Horton v. Liberty Mutual Insurance Company

PETITIONER:Horton
RESPONDENT:Liberty Mutual Insurance Company
LOCATION:Circuit Court of Montgomery County

DOCKET NO.: 478
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 367 US 348 (1961)
ARGUED: May 03, 1961
DECIDED: Jun 12, 1961

Facts of the case

Question

Audio Transcription for Oral Argument – May 03, 1961 in Horton v. Liberty Mutual Insurance Company

Earl Warren:

Emmett Horton, Petitioner, versus Liberty Mutual Insurance Company.

Mr. Tonahill.

Joe H. Tonahill:

Mr. Chief Justice, may it please the Court.

The question involved here is whether the amount of an Industrial Accident Board’s award of $1050 which the respondent appeal fixes jurisdiction under the diversity of jurisdiction statute.

This case arose in Texas under the Workmen’s Compensation Law of Texas.

The injured workman Horton filed his claim before the Board and the Board ruled and entered to file award allowing him 30 weeks at $35 a week.He claimed the maximum of 401 weeks but the Board allowed him 30 weeks.

On the day of the award, the respondent filed it directly in the United States District Court for the Eastern District of Texas seeking to set aside the Board’s award of $1050 and vacating it and holding it for note, claiming jurisdiction under the diversity statute.

The petitioner Horton filed a motion to dismiss on the ground the jurisdiction was not present because the amount that the respondent sought to relieve itself of liability for was only $1050 and did not meet the requisite jurisdictional requirement of $10,000 exclusive of interest and cost.

Subject to the motion to dismiss, the petitioner Horton filed a counterclaim, a compulsory counterclaim subject to its motion.The trial court dismissed both the main action of respondent and the counterclaim as well on the ground that no jurisdiction attached.

Under the Workmen’s Compensation Law of Texas Article 8307, Section 5, a party who is dissatisfied with the ruling of the Board has a right to appeal from that award to set that award aside.

That’s as far as it goes.

Charles E. Whittaker:

When you say “appeal”, do you mean appeal?

Joe H. Tonahill:

Well, appeal a branch that — to set it aside.

Yes, sir, appeal.

That’s what it would be.

William J. Brennan, Jr.:

Well, let — let’s see.

Suppose review had been sought in a state court, Mr. Tonahill, instead of this action would be brought to Federal District Court, what form will it take?

A new action in the state court or would it had been an appeal to some — one of the state courts from the judgment of the workmen’s compensation?

Joe H. Tonahill:

It would — it would be an appeal, a trial de novo, sir.

And that’s exactly what Horton did, the petitioner here.

He filed his notice of appeal.

The law requires that notice of appeal must be given in a suit file within 20 days thereafter.

Horton gave notice of —

William J. Brennan, Jr.:

An — a suit filed within 20 days thereafter?

Joe H. Tonahill:

Yes, sir.

To set aside —

William J. Brennan, Jr.:

Well, wouldn’t that require a pleading under Texas practice?

Joe H. Tonahill:

Yes, sir.

William J. Brennan, Jr.:

A complaint?

Joe H. Tonahill:

A complaint.

William J. Brennan, Jr.:

So that in form, it looks like a — a new original action, does it?

Joe H. Tonahill:

It is.

William J. Brennan, Jr.:

But it is, nevertheless, under your practice, that’s an appeal?

Joe H. Tonahill:

Well, it’s — it’s called an appeal.

It’s called a suit to set aside — it’s a suit to set aside the Boards award.

It’s a trial —

William J. Brennan, Jr.:

So what does notice of appeal to mean?

Was it that?

I appeal from a competent?

Joe H. Tonahill:

Yes, sir, it has been informed here that the claimant gives notice that he does not satisfy with the Board’s award of $1050 and will appeal therefrom in a suit of — in a court of competent jurisdiction.

William J. Brennan, Jr.:

But his appeal has to be, I might be clear about this, his appeal, so named is, in fact, an original complaint and —

Joe H. Tonahill:

That’s right.

William J. Brennan, Jr.:

— and in what — so what state court does it go with that original (Voice Overlap) —

Joe H. Tonahill:

Well, that’s the — that’s a good — you’re getting right to the heart of it, Your Honor, because under the Workmen’s Compensation Law, you can go to either the justice court depending upon the amount of the award or the amount being claimed which has jurisdiction up to $200.

Or you can go to county court which has jurisdiction from $200 to $1000 or, if the highest amount under the Act is claimed, you may go into the District Court which has unlimited jurisdiction of $500 and up.

Charles E. Whittaker:

Now, you said the highest amount that is claimed, did you?

Joe H. Tonahill:

That’s — that’s right.

Charles E. Whittaker:

Now, claimed in what?

Joe H. Tonahill:

Claimed in the claimant’s claim that he files with industrial —

Charles E. Whittaker:

And he claims for compensation?

Joe H. Tonahill:

Yes, sir.

And that is the basis of the respondent’s claim of jurisdiction.

The respondent is saying, “We want to relieve ourselves of the $1050 award that the Board has said that we owed the claimant.”

William J. Brennan, Jr.:

Now, what court do they go to then in —

Joe H. Tonahill:

Federal court.

William J. Brennan, Jr.:

No, no.

I’m trying to get back to the state court.

In your state — what happened in this case?

Joe H. Tonahill:

We went to state court —

William J. Brennan, Jr.:

You went to the state —

Joe H. Tonahill:

— and back to the federal court.

William J. Brennan, Jr.:

Now, you went to the — what state court did you go?

Joe H. Tonahill:

In the county where the injury arose, Orange County District — District Court.

William J. Brennan, Jr.:

In the county — to the District Court.

Joe H. Tonahill:

District Court of Orange County.

William J. Brennan, Jr.:

Because you claim something in excess of $1000?

Joe H. Tonahill:

That’s right.

William J. Brennan, Jr.:

I see.

And then what happened?

What did the respondent do?

Joe H. Tonahill:

The respondent, on the date of the award, give notice of appeal that same date and filed suit in the federal court in Beaumont, Texas.

William J. Brennan, Jr.:

Instead of going to any state court.

Joe H. Tonahill:

Instead of going to state court, they could have gone to District Court where we went.

And we filed our motion to dismiss because of lack of jurisdiction and also file our suit in state court.

William J. Brennan, Jr.:

Now, they could have gone to the state court because the amount was $1050, is that right?

Joe H. Tonahill:

That’s the only court we say that could have gone to, Your Honor.

William J. Brennan, Jr.:

Because it’s $1050.

Joe H. Tonahill:

That’s right.

William J. Brennan, Jr.:

$50 over the jurisdictional limit of the county court, is that it?

Joe H. Tonahill:

That’s exactly the point.

William J. Brennan, Jr.:

Yes.

Joe H. Tonahill:

But — and they raise to the court of that charge in filing their notice of appeal and a suit the same day.

They have 20 days from the date of the award to give notice of appeal.

They have 20 days from the notice to file your suit.

Charles E. Whittaker:

May I ask you, sir?

Under your state law on such a proceeding whether it be called an appeal or a plenary suit, what determines the amount in controversy, is it the amount awarded by the Commission or the amount claimed by the employee?

Joe H. Tonahill:

So far as the insurance company is concerned, it would be the amount claimed by the Commission if they should —

Charles E. Whittaker:

From a claimed award.

Joe H. Tonahill:

It should — it should be the amount awarded by the Commission.

They would base their suit on an appeal to the court as to the amount of the Board’s award.

Joe H. Tonahill:

However, to eliminate two suits, if the Board should award more than $500, they would go ahead into the District Court because the claimant would very likely go into the District Court too.

But otherwise, if the Board allowed $200 and the — and the claimant was willing to be satisfied of that, he wouldn’t have to appeal at all.

And if the carrier appealed, they would very likely go into that court or go into a higher court then the counterclaim would come back.

Charles E. Whittaker:

(Inaudible)

Joe H. Tonahill:

Yes, sir.

Charles E. Whittaker:

(Inaudible)

Joe H. Tonahill:

The insurer can go the justice court or to the county court or to the District Court because under the state rule — under the state rule, jurisdiction can be fixed in the highest court because of the highest amount claimed to the highest amount awarded.

If the claimant claims more than $1000 or more than $500, the insurance company has the right to go the District Court, that’s under the state rule.

And — or they can go into the court where the amount of the award is — is determined for the — either the county, the — the justice, the county or the District Court.

But the rule under — on the federal jurisdiction is not the same because it determined the — the amount of the award.

And that’s what they’re seeking.

That’s the pecuniary object of the respondent’s suit in coming into the District — Federal District Court is to relieve itself of that liability.

But what the respondent seeks to do is to engraft on the claimant’s claim for the maximum benefits before the administrative board.

They’re seeking to say, “Well, because he had a claim before the Board of $14,035 that gives the federal court jurisdiction under the $10,000 statute.”

Hugo L. Black:

Suppose the insurance company takes it up, takes it up, the award of $1000, original claim was $14,000, is there any way the insurance company then can be made to pay the $14,000 after it takes it up?

Joe H. Tonahill:

Only after a trial and — and judgment.

Hugo L. Black:

They could — they could be made to pay?

Joe H. Tonahill:

Oh, yes, sir.

Yes, sir.

The — the claimant would then counterclaim under his compulsory counterclaim rights, and then have a trial, and if they recovers that amount, that’s exactly what —

William J. Brennan, Jr.:

But only if you counterclaim.

Joe H. Tonahill:

That’s right.

If —

Hugo L. Black:

He —

Joe H. Tonahill:

— we did —

Hugo L. Black:

— he has to counterclaim, doesn’t he?

Joe H. Tonahill:

He has to or he’s — he’s out.

It’s set aside automatically.

Either — either side has a right to appeal and if the claimant is not the appellant, then he must counterclaim and seek to recover and then the burden of proof is on him.

Charles E. Whittaker:

(Inaudible)

Joe H. Tonahill:

Anytime.

Charles E. Whittaker:

(Inaudible)

Joe H. Tonahill:

It’s exactly like the Collins case, in a condemnation suit, Your Honor, no difference.

William J. Brennan, Jr.:

A jury trial in the court?

Joe H. Tonahill:

Yes, sir.

It’s — that’s the unusual thing about the Act.

In Texas —

William J. Brennan, Jr.:

In justice court?

Joe H. Tonahill:

— you have a right of proper jury trial.

William J. Brennan, Jr.:

Even in justice court?

Joe H. Tonahill:

Yes, sir.

Six — six-man jury.

Trial de novo on the proponents of the evidence rule.

Felix Frankfurter:

In — in this case, did the claimant infinitively claimed merely what the — we all Board awarded him a $1000?

Did he make a choice so that under no circumstances will he ever claim more than that $1000?

Joe H. Tonahill:

He — he very well could, Your Honor.

Felix Frankfurter:

No, no.

