Lake Coal Co. v. Roberts & Schaeffer Co.

PETITIONER:Lake Coal Co.
RESPONDENT:Roberts & Schaeffer Co.
LOCATION:Southhampton County Circuit Court

DOCKET NO.: 84-1240
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Sixth Circuit

CITATION: 474 US 120 (1985)
ARGUED: Oct 15, 1985
DECIDED: Dec 03, 1985

ADVOCATES:
Cleon Kilmer Combs – on behalf of the Respondent
Ronald Glen Polly – on behalf of the Petitioner

Facts of the case

Question

Audio Transcription for Oral Argument – October 15, 1985 in Lake Coal Co. v. Roberts & Schaeffer Co.

Warren E. Burger:

Mr. Polly?

Ronald Glen Polly:

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

The issue in this matter is whether exceptional circumstances exist to justify the stay, referring to the current state action in this pure diversity action.

In the San Carlos Apache case, the dismissal was upheld because the state’s suits were adequate to quantify the rights, water rights of the Indians.

Number two, they were carrying amendment policies irrelevant; number three, the state expertise and administrative machinery is adequate and set up.

The infancy of the federal suits, particularly the judicial bias against piecemeal litigation and convenience to the parties involving duplication of issues and effort.

The reasoning mentioned there to some great extent was that the concurrent federal proceedings as duplicative and wasteful, generating additional litigation through inconsistent disposition of property.

And, number two, the concurrent proceedings creates a serious potential for spawning an unseemly and destructive waste to see which forum can resolve the same issues first prejudicial to the possibility of recent decision-making by either forum.

In the Moses Cone Hospital case, the stay reversal was affirmed because the piecemeal litigation was not avoided as to the architect in the state court.

The priority measured by progress in the suits was not in favor of stay.

The federal law was the rule of decision on the merits and the state court action was inadequate to protect the rights.

The Court–

Sandra Day O’Connor:

Mr. Polly, what has happened to the state court action now.

It proceeded I understood.

Ronald Glen Polly:

–The state court action is set for trial November 4.

Sandra Day O’Connor:

I see.

Ronald Glen Polly:

The court was guided in the Moses Cone case by the federal policy and law to not delay arbitration under the Federal Arbitration Act.

The court noted specifically that vexatious or reactive nature of suits may influence the decision as to whether to defer to the concurrent state action.

This occurred not only in the Moses Cone case in the Court of Appeals, but also in the Calvert case and was mentioned by this Court as having considerable merit.

In the Colorado River case, the dismissal was upheld because the McCarran Amendment federal policy to avoid piecemeal litigation of water rights in a river system.

Number two, the absence of proceedings beyond the complaint; number three, particularly the extensive involvement of state water rights involving numerous defendants and the distance between state court and Denver and the Division Seven location of the size of the water right; and number five, the existing participation of U.S. in other similar state proceedings.

There, the particular language relating to the basis for justifying the stay derives.

The court said the issue must be decided on the basis of wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.

The court noted the virtual unflagging obligation to exercise jurisdiction.

The court also noted that the reasons of wise judicial administration are more limited and exceptional and the court indicated that there must be a weighing of factors with only the clearest of justifications.

The scales were described as consider the obligation to exercise as opposed to factors counseling against exercise.

The factors in this case are, number one, the priority of assuming jurisdiction of property, the question of in rem application.

This question has never been specifically an issue.

Roberts & Schaefer says the state action is in personam and I simply point out that that was deliberately so by Roberts Schaefer.

Byron R. White:

What do you think the federal court should have done if Roberts had to come to federal court first?

Byron R. White:

It started the suit, started the litigation, and Lake Coal counterclaimed in the federal court and then Lake Coal went to the state court and started this suit?

Ronald Glen Polly:

Justice White, I believe that the cases indicate that it would not matter if the same circumstances exist.

Byron R. White:

After the suit starts in the federal court?

Ronald Glen Polly:

Right.

Byron R. White:

Lake Coal starts a case of its own in a state court and then moves to federal court to dismiss.

Should the federal court grant that?

Ronald Glen Polly:

The existence of the state action… It is assumed that Lake would file the state action as well after the federal action.

So, the order in which the two were filed does not determine–

Byron R. White:

So, in my example you would be arguing for the same result, mainly the federal court should dismiss the action.

Ronald Glen Polly:

–So long as… Yes, Mr. Justice White.

