Goldlawr, Inc. v. Heiman

PETITIONER:Goldlawr, Inc.
RESPONDENT:Heiman
LOCATION:South Carolina State House

DOCKET NO.: 101
DECIDED BY: Warren Court (1962)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 369 US 463 (1962)
ARGUED: Mar 19, 1962
DECIDED: Apr 30, 1962

Facts of the case

Question

Audio Transcription for Oral Argument – March 19, 1962 in Goldlawr, Inc. v. Heiman

Earl Warren:

— and 1, GoldLawr, Incorporated, Petitioner, versus Marcus Heiman et al.

Mr. Rome.

You may proceed with your argument.

Edwin P. Rome:

In submission to Your Honors, this Honorable Court has granted a writ of certiorari to review a decision of the Court of Appeals for the Second Circuit.

That court was composed of Judges Hincks, Waterman and Moore.

Judge Moore wrote the decision below for the majority of the Circuit Court with Judge Hincks writing a dissenting opinion.

The question for review if Your Honors please is the following.

Did the District Court for the Eastern District of Pennsylvania having jurisdiction over the subject matter of the action, a private antitrust suit have power to transfer the case under 28 U.S.C. Section 1406 (a) for improper venue without having obtained personal jurisdiction over the transferred defendants.

The facts of the case are simple and are not in dispute.

I would undertake to state them briefly.

GoldLawr Incorporated is a Pennsylvania corporation which sued a number of corporate and individual defendants in the United States District Court for the Eastern District of Pennsylvania under the antitrust laws charging that there had been damaged suffered by it as the result of the nationwide monopolization and conspiracy on the part of the defendants, unreasonably to restraints trade in the legitimate theatre industry.

Trouble damages and injunctive relief were sought by the plaintiff corporation.

The action was instituted in the United States District Court for the Easter District Court of Pennsylvania on October 17, 1956 within one year from the date of entry of a consent decree in the Government’s antitrust action against the Shubert’s in connection with the legitimate theatre industry.

The purpose of that institution within that one year was of course to secure the benefits of the tolling statute under Section 5 (b) of the Clayton Act.

Service on all of the defendants was attempted in Philadelphia and thereafter, service was attempted also on select operating corporation and the United Booking Office Incorporated, two of the corporate respondents here by alias summons issued out of the Southern District of New York.

Motions were filed to dismiss for lack of jurisdiction and improper venue and also to quash the return of service.

These were filed in November of 1956.

The matter came on for argument having been fixed by the Honorable William Kraft in Philadelphia in June of 1957 and was decided on December 22, 1958.

At which time, there was a rejection by Judge Kraft of certain motions and a grant of certain other motions on the part of the defendant, respondents who are here now.

Before there was actually an order entered, there was application made by the plaintiff seeking the transfer of the action to the Southern District of New York and that was granted by Judge Kraft conformably to Section 1406 (a).

There was no specific reference by Judge Kraft to the problem of jurisdiction or lack of jurisdiction over the transferred defendants.

Thereafter in the Southern District of New York, the clerk of that court refused to issue new summonses to the transferred defendants for the reason that there were already returns of service of those summonses as to those defendants from the action in the Easter District Court of Philadelphia.

The individuals who had been transferred, three in number filed answers in New York and the matter continues as to them.

But the two corporate defendants select operating company and UBO, United Booking Office renewed their motions to dismiss and thereafter, Judge Palmieri in the Southern District granted their motions.

This was affirmed by the Court of Appeals for the Second Circuit.

John M. Harlan II:

But what about the defendant’s time?

Edwin P. Rome:

Yes sir.

At the time of argument in the Easter District Court in Philadelphia sir, Mr. Heiman was still alive and there had been an effort made to serve him by leaving a copy of the summons at an office in Philadelphia.

Thereafter, he died and I must admit quite frankly sir, there was no attempt made to substitute his executors or trustees thereafter.

The fact is that insofar as Mr. Heiman or his estate is concern, we as petitioners here do not press any point with regard to the decision made below in — in his case.

Edwin P. Rome:

Thereafter —

Earl Warren:

Mr. Rome, may I —

Edwin P. Rome:

Sir.

Earl Warren:

— may I ask if — if this action had been commenced in New York with all of the defendants properly deemed there?

Edwin P. Rome:

Yes sir.

Earl Warren:

They would have been.

Edwin P. Rome:

Yes sir.

I think there is no doubt Mr. Chief Justice that if the action had been started in New York and indeed, it could have been started in New York, it — it would have been possible of the plaintiff to secure service upon them.

This, if Your Honor would permit, leads me to address myself to the actual facts of the matter.

Earl Warren:

Yes go ahead.

Edwin P. Rome:

— because GoldLawr Incorporated is a Pennsylvania corporation which owns and operates the Erlanger Theatre in the City of Philadelphia.

Its complaint has to do with the fact that effectively, it was denied opportunity to license and present within its theatre legitimate place in Philadelphia for Philadelphia audiences or persons coming to Philadelphia to attend the theatre there.

The allegation of the complaint is that there was a nationwide monopoly and conspiracy on the part of all the defendants.

In our judgment sir, the essential operative facts of the case have to do with Philadelphia.

The theatre is located in Philadelphia.

The place that would have been presented for force would have been shown in Philadelphia and the plaintiff made a choice of forum in Philadelphia because they were the main and essential contacts with that forum.

But I repeat in response to Your Honor’s question, it would have in our judgment and I do not think my friend would dispute this, it would have been possible indeed, he makes much of the fact that it would have been possible to bring the action in New York and service would have been made there.

The Court of Appeals below that, if the Court please, held in affirming Judge Palmieri’s decision that there was not personal jurisdiction obtained over the transferred defendants and hence the transfer of the case was improper and granted the motions to dismiss.

It did not so hold because of any feeling that this was more in the interest of justice than would have been the case if the transfer had been sustained nor indeed did it feel that there was any clear cut line of authority in that regard.

Now, I think (Inaudible) would require me to say to Your Honors that there is a — an anomalous situation within the cases decided on this point.

Felix Frankfurter:

Before you go to the case, don’t you think it would be desirable to read the statute and in fact, you read it again?

