Source: http://supreme.justia.com/cases/federal/us/481/1/case.html
Timestamp: 2013-12-10 20:15:28
Document Index: 650226393

Matched Legal Cases: ['§ 52', '§ 2283', '§ 1983', '§ 1983', '§ 1983', '§ 1983', '§ 1254', '§ 13']

Pennzoil v. Texaco, Inc. - 481 U.S. 1 (1987) :: Justia US Supreme Court Center
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Pennzoil v. Texaco, Inc. - 481 U.S. 1 (1987)
Case	U.S. Supreme CourtPennzoil v. Texaco, Inc., 481 U.S. 1 (1987)Pennzoil v. Texaco, Inc.No. 85-1798Argued January 12, 1987Decided April 6, 1987481 U.S. 1APPEAL FROM THE UNITED STATES COURT OF APPEALS FOR
Under Texas law, a judgment creditor can secure and execute a lien on a judgment debtor's property unless the debtor files a supersedeas bond in at least the amount of the judgment, interest, and costs. Appellant obtained a jury verdict of $10.53 billion in its Texas state court suit alleging that appellee tortiously had induced a third oil company to breach a contract to sell its shares to appellant. Because it was clear that appellee would not be able to post a bond in the necessary amount, the verdict had substantial adverse effects on appellee's business and financial situation. Accordingly, even before the trial court entered judgment on the verdict, appellee filed suit in Federal District Court alleging that the Texas proceedings violated its rights under the Federal Constitution and various federal statutes. Appellee did not present these claims to the state court. Appellant argued, inter alia, that the Federal District Court should abstain from hearing the case under the doctrine of Younger v. Harris, 401 U. S. 37. The District Court rejected this contention, and, concluding that appellee's constitutional claims had "a very clear probability of success," issued a preliminary injunction barring any action to enforce the state court's judgment, which had now been entered. The Court of Appeals affirmed, holding, inter alia, that Younger abstention was unnecessary, because the state interests at stake differed in both kind and degree from those present in the cases in which this Court has held that Younger applied, and because Texas had failed to Page 481 U. S. 2 provide adequate procedures for adjudication of appellee's federal claims.
POWELL, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, O'CONNOR, and SCALIA, JJ., joined. SCALIA, J., filed a concurring opinion, in which O'CONNOR, J., joined, post, p. 481 U. S. 18. BRENNAN, J., filed an opinion concurring in the judgment, in which MARSHALL, Page 481 U. S. 3 J., joined, post, p. 481 U. S. 18. MARSHALL, J., filed an opinion concurring in the judgment, post, p. 481 U. S. 23. BLACKMUN, J., filed an opinion concurring in the judgment, post, p. 481 U. S. 27. STEVENS, J., filed an opinion concurring in the judgment, in which MARSHALL, J., joined, post, p. 481 U. S. 29.
The principal issue in this case is whether a federal district court lawfully may enjoin a plaintiff who has prevailed in a trial in state court from executing the judgment in its favor pending appeal of that judgment to a state appellate court. Page 481 U. S. 4
Although the parties disagree about the details, it was clear that the expected judgment would give Pennzoil significant rights under Texas law. By recording an abstract of a judgment in the real property records of any of the 254 counties in Texas, a judgment creditor can secure a lien on all of a judgment debtor's real property located in that county. See Tex.Prop.Code Ann. §§ 52.001-52.006 (1984). If a judgment creditor wishes to have the judgment enforced by state officials, so that it can take possession of any of the debtor's assets, it may secure a writ of execution from the clerk of the court that issued the judgment. See Tex.Rule Civ.Proc. 627. [Footnote 1] Rule 627 provides that such a writ usually can be obtained "after the expiration of thirty days from the time a Page 481 U. S. 5 final judgment is signed." [Footnote 2] But the judgment debtor "may suspend the execution of the judgment by filing a good and sufficient bond to be approved by the clerk." Rule 364(a). See Rule 368. [Footnote 3] For a money judgment, "the amount of the bond . . . shall be at least the amount of the judgment, interest, and costs." Rule 364(b). [Footnote 4]
App. to Juris. Statement A87 (District Court's Supplemental Finding of Fact 40, Jan. 10, 1986). The effects on Texaco were substantial: the price of its stock dropped markedly; it had difficulty obtaining credit; the rating of its bonds was lowered; and its trade creditors refused to sell it crude oil on customary terms. Id. at A90-A98 (District Court's Supplemental Findings of Fact 49-70). Page 481 U. S. 6
Texaco did not argue to the trial court that the judgment, or execution of the judgment, conflicted with federal law. Rather, on December 10, 1985 -- before the Texas court entered judgment [Footnote 5] -- Texaco filed this action in the United States District Court for the Southern District of New York in White Plains, New York, the site of Texaco's corporate headquarters. Texaco alleged that the Texas proceedings violated rights secured to Texaco by the Constitution and various federal statutes. [Footnote 6] It asked the District Court to enjoin Pennzoil from taking any action to enforce the judgment. Pennzoil's response, and basic position, was that the District Court could not hear the case. First, it argued that the Anti-Injunction Act, 28 U.S.C. § 2283, barred issuance of an injunction. It further contended that the court should abstain Page 481 U. S. 7 under the doctrine of Younger v. Harris, 401 U. S. 37 (1971). Third, it argued that the suit was, in effect, an appeal from the Texas trial court, and that the District Court had no jurisdiction under the principles of Rooker v. Fidelity Trust Co., 263 U. S. 413 (1923), and District of Columbia Court of Appeals v. Feldman, 460 U. S. 462 (1983).