Did — did he — did he take action whereby the — whatever went into court, I use that neutral term, whatever went into court, you just told us that means a de novo trial, did he take any action whereby the controversy in court could never be beyond $1000?

Joe H. Tonahill:

No, Your Honor.

He claimed the maximum benefits —

Felix Frankfurter:

Alright.

Joe H. Tonahill:

— before the Industrial Accident Board.

Felix Frankfurter:

But did he thereafter — the Industrial Accident Board went against him, didn’t it?

Joe H. Tonahill:

They — they wanted — they gave him only $1050.

Felix Frankfurter:

They went against him for the — for the larger amount.

Joe H. Tonahill:

That’s right.

Felix Frankfurter:

What I want to know is that he take a step in the course of this litigation whereby he, infinitively, finally never would claim more than $1000?

Joe H. Tonahill:

No, no, Your Honor.

He’s — he filed his counterclaim —

Felix Frankfurter:

Alright.

Joe H. Tonahill:

— compulsory counterclaim subject to his motion to dismiss, and federal court will lack the jurisdiction and then in state court, he filed his suit to appeal from the Board’s awards set for the maximum amount.

Felix Frankfurter:

So that he is still subject to all qualification you give him, he is still was out to get $14,000, is that right?

Joe H. Tonahill:

Yes, sir, but he wanted to get it in the court of his choice that Congress gave him in —

Felix Frankfurter:

I understand.

Joe H. Tonahill:

— in the amendment in 1958.

Felix Frankfurter:

The whole —

Joe H. Tonahill:

He — and —

Felix Frankfurter:

The whole question.

Joe H. Tonahill:

— and that too is a very valuable right that he is claiming.

And we contend that the respondent and the court below [Laughs] has sought to apply the state rule to a federal jurisdiction question in order to manipulate jurisdiction that does not exist.

Felix Frankfurter:

Well, I think — I think you want to get into the legal question.

The first one to be clear, his position is that he’d rather have $1000 from the federal court and $14,000 from the state court, is that right?

Joe H. Tonahill:

No, sir.

His position is he wants his $14,000 but he wants it in state court, the court of his choice that Congress gave him.

Felix Frankfurter:

I know Texas is of a great State but it hasn’t different currency, does it?

Joe H. Tonahill:

No, [Laughs] I don’t think there’s any different (Inaudible) Massachusetts Your Honor.

But there’s a difference in the trial you get in the federal court and — and in trial you get in state court because of the geographical distribution of the divisions in the — in Texas.

Hugo L. Black:

Are you saying that in determining the jurisdictions of federal court, it got to go on what the company claim and disregard what the claimant claim?

Joe H. Tonahill:

Not entirely for state court jurisdictional purpose — purposes.

Hugo L. Black:

So, what about federal court jurisdiction?

(Voice Overlap) —

Joe H. Tonahill:

The only — the only point in federal court jurisdiction is the amount of the Board’s award, Your Honor.

The Board must award, must say to the insurance company, “You owe this man $10,000 or more.”

Hugo L. Black:

I understand that.

But I — am I wrong in thinking that in federal court, you will be compelled if you want to claim the $14,000 to set it up?

Joe H. Tonahill:

That’s right.

Hugo L. Black:

And your federal court has jurisdiction to try if it has jurisdiction.

Joe H. Tonahill:

If it has jurisdiction —

Hugo L. Black:

Yes.

Joe H. Tonahill:

— in the first instance, yes, sir.

Hugo L. Black:

That’s right.

What you are claiming is, as I understand, federal court jurisdiction must be determined exclusively by the amount that the insurance company is seeking to avoid pay.

Joe H. Tonahill:

Exactly, and it must exceed $10,000.

Felix Frankfurter:

What you’re saying is that on your view of the diversity statute, a removed plaintiff can keep a litigation — keep a litigation out of the federal court by making a different monetary claim in the state court from the federal court.

That’s what you’re claiming.

Joe H. Tonahill:

He can claim less.

That’s right.

He can —

William J. Brennan, Jr.:

Well, Mr. Tonahill, now you said a removed plaintiff.

I gather — I thought you told us that what happened here was not that the respondent removed but that the respondent ordered original action in the federal court —

Joe H. Tonahill:

That’s true.

William J. Brennan, Jr.:

— to review or rather — if that’s the right word, in any event, they get to set aside the $10,050 award maybe.

Joe H. Tonahill:

That’s —

William J. Brennan, Jr.:

So this is not a removed action (Voice Overlap) —

Joe H. Tonahill:

This is an original action.

But the year before this said rule a year before the Congress amended the Act, there were 2147 of these cases brought to federal court, about 1000 of them, original actions and about 1140 by removal.

And if my position is correct, it’ll be about 1000 a year if —

Felix Frankfurter:

You already — your counterclaim means that if the jurisdiction is decided against you and you’ll get up your addendum and go for $14,000.

Joe H. Tonahill:

That’s right, Your Honor.

We — insofar as case —

Felix Frankfurter:

I’m not saying you’re not entitled.

I’m just trying to find out (Voice Overlap) —

Joe H. Tonahill:

That’s the first case we had in mind, Davis versus Department of Labor.[Laughs]

Earl Warren:

Could they remove the — could they remove the case to the federal courts, your case in the — in the state court?

Joe H. Tonahill:

No, Your Honor, because Congress forbid that in 1958.

Earl Warren:

That you rely on the 1958 Act?

Joe H. Tonahill:

Exactly, sir.

Earl Warren:

Yes.

Felix Frankfurter:

And you’re clear that this — that this must be — that this is not within the 1958 limitation?

Joe H. Tonahill:

No, sir.

Felix Frankfurter:

Pardon me?

Joe H. Tonahill:

It’s — it’s not within — it’s $1050 in the 1958 limitation.

Felix Frankfurter:

No, no.

This is not within — not the $10,000 but it isn’t the subject to the restriction of the Act limiting removal in Workmen’s Compensation cases, which was passed, as I understand it, partly in response to the clogged business of the Fifth Circuit.

Joe H. Tonahill:

Precisely.

They could not remove our case in the District Court in Orange County for $14,000.

William J. Brennan, Jr.:

So with — your point is they’re trying to get around the restriction of that statute against removal by starting an original action and lifting cells by the wrong bootstraps by relying in your $14,000 counterclaim to keep jurisdiction.

Joe H. Tonahill:

Relying on our claim before the Board.

William J. Brennan, Jr.:

Oh, on your claim before the Board.

Joe H. Tonahill:

Before the Board, yes, sir.

They’re trying to —

William J. Brennan, Jr.:

(Voice Overlap) —

Joe H. Tonahill:

— they’re trying to determine our claim before the Board under the state test.

Felix Frankfurter:

Your claim is, conversely, that you can — you can — of the diversity jurisdiction act, as it now stand, permits you to cut down what was your initial claim by sending it on — on what the Board allows you rather what you claim, is that right?

Joe H. Tonahill:

That’s right, sir.

Felix Frankfurter:

Now —

Joe H. Tonahill:

It gives —

Felix Frankfurter:

— however — however, plus the fact that if this case goes to trial, you will be beyond the $10,000 limit.

Joe H. Tonahill:

We could be, we couldn’t be.

We — we can claim less but — in court to the claim before the Board.

Felix Frankfurter:

But why did you didn’t?

Joe H. Tonahill:

That’s right.

Felix Frankfurter:

Why did you didn’t, to claim law?

Joe H. Tonahill:

We — we claim more subject to our county, subject to a motion to dismiss though in the federal court.

William J. Brennan, Jr.:

What I understand on your counterclaim, if you can win on your motion to dismiss to get that out of (Voice Overlap) —

Joe H. Tonahill:

That’s right, Your Honor, which is the state court in this instance as — because Congress said what you will do.

Felix Frankfurter:

It shows what a beautiful thing diversity of jurisdiction is.

Joe H. Tonahill:

That’s a wonderful thing.[Laughter]

Earl Warren:

Mr. VanDercreek.

William Vandercreek:

Mr. Chief Justice, may it please the Court.

William Vandercreek:

We feel that the nub of the jurisdictional amount problem before this Court serves on what is the object of the plaintiff insurance companies claim for relief.

We say this because the question before this Court is a question of whether Congress is giving the United States District Court federal jurisdiction over a state created cause of action.

Felix Frankfurter:

Could you mind —

William Vandercreek:

We’re —

Felix Frankfurter:

— that he already attempt the exact words of the statute referring to diversity jurisdiction?

William Vandercreek:

Section 1332 —

Felix Frankfurter:

Yes.

But this is the language as to what a — or what is a — how does it define — how you — what you may bring a suit for?

William Vandercreek:

The diversity court shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $10,000 exclusive of interest and cost.

Our position is, under federal law, that the matter in controversy in this suit does not exceed more than $10,000.

The court below in finding greater jurisdictional amount applied state law.

The only cause of action that is possessed by the plaintiff insurer is the right to set aside $1050 award.

Under the federal rule, as we understand decisions of this Court, the amount in controversy is said to be the direct and immediate object of the plaintiff’s claim for relief.

The decisions of this Court are not key to potential counterclaims.

Felix Frankfurter:

May I ask you this?

William Vandercreek:

Yes, sir.

Felix Frankfurter:

After the — suppose you hadn’t counterclaim subject to your jurisdictional resistance, suppose you hadn’t counterclaim and the opinion of the Court of Appeals has prevailed, that is, that there was jurisdiction, but you did not counterclaim in terms, suppose the case has gone back to the District Court, could you then, after it got that, have — has — somehow rather putting your counterclaim, would you been foreclosed after litigation started?

William Vandercreek:

We could have been foreclosed, Your Honor.

I suppose if the District —

Felix Frankfurter:

I don’t mean you could have been.

Would you have been?

William Vandercreek:

We don’t know, Your Honor.

For this reason —

Felix Frankfurter:

What does that came on?

William Vandercreek:

Sir?

Felix Frankfurter:

But what does that came on?

William Vandercreek:

Well, the time limit for filing a counterclaim whether it’d expired would have obtained permission of the District Court to then file a late counterclaim.

Felix Frankfurter:

Suppose the — suppose the time — there were no time pressure, could you, as a matter of right, counterclaim after the case got into the court, into the District Court?

William Vandercreek:

If our time limit has expired, here is the problem on that, Your Honor.

There is a time limit also in filing counterclaim in relationship to the appeal from the Industrial Accident Board.

William Vandercreek:

The parties must give their notice within 20 days and then file suit within 20 days.

Now, what has happened in some instances, the insurance company has appealed, defendant employee failed to counterclaim and he was thrown out on this jurisdictional motion and he lost his right to come in federal or lost his right to claim any compensation.

Felix Frankfurter:

I’ll take all the question of statutes of — statutes of limitation whether by statute or state law or rule regarding the case, what I want to know is this, because I do not know, I’m ignorant.

William Vandercreek:

[Laughs]

Felix Frankfurter:

I haven’t got the rules in my head.

