William H. Rehnquist: We'll hear argument now in Number 88-1203, Hoffmann-La Roche, Inc. v. Richard Sperling. Mr. Ridley.
John A. Ridley: Mr. Chief Justice, and may it please the Court: This matter involves an action brought pursuant to the Age Discrimination and Employment Act. Under that statute, joinder in the suit by perspective plaintiffs is governed by Section 16(b) of the Fair Labor Standards Act, which requires these individuals to file a consent to join action with the court. The issue before the Court is whether any ascertainable source of judicial power exists to permit the district court, as the district court itself here put it, to offer the mechanisms of judicial process to aid Plaintiffs in filling their class with all its possible members. Specifically, the district court here facilitated Plaintiff's solicitation effort in several ways. It compelled Hoffmann-La Roche to disclose to Plaintiffs the names and addresses of all those persons who Plaintiffs considered to be similarly situated, solely for the purpose of inviting them to assert money damage claims against Roche.
William H. Rehnquist: Would they... would the Plaintiffs eventually have been able to get that by discovery anyway, do you think?
John A. Ridley: Your Honor, that is uncertain, and of course, the district court here entered its order exclusively on the basis of facilitating the solicitation of claims.
William H. Rehnquist: Without treating it as a discovery matter yet.
John A. Ridley: That is correct, Your Honor. It directed... in addition to compelling the disclosure, the court also directed the Plaintiffs to send notice to those persons with the notice, expressly stating that it had been authorized by the court. In my argument this afternoon I would like to make three principal points.
Byron R. White: Did you say they did three things? The court did three things?
John A. Ridley: Well, Your Honor, the court did three things--
Byron R. White: It ordered the names, it ordered the... it authorized the notice--
John A. Ridley: --That is correct. It reviewed and authorized the notice.
Byron R. White: --And what else?
John A. Ridley: And it put its imprimatur on the notice which was to be sent out.
Byron R. White: Did the Plaintiffs pay for the notice?
John A. Ridley: They would have paid for the notice. It was not to be sent out by the clerk of the court or the clerk, the court itself, although that had been the Plaintiffs original request to the court.
William H. Rehnquist: Mr. Ridley, we have a good microphone system here. I don't think you need to speak quite as loud.
John A. Ridley: I apologize for the Court. In my argument this afternoon, I would like to make three principal points. First, judicial facilitation of notice is inconsistent with basic principles of judicial restraint and neutrality. Second, no authority for judicial facilitation can be gleaned from either the FLSA or the ADEA. And third, the attempt by the Plaintiffs here to rely on the court's inherent power or to engraft a notice provision onto the Federal Rules of Civil Procedure, and in particular Rule 83, must fail.
Sandra Day O'Connor: Mr. Ridley, you don't refer, I think, to Rule 16 of the Federal Rules in your brief. That rule provides that the district court may adopt special procedures for managing potentially difficult actions that may involve multiple parties. Do you think that rule might have some bearing on this matter?
John A. Ridley: Your Honor, there has never been a suggestion as I recall it in the papers below that that rule would govern the situation, and I submit that that would be a rule which would involve the regulation of the action by the district court, as opposed to the facilitation of the joinder of new parties not necessary to the action into the action. The Plaintiffs, in effect, concede here that due process does not mandate notice. And virtually every court which has addressed the issue has held expressly that notice is not required by due process in Section 16(b) cases. This is, of course, because non-parties are not bound by the judgment of the court in 16(b) cases. Moreover, potential opt-ins in these cases are not necessary parties, and their joinder is not required for the just adjudication of the claims of those who are already parties before the court.
William J. Brennan, Jr.: Would they then, do you think, have any information bearing on ADEA?
John A. Ridley: I am sorry, Justice, I did not hear.
William J. Brennan, Jr.: Would they have any information, do you know?
John A. Ridley: The potential opt-ins?
William J. Brennan, Jr.: Yes.
John A. Ridley: May have information. Yes, we would agree to that, Judge... Justice.
William J. Brennan, Jr.: Uh-huh.
John A. Ridley: But that does not make them necessary parties to the action.
Anthony M. Kennedy: Well, if they had information sufficient so that a discovery order were issued requiring the... the employer to divulge the names and addresses of all the affected employees, and if that is a given, in other words, would the court not then have power to condition the discovery request on the transmission of notice that the court approved?
John A. Ridley: Justice, we submit that there is nothing in the rules which would provide for disclosure for this purpose, and the purpose was expressly--
Anthony M. Kennedy: No, no, I am assuming, because Mr. Justice Brennan asked you if these other parties might not have some information, I am assuming that in a case, a court would find that the names and addresses of all the affected employees are discoverable.
John A. Ridley: --Your Honor--
Anthony M. Kennedy: Could the court then, as a condition to its discovery order, impose restrictions setting forth the kinds of statements that should be made to the employees if a mailing went out?
John A. Ridley: --Justice, I believe that if there were a discovery order which was appropriate under the federal rules governing discovery, I think that the court would and should enter a protective order against the utilization of that information for the purpose of solicitation.
Anthony M. Kennedy: Well, is that consistent with our Shapero case? Is that consistent with the First Amendment rights of the litigant to advise all interested persons of the pendency of the litigation? That would be a very odd order, wouldn't it?
John A. Ridley: No, Your Honor. We have no difficulty with... Shapero. We believe that the Plaintiffs were free here to solicit the non-parties whom they wished to have joined. Our objection is exclusively with the court's involving itself in that process--
Anthony M. Kennedy: But you just answered my question by saying that you think the court, if the names and addresses of all the employees were disclosed by discovery, could prohibit the use of that list for solicitation. And I am just curious to know why that isn't an infringement on First Amendment rights.
John A. Ridley: --Your Honor, I believe that the Plaintiffs could use a list which they got for valid purposes of discovery to obtain information from non parties. I do not believe that the court should permit them to come into court to request that information to solicit them, and--
Anthony M. Kennedy: Well, I won't take too much longer, but I am assuming that it is properly discoverable. I am assuming the Plaintiff has all of the names. And I am asking you what basis it is for you to make the further statement that the court could restrict the Plaintiffs from using that list to advise all employees similarly situated.
John A. Ridley: --Justice, only if the court has a basis for believing that that discovery would be used for solicitation purposes would the court then, I believe, find it appropriate to enter the protective order that it not be used for that sole purpose. We have... in this particular case, of course, there was no request to the court below for the discovery of names and addresses for any purpose other than to solicit. The court's decision below was based solely on its perception of its power to aid the Plaintiffs to go out to bring in all of the non parties before the court. That is the objection which we have, not to what discovery might be required at a subsequent date by the court.
William H. Rehnquist: I think Justice Kennedy's question is perhaps directed to the at least implication of your statement that solicitation is a bad word.
John A. Ridley: Oh, no. Judge... Justice, we have never objected to the solicitation by the Plaintiffs of non parties. We recognize that they have that First Amendment right and, in fact--
William J. Brennan, Jr.: --[inaudible] the court, that is... to get the names and addresses of the people even though those people may have information that would be useful--
John A. Ridley: --That is correct, Justice.
Speaker: --in reaching a determination.
John A. Ridley: And if, in fact, they obtain that information through some appropriate means for an appropriate purpose, so be it. But we do not believe that the... that the court should be involved in generating that solicitation.
Speaker: Why--
John A. Ridley: And that is the evil that occurred here.
Speaker: --Why?
John A. Ridley: Your Honor, because it cuts against the basic principles of neutrality, judicial restraint, which govern the courts of our country. We believe that the court should be the adjudicator of disputes, not the generator. And here there is no due process reason for these people to receive notice.
Antonin Scalia: Mr. Ridley, as, as I understand your, your, your brief, you do think the court has authority to deny an opt-in on the basis that the... that the notice was inadequate. Right?
John A. Ridley: No, Justice.
Speaker: No?
John A. Ridley: I don't believe we took that position. We--
Antonin Scalia: Well, let me ask you, do you think the court has the power to... to refuse to permit a particular plaintiff to opt-in on the basis that the notice that that plaintiff was given was... was misleading or inadequate?
John A. Ridley: --Oh, if it were misleading or inadequate, Your Honor, we don't believe that it has the, power, power to preclude the individual from opting-in, but we do believe that, under Rule 11, it then has the power.
Antonin Scalia: It can review the notice that was sent to these people by the lawyers inviting them to opt-in, and if it finds that notice misleading can refuse to allow them to opt-in. Is that your position?
John A. Ridley: Justice, if, in fact, there were an application brought after the notice were sent out, yes, I believe the court does have that power.
Antonin Scalia: Why?
John A. Ridley: Because those people, if, in fact, the notice were misleading, those people would be in the court as parties plaintiff in violation of Rule 11.
Antonin Scalia: In violation of Rule 11?
John A. Ridley: Or, with, with counsel having violated Rule 11. But in this instance, for example, Judge... Justice, there was the R.A.D.A.R. letter which was sent out. We did not ask--
Antonin Scalia: What about approving the letter in advance? Can the... can the court approve the letter in advance? Counsel brings it to the court and says since I don't want you to throw out these opt-in plaintiffs that I bring to you, why don't we both save ourselves some time; you approve the letter in advance. Can the court do that?