Edwin P. Rome:

Of course sir.

The statute involved says the following.

The District Court of a district in which is filed a case laying venue in the wrong division or district shall dismiss or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.

There is as that language I think states no reference to whether or not personal jurisdiction should have been secured in the transferor district and indeed, the courts below have recognized that there is no such language.

The court below, however, has concluded by implication from the Senate report discussing the particular statute at the time of its passage that by implication since there was an example given which seemed to speak in terms of service or personal jurisdiction having been obtained that therefore, personal jurisdiction in the form of service is required as a prerequisite to the transfer.

In our submission, if the Court please, this writ, this conclusion reads into this language a requirement that the specific words do not set forth which Judge Hincks at least below thought was unnecessary and which Judge Parker in the Internatio case in the Fourth Circuit and also which Professor Moore feels to be a less than satisfactory result.

The court below in the Second Circuit seemingly felt bound by an implication as I as say from the congressional record or perhaps by some feeling of uneasiness that its own earlier decision in 1950 in the Schiller case led to the chain of events which caused other courts including that of the Fourth Circuit to hold that personal service or jurisdiction was not in fact required.

It attempted to distinguish those other cases by referring to them as admiralty cases.

And further, it was reasoned that since the specific statute involved 1406 (a) was designed to cure a defect of venue, it ought not to be able to be used to cure a more grievous defect of jurisdiction without specific clear congressional mandate.

John M. Harlan II:

But Mr. Rome, what are the practical consequences of this view, assuming the Court of Appeals’ decision stands?

Edwin P. Rome:

The practical consequences of this Your Honor pleases, is the following.

John M. Harlan II:

(Inaudible)

Edwin P. Rome:

That the petitioner is now in the predicament of being unable to pursue a substantial part of his claim against these dismissed defendants because of the fact that we will have lost the benefit of the tolling statute — of the tolling of the statute of limitations.

Our action was originally begun as I said in the Philadelphia within one year of the end of the consent decree in the Government’s suit.

Therefore, we wouldn’t have had and did in fact have the benefit of the tolling statute.

Now, because transfer is held to be improper, to the extent we institute another action against these defendants in the — in the Southern District of New York, we are not able to take the case back to 1950 and hence we’ll suffer irreparable harm because a great many of the operative facts which we rely upon just establishing the monopolization and the conspiracy occurred in that earlier period of time.

John M. Harlan II:

You’re not barred absolutely by limitation?

Edwin P. Rome:

No sir.

John M. Harlan II:

But the amount of your damage isn’t cut down in effect?

Edwin P. Rome:

The amount of damage is cut down substantially sir and we say that it is not really in the interest of justice to permit this situation to happen.

Actually, I would take it that Your Honors grant of certiorari here is an evidence of your continuing interest in the problems revolving around the transfer statutes.

Obviously, within recent time, there are I think two decisions connected — in connection with 1404 (a) in Hoffman versus Blaski and the Continental Grain.

Felix Frankfurter:

Why were you thrown out in Philadelphia?

Edwin P. Rome:

We were thrown out as to these defendants Mr. Justice Frankfurter because Judge Kraft following a deliberation and consideration of the problem for 18 months concluded that there were not sufficient context as to these defendants to warrant the application of Section 12 of the Clayton Act so as to permit service to be had as to these defendants but —

Felix Frankfurter:

But you brought proceedings contemporaneously both in New York and Philadelphia?

Edwin P. Rome:

It could have been done, yes sir.

But actually as Judge Hincks recognizes below, there was indeed a good faith on the part of the plaintiff in bringing one action within the Eastern District of Pennsylvania because this then did not fragment the litigation.

It did not lead as we then sought to a multiplicity of suits.

All of the operative facts were the essentials ones in the view of counsel took place within the Eastern District of Pennsylvania.

And as a matter of fact, the very length of time that was required by the District Judge in Philadelphia to make an ultimate determination of the problem and the nicety of detail with which he dissected the problem really in our judgment demonstrates the good faith of plaintiff in bringing the action.

Felix Frankfurter:

But you don’t suggest that — that the judges in Philadelphia did nothing during those 18 months except to handover this problem, do you?

Edwin P. Rome:

I do not have the temerity to suggest sir that Judge Kraft in the busy Eastern District of Pennsylvania was devoting his time exclusively to this matter.

Felix Frankfurter:

You’re dissenting — you made two or three references to good faith, must have transferee court determine whether there were good faith or not?

Edwin P. Rome:

I think that is it a necessary heart of the determination of the transferor court because in the interest of —

Felix Frankfurter:

I heavily chose my words.

Edwin P. Rome:

I am aware of that sir and I’m not trying to avoid answering Your Honor’s question but it seems to me that initially, there should be recognition given by the transferee court to the determination made by the transferor court.

And yet, I cannot say in light of my reading of Your Honor’s opinions that it was been entirely without basis for the transferring court to make an independent determination of good faith or whether it was in the interest of justice.

Felix Frankfurter:

I know but the purpose of — or the reason for my question was that if you open the door to the transferee court to determine whether or not the error and — and the feelings of the wrong jurisdiction as a good faith error, that to me is not very appealing factor, perhaps to take into account to construe this kind of a jurisdictional or procedural — jurisdictional or procedural statute.

Edwin P. Rome:

I make reference to it Mr. Justice Frankfurter because it would appear that since the statute does think in terms of interest of justice.

Felix Frankfurter:

But what’s transferor court?

Edwin P. Rome:

Yes sir, yes sir.

Felix Frankfurter:

Certainly, he must — I suppose he must take into account or others relevant that to determine whether in the interests of justice.

Edwin P. Rome:

Yes sir.

I think that —

John M. Harlan II:

Well, that was the approach that Judge Hincks took in dissent.

Edwin P. Rome:

Indeed.

John M. Harlan II:

He said that the abuses, that the majority appeared if your construction was adopted where impart offended against by the fact that the transferor court would be thought there was not good faith, whatever you want to call it but denying the interest of justice transfer.

Edwin P. Rome:

Indeed Mr. Justice Harlan.

Felix Frankfurter:

What kind of — what kind of consideration entered to whether into the issue of good faith in this connection, the private consideration?

