Earl Warren: Number 523, Joan Greenway Collins et al., versus American Buslines Incorporated, Respondent Employer. Mr. Frank.
John P. Frank: May it please the Court. This matter comes here on a petition for certiorari to the Supreme Court of the State of Arizona. The parties are, first, the petitioners, Joan Collins, a widow, and her infant son, the defendant, corporation, American Buslines, and the defendant, Industrial Commission of Arizona. Mrs. Collins is the widow of one Adolphus Collins, whose death gives rise to this action, and Adolphus Collins was employed as a bus driver by the corporate defendant. Under the law of Arizona, the claim for industrial compensation, which is made here, will result and recompense being made, if any should be allowed by this Court, will result in recompense being made to Mrs. Collins from a fund which is maintained by the Industrial Commission of Arizona. And hence, so far as Mrs. Collins is concerned, her only interest is with the Industrial Commission. And hence, that is the only active or participating defendant here. The American Buslines Company is a Nebraska Corporation; it is in receivership in Nebraska. It has been duly informed and notified at all times with the process of this matter from the beginning to this moment, it has not participated. Should you decide the matter in favor of the petitioners, there will be a possible result in claim of the Industrial Commission against the Buslines, but that will be a separate action and will have to worry itself along, independent of -- of what we do here. Hence, this is a controversy for all practical and real purposes between the petitioner and the Industrial Commission of Arizona. Now, the facts of the matter are these, the husband of the petitioning widow was originally employed as a bus driver by the defendant corporation at El Paso, Texas, and I believe, 1951. The company moved him from El Paso to Arizona. And there, for some time, he operated the run from Tucson, Arizona, to Phoenix, Arizona. In the course of that operation, he became acquainted with and married the widow here, a girl from Phoenix, and they lived there for a time. Then, subsequently, the deceased was transferred by his company from the Tucson, Phoenix run to the Phoenix, Los Angeles run, an operation entirely in interstate commerce. And at that time, he took his little family, then an -- an infant of a few-weeks-old and wife, over to Los Angeles where they rented a trailer. And while he kept a mail address in Phoenix, he was in fact living in -- insofar as he had any formal legal residence, it was -- we will concede Los Angeles, in -- in the trailer there. His job consisted of driving from Los Angeles to Phoenix or return from Phoenix to Los Angeles. The mileage was approximately 60% in California, about 40% in our own State of Arizona. The company, as I say, has been in financial difficulties. Whether that does or does not account for the incident, I have no idea at all. We've merely speculated, but it was in any case using retread tires and one of them blew out at Wickenburg, Arizona, killing Adolphus Henry Collins in the resulting crash. His widow instituted proceedings for industrial compensation in the State of Arizona before the Industrial Commission there. Let me explain that insofar as she had choice as between California and Arizona, she chose Arizona for the obvious reason, which is that Arizona has extremely high compensation in death cases, California, very low. The California compensation would run something like $6000, perhaps, the Arizona compensation closer to $75,000. So then, hence, she sought to -- to do what anyone would do under the circumstances, to pursue the Arizona remedy, if she had one. This is the details, although, I think they're not relevant to -- to any matter, which you need to decide. Now, this matter then came before the Industrial Commission of Arizona. And now, may I mention the first of the two or three cases that you all ought to have in mind in the course of this discussion. That is the case of Watson Brothers as it had previously been decided in the State of Arizona. Prior to -- a couple of years prior to this incident, the law of Arizona had been accepted as applying to employees who are either employed in the State or partially outside of the State. That question was reviewed in the case of Watson Brothers. Now, the Watson Brothers case, please hold in mind, was a case that was decided before this matter. It is a case which was materially affected by what was done here. In the Watson Brothers case, our Court took another look at the -- at its own Workmen's Compensation Law. And it concluded that the term "regularly employed," which is the measure of coverage, could not apply to persons who were engaged at all in employment outside the State of Arizona, in large part because they fear it would be an unconstitutional burden on the commerce. Therefore, when this case came along, the Industrial Commission did the only thing it could do, it held that it had no jurisdiction at all under the then prevailing Watson Brothers case. At that point, following the normal Arizona practice, my partners appealed to this matter to the Arizona Supreme Court, and we asked the Arizona Supreme Court to overrule the Watson Brothers case and to restore the laws that had previously been. That is to say so that the Act could be in general