Courts had jurisdiction over a cause of action brought -- stated under 1983 -- Donald C. Brockett: I believe that they would have the jurisdiction with the Federal Court in order to hear that particular case. Concurrent jurisdiction with the federal --No. Potter Stewart: (Inaudible) Norman Rosenberg: Not specific cases because again of the choice by counsel in filing in Federal District Courts. Potter Stewart: It has to bring it to the Federal District Court? Donald C. Brockett: Now the attempt in this particular case and I think again this is the poorest case where this Court to be deciding the matter of pendent jurisdiction in attaching a state claim to a federal claim because of the fact that the complaint itself alleges an absence of a state claim. In fact as this Court has noted the Revised Code of Washington 36.16.070 specifically provides that the treasurer of Spokane County as any other elected official of Spokane County has the discretion to discharge at pleasure an employee and what counsel is asking in this case, what petitioner is asking is that the particular statute when and if it is ruled to be unconstitutional, or to have been applied in an unconstitutional manner would then create a state claim against the county for the action of the treasurer and would then ask that that state claim may be made pendent to the federal cause action which has been filed under the Federal Civil Rights Act. The difficulty that the county expresses here is as much the same as the difficulty expressed to this in Court in Moor versus County of Alameda, that there is to be a system of federalism, that there is to be a distinction between the State and Federal Courts and that as Justice Rehnquist, I believe said in a recent opinion, if such an extension of pendent jurisdiction as this would allow to bring in to the case an additional party that this Court has held should not be a person under the federal civil rights action. That that would only call for ingenious counsel to determine that there was a federal question and then determine that there should be pendent jurisdiction over any state claim that might be thought to exist and therefore would go into the Federal Court system. The questions of jurisdiction are questions of course, of constitutional law and it has been determined and it has been written specifically in Article 3, Section 2 of the Constitution that the Federal Courts are Courts of limited jurisdiction. Many of the writers on the extension of pendent jurisdiction and ancillary jurisdiction and the confusion between the two doctrines have indicated and the county would propose here that the Federal Court system is becoming a system of general jurisdiction by means of the use of pendent jurisdiction to allow the joining of state claims in particular cases. And it is especially an extension which I do not believe this Court wishes to exercise in this case because it would join a party which has specific been held not to be a person under the Civil Rights Act. The problems created by the extension of pendent jurisdiction are many and have been mentioned in various writings and I think this Court should certainly consider those problems. Number one, the major problem is that if the State Court in considering a question of federal law should err in interpreting the federal law then it can be corrected on review by this Court. However, if the Federal District Court would err in interpreting a state law that particular question is not subject to review by the State Courts. And therefore this Court should consider that question and force these causes of action to be tried on the basis of state claims in State Courts with an appropriate review by this court or other Federal Courts. Harry A. Blackmun: Just said is true with the respect to any diversity case, is it not? Donald C. Brockett: That is true your Honor but I think— Harry A. Blackmun: The defense could be frustrated by the fact if he is pulled down the federal side, he just cannot get a definitive state to ruling on the issue? Donald C. Brockett: That is correct your Honor. But the diversity case I would contend to you is a different situation in the federal question case and the allowing of the expansion of the federal question case by pendent jurisdiction. Diversity is specifically granted to the Federal Courts on the basis of the idea historically that an individual who was the citizen of another State could not get a fair trial by coming into that particular State. There is some questioning of that particular doctrine at present time because of the movement of society in the present day and the fact that there are many lawsuits that are brought in local jurisdictions that are in fact holding police officers liable for their conduct and I would warrant in this particular case if the facts warranted would hold the treasurer and the County liable for any tortuous conduct. Warren E. Burger: 1969 rather disparages this once valid idea about the New Englanders getting a bad deal in some other jurisdiction and vice versa, that was not? Donald C. Brockett: That is correct your Honor and I think that is something for this Court to consider in determining whether or not -- in fact the diversity problem has not crept into the federal question problem through the use of this. Warren E. Burger: But diversity jurisdiction only Congress can do that? Donald C. Brockett: That is right. Warren E. Burger: Are suggesting, we can do something about pendent jurisdiction cases? Donald C. Brockett: Yes, and what I am suggesting -- Excuse me. Warren E. Burger: And ancillary jurisdiction. Donald C. Brockett: Yes, and what I am suggesting is that this Court go back historically to the constitution and determine that the Federal Courts should have province and power only over cases arising under the constitution and laws of United States or diversity cases which as your Honor has said they can do nothing about. I think it is ridiculous for the doctrine of ancillary or pendent jurisdiction to have allowed an extension and to in effect fill up the Federal Courts with questions that should be better heard in the State Courts. William H. Rehnquist: Well, Mr. Brockett you certainly do not need any broad doctrine like that to prevail here on your case, do you all -- you are saying is that the principle of Gibbs as to pendent claim should not be extended by this Court to the new class of pendent party. Donald C. Brockett: Yes. What we are saying your Honor is that specifically this Court should refuse to go any further than it has or in fact may wish to retreat from the position that it took in Moor versus County of Alameda and determine in fact that there should not even be a pendent jurisdiction over claims even though between the same parties but -- Speaker: (Inaudible) Donald C. Brockett: Yes, and overrule Gibbs but that -- Speaker: (Inaudible) Donald C. Brockett: And Hurn against Oursler and the other cases which this Court has decided I would refer to phrase which I found in briefing for this case that I thought was of interest from Mr. Justice Holmes in which he once said, in my opinion the prevailing doctrine has been accepted upon a subtle fallacy that never has been analyzed if I am right the fallacy has resulted in an unconstitutional assumption of powers by the Courts of the United States which no lapse of time or respectable array of opinion should make us hesitate to correct. Now what I would say on the basis of that is that ancillary jurisdiction--. Potter Stewart: Citation of that statement? Donald C. Brockett: I am sorry your Honor it is not from the case I think it is from the speech of Mr. Justice. Potter Stewart: But it did, it did not have to do with this subject, did it? Donald C. Brockett: No it did not. It was not on the question. Potter Stewart: Then they are from where? Donald C. Brockett: If it were just a question of whether or not the Court should reanalyze its opinions and retreat from them if it is warranted. I think that this Court should find that ancillary jurisdiction certainly has a role to play in the federal jurisdictional scheme of things. Ancillary jurisdiction in its proper role is the jurisdiction of the Court to hear those matters which are ancillary to the cause before the Court on the basis of the defendant who is an unwilling party to the action, who has been brought into the action and decides that he wishes to raise a matter which is within then the ancillary jurisdiction of the Court. The pendent jurisdiction problem however, whether it extends to claims as it was extended in this Court by Moor versus County of Alameda or more importantly whether it extends to parties who are not properly a party to the particular action as we allege, the County of Spoken is not in this case. The Court should distinguish between those doctrines and we would submit, it should overrule the doctrine of pendent jurisdiction and not allow it within the Federal Courts. The doctrine has created problems in this regard, it would seem appropriate that a Court either has jurisdiction over a case or it does not have jurisdiction over a case. This Court recently in January the 28th of this year in the case of Thermtron Products, Inc. v. Hermansdorfer ruled that once a case has been removed to the Federal District Court that District Court has jurisdiction of the case and that in fact that the Court was somewhat split on the determination as to whether or not that jurisdiction could be given up and the case could be sent back to the State Court because of the crowded docket of the Federal District Court. Potter Stewart: Issue in that case was whether or not the District Court's order remand as reviewable? Donald C. Brockett: That is correct. Part of the issue was your Honor— Potter Stewart: There was no disagreement indicated as to the erroneous, is erroneous action in remand. Donald C. Brockett: No. That is correct. I think the statements however in that case that I am referring to that I would allege in this case is appropriate is that the Court once it had jurisdiction could not give it up. Now, the reason that I state that is for this reason, in the doctrine of pendent jurisdiction under the Moor versus the County of Alameda case, it is interesting to note that this Court has said, that some Courts have jurisdiction but do not need to exercise it, that in fact it is discretionary with the Court as to whether or not that jurisdiction should be exercised. I would warrant and contend to this Court that we decide that either the Courts has jurisdiction which shall be exercised in all cases or it does not have the jurisdiction and the Ninth Circuit and the District Judge, Judge Neil in this Court said that he was without power to hear this particular state claim because of the fact— Byron R. White: By the way I noticed that the Judge in his order dismissing and the Court of Appeals in its opinion, all refer to some state claim. Donald C. Brockett: Well, your Honor that is the interesting -- Byron R. White: They just – but they were stated orally in the sense that they were provable under the facts of the case? Donald C. Brockett: That is correct. Although our contention is that there is a specific allegation in the complaint itself that the action as taken was warranted by State statute so that there can in fact be no (Voice Overlap). Byron R. White: The law refer to whom there was one. Donald C. Brockett: Yes. Byron R. White: They stated there was one and I mean it said that these state claims? Donald C. Brockett: They were concerned about that state claim if one existed but then retreated to the position that they had no power to even consider whether a state claim existed because of the particular doctrine. Potter Stewart: The one that exist as my Brother White says if you look on page 27 of the Court of Appeals opinion? Donald C. Brockett: That is correct. Byron R. White: If you look at page 20 in the record the District Judge in dismissing said, nor has this Court power to exercise pendent jurisdiction over the claims against Spokane County? Donald C. Brockett: Yes. And those claims were just claims that were assumed to be existing for the purpose of determining whether the Court had power to even hear the case. And that is why the case came to this Court on the basis of the Ninth Circuit Court opinion that the Court did not have the power. John Paul Stevens: Mr. Brockett do you read the Ninth Circuit as did the District Court as holding that there is no power and not merely that it would be an abuse of discretion exercise the power but existed. Donald C. Brockett: That is correct. In fact in this particular case if the cases sent back from this Court and goes back to the Federal District Court he may still exercise the discretion not to hear the case because -- John Paul Stevens: I understand, it is the District -- that is why you read that the Court of Appeals also is going up on power. I found the opinion a little bit ambiguous but -- Donald C. Brockett: No. I think the Ninth Circuit Court does in fact as this District Court has said before virtually stands alone in determining that the pendent jurisdiction may not be extended to pendent parties. And that is the determination to be made in this case if this Court determines that this is an appropriate case in which to make that determination itself. We would contend that the doctrine of removable that the doctrines of abstention and certification by the Federal District Courts are doctrines that have in fact grown up as result of the fact that the Courts do not want to exercise jurisdiction over the State law claims and that they themselves feel that these claims should be better placed in the State Courts. That the State Court should make state law that if that law then is interrogation of federal rights that it will be ruled upon by the Federal Courts and will be appealed to this particular Court. That otherwise the States should not have the right to rule on their own State law and as the Chief Justice has mentioned because of the Court dockets that are very crowded the Courts and Judges are required to move around and may well be in a State and diversity case for example and not be that familiar with the state law. The Federal Court ruling upon the question of a state law may be looked to by a state legislature to give some guidance to it when in fact the state legislature should not be looking to the Federal Court determination. That determination should be made properly by a State Court with a review under our constitutional system and system of federalism by the Federal Courts. The petitioner in this case in the reply brief has indicated that it is absurd for the respondent to contend that this extension of the doctrine of pendent jurisdiction is being used to extend the scope of a 1983 action, Section 1983 of the United State Code. We would contend that that is not so absurd when one looks at 15 (m) jury trials 620 at Section 27 which states this, pendent jurisdiction is used for two purposes. One, to try common law or statutory tort claims against individual defendants sued under section 1983. And two, to bring the city or other entity into the action thus avoiding in part the holding of Monroe versus Pape, that cities are not suable under Section 1983, we would contend that that is exactly what is happening in the Federal Court System, and by the use of the doctrine of pendent jurisdiction and by an imaginative pleading or an imaginative party, a federal cause of action is filed and then the party attempts to apply for the pendent jurisdiction over the state law claim which should not be there. We would ask that that this Court determine that there is no power as the Ninth Circuit has said to entertain under pendant jurisdiction especially additional parties that if there is power and if there is discretion and for the Court to hear or not to hear on the basis of that power what kind of a rule will there be, that will be established throughout the country upon which all lawyers and Courts can base some consideration in a determination of the application of pendent jurisdiction. If it is to be based upon the discretion will it not have to be on a case by case basis and if the discretion is exercised on a case by case application then how is there any rule to which one can refer. The other difficulty is that if we are attempting to save judicial time and energy in adopting the doctrine of pendent jurisdiction, how will there be a saving of judicial time and energy if the Court has to determine on a case by case basis in the federal system whether or not the application of pendent jurisdiction and that doctrine is appropriate in that particular case. And will it not require a review by this Court on a case by case basis as to the exercise of that discretion. If the fairness is what is to be considered then is there a fairness to the defendant who has a right to be sued in the State Court on the basis of the state law claim and have that state law claim determined by the State Court if the action can be joined on the basis of pendent jurisdiction even though he was not a proper party to the federal question filed in the District Court. Byron R. White: If he sued the treasurer and the county in the State Court, the county on a state law claims and the treasurer on the federal claim and the state claim. And the treasurer removed to the Federal Court. Do you think the whole case could come to the Federal Court? Donald C. Brockett: Well, I think that that might well be a determination for the federal district judge at that point. Byron R. White: What do you think the statute means, it says the entire case maybe removed? Donald C. Brockett: I think that that might very appropriately bring the entire case into the federal system but it would be by a virtue of a move of the defendant as opposed to a move of the plaintiff who has attempted. Byron R. White: The power of the question? Donald C. Brockett: Well I think it is a power of the question when they look at it on the basis of the filing by the plaintiff and the attempt by him to join an additional party or an additional claim under pendent jurisdiction. But I think that that power of question is better -- Byron R. White: If it could not be a question and if the whole case were removable I am not suggesting that it is but if it were wholly removable and the Federal Court could handle it, it would not be a jurisdictional issue? Donald C. Brockett: Well, your Honor I would say, I would submit this that that is the proper application of the doctrine of ancillary jurisdiction as opposed to what should be distinguished in considering that jurisdiction from pendent jurisdiction. That is the proper doctrine of ancillary jurisdiction in which the defendant has chosen to remove and the defendant who is in the Court then asks that there be a jurisdiction by appropriate joinder even though of another party who he feels is liable rather than himself. The Twentieth United States code 1338 (b) which appears to be argued as an extension by Congress of pendent jurisdiction over patent and copyright cases, the county would allege in this case has been the only extension of that doctrine by Congressional Authority and that the other extension of pendent jurisdiction has been a Court created doctrine which this Court should carefully consider and recede from so that cases will be appropriately filed in the State Courts, the determinations will be made under state law in then if there is some difficulty with federal question or federal constitutional application, it will come in to the Federal Courts only upon that basis. Thank you. Warren E. Burger: Mr. Brockett you have just one minute left-- Mr. Rosenberg do you have anything further? Norman Rosenberg: Yes sir, very briefly. I too found the Ninth Circuit Court of Appeals opinion very curious. On the hand they affirmed that there was no power. On the other hand he did what he did not allow the District Court to do, analyze on a case by case basis whether it was appropriate to join the case. He said that this case was not an appropriate one to join, that is his view. Implicitly that states that there are cases that are appropriate to join and that is the value of pendant jurisdiction. The reason for pendent jurisdiction has had woven through it, the underlying rationale of judicial of economy and it is only the District Court that has the case before it that can decide with any effectiveness at all, whether it is appropriate to join all the claims and hear them all. An inflexible rule will be unworkable, will cause distress and will not promote judicial economy but will cause duplication of law suit. Thank you. Warren E. Burger: Thank you gentlemen. The case is submitted.

William H. Rehnquist: We will hear argument next in No. 90-741, Aletha Dewsnup v. Louis Timm. Spectators are admonished not to talk until they leave the courtroom. The court is still in session. Mr. Dyk, you may proceed whenever you are ready. Timothy B. Dyk: Mr. Chief Justice and may it please the Court: This case involves an important question under the bankruptcy code, namely whether liens that exceed the value of property in bankruptcy are to be avoided under section 506. The present bankruptcy is a Chapter 7 bankruptcy, a liquidation bankruptcy in which the assets of the debtor are generally sold to pay the claims of creditors. But the interpretation has significance also for the reorganization chapters, Chapters 11 and 13, which deal with business and consumer reorganizations. Before the 1978 code, the status of secured creditors in bankruptcy was somewhat unclear. Incredibly enough, Chapters 11 and 13 under the old code did not deal with secured creditors and, even in a liquidation bankruptcy, the effect of the bankruptcy on a lien was unclear. What Congress did was to enact section 506. The two sections of 506 that are relevant here today are section 506(a) and section 506(d). There is really no dispute between the parties as to the interpretation of section 506(a). section 506(a) deals with allowed claims, that is, claims which are approved or otherwise come into the bankruptcy proceeding and which are not disallowed by the bankruptcy court. William H. Rehnquist: Mr. Dyk, did you say a moment ago that under the act of 1898 and the Chandler Act, the pre-code, that it was unclear what happened to liens? Timothy B. Dyk: It was unclear. There were essentially three situations. This was discussed to some extent in the Chase... this Court's decision in the Chase case, which is cited in the briefs. Under Long v. Bullard, the creditor... the secured creditor could choose to ignore the bankruptcy proceedings entirely and the lien would survive the bankruptcy. On the other hand, if the secured creditor went into the bankruptcy proceeding and proved his claim to the full amount, he would have waived his lien. The situation that was unclear was when under 57(h), for example, a secured creditor went into bankruptcy and tried to prove part of his claim; that is, the claim that exceeded the value of the property. And I think it was unclear, and none of the cases cited by the respondents or the United States really deals with this situation... unclear in that situation what happened to the excess lien. Our suggestion is that one of the purposes of section 506 was to deal with that. What 506(a) does is to divide this claim of a secured creditor into two parts. Part one is to the extent that there is value in the property. The creditor has an allowed secured claim in the bankruptcy proceeding and that phrase is not only used in section 506 but in various other sections of the code as well. Then section 506(a) also says to the extent that the lien exceeds the value of the property, that the creditor has an allowed unsecured claim. Byron R. White: Well, Mr. Dyk, does the secured creditor still have the option of staying under the bankruptcy? Timothy B. Dyk: Well, the answer is yes and no. He does have the option to stay out of the bankruptcy, but there is a new provision in the '78 code, section 501(c), which allows the trustee or the debtor to force the secured creditor into bankruptcy and to-- Byron R. White: So he doesn't have a choice. Timothy B. Dyk: --Well, he has a choice, but it's not just his choice. If he stays out of the bankruptcy, the trustee or the debtor can override that and bring him in. William H. Rehnquist: He doesn't have the same choice he did under the pre-code bankruptcy? Timothy B. Dyk: No, and that was an important part of the 1978 code, was to bring the secured creditors into the bankruptcy to deal with their claims and to avoid these wandering liens which might exist to the extent that the lien exceeded the value of the property. Now there is no question about this bifurcation into the secured claim and the unsecured claim that's accomplished by 506(a). And I think there's no dispute that 506(a) applies to property that will be abandoned or has been abandoned just as it must apply to exempt property. Anthony M. Kennedy: Could you tell us, Mr. Dyk, how does the valuation work? Is the valuation, I take it, at the time of filing? And what happens if the value increases? Is there a hearing on valuation? Can you just tell me how that works? Timothy B. Dyk: Yes. 506(a) provides for a hearing to determine the value. Most courts have said that the value, I think, is to be determined at the time of the filing of the petition. And the court sets the value and that then determines what the secured claim is allowed... the secured claim is and what the allowed unsecured claim is. Anthony M. Kennedy: I suppose if the value has gone up after the time of filing, then the trustee wouldn't abandon it and we wouldn't have this problem. Timothy B. Dyk: Well, that's true, and there is a contention here that allowing the debtor to keep any increase in the case of abandoned property creates an unfairness. Now, one of the reasons that the property may go up in value is that the debtor has continued to make improvements on the property, planted crops in the case of farmland, or something like that. It is also possible, of course, that the market has changed or that the bankruptcy court has misvalued the property. But I think the opposing parties concede that that kind of misvaluation doesn't happen very often. William H. Rehnquist: If there is a misvaluation, supposing the bankruptcy court says the property is worth $50,000, it turns out it's later sold without any interim improvements for $125,000. Which value prevails? Timothy B. Dyk: Well, there is only a provision for the setting of one value in the bankruptcy proceeding, and the first value would prevail. But of course, the creditor in the bankruptcy proceeding, if you have property which has no value to the estate, can move for the lifting of the automatic stay. And that would allow the creditor to immediately foreclose on the property. So there need not be any time difference between the valuation and the actual sale. There was another concern, and I think it's reflected in the legislative history, and that is that if the creditor could keep the lien to the excess value, he could in essence coerce the debtor to give him more than he might otherwise be entitled to. That is true because property often has more value to the person who was using it than to a third-party purchaser. Anthony M. Kennedy: Well, that's always true, I take it, in the relations between the debtor and the lienholder. Timothy B. Dyk: Well, there's always a tension between the debtor and the lienholder. Anthony M. Kennedy: Of course, that's what the lienholder bargained for. Timothy B. Dyk: The lienholder bargained for that, but the idea of bankruptcy is to discharge some of these debts as personal liabilities and to enable the parties to go forward. For example, if you have a senior lienholder and a junior lienholder, if the junior lien is worthless, this provision allows the elimination of that junior lien so that the debtor can negotiate with the senior creditor and work out a plan for repayment over a period of time. If you allow the lien to wander around in secured claims, you have all sorts of problems. One of those problems is if the creditor in the bankruptcy has secured a payment on this second half of the claim, the allowed unsecured claim. Then what happens? Let's assume that we have a piece of property that's with a $150 lien on it; it's worth $100. That means that under this provision of the code, that there's a secured claim for $100 and an unsecured claim for $50. Well, what happens if the creditor in the bankruptcy secures a distribution from the estate of an additional $25 on the unsecured claim? Under the proposal that the opposing parties make here, there isn't any provision in the bankruptcy code to deal with that. Does the creditor keep the $150 lien even though he's already been paid part of his unsecured claim, or what happens? Anthony M. Kennedy: Is that true under the Attorney General's interpretation? Timothy B. Dyk: Under the Attorney General's interpretation, the only part of the lien... the only time that a lien would be avoided under 506(d) is if it were a disallowed claim. That cannot have been what Congress meant in the statute. What the United States attempts to do and what the respondents attempt to do is to divorce section 506(d) from section 506(a). What they are saying essentially is even though 506(a) bifurcates the claims into secured claims and unsecured claims, that the lien continues with respect to the unsecured claim. And it continues after bankruptcy and can be enforced against any appreciation. But that's not what 506(d) provided. It said that liens are void to the extent that they secure claims which are not allowed secured claims, which includes two categories. It includes claims that are disallowed, and it includes claims that are allowed unsecured claims. It's almost inconceivable that Congress would have wished to continue a lien with respect to a claim that it had characterized as an allowed unsecured claim and treat it in that respect throughout the bankruptcy proceedings and in various other sections of the code. Now the respondents' argument in this case... and the respondents and the United States themselves do not approach this question the same way. They want the same result but they cannot agree, apparently, on the reasoning. While the United States urges that section 506(d) is to be limited to a disallowance situation, the respondents in this case try to reach the result that they want by contending that the section 506(d) does not apply to abandoned property. Now the difficulty, of course, in this case is that at the time of the valuation, the property was not abandoned. It was only after the valuation that the secured creditors, and they were the ones that requested the abandonment, requested the abandonment and the trustee abandoned the property. So it was only after the valuation that this occurred. What the respondents suggest is that the code provision should be read to suggest that property that is abandoned or will be abandoned or might be abandoned somehow should not be covered by section 506(d). The problem with this interpretation is that they admit that section 506(a) must apply to abandoned property. There can be no question about that because section 506(a), by their own admission, is a critical predicate to the redemption provision of section 722 of the code. So if section 506(a) applies to abandoned property, as it must, there is no basis for saying that 506(d) does not apply. And the only argument that the respondents make for this limitation is that there is a phrase in 506(a), property in which the estate has an interest. They want to take that phrase from 506(a), read it into 506(d), and then say it has a different meaning in 506(d), that it doesn't include abandoned properties. Byron R. White: The court of appeals said that 506(a) didn't apply to abandoned property. Timothy B. Dyk: I understand the court of appeals said that. I do not understand the respondents to contend that and for the reason that I suggested, it just can't be true that 506(a) plays an important role in lien bifurcation with respect to abandoned property. And I think that the parties admit that you have to do that in order for section 722, the personal property redemption section, to work at all. Now there's various reliance by the respondents and the United States on the legislative history. They seem to admit that our reading of this provision is the simple meaning, by which I take it they mean the plain and simple meaning. But they say that the legislative history should cause the court to read the provision differently. And they urge that pre-code, it was clear that the lien in this situation was not avoided. I have explained why I believe that's a misreading of the pre-code history. It was unclear what happened to a lien in the circumstances pre-code; not unclear in what happened in the Long v. Bullard situation where the creditors stay out of the bankruptcy, but unclear what happened to the lien when he came into the bankruptcy. Then they try to read the legislative history of section 506(d) separately from the legislative history of section 506(a), just again to separate the two of them. But the legislative history of section 506(a) makes clear that Congress thought it was making a rather significant change in this area. And indeed the legislative history of 506(a) mentions the concern about what happens to liens in this bifurcation situation. So what we suggest is that there is no clear pre-code practice, point one; point two, that if you read the legislative history in its entirety, that it is clearly suggesting that there is a significant change being wrought here. I think if you look at the way 506(a) and (d) are designed to work and the way they carry forward into other sections of the bankruptcy code, you see that the congressional design in this provision could not be fulfilled if you were to adopt either of the readings of the respondents or the United States in this case. If there are no further questions, I would like to reserve the remainder of my time. William H. Rehnquist: Very well, Mr. Dyk. Mr. Taranto, we will hear now from you. Richard G. Taranto: Thank you, Mr. Chief Justice, and may it please the Court: Everyone agrees that 506(d) reduces a lien to the extent that the underlying claim has been disallowed in the bankruptcy proceeding. Our position is that that is all 506(d) does. Petitioner says that the provision also serves a second, completely different function; to deprive secured creditors with wholly valid, still unpaid claims, of their full State law rights in the property, and to transfer some of the actual value of the property to the debtor, allowing her to force a judicial valuation and redeem the property at the court-determined price, and immediately resell it for a profit, if the actual market value turns out to be higher. William H. Rehnquist: Mr. Taranto, would you state again what everybody agrees 506(d) accomplishes? Richard G. Taranto: That if the claim secured by the lien has been partly or wholly disallowed, the lien is reduced to reflect the disallowance of the claim. Byron R. White: Well, that's the United States' position, is that it? Richard G. Taranto: It is also the Government's position that... that's right. In our brief, we set forth two positions. Byron R. White: Yes. Richard G. Taranto: The fact that-- Byron R. White: Under your other position, what does 506(d) do? Richard G. Taranto: --It reaches the identical result. Our lead position in the brief is not so much an affirmative theory of what 506(d) does apply to, as it is a limiting theory of what it cannot sensibly apply to. And as a matter of fact, the two theories amount to the same thing. Take the two types of cases... Chapter 11 and 13 on the one hand, where the debtor is supposed to keep the property for future income, and Chapter 7 on the other hand. In Chapter 11 and 13, the only property that will not be abandoned is property the debtor is to keep. But 506(d) is completely unnecessary in that, in Chapter 11 and 13, because those chapters provide their own lien-reducing provisions. And they do so by carefully balancing creditor and debtor rights. The debtor gets the benefit of the lien reduction only by promising to pay... pay... promising personal liability in the future. In Chapter 7, if the property is secured by a lien for more than the property is worth, we entirely agree with petitioner that the property will virtually always be abandoned. The only exception will be where the property is either going to be purchased under 722, the redemption provision, in which case lien-stripping is completely unnecessary, or will be sold as part of a larger asset. So as a consequence, once one has taken abandoned property which plays no role in the administration of the bankruptcy estate out of the equation, the only thing left for 506(d) to do is to reduce liens on disallowed claims. We have two fundamental reasons why it seems to us clear that Congress did not intend this second-- John Paul Stevens: May I interrupt, to be sure I follow the argument. You say it just applies to disallowed claim. But it doesn't, doesn't say it's void to the extent that it secures something that is not an allowed secured claim. Richard G. Taranto: --Yes. John Paul Stevens: And isn't it, in this case, the amount over the value of the property... that is not an allowed secured claim, is it? Richard G. Taranto: Well, I think that that would-- John Paul Stevens: It's an unsecured claim. Richard G. Taranto: --I think the language could be read that way, and would not dispute the petitioner's reading is a permissible reading of that language, in isolation. I think that language could also be read to refer to the claim that a secured creditor comes into court with. It's a secured claim, and if it's allowed, it's an allowed secured claim. John Paul Stevens: Right. Richard G. Taranto: Petitioner herself does not read that language in isolation or literally. Instead, she says (d) must be interpreted by virtue of (a). We think that's wrong, essentially for three reasons. One, (a) is not... even if (a) was to be looked to to interpret (d), the analysis can't stop there. And it seems to us clear that the other evidence of what Congress intended, in terms of the substantive effect of the statute, disproves that that's the right way to look at it. Second, there's no particular reason to think that (d) must be construed in light of (a), simply because they're in 506. 506 deals with all of the general aspects of secured claims. And, indeed, (a) and (d) deal with two completely separate subjects... (a) adjusts the relative payout priorities between secured creditors and unsecured creditors. Debtors have no interest in the outcome of the bifurcation under (a). (d) has nothing to do with the unsecured creditors. (d) speaks only to the relationship after bankruptcy, given the property between the debtor and the secured creditor. And there is also a practical reason why the picture that petitioner relies on of (d) simply following (a) can't be right. Her theory says, (a) and (d) are really a two-part process; first bifurcate the claim, then reduce the lien. But if she's right about what (d) does, that picture is simply upside down. In virtually all Chapter 7 cases... perhaps as many as 97 percent... there will be no bifurcation of claims under (a), because there are no assets to distribute to unsecured creditors. And so there is no reason to go through a judicial valuation. Yet, in all those cases where the collateral is valued less than the lien, the debtor has an incentive to come in, demand a judicial valuation with all the litigation that entails, in the hope that by the time a foreclosure takes place, that judicial valuation will turn out to be wrong... either because of appreciation of the property, or because of judicial error. And so her picture of (d) simply being the second part of a two-part process, which is, I think, the linchpin of her effort to rely on 506(a) in interpreting (d), is, in fact, exactly wrong, if (d)-- Byron R. White: What about the 3 percent? Richard G. Taranto: --Well, in the 3 percent, there will either be... there will be a bifurcation of the claim, and (d) will then follow (a). It's perfectly clear that you can have both a bifurcation of the claim and then move on to decide what is to be done with the lien. Our position is that Congress quite clearly continued the very clear pre-code rule that even if the creditor comes in and under (a) or under the former Bankruptcy Act, section 57(h) and splits its claim, the lien clearly survives. William H. Rehnquist: That's Long against Bullard? Richard G. Taranto: That's Long against Bullard, as continued in the 1898 act by section 67(d), as explained by this Court in Louisville State... Joint State Bank against Radford. It is simply untrue that the law about what happened to the in rem property rights of a creditor was unclear in any of the circumstances that petitioner has mentioned. Byron R. White: Okay, the secured creditor comes in and bifurcates the claim. Part of it's secured and part of it's unsecured. Richard G. Taranto: Yes. Byron R. White: Then what does (d) to... (d) do to it? Richard G. Taranto: If the claim has been fully allowed, (d) is simply inapplicable. (d) is not the-- Byron R. White: Well, the claim is that the... the claim... the claim has not been fully allowed as a secured claim. Richard G. Taranto: --No, but it has been fully allowed as a claim under 502, which is the provision for the allowance of claims. If there is to be a distribution to unsecured creditors, then (a) applies and the claim is bifurcated, in that rare 3 percent of cases. But in any event-- Byron R. White: But then (d) has no application whatsoever, is that it? Richard G. Taranto: --I'm... that's right. If the claim has been fully allowed, (d) has no application. And indeed there is-- Anthony M. Kennedy: Now that's the Solicitor General's argument, as I understand it. Richard G. Taranto: --Yes, and it's the second argument we presented in our brief, which we in fact think is the... the only affirmative function served by 506(d). Anthony M. Kennedy: So you're in agreement with his interpretation? Richard G. Taranto: Yes. John Paul Stevens: Well, let me just ask another question, because I'm a little dense on this. Supposing the property is abandoned, and it's... you've got a value on it. And then it's sold for $5,000 more than the valuation. You are saying that the lienholder is entitled to that $5,000... assuming he has a general unsecured claim for more than $5,000 at that point. Richard G. Taranto: He's entitled to that $5,000 unless receiving that $5,000 plus the actual amount distributed on his unsecured claim would give him more than the... than the complete debt, unless he's getting paid-- John Paul Stevens: All right, but we'd assume that that wouldn't happen, that there's enough in the general... isn't that then saying that the lien continues to secure the unsecured portion of the total claim? Because you are saying the lienholder has priority as to the excess realized in the sale. Richard G. Taranto: --It does in one sense. What we think the phrase allowed secured claim means in (d) is the claim that the secured creditor comes into court with. After the creditor comes into court, if there is a bifurcation process under 506(a), which is a very rare event under Chapter 7, then there... that single allowed secured claim gets split into two claims, one of them still called an allowed secured claim, the other an allowed unsecured claim. But we think 506(d) applies to the claim as the creditor comes into court. The reason, aside from the very clear evidence that Congress meant to preserve pre-code law, which this Court explained in three cases last term, is that if you look at the effect on the debtor, this... petitioner's view gives the debtor exactly the same redemption right that Congress gave only to certain debtors, for only certain property in 722. Petitioner doesn't dispute... and... because it can't be disputed... that if the lien is reduced to the value of the property, then under every State's law, the debtor can exercise her State law rights, pay-off that amount of the lien, and redeem the property. If 506(d) meant that, there would have been no need whatsoever, for 722. And the very careful limits that Congress placed on the redemptions that write in 722 would be simply overridden. 722 gives the specific right the petitioner claims to buy property at a judicially determined value only to individual debtors, only for consumer debts, and only for a narrow class of property used for personal, household, or family use. 506(d) would give that right to any debtor... corporate or individual, in any type of bankruptcy proceeding, for any type of property, including commercial farmland. It simply makes no sense that Congress would give a very narrowly limited redemption right to debtors in 722, only to have that completely overridden in section 506(d). Anthony M. Kennedy: Is it a plausible hypothetical that a creditor who is a lienholder would receive some distribution as a... from the general estate to the extent that his claim is undersecured, and that that would happen before there is a sale on the property and a foreclosure of the lien? Richard G. Taranto: Well we're... first of all, we're talking only about the 3 percent of cases out of half a million bankruptcy cases. Anthony M. Kennedy: Well, within that 3 percent, is that a plausible hypothetical? Richard G. Taranto: It is plausible. Anthony M. Kennedy: And what would happen then? He receives $10,000 as a... from the general estate, and he has $100,000 left yet to be paid. Richard G. Taranto: Under State law, the amount of the lien follows the amount of the outstanding debt. And so if he actually receives a payment through the bankruptcy proceeding, the amount of the lien will be reduced accordingly. Anthony M. Kennedy: But this... then this is still, though, the same as Justice Stevens' question, to the extent that the amount of the foreclosure brings in more than the valuation of the property, he still takes that as a secured creditor? Richard G. Taranto: If he has already received a payment through the bankruptcy proceeding, before the foreclosure, then by the time of the foreclosure, the lien will have been reduced by that amount... not by the amount of the unsecured claim, but by the perhaps 10 percent, 5 percent that he is being paid on that claim. Anthony M. Kennedy: But to the extent that he is still undersecured, if the property does bring in more than anticipated, he still picks up the balance? Richard G. Taranto: Yes, because he is still, of course, owed money, the collateral has, in fact, produced money to repay his debt, what he bargained for was the right to proceed against that collateral... and it seems to us, simply to be a windfall to the debtor to pay that money to the debtor. One illustration of that is that it's perfectly clear that as to unsecured creditors and unencumbered property, if the property were to appreciate during the proceeding, the debtor is not given a preference over the unsecured creditor. First of all, there is no judicial valuation of that property, so there's no opportunity for judicial error. And as far as appreciation is concerned, the proceeds of any property of the estate remain the property of the estate. So if there is appreciation, it is perfectly clear that the unsecured creditors are... receive the benefit of that, and the debtor is not preferred to them. It makes no sense to prefer-- Byron R. White: Was this same argument made in the court of appeals? Richard G. Taranto: --The case, in fact, was not argued in the court of appeals. It was submitted on very short briefs. Byron R. White: Well, was it... was it brief... the same arguments made down in brief? Richard G. Taranto: Most of the supporting arguments, yes, indeed were. The theory that 506(d) is-- Byron R. White: I take it you're not defending the court of appeals' rationale here. Richard G. Taranto: --Basically, that's right. We are not. I don't think that-- Byron R. White: They had a... you don't defend the notion that the case can turn on whether or not the estate has an interest in the property, in abandoned property? Richard G. Taranto: --No, in fact, I think that that phrase is, in fact, something of a red herring. It doesn't appear in 506(d). Petitioner looks to that phrase because it's in 506(a), and imports it into (d) as defining the scope of (d). Byron R. White: So you want to... you want to affirm on another ground. Richard G. Taranto: For a different reason, on the same statutory ground, but yes, for a different reason, a different reading of the statute than the one that the Tenth Circuit relied on. As I say, I think that the affirmative explanation for what Congress actually had in mind in 506(d) is that liens are to be reduced only if the underlying claim has been disallowed. The abandonment idea is, I think, illustrative of a fundamental bankruptcy policy, that State law property rights are not to be impaired in bankruptcy unless there's an affirmative reason to do so. Byron R. White: And you think it's perfectly clear that under the... under the old code, the 1930... under the Chandler Act, that your client would have won? Richard G. Taranto: Yes, I don't think there's... there can be any doubt about that at all. That's what-- Byron R. White: I take it your colleague on the other side disagrees with you. Richard G. Taranto: --Well, I haven't, frankly, just seen any... any reason to doubt that. Section 67(d) of the 1898 act said, valid liens are valid through bankruptcy. The description of the general rule in the Radford case in 1935 was perfectly general, made no exception for what, in fact, would be the ordinary case, if there's going to be a bifurcation of the claim, in a Chapter 7 case. In the ordinary case, the creditor is not going to simply sit out of the proceeding. He will go in and prove, and bifurcate his claim. If the rule of Long v. Bullard and the Radford case, which the legislative history explicitly brings forward in 7... 1978... was modified for the usual case, there's certainly no indication whatever that that's so. William H. Rehnquist: Well, what is the incentive for a creditor to bifurcate his claim? Richard G. Taranto: If there is some money that will be distributed. William H. Rehnquist: If the... for general creditors. Richard G. Taranto: For general creditors. If he doesn't do that, then he loses whatever share of the general pool for general creditors-- Byron R. White: Well, I suppose if there is money to be distributed to general creditors, and he comes in, and he wants to share in it... and yet he also wants to... to have... he wants his lien to survive. Richard G. Taranto: --Yes. Byron R. White: And so he gets his share of whatever is distributed to general creditors, to the extent he's got an unsecured claim, he gets to share in the distribution. Richard G. Taranto: Yes. Byron R. White: But then he also has his lien. And if the property is really worth more than they thought it was, he gets more than other creditors, but of course he's got a lien. Richard G. Taranto: Right, he's bargained for more than other creditors. That's why he's got a secured interest. And if I can make one additional point about the windfall nature. It's not only the debtor who gets a windfall. An outsider who wants to come in and buy the property also gets a windfall. An outsider... take this case, for example... an outsider can come in and buy this property for less than the market value. Somebody who is willing to pay $60,000 for this piece of property, the market value, can finance the debtor's purchase of the property for the $39,000 assigned by the court, and then buy it from the debtor for $50,000.00. The debtor comes out ahead. The outsider comes out ahead. John Paul Stevens: Yes, but in that case, would a valuation... as I read the statute, I thought the valuation generally would take place at the time of any proposed distribution. And if there were an offer for more outstanding, I would suppose that the court would value the property at the market value. Richard G. Taranto: This whole dispute arises in only two circumstances; either the petitioner is right that the value is of value as of the time of the filing of the petition, and there's appreciation... which, in fact, the majority rule is to the contrary, or the judge makes an error. It seems to us in neither circumstance is there any bankruptcy giving the benefit of that too-low value to the debtor, when secured creditors remain unpaid and the collateral has the value to repay some of the secured creditors. Antonin Scalia: Mr. Taranto-- --I'm sorry, can I-- --Go ahead. Do you read, in section 722, the same phrase... you read it differently in 722 than you read it... than you read it in 506(d). Richard G. Taranto: Yes. Antonin Scalia: Why? Richard G. Taranto: Well, because I think the purposes are quite different. 722 and a number of other places in the code use the phrase allowed secured claim in the context of determining a payout amount, either in the 722 context by the debtor, or in other contexts by the bankruptcy estate, and where it is perfectly sensible that the phrase is used to refer back to the bifurcated claim under 506(a). 506(d) simply has... is addressed to a completely different subject, and the term, therefore, bears the alternative meaning that we think the rest of the code demands. Thank you. William H. Rehnquist: Thank you, Mr. Taranto. Mr. Mann, we will hear now from you. Ronald J. Mann: Mr. Chief Justice, and may it please the Court: The general interest of the United States in administration of the bankruptcy laws is augmented in this case because the United States, through the Resolution Trust Corporation, the Federal Deposit Insurance Corporation, and other Federal agencies, is probably the largest undersecured creditor in the country. The practical ramifications of this case show why we care. If petitioner is correct, bankruptcy proceedings not only avoid a debtor's personal liability on its debts, but they also strip down the creditor's interest in its collateral to judicially determined abstract valuation, and allow the debtor to retain any excess sales proceeds... free and clear not only of the lien, but of the claims of all creditors in the bankruptcy proceeding. Now, before I get started, I'd like to address a problem that Justice Kennedy spoke about, which is the effect of a distribution on... to unsecured creditors in the bankruptcy. As Mr. Taranto suggested, this does not happen that often, but the structure of the code does deal with it, under our view, in a perfectly rational way. When the money... section 506(a) will divide all claims that are allowed into secured claims and unsecured claims. If there is a distribution of an unsecured claim of... to general unsecured creditors, the total amount that remains owing to the creditor will be reduced, dollar-for-dollar. And so under perfectly normal property principles, the lien also will be reduced. If you start with a debt of $100, the bankruptcy judge says the collateral is worth $60, and general unsecured creditors get $5, the lien is now $95 because that's all the debt that's left. If there's a foreclosure sale, and the collateral sells for $70, the secured creditor would get $70. If it sells for $100, the secured creditor would get the $95 he's owed, and the other $5 would go to the debtor, as the owner of the collateral before the sale. Anthony M. Kennedy: But in that case, there is a windfall, in some sense, in that he's received pro rata too much from the unsecured portion of the estate. Ronald J. Mann: That's correct. It's not necessary to the decision of this case, I think, to decide how to deal with that. It's the United States' view that if the foreclosure occurs before the bankruptcy proceeding has been completed, you then have a marketplace determination of value, and the creditor's secured claim should be written up to the amount that occurs at the foreclosure sale... or at least there should be a hearing to allow the parties to talk about the value, and introduce that as evidence. Frankly, it does not seem to me that the reverse should be true: if the foreclosure sale brings a lower value, a lower value than what the bankruptcy judge placed on it, I don't think that in all circumstances the secured claim should be written down, because it's entirely likely that the secured creditor bought the asset for less. But there should be a hearing to determine what the value of the... the value after the sale, after it has been sold. William H. Rehnquist: Isn't this all kind of... you give the impression, Mr. Mann, this is all kind of optional, that well maybe it could be, maybe it couldn't... the statute doesn't provide one way or the other? Ronald J. Mann: The statute is very unclear on this. And the lower courts have not done well with this particular point. What the statute says is that the value shall be determined in light of the purpose of the valuation, and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use, or on a plan affecting such creditor's interest. It's clear that from that, and from the legislative history, that in some circumstances there should be multiple valuations. The legislative history gives a number of specific examples. It's not that clear whether a foreclosure is one of those situations. We think it makes good sense, and if the issue came to this Court, I mean that's what we think the Court should decide. I'm just saying that's not necessarily in this case, it's an issue that would come up after this case has been decided. William H. Rehnquist: Do you know enough about bankruptcy practice to know what sort of a hearing this initial valuation is? Do the parties call expert appraisal witnesses? Or is it just a kind of a seat-of-the-pants type of thing? Ronald J. Mann: I think it generally depends upon the value of the collateral, and the unlikeliness of an error, and the amount of money that's at stake. In a large Chapter 11, where you're valuing airplanes for Eastern Airlines, everybody's going to come in on every side of the case and submit as much expert testimony as they can to try and get a value. If it's a Chapter 7 case, and it's a piece of raw land, it may be that the only valuation is the debtor's statement as to what he thinks it's worth. And then the secured creditor will just argue. I mean it depends on how much the people want to spend on the valuation, like any other judicial proceeding. You can spend a lot, or not much, and take the risk. But I think that it's helpful to focus on what the purpose of section 506(a) is in doing the bifurcation, Justice Kennedy. It... the purpose of this, as shown in the legislative history, is to facilitate reorganization. Indeed, the legislative history on which petitioner relies, and explains there's a significant change, explains exactly what the purpose of bifurcating the claims is. And the purpose of bifurcating the claims is not directed at the wandering liens to which petitioner refers. If you look on the very page of the legislative history to which petitioner refers, it explains the purpose. It is that the determination of the amount of the secured claim facilitates reorganization, by defining the precise extent of the claims against the debtor, that must be treated specially as secured claims. In a reorganization proceeding, the property won't be sold. So you have to have a judicial valuation in order to determine how you're going to protect the secured creditor. In a liquidation proceeding, the property will be sold in a foreclosure sale, and there'll be a marketplace determination. So there's no reason for Congress to have needed a judicial valuation in that context. Um, I'd just like to make a few other brief points. Um, first I'd like to talk about the language of section 506(d), and second I'd like to speak about the pre-code practice, for just a moment. John Paul Stevens: May I ask you a question about pre-code practice before you get into that? Was it perfectly clear before the code that an undersecured creditor would be treated as an unsecured creditor for the part of the excess... the amount of the security was less than the amount of the total claim? Ronald J. Mann: Um, under pre-code practice, there were three options that a secured creditor had. A secured creditor could waive... waive his security, and attempt to prove for a secured... an unsecured claim for his entire claim. John Paul Stevens: Right. Ronald J. Mann: Okay, he could just stay out of the bankruptcy proceeding, not get anything-- John Paul Stevens: Right. Ronald J. Mann: --and then after the bankruptcy proceeding eventually foreclose, but he wouldn't have any personal recourse against the debtor. Or third, he could attempt to go into the bankruptcy and receive, in the pot with general unsecured creditors, as it were, his pro rata share. But we think that's basically the way that it works under the code. John Paul Stevens: But did he... is one... was one of his options was to have the land protect his secured position to the value of the property, and be an unsecured creditor for the balance? Ronald J. Mann: We think that that's fairly clear. I can... I can read to you exactly what this Court said when it addressed the point in Radford... which is the Court generally surveyed bankruptcy law in the course of invalidating a Federal statute that would accomplish the result that petitioner seeks here. It says, although each of our national bankruptcy acts followed a major, or minor depression, none had... prior to the Frazier-Limkey Amendment... sought to compel the hold-over mortgage to surrender to the bankrupt either the possession of the mortgage property or the title, so long as any part of the debt thereby secured, remained unpaid. It says, but unless the mortgagee released his security, in order to prove in bankruptcy for the full amount of his debt... which is one of the options... a mortgage, even of exempt property, was not disturbed by bankruptcy proceedings. We think it's fairly clear from that, and from the other cases, that nothing was going to happen in the bankruptcy code that would alter the lien. Byron R. White: What case were you reading from? Ronald J. Mann: That's from Louisville Joint Stock Land Bank v. Radford, at pages 582 and 583. John Paul Stevens: Yeah, but what you've read... what you've read I don't think addresses the precise question I asked. Ronald J. Mann: It doesn't address that precise question directly. But what it does is it says we've looked at the bankruptcy laws, and they don't do what petitioner says they do. It doesn't address every possible way to do it, but it says they don't do that in any provision of those laws, so-- If petitioner is right, the Court in Radford would have had to have made a mistake. And considering the weight that Congress placed on that analysis in Radford in the legislative history, I think it would be a relatively slender reed to suggest that the Radford Court made a mistake and Congress relied on that mistake. I really don't think that you can have pre-code practice much clearer than where the Supreme Court, itself, has said you can't do what petitioner wants to do. Congress has cited the provision in both of the reports... the coming provision, and then this Court last year said we believe that that's what the legislative history means. I just wanted to talk briefly about the language. As we see it, petitioner's argument hinges on her assertion that the reference in section 506(d) to a claim that is not an allowed secured claim must be taken to refer to claims that are allowed but not secured. Now, there's three real problems with that reading. The most fundamental problem is that even petitioner is not willing to apply the provision literally to all claims that are allowed but not secured, because petitioner acknowledges that it would be... implicitly in its brief... that it would be absurd to void the liens on property owned by third parties that secure claims that are allowed but not secured. The second problem with this reading, we think, is that it leaves section 506(d) in an odd place in the code. Byron R. White: Excuse me, go back over that last point for just a minute. Ronald J. Mann: Petitioner's general submission is that the reference in section 506(d) to a claim that is not an allowed, secured claim-- Byron R. White: Right. Ronald J. Mann: --refers not only to claims that are secured but not allowed... with which we agree-- Byron R. White: Right. Ronald J. Mann: --but also to claims that are allowed but not secured. But petitioner is unwilling to have the provision apply to all claims that are allowed but not secured. John Paul Stevens: If I could ask you just one question? In (d), could you read the phrase, not an allowed secured claim, to mean disallowed? To the extent that a lien secures a claim against the debtor that is a disallowed secured claim... is that-- Ronald J. Mann: If you read it that way, it would change the meaning of the statute. Because it covers not only claims that are disallowed, but claims covered by section 506(d)(2) that have not been allowed because the creditor did not come in under section 502. Antonin Scalia: --Had you finished the answer to my question? Ronald J. Mann: No. Antonin Scalia: I didn't think so. [Laughter] Ronald J. Mann: I'm going to try and be as brief as possible. Under section 506(a), if there is a secured creditor that has collateral owned by the debtor, and collateral owned by a third party, such as the debtor's brother, or a guarantor, and the collateral owned by the debtor is worth $60, and the collateral owned by the debtor's brother is worth $60, the debt is $100. After section 506(a) operates, there will be an allowed secured claim for $60, and an allowed unsecured claim for $40. Pursuant to section 506(d), petitioner suggests it will void all of the lien on the... it will void the $40 of the lien on the collateral owned by the debtor. Naturally, you would think, reading the statute as he says, is literally, it would void the other lien as well. And we obviously think you should not do that. Thank you, Mr. Chief Justice. William H. Rehnquist: Thank you, Mr. Mann. Mr. Dyk, do you have rebuttal? You have 15 minutes. Timothy B. Dyk: Justice Scalia, I had difficulty in following the United States argument in that respect, too. I think the simple answer is that 506(d) only applies if it relates to property. The debtor doesn't, of course, apply where it's some third-party property or something like that. What we are suggesting is that Congress had this phrase, allowed secured claim-- John Paul Stevens: But, but may I just interrupt, because I'm trying to think through Justice Scalia's problem, too. If it applies only to property of the debtor, could it not equally be read to apply only to property of the bankrupt estate? Timothy B. Dyk: --Well, I don't think it can be read that way because 506(a) necessarily has to apply to abandoned property. There's also a question of when you make the-- John Paul Stevens: Well, I'm not so sure about that. Because if it's abandoned, presumably at the time of the abandonment the valuation is made. And I take it... I see what you're saying. It continues to apply. Then it becomes debtor's property, but not part of the estate property. That's what you're saying, if it had an abandonment. Timothy B. Dyk: --Right, the property in this case is abandoned to the debtor. It could be abandoned to somebody else under some circumstances. But under this... in this case, it was abandoned to the debtor. Now at the time that the petition was filed, it was property of the estate. It automatically became property of the estate. And section 506(a) operates on that. It's not an elective provision, as the respondent suggests, not up to the creditor to decide whether to have the bifurcation or not. The Code says you bifurcate. And you bifurcate in every case. And it doesn't depend on whether-- John Paul Stevens: But the purpose of that is to protect the creditor's interest to the extent it's unsecured, isn't that right? The basic purpose of (a) is to be sure that the creditor is not limited to his asset when he, in fact, has a larger claim. Timothy B. Dyk: --That is one purpose. It is not the only purpose. Because throughout the code, the effort here is to resolve things, to deal with the secured claim... and this is true in the reorganization chapters, as well as the liquidation chapter... is to figure out how much of that should be treated as a secured claim and how much of it should be treated as an unsecured claim. And the theory that the respondents and the United States are articulating is that something which is an unsecured claim really still is a secured claim... or maybe it becomes a secured claim again when the bankruptcy is over with. It's difficult, I think, to read the words of the statute to achieve that result. John Paul Stevens: But is it not right, though, that the problem only arises if the valuation is not made at the time of the disposition? Timothy B. Dyk: The... well, I think the answer to that is no. And the reason is, it depends on what problem we're talking about. The argument of the respondents and the United States suggests that under our interpretation 506(d) is designed to deal with this problem of appreciated property, and to give the windfall to the debtor. We're not suggesting that that was what led Congress to create this situation. What led Congress to create 506(d) and 506(a) was the desire for certainty, the desire to have the bankruptcy proceeding resolve the matter, to pay off the creditor on his allowed secured claim, to give him an allowed unsecured claim which he could recover from the estate, and to allow the property to pass out of bankruptcy without some wandering lien covering some other amount. One of the purposes of Congress in bankruptcy is to allow the property to go out and to continue to be used for productive purposes. Often, real property... and in this case it's farmland... gets used. Congress doesn't want the property to sit there. So what happens is that the debtor begins to plant the crops, and farm the property, and to make improvements on it. All of a sudden the value is increased. Well, under those circumstances it would hardly be fair to give that excess value to the secured creditor. And yet if you do give that excess value to the secured creditor, what is going to happen? The debtor is going to just sit there and do nothing. The property will remain idle. So it's an effort to resolve things, to come to a conclusion, and so that everybody knows where things stand at the end of the bankruptcy. And it's also-- William H. Rehnquist: That's almost built into the statute, that difficulty, from the way everybody says the initial valuation controls, even though the foreclosure sale produces a much different price. Timothy B. Dyk: --Well, I think there are many ways around it. Of course, the valuation doesn't have to be wrong on the down side. It could be wrong on the up side too. Speaker: Sure. Timothy B. Dyk: But the code in the automatic stay provision says you can terminate the automatic stay if the property doesn't have value to the estate. You can have the valuation. You can have the sale immediately. There's no reason to have any period of time between those two. So in the majority of cases, you wouldn't have any excess value if-- William H. Rehnquist: But you could still have judicial error. Timothy B. Dyk: --You could have judicial error. The creditor, of course, can appeal the valuation if he doesn't like it. Byron R. White: Well, suppose he doesn't, and the sale is held very quickly, but nevertheless for some reason or another it sells for more than the valuation. Who gets the money? Timothy B. Dyk: Well, I think that depends. It depends on whether the property has been abandoned to the debtor or whether it remains as property of the estate. If there is excess value there, and the property has not been abandoned... in other words, the trustee says well, I think maybe this property is worth more than the court said it was worth... the property can be retained by the trustee on behalf of the estate and the unsecured creditors would get the additional value. Byron R. White: Well, how does the secured creditor get his money? Timothy B. Dyk: How does the secured... by a foreclosure sale. And by working-- Byron R. White: Once that foreclosure sale happens, it certainly isn't part of the estate anymore. Timothy B. Dyk: --No, but I thought the question was, if there's a difference between the judicially determined-- William H. Rehnquist: Yes. Timothy B. Dyk: --and the-- Byron R. White: At the foreclosure sale the property sells for more than it was valued in the bankruptcy proceeding. Timothy B. Dyk: --And, Justice White, what I was suggesting is if the property has not been abandoned at that point, the excess goes to the unsecured creditors. Anthony M. Kennedy: But this whole case is about property that has been abandoned, isn't it? Or am I-- Timothy B. Dyk: It is, but section 506(d) is dealing with a general run of situations. Anthony M. Kennedy: --Well, yes. Timothy B. Dyk: And the language of it is pretty clear. It's using-- Anthony M. Kennedy: But in the hypothetical that you put, that was put to you by Justice White, if the property's been abandoned, then the debtor is the one that keeps the excess. Timothy B. Dyk: --That's true. There can be some circumstances in which that will happen. They are not going to be very frequent. And the question is, whether because of that possibility in some speculative number of cases, the whole statute is going to be rewritten so that it does not achieve in other circumstances the goals for which Congress designed it. And we suggest that the best guide here to the result that Congress wanted was the language that it used. It said the lien is void if it secures a claim that is not an allowed secured claim. That is... is language that is used again and again and again in the code. And it has to have the meaning that we attribute to it. I understand the respondents to agree that in all these other sections of the code it has the meaning to which we attribute to it. And they're trying to say well, when it gets to 506(d), we're going to give it a different meaning because there's some policy here that we think should be read in here about a windfall... a policy which isn't reflected in the legislative history. Antonin Scalia: Could I go back to the other hypothetical you were just saying... why should it... why does it have to be that if the property is not abandoned by the estate, and then it sells for more than it was originally valued, why does it have to be that that excess would go to the unsecured creditors? Why could you simply not recalculate under (a) what the amount of the secured claim is? I mean, it seems to me quite wrong-- Timothy B. Dyk: Well, that suggestion-- Antonin Scalia: --that it should go to the unsecured creditors, rather than to the secured creditor. Timothy B. Dyk: --The suggestion of revaluation in the course of the bankruptcy proceedings has been made by the respondents. We think the code doesn't provide for it. And the reason the code doesn't provide for it is that what you need is certainty, to be able to figure out in the reorganization chapters what the plan of reorganization looks like. And you need to know what's the secured claim and what's the unsecured claim. And if you're going to keep revaluing it, it will be impossible to have a plan. And the same thing is true in the liquidation proceedings, that people will not know where they stand. There may be errors. Life is filled with errors. But the question is, as I suggested earlier, is should one rewrite the statute just because of a possibility of a small number of errors. And we suggest that there isn't any basis for rewriting the statute... certainly not on the face of the language, which we think is exceptionally clear, and certainly not in the legislative history, either. I'd like just to take one moment to address the suggestion that there is this wonderful clarity in the pre-code practice. There is wonderful clarity in the pre-code practice, if the secured creditor sits out the bankruptcy, the Long v. Bullard situation. There is not clarity if the secured creditor comes into bankruptcy and decides to prove part of his claim, that is-- William H. Rehnquist: Mr. Dyk, was the Louisville Joint Stock Bank a bifurcation case? Timothy B. Dyk: --No, it was not. William H. Rehnquist: Or a sitting-out case? Timothy B. Dyk: No, it... what... it was neither one of those. What Louisville was was a case in which, under the Frazier-Limkey Act, as originally drafted, the Congress wanted to help farmers. And they said, okay, if you've got a mortgage on your property, the debtor keeps the property for 5 years, no foreclosure for 5 years. The creditor gets 1 percent interest during that 5-year period. And then at the end of the 5-year period, that the debtor can redeem the property by paying its value. It is not talking about this bifurcated situation. It is not talking about what used to be section 57(h) under the old Bankruptcy Act. And there has been no case that has been cited to us, not one case... much less a well-settled practice... not one case under the old Bankruptcy Act in which in this bifurcated situation that the lien was preserved as to the unsecured claim. Not one case one way or the other. Byron R. White: Mr. Dyk, suppose that when the property's valued there's an immediate sale, and the property sells for exactly the amount of the valuation. Does the... will the debtor have a right to redemption at all? Timothy B. Dyk: That will depend on State laws. Byron R. White: All right, let's assume he does under State law. Timothy B. Dyk: He can redeem it, often after the foreclosure sale occurs, for the amount of the lien... which we say will be the value of the property. Byron R. White: Well, and this will be true even if... even if at the end of the redemption time, which may be 2 years, 6 months... suppose the property then is suddenly worth twice what it sold for? Timothy B. Dyk: Well, I think that's a problem that you have in any foreclosure sale, whether you have this provision of the bankruptcy code involved or not. That if there's a foreclosure sale, and the property sells for X amount, it discharges the debt. And if the property goes up in value, there's a redemption. Byron R. White: Suppose a secured creditor buys it for the amount of the valuation. And he just owns the property, and it's suddenly worth more, twice more than it was, than what it sold for, what he paid for it. Can the debtor redeem by just paying the-- Timothy B. Dyk: Justice White, that depends on State law. And if there's any anomaly-- John Paul Stevens: --But not if the statute is read literally. Because as a matter of Federal law, the lien would be void. Exactly. And I suppose it could no longer control the redemption price. Timothy B. Dyk: --No, but the Federal statute does not control how long the debtor has to redeem. John Paul Stevens: I know, but the price it will... the price he has to pay if he does redeem... State law says you can only redeem if you pay the full amount of the indebtedness or the full amount of the original lien. And if the lien is void as a matter of Federal law, it seems to me you're invalidating that State statute. Timothy B. Dyk: Well, you not invalidating the State statute. What you're doing is you're saying that bankruptcy has determined the amount of the lien. And everybody agrees that under some circumstances that-- John Paul Stevens: But are you saying that Federal law would not have any impact on the redemption price that a State could require on those facts? Timothy B. Dyk: --Well, of course it has an impact on the redemption price, in the sense that the lien has been avoided. But it doesn't tell you when the redemption should be allowed, nor does it tell you that there has to be a redemption provision. John Paul Stevens: Not when, but what must be paid at the time of redemption. Timothy B. Dyk: That's right, but the State doesn't have to have any redemption provision at all. It could say, well-- John Paul Stevens: No, but if it does have one that says you've got to pay the full amount of the lien, would that State requirement survive under your theory, or not? Timothy B. Dyk: --Well, I think it would survive, but the full amount of the lien would be the lien that remained after the bankruptcy proceeding, after this process of bifurcation to secured and unsecured claims. And that's what Congress intended to do. And it did it, I suggested earlier, in order to allow people to go on with their lives and improve the property and do things with it without having to worry about the recapture of that accreted value, and without giving the creditor the power at the foreclosure sale to say to the debtor, I can bid $150 for this $100 piece of property. And if you don't pay me more than it's worth, I will do that. And the reason that power exists is that property is often worth more to the debtor than it is to a third party. For example, in Mrs. Dewsnup's case, you have property which was with... in her family for generations. There's sentimental attachment. It's being used. John Paul Stevens: Yeah, but I suppose also one of the purposes of the valuation is to prevent the creditor from buying into the property at an unreasonably low figure, and therefore retaining an unreasonably large unsecured claim. Timothy B. Dyk: Well, then it certainly does not-- John Paul Stevens: That's not this case, of course-- Timothy B. Dyk: --No. John Paul Stevens: --but that's one of the purposes I would think of this provision. Timothy B. Dyk: That is correct. William H. Rehnquist: Thank you, Mr. Dyk. The case is submitted.

Earl Warren: Dovie Ray Baker et al., Petitioners, versus (Inaudible) Railroad Company. Mr. Davis. Harvey L. Davis: Mr. Chief Justice Warren, may it please the Court. This case is here on writ of certiorari to a Texas Court of Civil Appeal. There are two basic questions involved there. The first is whether the petitioners were denied their right to a trial by jury to determine whether Claude Baker, the deceased husband and father of petitioners was an employee of the railroad, the respondent, within the meaning of the Federal Employers' Liability Act. And the second basic question is whether Claude Baker was such an employee of the railroad as a matter of law. These are the pertinent facts. Claude Baker was hired and he was paid by the W. H. Nichols & Company as a member of a crew to do a type of maintenance work called “grouting” along the main line roadbed of the Texas & Pacific Railroad. He was killed by the negligence of one of the railroad trainman while he was working on the roadbed. Now, this maintenance work of grouting consists of pumping into the roadbed by means of a hydraulic pump, a mixture of sand, cement and water to fill in voids under the roadbed and to force up water pockets and its purpose is to strengthen and to stabilize and straighten the roadbed. The location for the grouting work was laid up by the engineering department of the railroad, and Claude Baker's job was to handle the cement. He would pour cement into the cement mixture and other employees would pour the sand and water in it. Baker would throw the cement sacks at his feet and occasionally would take the pile across the railroad tracks to be disposed of. After Baker was killed, his widow filed for compensation insurance under the laws of Texas and was awarded a compensation award of some $7000 -- almost $8000, I believe it was. Then her attorneys filed a common law suit for negligence against the railroad. However, in the subsequent investigation of the suit, facts were discovered which led the attorneys to the belief that Baker was in fact and under the law an employee of the railroad and therefore the pleadings were amended to allege a cause of action against the railroad under the Act. Now, the theory of the pleading was that the W. H. Nichols Company was not an independent contractor but was under the law and in fact an employee or an agent of the railroad and therefore Baker was an employee of the railroad and entitled to the benefits of the Act. Potter Stewart: May I ask you -- excuse me, Mr. Davis, so I can understand a little bit the Texas law? It's true, I expect, is it, the -- the Texas Workmen's Compensation statute permits a widow such as the plaintiff here to sue a -- an alleged third party tortfeasor or -- at common law -- Harvey L. Davis: Certainly. Potter Stewart: -- even after she has collected the compensation under the statute? Harvey L. Davis: Yes, sir. Potter Stewart: Is there any subrogation of anybody to complain? Harvey L. Davis: The right of subrogation is allowed to the insurance company, I believe. Potter Stewart: Up to the amount that they pay? Harvey L. Davis: We don't dispute that whatsoever. Potter Stewart: Up to the amount that they paid or -- Harvey L. Davis: Right. Potter Stewart: And is it also true that the Texas Workmen's Compensation statute by its terms, accepts a workman who is covered by the Federal Employers' Liability Act? Harvey L. Davis: No, it accepts employees of railroads though. Potter Stewart: Employees of railroad. Harvey L. Davis: Right. And the only effective compensation insurance in this case as far as the law is concerned is that it has some evidence that -- that it may be construed as some evidence that Nichols was not an independent contractor. However, there are cases directly in point where it has been held by the Court that the holding of compensation insurance by such a contractor indicates that it was an attempt to evade the provisions of the Federal Employers' Liability Act. And we believe that fits this case here. William J. Brennan, Jr.: Well, what would be the situation if you did have a recovery under the Federal Employers' Liability Act? As I understand workmen's compensation was almost $8000? Harvey L. Davis: Yes sir. William J. Brennan, Jr.: Then what happens to that $8000? Harvey L. Davis: If it's on common law negligence, there's no question that there is a right of subrogation by the insurance company. William J. Brennan, Jr.: So even to an award under the Federal Employers' Liability Act? Harvey L. Davis: There is -- there is no law on that point, Your Honor. We don't contest it -- we've never raised any contest about whether the insurance company may or may not get it back. They pled intervention and we did not answer their plea. However, the respondents did answer and denied that they had the right to get it back. We are unable to see whether it is any of the concern of the respondent, whether the insurance company gets it back or not. It is their liability that we seek. And then the compensation insurance is completely irrelevant to the liability of the respondent in this case. Charles E. Whittaker: (Inaudible) Harvey L. Davis: Right. Charles E. Whittaker: -- then that would be to say that this would be (Inaudible) Federal Employers' Liability Act case, isn't it, because they have to (Inaudible) Harvey L. Davis: No, it wouldn't exclude it. But now in this case -- I'll answer it this way. In this case, the petitioner, the widow did not know that there was a legal case that her employee under the law was an employee of the railway. It was the lawyers who determined that that possibility arose. She collected the compensation insurance believing he was only an employee of the Nichols Company. Charles E. Whittaker: (Inaudible) Harvey L. Davis: No sir. There -- Charles E. Whittaker: (Inaudible) Harvey L. Davis: No, sir. There are no -- there are cases directly in point on that that it is not a stopple. Further, the respondents have not pled that as a defense and have not argued except, I believe, they put it in their brief in this final brief. We discovered during the investigation of the case that the respondent through its Inspector Slaton, exercised actual control and have the right to control almost all of the minute details of the work of Baker and the other employees of Nichols. And also, in considering the written contract between Nichols and the railroad, we discovered that they had an indemnity clause, the effect of which was to completely exempt the railroad from any liabilities for doing this maintenance work. And therefore, we concluded that it was in the teeth of Section 55 of the Act and was void.So our first and our main point is that the petitioners were deprived of their right of a jury trial because of the substantial evidence that was introduced in the trial that the employee, Claude Baker, of the Nichols Company, doing maintenance work on the railroads main land tracks was not an independent contractor. Now, the test to determine whether the Nichols Company was an independent contractor that have been approved by this Honorable Court, are primarily whether the railroad have the control or the right to control the details of the work. That was approved in the Bond case cited on page 19 of our brief. Now, there's substantial evidence in the record to show that the workmen were told to obey Slaton and that they did obey him. Slaton being the respondent's inspector. That Slaton told them when and where to move these hydraulic jacks that only Slaton would mark the points where the hydraulic jack point would be inserted in the roadbed for pumping the grout mixture. That Slaton told them how to mix the grout mixture, when to thicken it, when to thin it and he admonish the inattentiveness of the men if they allowed the grout mixture to escape from the roadbed that he watch to see that they didn't put too much grout mixture in the roadbed so as to hump the tracks and get it out of level and that he took care to see that the operation of the grouting work did not interfere with the trains. Now, we believe that the jury was entitled to find these things as facts to show that the railroad through Slaton exercised actual control and had the right to control the details of the work. But the trail court refused to submit any issues under the Federal Employers' Liability Act to the jury and held as a matter of law that the Nichols Company was not an independent contractor. Charles E. Whittaker: (Inaudible) Harvey L. Davis: Yes sir. Charles E. Whittaker: (Inaudible) Harvey L. Davis: No, sir. One or the other. And in that regard, the Court of Civil Appeals in its opinion on page 217 in the record and as summarized on page 28 of our brief, admitted that the petitioners exercise actual control of the details of the work but then they held that that exercise of actual control was quote immaterial and then they disregard at all the evidence that we had introduced about the right of the railroad to control the details of work and held as a matter of law that the railroad did not have the right of control relying on the written contract alone which said that there was no right of control by the railroad. This proposition of law, we feel, is completely unfounded and wrong on its phase and there is no case in the books that says actual control is not material and would not be a jury issue. They cited the Cimorelli case which is also discussed on 28 -- on page 28 of our brief as authority but the Cimorelli case did not hold that or mean that at all. The Cimorelli case held that if the railroad had the right of control of the details of the work, they then did not even have to exercise acts of control for the contractor to be held not independent. Throughout the opinion of the Court of Civil Appeals, they violated the rule laid down in this -- by this Court to consider only the evidence favorable to the petitioners and the inferences therefrom and determining whether there is jury issue. Instead, they looked at the evidence favorable to respondent and the inferences therefrom and held as a matter of law that the Nichols Company was not an independent contractor. We feel that there is no question that there was a jury issue and on that point, we would ask that this case be remanded for a jury trial of the issues of whether Nichols was an independent contractor. However, I believe also that there are enough factors in this case where this Court can hold as a matter of law that Nichols was not an independent contractor. We be -- believe first that Nichols was not an independent contractor because this maintenance work was a non-delegable duty of the railroad to perform either by their own maintenance man or by others but it's their statutory duty by the federal statute and the state statutes. That plus the fact that the effect of this contract was to permit the railroad to have this work perform -- this non-delegable work perform with complete indemn -- indemnity to it and therefore exempt itself from liabilities under the Federal Employers' Liability Act. There is direct authority for that proposition in the case -- in the Erie case cited on page 41 of our brief. Now, the Texas court opinion on that point attempts to do a way with the argument by labeling the maintenance work as special or extraordinary using the terms of the witnesses for the respondent. However, the only case they cite for that is the Norman case cited on page 23 of our brief. And in the Norman case, every issue, that was -- that is involved in this case was stipulated in favor of the railroad by count. For instance, in the Norman case, they stipulated that the contractor involved in that case was really an independent contractor. They stipulated that the contract was in fact not made to evade or exempt the railroad from the liabilities of the Act and they also stipulated that the 1939 amendment to the Act should not be considered with reference to determining who were employees of the railroad. We submit that the use of the adjectives, special or extraordinary, cannot possibly change the fact that this was maintenance work imposed upon the railroad by statute as a matter of law as a duty not to our deceased but to the public that they had to maintain it and calling it special grouting work or extraordinary work doesn't change it. It was maintenance work. There is no doubt about it. It had to be done either by grouting or by some other means to strengthen and stabilize and keep the railroad tracks straight. Tom C. Clark: What is grouting? Harvey L. Davis: Grouting is the pumping of this cement mixture under pressure into the roadbed. Tom C. Clark: It's not the man that we see the Mexicans (Inaudible) working along the railroad, it's not that? Harvey L. Davis: Well, Mr. Justice Clark, I'm not sure. I'm -- I'm not familiar with -- with all the working aspects but if you see a cement mixture alongside of the track with common laborers inserting these things in the track under the directions of the -- of the railroad maintenance employees, it probably is grouting. Tom C. Clark: All right. Harvey L. Davis: But -- Tom C. Clark: It's done with machines, I take it. Harvey L. Davis: In machine. Now these machines, hydraulic mudjacks are ordinary machines used in highway construction. There's nothing special about them. It doesn't require any skill to operate them. All of which we believe indicates that they could have had this maintenance work done by their own employees at the chores. The only thing in the record that indicates that there is any skill was the pattern for the placing of the points and these were laid out in the engineering department of the railroad and also Inspector Slaton marked these points for the man to insert the hydraulic pressure. Charles E. Whittaker: May I ask (Inaudible) Harvey L. Davis: No I don't believe we have any cases. There are some -- there are some other state courts that have held that they are non-delegable and there is -- there are two federal cases that have held precisely that they're non-delegable. The -- one -- Tom C. Clark: (Voice Overlap) -- Harvey L. Davis: -- of them is the Mark case. Tom C. Clark: (Inaudible) Harvey L. Davis: I -- I don't know. Now, on that point, the respondents in their brief say that the record shows they never have done it and that they always know other railroad driver have done. However, the reference in record that is made is about two pages of testimony dealing with pole driving rather than grouting and all of their statements about the history of grouting really referred to pole driving. There has been an error on the exact testimony there. William J. Brennan, Jr.: Are you using non-delegable in the sense that it's unlawful for them the contract out the billing (Voice Overlap)? Harvey L. Davis: No. No, in the sense that it is their statutory duty to see that it is performed. William J. Brennan, Jr.: So that if it's performed by an independent contractor and some third party is injured, it's no defense that it was done by an independent contract? Harvey L. Davis: That plus the fact that they cannot exempt themselves from liabilities for having it done by immunity-indemnity such as they've tried to do here. William J. Brennan, Jr.: Well, but that -- that requires a finding -- is that under Section 55? That it was done with the purpose and intent -- Harvey L. Davis: Yes sir. William J. Brennan, Jr.: -- of avoiding. Harvey L. Davis: Yes sir. William J. Brennan, Jr.: Well, are you suggesting that on this record as a matter of law, we should conclude that this -- that this contracting was done with the purpose and intent of avoiding obligations of the (Voice Overlap)? Harvey L. Davis: Yes, I am, Your Honor. Under the authority of the Hubert case which was decided by this Court -- William J. Brennan, Jr.: That was very different. Harvey L. Davis: Well, the -- William J. Brennan, Jr.: What -- what is there in this record to support -- perhaps you're right that it may support a jury finding that it was done on that, right? But what is there to support a finding that that was the reason this contract was -- was entered into to avoid obligation on the federal court. Harvey L. Davis: I don't -- I don't claim or say that they may have had the actually intent to exempt -- William J. Brennan, Jr.: Well, don't they have to under the -- Harvey L. Davis: I don't think so. William J. Brennan, Jr.: -- under the wording of -- Harvey L. Davis: No, I believe that if it's a necessary operation and practical effect to that. I think that what he Hubert case says, we quote the language in the Hubert case which says that -- Hugo L. Black: Which part of Section 51 are you relying to? Harvey L. Davis: The part that provide for the employees of the railroad -- Hugo L. Black: And the duty on the part of the railroad to take care of his car and engines, appliances, machinery, truck, roadbed, works and so forth. Harvey L. Davis: Yes, sir. Hugo L. Black: That was in the evidence, is it not? Harvey L. Davis: No, the only evidence was the testimony of respondent and witnesses that they didn't -- it was -- they didn't make the contract to -- to get around the Act. We don't have any evidence as to what their actual intent was but the combination of the non-delegable duty being performed over contract where the railroad can have no liability whatsoever for their maintenance work that they have to do. The necessary and practical effect of the contract is to exempt them from any liabilities under the Act. Speaker: (Inaudible) Harvey L. Davis: Well, no. I believe if this Court says and hold that this is non-delegable work and that the effect of the -- of the contract is to completely indemnify the railroad and the performance of that work. And Section 51 also says that they are to perform it that it could be held so. However, I would like to approach -- give another approach as to the possibility of holding the Nichols Company, an independent contractor as a matter of law and that is on the analogy of the Sinkler case decided in this Court last year. Baker was doing the railroad work here as part of the unitary enterprise and he was exposed to all of its inherent danger just as other maintenance workers were. And therefore we believe he should be classified as an employee of the railroad under the Act. Now, in the Sinkler case, you consider the accommodating scope of the word agent. Here, we think you should consider the accommodating scope of the word employee. In the Sinkler, the railroad was held liable for the negligence of a truly independent contractor because that independent contractor was engaged with them in a common enterprise. Here, Nichols and Baker and the other employees were engaged in the railroad in a common enterprise, maintenance work. And in this case, it is the railroad itself who is negligent. In the Sinkler case, it was the independent contractor who was negligent. And further in this case, the railroad maintained the control and the right to control these workers. That was not done the in the Sinkler case. Charles E. Whittaker: (Inaudible) Harvey L. Davis: Right, Your Honor. No question that he -- but he was an employee. But the question was, was this independent contractor an agent of the railroad? Charles E. Whittaker: (Inaudible) Harvey L. Davis: Right. I think that theory is sound and I think it's just as sound to say that because he was doing this maintenance work, shoulder to shoulder with the rest of the employees of the railroad that for the purposes of the Act, he should be considered an employee also. We believe that the movement of the trains and maintenance work are equally as much the railroad work. Therefore, in conclusion, I would like to point out these factors whereby this Court may hold that Baker was an employee of the railroad as a matter of law. He was doing the railroad work. He was exposed to all of the inherent risk of a railroad worker. He was doing a part of the railroad unitary enterprise. The work was a franchise obligation. It was non-delegable. They had to have it done. The necessary operation and effect of the contract between Nichols and the company was to exempt the railroad of some of its obligations under that and the details of the Act were actually controlled by the railroad -- details of the work, pardon me. William J. Brennan, Jr.: Apart from your (Inaudible) Harvey L. Davis: Well, that's our -- that's our main and first argument. William J. Brennan, Jr.: (Inaudible) Harvey L. Davis: Yes, that's our first argument. William J. Brennan, Jr.: (Inaudible) Harvey L. Davis: Right. That's right. However, we are also urging that he is an employee as a matter of law. I will reserve the rest of my time for rebuttal. Earl Warren: You may. Hugo L. Black: Suppose he is not an employee, what would you say about any other words (Inaudible) Harvey L. Davis: No the Act -- the Act says he should be an employee. Hugo L. Black: As an officer, agent or employee? Harvey L. Davis: Well, agent would do but we believe being a common labor that employee best fits his category. The Nichols Company might be contained -- Hugo L. Black: You're doing something for them that the statute requires them to do -- Harvey L. Davis: Right. Hugo L. Black: -- arguing them? Harvey L. Davis: Yes. Thank you. Earl Warren: Mr. Case. D. L. Case: Mr. Chief Justice and Honorable members of the Court. I would like to call the facts to the Court's attention before going into the question of law. Thus, the evidence of this case shows that the respondent entered into a contract in writing with the Nichols Company as a result of advertising four bids. Two bids were received and the bid of Nichols was accepted by respondent. The deceased was an employee of the respondent. The testimony is uncontroverted. That respondent hired its own employees including deceased, told them when to go to work or come to work, when to take off for lunch, when to quit for the day, paid their salaries or wages, withheld for social security and then all the other things that are usual and customary in an employer-employee relationship. The history of this case is that it has been tried for the jury twice. As the Court knows in Texas, our practice is to submit cases to the jury on special issues. In both cases, the jury convicted respondent of certain acts of negligence approximately causing the death and in both cases convicted the deceased of certain acts of negligence approximately causing his death. Petitioners seek the benefit, I assume, Federal Employers' Liability Act in order to get the benefit of the comparative negligence. Now, as I view the petitioner's argument, their first approach is that the work in question was non-delegable. Earl Warren: Mr. Case -- Mr. Case, before you get into the law -- D. L. Case: Yes, sir. Earl Warren: -- would you mind commenting on -- on the argument of counsel to the effect that this contractor had the right to or not the contractor but an assistant engineer of the railroad company had the right even to discharge the contractor that he not only had the right to but he did direct to both the contractor and his work in the manner in which their -- their work was done. D. L. Case: Yes, Your Honor. Earl Warren: And all of those other things that are -- are in there. You didn't mention those in your statement of facts and I -- I think it's rather important to be considered. D. L. Case: Yes. I'll be glad to add immediately, Your Honor. The contracts did not spell out in detail itself the exact work to be done. That is it didn't say between mile post one and mile post ten you can do this grouting. It gave the general limits. The plans and specifications that were set out with the invitations to bid did give into a considerable more detail and work to be done. Now, the contract on its face says that the contract of Nichols shall occupy the status of an independent contractor and not to be a subject to the detail control of the respondent. The testimony is undisputed that the respondent specified in the contract and in the invitations to bid, the general limits within which the work would be done. The work was not done continuously and consecutively throughout those limits. Respondent's engineering department determined the areas of unstable tracks and advised the contractor of the areas in which the work was to be done. Now, before I forget it on the question of the right to discharge the contractor as well, simply, there's no provision in the contract to that effect and under the law of our State, he has reasonable time within which to do the work and a contractor is not terminable at will. I think it is a misstatement of the law by the petitioner as to the contract as being subject to being discharged at will. Now, as to the manner in which the grouting is done, I think that the petitioner misconceives the actual manner in which the work is done and that that leads to some confusion as to the exercise of control. It was the obligation under the contract for respondent to select the areas to be grouted and to advise the contractor of those areas. Now, apparently, petitioner conceives of grouting as being in the nature of an Easter egg hunt to seek out a particular water pocket here and one there and inject, excuse me, and inject the mixture in only those parts. The record does not bear that out. The limits of unstable track are specified by the engineering department and are designated to the contractor and within those limits, the embedment are right away as fill solidly with the material. It's not a matter of finding a little spot here and one across the track over there but within limits of so many feet or yards to build a track that's set forth of the material. Now, the testimony that the -- Earl Warren: That doesn't mean the whole roadbed in that vicinity is concrete is it? D. L. Case: No, that means that you pump as much of the material into the roadbed and that whole section as a roadbed will absorb. Earl Warren: Yes, for stabilizing the -- the rails -- ties. D. L. Case: Yes, that's correct, Your Honor. Earl Warren: Yes. D. L. Case: Now, as I conceive or understand the testimony with reference to the engineering department or to inspect or marking the tracks or ties that was a designation of the area in which the work was to be done and understanding the true nature of the grouting work, I believe the record supports the testimony of the respondent's witnesses that is even the testimony of the petitioner. And there is no conflict. That the inspector merely designated the area in which the points were to be inserted in the mixture pumps as distinguished from saying bring it over here, here is the spot and here's the spot over here. Now, as far as, I believe the points of testimony also that respondent's inspector had told them to move or at what distance rather to set the machines with reference to the tracks right away. Under our statutes in Texas, there is a minimum distance of clearance required for any obstructions adjacent to a track and certainly, any instructions that the inspector gave in that connection were with regard to safety in the normal operations of respondent's operations. Now, as far as the law is concerned, this Court and the other federal courts have recognized that particularly in Bond against Railroad that the giving of necessary instructions or information and the inspection of the progress of the work to see that the work is done in accordance with the contract, does not constitute a taking over of control or test of control so as to transform the otherwise independent contractor into an employee. We submit that the evidence relied upon by petitioners is nothing more than that character of information which the contract called upon respondent to give the petitioner and that character of supervision or surveillance as it had arrived to maintain to see that it got what it bargained for. So we say that there was no jury issue on the correct -- the actual exercise of the right of control. But in addition to that, we say that it is not the exercise of the right of control which is important or controlling. It is the right of control. The contract itself spells out the rights and duties of the parties. It is the right of control and not the exercise of control as the Court said in Bond against Railroad and that we submit to Your Honors that that is sound law for this reason. The relationships of the parties are entered into solemnly by written contracts. They tried to fix their respective positions. They say who shall have the right of control and who shall not. If because some -- some particular employee of the railroad on some occasion make some suggestion or give some instruction whether authorized by his employer or not, to an employee of the contractor, if that by it said changes the whole relationship then there can be no -- William J. Brennan, Jr.: Well, wouldn't that depend or would that depend on the extent to which it was done. For example, notwithstanding the language of this -- of the agreement between the railroad and the contractor if in fact all the directions of the method and manner of doing the work in terms of an ordinary foreman employed by Nichols would provide that direction, were provided by some railroad employee. I don't suppose it at least be a question of such control that a jury might find the petitioner here was an employee of the railroad. I'm not suggesting that's this case -- D. L. Case: Yes. William J. Brennan, Jr.: -- but it could be, could it not? D. L. Case: As I have conceived it, it may be evidence that the contract is not what it says on its face than it is and it may be evidence that the contracts or written contract was entered into for the purpose of evading the -- William J. Brennan, Jr.: Well, as a part from that even if it were not, even for another door. They entered into the contract and then whatever may be the circumstance, the actual direction and control of the manner of doing the work is assumed by a railroad employee rather than by a Nichols foreman or supervisor. D. L. Case: It may mark the notification of the contract if -- William J. Brennan, Jr.: Well, wouldn't that -- wouldn't that have a bearing on the -- on the fact question whether he was or was not an employee of the railroad? D. L. Case: I don't believe that it would, Your Honor unless it is a case of an oral agreement so that the acts done show what the agreement was or unless it may be evidence that the written contract was merely a sham or a substance of that nature. I think that the parties -- William J. Brennan, Jr.: I don't quite understand why it has to be a sham. D. L. Case: Well -- William J. Brennan, Jr.: However, your formula -- formulate the way you say it. Now wouldn't there be a fact question than in any event under the standard for determining employment relationship which this Court said down in Robinson? D. L. Case: Well, I believe the Bond case as it is the right of control and not the Act. William J. Brennan, Jr.: Which case? D. L. Case: Bond against Railroad, cited in -- William J. Brennan, Jr.: The other case in this Court? D. L. Case: Yes. Yes, Your Honor and I'm relying on that case and other similar to it. And I take it that otherwise, if by an isolated answer even (Voice Overlap) -- William J. Brennan, Jr.: -- that's what you say this record shows that in any event, if any railroad employee had anything to do with directing how this grouting was to be done, that was true only in isolated instances? D. L. Case: I say not in isolated case, Your Honor. I don't think the record shows how many times whether it was once or every day or several times a day when I say that the railroad employee did was to give information as to where the work was to be done and to see that the railroad got the job that it contracted for and that it amounts to nothing more than that. Potter Stewart: Inspection, really. D. L. Case: Yes, that's correct, Your Honor. Earl Warren: Mr. Case, may I -- may just ask a question to see how far your argument goes? Suppose we change the facts of this case just a little. As I -- as I understand that these men were working at this grouting on the railroad tracks and a train passed and through the negligence of somebody injured the deceit or killed. Now, suppose that instead of him being injured, the train was wrecked and the train crew itself was -- was injured and it could be traced directly to this contractor, the negligence that caused it. Would the railroad be liable to those -- under the FELA? D. L. Case: I think to its own employees, it has a non-delegable duty to maintain a safe place in which they are to work. Earl Warren: All right. D. L. Case: And that your answer is that -- the answer to your question is that -- I'm not familiar with a particular case but it maybe that the railroad would be liable. Earl Warren: Yes. Well -- D. L. Case: I suppose under the Sinkler case that the railroad would be liable. Earl Warren: Well then if it is -- if it is a non-delegable responsibility for that purpose, why wouldn't it be for this other -- that -- I just want to get the distinction between the two. D. L. Case: Well, I can answer Your Honor only by -- in this manner that it has never been held insofar as I know that a railroad owes a non-delegable duty to its employees to perform work of this character only by its employees. In Dougall against Spokane Railroad, certiorari denied. It was specifically held that the railroad does not have a non-delegable duty to perform work only by -- if that work was the cleaning of the embankment and work -- generally out doing work held that it -- there was not a non-delegable duty to perform that work only with its own employee so that there could not be an independent contractor relationship in any event. Earl Warren: The maintenance of track seems to be such a fundamental thing that I would imagine if anything was non-delegable, it would be keeping the roadbed in such condition position that it could be traveled with safety. D. L. Case: Well, in the Dougall case, it was as far as I can tell from reading the records substantially, just ordinary maintenance. Now, I would like to reply to Mr. Davis in that connection about whether this is ordinary or extraordinary and what significance it's has. Hugo L. Black: I wonder if it would bother you. I -- D. L. Case: Not at all, Your Honor. Hugo L. Black: I don't want to use your time but would you mind telling me precisely how you find from this record this man was injured and what caused it? D. L. Case: How I feel? Hugo L. Black: This man here in this case. D. L. Case: I feel that it's his own failure to keep a proper lookout for his own safety was the cause of it. Hugo L. Black: What -- what about his injury? D. L. Case: He had his back turned towards the oncoming train. It is true there were two trains passing at about the same time in the vicinity of where the accident occurred. This was a double track. And he apparently had his back turned to the train which struck him. He was at a safe distance from the track if he had remained there rather than looking to his rear before he turned and walked on to the track, he obviously walked on to the track and was killed. Hugo L. Black: Now, what do you understand is the evidence -- could be found from the evidence was the plaintiff's version of what caused him to be hurt? D. L. Case: The plaintiff, as I understand the case, relied on numerous acts and his pleadings and then they requested the issues which he request to submit. He relied on speed, failure to give warning by whistle or other signal. And I'm not certain of this but he may have claimed that the dissident's attention was diverted by the train coming from the opposite direction on the opposite track but in essence, his claim is that the railroad engine crew failed to keep a proper lookout, fail to warn him and that's about it and perhaps speed. Hugo L. Black: Nothing in connection with the way the track was at the time of the accident. D. L. Case: That's correct. That was assessed as though it were an ordinary crossing case as far as the acts of negligence are that they were allowed. William J. Brennan, Jr.: Well -- I though -- did the jury find here those negligence of the railroad and negligence of the deceased. And you don't question those findings here, do you? D. L. Case: No, I don't question at all. William J. Brennan, Jr.: No. The only issue before us is whether he was an employee. D. L. Case: That's correct. William J. Brennan, Jr.: And if he was then I gather he'd be what, entitled to restatement of this verdict, is that it? D. L. Case: If (Voice Overlap) if he were an employee, you mean as a matter of law? William J. Brennan, Jr.: Well if he was -- as far as there's a basis upon which a legally finding may be sustained of employment and then there's no issue of negligence or his negligence or the railroad's negligence to be litigated again, is it? D. L. Case: I think that there has been no submission of the issue submitting the theory of comparative negligence. William J. Brennan, Jr.: I see. D. L. Case: And in any event that the case, if reversed, it would have to be reversed and remand it for this trial. William J. Brennan, Jr.: Oh, I -- on the issues of negligence also? D. L. Case: I think so, in order for the jury to be able to compare the negligence otherwise, you'll see it hardly how the jury could file a percentage of negligence. William J. Brennan, Jr.: Yes. D. L. Case: On the delegability of this work, I would like to return to that again for a moment and use the analogy of the railroad contracting, let's say American car and a founder company for box cars. I think it would hardly be asserted that the railroad couldn't contract with the manufacturer of box cars to build its cars to its best cases and certainly, it owes just as much of an obligation to the public to maintain its equipment as it does on its right of way. Therefore, on the basis of Dougall and the others cited in our brief and on the basis of factors, I see no reason why the work can't be delegated. And the very act itself requires the plaintiff to first establish that her decedent was an employee, the word employee being used in its usual and ordinary sense. That is also stated in Dougall. I believe it's stated in Bond and in Robinson and others cited in our brief. On this question, so we say that there is no question of non-delegable duty and as far as any evidence of it, there being any purpose or intent or scheme on the part of respondent to evade the provisions of Section 5 of the Act, there simply is no evidence. I believe counsel for petitioners stated here that he agreed that there was no evidence of intent but says that it comes from the necessary effects of the contract. I think to say that is to beg the question. First, he must show that he had an employment status with the railroad otherwise, if the mere fact that you entered into a contract with an independent contractor, and if it's sustained as an independent contract of necessity, he doesn't come under the Act. In that case, every independent contract would be a scheme or device to evade the Act. There simply is no evidence of intent and in the case relied upon by petitioners, the Court specifically stated that the alleged employee had the burden of proving employment or proving a scheme or device to evade the provisions of the Act. The petitioner simply has not met that burden of proof. And as far as the -- I was going to say something about the extraordinary maintenance character of the work. I would think the way that got in to this lawsuit is that the petitioner pled in this petition that was extraordinary maintenance. Apparently, rely -- rely -- that it was ordinary maintenance, apparently relying on the dicta in miles whether it's an old issue of facts, I don't know. If it was and if there were an evidence whatsoever, raising an issue of the intent on the part of respondent to evade the provisions of the Act then under our procedural rules, the petitioner has waived any right to a jury determination because the rule requires if an issue is not submitted that the person requesting it or desiring a benefit of its finding request such issue and failing to do so waives any determination of the issue. William J. Brennan, Jr.: That's the state procedure. D. L. Case: State procedure and I submit -- William J. Brennan, Jr.: (Inaudible) D. L. Case: I beg your pardon. William J. Brennan, Jr.: (Inaudible) D. L. Case: I think so, Your Honor but I think there is nothing you need about it. It's all gathered in somewhat Rule 51 if the federal rules. So I think there's nothing. No advice on it as opposed to the federal procedure. Hugo L. Black: Do you think there's any more responsibility on the railroad to operate its trains under the Act than there is to maintain its right of way and tracks in good condition? D. L. Case: Well, certainly -- Hugo L. Black: Under the Act. D. L. Case: Certainly, under the Federal Employers' Liability Act is one inquiring that. Assume that it does have the non-delegable duty certainly to the public to operate its trains. And it may be -- Hugo L. Black: Well, what about the maintenance of its train? What distinction do you draw the Act provide for the negligence of the employees in operating and so forth and provides for the liability of the company of negligence, keeping its engines, appliances, tracks and so forth. How can you draw a distinction and say that independent contractors and employees -- with the employees of the railroad operating the train but would not be employees of the railroad or agents of the railroad for maintaining the tracks? D. L. Case: The only answer that I can give in the fact is historical work -- historical nature of the work. Railroads historically have operated its own trains. In this case, there is no evidence that this railroad or any other railroad has historically done grouting work. It may be that there are certain types of maintenance work or unloading and loading of cars that because of the historical relationship of railroad and employee could not be delegated. Hugo L. Black: The Act -- the Act itself controls, I suppose, it wouldn't be governed by history or unless it is governed by history, what distinction can you draw between saying that the employee of the independent contractor operating the train, an employee of the railroad, an employee of an independent contractor keeping up the tracks as the law requires, is it not? I'm not talking about this Section 55 -- D. L. Case: Yes. Well, I think it may have a necessary relationship to Section 55, Your Honor. The cases that have said that have found that it was railroad work and that the people were employees, have a history for example and some of the cases where the work was formerly done by the railroad and valuable facilities were donated by the railroad to the contractor to do the work which was formerly done by the railroad and the contractor was made up largely of the railroad's former employees. And it's called logic, looking only at one section and not the other, I suppose that there's no basis for a distinction unless it is historical. That's the only answer I can give. Is my time over, Your Honor? Earl Warren: When the red light is on. The white is five minutes. D. L. Case: Now, on the question of applying Sinkler to this case, there is no historical background in the act of Congress or in any of the decisions of this Court. William J. Brennan, Jr.: (Inaudible) D. L. Case: That's correct. William J. Brennan, Jr.: (Inaudible) D. L. Case: It was simplified under the Sinkler case that the other railroad was the agent of the defendant. William J. Brennan, Jr.: Under the language of the agent (Inaudible) D. L. Case: Yes, that's correct and all of the cases historically in this Court and other federal courts. It definitely established that the word employee is used in its natural, normal and ordinary sense. And the session such as Robinson holding the foreman porters were not railroad employees, was in existence at the time of the 1939 Amendment and if Congress had intended to extend the scope and coverage of the Act to persons who were not -- would not normally be considered as employees, I assume that it could have done so and would have. There's certainly no basis for extending it as I can see it in the legislative history. William J. Brennan, Jr.: What about Linstead? D. L. Case: I beg your pardon. William J. Brennan, Jr.: What about Linstead? D. L. Case: Linstead. As I recall, Linstead was the fellow that was taking a -- William J. Brennan, Jr.: (Inaudible) employees working on (Inaudible) D. L. Case: Oh yes, in that case, it was simply a matter of they were doing the acts -- they had loan an engine and caboose and crew to the CNO as I understand the case and they operating under the rules of the CNO and under the supervision of their superintendent. William J. Brennan, Jr.: (Inaudible) D. L. Case: Lone servant, Your Honor, is what that was. William J. Brennan, Jr.: Yes, but they were employees before. D. L. Case: Yes, temporary lone to the other. William J. Brennan, Jr.: (Inaudible) D. L. Case: Yes, that's right. As a lone service, as I understand it. My time is up, I'll take it, Your Honor. Thank you. I would like to call the Court's attention if I may impose on -- Earl Warren: Yes you may. D. L. Case: -- your time to a case which -- in which I understand an application is now pending in this Court which has not been cited by petitioner. It's a case of Byrne against Pennsylvania Railroad and I don't have the official citation, I have only a copy, photostatic copy of the opinion in the Circuit Court. Earl Warren: Well, what -- D. L. Case: A Court of Appeals -- Earl Warren: -- what was the petitioner's name? D. L. Case: B-Y-R-N-E -- Earl Warren: Byrne. D. L. Case: -- against Pennsylvania that held that a certain person was an employee of the railroad and it will distinguish it by saying that that is a lone servant case and not a case such as this. I do not have the official citation. Earl Warren: Is it a federal case or -- D. L. Case: It's a federal case that was -- Earl Warren: (Voice Overlap) -- D. L. Case: -- the opinion was December the 16th, 1958 for the Third Circuit. Earl Warren: Third Circuit. D. L. Case: Yes. Thank you, Your Honors. Harvey L. Davis: May it please the Court. I believe probably the Byrne case opinion being officially reported may be waiting on the Court's decision in this case. William J. Brennan, Jr.: (Inaudible) Harvey L. Davis: The Bond case on the -- on our -- William J. Brennan, Jr.: (Inaudible) Harvey L. Davis: Yes. William J. Brennan, Jr.: (Inaudible) Harvey L. Davis: Yes, the Bond case, the issue of a jury whether there was evidence for a jury trial was not at all involved, that's our main point here that there was evidence to go to the jury. That was involved in the -- in the Bond case. Now, in the Bond case, the Supreme Court held that there was no evidence of control or right to control and that the operations of Bond could be performed without being involved with the railroad's operation. In this case, it is completely different. Part of my argument about the non-delegable duty is the fact that the operation here, the maintenance of track is so interwoven with the railroad's operation that the -- that the railroad as of necessity has to have the right to control the detail of the work of these -- of these men. It's so intimate with their own statutory obligation. William J. Brennan, Jr.: I understand that a part from non-delegable is -- assuming that's -- that's irrelevant. Your insistence is still (Inaudible) exercise of this jury question, isn't that it? Harvey L. Davis: Right. William J. Brennan, Jr.: Whether or not he's an employee (Inaudible) Harvey L. Davis: Right. Now, counsel for respondent has picked up the evidence favorable to them and said that there was no right of control. However, it doesn't seem to be any question that there is sufficient substantive evidence here or an inference is there from whereby the issues to the jury -- issues should have gone to the jury to let them decide whether there was any control or right to control. And also, as far as the exercise of actual control, we don't say that that is the prime and most important element but we do say that there is evidence in this record of actual control whereby the jury could have found as a fact that there was actual control and that is part of the -- of the element of -- of independent contract. Hugo L. Black: Where did the work have to be done? Harvey L. Davis: Pardon? Hugo L. Black: Where did the work have to be -- Harvey L. Davis: The work had to be done on the railroad property, on their main line roadbed. It was maintenance work that had to be done there and it had to be done by the railroad by the statue. And I don't believe there can be any distinction historically or otherwise between the operation of the railroad and this maintenance work. And there are four or five cases directly in point where the courts have held. In Cimorelli, Barlion, Roth, (Inaudible) and Mark cases all have held that these so-called independent contractor employees were employees of the -- of the railroad. Two of those cases were maintenance cases. And the Dougall case cited by counsel relied again on that Norman case where all the issues in favor of the railroad were stipulated by the parties. We also requested an issue on comparative negligence in this case in the trial but the Court refused to submit. The Court in fact kept every aspect of the federal act from the jury and -- my time is up. Earl Warren: You may finish your statement. That one -- Harvey L. Davis: Well -- Earl Warren: -- that one statement. Harvey L. Davis: I -- I was just going to start on something new. So my time is up. Thank you. Earl Warren: All right.

Earl Warren: -- 87 of the Amalgamated Association of State Electric Railway and Motor Coach Employees of America petitioner versus Missouri. Mr. Dunau you may continue your argument. Bernard Dunau: Thank you sir. May it please the Court? The King-Thompson Act bluntly identifies its point of conflict with the National Act. It states in so many words that it shall be unlawful after a takeover of a utility to strike as a means of enforcing demands against the utility or against the State. It prohibits a strike to enforce bargaining demands. What this Court said 12 years ago in the Amalgamated Association case applies with precise equality to this case. It would be sufficient to state that the Wisconsin Act in forbidding peaceful strikes for higher wages in industries covered by the Federal Act has forbidden the exercise of rights protected by Section 7 of the Federal act. Missouri says, well, no we are treating with an emergency and that makes a difference, but the same emergency with which Missouri treats is the situation which this Court said, Wisconsin could not treat with. In the Wisconsin case we had a transit strike as we had here. We had an interruption of surface transportation in Milwaukee, Wisconsin as we had an interruption of surface transportation in Kansas City, Missouri. Speaker: [Inaudible] Bernard Dunau: I think Wisconsin blankets this case, yes sir. It could hardly make a legal difference; there can hardly be a legal difference between a strike which interrupts surface transportation in Milwaukee, and a strike which interrupts surface transportation in Kansas City. Now -- Speaker: [Inaudible] Bernard Dunau: So long as the State does not choose to become the owner and exclusive operator of that utility, I do not see what the State can do by the way of prohibiting this strike or curtailing it in any way which would not conflict with the Federal Act. Speaker: [Inaudible] Bernard Dunau: My -- the implications of my first part of my statement is if precisely if Missouri wants to own and operate the transit system in Kansas City or if the city wants to own and operate it, just as New York City owns and operates the subway systems then that the situation is outside of the scope of the Federal Act and the State can then do as it chooses within constitutional limits with respect to a strike in that system. Short of true governmental ownership and operation I do not see a way of regulating or prohibiting a strike of public utilities which would not conflict with the Federal Act. Speaker: [Inaudible] Bernard Dunau: No, if the end result was a genuine permanent exclusive ownership I do not think that it would make a difference that the occasion for the State's decision was a labor dispute. But I emphasize that it has to be a genuine permanent taking over not an ad-hoc interim seizure for the purpose of getting over a labor dispute and then a return of the enterprise to private ownership or any such stopgap measure that I think is simply a crude camouflage which tries to conceal the conflict of the Federal act we cannot on a -- Potter Stewart: Well do you mean a genuine take over in the sense and the fact that a condemnation for which conversation would have to be paid. Bernard Dunau: That's correct sir. I don't mean, for example that a State even if for the period of seizure it would operate it, but then plans to turn the utility back to the private owner at the end of the labor dispute that that is the kind of takeover which would be permitted under the Federal act. I mean that the State owns, operates, and will continue so far as one can tell permanently to own and operate the facility. Speaker: [Inaudible] Bernard Dunau: Yes sir. Now, in the Amalgamated Association case there were two cases decided. The second of the two cases was one in which Wisconsin sought to prohibit a strike interrupting gas service. Wisconsin was told it had no power to prohibit a strike interrupting gas service. Now, if we are to indulge in comparisons of so called emergencies, I would suppose that a strike which interrupts gas service would be more critical to a community than a transit strike. Yet, Wisconsin was told it could not prohibit a gas strike. I cannot see therefore how Missouri can prohibit a transit strike. Now the Missouri's argument seems to me to be based upon reading one part of this Court's decision and refusing to read another part of this Court's decision in Amalgamated Association. When Wisconsin was arguing for the right to regulate public utility strikes it said these are local emergencies which should remain within the police power of the state. To that argument the Court said two things. One, your statute is not emergency legislation and two, it would make no difference even if it were. The state concentrates on the first alternative and refuses to look at what this Court said by way of the alternative ground for decision. Specifically what this Court said alternatively was in any event, congressional imposition of certain restrictions on petitioner's right to strike far from supporting the Wisconsin Act shows that Congress has closed the State regulation, the field of peaceful strikes in industries affecting commerce and where as here the state seeks to deny entirely a federally guaranteed right which Congress itself restricted only to a limited extent in case of national emergencies, however serious, it is manifest that the state legislation is in conflict with federal law. So it seems to us that this Court said, albeit alternatively that you cannot enter this field by labeling your situation an emergency and it is old law that where you have alternative grounds for decision neither is obiter, both are authoritative adjudications. And, I think the untenability of trying to predicate state power on emergency is emphasized by the undisputed fact shown in this case that the principal component of this so called emergency was that a strike would curtail retail sales in downtown Kansas City. Once you start on this emergency trail there is no place you stop. The state says well we are different from the Wisconsin Statute because we do not provide for compulsory arbitration, that is a difference. It is a difference which it seems to us and makes the Wisconsin statute worse, not better from a conflict point of view, because the premise of the National Act is that in order for a union and an employer to bargain as equals the union must have a right to strike. If it does not have a right to strike bargaining is just talk, there is no means by which it can move the employer to change his position. Wisconsin took away the right to strike, but at least it offered a substitute in place of a compulsory arbitration. Missouri takes away the right to strike and offers nothing in it's place. It seems to us that it is a worst conflict. It does not ameliorate the situation to take away what the Federal Act has granted and to substitute nothing in its place. Arthur J. Goldberg: [Inaudible] Bernard Dunau: In this specific case here it was 14 months that the strike was prohibited. In other seizure cases, seizure has lasted from about eight days to a maximum of eight months. Arthur J. Goldberg: [Inaudible] Bernard Dunau: They remain in status quo by virtue of the executive order. Potter Stewart: But discussions, negotiations can go on. Bernard Dunau: Collective bargaining can go on but without the right to strike which for us makes collective bargaining a mockery. You cannot bargain collectively, you cannot do anything -- Potter Stewart: [Inaudible] discussions. Bernard Dunau: Yes, sir. But yes, discussions can go on and have in fact gone on in this case. Now the state says, well it makes a difference that we seized, that we are only prohibiting the strike during the period of seizure and this differentiates it from the federal -- from the Missouri -- from the Wisconsin situation. Well just like compulsory arbitration Congress canvassed seizure as a method of regulating labor disputes and just like compulsory arbitration, it rejected seizure as a way of solving labor disputes. Now I cannot put that more succinctly than it was put by this Court in Mr. Justice Black's opinion in the Steel Seizure case, when this Court held that the President could not seize the steel mills to avert a national emergency and predicated that judgment primarily on the fact that in the Taft-Hartley Act, Congress had withheld the power to seize in order to provide a means of getting over a labor dispute. Now specifically what was said in that opinion is this, “The use of a seizure technique to solve labor disputes in order to prevent work stoppages was not only unauthorized by any congressional enactment. Prior to this controversy, Congress had refused to adopt that method of settling labor disputes. When the Taft-Hartley Act was under consideration in 1947, Congress rejected an amendment which would have authorized such governmental seizures in cases of emergency. Apparently it was thought that the technique of seizure like that of compulsory arbitration would interfere with the process of collective bargaining. Consequently the plan Congress adopted in that Act did not provide for seizure under any circumstances. The power to seize which Congress withheld from the President to avert a national emergency, it did not grant to a State Governor to avert a local emergency. Seizure, compulsory arbitration, any other shortcut to industrial peace was blocked by Congress. Congress said we put our faith in collective bargaining backed by the right to strike.” This Court, 12 years ago said, “the creation of a special classification for public utilities is for Congress, not for this Court.” It in effect invited the people who thought that there should be state regulation or prohibition of public utility strikes to go to Congress and people have been going to Congress ever since. Bills have been introduced in 1951, 1954, 1958, 1959 and then the present session of Congress 1963, to authorize the states to regulate or prohibit public utility strikes. In 1954, in 1958 and 1959 those bills came on for a vote on the Senate floor. In each of those years those bills were roundly defeated. Congress has refused to authorize state intercession in this field, notwithstanding this Court's indication to go to Congress. It seems to us that if it's a good idea to have state regulation of public utility strikes, the place to make the argument and to sell that idea is across the mall, not here. I don't think there is any serious question of mootness in this case. This utility has been seized three times. Each time that it has threatened to strike it has been seized. This underlying labor dispute is still unresolved. Should this union go out on strike? Every factory which impels seizure the three previous times would still operate to impel seizure a fourth time. It seems to us that what we have here is a recurring threat of prohibition of the strike through seizure anytime this union will go out on strike. When you have this kind of a recurring threat, I do not see how you can have a mootness, a stilling, a non-live controversy. Furthermore, because of the very fact that these orders are temporary, temporary in the sense that a labor dispute does not go on forever and therefore seizure does not go on forever, and by the nature of a kind of dispute you have, you can never get to this Court in time to test the validity of the seizure if it's mere lifting will be sufficient to moot the controversy. In this case we thought we would finally make it, because the men were saying they were not going to settle till they had a determination of their right to strike. We held out, that did us not a one wit of good, the Governor then vacated seizure, if this controversy can be mooted by vacation of seizure it means one can never get to this Court to test the validity of the King-Thompson Act so long as you are willing to comply with the injunction while it is in force. You have to risk violating the injunction, getting thrown in jail for criminal contempt, and that is the only road by which you will get to this Court. Now, it seems to us that with a history of recurrent seizures, with the short-term orders which are necessarily involved with a combination of recurrence and a short-term order is the classic situation for saying that a controversy is not mooted. I think the other cases in which this Court has held that the controversy was mooted by virtue of the lifting of the seizure. In the two other cases, there was an actual settlement of a labor dispute. Here we do not have a settlement of the labor dispute. Here we have a real risk that if the union were to go out on strike tomorrow in this labor dispute, you would have seizure tomorrow unless the Governor chose not to because of the existence of this litigation. Now the other thing, it seems to me with respect to the other two cases, as I think it was possible to say on the records in those cases that we could awake a recurrence, we did not have to anticipate seizure. Now, we did not have to anticipate that there will be a recurrence. I think that basis for decision is no longer entertainable. I think this record shows that unless this case remains alive notwithstanding the lifting of seizure there is no way you can reach this Court to test the validity of the King-Thomson Act, and I think this Court's decisions both in the recurrent, in the situations of threatened recurrence and in the short-term order doctrine have posed the possibility to a wrongdoer being able to continue doing what he wants to do and at the point where you can finally decide whether what he is doing is valid or invalid, he pulls the case out under you by stopping what is the challenge act. Earl Warren: Mr. Nessenfeld. Joseph Nessenfeld: Mr. Chief Justice, may it please the Court. Addressing myself first to the mootness issue, it is the position of the State of Missouri that this case is in fact as moot as was Local No. 86, which this Court decided several years ago. It was moot because there was no subject matter then in existence upon which the judgment of this Court could operate. What the appellant's overlook is the nature of this case and the nature of the relief sought. In this case, the parties were the State of Missouri as the plaintiff, the union and the various officials and members as the defendants. The state sought an injunction. The state obtained an injunction. There was no declaratory relief sought or granted. The union then appealed, seeking relief from the restraint imposed by that injunction that is all they could seek on appeal by the action of the governor and releasing the property to the company not in order to avoid mootness. That I think is a reflection upon the Governor of Missouri. He did so because it was the mandatory duty of the Governor under the opinion of the Missouri Supreme Court in this very case to release the property just as soon as in his judgment, based on his investigation of the facts then existing, some 14 months later in the initial seizure, that there was no dire, immediate, imminent threat of jeopardy or disaster to the citizens of the state or the Community of Kansas City. Earl Warren: Has this labor dispute been settled? Joseph Nessenfeld: No Your Honor. Earl Warren: What changed the conditions, what were the changed conditions? Joseph Nessenfeld: The record does not reflect the change in conditions and I am unaware of that. Earl Warren: But you said there was -- Joseph Nessenfeld: The Governor made an investigation. The Governor made a determination, Your Honor. It was -- he made the initial determination that there was jeopardy. It could well have been, Your Honor, that he may have decided this late date that he was erroneous in his initial determination. That is possible, but that's neither here nor there but has now made a determination based on the facts now existing that there is no threat of jeopardy and therefore no need for the State of Missouri to retain possession and operate the system in Kansas City. Earl Warren: So the question of moot depends entirely upon the decision of the Governor for undisclosed reasons? Joseph Nessenfeld: I couldn't put it that way Your Honor. I think in this case the decision of mootness is based on the fact that the parties are no longer restrained. They are no longer affected, there is no judgment affecting them, there is no legal controversy. The only controversy in existence now is the academic one of this law, is whether it's valid or invalid. There may or may not be other ways of testing the validity of the law but it certainly isn't by means of an appeal from a judgment which no longer in existence. Earl Warren: Suppose that they decided to strike tomorrow would the Governor be -- would it be open to the Governor to seize the company again? Joseph Nessenfeld: All I could say Your Honor is this. If in the judgment of the Governor, he believes that there is such a dire, imminent threat of disaster as to warrant and justify seizure he could do so. I seriously doubt that he would, because I am certain they took that in consideration in releasing the property. Earl Warren: What were the stated grounds for the emergency? Joseph Nessenfeld: The stated grounds were simply that in his judgment that there was a threat of imminent jeopardy through the public interest, health and welfare. Earl Warren: There were no specifications of that? Joseph Nessenfeld: There were no specifications. The law does not require that he specify the grounds. His action of course is subject to this review as the [Inaudible] Court has held and the Trial Court held that he was justified on the evidence in making that determination. Earl Warren: What did the evidence show? Joseph Nessenfeld: The evidence showed -- well all I can do is repeat what the Missouri Supreme Court, how they summarized the evidence in the opinion. Earl Warren: Well it sometimes helps to have the facts disclosed here in the argument. Joseph Nessenfeld: Well Your Honor that is quite true. However it is, as we see it, the appellants have taken the position in this case that irrespective of whether the facts in this case justify the Governor in seizing the property, irrespective of whether the Trial Court was justified in upholding the Governor is finding of jeopardy, that even if the evidence disclosed jeopardy of the most dire character, their position nevertheless is that the law is invalid as a matter of law and that is -- Earl Warren: You just said to me that the Court had determined on the evidence that there was such a -- Joseph Nessenfeld: That is true Your Honor. Earl Warren: I merely ask you, what is the evidence? Joseph Nessenfeld: Well there was evidence of confusion, evidently chaos? Earl Warren: What kind of confusion? Joseph Nessenfeld: In -- oh well, all I can do is read what the Supreme Court said in their opinion. The Court [Inaudible] the record in this case that the further continuance of the concerted work stoppage by defendants on the circumstances shown could well, might well have resulted in extreme danger to the health, welfare and safety of the inhabitants of Kansas City, Missouri and an unrest, general confusion, disorganization, excitement, tension, inability to reach places of employment of the retail district of the city, reduction of employment and loss of wages by innocent victims of the strike, congestion of traffic, destruction of business, reduction and impairment of law enforcement agencies and the creation of havoc, disaster and general chaos in the community. And that is what the Court said, that the trial Court could have found. I can't point specifically to any specific testimony in the record. I say it is conceivable that the Court may well have been wrong in the finding jeopardy here, but that certainly doesn't invalidate this law. That is what they want here, they said in their reply brief they will not settle the cases unless the law is thrown out. That is all that's holding up settlement here Your Honor. So that the [Inaudible] makes no difference how much jeopardy there was? It's the law which is the subject of their attack, not the facts of this particular case and if the laws that are thrown out, it certainly couldn't be thrown out on the ground of -- as the Lower Courts made an error in the determination of the fact. Arthur J. Goldberg: General what is the [Inaudible] Joseph Nessenfeld: Yes. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: That is true Your Honor. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: I did not believe with a fair instance Your Honor. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: In this particular case, whether he sees it three times, because there are three disputes, I think that is true. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: Transportation strikes, there were some, I think, not in Kansas City. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: No, I'm not aware of it and in further answer to your question Mr. Justice Goldberg, I might say this that until the present opinion by the New Jersey Supreme Court clarified and I think they made the point clear, the real meaning of the stuatute, the Governors of the states were I would say unaware of the extent of their authority to act and the circumstance under which they are justified enacted and -- Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: I don't think that that was testified in that way Your Honor. I believe that in this case, type of case of this kind that there would less likelihood of the transit company being siezed in the future than there was in the past, because of the stress laid in the opinion of the Missouri Supreme Court not once, but three or four times on a necessity that there be an imminent drift of dire disaster. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: He did. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: He did Your Honor. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: I think what has changed is the emphasis, the color placed upon the language and meaning of the act, I think there has been a change Your Honor. The language of the act itself hasn't said it in words, but I think that as construed by the Court in this case, something has changed which maybe subjective, but it does have some bearing upon the future conduct of our Governors. Earl Warren: If you were to prevail in this case and immediately thereafter the union has struck? Joseph Nessenfeld: Yes sir. Earl Warren: What conditions would not be available now to justify the Governor's action that existed there? Joseph Nessenfeld: Well, certainly Your Honor I'm unaware of the conditions in Kansas City, I can't -- Earl Warren: Well, but you said that it's all because of the change in conditions. Joseph Nessenfeld: The conditions that was found by the Governor, Your Honor. Earl Warren: And I ask what conditions would have been changed? Joseph Nessenfeld: I can't speak for the Governor, I don't know what he found. This record certainly doesn't reflect anything other than what occurred in the first several days after this strike and further strike took place. Everything that's in this record is pretty ancient and much could have happened in somewhere in those 14 months since then. William O. Douglas: I notice that the jurisdictional statement in this case was filed on November 20th and that his order was entered on December 28th? Joseph Nessenfeld: Yes sir. William O. Douglas: And that we noted jurisdiction three days, after three days or before or three days after I guess it was. Joseph Nessenfeld: Yes sir. William O. Douglas: His order became effective. I wonder if there is an element of a contest here? Joseph Nessenfeld: I don't think there is, Your Honor. I see no point on that. Of course, at the time the Governor acted, the true effect of what he did wasn't immediately apparent and it became apparent in the light of the decision of the Court in this case, which held that any release by the Governor would operate of itself to relieve the parties of their restraints imposed by the Judges. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: Yes, sir. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: True. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: It has certainly litterally [Inaudible] Arthur J. Goldberg: Yes. Joseph Nessenfeld: No question about that, Your Honor. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: Subject to judicial review. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: That is true. Arthur J. Goldberg: [Inaudible] Joseph Nessenfeld: I may add Your Honor, it's not only a stike but also of the lock out is [Inaudible]. This statute works both ways. As I say, we do feel that this case, there is no subject matter presently in existence upon which any Judge under this Court could now offer. Now addressing myself in the brief time remaining to the merits; all that is involved in this case are certain sections of the act, not the act as a whole. The Missouri Court held that the act was seperable and that irrespective of the validity or invalidity of any of the remaining portions, they didn't concede or make any intimation that means the rest of it was invalid. But and so, these sections authorizing seizure and no strike during the pendency of the seizure stood on their own feet and were not related to necessarily, were independent of any provisions with respect to the State Mediation Board, powers, duties and functions of appreaing panels, also hearings or what have you. So, the real question here on preemption is simply whether Congress by the enactment of the Labor Management Relations Act of 1947 intended or manifested clearly and explicitly an intent to [Inaudible] of a State of of Missouri or any State for that matter, the right in power to act on behalf of the public, not on behalf of either the Union or the employer, but on behalf of the public to protect the public in the event of an emergency, which threatens imminent disasters to the public health welfare and safety of the public and to by virtue of such threat to take possession of the property or utility not necessarily a transit, but gas or electric or other such more basic utility and to operate the same in the public interest, during the period of such State seizure and possession. Earl Warren: Did the state operate it? Joseph Nessenfeld: In my judgment, the State did Your Honor. Earl Warren: What affirmative act of operation did it use? Joseph Nessenfeld: The State -- Governor first appointed Mr. Daniel C. Rogers as the Chairman of State Mediation Board as his agent to take possession of property, and in his executive order he gave him broad powers and directed that the internal rules and regulations of the company utility remain in existence, and the company then acted as the agent of the state in operating the utility during the pendency of the seizure. The law does not require that happen in that way, Your Honor. Earl Warren: Is there any change in personnel or any direction of the company by the Governor or his agents? Joseph Nessenfeld: There was no change in personnel, Your Honor. As I said, the law does not require it be done in that way. This was one of the alternatives facing the Governor and it seems to me is a very practical way of handling the situation. Earl Warren: How is it done on the other occasions, when he seized the company? Did the state on any of those other occasions operate the company? Joseph Nessenfeld: In any other way, Your Honor, no. That's the way it was done. As I say, the law does not require to be done in that way and possession. The fact that possession is conceded, it's admitted in the answer of the appellant's, that possession in this case carries with it the right of control and the right of control carries with it the right to decide how it should be operated during the tendency of the seizure. Byron R. White: [Inaudible] Joseph Nessenfeld: No, Your Honor, it did not. Byron R. White: Well, what is an employer -- an employer or somebody who is paid among other things? Joseph Nessenfeld: Yes. Byron R. White: The state didn't pay anything? Joseph Nessenfeld: The state did not pay. Byron R. White: The only -- what you are saying is the state is excluded from being an employer? Joseph Nessenfeld: No, Your Honor. Our position simply isn't that the -- by virtue of the exclusion of the state as an employer from the national act that the state can do what it has done here. We don't contend the state is the employer of these -- Byron R. White: So the inclusion has nothing to do with the -- you put no weight on the exclusion? Joseph Nessenfeld: We put no substantial weight on the exclusion, Your Honor. Byron R. White: And your point is that typically the incident and this comes down to the emergency? Joseph Nessenfeld: It comes down to the emergency aspect with these added facts that when the state having taken possession as it did, no question about it, with the right and operating it as it did, when the state does so, no one whether they be employees or otherwise should have the right by concerted action. Byron R. White: But this doesn't fall within any express language in the act? You are asking us to construe the act in a -- add another exception to it, as well as to add to the exception which covers state as the employer? Joseph Nessenfeld: We are not asking you to add any exceptions at all, Your Honor. We are simply saying that Congress in the act itself did not expressly manifest an intent to prohibit this type of action by the state. Byron R. White: Well, I thought potentially that was your intention with concerted activities with the act expressly? Joseph Nessenfeld: Section 7 does protect concerted activities. Byron R. White: I thought the act expressly says nothing shall interfere with the right to strike. Joseph Nessenfeld: I don't think the act is quite that broad, Your Honor. R. Justice Brennan: Is it Section 13 of the –- Byron R. White: Except that otherwise the hearing provided, the word is otherwise -- Joseph Nessenfeld: Section 13 provides that nothing in this act except that [Inaudible] construes it was either to interfere with or impede or diminish in any way the right to strike or to affect the limitations or qualifications on that right. Now we contend there is no such thing as an absolute right to strike, anymore than an absolute right to do almost anything. For example, a man -- facts of the example, may not shout Fire! In the crowded theatre, but he may shout Fire! If there is no one around. In this case, when the state in order to protect the public as a mutual, has nothing to do with the controversy between the employer and employee itself, but when there is a disaster threatening to the public and the state steps in to take action, then no one be the employers or otherwise shall have any right or should have any right to take any action concertedly to interfere with what the state is doing to protect the public interest and welfare. Byron R. White: And when the State takes possession in the name of what it ceases to be a public emergency situation, the right to strike should give way? Joseph Nessenfeld: The right to strike doesn't give way, as such it is postponed. Byron R. White: But I suppose the employers in these situations would still be subject to an unfair labor practice charge if they interfered with the right to strike even in those situations? Joseph Nessenfeld: Yes sir. This act leaves untouched any right as between employer and employee in support, when I say this act, I am speaking solely of these particular sections and they are, because this act means these sections involving seizure and barring the strike, their pendency in seizure as construed by the Court in this case. This act does not in any way affect the rights of either the employer or the employee into safety. R. Justice Brennan: You've said several times Attorney General, I think that there was possession, there was operation. Joseph Nessenfeld: Yes sir. R. Justice Brennan: Now what exactly was the first -- what was possession, did any state officers move in? Joseph Nessenfeld: Possession, by moving in you mean into the offices of the -- R. Justice Brennan: Did any state officials or anyone appointed by State, go in and take up -- Joseph Nessenfeld: Yes sir. R. Justice Brennan: Head quarters of the offices of the transit company? Joseph Nessenfeld: Mr. Rogers, the Chairman of the State Mediation Board was appointed the agent of that company for the purpose of taking possession. R. Justice Brennan: I know, but did he go in, did he open an office, did he -- what did he do? Joseph Nessenfeld: He didn't go in the office, I don't think. I think he went in the office, but he didn't stay in the office, let's put it that way. R. Justice Brennan: Well exactly what did he do about running the company? Joseph Nessenfeld: He appointed to the company as an agent -- R. Justice Brennan: Let the management go on just as it had been going on? Joseph Nessenfeld: The management went on as it had been. R. Justice Brennan: Did he participate in any policy decisions? Joseph Nessenfeld: No sir. Byron R. White: Then I suppose, the company's taxes went on to. Joseph Nessenfeld: Sir? Byron R. White: The Company's property tax liability went on too. Joseph Nessenfeld: Yes, that's true. Hugo L. Black: What real change was there in the operation itself? Joseph Nessenfeld: In the operation itself, there was no substantially real change. Hugo L. Black: Was there anything that -- Joseph Nessenfeld: I am not aware of it, Your Honor. Other than the fact that they were subject -- they knew they were subject through the overriding control of the Governor's agent. Hugo L. Black: And they were subject to that under the law, before that happened, right? Joseph Nessenfeld: No, Your Honor, they were never subject to that. Hugo L. Black: [Inaudible] you had the power to pass it, put them under supervision [Inaudible] they were under the law, weren't they? Joseph Nessenfeld: They were under the law, everyone is under the law Your Honor, but they were not subject to the jurisdiction of the Governor's agent. The Governor is the one who took possession and -- Hugo L. Black: Maybe the Governor is the one that on paper took possession. Joseph Nessenfeld: Call it paper, call it what you will Your Honor? Hugo L. Black: Well, was there anything else? Joseph Nessenfeld: No, there was technical -- Hugo L. Black: It has to be met on what it is -- Joseph Nessenfeld: There was legal possession -- Hugo L. Black: Maybe it's all right, maybe it's all right, but that's all in one assessment. Joseph Nessenfeld: There was legal possession. Hugo L. Black: Well there was -- Joseph Nessenfeld: But as I say Your Honor, the point I am trying to stress to the Court is that the act does not require it to be administered in this manner. Maybe they made a mistake in doing it this way -- Hugo L. Black: Well, that is a question of whether that's right and whether that violated the Labor Act, under the preemptive field, it is a different question. Joseph Nessenfeld: Yes, Your Honor. Hugo L. Black: But what difference is the [Inaudible] that the State of Missouri passing the law and saying, you shall not strike and saying you shall not strike, at the same time delivered a paper to somebody and said, we take legal or theoretical fictional possession. What's the difference? Joseph Nessenfeld: I think there is substantial difference Your Honor, because in this case, the right to strike is affected only during the temporary emergency period. Earl Warren: 14 months in this case? Joseph Nessenfeld: It so happened in this case, it never has happened this long before. Byron R. White: Now the strike is over –- Joseph Nessenfeld: You mean all other cases? Byron R. White: I mean that is [Inaudible] Joseph Nessenfeld: It cannot last longer than the strike. That is the outside maximum, but under the decision of the Court in Missouri, it should be terminated, possession should be terminated at a prior date and the union has the right under the opinion to request the Governor or the Court if the Governor refuses to terminate the possession, if conditions are such as no longer to require state possession, if the immanency of peril, disaster and jeopardy are no longer there. Hugo L. Black: Would you not have had precise to the same defense, whatever it is, if Missouri simply passed the law and said that during an emergency period of the public utility, for that could be closed by a strike, with great interest of the public welfare, there should be no strike. Joseph Nessenfeld: No, Your Honor, the important thing here is the nature and character of the emergency. Hugo L. Black: Well, I understand that but you could have the emergency without going through the paper operations. It may be that you have a right under the law. Joseph Nessenfeld: Yeah, I understand that -- R. Justice Brennan: I would like to you discuss your right, hold it free from a fictional possession. Joseph Nessenfeld: Well Your Honor, as I see it, there is no real way for a State in these circumstances simply bypassing the law to say that during the pendency of an emergency there shall be no strike because there must be some means of first determining the existence of the emergency. Hugo L. Black: Well, I suppose the law said that during -- the Governor is hereby given the right to determine whether there is an emergency which will affect the people adversely in connection with the public utility and to declare that there is one, when he does so declare, there shall be no strike during an emergency. Joseph Nessenfeld: Well, that in effect is what was done here. Hugo L. Black: Well that is right, that's what I wanted you to discuss forgetting the fictiional transfer. Joseph Nessenfeld: Yes, Your Honor. The important thing here is that this act was enacted under the police power of the State to protect the public interest. And we feel that no law enacted under the police power for that purpose should be deemed to be preempted by any federal statute unless there is some specific express mandate in the federal statute, which would so require. And in this case, where the Statute -- as the Statue does, sorry the red light is on. Earl Warren: You may finish your statement Mr. -- Joseph Nessenfeld: There were a statute, as this statute Your Honors limits the right to strike solely to the extent of an emergency, not an ordinary emergency, not any emergency created by any utility strike and not any emergency resulting from the interruption of services, but an emergency of such a nature, of such a drastic nature as to impair to a drastic extent and place the public health, welfare and safety of the public in imminent jeopardy and in those circumstances, those limited circumstances holding unlike the Wisconsin in which any utility strike constituted an emergency irrespective of jeopardy. And this -- in these particular -- in this type of case, where the emergency is such that it must be as such to pose a threat of imminent disaster to the public and that type of case the State must be held not to be helpless because otherwise it is no man's land, no one can act – shall -- the answer is that Rome shall burn while Nero is fiddling, that's the effect of it is. If the State can't act, if the State is rendered impotent and helpless to protect its citizens in the event of some dire drastic emergency, let's say not in this particular case, but what if it were of drastic nature, so the State can't act at all as is the position of the appellants here. And I say that something is wrong and I don't think that Congress could conceivably have intended by the mere enactment of the Labor Relations Management Act to have taken over the field to such an extent that the State has rendered completely helpless to protect its citizens by exercising its police power. Thank you.