The District Court justified its decision to grant injunctive relief by evaluating the prospects of Texaco's succeeding in its appeal in the Texas state courts. It considered the merits of the various challenges Texaco had made before the Texas Court of Appeals and concluded that these challenges "present generally fair grounds for litigation." Ibid. It then evaluated the constitutionality of the Texas lien and bond requirements by applying the test articulated in Mathews v. Eldridge, 424 U. S. 319 (1976). It concluded that application of the lien and bond provisions effectively would deny Texaco a right to appeal. It thought that the private interests and the State's interests favored protecting Texaco's right to appeal. Relying on its view of the merits of the state court appeal, the court found the risk of erroneous deprivation "quite severe." 626 F.Supp. at 257. Finally, Page 481 U. S. 8 it viewed the administrative burden on the State as "slight." Ibid. In light of these factors, the District Court concluded that Texaco's constitutional claims had "a very clear probability of success." Id. at 258. Accordingly, the court issued a preliminary injunction. [Footnote 7]
Next, the court considered whether Texaco had stated a claim under § 1983. The question was whether Texaco's complaint sought to redress action taken "under color of" state law, 42 U.S.C. § 1983. The court noted that "Pennzoil Page 481 U. S. 9 would have to act jointly with state agents by calling on state officials to attach and seize Texaco's assets." 784 F.2d at 1145. Relying on its reading of Lugar v. Edmondson Oil Co., 457 U. S. 922 (1982), the court concluded that the enjoined action would have been taken under color of state law, and thus that Texaco had stated a claim under § 1983. 784 F.2d at 1145-1147. Because § 1983 is an exception to the Anti-Injunction Act, see Mitchum v. Foster, supra, the court also found that the Anti-Injunction Act did not prevent the District Court from granting the relief sought by Texaco.
Pennzoil filed a jurisdictional statement in this Court. We noted probable jurisdiction under 28 U.S.C. § 1254(2). 477 U.S. 903 (1986). We reverse. Page 481 U. S. 10
Id. at 401 U. S. 44. Page 481 U. S. 11
Moore v. Sims, 442 U. S. 415, 442 U. S. 428 (1979). See Trainor v. Hernandez, 431 U. S. 434, 431 U. S. 445 (1977). [Footnote 9] This concern has special significance in this case. Because Texaco chose not to present to the Texas courts the constitutional claims asserted in this case, it is impossible to be certain that the governing Texas statutes and procedural rules actually raise these claims. Moreover, the Texas Constitution contains an Page 481 U. S. 12 "open courts" provision, Art. I, § 13, [Footnote 10] that appears to address Texaco's claims more specifically than the Due Process Clause of the Fourteenth Amendment. Thus, when this case was filed in federal court, it was entirely possible that the Texas courts would have resolved this case on state statutory or constitutional grounds, without reaching the federal constitutional questions Texaco raises in this case. [Footnote 11] As we have noted, Younger abstention in situations like this
Texaco's principal argument against Younger abstention is that exercise of the District Court's power did not implicate a "vital" or "important" state interest. Brief for Appellee 24-32. This argument reflects a misreading of our precedents. This Court repeatedly has recognized that the States have important interests in administering certain aspects of Page 481 U. S. 13 their judicial systems. E.g., Trainor v. Hernandez, supra, at 431 U. S. 441; Middlesex County Ethics Comm. v. Garden State Bar Assn., <