William H. Rehnquist: We'll hear argument next in No. 90-1150, Donald J. Willy v. Coastal Corporation. Mr. Maness, you may proceed.
Michael A. Maness: Thank you Mr. Chief Justice, and may it please the Court: The second section of article III of the Constitution limits the judicial power of the United States to nine carefully defined kinds of cases and controversies and none others. The question presented in this case is whether the United States District Court violated that constitutional limitation by awarding attorney's fees to Coastal and the other defendants as a sanction from Mr. Willy's asserted bad faith litigation, even though the Federal court never possessed article III subject matter jurisdiction over the controversy following the defendant's wrongful removal of the case from a State court, and even though Mr. Willy did not impede, obstruct, or delay the Federal court's resolution of any jurisdictional question, but instead correctly and repeatedly, and eventually successfully, contested the Federal court's unconstitutional exercise of the Federal judicial power over the case. We believe that this case is controlled by the court's decision in United States Catholic Conference against Abortion Rights Mobilization, Incorporated, that the district court's sanction order violated article III, and that that order and the judgment of the United States Court of Appeals for the Fifth Circuit mistakenly affirming it are unconstitutional and therefore should be reversed.
William H. Rehnquist: Did you just refer, Mr. Maness, to one of our cases in saying that it was controlled by that case?
Michael A. Maness: Yes, sir.
William H. Rehnquist: What case was that?
Michael A. Maness: United States Catholic Conference against Abortion Rights Mobilization, Incorporated.
William H. Rehnquist: And when was... do you have a citation for that or what?
Michael A. Maness: Yes, Your Honor, I do. It's cited in our blue brief.
William H. Rehnquist: Okay. That's fine. Thank you.
Michael A. Maness: Catholic Conference was a 1988 decision of this Court. I would like to state very briefly and very quickly some relevant facts which are for the most part entirely uncontradicted. Donald Willy worked as an in-house environmental attorney for the a subsidiary of Coastal Corporation in Houston from 1981 until 1984 when the company fired him. In 1985, represented by another Houston lawyer, George Young, Mr. Willy filed a State court lawsuit against Coastal and other defendants alleging a number of exclusively State law causes of action. The principal one of these arose under a Texas supreme court decision, Sabine Pilot Service Company against Hauck, which recognizes a remedy in Texas for those whose employment is wrongly terminated solely because of their refusal to violate the law. Mr. Young's petition on Mr. Willy's behalf alleged that Coastal had fired him because of his refusal to falsify environmental reports or to participate in the company's ongoing violations of State and Federal environmental laws at several of its facilities. Coastal and the other defendants wrongly removed the case to the United States District Court in Houston on December 30, 1985, almost 6 years ago.
Speaker: What was the basis for it?
Michael A. Maness: I think, certainly the court of appeals felt that there was more than an arguable basis for the removal and characterized it as having been undertaken in good faith. We don't, Justice White, dispute that characterization.
Sandra Day O'Connor: If there weren't any legitimate basis for removal, do you suppose the Federal district court would have the power to sanction the party removing the case wrongfully?
Michael A. Maness: No. It would not. I think, Justice O'Connor, what is implicit in this case and something I would like to touch on--
Sandra Day O'Connor: Even under the court's inherent authority?
Michael A. Maness: --That's correct. Our view is that the court's article III power over a case or controversy isn't determined by how clear or how difficult the jurisdictional question is. Our view is that the court either has the power to act under article III of the Constitution or it does not. And if it does not have the power, then no complexity of the jurisdictional issue or no good faith or, for that matter, bad faith be it with the parties or the judge can affect the outcome of the decision.
Sandra Day O'Connor: Well, do you think that would be true for criminal contempt sanctions for someone who wrongfully removed the case, but then has an outburst in the courtroom and insults the judge and the judge imposes a criminal sanction?
Michael A. Maness: No, I think our position straightforwardly draws a distinction between criminal contempt penalties--
Sandra Day O'Connor: And what is the article III power there?
Michael A. Maness: --Basically it's that criminal contempt sanctions implicitly or explicitly are cases that involve the United States. Cases to which the United States is party are specifically mentioned in the second section of article III. And, of course, as I think the court--
Sandra Day O'Connor: Well, what if the United States were not a party, but there is a suit between private parties and there is a wrongful removal and there is some outburst in court?
Michael A. Maness: --I think in those circumstances, Your Honor, the court would have a criminal contempt power that is--
Sandra Day O'Connor: Some kind of inherent power to protect its own dignity.
Michael A. Maness: --I'm not sure, quite honestly, that it should be characterized as an inherent power, given the fact that since the Judiciary Act of 1789 there has always been a statute that authorizes Federal courts to impose criminal contempt sanctions. The present statute, as Your Honor knows, is title XVIII, section 401. So it seems to me in the existing environment in which we operate, it's more appropriate to say in the event of such an outburst that the Federal court could punish it under the criminal contempt power conferred by article III, which Congress has implemented under title XVIII, section 401.
Antonin Scalia: Why, why do you choose to read that as applying to cases in which the court has jurisdiction and does not have jurisdiction both, whereas the other statutory authorities that exist you insist must be interpreted to apply only to cases where the court has jurisdiction? I mean, they don't say that, but you say that's the only reasonable way to read them. Why--
Michael A. Maness: Yes.
Antonin Scalia: --Why is that reasonable for the civil, but not for the criminal sanctions?