Warren E. Burger: We will hear arguments next in Abbott Laboratories against Portland Retail Druggist. Mr. Clarke you may proceed whenever you are ready. James H. Clarke: Mr. Chief Justice and may it please the Court. This is case is before you on our petition for certiorari to the Ninth Circuit, which reversed a judgment in favor of the petitioners, which had been entered on a motion for summary judgment by the District Court. The action is one for trouble damages and injunctive relief for price discrimination brought by an association, a retail druggist, against drug manufacturers. One of the classes of allegedly unlawful discriminatory sales are to non-profit hospitals. The petitioners pleaded, as a defense, the Nonprofit Institution Act, which exempts from the Robinson-Patman Act, all purchases of supplies for their own use by non-profit hospitals and certain other non-profit institutions. It was the respondents’ theory which has never changed and has been stated in this Court that the exemption is limited as a matter law to purchases of drugs that are physically consumed on hospital premises, and therefore cannot be competitively supplied by retailers. The District Court disagreed. It held it all drug users engaged in by the non-profit hospitals as shown by the record where the own use of the hospital and granted summary judgment. On appeal, the Court of Appeals affirmed as to the non-profit status of the thirteen general service hospitals whose affairs are before you today, but limited the exemption to inpatient and emergency room use. It agreed that all of the rejected drug uses by the non-profit hospitals serve the public and are proper hospital functions, that it held that in those cases the hospital was not the consumer and these drugs were purchased for its purchasers use instead of its own. Warren E. Burger: But laying aside all of the others categories that are involved, when a hospital sells to a customer who walks in off the street, are they forming a hospital function or a drugstore function? James H. Clarke: This would depend upon the circumstances of a particular sale Your Honor. There is no contention by the petitioners on one hand that a hospital can setup a retail drugstore and stock it with 13C (ph) merchandise. On the other hand, when a customer comes in who, as a matter of need, emergency, or for some other reason, finds it inconvenient or retail drugstore is unavailable, we say that the hospital is performing a hospital function, even though in those cases there is no associated hospital service of a distinct kind. Byron R. White: What about this refilling prescription in hospital by former patient of the hospital that has been given a prescription while in the hospital and he constantly gets it refilled at the hospital? James H. Clarke: The refilling of take home prescriptions is one of the three of the so-called minor categories of business that are involved in this lawsuit. In that case, it could still be a matter of convenience or a matter of extending hospital services or hospital has the pharmacy prescription and as a matter of convenience they will on occasion come back. Most of the hospitals according to this record do not fill or refill take home prescriptions. There are three or four that will do it. Potter Stewart: Mr. Clarke, this case process down despite all the weight and breadths and lengths length of the brief to the meaning of the phrase, “for their own use,” does it not? James H. Clarke: I believe so sir. Potter Stewart: And it is read, it can be read broadly to include, I suppose, certainly the situation that the Chief Justice referred to, the hospital pharmacy selling to somebody who comes in off the street in an emergency or otherwise, because that is for the use of the hospital and the profit is for the use of the hospital. James H. Clarke: Well that is -- Potter Stewart: That can be read broadly certainly and to the extent that you can read the phrase right out of the statute, can you not? James H. Clarke: You can. There is an additional analysis which we think supports our position in this area. We think that when a hospital -- when a sick person gets a hospital drug and uses it, consumes it, which is all the drugs happen to do. He is obviously using the drug. That is what the drug is for, it is been prescribed for him to make him well, he is using it. It is our position that when the hospital dispenses the drug to him as part of its institutional functions, it is also using the drug because that is all hospital use drugs for. Potter Stewart: Well, they sell drugs to make money and they do make money. James H. Clarke: They dispense drug; they charge for them and they make net profits. Potter Stewart: And therefore the sale of the drugs is for their own use. James H. Clarke: They make net profits. Potter Stewart: The profit is for their own use. James H. Clarke: That is right. Potter Stewart: And therefore there is no limit on this. This phrase read that way would not impose any limitation at all, would it? James H. Clarke: That is never been the position of the petitioners. Our position has been that the dispensing has to be associated or should be associated, in some way, with the hospital functions. Potter Stewart: With hospital patients? James H. Clarke: No, sir. Potter Stewart: Because a hospital can define its function, it can say we are going into the retail pharmacy business as one of our functions. James H. Clarke: I would not disagree with that and if this were an appropriate thing for hospitals to do at any given point in time. I would say that this would be a very possible conclusion. Now as the Court is aware the record shows that each hospital has a pharmacy. It is an integrated department of the hospital. It achieves net revenues and those net revenues are devoted to institutional purposes namely the financing of non-revenue producing departments. The principle drug use is for dispensing to in-patients. The record shows that some 90% or more of all of these hospital drug purchases are used that way and the dispute is over the remaining 10%. The bulk of this 10% is used in three established distributional practices. The first is the take home drugs that we referred to before. These are drugs that are prescribed by the doctor in amounts that are determined by the doctor and they are regarded as a continuation of the hospitals medication. Probably the most hotly debated area before this Court is a net of outpatient care. Outpatients fall into two classes according to this record. There are the traditional outpatient clinics of which there are half a dozen important associated with the hospitals as a hospital function which cater primarily to the poor. William H. Rehnquist: Are they all physically located within the hospitals? James H. Clarke: These are, I believe that a manual hospital has a sort of a campus type arrangement, so it would not necessarily be in the same building. William H. Rehnquist: But they are not wholly miles apart from the hospital? James H. Clarke: The clinics that I am now referring to are not. One of the issues in this case in the lower courts had to do with the Kaiser Medical Care – Best Kaiser Hospital, which the hospital for an HMO. They had -- William H. Rehnquist: But that was diverged on another ground by the Ninth Circuit. James H. Clarke: That is correct sir, but they have separated clinics. The importance of outpatient care is not however limited to the clinics that conventionally have served the poor. As I think is apparent from the American Hospital Association brief, which I will not repeat, this is a rapidly expanding area of hospital service. It is one which promotes the public interest by reducing hospital cost and reducing the incidents of inpatient care by emphasizing the incidents of outpatient care. Then the third primary category that was excluded is staff sales, the pharmacy privilege which is accorded by the hospitals to those who work for them and those who practice medicine in association with them. This is regarded by the institutions as a benefit to the institution something that promotes its operations, it is an important employee fringe benefit, it is negotiated for in some of the collective bargaining agreements that the institutions have and it is a subject of the fliers and publicity that they give their employees when they come to work. The only difference -- excuse me. Harry A. Blackmun: Now in under a collective bargaining agreement or as a matter of their own self imposed policy to sell drugs to their own employees and their employees families that had cost a low price they can continue to do so, however, this case is decided, can they not? James H. Clarke: The question is not Your Honor, whether the hospitals should be selling these drugs in these ways. The question is whether they are performing appropriate hospital function when they do. In the case of the pharmacy privilege, the record shows we believe that this is an integral part of the association of people and resources and materials which this hospitals -- which constitutes this hospital, that aids its operation. And it is our theory that the exemption extends to all drug uses that aid or promote the operations of a hospital and that this is the scope of this statutory exemption. Harry A. Blackmun: And you make the same argument with respect to a surgeon who happens to practice in the hospital with respect to his office patients? James H. Clarke: I think that so far as his patients who are hospitalized there is no problem as there is in any other case. Harry A. Blackmun: My question is not directed to that. James H. Clarke: But if the question is whether the surgeon should be allowed to supply his office patients with drugs purchased from the hospital pharmacy, which I -- if I am correctly construing -- Harry A. Blackmun: I thought that was one of the categories at issue here. James H. Clarke: This is again, one of the minor categories. The record shows that some, not all, but some of the hospitals will sell drugs to a doctor for his office use, usually injectables or specialty items which are not available in the general retail market. Harry A. Blackmun: Let me take that one step further. If Dr. Smith, who is on the staff, so to speak, of a particular hospital, gives an office prescription, is that patient, under this record, free to go to the hospital and have it filled with the hospital pharmacy? James H. Clarke: Not if the hospital does not sell the walk-in patients. Harry A. Blackmun: And if it does? James H. Clarke: If does, well then he would be like any other walk-in patient. Now with respect to walk-in patients the record is very clear that there are only two of these hospitals that make any walk-in sales on a non-discourage basis. There are two hospitals which are located in areas of particular need. One is next to a retirement home and the other is in an area of elderly and poor people, and the administrators of those hospitals said that they will fill walk-in business for those two categories in those two cases. Other than that the record we think is quite clear that the hospitals do not want walk-in business, they do not regard themselves as being in that business, and the incidence of walk-in sales is negligible far less than 1% of total sales. We think that the Court should consider in this case, in light of the statutory language, which is unlimited, it does not seek to define or limit the phrase use. The hospitals are institutions for the treatment of the sick and the injured. This is why they exist. And we say that it is the institutional use of their drugs when they are dispensed for the use of the sick and the injured. It is a functional term. The importance of drug therapy is also developed in the briefs. One of the keys to the expansion of outpatient services, which reduces the exorbitant cost of inpatient services has been drug therapy, which is received by hospital outpatients. All of these outpatients are registered hospital patients and they are all receiving hospital services. William J. Brennan, Jr.: Mr. Clarke, so far as I get it, the only category you or the only function that you seem to exclude is for their own use is the actual operation of a retail pharmacy. James H. Clarke: I agree. William J. Brennan, Jr.: That is all? James H. Clarke: That is all. William J. Brennan, Jr.: Everything else is hospital use? James H. Clarke: My powers of imagination or inventiveness are perhaps limited and there might be other categories that could be suggested. William J. Brennan, Jr.: Besides the -- James H. Clarke: Beside the general retail store, but that is the obvious limitation. I do think that the Court can approach it from the other end and say that everything is hospital use which assists, or aids, or is associated with its institutional operations. Now, that is a broad definition. It is where we begin. William J. Brennan, Jr.: I do not see how that excludes the retail off to that. James H. Clarke: The difference, as I see, is that in the case of a straight commercial retail operation of a kind that Mr. Justice Stewart referred to. There is no association of hospital activities as such with the sale and that is a possible ground of distinction. But I think, I want to emphasize that there are categories of drug use in this case, which are not associated with the actual performance of other hospital services. I am thinking particularly of supplying injectables to doctor’s offices and supplying walk-ins that come in the middle of the night and need drugs. Byron R. White: So you would exclude those or -- James H. Clarke: I do not exclude those. I say that under those circumstances the sale of the drug is itself a hospital use because it relates directly to the hospital function as a community medical resource. Byron R. White: Well then suppose that the hospital is on one side of the street and it has established a retail drugstore on the other side of the street, but it sells drugs to walk-in customers in both places, you would say the retail drugstore is out of bound? James H. Clarke: I would say well -- I am not anxious to build fences around this exemption Your Honor, but I -- Byron R. White: I understand that but you have excluded from the exemption retail drugstore. James H. Clarke: I have excluded that from the exemption because I think there is a distinction which I have tried to explain. Byron R. White: No, just a walk-in customer, who is never been in the hospital before who is not about to be again, comes in to buy some drugs. He does not want to cross the street to retail drugstore and you sell it to him out of the drug dispensary in the hospital, and if he is not or never been a patient in the hospital, as far as you know he is not a patient of anybody on the staff of the hospital, you just sell it to him. Now is that -- what connection does that have to some institutional service of the hospital? James H. Clarke: Well that isolated kind of sale would have no connection. Byron R. White: Well that is one of the categories mentioned in the Court’s opinion below. James H. Clarke: That is correct and the record shows that the policies of the hospitals are to discourage walk-in business. The record shows that the volume of this walk-in business is negligible. Byron R. White: You have brought the case. Now I want to know whether you think we should agree with the court below or on item 8 in their opinion namely, “Walk-in Customers”. James H. Clarke: No sir for two reasons: First, the record shows that the walk-in business which does occur is associated with the hospital function, that is usually in cases of special need. Therefore, there is an association with the hospital’s community responsibility and therefore there is a sufficient nexus with the hospital operation to justify it. Warren E. Burger: If the Eight Circuit opinion were narrowed to survive that emergency situation were accepted from their ban, would that satisfy your purpose? James H. Clarke: I think it would not -- excuse me. Byron R. White: They already have allowed that, did they not? James H. Clarke: No sir. I am afraid I did not follow your question. Byron R. White: I did not know they excluded from the exemption of the dispensing of drugs in emergency situation. James H. Clarke: No, it is in the emergency room which is a special service. This is not that kind of -- the emergency room usually have their own little supply of drugs which they dispense to somebody who is brought in and after an -- Byron R. White: They have excluded that from the -- they included in the -- James H. Clarke: That is correct sir. Byron R. White: But you are talking about some other kind of an emergency. James H. Clarke: I am talking about -- let us take the example of Emmanuel Hospital, which is located in the Black District to Portland. Drugstore is closed early in the day, it is a rough neighborhood and somebody has to get a prescription filled, so they come to the hospital pharmacy, and yes, Emmanuel will sell that walk-in customer and they do not know whether she is a patient of the staff of not. That is correct. The other way -- Warren E. Burger: Now as you said that the hospitals try to discourage the 1%, apparently you use that figure, the 1% of those who come in off the street to buy. Now, the Court of Appeals, of course, has rather firmly discouraged that kind of business. If that were not so, we were to reverse the Court of Appeals on that item with that not put a premium on every hospital in effect to open on pharmacy, right within their own establishment? James H. Clarke: We, our position does not go that far. Warren E. Burger: Well, I am asking you about a tendency. You cannot control all the hospitals, no one can. But if there were no limitation on hospitals right to sell to walk-in customers, the same kind of customers who come in to a drugstore, the traditional drugstore, would that not encourage hospitals to expand their pharmacy operations and actually seek walk-in business? James H. Clarke: Obviously, it would do so if the Court put an offense all around it. It is our position that the walk-in customer can properly be served in these cases of emergency or need. It is also our position that there has to be a certain flexibility in this statute. The pharmacist, when the person comes in, has to be able to exercise some kind of judgment. Warren E. Burger: Well what if defense were that the hospital pharmacy could not sell the walk-in patients before 9 in the morning or after 9 o’clock at night. Another is that they -- I guess I have it reversed -- that they could not sell to walk-in customers from 9 a.m. to 9 p.m. James H. Clarke: Whether that would cover the range of circumstances in which those sales would occur I cannot speculate. Warren E. Burger: Would it not be -- James H. Clarke: It would be an artificial kind of a limitation. Warren E. Burger: Well, what an artificial when that is approximately the business hours of the ordinary pharmacy? James H. Clarke: This is the point, this statute represents a congressional decision that was in the area of the statute. This will happen. This statute does not say one word about limiting the use of supplies in non-competitive ways, which is the net effect of the Court of Appeals. It is the effective APHA’s Brief and the -- excuse me. Warren E. Burger: Well, what about the language that Justice Stewart read to you, for their own use unless you give this expansive reading to the term “their use.” James H. Clarke: It is our position that there must be a nexus between the dispensing of the drug and the operation of the hospital. And if there is that nexus it does not matter what the circumstances or what kind of dispensing is involved. This is the fence you build around. It must be related in some way to the hospital’s operations, it must assist the hospital’s function in treating the sick and the injured, but that within that admittedly broad category. There are going to be many kinds of drug dispensing and the statute contemplates, because it is an exemption statute that from time to time there will be an impingement on somebody else’s business. Warren E. Burger: That would mean that they could always sell Aspirin and Bufferin to anyone who had a pain. Then would you say that that is the function of the hospital embraced in the language “for their own use”? James H. Clarke: I would say if they were at the hospital for diagnosis and they are under the care of the hospital, yes. Warren E. Burger: I am talking about walk-in patients. That is the subject, the frame. Are you saying that under this language it is a hospital function to sell an aspirin or similar materials to any person who has a pain who walks in off the street. James H. Clarke: I do not think that at this stage of hospital development that it necessarily is, no. I do think -- Warren E. Burger: Well, then you should have no objection to a court construing that language has not including the casual walk-in customer. James H. Clarke: I think that it has to include not exclude, the exemption has to include the casual walk-in customer who is there for whom the hospital is providing a resource that the customer needs. William H. Rehnquist: Well but then by your definitions the hospital presumed by determines its own function, and if it decides that that function should be performed out on the series of retail outlets of separated from the hospital you would still say that by selling Buffering and Aspirin in those outlets it is performing a function which their customer need. James H. Clarke: Mr. Justice, we do not say that the hospitals have an unlimited discretion to define their own functions. These functions are changing. They are changed by the -- William H. Rehnquist: I have yet to hear for you any place where you would limit it. James H. Clarke: The hospital’s discretion? Speaker: Yes. James H. Clarke: I think that there is an area within which you can say that certain kinds of activities are appropriate and certain kinds are not. At this point I would not say that opening a retail drug stores a proper function of a non-profit hospital but 20 years from now it might be. Speaker: And under this same statute then those activities would be exempt. James H. Clarke: If these were appropriate and proper hospital functions, yes sir, they would be. Speaker: Any appropriate and proper as defined by hospital practice generally. James H. Clarke: They will -- that is correct sir. I will reserve -- excuse me. Lewis F. Powell, Jr.: You have devoted a bit of your argument to a problem that involves, as I understand and what you said, less than one percent -- James H. Clarke: About one third of one percent. Lewis F. Powell, Jr.: -- one third of one percent, may we come back to what seems to me to be more substantial, I have in mind at the moment, outpatient operations. You said there were two categories of those: the traditional outpatients departments that save for the most part indigents; and secondly a newer type of outpatient department that save that probably generally primarily to relieve the threatened of inpatient service for which facilities are inadequate. Now are they -- are both of these functions performed from the same outpatient facilities, or do you have different type of facilities for the two? James H. Clarke: The general pattern Mr. Justice Powell is that the outpatient services are performed at the Central Institution, however, around the country the system of satellite clinics is developing an important one that has developed was the Kaiser Organization which of course is not before us. Lewis F. Powell, Jr.: You have satellites in two of the 12 hospitals, I thought you said -- James H. Clarke: That could -- they either are or they are being projected. Lewis F. Powell, Jr.: But basically the same facilities save both types of patients? James H. Clarke: That is my understanding sir. Lewis F. Powell, Jr.: Right and you said, as I understood it that outpatients are registered. James H. Clarke: That is correct. Lewis F. Powell, Jr.: What does that mean? James H. Clarke: That means that if they are registered on the books of the hospital as hospital patients just as of an inpatient is registered when he comes in. Lewis F. Powell, Jr.: And when a prescription is issued to a registered outpatient, does a prescription show on its face that the patient is a registered patient, so that the pharmacist can distinguish between the registered outpatient and the walk-in non-patient. James H. Clarke: I believe not. The way this is done at Emanuel which is the outstanding example in Portland, because it is so much larger and more comprehensive than the other, is that at least at the traditional outpatient clinics they gave the patient a card and he shows that card to the pharmacy when he comes in. Lewis F. Powell, Jr.: Which identifies him as a registered outpatient. James H. Clarke: That is correct. And the employee will have a card that identifies him. Lewis F. Powell, Jr.: And there is no reason why the outpatients who are registered cannot be identified. James H. Clarke: In that particular case. Now I do not know how this is handled in the other institutions. Lewis F. Powell, Jr.: Well it is basically possible to devise means to identify a registered patient. James H. Clarke: That is correct. Lewis F. Powell, Jr.: Another question I want to ask relates to renewals of prescription for inpatients. You said that this ordinarily occurred at the time of a discharge, prescription being provided for the patient to take home with him or her. Does the record show a percentage of renewals that occur or have occurred according to this record subsequent to discharge at the hospital, in other words repetitive renewals? James H. Clarke: It does not show a percentage. There are only three or four of the hospitals which will refill take home prescriptions and I believe that one of them -- in one or two of them that they did estimate the volume of it and the volume was quite low as I recall it, 25 or 30 a week or 20 a week or something of that kind in one of the larger ones, but there is no hard information about the actual volume of refill business. As a matter of fact, if the patient does any distance from the hospital it would be more convenient to go to a retail or drugstore anyway. This would happen only in these -- tend to happen only in these cases where the hospital pharmacy is convenient. I will reserve the rest of my time. Thank you. Potter Stewart: Mr. Clarke before you sit, may I ask you this question. On the front of your brief and on the inside cover of your brief are listed several petitioners in this case. I think those lists are not identical. May I ask, are there any other petitioners? James H. Clarke: No sir, so far as I know, the lists are identical. If they are not, the printer’s error -- Potter Stewart: Specifically may I ask is American (ph) company a petitioner? James H. Clarke: No sir. Potter Stewart: Thank you. Warren E. Burger: Mr. Tilbury, you may proceed whenever you are ready. Roger Tilbury: Mr. Chief Justice and may it please the Court. First I would like to answer Judge Powell’s question that he just presented as to the ratio of refills. There is any record evidence that in so far as Kaiser is concerned the ratio was approximately 40%. Now the other hospitals do not assign a new number to a refill and for this reason it is difficult to know and there records are incomplete they sometimes will assign a letter after the number, but we think it is substantially larger than the defendants so far have conceded. William H. Rehnquist: Kaiser had a different kind of operation now than the other hospitals, and then its summary judgement was reversed on a much broader ground about the Ninth Circuit. Roger Tilbury: In a way Your Honor that is true. However, the other hospitals are patterning themselves to a degree after Kaiser and we can see that if this Court should sustained the position that Mr. Clarke wishes that they are soon going to embark upon the same type of program. It is true as you point up that the Night Circuit did send that back for a reexamination insofar as Kaiser, but the matter of developing this clinics which are considerably removed incidentally in the case of Kaiser, some of them are up to 10 and 12 miles away from the hospital, will be the way in which they are definitely trending the goal. William H. Rehnquist: But the lawsuit has got to be decided on the basis of the fact that they exist, I presume. Roger Tilbury: Well I would certainly agree, yes. As a matter of fact Your Honor since you have mentioned that point, I would like to say that much of what Mr. Clarke has said seems to us to be irrelevant for the very reason that the issues that he assigned in his true briefs, this petition and all the way through his primary brief, do not deal with the category of walk-in, say, do not deal with refills, and they do not deal with the category of office use by doctors. The only three things that he has assigned, as you recall, deal specifically with the employee and the staff position sales and with the take home sales to a patient on his way out and to the matter of outpatients. These are the only things that seems to -- Byron R. White: But the outpatients include the outpatient clinics. Does it not or -- Roger Tilbury: I am not so sure; I can not tell for certain exactly what he has said. He has mentioned the factor of outpatients and he is -- but I am not entirely sure as to what position he is taking about. Byron R. White: Well, in the outpatient clinic or the clinic where the hospital operates a clinic for the public, I take it, the doctors are hospital agents or employees, and anyway the bill the patient get from the hospital. Roger Tilbury: Yes sir. Byron R. White: So it is a -- if one of those outpatients in an outpatient clinic is suddenly hospitalized and is there a week and then he is discharged but still an outpatient he will just get periodic bills from the hospital. Roger Tilbury: He would be billed at the hospital. Some of the doctors, however, I think almost all of the doctors at Kaiser Clinic in Portland practice only at the clinic, and it is only in a rare situation that they would refer anyone to the primary hospitals. They operate truly in the case of Kaiser and this is really tending to be true in other cases as well as drugstores in the true sense of the word. As a matter of fact, there were a few blocks of many of them. They have doctors that are there who are technically, in a real sense of the word, employees of the Kaiser Foundation although they have their own separate corporation called Permanente Services I might add, and in the sense that their connection with the hospital is rather tenuous one except that they are all technically under the Kaiser blanket. Warren E. Burger: Do you quarrel with the hospital filling a prescription or refilling or selling a non-prescription item after normal business hours to meet an emergency? Roger Tilbury: Not at all Your Honor. We have no quarrel with the hospital. Warren E. Burger: It is not our business or even the Court of Appeals to undertake to prescribed forms and mechanisms but from your close association as both of you gentlemen have had with this case. Would it be difficult in your view to set up a procedure and a mechanism to take care of some kind of a certification as to particular after our sales for an emergency that would define what the emergency law is. Roger Tilbury: No at all Your Honor. We have never objected to any sales by the hospitals of any kinds. As a matter off act we would not object, I do not think we can, since we also believe in free enterprise, if they wanted to conduct the retail store. They can conduct any type of operations -- excuse me. Warren E. Burger: That would be a different term. Roger Tilbury: Yes sir. The only thing we are saying -- Warren E. Burger: I am talking about within the framework that we have here. You, I take it, then would not object to walk-in service, walk-in customers or emergencies after normal business hours. Roger Tilbury: Not at all Your Honor. We certainly do not wanted to deprive anyone who needs medication and getting a medication. Potter Stewart: But when you say you would not object you can see that that would be, the purchase of those drugs would have been purchased by the hospital for their own use? Roger Tilbury: No sir. There is a distinction and I hope I am making it. Warren E. Burger: Well I was asking a question on the framework of our entire dialogue here. I ask, in fact, I purposed the question, do you think that is a proper hospital function? I repeat it. Is it a proper hospital function in this framework? The only reason that we are all here is if sales are made to walk-in customers after regular business hours and for some declared emergency situation. Roger Tilbury: I am sorry if I am not making it clear Your Honor, and I will try to make it clear. We do not object to any type of sale that the hospital wishes to make but we do say that the Congress when it passed 13C limited the exemption to their supplies for their own use and in the case mentioned -- Warren E. Burger: (Voice Overlap). Is it, for their own use, to sell after regular business hours to meet an emergency for outpatient? Is it “for there own use”? Roger Tilbury: No sir, unless that patient happened to be a hospitalized patient and unless he uses at any emergency room on the premises in other words. And this has always been the case, as a matter of fact -- William J. Brennan, Jr.: Will you help me Mr. Tilbury, we will not mind stating exactly what you just say is for there own use within these eight categories, it gets (Inaudible). Roger Tilbury: Well we think the Court of Appeals decision is correct that it should be limited to a use on the hospital premises by a patient or somebody -- William J. Brennan, Jr.: I see that would, one, they would dispense to the hospital’s inpatients in the course of treatment. That is for there own use, is it? Roger Tilbury: Yes sir, we concede. William J. Brennan, Jr.: (Voice overlap) on the petition cert. Now the second one is they would dispense in the course of treatment the patients at emergency clinics operated by the hospitals, is that for their own use? Roger Tilbury: Yes sir, we think it is. William J. Brennan, Jr.: They were provided to departing inpatient as take home prescription, is that for their own use? Roger Tilbury: No sir, just the first two Your Honor. William J. Brennan, Jr.: Well, only the first two, the other six are all within Robinson-Patman Act. Roger Tilbury: That is correct for the reason Your Honor --[Laughter] William J. Brennan, Jr.: (Inaudible) is positional. Roger Tilbury: For the reason that it is not used on the premises, it is not use under the hospital supervision, the individuals has no connection with the hospital once he leaves the hospital, and the reports indicated despite what Mr. Clarke has said that this was not intended to encompass the whirl, that Congress did intend to restrict it to a situation where it was intended to be used on the premises and for that particular function. Warren E. Burger: But does that not overlook the modern trend, when I say modern it is pertaining 30 or 40 years ago to keep people out of hospital if they can and be -- to get them out of the hospital as quickly as possible after surgery or other treatment? Roger Tilbury: We will all agree that that is a desire, yes. Warren E. Burger: They just are not enough hospital, are they? Roger Tilbury: Certainly that is true. And I do not think they are not enough drugstores either your honors at the present time. Warren E. Burger: As a result there, after the delivery of the baby they are having the mother and child go home sometimes in 24 hours, after surgery that is formerly was two or three weeks. They now send them home in two or three days or even less. Now are you going to cut the hospitals or are you going to have the trend that is going to lengthen in the hospital stay here? Roger Tilbury: In a way they may -- as I again repeat Your Honor. We do not object anything that can do to alleviate the plight of the patient whatever that maybe and if they wish to sell in any way emergency times or whatever that is fine. But we think the Congress meant what is said when the exemption was not at unlimited one. If they had meant strictly that it applies to all non-profit institutions they could have set it that way, but they did not. They specifically said purchases of their supplies for their own use. Now as you well know the words are construed with regards to their normal usage. The Congress is not presumed to use superfluous words. Those words have a meaning and the word “use” has always meant consumption by the individual using it. It does not mean a resale. As a matter of fact, rather strangely, Mr. Clarke seems to be a cross purposes with its own client Lilly, because for Mr. Debose (ph) for example, told the Congress during the extensive hearing which agree with our interpretation by Congress in 1967 and 68 extending over a thousand pages that that was what it meant. It meant a use within the institution itself and Mr. Debose (ph) who used to be in charge, manager of the Portland office for Lilly told Congress that in general I think we can say that the furnishing of drugs to outpatients or to patients off the street probably results in a competitive inequity to the retailer. And for years Lilly has required all of the hospitals that buy from it before they can acquire their goods at a preferential price to sign an agreement that the particular institution will “use the products only for its own use within the institution and not for resale.” Now at some -- Byron R. White: How about an instance, how about a (Inaudible) where the hospital sells in the hospital or in the clinic. Roger Tilbury: Well I would again say since it defines it in terms of -- Byron R. White: (Inaudible) Roger Tilbury: Yes sir, I would interpret Lilly’s agreement to mean that it has to be used at the hospital. If it is used as the hospital -- Byron R. White: Well, if the hospital in their premises? Roger Tilbury: Alright, then I would say it is a proper hospital use. Byron R. White: Unless if (Inaudible). Roger Tilbury: I can hardly speak for them but I would think so. Byron R. White: But you disagree with that? Roger Tilbury: No sir, no I do not disagree with. If it is used -- excuse me. Warren E. Burger: The comes under two. Byron R. White: That comes under two, it is not a an emergency clinic; it is not an emergency clinic. Roger Tilbury: Regardless Your Honor of whether they call it. Whatever they call it, if it is used at the hospital, under hospital doctors, on the premises, for consumption their, then this is a sort of thing that Congress intended. Byron R. White: Do you agree to that is within the exemption? Roger Tilbury: Yes sir, if it is used at the hospital. Byron R. White: It seems to me not broader than one or two. Well that is what I assumed. Roger Tilbury: My own position -- Harry A. Blackmun: You have just said for consumption there. Roger Tilbury: Yes sir. Harry A. Blackmun: Suppose the prescription given to an inpatient for 100 tablets whatever it is and when he is discharged tomorrow he has 90 of them left and takes them home, still alright under the Robinson-Patman act? Roger Tilbury: No sir, I do not think so, because the point of consumption is no longer at the hospital. Harry A. Blackmun: So the hospital then, on your theory, would have to purge that between the 10 that were consumed while an inpatient and the 90 that he took home? Roger Tilbury: Yes Mr. Justice Blackmun and incidently that is not a difficult thing, because once he leaves the hospital, the hospital rules and the Oregon statutes and the statutes in every state that I am aware of requires that he would be given a prescription number. They actually will repackage it in those situations or there are supposed to under the state law and they do I think, and assigned a number at the point he leaves the hospital, because it is no longer under the hospital control or supervision, and when they came to Congress and asked for this they talked in terms of the need and extending the care to the needy patient. This was the thing that was stressed. Now the hospital is not providing care when the individual is no longer at the hospital. By definition he cannot be extended the care of the hospital if he is not at the hospital and this is our position and I think this is what Congress -- Harry A. Blackmun: Well going back to the clinic case an outpatient of the hospital clinic is operated on the hospital premises and comes in regularly for shots -- Roger Tilbury: Yes sir. Harry A. Blackmun: -- at the hospital. Now you say apparently that that is within the exemption. Roger Tilbury: I think it is; I think it is. Harry A. Blackmun: Well that is certainly broader than number two just an emergency. Roger Tilbury: Well Your Honor my difficulty is this -- Harry A. Blackmun: Well, it is though, is it not? Roger Tilbury: Well I do not visualize it as such perhaps Your Honor may disagree with me, but the fact is that what is an inpatient and an outpatient is a matter of definition and there is considerable disagreement among hospital administrators as to what that term means. But I think when Congress spoke in terms of care and supervision and for their own use, they were speaking in terms of the hospital, because they not only said the word “their” once, they used the word twice and of course, they use the terms supplies for their own use. And, use has always, as far as I know, since Wycliffe in 1388 said that that means consumption; it does not mean that you resell it to somebody else for their use. We are talking about two entirely distinct things at that point. And at the point that the hospital has no more control over it in the case that Justice Blackmun mentioned where the drugs are taken home for consumption at the point it leaves the hospital. There is no more supervision at that point. Warren E. Burger: Let me put this in a practical, so that it makes a better question. 30 years ago or more, an appendectomy or herniotomy meant two weeks at least in the hospital. Roger Tilbury: Yes, sir. Speaker: Going that assumption, it is the fact. Today, it is two days or three days, but with the patient, may usually does go some sedation and pain killer and that sort of thing. Do you say that that is not part of the hospital care as long to furnish that kind of material, when the patient leaves the patient leaves the hospital and go home and do at home just what formerly was done for the patient in the hospital? Roger Tilbury: At the point he leaves the hospital, the hospital is no longer using it, the former patient is using it. And I think there is a distinction there. Warren E. Burger: But is he using it, if they give it to him before he leaves? Roger Tilbury: Yes, they give it to him before he leaves for consumption at the hospital, yes. Warren E. Burger: No, before he leaves for consumption at home, for consumption whenever he needs it, under instructions? Roger Tilbury: It is not the used by the hospital and I think we have to use the language that Congress itself used, and the Congressional Committee said that at the point it leaves the hospital, that it is no longer the hospital is using it, it is the private individual, because there is no control over that at the point it leaves the hospital. William H. Rehnquist: But you are reading, use by the hospital than use in the hospital. I mean, there is no use by the hospital in the sense that the hospital as an institution does not itself take any drug, it is patient that take drug. Roger Tilbury: Well, of course, that is true in the sense that the hospital, a corporation, does not imbibe and use the drugs, no. But, at the point that the hospital ceases to have any control or what happens to those drugs, and we have had many cases where we found that they have not only given them a medication for a couple of days, but they have given a medication for six months, and longer. And at that point, incidently, we have also in the record cases where they have actually pour sales on people who did not want the drugs at the time they left the hospital, but found it on their bills, and when they protested, they were not able to have it removed in certain cases. And incidentally, the quantum of the use is not the one percent or the one-third of one percent. We have evidence in the records showing that in the case of Kaiser, it is well over 400,000 prescriptions. William H. Rehnquist: But Kaiser is not here in any capacity. Roger Tilbury: All right, in the case of Saint Vincent’s and other one 231,000 over the space at about five and a half years. In the case of Good Samaritan, it is roughly, 54 a day, these are not minimal things. He is trying apparently to argue de minimis again, although at various times, he disavows a de minimis a defense here. William H. Rehnquist: Does the record show what the economic impact of hospital sales is on the drugs -- to the hospital pharmacies under sale the drugstores. Roger Tilbury: Yes, they do, quite often, and another problem is that they charge a differential price to their in-patient as against people that are coming off the street. They do not pass along the savings and cost, we have found many times the in-patient, he is charged, sometimes, considerably more even than an individual that went to the corner drugstore to buy. But then, having that leverage, plus not being taxed, which they are not, then they are able to slash the market considerably, at the other hand, by selling the drop in type people, people having no connection with the hospital. Now, was this the intent of Congress to literally destroy the corner drugstore, because they make no mistake about it. I do not exaggerate, that is precisely what has occurred in Portland and will occur nationwide and does occur. This sort of thing is a real source of danger. I do not think that there was the intent by Congress to upset the traditional patterns of distribution which had evolved over so many years. We say this, sure the hospital perform a function and a very good function. Fine, let us preserve them, but at the same time do not destroy the alternative which all of us have had up until now. Warren E. Burger: You do not want them to perform your client’s function, that is the essence of it, is it not? Roger Tilbury: No, Your Honor, I do not say that; I say, they can not. Warren E. Burger: Is that not the cases is about? Roger Tilbury: I say this that if they decided to add like corner drugstore, they should pay the same price. Warren E. Burger: No. Roger Tilbury: Only that. Speaker: That is your clients question, if that was a question, have in mind. Roger Tilbury: Well, 13C give them an exemption as you know, for certain purposes. Now, at the point, it is no longer for their use then we say the Robinson-Patman Act applies, and that they should freak with equality, the drugstores and the hospitals. If the hospital conducts its operation in precisely the same way as a corner drugstore, and they are. They are indistinguishable in many cases, and it is not limited strictly to Kaiser. Anyone can come in and incidentally the amount of these, we have found we have triple affidavits in the file saying and showing that it is very easy to purchase at some of these hospitals, even though their administrators later have disavowed it. But we have investigators that have been able to buy them with complete impunity, and not have it questioned at all. And this sort of this sort of thing is going to happen and will occur with greater frequency, unless in some way, this Court says that that law means what it says. And it was -- Lewis F. Powell, Jr.: Mr. Tilbury. Roger Tilbury: Yes, Your Honor. Lewis F. Powell, Jr.: You draw the line that whether or not the drugs were consumed on the premises of the hospital. Suppose there were no Section 13C at all, would there be any competition with respect to drugs consumed on the premises of the hospital? Roger Tilbury: I do not feel that that is a competitive impact, if it is consumed on the hospital premises by an inpatient. Lewis F. Powell, Jr.: Alright. So that, with respect to the drugs, would you think -- Roger Tilbury: May I -- excuse me, may I qualify that. I do not say that there would be a competitive effect insofar as our clients are concerned. There would be an impact, insofar, as a profit hospital that might be two blocks away. So in this regard, the law was changed. Lewis F. Powell, Jr.: This case involves only your clients. Roger Tilbury: Yes, sir, that is true, but I did want to point out that that change did take place because of 13C, because now, even though competition is affected, they may discriminate in price, in favor of a nonprofit hospital, even though it may have rather devastating effects to a profit hospital. Lewis F. Powell, Jr.: In terms of the interest, you represent your clients. Roger Tilbury: Yes, sir. Lewis F. Powell, Jr.: What purpose that Section13C said in light of your view of the Act? Roger Tilbury: It clarified the law, it permitted them to make sales within the hospital because Congress felt in 1938 that that was illegal. Both the Senate and the House Committees and also the letter which is quoted in both of those reports from the men who then headed the hospital bureau supplies and who was the more or less, the (Inaudible) of this particular bit of legislation. Lewis F. Powell, Jr.: If it says no adverse effect on competition resulting from drugs consumed within the hospitals, you never get to 13C, do you? Roger Tilbury: If in light of the present case law that is true. In light of the case laws, it was in 1938 Congress felt that that was an illegal operation. Now I am willing to concede -- Harry A. Blackmun: What about the secondary line that there will still be a question of competition for clients -- Roger Tilbury: That could be a primary line, yes sir Harry A. Blackmun: -- between manufacturers. Roger Tilbury: That is true. I would concede it. Harry A. Blackmun: And 13c would serve in that respect in any event. Roger Tilbury: Yes, Your Honor, it is certainly correct that that effect also took place, yes. But Congress certainly felt it was serving a function in passing 13c. Well, Congress felt it was illegal at that point, and the Senate Committee said so, and so did the, as manufacture said it had now made it illegal. So, this change was brought about by 13c, and it clarified the situation of the in hospital use as well. So that there is -- I concede it, and in light of the case law now I would concede that probably, even then, perhaps, it was unnecessary if the case law had developed to the point that it now had, but that was something that Congress was not in the position to forecast accurately. Now, again, why I return to the words of the stature which I think, basically, is what we are talking about. The word “supplies” also means something other than resale. A supply wagon in the days of old vestment supplies went through a particular fort or a particular city or something of that kind. It did not mean the things that were going to be sold in a vendor’s cart from door to door. These are not supplies, and “use” means -- and certainly under all of the use taxes in every sate I can think of, that at the point something is resold and of course, this is the Astro (ph) case, which this court decided in 1882, when you talked about a resale, that is no longer a “use”, it is simply supplying something to be used by somebody else. And when Congress stressed the word “their” twice, their supplies, and I noticed this seems to be dropped occasionally, from the petitioner’s brief, “their supplies for their own use”, that word “their” used twice, certainly, meant the hospital. It did not mean the private consumption of somebody off the premises having no connection with the hospital. And particularly, when they went to Congress and said, “We needed to take care of the needy sick”, with any institution. William H. Rehnquist: Would it be more precise, that has to mean for the use of the hospital’s own patients. Roger Tilbury: Well, I suppose that is an interesting thought. William H. Rehnquist: Well, because if you are talking about the use of the hospital, the hospital does not use the drug. Roger Tilbury: Well, they can do it for experimental purposes. I could conceive of that, but that is about the only exception. William H. Rehnquist: That is not what you are arguing here. Potter Stewart: You do not insist on that limitation. Roger Tilbury: No. Potter Stewart: That literally, as my brother Rehnquist says, then all it would be -- then the only supplies actually used by hospital would be things like furniture and so on, but in the area of drugs, would just be for their own experiment corporate use. Roger Tilbury: Well, I do not interpret it that way. Potter Stewart: For corporate consumption. Roger Tilbury: No, I would not so limit it. I think in the case of that by the patients in the hospital, that is certainly a permissible thing. No question about it. Now, I might say, also, that at the very least, and of course I do not need to argue extensively the point that this was decided on a summary judgment. It was decided at the early stage I have ever seen a case resolved in the sense that we had no meaningful discovery, we were not permitted to ask any interrogatories, no motion to produce what is permitted to us, we were not permitted to ask the depositions or take the depositions of a single one of any of the petitioner’s employees. The only thing we were permitted to ask was to pose a few of the hospital people, and we were greatly limited there. Thurgood Marshall: Did you not win? Roger Tilbury: Pardon me. Thurgood Marshall: Did you not win? Roger Tilbury: Did I win? Thurgood Marshall: Yes. Roger Tilbury: Well -- Thurgood Marshall: You won in the Court of Appeals.[Laughter] Roger Tilbury: Yes, that is true, but in the lower court -- yeah, sure. In the lower court, we had to go with a very handicapped situation, and we still think that the quantum of this discrimination, he is now insisting, it is like one-third of one percent. We think, it is more like 40%, if the truth emerges, and we certainly hope that it does. But I can never recall a case in my own experience where it is been resolved with so little discovery. Warren E. Burger: Do I correctly translate your obligation means that this Court should not reverse the Court of Appeals on this record, that we might affirm them on this record but not reverse them Roger Tilbury: Yes. Speaker: Is that what you are saying? Roger Tilbury: Yes, sir, I would be pleased about that. Yes, sir. William H. Rehnquist: Well, you have to cross petition to bring before us any problem as to the adequacy of the summary judgment hearing in the District Court, I would think. Roger Tilbury: That is true, and I did not, yet that is very true. Now, I might say this, our target is not the entire drug industry. As a matter of fact, you will notice, we have only sued 12 defendants which is probably enough to keep me talking but nevertheless, only 11 of these actually, because one is a holding company. There are many drug companies in this field including, I thought Lilly, because Lilly has this agreement which do not make this dichotomy at all. They do recognize the law and do have a unitary price insofar, as you have a competitive situation. Now, this case, this Court has said in the Standard Oil case and many others, in the Robinson-Patman case that competitors where you get a competitive impact should start from the same plane, and that is all we ask. We asked that if they want to act like drugstores, then give us the same break. Please let us acquire the same drugs and then let the consumer make the choice. If he prefers a hospital to us, fine, that is his privilege, but I do not think that if you are going to have a race, and that is what competition, I guess, fundamentally is, that one competitor should start off 10 yards behind the rest of the competitor. And that is what where we are. Some of the degree of competition here is astounding. I believe it was far in excess of anything I would have ever imagined. Sometimes, we are being charged five times what the hospital is. Now, if the drugstore, and I say this quite literally, is to survive then they must be given a chance to compete on fair and equal terms. They are not being given that chance now, and they have challenged me on the numbers. The fact is, they are not 211 as he stated in his required brief, in Portland, at the present time, there are 152. And if you want to go strictly at the city, in Portland itself, there are only 64 within the city limits, for a city of 450,000. They are used to be as a 123 more within the tri-county area as our map in the back of our exhibit shows. These are real dangers, we thank the drugstores as part of the American scene too, but it will no longer be that. Harry A. Blackmun: How many Portland drugstores, you are talking about, have changed. Roger Tilbury: At the present time, within the City of Portland, if you exclude the change, Your Honor, there are 64. Harry A. Blackmun: Well, and if we add the change? Roger Tilbury: The change would add, within the city limit itself, I think a number 17 or so, something like that. Potter Stewart: That is individual retail outlets? Roger Tilbury: Yes, sir and not -- that is kind of each individual retail outlet, even though it maybe part of a chain, but this is a problem, and it is really as I mentioned, just in passing that 23 new ones have opened. Well, those 23 are not all community pharmacies and in this sense, 1971, only seven of those are what we normally described as drugstores. The others are clinics, there are nursing homes, there are things of this kind, which -- my time is up. Thank you. Warren E. Burger: Thank you, gentlemen. The case is submitted.

John G. Roberts, Jr.: We'll hear argument next in Case 17-1077, Lorenzo versus the Securities and Exchange Commission. Mr. Heim. Robert Heim: Mr. Chief Justice, and may it please the Court: In Janus Capital, this Court held that only the maker of a misstatement can be held liable for that misstatement under Section 10(b) and Rule 10b-5(b). The court below correctly held that Petitioner, Frank Lorenzo, was not the maker of the statements that are at issue in the two emails in this case. However, the court below erred when it held that Lorenzo could nevertheless be liable for those very same misstatements under a theory that, by producing and sending those statements, he engaged in a deceptive act, artifice to defraud, or practice, for purposes of liability under Section 10(b), Rule 10b-5(a) and (c) and Section 17(a)(1). For three reasons Lorenzo's actions do not support liability. First, permitting liability under Rule 10b-5(a) and (c) and 17(a) would allow plaintiffs to sidestep this Court's holding in Janus and the limitations that were placed on misstatement liability. And it would allow plaintiffs to creatively relabel their inadequate misstatement claims as claims for deceptive devices and acts. The result is contrary to Janus and would render Rule 10b-5(b) a nullity. Second -- Sonia Sotomayor: Excuse me, Janus was a private cause of action, correct? Robert Heim: Yes, Your Honor, it was -- Sonia Sotomayor: Under 10b-5? Robert Heim: Yes, Your Honor, under 10b-5(b). Sonia Sotomayor: I -- I understand what Janus said, but I don't know how it squares with 17(a). And you swept 17(a) in. 10b-5 uses the phrase "to make" any untrue statement. But 17(a) says to obtain money or property by means of any -- of any untrue statement of a material fact. That seems dramatically different to me. 17(a) is a government provision, meaning only the government can sue under 17(a). Why should we be treating the two identically? I don't know that anywhere in your brief you explain that. I know that we've had -- made general statements that the two inform each other, but certainly not on this critical point, because Janus was based explicitly on the "making" language of 10b-5(b). Robert Heim: That's true, Your Honor. The -- the subsection that you quoted is actually from Section 17(a), subsection (2), which is not -- was not charged by the SEC and which Mr. Lorenzo was not accused of violating. And we agree that subsection (2) may be a better way for the SEC to proceed if they're going to try to hold Petitioner liable as a primary violator, because it -- it almost fits very closely here because that's the equivalent of Rule 10b-5(b). Elena Kagan: But the same point can be made, Mr. Heim, with respect to 10b-5(a) and (c) and also with respect to 17(a)(1) and (3), right? That the idea is -- is, look, Janus was a decision that -- it was a very textual decision. Its -- it interpreted the word "make." Its -- it had lots of examples from real life about who makes statements and who doesn't make statements. And neither (a) or (c) in 10b-5 has the same language in it. Robert Heim: Well, Justice Kagan, 10b-5(b) only addresses misstatements. The other categories in 10b-5(a) and 10b-5(c) are really conduct-based language. They get to acts and -- and practices and courses of business. And our view is that (a) and (c) cover quite a different type of fraud. Elena Kagan: So you think that (a) and (c) are sort of any -- everything except misrepresentations or omissions? Is that your position? Robert Heim: We -- that is essentially our position. We don't dispute that there can be cases where -- where you have both misstatements and deceptive conduct. But, as Desai said, in the circuit court of appeals, is that the judiciary's always recognized a difference between deceptive conduct and deceptive statements. Elena Kagan: So take this case. Mr. Lorenzo here sent false financial information to potential investors. He was -- when he did that, he was the head of the investment banking division. And he sent this false financial information. And you concede -- in your yellow brief, you conceded quite a few times that he did so with an intent to defraud. So he -- he sent -- he presses send, and -- and an email is sent that contains false financial information. And I'm looking -- for example, I'm looking at the language of 10b-5(c). Do you think he has not engaged in an act which operates as a fraud? Robert Heim: We do, Your Honor, for several reasons. One -- Elena Kagan: We do what? We? Robert Heim: We do not think that he engaged in any conduct that violated 10b-5(c) because, in order for 10b-5(b) to have any meaning, it -- Elena Kagan: I guess I'm wondering, just take -- I understand that argument, and it's, I think, a serious argument. But pretend that 10b-5(b) was not in the statute for just a second, and you're entitled to come back to it, but just pretend it wasn't in the statute. Is the behavior that was charged here and that you've conceded was done with an intent to deceive, is that engaging in an act that would operate as a fraud? Robert Heim: No -- no, Your Honor, for a couple of different reasons. One, the Congress has set up a statutory scheme for what constitutes aiding and abetting liability, and one of the key distinguishing features between primary liability and aiding and abetting is the concept of substantial assistance to a primary violator. In this case, Mr. Lorenzo just sent an email at the direction of his boss with content that was provided by his boss to the recipients. Ruth Bader Ginsburg: I tell you, all the content -- I mean, the email begins with a summary. It says the banking -- investment banking division is summarizing key points of the debenture offer. And then there's the part that allegedly was cut and paste. But it starts out with a reference to what the investment banking division is doing. And it's signed by the head of -- head of that division. It -- so -- so it's not simply conveying what the boss told Lorenzo to send. The whole thing wasn't cut and paste, just a portion of it. Isn't that so? Robert Heim: Well, Justice Ginsburg, the court below found that there was sufficient attribution in this email to Gregg Lorenzo because it does start off by saying that it's being sent at the request of Gregg Lorenzo. And the record -- and the D.C. Circuit, after looking at the Commission's findings, found that Gregg -- Frank Lorenzo was not the maker of the statements in the email. And one of the reasons for that finding was because it was attributed at the start of the email to -- to Gregg Lorenzo. Sonia Sotomayor: But -- but do we have a -- Elena Kagan: Mr. Heim, if I understand your position, it's irrespective of that fact. In other words, suppose that Mr. Lorenzo had made the email -- had -- had -- had come up with the email himself. If I understand your position, you would say, well, it's still not part of 10b-5(c) because that's a misrepresentation, and misrepresentations can only be charged under 10b-5(b). Isn't that what you would say? I thought that that was what you just told me. Robert Heim: Well, no. That's slightly different than our hypothetical because the question is really whether Rule 10b-5(b) misstatements can be a part of other subsections. And in that particular instance, if Mr. Lorenzo had drafted the email, there's certain other conduct, and our position is that, in order to be held liable for 10b-5(a) and (c), Mr. Lorenzo would have to have engaged in something in addition to just mere misstatements. Samuel A. Alito, Jr.: Did he make a misstatement? Did he personally make a misstatement? I think -- I thought your answer was no, he did not make a misstatement. Robert Heim: No, he didn't, and that was what the D.C. Circuit found. Samuel A. Alito, Jr.: Okay. So then why doesn't it fall within (c)? Why does your rule that if it's a misstatement it can't fall within anything other than (b) help you, when you argue that he didn't make a misstatement, he did something else? So why doesn't it fall within (c)? Robert Heim: Because Mr. Lorenzo didn't engage in any additional deceptive conduct other than making -- once he was deemed to be not the maker of the statement, our view is, consistent with the majority of circuits that have considered this question, is that some other inherent deceptive conduct would have to be engaged in by Mr. Lorenzo. Samuel A. Alito, Jr.: Well, just take the language of (c). Why doesn't his conduct fall squarely within the language of (c)? Robert Heim: Well, because (c) talks about conduct. It's a type of fraud that's categorically different than merely misstatements or omissions. Samuel A. Alito, Jr.: Well, you -- you say (c) can't include any verbal conduct? It has to be something else? I don't quite know how you're going to engage in a fraud without -- without saying some words. Robert Heim: No, Your Honor, that's not our position. There can be cases where there's both conduct and misstatements, which (c) would cover. Our position is, when you have a case like this one, when there's only misstatements and no deceptive conduct, that in order to allow a plaintiff to repackage those claims as claims under (a) and (c), would render 10b-5(b) meaningless. And, also, the D.C. Circuit set the bar very low. If sending an email that was prepared by somebody else constitutes enough of an action to constitute primary liability, it would really leave no room for any sort of aiding and abetting liability. It would convert anybody that, perhaps, gives some sort of substantial assistance to a primary violator. Sonia Sotomayor: I have a problem with -- Samuel A. Alito, Jr.: Well, I don't see why you need to get into aiding and abetting. He's -- he's a principal under (c). He did the -- he did the act that is described in (c). It's not necessary to -- to -- to -- to ask, all right, somebody -- he didn't do the act that is described in (c), but he aided and abetted somebody else who did the act. Robert Heim: Well, there's an important distinction to be drawn there because the concept of primary liability really ties into an active -- the statute and the regulation discusses concepts of using and employing, which implies a certain level of active conduct. Here, in this case, we have two emails that were sent moments apart, and the content was essentially prepared by his boss, Gregg Lorenzo. Ruth Bader Ginsburg: I'd like to go back to my question on that point. I'm looking at the Petitioner's Appendix 107. It sets out one of the two emails. And then there's a portion that's underlined, and I thought that that is what came from the boss, but the first part, it does say at the request of, but it says the investment banking division, of which Lorenzo is the head, has summarized key points about the debenture offering. Robert Heim: Well, no, Your Honor. The -- the record in the holding below was that the email as a whole came from the boss, Gregg Lorenzo, not from Petitioner, and that the Petitioner, Frank Lorenzo, was instructed by Gregg Lorenzo to send the email out to clients that were clients of his boss. Sonia Sotomayor: I'm sorry, I'm having -- Elena Kagan: If I could -- Sonia Sotomayor: -- I'm having a problem from the beginning. Once you concede, which I think you did, that you're not challenging that your client acted with an intent to deceive or defraud, that you aren't challenging the D.C. Circuit's conclusion to that effect? Is that correct? Robert Heim: Yes, Your Honor. Sonia Sotomayor: I don't understand, once you concede that mental state, and he has the act of putting together the email and encouraging customers to call him with questions, not to call his boss with questions, how could that standing alone give away your case? Robert Heim: Well, Your Honor -- Sonia Sotomayor: I mean, that -- that makes him both the maker of a false statement, whether his boss shared it or not, and I know the courts below thought differently, but it's also engaging in an act, practice, or course of conduct which operates or would operate as a fraud or deceit upon any person. Whether he was a maker or not, he was encouraging the customers to call him directly about buying or -- buying what was being offered. Robert Heim: Well, Justice Sotomayor, I think you're tying into what our position is with respect to what more would be necessary to convert over Mr. Lorenzo into a primary violator, because, if those customers had, in fact, called Frank Lorenzo, which they didn't, and he would then have repeated the statements or he would have engaged in some other type of deceptive conduct, but merely producing and sending the emails is such a low bar that the D.C. Circuit said for -- Elena Kagan: But, Mr. Heim, we've made very clear in Central Bank that this idea of primary and secondary, if your actions fit within the language of the particular provision of the statute that you're charged on, then you're a primary violator of that provision. Right? And even if, given some other language, you wouldn't be, or given, you know, some more common -- you know, some -- some other understanding of what it means, if you fit within the language and you violate that language, you're a primary violator. That's what we said in Central Bank. And I guess the import of these questions is he fit within that language. He engaged in an act that operated as a fraud. Robert Heim: Well, Justice Kagan, our view is that you can't take that language in -- in a vacuum. You have to consider it in the context of the statutory framework that Congress has put into place for aiding and abetting liability because, if you were to find that Frank Lorenzo engaged in a primary violation here, it would undermine Congress's statutory intent for setting up in Section -- Section 20 of the Exchange Act exactly who is an aider and abetter. And the key distinction is somebody who provides substantial assistance. Perhaps here the SEC -- Elena Kagan: Well, because -- that is useful because there are some people who don't fall within the language of the statute and, nonetheless, can be charged as an aider and abetter under Section 20, if the SEC does it, if it's not a private action. But what we said in Central Bank is, look, if you do the thing that's -- that is described in a particular subsection of this statute or of the -- or of 10b-5, the rule that implements it, then you're a primary violator as to that subsection. Robert Heim: Our view is that Mr. Lorenzo did not engage in conduct sufficient to form a violation of 10b-5(c), for instance. When -- when you look at the case law, it has a much higher standard for what constitutes violations of those provisions. So, in order for Mr. Lorenzo to have become a primary violator, he would have had to engage in more active misconduct. If he, for instance, would have set up a phony purchase order to substantiate one of the points of the email, if he were to go onto the Internet and produce content under phony aliases, these are all -- Elena Kagan: Well, those would have been bad too, but I guess I just don't get why the act that he did engage in is not an act that operates as a fraud? Robert Heim: Well, for two reasons, Your Honor. One, sending the email does not rise to the level of using or employing a fraudulent device under our view. And number two -- Elena Kagan: Well, that's -- you're quoting me (a) and I was using the language of (c), although, honestly, one could just as well use the language of (a) because we've said that a -- a fraudulent device is just a scheme to defraud. Robert Heim: Well, Your Honor, it -- it has a certain level of -- of intentionality behind it in terms of Mr. Lorenzo. So sending an email in and of itself would not, in our view, raise -- rise to the level of employing or using a deceptive device. And, you know, an additional related point to that is that this Court's holdings in Central Bank, Santa Fe, and other cases confine Rule 10b-5(b) to the boundaries of Section 10(b). So, in other words, Rule 10b-5 cannot go beyond the boundaries of Section 10(b) in terms of proscribing fraudulent conduct. And that line of cases says, in order for conduct to be fraudulent, it has to be either deceptive or manipulative. And the Chiarella case stands for the proposition that, unless there's a misstatement or an omission or some sort of manipulative trading, that those are essentially the three categories of fraud that are proscribed by Section 10(b). Elena Kagan: I have to say I think that that works against you, that principle, because, you're right, that all of 10b-5 is coming off of 10(b), which refers only to manipulative or deceptive devices or contrivances, but it's well understood that misrepresentations or omissions are manipulative or deceptive devices or contrivances, and just those misrepresentations alone. I mean, if -- if some of your arguments were correct, if you took them to their logical extent, you would have to say that misrepresentations and omissions don't fall within that language of 10(b). Robert Heim: Well, Justice Kagan, that's when you get into the importance of the Janus decision because, once Frank Lorenzo is determined not to be the maker of those misstatements, in our view, it takes him out of the category of misstatements and -- Elena Kagan: I understand, but your argument would also take out the makers of those misstatements. Robert Heim: Not necessarily because the makers of the misstatements would have primary liability. We're not contesting that here. And it's not one of the issues that -- that's at issue. Our view is that, once Mr. Lorenzo is deemed not to be the maker of the misstatement, the Court then would look to see, well, is there an omission, which there isn't here. Is there manipulative trading being done? John G. Roberts, Jr.: Well, but I thought -- I thought you said just a short while ago that simply sending an email is -- is -- is not enough. Robert Heim: Yes, Mr. Chief Justice. John G. Roberts, Jr.: So then you -- your distinction depends solely on the content of the email? In other words, it's -- it gets down to the basic question of whether or not Frank Lorenzo was involved at all in the drafting? So, for you -- for you to prevail, we have to understand him as -- as, I guess he argued at one point, not even reading the email? Robert Heim: No, Mr. Chief Justice. That -- I don't think, in order for us to prevail, you have to make that finding. Our position is that the Court should establish the test that Mr. Lorenzo's conduct has to be something that's inherently deceptive, and that would be sufficient to push him over the line from being somebody who is not the maker of the misstatement but could still somehow be held liable under Rules 10b-5(a) and (c). Stephen G. Breyer: So why wasn't it -- I mean, I -- I thought he sent his email around to people and said this company, which he knew was worthless from their filing, has $10 million in assets, which he knew wasn't true, and also had $43 million other to -- to back it up, which he knew wasn't true, and his defense was, well, I only sent it because my boss told me, his -- the other Lorenzo. And so, fine, then he's not the maker. But it seems pretty bad. I mean, he'd been working with this company for quite a long time and these investors. And so what is it that makes this just aiding and abetting? Maybe he didn't make the statement, but he was sure a big deal participant. Robert Heim: Yes, Justice Breyer. And -- and to be clear, Mr. Lorenzo acknowledged in the record at the trial that he made a mistake. And under our position, Mr. Lorenzo would not get off scot-free. There's very stringent remedies against aiders and abetters, as well as, as referenced before, Section 17(a)(2), which is not at issue here, would seem to perhaps fit much better because it's a -- it's a subsection that deals with obtaining money or property under false statements. And that doesn't raise the same Janus issues. And that doesn't raise the distinctions -- Sonia Sotomayor: I'm -- that's what I'm having trouble with. Whether 17(a)(2) was charged or not is irrelevant, because the way 17(a) is structured, it's not controlled by Janus at all. Robert Heim: Well -- Sonia Sotomayor: Because it doesn't talk about making statements. It talks about obtaining money or property by statements. There's no reason why we should limit, under Janus or otherwise, limit (3) from -- or 17(a)(1) or (3) from taking their natural meaning. If you make a materially false statement intentionally, which you've conceded he did, then he engaged in a transaction, practice, or course of business which operated or would operate as a fraud. Robert Heim: Well, Justice Sotomayor, just to be clear, our position, as was the D.C. Circuit, was that Mr. Lorenzo was not the maker of -- of these statements. Sonia Sotomayor: He wasn't the maker -- Robert Heim: Right. Sonia Sotomayor: -- but he had the scienter. Robert Heim: He had the scienter, but that's -- Sonia Sotomayor: And you're not disputing that. Robert Heim: Correct, but that's not the test in terms of whether he would fall into one category or the other. And this Court, in U.S. versus Naftalin, was addressing Section 17(a) and its different subsections, and it said that each subsection prohibits a different type of conduct. And in order to give meaning to each of the different subsections, it just cannot be read in such a way to say that every claim, for instance, for misstatements, could easily be brought under 17(a)(1) or 17(a)(3). Elena Kagan: Well, you -- you're suggesting that because (b) refers specifically to misrepresentations, that those misrepresentations do not fall within (a) or (c). But I guess, to understand that view of the Act, which is everything prohibits something different, you would have to, for example, think that (a) and (c) are mutually exclusive. What's the difference between (a) and (c)? Robert Heim: (a) and (c), Your Honor, are closer together. They both deal with fraud. They both deal with deceptive conduct. The -- the Court doesn't have to reach the issue as to whether or not there's a difference between (a) and (c) -- Elena Kagan: Well, no, but we have to understand what the statute is about. You're presenting one view of the statute, which is that each of these -- or the rule, which -- which is that each of these different sections is -- is apart from each -- is apart from the rest, that each prohibits a different thing from the -- and I guess I'm suggesting a different view of the statute, which -- which is -- which (a) and (c) make pretty clear, that these are very overlapping. One overlaps the other overlaps the other. They're all meant to essentially address the same thing. This is a kind of belt-and-suspenders statute, where it's like we're going to find every possible way to say this thing in order to make sure that fraudulent acts are covered. Robert Heim: Well, Justice Kagan, we don't dispute that there could be some overlap between the different subsections. But here, in order to sustain the D.C. Circuit, it would really be a wholesale elimination of one of the subsections, which is Rule 10b-5(b). And that would be contrary to the -- to the holding of Corley versus United States, where the Court is -- is -- the purpose is to find meaning for each of the different subsections and not read it in a way that would make one of them redundant. Elena Kagan: But then I'm going to ask you again, what's the difference in meaning between (a) and (c)? Robert Heim: Well, the -- they both deal with conduct. And I don't know if there is a real meaningful difference between (a) and (c) because they both have very similar language between the two. But I think the Court can -- as -- as the lower courts have, they can consider (a) and (c) as one type of fraud, which is conduct-based because the conduct -- the language is very similar, the plain language of (a) and (c). And the courts below, in the majority opinions that we cite, do treat (a) and (c) as very similar on one hand and then (b) as distinct. And the majority position is -- is that plaintiffs should not just be allowed to repackage inadequate 10b-5(b) claims, which are just the misstatement claims, and say that those misstatements, standing alone, can somehow be enough to satisfy the language of (a) and (c), which is a conduct-based fraud. And if the Court was to uphold that view, it would render 10b-5(b) meaningless and I think also, by implication, Section 17(a)(2), which 10b-5(b) was drawn on. So there's a lot of problems with sustaining the court's opinion below with regards to that. Ruth Bader Ginsburg: Can I ask you just some basic questions? The -- there's no doubt, is there, that at the time this email was sent, Lorenzo knew full well that the company was worthless? Robert Heim: Well, we -- we did not challenge the scienter finding, which was also conceivably, and as set out there, a recklessness finding. Mr. Lorenzo testified he did not see the disclosures in the earlier SEC filings. But we're not contesting scienter, which could be recklessness. Ruth Bader Ginsburg: And the record is a little confusing. At one point, the ALJ says he didn't even look at the email. At another point, he himself testified that he authored the emails. Robert Heim: Well, the -- the -- well, there is inconsistencies in the record, but, overall, the -- the import of the testimony taken together was such that it was Gregg Lorenzo that was the -- the creator of the email and the maker of the statements. And the SEC has not challenged that -- that holding either on -- in their case. And I would like to reserve the rest of my time for rebuttal if it's okay with the Court. John G. Roberts, Jr.: Thank you, counsel. Mr. Michel. Christopher G. Michel: Mr. Chief Justice, and may it please the Court: Petitioner's decision to send emails that grossly misrepresented the financial prospects of his client and to give illusory promises designed to deceive investors into backing a business that he knew was failing constitute a quintessential securities fraud. His conduct falls within the plain text and the common-sense meaning of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, and subsections (a) and (c) of Rule 10b-5. Sonia Sotomayor: Why didn't you charge -- John G. Roberts, Jr.: It sounds like the -- Sonia Sotomayor: I'm sorry. John G. Roberts, Jr.: It sounds like the argument your -- your client made in Janus that was rejected by this Court. Christopher G. Michel: Well, Mr. Chief Justice, in Janus, the provision at issue was 10b-5(b). And the government is no longer pressing a 10b-5(b) charge in this case. The -- the Janus opinion, from start to finish, is very clear that it's interpreting the term "make" in Rule 10b-5. Ruth Bader Ginsburg: But the essential argument on the other side is that the argument you're now pressing is just an end run about Janus. It would render Janus essentially inconsequential. All you do is repackage what would have been a 10b charge under 17 or 10b-5(a) and (c). Christopher G. Michel: Well, Your Honor, a couple of points in response to that. First of all, Janus will still have significant meaning, especially in private actions, because Janus limits the number -- limits who can come within 10b-5(b). And the Janus opinion was careful to -- to distinguish between aiders and abetters who are sort of background actors, the speech writer example is the one that the Court gave, preparatory actors who aren't themselves employing a device under (a) or engaging in an act under (c) but are instead merely supporting that. So our contention is not that everyone who has some involvement in a statement will somehow become primarily liable under (a) and (c) and Section 17(a). As Justice Kagan said, Central Bank was very clear that the test for primary liability is simply that the defendant has to satisfy all the elements of the statute. And in -- and Central Bank says expressly that even if somebody is a secondary actor in some colloquial sense, like a lawyer or an accountant, that person can still be primarily liable under the securities laws if that person satisfies all of the statutory requirements, as Petitioner did here and as I don't take him to seriously contest. His argument seems to be that subsection (b) of 10b-5 has some sort of field preemptive effect in that it serves as the sole vehicle for bringing claims -- securities fraud claims involving statements. Neil Gorsuch: Counsel, that's not how I understand the argument. And as I understand the argument, it goes something like this, and it proceeds in about five or six steps, I think. First, Central Bank says we've got to look at the statute. The rule is nice, but let's look at the statute. So we look at the statute, and it prohibits manipulative or deceptive devices essentially. Well, no manipulation is alleged here, just deception. Are we on the same page so far? Christopher G. Michel: Yes, Justice Gorsuch. Elena Kagan: Okay. All right. Deception, I think of fraud. Elena Kagan: Well, are you? Because there's another statute -- Neil Gorsuch: Well, if I -- if I -- Elena Kagan: -- too, which is Section 17. Christopher G. Michel: That's true. I took Justice Gorsuch to be referring to 10b-5. Neil Gorsuch: I'm just talking about 10(b) -- 10(b) at the moment. We can get to 17 in a minute. All right. But -- so we're -- so we're on the same page. And when we talk about deception or fraud, we have mens rea and actus reus. You say I'm not contesting mens rea, just actus reus. Okay, fine. When we get to actus reus, no omission is alleged, just an action. You could -- you could have an actus reus of fraud by act or omission, only act's charged here. And the only act seems to be this statement issued to potential investors, and we have a finding from the D.C. Circuit that it wasn't made, that act wasn't made, that statement wasn't made by this defendant. Now we could maybe overturn that, I suppose, and you could argue that. But, if you didn't make the act a fraud that's alleged, then doesn't that necessarily imply he substantially assisted if anything? I think that's the argument. Christopher G. Michel: So I think it was maybe around step four that I disagreed with you, and that is I think you said that he didn't make the act. But I do think it's important to distinguish, to your point on the text of the statute and the rule, what the D.C. Circuit found was that he didn't make the statement, and, therefore, he didn't fall within the text of 10b-5(b). Neil Gorsuch: But the only act of fraud, you have to have an act that deceives someone else. And the only thing that deceived anybody allegedly here were these emails, right? Christopher G. Michel: That's -- that's -- Neil Gorsuch: And he didn't -- and he didn't make them. Christopher G. Michel: That's -- well, the D.C. -- the ALJ found and the D.C. Circuit affirmed that he did personally produce and send these emails. Neil Gorsuch: Well, are -- are you challenging that? I understood the government to say we're not challenging the D.C. Circuit's holding that he didn't make the statements. Christopher G. Michel: We're not -- we are not challenging the finding that he didn't -- Neil Gorsuch: Okay. Christopher G. Michel: -- make the statements. But we -- we -- but the D.C. Circuit also determined, upholding the ALJ, that he did do the act. And if you look at the language of (c), Rule 10b-5(c), he engaged in the act of sending the emails. And I do want to make clear that this is not simply retransmitting the statement. He sent the emails on behalf of the investment banking division, which is exactly what his boss calculated would make the statements more misleading. Neil Gorsuch: The actus -- I think where we're getting stuck, and then I'll -- I'll stop, I promise, is that the actus reus for fraud is the act of actually deceiving another person. And the only thing that could have done that here would have been the transmission of the emails to other persons, right? Christopher G. Michel: I -- I agree. Neil Gorsuch: Okay. Christopher G. Michel: But I think the transmission of it -- Neil Gorsuch: We agree -- we agree on that. Christopher G. Michel: Yes -- Neil Gorsuch: Okay. Christopher G. Michel: -- but the transmission of -- the statement in the abstract, you know, does -- does nothing. It was the transmission of the email, which is an act. I think, if you look at the ordinary meaning of "act," it would include sending an email or the ordinary meaning of the verb "employ" in 10b-5(a). Neil Gorsuch: But the act -- the relevant act for fraud, again, though, is the act of deceiving another. Christopher G. Michel: And -- yes. And this email was extraordinarily deceptive, as was commented earlier. There were -- there were three gross mischaracterizations of the company under the representation that they would provide different layers of protection. Sonia Sotomayor: Just so I understand the SG's position on this issue, do you believe that Janus controls 17(a)(2)? You didn't charge it or it wasn't charged here. I don't know if it was -- it wasn't likely you personally, but are -- are you taking -- is the SG's office taking the position that Janus controls 17(a)(2)? Christopher G. Michel: No, that's not the SG office's position. It's not the Commission's position. It wasn't charged in this case, you're right, Your Honor, but we would not say that it controls. Sonia Sotomayor: Do you know why? Christopher G. Michel: I don't actually know exactly why (a)(2) wasn't -- 17(a)(2) wasn't charged in this case, but the reason we wouldn't take that position is that the verb "make" is not in 17(a)(2), and that is critically the word that the Court was interpreting in Janus. I -- on that point, I do want to make clear that Janus was self-consciously a decision only about 10b-5(b). I think it was the second question in the oral argument in that case from Justice Sotomayor was why isn't there an (a) claim, a scheme claim in this case? And petitioner's response was not that his clients wouldn't have been liable under that theory. It was that that simply hadn't arisen in the case. So Janus was clearly just deciding the meaning of (b), which I do think goes to the real flaw in Petitioner's argument, which is, again, that subsection (b) somehow restricts the meaning of (a) and (c) in Rule 10b-5 and also somehow restricts the meaning of subsection (a) of a completely different statute, the Securities Act of 1933. And I do think it's a quite extraordinary argument to say that the Commission could, by adopting a rule in 1942, change the meaning of a statute that was enacted by the Congress and signed by the President in 1933. In fact, you know, this Court has repeatedly rejected that kind of field preemption or exclusive remedy argument in the securities laws, most prominently in the Affiliated Ute case, where the Court says quite literally even though petitioner is not -- or the securities seller in that case is not liable under (b), he is liable under (a) and (c) because those provisions are not so restricted. Another good example is the Herman and MacLean case that we cite in our brief. There, petitioner was -- the defendant was found liable under Rule 10b-5 for misstatements or omissions in a registration statement, even though Section 11 of the Securities Act applies expressly to misstatements in registration statements. And the Court in a quite extended discussion said we're not going to apply a theory of displacement. We're not going to apply a theory of exclusive remedies. In fact, both of the two statutes, the Securities Act and the Exchange Act, have clauses that say they're not the exclusive remedies for securities laws. Stephen G. Breyer: What does "fraud" mean, other than trying -- doing something to -- to create in the mind of the hearer or recipient a false belief that is material? Christopher G. Michel: I -- I think that's a good -- I think that's a good description of it. Stephen G. Breyer: Well, that's Black's Law Dictionary. It's good enough. And, fine. (Laughter.) Stephen G. Breyer: If that's what it is, if that's what it is, there could be two ways of doing it. One, you make the statement yourself. Two, you're part of a group where someone else makes the statement, but you play a pretty important role. Indeed, you might be the boss of the group, in which case you're not an aider or abetter. So, if you're not the maker, but you do, in fact, give rise to, perhaps as the boss, the false misrepresentation, wouldn't that be covered by (a) and (c)? Christopher G. Michel: Yes. Stephen G. Breyer: Okay. I know that's your position. (Laughter.) Christopher G. Michel: Yes. Stephen G. Breyer: But I just wondered why this isn't fairly simple, because now what we did in Janus is we took a category of things which we thought the maker had made the false representation, and we thought, no, he wasn't the maker, but, still, he might be the big boss of a group of people who, in fact, took actions or made statements to cause the false representation to arise in the mind of the listener. I thought perhaps you would agree. Christopher G. Michel: I -- I do. I do agree. I do agree, Justice Breyer. Stephen G. Breyer: And that, it seemed to me, is your basic argument. Christopher G. Michel: That's correct. And, you know, we recognize there was a close decision in Janus, but I think Janus is ultimately a helpful decision for the Commission. Stephen G. Breyer: I was thinking about it that way, but I dissented in Janus. And so I don't want to be -- (Laughter.) Stephen G. Breyer: -- I don't want to be -- Christopher G. Michel: Well, I actually think -- Stephen G. Breyer: I don't want it to be oversimplified. Christopher G. Michel: Right. No, I think, you know, one quite simple explanation for Janus is that the Court simply followed the text of the rule, and that's precisely -- and there was dispute about it, but everybody agreed that you were going to interpret the text of the rule. And we believe, if you interpret the text of the rule here, it is quite clear, and -- and Petitioner is almost conceding, I think, that his conduct falls within the meaning of (a) and (c). It's only this argument that (b) somehow restricts or supersedes or preempts a charge under (a) and (c) of Rule 10(b). John G. Roberts, Jr.: Well, no, the argument is if you read (a) and (c) the way you do, Janus is a dead letter, right? I mean, in -- in the reply brief, the Petitioner says you never suggest any situation to which Janus would apply, if your reading of 10b-5 prevails. Christopher G. Michel: Mr. Chief Justice, that -- we disagree with that. I mean, if you had somebody -- John G. Roberts, Jr.: Well, let's hear if you -- go ahead. Christopher G. Michel: Well, perhaps we didn't suggest it in -- in our brief, but, you know, if you had somebody who was far back in the chain of drafting copy, you know, for example, a marketing director who drafted copy that was itself not deceptive but that that person knew would then be used in a fraud or you had a speech writer who drafted something that was not wrong but he knew was later going to be used in a fraud, that person in our view would be an aider and abetter. That would not be a primary violation, for the important reason that Rule 10b -- that Section 10(b) itself requires a deceptive act. And simply submitting material that you know is later going to be used fraudulently would give you the -- the requisite mens rea for substantial assistance but not for a violation of 10b-5(b) itself. And Janus will be the critical case in those scenarios between primary liability and secondary liability. And that's, of course, essential in a private action because there is no cause of action after Central Bank for aiding and abetting in a private action. And Janus will be the difference between liability and no liability for people in that situation. Now I do -- Stephen G. Breyer: I think the Chief Justice is thinking of someone who does -- prior to Janus, would have made a statement, and now that seemed to be excluded in Janus. Christopher G. Michel: So the -- I mean -- Stephen G. Breyer: And -- and now we have a way of making, for that set of people, Janus irrelevant because the aiding and abetting argument you just made would have existed pre-Janus or ante-Janus. One possible attitude is to say: So much the better. But that perhaps would be the dissenters' attitude. (Laughter.) Stephen G. Breyer: And so -- so -- so -- so what is the answer to the Chief Justice's question, which was raised by your opponents, that it still has life and, in fact, makes a difference even for people who before and after, maybe in the private context, what is -- what is -- Christopher G. Michel: May -- well, let me try to be clear. Before Janus, there would have been an argument that somebody far back in the chain of -- of making a statement was a maker of the statement under -- and was primarily liable under 10b-5(b). That means there could have been a private action against that defendant. After Janus, that argument is no longer available with respect to people far back in the chain who didn't commit one of the -- who don't fall within (a) or (c) as primary violators. Now we think that's not this case because Petitioner does fall within (a) and (c). But -- John G. Roberts, Jr.: Your -- so the SEC would argue that somebody that prepared one of these documents that's -- contains fraudulent material or -- or knew that it would be used in a fraud, in other words, you would say, oh, don't worry about that, that person's not a maker, he's not going to be liable because of Janus? Christopher G. Michel: Before Janus, we would have said he was a maker. But we accept Janus. And now we would say that that person is an aider and abetter who could be pursued by the Commission. That's -- that's the Malouf decision that we've cited in -- in our brief. Now I do want to make the point that aiding and abetting liability will not always be available. And so it's tempting to say that that's always a fallback for the Commission. First of all, of course, it's not available at all in a private right of action, which is one of the principal ways in which victims of fraud can recover money. But it's also not available even in a Commission action unless there's a primary violation. You have to find the primary violator. And that distinguishes this from typical criminal aiding and abetting under 18 U.S.C. 2. So you can easily hypothesize a situation in which somebody who makes the statement, perhaps a high-up corporate executive or a board of directors, lacks the scienter required for primary liability because they don't know what's going on with the details of the financial reports; they're trusting the lower-down people to do that. And the Commission can't pursue them for a primary violation because they lack scienter. And then the Commission can't pursue the aider and abetter because there's no primary violator. And that would, we submit, tear a big loophole in securities fraud law, and that would be a very damaging result for the Commission that I don't think Congress intended and that I don't think is within the ordinary meaning of the text here. My -- my friend said a couple of times that -- tried to draw a distinction between conduct and statements. And -- and as some of the questioning suggests, I just don't think that holds up. To start with, the Stoneridge opinion expressly says that the petitioner's course of conduct included both oral and written statements. So this Court has made clear that conduct can include statements. And -- and in addition, Section 10(b) itself, which -- Elena Kagan: I think he was saying something to the effect of, if it's only statements, it can't be conduct. Christopher G. Michel: Yeah, I -- I don't think that can work either. And I -- I think it was you, Justice Kagan, who suggested this. As my friend said, everything in 10b-5 has to come -- has to emanate from 10(b). And the only two nouns that are at issue in 10(b) are "devices" and "contrivances." Now Section 10(a) includes "device" -- or Rule 10b-5(a) includes "devices," which I take him to -- to concede is conduct. So, unless his position is that all statements are contrivances and covered by 10(b) for that reason, I think he's conceded -- Neil Gorsuch: Well, counsel -- Christopher G. Michel: -- that statements are devices under 10(b). Neil Gorsuch: -- I think what I'm -- what I heard at any rate -- and we can -- it's an interesting question what the argument is, but I had understood it that, all right, one can create a false impression in the mind of another through conduct or through statements. All right? Here, the only thing that was alleged to create a false impression in the mind of others was this statement and that that's the problem you have. If the only false act, the only actus reus, was a statement and he didn't make it, then what? Christopher G. Michel: Well, I think he -- he didn't make the statement, we -- the D.C. Circuit found, but he still employed the device to defraud or engaged in -- Neil Gorsuch: He sure helped. I mean, there's no doubt about it. He did a lot to help. But he didn't engage in any independent conduct that created a false impression in the mind of the other, other than disseminate the false statement that did that. Christopher G. Michel: Well, I -- I guess I -- I might quibble with the last point, that -- the "other than" is quite important. You know, he sent the email that -- Neil Gorsuch: Oh, for sure. Oh, for sure. And -- and you -- you've -- you've penalized him heavily and are going to be able to on anybody's account, but we're trying to draw a line here between primary and secondary. And that's -- that's where I'm stuck. Christopher G. Michel: Well, on the facts of this case, Your Honor, there is no secondary liability charge. So, if -- if the Court were to reverse, he would not be punished at all. Neil Gorsuch: We're not worried about just this case, are we, counsel? Christopher G. Michel: I -- I did want to make that one point. Neil Gorsuch: You've made the point, but you -- you concede we've got bigger fish to fry than that, right? Christopher G. Michel: Right. I -- I agree with that and I -- I do think you'll see sort of higher stakes and more sophisticated frauds, but I don't think you're likely to see a sort of more egregious fraud than this, where Petitioner, in addition to transmitting the statement that was made by Gregg Lorenzo, sent it as the head of the investment banking division. He asked -- he offered to follow up with questions. He signed it under his own name. Neil Gorsuch: You've got lots of mens rea, I grant you. Okay? And -- but -- Christopher G. Michel: Those are acts. Neil Gorsuch: Oh, those are acts. They are indeed acts. But, if the act that created the deception in the mind of another wasn't any conduct, it was a statement, then what, is the question? Christopher G. Michel: I suppose the answer to that is that sending an email is conduct. Elena Kagan: Yeah, it took acts to get to those minds, right? Christopher G. Michel: Absolutely, and the act it took in particular was sending the email, sending the two emails, without which these investors never would have been deceived. I -- I do very strongly think that the act was what led to the deception. Neil Gorsuch: It helped the deception, but the deceptive -- the thing that caused the deception in the mind of the other, to get back to Justice Breyer's quotation from Black's, was the statement in the email, the -- the erroneous facts transmitted to investors in the email, right? That's it? There's not -- Elena Kagan: No, it can't cause the deception unless it gets to those readers. Christopher G. Michel: I -- I agree with that. I mean, I suppose another way to think of it is if Petitioner had -- if Petitioner had called up the investors on the phone and said, you know, I hope you just got the email that I sent, this is not my statement, you know, I didn't make it, Gregg Lorenzo made it, but, boy, you really want to look at it because it's a great investment opportunity, and if you have any questions, let me know. The investment banking division is the one sending this -- John G. Roberts, Jr.: When you said -- when you said -- just to clarify, when you said, "I agree with that," were you agreeing with Justice Gorsuch or Justice Kagan? (Laughter.) Christopher G. Michel: I think it was Justice Kagan. John G. Roberts, Jr.: Okay. Stephen G. Breyer: Is there a distinction between conduct and statement? Christopher G. Michel: Well -- Stephen G. Breyer: Okay. Christopher G. Michel: No. Stephen G. Breyer: What did you just state? Christopher G. Michel: Yes. (Laughter.) Stephen G. Breyer: You know, I mean, don't we make statements all the time through conduct? Christopher G. Michel: Yes, of course. Stephen G. Breyer: Thank you. I -- since it was a favorable question, I thought you might be -- (Laughter.) Christopher G. Michel: And, you know, I -- I think it runs in both directions. The -- the Court has said -- you know, in --- in criminal law cases, the Court has said that not every crime that, you know, involves some sort of speech, you know, necessarily raises a First Amendment concern. I think it's a -- it's a well grounded principle that conduct does include statements. I -- I suppose a final point, as we're sort of searching for meaning for (b), I do think the Court has, you know, reiterated on many occasions that even a provision that seems redundant or that doesn't add anything to the substantive scope of the law can still serve a valuable purpose by clarifying or by -- by marking out what the heartland of the -- of the violation is. And here, if you look at the history of the securities laws, Rule 10b-5 came about nine years after the Securities Act, which had changed the common-law rule and brought disclosure and statements to the fore as a -- as a responsibility for those issuing and trading in securities. So it makes sense that Rule 10b-5(b) would -- would mark out statements as a particular area of concern and would say, if you can show that somebody made a statement, then you've shown liability under 10b-5. But I don't think that that in any way forecloses liability under (a) and (c). And as I said earlier, the Affiliated Ute case, I think, is -- is squarely on point and says somebody can be liable under (a) and (c) even if they're not liable under (b). Justice Alito's opinion, which we cited at page 36 of our brief, in the Lee case from the Third Circuit, I think is helpful on this point too. In that case, there was a statute that covered both crimes of deceit on the one hand and tax evasion on the other hand. And Justice Alito's opinion explained that a tax crime that was not evasion but still involved deceit would be covered by that statute because the enumeration of tax evasion didn't preempt the field or didn't serve as the exclusive vehicle for all tax-related claims. And I think the same analysis applies here. The statement -- the enumeration of statements in Rule 10b-5(b) does not preempt or foreclose acts of conduct that fall within the text of the statute. If there are no further questions, we'd ask the Court to affirm. John G. Roberts, Jr.: Thank you, counsel. Four minutes, Mr. Heim. Robert Heim: Thank you. My friend argues that their plain language of the rule and the statute covers Mr. Lorenzo's conduct. Yet, in the briefs that the SEC has submitted, they haven't cited any cases that cover simply sending an email out on behalf of another would qualify for primary liability. Secondly, the loophole hypothetical that was discussed as well, and the concerns about hindering the SEC's enforcement program, are really unfounded here because the SEC, in addition to having aiding and abetting liability, also has 17(a)(2), which covers specifically a situation where a person uses a false statement to obtain money or property. So that, the 17(a)(2), it's our position, covers the concerns that the Court raised in situations where perhaps there's a big boss that's -- Ruth Bader Ginsburg: Are you saying -- saying 17(a)(2) covers this case? Are you saying that Lorenzo used this statement to obtain money or property? Robert Heim: No, I think if that -- if that had been charged, Mr. Lorenzo would have arguments and defenses to 17(a)(2), but the charge would have been a closer fit to what the conduct is here and it would not have raised the serious issues with regards to undermining Congress's statutory framework with regards to aiding and abet -- aiding and abetting and the requirement to have substantial assistance, because, as Justice Gorsuch noted, Mr. Lorenzo did not engage in an inherently deceptive act. Sending an email is not inherently deceptive. And our position, consistent with the circuit court majority, is that the act, in order to take Mr. Lorenzo out of the category of misstatements and into the category of (a) and (c), has to be something that's inherently deceptive. And it -- otherwise, it's just a matter -- it's a very low bar. Ruth Bader Ginsburg: Why isn't it inherently deceptive to tell a succession of untruths? Robert Heim: The act is the sending of the email. And the -- the conduct that occurred here with Gregg Lorenzo is the actual maker of the statement. So Frank Lorenzo is essentially a conduit. He's somebody that's transmitting statements, you know, with scienter in this case on behalf of another. But, at the same time, simply sending an email is not enough to transform Frank Lorenzo into a primary violator from, perhaps, somebody who gave substantial assistance. And, furthermore, the language of the statutes and the rules have a clear distinction between statements and -- and conduct. And here, in order to transition Mr. Lorenzo out of that subsection (b) realm and into (a) and (c) and even into 17(a)(1), there has to be some inherently deceptive conduct, such as creating a phony purchase order or a phony contract with Charles Vista to raise capital. Those are the sorts of serious conduct that Congress had in mind when they established the distinctions between primary and secondary liability. And if there are no further questions. John G. Roberts, Jr.: Thank you, counsel. The case is submitted.

John G. Roberts, Jr.: We'll hear argument in Case 16-1215, Lamar, Archer & Cofrin versus Appling. Mr. Garre. Gregory G. Garre: Thank you, Mr. Chief Justice, and may it please the Court: Section 523(a)(2)(A) of the Bankruptcy Code prohibits the discharge of debts procured by fraudulent statements, other than a statement respecting the debtor's financial condition. Everyone agrees that "financial condition" is a term of art used by Congress and in commercial practice to refer to one's overall financial status. Yet, Respondent and the government ask this Court to interpret Section 523 and, in particular, Congress's use of "respecting" to eliminate the meaning of "financial condition," of a term of art, and essentially to substitute the word "finances" for it. Ruth Bader Ginsburg: Can you tell me, Mr. Garre, what is a statement respecting financial condition? In addition to a balance sheet and a profit and loss statement, what else would qualify? Gregory G. Garre: Sure. Well, our view is that a statement respecting financial condition is a statement that purports to present a picture of one's overall financial situation. And there are several things that could qualify as -- as that. One would, of course, be a classic balance statement or sheet. Another would be an indication of net -- net wealth or overall income -- a net -- net worth. Another would be a credit score, such as those that were common in 1926, when Congress passed this statute. Another would be net cash flow. All of these things look to one's overall financial situation, not to just one side of the ledger, an asset or a liability, and present a picture of overall financial status. And, again, Respondent's interpretation of "respecting" essentially eliminates that term as a term of limitation and as a term of art and substitutes the word "finances" for it. So a statement about any individual input, any individual asset, any individual liability suddenly becomes a statement respecting financial condition. And I think there are three central problems with -- with -- with Respondent's interpretation of "respecting." The first is, as I mentioned, that -- that their reading of "respecting" to mean "related to" eliminates Congress's decision to use the term of art "financial condition." It would be an odd thing for Congress to say we're going to refer to "financial condition" but then essentially eliminate the meaning of that by saying "respecting financial condition." And there's no reason why the Court has to interpret "respecting" to mean "related to." It can mean "related to." But it can also mean "about." And here in context, reading "respecting financial condition" to mean a statement about financial condition makes perfect sense. To say something is "about" means it refers to the subject of the object. Here, the object is the statement and here the subject is financial condition, one's overall financial status. So the fact that their reading of "respecting" to mean "related to" would eliminate "financial condition" as a term of art and a term of limitation is the first reason why this Court -- Elena Kagan: Could you tell me, Mr. -- Mr. Garre, what you think the difference is between "relating to" and "about"? Gregory G. Garre: I think, Your Honor, if -- if you go to the dictionary, the dictionary -- the definition that we provide for "about" means "on the subject of." It refers to the subject -- the subject here is financial condition. "Relating to" is a much broader term of breadth or at least can be used in that way. I mean, this Court famously -- as Justice Scalia famously said, everything is related to everything essentially. Elena Kagan: Yeah -- Gregory G. Garre: I mean, it's a term of great breadth. Elena Kagan: So there's something intuitive about what you just said, but then I started trying to come up with sentences in my head where I switched the two words, and I honestly couldn't find one where they meant something different. So I'm -- I'm hoping -- I'm hoping you can help me come up with those examples where -- you know, just give me a sentence where if you have "about," it means something different than if you have "relating to." Gregory G. Garre: Okay. Tell me about Ted Williams's batting average. And, here, we're using "about" and we're also using "batting average," which is a relative -- relative term, versus: Tell me something relating to his batting average. And I think you could see in that sentence that "relating to" is a much broader term, going to capture things like, oh, well, he struck out in the seventh inning versus, well, you know, he hit 400. It was an amazing season. Or he -- he almost hit the ball just -- he was almost just as likely to hit the ball as he was to not hit it. That's a statement about batting average. Nobody would think that if you said tell me about your GPA, and you said, well, gee, I missed the -- the last question on my last test, that that may be -- that's certainly a statement relating to your GPA, that -- that missing that question is going to impact, have some relationship to your EPA, but you wouldn't think of that as a statement about your GPA. And that's the way in which Congress was using "about" -- "respecting" here, as a preposition to modify "financial condition." Sonia Sotomayor: I'm -- Mr. Garre, the problem I have with your example is if I asked you tell me about your batting average and you said, I hit 5 out of 10 or I hit 6 out of 10, you would be answering that question, or you could say I hit 5 out of 10 when I was in a -- in a position to score a run. So the "about" would be answered in both ways. Gregory G. Garre: Well, I think, first of all, are you referring to the subject -- Sonia Sotomayor: The "respecting" would be answered in both ways. Gregory G. Garre: Well, you're -- you're referring to the subject, the batting average there. And your answer, actually, provide -- looked at both sides of the equation: How many hits he got and how many times at bat he got. So, in that sense, that's different than just saying we're talking about an individual asset. And then I think the sort of -- the ambiguity in your question was, did you mean his batting average in the game or his season? And maybe that would be something you would follow up on. But I think that your expression of that is perfectly consistent with our view, and sort of -- Stephen G. Breyer: A problem. You produced an irresistible example which I can't resist. (Laughter.) Stephen G. Breyer: And, therefore, I suspect that the key of your example is the word -- the word "something," not the word "respecting." And when you say "tell me about," what usually that means is "all about." But let's try it with the word "statement," which is in the statute. Make a statement about his batting average. Make a statement respecting his batting average. There, I'm with Justice Kagan; I have a hard time seeing the difference. Gregory G. Garre: Well, Your Honor, "a statement respecting" is still going to refer to about his batting average, the subject of it. Not -- I think if you said tell me a statement about his -- Stephen G. Breyer: No, not tell me. Make -- Gregory G. Garre: Make? Stephen G. Breyer: -- a statement about his batting average. Gregory G. Garre: Sure. He hit the -- Stephen G. Breyer: Make a statement respecting his batting average. Now you used "statement" and now there we are. Gregory G. Garre: He hit the ball more than he struck out, versus he was -- that's a statement respecting batting average, versus he was robbed of a hit in the seventh inning by a great catch. That's not a statement respecting -- Stephen G. Breyer: I'll take it -- I'll take it under consideration. (Laughter.) Samuel A. Alito, Jr.: And what -- Mr. Garre, what -- what trouble -- what if the debtor makes a statement about a specific asset or a liability, but anybody -- but the reasonable listener would take that to be a statement about or respecting financial situation? Gregory G. Garre: So our view, Justice Alito, is this Court should follow what Congress said and say that a statement about a single asset or a single liability is not a statement respecting financial condition. It's just not. If you disagree with that, then I think one fallback position the Court could take would be something like what you said: A reasonable person would view that as a statement about one's overall financial situation. Now this case couldn't be -- possibly be viewed in that way because it was clear that this was a statement about only a single asset and it was a statement in spite of his financial condition. So the Court couldn't possibly say that the statement in this case, about an individual tax refund, would be viewed, as a reasonable person, in this context dealing with a businessman, as a statement about -- Ruth Bader Ginsburg: I don't -- I don't follow that. Maybe you can explain that. I thought this was a law firm that had a client who was in default, and so the law firm said we're going to stop representing you. And the client said: Oh, don't do that. I'm going to get a tax refund and it will enable me to pay your bill. Why isn't that a statement reflecting -- respecting the financial position, the law firm knowing that the client was unable to pay, wasn't paying his bills, and then the client says: I can come up with something that will assure you I will be able to pay this bill? Gregory G. Garre: Sure. And this is -- you know, can come up in any number of situations dealing with collateral, whereas it's not uncommon for someone to know that another person is in dire financial straits but, nevertheless, to accept collateral in exchange for property or services as a means of paying for that. That's not a statement about overall financial condition. It's a statement that I have an asset can be -- that can be used to pay a debt. And this case was litigated all the way up on the premise that the statement at issue here was a statement about his tax refund, an individual asset. They argued below that, in fact, what the law firm was relying upon was its knowledge of his precarious financial condition. And the bankruptcy court rejected that and found that, no, it was relying on his statement about the tax refund. The district court rejected that, found he was relying on -- it was relying on a statement about the tax refund. And I don't even think they appealed that finding to the Eleventh Circuit. So I think that that's why this case is truly the case about a statement about a single asset, a -- a tax refund, that the debtor in this case lied about. And -- and this -- this paradigm here, the sort of classic collateral paradigm, we're talking about a single asset, couldn't be further removed from the situation that Congress was addressing. And I know not all members of the Court may want to look to that legislative history, but it's sort of the gorilla -- it's the elephant in the room here. And that's that when Congress was looking at this situation in 1978, what it was doing is looking at a particular abusive practice by some creditors, which were using written financial statements essentially to dupe applicants for credit into making false statements by simply omitting debts or assets on those statements, and then using that as coercion once they went into bankruptcy. And so Congress passed a specific rule that dealt with written financial statements. Neil Gorsuch: Mr. Garre, I'm not sure I understand how that helps you even on its own terms, assuming I'd be willing to look at it, of course. But if Congress's concern is that creditors are soliciting information that's incomplete about debts, liabilities, that's just half of the balance sheet that you want us to look at. So Congress appears to have been concerned, to the extent we can tell these things, about misstatements only with respect to one-half of overall financial condition. Right? Gregory G. Garre: Well, I don't think that's completely correct, Your Honor, in the sense that -- Neil Gorsuch: Good. How? Gregory G. Garre: -- that the legislative record makes clear that the forms, the financial statements that creditors were using, were statements that referred to both liabilities and assets. So those were financial statements about financial conditions. Neil Gorsuch: Right. No, I understand that, but the concern is that the misstatements were with respect to omitted liabilities, right? Gregory G. Garre: Congress -- the -- the creditors in that situation were using forms that represented one's overall financial status, referring to a credit score, net worth -- Neil Gorsuch: But doesn't that show that an omitted liability, one asset or lack -- or one debt, can reflect on the overall financial condition, that can be about and relevant to and reflect on the overall financial condition? Gregory G. Garre: It -- it certainly can be related to. But the question is what kinds of statements was Congress addressing. Neil Gorsuch: Well, Congress thought -- thought it could be about, didn't it? Gregory G. Garre: I don't -- I don't think it did. I mean, it -- it said it could be related to. But the situation there is you have creditors who are abusing a false financial statement that included liabilities and assets, debtors -- debtors who are essentially blameless. And, here, the situation is the opposite. There's no reason -- and Judge Ebel recognized this in the Tenth Circuit's decision in Joelson. There's no reason for a debtor to be misled or mistaken about an individual asset. And, conversely, there's no indication here in the -- Neil Gorsuch: But if you make a major representation about the absence of an overwhelming debt or the presence of an overwhelming asset, why can't that reflect on, be about, your overall financial condition? Gregory G. Garre: It's -- Neil Gorsuch: I own a genuine Vermeer. Gregory G. Garre: I think, I mean, I'll give two answers to that. One, my first answer is, if it's a statement about a single asset, it's just not a statement about overall -- Neil Gorsuch: Ever? Gregory G. Garre: -- financial condition. Neil Gorsuch: Categorically? Gregory G. Garre: Categorically. If I said I win -- Neil Gorsuch: All right. Let's say I don't -- Gregory G. Garre: You know, people who win the lottery -- Neil Gorsuch: Let's say I don't accept that. Gregory G. Garre: -- the lottery go broke too. Neil Gorsuch: Yeah. Gregory G. Garre: So that -- that's my first answer. Neil Gorsuch: What's your second answer? Gregory G. Garre: And my second answer is the one I gave to Justice Alito, which is that if one -- if the Court rejected the first answer, one could say that you'd look to whether a reasonable person in context would view the statement as being about one's overall financial situation. Stephen G. Breyer: But it depends on context, doesn't it? Gregory G. Garre: It would -- Stephen G. Breyer: The bank says, Schmidt, you are broke. Are you kidding, says Schmidt, I have a genuine Vermeer. (Laughter.) Gregory G. Garre: Right. Stephen G. Breyer: I mean, and, oh, oh, I didn't know that, says the teller. Here's $100,000. I mean, what -- what -- you know, what's that if it's not about overall financial? Gregory G. Garre: And that would be a hypothetical that I think would call into play this -- this separate rule, if the Court wanted to go there. Now you couldn't say that about the statement in this case. No reasonable person would look in the context here and say that the statement that I have a $100,000 tax -- Neil Gorsuch: Why isn't it exactly like the genuine Vermeer? All right? The law firm's chasing the client and -- and the client says: Okay, okay, okay, I'm late in paying, I know I'm terribly late in paying, but I have this tax refund coming. I have the genuine Vermeer almost in my possession. Right? Gregory G. Garre: Yes. I think -- Neil Gorsuch: Why isn't that -- why -- why isn't everyone in the room understanding exactly what that means, which is, okay, I don't have a lot else, but I've got this. Gregory G. Garre: I think -- I think it's the difference between "financial condition" and "ability to pay," which are two different concepts, and Congress said "financial condition." Neil Gorsuch: Well -- well, that -- that's a problem for me too, and maybe you can help me out with that, is the insolvency definitions in --- in the tax code, at least for municipalities -- Gregory G. Garre: Right. Neil Gorsuch: -- "financial condition" is defined as the ability to meet your current debts as they come due. Gregory G. Garre: That -- that's not the way Congress thought of it. If you look at the definition of insolvency, it refers to "financial condition" first, and the difference between assets and liabilities. Congress also differentiated between assets and liabilities and financial conditions in other provisions, where it listed those terms separately in 11 U.S.C. 1103(c)(2) and 1106(a)(3). And -- and there's two different -- two additional reasons why I don't think you could read "respecting" in the broad "related to" way that Respondent and the government ask you to here. The second -- the first one is that it strips "financial condition" of meaning. The second one is that Congress used the term "related to" in nearby provisions of the statute, in both 1926 and 1978, showing that when Congress meant "relating to," the broadest conceivable definition, it said "relating to." Not "respecting." And the third reason is just the consequences of Respondent's and the government's rule. Their rule would render the baseline rule in Section 523, that debts procured by fraud are not dischargeable, inapplicable to a common fact pattern under Section 523, which is statements made about one's finances to secure credit. Now the government itself on page 18 of its brief recognizes that that is a common situation, someone making statements about one's finances to -- to obtain credit. And yet the consequence of Respondent's and -- and the government's rule is to wipe that out as a basis for discharge. And there's -- there's no indication at all that Congress in mind -- that Congress had in mind such a dramatic reshifting of the ordinary regime that it has applied for a century in this context, which is a debt procured by fraud is not dischargeable. And this Court relied upon similar considerations, for example, in Maracich versus Spears, where it refused to interpret an exception to the Driver's Privacy Protection Act, in such a broad manner that it would really strike at the heart of the overlying objective there. And, here, we have a textually grounded objective, that this Court has recognized repeatedly, of not releasing, for debtors, debts procured by fraud. And I think one would look skeptically to a rule that would wipe out the application of that age-old rule in a commonly recurring context, which is statements made about finances. And that's -- Ruth Bader Ginsburg: May I -- may I ask you to clarify something? I -- I may not have understood this correctly. But the statement "don't worry, I am above water" -- Gregory G. Garre: Yeah. Ruth Bader Ginsburg: -- I think you said that would need to be in writing. Gregory G. Garre: It would. And I think that the -- the fairest way to read that would be a statement about financial condition. And that's quite different than a statement about an individual asset. That fact pattern is not coming up in the real world, Justice Ginsburg. No reasonable creditor would rely on a statement that general, but, in our view, that is a statement respecting financial condition that -- Ruth Bader Ginsburg: How is -- how is that significantly different from "don't worry, I have an anticipated tax refund that will enable me to pay your bill"? Gregory G. Garre: Right. Because that -- that's -- that goes to ability to pay, not overall financial condition. And, again -- and it goes to why we ask for collateral in loans commonly. Elena Kagan: Well, but Mr. -- Gregory G. Garre: Collateral is not a -- Elena Kagan: I'm sorry. Gregory G. Garre: I was going to say, I mean, you -- it's not uncommon for people to have -- be in dire financial straits but yet go to get loans on the basis of collateral. That's sort of the pay day situation that the government refers to. "Ability to pay" is a different concept than "financial condition." Congress would have known that. At the time it enacted the "financial condition" language initially, there were state laws that referred to "financial condition" or "ability to pay," as we mentioned in our reply brief. Elena Kagan: But which says more about your financial condition, Mr. Garre? "I'm above water." That's one option. Or "I have a bank account with a billion dollars in it." Gregory G. Garre: Well, I -- I think the "I'm above water" tells you about your financial condition. The "I" -- because it tells you about your overall financial status. The "I have a bank account with a billion dollars in it" tells you you have a lot of money. It doesn't tell you anything about your debts. Really rich people sometimes have really big liabilities. Ask Bernie Madoff. And so that does not give you a sense of overall financial status. Now, again -- and I think that calls into play Justice Alito's point, that if you disagreed with that, then maybe that is the kind of statement that one could look at and say that that is so astronomically big, a reasonable person would view that as a statement about overall -- concerning about overall financial situation. That's not the rule we would urge this Court to adopt. We would urge you to follow the text of what Congress said. And, again, it's accepted by everyone that "financial condition" is a term that refers to overall financial status. That's the easiest way to interpret the statute. It's the way that brings it in line with the problem that Congress sought to address. And, again, I mean, just referring -- returning to that problem briefly, there you had a situation of a certain class of creditors that were abusing written financial statements that included assets and liabilities and duping creditors -- debtors into making false statements. So you had blameworthy creditors and essentially blameless debtors. In that situation, Congress said you should -- we should rebalance the scales and not discharge those debts, unless they meet certain additional requirements in (B). This Court recognized that in Field versus Mans, which makes it a little bit different than the typical legislative history case. The government strenuously argued that the Court should interpret 523(a)(2)(A) in Field in light of that specific problem it was seeking to address. And that problem couldn't be further removed from the situation here, where you have a creditor that is entirely blameless and you have a debtor which had no reason to be misled or mistaken about a single individual asset, which is a point that Judge Ebel made in the Joelson case. So, in this case, there's no -- no reason to think that Congress would have wanted to balance the scales any differently. And, instead, there's every reason to think that Congress would have intended the baseline rule that has always applied in this context to apply to this situation, which is that a debt procured by fraud is not dischargeable. Here, the district court and the bankruptcy court both found that not only did the debtor lie about his tax refund -- and I think that the Respondent here has tried to rehabilitate the debtor a little bit. But just to be clear, there were findings made that he lied about the amount of the tax fund and whether or not they had actually received the tax fund. Both times. The -- the bankruptcy court found that the deceit was obvious. That's at page 60a of the Petition Appendix. So why would have Congress have intended to -- for a debtor engaged in obvious deceitful conduct against a creditor who's entirely blameless, to allow the debtor to discharge that debt? When you think about the consequences of the kind of behavior that that would promote, there's no reason to think that Congress would want to promote that kind of behavior, certainly not when one looks at -- Ruth Bader Ginsburg: Why wouldn't the result be to get people, especially law firms, to do -- do things in writing? Gregory G. Garre: Well, and that -- and that's an argument that -- that's a reason that the -- the Eleventh Circuit gave, and that is advanced by the Respondent here, not so much so by the government. And I think that that's sort of an example of the worst kind of legislative purpose in the sense that there's -- there's certainly no general statement of purpose that Congress intended things to be in writing generally. If Congress really had that objective, Justice Ginsburg, it wouldn't have limited the writing requirements to statements about financial condition. It would have applied it generally. Under their rule, they say that statements about professional qualifications or the values of assets are -- are different. But if Congress was really concerned about having writing -- things in writing for evidentiary purposes, it would apply that across the board. So I don't think there's any real traction to the notion that the -- the statute should be interpreted in light of this unstated objective to simply generate more reliable evidence in proceedings. Nor is there any indication that courts have had difficulty making credibility determinations about lies in this context. Those were carefully litigated here. Both courts below heard testimony, and they concluded that the Respondent in this case lied about the status of his tax refund and the amount of his tax refund. Given that, this case falls within the baseline rule that that debt is not dischargeable. The only way that Respondent and the government can pull that out of there is to give "respecting" the broadest conceivable breadth in terms of "relating to" and then, once you get to that point, to ask this Court essentially to impose judicial limits on the breadth of that term, because even they, I think, appreciate that if "respecting" really means "related to" here, then this is really going to swallow up the whole thing. I mean, they -- they say that the statement has to be about an asset, the Respondent does, but why isn't a statement that I run a hedge fund a statement relating to one's financial condition? Certainly, someone might -- would reasonably view it that way. Why isn't a statement that I graduated first in my class from Harvard Business School a statement respecting financial condition? Certainly, it would be related to that. And they're just asking this Court to draw arbitrary limits in order to cabin the reach of their rule. The government takes a slightly different approach and it asks this Court to -- asks this Court to adopt an ability to pay overview. But that's not in the statute either, as I've explained. Ability to pay something by committing an asset to pay a debt is different than one's overall financial status. You can be deeply in debt but still have an asset that you commit to paying a debt. If I could reserve the remainder of my time. John G. Roberts, Jr.: Thank you, counsel. Mr. Hughes. Paul W. Hughes: Thank you, Mr. Chief Justice, and may it please the Court: Petitioner's principal textual argument is to say, instead of looking to "relating to," they prefer the word "about." Now we reject the premise that there's any substantial legal difference between those two concepts. But even supposing there is a difference, the only example that Petitioner can offer that shows any difference is what we would call a trivial example, something that's a trivial impact on -- on the object. But in the context of this statute, Section 523(a)(2), those sorts of trivial examples structurally cannot exist. And that's because, in addition to demonstrating -- when a -- when a plaintiff comes forward with this sort of claim, in addition to identifying the -- the statement that the plaintiff alleges is fraudulent, the plaintiff must also identify why that statement was material to its decision-making, why the plaintiff actually relied on that statement, and why the plaintiff at minimum was justified in doing so. And so those requirements, those necessary requirements of a Section 523(a)(2) claim, necessarily and substantially limit the universe of claims that could be within the realm of statements respecting financial condition. And Congress was well aware that it was crafting a statute about fraud. It well knew of all of these other limitations that cabined the universe of -- of the potential kinds of claims. And so that precludes any court from having to consider these sorts of trivial examples. Neil Gorsuch: Well, let's -- let's take Mr. Garre's example of the Harvard Business School graduate. I graduated from Harvard Business School. And someone might reasonably rely on that and take it to be material and significant. But does it relate to financial condition, overall financial condition? Doesn't that term have to mean something? Paul W. Hughes: So a few things about that, Your Honor. First, to directly answer your question, we think that the clearest test is to ask: Does the statement describe what would be a line item on one's balance sheet or income statement? We think that's a very easy way to understand what it directly relates to. Neil Gorsuch: Okay. All right. So you'd rule it out on the basis that it has a to be at least something that would appear on a financial statement. All right. A lot of trivial things appear on financial statements, right? I have this, that, little asset. I own a car. It's a secondhand car. It's not worth a whole lot, but it would appear on a financial statement. That would be enough in your -- under your rule? Paul W. Hughes: Well, yes, Your Honor. And what would deal with that example is the materiality requirement. But, again, their rule is if you make that -- Neil Gorsuch: Well, no, no, it was reasonably relied on for the purpose of the loan or the services rendered or whatever, as collateral, surely, of course, it was. But it doesn't have anything to do with overall financial condition. It just means I own a very bad car. Paul W. Hughes: Well, the question would be the reliance theory there, Your Honor. And if they're relying on it, that statement, because it says something about your financial condition, I think that would be very clear evidence that it goes to financial condition. But, again, their test sets up a rule where, if it appears on your balance sheet, they agree (2)(B) applies in that circumstance. The only question here is, if you make that identical statement not in the context of a balance sheet but standing alone, does all of a sudden (2)(A) apply? And we think that rule doesn't make any sense, because it's the identical misstatement if you include a misstatement about a -- a worthless car on your balance sheet and you make that identical statement standing alone because the -- the -- the loan officer comes and asks you the next day: By the way, do you have any additional automobiles we should -- we should know about? The rule they set up is, if you put it on the balance sheet, (2)(B) applies, but if you say it standing alone, all of a sudden (2)(A) applies. That's all form and no substance. The rule -- the difference -- the distinction between (2)(A) and (2)(B) should not turn on what the packaging of the misstatement is, if it occurs on a balance sheet or if it occurs independently standing alone; it should look to what the -- what the actual substance of the statement is. And when the substance of the statement is one that goes to financial status, then it's a (2)(B) claim because it's a statement that's respecting financial condition. And, again, it's clear that that is this case. One need look no further than their amended complaint in the bankruptcy court. This is at the Eleventh Circuit's appendix, page A38. And they say what -- why was the tax information material? And they say: "It was material information regarding his and his company's financial status and abilities." Their theory of materiality and reliance was that this statement was material, and they relied upon it because it went to his financial status, his ability to pay. That's the identical reliance theory that the bankruptcy court adopted at Petition Appendix 62a. And so what our position is, is that a -- a creditor should not be able to, on the one hand, identify for purposes of -- of establishing reliance and materiality that the reason -- the actual reason they relied on this was because it was a statement about financial condition while at the same time, in -- in trying to avoid the requirements of (2)(B) say no, no, this was something that is not respecting financial condition because it didn't have the proper form of being on a full balance sheet. The reality, when -- when a creditor relies for this actual reason, that is what should govern the (2)(A)/(2)(B) analysis. Or else, again, you lead to these bizarre results, as I said, it shouldn't matter the truthful packaging. Again, as -- as -- Ruth Bader Ginsburg: Your -- your -- your understanding shrinks what would once fit under (2)(A). So what remains under (2)(A) when you don't have a writing requirement? Paul W. Hughes: So, Your Honor, a substantial amount remains under (2)(A), as 34 years of Fourth Circuit practice have shown, and that's because most of the claims -- most plaintiffs under Section 523(a)(2) are not lenders. Most plaintiffs have a variety of fraud claims that are entirely outside the loan context. And so just to look at this Court's recent 523(a)(2) cases, two years ago, the Court considered Husky International Electronics about fraudulent conveyance, which was a (2)(A) case. Prior to that, the Court looked at Cohen v. de la Cruz, which was a case about a fraudulent scheme to overcharge rents, in violation of state law. That was a (2)(A) case. Prior to that, in Grogan, with securities fraud, that was a (2)(A) case. All of these cases that deal with fraud entirely outside the lending capacity come up as (2)(A) cases. And as we've said, for 34 years, our approach has governed in the Fourth Circuit, and (2)(A) is -- is very much alive and well there. We documented dozens of examples of all sorts of frauds; for example, when somebody misrepresents the quality of service or the goods that they're selling and a whole panoply of -- of issues that have been addressed as (2)(A) cases in the Fourth Circuit, which has applied Angler for -- for the past 34 years. Elena Kagan: In saying that, are you saying that (2)(A) does not really exist anymore with respect to fraud on lenders? Paul W. Hughes: No, it still can exist for fraud with lenders, particularly when somebody is making a statement at the time of obtaining debt as to a future promise. And there, the fraudulent claim would not be what about their financial condition, but something that they are going to do in the future, perhaps how they use the proceeds of a loan or if they're going to convey ownership interests of the person who's giving them the loan. So there still is a role for (2)(A) in the context of lending. But the context of this statute, Congress was quite clear in -- in creating (2)(B) where it intended to have (2)(B) apply in the main in the lending capacity, that was because Congress recognized that there was a pattern and practice of abuses in the particular consumer lending space. And that's why Congress felt the need to impose heightened consumer protections in the -- in the (2)(B) context. And we think it would be a bizarre result if those protections could be circumvented by a rule, such that if the lender asks for everything but overall financial condition, if they just ask for the three most important assets and the three most important debts, all of a sudden those protections would cease to apply, even though the -- the creditor is getting the identical information that they want from getting a holistic balance sheet. So the context of this statute, we think, very clearly indicates why Congress would prefer for an approach that applies to statements about single assets, every bit as much as a statement about an overall balance sheet. In -- in addition to -- to that particular purpose, the very example that Congress gave in enacting the statute was a list of debts, only something on the debtor's balance sheet. And Congress had cited to a bankruptcy court decision, In re Hill, where Bankruptcy Judge Baer very clearly explained that the kind of example that Congress had in mind was not the kind of -- of document from which overall net worth could be obtained. So the very example that Congress enacted or identified for purposes of (2)(B) would not be captured by Petitioner's rule, which I think would be a surprising result. Beyond that, we know that Congress had in mind that (2)(B) would have real effect, and that's because the 1970 Bankruptcy Commission, when it issued its report in 1973, it recommended doing away with this exemption to bankruptcy in its entirety. It found that, on the whole, it was doing more harm than good to the public. Now Congress said we're not going to go that far. We're going to strike a compromise, and lenders will be able to exempt debts from discharge in these circumstances. John G. Roberts, Jr.: And they -- they all read the Bankruptcy Commission report? Paul W. Hughes: Well, it was -- it was entered in -- into the record, Your Honor. John G. Roberts, Jr.: It was entered into the record? Oh, then I'm sure they all read it. (Laughter.) Paul W. Hughes: Your Honor, though, to be clear, our principal argument rests on the text of the statute. And we think that that resolves this case. We -- we don't submit that going to these other sources are -- are necessary. We think the text is clear, but to the extent that there's any possible ambiguity, we -- we don't believe there is any, but we think all of these other points line up behind it, because along the same line, prior to the 1978 recodification, five circuits had looked at materially identical language, and they all reached the same result. Again, we think the text is the most compelling basis for the Court to decide this case, but the fact that the text, the legislative history, the -- the statutory lineage, and the clear purpose all line up the same direction, we think indicates why the Eleventh Circuit was absolutely correct in its -- its decision with this case. Sonia Sotomayor: May I go back to the argument Mr. Garre -- Garre did? He said the Congress was seeking to -- to protect debtors where credit companies were telling them to omit a particular item. Paul W. Hughes: Yes, Your Honor. Sonia Sotomayor: How does this rule protect those creditors? Paul W. Hughes: How -- Sonia Sotomayor: Because, if the debtor provides the balance sheet in writing but omits something that the creditor asks -- tells them it's not -- it's unimportant, why does the writing requirement save the debtor? It doesn't really. Paul W. Hughes: Well, Your Honor, that's because -- Sonia Sotomayor: It doesn't save the debtor because -- Paul W. Hughes: Your Honor, in (2)(B), there were two particular protections. One was the writing requirement, and you're correct, the writing requirement would not apply. But the other distinction between (2)(A), which does the work in that case, is the reasonable reliance requirement. Congress enhanced the standards from justifiable reliance, which typically does not require any affirmative duty to investigate, to reasonable reliance, which would include a duty to investigate, particularly for that example, because they said creditors, because they get consumer reports and other kinds of information from credit rating agencies, they can either know or pretty easily find out if that -- if that statement is incomplete. And so the reasonable reliance requirement is what -- what takes care of those cases. Samuel A. Alito, Jr.: Would you respond to -- to Mr. Garre's argument that the statement here concerns ability to pay and not financial condition? Paul W. Hughes: Well, it's hard for me to see the distinction between those two, Your Honor, because I think people are concerned about ability-to-pay statements because they go to financial condition, and vice versa, financial condition statements are -- are relevant to condition -- to ability to pay. But, again, as the government says, ability to pay is a very important part of this test. We have two separate amicus briefs who identify a separate way to look at financial condition, which is not just balance sheet solvency but is equitable solvency, which goes to ability to pay. So I think another way to look at this case is a statement that shows ability-to-pay liquidity is a statement that goes to financial condition. I think it's very hard to disaggregate those two. And this is obviously a statement about ability to pay. And so I think that does confirm that it is a statement respecting financial condition. Now I -- I think the one distinction that they try to make at page 14 of the yellow brief is that there was a model code that -- back in 1926 that looked to statements respecting financial condition and the means of ability to pay, and they try to suggest that since only "statement respecting financial condition" was plucked from that model code, that "means of ability to pay" is something different. That "means of ability to pay," the language in the context of that model code, was doing something very different. It was applying to what we today think of payment from insiders. So, for example, if you show up at the jewelry store and you say: Well, I don't have the ability to pay, I'm not going to make a representation about my financial condition, but my very wealthy grandmother is going to come tomorrow and pay for this diamond, that is a representation about your means of your ability to pay, which is distinct from your financial condition. So the distinction that they try to make in the yellow brief at page 14 is -- is about those third-party ability of means to pay. When you take those third parties out, I don't think there's much distinction between "financial condition" and the "ability to pay." Ruth Bader Ginsburg: What about the argument that you would be putting a burden on small businesses that deal informally? You would be putting a recordkeeping requirement on them for a statement like: I've got this tax refund. Paul W. Hughes: Well, so, Your Honor, this rule has applied for 34 years in the Fourth Circuit, and neither Petitioner nor its amici have come up with a shred of evidence that there has been any untoward policy effect on small business or any other sector of the economy. And I think we know exactly why, because the NFIB amicus brief cites its own report, and its report, at page 8, concludes that bankruptcies are not significant problems for small business. It goes through all the other problems that small businesses have in obtaining payment, and it says bankruptcies are relatively insignificant. And then that same report, at page 6, explains why, beyond that, that small businesses stand to benefit more from expansive rules that protect debtors for the very reason that small business owners are more likely to be debtors in bankruptcy cases than the general population. So the NFIB's own evidence suggests that -- that bankruptcies like this do not pose any practical problem on small businesses, beyond that -- that these sorts of rules help small business owners who are more likely to declare bankruptcy. And there's just simply no empirical evidence, even though we know our rule has governed for 34 years in the Carolinas, Virginias, and Maryland, and there's been no indication of any sort of overreach of -- of recordkeeping. John G. Roberts, Jr.: Well, you know, we -- we get these arguments a lot. This rule has been there for 30 years, and there are no problems. I mean, there are a lot of factors go into whether or not your -- there's no empirical evidence. It's not like there's a daily report about what charges have been made and then the cases have been settled or anything like that. The fact that there haven't been that many reported decisions, which I assume is the basis for your statement it hasn't been a problem, doesn't really tell you all that much in cases like this. Paul W. Hughes: Well, I think, Your Honor, the -- the point that we make is a -- is a more limited one, which is to say if the sky were falling in the Fourth Circuit, there would be some evidence or some outcry from these very substantial jurisdictions. There would be some indication that there was a problem that -- that came from this rule. So we're using this -- the -- the absence of evidence in the Fourth Circuit to simply say that any view of a policy concern is substantially overblown, because there hasn't been any identification of even a single case where there have been imposition of recordkeeping obligations that have been deemed improper or any sort of improper cost on small businesses. And, again, I think when we look to the NFIB evidence, that shows exactly why. This is just not a problem that, in the aggregate, was of concern to small businesses; and, rather, Congress was looking at this as consumer protection, how it dealt with consumer lending in the aggregate, and that's why it drafted the broad statute that it did to preclude any kinds of circumvention, because, again, a rule to the contrary would -- would lead to a result where if, you know, Appling had not just said I'm getting a $100,000 refund, but I'm getting a $100,000 refund and, therefore, my head is above water, that all of a sudden (2) -- (2)(B) would apply. That's just all form over substance, and there's no reason to think that -- that Congress would have actually done that. So we think our rule accords with what actual creditor behavior is, and that should be the rule of decision that Congress was concerned about substances. Additionally, as I've said, our rule captures the -- the only single example that Congress gave. And -- and finally, I think our rule is just plainly required by the -- the clear text of the statute, that the word "respecting" has a broadening function, there's been no indication that it has anything but a broadening function, and regardless if one thinks it's "relating to," "respecting," "about," all of that broadening function leads to the very same rule that the Eleventh Circuit adopted below, where statements about assets and liabilities necessarily qualify. Sonia Sotomayor: Could -- could you tell me how you think -- why you think your rule is better than the Solicitor General's suggestion? Paul W. Hughes: Well, our rule is -- is superior for several reasons. It accomplishes Congress's goal of extending debtor protection to this range of claims because, but for our rule -- Sonia Sotomayor: So how is your rule different from the Solicitor General's? Paul W. Hughes: Oh, sorry. Sorry. Apart from the Solicitor General's rule, I don't think our -- our approach has any pragmatic difference. I've -- I've thought through all the examples, and I can't think of an example where our rule departs from where the Solicitor General's rule would come out. We think our rule is a bit -- is -- is straightforward and -- and an easy one to apply. But I think, in all of these cases, if you think of ability to pay as either a requirement of the rule -- Sonia Sotomayor: All right. So articulate your rule and articulate them for me so that I have a clear idea of the differences. Paul W. Hughes: Sure. So -- Sonia Sotomayor: I know they spoke about context and purpose, and you didn't. So -- Paul W. Hughes: Yes, Your Honor. Our rule is that any statement that has a direct impact on one's overall financial condition, which Petitioner defines as the balance of assets and liabilities, is a statement respecting financial condition. So we think an easy way to think of this is, if it's a statement describing a single line item on a balance sheet or an income statement, that's what qualifies. The government's rule is they -- they say it's "an affirmative representation about a single asset if that representation is offered as evidence of the debtor's ability to pay." So they add that "if evidence of debtor's ability to pay." We think that's just descriptive of what's going to happen in these cases, rather than something that has to be added as a test. They offer this example of -- of items in commerce. We think our rule would come out the same way with items in commerce, just when one thinks about the timing of the transaction, because when that transaction closes, the representation one's relying upon that the good is genuine isn't about something on one's balance sheet; it's about an item that's actually being transmitted in commerce and it's coming off one's balance sheet. So, at that time of reliance, it's -- it's not a balance sheet style statement. So I don't think there's any practical difference between where we are and where the Solicitor General is. Thank you, Your Honor. John G. Roberts, Jr.: Thank you, counsel. Mr. Sandberg. Jeffrey E. Sandberg: Mr. Chief Justice, and may it please the Court: Our view and Respondent's view of the statute leaves the no-discharge rule in fraud cases basically intact. We're just interpreting the scope of the statute's provision that says that statements need to be in writing. And as the colloquy with Respondent's counsel makes clear, although some statements might indeed be insignificant, the dollar bill in my pocket or, by analogy, a single at bat of Ted Williams, the statute's only concerned with representations that have actual effect on creditor behavior. And the determination whether a statement is one respecting financial condition or not will make a practical difference only when the creditor has actually relied on it and the reliance was, at a minimum, at least justifiable. And the creditor who has relied on a statement about the value of a single asset, such as here a tax refund, has done so for exactly the same purpose that one would customarily rely on a comprehensive financial statement for, which is to form a judgment about the debtor's creditworthiness for purposes of consummating or not consummating a particular transaction. So "a statement respecting financial condition" is ultimately about the topic of the statement. It's not about the significance of the statement. So, if I make a statement about the status of the project being financed, say, I lied to the lender and say that we broke ground, we're moving on to Phase II when, in fact, there's not even a shovel that's hit the dirt yet, that's not a statement respecting financial condition; that's a statement respecting something else. I think it's also worth bearing in mind that this phrase wasn't plucked out of the ether in 1978. It had existed in prior bankruptcy law dating back to 1926. And it had been interpreted by courts over the years to extend beyond statements about overall financial condition, to include statements about particular assets under circumstances where a creditor had relied on that statement and -- and been defrauded. It's also worth bearing in mind that the -- the focus of the legislative process in the 1970s was the Commission's report. One of the two bills that was before Congress in the '70s was drafted by the Commission. The Commission included four legislators of the nine members, and the hearings were all about what had happened before the Commission, what the Commission was proposing. And it's striking that the Commission had proposed to eliminate the fraud exception to discharge entirely for consumer debts, not just for false financial statements, for all -- for all consumer debts. And Congress thought that that went too far. But it ultimately preserved a rule that this -- for the particular class of statements that deal with financial condition, the representation would need to be in writing if the creditor sought to render that claim non-dischargeable in the bankruptcy -- Samuel A. Alito, Jr.: You say that a statement respecting the debtor's financial condition "encompasses an affirmative representation about a single asset if that representation is offered as evidence of the debtor's ability to pay," right? So it's -- Jeffrey E. Sandberg: That's right. Samuel A. Alito, Jr.: That goes -- it is the intent of the person making the statement, the subjective intent of the person making the statement? Jeffrey E. Sandberg: No, we see it as an objective test -- test that turns on the context in which the statement is made. So, if a creditor hearing that statement in the context in which the statement was made -- and, remember, what -- we're talking here about oral statements because it only makes a difference -- Samuel A. Alito, Jr.: Right. Jeffrey E. Sandberg: -- for oral statements really. So, if the -- if the creditor says: Tell me about your financial condition and the debtor says: Here are the three significant assets I own that you should know about, one of them is a genuine Vermeer -- Samuel A. Alito, Jr.: So, if the debtor makes the statement not intending it to be evidence of -- to be taken as evidence of the debtor's ability to pay, but it is taken in that way by the creditor, that counts or a reasonable creditor would take it that way? Jeffrey E. Sandberg: I think a reasonable creditor gets closest to the -- the right approach. It's an objective test. In other areas of the law this Court has looked to, in discerning the purpose of a statement, has applied an objective test, such as, for example, whether an out-of-court statement is testimonial or not. And -- and we think that it's important for it to be objective just so that a creditor doesn't come into court when it files its complaint in the adversary proceeding and say: I didn't subjectively rely on it for ability to pay; I relied on something else. Elena Kagan: But Mr. -- Neil Gorsuch: Your -- your test -- I'm sorry, please. Elena Kagan: Mr. Hughes said that there was really no practical difference between your test with the evidence of ability-to-pay language in it and his test without it. Do you disagree with that or agree with that? Jeffrey E. Sandberg: As I understand Respondent's position, there -- there is no practical difference in how it turns out. We're really -- the point of our ability-to-pay language is -- is to get at what we think Congress was trying to do here. And one can agree or disagree as a general matter with its policy choice, but what we think Congress was trying to do was treat statements that go to a debtor's ability to pay differently than -- than other types. So a statement respecting financial condition is -- is one made for the purpose of shedding light on one's financial condition. And -- and why ever would a creditor care about that? Because they want to know if they're going to get their money back. Samuel A. Alito, Jr.: What if it's a false -- Neil Gorsuch: Following up on -- sorry. Samuel A. Alito, Jr.: What if it's a false statement about an asset, but it isn't one that would be taken by a -- a reasonable creditor as having any significant bearing on financial condition? Jeffrey E. Sandberg: Well, I think that that statement probably would not be material or it would not be one that the creditor would have reasonably relied upon. By hypothesis, we're talking about circumstances in which a creditor has come into court and said: I was defrauded. This statement that was made was so significant that I made a different lending decision than I would have. But then they -- they turn -- when it comes to the analysis of "statement respecting financial condition," they say: Oh, no, this statement wasn't significant enough to go to the debtor's overall financial condition. It's -- it just merely affected my decision about whether to consummate the deal. And I think that what Congress was focused on in the 1970s, for better or worse, was to affect real-world creditor behavior. And -- Sonia Sotomayor: So why do we have to look at the debtor's intent? Why don't we just -- won't the elements of reasonable reliance capture almost -- how can -- how can a creditor reasonably rely on a statement that wasn't -- that couldn't have been intended as -- Jeffrey E. Sandberg: I think that's right. I don't think we are looking to the debtor's intent under our approach. I think we're looking at what an objective observer coming at things from the creditor's side of the transaction would understand the statement to have been made for. Was it to shed light on the debtor's ability to -- to pay or not? Neil Gorsuch: We've been focusing on the balance sheet, and that's where your focus has been. Is it an asset? Would it appear on a financial statement? But what about an income statement or a representation about a future stream of income that wouldn't appear on a balance statement but might appear on an in -- income statement? I understood there to be a little daylight between your -- your position and your colleagues' on that. Jeffrey E. Sandberg: I think our approach would cover those statements because we think that they are financial representation -- representations that go to ability to pay. I'm not sure whether Respondent's counsel would say that their approach doesn't sweep that in. I think they also have referred to income or debt statements, in addition to balance sheets. And in that sense, where -- the government's approach isn't tethered to any -- the formality of the particular document or what would appear on any particular document. It's really about the purpose to which the statement -- Neil Gorsuch: Well, but you talked about assets or liabilities. That -- that doesn't necessarily represent income, future income streams. Jeffrey E. Sandberg: That's right. The articulation of the government's test that my colleague read sort of baked into it the premise of this case, which was a statement about a single asset. And so I don't know that this Court would need to think about the entire universe of representations in -- in order to resolve it, but certainly a statement that is not just about an asset or a liability but is about an income or an expenditure would also fall within our approach. So -- and as to why the Congress may have required statements to be in writing, it's true that it could have said much more in the legislative history than -- than it did, but we know one thing for a fact from the face of the statute. And everyone agrees about it. Congress did require statements to be in -- in writing if they're respecting financial condition in order for the creditor to prevail. Congress could have written in (2)(A) "a statement in writing respecting financial condition," but it didn't. It said "statement respecting financial condition." And then, in (2)(B), it imposed a writing requirement. And we think the -- the only way to -- to give -- we don't see how under Petitioner's approach it would be sensible to distinguish between statements that -- that go to the whole and statements that go to some or most or -- or one. I'd be happy to entertain any further questions that the Court may have. John G. Roberts, Jr.: Thank you, counsel. Five minutes, Mr. Garre. Gregory G. Garre: Thank you, Mr. Chief Justice. The rule advanced by Respondent and the government would essentially wipe out the application of 523's baseline rule in the consumer finance or simple collateral situation. The government says itself on page 18 of its brief that statements respecting debtors' finances are, of course, common in credit transactions. And under the rule that you've just heard today, any false statements about finances are going to result in a debt that's not dischargeable, if they're made orally, which, as the National Federation of Independent Businesses has told this Court, statements about finances are still made orally in common transactions throughout the United States by small businesses and regular folks. And there's just absolutely no indication that Congress intended to put creditors who are blameless in a situation where the debts created by deceitful debtors are going to be entirely discharged under this rule. The Fourth Circuit case law only proves that the Fourth Circuit has invented artificial limits on Respondent's "related to" principle. What -- what that case law doesn't show is all the debts about false statements, about individual assets that are being discharged in the Fourth Circuit and putting creditors in hardship situations that Congress did not intend to be discharged. So I don't think the Fourth Circuit case law really gets them anywhere. The -- the problem in this case is completely different than the problem that Congress had in mind. We're talking about debtors and creditors make a false statement about a single asset in the classic kind of collateral situation, where a -- there's no reason to think that the creditor is blame-worthy in any way and where the -- the debtor is entirely deceitful. In that situation, there's no evidence, either in the text or the history, that Congress intended to weigh the balance in favor of debtors there and excuse debtors by discharging debts procured by fraud. The ability-to-pay concept is just different than financial condition. Collateral on a $1,000 loan, you may be able to use that collateral to pay the loan, but that has no bearing on your overall financial situation. Lots of people who are in dire financial situations make statements about collateral in order to make loans. And a lender might look at the statement about a piece of property as evidence of an ability to pay, but that is not evidence of one's overall financial condition. And one thing, ironically, that I didn't hear from either Respondent or the government today is any real argument based on the text of the statute, either "respecting," which they've relied upon up to this point, or "financial condition." Nor did I hear them dispute that "financial condition" does refer to one's overall financial status. And I didn't hear any explanation as to how their "related to" interpretation of "respecting" doesn't negate that term as a term of art and term of limitation. The last thing I would say is, if this Court does adopt a new test in this area, and there have been, you know, competing versions of possibilities for this Court, we would urge this Court to vacate the decision below and to remand. For one thing, there's -- there's a dispute among the parties about exactly why Respondent made a false statement about the tax refund, whether Lamar was relying on its overall financial status. The courts below heard that and rejected the Respondent's position that he advanced today. And I would urge you to look at pages 60 to 61 of the Petition Appendix and 39 and 40 of the Petition Appendix, where the courts below held that we relied on the statement about his tax refund and not his overall financial condition. And because we relied on a statement about a single asset and not a statement about his overall financial condition, and because that statement was indisputably false, the debt at issue in this case should not be discharged under the command of Congress. If there are no further questions. John G. Roberts, Jr.: Thank you, counsel. The case is submitted.

Earl Warren: Number 286, Commissioner of Internal Revenue versus Southwest Exploration Company. Mr. Wilson, you may proceed. Melvin D. Wilson: Thank you, Your Honor. May it please the Court, just to review briefly the real issue in this case is whether the upland owners have depletable interest and economic interest in the mineral resources under the tidelands adjoining their uplands. They've claimed they do, does they receive rent for the -- the drill sites on their uplands and they also claim that under the state law that the effect of the state law was to terminate the drainage from the state tideland that was taking place from the uplanders vertical wells. The State obtained the use of the uplands as drill sites through respondent and under threat of condemnation to accomplish that purpose and in the manner that would not despoil the beaches. But the State, of course, could not prevent the upland owners from receiving rent for the use of their property, but this was ordinary rent for the use of inexhaustible land not a royalty for the consumption of a mineral resource. Southwest was not consuming the mineral resource under the uplanders land. They were running that, just leasing that to Standard Oil Company. And before this situation started, they had no interest in the State's mineral resource under the tidelands and they have agreed that none of these arrangements gave them an interest in the state lease or the state tidelands. Simply that their rent is commensurate with usefulness of the land but that is customary. Many storeowners who rent their stores are based on a percentage of sales of their tenant. They simply had an economic advantage derived from production and they are strangers to the State's mineral reserves. Now, the regulations and the cases of this court are very clearly defined depletable interest and I would like to read the regulation found in our respondent's brief on pages 1 and 2. It will take just a moment and it's -- I think right in point. The case starting on page 1, it says that Section 23 (m) provides that they should be allowed as deduction in computing net income in the case of oil and gas wells, a reasonable allowance for depletion. Under such provisions, the owner of an economic interest in mineral deposits is allowed annual depletion deductions. An economic interest is possessed in every case in which the taxpayer has required by investment any interest in mineral in place and secured by any form of legal relationship, income derived from the severance and sale of the mineral to which he must look for a return of his capitals or rather the affirmative portions of the regulation. I think the next two sentences cover the upland owner situation. But a person who has no capital investment in the mineral deposit does not possess an economic interest merely because through a contractual relation to the owner, he possesses a mere economic advantage derived from production. Thus, an agreement between the owner of an economic interest and another entitling the latter to purchase the product upon deduction or to sharing the net income derived from the interest of such owner does not convey a depletable economic interest. And we believe that that regulation is -- is clear and expressly covered this situation. It shows that Southwest has a depletable interest and the upland owners do not have. Now, that regulation was written in 1939 and embodies five decisions of this Court, defining depletable interest. The first two, Lynch versus Alworth-Stephens Company and Palmer versus Bender fixed, defined depletable interest and the next three decided this for a few months before this regulation was promulgated, limited depletion deductions. Those cases were the Bankline Oil Company, the O'Donnell and the Elbe case. By the time, I could -- I could point out just practically as if the names of those cases were in this regulation just exactly the paragraphs and the sentences that -- that they -- that are covered. Now, that regulation has been before this Court three times and three depletion cases since that regulation was written. In the Anderson versus Helvering, Kirby Petroleum and Burton-Sutton and this Court has never criticized that regulation nor criticized nor overruled any of the cases upon which it was based. Congress in the 17 years, this regulation has been on the books has not seen and found it necessary to clarify the regulation. We think it establishes the depletion theory that a person must have the right to go upon the property, drill and extract the mineral resource and receive some income therefrom and to have retained some interest therein, either a partnership interest or a tenants in common or a right of reversion or a contingent right of reversions not have counter disposed of their interest. We didn't think the regulation not only is clear but that it's valid. Of course, it conforms to the five decisions of this Court upon which it was based. It's not been criticized in the three subsequent decisions. Congress has deemed to have approved it and they have amended the Revenue Code nine times since that regulation was promulgated and have never amended the section relating to depletion of oil and gas wells. They are presumed to have noticed that the regulation conforms to the decisions of this Court. So this regulation is thrice -- thrice fortified based on an interpretation of the judicial department promulgated by the legislative department and approved by -- by the executive department, approved by the legislative department. We believe that it has a force and effect of law and is embedded in the law and fully as if it where in the statute itself and, of course, this Court does not strike down the valid law. Now, the Government and the upland owners are asking really for two depletion deductions on their land or based on their land, one, for their mineral resource to which is being consumed by their lessees, the Standard Oil Company, of course, which is no -- no question and then another depletion deduction based on the use of their -- their lands, their inexhaustible asset, a non-mineral property. They would deny to -- to Southwest depletion, deduction on a portion of the gross income from the state lease, its mineral property. But if Southwest that has assumed all the risks of drilling these wells and incurred all the expense of drilling and operating the wells and we believe that Southwest is entitled to the encouragement intended by Congress for those who explore and produce natural resources. Earl Warren: Mr. Zarky. Hilbert P. Zarky: I think my rebuttal time is -- Earl Warren: Oh, oh, you're time (Voice Overlap) -- Hilbert P. Zarky: -- expired. Earl Warren: Yes. All right so.

William H. Rehnquist: We'll hear argument this morning in Case Number 85-673, Neil F. Hartigan v. David Zbaraz. Mr. Hayes, you may proceed whenever you're ready. Michael J. Hayes: Mr. Chief Justice, and may it please the Court: This case comes before you today and presents two issues regarding the constitutionality of certain provisions of the Illinois Parental Notice of Abortion Act. Does the Act's twenty-four parental consultation period unduly interfere with the right of an unmarried, unemancipated minor to make her abortion decision? Secondly, does the judicial alternative to parental notice found in Section 5 of the Act provide a constitutionally sufficient framework to provide an expeditious confidential appeal from Circuit Court opinion adverse to the minor? Also, this Court has postponed consideration of its jurisdiction to hear this appeal and directed that it be considered with the merits. I shall initially address the jurisdictional issue. Most recently, this Court has made it clear that jurisdiction under Section 28 USC 1254, Part 2, is appropriate where, as inn this case, the order appealed from is final and there are no facts to be developed at trial. This case falls squarely within those elements of Section 1254.2 jurisdiction. The 7th Circuit order from which we appeal is clearly final. No further action to be taken by the lower court will be had on any question of fact or law presently within this case. There is no additional relief the Plaintiff can receive. There is no relief that the Defendant can receive from any adverse ruling of the 7th Circuit. The District Court cannot reverse the holding of unconstitutionality of the twenty-four hour period, parental consent period, nor can it reverse the holding of unconstitutionality as the exceptions to that period found in Section 7 of the Act. Neither can the District Court reverse the 7th Circuit on its finding that the existing judicial by-pass provided in Illinois law is constitutionally insufficient to meet the requirements of this Court. The Court has, therefore, issued final orders on the unconstitutionality on the twenty-four parental consultation period, Section 5 of the Act. Excuse me. Section 4 of the Act and on the exceptions thereto in Section 7. It has also issued a final order that the judicial by-pass procedures found in the Act provided by the Illinois legislature are unconstitutional. The only conceivable action on remand is hypothetical and contingent upon the some day possible activity of a party not before the Court. The Act has been permanently enjoined and the statute was held constitutional inoperative. We contend that clearly makes the order of the 7th Circuit final. Jurisdictional statutes should be strictly construed, but they should be applied in a practical rather than a hyper-technical fashion. Such an-- William H. Rehnquist: Mr. Hayes, didn't the 7th Circuit reserve judgment as to a part of the matter pending in the promulgation of rules by the Supreme Court of Illinois? Michael J. Hayes: --Your Honor, it could appear that way, but a practical look at the opinion and a close reading of it clearly indicates that the statute that the legislature passed with its by-pass procedures coupled with the rules that exist in Illinois under our Supreme Court rules for appellate practice were held to be constitutionally insufficient as they exist. They did indicate that the case would go back in any event the Supreme Court ever passed the rules in the future. They might then consider having the District Court look at those, but as the case came before the 7th Circuit from the District Court, it is clear that everything that was there was held to be unconstitutional on those three issues that I've mentioned. John Paul Stevens: May I ask, what is the status of the rule-making procedure proceeding before the Illinois Supreme Court? I assume it's in progress. Michael J. Hayes: The rule-making procedure, as far as I know, Justice Stevens, has not been underway. John Paul Stevens: Has anybody initiated that or taken any action to get that work done? Michael J. Hayes: Excuse me? John Paul Stevens: Has it been initiated? Has anybody proposed rules? Michael J. Hayes: Not to my knowledge. It has not been initiated. John Paul Stevens: Who is responsible for initiating it, do you suppose? Michael J. Hayes: Well, initially, the Supreme Court, of course, would have authority to initiate on their own through a committee to draft rules and to review the rules. I suspect the Bar Associations and I suspect any individual could probably initiate it. John Paul Stevens: How about the Attorney General of the state? Has he done anything about it? Michael J. Hayes: The Attorney General of the state has not petitioned the Supreme Court to implement rules, to add additional rules. It's been the position of the Attorney General of the state that the existing rules provide the constitutionally sufficient framework required for a judicial by-pass. Antonin Scalia: What about his position as to whether the statute itself is operative if those rules are never promulgated? I mean, it might well be constitutional to apply the statute without the rules, but it might also be contrary to the intent of the Illinois legislature. Has anyone Illinois court spoken about that? Michael J. Hayes: They have not, Justice Scalia. It's the intention or the position of the Illinois Attorney General's office that should the injunction be vacated and a Court of Appeals decision be reversed, that that statute, much like the statutes that were involved in Ashcroft and Bellotti could go into effect with the rules that exist, and that if additional rules and fine-tuning needs to be done, certainly the Supreme Court will be assumed to follow the edicts of this Court and provide that fine-tuning. Antonin Scalia: That's a question of legislative intent, though, isn't it? Michael J. Hayes: As to whether the Supreme Court-- Antonin Scalia: As to whether the Illinois legislature intended this statute to be implemented if the rules provision never went into effect, if the Illinois Supreme Court never adopted the emergency rules that it anticipated. Michael J. Hayes: --No, I disagree, Justice Scalia. First of all, I believe that the legislative intent was to ask the Supreme Court of Illinois to pass additional rules as necessary, as they found to be necessary, to provide a constitutional framework for which this judicial by-pass-- Antonin Scalia: I don't think you're disagreeing. I'm just saying that it is ultimately a question of what the Illinois legislature intended. Michael J. Hayes: --That's correct. Antonin Scalia: And the Attorney General asserts the legislature intended one thing, but, ultimately, that's a question to be answered by the Illinois courts, I take it, isn't it? Michael J. Hayes: That's correct. The only-- Antonin Scalia: The same courts that have refused to promulgate the rules thus far. Michael J. Hayes: --Well, Justice Scalia, they have not had an opportunity to have a viable statute in front of them to promulgate rules. I think it's not correct or illogical to ask the Supreme Court of Illinois to go into a rule-making process for a statute that has never had one day of operative effect because of the intervention, we contend, improperly of the Federal District Court in entering the injunction. So, this case is precisely the type of case that Congress intended this Court to review on appeal under 1254.2. The 7th Circuit expressly held provisions of an Illinois law unconstitutional. The ruling of unconstitutionality has interrupted a program which the 7th Circuit recognized as promulgated to further significant state interest of the state of minors and of parents. The order of the 7th Circuit requires the Illinois Supreme Court to expend time and resources in order to get a ruling on an effective statute and those are the types of comity concerns that 1254 was passed to prevent. To allow a state statute to be reviewed, we contend that if this case or this order is held not to be final, the comity concerns 1254.2 was intended to foster would be thwarted. The Court clearly, in our opinion, has jurisdiction to hear this case. Additionally, however, should this Court determine now to grant review under 1254.2, we would ask it to exercise its discretionary authority to hear this case under a petition for writ of certiorari, Section 2103. There are important issues of public policy involved in this case and that review by this Court will be significant in assisting Illinois in this statute and in others and other states who are confused and unclear because of the decisions in this case in the regulation of these areas, as to what are the boundaries that their statutes must stay within. Antonin Scalia: Mr. Hayes, do you think, moving from the question of whether we have jurisdiction to hear the appeal, is it clear that the District Court had proper jurisdiction to entertain this suit in the first place? As I understand it, the suit was brought with respect to a statute that envisioned the promulgation of emergency rules by the Illinois Supreme Court, and the suit was brought before those rules had ever been issued, and the District Court jumped right in to create the situation that you describe, which, in your words, is deterring the Illinois Supreme Court from ever issuing those rules since they are rules governing a statute that's been declared unconstitutional. Michael J. Hayes: Justice Scalia, I would agree with you that... I think that's the problem with the Appellees' suggestion that this case isn't ripe because if it's not ripe for review under 1254.2 because the Supreme Court didn't pass some rules and those rules have never existed, that same argument means that it wasn't ripe at the District Court level, and that the injunctions that were entered were improperly entered. That's another reason why I think the Court has to find finality here, and that the argument raised on appeal to this Court that because of that possibility of rules existing, some day in the future, it destroys the ripeness for appeal and reviewing this case, that same argument taken to its logical extreme in the other hand would destroy the justiciability of the case in the first instance in the trial court. John Paul Stevens: Does that mean, Mr. Hayes, that there need not have even be a lawsuit filed, the statute would not have had any legal effect until the rules were promulgated? Is that your position? Michael J. Hayes: Oh, on the contrary, Justice Stevens. John Paul Stevens: Then, why wasn't it ripe for adjudication? If it did have legal effect right away, why wouldn't it have been ripe for adjudication? Michael J. Hayes: I agree it's ripe for adjudication. John Paul Stevens: I mean, at the time of the District Court's decision. Michael J. Hayes: I agree then and I agree now, and I don't believe, first of all, that the statute's operation, as I'll discuss later when I get to the by-pass procedure, requires in Illinois, as a constitutional basis, the passage of additional rules. I believe that the framework in the statute and the existing rules that we have provide the necessary framework for the by-pass procedures and the standards set for those procedures by this Court. I also believe that the legislature in the Illinois was not trying to make a judgment, a legal judgment that the Court would make in Illinois, as to whether more rules were necessary. They left that in the section of the statute to the Supreme Court. They directed that the Court make sure that there is expeditious and confidential appeals, but they left that question squarely to, and appropriately under the Illinois constitution, the discretion and incision of the Illinois Supreme Court. Antonin Scalia: Did either the District Court or the Court of Appeals here make a finding that this statute could be implemented whether or not the Supreme Court of Illinois ever issues those rules? Is that a finding made? Michael J. Hayes: They did not. In fact, I think-- Antonin Scalia: But you're telling us that that's essential to the jurisdiction here. Michael J. Hayes: --Pardon me. I don't quite understand the question. Antonin Scalia: As I understand your position, it is an essential element of the jurisdiction that this statute is operative without the Illinois Supreme Court rules. Michael J. Hayes: That's correct. Antonin Scalia: And, yet, neither of the Courts below has made a finding that that's how the statute should be interpreted, which is a question of Illinois law, but nobody has made any finding to that effect yet. Michael J. Hayes: They have found that it was the intention and the Plaintiffs allege that it was the intention of the Illinois officials, namely the Attorney General of the state, to enforce the statute upon its becoming effective as it existed, and that because there was not what they believed to be necessary additional specificity in the rules of the Supreme Court, the Court enjoined it from going ahead. So that the threatened action of having the statute effective was enough in the Plaintiff's view and in the Court's rule to get jurisdiction to enjoin the statute. As to the constitutionality of the provision in the statute for the twenty-four hour period of parental consultation, the Court below, the 7th Circuit, acknowledged that the state has significant interest in promoting parental consultation in a minor's abortion decision, and in protecting the right of a parent to be involved in that decision. The interest as to the child is based upon the recognized presumption that minors aren't able to make decisions in an informed and mature manner on very important subject matters, such as the abortion decision. The state significant interest also takes into account its ability to protect the constitutional right of the parent to supervise, direct, nurture and properly control the upbringing of their children. Thus, the Court in the 7th Circuit recognized that by requiring minors to give notice of their impending abortion decision to their parents, the statute and the state were validly promoting the interest and preserving the state's interest in family structure, its obligation to protect minors from their own immaturity, and also protecting the rights of individuals as parents to have a say-so and consult with their minor children in a very important family personal matter. After acknowledging these important issues, however, and recognizing that notice was intended to foster that important consultation, 7th Circuit struck as unconstitutional a short twenty-four waiting period after notice, indicating that the type of a wait was too burdensome on the minor's abortion decision. That result is illogical and not supported by any precedence in this Court. Notice without time for a meaningful consultation is meaningless. The Court recognized the important significant benefits of parental consultation on the one hand and the need for parental involvement in the minor's decision, and then said there is no time for the parent to be heard and importantly for the minor to hear the advice of the parent. There was no time for consultation to occur. The Court reached this incorrect position by relying on a series of cases that struck waiting periods for an adult woman seeking to have an abortion. Waiting period for adults who have freely given consent have been held to unjustly interfere with the woman's abortion decision, even when the state said, well, we wanted to provide time for the woman to reflect on her decision. That's not the case when the twenty-four waiting period is designed to provide consultation time for the parent and the minor child. Although the Court below recognized that the state may have a significant interest promulgated by a statute which regulates a minor, but that same interest would not be protected by that same statute applied to an adult, it refused to apply that standard. It failed to apply the principles to this case and instead applied the standard for adults to a statute aimed solely at unmarried, unemancipated minors. It is obvious that the twenty-four hour waiting period is more burdensome on the minor's decision than would be no period. That restriction is entirely justified, however, to protect and promote the significant interest recognized by this Court and the minor to have the consultation with his parent and by the parent to have the consultation time with the minor. The state is not obligated to pass legislation to promote its legitimate state interest and then leave that interest, the success of that interest to chance. Rather, it is justified, we contend, in selecting means that attempt to guarantee that the good intentions of the statute do occur. We believe that the twenty-four hour waiting period, a very short time for consultation after notice, clearly outweighs any burden or risk or interference with a minor's abortion decision. John Paul Stevens: Can I ask you a question about how this statute would work without the Supreme Court rules? It has a provision in it for a guardian ad litem, as I understand it, for the minor who comes in and asks for judicial by-pass of the consent provision. Michael J. Hayes: That's correct. John Paul Stevens: Who pays the guardian ad litem's fee? Michael J. Hayes: There are no costs to the minor. The state, either through the county or through the state appropriations system, will provide the services of the guardian ad litem and a court-appointed attorney as well. John Paul Stevens: Is that set out in the statute or is that... what's the source of that? Michael J. Hayes: Yes, it is set out. It's directed to be provided to the minor. John Paul Stevens: At state expense? Michael J. Hayes: That's correct. John Paul Stevens: I see. Thank you. Michael J. Hayes: In drafting and passing the Parental Notice of Abortion Act, the Illinois legislature elected to include a judicial alternative to notice. The judicial alternative found in Section 5 of the Act is intended to allow a minor who believes she is informed enough and mature enough to make her own decision without parental consultation and guidance or a minor who believes it's in her best interests not to notify her parents, to waive or by-pass that notice provision. The waiver of notice provisions are found in Section 5. They provide that a minor can proceed in court on his own. A guardian ad litem will be appointed. An attorney will be appointed. The proceedings will be confidential and anonymous. The decision will be rendered within forty-eight hours from the filing of the petition. The standard that's set forth in the statute leaves the court only two findings, provides two bases for the review to the judge. That the person is mature and informed enough to make her own decision and that notice to the parents is not in her best interests. Those were taken right from the constitutional decisions of this Court. The Court also... the statute also requires the Court to make written findings and provide a confidential record, expedited confidential appellate process is provided for in the statute, and only the minor can appeal the decision of the Circuit Court. Of course, as I mentioned, there will be no fees. So, the economic burdens that may have been argued and applied in this case are taken away by the statute. John Paul Stevens: May I just be sure? Are you... when you say that there are no fees, is it the no filing fees in Sub-Section (h) of Section 5 that you rely on for that? Michael J. Hayes: Yes. There are no filing fees. In addition,-- John Paul Stevens: And what is the source of the statement no attorneys fees? Michael J. Hayes: --It's the... our belief that the legislature intended in this Act when they provide that a guardian ad litem will be appointed and that the Court-- John Paul Stevens: So, that's your instruction of the general legislative intent rather than any specific finding in the Act? Michael J. Hayes: --That's correct. John Paul Stevens: I hadn't found it. Michael J. Hayes: Correct. In reviewing the provisions of this judicial alternative to parental notice, the Court of Appeals recognized that all the cases they relied on to require by-pass alternatives have been consent statutes, not notice statutes. The Court required alternative procedures in those cases because a parent could veto or, as a blanket veto, block the minor's abortion decision. Illinois has elected to promote the significant interest fostered by parental involvement in the minor's abortion decision through notice and not consent. Assuming, however, that the same alternative procedures are constitutionally mandated in a notice only statute, as has been required by the Court in Ashcroft, the Illinois statutory provisions as they exist are constitutionally sufficient as a framework to meet the standard for alternative procedures set out in Ashcroft. In enacting Section 5, Illinois has elected to provide a by-pass procedure for parental notice that provides each of the characteristics this Court has declared necessary in Ashcroft. The Court provides for an alternative by having an expeditious court proceeding, respects the anonymity of the minor,-- John Paul Stevens: Mr. Hayes, can I ask you one other question about the statute? Michael J. Hayes: --Certainly. John Paul Stevens: What is the reason for notice to both parents? Why isn't notice to one parent sufficient? Michael J. Hayes: Illinois has decided that by choosing a two-parent notification statute that, as we know from our cases, both parents have a right to raise and nurture and guide their child. It's not a right that is established just for one parent. We know very clearly that whether it be the mother or the father, each together and perhaps separately are entitled to-- John Paul Stevens: Does that shed light on the state's interest in being sure that the child is having the benefit of sympathetic advice and so forth? Michael J. Hayes: --It certainly does because if you view the statute only looking from the benefits to the child, there's another purpose that this Court has recognized and our statute provides, and that's the right of parents. Parents, it must be remembered, have the-- John Paul Stevens: You have to rely on that right to justify notice to both parents. You don't rely on just the best interests of the child for that reason. Michael J. Hayes: --No. Both parents also applies to best interests for the child, as I pointed out. The child has a right to expect, both the father, the mother, perhaps bringing different perspectives to the decision, different considerations, to receive that input and involvement in the process. But, in addition to that, both parents have a constitutional right, we contend, to make those decisions and help nurture their child. The Act also provides appropriate standards for waiver. It removes, as we talked about earlier, as I mentioned earlier, all economic considerations. This Court has required no more when it's approved the parental consent statute in Ashcroft. The Court of Appeals held Section 5 constitutionally insufficient because it did not with great specificity contain each and every provision for implementation. Further, the Court held too much was left to judicial discretion, particularly on appeal, and I point out that's although in the opinion itself, the Court recognized and held that under Supreme Court rules that exist, the minor has an unquestionably good opportunity for expeditious appeals. Right in their decision, but, yet, they find there's more required, more specificity on implementation. This Court has not required such detail and specificity when reviewing a statute such as this one, especially when it's been attacked before enforcement as faciously unconstitutional. The statutory alternative has been approved. It provides a framework in which a by-pass procedure can work to facilitate an expeditious and confidential appeal. Appellants contend that Illinois provisions relative to waiving the parental notice requirement provide just such a framework. As in Ashcroft, there is no reason for this Court to believe that Illinois courts will disobey or ignore the constitutional mandates in implementing this by-pass procedure. The edicts of this Court as to what is constitutionally required will certainly limit or shape the discretion of Illinois courts to the extent it may exist. This is especially true in a case, as here, where the statute was enjoined prior to its effective date. The Illinois legislature, out of respect for the state constitutional provision requiring separation of powers, requested that the Court promulgate any rules it found necessary to ensure the proceedings under this Act are handled in an expeditious and confidential manner. The legislature's request clearly evidences their concern that a statute which advances such significant interests be implemented as this Court directs. What additional rules, if any, need be implemented will await this Court's ruling on whether the existing statute and rules provide a constitutionally sufficient framework to provide expeditious and anonymous judicial alternatives to notice. We respectfully request this Court to reverse the decision of the 7th Circuit Court of Appeals, that the twenty-four hour consultation period is unconstitutional-- Thurgood Marshall: Mr. Hayes,-- Michael J. Hayes: --with its exceptions. Thurgood Marshall: --excuse me. I was just wondering. Is there any other medical procedure in Illinois that has a rule like this? Michael J. Hayes: There is no other medical procedure. There are the standard procedures in Illinois for parents to consent to surgical procedures and medical service for their minor children. There is a statute, as pointed out in the briefs, that allows pregnant minors to consent to surgical procedures. Thurgood Marshall: That's what I was questioning about. Is there nothing other than that one citation? Michael J. Hayes: That's correct. We would also ask-- Antonin Scalia: I don't understand what that means. Suppose you have a minor who wants to have some kind of elective surgery, let's say a facelift or sterilization, whatever you like. Michael J. Hayes: --I would require parental consent. Antonin Scalia: It would. Michael J. Hayes: Consent. That notice. Antonin Scalia: Consent. Of both parents? Michael J. Hayes: I believe one would be sufficient. Speaker: One would be sufficient. Michael J. Hayes: In the judicial alternative, we would ask also that the Court reverse that decision of the 7th Circuit. Thank you. William H. Rehnquist: Thank you, Mr. Hayes. We'll hear now from you, Ms. Connell. Colleen K. Connell: Thank you, Mr. Chief Justice, and may it please the Court: Mr. Hartigan has not met his burden of establishing either obligatory or discretionary jurisdiction to review the issues he now raises nor has he satisfied the burden of showing that the Illinois statute is carefully enough drawn to achieve a significant state interest without burdening the exercise of fundamental right. There is no jurisdiction here under Section 1254 because the 7th Circuit did not enter a final order declaring the Illinois statute invalid as repugnant to the Constitution. Starting, first, with the finality portion, the 7th Circuit's decision remanded this matter to the District Court for further proceedings. Likewise, the 7th Circuit did not declare the statute unconstitutional. Instead, as Mr. Hartigan recognized in his jurisdictional statement to this Court, the 7th Circuit specifically reserved the issue of the Act's ultimate constitutionality. The reason the 7th Circuit reserved the issue of the Act's constitutionality was because the 7th Circuit found that the statute by its own terms was incomplete. It was incomplete because the statute specifically sets out a desire by the Illinois General Assembly for a judicial by-pass for any young woman who cannot tell either both of her parents or one of her parents about her pregnancy and her desire to have an abortion. Now, this incomplete statutory scheme is really at the root of the jurisdictional efficiency that we have here. The statute itself in Sections 5(f) and 5(g) specifically say that a confidential and expedited appeal shall be available as the Illinois Supreme Court provides by rule. In the next provision of the statute, the General Assembly respectfully requests the Illinois Supreme Court to promulgate any rules necessary. Mr. Hartigan's counsel misstates the statute when he contends that the statute calls for the Illinois Supreme Court to promulgate any rules that it thought were necessary. The statute doesn't say that. The statute says any rules and regulations necessary to ensure that proceedings under this Act are handled in an expeditious and confidential manner. John Paul Stevens: But what if the Illinois Supreme Court thinks the present structure of Illinois rules in the appellate courts is adequate to accomplish that and, so, nothing more is necessary? What if they've looked at it and they've so concluded? Colleen K. Connell: Your Honor, the existing Illinois rules are not adequate. John Paul Stevens: Well, you tell us they're not. Now, maybe you're right, but what if I'm an Illinois Supreme Court Justice and I disagree with you, and I think what we've got now is perfectly okay? What would I have to do? Nothing. Colleen K. Connell: Your Honor, there's been no indication that that is what the Illinois Supreme Court thinks. Further, Your Honor, there is-- John Paul Stevens: Well, it certainly has. They haven't taken any action. I assume that they respect the General Assembly when the General Assembly asks them to do something they think is necessary. I don't think... you know, they're just defining another branch of the state government, are they? Colleen K. Connell: --No. Well, Your Honor, I don't think that the Illinois Supreme Court is perhaps intending any disrespect for the Illinois General Assembly, but the Illinois Supreme Court is a separate branch of Illinois government, under the Illinois constitutional scheme, and it can act or decline to act for any variety of reasons, Your Honor, and what has happened here really is, I believe, a stalemate between the Illinois General Assembly on the one hand, which wants this statute, and which wants a judicial by-pass system with rules, and that the Illinois General Assembly wants additional rules, Your Honor, cannot be in question because after the 7th Circuit decision, both Houses of the Illinois General Assembly past a resolution calling again for the Illinois Supreme Court to promulgate those rules. And that rules are necessary, just briefly, is apparent just because the most obviously, there are no rules, for example, in the Illinois system governing confidentiality. Antonin Scalia: That is a question for the Illinois Supreme Court under the statute. It says such rules as are necessary. What puzzles me is why does this incompleteness of the statute trouble you now but it did not trouble you when you brought your suit? Colleen K. Connell: Well, Your Honor, it has always troubled us. The reason that we sought to enjoin the statute, Justice Scalia, is because Mr. Hartigan, although conceding in the District Court that the statute clearly anticipated additional rules, wanted to enforce that statute without the rule. Antonin Scalia: You have gotten then... you have been successful below. You have a final order that prevents him from enforcing the statute without the rules, don't you? He cannot now do what he wanted to do, enforce the statute without the rules. The injunction that's now in existence prevents him from doing that. Colleen K. Connell: Your Honor, the injunction prevents the enforcement of the statute, but it does not, as required by Section 1254, declare the statute unconstitutional. Instead, it leaves open an opportunity for the Illinois Supreme Court to promulgate the rules that the legislature specifically requested. Antonin Scalia: If that opportunity is ever accepted by the Illinois Supreme Court. Colleen K. Connell: If that opportunity-- Antonin Scalia: It's entirely possible that the Illinois Supreme Court never adopts its rules and forever, nonetheless, should it adopt that course, this Attorney General is restrained from doing what he wants to do on the ground that to do that under the statute, as he interprets it, is unconstitutional. Isn't that the situation? Colleen K. Connell: --Your Honor, if the Illinois General... excuse me. If the Illinois Supreme Court chooses not to act, that is an independent decision by a state body of government, and with respect to Mr. Hartigan being forever barred from enforcing the statute, that is because the statute as designed, as written, calls for rules, and the General Assembly, when it passed the statute, was aware of the fact that the Illinois Supreme Court's action was needed before there could be such rules. Antonin Scalia: He asserts it doesn't require rules. He asserts he can enforce it without the rules. You have a judgment that says you cannot enforce it without the rules period. Now, why isn't that a final determination that the statute as he interprets it is unconstitutional? Colleen K. Connell: Your Honor, it is not a ruling below that satisfies the jurisdictional requirements of this Court because even though it may be a final decision with respect to whether the statute is incomplete. Your Honor, it is not a final ruling that the Act itself is unconstitutional. Indeed, as I indicated earlier, Mr. Hartigan, in his jurisdictional statement, conceded that the 7th Circuit did not strike the statute down. It reserved-- Sandra Day O'Connor: Ms. Connell, don't you think that we would at least have jurisdiction if we granted certiorari to review whether the injunction was properly issued below? Colleen K. Connell: --Justice O'Connor, I think that the same constraint that caution against the exercise of obligatory jurisdiction also counsel against the exercise of discretionary-- William H. Rehnquist: The question... Ms. Connell, the question is whether we have jurisdiction to grant certiorari, not whether we ought to grant it. That was Justice O'Connor's question. What's your answer to that? Colleen K. Connell: --Mr. Justice Rehnquist, I think that with respect to the questions that Mr. Hartigan now raises, if this Court were to decide to grant certiorari jurisdiction, there would be a substantial risk perhaps of issuing an advisory opinion because the issues that Mr. Hartigan asks review on of whether this statute requires rules, when, in fact, the... excuse me. Of whether the statute is constitutional without rules is taken care of by the fact that the statute itself asks for rules. William H. Rehnquist: That would be a reason why the Court should not grant certiorari, but I think all we require jurisdictionally to follow up on Justice O'Connor's question is that a case be in the Court of Appeals, and there's no question this case was in the Court of Appeals, is it? Colleen K. Connell: That's right, Your Honor. No question about that. But, again, to reiterate, I think that the standards that this Court has adhered to consistently since the decision in Ashwander, clearly the doctrine of necessity, counsel against the exercise of jurisdiction here. We have a Court of Appeals which was being sensitive to the comity concerns expressed by this Court in a multitude of decisions, saying we are not going to reach the constitutional issue prematurely. We are not going to strike down the statute before we provide the Illinois Supreme Court an opportunity, a continuing opportunity to fulfill its constitutional role and to promulgate rules that might bring the statute in compliance with the Constitution. Thurgood Marshall: How much time did you give the Supreme Court to adopt those rules before you filed suit? Colleen K. Connell: Your Honor,-- Thurgood Marshall: That's a very simple question. Colleen K. Connell: --Your Honor, approximately eighty-eight days, my recollection. Thurgood Marshall: And about how long does it take a state to adopt... your state to adopt its rules? Colleen K. Connell: Your Honor, the-- Thurgood Marshall: How many years? Colleen K. Connell: --answer is that it varies because-- Speaker: That's right. Colleen K. Connell: --the-- Thurgood Marshall: If we had those rules, we could decide the case very easily, couldn't we? Colleen K. Connell: --Yes, Your Honor. Thurgood Marshall: But you jumped the gun, didn't you? Colleen K. Connell: No, Your Honor, we didn't jump the gun because had we not filed for injunctive relief in the District Court, Mr. Hartigan and his co-defendant, Mr. Daley, who is a representative of all the states attorneys in the State of Illinois, were prepared to enforce that law without the rules that the statute requested, even though, as Mr. Hartigan conceded, rules were clearly anticipated by the statute itself. Now, the consequences of-- Thurgood Marshall: Mexican stand-off. Colleen K. Connell: --Some kind of stand-off. Thurgood Marshall: Well, what rule of this Court do we deal with that, with a Mexican stand-off? Colleen K. Connell: Your Honor, I think that that stand-off is an issue really to be resolved by the Illinois State constitutional systems and the Illinois state government. If the Illinois General Assembly does not want to persist in its desire for judicial by-pass, which needs action by an independent branch of the Illinois government, then the Illinois General Assembly can amend the statute to substitute perhaps an administrative by-pass which this Court has indicated might be appropriate in its Bellotti decision or it might try a host of different alternatives to achieve its desired parental involvement. The Illinois General Assembly hasn't done that. Instead, it reiterated its desire for the statute to go as written with rules when the Illinois Supreme Court-- Sandra Day O'Connor: Ms. Connell, shouldn't the District Court in the first instance either have abstained to let the Illinois courts decide whether the statute could go into effect by its own terms without Supreme Court rules or determine whether as a matter of state law the statute could go into effect by its own terms and then act accordingly? Colleen K. Connell: --Your Honor, I think that the District Court was really faced with the issue of eminent enforcement of this statute and the issue at that point then became a federal issue of whether this skeletal statute without the rules requested provided an adequate framework within the context of Bellotti and Ashcroft that provided the young woman with an assurance-- Sandra Day O'Connor: Well, proceeding in that fashion has just created a stand-off, as has already been pointed out. So, I wonder whether it isn't appropriate to look at whether the injunction was properly issued. Colleen K. Connell: --Your Honor, I think the injunction clearly was properly issued and, again, I would say that certainly the 7th Circuit decision which vacated the decision that the Act was finally and completely unconstitutional really struck that balance that you're concerned about because it said, look, if we don't continue the injunction, this Act will go into effect and it will be enforced because it had the enforcement agencies of the state in court before it saying it would be enforced. So, it had to provide some sort of interim relief, and to have abstained, Your Honor, in the classic sense of that doctrine would have left the young women here without any protection of their fundamental rights and with the enforcement of a statute that was incomplete in its own terms and did not provide the confidential and expeditious judicial by-pass that the General Assembly intended. William H. Rehnquist: You're right, you're right, Ms. Connell. The prosecution would have failed in state court, wouldn't it, or any sort of action would have failed in state court because, in your view, the legislature did not intend the statute to go into effect without rules in the Supreme Court of Illinois, and the first time the... the state attorney general or Mr. Daley walked into state court to do something about this, the state courts would have told him that. Colleen K. Connell: Your Honor, I have no assurance of that, and-- William H. Rehnquist: Well, then, you must be in some doubt about your construction of state law, if you feel you have no assurance of that. Colleen K. Connell: --Your Honor, the problem is that they were threatening to enforce it and for this law to even be threatened to enforce would have provided a substantial chill to the physicians who are also plaintiffs in this action and who would, given the serious criminal penalties attached to a violation of the statute, been chilled and would not have performed the abortion for the young woman and would not have allowed them to effectuate their fundamental right. Antonin Scalia: But you can't have it both ways, Ms. Connell. If you want to attack a statute which you interpret as being a statute that allows you to go forward without the Supreme Court rules, then it seems to me, fine, if you want to attack the statute as being that kind of a statute, then it seems to me you have to take the unpleasant part of that, which is when that statute is struck down, there is jurisdiction here to review the striking down. But you want to have the one without the other. You want to strike it down as being what you now say it is, a statute that can't go forward or that can go forward without the Supreme Court rule, but then you come here and you say, no, actually, nothing is really happening. Colleen K. Connell: No, Your Honor, it's not that nothing has really happened. It's that the 7th Circuit's decision, which did not declare the statute unconstitutional, left the state an opportunity to render it constitutional. Antonin Scalia: It declared your statute unconstitutional, the one you asserted this statute was, namely a statute that allows the Attorney General to go forward without the Supreme Court rules, otherwise there wouldn't have been any jurisdiction in the District Court. Colleen K. Connell: But, Your Honor, with all due respect, it's not my statute, it's the State of Illinois' statute, and that statute does request rules, and, really, without those rules, not only-- Antonin Scalia: But you didn't say that in the District Court. Your whole theory in the District Court was the state is going to go ahead without these rules and that is what the statute says and such a statute is unconstitutional. Your theory in the District Court was not enjoining the Attorney General from going ahead because he's violating state law; your theory is he may well be in compliance with state law and that law is unconstitutional. Colleen K. Connell: --No, Your Honor. Our concern was that Mr. Hartigan's desire to enforce this statute in its incomplete form, regardless of whether it violated state law or not, would have violated the Federal Constitution because it would not have provided the requisite assurances that a young woman could pursue a judicial by-pass in an expedited and in a confidential manner. Your Honor, just to move into the merits, it's that problem of incompleteness which really shows why the 7th Circuit's decision was correct. The statute below-- Antonin Scalia: I'll let you move into the merits, Ms. Connell. I think that's fair. Colleen K. Connell: --Thank you. John Paul Stevens: Let me just ask this because... is it correct that the Court of Appeals' opinion held that the statute without the rules does not provide either an expedited or a confidential method of review and, therefore, is both unconstitutional without that and it also fails to comply with the intent of the legislature because those two requirements, confidentiality and expedition, are both statutory requirements and you contend they're also constitutional requirements? The 7th Circuit agreed with you, so their decision is both, on what the statute means without the rules and what its constitutional status is. Colleen K. Connell: Yes, Your Honor, absolutely. The fact that the Illinois statute does not provide and cannot provide any guarantees of an expedited and confidential appeal raises very serious constitutional problems under the Federal Constitution. Just briefly, the Illinois statute does not provide any assurances that a young woman can make an appeal and preserve the privacy interests that this Court has found to be part of her fundamental rights. There are no provisions anywhere in the statute itself or the existing Illinois appellate rules which provide any guidance or any provisions for a young woman to keep her identity confidential. There are no provisions for filing with her initials. There are no provisions for filing using a Jane Doe pseudonym. So, to compare this case with the Ashcroft statute, which did provide for the specific filing of the young woman's petition with her initials, this one does not provide the necessary assurances of confidentiality. Now, the lack of any assurances that the privacy will be protected is completely at odds with this Court's decision, including most recently the decision in Thornburgh, where the Court held that the Constitution demands that such an intensely private decision, such as the decision to end a pregnancy, must be protected in a manner that assures the young woman's privacy. Likewise, there is no provision in the statute itself or in the existing Illinois rules that provide any assurances of an expedited appeal, and that's critical and it's a critical deficiency because, as this Court is well aware, time is absolutely of the essence in the abortion context. Now, the problem with the Illinois system is that the timing of the entire appellate process is left to the complete and unfettered discretion of the personnel at the various levels of the Illinois appellate system. Our experience shows us that long delays will occur even if an appeal is expedited under any of the existing Illinois rules. Now, Defendant, Mr. Hartigan, trots out Rule 311 in his supplemental reply brief as a way in which a minor might have a chance or possibility of an expedited appeal. Now, the problem with Rule 311, as Mr. Hartigan recognizes in Footnote 10 of his supplemental reply, is that it provides a possibility of expedition only if, only if the Illinois Appellate Courts don't apply it as written. To not apply the rule as written provides the young woman no guidance. It certainly does not provide even the framework of expedition that this Court has required in Ashcroft and Bellotti and in other decisions in this area. Now, the problem with the rule is also exacerbated by the-- Antonin Scalia: Ms. Connell, let's assume a rule without any by-pass provision, a rule that requires notification of the parents absolutely and one day after that notification for the parents to speak with the child about the abortion. What cases of ours say that that is unconstitutional? Colleen K. Connell: --Your Honor, I think this Court answered that decision in Bellotti in the context of compelled parental notice to parents when their daughter was seeking to invoke a by-pass around parental involvement and the parental consent, and this Court ruled that the privacy interests of the young woman was protected even to the extent that she should be allowed to seek judicial review or to seek an alternative to parental involvement without even notification to her parents, Your Honor. This Court reiterated its concern-- Antonin Scalia: Does this apply for other minor personal operations? Let's say a sterilization. Suppose you have a thirteen year old who decides that she wants to be sexually active and doesn't want to have to worry about the problem of having abortions later and decides she wants sterilization, would the same constraints apply? Colleen K. Connell: --Your Honor, in Illinois, if the young woman is pregnant and desires sterilization after the pregnancy, then, when she's pregnant, she has the complete ability under Illinois statutory law to make any decisions concerning her pregnancy or any medical procedures surrounding that pregnancy without parental involvement. Antonin Scalia: I'm talking about a non-pregnant young woman. Colleen K. Connell: If the young woman is not pregnant, then the involvement of only one parent is needed, Your Honor. Antonin Scalia: Is that... and the consent is needed, isn't it, not just notification, but actual consent? Colleen K. Connell: Yes, Your Honor. Unless the minor has been found to be emancipated or is married. Antonin Scalia: Is that constitutional? Colleen K. Connell: Your Honor, the right of sterilization to a minor is something that's not been ruled on by this Court, and I suggest that it does not present precisely the same constitutional issues as the abortion issue because the right to or the desire to be sterilized is an issue that can be deferred until the minor reaches her age of majority. By way of contrast, the-- Antonin Scalia: Not if she wants to be sexually active until that point. Colleen K. Connell: --Your Honor, if she wishes to be sexually active, there are other alternatives as well, including the use of contraceptives which are not permanent, such as sterilization, and under Illinois law, a young woman can get contraceptives without either notification to or consent of her parents. The problems with the Illinois system are not limited to the fact that there are no specific rules setting the time frame for the appellate procedure. Mr. Hartigan is incorrect when he suggests that only the young woman can appeal from a lower court decision concerning her... denying her petition to have an abortion. Under the Illinois rule, a guardian ad litem is appointed and under Illinois law, as cited at page 22 of Plaintiff's supplemental reply brief, that guardian ad litem has a right, indeed, even an obligation, to go to the Appellate Court if his construction of the young woman's best interests or maturity is at odds with the young woman's argument. Further, when such a guardian ad litem is provided for, there is no provision in the Illinois statute which provides for the payment of the guardian ad litem's fees. Section 5(h) of the statute only deals with the filing fees. It does not deal with the guardian ad litem fees, and under other provisions of Illinois law, most pertinently the divorce code, the guardian ad litem fees that are appointed for the children in a divorce, the guardian ad litem fees are paid for by the parents. Now, the problems that-- John Paul Stevens: What about attorneys fees for the-- Colleen K. Connell: --No mention of that either, Your Honor. John Paul Stevens: --So, you basically disagree with your opponent on who pays these expenses? Colleen K. Connell: Absolutely. John Paul Stevens: I notice the statute requires a confidential record of the evidence be maintained. I suppose you have to have a court reporter, too. Colleen K. Connell: Yes, Your Honor. John Paul Stevens: You have to pay the court reporter, too. Colleen K. Connell: No provisions for that nor is there any provision, as another indication of the problem of the statute, for the court reporter to expedite the transcript, and under other provisions of the Illinois appellate procedure, the court reporter has forty-nine days in which to complete the transcript and prepare the record, Your Honor. Briefly, the problems with the lack of specificity in the Illinois rules are that it will result in long delays. Our experience tells us that the delays of two months are not uncommon, even in a situation of a so-called expedited appeal, where a seventeen year old minor with terminal illness claimed that forced medical care was contrary to her religion. Now, the consequences of delay in the abortion context are manifest and they're not contested, even by Mr. Hartigan. The medical community is unanimous in its condemnation of a delay, a mandatory delay, after an informed decision has been made. Now, the reason for that is that mandatory delay of even a few short days or a week result in statistically significant increases in the complications and in the mortality rate faced by young women who are electing to effectuate a constitutional-- Antonin Scalia: Ms. Connell, the premise of this statute is that an informed decision has not been made until the young woman talks with her parents. Colleen K. Connell: --Your Honor, I think that that is not the-- Antonin Scalia: Just speaking with a doctor who may not have her interests as much in heart as her parents do is not enough. Isn't that a reasonable assumption for the legislature to make? Colleen K. Connell: --Your Honor, this Court has held in the past that the legislature cannot presume that every minor is incapable of giving informed consent, and, indeed, in the earlier section of the Illinois statute that I cited, a pregnant minor with respect to all provisions of medical care is presumed mature under the Illinois Code. Now, the problem with this mandatory delay in that it will result in medical harm in exchange for really nothing. The state has not shown how any purpose can be achieved by this statute. There was no showing below that this mandatory delay will result in more consultation and better consultation or in an informed decision. Antonin Scalia: The delay only applies if she wants to avoid giving notification to the parents. Colleen K. Connell: No, Your Honor. The delay attached-- Antonin Scalia: If she's willing to give notification to the parents, I thought it's just a twenty-four period. Colleen K. Connell: --But that's still a delay, Your Honor, and as indicated by the record and indicated by the briefs of Appellees, the mandatory twenty-four hour period often stretches into a much longer period. Indeed, as this Court recognized in striking down a similar mandatory delay period in the Akron decision, and, Your Honor, the problem with this is that it assumes, contrary to the evidence in this case, and contrary to all other evidence, that no young woman ever voluntarily consults her parents. That's the additional problem with this statute. Even for a young woman who tells her parents, who consults with them and they reach a family decision that the abortion is in her best interests, that family cannot effectuate their decision without the mandatory state-imposed delay because under the terms of the statute, the physician must notify the parent and it's both parents, and then wait the twenty-four period, unless the young woman and her family are willing to submit themselves to one of two additional requirements, each of which result in an additional and undue burden on the young woman's fundamental right. Very quickly, those additional burdens would either require both parents to accompany the young woman to the abortion facility or the doctor's office, or require the young woman's parents to sign before a Notary a statement that they have been informed of their daughter's pregnancy, they've been informed of her desire to end the pregnancy, and that they do not object to the waiver of the mandatory waiting period. As the District Court found and as the 7th Circuit affirmed, such an additional requirement is no exception at all, but is really an additional burden because that requirement is really tantamount to publication, especially in small towns, of the young woman's abortion decision. In conclusion, the state statute here is incomplete and this Court does not have the jurisdiction. However, should this Court reach the issue on the merits, the Illinois statute does not achieve its stated purposes. It imposes a knowing risk of additional medical harm in return for nothing more than speculative hope, which the state did not prove below, of increased or better consultation. The risk of this over-broad statute, which applies across the board, is simply too great. It cannot be sustained under previous decisions of this Court and the 7th Circuit's decision finding that in its incomplete form, it cannot be enforced, should be affirmed. William H. Rehnquist: Thank you, Ms. Connell. Mr. Hayes, you have four minutes remaining. Michael J. Hayes: Thank you, Mr. Chief Justice. Appellees make significant argument about the fact that in their view the Illinois legislature has commanded that additional rules be instituted before the statute can meet the standards that the legislature was attempting to meet, namely those in the Ashcroft-- John Paul Stevens: Mr. Hayes, let me just interrupt. It is clear that the Illinois legislature has commended and expedited a confidential appeal. Michael J. Hayes: --That is correct. John Paul Stevens: And is it not also true that the 7th Circuit upheld that the statute without the rules as a matter of Illinois law does not provide for either of those things? Michael J. Hayes: No, I don't believe that it did. The 7th Circuit, as I pointed out in my opening argument, recognized that surely a minor has an opportunity for an expeditious appeal with the present Illinois Supreme Court rules. They recognized that right in their opinion. What they went on to say is that's not good enough here. We want more specificity. We contend that in a facial attack on our statute and our existing rules as they applied to form this by-pass, you cannot apply as Appellees have done and as applied to argument, that we know a case, we had an experience where. Well, if those occur and maybe they will occur ultimately, those are improper standards to apply in a statute and a statutory scheme that has been attacked as facially unconstitutional prior to its-- John Paul Stevens: I read their opinion, maybe not on the expedition, but I read their opinion as saying that the present Illinois statutory scheme and rules do not provide the kind of confidentiality that is necessary, either to meet the word in the statute or to meet what they regard as the constitutional requirements. Michael J. Hayes: --Justice Stevens, the difference between the confidentiality provided in Illinois and that which was recognized and provided in Missouri and Ashcroft is that the statute said a minor can use their initials. Our statute said the minor may proceed in a confidential and anonymous fashion and we have a court tradition in Illinois clearly recognized that in many cases cited in the briefs that the courts allow the use of pseudonyms. John Paul Stevens: You may be right, and the Court of Appeals may be wrong. All I'm suggesting is I think the Court of Appeals concluded that the confidentiality requirement was not satisfied under the existing State of Illinois law. Michael J. Hayes: They first found that the confidentiality requirement and the expedition of appeal were necessary in a pure notice statute, and then, having found that, held that our statute did not meet the, in their opinion, standards set forth in Ashcroft as providing a constitutionally sufficient framework to allow for confidentiality and expedition. John Paul Stevens: But you agree, do you not, that confidentiality and expedition are essential? Michael J. Hayes: They are essential to the by-pass procedures that were outlined and articulated by Ashcroft-- John Paul Stevens: Do you agree that the Illinois legislature... it was the intent of the Illinois legislature that there be an expeditious and confidential procedure? Michael J. Hayes: --I do. Speaker: Okay. Michael J. Hayes: Again, we would ask this Court to consider fully the issue of the constitutionality of the twenty-four hour parent parental consultation period to allow what has been recognized as a very important and significant role for both the minor, a right of the minor to hear and a right of the parent to have input in to a very important decision the minor will make, to allow some time for that to occur. We would also this Court-- Harry A. Blackmun: But you ask it of both parents? Michael J. Hayes: --We do ask it of both parents. Harry A. Blackmun: Suppose the father is on military duty in Viet Nam? Michael J. Hayes: The statute provides very clearly that if it's unreasonable to reach that parent, then the parent... then the parent that is present and reachable is sufficient. Harry A. Blackmun: Suppose he's on business in Honolulu? Michael J. Hayes: That's really a question of whether it's reasonable to reach him or not, I would suspect. If it's so far that they can't get ahold of him, there is always the opportunity to begin a by-pass procedure with the mother or the present parent along with the child that, of course, would very quickly the judge and the Circuit Court would obviously grant that. Thank you. William H. Rehnquist: Thank you, Mr. Hayes. The case is submitted.