John A. Ridley: --Justice, if the plaintiff were voluntarily to come before the court, I think the first question the court should ask is why is the plaintiff coming here. Why should the court be involved in any way in this solicitation process? Ultimately, we would have no specific concern with that as Defendants, if, in fact, there were a commitment that this was going to be the only time that the plaintiffs came before the court, that they felt that they needed that guidance, and that they wouldn't use the court's having reviewed the document for solicitation. Where we draw the line is that if the court were to require the plaintiffs to come before it, we believe that this is inconsistent with the First Amendment rights of the plaintiffs.
Byron R. White: Well, what... you must be, you are probably confining your argument to the Age Discrimination Act where there is a class action, because it certainly is normal to, in, in many class actions, for the court to become deeply involved in notice.
John A. Ridley: That is correct, Justice, but--
Byron R. White: Rule 23, the court actually orders notice.
John A. Ridley: --That is correct, Justice, but those cases are not claims generation. Rule 23 is not involved in any way in claims generation. Those parties have been certified as parties. After the certification procedure, they are parties before the court. And that notice is sent out to ensure that their due process rights are honored. This is a uniquely... different situation. Here, Rule 23 does not govern ADEA or 16(b) actions, generally, and there is no due process or necessary party requirement that mandates that non parties go out, be given notice. These people are, are just the same as, as individuals who have been the victims for example of a mass air crash, where no Rule 23 class action has been certified.
William H. Rehnquist: When you say a 16(b) action, 16(b) of what, Mr. Ridley?
John A. Ridley: I am sorry.
William H. Rehnquist: Is that of 29 U.S. C?
John A. Ridley: Yes, it is Section 16(b) of the Fair Labor Standards Acts; it's, it's Section 216(b) of Title 29. But there is a... I, I believe, a critical difference between the notice which is required to be sent out in Rule 23 cases when classes have been certified, and the notice which the court wished to send out here, where there has been no class certified, where no Rule 23 class will be certified because it is inconsistent because the statute, the 16(b) statute, requires the individuals to affirmatively opt-in. Given that, we submit that Rule 23 case law jurisprudence is totally inapposite to what is before the Court today.
John Paul Stevens: Of course, it is true in the Rule 23 class actions that, I suppose, that the court is not totally neutral, or is it, when it certifies a class. It takes the action of the district court to make the other members of the class actually become parties.
John A. Ridley: That they, the district court--
John Paul Stevens: They are not parties just because a complaint is filed.
John A. Ridley: --That is correct, and we submit, Justice, that that process whereby the district court certifies an action as a class action, which is wholly absent in a 16(b) situation: we have no requirements, no criteria to be satisfied before notice is sent out, if--
John Paul Stevens: But you wouldn't say that a judge, when a district judge certifies a class the judge isn't acting in a neutral fashion, would you?
John A. Ridley: --Those individuals, once the class has been certified--
John Paul Stevens: No, no, I said in the, in the process of certifying the class the judge is acting in a perfectly neutral way, is he not?
John A. Ridley: --Yes, and that is, he is adjudicating the rights where the, where the issue--
John Paul Stevens: Well, why isn't it equally... why isn't it also neutral if Congress has said that persons similarly situated may join a suit by affirmative act, why isn't it neutral for the judge to participate in the process by which they find out about the case?
John A. Ridley: --Justice, I believe that the analogy is to those who might be joined under Rule 24(b), under a permissive intervention situation, where they have claims which might properly be joined because they have common questions of law or fact with the claims of those already before the court. But there is no need for them to be parties in order to adjudicate the claims of those who are before the court.
John Paul Stevens: No, but, but is there anything that is not neutral about a judge thinking well, we may have 40 or 50 law suits; it makes sense to me to have them all disposed of in the same proceeding, so I will arrange to have notice sent to all the... all this group of people. Why is that not... you say that it is a question of judicial neutrality, and I don't see that there is any bias involved in that.
John A. Ridley: Well, Justice, I submit that if the issue is claims consolidation, rather than claims gathering, we have procedures which amply cover that. Obviously, 140... Section 1404 of the Judicial Panel for Multi District Litigation and the like, all those sections, that law, that body of law provides for consolidating claims which individuals have brought, whether in the same form or different forms. That's not, I suggest, the issue here. The issue here is the court assisting the Plaintiffs, very actively assisting the Plaintiffs in going out and generating and bringing in those potential claimants. And that, I submit, is a radical departure for the court to do. I think what happens is that we are accustomed to notice in the context of Rule 23, but I believe that there is a significant difference between the Rule 23, situation where you have already an adjudication that these individuals are parties to the action, and here... and, and their due process rights obviously are affected because they are to be bound by that action... and the situation here, where there is no due process consideration, nobody suggests that. There is no effect on these non parties if the court does not assist in bringing them before the court.
John Paul Stevens: Well, the statute might run, I suppose.
John A. Ridley: Your Honor, that can happen with respect to any potential litigant who might have a claim out there. And we have never, I don't think it has ever been suggested that it is the role of the judiciary to go out and to ensure that those who have statutes of limitation which might be running are brought in before the court so that the court can adjudicate their claims in a timely fashion.
Antonin Scalia: But Justice Stevens is right, it does... does it have anything to do with neutrality? Is neutrality the problem or is it perhaps that there is no case or controversy. Is that what you are saying?
John A. Ridley: Well, there is... there is a case or controversy in the sense that there are parties before the court whose claims will be adjudicated. But what we suggest here is that the court is assisting the Plaintiffs in a tactical maneuver. I, I don't use maneuver in the bad sense of, of the term, but--
Antonin Scalia: It sounds like it. Let me ask you another kind of a practical side of this thing. Supposing that we agreed with you, you say you can't do this this way, and so then the plaintiff says to himself well, these people are all potential witnesses because they are all affected by the same employment decision, same facts. Every one of them might have some story to tell that will shed light on whether there was discrimination. So I would like the list, whole list just to use them as... to interview them as prospective witnesses. The judge would have to grant the discovery request, wouldn't he?
John A. Ridley: --He may well.
Antonin Scalia: And if he does, and then they say now that I have got the list I am going to send them all a letter, you couldn't stop them from sending a letter, could you? I... I'm just wondering if whether you aren't asking that a different procedure be followed to get to precisely the same result anyway.
John A. Ridley: Justice, in this case, there was no claim--
Antonin Scalia: I know they didn't do that here, but I am just saying supposing you win and then they come back and say well, judge, we have got another theory, we want to do it this way. Why can't they prevail that way?
John A. Ridley: --The district court's... the district court's purpose here was extremely candidly expressed. It was to aid plaintiffs in filling their class.
Antonin Scalia: I understand that. But I'm saying supposing you have won, and I, I'm a smart lawyer and I say well I can get around this, I'll ask for them because I want to take their depositions, and then I use the list to, to tell them about the law suit. But in that event... in that event he wouldn't have the imprimatur on it.
John A. Ridley: Well, he may or may not under Justice Stevens' hypothesis.
John Paul Stevens: Well, no, you wouldn't, but when you're... a separate question is whether the notice is proper when it says is it done with the authority of the court. But you would really have a problem even if you didn't have that in there. You really would.
John A. Ridley: Yes, we would.
John Paul Stevens: But I am just wondering if we are really fighting about anything.
John A. Ridley: Oh, I think so, Justice. I... I take comfort in the ability of the district courts to enter protective orders when necessary to--
John Paul Stevens: But how could you enter protective orders saying you can't solicit these people as clients? They have got a First Amendment... as Justice Kennedy pointed out, they've got a First Amendment right to do that, no matter how they get the names.
John A. Ridley: --It is customary in the age cases which the courts, the district courts adjudicate, for example, for them to set cut-off dates for opt-ins. Typically, those cut off dates are not long after the filing of the initial complaint. Now, that is a pure case management concern. But I believe that a district court could enter a protective order which would ensure--
Speaker: But I don't think he would have to.
John A. Ridley: --that, given the good faith of the counsel--
John Paul Stevens: Maybe the judge would do that, but he might not grant the plaintiffs' request here, either. But our question is one of power. And,... and it seems to be quite clear the judge would have power to grant discovery, and having done so, unless he had a very short period of opting-in, the, the plaintiff could normally follow up with notice.
John A. Ridley: --I believe that the court does have the power to grant discovery on an appropriate application, and I believe the court has the power to limit the plaintiffs' use of that discovery, and to direct the plaintiff not to use that for improper... for solicitation purposes.
William H. Rehnquist: But why is that improper, in view of the previous colloquy that we had?
John A. Ridley: Justice, we have no problem with the plaintiffs' using any means available to them to go out to solicit the joinder. The Plaintiffs have done it here, they have done it in any number of cases we cite in our briefs where the court has not given notice or assisted in the giving of notice, and there have been hundreds and even thousands of individuals brought in. That's the plaintiff's right, that's the counsel's right under Shapero. Where we draw the line is when the court involves itself in that process.