Michael A. Maness: I think, I think perhaps the best way to answer that, if I can do it directly, is that that's the distinction that the Mine Workers case brought. The Mine Workers case holds that there is implicit in this entire area a meaningful, principal distinction between vindications of judicial authority by criminal contempt sanctions and equivalent efforts to vindicate, in that instance, court orders, by civil contempt sanctions. It seems to me that that's logical and makes a great deal of sense when one undertakes to analyze what's at stake here. What's at stake is the authority of the court, the ability to undertake the functions consigned to it by Congress in article III.
Antonin Scalia: Do you think criminal sanctions, criminal contempt sanctions could have been imposed here if the court, if the court regarded what was being done as contemptuous, as an obstruction of its procedures?
Michael A. Maness: I think if the court had reached that conclusion and it were supported by the evidence, and of course, if Mr. Willy and Mr. Young had been accorded the procedural protections that criminal contempt implicates, yes, I think that would have been an instance in which criminal contempt sanctions could have been imposed.
William H. Rehnquist: Excuse me, Mr. Maness, your opponent cites the case of Chicot County Valley Drainage District, the opinion by Chief Justice Hughes, in which this Court held that even though a grant of Federal jurisdiction was unconstitutional, nonetheless a lot of consequences flowed from something having been acted on under that grant. What's your... how do you distinguish that case?
Michael A. Maness: I think that case and such cases as Stoll against Gottlieb indicate clearly that notwithstanding the fundamental importance of the article III power, and the fact that a court in order to act has to have that power under both article III and ordinarily a statutory grant of jurisdiction from Congress, but nonetheless, there are also countervailing considerations that sometimes can override that. And the example, of course, of res judicata, collateral estoppel, similar sorts of administrative devices that are simply more important constitutionally than allowing, for example, absence of subject matter jurisdiction to be raised long after the judgment is entered and long after the case has otherwise been closed.
William H. Rehnquist: So it isn't just a totally clear line between black and white. There has to be some evaluation of for what the claim is.
Michael A. Maness: I think so. But I'm troubled if the Court were to extend that principle to going back to what I think was soundly repudiated in Catholic Conference. And that's the idea that there's something called colorable jurisdiction. I was perviewing the transcript of the argument in Catholic Conference yesterday. I recall the question coming up that the Court was interested in knowing what is colorable jurisdiction. And counsel for the parties were unable to define it. Then the question was asked, what did the Second Circuit mean when it used the term colorable jurisdiction. And I think there was still some question. I think the Court in Catholic Conference decisively and soundly repudiated the idea that because a Federal court looks like it has the constitutional power to act, that that's the functional equivalent of its having the constitutional power to act. I think we've also pointed out in our brief that there's an observation in Szabo Food, which was quoted in Cooter & Gell, a very important case that I would like to turn to in a moment, Judge Easterbrook suggested that if a district court elects to proceed forward with the case and to supervise discovery under rule 16 and to conduct a trial and to enter a judgment, and then discovers at the end that the court doesn't have article III subject matter jurisdiction, it can nonetheless treat any derelictions by counsel of the parties that occurs during that period as appropriately sanctionable, either under rule 11 or under an inherent power. But we think that's flatly mistaken. I had thought since Capron against Van Noorden that jurisdictional issues have to be decided at the first of the case, not at the end. And I had thought that at least since Turner against the President and Directors of the Bank of North America, a case decided by this Court in 1799, that if it's a tossup, if the judge says to herself, gee, I don't know whether I have jurisdiction or not, it's equally balanced, the presumption is the court doesn't have jurisdiction unless promptly dismissed or remand the case. We've also pointed to some 12 decisions--
Byron R. White: What if the, what if the case goes up to the appellate court, there's never been any jurisdictional question raised, but the appellate, the court of appeals, like it should, raises a jurisdictional issue and says there's no, never has been any jurisdiction in the lower court. I suppose that you would take the same position.
Michael A. Maness: --Absolutely. I want to make it plain, Justice White, that, the fact that Mr. Willy and his counsel raised the absence of constitutional power from the get-go is just icing on the cake for us. The result would be exactly the same even if they had never raised it, even if it had never been raised in the court of appeals, even if it had not even been raised in the petition for certiorari, but the court had suddenly said, wait a minute, there's no article III power.
Antonin Scalia: Mr. Maness, you acknowledge that this thing is not black and white and that sometimes we allow consequences even when there's no jurisdiction. Why isn't a very logical line to draw, and one that would put the Catholic Bishops case on the right side of the line, the line between the litigant who submits himself to the allegedly wrongful jurisdiction of the court, voluntarily goes ahead with litigation. In Catholic Bishops, as I recall, it was contended from the outset by the Catholic bishops that the court had no part of that and had no jurisdiction over them. And we would not allow them to be punished by the court's contempt power. But where you come and willingly litigate, why can't we treat that differently and do no damage to the Catholic Bishops case?
Michael A. Maness: Well, oddly enough I attempted all the way through to persuade both the district court and the court of appeals that that was a logical and sensible accomodation--
Byron R. White: Because that's your... your client is in that position.
Michael A. Maness: --Exactly. But I also want to state that--
Byron R. White: But you went ahead with the litigation. You went ahead with the litigation and filed a whole batch of documents that were just ridiculous. By--
Michael A. Maness: --I didn't do them. My predecessor-- [Laughter]
Antonin Scalia: --Right. I'm sorry. But the point is you did not stand on your refusal. You did not stand on your refusal.