application for persons whether within or without the State in appropriate circumstances. And this, the Arizona Supreme Court was persuaded to do. It said, “We repudiate the Watson Brothers decision. We decide that our law which is meant to be generous have been construed in a niggardly fashion there, and we hold that our law does cover all persons who are employed in the State or outside the State, at least where the injury occurs within the State." But then, they went to having repudiated, that was their word. They -- they had rejected the Watson Brothers case entirely. The Court then went on to the exact immediate situation and it held that our law could not constitutionally apply in the case of a motor carrier operator who was engaged exclusively in the interstate commerce. In short, they held that the law cover the situation, but in fact that it could not that it was invalid in this one context. They said, and I should explain that you have permitted us to come up here on a petition in which we have printed the relevant matters in the back of the petition for certiorari and that is where the opinion is and you've not had us redo it, they said and I quote from passages at page 20 and 21 of that petition. I'm quoting from the opinion of the majority, "We hold that to assume jurisdiction under our Workmen's Compensation Laws on the facts of this case would constitute an undue burden on interstate commerce." They said, "If the decedent had not been covered in California, then there would be no duplication upon which to find an undue burden. It is not the application of state Workmen's Compensation Laws which is prohibited under our interpretation of the Commerce Clause but a double application." Now, let me make clear exactly what it was that was troubling our Court. The Court did not have the impression that there was any possibility of double coverage in the sense of being paid twice. The Court cites and analyzes the opinion of this Court in the matter of McCartney, and it recognized that the smaller award would be credited against the larger. There's no -- no fear on our Court's part in that respect. The burden to which our Court found was the fact that the bus company would have to carry added insurance. The burden is the extra insurance which is required if it is -- are required to insure to cover the Arizona load as well as the California load. The Court says at page 20 into what is the heart of the decision, "If we were to reach the result which petitioner wants, the only recourse of the bus company would be to establish protection from liability in all States by the payment of insurance premiums." The threat of liability would require duplicate premiums, and it is this duplication which creates the undue burden on interstate commerce. It is the need imposed by the laws of our State to insure twice that constitutes the undue burden, not the manner in which the duplications it --
Felix Frankfurter: Would you mind explaining the subject to mean if -- do tell us, the Arizona compensation awards are greater than the -- than the California award, is that right?
John P. Frank: Considerably, yes.
Felix Frankfurter: Then, an insurance for the greater would take care of the lesser.
John P. Frank: That is correct, Your Honor. Now the --
Felix Frankfurter: But the -- I don't quite follow it. But they would have to carry it both, they could carry the insurance that could inevitably has a lesser included to greater that has to insure in both -- that happens to both case?
John P. Frank: This is where the added cost would come from, Your Honor. The carrier could -- has its choice under our law of insuring either in the state fund or of insuring outside in separate. The net effect of the decision, if it went away, we think it should go. They require him to use the outside insurance, rather than the state fund in order that he could do exactly what you say, namely, that he could take an insurance broad enough to cover the largest liability of the jury -- of all jurisdictions in which he operates.
Felix Frankfurter: Could automatically insured from the State, in the Arizona State fund?
John P. Frank: I do not believe. I will ask Mr. Franks, my almost namesake to -- who was the counsel to the Industrial Commission, may qualify this, but I do not believe that he could insure in the fund which Mr. Franks represents in such fashion as would also cover him for a California liability. It is my --
Felix Frankfurter: (Voice Overlap) Let me ask you a further question. Is there any disadvantage in driving into -- to insure outside rather on the fund?
John P. Frank: Your Honor, other than a possible slight increase in cost, I know of none. None has been suggested. There is --
Felix Frankfurter: That is usually what the matter in insuring cost.
John P. Frank: That's right. We're dealing with a cost and I'll take it up in a moment. There is -- it is likely to be slight, very slightly more expensive if he is required to carry higher insurance to cover all of the States in which the employer operates.
Stanley Reed: But if -- if he insured on the -- solely under California, the employer would be protected in both States and so would the employee.
John P. Frank: If he -- he would be completely protected, if he insures with any private insurance company which permits him to get general coverage.
Stanley Reed: He insured with the fund in California.