All right–

Ronald Glen Polly:

So long as the piecemeal litigation situation exists in the state court where the subcontractors are parties and they are not parties in the federal court action.

I pointed out that the in rem question–

Sandra Day O’Connor:

–Well, what if there weren’t subcontractors who were parties to the state action and the federal court action is filed first?

Ronald Glen Polly:

–I think in that event we do not have piecemeal litigation questions and in all likelihood the state action… the federal action would stand.

Sandra Day O’Connor:

Even though only state issues were involved?

Ronald Glen Polly:

Yes.

Byron R. White:

So, in this case, except for the other parties that were in the state suit, if they hadn’t been made parties in the state suit, but the federal court case was started later, you would think the federal court case could go ahead, is that right?

Ronald Glen Polly:

Well, I think there is argument under the cases for the position that the federal court under the test, because state law applies in all the other factors indicate in favor of stay.

I think that it could be decided in that manner in the discretion of the court.

But–

Sandra Day O’Connor:

Do you think the removal power is a factor to be considered whether or not an action in a state court could be removed to the federal court?

Ronald Glen Polly:

–I think yes.

I think one of the cases indicated that lower court cases… In fact, where removal was possible it was more indicated that the federal action should be stayed, because there, instead of filing a separate suit, removal could have been achieved.

Sandra Day O’Connor:

Where the subcontractors are parties in a state court action in this case no removal is possible under the federal removal statute, is that right?

Ronald Glen Polly:

That is correct, Justice O’Connor.

The point is the R&S attempted removal and the federal court remanded the case to the state court and then six months after the state court action was stopped the second federal court action was filed by Roberts & Schaefer.

There is indication here of defensive tactical maneuvers on the part of Roberts & Schaefer.

Occupy Lake with the removal, then when the removal fails, attempt a second action.

I started to point out before the questions were asked that with respect to in rem Roberts & Schaefer deliberately did not file its lien in its counterclaim in the state court and did not amend that counterclaim until after the district judge had ruled.

William H. Rehnquist:

Mr. Polly, I take it from one of your answers to one of Justice White’s questions… tell me if I am wrong in saying I take it that you would agree that there is a fair amount of discretion in the district court.

That he might decide to stay the federal action, he might not decide to stay the federal action and conceivably he could be affirmed by the court of appeals, whichever thing he did.

Ronald Glen Polly:

I think that is the case, Justice Rehnquist.

Yes, I think that is the case.

The indication–

Byron R. White:

Well, if the district court had refused to dismiss the case… He dismissed, didn’t he?

Ronald Glen Polly:

–Yes, he stayed.

Byron R. White:

Yes, he stayed.

He didn’t dismiss.

Ronald Glen Polly:

No.

Byron R. White:

He stayed.

Ronald Glen Polly:

He stayed.

Byron R. White:

What if he had refused to stay?

Ronald Glen Polly:

I think that would have been subject to appeal as well.

Byron R. White:

Well, I know, but I thought you… You mean, he would not have had the discretion to entertain the suit.

Ronald Glen Polly:

No.

Byron R. White:

He would have had to stay.

Ronald Glen Polly:

In my opinion, yes, he had to stay, because of the circumstances of the piecemeal litigation in the state court.

Byron R. White:

So, his discretion would not have extended so far as to… as not to stay in this case.

Ronald Glen Polly:

No, no.

I mean, that is very clear under these cases.

The question, as I understood from Justice Rehnquist, was setting aside the piecemeal litigation question did the federal court have discretion without piecemeal litigation.

That is the question I thought was being asked.

Byron R. White:

Right.

Ronald Glen Polly:

Now, when you say what indication is there of vexation and react to tactical defense of maneuvers, it is quite obvious that when the in rem part of this case was deliberately avoided, although that question never was specifically in point in this case, because the counterclaim in the state court did not incorporate the lien that was incorporated in the federal action.

But, certainly as soon as the district judge made his decision, the counterclaim was amended by Roberts & Schaefer to include the lien.

The judge made the decision in July and immediately after he made the decision in July the amended counterclaim was filed.

I don’t think my opposition will deny that.

But, nevertheless, that is not the basis for the district judge’s decision.

The second issue is whether there was any inconvenience of the federal forum and we don’t indicate any inconvenience in this case.

Ronald Glen Polly:

The federal forum is in the adjoining county, a similar mountain county.