Edwin P. Rome:

The question of whether it seems to me the plaintiff was shopping improvidently for a jurisdiction whether he had or had not any reasonable basis to suppose that the court —

Felix Frankfurter:

But this is — if the transferor judge called witnesses and cross-examined?

Edwin P. Rome:

No sir.

Felix Frankfurter:

The counsel said that he would make it.

I’m just trying to explore what —

Edwin P. Rome:

But —

Felix Frankfurter:

— lies behind this.

Edwin P. Rome:

But there was presented to the judge in the transferor court a variety of evidence emanating out of affidavits and depositions with regard to the matter so that it was able to make a determination not in a vacuum, not based upon facts in limbo and indeed not based upon a failure of the defendants to have their day in court and present argument against the possibility of transfer.

I am aware of the fact that the Court of Appeals for the Third Circuit in the Hohensee case did take into account that there might be some abuse arising out of the fact that service was extended improperly or run duly and yet, it would appear that this is answered by the very kinds of considerations that Your Honor referred to in your own opinion in the Hoffman versus Blaski.

And the — the normal criteria of good faith, however, they might be enunciated in our judgment would be found here and this has not really been attacked or denied by the court below or even by my friends on the other side.

Felix Frankfurter:

There considerations, the state law claiming — I don’t mean state procedural law, the state substantive law, any — any (Inaudible) problem entered into this (Voice Overlap) —

Edwin P. Rome:

I would think not, Your Honor.

Felix Frankfurter:

But in — in a diversity case, they would.

Edwin P. Rome:

Yes sir but —

Felix Frankfurter:

Not in your case, not in a federal right case.

Edwin P. Rome:

I think not in this.

Felix Frankfurter:

Under the diversity case, you’d have nothing but state law.

Edwin P. Rome:

Yes sir.

Felix Frankfurter:

And therefore, there might be — counsel might take or join this view of what — what state laws in one state as again state law in another state.

Is that right?

Edwin P. Rome:

That might be true, Your Honor.

But again, this would seem to me to be safeguarded by the caring consideration that would inevitably be given to the matter by the District Judge and the transferor court.

Felix Frankfurter:

You mean that the transferor court, the opposing counsel would say, Well, Your Honor, it’s perfectly plain that suit was sought to be the jurisdiction or venue was sought to be satisfied in the state X because state X is content of law.

The rule is transfers it to state Y and state X is more favorable than to that and if you bring it to the state Y, that kind of thing.

Edwin P. Rome:

That kind of thing would — and in my judgment Your Honor inevitably would be brought to the attention of the judge in the transferor court.

Actually, under these circumstances, there would appear to be no lack of power on the part of the transferor court under the statute to do what it did because this I think is answered by the apt language of Judge Parker in the Fourth Circuit where he spoke in terms of jurisdiction over the proceedings.

There is no danger that could defendants would be harmed or prejudiced here in light of the fact that inevitably in the transferee court, there would have to be service made upon them and we recognize here on all sides that service could indeed be affected within the Southern District of New York.

Hence, this is not a situation such as confronted Your Honors in Hoffman versus Blaski by way of the illustration where the action could not have been brought originally in the transferee court.

Insofar as the basic result returning to Your Honor’s question Mr. Justice Harlan, there is one further element which is truly, not only with regard to the petitioner here, but we think with regard to many other parties who would be similarly situated under the present state of the law and the decisions.

It would seem to be true that the criteria for venue and the criteria for service or process so as to affect jurisdiction are essentially the same.

And hence, the result reached below would seem largely to vitiate the effectiveness of 1406 (a) because if it is impossible to have proper venue, it is also improper to have jurisdiction within the transferor court and if transit in — if jurisdiction within the transferor court is required, then a number of statutes cited in our brief would be seriously curtailed in their effectiveness and an illustration of it is found in this very case under the antitrust laws.

Felix Frankfurter:

I’m — I’m — I’m not sure I understand you but appreciate at least your argument.

Did you say that substantially there is an equation between venue and — and jurisdictional service or process?

Edwin P. Rome:

As to corporate defendants, it would seem to me — to be so sir because the necessary requirements to —

Felix Frankfurter:

But the other way around for the corporation sue an individual, you get very different situation as to — different elements give venue to a large extent in the federal court.

That’s in almost arbitrary matter, not arbitrary but, the Congress has a matter of choice determines what is the fair break for trial and jurisdiction is presupposed.

Jurisdiction in the sense that — that — that satisfying requirement of due process, that’s what it ultimately gets down with.

So I don’t quite understand why you — you equate them.

Edwin P. Rome:

Essentially sir because in this specific case —

Felix Frankfurter:

I’m not talking about this case because you can justify this case.

Edwin P. Rome:

No, of course not, Your Honor.

Felix Frankfurter:

And it might be so with reference to — to corporations in light of the Shoe case et cetera.

But one has to consider — those aren’t the only litigants in this world or they are not only the defendants.

Edwin P. Rome:

No, but they are the one sir as to whom this problem it would appear more usually arises.

And hence, I would —

Felix Frankfurter:

You mean an individual suing a corporation?

Edwin P. Rome:

Yes sir.

Felix Frankfurter:

And therefore, the corporation is amenable by some tenuous connection with the locality and that gives venue, is that it?

Edwin P. Rome:

Yes sir.

Felix Frankfurter:

You’re making a lot assumptions I think that this statute was passed with reference to litigation by corporate plaintiffs.

Edwin P. Rome:

No, I do not for a moment suggest that to be so but the report and the consideration given to the legislation at the time of its passage does make reference to it.

And in light of the comment made upon at below, I was attempting to invite Your Honors on consideration or attention to that aspect of the problem.

In ultimate essence, this case represents therefore perhaps another aspect or another side of the coin which Your Honors have had before you in Hoffman versus Blaski and the Continental Grain case because in those instances, defendants were seeking to affect transfer to jurisdictions where the action might not initially have been brought against them.

Here, we have a plaintiff under 1406 (a) seeking to affect a transfer in the interest of justice to a jurisdiction where indisputably, the action might originally have been brought.