William H. Rehnquist: Well, you say where the court involves itself in that process. Now, you mean something more by that than just having the notice go out under the... on the, the stationery of the court, or the... and have the district court sign it. You, you mean something more than that?
John A. Ridley: Yes, Justice. When the court orders the production from Hoffmann-La Roche of the names of all of the individuals so that the Plaintiffs can use that to go out and solicit.
William H. Rehnquist: But why, why is that improper?
John A. Ridley: Because it is the use of the courts for a purpose which is not provided by the rules of discovery, we submit.
William H. Rehnquist: So you say if it were requested in terms of discovery, that would be for the trial of a lawsuit which the court is going to do eventually. If you use it just for purposes of getting additional clients, that is something the court ought not to be involved in?
John A. Ridley: That is correct, Justice, if I understand--
William H. Rehnquist: But now, if, if the court didn't has sent out a notice on its own, isn't it likely that the Plaintiffs would send a notice out on their own?
John A. Ridley: --Well, in this instance the court should not be sending out notice on its own, under... under--
William H. Rehnquist: But my question was, assuming that the court said... agreed with you, that the judge said, well, I can't send out any notice, then aren't the Plaintiffs going to send out a notice?
John A. Ridley: --Yes, and so be it. We have no problem with the plaintiff sending out--
Speaker: But they did in this case.
John A. Ridley: --They did in this case; they do it in any number of cases.
William H. Rehnquist: Well, then... then does, does the defendant in, in practice in this kind of case have a right to come into court and object to that notice?
John A. Ridley: In this instance, we did object to the so-called R.A.D.A.R. letter, in which the Defendants, the Plaintiffs sent out before instituting the suit. The facts here, Justice, Chief Justice, were these. After the reduction in force, in which over 1,000 individuals were terminated, the Plaintiffs and counsel got together very, very promptly and had a list of some 600 plus names out of a total of, potential total of 700 individuals who might come within their definition of that class, and they sent out letters to all of them. Right after the terminations.
William H. Rehnquist: One, one, one reason the court of appeals, I believe, it might have been the district court, I think, gave for affirming the district court was that the district court was going to spend some time on this matter anyway. If the Plaintiffs pick up and send out a notice, the Defendants object to it, the district court is going to have to consider that anyway.
John A. Ridley: Chief Justice, we understand that. We acknowledge it, if in fact the notice is a, is a problem notice. But that is not to suggest that the court should involve itself in restraining the Plaintiffs First Amendment rights by reviewing... by mandating the review of that notice.
William H. Rehnquist: If a defendant comes in and objects to the notice, surely the defendant is asking the court to put some restrictions on the plaintiffs.
John A. Ridley: We do not believe that the defendant has the right to come in and ask the court to enter a prior restraint against their notice going out.
William H. Rehnquist: But didn't, didn't you come in and object to the notice in this case?
John A. Ridley: After the... after the individual, after the 400 individuals opted-in on the basis of the R.A.D.A.R. letter, which we considered to be incomplete and inflammatory and inappropriate, we came in and said at this point in time we are objecting because these people were never contacted by counsel. They got a letter with a consent to form... consent to join form and they sent in their opt-ins.
Antonin Scalia: Were they... were they objecting to it? Were these people objecting to it? I don't see how the court gets involved in that?
John A. Ridley: At that point in time, Justice--
Antonin Scalia: You are willing to have the court get involved in the acquisition of clients for the benefit of your side of the case, but not for the benefits of the other side of the case. What business was it of the court's whether, whether these people who chose to join felt that they had gotten adequate or inadequate notice? At this stage, what business is it?
John A. Ridley: --Well, with respect to the R.A.D.A.R. letter which went out from Plaintiffs, we believed that that letter was so incomplete and misleading that those people who were brought... came in as a result of that letter, should be sent corrective notice. We did not ask that they not be permitted to join. We simply said that the consents should be vacated without prejudice to a corrective notice. And there was... there is a precedent in the Ninth Circuit for precisely that in the Partlow decision, which we relied on. But here you have the court dealing with people, parties, who are now before the court. Once those people send in the consents they are parties to the action, and we believe that the court has all the power it needs to deal with those parties.
Sandra Day O'Connor: Mr. Ridley, do you assert that the trial court violated some constitutional right of your client by the trial court's action?
John A. Ridley: No, Justice, we do not.
Sandra Day O'Connor: All right, you complain then that the trial court violated some rule?
John A. Ridley: Your Honor, we suggest that the appropriate analysis is whether there is a source of power to authorize the trial court to do this, and we say there is--
Sandra Day O'Connor: Well, don't we recognize a broad scope of authority in trial courts to manage the cases assigned to them. Isn't this a critical tool that trial courts must have to manage the caseloads that they have? I don't understand why you are suggesting that it's an obligation that we limit the power of the trial court to manage its cases.
John A. Ridley: --Obviously, we have no objection to the management of the cases which are before the district court. There are a number of additional--
Sandra Day O'Connor: Well, there is a case before the district court in, in which at least some plaintiffs were properly before it and your client was properly before it.
John A. Ridley: --That is correct, Justice, but what is happening here is not case management, by any stretch. The court has all the power to consolidate the cases which are brought before it, but we are suggesting here that this is pure claims generation. These parties are not before the court, in any sense of the word, the individuals who would receive the notice from the court. They have in many, many instances already received notice from Plaintiffs' counsel. 600 letters were sent out, 400 opted-in, 200 out of a 300 universe of potential recipients of court notice have already received notice. And we submit, respectfully, that that is inappropriate for the court now to come and request that these people, if they believe that they have any claims, come before the court. It... it... if the Court can appreciate how unique a situation this is, and how different it is from Rule 23 situations where there has been an adjudication by the court, that the "non parties" are in fact before the court and, and, and the class has been certified, we submit here that there is absolutely no precedent. We believe that the Ninth Circuit decision in the Pan Am air crash case puts this entire situation in proper context, where the court there was facing the issue of a district court requesting notice to go out to non-parties who were not necessary for the adjudication of the case, and whose due process rights were not impacted by the adjudication of the case which was before the court. I see that my time is up, Chief Justice. Thank you.
William H. Rehnquist: Thank you, Mr. Ridley. Mr. Flamm, we'll hear now from you.
Leonard N. Flamm: Mr. Chief Justice, and may it please the Court: How the issue before this Court is to be answered may well boil down to how the question is phrased. The question is couched in the form of whether there is anything in any court rule or statute or otherwise which bars a district court from exercising its power to facilitate notice to potential litigants. Why, Respondents have shown that the answer to that question is clearly no, based upon an absence of any conflict, of any statute, rule, legislative history or policy. Aside from asserting some generalized objections which we have heard about impartiality and judicial passivism, Roche apparently does not... does not even disagree. That would seem to end the matter, except Roche has asked that this Court rephrase the question from, is there anything that bars court-facilitated notice, to the question, is there any specific authority for having it. Of course, in so doing, Roche has attempted to shift the burden of justification squarely upon the Respondents in this case.
Antonin Scalia: The courts can do anything that, that is, is not barred. Is that--
Leonard N. Flamm: That is our position, Your Honor.
Antonin Scalia: --That is the rule we operate. Court... courts can do anything that is not barred. That is wonderful, I never-- [Laughter] You can't mean that, can you?
Leonard N. Flamm: We would agree that the Roche approach is incorrect, but we are prepared for purposes of the argument today to play into Roche's rules that we have an affirmative obligation and we have met our affirmative obligation, and that there... and that there is affirmative standing in the statute and in the rules and in the legislative history for what we propose--
Antonin Scalia: Suppose... suppose a court has before it a case involving a train wreck, in which there are a lot of injured people, no special statute governing this train wreck like the Age Discrimination Act. It has one suit, and it says, gee, this court's probably going to get a lot of other suits from this same train wreck; it is sort of a shame to have to try them one by one. Do you think that court could... could send out notice to, to all the other people saying, you know, save us some trouble will you, we, we have one case in front of us, we'd like not-- Can a court do the--
Leonard N. Flamm: --I'd like to add to that question two parts. The Ninth Circuit has addressed a very similar issue and has, unfortunately, found that the court does not have some residual power. I would assert that there is, of course, a case management power within the court, so the answer to the question is, I think, in disagreement with the Ninth Circuit, is yes, the court has the power.
Antonin Scalia: --Now--
Leonard N. Flamm: And for that reason--
Speaker: --[inaudible] management?
Leonard N. Flamm: --the case management authority that is inherent in the court's general jurisdiction is inherent--
William H. Rehnquist: You would regard it as case management when you have got one plaintiff in a personal injury action before you, or where it was a train wreck and there are probably a lot of other plaintiffs, to say let's send out notice to everybody else who we can find that might have suffered injury in that to come in and join this suit, when, when there is no set thing similar as 216(b)? That is an extraordinary notion of case management.
Leonard N. Flamm: --Well, obviously, we have 216(b) here. But leaving the 216(b) question aside, if the court had some basis to believe that these people are going to come crashing through the court door anyway, there, there may be a basis for it. I don't know that I have to reach that issue for purposes of this appeal. We think 216(b) satisfies any of the concerns that were previously expressed by Roche that this is somehow proceeding without any statute or basis.