Earl Warren: Number 501, Binks Manufacturing Company, Petitioner, versus Ransburg Electro-Coating Corporation. W. Donald Mcsweeney: May it please the Court -- Earl Warren: Mr. McSweeney. W. Donald Mcsweeney: -- Mr. Chief Justice. Before proceeding with my argument, I'd respectfully ask leave of this Court for permission to file a reply brief herein, no later than tomorrow. We received the answering brief of the respondents only this past Saturday in Chicago. We've made arrangements to print it overnight and I will make every effort to give the typewritten copy to my opponent this evening. Earl Warren: You may do that. W. Donald Mcsweeney: Thank you, Your Honor. This is an antitrust case and involves also the misuse of patents. With the additional point urged in part 5 of our brief that respondent fraudulently procured the Starkey patents. That 0.5 will be handled in this oral argument by Mr. Meroni. I will confine myself to the first four points of our brief. The issues which I shall discuss are a matter of the restraint of trade and monopoly which we say the totality of the conduct of this respondent has brought about and it has achieved a monopoly position today in the field of airless electrostatic spraying and painting. Secondly, and we say additionally and standing alone, its practices of tying in equipment leases with patent licenses are illegal. And we say also that it is engaged in a program of compulsory package licensing of patents which standing alone is illegal. And that it has violated the laws because of its dominant position and its position holding basic patent of requiring in its patent license agreements grant-back clauses of future inventions. John M. Harlan II: (Inaudible) W. Donald Mcsweeney: No, I'm not, Your Honor, I think there were erroneous legal tests applied here. I think I shall demonstrate or even from construing the agreements, you'll find for example with respect to the tie-in argument that ? that the agreement, the so called alternative agreement of theirs compelled a prospective licensee to go back to Ransburg, the respondent to get equipment. The petitioner, Binks -- Binks Manufacturing Company commenced this action by filing a declaratory judgment action. It was there or it's been a -- and that was in 1946 -- in 1956, October. There was a counterclaim filed by a respondent, Ransburg, beyond alleging infringement of the Starkey method patent. Binks, the petitioner, denied infringement alleged invalidity and misuse of the patent and charged violations of the Sherman and Clayton Acts. The -- later, when the Starkey apparatus patent issued in June of 1957, it was brought in to the lawsuit in May of 1958. The District Court found in favor of the respondent Ransburg, on all issues. And the Court of Appeals affirmed except with respect to the matter of allowing Ransburg attorney's fees and the matter of attorney's fees is not here before this Court, matter of Ransburg's attorney's fees. Now, the respondent Ransburg is in the business of leasing equipment used in electrostatic spray coating or painting. There are, and we shall be discussing, two different painting processes which the respondent leads us. First, which is called the number one process and then later commencing in 1951, they began marketing their number two process. The number two --- number one process which they commenced marketing in 19 -- approximately 1944, consists basically in employing an electrostatic field for depositing liquid particles delivered or sprayed into the field by a conventional air spray gun. Charles E. Whittaker: Is the number one process before us? W. Donald Mcsweeney: I think the number one process is before us in -- insofar as it's part of the buildup of this monopoly position of their -- the respondent, there's no -- it's before us in that respect. We alleged that by the position they attained in marketing the number one process, they got ? they got a dominant position there and the impetus from that gave them the dominant position immediately upon marketing the airless process in 1951, Mr. Justice Whittaker. The number two process, a rotating or centrifugal bell or disk is substituted for the air gun of the number one process. The number two process commonly referred to as the airless process has no spray gun used in it. Now, respondent's marketing program, since respondent began licensing its electrostatic spray coating process in 1944, it has combined a patent licensing and an equipment leasing arrangement. The respondent never sells this equipment. It always leases it. And it charges an initial fee ranging from $5000 to $40,000 depending upon the size and type of the installation. And then in addition, either a minimum monthly fee or a percentage of the cost of the coating material which passes through the process whichever those monthly fees is higher. As of the time of the filing of this case, the respondent is granted 733 electrostatic coating licenses. Now that includes airless and with air. And there 463 still in enforced, it had granted some 337 airless licenses of which beginning of this suit, there 272 still enforced in effect. William O. Douglas: Can you get the -- the patent licensing without the equipment? W. Donald Mcsweeney: Well, that's -- that's the contention we make, Your Honor that you cannot. William O. Douglas: Just what are the findings on that? W. Donald Mcsweeney: The findings are that the that they did not require, that Ransburg did not require as a condition of getting a patent license, the taking of respondent's equipment. But we or I shall argue and I -- our brief doesn't -- I think we can demonstrate that the so-called alternative agreement which they've printed and stopped commencing in 1953, really gave no choice. And I'm going to come -- excuse me, Your Honor. John M. Harlan II: Of course, (Voice Overlap) precisely to the contrary. W. Donald Mcsweeney: The Court, however, didn't construe, did improperly construe this -- this agreement if the Court please and it's an agreement the -- as a matter of contract law, I believe that this Court can conclude that that agreement has -- requires the potential or prospective licensee to come to Ransburg for the equipment and that there was no freedom of choice there. And the agreement which I'm going to discuss in a little detail, planned to, is set forth in the record volume 3 at page 31. It's in -- Charles E. Whittaker: (Inaudible) directly understand that there are two patents involved? One the 1954 patent, ending in the numbers 536 for a process or a method and another of the 1957 patent, ending in the numbers 417 is for an apparatus? W. Donald Mcsweeney: Combination apparatus. Charles E. Whittaker: Is that correct? W. Donald Mcsweeney: Yes, Your Honor. Charles E. Whittaker: Thank you. Now, in its marketing program, the respondent prepares a standard printed form of contract. And these terms have been substantially the same from the time of leasing the number one process up through the leasing of the number two process. And there are, however, some -- over that period, some 45 different agreements used. In this agreement, the respondent represents that it is the owner or otherwise has the right to grant licenses under inventions and let his patent pertaining to and covering methods and apparatus used in the number one or the number two process depending on which it's licensing. But it usually does not spec -- specify the patents or doesn't specifically identify the patents or any inventions. It has never submitted a -- any license agreement under any specific single patent. I said, usually because in some seven patents or seven agreements, it has listed patents. In one of these agreements, it will show in this case, none of the 36 patents listed, was applicable to the system or -- or even to the process that it was licensing. And then in the agreement -- in the agreements with six other companies, the respondent in at least three -- with at least three of these companies, it included patents which were clearly inapplicable to the process that it was licensing and that will -- I believe, be a significance in our argument on compulsory package licensing of patents. Now, continuing with the facts, I say in addition to retaining title to the equipment, respondent reserves the right to make changes in the ? in the equipment. And in consideration of the fees it gets, it agrees to supply replacement parts including staple commodities, as well as it agrees to -- to supply services. Charles E. Whittaker: When you say staple commodities, do I understand you to mean non-patented things? W. Donald Mcsweeney: Yes, Your Honor. Charles E. Whittaker: Thanks. W. Donald Mcsweeney: And there's an exhibit where we list those -- even things like hoses, pliers and that type of common ordinary -- in volume 1 page 182, there's a list, a typical list of those parts. Felix Frankfurter: Are they conditioned upon the license? W. Donald Mcsweeney: Well, you -- Felix Frankfurter: Is the license conditioned upon utilizing those? W. Donald Mcsweeney: You don't have to utilize them I suppose, Your Honor, but you have to pay for them in the first place. Felix Frankfurter: You mean that -- you mean you have to pay for them you have -- W. Donald Mcsweeney: You yes, Your Honor. Felix Frankfurter: (Inaudible) W. Donald Mcsweeney: Now in addition to these agreements. Felix Frankfurter: Meaning -- W. Donald Mcsweeney: -- the respondent was -- Felix Frankfurter: You don't get -- you don't get the patent? You don't get the license, if you don't pay for those fees? W. Donald Mcsweeney: That is correct, Your Honor. Felix Frankfurter: Alright. Charles E. Whittaker: Well, do you have to buy those non-patented things from transfers or can you get it from hardware store? (Inaudible) Felix Frankfurter: Well that -- W. Donald Mcsweeney: It's physically possible, Your Honor, to get them there. Their sachets would be in a hardware store, I suppose I might -- Felix Frankfurter: But my question -- my question -- W. Donald Mcsweeney: Well, you have to -- yes -- Felix Frankfurter: My question was whether the grant of a license was conditioned upon buying these things or paying for these things. I got your distinction, but it's thrown away after you buy them -- W. Donald Mcsweeney: Yes, Your Honor. Felix Frankfurter: Whether you have to pay for these things from the licensor. W. Donald Mcsweeney: Yes, you do, Your Honor. Now -- Felix Frankfurter: But you've just answer the contrary to Justice Whittaker. W. Donald Mcsweeney: Well, you pay in advance. When you first get the license, you pay a fee which includes an amount which takes care of the replacement parts and the services. Felix Frankfurter: Well then the answer to my question whether buying for these non-patented bought parts, is a condition to the getting the license, the answer is yes, is that it? W. Donald Mcsweeney: It is yes, Your Honor. I would like to say that in 1953, respondent printed and stopped a so-called alternative agreement, which did not have in it, a provision expressly saying, this you take our equipment. Felix Frankfurter: Well, is this -- W. Donald Mcsweeney: It never -- Felix Frankfurter: Is the decree that we're reviewing, if we're asked to review here, is the decree based on a licensing system which requires payment for non-patentable parts. W. Donald Mcsweeney: Yes, it does require payment for non-patentable parts. Whenever you take any equipment from them, you always take -- Felix Frankfurter: But must you take the equipment from them? W. Donald Mcsweeney: I say you must, Your Honor. Felix Frankfurter: Alright. I just want to be clear. W. Donald Mcsweeney: And I'm going to come to that. There's a big argument in this lawsuit over that very point. The question is under this alternative so-called alternative agreement, does it compel you -- does it drive you back to Ransburg for your equipment? You will note that it -- it talks about it -- it says, you get -- you you are -- have the right to use a system as prescribed in the Ransburg drawings, subject to such changes and specifications as Ransburg may make. That I say, gives Ransburg the power. Hugo L. Black: What page is that? W. Donald Mcsweeney: That's on page -- volume 3, page 18, Your Honor. Hugo L. Black: Page 18? W. Donald Mcsweeney: Oh, excuse me. The one I referred to before was on page -- commencing on page 31. That's Exhibit D, runs for about till page 36. Hugo L. Black: Which part of it has the language which you've just referred? W. Donald Mcsweeney: On page 32, Your Honor, paragraph numbered 1, where it says license. And the last part -- sentence -- last part of that paragraph, it says, you have these licenses -- to use said process as shown in Ransburg volume number blank, subject to such changes therein and such further specifications as Ransburg may prescribe. John M. Harlan II: The lower court did not give him the interpretation you suggest to that provision, could it? W. Donald Mcsweeney: I take it they did not, Your Honor or they never could've arrived at the result I'm suggesting here. This this -- I want to say at this time since we've got into this a little -- I think at preliminary, we must make clear is that, there's no practice to go by under this agreement. They never put this contract into effect, Ransburg says no one wanted. There's no -- we don't know what in fact they actually did with this contract. We know that this is the contract which they said, "Here is the alternative. If you don't want our equipment, sign this contract." I say that this contract drives your right back to Ransburg for the equipment. It's the power they retained if you signed this contract which is the vicious thing, which makes the tie-in in this case. John M. Harlan II: What do you do with finding 66? W. Donald Mcsweeney: I say that with finding 66, the District Court just misconstrued or ignored the agreement -- John M. Harlan II: Then you are asking us to overturn the (Inaudible) W. Donald Mcsweeney: I know -- John M. Harlan II: We have to review the evidence. W. Donald Mcsweeney: I'm asking you to interpret a contract, a written contract which is before this Court. And you will then overturn that finding, I -- I believe. In that respect -- John M. Harlan II: You don't want to that. The finding in the stand is what would contrary to what you were arguing, (Inaudible) W. Donald Mcsweeney: It is flatly contrary, but I don't believe it involves your overturning it, Your Honor. I don't believe involves your determining any basic facts. John M. Harlan II: How do you do that? How do you live it, did not believe it to be (Inaudible) W. Donald Mcsweeney: You can overturn it. I think it's just a conclusion. And they've wrongly -- that court has wrongly applied a rule of law in a -- a legal construction of a written contract. And this Court, I submit, is as -- in a -- an eligible position as -- able a position to construe that contract and to construe it, in a way I suggest, which will in effect, overturn that finding. Yes, Your Honor. Felix Frankfurter: I must have misconceived your answer because I got from your answer when you said the power they have drives you back the compulsory paying for this non-patentable things. The questions of power and question for construction of an agreement which in the power means de facto exercise of coercive influence and that I should think, is in the realm of evidence, isn't that true? W. Donald Mcsweeney: Well, the other evidence, yes, Your Honor that that -- what was it done in practice is in other evidence. Felix Frankfurter: Well -- W. Donald Mcsweeney: -- because this agreement was never put into effect. Felix Frankfurter: Well therefore the -- to pursue Justice Harlan's question, therefore that finding I don't know its number, partly rests on reading a document, but also rests on the whole evidence as to what was done under it, isn't that true? W. Donald Mcsweeney: I think they're separate -- those are separate matters, Your Honor, because under this contract, this contract which I've referred to was never executed. No one ever took it. This is the contract that Ransburg said, if you don't want equipment, take this alternate contract. So everybody who took that contract, took the contract which had the equipment provision in it. Felix Frankfurter: But Mr. McSweeney, one can't gather from reading a document that it was never enforced and can't get that from a piece of paper. That must come from surrounding evidence. W. Donald Mcsweeney: Oh, the evidence is -- Felix Frankfurter: And therefore, I'm not saying it isn't fair. I'm not suggesting it isn't fair. I don't know a thing about it. I'm suggesting that we do have to, as Justice Harlan has been pressing you. We do have to go into the evidence since I'm -- we've (Inaudible) W. Donald Mcsweeney: In that respect, you do. Felix Frankfurter: -- challenge the findings but I can't I cannot understand that we're not to challenge finding, is it, for the 66, which on its face doesn't give the conclusion from which you for which you argued. And of course, you have to go outside of that finding to find that which appeared on paper or the sham. That's your point. W. Donald Mcsweeney: Yes, that's my point, Your Honor. Felix Frankfurter: Well, but you don't prove sham merely by reading a piece of paper. W. Donald Mcsweeney: Well, I -- the other evidence shows that this was never used. This contract was never accepted. Felix Frankfurter: And did the judge find -- so find on that other evidence? Did the District Court make findings that this contract on which it relied in 66 was a functus, was a fiction? W. Donald Mcsweeney: Not that he ever called it that. Hugo L. Black: What about finding 67, does that have any reference to it? Im not I don't quite understand whether it does or not. That says that all of them had required their supplying of the equipment. Is that what you're talking about? W. Donald Mcsweeney: Well, that -- I -- it's true the District Court found that as a requirement, it never was a requirement. Hugo L. Black: So what I'm as what I've understanding -- I understood you to say that no one had ever signed any, except those that required the equipment and your claim is that they had to do that to get any contract at all, is that it? W. Donald Mcsweeney: Oh, my claim is that even had they taken this alternative form of contract, they would have, by the expressed terms of this so-called alternative contract, been driven to Ransburg, to take the equipment. Hugo L. Black: And there was any finding that says anything about this particular form of contract on which you rely. W. Donald Mcsweeney: Well, they there's they don't -- the District Court didn't make any finding with respect to that. Hugo L. Black: Did you ask did you ask for any? W. Donald Mcsweeney: I don't recall. I don't know if we asked for one. I didn't get one. In continuing with respect to certain of the facts which I think are to remain to my argument, I want to mention that in 1951, when the respondent began licensing its number two process, it inserted in its agreements, in all of its agreements with respect to the airless, the number two system, a provision for grant-back -- for the grant-back of any inventions, improvements or patents, domestic or foreign, from any source relating to methods or apparatus involving this airless electrostatic spray coating. And this grant-back was not restricted to improvements upon the apparatus being licensed and in the extent that during the term of the agreement and for two years, thereafter. Now, it's true in 1945, respondent used a type of contract which didn't have the grant-back provision in it, but it did not at that time, cancel the outstanding agreements containing grant back. John M. Harlan II: Were there any? W. Donald Mcsweeney: There were 133 which remained in effsect, full force and effect through the -- this lawsuit and through the closing of proof and through the time the findings were added. I noted in respondent's brief the -- it goes outside the record to say they've been eliminated in sometime in 1959. Well that would have been after these findings were entered. If they were, it's not in the record, and if they were, I suggest it's too late, as far as it's no purge to do it at that time. In 19 -- prior to 1953, this form, this so-called alternative form, which supposedly didn't require the licensing of equipment, had never been in existence. But in 1953 was the first time they printed and stocked such a form. And that time, they sent letters to their existing licensees, asked him if they'd want to take that kind of equipment. Now, these existing licensees already had taken equipment from Ransburg and they had paid large sums for it. They -- they would have had to under the terms of this proposal -- they would've had to return that equipment, but they wouldn't get a refund of their money. Of course, none of them took advantage of that so-called offer. William J. Brennan, Jr.: And you claim that was not enough to purge and that was not -- W. Donald Mcsweeney: It was not enough to purge and I mentioned that the United States Government has filed in an amicus memorandum here on that point and on the point with respect to the -- that is that they didn't do enough to purge and on the ? on the point with respect to grant that clauses. Charles E. Whittaker: Mr McSweeney. W. Donald Mcsweeney: Yes, Your Honor. Charles E. Whittaker: Has not the district judge foreclosed you on your argument of tie-ins of parts by finding 65 where it says that, Although much of the specialized equipment required for the practice of the process was and is not available on the open market. And then has produced the same and furnished it to its licensees in order to be able to market its processes. It has always been the expressed policy of the defendant and so understood by all its officers that if a prospective licensee prefers to obtain equipment elsewhere, then from the defendant he was free to do so and that reduced fees could obtain a license from defendant without equipment, et cetera.? Now does --what about that finding in connection with your argument of tie-in on parts? W. Donald Mcsweeney: Well, Your Honor, I think that that one the one is not based on any fact in the record, as far as -- I would have two answers to that with respect to this -- that it was not available on the open market. Secondly, if there was a tie-in -- if it was a condition, the availability on the open market on lack of availability doesn't matter. That -- if it was -- it had some intrinsic value. Over and above that of competitors, they wouldn't have had to tie it in. The question I think is whether they tied it in. This -- the petitioner here has for many years, been in the spray painting supply business and it sells spray guns and allied equipment. And it developed a simple electrostatic liquid spraying device or emitter. And it was capable as its president testified, "I'm ready to supply equipment for an electrostatic spray coating system on order." And it had interested a prospective customer in buying this. So the petitioner was if it could have gotten into this market, it was ready, willing and able to supply equipment. We contend that's where our injury is. If -- if there hadn't been a tie-in, we would have been able to sell our equipment. And that's where this conduct impinged upon us and that's why we were injured under the antitrust laws. We're also urging here in the misuse of patents. We contend that the first, that the totality of this conduct gave the respondent a monopoly position and it constituted a restraint of trade. And that monopoly position which it had had because it was the only supplier of this equipment in the market and that's admitted and there was no other supplier of replacement parts or no other service organization when this company went into marketing of its number two process in 1951. Charles E. Whittaker: (Inaudible) in respondents' brief that they initially came to you, tried to induce your company to do their manufacturing? W. Donald Mcsweeney: The evidence shows that they asked us to make something for them in 1944. I believe, the president of our company testified and didn't or couldn't at that time or didn't want to make one of these items for a voltage pen in 1944. Charles E. Whittaker: There are findings here I observed that Ransburg decided not to make anything that could be purchased and it would only manufacture what wasn't available on the market. Is that so or not? W. Donald Mcsweeney: That's unsupported in the record, Your Honor. That's not mine. Charles E. Whittaker: Not supported by evidence? W. Donald Mcsweeney: That's correct. Now, the amount these -- these licensing fees consisted -- amounted to some on the number two airless system in 1956, the amount of this -- something over $2,200,000. And the total amount of these fees for the period of 1951 to 1957 was over $8,000,000. Ransburg said in his brief -- or said they admitted it had some $2,250,000 invested in at leased equipment, figured on a cost basis. I'm going to pass a common -- we have -- write out in our brief at pages 7 to 9 and he pranks the various activities of the respondent in acquiring when it embarked upon this licensing program of acquiring patents from others. And acquiring those patents on a non-exclusive basis for the right to sublicense, which we say should -- well, excuse me, they are on exclusive basis, where the -- in their field were the right to sublicense, which was we contend for the purpose of monopolizing this field. It didn't just take a non-exclusive license. In each instance, they got an exclusive license. Now, we say that our injury is that because of the totality of the conduct of respondent we, Binks, are unable to market our equipment in the airless electrostatic field. Now, specifically with respect to this time, I say it with -- in every instance under the number two airless system and every instance where they actually leased it, a respondent joined a patent license with an equipment lease. The practice under the number one system prior thereto had been substantially the same. A few licenses that were without leases, one was in a settlement of a lawsuit, the others were with a few licensees who had previously taken their equipment for use in another system. Prior to 1953, then the only form -- the standard form had in it a paragraph on equipment leasing. There were in the company, certain internal memoranda saying, if the -- we have a policy of making available patent licenses without leases. These were distributed just to their own salespeople and to the distributors. But at the same time, they were outstanding, these brochures which we've referred in our brief and that are in the record, volume 2 at pages 854 and 862 was given. The emphasis has placed upon the equipment. The trade gets the idea if it does business with Ransburg, it must take its equipment. Now, in 1953 and the Ransburg makes a big point of this, it changed its policy. We called it in our brief an attempt to purge. At that time, guess what did it would do? Well, it wrote to the existing licensees. All of whom had license -- licenses with leases and said, "You can go to another -- this other form without equipment." The other form now was this form which I contend, didn't give them that free choice. Now, these licensees had no reason in -- in the world to do that because they'd already in effect, paid for the equipment. They wouldn't have to return their equipment without a refund of money. At that time, for the first time and since after 1953, respondent, Ransburg, prepared a pricing schedule which would give the necessary information to one of its salesmen to price out a license without equipment. And it did tally salespeople to advise perspective licensees that they had this alternative agreement. However, no one ever took it. Now, this alternative agreement in page -- Charles E. Whittaker: Would you tell me, do you contend it was monopolistic or otherwise illegal for them to have a form of agreement requiring the supplying of the apparatus if they gave to the customers a choice to take with it -- the process without it -- without the equipment -- apparatus? W. Donald Mcsweeney: I think the practice which they pursued here was illegal because in the setting of this case, they always licensed only with equipment -- Charles E. Whittaker: Wasn't that -- W. Donald Mcsweeney: -- with equipment lease. Charles E. Whittaker: Wasn't that as the Court found because the customers so elected thus, between the choices? W. Donald Mcsweeney: No, the other choice I say was no alternative, Your Honor. It forced them to Ransburg equipment. That -- that agreement -- Charles E. Whittaker: In find -- in finding 70, the Court deals with this.Of -- at record 2003, doesn't it? Unless the terms upon which defendant would have quoted in number two process non-equipment license, had the request, therefore, have been made were academic until 1954 and then it goes on. W. Donald Mcsweeney: Well, it was -- it was academic -- well, I say Your Honor to that that this -- not this -- this so-called alternative agreement didn't really give you any choice. It says in the agreement, if I may refer again to volume 3, page 32, it's argued -- you'd get -- you get a license and you may use it as shown in Ransburg's drawing. They draw and then they have the power to make a drawing. They can draw in -- they can make a drawing which is Ransburg's equipment and only its equipment. For example, it could draw in the patented apparatus on the Starkey -- enact that apparatus patented. You'd have to come to Ransburg to get it. Hugo L. Black: How do we know without a finding that that was the alternate? The alternate finding seems to be other way. W. Donald Mcsweeney: Finding -- Hugo L. Black: I can understand the force of your argument, if you had something to show that this concept was tendered to and they'd say you take this or that because all of the contract seems to have the tie-in probe. That was -- W. Donald Mcsweeney: They do -- Hugo L. Black: -- (Voice Overlap) answer (Inaudible) W. Donald Mcsweeney: That's right. It is, Your Honor. Hugo L. Black: When do you show or how do we find out, except from findings about this alternative that you should give? Did you -- did you try to ask for anything findings and have them rejected? W. Donald Mcsweeney: We never had -- we asked for a lot of findings. None of them were. Hugo L. Black: Did you ask for any on this point that were rejected? Did you ask for a -- W. Donald Mcsweeney: I don't have -- Hugo L. Black: -- finding to the effect that by reason of there being 300 or whatever it was, contracts all of which, contained the -- tie-in clause, it's nothing but its tie-in clause, did you ask for findings as to the effect of that? W. Donald Mcsweeney: I don't know that we did. I don't know. Hugo L. Black: And there is none. W. Donald Mcsweeney: There is none. That -- that's right. Hugo L. Black: Well, it seems to me that you're arguing unless you are challenging the findings and point as to the evidence instead of showing that the findings are wrong. W. Donald Mcsweeney: Well, I think that -- Hugo L. Black: I can't quite understand your argument. W. Donald Mcsweeney: Starting in 1953, they had two forms of contract. One, without the paragraph for equipment which is this agreement which I refer to at the record -- Hugo L. Black: Page 32. W. Donald Mcsweeney: Yes, Your Honor. The other is a contract with a paragraph specially -- specifying you take equipment. Hugo L. Black: That's the time that all contracts they had were of that kind? W. Donald Mcsweeney: Yes, Your Honor. Hugo L. Black: The Government seems to argue I assume, that from the fact that all the contracts were of that kind, that it was enough to show that the tie-in contract had to be made. Is that what you're arguing? W. Donald Mcsweeney: I think that that is true and I'm arguing that, but I'm arguing additionally, Your Honor that there was no real alternative. Hugo L. Black: Will that -- the problem is let's assumed -- you're assuming though that there was no real alternative, with no findings to back it and not showing us the evidence it proves, if I -- unless I'm wrong. And I'm interested in that point because it seems to me that the -- W. Donald Mcsweeney: Well, the findings -- Hugo L. Black: (Voice Overlap) W. Donald Mcsweeney: The other way -- the findings, the other way are based upon the existence of this so-called alternative agreement. So if this alternative agreement is not really an alternative, the findings are clearly wrong. Hugo L. Black: Now, where do we -- where can we know that it's based on the alternative agreement rather than evidence? It seems to be based on evidence, if the judge heard. W. Donald Mcsweeney: Well, the evidence is that these are the only forms available. When they sent two forms, they only let this out of their company on two instances. They sent two forms to Binks, petitioner. Here, they are and they -- they were each one of these -- these types. Felix Frankfurter: But you -- you argued, at least I understood you to contend that the second alternative wasn't chosen and in fact not a true alternative, isn't that right? W. Donald Mcsweeney: That's correct, Your Honor. Felix Frankfurter: But that, could one gather that merely from reading the alternative -- the piece of paper? W. Donald Mcsweeney: I contend you can gather that, Your Honor, from reading the contract itself. Felix Frankfurter: And on the face of it, that shows that that is no alternative. W. Donald Mcsweeney: Absolutely, Your Honor. That's right. William J. Brennan, Jr.: You mean Mr. McSweeney, just those words that you've pointed to us at page 32, subject to such changes therein and the incorporation of the Ransburg's drawing -- drawings, is that all there is? W. Donald Mcsweeney: Subject to such changes therein and such further specification as Ransburg may prescribe -- William J. Brennan, Jr.: Well now, I'm -- what I'm asking is, is that what you tell us shows that there's nothing but a Hobson's choice? W. Donald Mcsweeney: That's right, Your Honor. Well, that coupled -- if we go beyond that, to any practice, I say that shows it in the contract itself. Felix Frankfurter: That -- that is so only if the specifications which they require were specifications for non-patentable parts. If they were for patentable parts, then they were there within their right. W. Donald Mcsweeney: I don't believe that's true, Your Honor. They're -- they're giving a license under a method patent here? They haven't any right to tie-in parts to it. As I understand the law -- as I understand the B.B Chemical against Ellis, they had a method patent. They haven't any right to tie-in parts. The method patent doesn't patent any of their parts. Felix Frankfurter: No, but the part -- patent may have patented. W. Donald Mcsweeney: Then they're combining -- then they're combining two licenses under a compulsory -- Felix Frankfurter: Is that your point? I thought your point earlier was that there -- it required them to pay for non-patentable facilities, didn't you? W. Donald Mcsweeney: That's a further point we have -- Felix Frankfurter: But that -- W. Donald Mcsweeney: -- Your Honor. Felix Frankfurter: But now, I -- Felix Frankfurter: -- but as to that, one cannot get that from merely reading the contract can we? If they leave -- unless they have such coercive monopolistic power, that there is no choice, Hobson's choice, I guess (Voice Overlap) -- W. Donald Mcsweeney: Well that's the setting of this case, which we argue Felix Frankfurter: But maybe, but -- but the -- the finding doesn't -- finding -- the finding to which you refer doesn't establish that. W. Donald Mcsweeney: Well, the facts if doesn't, it's clearly wrong. The facts show that Ransburg dominates this airless electrostatic spray coating industry. That it's the only one in it. Felix Frankfurter: But for some reason, you've declined to answer Justice Harlan's question that you're not challenging the findings as not sustained by the evidence. W. Donald Mcsweeney: I'm challenging the findings, Your Honor. Felix Frankfurter: Alright. W. Donald Mcsweeney: It's not sustained by the evidence, but I'm adding that this Court can construe this contract as a matter of law and rule with me. There was -- Charles E. Whittaker: Was there or was there not, in this voluminous record, much evidence on the course of practice in daily life, or I guess, this Ransburg Company? W. Donald Mcsweeney: There was considerable and the practice with respect to what kind of a contract they ever entered into is all one way. They always entered into a contract which had in it the provision for leasing equipment. William J. Brennan, Jr.: That nobody ever took this alternative agreement. W. Donald Mcsweeney: That's right Mr. Justice Brennan. William J. Brennan, Jr.: Now, what -- what does the record show? Don't let -- get back to the findings too far, if you will. But what is the nature of the evidence which explains why no one took this form of agreement? W. Donald Mcsweeney: Well, existing licensees first considered them. They had already paid a lot of money to get the equipment. If they took as the letters to them said, they had to return the equipment to Ransburg, but not get a refund. That alone would keep them from taking it. William J. Brennan, Jr.: Anything else? W. Donald Mcsweeney: The other, I believe would be that you would recognize from this contract that your -- your so-called alternative contract that you give Ransburg the power to come out and change the drawing, change the specifications after you've got someone else's equipment in there. They could come out and say, "Well that isn't right. That's our right to have under this. Here, we're changing that." So you can't use Mr. Binks' equipment. It doesn't meet this drawing. You've got to -- you want to use our patents, you've got to use our equipment.You've got to use equipment that's in this drawing. They could've -- and whether they drew it to make them use Ransburg patented equipment or unpatented equipment, they still had the power to keep the licensee from using the equipment of anyone else. Earl Warren: Is there a finding on that first point that you made Mr. McSweeney that -- that anyone who was to return the property, had to return it without a refund whether he had had -- they'd had only acquired at great expense, and that it would be to their injury? W. Donald Mcsweeney: That's uncontested, Your Honor. Didn't enter a find, there's no contest on that. Earl Warren: There is not question on that. W. Donald Mcsweeney: No question, but that is -- Earl Warren: And to what -- to what extent would they be insured to -- would you (Voice Overlap) -- W. Donald Mcsweeney: Well, they could've paid anywhere from $5000 to $40,000 in an initial fee, plus the monthly fee, all that would probably -- if they were a big customer, it wouldn't -- they wouldn't be under the minimum monthly fee. They'd be paying on the amount of paint used. Could -- they couldn't devise post. They could lose over well anything from $40,000 up, I don't know how much. It depends on who it was. Earl Warren: Mr. Meroni. Charles F. Meroni: Yes, Your Honor. If the Court please, this phase of the argument pertains to part 5 of our brief. To be valid and enforceable, a patent must claim from a background free of thought or inequitable conduct. This Court has so held in the Keystone, Hazel-Atlas and the precision cases cited in our brief. Here, the respondent procured the allowance of its patents on the basis of affidavits showing commercial success of the number two system. But the affidavits neglected to point out that the number two system did not embody what was alleged to be the heart of the Starkey invention. We say it was those omissions in the affidavits that constituted the perpetration of a fraud on the patent laws. Though, I might say that in that regard, that the only finding that I've been able to locate pertaining to this, is finding 91 of the findings here and they were all proposed by the defendant for the most part and adopted by the Court. And that appears at page 1013. In that finding, the Court held that there was no willful representations of the patent office or withheld from the patent office knowledge of a pertinent prior right. Well, that has nothing to do with this point, which has to do with the withholding or concealment of evidence as to what the true character of the number two system was. In the affidavits that were filed, the party Starkey or the respondent, failed to disclose what that system was. Now, it should be borne in mind that these applications particularly the method case, was pending over 10 years. It was filed on September 29th, 1944 and it wasn't though issued until August 3rd, 1954. During that period of time, there were repeated rejections both by the examining staff and by the Board of Appeals. In the course of their representations, the applicants who were Starkey and Ransburg said to the patent office, and I'm quoting from page 55 of my brief a short sentence, The heart of applicant's invention lies in the concept of employing a single electrostatic field which acts as the soul agent to atomize paint, disperse the particles formed by atomization and deposit those particles on the work. That statement was repeated constantly and Dr. Miller also admitted, as pointed out on the same page of our brief, that the thing that was considered new when he recorded the Starkey idea was the concept of using electrostatic forces alone to atomize, disperse and deposit these materials. In other words, they -- they believe it to be new, to use the field by itself, apart from anything else, as the atomizing and dispersing and coding medium. Now, there's no question here, there's no dispute about the fact that none of the structures shown on the Starkey patents and incidentally, the drawings of the two patents are identical. One is an apparatus patent that was divided out arbitrarily from the method patent without any requirement of division by the Patent Office. So that the history of the apparent case which is the method case also carries over to the apparatus case, it being a true division. Now, there's no question that none of the structure shown in those patents were ever commercialized. That's unequivocally admitted by the respondent and that with respect, I'd like to call your attention for volume 1, page 199, request for admission 30. Does defendant admit that it never commercialized by sale or lease, any electrostatic sprayer apparatus of the structure shown in -- in anyone of the figures of either of its earlier process patent number or it's later apparatus patent number? And the answer was, yes. Now, for some eight years after the Starkey application was allowed or was filed, only one narrow claim was allowed. In 19 -- in 1949, the pew patent expired, that was the patent that the respondent acquired from Western Electric Company and which covered the number one system. Also at that time, the respondent brought forth this number two system, making use of both a centriphical means and a field to affect atomization and spray. Now, our position, Your Honor, as to that point and which we believe is very critical to this case is shown on page 349 to 351 of volume 1, beginning at the middle of the page at 552 and ending in the middle of page 351. There it -- there, it is conclusively shown that the number two system did not depend on the field alone for atomization, dispersion and deposition. Hugo L. Black: Are you arguing then in connection with your charge (Inaudible) Charles F. Meroni: Yes, Your Honor. They -- they fail -- the respondent failed to tell the Patent Office that the number two system did -- did not accomplish coating by the use of the field alone. Hugo L. Black: So, what do you do with the findings in that 91? Charles F. Meroni: There are -- Hugo L. Black: -- or rather 291 (Voice Overlap) Charles F. Meroni: Well that -- that makes no finding as to the omissions from the application relative to the commercial number two system. It pertains to the question of whether or not they omitted telling the Patent Office about earlier priority. We say that there is no finding on this particular point that we're raising here, under the fraud point. Hugo L. Black: Did you ask for one? Charles F. Meroni: We submitted complete findings to the Court. Hugo L. Black: Did you ask for finding on this particular thing and are you claiming (Voice Overlap) -- Charles F. Meroni: My recollection is that we did, although it doesn't appear on this record, because the findings were not adopted by the Court. Now, there's one other point Your Honor that I'd like to make it my limited time here and that is -- and that is on page 36 of the -- of our opponents' brief, reference is made to the juvenile patent and an argument is there given, which we believe is entirely out of order. That patent does not appear before this Court and is not certified as a part of this record. And we believe that the argument on page 36 of respondent's brief should be ignored by this Court. And we'd like to reserve some time for rebuttal. Hugo L. Black: Yes, you may. You'd better rest your time. Elbert R. Gilliom: May it please the Court -- Earl Warren: Mr. Gilliom. Elbert R. Gilliom: -- Mr. Chief Justice. I would like first to supplement the statement of facts which Mr. McSweeney made briefly and then to treat each of the questions raised by the writ of certiorari in the order in which they appear in the briefs. The issues before this Court arise out of a series of the events starting back in about 1957. The Ransburg -- William O. Douglas: But may I -- Mr. Gilliom, may I ask -- Elbert R. Gilliom: Justice Douglas. William O. Douglas: -- I haven't found any answer on your part to the two points made by the Government in its amicus brief. Have you filed a brief other than this main brief? Elbert R. Gilliom: No, Mr. Justice Douglas. We answered the Government's brief at two -- there are two points in our brief in reply to the petitioner's brief. The first point in which the Government expressed interest was the matter of alleged tying of equipment -- William O. Douglas: Yes, that is -- Elbert R. Gilliom: -- to the patent licenses -- William O. Douglas: You don't even cite or discuss the Ellis case. I'm not -- I don't want to divert you from the argument, but just to put you the problems that I have -- Elbert R. Gilliom: Yes. I will handle that. William O. Douglas: Would you -- in due -- due course get to the problems of the Ellis case? Elbert R. Gilliom: Yes, I will. William O. Douglas: And -- and I assume that you start with the assumption that originally there was an unlawful illegal tie-in arrangement. Elbert R. Gilliom: No, we do not Your Honor. That is the very point, in other words -- William O. Douglas: I mean in 1951? Elbert R. Gilliom: We -- we -- William O. Douglas: 1950 -- Elbert R. Gilliom: I beg you pardon? William O. Douglas: At -- at some -- at some stage. Elbert R. Gilliom: No, we do not start with that assumption at all. In fact, Your Honor, a point that we make in our brief is just to the opposite. The Government has assumed the effect which did not exist and against it, the expressed findings of the trial court are very clear. In other words, we do not concede any misuse prior to 1953. We very empathically state that there was not, our policy was consistent from the time this company was organized until the time of the trial has remained so. William O. Douglas: Then -- then in your -- as you go along, you might explain for my benefit the -- the function of that untying letter, the letter that gave information on time. Elbert R. Gilliom: I'll -- I'll be glad to. The Ransburg Company started out as the soul proprietorship, manufacturing housewares such as bread boxes, canister sets, waste baskets and so forth. And they spray painted these products with ordinary conventional spray guns made by the large manufacturers such as the Binks Company. There was a great deal of waste paint that came from that process, because of the fact that the air blast carried the paint beyond the product and wasted it and had to be exhausted and much of it was not recovered. It was as a result of experiments started by Mr. Ransburg's sons back in 1937 that they developed this number one process, which was simply using a compressed air spray gun the same type, to atomize the paint. But combining with it, an electrostatic field which imparted charges to the paint particles and attracted them to the articles of manufacture, thereby, tending to overcome the effect of the air blast and making a more efficient painting operation. Now, that number one process which has been referred to here as the air type process is not before this Court, we submit for the reason that since 1950 as the trial court found, there have been at least six firms in competition with each other, marketing the air type systems.The Binks Company, representatives testified in this case that there was no obstacle to their marketing, the air type electrostatic systems, since they first became interested in it, but they elected not to do so until 1958. The issues before this Court are confined to the so-called airless systems or the number two system which briefly is this. Instead of a compressed air spray gun to atomize the paint, it's atomized either by means of a stationary atomizing head or rotating disks or bells, which feed the paint at a control rate to a zone of atomization at the edge of the head where the power of the electrostatic field itself tears off this atomized particles of paint from the liquid film and disperses it in the form of the spray and deposits it upon the article of manufacture. The field is maintained in that case directly between atomizing head and the articles of manufacture on the conveyer. Now, it was on this improved process which in many cases results in almost 100% efficiency in the deposit of paint and therefore, saves a great deal in paint cost as well as labor cost. It's on this process that these two patents were acquired by application of the Ransburg Company. One, for the method of painting in that manner and the other with respect to the apparatus, the method patent as I think the Court has observed, was issued in 1954 and the apparatus patent came out in 1957, probably these proceedings were pending in the trial court and was brought in by supplemental pleadings. Now, when the company brought out these processes for public use, it found as would anyone that had an idea to market, that in order to sell that idea to industry and to persuade manufacturers of consumer goods that this was a better way to paint their products, they have to supply the tools for doing that. Many of the components of this specialized equipment were not available on the open market. That was true when the number one system was brought out in about 1944. It was also true when the number two system came out. When the number one system came out, there was not a safe voltage supply or power pack. William J. Brennan, Jr.: Safe what? Elbert R. Gilliom: The voltage supply or power pack. In other words, the ones that were available for that time for x-ray purposes and so forth put out too much current and were likely to cause a lethal shock or a fire. The same thing was true with respect to the electrodes and the controls of the electrical equipment. Ransburg contacted such firms as General Electric Company, a number of others to attempt to interest them in making this special equipment. Ransburg's interest being in licensing the process, it was not interested in the equipment. It had no success I'd suppose partially, because that was during the war period and these companies had bigger fish to fry. As a result, it had to design its own power pack, its own control, its own electrodes and produce them in order to get anyone to take this process or to consider it for their production lines. The same thing was true when the number two process came out. These special atomizing heads were not available. They were absolutely new. The same thing was true with respect to the accurately controllable paint supply system and that was a very crucial aspect of this rather delicate system. And the fact is that Ransburg did contact the other large manufacturers among whom were Binks. The Court asked whether there was any evidence of that supporting finding number 10 and if the Court will refer to volume 3 of the record page 240, Mr. Roche, the president of the Binks Company himself, testified that they sold the equipment in conjunction with the systems that Ransburg put out. And there is no question but what the spray guns, paint spray boots, air paint exhaust systems, air make up systems and so forth, were sold by companies like Binks. When the number two system was being marketed, Ransburg had problems with respect to the paint supply which had to be controlled very accurately and it discussed that with the Binks Company among other people, which appears from Volume 1 of the record, page 710 in the testimony of Mr. Rice where he said, they couldn't -- this is talking about the airless system. He said they couldn't use a standard circulating system or pressure regulators -- regulators that we had used in our line. They even requested us at one time, to make up a special regulator to operate at the low pressures, if they need it. Those were the steps that the company took to obtain assistance in getting the equipment necessary to interest industry in this very valuable device. It ended up that Ransburg itself, although a small concern had to design this equipment with the help of a man who was well-versed in electrical science and had been on a faculty of Purdue University. As it began the marketing systems and industry began to see the value, Ransburg made this equipment available along with its licenses on a leased basis. Now, the -- the contact essentially was a written license to use the process as long as the process patent was the only one that Ransburg have. The contract also said, however, that the company owned inventions and patent applications that have to do with methods and apparatus for electrostatic painting. So that, whoever took one of the written licenses was licensed not only under the patents it had, but under the inventions and applications that were pending. Now, the equipment which was made available to these manufactures was entirely at the option of the manufacturers. The trial court found as a fact and the evidence supports it amply that there never was any requirement on the part of Ransburg, there was never any forcing that anyone take equipment in any instance whatever. William J. Brennan, Jr.: Now, this -- Elbert R. Gilliom: Yes, sir. William J. Brennan, Jr.: -- you've spoken now to the process number one or -- Elbert R. Gilliom: Either one -- William J. Brennan, Jr.: Either one. Elbert R. Gilliom: Either one, that's correct. In other words, this record can be read from the first page to the last and there is not that first bit of evidence from any licensee or prospective licensee or otherwise, that he ever asked to have this license without equipment and couldn't get it. That he was ever discouraged from asking for a license without equipment or that the terms upon which an alternative was available, were not fair and adequate. Now -- Hugo L. Black: During the evidence that the contract on which he relied the form of a contract on which your adversary relied, was offered as this sole alternative to buying the apparatus, the additional apparatus? Elbert R. Gilliom: The evidence on that Mr. Justice Black is that up until 1954, no one had ever shown any interest whatever, in a non-equipment license. And in 1954, after the Ransburg Company had -- Felix Frankfurter: Did you say no -- no one had shown any interest? Elbert R. Gilliom: Yes. Felix Frankfurter: But the non-equipment license was available? Elbert R. Gilliom: It -- Felix Frankfurter: Was it denied? Elbert R. Gilliom: A non-equipment license has been available as a matter of company policy since the beginning. Felix Frankfurter: And was known to be available? Elbert R. Gilliom: It was known to all the Ransburg personnel to be available and the salesmen were instructed to -- to let their prospects know that. Yes. William J. Brennan, Jr.: But, I gather Mr. Gilliom the reason for this is if I understood what you are telling us, is that this equipment was not generally available -- Elbert R. Gilliom: That's correct. William J. Brennan, Jr.: -- in other places. Elbert R. Gilliom: That's correct. William J. Brennan, Jr.: And no one had had any interest in manufacturing in the competition with -- Elbert R. Gilliom: Exactly. William J. Brennan, Jr.: Is that it? Elbert R. Gilliom: Exactly. William J. Brennan, Jr.: Or manufacturing it themselves as they were licensee. Elbert R. Gilliom: I think that's correct. And I believe the reason for it appears from the very fact that in a period of approximately five years, when the number two process was introduced to 1951 up until the time of the trial, there had only been a few entered licenses granted. I think the simple explanation is that the equipment manufacturers were not interested in that kind of volume. In other words, this is not a shelf -- a store shelf item, where you can count on so many thousand of year, which would warrant the research and development and everything that's involved in putting an item on the shelf. Felix Frankfurter: But is there are -- Elbert R. Gilliom: Each -- Felix Frankfurter: -- any evidence to bearing on Justice Black's question. Is there any evidence that there would be the active discouragement or that your equipment were forced upon respective licenses? Elbert R. Gilliom: None, whatever. Hugo L. Black: What else -- but you still haven't quite answer that question. Whether the evidence shows that this alternative contract was the only one they were offered. Elbert R. Gilliom: The evidence -- Hugo L. Black: A form of contract to which you referred on page a hundred and -- Elbert R. Gilliom: Page 30 -- 32 -- Hugo L. Black: Volume 3. Elbert R. Gilliom: The only written form of contract was the one on page 32 or slight revisions of that. I think in full answer to your question, I would have to go back a little Mr. Justice Black and say this. That prior to 1953, the Ransburg Company did not prepare form contracts, standard contracts for non-equipment licenses. In 1953, out of what I would call a super (Inaudible) some caution, they prepared those forms for the first time although no one had ever asked for one or had shown any interest in them, even though it had always been the policy that anyone who wanted a non-equipment license could have it. But it's applied those forms and there have been one or two revisions since then, but in substance, they have been the same. So that that is the only form that has ever been submitted to anyone if that is the answer to your question. Hugo L. Black: And then, have all the contracts that have been signed during all that period of time, required that they buy apparatus from it? Elbert R. Gilliom: The contract does not require it. Hugo L. Black: But does it provide that they do buy it? Had there ever been any that it did not? Elbert R. Gilliom: No. Each of the contracts with respect to the number two system at least, has included the obligation of Ransburg to supply the equipment on a lease basis. But at the time of negotiation, the prospective licensee was absolutely free to take either a license without that equipment or to take it, once he -- Hugo L. Black: Well you mean, take -- take the license at the -- under this other form? Elbert R. Gilliom: Yes. Hugo L. Black: Which did provide that -- that were subject to such changes and so forth, as you might make? Elbert R. Gilliom: Yes. If the Court will note though, that language which was referred to by Mr. McSweeney it says, Subject to such changes therein and further specifications as Ransburg may prescribe. In other words, if a man had a license to use a -- use a unit of somebody else's equipment under this non-equipment license and if there were some aspect of that which would improve operations, Ransburg reserve the right to specify what the change might be. Not to designate its equipment, but specification, a reasonable specification which could be met by anybody's equipment. Hugo L. Black: Did -- did your contracts if they did -- if they did sign, provide for the supplying of the (Inaudible) set out on page 187, Volume 1 and was that obtainable at other places? Elbert R. Gilliom: That is a -- what might be called a typical shipment memorandum of the items that went to a costumer who had elected to take the license with the Ransburg equipment. Hugo L. Black: But that -- that shows does it not, a great deal of a -- of an equipment that was -- could've bought on the market. Elbert R. Gilliom: Oh yes, yes. Our point is, however, that the -- that the man who wanted the license under the patent, was not required to take this at all. But once he had said he wanted it, it was shipped to him, in accordance with this list. Felix Frankfurter: Was there -- were there -- was there any witness or witnesses produced by Binks who testified that they couldn't get a license from Ransburg, unless they also bought a paper, the things on that list. Elbert R. Gilliom: Not one. Felix Frankfurter: Was there any witness by -- produced by Binks or offered by Binks of purchases who signed the equipment, the facilities that you furnished for getting the license who testified he had to take those facilities or not get the license. Elbert R. Gilliom: Not one. The Binks Company took the depositions of -- as I recall three or four representatives of companies that had dealt with Ransburg and each one of those deponents testified that his company had taken the license with equipment. Two or three of them said they weren't aware that they could've had a non-equipment license or nobody told them about it. But they did not say that they were forced or required to take it. On the contrary, each one of them as the Court found and as we point out in our brief, said that, we went to Ransburg for the equipment. It was the equipment that we were interested in. Witness Wallin, who represented the Webcor Company, said that Ransburg advised him in writing that he could've had either one. The contract with or without equipment and that his company didn't want to get into the engineering that would be involved to get the equipment somewhere else, they wanted to experience company to franchise it and they elected to take it. But not a single costumer or prospect has testified either in their position otherwise that he felt forced or required to take the equipment or anything else to get a license. Now, the -- the policy -- Earl Warren: We'll -- we'll recess now.

William H. Rehnquist: We'll hear argument next in Number 00-151, the United States v. Oakland Cannabis Buyers. General Underwood. Barbara D. Underwood: Mr. Chief Justice, and may it please the Court: The Controlled Substances Act prohibits the distribution of marijuana outside federally authorized research programs because Congress, the Attorney General and the Secretary of Health and Human Services have each determined that there is no currently accepted medical use for the drug, and it has a high potential for abuse. The statute also recognizes that new information might come to light that would justify less restrictive controls so it establishes administrative procedure for changing the classification and the restrictions for marijuana and other controlled substances. That statutory scheme leaves no room for the Oakland Cannabis Buyers' Cooperative to distribute marijuana without the approval of the Attorney General under a claim of medical necessity, and it leaves no room for a court to consider such a claim as a basis for refusing to enjoin the marijuana operations of the cooperative. The Ninth Circuit's ruling in effect authorizes the operation of marijuana pharmacies outside the safeguards and restrictions of the Act and undermines the ability of the Act to protect the public from hazardous drugs. The common law defense of necessity can sometimes authorize a person to violate the law in order to avoid a more serious harm but it doesn't apply here for three reasons. First, because the legislature has already balanced the harms and come to a different conclusion. Congress anticipated there would be claims of medical uses for controlled substances and provided an administrative procedure for evaluating them allowing trial judges and juries to redetermine that balance in individual cases would undermine the procedure established by Congress. Second, because the defense has no application because the co-ops members and the co-op itself have alternatives to violating the criminal law. They have substantive alternatives, other lawful medications including a synthetic form of the active ingredient of marijuana. John Paul Stevens: May I ask one question on that subject Ms. Underwood? You have a footnote in your brief, footnote 11, that describes some of the situations there that gives the impression that this whole case is a sham, that it's really just a front for using marijuana and I'm wondering if... and your argument you're just making now suggests there are always alternatives. Do you think we should take the case on the assumption that there really are some people for whom this is a medical necessity or should we assume that there are no such people. Barbara D. Underwood: The... on the assumption that there are no such people because the Food and Drug Administration charged with evaluating the medical... the scientific information and the DEA, that is the agency that report to the Attorney General and the Secretary of Health and Human Services having evaluated the claims of medical use have found that there is no accepted medical use, that some of the claims of medical use are simply wrong. Ruth Bader Ginsburg: General Underwood, may I just stop you there because take one of the examples that was in the brief, the one about the man who was constantly vomiting and the only thing that calmed him down, he had a lymphoma or something like that, that is not an uncommon experience and what surprised me about this case was that that kind of thing has been going on, individual doctor prescribing marijuana just to prevent that kind of extreme suffering, and that seemed to have gone without enforcement until California passes this proposition and you get clinics selling it, not individual doctor. Am I wrong in thinking that there has been quite a bit of this going on in the medical profession. Barbara D. Underwood: The record doesn't reflect and I don't know how much of it has been going on. I think there are two things to say in response to that though, one is that the agencies charged with evaluating the medical uses here have ongoing studies and have so far concluded that there are... that the particular use that you're describing is best served... there's now an extract of marijuana that's been on the market... been available and been put on the lower schedule than schedule one for 15 or 16 years which is this Marinol and efforts are being made to find other methods of administering the pure substance and determining whether it has the effect that's described. Antonin Scalia: Ms. Underwood, these judgments made by the federal agencies, the FDA and the DEA, I think they take into account the overall public interest, I mean, they... I'm not sure that they have come to the conclusion that marijuana would never ever, ever be helpful to someone who's in extreme pain. I think what they've probably done is made the judgment that the chances of its being that helpful and not being replaceable by something else are so slim that in view of the abuses to which general permission for its use would lead it's best that it be proscribed, is that an inaccurate determination on my part? Could you really say that there has been a determination by the federal government that marijuana is never medically useful. Barbara D. Underwood: Well the determination that's been made is that the medical utility of it has not been established which is a slightly different way of putting it but there is a separate determination the FDA makes determinations as it does with substances that aren't on the controlled substances list, that is there are new drugs that are proposed all the time which might possibly be useful and aren't authorized for use until after tests satisfy the FDA that the drug is safe and effective for use and marijuana has not passed that screen. There is an additional screen for controlled substances that is in addition to considering and the scheduling decision takes into account not just medical utility but also the potential for abuse, but the FDA's role in it, the Health and Human Services role in it is just to assess or it has a role in simply assessing the medical evidence and has concluded that to date there is insufficient reason to think that it is a safe and effective drug although there are continuing research projects going on to try and pursue the anecdotal information that it is sometimes helpful or that components of marijuana are sometimes helpful. Ruth Bader Ginsburg: Ms. Underwood, it would help me, General Underwood, if you would tell me why the word preemption doesn't appear in the government's brief because I took the simple-minded approach looking at this, Congress says this is a schedule one drug and California says you can have it if you've got a note from a doctor that says you have a migraine headache. Why isn't the federal law that says this is the schedule one drug preemptive, it must have been with some thought that you didn't use that word. Barbara D. Underwood: Well the California law doesn't actually purport to authorize the distribution of marijuana with a doctor's note, it provides a defense to California law. Now it is true that an effort is being made here to invoke the judgment behind that law as in support of the claim of medical necessity, but California didn't purport to create a defense to federal law as it couldn't have if it had tried it would have been presumably preemptive... preempted. But it's perfectly possible to comply with both California law and federal law. There isn't that kind of conflict here. Ruth Bader Ginsburg: Explain that to me because I thought to comply with federal law you can't sell it. Barbara D. Underwood: Well that's right but California law doesn't require you to sell it. It simply says that you won't be... California could remove the... could eliminate-- Ruth Bader Ginsburg: All it says you'll be at the mercy of the feds and we won't go after you. Barbara D. Underwood: --That's correct. That's correct. And I should say that the decision of the federal agencies not to accept the kind of anecdotal evidence that you're suggesting is a decision that the federal... the Food and Drug Administration has made again not just in the controlled substance area but it has concluded that the anecdotal reports of individuals are a basis for research, a reason to conduct research and not a basis for authorizing the use of a drug or changing its scheduling. Anthony M. Kennedy: General Underwood, there's some indication in the trial court's observation, he had no choice but to enter this injunction, that's something of an over-reading, but suppose I were the district judge and I said, you know, General Underwood, you want me to basically supervise what's going to be a major effort to prosecute people and you're doing this under my contempt power, I don't want the court to get involved in this, you have your own United States and assistant United States attorneys, you have investigate these, bring these as prosecutions and then we'll hear these cases and if there's a necessity defense or something we can rule on it, but you're basically asking me to issue an injunction and in order to enforce it I'm going to have to make prosecutorial decisions, I don't want to be bothered with that because I think it intrudes upon a separation of powers balance, it's making me more of a prosecutor than a neutral judge. If he said that would he be abusing his discretion? Barbara D. Underwood: Yes. There are grounds on which a court can deny injunctive relief. For example, if the court found that violations had stopped and are unlikely to recur and an injunction wasn't necessary to effectuate the purposes of the act, this Court noted that in Hecht against Bowles, and there may be other grounds but I would say that the judge who said what you just said would be, in fact, intruding on Article II executive prerogatives by insisting that when Congress has provided both civil and criminal enforcement mechanisms as it often does that the executive is not free to choose the enforcement mechanism, the civil enforcement mechanism that-- John Paul Stevens: May I ask this question, does the executive, the district attorney have prosecutorial discretion not to bring a case if he thinks a particular defendant really is a person that has this serious illness and so forth. Barbara D. Underwood: --There's always prosecutorial discretion. John Paul Stevens: Why would a judge have less discretion than a prosecutor? Barbara D. Underwood: The judge has different discretion from a prosecutor, it is for the prosecutor to decide whether a case merits prosecution or whether a civil injunction is worth bringing. John Paul Stevens: If the judge reacts to precisely the same reasons that motivate a prosecutor not to bring a case, would that be an abuse of discretion? Barbara D. Underwood: Yes it would. The court's role in the process is not the executive's role. The court cannot deny an injunction on the grounds that the executive should for instance have chosen the criminal sanction or should not have brought the case at all. If-- Anthony M. Kennedy: Suppose the judge has legitimate concerns that given the resources of the court that it's going to make him basically substitute for the United States attorney in the Northern District of California, he's going to have to decide who to prosecute for contempt and it's going to be criminal contempt and so forth, basically it seems to me that he's now being put in the role of the supervising prosecutor just in order to enforce his injunction. Barbara D. Underwood: --Well no the contempt actions of him would be brought by prosecutor and I'd like to point out why civil-- Anthony M. Kennedy: I'm sure that he has or should have a major say in how he's going to enforce his injunction, who he's going to bring to court for the contempt action in the first instance, what kind of examples he's going to make, et cetera. Barbara D. Underwood: --There's a reason why civil injunctive enforcement is authorized and why it's appropriate. I don't think it's for the court to second-guess the prosecutor but there is a reason. The civil injunctive remedy in this statute was patterned on a similar provision in the Food, Drug and Cosmetic Act, and the purpose of that was to provide a way to resolve legal disputes without the harshness of a criminal prosecution. This is just that kind of dispute, open and ongoing violations of the law designed to test its statute with the California state law in the background, once... there's no reason to think that once a court resolves the question that... holds, for instance, that there is no medical necessity defense or holds that in any event whatever medical necessity defense there might be doesn't authorize the operations of marijuana pharmacies as in this case, that the Oakland Cannabis Buyers' Cooperative won't comply with the law. David H. Souter: Well, maybe it will, but isn't the real concern, and I want to state a variant on Justice Kennedy's question, isn't the real concern behind this that with the passage of the California proposition and the popularity within the California population that that necessarily entails, it will be very, very difficult for the government ever to get a criminal conviction in a jury trial, and the reason, it seems to me, that the reason I assumed this was being brought was to avoid hung juries in criminal cases. If the trial court in fact were to conclude that that is the reason and that's why the injunctive remedy was being invoked, would that be a good reason for the court to say it is not certainly a necessary and maybe not an appropriate use of equity to give the government an alternative to six month or less sentences for criminal contempt in order, in effect, to make a criminal statute enforceable which in the normal criminal course is not. Would that be an abuse of discretion? Barbara D. Underwood: Not if the statute authorizes a civil injunctive remedy and... but I would like-- Antonin Scalia: It would not be an abuse of-- Barbara D. Underwood: --Excuse me. I misspoke. That would not be-- Antonin Scalia: --You scared me there for a minute. Barbara D. Underwood: --It would be an abuse of discretion. It would not be an appropriate ground for withholding injunctive relief but I would like to point out that the statute, this statute, perhaps out of a concern like that or perhaps for some other reason, contains a jury trial requirement... provides a jury trial for a trial of the contempt of an injunction that is obtained-- David H. Souter: No matter what the lengths of sentence requested? Barbara D. Underwood: --Yes. Antonin Scalia: General Underwood, do you agree with all of the premises of these questions? I mean is-- Barbara D. Underwood: No. Antonin Scalia: --Is it true that California juries generally don't convict people of crimes that they don't agree with? Is that the practice in... I haven't lived in California in quite a while but California juries only enforce those criminal laws they like, is that the general practice. Barbara D. Underwood: I have no information about that but I would like to point-- Antonin Scalia: Do we know whether this United States attorney brought this as a civil... as a civil matter precisely because of the legal doubt or rather in order to avoid a jury trial, do we have any idea which of the two it is. Barbara D. Underwood: --I was not... I don't have the answer to that question but I know-- Antonin Scalia: And of course, this entire argument would disappear if Congress eliminated the criminal penalty and then presumably the U.S. attorney would be free to get as many injunctions as he liked with the same consequences. Barbara D. Underwood: --I should think so. I would just like to-- Ruth Bader Ginsburg: There's one aspect of this General Underwood that Respondent says and this I think you might know the answer to, Respondent says that overwhelmingly this Act is enforced by a criminal prosecution rather than civil injunction. And do you know that, what is the enforcement practice with respect to the CSA. Barbara D. Underwood: --I know that civil injunctions have been used on other... exactly on occasions under this statute as well as under other statutes where there is a business enterprise going on that has a dispute with the government about whether what they're doing is outside the statute. I don't think it's-- William H. Rehnquist: Romero-Barcelo was a civil injunction in connection with the EPA, wasn't it? Barbara D. Underwood: --That's correct but... and under this statute in particular though the Controlled Substances Act it is not customary to seek injunctions against street dealers of narcotics but it is customary to seek injunctions against, for instance, manufacturing plants that are claiming that their use of particular chemicals is... what they're doing is within the Act or without the Act, I mean, when there is essentially a dispute with the business enterprise about the legality and propriety of what they're doing and that is actually not just under the Controlled Substances Act but under many statutes, the kind of occasion when an injunction is used to resolve the legal dispute on the assumption that once that legal dispute is resolved it will not be necessary to seek further enforcement but there will be-- John Paul Stevens: Of course you can make the same argument for bringing criminal prosecution, so presumably you put somebody in jail, they'll stop doing it too. Barbara D. Underwood: --Yes, but what Congress said actually in authorizing injunctive relief is that when there is this kind of dispute it is desirable to provide a mechanism for resolving it without putting people at risk of going to jail if... and that's one-- Antonin Scalia: You're referring to the legislative history I presume, it doesn't say that in the statute, does it? Barbara D. Underwood: --No, it does not. I'm referring to legislative history actually-- Antonin Scalia: Some little piece of Congress said that, right? Barbara D. Underwood: --Well, I'm actually referring to legislative history of the Food, Drug... of the analog provision in the Food, Drug and Cosmetic Act simply to suggest not that we know that that's what Congress voted on but that that is a common widely-understood reason-- --That is a common widely-understood reason-- John Paul Stevens: Yes but those are cases where there's a legitimate difference of opinion on whether there was a violation of law. Your view here that violation of law is so obvious and clear that there isn't even any colorable argument to the contrary. Barbara D. Underwood: --That's our view but there is a claim to the contrary and I don't think it requires that we credit that claim to decide that an appropriate way to resolve that dispute is in a civil enforcement action, and that... so that's the story about when we sometimes use civil enforcement actions. Actually very often... Respondent has suggested that it's hardly ever used because there aren't reported opinions, the most common occasion where civil enforcement actions are used they're also settled. That is, the injunction... the complaint is filed and there's a civil settlement involving money and agreements to change practices and make an agreement not to deal in a particular drug, chemical for some period of time. There are numerous examples of that. Anthony M. Kennedy: What is the advantage the government has from an injunction rather than a concerted effort of discrete prosecutions by the United States attorney's office? Barbara D. Underwood: For example, here, where we are arguing where it is our position that there simply is no medical-necessity defense at all and therefore that one shouldn't be entertaining evidence and adjudicating the appropriateness of a medical-necessity defense in a particular case, the way to get that resolved systemically is in a civil... a civil proceeding that simply presents that legal question. Anthony M. Kennedy: Then you do want us to rule on the issue that the Ninth Circuit... you're ruling just as a general matter that there's no medical-necessity defense. Barbara D. Underwood: It is a part of our argument-- Anthony M. Kennedy: I'm concerned about using the courts to answer questions so remote from specific disputes. Barbara D. Underwood: --It isn't necessary to reach that result but it is a part of our argument that the reason the injunction... the reason the Ninth Circuit was wrong to suggest that the injunction might not issue or might be limited that the court predicated that holding on an error of law, I mean one... there are many reasons why a court might exercise its discretion but it is not a good reason to exercise its discretion to rely on a mistake of law and a mistaken view of the law and that mistake is that the Controlled Substances Act authorizes, contemplates or is consistent with a medical-necessity defense. Anthony M. Kennedy: Well, then you're very pleased with what the Ninth Circuit did in one sense because now you can get the issue resolved up here. Barbara D. Underwood: I would say that's the result of what the Ninth Circuit-- Anthony M. Kennedy: But I just don't think that's a good use of the federal district court's authority. Antonin Scalia: Out of evil cometh good, General Underwood, isn't that wonderful. Barbara D. Underwood: --Pardon me? Antonin Scalia: I just said out of evil cometh good is your position on the Ninth Circuit. Barbara D. Underwood: Our initial position was not that we wanted to bring this to the United States Supreme Court but that the practice... that the Oakland Cannabis Buyers' Cooperative and similar cooperatives should be enjoined from engaging in the open and notorious violation of the Controlled Substances Act-- William H. Rehnquist: General Underwood, if you take it as a criminal prosecution and it's an unsettled question of law whether it is a medical-necessity defense, a typical district trial judge is probably going to err on the side of letting it in since you can't say one way or the other and you may not get it resolved in a criminal prosecution. Barbara D. Underwood: --That's correct. Antonin Scalia: General Underwood, what is the penalty for violating an injunction? Barbara D. Underwood: The statute calls for enforcement by contempt. Antonin Scalia: Would be criminal contempt? Barbara D. Underwood: Well there's a... no, well, there's a civil contempt in the statute. Antonin Scalia: What I'm getting to is would you be entitled to a jury in the trial for contempt? Barbara D. Underwood: Yes, I said earlier the defendant by statute is entitled to a jury. Ruth Bader Ginsburg: Still it's civil so it wouldn't be beyond a reasonable doubt, it would be I think it's clear and convincing in this case; is that right? Barbara D. Underwood: It's not a criminal proceeding it's a trial under Federal Rules of Civil Procedure-- Antonin Scalia: That would make a big difference to a jury who doesn't want to convict this person. I mean, at the end of the road there's a jury, which is going to let you off if it wants to let you off, whatever the standard of proof is so that if the U.S. attorney here were only trying to avoid a jury, he ought to be replaced. David H. Souter: But the juries... there can be a criminal contempt proceeding if the injunction is violated under the statute, correct? Something was said a minute ago about its being just a civil jury. The U.S. attorney could bring criminal contempt if someone violated it and I thought your answer was under the statute even if it's criminal contempt and the penalty would be... the penalty requested would be within the minor offense range, they'd still get a jury trial and that was the answer to my suggestion. Barbara D. Underwood: --The statute's Section 882 says in case of an alleged violation of an injunction or a restraining order issued under this Section, trial shall upon demand of the accused be by a jury under the... in accordance with the Federal Rules of Civil Procedure. That's what Congress contemplated and instructed. Ruth Bader Ginsburg: I understood you before in answer to the question about why the civil injunction to say that you wouldn't do that with a street peddler but you want to put this clinic out of business. Barbara D. Underwood: Want to stop it from engaging in the unlawful distribution of marijuana, it might have some other business, but I don't believe the Oakland Cannabis Buyers' Cooperative at the moment is engaged in other businesses, and as I've said, that's the dispute that we have with the Oakland Cannabis Buyers' Cooperative about whether what they're doing is lawful or not is one that is ideally suited to resolution in a civil... in a civil litigation. I think I'll reserve the rest of my time for rebuttal. William H. Rehnquist: Very well General Underwood. Mr. Uelmen, we'll hear from you. Gerald F. Uelmen: Mr. Chief justice and may it please the Court: When the government initiated these proceedings, it made a tactical choice to forego criminal prosecution in favor of seeking injunctive relief pursuant to Section 882. That choice had serious consequences for the Respondents because it deprived them of the full opportunity to a jury trial. Antonin Scalia: Did your Respondents ask to be prosecuted criminally, was that their preference? Gerald F. Uelmen: We had no choice in the matter, Your Honor. David H. Souter: How did it deprive them, I mean, Ms. Underwood's answer was they get a jury trial in any case. Gerald F. Uelmen: It's a jury trial in accordance with the Federal Rules of Civil Procedure which means that the court can enter a summary judgment and the court does not apply the standard of proof beyond a reasonable doubt and that actually happened in this case. David H. Souter: You mean for a criminal contempt? Gerald F. Uelmen: For a civil contempt. David H. Souter: What about criminal? Gerald F. Uelmen: Well, they have not initiated a criminal contempt prosecution. That would be a criminal prosecution and we would have a right, full right to-- Anthony M. Kennedy: What's the sanction for finding of a civil contempt violation? It can't be jail. Gerald F. Uelmen: --No. I believe they could be fined. William H. Rehnquist: In a civil contempt they say you have the key to the jail in your own pocket because it's enforced to cause to you do something, you can be jailed I believe on civil contempt. Gerald F. Uelmen: If you refuse to-- William H. Rehnquist: Right. Gerald F. Uelmen: --Yes, until you conform with the order. And that happened here. I mean, these Respondents were found in contempt of court without a jury trial. William H. Rehnquist: Did they ask for a jury trial? Gerald F. Uelmen: Yes, but the court ruled that under Section 882 the trial as conducted in accordance with the Federal Rules of Civil Procedure. Therefore a summary judgment could be entered and the government succeeded in obtaining a summary judgment. David H. Souter: And what was the penalty that was being requested, was the penalty a fine or cumulative incarceration? Gerald F. Uelmen: No fine was imposed. David H. Souter: What was requested when you went to trial, did the government say, we forego any incarceration as punishment we're going to ask for a fine as punishment, did the government make any specification of that sort? Gerald F. Uelmen: No, the government asked that the sheriff or the marshal seize the premises in which the business was being operated and of course the Respondents were at risk of incarceration if they remained in contempt. Anthony M. Kennedy: Well, that's just like a civil nuisance action, it's just a nuisance action in the federal court is all it amounts to. Gerald F. Uelmen: But the point is the defenses that the Respondents wished to assert were never determined by a jury. David H. Souter: But you're in effect saying that even if it's purely civil contempt if they are found to violated the injunction and they do not agree to abide by the injunction in the future they can at least be jailed coercively. Is that the point? Gerald F. Uelmen: Absolutely. David H. Souter: Okay. Gerald F. Uelmen: Yes. It would truly be ironic to hold that federal prosecutors have full discretion to decline prosecution but when they elect to come into a federal court sitting as a court of equity, that court has no discretion to decline to issue an injunction. Anthony M. Kennedy: Just... I take it that if I'm a trial judge and I have someone who's violated my injunction, I can't say, I'm going to put you in jail now until you sign an agreement not to do this anymore. I can't do that. It's a coercive action for something that's within the power... within your power to perform, to turnover some goods, to unlock a locker to... but that's not... so there can't be any... there can't be incarceration-- Gerald F. Uelmen: Clearly, you could incarcerate me until I obey the court order. I mean, that's done all the time with a witness who refuses to testify and is held in contempt. Anthony M. Kennedy: --But these are all past acts, there's nothing to incarcerate for or am I wrong? Am I missing something, did the judge incarcerated these people? He couldn't. Gerald F. Uelmen: He did not in this case because the Respondents agreed to refrain from the conduct, the contempt was purged ultimately, but if the... if the Respondents insisted on continuing their operation in violation of the injunction, they could have been jailed. Anthony M. Kennedy: Well, I disagree with that but we'll leave it. Antonin Scalia: Right. I thought that this kind of civil contempt where you have the key in your pocket is only for the kind of contempt that's in the presence of the court where you refuse to testify or disrupt proceedings or something like that, I'm not sure that... any way, we can look that up. Let me come to your perception that it would be unthinkable that it could be up to the U.S. attorney whether to bring a criminal action or not, but a federal judge could not decide that he won't issue an injunction using the same sort of discretion, why is that so unthinkable? I mean, in a criminal case the federal judge certainly can't say, you know, I don't think this criminal case should have been brought at all. Gerald F. Uelmen: In a criminal case, Your Honor-- Antonin Scalia: It's a stupid prosecution and I'm going to ignore it. He can't do that, can he? Gerald F. Uelmen: --In a criminal case a judge is sitting as a court of law, what we're saying is when a federal court is sitting as a court of equity it has the traditional discretion to weigh the interests, to balance the interests-- Antonin Scalia: To say this civil action should not have been brought, I disagree with the United States attorney that this civil action which is authorized... which he's authorized to bring under the statute should have been brought and therefore I will nullify it, you think a court has that power. Gerald F. Uelmen: --What we're saying is that all the statute says is if the court has jurisdiction to issue an injunction surely they can come in and ask for an injunction and we're saying the court has discretion to say under these circumstances I'm not going to issue an injunction. William H. Rehnquist: What's your case authority for that sort of a proposition because the cases you cite in your brief strike me as quite far off the point, Hecht and company and Romero-Barcelo. In those cases the person was either in compliance by the time it got to court or else the court said, look, I won't issue an injunction, Romero-Barcelo, but you have to go get a permit. In no case did the Court ever say well we think you've got a defense to this act so we're not going to issue the injunction. Gerald F. Uelmen: Well we believe that Hecht v. Bowles and Weinberger v. Romero-Barcelo are quite on point because in both cases it was within contemplation that future violations would occur and the Court still declined to exercise its jurisdiction-- William H. Rehnquist: Because in one way it said, the violations had been cured as promptly as they'd been called the attention that Hecht's had put in a new staff to try to do things. I mean, it's quite different from your case where you say we're going to just go ahead and do this. Gerald F. Uelmen: --Well in Romero-Barcelo the Court, in effect, said that the Navy can continue to drop its bombs while it applies for a permit, so-- Ruth Bader Ginsburg: But there wasn't any failure to rule on what the law is in both of those cases. The judge adjudicated the case and said you did wrong, but I'm not going to slap you with an injunction because in the Bowles case it was inadvertent and I have ever reason to believe you won't do it again. I didn't get from any of the cases you cite authority that a judge would have to say, I'm just not going to participate in the adjudication of this case. Gerald F. Uelmen: --Well, first of all, by declining to enjoin, the court is not allowing the violations to continue because the government still has the option of initiating a criminal prosecution at any time and that's-- Sandra Day O'Connor: It seems to me what happened here is that it originally went to a federal district court judge who granted an injunction and then it was appealed-- Gerald F. Uelmen: --That's correct. Sandra Day O'Connor: --at the Ninth Circuit and the Ninth Circuit appeared at least to create some kind of a blanket exception to the provisions of the Controlled Substances Act and returned it to the district court which it required to withdraw or to enter. Gerald F. Uelmen: What the Ninth Circuit held is that the district court had discretion to allow this exemption to the injunction for two reasons, first, because the Respondents who came within this common law necessity defense were not violating the Act so they should not be enjoined because-- Sandra Day O'Connor: It was a kind of a blanket medical-necessity defense that it recognized when I would have thought that the initial trial judge did not abuse his discretion at all and that the Ninth Circuit erred at the point that it created this blanket defense. Gerald F. Uelmen: --Well, it's not a blanket defense, Your Honor, in is the sense that every Respondent who wishes to take advantage of it is going to have to show that they are suffering from a serious medical condition, that they face imminent harm of death or blindness, that cannabis will alleviate their condition and that they have no reasonable alternative, that everybody alternative available has been tried and found ineffective for them so-- Ruth Bader Ginsburg: But the action is brought against the clinic not against the individual sufferers, so you seem to be putting together two things that don't mix, you're saying that an individual might have a plea of medical necessity, but the judge who is faced with a clinic that's selling to all kinds of people, some of them don't fit that description at all. Gerald F. Uelmen: --Well, no, actually selling to anyone other than the limited number of patients who come within this exception is enjoined by the preliminary injunction, all the court has done is to create a very narrow exception for a very limited number of patients who come within these four criteria. Anthony M. Kennedy: It doesn't sound to me limited at all, even with drugs that can be dispensed, doctors are required, prescriptions are required, that wasn't any part of this injunction as envisioned by the Ninth Circuit at all. Gerald F. Uelmen: Well our contention is that-- Anthony M. Kennedy: Nonmedical people deciding the so-called medical necessity. That's a huge rewriting of the statute. Gerald F. Uelmen: --Well, it's implicit in all of these conditions that there is a medical decision being made. That is, no patient qualifies under the California initiative unless they have a physician's recommendation or approval in meeting the criteria that all alternatives have been tried and failed implicitly assumes some medical supervision in that process. Our contention is that when we come within this medical-necessity defense no prescription is necessary. That we're dealing with highly unusual circumstances that were not contemplated by Congress when it required a prescription for the normal use of any drug, when a physician issues a-- William H. Rehnquist: To say it wasn't contemplated by Congress when Congress made a finding that there's no known medical use for it doesn't make much sense, I think. Gerald F. Uelmen: --Well, Your Honor, Congress never made such a finding. They did not say there is no known medical use for cannabis. William H. Rehnquist: What is the definition of schedule one in the Controlled Substances Act. Gerald F. Uelmen: The criteria for placement on schedule one or movement off of schedule one when it's done administratively by the DEA are set forth in Section 812 and those criteria do include no currently accepted medical use, but Congress itself put cannabis on schedule one, so it wasn't bound by those criteria. William H. Rehnquist: But presumably if it did it itself, it must have thought that it qualified for schedule one under those criteria, it just didn't want to leave it up to an administrative agency to make the decision. Gerald F. Uelmen: All it had to conclude in terms of a rational basis test was that it wanted to impose the most restrictive limitation and that is schedule one, no use without a prescription, but we're saying even that finding, that there's no use without a prescription, is not a rejection that under limited circumstances where a patient is facing imminent harm and has no reasonable alternative, the drug cannot be used without a prescription, it's a classic illustration of the choice-of-evils defense. Antonin Scalia: If that's the case how could it be that the patient wouldn't be able to get a prescription. I mean, you're saying it's absolutely necessary for you to stop the patient from dying or from vomiting or whatever. Gerald F. Uelmen: That's right. Antonin Scalia: There's not a doctor in California who will say, you know, here I'll write you a prescription. Gerald F. Uelmen: Not for cannabis, not for cannabis because it is on schedule one, a physician cannot write a prescription. Antonin Scalia: Okay, so it's not just a requirement of a prescription that Congress is prescribing. Gerald F. Uelmen: Well, by putting it on schedule one they're saying you can't... you can't use it by prescription, now when a doctor issues a prescription all he's concluding is that this will help you, he's not required to conclude that you have no other alternative. He's not required to conclude you have a serious condition and you may die or go blind if you don't have this medicine, all he's got to say is, this will help you, here's a prescription, go get it and take it. But the medical-necessity defense requires much more. It requires a conclusion that the patient is facing a serious medical crisis. William H. Rehnquist: Is there any other case in which this Court has recognized the medical-necessity defense. Gerald F. Uelmen: Well, calling it medical necessity-- William H. Rehnquist: Well, I asked you a question. Gerald F. Uelmen: --No. Okay. But medical necessity is just an example of the classic necessity defense defined by the model penal code. In fact, one of the examples-- William H. Rehnquist: That's based on common law, is it not? Gerald F. Uelmen: --Yes, it is. William H. Rehnquist: What you have here is a statute that Congress enacted that quite arguably simply ruled out the sort of defense that you're urging. Gerald F. Uelmen: Well, Congress certainly didn't explicitly rule it out. What the government is arguing is that we can imply this limitation from the structure of the Act and from its purpose, but a careful-- William H. Rehnquist: Or from its placement on schedule one. Gerald F. Uelmen: --Well, its placement on schedule one involves this issue of currently accepted medical use which is a term of art that does not address the question of whether under particular circumstances of an individual patient facing a medical crisis there might be medical utility for the drug. Ruth Bader Ginsburg: Do I understand you correctly Mr. Uelmen from what you've argued about medical necessity, the California initiative is essentially irrelevant because you'd be making the same argument in any state; is that correct. Gerald F. Uelmen: That is absolutely correct. This defense should be available to any patient in any state regardless of whether that state has approved under broader conditions the general use of cannabis as medication. Antonin Scalia: I guess would it be limited to cannabis or would you have a similar exception to any of the prohibitions. Gerald F. Uelmen: Well, if the conditions are met that you face this imminent crisis and no other alternative is available, yes, it should be available for other medications as well. Antonin Scalia: It would be up to the individual who wants it to take his chances and say I think there's medical necessity and then try and prove that later-- Gerald F. Uelmen: That's a risky venture because that individual is going to have to prove in a court of law that in fact he had... he was facing this crisis and he had no alternative. Antonin Scalia: --Well, you know if he really thinks he's going to die that's an easy gamble right, a jury versus the grim reaper, I'll take the jury any day. Gerald F. Uelmen: Well, at least in the confines of the modification of this injunction we're talking about more than that, we're talking about a requirement that you prove that you have tried all of the other alternatives that might be available and they didn't help. William H. Rehnquist: How serious does your medical condition have to be? I mean, I gather cannabis is not a life-saving drug. It alleviates great pain and discomfort. Gerald F. Uelmen: Well, we believe it is a life-saving drug. It's a life-saving drug for AIDS patients who are not going to benefit from the new medications available to keep them alive if they can't keep their weight up, if they can't maintain their general health. William H. Rehnquist: So how serious... how serious does a case have to be before this medical-necessity defense kicks in, in your view. Gerald F. Uelmen: Well, in the injunction we're talking in terms of imminent harm, we believe that-- William H. Rehnquist: What sort of harm? Gerald F. Uelmen: --Death, starvation, blindness. Antonin Scalia: Stomachache? Gerald F. Uelmen: No. Antonin Scalia: That's a harm, isn't it? Gerald F. Uelmen: We're talking about patients who are going to lose their sight, who are going to forego chemotherapy or radiation because they can't live with the severe nausea. Antonin Scalia: You have to add some adjective to just imminent harm, you want imminent life-threatening harm, imminent what? You want to exclude a stomachache and an earache maybe. Gerald F. Uelmen: No, I think we're talking about much more serious harm, but we're talking about balancing the choice of evils here. Ruth Bader Ginsburg: Suppose Congress were to say we don't want a medical... we didn't... we thought controlled substance schedule one is prohibited. Now we're going to make clear there's no medical-necessity defense then what happens to your-- Gerald F. Uelmen: Clearly Congress did not say that, but if it did, we would contend that we then have a serious constitutional problem in terms of a violation of the substantive due process right to preserve your life, then we can cite the Glucksberg case-- David H. Souter: --May I just ask you a question? I take it there was no constitutional litigation below that you're raising the constitutional issue here on the constitutional avoidance rationale. Gerald F. Uelmen: --Yes, the constitutional issue was raised but in a different context. David H. Souter: Was it, I mean, did you put in evidence on it or did you argue it or was it just one of those things that you never got to? Gerald F. Uelmen: It was argued in the context of the broader motion to dismiss, but with respect to the medical-necessity issue that's before this Court, our position is that if this statute is construed to preclude a medical-necessity defense under these circumstances where the patient faces loss of life or loss of sight there would be a violation of a substantive due process right-- David H. Souter: Do you also raise the Commerce Clause on constitutionality? Gerald F. Uelmen: --We did, we did. William H. Rehnquist: Did you press both of those in the court of appeals when you were appealing from the original injunction. Gerald F. Uelmen: They were fully briefed in the court of appeals in the context of the dismissal motion-- William H. Rehnquist: And the court of appeals didn't pass on them I gather. Gerald F. Uelmen: --No, they didn't, although they didn't address it specifically in the context of the medical-necessity defense. Anthony M. Kennedy: But you're asking us to uphold that this defense exists in broad general terms, it's a sweeping proposition with no specific plaintiff in front of us, with no specific symptoms or testimony from a doctor as to this person, which-- Gerald F. Uelmen: Well, it may be better. Anthony M. Kennedy: --Which led me to question that the whole use of the injunctive power to begin with but so long as we have the injunction, the statutory authority, it seems to me you have to wait for a specific case to raise this defense. Gerald F. Uelmen: Well, that's our position Justice Kennedy that the availability of the medical-necessity defense should await a criminal prosecution in which the defense is asserted and evidence is presented and-- Anthony M. Kennedy: Well, but in the meantime it seems to me that nuisance can be enjoined and if the defendant wants to take his chances on a criminal contempt he can do so. Gerald F. Uelmen: --Well, our contention is that you can decide this Court just based on the traditional discretion that a court of equity has to allow this exception to the injunction. William H. Rehnquist: I think it was pointed out earlier that the district court here whose discretion it is originally granted the injunction just what the government asked for, and it was the court of appeals who does not have discretion which directed the district court to exercise it in a different way. Gerald F. Uelmen: Well, the court of appeals was saying that the district court misconceived the law when the court was asked to modify the junction. William H. Rehnquist: And what should we do if we decide that the court of appeals misconceived the law? I mean, what should we do with this case? Gerald F. Uelmen: Well, if you feel that the court of appeals misconceived the law then of course you're going to have to reverse the court of appeals, but our position is the court of appeals was essentially correct on both grounds, that the court does have discretion to decline to enjoin and these... this conduct doesn't violate the statute because it comes within this medical necessity defense. Antonin Scalia: Mr. Uelmen, let me talk about the medical, I had understood medical-necessity defense, if it existed, to be a defense on the part of the person who is in medical necessity and who uses marijuana or any other prohibited drug when he shouldn't. Now you would extend this also to the person who provides it to any persons who was in such needs. Gerald F. Uelmen: That's correct. Antonin Scalia: And you would extend it beyond that to someone who opens up a business in order to provide prohibited drugs to people who need them. That's a vast expansion beyond any necessity defense that I've ever heard of before. Gerald F. Uelmen: Well it's perfectly-- Antonin Scalia: I've heard of necessity defense on the part of defendant who used it or whatnot, but you're saying by reason of a necessity defense you can open up a business to provide for these necessities. Gerald F. Uelmen: --If it's perfectly consistent with the choice of evils concept of the necessity defense because the person who provides the substance to the patient is also faced with a choice of evils. The case of United States versus Newcomb which we cite in our brief on page 23 makes it very clear that this common law necessity defense extends to the third-party provider as well. William H. Rehnquist: Well, what choice of evils is the provider faced with? Gerald F. Uelmen: Of letting someone die or violating the law. William H. Rehnquist: Well, of not being able to supply the person. I mean it certainly isn't the provider's responsibility to look after the individual. Gerald F. Uelmen: Well-- William H. Rehnquist: You say letting someone die. Gerald F. Uelmen: --We're saying the necessity defense permits or justifies this choice even by the provider as well as the patient. Actually the choice of evils defense as described in the model penal code offers this as an example, a druggist may dispense a drug without the requisite prescription to alleviate grave distress in an emergency. Antonin Scalia: But is this is a regular druggist, this is not a druggist who's in the business of providing illegal drugs to people in necessity. I mean you're making a business out of it. I can understand-- Gerald F. Uelmen: It's a very limited business under this injunction which can serve only patients who meet these criteria, and I might point out it's a business in which the government itself has been engaged. The government provides cannabis at the present time to eight patients who meet essentially the criteria of medical necessity and-- William H. Rehnquist: --I don't think your example from the model penal code would envision a pharmacist filling a prescription or filling an order for some drug that is on schedule one which no prescription is good for. Gerald F. Uelmen: --Well, we're saying the requirement of a prescription is not a judgment with respect to the availability of a necessity defense. Even a drug as to which no prescription is permitted-- William H. Rehnquist: It's one thing to say that a state law requiring a prescription for a bunch of drugs can be violated in an emergency. It's another thing to say that a schedule one law which says there's no useful medical purpose for this drug shall be violated. Gerald F. Uelmen: --Well the government's position actually is that there is no necessity defense for any drug under the Controlled Substances Act, and I think it's very important that the court realize that the reason we're here is because the government shut down the only program that could accommodate these patients. For many years they provided Cannabis and still do for eight patients who come within this medical necessity criteria, and they closed that program down in 1992 and they say in their brief we can do it because we're the Federal Government. You can't do it because you're a private citizen. Well, we're saying if you won't do it, we can do it because the only justification you have to do it is the same necessity defense that we're asserting and the way the necessity defense works is if a patient comes in and says I have to have this to live and the court says well, the government has a program. They'll give it to you. Therefore you have a reasonable alternative. You don't have a necessity defense and that's exactly what happened in United States versus Burton the sixth circuit case. A patient with glaucoma comes into court, asserts a necessity defense. The court says you have a reasonable alternative and that patient then goes to the government and they put him on the compassionate IND program and provide him with cannabis. Well, now the government decides we're not going to operate that program anymore and we say if you're not going to do it then we can because the only justification you had to do it was this medical necessity concept. There is no authorization within the Controlled Substances Act for the government to give Cannabis as medicine to patients and when this program was examined by Congress, and I especially invite the Court to carefully look at the hearings held by Congress on the therapeutic uses of marijuana in schedule one drugs. The way this program was explained to Congress in 1980 was we are providing Cannabis for medical use by these patients and the reason we're doing it is because of compassion and because of the therapeutics. That was the explanation given by Congress. Ruth Bader Ginsburg: I thought it came out of a settlement of a lawsuit. Gerald F. Uelmen: It came out of a settlement of a lawsuit where the patient successfully asserted a medical necessity defense and the federal authorities then stepped in and said we will provide you with the Cannabis you need to preserve your sight. Ruth Bader Ginsburg: Successfully in what way did the plaintiff get a judgment in that case? Speaker: You said there was a settlement. Gerald F. Uelmen: This was after he was acquitted he brought a civil lawsuit and in settlement of that suit this program was established. Speaker: Thank you, Mr. Uelmen. General Underwood, you have three minutes remaining. Barbara D. Underwood: A medical necessity defense is foreclosed here not only by the fact that Congress contemplated and rejected it and not only by the fact that alternatives are available but also because any necessity defense is a response to unusual and unforeseen circumstances. It couldn't possibly, the common law necessity defense couldn't possibly authorize an ongoing enterprise designed to stand ready and provide supplies to people who might show up with their own individual claims of medical necessity. There's no constitutional problem with the statutory procedure for deciding when and if medical uses for a drug exist where with... and the court held in Weinberger against Hynson that it's perfectly appropriate for the FDA to reject anecdotal evidence and insist on controlled studies. There's also no problem with protecting sick people from charlatans or unsafe and ineffective drugs as this Court held in Rutherford in dealing with Laetrile the claim that there was a right to use Laetrile. Respondents in this case have never presented their claims, the claims they're making here, to the FDA. They've never sought review of the classification of marijuana in schedule one, they've never sought access to, at least so far as the record reflects, to the clinical trials that are ongoing right now to deal with synthetic manufacture of components of marijuana, and on the remedy for contempt at the petition appendix at 25 A and again at 37 A it's perfectly clear that the government was not seeking fines or incarceration, that the judge wasn't contemplating fines or incarceration but just evicting and padlocking, closing down this business. William H. Rehnquist: Thank you General Underwood. The case is submitted.

Earl Warren: Number 84, Frank Masciale, petitioner, versus United States of America. Mr. Clark? Merrell E. Clark, Jr.: May it please the Court. This case comes here on writ of certiorari to the Court of Appeals for the Second Circuit. The Second Circuit Court had affirmed by a divided court the petitioner's conviction of violation of the narcotics laws. The particular statutes involved are listed on Page 2 of petitioner's brief and are printed in the appendix, but they do not raise the question which is really at issue here. Petitioner was tried by a jury in the District Court for the Eastern District of New York, and was convicted of unlawfully selling and conspiring to sell an ounce and a quarter of heroin hydrochloride. He received a three-year sentence. Upon appeal, a counsel was assigned by the Court of Appeals for the Second Circuit through the New York Legal Aid Society. Now, the fact is that petitioner did participate in that narcotic sale. That participation is freely conceded here and was freely conceded on the trial. The defense was that of entrapment. In other words, the particular sale of narcotics in which petitioner participated was induced by a Federal agent. The question presented here is whether the Trial Court erred in submitting the case to the jury, when the undisputed facts showed, first, the inducement by the document; second, the petitioner had not previously dealt in narcotics, or in fact that he was not a user of narcotics; third, that the urging of the government agents had continued for a period of over two months before the petitioner actually committed the illegal act and fourth, whether the government failed to produce any evidence whatsoever of the inducements first offered to the petitioner and his response thereto. Now, before turning to the facts I would just like mention one decision of this Court as a sort of background to the facts that is the case of Sorrells versus United States, 287 U.S. 435 (1932). I mention it, because it is to my knowledge the only occasion on which this Court has spoken on the defense of entrapment, and most of what I will say refers to that case as the touchstone. In that case this Court first held that entrapment was a valid defense, and the Court said the controlling question, the controlling question is, whether the defendant is a person, otherwise innocent, whom the government is seeking to punish for an alleged offense which is the product of the creative activity of its officials? Now, the facts are these. The narcotic sale we are concerned with took place in Brooklyn on March 2, 1954. The purchaser is a man name Marshall, who was a government agent. The actual seller was never apprehended. He dealt with Marshall on the telephone, he was never identified, and the government never succeeded in catching him. Marshall dealt through a middleman, a man named Seifert. I am sorry to bother you with all this dramatic personae, but it is important, a man named Seifert who introduced agent Marshall to the seller over the telephone and who led agent Marshall to the empty lot, where the ounce and a quarter of heroin had been lodged. Now, petitioner's role in the transaction was to introduce Marshall, the government agent, to Seifert, the middleman, and that is virtually all he had to do for the transaction. The story begins chronologically in December 1953, approximately three months before the sale took place when one Kowel appeared in agent Marshall's office and applied for employment as someone familiar with the narcotics business. Agent Marshall testified that he hired Kowel as a special employee, paid him on an informal basis. Kowel would come in and say he had spent five or ten dollars in a bar the night before and Marshall would reimburse him. But there has been no contention as for the purpose of this case, Kowel was anything but an agent of the government. Kowel was also, and had been for some years, a friend of the defendant. Shortly after Kowel's employment by agent Marshall, he suggested to the defendant that the defendant enter the narcotics business. He pointed out to the defendant that there was a lot of money to be made in the narcotics business. The defendant, as he testified, Kowel himself did not testify, and the only knowledge we have as to this early stage of the story comes from the defendant. Speaker: What was the defendant's business? Merrell E. Clark, Jr.: The defendant, Your Honor, so far as the record showed, I believe the record doesn't show what his business was, he actually had worked on the waterfront, had been a truck driver, he had two convictions for gambling and one conviction for conspiracy to attempt to commit a robbery. But there is no evidence in the record whatsoever, and I believe it's not contended that he had ever dealt in narcotics previously. The defendant testified, as I say his testimony was uncontradicted, that he in the first instance rejected these suggestions. He told Kowel he wanted no part in the narcotics business, but Kowel was persistent, repeated his suggestion on two or three separate occasions and finally urged the defendant to meet a big buyer of narcotics from Texas, whom Kowel was going to introduce him to. Well, again, the defendant resisted the suggestion, but in the end he consented to meet the big buyer from Texas. The meeting took place in Brooklyn on January 14, and as the Court has no doubt surmised, the big buyer from Texas was agent Marshall, and Marshall asked the defendant if he could locate a source of narcotics. Marshall testified as to this meeting. His testimony in substance was that the defendant was willing, expressed willingness to try to locate a source of narcotics for him, boasted that in his gambling contacts he had known in the past at least of people who were in the narcotics business. But he told Marshall and Marshall so testified that he did not know right then any source of narcotics, but he undertook to try to find the source. Then his testimony, which of course, I think, we must assume the jury disbelieved that he was just stringing Marshall along, but I think for the purpose of this review we must assume that he was actually at that point willing to find a source of narcotics for the buyer from Texas. Felix Frankfurter: On cross-examination, was defendant asked as to his prior purchases or addiction to narcotics? Merrell E. Clark, Jr.: He was asked, Your Honor, I think on direct, I don't recall. Felix Frankfurter: Well, on direct. Merrell E. Clark, Jr.: Yes sir and he was and he testified, he had never dealt with narcotics and never used narcotics. Felix Frankfurter: say it must be believed a minute ago that the jury rejected his testimony. The just had disbelieved that? Merrell E. Clark, Jr.: Oh no, not as to that, Your Honor. I say no. Felix Frankfurter: Just the statement that is why not? Merrell E. Clark, Jr.: Well, Your Honor, they might have disregarded it, but if they disregard that, they are left with the case where there is no evidence whatsoever as to whether the man ever had or had not dealt with narcotics. Felix Frankfurter: You say – do I interpret with that answer that, there being nothing else, there being no other, according to your statement of the fact, there being nothing in the record, assuming the defendant is out altogether, there being nothing in the record, from which they could have inferred, reasonably inferred, his prior relation to narcotics, they couldn't from his denial, from this own denial have drawn an affirmative conclusion. Merrell E. Clark, Jr.: Yes Sir. Felix Frankfurter: That's what your answer is. Merrell E. Clark, Jr.: That's my position. Now, following this meeting of January 14, there ensued a period of approximately six weeks during which the defendant undertook to locate a source of narcotics for the buyer from Texas. Agent Marshall testified that he spoke to the defendant during that period perhaps ten times, two or three of which were in person, about among other things the defendant's inability to locate a source of narcotics. Finally however, the defendant did locate a source of narcotics and on March 1, he introduced Agent Marshall to the middleman Seifert. Seifert then introduced Marshall to the seller and the transaction took place. Felix Frankfurter: You said finally Mr. Clark, finally. Merrell E. Clark, Jr.: Yes Sir. Felix Frankfurter: What is the evidence of ready knowledge on his part? Merrell E. Clark, Jr.: The evidence on that score, Your Honor, is this, Seifert pleaded guilty and tuned state's evidence and both he and the defendant testified that they had not known each other on January 14, that is at the time when the defendant was first approached by Marshall to find a source of narcotics. They testified they have known each other about a month prior to March 1 and they testified both that the first time the defendant mentioned Seifert the possibility of selling narcotics was March 1, the very day when the defendant introduced Seifert to Marshall. Felix Frankfurter: Would you mind spelling out in more particularity, the first approach by the government agent was in January what? Merrell E. Clark, Jr.: Well, Your Honor, the first approach by Kowel was, we contend, and it was conceded a government agent, was either late December or early January. Felix Frankfurter: At that time you say, is there any evidence that at that time the petitioner here had any kind of relations, never mind how close, had any kind of relations with the source of the supplier? Merrell E. Clark, Jr.: There is not evidence whatsoever that he had any relations with the source he ultimately located. Felix Frankfurter: Is that your precise answer? Merrell E. Clark, Jr.: Yes Sir, I mean to be and I anticipate another question. Felix Frankfurter: All right! What's the answer to the next question? Merrell E. Clark, Jr.: The next question is, that the only evidence that he had any connection at all ever with any source of narcotics was Marshall's testimony that at their first meeting on January 14, petitioner said in the past, in his gambling activities, he had known people in narcotics. He no longer knew those people, but he would try to find a source for Marshall. That's the story. Felix Frankfurter: So now creep along from January 14 on so as to make out -- the intent of my question is clear that namely is what generalization, what allowable basis, on the record, what allowable basis is there in the record that he had such relations that he wasn't that innocent in this business? Merrell E. Clark, Jr.: Well, Sir, the allowable evidence -- Felix Frankfurter: Meaning not that he was in the business but that -- Merrell E. Clark, Jr.: Yes, that he had contacts. Felix Frankfurter: We know that. Merrell E. Clark, Jr.: Well, the allowable evidence sir, I think is no more than this, that he did meet Seifert around February 1. We don't know exactly how. They were introduced by a mutual friend in a restaurant, but narcotics both of them said were not discussed. There is then a hiatus until March 1, when the defendant ran into Seifert, brought up the question of narcotics. Seifert indicated that he had a source and the defendant right then and there arranged a meeting between Marshall and Seifert. Felix Frankfurter: Was there anything on cross-examination upon which the jury could have inferred that his disavows, his discrediting disavows for cause, I mean, in this field? Merrell E. Clark, Jr.: Yes sir. I don't know of anything, Your Honor, and the government hasn't suggested anything. Now, I mentioned that the defendant had other convictions, two for gambling and one for conspiracy to commit robbery. The Court below didn't refer to those as in any way significant, apparently because they are so unrelated to the narcotics field as perhaps not to indicate any predisposition to sell narcotics. Now I will return once again to the Sorrells' case, because it is virtually all we have to work with. It's the landmark case as I indicated that -- Felix Frankfurter: That is quite so from this Court, but you've got a good deal of material in the Second Circuit. Merrell E. Clark, Jr.: Oh there is a great volume of material below, yes sir. The cases are virtually numerous, it's true. The Sorrells case is a landmark case, L. Chadmick was a valid defense. It set up rather general standards from which the law of courts were to work in determining whether the defense has been proved or not. I mentioned the controlling question is whether the person is otherwise innocent. Speaker: You accept our standards for the purposes of your argument? Merrell E. Clark, Jr.: Yes sir, I do. Felix Frankfurter: I notice you say standard. I notice you say standard, because there is a decisive difference between the (Inaudible) dissenters might get at it. Merrell E. Clark, Jr.: Oh yes. Felix Frankfurter: How do you think that makes no difference? Merrell E. Clark, Jr.: I go along with the majority of opinion sir. Felix Frankfurter: All right. That isn't an applied exception to the -- exception to the substantive law? Isn't that the base in the word, isn't that the majority opinion? Merrell E. Clark, Jr.: The philosophy of it, yes sir. Felix Frankfurter: Yeah, that impliedly it isn't a crime for somebody to do this if he is entrapped into doing it. Merrell E. Clark, Jr.: The legislature didn't intend the law to apply. Felix Frankfurter: To apply. Merrell E. Clark, Jr.: Exactly. Felix Frankfurter: I thought it's a defense, but he hasn't committed any offense. Merrell E. Clark, Jr.: Well I am sorry if I used the word defense loosely, Your Honor. Felix Frankfurter: But I mean, I just want to know. Merrell E. Clark, Jr.: Yes, that's right. I subscribe to that completely. Now in deciding this controlling question of whether the person is otherwise innocent, this Court said, the predisposition and criminal design of the defendant are relevant and went to say that defendant could not complain of a searching inquiry into his own conduct and predisposition as bearing on the issue. Now sir, within that framework, we say here, that there is no substantial evidence of predisposition or criminal design, and that is, point one of the case. The only evidence here is evidence at the most, the willingness to be seduced by the government agent at the time of the meeting with Marshall. We submit if that is all that the court below rested its decision upon and we submit that it was erroneous in that regard. Felix Frankfurter: Let me ask you this Mr. Clark? Suppose the government were to concede in a case, not this case at the most, suppose the case cleanly on its facts fit that a government agent got to talking with a fellow in a bar room and said to him, how he did it to make substantial money, it is conceded that the victim as I should call him so, never thought about that before, had no prior knowledge, but suddenly saw opening up of the opportunity. Is that case clearly within Sorrells and not a case of entrapment would you say? Merrell E. Clark, Jr.: I would say that case is a clear case of entrapment, Your Honor, and there should be no convictions. Felix Frankfurter: I think that was clear, there couldn't be any controversy about that (Inaudible) Merrell E. Clark, Jr.: Oh no, I think there will be controversy right here, but -- Felix Frankfurter: But that is in this case. Well, you say it is this case. Merrell E. Clark, Jr.: Yes sir. Felix Frankfurter: Well take my case in which there is no question of when he knew Seifert and all of the rest, I want to get rid of everything in these questions I put to you, it's disbelief by the jury of too selling on cross conceded but the fellow never thought of it before and in the course of (Inaudible) opened up, well that's interesting. Merrell E. Clark, Jr.: And he immediately accepted. Felix Frankfurter: Well he doesn't immediately accept it, he doesn't, but it is, I want to think about this. Merrell E. Clark, Jr.: Well sir – Felix Frankfurter: I mean you can see, the government agent says this is a prospect for his purposes and they have another guy. Two months later he finally says, well, it's something I am going for. But that would be a clear case if you think the government would say that is not Sorrells? Merrell E. Clark, Jr.: I am not sure what do you mean by not Sorrells, Your Honor, I think it's a clear case of a ballot defense of entrapment. Felix Frankfurter: Yes, but I mean would it be arguable that that is not within the Sorrells decision? Merrell E. Clark, Jr.: I think it's arguable, yes indeed. Felix Frankfurter: Well what would be the argument, I am curious to know that? Merrell E. Clark, Jr.: Well sir, as I interpret the majority below, I believe what they have said here is this defendant acquiesced so willingly in the suggestion that that is enough to rebut -- Felix Frankfurter: I want you to see what the case I put. This is a brand new world that we have, he thinks about it and two weeks later or a month later he finally engages at the end of -- do you think that's arguably is not covered by Sorrells? I don't know what would be covered by Sorrels then. Merrell E. Clark, Jr.: Well, Your Honor, I think it's a clear case -- Felix Frankfurter: But you think your case is this -- the case -- Merrell E. Clark, Jr.: This or a sub-clause 2, that they would fall on the same side of the line, yes sir. And my reason for it, it's really kind of expressed by Judge Frank below than by me. He discusses the majority of decisions on Page 119 of the record, and then says in his words which to me are very persuasive. If my colleague's distinction between easy and a difficult persuasion is adopted, how will it work? Just what is an easy seduction, what is its measure? After how long a period of official instigation is a defendant's literal infarction of a statute not a crime? Will it be a crime if he yields to be detected as blandishment at the end of two or three months but not at the end of 8 or 10? In other words, I think any case which rests for its rebuttal of the defense on the defendant's willingness, whether it's instantaneous or in your case, two or three months, I think any case where that is the only evidence to rebut the defense, the defense is not rebutted, because I think it's unworkable. I think there must be evidence of predisposition of some past conduct which will justify what this Court said in the Sorrells case is a questionable practice on the part of law and enforcement officials, only justified as a device or a strategem to catch somebody who they can't otherwise catch, who is engaged in the criminal activity. Now, there is no evidence here, no evidence here of past sales of narcotics, no evidence of narcotic use, no evidence, in fact, on the contrary, clear proof that this defendant was unprepared on January 14 to sell narcotics, because assuming the greatest willingness, it took him six weeks to find even a middleman who could lead the agent to somebody with narcotics. Harold Burton: What about Kowel's statement to Marshall (Inaudible) in past, wasn't there some evidence (Inaudible)? Merrell E. Clark, Jr.: I don't believe it is evidence of that, Your Honor. In the first place of course it was pure heresy as far as the truth of it was concerned. I think it's admissible because it was part of the circumstances which got Marshall moving in the direction of the defendant. But so far as being evidence of past activity, I don't believe it was evidence of that. Speaker: Was (Inaudible) limited? Merrell E. Clark, Jr.: Was it limited at the trial? Speaker: Yes. Merrell E. Clark, Jr.: No sir, it was not. Now, there is a second ground here Your Honors which applies to this case, I think more, specifically than the general matter I have been discussing, and that is, even if ready acquiescence is enough, it must at least be ready acquiescence expressed to the first persuader. In other words, it is not right for the court to say, oh, I have missed a defendant. When Marshall came to you, you said, fine, I will go and locate you a source. That's not enough because absent -- the defendant's testimony, the record is silent on the persuasion practiced on him by the first government agent Kowel. So that even on this issue of willingness or this rebuttal to the defense of entrapment based on defendant's willingness there is, we contend, a fatal hole in the government's case. The defendant testified as to it at length, described his reluctance, as ultimately reluctant to yielding Kowel's persuasion and of course the jury disbelieved it, but once again, if it is disbelieved, there is no evidence whatsoever of what Kowel said to the man or what his reaction was to it. Those are the two grounds, Your Honor, the first that willingness alone is not enough, there must be some evidence of predisposition, past conduct or preparedness, and even if this Court were to decide that ready acquiescence might be evidence, if you will, of predisposition, in this case there was not prima facie proof of willingness because the record of silent, as far as the government is concerned of the artifices practiced. Felix Frankfurter: What kind of charge did the court give? What kind of charge? Merrell E. Clark, Jr.: The court for its charge, Your Honor, really quoted from the first Sherman case in the Second Circuit. In other words, it charged that once -- Felix Frankfurter: Are you content with the charge? Merrell E. Clark, Jr.: Pardon me? Felix Frankfurter: Are you content with the charge? Merrell E. Clark, Jr.: Well, yes sir, we are content with the charge, yes, we are. Felix Frankfurter: The charge got submitted to proper standards of the jury. Merrell E. Clark, Jr.: Yes, they did. Felix Frankfurter: And that way you say the case shouldn't have been allowed to go to the jury at all? Merrell E. Clark, Jr.: Yes sir. Felix Frankfurter: Where is the charge? In the Sherman case, is that the case that Judge Learned handled? Merrell E. Clark, Jr.: Yes sir. The charge is at Page -- Felix Frankfurter: Which, there were two Sherman cases, I remember. Merrell E. Clark, Jr.: Yes sir, the second one is following me right here today; the first one was the one Learned Hand wrote the opinion. Felix Frankfurter: And it's from the first one that the charge -- Merrell E. Clark, Jr.: First one that the charge came, that's correct. Felix Frankfurter: Where is that? Merrell E. Clark, Jr.: It's at Page 97 of the printed transcript. If I may summarize briefly on it, I think it is a proper standard. The court said in substance that once inducement by the government has been shown, the government has the burden of showing that the defendant was ready and willing without persuasion to commit the offense shown and our contention is here that there is no evidence from which the jury could find that the defendant was ready and willing without persuasion to commit the offense. Earl Warren: Mr. Knapp. James W. Knapp: May it please Your Honor, it seems that the defense's contention is really this, and I am not sure that he what hasn't almost abandoned or one of them. I may be incorrect in that, but there were two government agents. He says I was trapped by both of them, at least that's what I thought he was arguing until I heard him argue and he seems to admit that as to the approach by the government agent Marshall that the evidence shows willingness and readiness on the part of the petitioner to engage in the narcotics traffic. And I say to Your Honors that if that is the case and we will show (Inaudible) to contend of course that willingness is not enough, that we have to show more than willingness to make out that there was no entrapment in this issue. But he admits that the testimony, as far as Marshall was concerned, is that the defendant was ready and willing to engage in the narcotics traffic on January 14, 1954, when Marshall first approached him about it and I would like to read for Your Honor the testimony of Marshall in that respect. He said, Chappy, Jack and I then sat down in one of the booths -- William J. Brennan, Jr.: Where are you reading from? James W. Knapp: From record, Page 6, Your Honor. William J. Brennan, Jr.: Thank you. James W. Knapp: And almost immediately we started to discuss the narcotics traffic. I told Chappy that I was interested in large quantities of drugs, heroin to be exact, and not as a street pusher. And if I may quote, but that I have transacted my business, posed as a seller out of New York City, and I was only interested in good and large quantities. And he should tell me right away if he is not the person to see, then we will finish this conversation pleasantly right then and there. Now, that's what his initial approach to the defendant was, but the defendant didn't tell him he was not willing. He questioned the man as to his knowledge of the narcotics traffic. The entire topic was to find out my extent of my -- of the narcotics traffic and then Mr. Masciale told me and this is record Page 7, Your Honor that primarily he was a gambler and that he was not a narcotics trafficker as such, that his business was mostly gambling, but that he knew the right people in the narcotics traffic. He further said that up to a week ago or a week prior question that would have been a week prior to January 14th, prior to January 14th he knew or he had a very good source which could supply me with X amount of quality of heroine, but that somehow he had a falling out with these people. He said further that he knew someone whom he considered high up in the narcotics traffic and to whom he could introduce me in that I was able to get and I can quote this, “88% pure heroine” from this source. Felix Frankfurter: Now suppose there was an introduction. Suppose if this is clear, but after that there was an introduction, but that he had nothing to do with it, an exposit would be admitted by the government that he need to either profited by or dealt with it or anything else, but that having talked with Marshall he said that, well, I am not n this business, but I know some people who are. Would he become a aider and abettor or a coconspirator, do you think? James W. Knapp: Well, if he produced the man, of course he would, because he would, because he was -- Felix Frankfurter: Oh, he did produce the man. He introduces, I know this fellow. You want to know somebody in the narcotics business, Mr. Jones is in the narcotics business. That would make him a coconspirator? James W. Knapp: I do not think that what go far enough to making an aider and abettor. Felix Frankfurter: Will it make him a coconspirator? James W. Knapp: I think it is a close question, Your Honor. It might very well make it a coconspirator. Felix Frankfurter: But it is fact that -- assume this. Assume that he had no prior dealing that government had to concede that this fellow had no prior narcotics connections or record, but in the world in which he moved he also knew people where in the narcotic business and he sat down with a government agent who I notice almost immediately started to discuss. I don't what that means. There is the fact that a government agent sits down with somebody who is into the gambling world and the gambler finds his talk interesting and listens to him, does that show readiness to commit crime, willingness, ready and willing? What is ready and willing mean? He does not say, shut up, I am not interesting in narcotics and I do not want listen to it. I know the Supreme Court cases and this may get me into trouble. James W. Knapp: I do not think it is merely sitting down and discussing it, but when you consider all other facts here did not merely discuss it. He went further. He went further here. He said that Masciale told me he is primarily a gambler that he is not a narcotics trafficker as such, but that he knew the right people, that he had a very good source which could supply me with an excellent quality of heroine, but somehow he had had a falling out with him, and that he knew someone he considered high in the narcotics traffic to whom he could introduce me, and that I was able to get 88% pure heroin. It is much further than just sitting down and having an accidental conversation in which he mentions the man's name where he might able to get it. Now that is a different situation. He is going further and he has taken the ball after it has been given to him and he is running with it. He says he can talk. Felix Frankfurter: The question that I ask you is because I think to me it makes a lot of difference whether you are to imply into the statute a limitation by Congress that it is not making it a crime for a man who does not shut up of a government agent who talks about his businesses. Says, I do not want to hear about it. I am not interested, but listens to what might be very interesting tale and gets interested although there is no antecedent proof that that man was going to embark upon that kind of business except by the enticement of an agent or whether you take the view of Justice Roberts' concurring opinion that this is shabby business for the government to do. It makes all the difference in the world I think to me whether this is an implied exception in the statute or that this is the kind of a thing that should not be encouraged by having the government go in the business of having people commit crimes who vouch for their activity when they are committing it. James W. Knapp: Now as I understand at this Sorrells' case resulted in just that conflict among his bench. Felix Frankfurter: That's right. James W. Knapp: And the majority of the Court, there was one judge who said it was not entrapment at all and the majority opinion said there is not any offence. This isn't where you plea in bar say I did it with -- Felix Frankfurter: You are quite right about that. James W. Knapp: He says this is no offense. Now the reason it is not an offense is that the government will not be presumed to intent -- the right of the Congress to intent the conviction of people who are enticed and induced into the commission of the government's agent. It is the government's duty to prevent crime and not to incite it, the real freedom of man. Felix Frankfurter: Now what I want to know is whether this being a criminal case so that the reliance of the usual arguments for a hearing to a case from my point of view does not apply applied to this. What I want to know is rather the government rests on the assumptions that Sorrells case -- the problem of entrapment is concluded by the theory on which the Sorrells case was decided. James W. Knapp: Your Honor, please, we, of course, agree with the theory of the Sorrells case, but as I believe Mr. Judge Hand pointed out in the (Inaudible) case afterwards that it did not solve everything. It was a general laying down the principles of law which the District Courts and Circuit Courts had to work in and they had to find the means of carrying out this mandate of this Court. Perhaps, that is where we have no trouble. Felix Frankfurter: But I am suggesting something else Mr. Knapp. I am suggesting that it may make a difference whether you would take the ground on which the court, you rightly say the court, I prefer to say a court instead of majority, the majority makes the court, what you take the ground of the court in recognizing entrapment and saving a defendant or of the court or that you take the view of the Robert's view, to me it makes a difference. James W. Knapp: I understand Your Honor and I think I understand the reason, because if the position of the majority and of the court has a final say is that it is no offense, it is a not guilty plea and it is showing in which you are entitled to finding not guilty. He did not commit it. And in that respect, the Sorrells case, those it seems to me the courts did not bother whether he is entrapped or not is not simply what was done, what was asked, but what was his mental process at the time. Was he a person who was otherwise innocent who would not have ever committed this or ever done this thing if it had not been brought out and suggested and induced and incited by the government? Now when we get to that question of what was his mental process at the time the only way we can ever tell is by the evidence and by what the factual situation is. Here in this case how do we tell his mental process, by what he said, his willingness to go along with it. Earl Warren: We'll recess now Mr. – James W. Knapp: Excuse me –

