Seatrain Shipbuilding Corporation v. Shell Oil Company – Oral Argument – November 28, 1979 (Part 1)

Media for Seatrain Shipbuilding Corporation v. Shell Oil Company

Audio Transcription for Opinion Announcement – February 20, 1980 in Seatrain Shipbuilding Corporation v. Shell Oil Company
Audio Transcription for Oral Argument – November 28, 1979 (Part 2) in Seatrain Shipbuilding Corporation v. Shell Oil Company

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Warren E. Burger:

We’ll hear arguments next in Seatrain Shipbuilding Corporation against Shell Oil Company.

Mr. McDaniels, you may proceed whenever you’re ready.

William E. McDaniels:

Mr. Chief Justice and may it please the Court.

This case comes before the Court on writ of certiorari to the United States Court of Appeals for the District of Columbia Circuit.

The Petitioners, Polk and Seatrain, were signatories to a contract entered into in June of 1972 with the Secretary of Commerce, whereby $27.2 million in subsidy was provided towards the construction of the Supertanker Stuyvesant.

The issue that this case presents involves whether the Secretary of Commerce has the power, under the Merchant Marine Act of 1936, to amend that contract to delete there from certain terms restrec — certain terms restricting the domestic trade by the Stuyvesant in exchange for a repayment of the subsidy awarded.

The District Court held that power existed, but —

William H. Rehnquist:

Doesn’t it also present a jurisdictional issue of how the case ever got from the District Court to the Court of Appeals?

William E. McDaniels:

Yes, Your Honor, it does.

The District Court had —

Harry A. Blackmun:

Are you very enthusiastic about that issue?

William E. McDaniels:

Your Honor, Mr. Levander has briefed that issue and would be arguing it.

We support his brief.

We have not addressed it in our particular briefs.

Harry A. Blackmun:

You certainly didn’t cover or didn’t touch upon it in your initial brief?

William E. McDaniels:

We did not, Your Honor.

The time of argument has been divided and, with the permission of the Court, I would address the merits and Mr. Levander would address the issue of appealability.

We support the Solicitor General’s position in that regard.

What happened was there was a remand of the particular exercise of this authority in the case of the Stuyvesant for further consideration by the Secretary and prior to the decision on remand, the Plaintiffs here, Shell and Alaska Bulk, took appeal of the issue of authority to the Court of Appeals and the Court of Appeals, in split decision, decided the Secretary did not enjoy the authority under the Act.

The Stuyvesant, Your Honor, may it please the Court, had the benefit of and participation by the Secretary of Commerce directly and indirectly in its construction financing.

The Secretary had a loaned out right under the Economic Development Administration Act, $5 million and guaranteed 90% of other $80 million in loans which were used to refurbish the shipyard, the Brooklyn Navy Yard, where the vessels were built.

This was part of a program to both establish a shipyard for use in national purposes and, also, to employ the hardcore unemployed in that area and provide them job training.

Harry A. Blackmun:

Mr. McDaniels, let me ask.

Is the Solicitor General going to confine his argument to the jurisdictional issue?

William E. McDaniels:

No, I believe he would address the merits as well, Your Honor.

Harry A. Blackmun:

Because it’s hard for us to get to the merits if we don’t have jurisdiction.

William E. McDaniels:

I certainly would, if you had some questions of the — of Mr. Levander on the question of appealabilities, to sit down and have him argue now and argue later on the merits.

William H. Rehnquist:

Isn’t that a rather odd distribution of time to, first, argue the merits when there’s a question of dis — of jurisdiction?

William E. McDaniels:

I agree, Your Honor, but it was suggested that, as Petitioner, I was required to go first and Mr. Levander and I had discussed it.

I would prefer if he goes first, but it’s up to the Court.

Audio Transcription for Oral Argument – November 28, 1979 (Part 2) in Seatrain Shipbuilding Corporation v. Shell Oil Company

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William E. McDaniels:

He’s prepared to address that issue within the time that he has.

Warren E. Burger:

It’s your case.