William H. Rehnquist: Well, then what you, but you said unfortunately the Ninth Circuit has said the court wouldn't have. Why do you regard that as unfortunate?
Leonard N. Flamm: Well, I think there is a basis for a Court, if they see that there is an, an imminent likelihood of a number of actions about to be brought... this was... that was an airplane crash, and we, we all know there was not only one survivor, there were a number of persons who were facially similarly situated. The district court, through the special master who had experience apparent... apparently in the airline crashes, was eager to have these people come in because he knew well from his experience that that was a case in which it would be desirable for multiplicity of litigation purposes, case management purposes, to get all the cases heard. I, I don't know that we need to reach that issue, Sir, because we have the 216(b) position of... of the... of Congress on that.
Antonin Scalia: How does 216(b) change it? I mean, let's assume I disagree with you on the first one, that I agree with the Ninth Circuit.
Leonard N. Flamm: 216(b) is a specific affirmative statement by Congress that it's a good idea that all persons with similarly-situated claims be allowed to intervene in that action... maybe, though, intervene is not the right word, to come into the action.
Antonin Scalia: Don't the federal rules of permissive joinder amount to a similar... a similar endorsement of joining actions by the Congress?
Leonard N. Flamm: Well, if we are talking 24, you have to start with the fact that people in, in a 24 situation know themselves about the fact that the action is, is out there. In 216(b) it is neutrally phrased. It just says that all persons who are similarly situated may, through a, through a mechanism, find themselves in the litigation by filing the opt-in consent form. So, I think 216(b) is the clearest statement on the part of Congress that we could get that the idea of a group action is something that they want to be promoting, and, and, and when you apply that in the ideal situation you have even greater--
Antonin Scalia: I think the permissive joinder as well as mandatory joinder provisions of the, of the rules amount to a similar endorsement of the desirability of that, of that action.
Leonard N. Flamm: --Well, then, then, we're not arguing. I am just--
Antonin Scalia: Well, then, then we're only arguing if we disagree as to, as to what the court can do in the railroad case.
Leonard N. Flamm: --I would agree with that. Roche's principal argument on this appeal is that... their first argument is that Section 216(b), although it provides for a joinder situation or a collective action, is specifically silent on the issue of court-facilitated notice. Of course, that statement is, is true, but silence alone is, as we have seen in many other decisions before this Court, is an unhelpful guide to plumbing congressional intent either way. This is not a case, if I may, where we have pregnant silence. This is not an area where the issue would be expected normally to be addressed in a statute. This is a detail, if I may use that word, which should be left to the court, the detail of notice. So the absence of expressed language should not have any significance, apart from the fact that Congress didn't feel the need to speak on the subject. There is a second argument that Roche has made that Roche, that than the Congress, when they selected 216(b), somehow intended to adopt the judicial gloss of 1938 or the judicial gloss of 1947 that was surrounding 216(b), and since that judicial gloss was less than clear on the issue of court-facilitated notice, why that would mean that the Congress was making some kind of affirmative direction that the... that the gloss that, whatever it was, should not be accepted. The case law that pre-existed the ADEA 1967 shows that there was no widespread use of a judicially authorized notice, but there was, nonetheless, some case law support for it. We will concede that the number of cases supporting judicial notice were, were not legion, but the likely explanation for that in 1947 was that the unions, who were the principal disseminators of the notice, didn't need the names and addresses. So Congress really had no need to be concerned about whether notice was needed... would be given to people who didn't have the names and addresses already. But it is instruct--
Byron R. White: xxx bring a class action under the ADEA, under Rule 23?
Leonard N. Flamm: --Your Honor, that's... that's a wonderful question that is technically not before the Court. The statute has designated a specific mechanism, the 216(b) mechanism, and it seems to--
Byron R. White: Well, it just says that parties may opt-in.
Leonard N. Flamm: --I understand that, Sir. It is a question that certainly has troubled us deeply. It... it case law seems to be settled--
Byron R. White: You think that would just preclude bringing... having a certification of the class?
Leonard N. Flamm: --If we could use Rule 23 this discussion would be, would be highly academic.
Byron R. White: That is exactly right.
Leonard N. Flamm: I, I follow your point. The settled case law followed by the circuit and the district in which we were in seemed to accept as a given that Rule 23 would not apply for the reason that 216(b) was a, was a specifically-designated provision in the FLSA, and that Congress took a rifle shot to bring that particular mechanism in, and by somehow a process--
Byron R. White: It meant to preclude... ordinary ways of bringing in class actions?
Leonard N. Flamm: --It seems that that's the case law that has fairly gotten to the point where the, the reliance on 216(b) became necessitated. That is correct. But the point I want to make about--
Harry A. Blackmun: Counsel, last term near the end, this Court decided Martin against Wilks. Does that case, in your estimation, help you or hinder you?
Leonard N. Flamm: --Well, in our final section of our brief we thought that the general language of that--
Harry A. Blackmun: I have just read what you said.
Leonard N. Flamm: --I understand that, sir. Our position would be that the general direction, that the burden is now devolving back on the Plaintiffs to get the people up and Martin v. Wilks, to that extent, supports our position before this Court. The point I want to make on the 1947 amendment is that Congress had a scalpel in its hand in 1947. It took out a certain type of action, it took out that representative action in which the person who brought the action was not himself a grievant. But it left in the other kind of collective action in which the representative was himself a, a, grievant. And when Congress was wielding that scalpel in '47, and if they were aware of what that judicial practice or non practice was with respect to notice, and they didn't see fit to take out all these collective actions, that failure to weed... to wield the scalpel in that case, in our view, would constitute some additional evidence that Congress was quite content to allow 216(b) to be interpreted by the courts in a way to promote the continued use of the collective action device in Section 216(b).
Harry A. Blackmun: Counsel, how many hundred other people did you get to opt-in?
Leonard N. Flamm: During the course of the litigation, we got approximately 400 people, a good bulk of--
Harry A. Blackmun: And then why do you need the rest of them, other than to have additional clients and additional fees?
Leonard N. Flamm: --Your Honor, the reason is the pooling of resources that enable ADEA actions to proceed on this basis. The word need is... is a word that has a lot of meanings. I don't need them for, for, for necessarily winning the case, although I might, because every person who comes in and tells me about his case provides some additional piece of pooling of information. He provides that much additional financial resource, he provides that much of additional story to tell the jury, if it is to go that far about what his particular problem is.
Harry A. Blackmun: That is true of any multiple plaintiff tort litigation, isn't it?
Leonard N. Flamm: Yes, sir.
Harry A. Blackmun: And yet, you wouldn't be doing that in tort litigation.
Leonard N. Flamm: That is correct, sir. The statute is our authorization. The statute doesn't say you can... you have to stop when you've got enough people... when you've got the critical mass to win your case. The statute says you can go and get, as we read it, all the people who are similarly situated. And to argue that I have to stop because I am filled, I am sated with enough people, seems at least unfair to the people who by sheer happenstance or the vagaries of rumor weren't among the first wave or the second wave of people who learned through the grapevine about this case. It seems, as stewards of this class, that we are the attorneys and we have an obligation to go and see this through and see that all persons are receiving the equal opportunity of notice that this statute seems to require.
Harry A. Blackmun: Mr. Flamm-- --And it is true that some don't need it, but who is to say who doesn't need it after our critical mass has been reached? Mr. Flamm, could I ask you a question about that?
Leonard N. Flamm: Sure.
John Paul Stevens: When, when a person signs a consent to join the suit and joins it, and assume you lose the suit, sometimes plaintiffs lose these suits, are they liable for costs?
Leonard N. Flamm: The question of the opt-ins' liability for costs, we have indicated in our... in the notice that we would ask the court to, to circulate, that it's an open question, but we would have no objection if that issue were, were fairly addressed in the notice. I, I don't know the answer to the question, to be perfectly honest.
John Paul Stevens: I see. And notice doesn't provide an answer, does it?
Leonard N. Flamm: The... if there is a full court notice, some courts have considered the propriety and desirability of putting in a paragraph regarding the liability for costs. Some district courts have said there is a chilling effect to the inclusion of that language--
Speaker: I would think they would.
Leonard N. Flamm: --We don't take a position on that at this time, because obviously if we lose down the line, I think, we would probably be happy if we could disperse the allocation of costs among all the litigants. But I think that, again, is a detail that ought to be left to--
John Paul Stevens: It is not really raised, I guess, by this proceeding.
Leonard N. Flamm: --Yes, sir.
John Paul Stevens: Because the notice, as I remember, it doesn't say anything about that, does it?
Leonard N. Flamm: We took the position in the district court that it was chilling, but we certainly realize that that was an issue of discretion for the district court to determine on its own basis depending upon what he thought these people ought to know as part of the information they were receiving to join the action.