Michael A. Maness: That's correct.
Antonin Scalia: Which the bishops did. They just refused to turn over the stuff.
Michael A. Maness: That's correct.
Antonin Scalia: Now why can't I put you to that choice?
Michael A. Maness: It seems to me first of all that that would entail Mr. Willy simply refusing to go forward. What... as I understand it, he's supposed to say, I'm so sure that the court lacks article III subject matter jurisdiction that I'm going to not do anything, I'm not going to prosecute the case, I'm not going to attend the first rule 16 scheduling conference, I'm just going to go home.
Antonin Scalia: Foreign sovereigns do, they don't even show up.
Michael A. Maness: And I think first of all, and I don't mean to be rhetorical when I say this, but I think it's an answer to your question is, where do you find that in the Constitution? It seems to me that the Constitution, both simultaneously extends the judicial power in the second section of article III and limits it.
Antonin Scalia: See, I don't find the gray in the Constitution. I only find the black and the white in the Constitution. We've passed that once you acknowledge that there are some grays. We're just arguing over whether this is one of the shades of gray permitted.
Michael A. Maness: But it seems to me that's an unworkable and untenable distinction.
Byron R. White: But you, you would also, I suppose, say that the, if people are, a lot of times litigate over jurisdiction. And if it turns out that the court doesn't have any jurisdiction, is the court without power to sanction attorneys who should be sanctioned in litigating jurisdiction?
Michael A. Maness: First of all, we've made it, I think, clear in light of the Court's decision in Catholic Conference that interferences with or obstructions with jurisdictional determinations are as sanctionable as any other case in which the court does have--
Byron R. White: I know, but I would think you're, I would think if you accept that you have to accept some other things.
Michael A. Maness: --Well, we certainly conceded that in terms of, when we talk of sanctions, this case involves an award of attorney's fees as a sanction. But we've conceded and indeed maintained that misconduct by an attorney or a litigant--
Byron R. White: Well, you concede then that courts have the jurisdiction to determine their own jurisdiction.
Michael A. Maness: --Absolutely.
Byron R. White: Well, in this district court, it thought it had jurisdiction. It determined it. And there you were, you were stuck until you got to the court of appeals.
Michael A. Maness: I saw that thought Justice White expressed in the transcript in the argument in Catholic Conference. And all I can say is as I understand the Constitution, it is that the court at the time it entertains the suit from the very beginning either has the jurisdiction or it doesn't. And if it mistakenly thinks it does but really doesn't, it doesn't somehow by virtue of having made that mistake empower itself to act. This is certainly a very strange constitutional power for which Coastal contends. It's one that can only be exercised if the district court has booted the jurisdictional determination.
Byron R. White: And you don't think that the attorney could have been held in contempt?
Michael A. Maness: Oh, yes, I do. Absolutely. If in fact the attorney's conduct was criminally contumacious--
Byron R. White: I didn't say criminal.
Michael A. Maness: --Civil contempt?
Speaker: Yes.
Michael A. Maness: Oh, no. I wouldn't say the civil contempt sanctions were imposable on the basis of the Mine Workers.
Byron R. White: But criminal?
Michael A. Maness: Criminal contempt could be, yes. That is assuming that sanctions were imposed in accordance with Federal Criminal Rule 41.
John Paul Stevens: Yes, but, you're arguing... I'm sorry. I was going to say, do you think that sanctions here are more akin to criminal or civil?
Michael A. Maness: I think the Court has already answered that question in Chambers against NASCO last June when it quoted Hutto against Finney and said that they're more equivalent to civil penalties rather than criminal. And if they're more equivalent to criminal penalties, why aren't they in the Federal Criminal Rules? Why don't we have a Federal Criminal Rule 11(a) that authorizes the imposition of something equivalent to or functionally equivalent to criminal contempt penalties via an amended rule 11(a) that would award attorney's fees perhaps as a fine. We've also pointed out in our brief that apart from the fact that Mr. Willy and Mr. Young weren't accorded any of the procedural protections that a criminal prosecution for criminal contempt would entail, if these sanctions are like criminal contempt, then Coastal's counsel should not be here, because interested parties under Young against Vuitton can't prosecute a criminal contempt proceeding. And indeed, if under Providence Journal, Mr. Beatty couldn't be here, but we should have General Starr instead. And I suggest that General Starr would not touch this case with a 10-foot pole.
John Paul Stevens: Your position is that in Catholic Conference the bishops, in addition to contesting jurisdiction, filed fraudulent and misleading documents, purportedly in response to the subpoena... the only sanction available to the court is a criminal sanction?
Michael A. Maness: No. The lawyers responsible for that misconduct would be sanctionable by suspension or disbarment.
Anthony M. Kennedy: But not under rule 11.
Michael A. Maness: Not under rule 11. And the reason I suggest that that must be true and I say must as if it's an inevitable consequence, and I know it is not, is the alternative argument that Coastal makes, it says basically that the courts, apart from the inherent power argument has power, under rule 11, even in the absence of subject matter jurisdiction. I've read Catholic--
Anthony M. Kennedy: But don't lawyers have a special obligation under rule 11 quite without reference to jurisdiction?
Michael A. Maness: --Certainly. I believe that rule 11, as Cooter & Gell makes plain, entails a very significant obligation for lawyers who sign pleadings.