Earl Warren: Number 158, Fleming Smith, Petitioner, versus Illinois. Mr. Getty, I think you may proceed now. Gerald W. Getty: Mr. Chief Justice, may it please the Court. This is the case of Fleming Smith that originated in Illinois and has taken on appeal from the Illinois Appellate Court. The question involved here is the constitutional provision namely the Sixth Amendment and that part which states in all criminal prosecutions, the accused shall enjoy the right to be confronted with the witnesses against him. We are also concerned about the Fourteenth Amendment, the Due Process Clause of the Fourteenth Amendment. The question as we see it presented for review is, should the informer's privilege be permitted to encroach upon the accused Sixth Amendment right to be confronted by witnesses against him. The facts of this particular case are -- as the normal case in a narcotic case where an addict is induced or the addict tells a police where he can supposedly make a purchase and this particular addict was searched and then escorted by two policemen to a restaurant on the South Side of Chicago, and there, this person by the name of James Jordan, and we do find from the record that this is not his correct name, did enter the restaurant and it is alleged and he did testify that he made a purchase of narcotics from one Fleming Smith in that restaurant. The two policemen are outside of the restaurant and certainly could not observed whether he did or did not make a purchase and they never testified to such things in the record. The person, James Jordan, testified on the stand that he made the purchase from Fleming Smith. But when he was cross-examined and asked whether his name was James Jordan, there was an objection and further it was elicited finally that his name was not James Jordan. And when it was asked whether -- what his name was, there was an objection and his name was never disclosed. At that point, though they had produced this witness on the issue of guilt, it was denied, denied the facts and the defendant to know the person that was accusing him. They took -- attempted to elicit the address of James Jordan and there was an objection and that was never disclosed. When Fleming Smith took the stand, he denied any of the pur -- of the sale of narcotics to James Jordan. Fleming Smith admitted that he was an addict and when he was arrested, sometime after James Jordan left the restaurant on February 28th, 1964, he did have a packet of narcotics on him. He also had four single dollar bill on him that had been marked money. The police at the time that James Jordan or just prior thereto entered -- that James Jordan entered the restaurant, did give him six $1 bills that were marked and four quarters. The purchase according to James Jordan was for $4 and 75 cents, a $5-bag. The four quarters were never found on Fleming Smith. Fleming Smith explains in the trial the reason and why he had the four $1 bill is that he had just prior thereto paid for a restaurant bill and received them in change. So that Fleming Smith at all times denied the sale.He said that James Jordan did approach him, he said he had no narcotics for sale but referred him to one Herbert Simpson in the rear of this restaurant. Now the state in their brief presents the question, does the constitution require that the true identity and present address of a governmental informant be disclosed on cross-examination? And our answer to that is yes, when it is on the issue of guilt. This is not the case of the type of informer that merely points the finger of suspicion that the police depend upon for information, that type of person gives information to the police and there is a flow of information and we realized that this is probably one of the great scientific detection apparatus that law enforcement does have, the informant. Speaker: Am I wrong in thinking that counsel for the defendant said he knew this man, Jordan? Gerald W. Getty: There is some evidence that -- Speaker: Page 78, he says he knew him and he represented him. Gerald W. Getty: There's never -- oh, the counsel? Speaker: Yes, the counsel. There was a statement that counsel did know but there was never a finding of fact that he knew him by any other name or what name he knew him by. It might very well have been that he knew him by James Jordan, but at the same time when this man is testifying, he does state that this is not his right name, never a finding of fact that Mr. Pride who represented him knew who this man was by his correct name, never finding a fact. Speaker: Well, Mr. Pride says that he had represented Jordan at one time, not merely knew him, but he had represented him as a lawyer. Gerald W. Getty: Yes, he did represent him but never -- it might have been as James Jordan. We have a right to assume that. We know -- no, there is nothing in the record here that shows that he represented him by any other name. Speaker: At page 78, page 78. Gerald W. Getty: Now it is our position that where there is an issue of guilt as distinguished from that type of informer that informs but never actually testifies against the defendant. That type of informer that merely informs, merely gives information in order to keep this flow of information, in order to protect as the state always wants them protected, this informant under the case is we believe there -- they do not have to disclose their name and address or if you please their identity. However we have a different problem where on a question of guilt and the man is produced, don't we have the right to know who this witness is that is presented against the defendant? The right to know who our accusers are, and that is the issue because this person then becomes a material witness and we should not be prevented from having a full cross-examination, because to have a full cross-examination, we must know who we are cross-examining. Thurgood Marshall: Mr. Getty, you really mean you have to know his name? Gerald W. Getty: We have to know his name. Thurgood Marshall: But he is right there. You're looking at him? Gerald W. Getty: That's merely gazing on somebody. Thurgood Marshall: No, you're questioning him? Gerald W. Getty: We're questioning him. Thurgood Marshall: And you knew him, the lawyer knew him? Gerald W. Getty: Well, there's a statement that -- Thurgood Marshall: Well, I would assume that the lawyer who represents a man knows his client. Gerald W. Getty: Well, there is no find -- Thurgood Marshall: I would assume though -- -- there is no finding of fact. He could have represented him as James Jordan. Gerald W. Getty: There's also information that he -- Thurgood Marshall: Wouldn't he -- Gerald W. Getty: -- that he knew him as Fishbait in there. Thurgood Marshall: Yes, he knew him quite well. He also knew -- all the other times he testified. Isn't that also in the record? He knew the other person that this man had testified against. Gerald W. Getty: He knew -- Thurgood Marshall: He said, “Did you testify in such and such a name case, in such and such a name case?” Gerald W. Getty: There was a couple of occasions there. This man was an informer and he apparently did testify against others. Thurgood Marshall: No, I mean the lawyer knew that before this point. Gerald W. Getty: I don't think so Your Honor. Thurgood Marshall: Well, how could he remember the name? Just pull it out (Inaudible)? Gerald W. Getty: If there is -- there's a possibility that he did. I never in this record was firmly convinced that Mr. Pride actually knew this man, knew his correct name. I think Mr. Pride was astonished when he found out that his name wasn't James Jordan because we don't -- Thurgood Marshall: Well, why didn't he asked -- Gerald W. Getty: -- find him with the next name, “Isn't your name John Jones?” Thurgood Marshall: Well, no. My point Mr. Getty is -- I'm not asserting -- you are that he was so surprised because he's the one who asked the question, that this is not your real name, is it? I don't think he was too surprised. Gerald W. Getty: Well, it was never a finding of fact that he knew him by any other name, that's -- Thurgood Marshall: But there isn't -- Gerald W. Getty: And I -- Thurgood Marshall: He says, I knew him and I represent him. Gerald W. Getty: I think the real issue -- Thurgood Marshall: And I would assume from that that he knew the man, and he knew where he lived, and he knew something about him -- Gerald W. Getty: Well -- Thurgood Marshall: -- because he represents him. Gerald W. Getty: I would say this that he probably knew something about him because there is evidence or indication here they represented him. Whether he knew him by his right name, whether he knew where he actually lived, there's nothing in the record that would indicate that. Speaker: Wouldn't you think the fact that counsel asked this, a rather an unusual question out of the blue, is that to some indication that he knew that the man was giving a name different from the one that he -- the lawyer knew was -- he had as his client? Gerald W. Getty: Well, there is still isn't any evidence that he actually did know his name and confront him with his correct name. I think he was at the end of the line that he didn't know his right name and he didn't know where this man lived. And these narcotic addicts always go by incorrect names, not their real true given names. That's been the experiences that I have witnessed and been involved with. Potter Stewart: But on the cross-examination, it was brought out was it not? The defendant counsel was allowed to bring out and did bring out that this man going by the name of James Jordan, was an addict at that time, that he had prior convictions. That he was -- that he had a criminal charge then pending against him. That he was being paid for his services as an informer and that James Jordan was an assumed name, all those things presumably damaging to his credibility. What more do you suggest to -- if they found, “Well, he also went by name of Fishbait,” that was brought out, and let's say it's also been brought out, “Well, I also go out by the name of John Smith, Tom Brown, and Alfred Green, what would that of help? I mean why -- it was shown that he went -- that he had another name that this was an assumed name, his criminal record were shown, his addiction of narcotics were shown. In fact, he was a paid informer were shown. And as Mr. Justice Harlan and Mr. Justice Marshall have suggested, it was also shown that the lawyer in fact knew who he was having serviced as his employer, what more could have been brought out? Gerald W. Getty: By that cross-examination, it was superficial. Here, he brought all it up, but everything he said was what James Jordan wanted him to know. James Jordan said that he had been in the penitentiary. But with his correct name and an address, we might have found out that he had been in the penitentiary or in several penitentiaries. Potter Stewart: No, he said he had been convicted for larceny, and he'd been convicted of burglary, and he said there was a -- then a charge pending against him. Gerald W. Getty: And we might have found out that there was more charges pending against him such as he had a charge -- that probably he would be a witness in the case of Herbert Simpson, the man that Fleming Smith directed him to. We might have found out that he had been in the mental institution before. We might have found out that he was in custody of the police. We might have found out that he was testifying because he was going to receive immunity. We might have found out -- those things that are very important that might have tipped the scales in favor of Fleming Smith before the trier of fact in this case. It's not just that he was an addict, not just that he had been in the penitentiary before, but all those other things that could have been brought by knowing his true name and his true address. Potter Stewart: Well, I thought they -- you represented to us that its typical for these people not to use their true name. Gerald W. Getty: I found -- Potter Stewart: He testified that he's gone by -- that he had at least two other names. Gerald W. Getty: Yes. Potter Stewart: One Fishbait and one the undisclosed “real name.” I don't quite see how all of this speculative information could've been made available by just giving one of his -- perhaps many other names. Gerald W. Getty: Well, we know that this was not his true name. We know that he is even lying on the stand. Potter Stewart: Well, that was all shown, wasn't it? Gerald W. Getty: Yes. Potter Stewart: Was this a jury case? Gerald W. Getty: That was all shown. That was all shown that this was not his correct name. But without his name, without his address, we can't find out in what other theater of activity he was engaged in by investigation. Potter Stewart: Was this a jury case? Gerald W. Getty: This was before a court or a judge. Abe Fortas: I see on page 16 that the Court refused to grant the order an answer whether he is known in the streets of Southport. Gerald W. Getty: It was Southport, I stand corrected, instead of (Voice Overlap) -- Abe Fortas: But did he ever admits that his name was Fish -- that he's known as Fishbait? Gerald W. Getty: I don't think he was permitted -- Abe Fortas: (Inaudible) Gerald W. Getty: I don't think he was permitted to state whether he had gone in Southport. Abe Fortas: On page 16, Mr. Pride says, “Are you known in the streets of Southport?” There is an objection of that and the Court says, “I won't have him answer that.” Now, did he ever answer anywhere else in the (Voice Overlap)? Gerald W. Getty: No, he didn't. Abe Fortas: What's all this trouble about Fishbait? Gerald W. Getty: I stand corrected, it was Southport. I -- Abe Fortas: (Inaudible) Gerald W. Getty: I had another case where it was Fishbait. Abe Fortas: Well, that's -- this is this case. This is a Southport case. Gerald W. Getty: Southport, yes. Abe Fortas: But he weren't -- he never admitted his name. He was referred to as Southport, did he? Gerald W. Getty: No, he never did. He never did. So here, Mr. Pride is using this nickname and probably it's something that he doesn't even know whether he was known by it. Earl Warren: The Court refused that that was the question to be answered? Gerald W. Getty: Yes. Now it has been indicated in some of the following cases which is the reasoning and we feel is the correct reasoning that we have approached this case in, and it's the Roviaro versus the U.S. , 1957 case, 353 U.S. and there where there was a witness and it was on the issue of guilt. It was determined that this was a material witness and that this witness should be disclosed. And there it was distinguished also that the -- on the -- where there's an informant on probable cause as to whether there was a good arrest. There the police officer, if has received information from this informant, then he would not have to disclose the name, the address, the identity of his informant. There we find a distinction between probable cause and where there is a question of the -- on the issue of guilt or innocence. Or there is an issue of guilt or innocence then the identity of this informer must be disclosed. Also in a recent case, the same distinction in the case of McCray versus Illinois decided March of 1967. There, that case was affirmed because it was found by this Court that it was on the issue of probable clause but that if it had been an issue where there -- an issue of guilt and this informer had been a material witness, then there should be disclosure of that informant. Also in the Alford versus the U.S. , 1931 282 Illinois, in that case where it was refused to disclose the address of a material witness. On that particular point alone, the case was reversed. Potter Stewart: There was no mention of a -- the constitution in the Alford, was there? I looked it up the other day when I was preparing for this argument and I couldn't find any. Alford against the United States, 282 U.S.-- Gerald W. Getty: It has to do with -- Potter Stewart: It was not decided on a constitutional basis, was it? Gerald W. Getty: It had to do with the cross-examination. Potter Stewart: Yes, I think he stated the facts correctly -- Gerald W. Getty: Yes. Potter Stewart: -- as a decision, but it was not put on a constitutional basis. Gerald W. Getty: Merely on a stifling cross-examination. Potter Stewart: It was a -- this Court as reviewing a federal conviction. Gerald W. Getty: That's right. It is federal -- however in Pointer versus Texas, 1965 380 U.S. , there, this Court where they merely used -- didn't produce a witness but used his transcript, it was there decided that this was a constitutional violation. It wouldn't be due process. Thurgood Marshall: How long did the trial last Mr. Getty? Gerald W. Getty: I don't know. I think maybe possibly a day, a day and half. I'm not sure about that. Thurgood Marshall: Well, assuming it lasted a day, and you got the full name, address of his witness, what good would that do except in (Inaudible)? Gerald W. Getty: Well, it be -- surprised what you can do overnight. Thurgood Marshall: I said assuming it was only one day, it wasn't any overnight. Gerald W. Getty: Well, you can ask for time, if you get it, as for time, maybe 24 hours. You can't tell what you're going to discover when you have certain information. Enough and what that information, you can't tell what you're going to be able to disclose with that knowledge on cross-examination. I have found that out in the trial cases. Potter Stewart: Mr. Getty, the record indicates that was a two-day trial, September 21 and 22, 1964? Gerald W. Getty: Yes, I state it. I thought it was a day and a day and a half, two-day trial. Well, now though -- that is the issue Your Honors. It's a question of -- on a question of guilt that the identity, not only the production but the identity of the witness should be disclosed, where it's only on probable cause then it would not be necessary and that is the law, we know that, that the informer may not be disclosed. Earl Warren: Mr. O'Toole. John J. O'Toole: Mr. Chief Justice and may it please the Court. The issue that's presented in this case is actually revolves or is a takeoff from Rovario. The Rovario this Court held that where the testimony of an informant -- the merits of the case is necessary for the defense, that the informant must be disclosed. However, we don't think that this is a -- and I don't believe that the Court intended this to be a blanket, unfettered disclosure of all informants. I believe that it's needless to go into the importance of informants in the law enforcement field where necessity, actual necessity that we have this Court has recognized at that time and time again. But the fact remains that we fully admit that if the testimony, the identity of an informant is necessary to allow a defendant to properly defend themselves, we agree that his name and identity should be revealed. However, in this situation that we feel, and as the Court said in Rovario, each case should be considered on its own and the rights of the people balanced against the rights of the defendant. Now in this situation, the defendant took the stand was subjected to a full cross-examination, the majority of this transcript as a cross-examination of James Jordan, the only thing that his name and true address could have possibly brought out with facts relating to his credibility. And as Mr. Justice Stewart aptly put it, how could his credibility been more destroyed than that to say that I was convicted on larceny, spent a year Vandalia, I was in (Inaudible) for burglary, I am an addict, presently an addict, I had a shot last week, (Inaudible) even rolled up the man's sleeve and pointed out the pinhole marks in his arm in front of the judge. The judge observed this. He stated, “I am presently under indictment. I come up in one month for trial,” what more could you say? This man's credibility is already destroyed as far as it's possible. But the thing that the petitioner doesn't mention is that with the exception of the actual passage of the narcotics from Fleming Smith to James Jordan, every bit of a testimony of Fleming Smith was corroborated by two police officers. Abe Fortas: Just suppose you could -- Earl Warren: Mr. O'Toole, may I -- Abe Fortas: Suppose you put him on the stand and put a mask, a hood on his head, is that alright? John J. O'Toole: No, I don't believe so Your Honor. Abe Fortas: What's the difference? John J. O'Toole: I think there's a big difference. Abe Fortas: That's what I want to know, what's that big difference? John J. O'Toole: Alright. One is, if you put a mask over his face, you don't even know if that was the same person you came in contact. However -- Abe Fortas: (Inaudible) John J. O'Toole: The defendant? Abe Fortas: That he came in contact with. John J. O'Toole: That he came in contact with (Inaudible) -- on a controlled sale of narcotics. Now, he knows -- Abe Fortas: But suppose you didn't see him at all.Suppose the transaction was such in which he just passed the money through a crack in the door or the window, and the narcotics was passed to him, then it'd be alright. That wouldn't -- an issue in the case, and then it'd be all right to put (Voice Overlap) -- John J. O'Toole: I think this -- that if gestational features are not necessary for the defense of the defendant, yes, I think you could put a mask. Abe Fortas: Could it be alright to have in the Courts of the United States or state courts, persons taking the witness stand wearing a black hood with holes except for their eyes and a hole kept for his mouth and so he testifies in that fashion, do you really take that position? John J. O'Toole: No, I can't really take that position Mr. Justice, right. Earl Warren: Mr. O'Toole, let me ask you this question. Do you attach any of the constitutional distinction between the case where the counsel does not know the witness and where the -- a case where he have represent him here, is that material to the decision in this case -- John J. O'Toole: Oh! Earl Warren: -- or are you asking us for (Inaudible) of that in your case, you'd still be here? John J. O'Toole: We think that this is a very important factor in this case to point out and emphasize the fact that it was not necessary in this case for the state to divulge in the present address and true identity of this informant. Now the only decisions had actually have come down. Earl Warren: Well, let me ask you then if it's important in this case, let me ask you. If it wasn't in this case, would you be defend -- here defending this procedure? John J. O'Toole: Yes, I don't think -- that is a controlling factor. Earl Warren: You don't' think it makes any difference constitutionally whether he knew him or not? John J. O'Toole: Oh, I think it adds great weight to our argument -- Earl Warren: But -- John J. O'Toole: -- but I think -- Earl Warren: But you wanted -- you want an opinion from this Court to the effect that not with -- that even if the counsel had not known this man at all, that you would still have had the right to do what you did in this case? John J. O'Toole: Yes, we do not contend that together with the fact of his destroyed credibility, the corroboration of his testimony and the fact that the attorney knew him, all three of these add to it but we can take away to one and we still have sufficient reason to say -- Byron R. White: Well, why do you want to -- what interest does the state got in this? John J. O'Toole: The interest of the State of Illinois is, one, to protect the informant's situation and the informant -- Byron R. White: But wasn't he still known as Jordan? John J. O'Toole: That was an alias. Byron R. White: Oh, I know but wasn't he known as Jordan up and down the street? John J. O'Toole: This I can't say. The record only divulges that he was sworn in as James Jordan. Byron R. White: When he testified (Voice Overlap) -- John J. O'Toole: And he testified that this was his name. Byron R. White: In other cases as Jordan, isn't it? John J. O'Toole: He did not say that he testified under that same name. Byron R. White: Well, he must have been known like something up and down the street? He was (Voice Overlap) -- John J. O'Toole: Oh, they know who he was. I mean just (Voice Overlap) -- Byron R. White: Well, but, what name was he known by? Well, once you surface an informant and he starts testifying, it seems to me that you've -- the interest in protecting the informer at least diminishes. John J. O'Toole: Right. Byron R. White: Once you -- and that's usually why you store up to 20 cases before you put them on the stand. John J. O'Toole: Well, this is -- Byron R. White: And once he comes out, then the people who know it and especially if he testifies under a name that he's known by up and down the street, that's -- I don't know what the -- John J. O'Toole: Well -- Byron R. White: I wonder how much interest the states (Voice Overlap)? John J. O'Toole: Let me say this that as far as the informant's situation goes, that once an individual does expose himself in court, he is open for retaliation. Now, the interest the state has is that if we don't do everything we possibly can within the constitutional guideline to protect the informant, we are not going to be able to get an informant. Now, let's just give the one example, at least, sure they know who he is. But maybe they don't know where he is today.Let's not give him his present address. They're not playing ball games. I was talking with Mr. Judge -- I mean, Mr. Judge (Inaudible). The other day, we sat in a Narcotics Court in Cook County for 5 years -- Byron R. White: But don't you think the witness should be forced whether he's an informer or not to give his address? John J. O'Toole: If it's necessary for the defense, yes. In this case, I can't say -- Byron R. White: Yes, but that's (Voice Overlap) -- if automatically if a state's witness was asked his address. Don't you think that the defense is entitled to have it without showing that this is -- without showing anything? They want to check and find out about his reputation maybe or things like that. John J. O'Toole: Under normal circumstances, I would say perfectly right. Byron R. White: How about this circumstance? John J. O'Toole: In this circumstance, I'd say definitely no. Abe Fortas: Do you think a -- Byron R. White: You could say -- Abe Fortas: I beg your pardon. Byron R. White: You could say that -- what you could really say is that this fellow, you shouldn't have to give any name whatsoever? John J. O'Toole: I think an alias. This is -- Earl Warren: What is your answer to that? John J. O'Toole: Excuse me. Earl Warren: What is your answer to what Justice White just said? John J. O'Toole: I haven't answered it yet Your Honor. Byron R. White: Well, your case -- Earl Warren: You said something, I just (Voice Overlap) -- Byron R. White: -- you would -- I gather that you would say that when a state puts on a witness and that they don't need to ask him his name and if he's asked his name on a cross-examination, he doesn't need to give any at all, nor his address? John J. O'Toole: Unless it was necessary for the defense -- for the defendant. This is not the normal situation that we have in a normal trial. What we have here is we have -- Byron R. White: Well, that -- is that enough to be -- to make it necessary that the defense would like to know who he is so that they could check on his criminal record -- John J. O'Toole: And I say that -- Byron R. White: -- under his right name, is it enough that they could check on his reputation in the neighborhood? John J. O'Toole: For truth and veracity? Byron R. White: Yes. William J. Brennan, Jr.: Is it the -- John J. O'Toole: Here is a man (Voice Overlap) -- Byron R. White: Is that enough to make it necessary for the defense? John J. O'Toole: But it depends upon the circumstances Byron R. White: And he -- John J. O'Toole: He not -- John J. O'Toole: I know, but you don't want to bring in these other things now. Don't bring in the fact that this lawyer already knew because you want to put that aside. You've said you wanted it to put aside. And you want to rule that wholly aside from this -- what this lawyer knew. Now, let's just take it without -- what the lawyer knew. He doesn't know anything. And he doesn't know anything, the fellow gets up and says, “I won't give my name and I won't give my address”. Thurgood Marshall: Can he say John Doe (Voice Overlap)? John J. O'Toole: But he also justifies that I'm a convicted felon. I'm an addict. Byron R. White: Yes. (Inaudible) John J. O'Toole: I am presently under indictment. I'm being paid by the police. I think his credibility is pretty well attacked right there. What are they going to do? What are they going to find out with his present address -- Byron R. White: You might found that, you might find out that -- you might find out that he had a lot of fights with this defendant and was out to get him. He knew who he was, what his associations were. John J. O'Toole: I think we had a lot of fights with the defendant was that the defendant can tell us the answer. Abe Fortas: Let me -- John J. O'Toole: (Inaudible) he may have some -- Abe Fortas: -- will you assume for a moment, (Inaudible). John J. O'Toole: Go ahead. Abe Fortas: Will you assume for a moment that you are a counsel for Mr. Smith in this criminal case, regardless of what you might know about a witness, is it or is it not your duty as a lawyer to make an investigation of that witness? John J. O'Toole: Yes, that's -- Abe Fortas: Now how can you make that investigate -- if that is so that the fact that this lawyer knew something is immaterial, how can a lawyer discharge his duty to his client to make an investigation if he doesn't know the witness' name? John J. O'Toole: The point that is in this case is that the name and address can lead to only one thing, destruction of credibility and that in this instance, it was not necessary because its credibility was shattered as far as it could possibly go. Abe Fortas: Well, that -- lawyers don't operate that way. You don't operate that way. You don't say that, “I know XY and Z about a fellow and I'm going to bring that out in court and that will destroy his credibility and I don't have to know anything more”. That's not the way lawyers suppose to go about the performance of his duty, is it? John J. O'Toole: There are rules, and privileges, and rights that exist with the people too. And that in this situation, we have a governmental privilege that has been engrafted since the first case, I think it was a treason case, Thomas Hardy in England 1792, that the state, the government has a right for your benefit -- for my benefit to protect informants so we have a flow of information. Thurgood Marshall: Even after you produce him in court? John J. O'Toole: Yes, I'd say. I think we ought to do everything possible to protect informants, if we don't -- Thurgood Marshall: Well, why didn't -- John J. O'Toole: -- the system is going to breakdown. Thurgood Marshall: Do you go for a system that would say you put the witness on the stand and he says, “My name is John Doe.” John J. O'Toole: Yes, if -- Thurgood Marshall: And do you say that this -- John J. O'Toole: His true name is not necessary for his defense, I submit (Voice Overlap) -- Thurgood Marshall: You say that his credibility couldn't be further destroyed? What about -- John J. O'Toole: Oh, I think it would be cumulative -- any evidence that was (Voice Overlap) -- Thurgood Marshall: Well, what about they get his right name and they found he's been convicted of perjury, that would hurt a little more, wouldn't it? John J. O'Toole: I think that'll hurt a little bit more but it's cumulative, really. Oh, this is a situation where we have to balance the rights. This isn't a situation where the state is merely refusing to do it, to try to convict someone. Thurgood Marshall: Well, I think if you -- John J. O'Toole: We're trying to protect the system. Thurgood Marshall: I would respectfully suggest that if you're balancing rights, when you first put him on the stand, you should have told the Court that this man's name is not James Jordan. John J. O'Toole: I agree with you that its -- that if perhaps it was an alias, I can see no harm in it at all. Thurgood Marshall: But don't you think your duty bound to do that? The man's under oath and testifies that this is my name and really is not his name. John J. O'Toole: Yes, I agree. You're right, Your Honor. Thurgood Marshall: I mean, you're balancing these things and then you balance them all under the (Inaudible). John J. O'Toole: A situation that is similarly akin to this is a situation of where a person might invoke the right of self-incrimination in a trial. And the Federal Courts of Appeals have consistently held that where a witness, a governmental witness, invokes self-incrimination, and his testimony which is -- which he invokes the privilege, only goes to credibility that the error created is only harmless. Now this is the Cardillo case in a -- spells this out, has been followed consistently by nearly every Circuit Court. William J. Brennan, Jr.: You don't really mean that there's no distinction between two of those cases? John J. O'Toole: Oh, I think there's a little distinction there. William J. Brennan, Jr.: A little -- John J. O'Toole: I think that -- William J. Brennan, Jr.: A little. John J. O'Toole: I think that -- William J. Brennan, Jr.: Oh, heavens. John J. O'Toole: I think that there's a corollary between the two. True, the governmental privilege is not a constitutional right. Byron R. White: I think that's quite a difference, isn't it? John J. O'Toole: Right. But it is not a mere evidentiary matter and a procedural matter. I think that the governmental privilege is something that shouldn't yield too easily, and I fully agree and I don't -- Earl Warren: Are there not cases where a defendant or a witness on the stand rather has been convicted of contempt and put into jail for refusing to tell what his name is or where he lives? John J. O'Toole: There are. Earl Warren: Then how do you distinguish those cases from this? Even though he claims a privilege? John J. O'Toole: Even though he claims -- the situation is not the same. In those situations, we don't have -- Earl Warren: Why not, a witness is a witness, isn't he? John J. O'Toole: That's right Your Honor. Earl Warren: And whether he's a witness for the government or a witness for the defendant, isn't that right? John J. O'Toole: That's right Your Honor. Earl Warren: And whether he's an informant or whether he's just an observer, he's a witness, as a witness, -- John J. O'Toole: Right. Earl Warren: -- isn't he? John J. O'Toole: Right. Earl Warren: Alright then, what's the distinction? John J. O'Toole: The distinction is here is that you and I and the other 200 million people in this country collectively have a privilege to protect the informant's situation unless it is necessary for the defense of this individual defendant. Byron R. White: How do you prove that? How does the defendant ever prove that except saying I'd like to know something about this fellow, I can at least know his name so that I can carry on a meeting for cross-examination, that isn't enough of a showing? What would he ever have to show? John J. O'Toole: What has -- the defendant here -- Byron R. White: I suppose, if you could make that showing, why, your answer would be, “Well, you don't need to cross-examine him anyway”. You already have the facts. John J. O'Toole: No. I think that on the facts in this individual case, we are really asking two things. One, let's not have a blanket rule. Let's not have a universal principle that where we have a participating informant that he must in all situations divulge his name and his present address. But rather, that in keeping with the language of this Court in Rovario, each case should fall -- arise on its own merits. I think it would -- Byron R. White: Well, if -- John J. O'Toole: The Court said this, “We believe that no fixed rule with respect to disclosure is justifiable”. The problem is when it calls for balancing of the public interest and protecting the flow of information against the individual's right to prepare his defense. We ask two things. Truthfully, if you reverse this case on the basis of the fact situation, that would be a loss. But it would not be damaging. What we want, and what we want to take back in Illinois and I think for the benefits of all the states is the fact that where no -- we don't want a universal rule in such where we have a participating informant, there must just be complete unfettered cross-examination even where it will not be beneficial to the defendant. In this situation, what could they have learned really? They could affect his credibility. And -- Byron R. White: What's wrong with -- John J. O'Toole: And anything that he do, it just pile more to it. Byron R. White: But nobody has unfettered cross-examination rights anyway. John J. O'Toole: Well, I'm -- excuse me for going beyond the realm. But what I'm talking about is that we are -- if -- I believe there are situations where the name and the present address really aren't going to be that helpful to the defendant. Where on a (Inaudible), if we can protect the name and the present whereabouts of an informant, we are bolstering the whole system because we are showing these people that we are going to do everything we possibly can to protect them. Byron R. White: But you don't want a rule then -- it says that an informant never has to give his name (Inaudible). John J. O'Toole: No. Oh, I'm not asking for that. I think that would be unreasonable. What I'm asking for is that we get -- that don't have a rule which says that he must in each case regardless of the circumstances the facts what is brought out in the cross-examination that he be required to give his name and present address. He might not make it until -- Byron R. White: Well, why shouldn't the states -- why shouldn't -- it should be on the other foot, if the states are going to serve this -- an informant and put him on the bench, so why shouldn't the state have to come up and give some pretty solid reason if it wants to interfere with what -- what the words would be cross-examination, “What's your name and where do you live?” Why shouldn't the state has to come up and say, "Now, look there are some -- that there are some real hazard to this informant, and here's what it is", instead of just saying -- John J. O'Toole: Oh, I -- oh, perhaps I assumed too much but I thought this Court was well-aware of the fact that what does happen -- Byron R. White: Well, I'm well informed. Frankly, I'm quite aware of what happens to informants but I'm -- but I -- I'm not so aware that if the -- that once you put them on the stand, that you're going to protect them very much by not having him -- John J. O'Toole: Correct. Byron R. White: -- give his name. John J. O'Toole: I agree with -- Byron R. White: I think you -- going to have to explain that a little bit as to why -- John J. O'Toole: I agree with your point but (Voice Overlap) -- Byron R. White: But -- what -- how the hazard is enhanced when you make him give his name very especially when the -- John J. O'Toole: All that -- Byron R. White: -- when the fellow is obviously using a name by which he -- and gives a name by which he's known as up and down the street, Jordan. John J. O'Toole: Let's give him every break we can. At least let's do that. Earl Warren: (Inaudible) John J. O'Toole: Oh, I mean try to hide his identity and his present whereabouts, let's do that -- Byron R. White: Wherever he is (Voice Overlap) -- John J. O'Toole: (Inaudible) Byron R. White: Everybody knows where he is. John J. O'Toole: Well, he's in the courtroom now, but where is he's going to be at 5 o'clock or 10 o'clock tonight. This is the problem. But I agree with you, that once he exposes himself, that's a -- he has subjected to -- through this retaliation but let's give (Voice Overlap) -- Thurgood Marshall: He changed it when he testified three or four times, he just makes a habit of testifying? John J. O'Toole: I don't think he could buy an insurance policy Your Honor, that's for sure. But I do believe this, that there are informants that are useful two, three, four, or five years, some of them. Some of them move. Some of them voluntarily assign themselves (Inaudible) if they're an addict. And there are cases of informants that do not befall this horrible fate as befall so many of them. Abe Fortas: What about a prosecutor who puts a person on the stand and permits him to give a false -- a name that is false in which the prosecutor knows it's false? John J. O'Toole: I think he should divulge in the Court. Abe Fortas: That wasn't done here, was it? John J. O'Toole: I know. Abe Fortas: Sir? John J. O'Toole: I know that Your Honor. Fortunately, it was brought out. I mean, the Court was aware of it. It was brought out in cross-examination. Earl Warren: Do you mean that (Inaudible) of the prosecutor was brought out? John J. O'Toole: No, no. I know I don't (Voice Overlap) -- Earl Warren: Well, wasn't it (Inaudible) if they put a man on the stand and have him say that his name was Jordan but it wasn't Jordan. John J. O'Toole: Maybe the prosecutor thought that was his real name. This is a funny situation but if you have a witness or an informant -- Earl Warren: And if he thought it was -- John J. O'Toole: -- he has to prosecute -- Earl Warren: -- his true name, -- if he thought it was his true name, why would he object to the defense asking him what his true name is? John J. O'Toole: Because to protect the identity of the informant. Earl Warren: But if he thought it was his true name, why wouldn't he let him say, “Yes my true name is Jordan”. John J. O'Toole: He probably didn't want the petitioner to know who this man really was. Earl Warren: Do you -- John J. O'Toole: I -- Earl Warren: Alright. John J. O'Toole: I know, Your Honor, it's -- I mean, here's the point, if were the prosecutor and the witness might tell me his name is James Jordan. I might believe him. I might not believe it. I have no way of really knowing if that is his name -- Earl Warren: Well, then you have -- John J. O'Toole: -- especially an addict. Earl Warren: By the same reasoning, you have no reason to believe that this man didn't tell the counsel for the defense that his name was Jordan when he represented him on a prior case? John J. O'Toole: I think we have to assume that Mr. Martwick conducted himself as a proper attorney in that -- therefore I have to assume at least that the -- he didn't know that James Jordan was not his actual name. Earl Warren: Then don't you assume also -- do you assume also that the counsel for the defense probably thought his name was Jordan too? John J. O'Toole: Counsel for the defense knew him. Counsel for defense probably knew his right name because he had represented him before. That's the -- Earl Warren: Yes. Well, -- John J. O'Toole: It's the fact (Voice Overlap) -- Earl Warren: Is this another prosecutor really represent him when he was a paid agent, and an ex-convict charged with -- also charged with narcotics violations, and he in this preparation of the case wouldn't he know him just as well as the defense counsel would know him in representing him when he was charged with the crime? John J. O'Toole: I don't believe so Your Honor. The situation in Cook County is such is that -- in the state attorney's office and attorney might have -- you know, one trial right after another. He dropped one file, pick up the next and the -- Earl Warren: Some lawyers do that too, -- John J. O'Toole: In the (Voice Overlap) -- Earl Warren: -- from police courts. I have seen them, many, many years. I know they do that. John J. O'Toole: (Inaudible) Earl Warren: They take them right out of this room and represent them and -- John J. O'Toole: Right. But it's very difficult sometimes to adequately talk to your witnesses prior to the presentation of your case. The case load is so tremendous at Cook County that this is a real problem as the -- but I cannot assume that Bob Martwick did not conduct himself in a proper way. And I truthfully, I mean, having been (Inaudible) myself for a while, I really -- if somebody tells you, “My name is John Jones”. That's John Jones. I don't know who he is. I mean, I can't -- I'm -- true, as if you put a witness on a stand, you're vouching for his credibility but how do you really know? You don't. Earl Warren: You're also vouching for the truth and what you're saying -- John J. O'Toole: Right. Earl Warren: -- so far is you know it, aren't his name? John J. O'Toole: That is right Your Honor. Earl Warren: Yes. And he says his name is Jordan and it isn't, doesn't that go to the truth of his testimony? John J. O'Toole: I think it affects his credibility. William J. Brennan, Jr.: The informant -- Earl Warren: Can I -- irrespective of the question of credibility, why isn't this man on the question of guilt or innocence entitled to know whether this man is Jordan and where he lives, and what his contact has been so far as this case is concerned? Why isn't the man entitled to know that? John J. O'Toole: If it's going to help him, yes, he isn't. Earl Warren: I beg your pardon. John J. O'Toole: If it is going to be of aid to the defendant, yes. If it isn't going to be merely to add more weight to the -- to his already practically destroyed credibility, then let's balance that against the rights that we possess. Earl Warren: Well, let's just suppose that there are two gangs of narcotics federation in Chicago, I guess that he is at that time, and suppose this man belong to one and this witness, Jordan belong to another. And if his name, true name, and his identity were known that they could establish that this man was working with the other gangs to put the -- this man out of business, wouldn't that be a material in the trial -- the cases? John J. O'Toole: I think so Your Honor, but I think there's -- Earl Warren: Well, why (Voice Overlap) -- John J. O'Toole: I think there's only one -- Earl Warren: Let's -- John J. O'Toole: -- source of narcotics. Earl Warren: One source of narcotics in Chicago? John J. O'Toole: I think so. Earl Warren: Do you mean all -- it falls, all of it comes from one source -- John J. O'Toole: The seller on the street is normally an addict. The people that are taking the profit out of narcotics never go down on the street and actually sell the $5-bag went up to $16, these people aren't and -- Earl Warren: You too, don't you know that it's not uncommon for one narcotics operator to even murder the other operators in the same business? John J. O'Toole: Yes. Earl Warren: Or -- who are trying to takeover or who do have the major control of it. Why do you say to us that there's only one group? John J. O'Toole: Oh, I think it is -- I think the syndicate is the sole -- real supplier of narcotics. Earl Warren: (Inaudible) John J. O'Toole: Sure there are a few independent small operators that might run some in from Mexico, marijuana or something but the -- Earl Warren: Yes, well, this is a small man. This is a small man too. He might have been in conflict with other small operators. John J. O'Toole: This man was selling narcotics because he was supporting a habit and that's exactly why he was selling narcotics, Fleming Smith. Earl Warren: A very, very small operator? John J. O'Toole: Right, I agree. But I cannot argue against the fact that if in a given situation, the name and present address are necessary to the defendant. I'd say that the state should be required to reveal his identity. Earl Warren: Who is entitled to make the determination as to whether information concerning witness is necessary in the preparation of the case? John J. O'Toole: Oh, I think this decision has to be made at the trial but the trial have to (Voice Overlap) -- Earl Warren: I didn't ask about this decision, who's -- who is entitled to make that decision as to whether that information is required in the preparation of the case? John J. O'Toole: Oh, I think the state would always take the position. They will try to take the position that we don't have to reveal it. Earl Warren: I didn't ask you that. I asked you who's entitled to make the decision for the purpose of the trial as to what is necessary for the purpose of the cross-examination of a witness. John J. O'Toole: I don't think that the decision lies totally within the defense or I don't think it lies -- Earl Warren: I beg your pardon? John J. O'Toole: I don't think it lies totally with the defense or with the prosecution. I think the decision has to be made at trial during cross-examination by the trial judge when he is evaluating the facts that have been elicited on cross-examination. And then he is the one who has to make the ultimate determination on whether he should allow the governmental privilege to be invoked or whether the name and present address should be given to the defendant because it'll be of aid to him in his defense. Earl Warren: Very well. John J. O'Toole: Thank you very much. Gerald W. Getty: Briefly to answer Mr. O'Toole, it's our position and has been our position in the brief that once the state has produced a witness that they lose any governmental privilege. And that to make the Sixth Amendment meaningful and that we have a right to know the witnesses that are presented against the accused, to make it meaningful, then we -- it is basic that we should at least know the name and address of the witness presented against the defendant as to who is to decide whether what to do with the name and the address, what to investigate should lie with the defense so that we can properly defend the man that is accused.

John G. Roberts, Jr.: We will hear argument first this morning in Case 13-502, Reed v. Town of Gilbert. Mr. Cortman. David A Cortman: Mr. Chief Justice, and may it please the Court: The town's code discriminates on its face by treating certain signs differently based solely on what they say. For example, political signs may be 32 square feet, may be unlimited in number, and may be placed in the right-of-way of the entire town for five months before the election; but the church's signs can only be one-fifth of that side -- size, only placed in the dark of night, the night before the church service. While the church's signs with directional content are only allowed up for 14 hours, other signs with directional content are allowed up for much longer. For example, builders' directional signs to home sales events are allowed up to be the entire -- are allowed up the entire weekend, and homeowners' association event signs are allowed to be up for 30 days. Ruth Bader Ginsburg: Well, what are -- what are you seeking? Do you -- do you want whatever is the most favorable rule, say, for ideological signs? Is that what you want? Or do you accept that it could be some limit on event signs, say, some reasonable time limit? David A Cortman: We're -- we're seeking the same as the -- the favorable signs, which, in this case, would be both ideological and political signs. And -- and the reason on that-- Ruth Bader Ginsburg: But the ideological isn't time unlimited. David A Cortman: --Well, but it's not allowed on the right-of-way, and so that's a major factor in this case because political signs are allowed on the right-of-way, and so the treatment that we're seeking is merely equal treatment under the First Amendment. Ruth Bader Ginsburg: The same treatment as political signs, then, is that-- David A Cortman: The -- the same treatment as political signs that are allowed up in the right-of-way, that's right. And ideological signs, interestingly enough, are still based into their own content category, but they are not allowed on the right-of-way, yet they are allowed up for an unlimited period of time. Sonia Sotomayor: Are you -- are you seeking unlimited placement? David A Cortman: We are not. We're seeking placement that any other temporary signs get, which is the category that we're talking about. And, in fact, the -- the city, the town here has freedom to regulate the amount of time signs can go up, the size of the signs, the number of the signs. All our argument is, is that they do it across the board and not treat signs differently based on their content. John G. Roberts, Jr.: Your -- your argument does not turn on the fact that it's a church's sign, does it? I mean, you -- your argument would be the same if this is a temporary sign about where the soccer game was going to be? David A Cortman: Well, that's right. And -- and the church's sign merely adds additional components to it. For example, the town puts our -- the church's sign into a category called directional signs; but, yet, the church's sign has religious speech on it. It has, obviously, directional speech. It has ideological speech. But that's correct, it's -- it's equal treatment for that type of sign. And -- and the category-- Elena Kagan: Can I ask about the category for political signs, which is the most favorable? Because all the time this Court says that political speech is the most valued kind of speech. It's at the heart of the First Amendment. It gets special First Amendment protection. So in a way, why aren't -- isn't -- isn't the locality here basically adopting the same kind of category-based understanding of political speech and its special rule and First Amendment analysis that this Court has very frequently articulated? David A Cortman: --But I think this Court has also said, for example, that -- that religious speech also handles that category of core speech under the First Amendment. And the problem is, is what the -- what the town does here, it's valuing speech, and I think that is one of the problems. It is saying that political speech in this case is more valuable than an invitation to church. And so I think this Court has made clear that -- that the government-- John G. Roberts, Jr.: I -- I'm sorry. That was the significance of my prior question. What -- what they're really saying is that political speech is more valuable than speech about where the soccer game is. In other words, I thought you indicated that your argument did not depend on the fact that the sign was a sign for the church. David A Cortman: --Well, that's right. It doesn't depend on that fact. I was merely referring to the facts of this case. I apologize-- John G. Roberts, Jr.: Don't you think that political speech is more valuable than directions to the soccer game? David A Cortman: --Maybe in some people's eyes, but the problem we have is -- is should the government be deciding what speech is more valuable than others, because that is exactly what it did in this case. It has said that, in fact, your speech is not valuable and we can completely ban it. And I think one of the problems-- Sonia Sotomayor: Well, let's -- let's take a sign that in all other ways is equal except that it says no signs on residential property except properties that are being sold. And so it's valued the homeowner's right to sell its property. Would that be contrary to the First Amendment, and if not, why is that value any different than valuing political speech? David A Cortman: --I think it would be. I think this Court's case Linmark dealt with a similar circumstance, where in that city, it banned all residential signs except for -- in fact, it was the reverse. It banned for sale signs and allowed some residential signs that were exceptions. But this Court said exactly that, that the town shouldn't value different types of speech, especially on private property when you have homeowners' rights that also comes in play in addition to speech rights. Samuel A. Alito, Jr.: What if it's commercial and it relates to a one-time event. For example, for a yard sale. David A Cortman: Right. Samuel A. Alito, Jr.: If the State and the city allow election-related signs to be put up in the right-of-way, then anybody who has a yard sale has an equal right? David A Cortman: Well, I think -- I think commercial speech, under this Court's jurisprudence, can be treated differently, and that's one of the important things. The category here is narrow because government speech -- government can put up whatever signs that it would like. It doesn't trigger any problem under the First Amendment. We hear a lot in the other briefs about warning signs and other types of signs. The government is free to put up all the signs that it would like without triggering this problem. Commercial speech is also in a different category, according to this Court. So the narrow category that we're talking about is temporary signs, not permanent signs, that are put up in the right-of-way that can be regulated. Anthony M. Kennedy: Do you think directional signs is a valid category? David A Cortman: The reason I don't think it is is because here, the direction is part of the invitation to come and worship or part of the invitation to come to a different event. So the directional part of it is in addition to the ideological speech, the invitation to come in and worship. And so although it appears to be a different category of directional, it's important to the speech of the church, inviting the community and saying come worship with us, and here is where we are located. And what's interesting about that, if the church, for example, says we're meeting now at a senior living center, that is considered to be a directional sign because the definition is a sign that is intended to invite and direct someone to your service, that would then be banned in the right-of-way. Anthony M. Kennedy: I guess you see the concern, if an affluent person wants to celebrate a birthday, he can put "Happy birthday, Uncle Fred" as many places as a political sign, and as for long. David A Cortman: Well, I think one of the issues is if the government has decided that its interest -- which, by the way, is what drives this, the interest in safety and aesthetics, which is the two interests the government proposes. If those have already been deemed to be less important than speech, then I think speech should be allowed. But-- Anthony M. Kennedy: Your answer to the question is "Happy birthday, Uncle Fred" can have as many signs and for as long as the political campaign. David A Cortman: --I think -- I think that is right. And I-- Anthony M. Kennedy: That has -- that has to be -- seem to me -- what about historical marker, the birthplace of James Madison or whatever? David A Cortman: --I think the answer to that is the government is free to put up that marker without any-- Anthony M. Kennedy: No, no, it's privately -- privately owned. David A Cortman: --Well, I think if it's -- if it's allowing private speech, then we engage in the problem of valuing. For example, in that case, we think that marker is more important than someone else's speech. Anthony M. Kennedy: So again, under your view, "Happy birthday, Uncle Fred" and "Save your soul" and "Birthplace of James Madison" can all be up for the same length of time, same size. David A Cortman: I think it can, because otherwise I think we have a problem with content-based discrimination-- Antonin Scalia: What about permanent signs? I assume that what you say about temporary signs would apply equally to permanent signs, wouldn't it? David A Cortman: --It would, but in a different category. In other words, our category that we're discussing is temporary signs, so ours wouldn't affect permanent signs. I believe you could make -- that's a content-neutral category. But if you had a permanent sign, I think within the permanent sign category, the answer is-- Antonin Scalia: Within the permanent sign category-- David A Cortman: --Yes. Antonin Scalia: --they all have to have the same-- David A Cortman: I believe so, because-- Antonin Scalia: --except commercial, I assume. David A Cortman: --And especially if -- most of the permanent signs are commercial signs. When we talk about billboards and other types of signs, so this Court I think has made clear if you have, for example, billboards and other permanent signs that do allow commercial speech, then the municipality must allow noncommercial speech. Sonia Sotomayor: Well, you characterize-- Samuel A. Alito, Jr.: Well, what would happen if one church has a -- always meets in the same place and it wants to put up a sign that says, every Sunday this is the place to go, and another church moves around, so it wants to put up a temporary sign. Do they have to be treated the same? David A Cortman: I think they would. If we're talking about the category of what goes on public property, what goes on the right-of-way. On their own property is a different question. But here, the town has already decided to allow an unlimited number of political signs up to 30 square -- 32 square feet for nearly the entire year. There are four elections in Arizona, so with this time limit of five months, you have political signs in an unlimited number. And those signs affect the safety and aesthetics interest the same way as the church's sign does, the same way as an invitation-- Sonia Sotomayor: --How do you create your temporary category without reading the sign? And so there is some force, the counterargument that what is being regulated here is not the content but the function of the sign. So how do you get around that argument? Because you've already created a category that requires you to read the sign. David A Cortman: --I don't think it does, and the reason the way the temporary sign is defined here is merely a sign that's often intended and constructed not to be permanent. So it doesn't matter what is on that sign; that's why we think that category is content neutral, because as long as it's a temporary sign, it doesn't matter what the sign says. A permanent sign is just duration, and there can be duration requirements, there can be size requirements, location requirements. That the government-- John G. Roberts, Jr.: So your point is if it's -- if it's stuck in the ground with a little stake-- David A Cortman: --Right. John G. Roberts, Jr.: --then it can be treated one way, but if it's in concrete -- but-- David A Cortman: That's right. John G. Roberts, Jr.: --It seems to me that you are trying to find a, I don't know, a difficult way to deal with an issue that could be readily addressed just by seeing if the sign is for a limited event. In other words, what if somebody -- every time -- you know, the stake in the ground at least could last for three weeks, so every three weeks, they come along and stick the stake back in the ground. You are saying the only way they can distinguish is by looking at whether it has a stake in the ground or whether it's in concrete, and yet that seems to me that doesn't help the -- that doesn't answer the city's legitimate concern. David A Cortman: But I think what is important here is the fact if the city, the town has already agreed that an election is an event, and so we have an election that's an event, but yet that single event sign can be up for five months, and yet we have an event where that single event can only be up overnight. And so it's already made that determination that it would allow those types of signs for what I think is a comparable use, a single event to a single event. The other thing I would say is if you allow signs to be up for one single event for five months, certainly there should be some way to say, well, if we have a recurring event as we do here, certainly the sign should be allowed up at least equal to the same time, and-- Anthony M. Kennedy: Well, I mean, to say that an election is a single event in the same way as a football game, a cookout, a basketball championship, it's -- it seems to me is a very difficult thing for this Court to have to decide. It's just not -- a political campaign is a dynamic that goes on for some weeks that the signs initiate a discussion. I can see where you can say the religious sign does or at least should initiate the same discussion of -- on issues that are certainly of the same importance, if not more. David A Cortman: --Certainly-- Anthony M. Kennedy: But it seems to me you are forcing us into making a very wooden distinction that could result in a proliferation of signs for birthday parties or for every conceivable event that could be up for five months. David A Cortman: --But I think the problem is there -- there already is that here, because we have an unlimited number of political signs. And so if the streets are already littered in an unlimited number of political signs, which they are, then how serious is the town's interest to reduce clutter? And I think that's the problem. The way to reduce clutter is to say, for example, many different ways, you can only have one sign per block, five signs total. It could only be a certain size. But it's hard to take the interests seriously of reducing clutter when it allows political signs to clutter the entire town in an unlimited number for the entire year. The church's signs or an event signs are not the problem. What we have here is is carte blanche authority for political signs to clutter the landscape, unlimited in number for the entire year, and yet the concern is for maybe a few more signs that may be placed. Samuel A. Alito, Jr.: Can the town say that signs relating to a one-time event, an election or anything else that occurs on a particular date, have to be taken down within a period of time after that event? And if can say that, isn't that content-based, the way you define that concept? David A Cortman: I don't believe it is. In fact, the Washington, D.C., municipal regulations have that exact code, and -- and it's one that we would recommend to the Court. I believe it's 13605. And what it says is all temporary signs should be treated the same, period. You can put -- you have to put your date on the sign for when you put it up. Every temporary sign can be up for 180 days. If it's tied to an event, after the event is over, it needs to be down 30 days after the event. I think -- our opinion is the reason that is content-neutral is whenever something is over, if your store is closed, the event is done, then the sign can be removed. But the important part is every sign can be up for the same amount of time, even if it is that event that's over now. And I think that's the way you deal with these -- these single event-- Samuel A. Alito, Jr.: I thought you said the way you distinguish between temporary signs and permanent signs is based on the -- the nature of the sign, not what it says. David A Cortman: --Right. Samuel A. Alito, Jr.: So that gets you over the problem Justice Sotomayor mentioned about having to read the sign. David A Cortman: Right. Samuel A. Alito, Jr.: But if this -- if there's a rule that says the sign has to be down within a certain period of time after the date of the event, which is on the sign, I don't see how you get around to reading the sign. David A Cortman: Well, what you would be reading is the date, and -- and the code requires the date to be placed on the sign both for when the sign is placed and -- and for -- you know, for what the event is. But I think that-- Samuel A. Alito, Jr.: So if somebody puts up a sign for a yard sale two days before the yard sale, then they can -- that can stay up for 48 days after the yard sale? It has 50 days or whatever the period of time is? David A Cortman: --Yes, according to -- according to the code. But what is interesting, that time period can be anything the town desires. It -- it doesn't need to be -- and we're not looking for signs all year long. The town can say, for example, temporary signs can be up for seven days, they can be a certain size. Like Washington, D.C., does, you can only have three signs per block, have to be spaced out. And -- and that's part of our point. And I think one of the things to take a -- to take look at is the amici brief that's been filed on behalf of the town by the National League of Cities, and the reason that brief is important, for example, on page 10 and 13, it lists dozens and-- Antonin Scalia: What page? David A Cortman: --Page 10 of the amici brief on behalf of the National League of Cities on behalf of the town. And the reason I point out this brief is we don't believe that the content-neutral regulation would tie the hands of the town because, as -- as they say, there are dozens and dozens of ways to regulate signs on a content-neutral way. For example, and this has to do with permanent signs-- Antonin Scalia: What page is this again? David A Cortman: --This is page 10 on the National League of Cities' amici brief. Antonin Scalia: Got it. David A Cortman: It says you can regulate locational criteria, off-site signs, number of signs, spacing, setbacks, placement criteria, roof sign, ground signs, wall signs, projecting signs. And all my point is, as we look through their brief, there are innumerable ways for the Court -- excuse me -- for the town to regulate signs. There is no reason to look at the content of the sign, and the reason is the content of the sign affects the -- the government interest of safety and aesthetics in the same way. If -- if you have, for example, clutter, whether it's the church's sign or a political sign, it's going to clutter the roadways the same way. So the way to deal with clutter is an easy rule, and, in fact, even the town concedes that the content-based test that this Court has -- has used and that the majority of the circuits now use in the sign context -- the First Circuit, the Second Circuit, the Eighth Circuit, and the Eleventh apply this test to sign codes, and what they say, it's actually easier for the town because you-- Stephen G. Breyer: For the towns it might be. What about there are vast areas of the country where there is scenery and people want to keep the scenery the same, and they don't want signs at all, but they don't want to say no signs because someone who wants to put up a sign that says Geronimo is buried 50 feet away from here. David A Cortman: --Right. Stephen G. Breyer: Now, if they say, okay, we'll make an exception for that, does that mean that they have to have an exception for everything, and pretty soon the entire State of Wyoming is just filled with clutter? David A Cortman: I wouldn't say everything. But what I would say is -- is content-neutral categories. But they can say, for example, each person could-- Stephen G. Breyer: No, no, it's not a content-neutral category. What it is, is it is a category that says if you want to say Geronimo is buried here you can, because that will bring people to look at the grave, and that's it; we don't want anything else. We're trying to keep the place looking nice. Now, that's not a city. Cities are filled with clutter anyway, at least most parts. But that's -- so -- so what is -- I'm trying to drive at what is your definition of U.S. Code is filled with content distinctions. All of crime is filled with content distinctions. All of regulation has content distinctions. So what is it precisely in respect to the content-neutral rule that is consistent with the U.S. Code and is consistent with the example, if any, that I gave? David A Cortman: --The definition we would propose is the same one this Court has used since the Mosley case about what is content-based, and that is if there -- the restriction or the regulation looks at the subject matter, looks at-- Stephen G. Breyer: No, try -- try the criminal code and solicitation, where if you solicit for certain things you commit serious crimes, and if you commit certain -- solicit for certain other things, they are less serious and so forth. We all know that. How does your definition apply there? David A Cortman: --Well, I don't think-- Stephen G. Breyer: Or how does it apply -- you see, I'm -- I'm confused. I understand the words-- David A Cortman: --Right. Stephen G. Breyer: --but I just have never been able to understand how they apply in many cases. David A Cortman: Only limited here to to free speech questions, not criminal laws, not-- Stephen G. Breyer: No, no, I'm sorry. There's a free speech question under criminal law. Does the First Amendment permit solicitation of drugs to be punished less or more? You understand what I'm driving at-- David A Cortman: --I do. Stephen G. Breyer: --think of the U.S. Code, and what I want and hoping for is enlightenment. David A Cortman: I think if there is -- it's a conduct-related offense, we don't get into free speech. If there is a free speech offense, even under the Code, I believe this Court's cases say, for example, there are vagueness cases where there are criminal laws. This, in fact, is a criminal law. If you continue to put up your signs, you could actually get fined and jail time. So I believe the First Amendment would also apply if it's speech-related. In answer to your hypothetical, I think there are many ways for the locality to regulate those signs. For example, if it doesn't want many signs, it can say one person can put up a temporary sign or a permanent sign or whatever have you. But to say, for example, you could put up a private sign because you think this one location is interesting, what if another person has a location they want people to come visit? Should the government be able to say, well, we think your location is important, but your location is not. And our response is the government could put up the sign if it -- if it wants to make that choice about historical landmarks or other types of signs or directional types of signs. I -- I'd like to reserve the remainder of time for rebuttal if I may. John G. Roberts, Jr.: Thank you, Mr. Cortman. Mr. Feigin. Eric J. Feigin: Thank you, Mr. Chief Justice, and may it please the Court: We agree with Petitioners that Respondents' ordinance here is unconstitutional, but we think that a context-specific intermediate scrutiny approach should apply in evaluating speech-permissive exceptions to a sign ordinance where those exceptions are based on the same longstanding traditional rationales that justify the sign ordinance as a whole. A wooden application of strict scrutiny in this context would suggest that it's presumptively unconstitutional, for example, for a town to limit signs on public property but have an exception if you want to paint your street number on your curb. Now, that doesn't make a great deal of practical sense, and that's not an example I just made up. That's essentially the ordinance that this Court upheld, albeit without specifically addressing this particular issue, in Taxpayers for Vincent. On a theoretical level, the normal reasons for deep judicial skepticism of exceptions to a regulation of speech don't apply in the context of that street address exception, exceptions for danger or safety signs, or other types of exceptions that track the normal safety and nonproliferation rationales for a sign regulation. Those kinds of exceptions don't create any inference that the government is attempting to favor one viewpoint or another, that it's trying to limit the set of ideas that are going to come into the public marketplace, or that it doesn't truly believe in the safety and nonproliferation rationales that underlie the sign regulation as a whole. John G. Roberts, Jr.: Well, I mean, you -- you obviously know the difficulty with that, which is how does the government decide when there should be an exception or how does a court decide when there should be an exception and when there shouldn't be? I mean, I understood the whole point of the strict scrutiny for content-based restrictions is to find out which are the types of speech or the particular types of regulation that should be given an exception, rather than starting with saying, well, you don't apply this scrutiny because there ought to be an exception. Eric J. Feigin: Well, I think the main problem with strict scrutiny in this context is it sends a signal to legislatures that they are on safer ground if they enact a broad and undifferentiated restriction on signs than if they try to tailor it only to those types of signs that actually cause the problem that they are trying to prevent. And I think that the way the Court can manage the situation is to see whether, under intermediate scrutiny, there really are safety and-or nonproliferation rationales that track onto whatever exception is being drawn. So if we could use, for example, Justice Sotomayor's example of the "For Sale" signs. A town might permissibly have an ordinance that limits the number of signs you can have on your lawn to two, two signs of any type; but it might also say, you know, we're not going to count "for Sale" signs against your quota of two and the reason is that "For Sale" signs are only up on a very small percentage of properties at any given of time, they are up for a very limited purpose when the property is for sale, and they go down once the sale is consummated. Antonin Scalia: And you want us to sort -- sort these ordinances out one by one and examine each of these exceptions and say, you know, this is okay and this isn't okay? I don't know that the Federal Judiciary is numerous enough to do that, and it's a much more simple rule that the other side presents: Treat all signs the same. If clutter is the problem, they all clutter. And you shouldn't -- you shouldn't allow or disallow on the basis of the message. Eric J. Feigin: Well, Your Honor, it's a simple rule, but I think it's an extremely impractical rule that is going to foreclose experimentation and local solutions to local problems. Let me give you another example of a town that has some sort of sign restriction, but it doesn't apply that sign restriction to safety signs like "Children at Play" or "Hidden Driveway Ahead". If you are going to apply strict scrutiny to those kinds of exceptions, they are probably not going to pass muster unless it's a really watered-down version of strict scrutiny that I think is unfamiliar to the courts. There is actually a fairly robust empirically-- Antonin Scalia: What is the problem? You make -- you make your sign limits big enough that those signs will attract attention, that's all. Eric J. Feigin: --Well, I think towns legitimately should not have to be put to the choice if they want to prevent the proliferation of signs that would cause safety problems-- Antonin Scalia: Or have the town put up the signs, in which case they can be as big as the town wants. We're just talking about private signs here. Eric J. Feigin: --Your Honor, I'm not-- Antonin Scalia: So you're you're -- saying every private individual has to have a big sign, "Children At Play", right? Eric J. Feigin: --Well, I don't want to resist too hard the idea that the Government can put up any signs it wants, but I think the reason we think the Government could put up the signs here is not because the Government can say that it can speak on certain topics and private citizens can't, but because of the nature of the signs that are being put up, which means that some work has to be done here by the fact that the types of signs I described are safety signs. Now, for that kind of exception to strict scrutiny, it turns out there's actually a fairly robust empirical debate about whether "Children At Play" signs or "Hidden Driveway Ahead" signs actually do enhance safety. And courts are going to have to make a one-size-fits-all conclusion about whether the state of the evidence, which right now is fairly equivocal, justifies that sort of exception. John G. Roberts, Jr.: Counsel, I'm not sure -- I'm not sure your whole approach is not precluded by our decision in McCullen. There, we said that a facially neutral law does not become content-based simply because it may disproportionately affect certain types of certain topics. And we said the question in such a case -- in other words, when you are dealing with a facially neutral -- law is whether the law is justified without reference to the content. So it seems to me that you've got to get over the content neutrality. Your argument only applies when it's content neutral and yet here we're dealing with a situation where you're saying it's an exception to the content-based rule. Eric J. Feigin: Well, Your Honor, I think the Court can deal with the competing interests in this case more easily not by getting bogged down in the definition of content-based and content-neutral, which I can address in a second, but by focusing more on the bottom-line question of whether this is an appropriate case for the application of strict scrutiny or intermediate scrutiny. Ruth Bader Ginsburg: When you use those labels in the context of the First Amendment, do they mean the same thing that they mean in equal protection? That is, intermediate scrutiny is a pretty tough standard in equal protection. Eric J. Feigin: Well, I think there are a couple of flavors of intermediate scrutiny, both under the Constitution at large and under the First Amendment in particular. I think here we would be urging something more like a reasonable fit test, which we think would give municipalities enough room to draw the kinds of distinctions that I think they reasonably should be able to make between painting your street number on your curb so people can more easily find your house and restrictions on, you know, particular types of speech that are much more likely to be motivated by disagreement with that speech. We do think that intermediate scrutiny has a fair amount of teeth in the circumstance, I mean, and we're putting our money where our mouth is because we think that the particular ordinance at issue here fails intermediate scrutiny. But intermediate scrutiny would give municipalities enough room to draw these kinds of distinctions and to draw, in particular, the kinds of distinctions that are drawn in the Highway Beautification Act, which allows certain types of signs that do enhance safety and aesthetics, but generally doesn't allow the ground on the sides of freeways to become a breeding ground for signs which would decrease driver safety and decrease appreciation-- Sonia Sotomayor: Do you think that a-- I'm sorry. John G. Roberts, Jr.: Justice Sotomayor. Sonia Sotomayor: Do you think that a library could say big books are preferable to little books and it so happens that big books are coffee books and little books tend to be mostly political, so we're going to put all the political books in the basement and all the big books on the main floor? Is that a distinction that the First Amendment permits? Eric J. Feigin: --I think a court might be reasonably fairly skeptical of that kind of distinction. But I think signs, Your Honor, present particular First Amendment problems that the Court had to grapple with and didn't quite resolve in MetroMedia and City of Ladue. One distinct problem with signs is that the -- it's very difficult for legislatures to tailor sign regulations and describe types of signs that it doesn't think it needs to regulate to advance its interest, thereby allow more speech, without describing those types of signs in a manner that could be viewed as content-based. And that's what makes sign regulation very difficult and why we think some sort of context-specific rule in this circumstance would be appropriate. Antonin Scalia: I don't see why. I mean, you say it, but why is it true? Just make whatever the sign requirement is big enough that any private signs that need to get people's attention will get people's attention. Eric J. Feigin: Well, I think-- Antonin Scalia: What you say about signs I assume applies to noise as well, right? If the city has a noise ordinance, it can distinguish between noises for various purposes. A political sound truck before an election can be given a higher allowance, and, I don't know, a street evangelist given a lower allowance. Eric J. Feigin: --I don't think that would be permissible, Your Honor. I think one key here is that the type of exceptions we're talking about, the only types we think should be subject to intermediate scrutiny, are ones that track the safety and nonproliferation rationales for the sign ordinance as a whole. If the City is advancing a distinction based on the fact that they think political speech or ideological speech is more valuable than, say, religious speech, we think that would be subject to strict scrutiny. Thank you. John G. Roberts, Jr.: Thank you, counsel. Mr. Savrin. Philip W. Savrin: Mr. Chief Justice, and may it please the Court: The problem with applying strict scrutiny in this case or this type of case is that it will have, we believe, the opposite effect. It will limit speech because towns, cities will enact one size fits all. In order to do that, as Petitioner's counsel indicated, there need to be limitations on the number of signs, on the duration of signs. The signs would have to be all large enough to accommodate the largest message that needs to be communicated. And in order to pass strict scrutiny, the legislatures in these towns and cities across this country would be inclined to ban all signs except those that the First Amendment absolutely allows. Samuel A. Alito, Jr.: You can make that argument in all kinds of contexts. I don't know where it gets you. Suppose that the question is, whether the town is going to allow anybody to speak in a park, and the town -- the town council says, well, you know, we would like to have people be able to speak on subjects that we like, but there are some subjects we really don't like. We don't want people to speak on those. So we have the choice, we allow everybody to speak or we allow nobody to speak. You can make exactly that same argument in lots of other contexts where I don't think the distinction could be justified. Isn't that right? Philip W. Savrin: I think there is a difference, Justice Alito, in signs as opposed to speech because signs do take up physical space. They displace other uses of land, and they perform different functions. One thing that we would like to emphasize in this case is that the temporary directional sign provision is limited to in signs that are intended to guide travelers along a route from Point A to Point B. If they have expressive content on them, then they are no longer a directional sign but are then an expressive sign; and there is a different provision that applies for that. Ruth Bader Ginsburg: So if the sign here said, "We welcome you to attend our church service. " and then it says on the bottom, meeting place, and it specifies the meeting place, but the message is "we welcome you to attend our service. " that's ideological? Philip W. Savrin: That is ideological. That would not be a directional sign because it's not directing travelers along -- along the route to that location. Ruth Bader Ginsburg: But it says also "welcome you to attend our church service, it will be held at. " So it's giving the direction, but it's also expressing the message that everyone is welcome to come worship. Philip W. Savrin: I believe the way that this code has been interpreted, Justice Ginsburg, is that that would not be a directional sign because it's not saying turn right, turn left, go straight a few miles. It's not giving directions about how to get there. So I believe that that type of sign would be permitted under this ordinance as an ideological sign and would not be limited to the terms of the temporary directional. Elena Kagan: Mr. Savrin, could I ask what the -- your justification is for these specially generous provisions on ideological signs? I mean, putting aside the level of scrutiny, why do you have these very generous rules for ideological signs as compared to others? Philip W. Savrin: Well, specifically on the ideological signs is to protect the First Amendment right of anyone to speak on any topic at any time. The difference in the-- Elena Kagan: So you are not even purporting to have a content -- neutral justification for this. You are essentially saying, yes, we generally dislike clutter, but we're willing to make exceptions for clutter for speech that we think has special First Amendment significance. Philip W. Savrin: --That would not be our position, Justice Kagan. Our position is that it's not content-based in a constitutional sense for purposes of applying strict scrutiny, that the distinction is permissible here without relation to the content or in terms of favoring or censoring certain viewpoints or ideas. Antonin Scalia: Well, view point discrimination is quite different from content discrimination. And you are trying to reduce our rules against discriminating on the basis of content to a rule against viewpoint discrimination. Philip W. Savrin: Not just view-- Antonin Scalia: I mean, ideological signs, that is a content category, and there is as much a First Amendment right to give somebody directions as there is to speak about -- about being green or whatever else. Is there no First Amendment right to give somebody directions? Philip W. Savrin: --Justice Scalia, we would say that the -- they perform different functions. It certainly-- Antonin Scalia: They sure do, but is there a First Amendment right for these other messages or not? Philip W. Savrin: --I think they would have a right to speak, and I think that they do have that right to speak and that intermediate scrutiny applies to regulations about how speech can be communicated as opposed to what can be communicated. Ruth Bader Ginsburg: But you did say in your brief that the First Amendment does not require directional signs, so they could be banned altogether. Philip W. Savrin: I think if it's narrowly tailored and meets the intermediate scrutiny test in a particular jurisdiction, then-- Ruth Bader Ginsburg: Well, that is a lot of words. I'm giving you an example. The law says no directional signs. That's the law. Does that -- is -- does that offend the First Amendment? Philip W. Savrin: --I think that it -- well, when you say offend the First Amendment, I think you would have to apply the intermediate scrutiny analysis and our position would be that it would -- that it could survive that analysis. If I could return to Justice Kagan's question about the interests that are served, it's different. A directional sign, there needs to be more than in order to direct travelers along a route, so that justifies a -- perhaps a smaller size. There is no contention in the record; in fact, the court of appeals found that they function as intended. As far as the duration is concerned, there's no travelers going to an event that is not presently occurring. In fact, the Town of Gilbert expanded the time frame from 2 hours to 12 hours, and I -- our question is whether or not that is something that implicates First Amendment jurisprudence as opposed to-- Stephen G. Breyer: You say on -- suppose we're talking about the context of signs. You say, well, let's look to the purpose of forbidding -- any prohibition, and I guess it has to do with safety or beautification. Philip W. Savrin: --Yes. Stephen G. Breyer: First question would be: Is there some category that you don't allow to put up signs? Answer, no. Everybody can put up signs. So what about applying strict scrutiny to that? If you are going to distinguish on the basis of what the sign says, you have to have an awfully good reason, if your decision is you can't put up one at all. Next, you put them up, but you have all content -- all kinds of distinctions how, how long, et cetera. Now, in respect to that, maybe you should have more leeway, leeway depending upon the purpose of the sign. So if, for example, it's about an open air, municipal movie, you could say put up signs about movies or something. I mean, you know, you maybe have more leeway there. But still they're saying you would flunk even that test here because there isn't really a very good reason at all in this case for making the sign smaller or for putting it there for such a short time. Now, how do you react -- there are three parts: One, very tough if you are going to say you can't put it up at all, sometimes called strict scrutiny; two, somewhat more lenient if it gets up, but you are trying to distinguish among how and under what circumstances, how long; and then three, do you even satisfy that one? That's called time, place and manner, the second one. Philip W. Savrin: Yes, okay. Well, with respect to the first one, the interest most of the times in sign ordinance regulations as the -- as you've indicated, is aesthetics and safety. With respect to aesthetics, I don't believe that that would meet the definition of a compelling interest, so that it's -- it's automatically, presumptively, and conclusively unconstitutional if the strict scrutiny is applied and that's the -- there is no compelling interest. With respect to the interests at stake here, we again believe that directional signs are functionally different from an ideological sign or even from a political sign, that the directional signs do not need to be larger and also that there are more of them. And so if there are more of them, the trade-off is -- at least the legislature in this town has decided the trade-off is that they need to be smaller because they need to guide travelers along a route. Antonin Scalia: And political signs are there almost all year, on the rights-of-way. You talk about clutter. What if somebody doesn't like politics, and he says politics is spinach. I want ideology. I would like ideological signs on the right-of-way. You say, I'm sorry, you are wrong, we think politics is more important, because we are politicians and we're on the city council. [Laughter] Philip W. Savrin: I have two responses to that, Justice Scalia. The first one is that there is a statute in Arizona that this ordinance complies with in terms of the placement, the duration, and the size of the political signs. The town doesn't have any leeway in that because it needs to comply with the statute. Ruth Bader Ginsburg: Does this State statute have the same size and duration? The State statute says that you have to allow political signs, but does it specify the size and the duration? Philip W. Savrin: Yes, Justice Ginsburg, it does. Ruth Bader Ginsburg: So you're saying that the town ordinance just mirrors the State? Philip W. Savrin: Yes. Yes, it does. Ruth Bader Ginsburg: And do you have that State law? Philip W. Savrin: I do. It's section 16-1019. Antonin Scalia: So your defense to a First Amendment complaint is, what, the State made me do it? Philip W. Savrin: Well, our defense -- well, in part, yes, because we need to comply with the statute, and it doesn't make sense that, as a result, all signs need to be -- meet those provisions for purposes of preserving beauty, reducing clutter, so on and so forth. Antonin Scalia: It makes a lot of sense if you believe in the First Amendment. Philip W. Savrin: Well-- Antonin Scalia: If you believe that neither the State nor the city is entitled to say politics is really important, as opposed to music. Philip W. Savrin: --The other consideration here, Justice Scalia, is that we're talking about public property. And one of the issues that has not been developed, certainly in the record in this -- at this Court, is the extent to which the government can select subject matter for what is a non-traditional public forum. So there are issues as well that would need to be developed a little bit further before any application of intermediate scrutiny, we say, could be continued -- they -- if the -- if their -- if this Court were to find problems with the Ninth Circuit's application of intermediate scrutiny, and I think that there would still be some issues on location that would need to be developed on the public forum, and that-- Ruth Bader Ginsburg: You say the street is not a -- not a traditional public forum? Philip W. Savrin: --That is the certainly Gilbert's position. It was something that was argued in the Ninth Circuit. The Ninth Circuit did not resolve that issue. But I believe that would be a question of Arizona law. But, again, we have not developed that and that issue has not been developed in this -- at this -- in this Court, and I think the reason is because the issue in this Court is whether or not strict scrutiny applies. Samuel A. Alito, Jr.: Well, how do you justify the -- the differing treatments of Petitioner's sign, on the one hand, and the weekend builder event signs and homeowners' association signs? Homeowners' association signs can be 80 square feet, and the Petitioner's sign can be 6 square feet. Philip W. Savrin: The homeowners' signs are not really directional signs, because they can only be within the residential community. They are not directing travelers off site, in a generic sense, to a location. There is also a permit requirement. And the other thing is -- about the 80 square feet is, that is total sign area. That's not one sign. That's the total sign area you can have. John G. Roberts, Jr.: Has anyone ever been denied one of those permits? Philip W. Savrin: I don't know the answer to that question, Your Honor. Samuel A. Alito, Jr.: Suppose the Petitioners want to put up a sign that says, we're having a church service at 10:00 o'clock on Sunday morning. Under your code, when can they put that up and when do they have to take it down? Philip W. Savrin: They could put it up 12 hours before, so that would be 10:00 o'clock p.m., and they could take it -- and they have to take down, I believe it's an hour afterwards. Samuel A. Alito, Jr.: So they can put it up after dark on Saturday and then they have to take it down within an hour after, when, the commencement of the service, or-- Philip W. Savrin: The end of the event. Samuel A. Alito, Jr.: --the end of this-- Philip W. Savrin: The end of the event. If the-- Samuel A. Alito, Jr.: --Do you think that really gives them an opportunity to invite people to come to their service? Philip W. Savrin: --The purpose of these signs is not supposed to be invitational; it's supposed to be directional. If the event was occurring at 10:00 o'clock at night or at 6:00 o'clock in the evening, it could be up during the day. If the event occurs all weekend long, it could be up all weekend long. It's -- it's tied to the event. So in that sense, it it -- absolutely serves its purpose for having on -- on the 12 hours before, because if they want to invite members of the public to the services, they can and do have many other opportunities and alternatives -- including signage, including the ideological sign -- that they can use. Samuel A. Alito, Jr.: So they could put up a, quote/unquote, ideological sign that says, "Come to our service on Sunday morning. " but no arrow, and then they put up another sign that says, this is the arrow? Or maybe they put up on the first sign, "Come to our service on Sunday morning; we can't tell you now where it will be because the town won't let us, but if you come -- if you drive by here tomorrow morning at a certain time, you will see an arrow. " [Laughter] Philip W. Savrin: The sign could say, Your Honor, where it is taking place, but if it is intending to guide travelers to that location, then it would need to comply with -- with the provisions. And the reason, again-- Ruth Bader Ginsburg: What is the -- what is the guidance? I'm looking at the Good News signs on page 3 of the little brief. It just has an arrow. It says the name of the elementary school, and then it has -- it looks like a telephone number and an arrow. The arrow is a direction? Philip W. Savrin: --Yes, Your Honor. Ruth Bader Ginsburg: This is not, as you described earlier, turn left on Main Street, turn right on Front Street. Philip W. Savrin: It is the same function as that. But we would say the-- Stephen G. Breyer: What is this about, this argument? I mean, you agree they can put up a big sign. Can they put up a big sign, ideological, saying, "Come to the next service next Tuesday, 4th and H Streets, three blocks right and two blocks left? " All right? Or are you saying they can't say, "three blocks right and two blocks left? " That's what this argument is about? Philip W. Savrin: --That is what it comes down to. Stephen G. Breyer: Well, my goodness. I mean -- I mean, on that, it does sound as if the town is being a little unreasonable, doesn't it? Philip W. Savrin: Well, we would say that it has -- that the sign has an -- what this Court has termed an incidental effect on the expression of the Petitioners, that certainly they can have the ideological sign, the information that they want to include-- Stephen G. Breyer: Suppose we said this: That where, in fact, the argument is of this nature, where, in fact, there are -- you can have a big sign and have everything on it except an arrow, and the purpose of the sign is, in fact, to tell people both what is happening and where. That there is no good, under any test, reason for requiring this little dingy thing? End of the case. Let's go with that. Philip W. Savrin: --Well, Your Honor -- our response to that, Your Honor, is that the directional signs, in order to work, need to guide travelers along the route. So there's going to be a whole lot of these signs in order for them to function as intended. It can be a mile away, it can be two miles away. So having just one sign, perhaps, under the Court's hypothetical, it seems rather silly, but if you are thinking about having a whole bunch of these signs over a long distance, then I think then that-- Ruth Bader Ginsburg: Does Good News -- does the Good News church have a number of signs -- just as illustration, how many signs do they have? Philip W. Savrin: --I believe the number is 15, but-- I'm not 100 percent sure about that, Your Honor. I know that they have quite a few. Sonia Sotomayor: Can you see that car -- when you -- can you see that sign at all when you pass-- Philip W. Savrin: I'm sorry, Your Honor? Sonia Sotomayor: --Can you see that sign at -- all when you pass in a moving car? Philip W. Savrin: Yes. In fact, the court of appeals has found that it functioned as intended and there is no indication that that it did not. So there's -- it seems to me that those are the kind of decisions, as far as size, duration, are ones that should be the father of legislative deliberation. And as long as it meets the intermediate scrutiny test, it should pass Constitutional muster. Antonin Scalia: Whatever that is. Whatever that is, right? Philip W. Savrin: Well, the intermediate scrutiny test, I think, is if it's narrowly tailored, and also if there are alternative modes of communication. But I think that applying strict scrutiny to these types of regulations will result in sign ordinances being struck down uniformly, just about, and the only speech that -- that will be allowed will be speech that is constitutionally required. Everything else will not be. But I think the problem, if there is one, that Gilbert has gotten into is that it allows a lot of speech that a lot of other ordinances might not in a lot of different formats. Elena Kagan: Just, again, if I could understand-- Philip W. Savrin: Yes. Elena Kagan: --let's even assume that intermediate scrutiny applies, and just focus in on this special provision for ideological speech which allows very large signs to stay up as long as possible. And you would say we're making that exception, if you will, to the general rule that there shouldn't be clutter and there shouldn't be a lot of these signs because, why? Philip W. Savrin: Because directional signs-- Elena Kagan: No, no, no. Philip W. Savrin: --I'm sorry. Elena Kagan: I just asked you for the exemption for ideological signs, for the specially generous provision for ideological signs. Why do ideological signs get such generous treatment? Philip W. Savrin: Because the -- to protect the First Amendment right to speak. Elena Kagan: Okay. So that is a content-based rationale. And, you know, on one theory, you lose regardless of what the standard of review is. Philip W. Savrin: If the-- Elena Kagan: You are not justifying it on the grounds of safety or on the grounds of clutter. You're saying, this is a special kind of speech that we think there ought to be more of. Philip W. Savrin: --With respect to the ideological sign? Elena Kagan: Yeah. Philip W. Savrin: Yeah, the purpose of that is -- is it is content-neutral in terms of anything can be on that sign. And what we're saying-- Elena Kagan: So that goes back to what Justice Scalia said. It's viewpoint neutral, but, you know, it's content-based. And maybe you are just saying that we've run amok on this content-based distinction, and there would be an argument there. But, I mean, it is content-based to say what is ideology and what is not. Philip W. Savrin: --And I would agree that that's what we're arguing, Your Honor, that what we're saying is that the First Amendment is -- guards against the abridgment of speech. And having a rigid content definition to be the on/off switch for whether strict scrutiny or intermediate scrutiny applies does is not workable, does not achieve commonsense results. It handicaps the legislatures in their ability to be flexible. Antonin Scalia: Well, maybe you think that, but the guy who doesn't like politics and likes ideology doesn't think that. Philip W. Savrin: Well, the-- Antonin Scalia: So we're -- we're supposed to sit here and say, oh, political speech is the most valuable and you can allow that, but ideological speech comes in a close second, and then what? Then directional speech or whatever else? Philip W. Savrin: --Well, I-- Antonin Scalia: I don't want to do that. I don't think you should want any governmental official, even -- even a judge, to do stuff like that. Philip W. Savrin: --Your Honor, I think for purposes of ruling in this case, I think the question is whether or not the temporary directional sign is subject to -- is content-based in a constitutional sense such that it would be subject to strict scrutiny. We believe that that would be improper. We think that it would be against the jurisprudence of this Court. Antonin Scalia: What is content-based in a constitutional sense, as opposed to content-based in a non-constitutional sense? Philip W. Savrin: Whether it puts the finger on a scale of ideas or viewpoints, whether the substance of it -- whether-- Antonin Scalia: That is viewpoint-based, not content-based. Philip W. Savrin: --Well, whether it favors or censors-- Antonin Scalia: You want to eliminate content-based as the criterion and make it viewpoint-based. Philip W. Savrin: --No, Your Honor, that is not what we're advocating. What we're advocating is that if an ordinance does not -- if an ordinance addresses the function of the sign as opposed to the particular ideas or even the subject matter, then it would not be content-based for purposes of-- Antonin Scalia: Is there is there a difference between the function of the sign and the content of the sign? Philip W. Savrin: --Yes, Your Honor. Antonin Scalia: I frankly can't grasp that. What is it? Philip W. Savrin: Well, it depends on how-- Antonin Scalia: Doesn't its function depend upon its content? Philip W. Savrin: --In a literal sense, yes. Antonin Scalia: Oh, I see. What sense are we talking here? [Laughter] Poetic? Philip W. Savrin: Well, both-- Antonin Scalia: Poetic? Philip W. Savrin: --No. We think that there needs a be a -- a nuance, as the Federal government has indicated. So it guides the the content test is a guide for courts to determine which level of scrutiny applies. And at some level, if content is the on/off switch, then such distinctions as temporary and permanent, commercial and noncommercial, even onsite and offsite, are going to be content. And we don't believe that that in and of itself justifies strict scrutiny. John G. Roberts, Jr.: Thank you, counsel. Mr. Cortman, you have four minutes remaining. David A Cortman: Thank you, Mr. Chief Justice. Just a few quick points in response, if I may. Clarification point on the State statute. First of all, when this case began, the State statute was not in effect, and political signs were actually allowed up for longer than the period of time. When the State statute was enacted, it actually lessened that time. So it's not the State's doing that the town decided to allow political signs in its -- in its right-of-way. But even with the State statute, the -- if the State has decided that its interest in free speech in political signs outweighs the interest in safety and aesthetics, then the town should basically adopt an ordinance that abides by that. And the simple way to do that is to treat it as a constitutional floor. If the State has decided that we're going to allow political signs up for that period of time -- and by the way, the statue doesn't mention other signs. So it's not a restriction like this town code is. All it says is, we've deemed it important enough for political signs to be up for-- Anthony M. Kennedy: It's just permissive for political signs. David A Cortman: --That's right. And so the response by the town is, okay, if that's the case and the State has decided that political signs outweigh our interests in safety and aesthetics, the way we deal with that is treating other similar signs the same. I think, a couple other points, the noise ordinance is a perfect example, whether it's the that side case or the Kobachs case. This ordinance would be akin to allowing, for example, political speech to be much louder in decibels and for longer periods of time, and someone on the street corner inviting someone to church must be quieter and for lesser periods of time. And quickly, if I may address the safety and beautification interests, they are certainly important interests. But as this Court said several times in Carey v. Brown, for example, and Discovery Network, the distinctions, the content-based distinctions in the code bear no relationship to the government interest. The distinctions don't advance those interests. And as to being under-inclusive, I think it's similar to what this Court found in Discovery Network. When there the town wanted to prohibit 62 news racks and then allow 1,500 to 2,000 news racks to remain, this Court said that was under-inclusive and would fail just on that. Here, the town is allowing an unlimited number of political signs, but then prohibiting just a few other signs. Thank you. John G. Roberts, Jr.: Thank you, counsel. The case is submitted.

William H. Rehnquist: We'll hear argument now in No. 87-1104, Walter Zant v. William Neal Moore. Ms. Boleyn, you may proceed whenever you're ready. Susan V. Boleyn: Mr. Chief Justice, and may it please the Court: This is a second application for federal habeas corpus relief that raises both old and new grounds. On the new grounds, they allege that a change in the law permits them to present these new claims for the first time in a second or subsequent application. It's the Petitioner's position that the failure of the Respondent to include these so-called new claims in his first application was inexcusable neglect and, therefore, this application should have been dismissed as an abuse of the writ. There are three major points which the Petitioner would like to discuss today and these three points are as follows. First, when a district court is faced with reviewing a second or subsequent application for federal habeas corpus relief that raises new claims based on alleged changes in the law, the district court should not focus on whether or not the decision that's cited by the applicant is in fact new law. Instead, the proper focus of the district court's consideration should be whether at the time the first application was filed and it was pending in the district court that the claim was reasonably available to the applicant at that time. The second point the Petitioner would like to make is that reasonably available means was there a sufficient legal basis in existence at the time the first application was filed and during the time it was pending to enable the applicant to raise the claim. And finally, under our standard that we're proposing to the Court today, the burden would remain on the applicant to excuse his omission of the new claims from the earlier application and to show that it was not inexcusable neglect to fail to include these claims. If we take the reasonably available standard that we're propounding to the Court today and apply it in the practical context, this is what occurs. Of course, the applicant files a second or successive application for federal habeas corpus relief and the government, as is its burden, pleads abuse of the writ with clarity and particularity. And essentially implicit in our response to their second or successive application is our belief that there is no newly available facts and no newly available law which would allow the applicant to raise a claim at this time which he didn't have at a previous application time. Of course, once we plead abuse of the writ and we say that there's new... no new law, then of course the applicant has to respond to the pleading of abuse of the writ. And what generally happens is they simply say change in the law and they cite a case for it that was rendered subsequent to the time that the first application was disposed of. They hope by mouthing what are sometimes thought of as magic words of "change in the law", that they can thereby excuse their inexcusable neglect in failing to raise that claim at the first time. And, of course, they also hope that what will happen is that the district court will look to the government to determine whether or not the claim was reasonably available at that time. When the district court then is faced with our allegation of abuse of the writ and their allegation that there's new law, what does the district court have to do? Well, essentially the district court can't decide whether the decision is new law in a legal vacuum. Instead, what the district court has to do is look at the claim and decide whether or not at the time the first application was filed and was pending that the claim was reasonably available. So, they compare the date of the decision cited back to the date that the first application was filed. Sandra Day O'Connor: Ms. Boleyn, may I inquire how your proposed standard differs from that in Reed against Ross for the novelty standard for procedural defaults? Susan V. Boleyn: Your Honor, our reasonably available standard differs from the, the standards set forth in Reed v. Ross for the cause standard in several respects. First of all, our standard is not as high a standard as a Reed v. Ross standard because we don't have the additional element of prejudice. And second, of course, primarily when you're discussing a procedural default, you're looking at whether counsel failed to preserve the issue and why the issue was not preserved; whereas on our reasonably available standard, the focus that you have is why the claim could not have been presented. So, really in a procedural default context, a Reed v. Ross type situation, one of the things you're looking at is foreseeability; whereas in our test you have the benefit of hindsight and you can look back to the legal environment as it existed at the time the first application was filed. Then, of course, too, when you're looking at a procedural default context, the prior proceeding that you're examining is a proceeding in which you had the right to counsel and you had the right to effective assistance because it's trial or appeal. But in our standard, you're looking at a proceeding where you did not have the right to counsel and so, in effect, it just doesn't factor in. Sandra Day O'Connor: How does your standard differ from that suggested by Judge Tjoflat below? Susan V. Boleyn: Our standard is very similar to that of Judge Tjoflat. We just... he, he used the tools language of Reed v. Ross, and we simply said was it reasonably available, was there a sufficient legal basis for the claim. And it's similar for the tools language that Judge Tjoflat adopted. The only thing that Judge Tjoflat did was he referred to the Reed v. Ross language about whether other petitioners were raising the claim at the same time. And we've simply said in our standard that that might be germane, but it might not be outcome-determinative in determining whether the claim was reasonably available. So, it's very similar to what he's... what he's alleged. Antonin Scalia: Could you... could you tell me how it could ever be held that the claim... that the claim was not reasonably available when there has been a change in the law? I mean, almost by definition somebody else thought of it. So, how could you possibly ever... I mean, why not just adopt a simpler rule that you simply can't do it at all? Period. Is there any difference? Susan V. Boleyn: We think we have adopted a simpler rule because part of it depends on the way you look at new law. I mean, new law could be viewed as every decision that this Court decides or every decision that any court decides. So, the question can't focus on whether it's new law unless you relate it to some point in time. To say whether it's new law for retroactivity purposes or new law for prophylactic purposes, all different types of purposes is where it's new law. So, the only way you can do when you're in a habeas corpus setting is you have to look at the conduct of the applicant for the writ. And when you're looking at his conduct, you have to look at the point in time when he sought to avail himself of the federal habeas corpus remedy. So, the new law or the, the decision only has relevance in the context of the habeas corpus proceeding back to the time of the first application. Antonin Scalia: But at least if he... if his trial where he didn't raise the point was simultaneous with the trial in which the point was raised that came up here that produced the decision which is allegedly new law, at least in all those cases you would have to say it was reasonably available, wouldn't you? So, you would only be talking about those cases that were earlier than the one at which the point was first raised. Susan V. Boleyn: You would only be talking about those cases that were earlier than the one in which the point raised, but that would not necessarily be an excuse because you could have-- Speaker: I understand. Susan V. Boleyn: --earlier decisions that foreshadowed the new or clear break or precedent-setting decision. We're not going to have to wait until this Court gives a decision to hold that it would be reasonable for an applicant to raise the claim. Of course, as this Court is aware, many of the 1960s and 1970 cases clearly outlined for persons dealing in federal habeas corpus the expansion of rights that was going to be available to criminal defendants and foreshadowed many of the decisions that came out in the 1970s and 1980s. So, you had the tools. You had these basic decisions, and applying them to the factual context in which you're dealing with is the job of the attorney. He has got to have some ability to determine whether there are some, some basic landmark cases out there that might be extended to cover the factual situation that's in that case. So-- Anthony M. Kennedy: Can you give me some specific examples of decisions of this Court that the Petitioner could rely on as new law under your standard? Susan V. Boleyn: --Your Honor, that's a difficult question to ask unless you can pinpoint the time period that we're talking about I think, as I've already said. But let's suppose that you are a, a capital litigant in Georgia in the period between Gregg v. Georgia, 1976, and Green v. Georgia. And in Green v. Georgia, of course, they said that the hearsay prohibitions under Georgia law weren't applicable to the sentencing phase. It's possible that a petitioner in that time period between those two decisions would have no reasonably available basis to allege that the hearsay prohibitions that are... that are in the guilt phase were also applicable to the sentencing phase since those two phases under Georgia law are the same. So, it's arguable that that's an example of a case which was clearly new law, at least under Georgia law, to require those hearsay restrictions to be taken out of the sentencing proceeding. So, arguably he might have a, a claim based on that that would be excusable neglect for failing to raise it in the first application. Anthony M. Kennedy: And no examples occur to you of our decisions in the 1980s? Susan V. Boleyn: Your Honor, I've spent a lot of time thinking about that. Some of the major 1980s examples that I can think of would depend on the state of the law in other states of which I'm unfamiliar. For example, Caldwell v. Mississippi. The Caldwell... so-called Caldwell argument has been against the law in Georgia for 200 years. Apparently it wasn't against the law in Mississippi. So, perhaps some applicant, depending on the timing of their first and second applications, Caldwell v. Mississippi might be new law in their jurisdiction. So, the problem is if you... if you don't place it in the context of a particular jurisdiction or a particular time frame, it's difficult to answer whether some of the major decisions that we're all familiar with really would be an excuse in the abstract. Antonin Scalia: Even in your Green example, somebody, somebody prior to Green had the... had the necessary tools. Susan V. Boleyn: Yes, they did. Antonin Scalia: Or else Green would not have been decided that way. Susan V. Boleyn: Yes, they did. Antonin Scalia: So, how can you even say that with respect to Green? Susan V. Boleyn: Well, I think you'd have to look at the circumstances. First of all, you'd have to look at what would be reasonable in that time frame, what decisions they had that might have foreshadowed Green. And that's why I say it's possibly an excuse. It wouldn't necessarily be an excuse. And the only reason I use that is because I'm familiar with Georgia law, so that might possibly be an excuse for him. But even still, of course, you know, stare decisis and all of the decisions of the Court really rely on something else. The question is maybe under Georgia law or some other authority that I'm not familiar with, that claim could be made. But the fact that... that somebody was... was smart enough to raise a claim that ultimately got relief doesn't necessarily mean that it was unreasonable for them not to raise it previously. If we apply the reasonably available analysis to the new law claims in this application, this is what results. There's two new law claims. The first of these in our case is the Proffitt v. Wainwright claim. And essentially when we pled abuse of the writ, the Respondent in this case said I needed Proffitt to make this claim. Without Proffitt, this claim was unavailable to me at the time of the first application. John Paul Stevens: May I just ask one, one preliminary question? You're basically asking us to overrule Sanders, are you? Susan V. Boleyn: No, we're not, Your Honor. Our view of Sanders is that is to prohibit piecemeal litigation which Sanders defines as any litigation whose intent is to vex, harass or delay. And-- John Paul Stevens: Do you accept the interpretation of abuse of the writ terms in Sanders? Susan V. Boleyn: --Your Honor, if you look at Sanders, plus Rule 9(b) and the advisory notes referring back to Sanders, they talk about several types of abuse of the writ that are available. Intentional-- John Paul Stevens: I'm not sure that's... I'm not sure that's answering my question. Susan V. Boleyn: --May... if you'd restate, Your Honor, I'll try to be-- John Paul Stevens: Do you agree with what... do you agree with everything in the Sanders opinion, I'll put it that way, insofar as it discusses abuse of the writ and Rule 9(b)? Susan V. Boleyn: --Insofar as it states that equitable principles govern habeas corpus, insofar as it states that any type of-- John Paul Stevens: Would you agree with everything in the opinion? If not, what do you disagree with? Susan V. Boleyn: --Insofar as some courts have read Sanders to limit abuse of the writ solely to types of things like sandbagging or deliberate withholding, I would disagree with those interpretations of Sanders. My interpretation of Sanders is that it prohibits any types of abuse of the writ and it gives illustrative examples that we say are nonexhaustive of what type of proceedings would abuse the writ. But when they put that word "delay" in there, they're talking about capital litigation. They are talking about the fact that it's commonplace now for capital litigants to file a second round of federal habeas corpus proceedings whose only intent is to delay. And so that part of Sanders directly feeds in to this case and to our, our abuse of the writ standard. Again, if we try to apply the reasonably available standard to the two claims that we have here, the first one is Proffitt v. Wainwright. And as I've said, they said until the Fifth Circuit entered Proffitt v. Wainwright, we could not have raised the claim. Under our analysis, then of course in our pleading of abuse of the writ, we would tell them, as we did tell them, that Proffitt was based on... primarily on Gardner v. Florida, and that in Gardner v. Florida in 1977 this Court clearly foreshadowed the result that the Fifth Circuit reached in Proffitt. And, of course, Gardner was decided in 1977, and this application, the federal habeas corpus relief, the initial one, was filed in November of 1978. And then, of course, Gardner had prior law supporting it: this Court, Douglas v. Alabama, California v. Green, Chambers v. Mississippi. So, if you didn't want to use Gardner, you still had other similar decisions of this Court that you could have relied on. Sandra Day O'Connor: Ms. Boleyn, did either the Eleventh Circuit or the... or the parties address the retroactivity of Gardner or Proffitt? Susan V. Boleyn: No, we did not address the retroactivity question, solely on abuse. So, essentially they said we needed Proffitt to make this claim. Our response is you didn't need the... you didn't need Proffitt because you had Gardner v. Florida and the prior decisions in that. And therefore, since you didn't need it to raise the claim, the claim was reasonably available to you in 1978. Since it was reasonably available, your failure to present it was inexcusable neglect, and since inexcusable neglect is one of the forms of abuse of the writ now that abuses have become more sophisticated, then therefore you have abused the writ of habeas corpus and you are not entitled to review this issue on the merits. With reference to the other new law claim, Estelle v. Smith, again we apply the reasonably available test to Estelle v. Smith. They say until this Court's decision in Estelle v. Smith, they couldn't have raised the claim. We say, yes, you could. You could have raised In re Gault. You could have used Miranda v. Arizona, and you could have even used the district court's decision in Smith v. Estelle, which was decided one year before this first application was filed, and if not that, you could have used the Fifth Circuit's decision in Smith v. Estelle, which was entered while the application was pending in the district court. So, we essentially say you didn't need this Court's decision in Estelle v. Smith to raise the Estelle v. Smith claim. And since you didn't need it, the claim was reasonably available to you, and your failure to present it constituted inexcusable neglect, which should have been dismissed as abuse of the writ. William H. Rehnquist: Ms. Boleyn, you say the point of focus when you're talking about abuse of the writ is what was available at the time of the first habeas application, not the trial. Is that correct? Susan V. Boleyn: You take into... that's correct, Your Honor. You take into consideration whether there was any foreclosure of a right to object in the trial. So, that, that does work into the equation, but the primary point of focus is the time the application was filed and the period of time it was pending in the district court. You do have to look back to the procedural history to determine whether... what the existence of state law was because what is part of the legal environment that you're looking at is... involves the state statute and state law, as well as federal law and federal constitutional principles. The only claim we haven't addressed so far is... and I'll, I'll go off of the new law claims at this time... is we have one old claim we'd like to discuss, and that's the Gardner v. Florida claim. We're trying to take the easy road out in this and say that Sanders allows us to determine that no relitigation of the Gardner claim is necessary because this claim is conclusively without merit. So, we would not ask the Court to reach the ends of justice on this old claim in the context of this case. Speaker: xxx Eleventh Circuit [inaudible] claim. Susan V. Boleyn: The Eleventh Circuit treated it... Judge Tjoflat, the dissenter of course, treated it as having been-- Speaker: xxx. Susan V. Boleyn: --They treated it as... they treated it as both in discussing it, but they treated it as an old claim. Byron R. White: And so... and so that came down to a ends of justice issue. Susan V. Boleyn: Yes. They remanded it for ends of justice inquiry and they specifically directed that the district court look at Smith v. Murray. They wanted them to look at the procedural default context of that. As we've said, we think the Gardner claim is conclusively without merit. The Gardner claim was raised both in the motion for declaratory judgment before the State Supreme Court. It was also raised and fully litigated at the state habeas corpus proceedings and found to be conclusively without merit. The bottom line is the presentence report was given to trial counsel and shown to Mr. Moore, and they tried to litigate that and prove otherwise and were unsuccessful. It was also raised, we might add, in the first application for federal habeas corpus relief, but only in the procedural history portion of that application. It was not raised in the claims. It wasn't until two years later that they raised the Gardner claim by means of amendment when they switched counsel and got new habeas counsel in there. Then they put the Gardner claim in their amendment. Of course, this amendment was disallowed by the district court, and that finding was upheld in the first appeal in the Eleventh Circuit. So, there has been no change in the law, and there has been no change in the facts because it's obviously based on Gardner, 1977, before the first application in 1978. John Paul Stevens: May I just make sure of one... your point on the Gardner claim? Did he have a... have a federal habeas corpus hearing on the merits of the Gardner claim? Susan V. Boleyn: No, he didn't because Mr. Bonner, his first habeas counsel, admitted to the court there were no new facts that needed a hearing. John Paul Stevens: So-- Susan V. Boleyn: He did-- John Paul Stevens: --So, then he... is it correct that he has never had a hearing in federal court on the merits of his Gardner claim? Susan V. Boleyn: --No, he has not, Your Honor. He had an oral argument before the magistrate which he simply argued the points and, and said that there were no new facts and he did not need an evidentiary hearing. That was the first counsel, Mr. Bonner. John Paul Stevens: Why isn't he entitled to a hearing now? I'm not quite clear. Susan V. Boleyn: Well, first of all, Your Honor, there's no-- John Paul Stevens: You say there's no merit... it's wrong on the merits. Susan V. Boleyn: --Right. John Paul Stevens: But it has been determined wrong on the merits by the state court. Susan V. Boleyn: He's not entitled to relitigate a claim that was exhausted and fully litigated in the state courts prior to the first application and we submit deliberately left out. It was cited in the procedural history. So, we know that Mr. Bonner knew about it. He was the attorney who had litigated in the state habeas corpus court. John Paul Stevens: Your point on the Gardner claim is not that it's without merit, but rather it was deliberately withheld. Susan V. Boleyn: I think we both... we've said both, Your Honor. John Paul Stevens: Well, it can't be both, can it? How, how could it... if it was never litigated, how can you say it has no merit? Susan V. Boleyn: The basis of their Gardner claim has always been that they didn't ever get to see the report at all. John Paul Stevens: Right. And... and no federal court has passed on the accuracy of that contention. Susan V. Boleyn: Yes, they have, Your Honor. The district court said that this issue was fully... in disallowing the amendment, the district court looked back at the development of the claim in the state habeas corpus court, and he said he had no sound reason to doubt the judgment of the state habeas corpus court. And he listed the various findings the state courts had made and said he saw no reason and there was no new evidence on that point. And he found it to, to be unpersuasive that there was any merit to the contention that they did not see, see the presentence report. So, the main thing is they've never been able to factually establish that the report wasn't made available to him. Then they sort of shifted in midstream and said, well, we might have seen it in that period that the judge took the recess between the sentencing proceedings taking place and the actual pronouncement of sentence, but we only have 30 and 45 minutes. No, we didn't get an adequate opportunity to see it. So, they really switched their Gardner claim around a little bit which is why our position may appear to be inconsistent. The first thing we're saying it's without merit because they did get to see the report. John Paul Stevens: When you say they switched it around, who... I'm still not... it's a little difficult to keep all the facts clearly in mind. Susan V. Boleyn: Yes. John Paul Stevens: They switched it around in federal court or in state-- Susan V. Boleyn: Yes, in the amendment. In the amendment they said they didn't have an adequate opportunity. John Paul Stevens: --And has the... has the federal court ever decided they did have an adequate chance to look at it? Susan V. Boleyn: The federal court only addressed the, the amendment and the merits of the Gardner claim in the order disallowing the amendment. That's the only time it was addressed by the district court. But it said... it basically found it to be without-- John Paul Stevens: It sounds... from the way you describe it, it sounds like the district court made a factual determination without taking evidence on the point. Susan V. Boleyn: --It had the evidence of the state court proceedings, which there was no evidence that it was not full and fair. In fact, counsel had admitted that they had no new evidence and they didn't request a thorough evidentiary hearing. So, essentially they had a full and fair proceeding in state court, so they didn't need to have a, a further litigation. In the state court what happened is Mr. Pierce, who represented Mr. Moore at the time of his sentencing proceeding... he testified... and Mr. Moore was there and the probation officer, who submitted the report, submitted an affidavit. So, you had the three main parties who could have established the claim. They were there in state court subject to cross-examination, except for Mr. Rachels who did the probation report. And so, they could have presented anything they wanted to at the time. So, there was really no... nothing further to present in the federal evidentiary hearing except perhaps to recall them to hear the same testimony. And finally, I'll reserve the remaining time for rebuttal by simply saying that if the Court declines to accept our invitation to adopt the reasonably available test, we ask the Court please to give the district courts a practical, workable test to evaluate claims of new law. And in any test that the court adopts to make the test objective, to not make it relevant to foreseeability and to make certain that the burden remains on the applicant to demonstrate that his omission of the claim was not the result of inexcusable neglect. Anthony M. Kennedy: Should there be a difference in a pro se petitioner and one with counsel? Susan V. Boleyn: Yes, Your Honor. You factor that into the process. Instead of using what a reasonable attorney would have raised, you use what a reasonable person standing in the shoes of that particular petitioner could have raised. So, you do... you do incorporate a lower standard in there if it's a pro se petitioner. I'll reserve the remainder of my time. William H. Rehnquist: Thank you, Ms. Boleyn. Mr. Boger, we'll hear from you now. John Charles Boger: Mr. Chief Justice, and may it please the Court: There are two central questions on this appeal. The first is whether the federal courts have the authority to modify standards that were established by Congress for the evaluation of new constitutional claims that are presented for the first time in a second habeas corpus petition. This question has a subpart: may the federal court substitute a standard that is stricter, less equitable and harsher to habeas defendants? The second central question in this case involves the decision of the district court to dismiss Mr. Moore's constitutional challenge to the state's use of a presentence report at his sentencing hearing. The district court dismissed the challenge... and I'll answer your question now, Justice Stevens... without ever addressing its merits, either on the first application or the second one, finding it to be an abuse of the writ. The question here presented with respect to that Gardner claim is whether the district court should reconsider its dismissal in the ends of justice when the presentence report in question was so marred by false and misleading information that it provoked the district court to find... and I quote... "that sufficient likelihood exists that a wrongful sentence was imposed on Mr. Moore based on inadequate information. " If I may, I'll begin with the first of these questions. Our principal submission is that the standards that govern successive habeas corpus petitions have been set by Congress. While fair-minded persons undoubtedly disagree and disagree sharply on the wisest treatment of such petitions, Congress itself during a 40-year dialogue with the Judicial Conference, with attorneys general, with other interested parties, none of them shy, has repeatedly considered the diverse policy interests and has struck for itself a clear balance that's reflected in 2244(b) and Rule 9(b), which embody its own legislative judgment about how the competing interests should be reconciled. If federal courts are bound by the congressional choices reflected in 2244 and Rule 9, the judgment of the court of appeals, though not its precise holding, should be affirmed. William H. Rehnquist: Well, what congressional choice, Mr. Boger, do you think was involved in the language involving the abuse of the writ in Rule 9? John Charles Boger: Well, the legislative history, Your Honor, I believe reflects a choice-- William H. Rehnquist: How... how does the statute itself read? John Charles Boger: --The statute itself, Your Honor, says... asks whether the defendant has deliberately withheld or otherwise abused the writ. The legislative history, though, I'm sure is well-known to this Court. This Court, through the Rules Enabling Act, promulgated rules for adoption by... approval by Congress, including a Rule 9(b), that had different language from what finally appears. The language was "not excusable". Congress held up the enactment or the approval of that set of rules. It did so holding hearings the summer after they were proposed. The hearings focused on four rules, one of them Rule 9(b). There was concern expressed during those hearings as to whether this proposed language of not excusable might change the standards that had formerly been followed, the standards reflected in Sanders. There's colloquy in the hearing that we cite to the Court in our brief between Father Drinan and... and, for example, who was on the House Judiciary Committee and someone from the Judicial Conference saying-- William H. Rehnquist: A colloquy is... is legislative history? John Charles Boger: --No, Your Honor, it's not. It certainly helps to guide the Court's judgment as it looks through what happened. But the question back and forth, because it ultimately winds its way into a report, was are we doing anything more here with this new proposed language than incorporating Sanders v. United States? And the answer is no. That's what's being done with this language. William H. Rehnquist: Well, do you think Sanders froze the abuse of the writ doctrine for all time? John Charles Boger: As a judicial holding perhaps it did not. When it has been ratified by Congress, first in 2244(b) and then in Rule 9(b), yes. I think-- William H. Rehnquist: But if... if you ratify a judicial holding that left things fluid, why doesn't the ratification also leave them fluid? John Charles Boger: --I don't believe that it did leave things fluid on this point, Your Honor. The rule in Sanders reflected it... the judgment that what was of concern were parties who had deliberately withheld new claims or who had engaged in conduct that was inexcusably neglectful. The court pointed to the kind of conduct it meant, and the conduct reflected, in essence, bad faith behavior by the defendant or his attorney. That's the essence of the equitable underpinnings of both deliberate withholding and inexcusable neglect. When the Congress in 1966 then turned to 2244(b), it reflects in the legislative report the kind of behavior it's worried about are parties who bring identical petitions one after another, or who withhold claims, as it put it, obviously well-known to them. That language, which is in the legislative report, was drawn from the Judicial Conference report to Congress. That was what Judge Orey Phillips said had concerned the Judicial conduct... Conference: petitioners who withheld claims obviously well-known to them. That's a league... two leagues... away from the kind of standard that Ms. Boleyn and the State of Georgia are proposing here. And what Congress did in, in 1966 it further ratified in 1976 with Rule 9(b). It said in its legislative report that modified the proposed Rule 9(b) we are afraid that this new not excusable language might give federal judges too great a discretion to dismiss claims. And then it cited Sanders v. United States in passing, once again reflecting congressional judgment that Sanders and the standards reflected there were those than Congress had chosen. I think the legislative history, particularly as it involves two separate actions-- Antonin Scalia: Excuse me. What if... what if I didn't agree with that... what legislative report was that? John Charles Boger: --Well, we have... we have two reports. We have I think a Senate report in 1966. Antonin Scalia: If I were a member of the Senate, could I have voted against that report? John Charles Boger: You could have, Your Honor. There are no dissenting voices I think on that report. Antonin Scalia: Can a member of the Senate vote against a report? I didn't know that a report went up for a vote. John Charles Boger: I'm sorry. I think they can... I'm not clear on that, but I thought there could be dissenting opinions by... by a member of a committee. Antonin Scalia: A member of the committee, but certainly the rest of the Senate didn't vote on the report, did they? John Charles Boger: No. That's correct. Antonin Scalia: You're hanging an awful lot on, on, on the report from the committee, and you're speaking as though Congress said this. John Charles Boger: Well, let me... let add, Your Honor, it's not as if Congress was unaware of other voices. There had been legislation virtually every session of Congress from 1953 through 1988 proposing habeas corpus amendments. The voices of the attorney generals and others have been quite firm in those legislative debates. There have been floor debates as well. Indeed, in 1966 there was a proposal to enact a negligence standard. And on the floor, the Congressional Record reflects, that... that proposal was rejected. So, of course, congressional disapproval of a bill is not decisive, but seen in the context of the approval of standards that reflect and are said to reflect Sanders v. United States, I think it's, it's awfully strong legislative history, Your Honor. Antonin Scalia: It... granting, granting all that you say, why does it... and maybe this is the same as the Chief Justice's question... why does it show anything more than that Congress was not willing to change the rule? You, you, you have to establish something further than that, namely, that Congress did not want us to be able to change the rule. John Charles Boger: Well, my understanding of the way the... both the substantive law works and the Rules Enabling Act works is that this Court may propose rules to Congress which Congress then accepts or rejects. That's what happened. That dialogue took place with Rule 9(b). A proposed rule which contained language which Congress feared might give too great a discretion to dismiss successive petitions was rejected. That seems to me is the congressional response saying, no, we don't want a rule that may go that far. That's precisely what the report said in explaining the change in Rule 9(b) back to the language "or otherwise abuse of the writ. " So, I don't think the Court has power, if, if Congress has acted in a statutory area like habeas corpus, to disregard that rule, that standard that Congress has set. One can contrast this with the procedural default area. Where Congress is silent, where Congress has not spoken a jurisprudence can develop. And certainly this Court has developed such a jurisprudence in cases from Davis and Francis on through Sykes and Engle v. Isaacs and so forth. That's not the history of successive petition law. Successive petition law by contrast, by marked contrast, has had two congressional interventions in this period, and both of them reflect strong adherence to the Sanders v. United States standard. Let me, though, move to the new law claim that is among those that our client tried to present in his first application. He sought to raise a claim under Estelle v. Smith, a 1981 decision of this Court. Ms. Boleyn wants to suggest that Estelle v. Smith was foreordained, was clear to any reasonable counsel. But it's not at all clear. It certainly wasn't in 1978 when Mr. Moore filed his first federal application, that the Fifth Amendment rights survived the guilt determination at a trial. I remember being here in the Court for oral argument in 1980 when Estelle v. Smith was argued. I remember the Texas attorney general saying there simply is no right of self-incrimination left once guilt has been adjudicated. That was conventional wisdom in 1980. Indeed, in Estelle v. Smith itself, three Justices of this Court declined to reach the Fifth Amendment ground, the self-incrimination ground. And one, Chief Justice Rehnquist, says I'm not at all persuaded that there is a Fifth Amendment right that survives the guilt determination. There's contemporary evidence that, that demonstrates exactly how novel that rule was at the time. Justice Kennedy may remember a case of Bauman v. United States out of the Ninth Circuit, which was a 1982 decision that came up less than a year after Estelle v. Smith. An Estelle claim was raised in Bauman, but the Ninth Circuit said we do not blame the district court for giving this claim short shrift. It arose only a month before Estelle v. Smith was decided, and until that time, until Estelle was pronounced by this Court, we know of no Supreme Court opinion or circuit court opinion that ever suggested that the Fifth and Sixth Amendment rights addressed in Estelle v. Smith extend past the guilt determination phase and into the sentencing phase of trial. That was a Ninth Circuit contemporaneous, if you would, witness to the novelty of Estelle v. Smith. The Fifth Circuit itself subsequently held, as we cited in our brief, in Gray v. Lucas that reasonable counsel in 1979, a year after Mr. Moore had filed his petition, could not have been expected to foresee a change like that in Estelle v. Smith. There's an additional point on Estelle, and that is that our client, Mr. Moore, is not in the shoes of Ernest Benjamin Smith himself. It was not a psychiatric interview that Mr. Moore has challenged. Instead, he has extended Estelle v. Smith to the probation officer context. If Estelle itself was a surprise, was novel, we submit that the extension of Estelle to the probation officer's situation was far from clear to counsel, even reasonable counsel, other than Moore's in 1978. My understanding, indeed, is this Court granted certiorari last term in Cox v. Vermont to ask and answer the question whether Estelle applies in non-capital cases to probation officer reports. The matter is still unresolved in 1978... or 1988. Once again, Bauman held, the Ninth Circuit case, that in the probation officer setting, Estelle v. Smith didn't apply. Bauman also pointed out that it was a non-capital case and made some capital/non-capital distinctions which I think are quite important. But what I'm trying to do is to suggest that Estelle was far from clear in 1978 or even '80 or '81 or '82. There are other cases that I could cite that express the sense of the novelty of that doctrine, but let me move on for a moment to Proffitt v. Wainwright, a second new law claim. When this case was decided by Justice Crabbage... or Judge Crabbage in the Eleventh Circuit in 1982, four years after Mr. Moore had come into federal habeas for the first time, she wrote whether the right to cross-examine adverse witnesses extends to capital sentencing proceedings has not been specifically addressed by the Supreme Court and is an issue of first impression in this circuit. Our research suggested maybe at that time, 1982, an issue of first impression everywhere. The State, of course, has cited Gardner v. Florida, and said Gardner clearly presaged Proffitt v. Wainwright. We respectfully disagree. Gardner merely held that presentence reports could be made available to defense counsel for their rebuttal. It said nothing about whether the longstanding, widespread practice of submission of written documents at sentencing was to all of a sudden be overturned, and any defense counsel who wanted to cross-examine anyone who had filed a document as part of that report could come into court and be confronted and cross-examined. I'm still not sure whether Proffitt has been extended very far in, in the non-capital context to this date. We don't have very much information that I've been able to amass on that. So, in other words-- William H. Rehnquist: Proffitt is a decision of the Eleventh Circuit. John Charles Boger: --That's correct. It's not yet a decision this Court has passed on. My, my point, once again, is that these claims in retrospect may seem obvious once all of the woof and the warp has been put together. They're far from obvious at the time. It's as if one were to say of a chemist that the atomic table was always present. So, therefore, it's obvious that someone should have come up with the new formula that has been devised. Let me move quickly, though, to the Gardner v. Florida claim because I think-- Sandra Day O'Connor: On Gardner, Mr. Boger, didn't the state court determine that the attorney had seen the report, the presentence report? John Charles Boger: --The, the state court does make a holding that the claim is without merit. It does so after it recites a portion of the sentencing transcript where the report is put into evidence and an affidavit from the probation officer who says that he gave the report to defendant... the defendant's counsel and saw defendant's counsel discuss the confession portion. Sandra Day O'Connor: I thought it could be fairly read as finding that the attorney had seen the report. Why didn't Respondent raise the Gardner claim in the first federal habeas petition? John Charles Boger: We don't know why Mr.... Mr. Bonner did not. Of course, the Respondent did through substitute counsel the day after she entered the case. And I want to clarify the question a little further that Justice Stevens asked. Mr. Bonner did not raise the Gardner claim. He was the initial counsel. But he filed the petition and very shortly thereafter moved to withdraw from the case citing to the federal judge that he was overworked, that he thought that Mr. Moore's constitutional interest would suffer prejudice if he continued in the case. He then went to an evidentiary hearing so... or a status conference, so-called, during which the magistrate asked him if he wanted to put on evidence on any of the claims that were in the case, and he said no. Gardner, of course, was not in the case, so he never said we don't need any more evidence taken on the Gardner point. When subsequently Mr. Bonner left the case and new counsel came in, still seven months before the district court decided it, new counsel immediately moved to amend to add the Gardner claim, which had been exhausted. She asked for an evidentiary hearing on the claim. And let me explain, Justice O'Connor, what that evidentiary hearing was intended to do. Although it may have been true that the 74-page report in toto was given to Mr. Pierce, the trial counsel, during the proceeding, there is no finding on whether he realized that within that report there was a five-page narrative by Officer Rachels that contained a good deal of the most damaging evidence that was submitted against the defendant. There is certainly no finding on whether he realized that was in the larger document. Indeed, he both signed affidavits and swore in state habeas corpus proceedings that he never saw it. Moreover, there's certainly no finding on whether the opportunity afforded was reasonable. Under federal standards, Rule 32 of the Federal Rules of Criminal Procedure, to hand counsel a presentence report at the very outset of the sentencing hearing would likely not be deemed reasonable. And certainly our argument is under Gardner this was unreasonable notice. Whatever kind of notice it was, it wasn't sufficient notice for Mr. Pierce to have realized that his client's whole case was being jeopardized by this report because the report included, among other things, the suggestion that Mr. Moore had 10 prior crimes when in fact he had four juvenile adjudications. The report suggested that the crime was a great deal more deliberate and premeditated. For example, it's the only document... the only evidence before the sentencing judge that Mr. Moore may have fired first. The sentencing report... the presentence report suggests Mr. Moore began firing four or five shots, and the victim fired in response. Every other document and every other piece of testimony in this case is that Mr. Moore entered the bedroom window, came into the living room. The bedroom door opened. The victim came out of the bedroom door in the dark, hit Mr. Moore on the leg with a shotgun barrel, fired the shotgun, and then Mr. Moore, who was drunk, responded by firing four or five shots from his pistol. The degree of deliberation, on the one hand, cold-bloodedly shooting this man four or five times, on the other hand, responding to his own initial shot with the shotgun is a very serious one in terms of judging the heinousness of this crime. And it was the presentence report that contained that one variant account, an account that the judge apparently credited because his trial judge's report, which judges submit in Georgia at the State Supreme Court, reflected that view of the crime. There are other serious errors and omissions in that presentence report as well. Let me... let me add that the district judge who is the closest to this case and saw the facts in the greatest degree of complexity was the person who suggested that, that if Mr. Pierce had failed to see this report, an issue which he didn't pass on, as Justice Stevens points out, since he never reached the merits of the claim, he thinks that a wrongful sentence may have been imposed based on inadequate information. William H. Rehnquist: Well, why did he not reach the claim? John Charles Boger: Initially, Your Honor, he denied the motion to amend to add the Gardner claim in the context of granting full sentencing relief on another issue. In other words, let me... let me explain the status of this case. Ms. Hicks comes in the case in the fall of 1980. She immediately raises the Gardner claim among several others. William H. Rehnquist: When you say she immediately raises them, she files a motion to amend the petition? John Charles Boger: She filed a motion to amend saying I want to amend to add in the Gardner claim. At this point it is unclear even who the judge is because Judge Lawrence who originally had the case had died and there had been about a year in which there had been no activity. So, so, she filed a motion for clarification of who the judge was. That was clarified. She filed a motion for an evidentiary hearing. She wrote a letter to the court saying there's... I want to sort of begin to, to reassemble this case. I want to explain what issues we believe are before the court, ready for a hearing, what issues we've move to add and seek a hearing on, and what issues we have to go back and exhaust further in the state courts. So, she filed a series of documents which reflect that attempt to reorganize the case. What, what followed is that the district judge in April of the following year without notice denied the motion to amend, denied her motion for a hearing-- William H. Rehnquist: You say without notice. Are you suggesting there's some impropriety-- John Charles Boger: --Oh, none at all. None at all. William H. Rehnquist: --Then why do you mention the fact it was without notice? John Charles Boger: I simply meant that Ms. Hicks, and by this time Mr. Givelber, didn't know until they had received full sentencing relief what the dispositions were going to be on the Gardner or other motions. But the relief they received... and this is important to understand as well... was not just a resentencing hearing. The district judge concluded on a ground subsequently overturned that Mr. Moore could not be resentenced to death because his death sentence was disproportionately excessive. Consequently, there was no point to go back, as Ms. Boleyn suggested, to start adding Estelle claims or Proffitt claims or Gardner claims. They would all have been moot applications. The client at that point had a... had a ruling from a district court that full sentencing relief should be given. And, of course, that was then what was litigated up to the court of appeals. William H. Rehnquist: That, that was reversed by the court of appeals? John Charles Boger: That's right. The court of appeals said that the analysis conducted by the district court was improper. The court of appeals panel, I might add, granted relief on yet another ground. Mr. Moore has had relief from the district court, from the circuit panel and now from the circuit en banc. The court of appeals panel said a non-statutory aggravating circumstance played a major role in the sentencing judge... judge's decision, and that's unconstitutional. It unfortunately gave out its ruling on June the 23rd, the same day in which this Court decided Zant v. Stephens in 1983 and said a non-statutory aggravating circumstance doesn't invalidate the death sentence. So, once again Mr. Moore, who had obtained relief on another ground, found himself without relief. He pursued those matters to, to the Supreme Court, lost on certiorari, and at that point quickly came in and filed the new law claims under Estelle and Proffitt and sought a first adjudication on the merits of the Gardner claim. The district judge denied relief on the Gardner claim, as you know, finding that it was an abuse. It's a... it's a difficult finding because it's not a second adjudication on the merits. But he says sufficient opportunity had earlier been afforded that he was not going to award relief or even an opportunity to be heard on the merits at this time. He didn't consider the ends of justice question. The court of appeals reluctantly or with some hesitation said we will not find it an abuse of your discretion, district court, to have dismissed this petition as abusive, but we do think the interests of justice call for you to give further consideration to whether you ought to reach the merits even if there's an abuse. Our submission to the Court on the ends of justice point is that no matter what standards the Court majority ultimately holds meet the ends of justice test, Mr. Moore will be one of the people who falls within the core of that test. In Kuhlmann v. Wilson, four members of the Court, as you remember, suggested that ends of justice might be best defined in terms of actual factual innocence. And then in a related context in Smith v. Murray, a majority of the Court suggested that in the capital sentencing phase, the receipt of false or misleading information was sufficient to meet that related test for procedural default. Well, what we have in this case is precisely that. The receipt of false and misleading information by the sentencing judge upon which he relied, with the district court finding that it may well have made a life or death difference, that is within the core of the equity jurisprudence that has long marked habeas corpus. And for that reason, we've submitted that the court of appeals was certainly right to remand this case in the interest of justice. If there are no further questions, thank you. William H. Rehnquist: Thank you, Mr. Boger. Ms. Boleyn, you have eight minutes remaining. Susan V. Boleyn: Let me clarify that under the standard that we've proposed, which we think is clearly authorized by both Sanders and Rule 9(b), we're not asking counsel representing a habeas corpus petitioner to be able to foresee all the types of matters that Mr. Boger has discussed before the Court this morning. We're asking them to look around them, see what legal precedents they have available and whether they can mount a claim applying those precedents to the facts of their case. That's what lawyers do, and that's all that we're asking them to do. Of course, it's interesting to me, if I were-- Byron R. White: xxx court of appeals ask that question? What did they ask? Susan V. Boleyn: --Excuse me, Your Honor? Byron R. White: What did the... what did the court of appeals... what was their test? Susan V. Boleyn: The court of appeals test, Your Honor, was that reasonably competent habeas counsel could not have foreseen the cases that ultimately came out. Byron R. White: Is your... is your test different from that? Susan V. Boleyn: Yes, Your Honor, very different. Byron R. White: What is it? It has to be... you have to be extremely reasonable or what? Susan V. Boleyn: You have to be reasonably competent habeas counsel, but you don't have to have this clairvoyance that is implied at least by... to some extent-- Byron R. White: Well, I, I just don't understand how you differ... how your test differs from the court of appeals. Susan V. Boleyn: --Let me see if I can clarify that. Byron R. White: Reasonably competent counsel was the court of appeals test? Susan V. Boleyn: But they said reasonably competent counsel could not have foreseen the confluence of all these decisions. And our focus is not what you could have foreseen in the future, but did you look around and was something reasonably available then. So, it's a difference in focus. You still got reasonable counsel, but what is reasonable, when you're looking at procedural default and which we said is... shouldn't be applied over in this context, isn't the same thing that's reasonable when you're talking about why didn't counsel raise the claim. And, of course, it's very interesting that... and my understanding is that Mr. Boger along with Mr. Givelber came into this particular case in the district court right before decision, and Mr. Boger had been one of the counsel listed on behalf of Mr. Smith and Smith v. Estelle in the Fifth Circuit. Byron R. White: Well, do you think Judge Tjoflat really differed with the standard the majority applied, or was he just differ... differing with the application of the standard? Susan V. Boleyn: He differed with the standard, Your Honor, because he wasn't going to say the question was whether a reasonably competent habeas attorney could have foreseen. What he was talking about were there the ingredients... he called them ingredients instead of tools I think... were the ingredients there to raise the claim. So, it's a difference in focus, and we're, of course, going with Judge Tjoflat. William H. Rehnquist: But is there... is the difference only in the,... the time on which you focus? Susan V. Boleyn: No. William H. Rehnquist: Or is it something more? It's really just on the time, isn't it? Susan V. Boleyn: It's not only just the time that you're focusing on; it's a matter of perspective. In one you're talking about why was it not preserved. In another case, you're talking about why was it not presented. And if there's, there's something that you can cite for that principle even if it's not directly on point, then it's available because you're always... the problem is you're always going to have new law. So, if something stays in the district court long enough or in the Eleventh Circuit or another court of appeals long enough, there are going to be new decisions that you can cite for the same proposition. So, the question is was there anything that you could use to cite the proposition in that case? And so, it's more than just the point in time... the focus... although that's the most important-- Byron R. White: So, you say you shouldn't ask whether, whether a later decision was foreseeable, but you ask whether or not the claim should have been made? Susan V. Boleyn: --And were there decisions then that they could use, not could they foresee the one that ultimately came, but were there decisions around them that they could use to mount the claim based on their factual situation? So, it's other than foreseeability. The other thing that I'd like to point out is that I don't believe that the Sanders court could in any way envision the types of abuses of the writ that are taking place today. I don't believe that they could envision that piecemeal litigation would just be out... astounding in its number and in the sophisticated types of abuses of the writ that there are. I think they viewed abuse of the writ as a very simple form more like deliberate withholding or deliberate bypass, but now we have new claims and old claims and withheld claims and bypass claims and claims based on new law and claims based on new facts. And when you have more sophisticated types of abuses, it cries out for the interpretation of the general standard in 9(b) by this Court. It's interesting to note, if we want to talk about the committee notes, that the committee's notes to Rule 9(b) say we are leaving it to the courts to interpret this standard on a case-by-case basis in the exercise of their judicial discretion. So, Rule 9(b) itself has left it to this Court and other courts to interpret the standard because as Sanders simply says, we're not going to permit abuse and abuse is conduct that is abusive. So, the question is what is abusive conduct? And that's why they try to get around their own abuse by talking about new law claims. That's all I have if there's no further questions. William H. Rehnquist: Thank you, Ms. Boleyn. The case is submitted.

William H. Rehnquist: We'll hear argument first this morning in Number 96-1769, the Ohio Adult Parole Authority v. Woodard. Mr. Klatt. William A. Klatt: Mr. Chief Justice, may it please the Court-- This case presents a challenge to Ohio's death penalty clemency procedures under the Due Process Clause of the Fourteenth Amendment and the SelfIncrimination Clause of the Fifth and Fourteenth Amendments. If I may, I'd like to address the due process challenge first. Fundamentally, respondent's due process challenge fails for two reasons. First, he has no constitutional or inherent right to clemency based upon this Court's decision in Connecticut Board of Pardons v. Dumschat. Second, Ohio's adoption of the clemency power and the procedures associated with it do not create a constitutional entitlement because the Governor's exercise of that power remains wholly discretionary. Sandra Day O'Connor: Well, let me ask you something, Mr. Klatt. Suppose that the Governor... obviously an unlikely scenario, but suppose the Governor of Ohio, some future Governor, decided that he would grant clemency to... he would at least allow clemency hearings and consider clemency for white defendants but not black. No limit there on a policy like that, would you say, under the Constitution? William A. Klatt: I believe there would be a limit under that-- Sandra Day O'Connor: So what we have to decide-- William A. Klatt: --There would be an equal-- Sandra Day O'Connor: --is, what are the limits, and how do we draw that line. William A. Klatt: --Yes. Sandra Day O'Connor: So you do concede that there would be some equal protection concerns, certainly, constitutionally imposed? William A. Klatt: Yes, Your Honor, we do concede that, not rational basis equal protection, but certainly a suspect category, perhaps even a substantive due process problem in an outrageous circumstance. William H. Rehnquist: The court of appeals here, as I understand it, based its ruling on the Due Process Clause, not the Equal Protection Clause, is that correct? William A. Klatt: That is correct. Antonin Scalia: I don't see... what difference would that make, what clause you're proceeding under? William A. Klatt: Your Honor, I don't believe it would make a difference in terms of equal protection, rational basis and due process. I think the analysis would be essentially the same, although for slightly different reasons. Fundamentally, the Due Process Clause is not violated in this instance because there is no underlying life, liberty, or property interest that's at stake. That interest has been adequately safeguarded by the substantial protections that exist at the trial court level and certainly throughout the appeal process leading to the final conviction. Ruth Bader Ginsburg: Mr. Klatt, are you then saying that what... there may be some process due, but whatever process due it has been allowed, or are you taking the position that due process, as distinguished from equal protection, your answer to Justice O'Connor, due process doesn't enter into it? The examples that, was it Judge Nelson gave, were due process examples. That is, arbitrary decisionmaking. She gave the example of a coin toss, or picking the straw out. So are you saying, suppose the parole board said, oh, we have better things to do with our time than read all this stuff, so we're going to toss a coin and every tenth or, say, every tenth applicant will get clemency? William A. Klatt: Your Honor, our position is that fundamentally, because there is no underlying life, liberty, or property interest, that a Governor could make a clemency decision in an arbitrary manner. It's almost inherent in the concept of unfettered discretion. I don't think that would happen. There's no reason to believe that a Governor would act any less responsibly than a court would in exercising power, and in fact clemency by constitutional design was meant to be an unfettered power of the executive branch as a check on the judicial branch, so fundamentally our position-- Ruth Bader Ginsburg: So it could be totally arbitrary as long as it's not a denial, so you're saying there is an equal protection check but not a due process check, is that-- William A. Klatt: --Yes. Yes. That's exactly our position. David H. Souter: --Then it does matter on your analysis that, although the State... although there is no... in your judgment, although there is no life interest to be protected, and although the State is not obligated to give any clemency consideration at all, it still does not matter on your analysis that the State has chosen to do it, that that does not implicate a due process concern. William A. Klatt: It does not implicate it on these facts for the simple reason that Ohio, in enacting the power, did not in any way create standards or criteria that limit the discretion of the decisionmaker. William H. Rehnquist: Well, that's certainly what Dumschat held, wasn't it? William A. Klatt: That's exactly what Dumschat held, Your Honor, and it's a case that we rely very heavily on. We believe it's a case that is right on point in terms of the facts that are confronted with... that are confronted the Court in our case. Anthony M. Kennedy: And the answer that the respondents give is that they say because this is a death penalty it is necessarily a part of the criminal process, and Dumschat was not. Is that how you understand their argument? William A. Klatt: They, of course, make a number of arguments, Your Honor, but that is one of them, and I believe the argument is flawed for the simple reason that the Court in Dumschat, relying I think principally on the Greenholtz analysis, basically said that if the interest that was at issue... and in that case I admit it was a liberty interest, not a life interest, but I don't think that matters, because what the Court was saying is, if the interest that was at issue was contemplated and encompassed in the underlying conviction and sentence, that that interest has been adequately safeguarded, and-- Anthony M. Kennedy: Now, suppose... and I suppose it's not too unimaginable a hypothetical... that the clemency authorities said that you may not consult counsel in preparation for your clemency hearing. William A. Klatt: --Well, I think that would... it sounds as if you're asking a straight right to counsel question. Anthony M. Kennedy: Yes. That would probably be under just the Sixth Amendment, wouldn't it? William A. Klatt: It would be I think just under the Sixth Amendment, which of course is not at issue in this case. In answer to your question, I believe there is no right to counsel constitutionally to... in the clemency process, so the State would not have to provide a counsel. Now, of course, Ohio does provide counsel in that process. Anthony M. Kennedy: Well, but in my hypothetical he has a counsel but he's forbidden to consult the counsel in preparing his written submission to the clemency board. William A. Klatt: I don't believe that would violate due process, because there is no underlying-- Anthony M. Kennedy: Well, would it violate any provision of the Constitution? William A. Klatt: --It potentially could violate the Sixth Amendment. It potentially could. Anthony M. Kennedy: Well, of course, now the Sixth Amendment is applicable to the States via the Fourteenth, and then you're right back into the question of having to have a life, liberty or property interest. I would assume it would be life here. William A. Klatt: It certainly is a life interest here. In that hypothetical, denying counsel at all in the process certainly does not seem correct, but if there's no underlying life, liberty, or property interest I don't know how it would implicate a due process interest. David H. Souter: Does it follow from your argument that there is no due process implication to the provision of direct appeals in criminal cases, no due process implication in providing the cert process that we do? William A. Klatt: I don't believe that does follow, Your Honor. Clemency and that power is very distinct from the processes that involve the judicial processes. David H. Souter: Oh, I will grant... I'll grant you that, but what I was picking up on was the statement you made ago in one of your answers, I guess, to Justice Kennedy, that the interest being protected had been protected in the underlying proceeding. And I thought your point was that when in the underlying criminal proceeding, for example, leading to conviction, these interests had been protected, and there was simply a constitutionally unnecessary further proceeding, whether it be appeal, or cert, or clemency in this case, that there was no application of due process to those superadded stages. Maybe I misunderstood your argument. William A. Klatt: If I implied that, I misspoke. It's our position that Evitts, which, of course, is a case that is heavily relied upon by my opponent and relied upon by the Sixth Circuit below, is also correctly decided in the sense that due process certainly applies throughout the adjudicatory process, which would include the appeal process. How much-- David H. Souter: Right, but on your theory why shouldn't the due process stop at the conviction? William A. Klatt: --Because the other processes are part of the system for adjudicating the guilt or innocence of the defendant. Clemency is not-- David H. Souter: So the adjudication's not final, in other words. William A. Klatt: --Correct. Correct. John Paul Stevens: Then under your position, as I understand it, a State could totally abolish appeal and say after the trial court proceedings are over whether or not the man will be sentenced or executed should be left entirely to the unbridled discretion of the Governor. William A. Klatt: Yes. John Paul Stevens: They could do that. William A. Klatt: Yes. William H. Rehnquist: That's certainly consistent with the reasoning in Evitts, is it not, that-- William A. Klatt: I believe-- William H. Rehnquist: --you can't block an appeal from an indigent if the State provides one, but the State under Durston v. King doesn't have to provide one. William A. Klatt: --I believe that's correct, Your Honor. The-- Antonin Scalia: And if there's anything that seems harsh about that, I suppose it is the deprivation of the appeal, not the deprivation of additional procedures in the pardon. William A. Klatt: --I would agree, Your Honor. I might add that the fundamental flaw, I believe, in the application of Evitts to this case, is that the lower court's decision was based upon a faulty premise, and that premise is, that faulty premise is that clemency is part of Ohio's system for the adjudication of the guilt or innocence of the defendant. Anthony M. Kennedy: Well, we have said in cases such as the Herrera case, in talking about the finality of habeas corpus, that there is always clemency. We have made the link, to some extent, in our own writing. William A. Klatt: Well, I would contend, Your Honor, that simply acknowledging the existence of a power of another branch of Government does not, in and of itself, make it part of the process, and in fact, as I mentioned earlier, as a matter of constitutional structure, clemency is one of the checks and balances that we believe exists, certainly under Ohio's constitution, that is an executive branch's check on the judicial system. And of course, the check on the clemency power itself is basically the electoral process. Sandra Day O'Connor: Well, Mr. Klatt, in Dumschat this Court's opinion said that unlike probation pardon and commutation decisions have not traditionally been the business of the courts and, as such, they're rarely subjects for judicial review. If we were to take the position that it is conceivable that wholly arbitrary action in the clemency procedure could be addressed under the Due Process Clause, how would you address the allegations that are made here? Would they survive that rare situation, or how would you address those challenges in this case, if there... if we left open the possibility that there could conceivably be a due process violation? William A. Klatt: Well, I certainly would hope that you wouldn't, but I believe that Ohio's death penalty clemency procedure in this case would survive such scrutiny. Sandra Day O'Connor: Are you going to address the allegations with any particularity or specificity in giving me that answer? William A. Klatt: I'd be certainly happy to. Keep in mind here that this policy was enacted to address a problem, and the problem was that the Governor was confronted with clemency applications with very little information, oftentimes because counsel for the death row inmates would not seek stays until the very last minute. In fact, they had a situation where counsel for a death row inmate filed for the stay the day before the execution date with the district court judge. That judge denied the stay. The stay was subsequently granted later that day in the Sixth Circuit, but the Governor was quite upset that with practically no information he was confronted with a clemency situation, so they enact these procedures. The procedures are designed to be fair-- Anthony M. Kennedy: I didn't quite... was the stay application, a request for a stay-- William A. Klatt: --Of the execution-- Anthony M. Kennedy: --of the execution by the Governor, so that the-- William A. Klatt: --No. Anthony M. Kennedy: --clemency process could take place, or it was just-- William A. Klatt: I'm sorry-- Anthony M. Kennedy: --a collateral... additional collateral attack on the conviction? William A. Klatt: --It was a stay obtained in the Sixth Circuit, a stay of execution so that he could pursue Federal habeas. I'm sorry if I misspoke. Stephen G. Breyer: The problem that I'm having is, this case is in an interlocutory posture, and so looking at the opinion, I thought perhaps the circuit has just held that the Due Process Clause could, in some conceivable circumstance, be violated, and can we say now that we could never even imagine a circumstance, so matter how bizarre or peculiar or unfair the system was, that it couldn't possibly be a violation no matter what, and the same, really, in a sense is true of the Fifth Amendment part. Is it... do we have to say that there's never a circumstance, even if the clemency board were to say, you have to confess to every crime ever, ever conceivable by any member of... you know, I mean think of the most bizarre circumstance you can. And now, if there is such a circumstance in which either of these clauses would apply, how can we say that you win, in this posture of the case? William A. Klatt: Well, it's our position, Your Honor, and we are taking an absolute position, that with respect to due process there is no due process protections that apply here for the simple reason, as I stated earlier, that there is no underlying life, liberty, or property interest to-- Anthony M. Kennedy: I suppose we could put the same kind of questions if you were arguing about the executive power to appoint or to... in the Federal context to recognize a foreign nation. We don't like arbitrary government, but certain powers are committed to the executive. William A. Klatt: --Some power, some delegation of power is absolute. The veto power. State-- Ruth Bader Ginsburg: Mr. Klatt, I thought that that was one of the arguments that you made, but in your first exchange with Justice O'Connor you said yes, there'd be an equal protection check, so I was thinking that your argument was kind of like a, what's labeled political question. This is committed to another branch of Government, totally executive, judiciary, hands off. But your immediate response was no, there is judicial review for constitutionality under the heading of equal protection, so I gathered from that answer that you weren't taking the answer that you are now giving, that this is just handsoff for the judiciary, it is entirely executive branch business. William A. Klatt: --I may have misspoke. My point was that with respect to a due process analysis our position is absolute, because you could-- Ruth Bader Ginsburg: But if you're using the political question doctrine, that model, it isn't that as to one clause or as to another clause, it's even... it's a First Amendment violation, whatever. It simply is committed to another branch of Government. William A. Klatt: --We're not going quite that far, because we have acknowledged that there might be some outrageous circumstance where there could be-- Antonin Scalia: What is outrageous? I mean, once you say equal protection, it seems to me you give... suppose the Governor has two applicants for pardon, they are identical in all their circumstances, and the Governor says, I grant one and I don't grant the other. Is that... you think we can intervene in that case? William A. Klatt: --No. Antonin Scalia: And if we can't intervene in that case, I suppose we can look to see if they are identical circumstances, so the ball game's over. You've gotten the whole matter into the court. I don't see how you can give away the Equal Protection Clause and achieve what you're seeking to achieve here. Well... go ahead. Answer Justice Scalia. If you consider it a question, answer it. [Laughter] William A. Klatt: I'd be happy to respond-- Antonin Scalia: Don't you think that if you give away the Equal Protection Clause-- [Laughter] William A. Klatt: --It's the position of the State of Ohio that since the clemency power comes from the constitution, at least the Ohio constitution, in Ohio, that it can't violate another expressed provision of the Constitution, and the only one I can think of would be a racebased decision. That seems inherently wrong-- Antonin Scalia: Why, because that is currently a very enraging thing, but why is that any more enraging than two identically qualified people, and the Governor says, I like this guy, you get it, you don't get it? Why is that any different? William A. Klatt: --Well, even in Dumschat the Court seemed to indicate that you could deny clemency for any reason or no reason at all for any constitutionally permissible reason. If it's not a constitutionally permissible reason it might create a problem. Now, keep in mind, equal protection is not an issue that's currently before you, but if I understand, it's... it's a diff... hypothetical. William H. Rehnquist: So, supposing the Governor has complete control over the use of the Ohio State stadium for the Ohio StateMichigan game, and he decides that only white people will be admitted for that game. Now, nobody has any sort of a protected liberty interest or property interest to go to that game at all, but nonetheless the Equal Protection Clause would apply to prevent that sort of discrimination, would it not? William A. Klatt: I believe it would, and that's I think our essential point, and I don't think quite frankly from a practical standpoint it's that much of a concession. What is really a problem here is applying a due process analysis which would... at any level, which seems to totally open up the door. Antonin Scalia: It's easy enough if you limit it to race alone, but once you say you're entitled to equal treatment, why isn't he entitled to come to the court and say, look, just last year somebody was pardoned who has, you know, exactly the same qual... or no better qualifications? Why doesn't... isn't that a denial of... is race the only basis for denial of equal protection? William A. Klatt: Well, certainly, race is not the only basis, but the-- Sandra Day O'Connor: Well, I guess if it's a racebased discrimination we apply heightened scrutiny to it, and if it's not, you have a totally different standard, wouldn't you say? --then you agree the Governor could have a policy of pardoning all women and no men, or could he not? That also invokes heightened scrutiny of some sort, does it not? William A. Klatt: --That would be intermediate scrutiny, which would be higher. John Paul Stevens: We could review his pardoning power on such a challenge, you would agree. William A. Klatt: That, I think, is a very close question. I think it would be-- John Paul Stevens: You want to have it both ways on almost every hypothetical. [Laughter] No, but Mr. Klatt, isn't your argument here that the Equal Protection Clause does not apply contingent upon the kind of protected interest analysis which is identical to the Due Process Clause? William A. Klatt: --That's exactly it, Your Honor. William H. Rehnquist: And your argument as I understood it was that once there has been a final adjudication through the appellate process which has resulted in a judgment that this individual should lose his life, that there is no life interest left for the Due Proces Clause to protect. Isn't that your argument, and that's why you take the absolutist position on due process? William A. Klatt: Yes. William H. Rehnquist: So that if we disagree with you on that, if we say, for example, well, clemency really is part of the adjudicatory process, or if we were to say, well, if you grant a clemency proceeding you've got to have some minimal process for it, you would lose, but at least you would lose because we were rejecting that absolutist analysis as being sufficient, but that's still consistent, I think, with your position on equal protection. William A. Klatt: I believe that's correct, Your Honor. Sandra Day O'Connor: Well, Mr. Klatt, you never have answered my question. Would you lose if we said there might be some extreme situation governed by the Due Process Clause? You've never addressed what the allegations are here. One is based on the Fifth Amendment, I believe, and one is based on the timing of the-- William A. Klatt: Correct, and I didn't-- Sandra Day O'Connor: --clemency hearing. Are you going to talk about the merits of the claims at all, or are we to end this argument without ever hearing whether you would lose in the event we don't adopt the absolutist position? William A. Klatt: --I believe we would win even if there were some level of due process protection. Speaker: Well, why? William A. Klatt: And the reason is, is because here we had notice, and opportunity for an interview. Counsel could participate in terms of helping with the preparation of written materials that the applicant could submit if they wanted to, so you certainly had notice, opportunity for participation, an informal review process... the whole procedure was designed to be fair both to the inmate as well as to the public, as well as to the courts, and as well as to the prosecutor, so I believe the procedure is a fair one under any analysis. It is not, however, an adjudicatory process, and it is not an adversarial process, which is the very reason why counsel were not permitted at the interview, and counsel would not be permitted at the review itself, and we don't believe that that is in any way problematic, because there's no due process requirement under our argument that that applies, and it's-- Stephen G. Breyer: I take it part of his argument might be, though I'm not positive on this, is that the timing of this is really... there's no reason in the world under the... as far as clemency is concerned that you have to have the timing deadlines the way you do, and the way you do means that he has to incriminate himself completely at a time prior to the ultimate affirmation of his convictions, and you could move that easily so he didn't have to do that, but the way it stands, he might have to have a new trial, and then he'd be convicted out of his own mouth simply because of an unnecessary and arbitrary timing circumstance in the rules. I think there's something like that going on. William A. Klatt: --I believe that's their argument. Stephen G. Breyer: Well, what's the answer to that? William A. Klatt: I think the answer is that there is a legitimate... it's not an unreasonable and arbitrary matter of timing. There's a very good reason for it, and the reason is that the Governor needs to be sure that he has the information necessary so that he can responsibly exercise the discretion that he has. We're talking about a very short time frame here. The rule says that if you're within 45 days of an execution date and it hasn't been stayed, that's when the interview process and the formal review process goes forward, so there is a legitimate State interest-- Anthony M. Kennedy: And in this case there was a delay in filing the habeas petition, I take it. William A. Klatt: --There was, and the timing problem in this case was created essentially by the respondent themselves for not getting the stay in a timely way. Anthony M. Kennedy: But suppose, just to test the theory and to take Justice Breyer's question a little bit further, a State had a parallel track. The minute the trial court proceedings were concluded the clemency proceedings started, and the Governor said, it's very important that you admit guilt, failure to admit guilt will be an inference against you, and this was a parallel process with the direct review. Any problems with that? William A. Klatt: The further-- Anthony M. Kennedy: I know that's not your case, but we're just-- William A. Klatt: --That's obviously not our case, but I suppose that there is a line some place where timing seems to give rise to compulsion, and that might be a problem. I'm not sure that it exists in the hypothetical that you proposed, but it might, but certainly, given where the process was in this case, that does not seem to be problematic. Antonin Scalia: --I assume that this answer is on the assumption that the Due Process Clause applies. William A. Klatt: Yes. Antonin Scalia: This is not your position in this litigation. William A. Klatt: Absolutely not. Antonin Scalia: You would say in this litigation it doesn't matter. William A. Klatt: Yes. If I may, I'd like to reserve the remainder of my time, Your Honor. William H. Rehnquist: Very well, Mr. Klatt. Ms. Shank, we'll hear from you. S. Adele Shank: Mr. Chief Justice, and may it please the Court-- Respondent Eugene Woodard asks only that this Court find that within the parameters of the pleadings there may be some set of facts upon which he may prevail and that this case be remanded to determine whether such set of facts exists. William H. Rehnquist: Well, we deal, Ms. Shank, don't we, with the facts that were alleged with respect to the Ohio parole, Ohio clemency process. I mean, it's not as if we could conjure up some hypothetical set of facts that weren't the standard Ohio clemency process. S. Adele Shank: We are bound by what's in the pleadings and by the process as it appears in the record, Your Honor, and if I understand your question, I think you're asking if the Court can make a decision on those facts alone. William H. Rehnquist: Well, the... I got the intimation, perhaps mistakenly, from your statement that if we could conceive of some clemency process somewhere that had some sort of provisions in it that would be so arbitrary we would say due process applies, we should bring that to bear on this case, but we're dealing with an established system of clemency in Ohio, are we not? S. Adele Shank: And I agree, it has to be some process that you can conceive within the procedure that is present here, but I think there are many such conceivable fact situations that may or may not be able to be proved on remand. Antonin Scalia: But I thought the remand was limited to whether the district court could find that the coercion to confess guilt was an unconstitutional condition. S. Adele Shank: Your Honor, that-- Antonin Scalia: Wasn't that what the remand was limited to, or was it remanded for the district court to come up with any other due process violation? S. Adele Shank: --Well, it was remanded with respect to both the Sixth Circuit's analysis of Evitts v. Lucey and the idea that clemency is, in fact, as it is, an integral part of Ohio's criminal justice system as well as on the Fifth Amendment issue. But, of course, because this is a case that was ruled on based on a motion to dismiss and therefore the pleadings, this Court comes to it as if it's de novo review, and so the Court can look within the pleadings as broadly as it chooses to, so any set of facts that the Court can conceive would be... that would allow due process to apply-- Sandra Day O'Connor: Well, I would assume we at least have to look at the facts alleged in this complaint, not some conceivable set of facts from somebody else. S. Adele Shank: --Again, Justice O'Connor-- Speaker: Don't we? S. Adele Shank: --Yes, absolutely. Sandra Day O'Connor: Don't we look at this complaint? S. Adele Shank: I do. Sandra Day O'Connor: And this complaint says-- S. Adele Shank: Yes. Sandra Day O'Connor: --Well, under Ohio's provisions here, which gives the convicted defendant an opportunity to ask for an interview but doesn't require it, you say that's a Fifth Amendment violation there, and it won't stand up. I assume we can address that, can't we, just head on. S. Adele Shank: Certainly, Justice O'Connor, the Court can do anything as if on de novo review within the parameters of the pleadings. Speaker: Well-- S. Adele Shank: And that is what I'm trying to say. William H. Rehnquist: --But also we have to take it in the prism of the Sixth Circuit's analysis. I mean, if we disagree with the Sixth Circuit's analysis, the fact that the pleadings might have formed the basis for some other sort of analysis wouldn't have much to do with how we treated the opinion of the Sixth Circuit. S. Adele Shank: Chief Justice Rehnquist, it's true that the Sixth Circuit's opinion surely should be informative and helpful to the Court. Speaker: Yes. S. Adele Shank: But it is my understanding that the Court can clearly look, as if on de novo review, at the pleadings and determine whether or not there are other problems or other aspects of this process that need to be considered in order to-- William H. Rehnquist: But what we granted review on was not the pleadings that were filed in the district court. It was the opinion of the Sixth Circuit, and if, for example, we should feel that the Sixth Circuit totally misapprehended our Dumschat opinion we would probably say so in an opinion. S. Adele Shank: --And it could very well be that the Court would choose to remand for... to the Sixth Circuit for assessment in light of what it took to be a misunderstanding. Anthony M. Kennedy: And we also would, and I think must examine the Sixth Circuit's holding that the selfincrimination aspect of the case presents a serious constitutional problem in that it's an unconstitutional condition on the imposition of the... on the Fifth Amendment. S. Adele Shank: Certainly the Court may choose to do that. You are obviously not required to do so. We think that it is an unconstitutional condition, and I hope I haven't said anything to make you think I'm saying you should only address one issue. I'm not. Anthony M. Kennedy: Well, but that's the best way for us to get into the case and that's, it seems to me, a quite problematic holding on the part of the court of appeals. Suppose the Governor says, I'm not interested in granting clemency to people that haven't confessed, that shows remorse. That's what I'm interested in. There's no problem with that, is there? S. Adele Shank: Well, one of the things that I'd like to point out which-- Anthony M. Kennedy: You may disagree with it as a policy matter, but as a constitutional matter he has a complete right to say that, I should assume. S. Adele Shank: --It's absolutely true that the Governor has complete discretion under Ohio's clemency processes. However, the Governor's executive discretionary decisionmaking authority truly is not at issue in this case. We are looking not at the end result, which is the decision made by the chief executive of the State, but rather at the procedures that are limiting the right to seek clemency. We're looking at the front end of a process. As this Court noted in Dumschat, there the Court found there was no due process interest in that end result, at least none that required an explanation of the reasons for a clemency decision. William H. Rehnquist: It said none at all. Didn't the Dumschat opinion say that? S. Adele Shank: The Court found that there were no due process liberty interests at that point. Speaker: Yes. S. Adele Shank: But the important point for us with regard to Dumschat is the fact that the Court noted in the final line of the opinion that Connecticut had a State right to clemency and there had been no breach of that right. Now, the Court went no further, but the fact that the Court recognized a difference between the end result of the executive discretionary decisionmaking process and a possible difference between that and the right to get your papers on the Governor's desk is what we are focusing on here. The other thing is that I think-- William H. Rehnquist: Well, let me read you a couple of sentences from Dumschat which strike me as being a little different than the way you interpret... the Court said we rejected the claim that a constitutional entitlement to release from a valid prison sentence exists independently of a right explicitly conferred by the State, and then it goes on to quote from Greenholtz. There is no constitutional or inherent right of a convicted person to be conditionally released before the expiration of a valid sentence. Well, it seems to me that says that unless the State has created some sort of a liberty interest there isn't any. Justice Stevens in dissent, of course, felt differently. S. Adele Shank: --Chief Justice Rehnquist, I agree with what you just read from Dumschat, and I think that what is important about it is that it does focus on the decision, and that's what this Court said there isn't an interest in. At the end of this process, as Justice Ginsburg noted, we are moving into the executive discretionary decisionmaking process, and there, the Court is right, but we are not looking at that end of it, and we're not looking at what the decision is. We are looking at the right to apply for clemency and get to the point where we get a decision, and I think Ohio-- Antonin Scalia: This is... I don't understand this. This is sort of a right to the process with nothing at the end of it? S. Adele Shank: --It's a right-- Antonin Scalia: Just a right to the process... I can understand, and I think Dumschat permits your claiming a right to the procedure which the State has accorded, so that if they violate their own procedures for clemency, yes, you would have some right to complain. But where their procedures give you no more than what you've received, you're asserting that you've been deprived of what? You say, I'm not being deprived of my liberty, but I'm just being deprived of something in the abstract that... I don't... I really don't understand-- S. Adele Shank: --Well, okay, Justice Scalia, we're actually presenting four different grounds, one of them being the fact that the State has created a liberty interest and a life interest in clemency in Ohio, and that is in the right to seek it, and the Ohio supreme court noted in Weaver v. State that clemency is the remedy that is available to individuals who are unable to achieve redress in the courts. They said in In re Kline that Ohio defendants who can't have a conviction overturned because it's beyond judicial process have a right to apply for clemency. On top of that-- Antonin Scalia: --Right, but... let me just clarify. You're not contending that Ohio violated any of its own laws pertaining to the clemency application. You're saying that something which they have in there shouldn't be there, or that something which they don't have should. S. Adele Shank: --We are saying that this process violates that Statecreated right to seek clemency in that particular analysis. William H. Rehnquist: The court of appeals disagreed with you on that point though, didn't it? S. Adele Shank: The court of appeals-- William H. Rehnquist: Did it, or did it not? S. Adele Shank: --They did not accept that position, but again, I would like to put forward, Your Honor, that we were on motions and pleadings, and the facts hadn't been fully explicated, so the court didn't have before it the full history and background-- William H. Rehnquist: Well, but presumably the court of appeals well knew that you... dealing with a complaint dismissed on motion you give it a generous construction. You say that's what we should do, and certainly I'm sure the court of appeals knew that. S. Adele Shank: --Your Honor, I can tell you from reviewing the pleadings that the cases that I've just cited to you, In re Kline and Weaver v. State were not before the court, and very, very little-- William H. Rehnquist: You didn't argue that point to the court of appeals? Did-- S. Adele Shank: --Your Honor, the question of whether or not there was-- William H. Rehnquist: --I asked you a question, Ms. Shank. S. Adele Shank: --I'm sorry, Your Honor. William H. Rehnquist: I asked you, did you argue those cases that you just cited to the court of appeals? S. Adele Shank: No, they were not included in the briefing at that point, Your Honor, but the issue was included, the question of whether there was a State right. But I think that the entire process has been truncated by the fact that it was... that the Court... it's here before the Court without sufficient fact development. That's why a remand is in order. Were the Court to send it back-- Ruth Bader Ginsburg: Ms. Shank, one of the problems is, it's always going to be facial because you took this case out of the Ohio system... true, it's an executive process, and you're taking it into the Federal court and you're saying now, what if, what if. We don't know what it would be. Are you taking the position that it is inevitable that this procedure that Ohio has would yield a violation of due process? Couldn't one say, well, it may work so that he is treated fairly. How can one say just on what we have here that applying these rules to his case would inevitably deny due process? S. Adele Shank: --Justice Ginsburg, we agree with that. We think that it is possible that it could go back on remand. There could be full hearings, and there could be factual development that determined that in fact sufficient due process protections have been recognized, but-- Ruth Bader Ginsburg: But it had been... nothing has happened. You took... you got a stay and took it all into the Federal court, so we don't know how this State process would work because it didn't get off the ground. S. Adele Shank: --That's correct. It-- Stephen G. Breyer: The analogy that I'm... sorry. Were you... answer Justice Ginsburg. S. Adele Shank: --I was just going to say, it's correct we would... for this Court right now the determination has to be whether within the parameters of what's before it, that we might possibly prevail on a set of facts that could be established on remand, and so what you suggested earlier, that we could go back and find that what has been provided is sufficient, is a very real possibility. It's certainly not what we believe, but it is possible, and it could happen. So there's nothing in this case to say that we couldn't go back and find ourselves being told that due process parameters have already been satisfied. Ruth Bader Ginsburg: Or will be. S. Adele Shank: Or will be under the-- John Paul Stevens: May I go back to Dumschat for a second, because I didn't think you distinguished it in the same way that the court of appeals did. It seems to me one can reasonably say that the right to due process before liberty is taken away is exhausted once you're in jail, because your liberty's gone. But you're relying on the right to due process before life is taken away, and this man is still alive, so you have an argument for a protected interest in procedures until his life is taken away that just wasn't available in Dumschat because he was in jail. S. Adele Shank: --That's correct. We do also present to the Court the fact that there is a Federal life interest protected by the Fourteenth Amendment that is independent of the other issues that we've presented, the other types of interests, and that that was not present in Dumschat, and that it independently is basis alone to allow this Court to make the decision that special... that this special proceeding for death penalty cases impacts that life interest and therefore distinguishes it from Dumschat. David H. Souter: I think the State might argue this way in response to your argument about the life interest. I think the State might say, we agree that there is a life interest up to the time which may lawfully be set for execution under Ohio law, but that's not what's in question here. What's in question here is an opportunity to have life after the date which the law has already said at which it may be taken away, and because you have no life interest after that point... you litigated that on direct appeal and you lost... because you have no life interest after that point, and because that is the only life interest that could be served by clemency, there is no interest for Fourteenth... for due process analysis, to which process could apply and help you. What's your answer to that argument? S. Adele Shank: Well, first that the life interest remains fully intact as long as a person is alive. I mean, the Fourteenth Amendment right to life that is protected is nothing more and as simple as the right to be alive and to continue to live, and a date does not determine when that right that is protected ends. The only thing that ends that right and its protection under the Constitution is actual death. So the life interest, unlike liberty, isn't diminished in increments. It's not diminished by having been placed into the prison, as is the liberty interest, and it can't be diminished in bits and pieces. It exists with all of its... in its fullblown state until the moment of death. And I think recently this Court recognized that in its... addressing the question of whether or not there was a right to assisted suicide. There the Court even cited the Ohio supreme court, saying that even condemned prisoners have the right to protection of law up until the last moment of life. William H. Rehnquist: Well, all we held in the assisted suicide case was that there was no constitutional right to have the assistance of a physician if you wanted to commit suicide, wasn't it? S. Adele Shank: That's correct. Stephen G. Breyer: Can you think of any other analogies? I take it your basic argument is that the procedural part of this is something that the Ohio legislature itself has said is not within the Governor's exclusive power. They say the general assembly's authority to regulate the application process extends from the time just before the Governor reaches the decision, and you're talking about that time before, is that right? S. Adele Shank: That's correct. Stephen G. Breyer: And what I'm looking for, the only one with a very far analogy is like international airline applications, where the Courts won't review what the President's final decision is, but I've always thought they would review what used to be the Civil Aeronautics Board's preparation of the recommendation to the President. That's a pretty farout analogy, and I wonder if there are other instances you could think of where the congressionally regulated preparation of the application is certainly reviewable, but the final decision is not. You've looked into this, so I assume your answer is no, you can't. S. Adele Shank: I have looked into it, and I think that there are some arguments about veto. I mean, that's a possibility, although there are different remedies, rather than going back to the-- Stephen G. Breyer: All right. Have you... the other question that I has is, is the particular problem here, which I couldn't quite figure out from the dates... I can't keep them quite in mind, but the particular problem is that the State says, prepare this 45 days before the execution is scheduled, but in the case of your client, he had to go to his hearing 6 months before, or 4 months before, because there was a stay that said the execution couldn't take place until January 18, '95, but they wanted to have the hearing on September 9, 1994, and you're objecting to the fact that they made him come to that hearing without a lawyer, and having to incriminate himself so soon. Could you explain that a little bit, how those work? S. Adele Shank: --Sure. There are a number of factors involved in it. The time frame is that if you have not managed to get a stay when... within 45 days before the first scheduled execution date after the Ohio supreme court finishes direct appellate review, a hearing will be scheduled, and even if you get a subsequent stay... in this case the stay was actually granted on the 45th day, so it's one of those counting things. They decided that day did count for their purposes, and we would, of course-- Stephen G. Breyer: So your objection, then, precisely is you say, look, he can't have a lawyer, he has to incriminate himself, and all they have to do to avoid the problem and keep their time is, you say, do it 45 days before, but if there's been an extension of a stay, well, then it's 45 days before the real execution date, not the one that was just hypothetical. Is that the problem? S. Adele Shank: --Well, the problem is more complicated than that because, of course, the petition... I mean, the respondent in this case, or the inmate in any case has an extremely limited control on that timing. You can file for a stay, but there are many exigencies that come up in the court system that sometimes it takes 2 months to get a stay, sometimes you're very lucky and you can get a stay within a week or 2 or 3 days, so you don't have control over the timing in this case no matter how it is handled. But part of the reason that this is so critical is that whenever this particular process kicks in it then negates the opportunity... well, I should say, negates the right to have a clemency application filed by the inmate and have it considered. William H. Rehnquist: Ms. Shank, is there any rule in Ohio that you know of that would prevent your client in his interview with the clemency people from declining to answer a question because it might incriminate him? S. Adele Shank: There's nothing in the procedure that says that that could not be done, although the procedure itself is, with regard to the interview is inherently coercive, counsel is specifically prohibited from being there, in this case we had 3 days' notice and counsel would not have had an opportunity-- William H. Rehnquist: But so far as you know there are no further sanctions... in fact, it's difficult to see what further sanction could be attached to someone who is condemned to death... would be attached if the... if your client simply said, I'm not going to answer that question? S. Adele Shank: --Well, they may draw an adverse inference from his silence, may view him as being uncooperative, and go-- William H. Rehnquist: But that wouldn't incriminate him. S. Adele Shank: --Well, but it's part of what the problem is with the choice that he is facing. Incriminating him if he chose to speak and then those matters were used against him-- William H. Rehnquist: But that happens in civil proceedings all the time. S. Adele Shank: --And it's possible, too, that it could be used to impeach him, and the silence itself could at least be attempted to be used for impeachment in subsequent criminal proceedings, so-- William H. Rehnquist: Well, by the time you get to clemency beggars can't be choosers. S. Adele Shank: --Well, Your Honor, and I think that if clemency were to be handled at the end of the process instead of at this premature point where you have ongoing litigation and future litigation as a right still in front of you, that it might be possible that a procedure that set some time limits toward the end of the process would meet due process. Antonin Scalia: Ms. Shank, it's not only capital defendants who apply for clemency, and it's quite possible to talk about the end of the process when you're dealing with a capital defendant who's lost, but what about other defendants? What's the end of the process? As long as they're in prison they can continue to find new reasons why the case should be reopened, and so forth and so on. What is the end of the process for someone who hasn't... you know, who hasn't been condemned to death? S. Adele Shank: Well, for Ohio's purposes it's not relevant because they don't put these restrictions on noncapital defendants. These restrictions and these time frames, this mandatory, this forced clemency review at this early date is only applied in capital cases. Antonin Scalia: Well, but in any of the other cases, whenever the hearing is held, wouldn't the prisoner have the same objection? You know, I'm going to be spending years in prison trying to figure out what went wrong in my trial, and I'm going to file collateral review applications, and by making me come in and confess, you're making it impossible for me to do that. Wouldn't every prisoner have that claim? S. Adele Shank: Well, Justice Scalia, I think it's part of the problem with that process, is that if a prisoner initiates the clemency process, if he exercises that State right we've talked to you about seeking clemency, then he's made some choices about where he wants to go and the statements he's making. But when he is subjected to a forced process at a time when he is still in litigation, those considerations aren't available to him. Antonin Scalia: I understand, but my... the point I'm making is, we can't solve the problem, as Justice Breyer suggests, by simply making sure that the proceeding here is held after the last habeas before the execution. The problem's going to exist in noncapital cases perpetually. S. Adele Shank: Justice Scalia, I must say that if it was a forced process at some time I think that perhaps the hypothetical you're proposing would have application to noncapital cases, but that's not the situation in Ohio. Noncapital cases aren't subjected to that standard. They aren't forced into clemency review and, of course, we are dealing with the capital case here. Ruth Bader Ginsburg: Suppose Ohio said, well, for capital cases we're going to have a simple proceeding. It's just the Governor and whatever trusted advisor, so we cut out all this process that you're complaining is inadequate. Would it be constitutional for Ohio to have such a system, just the Governor, who will consult with a trusted advisor? S. Adele Shank: I think that at least under the parameters that we're dealing with in this case the answer would be yes, because the right to seek would not have been impaired. As long as the State doesn't erect a barrier to getting to the decisionmaker, I think that the clemency right to seek has been observed. Part of the problem we have here is that we have a process that keeps us-- Ruth Bader Ginsburg: So once you have a process, once you try to install something like this, it better be meticulously observed. Doesn't that give the signal that it's not very wise for a State to have these processes, that they ought to stick with just a simple, you ask the Governor, the Governor says no, that's it? S. Adele Shank: --I don't think it has that meaning here, because the meticulous observation of rules comes from that line of cases, Meacham and the prison cases, Greenholtz, some of the cases that have been mentioned. But in those cases, the procedure did not erect a barrier either to getting to the final decisionmaker even in Dumschat, even in the prison cases, and it did not prevent the ultimate decisionmaker from making his decision. This process has to be complied with... I mean, the application process has to be complied with for the Governor to make a valid decision, and it's a forced process that once it's been engaged in, its initial timing denies a meaningful opportunity to be heard at a meaningful time and then precludes the right to seek when it is meaningful, because it becomes discretionary with the APA whether a subsequent application from the inmate will be considered for clemency. That is under paragraph G of the policy, which makes it forever, and then in the administrative code, 5120 1-1-15 puts a 2-year limit on it. At the moment I cannot tell you which of those the courts of Ohio will determine may or may not be the final time limit on how long they can withhold the clemency application from consideration. So I think that the process distinction here, and the reason we don't have to worry about the details, is that this is a process that keeps us from getting there. Those cases that address that kind of detailed parsing of the language are ones where you always were able to get there. I also think that in this case we have a situation where the process itself has created the kinds of parameters that this Court has recognized as creating a due process interest, a Statecreated liberty interest that deserves due process protection. Anthony M. Kennedy: Do we have... it seems to me that the most forceful of your arguments is the unconstitutional condition argument on the selfincrimination privilege that he has in the criminal proceedings, and there we focus on the criminal side and say, he's losing something on the criminal side because you're coercing or compelling the abandonment of the privilege. What's your best case on that? Baxter doesn't work for you, really. S. Adele Shank: Well-- Anthony M. Kennedy: And as sort of a followup to that, do we ultimately come back to the question whether or not there is a right to the clemency proceeding, so that we're back to the initial point. S. Adele Shank: --You don't have to come back... I'll answer the last part first. You don't have to come back to there being a right to the clemency proceeding in order to reach the question whether or not this imposes an unconstitutional condition. Anthony M. Kennedy: And what's the best case for that? S. Adele Shank: I think that the best case for us is one that analyzes the rough proportionality or rational nexus that must exist between the condition that's being imposed and the policy it's supposed to implement, and that is Dolan v. City of Tigard, where this Court found that that was essential. The purpose, the stated purpose, the declared purpose by the Ohio supreme court and the Ohio constitutional debates for these legislative regulations on the application process, and they are legislative, not executive, is to ensure the quality of information that reaches the Government. When you put the person in the position of either being unable to participate because they have to exert their Fifth Amendment rights, or being in a coercive situation, then you have undermined the State's stated purpose for having these regulations. William H. Rehnquist: Thank you, Ms. Shank. Mr. Klatt, you have 3 minutes remaining. William A. Klatt: Thank you. One thing I'd like to make very clear is that there is nothing in Ohio's death penalty clemency procedures that compel the respondent to incriminate himself. The interview places no condition requiring the waiver of any constitutional right, and has no element of compulsion. Anthony M. Kennedy: Suppose it was very clear that silence would be not only an adverse inference but would likely result in denial of clemency. William A. Klatt: You might have compulsion under those circumstances. That's not the situation here. Stephen G. Breyer: What if the... I don't know if she wants this argument, but the strongest point, I thought, going back to the complaint, would be a Mathews v. Eldridge point, that all she wants is you to postpone this hearing until it's 45 days before the real execution, and you won't do it. And the State's interest in not doing it... you know, not postponing it till the 45 days is real, is zero, her interest is... well, she loses her right, the client loses right to a lawyer and selfincrimination in a real practical way, very strong. The administrative ease is tremendous. All you have to do is say we're going to follow what the court does, and therefore this is a tremendously strong argument for... since it isn't even the Governor, it's the special board run by the legislature, for denial of due process. Now, I'm being quick about that, but I... so what's your... what... I got that out of the complaint... what's-- William A. Klatt: Well, I would respectfully disagree, that there is a very important, legitimate State interest in the timing of obtaining the information. Even if a stay would be obtained, the order-- Stephen G. Breyer: --Sure there is, but everybody else, everybody without a stay it's 45 days before, it's before the real execution, so what's your interest in getting that information 6 months before the execution, where all that's happened is that there's been a court order delaying it for 6 months. William A. Klatt: --Well, if I understand your question, I don't know that the State would have an interest at that point-- Stephen G. Breyer: Here they ask... they pointed out, they enclose, attached to the complaint, the court order of Ohio making the execution date not 45 days after September 9, but sometime after the following January 18, and still the board, they say, wouldn't postpone the hearing. They wanted to have it on the 9th. William A. Klatt: --That's correct. The simple fact that there is a time limit... in this instance it was 45 days, which seems to be a reasonable period of time... who knows when the stay might ultimately be obtained. It might never be obtained. William H. Rehnquist: I suppose for Mathews v. Eldridge to apply there has to be some protected interest under the Due Process Clause in the first place. William A. Klatt: Absolutely, and fundamentally-- William H. Rehnquist: Thank you, Mr. Klatt. I think you've answered the question. The case is submitted.