Antonin Scalia: Mr. Flamm, can I ask, and... it, it sort of gets back to the same thing again, but I want to know why Section 216 is any more an indication of the government favoring the court reaching out to bring in these plaintiffs than is Rule 20 of the Federal Rules, which says all persons may join in one action as plaintiffs if they assert any right to relief jointly, severally or in the alternative, in respect of or arising out of the same transaction, occurrence or series of transactions where there are common facts. Now, that says they all have a right to, to appear as... jointly in the same case. 216 says that any employee, if he gives his consent, can join this case. In one case, as in the other, the Congress is endorsing a right to proceed that way. Now, why wouldn't it be so, well... you, you say it is so, you say it is so, that under Rule 20 the court can go out and, and seek plaintiffs as well, right?
Leonard N. Flamm: I think the distinction, Sir, is that in Rule... in 216(b) there seems to be a declaration of a class concept in the sense that it says... it doesn't say all persons who have a feeling that they would like to come in may come in, it says all persons who are "similarly situated" may come in and have a representative prosecute the lawsuit on their behalf. That is going at least a couple steps beyond, if I may, what is in Rule 20, which just says, well, if there is a similar transaction everybody can go and put their own case in. In 216(b) you've got a representative situation and you've got a limitation that it ought to be a class that at least has some cognizability, namely that it be a class of similarly situated persons.
Antonin Scalia: Where does it say that, I am looking for the--
Leonard N. Flamm: In... I think you trivialize 216(b) if you say it is nothing more than Rule 20.
Antonin Scalia: --on behalf of themselves and other employees similarly situated, that is the... that is the--
Leonard N. Flamm: Justice, I think you... as I was trying to say, I think you trivialize 216(b) if it means, if it means nothing more than a permissive joinder provision, because here you have got a representative doing the prosecuting and you also have, it seems to me in the statute, a self-formed class. It is not just anybody who feels like it can come in. The... that's certainly going beyond what is in Rule 20 and Rule 24, in answer to your question. Roche has made an argument here that, that Congress failed to include court notice in the ADEA in 1967, despite an express inclusion by the Advisory Committee of court notice in Rule 23 only one year earlier. And it tributes to congressional inaction to add notice to Rule... to Rule 216(b) actions that there was some kind of congressional rejection. I would point out to the court that this argument is based upon a gratuitous juxtaposition that the federal rules amendment came in '66, ADEA was passed in '67. If there was a different time frame the Defendant's argument would lose some of its force. The legislative history--
Sandra Day O'Connor: --Mr.... Mr. Flamm, do you rely at all on Rule 16(b) as authority?
Leonard N. Flamm: --Your Honor, I heard your question earlier and I, I, I hadn't put it in the brief, and I wish I had. The answer is I'd have to take a closer look, but it does seem to raise again the general power of a court to supervise and manage a, a litigation.
Sandra Day O'Connor: So, you still assert that as part of case management alone that a trial judge can go out and facilitate notice to potential party plaintiffs?
Leonard N. Flamm: I would say he could use 16. I'd say he has the power reflected in 20, in 24, in 23, and we haven't discussed it but Rule 83, which is the old... the, the catch-all category, which says you can regulate your practice in any reasonable manner--
William H. Rehnquist: Mr. Flamm, exactly what section of... what part of Rule 16(b) do you think authorizes the sort of thing that was done here, Rule 16(b)?
Leonard N. Flamm: --I, I was just picking up Justice O'Connor's point--
Speaker: Well, yes, but you said you agree--
Leonard N. Flamm: --I, I, I meant statute. I'm sorry, sir. I meant Section 216(b). I apologize.
William H. Rehnquist: --I'm sorry, I thought Justice... I, I... I thought you were referring to Rule 16.
Leonard N. Flamm: No, sir, I meant Section 216(b) of the statute.
Sandra Day O'Connor: You mean 216. You don't rely at all on Rule 16?
Leonard N. Flamm: I have not asserted that in the brief, although as I said to you in candor, I wish that we had put that point in as well, that Rule 16 also provides still another--
William H. Rehnquist: Well, then let me ask you--
Leonard N. Flamm: --All right, go. [Laughter]
William H. Rehnquist: --just where in Rule 16 do you find this? Just where in Rule 16(b), what language do you--
Leonard N. Flamm: I don't have the rule in front of me, sir.
William H. Rehnquist: --Well then how can you say you think it provides it?
Leonard N. Flamm: Because it is a case management point and the court has the power--
William H. Rehnquist: It is a pretrial conference scheduling [inaudible]. That is what the rule says, the heading says. And you are not prepared to cite any language in the rule supporting, and yet you say you rely on it?
Leonard N. Flamm: --No, no, sir. We had not put this point in our brief.
William H. Rehnquist: No, but you said you wished you had.
Leonard N. Flamm: Because the argument seemed to have some persuasiveness as--
William H. Rehnquist: Why, why? Because it was made by one of the Justices? [Laughter] Let the record show that counsel is nodding his head.
Leonard N. Flamm: --Implicit in Roche's argument regarding Rule 23's... Rule... Rule 23's inclusion of notice and the absence of notice in 216(b) is that Congress had some duty to take a step, and amend 216(b) or to make sure that when 216(b) was incorporated into ADEA that notice language would specifically go in. It, it is our feeling that Congress does not have the duty to rush out and make a series of conforming legislative amendments each time a federal rules change could conceivably impact on a procedural aspect on a federal right. The, the type of change that Congress would have had to have made would have involved precisely what we think are, are procedural matters, which are normally left to the court's discretion. Finally, the, the point is made that somehow notice, the concept of court notice is indigenous to Rule 23, and sprang fully blown from Rule 23 and never preexisted. Of course, the concept of court notice existed well before Rule 23, and Rule 23 does not actually confer the power on a court to give notice so much as it merely confirms a court's original inherent power all along. The Advisory Committee was bestirred to put explicit notice provision in the Rule 23 because of due process considerations, which are certainly not present at bar. But there is Rule 23(d)(2), which provides for an optional form of court notice when due process concerns are not implicated. And to that extent, Rule 23(d)(2)'s power is broad enough to encompass what a court would be doing here today: the power of, of ordering notice for the fair conduct of the litigation. I would also point out that the Advisory Committee note to Rule 23 states that the present provisions of 216(b) are not intended to be affected by Rule 23 as amended. And yet if you look at Rule 23 and you argue it somehow to impact on 216(b), you're precisely countermanding, countermanding, the, the directive of the Advisory Committee note. Because to argue that 216(b) ought to have notice because Rule 23 has notice, why, that is doing the very thing that the Advisory Committee note cautions not to do: not to interpret 216(b) in light of anything that is going on or has gone on with... with Rule 23. Roche's final argument is that the 1947 amendments reflect some general hostility, 1947 amendments to 216(b) reflect some general congressional hostility to all mass joinder actions. Of course, I made the point earlier that to cut out half, but to leave half, is hardly to suggest that they had a hostility to all mass joinder actions. If they had the scalpel, they took care of what they had to take care of, and left what they had to left... had to leave. Briefly, I would like to address some general observations about helping the plaintiffs or not helping the plaintiffs. On one hand, Roche seems to argue that this unduly helps the Plaintiffs. It, it is our position that this is not an invitation to join, it is not an exhortation, it is not a conscription to join. It is an advisory notice in which the court, for its own reasons, is not acting as an umpire but is acting on its own for its own case management reasons. And those are interests which go beyond the needs of the litigants. Roche also argues conversely the Plaintiffs don't need the help, and we heard the point earlier discussed that we had successfully gotten 400, why don't we leave the dinner table? We should be filled up. The answer is you don't know how many people are going to come in. The process of informal networking, which is what we would be relegated to, is slow, it is inefficient, it's unreliable, it's incomplete. Networking can never be effective as court notice. But networking is inevitable, Your Honors, and it is unregulated. And because it is inevitable and because it is unregulated, those are two reasons in an of themselves why this Court ought to be concerned... ought to be concerned with giving court-facilitated notice. We have heard it said that this is helping strangers to a litigation. Well, it is true it does. But to a great extent, the pooling of resources, both monetary and informational, also benefits the litigants, who are desirous of proceeding with as many people in their corner as they want. Now, the point may be made, well, this... isn't this class action run amuck? That may raise a question for congressional resolution. But we are talking here about everybody being given a chance to come into this action on the, one the basis of fair notice, on the basis of fair conduct. And for us to say at one point, well, you have got enough and we don't want to help any more strangers because the people already before the court have enough help, I don't think the court, at least at this stage of the game, ought to be making those determinations. In any event, that is an issue of the appropriateness of class notice. That goes back to the very issue that we started out with: is this a notice question or is this a question of what is judicial discretion here? If a court says you have already got 400 and you don't need any more, then let the district court say that. But in this particular case the court is not going... we are not addressing the discretion or the propriety of the court's exercise of discretion. It is a power issue only and, therefore, the questions that were raised about maximizing litigation, stockpiling plaintiffs, seem to have no application to this case. As I said before, the precise issue before you is really a limited one. It is a power issue. Obviously, the order that is sought by the Plaintiffs in this case will benefit them. There is no question about that. Indeed class actions under the ADEA may never get off the ground if the... if this court notice procedure is not followed. In our case we had 400, but in the next case there may be only a plaintiff who is not well connected and who is not well heeled. And what is he supposed to do if he can't find the friends and, and conduct the grapevine activities that he needs to, to, to build a case with some degree of force against an employer? Roche has essentially skirted the basic issue of power, and they have argued what should be done, not what can be done. And to the extent that this Court is being asked to limit--
Byron R. White: Why do you want to involve the court in the, in the business of building the case? You, you sent out a notice of your own to 600 people--
Leonard N. Flamm: --We, we would have done it on our own. All we, all we needed was--
Byron R. White: --Well, you did it. You did it on your own, but you didn't... you only got 400 responses to your own notice, is that right?