In fact, where the Hatfield and McCoy feud that Mr. Combs speaks about in his brief occurred.

William H. Rehnquist:

Where is the site of the nearest federal courthouse?

Ronald Glen Polly:

Pikeville, Pikeville, Kentucky.

Pike County which is just adjacent and in as deep of the mountains as Letcher County is.

What Roberts & Schaefer expected to achieve in its claim of… late claim of saying, well, we have the basis here of imagined prejudice in the local court.

The trial in the federal court would be the same with respect to the jury.

William H. Rehnquist:

I talked to one of your colleagues in Kentucky who had argued Thermtron here and asked him, after Thermtron was decided, why he was interested in getting into a federal court rather than the Kentucky state court and he said in a federal court you can draw your jurors from a large part of the state, whereas if you are a state court, it is just the particular county you are in.

Ronald Glen Polly:

Well, yes, particular county in state court but in a large part of the same locale in federal court, in other words, come from other counties.

As I understood it, Roberts & Schaefer’s comments about the Hatfield and McCoy feud was almost as if he is going to get a different make up in his jury down at federal court and that is not true.

The third question is the priority of the progress of the suits and, of course, that is not at issue in this case at the time the decision was made by the district court, but we do know now that the progress of the state suit is relevant in terms of practical application in this case.

Harry A. Blackmun:

When is that suit set for trial?

Ronald Glen Polly:

November 4th of this year.

The primary… as I have indicated, the primary basis for upholding the stay in this case is the avoidance of piecemeal litigation.

Clearly the subcontractors are defendants in the state action and not the federal action.

There are issues that require the same proof as would be in the federal action.

The federal action would in no wise dispose of that question with respect to the subcontractors and the same proof would have to be introduced again by the same parties and cause obviously piecemeal litigation.

Harry A. Blackmun:

Mr. Polly, suppose you proceed with the state litigation next month and it goes to judgment.

Does this case become moot?

Ronald Glen Polly:

Justice Blackmun, in my opinion it does.

The state action would be res judicata so long as… if this case were affirmed, if the Roberts & Schaefer attorney could not obtain quick action by the district judge and attempt to get an adjudication there on a summary judgment motion, if summary judgment was rendered before November 4, then the state action would be moot.

William H. Rehnquist:

But, certainly there is an appeal from the Circuit Court of Letcher County within the Kentucky judicial system.

Ronald Glen Polly:

Oh, yes.

Oh, yes, in the sense of res judicata assuming that the state court action is upheld in the appeal.

I mean, we were discussing this.

As I understood it, Justice Rehnquist, that the state court action is decided.

To me, that mean final… If it is finally decided, it is res judicata.

Of course, if the trial verdict was appealed and reversed, then I think certainly there is no question but the decision of this Court is very relevant and in no wise moot.

John Paul Stevens:

Which would be res judicata, if the Kentucky trial proceedings ended first, but the federal court went ahead… say they vacated the stay or something… and the federal that upheld the process ran its course first.

Would the federal case be res judicata?

John Paul Stevens:

I don’t know how fast your Kentucky appellate process works, but assume it is slower than the federal.

Ronald Glen Polly:

Right.

In my opinion, Justice Stevens, once a verdict is rendered in the state court, that judgment becomes res judicata with respect to the federal proceedings and would change the federal proceedings.

John Paul Stevens:

Even though it is on appeal?

Ronald Glen Polly:

The federal proceedings would not even be subject to appeal at that–

John Paul Stevens:

No, no, no.

Even if the state court judgment is not final in the sense that there is review pending in the appellate court of Kentucky.

Ronald Glen Polly:

–I think, yes.

The res judicata effect of the state court judgment coming first would affect the federal proceedings in terms of a stay at that point based on the decision there.

The Court of Appeals in this case held that piecemeal litigation is not involved because Lake has shown no arguably valid claim against the non-signatory subcontractors.

I point out to you that that is not the issue.

That issue was never argued in any of the briefs, was never presented, no cases were cited by either side, and the Court of Appeals simply got the wrong issue.

The point is that the case exists in state court against the subcontractors in the first place.

It is not a question of whether you have an arguably valid claim against the subcontractors, but whether or not that claim exists in state court.