We’ll allow you to make the decision, but as my colleagues have suggested, it’s putting the cart before the horse a little.

William E. McDaniels:

I agree.

William J. Brennan, Jr.:

Who suggested you had to go first?

William E. McDaniels:

It was suggested that, as Petitioner —

William J. Brennan, Jr.:

Who suggested?

William E. McDaniels:

The discussions with the Solicitor General’s Office suggested it was appropriate that I go first, as the Petitioner.

I would be happy to have Mr. Levander take the podium at this time.

Warren E. Burger:

Mr. Levander.

Andrew J. Levander:

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

Although I am also prepared to discuss the merits of this case, I would address myself primarily to the jurisdiction presented here.

Plaintiffs’ complaint asserted that the Stuyvesant transaction which is at issue here was unlawful for essentially three reasons.

First is that the Secretary lacked power to enter into such transaction.

The second is that, given the circumstances of this case, the Secretary had abused her discretion by entering into the transaction, for failing to consider the economic impact on the existing domestic traders in the Alaskan trade.

Third, they challenge the nature of the proceedings in the — before the Secretary, under the Administrative Procedure Act.

On November 22, 1977, the District Court concluded that the Secretary had power to enter into a Stuyvesant type of transaction.

He concluded, however, that the Secretary had abused her discretion by failing to consider the economic impact issue.

The District Court, therefore, granted partial summary judgment to both sides and remanded the case to the Secretary for determination within 45 days of the economic impact issue.

The —

Harry A. Blackmun:

Was the jurisdictional argument made in the Court of Appeals?

Andrew J. Levander:

Well, it was first mentioned to the District Court by Mr. McDaniels at the time of the entry of order and in the Court of Appeals, in the petition for rehearing, no — a footnote addressed this issue.

William H. Rehnquist:

Any federal court has to take note of it on its own motion, does it not?

Andrew J. Levander:

That’s made quite clear by this Court’s decision in Wetzel, Your Honor.

The court also concluded on November 22nd, the District Court, that the third issue, the procedural claim, would require a trial and, therefore, did not grant summary judgment either way on that issue.

On November 30th, Plaintiffs, the Respondents here who I’ll refer to as Plaintiffs since we’re also technically Respondents, went before the court and asked them to modify the judgment.

First, they voluntarily dismissed their procedural claim.

Second, they first asked the court to enter a certification under 28 U.S.C., 1292 (b).

That provision, in our view, is the only provision which would have allowed an interlocutory appeal on the statutory power question.

The District Court, however, intimated that it was not — it didn’t think that was appropriate or it didn’t think it was necessary and it agreed to accept the Plaintiffs’ second suggestion, which was that it enter a certification under Rule 54 (b) to allow an immediate appeal of the statutory question.

Audio Transcription for Oral Argument – November 28, 1979 (Part 2) in Seatrain Shipbuilding Corporation v. Shell Oil Company

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Andrew J. Levander:

At that point, Petitioners — the Plaintiffs appealed, although the Secretary had never had a chance to render its decision on the remand on that point, and although the District Court has never had a chance to address the remand decision which came down while the appeal was pending.

We submit that that appeal was premature and the Court of Appeals lacked power to hear this case.

Primary submission of plaintiffs as to why jurisdiction iss — existed in the Court of Appeals is that the November 30th order constituted a valid Rule 54 (b) certification, that’s the question of the Secretary’s power.

Rule 54 (b) permits the District Court to enter a final judgment as to any separate claim for relief even though the litigation as a whole is not terminated.

For example, in this case, suppose the Plaintiffs had sued the Secretary regarding the Stuyvesant transaction and, in addition, had sued the Secretary for a subsidy that they claim was due them on some other unrelated transaction.

If the Secretary, excuse me, if the District Court, during the course of that litigation, had concluded that the Secretary did not owe them the subsidy and finally determine that separate claim and then — but then, there were further proceedings to be had on the Stuyvesant claim, then the District Court, in our view, would have had the power to enter a Rule 54 (b) certification because, then, a certification would have been finally determined and that’s what Rule 54 (b) exists to do.