Leonard N. Flamm: --That is correct, sir.
Byron R. White: But you thought the court would be... could help you scare up some more?
Leonard N. Flamm: Well, I, I, I mean that phrasing of the question sort of puts me in a difficult position. We thought we had a responsibility to the existing class--
Byron R. White: Maybe it's a different word than saying building a case.
Leonard N. Flamm: --All right, sir, we thought we had responsibilities to our clients and to the class as a whole to promptly--
Byron R. White: Well, why didn't you just send out another notice yourself?
Leonard N. Flamm: --I'm sorry. We didn't have any more names. We had--
Byron R. White: Well, you sent it out to 600; you didn't get answers from all of them.
Leonard N. Flamm: --We... I... I didn't send out any, but 600 may have been sent out. 400 responses came in, but we well knew there were even more than the 600, and should we have let... should we have cast them adrift? Did we have a responsibility to that class that we did represent?
Byron R. White: Well, how about... how about just getting... how about just using discovery to get the names and then sending out the notice without involving the court?
Leonard N. Flamm: We were concerned that if, that if we just took the names without the purpose of... we wanted to be straightforward to say that we were going to use the names for a solicitation purpose. Now, it has come up today that we could--
Byron R. White: Well, I know, but so you do that, you get the names, but why did you want the court to... why did you want to involve the court in, in... to say that the judge has authorized this?
Leonard N. Flamm: --Sir, we don't, we didn't need that language. I will be candid enough to say that that was... something we asked for, but something we could certainly have lived without. We could have been content in this case with the names and addresses without more. We thought for case management purposes that it provided the court with an opportunity to... to send that notice.
Byron R. White: You don't think it did you any good to have the court expressly involved in it?
Leonard N. Flamm: It did us a great deal of good for case management purposes. We're happy the court came involved in this. But in terms of our strict needs, the names and addresses would have sufficed. The court notice set cut offs, set limitations, provided a form of fair notice and provided a host of benefits that we were quite content with. But we could have lived without it, in the strict sense of, of getting the names and addresses and facilitating the matter.
Thurgood Marshall: You just wanted to help the court; you didn't want to help yourself?
Leonard N. Flamm: Well-- [Laughter]
Thurgood Marshall: You want me to believe that? [Laughter]
Leonard N. Flamm: I, I thought we chose the path that we were obliged to take in terms of best representing the class.
Thurgood Marshall: Why didn't you just, as Justice White said, just ask for another list?
Leonard N. Flamm: Because the solicitation issue hadn't been as clear with Shapero not yet decided.
Thurgood Marshall: It was clearer than what you have now, isn't... wasn't it?
Leonard N. Flamm: Well, we didn't--
Thurgood Marshall: Wasn't it clearer than what you have now?
Leonard N. Flamm: --I don't know, sir.
Thurgood Marshall: Well, you're up here defending it.
Leonard N. Flamm: We didn't know how... we didn't have Shapero on the books--
Thurgood Marshall: You wanted to try something new?
Leonard N. Flamm: --No, we wanted to see that... it... it... that the case law, Seventh Circuit, Second Circuit, had said use a court notice; it, it, it, it's a better procedure than just grabbing the names.
Thurgood Marshall: Did the court ask you for this help?
Leonard N. Flamm: I could be content with the names and addresses. I think the, the court's additional involvement in the notice has good case management--
Thurgood Marshall: You thought you were helping the court, not yourself?
Leonard N. Flamm: --The court can participate if it chooses to involve itself in the formulation of the notice. We would make... we would condition our communication to these people on the court's reviewing the notice. We don't require it as an immediate need for this particular litigation. I think we have shown that we have met the burden that we have before the Court.
William H. Rehnquist: Thank you, Mr. Flamm. The case is submitted.


Warren E. Burger: We'll hear arguments next in 70-99, Evansville-Vanderburgh Airport Authority against Delta Airlines. Mr. Trockman, just so that you and Mr. Mallory can plan your time, we will probably complete your argument and perhaps if it's feasible, open some phase of your friend's argument.
Howard P. Trockman: Yes, Your Honor. Mr. Chief Justice and may it please the Court. This is a review of a decision of the Indiana Supreme Court rendered on December 23, 1970, declaring the ordinance involved in this proceeding, unconstitutional under the Commerce Clause of the Constitution. The petitioner, Evansville-Vanderburgh Airport Authority District, is a regional airport. By that I mean, it lies in the Southwestern tip of Indiana and is utilized by not only the residents of Vanderburgh County Indiana, where it is located, but by many people residing outside of the area. The district was created by a state statute. It has both legislative and taxing powers and it was created specifically to operate Dress Regional Airport. As I stated, it is a primary airport which serves Illinois, Kentucky as well Southern Indiana residents. Approximately, 300,000 people move through this airport per year using commercial aircraft. 40% of these users, as shown by the stipulated facts in this cause of Dress Airport reside outside the city .The yearly operating deficits to which I will elude later in this argument, are supported up until now only by tax levies on Vanderburgh county property owners. The stipulated facts which I refer to --
Harry A. Blackmun: When you make that statement, don't you charge landing fees?
Howard P. Trockman: Yes, Your Honor, there are landing fees charged by contract to each of the commercial airlines serving the airport.
Harry A. Blackmun: And you have rental space within the airport?
Howard P. Trockman: We have rental space within the airport which is used on a per square foot basis by each of the airlines. During the course of this appeal, Your Honor and I have pointed this out in the reply brief, the charges which we are attempting to establish by this use and service charge ordinance were accepted from the contract of renewal of all of these lease agreements and therefore the question has been left open pending the outcome of this review.
William H. Rehnquist: I take it that the deficit you referred is the failure of the kind of charges that justice Blackmun has referred to to cover the operating expenses of the airport?
Howard P. Trockman: Exactly.
Harry A. Blackmun: Isn't it a disease that reflects all airports?
Howard P. Trockman: I don't think it reflects all airports, Mr. Justice Blackmun. I feel that some of the larger airports enjoy a very handsome revenue, but it is the type of airport that comes from Midwestern part of the United States such as the small or medium size hub-airports which we represent with a space and perplexed with this financial problem and this is what caused, I might add, the passage of the use and service charge ordinance which I will outline to you.
Warren E. Burger: Is there anything to prevent from raising their landing fees except that it might drive the airlines out?
Howard P. Trockman: There is nothing to prevent the raising of the landing fees, Mr. Chief Justice, but we do know that if the landing fees will raise that this type of raise and the levy would be passed along to the passenger in some way. Either the air fares would be increased, or the passengers would be paying for this charge in some manner. It's obvious to me and I think it probably should be to the Court that whatever charges are paid by the airlines are passed along to the ultimate consumer and this of course, is the purpose of the use and service charge ordinance in this particular case. It is designed to be passed along to the consumer on a user basis, not on the basis of a property tax that just effects Vanderburgh county residents many of whom never use the airport. But when we have some 120,000 people residing outside the perimeter of Vanderburgh county using this airport and do not support it directly through any property tax, we feel that a much more equitable and broader base of support should be made and that's the formulation of the user tax. The preamble of the ordinance in question recites the need for revenue to support existing and future facilities at the airport.
Byron R. White: What are the other sources of revenue? Are there any other source of tax revenue for the airport?
Howard P. Trockman: There are no other sources for tax revenue other than a Vanderburgh County property tax and add government tax.
Byron R. White: Part of that is allocated to the airport?
Howard P. Trockman: Yes the airport has up until this legislature, it had a $0.12 limitation on each $100 of accessed evaluation of property in Vanderburgh County.
Byron R. White: So all of the residents (Inaudible)
Howard P. Trockman: Yes. That's correct.
William H. Rehnquist: Is the airport district is larger than the city of Evansville itself?
Howard P. Trockman: The airport district is coterminous in accordance with the statute with the boundary lines of Vanderburgh county. So that the ad valorem tax which is levied to support the deficit, to raise the deficit to keep the airport in existence, it's levied only on the Vanderburgh county residents. Now recognizing the need for revenue to support the existing and future facilities, and by the way, I will refer later, to Exhibit D which is the part of the stipulation where the consultant's report requires an estimated expenditure of local funds of $6.9 million of airport improvements. The airport board passed this ordinance on February 26, 1968. It notified the airlines of the passage of this ordinance in advance and notified it that it would become effective on July 1, 1968. As I stated, it was designed in part to deprave the cost of providing commercial airport facilities for use by commercial aircraft and commercial passengers. The ordinance establishes a $1 for enplaning passenger charge and as I said, it is on the passenger, to be collected by the airlines and remitted twice yearly. It applies without distinction whatsoever to whether the passenger travels in interstate or intrastate commerce, each passenger is treated the same. And the fact that these respondent airlines might subsequently refer to the fact that there are 88% more or less people who are traveling outside of the airport to locations beyond the state of Indiana is unimportant and I don't think relevant to the proceeding as long as interstate and intrastate passengers are taxed or charged equally.