Anthony M. Kennedy: In this case, were the lawyers and the client both sanctioned?
Michael A. Maness: Yes. One lawyer, one client.
Anthony M. Kennedy: All right. So do you take the position that the lawyer can be sanctioned?
Michael A. Maness: Certainly the lawyer could have been suspended or disbarred assuming he--
Anthony M. Kennedy: But can he be sanctioned under rule 11?
Michael A. Maness: --No, not in the absence of article III subject matter jurisdiction. And in fact--
Anthony M. Kennedy: Well, but disbarment is not a criminal penalty.
Michael A. Maness: --Certainly it's not. But it also doesn't involve the adjudication of a case or controversy that's not within the second section of article III, either.
Anthony M. Kennedy: Well, I'm not sure that it doesn't if the unprofessional conduct takes place in the course of the proceeding.
Michael A. Maness: Well, conceivably, arguably, it is. But at least it's an alternative remedy, an alternative mechanism that the court can use apart from awarding attorney's fees to the people who have wrongly invoked--
Anthony M. Kennedy: Because it seems to me here that the gravamen of the injury to the court was the misfeasance of the attorney.
Michael A. Maness: --Yes.
Anthony M. Kennedy: And the court has a special authority over attorneys under rule 11. It seems to me that that quite distinguishes this case from Catholic Conference.
Michael A. Maness: And of course, I don't represent the attorney. I represent the litigant who was also himself an attorney and who presumably the court of law--
Anthony M. Kennedy: Well, that leads to the next point. Isn't the litigant's liability derivative of the attorney in a sense?
Michael A. Maness: --I don't think so. I guess there's an argument to be made that when the litigant is herself or himself an attorney that the attorney/litigant should be held to a higher standard.
Anthony M. Kennedy: Was there a finding here that the client conspired with the attorney or was an accessory with the attorney in the perpetration of the violation?
Michael A. Maness: There was no specific finding of that. There was no--
Anthony M. Kennedy: I take it's implicit.
Michael A. Maness: --I certainly think that's true. In fact, so implicit that both the district court and the court of appeals used a technique in their order and opinion of saying plaintiff or Willy when they actually were referring to actions that had occurred and the records revealed were undertaken by Mr. Young, the attorney.
Byron R. White: Because the whole point of rule 11 is to control the conduct of attorneys.
Michael A. Maness: Exactly. But of course, the whole point of article III is to restrain excessive uses of judicial power. When the Constitution limits the judiciary as it does the political branches--
Anthony M. Kennedy: Yes, but it seems to me that the point of the sanction against your client is to discourage him and others from permitting their attorneys to engage in this sort of conduct.
Michael A. Maness: --I think that's certainly true.
David H. Souter: Don't you have to take it, then, a further step that the object of doing that is essentially to protect the other party. And by the same reasoning that we accept the court's authority to impose criminal contempt sanctions for the purpose of protecting the court, why doesn't this essentially the same reasoning extend to allowing these civil sanctions whether it be under rule 11 or inherent power to protect the other parties once they are accepted by the court as being before them?
Michael A. Maness: I think, Justice Souter, that that, that that argument and that reasoning could, in fact, be used in this case if the Court were prepared to say that exigency and necessity are a substitute for the article III judicial power.
David H. Souter: What have we said in criminal contempt?
Michael A. Maness: Well, I think you, and I may be mistaken here, I think the Court has said in the Mine Workers case that the court in that case did have the article III judicial powers, a case to which the United States was a party, a case in which the court was entertaining a Federal question, a very real question as to whether or not the court has the authority to impose a specific remedy, the injunction.
David H. Souter: But don't you, don't you concede, I mean, you have conceded in this case that there would be a criminal contempt power.
Michael A. Maness: I conceded, Your Honor, that that conceivably if the evidence were sufficient to overcome the presumption of innocence, for example, that Mr. Willy would have enjoyed had he known that he was going to be accused of criminal--
David H. Souter: But, I mean, right, but that essentially goes to the factual basis of the action as opposed to the jurisdiction of the court to engage in it. And why doesn't the protective justification for that concession go as far as conceding the issue here as well?
Michael A. Maness: --Because at least, since what, Michaelson and I suspect probably in a number of other criminal contempt proceedings, the Court has said that criminal contempt, even if it arises in a civil lawsuit, is a separate case. It's a different proceeding. It's designed not to adjudicate the rights of the parties, but to vindicate the authority of the court.
David H. Souter: I don't want to be impatient, but, I mean, that's kind of the analytical structure of the Court's answer. But the ultimate reason for engaging in that kind of analytical exercise was a protective reason, wasn't it?
Michael A. Maness: Certainly.
David H. Souter: And why doesn't the same protective reason argue just as persuasively here?
Michael A. Maness: Well, Justice Souter, if the Court were to accept that reason, it would essentially be saying that even in the absence of article III subject matter jurisdiction, a United States district court that mistakenly undertakes to hear and decide a case over which it lacks the judicial power nonetheless has a form of judicial power.
David H. Souter: And isn't, isn't, isn't one rationale for that that although the court may lack article III subject matter jurisdiction as finally adjudicated, the court has an article III obligation to the parties before it while they are before it, and isn't that sufficient?
Michael A. Maness: Yes. But the answer, I think, is the parties should not before the court if it lacks article III subject matter jurisdiction. They should be dismissed or remanded.