Could you, in this case, assuming the District Court will grant a jurisdiction, suppose we decided it had jurisdiction, could you, in a case like this, put statutes of limitation aside, counterclaim beyond the amount of the award of the void?

William Vandercreek:

Yes, sir.

The employee could.

The employee could —

Felix Frankfurter:

The employee could.

William Vandercreek:

He could counterclaim for — in this case, for any amount up to $14,035.

He could counterclaim for $2000 —

Felix Frankfurter:

And that — and the amount — the amount up to which he could counterclaim although he didn’t counterclaim, to begin with, would be determined by state law, is that correct?

William Vandercreek:

Right.

The maximum compensation that he’s entitled to under the State Workmen’s Compensation Act which is $14,035.

Felix Frankfurter:

So, assuming — putting so on the basis of what you tell me as the law, whether you could counterclaim to an amount beyond $10,000 would depend upon the specific facts of the — of the particular litigation but not the federal rules of federal law, is that correct?

William Vandercreek:

Yes, Your Honor.

His cause of action is given to him by the —

Felix Frankfurter:

State.

William Vandercreek:

— state courts and his trying to report —

Felix Frankfurter:

So, he could counterclaim although he only got — although the suit is merely — the award is merely for —

William Vandercreek:

Yes.

Felix Frankfurter:

— much lesser amount.

William Vandercreek:

As Mr. Tonahill pointed out, either party can move —

Felix Frankfurter:

Alright.

William Vandercreek:

— to set aside the Board’s award.

Felix Frankfurter:

So that this litigation which started, forget all about statutes of limitation, I don’t mean that they wouldn’t be bear apart.

William Vandercreek:

Well, this is why we have to counterclaim because we were worried about that, Your Honor.

Felix Frankfurter:

So that — so that this suit begun in the District Court for an amount of $1000 could exceed the statutory limit.

William Vandercreek:

No question about that, Your Honor.

William Vandercreek:

You are undoubtedly — perhaps thinking some language in the St. Paul Mercury case which —

Felix Frankfurter:

I can assure you, I’m not thinking because I’m right in the case.

I’m just thinking.

That’s all.

William Vandercreek:

Beg the Court’s apology.

We claim that the court below, the Fifth Circuit erred in applying a state rule for determining jurisdictional amount rather than a federal rule for determining jurisdictional amount.

As I stated, our position is a federal rule is a key to the insurer’s cause of action.

In this connection, I would like to draw the Court’s attention to the case of Booth versus Texas Employers’ Insurance Association.

This is a state case which the Fifth Circuit said was controlling.

Our reason for referring to this case is to show that they apply the mere rule for determining jurisdictional amount which is not based upon the claim for relief asserted by the insurance company in their complaint.

But first of all, the record at page 43 of the Fifth Circuit’s opinion, they misstate the holding of the Booth case.

At page 43 of the record, the Fifth Circuit states that regardless of who brings the suit that the Supreme Court in Texas quite logically held that the amount in controversy is the amount of the claim.

With deference to the Fifth Circuit, this statement is totally incorrect, with one exception, I should add.

Booth held that the amount in controversy in a suit by employee that says that Board’s award was amount as presented in this Court petition without reference to what he had claimed before the Board.

Moreover, in suits by the insurance company says that the Board’s award where the employee has not claimed a fixed amount before the Industrial Accident Board, the amount in controversy under the state law is the amount of the Board’s award.

The Booth case at 132 Tex. 252 commented on and said their state rule for determining jurisdictional amount to rule it was implied in this case was mere logical rule in view of the other holdings that the amount in controversy is determined by a plan of court’s petition.

Now, again, considering what we consider to be the crux of the case upon the object of insurer’s claim for relief, the respondent, in his brief, takes the position at page 1, they’re seeking to be relieved of a claim liability of $14,035 asserted by court.

In a case, as he cites on page 89 are Declaratory Judgement Act cases.

We feel that the respondent’s position is basically trying to convert his action into a form of declaratory relief saying that he’s seeking to get rid of a $14,000 claim.

Our position and the reasons why we feel the plaintiff’s claim in this suit only involves $1050 or as follows.

First of all, the very statute which creates the state cause of action, Texas statute Article 8307, Section 5 gives the party a right to set aside the Board’s award.

It is not authorized declaratory relief.

Secondly, under the Texas statute case as construing the statute, the amount in controversy is not key to the claim before the Board with one exception with the amount involved in the court petition.

Moreover, the respondent’s pleadings in this very case, he asked if the Board’s award would be set aside.

He does not seek declaratory relief to avoid paying of $14,035 potential claim.

Moreover, the final reason why we feel that his claim only involves $1050 because it’s necessary for the employee to come in and counterclaim and when he comes in and counterclaims, the amount that he will recover will depend upon his counterclaim and not what he claimed before the Board.

John M. Harlan II:

Can I ask you a question?

In your suit (Inaudible)

William Vandercreek:

Yes, sir.

John M. Harlan II:

(Inaudible)

William Vandercreek:

No, it couldn’t.

They got in the federal court the same day that the Board’s award came down.

I’m afraid it has to go behind the record to explain what’s going on in those situations but their suit to set aside, the Board’s award was filed in federal court the same day that the Industrial Accident Board came down.

We then wanted the state court to file an action in state court.

We came back and file a motion to dismiss in federal court or subject to counterclaim.

The respondent also filed a plea in abatement to our state court action.

The plea in abatement is set out in Appendix C to our main brief.

His plea in abatement to prevent the workman from trying his case in state court was based on the fact that their prior filing of a suit in federal court, as this is going a turn into a raise to the courthouse.

The insurance company can beat the employee every time.

John M. Harlan II:

(Inaudible)

William Vandercreek:

The District — we do not urge the abstention doctrine because the District Court was under appealing — under the appealing by following the previous District Court opinion in National Surety Company versus Chamberlain that no federal jurisdiction exists.

The United States District Court for the Eastern District of Texas dismissed the suit for want of federal jurisdictional amount was that the Fifth Circuit reversed and reinstated it.

We have still been unable to get to trial in state court because of the plea in abatement.

Hugo L. Black:

Has Congress — any bill had been offered in Congress since this opinion came down in this connection?

William Vandercreek:

No, Your Honor.

The purpose of the legislation as set out in the Senate Report was to give the employee the choice of forms to equate this type of State Workmen’s Compensation Act like the Jones Act before the insurance company merely removed the federal court.

Now, still removing, they go in the federal court and then our position is they make them out in controversy not dependent on their cause of action but they pitch it to a potential counterclaim which may be asserted by employee.

Now, of course —

Hugo L. Black:

I understand that.

I —

William Vandercreek:

Yes, Your Honor.

Hugo L. Black:

— I did not make my question clear.

William Vandercreek:

I’m sorry.

Hugo L. Black:

The opinion of the Court of Appeals came down in February 22nd, 1960.

It’s over a year ago.

Has there been any effort made to get the bills, the law changed since that time?

William Vandercreek:

No, it has not, Your Honor.

We thought that the statute, as enacted, would accomplish the satisfactory purpose released the people who supported and thought it would.

And as you know, the Judicial Conference approved the prohibition of removal of jurisdiction, that’s set out in page 10A of appendix.

Now, I’m scarcely urging any estoppel on this Court but still, we don’t think the purpose of that legislation which is set out clearly in the Senate Report should be emasculated through a judicial decision.

Felix Frankfurter:

Am I right in recalling, I may well be wrong, that the Texas — that volume of the cases that got into the federal court from the awards of your Board was explicitly referred to in making the amendment, is that correct?

William Vandercreek:

Yes, that is absolutely correct, Your Honor.

Felix Frankfurter:

Have you got — have got — do you do you quote from that?

William Vandercreek:

I certainly do in the appendix to our main brief, Your Honor.

We set out the statistics and some highlights from that Report as Appendix A on page 1A and these statistics are set out on page 5A of our brief.

Felix Frankfurter:

I don’t care about the statistics.

What I want to know is whether Congress or the Report bringing in this — this limitation referred specifically to the clogging of the federal court in Texas by Workmen’s Compensation Act.

William Vandercreek:

Yes, Your Honor, referred both to Texas and also pointed out in the Senate Report that there’s some other States.

I believe I’ve mentioned New Mexico, Louisiana and one other State and where this problem of jurisdiction over State Workmen’s Compensation case has been clogging the federal doctrine.

The most acute problem is of course in the position of Texas.

Charles E. Whittaker:

The trouble is the uncertainty at least rises, does it not, from the fact that those references were all to the congestions caused by removals?

And Congress dealt in the 1958th Act only with the prohibition of the removal of such cases and did not close the gate against the bringing of plenary suits.

William Vandercreek:

That is true, Your Honor.

But Congress also increased the jurisdictional amount, as you recall, from $3000 to $10,000 in an effort to reduce diversity jurisdiction.

They prohibit removal expressly according to Senate Report to give the employee a choice.

But we oppose as insurance company coming in federal court basing the amount in controversy now upon the right to set aside $1000 award that fits to the potential counterclaim which the employee inserted against them.

They’re preventing the employee from going into state court which we feel the Senate Report clearly and expressly indicated.

William J. Brennan, Jr.:

Tell me, Mr. VanDercreek, if instead of a $10,050 award, you had a $10,500 award, would you have the like to stand on?

William Vandercreek:

I would still argue under the Senate Report that the federal court should abstain.

But also we’d have the problem there of whether or not this constitutions an original civil action as I already pointed out that says isn’t an appeal but it’s a trial de novo but nevertheless, it’s still (Voice Overlap) —

William J. Brennan, Jr.:

Well, I find the same jury on Texas Supreme Court.

Didn’t it say that the suit was set aside and award is in fact a suit not an appeal?

William Vandercreek:

Yes, Your Honor.

But it has this limitation because it is appeal de novo the cause of action tried on appeal must be the same thing as asserted below.

For example, in the Herd case which is decided in the record on page 44, the insurance company has the right to request the party to submit to an operation.

The Herd case is held because they did not make that request before the Board, that, therefore, it should not raise it for the first time on the appeal de novo because you were dealing with an appeal and is not purely a trial de novo.

William J. Brennan, Jr.:

(Voice Overlap) — appeal then isn’t it?

Well, tell me this though, I — you just said that even if it were a $10,500 award you’d still be here, and one of the reasons you suggest was that the Congress intended the District Courts to abstain exercise in jurisdiction even in those cases, is there any — any history to that effect?

William Vandercreek:

If I may, Your Honor, I’d like to rephrase.

I hope I did not give the Court erroneous impression.

William Vandercreek:

Congress, in its report, did not say that the federal court should abstain from exercising jurisdiction.

But I think the language is so clearly expressed in the Senate Report as to what they’re trying to accomplish as being completely circumvented by this type of action.

William J. Brennan, Jr.:

Well, tell me.