William H. Rehnquist: We'll hear argument now in Number 88-266, Oklahoma Tax Commission versus Jan Graham. Mr. Miley, you may proceed whenever you're ready. David Allen Miley: Mr. Chief Justice, and may it please the Court: Today this Court is asked to decide whether an Indian tribe is answerable in state court for ignoring its obligation to collect and remit taxes to the State of Oklahoma despite this Court's sanction of state laws imposing such obligations. The Tax Commission brought this action in state district court to enjoin the Chickasaw Nation from operating a motel business until all taxes were collected and remitted to the state in compliance with state tax laws. The tribe removed this case to the federal court, and that court denied the state's motion to remand on the basis that a suit against an Indian tribe is a federal matter. After assuming jurisdiction, the federal court then dismissed the state's case holding that an Indian tribe cannot be sued without its consent under the Indian sovereignty doctrine. In affirming these decisions, the Tenth Circuit ruled that an Indian tribe enjoys absolute sovereign immunity within its territory and thereby foreclosed the state's right to have its valid taxes collected. The first question we ask this Court to consider is whether removal jurisdiction exists in this case. The state submits that federal removal jurisdiction does not exist because the state's lawsuit is not based on federal law to any extent, but only alleges violations of state law to which the Tax Commission requests relief provided by state law. The respondent urges that its status as an Indian tribe creates a federal cause of action that is properly removable. However, this Court has held in the Mescalero Apache Tribe opinion in 1973 that the federal government does not have exclusive jurisdiction over an Indian tribe for all purposes and that the encouragement for tribal economic development under the Indian Reorganization Act does not establish a tribal business as an arm of the government and, therefore, off reservation activity is within the reach of state law. But the heart of the matter is that the Tax Commission's complaint properly pleads a cause of action to collect state taxes which is based exclusively on state law, as it must be. The tribe may raise substantial federal questions in defense of the state's claim, but federal questions in a defensive argument cannot serve as a basis for federal removal jurisdiction. Under the well pleaded complaint rule, a federal statute or a substantial question of federal law must be the basis of the plaintiff's claim rather than a basis of the defendant's defense. And, therefore, this case should be remanded to the state district court. But beyond the issue of removal jurisdiction, this case concerns whether the Indian sovereignty doctrine bars the state's lawsuit. William H. Rehnquist: I don't think... if this Court were to conclude that the case had been improperly removed from the state trial court to the Federal District Court, we wouldn't then get to the... the question of the sovereignty, would we? David Allen Miley: You would not get to that question, and the state would have to decide if that was a proper defense to the state's actions. The state district court would have to determine if that was a valid defense so that once the removal issue is... is decided in the state's favor, we would not have to determine whether the state's case should be dismissed based on Indian sovereign immunity. William H. Rehnquist: Well, the state court might have to make that decision. David Allen Miley: The state court may have to make that decision, but the state court has already made that decision. In another case the state supreme court has ruled in the State ex rel. May versus Seneca-Cayuga Tribe... the Oklahoma Supreme Court ruled that the Indian sovereignty doctrine does not bar the state's lawsuit. So that if this case was remanded to the state court, the case would be tried on the merits. William H. Rehnquist: And the tribe would have a right to appeal again through the state courts and eventually to this court-- David Allen Miley: That-- William H. Rehnquist: --on that point? David Allen Miley: --That is correct. So that the Indian sovereignty doctrine at this point only comes into play if the state loses on the removal jurisdiction argument. And I feel that that is a fairly clear-cut argument in that the Indian tribe is not a part of the federal government. The activity is off-reservation, and I feel that under the Mescalero case and under Moe versus the Confederated Tribes cons... under the Moe decision and the Colville decision, I believe, whether... whether the business activity is on or off of a reservation, this court has ruled that the state does have a right to have its... its valid taxes collected. John Paul Stevens: May I interrupt you? You said that this... this incident, this business is conducted off the reservation. David Allen Miley: Yes. John Paul Stevens: And the record in the case consists just of the complaint, doesn't it? David Allen Miley: That is correct. John Paul Stevens: And does the complaint allege that the... that the... this Murray... whatever it is... Sulphur, Oklahoma, is... is or is not within the reservation? I don't think the complaint says one way or another. David Allen Miley: No. It... it alleges that the state laws were violated by this motel operation and sues the owners and operators of the motel. John Paul Stevens: But what I mean is we cannot tell from the record whether the hotel is on the reservation or off the reservation, can we? David Allen Miley: No, you cannot because... because that wasn't developed. No evidence was developed in the case. John Paul Stevens: Not... no allegation even one way or the other? Don't we just have the complaint? That's the whole-- David Allen Miley: That alleges that taxes are owed. John Paul Stevens: --Yeah. David Allen Miley: Yes. Byron R. White: Is there a reservation? David Allen Miley: No, there's no reservations in Oklahoma, so... I believe that was... that has been briefed throughout the case because many times it is necessary to-- Byron R. White: This is one of the assimilated tribes, is it? David Allen Miley: --Yes. We contend that is... that it is... the tribes in Oklahoma have been assimilated rather than operate under the reservation system. Byron R. White: But isn't there any trust property, Indian trust property in Oklahoma? David Allen Miley: Yes. This-- Byron R. White: Well, is this... is this... is this establishment on Indian trust property or not? David Allen Miley: --It... well, it is not on an allotment as defined in Title 18 United States Code 1151(c) because the Indian title to this particular piece of land was extinguished, and it did go into non-Indian ownership. This tribe did purchase this particular motel property in 1972 and in 1985 under Title 25 U.S.C. Section 501, which allows transfer of lands acquired by tribes to the United States in trust for the benefit of the tribe, this land was placed in trust with the United States for the tribe's benefit. However, as this Court has ruled in the Mescalero opinion, the transfer in trust does not create Indian country which... which many of the cases involving the allocation of jurisdiction between the state and a tribe consists of so that... so that this piece of property, although it is held in trust, that statute did not create any broad exemptions from taxes or regulation that all other businesses throughout the state are subject to. Therefore... going on with my... I think I've fairly well said all I can about the... the removal question which... which may determine the outcome presently. Anthony M. Kennedy: Let me ask you, counsel, do the tribes have the authority to waive their immunity from suit? David Allen Miley: I believe they do have authority to waive immunity from suit. Anthony M. Kennedy: Have we so helm or is there a case that establishes that? David Allen Miley: I am not aware of a case that establishes their ability to waive, but they have not made a waiver in this case. Anthony M. Kennedy: Was there a disposition at that time? Yes. David Allen Miley: However, I don't think the waiver is necessary because their sovereignty does not extend that far, does not extend over the state's lawsuit. Anthony M. Kennedy: Well, I recognize you claim, of courser they don't have immunity anyway, but they claim they do. David Allen Miley: Yes. Anthony M. Kennedy: But you also take a position that it can be waived if they do have it? David Allen Miley: I... I'm assuming that it can be waive. I didn't... I believe they do have sovereign immunity over their internal relations such that tribal rites, say, a tribal member or a person wanting to establish tribal membership was denied for some reason. The tribe... that would be a relationship internal to the tribe, but they would have plenary authority over and a suit against the tribe on that issue may not be maintained because of the tribe's sovereign immunity. However, when the tribe operates a business in the... it... it steps outside the reach or that... their internal... their sphere of internal jurisdiction or internal relations and steps into the reach of state law so that the tribe may properly allege a cause of action against them to collect taxes when the tribe chooses to enter the business community. So that their sovereign immunity is not a question at that point. It is raised in defense, but I contend that it's not a valid defense. Sandra Day O'Connor: Counsel, does the new Indian gaming Regulatory Act complete foreclose future efforts by Oklahoma to tax Indian bingo games? David Allen Miley: I believe it does. It completely occupies the field, and the Tenth Circuit has also held that the State of Oklahoma cannot tax Indian bingo operations, And, therefore, we are-- Sandra Day O'Connor: But it's not retroactive, I take it? David Allen Miley: --That it is not retroactive? Sandra Day O'Connor: This new act? Does it cover your case so that this new act precludes this-- David Allen Miley: Well, this is a motel. This is a motel business. A bingo operation was... was operated there, plus a restaurant. However, the state sales tax applies against the rental of motel rooms. It applies against restaurant sales. Sandra Day O'Connor: --The state isn't trying to tax any of the bingo operation? David Allen Miley: No, not at this point. We did allege that taxes were owed on the bingo operation. Sandra Day O'Connor: I thought that was part of the complaint. David Allen Miley: That was part of the complaint and now that is foreclosed, so when we do reach the merits of this case, bingo sales will not be a part of the effort to tax in this case. Antonin Scalia: Why is that? David Allen Miley: Because of the new Indian Gaming Regulatory Act. Antonin Scalia: Does that say that it's retroactive, that it applies retroactively? David Allen Miley: Not it doesn't, but we have not collected any taxes from the bingo operations thus far, and the Tenth Circuit in the Creek Nation... Oklahoma Tax Commission versus the Creek Nation... held that we could not tax bingo sales. So-- Antonin Scalia: We have a line of decision that says you decide the case on the basis of current law, and that's the current law. But we have another line of decision that says that laws are not normally to be interpreted to be retroactive. And I'm just wondering which of the two lines you were using here. David Allen Miley: --Well, I... I suppose I am interpreting the current law as it stands in that now we will not be able to assert that cause. Antonin Scalia: You're not asserting. That's out of this case? David Allen Miley: Yes. Yes, it is out of this case right now. So, the... as far as the... these tribes' sovereign immunity, the state does recognize that the tribe does have a tribal government and can tax its own sales. However, these taxes do not displace or preempt the state taxes, but the state aria the tribe can tax the same transactions, but that really goes more to the... the merits of the case, but really the... what the point is is that the Indian sovereignty doctrine does not bar the state's suit because that doctrine has been adjusted to accommodate the state's legitimate interest in taxing its citizens, and I do not feel that this... the state's interest... I feel that the state's interest could be fulfilled by the tribe's Business enterprise, and the tribe could fulfill their interests in the economic development of their business because the state tax will not prevent the tribe from sustaining their economic development, just as it does not prevent all other businesses from making a profit in the state. But if the state cannot rely on the decisions of this Court which I feel recognize the state's right to have its taxes collected from its citizens, then the state's right to have this tribe collect the tax and remit it will be lost forever if the Tenth Circuit decision stands because the tribe has expressed that regardless of the merits of the case, they do not intend to collect the state's taxes, and if they can successfully avoid a lawsuit, by asserting sovereign immunity in a federal court, they do not feel compelled to... to abide by state law and collect the state's taxes. So that in that case, whole areas of state taxation will be put beyond the reach of state jurisdiction, and the state taxing system will necessarily be restructured by the Tenth Circuit's opinion in that regard because we will not be-- Sandra Day O'Connor: Well, that's not the issue before us, is it, the merits of whether-- David Allen Miley: --No, the merits... but the merits are bound up in the... the... the sovereign immunity of tribe, and I feel that if the state has its right... has a right, it must also have the ability to enforce that right against the tribe. Sandra Day O'Connor: --I just don't see why we have to address that at all. David Allen Miley: Well, you wouldn't have to address it if... if the defense of sovereign immunity is not a valid defense, because it would have to go back down for trial at that point. So that to... to conclude this argument, I... I think from reading the cases, the trend in this Court has been away from the idea of inherent Indian sovereignty and toward reliance on... on federal preemption or on infringement of tribal government. So that when state action is not... is not preempted or infringed, that the... the requirements under state tax laws may validly be imposed against the tribe and necessarily since taxes are... are enforced, are complied with voluntarily, but are enforced principally, the only... the only avenue we have to enforce is... is the state courts because, of course, the federal government does not enforce state laws. And without that... without enforcement we... we see that we cannot... if we cannot come to court to... to have our rights vindicated, then the state will have lost its... lost its rights. If the Court doesn't have any further questions. William H. Rehnquist: Thank you, Mr. Miley. We'll hear now from you, Mr. Rabon. Bob Rabon: Mr. Chief Justice, and may it please the Court: If I might, I would like to respond to a question that Justice Kennedy asked, I believe, regarding whether or not the tribe had waived its sovereign immunity or whether it can waive its sovereign immunity and whether or not this Court has held whether it can. The tribe here has not waived its sovereign immunity from suit. I know of no decision of this Court that holds that a tribe can waive its sovereign immunity absent some act of Congress. Byron R. White: Nor that it can't. Bob Rabon: Nor that it can't. I think there's... I don't recall the citation, but I think there's a Ninth Circuit court case that says that they can. I'm not sure about that, and don't have the citation. Anthony M. Kennedy: Well, some of the cases are ones in which the tribe brings suit, and it's usually a concomitant of bringing suit that waivers implied to that extent, but if we assume that tribal immunity can be waived, then that issue is particularly speculative at this time, and it would seem to me to more like defense than an element of the complaint. Bob Rabon: Well, we don't view it in that light. We see the... the fact that a complaint is filed in state court against an Indian tribe asserting the right to apply state tax laws, asserting coercive state civil jurisdiction, impliedly asserting an abrogation of sovereign immunity, we see those as affirmative matters and not necessarily matters that should be raised on... by defense. Sandra Day O'Connor: Well, what if the suit... there were a state brought against a state anti the state wanted to assert 11th Amendment immunity? That's no more than a defense, isn't it? Wouldn't you have to get into federal court or to be removed into federal court? Wouldn't you have to have some other basis under federal law to get there other than the 11th immunity defense? Why isn't this exactly the same? Bob Rabon: I think that the... I think that it would be incumbent upon the plaintiff in that case to allege... when you have a state as a party defendant-- Sandra Day O'Connor: Right. Bob Rabon: --to allege the authority to... and that's happening in this case. Sandra Day O'Connor: There's no case for that proposition that, I know of. Can you cite me one? Bob Rabon: No, Your Honor. William H. Rehnquist: The general rule surely is under the well pleaded complaint doctrine that the plaintiff sets forth its basis for recovery. And if that involves only state law, then it's not removable. Bob Rabon: That is one test. William H. Rehnquist: Well, what other test is there? Bob Rabon: Well, in the case of Gulley versus First National Bank, the Court, Justice Cardoza, said that there were other criteria, standards for removal of Jurisdiction that you look to, such as the probable course of the trial, the real substance of the case. He said that while a suit to enforce a right or rights with origins under... with their origins in federal law may not necessarily be federal unless it really and substantially involves a dispute or controversy respecting the validity, construction or effect of such law upon which the determination of which the result depends. William H. Rehnquist: Well, Gulley was decided in 1936, and in cases as recently as our Caterpillar, which are maybe one or two years old, certainly we've talked and talked only really about the well pleaded complaint doctrine. Bob Rabon: That assumes that the state can create a cause of action against an Indian tribe, and we don't think that they can. in Caterpillar-- William H. Rehnquist: Well, but the... under the well pleaded complaint doctrine, you don't decide on how good a cause of action a complaint states. That's for the court in which the plaintiff sues to decide. All you decide under the well pleaded complaint doctrine is whether there's something in the complaint that shows you that the plaintiff is relying on federal law to establish his case, And you... you're... this just doesn't meet that. You agree that if the well pleaded complaint rule governs here the Tenth Circuit was wrong, don't you? Bob Rabon: --If the well pleaded complaint rule governs and... and the well pleaded complaint does not raise or present substantial federal questions, and I believe that's what he Court said in Franchise Tax Board and Caterpillar versus Williams. William H. Rehnquist: Well, are you saying that the state's complaint here rested on federal law? Bob Rabon: Yes. I say... I say that... I say that the state's... the very right to assert the claims that the state asserts are vested in... are bottomed in federal law. William H. Rehnquist: And what federal law is that? Bob Rabon: Federal common law. William H. Rehnquist: But what is the substance of the federal law? What does the federal law that you're talking about say? Bob Rabon: Well, in Oneida in the-- William H. Rehnquist: I mean tell me just what the summarize what the federal law say that you're talking about. Bob Rabon: --Well, the power of Congress with regard to... with regard to whether or not an Indian tribe may be sued in the first instance is plenary. William H. Rehnquist: Well, the power of Congress to legislate in that area undoubtedly is plenary, but this doesn't mean that whenever... whenever someone sues an Indian tribe in the state court and simply sets forth a state ground of action, the Oklahoma tax law that says you're liable for sales tax, it... it becomes removable to federal court. Bob Rabon: Well, if the well pleaded complaint rule were to... were to apply in this particular case, we still submit that the case is completely preempted by... by federal law and the areas that are raised by... inherently in the complaint are completely preempted by federal law. We-- Antonin Scalia: The problem is-- Bob Rabon: --as I recall-- Antonin Scalia: --The problem is that it... that it isn't just the areas raised in the complaint that have to be preempted. I mean, the complaint may on its face suggest a particular defense. It has to be the claim that has to be a federal claim. And that's what I find it hard to see in this complaint. How is there a federal claim? The only federal claim you're suggesting is that well, the state claim would not exist if the federal congress chose to eliminate it. But, gee, you could say that about almost any state complaint. Congress could preempt almost any state action in the world. So, in a way, it's a condition to any state cause of action that Congress has chosen not to preempt it. But we don't say that every state cause of action is thereby a federal cause of action because it's only by the good will of Congress that the state action continues to exist. Why is that different from what you're arguing here? Bob Rabon: --We think that when you name an Indian tribe a federally recognized and protected Indian tribe and a state asserts the right to apply its... its laws and to... to assert coercive state civil jurisdiction over it, that the complaint inherently presents federal questions, substantial federal questions. The state cannot... I've said this before, but we just don't see how the state can create the right in itself to assert these claims. And in the Onelda case, the court said that you look to the underlying right, the underlying right asserted. In this case we believe that the petition inherently asserts the right to limit aspects of the Chickasaw Nation's sovereignty. In National Farmers Insurance Company versus Crow Tribe, the court said in that case where the complaint asserts the right to curtail or limit a tribe's or aspects of a tribe's sovereignty, that it arises out of federal law for purposes of 13... Section 1331. And, of course, the test for 1331 and the removal test under 1441 are the same. But, in any event, we contend that... that the complete preemption rule applies here because the... the... the Congress has completely dominated and indicated its intent to govern the field of tribal sovereign immunity and state civil jurisdiction. With regard to the area of state civil jurisdiction the Congress has allowed the states to have jurisdiction with great care and selectivity. In 1953 the... and incidentally, the Congress has shown that it knows how to grant the states civil jurisdiction. In 1953 an example would be Public Law 280 and its 1968 amendments. In Wold Engineering versus Three Tribes the... this Court described Public Law 280 as a comprehensive and detailed scheme, the primary expression of federal policy and that it preempts incompatible state action. Oklahoma is not a Public Law 280 state. Certainly the attempt by the Oklahoma Tax Commission to assert state court civil jurisdiction over an Indian tribe in that... in that state is incompatible with Public Law 280. Another example of... when Congress has allowed civil jurisdiction over Indian tribes is the Termination Acts of 1954, making certain tribes subject to the laws of the states at the time they terminated those tribes' federal status. Congress has also exhibited a... a... its domination in the area of whether or not tribal sovereign immunity is abrogated. It has shown that it will only abrogate tribal sovereign immunity, again, with great care and very infrequently. As it relates to the Chickasaw Nation, we know of only three times that it specifically has abrogated the Chickasaw Nation's sovereign immunity, and that would be in the Curtis Act of 1898... there was a limited abrogation there... the Five Tribes Act of 1906, where it allowed certain counterclaims and actions that were... that were pending where the tribes were... were plaintiffs. In Public law 93-195 in 1975 when the Choctaw and Chickasaw Nations and the Cherokee Nations were allowed to sue each other to determine the respective ownerships of the Arkansas River beds, as related to the Indian tribes generally, the Indian Civil Rights Act of 1968 allows for habeas corpus relief only. Recently in the Indian Gaming Regulatory Act of 1988 the Congress allowed certain actions arising out of the compacts that... that states and tribes might enter into to be the subject of suits against tribes. Moreover, Congress has reemphasized its commitment to tribal sovereign immunity in the Indian Self-determination Act of 1975 where it said that there was nothing in that act should be construed as affecting, modifying, diminishing, or otherwise impairing the sovereign immunity from suit enjoyed by Indian tribes. Another federal area in which state law is completely displaced is the treaties that the United States government has entered into with the Chickasaw Nation. In 1832 the preamble of the... of that treaty with the Chickasaw Nation showed that the principal consideration for removal was to escape state laws which oppressed the Chickasaw Nation. In 1834 when the Chickasaw Nation finally did agree to remove, the principal consideration that the tribe advanced in that matter was, again, to escape state laws, and the federal government promised to protect them from inroads from the whites. In 1837 the Choc... the Chickasaws acquired their present reservation from the Choctaws. That treaty provided that the Chickasaws would hold that reservation on the same terms and conditions as the Choctaws held it. The Choctaws acquired that reservation under the Treaty to Dancing Rabbit Creek in 1830, and when they acquired those lands, the United States government promised them that they would not allow any state to pass laws for the tribe or its descendants. Here the state is clearly invoking its laws against the tribe. Sandra Day O'Connor: Counsel, there is no reservation today, is there? Bob Rabon: We take the position that the reservation boundaries in Oklahoma have, with the exception of two Indian tribes that we know of, have never been abolished by Congress. But even if they had been, Indian country within areas where the reservation boundaries had been abolished or the reservation has been diminished continues to be under federal and tribal jurisdiction. Finally, Oklahoma's Enabling Act conditioned its becoming a state on its disclaiming any jurisdiction to limit the rights of persons or property pertaining to the Indians of said territory. We think that the decisions of this Court, the active involvement of the Congress, and these treaty rights completely preempt the state law cause of action asserted by the State of Oklahoma here, and that this case was properly removed. Of course, the trial court dismissed this case because there was no affirmative showing of a waiver of the tribe's sovereign immunity, but... and we think that the court was correct. Perhaps it would have been more correctly decided had it determined what the state court's jurisdiction was for purposes of determining whether or not there was derivative jurisdiction that was necessary at the time this case was removed, prior to the 1986 amendment of the removal statute. And had it done that, we feel that it would have determined that the state court did not have jurisdiction and that dismissal, as was mandated by Lambert Run Coal Company versus Baltimore & Ohio Railroad mandated dismissal as opposed to remand. We think that under either theory the result was correct. We... I would like to take issue with... with one question that counsel... one statement that counsel made that... that it is the tribe's assertion that it does not have to collect any cigarette taxes in this case. You only have to look at the complaint. The complaint seeks... it makes no distinction between tribal members and non-tribal members. And as I understand the decision in Colville and Moe and Chamenuevi that this Court has only held that the tribes are required to collect those taxes as they relate to non-tribal members, certainly my client does not believe that it has a right to... to defy this Court's decision in that regard. But that's not what the state is asking for here. The state is asking for much broader relief. And as you see, as you read into their... read their... their briefs and the position that they've taken that no Indian tribe in Oklahoma has any immunities left. Sandra Day O'Connor: Well, presumably the Oklahoma courts are competent to deal with that question, at least initially, and subject to ultimately being reviewed here? Bob Rabon: Yes, and if this case was improperly removed and it is remanded back to the state court, the state court would get that opportunity. But we feel that... that because of the complete preemption doctrine that we had the prerogative and that to remove this case to federal court. Quite frankly we removed this case to federal court because of the case cited by the Tax Commission, which was decided only about three months before this case was pass... was filed, and that is May ex rel. Oklahoma Tax Commission versus Seneca-Cayuga Tribe, where the Oklahoma Supreme Court held that the state courts had the right to regulate bingo gaming on Indian country in Oklahoma-- Sandra Day O'Connor: Presumably the federal statute that's been enacted speaks to that question. Bob Rabon: --The Court also held in that case that the tribe did not have sovereign immunity from suit in spite of the fact that there was nothing in the record that indicated that the tribe had waived sovereign immunity or that Congress has waived the tribe's sovereign immunity from suit. That case subsequently was sent back to the state court for trial and was enjoined by the Federal District Court in the Northern District of Oklahoma from proceeding further. Harry A. Blackmun: Was there any appeal from that? Bob Rabon: That case, I believe, is on appeal to the Tenth Circuit at this time. Antonin Scalia: Well, I can understand why you wanted to be out of the Oklahoma state courts, but just because you see an opinion of the Oklahoma state courts that you don't like and you figure well, it's useless litigating... useless litigating here, that doesn't necessarily give you a right to go into federal court. I mean some-- Bob Rabon: No, I'm not... I'm not contending that. We continue to take the position that... that the issues presented when the state asserts the rights that it asserted here against an Indian tribe in state court inherently present substantial federal questions and are completely preempted. Antonin Scalia: --It's a federal claim, is that what you're contending-- Bob Rabon: Yes. Antonin Scalia: --that it is a federal claim, not the issues presented, but it is a federal claim that-- Bob Rabon: That the right, the-- Antonin Scalia: --Oklahoma was asserting a federal claim when it sought to collect state taxes is what you're telling us. Bob Rabon: --It's asserting a federal claim to to assert its tax laws against the tribe is what I'm saying. Antonin Scalia: I mean, what we said in Onelda, which... which you quote to us, is that it was a federal claim that was being asserted, and that's what you have to establish here, it seems to me, that the attempt to collect state taxes is a federal claim. That's a pretty hard thing to establish, I think. Bob Rabon: In Onelda, I believe the Court found that the complaint only alleged a state law cause of action in ejectment, but that the underlying right to assert that... that cause of action had its origins in federal law. Antonin Scalia: I think what we said is that enough has been said to indicate that the complaint in this case asserts a present right to possession under federal law. We found a federal claim being asserted there. Bob Rabon: Perhaps... perhaps I've misinterpreted what the Court has said there, but the way I interpreted that decision was that in that case, in spite of the fact that the complaint only alleged a state law cause of action... and that's what the Court said there, that it only alleged a state law cause of action in ejectment... the underlying right to assert that was based on federal law. Antonin Scalia: We said elsewhere accepting the premise of the Court of Appeals that the case was essentially a possessory action, we are of the view that the complaint asserted a current right to possession conferred by federal law, wholly independent of state law. Is that the case in which the complaint alleged a violation of the Non-Intercourse Act, the federal statute? That was the basis for-- --I believe that's correct. So, they're affirmatively relying on a federal statute. Bob Rabon: Yes. John Paul Stevens: But you don't have a parallel to that here, I don't think? Bob Rabon: No, I don't. Except in that case the Court said that there was no federal statute which made New York's statutory or decisional law applicable to an Indian tribe and, therefore, the governing rule of law would be fashioned in the mode of the federal common law, as I understand. I think I have correctly quote that from the decision. But we still submit that... that anytime the state sues a federally recognized Indian tribe asserting these rights that it... that's been asserted here, that it... it raises issues that are completely preempted by federal law. I might... in closing, I would like to... to address one other statement that was made by... counsel cited to... to Mescalero Apache versus Jones. In that case sovereign immunity from suit was not at issue, and the tribe submitted itself to the jurisdiction of the court. If there are no further questions, I will conclude my argument at this time. William H. Rehnquist: Thank you, Mr. Rabon. Mr. Miley, do you have rebuttal? David Allen Miley: Thank you, Mr. Chief Justice. All I would want to say is to sum up that I believe the Caterpillar case is controlling on the well pleaded complaint rule, and this should dispose of the issues, but in the Mescalero case it was ruled there on... which was here on cert. from the state court of New Mexico... that the federal law... the federal government does not have exclusive jurisdiction over the tribe for all purposes and, therefore, the state's revenue laws can be properly applied against the tribal enterprise which is... and I believe that that case is controlling because it is indistinguishable in terms of the status of the land involved and the business being operated. And I would... if the Court has no other questions, I'm through. William H. Rehnquist: Thank you, Mr. Miley. The case is submitted.

John G. Roberts, Jr.: We'll hear argument next in Ayers versus Belmontes. Mr. Johnson. Mark A. Johnson: Mr. Chief Justice, and may it please the Court: This case concerns the constitutional sufficiency of California's catchall factor (k) instruction, which was given in the penalty-phase portion of California capital cases, and which directed the jurors to consider any other circumstance that extenuates the gravity of the crime, even though it is not a legal excuse for the crime. In this case, the Ninth Circuit Court of Appeals held that this instruction violates the Eighth Amendment because it allegedly misled the jurors to believe they could not consider so-called forward-looking evidence that did not relate directly to the defendant's actual culpability for the crime itself. In the State's view, the Ninth Circuit's conclusion is fundamentally flawed, because it rests on an illusory distinction between different forms of character evidence in a way that is inconsistent with this Court's prior decisions in California... or Boyde versus California and Brown versus Payton. In Boyde, this Court addressed, and rejected, a virtually identical challenge to the factor (k), and concluded that this instruction did, in fact, allow jurors to consider non-crime-related evidence; specifically, it allowed the jurors to consider evidence of the defendant's background and character. There was nothing in the Boyde decision to support the Ninth Circuit's distinction between different forms of character evidence. In fact, Boyde implicitly acknowledged that the factor (k) would, in fact, be understood to encompass Belmontes' good character evidence, in this case, because, for all practical purposes, there is no meaningful distinction between the nature of the background and character offered in Boyde and the nature of the background-- John Paul Stevens: Mr. Johnson, would you comment on the footnote on the... on the... drawing the distinction with regard to the dance contest that the defendant won in that case, between... it's over here; I'm asking the question... between facts that occurred before the crime and facts that might have occurred after. Mark A. Johnson: --Yes, Your Honor. In footnote 5, this Court addressed a contention, raised for the first time in argument, that Boyde's evidence might be admissible under Skipper versus South Carolina, and this Court distinguished Boyde from Skipper, for a couple of reasons. First, as the... as Your Honor pointed out, the evidence in this case related to good-character evidence, events that occurred before the crime itself, unlike in Skipper, which dealt with post-crime events. The Court also pointed out that the evidence in Boyde... his dancing achievement, his good character evidence in that case... was not offered for the specific inference that the evidence in Skipper was offered. The Court, in footnote 5... and in the opinion, in general, in Boyde... nonetheless found that this evidence did, in fact, constitute good... character evidence of the... of the defendant's present good character, because it showed that his crime was an aberration from otherwise good character. Or, as Justice Marshall put it in his dissenting opinion, that Boyde had redeeming qualities, which is a decidedly forward-looking consideration. And, as I was saying, the evidence in this case, and in Boyde-- Antonin Scalia: It doesn't have to be forward... looking, does it? I mean, I thought we've said "so long as it can be taken into account in any manner. " whether backward-looking or forward-looking. Haven't we said that, explicitly? Mark A. Johnson: --Yes Your Honor. The... and, in fact, the Court has, in Franklin versus Linite, said that they have not distinguished between different forms of character evidence. And I understand that, in the past, we've always discussed background and character evidence as sort of the same thing. In this case, however, the Ninth Circuit's conclusion does, in fact, rest on a distinction between different forms of backward-looking and forward-looking character-- Anthony M. Kennedy: Well it was-- Mark A. Johnson: --evidence. Anthony M. Kennedy: --it was addressing itself to the fact... to the words of the factor (k) instruction. How does post-crime prison conduct reduce the seriousness of a previous crime? Mark A. Johnson: It does not... it does not relate to the seriousness of the... of the crime at all. The... Boyde's dancing-- Anthony M. Kennedy: Well, I mean, it has to relate to the gravity of the crime, under the words of factor (k), doesn't it? Mark A. Johnson: --It would relate to the gravity... to circumstances that extenuate the gravity of the crime, for purposes of a jury's sentencing determination. And the point I'd like to make on that point is this, Your Honor. In California, jurors are well aware what their task is at a sentencing determination. In California, the guilt and the death eligibility determinations are made during the guilt-phase trial and the jurors are expressly told, during the penalty-phase trial, that their lone determination, their one concern, is to decide between a sentence of death or a sentence of life without the possibility of parole. And, in that light, the jurors are very well aware that their only determination in a California case is to make a moral, normative determination, a single normal... moral normative determination, as to whether this man, this defendant standing before them in this Court today, deserves death or life without possibility-- Anthony M. Kennedy: Well, now, do you-- Mark A. Johnson: --of parole. Anthony M. Kennedy: --do you have an instruction that supports what you've just told us, that the jury is told they have to make a single moral determination? Is that what the court instructed the jury? Or was-- Mark A. Johnson: No, that's-- Anthony M. Kennedy: --instructed in items of factor (k)? Mark A. Johnson: --The-- Anthony M. Kennedy: And I think you have to rest on your argument, that what we are talking about is the gravity of his crime "for purposes of sentencing". I understand that argument. But then, when you go on to make the argument you just made, the jury understands it is a single moral judgment, what... is there some specific instruction you can point to, other than the factor (k) instruction itself? Mark A. Johnson: --No, they are... and I may have been misleading. The jurors are expressly instructed that is... that it is their duty to determine, and their only duty to determine, whether the defendant should receive life or death and parole, and... or life without the possibility of parole... and in-- John G. Roberts, Jr.: Well-- Mark A. Johnson: --light of that determination, jurors, naturally, would understand that they could take into account anything that extenuated the gravity of the crime. John G. Roberts, Jr.: --Well, that's what they were told, right? They're instructed that the mitigating circumstances, including factor (k), are merely examples, right? Mark A. Johnson: Yes. In this... yes. In-- John Paul Stevens: May I ask you about that? This case is unusual, because it has that separate instruction that, "The mitigating circumstances are merely examples, and you should pay careful attention to those, but you may... but you may rely on other mitigating circumstances. " May I ask you, would it have been constitutional if the judge had added a sentence at the end of that instruction which said, "However, you may not consider anything mitigating unless it extenuates the gravity of the crime? " Mark A. Johnson: --It would have been constitutional, to the extent that it would have allowed the jurors to give some use whatsoever to Belmontes' proffered evidence in mitigation, and that's what this Court's prior cases has... and, particularly, the various Texas cases have said that jurors must be given an avenue to make use of the evidence. In California-- John Paul Stevens: I'm not sure you've answered my question. Would it have been a constitutional addition to that instruction to say, "But I want to... you to clearly understand that it is not to be considered mitigating unless it extenuates the gravity of the crime? " Would that have been permissible? Mark A. Johnson: --It would appear to... no. It would appear not to be, because-- John Paul Stevens: Because that would have foreclosed consideration of the Skipper-type evidence, right? Mark A. Johnson: --It would have... well, it would foreclose consideration of all present good-character evidence, I believe. It would... it would have foreclosed the consideration of Boyde's evidence, of Payton's evidence. John Paul Stevens: So, then the question in this case is whether the jury might have understood factor (k) to limit them to the consideration of factors that extenuate the gravity of the crime. Mark A. Johnson: Well, the... yes, the question is whether the jurors would reasonably understand the instruction to preclude the consideration of constitutionally... of relevant evidence. John G. Roberts, Jr.: This Court, in Payton, said that it was not unreasonable to conclude that evidence of remorse extenuated the gravity of the crime. So, why wouldn't an instruction to the jury along the lines of Justice Stevens's hypothetical have been perfectly constitutional as extenuate the gravity of the crime that's interpreted in Brown versus Payton? Mark A. Johnson: Well, to the... to the extent... the jurors would have likely understood that, it... that instruction in Belmontes and in Payton, to extenuate the gravity of the crime for purposes of their sentencing determination-- Antonin Scalia: Well, that's what I thought your position was. And-- Mark A. Johnson: --Yes-- Antonin Scalia: --then you back off of it, and you say, "extenuate the gravity" of the crime doesn't relate to anything that's after the crime. I would have... I would have interpreted the phrase to mean "anything that justifies you in giving a lesser punishment for the crime. " Mark A. Johnson: --That's precisely my argument. Antonin Scalia: Well, then your answer to Justice Stevens should have been different. Mark A. Johnson: Well, if... and I apologize if I was misunderstood. My-- Ruth Bader Ginsburg: Do you think-- Mark A. Johnson: --question-- Ruth Bader Ginsburg: --that the jury in this very case understood that, given the questions that were asked? Mark A. Johnson: --Oh, yes, Your Honor. In this... in this case, I... there is certainly no reasonable likelihood that the jurors felt precluded, because, as was previously discussed, first there was this additional instruction that supplemented the other instructions in this case that made it very clear that the aggravating factors, the various factors listed in the standard instruction A through G, that those were the... they could only rely on those two for aggravating factors, but their understanding of mitigating factors was not limited. In fact, they were expressly told that the previous factors were merely examples. Ruth Bader Ginsburg: What about the... what actually went on? I mean, the jury first came in and said, "What if we can't decide? " "Can we decide by majority? " And then the question was asked, that seemed to indicate the jurors' understanding, that we take all those factors that you told us about, and we just take those factors into account. And there were clarifying instructions asked by the defense that were not given. Mark A. Johnson: Well, there... to answer your questions, Your Honor, first, there was no indication at this conference that the jurors were, in fact, confused about whether they could consider any particular evidence as being mitigating. The conference itself was called to address, as you mentioned, the jurors' concern... or the jurors' inquiry about the result... what would happen if they couldn't reach a unanimous verdict in this case. David H. Souter: Well, that may be why they had the conference, but they got into the colloquy that Justice Ginsburg described. And the last... as I recall, the last reference to "factors", whether aggravating or mitigating, was simply in terms of the list, or "the listing", I guess the term was, so that the... it seems to me at least, there's a fair argument on the other side of this case, that the last reference that the... that the judge made to the jurors with respect to aggravation or mitigation was to refer to a listing. The listing itself didn't have anything to do, as I understand it, with the instruction that you are not limited to the listed mitigating factors. So, the concern is that, because the last reference was to the list, that the list included factor (k), without embellishment, and that jurors tend to give... we have held that the jurors tend to give the greatest emphasis to clarifying instructions or later instructions in response to questions. Isn't it a pretty good argument that, in this case, there is... there's a reasonable likelihood that the jurors went back to their task thinking that they were limited to the list? Mark A. Johnson: Respectfully, no, Your Honor. And the reason why is-- David H. Souter: Well, I... I'm not necessarily saying that's my position, so you don't have to be respectful to me about it. Just-- Mark A. Johnson: --I'll be respectful anyhow, Your Honor. David H. Souter: --knock it down if you can. Antonin Scalia: Be respectful anyway. Mark A. Johnson: Yes. The point is, with this instruction conference, there... the... an argument that this reference to (k); and there is nothing in there... in any of these questions to put anybody on notice that that... that they had any such concerns. And first-- David H. Souter: Well, except for the language of factor (k) itself. And if... without some embellishment, isn't it a bit of a stretch to think that factor (k) goes as far as Skipper evidence? Mark A. Johnson: --No, Your Honor, it's not a stretch at all, because any evidence relating to the defendant's background and character, his present character in court, could be seen as extenuating the gravity of the crime for sentencing purposes. Ruth Bader Ginsburg: Well-- Mark A. Johnson: And the jurors-- Ruth Bader Ginsburg: --California itself recognized that there was a problem here of jury confusion. And now they have amended the provision so that it would be clear to any juror. Mark A. Johnson: --That's correct, Your Honor, in People v. Easley the California-- Antonin Scalia: Or maybe they thought that was a problem of Ninth Circuit confusion rather than jury confusion. [Laughter] I mean, having that opinion in front of them, you would think they would amend it, of course, to prevent that kind of decision again. Mark A. Johnson: --Well, they... what they were doing was certainly a prophylactic measure here, to... they recognized that perhaps there might be some concern of confusion, and so they wanted to forestall any chance of that happening. But notably, this case and... this case, and no other California Supreme Court case, has found that the factor (k) instruction, the pre-Easley version of it, by itself, did mislead the jurors. In fact, the Supreme Court, in this case, came down 7-0 in support of the conclusion that the jurors were properly told about the-- Ruth Bader Ginsburg: Where does this factor (k) come from? What was the source of it? Mark A. Johnson: --The factor (k), as the entire standard instruction given in these cases, recites verbatim the language of the California statute, which is California penal code section 190.3. And, interestingly enough, the... not only the California Supreme Court, but this Court, implicitly has... have both said that not only the California statute, but the instruction... this standard instruction, upon... which is based on the statute, do allow consideration of all relevant mitigating factors. In fact, as far back as 1983, in this Court's California v. Ramos decision, this Court stated, albeit in dicta, that the factor (k)... or that the standard instruction would allow consideration of background and character evidence; and, in fact, the Court stated, in footnote 20-- John Paul Stevens: General Johnson, I don't mean to interrupt you, but I want to be sure you answered your... you stick to your answer on... to my question, earlier,-- Mark A. Johnson: --Okay. John Paul Stevens: --because you... I think you changed your answer after Justice... the Chief Justice and Justice Scalia suggested you might have made a mistake. Are you... is it your position that it would be constitutional to instruct the jury that, "You may not consider any evidence mitigating, unless it extenuates the gravity of the crime? " Mark A. Johnson: Yes, Your Honor, because the jurors would... even if that instruction were given, the jurors would understand that an instruction that extenuates the gravity of the crime would encompass any relevant character evidence. And this Court has made these determinations all the time. John Paul Stevens: Is-- Mark A. Johnson: That-- John Paul Stevens: --that answer consistent with the position of defense counsel, who said he would not insult the intelligence of the jury by suggesting to them that the religious conversion of the defendant did not extenuate the gravity of the crime? Mark A. Johnson: --No, Your Honor. What the... what the counsel actually said was that the defendant's religious conversion did not provide an excuse for the crime itself. And, in fact, that argument was, itself, echoing the language of the factor (k) instruction, which of course-- John Paul Stevens: That's right. Mark A. Johnson: --directs the jurors to consider any other circumstance that extenuates the gravity of the crime, even though it's not a legal excuse for the crime. And so, counsel was dovetailing his very effective argument with the... with the instruction itself. And what's significant here is that, like in Payton, like in Boyde, this case involved virtually all of Belmontes' penalty-phase evidence. And the entire main thrust of his argument to the jury was that he could not make it on the outside, but he could fit in the system and contribute to society in the future, if given a chance on the inside. And again, as was true in Boyde and Payton-- John Paul Stevens: If that were true would that have extenuated the gravity of the crime, if he could get along in prison? Mark A. Johnson: --Yes, for purposes of jurors... at jury's sentencing determination, absolutely, because it would be viewed as good-character evidence, precisely-- John Paul Stevens: And you think juries would clearly understand that what he did in the future in prison would extenuate the gravity of the crime. Mark A. Johnson: --Yes, Your Honor, because, in light of everything that's been said and done in this trial, as the Boyde Court noted, jurors do not parse instructions for subtle shades of meaning; they understand instructions in a commonsense manner, and in-- John G. Roberts, Jr.: The prosecutor didn't object to any of this mitigating... mitigation evidence that was submitted by the defendant, did he? Mark A. Johnson: --The prosecutor objected to none of this evidence. And, in fact, the prosecutor, in closing statement, argued that the... not only could the jurors consider Belmontes' forward-looking prospects, but the jurors should consider those prospects. So, in this case what we have-- Ruth Bader Ginsburg: Well, the prosecutor's closing was schizophrenic, because he said, "But really this shouldn't matter". Mark A. Johnson: --He acknowledged it was something that... this argument was something that was proper for consideration, but... however, he argued that the evidence of Belmontes' religious conversion, which happens... you know, and then lapsed immediately before he committed the murder, in this case... was very weak evidence. But he did, nonetheless, tell the jurors that they could consider Belmontes' prior character as bearing on his present character now. David H. Souter: But, didn't he go beyond saying it was weak? He did say that, but didn't he say that he doubted that it fit within (k)? Ruth Bader Ginsburg: Yes. Mark A. Johnson: He's... yes, the prosecutor first stated that the factor (k) was a catchall, a true catchall. David H. Souter: So, the prosecutor, I take it, would have answered Justice Stevens's question the other way. The prosecutor would have said, "Well, no, this probably would not be understood by the jurors to refer to the gravity of the offense. " Mark A. Johnson: No, Your Honor, because in the... in the previous page, the prosecutor did State that it was a catchall, you know, which, by implication, incorporates everything, but... and the prosecutor's argument, that, "I'm not sure if it fits in there. " signifies that there... not that the evidence... that such evidence could not be considered as mitigating as a... in a general matter, but that... just that the religious evidence in this case was extremely weak, to the point of having, as a practical purpose, no mitigating value. The prosecutor followed that comment. I'm not sure it fits in there, in next breath, with, "It's"... something to the effect of, "It's no secret that Belmontes' religious evidence is pretty shaky here. " and went on to conclude that. But then, in the next breath, he said, "But, nonetheless, this is something that's proper for you to consider. " And, again, reasonable jurors, hearing this... having been given the instruction here... would reasonably interpret this... all of this evidence as something they could use to extenuate the gravity of the crime. And particularly in this context, because, like in Boyde, in addition to this factor (k), the standard instruction directed the jurors to consider all the evidence. The first factor of the enumerated factors... (a) through (g), in this case... told the jurors that they should... that they should focus on... that the first thing to consider was the... or the circumstances of the crime itself. The final factor, therefore, that any other circumstance that extenuates the gravity of the crime would clearly be understood to relate to matters outside the crime itself. And, to the extent that there was any ambiguity about the meaning of that in this particular case, the argument by counsel, the additional instruction here, clarified that to the point that there is certainly no reasonable likelihood that the jurors felt that they were constrained in considering any mitigating evidence in any way they thought fit. Ruth Bader Ginsburg: Mr. Johnson, when I asked you about the derivation of factor (k), you gave me a California statutory cite, but is there... does it come from any model code? Does any other State have such a provision? How widespread is it? Mark A. Johnson: Of the... the actual wording of this instruction? Ruth Bader Ginsburg: How many States have an instruction that talks about extenuating the circumstances of the crime? Mark A. Johnson: I'm not sure, Your Honor. I'm not sure. I know that this... that this instruction itself came from the statute, which, in turn, was adopted from the California Briggs initiative in the 1978 statute. I'm not aware of any... of any other States... there may or may not be... who have adopted the same statutory model that California has. Ruth Bader Ginsburg: Which... California hasn't had it since 1983, right? Mark A. Johnson: Pardon me, Your Honor? Ruth Bader Ginsburg: California hasn't used this instruction since 1983. Mark A. Johnson: That's correct, Your Honor. After People v. Easely, the California Supreme Court augmented the instruction. Ruth Bader Ginsburg: So, is this a one-of-a-kind case? I mean, you said, in your brief, that the Ninth Circuit decision threatens many other valid California death judgments. But these would all have to be rather ancient cases. Mark A. Johnson: Yes. And, unfortunately, there's... there are several of them that are still being litigated. I've done research on this issue, and, as of this date, I can't give you an actual... an absolute number, but I believe there is approximately 15 cases pending, like this one, that involve the factor (k) instruction... this factor (k) instruction... that involve evidence of... somehow, future-looking evidence, which... all character evidence, frankly, is future-looking-- Ruth Bader Ginsburg: And-- Mark A. Johnson: --whereas-- Ruth Bader Ginsburg: --that wouldn't wash out, on the other grounds? Mark A. Johnson: --Right, that... and... that are still pending, and that are... unlike Payton, are not governed by the AEDPA. Antonin Scalia: But you're saying those convictions are more than... more than 23 years old? Mark A. Johnson: Yes, Your Honor. Unfortunately, there's... they're... I believe all of them are being litigated now in the Federal court system in California. If you have no further questions, I guess I'll reserve the rest of my time. John G. Roberts, Jr.: Thank you, Counsel. Mr. Multhaup. Eric S. Multhaup: Mr. Chief Justice, and may it please the Court: Here is Respondent's 60-second nutshell summary of our core position. This case does not turn on the constitutional factor (k) standing alone. Rather, it turns on a straightforward application of the Boyde test, to the unusual, unique circumstances that occurred during the arguments, instructions to deliberations at the penalty trial of this case. Here are the two key components of our claim. During arguments to the jury, both counsel conveyed to the jury that Belmontes' evidence of Youth Authority religious experience was not covered by factor (k). However, both counsel suggested to the jury that it should be considered anyway. Now, this is unusual, because, of all... of all the things that the district attorney and the defense counsel disagreed on, this was one that they did agree on, and it's likely that the jury would have taken note of that. The case then proceeded to instructions and deliberations. The jury came back to court, announced that they were deeply divided, perhaps with a majority favoring life. The turning point occurred when one juror, Juror Hern, requested judicial confirmation that the specific list of factors previously given was the only base... was the only framework within which the penalty decision could be made. At that point, the trial court had a constitutional obligation to disabuse Juror Hern and the rest of the assembled jurors of that misapprehension and, at the very least, to reinstruct the jurors that the enumerated factors were merely illustrative and not exhaustive, and instruct the jurors that the jury had to consider all of the mitigating evidence. The trial court did neither, with the result that the jury all too likely returned to its deliberations with the belief that the only factors... the only matters they considered... could consider were those encompassed within the enumerated factors, and believing... based on counsel's prior arguments... that factor (k) did not include the Youth Authority religious-experience evidence. Samuel A. Alito, Jr.: When did the defense counsel say that this evidence did not fit within factor (k)? Eric S. Multhaup: Your Honor, it occurred in argument. And my counsel... esteemed co-counsel will give me the exact page... but it occurred in the context... the context... during the prosecutor's argument, the prosecutor said to the jury that, "I suspect"... and then he, for emphasis, said, "I can't imagine that you won't be told that the religious-conversion evidence doesn't fit within factor (k). " And, at that point, he expressed reservations, doubts, as to whether it did fit in factor (k) or-- John G. Roberts, Jr.: Why does that-- Eric S. Multhaup: --any other factor. John G. Roberts, Jr.: --Why does that matter? Because the jury was told that the factors were merely-- examples of the mitigating evidence they could consider. Eric S. Multhaup: I'm more than-- John G. Roberts, Jr.: It probably didn't fit into factor (h), either, but it doesn't matter. Eric S. Multhaup: --Well, it has... if it... oh, Your Honor, the... calling your... or you've called my attention to the instruction that said that the set... in the prior set of... or in the general set of instructions, that the enumerated factors were merely illustrative. Now, that instruction had a cloud of confusion surrounding it, because the way it was phrased was, the Court said, "The mitigating factors that I have expressed to you are illustrative. " There was no list of mitigating factors. There was only a single list, unitary list, of factors that could be either aggravating or mitigating, depending on a jury's decision. The instruction that you're referring to, Your Honor, was a... was the result of the trial court denying some, and granting some, parts of the special instructions requested by the defense. And so, when the trial court said to the jury, "The list of mitigating factors is illustrative only. " I... we, who know the background of this, understand what... the point he was trying to make, but the jury, hearing it, they would think, very reasonably, "There's no list of mitigating factors. " Samuel A. Alito, Jr.: You said this case is different because both counsel told the jury that the evidence that you're relying on did not fit within factor (k). And I'm not sure what you're referring to. Eric S. Multhaup: Okay. Samuel A. Alito, Jr.: Now, as to defense counsel, are you referring to what you quoted on page 9 of your brief, where he says, "I'm not going to insult you. " --what you highlighted on page 9... "I'm not going to insult you by telling you I think it excuses, in any way, what happened here? " That's what you... is that what you're referring to? Eric S. Multhaup: That's one of the passages that I am referring to, and it came as a direct response to the District Attorney, in effect, calling out the defense attorney, "I can't imagine that you won't be told that this fits within factor (k). " So, at that point, the defense counsel had to make a decision, "Okay, either I have to argue that my Skipper evidence is... my square peg of Skipper evidence has to fit in the round hole of-- " Samuel A. Alito, Jr.: Isn't he-- Eric S. Multhaup: --(k)> ["]-- Samuel A. Alito, Jr.: --saying something very different there? He isn't... he's not saying, "This doesn't fit within factor (k). " And he makes no reference to factor (k). He says nothing about "extenuating". He says "excuses". Isn't that something very different, "excusing" the crime? Eric S. Multhaup: --Your Honor, this Court has used the terms "extenuate" and "excuse" as synonyms in Boyde and-- Samuel A. Alito, Jr.: If you had been-- Eric S. Multhaup: --in Payton with-- Samuel A. Alito, Jr.: --if you were arguing this to the jury, would you have said, "You know, my client earned a position of responsibility on the fire crew that patrolled the Sierra Foothills, and, therefore, that excuses the crime that you've found that he committed here? " Eric S. Multhaup: --No. No. The-- Stephen G. Breyer: I don't see, anywhere in Mr. Schick's statement, at least from 165 to 170, where he says what you said he said. Now, maybe he says it some other place, but... I'd like the reference to it... but I... what I have him as saying is that... he says, for example, several times, "The presence... I don't suggest that the... that the presence of religion, in itself, is totally mitigating. " Well, it certainly wasn't, in this instance. I gather I'm right. Am I right in thinking that all this religious conversion took place before he murdered the girl? So, this is not a case of your trying to get some evidence that took place after the crime. Eric S. Multhaup: --That's right. And-- Stephen G. Breyer: All right. If-- Eric S. Multhaup: --then-- Stephen G. Breyer: --that's right, then maybe it does more easily fit within factor (k). The prosecutor told the jury they should consider it, or they could. The judge told the jury they could consider it... it sounded as... says, "You take it... this is an example. " --he says, "It's an example in factor (k). " Maybe he's wrong, but they certainly likely think they can consider it. And Mr. Schick doesn't say it's not in factor (k). At least, I don't see it. That's why I'm asking. Eric S. Multhaup: --Your Honor, the whole point of factor (k) is that... evidence that's an excuse for the crime. And if we're-- Stephen G. Breyer: No, no, I know the point of factor (k). I'm trying to be absolutely certain, before thinking-- Eric S. Multhaup: --Right. Stephen G. Breyer: --he didn't say it, that I've made every effort to get from you the place where... that this... where the defense counsel says, "Jury, I agree, you cannot put this into factor (k). " Eric S. Multhaup: Okay. And, Your Honor, looking at it in context, given the district attorney's argument, the district attorney says, "I can't imagine you won't be told that it doesn't... that it... that it doesn't fit within factor (k). " So, the defense attorney gets up and says, "I'm... I am going to tell you that it doesn't within... fit within factor (k). " "It doesn't-- " Anthony M. Kennedy: And that page-- Eric S. Multhaup: --"constitute"-- Anthony M. Kennedy: --where he says that is where? Eric S. Multhaup: --When he... when he says, Your Honor, "It doesn't constitute an excuse in any way. " Stephen G. Breyer: Were his words "it doesn't constitute an excuse"? Eric S. Multhaup: "It doesn't excuse, in any way. " Your Honor. And we... as a matter-- Anthony M. Kennedy: But in-- Eric S. Multhaup: --of semantics-- Anthony M. Kennedy: --but, in a sense, that's right, just like remorse. Remorse doesn't excuse the crime. It's a consideration that you take into account in assessing the gravity of the crime for purposes of punishment. Eric S. Multhaup: --Okay. Your Honor, this is a point of, perhaps, semantics. But the... by the time you get to penalty phase, there's nothing to excuse the crime, in the sense of self-defense or "not guilty by reason of insanity. " The only thing-- Stephen G. Breyer: --"in any way". Eric S. Multhaup: --It does say "in any way". Stephen G. Breyer: Where? Antonin Scalia: It's on page 9 of your... of your brief. The-- Eric S. Multhaup: Thank you. Stephen G. Breyer: Thank you. Antonin Scalia: --italicized portion. John Paul Stevens: It's on 166 of the joint appendix. Eric S. Multhaup: Thank you. And if the... if trial counsel was trying to make the point that, "Well, it doesn't constitute a legal excuse, but it does constitute a partial excuse or some kind of mitigating evidence under this factor. " he would have put that in there. The clear import, from the context here, is that defense counsel was not trying to sell the jury a position that was, on its face, untenable, but, rather, to acknowledge that it did not fit within the "excuse the gravity of the crime. " factor, which-- Antonin Scalia: Only if you think that excusing the crime and extenuating its gravity are one and the same thing, which I don't really think. Eric S. Multhaup: --Well, Your Honor, there's two... I'd like to make two responses to that. First of all, this Court has used those terms interchangeably, in Boyde and Payton, with respect to mitigating evidence. Second of all, let's... as a... as a practical matter, we have a defense attorney arguing a case to a jury in a Central Valley California county. And if the defense attorney has a choice between two synonyms, one which is used in common parlance, "excuse", and one which is not used in common parlance, "extenuate", it hardly constitutes an... a defect or concession on his part if he were to say, "This does not excuse the crime in any way. " That's plain speaking to a jury, that... and what he... what he... counsel-- Ruth Bader Ginsburg: But wouldn't a jury think all this evidence must have some purpose? The only purpose it could have is to... is to propel us toward life rather than death. I mean, the bulk of the evidence at the sentencing phase... wasn't it +/? was how he behaved when he was a prisoner before. Eric S. Multhaup: --Your Honor, not... that's not exactly what happened at penalty phase here. This is not a case like Boyde, where all the evidence was background and character evidence, and it's not a case like Payton, where the only evidence was a post-crime conversion. This case involved a mixture of evidence, where first there was the grandfather who testified to what a bad upbringing he had, traditional background and character evidence. The mother testified to her undying love for her son, traditional evidence. Friends testified to his good characteristics. And then, at the end, there was a clear segment that related to his good performance in Youth Authority and his religious conversion. So, it was only a... it was a partial part of... partial part of the penalty-phase presentation, but it certainly wasn't the entire presentation, as it was in Boyde and-- Ruth Bader Ginsburg: Even so, there was-- Eric S. Multhaup: --Payton. Ruth Bader Ginsburg: --there was extensive testimony about his prospects for doing good in a prison setting. Eric S. Multhaup: Well, certainly, Your Honor. Ruth Bader Ginsburg: And the jury must have thought there's some reason why the judge allowed that evidence in. And what reason could it be, other than to show that, if he is given life, he will be a good prisoner? Eric S. Multhaup: Your Honor, that's a very logical, sensible thing for the jury to have thought. And now I'd like to drop the second shoe of the key components of our claim. The first shoe was the arguments of counsel that we've discussed the various permutations on. The most likely... so, the jury began deliberating based on the instructions and the arguments that they had... that they had had. And it's entirely likely that when the jury was favoring a life verdict during the first part of their deliberations, Belmontes' prospects for good behavior in prison and contributions were part of the debate. When Juror Hern asked for judicial clarification... not clarification, confirmation... of a very specific view that only the enumerated factors could be considered in the penalty-phase deliberations, the jury... and the trial court assented without qualification to that... at that point, the jury would have very likely thought, "The trial court who holds a position of great deference to us, much more than most other authority figures we have in our life, just told us what the marching orders are here. " "This is the framework for decision. " Now, what happened during the... during the trial is the defense... and I'm suggesting what the jury might have thought, in relation to your question... that, "The defense attorney was taking his best shot for his client, pushing the envelope, maybe went over the top a little bit. " "But defense attorneys do that. " "The prosecutor was being a very decent stand-up kind of person, and... but, right now, when we get down to the business of making the decision, we have to follow the rules. " "And the rules are what the... are what the... are what Judge Gisson just confirmed to us, that we are limited to the enumerated factors, and factor (k) does not include the Skipper evidence, because that was explained to us by counsel. " I would like to-- John G. Roberts, Jr.: Before you move on, Counsel-- Anthony M. Kennedy: Well, of course you-- John G. Roberts, Jr.: --don't you-- Anthony M. Kennedy: --don't you... excuse me. Excuse me. John G. Roberts, Jr.: --don't you have to address the Teague question a little bit? You... you're entitled to this new rule adopted by the Court of Appeals only if it was dictated by precedent at the time the judgment became final. Isn't that kind of a hard argument to make in light of our subsequent decision in Brown v. Payton? Eric S. Multhaup: --Your Honor, I don't see... as to the first part of Your Honor's question, I don't believe that there is any new rule whatsoever in the Ninth Circuit opinion. It's a straightforward application of Boyde to the totality of circumstances that occurred. John G. Roberts, Jr.: Of Boyde? It's straightforward application of Boyde? Eric S. Multhaup: Yes. The Ninth Circuit began with Boyde, and it went through all of the proceedings at trial, and concluded that there was a reasonable likelihood that the jury didn't consider Skipper evidence. And that's what we're asking this Court to do, the exact same... applying the Boyde test to the rule... the rule of decision that was clearly established by this Court as of 1986, and reiterated and expanded by this Court in 1987, with Skipper. Antonin Scalia: Yes, but what has to be clear under Teague is not just the rule, but the rule's application in circumstances like this. There are a lot of rules that are clear, but if Teague means anything at all it has to mean that you should have known that, in this case, the rule would produce this result. So it's not enough to say that there was a rule. There are a lot of rules out there, but the question is whether the outcome should have been clear at the time. Isn't that what Teague means? Eric S. Multhaup: Certainly, Your Honor. And applying... because when we... when we take a look at Penry I, this Court said... in response to a Teague argument by the attorney general, this Court held that Penry got past the threshold Teague issue because of... at the time of the finality of his direct appeal, in 1986, the rule was well-established that the sentencer may not be precluded from considering relevant evidence in mitigation, by Lockett, Eddings, and others. So if that was a firmly established rule as of 1986-- John G. Roberts, Jr.: Well, Penry was considerably tightened by the subsequent decision in Graham versus Collins, though. Eric S. Multhaup: --Graham v. Collins was an AEDPA case, as was Payton. So, we have a very, very different standard of review. And, if I may, Your Honor-- John G. Roberts, Jr.: No, I know Payton was an AEDPA case, but it, nonetheless, concluded that it was not unreasonable for the California Supreme Court to read instruction (k) in a way that allowed this evidence to be considered. And I would have thought, if it was not unreasonable to have that reading, that the contrary reading that you're proposing, and that the Ninth Circuit adopted below, could hardly be said to have been dictated by existing precedent. Eric S. Multhaup: --Ah. Well, the... our position in relation to that is, the direct quote from... direct quote from Payton itself, in which the Court said that, assuming the California Supreme Court was incorrect, Payton, nonetheless, loses. Here we're arguing that the California Supreme Court was incorrect, and, therefore, Belmontes-- John G. Roberts, Jr.: Because if it was-- Eric S. Multhaup: --should win. John G. Roberts, Jr.: --because, even if incorrect, it was, nonetheless, reasonable. And I'm just having trouble understanding how, if a contrary position is dictated by precedent under Teague, a reading 180 degrees the opposite of that could be regarded by this Court as reasonable. Eric S. Multhaup: The unusual facts of this case are much stronger in favor of relief under the Boyde test than were those in Payton. Therefore, applying the longstanding rule of Lockett and Eddings to the different, and more compelling, facts of this case, there is no reason... there is every reason to provide Belmontes relief, where it was denied to Payton. And there's no reason to believe that the California Supreme Court was being incorrect, but reasonable, in... to presume, or find, based on Payton, that the California Supreme Court was being incorrect, but reasonable, in this case. Penry could not have won his case under the... under the... that particular analysis, because the Texas-- John G. Roberts, Jr.: Well, I-- Eric S. Multhaup: --Supreme Court-- John G. Roberts, Jr.: --Graham didn't win his case. Eric S. Multhaup: --And Payton didn't win either, but we're operating under the prior regime. So... I understand the... the Court is suggesting, I believe, that somehow Payton is a sword, in some sense, to deny relief as to all California defendants under penalty-phase instructional claims cited by the California Supreme Court, even under different facts and under more egregious circumstances. And I... I may have... be misinterpreting the Court's argument, but I would argue that there are any number of scenarios, notwithstanding Payton, that would require relief under the pre-AEDPA standards when you apply the test of Boyde to all the circumstances of the case. Ruth Bader Ginsburg: Mr. Multhaup, one aspect of your argument I wish you would clarify, and that's in your brief at page 20, footnote 3. As I understand it, you are saying... you are not challenging factor... the factor (k) instruction as excluding Skipper evidence. Your challenge is limited to this particular case. Is that what you're saying in that footnote? Eric S. Multhaup: Yes, Your Honor. I'm not here to refight the battle of Boyde. You know, I spilled tons of hours of time and printer's ink in an amicus brief in 1989, and I understand the concept of "you lose". What we are arguing is that the Boyde test should be applied to the circumstances of this case, and that factor (k), standing alone, in a... in a case where defendant relies on Skipper evidence, does not warrant relief by that fact alone. Here we have much more than that fact which, under Boyde, does call for relief. I would like to give-- Ruth Bader Ginsburg: And the-- Eric S. Multhaup: --Respondent's-- Ruth Bader Ginsburg: --the "much more" is the questions that the jury asked? Eric S. Multhaup: --The "much more" includes the arguments by counsel, which, notwithstanding different... reasonably differing views of it, does put a context on the... put into context what defense counsel was arguing. We have the confusion inherent in the instruction that the Court gave the... the putatively proper instruction about them being illustrative rather than exhaustive. We have the colloquy during the penalty deliberations. We have Juror Hailstone's follow-up question regarding the possibility of considering the availability of psychiatric treatment, which was explicitly rejected, and very likely confirming the message that had just been given to... via the answer to Juror Hern's case, that only the enumerated factors can be considered. John G. Roberts, Jr.: Well, there is no evidence on that question presented, right? The reason that the possibility of psychiatric treatment couldn't be considered is because neither party had put evidence on that question before the jury. Eric S. Multhaup: Well, Your Honor, you know that, because you're the Chief Justice, but the people of San Joaquin County had no idea that that was the reason, and if not explained-- John G. Roberts, Jr.: No, no. It's a question of what mitigating evidence was put before the jury. The jurors couldn't consider that, because it was the... quite proper for the trial judge to say, "You can't consider that, because there was no evidence on it. " Eric S. Multhaup: --It would have been perfectly proper for the trial court to say, "You can't consider that, because. " --appended exactly the... the explanation that you gave. And the jurors would have understood that they had to consider the evidence presented, but they couldn't speculate about other things. If, at the crucial point in the proceedings, the trial court had said, "Juror Hern, you do have to pay attention to those factors, but they're illustrative rather than exhaustive, and you must consider all of Belmontes' evidence. " "Please go back and deliberate. " that would have cured the errors here. However, the error occurred when the... when the court didn't do that. And Juror Hailstone's question... the trial court's answer could only have reaffirmed the misimpression that the court returned to the... to deliberate with. I have a... just a few minutes, and I would like to give Respondent's answer to Justice Kennedy's question to Petitioner, paraphrasing somewhat, How does Skipper evidence extenuate the gravity of the crime? And the answer is, it doesn't at all, logically, ethically, or morally. As defense counsel conveyed to the jury, the circumstances of the crime are what they are, and there's nothing that can be done about that. The circumstances of the crime are immutable and irreparable. The only thing that can be extenuated in a penalty presentation is Petitioner's culpability for the crime. And counsel argued that Petitioner's culpability was some... to some extent, extenuated and mitigated because the evidence showed that there was no plan to kill the decedent when they went to her house. Anthony M. Kennedy: But we have said that remorse extenuates the gravity of the crime, for punishment purposes, under factor (k). Eric S. Multhaup: Well, of-- Anthony M. Kennedy: And that-- Eric S. Multhaup: --course-- Anthony M. Kennedy: --And that... and that... that's post... that's post-crime. Eric S. Multhaup: --And, Your Honor, this pre and post-distinction, I don't believe has... is a relevant distinction. It's whether it's functionally related to the culpability for the crime, because when a defendant expresses remorse-- Anthony M. Kennedy: Oh, you think pre and crime... pre and post-distinction has no bearing on this case? I thought that was really the linchpin of your argument? Eric S. Multhaup: --No, Your Honor. It's that Skipper evidence is a specific and different kind of mitigating character evidence that doesn't extenuate the gravity of the crime, but it provides a different kind of reason for sparing the defendant's life. There is-- Ruth Bader Ginsburg: And yours is both pre and post... that is, you're referring to conduct that took place before this crime was committed... that is, his prior incarceration... and asking the jury to project that forward to say, "That's how he behaved in prison, before he committed this most recent crime, and that's how he's likely to behave again. " Eric S. Multhaup: --Well, all of the Skipper evidence in this case occurred as a matter of historical fact before the capital crime and... which, in fact, gives it's much... gives it much more weight, because it can't be suggested that he contrived his good conduct after being arrested for a capital crime. But, I'm going to make a broad statement here. There is no reported case in California where either a defense attorney or the California Supreme Court makes a text-based argument that Skipper evidence extenuates the gravity of the crime, because it's illogical and doesn't work. Look what the defense attorney did in Payton. He argued that, "Well, of course you have to consider that evidence under factor (k), because it's a catchall. " "It's supposed to be inclusive. " That's not a text-based argument, that's a circumstantial-evidence kind of... kind of argument. When we look at that... when we look at that phrasing of "extenuating the gravity of the crime. " with its plain meaning in English, and the distinction made, in Skipper itself, that Skipper evidence does not relate to Petitioner's culpability for the crime, the jury is going to appreciate what the... what the attorney said to them, that the... that the Youth Authority religious evidence does not extenuate the gravity of the crime, but has independent mitigating effect outside those enumerated factors. There's nothing... that's a perfectly appropriate position to take, no constitutional problem there until, during deliberations, the trial court confirmed that they could only consider the enumerated factors and could not consider nonstatutory mitigation, the... any other kind of mitigation, because that, in effect, closed out consideration of the... of the Skipper evidence. Antonin Scalia: If the judge's response to Juror Hern was so misleading, why didn't counsel object to it, if it was as obviously misleading as you say? Eric S. Multhaup: Your Honor, it's like being... stepping off a curb and being hit by a bicycle that you didn't see coming. This occurs in the middle of jury deliberations. Nobody expected a juror to ask a question of this type. And, of course, I'm speculating here, but the trial court fielded the questions, responded off-thecuff, and the juror... jury went back. Antonin Scalia: That's why you have counsel there, to help the court when the court makes a real boo-boo, and if this was as obviously error as you say, one would have expected some objection from defense counsel. Eric S. Multhaup: One could also have expected the trial court to say, "Let's take a minute to think about that. " "We're going into recess, and I'd like counsel's opinion about this, because this is a difficult question. " "It's not a simple yes-or-no answer. " Under-- John G. Roberts, Jr.: Thank you, counsel. Mr. Johnson, you have 6 minutes remaining. Mark A. Johnson: Thank you, Your Honor. In a minute, I'd like to briefly touch on the Teague issue. At the time Belmontes' judgment was pending, there was no precedent that would have dictated the Ninth Circuit's conclusion here regarding the sufficiency of the factor (k) instruction. And, indeed, this Court's subsequent holdings, in Boyde and Payton, bear out the fact that it was at least... that that decision certainly was not dictated by precedent. In Boyde, this Court dealt with evidence of good character that was precisely the same as the evidence of good character here. The... Belmontes' evidence of having succeeded during a prior commitment and religious conversion, that he might be able to help others in the future, was good-character evidence in the same way that Boyde's evidence of having won a dancing prize, of having helped children, of having helped artistic... having artistic abilities, was all good character. And there is certainly nothing in Boyde to suggest that there is any distinction. But, even if there was, it would not be one that would compel all rational jurists to distinguish the two cases. And that's further buttressed, of course, by this Court's more recent opinion in Payton, which found that it was at least reasonable for the State Court to conclude that Payton's post-crime forward-looking evidence would be understood to fall within the factor (k) instruction if it was at least reasonable for California to find that such forward... post-crime forward-looking evidence would fit within the factor (k). The Ninth Circuit's conclusion, to the contrary, regarding pre-crime good-character evidence, certainly was not dictated by precedent. I'd also like to address, quickly in my remaining time, Mr. Multhaup's arguments regarding the jury... or the argument of counsel and the jury questions. Again, Boyde counsels that the relevant consideration is whether there is any reasonable likelihood that the jurors view the instructions in a way as to foreclose consideration of constitutionally relevant evidence. In this case, both... the jurors were instructed with the factor (k). As I've said, they were given the supplemental instruction that said that the... that the previous listing... factors were only examples of some. And then, both counsel clearly said that the jurors could, and should, consider this evidence. Is there some possibility out there that some juror might have misinterpreted this in a... in a... in a different manner? I suppose so, but there is certainly no reasonable likelihood, especially in light of the fact that Belmontes' evidence, virtually all of it, was directed at this main thrust of the argument. And, just like in Payton and Boyde, for the jurors to have believed that they could nonetheless not consider that evidence would have turned the whole proceedings in a virtual charade or a pointless exercise. So far as the questions during juror deliberations, it's, first, important to recognize, none of these jurors said anything to suggest that they were actually confused about whether they could consider any evidence offered. Their question... Juror Hern's question merely related to her... she wanted to confirm her understanding about the role of balancing mitigating versus aggravating factors under California law. And certainly the parties there if... would have been in a better position to realize it if these questions somehow suggested some ambiguity. There was no objection there. Moreover, in the same conference, the judge advised the jurors to review the instructions again, which, of course, again included the factor (k), and which, of course, included the supplemental instruction that said that their consideration of mitigating factors was not limited to those that had been listed, but those that had been listed were merely examples. If the Court has no further questions, I will submit the case. John G. Roberts, Jr.: Thank you, Counsel. The case is submitted. Speaker: The Honorable Court is now adjourned until tomorrow at ten o'clock.

Peyton Ford: If the Court please, I would like to briefly refer outside of the mainstream of my argument to several matters that Mr. Ogden raised yesterday. One is, the transfer of the case from Judge Wallis to Judge Chandler. On page 81 of the record, there's a letter from Judge Wallis to the clerk of the United States District Court, where he says to the clerk, “at the request of Mr. John Ogden, one of the attorneys for Mr. Simler, in the above styled case, I am assigning this case to the Honorable Steven S. Chandler for trial and disposition. In connection with Mr. Ogden's further argument as to the reasonable fee and so forth, in his deposition at 105 of the -- 106, I guess in -- of the record, he asked this question, “Alright sir, then did you know when you employed Mr. Conner, what a reasonable fee was or wasn't a reasonable fee? You put in there a reasonable fee to be fixed by the Court?” “No, but I trust him in the cost in there that we would if we couldn't agree on a reasonable fee, it'd be left up to the County Court, the court, Mr. Simler or any other court.” As to the question of federal law controlling and whether the respondent was or wasn't in agreement or disagreement with it on the prior proceedings, in fact, the position was never contested one way or the other. The Court sent this case back to the Tenth Circuit as I read their ruling for the Tenth Circuit to decide whether state law required a jury trial or non-jury trial and the Tenth Circuit in obedience to this Court's direction held that it was a non-jury trial, citing the Southard case in which they specifically held, overruled the Haunstein case that Mr. Ogden was citing at the conclusion of his argument yesterday. However, the respondent in this case does not argue that the federal law isn't applicable under Rule 56 in an action for finding a promotion for summary judgment in portion and motion for summary judgment it makes no difference whether it's a jury trial or a non-jury trial. Now, as I concluded yesterday, I pointed out that under the action for -- under the motion for summary judgment that the petitioner clearly agreed on the terms of the September agreement, the execution of it, the full performance by -- of the contract by the petitioner and that the litigation was taken to both the Supreme Court of Oklahoma and the Supreme Court of United States to this Court and as the result of his efforts they recovered this 160-acre farm which is of great value. As to the motion for summary judgment granted below, the Court held three very extensive hearings on it. Affidavits were filed, depositions were taken from all parties present at the signing of the September agreement. In petitioner's counterclaim, he asked that the September agreement be set aside because he'd been overreached. In support of this position, he basically alleged only three things: one, his age which is 74; two, his inexperience in litigation and three, the fact that he just doesn't want to be bound by the agreement. Some subjective state of mind he said occurred at the time the agreement was signed. Well, of course that can't vary the terms of unambiguous written agreement. Potter Stewart: The petitioner's position now if this wasn't an agreement at all based on the famous race -- racehorse jockey doctrine, whatever is the race? Peyton Ford: If it wasn't agreement, agreement the first letter wasn't needed. Potter Stewart: Now, there's a consideration for the first letter anyway. Peyton Ford: And a consideration for this. Potter Stewart: What was it? Peyton Ford: This was a mere clarification of the first document stating -- the first man said a reasonable fee, this clarified what a reasonable fee was. Byron R. White: [Inaudible] Peyton Ford: Yes. In my -- Byron R. White: [Inaudible] Peyton Ford: Well, he is talking about the -- Potter Stewart: [Inaudible] Peyton Ford: Well, he is talking about the Haunstein case which this Court in effect held and the Tenth Circuit specifically held overruled in the Southard case overruled the Haunstein case. And the first -- I think the most important consideration is that for now being upon assumption that internal Oklahoma law, this is at page 7 of my brief, affirmatively the outlaws, attorney fees, contracts are more than reasonable notwithstanding that they are prescribed in an otherwise lawful contract. Such an assumption is nowhere asserted to prove by the petitioner either below or in the -- or in his brief before this Court. At any event, the recent decision of Southard makes it plain that such assumption is not the substantive law of Oklahoma. The only precedent respondent cites is Holstein which I said has been overruled but in the subsequent case, the Oklahoma Court stated and I'm quoting, “Since we hold that the deed and the attorney client contract are binding. There is no necessity to discuss the value of the services on quantum meruit.” And when they had to say that in attacking such an instrument that the -- it was the action was equitable in nature but I'm not relying upon the substantive law of a state to characterize this as one equitable action. It's clear under the federal law that is an equitable action. Speaker: I understood, perhaps I'm wrong. I understood that you were arguing this case on the premise that federal law controlled both with respect to a right to a jury trial and with respect to the characterization is equitable or non-equitable. Peyton Ford: That's right. Speaker: The cause of action, federal law applies throughout, that's your premise? Peyton Ford: That's my premise. Speaker: So that the Southard and the case for these purposes decide the point? Peyton Ford: So far as the substantive law of the state though concerning when you reached a -- Speaker: Right. Peyton Ford: -- the reasonableness of -- Speaker: In other words (Voice Overlap) -- Peyton Ford: -- 20 more contract -- Speaker: -- to be more concrete. If under state law this action would be characterized as an equitable cause of action, but under federal law and I'm just assuming just for a moment, under federal law it would be characterized as an action of law, the federal law would govern and a jury trial would follow, isn't that your premise? Peyton Ford: Yes sir. Speaker: That's what I thought. Potter Stewart: Well, wasn't your premise in the petition for rehearing which I have, I sent to the clerk's office for (Voice Overlap) -- Peyton Ford: I meant to bring that up (Voice Overlap) -- Potter Stewart: -- in the original denial of -- in the original denial of certiorari you relied entirely on Southard for the proposition that there was no right to a jury in this case. Peyton Ford: Under state law. Potter Stewart: Under state law. Peyton Ford: Because the Tenth Circuit has relied upon state law, not federal law. We hadn't met the question. In my judgment, now you've -- now the Court has before it clean. Speaker: In other words, there is no basis -- a suggestion where -- suggest in your brief that we should dismiss the writ as improvidently granted because the jury question in the -- Peyton Ford: Yes, if you want to follow the doctrine of constitution (Inaudible) -- Speaker: It's squarely, isn't it? Peyton Ford: It's squarely here but if the summary judgment was properly granted, you don't reach it. Speaker: Yes, but summary judgment was granted on the first door around the state court and Court of Appeals reversed (Voice Overlap) -- Peyton Ford: I contend the court of -- my contention is the Court of Appeals was in error when they sent it back to the Court for trial before the Court. Speaker: But the fact is that the case since their first conversion by the Court of Appeals was tried on the merits. Potter Stewart: It never been tried on there? Peyton Ford: Never been tried. Speaker: Wasn't it? Peyton Ford: No sir. They sent it back to be tried and (Voice Overlap) -- Speaker: I beg your pardon. Yes, I see. Yes, you're quite right. Tom C. Clark: You say there's no conflict in the facts? Peyton Ford: That's right. Tom C. Clark: That therefore the summary judgment was properly entered. Peyton Ford: That's right. Potter Stewart: But the Court of Appeals –- Tom C. Clark: [Inaudible] then you say that not entitled to a jury under federal law anyway? Peyton Ford: That's right. And I say that because the Seventh Amendment is the only amendment that has any so-called historical background and Judge Friendly in a recent case pointed that out very clearly and if you go back to the historical background under the Seventh Amendment, it's only those trial -- only those cases that were entitled to a jury trial by common law in 1791 that are now entitled to a jury trial. Well, at common law, in 1791, a contract between a client and a barrister was not enforceable at all. Though, there was no cause of action but following in another step under federal and under all these cited cases, an action to set aside and rescind a written agreement is purely equitable. And under the Seventh Amendment, that is not triable to the jury. And it's an equitable proceeding here because you can't reach the question of a reasonable attorney's fee until this document is set aside or modified which is purely equitable in nature. So anyway, you reach it, I don't think you can reach the question that this is triable to a jury. Tom C. Clark: What about the fraud issue? Peyton Ford: Well, it's our contention that there's completely no evidence of fraud in the case that as I have previously stated, they only relied upon three things, his age, his inexperience, and his unwillingness to be bound with the contract. Byron R. White: Is this your only -- is your only answer to Justice Harlan's question [Inaudible] is an allegation cause? Peyton Ford: The mere allegation -- Byron R. White: [Inaudible] Peyton Ford: A mere allegation of ultimate facts -- Byron R. White: Yes, but the (Voice Overlap) -- Peyton Ford: -- and conclusions. Byron R. White: -- the summary judgment was the only -- and there's got to be a trial for the -- there's an allegation of fraud [Inaudible]? Peyton Ford: Yes, but I want you to consider that the Court in grating this motion to summary judgment had before it affidavits. It had before it depositions of all the parties, all the parties were present. And the Court in its sound discretion and this Court must recognize some discretionary right upon a trial court in granting a motion for summary judgment. Now, that there was no overreaching -- William J. Brennan, Jr.: Now, let's see now, that the court was -- I haven't looked at these affidavits, are they in the record? Peyton Ford: Yes. William J. Brennan, Jr.: On the motion for summary judgment? Peyton Ford: Yes. William J. Brennan, Jr.: Were the facts that Mr. Ogden pleaded, he told us yesterday require to the counterclaim, were those facts developed in affidavit? Peyton Ford: They have simply didn't exist in the affidavit. William J. Brennan, Jr.: You mean they were not in the affidavit? Peyton Ford: Not as he stated, no. Byron R. White: Well, let's just assume there's a -- was there -- was there a question on summary judgment in this case whatsoever, that is going to be at the trial [Inaudible] on the merits on whether or not this contract to be rescinded for fraud? Now, is it your contention that it will be tried by a jury or not? Is that an equitable -- is that an equitable action? Peyton Ford: That's an equitable action, certainly. Byron R. White: Well, [Inaudible] in any event, was there fraud in the case or there isn't -- the -- that the action was set aside, that it involved [Inaudible] -- that this case involved the [Inaudible]? Peyton Ford: Without to -- Byron R. White: [Inaudible] Peyton Ford: Without burdening the Court, I think this is clearly stated in Moore's Federal Practice, Volume 5 at 183 in Footnotes 2 and 5 on the question Justice White has just asked me. Speaker: Mr. Ford, it is true, I take it, that in order to deal with this matter on the summary judgment premise which I think would result in dismissal of the writ as far as I'm concerned if it's correct. Peyton Ford: Yes. Speaker: We'd have to reverse the Court of Appeals' determination that there was a triable issue of fact? Peyton Ford: Yes, sir. Potter Stewart: The Court of Appeals has decided that twice in effect, in both its opinion. First, by remanding it for a trial before a jury and then by remanding if for a trial before the Court twice that is -- it is adhered to the position that summary judgment was inappropriate and improper in this case. Hugo L. Black: What is the basic dispute between you and [Inaudible] Peyton Ford: That's such a simple question. I don't know why I can't answer it. Hugo L. Black: [Inaudible] something to do with the case. Isn't the basic dispute whether you hold them -- they owe you money, expressed on -- via express by 5 contracts? Peyton Ford: Yes sir. Hugo L. Black: That's the basic dispute between you? Peyton Ford: Yes sir. Hugo L. Black: What about common law action of this type, who tries that? Peyton Ford: The common law action in this type of case I contend is equitable -- is triable to the Court if we didn't have Rule 56 in the summary judgment doctrine and I contend that's applicable -- Hugo L. Black: That's (Voice Overlap) but assuming that the summary judgment was wrong from the evidence, there was a dispute in fact between them, wasn't there? Peyton Ford: This is a -- this is a construction in his counterclaim to set aside the contract providing for these great -- graduating fees from 25% to 33% to 50%. Hugo L. Black: What was the dispute set up in the complaint? Peyton Ford: The original complaint was an action for declaratory judgment to find out how much -- who owed who and how much. Hugo L. Black: Who owed who? Peyton Ford: And how much. Hugo L. Black: That -- as I recall it under the common law that was at least considered a pretty good common law action, wasn't it? Peyton Ford: I would say so but -- Hugo L. Black: Isn't it about the most basic, most premised common law action to bring up a dispute about how much somebody owed somebody else? Peyton Ford: Well, if it is in nature of accounting, it could be equitable. Hugo L. Black: Well, no question here that you had to have any accounting, is it? Peyton Ford: Yes, there is an accounting question. Hugo L. Black: There's an accounting, was that the basic from which you are claiming that it was not triable by a jury? Peyton Ford: No, but we filed just an answer to his action for a declaratory judgment. We counterclaimed and pled that September 25th agreement which he and his -- the petitioner in his original action only pled that July (Voice Overlap). Hugo L. Black: Is that your position that the counterclaim deprived the man of a right to trial by a jury who has filed a complaint and was entitled a right to trial by a jury? Peyton Ford: Certainly because he can't get to the first letter until the second contract is construed by the Court and that's not a jury question. William J. Brennan, Jr.: But the second -- second one is set aside. Peyton Ford: No. Set aside. William J. Brennan, Jr.: On the basis (Voice Overlap) -- Peyton Ford: And that's an equitable question. Hugo L. Black: Better not, provided they two, they have -- one of them equity and try it first whether he's been -- contracts would be rescinded if they decide it shouldn't and you got to sue on that contract then you go back to common law and get a jury, is that it? Peyton Ford: No, I don't think so in this case because the very -- Hugo L. Black: And in any case if this -- Peyton Ford: Well, there's a variation -- Hugo L. Black: Completing it up like this. Peyton Ford: There's a variation on the theme here. In this case, the July contract specifically provided that the reasonableness of the fee would be decided by a county court or any other court. It never contemplated the jury in the original agreement. Hugo L. Black: Well, there's -- do you mean that the reasonable agreement waived the right, constitutional right to trial by a jury in the federal court? Peyton Ford: I don't think it was a waiver of a constitutional right. It was the -- it was embodied in the contract and even in his deposition in this cause the petitioner never questioned that. I just read that to -- Hugo L. Black: [Inaudible] the whole case rescinded somewhat on how men viewed the right to trial by a jury under the Seventh Amendment, doesn't it? Peyton Ford: Yes, I'd say that. Hugo L. Black: [Inaudible] Peyton Ford: I'm sure. Have a lot to do with it. Byron R. White: But why wouldn't -- why wouldn't the [Inaudible] had the right to a jury trial with the [Inaudible]? Then the remaining question is how much [Inaudible] or how much [Inaudible] was it? Peyton Ford: [Inaudible] Byron R. White: [Inaudible] Peyton Ford: No, but I just stated to Justice Black, he have never contended including his deposition that the summary judgment he was ever entitled to a jury trial under his July agreement. And under the historical test that I first mentioned which I'm coming back, there was no right to a trial by a jury or any right. It was only moral obligation under English common law for the enforcement of attorney embarrassed with the contract and is -- it's simply to me the -- probably the best analogy. Byron R. White: [Inaudible] Peyton Ford: If you can't sue -- you can't sue -- Byron R. White: [Inaudible] Peyton Ford: Well, no but their actions -- analogies to it, actions to set aside the verdict notwithstanding and so forth and so on. I think that perhaps the best analogy is you can't sue the sovereign without his consent. That was the common law in 1791 when the Seventh Amendment was enacted. There are many cases where the sovereign has given his consent to be sued but the Courts have consistently held that that doesn't give the right to a trial by jury that similar to this cause of action in the -- neither one of them existed. Now, that they have come in to being since the Seventh Amendment whether it be by the sovereign in an act of grace or whether it be just the change of the law, that doesn't change your right to a trial by jury. William J. Brennan, Jr.: Well tell me, Mr. Ford, if summary judgment point has no merits, aren't you going to shift probably with your other argument in light of our Dairy Queen and that other decision of ours -- Peyton Ford: I don't think so. William J. Brennan, Jr.: How do you distinguish them? Peyton Ford: In the Dairy Queen case of the petitioner's defense to a breach of contract was the subsequent oral modification of the contract and the Court held there that while there was such an oral modification raised factual issues triable to the jury, I don't think that's our case at all. In our case, there's never been any question as the alleged September contract or what it is or its terms and conditions. The only question raised is sought to be set aside by fraud. But in this point, the underlying facts aren't contested. And even if they weren't, the dispute would be subsumed within the overall claim set aside for written instrument which is equitable in nature. We have no dispute on the facts here. In Dairy Queen you had an attempt to modify -- William J. Brennan, Jr.: Are there federal court decisions -- at least, are there any in this Court that an action to rescind a written agreement for ground -- on grounds of actual cause are equitable in nature? Peyton Ford: Yes, there are several. There was -- the Moore citation I gave you had several cases. I don't have them -- William J. Brennan, Jr.: Are they decisions of this Court? Peyton Ford: Yes, sir. William J. Brennan, Jr.: I don't think that certainly state facts; that the reason wasn't in my state. Peyton Ford: I will get the decision, there is one in -- it's cited in the Moore citation cited in our brief on page 22 and some subsequent cases following that on page 23. Am I right? I'm wrong, that was another citation on Moore, that must be the 183 citation. Byron R. White: Page 29 of your brief? Peyton Ford: Yes, that's it. I was looking at the wrong Moore. Those are the cases and the case is cited in those two footnotes I mentioned on Moore, the full text in Moore is not cited here. The only other case that I remember Mr. Ogden mentioning was the Beacon Theatre case. In that case, the Court held that where legal and equitable claims have joined, it's improper to try the equitable claim by the Court ahead of the issues triable and the jury for this might incur of the litigants' right to a jury trial. I think the answer to that has two reasons. The first is that the Beacon doctrine affects only those cases where there's an issue of fact common to the legal and equitable claims and that isn't true in this case. The question about the reasonable attorney fee here has nothing whatever to do with the question of whether the September instrument was fraudulently induced. And furthermore, the reasonable fee claim is a contingent claim, that is it's not an -- it's not an alternative to the cancellation of the contract, that is the reasonable fee claim is contingent upon the cancellation of the contract. It's a claim that can arise only after it's been decided that the September instrument was to be set aside and Beacon doesn't reach that question on purely contingent claims and in that, I call your attention to the case of Damsky v. [Inaudible] cited on page -- its 289 F.2d. That's same case that I cited in connection with historical construction of Seventh Amendment decided by Judge Friendly in the Second Circuit. Hugo L. Black: Do you think that's consistent with Beacon and Dairy Queen? Peyton Ford: Sir. Hugo L. Black: Do you think Judge Friendly's opinion is consistent with Beacon and Dairy Queen? Peyton Ford: Yes sir, within the ambit of the given factual situation in this case. I would like to read briefly from a colloquy between the Court and Mr. Ogden that was referenced to 102 of the transcript where the Court is doing its best to get Mr. Ogden to tell him what other evidence he has to offer except the affidavits and depositions filed in connection with the motion for summary judgment. The court says, what additional testimony, I don't want to know what it is, but what point would you offer it to. Well, if Your Honor please, we would offer just for the reasonableness of the fee. That is one thing we would do because we think that would be proper. Next, Your Honor, Mr. Simler has testified he doesn't desire to change his testimony but we do desire to corroborate it with other testimony which we have at the time of the Court. Now, could there be any other testimony on this point? Well, Mr. Conner and Mr. Simler are in complete disagreement on what took place. There were only two of them who were there but if the Court please I'm not saying, “Well, there are other people there both charged whose testimony you're going to rely upon or add to it.” Well, I think I'm going to rely upon Mr. Arnold Britten who was a third person present. Mr. Britten sued Mr. Simler for attorney fee. You're going to use Mr. Britten now, what are you going to prove by Mr. Ogden Judge. I've got his deposition as I recall it, he testified in that deposition I don't attempt to remember the details, but as I recall he testified, it was after this county court case which is October 2 that Mr. Grigsby got up the idea to file a suit in a federal court. Mr. Conner had nothing to with it. Are you willing for that to be part of the record, Mr. Bailey who was representing Mr. Conner then, we're willing to stipulate that the deposition be filed in this case; his affidavit as to his testimony is also on file. The Court, “What about his deposition there, why don't [Inaudible] his deposition come in.” John B. Ogden: He was her adversary. Mr. Bailey, it won't change the truth. Mr. Ogden, we're bound -- we're not bound in the adversary proceeding. The Court if you want him as a witness, surely you -- if you want him as a witness here, you want to bound by him, not all of the judge, the Court just part of it. Somebody sues you and you have their testimony you don't want all of it in other case just the part that's relevant to the execution of a letter. John B. Ogden: May I say to the Court what other witnesses do you have? And I've mentioned one there, “Alright, what about it? Let's -- let -- we will let that in and if you will get the deposition up here and only that will go in with reference to the letter of September 25. Any evidence in their first letter that may be used then you got it in the record as any other evidence and you got it in the record and any other evidence cannot be considered.” What are you going to prove on something more in Court and let's see what it would be? Mr. Ogden: Well, I have getting up here and talk to him. The Court: I thought you came here for pretrial and then it goes on. But it's clear all the depositions, all the affidavits before the Court and although the colloquy isn't as clear as it might be it's also clear that one of the evident -- other evidence that could be produced. And I make that argument in support of the motion granted to sustain the summary judgment. And in the pleadings their only conclusions pled, they're not our ultimate facts. There are no facts alleged as to fraud of any appreciable nature. There's only one other factual situation I would want to mention that Mr. Ogden yesterday did mention that Mr. Conner had Mr. Simler up there for the purpose of signing a will in September 1952 when this latter agreement presented into by Mr. Simler's deposition that is lodged in the clerk's office on page 30. That will was entered into in September 1953 not September 1952. Now, in conclusion, if I can reach after briefly it's the respondent's position: one, that in a federal diversity action at summary judgment is a perfectly proper method of procedure even though the countervailing practice doesn't prevail in the foreign state. Two, that under summary judgment action it makes no deference whether the case is triable to a jury or not to a jury; three, that the court acted properly in granting the summary judgment. Speaker: How much money is involved in this in addition to attorney's fee? Peyton Ford: I don't know, this is a 160-acre farm in Caddo County which is in the so-called a cement producing area of Oklahoma. It's got oil runs of about four -- 350,000 and 40,000 a month -- Speaker: This is an oil situation? Peyton Ford: And it's (Voice Overlap) -- Speaker: [Inaudible] Peyton Ford: That is one of the riches producing area in Oklahoma has about 13 producing sands and I don't know how many been touched on this 160. Hugo L. Black: Does the record indicate how much it's worth? Peyton Ford: I would -- from half a million to 400,000. Hugo L. Black: And the claim -- there's difference between what's a reasonable fee and what's presented to that trial? Peyton Ford: Half of it. Hugo L. Black: Half of it? Speaker: That is about $250,000? Peyton Ford: Of course, there are some -- some didn't pay that would have to be accounted. Speaker: Yes, sure. Potter Stewart: Some $90,000 had been paid, isn't it? Peyton Ford: I don't know what the exact (Voice Overlap) -- Potter Stewart: [Inaudible] Peyton Ford: There was -- there were 25 and the question is to -- how you treat some 12,000 but the services of any other attorneys if Mr. Conner hired in this was to be taken cared out of his 50%. Potter Stewart: Of Mr. Conner's 50%? Peyton Ford: Yes. Hugo L. Black: Aside from this litigation over the fee, what other litigation you have now? Peyton Ford: In the beginning, they filed a -- this -- the sister of Mr. Simler died and cut him off with $1 and no more. That was when he went to Mr. Conner. He filed an action in the County Court of the Oklahoma County contesting the will. That was on October the 2nd at 1952. On October the 14th, 1952 they filed an action in federal court to set aside the will, contending that because this was a corporation, the Constitution of Oklahoma forbade corporation to take any land outside of the city limit that wasn't used for corporate purposes. Now, that case went to the Court of Appeals twice and the Supreme Court -- Hugo L. Black: United States Court of Appeals? Peyton Ford: In the United States Supreme Court twice. Ultimately, it was determined that the Sisters of Saint Francis could not take under the will, therefore, it went in test and through Mr. Conner's efforts of 19 separate proceedings, Mr. Simler got 160 acres in Caddo County which we have just roughly placed evaluation on. At the same time, while the County Court admitted the factum of the will, it was a federal court action that caused ultimately this property to go to Mr. Simler. But at the same time in the probate action in the County Court, the court assessed, “How are the proceeds of the farm, certain expenses and legacies and so forth.” Mr. Conner took that case to the Supreme Court of Oklahoma and the Supreme Court of Oklahoma held of some 100 and $10,000 or $20,000 that was assessed against the farm not the estate that should be paid from these -- $73,000 should be paid from the estate, not the proceeds from the farm and in con -- I've concluded my historical Seventh Amendment question. I don't think I need to say anymore than that. Thank you. John B. Ogden: If Your Honor please may I just state this, I really wish I had time to make -- might have to [Inaudible] I just don't feel like to justify with the short time I have left to tell the Court the -- here, you asked about the litigation. Well, all there was to it, Mrs. Fletcher died and she gave different people different amounts of money and her brother a dollar. Now, the Supreme Court of Oklahoma upheld that will. The County Court upheld. The suit the County Court, I mean the petition to probate the will was disposed off on October 2nd, 1952 about seven days after this letter was signed. Of course when the letter was signed, nobody knew what the County Court would hold. That's the first trial that was ever held. Then they appealed the District Court before Judge Mills, the District Judge and he upheld the will. Then they appealed to Supreme Court and the Supreme Court upheld the will of Oklahoma. So, then everything except this farm went to the people as a will to, Mr. Simler got nothing with that which was substantial, I would say more than a $100,000 in cash. Now, then Mr. Grigsby who had a 28% contract with Mr. Conner, said, “I will get 28% of your fee in writing.” He conceived the idea and filed this suit in a federal court saying this corporation couldn't take because it was a corporation and this farm was necessary for its operation. Now, the judge, in Oklahoma City, Judge Wallis sustained the motion for summary judgment and then Mr. Grigsby for Mr. Simler appealed and went to Denver and argued the case before the Court of Appeals and the Court of Appeals said in 210 F.2d at page 99 that this con -- this corporation is utterly forbidden to take this property because the Constitution of Oklahoma won't let it take it. So, then you have 160 acres over here with unwilled property. Well, of course where they said in that opinion that property belongs to Mr. Simler because he is the next -- he's the only heir. So, that's the way that came about. Now, if the Court please, that case was certiorari -- certiorari was denied in that case. Now, in this case here, if the Court please, I want to call the Court's attention to the fact that suppose they instead of arguing this matter that we would be arguing, are trying the case and I'd called Mr. Simler and say, “Now, Mr. Simler how old are you?” He said, “Have you ever been in court?” “No, never been in court.” Do you know anything about lawyer's fees? “No sir.” Then I want you to tell the court and jury what a reasonable fee is. They say, “Well, we object that if the Court please he is not competent to tell what a reasonable fee is. The court sustained. Now, the next thing if the Court please, if the Court will read the Haunstein case which contrary and I must engage with counsel has never been overruled by any court at any time anywhere. I have the Haunstein case here and as I quoted yesterday from that this contract, this second letter, it's not even a contract, is absolutely utterly, presumptively fraudulent, that's what that said. That was the same kind of a case between a lawyer to client in Oklahoma. So since that was presumptively fraudulent, then the Court said even the burden is on the lawyer then to prove that that second letter was fair, just and reasonable and even then, yes, the very wording of the Supreme Court, he is not entitled to more than a reasonable fee regardless of the contract price. So it wouldn't make a difference. See if the Court please, there is a great distinction when a lawyer -- a client comes in my office I can make any kind of contract with him, I want to do, but after he becomes my client, the law forbids that I make any contract with him except one that is fair and reasonable. I can't change it up because I have too much advantage of him. He wouldn't come to me unless he had faith in me. Now, if the Court please this common law matters, I will call at your attention and may I say it before I forget, I have the briefs here from the Supreme Court of Oklahoma in the Southard versus MacDonald case and I have told the Court on what they contend there just a suit to cancel the deed had nothing to with the case at bar. There's no deed and that contract in Southard versus MacDonald was made at the inception of the -- they made a contract, it says it will give you 40%. Then when they got through the case, the lawyer said, “Give me a deed, you said you'd give me 40%, you said alright.” That's contract beginning of it. They made him a deed then four years, seven months and 10 days later, those people sought to cancel that deed that they gave their lawyer four years before a fellow lawyer. And so it has no connection in this case. Now, if the Court please, this common law case that he referred to in his brief I want to read that to you. That was in 1693, it's only eight from 10 lines. It'll take just a minute. It says, I can't hardly read because that old pen, penny here but I got it anyway. The plaintiff being a counselor at law brought a bill for fees due to him from the defendant being a solicitor and was to account with him at the end of every term. The defendant demurred. This Court allowed demurer some kind of words I can't understand, demurrer affirmed and the bill dismissed, that's the common law actually that he referred to. In 1693, 98 years before the Constitution was adopted. The next one he refers too, I also have it. I'd like to read it to you, just a line from it. We do not find any difference in the Middle Ages both a like that sue for their fees but it was laid down. In 1629, 1630 that a barrister unlike an attorney could not sue for his fees but in this case, this is an attorney contract so of course that wouldn't have anything to do with it as I view it. Now, if the Court please, I really think that I should in fairness to Mr. Simler and I just didn't have time see these parties took additional time to file a brief, 30 days. Then when I got their brief and then of course I'm just a fair, ordinary lawyer and -- around in a different place but this happened to be pretty busy time of the year for me and consequently I didn't have time to get up a reply brief. I thought I should but I did make some notes which I would like to call to the Court's attention now. Now, if the Court please, Colorado, the Supreme Court of Colorado said in a case here very similar to this, all of these that I'm going to call your attention are cases where the lawyer made a contract with his client after the relationship begin. Now, in Rough versus Cool, 362 Pacific Second, 396, The Supreme Court of Colorado used this language. Now, could I just get that all here? I hate getting heard because when I do it kind of bothers me and I'm not much have the court. Here's what the Supreme Court said, “Once the confidential relationship the attorney and client exists the law governing contracts entered into them is very different, entered in to about him is very different.” The test applied to such contracts when the attorney seeks to enforce the same is well stated. 7CGS attorney and client, Section 204; when -- where after a relationship had -- this is CGS, I'm reading from, Wallis from the opinion of the Court but that Court didn't see this, where after a relationship has been established the attorney and client entered into an agreement in reference to the attorney's compensation, the burdens of whom the attorney to prove that the agreement was fairly and [Inaudible] was supported by an adequate consideration that he gave a client full knowledge of the facts of his legal rights when he entered into the agreement and that service to be performed were reasonably worth the amount stated in the agreement. And then concluding it says, upon demand and action for the recovery specific real of personal property with or without them just or for a money claim to do on a contact of damages to breach the contract must be tried by a jury unless the jury is waived, that's Colorado speaking. Now, if the Court please, as I told the Court, the Supreme Court of California held in a case that where they passed the law and California said the lawyer, if he withdraws, the judge would fix fee and they have this unconstitutional, they violated the Constitution. Now, then if the Court please, citing CGS again 50CGS 77874 where there is a dispute over terms of an agreement as to the fee to be paid, also where it is provided a statute that an acts for damages is claimed if successful may recover reasonable fee. The amount of such fee must be determined by a jury. Now, if the Court please I just won't read from these because I haven't got the time. Speaker: [Inaudible] federal law governs this question. John B. Ogden: Yes, that's right. Speaker: So that this is the -- John B. Ogden: Sure, they -- Speaker: -- the point. John B. Ogden: If the Court please now I know that when I get through here I feel like because I have overlooked something but I will call the Court's attention to this, I made a notation here -- of it. I stated yesterday and I guess it sounds that he could testify, I'm certain it didn't mean it that way that I try the case to the district judge and I held certain thing that are cited there in the brief. So the agreement to do that which were -- I didn't mean it that way but it did sound it, but here's another case from another court, an agreement to do that which one is already obligated to do is not sufficient consideration to support a contract and it promise to pay additional compensation for performance by promisee of contract, that promisee is already under obligation to perform is without consideration. Speaker: But this isn't that situation. This is a case of parties agreeing to liquidate what is meant by a reasonable fee and I can't understand why there isn't plenty of consideration as far as that's concerned? John B. Ogden: Well, if the Court please, may I just say this that for the second letter as I construe it there couldn't have been any consideration because Mr. Conner was already bound to represent him to the best of his ability. Speaker: For an unliquidated fee, unliquidated fee (Voice Overlap) -- John B. Ogden: For a -- for a reasonable compensation. Speaker: And people's ideas, what is reasonable are very wide sometimes particularly -- John B. Ogden: Yes. Speaker: -- when it comes to lawyer's fees in this (Voice Overlap) -- John B. Ogden: But surely -- Speaker: -- contracts simply liquidated what that amount was. John B. Ogden: If the Court please, I want to say though, I have a case here that is very similar to it and it said that that modification, any modification of an existing contract, I've got the case cited right here, any modification of it must be supported by a consideration just like any other contract. Speaker: That's what I'm suggesting to you that a liquidation of an unliquidated amount is consideration on both sides in fixing -- John B. Ogden: Well, I don't -- Speaker: -- liquidating what is theretofore uncertain. John B. Ogden: Well, if the Court please I just say this to the Court that I have cited that case there on that point. Now, then so I feel like that under the Haunstein case in Oklahoma and the many other cases and the general authority throughout the United States is that the lawyer, he just can't make any contract with him for anything except the reasonable fee and he's already have that so therefore he couldn't -- he couldn't -- Hugo L. Black: You mean that the lawyer can't make a contract for a fee for percentage basis? John B. Ogden: Yes sir, he can make a contract for fees for up to 50% under Oklahoma law, but to make a contract with his client that must be done before the relationship of attorney and client exists. Now, that's what the Haunstein case said. That was the very facts in that case. Hugo L. Black: I believe you'd do better if you stick to federal law as Justice Harlan suggested. John B. Ogden: Yes, I think that's -- Hugo L. Black: What -- you have a case where they -- that if you hadn't filed a declaratory judgment, what would they have sued you on? John B. Ogden: They would have sued us for a reasonable fee. Hugo L. Black: Would they have sued you for on the contract? John B. Ogden: Yes sir, they would have. Hugo L. Black: And you would've had sued against you on a contract? John B. Ogden: Yes sir, that's correct. Hugo L. Black: You chose however to go in and ask for declaratory judgment? John B. Ogden: That's correct, if Your Honor please. Hugo L. Black: That's what happened in the Beacon case? John B. Ogden: Yes. Hugo L. Black: And you now have this question whether when you come in for declaratory judgment decide the same issue, you thereby lose the right to trial by a jury the constitutional right to trial by a jury they would've been -- had it -- if they had any sued it on the old way just direct? John B. Ogden: Yes sir. If Your Honor. Hugo L. Black: That's the issue. John B. Ogden: If Your Honor please, the court -- this Court has said that declaratory judgment act doesn't deprive a person of their right to a jury trial. Hugo L. Black: That's the first time you said it though. John B. Ogden: Well, I -- Hugo L. Black: As I recall. John B. Ogden: Well, I cite it in the brief and I didn't say because if the Court please. I felt like it but I've cited the case is here from the Supreme Court. Now, if You Honor -- Potter Stewart: They would've sued you in fact or might well have sued you for specific performance to convey an undivided half interest in that property, in that 160-acre farm. John B. Ogden: Yes. Potter Stewart: Now, do you contend there's a right to a jury trial in that kind of a consideration? John B. Ogden: Yes, there is, if Your Honor please. May I say this to the Court, if they bring a suit for specific personal or real property, it doesn't make any difference which, with -- that we're entitled to a jury trial. Now, of course (Voice Overlap) -- Potter Stewart: To convey an undivided half interest in that real property? John B. Ogden: Yes sir. Potter Stewart: You're entitled to a jury trial? John B. Ogden: They're seek -- yes. Potter Stewart: Under what law? John B. Ogden: Well, under the federal and state both, I want to read it since the court said that -- Hugo L. Black: Who said that? John B. Ogden: Since the Court asked me that. Hugo L. Black: Well, who said that? What state -- what federal decision is it? John B. Ogden: Well, I -- if the Court please, I can find it but it just take (Voice Overlap) -- Potter Stewart: I doubt if you could find it. John B. Ogden: Sir. Hugo L. Black: I don't think you can. I doubt if you can. John B. Ogden: If they sue for specific property? Potter Stewart: Or specific performance to convey an undivided half interest in that 160-acre farm in accordance with the agreement of September or whatever year it was? John B. Ogden: Well, if Your Honor please I'd like to read this. This is Title 12, Article 556 of the Oklahoma statute annotated and I'll give my reason for reading just a moment. Issue of law must be tried by the Court unless referred. Issues of fact arising in action for the recovery of money or of specific real of personal property shall be tried by a jury unless a jury is waived (Voice Overlap). Potter Stewart: That's the Oklahoma law, isn't it? John B. Ogden: That statute, yes sir. Potter Stewart: Now, then --now you told us throughout your argument that federal law should apply. John B. Ogden: Yes, that's my opinion, if the Court please, it's always been and still is and I certainly don't change it now. But let me just say this to the Court as I view it, they are seeking here half of the farm and they're seeking that half of the farm because of the fact and you asked about the value of it, I don't know any more than he does but when this suit was filed shortly thereafter the Court made an order and tied up all the money. And it's in the hands of the Court and the Circuit Court releases some to Mrs. Simler at one time, but regardless of that if the Court please they are seeking here money, they want half for the money that's accumulated all through, they want half for the land. Now, then whether or not I'm entitled to a jury trial in that case, I think I am but under this opinion right here from this Court in the Dairy Queen case and I marked it but I couldn't find it because I'm kind of in hurry there but the Dairy Queen case here is what the -- this Court said, I'm reading from a divided opinion. Petitioner's primary defense to charge a breach of contract that is the contract that modified the subsequent oral brief presents purely a legal question having nothing whatever to do with either innovation as a district judge suggests or reformation as he suggest to the respondent here. Such a defense goes to question on just what under the law the contract between the respondent and petitioner is and in an action to collect the debt for breach of a contract between these parties, the petitioner has a right to have a jury determine not only whether the contract has been breached and the extent of the damages if any, but also just what the contract is. Now, if the Court please if this contract was entered into without consideration that would be a question of fact for the jury to pass upon. Now, then if the Court please, if he was overreached and it became a question of fraud that the jury found he committed fraud in securing this second letter. That is a question for a jury to pass upon and this Court, the Supreme Court of United States and all of the federal courts so far as I've been able to find have always held that that is a question for the jury to pass upon. So as Justice -- Arthur J. Goldberg: [Inaudible] John B. Ogden: Yes, sir surely. Arthur J. Goldberg: [Inaudible] John B. Ogden: That's exactly right, if Your Honor please -- Arthur J. Goldberg: [Inaudible] John B. Ogden: Yes, sir. And -- Arthur J. Goldberg: [Inaudible] John B. Ogden: Yes, sir. Arthur J. Goldberg: [Inaudible] John B. Ogden: Obtained. Arthur J. Goldberg: [Inaudible] John B. Ogden: That is correct. Arthur J. Goldberg: [Inaudible] John B. Ogden: No, sir. Arthur J. Goldberg: [Inaudible] John B. Ogden: That's right. Now, if Your Honor please may I say this? This Court said and I can't just tell you right now because it would just take too long to look it up, but this Court has said that we have a right when we bring a suit, we bring the suit and they can't come in and file some -- any kind of appeal. They won't do any claim of equitable relief and deprive us of the right under the Constitution of the United States a jury trial. They just don't have a right to do that. This Court said that and so in several cases the -- Potter Stewart: The whole question here is whether you do have a right under the Constitution of the United States to a jury trial. If you do obviously nobody can deprive you of it. John B. Ogden: Yes sir. Now, then if Your Honor please, if we just had my petition, our complaint here before the Court there wouldn't be any question whether we would be entitled to a jury trial. Then, because it just asked for -- confirm what a reasonable fee is in this case then when they filed their answer and claimed half for the land and half for the money impounded in the hands of the Court, they're suing for money. Then we reply to that and we say that there was no consideration for that and then we also say if the Court please, it was obtained by fraud in both factual and constructive and as therefore going for that reason. Now, if the Court please in closing, I guess I don't really know I've got to kind of add some matters noted here but it's kind of hard to -- you know the -- to get all these matter before the Court when you kind of break the general line of your presentation but I want to say this in closing, if Your Honor please, this is not a suit for a specific performance of a contract. Mr. Simler -- Mr. Conner in his response or answer in the cross complaint, he says this second letter is not a contract at all. He says that's not a contract. He said that was only entered into for the purpose of determining or clarifying what a reasonable fee was. That's in his answer. I can show you the book page. So he says that wasn't the contract; that was just for the letter for the purpose. Now, just to make it kind of foolish, maybe bring out -- suppose he meet Mr. Simler out in the hall and said, “Mr. Simler what do you figure a reasonable fee is?” We got -- he say, “Well, I guess 50% will be reasonable.” Well that wouldn't make a contract. Now, that's all the letter is, just not -- nothing has ever been signed by Mr. Conner, the second letter or the first either. So, just because they put in a letter that Mr. Simler thought 50% was reasonable. Hugo L. Black: Suppose it is a contract -- John B. Ogden: Assume that it is -- Hugo L. Black: Assume it is -- John B. Ogden: Yes. Hugo L. Black: -- and get the argument -- John B. Ogden: That's right. Hugo L. Black: What would he sue on? John B. Ogden: What would Mr. Conner sue? Hugo L. Black: No, what was his complaint claimed? John B. Ogden: Yes, complaint claimed if Your Honor please, that on the 13th day of July and they're into the contract for a reasonable fee. Hugo L. Black: What -- but no, no that's not that contracted you're suing on. John B. Ogden: I didn't quite finish that yet and then he would allege further that on the 25th, that's what he puts in his answer for the purpose of clarifying that contract that Mr. Simler agreed that 50% was a reasonable fee. Hugo L. Black: What would he sue you for? John B. Ogden: He'd sue -- Hugo L. Black: But he sue you, is it as a suit for a specific performance -- John B. Ogden: No sir. Hugo L. Black: -- when a man sues another on a contract to make him pay what he agreed to pay? John B. Ogden: I thought it would sue for one half of the property and the money up there in the hands of the Court that would be what I'd sue for if I was presenting the matter to -- Hugo L. Black: But – [Inaudible] suit for the dead? John B. Ogden: Well, he didn't do that though in this case for. If he sued, you can look at his answer from the cross complaint that he sued for one half of the property and one half of to proceeds that accumulated during that period of time. That's what he sued for in this case. Hugo L. Black: That's what he said up in his answer? John B. Ogden: Yes sir, that's what he said up in his answer and we replied to it. But -- and we replied to it and set forth the reasons that there was not -- that he wasn't entitled to it. We want him to have a reasonable fee but on the jury to tell us what a reasonable fee was? Now then, if the Court please, I don't have any way of knowing too well but now this Court said and I just mentioned to you just a moment ago that a declaratory judgment act preserves the right to a trial by juries and then the Court further says there's question of fraudulent misrepresentation was decisive of issues both and insures action for judgment on declaring live policies void because of fraudulent misrepresentation. And seeking recession, now I'd like the Court to note this and cancellation of policies and in beneficiary counterclaim for face amount of policies and beneficiary could not be deprived of his constitutional right to a jury trial on such issues by suspending action on counterclaim and trying complaint for declaratory judgment without a jury. And then of course the Beacon case referred to next and I have a great number of federal cases but there's one if Your Honor please, which is a lawyer fee case, a federal case. And it's found in 300 F.2d on page number 1, and I have it right here but I won't have the time to read it. Earl Warren: No, your time is up. John B. Ogden: Is it up? If Your Honor please, would it be -- I don't know because I know, at this late they had asked to file a reply brief. The reason I say that is because the fact that I didn't have an opportunity to inform that, I didn't feel like it. I filed an application and written application for it. Potter Stewart: I'd have the right to file (Inaudible) -- Speaker: [Inaudible] Earl Warren: Of course, you were denied. I should get you a fair trial. John B. Ogden: I'd do it as soon as I get home, if Your Honor please. Earl Warren: You may.