And, in the second place, in our petition for reconsideration, we pointed out to the Court that certainly under state law we have an arguably valid claim against the subcontractors based on third-party beneficiary law and the alternative cause of action in the state court of negligence of the subcontractors.

My point was how… when the judge asked me the question about the arguably valid claim, my statement was how can you imagine that a subcontractor can come in and make a mess of a wash plant, construct it defectively, and not have liability to the people that own the wash plant and is having the work done.

And, that is the cause of action.

But, that is not the point.

That question was raised on the removal action and was turned down by the district judge, exhaustively briefed.

The point in the removal action was an issue but not on the issue of whether or not there were exceptional circumstances to justify the stay.

The Court of Appeals further says that piecemeal litigation will not be avoided because R&S could file separate actions against the subcontractors.

And, R&S adds that Lake can file third-party complaint in federal action against the subcontractors.

I point out to you that these are imaginary cases as opposed to the reality of the present circumstances.

It is not in this case which cases may be filed, but rather what cases have been filed.

And, on the basis of the cases that exist, this Court should make a decision with respect to piecemeal litigation whether it satisfactorily justifies the stay in view of all the other circumstances.

Byron R. White:

Well, you lost on the piecemeal litigation factor in the Court of Appeals.

Ronald Glen Polly:

That is correct.

Byron R. White:

They said they didn’t think there would be piecemeal litigation.

Ronald Glen Polly:

No.

Byron R. White:

Do we have to second guess that?

Ronald Glen Polly:

No, Justice White.

I don’t think that is what the Court of Appeals said.

The Court of Appeals said, number one, that piecemeal litigation is not involved because Lake does not have an arguably valid claim in state court against the subcontractors.

If we have an arguably valid claim or if the arguably valid claim is not relevant, then piecemeal litigation… that is the basis for the Court of Appeals.

They didn’t say piecemeal litigation didn’t occur under the present circumstances if we have an arguably valid claim.

Byron R. White:

Well, I know, but they said you didn’t.

Ronald Glen Polly:

Have an arguably valid claim?

Byron R. White:

Yes.

Do we have to second guess that?

Ronald Glen Polly:

No.

My point is that that is not the issue.

The issue is that we do have a case in state court; and, number two–

Byron R. White:

I know.

The issue is… One of the factors you consider is whether piecemeal litigation will be created.

Ronald Glen Polly:

–Exactly.

And, we have a case–

Byron R. White:

And, the Court of Appeals concluded that, no, it would not.

Ronald Glen Polly:

–The Court of Appeals concluded that we did not have an arguably valid case.

Byron R. White:

And, therefore, there is no piecemeal litigation.

Ronald Glen Polly:

Exactly.

And, my statement to you is that that ruling by the Court of Appeals was not the issue.

The issue is whether or not the case exists, not whether we have an arguably valid claim.

The case does exist.

Byron R. White:

I don’t… If the Court of Appeals had thought piecemeal litigation would occur, they might have stayed the case.

Ronald Glen Polly:

Yes.

Byron R. White:

But, they didn’t.

Ronald Glen Polly:

They didn’t.

But, the reasoning they gave as to saying that piecemeal litigation did not occur were not at issue.

Sandra Day O’Connor:

Well, Mr. Polly, can a plaintiff in a state court action just name anyone who is a resident of the state, however fraudulently and thereby defeat the right of someone to remove to federal court?

Ronald Glen Polly:

No, Justice O’Connor.

Ronald Glen Polly:

That is not the point.

The point is that we have the case in state court in the first place and it is not–

Sandra Day O’Connor:

Why can’t the district court look at whether there is a fraudulent joinder of someone in the state court action?

Ronald Glen Polly:

–I pointed out, Justice O’Connor, that the district judge did do that on removal.

But, the question was not raised in the issue of stay.

And, the Court of Appeals sidetracked to that issue when it was not even in the case and there was no briefing on it.

To just come out of the blue and say you don’t have a valid cause of action–

William H. Rehnquist:

Are you saying that the Court of Appeals took a contrary view to the district court when the district court remanded or what were the arguments made at the district court as to the grounds for removal and remanding?

Was the fraudulent joinder point argued there?

Ronald Glen Polly:

–Yes, the fraudulent joinder, that we had no valid cause of action.

William H. Rehnquist:

The district court remanded.

Ronald Glen Polly:

Absolutely.

Said that we did have an arguably valid claim and that that was for decision by the state court.