That, however, in our view, is not what happened here.

Before I turn to that, I would like to say at the outset that the standard of review of the 54 (b) requests in — depends on what is being challenged.

If the question involves whether or not the District Court should have exercised its discretion as to a clearly separate claim, then this court’s decision in Sears, Roebuck against Mackey and other decisions make clear that there’s an abusive discretion standard.

However, the Court’s subsequent decision in Liberty Mutual Insurance Company against Wetzel makes it clear that where the question is simply whether or not there are separate claims, they can be certified under Rule 54 (b).

That is purely a legal question and there’s no deference due.

In our view, what happened here is that the Plaintiffs had two interrelated legal theories supporting a legal right, and such interrelated legal theories do not constitute separate claims within the purview of Rule 54 (b).

Potter Stewart:

Do you think claims for relief as used in Rule 54 (b) is synonymous with causes of action?

Andrew J. Levander:

I think it’s a very similar concept, if not identical, Your Honor.

Potter Stewart:

Well, how is it different?

Andrew J. Levander:

Well, this Court in Mackey and in Wetzel never precisely said what a claim for relief was.

Potter Stewart:

Well, you’re arguing this case what do you submit?

Andrew J. Levander:

Well, I submit that a — that the Court indicated in Wetzel and Mackey that a separate claim is independent cause of action separately enforceable on a mutually exclusive basis and, by that, I mean if the awarding of relief on one of the alleged claims precludes or obviates the need for relief on the other alleged claim then, in fact, you do not have separate claims and you just have interrelated theories.

Now, in Mackey —

Potter Stewart:

It doesn’t say pay, it says claim for relief.

Andrew J. Levander:

Well, obviously, after —

Potter Stewart:

And I understood your answer to be as it is tantamount to claim for relief means cause of action.

Andrew J. Levander:

Right and in Wetzel, the fact that there were different — there was a damage claim, and an injunctive claim, and a declaratory relief claim, all rising out of one single legal right, the Court said that’s not separate claim for purposes of Rule 54 (b).

Similarly, here — well, in Mackey where they did hold that 54 (b) was properly used, the Plaintiff in that case could have recovered on its antitrust claims and it’s common law tort claims and business claims and unfair competition claims, regardless of what happened as to the antitrust claim and, so, therefore, they were separate claims.

The rights are separate and the recoveries are separate, and they’re not — one doesn’t preclude or obviate the need for the other.

Here, however, if our — if the District Court had granted conclusively either one of Plaintiffs’ legal theories, there would have been no need to address the legal theory.

And, also, if the Secretary, on re —

John Paul Stevens:

Mr. Levander, is that true as to the Alaska Bulk complaint?

Potter Stewart:

Yes.

Andrew J. Levander:

Well, that’s where I’m getting.

Audio Transcription for Oral Argument – November 28, 1979 (Part 2) in Seatrain Shipbuilding Corporation v. Shell Oil Company

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Andrew J. Levander:

That’s my next point.

John Paul Stevens:

Alright.

Andrew J. Levander:

Their major submission, as I see it, is that they have two separate claims.

The first claim is that they’re complaining about the Stuyvesant itself —

Potter Stewart:

Right.

Andrew J. Levander:

— and its operation, and the second claim is that they have a right to know about the broader picture or they allege the broader picture the statutory question.

And, their theory is that even if the Secretary, on remand, had concluded that the economic impact was sufficiently adverse as to not go forward with the Stuyvesant transaction that they, nonetheless, could have appealed the District Court’s determination of the statutory power question to the Court of Appeals.

In our view, that ignores the case requi — controversy requirement of Article 3.

Certainly, if the Secretary had never authorized the Stuyvesant to operate in the first place, you would have had an unripe claim.

They could not have entered court and asked for a declaration as to the Secretary’s power when there was no impending use of that power and there was no decision to use it.

Similarly, if the Secretary decided to withdraw from the Stuyvesant transaction and not go forth with it, then you would have a situation which was moot.