William Vandercreek:

I think it —

William J. Brennan, Jr.:

Was there any —

William Vandercreek:

— would be very proper to abstain.

William J. Brennan, Jr.:

— was there anything in the legislative history concerning the increase from $3000 to $10,000 which indicated that that increase was made in part to keep out of federal court’s original actions of this kind from Texas (Voice Overlap) —

William Vandercreek:

Yes, Your Honor, because it expressly states in the Report that one of the purposes of increasing jurisdictional amount was to avoid the federal courts from furthering away their time and trial of petty controversies.

Now, most of these cases, we cited —

William J. Brennan, Jr.:

Now, was there specific reference or expressed reference rather to the problem in Texas and Louisiana has one of the reasons why the amount was increased from $3000 to $10,000.

William Vandercreek:

No, there was not, you’re — under the jurisdictional amount requirement.

William J. Brennan, Jr.:

This — this is related — I mean, this table at page 5A of your appendix to your brief, is — is this only of cases — now, it’s not only a removed cases, is it?

It also has a table where — of original Act.

William Vandercreek:

That is correct, Your Honor.

William J. Brennan, Jr.:

Well, now, the — the prohibition against removal couldn’t have affected the original Act?

William Vandercreek:

Well, I don’t have any later statistics but I believe the administrative officer of United States courts will bear me out on this that there are very few cases now being filed as original actions in federal court after the prohibition of removal.

One of the reasons that the employees sometimes file original action to federal court because he knew in advance the insurance company was going to remove.

William J. Brennan, Jr.:

Oh, these original actions then are employees, I see.

William Vandercreek:

I believe it’s expressed as to who brought them there.

William J. Brennan, Jr.:

Well, the statistics don’t show that.

This indicates that the defendant most of the time brought the original action.(Voice Overlap) —

William Vandercreek:

That’s very true.

The employee — before the 1958 amendment, the employee was the one that most automatically to bring a suit to set aside the Board’s award.

And he could bring it under the decisions of that time either federal court or state court.

When he brought in state court, the insurance company would remove to federal court.

William J. Brennan, Jr.:

Well, I — I’m probably wrong.

Justice Stewart points out that — these figures at 5A, this indicates the insurance company was the defendant with 435 suits, the plaintiff with only 10, is that it?

William Vandercreek:

That is correct, Your Honor.

Charles E. Whittaker:

You (Voice Overlap) —

Felix Frankfurter:

(Voice Overlap) —

William Vandercreek:

Yes, Mr. Justice Frankfurter?

Felix Frankfurter:

I would like to ask you a few questions to — to disentangled things that I think are being mixed up.

No secret that I — I’m not a hot part of the diversity jurisdiction.

But while we’ve got it, I don’t think we can play ducks and drakes with them.

In the first place, when you say where you argue abstain that although their jurisdiction should have abstained, you must have in mind that this Court in Winter Haven decided just the opposite but the Court can’t refuse to entertain diversity jurisdiction because it seems desirable not to entertain it.

So, what you’re asking us if you talk about abstention would be to overrule Winter Haven.

That’s number one.

Number two, what I’d like to know is that when Congress talked about original suits in its report, withdrawing removal, did it mean by original suits, a suit like this in which there is a de novo proceeding, but in fact, you’re reviewing or going over the ground and indeed, could not begin a suit unless you first went to your Board?

I don’t know.

And that’s what I want to know both from you and from respondent’s counsel is whether on this Senate Committee, was there a Texas lawyer on the Senate Committee who knew the nice distinction that has been elucidated here, namely, that if a suit de novo in the sense that you can try out everything in the District Court but if the suit de novo which is conditioned on a prior administrative proceeding.

Now, all those things have been taken into account not all mixed up like a collage.

William Vandercreek:

With reference to your first question on the Winter Haven case, the only case which I could cite back would be Louisiana Power and Light Company versus City of Thibodaux, I certainly grant, Your Honor, that case can be distinguished from the facts in this particular proceeding.

So, it won’t be any doubt that our position is that there is no federal jurisdiction that the federal jurisdiction will now — is not present in this controversy.

And our abstention theory is purely an alternative and infringement fact, the position, Your Honor.

In the Senate Report, as I recall it, there was some comments on Workmen’s Compensation Act in which they point that in most States, it is so connected up with the administrative action that the courts do not have original jurisdiction.

In the Senate Report, there’s — we’re aware of the fact that they didn’t have an Industrial Accident Board in Texas, I believe, but they consider it to be an original civil action.

There has been no federal case to my knowledge which is expressly considered a problem of whether or not an appeal from the Texas Industrial Accident Board even though it’d be a trial de novo is an original action for purposes of federal jurisdiction.

Felix Frankfurter:

But what you are really urging, as I understand it, is although Congress specifically used the word “removal”, even what is normally so technical term as removed may, in the context of the whole history of this legislation on the report, have a broader meaning, namely, anything that get to the court after it had a beginning in the Workmen’s Compensation Board.

That’s really what you’re arguing, on that phase?

William Vandercreek:

Yes, I think that’s a fair statement —

Felix Frankfurter:

Alright.

William Vandercreek:

— Your Honor.

As I’ve mentioned, I’m sure without going to court, our position is that the respondent is going in — in federal court.

His cause of action must be based on his claim and not key to a potential counterclaim.

We feel that the — all decisions of this Court in determining the amount in controversy had based upon the plaintiff’s claim.

Felix Frankfurter:

But that’s a different — that’s a different thing.

But if you rely — if I may say so, you argue, in the first place, $1000 determines the amount in controversy.

William Vandercreek:

Yes, because that’s his cause of action.

Felix Frankfurter:

That’s his cause of action.

But you also argue on the other part of the 1958 amendment, namely, that although Congress said removal of Workmen’s Compensation cases, it used the term “removal” not with nicety with reference to Texas law and legislation but in the law in a looser sense anything that gets into court after it’s been — before Workmen’s Compensation Board.

William Vandercreek:

Well, there’s one thing that would handicap me in answering completely yes that — Your Honor.

The Senate Report says they want to give the employee the choice of form.

And I supposed under the Senate Report that they wanted to let the employee choose if you want to go on federal court or go in — in state court.

Felix Frankfurter:

Well, aren’t there some States in which the employee can go to the federal courts to begin with?

William Vandercreek:

Yes, the New Mexico, as I understand your —

Felix Frankfurter:

To begin with without going before the Board at all.

William Vandercreek:

The New Mexico and also, I believe, in Louisiana, but in New Mexico, there is no prior proceeding before the Board.

Felix Frankfurter:

So therefore — so therefore, the Senate report to that extent would not be empty — empty word because it could be absorbed by or be allocated to States in which that is true.

William Vandercreek:

Yes, that is true, Your Honor.

But the principal thrust, the Senate Report was concerned with the problem of Texas on our position —

Felix Frankfurter:

So therefore, I should think that works both ways I mean and the — the respondent will deal with it.

If its —

William Vandercreek:

Well, I assume he will.

Felix Frankfurter:

— principle is concerned with — with Texas, then presumably, it dealt with the whole Texas legislation and not playing these — these professional games.

William Vandercreek:

With reference to our position on the counterclaim, we’re relying Rule 12 (b) and 41 (c), the — previously been mentioned the employee has to file a counterclaim.

He can’t take a chance.

I’m trying to speculate what the outcome will be on its motion to dismiss.

There are two District Court cases which discussed where the Rule 12 (b) applies to defenses or other objections where there’s a counterclaim present.

One case is Hook versus — & Ackerman versus Hirsh, which is cited on the record page 45, contrary position which has held that Rule 12 (b) does apply to subject to counterclaim is not cited in the briefs is Keil Lock versus Earle Hardware, 16 F.R.D. 388 by Judge Walsh.

Earl Warren:

Mr. VanDercreek what is — what language in the legislative history more clearly than any other shows that the Congress had in mind not only removal but the filing of original actions?(Voice Overlap) —

William Vandercreek:

I would believe the appendix in page 6A and 7A which is an excerpt from the Senate Report reading from 7A it says, “This proposed legislation of conflicts is the same purpose and grants the same privilege to workmen who are entitled to compensation under State Compensation Act.”

That is the workman has asked and filed his case in either federal court or state court.

If he files in the state court, it is not removal to the federal court.

Now, if the respondent can come into federal court upon the cause of actions, the way he has asserted, it makes a complete nullity of this particular provision.

We say that Congress closed the backdoor of the federal courthouse.

He should not be able to get in the front door by manipulating the amount in controversy.

Felix Frankfurter:

May I ask this — I beg your pardon, sir.

Hugo L. Black:

No, I just thought — I just thought to ask you this question, did your argument mean that the plaintiff, in this particular case, does — can go into the federal court but the defendant cannot?

William Vandercreek:

We feel that the employee may go into federal court because his cause of action besides being right merely says, “I have Board’s award.”

He could state a claim for $14,035.

William Vandercreek:

On the other hand, we say that the only thing facing the insurance company is the $1050 award.Unless, he brings suit to set aside the Board’s award that $1050 award becomes binding upon both parties and then the next procedure is, no one gives notice of dissatisfaction within 20 days, the employee can then bring suit on $1050 award for penalty and for attorney’s fees but —

Hugo L. Black:

I understand your legal argument, but is the result, plaintiff does have — can go to federal court if it has jurisdiction while the defendant does not if it’s — unless its claim is moved in $10,000 award, award $10,000?

Felix Frankfurter:

And is it — if I may add, there, too, on the theory that it is a new suit.

That it’s a new suit not a removal.

What do you say even a removal suit can be brought transcend beyond — that you may even remove a non-new suit in the federal court despite this new legislation.

No, I think there could be any — any removal in reference to your question, Mr. Justice Black.

I would take this position on jurisdictional amount.

If the Board awards more than $10,000, then for purposes of jurisdictional amount when the insurance company brings the motion to set aside the Board’s award, the jurisdictional amount will be present.

On the other hand, any time the Board issues an award for less than $10,000, it is our position the suit to set aside the Board’s award which is the only right created under state statute possessed by insurance company.

In all those cases, there is no federal jurisdiction.

Now, this will knock out —

Hugo L. Black:

For the — for the defendant, but there is for the plaintiff.

William Vandercreek:

Because he’s asserting a —

Hugo L. Black:

(Voice Overlap) — because — is that the result of it?

William Vandercreek:

It could very well be.

Yes, Your Honor.

Hugo L. Black:

Well, can it — can it be anything else?

I’m trying to find out if it can.

I want to find out —

William Vandercreek:

No, I — I don’t mean to —

Hugo L. Black:

(Voice Overlap) —

William Vandercreek:

— rest and see me evade the question.

No, sir, that’s absolutely true.

If our position is sustained, the employee will have an option to go on federal court or state court and the insurance company because well, over 99% of awards are below $10,000 will not be able to go in federal court to set aside the award.