Speaker: You wanted--
Michael A. Maness: Yes, I'm asking the Court to hold district judges as accountable as we are under rule 11. Absolutely.
Byron R. White: --I suppose you think personal jurisdiction is another matter?
Michael A. Maness: Yes, absolutely, under Insurance Corporation of Ireland.
Byron R. White: Well, what if, what if the reason, what if the reason you don't have personal jurisdiction is because the Constitution forbids it?
Michael A. Maness: I think that then would presumably implicate article III subject matter jurisdiction and would be in our case then.
Byron R. White: So if some court is wrong in thinking it has long-arm jurisdiction and wrong because the Constitution says it's wrong, then you would be making the same argument.
Michael A. Maness: I don't think so, because the Insurance Corporation of Ireland draws a very clear line between personal jurisdiction that can be, for example, established by rule 37 sanction and article III subject matter jurisdiction. Before I reserve, with the Court's permission, a few moments for rebuttal, I would like to suggest that Cooter & Gell, which is the linchpin of Coastal's arguments, really doesn't control this case. It's not a constitutional decision. The Court wasn't confronted with an article III issue in that case. And perhaps most significantly, the Court in Cooter & Gell specifically adverted to the district court's article III subject matter jurisdiction as the source of its authority, both for considering the merits of the case and for imposing sanctions. With the Court's permission, I will reserve just a few moments.
William H. Rehnquist: Very well, Mr. Maness. Mr. Beatty. Is it Beatty or Beatty?
Michael L. Beatty: Beatty. Mr. Chief Justice, and may it please the Court: Just as opposing counsel has already acknowledged, there are two bases upon which we believe that the court has jurisdiction in this case. The first is the inherent power and manifestations of that inherent power represent both the inherent power to police proceedings as well as the inherent power to determine jurisdiction. As a separate and independent basis, however, we suggest to the Court that the necessary and proper cause through which the Rules Enabling Act was passed and rule 11 was promulgated also provides a sufficient constitutional basis which is the question presented. That is the constitutional basis for rule 11 sanctions in this case. Now, opposing counsel is willing to concede that inherent power certainly exists. Inherent power exists outside of article III, section 2 subject matter jurisdiction. And once this concession is made, it becomes extremely difficult, indeed, I would suggest impossible, to reconcile the position of the petitioner in this case.
Antonin Scalia: Except for, except for the Catholic Conference of Bishops case. Why wouldn't that have come out the other way if it's inherent power that you argue for, exists in this context.
Michael L. Beatty: What we had in Catholic Conference was a situation in which the bishops did exactly what Mr. Willy could have done. The bishops had a situation where they were held in civil contempt. They then sought an immediate interlocutory appeal. And they said, we are not going to participate in this proceeding any longer because we believe that you do not have jurisdiction in the underlying case, and as a result we must respectfully decline to tender any documents or to honor the subpoena. As a result, that case went up. Justice Stevens has already pointed out if the Catholic bishops' attorneys had said we believe that there is no jurisdiction, but we want to brief the issue on the merits, we would like to address the merits of this case and in the context of that, what they did was they cited misleading citations, rules of evidence that didn't exist, tendered documents to the court with affidavits that were wholly inadequate to establish them, 1,200 pages, and said, oh, and read this by the way, then I submit that Catholic Conference would say, first of all that this was a civil contempt matter and what happens is there's no jurisdiction, but the court will retain jurisdiction on the rule 11 issue and will sanction and should sanction attorneys when their misbehavior reaches a--
Antonin Scalia: So you would draw the line between standing on your rights and refusing to proceed further and that cannot be the subject of a sanction. But if you do proceed even while protesting all the time that there is no jurisdiction, then you're subject.
Michael L. Beatty: --Certainly. I think, I was trying, I'm trying to go through all the hypotheticals that I could imagine in my mind.
John Paul Stevens: Instead of a hypothetical, what about this very case? What is the plaintiff supposed to do? The plaintiff has filed the lawsuit in a State court, got removed to the Federal court, he says I won't go ahead, he goes ahead and files another lawsuit in the State court, gets removed again. How is he ever going to get his rights vindicated if he keeps getting removed to the Federal court?
Michael L. Beatty: Well, the short answer, Your Honor, is that he can behave. That is what--
John Paul Stevens: Well, of course. But I don't see how your line works in this case. If there's no contempt, you got no problem. And you can also punish him by criminal contempt. Your opponent agrees to that. But I don't understand the line you draw as applied to this fact situation.
Michael L. Beatty: --I'm sorry, perhaps I didn't understand your fact situation. If what happened is there was a removal and he believed that there was not appropriate subject matter jurisdiction in the case--
John Paul Stevens: Right.
Michael L. Beatty: --and he simply refused to respond, then what would happen is a judgment would be entered against him and he would then have the opportunity to appeal the lack of subject matter jurisdiction to the Fifth Circuit.
John Paul Stevens: Oh, I see. But he's not in effect, he continues, he litigates the jurisdictional issue.
Michael L. Beatty: Certainly he litigates the jurisdictional issue because it's even conceded by petitioner that the Federal court has the jurisdiction to determine jurisdiction. He can't escape that fact. And he would willingly submit to that. He would also say, I would behave in that circumstance. So he has a choice.
John Paul Stevens: Well, but did he do any more than contest the jurisdictional issue in this case?