And yet here, under the ruling of the law, the plaintiff has denied the opportunity or right to do that although the judge in the Eastern District of Pennsylvania felt that it was in conformity with 1406 (a) to permit it and both majority and dissenting opinion below would seem to be in one view as to the propriety of it from the point of view of affecting ultimate justice.

The view with deference to the court below of the majority would seem to turn upon therefore a more narrowly limited construction of 1406 than the very words of the statute would require and has the net result of doing substantial damage, harm to the petitioner here because as I have stated, it cuts off a very considerable measure of the damage period.

We think that the statute as drawn on its very faith insofar as the plain words are concerned would permit the transfer.

We think that there was nothing in the congressional record or report having to do with the passage of the legislation that would preclude it the result of sustaining the transfer.

Indeed, the one illustration given in the Senate report that represents an element of caution where the illustrations spoke in terms of a situation in which jurisdiction had been obtained in the transferor court is indeed answered by Your Honors’ decision in the Hoffman versus Blaski.

And hence, that fear no longer would seem to be well-founded.

And finally, it would seem that the result here does prevent the plaintiff without an opportunity to have his day in court on the merits being precluded unnecessarily.

John M. Harlan II:

What is the weight of decision in the lower court?

Edwin P. Rome:

The decisions in the lower court, sir, I am bound to say represented element of confusion.But it would appear in my mind clear that the Circuit Court for the District of Columbia, the Fourth Circuit indeed earlier decisions within the Second Circuit, earlier decisions of the District Court in the Third Circuit would support the transfer without the necessity of having acquired personal jurisdiction.

Felix Frankfurter:

How many circuits have passed on?

How many courts have — in the first place, how many Courts of Appeals?

This statute has been on the books since 1949.

Edwin P. Rome:

Yes, sir.

Felix Frankfurter:

That means 13 years.

How many courts have appealed with that (Voice Overlap)?

Edwin P. Rome:

The Second, Third and Fourth.

Felix Frankfurter:

Only those three?

Edwin P. Rome:

Yes, sir.

Felix Frankfurter:

Has it arisen in others.

Edwin P. Rome:

No, it would appear not to if there wasn’t accept —

Felix Frankfurter:

What about District Courts?

Edwin P. Rome:

It has arisen in, to my best recollection sir, five District Courts —

Felix Frankfurter:

Most side of those circuits?

Edwin P. Rome:

No, most of them are within those circuits actually, sir.

I think too that a reading of the cases would lead to the conclusion that only recently in the Second Circuit in this very case, in the Third Circuit in the Hohensee case and in Judge Parker’s decision in Internatio in the Fourth Circuit has the matter really been the subject of any discussion.

It frequently would appear that results were reached either granting transfer or denying transfer, without any articulation of reason being given by the court.

Edwin P. Rome:

But in those three cases that invite Your Honors’ attention too, there is actually discussion of the problem.

John M. Harlan II:

Well, Judge Parker’s decision was in admiralty case whether or not —

Edwin P. Rome:

It was —

John M. Harlan II:

— distinguishable or not.

Edwin P. Rome:

It was an admiralty case —

John M. Harlan II:

And then there are a group of cases that go under 1404.

Edwin P. Rome:

Yes, sir.

John M. Harlan II:

Which are against him, aren’t they on them all?

Edwin P. Rome:

Yes, sir.

In the sense that transfer is denied there but I would suggest for Your Honors’ consideration that 1404 may not necessarily be entirely applicable to our problem under 1406 (a), 1404 normally has to do with an application by defendants for transfer where historically there is acceptable venue in at least two jurisdictions.

Here, we start almost by hypothesis with wrong venue in the transferor court and hence that might too post a difference.

I think actually, a fair reading of the decisions even though they’d be admiralty cases would indicate and I think this is most particularly true of Judge Parker’s decision, to have turned not upon the fact of it’s being an admiralty case but truly upon the intension conceived by Judge Parker to be found back of 1406 (a) where he said that time consuming and justice defeating technicality, so it’s not to be permitted to weigh in the balance adverse to the transfer.

Felix Frankfurter:

Mr. Rome may I ask where the District Courts in acting under 1406 refusing to transfer?

Have they on the whole of just decided without writing opinions or is there a body of — of expressed reasoning or explanation when they had done these motions?

Edwin P. Rome:

I think Your Honor would find, there are two cases that really —

Felix Frankfurter:

I’m not talking about our immediate problem.

I’m talking about the way District Courts go about in 14 —

Edwin P. Rome:

Yes.

Felix Frankfurter:

1406?

Edwin P. Rome:

I think sir, that there would be only two cases that would touch upon what Your Honor has in mind.

One is a decision by Judge Van Dusen in the Eastern District of Pennsylvania in the Orszulak case.

Another is — that of Judge Dimock in the Southern District of New York where he felt himself bound to follow the decision of the Second Circuit in the Schiller case although expressing some reservation as to the propriety of that decision on ultimate — in ultimate essence.

Felix Frankfurter:

Well I don’t — I’m not sure if you’re talking about the same thing (Voice Overlap).

Edwin P. Rome:

Forgive me, sir.

Felix Frankfurter:

Whether the interest — in the interest of justice that’s for the District Court to — to marshal massive considerations for and — gone.

Edwin P. Rome:

Yes, sir.

Felix Frankfurter:

Now, as the Second Circuit directed the District Court, what considerations are irrelevant for that?

Edwin P. Rome:

I cannot say, Your Honor that there is any decision.

Felix Frankfurter:

How often do you happen to know whether these motions have any kind of frequency —

Edwin P. Rome:

It would appear —

Felix Frankfurter:

— in commercial district?

Edwin P. Rome:

It would appear Your Honor from the number of cases that we have found and which are cited on our brief and also in Mr. Phillips’ brief that this is a situation that does arise with some frequency.

Felix Frankfurter:

Cases without a recent opinion, disposition.

Edwin P. Rome:

In some instances, not even reported decisions in other instances, merely the entry of an order of transfer.

Felix Frankfurter:

What did Judge Van Dusen do?

Edwin P. Rome:

Judge Van Dusen granted the order of transfer even though there had been no personal jurisdiction in that case.

This is in the Eastern District of Pennsylvania.

Thereafter, the Third Circuit in the Hohensee case —

Felix Frankfurter:

That he can’t do it?