John P. Frank: My impression, Your Honor, is that the California fund also would not permit him to pay an Arizona judgment so that the net effect would be that I -- I --
Stanley Reed: But the -- both the employer and the employee would be protected as the California being the residence of the employee. So, by insuring under the California upon the law, he's protected in accordance with the California --
John P. Frank: In accordance with the California law, yes, but he would not be protected as I understand it against ours.
Stanley Reed: Well, what -- but he got the workmen's compensation wherever he went?
John P. Frank: He'd either have take workmen's compensation wherever he goes or else do what Mr. Justice Frankfurter suggest and what the interstate carriers would necessarily do, namely, go outside the state funds and take his insurance with somebody big enough to cover all jurisdiction.
Stanley Reed: (Voice Overlap) actually wouldn't do that if they could get full protection from California.
John P. Frank: Of course not. Now, they --
Stanley Reed: And they -- they would have the full protection of the California law in an Arizona accident.
John P. Frank: Now -- now, Your Honor is on that point, but I -- I must -- that I'm unable to answer you as satisfactorily as I wish I could, I am not sure. But my impression is, and I'm -- I'm willing to yield the point against myself since I don't know for sure. My impression is that the California coverage would protect him only for a judgment given in California, and that the California fund would not protect him.
Stanley Reed: No, but --
John P. Frank: Am I correct in that?
Stanley Reed: But protect him in California for an accident that took place in Arizona.
John P. Frank: He would be protected, but only in the amount which California allows.
Harold Burton: In the place of his residence --
John P. Frank: Right. I'm sorry, Your Honor, that is exactly correct. Now, the basic problem, which is here, is the question of the extent to which in an interstate commerce situation, the law of the place of injury is allowed to be controlling for purposes of workmen's compensation. This Court has had an extraordinary number of cases on this general problem over the years; the problem of the place of contract or the place of residence versus the place of injury. And it may be useful if we briefly review your recent holdings in this area and feels which almost, but not quite, close the matter which is before you today. In the first place, there is the general problem.
Felix Frankfurter: Would you -- would it trouble you if before you go into our cases, you would stick on your proposition, the propositions of law you're sending to this Court.
John P. Frank: The proposition of law, Mr. Justice Frankfurter, which we tended to this Court is, that the Constitution of the United States by virtue of its Commerce Clause, puts no limitation on the power of the State of Arizona to give a workmen's compensation award to a driver in interstate commerce who is in fact injured in that State. We must necessarily assert a negative, namely, that there is no constitutional limitation as our court below thought there was to do what in all humanity had clearly wanted to do when what it felt to constrain from doing solely because of its conception of the laws laid down by this tribunal.
Felix Frankfurter: But not as a general problem. I -- I think the issue is a little matter about the, I mean, this -- this does not -- it's because of the argument or the suggestion of intention that it would require the practical services that carry -- they take out to cover insurance and the cost of another insurance or the insurer which is appreciately -- I take it, there must be this -- it can't be negligible, appreciably higher than (Inaudible)
John P. Frank: We can word it in terms of the insurance cost and if that puts it more narrowly, fairly enough. Then the question is, can a state of injury give a judgment in workmen's compensation despite the fact that permitting such a rule may slightly increase the cost of insurance?
Felix Frankfurter: All I'm suggesting is if Arizona could constitutionally -- I'm sorry, the right to insurance to cover out of state injury, then the problem wouldn't arise, would it?
John P. Frank: If Arizona chose to do that, but I must concede that Arizona has it, so that --
Felix Frankfurter: I understand that. That it was a -- the problem is narrow.