Felix Frankfurter:

But you —

Charles E. Whittaker:

(Inaudible) the District Court of the United States.

William Vandercreek:

Yes, Your Honor.

That’s —

Charles E. Whittaker:

And that’s all what it is.

William Vandercreek:

Precisely, because the insurance company is really the true defendant.

William Vandercreek:

And when they prohibited the defendant’s right to remove, they’ve tossed him out in going to the federal court.

Charles E. Whittaker:

(Inaudible) that’s what Congress did.

William Vandercreek:

Yes, Your Honor.

That’s precisely true.

Felix Frankfurter:

But — but in — what you say — when you say that’s all it did, let’s see the implication.

That means that a suit began in the federal court is not a removal.

So it can’t be deemed a removal when the employer fixed to go into the federal court.

You can’t have it both ways.

And therefore, you can — the employee can go into the federal court if it’s more than $10,000 because you say that isn’t a removal.

That’s an original suit under Texas law.

The employee — if — if the employer goes into the federal court on an award less than $10,000 for the employee, you’ll resist that because it doesn’t meet the $10,000 requirement, is that right?

William Vandercreek:

Yes, Your Honor.

They remove —

Felix Frankfurter:

But you’ve also said to me earlier, you replied earlier that if you go into the Federal District Court on an award less than $10,000 and say nothing and not object to the jurisdiction, forget about it whether the court should raise it, say nothing.

You can counterclaim after the suit has begun for an amount less than $10,000, is that correct?

William Vandercreek:

That is absolutely correct, Your Honor.

Felix Frankfurter:

Well, then you can get in to the District Court then — then the litigation would be for more than $10,000 if it’s potentially more than $10,000.

William Vandercreek:

Well, our position to that, Your Honor, is that in St. Paul Mercury case, the expression was used that the amount in controversy, as set forth by the plaintiff’s complaint, is controlling unless it appears to legal certainty unless it is involved.

Felix Frankfurter:

Now, we’re here — the petition is here because we’re trying to understand this and see whether St. Paul or any other cases are correct.

I’m trying to find out what’s this — all this means with all my hostility to diversity jurisdiction.

William Vandercreek:

Let me make this point, if I may then, Your Honor.

The removal statute, they would file a suit in actual state court and then it would remove from state court to federal court.

It was not removed directly from the Industrial Accident Board into the federal court.

William J. Brennan, Jr.:

And for that reason, I gather, you’re not making any argument to us that this judicial proceeding is, in effect, the removal of the State Board’s administrative (Inaudible), is that correct?

William Vandercreek:

That’s correct.

I’m not making (Voice Overlap) —

William J. Brennan, Jr.:

In other words, you’re resting entirely on this, not on the section which — of the new legislation in which bars removal to the federal court.

But on the increase of jurisdiction of $10,000, your argument is that this complaint determines the jurisdictional amount of not less than $10,000.

William Vandercreek:

Yes, Your Honor.

William J. Brennan, Jr.:

Is that it?

William Vandercreek:

Then — that’s why we make that position because we’re taking another position toward the purpose of the statute prohibiting removal.

We also —

Charles E. Whittaker:

(Inaudible)

William Vandercreek:

Yes.

He says — he says he doesn’t even owe $1050.

The Board gave $1050.

He says that this is too much.

We want this $1050 award thrown out.

That is the language which I believe is used in the pleadings as filed by the insurance company in this suit.

Charles E. Whittaker:

(Inaudible)

William Vandercreek:

No, I would say not, Your Honor.

I would say this that at the time he filed the suit, he doesn’t know whether the employees are going to counterclaim for anything or not.

The employee may be perfectly satisfied.

Charles E. Whittaker:

(Inaudible)

William Vandercreek:

Yes, that’s right.

But the employee could come back and counterclaim for $2000 in a suit by $1050 and then you have a dispute involving $2000 which will be litigated in the Federal District Court even though the jurisdictional amount requirement says $10,000.

Earl Warren:

Mr. Cobb.

Howell Cobb:

May it please the Court.

The contention of the respondent here is that when Horton filed his claim before the — before the Industrial Accident Board of Texas, he claimed that the respondent owed him $14,035.

The Board did not agree with it.

The Texas Supreme Court has held that when a — injured workman may — what would — would ordinarily call a plaintiff with the employee claims that the insurance company owes him compensation, if the amount he claims before that Board sets the pecuniary value of the matter at issue.

That was squarely held in this Booth versus Texas Employers.

It — it held there that the amount — when the claim with the Board shows the amount claimed in dollars and cents or by a statement or facts which the amount can definitely be determined in the award of the Board is less than the amount of the claim, then the amount shown by the claim is the amount in controversy.

As Booth versus Texas Employers, it’s a Supreme Court of Texas case, our position is that Horton’s rights such he has to compensation are set up by the Texas — the Texas Workmen’s Compensation Act and what the Supreme Court says he is entitled to is what the value in controversy or the — subject to controversy here.

That because the Supreme Court of Texas holds this $14,000, that is the liability that we are being exposed to.

That when the Board awards any award against us, that the amount of our potential liability is that $14,000 and our suit to set aside the award is what it’s called.

It’s not an appeal.

The statutes call it a suit to set aside the award.

But what is really involved is what Horton is claiming.

We —

William J. Brennan, Jr.:

May I ask you —

Howell Cobb:

Yes, sir.

William J. Brennan, Jr.:

— Mr. Cobb, when one goes in your administrative agency with a claim for workmen’s compensation, is it often that the claimant asks for less than the $14,035?

Howell Cobb:

Yes, sir.

On the number of specific injuries and things of that sort it’s —

William J. Brennan, Jr.:

What’s the kind of case where the — I — I’ve — we’ve — Mr. Tonahill said that $14,035 is the maximum that may be —

Howell Cobb:

Yes, sir.

William J. Brennan, Jr.:

— obtained under this statute?

Howell Cobb:

Yes, sir.

William J. Brennan, Jr.:

Well, what kind of case is that?

Howell Cobb:

That is total and permanent disability.

William J. Brennan, Jr.:

Total permanent.

Howell Cobb:

Yes, sir.

William J. Brennan, Jr.:

But if the one removed was a finger or an arm or a leg, it might be for some less than that?

Howell Cobb:

Oh, yes, sir.

The — the only — the — there are only two awards under the Texas Compensation Act that can be in excess of $10,000.

That’s a death action and total and permanent disability.

Now, anything less than that would be less than — award less than $10,000, any claim of any other injuries.

William J. Brennan, Jr.:

So that you — I see.

Except on those two instances then, you would have no basis for going into the federal court on your theory that it’s the amount of claim —

Howell Cobb:

That — that is true.

William J. Brennan, Jr.:

— rather than the amount of award.

Howell Cobb:

Only in a death action in which the award is 12 — over $12,000 and award of total and permanent disability where it claimed a total and permanent disability.

Those are the only two.

All other injuries would — would result in a monetary value (Voice Overlap) —

William J. Brennan, Jr.:

For any large amount of cases where either death or there were no statistics?

Howell Cobb:

I do not know.

I imagine that the death case is very small in – in consideration of all of the claims made, and I imagine the total permanent claims and awards are less than loss of fingers, arm or legs or that sort.

Earl Warren:

What if the petitioner had filed a counterclaim for $9999 instead of the $14,000, would you be here?

Howell Cobb:

Yes, sir.

Howell Cobb:

I — I think so because my —

Earl Warren:

Do you think it will make no difference?

Howell Cobb:

On the original action, no, sir.

I don’t think so.

Earl Warren:

In the act — your action —

Howell Cobb:

That —

Earl Warren:

— in your action in the federal court, was it filed counterclaim for $9999?

Would the District Court, the United States District Court have jurisdiction?

Howell Cobb:

I think so, Your Honor, because the Texas statute says that if the final order or award of the Board is against the association which they mean the insurance carrier, then the association and not the employer shall bring suit to set aside and set final ruling and decision if it desires.

And the court shall, in either event, determine the issues in such cause instead of the Board upon trial de novo and the burden of proof shall rest upon the party claiming compensation.

So whichever side takes a compensation claim to the court, the burden of proof is on the employee.

Now —

Earl Warren:

Well, I know but it’s under the — that would bring — put it under the — the jurisdictional amount for diversity jurisdiction.

Howell Cobb:

Well, I — I don’t think so, if Your Honor please, because the — under the — the interpretation of the Texas statute, what is involved is what the claimant claims he is entitled to under the claim filed with the Board.

He and either party appealed the burden of proof is still on the employee to maintain that claim.

Felix Frankfurter:

Can a — can a claimant under a compensatory statute cut down the amount of recovery below the statutory maximum?

Howell Cobb:

Yes, sir.

Felix Frankfurter:

Well, why can’t — if he does that, then why isn’t the Chief Justice’s question controlling.

Howell Cobb:

Because —

Felix Frankfurter:

(Voice Overlap) — says the statute enables me if this is tried out against $14,000 but I think an honest man or my lawyer having shaking me down on what really happened to me, can only claim $8000.

Is he allowed to do that?

Howell Cobb:

In — in this case, he could be, yes, sir.

If — if this claim —

Felix Frankfurter:

In any event, (Inaudible) case put by the Chief Justice.

Howell Cobb:

Well, he would asked about lawsuit, and I — I feel —

Felix Frankfurter:

No, no, he — put your specific case.

Howell Cobb:

Alright, sir, if the claim that he made was vague and indefinite before the Board and could not be determined, yes, sir.

We would not be here.

But in a case where the Supreme Court says that the amount in controversy between the parties of Supreme Court of Texas says that the amount in controversy between the party is what the employee claims before the Board.

Felix Frankfurter:

But — but can’t the man cut down his claims?

Howell Cobb:

Yes, sir.

Felix Frankfurter:

Is your — are you so humanistic in Texas that if appellant’s (Inaudible) only to the tune of $9000, the court says “Oh, no, but you may get $14,000?”

I believe that’s the thing about Texas but —

Howell Cobb:

Sir?

Felix Frankfurter:

— not that.[Laughter]

Howell Cobb:

Sir?

Charles E. Whittaker:

Isn’t this the answer to that?

Until he does file a counterclaim for an amount less than the $10,000 in the federal court under the Booth case, the amount made in the claim must stand for the amount, is —

Howell Cobb:

Yes.

Charles E. Whittaker:

— that not right?

Howell Cobb:

Yes, sir and he can — and he can go to file on that.

He —

Felix Frankfurter:

But Mr. Cobb, the Chief Justice gave a supposition which negative to that.

Earl Warren:

Exactly.

Howell Cobb:

Well, the — maybe I miss the point completely.

I’m sorry, Your Honor.

Felix Frankfurter:

I must say — I don’t think you fully comprehended the Chief Justice’s question.

Howell Cobb:

Then — then I —

Felix Frankfurter:

He does precisely what Justice Whittaker just put in legal terms, namely, he formally said, “My counterclaim will be only for $9999.”