Earl Warren: Number 32, Howard Farmer, Petitioner, versus Arabian-American Oil Company, and Number 33, Arabian-American Oil Company versus Howard Farmer. Mr. Nulman you may continue you argument. Kalman I. Nulman: Mr. Chief Justice, may it please the Court. First may I say, I'm afraid that I didn't fully get the import of the question that Mr. Justice Goldberg asked me yesterday nor that did I as fully answered the question of Mr. Justice Harlan as I should have liked. And I hope that I may be permitted in the course of my argument to return to both of these matters. At the conclusion of yesterday's session, I had come to the point where following a dismissal of the plaintiff's complaint after first jury trial and a reversal and remand by the Court of Appeals, there had been an application made to require the plaintiff to furnish a bond for security of costs which was granted. And a bond of $10,000 required first modified to $6000 and that was followed by dismissal of plaintiff's complaint for failure to furnish the bond which resulted in a second appeal to the Court of Appeals. That court reversed holding that the requirement for the furnishing of the bond had the effect of depriving the plaintiff of his day in court. And in the course of its opinion the court volunteered to grant a pointed observations concerning what it described as the expansive way of trying the case which had been followed by the defendant. And it referred particularly to the bringing of witnesses from Saudi Arabia. And Judge Clark, the late Judge Clark, speaking for the unanimous court indicated very plainly that the -- that in the circumstances of this case having in mind the various factors such as the amount involved and the condition of the parties, the plaintiff, that resort could have been had and should have been had to the deposition procedures prescribed by the rules. Thereafter, a second trial was had before Judge Weinfeld, the jury in the course of its long deliberations returned and reported it was unable to agree and after some additional instructions from the court returned, deliberated further, and returned a verdict for the defendant. Earl Warren: How much was the first bond required? Kalman I. Nulman: The first was $10,000 and the -- we applied for reargument and the District Judge reduced it to $6000 and we had made proof which the Court of Appeals considered sufficient that we were unable to furnish either such bond. Earl Warren: I see. Kalman I. Nulman: Following the second dismissal, the defendant tax costs at the clerk -- with the clerk and these costs in the first instance amounted to $11,900. We applied for review and in due course, the second trial judge after deliberation lasting nine months rendered an opinion and decision wherein he reduced the -- by -- the costs to the sum of some $800. And in the course of this opinion, Judge Weinfeld made reference first to the Court of Appeals' decision and its scriptures on the methods of trying the case followed by the defendant, made his own observation as to the free and easy method adopted by the defendant and that's the language of the judge. And as an instance of the free and easy method followed by the defendant, he gave the illustration of an argument of a motion for summary judgment about a year prior to the first trial. The defendant had, without any request of the court or any indication by the court that it desired a transcript of the minutes, had ordered the minutes of that hearing and attached the cost of those minutes against the plaintiff at the first trial. I might say that the costs of the first trial were taxed and reviewed while our appeal was before the Court of Appeals and we had already served and filed our brief. The first trial judge declined to stay the taxation but the Court of Appeals, on our application, did so. Now Judge Weinfeld -- Speaker: -- of the record? Kalman I. Nulman: I beg your pardon? Speaker: Page of the record. Kalman I. Nulman: It was two volumes of several thousands of pages, and fortunately for us the defendant had ordered those minutes and had filed them in the office of the clerk. That is, the stenographer had filed his copy in the office of the clerk and we made extracts from that record and the actual printed record of the appeal amounted to some 60 pages and was this size. That is to say without the appendix, it was 50 pages and there were an additional 74 printed pages for our principal brief and half again as much for our reply brief, and that was the extent of the printed record. As for the actual court record, the -- it was extremely voluminous and the volume ran to, I think and I hope I'm not in error, 1200 to 1300 pages, that was the first trial. And in that regard, I might -- for the information that the court say that the plaintiff who was the only live witness called in his behalf took up just the smallest part of that on his own direct examination. His cross-examination consumed twice the extent of his -- it's direct and the balance were taken up with the witnesses called by the defendant. Now Judge Weinfeld said that here was an instance of the free and easy approach to litigation followed by the defendant who ordered the minutes of the argument of the motion without any request from the court or any indication that the court desired its use. And the cost of those minutes was taxed by the first trial judge without any reference to the actual judge who had heard the motion as to its necessity. Now in our brief we call attention to that portion of Judge Weinfeld's decision and the defendant replied that the first trial judge had considered those minutes as necessary and included a quotation from the first trial's judge's decision which referred to three pretrial hearings. While these pretrial hearings had no reference to these particular minutes as I pointed out last night, and they refer to three separate pretrial hearings at which the minutes were taken and for which costs were taxed. Now, in addition to that, the trial -- the second trial judge stated that in bringing this suit the plaintiff acted in good faith and that in determining whether or not live witnesses should be brought from far off places, the rule laid down by the Court of Appeals in an opinion written by Mr. Justice -- then Judge Harlan, that the condition of the respected parties should be taken into accounts as well as the magnitude of the matters involved and the subject of the action. And that in his opinion, the magnitude and subject of the action didn't require it, and he said further it well may be that the various procedures followed by the defendant served its convenience as well as that of its counsel but that they were not necessary within the meaning of the statute. And to impose a staggering burden of this kind upon a defeated litigant in this situation of this plaintiff could well have the effect of closing the courts to a great many litigants. The language is my own but the sentiment was that of the judge. Before the second trial judge, the defendant argued that it should follow the previous determination of the first judge as a matter of comity and as a matter of orderly procedure but he declined to do so. An appeal was taken to the Court of Appeals and we opposed the appeal on the ground, first that the appeal involved only the matter of costs and that the costs have been determined in the discretion of the court and that under these conditions, under the rule laid down by this Court that was not appealable. Now, I might say that in that appeal, the defendant did not urge that there had been an abuse of discretion nor did it urge that the failure to follow the first judge's determination was erroneous as a matter of law. It merely contended that the first judge's determination should have been followed. Following the argument and submission of that appeal, the appellate court apparently divided two to one in favor of affirmance, that is Judges Hayes and Smith voted for affirmance, and the Chief Judge voted for reversal. And they thought that the importance of the subject required that the entire court be convened en banc and that was done and the court in a five to four division voted to reverse. The Chief Judge, Judges Moore, Judge Friendly, Judge Kaufman and Judge Marshall voted with the majority. Judge Smith wrote a dissenting opinion in which Judge Hayes and Judge Clark concurred. Judge Clark wrote a separate concurring opinion and Judge Waterman wrote an opinion of his own. Now I'll state Judge Waterman's position first. He believed that the determination should be affirmed, but unlike both the majority and the minority, he was of the opinion that the District Judge should be left with discretion to determine whether or not in a given case the exigencies of that particular case did not require that costs in a greater amount than those prescribed by the rule or those limited by the 100-mile limitation should not be granted. Now as to that, I should like to comment first that I feel that the right of access to the court is so vital and so important and that it is a right and not a privilege that it should not be left for the determination of some individual judge, in some circumstances we know nothing about, but which we can imagine from this very case as to whether a litigant would be permitted to litigate. We think he -- every litigant, every person and every citizen is entitled to litigate as a matter of right and not by reason of judicial favor. So, I get back to the majority view. The majority first commented on our contention that this was not appealable. And they said that they believed that since the enactment of these particular rules which gave the District Judge discretion as to whether or not costs should be taxed, the rule previously laid down by this Court to the effect that of judgments for costs alone where the question of discretion alone was involved was no longer valid. Well, what the majority overlooked was that the rule laid down by this Court was so laid down precisely because the District Judge had discretion. And they said that because the District Court had discretion, a judgment for costs alone was not appealable. However, that determination and this is the part of the answer that I feel I should've given Mr. Justice Goldberg yesterday. That determination isn't -- I'm afraid before this Court although I've included it as one of the questions, in the thought that if this Court wished to make any comment on the subject it would be in the record. It's not before the Court because that determination was not essential to the holding of the Court of Appeals. The Court of Appeals having put its granting of the right to appeal on a totally different ground namely that the failure of the second judge to follow the holding of the first judge was erroneous as a matter of law, and that it was that disregard of the law which gave the defendant the right to appeal. Therefore, the question as to whether a purely discretionary determination as to cost was appealable or not, or whether the rule laid down by this Court was or was not valid while they passed upon it, it was pure dicta so far as this determination was concerned. And it's for that reason Your Honor that I said yesterday that the determination of the Court of Appeals put the case in a different posture altogether. And I can't come here and say that they should never have been given the right to appeal because costs alone were involved, because the Court of Appeals said “Well, cost alone weren't involved. The requirement of law is that you must follow the decision of the first judge.” And having violated that rule of law there here is a matter of right. Now, I get to the point and this is where I should have answered Mr. Justice Goldberg's answer -- question in the affirmative. It's perfectly true that if this Court should hold that the Court of Appeals erred in determining that as a matter of law that a second judge was bound to follow the ruling of the first judge, there need be no further determination as to what we considered to be the main question of this appeal. And I was so obsessed, I must tell you, with the thought of the importance of this question that I merrily in my own mind disregarded the other. And I hope that this is a more satisfactory answer than the one I gave yesterday. Now, as to the question put by Mr. Justice Harlan, in the various decisions and there have been many and various decision with many and various reasons given as to why the 100-mile limitation should or should not be followed. The one that seemed to me to make the most sense and the one that came closer to the heart and core of this whole matter was one in Michigan in 1888 by District Court Judge in the case of Vernan which is cited in one of the opinions in the Court of Appeals. And if I may just read that, it explains so exactly what my thought was. He said, “I see no reason why he” referring to the litigant, “might not procure the attendance of an important witness from California or even Australia or other remote quarter of the globe and practically ruin the opposite party by the accumulation of costs”. And it was for that reason that that particular court adhered to the 100-mile limitation. But I must say that none of these cases follow any routine or any pattern except the latter of the cases which have fallen into a pattern. And each of the cases which might be considered to have formulated the rule, all appear to me to have been decided on an ad hoc basis. It depended on the equities of the particular situation, and it was in that fashion that the rule evolved. And I have made no effort in our brief to improve upon the reasons given in the dissenting opinions below as to the justifications of the rule. First, it would be presumptuous and it would be supererogation and frankly, I myself see no logic in the rule. And to me it's more important that there is such rule than to find a reason for it any more than I would find a reason for the 100-mile limitation prescribed by this Court in admiralty. Now the point that I come to now deals with the requirement that in exercising his discretion under the rule as to whether to grant or withhold cost, a judge is bound to take into consideration the views expressed by another judge. It seems to me that in the very nature of a discretion conferred upon a judge, it's an impossibility to say to a judge, “You may exercise your discretion provided you give weight to views expressed by other judges”. Discretion isn't given by withholding it at the time that you're given it. Secondly, the reason that was given seemed to me not to be a very valid reason and the Court said with great concern for the sensitivity of the judge affected and for his views that they thought that it was not altogether proper to affront a judge by disregarding his views and having another judge come to a different conclusion. Well, it seems to me that by the time a judge has ascended the bench, he has become pretty well accustomed to contrariety of opinion. If he hasn't, by virtue of his practice and by virtue of his encounter with his adversaries in the courts, he has in many, many ways. And once he ascends the bench, he encounters contrariety of opinion from at least 50% of the lawyers who appear before him. True, he has the ascendancy but every time appellate court speaks, he is subjected to the trauma of contrariety of opinion. And if he happens to be a married man, and is fortunate in having teenage children, he encounters it at home every day of his life. And if I may borrow an expression of Samuel Johnson's in his essay on hope, and he said concerning Addison if contrariety could poison a politician, he would not live a single day. And so I say if contrariety could poison a judge, he would not live a single day. So to say that a judge may not exercise the discretion conferred upon him by law for fear of giving offense to another judge who is previously expressed an opinion just -- it doesn't conform to the realities of the situation and offers no justification for the denial of justice to the litigant who may be affected. And more important than that, the second judge in this particular case had the advantage in deciding whether to grant or withhold costs of having an expression by the Court of Appeals on the manner of trying this case in various other factors. And the discretion conferred by the statute should be given as the situation stands right up to the moment of the exercise of discretion and should not permit the dead hand of some prior determination made under other circumstances to control his conscience. So, I say that the rule isn't a good one. It could lead only to confusion. And in this particular case it shows the extent to which it can confuse when the Court of Appeals while holding that the second trial judge was bound to follow the first trial judge, held at the same time that a good portion of the first trial judge's determination was erroneous and it reversed that portion of it. So, I think Your Honors that this is a rule that's so important that so vitally affects litigants particularly those who don't have great means that clarification of the rule for the guidance of all of the circuits should be made. And I believe it should be made in the manner proposed by the minority below. Now, the next point that I come to is the point that we consider that -- I should like just to say about that that the controverted points that the Court of Appeals held was erroneous was that when application was made for re-taxation before the first judge, we pointed out that certain seats on the company owned planes had been unoccupied at the same time that these witnesses were brought in. And the court suspended his decision as to that portion of the costs and asked for proof under ought as to whether or not first it was company plane, secondly whether they were regularly run trips or whether they will run specially to accommodate these witnesses, and whether they would've been empty seats anyway of these -- to these persons had not occupied them. And when the proof was furnished by the defendants and it proved that these were regularly scheduled runs which would've run regardless that if these witnesses had not occupied them, those seats would have remained empty. To our great surprise he nevertheless made the award and held that because the defendants accounting procedures were perfectly correct and proper that he should make the allowance. Now, the second point that I come to and that we consider the really important point is the amount of costs that were taxed here and the great danger that would result to this country and to its citizens if some curb were not put upon the taxing of cost. We have said and the defendant has not controverted, that if the limitation were removed as proposed by the court below, the costs would be enlarged to such an amount as to close the doors of our courthouse to a large numbers of our citizens. That has not been controverted. We have appended some summary showing the earnings of the citizenry of this country and there has been no mention made of this chart nor of the conclusion that we draw from it by the defendant. And they -- I don't know whether they intend to argue the matter but their briefs had not discussed the subject at all. Now -- Earl Warren: Let me just (Inaudible) as to why depositions would not serve the purpose? Kalman I. Nulman: No sir. The -- in that -- no testimony was taken and I 'am not aware that anybody ever called upon the defendant to state whether or not they would suffice. The -- as Judge Clark pointed out in his declaring opinion, not withstanding the very pointed reference made by the Court of Appeals in its second opinion as to the -- first termed expensive and then expect -- expansive way of trying the case. The defendant heedless of that went ahead and proceeded again to bring the witnesses. Now, it's not -- Earl Warren: You don't know whether it's important here or not, but did the plaintiff know that before the first trial, that they were bringing these witnesses here and intended to tax them as cost? Kalman I. Nulman: We weren't sure until shortly before the trial as to who would be brought. As to their intending to tax them for costs, we had no idea about it. We had thought that the costs would be limited pretty much as they were in the state court. And we had a great deal of difficulty, as a matter of fact, in examining the defendant's witnesses. We deferred to the convenience of the defendant and exceeded to their request for numerous adjournments. One day, we were told that we could examine a particular witness but that we would have to examine him that day and conclude his examination that day because he was going back to Saudi Arabia. We had to drop everything that we were doing and sit down and spent an entire day without respite. Examined great numbers of documents and that was the end of that, off they went. Now, I might say and I know that this is a subject that's not appropriate in this Court, I could have had the occasion arisen demonstrated that there was no need for many of the witnesses. The defendant staged what I only could describe as an extravaganza, complete with pretty ladies in uniform. And finally just give one illustration of what I mean. I will have to refer again to the facts. The defendant did not for two years -- for approximately two years after the commencement of trial assert a defense of justification for this charge. It had examined the plaintiff at the very outset of the case and had elicited certain facts upon which it later predicated its defense of justification, but for two years it never moved to include that as a defense. Now what did that defense consisted? The defendant had a rule at its hospital in Saudi Arabia that before any surgical operation, certain preoperative procedures should be followed, the taking of a blood count and a blood -- and a urine analysis. Now the physician or the surgeon performing the surgery had no responsibility for the taking of these preoperative tests. That was prescribed. There was a staff set up to do it, they did it as automatically as anything else could be done. And in the particular instant, I am talking about these preoperative procedures were taken and the results were negative, that is to say they proved satisfactory for the operation. The doctor in his examination was asked whether he had taken these procedures and he said truthfully he had not. And then thinking to justify the failure to take them, his failure to take them, he went on to say they were unnecessary. The fact of the matter was these procedures as I said were taken and proved negative. Now the doctor had said he had never seen a written rule requiring such procedures and that same statement was made in the examination before trial and at trial by the doctor's superior, the head of the particular medical installation who said he also had never seen a written rule to that effect. Now out of the doctor's statement, our client's statement that he has never seen such rule, they called medical experts to prove the terrible consequences that comes from not following such rule. They called the head of a former -- of a hospital at which the plaintiff had formally been employed to say that while in that hospital many years earlier, the plaintiff had acknowledged receipt of a set of rules which included such rule. Well, the validity or the usefulness of such a rule wasn't in controversy nor did we challenged the necessity for the preoperative procedures prescribed and yet from the witnesses that were called it was made to appear as if we opposed all procedures, we were against them, that we charged ahead and didn't do them and the narrow issue that was in this case was whether the doctor had been orally informed of the results of these procedures before commencing the operation. And on that narrow issue, they justified the calling of all manner of witnesses and I think (Inaudible) -- I think that their necessity really was conjured up in the minds of the defendant but a rich and resourceful defendant can justify the necessity to most anything if he thinks it will help win the lawsuit. I see my time is approaching -- the end of my time is approaching. I regret that I haven't had a chance to conclude it but I think that the justice of the point we make, namely that in a country where all of us are subordinate to the laws, the executive, the judiciary and the administrative departments, where all our rights are tied up in the constitution, where every thing that we cherish, whether be person, liberty or property, depends upon the constitution. We can't depend upon the dead letter of the constitution to ensure to our citizens those rights unless they're given the means of establishing them and enforcing them in a court of law. And if they're forced to buy a ticket of admission and pay as they'd go, many, many citizens who can't afford to purchase the ticket or pay their way would be deprived of what they're entitled to as a matter of right from the state which has taken away from each of us the right of self-help in aid of our rights and has substituted the power of the state which we are committed to extend to every citizen. Earl Warren: Mr. Bordeau. Chester Bordeau: Mr. Chief Justice, and may it please the Court. In Mr. Nulman's statement yesterday, he stated that there is -- that the (Inaudible) respondent in one case, the petitioner and another, had pay -- played fast and loose with the court. I'm very much disturbed about such a statement being made to this Court. In the first place I must say again as I said to Mr. Nulman, I will rely on the record and I will rely on the statements made in my reply brief, but I should like to have just one opportunity to point out the type of fast and looseness that Mr. Nulman speaks of. At page 3, Mr. Nulman's answering brief in Number 33, he states although the words leech -- rich litigant I enclosed by the defendant in quotation marks followed by a reference to pages 754, 755, the reference in our brief was T74 and T55 of the transcript of this record which is before this Court, wherein this quotation is presumably to be found. The fact is that neither at that place nor elsewhere is such a quotation to be found. Judge Weinfeld never used any such term nor did he refuse to award the defendant an allowance on any such ground. And now Your Honors, I would like to refer to the record before this Court and I refer to pages 54 and 55 of the record which is an opinion by Judge Weinfeld delivered by him on September the 11th, 1962 relating to costs that had been taxed and on his review of the taxation of those costs on the second trial. At page 54, Judge Weinfeld stated that Rule 54 (d), the Federal Rules of Civil Procedure which provides that cost shall be allowed as of cost to the prevailing party unless the court otherwise directs, vest discretion in the court in passing upon the necessity and reasonableness of the costs. The policy of the federal courts has been to keep litigation cost down as particularly enunciated in Rule 1 of the rule -- Federal Rules of Civil Procedure. And then Judge Weinfeld proceeds to quote from that Rule, “To secure the just, speedy and inexpensive determination of every action”. That is the end of the quotation from the Rule. Judge Weinfeld then proceeds to stay the court's discretion should be exercised in conformity with that policy to quote -- to avoid “making the federal court only for rich litigants”. The quotation is from a statement contained in the opinion of Circuit Judge Clark on the appeal from the order dismissing the complaint for the failure -- from the plaintiff's failure to furnish a bond for security -- for costs. Hugo L. Black: Was that a majority of dissenting opinion? Chester Bordeau: Judge Clark's? Hugo L. Black: Yes. Chester Bordeau: That was unanimous sir. Hugo L. Black: What? Chester Bordeau: That was unanimous. Hugo L. Black: Unanimous? Chester Bordeau: That's correct. Hugo L. Black: But what's wrong with quoting it? Chester Bordeau: Oh, I'm not claiming it's wrong to quote it. I'm addressing myself Mr. Justice Black to the statement made by my opponent that we made a misstatement in saying and using the words rich litigant and attributing it to Judge Weinfeld. Now here, Judge Weinfeld quoting those very words from the Court of Appeals and he's adopting those words and stating those words, that's all we're saying, that's the only purpose of -- Earl Warren: Are the words used in the same sets in both instances? That would seem to be the important thing. Chester Bordeau: Well, I think it is. I think definitely, yes. Earl Warren: How did he use it in -- on page 3 was it you say of his -- Chester Bordeau: It's on page -- Earl Warren: 3 of his brief? Chester Bordeau: Oh, the answering brief of the respondent, he says although the words rich litigant are enclosed by the defendant in quotation marks followed by a reference to pages 7, it should be 54 and 55 of the record, where this quotation is presumably to be found, the fact is that neither at that place nor elsewhere in such quote -- is such a quotation to be found. Judge Weinfeld never used any such term nor did he refuse to award the defendant an allowance on any such ground. I say he's adoption -- Earl Warren: Does that (Voice Overlap) -- Chester Bordeau: -- of the words of the Court of Appeals were used by Judge Weinfeld. Earl Warren: Well, that last part is what bothers me in connection with what you just read from the record, is what he read -- is what you read from the record say that they're not entitled to these costs because they're a rich litigant? Didn't he on the contrary say that a rich litigant shouldn't be permitted to try the case over expensively for the purpose of loading the costs on the defendant to an extent that would prevent him from going into court? Chester Bordeau: Mr. Chief Justice, all I am trying to do at this time, I'm going to come into more detail in answer to you question later on, but if you want me to answer now, I will. Earl Warren: Well, I would -- Chester Bordeau: But all I'm doing now is to try to indicate and to demonstrate to this Court that when the plaintiff said that we are playing fast and loose with the court in making statements such as contained in our brief with respect to the use of the words rich litigant by Judge Weinfeld. And he said Judge Weinfeld never used those terms. All I wanted to do -- Earl Warren: Well, he -- Chester Bordeau: -- at this point -- Earl Warren: Isn't he saying he never used them in that sentence? Now, isn't the use of the words, what were more important -- whether it's more important to us and the fact that whether that you can find them some place in the record, you must take them in context? It seems to me if they're justifiable, I don't say they're not, but I'm asking you the question as to whether Judge Weinfeld used the term rich litigant in the sense that you are now presenting to us. Chester Bordeau: Well, Judge Weinfeld does say Mr. Chief Justice. The Court's discretion -- now, he's talking about a discretion in the awarding or denial of cause, should be exercised in conformity with that policy. That is the policy referred to in Rule 1 of the Federal Rules of Civil Procedure, to avoid “making the federal court a court only for rich litigants”. Earl Warren: Yes. Chester Bordeau: I think it's clear that Judge Weinfeld is stating that a discretion should not be used that a discretion should be exercised in conformity to avoid a court being used for only rich litigants and that's -- Earl Warren: But before (Voice Overlap) -- Chester Bordeau: -- the only point we made. Earl Warren: Before that he said, while this defendant as the Court of Appeals observed, “With its rich resources, he may well wish to try the case expensively”. Chester Bordeau: That's correct. Earl Warren: It, as a successful litigant is entitled to tax costs only in amount specified in applicable statutes and where not expressly specified the allowable costs must not only be reasonable but necessary in resisting the plaintiff's claim. That's on page 54. Now, is that you say -- Chester Bordeau: (Inaudible) Earl Warren: -- there that he denied them those costs because they were rich litigant. He says they're not -- Chester Bordeau: Well. Earl Warren: They're not entitled to over try their case and then assess the costs against the plaintiff. Chester Bordeau: Well, Mr. Chief Justice, the words appear in the opinion of Judge Weinfeld and we have -- Hugo L. Black: Does the words rich -- Chester Bordeau: -- the opinion here. Hugo L. Black: Does the word rich litigant appear in any -- Chester Bordeau: Not litigant, it's the word rich litigants. Hugo L. Black: That's quite different, isn't it? Chester Bordeau: That's correct. Hugo L. Black: Altogether different. Chester Bordeau: Well, I don't see -- Hugo L. Black: Or in the sense used? Chester Bordeau: I don't think that -- Hugo L. Black: Because if he had said, "We will do this because he is a rich litigant", that would've been one thing which I was -- Chester Bordeau: Well, I think that's -- I think -- Hugo L. Black: (Inaudible) Chester Bordeau: I think that's the sense of this -- Hugo L. Black: Well, that sense -- Chester Bordeau: -- Your Honor. Hugo L. Black: -- of it, it seems to me is that they were bothered what the court have said that the rules should be interpreted toward not to give advantage to rich litigants. Not that he was saying, they should decide against this litigant because he's rich. Maybe that he could have explained more better than he did why he -- judge hadn't said that. Chester Bordeau: But he is making -- Hugo L. Black: The judge did not say that this case could be decided against the -- your client because he was a rich litigant. Chester Bordeau: This statement is made by Judge Weinfeld in a consideration of the exercise of the discretion of a District Judge in passing upon cost. I imagine it must have some relevancy and I think the relevancy -- Hugo L. Black: Well, it does have relevancy -- Chester Bordeau: -- which we (Inaudible) -- Hugo L. Black: -- doesn't he? Chester Bordeau: Pardon? Hugo L. Black: It does have relevancy that -- Chester Bordeau: Oh yes! I maintain it does. Hugo L. Black: (Inaudible)in determining the basis of the rule, it would not be administered -- Chester Bordeau: That's right. Hugo L. Black: -- in a certain way that rich litigants would get an unfair advantage. Chester Bordeau: That's correct. Hugo L. Black: But it -- so far as I can see from what you've said and what I've read of what Judge Weinfeld said, he didn't say that he was deciding this against your client because he was a rich litigant. There's quite a different. Chester Bordeau: Well, the fact is he did -- Hugo L. Black: Maybe you're like -- maybe you're stretching it and maybe the other side minimized it. Chester Bordeau: The fact is that he did rule against us. He brought the cost down from some -- Hugo L. Black: That's right. Chester Bordeau: -- $6000 to $800. Hugo L. Black: And that's the issue here so whether he abuses discretion in doing it, isn't it, or whether he had a right to do it? Chester Bordeau: That's correct, that's one of the questions. Hugo L. Black: That's the two questions isn't it, are there any more? Chester Bordeau: Oh, there are a number of questions here Your Honor, I'm going to try to go in to those if I may. I think it would be of interest at the beginning or in the consideration of this appeal that the Court's attention should be called to the specific rules and the specific statutes that we are called upon to consider in the disposition of this appeal. I have those statutes and rules in my appendix. They appear at pages 2 (a) and 3 (a) of the appendix. I think those are the things that we have to start off with. These are the statutes, these are the rules, but the courts below have been construing in what -- which this Court would -- I believe will be called upon to construe. Rule 54 which appears at page 2 (a) of the -- of my appendix the rules of civil procedure for the federal cost, Rule 54, judgments, costs, subdivision (b) cost, “except when expressed provision therefore is made either in a statute of the United States or in these rules, cost shall be allowed as of course to the prevailing party unless the court otherwise directs”. And then it goes on as about to the United States with which we're not concerned. With cost against the United States, they shall be imposed only to the extent permitted by the -- Hugo L. Black: What is the otherwise directly means, according to your contention? Chester Bordeau: Oh, I think what that means Mr. Justice Black is this. That if the court in the exercise of its discretion should determine that costs should not be allowed as a matter cost but there must be some reason, there must be some legal reason, some legal consideration in the court's exercising a discretion for I am sure that the Congress and that this Court would not consider discretion to be an exercise of the will of the judge based on caprice, on arbitrariness -- Hugo L. Black: Is that (Voice Overlap) -- Chester Bordeau: -- on whimsical -- pardon? Hugo L. Black: Is that the basis of your contention that he based it on caprice and arbitrariness? Chester Bordeau: No, that's -- no, I'm just saying -- I'm talking now about what is discretion and I'm going further. Hugo L. Black: Because I was just trying to get down to the issue on that (Voice Overlap) -- Chester Bordeau: And that's what I'm coming to. Hugo L. Black: Cause I haven't fully understood (Voice Overlap) -- Chester Bordeau: Right. Hugo L. Black: -- on either side. Chester Bordeau: And then I say that the discretion that the court is talking about is a legal discretion. In other words, when should a court exercise its discretion this way and when should a court exercise its discretion that way. There should be some guidepost to direct or to help or to suggest to a court when it should exercise in granting costs and denying costs, keeping in mind that the general purpose under this rule seems to be if the cost shall be allowed as of course to the prevailing party unless the court directs otherwise. Now, I say that the discretion I suggest that the discretion to be exercised by the court should be exercised in this way. If there should be a determination by the trial judge in this, I say, is the only place where discretion should apply. In his discretion, if he should determine that an expense, whether it be travel expense, "study case expenses", or other expenses that may be incurred as permitted by the statute, and that is the statute we're referring to here, 1920 I think it is, which appears on page 4 (a) which list the items of cost that may be allowed. That he should determine whether or not the incurring of those expenses which are referred to in Section 1920 of the judicial code which as Your Honors will note provides for the taxation of cost that is may tax again, may tax discretionary, fees of the clerk, of the marshal, fees of the court reporter, or all or any part of this (Inaudible) phonographic transcript necessarily obtained for use in a case. Three, and this is the one that applies to the witnesses coming upon places outside of the United States and from far places in the United States. Fees and disbursements for printing and witnesses, and then they have another one, fees for the exemplification and copies of papers necessarily obtained for use in the case. Now -- Arthur J. Goldberg: (Inaudible) Chester Bordeau: It has no limitation. Arthur J. Goldberg: (Inaudible) Chester Bordeau: That's correct. Arthur J. Goldberg: (Inaudible) Chester Bordeau: Well, I -- Arthur J. Goldberg: (Inaudible) Chester Bordeau: Mr. Justice Goldberg, I might suggest that the answer to your question is that for the witness from places that they suggest here required to travel between the territories and possessions or to and from the continental United States shall be entitled to the actual expenses of travel at the lowest first class rate. I might suggest that the answer to your question is that in order for such a witness to come, and say from Dhahran, Saudi Arabia he is required to travel from Dhahran to the United States, I think it's as simple as that. Arthur J. Goldberg: (Inaudible) Chester Bordeau: That's right. Arthur J. Goldberg: (Inaudible) Chester Bordeau: Might I suggest -- Arthur J. Goldberg: (Inaudible) Chester Bordeau: Might I suggest to that -- to Your Honor that of course the subpoena power wouldn't run to Saudi Arabia or Europe. Arthur J. Goldberg: (Inaudible) Chester Bordeau: So,you'd -- they require (Inaudible) about subpoena's power. Arthur J. Goldberg: (Inaudible) Chester Bordeau: Oh, that's correct. Arthur J. Goldberg: (Inaudible) Chester Bordeau: Well, the only -- I might call Your Honor's attention, I don't want to avoid answering you question, that this Section 1900 and I was speaking of 1821, there is a reference in the legislative history of this in which it had said the purpose of this bill, I'm reading now from the legislative history. Arthur J. Goldberg: Is that in your brief? Chester Bordeau: It's referred to in my brief, but this is a legal document. Arthur J. Goldberg: (Inaudible) Chester Bordeau: United States Courts and Commissioners' witness fees and it's printed from Senate Report, Number 187, March 28, 1949 to comp -- to the company Senate Bill 635. The exact references are given in my brief Mr. Justice Goldberg. Hugo L. Black: May I ask you -- I don't want to -- I do want to get the issues (Inaudible) -- Chester Bordeau: Surely -- Hugo L. Black: Because -- Chester Bordeau: I don't know what that -- Hugo L. Black: I thought (Inaudible) -- Chester Bordeau: If I answer you fully -- I was just about to give you this legislative history, if you want it? Arthur J. Goldberg: (Inaudible) Hugo L. Black: Well, all I wanted to ask -- Arthur J. Goldberg: (Inaudible) Hugo L. Black: -- is find out -- Arthur J. Goldberg: (Inaudible) Hugo L. Black: -- while you're on that point was this. When we're thinking about the facts that these are witnesses, they've been brought, is it your idea that the court if it decided that they were summoning witnesses that could just as well have given that evidence by deposition that the court cannot reduce costs on that grounds? Chester Bordeau: Yes, I do so contend. Hugo L. Black: That -- Chester Bordeau: Because I say the deposition -- the use of deposition in a case such as this where we've had two trials, and which has been described by at least two or three judges in the appeal courts as involving a very sharp issue of fact and I'll go into those issues later. Hugo L. Black: Yes, but that's -- this -- I was asking (Inaudible) that goes to the point of whether there was an abuse of discretion. Is it your position that -- I recall it is, about 20 witnesses were summoned at one point. Chester Bordeau: No, we didn't do that (Voice Overlap) -- Hugo L. Black: I know you didn't. I'm not talking about -- you did here. I'm testing what the issue is. 20 witnesses were summoned for one point, the court wouldn't let them use just two or three. Chester Bordeau: That's right. Hugo L. Black: Could they have been made to pay under -- Chester Bordeau: No. Hugo L. Black: They had summoned the witnesses (Voice Overlap) -- Chester Bordeau: No, (Inaudible) -- Hugo L. Black: (Inaudible) Chester Bordeau: I think the answer to your -- Hugo L. Black: What the court have been required to let you pay those witnesses? Chester Bordeau: I think the answer to Your Honor's question is this. That it would be in the discretion of the trial judge to determine whether one, two, three or 20 witnesses were necessary for the determination of the truth with respect to the matter testified to it. Hugo L. Black: Now one step further, would it be within his discretion where the expenses were great in bringing somebody from a foreign country to say, “Well, you could've done this just as well by deposition. We heard the evidence. We've seen the case tried and we've reached a conclusion that they could've done all right with deposition, if not, then they bringing them here was not justified”. Chester Bordeau: I think there would be a distinct dis -- abuse of discretion in a case involving sharp issues of fact. I think there is only one way to come to the truth where a sharp issue of fact is involved, is to look the witness in the eye and to observe him in the giving -- Hugo L. Black: (Inaudible) Chester Bordeau: -- of his testimony. I don't know -- Hugo L. Black: Your position is then that for a rigid rule, it says the court cannot ever by the sharp issues of fact, maybe that's right, cannot ever say, “Well, you could've done this as well by deposition. We're not going to let you tax these costs against your opponent.” Chester Bordeau: I think that's probably right. Hugo L. Black: Well, thank you. I didn't want to interrupt but I wanted before you left that (Voice Overlap) -- Chester Bordeau: Oh, yes. Hugo L. Black: (Inaudible) Chester Bordeau: Well, I appreciate you're -- Hugo L. Black: -- what the issue is. Chester Bordeau: -- asking a question. Speaker: I take it at some point for the use of what (Inaudible). Chester Bordeau: I would -- I was coming to that and I would like to have that opportunity, but I don't think and unless -- Mr. Justice Goldberg's question is not been fully answered on this -- could you -- Speaker: (Inaudible) Chester Bordeau: Yes. The purpose of the this bill is to increase the fees of witnesses appearing at the United States courts and before United States commissioners from the presently existing amount of $2 per day to the sum of $4 per day, the (Inaudible) -- subsistence fee from $4 per day to $5 per day. And the travel allowance from the presently existing 5 cents per mile to 7 cents per mile. The mere statement of the fact that the present fee for witnesses is $2 per day, subsistence is $4 per day and the mileage is 5 cents per day, points up the present inadequacy of such amounts to fairly compensate the individual either for his time or expenses incident to his service as a witness. It is unreasonable to expect and require witnesses to attend court at a personal financial loss. And going on, the amounts arrived at in this bill are considered to be more fair than presently existing to then existing amounts, although it is recognized that certain witnesses will not under the proposed rates be adequately compensated in order to fairly compensate everyone appearing as a witness it would be necessary to have either a graduated scale of fees or leave the amount of such fees to the discretion of the judge. Neither was con -- neither was it considered feasible and therefore the amounts arrived at herein are more or less arbitrary or considered to be necessary fair to the average witness. And then there is attached, Mr. Justice Goldberg, to this statement of purpose. There is a statement from the Assistant to the Attorney General, Mr. Peyton Ford, to the Honorable Pat McCarran, Chairman of the Committee on Judiciary in which he refers to these various items to which I have -- from which I've just quoted. And then he goes on to say this, this is the Assistant to the Attorney General. Therefore, doing a review of the law -- of the laws relating -- fixing the rates of compensation for witnesses and the reimbursement for their expenses reveal that the witnesses' attendance fee and subsistence allowance are the same as they were 40 years ago. Such rates -- then he talks more about these rates, I won't burden you with that. Then he winds up this way, for overseas travel, and I think is what you're interested in Mr. Justice Goldberg. For overseas travel, it is recommended that witnesses be allowed their actual expenses at the lowest first class rate available. There have been times when a witness had been required to engage in such travel at a personal financial sacrifice. A draft of the proposed bill to accomplish the foregoing purposes enclosed. And at that -- Speaker: (Inaudible) Chester Bordeau: Well, than that would -- wouldn't that be placed in a criminal statute, Your Honor? Arthur J. Goldberg: That you would have to consider this as (Inaudible). Chester Bordeau: This is -- this 1821 applies to civil cases. Arthur J. Goldberg: (Inaudible) but required to both. Chester Bordeau: Yes, to both, correct. Arthur J. Goldberg: (Inaudible) Chester Bordeau: Well, there in -- Arthur J. Goldberg: (Inaudible) Chester Bordeau: I don't know Mr. Justice Goldberg of there being any provision in the law whereby a citizen of France or of England could be required to attend in the United States, and that's what this statute is talking about, overseas. Arthur J. Goldberg: (Inaudible) But, first of all this case has been made (Inaudible). Chester Bordeau: Of course Mr. Justice Goldberg, I don't rely -- we don't rely solely on that amendment to 1821 which is made in 1948. That is only one of the arguments that we make. Now in order to follow the suggestion made by Mr. Justice Harlan, this action was commenced in the year 1956, I think these dates and this little bit of history is quite important. In 1956, in the original complaint, the plaintiff claimed $4000. An answer was interposed amounting to a general denial. In 1958, this is a year and a month before the first trial, before Judge Palmieri on May the 11th, 1958 and in April of 1958 I say, there was an order -- an answer served by this defendant. And that answer appears at page -- maybe at my record -- appears at page 3 and 4 of the transcript in this case. You've heard many statements about there being injected various defenses on the eve of trial. Now here is an answer, was interposed and filed in the court in April of 1958, and it says, “as and for its affirmative defense” page 3, “that the agreement alleged in paragraph third, fourth and fifth of the complaint is void as a matter of law because it was not in writing.” And as a -- as in 42nd affirmative defense, page 4, the defense alleges if and in the event that it is found that plaintiff was employed by the defendant for a term as he claimed in his complaint. Defendant alleges that he'd terminated plaintiff's employment for a good cause and yet we have heard a lot of the many statements made here that this defense was not raised until the trial commenced in 1959. Well, that's just not true. Here, that answer was filed and the docket of the clerk will show that it was filed, and I have a photocopy of that docket here, and that's in April of 1958 in the trial May of 1959. We were not injecting any new issues on the eve of trial, but then we were (Inaudible) -- that's what the pleadings were. Now, I conducted an examination before trial -- Earl Warren: When was your original answer filed? Chester Bordeau: Oh, 1956, of the -- (Inaudible) -- I think the suit was started in June, it was removed and within the required time I think we interposed an answer Your Honor. Earl Warren: And in 1958, two years later you did -- Chester Bordeau: That's correct. Earl Warren: -- filed an amended answer -- Chester Bordeau: That's correct. Earl Warren: -- raising additional issues. Chester Bordeau: That's correct, by permission of the court. That was an order entered -- Earl Warren: But -- Chester Bordeau: -- by permission of the court and that order also appears in the record, it's an order of Mr. Justice or rather Chief Justice -- Chief Judge Ryan. Now, to proceed pursuant to the suggestion made, I conducted an examination before trial, Dr. Farmer in New York. And that was in the year -- in October of 1956. And I questioned Dr. Farmer with respect to the occasion of his discharge by the defendant. He claimed that he was discharged, I think this is very important in the background of this case, that he was discharged because he had refused to be intimidated by the defendant's doctors into making false reports with respect to his findings relating to trachoma. Trachoma is a very serious eye disease which in many cases leads to blindness. He said he was being intimidated and bullied to make false entries, to make false diagnoses of his findings with respect to trachoma. And it was for that reason, said he, that he was discharged. And I asked him whether or not he wasn't discharged for the reason that he had conducted a non-emergency operation on a four and a half year old Arab boy who had a sickness or disease of the eye, I think it's called Chalazions which are growths on the inner lids of the eyes. And that this operation was performed under general anesthesia and I asked him whether or not it was not an accepted rule in the medical profession that before any operation is performed under general anesthesia that there should first be obtained by the operating surgeon the results of pre-laboratory tests. Those pre-laboratory tests are urinalysis and a blood count. He said he never heard of such a rule. It wasn't until he returned in 1956 sometime immediately prior at the time when I examined him that he has learned of any such rule. He also testified that he conducted this -- Earl Warren: Well, were you referring to a written rule? Chester Bordeau: We are referring to a written rule and also a rule of a medical profession widely and generally and always accepted apparently claimed, the medical testimony we have, both a written and a general rule. It can actually -- it makes think right now about this pretty lady in uniform that he'd been talking to, she (Inaudible) -- she testified about that bulletin board -- about that rule -- the written rule being on a bulletin board. This is the pretty lady in uniform that Mr. Nulman is talking about. She appeared from someplace in the United States as a member of the Air Force and she had her uniform when she came here. She was a member of the Air Force and was wearing her uniform. She came from her post with special leave to come here. That's the pretty lady in uniform. Earl Warren: On what bulletin board? The bulletin board -- Chester Bordeau: What? Earl Warren: The bulletin board that is available (Voice Overlap) -- Chester Bordeau: The bulletin board right outside the operating room Your Honor. Earl Warren: On this -- in this plant? Chester Bordeau: In this hospital, in this hospital in Dhahran, Saudi Arabia. Earl Warren: I thought Mr. -- or your counsel said that there had been such a test made, both the blood test urinalysis immediately preceding this. Chester Bordeau: Well, that's what I'm coming to Your Honor, I want to tell -- I want to talk to you about that. On the -- the examination before trial, he said he didn't need any of these pre-laboratory tests. He had looked at the boy, the boy was healthy. He didn't need any of these. This pretty girl in uniform who was a nurse in the operating room said that she was there -- she was attending -- was there and sought that there was no laboratory tests and that Dr. Farmer was told that he should not conduct the examination without the benefit of these pre-laboratory test. Hugo L. Black: Who did you say had said that about the pretty girl? Chester Bordeau: He -- Mr. Nulman, I think you may recall in his statement Your Honor, he talks about our colleague, this extravaganza. He was talking about a pretty girl in uniform. You may remember he saying that, but that's the girl he's talking about, and it is not an extravaganza. It was required that we produce witness who could relate the facts as the jury finally believed, believed the facts as to the reason for Dr. Farmer's discharge. Earl Warren: Well, was there any such analysis made in this case before the (Voice Overlap) -- Chester Bordeau: In fact there was Your Honor. Earl Warren: There was? Chester Bordeau: Oh yes! In fact there was. Earl Warren: And then -- Chester Bordeau: And it was in process. Dr. Farmer had been requested by Nurse Swanson, who also testified at the trial, to wait five or ten minutes that the test had been taken they were in the process of being developed, but he waived -- he said there's no occasion to wait. And she was an anesthetist and she wouldn't attend on the operation. She said, “Rules require it that we have these tests before any operation is performed”. And he said, “Well, I don't need you”. And then what Dr. Farmer did even in violation of another rule or another practice in the medical practice at least, he performed the operation and administered the anesthesia simultaneously. Our medical testimony to which I will refer later indicates that that is the most hazardous proceeding for any surgeon to engage in no matter how long or how short the operation may be. That he said he could do both that he could observe whatever is necessary to observe in the giving of anesthesia and he can perform the operation of both eyes of this Arab boy at the same time. I'll talk about the medical angle as I go on, there's some very serious implications involved. Earl Warren: On the question of this written notice, I understood Mr. Nulman to say that the superior of this doctor at the hospital, one of your witnesses, testified that to his knowledge there was no such written order. Did I (Voice Overlap) -- Chester Bordeau: Mister -- Earl Warren: I beg you pardon? Chester Bordeau: Mr. Nulman is referring to Dr. Bourne. Dr. Bourne was an assistant medical director. He was stationed from time to time in Saudi Arabia and sometimes in the United States. The medical director was Dr. Page who is located and stationed in Dhahran, Saudi Arabia. He was called and he testified about this bulletin board and about this rule. Now Dr. Bourne testified as Mr. Nulman has stated, now he was not the chief as noted by Mr. Nulman in his brief, he was an assistant administrative officer on the administrative staff in Saudi Arabia. The medical director was Dr. Page. Earl Warren: Was he stationed there -- was he stationed to that hospital? Chester Bordeau: He was there from time to time Your Honor. He was in New York and he was in Saudi Arabia. Now, he said he didn't recall having seen such a rule on the bulletin board. Dr. Page did, Dr. Lonus (ph) who was the chief of surgery did, Neil nurse, this pretty girl in uniform she did, and the nurse -- the anesthetist Swanson who was in the operating room, she did. And we also have on that very score Your Honor and I'm glad you asked this question. After this occurrence on this operation, Dr. Lonus who came here to testify stated that after the operation Dr. Farmer admitted to him that he had not received the results of these pre-laboratory tests. Hugo L. Black: What did he testify on the trial? Chester Bordeau: He testified to that. He testified that -- Hugo L. Black: I mean Dr. Farmer. Chester Bordeau: Pardon? Hugo L. Black: What did the doctor testify -- Chester Bordeau: Well, you see that's where -- I mean -- Hugo L. Black: -- in the trial? Chester Bordeau: On this trial he did this Your Honor. Now, I told you when he testified to an examination before trial he didn't have the laboratory test, he didn't need them, he hadn't seen them. Hugo L. Black: What did he testify at the trial? Chester Bordeau: Now, at the trial he testified this way. Hugo L. Black: Did he testify that he had or had not -- Chester Bordeau: Yes he did. Hugo L. Black: And was that the crux point of dispute between him and the lady? Chester Bordeau: That was one of the disputes. Hugo L. Black: The point of dispute was, he said he did, both of them agreed that the test had been taken. But she testified, as I understand it, that he had not waited for them, he testified he had. Was that the point (Voice Overlap) -- Chester Bordeau: No, he did not testify that he waited. He said he proceeded with the surgery because it wasn't necessary to have these results. Hugo L. Black: At the trial? Chester Bordeau: No, this was on the -- Hugo L. Black: I'm not -- Chester Bordeau: -- examination before trial. Hugo L. Black: At the trial. Chester Bordeau: At the trial, now he changed the testimony Your Honor. Hugo L. Black: What did he testify at the trial? Chester Bordeau: Now, -- at the trial he testified that he didn't have the results contrary to what he testified to in the examination for a trial. Hugo L. Black: I understand that, both of -- I'm trying to get what the point of issue was if it -- if the -- that your -- that the question of reasonable is necessary. And the nurse testified with a uniform, as I understand it, that quite different to him as to whether they -- he had waited for it at the trial. But both agreed that it was not -- that the test were taken. Chester Bordeau: Were negative. Hugo L. Black: That (Inaudible) -- both agreed they didn't take it. Chester Bordeau: Oh yes! Now, but he testified the point that I'm making with respect to this -- Hugo L. Black: Now that the judge has made this decision to hear that evidence from both sides? Chester Bordeau: Oh, yes! Judge Palmieri heard this. Now he changed, as I said, the testimony on the trial. Hugo L. Black: Of -- what did the (Inaudible) -- Chester Bordeau: But I want to emphasize this very much Your Honor. Hugo L. Black: But you've emphasized it. Chester Bordeau: And -- Hugo L. Black: This is all you want. Chester Bordeau: And the -- comes the second trial that follow through on that. So on the first trial, he said he got the results from a nurse, a Lebanese nurse by the name of (Inaudible) but we hadn't heard, I've never heard of (Inaudible) before. But we got in touch with (Inaudible) over in Saudi Arabia and we had him flown over here on this first trial to find what the facts were. And (Inaudible) took the stand here in New York and he said, “I never gave him the results of any such tests. That is not true and I -- the fact is that I never gave him. I'm never in the position to give him because the operation was over by the time I have the results.” Now, this is on a second trial -- this on the first trial. And then on the second trial, mind you this, on the second trial realizing that we had gotten the testimony of (Inaudible) hurriedly and suddenly under the surprise information that we have given by Dr. Farmer as to -- he didn't get the results from Mr. (Inaudible), so we -- as I've said we've flew him over here. But on the second trial, he took it -- well, we had Mr. (Inaudible) so he changed the testimony a little bit again. On the second trial he says that -- I asked him that, “Where did you get this information about the test before the conducting of the examination?” Oh, he said it was from the nurse. And I asked him whether the name that nurse, (Inaudible)? “Well, I'm not sure”, he says on the second trial. It may have been another nurse. And I tried to pin him down on it and say, “Now, isn't it more than an impression? Didn't you testify on the first trial here that it was (Inaudible) and you were positive about it?” “Well, you said that you're leading me on Mr. Bordeau, you're leading me on”. But I said, “What is the fact -- what is the fact? Well, he said it may, this is the second trial, “It may have been -- maybe it was another nurse”. Well, we don't know who he's talking about then and we try to have anybody available that could possibly contradict this man's shifting testimony from time to time from examination before trial to -- first trial to second trial, the very difficult thing to meet all these shiftings in the testimony in this plaintiff. Now -- Arthur J. Goldberg: Is there an (Inaudible) case before the jury, is that correct? Chester Bordeau: That's correct. Arthur J. Goldberg: Now what about cost? Chester Bordeau: Now the cost, the large -- their items of cost here are probably two items or two categories of items. One is the transportation of the witnesses, that's number one. And the other is the transcript, transcript of deposition, the transcripts of testimony taken during the trial. Now, I say that the transcripts were necessary particularly, and I say particularly on the first and the second trial for that matter. But on the first trial these minutes were ordered with the approval of the court. They were used by the court from day to day. They were used in checking the record with Mr. Nulman who was in many disagreement, many dis -- engaged in many disagreements with the trial judge as to what happened from day to day. And judge Palmieri had the record before him and read the record to him to correct his recollection of the record. And that daily transcript proved to be very important and very necessary in the defense of this action. It was also used by the jury in wanting to know the answers that had been given to various questions by the witness Farmer and by other witnesses. Arthur J. Goldberg: That one of the (Inaudible). Chester Bordeau: Well, I think that daily transcript is vitally important Your Honor in a case where were faced with a shifting witness. Mind you here was one man whose -- that involved ten or 20 people in his various contacts with the defendant. He could pick out whoever he thought would might -- what might not -- who might not be available and we would have to run, as we did with (Inaudible), run to Saudi Arabia fast and get him here in order to use on the trial. We are dealing with a witness of that kind. We had been warned on the first trial of what he had done and I think it is only fair that we should've been prepared for the second trial by having those witnesses available who could testify to what we thought was everything he could say. But he could shift and shift and shift, and there was another shift even on the second trial. There was a shift with respect to the charge made for the first time. This is after an examination before trial. This is after first trial. And on the third trial the charges made that the defendant had falsified his records relating to this Arab boy, and maybe the record that we had related to another boy, may it -- not this Arab boy. William J. Brennan, Jr.: (Inaudible) Chester Bordeau: Pardon? William J. Brennan, Jr.: On this case -- the third trial? Chester Bordeau: On the second trial. William J. Brennan, Jr.: (Inaudible) Chester Bordeau: Two, they're on the second trial and made this charge that we had changed these records. Now these are very serious charges to make against anybody whether the amount involved is $5 or $5 million. These are serious charges to be made and they should be meted effectively as possible. And we so -- but we've thought to be the most effective means of meeting these very serious grave charges made against this defendant. And I think that the daily transcripts were very vital and very important and necessary and it -- for the defendant in the defense of this action. Now with respect -- Speaker: (Inaudible) Chester Bordeau: Now with respect to the witnesses, I think what I have said it -- here before indicates the importance of having those witnesses available in New York physically, live where they could be seen by a jury to state the facts with respect to these serious charges made by this Dr. Farmer. William J. Brennan, Jr.: (Inaudible) Speaker: Oh! We're talking about two or three, three I think it is. I think the record here show about -- William J. Brennan, Jr.: (Inaudible) Chester Bordeau: Well, you've got the minutes of the trials, Your Honor, it's two trials. William J. Brennan, Jr.: I don't have it, I -- how many -- how much of the $11,000 was involved (Inaudible) being in here? Chester Bordeau: Well, I could calculate that in a minute, I don't have the figure ready at hand. It's a -- I have it in the record. I think we have indicated by what I have said that the attendance of these witnesses was an important and was a necessary thing for us to do in the defense of this action. And I say that any rule that should be formulated should be a rule that will permit a party litigant to be reimbursed for any necessary expenses in the defense or the prosecution of an action. And if the discretion to be used by the court should be limited to whether or not the expense incurred were necessary to the prosecution or defense of the action. Earl Warren: When was the first bond required by the court? Chester Bordeau: That was after the first trial Your Honor. Earl Warren: After the first trial. Chester Bordeau: Yes sir. That's not involved on this appeal. Earl Warren: I see. Speaker: Are you going to address yourself at some point to the question of law as to whether the 100-mile rule, 100-mile limit on subpoena power should be imported into the cost statute? Chester Bordeau: I do. I don't -- Speaker: Let me ask you this question? Now, when -- all of these cases, as I understand it, when I followed the result, we really got three questions in front of us. Number one is whether there is such a limitation on the cost rule. And number two is whether there was an error of law as your opponent claims in the Court of Appeals ruling that Judge Weinfeld was bound to follow Judge Palmieri's award of cost on the first trial. And number three whether they're assuming that both those things are actually in your favor, there was abuse of discretion. Chester Bordeau: That's right. Speaker: Isn't that all there is to this case? Chester Bordeau: That's right. Speaker: Anything more? Chester Bordeau: And I think it's an informed discretion -- Speaker: Is there anything more than that? Chester Bordeau: No. Speaker: Well, I'd like to hear you for myself on the question of the subpoena limitation being imported into the -- Chester Bordeau: Well, all the applications as I understand it that the 100 mile rule, in the allowance by some courts of costs limited to the extent of 100 miles from the place of trial emerged from a consideration of Rule 45 (e) of the Federal Rules of Civil Procedure relating to the subpoena power. And that section permits the service of a subpoena within the district where the court is sitting or within 100 miles of the place where the court is sitting. That 45 (e) appears at page 2A of my Appendix. Some way or other, the judges or the courts started to apply the rule with regards to the extent of the subpoena power in saying as to what cost were recoverable. In other words that subpoena -- only insofar as the subpoena could issue could a court assess costs against the party for having someone to attend at the trial. And there is nothing in 45 (e) -- there is nothing in 45 (e) of Rules of Civil Procedure that would suggest any such thing. There is nothing in any of the other provisions of law which suggest any such thing. There is nothing in the Rules of Civil Procedure that suggest any such thing. Speaker: The courts -- if the courts did that, did they do it in terms of rules of different guidelines that they (Inaudible) Chester Bordeau: I think some courts -- Speaker: (Inaudible) Chester Bordeau: Some courts felt they were bound and I think others did as Your Honor suggests that they felt that would be a way of doing it, but there is nothing to justify. That's what I say is not a legal reason for the exercise of a discretion this way or the other. That is not a reason. The fact that a court may issue or may tax cost for subpoena fees is not a reason why the rule should be limited to that. There is nothing anywhere in the law that provides that accepts some construction of some courts with respect to this. And I say that the appli -- of the application of a 100-mile expense is not justified, had not ever been justified. Potter Stewart: Haven't the vast majority of the federal courts considered themselves bound in allowing cost for mileage of witnesses to the 100-mile -- Chester Bordeau: Do I have -- Potter Stewart: -- in the district rule? Chester Bordeau: Mr. Justice, I haven't counted but I think there are eight number both ways. Potter Stewart: Are there? (Inaudible) Chester Bordeau: A great number both ways. Potter Stewart: I haven't read the cases but I was quite -- Chester Bordeau: I haven't -- I have -- Potter Stewart: -- impress with the long string of citations of -- Chester Bordeau: I -- maybe I should've -- Potter Stewart: -- citations -- Chester Bordeau: -- prepared -- Potter Stewart: -- in the dissenting opinion. I -- Chester Bordeau: Yes. Potter Stewart: I had the idea that most courts had (Voice Overlap) -- Chester Bordeau: (Inaudible) Potter Stewart: -- felt themselves limited. Chester Bordeau: Since 1948, when 1821 was amended as we were discussing a few minutes ago. It is my recollection that all of the cases decided except Judge Weinfeld's decision here in the Court of Appeals' decision have all determined that the 100-mile limitation is not applicable. Arthur J. Goldberg: (Inaudible) Chester Bordeau: An American citizen? Arthur J. Goldberg: (Inaudible) Chester Bordeau: But that wouldn't apply to a principle -- Arthur J. Goldberg: The principle here? Chester Bordeau: But it wouldn't apply to our principle. Arthur J. Goldberg: (Inaudible) Chester Bordeau: It wouldn't apply to a principle. Arthur J. Goldberg: Yes, but not throughout the case. Now, here then, if you (Inaudible) Chester Bordeau: Oh, I read that amendment to Your Honor to suggest -- I've only got five minutes Mr. Chief Justice -- Earl Warren: No, I just want you to speak in front of the -- Chester Bordeau: Oh, I'm sorry -- Earl Warren: -- podium so it could be recorded. Chester Bordeau: Yes, what I said (Inaudible) Earl Warren: No. Chester Bordeau: I -- the interpretation I placed on 8 20 -- 1821 is that it's a suggestion or a deduction which could be made from the use of their statute by Congress to indicate that expenses other than those that are -- come within a subpoena power are certainly taxable. Arthur J. Goldberg: (Inaudible) Chester Bordeau: No, I do not. And I think the other statutes support us. The foundation for the argument which we have made that is Sections 1920 and Rule 45 -- 54. Now my time is coming to an end and I would like to make this last observation. In the opinion of the Court of Appeal -- the Court of Appeals, the reference was made by Chief Judge Lumbard to the effect that a court in the exercise of its discretion could take into consideration the relative wealth of the parties. I think that that suggestion is a suggestion which should be rejected by this Court. I think that there can only be one application of the rules. They would have to apply to those with wealth and they would have to apply to those without wealth. And in that connection, I would like to call the court's attention to the words of Mr. Justice Goldberg in a lecture given by him before the New York University School of Law. I think it was the James Madison lecture given on February 11th, 1964. There, Judge -- Mr. Justice Goldberg after referring to some very pertinent and words of Mr. Justice Black as follows providing equal justice for poor and rich, weak and powerful alike is an age old problem, those are the words of Mr. Justice Black to which Mr. Justice Goldberg referred. And then Mr. Justice Goldberg went on to say, “Here is another aspect of equality. We derive our constitutional inspiration from the Bible.” And he quotes, he quotes from the third book of Moses, Leviticus, “You shall do no injustice in judgment. You shall not be partial to the poor or defer to the great, but in righteousness shall you judge your neighbor”. That is the end of the quotation but Mr. Justice Goldberg proceeds. Justices of our court and many state courts take an oath to do equal justice to the poor and to the rich. And I say that we cannot have a rule which would say because you are wealthy or you are -- you're entire cost can be taxed against you and if you are not as wealthy or wealthy, that costs shall not be taxed against you. I think with those remarks, I see the red light and -- Earl Warren: Mr. Bordeau, I'd like to ask you just one question about whether or not Judge Weinfeld was foreclosed from fixing costs of the first trial by the order of Judge Palmieri? Chester Bordeau: I think he should be Your Honor, for that -- but may state my reason for that? Earl Warren: Will you state it briefly? We (Voice Overlap) -- Chester Bordeau: Very briefly. Earl Warren: I'd like to know your position. Chester Bordeau: Very briefly Your Honor. I think there is a rule where a second judge while he might -- he should probably give great respect to what his Brother judge has said in the disposition of any preliminary motions. I think he still has the power and the right if he is convinced that an earlier ruling is completely erroneous. But I don't think that rule applies here where you got a judge who sat during a trial from 10 or 12 days, had occasioned to observe what was necessary and not necessary that his rulings should be reversed by a judge who did not sit on that trial. I think that is error for the second judge to do that. I think the judge who sat on the trial who was able to observe what occurred is the one that should fix those costs. And if they should not be reversed by a judge who did not sit on that first trial, I think that's wrong. Earl Warren: Even though the first judge was reversed by the Court of Appeals? Chester Bordeau: He was not reversed on that. Earl Warren: No, but it was reversed. Chester Bordeau: He was reversed on a statute of frauds question. Statute of frauds question in which the Court of Appeals two years later reversed itself in favor of what Judge Palmieri had done. Hugo L. Black: Your quotation from which you've read lead me to ask the question, do you think that in order to hold that Judge Weinfeld was wrong that that would mean that he was deciding against the rich because the rich were rich? Chester Bordeau: I think it was a consideration in his mind if you read those opinion. I think you might deduce that. Otherwise, probably it wouldn't be mentioned. Hugo L. Black: Otherwise what? Chester Bordeau: Otherwise, why should -- should any mention be made of it? Hugo L. Black: Well, he said reasonable and proper, he puts those in issue as I recall it in the words -- Chester Bordeau: He don't have to tell us about rich and poor -- Hugo L. Black: -- what should be reasonable and proper -- Chester Bordeau: He wouldn't have to tell us about rich and poor then, would you? Hugo L. Black: What? Chester Bordeau: He wouldn't have to tell us about the rich and the poor. Hugo L. Black: Why wouldn't he? Why -- Chester Bordeau: Why would he? Hugo L. Black: Why would it not be relevant in construing the rule according to the judge (Inaudible) as meaning that it was not to have a set up in some way, it would allow the person who is rich enough to do so to oppress the person who was poor in a litigation. Chester Bordeau: Well, I -- Hugo L. Black: That it was a philosophical observation there, but why -- are we to decide -- if we decide with you that Judge Weinfeld did this in order to (Voice Overlap) -- Chester Bordeau: Oh, I don't think that's necessary. Hugo L. Black: -- the rich, because he were rich? Chester Bordeau: No, I don't think that's necessary but I think the statement from this Court that any -- the use of any fact or in the dis -- exercise of discretion by a court that's based on the comparative wealth of the party is not a proper consideration. That would not be out of order. Potter Stewart: But Mr. Bordeau, isn't the point simply this that a litigant with unlimited economically financial resources can if he chooses bring 50 witnesses from Tokyo, Japan all of them cumulated let's say. And that a District Judge in his discretion can say that is litigative overkill, so to speak -- Chester Bordeau: That's right. Potter Stewart: -- and it wasn't necessary to the trial of the case and therefore I'm not going to allow those costs. Chester Bordeau: That's right. Potter Stewart: And that's where the point of rich -- that's the point of being rich -- Chester Bordeau: That's right. Potter Stewart: -- you can if you want to -- Chester Bordeau: That's right. Potter Stewart: -- exercise an abundance and unnecessary abundance of caution. Chester Bordeau: But you don't tax your opponent with it. In further answer to what Your Honor has just stated, it's been stated -- we're denying access to the courts. That's not so by the application of the rule that I advocate. There isn't a denial of access to the courts. The fact is that you take poor litigants, if a poor litigant had a worthy cause that he didn't have the prospect of collecting the cost that he would have to incur in a transportation of witnesses from far away, he would be denied. He would be denied, effectively denied the use of the court and that applies to a poor defendant who couldn't call for witness and expect to be repaid. So the rule should permit the payment of expenses that are necessarily exerted by the -- by a plaintiff or a defendant, whether they're poor or they're rich. Byron R. White: Would you disagree with the Court of Appeals then when it said that even in the case of a necessary witness, a court has discretion, has the power to go beyond the 100-mile rule but it doesn't -- but it need be that it may consider the respective financial resources of the party. Now, that's what I gathered from the court -- the majority opinion of the Court of Appeals. Chester Bordeau: From my own? Byron R. White: That is the -- that is what you are bringing up here, Number 33. Chester Bordeau: That's right. Now my only suggestion about that is that there should be a limitation on the exercise of that discretion. And that discretion should be limited by finding out or in determining what is necessary and reasonable -- Byron R. White: Once you decide -- Chester Bordeau: -- that the exercise -- Byron R. White: -- that's necessary, to discretion him. Chester Bordeau: That's right. And in this case, in further answer your question Mr. Justice White, Judge Weinfeld on the second trial didn't deny cost on the ground that these witnesses were not necessary. He allowed $16 but he must have found they were necessary otherwise he shouldn't have allowed that. Byron R. White: Well, the Court of Appeals said that, as I gather the Court of Appeals affirmed Judge Weinfeld to some extent, but the Court of Appeals would allow a District Judge in his discretion even in the case of a necessary witness to deny cost on the grounds of the relative financial status of the parties. Chester Bordeau: There is a statement to that effect in that opinion. Thank you Your Honors. Kalman I. Nulman: I want to request the Chief Justice if I may, I think -- Earl Warren: Yes, I think you have one minute. Kalman I. Nulman: I'll address myself to the last thing that Mr. Bordeau said. The argument that the poor are benefited by the allowance of great -- of costs sounds plausible, but in the actual event it's illusory because it supposes first that he has the funds to advance during the trial, and secondly it fails to take account of the fact that the benefit to him from the recoupment is disproportionate to the financial ruin which he faces if he loses. Now as to the disparity between the rich and the poor, our theory of law has always been that the individual fitted against the overwhelming might of the state is entitled to certain equalizing factors. And as evidence of that, the first ten amendments of our constitution provides safeguards for the individual against the might of the state. Now as to the quotations that Mr. Bordeau read, I'll stand on the statement we made in our brief about the two answers as quoted at page 7 of Mr. Bordeau's brief. And finally as to my statement that Dr. Bourne was Dr. Farmer's chief, these questions as reflected in the record were asked and answered specifically, “Dr. Bourne, did you ever see any written rule requiring preoperative laboratory procedures such as the taking of urine and blood specimens for analysis?” “I do not definitely recall having seen them”. “You were Dr. Farmer's chief, were you not?” “Yes”. “What I'm asking you Dr. Bourne is was there any list of rules containing among them such a rule?” “I was under the impression that it had at some time been written out. I actually have never seen such a written rule pertaining to it in our hospital”. Earl Warren: Very well.

Earl Warren: -- your time had this it? John P. Nelson, Jr.: Ask in rebuttal. Earl Warren: Yes. Attorney General Gremillion. Jack P. F. Gremillion: Thank you, Mr. Chief Justice and Associate Justices of this Court. I find Louisiana in a unique position here today because frankly we have no quarrel with the law as it presently exist at least in our opinion in this matter. I think that this case of Lombard here, is one that was largely determined revolved its decision on what the facts actually are. And they are so important that I would like to take a minute to go through the facts of this case.And then we can discuss the appropriate legal points. Now, the facts surrounding this case was the basis of a criminal mischief charge brought against these defendants are still in Louisiana. Between 10 and 11 o'clock on the morning of September the 17th 1960, two Negro men, a Negro woman and a white man took seats at a 24 stew lodge counter, reserved the white customers in McCrory's Five and Ten Cent Store or Canal Street in New Orleans. Now, McCrory's is one of the national chain operates in 34 states. It sells all kind of merchandize and it's open to the public and of course the statements I'm making here are born out by the record because I am following my brief. The question of whether the lunch counter facilities in the various McCrory stores are segregated or integrated is left to the National Office of the McCrory stores to be determined by local tradition law and custom as interpreted by the manager of each individual store. And that's in a transcript of the record at page 21. Of course, as it has been point by Mr. Nelson, Louisiana has no law requiring segregation of eating facilities in its state. It never has had -- neither thus the City of New Orleans nor do I know of any single municipality that has such an ordinance in the state, back there is none. Now, the McCrory Store in which these defendants stay and having demonstration had separate food counters for serving food to Negro and white customers since 1938. And as I said before, there is no law or ordinance requiring the segregation with these eating places and by operating separate lunch counters for whites and Negroes, McCrory was simply following a local custom as interpreted by that store manager, Mr. Barrett. An employee of the lunch counter at which the defendants sat down called the restaurant manager who informed these four students both white and Negro, that he could not serve them at that counter and that he had to sell them eating materials at the rear of the store were he had a colored counter. Now, when the manager received no answer at all from these individuals, this is the restaurant manager, he turned off the lights. He removed the unoccupied stools -- stools and he closed the lunch counter. A sign reading? This counter is closed was pointed out to the students but they remained silent. The restaurant manager then called the store manager and the police. Now, the police -- it's significant, the police were never present in anytime. The manger, Mr. Barrett, came behind the counter and he talked to the individuals and he asked them to leave. Police still was not in -- were not in the establishment. But they neither answered in nor did they move the concen -- continued to sit down. When the police arrived, the store manager advised the students in the presence of the police and prior to talking to the police that the counter which they were seated was close and he asked them to leave the store, nothing happened. Hugo L. Black: I didn't quite get it. Did I miss -- how did the police -- were they called under this? Jack P. F. Gremillion: Yes. The restaurant manager notified the store manager and then called the police. Up to that time the police were not involved in this factual situation at all. And when the police arrived, the store manager talked to the four individuals and he told them that the counter which they were seating was closed and he asked them to leave the store. Now, as I said nothing happened. Thereupon -- Potter Stewart: Now, was that done in the presence of the police? Jack P. F. Gremillion: Yes. And the manager told these individuals that he ordered them out of store and he asked the police to take them out of the store because it was his custom not to serve them. His custom as interpreted by him. It was his custom not to serve them at that particular counter. Then the police officers told them, ?The manager wants you out. You are violating Louisiana law.? And that's of course is in the record. And the -- Potter Stewart: He didn't identify what law they were violating, did he? Jack P. F. Gremillion: No, he just said you're violating the State law and he asked them to leave. He asked, Which one was the leader? And the white student and said, I am the leader. And that's the only word that was ever spoken by these four people. He identified himself as the leader. And he said that they had come there for a particular purpose. And that their mission was to be served and that if they were not served, they were willing to be arrested. So the Major, I forget his name right now, the police -- Potter Stewart: Now, what law were they violating if any right at that moment? By saying they wanted to be served. Jack P. F. Gremillion: They were violating the criminal mischief statute of the State of Louisiana which read as follows. And this is the basis of the charge against them, Taking temporary possession of any part or parts of a place of business, or remaining in place of business, after the person in charge of such business or portion of such business has ordered to such person to leave the premises after he resist from the temporary possession of any part of parts of such business. In other words -- Potter Stewart: So while -- while this is what you referred or called a criminal mischief statute that part of it at least is very similar to the trespass statute that we have in the previous cases, is that right? Jack P. F. Gremillion: Well, you might say that but it -- it was a statute that was passed by the 1960 session of the legislator, and was designed to protect the rights of the private individual on his property from the invasion by anyone regardless of race, creed, or color. Now, counsel -- and I might go into this right now. Counsel has attempted to tell you that there was a great segregation program passed by the State of Louisiana of that session of the legislature. Well, it may be that there were a lot of laws passed that was subsequently declared unconstitutional in litigation in the eastern district and subsequently in the Fifth Circuit Court of Appeals. But these particular statutes, these particular criminal statutes were passed as the result of District Attorney's conferences and I might tell the Court that as Attorney General, I've already made conferences for the District Attorneys in my state which is required to some states. And we meet every year in February of the year and we discuss the decisions of this Court as they affect our laws. We discuss the decisions of our Supreme Court as they affect our criminal statutes. And we are always amending our criminal code to provide the situations that were never covered by law of the Court. So there is no significance to be attached in such a fact like that. In fact, as the result of the working with the Louisiana Law Institute, our Court of Criminal And Civil Procedures was completely overhauled at the same session of the legislature. So I don't think anyone can say that that was the result in trying to maintain the policy of segregation in my states. Some of the laws that we amended we act quite a bit of litigation involving our registrars and voters. We woke up to find out that no one could ever provide the material for the registrar of voters because until recent years, the office was relatively unimportant. And it passed the law at that session making the Attorney General the attorney for the registrar of voters just giving me a little more work to do. But I recite that to you because there's nothing in any of these statutes that we passed which would Your Honor upon recommendations of the District Attorneys and this act was drawn in my office. So I don't know why it was put in there. We never have a statute before because we never have had situations that existed like this before. We never had the statute on our books that could punish someone for coming in and taking possession of their property, much like that someone would walk into your home and say, I'm in your home. And you could say, Well I don't want you in my home, get out. And we never had a statute to cover. Certainly, you would have the right to invite him out and if he refuse to go out you would certainly have the right to call the police because he has no right to be in your home, no federal right, no other vested right. And that's why we pass this particular statute. Speaker: What did the statute accomplish if this already embraced the general trespass statute? Jack P. F. Gremillion: Mr. Justice Harlan, our general trespass statute, as I recall, relates mostly to farming and includes the lands. The general trespass statute of our state would not cover the factual situation that it could here. Speaker: Can you give me the citation? Jack P. F. Gremillion: Unfortunately I -- I do not have it with me. I didn't think they form a portion of this case but I would be very glad to provide that to the clerk for you. Speaker: Alright, thank you. William J. Brennan, Jr.: Mr. Attorney General the penalties are on the general trespass statute? Jack P. F. Gremillion: No, but they are the same approximately. They are misdemeanors. They have provided for a fine or I believe one year in jail up to a thousand dollars after discretion of the Court or depending upon the facts of the case. Earl Warren: Had you -- had your Supreme Court held that your general trespass statute did not apply to businesses like this? Jack P. F. Gremillion: Well, it was -- no they had never had held but it was always the contention of the District Attorneys and others that the general trespass statute would not apply to a situation where individuals came in to a place of business such as happened here and took possession of it because the general trespass statute did not cover such a situation. And that's why we pass this statute; we wanted to spell it out. Tom C. Clark: Is it -- has it been applied to any group except Negroes? Jack P. F. Gremillion: Well, -- Potter Stewart: It is applied to Jews? Jack P. F. Gremillion: -- I can't say -- it's been used in several court prosecutions in the state. How many? I do not know. But we published a booklet on the number of our -- we published the booklet on the number of ads that it's been used. It's been used to about 40 or 50 times since it's passed indiscriminately both white and colored, I mean, regardless of race, creed, or color. There's been no distinction, Your Honors, what I'm trying to point out to you. Potter Stewart: Is it applied to people like the Americans with Mexican ancestor? Jack P. F. Gremillion: Well, I'm sure that it would apply to them if one had committed the particular crime. But our State Supreme Court -- Potter Stewart: And -- Jack P. F. Gremillion: -- Your Honor went in to that very Catholic in his decision, when it discussed the constitutionality of its statute and its application. And of course I don't want burden this Court by reading that to you but it's in the record -- Tom C. Clark: Yes, we -- yes I'm aware. Jack P. F. Gremillion: What's that? Tom C. Clark: Yes, I'm aware of the opinion. Jack P. F. Gremillion: You are aware? Tom C. Clark: Yes. Jack P. F. Gremillion: Alright. But I just want to save time because I need to talk about something that we all know about. Arthur J. Goldberg: General, have made several references to people coming in and taking possession but surely there's a difference here. These people were invited into the store, weren't they? Jack P. F. Gremillion: Well, that is true. Arthur J. Goldberg: And thus -- Jack P. F. Gremillion: But -- but after they -- after they were invited in as customers and they went to this particular place of business, the store manager walks ups and says, I cannot serve you. I am asking you to leave our premises. Potter Stewart: They say, I cannot or I will not? Jack P. F. Gremillion: Well, I thought they could make any difference when he said, I cannot -- Potter Stewart: It might make a great deal of difference. It's a matter of semantics that are not important -- Jack P. F. Gremillion: Yes. Potter Stewart: But if he said, I cannot that meant that he was being coerced. Jack P. F. Gremillion: But there is no evidence of coercion in this case, Your Honor. There's absolutely no evidence of coercion in this record whatsoever. Arthur J. Goldberg: What about the statement, General -- once made by the Mayor and chief of police. Jack P. F. Gremillion: I'd be very glad to discuss that. Now, you must bear in mind, that these sit-in demonstrations occurred just about the time we were having sit-in demonstrations all over the south. And feelings were rising high. We had a sit-in demonstration at Woolworths which caused the Superintendent of Police to issue that particular statement, but that was on a Friday. On the next Saturday, we had a picketing fiasco at another store in the French Quarter in New Orleans. It turned out not to be in a peaceful picketing at all and in fact, the police were not there of course, they're too being called. And the picket were running the pedestrians over the street and making them run out into the narrow streets of the French Quarter. And there was a tremendous excitement prevailing that could have blown-up in any minute and we could have had race riots. That was when after that particular cause and incidentally those individuals have been charged with obstructing a public passage way and making pedestrians get off. And that case was tried and they were convicted in the lower court is now in the Supreme Court of Louisiana. And I imagine we'll be having it up here sooner or later. But anyway -- Hugo L. Black: (Inaudible) William J. Brennan, Jr.: Possibly, a Yick Wo case. Jack P. F. Gremillion: A what, sir? William J. Brennan, Jr.: Yick Wo, you know the Yick Wo case? Jack P. F. Gremillion: Yes. I don't think so. William J. Brennan, Jr.: Where the law was -- it is a law that used against a race, a group, one group. It has the label Negro on it. That had the label of Chinese on it, the Yick Wo case? Jack P. F. Gremillion: Well I don't -- I don't think that these laws were used indiscriminately against Negroes in this particular, I do not. And I don't think there's any proof in this record -- William J. Brennan, Jr.: I was just -- Jack P. F. Gremillion: -- it will indicate that. William J. Brennan, Jr.: I will just listening to what you're saying. Jack P. F. Gremillion: Yes, Your Honor. Hugo L. Black: Now we're were we? Jack P. F. Gremillion: We were talking about the Mayor's statement -- Potter Stewart: Talking about the -- Hugo L. Black: The mayor's statement? Jack P. F. Gremillion: Yes. Hugo L. Black: Alright. Jack P. F. Gremillion: So then -- so then Mayor Morrison issued his statement. Now, I can read those statements very carefully. I've read them again this morning When Mayor Morrison refers to so-called peaceful picketing, what he meant was something that was attempting to be conducted under the guise of law which could possibly obstruct the peace and harmony of the community. And that's why those statements were issued. They were issued purely as the ministerial function of the Mayor and his chief law enforcement officer. It is significant to note that the Mayor at no time said he was sending police to these department stores. At no time did he say that he was going to take the law into his own hands. And reading these, you can only come to the conclusion that here was the Mayor of a great city, a great mayor, a distinguished mayor, who was doing his job, under the Constitution of his state and the Constitution of the United States to maintain peace and order. Now, Mr. Justices let me ask you this and this is one of the dilemmas that Louisiana face -- faces. When we in cases of this kind call upon our police, which we've certainly got a right to do after an occurrence has happened such as this. If we fail to maintain the peace and tranquility of our community by the use of our own police which is paid to do that. If we fail to do that, we are castigated before the eyes of the nation and the press. The first thing, you know, we've gotten marshals and in some cases troops. Then if we don't take care of our people, if we don't use our police to maintain law and order in a community, we come before this great tribunal claiming that their rights have been violated as the result of certain sections of the Due Process Clause of the Constitution. Now, what are we going to do? The only thing that we can do is exactly what's transpired in this case. I say to this Court that Mayor Morrison is a man of moderation and so is Chief Giarrusso. He'd been an outstanding mayor and he acted without discrimination whatsoever in this case. He had just run for governor in that law the Negro votes. Certainly, he wasn't going to turn around and repudiate him and furthermore I say to this Court that the President of the United States would have never appointed Mayor Morrison as the ambassador to organization of American States if he had it in anyway discriminated against anybody in the City of New Orleans. So I attach no significance whatsoever. It certainly not a part of the race just type of this case. It was not a directive to any storeowner that they get to together. It was not a directive to a storeowner to call the police, nothing was mentioned about that. Arthur J. Goldberg: Doesn't this record clearly plainly indicate that was the storeowners didn't get together prior to the particular demonstration which is here involved? Jack P. F. Gremillion: Mr. Justice, my answer to that is that it wouldn't have made any difference if they have got together and discuss it because it doesn't constitute state action. Because private citizens and owners private property can get together and discuss the problems -- Arthur J. Goldberg: What about getting -- Jack P. F. Gremillion: -- no more than they would get together and discuss their income tax problem, the federal income taxes, would you say that that would be federal action? Arthur J. Goldberg: But General what -- what if they got together with the police? Jack P. F. Gremillion: But they did not get together with the police. And there is no evidence in here to prove that they have got together -- Arthur J. Goldberg: But weren't the petitioner's -- weren't the defendants foreclosed by the trial court from offering that evidence? Jack P. F. Gremillion: Yes, because of the fact it's absolutely irrelevant to the prosecution of the crime. And even if they had proved it that these people have discussed such a situation before it, it's still would be immaterial because all they were talking about was the question of what their property rights are. I repeat -- Speaker: We don't know. Jack P. F. Gremillion: -- but this -- Speaker: We don't know -- Jack P. F. Gremillion: But if your -- Mr. Justice Harlan I say to you that even if they had shown that there have been discussions -- Speaker: (Inaudible) Jack P. F. Gremillion: -- it would have still been immaterial because -- they could -- Speaker: (Inaudible) the policy of whatever it was and keeping these Negroes out and he said, alright, would that be a relevant? Jack P. F. Gremillion: Alright. If such a thing was possible and had been proved and surely it would have been allowed but he (Voice Overlap) wait just a minute. Speaker: Well they -- they was allowed to in anything. Jack P. F. Gremillion: But these people were defended by their competent counsel. He had Chief Giarrusso on the stand. He had Morrison on the stand. He only called them as witnesses on the motion to quash. He didn't call them on the trial of this case. He had that right. He had that opportunity to prove that and did not avail himself of it. So that was even he failed to do that it didn't exist. Now, if this Court wants remand the case for the taking of that evidence, I shall move. Arthur J. Goldberg: General, would you have said as a very experienced lawyer which you are is very able in that in light of the rulings of the trial court in this case where such evidence was offered any purpose would have been served by a counsel further pursuing this into trial court made it very clear. I refer to page 94 of the record that he would not admit evidence on the question of whether what was discussed with the police. Jack P. F. Gremillion: Well, I -- Arthur J. Goldberg: And then Mr. Nelson object and reserve his objection on that point? Jack P. F. Gremillion: And the Court went into that very thoroughly. They said that it was absolutely immaterial. He didn't offer to prove to concert and apparently did they offer any proof of concertion or solutions, or cooperation to deny to buy anything. You can look to Mr. Nelson's objections and he never called that to the Court's attention. Arthur J. Goldberg: Well, look at page 94 again if you will. Jack P. F. Gremillion: Yes. Arthur J. Goldberg: Doesn't he call that to the Court's attention when he said that his purpose in offering this evidence is to show what state policy is? Jack P. F. Gremillion: But it's been held in the Howard Johnson case that regardless of what state policy is that that is not -- that come within the scope of state action under the Fourteenth Amendment. Our Supreme Court went into that very thoroughly in its opinion. Arthur J. Goldberg: But are you arguing that if the State here directed the storeowner not to admit Negroes it would not be state action? Jack P. F. Gremillion: Mr. Justice Goldberg, I say this. That if the -- oh yes, I've been reading here of that, that there are definitely. I also say this, that if the manager and it got together with all the managers and it's decided that they were going to segregate their colors and that -- then he comes around to change his mind, and called the police and someone sued him rather as a result of his breaking the agreement. That that could of course be state action, likewise, if you had decided that, say he was a great advocate of civil rights and in his own mind his interpretation of what the custom was that he had decided, he was going to serve everybody indiscriminately. And that group of each citizen called the police and one of them had the police arrest him, do you understand? Then that would be state action, but that is not what happened here. What happened here is that you had a bunch of people who moved in deliberately with design sat down and said, I want service. The manager says, I'm not going to serve you. The police had never been called. The police had never been contacted. The police gave him ample opportunity to leave and reluctantly arrested them after they had been in that count of some 20 and 25 minutes. So as -- as I -- yes, Your Honor? Earl Warren: Excuse me -- Mr. Nelson wanted to conduct his cross-examination and direct it to this language of the Mayor in his public statement. I have today directed the Superintendent of police that no additional sit-in demonstrations or so-called peaceful picketing outside retail stores by sit-in demonstrators or their sympathizers will be permitted. And then jumping over to the end of it, It is my determination that the community interest, the public safety, and the economic welfare of this city require that such demonstrations seized and that henceforth, they be prohibited by the police department. Now, would you discuss whether that represents state action in as much as the Mayor is the -- is the chief officer of the city and the Superintendent is his -- is appointee and subordinate to him. Jack P. F. Gremillion: Well, my answer to that would be this, Your Honor. Again, he was speaking about his customers, but when -- Earl Warren: But where in the Court did he say so? Jack P. F. Gremillion: Well, that's what he's talking about -- Earl Warren: Where -- where did they -- where did he say so? Jack P. F. Gremillion: I'm looking at it, Mr. Chief Justice, from the standpoint of what Mayor Morrison meant by that. Earl Warren: Well, alright. Well now, why -- why not use, why not apply the language that he used in there to -- to indicate that? What did he say in there to establish your position? Jack P. F. Gremillion: But I come back to this. He did not call the Mayor on the trial of this case and asked him a single thing about that. These sit-ins happened after the statement of the Mayor. So apparently it had no effect. He never discussed with Mr. Barrett during the trial of this case whether Barrett ever new about the existence of those particular statements and I don't think -- Earl Warren: He couldn't -- he couldn't go into that -- Jack P. F. Gremillion: And I don't -- Earl Warren: -- could he? Jack P. F. Gremillion: I don't think that -- I don't think that that constitutes state action, because I think that all that the Mayor was trying to do was to maintain peace and order. And it is a fact that these sit-ins occurred and Mr. Nelson said very quietly without any passion whatsoever. And of course, the State police was not there to stop them as the result of this statement by the Mayor. The statement by the Mayor to me is whether as the Chief of Police is strictly one of maintaining peaceful situations in the City of New Orleans. He noted in his statement that he didn't say anything about peaceful picketing, he's talked about so-called peaceful picketing. Hugo L. Black: Well, I suppose you would agree, General, wouldn't you that even they didn't have any law on the book, if the law wants to enforce customarily of the common practice that that would be the same as though it were written on the books? Jack P. F. Gremillion: Oh no, I don't agree with that -- Hugo L. Black: What would you do with -- Jack P. F. Gremillion: -- I don't think that we ask them all -- Hugo L. Black: We had them in those cases of that time. Jack P. F. Gremillion: I don't -- I don't think that -- Hugo L. Black: Not particularly in this field and then all them but -- Jack P. F. Gremillion: I -- Hugo L. Black: They had a case where down in Tennessee the question of denial of equal protection of the law has came up on Texas. The book said one thing but the practice was another. And we said that if the practice was this, even though it was not written on the statute who decided the case according to the way what actually happened as in the Yick Wo case to which Justice Douglas called your attention. It doesn't make any difference about what law is written on the book if the states to its official, I would say, I would think you would go that far. Jack P. F. Gremillion: Well -- Hugo L. Black: Because I think your defense is the one which you've mentioned at first but have not mentioned in what sense that you have what is in effect the trespass after warranting or trespass when a man has been warned to get out. I see no difference between the two. Jack P. F. Gremillion: That's correct. Hugo L. Black: That's what you have. Jack P. F. Gremillion: That's correct. Hugo L. Black: Now, if you have that but even that law is used constantly and continuously and by agreement of officials, for the purpose of prohibiting something which you cannot -- the State cannot prohibit to it and I suppose you would agree that the State couldn't pass the law to make it illegal for a merchant to serve a colored man, wouldn't you? Jack P. F. Gremillion: I agree with that, Your Honor -- Hugo L. Black: Yes. Jack P. F. Gremillion: And that's why -- we don't have such -- Hugo L. Black: That's right. That's right.(Voice Overlap) Jack P. F. Gremillion: -- that into a state -- Hugo L. Black: Well, I thought you were that being the case. If you all -- if you have such a law in actual practice although it's not written on the book. And that law which is an actual practice among your officials were utilized here, how could you escape the fact that that was that state action? Jack P. F. Gremillion: Because I think that the cases show that the merely utilization of the courts is not sufficient state action as it covers the Due Process Clause of the Fourteenth Amendment. Hugo L. Black: But one could have -- one could agree with your holding on that. Jack P. F. Gremillion: But the question that we have here to finally premise one that you're talking about but does this really constitutes state action? Hugo L. Black: Well if -- Jack P. F. Gremillion: Now, what happened in this particular instance -- Hugo L. Black: If they could have prove that the Mayor of the city and he has a good deal of power whether -- whether the statute says that in that he goes turn and said now, We want this stopped, these sitting-in. We're not going to -- we don't care whether you want it stopoed or not. Jack P. F. Gremillion: But he is talking about unlawful -- Hugo L. Black: I know but suppose he said that and he said, if we're going to have the police read it, you call it. Jack P. F. Gremillion: Oh, I would agree to that, Your Honor. Hugo L. Black: Well then, why shouldn't the man be allowed when you said that these are to try to prove that fact? Jack P. F. Gremillion: Because that didn't not -- did the factual situation as it occurred here. Hugo L. Black: We don't know -- Jack P. F. Gremillion: The only necessary -- the only you can -- Hugo L. Black: How can you know? Jack P. F. Gremillion: The only necessary -- Hugo L. Black: Unless they have permitted to offer the evidence. Jack P. F. Gremillion: The only necessary ingredient to this crime is to show the possession -- is to show the others to leave and to show the continuance of the remaining. And that was all that was necessary for this particular conviction. Hugo L. Black: Now, I draw -- Jack P. F. Gremillion: Now all -- Hugo L. Black: -- a distinction to myself. I like to call your attention to it. You're reluctant to meet that situation. For myself, I draw and decided a distinction between what the State can enforce where the owner of property wants to protect it for certain uses, has a right to do it and one where the police or the State steps in and says, irrespective of what you want, I think I wrote someone on that in the Struthers case. Potter Stewart: Yes. Hugo L. Black: Irrespective of what you want, we won't -- Jack P. F. Gremillion: That was before -- Hugo L. Black: -- we want you -- we want to stop this thing and therefore you sit-in blacks and we'll arrest you.If they said that, you would agree I suppose that that would be state action. Jack P. F. Gremillion: I would agree with that, Your Honor. Hugo L. Black: Well, I'm asking you now, but this only point on that is, that he was denied the opportunity to offer evidence. Jack P. F. Gremillion: Well -- Hugo L. Black: To show it if he could, maybe he couldn't? Jack P. F. Gremillion: I must be quite frank with you and tell you that if that was in the record, I would agree with you. But it is not in the record and it's not the State's fault that he didn't call the Mayor and the Superintendent of Police to prove that particular point even though he was not allowed to introduce that evidence by a question of Mr. Barrett. Hugo L. Black: Why should a lawyer do that when the Court tells him in advance? We're not going to have any evidence on that subject. Byron R. White: Well, General -- Jack P. F. Gremillion: Yes. Byron R. White: (Inaudible) Jack P. F. Gremillion: I don't quite understand who you're talking -- you mean -- you mean the store manager? Byron R. White: Some people say the question is whether or not the store owner had decided his own, the discretion of his own decision. And that gentleman is on the stand that being somewhat significant to acquire to whether or not this is of the State's decision as repeatedly be excluded. And if when he asked the question, he said he -- the question was whether if their decision was a matter of conforming to State policy or not. Jack P. F. Gremillion: Yes. Byron R. White: And this was the direction of which apparently he was headed. Now, it's true that he might have gotten that this in other ways. But in the long run, he would -- it would be most sensible, I would think, to get out through the owner of the store even if he had the Mayor and the policeman on the stand. The police chief on the stand, he still, I would think, would feel some compulsion to get at this matter to the storeowner. Hugo L. Black: I understand you. Jack P. F. Gremillion: Well, Mr. Justice White all of that -- the answer to that is cover the in Judge Cox denial of the motion to quash and also in the judgment of the Supreme Court of the State which is for that -- Byron R. White: How is that general? Jack P. F. Gremillion: Say it is covered -- Byron R. White: Yes, but how is it covered? Jack P. F. Gremillion: It's discussed in the -- Byron R. White: Well, what's the anwer? Jack P. F. Gremillion: Could you just bear with me just for a second. Here it is on page 146 of Supreme Court's opinion. The defendants sought to introduce evidence to establish that the action of the manager of McCrory's was provoked or encouraged by the State. And that they would have this Court hold at this action of McCrory's was not of its own voluntary action, it was influenced by the officers of the State. The conclusion contented for as incompatible with the facts rather the testimony supports a finding as a manager of McCrory's had for the past several years for few service to Negroes, that the policy the store was established by him that he'd setout the policy he founded consistently. That Negroes had habitually been granted access to one counter and within the store and it deliberately provoked mischief and disturbance such as the one he complained of here had not previously occurred. In the -- passed to other Negroes could have mistaken to take sits encountered question and they were told to move and cooperate, and recognize the request of McCrory's employees and had said that the counter set side from him. Even under the provisions of requested statute, it is apparent that the prosecution is dependent from will of the proprietor. For all that after he is automatically intrudes to relinquish possession of his place of business that a violation of the statute occurs. The State therefore without the exercise of propriety would define no basis under the statute to prosecute and then it goes on -- Byron R. White: Well I'm -- I still don't have -- Jack P. F. Gremillion: Well I -- I know that you were not properly answer that and I must admit (Voice Overlap) -- Byron R. White: I don't know if there is any answer there specifically to the question -- Jack P. F. Gremillion: Mr. Justice White, I will agree that we are probably weak on that particular point. But it will just so be it as far as we're concerned if this Court says that it should have been allowed and the Court is not going to do by except of his mandate. But we don't feel that their rights were violated in this respect at this particular trial because of the provisions of Louisiana law. And the Court went into that quite thoroughly and I'll just have to stand on the decision of my Supreme Court. Earl Warren: General, you said that a few moments ago that the Mayor was speaking only of unlawful demonstrations. So, would you show me in his statement please where he says he's only referring to it. Jack P. F. Gremillion: No, he doesn't come right out and say that. But certainly I don't think anyone would understand that he was trying to say that he was referring to anything but violations of the law. In other words, I'm being extended about this as I possibly can. And I'm looking at -- I'm considering what -- what occurred, these three demonstrations and why the Mayor did this and I've never talk to him about it. I've never discussed it with him. And I suppose that we can draw that anyone can draw his own inferences from his statement. But I repeat that I think that his statement was one purely of a ministerial nature in which he was trying to maintain the peace of the community. Because he went ahead and quoted in his statement, Mr. Chief Justice, Act 17 of the 1960 legislature by disturbing the peace. He quoted another provisions of Act 70. He quoted 80 which was obstructing public passages and the restraining of traffic. And looking at it from the overall picture, I don't think -- I think he was directing his statement to the entire population of New Orleans and not to one specific group to restrain themselves and to act in a lawful manner. Now, that's what I get from it and apparently that's what the Court got from it and I repeat that Mayor Morrison is certainly a man of moderation. He's very liberal with his thoughts and I don't think that he ever had in mind the utilization of the police force that he's an officer or anybody to take anyone's rights away. And I repeat that certainly these sit-ins occurred some four or five days after his particular statements so it must have been a situation whereby these individuals wanted to provoke some action where they could come under the cover in the cloak of the Fourteenth Amendment and have their prosecutions voided. Earl Warren: He wasn't speaking to general public when he said this: I have carefully reviewed the reports of these two initial demonstrations by a small group of misguided white and Negro students, or former students. It is my considered opinion that regardless of the avowed purpose or intent of the participants, the effect of such demonstrations is not in the public interest of this community. Jack P. F. Gremillion: That is correct. Now, in all candor, he's not that speaking about the policy of the State which was one in favor of segregation. That I admit, we admitted in our brief that's what he is talking about. Earl Warren: He's talking about maintaining that policy of segregation. Jack P. F. Gremillion: He's talking about a policy or a custom which -- Earl Warren: Yes. Jack P. F. Gremillion: -- people in my State had practice that was since we became a union, ever since we were readmitted to the union and which -- as our Supreme Court said that's practiced freely by both white and black. Earl Warren: And he was -- Jack P. F. Gremillion: But let me tell you something, Your Honor -- Earl Warren: Well, may I just ask -- Jack P. F. Gremillion: Yes. Earl Warren: -- just one more question. And he is insisting in the statement that that be adhered to? Jack P. F. Gremillion: Oh yes. Absolutely, because he -- as he says, it's not in the public interest and he does not want any unlawful acts to occur. That's what I draw upon. We were talking about inns and in that connection let me go into this. We were talking about the inns and hotels and you've talked to the other states about that. We have no such statute in that respect. But, talking about the policy of the State, just recently a motel was opened up in Baton Rouge, it's called the International Motel. And they've got signs all up and down the highway. You know what they got on the bottom of those signs in big -- owned and operated by and for colored people only. We've got the Lincoln Hotel in Baton Rouge the same way. We've got hotels in New Orleans the same way. We've got tourist courts in Lafayette. We've got tourist courts in Lake Charles and Shreveport. And it's publicly, they said, This is for colored only?. Now, who made them do that? Strictly, the policy of State that's all. Negroes are doing it just as much as white people, are we to be condemned if they do that, can you say that a policy is state action under the Due Process Clause of the Fourteenth Amendment? Tom C. Clark: I suppose -- Jack P. F. Gremillion: The civil rights cases hold otherwise and I agree with the gentlemen up here from Baltimore, wherever he was from, yesterday when he said that to reverse these convictions, you have overrule civil rights cases. And I said quite frankly, I agree with you as to what the law is now I believe to overrule this if you approach it from the facts of the law that you have to overrule the Civil Rights Acts which of course will give us by decision of this Court, if you do that in National Civil Rights Policy. Tom C. Clark: I suppose that we have the same case that we have today if a white man was thrown out of a Negro restaurant. Jack P. F. Gremillion: We surely would. And if he would go into that International Motel that I'm talking about to seek a room, why you'd have another astronaut coming out of Baton Rouge. Let me tell you another little incident now, Mr. Justice. Let me tell you no one -- well I'm not trying to be fastidious with the Courts I -- I -- Hugo L. Black: You conceded. Jack P. F. Gremillion: I really was trying to tell you what it would be. Now, we have a case that I'm sure it's going to end up here. I have a Negro in Louisiana charged back with rape. Tom C. Clark: Yes. Jack P. F. Gremillion: And he claims that his constitutional rights have been violated because Negroes have been systematically included in the jury pounds and he wants to be -- he wants to be tried by an all white jury. Now, he had one for the books. So I'm only bringing that out to tell you what the policy of my state is what the custom has meant. And it hasn't been enforced by white people. It always been enforce by Negro thought as well. We've got a little community down at Houma, Louisiana which is sort of an Indian tribe. A mixture of French and Negro and they've got their own school, they want their own school, they tell the School Board they want nobody else in there, they don't want white people. They don't want colored people. They don't want others. They want their school. Those are things that are just innate. Those are the things that are positive and there's no law that requires them. They just do that. They segregate and state onto themselves. Yes, gentlemen this is a serious question. I realize that all of these cases are ticklish because they involve prejudices and we've got prejudices all over the United States not only in the State of Louisiana. In fact, I'd we've got more throughout the United States and we have in our State. We don't -- we don't try to hurt anybody. I don't issue opinions in my office. This opinion is for black and this opinion is for white. I don't have segregated signs in my office. I receive all the races in my office Mexican, red, green and all, the Irish. Earl Warren: But General said in -- Arthur J. Goldberg: (Inaudible) of what has happened, then what the Mayor was saying in his statement was, that it was not conducive to the best interest of the city to have these segregated eating places in New Orleans. And therefore, he was instructing the Police Department to prohibit any effort to desegregate restaurants, isn't that what he was saying in effect? Jack P. F. Gremillion: No, I don't think so, Your Honor, because he did say that he knew of no integrated eating places as well as the chief. But I come back to the fact when you read his statement in view of what had occurred, what was in the papers about the sit-ins in the rest of the cities and about the two that it already happened in New Orleans. That he was a appealing to the prior, to the intellect, and to the peace loving people of the City of New Orleans. And that that's all that he was trying to do. And now the reason I say that is because if he had met otherwise, he had the power to take police in station him McCrory's, in Captain (Inaudible), in Woolworths, in Kress, and all of those stores, but he did not do that. He allowed those people to conduct their business as they wish and as they saw fit. And that is further proven by the facts that this is in the Government's brief and Mr. Nelson admitted it yesterday. That these storeowners have gotten together and decided they were going to open the lunch counters to everybody which was done just recently. So -- Byron R. White: General (Inaudible) the action of the store? Jack P. F. Gremillion: No. No, it is not. There is no one -- there's no evidence showing any connection whatsoever between the Mayor's statement and the fact that the store manager knew about it or that he used the Mayor's statement as the basis of his decision. Byron R. White: Well, the only -- the only -- is the only fact that the storeowner that he was following local custom? Jack P. F. Gremillion: The storeowner said he was following local custom as determined by him. And that he had followed that policy for years, and that he had followed it with other cities and if that was his prerogative, and he is alone. Byron R. White: Is there any evidence that he knew or heard or being -- Jack P. F. Gremillion: No. Byron R. White: -- read the Mayor's statement? Jack P. F. Gremillion: No. There is no evidence. And I stated that earlier, Mr. Justice, there is no evidence to that effect that I know of. Earl Warren: You didn't say in this case -- didn't the storeowners say that he was following the local custom law and something else? Jack P. F. Gremillion: Oh yes, because that was his instruction -- Earl Warren: So he was -- he was following the law? Jack P. F. Gremillion: No. But we had no law. You see that's his statement. Earl Warren: What -- Jack P. F. Gremillion: That his statement though tradition law -- Earl Warren: Yes and you would found that (Voice Overlap) -- Jack P. F. Gremillion: Because in other -- because in other (Voice Overlap) -- Earl Warren: -- you finally have -- Jack P. F. Gremillion: -- Mr. Chief Justice upon of it -- Earl Warren: Yes, go ahead -- Jack P. F. Gremillion: -- this is important. Because in other communities such as a case we have here, you do have laws. And that's what he was talking about. There was no state law written or unwritten on this particular subject. Earl Warren: Well -- Jack P. F. Gremillion: He was exercising his own right of choice. And there is no connection? Earl Warren: Justice -- Jack P. F. Gremillion: -- whatsoever. Earl Warren: -- Black was just pointing out to you a few moments ago that whether the law in specific terms required such a conduct that if the administration of the authorities were such that it did that it constitutes state action. And here they wouldn't even let the counsel for the defendants interrogate the owner as to what his conversations were with the police prior to the time that this all happened? Suppose they have discussed -- Jack P. F. Gremillion: But didn't -- he said in the record that he hadn't talk to the police if I'm not mistaken. He said he hadn't talk to the police. The police didn't tell him what to do. That was brought out here in the trial of the case. He ask -- he talked to the policeman, he says, What must I do? And the policeman says, All you can do is to ask them to leave. And he says, but he had already done that, do you understand? Earl Warren: No, I don't quite understand. That I didn't quite understand in that way, General. I thought that -- Jack P. F. Gremillion: Yes. Earl Warren: -- Mr. Nelson wanted to inquire what the relationship between the manager and the police was before this thing happened and the trial judge would not permit him to answer the question. Jack P. F. Gremillion: Well -- Earl Warren: But -- Jack P. F. Gremillion: Let me say this -- Earl Warren: -- whatever it is, if it's in the record we have it, don't worry. Jack P. F. Gremillion: But if -- if it was -- if it was denied to him. If I would've been defending those people, I would sought some other way to get it in. And I don't think that Louisiana should be held responsible for the negligence of -- because the attorney is competent as my friend in Louisiana maybe. Earl Warren: But you would have thought it was immaterial? Jack P. F. Gremillion: No. Not if I have been an Assistant District Attorney or if I had been a judge, no, because it was not sufficient to prove the material or the res gustae, or the essential allegations for a conviction. And in that, I know Judge Clark very well. By the way, you -- Speaker: (Inaudible) the evidence we have here. There would still have been left the question of whether or not the storeowner was or wasn't exercising his own choice. Jack P. F. Gremillion: But that was proven, Your Honor. That was proven. That actually was proven that he alone made that decision, that's in the record. Hugo L. Black: But this unlike many other defendants as I read the record. He didn't want to stand on but it didn't set up at time, he wants to offer another evidence and show that was not (Inaudible) and if that's true, if it was the choice of the Mayor which he follows rather than his own, then of course the principle on which you stand, the owner has a right to act on his own judgment wouldn't apply, would it? If it was the choice of the Mayor rather than the -- and the police rather than -- Jack P. F. Gremillion: Oh yes, I see what you're getting that. Oh yes. If the Mayor had sent instructions out by public and so forth, and said, Now look, you don't let anybody come in here that would have been state action, there's no doubt about it. Hugo L. Black: There is one thing -- Jack P. F. Gremillion: But that did not happen in this case. Hugo L. Black: If one thinks that the record leaves that question unanswered because the Court right -- have mistaken there are -- whatever it was, made or mistaken and not let evidence get in, then of course the case should be reverse, doesn't it? Jack P. F. Gremillion: Well, I don't see that it should be reverse. Hugo L. Black: Well, I understand that (Voice Overlap) -- Jack P. F. Gremillion: Sent back if there is crucial evidence. Byron R. White: General (Inaudible), I don't let anybody in the store and the department store hadn't anyone in the store into the lunch counter. Jack P. F. Gremillion: That would have been state action. Byron R. White: Well it would have been a state action because you still have a question left of the -- of whether or not the storeowner say, I agreed with the Mayor no matter what the Mayor said I would have done anyway. If he had told me to let them in, I was going to leave that and I was going to keep them out. Jack P. F. Gremillion: Well -- Byron R. White: Isn't there still -- has the question of whose will, whose decision it was? Jack P. F. Gremillion: Well now, I don't think so, Mr. Justice White, because the -- all of that was thoroughly going into both on the motion to quash and both on the trial of the cause that Mr. Nelson cross examined Mr. Barrett and Mr. (Inaudible) very, very thoroughly and that was brought out. Byron R. White: So you would say then as to that -- Jack P. F. Gremillion: That the question of what the National Policy was kept out of the record -- Byron R. White: You will say then that if there was -- if there was an expressed, there was an expressed statement by the Mayor, some other official ruling or directive to keep Negroes out of lunch counters that that implements it. Jack P. F. Gremillion: Oh yes. Byron R. White: When they keep it up -- when they keep him out no matter whose decision it was after that, you would say that -- that the -- Jack P. F. Gremillion: If there had been some showing that the Mayor or even the Chief of Police said these things -- we're not going to permit him, we're going to put police at the doors. You were instructed to call us immediately and we will arrest them for you, yes that could be state action. Byron R. White: Well as long as the -- as long as the Louisiana had had a state law or a municipal ordinance forbidding the storeowners to let Negroes come to lunch counters. That would -- that would indicate as far as you're concerned. Jack P. F. Gremillion: Oh yes. But we don't have such a statute and we never -- Byron R. White: Regardless of whether -- it would have been constitutionally unsound. Jack P. F. Gremillion: That's correct. But I'm -- I will repeat. We have no such statute, no ordinance and we never had. Byron R. White: Yes. Earl Warren: Mr. Nelson. John P. Nelson, Jr.: May it please the Court. I was on Mayor Morrison's staff for four years as an Assistant District Attorney fully aware of the problems involved in Mayor Morrison's administration. I might not point out to Court that the reason why they have a sign on Negro motels by colored only is because of a state statute that segregates inns, hotels, and places where people go in. The Attorney General must have forgotten above that statute or overlooked it. Earl Warren: Is that statute in your brief? John P. Nelson, Jr.: No, it is not sir. But it's still in full force and effect and it's one of the reasons why the New Orleans hotels have never desegregated specifically mentioned. Earl Warren: Would you mind giving us -- would you mind giving us a citation of that, Mr. Nelson? John P. Nelson, Jr.: I will. It's in the Government's brief -- Earl Warren: Well it's in the Government's brief -- John P. Nelson, Jr.: Yes. Earl Warren: Yes, very well, never mind that we -- Hugo L. Black: Would you say that that occurred? John P. Nelson, Jr.: It's never been repealed. It's on the statute right now. Hugo L. Black: But did you say precisely what it could do? John P. Nelson, Jr.: It segregates hotels. The Negro and white cannot live under the same roof together in Louisiana in a hotel in -- today. And that is not a question of state policy and the reason why this man would leave Baton Rouge as fast as he would because the police would have ejected him not because of -- Hugo L. Black: Would that apply to a store? John P. Nelson, Jr.: Sir? Hugo L. Black: Would that apply to a store? John P. Nelson, Jr.: Sir? Hugo L. Black: Do they have one covering of the store? John P. Nelson, Jr.: No sir, they do not. Another thing, please gentlemen, if you send this case back, give us some directives, some limitations within which we can try this case. To try cases like this in Louisiana courts today from a defendant attorney standpoint is a trying ordeal. Particularly when you get the Attorney General of the State that makes statements above race rights due to picketing and maybe that's what Mayor Morrison was referring to, you know what the picketing consisted of? One picket walking on a sidewalk behind Woolworths on Ardebil Street was arrested. This is the man that represents him. This case is now depending before the Louisiana Supreme Court. This is the case that the Attorney General said it was about to cause race riots and massive picketing, and people picketing push -- pickets pushing people off the sidewalks in the French Quarter, one picket. Now, there is a -- there is a great deal of play in Louisiana in politics. The statement is when you run for political office, you play in South Louisiana and you pray in North Louisiana. Now, this same thing is being done here. We say one thing in New Orleans and thing here. And the thing is, is that we are trying to somehow to get into the main stream of a legal life that's going on in United States in Terrebonne Parish the unions. Do you think they want to segregate themselves? This is about -- a case is just about the store, it's five Indians. You know, they force an Indian to go to an Indian school. They can't go to Negro school or white schools in Terrebonne Parish. This is not an Indian reservation. You know they can't go in high school in Terrebonne Parish. They've got a two room grammar school there. And when they want to go to high school they have to tree hours to another parish. Do think they want this as the Attorney General would have you believe? Members of this Court, basically, this is not a question to eat a hotdog with a white man. This is a protest and dissent in an effort to change attitudes to try to develop that consciousness of a community to choose justice and equal treatment. Basically that's what this is. Potter Stewart: (Inaudible) the restaurants are now intergraded, is it not? John P. Nelson, Jr.: Yes, sir. Potter Stewart: So the attitudes that have been change and so far as conduct reflects attitude? John P. Nelson, Jr.: The attitudes in the city New Orleans have greatly changed. If by step across the parish line it has not changed just one walk away depending upon where I am. And there is no question that in the -- in the City of New Orleans the attitudes have been changing. That's -- Arthur J. Goldberg: Mr. Nelson, your answer in the hotel situation. I thought that the Attorney General statement was the correct one that the State have previously had statute banning segregation or the requiring segregation and he have appealed that statute, isn't that correct? John P. Nelson, Jr.: On hotels and motels are desegregated, now am I mistaken, Mr. General? They say, they have a statute in full force in effect to be segregated. You mean Negro can walk into the Roosevelt Hotel? William O. Douglas: No statute -- no statute covering the integration, the public integration of motels and -- Arthur J. Goldberg: Well, I don't want to belabor the point but I -- I have though that what happen said was that there has been a statute requiring segre -- requiring this segregation. Opening inns to everyone and their statute has been repealed. John P. Nelson, Jr.: That's correct. Arthur J. Goldberg: Now, the law now stands there are no statute at all. John P. Nelson, Jr.: Well, you're talking about a -- the little civil rights statute that we have. Arthur J. Goldberg: Innkeeper statute. John P. Nelson, Jr.: If there was until 1954 when it was repealed. Arthur J. Goldberg: That is correct. John P. Nelson, Jr.: But today hotels are segregated by statute in the City of New Orleans and the State of Louisiana. Arthur J. Goldberg: I don't find such a statue quoted in the Government's brief. John P. Nelson, Jr.: Well, in any event, I will -- I will correct that if I'm mistaken. If I see -- Earl Warren: If you find such a statute, will you make a memorandum of it with the Court please. John P. Nelson, Jr.: I will. If might -- or to New Orleans City ordinance he says, -- but any event I will correct that. If I might just sum up in a hurry, as I see to this Court the job, the issue here there are three: Number one, the determination of state action in these cases, number two the question of defining the limits within the which a protest might be made in a store which is open to the general public and in defining those limits, you also set a limitation on the power of the State to prevent that particular right being exercised, and the third is brought by Justice Douglas, the question of whether there is state involvement per se in the operation of a store such as McCrory's or Kress or Woolworths. Now, in so forth -- Hugo L. Black: How could you distinguish between McCrory and Woolworths? John P. Nelson, Jr.: No sir, they are not. Hugo L. Black: -- that's for the store. John P. Nelson, Jr.: -- it's the same, they're identical. They're identical. Hugo L. Black: Whether that's corner store where the man lives in it or didn't live in it? John P. Nelson, Jr.: That there's no one who lives there it would -- Hugo L. Black: I know but you would -- if it would apply to McCrory's and the other, it would have to apply for the smaller ones, wouldn't it? John P. Nelson, Jr.: It would apply to any store open to the public. Hugo L. Black: That's right. John P. Nelson, Jr.: Now, I do not say we don't have to cons -- we do not have to concern ourselves with the question of whether the Metropolitan Club or the Boston Club in the City of New Orleans because you have an element of privacy there. You have an element of privacy that you don't -- you do not have in McCrory's or Woolworths, or Kress. And that element may make a tremendous step and so here we concern ourselves with a piece of property that's open to the entire public. That's the -- that's a public store affair that men have given up their rights to any type of privacy in it. I -- so the question is on that issue -- William J. Brennan, Jr.: A retail house there is not being a home? John P. Nelson, Jr.: No sir. So on -- on that issue, the question that we're looking for that -- if this Court -- if this case is sent back specifically looking for guidance is whether or not these kids who have protested on this open property or exercising a First Amendment right, and whether that right will be preferred to the corresponding property right of racial discrimination that a man may have, which would of course then be exercised by prosecution and subsequent sentence. I say if we start with Marsh and which was no state action a privately owned town in Marsh. And as I appreciate the case -- Hugo L. Black: Marsh, as I recall it, didn't say that a state couldn't have laws that are against trespass, they have to warn you of leaving the property after notice. John P. Nelson, Jr.: No sir. But the way I read the Marsh with the privately owned town of Marsh but no state involvement. This was the day -- this was set up as a characterization of a particular piece of property so as to define the limits of legal rights being exercised on it, apply that to McCrory's. And then we come up to date on the Shelley versus Kraemer. And I submit that on the basis of these two cases, as far as I appreciate the jurisprudence, we can come to an answer -- we can come to the -- to the legal conclusion that the preferred right of these kids to demonstrate in a manner in which they did, and the circumstances which were -- within which the act took place and the environment that covered the whole thing that to be accused of trespassing was a depri -- was a violation of their Fourteenth Amendment rights. Hugo L. Black: May I ask you just one thing. I don't -- I want to see just the exact link of the argument you've just made. John P. Nelson, Jr.: Yes sir. Hugo L. Black: Are you saying that the State is without power by reason of the Federal Constitution or that owners of property of the store were unable because of the Federal Constitution to decide who they'll sell and who they want to sell and the conditions under which they will serve customers of the store. Do you have to go that far in this case? John P. Nelson, Jr.: Because of the strong state action in this case -- Hugo L. Black: Well that -- John P. Nelson, Jr.: -- I think we can go that far. Hugo L. Black: I understand. I understand that fully. But the issue, basic issue, when you get to bottom of some of these cases here whether an owner of a store can do this and whether because he has a right to do it, the State can call its officials to help enforce his legal rights. John P. Nelson, Jr.: In McCrory's, or stores open to public. Hugo L. Black: Well, all stores open to the public. John P. Nelson, Jr.: Well not -- not the Morrison's cafeteria in the city. They stopped at the sidewalk. I wouldn't say that it was open to the public, not Saenger Theater. It's a property that's vested -- it has a public faculty about it. But it's really not open to the public and they might -- they put on white only sign the barbershop that might want just to wait on white man. The manicurist -- Hugo L. Black: Could they say that? John P. Nelson, Jr.: Sir? Hugo L. Black: Could the barbershop say that? John P. Nelson, Jr.: Could he say it? Hugo L. Black: But the Fourteen Amendment forbids the barbershop saying that. John P. Nelson, Jr.: Well Your Honor they -- Hugo L. Black: That it will serve only white or serve only colored. Why does your argument take it too on the case of that county? John P. Nelson, Jr.: I won't -- well we're not -- I haven't. Frankly, to answer your question I have not thought that through yet. Because they have an element of privacy -- of privacy, an element of privacy in there, that we don't have in the McCrory type situation where you -- Hugo L. Black: But I find a bit trouble to myself. It's maybe because I'm too liberal. But I find a great trouble myself seeing some store, some merchant dealers down there can choose their customers and some cannot. It would seem to me that if the man and the country place could by his door is wide open to everybody who wants to come in and you tell them not to. He would be governed by the Constitution on that just the same as McCrory or if the Constitution forbids him to choose his costumers on account of color. John P. Nelson, Jr.: Sir, if the -- if that is the predominant right, every, every dispense of a goods of the City of New Orleans could refuse to serve every Negro, at what point then -- Hugo L. Black: Well, are you -- are you saying that the Federal Constitution without any legislation to back it, bars a merchant from following that course, that is, as I understand it, it's ultimately the basic issue that would sometimes have to be reach in some of these cases, maybe not indeed? John P. Nelson, Jr.: Not indeed, sir. And insofar as the -- as to whether the Constitution would prohibit a manager from actually serving the costumer I would approach it on this that I believe that the Constitution would prohibit a Negro from protesting at that very counter if it's open to the public, that he'd not be serve. And that for that protest I don't think he should be -- the Constitution keep him out of jail. Hugo L. Black: The question behind that would still be whether he can go into a mercantile establishment against the will of the owner or stay there against the will of the owner in order to make his speech of protest. Are you saying he could? John P. Nelson, Jr.: Absolutely, under circumstances of which these demonstrations took place I say this was free speech and they were invited in and they can do it. I respectfully submit that they can. Byron R. White: I understand with reference to your argument, that you are in fact saying that no matter what how you answered the question of whether or not a storeowner has the right to discuss it -- that it's unquestionably clear that the State has no right to chose them for it, and that in this case, the State chose them for it. John P. Nelson, Jr.: That's right. Byron R. White: That is one of your -- one branch of your argument. John P. Nelson, Jr.: That's correct. Byron R. White: And if you're correct on that whether these other questions are in the case. John P. Nelson, Jr.: That's correct, sir. Byron R. White: Is that true? John P. Nelson, Jr.: That's true. Byron R. White: And it's only if you answer that question in a certain way that you must reach the other branch of your argument you'd stated today in which I didn't understand you stated yesterday, that a store is such an establishment. That it may not discriminate because a store per se is a state action for the purposes of the Fourteenth Amendment. John P. Nelson, Jr.: That's correct. But with the requesting of court possibility that this case may be sent back for a new trial. And I would respectfully request that that'd be done, that these questions in this case of these issues be defined so that we'll have some guidance to prevent the reappearing in 1964. Hugo L. Black: May I ask you if we sent back under Louisiana law whether it would now be moot since all of the stores are permitting them to come in? John P. Nelson, Jr.: I don't think that we -- Hugo L. Black: But I -- John P. Nelson, Jr.: -- I don't think the governor would dismiss these cases. The environment is not -- that I don't know. I -- I'm sure it would be moot, be a question of whether the District Attorney would want it just arbitrarily nolle prosequi the cases. Hugo L. Black: But if they're -- would be moot then, they're moot now. John P. Nelson, Jr.: Well I don't -- there is -- there is a jail sentence facing these kids -- Hugo L. Black: Well, there still would be but how would it change if these cases were sent back how in terms of mootness would the situation had been changed? John P. Nelson, Jr.: Well, if they know mootness insofar is concerned. Hugo L. Black: (Voice Overlap) I mean that somebody has to take some actions before the State would do that? John P. Nelson, Jr.: That's correct, sir. Hugo L. Black: But if there had been a statute in that state which forbad this to be done, and the State had changed it, many states hold under those circumstances the pending actions obeyed cannot presume the same thing would be through of the judgment. Although not a statute, it's a common law it -- it's a custom. The law has been forbidden and that law changes, their custom changes, the practice of the State changes, the State could well hope if it wanted to and it might that all actions pending on it had obeyed it, but that was the question. John P. Nelson, Jr.: Your Honor, of course they -- Louisiana and I respectfully submit it would not because it depends -- would not, because the pendency of absolved. Hugo L. Black: If we affirm this judgment. We have to do it on the basis on the assumption that this person goes to jail. John P. Nelson, Jr.: You would. There's no question -- Tom C. Clark: Perhaps the governor would be soft-hearted in pardoning for something. We couldn't make that assumption. John P. Nelson, Jr.: No sir. Because of the fact there's -- the pendency of so many cases in Alexandria, in Shreveport and in other areas in Louisiana where this is still a vital issue. Thank you. Earl Warren: Very well, Mr. Nelson.

Earl Warren: 90, 95, 98, 99, 100, 101, 102, 105, 117, 181, 261, 262, 266, and 388. Mr. Merrill. Bruce R. Merrill: Mr. Chief Justice Warren, Mr. Justices, if it please the Court. I'm arguing for Continental Oil Company and Midhurst Oil Corporation. Of the many extremely important issues raised in the Permian Basin Area Rate Cases my argument is restricted to three issues which I believe to be the very foundation of these cases. These three issues go to the theory and method of produced regulation. My argument accepts the legality of producer regulation on an area and a group basis provided such regulation is not arbitrary, discriminatory or capricious that producer petitioners that will follow me in argument and the producers who are respondents only, who would follow them addressed themselves to different issues. A conscientious effort has been made to ensure that no issue will be argued by more than one producer counsel. Earl Warren: May I ask you if you're in Court with all of your colleagues on that preliminary statement you just made? Bruce R. Merrill: I believe I am Your Honor. Earl Warren: Yes, I just want to know if there's any contrary between -- Bruce R. Merrill: I believe not Your Honor. Earl Warren: Yes. Bruce R. Merrill: Historically, the Commission had determined rates on utility rate base, cost to service method. Inherent in this method is a clear foreseeable relationship as to any particular service to be rendered for each utility entity and the cost of rendering that service. A certain number of dollars will provide a service for which a certain rate must be permitted. This is the heart of utility regulation and this system has worked very well in the utility industries. When this Court held that the Natural Gas Act applied to the producers of natural gas, spokesman for this industry vehemently urged that this industry was no count whatever to a public utility and that a utility method of regulation could not successfully be applied in the producing industry. The Commission staff urged rejection of this pleads. After all, it was expert in utility regulation that knew they were they method. This ideological battle weighs for seven years while the producers thought cost to service regulation and urged the method of regulation based upon the consideration of the economic characteristics of and the economic factors that work in the producing industry. Producers argued first that the cost of gas cannot be determined like the cost of public utility service with little joint cause but for gas in a joint product with oil and with natural gas liquids the best that could be done was to estimate the cost of gas using some cost in formula in flowing wholly arbitrary allocation method that allocates the joint cause. In no real sense could the cost of gas actually be determined. The producers argued second that the Commission owed a duty to induce an adequate continuing supply of gas for the interstate consumer and that even if the cost of gas could be determined, a cost determined rate could not perform the function of a listening supply due to the lack of relationship between expenditures and results. The forcibility, the dollars of input, the output and the rate that would provide an adequate return so characteristic in the utilities was absent in the producer industry. Nonetheless, during these seven years, the utility rate based cost of service method was employed by the Commission while each side shamelessly computed cost to service studies designed to yield a desired cost result. It was readily apparent that the joint cost constituted such a large percentage of the total cost that any desired cost result could be obtained and was obtained. Finally, the Commission recognized what foolishness this was. Concurrently with the second Phillips opinion, the Commission issued a statement of general policy in which it announced it was abandoning individual regulation in favor of regulation of an area and a group basis. For as reasons stated in the second Phillips that in the experience of the Commission and I've hoped has shown beyond any doubt that the traditional original cost, prudent investment rate base method of regulating utilities is not a sensible or even a workable method of fixing the rates of independent producers of natural gas. Producers of natural gas cannot by any stretch of the imagination be properly classified as traditional public utilities. Their result finally reached may give the illusion of accuracy since mathematical processes are involved and a definite prize for Mcf is the final result. But such a result must be tested against the realities of the marketplace. Thus, prices calculated solely on the cost rate base principle cannot be accepted if they are higher than a buyer pay or lower than the seller will accept when an unrealistic result is reached, they formulate for allocations must be changed in order to bring about a reasonable result. The allocation method has then become a means of supporting a result already arrived at rather than a means on arriving at a result which was previously unknown. From the foregoing, it follows that effective regulation of the price of natural gas must be on some more manageable plan than the rate base method.” Speaker: Where do that come from? Bruce R. Merrill: This comes from the second Phillips decision of the Commission, Opinion Number 338, Your -- Mr. Justice Harlan. Earl Warren: What -- Bruce R. Merrill: The opinion of -- Earl Warren: -- year was that? What year was that, the -- Bruce R. Merrill: That was 1963 I believe. Six -- 1960 right, it preceded the -- Earl Warren: 1960? Bruce R. Merrill: Preceded the commencement of the area rate proceeding, yes Your Honor. At this point in time, the Commission was -- Potter Stewart: Was that in the -- that's in a item -- opinion of the Commissioner's there or in the brief for Commission in this Court. Bruce R. Merrill: No, that is in Opinion Number 338 of the Commission commonly known as the second Phillips decision. Potter Stewart: And then that case came here? Bruce R. Merrill: And -- yes Your Honor -- Speaker: That was the one -- Bruce R. Merrill: -- that case came here. Speaker: -- that's involves -- Bruce R. Merrill: And that's the one of which you have found the Commission and its filings that it need not use cost of services in its regulation. Potter Stewart: Well that was the first Permian Basin case, wasn't it? Bruce R. Merrill: No, that was the forerunner of the Permian Basin case Your Honor. Potter Stewart: Oh, no I -- Bruce R. Merrill: At this point in time, the Commission was completely correct and was supported in such findings by this Court in its second Phillips Act opinion. The Commission found that true in an order ruling on evidence to be considered in these proceedings, proscribing cost of service evidenced on either individual or a group basis. Subsequently however, there were important changes in the composition of the Commission and more than a year after the first ruling, a second ruling issued in which cost to service was to be permitted on a group basis. Such composite studies that the Commission found may not suffer from the same deficiencies as similar cost that is on an individual basis. The Commission should have known that its findings respecting unit costing would be as true for composite and area costing as it had been for individual costing. Abe Fortas: Well, do -- Bruce R. Merrill: Now -- Abe Fortas: Why is there -- Mr. Merrill, was there also a change in the underlying facts that is to say, when did the directional technique of -- for finding gas oil -- gas oils of -- become an important factor in the industry? I don't know, let's review our -- Bruce R. Merrill: Mr. Justice Fortas -- Abe Fortas: But here you ask that (Voice Overlap) -- you heard the argument on that. Bruce R. Merrill: I don't think anybody could put their finger on a point in time when directionality became a matter of significant change in the industry. Actually, a directionality is only the consequence of the amassing of drilling history so that the --you drill enough wells in one area and get the certain product as result of that drilling.You know that if you go to drill in that area, you're going to find either oil or gas -- Abe Fortas: I understand that -- Bruce R. Merrill: -- and it just cumulates it. Abe Fortas: -- but I suppose -- let's supposed there did come a point of time that would show -- let us say a majority of the gas that were sold was a gas-well gas, is that right? Bruce R. Merrill: Yes. Abe Fortas: And can you approximate that point of time for us? Bruce R. Merrill: No Mr. Justice Fortas, I cannot. I know that the -- Abe Fortas: You think it was in the Sixteenth -- Bruce R. Merrill: The national result is the reverse of the Permian Basin result but -- Abe Fortas: But would this have happened after the statement made by the Commission on the second Phillips case? Bruce R. Merrill: I doubt if gas-well gas on a national basis ever exceeded, I mean that they're all oil gas on a national basis ever exceeded gas-well gas. I believe there's always been -- Abe Fortas: Alright, well let me just state to you what's running through my mind. I don't know whether its sound. But what's running through my mind is that the impression of the argument -- from the argument yesterday that there came a point of time when gas-well gas became a predominant importance in the industry. And the possibility that because of that change in the characteristics of the industry, a quotation that you just read from the Commission's second Philips case may not have had the same opinion, say in the same thrust that it had at the time that the Commission wrote that. Now -- Bruce R. Merrill: If that's -- Abe Fortas: Is that so or not? Bruce R. Merrill: If that is so Mr. Justice Fortas, then it not be consequence of the predominance of gas-well gas. It may have some variant on the fact that the industry alleged for the first time during the course of the Permian Basin proceeding that it posses these directionality. But it really -- Abe Fortas: (Voice Overlap) Bruce R. Merrill: -- really shouldn't have any bearing on the regulatory method insofar as the use or not -- non-use of cost. Abe Fortas: Yes, I'm just trying to get the opposing contentions bear in my mind and if I correctly understand the situation, perhaps very likelihood I don't. At a time when the industry was dominated by gas that was produced jointly with oil, say, the Commission made the -- that at that time, the Commission said that the use of a cost data is not feasible because of the necessarily arbitrary characteristics of allocating joint cost. Then there came a point of time when it was not gas and association with oil but gas that had been produced more or less independently of oil. At that became dominant in the industry and the question that the arguments today and what you've said here raised in my mind is whether that may have made a difference in the logic of the Commission statement in the second Phillips. Bruce R. Merrill: In this sense of the word Mr. Justice Fortas, it does, because the Commission after they accepted the proposition that there was directionality in the industries they were -- then we will endeavor to cost gas-well gas only leaving out of the cost data and the cost mass, the figures relating to oil well gas. And therefore, we will limit the allocation product. But to keep it in focus, the allocation column still goes to 55% of the cost even under the current cost of gas-well gas. Earl Warren: Was there a date where you could reasonably say that the emphasis had shifted to gas-well gas rather than the other? That's all, I think that -- just support (Inaudible) -- Bruce R. Merrill: I think not Your Honor -- Mr. Justice -- Chief Justice Warren. Earl Warren: Then -- and then you take the position that they are -- the other side is possibly wrong on the states that there was such a shift? Bruce R. Merrill: I don't believe the other side Mr. Chief Justice Warren quite said that. I think that they said that the industry showed an ability to search directionally at a point in time, which was during the course of the Permian Basin hearing. I do not believe that they said that the importance of gas-well gas as compared to all of the gas that there was any shift in that at any point in time. And I do not believe that that is the case. The Commission went from out -- not at rejection of cost to service as a producer regulatory method to have a permission to adduce cost of service evidence on a group basis to predicate in this decision entirely upon unit cost estimations. And this was done in the phase of the fact that composite costing surface from all of the deficiencies of individual costing has all the same opportunities to arrive at any desired result. But even worse, suffers from the additional deficiencies of inadequate and inconsistent data and data sources. This course of action was also taken in the face of the fact that the Commission admitted in its opinion that two-thirds of the Permian Basin gas, the gas produced from oil well could not be -- I mean, if they cost even on a composite basis. Mr. Justice Jackson, with rare foresight, foretold the dilemma which must result in an effort to regulate the producing industry as a public utility. In FPC versus Hope, 320 U.S. 591, he -- it was perceived, the fundamental difference between the utility business of providing an inexhaustible service and the finding, developing and producing of irreplaceable gas at an unknown cost. The consequence of the relationship between inputs and outputs, sole characteristic in the utilities and so absent in the producing industry was clear to him. He said the service was to be measured by what was got out of the ground not by what was put in the ground and that there was no more relation between investment and result in a game of poker. He thought it easier to directly determine the fair market value of gas than to indulge in a round about way of rate based price fixing. A year later, in Colorado Interstate versus FPC, 324 U.S. 581, Mr. Justice Jackson was in even more prophetic. There he indicated he had not buy the end result test as to catch all solution to all problems nor the necessary correlative velocity that they -- and justifies the means. This was especially true where as in the rate of -- natural gas rate making the use of rate based figures was a little better than to draw figures from a hat. He bemoaned his lack of intuitive knowledge by which he may determine -- may decide that a rate so determined was just and reasonable. In that case, he laid down the foundation of what became the regulatory method advocated by the producers. He said and I quote, “Foresight of gas rate regulation will concern itself for the present and future rather than with the past as the rate base formula does.” It will take account of conditions and trends at the source of the supply being regulated. It was used price as a tool to bring goods to market, to obtain for the public service that needed amount of gas. Once the price is reached, that will do that. There is no legal or economic reason to go higher. On the other hand, if the supply is not too (Inaudible) and the price is not a sufficient incentive to exploit it and fails to bring forth the quality needed, the price is unwisely low even if it does square perfectly with somebody's idea of return on a rate base. Before going into the supply consequences of the present regulatory method, I will quickly enumerate the reasons why rate based regulation they produced in the industry is arbitrary, discriminatory and unlawful. One, the cost of gas as distinguished from the cost of the utility service cannot be determined. Two, a rate fixed at any estimated cost can perform the economic function of a listening supply only as the consequence of accident, such there's no relationship between cost incurred and supply added. Three, if a cost determined interstate rate is less than or equal to a free market determined in cost state rate available gas supply will tend to move to the intrastate market. Four, cost based rates are not amenable to the judicial review to its participants in a producer area rate proceeding are entitled. The Tenth Circuit said and I quote, “In arriving at the Permian Basin rates, the Commission used many sources of cost information that producers attacked these sources on many invalid grounds to take up each of these objections would increase the rate of this opinion to encyclopedic dimensions. From the information so obtained, the parties, the staff, and the Commission made many competitions and reached many results. The assumptions, allocations, formula, equations, averages, means, and massive calculations they intrigue a mathematician or a statistician but they have no attraction for us. We respectfully declined to be drawn into such a turmoil of numbers. We cannot in a few months unravel as null of statistics developed in the years of hearings.” A regulatory method which is too massive and too complicated to permit appellate review can hardly be deemed a valid method. And the end result test fails because the only thing against which the end result may be tested is the untested cost result. Five, cost to service discourages exploration because it uses past calls to set future rates without any adjustment contemplation. Sixth, in periods of declining explorations such as over the past 10 years, successive cost to service studies will use successively lower cost results which in turn will inspire further reduced exploratory expend -- investment. While each of these studies well appeared to provide the industry with the return, it is in fact liquidating in the day of gas shortage and gas ration and is being advanced. Seven, cost to service estimated area by area will discriminate against those consumers who draw their supplies from high cost areas and discriminate in favor of those consumers withdraw their supplies from low cost areas. Eight, the cost of gas has no relation to the commodity value of gas. To those members of the Court who may have a copy of my brief before them, I respectfully direct your attention to page 29 where all appears a most illuminating table. This table plainly tells us that under the empathies of Commission regulation, we are slowly running out of gas. However high, the Commission is to be graded, for providing the consumer with low rates for gas, it is lacking in providing the consumer with an adequate continuing supply of gas. Column B shows the plunge in successful exploratory drilling for the years 1960 to 1966 from 868 in the former years steadily down to 578 in the latter year. While in absolute figures, the total reserves in Column C show us nine increase, increase is nowhere near as great as to increase in actual demand showing in Column E with the attendant continuous decline in the proportion of reserves to production so in Column G. I wish I could tell this Court at 1967 would reverse this trends but I cannot. In 1967, successful exploratory well is drilled, will be down to only 445 if the percentage decline for the first nine months of 1967 compared to the first nine months of 1966 continues. Actual demand will be up to 18.4 trillion cubic feet. The reserve to production ratio will be down to only 15.7 to 1. This is practically down to the 15.5 to 1 which was the lowest figure that any party to these proceedings ever suggested it was safe to allow. If these trends are not reversed or rested, it is frightening to ponder what the supply-demand relationship to future prospects will be by 1970, only three years away. These are the economic forces that are working (Voice Overlap) -- Potter Stewart: What is the ratio in the oil industry here in United States? Bruce R. Merrill: The oil industry, it has run generally by 12 to 13 to 1. Potter Stewart: And (Inaudible) -- it's been rather steady. Bruce R. Merrill: And cost that way for decades Mr. Justice Stewart. These -- the economic forces that worked in the industry, they are plain to see, they are easily evaluated at any point in time and they cannot be ignored in the process of ratemaking. The Commission's dual price rate design is demonstrably wrong and unlawful in several respects. One, the dual price system itself does not provide incentive as claimed by the Commission. A single high enough price will provide incentive. And incentive will not be supplied by prices which are too low no matter how many price differentials are provided according to dates of commitment to the interstate market. Abe Fortas: Mr. Merrill, is there a different -- a legal distinction between the Commission's job and the job of their reviewing forth with respect to this consideration? That is to say, you argue and I think understand it, that an incentive -- price incentive has to be provided in the rate structure in the national intrastate, I quite understand that I think. The question is does a -- does that consideration apply with the same vigor in terms of the reviewing court's function as it does in terms of the administrative agency, that is to say are franchises not total that completes franchise? What your -- what do you say about that? Bruce R. Merrill: Mr. Justice Fortas, I think that in the first instance, it is up to the regulatory agent to provide the regulatory system and the rate structure over that sort of thing. I think that in the file analysis is up to the Court could give the Commission guidance whether it is demonstrable that the Commission has come up with a system that is unworkable or arbitrary discriminatory. Abe Fortas: Well, (Inaudible) arbitrary and discriminatory are different matters. And I was -- Bruce R. Merrill: Well -- Abe Fortas: -- talking to you about this matter providing an incentive for exploration. Well, do you derive that from the constitutional provision or from something in the statute or something in the legislative history that it is the judicially and forcible duty of the Commission to do that? Bruce R. Merrill: Mr. Justice Fortas, it is my understanding that the Natural Gas Act at various cases have held that the Commission has a dual function. One is to provide adequate supply of gas to the consumer. And two, is at the lowest reasonable rate at which that first former function can be performed. And I think that the judiciary has the ultimate duty to see that the Commission is performing the -- its given function. Abe Fortas: Well, I am -- what I'm trying to get to -- (Inaudible) is to what is there -- what specific provision on the constitution or what specific provision in the statute? Do you rely upon to say that it is the function of the Court's to require not only that the Commission pay or what Justice Jackson, that the Commission provide payment for a cost of producing the gas but also that the Commission provide rates that will give an incentive for exploration, kind of distinction that Mr. Justice Jackson made the -- in that quotation that you read. That's what I'm asking about. What is the specific provision of law on which you rely with respect from the question of public -- imperative public policy? Bruce R. Merrill: Mr. Justice Fortas, I can't put my finger or anything in the Natural Gas Act nor the legislative history which specifically directs its intention to that. However, there are numerous recitations in the Commission opinions and Court opinions that the duty of the Commission is to induce an adequate supply to the interstate consumer as well as to regulate the rates that were in effect -- of the first function that can be performed at the lowest reasonable rate. Speaker: (Inaudible) Bruce R. Merrill: They have acknowledged it as being their duty Mr. Justice Harlan, yes. My argument is that they're failing and -- Earl Warren: Can you speak a little louder please, it's unclear? Bruce R. Merrill: Yes Mr. Chief Justice Warren. I said that the Commission has acknowledged that duty and it is argument that they are failing in that acknowledged duty. Speaker: (Inaudible) Bruce R. Merrill: My argument depends upon the existence of that duty Justice Harlan. Speaker: (Inaudible) Bruce R. Merrill: Yes, Mr. Justice Harlan. Speaker: (Inaudible) Bruce R. Merrill: That is precisely correct. Speaker: (Inaudible) Bruce R. Merrill: Well, my argument Mr. Justice Harlan is the function of this Court is to direct the Commission that unit cost estimations are an improper and unworkable method of accomplishing these objectives and that sincere and considered evaluation of the economic characteristics of the industry are necessary and obedient to whatever method they do evolve. Hugo L. Black: Suppose Congress had passed this precise law etcetera, what would you say to that? Bruce R. Merrill: Then I think this -- I think really it would be on the same posture as it is now. I don't believe it was necessary before -- Hugo L. Black: If you've gotten the power to do it? Bruce R. Merrill: I believe that is right -- Hugo L. Black: (Inaudible) Bruce R. Merrill: -- Mr. Justice Black. Hugo L. Black: Would you challenge that constitutional power today? Bruce R. Merrill: No, no. I will not challenge the constitutional power to do it. Hugo L. Black: Then you would say that Congress could pass? Bruce R. Merrill: Absolutely yes. Earl Warren: Am I wrong in believing that the counsel yesterday argued that they -- the Commission had to left a cushion in there for exploration? Bruce R. Merrill: Mr. Chief Justice Warren that is so only if you accept their computed cost study which of course I do not accept. They have a cost of service computation at which they claim that a portion of the exploratory cost component is an inducement to explore but I don't agree with that or accept that at all. Earl Warren: I know, but we're dealing with something else here. I understood you to say a little while ago that the Commission rejected any responsibility for it, for having a cushion for exploration. Bruce R. Merrill: I didn't intend to give that impression Mr. Chief Justice Warren. Earl Warren: What was the -- what was -- what did you say in that regard? Bruce R. Merrill: I did not address myself to the question of incentive in connection with the evaluation of their costing studies at all Mr. Chief Justice Warren. I am a little bit in a lost -- what (Inaudible), I must have misled you in some respect. Earl Warren: You would -- but the -- you don't challenge the fact that the Commission undertook to make some provision for exploration and the search that it has done now, do you? Bruce R. Merrill: No. Earl Warren: You -- all you say is that they didn't do it properly? Bruce R. Merrill: That is correct. I further say that is impossible to be correct and do it on a cost basis. Earl Warren: I see, (Inaudible). Mr. Martin. Crawford C. Martin: Mr. Chief Justice Warren, Associate Justices, may it please the Court. My name is Crawford Martin. I'm the Elected Attorney General of Texas and I appear here this morning representing the State of Texas in official capacity. I -- some of these producers maybe my constituents but they are -- I do not represent the producers here this morning. We are representing the state and we appear before you here presenting four points that have nothing to do with expert witnesses or the things in this lawsuit. It's only the state's interest and Mr. Boston Witt, Attorney General of New Mexico beyond the left will present the last two points, I will present two points. Our arguments will be brief as you see the producers after part of the time. But I will try to go as fast as I can on them Your Honor. The points that we have are listed at four points. I will cover the first two, they're actually all related. We first contend that the State of Texas presented evidence in this case before the Commission of the hearing examiner, the Commission rejected it on account of the holding in the Hope case and the Circuit Court of Den -- in Denver, Colorado upheld that particular point. There's only one little paragraph in the decision that we disagree with and that's what we're actually here this morning. As you know the Hope case was decided in 1944, some 10 years before this Court held that the producer came under the Natural Gas Act. We are -- appeal that we do not -- that that decision does not control as it now, the Act is now come into be. It was one pipeline, do you remember out of West Virginia and one producer -- or not producer, one distributor there or the consumers rather, and the Court in that case found that I would just -- it was a small of matter. West Virginia was trying to argue that they wanted to keep the price of gas up in order to protect coal and all that have an effect on the economy of the State of West Virginia and the Court rejected that. But we don't have that thing here this morning. The Court said in that case, in the Hope case that the results to West Virginia were -- in our -- I believe I quoted right, it was indirect and it was insignificant. Now we have in Texas and New Mexico, since we're arguing this jointly, a tremendous area out there. We have 4,700,000 acres of land in this basin. I believe New Mexico has around 3 million acres in the basin. Now this 4,700,000, the greatest majority of the fact in all of it is state owned land. The state owns the minerals under this land. They're producing -- the producers here made contract with landowner which -- acting as agent for the state are the state in most cases lately have been leasing the land themselves. We have grown up tremendous cities and an area. If you've been there, is not in the world but (Inaudible) less than 3 to 4 inches of the land a year not suited (Inaudible) there's no irrigation water. The ranching is all it can do outside of producing oil. It built up a tremendous economy in there. And we undertook before the examiner and to show the Commission that the production of oil and the production of gas had a tremendous impact on the economy of our state. Now we're not just talking about -- the one I'm talking about the Hope case. I'm not just talking about this particular case because as it was indicated yesterday they have hearings under way in which will cover -- blanket our entire estate. I don't know of any -- (Inaudible) left out I'm sure that they have tried to get (Inaudible). But those -- will have the last case, I believe the catchall. And I won't -- I want the Court to understand that we don't have a one plea here this morning that's all we're after. All we're interested in is that the State of Texas be allowed to present its evidence as to the effect that the Commission order might have on the state and its economy. I'm going to read those brief in and with our cut cover one or two then we -- and then will turnover to Mr. Witt. I -- the -- Byron R. White: (Inaudible) William J. Brennan, Jr.: Didn't you have this opportunity? Crawford C. Martin: Sir? William J. Brennan, Jr.: Didn't you have this opportunity. Crawford C. Martin: We had an opportunity to present. We presented one morning, I believe, of the evidence there but the Commission rejected it and said they will not consider it and they -- the -- didn't record. The way I read the decision, they said that they could not on account of the Hope case. They decided the Hope case and rejected our -- Potter Stewart: In the brief, what was your ultimate proof? Crawford C. Martin: Sir, we offered a proof of -- on the conservation of gas. Our Railroad Commissioner Mr. Murray at the time testified as to how this would work with that and the other was offered by Mr. Stockton who was with the University of Texas and he offered testimony concerning that if the production of gas, exploration of gas is discontinued that this economy with million and millions of dollar would completely collapse, so there's nothing else to support. That was frankly offered but the Court decided the Hope case. What I want to try to tell you, (Inaudible) of the Hope case, in my opinion, there's no -- no longer apply to the facts or at least to -- as I understand. Now New Mexico they'd say, they have 3 million acres and about 45% of their education comes out of that particular basin. Now we feel that the Commission failed in the statutory responsibility to the public to protect the public. What is the public interest? That is -- that's the question that was -- that is the question that I could -- that we have here in front of us. I think the public interest includes a tremendous wide field. Is not -- and I think the Commission has taken that in view and we're a little bit alarmed if they didn't allow the full range and look at that testimony because we feel that the public interest includes all the states. And this is a constitutional question that we've mentioned in here about this place being only for footing. I know it's very easy to say, "Well, you're producing state and therefore you shouldn't have anything to do with it". As long as it is only cost basis, as long as it is strictly on a cost basis, I would probably agree with the Court. I don't disagree with the Hope case and original finding but I certainly disagree with it when you change it from and it seems that that's the direction the Commission is going at, when you're changing it from a cost basis over to other -- bringing other factors particular to explore for new gas. Then you would certainly bring in and Mr. Witt will cover that point adequately, the conservation of oil and gas. As I have stated, they have done a tremendous job and the Railroad Commission has -- we feel likely conserving oil and gas and the compact was renewed I believe only this -- here today for two more years. I wanted to state to the Court as my opinion, the Commission and the Court completely were in error and not lying this evidence in because of the public interest. There are two ways of looking at it. You can say well, that you're going to have -- just look at the consumer in the matter and I believe it's indicated by the arguments here yesterday that the consumer in this case, but we told it about it is a small consumer, that's what the State of California preceded. I say that there are two ways of looking at it and the way we like this Court to look at our end of it, there are high quantities and there are low quantities. As far as I'm concerned, I believed that the consumer in California and I have nothing against them. And I want to say that if the state is allowed in here, it may be the time come and it probably will come soon that we might be just as interested in the lower price of gas than we were in the higher price of gas. But the low consumer in California, I mean the low quantity as I see it in California, is testified here at least stated in the Court yesterday was around $6 to $8 at the most, maybe $10 per person out there. I slipped into the meddling of this area, El Paso, the person out there has a high quantity because he has a tremendous interest in the matter. Millions of dollars invested that each person draws a salary out of that and I certainly don't stand here in front of the Court to say that you should support something in order just to keep few people off. What we feel like that the Court should look at this and should allow us by all means to come in and present our evidence. If the Court doesn't -- if the Commission doesn't want to give us any consideration, we -- I would say, but we think it should be allowed to present it. Thank you. Earl Warren: Thank you Attorney General. Attorney General Witt. Boston E. Witt: Mr. Chief Justice, may it please the Court. My name is Boston Witt. I'm the Attorney General of New Mexico. I appear here on behalf of New Mexico in opposition to the Commission's order. Now, the Court please I could stand here during my allotted time and commiserate about how much tax money this decision will cost New Mexico. But it seems to me there is a far more important question at issue here. Far more important than any tax lost to New Mexico. Even more important than any profit, to any company involved in this case and in my judgment more important than the price of gas to the consumers in California. It seems to me that the more important question is, what will be the day when the consumers of California will it -- be able to buy gas, be unable to buy gas from the Permian Basin at any price. The question then of course is conservation. Now, we have to remember that in the discussion yesterday, it was pointed out that two-thirds of all gas produced in the Permian Basin is casinghead gas. That is to say gas produced in conjunction with oil. Casinghead gas is somewhat different form a gas-well gas, and that it must be produced at the same time that the oil is produced. When you produce the oil, you must by necessity produce the gas. At that point, two things can be done with the gas. One, it can be marketed if the cost involved in gathering it and bringing it up to pipeline standards are -- the price is sufficient to justify the cost. Or two, it can be vented to the atmosphere and flared. Now New Mexico in the 1930s, along with Texas were the leaders in the conservation measures in the hydrocarbon field. Potter Stewart: Is there no way of storing it at that point? Boston E. Witt: Not on casinghead gas. Potter Stewart: That's what I'm talking about, I appreciate it. Boston E. Witt: New Mexico and Texas led the nation in conservation of hydrocarbon energy. In the early 1930s, we passed a statute empowering our Oil Conservation Commission to prohibit the flaring of gas. Now we permitted them to flare gas for some period of time for the simple fact that it was uneconomical to gather at that point because the price was insufficient to justify the cost. But almost two decades ago, New Mexico has prohibited producers from flaring casinghead gas. We have -- we did so, because at that point, the price became economic enough that we could force them to market and gather it. Now this is in contradistinction of California. California had great and vast reserves of hydrocarbon energy. And today, they are barren. And I must say that California appeared before you yesterday as a consumer state as it must because its hydrocarbon energy now has been wasted, it has perhaps lead the nation in lack of conservation practices. So what appears before this Court today, or yesterday, and ask this Court to put its stamp of approval on a decision of this -- of the Federal Power Commission which will be the seed which might well destroy New Mexico's conservation practices. Now -- Earl Warren: I understand there are no laws in California against for -- Boston E. Witt: There -- Earl Warren: -- for the conservation of gas. Boston E. Witt: Mr. Chief Justice, there are conservation measures in California. But California has never adopted the well spacing regulations, has never adopted the proration theory which we think are so necessary to the conservation of hydrocarbon energy. Earl Warren: But there has been, not only been -- in legislation of that kind that there has been enforcement of it, is there not? Boston E. Witt: That's correct. Earl Warren: (Inaudible) Boston E. Witt: That's correct. But I think it is a -- so clear that this Court may take judicial knowledge of it that California has not done nearly the job on conservation of its hydrocarbon energies as -- that New Mexico and Texas have done. I think testimony of the fact that their hydrocarbon energy is largely expanded at this point, it is proved of the point. Now, if we -- now I want to be very clear about this, we are not standing here saying that the price the Commission set for casinghead gas will -- is at that point, where it is uneconomic to produce it any longer. We think it -- that may be the case but we're not here saying that's the case. What we are saying is that we appeared in New Mexico as well as Texas appeared before the Commission and that offered testimony as to what effect their decision would have on New Mexico's conservation practices. As General Martin pointed out that testimony was rejected. We appeared in the Court of Appeals in the Tenth Circuit and again urged our position on the conservation to the Court of Appeals. And again, the Court of Appeals rejected our offer of proof. Now it seems to me that the question of conservation is not a parochial issue to New Mexico, indeed it is an issue of vital interest to the nation. William J. Brennan, Jr.: May I ask -- Boston E. Witt: Yes sir? William J. Brennan, Jr.: (Inaudible) the failure of the Commission to -- Boston E. Witt: Well -- William J. Brennan, Jr.: -- consider this position -- what does it -- concerns New Mexico (Voice Overlap) -- Boston E. Witt: Well the problem is, if they set the price of casinghead gas at a point so low that it is uneconomical -- William J. Brennan, Jr.: Which you're not -- Boston E. Witt: -- to harvest its -- William J. Brennan, Jr.: (Inaudible) Boston E. Witt: We're not saying that they have reached that point. We're saying they did not consider our offer of testimony on that point. And we think the question of conservation is a necessary part of the public interest under the National Gas Act. Byron R. White: Well, what's conservation have to do with the -- got to do with -- what are they (Inaudible)? Boston E. Witt: Because if it is uneconomic, at a price to gather and produce the gas, the companies are going to flare it. They won't go to the expense of gathering the gas and putting it into the market, (Voice Overlap) flared it -- William O. Douglas: You're not talking about gas-well gas -- Boston E. Witt: We're talking about casinghead gas. William O. Douglas: Casinghead gas, yes. Boston E. Witt: Yes sir, which constitutes two-thirds of the Permian Basin. William J. Brennan, Jr.: And (Inaudible) -- you're saying that the proofs beyond economic, that is a price -- Boston E. Witt: They will flare -- William J. Brennan, Jr.: -- that you're going to have to permit them to flare (Inaudible). Boston E. Witt: Well, if we refuse to permit them to flare it and they cannot recover their cost by marketing it, it seems to me that our -- that the order of our Conservation Commission would be put in jeopardy on constitutional grounds. William O. Douglas: Of course they were -- they relied as I gather on our Hope case -- Boston E. Witt: That's right. William J. Brennan, Jr.: Although, Hope was decided before the Phillips case, wasn't it? Boston E. Witt: That's correct (Voice Overlap). William O. Douglas: That Hope doesn't involve these producers -- Boston E. Witt: That's right -- William O. Douglas: -- but interstate transit. Boston E. Witt: The Federal Power Commission and the Court of Appeals said, however much we would like to consider this testimony, we are prohibited from doing so by the Hope case. Because the Hope case said, the interest of the producing states is not a part of the public interest. Now, our point as General Martin pointed out is, we think the evolution of the law has progressed further than that at this time. We think conservation is a national issue. Abe Fortas: But General, do I understand that you're not attacking the rates fixed by the Federal Power Commission? Boston E. Witt: We do not say here that the rate they set for casinghead gas will cause this effect. Abe Fortas: Well, I -- Boston E. Witt: We are saying the -- Abe Fortas: I think I understand your point as a matter of fact mattered but, are you urging that the states are prejudiced by the decision? Boston E. Witt: Yes sir for this reason. Abe Fortas: How so? Boston E. Witt: Not only as conserve -- there is no federal authority to conserve hydrocarbon energy in New Mexico. Abe Fortas: I understand that, but I mean to say if you do -- if you are -- not, if you don't take the position that these rates are fixed so as to injure the conservation interest of the state, how is the state prejudiced (Voice Overlap)? Boston E. Witt: Well, we say we don't know, we think this rate may reach this point. Byron R. White: Well, would you want to offer evidence to prove that? Boston E. Witt: Yes sir, yes sir. Potter Stewart: You want to offer evidence to prove that. Boston E. Witt: We would like to go in and offer our testimony on the impact of this decision, how important it is. William O. Douglas: Well, you had entered it in there but you were denied. Boston E. Witt: And it was not considered because they said we cannot under the Hope case. Byron R. White: But you offered the evidence that the reason for offering them was to prove that the casinghead gas was not to be produced in an economic basis rate? Boston E. Witt: We think the Commission when it decided -- Byron R. White: Well, isn't that what you offered before us? Boston E. Witt: Yes sir, we offered it -- we offered testimony that whatever price they established would have a profound effect upon conservation in New Mexico which is directly related to -- Byron R. White: That maybe so. That may be quite so but were you also claiming that the pricing the Commission would -- suggested that were uneconomic? Boston E. Witt: Well, we say -- we are saying we don't know at this point because nobody can tell. We're -- all I am saying to the Court is that in considering what is -- Byron R. White: Well, yes, the Commission knew that it is going to have to set the prices to be economic, isn't it? Well, I mean they have found that people from (Inaudible) that the average producer can make a profit of these rates. Boston E. Witt: Well we don't know whether they can -- Byron R. White: Now let's assume that's true. Just assume with me for a moment that is true. Now how about if that's true, are the conservation of this -- New Mexico include it? Boston E. Witt: Yes sir. Because -- now we're talking about two different questions, casinghead gas they said we are going to set it 14 and a half cents. Byron R. White: Alright. Boston E. Witt: But -- Byron R. White: Let's assume that the average producer can make a profit at that rate. Boston E. Witt: Well, now -- that's not going to be the actual rate Mr. Justice. Byron R. White: Let's just -- let's assume that he can make a profit there. Boston E. Witt: Well I -- on what the -- in fact rate, on casinghead gas will be in the Permian Basin is quite a different matter from the rate they set in the order because as was pointed out -- Byron R. White: All of the adjustments? Boston E. Witt: Sir? Byron R. White: Because of the quality adjustments? Boston E. Witt: That's right. The price will be closer to 9 cents than it will be closer to 14. And we think on that basis we may very well get to the position where the companies are going to come to us and say we can't make a profit on the casinghead gas because of the adjustments. Byron R. White: Yes, but let's assume that that's not so. Assume that they can make a profit. Now your conservation interests are well served in that case. I mean they're not damaged in anyway. Boston E. Witt: Not only are interested, it seems to me they're the interest of the nation. Byron R. White: Well, isn't that (Voice Overlap) -- yes, but if it's true that they can make a profit at this rate then your interests are not damaged. Boston E. Witt: Well, our -- New Mexico's interest are not damaged but if -- Byron R. White: Alright. That's enough (Inaudible). New Mexico's interest aren't damaged so the question gets back to whether or not the Commission -- the reasonableness, the justice, the reason was – of the rates the Commission fixed. Now, that question to say, now whether -- whatever your conservation is concern. Boston E. Witt: Well, only and that can -- Byron R. White: If there're just and reasonable in this interest, they -- that they can make a profit where interests are not damaged. Bruce R. Merrill: If the law requires that they consider the public interest in setting a rate, it seems to me that it -- they must buy the nature of the -- definition of public interest consider conservation in determining their rate they didn't do so. Byron R. White: Yes, but considering it won't change the result. Bruce R. Merrill: It (Inaudible) very well. Byron R. White: No, it wasn't -- all they would have to do -- all they would do is to ensure that the rate is just and reasonable. And that the -- Bruce R. Merrill: Considering the conservation question of casinghead gas alone. Earl Warren: Mr. Varner. Herbert W. Varner: Mr. Chief Justice and may it please the Court. My name is Herbert Varner and I'm appearing on behalf of the Superior Oil Company. The Superior Oil Company is a large nonintegrated producer of oil and gas. We have no refining operations, no retail marketing of any kind. We do not engage in the federal chemical business, on the plastics business, (Inaudible). Our operations are limited exclusively to exploring far and producing that oil and gas which is sold generally in the (Inaudible). Because of the limited nature of our operations, relatively more allow a capital is expanded annually for exploration, than that of most other companies. More than that perhaps in the integrated company, because necessarily their budgets must include their exploration function and accommodate to the other aspects of their business which are vary in their needs from year to year, more than the so-called small producers, merely because of our size. Our operations are identical with that of the so-called small producer. Because of the fact that we need to drill more wells and deep wells, we are what is known as a high cost company. We do not gold plate our wells. Dr. Warren (ph), a witness for the Commission, explained in -- explaining why there was a variation in annual cost of the various companies for drilling and exploration, that primarily it results from what he call the well mix, the well mix being the type of well and the depth of well. And he said these are the factors that lead to add cost, not extractions, not improvements. He did point out that there was a great range in cost from here to here between the various companies. But he did not point out and it is not true, that a high cost operator who continues to do the same thing won't continue doing a high cost operation. It's just inherent in the nature of the business. As I say, there are some changes in some of the companies. Now, the argument has been made that even though they don't get their money back this year, next year they're the low cost companies can get it. That argument to me runs right into the phase of regulatory rules that future rates will not be made to compensate the past losses. Now I would assume that present rates will not be fixed to compensate for potential savings which may or may not ever develop. But this fact explains why superior takes the position that we do, that group rate fixing is invalid. The fact is that high cost companies get the benefit of the reduced rate that results from average whereas the low cost companies get a part of their cost, a part of the high company cost which go into their averages and permit the computation of a rate of return for them on figures which are in fact actually higher than their cost. Byron R. White: Well, do you object to group rate fixing? Herbert W. Varner: Yes sir. Byron R. White: And -- regardless with the basis? Herbert W. Varner: Yes Your Honor. Byron R. White: So you do different from continentals? Herbert W. Varner: I do quite differently from continental. I take the position that group rate fixing under the Natural Gas Act is not provided for in the Act. Byron R. White: Whether its deal price basis or -- Herbert W. Varner: Right. Byron R. White: -- cost figure? Herbert W. Varner: Right. I may give you an exception later of suggesting method if you want it. William J. Brennan, Jr.: Well let's see, is it -- are you -- are -- is this the position of the dissent in the second Philips case? Herbert W. Varner: I did not -- William J. Brennan, Jr.: Is your position the position of the dissent in second Phillip? Herbert W. Varner: Yes in part. It is in part, yes Your Honor. I would say basically so. I think this, if I must put myself in a nutshell, I'd say my position is that the Hope decision is correct. Now, as I say I am going to address myself primarily to the issue of legality. And the basis of (Inaudible) is that the natural gas itself at work, requires individual rate fixing. Furthermore the decisions of this Court, the intent of Congress in passing the Act as this Court has described it, the Natural Gas Pipeline Case, the Hope Case and the Colorado Interstate case, I think leads a no conclusion other than that individual rate fixing is absolutely required. Furthermore, I would like to show that if the Natural Gas Act does not provide for the establishment of individual just and reasonable rate, then the Act doesn't have any standard of regulation whatsoever. It is with that question then, I believe, an unlawful, unconstitutional delegation of legislative power. Because then, they are legislating rates and they have no standard whatsoever. Now the Act was passed in 1938, and as the court below found, all of its wording goes to the (Inaudible). Now, the general counsel for the Commission told you a particular attention to Section 4 and I'd like to do the same thing. He urged going here, that any rate has to be just and reasonable. I will look at the same Section because it says all rates of any natural gas company must be just and reasonable and if they're not, they're unlawful. This was the rate standard under which the Natural Gas Act was held constitutional in natural gas pipe. There, with reference to the just and reasonable rate and the lowest reasonable rate permitted under Section 5, the Court said, by long standing usage in the field of rate regulation, a just and reasonable rate or the lowest reasonable rate is one which is not confiscatory in the constitutional sense. The constitutional sense itself is an individual consent. It applies to a person or a company. Now I admit it that the constitution doesn't find rate fixing or agencies to the use of a single formula, but the leeway to choose a formula for fixing has absolutely nothing with meeting the standard of rate fixing which again is just and reasonable. Now this was the precise holding as I understand the Hope Natural Gas case. There, they said that at the end result is just and reasonable. It doesn't make much difference how they got that. They can use any formula they choose. And they said to be just and reasonable the rate must be one that will produce revenue sufficient to cover the operating cost and the capital cost of the business. It must be rates which from the investor or a company point, will lead capital cost the ability to pay interest on debt, pay dividends, to have sufficient return to measure what the risk in several enterprises to maintain confidence in the financial integrity of the business, to permit that business, to maintain its credit and attract more capital. The obtaining and maintaining of credit, the payment of dividends, the attraction of capital, even the payment of operating expenses are all individual company obligations and abilities. The industry does not have these capabilities, it does not have these obligations. Since you cannot comply, the Hope case to the industry as such, then it seems to me you are in the position where there is no standard whatsoever under the Natural Gas Act. Now, there cannot be any question as to the fact that Hope did in fact require individualized rate fixing. The very option was suggested in the dissenting opinion of Mr. Justice Jackson, there he pointed out that because and incidentally these are the same reasons now put forth for the group rate method, because of the erratic nature and the peculiar characteristic of this business, the erratic nature between investment and results. That it was improper to use any sort of cost of service. Incidentally, I do not insist on the cost of service, that doesn't have to be the method. But -- then he said what he would like to do, is to fix the price of gas on some sort of a commodity, a basis that didn't assure a fair return to any producer. In his own words, his views were rejected by the majority of the Court because Congress in passing the Natural Gas Act intended to and did provide for regulation along recognized in more or less standardized matter. They then -- conceivable to me that the individual rate fixing requirement opposed in 1944 is not equally applicable today even though it may be inconvenient with the administrative agency. Certainly, since 1938 when this Act was passed, neither the purpose nor the intent of Congress has changed. Furthermore, it's rather unbelievable to me that a rate fixing agency would propose a matter which by design is going to provide far in the words or the court below of bankruptcy rate for a high percentage of the industry and less than a fair rate for 50% of it. This is the exact -- Potter Stewart: Do you claim that the -- your client Superior Oil Company is -- that the rate has that effect upon Superior Oil Company? Herbert W. Varner: Yes Mr. Justice. Potter Stewart: Is there evidence in the record to that? Herbert W. Varner: Yes sir. I would refer you to the cost of service exhibit of the Superior Oil Company which was offered refused of course because there was a preliminary order to the effect that individual cost would not be considered or heard. William J. Brennan, Jr.: Did I understand you to say that this rate of Superior is a bankruptcy rate? Herbert W. Varner: Yes sir. I would also -- William J. Brennan, Jr.: Yet, it will not cover your out-of-pocket cost or whatever or all covered cost, (Inaudible)? Herbert W. Varner: It -- I won't say it won't cover out-of-pocket cost -- Byron R. White: By ordinary accounting principles this -- you -- will roughly cover your costs? Herbert W. Varner: You have placed me in a terrible position Mr. Justice White. Byron R. White: Well I know but you can give me -- you're placing us in it. Herbert W. Varner: Alright, may I answer it this way? Byron R. White: Perhaps you're saying this rate won't -- Herbert W. Varner: Well, you asked me -- Byron R. White: -- by the bankruptcy (Voice Overlap) -- Herbert W. Varner: -- by ordinary accounting methods. Byron R. White: All I just want to know is what you mean by that? Herbert W. Varner: Very well, let me explain. You asked by ordinary accounting methods, ordinary -- Byron R. White: Well, what if -- by whatever method you were talking about. Herbert W. Varner: Alright sir. By the methods that I believe were used here on a composite basis, that would be the result. I would give you an example that is in the record of some variant between the cost, there is an exhibit here put in by the staff witness Wright. It's Exhibit Number 174, found at record of 499E and 500E. And it shows the cost for raw gas, total raw gas of some 60 producers in the Permian Basin which includes among others the Superior Oil Company. William J. Brennan, Jr.: Are you casinghead or (Voice Overlap)? Herbert W. Varner: We're both. William J. Brennan, Jr.: You are -- Herbert W. Varner: And I think you will find that everybody in the industry in the Permian Basin is both primarily because -- William J. Brennan, Jr.: Any proportion one -- for you, I mean sort of -- Herbert W. Varner: If you won't rule me to this, I'd say we do not have -- William J. Brennan, Jr.: (Inaudible) Herbert W. Varner: -- in all probability in a gas-well gas. I believe it's all -- William J. Brennan, Jr.: (Inaudible) Herbert W. Varner: -- associated gas. I believe that happens to be our particular situation. If you look at that exhibit that I've pointed to you, you'll have to look the company number 48 because the companies are not named. The rate there shown for the Superior Oil Company is 14.7. You will observe and somebody asked this question yesterday so I'll get to it now. That somebody asked a question, what is the variants of cost between the companies? The com -- the variants here, and this is not total cost, but this is a cost concept that Mr. Wright developed on this particular item and it shows there it ranged from 4 cents per thousand to 28.9 cent per thousand for all except the last company. The last company, the 60th with a dollar 22, so that's pretty high. Now, the fact is that if you'd -- William J. Brennan, Jr.: If you -- if you're casinghead you're -- would not the case of bankruptcy just take into account the oil revenue? Herbert W. Varner: No sir, it doesn't take into account the oil revenue and for the very simple reason that oil isn't regulated, but we have made allocations. Now of course in this particular case they did not. They used -- they determined cost for gas-well gas for the reason that they said there are fewer allocations. The -- someone has pointed out, you still have 55% of the total cost is an allocated cost. But be that as it might they could -- they imputed that cost over to the associated gas. Now as I say, this ratemaking method, by design is going to result in a high percentage of the companies going out of business or being required to go out of business every time there's a successive hearing because obviously if the high cost -- the highest cost producers here are eliminated, the next time you got a low rated average and so you are going to eliminate those and pretty soon you're going to get down to where there are no others. Then that effect of it -- it seems to me it's totally contrary to general national policy. Byron R. White: Well without the gas production, you wouldn't produce oil in there? Herbert W. Varner: Without the -- no. Without the oil production, we probably would not have produced this gas. Now the thing is this, if we do not continue to produce the gas as General Witt pointed out, we can't produce the oil because it is now prohibited to flare gas. Earl Warren: Because of what? Herbert W. Varner: Prohibited to flare gas for the sole production of -- sole purpose of producing oil that maybe I think pointed out some exceptional circumstances where economics will not permit it. Now unless we have this economics imposed on us, we've been able to -- forward to gather it and sell it. Now I would point out too, the Natural Gas Act certainly does not require a uniform. A uniform price is alien to the industry. It hasn't even been a matter that the purchasers have embarked upon their prices in the same field at the same time are generally are the same. But between purchasers, there's always been a difference in price. There is in a situation here that have been pointed to where they say, but you can't make money anyhow. The fact to the matter is that we've been getting along very well at our contract rates and the contract rates, high, low or otherwise have been rates that the public not only could afford but found sufficiently interesting to increase their demand for the product. I certainly can assure you that if you can eliminate any high percentage of the 50% of the companies who will not make a just and reasonable rate in their gas production, there is an absolute shortage tomorrow if that's when it becomes effective. Now, I would also call to you -- to the Court's attention that in Justice Jackson's dissent in Hope, he recognized that in this situation if the party who's rate was -- did not yield a fair return, wanted to get out of the business and was compelled by some other reasons to stay in, then the Court -- he was suggesting would not meet constitutional requirements and that's exactly what's happened here. Now, what I wanted to say a moment ago was that there can be absolutely no question as to the effect of the holding in Hope. And for that, I would call to the Court's attention, the decision in Bowles versus Willingham which involved a wartime federal rent control statute. That opinion written less than 90 days after Hope, again, by Mr. Justice Douglas speaking on behalf of the majority of the Court, pointed out that there was a distinction between this rent control line and the Natural Gas Act because Congress in passing the Natural Gas Act provided the fixing a rates which are just and reasonable in their application to particular companies or particular parties and he cited Hope of course with that to review. Now then, if we assume, which I don't, that Hope is not governing here and I do not see how group rate fixing can be established without overruling Hope. And I certainly do not think that second Phillips did that because second Phillips relied in fact on Hope. Second Phillips says, "First, we're not going to render advisory opinions, which of course is nothing new in history of this Court, and they didn't". But they did say this, they said, "We can't -- now determine that the method employed will necessarily result in a rate which is not just to the consumer and not just and reasonable to the producer, a rate to which they each have a right". That's that right I am here insisting upon. Now, if the Act doesn't provide for group rate fixing and certainly I think everybody concedes it does not provide for it and the question is does it prohibit? Then if it doesn't, then by what standard must the composition of groups be determined by the Federal Power Commission. The Act provides none. Now obviously if the Federal Power Commission can pick any group it chooses, then by the very constitution of the group itself you foreclose and foreordain what the average rate will be and what appears to be a just and reasonable rate. Now if the answer of it that -- well it doesn't say one way or another so obviously the implication is that they may create reasonable groups, then if that'd be the case in this particular proceeding we have all been deprived the due process of law for the reason of that. With the institution of the proceeding here, the Commission also provided in the very same law that they would not entertain objections or a contention to the effect that the group fixed was not sufficient for rate making purposes. And we have been deprived of that and therefore as I say we have been deprived of due process of law. Thank you. Earl Warren: Mr. Henderson. Robert W. Henderson: Mr. Chief Justice, may it please the Court. My name is Robert W. Henderson. I represent Hunt Oil Company and several other independent producers. We are petitioners in Number 101. It is not our position before this Court that group area ratemaking per se is unlawful. It is our position that the application of the method by the Commission in this case is unlawful. First, it violates the individual constitutional rights of the independent producer by lowering their revenues below the cost incurred by those producers without taking into consideration, the cost incurring factors of the gas itself. The second reason that the method used by the Commission in this case is unlawful is because it does not provide for a just and reasonable rate for the group nor for the individual oil and gas producers. Because it fails to provide for the lowest possible reasonable rate, it is inconsistent with the maintenance of adequate service in the public interest. First I would like to point out some pertinent facts which should be considered by this Commission in determining whether or not the method applied by the Commission violates the constitution or the statute. That is reference should be made to the exhibits in the record which appear at 519E, 520E which is basically the Exhibit 174 prepared by the staff witness Wright. It shows the individual cost of the producers whose cost reduced by the Commission in arriving at the average. Of course that exhibit uses a 9.5% rate of return. So therefore for the exhibit to actually be comparable with what the Commission determined in Opinion 468, the return component of that exhibit would have to be raised from 9.5% to 12%. Basically that is what we have done in the Appendix 1 to our brief where we have taken the individual cost of the 44 producers, raised the rate of return from 9.5% to 12% and have shown exactly what the individual cost of the companies would be and this is what it showed. Abe Fortas: But why did you take the 9.5%, the preparation of the exhibit -- Robert W. Henderson: The -- Abe Fortas: -- initially? Robert W. Henderson: It is a -- original staff exhibit. What the Commission did, they applied a 12% rate of return -- Abe Fortas: I understand that. Robert W. Henderson: -- to the cost of 44 producers. Abe Fortas: But where did the 9.5% figure come from? Robert W. Henderson: The 9.5% figure Your Honor came from the recommendation of the staff witness, the entire staff's case was built on the proposition of the 9.5% rate of return should be used. Abe Fortas: Did you object to the 9.5%? Robert W. Henderson: The industry of which -- we were supporting the industry witness was contending a 16% rate of return to be used. The Commission about to -- a 12% rate of return. So the appendix to our brief raises the figures from 9.5% to 12% and sets forth the cost of the 44 producers whose cost reduced by the Commission of arriving at the average. Among the 44 producers there is a wide dispersion of cost. This wide dispersion is shown in Schedule 2, of Appendix 1 attached to our brief. That appendix shows of the per unit cost was as low as 5 cents per Mcf and it all further shows the 16 producers of the 44 had cost below the 14.5 some average, and that 28 of the producers had cost above 14.5 set price. Of the 28 producers who had cost above the 14.5 cents, well, had cost between 14.5 to 20 cents. Sixteen of the 28 had cost even above 20 cents per Mcf. If you would take an average of the cost of the producers who have cost below the 14.5, their cost would average 12.6 cents. If you were to take an average of the 28 producers who have cost above the 14.5, their cost would average 23 cents. The Commission attempts to leave the impression that cost above the average is extravagant or wasteful cost and cites to Acker versus U.S., 298 U.S. 426 for the proposition that regulatory agencies should not allow such cost. We do not contend that extravagant or wasteful cost should be allowed. We have no gold plated wells. Acker versus U.S. should be cited for the proposition that the method used by the Commission in this case is inappropriate. In that case, this Court stated and I quote, “The Secretary was not bound to and indeed he could not adopt anyone agency's cost or an average of the cost irrelevant. To do so would be to leave out a consideration, relative size, relative volume and relative efficiency of individual agencies”, end of quote, page 429. In this case, the Commission has not considered any fact other than the average cost of a select group of companies representing only 16% of the gas in the average. No consideration has been given to the size, volume or other cost incurring factors which are inherent in the gas itself. The Commission in this case has not made any findings to the effect that the cost incurred by the producers were extravagant or wasteful. In fact, all of the cost of the selected group of 44 producers were included in the cost finding. This inclusion should by implication stand for the proposition that the cost so included was not extravagant or wasteful. The wide variations in per unit cost between producers is not a question of extravagant or wasteful cost but is an inherent characteristic of the gas producing industry. Abe Fortas: Is it your position that this rate is confiscatory as to the Hunt Oil Company (Voice Overlap)? Robert W. Henderson: Yes sir. Abe Fortas: And is it your position that the record contains evidence to demonstrate that? Robert W. Henderson: We, like Superior Oil Company tendered the -- a complete cost showing with reference to Hunt Oil Company. But pursuant to the Commission's order with reference to individual company cost, the examiner excluded all of the cost material. Abe Fortas: What percentage if you can tell me, as your cost as shown with -- related to exploration? Robert W. Henderson: I can say this Justice Fortas that our cost with reference to exploration would be somewhat higher than the average of 4.08 cents. I believe it would be approximately 6% -- excuse me, -- Abe Fortas: Well, do you -- Robert W. Henderson: -- 6 cents. But Your Honor, most of the cost is embedded cost that is cost in drilling deep wells. Abe Fortas: Yes, but however that may be, is it your position that to determine the (Inaudible) the lower rates confiscatory that your coal exploration cost has to be taken into account? Robert W. Henderson: That is a most difficult question Your Honor. Abe Fortas: That's a constitutional question. Robert W. Henderson: I personally -- Abe Fortas: And I'm asking it to you for your -- I'm asking about it because of its (Inaudible). Robert W. Henderson: I believe Your Honor that sufficient amount of exploration expenditure should be included in determining whether or not confiscation has resulted. Now, what amount it should be, I -- at this moment I cannot say. It should at least be that amount -- Abe Fortas: It should be some. That would be (Voice Overlap) -- Robert W. Henderson: Yes sir. It should be at least that amount which would replace the volumes that you are -- presently so. Abe Fortas: Fine. Now, on a reasonable basis. Robert W. Henderson: Yes sir. Abe Fortas: Now the question is that the industry average is 4% and the history shows that the volume and assume for the moment that the history shows that the volume has been that has been sold -- has been replaced, is it -- would it still be your position that Hunt Oil should be allowed to call such a percent? Robert W. Henderson: If I understand the question Justice Fortas, you're assuming that the industry has an average of 4% per Mcf exploration expense? Abe Fortas: (Inaudible) Robert W. Henderson: That basically Hunt Oil Company would have an average of 6 cents exploration -- Abe Fortas: Because (Voice Overlap) -- Robert W. Henderson: -- expenditures and has been able to replace the volumes that they have been currently selling. I would say in that situation Your Honor that basically the industry by incurring the 4 cents exploration expenditure has basically replaced the volumes that the industry had sold. That we've got (Inaudible) to just maintain the status quo. Definitely -- Abe Fortas: So (Voice Overlap) -- Robert W. Henderson: -- I believe from a confiscatory standpoint, that should be included. Abe Fortas: So you'd have to discount this cost on that (Inaudible)? Robert W. Henderson: I would say from the confiscatory standpoint that there is certainly some latitude in allowing a confiscation, maybe all of the exploration development expenditures may not be allowed. But Your Honor, most of the cost with reference to confiscation comes from the actual amount of investment that you have in the wells on the profit, the operating expense. Abe Fortas: Well let's say that perhaps, can you tell me, if you took only the fair return, whatever that might be on the amount of your investment in the existing oil wells and your operating expenses excluding exploration, would the results still be confiscatory as to Hunt Oil Company under these rates? Robert W. Henderson: Yes sir it would be. Not only for Hunt Oil Company but for all of the in -- small independent producers, -- Abe Fortas: But you're not a small independent producer, are you? Robert W. Henderson: We are a large independent producer somewhat like Superior Oil Company -- Abe Fortas: That's what I -- Robert W. Henderson: -- but we are primarily -- Abe Fortas: (Inaudible) Robert W. Henderson: -- excuse me sir. Abe Fortas: And you still -- you say that excluding all cost for exploration that a rate of return -- fair rate of return on the investment, I won't ask you what that is, plus your our of pocket operating expenses, if these rates, you would not be covering those two items? Robert W. Henderson: Justice Fortas I believe you said, excluding all exploration and development expenditures. Abe Fortas: But -- for the moment, yes sir because that's what I understood you argue in your last statement I -- to the time you made which I'm sorry -- Robert W. Henderson: And my prior answer to you was with the idea that a reasonable amount of exploration development expenditure would be included in considering what the confiscation resulted. In some areas Your Honor, I cannot state for a fact about Permian Basin. In some areas, the cost actually put into the well investment is at the revenue level. Abe Fortas: I understand that, we're talking only about Permian Basin. It's not covered for us at the moment. Robert W. Henderson: In 19 six -- Hugo L. Black: I don't quite understand. Are you saying that -- suppose you have 6% (Inaudible) in the -- including the amount, certain amount by exploration, 6 cents? But that wasn't enough, would you say that that was -- your property was (Inaudible) confiscating? Robert W. Henderson: Your Honor, I construe confiscation in the oil and gas industry as being that you should have a return of your capital. And I believe that is -- Hugo L. Black: Well I -- Robert W. Henderson: -- is depreciation -- Hugo L. Black: I think if we get 50 cents or a dollar per gallon, everybody can use the interest (Inaudible). Would you say that you could then say that because the exploration cost included (Inaudible), is your proposition to confiscate? Robert W. Henderson: I believe Your Honor that anytime you consider the oil and gas industry, you have to include a certain amount of exploration expenditures -- Hugo L. Black: But suppose it includes enough so that you're getting a great deal more than that -- Robert W. Henderson: Well that -- there would be -- Hugo L. Black: -- a dollar a gallon. Robert W. Henderson: That would be a different question Your Honor. If I understand your question -- Hugo L. Black: I thought you said that that would be a confiscation? I couldn't believe it is. You do not say that? Robert W. Henderson: I don't completely understand your question Justice Black. Hugo L. Black: Well, I mean this, supposed it cost you 10 cents to do the exploring, you know that? Robert W. Henderson: Yes sir. Hugo L. Black: They looked at and they decide they want to give you credit and take care of everything if they can't (Inaudible). They want to give you something else, they give you a dollar a gallon. Largely more than this -- the whole thing cost (Inaudible). Could you say that there was anybody who could possibly (Inaudible) confiscatory because they had conserved the exploration cost (Inaudible)? Robert W. Henderson: No sir, no, no, that situation, I might -- there should be enough revenues for that to cover the ordinary replacement cost of the products that yourself and if that happens -- Hugo L. Black: Well, I'm assuming -- I'll put it $20 a gallon if you would. Robert W. Henderson: Right. Hugo L. Black: Anything you want, would you then say it's confiscatory that -- not to give me the whole cost including that somewhere and say we are including the complete cost for exploration, could you claim confiscation? Robert W. Henderson: I would not stand before this Court and claim constitution -- Hugo L. Black: Well, not for the (Voice Overlap) -- Robert W. Henderson: -- confiscation under those circumstances, no Your Honor. Hugo L. Black: I thought you (Inaudible). Robert W. Henderson: I'm sorry, I meant -- I've left that impression Your Honor. The wide variations of per unit cost between producers is a cost incurring factor in the gas itself depends upon the time the gas was discovered and developed, it depends upon the depth on which the gas is discovered. It depends upon the size of the reservoirs and the rate of production that those reservoirs are produced by. That is why we have the wide dispersion of cost of the gas and that is the reason why you have the wide dispersions of cost with reference to individual producer. Moreover, it depends in part of whether the producer is an active explorationist or whether he is depleting his inventory without replacement. Now the period of time in which gas is discovered and developed as a material effective on cost, the examiner found the cost increased by approximately 75% from 1948 to 1960. Costs prior to 1948 relating to 25% of the volumes has been included in the composite on which the Commission has determined the 14.5 cents price. The Commission itself recognized that drilling cost decreased by approximately 6% from 1958 to 1960. If gas cost 16.5 cents of 1960, the gas discovered and developed in 1958 would have the cost 17.5 cents, not 14.5. The size of the reservoir discovered in the rate -- such reservoir is depleted is substantially material on the per unit cost of gas. The record shows in this proceeding that in the 1960 test year, in the Permian Basin area when you are considering only gas-well gas, two fields in that entire Permian Basin area accounted for 52.5% of the gas, 13 fields accounted for 17 -- excuse me, 76% of it, 24% of the gas-well gas in 1960 produced in the Permian Basin came from 358 (Inaudible). However, there is no record -- evidence as to whether the cost used by the Commission relating to the group of 44 producers came entirely from the two field or whether it came from the 13 fields or whether there was a dispersion among the other 358 fields. It cannot be disputed that you have two reservoirs and the cost of each reservoir is the same. And one reservoir contains twice as much gas. The smaller reservoir and the gas produced from it, the gas cost is going to be twice as high thus a cost incurring factor of gas, etcetera. Abe Fortas: Alright, I think I follow on this but I hate to take more of your time, the problem that perplexes me in this field is, how you can really be in anywhere with respect to the confiscation argument in view of the fact that the exploration cost here are absolutely with -- are almost absolutely within the control of the producer. Now this to say that the argument assumes that the -- that if a producer at all -- if the argument assumes that all a producer's exploration cost are properly part of the cost base for purposes of confiscation, then if a producer can go out and -- to enlarge his own supply and spend all the money that he can beg or borrow for exploration just to enlarge his own position in the industry and his own share of market and that -- all of that cost would go to this cost base and he'll use it for purposes of measuring confiscation and that's a concept that -- does not at all like the usual thing that lawyer encounters in this or -- with the respect to the constitutional standard. Robert W. Henderson: Justice Fortas I believe there could be a very simple answer to that. Let's take over -- let's -- don't take one test of year, let's take over a period of years, three-year supply. This particular producer was replacing double the reserves produced, he was adding reserves twice the amount produced. So let's assume his exploration expenditures were 10 cents. In that situation, then I would I say from a confiscatory standpoint, on a constitutional standpoint, that basically he should be allowed at least that proportion of the exploration expenditures which would let him replace the reserves he is producing, which would be one-half -- Abe Fortas: Alright. Now -- Robert W. Henderson: -- and that the (Voice Overlap) -- Abe Fortas: Now my question to you is, does this record with respect to your client -- does this record contain information sufficiently specific individualized and precise so as to permit a judgment on that point either in terms of the evidence that was admitted or in terms of the ultimate proof. Robert W. Henderson: Your Honor, I'm at -- based upon the Commission's orders about no individual cost evidence, the evidence does -- on the individual company basis does not go that far. Abe Fortas: May I ask you about including the offer of -- any offer of proof (Voice Overlap)? Robert W. Henderson: There is an offer of proof Your Honor, but the evidence does not go that far. Earl Warren: Mr. Attwell. J. Evans Attwell: May it please the Court. My name is Evans Attwell, and I appear here on behalf of Perry R. Bass et al. Petitioners in Number 105. My clients have the somewhat dubious distinction of offering the largest single reduction of any firm certificated price in the Permian Basin area as a result of the area rates prescribed by the Commission in this case. During the time allotted me for oral argument, I would like to focus your attention on the failure of the Commission to include any amount in its cost base area rate to compensate producers such as my client for a substantial out-of-pocket cost incurred in rendering, gathering and treading services which are of demonstrable value to the consumer in which if performed by a pipeline would admittedly be included in the pipeline's cost of service to its customers. If my time permits, perhaps after lunch, I would also like to briefly comment on a procedural due process question concerning the quality standard set by the Commission. From the consumer standpoint, the natural gas business is divided into four basic functions. First, the gas must be found and produced at the well bed, then it must be gathered for many different wells, might I say this gathering function is necessary whether it's oil-well gas, whether it's gas-well gas, whether it's new gas, whether it's old gas. In some instances, the gas contains impurities and must be cleaned. In other instances, the pressure of the gas is too low and it must be compressed before it can be delivered to the interstate pipeline companies which transport at long distances to distribution companies which in turn sell it to the housewives and to the other consumers. Now each of these functions must be performed if gas is to be made available to the consumer at the burned tip. It is undisputed that the area rates in this case were fixed on the basis of the Commission's computation of the cost of gas at the wellhead that is before gathering, before any treading. We don't challenge any of those false computations. What we do challenge is that the Commission admittedly did not determine or make any allowance to compensate producers such as my clients for the cost they incurred performing services beyond the wellhead. Byron R. White: Did they address themselves to it at all? Did they deal with the issue? J. Evans Attwell: Yes they did. I think that Mr. Solomon dealt with it yesterday. Mr. Justice -- alright, I believe that he said that -- Potter Stewart: (Inaudible) J. Evans Attwell: I was -- I'm planning to touch on that and meet that issue -- Potter Stewart: That'd be fine. J. Evans Attwell: But as I understand his position, he says that if they bring the gas up to the quality standard, they're compensated because they get the ceiling price. I think that the answer to that is threefold. First, I want to make it very clear to the Court that no processing or treading cost were included anywhere in the cost computations used by the Commission in determining its area rates. I think secondly, the argument of the Commission ignores the fact that these processing and treading services actually exceed the minimum standards prescribed by the Commission. In other words, my client for instance, they compressed the gas 20% more than the Commission would require and yet they get no compensation for that, no compensation for the extra cost that they incur to doing. And of course, the Commission's quality standard by bringing it up to the quality standard has nothing to do with gathering whatsoever. If the gas is delivered at the wellhead the area price applies. If it's gathered over many, many miles and many, many thousands of acres, the price is the same. Oh, I think that that's the answer to that. What we really challenge here is that the Commission admittedly did not determine or make any allowance for such cost. We submit that in fixing area rates the Commission simply cannot regard -- disregard actual legitimate cost of gathering and treading gas after it was produced but before it is delivered to pipelines. This cost benefit the consumer and some allocated portion should have been allowed by the Commission in fixing just and reasonable rates in the Permian Basin. Such gathering and treading cost actually involves millions and millions of dollars. For example, my clients alone own and operate the equivalent of 253 miles of 3-inch pipeline that connect and gather gas from hundreds of wells over many thousands of acres. We have installed over 24,000 horsepower compression to compress the gas to the pressure required by the pipeline, which I have just stated is actually 20% higher than the Commission standard. Our investment in this gathering in the compression plant is our equipment is -- in excess of $13.8 million. Of course the total investment of the other producers in the Permian Basin rendering similar services is much greater. There is no question that if these services had been performed by pipelines, they would have been included in the pipelines cost of service. This Court had so held on many different occasions. It follows that when producers such as my client provide identical services, they too should be compensated for their cost. Now the Tenth Circuit attempted to wash its hands of this problem. It says -- Abe Fortas: When you say they should be compensated for that cost, you mean that they ought to be a rate plus something else fixed by the Commission or do you mean -- or are you suggesting that there was error in the failure to include this in cost basis? J. Evans Attwell: Mr. Justice Fortas, they have cost of gas at the wellhead. Abe Fortas: I understand -- J. Evans Attwell: I say -- Abe Fortas: -- but I'm asking you which -- for which position are you contending? J. Evans Attwell: I'm contending that if that wellhead price is correct, we will assume that for the sake of argument that then they got to put an increment on top of that -- Abe Fortas: Well, (Voice Overlap) -- J. Evans Attwell: -- of area basis to compensate -- Abe Fortas: Alright. J. Evans Attwell: -- those producers in the area adduced in these amounts. Abe Fortas: Let's see if we can try to very clear about this. Are you saying that the order we have before us is an error or failure of the Commission to include and increment over and above the rate fixed? J. Evans Attwell: Precisely. Potter Stewart: For certain producers? J. Evans Attwell: For certain producers. The Tenth Circuit attempted to wash its hands to this issue with. It said -- it stated and I quote that it involved the troublesome field of cost allocations. This is misleading because the Court failed to recognize that the Commission made no allocation of the cost of gathering and treading gas. It simply did not include allowance of any kind for these services. Our complaint is not that the Commission erred in allocating the cost of gathering and treading but that it completely disregarded such cost despite the fact that they are actual, legitimate and necessary cost which benefit the consumer and therefore must be included in any lawful scheme of area rate regulation. Certainly, there's going to be an allocation of these costs between gas and liquid. It has going to have to be made but it is our position that this is a matter that should be made in the first instance by the Commission. Earl Warren: We'll recess now.