John P. Frank: It's an extremely narrow problem, indeed it is. And the bulk of what is here, this Court disposed of last year in an opinion in the case of Carroll, which I think hadn't been decided when this matter was argued in Arizona, might possibly have led to an opposite result there. The situation there was this. In the Carroll case, you have the problem of an employee who was hired in the State of Missouri and who lived in the State of Missouri, but who went to Arkansas to do his work. And in Arkansas, he was injured. The case up to this point is identical with the instant case but for one circumstance, and that is that the employee was not engaged exclusively in interstate commerce. He was a construction worker. He made a claim in Missouri, actually receives some workmen's compensation, our person has not done that, abandoned it, went back to Arkansas and made his claim there. And the question was whether, under those circumstances, the full faith and credit clause require that he be given his compensation only in the State of Missouri, then to the State of his residence, the State of this contracting. This Court reviewed the subject over a period of the many years that that question has been before you, and you said, referring back to Pacific Employers Liability case, "That case teaches that in this personal injury cases, the State where the injury occurs need not be a vessel to the home state and allow only that remedy which the home state has marked as the exclusive one. The State of the form also has interest to serve and to protect. Her interests are large and considerable and are to be weighed, not only in the light of the facts of this case, but by the kind of situation presented for we write not only for this case and this day alone, but for this type of case. The State where the tort occurs, certainly, has a concern in the problems following in the wake of the injury." And thereupon, this Court went on to specify what some of them were. In other words, for full faith and credit purposes, you have now held that in the general run of situations, that would be most of the cases, the state of injury does have a right to give workmen's compensation despite the fact that the employee lives elsewhere and made -- then he's made his contract of employment elsewhere. Now, we can narrow the problem down still further. The question arises as to employees who are partially in interstate commerce or working for companies which are partially in interstate commerce but not exclusively so. Most of the trouble in this field arises from the Ohio case of Spohn. In the Ohio case of Spohn, duly cited, it was held that where pure interstate commerce was involved, the state of the injury could not give recovery in situations such as the one we have here. In that case, the Court did not cite or mention and it was apparently not aware of the Pacific Employers Insurance Company case of this Court which had been recently decided. And it cited no federal cases whatsoever on the critical point. Two years thereafter, Ohio modified its Spohn case, and in the case of Holly, held that this rule would not apply where the company was engaged in any intrastate commerce at all, even though the particular driver was engaged exclusively in an interstate commerce. And this distinction was accepted by the Arizona Court. There is no decision by this Court, square on the point, but what I am meaning to call to your attention is that so far as your decisions are concerned in the general run of situations, you have found that the full faith and credit clause does not bar compensation in the state of injury. And that the state cases, I have cited others, I'm merely giving you high spots orally, that the state cases have held, including even the court below, that the Commerce Clause itself does not bar a recovery, except in a case of a company, which is supposed to be engaged exclusively in interstate commerce, and only, that one Ohio case and this case, have held that. The New York cases have gone quite the other way and so of others, which we have decided to which they have been duly cited.So, we then come down to the narrow point, which is before you now, the only matter which is in contest. Under the repeated decisions, the state of injury can give workmen's compensation in a wide variety of situations. There is a decision covering almost every imaginable situation, except the one of the company engaged exclusively in interstate commerce. And the problem is, should there be an exception made in that area to exclude those cases and those persons from workmen's compensation in the state of injury? Now, the court below reached its result on the basis of the citation of only one case from this Court, and that was Southern Pacific against Arizona. Your Honors are keenly aware that in a state such as my own, we don't get so many constitutional cases or so many commerce clause cases and these are not customarily familiar matters. And hence, there is likely to be a once-bitten, twice-shy psychology. And the fact that our Court was reversed in Southern Pacific against Arizona undoubtedly caused it to be peculiarly sensitive to the teachings of that case. You will recall that in the Southern Pacific case, this Court invalidated a statute from my state, which put a limitation on the number of cars that there could be in trains running across the State. This Court found upon an extensive factual record or in majority that this Court found upon an extensive factual record that the Arizona law, first, served no useful purpose, that it did not promote safety indeed that it impeded it. And second, that it severely crippled traffic operating between El Paso and Los Angeles. Against that framework, this Court held that that particular regulation was invalid. We submit that that case really has no bearing on the instant case, that it is not authority for holding invalid, the state law, which we now have. Where there is no possible discrimination against commerce, there is no burden on commerce except to denote minor financial burden with that. And where the -- there is a complete absence of the factors which influence some of you in the Southern Pacific case, because there, you believe, many of you, that transportation in the Southwest would be severely impeded or was being severely impeded by the Arizona law, and no one can suppose that such a result is likely to follow here. Indeed, the cases, the state cases that have considered the point, they are duly cited. They've gone the other way, and indeed, I do not know of any case in recent years at least, involving a police power regulation such as this, in which you have invalidated a state statute, purely because of a financial burden where there was no discrimination against the interstate commerce, no serious handicap to interstate commerce and indeed, almost no burden at all.