And, my point has been that that is not an issue in the Court of Appeals on the stay.

The rule of decision on the merits, federal law as opposed to state law, obviously state law is strictly involved.

And, the adequacy of the state action to protect the rights, there is no specific indication of prejudice here.

Certainly the state action under all the cases is adequate to protect the rights and that matter was not at issue.

The district court’s findings for the stay were that in fairness to the parties and to avoid multiplicity of judicial time and effort and piecemeal litigation the stay was entered.

The district court also found that there was no good cause shown to litigate in both courts, simply saying, as in all these cases, that there were no countervailing reasons to outweigh proceeding, adjudicating, as opposed to the stay.

In other words, that there were no countervailing reasons such as federal question involved such as in the Moses Cone case where the Arbitration Act demonstrated a federal policy that guided the decision.

Mr. Chief Justice, with your permission, I reserve my remaining time for rebuttal.

Warren E. Burger:

Very well.

Mr. Combs?

Cleon Kilmer Combs:

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

At the outset, I would like to make it clear that Roberts & Schaefer initially perceived its right to a federal forum when this action was first initiated in the state court.

We have pursued that view diligently right up to this Court.

We sought to remove for the very reason Mr. Polly mentioned.

We certainly did not want to leave any stone unturned and weigh that right and we did not.

Upon remand we immediately followed this Court’s admonition in Colorado River.

Moses H. Cone instituted a separate federal action to exercise our right to a federal forum which we conceived was granted to us by the Congress.

Sandra Day O’Connor:

Mr. Combs, aren’t the concerns that are reflected by diversity jurisdiction satisfied fully by the option of removing a case that has been filed in a state court to a federal court under the removal power of the statute, and if it turns out that removal is not possible because of the absence of diversity, complete diversity in the state case, do you think Congress still intended that the defendant who can’t remove should be able to exercise diversity jurisdiction in the federal court?

Cleon Kilmer Combs:

I certainly do, Your Honor, and I think this Court has so held in a number of cases.

I don’t know that the factual situation is true, but–

Sandra Day O’Connor:

I am not sure that this Court has ruled on that actually.

Cleon Kilmer Combs:

–I don’t know of any instance where that particular factual situation has existed, but the rule of concurrent jurisdiction, the pending of parallel suits in state and federal court, has been in existence for further back than I would like to concede.

Sandra Day O’Connor:

But, shouldn’t we look at what Congress has addressed in the framework of the removal power and the diversity jurisdiction statute, look at them together, because Congress has spoken to both issues and don’t they relate to each other?

Cleon Kilmer Combs:

I don’t think so, Your Honor, because, as we pointed out a moment ago, lawyers are a rather ingenious group and many procedural situations can be developed to defeat diversity jurisdiction as was true in this case.

And, the mere defeat of removal jurisdiction does not mean that the Congress did not intend for that participant, that party, that citizens of another state, not to have a right to a federal forum.

Sandra Day O’Connor:

Well, what if removal had been possible under the circumstances of the case?

Suppose no subcontractors had been named, but instead of removing the action to the nearest federal court in Kentucky, you had instead instituted a new diversity action in the federal court in Illinois to be closer to your corporate headquarters.

Would that have been all right too in your view?

Cleon Kilmer Combs:

There we have the Microsoft case I believe it is and certainly… I think the action in Illinois would be permissible as concurrent federal jurisdiction, but we have a tool to deal with that and that is the right to transfer that case to the most convenient forum which I think it would be its return to Pikeville.

I would see no reason to dismiss or even stay that case, but just simply transfer it to Pikeville.

At least that would be my thinking on it, Your Honor.

Now, the problem that I am having, the initial problem, and it is a problem that bothers the Court of Appeals, was the shifting of the burden.

The district court imposed upon Roberts & Schaefer the burden of showing good cause for exercising a right to a federal forum granted by the Congress.

And, in our view, a right to a federal forum granted by the Congress, federal jurisdiction, is not subject to any presumption which must be overcome.

The Court of Appeals so held and we suggest that that is the proper rule.

John Paul Stevens:

Mr. Combs, can I ask you a question that related to what Justice O’Connor was asking you?

You contend, as I understand, and you persuaded the Court of Appeals, that there was no arguably valid claim involving the subcontractors.

Cleon Kilmer Combs:

Yes, we do, Your Honor.