There would be no more case or controversy and they couldn’t go forth and litigate the issue in the Court of Appeals as to the claim of the statutory power.

John Paul Stevens:

Which he in fact decided to the contrary.

I mean, the court, in fact, decided to the contrary.

Andrew J. Levander:

Yes, but I don’t think you can judge– first of all, I don’t think you can judge juris —

John Paul Stevens:

Well, don’t you have to judge appealability at the time the appeal is attempted to be prosecuted?

Andrew J. Levander:

That’s right and, at that time —

John Paul Stevens:

At that time, both claims were still being made and neither of them could be said there was no case or controversy.

Andrew J. Levander:

But neither — well, the two legal theories, one of them had been conclusively determined by the District Court but the other one had not, and the purpose of Rule 54 (b) is to not increase interlocutory appeals of interrelated litigation.

It’s to alleviate the hardship —

John Paul Stevens:

But your mootness arguments — I’m just addressing your mootness argument, at the time of the remand for the competitive inquiry, neither theory could be disposed of on the ground that it was moot?

Andrew J. Levander:

That’s correct, but what I’m suggesting is that the test to determine whether we have truly separate claims or, as the Courts of Appeals have realized in other circumstances, interrelated legal theories is whether or not the granting of one of the theories would obviate the need to get relief on the other theory because if their — the relief would be the same when we end the case, then there’s — then in our view, there is no such thing as a separate claim.

It’s not separate.

It’s a related closely intertwined legal theories and that is — that kind of single claim multiple theory kind of litigation is not subject to a Rule 54 (b) certification.

John Paul Stevens:

Well, would your argument fail if there had been 15 or 16 similar transactions on the horizon?

Andrew J. Levander:

Well, that might indicate that mootness was not appropriate in this particular case, but here mootness is clearly an appropriate doctrine.

John Paul Stevens:

Your argument would fail on the hypothetical I’ve given.

Andrew J. Levander:

That’s right, well possibly, but here, the Secretary has used —

John Paul Stevens:

Why do you say possibly, because isn’t your whole argument that that claim is moot on these facts and I posit the facts where it would not be moot?

Andrew J. Levander:

Well, yes, if there were other transactions already —

Audio Transcription for Oral Argument – November 28, 1979 (Part 2) in Seatrain Shipbuilding Corporation v. Shell Oil Company

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John Paul Stevens:

Yes.

Andrew J. Levander:

— approved, yes that would be ongoing, but here the Secretary has used her power, something like five times, in– since 1936.

Moreover, on the remand, if it had determined not to go forward with the claim, it would have determined — she would have determined that the economic impact was sufficiently adverse on the elist — existing Alaskan traders that the Stuyvesant shouldn’t enter, and that finding —

William H. Rehnquist:

Mr. Levander, on my Colleague Stevens’ hypothesis, there were 15 or 16 foreseeable claims in the future.

To avoid mootness, you would not only have to have that but you would have to have them by the same plaintiffs, would you not?

Andrew J. Levander:

No, I understood Mr. Justice Stevens’ hypothetical to be that there were 15 other applications granted or in the process of being granted as the Alaskan trade, and it di — it would —

John Paul Stevens:

Each of which might have the same impact on the claim?

Andrew J. Levander:

On the Plaintiffs.

John Paul Stevens:

Right.

William H. Rehnquist:

On the p — they had the same impact on the Plaintiffs.

Andrew J. Levander:

They would have to be.

I mean, if the — I take it that even Plaintiffs wouldn’t claim that they have any right to complain about the Secretary’s exercise of power in a situation or in an area of trade which they don’t operate, although they may say otherwise.

But as I started to say that mootness is particularly appropriate in this case not only because the Secretary has so seldomly exercised her power, which is the appropriate way that it should be exercised, but also it is — the finding that she would had to made on remand would have militated against forever or in the reasonable future authorizing any other ship to enter the Alaskan trade, any other ship that was willing to repay it’s subsidy and become unsubsidized.