William H. Rehnquist: We'll hear argument next in Number 01-9094, Abu-Ali Abdur' Rahman versus Ricky Bell. Mr. Liebman. I think the Court would like to hear argument on the questions we asked for supplemental briefing on, as well as your original petition. James S. Liebman: Okay. Mr. Chief Justice, and may it please the Court: The question I'd like to take up first is why, in our view, the unusual circumstances of this case satisfy the two sets of demanding requirements that are on the petitioner here to succeed: 1) he has to show that this is not a successive petition, and 2) he then additionally has to get over the high hurdle that 60(b) imposes. Let me, though, go first to the jurisdictional questions that Your Honor referred to. This case was in the court of appeals in three ways. It was there because Mr.... the petitioner here went into the district court and he said, here's my 60(b) motion, I'd like to get 60(b) relief. The district court... and this is on pages 42 through 44 of the record, of the joint appendix... said very, very clearly that it was going to make two rulings. First it said, this is not a Rule 60(b) motion, it is something else, it's a successive petition. Because it's a successive petition, you cannot get 60(b) relief in this court, and I'm going to refer or-- Sandra Day O'Connor: That's the district court judge? James S. Liebman: --Right. What I... but what that did, Your Honor, was to establish a final disposition. It terminated all of the petitioner's rights under 60(b). There were no rights left. He told the district court-- William H. Rehnquist: Couldn't he have moved to... in the Sixth Circuit... to remand the case if he disagreed with that? James S. Liebman: --He did. He did, Your Honor. William H. Rehnquist: Well, but that means that the district court's decision was not final. James S. Liebman: Well, it was final for purposes of the 60(b), because the... for purposes of the district court's view there could be, would be, never could be any 60(b) relief. Sandra Day O'Connor: But it wasn't a final judgment in the sense that an appeal could be sought from that, because it was transferred. The district court judge transferred it. He didn't dismiss the 60(b) motion, which I would have thought the district court might have done, and then it perhaps could have been appealable. James S. Liebman: Well, Your Honor, all of that's right, and if the belts don't work, let's go to the suspenders. He... the case was transferred to the court of appeals. The court of appeals, however, could not take jurisdiction over the case unless the prerequisite for its jurisdiction was established, and if you look at 2244(b)(3), which is in our appendix to our brief at page 1a-- William H. Rehnquist: Page 1a of the blue brief? James S. Liebman: --1a of the blue brief, it's very clear under (b)(3)(A) that it has to be a second or successive application before the court of appeals has any jurisdiction to do anything with it, so its jurisdiction turns on the question whether it was a successive petition or not. If it wasn't one, it could not act under this statute and would have to remand back to the district court. That's exactly what happened in the Martinez-Villareal case. Sandra Day O'Connor: Well, what... what does the statute, the AEDPA statute contemplate? That somebody in this defendant's position could have applied to the court of appeals for permission to file a successive petition? Could that have been done here? James S. Liebman: Yes. Sandra Day O'Connor: That was not done? James S. Liebman: It was not done here because he was saying all along this was not a successive petition, if it was, he would not satisfy it. He-- William H. Rehnquist: Go ahead. James S. Liebman: --He was saying that he did satisfy the requirements of 60(b), that the statute recognizes a difference between certain-- Sandra Day O'Connor: Well, then, to get an appeal on that... it sounds so complicated, because the law has gotten so complicated with AEDPA, but maybe he should have sought transfer back to the district court so the district court could dismiss it and give something from which an appeal could be taken. James S. Liebman: --Oh but, Your Honor, in Martinez-Villareal, I think it's very clear this case is exactly the same as Martinez-Villareal, which this Court ruled expressly on the... the first question it took up was the jurisdictional question. What happened there is that the petitioner went to the district court, the district court said, this is a successive petition, I'm transferring, you can't be in this court. He then took an appeal, and he went up on a transfer saying, okay, you've got the transferred motion in front of you. The court of appeals actually dismissed the appeal saying, we don't have that, but it decided in the context of the transfer... and this is very standard procedure here now under AEDPA... it decided, first question first, do we have jurisdiction, and it said, you know what, we figured out that we don't have jurisdiction because this is not a successive petition, so we remand back to the district court. This Court then took cert on that question, and the first question it asked was, do we have cert here because of subsection (e) here, and it said, we do have cert here because (e) is very clear. The grant or denial of authorization can't come to the Court. William H. Rehnquist: Well, let's go back to (3)(A) for a minute, Mr. Liebman. It says... as you point out... before a second or successive application permitted by this section is filed in the district court. You say all of that is a prerequisite, I take it, for the court of appeals acting, but supposing it's a second or successive application that is not permitted by this section. That wouldn't deprive the court of appeals of the jurisdiction to say no, would it? James S. Liebman: Absolutely. In fact, it has the obligation, not just the jurisdiction, to decide whether it is a successive petition, because if it isn't, it can't decide the case, because then it's got to start with the district-- William H. Rehnquist: Well, but... so then the first, the... the first clause of (3)(A) is not really, strictly speaking, entirely jurisdictional. James S. Liebman: --Oh, well I... I'm not actually sure it's the first clause. It says that the applicant shall move in the appropriate court for an order authorizing that. That's what essentially gives the court the jurisdiction, but it's got to be for an order authorizing what qualifies under the statute as a second and successive application. This was not a second and successive application. Therefore, as in Martinez-Villareal-- William H. Rehnquist: Well, that's, of course, part of the issue in the case. James S. Liebman: --Right, but that... his position was it was not, and therefore the court needed to dismiss that case, and it had two options at that point. It could either remand it back, which is the majority approach, or it could simply have dismissed, and then he could have gone back and filed in the district court again, which is what a few courts do. Ruth Bader Ginsburg: Mr. Liebman, initially in this case, when the district judge transferred... I think it got one on the State's recommendation that that's how you handle these cases. On behalf of the defendant, did anyone ever say, please enter judgment against me under 60(b), I want to make this... test whether this is a 60(b) case or a habeas case? James S. Liebman: That did not happen, Your Honor, although petitioner understood the court's decision, if you look on pages 41 and 42, to say this... it expressly says, you cannot file 60(b) here in this court because it's automatically successive. You cannot do it. You will never get any rights under 60(b). Ruth Bader Ginsburg: But he could have asked to test that. He could have said, please don't transfer. James S. Liebman: He could have, but in... Your Honor, in the Martinez-Villareal case, there was no such question, no... no-- Stephen G. Breyer: --see what Martinez-Real has to do with it. I may be missing it, but I thought that in... in this case, the reason that you cannot appeal from the court of appeals order refusing to give you permission to file a second habeas is because there's a statute that says you can't come to this court when a court of appeals refuses to give permission on second habeas, and none of that was involved, to my knowledge, in Martinez-Real. James S. Liebman: --Oh, yes-- Stephen G. Breyer: That was a question about whether or not there was a premature decision, or whatever it was, and they sent... the court of appeals sent it back for adjudication on this issue. James S. Liebman: --No, Your Honor. Stephen G. Breyer: No, it's... I'm not right? James S. Liebman: The provision (e) here says that the grant or denial of an authorization cannot come up to the Court on cert, so the fact that the court there in-- Stephen G. Breyer: You mean, Martinez-Real was a grant of a petition for second or successive? James S. Liebman: --No. It was-- Stephen G. Breyer: Well, then, what has that statute to do with it? James S. Liebman: --What it said was... and this is what the Court said in Martinez-Villareal quite clearly. There's a threshold question. The threshold question is, do we have in front of us a second or successive petition. Stephen G. Breyer: In Martinez-Real? James S. Liebman: Yes. Yes, yes, yes. That was the question there, because Martinez-Villareal filed a request to-- Stephen G. Breyer: And what did the court of appeals say was the answer? James S. Liebman: --It said, the answer is, this is not a second or successive petition. Stephen G. Breyer: Fine, so then the statute doesn't apply, I guess-- James S. Liebman: Oh... but here the court said... if I can be clear about this... the court said two things, and it said them actually in different orders. January 18 order, it said, this is a successive petition, so now we've got to go to the gateway question of whether you can get into court. And then a couple of weeks later, actually almost a month later, February 11, it said, you don't meet the gateway requirement. Stephen G. Breyer: --I... I just don't see how you get around the statute that says that you can't come here after a court of appeals either grants or denies the second or successive. James S. Liebman: Well, that's what I'm-- Stephen G. Breyer: Which wasn't at issue, I take it, in the other case. James S. Liebman: --That's what I'm trying to say. The very first thing that our cert petition says in this case is, we are not asking for cert from the question of whether or not we meet the gateway requirement. Stephen G. Breyer: Yes, but you... one doesn't really ask for cert from... from a question. One asks for cert to review an order, and the order of the court of appeals is an order granting or denying. James S. Liebman: This order had multiple parts, Your Honor. It was actually divided up into multiple parts, and what he said was, we are asking for cert from some parts of the order, segmented out and given paragraphs. We are not asking for cert from other parts of that decision. William H. Rehnquist: But I think the question is whether you can ask for cert for any... from any... part of it in view of the provision of the statute that it's not... I just don't... I'm not sure you can bifurcate the order and say, we're not challenging the denial, we're challenging, in effect, the reason for the denial. James S. Liebman: Well, this was not a denial. What the statute says... and I think that's really important... is the grant... I'm reading (e), as we go over from (1)(A) to (2)(A). The grant or denial of an authorization by a court of appeals to file a second or successive application shall not be appealable, but he was not appealing the grant or denial. He was appealing the preliminary question whether it even was, whether the court even could have taken jurisdiction of that because it had a second or successive-- Antonin Scalia: That's not a judgment. You... you appeal judgments, you appeal orders, you appeal dispositions of the lower court. You... you don't appeal statements or... or expressions. You... you appeal dispositions. The only disposition here was the denial of the... of the application. James S. Liebman: --Well, Your Honor, then let me go to the garter if the belts and suspenders haven't worked here. Petitioner filed a motion in the court of appeals on his original appeal, and he said, in this appeal, what we would like you to do is, rather than issuing the mandate on the judgment that you issued before, which went up on cert, we would like you to remand this case in order for the court below to take up these issues, whether on 60(b) or in other ways, and the court denied that motion. It didn't say why, but it denied that motion without, expressly in regard to that, doing any kind of gatewaying. It just said, we deny it. Now, it gives the reason in the earlier January 18 order that it thought that any post judgment motion in one of these cases was automatically successive, and that's our first question-- Stephen G. Breyer: All right, but-- James S. Liebman: --which is, that was a mistake-- Stephen G. Breyer: --on that... now, this will get to the merits, which I'm sure you'd like to get to-- James S. Liebman: --Yes. Stephen G. Breyer: --but I thought that the argument that what the court of appeals did was right is roughly the following, that what your client should have done, or the way it should have worked is that the district court initially dismissed... dismissed on the ground that there was a procedural default... his initial parts of the initial petition, because, said the district court, he didn't exhaust those, and he can't do it now because the time is up, and your client never appealed that ruling in... the first time. What he should have done is appealed it. Then, when he asked for cert and the Tennessee statement came down, he would simply have amended his cert petition and allowed us to GVR in light of our case in Tennessee, but he couldn't do that, because he hadn't appealed that in the first place, and therefore he had a final ruling, a final judgment against him on that issue, and... and that's why... that's why what the court of appeals did was right, and that's also why it really is a second and successive, because after all, you... it's... you want a district judge to reopen a judgment where he made a mistake but you didn't appeal it. James S. Liebman: Your Honor, you're absolutely right, the premise, which is that Rule 60(b) or related motions in the court of appeals cannot be used to fill the office of an appeal, but there's a very established doctrine there. It came up in the Muniz case, in the Blackmon v. Money remand that this Court made, and the question there is whether it was reasonably available to him at that moment to make an appeal. If it was, 60(b) doesn't come into play, and that's perhaps the most important question in this case. As of the time Mr. Abdur' Rahman filed his brief, his first brief, opening brief in the Tennessee... I mean, in the Sixth Circuit on August 5, 1999, this Court's O'Sullivan decision had come down two months earlier. O'Sullivan read a rule of Illinois procedure establishing a discretionary review process that is identical in terms. The State of Alabama has actually gone through the terms in its brief and shown that they're identical. This Court said, and I quote, without more, those words are not sufficient to tell us that that discretionary procedure is outside the ordinary post-conviction review process in that State. In this State of Tennessee at the time, there was that rule, identical to the rule in O'Sullivan, and nothing more in the law. In fact, the State concedes in its brief that there was nothing in Tennessee law at the time besides the rule. So it was not available to him at that point for the very reason that if he had made that argument, it would have been a frivolous argument because it would have run foursquare into the precise holding of a decision of this Court but two months before. It was only when Rule 39 came down after the appeal was over, while the case was on cert, that it said no, no, no, no, the law of Tennessee has been since 1967 that our discretionary review procedure in Rule 11 has never been part of the regular and routine State post-conviction review process that we have-- William H. Rehnquist: Mr. Liebman, we've decided a couple of cases, one about 30 years ago, Harris against Nelson, and then another case called Pitchess, in maybe... that indicate that the Federal Rules of Civil Procedure, and particularly 60(b), do not apply if they conflict at all with the habeas regulations. Now, you don't cite either... either of those cases in your brief. James S. Liebman: --Yes, we do. We cite-- William H. Rehnquist: I'm sorry. I-- James S. Liebman: --We cite both of them on-- William H. Rehnquist: --I didn't see them in the index. James S. Liebman: --Well, I believe that they are cited in our... well, I guess you're right. I thought we had cited them in the reply brief, but we make reference to them where we point out, if I can find it here... yes, we do, Your Honor. On page 3 of our reply brief, the yellow brief, we cite Pitchess and Browder. William H. Rehnquist: You didn't cite them in your opening brief. James S. Liebman: We didn't. The State raised them, and we responded to them, and the point is that we actually think that Martinez-Villareal and Slack stand on top of Pitchess and Browder, so that they were obviously decided in that same context, and so we cited the more recent case, but in any event in our reply brief, what we point out is, this Court has been very clear to say, is there a conflict between a Federal Rule of Civil Procedure and the habeas jurisprudence? If so, the civil rule doesn't apply. If not, it does apply, and as almost all of the courts of appeals have held, there are certain very limited circumstances when a 60(b) motion does not interfere with the policies of the habeas jurisprudence, and in those limited number of cases, which includes this one, it is appropriate to use 60(b). William H. Rehnquist: Well, I thought the Second Circuit was the only case that really supported you-- James S. Liebman: Oh, no. William H. Rehnquist: --in this area as to whether a 60(b) rule can be used as a substitute. James S. Liebman: No, Your Honor. We don't at all stand on the Second Circuit approach to this. The majority rule is that it is a case-by-case analysis. It's... for example... the Dunlap case where Judge Posner recently cited all of the lower court opinions, and what he said was, the majority rule is that you have to look. You have to say, is this the kind of 60(b) that avoids the problems that successive petitions are... cause that we have a rule for? If they do, decide the 60(b) motion. If not-- William H. Rehnquist: How... how long after the district court ruled that your claims were not... not exhausted, how much time elapsed between then and the time you filed your Rule 60 motion? James S. Liebman: --We filed the Rule-- William H. Rehnquist: 3-1/2 years, wasn't it? James S. Liebman: --But it was the key point-- William H. Rehnquist: Just answer my question. James S. Liebman: --Yes. Yes. Yes, Your Honor-- William H. Rehnquist: It was 3-1/2 years? James S. Liebman: --I think 3-1/2 years is the right... but the reason is that the trigger for the 60(b) motion did not come down until June 2001. Stephen G. Breyer: That's true, but the... now I'm thinking, when I read the Sixth Circuit's opinion again, they're not really saying anything different. I think they must mean... I grant you it can be read either way, but I can't believe that they mean every 60(b) motion no matter what is second or successive. It seems to have arisen in cases where they had good reason to think that the 60(b) motion in that case was second or successive, as in your case they are looking at the 60(b) motion as a substitute for a new petition for the reason that it was dismissed the first time as a procedural default, which is the end of this matter. James S. Liebman: Well-- Stephen G. Breyer: And you didn't appeal it. Rather, for whatever set of reasons, you wait... I mean, not saying it was your fault, but you wait and go back and do this other thing. James S. Liebman: --Well, Your Honor, two points. Stephen G. Breyer: So is there... is there really a minority rule at all? James S. Liebman: Well-- Stephen G. Breyer: Is there some court that really meant it, that no matter what, 60(b) is always second or successive? James S. Liebman: --That is the argument that the State made here, and it's what the district court said, and I can tell you the district court believed it, but it doesn't matter here. I don't want to get off on that, because we think that whatever the rule ought to be, this is the kind of 60(b) motion that is not successive for two reasons. First of all, it is... it relies upon legal and factual issues that are entirely within the four corners of the original proceeding. There's nothing new here. The law, the facts, the evidence, everything is the same. Secondly, so that means you're not getting out-- Anthony M. Kennedy: Well, the law's new. I mean, that's your whole point. James S. Liebman: --Well, but it isn't new, Your Honor. It was a declaration of the law as it existed all the way back in 1967. Anthony M. Kennedy: Well, all right, I'll-- James S. Liebman: But it's like the Fiore case, Your Honor, where the Pennsylvania supreme court said yes, we came down with this interpretation of the State statute, and it's true the lower courts had all seen it differently up to that point, but we were telling you what the statute meant all the way back, and this Court treated it as, quote, old law. Ruth Bader Ginsburg: --But then you said you didn't need to put it in your... make a cross-appeal of it because you didn't think it was a tenable argument, so you can't... I don't... I don't see how you could have it both ways, to say it was the law all along, but we didn't have to say that that was the law because O'Sullivan-- James S. Liebman: Well, because-- Ruth Bader Ginsburg: --hadn't come down, or had just come down. James S. Liebman: --Well, Your Honor, what O'Sullivan says is, if there is a clear statement of law by State law, by rule or decision that says... as the South Carolina-Arizona provisions cited in this paragraph say... that this particular discretionary review procedure, quote, is not available, then the Supreme Court and the Federal courts will respect it, but otherwise, if we don't know what the law is, or it's not clear, then we don't need to respect it, so that was-- Ruth Bader Ginsburg: But the appellate... the appellate brief in this case, the brief in the Sixth Circuit, when the... when the prosecutor was appealing on the ineffective assistance of counsel, that was filed before O'Sullivan came down, wasn't it? James S. Liebman: --The State's brief was filed before, petitioner's brief filed after. Ruth Bader Ginsburg: But the point at which you could have filed a cross-appeal was before. James S. Liebman: Oh, Your Honor, that's a very important point. In our certificate of probable cause to appeal we asked the district judge, starting with point 1, the prosecutorial misconduct claims and the procedural default ruling on them is what we want to take up to the court of appeals on our appeal, and the district court granted a CPC... a certificate of probable cause... on that ground, so that was in the case, it was in the appeal, and it was specifically in the mind... well, it was on the paper that this was the issue that the cross-appeal was going to be focused on. Stephen G. Breyer: I thought you didn't appeal. I thought you did not appeal the first time... we're back in the year 2000, or early 2001. James S. Liebman: '99, actually. Stephen G. Breyer: '99? James S. Liebman: Yes. Stephen G. Breyer: All right. At that time I thought you did not appeal the district court's ruling that you had procedurally defaulted because you hadn't exhausted claims X, Y, and Z, and the time had run. James S. Liebman: Well, all I would say-- Stephen G. Breyer: Am I right about that? James S. Liebman: --You're right, but they were in the certificate of probable cause, which is... you have to get that first, but of course the court of appeals doesn't reach your certificate of probable cause. Stephen G. Breyer: No, no, so I don't see how that helps you. James S. Liebman: Well, I'm just saying... well, it does help in this sense, Your Honor, I think, which is that until O'Sullivan came down and removed the argument that petitioner thought he had, he was planning to raise it, but when O'Sullivan came down, after the CPC, but before he actually got to file his brief, now suddenly the claim that he wanted to raise looked frivolous, because there was not a declaration of State law on the point. There came to be a declaration of State law, and when it came sua sponte, it happened to say, because the court in Tennessee believed that this to be... was the case... that the law of Tennessee has always been since 1967 that this was never part of the post-conviction review process, so-- William H. Rehnquist: Hasn't the Sixth Circuit had an opinion on that subject as to whether the rule promulgated by the Tennessee supreme court was a change, or was it not? James S. Liebman: --No, it has not. The issue is percolating in the lower courts and in the Sixth Circuit, but it has not ruled yet. William H. Rehnquist: But isn't the-- John Paul Stevens: --The Sixth Circuit did... the Sixth Circuit had held before in a case arising out of Kentucky that if you don't go to the top court, you have not exhausted. James S. Liebman: They said that in Kentucky based upon a Kentucky supreme court decision in 1985. John Paul Stevens: Right. James S. Liebman: After that point, there are five or six decisions of the Sixth Circuit saying that failure to exhaust that remedy is failure to exhaust. There is no similar decision in Tennessee at all in the court of appeals before O'Sullivan came down, because the understanding of practice there, and I know because I practiced there at that time, was that this didn't need to be exhausted. Stephen G. Breyer: All right, so isn't the right way to do this, if you were writing it from scratch, we have the statute, you simply say, look, this is what second and successives are for. When the law changes just in the middle of the case, bring a second and successive. That's the rare case where it should be allowed. James S. Liebman: The law did not change. Stephen G. Breyer: I mean, I don't-- --But I mean what happened to you. Isn't that the case that they're there for? James S. Liebman: This... the second and successive is designed to avoid every change in the law being the basis for a habeas petition, but this is not a change in the law. It's exactly... every petitioner literally argued that not only is this discretionary, so it should not be exhausted, but he also said the nature of this discretionary process shouldn't be exhausted because it's different from post-conviction. David H. Souter: Well, may I ask you one more question? If it had merely been a change in Tennessee law, that would not have been a predicate for a second and successive habeas, would it? James S. Liebman: Absolutely. If it is a change of law, it's preempted by the terms of the successive statute which says, we've got a rule here for changes in the law, but that's why this isn't successive, because this is not a change in the law, it's within the four corners-- William H. Rehnquist: But doesn't that foreclose you, because when you're... if it's not second and successive as defined by AEDPA, that means those are the only kind you can bring? James S. Liebman: --No, Your Honor-- William H. Rehnquist: Not that you can pull something else in under Rule 60. James S. Liebman: --No, Your Honor. David H. Souter: No-- James S. Liebman: The State agrees if it's fraud, if... Martinez-Villareal, where you've got some State court decision that changes everything-- William H. Rehnquist: --Well-- James S. Liebman: --it's got to be-- William H. Rehnquist: --are you suggesting there was fraud here? James S. Liebman: --No, no, no, I'm saying, Your Honor, that there are certain circumstances where something that is literally second in time does not qualify as a second or successive petition that triggers 2244, and so we need to know what that is, and the two standards are when it is within the four corners of the first petition and it completely undermines-- William H. Rehnquist: Now, what's... what's the authority for that statement? James S. Liebman: --The authority is Martinez-Villareal, Slack, and Calderon, and a huge body of lower court law that establishes those very, very narrow circumstances where it's so tied into the first petition because it's the same facts, and it so undermines that first judgment that there's no judgment left, that you need something to substitute for it, but you don't have a successive petition. William H. Rehnquist: Thank you, Mr. Liebman. I take it you're reserving your time? James S. Liebman: Yes, I am. William H. Rehnquist: General Summers. Paul G. Summers: Thank you, Mr. Chief Justice, and may it please the Court: This Court lacks jurisdiction of this case and the writ should be dismissed, but if this Court concludes that it does have jurisdiction, then the alleged 60(b) motion was a prohibited second or successive application because it attempted to revisit a prior final adjudication based upon alleged error of fact or law. Turning to the jurisdictional issue, the court of appeals did not have jurisdiction to review the transfer order. The transfer order was not a final order. It had no jurisdiction in the district court. The district court had no jurisdiction over the... over the motion because it considered it as what it was. It was a second or successive application. John Paul Stevens: Doesn't the jurisdictional issue really turn on whether it was a second or successive? Paul G. Summers: No, Your Honor, it does not. Under the gatekeeping authority of 2244(b)(3) of AEDPA, then the sold province as to determine whether or not a second or successive application should be granted or should be denied is in the province of the Sixth Circuit. David H. Souter: But is it strictly in the province of the Sixth Circuit to determine that what it has before it is a request for something that should be called a second or successive petition within the meaning of the statute? If it is, they've got the final word, but whether it is is a separate question. Paul G. Summers: Your Honor, our position is that you can't separate these two functions. Under AEDPA, and under the clear enactment of Congress, when Congress gave the court of appeals the exclusive and sole jurisdiction as to whether or not a... an application or leave for application for a second or successive should be granted or denied, it also gave them the exclusive authority to determine whether it was-- David H. Souter: Well, it didn't do so in so many words. I mean, is your argument that if we split this question into a) jurisdictional fact, b) the authority of the court if the jurisdictional fact is present, if we split those two questions that there's going to be constant litigation over the jurisdictional fact, and that's why we ought to read the statute your way, or is there some point of text that is not occurring to me that supports you? Paul G. Summers: --Absolutely, Your Honor. David H. Souter: Well, it's one or the other. Paul G. Summers: Well-- [Laughter] David H. Souter: Is it text or policy? Paul G. Summers: It's the first one, Your Honor. David H. Souter: Okay. Paul G. Summers: If you were to split those two decisions that the court of appeal has jurisdiction over, then there would be a proliferation of appeal of that first predicate decision. The decision, the first-- David H. Souter: Well, is it going to be... I mean, is it going to be a difficult question in most cases? I mean, this is an extraordinary case. You can see how the jurisdictional fact question gets raised here, but you know, in most cases is this going to be even a colorable issue? Paul G. Summers: --Your Honor, I don't... I would not... I don't think this is, frankly, an extraordinary case to determine whether or not it was a second or successive. That is to say that when the Sixth Circuit got the transfer order, they saw just what it was, and that it was a second or successive application-- John Paul Stevens: Yes, you say that, but the relief sought in the 60(b) motion was not relief from the State court judgment. It was relief from the final judgment in the habeas proceeding because of the Tennessee rule, so they asked to reopen the habeas proceeding, not to file a second habeas proceeding, and they asked to reopen it, and just to have a claim which was undecided in that proceeding decided, which had never been decided, so there was not asked for second consideration of a claim, just for the first consideration. Paul G. Summers: --Yes, Your Honor. What they asked for was the relitigation of a claim that had been... that... that-- John Paul Stevens: Not of a claim, a first litigation of a claim. Paul G. Summers: --They... they asked for... they asked for the relitigation of a prior final determination, which we... we submit and we... our position is that this was, in fact, a second-- John Paul Stevens: Did they ask in the 60(b) motion for relief from the State court judgment which would be the relief requested in the habeas proceeding? Paul G. Summers: --They asked... I'm sorry. John Paul Stevens: Did they ask for relief from the State court judgment in the 60(b) motion, or just from the habeas court judgment? Paul G. Summers: They asked for relief from the... from the habeas judgment in the... in the district court-- John Paul Stevens: So then it was a 60(b) motion, because that's what 60(b) is directed at, where the second or successive petition would have asked for relief from the State court judgment. Paul G. Summers: --Well, they alleged that it was a 60(b) motion, but when the district court received the motion, the district court put substance over form and saw clearly that it was a second or successive-- John Paul Stevens: Well, you call it that, but supposing instead of the... the Tennessee rule, they had been able to demonstrate it... very improbable, just to give the hypothesis out... that a waiver of the claim for the prosecutorial misconduct had been executed and the waiver was false, that there was a fraud on the court in... in having that issue precluded from review. Would a 60(b) motion have been permissible then? Paul G. Summers: --It would be the inherent authority of the... of the district court to take care of a situation of fraud on the court. John Paul Stevens: By granting a 60(b) motion? Paul G. Summers: Well, we don't think it would even have to be a 60(b) motion. John Paul Stevens: Well, wouldn't that be the office of a 60(b) motion, to correct that very fraud? Paul G. Summers: Fraud on the court that would impugn the very integrity of the prior final adjudication would, in fact, be... be-- William H. Rehnquist: Well, you go on a different section of Rule 60, wouldn't you-- John Paul Stevens: --That's correct. Paul G. Summers: --Yes. William H. Rehnquist: --the section of Rule 60 that specially deals with fraud. Paul G. Summers: That's right. John Paul Stevens: But in that situation a 60(b) motion would be permissible under that section? Paul G. Summers: If there was a fraud on the court. John Paul Stevens: Right. Paul G. Summers: But that... but the fraud on the court would undermine the complete efficacies of the proceedings, and that the final judgment wouldn't even be final, because it would be a sham. John Paul Stevens: Well, but you have to file a motion and have those facts developed in order to do it, and 60(b) is the avenue for doing that. Paul G. Summers: That... I mean, that could be a possible avenue, but that... but that would only go as to the fraud on the integrity-- John Paul Stevens: And here, the relief requested is precisely the same, namely that one claim was not heard which was in the case, for a reason that was... turned out to be a gross mistake of the law. They thought the law was exhaustion because of a rule of law, and it turns out they were wrong, so you have... instead of fraud, you have a mistake of law. Now, maybe that doesn't... doesn't justify 60(b) relief, but it certainly is a classic case of what 60(b) is directed to... to solve. Paul G. Summers: --Well-- John Paul Stevens: Directed at the final judgment in the habeas proceeding as opposed to the final judgment in the State proceeding. Paul G. Summers: --Of... of course, Your Honor, that argument would fly in the face of the finality requirements of AEDPA, which only... which only gives us... which only gives us limited circumstances to relitigate-- John Paul Stevens: But that's true of my fraud case, too. Paul G. Summers: --Well, but in the fraud case, Your Honor, the fraud on the court means that the original judgment is a complete sham, is a complete sham, and there was no-- John Paul Stevens: And here it isn't a sham, it was just a mistake. They misread the law. Paul G. Summers: --Well, they want it both ways, if it please the Court. They either say that it was a new rule or an... or an old rule that clarified Tennessee law. If it was a new rule, then that would contravene 2244(b) under AEDPA. David H. Souter: But that-- Stephen G. Breyer: --What is the right way to do it? That is, in your opinion, how... suppose we had a... we have a defendant, a petitioner, a convicted person, and he has a whole lot of claims, and there he is in Federal court and he brought all of his claims up to the State supreme court but for three, then he suddenly thinks, oh my God, I wish I'd brought those up, too, and the district judge says, well, you sure had to, so you lost them, because it's too late now. Procedural default. It seems obviously right, doesn't even appeal that part of the case. But while the case is on appeal, this Court says, he didn't have to go to the State supreme court with those three claims if the State supreme court agrees, and then State supreme court then does. All right. Now, there he is. Under the law as it is right now, he can make his three points. He can make his three claims, and yet as it was before, he couldn't, and it's right on the case, it's still ongoing. What's supposed to happen? Paul G. Summers: When the-- Stephen G. Breyer: In your opinion is there just... is there no way a person could say, judge, please read the supreme court and the Tennessee court, and you'll see that your ruling was wrong, and believe me, that's right, so what is he supposed to do? Paul G. Summers: --A prior final determination... a prior final determination by the district court as to the procedural default should be conclusive. Stephen G. Breyer: So you're saying he's just out of luck, nothing? Paul G. Summers: Yes, sir, because... because-- Stephen G. Breyer: It seems terribly unfair-- Paul G. Summers: --Well, but we... yes, Your Honor, but under the provisions of AEDPA there are two circumstances where he could file a second or successive, which we say is what he has, in fact, done here. One, of course, is if it's a new claim involving a constitutional law that's made retroactive by this very Court, or newly-discovered evidence to show factual innocence, but when that court... when that district court... makes a final, a prior final adjudication, then that is... that should be... that should be final. He should appeal that decision. He should appeal that decision-- Ruth Bader Ginsburg: --General Summers-- Paul G. Summers: --through the normal appellate process. Ruth Bader Ginsburg: --General Summers-- Paul G. Summers: He did not in this case. Ruth Bader Ginsburg: --You... are you... you're making the general point that's not peculiar to AEDPA? I... tell me if my understanding is correct... that 60(b) is not supposed to do service in place of an appeal. Paul G. Summers: Yes, Your Honor. Ruth Bader Ginsburg: So if a district court rules incorrectly, and you didn't appeal that, and then there's a clarifying decision by some other court that really shows the district court was incorrect on the procedural default, you can't then say, ah, give me the relief under 60(b) that I could have gotten if I had taken a timely appeal. Paul G. Summers: Yes, Your Honor. If the-- Ruth Bader Ginsburg: And that's wholly apart from AEDPA. Paul G. Summers: --Yes, Your Honor, that's correct. If this petitioner had decided that instead, the district court found that he had improperly exhausted his remedies under State law, that he'd showed no cause of prejudice or fundamental miscarriage of justice, that he had procedurally defaulted, and that he, his claim was... it was conclusive that he had no habeas relief, if the petitioner had wanted to appeal that... had wanted to find out whether or not the district court was wrong... he should have appealed that case. He did not. Under... under the case law but also under 60(b) doctrine a 60(b) motion is not a substitute for an appeal. He did not appeal that adjudication by the district judge. He's out of business so far as that's concerned. What he filed in the district court, the district judge got that document, he looked at substance, and the district court said, this is a second or successive. The only jurisdiction in the world to determine whether to grant or deny second or successive is the court of appeals. When that court of appeals got that transfer order, there was no termination. They got what was-- John Paul Stevens: Is it conceivable that a district judge might erroneously in some case call something second or successive and it really wasn't? Is it ever possible for him to do... make that? Paul G. Summers: --Well, human beings, it's certainly possible. John Paul Stevens: And if he does make a mistake, what's the remedy for it? Paul G. Summers: There could be a motion to transfer in the court of appeals. The court of appeals if, in fact, finds that it was improvidently transferred, could transfer it back. That would be that remedy, Your Honor. John Paul Stevens: But what if instead... I gave you a fraud example... instead of that it was a mistake. The judge thought that the petitioner had waived the case. They thought there was a document in the file waiving this issue and he was just dead wrong, and he said, then the... after the decision... the final decision in the habeas case, the judge... the litigant finds out that the judge incorrectly relied on a mistaken representation of fact. Could he not file a 60(b) to correct that? Paul G. Summers: No, Your Honor. If it was a mistake of fact, if it did not go to... to undermine the integrity of that being a final adjudication, no. John Paul Stevens: Well, it... it undermines it in the sense that it denied the litigant a hearing on a claim asserted in the habeas proceeding, namely, the prosecutorial misconduct. He just never got a hearing on that. Paul G. Summers: If he were... if it were something of the nature of... of denying him the opportunity to have a hearing, or if, in fact-- John Paul Stevens: That's exactly what it was here, too. Paul G. Summers: --Well, no, sir. He did... he received a hearing. He received a hearing, Your Honor, that... and in that hearing it was determined by the court that he had improperly-- John Paul Stevens: He failed to exhaust. Paul G. Summers: --Failed to exhaust... improperly, that he-- John Paul Stevens: And that ruling was wrong. Paul G. Summers: --failed to show cause of prejudice, that there was no miscarriage of justice, and that he was conclusively entitled to no habeas relief in the district court, and that was a conclusive final determination, and if he had felt like the court was wrong, he should have filed an appeal in the Sixth Circuit. John Paul Stevens: Well, I understand that argument, but if... but I don't understand your position if it was based on a mistake of fact, rather than a mistake of law. Here was just a clear mistake of law. The parties all misunderstood what the law, as later explained by the Tennessee court, was. It was... he did not... he had, in fact, exhausted. Paul G. Summers: Your Honor, if he had thought the judge had made a mistake, he should have appealed. John Paul Stevens: He didn't think so. Speaker: He didn't know that 'til Tennessee adopted its rule-- Paul G. Summers: Well-- John Paul Stevens: --which was 2 years later. Paul G. Summers: --Well, his argument that Tennessee adopted a rule that either is a new rule or an old rule is not of much import as far as we're concerned, because the Rule 39 that he relies upon changed nothing in Tennessee law-- John Paul Stevens: Right. Paul G. Summers: --so far as appellate process. John Paul Stevens: But they changed the understanding of the district judge and the litigants. They thought the law was otherwise. Paul G. Summers: Well, I think... I think the district court knew what the law was when he made that decision, but certainly the Sixth Circuit knew what the law was. John Paul Stevens: You think he knew what the Tennessee court was later going to decide? Well, actually, the-- Because what he did is flatly inconsistent with what the Tennessee court decided. Paul G. Summers: --What the Tennessee court later decided, Your Honor, did not change Tennessee law so far as discretionary review at all... at all. John Paul Stevens: But it did demonstrate, did it not, that the district judge was wrong in his ruling on exhaustion? Paul G. Summers: The district judge was exactly correct on his decision. Ruth Bader Ginsburg: That's the question. That's the ultimate question that I think this Court granted cert to decide, but then we discovered that there are all these... this procedural... the question whether a Tennessee court saying you don't have to exhaust does service for the Federal courts. That is, the Federal courts could say it's an open question. You have to exhaust the remedies that are available to you. You could have requested review. You didn't request review. We don't care if Tennessee says, ah, you don't have to, because that's... that ruling would be made only for purposes of saying, let's get into the Federal court. I take it that's your position. Paul G. Summers: The decision as to the availability of a remedy is a State decision. The decision as to what has been exhausted is a Federal decision, Your Honor. Ruth Bader Ginsburg: Yes. Paul G. Summers: The Rule 39 that the petitioner relies upon did not change discretionary review in Tennessee one iota. As a matter of fact, the Tennessee Rule of Appellate Procedure 11 says in its comment that Rule 39 does not change TRAP... as we call it, TRAP 11... whatsoever. Discretionary review was in '95, when he did not appeal to the supreme court, as well as in June 28, 2001, an absolute available remedy under the normal appellate processes in Tennessee. Ruth Bader Ginsburg: So on your view, the district court was right when the district court said the first time around, sorry, you didn't exhaust. Paul G. Summers: Your Honor, our view is that the district court was right in 1998 when he ruled that the claims were procedurally defaulted, and if this case... if this case were to go back to the district court today, he would rule that the claims had been procedurally-- Ruth Bader Ginsburg: Well, that... we don't know that because I think it's an open question whether... after O'Sullivan... the position taken in O'Sullivan would apply when the State court says you don't have to exhaust. Paul G. Summers: --But there's no question that... there is no question that in 1998, when the district court found that the... that the issues had been procedurally defaulted, and that there had been no showing of cause in prejudice, no miscarriage of justice, that that was a conclusive final determination. What this... what this petitioner attempts to do is to... under the guise of a post-judgment pleading... avoid or evade the second or successive restriction. This flies in the face of AEDPA, would be a mockery of the finality requirements of AEDPA, and we would submit to the Court that the transfer to the court of appeals was a proper transfer, and that the court of appeals properly determined the gatekeeping criteria was satisfied, the writ should be dismissed or, in the alternative, the decision of the court of appeals should be affirmed. William H. Rehnquist: Thank you, General Summers. Mr. Zidlicky, we'll hear from you. Paul J. Zidlicky: Mr. Chief Justice, and may it please the Court: I'd like to start by first responding to Justice Stevens' question, in which he said that the Rule 60(b) motion didn't seek the relief of granting of Federal habeas. It actually did. In the joint appendix in 170, the court... the petitioner sought relief from the State court judgment in bullet point... I believe it's five, but in any event, I think underlying that is the question of whether there had been a prior-- John Paul Stevens: You say the 60(b) motion was directed at the State court judgment, is that what you're telling me? Paul J. Zidlicky: --Yes. Yes, Justice Stevens. John Paul Stevens: And not at the habeas... not asking the habeas court to vacate the ruling on the... on... denying habeas and setting it down for a ruling on the... on the prosecutorial misconduct? Paul J. Zidlicky: For both. For both, Justice Stevens. He asked for both of those, and I think... he sought to reopen the judgment, and he also sought... he sought in bullet point 5 to... or, relief from the State court judgment, and that's in the joint appendix. The question-- Speaker: But 60(b) just gets him the first step, and if he succeeds in the first step, then he goes further and says, okay, relieve me from the State court judgment. Paul J. Zidlicky: --Well, I was just responding just to Justice Stevens' point that he didn't seek that relief in his Rule 60(b) motion. He actually did, but the... but the underlying question is-- David H. Souter: But he's doing it simply because he is saying, I guess, that's where I'm trying to get to ultimately. Paul J. Zidlicky: --What he's trying to do is, he's trying to relitigate a claim that had been adjudicated against him through Rule 60(b), and this Court said in Calderon that you can't... that the requirements of 2244(b) can't be evaded, and one of those requirements is, you can't relitigate a claim that has been adjudicated. John Paul Stevens: Well, he's not relitigating a claim that's been adjudicated, he's relitigating... he wants to litigate a claim that had not been adjudicated. He wanted a ruling on the merits of his claim, which he never got. Paul J. Zidlicky: No, Justice Stevens, there was an adjudication of his claim. There was an adjudication of his claim by the district court which said his claim was procedurally defaulted-- John Paul Stevens: Yes. Paul J. Zidlicky: --and that he had failed to establish cause and prejudice, and that-- John Paul Stevens: Correct, but they didn't get a ruling on the merits of the claim. Paul J. Zidlicky: --No, he-- John Paul Stevens: They just ruled that it was procedurally defaulted because it had not been exhausted. Paul J. Zidlicky: --Well, that's... but I don't think that's right, Justice Stevens. In this Court's cases in Stewart and Slack, the Court made clear that in determining whether there had been a prior... the language that the Court had used was whether there had been a prior adjudication of the claim. Here, there was a prior adjudication of the claim. This Court's precedent, going back to Wainwright v. Sykes, Coleman v. Thompson, and-- Speaker: But the adjudication to which you refer is a holding that it was procedurally defaulted because the... they had not been exhausted in the supreme court of Tennessee. John Paul Stevens: Is that not correct? Paul J. Zidlicky: --That's correct, Justice Stevens. John Paul Stevens: And that amounts to an adjudication on the merits, but in fact, the merits had never been decided. Paul J. Zidlicky: No, it is... it's an adjudication for purposes of... it's... for purposes of determining whether he can come back and file to relitigate the issue, come back and-- David H. Souter: Right, it's an adjudication that has finality, which merits adjudications usually do, but it's a finality adjudication that does not rest upon any finding about the underlying merits of the claim that he wanted to bring for relief. Isn't that clear? Paul J. Zidlicky: --That's not the test that this Court has adopted in-- David H. Souter: I'm not asking you whether it's... I'm just asking you as a descriptive matter-- Paul J. Zidlicky: --I don't... you're right, Justice Souter, he didn't make a determination regarding the underlying merit of the constitutional claim, but-- David H. Souter: --Okay, and we use the term, I think... correct me if I'm wrong, we use the term, merits determination, to refer to a determination that is binding, i.e., he can't do something back in the State court and then come back and try again here. We call that a determination on the merits, but there are two kinds of merits determinations. One is a finding of default which cannot be cured. Second is a finding which may involve default, but may involve a determination on the merits of the underlying claim, and this is just a default kind of merits, not an underlying claim kind of merits finality, isn't that correct, just as a descriptive matter? Paul J. Zidlicky: --I think it's correct as a descriptive matter to... but with one qualification. What you're saying is that there is an exception for... I think in substance what you're saying is, you can continue to relitigate claims of procedural default because they're, quote, not on the merits, but I think the way-- David H. Souter: Well, maybe you can and maybe you can't. His argument here is, this is one that I ought to be allowed to relitigate, i.e., to litigate despite a finality judgment, because of something very unusual that happened as a result of the supreme court's rule change. What he's saying is, this is a special kind of... third kind of case in the middle, and you want to treat this one for 60(b) purposes like a nonfinal determination. I think that's the argument. Paul J. Zidlicky: --Justice Souter, and perhaps this... this is... I don't think this is an exceptional case in this regard. When he went back-- David H. Souter: Well, he may be wrong that it's an exceptional case, but that's the argument that he's making, isn't it? Paul J. Zidlicky: --Well, the argument that he's making is, he's entitled to relitigate a claim that has been adjudicated against the-- David H. Souter: No, he's not making that blanket statement. He's saying that in a case like this, in which the finality which is claimed does not rest on a merits determination, I ought to have a chance under 60(b). Paul J. Zidlicky: --Well, I do think that this is... this case is fundamentally different than the case in Stewart and Slack. In those cases, what the court had determined was, it wasn't a second or successive habeas petition. You weren't seeking to relitigate, and the reason was because you'd never received an adjudication of the case at all. The court didn't say no to your habeas claim. It said, not yet. In Slack, the court said, go... go exhaust. In Stewart, the court said, the case is not ripe. Here what the court... here what the court... the district court told him was, they didn't say not yet, the court said no, you're going to lose, and you're going to lose based on precedent from this Court starting with Wainwright v. Sykes. Really what they're asking is for an... a loophole to this... to the requirement for second and successive petitions for procedurally defaulted cases, and if that's the loophole, then there's no way to distinguish that from abuse of... abuse of the writ cases, because in both instances, you can make the argument that there wasn't any ruling on the substantive merits, but there was a ruling, and the one that's important was, he received an adjudication, and if he disagreed with that adjudication he should have-- Anthony M. Kennedy: Could you describe for me what portion of Rule 60(b) is still operative with reference to mistakes, given AEDPA? Does AEDPA completely supersede Rule 60(b) with reference to the category of mistakes and, if not, how would you characterize or describe for us what remains of Rule 60(b)? Paul J. Zidlicky: --I think what... the analysis that the Court would have to determine is whether there had been an adjudication. If later on there's a claim, after the court has decided the issue, that there was a mistake of fact or a mistake of law, the question is, are you trying to relitigate the issue, and if that's the case then 60(b) wouldn't apply. But if you're saying that there was never adjudication in the first place for the example of a judge who had been bribed in the first Federal habeas proceedings, you would say, well, that's not a second or successive habeas application-- Anthony M. Kennedy: As to anything that's been adjudicated, the category of mistakes is removed from Rule 60(b) when AEDPA is in the picture? Paul J. Zidlicky: --I think if there's been an adjudication, and I think that's the sense that... in your decision in Slack... that's the underlying issue. Now, it... that doesn't mean that there's no relief. You can... you can try to seek to file a second or successive habeas application, but this Court in Davis versus Pitchess made clear that Rule 60(b) is not a way of circumventing the requirements of AEDPA, and you in Calderon made clear that what AEDPA prohibits is the relitigation of a claim that had been adjudicated, and that's exactly what we have in this case. There had been an adjudication. He claims that it was wrong. John Paul Stevens: I think... I think you're saying that if there's an adjudication, there's no room for a 60(b) motion predicated on a mistake. That's your submission? Paul J. Zidlicky: That is my submission. I don't think there was a mistake here. I-- John Paul Stevens: I understand, but that's your submission. In construing Rule 60(b), it simply does not apply if there's been an adjudication, but my suggestion to you is that the only time 60(b) applies is when you've got a judgment you want to reopen. Paul J. Zidlicky: --Well, Your Honor... and the reason that 60(b)... you know, one of the arguments that petitioner makes here is, they say that, well, these claims will rarely be granted so you don't have to worry about it, but the... but what AEDPA requires is, it says these claims are... the... if you're trying to relitigate a second or successive habeas application, what it does is, it takes that away from the district court completely, the delay in the costs that are associated with that relitigation. John Paul Stevens: I agree with everything you say if you are correct in classifying a particular judgment... I mean, a particular claim as a second or successive claim. Paul J. Zidlicky: Right. John Paul Stevens: There are some cases, I think, when that classification does not fit the facts. Paul J. Zidlicky: But I think, though, a determination of procedural default falls in the heartland of habeas jurisprudence, and it's the heartland of a determination that you're not entitled to relief. In Slack and in Stewart-- Anthony M. Kennedy: So in your view, 60(b) necessarily has a much more narrow application in AEDPA cases than in other cases, or in habeas cases than in other cases? Paul J. Zidlicky: --Yes, Justice... Justice Kennedy, I think that's right, and I think the reason why is because, as this Court explained in Davis versus Pitchess, you can't use 60(b) to circumvent the substantive requirements of-- Stephen G. Breyer: Well, what do they really intend in Congress if, for example, the court comes up with an interpretation of a statute that shows the defendant didn't commit a crime, and there he is in habeas. He's got a final ruling, denied. Lo and behold the Supreme Court comes up with a case to say, you never committed a crime. He looks at AEDPA. He can't find it's a second or successive because it says, constitutional ruling. What's he supposed to do? Nothing? And do you think Congress meant that there was no remedy at all? Paul J. Zidlicky: --I think... I think what Congress did was, it... it did identify the criteria that... that a district court would look to in determining... it defined that criteria, but the one... the one place that you could look to is, you could then go back to this Court's original jurisdiction under 2241 for those exceptional circumstances. William H. Rehnquist: Thank you. Thank you, Mr. Zidlicky. Mr. Liebman, you have 3 minutes remaining. James S. Liebman: I would like to direct the Court's attention to pages 12 and 13 of our reply brief, the yellow brief. On those pages, in the footnote in the text there are a number of cases that are cited. Every single one of those cases is a 60(b) case in a habeas or 2255 situation where 60(b) was granted, relief was granted and it was determined that this was not a second or successive petition. In each one of those cases, the reason was mistake of law, the U.S. Supreme Court or some other court came down with a new decision, and in every one of those cases, that issue was not raised on direct appeal to the court of appeals. It came back on a 60(b). In each case they had to adjudicate the question of whether it was reasonable for them not to have raised it in the court of appeals at that time, and in each case they did on the ground that the new decision that came down changed everything, and it suddenly made what looked like a frivolous claim at that time into what was not a frivolous claim, but, indeed, one on which there was at least a right to adjudication on the merits. In some cases they won, in some they lost when they went to the merits after they got their 60(b) relief, but the fact is that those cases, including this Court's GVR in Blackmon v. Money, which was a 60(b) case on a successive, or a second, not a successive but a second habeas petition, were cases where they had not been raised on appeal, but they... they were determined to be at least potentially ones where there was a reasonable basis for not having done it, and frivolousness, not making frivolous claims is such a basis. This Court in Gomez and other cases has been particularly emphatic that habeas petitioners should not... especially in capital cases... should not be raising frivolous claims. The second thing I want to point to is that the 2244(b)(3)(E), which says that there is no... it not only says the Supreme Court can't take a cert petition, it says that rehearing petitions can't be held in the court of appeals, but the court of appeals are unanimous in saying, if the question is whether this is a second or successive petition, that can be reheard. That's not governed by 2244(b)(3)(E). We can separate that question out, and we can decide that, and it's exactly the same thing here. The key case there is Mancuso in the Second Circuit, 166 F. 3d 97, so the courts have been separating out those questions, saying if it's a question of jurisdiction-- William H. Rehnquist: Thank you, Mr. Liebman. The case is submitted.

William H. Rehnquist: Mr. Cleary, you may proceed whenever you're ready. John J. Cleary: Mr. Chief Justice, and may it please the Court: The reason the Petitioner chose Mr. Iredale as his attorney in this case was best stated by the trial judge, who said "were I in his position, I would want Mr. Iredale representing me, too, because he did a fantastic job in the prior trial and I can fully understand why he wanted him as his attorney. " This case turns on the question of right to counsel of choice. I would suggest that it's a disqualification issue clear and simple. The issue is presented where all parties waived any potential conflict, and the question decided here was the question as to the timing. The timing in this case was that the attorney following basically the guidelines of Cuyler v. Sullivan entered the case at the time he could, when he disposed of the other two. When the second guilty plea was entered, he indicated I am now going... I am retained by this defendant who has seen my superior trial skills and wants me. He has his independent attorney, this is not someone else, the attorney knows of the performance and says we want him. The trial judge says, when presented initially with it, if the clients have no problem and the prosecutor has no problem, I see no problem. At this time, the prosecutor said we don't plan to call this person as a witness, but there is a potential, a possibility. No time previously was this individual considered as a witness. The following Monday, a written objection is filed to the appearance of this attorney because (1) he would not be involved, Gomez-Barajas would not be involved, but now there's other person who wasn't going to be a witness will now be a witness. That witness would provide no adverse information against the Petitioner. That witness would provide adverse information and substantiate the Government's principal witness that he was a large-scale dope dealer because, in fact, he did deliver marijuana to this individual's home. The key question was, did that marijuana get to the Petitioner's home. The answer was there was no showing in the record, and the Government just assumed that that connection was sufficient to knock out counsel. I think it's also important to note in this case is the District Court finding, and these things are so critical for, I think, an appellate tribunal. In this case, the Court said based on the representations of the Government, so there was no factual finding. It was assumed that what the Government presented in its written papers were sufficient. Second, I have no choice but to file... find irreconcilable conflict, not a discretionary, a balancing of the issues. There was no hearing. Antonin Scalia: Excuse me. Were any of the Government's representations contradicted at that time? John J. Cleary: Yes, Your Honor, they were. Flat out. Throughout the initial hearing. Antonin Scalia: Not conclusions, but representations, specifically what was contradicted. I'm not sure that means that the district judge was not making any evaluation of his own. It would be a natural way to say it based on the Government's representations, there being no contradiction of those. I have no choice. John J. Cleary: Right. Antonin Scalia: What factual representation was contradicted? John J. Cleary: The factual representation was contradicted, first, as to Mr. Iredale being... I mean, Mr. Wheat, the Petitioner, being a possible witness against Mr. Gomez-Barajas, if his deal fell through. The arrangement as to the non-marijuana charges. That is to say, the other charges and the Government's representation was that, gee whiz, if that fell apart, Mr. Wheat might be a possible witness against Mr. Gomez-Barajas, and on that record, we have flatly contradicted by the assertions of Mr. Iredale that there is no way he could be a witness in that transaction. So, we do have a classic confrontation. William H. Rehnquist: Were they talking about the prosecution calling him as a witness or the defense? John J. Cleary: No. In that case, Your Honor, there was an assertion by the prosecutor that he thought there might be a possibility. However, in his written statement of which the judge based the decision on, he stated only as to the deal. I think both sides acknowledged that Gomez-Barajas would not be a witness. William H. Rehnquist: Well, is that somewhere in the record? So that we know that the District Court credited that rather than the Government's representation? John J. Cleary: Well, the Government didn't say he was going to be called as a witness. The Government said that the reason that Gomez-Barajas was going to be involved was if the plea fell apart, then the Petitioner might be a possible government witness against Gomez-Barajas. The Government, in its representation to the Court, did not even suggest that Mr. Gomez-Barajas would be a witness for them or the defense. William H. Rehnquist: Perhaps I'm just not getting all of it, but in your answer to Justice Scalia's question, you say the Government. The Government represented that someone might be a witness. John J. Cleary: That's... maybe there's... there's two individuals. Gomez-Barajas and Bravo. Bravo was a witness in the trial. There's no question as to that. William H. Rehnquist: But when the Government is speaking before the trial, all they can do is represent as to possibilities. They can't say in fact yes, he will surely be called. John J. Cleary: Well, I think in the sequence in this case, sticking to the record that we have on the 22nd of August, the statement of the... at the first time Bravo entered a plea and indicating that now Mr. Iredale is the attorney for the Petitioner, the Government says, at this time, we have no plans to call him. They already made the adjudication. They have the trial the following week. There is the possibility. So, I think at this time, what we have so close to the trial after the plea is entered an indication that he is not a viable true-to-form and anticipated witness. William H. Rehnquist: Then, the Government changed its representation shortly after that, didn't they? John J. Cleary: That's correct. William H. Rehnquist: And are you saying that the Government's second representation was contradicted? John J. Cleary: Yes. No. I think the defense said, yes, he is going to be calling him as a witness. What was the contradiction was as to whether or not that witness would give evidence that would, in effect, be adverse towards the Petitioner. And I think that the concern was that what the witness had to say and in the case we had... and what's important, I think, is the time sequence on this. The original case, Mr. Iredale represented Gomez-Barajas. In April of 1985, some several months before, appointed counsel represented the witness Bravo. Bravo relieved the appointed counsel and at that time, Mr. Iredale was representing two defendants with the approval of the court and no objection from the Government. And I think then to see the sequence of events where they have no objection to multiple representation as such, to shift after Iredale has successfully engaged them and really done damage to their witnesses, the same witnesses the Petitioner would be facing, changed the ball park. I think, further, that what the Court also said after it found an irrebuttable presumption of conflict, it said no waiver is possible. It didn't say a question about an intelligent knowing and voluntary waiver, which I think is an appropriate inquiry for a court, but said no waiver is possible. Anthony M. Kennedy: Mr. Cleary, did you ask for a hearing? The trial is on Tuesday and these arguments are taking place on Monday. Did you ask for an evidentiary hearing? John J. Cleary: What happened was, Your Honor, that at first, the previous Thursday is when Bravo, the witness, entered the plea, and the court indicated it had no objection and at that time, the representations were made that all parties involved had consent and the court said, but I will give the Government an opportunity to object if it wishes to object, and what had happened is the Government filed the written paper, the memoranda, on the following Monday. The trial is scheduled for Tuesday, and at that time, on Monday, given the Government's objections, the court never inquired as to a hearing and the offer was made and there was a clear cut offer of proof, that these individuals would testify that they (1) had no conflict and that they were willing to waive any type of conflict, potential or actual. Anthony M. Kennedy: Am I correct that you did not ask for an evidentiary hearing? You just submitted it on offers of proof? John J. Cleary: I think that they asked for the question of taking a waiver, but I think the judge foreclosed it by saying waivers are not possible. So, the inquiry of what could be said as to the nature of the conflicts or their intelligent waiver was never considered below. I think that in this case, the representation as to conflict are minimal. I think that the concern is we have like a double standard. In Cuyler, this Court found where we had two attorneys representing three defendants, and the first one went first to trial and was convicted of murder. The attorney still representing the other two and found that there was multiple representations. The court held that multiple representation doesn't work to the disadvantage, that the right to counsel of choice is that it's a benefit. You should have the ability to choose who your attorney might be. In that opinion, there was at least some concern given for the deference that was owed to the choice of the client and the attorneys involved. In Cuyler, we had a situation where there was a potential conflict and this Court found an implicit waiver. In this case, we suggest that what we have at most is a speculative or potential conflict and should it not be able to be overcome by an expressed waiver,-- William H. Rehnquist: Mr. Cleary, you're not suggesting that in a voluntary knowing waiver on the part of a defendant is the final answer to any conflict, are you? That that ought to just guarantee the selection of this particular lawyer? John J. Cleary: --I am suggesting that a knowing intelligent and voluntary waiver, I mean one fully explored by the court,-- William H. Rehnquist: I think the question asked you can be answered yes or no, and then you can explain your answer. John J. Cleary: --Yes. William H. Rehnquist: You say that a voluntary knowing intelligent waiver can concludes the matter? John J. Cleary: Yes. Byron R. White: Even though you could say there would be a conflict? John J. Cleary: Yes, Your Honor. If I can give an example. Byron R. White: Yes. John J. Cleary: The famous Loeb Leopold case was two University of Chicago law students who murdered a young boy, and they both made accusations, one accusing the other. They picked a single attorney, Clarence Darrow, to represent them, and could the prosecutor come in and move to disqualify like here, on the grounds that there would be a conflict of interest between the two or should not the two be allowed to make the choice that may be notwithstanding the conflict, their best interests might be served by a state escaping the scaffold, and I think that in that context, we could have an actual conflict that can be waived. In the context of this case before the Court now, my suggestion is there's only two potential conflicts. William H. Rehnquist: But how about, you know, the ABA standards on conflicts, state bar standards on conflicts? You know, they are not favored, to put it mildly. John J. Cleary: The standards the Court refers to is that they lean towards, and I would say as a general rule, the preference is to have separate counsel, and to that extent, where I track the other lawyers. However, each one of those professional rules gives way and defers to the right of the defendant to choose, and I think that we have to protect that right. William H. Rehnquist: Even in the face of a known conflict? John J. Cleary: Even in the face of a known conflict. Would I be in a better position to choose my attorney or have the Government choose the attorney for me? And I think given that tension, I would like to think I could choose my own attorney. William H. Rehnquist: Yes, but you can carry that to... you can say, you know, my real favorite is someone who isn't admitted to the bar. John J. Cleary: Your Honor is correct. I think there's... the Court, I think, in Chandler v. Fretag referred to it as an unqualified right. However, I think the right to demand counsel and, therefore, would have to be a lawyer. Second,-- William H. Rehnquist: Why? I mean, on your theory, if I think someone who is not a lawyer is better, the only reason we demand a lawyer is to protect the defendant even when he doesn't want to protect himself. He thinks he knows better, that he'll be better off with his non-lawyer. John J. Cleary: --I would have to stick to the terms of the Constitution which said counsel, and I think that the meaning and understanding of counsel at the time it was adopted in 1791 would mean a lawyer, and also at that time would mean also the right to choose a lawyer because this Court really didn't evolve the alternative appointed counsel until Powell v. Alabama. Sandra Day O'Connor: Mr. Cleary, do you think the public has no right to have a trial proceeding that appears in all respects to be fair, including not having an attorney represent two defendants if there is an apparent conflict of interest? John J. Cleary: I think that the public's interest has to be balanced against those on trial. I think if there was a problem as to, and this gets into the issue of was it an intelligent waiver, a knowing waiver or a voluntary waiver, I think the Court can interject itself, and there are decisions, for example, when the individual might be an attorney that's involved and wants to represent both people. I think there are some questions as to whether or not that would be voluntary by virtue of the relationship. My suggestion is that the public would be more scornful, that if prosecutors could come in and move to disqualify the best qualified defense lawyers and think that the person has to take someone other than the person's choice of counsel, when, in our system, we face in a criminal context the Government. And you have to think that the person who is with you is your advocate, your soldier, your protector. Byron R. White: Do you base your alleged right entirely on the Sixth Amendment? John J. Cleary: Yes, Your Honor. I think that the Sixth Amendment as developed by this Court, and I think it's rather clear cut and I think, if anything, I'm here with the pristine pure right to counsel because I have 1791. When you look at the authorities, what you had was only the right to counsel of choice. In Powell v. Alabama, 1932, this Court held that due process because the Sixth Amendment didn't apply to the states, that there was a right to appointed counsel in a death case, but Alabama already had it, and you evaluated it, and you said that the right to counsel at that time existed only by statute. '42 Betts v. Brady didn't find it, said no, doesn't apply. Sandra Day O'Connor: The Government takes the position that the right to counsel of choice, if it exists at all, is not found in the Sixth Amendment, but in due process. John J. Cleary: I would suggest that the argument was evolved by this Court in the context of the due process application because the only way it could be extended to the states would be through the Fourteenth Amendment due process clause. So, I would say in embryonic form, that was the only justification. I think since Gideon, it's very clear that the Sixth Amendment inheres in the right to counsel, so that you have it applied to the states. Sandra Day O'Connor: Yes, but the Government says that entitles you to adequate legal representation, but doesn't extend to a choice. John J. Cleary: I would say that I am not in a position to comment on the due process clause under the Fifth as was applied in the case when I had the Sixth, which, in historic traditional concept, gives the right to counsel of choice. Byron R. White: Do you think the Court before... before the Court grants the request to appoint this counsel, can demand a waiver? It sounds to me like you say counsel of choice goes to the Court, says I want to discharge my counsel and have another. John J. Cleary: Well, I don't think that it can be asserted in unreasonable fashion. I think it has to be a reasonable opportunity and limits could be placed on it. If it's a dilatory-- Byron R. White: What kind of limits? John J. Cleary: --Well, I can only use the rule of thumb of reasonable. It should be given a reasonable opportunity to assert it, and if it will not delay the trial. In this particular case,-- Byron R. White: Well, I know, but can the court insist on a waiver of what appears to be a conflict of interest? John J. Cleary: --If the court makes the inquiry in a federal context under Rule 44(c), the court can ask if there's a waiver. I don't think the court can force a waiver from someone. If it finds there is no waiver, then I think it has to say other counsel are going to be necessary. Byron R. White: Well, so, he could... the court could turn it down, if there's... if a waiver is declined? John J. Cleary: If a waiver... if there is not an intelligent waiver, the court doesn't have to accept it. If there's joint representation, and-- Byron R. White: I take it then on your position that if one of these persons is convicted and the other is acquitted, the person who is convicted is a fellow who got the waiver, that he is stuck with it, he just can never come back and say, look, that judge shouldn't have allowed this, there was obvious conflict, I was denied due process. John J. Cleary: --That was the situation in Cuyler v. Sullivan, where the one who was convicted and two were acquitted, and the question was this Court, and I think it was over two dissents or at least commentary that there should have been an inquiry by the court. This Court found an implicit waiver, and in this context where we have an expressed waiver by all the parties, and this is not government witnesses, this is not the Government like we have former federal prosecutors, and the question is, yes, I think that the waiver. This Court would have to sit down and do what it's doing now, to go through, to make the test, is it speculative, potential, actual conflict. Byron R. White: Well, at least you would certainly have to, in my example, you certainly then have to at least relitigate again voluntariness, whether you were really intelligent and whether you were informed of all the circumstances, and whether you really were aware of the seriousness of the conflict when you went in. John J. Cleary: I think that there has to be an inquiry, and it wouldn't have to take very long. The question is Rule 11 usually takes ten to fifteen minutes as the Court knows. In this type of case, we have a classic example in Krebs, a Sixth Circuit case that I cited, where it was Judge Peck who wrote the opinion and the trial judge was supersensitive. Do you want other counsel appointed, you have appointed counsel available, and he did it in a matter of minutes and that was the end of it, and in that case, it was an actual conflict because the prosecutor intimated that the attorney representing him may be involved in the criminal misconduct, and I think in that context, from an appellate tribunal, you would want a cleaner sanitized clear cut established waiver rather than the speculation about what constitutes what type of conflict and to disqualify attorneys. Byron R. White: I suppose... would he also waive any claim of ineffectiveness by the counsel's performance during trial? I thought he was going to be good, but it turns out he was wholly ineffective. John J. Cleary: I think the right to counsel of choice is different than the right to effective assistance of counsel, and I think one is-- Byron R. White: Well, when trial counsel fails to object to testimony or lets some in because it favors one of his clients but not the other, is that ineffectiveness? John J. Cleary: --I think that the Court, to the extent that it would ask the person, do you want to fly under your own flag, and I think we see judges do this all the time, do you want attorney X representing you, and they say unequivocally yes, then I think we should give the individual that choice, and I think an effective-- Byron R. White: I don't know how you're going to really protect the court system from two or three more trials about counsel if you permit... if a judge is just foreclosed from turning down this choice where there are conflicts. John J. Cleary: --I think, Your Honor, that what we're trying to suggest is that in this case, the judge used the atom bomb to disqualification. There were other procedures in this case. For example, Mr. Iredale not to examine that particular witness, and there were also other alternatives, cures that could be used in this case, other than total disqualification. We didn't have it. And I think that in the context of this case, where we do have something so fundamental as the right to counsel of choice, and we see that and I would say it's analogous to Faretta and it's not to be measured by Cronic or Strickland, which is the lowest minimum level of effective assistance of counsel. William H. Rehnquist: Mr. Cleary, in Faretta, we have seen many examples since Faretta of relitigating a question of whether the court was justified in letting them proceed on their own. John J. Cleary: Your Honor,-- William H. Rehnquist: The trial court can't win in some of these situations. If he says no, you're not capable of proceeding on your own, it's appealed, I should have been able to represent myself. If he says yes, you are capable of representing yourself as you want to, he later comes in and says if I had any sense, I never would have tried that. John J. Cleary: --I think we all have to assume risks that are made in waivers. The defendants in the police station often waive counsel thinking it's for their mythical benefit, and find out that they have to live with that mistake much later on. Antonin Scalia: If I thought we'd have to live with it, I could easily accept the argument you're making with this, but I cannot imagine that you really think that these people are going to live with the waivers they make. Let's assume the most voluntary informed waiver you can imagine, this counsel is going to represent all three of us and then what happens at trial is that counsel in order to save two of them allows in testimony or, indeed, elicits testimony that absolutely condemns the third. Counsel said, well, I did the best I could, I, after all, was representing all three. You acknowledged that I could represent all three. You waived it. Now, are we really going to allow that to happen? John J. Cleary: First of all, I think the Court denigrates the role of defense counsel because most of us are not going to put ourselves in that situation, and in Cuyler, there was a representation that certain deferences were going to be. In that situation, no defense counsel would take himself into that position, but there can be cases where-- Antonin Scalia: We have no problem if we posit that no defense counsel will ever put himself in a situation of a bad conflict. We don't have to worry about any of this. I mean, that's the problem we're talking about. John J. Cleary: --But I think there has to be some point where the individual... in the context of this case, we have the Government using it as a tactical advantage to knock out counsel who face the same witnesses, and when you have the reason to want this particular attorney and you see not demanipulative, not be stumbling, not be mistaken guidance but a firm choice, even though it has with it certain risks, and the Court is correct, I think just the same way we have pleas of guilty, can't everybody say that the plea of guilty is wrong and that's why we have a Rule 11 hearing. I think that the time involved in the context of this case, where all three parties waive, it was a speculative conflict that in this particular instance, there should be, I think, the right to go forward with your chosen advocate. I would like to suggest that Faretta, I think, would be the analogous rather than Cronic v. Strickland, for determining it. This Court made reference to that in Cronic as to distinguishment, lining up with Flanagan in every circuit that has treated it when the right has been denied. It is done without a showing of prejudice. I'd like to reserve my remaining time. William H. Rehnquist: Thank you, Mr. Cleary. We'll hear now from you, Mr. Kellogg. Michael K. Kellogg: Thank you, Mr. Chief Justice, and may it please the Court: The absolute position taken by Petitioner is that he has an unqualified right to waive any conflicts of interest arising out of multiple representation stemming from the Sixth Amendment. Now, we acknowledge at the outset that a criminal defendant in most cases has a right to choose any lawyer he wants, but that right does not stem from the Sixth Amendment, and it's an inherently qualified right. It is not like the right to counsel or the right to self-representation which must be enforced directly by the Court in every serious criminal case. Now, the right to choose your counsel is inherently subject to a number of significant qualifications which Petitioner ignores. For example, the lawyer one would choose may be unwilling to represent you or his fees may be too high or he may have other commitments which conflict with the court's schedule and make him unable to appear. He may not be admitted to the bar of the court. He may be a lay man or a disbarred attorney. All these sorts of reasons can limit to some extent the defendant's choice of counsel. It is also limited by the existence of certain serious conflicts of interest. These conflicts can be very many types. For example, the lawyer he wants may be a former prosecutor who, while he was working for the Government, was involved in the same criminal matter or the lawyer may have been retained by third parties with interests adverse to that defendant or he may be a fact witness at the trial or implicated in the same criminal conduct with which the defendant is charged. Courts have universally held that under those circumstances, the conflicts of interest override the defendant's right to choose his counsel and permits disqualification. Now, the most common of these types of conflicts arises in cases where one lawyer represents more than one defendant in a given criminal case, and Rule 44(c) was designed to deal with that situation. States that... the District Court has to inquire into every instance of multiple representation, and take such actions as may be appropriate unless there's good cause to believe that no conflicts are likely to develop at trial. The Rule 44(c) does not itself state what actions, what measures might be appropriate if conflicts are likely to arise, but the advisory committee note to the rule makes clear that disqualification of counsel is legitimate option. The dangers created by multiple representation that Rule 44(c) is designed to address is primarily centered around the fact as noted during the previous argument that the interest of the two defendants may diverge at trial. Disparity of evidence in one... between the defendants may require the lawyer to forego presenting a witness or making an argument or taking other action that would help one of his clients at the expense of the other. John Paul Stevens: Mr. Kellogg, let me throw out a question that troubles me about the case to be sure you don't overlook it. You're mainly directing your remarks to the case in which the new counsel would be the sole attorney for the defendant, and I'm particularly concerned in this case about the fact that this lawyer was willing to be additional counsel and he could have kept the same counsel and this man just work along with him. Why wouldn't there be adequate protection against the concerns you address if he let them both sit at counsel table? Michael K. Kellogg: Well, first of all, from the record, it's not actually clear whether Iredale was going to represent him by himself or whether he was just-- John Paul Stevens: He originally wanted to do it by himself, but it seemed to me that it was rather clear that he was willing to serve as additional counsel and just cross examine these witnesses that seemed so important to him, and I hope you cover that point as fully as you can before you get through because that's what troubles me about this case. Michael K. Kellogg: --Well, it raises problems because he was representing the other two defendants alone. So, no other counsel would be protecting their interests independently, and with respect to his representation of Wheat, it would have involved one of his clients being a principal... not a principal witness, but certainly a witness with adverse information to the Petitioner at the trial and it was also particularly troubling about this case is the fact that he was representing defendants at widely disparate levels of what was a fairly large conspiracy. He was representing the lead defendant, who is the ultimate source of the marijuana. He was representing a middle level defendant, Petitioner, who was responsible for brokering large amounts of marijuana, and one of the small fish at the bottom who delivered one van load. John Paul Stevens: But I don't see why the other lawyer wouldn't be perfectly able to look out for all the pitfalls that would concern the Court in that situation. If you assume the other lawyer is completely independent and competent, which I gather he was from the record, he would surely, it would seem to me, understand the potential for conflict and surely there is some potential for conflict here. Michael K. Kellogg: Well, Rule 44(c) does say that the primary burden is placed on the lawyer to anticipate conflicts that are likely to develop, but there's a number of reasons why they can't do that, and Rule 44(c) goes on to state that even the defense counsel is not going to be able to anticipate all the sorts of conflicts that might arise at trial because he's not going to know fully what the nature of the Government's case is. Also, there's the problem that in representing more than one defendant, it's difficult to give independent advice to each defendant if the multiple representation favors one at the expense of the other. Now, with Petitioner having a separate counsel to represent him, that concern would be alleviated somewhat, but with the other two defendants not having separate counsel, that concern... that's a very legitimate concern of the District Court. The fact that the motion to disqualify-- John Paul Stevens: Clarify one thing for me. During the trial of this case, the man that wanted to come in, I forget his name now,-- Michael K. Kellogg: --Iredale. John Paul Stevens: --Iredale, was not going to represent another defendant during that same trial, was he? Michael K. Kellogg: No. It would have been-- John Paul Stevens: If the trial had been almost terminated and a plea taken, but during the hearing itself, there wasn't any possibility of conflict of that kind. Michael K. Kellogg: --Well, he would have been representing a witness against Petitioner. John Paul Stevens: But the witness would have been, in effect, a former client. Michael K. Kellogg: Yes. John Paul Stevens: But the other lawyer-- Michael K. Kellogg: He had not yet been sentenced. John Paul Stevens: --And if it looked like it was really... he was not doing an effective job, why couldn't the court say, well, I think we better have the other lawyer examine this particular witness. Michael K. Kellogg: Well, that would have been one option. John Paul Stevens: Why wouldn't that have been an adequate option? Because... I know you say that there's no absolute right to counsel of your choice, but surely there is some value to letting a defendant have choice if all the other conditions are met, that he's a lawyer and that he's competent and so forth and so on. There is some value the Court should respect, is there not? Michael K. Kellogg: There is, but the concerns here are really twofold. First, there's the concern as the Chief Justice and Justice Scalia noted during Petitioner's argument, with the problem of adequate waivers. Each defendant has a right to conflict-free representation, that he can waive only if he understands and appreciates all the dangers involved. John Paul Stevens: Now, that argument would support a rule that will never respect a waiver because it may have litigation about it later. We just won't allow waivers. I mean, you can't push that too far. There's got to be some situations in which a defendant can waive conflicts, and there's always a risk, you're absolutely right, there's always a risk in these situations in post-conviction proceedings they'll say I didn't know what I was doing just as you have in Faretta, but can that be an adequate reason for never accepting a waiver? Michael K. Kellogg: I think it certainly... it could be. Rule 44(c) could be written to forbid all cases of multiple representation. It would serve significant interests of the criminal justice system in the finality of judgments and the independent interest in the fairness and integrity of the proceedings. Now, it's written, it doesn't go that far. It takes a lesser position to the effect that the trial judge must have some discretion to override waivers in certain circumstances. We're not suggesting a standard in which all cases of multiple representation would lead to disqualification, but only when there's a substantial likelihood of a serious conflict. Anthony M. Kennedy: What was that substantial likelihood here? Michael K. Kellogg: Substantial likelihood was created by, first, as I mentioned, disparate positions of the defendants in a criminal conspiracy. Gomez-Barajas was the lead defendant. Petitioner was a lesser defendant. Whenever you have a lead defendant and the lesser defendant represented by the same attorney in a criminal proceeding, there's always a danger that the lead defendant will exercise too much influence upon the decisions of the lesser defendant. This particularly is true in narcotics cases-- Byron R. White: You mean the lawyer representing the lesser defendant? Michael K. Kellogg: --That's correct. Well, decisions... that's correct. Decisions that the lawyer will take on behalf of that defendant. Anthony M. Kennedy: Well, in almost every criminal trial, there is one dominant and one secondary character, and, so, you would almost say that there is an absolute rule that the judge is never required to accept a waiver when there are two defendants, one of whom is dominant. Michael K. Kellogg: If there is reason to think that there is a hierarchial relationship between them, I would say that the potential for conflict is sufficient that the District Court would have discretion under those circumstances to disqualify the joint representation. I'd like to explain to you in a little more detail the nature of the concerns here. Even if the District Court goes to great lengths to get a knowing and intelligent waiver, it is still going to be subject to collateral attack on various grounds. The defendant can easily claim that he did not foresee the actual conflicts that would develop or that he was coerced by his co-defendant or that he was misled by incompetent counsel, and there's a strong interest in the finality of the judgments in preventing such collateral attack and such uncertainty. There is also, as Justice O'Connor pointed out, an independent interest in the fairness and the integrity of the proceedings. Even if the defendant is fully aware of the dangers of multiple representation, he might accept it because at the behest of a more powerful defendant, co-defendant, or in order to help a more culpable friend or family member. Now, the-- Anthony M. Kennedy: Well, Mr. Cleary takes the position, the rather clear position that waiver is always permitted, and that, at first blush, sounds like a hard rule. But it seems to me that your position is that the judge can always decline the request for joint counsel. I can't imagine an instance in, say, a narcotic trial, conspiracy, where the waivers would be allowed. So, it seems to me that your position is equally clear and hard-lined on the other side. Michael K. Kellogg: --I think not. If the evidence in a particular case is roughly equal against two defendants, if there doesn't seem to be any coercive relationship between them, then there would be no reason that the District Court could not allow joint representation in that case, even though it's certainly possible that conflicts would arise. William H. Rehnquist: Mr. Kellogg, perhaps I misunderstood your position. I thought it was that the... where there's a conflict, the District Court would not be reversed for abusing discretion if he said no, but that he in exercise of his discretion could allow it. Michael K. Kellogg: He could allow it. He could allow the representation. That's correct. But in the exercise of his discretion, if he does disallow the representation, it can rarely be reversed because there... the possibility for potentials of conflict are rife in any joint representation. Antonin Scalia: Well, I'm sort of hung up on Justice Stevens' point. If I agree with that, still and all, in this case, there was not even in the particular trial here a request for joint representation alone, but with another attorney. Could you spell out to me what were the conflict problems with the other defendants? How could his representation of the other two alone be prejudiced by his taking on joint representation of Wheat? Michael K. Kellogg: Well, first, with respect to Bravo, who is going to be the witness at trial against Wheat, Iredale would have received confidential information in the course of representing Bravo. When Bravo took the witness stand, that confidential information might have been available as a good source of impeachment of Bravo. Helpful to the Petitioner. So, he has a choice. He either helps the Petitioner by burying his former client or actually his current client because the client hasn't been sentenced yet in front of the very judge who's going to sentence him, or else he holds off and doesn't cross examine vigorously and thereby hurts the defendant that he's currently representing. There's also the difficulty-- John Paul Stevens: Yes, but before you leave that witness, in fact, they didn't even cross examine him, did they? Michael K. Kellogg: --No, they did not. In fact,-- John Paul Stevens: So, this is totally conjectural. Michael K. Kellogg: --I don't think it's conjectural because the decision has to be made in advance of trial. It is clear that-- John Paul Stevens: But that's my point. If you've got both lawyers there, why couldn't you see what he said? Then, let the judge say, no, no, he's been talking about things that you probably have confidential knowledge of that I don't think you should cross examine as the lawyer. Why couldn't the judge wait until he saw what the witness had to say, and he would have found out there was no reason in the world to deny this man the lawyer he wants? Michael K. Kellogg: --Well, he-- John Paul Stevens: Based on that particular argument. Michael K. Kellogg: --The judge knew what the witness was going to say because the judge had taken his guilty plea. John Paul Stevens: Then, why not... then, there was no need for cross... well, I'm sorry, I shouldn't-- Michael K. Kellogg: Bravo did provide evidence adverse to Petitioner. He testified as to two overt acts in the indictment and he corroborated the testimony of the main witness against Petitioner. John Paul Stevens: --And the Petitioner didn't dispute those two overt acts? Those are the deliveries to the intermediary, were they not? Michael K. Kellogg: That's correct. Now, I was going to say there's also the problem of the appearance of impropriety in representing both the witness and the defendant in the sense that the testimony of one can be curtailed to benefit the other in exchange for the cross examination being curtailed to represent the witness. Now, for example, Bravo pleaded guilty to criminal conspiracy and acknowledged that he had participated in one single overt act, one delivery of marijuana. He said that was the extent of my involvement. Now, if his involvement is, in fact, greater than that, he's involved in more than one delivery and perhaps a delivery with Petitioner, then what could be more convenient than having the same counsel representing both, not cross examining Bravo about other acts, and thereby not bringing out any connection with the Petitioner. Now, I recognize that there's not-- John Paul Stevens: And who would that hurt except the Government? Michael K. Kellogg: --Pardon? John Paul Stevens: That would hurt the Government, not bringing that out, but how would that hurt either of the defendants? Michael K. Kellogg: Well, I think there's an independent interest here in the fairness and integrity of the criminal justice system which would not be served by allowing such an appearance of impropriety. There's really two separate interests here. The interest in the finality of judgments and the interests in the fairness and integrity of the particular proceedings. Now, Petitioner-- Antonin Scalia: What about the other witness? What about the other one that he was representing? Michael K. Kellogg: --Well, Gomez-Barajas, as I noted, was the lead defendant in the case. He has an interest certainly in not being called as a witness against Petitioner or otherwise being embarrassed by Petitioner's defense, which could be served by having his attorney representing Petitioner. Antonin Scalia: What is the status of his case at this point? Michael K. Kellogg: He had been acquitted on the main marijuana conspiracy and several substantive counts. He still had other narcotics counts and tax charges to which he had entered a guilty plea, and he was awaiting sentence. There had been a negotiated plea agreement and the District Court had indicated that he would be able to withdraw his plea if the judge did not accept the sentencing recommendation that had been made, but there had been a sentencing recommendation made in his case. Byron R. White: I think your substantial likelihood test might be satisfied in the case in the sense that there would be a substantial likelihood of the conflict, but the trial judge could, nevertheless, take the waiver. Michael K. Kellogg: Well, certainly if the court-- Byron R. White: I know you submit the trial judge would have discretion not to take the waiver in that circumstance. May he take the waiver? Michael K. Kellogg: --If there is a substantial likelihood of a serious conflict of interest, the trial judge still has a possibility of being able to cure that short of a waiver. For example, through a severance or some other action. Byron R. White: Well, there wasn't going to be any question of a severance in this case? Michael K. Kellogg: No. Byron R. White: These were going to be trials on end, I guess, end to end. The possibility that he could take the waiver. Michael K. Kellogg: Yes. Byron R. White: And-- Michael K. Kellogg: Assuming he can do something to protect against conflict. Byron R. White: --And is it also your position that where there are joint trials, two people at the same trial or two people who have been charged in the same charge but going to be tried one after another, are you saying that there are circumstances involving those facts that would not present a substantial likelihood of conflict? Michael K. Kellogg: Yes. There could be circumstances in which a substantial likelihood of a conflict was not presented. That's correct. Antonin Scalia: This is not it. Michael K. Kellogg: But this is not it. However, I would stress that our principal interest in the standard fashion by the court in this case, rather than the particular facts of this case, the facts could be strong. But the important point that we want to stress is that the two positions adopted by Petitioner in his brief, the absolute position that waiver cures everything, is unacceptable and contrary to the views of the established disciplinary standards in every Court of Appeals. The other standard that Petitioner puts forward in his brief is to try to say that only when there is an actual conflict of interest can disqualification be permitted, and we would submit that that standard makes no sense in this context because the decision has to be made prior to trial. As the advisory committee notes, you can't anticipate all the problems that are likely to develop in the course of a trial, and if you wait for them to develop, then it's too late. you have invited a mistrial in the case. The important standard that we would suggest is that the judge, trial judge finds a substantial likelihood of a serious conflict of interest and he does have discretion to disqualify counsel. The final point that I would like to make is that even if Petitioner could somehow show that the District Court abused its discretion in this case because there wasn't a serious likelihood of conflict of interest, he still has failed to show any way in which he has been prejudiced by that decision. There's been no challenge here to the sufficiency of the evidence or the fairness of the trial that he actually received or the competence of his counsel. Now, the right to the assistance of counsel, this Court has repeatedly stressed, is recognized not for its own sake, but for the ability of the accused to get a fair trial. Harry A. Blackmun: And tell me again why must prejudice be shown. Michael K. Kellogg: Pardon? Harry A. Blackmun: Tell me again why must prejudice be shown. Michael K. Kellogg: It must be shown because of this Court's statements in Strickland and Cronic as... that the purpose of the Sixth Amendment is served as long as Petitioner received a fair trial at which he received the assistance of competent counsel so as not to cast any doubt on the reliability of the verdict. If Petitioner is completely denied counsel, then the Court has held that the rule of automatic reversal is appropriate, but in a case where Petitioner receives the assistance of counsel and there's no question that there's a reliability of verdict, there's no reason to set that verdict aside. Harry A. Blackmun: How would one ever prove prejudice, really? Michael K. Kellogg: One would prove it by showing that the trial one actually had was unfair within the meaning of Strickland because the performance of one's counsel fell measurably below the standards of the profession and undermines the reliability of the verdict. Anthony M. Kennedy: Well, then, you get a new trial anyway. Michael K. Kellogg: That's correct. John Paul Stevens: That really means there's no remedy whatsoever for violating the right that's asserted here, if there is such a right, because if you require that standard, you... the judge... what the trial judge should always do is disqualify counsel, and he... as long as he's got somebody out there who crosses the threshold of minimum effectiveness, he cannot commit reversible error. Michael K. Kellogg: That's true, but there's no reason to think that the trial judge would not conscientiously-- John Paul Stevens: There's a lot of trial judges I know who don't like to be reversed. Michael K. Kellogg: --But in this respect, the right to counsel of choice would not be really any different from, for example, a District Court's decision on the severance motion or a discovery motion, which is reviewable only in the context of general review of a fair trial. Unless the Court has any further questions. William H. Rehnquist: Thank you, Mr. Kellogg. Mr. Cleary, you have seven minutes remaining. John J. Cleary: Thank you, Your Honor. First, I would start off with in Bravo's case, the attorney or substitute attorney agreed not to impeach Mr. Bravo and to indicate the, I think, lucidity and accuracy of the testimony of that witness on behalf of the Government. He got the benefit of the bargain. He was promised an FYCA probation, thirty days halfway house. He testified, all right, the Government would recommend thirty days, go away, the Government so recommended. So, we have Government satisfaction with his testimony. As to Gomez-Barajas being the source, that is wrong. The facts of this case indicate there were several enumerated sources of marijuana, not Gomez-Barajas, and the reason he wasn't was there was a prior acquittal and Vidal was still shaking in his boots about the examination that he might have. The question that Justice Stevens raised is absolutely true, that there was almost on the knees begging that this super-star defense lawyer be joined to the defense team. Please, let me have Mr. Iredale. Let us add him to the trial team. That's 1 RT 53-154. However, also, there was two points for two of the witnesses, Vidal and one of the other witnesses, and the defense lawyer again says, please, please, let me have Mr. Iredale cross examine these witnesses. That was denied. That was not available. Antonin Scalia: I don't see what his agreement not to... he promises that he won't cross examine which one was it? John J. Cleary: Bravo, Your Honor. Antonin Scalia: Bravo. That doesn't prove anything except that perhaps he was being induced by one of his conflicts not to do something that maybe he should have done. John J. Cleary: Well, I think-- Antonin Scalia: I mean,-- John J. Cleary: --I understand the Court's position and that we're getting into certain imponderables, except that in this case, he had the advantage of two separate defense counsels. Not only for Mr. Wheat but also the co-defendant and neither one examined Bravo. Antonin Scalia: --Another thing. When he said, could I be added to the defense team, what does that mean? Was it clear that he would be in a subordinate position to someone else who would make the final call? If he was on the defense team and still had the decisions on those matters that were matters raising his conflict, it wouldn't do anything of any assistance to simply put him in with somebody else. John J. Cleary: I think the only one would be as to Bravo, and I think it could be easily sanitized as an alternative other than total disqualification to say that he cannot examine Bravo, and in the context of this case, I think that would have been reasonable. The two other issues that I find every interesting is the Washington case, the former federal prosecutor, came out of the Ninth Circuit, and in that case, the trial judge did almost like here. This man is a former prosecutor. He may have had confidential information. Appearance of evil, whap, he's off the case. The Ninth Circuit reversed, remanded, and in that case, the former federal prosecutor, we had different clients. The client, the former client is objecting, and the court held in that case, this appearance alone won't cut it because you have to honor the right to choice, and remanded it to determine if there was confidential information. The same procedure that could have been done here. Diozzio is, I think, a very close case, where the Government has negotiated with two tax lawyers. They were willing to stipulate and at the time of trial, the Government says we're going to call the two tax lawyers as witnesses. So, they knock them off of the case, and they offered a stipulation as to what they would be, witnesses in the case. They could not question the witness, but be an actual witness. And the First Circuit reversed because of the tactical manipulation involved, and I think that there has to be some credence given to the right to choice. The last thing I would say is that we have in our society at least the concept of an ordered liberty, a fundamental right of choice, the right to go with the one you want. That kind of oozed out of Faretta and I think that rises up in this particular case. But what's very, very important is the fact that we can't review the imponderables. What would Iredale have done in negotiations? They were close negotiations in this case. Could he have finalized that? What would Iredale have done on Vidal? How can I prove those things? It's impossible for me and should I suffer the detriment? I think that this case is analogous to Faretta, and I think that it has to be a showing that this Court will enforce in a limited context, in the context of these facts, which is a potential speculative conflict where all parties waived, that there must be a Sixth Amendment right to counsel of choice. Thank you. William H. Rehnquist: Thank you, Mr. Cleary. The case is submitted. Speaker: The honorable court is now adjourned until Monday next at ten o'clock.

William H. Rehnquist: We'll hear argument next in Number 99-502, Donald E. Nelson v. Adams USA. Spectators are admonished, do not talk until you get out of the courtroom. The Court remains in session. Ms. Dixon. Debra J. Dixon: Mr. Chief Justice, and may it please the Court: This is a case where the respondent, Adams USA, obtained a judgment of invalidity, had that judgment affirmed on appeal, obtained a judicial determination of inequitable conduct for an award of attorney's fees, had that award reaffirmed, had All American Sports Corporation dismissed from the judgment, obtained a judicial determination as to the amount of fees to be paid, had that fee award reduced to judgment in the amount of $178,000. Then, and only then, did the respondent attempt to have Don Nelson joined as a party. The rules of substantive law, the rules of constitutional law, and the rules of procedural law all tell us that Adams did this wrong. Sandra Day O'Connor: Ms. Dixon, I take it that you don't challenge the fact that the pleadings were amended to add the petitioner. Debra J. Dixon: I do challenge that, Your Honor. What I understand the record to say is that the respondents were granted leave to amend their complaint to join Don Nelson as a party. However, as we sit here today-- Sandra Day O'Connor: Was any objection made below at that time to the amendment? Debra J. Dixon: --There was an object... there was a motion filed to alter or amend the judgment, but there was no formal objection. Mr. Nelson had not been served with process and had not filed a responsive pleading at that time. Stephen G. Breyer: That's exactly what's bothering me about the case, because it seems that the obvious objection would be that it wasn't... that justice didn't require the amendment under Rule 15. That's the objection that wasn't made. Instead what you're saying is that there wasn't service of process, there wasn't jurisdiction, and those things seem either waived, or... they seem waived, basically, so the issue that should be here isn't here, the issue that shouldn't be here is here, and there I am, stuck. And now, how do you get me out of that? Debra J. Dixon: Your Honor, the waiver rule specifically states that one must assert a defense at their first opportunity. Under Federal Civil Rule 12, that first opportunity is in one's responsive pleading. A potential party has absolutely no obligation to file a responsive pleading until he or she has been served with process. Stephen G. Breyer: Oh, that may be, but unfortunately I gather that that issue is waived. I mean, isn't it? I mean, is it here? I mean, did you raise the objection below? Did you say, judge, in the district court, my client has not been served with process and therefore-- Antonin Scalia: --Your client wasn't there below. That's your position. Debra J. Dixon: Precisely, Justice Scalia. Antonin Scalia: Your client couldn't have waived it below, because your client hadn't been served and therefore was not present. Stephen G. Breyer: I misspoke. It's the jurisdiction, I gather, that they're saying is waived. Speaker: I gather that they're saying, anyway, that the service of process issue is not properly before us. Debra J. Dixon: Your... if I may address Justice Scalia's point first, that's precisely the position of the petitioner. He was not there. Because he wasn't there, there was nothing for Mr. Nelson to waive. As it relates to the jurisdictional issue, I believe this Court has spoken on multiple occasions stating that, until one has been served with service of process and had an opportunity to be heard, they are not subject to the jurisdiction of the court. Being as though Mr. Nelson was not subject to the jurisdiction of the district court, he was not able to waive the jurisdiction of that court. Anthony M. Kennedy: Well, you did move to amend the judgment. Debra J. Dixon: Absolutely, Your Honor. Anthony M. Kennedy: And you take it that's tantamount to a special appearance, is that-- Debra J. Dixon: I would disagree with that, Your Honor. Quite frankly, based on my reading of the record, it appears as though the motion to amend or alter the judgment was nothing more than an attempt to buy time on appeal. Post judgment, there are only two-- Anthony M. Kennedy: --Now, just a minute here. You're saying that Rule 15 was an objection, that even though it appears he might have had a meritorious ground to say it doesn't relate back under 15(c), that he doesn't have to do that because he's not there. He's not a party. Debra J. Dixon: --Correct, Your Honor. Anthony M. Kennedy: And then I said, well, but you did move to amend the judgment, and you said, well, that was just a delaying tactic. That doesn't sound to me like you're being consistent in your position of saying that he's not a party before the court. Debra J. Dixon: I would disagree with the Court. My position is that post judgment there are only two remedies available to someone in the position of Mr. Nelson. One is filing an appeal, the second is filing a 60(b), both of which have been done by Mr. Nelson as he sits before this Court. He was not a party to the underlying action at the time that motion was pending before the court and, as a result, was not in a position to file a responsive pleading. Ruth Bader Ginsburg: What were the grounds of his 60(b) motion? Debra J. Dixon: His 60(b) motion related, Your Honor, to the due process violation as well as the violations of the Federal Civil Rules. Ruth Bader Ginsburg: So he was saying through Rule 60(b) I should not have been added as a party to the judgment when I was never entered as a party to the lawsuit? Debra J. Dixon: Exactly, Your Honor. David H. Souter: You don't seem to rely on 15(c)(3), which I thought gave maybe too easy an answer in your favor, because one of the... in addressing the question of adding a party by amendment, 15(c)(3)(A) sets as a condition that the party to be added gets sufficient notice so that he will not be prejudiced in putting in a defense, which seems to imply very clearly that it can't be done when the case is closed and no defense can be put in. Is... that's... maybe that's too easy. Is there a reason you don't rely on that? Debra J. Dixon: Your Honor, procedurally it's the petitioner's position that based on the statute under which Adams is seeking awards and the extension of the judgment of attorney's fees against Mr. Nelson, they have not even met their threshold requirement of prevailing party. Based on that, the issue of whether or not 15(c) and, in fact, the due process requirements have been met in effect become a secondary issue. Ruth Bader Ginsburg: But if you're wrong on your first argument, if Adams remains the prevailing party in the lawsuit, then do you agree that on the further arguments that you make, you can win here, but there must be further proceedings in the district court? In other words, this could go back, and the... Adams can say, now we want to do it right, Your Honor, so we're going to serve a pleading on Nelson, which hasn't been up to now done. You were talking about service of process, but there hasn't even been a complaint drawn. Debra J. Dixon: Correct, Justice Ginsburg. I would represent to the Court that Mr. Nelson sits in this courtroom today, more than 2 years after the district court granted leave to amend the complaint, ready, willing, and able, if this Court's judgment so orders, to accept service of process, appear in the district court, and litigate this matter on its merits. Ruth Bader Ginsburg: Yes, I wanted to clarify that. So you recognize if you lose on the prevailing party thing, then it does go back to the district court and he can fight it out there. Debra J. Dixon: Certainly, Your Honor. Stephen G. Breyer: Could you just elaborate just a minute on... I thought that... I mean, I completely agree with you, obviously if you don't have jurisdiction over a human being, you cannot make that human being do anything, but I think that they... what the other side was saying is that there is jurisdiction over your client for the following reason. At some point, he appeared. When he appeared in the case... I can't tell you, I'm not that familiar to know just when he did. When he appeared with the case, he mentioned nothing about jurisdiction whatsoever. He made a few substantive defenses, and if in fact you're going to make an appearance and you don't raise the issue, and you're there in court, that in effect waives your claim as to jurisdiction. You didn't make a special appearance. You... and I thought that was basically the law, and so I want to be sure I get your response to that. Debra J. Dixon: Your Honor, by virtue of filing... the very fact that Mr. Nelson filed a motion to amend and/or alter the pleadings, which, as I understand the Court, the Court is directing my attention to-- Stephen G. Breyer: Well, you'll be more familiar with their argument from their brief, frankly, than I will. You've probably read it several times, and that's what I'm trying to refer to. They say he appeared at some point, and when he appeared at that point in this case, he didn't raise the jurisdictional defenses or lack of notice defense and, because he didn't raise them, but responded on the merits, he basically has waived his defense of no jurisdiction, because he's there, or they made it approximately like that. I'm referring to their argument, not to my argument, and I want to know what your response is to it. Debra J. Dixon: --Your Honor, my response to that question is two pronged. First and foremost, Mr. Nelson's position continues to be the Court has not... does not have jurisdiction over him in this matter because the respondents have not filed the procedural requirements for jurisdiction to attach. As I understand-- Sandra Day O'Connor: Well, but that can be waived. That can be waived. Do you concede that? The lack of service and the lack of jurisdiction can be waived, can it not? Debra J. Dixon: --By consent it can be waived, certainly, Your Honor. Sandra Day O'Connor: And courts have said that when such a person makes an appearance and files a pleading, that constitutes a waiver, and that's the question. Debra J. Dixon: Your Honor, I would suggest to this Court there are certain pleadings that may waive those jurisdictional requirements. However, I would likewise represent to this Court it's the petitioner's position that merely by filing a motion to alter or amend the judgment pursuant to Civil Rule 59 does not constitute such a waiver. Antonin Scalia: Ms. Dixon, I think we may be talking at cross purposes here. There are really two separate issues. One is simply the question of whether he was there, whether he was in the case. That is the precise point that he made when he filed his pleading. He said, you can't enter this judgment against me because I wasn't there. There's a second issue, which is whether, if the court did enter a judgment against him when he wasn't there, it would violate the Constitution. Now, he did not raise those constitutional arguments when he first appeared, but he did raise the argument, I'm not here. Isn't that correct? Debra J. Dixon: It is correct, Justice Scalia. However, the distinction is made as to the timing that this... the issue was raised. As the Court is aware, Mr. Nelson did not file the motion to amend or alter the judgment until judgment on the merits had been rendered. He was simply brought into this case as a... attempted to be brought into this case as a last ditch effort by Adams to have somebody pony up the $178,000 in fees. By virtue of the fact that Mr. Nelson was never subject to jurisdiction of this Court when it was heard on its merits, he cannot, based on this Court's prior rulings, be subject to an award of attorney's fees post judgment. David H. Souter: Okay, but I just want to get to the narrow waiver point that was raised, and my recollection is the same as Justice Scalia's, and that is... I don't remember procedurally how to describe this, but my recollection from reading the briefs was that at the first moment that he filed any pleading following the joinder, one of the things he said is, you can't do this because I am not a party, or was not a party. Is that recollection correct, that he raised his nonparty status at that moment? Debra J. Dixon: He did, Your Honor. David H. Souter: Okay. Stephen G. Breyer: I suppose that that's an... now I'm not certain about what the law is on that. I mean, he... in other words, the... of course he wasn't a party. The issue is to make him a party. Debra J. Dixon: Absolutely, Your Honor. Stephen G. Breyer: And so therefore there would be a question as to whether or not the court has... should make him a party. Now, if you say, I'm not a party, don't make me a party, does that waive your juris... I don't know, does it waive your jurisdictional argument? Debra J. Dixon: Your Honor, I would suggest to this Court that based on civil rules, as well as this Court's prior holdings, that's simply not the case. More importantly, a careful review of the docket from the district court undercuts any such argument. On March 25 of 1998, at 10:09 a.m., the district court's docket was silent as to Donald Nelson in his individual capacity. One minute later, at 10:10 a.m., the docket reflected not only had Mr. Nelson been joined as a party, but was subject to and bound by a judgment in excess of 178,000-- Anthony M. Kennedy: I understand, but you... and your position, I take it, is that when he does come to court and move to amend the judgment, this is tantamount to a special appearance challenging the court's authority to treat him as a party. Debra J. Dixon: --Your Honor, I would say that he certainly did raise the issue of the court's jurisdiction as part of his motion to alter and amend, but in no way did he subject himself to that jurisdiction. Anthony M. Kennedy: So that it's tantamount to a special appearance to challenge jurisdiction. Debra J. Dixon: I would disagree with the Court. I do not believe-- Ruth Bader Ginsburg: Special appearance means that you are there only for that limited purpose, and you're not... so I think you agree with what Justice Kennedy just said. A special appearance is a limited appearance simply for the purpose of making that application, and not subjecting yourself generally to the jurisdiction of the court. Debra J. Dixon: --I understand the distinction technically. I just wanted to differentiate. In the Zenith case counsel for Hazeltine, when they came in, they specifically acknowledged to the court they were making a, quote, special appearance, end quote. There was no such appearance filed on behalf of Mr. Nelson in conjunction with his motion to amend or alter-- Ruth Bader Ginsburg: He's doing something. Antonin Scalia: He's making some appearance. Debra J. Dixon: --Absolutely. Antonin Scalia: I mean, the motion just didn't float down from nobody. He's either making a general appearance or a special appearance. Which one would you rather have? Debra J. Dixon: I would definitely go with the special appearance, Your Honor. David H. Souter: Okay. Then if you win on that... if you win on that, you won, I guess. I think. If you win on that, that it was a special appearance, and the jurisdictional issue is there, and they didn't have jurisdiction because they never served him, I guess... you'd at least have to find out about that. Suppose you lost on that. Suppose, just for the sake of argument. For the sake of argument, suppose it turns out to be a waiver of the jurisdiction. Is there any other ground you could win on? Debra J. Dixon: Absolutely, Your Honor. Under section 285, the statute that provides for awards of attorney's fees in patent cases involving exceptional circumstances, that statute has, as is outlined... as is also found in the civil rights arena, a threshold requirement of being a, quote, prevailing party, end quote. This Court, although it has not specifically addressed the definition of prevailing party, subject to section 285, has on a multitude of occasions wrestled with and, in fact, addressed the definition of prevailing party within the civil rights arena, specifically under 42 U.S.C. 1988. In each of those cases, this Court has found in order to be a prevailing party one must have prevailed against the opposing side on the merits. The record before this Court is clear. When this matter was adjudicated on its merits, Donald Nelson was not a party. By virtue of the fact he was not a party on the merits, under section 285, it is impossible for him to be subject to an award of fees post judgment-- Stephen G. Breyer: What's worrying me about that argument is, there's a lot of authority that a prevailing party is a person who gets the practical thing he wanted as against, let's say, the defendant, and so if it was proper to make him a defendant, or the effect thereof, I wouldn't want to undercut that law and say that the... you know, if he really... if it was proper to make him the opposite side... didn't they get the practical relief they wanted as against him-- Debra J. Dixon: --Your Honor-- Stephen G. Breyer: --i.e. that the... yes. Debra J. Dixon: --Your Honor, I would agree with you on a more global scale. However, as it relates to the specific circumstances of this Court, as the record reflects, at the time the underlying litigation was instituted, Mr. Nelson had released all right, title, and interest he had in the subject patents, the 110 and the 702 patent. He had absolutely no relationship to either of those patents when the underlying litigation commenced. By virtue of that lack of a relationship to either of those patents, there were no merits against Mr. Nelson to which Adams could prevail upon. Ruth Bader Ginsburg: That's what he'd like to litigate if he had a chance to, but he... well, what do you make of Rule 21, which says that parties may be added by order of the court on motion of any party at any stage of the action? Debra J. Dixon: I would suggest to this Court that certainly Rule 21 applies, again in the more global sense, but it does not absolve the party attempting to amend to their Rule 4 requirement of service of process. This Court has stated repeatedly that one, in order to be subject to the jurisdiction of the court, must be served with process and have an opportunity to be heard. Ruth Bader Ginsburg: I thought you were going to say that any stage of the action doesn't mean after judgment is rendered. Debra J. Dixon: Well, certainly that's a collateral point, Justice Ginsburg. However-- David H. Souter: But you are saying that. You said... I assume when you said opportunity to be heard, I thought you meant opportunity to put in a defense, which he can't do after judgment. Debra J. Dixon: --Your Honor, I would suggest to this Court that there are certain circumstances where, post judgment, Mr. Nelson could be served with process and joined as a party. However, that mandates that he be permitted to be heard on the merits, specifically the merits which led to the award of attorney's fees, but that does not-- David H. Souter: Why isn't it... why don't you... and I may be missing something here, but why wouldn't it be simpler for your position to say, no, they can't get him into this action after judgment. What they can do is try to collect the attorney's fees from him by pursuing him in a separate action and claiming that there is, in fact, preclusion. He can then defend on whether or not there is preclusion in the assertion of the fee claim against him, and he will do so based on whether he was given an equitable opportunity to be heard if he had wanted to in the first action, and so on. Why isn't that the more orderly way to structure the possibilities for what they want to do and you want to defend? Debra J. Dixon: --Justice Souter, I would wholeheartedly agree with you. As I indicated earlier, Mr. Nelson sits here today ready, willing, and able to answer claims that are made-- Ruth Bader Ginsburg: But Ms. Dixon, you told me they wouldn't have to bring a new lawsuit, that assuming you lose on your prevailing party interpretation, that Mr. Nelson stands ready in this very case. The judgment is reopened. The question is whether he should be added as a party to it. He could stay in the district court. He doesn't have to bring... Adams doesn't have to bring another action, and just air the question, is he responsible for attorney's fees, with no new litigation, or are you changing your mind about that? Debra J. Dixon: --No, I'm not, Your Honor. I think those... both of those options are available to Adams. What the fundamental principle involved in both-- Ruth Bader Ginsburg: Well, why would Adams ever want to start a brand new lawsuit when they already are in court? Debra J. Dixon: --I can't fathom circumstances under which they'd want to. However, all we're requesting is that they finish the lawsuit they started with Mr.-- Ruth Bader Ginsburg: Well, they didn't even start it. I mean, Mr. Nelson started the lawsuit. Adams didn't start the lawsuit. Debra J. Dixon: --But Adams certainly did assert counterclaims, which they vigorously prosecuted. Stephen G. Breyer: Well, the reason... all these considerations you brought up, what's bothering me at the bottom of this is that there seems to me an obvious rules based vehicle for you to make your argument. You would just say, judge, it's not in the interests of justice to permit this amendment. My client hasn't been here, et cetera, there are other ways to get him. And that's why this case seems about Rule 15 at the bottom to me, but unfortunately for you, I guess, if I'm right, then you didn't make that argument, so why am I not right? Debra J. Dixon: Your Honor, I believe that the petitioner on appeal has, whether or not he raised the Rule 15 argument directly, certainly raised that by virtue of his more far reaching violation of the Federal Rules of Civil Procedure argument. The fundamental principle involved in this case is a complete failure of service of process, and notwithstanding that complete failure of service of process, an attempt to bind a stranger to the litigation post judgment, and that finding by both the district court as well as the Federal circuit court flies in the face of this Court's prior rulings. Ruth Bader Ginsburg: Ms. Dixon, I keep wondering why you're emphasizing service of process. No complaint was ever filed in the district court naming Nelson. Debra J. Dixon: Correct. Ruth Bader Ginsburg: So isn't the filing of a complaint a little more basic than the service of process after you file the complaint? Debra J. Dixon: Certainly the filing of the complaint is the predicate act to permit Mr. Nelson to file a responsive pleading, hence subjecting himself to the jurisdiction of this Court, of the district court. The fundamental problem in this case is that, without that opportunity to be heard, Mr. Nelson was nonetheless subject to a judgment where he had no opportunity to litigate the underlying merits. Justice Newman, in her dissent in the Federal circuit court, stated it very accurately, that both the respondents and the majority for the Federal circuit hold hard and fast to this concept of this case presenting a, quote, particular circumstance, end quote, and by virtue of that particular circumstance, a violation of both the letter and spirit of not only the Rules of Civil Procedure but also the Due Process Clause of the Fifth Amendment have been violated. It's the petitioner's position that circumstances should not circumvent the rules. They should be strictly adhered to and be uniformly applied to both-- William H. Rehnquist: Was your constitutional claim raised before the Federal circuit? Debra J. Dixon: --Your Honor, I did not find it in the brief. However, if I could direct the Court's attention to Justice... Judge Newman's dissenting opinion, it was discussed at length, and one must presume that it was dealt with before that court. William H. Rehnquist: Oh, I'm not at all sure that's true of our practice. If it appears in the majority opinion one needn't go further, because even if the majority opinion discussed it without having been raised we have jurisdiction to review it, but if it's not discussed in the majority opinion and wasn't raised in the brief, I'm not at all sure it's before us. Debra J. Dixon: Your Honor, I would respectfully disagree with that conclusion. Assuming, without conceding, that the Due Process Clause was not raised before the Federal circuit court, the due process considerations in this case are so fundamental to the issue that this Court has the authority to exercise their supervisory responsibilities and deal with that issue in the Nelson v. Adams matter. William H. Rehnquist: And what's your authority for that, that proposition that you just stated? Debra J. Dixon: I would say that that's Rules of the Supreme Court 10. William H. Rehnquist: You don't have a case? Debra J. Dixon: Not off hand I don't, Your Honor. Anthony M. Kennedy: Getting back to where we were at the very beginning of the argument, because I just want to anticipate what I think respondents are going to tell me, when you went into the district court, when Mr. Nelson made his first appearance, page 4 of the red brief tells us that Nelson, in full Italics, Nelson did not raise issues of due process, personal jurisdiction, or service of process. All you made was the motion under the substantive provision of the patent law, and if I were asked I would say that is a waiver. Debra J. Dixon: Again, I would disagree with the Court that that's a waiver. Anthony M. Kennedy: And if I find it's a waiver, then I'd say that it's fair to say, why didn't you move to... so long as you made what I think is an appearance, a general appearance, why didn't you move under Rule 15(c) to say this doesn't relate back, there's no mistaken identity of the parties? I mean, that's, it seems to me, the clear vice in what the court did here under the rules, if... forgetting about the serious due process one. But you say this is so fundamental that we should raise it here for the first time under Rule 10. You didn't even raise it in the trial court. Debra J. Dixon: Your Honor, I would suggest to this Court that the opportunity was not provided specifically to Mr. Nelson because that appearance was made post judgment. The two remedies that were available to him were a direct appeal and a 60(b) motion, both of which he availed himself to. If the Court has no further questions, I would like to reserve the balance of my time. William H. Rehnquist: Very well, Ms. Dixon. Mr. Wheat, we'll hear from you. Jack A. Wheat: Mr. Chief Justice, and may it please the Court: There are at least three major waivers in this case. One, jurisdiction was waived. The motion to vacate was not a special appearance. Paragraph 1 of the motion to vacate-- Anthony M. Kennedy: Where can we find that motion? I see the reference to the docket entry in the joint appendix. Is the motion itself in the joint appendix? Jack A. Wheat: --I don't recall, Your Honor. Anthony M. Kennedy: So what are you reading-- Jack A. Wheat: There's a docket item number 133-- Antonin Scalia: --I find that extraordinary. These things are central to both sides, and the briefs on both sides go into these things, and we don't have the documents in front of us. I don't know how you selected what goes into the appendix. David H. Souter: Well, Mr. Wheat, at least on page 3 of... yes, page 3 of your brief you say that on April 8 Nelson, appearing individually, brought a motion to amend, and this was, as I understand it from the sequence you set out, the first pleading that Nelson filed after being joined as a party, and you say... again, I'm still on page 3 of your brief... that he raised two claims. Number 1, he said that section 285 doesn't allow an award of fees in these circumstances and number 2, he couldn't be held under 285 anyway, because he was not a party. I mean, it seems to me that that may not have been the most subtle way, that latter claim that he was not a party may not have been the most complete or subtle way to raise the point, but it sounds as though someone is trying to raise the point that there's no jurisdiction here, and so I have my... I have difficulty in just taking it as a waiver. Jack A. Wheat: --To address your question, Your Honor, in section 1 of the motion to vacate, they acknowledged he was a party and requested that the order be amended to delete him as a party. David H. Souter: Well, I assume what they meant was, he's a party because you've just issued an order saying he is one, but... and taking the pleading as you've described it in your own brief, his next statement was, I am not a party, or was not a party through the litigation, and that makes... I guess that doesn't make any sense to me except on the theory that he's saying, you have no jurisdiction over me. Jack A. Wheat: Your Honor, I understand your point. I don't agree with it. Jurisdiction was not challenged. On appeal, jurisdiction was not challenged. David H. Souter: Well, it was not challenged using the word, jurisdiction, but what else was he getting at in the second part of his motion to amend the judgment? I mean, if I could find a commonsensical reading that doesn't involve a jurisdictional challenge, I might accept your argument. Jack A. Wheat: The way this case progressed, Your Honor, was that eventually led into the argument made on appeal by analogy to the civil rights cases that a fee award was not-- Stephen G. Breyer: Okay, but if I may interrupt you, just go back to this question. What else would it be reasonable to assume he was trying to get at by that second point, right at that moment, April 8, 1998. Jack A. Wheat: --And which section are you referring to, Your Honor? Stephen G. Breyer: I'm on page 3 of your brief, the bottom of the page. You are describing the substance of the motion to amend, which was the first pleading, as I understand it, that he filed after the court had joined or purported to join him as a party, and he says two things in his motion to amend the judgment. Number 1, he says, 285 doesn't, in fact, entitle them to fees. Number 2, he says, beside... even aside from that, and I'm quoting your brief, he was not a party to the litigation. Don't you think the reasonable way to read that second point is, he is claiming... he is contesting jurisdiction over him? Jack A. Wheat: Your Honor, I'm-- Stephen G. Breyer: What else was he doing? Tell me that. Jack A. Wheat: --He was saying, I'm not liable for this fee award-- Antonin Scalia: Under 285. Jack A. Wheat: --Under 285. Stephen G. Breyer: He said that in the first part. Antonin Scalia: Right. Stephen G. Breyer: Now we're at the second part. He's saying, I'm not liable because I was not a party to the litigation. Jack A. Wheat: Was not a party when the judgment was originally entered, yes, Your Honor. That's the way I understood that argument. Stephen G. Breyer: Isn't he contesting the jurisdiction of the court to make him pay the fee award? Jack A. Wheat: I do not read that as a challenge to the jurisdiction. On appeal, jurisdiction was not challenged. A Rule 15 argument was made on appeal. Ruth Bader Ginsburg: Rule 15 relates to what parties must do. His position, I take it, is, he never comes within Rule 15 because he's never even been... no complaint has ever been filed against him, no less served on him, so Rule 15 is assuming you are already a party, and then states your obligations. Jack A. Wheat: Justice Ginsburg, as I read the Rule 15 argument it was about the timing, not the question of whether he was made a party... questioning the timing, was it too late in the proceeding to make him a party, and that question's been waived in this Court. Page-- Ruth Bader Ginsburg: But you don't waive a question when you are not in the litigation at all. Rule 15 is framed in terms of somebody who's already there... can you have an amendment that relates back +/? but it speaks in terms of parties, people who have party status. The underlying... the root problem here is, it sounds a little bit like the Red Queen who says, judgment first, and then you could state your defense. Jack A. Wheat: --Your Honor, it was a peculiar procedure. We've looked to the peculiarities and particularities of this case. We were looking at the fact that it appeared Mr. Nelson was collaterally estopped by the finding against Ohio Cellular Products. He didn't question jurisdiction. He questioned the timing of the amendment. Antonin Scalia: I don't know any other way to reasonably interpret his first appearance. As you describe it, he could not be held liable under section 285 because he was not a party. Now, there's nothing in section 285 that mentions party. I mean, he's appealing to a general principle that you can't be held liable in a piece of litigation, whether it involves 285 or anything else, unless you're a party. Now, that... you know, that sounds to me-- John Paul Stevens: --May I ask you a preliminary-- Antonin Scalia: --like a jurisdictional objection. What else was he objecting to? Was he referring to some language in 285? Jack A. Wheat: Your Honor, I understood it to be two objections. The 285 objection was because we had not prevailed against him, the analogy to the civil rights cases, and objecting to the timing of the amendment, a Rule 15 objection which has been waived, page 7 of the petition for cert. They say they no longer question the timing of that amendment. They agree the timing was appropriate under the circumstances of the case. Speaker: Well, of course, 285 does mention parties. It mentions prevailing party, and I suppose your argument would be that he would say this means that the nonprevailing party is the one who has to pay the fees, and he's not a nonprevailing party under 285. Jack A. Wheat: I understand their argument, Your Honor-- Anthony M. Kennedy: But-- Jack A. Wheat: --and disagree with it. Anthony M. Kennedy: --You agree with that. Antonin Scalia: No, I think you want to agree with that. Anthony M. Kennedy: I think-- [Laughter] I think you agree with-- Jack A. Wheat: They're arguing that he was not a nonprevailing party, is my understanding. David H. Souter: --You're... he's-- Jack A. Wheat: Are we saying the same thing? Excuse me, Your Honor. Speaker: --Well, in all events, I take it that he could be a nonprevailing party for two reasons: 1) that he just doesn't fit within the purpose and intent of 285 as a substantive matter; 2) he could be a nonprevailing party because he wasn't in the litigation as a matter of due process. Jack A. Wheat: Yes, Your Honor. A couple of points there. Of course, due process is a waivable defense. We think he did have due process here. He was-- Sandra Day O'Connor: What process do you say is due before someone can be made a party to amend, to bring someone in? Jack A. Wheat: --In the collateral estoppel context, I believe because of the collateral estoppel situation I believe Mr. Nelson had his due process. Sandra Day O'Connor: Do you think that a complaint has to be filed to accord due process before a complaint can be amended to bring somebody in? Jack A. Wheat: Your Honor, the order we tendered with the motion to amend, the order said the third party complaint is deemed amended to add Mr. Nelson as a party. Sandra Day O'Connor: I would have thought it was-- Jack A. Wheat: There was no change-- Sandra Day O'Connor: --I would have thought it was fairly fundamental under due process that you have to have a complaint that names the party, and serve the party with process. Jack A. Wheat: --Your Honor, service of process is fundamental. Stephen G. Breyer: You don't always, I guess, do you? I mean, there can be weird situations where they just made a mistake in the name, or say they were Siamese twins and the other one wasn't named properly but he's been in the courtroom the whole time. I mean, there are odd situations where I guess you can, but it isn't normal, right? I mean, it's not normal that you would... what happened here would happen. Jack A. Wheat: This was not a normal case, I agree, Your Honor. Perhaps a complaint would have been the approach, rather than a motion. The case law we've cited in our brief says that if that happens, if you proceed by motion instead of by complaint, but if the response to the motion is not an objection that you should have filed-- Ruth Bader Ginsburg: Where does it say... I never heard of a... you can file a motion for leave to file an amended complaint, but then you have to file the amended complaint. I never heard of a motion being a substitute for a complaint before. Jack A. Wheat: --Your Honor, there were about three cases we cited in our brief on pages 30 and 31, where the courts uniformly held in those cases that it was a waiver of the right to be served if in your response to those motions you did not object to not being served with the complaint. Here, he did not object to not being served with the complaint until we got to this Court. John Paul Stevens: But may I ask you kind of a preliminary question? He first reared his ugly head after March 25, 1998, isn't that right? Jack A. Wheat: He referring to-- John Paul Stevens: Mr. Nelson. He first... he was not a party prior to March 25, 1998, was he? Jack A. Wheat: --He was not a named party, but he was actively involved in the litigation, Your Honor. John Paul Stevens: Well, was he a party to the litigation before 1998? Jack A. Wheat: He was not a named party, I agree, Your Honor. John Paul Stevens: He was not a party, period. Jack A. Wheat: He was not party, Your Honor. John Paul Stevens: All right. Jack A. Wheat: That's correct. John Paul Stevens: Now, if on March 27, 1998, nothing had been done by either side, could the marshall have levied on that judgment, in your view? Jack A. Wheat: Against Mr. Nelson? John Paul Stevens: Yes. Jack A. Wheat: I believe Ohio has... you have to wait 10 days to allow-- John Paul Stevens: Wait the 10 days, then. Wait 15 days. Do you think it was a valid judgment that would be enforceable by seizing his assets? Jack A. Wheat: --Your Honor, I'll be candid with the Court and say, frankly we were scratching our heads saying, what do we do next, and less than a week later, after we received the order, in came the entry of appearance. We said, okay, he's here now. John Paul Stevens: So that without that appearance you would agree, I think, that there was no power... there was a void judgment as to him. Jack A. Wheat: We felt that we needed to serve him with something, and we weren't sure what. The order saying the complaint's deemed... the third party complaint's deemed amended to add him as a third party, serve him with a copy of the third party complaint-- Ruth Bader Ginsburg: Why didn't you join him initially? You're arguing issue preclusion. You're saying he was really there even though we didn't join him. That's the mystery. Why didn't you join him in his individual capacity? Jack A. Wheat: --Frankly, Your Honor, my practice, whether it's good practice or not, is, I don't sue every potential party. I tend to go after-- Ruth Bader Ginsburg: Yes, but you don't... I'm sure it isn't your practice ordinarily to join people after final judgment has been rendered. [Laughter] Jack A. Wheat: --It's not, Your Honor. This was not a normal case. You know, in the patent infringement-- Ruth Bader Ginsburg: But you know, you have only one case that's somewhat in point, and that's the Fromson case. But that's when the corporation represented to the Court that it was going to be good for the judgment, that it would have the wherewithal to pay, so you didn't have to join the principal, and then it turned out the corporation had nothing. Here, there was nothing of that nature. Jack A. Wheat: --Yes, Your Honor, Fromson is factually distinguishable based upon that distinction you just made, but the law in Fromson is the timing of an amendment post judgment, and the Federal circuit held that was appropriate, that you can amend post judgment to add a new party. That's what we did. Ruth Bader Ginsburg: Even though the Court in Fromson itself made it clear that what drove that result was a misrepresentation that had made to the... made to the Court, with the principal's knowledge, that the corporation would be good for the judgment. Jack A. Wheat: Yes, a consideration and whether to allow an amendment, whether it's unjust. That was an equitable consideration. I agree. I think the more pertinent case, Your Honor, is American Surety, where Justice Brandeis writing for the quote... for the Court was that it was a situation where a judgment was entered against the surety company without notice, the Court, Justice Brandeis speaking for the Court said, we're assuming due process was denied, but when you filed your motion to vacate you did not raise that issue. When you appealed, you did not raise that issue. It was not waived... it was not raised until your motion for rehearing at the appellate court. Ruth Bader Ginsburg: But Brandeis didn't say that you wouldn't have the opportunity then to be heard. He said you could be heard after judgment. Jack A. Wheat: And-- Ruth Bader Ginsburg: It didn't have this multiple waiver that you're arguing, and also wasn't it true in that case that at least the plaintiff was arguing the surety company covered two defendants? It consented to be there. It consented to being a party. Jack A. Wheat: --Well, I think that the Court said no, it probably wasn't a bond posted for both parties, but it was too late to raise that issue because you didn't raise it until your motion-- Ruth Bader Ginsburg: In other words, I never understood Brandeis to be saying in that case that you get no chance to put on your defense on the merits. He said, you do. Jack A. Wheat: --You do, but it may be post judgment, as long as you have an opportunity to be heard. Ruth Bader Ginsburg: Well, that's what Ms. Dixon says that she wants, go back to the district court and let her make her defenses. Jack A. Wheat: Mr. Nelson had his opportunity. The order was amended. He said-- Ruth Bader Ginsburg: Well, all I'm saying is, you cannot use American Surety for the proposition that not only can you join someone after the judgment, but then you can say, and we're not going to let you put on your defense. Jack A. Wheat: --The point I'm trying to make is, under American Surety your opportunity to be heard post judgment is adequate as long as you do have that opportunity. The order, the judgment was amended. Mr. Nelson said, here I am, let's resolve it in this court. The judge said, okay, make your argument. He made his argument. He didn't challenge jurisdiction. He didn't challenge the finding that he had-- Ruth Bader Ginsburg: He said, I'm not here. I'm not properly here. Jack A. Wheat: --He said I'm here and shouldn't be here, and then on appeal he challenged the timing of the amendment-- Anthony M. Kennedy: Mr.-- Jack A. Wheat: --not whether he had not been served. That wasn't an issue at the Federal circuit. Stephen G. Breyer: --And you said a second ago... I just want to ask you this technical point. I think you said a second ago that in the cert petition he has withdrawn the objection to the timing, and you referred to a page, but I didn't get it. What page is that on? Jack A. Wheat: Page 7. Stephen G. Breyer: 7, thank you. Jack A. Wheat: The petitioner does not here challenge the liberal pleading provisions of the Federal Rules of Civil Procedure, and does not challenge the district court's decision to grant respondents leave to 1) amend their complaint, 2) join petitioner as a new party defendant, and 3) to do so after judgment had been rendered. The timing was the issue in the Federal circuit, along with does 285 even apply. The timing issue is waived. Does 285 apply? I think if you analogize to the civil rights cases, it's a specious analogy. Ruth Bader Ginsburg: We're not arguing the merits, because the basis on which you won on the merits don't matter. Jack A. Wheat: Excuse me, Your Honor? Ruth Bader Ginsburg: The basis on which you won, that he waived his right to defend on the merits, so what 285 means or doesn't mean is the question that he would like to argue, but you said... so the point that you're making would be academic if you're right that he's waived everything. Jack A. Wheat: No, I think 285 was argued at the Federal circuit, and was argued-- Antonin Scalia: And it's the first question presented here, too, isn't it? I mean, it's the first question on which we granted cert.-- Jack A. Wheat: --Yes. In our response to the petition for cert, our position was that's the only issue that would really be ripe for consideration by this Court, that all the other issues have been waived, and again, we think it's a specious analogy to analogize the 285 fee award to a civil rights fee award because they are awarded for totally different purposes. William H. Rehnquist: --And the court of appeals decision in this case at page 23 of the petition for writ of certiorari, under... where they have the discussion section, the second paragraph, it's talking about what Nelson contends. It says he can't be responsible individually for paying the fee award. Such a prohibition against assessing attorney's fees against a nonparty he seeks to fashion from language in the Supreme Court's decision in Kentucky v. Graham. There he was certainly complaining about an award against him having been made when he was not a party, don't you think? Jack A. Wheat: Well, the way we understood it was, he should have been a party when we obtained the judgment on the merits, and he was not a party at that point. Collaterally estopped, perhaps, but not a named party at that point. David H. Souter: You're taking it as, he's not making the argument, I have never been to the United States of America, I never got any notice and I don't know what this is about, and you have no jurisdiction. He's making the argument, I've been here the whole time, I know everything that's going on, I have total notice, and I'm in here telling you that you can only award attorney's fees under this statute against a real party, not somebody who's just been made a party for purposes of the attorney fees. Jack A. Wheat: Your Honor, that is my understanding. David H. Souter: All right. Now, I guess it would be helpful to find out which argument he's making if we actually had the document in which he made it, and I gather we don't. Where is it? You have it up there, but we don't have it, I think. Jack A. Wheat: What I have is the petition for cert, Your Honor. David H. Souter: Oh, all right. Well, where is the document in which he went to the district court and made whatever argument it was he made? Is that with the Clerk's Office or somewhere? Jack A. Wheat: There have actually been two, and we need to clarify this quickly. There was the motion to alter and amend the judgment entry, docket item number 133. Sandra Day O'Connor: 133? Jack A. Wheat: Yes, 133. Ms. Dixon this morning did mention the Rule 60(b) motion to vacate the judgment. That motion is totally collateral to the record you have. That motion was filed after the Federal circuit affirmed the judgment. The trial court has held that jurisdiction was waived. That decision is reprinted, full text, in our response to the petition for cert.-- That issue is at the Federal circuit right now, whether the trial court had jurisdiction. I mean, they're going to have it one way or the other. Did they raise it in the matter that's before this Court, or did they not raise it? There, they say it wasn't raised yet. It needs to be addressed. Ruth Bader Ginsburg: What is this other proceeding that's now pending in-- Jack A. Wheat: It's... after the Federal circuit affirmed this judgment, they filed a Rule 60(b) motion to vacate the judgment, filed that with the trial court. The trial court overruled that motion. The opinion is reprinted full text in our response to the petition for cert. That order is now on appeal at the Federal circuit and is fully briefed. It is not in the record on appeal here that you have, the record you-- Ruth Bader Ginsburg: --Has it been stayed pending our decision in this case? Jack A. Wheat: --I haven't received an order to that effect, but I suspect that it has, but that's just a guess on my part. Ruth Bader Ginsburg: There's one other feature of this that I'm curious about, in addition... I wondered why you didn't join him in the first place, then at the end I take it your concern is that the corporation does not have the wherewithal to pay this judgment. If he were sole shareholder, and the assets of the corporation were distributed to him, you could go after those assets in his hands, couldn't you? Jack A. Wheat: You mean, based upon the judgment we have against him-- Ruth Bader Ginsburg: My understanding was that in a bankruptcy situation, where you have a one person corporation, that that shareholder, you can go after the shareholder to the extent that he got a distribution from the corporation. Jack A. Wheat: --I'm not involved in collection law, but I do generally understand that to be the case, that if there is a liquidation you can follow the assets to the shareholder. Ruth Bader Ginsburg: Right. Jack A. Wheat: I don't know that there are any assets. We've tried various executions and they've all come back with there being no property found against the corporation. We were told it was going to be shut down if we obtained a judgment against it, and that's what motivated us to then proceed against Mr. Nelson individually, being our view he was collaterally estopped to challenge the finding that the fee award was based upon his inequitable conduct, and that finding wasn't challenged at either the trial court or the Federal circuit. Ruth Bader Ginsburg: But in the trial court he wasn't there, and the problem that this case presents is, the corporate form means something, and your argument seems to suggest that any time you have a judgment against a one person corporation, that after you get that judgment, you can join the sole shareholder if you're shaky about-- Jack A. Wheat: Justice... excuse me. Ruth Bader Ginsburg: --there being enough in the corporate till. Jack A. Wheat: Justice Ginsburg, we're asking for something much more narrow than that: when you have a situation where it's a controlling shareholder, in this case the sole shareholder, the controlling officer, the person actively involved in the litigation, the person controlling the litigation and therefore collaterally estopped by the finding against the corporation, and if it is that person who committed the fraud which warranted the fee award, that you should be allowed to recover that fee award. Ruth Bader Ginsburg: Well, you may well be right ultimately, but as I understand Mr. Nelson's position, he is challenging that he was solely in control of the litigation, of what went on, that he is raising a number of factual questions that haven't been aired before any court. Jack A. Wheat: Your Honor, I don't believe that's in the record. Pre judgment, he challenged whether he committed inequitable conduct. The trial court found that he did. Ruth Bader Ginsburg: He didn't. The corporation did. Jack A. Wheat: No. Ruth Bader Ginsburg: He wasn't-- Jack A. Wheat: They found that it was his inequitable conduct that was imputed to the corporation, and that that inequitable conduct that he personally committed was what support-- Ruth Bader Ginsburg: --Yes, but he was not a party to that, and he is at least contesting the extent to which he had control over the litigation because the corporation changed hands in between, and that you say he was in control. Jack A. Wheat: --Your-- Ruth Bader Ginsburg: Do I read his position incorrectly to challenge that? Jack A. Wheat: --That argument did not come up until we were in this Court. It would have been logical in his first appearance to say, hey, I'm not served, you don't have jurisdiction, I'm not in privity with Ohio Cellular Products. None of those arguments were made. He said, here I am. I don't think I have to pay the fee award. Ruth Bader Ginsburg: I thought he said, here I am not because I'm not a party. Jack A. Wheat: He said he did not... should not be a party, and wanted that order reversed or vacated that made him a party. John Paul Stevens: May I ask just a question about the merits? Are there cases out there in which a corporation brought a patent suit and lost because its sales manager or patent office manager engaged in serious inequitable conduct in the patent office and that voided the patent, in which, after the litigation was all over, they got a judgment against the officer who committed the wrongdoing? Jack A. Wheat: Yes, Your Honor, there are. I think the best case on that point is the Hughes, H u g h e s, case cited in our brief. John Paul Stevens: And they got attorney's fees from the officer? Jack A. Wheat: Yes. It was the patentee who no longer owned the patent. It was assigned to his corporation, but he was the one who committed the inequitable conduct, and the Federal circuit held that he was liable for a fee award. In fact, I'm aware of no cases saying you cannot hold the patentee-- Stephen G. Breyer: Even if you're wrong, I guess your narrowest argument is, even if you're wrong, the way to do it is Rule 15, and say it's not in the interests of justice, rather than start redefining prevailing party under the... am I right, or not, that if you're wrong on that, the way to attack you is through Rule 15? Jack A. Wheat: --Oh, I think there are two ways we could have pursued it, Rule 15, which we did-- Stephen G. Breyer: Yes. Jack A. Wheat: --or we could have filed an independent action in both claiming he was collaterally estopped, but yes, that does then get to the issue, is he liable for the fee award. The jurisprudence interpreting 285 is clear that the one who commits inequitable conduct can be held liable. William H. Rehnquist: But that's a matter of substantive law. The question here is really, you know, anyone who is... you make a claim against... under substantive law. You have to make the claim and give them an... you know, notice that the claim is being made against them, and give them an opportunity to come in and defend themselves. Jack A. Wheat: Yes, I agree, Your Honor. William H. Rehnquist: And is... I understood from the briefs, or perhaps from the lower court opinion, that you make no claim here to piercing the corporate veil? Jack A. Wheat: No. We did not proceed under that theory. We proceeded under the theory that the person who committed the inequitable conduct is... can be held accountable for the fee award, and under the theory that he was collaterally estopped to dispute the finding that he committed inequitable conduct adequate to support the fee award. Unless there are other questions, I will conclude my remarks. I thank the Court for its attention to this matter. William H. Rehnquist: Thank you, Mr. Wheat. Ms. Dixon, you have 3 minutes left. Debra J. Dixon: Thank you, Mr. Chief Justice. There are a few points I wish to attempt to clarify for the Court. Sandra Day O'Connor: Would you clarify for me why, in your petition for cert, you said that petitioner does not challenge the district court's decision to grant respondents leave to amend the complaint and to join petitioner as a new party defendant, and to do so after judgment had been rendered? I mean, there we are. So that isn't some kind of a waiver? Debra J. Dixon: No, it isn't, Your Honor, because even conceding the district court's ability to perfect all three of those items, it does not obviate Mr. Nelson's right to service of process and the right to be heard. What the petitioner does challenge in the district court, and object to in the district court's finding, was having rendered a judgment against him without affording him the opportunity to be heard on or defend on the merits, and there were multiple defenses available to Mr. Nelson, as well as a potential counterclaim, which were not available to Ohio Cellular Products, which in turn were not raised at the trial court. Antonin Scalia: Ms. Dixon, how do you explain the statement by the trial court here on your later application for a 60(b) motion? In denying it, the court says this: the Federal Rules of Civil Procedure provide that a challenge to personal jurisdiction, insufficiency of process, or insufficiency of service of process is waived if not made in the party's first responsive pleading or motion. It is not disputed that Nelson did not, in any of his prior pleadings, make the objections he now seeks to raise, that is, personal jurisdiction, insufficiency of process, or insufficiency of service of process. Debra J. Dixon: Your Honor, I respond to that quite directly. Under Civil Rule 12, a responsive pleading is a party's first opportunity to be heard. However, the responsive pleading is deemed to either be a dispositive motion prior to filing an answer, or an answer. The predicate to that is Adams' filing of a complaint and giving Mr. Nelson the opportunity to affirmatively respond to the same. Antonin Scalia: You... well, I mean, it seems a reasonable rule laid down in that denial of the motion that the Federal rules provide that these defenses are waived if not made in the party's first responsive pleading or motion, and you're saying that you didn't have to make those defenses in your first motion? Debra J. Dixon: Correct, Your Honor, because, as we had addressed during my initial argument, Mr. Nelson's filing the Rule 59 motion would have been a special appearance, and he would not have been subject to the jurisdiction of the court by virtue of the same. Speaker: In other words, the answer by motion or by answer to the complaint, Rule 12 is the rule in question, and Rule 12 says you can make a motion in advance of answering the complaint, or you can answer the complaint, so Rule 12 is set up to deal with the case where a complaint was filed, and then it says you respond to that complaint either by pre answer, motion, or by answer. Debra J. Dixon: Precisely, Your Honor. Antonin Scalia: How can you consider your first, your April 8 appearance a special appearance when you made two arguments, the first one of which is obviously to the merits, namely, section 285 does not allow an award of attorney's fees against an individual who engaged in inequitable conduct? That's certainly a general appearance. Debra J. Dixon: I would disagree with the Court. It was merely a special appearance in an attempt to bring some deficiencies in the procedural aspects of the case to the court's attention. William H. Rehnquist: Thank you, Ms. Dixon. The case is submitted.