Michael L. Beatty: Certainly, Your Honor. Absolutely, he did. What happened, what happened after the case, after the motion to remand was denied, a motion to dismiss was filed and a motion for partial summary judgment was filed by Willy, by the petitioner in this case, a motion for partial summary judgment on the merits. What then happened was misleading citations which were discussed in the brief as though the omitted portion was not omitted, what happened was citations to rules of evidence that did not exist, all of those happened in the context of the motion for summary judgment.
John Paul Stevens: Let me just be sure I get the procedure. You're suggesting he had to take an adverse judgment on the merits and then appeal the jurisdictional issue because he couldn't have appealed the--
Michael L. Beatty: No. He did have, again, he did have that one other alternative. It's a dichotomy, I agree. One is that he can say, I'll take a judgment against me and appeal jurisdiction. The other thing he could do is say I will litigate the merits and I'll behave.
John Paul Stevens: --Oh, right. Right.
Michael L. Beatty: I hope and I would submit that that's not a hard, that shouldn't be that difficult a choice for a litigant to take.
John Paul Stevens: Well, it's a little different choice, though, than the choice of the subpoenaed party in the Catholic Bishops case. That's the point I'm making.
Michael L. Beatty: Yes. I would concur. And as a result what happens is once we begin to say that there is inherent power both to determine jurisdiction and inherent power that exists within the court to police its own proceedings, then there must be the ability to sanction someone who does the kind of activity which is at stake in this particular case. Really, as a constitutional matter, the only thing that petitioner can raise is the fact that somehow attorney's fees might not be applicable. And yet that argument has been rejected. The Court has held that attorney's fees certainly can be imposed either under rule 11 or under the court's inherent power.
Sandra Day O'Connor: Well, our, our cases in Chambers against NASCO and Hutto against Finney suggests that fee shifting sanctions are analogous to civil contempt. And perhaps that answers the question.
Michael L. Beatty: If I might, Your Honor, address both that issue of Hutto v. Finney as well as the issue of attorney fee shifting. It was pointed out both in the majority by Justice White that the reason that fee shifting is of concern is because of concern for the American rule. Now I submit that that is not a constitutional impediment, that is, a court could take, act further. The Court has just elected to stop short of that and say, on fee shifting we're going to honor what we believe, what Justice Scalia referred to in his dissent as deeply rooted history and congressional policy. And so for that reason, there's a slight rub, but it's not a constitutional rub at the attorney's fee level. And then with regard to Hutto v. Finney, if you look at that, recall that that case was the prison case dealing with a situation in Arkansas in which Arkansas had repeatedly been told, please take action. It was more than an exhortation of please, it was a take action. And that that had not been done in order to clarify, in order to remedy the problems in their prison system. And therefore, the Court imposed a $ 20, 000 attorney's fee sanctions, but said in that case we hope that will incline them to behave in the future and hope that they... and that was civil contempt. Here, and I would refer to your decisions over and over in Business Guides as well as your decision in Cooter & Gell.
Sandra Day O'Connor: I don't think they help you because there there was article III jurisdiction at one point in those cases. I don't see how that helps you.
Michael L. Beatty: I don't raise it for that position. I raise it for the position that it was repeatedly said rule 11 sanctions are designed to punish. Rule 11 sanctions are designed to deter misconduct. Rule 11 sanctions are designed to curb abuses of the judicial process. The language that's used. And therefore, in Cooter & Gell you can get the results where even though the case was dismissed and no longer present before the court, the court could say, I nonetheless wish to sanction this conduct because that's not the kind of behavior we wish to condone, just as in this case either through the inherent power or through the use of rule 11 sanctions, the court should be able to say exactly the same thing. You may certainly contest jurisdiction if you wish. You may be here and contest the merits if you wish to do that. But the one thing the court has a right to demand of all litigants is that they follow the rules. If I might, simply because it would appear that from an attorney's fees standpoint, there certainly is not a problem, a constitutional limitation, I would submit also that there is not a problem with regard to the inherent power operating outside of article III, section 2. Gompers is an example of that situation, albeit Gompers was a situation in which criminal contempt was ultimately used as the sanction. In Gompers v. Buck's Stove, what happened was after the case had been litigated but was on appeal, there was a settlement. As a result, the court noted in its last paragraph this case is now moot, but, said, we retained jurisdiction in order to see whether or not there was a contempt which should be punished. And it's because of that, the court's ability to go back and look and punish activities which does take place within the court's proper and justiciable sphere.
John Paul Stevens: But your argument on punishment, I'm not sure he disagrees with, with the distinction he emphasized from United Mine Workers between civil and criminal.
Michael L. Beatty: But... I understand that. Rule 11 is not, is more like. And I think that's the best way to describe it.
Speaker: You think it's more like criminal.
Michael L. Beatty: It's more like criminal.
John Paul Stevens: But, wait a minute on it. Two questions. One, are the procedures adequate for criminal contempt? And secondly, who gets the money? Is it paid to the court or paid to the opposite party?
Michael L. Beatty: It is, in rule 11, in this situation, it is paid to the opposite party.
John Paul Stevens: And is that typical of criminal situations?
Michael L. Beatty: In a criminal contempt situation it might be, but normally is not done. And certainly there are additional constitutional safeguards. However, in the inherent, in the use of the inherent power what has happened, and I would like to quote if I might Justice White, when he refers in Chambers v. NASCO to the parties and to Hutto, he says the imposition of sanctions in this instance transcends a court's equitable power concerning relations between the parties and reaches the court's inherent power to police itself, thus serving the dual purpose of vindicating judicial authority without resort to the more drastic sanctions available for contempt of court and making the prevailing party whole for expenses caused by his opponent's obstinacy. That's the inherent power as noted in the majority opinion, gave the court the opportunity to do something less than criminal contempt.