Felix Frankfurter: I suppose it's the whole concept of burden implied financial burden or at least predominantly involved financial burden. That's the burden implied.
John P. Frank: Mr. Justice, but in your -- in -- in the opinion of the Court in Freeman against Hewitt, for example, the -- you yourself were careful to emphasize the possible greater leniency, which may be allowed to police power regulations. And in the general run of the commerce clause cases here that you have been invalidating have been cases of actual serious or substantial burden or discrimination. As for example, in Dean Milk, a majority of this Court supposed that the trade between Illinois and Dane County, Wisconsin would be rendered virtually impossible by the local arguments.Or in the Hood Mill case, you supposed that the same result was reached as for the trade between Troy, New York, and if I recall it correctly, Massachusetts, or in Southern Pacific, these are the recent major invalidations here. In Southern Pacific, you supposed the -- the Arizona case that there was a very heavy and serious burden. Now, here, we are dealing at most with the financial burden of most minor proportion. It is impossible on this record to demonstrate what that burden would be. There is no record. There is no showing at all of burden. And I remind you that this Court in Southern Pacific held that it would not invalidate laws on this ground unless there was some actual factual showing, either in the record or which could reasonably be supposed. But here, I don't know, but what it is worth, and I do not claim that it is more than suggesting. We have appended such statistics as there are from the Interstate Commerce Commission, which may be at least suggestive on the particular subject. If I may direct your attention in the brief of petitioners to the summary of those statistics at page 5, and you may assume that this comes from the most recent report of the I.C.C. and it's the best statics we have. You will see that the percentage of workmen's compensation cost to the total cost of bus operations is something in the neighborhood of 6600 of 1%. But that percentage covers all workmen's compensation for all types of employees; intrastate, interstate, the station attendants, all the rest of them. I will not burden you here, but I have outlined in the brief and do suggest that the amount of actual increase of burden on the industry which would be required, which would be imposed if the motor carriers are required to insure to the highest jurisdiction through which they operate, is in the realm of at most a few thousands of one percent. We are dealing without doubt. I respectfully submit, with the most minute, trifling burden, which has ever been found or at least has been found in recent years to be supposed to be a serious burden on the interstate commerce.
Earl Warren: Mr. Frank, did I understand you to say you did not know what the practice in the industry was so far as insuring against liability in all -- all states is concerned with these interstate operations?
John P. Frank: No, I assume that, and indeed, I -- I am acquainted with the general practice. And normally, there is full insurance adequate to carry all kinds of -- of obligations. And why there should not be, for example, if the truck hit somebody in the State of Arizona, there is no doubt but that they'd have to pay compensation and they'd have to carry insurance to pay for it. And why the one small category of employee should be excluded from that protection is to me unfathomable. I'm merely saying that the workmen's compensation cost is -- is a very, very small amount and that it would be harsh in the extreme to interpret the Constitution of the United States to bar recovery in state of injury for the employee who is actually operating the motor carrier.
Stanley Reed: Perhaps you said (Inaudible) Does this company have workmen's compensation insurance in Arizona?
John P. Frank: This company had sufficient compensation in Arizona so that there is a reasonable basis for claiming against this fund. The exact details of that are better known to Mr. Franks than they are to me. If I may have it back for a moment more to -- I'm sorry.
Stanley Reed: What did it do with the -- what do you do in the Arizona --
John P. Frank: What we'll do in Arizona is this.
Stanley Reed: No, no, do you -- do you take out of policy? Do you notify the -- the Workmen's Compensation Board if you're carrying insurance there and to pay half a portion of your wages?
John P. Frank: There is a system of paying into the fund, which Mr. Franks represents, and this is done on a system of assessments and -- and notices and so on. Now, I confess that I cannot tell you in detail how it works. I simply don't know, but it is adequate for this Court.
Stanley Reed: Well, your -- your view to this -- to this company carry workmen's compensation under the Arizona --
John P. Frank: Sufficiently so that there -- no claim has been raised at any time, but that Mrs.Collins is properly proceeding against the Industrial Commission for possible dispute which the Industrial Commission may someday have on American Busline, may bring Mr. Franks back here, but I will not be with it. If I may just pause for just a moment more of the question of the Chief Justice, I call to your attention, Mr. Chief Justice, that this Court, prior to the Motor Carrier Act of 1935, in three separate cases, held that the State did have power to impose insurance requirements on the motor carriers operating within their borders. So that what we are down through are -- is whether the employees operating the interstate carriers should be entitled to the same kind of protection of the State in a state of injury, which substantially everybody else in the economy of the United States can have. Thank you very much.