John Paul Stevens:

Now, if you had been successful in persuading the district court of that effect at the time of your effort to remove, would you not have been successful in removing?

Cleon Kilmer Combs:

We think so, Your Honor.

That is why we asserted it.

John Paul Stevens:

Then, does it not appear that the effect of what you have done is to get appellate review of the district court’s… as you would say… erroneous decision on removal?

Cleon Kilmer Combs:

I suggest not, Your Honor, because if there is parallel federal jurisdiction, concurrent jurisdiction… This case is a case which was instituted in the federal court under a statute granting us a federal forum and the appeal is from that corner and not from the other.

John Paul Stevens:

But, is it not true that… not probable at least that if the Court of Appeals had agreed with the district court’s remand order and thought that these parties were genuine… there was a genuine separate lawsuit against the two subcontractors it would have decided the appeal differently?

It seems to me the whole question of where you litigate turns on the bona fides of the claims against the subcontractors.

Cleon Kilmer Combs:

I don’t really think it does, Your Honor, because certainly the question of the subcontractors is… The main thrust of this case and this claim really is this contract–

John Paul Stevens:

Right.

Cleon Kilmer Combs:

–between these two parties that we have before us here today.

And, the question is Roberts & Schaefer’s right to a federal forum by virtue of diversity to determine that controversy.

And, I don’t think that… What you are referring to, I take it, is whether that is sufficient exceptional circumstances.

I submit that it is not.

John Paul Stevens:

Well, what is troubling me… It seems to me that Congress is giving us conflicting signals.

On one hand, they say you have got a right to a federal forum in a diversity case, on the other hand, they say if you try to remove and you fail you don’t get any appeal from an order denying removal or remanding the case.

Cleon Kilmer Combs:

That would be the effect.

Actually, if that were held, then we would be denied on both ends of the spectrum.

We would be denied relief both ways and it would have been ridiculous for me to attempt to remove.

I should have just gone ahead and immediately filed.

John Paul Stevens:

Well, it wouldn’t have been ridiculous, but it would, in effect, say that a decision on a question like this is lodged in the district court and not normally going to be reviewable and if you happen to lose maybe a different district judge would have decided it otherwise.

In other words, I think there is a close question on your removal.

It is not perfectly clear he was right in denying you removal.

Cleon Kilmer Combs:

I think that is true, Your Honor, and I would like to point out that the heavy burden was on Lake Coal Company.

If they wanted a stay, a heavy burden was to come in and establish in the record that this would cause multiplicity of litigation.

And, the record is virtually silent on that.

As a matter of fact, it is silent.

That burden was not carried.

And, the Court of Appeals recognized that and spoke to it and held expressly that it was not met.

And, we think the Court of Appeals put that to rest at that point.

There is no claim of abstention here.

We don’t have any Berford claim, we don’t have any Younger claim.

We do have an exceptional circumstances claim.

The in personam was addressed, but actually what was addressed is merely left, and as we know, the point where a federal court draws the line and refuses to act in a race case is where the race… the property is in the actual possession of a state court and is being administered by the state court.

Certainly, under those circumstances, a federal court should and will abstain.

Byron R. White:

What if the stay in the federal court had not been granted?

I take it your position would be that the two suits should go on simultaneously.

Cleon Kilmer Combs:

Yes, Your Honor.

Byron R. White:

Litigating the same issue in each court and whoever… whichever court arrived at judgment first would then conclude the other.

Cleon Kilmer Combs:

You would have the proverbial race to the judgment.

Cleon Kilmer Combs:

We had a race to the courthouse and I lost.

I guess we would have a race to the judgment.

William H. Rehnquist:

Well, does that seem to you like a sensible way to run a judicial system?

Cleon Kilmer Combs:

No, Your Honor, but we do have a federal system and–

William H. Rehnquist:

If you say no, it is not a sensible way to run a judicial system, then there must be something wrong with the doctrines you urging… and say that is what should have happened.

Cleon Kilmer Combs:

–I think the compelling issue is whether a litigant is entitled to a federal forum.

William H. Rehnquist:

You say he is entitled to a federal forum come hell or high water regardless of totally duplicative litigation in the state court.

Cleon Kilmer Combs:

I suggest, Your Honor, that is a political argument as most of these things are and really addresses itself to the Congress.

William H. Rehnquist:

And, you think Congress would have been deeply pleased with this spectacle of litigation, identical litigation, running its course both in the Kentucky state court and in the federal district court.