John Paul Stevens: But have we ever described that kind of inherent power in a case over which the court has no jurisdiction?
Michael L. Beatty: The Court has not dealt with this particular situation before, inherent power in this particular situation where subsequently--
John Paul Stevens: Inherent power when they've got no power at all.
Michael L. Beatty: --I beg your pardon?
John Paul Stevens: Inherent power, when we have no power at all.
Michael L. Beatty: Oh, but no--
John Paul Stevens: We have power to, now the criminal contempt power, that's easy. That's settled and so forth. But is there any case, do you have any case that's really held that in a case of where there's no jurisdiction you can impose a sanction on an adverse party to pay, you know, to pay to your opponent in litigation?
Michael L. Beatty: --No. I cannot cite you--
John Paul Stevens: But in Hutto against Finney, I may be fuzzy about it, but that was really a statutory case. That was enforcement of the civil rights attorney's fee award action.
Michael L. Beatty: --Yes, but the argument that was raised was a rule 11 case because it was, Arkansas was arguing that there couldn't be an imposition of attorney's fees against them because it would interfere with their position--
John Paul Stevens: The Eleventh Amendment, yes. But that wasn't the sole grounds for rejecting that.
Michael L. Beatty: --I apologize. That's the reason this case is here. But once you say that the court has this inherent power to govern proceedings... let me, for example, turn to jurisdiction to determine jurisdiction. If what happens is, let's assume just by way of assumption that what happens is that you have an environmental case in which a standing issue is raised regarding someone in Sri Lanka. It could be entirely possible that that case could be litigated a significant way down the road without having a jurisdictional determination made. Indeed, it could be possible that the jurisdictional circumstance could change. For example, the litigant could die. The case could thereby become moot. We couldn't even solve the problem by overruling Catland v. United States in saying before anything else will happen, before anything else will happen, we must make certain that we have subject matter jurisdiction. You take the case from the district court to the court of appeals to the Supreme Court and then you would say you have jurisdiction, go back to the district court. It can be raised at any time. It may well happen that circumstances change such that all of a sudden the court is divested of jurisdiction. And what the argument of petitioner seems to suggest is that during that entire preceding period there would be no opportunity to impose rule 11 sanctions on a litigant in a case. And that's what's so troublesome. I come here--
John Paul Stevens: Since we got along without rule 11 for a long time, that wouldn't be the end of the world. [Laughter]
Michael L. Beatty: --Your Honor, I--
Antonin Scalia: And the question is really that, whether it isn't enough to protect the court's integrity against these assaults to have the criminal sanctions available, which you call, you call the rule 11 lesser sanctions, but in one respect they're greater. You don't have the kind of safeguard, the kind of protections that I think the contumacy can be less probably under rule 11 than is needed for criminal sanctions.
Michael L. Beatty: --The importance of the case I don't underestimate. However, it's important to note, remember that the 1983 amendment indicated that what happened was that they needed to change the sanctions in order, for example, to establish an objective test as opposed to a subjective test. The advisor said, we need to be able to get at this conduct. I come to you as a person who practices primarily in front of the district courts. We all know the problems that are existing down there. I would suggest that even though we may have gotten along well for 200 years, primarily we've gotten along well for 200 years because people have obeyed the rules and do believe that rule 11 would apply. That's what the majority of the lower courts have always suggested is that the rules would apply. Certainly, the plain language of the rule applied and no one argues with it. The rules apply in every case. And this is the judicial standard that has always been used, utilized, which if you look at the plain language of the rule, and no one questions that it applies in all civil cases, it applies by rule 81(c) in all cases which are removed.
John Paul Stevens: Yes, but counsel, you're talking about the relatively narrow category of cases. And they really are very... they're a fair number, but they're comparatively small in which it turns out there was no jurisdiction to start with. And defeating your position would in effect impose on lawyers a very careful obligation to be darn sure about jurisdiction before they file rule 11 motions or anything else. And your client booted it on that issue.
Michael L. Beatty: Of course, my suggestion with regard to my client is that, and I've had, we've had a couple of cases come up like this. You get up and all of a sudden the Supreme Court makes a decision like Merrell-Dow and all of a sudden everybody says, whoops, let's go back and look at subject matter jurisdiction. Or for example--
John Paul Stevens: Yes, but that isn't this kind of case. That isn't this case.
Michael L. Beatty: --Well, this is this case. This is what happened on the jurisdiction issue. It's the Merrell-Dow which says positively, ultimately if the Fifth Circuit Court of Appeals on the jurisdictional issue. It's also true of Carden v. Arkoma Associates. And neither things were all of a sudden, here, we're questioning whether or not limited partnerships can meet the diversity jurisdiction. Parties litigate and go through the process and then all of a sudden find out that what they were doing was not proper. But that doesn't mean that litigants shouldn't behave once they're in front of a courtroom and in the courtroom, once these issues have been decided and can properly be brought up on appeal. All we're asking is that rule 11 sanctions be available so that people will behave. As a constitutional matter--
Antonin Scalia: It's certainly a reasonable position. Maybe there should be a statute like that.