Allan R. Rosenberg: I very much doubt that the Court has an adequate idea of what the issues are in this case or what the -- particularly with respect to the factual nature of the problem involved here or what the issues are likely to be in the typical case involving an arbitration clause and the collective bargaining contract that contains a no-strike clause from the presentation of my Brother Farr. As I heard him, it was a little case involving Mr. Boiardi who wasn't getting paid and Mr. Armstrong who was improperly discharged so he claimed. And these are things which really no one is being heard on and it's better to leave it to General Electric to decide whether or not this is arbitrable or not. And perhaps, the employees ought to be able to sue and without regard to the union and bypassing the union and go to some court where the state of federal depending on what's involved. And -- and of course, if the union -- if the employer refuses to arbitrate why the union has relief of its no-strike clause and that's all fine. Now, I submit that without an understanding of what is involved in this case and in other cases involving the kind of grievance to get something on the issue of arbitration and goes to Court, one will not appreciate the problem involved here without regard to the legal issues involved. Here, we start with a contract. First, let me say that we have a local union, a local Massachusetts union representing the employees of the General Electric Company of Ashland, Massachusetts. The General Electric Company causes a New York Corporation in an industry affecting commerce. The record has an uncontroverted affidavit that all the employees represented by or members of this local Massachusetts union are citizens of States other than New York and it gets Massachusetts, Rhode Island and Connecticut. And the -- the factual basis of the case as far as that is concerned is that the parties are diverse. The contract was made in June of 1953 and it has been automatically renewed through August 1956 and is replaced in August 1956 by a five-year contract with this local union. So we have a situation different from that in the Lincoln Mills case where there was a termination of the contract. Here, there's been a continuous contract containing the same terms. Now, the terms of this contract with respect to the grievance procedure are the conventional four-step grievance procedure going through progressively higher levels from the lowest level of foremen to the plant manager. And if there is a dispute which is not settled in the grievance procedure, it goes to arbitration. The only parties to the arbitration are the union and the company. The employees are excluded from its terms. The union selects the arbitrator with the company, the cost of the arbitration, the entire administration of the arbitration agreement is in the hands of the union and the company. Employees have no rights in that as such, not directly. Now, there is a grievance -- a -- a no-strike provision in this contract and that is related to the grievance procedure and it permit strikes when grievances which have been processed and arbitration has not been resorted to, either party being able to resort to arbitration under the arbitration clause. And there are further limitations about 60 days notice. Now, there is the provision involved in the Boiardi grievance is set forth in Article IX and its first paragraph -- first numbered paragraph, "The company shall furnish the union within 30 days after the signing of this agreement a complete list of job classifications and rate ranges." And the grievance here is that Boiardi is classifying at a job classification, repairman 3501, and he's not getting the rate for it. What is the significance of that in this company? It is that the rates that have been agreed upon, the whole rate structure of this company, is imperiled by what the union asserts to be a rate that's not -- that is being put into effect, that hasn't been bargained, that hasn't been furnished by the company. This does not -- this is not approved wages. It may result in six cents an hour, I think, the difference for this one individual employee. But if the company, as it might turn out, for example, in arbitration, is able to put an 'L' after a rate, meaning learner, and pay six cents an hour or less for one rate. There's no reason in the world I suppose that it can't do it after other rates. So you have the whole rate structure of the General Electric Plant of Ashland involved. This question involves whether or not the company has furnished a complete list of job descriptions and rate ranges to the union within 30 days after the signing of this contract in June of 1953. That's what's involved here. What is involved is what not only Boiardi but every employee who has a job classification and a rate range is getting what the union and the company bargained to give him. That's the problem here. Now, they're saying, no one is hurt. They say, let the employee sue. Let the company decide whether it's arbitrable or not is to negate the purpose for which the collective bargain was made, should they strike or should they go to arbitration. They've chosen, as they have a right to do, to go to arbitration on it. Now, the company could very well say, this is not arbitrable and tested out as it did in the Boston Herald-Traveler case. But it takes the flat position, not that this isn't arbitrable, but there is no relief to be had in the federal courts in this contract of a manufacturing company with production and maintenance employees involved in a rate structure case which cuts across the whole of its -- of plant in -- in Ashland. Felix Frankfurter: Is the Boston-Herald case been reported, Mr. Rosenberg? Allan R. Rosenberg: I believe it has, Your Honor. I don't have the reference. It was a companion case on the enforceability aspect of it to the General Electric and the Goodall-Sanford cases. But it went down to the District Court and then came up again on arbitrability. We are -- Hugo L. Black: (Inaudible) Allan R. Rosenberg: What's that? Hugo L. Black: (Inaudible) Allan R. Rosenberg: Mr. Farr informs me it's in the same volume as this case. Felix Frankfurter: Thank you very much. Allan R. Rosenberg: Now, the Boiardi case -- I'm sorry, the Armstrong case arises out of a different section of the contract. That section of the contract has to do with the grievance procedure itself and it concerns -- it's in Article 12. And there is a clause concerning a grievance -- concerning dismissal for cause. Now, I cannot make the same argument about a dismissal for cause that I make about the rate structure in this plant, but I do make this that the -- in the first place, it's apparent that the underlying grievance that is beyond the -- the case on arbitration. The -- the arbitration clause unquestionably runs to the union, qua union, so that we have here, as I suggest, a case appropriate for 301 jurisdiction whether it is a jurisdiction over the subject matter or jurisdiction to grant the particular kind of relief to one side. We -- we have jurisdiction qua over a union controversy here. And the underlying grievance in the Boiardi case concerns a promise that the company will turn over to the union not to Mr. Boiardi or to any of the 700 or 800 employees in this plant but it's a promise that runs to the union. That's the underlying grievance and then beyond that, there is Mr. Boiardi's right and the union's right to test whether that promise by the company to the union has been fulfilled. In the Armstrong case, we have a situation that's not the same. We have a man who is discharged and the only aspect of it that I would think the union has a direct interest in is the aspect that it hasn't all discharged for cause cases where the union's interest in -- in the law of the bargain, in the law of the collective bargaining contract were the company says, we shall not discharge except for cause or in this case, a more elliptical form of it, is observed for the protection of the individual members. In that, the union has a stake, as I think it was pointed out in the -- Mr. Justice Frankfurter's opinion in the -- in the Westinghouse case. These cases often triggered strikes and disputes which lead to strikes. So certainly with respect to the underlying premise in the -- in the rate structure case and the Boiardi case, we have a -- a situation which is kind of doubled bottom. We have, first, the premise running to the union to arbitrate and this involves a premise running to the union to turn over a complete list of right ranges and job descriptions. Now, it is a fact, as Mr. Farr has pointed out, that this case was dismissed by the -- a motion to strike the equitable relief and finally, a final judgment had been granted by the District Court of Massachusetts in this case on the sole ground that the plain language of the Norris-LaGuardia Act forbids the issuance of the injunction as the Court called it sought in this case, what we sought in the complaint which was filed in December 1954 prior to Westinghouse. And while the American Thread was the single case in Massachusetts in the Federal District Court there on that subject. What we sought was a decree of specific performance of this arbitration clause. Felix Frankfurter: Are you making a point that this is not an injunction within the scope of the Norris-LaGuardia Act? Allan R. Rosenberg: Your Honor, I say it is not the kind of order or decree or injunction or mandatory relief requested which the Norris-LaGuardia Act is aimed at. Felix Frankfurter: Well, I -- that's on the substantive side that I am making a point as to the particular kind of order, namely, that an order for a specific performance which limits -- which is an injunction not to do something that you want to do. Are you making a point that that is not both an injunction if that phrase is use? I don't mean -- Allan R. Rosenberg: Well, I think -- Felix Frankfurter: -- I don't mean to touch the major question. Allan R. Rosenberg: I understand. Felix Frankfurter: (Voice Overlap) argue about that. Allan R. Rosenberg: I think that -- that there is -- there's law of both ways on that and I would hesitate to -- Felix Frankfurter: All right. Allan R. Rosenberg: -- to try to fix a label on something -- Felix Frankfurter: But you're not -- Allan R. Rosenberg: -- and determine its substance. Felix Frankfurter: That isn't your reliance. Allan R. Rosenberg: No. Felix Frankfurter: I'm just saying the Norris-LaGuardia Act doesn't apply. Allan R. Rosenberg: No. I think the Norris-LaGuardia Act applies to -- as -- as Judge -- Chief Judge Magruder said to labor injunction -- Felix Frankfurter: I understand that. Allan R. Rosenberg: -- on a typical sense. Felix Frankfurter: But that goes to the content, the nature of -- Allan R. Rosenberg: That's right. Felix Frankfurter: -- the controversy -- Allan R. Rosenberg: That's right. Felix Frankfurter: -- and not that -- that this isn't of the nature of injunction. That a specific performance is an indicative way of saying you must do the opposite of that which you're ordered to do. Allan R. Rosenberg: I place no reliance, Your Honor. Felix Frankfurter: All right. That's all I wanted. Allan R. Rosenberg: I do say as the George amendment which I've outlined in the brief points out that there is some reason for thinking that the -- and as this Court in the Virginia Railway case adverted to the -- to the mandatory nature of the mandatory injunctions or mandatory orders where -- as I see it bypassed or left out of those legislative history to indicate that they were not to be included in the prohibitions of the Norris-LaGuardia Act. But I think basically, as Chief Judge Magruder says, this isn't the kind of thing that the Norris-LaGuardia Act was aimed at. Now, the Court of Appeals, having before just the dismissal on the ground of the bar of the Norris-LaGuardia Act did have arguments presented on state law, on the United States Arbitration Act on Section 301. And -- Felix Frankfurter: Judge Aldrich went exclusively on Norris-LaGuardia, didn't he? Allan R. Rosenberg: So I understand it and so the Court of Appeals did. He said and I'm quoting him, "The plain language of the Norris-LaGuardia Act forbids the issuance of the injunction." Now, I do not think that Judge Magruder's position has been accurately represented with respect to Section 301. As I read it, while he says that it was not intended either to create any new remedies or to deny applicable existing remedies, he does say that if you read the maximum into it that can be read into him, the most that could be read into it would be that it authorizes equitable remedies in general including decrees for specific performance of an arbitration agreement. That's on page 73 of the record. He finds on the basis of the legislative history which I will try to trace briefly for Your Honors that -- that's the most that can be read into it. And I say as Judge Wyzanski said, this is a statute in which, under Title 2, the declaration of policy and otherwise the maximum degree of enforcement of arbitration clauses should be read into it. Felix Frankfurter: Is it fair to say that Judge Magruder did not rest on 301? Allan R. Rosenberg: No, I don't -- Felix Frankfurter: I thought you said it couldn't be rested on 301. Allan R. Rosenberg: Well, he did rest on it as a jurisdictional basis. Felix Frankfurter: Yes, I understand that. But -- but for the purpose of -- he wouldn't -- he wouldn't have granted specific performance to arbitrate on the basis of 301, is that correct? Allan R. Rosenberg: I think that's -- that's probably correct. He says it lacks the procedural safeguards and it's impractical to use it. I gather that if pressed, he would say, maybe you can read into it if you read it at its maximum. Felix Frankfurter: Many are -- I suppose, you've got what he's written -- Allan R. Rosenberg: Yes. Felix Frankfurter: -- it's clear he didn't rest on 301 but said it couldn't be rested. You have to go over to arbitration. Allan R. Rosenberg: Right. Felix Frankfurter: And as you rightly indicate, but he uses 301 for jurisdiction of purpose. Allan R. Rosenberg: That's right. And I don't think, if Your Honor please, that there is any serious question or should be even under Westinghouse that this is a union controversy on which jurisdiction of the District Court over the subject matter clearly attaches. It is -- it seems to me to scale the importance of the problem down to talk about while these little arbitration things and if the company wants to agree or it doesn't want to agree. This is and has become a policy of the United States, Title 2 of the -- of the Taft-Hartley Act. It says it is a policy of the United States that such arbitration clauses should be included in collective bargaining contracts. And I think that the approach of both the Senate and the House in their separate versions of this legislation toward accomplishing some remedy for the violations of contracts and refusal to honor arbitration agreements makes it, to me, sufficiently clear. And by sufficiently, I mean, sufficiently to persuade Mr. Chief Judge Magruder to make the statement that he made and to persuade this Court and I think the Court's reluctance -- the lower court's reluctance to use it and to go to the Arbitration Act is misguided. I think that there is enough in the legislative history. And I -- let -- let me call without repeating what the statutory recognition of these contracts is valid, binding and enforceable and the effort of the Senate to go tandem with 301 and Sections 8 (a) (6) and 8 (b) (5). Without repeating what Your Honors have already heard on that, there was a question raised by Mr. Justice Frankfurter, “Could you dispense with going to the Board under the Senate version without -- before you go to Court?” Now, the Senate considered that. The Senate report made a point on that. It made the point -- it is the purpose of this bill to encourage collective bargaining and somewhat. It would not be conducive to that object if the Board became the form for trying day-to-day grievances or from the guide of unfair labor practice cases. It entertained damage actions arising under breach of contract. Hence, the Committee anticipates that the Board will develop by rules and regulations a policy of entertaining under these provisions and those provisions with the unfair labor practice provisions, if Your Honor will recall which would eventuate in a cease and desist and affirmative order requiring compliance with the terms that the particular case warranted. The Board will develop by rules and regulations a policy of entertaining under these provisions only such cases alleging violation of contract as cannot be settled by resort to the machinery established by the contract itself, voluntary arbitration or if necessary by litigation in court. And it talks about any other cause would engulf the Board with a vast number of petty cases and so on. In short, the intention of the Committee in this regard is of cases of contract, violation to be entertained on a highly selected basis when it is demonstrated in the Board that alternative methods of settling the dispute have been exhausted or are not available. Felix Frankfurter: Well, that would indicate just -- from hearing what you read would indicate that the Board would have the kind of discretion to entertain what alleged unfair labor practices referring to on the basis on which it now selectively entertains unfair labor practice, is that right? Allan R. Rosenberg: Well, I don't -- Felix Frankfurter: I mean, all you've read said that the Board wouldn't have to entertain every case for claim of underpayment or -- but would selectively take what cases would give rise to a general rule. Allan R. Rosenberg: Well, I think -- Felix Frankfurter: In another words, just what it's doing now on a larger scale of saying, we wouldn't handle a lot of the cases to which reference are made in Chief Justice's opinion yesterday. Allan R. Rosenberg: Well, I think if you refer to jurisdictional features, that maybe so but I gather that this means -- Felix Frankfurter: I don't know what jurisdiction of it -- Allan R. Rosenberg: Well, I mean the -- Felix Frankfurter: -- and what is the -- Allan R. Rosenberg: -- quantitative -- Felix Frankfurter: (Voice Overlap) of the Board. Allan R. Rosenberg: The quantitative aspect of it, more than 100,000, more than 50,000, the company and the commerce aspect involved. But I think they refer to the importance of it, the important of -- the importance of the particular subject matter rather than the affect upon commerce, the nature of the -- of the industry. Now, it's -- it's sufficiently evident, I say, that in the Senate Bill, the 301 and the unfair labor practice sections were to be driven in tandem that you would get alternative or correlative relief out of either one. And since it's clear that you could get specific performance by way of the unfair labor practice and the Senate committee makes it quite clearly that you could get alternative or similar relief out of 301. There is a -- an intention and authority in Congress in that version of the Senate Bill to get out of 301, what was in 8 (a) (6) and 8 (b) (5). Now, you have the same thing in the House bill. The House bill approach is a little bit differently. It had a provision under definitions of what collective bargaining means in Section 211 (a), that you had to -- that there was a procedure for settling grievances, you had to follow it. And then, they made in 8 (a) (5) and 8 (b) (2) an unfair labor practice to refuse to bargain collectively to follow the grievance procedure. And in Section 302 which was the House version of Section 301, they -- in -- in one subsection of it, they made the Norris-LaGuardia Act inapplicable. Now, it's evident from this that the House at least envisions full equitable relief out of its version of Section 302, otherwise, they wouldn't have made the Norris-LaGuardia Act and I quote, "To the extent that the Norris-LaGuardia Act stood in the way of granting that kind of equitable relief, they remove it." Now, when it got to the -- to conference and -- and the minority report in the Senate as my Brother Farr has mentioned and the remarks of Senator Morris on his disappointment about their excluding the alternative unfair labor practice method. He makes it quite clear. He was in favor of it. He was not an opponent of it. He make it clear, it seemed to me or sufficiently clear that when the conference report eliminated the unfair labor practice group, it left in what the Senate said should be handled through 301 and what the House in its version decided should be handled through its Section 302. Felix Frankfurter: Did the lifting of the Norris-LaGuardia Act go to conference? Allan R. Rosenberg: Yes, it did. Felix Frankfurter: And it -- at -- it was the conference that knocked it out. Allan R. Rosenberg: The conference had knocked it out. Now, the significance of that, if Your Honor please, is that the relief that maybe granted, assuming I'm correct about that equitable relief maybe granted under Section 301. The relief that maybe granted under Section 301 so construed is not a coextensive with the prohibitions of the Norris-LaGuardia Act. The Norris-LaGuardia Act doesn't prohibit everything that could be granted under Section 301. It's evident in this case. It's evident I say in the Steele and Tunstall type of cases. It's evident in the -- in the case from the Third Circuit involving the S.O.-- Standard Oil of California of -- the S.O., Standard Oil case where the -- despite the Norris-LaGuardia Act, referred for the Court of Appeals from the Third Circuit issued an order directing the company to negotiate on a new wage rate. Now, it -- I -- I say that the -- the a court could prohibit racial discrimination without violating, without running up against the interdictions of the Norris-LaGuardia Act under Section 301. All I'm doing by way of illustration, if Your Honors please, is to show that if you construe Section 301 in the light of its legislative history, in the light of its attempt to make a binding enforceable agreement, in the light of the transfer of the specific performance aspects from the unfair labor practice sections of the Act which were omitted and in the placing of those sections in the Section 301, both in the House and the Senate version and the conference version, then it seems to me you get the result that Section 301, in the light of this legislative history in its own terms, authorizes the kind of equitable relief which Chief Judge Magruder talked about including the degree for specific performance of an arbitration agreement except whether Norris-LaGuardia Act apply. That is to saying, if the attempt is made to enforce a no-strike clause in a -- under Section 301 by way of injunction, the Norris-LaGuardia Act would prevent it. And in the case in the First Circuit involving an attempt to prevent benefit payments, it would run up against the provisions -- the specific provisions of Section 4, that's Copra against Suro decided in 1956 in the First Circuit. But there are provisions -- there is relief that maybe granted, as I construe Section 301 in the light of its legislative history, which do not encounter the prohibitions of the Norris-LaGuardia Act and one of those is the decree for specific performance of an arbitration agreement. Now, perhaps it is useful to point out some of the differences between this case and the preceding cases. As I've already indicated, the contract in this case unlike the contracts in the other cases is still in existence, it has never terminated or at least it was an existence until August 1956 and then it was -- by agreement of the parties, replaced by a five-year contract containing the same terms and now in existence. Unlike the other two cases, General Electric is still in the business in Ashland. There is no termination of employment. These grievances, vary somewhat different relationship. I'm not sure how -- how different in -- in -- if it were not for the fact that employment had -- has ceased or terminated in the other cases, but these are rate classifications and a discharge. They differ from the fringe benefits which are apparently once for all involved in the Goodall-Sanford case upon termination. Felix Frankfurter: That's money, isn't it? Allan R. Rosenberg: That's right. The discharged case involves reinstatement as well as -- as backpay if any -- and there maybe no backpay. In this case, this is a particularly suitable case perhaps for arbitration because the union said in its grievance, the penalty of discharge is too severe indicating that they may have been a law legal right to discharge the man because he did not do what he was told to do. But that in the exercise of the kind of discretion which arbitrators have in this field, it would be a good thing for labor relations if they are -- if it went to arbitration you could get that result. Felix Frankfurter: Let me be clear, Mr. Rosenberg. One of -- I'm not at all questioning the -- the scope that you gave to this litigation, but one of the cases involves backpay, is that right? Do -- are both -- Allan R. Rosenberg: Now, they both may have involved backpay. Felix Frankfurter: Then -- yes, they may. But -- but is there a difference in the -- in the questions by which where liability for backpay would be determined? Allan R. Rosenberg: Oh, yes. Felix Frankfurter: Is -- is one of these cases like Westinghouse -- I -- I mean in the -- with the subject matter. Allan R. Rosenberg: It may be. If the arbitrator, for example were to say that Armstrong has accrued wages owing to him, as a result of his unlawful discharge, I supposed it would be like Westinghouse. But if the arbitrator's say, “Well, the penalty of discharge was too severe but he's already been out a year and half and we'll cut off his wages, he won't get any accrued backpay and we'll put him back to work.” Then it's a prospective operation. It does not necessarily involve accrued wages. Felix Frankfurter: But so far as -- so far as backpay is concern, is the question legally different from the one that was involved in Westinghouse where there are also have to be a determination prior to say whether there should or shouldn't be back pay, namely, where the man off on their own time, was it clear at all or wasn't clear at all? Allan R. Rosenberg: Well, I think there is -- the difference in the aspect of the remedy in the prospective aspect of reinstatement. Felix Frankfurter: Yes. Allan R. Rosenberg: But apart from that, I think there is no legal difference. Felix Frankfurter: All right. Allan R. Rosenberg: I think there is a -- a difference in the Boiardi case because while it's true that in a sense backpay is involved, there are much -- much more involved and it's a continuing and much broader aspect of the case. Now -- well, of course, we don't have in this case the appealability of the -- of the order that we do in the Goodall-Sanford case and we have in this case state law, which my Brother Farr did not advert to it at all, and we have allegations with respect to diversity jurisdiction. Felix Frankfurter: Well -- but what about that? Allan R. Rosenberg: Well -- Felix Frankfurter: What do you say about diversity? I understood you to say -- I heard you say, I think, that the outset, that in fact, the record present the case of diversity. Allan R. Rosenberg: That is correct. Felix Frankfurter: Proper alignment of parties on the respective sides -- Allan R. Rosenberg: That's right. Felix Frankfurter: -- is that right? Allan R. Rosenberg: That's right. Felix Frankfurter: And you just said you have diversity. Meaning by that that in fact you have diversities? Allan R. Rosenberg: Well, Your Honor, I think we have -- Felix Frankfurter: I thought I heard Mr. Farr say that there was a -- you moved to amend so as to include diversity and for some reason, the Court of Appeals denied that, is that right? Allan R. Rosenberg: Well, I can explain that a little more accurately I think or fully by saying that -- Felix Frankfurter: Because diversity, then it changes the whole nature of the problem certainly for one member of this Court. Allan R. Rosenberg: Well, I think that -- that there is diversity. There is an affidavit in the Court of Appeals where I moved to amend to show jurisdiction under 28.1653. I think that's the section number, in which it's alleged and not controverted that all the members of this union and all persons represented by it are citizens of Connecticut, Rhode Island and Massachusetts, none of New York and with the corporation that is alleged to be a New York Corporation. It's alleged in the complaint that the matter in controversy exceeds $3000. It's alleged irreparable damage and similar equitable allegations. Now, the -- the problem, as far as diversity is concern, as far as the Court of Appeals is concern, is that under Massachusetts law, a union may not sue in its own name and this suit was brought in the name of Local 205 U.E. Now, it said in its opinion, the Court of Appeals did, that we amended to show diversity. But this has become moot and in any event, it cannot be granted because of the capacity because the rule of state law with respect to the capacity of the union to sue in its own name. Now -- Felix Frankfurter: Well, I -- it said -- according to me, its beyond -- and I wonder, it can give you capacity, what does it mean? Allan R. Rosenberg: I should think it does nothing if doesn't give you that. So, the -- the reason for dismissal is -- is capacity or the fact that by having decided that the federal question is involved rather than a -- Felix Frankfurter: But it wasn't lateness. It wasn't the -- Allan R. Rosenberg: No -- Felix Frankfurter: This was -- Allan R. Rosenberg: No. I'll read you -- Felix Frankfurter: In other words, judge -- I -- I thought there were enough questions but this entered -- would bring -- Allan R. Rosenberg: All right, sir. Felix Frankfurter: -- a new one. Allan R. Rosenberg: Well, let me read you exactly what it said -- what the Court said, “The plaintiff has submitted a motion to this Court under 28 U.S.C.1653, this is on page 82 of the record, "to amend its complaint so as to allege diversity of citizenship between all the members of the union and defendant. No doubt was hedged against the ruling that relief could not be granted under the law of applicable to a federal question case." In view of our decision, this motion may have become moot but it must, in any event, be denied for it cannot accomplish the result intended Rule 17 (b), Donahue against Kenney in the light. Felix Frankfurter: With all respect, I didn't understand what it -- may have become moot. What's that mean? Allan R. Rosenberg: Well, it -- Felix Frankfurter: If that's become moot, why isn't the rest of the case moot? Is it moot because he's already granted -- Allan R. Rosenberg: I believe so. Felix Frankfurter: You want it on a different ground? Allan R. Rosenberg: Yes, sir, yes, sir. But I say that it's quite clear from the cases and from the statute itself that 301 (b) which is involved in this is a -- is a capacity statute and applicable generally. And that we are entitled to sue in the federal court even if state law and diversity is involved even where state law would not permit us to sue in -- in the name of the union. And I think that diversity -- Felix Frankfurter: What's Donahue against Kenney, Mr. Rosenberg? Allan R. Rosenberg: What's that? Felix Frankfurter: What is Donahue against Kenny which he cites? Allan R. Rosenberg: That's a -- a Massachusetts case. Felix Frankfurter: Yes. What does it hold? Allan R. Rosenberg: It holds as I think -- Felix Frankfurter: Within the Massachusetts court, you can't do this. Allan R. Rosenberg: That's right. (Voice Overlap) -- Felix Frankfurter: That should -- that way you can't do it in the federal court although you've got 301 which if it does anything as you say, it does that. Allan R. Rosenberg: That's right. Felix Frankfurter: Well, that's all. Allan R. Rosenberg: So, I think that if we turn to -- Felix Frankfurter: (Voice Overlap) -- Allan R. Rosenberg: We -- we have an adequate pleading basis at any rate for diversity. And we have a favorable state law in Massachusetts. At the time, the Court of Appeals decided this case. There were -- there was a statute on the books, Chapter 150, Section 11, which made all provisions relating to arbitration in collective bargaining contracts valid and went on to say that if the parties agreed that the determination should be final, then the determination could be enforced by appropriate or proper judicial proceedings. Now, there were two cases on the books construing that and the language of the -- of the decisions of the Supreme Judicial Court make it clear and they quote in the brief that they were giving it a very liberal construction. They granted specific performance of a check-off agreement and they granted a -- a wage assignment agreement also. But right after the Supreme Judicial Court decided the -- or right after the Court of Appeals decided this case, the Supreme Judicial Court came out with two opinions, rather one and then only recently another. In the -- in the first of those opinions, Post Publishing Company against Court involving the Boston Post, the employer had discharged some large number of employees of the newspaper and had refused to arbitrate them for reasons which not apparent in the opinion. The American Arbitration Association and the union, nevertheless, after notice went ahead and it began arbitration of these cases and the employer brought suit in the Massachusetts courts to enjoin the arbitration. The Court went up to the Supreme Judicial Court and the Court refused to enjoined that arbitration and it permitted it to proceed even though there are allegations of preemption by the National Labor Relations Board and said in language again literally construing the statute that all collective -- all provisions of collective bargaining contract shall be valid that the purpose of it was to promote industrial peace and that arbitration should be allowed to sweep away the items which are not preempted, so that you can finally get down to what decisions (Voice Overlap) -- Felix Frankfurter: Was -- was there opinion reported? Allan R. Rosenberg: Yes, Your Honor. It's in 140, Northeast 2nd at 185. Now, the second case involved a case which was here of -- aspect of a case which was here on certiorari, it's Leonard against the Eastern Massachusetts Railway Company. And in that case, which was decided in January, I think it was January 21st of this year, the -- the Court issued a declaratory judgment that the union upon compliance with certain provisions of its contract was entitled to go ahead to arbitration and that the -- over the opposition of the employer. So it -- it made quite clear in -- in its decision that it haven't reached the question as to whether it would order arbitration because there was a preliminary question of compliance by the union with provisions of its contract. But it made equally clear that upon such compliance by the union, the union was entitled by way of its issuance of a declaratory judgment that entitled to have these disputes arbitrated in accordance with the arbitration provisions of the contract. Now, I say that where the statute is such that it makes the arbitration provisions valid, where the Court will -- over the objection of the employer refused to enjoin an arbitration that's going ahead on this type of collective or grievance arbitration and where the Court will issue a declaratory judgment if the union is entitled to arbitration under the collective bargaining agreement. I think that Massachusetts court have shown a sufficient hospitality to the idea of specific performance in -- under Massachusetts law and a sufficient deference, as they say in their decisions, to federal policy on this Court, both with respective preemption and the respect to arbitration as a favored federal policy in this -- in -- in achieving industrial peace. Felix Frankfurter: Now, the American Thread case didn't go up, did it? Allan R. Rosenberg: It did not. Felix Frankfurter: Now -- but -- but in that case, Judge Wyzanski said the question of -- of enforcing arbitration is a matter of federal law not state law. Allan R. Rosenberg: That's right. Felix Frankfurter: And Judge Magruder may have been indifferent to what you wanted to put before him under diversity on the assumption that its federal law is govern and Massachusetts law is of no help. Allan R. Rosenberg: Well, until -- perhaps, Professor Cox compounded the confusion by an article that he wrote in which he said, it's difficult to know what the state of enforcement is in Massachusetts because there are problems under the statute. The statute -- Felix Frankfurter: But if you don't have to bother about what local Massachusetts law is, you can be indifferent to the confusion. Allan R. Rosenberg: Well, I -- I'm sure that's true. At any rate, we have here both a -- a -- it seems to me a sufficient basis for the -- Felix Frankfurter: But what you're saying is that you've got all federal law and state law. Allan R. Rosenberg: That is right. Felix Frankfurter: And therefore, he wasn't confronted with the problem of choosing between the two, isn't that? Allan R. Rosenberg: Well, he chose -- he chose federal law. Felix Frankfurter: He chose but I -- but you say that -- that you have another string to your -- Allan R. Rosenberg: That is right. Felix Frankfurter: -- to your bow, namely, the state law under diversity. Allan R. Rosenberg: That is right. Felix Frankfurter: And he thought that was moot, cause the moot. And in any event -- in any event, he couldn't understand it. Allan R. Rosenberg: And now -- Felix Frankfurter: The implication is, of your argument, that you have a right here to sustain the judgment on any ground that makes it sustainable. Allan R. Rosenberg: That is -- that is my position, Your Honor. I think I have a right and I speak in terms of the statutory authority of what I find in Section 301 has illumined by this aspect of its legislative history, perhaps, the kind of ground on which Judge Brown and his dissent in the Lincoln Mills case employed and, of course, the Arbitration Act. Now, I would like -- Felix Frankfurter: And the diversity. Allan R. Rosenberg: And -- and diversity as a support -- Felix Frankfurter: But in one sense that you must clear for all those is Norris-LaGuardia. Allan R. Rosenberg: That is right. Norris-LaGuardia defies the court of jurisdiction to do anything that's why the District Court didn't get to decide whether diversity or otherwise. Now, on the Arbitration Act, but let me turn first to the exclusionary language in Section 1, the exclusion of contracts and employment of railroad -- of -- of seamen, railway men and other workers in interstate or foreign commerce. I don't think there's any dispute that the objection was made for the bill when it was presented in the 64th Congress by Furuseth of the International Seamen's Union. Now, it is said that the bill was solely commercial arbitration. Well, it may have been so but they had a slipper in it. They covered seamen's wagers, in any other matter which if the subject of controversy would be cognizable in admiralty. So, when the question of seamen's wages under a compulsory arbitration statute as Furuseth viewed it, it came to the attention of Furuseth, he engaged in long analysis which is printed in the proceedings of the conventions of the International Seamen's Union. The union adopted a resolution on compulsory labor which has been referred to and there was a discussion about it. Now, the -- the -- there's no question that the -- the purpose, the -- the motive of the Seamen's Union was the protection of seamen particularly against the compulsory arbitration of seamen's wages, the right to put ship in harbor, protection under the Jones Act and the right to food. These were the things that were mentioned in the analysis in the discussion and -- and partly in the resolution. And whether it includes railway men and transportation workers, let me quote to you what was said in the analysis, “The seamen having made the contract to serve must serve. The railroad man having entered into a contract to serve with an arbitration clause inserted must continue to serve because such contract that comes through this law if enacted valid, enforceable, irrevocable save upon such crimes as existed law in equity. And it says further that the -- the hunger of the -- the seamen's hunger and the hunger of the wife and children of the railway men and so with other hungry workers in interstate or foreign commerce. That is said out in the analysis in the discussion and quoted in the brief -- in our brief. What the -- what Furuseth was talking about was precisely what Secretary of Labor wrote, contracts of employment of seamen, railway men and other workers in interstate or foreign commerce. That is an almost precise power to taking the classes of workers at first that's mentioned. And when he was mentioned, it was individual contracts of hire, the railway men with the contract for arbitration. The seamen with a shipping articles and so with other workers in interstate or foreign commerce. Now, when the arbitration is -- when the proponents of the bill came, they talked about Stevedores, contracts with Stevedores. There is no mentioned in anywhere in this by the proponents or the opponents of the bill of collective bargaining contracts except in first, that's analysis in which he says, if you put them -- if -- if the union makes a collective bargaining contract, it will be an out of danger because it will bind the members. The bill was brought up in the next session of Congress and they left out seamen's wages. The slipper was removed. But they still let in any other matter which are the subject of controversy would be cognizable in admiralty and that be meant food, Jones Act, right to put ship in harbor and other protections which the seamen had in -- under Maritime Legislation. And so, they opposed it. And so the American Federation of Labor opposed that saying, the danger to seamen's wages is no mentioned of collective bargaining contract. So, the American Bar Associations spoke about the reasons for the opposition as being due to compulsory arbitration of seamen's wages. It is true that this was proposed by commercial legislation people leaving out the aspect of -- they are trying to get that seamen's wages and perhaps, some of these other things. They were -- what was done, as a result of the protest in Section 1, was to exclude the thing about which the seamen's union was protesting, namely, the contracts of employment of seamen, railway men and other interstate and foreign commerce such as Stevedores. Felix Frankfurter: Mr. Rosenberg, about your own analysis, your own discussion showed that as the -- as the legislation evolved instead of dealing with subject matters catching fee that are dealing with content that dealt with categories of employee as of -- as we now have the statute. That's true, isn't it? Allan R. Rosenberg: I think so. Felix Frankfurter: (Voice Overlap) wages and all the rest? Allan R. Rosenberg: I think so. Felix Frankfurter: But to color the whole thing, of course, as the thing went in the succession of -- of drafting and oppositions and so on, we now have what we have, not at all any subject matter, the categories of employees. Allan R. Rosenberg: Well, I think with respect to the exclusion that is true, Your Honor. They excluded as a result of a specific protest, the particular thing protested about and for reasons -- Felix Frankfurter: That's just what they didn't do. They didn't talk about wages and -- and all the rest. Allan R. Rosenberg: They cut that out. Felix Frankfurter: Yes, that's what I'm suggesting. Allan R. Rosenberg: Now, when you get to the next section of the bill that is contracts, evidencing transactions involving interstate commerce. I know the argument that you read one narrowly and you read one broadly and you go back to 2441 and up to 57 for another. But if you take a look at the House Report on this, it says, and I think it's referred to in Mr. Justice Douglas' opinion in the -- the Court's opinion in the Bernhardt case, the matter is probably the subject to federal action. I'm reading from report Number 96, whether an agreement for arbitration shall be enforced in that is a question of procedure to be determined by the lower court in which the proceeding is brought and not one of substantive law to be determined by the law of the forum which the contract was made. Before such contracts, it could be enforced in the federal court before this law is essential, the Arbitration Act. The bill declared that such agreement shall be recognized and enforced by the courts of the United States. The remedy is founded also upon the federal control over interstate commerce and over admiralty. The control over interstate commerce reaches not only the physical interstate shipment of goods but also contracts relating to interstate commerce. Now, I submit that that is broadened to cover collective bargaining contracts which relate to interstate commerce and do not nearly relate to the interstate physical interstate shipment of goods. I think that there is no valid basis for the argument that you're reading one broadly and one narrowly when you're talking about a protest over a particular item or particular category of employees who signed shipping articles or railway men who had contracts with arbitration clauses in Section 1 with this exclusionary language and the power of Congress to regulate interstate commerce and this legislation in aid of it. So I say that that is a ground which it seems to me sufficient to distinguish the -- the clauses in Section 1, the exclusionary clause and the power clause, the coverage clause in Section 2. Felix Frankfurter: What -- what you've just said brings into play Professor Cox's and this -- on this board not confusing article, that you just called -- you just said that the basis of the reviews with the contract in collective bargaining contract are used to phrase in Section 2, you call them collective bargaining contract in order to bring it into commerce. But in Section 1, it isn't a contract in a sense of contract of employment of Section 1. That's true, isn't it? Allan R. Rosenberg: Collective bargaining contract is not a contract of employment in the meaning of Section 1. Felix Frankfurter: I understand that. I'm suggesting of Professor Cox -- Allan R. Rosenberg: Yes. Felix Frankfurter: -- that in Section 1, you say, it isn't a contract of employment but in Section 2 is the same with Section 2 by regarding a collective bargaining agreement, a collective bargaining contract and used the word -- I'm not saying it isn't allowable. All I'm saying is a little strange -- Allan R. Rosenberg: I -- I understand. Felix Frankfurter: -- on one's mind -- Allan R. Rosenberg: Well, I think -- Felix Frankfurter: -- if it's not a contract of employment on Section 1 but this is a contract under Section 2. Allan R. Rosenberg: Well, I think you have to go further, if Your Honor please. It's a contract of employment of workers in interstate commerce and they were thinking about, as the legislation and what I've read you or referred to indicates, seamen who signed shipping articles which have contracts -- Felix Frankfurter: I understand that. Allan R. Rosenberg: -- of employment with stevedores -- Felix Frankfurter: I'm just suggesting that -- that that which is not a contract of employment in Section 1, is utilized as a contract in order to sustain it as in commerce. Allan R. Rosenberg: I think properly so. Felix Frankfurter: All right. That's -- Allan R. Rosenberg: Yes. Felix Frankfurter: -- maybe properly but all I'm saying is, it's a nice point. Allan R. Rosenberg: Now, if one has to find the meaning of a statute in terms of its policy, in terms of the object to be attained certainly, the policy of furthering labor arbitration which is embodied as a public policy of the United States in Title 2 of the Taft-Hartley Act and in other statutes consistently from the Norris-LaGuardia Act or from the Railway Labor Act on them. The furtherance of that national policy by the President's Committee on labor-management which since 1945 has made a -- a concerted appurtenance referred to in the brief to encourage the inclusion of -- of arbitration clauses and collective bargaining contracts even before the policy declaration of the Title 2 of Taft-Hartley and other national policy which is -- it seems to me almost -- without exception referred to as favored federal policy and it indicates that this is a perfectly proper basis for interpreting Section 2 of the -- of the United States Arbitration Act. I'd like to say one word about Section 4 of the Arbitration Act. My Brother makes a plausible point, apparently a plausible point about say, for this agreement that the Court would have jurisdiction. Well, I submit that on a number of grounds, the requirements of Section 4 of the Arbitration Act is satisfied. First of all, you don't get jurisdiction by way of the contract. You get it by way of Section 301. And under 301 and the Westinghouse case, this is a qua union controversy. This is a controversy not involving the individual rights, hiring contracts of individuals or accrued wages. This is a contract in which the union is the beneficiary or the promisor. So, we have a -- as Chief Judge Magruder says that would satisfy Section 301 and satisfy Section 4. Now, the reason I think, I -- I can only speculate because there is no legislative history, but you will recall that the Red Cross Line and the Atlantic Fruit Company case, it was decided in 1924. And in that opinion, Mr. Justice Brandeis said that if an executory agreement will make a rule of court, it could be enforced even though there were no legislation on the subject. And I think it was to avoid that as much as anything else that is to say, executory agreements being made rules of court which would then allow the federal court to enforce them. The Congress apparently wanted to make sure there was federal jurisdiction apart from the contract itself. And I say in this case -- Felix Frankfurter: That is what it says? Allan R. Rosenberg: Say, for this agreement. Felix Frankfurter: Say, for this agreement. Allan R. Rosenberg: Say, for this agreement. Felix Frankfurter: In other words, you go to -- you find out whether this agreement or whether the agreement arises under a federal statute. Allan R. Rosenberg: Or under diversity action -- Felix Frankfurter: Or under diversity action -- Allan R. Rosenberg: Or as -- as I say -- Felix Frankfurter: Has anyone had the jurisdiction? Allan R. Rosenberg: Or -- or under protective jurisdiction, if you like. Felix Frankfurter: But I don't know -- that -- I was hoping we'd get through these arguments without hearing that dubious phrase. Allan R. Rosenberg: Well, I think that the opinion of the court below which relies on the aspect of federal jurisdiction with the name that you don't like. Felix Frankfurter: It isn't -- it isn't the name. It's perfectly good English word. I don't understand what they mean in this connection. Allan R. Rosenberg: Well, I won't -- I won't press that, but there are aspects in which federal law or state law or any law available may be used to protect the federal policy where the Court has jurisdiction. Felix Frankfurter: It's only if that's to be argued, we'd spend more than three minutes on it. Allan R. Rosenberg: Well, there's only an hour, Your Honor, for a very complicated -- Felix Frankfurter: (Voice Overlap) -- Allan R. Rosenberg: -- set of facts. Felix Frankfurter: -- (Voice Overlap) and you can use it if you thought that was important. Nevertheless, the fact -- the fact that Congress might, what I'm suggesting is this, the fact that constitutionally Congress might confer jurisdiction upon federal court to set its purposes doesn't mean that within the terms of the statute, a case arises under such a federal statute because ever since Gully, which is from my point of view, a landmark case, we know that you can't go back ultimately that the immediate issue must be one that arises under the statute and not waived to the far reaches. Allan R. Rosenberg: Well, I say, sir, that in the 301, with the gloss of the statute of legislative history as I construe it or the Arbitration Act though both written in tandem as the Chief -- as the court below does, is a sufficient warrant as a law of the United States under which this case arises. Felix Frankfurter: It's a very different thing, Mr. Rosenberg. If you got -- if you can rest on the Arbitration Act and you -- if you rest on the Arbitration Act, you still must have -- you can't lift itself by it, you can't lift -- you can't lift itself by its own terms because Section 4 has a qualification. It doesn't say anything that it saw fit simply as a matter of constitutional law back to Congress -- Allan R. Rosenberg: Right. Felix Frankfurter: -- can be enforced. It said that it -- you must have an agreement which under some statute. Allan R. Rosenberg: Well, I say under 301 and passing that for the moment, if it is not enforceable under Section 4 and that's the five-day procedure, and there are specific things which we didn't employ in this case, it's still enforceable without regard to that say for this agreement clause under Section 2 because Section 2 says, it should be valid, binding and irrevocable -- valid, enforceable and irrevocable. Felix Frankfurter: You got a -- but Section 4 is the thing you've drawn in order to know what the Court should do. Allan R. Rosenberg: Well -- Felix Frankfurter: The Congress -- if you had no Section 4, maybe the courts could have fashion their own procedural remedies. But Congress hasn't left with that thing. It has made specific provision by Section 4. You can't disregard it and go merely to the subsequent provision of 2. This is very tricky, an intricate business and -- and we're dealing with a very -- a very specialized strictly defined jurisdiction out of the federal courts. Allan R. Rosenberg: Well, I -- I recognized that and there were all kinds of problems as Your Honors know in these cases. But it seems to me that if you have a federal statute which says explicitly that a contract -- collective bargaining contract and -- and as you construe contract evidencing a transaction involving commerce shall be binding, enforceable and irrevocable. Felix Frankfurter: You have that in what section? Allan R. Rosenberg: You have in Section 2 of the Arbitration Act. Felix Frankfurter: But then you have to read it at 4. Allan R. Rosenberg: Well, I'm not sure you do. Four says, in the particular way under certain circumstances on a five-day notice, you can do it. Felix Frankfurter: It tells how a court can give you the relief you want. And when Congress tells you how you can get the relief, you must obey what Congress -- courts must obey how they should carry out their (Voice Overlap) -- Allan R. Rosenberg: Well, if that were exclusive, if that were the only way and if the statute so say, I would agree but I think it is not exclusive. Felix Frankfurter: All right. Allan R. Rosenberg: Now, may I come back then to the -- what I understood my Brother Farr to say at the outset that no one is being heard by this. Well, all that's being heard is the agreed rate structure and the Boiardi case. Let the company decide but that isn't what Congress said.Congress said as I -- as we interpret it, that there are rights here, rights for which valuable consideration was given, rights to arbitrate and return for no-strike clause under a general policy of favoring arbitration and trying to achieve a form of industrial peace. Let the employees sue. Well, that's going to compound confusion even worst instead of having an arbitration which will take the numerous cases and -- and put them into a process which does not involve the courts. You're going to flood the courts with what is called petty litigation. And I am not sure in the light of the Mead case in which a -- the Teamsters Union was held in damages for violation under Section 301 of a -- an arbitration clause along which contain no no-strike clause in the contract for some $359,000, whether the -- if the employer refuses to arbitrate the union is free of its obligations. There is a very serious question as to whether if the remedy of specific enforcement is not available, the contract is illusory. It may not be illusory. It may be that the union or the employer is liable in damages, however, small in the employer's side it may be. But a paternalistic approach to this thing, let General Electric decide what is arbitrable and what is not arbitrable and let the employees go sue and bypass the union. It seems to me it can only lead to trouble, industrial disputes and the purposes contrary to the policy of the statute.

William H. Rehnquist: We'll hear argument next in Number 01-1127, Bill Lockyer v. Leandro Andrade. Mr. Danzig. Douglas P. Danzig: Mr. Chief Justice, and may it please the Court: The Ninth Circuit's grant of habeas relief in this case should be reversed for two reasons. First, the court erred in setting aside the State court judgment because it did not properly apply the principles of habeas corpus review to cases that are considered under the AEDPA. As confirmed in two concurring opinions issued by this Court yesterday, Early v. Hill and Woodford v. Visciotti, this case is resolvable on AEDPA grounds and therefore the Court need not address the constitutional issues in this case. In any event, independent of the habeas corpus aspects of this case, the sentence in this case is not grossly disproportionate and therefore does not violate this... the Eighth Amendment. Pursuant to 28 U.S.C. 2254(d), a Federal court may not grant habeas relief unless the State court determination on the merits was either contrary to, or involved an unreasonable application of this Court's clear controlling precedent. In this case, the Ninth Circuit held that the State court determination involved an unreasonable application. Despite the Ninth-- William H. Rehnquist: Is this the case in which the Ninth Circuit first decided for itself the constitutional question, and then decided whether the State court had reasonably applied it? Douglas P. Danzig: --Yes, that is correct, Your Honor. Despite the Ninth Circuit's holding in this case, a careful analysis of the Ninth Circuit's opinion here reveals that although they reversed, or granted habeas relief, reversing the district court on unreasonable application grounds, the fact of the matter is this, all of the reasoning lends itself to a contrary-to analysis rather than an unreasonable application, and opposing, or the respondent has, in fact briefed the contrary-to prong of the 2254 as well as the unreasonable application prong. For example, the... and for the most part the circuit court held that holding was based on the conclusion that the State court merits determination erred because it did not consider the three-case triumvirate of Rummel, Solem, and Harmelin, and faulted the State court for failing to apply, or essentially disregarding Solem, but as Early v. Packer made clear yesterday, on... when we are talking about a contrary-to application, it's not necessary for the State court to have cited this Court's controlling authority, and it's not even necessary for the Court to be aware of it, and in fact the State court in this case cited, or provided what we call a Lynch analysis under California law, which incorporated virtually every aspect of the Solem analysis that the State court said... pardon me, that the Ninth Circuit said the State court disregarded. So on that basis alone, and I think Early makes... the per curiam opinion in Early makes clear that that's okay if you have an application of State law, or you rely on State law that provides even greater depth of analysis than the Federal rule would require, and that's what happened here. The Lynch analysis requires what would be comparable to the second and third prongs under the Solem analysis, which, following Harmelin, are deemed no longer required unless... and serve only to validate an initial inference on the first prong, so this was clearly not a contrary-to case. The court... the State court-- John Paul Stevens: May I just ask on that point, do you think there was not even the need to look at the second or third elements of the test because there is not even a basis for saying this sentence was grossly disproportionate? Douglas P. Danzig: --Yes, Justice Stevens, I agree with that. I think that there is no inference-- John Paul Stevens: In other words, the case could be decided on the ground that there's... an inference of gross disproportionality should not be drawn in this case? Douglas P. Danzig: --That's correct, Your Honor, I do agree with that, and on the Eighth Amendment, the pure Eighth Amendment question, that there was no inference of gross disproportionality here, and therefore the second and third prongs were not required, but the State court did, in fact, apply a second and third prong analysis, and that leads into the only portion of the Ninth Circuit's opinion that really addresses the reasonableness of the State court's decision. The Ninth Circuit disposed of the unreasonable application analysis in a footnote, and it basically said that the State court's reliance on State law is irrelevant because it didn't cite Federal law, and I think that the decision yesterday in Early v. Hill kind of renders that particular portion of the analysis-- John Paul Stevens: Would you just refresh my recollection on the facts of this case, because the prior argument, the argument was made that violence was the critical matter in the prior conviction. Were there violence in the earlier, in the priors in this case? Douglas P. Danzig: --The record does not indicate whether there were or not, Your Honor. The priors that were the predicate for the three strikes sentence were both residential burglaries, and there... we have no facts concerning them in the record, but the gravamen, as we all know, of a residential burglary is the potential for danger and violence that comes from invading someone's home, and also subsequent to this case being decided quite recently, the California legislature amended its statute and now includes a residential burglary where the house is occupied in its articulation of violent felonies. It's no longer just confined to the serious felony-- John Paul Stevens: Do you agree with your colleague in the prior case that violence is a critical element in the priors or not? Douglas P. Danzig: --No, I do not, Your Honor. John Paul Stevens: Okay. Douglas P. Danzig: Not to be overly inconsistent between our mutual arguments, but I think this Court has held that the presence or absence of violence does not necessarily dictate the proportionality analysis. There may be circumstances where a crime is of sufficient gravity that doesn't involve violence, such that extremely long sentences are appropriate. Stephen G. Breyer: I agree on the merits that we can't convert this Court into a sentencing commission, but it's also true, I guess, that there must be some way of deciding when a State has gone too far, and I don't know any way that's other than highly subjective, except to look at data that would show what happened in the past, but if you take that, how do you give the State the right to become harsher in the future? Now, you're going to say, well, it has that right, and of course it does to a degree, but is there a way to say that it has to meet some burden, or that it has to show something if it's going to change dramatically what was the consensus in the past-- Douglas P. Danzig: I don't think that-- Stephen G. Breyer: --in a harsh direction? Douglas P. Danzig: --I don't think that the fact that it's going to change dramatically is determinative or dispositive, but I do think, Justice Breyer, that there are a couple of responses to that question. First of all, turning back to one of the questions Justice Souter asked in the prior argument, I believe that when the State is going to define certain felonies as being sufficiently serious to trigger the imposition of the three strikes, or three strikes approach or harsher sentencing, I think a rational basis... the courts may be required to engage in a heightened scrutiny analysis to determine whether there's a rational basis for that in the first place. But I think that's distinct from any proportionality analysis, and the problem with the hypothetical that you pose is that, while you are correct that there is a subjective prong to this, the question is, where does that subjectivity belong? Is it within the particular personal subjective views of the reviewing court, or is it within the confines of the subjective views as reflect... that the legislature represents of the subjective views of the citizenry? Stephen G. Breyer: It has to be the latter, but still there has to be a way of deciding when they go too far. In other words-- Stephen G. Breyer: And that's what I'm looking for, and I look to... you know, what I've said before as a way of isolating the problem, and then... and I think here you might say that on the merits of your case, it'll... you'd be hard-pressed to find many examples outside of the three strikes laws where there were such sentences given for such things. Douglas P. Danzig: --I-- Stephen G. Breyer: I think so. I mean, there are a handful in the SG's brief, that's true. Douglas P. Danzig: --I understand your question, Justice Breyer, to basically go to what is grossly disproportionate. Stephen G. Breyer: That's right. Douglas P. Danzig: And the Court, this Court has not defined that term, or given us any clear guidelines, but we do know that by the very nature, grossly disproportionate implies an extreme situation, and-- Anthony M. Kennedy: Suppose we were to find... and there's argument in this about the briefs both ways, but suppose we were to conclude that this has likely been a most effective scheme, that it's reduced the crime rate in the State of California. The prisoners talk about it all the time. They know what three strikes means. It's a simple thing that they can understand, and that it works. If we made that finding, and there... your adversaries will disagree that that's true, but if we made that finding, does that bear on whether the sentence is disproportionate? Douglas P. Danzig: --Not really, because I suppose... I mean, in an extreme example, Justice Kennedy, we could lock up everybody for extremely long periods of time, and it could still go past that point of proportion, of gross disproportionality. I think there has to be a more clear definition than simply the impact of the sentencing statute, and-- Sandra Day O'Connor: Well, what's your limiting principle here? Douglas P. Danzig: --The limiting-- Sandra Day O'Connor: Is there one? Douglas P. Danzig: --The limiting principle we offer is, or we urge upon the Court is the one that's been mentioned in a... or has been used as related to an example mentioned in a couple of the Court's opinions, when they refer to lifetime for parking, and the reasonable mean... understanding of that example is often cited as a life sentence for a first-time parking-- Anthony M. Kennedy: But that-- Sandra Day O'Connor: --Excuse me, what is your limiting principle? I haven't heard it. Douglas P. Danzig: --The limiting principle would be that those are, that sentences are grossly disproportionate when they are not reasonably susceptible to debate amongst reasonable minds. Anthony M. Kennedy: But-- John Paul Stevens: --You seem to be-- Anthony M. Kennedy: --in this particular case it's 50 years for stealing some tapes, right? Douglas P. Danzig: No, Your Honor, I... Justice Stevens, I disagree with that. It is not a 50-year sentence for stealing tapes, it is two 25-years-to-life sentences. John Paul Stevens: But they're consecutive. Douglas P. Danzig: They are consecutive. John Paul Stevens: Well, why isn't that 50? Speaker: [Laughter] Douglas P. Danzig: Because I think it's important to bear in mind two things in reaching that conclusion. First of all, they represent independent episodes of criminal behavior. They are not connected. They may have the impact of resulting in a 50-year sentence, but it... but they do reflect the fact that the... Mr. Andrade in this case demonstrated beyond any question that he is a habitual offender. He was arrested and either cited and released, or booked and released and 2 weeks later he went right back out and did the same thing. Not only that, he told the probation officer that he stole the tapes in order to sell them to buy heroin, not as gifts for his children, but to buy heroin with. He also indicated he was a hopeless heroin addict, and that he always does something stupid when released from prison, and I think the reasonable inference of what he meant was, he always goes out and recommits crimes, so I think that's part of why it's not a 50-year-- John Paul Stevens: Well, is he being punished because he's a heroin addict or because he stole these tapes? Douglas P. Danzig: --He's being punished because of his, of a combination of his record of recidivism and his... or his habitual criminal behavior. The other reason I think it's important to make the distinction between the two 25-to-life sentences versus characterizing it as 50 to life for receiving, or for stealing some tapes is because of the ameliorative effects of the California sentencing structure. Anthony M. Kennedy: But in light of the answer that you gave to my question, and then to Justice O'Connor's about what is the standard, I'm now at somewhat a loss as to how to defend your statute under the incapacitation and deterrence theory. That doesn't bear on proportionality? That's quite a surprising answer to me. I thought the whole point of this statute was that we wanted something that works. Douglas P. Danzig: And I agree, Your Honor, and if I misstated that, I did not mean to. I think that the-- Anthony M. Kennedy: Then proportionality has to be judged against the legislative objective, I should think. Douglas P. Danzig: --Absolutely, Justice Kennedy. Anthony M. Kennedy: Well, then, then the question that I put to you does bear on proportionality. The premise I put to you does bear on proportionality, that we need a system that's simple but works, that reduces crime in the State, and you told me, oh, well, that means we could lock up everything, everybody so you can't use that. Douglas P. Danzig: No, I did not mean-- Anthony M. Kennedy: But we don't lock up everybody. That's not the three strikes statute. Douglas P. Danzig: --I did not mean to imply that it doesn't bear on proportionality, I certainly believe that it does. I simply said that standing alone, without any further consideration, that would also justify an extreme example, but yes, I do believe that it does bear on proportionality in light of the legislative purpose of the statute, but in measuring that legislative purpose, I do believe that what's reasonable... sentences, evaluating sentences on whether they are reasonably susceptible to debate also provides a framework or a lens with which to look, to apply that analysis. Anthony M. Kennedy: Mr. Danzig-- David H. Souter: --Okay, but if we do that-- Ruth Bader Ginsburg: --if we can just back up, I think you started out by urging that we not do what the Ninth Circuit did in terms of the order. It first made a ruling that there was a violation of the Eighth Amendment, and then it determined whether we had clearly established law. Douglas P. Danzig: That's correct. Ruth Bader Ginsburg: You are urging that we not reach any ultimate decision on the Eighth Amendment question, but simply decide that however you come out on that, the... there was no violation of clearly established Federal law. Douglas P. Danzig: Not exactly, Justice Ginsburg. We are saying that the case is disposable on AEDPA grounds, but if the Court found that the State court merits determination was unreasonable, it necessarily would have to turn to the Eighth Amendment issue. Ruth Bader Ginsburg: Yes, but which... the Ninth Circuit said it's appropriate in these cases to decide the Eighth Amendment question first. What is your view on that? Should we follow in line with what the Ninth Circuit did, or should we say the proper thing to do is to find out whether it's an unreasonable interpretation of clearly established Federal law, and if it isn't, that's the end of it? Douglas P. Danzig: The latter, Justice Ginsburg. The methodology that the Ninth Circuit has developed as articulated in Van Tran is inconsistent with the very spirit of the AEDPA. William H. Rehnquist: Well, it's also inconsistent with our idea that we try to avoid constitutional questions if we can, isn't it? Douglas P. Danzig: Yes, it is, Your Honor. John Paul Stevens: But you said earlier that you thought the proper analysis was contrary to, rather than unreasonable application, and how can you decide whether something's contrary to a rule unless you know what the rule is? Douglas P. Danzig: I would like to clarify that, Justice Stevens. I didn't say that the proper analysis in this case was contrary to. I said that the Ninth Circuit purported to reach an unreasonable application prong, but when you look at their reasoning, it actually is a contrary-to argument that they made, and I meant to say that when... if... to the extent that it is a contrary-to decision that they made, no matter the fact that they ultimately labeled it unreasonable application, this Court's per curiam decision yesterday in Early v. Packer has essentially resolved that question, because of what they base their decision on. John Paul Stevens: I'm not sure you've answered my question. It seems to me that we have to decide whether or not... regardless of what the Ninth Circuit did, I think one of the things we have to decide is whether or not the sentence in this case is contrary to a Federal rule, and I don't know how we can decide that without knowing what the Federal rule is, and I was asking for your advice on that point. Douglas P. Danzig: The Federal rule I think is articulated in Harmelin, and that is that grossly disproportionate sentences violate the Eighth Amendment. John Paul Stevens: But we have to identify that as the Federal rule before we go on to decide whether it's contrary to, I think. Is that... would you agree with that? Douglas P. Danzig: Yes. You're... I would. Ruth Bader Ginsburg: That seems just the opposite of what you responded to me earlier, that we don't have to decide the Eighth Amendment question, that we can just decide whatever the answer to that is, this was not off the chart. Douglas P. Danzig: I don't think that we have to... that it's necessary to resolve the Eighth Amendment question, but it may be necessary to know what the rule is before we know whether the State court selected the right rule or not-- Antonin Scalia: But if we know what the rule is-- Ruth Bader Ginsburg: --Well, precisely we have to ask whether there is a Federal rule. Antonin Scalia: We don't have to know what it is. The question is, is there a clearly pronounced Federal rule. Douglas P. Danzig: --Correct. Antonin Scalia: And the answer to that may well be no. Douglas P. Danzig: In many circumstances it may be. Antonin Scalia: In which case we have no occasion to pronounce on what the Federal rule is. Douglas P. Danzig: Correct. Antonin Scalia: All we have to say is that there is no clearly enunciated Federal rule here. Stephen G. Breyer: Can I go back for a second to the merits of this? Douglas P. Danzig: Yes. Stephen G. Breyer: Because I... we all have... my problem that I'm struggling with is, is there an objective standard. You're absolutely right about what the problem is I'm having, and I tend to... do look to this empirical stuff as a way of finding an objective standard, and if here the empirical part suggests this is way out of line, I'm now faced with the question, well, can't the State make a harsher system if it has a reason for doing it, and I think the answer to that question must be yes. But then... then I'd ask, very well, doesn't the State have to come up with some reason that's persuasive in this case that it makes a difference to extend the three-strike thing with this kind of thing in mind, this kind of case in mind, to the wobblers? I mean, is there some punitive purpose in terms of incapacitation that's gained, of a significant kind, by increasing the wobbler sentences by factors of, you know, multiples of four or five or 10 or something, over what they would have been before when committed by serious criminals, and I guess the answer to that is, there's no indication, or is there? Douglas P. Danzig: The... I think you can't... that begs the question. It cannot disassociate the wobbler offense that's at issue in this particular case from the recidivism. Stephen G. Breyer: No, no, I'm not. I'm only considering the class of recidivists, and I'm saying... let's call them recidivist plus wobbler, all right. That group of people, recidivist plus wobbler, is getting an enormous increase in sentence over what was or is any other place, on average, and therefore I think, gee, maybe this is really grossly disproportionate. Douglas P. Danzig: But it's a certain class of recidivists. It's not just recidivists in general. It is that class-- Stephen G. Breyer: No, that's right. Douglas P. Danzig: --that's already demonstrated that they are willing to commit the most serious and violent-- Stephen G. Breyer: That's right. Douglas P. Danzig: --potentially violent types of crimes, and has now indicated that they are also unwilling to remain law-abiding, and there comes a point at which the State has a right to say, enough is enough. Stephen G. Breyer: So jay-walking? Douglas P. Danzig: Well, I think that would probably return to the rational basis, the... analysis. Stephen G. Breyer: Fine. If jay-walking's not there, and this is, the wobblers, why can the wobblers be there, but not the jay-walkers? That's what I'm... that's what I'm thinking about here. Douglas P. Danzig: There is a distinction between the wobblers and the jay-walking. There's the obvious distinction that there's a longstanding historical tradition between felonies and misdemeanors and infractions. The infractions, the jay-walking doesn't even present, for the most part, a property or personal safety issue. William H. Rehnquist: Well, does California fine people for jay-walking? Douglas P. Danzig: There is, I believe, a code on the books that makes it an offense, or an infraction. William H. Rehnquist: Is it enforced at all? Douglas P. Danzig: I do not know the answer to that, Your Honor. William H. Rehnquist: Mr. Danzig-- John Paul Stevens: --I don't understand why a parking offense wouldn't qualify if a man is on parole, and any breach of parole is always emphasized as being particularly bad, and one of the things he can't do is engage in parking in no-parking zones, and if he did that in breach of a parole, and he had nine prior cases, I don't know why you couldn't impose your three-strike penalty on the overtime parker. Douglas P. Danzig: The... if the California legislature chose-- John Paul Stevens: It says, any violation... it put it in as a wobbler, any violation of a parole condition by a person who's on parole. Douglas P. Danzig: --That is not a wobbler offense. It's a parole revocation issue. John Paul Stevens: It would not, because the other, in the other case they emphasized the fact he'd been on parole a number of times, what... his violations were parole violations. Is the fact that whether or not it's a parole violation relevant to our inquiry at all? Douglas P. Danzig: It is in the sense that the Court has held that when doing a proportionality analysis, his entire criminal picture can be taken into consideration. We're not... the Court is not required to confine the analysis only to the predicate and triggering offenses, so in that sense it does... it is an indication of continued habitual criminality and an unwillingness to remain law-abiding. David H. Souter: I think you're saying-- Ruth Bader Ginsburg: --Mr. Danzig, there is something missing in this case that was present in the other. That is, the judge in the... Mr. Ewing's case was asked to reduce the wobbler to a misdemeanor, was asked to strike a strike and she said no, it's not within the spirit of the three-strikes law. Here, the California court of appeals seemed almost nonplussed that there had not been such requests timely made to the trial judge, and twice the court of appeal said it would still be open to Mr. Andrade to pursue on State habeas both pleas, that is, the wobbler should be reduced to a misdemeanor, a strike should be out. Do you agree that that avenue of relief is open to Mr. Andrade? Douglas P. Danzig: Yes, but it requires an explanation, Your Honor. He... Mr. Andrade did, in fact, ask the court for misdemeanor treatment under California Penal Code section 17(b). Ruth Bader Ginsburg: He didn't repeat it at the time of sentencing. Douglas P. Danzig: No, he did not, Your Honor, but there is an odd chronological history here that's just... that distinguishes this case. The California court of appeal, or... pardon me. The judgment came down in this case a few weeks before the California supreme court issued its decision in Romero granting trial courts the discretion to dismiss priors, so in the California court of appeals decision, they noted that that Romero decision had said that if you got a record that you can't determine whether the sentencing judge knew whether he had or not... he or she had discretion to dismiss the strikes, then the proper basis for addressing that is through State habeas. Mr. Andrade then filed a petition for review to the California supreme court which was denied, and without prejudice to file a State habeas corpus petition based on Romero, which he did. He went back to State court, filed a habeas corpus petition... pardon me. He did not file a State habeas corpus petition... pardon me. He did file a State habeas corpus petition which was entertained by the same sentencing court that had sentenced him, and that court said that it did not find that he was appropriate candidate for dismissing the strikes. Curiously, though, that court also noted that if it felt that it read the law as having discretion to impose concurrent rather than consecutive sentences, it might consider it. That wasn't an issue at the time. It was just kind of dicta within the court's, the sentencing court's decision. Ultimately, though, about a year later, the California supreme court issued another case called People v. Garcia in which the supreme court said that sentencing courts have a right to dismiss strikes on a count-by-count basis, and Mr. Andrade has never asked by any vehicle for a reconsideration of that issue, so in theory he could go back at this point and file another State habeas corpus petition and ask for what we would call Garcia consideration, and... which, based on what the court, the sentencing court had previously indicated, the court might be inclined to grant him, which would reduce this sentence if, assuming it was applied to one of the counts, to a 25-year-to-life sentence. Anthony M. Kennedy: Would you object to that relief? Douglas P. Danzig: We would not concede the issue, but... and I'm not saying that we would necessarily oppose it, but it is available to him. We'd have to consider our position on that if and when it was... he made that application. William H. Rehnquist: Do you wish to reserve some time? Douglas P. Danzig: Yes, I do, Your Honor. William H. Rehnquist: Very well. Thank you, Mr. Danzig. Douglas P. Danzig: Thank you. William H. Rehnquist: Mr. Chemerinsky, we'll hear from you. Erwin Chemerinsky: Mr. Chief Justice, and may it please the Court: Today, the State of California asks this Court to disregard and essentially to overrule a century of decisions that have held that grossly disproportionate penalties violate the Eighth Amendment. If any sentence is grossly disproportionate, it's that which was imposed on Leandro Andrade. Antonin Scalia: A century of decisions? I thought we decided this since I've been on the Court. I've been here longer than I thought, I guess. Speaker: [Laughter] Erwin Chemerinsky: I'm sorry, Justice Scalia, I didn't hear the question. Antonin Scalia: You say there... for a century we have been engaged in proportionality analysis? Erwin Chemerinsky: Yes, Your Honor. In Weems v. United States in 1910, this Court said that sentences must be graduated in proportion to the offense. Most recently, in Harmelin v. Michigan, seven Justices... and Justice Kennedy's opinion becomes the rule of Harmelin... prescribed a three-part test based on Solem v. Helm for deciding if a sentence is cruel and unusual punishment. Ruth Bader Ginsburg: Mr. Chemerinsky-- William H. Rehnquist: --I don't think that's quite accurate, Mr. Chemerinsky. I think if you were to take points, decisional points, you would look at Rummel on one side, and then Solem moves away from that, and then Harmelin moves back towards Rummel. Erwin Chemerinsky: Chief Justice Rehnquist, each of the cases said it's consistent with all of the cases, and each of these cases cites to Weems v. United States as saying that grossly disproportionate punishments violate the Eighth Amendment. William H. Rehnquist: What do you do as a State court judge trying to apply our cases when you take those three cases? I mean, it isn't a very obvious answer, is it? Erwin Chemerinsky: Your Honor, many State courts, and virtually every circuit has said that Justice Kennedy's opinion from Harmelin becomes the rule of Harmelin, because in United States v. Marks it was the narrowest ground that a majority agreed to, and of course Justice Kennedy's opinion is simply a modification of the three-part Solem test. William H. Rehnquist: Well, it... Justice... I've just read it over, and it cites Rummel more often than it cites Solem. Erwin Chemerinsky: Your Honor-- William H. Rehnquist: So the point that I think you need to address is the AEDPA point. That is, is the supreme court of California way out of line, or whatever the test is, you know, improperly applied-- Speaker: [Laughter] William H. Rehnquist: --in the light of these cases. Erwin Chemerinsky: --Yes, Your Honor. Under this Court's decision in Williams v. Taylor, in Bell v. Cone and yes, in Early v. Packer, there are two ways in which a Federal court can grant habeas relief. One is to find that it is contrary to clearly established Federal law. The other is to find that it's an unreasonable application of clearly established Federal law. Both are present here, and all-- Ruth Bader Ginsburg: But one must find in either case clearly established Federal law, and frankly that's my problem when you cite Weems. There are lots of grand statements in our cases, but most of them come out rejecting the claim, and you cited Weems. That was an extraordinary case because it involved not simply hard labor, but hard and painful labor. It was a kind of a penalty that was foreign to Anglo-American law, and if that's the one example before we get to Solem, you really don't have anything concrete to go on. You just have grandly general statements. Erwin Chemerinsky: --Your Honor, there are cases prior to Solem that found sentences to be cruel and unusual punishment. In Robinson v. California in 1962, for example-- Ruth Bader Ginsburg: That was a status crime. Erwin Chemerinsky: --Yes, Your Honor, and it did find a violation of the Eighth Amendment. Ruth Bader Ginsburg: But you're not saying, are you, that being an habitual criminal is like being a drug addict or a drunk? That is, just being drunk, just being stoned on drugs is not a crime? Erwin Chemerinsky: No. My point, Your Honor, is that this Court has repeatedly said that grossly disproportionate sentences violate the Eighth Amendment, and the cases that I mentioned say that. In addition-- Ruth Bader Ginsburg: That's what they say, but you've given Robinson as an example, and that's a case where I thought the Court said there was no crime, not that it was cruel and unusual punishment for a crime. Erwin Chemerinsky: --Yes, Your Honor, and what I'm simply saying is, these are examples which the Court has repeatedly said that grossly disproportionate sentences violate the Eighth Amendment. Antonin Scalia: Did the California courts contradict that? Did the California courts here say, grossly disproportionate crimes don't violate the Eighth Amendment? Erwin Chemerinsky: Yes, Your Honor. The California court of appeals, and you find this in the appendix to the cert petition, said it questioned whether gross disproportionality analysis would be applied, and it questioned whether Solem v. Helm analysis applied, and therefore the California court of appeals did not apply the three-part test from Solem v. Helm and the three-part test that comes from Justice Kennedy's opinion in Harmelin. And in answer to Justice Ginsburg's question, it is those cases that announce the test that should have been applied, and those cases are clearly established law. William H. Rehnquist: Your opponent says that the California court relied on a Lynch analysis, which is a State court doing much the same thing. Erwin Chemerinsky: No, Your Honor-- William H. Rehnquist: Do you disagree with that? Erwin Chemerinsky: --I do disagree. First, the California court of appeal expressly said it was not going to do gross disproportionality analysis. It did not do Solem analysis. It did not do Harmelin analysis. William H. Rehnquist: Well, I realize that, and my question to you was, if the California court said we're going to do a Lynch analysis, is that substantially the same thing? Erwin Chemerinsky: No, Your Honor. The California court of appeal said the test under California law is whether the sentence, quote, shocks the conscience. That is a quite different test than the objective test of Solem and Harmelin, which is carefully calibrated determining whether a sentence is grossly disproportionate. Also, the three factors used by the California court of appeal under the Lynch analysis were quite different than the Solem analysis. First, there was no comparison of the gravity of the offense to the harshness of the punishment. Second, the court did not look to similar punishments in the same jurisdiction. In California, the punishment for rape would have been 8 years in prison, the punishment for manslaughter would have been 11 years in prison, the punishment for second degree murder would have been 15 years in prison, and he received 50 years to life. In fact, if his prior offenses had been rape and murder, he could have at most gotten a year in jail. This goes to Justice Stevens' question earlier. His prior... his crime here was the misdemeanor of shoplifting. Because of double-counting it was elevated first to petty theft with a prior, and then it triggered the three strikes law, but in order for it to be petty theft with a prior, there has to be a prior property offense. If his prior crimes had been rape and murder, then his maximum sentence for stealing these videotapes would have been a year in jail. It's because his prior offenses were property crimes that the double-counting could occur. Additionally-- William H. Rehnquist: I thought your opponent, or perhaps the representative of the State, said that was not so. Erwin Chemerinsky: --No, Your Honor. The confusion here is that with regard to petty theft, petty theft, the misdemeanor can become the wobbler petty theft with a prior under California Penal Code section 666 only if the prior crime is a property crime, and if you look at California Penal Code section 66, it enumerates just property crimes. Ruth Bader Ginsburg: Mr. Chemerinsky, I thought that what made the petty theft in this case into a wobbler was not the crimes that were listed as strikes, but another petty theft. Is that not true? Erwin Chemerinsky: Yes, Your Honor. They used a petty theft, but they also used the burglaries to convert the petty theft to a petty theft with a prior, and then they used the petty theft with a prior to trigger the three strikes law. Ruth Bader Ginsburg: I thought they used... they didn't... there was a second petty theft. That was the crime of conviction. I thought there was an earlier one that made the crime of conviction the petty theft with a prior. Is that wrong? Erwin Chemerinsky: That is correct. However, Your Honor, under California Penal Code section 667(g) any prior felonies must be pled and proven, and the only prior felonies here that were ever mentioned were the burglaries, and as a result, simply because of stealing $152 worth of videotapes in those burglaries, he received a sentence of 50 years to life, and under the third prong of the rule of-- Ruth Bader Ginsburg: Well, is it not so that a judge having the two strikes that are listed, and also having the full record of the crimes that this person has committed, that that's relevant to the discretion the judge has to strike a strike, or to say I'm not going to treat that petty theft as a felony, the petty theft with prior as a felony. I'm not going to do that. There was in this case, was there not, in addition to the two strikes, some serious criminal activity? Erwin Chemerinsky: --No, Your Honor, they played no role in the sentence here, and the reason, as I said, is the California Penal Code says any prior felonies must be pled and proven. If you look at the felony complaint-- Ruth Bader Ginsburg: I didn't ask you about-- Erwin Chemerinsky: --I'm sorry. Ruth Bader Ginsburg: --the ones that count as strikes. I asked you about the sentencing judge who has discretion could say, looking at... if that's all we had on this record, I'm not going... I'm going to exercise my discretion to knock down the wobbler to a misdemeanor. I'm going to knock out a strike. Isn't that in effect what sentencing judges would do? They would look not simply to the two strikes that are formally pled, but this person's entire record. Erwin Chemerinsky: Your Honor, this is not what occurred here. If you look at the sentencing transcript on page 37 of the Joint Appendix, you'll see that the sentencing judge made no mention to anything other than the three burglaries. Anthony M. Kennedy: Well, isn't he presumed to know what the record is? Erwin Chemerinsky: No, Your Honor, because California Penal Code requires an order, for it to be considered a strike, it has to be pled and proven. The criminal complaint here, the criminal information, the jury finding was just as to those burglaries, and the sentencing judge focused it just on those burglaries. Anthony M. Kennedy: Well, no. No. That's true as to the strikes, but that doesn't mean that he didn't notice the entire record in order to inform his discretion. Erwin Chemerinsky: Your Honor, there's no-- Anthony M. Kennedy: Or her. Erwin Chemerinsky: --indication here that there was ever any consideration other than the burglaries. Anthony M. Kennedy: But there's no indication that the record was not before the judge. Antonin Scalia: Doesn't he have that record before him? Isn't there a presentence, equivalent of a presentencing report? Doesn't he get the record of what this person he's about to sentence has done in the past? Erwin Chemerinsky: There was a probation report, but because under California law prior strikes have to be pled and proven, because only the burglaries were mentioned, there's no reason here for the judge-- Antonin Scalia: Excuse me. Only the burglaries were mentioned in the presentencing report? Erwin Chemerinsky: --No. Only the burglaries were proven. Antonin Scalia: Were proven? Erwin Chemerinsky: The jury, on pages 18 and 19 of the joint appendix, found the burglaries, thus there was no reason for Andrade to challenge the contents of the probation report, and the judge never mentioned the probation report. He focused just on the burglaries. And the other thing that makes this case, I think, quite unique is no other State in the country would impose a punishment like this on Andrade. The Solicitor General's brief points to some instances where in essence grand theft, stealing more than $400 has led to a sentence. The State can't identify, and there is no instance where anybody else has received this sentence. Stephen G. Breyer: They're saying, I take it, on this point that let's think of the class of serious criminals, and we've decided in California to tell all people in that class one more crime, you've had it. Now, they have to define one more crime, and so where they choose to draw the line is the line not before you get to wobblers, but the line after you get to wobblers, and they say that takes jay-walking and parking offenses and everything and says, we're not talking about those, we're talking about these, and what the other side is arguing is, that's within the legislative discretion that the Cruel and Unusual Punishment Clause must give. All right. Why isn't it? Erwin Chemerinsky: Justice Breyer, the reason this case is different is the underlying conduct here is a misdemeanor that's double-counted in order to become the basis for a life sentence. Earlier, for example, Justice Scalia even invoked the distinction between misdemeanor and felony. A key point here is, there is no limiting principle that-- Stephen G. Breyer: Well, no, they're saying on that particular point, and I'm trying to get your response-- Erwin Chemerinsky: --Yes. Stephen G. Breyer: --they say, there are felonies which are not wobblers, and they're quite serious. Stephen G. Breyer: There are wobblers which are medium-serious, and there are those things that can't even wobble. Stephen G. Breyer: They are trivial, and where we choose to draw the line is between the last... you know, between... below the wobblers and not above. What's wrong with that? Erwin Chemerinsky: Because that could lead to an indeterminate life sentence for stealing a candy bar or even a gum ball. Stephen G. Breyer: Yes, it could. Erwin Chemerinsky: And that would violate-- Stephen G. Breyer: It could, and they'll say yes, that is true in certain circumstances, and then they will repeat the argument I just made. I'm not holding him to my argument. I'm trying to push you a little bit, and to say, if people are told, one more gum ball and you've had it, that's a legitimate purpose of sentencing. Now, how do I come back in some other than purely subjective way and say, well, you know, you've gone too far? Is there anything one is to appeal to other than a judge's subjective reaction? Erwin Chemerinsky: --It is not subjective, it is the three-part objective test that is the rule of Harmelin. It is first comparing the gravity of the offense to the harshness of the punishment. In Solem v. Helm, this Court said the courts can evaluate the gravity of the offense, looking to see if it's a violent versus a nonviolent offense. Leandro Andrade never committed any violent offense. Anthony M. Kennedy: But in that, there's nothing in Harmelin as I reread it that indicates that you must preclude or prescind from that analysis, that initial analysis, the fact that there is a recidivist element here. Erwin Chemerinsky: Of course. Anthony M. Kennedy: Recidivism is part of the analysis. Erwin Chemerinsky: It is, and recidivists can-- Anthony M. Kennedy: So we're not just talking about gum balls. We're talking about all of the offenses, including breaking and entering with knives and so forth. Erwin Chemerinsky: --But Leandro Andrade never was accused or convicted of breaking and entering with knives and in fact, Your Honor, even if you look at all of his offenses, his criminal pattern is virtually identical to that of Helm in Solem v. Helm. I would go back to Chief Justice Rehnquist's question-- Ruth Bader Ginsburg: On that matter, what about what Judge Sneed said in his dissent in the Ninth Circuit when he pointed out that there was much in this criminal history record in addition to the two strikes, including Federal marijuana transportation offenses and a parole violation for escape from Federal prison? Erwin Chemerinsky: --First, Your Honor, as I said before, there's no indication that those were ever considered, nor could they be by the sentencing court, but second, Your Honor, even if you consider all of those, then his criminal record is virtually identical to Helm's in Solem v. Helm, and this does go to Chief Justice Rehnquist's initial question. One way that this Court has said that you can find that a penalty or a sentence is contrary to clearly established Federal law is if a State court ignores a decision that is on all fours. Solem v. Helm-- Ruth Bader Ginsburg: Well, on all fours, on that point, is there any decision where a term of years was struck down as disproportionate? Solem, I take it, was a life sentence. Erwin Chemerinsky: --Your Honor, in Solem v. Helm it was a life sentence, but there's nothing in Solem or Harmelin that indicates that disproportionality analysis is only where there's no possibility of parole. If that were the analysis, then a State could avoid disproportionality review just by calling every life without possibility of parole a 75-year sentence. Ruth Bader Ginsburg: If the question is what's clearly established, and if I'm a trial court judge, I'll look to see what the court did, not grandly general statements that it made about constitutional principle, and if I... if my investigation led me to find that no, there has not been a single case in which a term of years has been struck down, then I might assume that the law for terms of years is not clearly established. Erwin Chemerinsky: Your Honor, Solem v. Helm answers that question. Here, Leandro Andrade received an indeterminate life sentence with no possibility of parole for 50 years. That is the functional equivalent of the sentence that Helm received in Solem v. Helm, and yet the California court of appeal expressly said it would not apply Solem v. Helm. David H. Souter: Mr. Chemerinsky, the difficulty that I have with your argument is, number 1, the point that Justice Ginsburg made, but a further point that has come out this morning. When we are asking whether there is clearly established law, I think we've got to take into consideration something that has become clear from, I think has become clear from this argument, and that is that there is a question as to whether the test is genuinely a proportionality or a gross disproportionality test, or whether that is simply an example of a kind of rational basis test, because we've had this difficulty in fitting the recidivism into the structure of proportionality analysis, and I think what tends to come out in the answers that we've gotten this morning is, there's more than just proportionality which is being considered here. If that is true, if that is a fair characterization of the way our reasoning is working, then don't we have great difficulty in saying that there was clearly established law simply by looking to Solem and to Harmelin? Erwin Chemerinsky: No, Your Honor. The reason is, two things were clearly established at the time the California court of appeal decision came down, first, that grossly disproportionate sentences violate the Eighth Amendment, and the court said it questioned it, didn't apply it, and second, the test that's supposed to be used, the objective test from the rule of Harmelin... from Solem v. Helm, and the court did not apply that three-part test, and in that way the court acted contrary to clearly established law. Also, since Solem v. Helm is really factually indistinguishable in this case, the court acted contrary to in not following, and in addition-- David H. Souter: You're saying that if the law is going to become unclear, it's going to be as a result of what we say this morning, as... rather than what we have said before. Erwin Chemerinsky: --Yes, Your Honor, at least with... insofar as gross disproportionality violates the Eighth Amendment, and the test for gross disproportionality being clearly established, and the California courts followed neither of those. William H. Rehnquist: Well, do you... Mr. Chemerinsky, do you... do you think that Solem v. Helm was as strong a case after our decision in Harmelin as it was before? Erwin Chemerinsky: Yes, in two ways. First, the three-part test that it prescribes is still followed, though Justice Kennedy's opinion from Harmelin says there's only a need to consider the latter two prongs if there is an inference of gross disproportionality comparing the gravity of the offense to the harshness of the punishment. And second, no subsequent case, including Harmelin, has ever ruled, overruled Solem v. Helm, so-- William H. Rehnquist: Well, but do you think a State court judge is acting unreasonably if he says we have three cases, Rummel, Solem, and Harmelin, and it just isn't quite all that clear? Erwin Chemerinsky: --No, Your Honor, I think that is unreasonable here, because the California court of appeal applied only Rummel, but in footnote 32 in Solem, the Court said that Rummel is confined to its facts, because it's before the three-part test. William H. Rehnquist: Yes, but then Harmelin goes ahead and, as I say, cites Rummel more often than it does Solem. Erwin Chemerinsky: And Rummel remains good law insofar as result, but Harmelin affirms the three-part test. This Court has repeatedly affirmed that three-part test. Ruth Bader Ginsburg: Although it didn't apply it, although it said, we don't have to go beyond the first step, and it said, you might get to those others in exceedingly rare cases. Erwin Chemerinsky: That's correct, Your Honor-- Ruth Bader Ginsburg: And I suppose what you are telling us is, this is that rare case. Erwin Chemerinsky: --This is that rare case, because in this instance, a man who had never committed a violent crime received an indeterminate life sentence with no possibility of parole for 50 years for stealing a small amount of videotapes. Ruth Bader Ginsburg: May I ask this question that's... is a practical one, is, in view of what I referred to before that Judge Sneed brought out in his dissent, if any of those other activities could have been priors, wouldn't a resentencing here likely yield the very same result, except that this time the prosecutor would spell out what that entire course of conduct was? Erwin Chemerinsky: I think, Your Honor, that there is very little likelihood, based on all of the California cases, that a resentencing would lead to a different result here, so in that sense I agree with you, and that's why it really is a constitutional issue. Does an indeterminate life sentence for this conduct, even taking into account his recidivism, justify the penalty that was received here? This Court has prescribed exactly the objective factors to be considered, and to treat stealing $153 worth of videotapes more seriously than second degree murder doesn't even meet a rational basis test, and it is an unreasonable application, and in that way, this case-- Ruth Bader Ginsburg: Well, it wasn't that they were treating this person as someone whose prior record warranted incapacitating him. They weren't merely punishing a single offense. They were punishing a person, or they were incapacitating a person that they found to be an incorrigible offender. Erwin Chemerinsky: --Based on three burglaries that were 13 years earlier, and twice shoplifting a small amount of videotapes, and that's why our argument is that this is that rare case where it is grossly disproportionate punishment to in essence-- Ruth Bader Ginsburg: But that case hasn't been seen yet. This would be it. This... there has been... am I wrong in thinking there has been no case since Harmelin where we have said that a sentence is grossly disproportionate, and no lower Federal court has struck down a sentence since then? Erwin Chemerinsky: --It is correct that this Court has not found any sentence to be grossly disproportionate since Harmelin... you've not dealt with this issue since Harmelin... but there are lower court cases. For example, a year ago the Eighth Circuit in Henderson v. Norris found a life sentence for possessing a small amount of cocaine was grossly disproportionate, applying the rule of Harmelin and also applying the Solem v. Helm test. Ruth Bader Ginsburg: Was that a recidivist case? Erwin Chemerinsky: I don't think it was a recidivist case, Your Honor. Ruth Bader Ginsburg: Has there been a recidivist case since that trilogy that you recited? Erwin Chemerinsky: There are State courts that have found recidivist sentencing structures to violate United States Constitution, but there are not... then those would also involve recidivists, and those would have applied both Solem and Helm. The West Virginia court in State v. Deal, for example, found a recidivist sentencing structure to be cruel and unusual punishment. The Colorado court of appeals in People v. Gaskins came to the same result, and that also explains why this case is different than Early v. Packer, which you decided yesterday, and there the criticism was that it was a situation where the State court didn't cite to or mention the controlling Supreme Court decision. Here, the California supreme court said it was rejecting the test prescribed by this Court, rejecting the test from Harmelin v. Michigan, which is a very different situation than this case. Ruth Bader Ginsburg: What were the words that it used? I don't think it was that strong. I thought it questioned whether those... that was still good law. Erwin Chemerinsky: Yes, Your Honor. The exact wording from the court was the question. The exact wording was, and I quote to you from page 76 of the appendix to the cert petition, however, to the extent that the defendant suggests that proportionality analysis applies under both the State and Federal Constitutions, we must question that assertion, and then the court said, on the same page, the current validity of the Solem proportionality analysis is questionable. And having said it was questionable, the court then did not apply the rule that grossly disproportionate sentences violate the Eighth Amendment. The court did not apply the Solem analysis, the rule of Harmelin that the court identified in Harmelin v. Michigan, and it was the failure of the court to apply the controlling test, it was the failure of the court to follow the controlling precedent-- William H. Rehnquist: Well-- Erwin Chemerinsky: --that made the decision contrary. William H. Rehnquist: --they say, Mr. Chemerinsky, on that same page, they say that the Solem proportionality analysis is questionable in the light of Harmelin v. Michigan. They certainly weren't saying they were refusing to apply Harmelin. Erwin Chemerinsky: But Your Honor, they then did not apply the three-part test that Justice Kennedy articulated, which is the rule of Harmelin-- William H. Rehnquist: But I thought you said they simply refused to follow Harmelin. Erwin Chemerinsky: --Well, they didn't-- William H. Rehnquist: I... you're not meaning, then, that they expressly refused to follow Harmelin, you're saying that, in fact, they didn't use the same formula as Harmelin suggested? Erwin Chemerinsky: --Well, that's correct, Your Honor, they didn't use in any way the three-part test from Harmelin. Antonin Scalia: But-- Erwin Chemerinsky: All they did was analogize to Rummel v. Estelle. Antonin Scalia: --That was not the Court's test, that was Justice Kennedy's test, which you say was the lowest common denominator. You think it's clearly established law that where you have a split decision, the lowest common denominator is the law of the land? Erwin Chemerinsky: In United States-- Antonin Scalia: I think that's a highly controverted proposition myself. Erwin Chemerinsky: --Your Honor, in United States v. Marks this Court described how to determine the rule when there is no majority opinion, but especially here, where Justice Kennedy is simply slightly modifying a prior test from Solem v. Helm, the law is clearly established. Antonin Scalia: Not an opinion of the Court, an opinion of Justice Kennedy, and you say that all the States' courts have to accept the proposition that that is the law of the land? Erwin Chemerinsky: Your Honor, virtually every circuit has said that is the rule of Harmelin, but especially so here, where it is simply slightly modifying a test that's been on the books for 20 years, since Solem v. Helm, that says three considerations are used to calibrate whether a sentence is cruel and unusual. Antonin Scalia: So Justice Powell's opinion in Bakke is the law of the land, and you think that that is generally accepted? Erwin Chemerinsky: My sense is you're going to have occasion soon enough to deal with that issue-- Antonin Scalia: Understood. Erwin Chemerinsky: --but-- [Laughter] Antonin Scalia: My point is that the proposition is not, is simply not well-established, that you must accept a less than majority opinion of the Supreme Court as being the law of the land so long as it's the lowest common denominator. Erwin Chemerinsky: Your Honor, I think there's three reasons why it is. First, this Court's opinion in United States v. Marks describes how to determine what the holding is. Second, every circuit... and we cite this in our brief... refers to the rule of Harmelin, and virtually every State that's considered it refers to the rule of Harmelin, which shows that it's clearly established. And third, the Solem v. Helm test was not in any way overruled. Seven Justices in this Court in Harmelin adhered to the Solem test. William H. Rehnquist: But they split 4 to 3 as to what the test required in that case, didn't they? Erwin Chemerinsky: But seven Justices-- William H. Rehnquist: So you... doesn't that throw some doubt as to how closely you follow that? Erwin Chemerinsky: --No, Your Honor. Seven Justices agreed that grossly disproportionate sentences violate the Constitution. Four would apply an even more protective standard for criminal defendants, but seven Justices clearly adhered to that. Seven justices adhered to the Solem v. Helm test. William H. Rehnquist: But doesn't that suggest that the test isn't that clear if they apply it and three come out one way and four come out the other? Erwin Chemerinsky: Your Honor, often Justices will disagree, but the question here is, is the rule clearly established, and the rule that grossly disproportionate sentences violate the Constitution, the rule that there's an objective three-part test, is what is the clearly established law, and Your Honor, if any sentence is grossly disproportionate, it's this case. The punishment here isn't just cruel and unusual, it's cruel and unique. The State can't point to even one other person in this history of the United States who has received a sentence of 50 years to life for shoplifting a small amount of merchandise. Even in California this sentence would be regarded as quite... much larger than, say, second degree murder, manslaughter, rape, which shows that it is a grossly disproportionate punishment. Thank you. William H. Rehnquist: Thank you, Mr. Chemerinsky. Mr. Danzig, you have 4 minutes remaining. Douglas P. Danzig: Thank you. Given the limited time, there are just a couple of brief points I would like to make about respondent's argument. I think it's clear that when he's arguing that the proportionality analysis has to be confined to the predicate offenses and the triggering offense, without regard to the entire record, what he is essentially doing is raising a facial challenge to the statute despite the fact that the Ninth Circuit claimed that they were not invalidating the statute, and to that extent that any facial challenge can be made, the ameliorating provisions of the California scheme would result in a finding that the statute is not... in... unconstitutional on its face. Secondly, just as a points, a couple of points of correction... the Court has already touched upon it... the court of appeal did not question whether the proportionality analysis was correct. It questioned whether Solem's version of the proportionality analysis was still correct. That's what the State court did, and it still went ahead and applied a proportionality analysis via a State court decision of Lynch. And in terms of whether gross disproportionality was addressed or not, the State used, or the State court used a standard articulated from Lynch, which is shocks the conscience, and it is much stronger language and is at least reasonably a euphemism for grossly disproportionate. Also, I will find the page in just a moment, but I believe at the sentencing hearing the judge did indicate that he had considered the probation report. It's in the joint appendix, and I will find the cite in a moment. Ultimately, if there's any doubt about whether there's clear precedent or not, the... I think that the State court determination should be given deference in this case, and almost finally, not... Andrade did not receive life for three burglaries and two petties, he received that because the ameliorating provisions go into the analysis, and as he was not granted the benefit of any of them, and in fact hasn't even asserted one of them, he did not receive that sentence for that, for strictly life for three burglaries and two petties. He's received it based on his overall record. In terms of whether there are... anyone else in California has suffered a similar sentence, while we... I have no reference to any 50-year-to-life sentences based on two convictions, there are 300 and... approximately 344 defendants in California serving 25-year-to-life sentences for petty offense, offense with a prior which constitutes the one 25-to-life sentence. Anthony M. Kennedy: But that's under the three strikes regime? Douglas P. Danzig: Correct, Your Honor. Finally-- Anthony M. Kennedy: So that doesn't tell us much about the constitutionality of the three strikes regime. Douglas P. Danzig: --No. It was simply a response to respondent's assertion that we could not point to anyone else serving a similarly severe sentence for a similar crime-- Stephen G. Breyer: But we have the SG's footnote, which does have a few. Douglas P. Danzig: --Yes, Your Honor. Stephen G. Breyer: But not this serious. I mean, not this trivial. Douglas P. Danzig: Well, I don't think... I would not characterize it as trivial, but I understand-- Stephen G. Breyer: Not this... I'm looking for the right word. Not this minor? Douglas P. Danzig: --I think that under the California scheme it's clear presumptively that theft is a felony offense, and we simply grant... and California simply grants the first-time offender an opportunity to reform. I don't consider it trivial or minor. Ultimately, we would ask the Court to disapprove Van Tran. It's presenting significant problems. It's inconsistent with this Court's pronouncements in Williams v. Taylor and in Bell v. Cone and Penry v. Johnson. It establishes a methodology that is simply incorrect, and finally, in 1996, Congress limited the scope of Federal habeas corpus review. Here, the Ninth Circuit failed to properly apply those, the principles guiding that analysis. William H. Rehnquist: Thank you, Mr. Danzig. Douglas P. Danzig: Thank you, Your Honor. William H. Rehnquist: The case is submitted.

Earl Warren: Number 153, Olin Mathieson Chemical Corporation versus National Labor Relations Board. Mr. Stuart. William A. Stuart: May it please the Court. And if the Court will find that there's no material conflict in the facts in this case. The question involved as to whether strikers, even though nonstrikers who come back to work during the strike and before the Union has ordered back the body, the main body of the strikers, to come back and are reinstated in their permanent tenure whether they must be replaced or displaced in order to make run for the strikers who strike it out until the Union ordered them back. That is the prerogative question involved as to the effect, if any, of length of service upon the employees involved here, to the effect particularly of some of the employees who stuck it out to the end having greater length of service than the any employees who abandoned the strike and came back and were reinstated in a permanent tenure while the others were still there. Now, what happened in the case was that this employer which operates the plant at Morgantown, West Virginia, a chemical plant, made a study of the maintenance work with the view to determining why it was costing more than it seemed it should cost. As a result of that study, reorganization of the maintenance department was determined upon involving a reduction in force of 94 of the maintenance employees. However, before the layoff list could be prepared and the layoff made, the strike intervened. The maintenance force consisted of 234 employees, all of them union members, all of them members of these Unions who initiated the present proceeding. Now, the strike was an economic strike. There is no question anywhere in this case about any unfair labor practice being connected with the strike and the reduction of force was also an economic reduction, no question of any unfair labor practice in determining upon the number of employees to be replaced. While bargaining negotiations were going on between the employer and these Unions for looking to -- making of a new collective agreement, the contract expired. And some two weeks after that, the strike began there -- there being no contract. As to the seniority rights -- the seniority rights expired as we contend with the contract. Those rights were purely breach of contract, and when the contract came to an end, so did the seniority rights. Now all of this happened, the specific occurrences out of which this case finally -- although, all happened in -- in quite a short time. The general workers and the maintenance workers didn't go out. I mean the production workers didn't go out. The maintenance workers went out on strike, the production workers did not and the company decided to attempt to continue to operate the plant and not to close down on account of the strike. Some other strikers, as I said, triggered back to work and among of them, there are seven who are the employers whom the Board, by its order, has directed to be reinstated in lieu of seven others who must thereby be displaced. The company gave notice to the Unions after the strike had been going on about a couple of weeks that it would begin to interview applicants for jobs to replace the strikers. And two days after that, the Union ordered the whole mass of remaining strikers back to work without any settlement, not only saw that on a notice, this body of men just suddenly appeared. And at that time, on account of the previously determined reduction in force, there were 94 more employers applying for work and that were upon the job of this sort. However, these employers all appeared at once, the company was wholly unfair that had no notice and liability of coming back, it couldn't tell of course how many had come whether all, or only a -- a large part and tell who had come and who had not. So there, it was confronted with the -- upon the risk of what to do. Well what they did was to let them all in. The plant had been strike bound now for some three weeks and -- and probably, there was plenty of -- of temporary work to be done so they -- they let them all in. And they got down to work to make out the layoff list in preparation for putting into effect in the predetermined but delayed reduction in force. And then -- well, in less than two weeks, after the balance of the strikers came back, this work was done and the names of the 94 would be laid off had been determined. And then on April 2nd, the men were ordered back on the March 17th. On April 2nd, the parties met in collective bargaining, well if you again can try to settle the issues which would follow the strike in which they again failed. But at that meeting, the employers' representatives informed the Union that the layoff had been determined upon and gave notice as to the names of the employers who would be -- who would be laid off. And those employees included the seven who are the complainants here. And they had greater length of service than the seven who had been -- who had returned earlier among -- they were among the trip that goes back, and who would have to be displaced upon the reinstatement of these seven. And after this collective bargaining contract, the employer proposed a clause going to the seniority provision of the new collective agreement which confirmed that the employees who trickled back before the Union ordered back the bounds that they would have permanent tenure before the employees who came in at the end with respect to future layoffs' event. In other words, providing that -- William J. Brennan, Jr.: How was that done, by a general notice or just to -- to those who returned? William A. Stuart: That was by a written proposal to the Union representatives on a clause to be included in the new collective agreement. William J. Brennan, Jr.: No, I mean, this advised to those who returned before the main body of workers that they would have a permanent status. Was that told to them at the time they came back? William A. Stuart: It was not, Your Honor. Nothing was said one way or the other. William J. Brennan, Jr.: In other words, the first notice of this was on the occasion of the collective bargaining for the new agreement subsequently for the return of everyone. William A. Stuart: So far as the record shows, nothing was said one way or the other when the men came back or than the later time until the layoff list was being made out. But I must say that the facts briefly and they indicate that it was assumed that this man did come back with permanent tenure that they were reinstated as returning strikers with permanent tenure. William J. Brennan, Jr.: Well, but ahead of everyone else? You say it was assumed. William A. Stuart: It was assumed here. The point was this, Your Honor. As we contend, here was the plant with a number of available jobs. The plant was endeavoring to continue to operate, and were practically without maintenance employees. There was a great need for maintenance employees in order to continue the operation of the plant. Now, when these men came back, they were employees, they were on a strike, they were entitled to reinstatement and they got it. And -- William J. Brennan, Jr.: Well, what I'm trying to get at of course is whether -- is there anything in this record which justifies an inference that one of the inducements to get these seven or whatever the number may be to come back in advance of the large body, was that they would, by coming back, get preferential status seniority wise? William A. Stuart: No, Your Honor, and strangely, when I say strangely, and then relate the Court held that of that had happened, if the employer had offered the strikers as an inducement to return, the assurance of permanent tenure above those who would have, who stayed out, and then the decision would have been different. But that would have brought it within the Mackay doctrine which I will -- will come to. But that -- that position, we strongly disagree with. If the Court please, we don't think that the employer had any right in the world to seek -- to get these employees to abandon the strike by offering them inducements. And we think that it would have been sure to have been the object of a complaint by the Unions for strike breaking if it had done that. Hugo L. Black: Well, that's what -- isn't that what the Court -- the basis on which the Court acted and that was what the Board had found that they did do it for the purpose of granting a property? William A. Stuart: No, Your Honor. Hugo L. Black: What -- I don't quite understand. What's meant by the statement on page 26? Is it this case or some other case? William A. Stuart: 26 -- 26 of what, Your Honor? Hugo L. Black: Right here on the second part of it. Well, it said Judge Dobie. Judge Dobie said whether the question presented all, whether the Board has properly found that the company violated Section 8 (a) (3) so forth by changing its seniority policy after a strike to give preference to nonstrikers and to employees that return to work. William A. Stuart: After the strike, Your Honor. I understood that Mr. Justice Brennan was inquiring whether these strikers, while the strike was on, were offered any inducement to come back to work and abandon the strike. But what Judge Dobie is talking about there is the proposal which the employer made and which the employer -- you know that would've put into effect when -- and then passed, developed in the bargaining negotiation doorway. The proposal that the contract recognized the fact that these men who came back, while there were available jobs and before the body had been ordered back by the Union, did receive permanent tenure. And that therefore, in the case of future layoffs, the man who came back last would be laid off before, there was -- who trickled back during the strike. But -- Hugo L. Black: What does he mean by saying "Always does not dispute the fact, promulgation and implementation of its superseniority policy was discriminatory in favor of employees abandoning or not participating in the strike -- William A. Stuart: What page is that? Hugo L. Black: -- against those remaining on strike until it called out." William A. Stuart: What page is that, Your Honor? Hugo L. Black: Page 27 and 28 right at the bottom of 27 and top of 28. William A. Stuart: Well, I don't think -- I don't think he meant it. At any rate, I don't think it would have been justified if it was meant discriminatory in the sense of being a violation of the Act. Now, there isn't any question that if these men who trickled back, then on being reinstated and before the other men came back did actually -- were actually entitled to and did actually receive permanent tenure. There isn't any question that by getting that, they got a superior position as to future layoffs, although those who struck to strike out -- strike out to the end. Hugo L. Black: And that Olin did promulgate and implement its superseniority policy to accomplish that purpose. William A. Stuart: Well, that is the proposal which was made to the Unions by the employer on -- at the first collective bargaining negotiation and conference after the strike ended. Hugo L. Black: Then he added not as all and denied that its action discouraged union activities. William A. Stuart: Well, I think that's a matter of -- of inference, Your Honor. Felix Frankfurter: But the Board drew -- drew it. Hugo L. Black: Oh, it felt. Felix Frankfurter: The Board drew it William A. Stuart: Of great many things -- Hugo L. Black: Judge Dobie said all and then denied. William A. Stuart: Well, I -- I don't deny it. I don't think anyone could deny that. It discouraged union activity very much for these men to lose a strike. Hugo L. Black: Well, he didn't say lose a strike, if that -- William A. Stuart: I know he didn't, but I'm saying that. Hugo L. Black: Then the Olin adopted a policy and put it in effect for that purpose. William A. Stuart: In other words, there are great many things may have a discouraging effect on union activity and so, with the difference, I say this to Your Honors, still may not be a violation of the Act. Felix Frankfurter: But wasn't -- wasn't there a year, a purposeful classification as to seniority rights, purposefully disadvantaging those who had been out on strike -- not as an inevitable consequences -- consequence of making replacement but designed to have those fellows remember. William A. Stuart: No, Your Honor. Felix Frankfurter: It wasn't the operation -- the inevitable operation of hiring people to replace people on strike and hiring people who would then obtain permanent tenure. That's one of the -- William A. Stuart: As we contend -- Felix Frankfurter: -- typical aspects of a strike, but that has been held not to be, as I understand it, an unfair labor practice. William A. Stuart: Quite so, Your Honor, and that is precisely what our contention is here, that this clause to be added to the contract and which was -- unilaterally effectuate it and then the union then agreed to it, was no more than a regulation of the inevitable consequences of the fact -- Felix Frankfurter: Are you -- I beg your pardon. William A. Stuart: -- no more than a recognition and a confirmation of the inevitable consequences of the fact that these employees came back to work from a strike when jobs were available, and thereby, became of their own right entitled to permanent tenure and that's what they've got. And as a result of that, when the body of strikers came back later, there were later for a fewer permanent jobs than there were employees and made it for these employees who came back last had to take temporary jobs. Felix Frankfurter: Are you -- are you urging on this Court the proposition that although the Board made a finding that there was this conscious discrimination after the strike was over with a view of inflicting that kind of disadvantage to those who had been on strike that that's what the Board found. Are you urging there was no basis for that finding and no basis for the Court of Appeals in sustaining that finding or finding that finding sufficiently sustained for them to require to be respected, are you -- are you? William A. Stuart: I am contending that along with some other -- Felix Frankfurter: All right. William A. Stuart: -- along with some other things, Your Honor. Harold Burton: But aren't you making the point -- but aren't you making the point that this was in the nature of a reward after the event rather than an inducement before the event? William A. Stuart: That is -- that is -- no -- no, Your Honor. We're not making that either. The Board contended that this was a reward after the event to the strikers who came back before the -- the body who were ordered back then it was a penalty -- Harold Burton: Everybody agrees -- everybody agrees there wasn't -- not made before they came back. William A. Stuart: Everyone agrees that nothing was said before they came back. Yes, Your Honor. William J. Brennan, Jr.: Well, Mr. Stuart, I gather then that you're asking us to say that actually, in legal consequence, what was done here does not differ from a situation in which rather than seven strikers coming in and taking those jobs, you had employed seven new men. William A. Stuart: Precisely, Your Honor, precisely. And we are saying further that the Court, in placing its decision holding it upon the ground that these employees who trickled back were not approached by the petitioner and were not offered inducements to come back and -- but on the contrary came back voluntarily that they therefore -- they thereby proved that it wasn't necessary for the company to give them this permanent tenure in order to get them, and therefore they weren't entitled to it. Hugo L. Black: May I say that -- I -- I'd like to find out if I'm wrong about it. It seems to me that you're asking the Court to say that the trial examiner, the Board and the Circuit Court of Appeals were wrong in approving this finding which Judge Dobie states on page 20C. The Board found an agreement with the trial examiner that Olin changed its seniority policy after the strike so as to give preference to employees who had worked during the strike in order to discipline the employees adhering to the strike, went at the very end and that Olin's action in this regard and its further action pursuant to its new policy of laying off all seven employees would be violative of Section 8 (a) (3). And how could we hold the view unless we disagree with the findings of the trial examiner, findings of the Board as approved by the Court of Appeals? William A. Stuart: Well, Your Honor, I think you can -- I think you can hold with me without doing more than holding that this employer would have -- have been guilty of strike breaking if it had done the same which was the sole thing the Court said they didn't do in order to win a favorable decision in the case. And let me -- let -- Hugo L. Black: But what do you do about this finding? Is this finding right or wrong? William A. Stuart: The finding -- the finding is wrong, Your Honor, and that it -- Hugo L. Black: Why, because it's not supported by the facts? William A. Stuart: Not supported by the evidence, sir. Hugo L. Black: Not supported by the evidence. So what you're presenting here, we overturn the findings made by the trial examiner, approved by the Board, and then approved by the Court of Appeals. We have to, don't we, if we -- in order to get away from that finding. William A. Stuart: Well, Your Honor, I -- I don't think it's quite as simple as that. Your -- Your Honor is going to have before you the question of the applicability of the Mackay decision of this Court. That's the whole thing here. That's the -- that's the doctrine on which both parties rely here. And if Mackay is interpreted as we contend then that's automatically not to set finding out, it's a matter of law more than a matter of fact. William J. Brennan, Jr.: Well, would you tell me this, Mr. Stuart, if I may refer you back to what Mr. Justice Black was just reading for you. Does Mackay hold anything like this if this had read so as to give preference to new employees hired during the strike in order to discipline employees adhering to the strike?D oes Mackay say anything like that? William A. Stuart: Let me -- let me just read, Your Honor, exactly what Mackay does say. Of course, that -- it's in a very short -- Hugo L. Black: Page 28? William A. Stuart: -- brief on pages 18 and 19 in our brief -- 19 and 20, Your Honor. Nor was it an unfair labor practice to replace the striking employees without us and enough to carry on the business. William J. Brennan, Jr.: Yes, well now, but look at the difference. The words I substitute in the sentence that Mr. Justice Black read to you would make a breach you see, so as to give a -- give preference to employees hired during the strike, not in order to carry on the business but according to the finding of the Board, in order to discipline employees adhering to the strike. That was the Board's finding. William A. Stuart: That was the Board's finding. William J. Brennan, Jr.: Well now, now if -- how -- how do you get over that? How -- William A. Stuart: Well -- William J. Brennan, Jr.: Other than as Mr. Justice Black suggests, so you're asking us now to say that the evidence didn't support that finding. William A. Stuart: We got over it in this way, Your Honor. The Board started, they started these whole proceeding now -- they -- they started the deal at the end of the strike and there's the -- after everybody was back. And they said, "Then after the strike was over, you came here to the bargaining conference with this proposal and you put it unilaterally into effect after the strike was over when we declined to a great turn." But now, what the Board didn't do and as we say should have done was to -- regarded back to the time during the strike and should have consulted the Mackay case or the Mackay doctrine as applying then when these men came back. When they came back, they had the right. They were employees and they had the right to reinstatement and permanent tenure, they had that right. And if the employer had declined to receive them in permanent tenure, the employee -- the employer would probably -- probably have been the object of an unfair labor practice proceeding. As a matter of law, they had that right. Now the Board, instead of starting now where it should have started, it started at a much later period when what was done merely confirms the legal effects of what had happened while the strike was going on. William J. Brennan, Jr.: But I think as I -- am I correct -- William A. Stuart: And it's a matter of law. William J. Brennan, Jr.: Am I correct that Mackay in point of time concern the right of the employer, in other words, the charge was that he had replaced strikers in an effort to carry on this business and that that was an unfair labor practice. And all this Court said was that was not. William A. Stuart: That's right. William J. Brennan, Jr.: Now, your view in your case however, as I understand it, the action at which -- your action at which the complaint was directed is your action as subsequent to the strike in relation to the -- according at that time as the Board found at least for the purpose of punishing these other strikers who didn't come back. William A. Stuart: In relation to, Your Honor, what happened after the strike and without any relation at all to what happened during the strike. Hugo L. Black: What difference does that make? Is -- can -- can an unfair labor practice be excused by saying it occurred after a strike? In other words, suppose -- or -- or you would come here and admit to us just what's in here and say "Yes, we setup this program. It was after the strike, however. And we did it for the purpose of disciplining these men on the strike and to keep them from doing that in the future." Would that be a violation of the Act? William A. Stuart: Well, Your Honor -- Hugo L. Black: If you say -- if -- suppose you said that -- William A. Stuart: We -- Hugo L. Black: -- would that be a violation of the Act? William A. Stuart: Well, if we did it, but we didn't do it. Hugo L. Black: That's right and they say you did. William A. Stuart: Well, they -- they draw that as more to legal conclusion on a closed conclusion of facts, Your Honor. Hugo L. Black: Judge Dobie didn't so treat it. William A. Stuart: Well, I -- I want to have a little something to say about Judge Dobie's decision in a moment. But I -- I do want to -- I do want to get this clear. As we contend what was done after the strike in putting into black and white this provision as to the two classes -- in case of -- of subsequent layoffs. That did no more than recognize what had happened as a necessary legal consequence during the strike. We're -- we're standing on law here and not on the facts, Your Honor, and I -- I want to go away from the Board's -- from the idea that that is a Board that -- that finding of the Board is a finding of fact upon any basis that the Board can stand upon. Felix Frankfurter: Mr. Stuart -- William A. Stuart: But that's our position. Felix Frankfurter: Mr. Stuart, there was another part of the decision in the Mackay case. Namely, the Court found that the Board was justified in finding that in taking back the people, they discriminated against those who were the most active in the union activity. William A. Stuart: That's right, Your Honor. Felix Frankfurter: Now, as I understand this decision and regarding this on this, that's what the Board found in this case with reference to the layoff, references of seniority rights. Is that -- William A. Stuart: Seniority rights. Felix Frankfurter: Well, that's the seniority right. It's found that in fact, it found -- I don't see how a discrimination is other than an ascertainment of fact whether you discriminate or not, must be an ascertainment of -- call it what you will, a conclusion by the Board on the record that they aimed at people who are particularly aggressive in the strike. Now, I can well understand, of course I can understand you to maintain that there isn't a shred of support for any such conclusion. William A. Stuart: There's no such contention. Felix Frankfurter: So that's an -- that's an arbitrary, then it becomes no finding, it becomes a dogmatic assertion. Is that your position? William A. Stuart: Yes, Your Honor, and there's no contention on the part of the -- of the Board at all that this was aimed at people who -- who are particularly active in the strike, none at all. As a matter of fact, all the men who had the greater length of service got back. And this made it for just caught to pay a land. All of them but these seven had so little length of service that even under the Board's construction, they still didn't get in. But the -- the -- it was just these seven who were far down the list, anyhow, who were not outranked by the lower seven of those who were -- who were kept. But I -- I do -- I don't want to urge this upon the Court that the Board in finding that there was a -- in effect that there was a violation of seniority here that there was a discrimination against seniority. We contend this stronger as we can that the Board introduced in the case a very confusing issue there because there was no seniority at all, it was not in existence, and these men had no seniority. And to say that the employer departed from its former seniority policy is merely to say that it departed from the provisions of the collective agreement to which had been enforced before it expire. And I -- William J. Brennan, Jr.: Then tell me, Mr. Stuart, if there had been no strike and the Union and the company had not been able to agree on a renewal agreement. During the hiatus before they agreed on and after the termination date, would there had been no applicable seniority policy on that plant? William A. Stuart: We cite the authorities, if Your Honor please. In the brief, I think not. And in fact the -- the trial examiner in this case made that point very neatly. When the Board attorney was undertaking to say that there should be some regard to the seniority provisions, the old contract even though it had had expired. And the trial examiner said, "Well, you went on a strike didn't you?" And the Board attorney said, "Yes, but the contract had expired." The trial examiner said, "Yes, that's my point." In other words, there was a -- there was a -- a no-strike provision on this contract. Unless the contract had expired, of course, there couldn't have been any strike and none of this would have happened. And we do contend most strongly that there was no seniority in effect and there are a number of cases cited in the -- in the brief. Now, the whole -- the whole point of the case -- William J. Brennan, Jr.: May I ask this, Mr. Stuart? Sorry to interrupt so often. Has there -- was there any formal announcement at anytime by this employer that the -- in addition or when the contract expired by its terms, was anything said after that that the old contract seniority shall not apply or otherwise any -- William A. Stuart: Nothing to say. William J. Brennan, Jr.: Nothing of that kind. William A. Stuart: Nothing to say. William J. Brennan, Jr.: Do you rely on the mere fact of termination of the agreement as importing -- William A. Stuart: (Voice Overlap) -- William J. Brennan, Jr.: -- that thereafter, there was no seniority? William A. Stuart: The termination of the agreement as emphasized by the fact that the employees promptly went on a strike thereafter, against -- what would have been against the no-strike clause in the contract. Hugo L. Black: You referred to the trial examiner. Didn't he specifically and pointedly find that this discharge laid off seven employees discriminatorily pursuant to his discriminatory seniority policy put into effect? William A. Stuart: Yes. And he -- he was just wrong, Your Honor. As -- as we contend, there wasn't any seniority. And he lost sight of the fact that earlier, he -- he had recognized the fact that there -- there was nothing under the contract in effect. William O. Douglas: Before you came in here? William A. Stuart: Now, I'd like to -- I'd like just to summarize this point which really is the whole point of the case as we see it. And that is that here were returning strikers who applied for reinstatement. There were numerous jobs available at the time, they were entitled to reinstatement and permanent tenure and they got it. Now, when they were in there, they were there. They had a position that they were entitled to and were entitled to defend against the other strikers who did -- who had not returned under the very clear holding of the Mackay decision as -- as we understand. The -- the Mackay case says, he is not bound, the employer, he is not bound to destroy -- to discharge those higher, to fill the places of strikers upon the election of the latter to resume their employment in order to create places for them. Well, now that's what the Board has done here. It has ordered this employer to lay off these seven men who obtained permanent tenure by coming back, presenting themselves and getting it while there were ample jobs available. The Board has ordered the employer to lay them off in order to make places for strikers who returned later, and for whom there were not available jobs. Now, that -- that is what the case comes down to and irrespective of the finding of fact which amounts to an inference as to the employer's motivation in connection with the time at which the proposal to the union was made, irrespective of that. We contend that as a matter of law, these seven employees along with a number of others who returned before the strike was called off by the Unions that they acquired a status which they are entitled to hold. Felix Frankfurter: When you say irrespective of the finding of motivation, how can you -- how can you put that aside to be irrelevant? That's what discrimination involves normally, motive. I mean that's what -- that's what discrimination means that you prefer between -- that's your purpose or motive or call it what you will. William A. Stuart: Your Honor, I am speaking of the motivation at the material and critical time. There could not have been any such motivation as the Board found at the time when these men presented themselves. Felix Frankfurter: I understand -- I understand the argument that the Board was just entitled to find it as a matter of law, I understand that. William A. Stuart: The Board found this as to something that happened long afterwards. And they didn't go back to the time when the motivation would have counted, that's our point, when the motivation applied. And the employer could have had only one motivation when these men presented themselves. And that was that it was his obligation to admit them to the plant and give them -- put them back to reinstatement in permanent tenure employment. And that was the decisive time -- and that's when the status was fixed. Now that's our contention on what -- whatever the Board may have found as to the things that happened afterward, can't relate back to that, and our inference based on -- based on this black and white confirmation of a legal status which arose while the strike was going, can't -- can't affect that as we contend. Now, the -- I want to -- I want to say something here about the Court's decision because as the point file which I think is -- is quite well remarkable. The Board and the Court found that this was a discriminatory interference with the exercise of the right to strike by rewarding the strikers who returned before for abandoning the strike and thereby penalizing the others for continuing to stay at it. Now, that decision, if the Court will examine it on this point, is on extraordinarily narrow ground. And that is this that the promise of permanent tenure was not made to these strikers before they returned from the strike and as an inducement to return. On page 30, here is what the Court said, "With a strike in progress, the primary concern of the employer is to keep his plant in operation. It is then proper for an employer who might be unable to procure replacement save upon a promise of permanent tenure, to promise such tenure to the replacements." Now, that is evidently saying that if the employer had done that here, the decision would have been in his favor. But says the Court, "When the strike is over, when the plant is in operation, then the imposition of the superseniority policy in favor of the replacements and against the strikers is quite a different matter." The whole thing is on that now and they've had it. That is the case before us. There is nothing in the record here to show that at the time of Olin secured these replacements for the strikers, Olin made any promise of permanent tenure to these replacements. And within our brief, the Mackay case, as condoning this conduct on the part of Olin. Now, the Board -- the Board's conclusion was the same. That simply follows the conclusion of the Board. If their whole case turns from the fact that it wasn't necessary in the situation that existed in the strike, it wasn't necessary for the employer to promise these strikers any inducement in order to get him to come back. Since he came back voluntarily and the employer was not under the -- the pressure in endeavoring to keep its plant operating to approach them and offer them inducements to come, that therefore, the decision is against the employer. Whereas if the employer had done that, it would have been -- it would have been the employers' favor. Now, we say and the cases that was cited in the brief that the employer couldn't possibly have done that without being open to a charge of strike breaking and we understand the Board to concede that in its brief. Now, the -- the order of the Board on page 41 of the transcript says this, and I come back again to that matter of seniority and departure from the former seniority policy which the Board found. Item C -- Hugo L. Black: Where are you reading? William A. Stuart: Page 41 of the transcript, item C. Hugo L. Black: Page 41, on the first part. William A. Stuart: Yes, Your Honor. C, rescind forthwith his discriminatory seniority policy announced on April 2nd, 1954 and effectuated on April 9, 1954 and restore all employees affected thereby to the seniority they would have enjoyed, absence such discriminatory policy. Now, that is the prime example of the confusion which the Board introduced in the -- in the case by assuming the existence of seniority rights in these employees when they didn't exist. Now that order, as we -- as we see it, certainly would be very difficult to see how that order could possibly be enforced. What in the world is the seniority they would have enjoyed, absence to such discriminatory policies -- policy, nobody can say. The Act doesn't create any seniority. The -- the contract had expired. They -- they didn't enjoy any seniority. And that -- that is just an illustration as -- as we contend of the confusion in -- into which the Board was led by assuming that there was any distinction between these employees on the ground of length of service. There weren't any. The Board -- the -- the employer might very well have taken any number of different tests or basis for deciding who's going to -- who's going to be retained and who's going to be laid off. He wasn't limited by the law. He might have laid them off on a basis of skill and efficiency or of any number of things. But he actually did use was what the Board is complaining about here. But our contention is that that issue has no place in the case. There was no seniority, there's no seniority policy, and there were no seniority rights which these seven could call upon the -- could successfully call upon the Board to enforce. Now, this -- this case has the same question exactly. It was before the Ninth Circuit in the -- in the Potlatch case. And the Ninth Circuit decided in accordance with the contentions which we are making here. In fact, the written proposal which the Court has denounced in this case was almost word for word the same as it was in the Potlatch case. Harold Burton: Do you claim a direct conflict in the Potlatch case in this decision below? William A. Stuart: Yes, Your Honor, and I understand the Board to concede that practically. Hugo L. Black: What were the findings in the Potlatch case? William A. Stuart: The findings (Voice Overlap) -- Hugo L. Black: How could there be a -- how could there be a conflict unless it's on -- it's when -- when -- Earl Warren: Yes. Hugo L. Black: -- so far as the evidence is concerned to support the findings. William A. Stuart: The situation on the Potlatch case was in all essential particular as the same as in this case, Your Honor. Hugo L. Black: How could it be the same? The question here is, they've found, that your people did this for the purpose of discriminating against these people and put in the policy with any such purpose. William A. Stuart: They've found that in Potlatch too, Your Honor and then the Court overturned it. Hugo L. Black: They overturned your findings but that's on the evidence before them. William A. Stuart: No sir. Hugo L. Black: This is quite different evidence, how could there be a conflict? William A. Stuart: There's practically no difference in the evidence, Your Honor. The whole thing went along just exactly the same way. Precisely, the only difference was, and I don't think that's a material difference at all that there were some new employees as replacements who came in as well as some returning strikers. But the announcement was made by the employer in both cases after the strike had failed. It was made at the beginning of the first bargaining conference. It's true that in Potlatch, the strike was settled at the bargaining conferences and this case was not settled but the announcement we made at exactly the same time, they were at the beginning of the bargaining conferences and that's where they argued to fail and after the plant was going on in collaboration. William J. Brennan, Jr.: Well -- but I -- I guess this is an actual -- I'm looking at the Court of Appeals' opinion at page 30 in which this is quoted from Potlatch. "In the instant case, therefore, the discrimination between replacements and strikers is not an unfair labor practice, it's quite a tendency discouraging an activity because the benefit conferred upon the replacements is a benefit reasonably appropriate for the employer to confer in attempting to protect the continuous business and so forth." William A. Stuart: Yes. William J. Brennan, Jr.: Isn't that a very different finding in the one that was found here that this finding being, that what was done was an order to discipline employees? William A. Stuart: Yes, Your Honor. Well, that -- William J. Brennan, Jr.: Now, what about this Mr. Stuart, is this an accurate summarization of at least one fact in the record that Olin's -- I'm looking at page 29. "Olin's attorney, Stull, admitted in one of the conferences with Union representative that Olin's insistence on that superseniority plan was motivated by Olin's preference for the employees who had been loyal to Olin by helping to break the strike, and also Olin's concern that the plant be not shutdown again." Is that accurate? William A. Stuart: That's accurate but the inference is erroneous, Your Honor. William J. Brennan, Jr.: Well, I'm –- I'm trying to -- William A. Stuart: Well, let me -- William J. Brennan, Jr.: It seem to me that there must have been rather -- if that's accurate, that law of it or if its standing alone support this finding that the whole purpose of what was done was in order to discipline employees adhering to the strike. William A. Stuart: Let me explain this, Your Honor, which will account for the answer I gave Your Honor. The Court there was assuming that the plant had been shutdown by the strike, which it had not, and was assuming that Mr. Stull was talking about its being shutdown by future strike which it was not. If -- when Your Honor considers the facts, you will find that this was a trial run of this plant. The list it was going to terminate was regardless -- regarding among the plant and was a list to this employer on the list which was terminated the following year. And the production record which was made during this period, this very critical period, it was going to determine whether at least it was going to be renewed or whether all these employees would be out of the job. Now, that was the plant but as the -- the point about the plant being shutdown. And if the contract, if Your Honor would look at the -- would -- would look at the exhibit and read that in this context, you will see that what Mr. Stull was talking about was the possibility that unless men were loyal to the job and the plant operated at -- at full blast and effectively that the plant wouldn't shutdown because the top measure would renew the list the following year. Hugo L. Black: Do you think our Universal Camera decision has any relation to this case? William A. Stuart: Well, Your Honor, I think it has. Hugo L. Black: In that case, we've indicated pretty strongly, doesn't it, that the Court of Appeals starts first responsibility and only in the most exceptional circumstances when we attempt to read all the evidence to overturn the finding? William A. Stuart: Yes, Your Honor. I think also in that case, however, you indicated pretty strongly that under Taft-Hartley, you were not bound in the same way that you had formerly been by the Board's findings. And what the Court has done here has been to have more, as a matter of law than as a matter of fact as it -- as we contend. And now, if the Court please, I should like to -- I have only a few minutes left on my time, I should like to reserve it for rebuttal. Earl Warren: Just one moment please. The Court as of the opinion that the judgment in this case must be affirmed and, counsel, it will not be necessary for you to argue. We'll recess now.