Stanley Reed: Mr. Franks.
John F. Franks: May it please the Court. Speaking for the Industrial Commission of Arizona and the Supreme Court of Arizona in this instance, we bear under circumstances that are somewhat confusing to us. I just recalled that when counsel was asked to state his proposition, he stated that in the negative and it is that negative approach that it -- confuses us, if the Court please. The instant case has not reached this Court on the basis or for the reasons that were present in Southern Pacific versus Arizona. In that case, the Supreme Court of the State of Arizona, as counsel has pointed out, passed upon a legislative enactment of the State of Arizona which placed certain restrictions upon an interstate carrier. The Arizona Court upheld the state legislation on the grounds that there was no burden upon the federal commerce. In that case, the Court or the State of Arizona took an affirmative action. It placed what was finally deemed by this Court to be a burden upon a free flow of commerce between the States. Now, it occurs to me that the type of argument, which was afforded in the Southern Pacific case, was positive argument on both sides, and I do not find that in the instant case. Here, in Collins versus American Buslines, the instant case, and versus the Industrial Commission of Arizona, they find that neither the state agency, the Industrial Commission nor the Supreme Court of Arizona gave sanction to any act or practice which could be construed to interfere in any manner with the free flow of commerce between the State. On the contrary, if the Court please, such action was expressly avoided. And hence, even though we haven't been inclined to burden a commerce between the States, we find ourselves, before this Court, where an effort is apparently being made by petitioners to relieve the Supreme Court in the State of Arizona of any compulsions that it may have had regarding the effect of the Federal Commerce Clause when it rendered its decision. We fully appreciate, of course, the fact that this Court has, on occasion, taking jurisdiction in order to pass upon an interpretation of a federal statute by the state court or the state court seemingly interpreted the federal statute as a prohibition against certain local interpretation. And the cases are cited in petitioner's petition for writ of certiorari which constitutes the record in this case. We still feel in the instant case that the Arizona jurisdiction should be left to its own state-level interpretation in the instant fact situation. And it is in this connection that we appear and present argument in behalf of the state agency in Arizona that took the initial position in this case, pursuant to an earlier decision of the Arizona Supreme Court, the Watson Brothers case as counsel had pointed out. Now, counsel for petitioner has taken the liberty in this case of -- of extending his brief beyond the actual paper record of the case and we certainly have no quarrel with that under the circumstances. This particular case, if I might point out to the Court, reached the Supreme Court of the State of Arizona under a rather sketchy record. The claim of the petitioners was filed with this -- the Industrial Commission of Arizona, and a hearing was held before that body, and it was the record of that hearing that went direct to the Supreme Court to the State of Arizona on certiorari. The hearing record was rather sketchy. The Commission merely made an attempt to ascertain whether a man was regularly employed in Arizona under the ruling of the prior Watson case, so the hearing was merely concerned with ascertaining where the man lived, where and was he employed, and whether or not he was covered in the State of California under the California Workmen's Compensation Act. And of course, the inquiry was made regarding dependents, the widow status, and the status of the child. The case, as I say, reached the Supreme Court of Arizona on that type of a sketchy record. And therefore, we find it necessary here to refer to some actual situation, some aspects of the situation which of course do not appear in the actual paper record before this Court now. But I'm firmly convinced that there were many matters, all of common knowledge, to the members of the Supreme Court of Arizona when the decision in the case was entered, and that they must have had an effect upon the Court in the reaching of this result which we have. The record here does indicate in the basic fact situation that we do have a carrier engaged exclusively in interstate commerce. There is no dispute about that. There is no dispute over the fact that we have a claim for death benefits under the Arizona Workmen's Compensation Act arising from the accidental death of an employee of this interstate carrier which employee was a resident of the State of California. He was hired in the State of California, and he was fully covered for workmen's compensation benefits under the laws of the State of California. His work, however, like many of the other employees or the interstate carriers, required him to be within the territorial limits of the State of Arizona at certain intervals. Now, the record does not fully show the exact extent and nature of the Arizona Workmen's Compensation Act, and I believe that it is important to consider for a moment some of the peculiar features. We can describe the Arizona Act as unique among the Acts of the various states. To begin with, in Arizona, we have what is termed an "Exclusive Remedy Act". Now, that alone is not unique. Some other states do have the Exclusive Remedy Act but not all of them, and California, New Mexico, Nevada, Colorado, the States immediately bordering Arizona are in the latter category. They have Workmen's Compensation Acts, or schemes or patterns of Workmen's Compensation Acts which are not in the exclusive remedy cover -- category.