Michael L. Beatty: --Well, but, my argument, of course, would be that there is, that there is the equivalent of a statute on that. What we have is, we have the necessary and proper cause as the constitutional issue. What we secondly have is we have the Rules Enabling Act. And certainly 27(b)(2)(b) says it should not abridge, enlarge, or modify substantive rights. But here, I want to emphasize that Mr. Willy's substantive rights are absolutely intact. His case on the merits proceeds in the district court in the State of Texas today. It has not been affected one iota, unlike many of the other cases in which we're looking at procedural rules and we're asking about the impact on a litigant and he may well lose his case on the merits as a result of the impact of the Federal rule. Here there has been no impact whatsoever. And again, that would point out the point that, what I think is a very important issue which is it would seem that either from the standpoint of separation of powers or from the standpoint of Federalism, that there's not a competing interest on the other side.
Antonin Scalia: Wouldn't that argument about, you know, that Federal rules don't affect substantive rights, wouldn't that have, again, produced a different result in the Conference of Catholic Bishops case? I mean, that's what stands between you and what you want to do, it seems to me. That case comes out differently if we accept your argument.
Michael L. Beatty: No, Your Honor, again, and frankly, because I accept the argument that you have, or the distinguishing factor that you already made, which is that that was a civil contempt case by a nonparty who all of a sudden, who had that right, that immediate right of an interlocutory appeal. He was able to bring that up. Here what we have is we have the Court consistently said we don't want to have piecemeal litigation. Catland v. United States says raise your jurisdictional issue, let's go through and litigate the merits and take it on up.
Antonin Scalia: My only point is that distinction is not in rule 11. If you're going a constitutional route, if you're going in an inherent power route, I think you can make that distinction. But I'm not sure that you can make it in rule 11.
Michael L. Beatty: Well, Your Honor--
Antonin Scalia: If your argument is no substantive rights are affected, rule 11 simply covers this. It's an easy case. Then Catholic Bishops was a hard case and you got it wrong.
Michael L. Beatty: --Well, except, Your Honor, to the extent that you say that the rules, the rules themselves, recognize the jurisdiction of a court to its inherent power. So what happens, all that does, all that does is that just circles that. If what happens is the rules apply where the courts have jurisdiction and the courts have jurisdiction everywhere under article III, section 2.
Antonin Scalia: If that's all you mean by your rule 11 argument, it just falls back onto the constitutional inherent power argument, I'm sure.
Michael L. Beatty: But, Your Honor--
Antonin Scalia: It doesn't get you very far. Let's just talk about inherent power then and forget about rule 11.
Michael L. Beatty: --Except, Your Honor, the thing that is important to note there is the question presented to the Court is a constitutional one and if the issue is does the necessary and proper clause support the legislature that the Congress, in this instant, is passing legislation which would get at this type of behavior. And the answer is yes. And that's the reason I say there are two separate... and a constitutional basis for this.
Anthony M. Kennedy: Was the bishops' case a constitutional case in your view?
Michael L. Beatty: No, Your Honor. Let me finally conclude that it would seem to me that one ultimately has to come out with, yes, there is inherent power, yes, that inherent power may well be shaped, not only by Congress, but the inherent power is reserved to the courts and the Court could use that since the beginning of the republic, either of those constitutionally to support the sanctions of rule 11 in this case. Thank you very much.
William H. Rehnquist: Thank you, Mr. Beatty. Mr. Maness, you have 3 minutes remaining.
Michael A. Maness: Mr. Chief Justice, the Court stated in Catholic Conference that a court, Federal district court's subpoena power under Federal Civil Rule 45 cannot be greater than its article III subject matter jurisdiction. I suggest exactly the same principle compels the holding that a court's sanction power under rule 11 cannot be greater than its article III subject matter jurisdiction. I would have thought at least since Sibbach against Wilson & Co. and in light of the express provisions of Federal Rule 82, that this isn't a rule 11 case because rule 11 can't enlarge the jurisdiction of the Federal district court. And we're talking here about jurisdiction in a most fundamental sense, the power of a court to do something. Another distinction, and I think it's crucial in light of the discussions we've had this morning is that in Catholic Conference the civil contempt sanctions were imposed against a nonparty and therefore were immediately appealable. In this case, by contrast, we were stuck to the fly paper. And conceivably, if the district court had not granted Coastal's motion to dismiss, we might have been in the Federal district court much longer than we were. Finally, I would like to leave the Court with this hypothetical. What makes Coastal's argument somewhat compelling is the assumption, and I think it's an appropriate assumption, that the district court acted in good faith. But suppose the district court acted in bad faith, suppose from the beginning it said, look, I realize I don't have article III subject matter jurisdiction, but I've got to decide this case anyway since it's very important question of State law. And if I leave it to the State courts, they're probably going to botch it. Is it conceivably arguable then if the district court proceeds to hear and preside the case over a period of years that the court could then attempt to award attorney's fees to the party wrongly moving the case? And if the Court is going to draw a distinction between good faith exercises of colorable article III power and bad faith exercises, then it's right back where it was at Catholic Conference. And seven members of the Court, seven members of the present Court, rejected that argument fairly conclusively and fairly persuasively. We think the Federal judicial power under article III doesn't depend on subjective mental processes of judges or litigants. It depends upon the Constitution of the United States. The sanctions order in this case violated the second section of article III and should be reversed.
William H. Rehnquist: Thank you, Mr. Maness. The case is submitted.