Cleon Kilmer Combs:

I would hope the Congress would not be pleased, Your Honor, but then my remedy… the only remedy I know is to write my congressman because the jurisdiction of the federal courts is vested exclusively in the Congress.

I would like to speak to that later.

Sandra Day O’Connor:

Don’t you think the congressman might respond and tell you we have spoken and we have written the removal statute and it is linked to the diversity statute and we have denied the right of appeal from an order under the removal power and that is it, we have spoken?

Now, you courts have to implement these statutes together and make them work.

Cleon Kilmer Combs:

Your Honor, I don’t read the diversity… The original diversity statute and the removal of diversity statute as being… You can choose one or the other–

Sandra Day O’Connor:

Well, read them together.

I mean, is there anything wrong with that and with the argument that, indeed, Congress has a right to speak and it did speak.

Cleon Kilmer Combs:

–I am sorry, Your Honor, I am having trouble following your last question.

Sandra Day O’Connor:

Well, it was more a comment than a question.

Thank you.

Cleon Kilmer Combs:

I am suggesting that the Congress has said you may remove if it is removable.

If it is not, and you have diversity jurisdiction otherwise, you may institute a separate parallel proceeding.

That is what we have done.

And, we suggest that once the Congress determines that jurisdiction does exist, that there is the often spoken, unflagging obligation to proceed and we think that is what should have happened in this case.

Now, I would like to address for a moment, if I may, the exceptional circumstances situation.

And, I am troubled by exceptional circumstances because they are in the eye of the beholder.

It all depends on whose circumstances they are and it becomes entangled and enmeshed with discretion.

And, I recognize for a lawyer to address a court and suggest that there is no discretion is hazardous at best.

But, I suggest that constitutionally there is no discretion with regard to jurisdiction.

Discretion is an innate part of jurisdiction.

Jurisdiction, in my view, is a mandate to a court to act and adjudicate an adjudicable controversy.

Cleon Kilmer Combs:

That is what we have here.

William H. Rehnquist:

Mr. Combs, you said you thought constitutionally there could be no discretion.

Do you mean that Congress could not have said when it passed the statutes for the purpose of conferring jurisdiction on the district court that the district court should have jurisdiction to stay the case where there would be duplicative litigation?

Cleon Kilmer Combs:

I think they could very well have done so, Your Honor, and maybe that is the answer.

But, there again, that is a political decision.

William H. Rehnquist:

But, at any rate, it is not any constitutional doctrine that you… Congress couldn’t have achieved this–

Cleon Kilmer Combs:

No.

What I am saying is that there is presently a constitutional prohibition against exercising a discretion.

William H. Rehnquist:

–Where do we find that in the Constitution?

Cleon Kilmer Combs:

You find it in the area where matters of jurisdiction are withheld and granted to the Congress.

And, when the Congress determines jurisdiction, the Congress determines whether jurisdiction shall exist in this case, whether jurisdiction shall not exist in the next case, whether it shall exist with discretion to stay in the third case.

In other words, the entire spectrum of jurisdiction power rests with the Congress and not with any court.

Sandra Day O’Connor:

So, in your view, cases from this Court like the Younger or Pullman abstention cases are all erroneously decided?

Cleon Kilmer Combs:

No, Your Honor, but–

Sandra Day O’Connor:

And the Colorado River factors case as well.

Cleon Kilmer Combs:

–Addressing that specifically, I view… Of course, Younger, Berford and the other abstention cases are bottomed on the concept of the separation of the federal government and state government and the operation of the state government, the non-interference, the non-intrusion of the federal government into the vital affairs of the state.

And, I agree with those cases.

Now, when I start having a little trouble is with Colorado River and Arizona, because in Colorado River and in Arizona the Court used the exceptional circumstances test.

In my mind, exceptional circumstances is almost tantamount to discretion.

It may be discretion, although the Court very pointedly says that it is the narrowest of discretion.

And, again, I am back to the constitutional problem, the jurisdictional problem, of discretion.

Certainly in the Declaratory Judgment Act, the Brillhart case, the Congress granted the discretion and the court exercised it and this Court upheld it.

So, I would suggest that Colorado River and Arizona maybe are closer akin, or what we in Kentucky call kissing cousins, of Berford and some of the civil counterparts of Younger where the state has a vital interest, because having practiced for a short time in Arizona, I know what water rights mean.