Edwin P. Rome:

Well, it doesn’t say that it can’t be done, sir except by implication referring to it as an admiralty case which was based on Internatio which in turn was an admiralty case.

Felix Frankfurter:

Did Judge Van Dusen reason — give a reasoned opinion?

Edwin P. Rome:

In my judgment sir, a very reasoned opinion.

Felix Frankfurter:

What is the citation?

Edwin P. Rome:

That is — I didn’t know sir.

Sorry —

Felix Frankfurter:

Don’t bother.

Is it on your brief?

Edwin P. Rome:

Yes, sir.

Felix Frankfurter:

What’s the name of the case?

Edwin P. Rome:

Orszulak, Your Honor.

I apologize for not being able to —

Felix Frankfurter:

Don’t take your time, Mr. Rome.

Edwin P. Rome:

Forgive me, sir.

Felix Frankfurter:

I’ll find it.

Edwin P. Rome:

It is a recent decision just shortly before the decision of the Circuit Court in the Hohensee case.

It is thrust to one side by Judge Daley as being essentially based on the fact of admiralty.

Earl Warren:

What is the name of that case?

Felix Frankfurter:

I don’t get —

Edwin P. Rome:

Orszulak — O-R-S-Z-U-L-A-K

John M. Harlan II:

I don’t see it in your index.

Edwin P. Rome:

It is found sir in 168 Federal Supplement at 15.

It’s also referred to by Judge Hincks in his dissenting opinion.

Earl Warren:

Oh, Mr. Phillips I beg your pardon.

C. Russell Phillips:

With permission of Your Honors, I should like to dispose of two side issues to begin with.

The first involves this question of good faith and I think we may have gotten on the wrong foot there.

There is no question whatsoever of good faith by anybody here.

It just happens that Judge Hincks in his dissenting opinion pointed out that the plaintiff was not acting just capriciously in trying to serve these defendants in Philadelphia, and he held that they acted in good faith.

There was no question of Judge Kraft’s good faith or was there every any attack on his decision in anyway except on the pure question of law which is here before Your Honors.

Potter Stewart:

This transfer was made on Judge Kraft’s own motion, was it?

C. Russell Phillips:

Yes — no, sir.

No, sir.

The plaintiff filed a motion.

Potter Stewart:

The plaintiff filed a motion.

C. Russell Phillips:

The plaintiff filed the motion, sir.

Potter Stewart:

In response to your motion to dismiss, is that it?

C. Russell Phillips:

You can hardly say it was in response.

I filed a motion to dismiss and Judge Kraft felt I was entitled to that motion.

Then immediately the plaintiff requested a transfer instead of dismissal.

And Judge Kraft signed the order of transfer without any opinion.

I may say that he must have suffered considerable torment at the time because he made his decision before any of these decisions that we’re talking about here.

The other collateral point that I should like to get out of the way is this.

Professor Moore has considered this question, and has announced that the rule of the other side would be the better rule.

I think we are not here to decide what ought to be done.

We have here simply a pure simple question of statutory construction.

What did Congress do in this new grant of jurisdiction to the federal courts?

Whether it reached the ultimate of what’s best for the country, I don’t know.

Judge Parker has considered that in one of these cases and he thinks that the whole of the United States has now become a homogenous mass so that an action should be brought in the federal court.

I’m asigned to wherever it might be best handled.

John M. Harlan II:

Or should we take the statute on its face read it literally it isn’t evident this compelling — it compels wanted to take your view of the case, is it?

C. Russell Phillips:

Well, I should like to get to that point because that is my view.

C. Russell Phillips:

We seem to have avoided this statute and the question is not really what ought to have been done or might have been done.

But what did Congress do?

And we must remember that whether it was good or bad prior to 1948, federal courts had no such power to transfer back and forth.

In 1948, the statute was first passed and it was mandatory.

If under 1406 the venue is brought in the wrong place, the court has got to transfer it to a place where the suit might have been brought.

And the very next year, Congress realized the difficulty there because then the surest way of getting jurisdiction into the federal court was to bring it as far from home base as you could and leave it to the court to find out where it ought too have been brought and sent it there.

And the very next year, Congress gave the District Court the right to determine whether that should be done or not in the interest of justice.

So now, if you bring a suit in the wrong district, you run the risk that the court may say that’s not fair.

Judge Hincks pointed out that that is not involved here.

It must also be recognized that the only question here is the simple ones they did in the petitioner’s brief.

May a court which has no jurisdiction over the parties where service has never been made, transfer under Section 1406 to some of their district where the suit might have been brought.

Now, when Judge Kraft signed this order, I have the difficult decision of what to do about it.

This transfer order affected only some of the defendants.

And if Your Honors will remember Section 54 (b) of the Rules of Civil Procedure, the interlocutory appeal section, it is provided there that you may appeal if the court permits you whether it has been a decision on some but less than all of the causes of action.

A great many cases arose and I think none of them reached this Court but all of them decided that a decision as to some but less than all of the parties is not the equivalent of a decision on some but less than all of the causes.

That therefore, barred me from an appeal in the — in the Third Circuit.

So when case was transferred, I followed it through and move to dismiss in that court.

Your Honors are pretty much —

Felix Frankfurter:

Well, you could have — correct me.

You could have had a certificate from the District Court disassociating your — making an appeal of them in short under recent statutes over there.

C. Russell Phillips:

I think that I could today because Your Honors very recently amended 54 (b) to provide that an interlocutory appeal maybe permitted where the decision involves some but less than all of the parties.

Felix Frankfurter:

If the district —

C. Russell Phillips:

If the District Court approved it but in those —

Felix Frankfurter:

This preceded that rule, just preceded that thing.

C. Russell Phillips:

Yes, sir.

This preceded that recent change in the rules.

And there again, I think Your Honors amendment of the rule if I may say so improves the situation but that didn’t mean in my judgment at any rate that I have the right.

As a matter of fact, we had litigation on that subject in another issue here and did not succeed.

Felix Frankfurter:

We have it in — in this very case.

C. Russell Phillips:

Yes, sir.

C. Russell Phillips:

In this very case, so when we got to the Second Circuit in the District Court, I moved to dismiss there.