Potter Stewart: The tax is imposed only on passenger whose trips originate at Dress Memorial Airport?
Howard P. Trockman: That is correct, Your Honor and you will find a stipulation to the affect that enplaning passenger is by identity the deplaning passenger because most people who start one leg of a journey are either completing a journey which had its origin in Evansville or completing a journey which had its origin in low county other than Evansville. So it's our position that by saying enplaning passenger, we are reaching all commercial airline passengers.
Potter Stewart: But it's a passenger whose -- what is taxed is the passenger whose present trip originates in Evansville?
Howard P. Trockman: That's correct, regardless of his residence.
Potter Stewart: Yes.
William H. Rehnquist: You have a stipulation, do you not as to 145,000 versus a 146,000, very closely equivalent between (Inaudible)?
Howard P. Trockman: Yes, the stipulation, I believe is a very per stipulation upon which we rely, found at page 53 of the appendix at the bottom, paragraph ten. I am sorry that is not the stipulation. I think it's on 43. Anyway, there are some 146,000 enplaning passengers at Dress Memorial Airport in 1967 and this is pointed out in the stipulations. I cannot find the exact location, this is paragraph 12, page 46 of the appendix Your Honor. And there is a like number or substantially like number of deplaning passengers at the airport for the same period. Now for the first time in any use tax statute that's been passed by any state or local municipality, the airlines were allowed by the terms of this ordinance, a 6% deduction for its administrative cost of collecting the passenger enplanement charge. I don't know of any other statute, sales tax, gross income tax, highway use tax statutes, at least I have not found any to the state which gives to the airlines or gives to the motor carrier an allowance for this administrative charge and there are cases of course, which state that no such requirement can be made in the statute, but we have had but we have made such an allowance. The ordinance does provide that the proceeds are appropriated for the capital improvements of the airport. Now the question involved in this proceeding is of grave and vital concern of the preservation of state and local governing bodies to provide and improve facilities for use of commerce and to charge reasonably therefore.
Thurgood Marshall: But didn't the Supreme Court of Indiana just said it wasn't using tax, because the only people they got taxed were only that flew the airplanes not those who used it.
Howard P. Trockman: Yes, Your Honor there was a statement to this effect and I am prepared to respond to that statement. The use of the facilities of Dress Regional Airport, are enjoyed primarily by the commercial airline passengers. The stipulations involved in our Appendix are very replete, with statements to the effect that the existing facilities, at Dress Memorial Airport, Dress Regional Airport, would not be essential except for the required use by intrastate commerce, or by persons traveling in commercial aircraft, and I would like to refer in response to your question, to pages 53, 54 and 55 of the Appendix where these stipulations are shown. At Paragraph 10, found at the bottom of page 53 of the Appendix, the stipulation was and this was agreed to by the airlines that the terminal building itself would not be essential except for the required use by commercial airlines and their passengers. And also in reference to the terminal building, most of their facilities constituting the terminal building would likewise not be necessary except for the required use by commercial airlines and their passengers. In other words, it would not be required for noncommercial or private aviation. There is a stipulation also Your Honor to the effect that the runway lengths, the approach areas, ramp ways, taxi ways, the instrument approach lighting systems and the safety aids at the airport would not even be necessary to accommodate private or noncommercial aircraft. Thus they are provided for the use of commercial airlines, and the comparison which we have made which I think is very interesting at Paragraph 14, page 54 of the Appendix, is that in order to have a noncommercial private aviation type airport, there would only be required some two runways, possibly even of a grass strip of 3,500-4,000 feet which would cost some $20 or $25 per lineal foot to construct. But in order to accommodate commercial airlines and their aircraft and the passengers who travel on these aircraft, as shown at Paragraph 15, Page 55 of the stipulation, present construction requirements would require a $200 per lineal foot, expenditure. Making a comparison of the cost involved for noncommercial as opposed to commercial aviation, the two runways that I mentioned for private aircraft, would only cost some $2,00,000, 8,000 feet $25 per lineal foot. The required cost for commercial airlines, using these same runways which we now have at the airport some 16,000 feet of runways, is $3.2 million, and I submit, this is a substantial variation in cost in order to accommodate commercial airlines and their passengers, whether they be intrastate or interstate.
Harry A. Blackmun: Of course, all that difference isn’t paid by the airport facility, is it?
Howard P. Trockman: I don't believe I understand your question Mr. Justice Blackmun.
Harry A. Blackmun: Well, you are making a point of the difference in the cost between the runways, for example in a private noncommercial airport and that in the more of commercial one. Now am I not correct in my impression that most of these cost, bulk of them are supplied by Federal grants?
Howard P. Trockman: No, they are not You Honor. Under the Aviation Facilities Act which was recently amended in 1970, most funds which could be contributed in granting an aid towards airport improvements, it is some 50% of the project cost. As a matter of fact in the Airport Facilities Act, there was a statement to the effect that substantial expansion of the local airports was needed to provide the necessary improvements to accommodate commercial aircraft, and commercial airlines. And in order to supply these improvements, our consultants came up with exhibit 'D' which is shown in the Appendix, some $6.9 million worth of expenditure, solely of local funds after deducting all possible federal grants and aid which would be available. In other words, the project would be of a cost substantially more expensive than $6.9 million. In order to comply with the needed improvements at this airport and this consultant’s report, Your Honor, was adopted by the Board of the Airport Authority formally.
Harry A. Blackmun: Do you have state grants in (Inaudible)?
Howard P. Trockman: We have state grounds --
Harry A. Blackmun: State grants.
Howard P. Trockman: No state grants are allotted to us. We work through the State Aeronautics Commission but to the present date, no funds have been allotted or received by the Evansville Regional Airport for the construction of funds.
Harry A. Blackmun: In some states such funds are available from the states?
Howard P. Trockman: Through some type of state wise tax levied, but not yet through the State of Indiana.
Harry A. Blackmun: Now you referred to the 1970 statute, but this airport was constructed prior to 1970, I take it?
Howard P. Trockman: It was constructed sometime before that. It was actually constructed and substantially recorded (ph) during the war in order to accommodate aircraft using the airport, who were using local military industry. But the funds for this airport, Your Honor, have primarily and substantially been provided at the cost and expense of Vanderburgh County residents and this is shown definitely by the stipulations.
Harry A. Blackmun: When you say primarily and substantially, do you mean the vast majority of it?
Howard P. Trockman: Yes, Your Honor.
Harry A. Blackmun: This is the most unusual situation, is it not?
Howard P. Trockman: Well, no it is not unusual. For instance when it comes to the terminal building up at least until recently, our recent expansion of the terminal building, did not result in any receipt to federal funds. We recently had a $980,000 bond issue which is also recited in the stipulations for the purpose of financing a construction of an addition to our terminal building. Federal grants and aid don't reach terminal buildings or roadways, leading to the terminal building for instance. But federal grants and aid do reach runways and taxi ways to which federal grants will supply approximately 50% of the funds. But Congress nor the Federal Aviation Administration has not undertaken the burden of financing the improvements, at Dress Airport, that is on the local airport and until now on the local county residents.
Byron R. White: As a practical matter how will airlines pay their way of -- it actually be using the airport? As airlines they pay rent for their --
Howard P. Trockman: They pay a square footage charge for the office spaces which they utilize and at most airports, including Dress, they pay an enplanement charge but a charge which is based up on the gross landing weight of a particular aircraft.
Byron R. White: Now I suppose both charges passengers end up paying?
Howard P. Trockman: There is no question about it. If they don't, the airlines are operated with a substantial deficit as we do.
Byron R. White: What as a practical matter keeps the airport authority from simply raising the landing fee so that it would be spread over everybody who is using that particular airline and that particular airport?
Howard P. Trockman: Well, I think Your Honor this is what we have done by passing ordinance number 33, rather than funneling it through the airlines, by charging the airlines, a dollar for enplanement passenger fee, which we know ultimately will be passed along to the consumers, the commercial airline passenger, we have tax and has established use and service charge, for the airline passenger which is designed to be collected --
Byron R. White: Why did you do it that way rather than just raising the landing fee?
Howard P. Trockman: Well, at the time we did have a contract with the airlines which did specify a certain gross landing weight. This was one consideration, but the board’s explanation of this was that if there was going to be passed along to this consumer, the airport is going to be used on a user basis, if they want to have a more equitable use of the facilities and let the people pay for it according to the use then why not pass it along the passenger since they are going to pay for it anyway.
Byron R. White: If you don't -- they tax the deplaning passengers?
Howard P. Trockman: We do Mr. Justice White because the deplaning passenger also is an emplaning passenger.
Byron R. White: You think he has either already paid it when he left or he is going to pay it when he does leave?