Howell Cobb:

Then after — then after that point, if he abandons the rest of his claim, then we would not be here.

Earl Warren:

Well, that’s — that’s the — that’s the point that remained.

Howell Cobb:

Alright, sir.

Earl Warren:

The court wouldn’t have jurisdiction if all he was seeking in — in that court was less than $10,000 and that court would not have jurisdiction.

Howell Cobb:

But the — at — at that time yes, sir.

But when it was originally brought and when the liability was in excess of $10,000, I think that they had jurisdiction up until the time the counterclaim for less than that was filed.

Earl Warren:

But that would divest the — the court of jurisdiction.

Howell Cobb:

I think it would be a judicial mission that he wouldn’t entitle to more than the — the Supreme — than the jurisdictional amount.

Earl Warren:

Alright.

Now, let me ask you one other question please.

Suppose that the petitioner have — have beat the respondent to the courts, I suppose you’ve gotten to the county courthouse before you got to the federal court, would your — would the District Court have any jurisdiction then?

Howell Cobb:

The — the United States District Court?

Earl Warren:

Yes.

Howell Cobb:

No, sir.

We — we could not remove the case.

Earl Warren:

You couldn’t remove.

Howell Cobb:

And — and second reason is that when the award is appealed from, it’s vacated and then there’s nothing left for us to find and file a lawsuit in the federal court.

He is there — he is there, and we’ve prevented from removal, and there is no award to appeal from.

Earl Warren:

So the — so you think it’s just a question of — of a race between the courthouse and the federal courts to determine jurisdiction in this manner?

Howell Cobb:

No, I don’t think it’s necessarily a race, Your Honor.

Earl Warren:

Well —

Howell Cobb:

I don’t —

Earl Warren:

— you went off and passed — you went off —

Howell Cobb:

Yes, sir.

Earl Warren:

— passed the very same day, and I —

Howell Cobb:

Yes, sir.

Earl Warren:

— presume you did it for purpose.

Howell Cobb:

Yes, sir.

Earl Warren:

And that was to beat them to the courthouse, right?

Howell Cobb:

Well, yes, sir.

Earl Warren:

Alright.[Laughter]

Now — now, let me ask you — let me ask you this.

Do you think that Congress when it passed the 1958 law intended to create a situation of that kind?

Howell Cobb:

They could have prevented it, and I don’t — I don’t feel that they did prevent it.

They could have said or file.

Earl Warren:

But you — would you say that — that the intention of Congress was, at that condition, should prevail?

Howell Cobb:

I do not know, sir.

I doubt that they would want to create a situation where there would be races to the courthouse.

However — nevertheless, if we are entitled to file a direct action in the — in the federal court regardless of whether they are entitled to file one in the state court, I don’t think the time element is necessarily controlling if we are, in fact, entitled under the diversity jurisdiction to file a lawsuit.

Earl Warren:

Yes, but we are — we are, are we not, trying to find out what the intention of Congress was in that 1958 Act?

Howell Cobb:

Yes, sir.

Howell Cobb:

And I believe that they knew at the time that it was enacted that they were about 1100 of these lawsuits removed every year and about 900 of them file directly.

And they did not bar the filing of any of them.

And the employee can still, if he desires to, file 900 of these cases in Texas every year.

Earl Warren:

How many of those 900 were filed by the insurance companies?

Howell Cobb:

I think 28.

Earl Warren:

28.

Howell Cobb:

I’m sorry, sir, 25 out of 982.

25 were filled by the insurance company.

Earl Warren:

But Congress said that it — it intended to permit employees to continue to have that freedom of choice, isn’t it?

Howell Cobb:

Yes, sir, but — yes, sir.

They also knew at the same time that there were 25 out of these 2000 lawsuits that were being filed by insurance companies as plaintiffs to appeal —

Earl Warren:

But they —

Howell Cobb:

— from (Voice Overlap) —

Earl Warren:

— but they didn’t say that — they didn’t say that the insurance company should have the same right as the employee did.

Howell Cobb:

No, sir.

They didn’t say that they should but they recognized that they did previously have the right and then they didn’t subsequently bar them by saying, “A defendant or an insurer cannot remove a case” and they could have said, “or filed.”

But they knew at same time that 25 out of these 2000 lawsuits were being filled as plaintiffs by — directed by insurance companies.

The — the award of the Board or to talk about an appeal this is, in fact, a — a new lawsuit, it’s an original action.

The proceed — any of the proceedings before the Industrial Accident Board even the award of the Board is not admissible in evidence, it’s not reviewed and to introduce the award as reversible error.

It is strictly a new lawsuit.

It is a lawsuit in which —

Felix Frankfurter:

Please state that again.

Howell Cobb:

The award of the Industrial Accident Board or any of the proceedings before the Industrial Accident Board are not admissible in this lawsuit, it’s filed in which the —

Felix Frankfurter:

Not by statutory —

Howell Cobb:

Statutory —

Felix Frankfurter:

— limitation.

Howell Cobb:

— statutory and by case law and — and in any introduction of the award of the Board.

Felix Frankfurter:

And yet, you must — one must go to the Board first, isn’t right?

Howell Cobb:

Yes, sir.

One must file a claim before the Board.

Howell Cobb:

And then if the award is even introduced in evidence, its reversible error to introduce that award.

So that the — the —

Potter Stewart:

Now, this is a jury — a jury trial?

Howell Cobb:

Yes, sir, on all issues of fact.

Potter Stewart:

In the federal court, I — you need a unanimous jury.

Howell Cobb:

Yes, sir.

Potter Stewart:

Is this also true in the state court?

Howell Cobb:

It’s half true, the house, its 10-to-2.

I believe now, sir.

Potter Stewart:

10 out of the 12.

Howell Cobb:

Yes, sir.

Potter Stewart:

Of course, in — in the — the lower house in the municipal court or whatever issues, you just have a jury of six, in that State?

Howell Cobb:

In — in two courts, yes, sir, the county court and the justice court.

Potter Stewart:

Assuming you go on to the State District Court, you don’t enter unanimously (Voice Overlap) —

Howell Cobb:

Well, you — I think you still don’t do until the State Senate passes it which they haven’t done yet.

It passed the House but not the Senate.

Hugo L. Black:

Can’t you now (Inaudible)

Howell Cobb:

Well, it’s — it is still unanimous —

(Voice Overlap) —

Howell Cobb:

— Your Honor, but there is a bill pending at the House to pass to make it 10-to-2.

William J. Brennan, Jr.:

This would be candidly in all jury trial, civil juries.

Howell Cobb:

Yes, sir.

Felix Frankfurter:

Mr. Cobb.

Howell Cobb:

Yes, sir.

Felix Frankfurter:

I’m trying to understand the mysteries of Texas law administration.

You just said that — that after there is an award, no matter what the amount, and then the case gets into the court either state or federal, the fact of the amount of the award can’t be disclosed in the — in the trial.

Howell Cobb:

That’s right, sir.

Felix Frankfurter:

Well, then, how can — how can the court know that it’s only for $1000?

Howell Cobb:

Well, may be — may —

Felix Frankfurter:

I mean what —

Howell Cobb:

— it cannot be disclosed to the jury is what I mean.

Of course, it’s —

Felix Frankfurter:

So it is an item that cannot be made part of the litigation —

Howell Cobb:

That —

Felix Frankfurter:

— for which — for which the suit is brought, is that right?

Howell Cobb:

That is right.

And yet, it is a necessary step in the bringing of this suit.

In other words, it has to be an award until there is no award —

Felix Frankfurter:

It has to be an award but it can be $5 or $15 or $14,000.

Howell Cobb:

Yes, sir.

Felix Frankfurter:

But that fact is not made part of the record of the proceedings —

Howell Cobb:

No, sir.

Felix Frankfurter:

— of the — of the substantive cause of action.

Howell Cobb:

No, sir.

The amount of the award is neither pled nor approved.

The only thing that’s pled or approved is an award was made.

The amount of it is not admissible in evidence and if the — if one party or the other files a pleading, it can be stating that the award was zero or $14,000.

Felix Frankfurter:

Where is — where is your pleading by which you began the suit in the federal court?

What did you say about the addendum of the award?

Howell Cobb:

I said that — that he was asserting a claim against us that we desired to set aside — it was a formal as — its on page 1 of the record.

In page 3, in — at paragraph (4), I say that the amount of — in controversy as claimed by the defendant in which the defendant, which was the employee, claimed before the Board was $14,000 which is a claimed liability against us.

Felix Frankfurter:

So that on your — on your complaint, you simply said this is a suit under Texas statute and diversity jurisdiction.

Howell Cobb:

Yes sir.

Felix Frankfurter:

And the Texas statute allows a recovery of $14,000 on concept that the jury would bring in $14,000.

Howell Cobb:

Yes, sir.

Because when — when I appealed, the burden of proof is still on him and he is allowed to — I mean he has burden of going forward and he is still allowed to recover anything that he is claiming.

And the award is not even admissible, it’s not — if it’s pled, it can be stricken.

Felix Frankfurter:

But if the Chief Justice’s supposition were then taking up by the motion to dismiss or whatever it is in which they say we disavow an amount beyond $9,000, then on the face of the pleading, and you don’t contradict — you — whether — that would be controlling, wouldn’t be?

That’d be a judicial admission.

Howell Cobb:

Yes, sir.

Howell Cobb:

Once he comes in and answers and said, “No, we don’t claim $14,000.”

Felix Frankfurter:

$14,000.

He claimed $9,000, then you say the court is —

Howell Cobb:

I think —

Felix Frankfurter:

— is ousted of jurisdiction.

Howell Cobb:

Would — would that be — would not — would that be the case in a — in a suit that I’m brining for an excess of $10,000?

Or —

Felix Frankfurter:

Pardon me.

Howell Cobb:

Well, could you not judicially — a plaintiff judicially admit himself out of federal jurisdiction?

Felix Frankfurter:

Or — or — yes, certainly, he could.

Forget — let’s forget about workmen’s compensation or any diversity case on the contract.

Howell Cobb:

Yes, sir.

Felix Frankfurter:

You say that the contract cost for whatever it is, $25,000 adding up to what we’re recovering — potentially covered $25,000.

And the defendant said, “I now solemnly say that the outmost of any jury could be simply be fined as $9000 and that’s all I’m going to ask the jury.”

Of course, he’d be thrown out, wouldn’t it?

Howell Cobb:

I think it would be judicial admission if —

Felix Frankfurter:

Yes.

Howell Cobb:

— the person claiming — claiming the amount of $14,000 later says “No, I’m —

Felix Frankfurter:

And you say there’s no such things are placed here?

Howell Cobb:

No, sir.

He — he cross it for $14,035 just to see a claime before the Industrial Accident Board.

And six days later, they filed a suit in Orange County, Texas for $14,000 for the same amount.