Not attacking Judge Kraft’s good faith at all but just simply saying that under the statute that he purported to follow, he didn’t have the right to move my clients around without having made service.

That made a difference to my clients because by that time, the statute of limitation had moved forward so that the period for which damages could be claimed was a different period than initially was involved.

And if I may digress a moment, I should like to discuss this question of the hardship that Mr. Justice Harlan mentioned there by residing just a little of the time schedule here.

This suit was started on October 1956.

Mr. Rome was not counsel then.

The counsel at that time withdrew after about four years.

The complaint asked for four years of damages, quite obviously overlooking the suspension statute that has been referred to here.

I filed a motion to dismiss on a lot of grounds, lack of service and jurisdiction and also under the ground of the statute of limitations because even on the plaintiffs interpretation of the statute that had the wrong period.

And being fearful of the rule that you may file one motion and you must include it in all your reasons, I feared that if I didn’t mention the statute of limitations, I might be barred.

That must have alerted the plaintiff because very — in February the following year, it filed a motion to amend carrying its period of limitations, its damages, back a couple of years earlier which it might have done in the first place.

The point I mentioned is that being alerted during that period of five or six months up until February 17th, 1957, the plaintiff could have started a cautionary action in New York where my clients could readily have been served.

Mr. Shubert’s are indigenous to New York and Mr. Shubert occupied the same office for 60 years.

There is no question of service.

But the plaintiff didn’t do that.

Until August 1959, almost three years later when it got around the filing of cautionary action in New York which is beyond my power to attack, I mentioned all of this because if there is any hardship in this case because of the statute of limitations, it’s the plaintiff’s own doing.

It was alerted by my motions in plenty of time.

In fact, one of my objects was to get this litigation to New York because that’s where the Shuberts are.

And any conspiracy alleged to keep shows away from this Erlanger Theatre must have transpired in New York.

That’s where the producers are and I think I needn’t argue with that where its shows originate.

We’ve had discovered it for several years and almost all of it in New York, that’s where this litigation belongs.

Felix Frankfurter:

That’s because you’re unfair to the statute of Philadelphia because to my knowledge not a few have shows that first tried out in Philadelphia to see it.

C. Russell Phillips:

Yes, sir — but they come —

Felix Frankfurter:

But they didn’t survive in New York.

C. Russell Phillips:

They come — they are generated in New York where the producers are that’s where they rehearsed and then they send them to New Haven or Wilmington or Philadelphia for tryouts.

Incidentally —

Felix Frankfurter:

Well most sophisticated audiences.

C. Russell Phillips:

Oh, well at least they don’t — they are better if Your Honor pleases on first nights because they don’t boo and walkout on the first night.

They expect some changes the second night and that’s what happens.

Incidentally, this Erlanger Theatre is — has been here 40 now.

C. Russell Phillips:

Mr. Goldman who owns it brought an action against the movie producers for keeping movies out of this theatre and he won.

During all litigation, he claimed that was a movie theatre and no good for plays.

As soon as he brought his movie case, he didn’t put any movies in it all but he changed and claimed that it is now a legitimate theatre and he sued the Shuberts for keeping shows away not at the same time, but in the subsequent period.

He evidently expected shows to rush to it.

But now if Your Honors will look at this statute, the District Court of a district, it’s on page 2 of my brief.

I think Your Honors must know it by heart.

The District Court in a district in which they sue, his filing venue, in the wrong division or district shall dismiss.

Or if it’d be in the interest of justice transfer and I emphasize such case to any district or division in which it could have been brought.

This could all have been brought in New York.

Those words such case are interesting because here you’ll observe that this such case wasn’t transferred to New York.

It was transferred only as to some of the defendants.

I don’t know that I add anything new to my argument but I add a new reason for it because in the absence of the defendants, this case was not only transferred but it was split up.

Now, I’m not sure that Congress authorized the splitting up in the absence of service, in the absence of the presence of the defendants anymore than it authorizes the transfer itself.

Now, if the court had jurisdiction, if there had been service, of course the court may sever but it can’t sever, it can’t transfer, it can’t do anything with the case except there’d be some statutory authority for it.

And this statute is the only authority for a transfer.

Now, it’s interesting —

Potter Stewart:

Well, are there any considerations given or any discussion of the possibility had in the District Court of Philadelphia about transferring the entire case to this other district of New York?

C. Russell Phillips:

I would have been delighted sir, but we were caught there as to one or two defendants and couldn’t get away and that it’s there.

I should be delighted —

Potter Stewart:

So far as you know, the District Judge didn’t consider that alternative?

C. Russell Phillips:

He wasn’t asked to sir.

Potter Stewart:

That was that.

C. Russell Phillips:

I was in no position to do it and the plaintiff never did because the struggle has been to maintain this inequality of distance from Philadelphia to New York.

It’s further from Philadelphia to New York and from New York to Philadelphia.

Potter Stewart:

This is a — this is a conspiracy I suppose, isn’t it?

C. Russell Phillips:

Yes, sir.

Potter Stewart:

And alleged conspiracy by several defendants and if the — if the petitioner prevails here, how would you imagine that the litigation will proceed, that one of courts would (Voice Overlap) on the other.

C. Russell Phillips:

Well if the petitioner prevails that this — this — this case to be on recall now, it split into two places.

You can’t get it all into one unless one court or the other will transfer it.

And it’s already been held without any appeal that some my defendants here can’t reserve in New York.

C. Russell Phillips:

That’s what — in Philadelphia I mean, that’s what this case is about.

It couldn’t be brought against them all in Philadelphia.

Potter Stewart:

It could, however, in New York.

C. Russell Phillips:

Oh yes, sir.

Oh yes sir.

It could have.

Potter Stewart:

Now, the case could therefore been transferred in New York, although you say not as to your (Voice Overlap) originally brought in New York.

C. Russell Phillips:

Nobody asked the court to transfer this case to New York under Section 1404.

There’s a very good reason for that because under Section 1404 which is in almost exactly the same language, so many cases including several in this Court hold that there must be two courts where there is jurisdiction, its venue, the transferor and the transferee and this Court in Philadelphia would have no more jurisdiction under 1404 than it did under 1406.