And, as this Court pointed out in Arizona, that is a very… I forget the terminology, but it is unique.

And, here, Colorado and Arizona were attempting to establish through the state court system a pattern of water rights which this Court held provided exceptional circumstances.

I would suggest that maybe more appropriate it should have been intrusion into areas that should be reserved for the states.

And, I would suggest that if… I don’t think it is a discretion, but I think the federal courts, when they come into an area of that sort, they should look into it and make a determination, a finding of fact, if you please, not a discretion, but a finding of fact as to whether there will be an intrusion into the vital functions of the state which might well be contrary to the comity between the federal government and the states.

Now, the state law issue, I think, should be put to rest and I think can be put to rest very quickly.

That is what Erie is all about.

That is what the diversity statute is all about.

Cleon Kilmer Combs:

If we were to stay every case because it is based on state law, we would repeal the diversity statute and we all know that is an area reserved for the Congress.

Conservation of judicial time: That is extremely interesting to me because ten years ago this very month I was standing here in the same spot defending Judge Hermensdorfer and Judge Hermensdorfer didn’t have time and he was serious and he meant it.

But, this Court wisely determined that the Congress had spoken, that the conferring of jurisdictions in diversity of removal cases was a mandate of the Congress which he should have heeded and ordered him to heed it.

Certainly, these things are sometimes wasteful, waste of time, waste of money.

Maybe there should be better ways, but again that addresses itself to the Congress and not to us.

Another thing that bothers me is… Of course, the Microsoftware case I mentioned a moment ago, I misnamed it.

Another matter I would like to cover briefly is diversity jurisdiction and its relationship to federal questions, civil rights, whatever.

I mention in my brief and I would like to emphasize now that I know of no jurisdictional pecking order, I know of no jurisdictional statute that says diversity shall be tried first, second, or third, whether it should be number one or number ten on the list of one to ten.

And, I think in the absence of a congressional expression, we must treat each jurisdictional… each conferring in jurisdiction as a congressional mandate of at least equal equality.

The jurisdiction that I advocate today happens to be a senior citizen, the most senior of all, I suppose, but certainly the mere factor that it may have here and may not even be in great favor in a lot of places, doesn’t mean that it is to be condemned or moved to the back of the bus.

Certainly, as a senior citizen, it is entitled to as much consideration and is entitled to go forward with at least the same deliberate speed to adjudication as any other jurisdiction unless the Congress mandates otherwise as it has in a few instances.

It distresses me to see judgments made by the individual districts or even the circuits as to which should take precedence, which should be first, which should be second, which should ninth, which should be tenth.

I think that is a political decision for the Congress and not for the courts.

I would suggest that all jurisdictional mandates move forward equally unless and until the Congress dictates otherwise.

I notice the Colorado District in Local Rule 200 says that diversity actions will be given the lowest priority and will be heard and tried when, as, and if time permits.

Again, I suggest that is a judgment for the Congress and not for the courts.

I am suggesting that the Sixth Circuit has decided the case correctly, has decided that the congressional mandate of the Congress should be enforced and has properly reversed the district court with directions to exercise jurisdiction.

If the Court has nothing further, may I be excused?

Warren E. Burger:

Do you have anything further, Mr. Polly?

Ronald Glen Polly:

I wish first to say again with respect to the piecemeal litigation issue and the finding by the Court of Appeals that Lake did not have an arguably valid claim against the subcontractors, and, therefore, there was no piecemeal litigation.

Let me point out to this Court that the district judge in this case found that piecemeal litigation exists.

Not only did the Court of Appeals find that it did not exist but the district judge found that it did exist specifically in his stay order.

The question is not whether the Court of Appeals made that finding and could make that finding.

The question is whether or not the Court of Appeals was correct.

The issue is whether or not the district judge abused his discretion in finding that piecemeal litigation occurred.

And, yes, this Court must determine whether or not the Court of Appeals was correct in ruling that the district judge abused his discretion in finding that piecemeal litigation exists.

The district judge, it must be realized, impliedly found in the stay request that Lake had an arguably valid claim against the subcontractors as he had–

Warren E. Burger:

Your time has expired, counselor.

Ronald Glen Polly:

–Thank you.

Warren E. Burger:

Thank you, gentlemen.

Warren E. Burger:

The case is submitted.