Hugo L. Black:

Did you mean —

Howell Cobb:

So —

Hugo L. Black:

— if he sued for $25,000 — I’m not quite sure about that, sued for $25,000 for personal injury, after he filed the suit, he comes in and says “I am not going to reduce this.

I’m — I only want to get $9,000.”

Could he have it removed back to the state court then or have it dismiss for want of jurisdiction?

I’m not sure about that (Voice Overlap) —

Howell Cobb:

I’m — I’m not sure either, Your Honor.

Hugo L. Black:

I have had some cases whether they denied me that right (Inaudible) [Laughs] for that.

Howell Cobb:

I know in —

Felix Frankfurter:

I don’t see how you can keep them in the federal court.

How can you keep them if you say I now bind myself to not want more than $9000?

How could you keep them in the federal court?

Howell Cobb:

I — I don’t know.

I know this is true in land cases, Your Honor, that if —

Felix Frankfurter:

How you could keep them there?

Hugo L. Black:

I don’t how he could.

Charles E. Whittaker:

(Voice Overlap) —

Hugo L. Black:

I remember they did (Inaudible)

Felix Frankfurter:

(Inaudible)

Hugo L. Black:

I believe (Inaudible)

Charles E. Whittaker:

Many situations try to remove cases from federal court.

Plaintiff didn’t like it, files a remittitur, attempts to dismiss, you can’t do that with files in remittitur claim in less than the — the jurisdictional amount but the cases say that once the jurisdiction is vested properly, it’s there to the end —

Howell Cobb:

Then I —

Charles E. Whittaker:

— is that right?

Howell Cobb:

— then I was wrong when I answered the Chief Justice —

Felix Frankfurter:

I don’t he would —

Howell Cobb:

— that counterclaim —

Hugo L. Black:

My practise —

Howell Cobb:

— if that is correct.

Hugo L. Black:

— my practice was in those and I had to do it a number of times.

To dismiss that suit, you pay the cost and then claim — they all claim $2999.99.

Howell Cobb:

Yes.

Hugo L. Black:

But I — I’ve done it many times.

Several time not many times because I didn’t make that.

It takes time.

I hope.[Laughter]

Earl Warren:

Well, Mr. Cobb —

Howell Cobb:

Sir.

Earl Warren:

I don’t quite understand because you say this is an original action, a new — a new action.

It’s not an appeal from the Industrial Accident Board.

It’s a new — it’s a new action.

Now, you file an action to — to review this order of $1050 and you do allege in your complaint that such an order was made —

Howell Cobb:

Yes.

Earl Warren:

— to that extent, do you not?

Howell Cobb:

Yes, sir.

It is —

Earl Warren:

Yes.

Howell Cobb:

— jurisdictional —

Earl Warren:

Yes.

Howell Cobb:

— but then an order has been made.

I —

Earl Warren:

Yes.

Howell Cobb:

— describe the amount.

Earl Warren:

Yes.

And by describing the amount.

Howell Cobb:

Yes, sir.

Earl Warren:

Alright.

Now, you file a — you file a — a new suit in the — in the federal court.

And — is the issue set until you know what the counterclaim will be in that court?

And if he files $9,999, isn’t that the thing that determines it?

Howell Cobb:

Actually, I don’t think so, Your Honor, because of — of the holding in the Supreme Court of Texas that the amount involved — that really what this is — what do you call —

Earl Warren:

Yes.

Howell Cobb:

— an appeal is a right of the employee to compensation.

Earl Warren:

Yes.

Howell Cobb:

And what sets his right to how much compensation is the claim that he files.

And then regardless of which party appeals, I mean, it — it doesn’t matter —

Earl Warren:

Now, you’re — you’re using —

Howell Cobb:

— upon suit —

Earl Warren:

— your appeal to help you where —

Howell Cobb:

Alright, sir.

Earl Warren:

— formally, you were saying this without —

Howell Cobb:

Well —

Earl Warren:

— an independent action to —

Howell Cobb:

Well, actually, sir —

Earl Warren:

— to help your position.

Howell Cobb:

— we — we all — I mean, the lawyers, they call it an appeal.

Actually, the statute never talks of an appeal.

It calls of — before a suit.

We —

Earl Warren:

Yes.

Howell Cobb:

— but you have to give notice not of — of appeal but of intention to rather a dissatisfaction with the awards.

But we —

Earl Warren:

Yes.

Howell Cobb:

— call it by shorthand appeals.

Earl Warren:

Yes.

Howell Cobb:

It is a — it is a suit and when such a suit is brought to set aside, as the statute calls, the award of the — or the ruling of the Board, the burden of proof is — I mean, on the claimant, that is the employee, regardless of who gets in as a nominal plaintiff would offend.

The burden of proof is on the claimant to assert and prove his claim.

And as the Supreme Court of Texas has stated, the amount of the claim go on the compensation that he is entitled to in such a suit regardless of who files the suit is how much he claim before that Board.

If he claimed it less, then he would be entitled to less in such a suit.

Earl Warren:

He will be entitled what?

Howell Cobb:

He would not be entitled to anymore than he claimed before the Industrial Accident Board.

If he claims —

Earl Warren:

Yes.

Howell Cobb:

— a loss of — loss of use of a little finger, he could not then come in and — and claim total permanent disability —

Earl Warren:

Yes.

Howell Cobb:

— on such an appeal.

But when he claims total permanent disability or $14,000 before the Board, and some award is entered and a suit to set it aside has made, then the burden is on — on the plaintiff regardless of who brings that suit in court to prove his right to compensation and the amount that he is entitled to recover, he is set by his — set and fixed by the filing of his claim before that Board.

And the award never thereafter enters to it.

Howell Cobb:

That’s why I feel that the petitioner’s position that — that we’re merely seeking to escape liability of $1050 award is — is not true because we are seeking to escape responsibility for the claim or so much is he entitled to $14,000 because once this suit is brought, that award has no place in it.

Earl Warren:

Yes.

Well, I can — I can see how — how perhaps the man wouldn’t be permitted to reduce his — his claim in a lawsuit in order to prevent removal where he had once claimed more than $10,000.But here, you say that it — it’s not removal, it’s a brand new suit.

Howell Cobb:

Yes, sir.

Earl Warren:

And there, shouldn’t he be entitled to claim as much less than the original claim as he wants to claim?

Howell Cobb:

No more than it — it’s still a granting suit when the employee brings it in federal court which he is allowed to do.

And if he brings it for $14,000 and we join issue on that.

Earl Warren:

Yes.

Howell Cobb:

And then he later attempts and say, “I made a mistake in — in claiming $14,000.

I now want to claim $9000 or $5000.

I do not think that that would oust jurisdiction of the federal court.

I think —

Earl Warren:

Oh, no —

Howell Cobb:

— it’s the same situation here, where we are seeking to relieve ourselves of liability not for $1000 but $14,000.

Now, he comes in and says, “No, I — I really only want $9999.”

I think you would have to dismiss or counterclaim or — we would have to — how would that be?

He would or he’d just be there.

[Laughter] He would just be there.

Earl Warren:

Be there but —

Howell Cobb:

Yes, sir.

Earl Warren:

— he would be there for less than the jurisdiction amount.

Howell Cobb:

Well, I make it a one — if once he filed his claim, he attaches this to what the issue between theses two parties.

Earl Warren:

Yes.

I — I think I have your —

Howell Cobb:

Yes, sir.

Earl Warren:

— point, Mr. — I won’t take anymore of your time.

Tom C. Clark:

Now if he increase the amount of $15,000.

Howell Cobb:

Yes, $14,050 would —

Tom C. Clark:

Yes.

Howell Cobb:

But —

Tom C. Clark:

How about your relief?

You are asking that the award be set aside.

Is that your reason before this Board?

Howell Cobb:

Well, not only the award but that he take nothing by his claim, then he take nothing.

Tom C. Clark:

Your — your liability was $1050 and your prayer was that the relief — the award be set aside.

Howell Cobb:

Yes, sir.

Tom C. Clark:

(Inaudible) somewhat $1050 or $1435.

Howell Cobb:

Yes, sir.

And that he take — and — and plaintiff further phrased that defendant take nothing out and from the plaintiff.

William J. Brennan, Jr.:

Well, that’s — that’s —

Tom C. Clark:

Well, that —

Howell Cobb:

[Laughs]

William J. Brennan, Jr.:

— obviously follows that the award set aside, isn’t it?

Howell Cobb:

The award could be set aside and he could —

William J. Brennan, Jr.:

I know, but you haven’t vacated, set aside, voided and —

Howell Cobb:

Yes, often not.

William J. Brennan, Jr.:

— declared to be at most further force and effect.

I can’t imagine.

If you got that and that certainly takes nothing.

Howell Cobb:

Well, if it — he is still entitled to recover some amount of money under his claim, more or less than the award, the award is just a jurisdictional step in — in the filing of the lawsuit just like the occurrence of the accident as a jurisdictional step.

William J. Brennan, Jr.:

Well, what happens in your state practice if — if he is satisfied with the Board’s award and the carrier is not, and you take an appeal to carry or place an appeal to the state court, does this reopen the whole amount more than the $1050 (Voice Overlap) —

Howell Cobb:

Yes, sir.

Up to the amount that he may claim.

William J. Brennan, Jr.:

Even though he offers no — nothing more than the evidence that was often before the Board, yet if they come along, the jury comes along with $5000 instead of $1050, this is the risk you take, is it not?

Howell Cobb:

Yes, sir.

Tom C. Clark:

He is bound by the claim.

Howell Cobb:

He is bound by the claim that he files but not by the evidence the order — award —

Tom C. Clark:

Yes.

Howell Cobb:

— of the Board but by the claim that he filed.

And since he is bound by it, we feel that that’s what attaches the amount in — between the two courts.

Tom C. Clark:

The claim here was $14,035.

Howell Cobb:

Yes, sir.

It was total permanent, $14,035.

And our alternative position, we think that jurisdiction attached with the filing of the petition but in the event it didn’t, he affirmatively cross-action for that amount of money calling it subject to dismiss but he sought relief to the Court not for any lesser amount than what he claimed before the Board and claimed in a subsequent suit in the state court.

Earl Warren:

May — may I ask, Mr. Cobb, I promise you I wouldn’t ask you anymore questions —

Howell Cobb:

Alright.

Earl Warren:

— but I just want to — I just want to —

Howell Cobb:

I hope —

Earl Warren:

— get this in my mind.

Suppose you file this suit in the — in the state court and suppose no counterclaim was filed, what would happen?

Howell Cobb:

When we tried it with, as I understand it, that — Your Honor as far as I know this never happen but — because once — one of these insurers’ appeals, a cross-action is then filed.

But if that happen, as I understand it, the claim would be litigated and the burden of proof would be on the — the employee to establish the extent and duration of his interest.

That is my understanding of it.