Felix Frankfurter:

How about the other way around Mr. Phillips, sending your — your duly served Philadelphia clients to New York, is there any power, has anybody thought?

C. Russell Phillips:

Oh yes, sir.

Felix Frankfurter:

Under — under what?

C. Russell Phillips:

Section 1404, convenience.

Felix Frankfurter:

There is more convenience.

C. Russell Phillips:

Yes, sir.

I have under consideration we have —

Felix Frankfurter:

And when you think you are in no position, that’s why I was wondering?

You say you are in no position, do I ask, why not?

C. Russell Phillips:

I was suggesting as to the defendants that are involved here.

I am in such position as to those that were served in Philadelphia that Your Honors —

Felix Frankfurter:

But you just said a little while ago, that’s the reason I asked the question.

I thought you said it’s now irrevocably split up into two counts, is that so?

C. Russell Phillips:

No, Sir.

Not — not — not the parties agree or the court —

Felix Frankfurter:

The Court?

C. Russell Phillips:

— and actually, I proposed we’ve given no consideration with the client but I proposed to ask that the case be transferred to New York.

The plaintiff has a legitimate interest here.

It wants its case in its hometown.

I have a legitimate interest in having it in New York because we’ve been multitudinously this rendering, discovering, all issue but records are there.

Felix Frankfurter:

I should think in the interest of justice, afraid of deficiency, well it’s not fully unlimited in the judicial — judicial interest must have interest relevant or judicial judgment must be taken into account.

Felix Frankfurter:

But I should think considerations of such as of the main — main witnesses or numerous other plaintiffs, defendants are in the New York, all those are relevant to 1404, aren’t they?

C. Russell Phillips:

Oh I think so, if Your Honor pleases.

I think they are.

You see, the — this conspiracy that’s alleged in paragraph 7 — 6 or 7 of the complaint says that Shuberts brought pressure to bear on produces, to stay away from this Erlanger Theatre.

I can’t point to any testimony that says so except that the producers are in New York.

That’s — that’s the — the end of the rainbow for all shows, broadways where they want to be.

And if there were such a conspiracy, it must have happened very largely in New York that’s where they are and you can’t find them in Philadelphia.

I’ve got to try the subpoena and we’ll take their depositions.

But if we’re in New York, they’re right down in the street 10 minutes subway ride or a few course or an hour of taxi ride and that they have no difficult to get them into court.

That’s what I want to do and I’m interested in having the litigation in New York but I have a plaintiff here who brought it in Philadelphia and has legitimate interest in wanting it there.

That’s what this fight is about.

And if the plaintiff has caught short, it’s his own fault.

He took him three years or nearly three years to file a cautionary suit that’s beyond my power to attack.

Now, I took the trouble of copying out 1404 and 1406, they didn’t print them that way in the brief.

But if you look in the book, they’re separated by about 20 pages of citations.

And so I printed them here.

I have copies that the Court can have but the court — well, I’d better not try to do that because it’s just for convenience.

But if you look at 1404 that we’ve been talking about for the convenience of the parties and witnesses and the interest of justice, a District Court may transfer any civil action on any case, but any civil action to any other district or division where it might have been brought.

Now, that language has been held repeatedly to mean that both courts have to have jurisdiction and venue.

And on this subject of part of a case, it’s very interesting to consider whether without jurisdiction, a court may divide or split up a case.

There are good many ways or several ways that can be done.

I’ve mentioned one by sending some parties one way and some others in another but if not infrequent that the issues are separated.

Liability tried in one district or one jurisdiction rather and liability — I mean liability in one trial and damages in another.

We have a case — a lot of cases in Philadelphia rising out of — an airplane wreck in Boston Harbor a little over a year ago killing many people who happened to live in Philadelphia.

There has been serious consideration of whether it is possible to try the issue of liability in Boston where multitudes of evidence of negligence and so on lie.

And tried the issue of damages in Philadelphia where the parties lived and have their earnings and so on.

I don’t know whether that can be done or not but that may yet reach this Court.

I don’t know of a case where there’s been a severance like that between districts.

But here, the attempt is to sever without any jurisdiction at all.

Now, if you look at the (b) Section of 1404, there’s a very curious circumstance there.

C. Russell Phillips:

1404 (b) upon motion consent or stipulation of all parties, any action suit or proceeding or any motion in connection therewith may be transferred to any other district.

The same day that the court passed 1404 and 1406, it provided for splitting up an action or sending a motion or part of the case to another district.

It provided for that in Section 1404.

We are asked to assume that it meant the same thing when it wrote 1406 but didn’t say it.

And I just can’t fix up that where it has proper statutory construction.

Then Judge Moore in his majority opinion points out here that these sections are under the heading in the Judicial Code, Section Chapter 87 entitled Venue, venue.

And when you read Section 1404, it reads change of venue.

And 1406 cure or waiver of defects, we are asked to construe that as the meaning the cure or waiver of defects in jurisdiction.

Felix Frankfurter:

And perhaps Mr. Phillips, both you and I are bound by Hoffman and Blaski (Voice Overlap) —

C. Russell Phillips:

Well, I certainly am if Your Honor pleases.

Felix Frankfurter:

It’s got it in — well — you’ll start with that in — in full deference to it.

What comfort or discomfort you get from that case with reference to this one?

C. Russell Phillips:

Oh I get a — I get a great deal of comfort, if Your Honor please.

These two statutes are in the same language.

Felix Frankfurter:

Yes.

C. Russell Phillips:

And the court there was asked to consider 1404 as a remedial statute and broadly construe it beyond the content of its words.

And the majority, I think Justice Whittaker spoke for it, declined to do that.

This was a jurisdictional statute and whatever jurisdiction this Court has must be found in that statute, not something beyond.

That’s where it gives me comfort.

Felix Frankfurter:

Well, but the — the situation of the two if the two sections deal with a very different — are different, aren’t they?

C. Russell Phillips:

Oh, they’re —

Felix Frankfurter:

It’s —

C. Russell Phillips:

— quite different.

Felix Frankfurter:

— quite different because in Hoffman-Blaski, you’ve got a court that has jurisdictions — there’s —

C. Russell Phillips:

— suppose that I have.