I want to address one point of the — on the merits, if I might, unless, well —

John Paul Stevens:

May I ask just one other question?

Andrew J. Levander:

Yes.

John Paul Stevens:

What’s the practical consequence?

If you prevail on the jurisdictional issue and we dismiss the appeal, won’t the case be right back here almost immediately?

Andrew J. Levander:

Well, not necessarily.

First of all, it would be vacated.

It would go back down to the District Court.

The District Court would have to consider the findings on remand.

More — and, it might actually conclude that the Secretary had abused her discretion and enter the injunction and the case would be over.

Otherwise, it is possible the first time around the District Court and, implicitly, the Court of Appeals rejected our standing claim that Plaintiffs do not have standing, but I think that Simon against Eastern Kentucky Welfare Rights Organization makes it clear that you can judge standing from two positions; one at the pleading stage and, secondly, at the proof stage.

And here the remand proceedings demonstrate that at least some, if not all, of Trinidad and Alaska bulk ships, which are of the smaller variety, do not compete against the bigger Stuyvesant vessel and, therefore, it’s possible that at least some of the Plaintiffs do not have standing.

Moreover, Shell points out in its brief and in footnote 6, I believe, that it has gotten Alaskan oil charters and so, therefore, I’m not quite sure what its potential injury would be either.

William H. Rehnquist:

Wouldn’t another practical consequence of your prevailing on your jurisdictional claim be that District Courts and Courts of Appeals and litigants would be much more careful of the rules that this Court is promulgated as to when a case can be appealed and when it can’t?

Andrew J. Levander:

That’s exact– absolutely correct, Mr. Justice Rehnquist and as an institutional litigant, the United States has a very great interest in making sure that the final judgment rule is adhered to, if at all possible.

I mean, the United States is involved in many remand decisions and, as a general rule, the Courts of Appeals have recognized, including an opinion by Mr. Justice Blackmun when he was on the Eighth Circuit that a remand decision is not final judgment for purposes of 1291, and we don’t think there’s any reason to distinguish from that rule in this case.

Potter Stewart:

The practical matter the — isn’t my brother Stevens correct that the — this would be remanded to the District Court and even though the District Court then agreed that the Secretary, on remand to her, now him I guess, was quite right and it’s in the finding that by a — as to the competitive situation, but nonetheless under the compulsion of the law of the circuit would enjoin the Secretary, it would have to.

Audio Transcription for Oral Argument – November 28, 1979 (Part 2) in Seatrain Shipbuilding Corporation v. Shell Oil Company

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Andrew J. Levander:

No.

I think it would vacate the Court of Appeals decision and, therefore, that decision would not be the law of the circuit any longer and then you would have to go through the litigation on the remand and it might be determined that there was no standing of the Plaintiffs.

Potter Stewart:

It would be an educated guess by any district judge as to what the law of the circuit was, wouldn’t it?

[Laughter]

Andrew J. Levander:

That’s —

Potter Stewart:

And then Seatrain would be right back up here, first of all, in the Court of Appeals and then here.

Andrew J. Levander:

Well, that was also the case in Wetzel, Your Honor, where everything had been litigated but the entry of the relief and there this Court sua sponte vacated the Court of Appeals decision.

John Paul Stevens:

There is this difference though with Wetzel, if I’m not — if I understand your position correctly.

There, there was precedent rather clearly establishing that that was not final under the statute.

Here, I think the Government agrees the question is open.

You may well be right, but you don’t have a direct precedent for this.

Andrew J. Levander:

Well, no direct precedent in this Court, although I think that the Boston and Mane Railroad case is very close in many aspects and I think that the Court of Appeals decisions are uniformly in our favor.

This is not a collateral decision of any sort.

This goes right to the heart of the merits.

They will be easily reviewed on appeal and there’s no reason to divert from the generally accepted rule that a remand decision is not a final order and it’s not subject to 54 (b) unless there are separate claims.

Warren E. Burger:

We’ll resume there at 1:00, counsel.