But the form of —

Earl Warren:

Well, it’s conceivable of the man might be satisfied with the award if —

Howell Cobb:

I would —

Earl Warren:

— that was given to him and might not feel it necessary or to file a counterclaim.

He just — he just say — not file any.

Now, what would that do about it?

Would — would he — would they still be opened to —

Howell Cobb:

I think in trying —

Earl Warren:

— to get $14,000?

Howell Cobb:

If they lose it, I think so, sir.

Earl Warren:

I beg your pardon?

Howell Cobb:

I think if they loss it, they would be.

Earl Warren:

In a lawsuit, they would be?

Howell Cobb:

I think so if he claim that.

Earl Warren:

In the — if he claimed it originally before the Board.

Howell Cobb:

I think so and —

Earl Warren:

Yes.

Howell Cobb:

— then a suit bring it aside was — was brought.

I think so.

As a practical manner, they always file a cross-action.

Earl Warren:

Yes, well, now, let’s take it in your — in — in this case, in the — in the federal court.

Then — if he haven’t filed the $14,000 counterclaim, would he still had been entitled to $14,000 in the federal court if the facts had warranted it?

Howell Cobb:

I think so.

Yes, sir.

Earl Warren:

You do.

I — I just don’t know.

I have no idea that —

Howell Cobb:

Because — because he claimed that same total permanent disability before the State Board, and that is exactly what we were seeking to relieve our liability act.

Charles E. Whittaker:

Well, if I understand it, if it’s a trial de novo in either court, then all is open.

Howell Cobb:

Yes, sir.

Charles E. Whittaker:

And whatever amount, if any, the evidence sustained is the judgment.

Howell Cobb:

Yes, sir.

Charles E. Whittaker:

Isn’t that right?

Howell Cobb:

Yes, sir.

And the Board’s award has nothing to do with the —

Charles E. Whittaker:

So it could be all away from nothing up to the amount stated in the claim of $14,000.

Howell Cobb:

Yes, sir.

Charles E. Whittaker:

Is that right?

Howell Cobb:

Regardless of who appealed.

Charles E. Whittaker:

In either court?

Howell Cobb:

Yes, sir, state or federal.

Yes, sir.

Charles E. Whittaker:

And this could be so whether the redress was sought, the suit we brought either by the claimant or by the employer.

Howell Cobb:

That’s my understanding of it because of the — the whole purpose of the suit, so-called, to set aside the award is to review how much compensation the claimant is entitled to within the scope of the claim that he made.

Charles E. Whittaker:

Well, if that is not so, it’s not a de novo proceeding.

Howell Cobb:

That is right, sir.

And it is completely de novo.

Howell Cobb:

For those — those reasons and further of the alternative reason that he affirmatively sought $14,000 in his counterclaim, we feel that the decision below should be affirmed.

Earl Warren:

Mr. VanDercreek.

William Vandercreek:

We have just one comment to make and reply, Your Honor.

You ask where there are any cases where the employee did not file a counterclaim.

There’s one cited in our brief, in our reply brief on page 2.

It is Morris versus Maryland Casualty Company 130 S.W.2d 1080.

In that case, the employee did not file a counterclaim, he claimed that the court didn’t have — didn’t have — state court did not have jurisdiction.

The court held that jurisdiction was present and he loss out entirely because it’s necessary for the employee to come in and counterclaim.

The mere filing of the suit by insurance company to set aside the award has the effect of terminating that award.

He must appeal from the final award.

Now, all these rules concerning the Texas (Voice Overlap) —

Earl Warren:

So under that case — under that case, he must file a counterclaim for anything he expects to get, is that right?

William Vandercreek:

If he wants to get any compensation, he is going to have to file some sort of counterclaim, that is correct, Your Honor.

William J. Brennan, Jr.:

Do you mean get any compensation or anything in excess of the award?

William Vandercreek:

Under Texas’ practices theory will be to actually file a — a counterclaim.

In federal practice, he would probably — he never says —

William J. Brennan, Jr.:

Oh, what happened in this case —

William Vandercreek:

— entitled to the Board’s award.

William J. Brennan, Jr.:

— what happened in this case that you cited this truly well (Voice Overlap) —

William Vandercreek:

In the Morris case —

William J. Brennan, Jr.:

Yes.

William Vandercreek:

— the Board awarded, as I recall, around $300.

The suit was brought in the county court by insurance company to set aside the Board’s award.

The employee moved to dismiss on grounds that his claim involved more than $300 and that should have brought in the State District Court.

The case held and since he had not claimed the specified amount before the Industrial Accident Board, just file the mere claim that the Texas rule in suits — in that instance, of suits to — by insurers to set aside the Board’s award that the amount in controversy was the amount of the award.

They held that the county court had jurisdiction and they also held that the employee because he failed to file a counterclaim would take nothing.

The — all the rules applicable to the —

William J. Brennan, Jr.:

I don’t follow this — take nothing, why would take nothing?

Not even the $300?

William Vandercreek:

He ain’t going to think, Your Honor, because when the insurance company came in to set aside the Board’s award unless he comes in and stands on his two feet and presents his claim, he’s all through.

William J. Brennan, Jr.:

And — and he wasn’t allowed to present his — his claim (Voice Overlap) —

William Vandercreek:

Well, he just moved to dismiss for want of jurisdiction.

And they said — held that since he failed to file a counterclaim, it was just flock as far as the employee was concern.

He was not giving the option of going back in and filing a counterclaim as he attempted to —

William J. Brennan, Jr.:

You mean he was not allowed to offer his evidence in the county court?

William Vandercreek:

That is true.

William J. Brennan, Jr.:

And this because he had not filed a counterclaim, is that it?

William Vandercreek:

Yes.

He had merely moved to dismiss for want of jurisdiction.

Potter Stewart:

So won by default so to speak, is that it?

William Vandercreek:

Won by default because his motion to dismiss for want of jurisdiction is bad court rule in motion to dismiss want of jurisdiction and holding there was jurisdiction.

He chose to rely on his motion of no jurisdiction.

He lost and he said in the appellate court, “We’re not going to send it back for retrial or permitting to amend.”

William J. Brennan, Jr.:

Because he has not filed the counterclaim.

William Vandercreek:

That is precisely correct, Your Honor.

Tom C. Clark:

(Inaudible)

William Vandercreek:

It’s Morris versus Maryland Casualty Company, 130 S.W.2d 1080.

It cites in the reliance upon the Booth case.

The Booth case is the Texas case which sets out the various rules and steps and appeals from the Board in amount in controversy.

William J. Brennan, Jr.:

May I ask you, Mr. VanDercreek, before you sit down?

I understood Mr. Cobb to say that the number of — of petitions, if that’s the right style for compensation in which something in excess of $10,000 is sought is a small portion of the total number compensation claims, this is — excluding death actions.

William Vandercreek:

No, I was — as a matter of fact, I would say that most of the petitions filed with the Board would probably be for — well, let me say I don’t know first of all.

But by and large, the attorneys who practice in the workmen’s comp — in Texas usually are trying to file an action for total and permanent disability.

Now, even though the person just lost his little finger, he can say besides claiming for loss of the finger, which is specified amount, he can also say that the loss of his finger affected his entire body and now he’s totally and permanently disabled.

To protect themselves, they were quite often automatically file a maximum, they don’t — total and permanent.

They don’t have to claim permanent and partial.

William J. Brennan, Jr.:

Now, is there also a practice in that stating any amount in the petition?

William Vandercreek:

Yes, there is.

Sometimes the workman will just write in a letter requesting a claim where he does not specify any amount before the Board.

The Texas rule for the term jurisdiction and a suit by insurance company is the amount of the Board’s award.

William Vandercreek:

This is all — I mean, all the Texas rules are summarized in the Booth case.

The Fifth Circuit made, in this representation saying regardless who brings a suit, it’s the amount in controversy, it’s the amount employee claim before the Board.

That is not what the Booth case held.

It held in a suit by employee to set aside the Board’s award.

It was not his claim to avoid a privilege in his court petition.

Earl Warren:

Well, then, in the Texas — in the Texas courts, could a man say, “I — I lost my finger, and I’m therefore permanently and entirely incapacitated,” and — without — without specifying any amount of — of damages can then get an award?

William Vandercreek:

Yes, he could.

He could file —

Earl Warren:

And as I understood Mr. Cobb that in those circumstances, if the award was less than the $10,000, the federal court would not have jurisdiction.

Did — did — I misunderstood you, did I?

So don’t — don’t bother.

If I did misunderstand you, that’s alright.

Howell Cobb:

(Inaudible)

Earl Warren:

Yes.

You could go.

You may ask.

Howell Cobb:

I — I meant the claim amount there if, for specific injury, let anything less than total and permanent disability or death.

In other words, any claims may, or any specific injury, such as the loss of a leg or —

Earl Warren:

Yes.

Howell Cobb:

Thank you.

Earl Warren:

Anything?

And — and there is no permanent and — and total disability claimed.

Howell Cobb:

Sir?

Earl Warren:

And no total and permanent disability is claimed.

Howell Cobb:

Yes, sir.

He’s claiming the loss of a leg which is $7000 that is the maximum recovery.

Earl Warren:

Yes.

Did he —

William Vandercreek:

But he claims the loss of a leg, he also claimed total and permanent —

Earl Warren:

Yes.

William Vandercreek:

— before the Board.

Felix Frankfurter:

Before you sit down, Mr. VenDercreek.

I’d like to ask this question.

In — what is on the plaintiff’s original complaint, the insurance case, it says the result — the — the claim the sum of $14,000.

When your motion to dismiss, you say that the award of $1050, what I want to know is would that statement of the award find any place if the case went to trial either in the state or the federal court?

William Vandercreek:

The award which — which, itself, is — supersedes the administrative claim is, in itself, set aside by the filing of the suit.

When you file a suit to set aside the Board’s award —

Felix Frankfurter:

Would the fact — I didn’t make my question clear.

Would the fact that there was an award in amount of $1050, he allowed to appear in the litigation even in the state or federal court.

William Vandercreek:

No, Your Honor.

Mr. Cobb gave absolutely —

Felix Frankfurter:

Alright.

William Vandercreek:

— the correct answer —

William J. Brennan, Jr.:

They don’t (Voice Overlap) —

William Vandercreek:

— neither with the claim filed before the Board.

But you have to put —

William J. Brennan, Jr.:

(Voice Overlap) — pleadings to the jury, I gather in your —

William Vandercreek:

Not and then ask could you — it’s jurisdictional of the award and the claim, a matter which is explained in the Booth, and you do have to put in your pleadings and as he did, I believe, it’s on page — top of page 3 of the record, asked for it to be set aside.

Felix Frankfurter:

But the fact of the amount would not appear — would have to be kept out of the litigation in the court.

William Vandercreek:

Yes, he cannot tell the jury, “You got an award for such and such.”

It goes to the court and not to the jury.

Earl Warren:

Very well.