Felix Frankfurter:

— no doubt, no doubt that the court could litigate.

They could let the litigation go forward.

And then it is ours as a matter of — of so called I’m using the word conclusively equitable consideration, consideration of fairness or the administration of justice to send in to another court.

Now, what this Court decided in Blaski was that to ask a court or allow a court to give up its conceded jurisdiction in the interest of the justice, to a court with initially or fundamentally couldn’t have conceived with the jurisdiction is straightening the statute is doing something to it.

C. Russell Phillips:

Yes, sir.

Felix Frankfurter:

Now here, you got the reverse.

C. Russell Phillips:

Yes, sir.

Felix Frankfurter:

You got just the reverse namely, that you’ve got a court which — which transcribe a case and Congress up to 1948 said if that so, if you’ve chosen the wrong forum, too bad, lawyers are supposed to be learned people.

It’s a large assumption that you must face.

C. Russell Phillips:

Yes, sir.

Felix Frankfurter:

But anyhow, they must make a choice on these matters.

They made the wrong choice and that’s that.

Along comes in Congress in 1948 and then in 1949 and says, “You’ve begun a litigation of court which is found not to have juris — not to have power to dispose of the litigation.”

Venue problems we all know, that we all — all of us lawyers know is not approximate adding to and to.

Then they raised dubious problems, don’t they?

And so you have a court which concludes that it can dispose of the case sending it to a court that concededly does have jurisdiction.

Now, in the practicality of — of the conducts of affairs, it’s a very different thing to allow a court which has power to dispose off litigation to send it to a court which initially wouldn’t have had power.

As again, the court then initially doesn’t have jurisdiction, instead of letting the whole metaphor, send it of course that concededly does have jurisdiction.

All I’m suggesting — well, it’s obvious of course is that that you might take the same phrases that they have a different context in the actual administration of justice.

C. Russell Phillips:

I see, I think Your Honor’s comment have been pretty much followed by Professor Moore who says that the rule might better have been the other way.

Well, that’s not my problem and my problem is —

Felix Frankfurter:

The so-called bidding in his four volumes or six, I don’t go to him until (Voice Overlap) —

C. Russell Phillips:

Well, I didn’t go to him in this case because he doesn’t like my decision and commented on it.

Now, if Your Honors please, I should like trace these decisions just a little bit because they’ve attracted a good deal comment here.

Your Honors have asked what courts have considered this question.

And my difficulties here don’t approach those that I had in the Second Circuit because the outstanding decision there was, was in the Second Circuit that it reached the opposite result, and had been so held by a couple of other torts including Judge Dimock in the Southern District of New York.

So I went in to the Second Circuit and told them that I did not think that their court had considered this question but I knew of no better place to find out and ask them.

And I pointed out some facts that a great many judges and presumably counsel too have overlooked.

In the Schiller case, the judge in a case where there was no service and no jurisdiction transferred to another district.

And then the amazing thing happened, the defendant said, “I’m delighted.

You couldn’t have served me there but I’m glad.

I’ll go down there and I’ll appear.”

And the plaintiff complained.

He brought mandamus to reverse that decision and nobody noticed that.

While the facts were that a court without jurisdiction did transfer, nobody notice that that defendant agreed to it that he had the perfect right to have cured any defects there were.

C. Russell Phillips:

And it was the plaintiff who complained in the Court of Appeals in amazement said, “Why, who are you to complain Mr. Plaintiff.

You in — your just certs are dismissal, you didn’t get service here.”

And here’s the defendant who said, “Sue me over there.

It’s alright with me.”

And we transferred it, “Who are you to complain?”

That’s —

William J. Brennan, Jr.:

(Inaudible)

C. Russell Phillips:

The Schiller case, Schiller versus Mit-Clip.

When I went to the Second Circuit, we had a different array of judges but they’re quite closely, and they must have discussed it because they all agree, five of them sat on this thing eventually and agreed that they had not considered that question at all.

They transferred it because everybody but the plaintiff agreed to it.

And Judge Dimock came along a little bit later and worked in another case in the District Court in New York, Southern District, where there had been no service.

He permitted a transfer but he expressly stated he had a good deal of misgivings but he felt he was bound by the Schiller case.

Then the District Circuit and the Fourth Circuit followed and all of these cases either cite the Schiller case as authority or they cite a case which itself depends in its antecedents on the Schiller case.

And if you read that, if Your Honor please it did not so hold, the Second Court readily agreed the Second Circuit that it did not so hold.

So there is not an imposing array of difference of opinion here.

It’s true that the District and the Second and the Fourth Circuit use words of approval but they always cite for it at this case, which does not in — in all fairness so hold.

Now, I think that that is the — the essence of my argument, if Your Honor please, insufficient for this purpose.

I think I neglected to state that I represent the two corporate defendants here.

And Mr. Lipper represents the estate of Marcus Heiman.

I should have started that way.

Aaron Lipper:

If Your Honors please —

Earl Warren:

Mr. Lipper.

Aaron Lipper:

— in the light of the comment of Mr. Rome to the question of Justice Harlan, I respect in stating that he wasn’t interested in our defendant nor respondent.

I respectfully move to either dismiss the appeal as to the name of the defendant Marcus Heiman now represented by the Morgan Guaranty Trust Company’s Executive or for an affirmance of the appeal.

Earl Warren:

Mr. Rome.

Edwin P. Rome:

I would just ask leave to bring to Your Honors attention the fact that Mr. Phillips said inverted in passing to the conclusion of the court below in the majority opinion about the use of the language and the actual placing of the words of 1406 as being indicative that it was intended only to cure a venue defect.

Actually however, no inference of course of legislative construction as to be drawn from the placing of the statute or the title headings of it.

The other point that I would ask leave to mention is that regardless of what one may say concerning the subsequent analysis by the Second Circuit of its decision in Schiller.

It remains true that the Second Circuit did in fact sustained a transfer of a case where there had not been jurisdiction in the transferor court.

And finally that Judge Parker, even though this was an admiralty case in the Internatio in the Fourth Circuit rest his conclusions squarely on the language and the purpose of 1406.

Edwin P. Rome:

Thank you, sir.