Howard P. Trockman: That’s right. When I depart Dress Regional Airport for Washington DC, I am not going to be driving back normally, unless the weather does not permit me to fly. I am going to be returning to the Dress Regional Airport by aircraft. The same is true for anyone who is traveling to Evansville. They are going to board an airplane and to complete the second leg of their journey, after they arrive there and transact whatever business they might have.
Byron R. White: But you don’t tax anybody who comes out (Inaudible)
Howard P. Trockman: Well yes we do, and the stipulations do show that --
Byron R. White: How do you tax them -- you charge them the --
Howard P. Trockman: Our airport concessioners pay us --
Byron R. White: They pay you rent.
Howard P. Trockman: -- pay us rent and pay us on the basis of a gross percentage of the food prices charged to the consumers who eat in the restaurant for instance. The charge is 7.5% as shown by the stipulations. We get 7.5% for every item of food, and 12.5% for every item of drink, alcoholic beverage which is consumed on the premises. The airport parking is gauged on a similar method. We receive up to 80% for the parking fee.
Byron R. White: But is this the lot of (Inaudible) building that isn't (Inaudible), the cost has to be borne by the authority itself, I guess?
Howard P. Trockman: That is correct. And lot of this is -- we attempt to pass along to the airlines, but we have not yet had a fair return to support this facility. And if we are just going to support this facility in accordance with the way our consultants tell us that it needs to be supported by the construction of additional capital improvements, as is shown by the stipulations, we are going to run out of tax money to pay for these improvements and we need another method to with -- we need the method of the enplanement service charge to help us finance these improvements.
William H. Rehnquist: Mr. Trockman, I suppose there is some equity in favor of a dollar-a-head enplaning passenger taxes as opposed to just raising the landing fee, because your dollar-a-head-tax enables you to tax more heavily to Delta flight that comes in with 120 passengers on it than the Delta flight that comes in with 10 passengers on it.
Howard P. Trockman: That’s correct. Theoretically, the weight of the aircraft and use of the facility is more with the use of more per passenger plane movements, and we feel that by having such a charge is much more equitable method of measuring our revenues and in arriving at an equitable charge.
Harry A. Blackmun: Following through on the practicalities, landing fees and space rentals are matter primarily of negotiation with the airlines, are they not?
Howard P. Trockman: That is correct.
Harry A. Blackmun: And do I assume correctly that they are all joined together to resist your attempts to raise?
Howard P. Trockman: No question about that. They have done so in the past.
Harry A. Blackmun: And do I also assume correctly that they are threatening at times to overfly, if you get too high?
Howard P. Trockman: To be fair, I don’t think the airlines have ever made such a statement. I know they have rebutted but they have never made such a statement.
Warren E. Burger: But wouldn’t the CAB control that anyway?
Howard P. Trockman: Well under the CAB regulations they are required under their certificated routes to fly between certain points. For instance, we have in our stipulations that some 88% of the people fly outside the airport to locations beyond the State of Indiana. Since the appeal of this case Allegheny for instance, has added another flight which has a flight terminating in Indianapolis, Indiana. So that the percentages are constantly going to be changing, and it maybe 88:12 one year, and it might 60:40 the next, but I think this aspect of it is immaterial so long as we reach both the implanting passengers who arrives and departs in Indianapolis or Evansville and the passenger who goes beyond the State of Indiana.
Byron R. White: What about the privater aircraft that use --
Howard P. Trockman: Private aircraft --
Byron R. White: -- just pay landing fee.
Howard P. Trockman: -- is used on the -- we receive revenues from private aircraft indirectly through a fix based operators who maintain hanger facilities and repair facilities for these aircraft. Any gasoline which is sold to private aircraft at the airport, we receive $0.5 per gallon revenue, and this is a substantial amount of money.
Byron R. White: So you are wrap up in the equivalent of any landing fees or enplaning fees in that --
Howard P. Trockman: Unquestionably we do derive revenue, substantial revenue from our flowage fees.
Harry A. Blackmun: Don’t you have a tie-down fees?
Howard P. Trockman: Tie-down fees are actually charged by the fixed based operators. Now, they also pay on a square footage space contract which they have. But the actual revenue, the substantial revenue which we derive is through the flowage fee, that's paid by the private commercial or private airline aircraft owners. But we submit that the use and service charge in question is in essence, no different from the federal excise tax of 8% which is levied by the federal government in order to adopt and ask their 50% share of some of the grants and aid for improvements which are made. And it's certainly no different than the charges that are made by the airlines for the use of aircraft because it's all designed and gauged by the use of the facilities given and offered to the passenger for its use. Article 1, Section 8, Clause 3 of the federal constitution, grants to Congress the power to regulate commerce. But we contend, and the cases show this, that it does not give it the exclusive power, only the power to regulate it in its entirety if it sees fit. That Congress has not shown fit to preclude the states from any reasonable regulations. And as I say the question involved in this proceeding is whether we can require Congress to pay its own way for the use of variable facilities which we are furnished to commerce and secondarily whether the dollar charge is reasonable. In a Braniff airlines case in 1954, the Civil Aeronautics Act of 1938 was called into question and this Court stated that this Act did not exclude or preempt the states from passing or enacting reasonable regulations and until an act of Congress overrides all conflicting legislation, the states can pass reasonable regulations for the use of its facilities. As I stated the Aviation Facilities Act has already made the demands on local government to improve its airport system. And the act further requires minimum standards that have to be a established by local airports, in order to serve as commercial airports. In the General Motors case, we feel that this is very pertinent on the subject decided in 1965 and quoted it in our opinion, it is not whether a state, or whether commerce can be taxed, it is how it can be taxed. Our first significant case, we feel, it was decided on the use of valuable facilities furnished to commerce was back in 1886 in the case of Huse versus Glover. This involved the tax for the use of artificially constructed navigational facilities. Although I am not going to quote extensively from this case, I think the rationale of this case requires as much today as it did it 1886. The Court said, how the highways of a state, whether on land or by water may be best improved is a matter for state determination. And it is not the purpose of the Commerce Clause, the Court goes on to say, to relive those engaged in interstate commerce of their just share of the state tax burden. This Court stated, and it is repeatedly held that the private inconvenience must yield to the public good. And significantly we say, that the only bridge that needs to be gapped between 1886 and 1972, the date that we argue this case, is the fact that the highways that the runways of our airport and indeed the highways of our airport.
Byron R. White: Let's assume that this dollar a head just went into the general revenue of the county or of the state, and wasn't allocated for the use of (Inaudible)
Howard P. Trockman: I think -- I think Your Honor that would make a very large difference, but we have appropriated this --
Byron R. White: You think you might be stuck with Crandall then?
Howard P. Trockman: We might be stuck with Crandall, but Crandall as the respondents have rigorously argued is a mere departure tax, it's a mere tax to leave the state.
Byron R. White: Just a revenue --
Howard P. Trockman: It's not even based upon the use of facility.
Byron R. White: That's right.
William H. Rehnquist: Even if you live on your own road to the tax.
Howard P. Trockman: That is correct.
Byron R. White: So that was just a wholly a revenue measure?
Howard P. Trockman: That is correct. In almost every case that is found throughout the airlines' briefs Your Honor that involves discrimination or national uniformity is either based upon the fact that interstate commerce is taxed is an unequal matter to that of interstate commerce. Local interstate users were not being taxed under these use tax statutes.
Byron R. White: Or it's been charged more than it is necessary to pay its way?
Howard P. Trockman: That is correct. Now, we have in our stipulations, a statement to the effect, that the revenues to be derived by the maximum tax levies of Vanderburgh County, Indiana plus the revenue which we intend to derive from this use and service charge ordinance, will not even then be sufficient to complete our overall improvement program in order to comply with the consultant's report and what we determine, the Aviation Facilities Act, demands that we make at the airport.
Byron R. White: Well let's -- I suppose arguably you get the same answer even if this tax went into the general revenues of the county or the state and the county or the state was the one that had to make up the deficit of the airport?
Howard P. Trockman: That is so, yes, but there are cases that I've read in the effect that such a tax is not constitutional, if it's not appropriated for the purpose for providing the improvements needed and enjoyed by commerce.
Byron R. White: So if the state could show that every year it appropriated more than the amount of the tax to the airport --
Howard P. Trockman: That could be done, yes, unfortunately. Now, the Aero Mayflower case versus Railroad Commission which was decided in 1947, cited at page 28 of our brief, tells that even where a state has received federal aid, and this runs to a question that you asked me Mr. Justice Blackmun, that even where a state receives federal funds that a gross receipts tax on motor carriage was valid. And the Court went on to say that the state was not required to furnish facilities to commerce free of charge. And this holding has been upheld by this Court, has been repeated by this Court in the Aero Mayflower case, the Sprout case, the Bingaman case all of which we have cited in our briefs. So we say the incidence of the charge as the respondents argue is not only on the act of enplanement, but it is on the valuable use of airport facilities furnished at a great burden and expense to Vanderburgh County taxpayers. We submit Your Honor that the use and service charge of this nature is not only constitutional, but equitable in nature.
Warren E. Burger: Thank You Mr. Trockman. We'll not ask you to divide your arguments for a minute-and-half remaining. We will resume in the morning.