Felix Frankfurter: Because that picture that gave this Court some trouble on your statute first came before us 25 years ago, whenever it was.
John F. Franks: Yes, Your Honor. I -- that is the case. Now, in the Exclusive Remedy Act, in the absence of rejection of the Act by an employee prior to injury, the Act itself is deemed by law to be the exclusive remedy for the injured employee, and the exclusive remedy for dependents in the event of accidental death. The Arizona Act is also one of extraterritorial coverage and that employees hired in Arizona and regularly employed in Arizona, by Arizona employers, are deemed to be covered under the Arizona Act even though performing duties for their employer outside the territorial limits of the State of Arizona. We didn't have a feature which truly makes the Arizona Workmen's Compensation Act unique. It is an act of unlimited benefits from a compensation and death benefit standpoint. Awards in Arizona in workmen's compensation cases are based upon a percentage of average monthly wage and permanent disability awards can continue for life without monthly or weekly limitation. Likewise, death benefit awards to widows may continue for the life of the widow in monthly payments based upon a percentage of the deceased's average monthly wage. From the underwriting and the actuarial standpoint, and in the fiscal matters pertaining to the administration of the Arizona Workmen's Compensation Act, the Act is one where the state fund is practically a monopolistic fund. It is not an Act that attracts the interest of private carriers to any great extent, although, the Act is written to permit coverage by private carriers at the option of the employer. Insurance rates, applicable to policies carried by the state fund in Arizona, the state fund administered by the Industrial Commission of Arizona, are made lower by statute than the rates applicable to policies carried through the private carrier companies. Our Act, 29 years ago, was purposely written that way in order to ensure a bulk of the business in the state fund. The compilers of the Act realized that the state fund could not pay the enormous benefits provided by the Act, unless it had the bulk of the coverage. And therefore, the private carrier situation was discouraged, although, they were permitted to come in and write at higher rates. The rates, which private carriers must charge if they choose to become qualified in the first instance and write workmen's compensation insurance in Arizona, are 10% higher than the rates applicable in the state fund. Now, the members of the Industrial Commission, the agency which controls the state fund and which also controls the underwriting phases of all coverages under the Act, has no power to make a selection of coverage for the employer. The employer has the option to ensure him the state fund if he chooses to do so, if he has the liability in Arizona under the Act, or he has the option to ensure by a private carrier or assuming that he can find a private carrier interested in his business, or he may become a self-insure under the Act by meeting certain qualifications regarding financial responsibilities, size of his operations and so forth, subject to the approval of the Industrial Commission. Now, I mentioned in this point that the Industrial Commission has no power to make this selection of coverage for the employer because one of the main arguments of petitioners in this case, in urging the desired result, is that the interstate carrier can solve all of his problems by carrying his insurance with a private carrier of insurance in Arizona. We say that such contention would make the private carrier coverage mandatory in such an instance if the Commission were to tell the employer that he must go to a private carrier. And thus, the option, specifically given by the statute, would be nullified and certainly the employer would be discriminated against, no question about that. The Act gives the option to the employer when he has a liability in our state. Now, particular attention should be given to the basis for benefits under the Arizona Act, a point which was a subject of comment by Chief Justice LaPrade in the opinion below. A statutory basis, as I have stated, is the average monthly wage of the employee when we consider the employee in interstate commerce or I should say the employee of an interstate carrier disregarding the interstate commerce feature. Such as the employee in this case, we find a man who has an overall average monthly wage, whether he earns all of it in Arizona or not. Only a part of that wage could be deemed or have been earned in Arizona. And in this instance, with the state fund carrier, being limited to insurance premiums on the Arizona portion of the wage, our Supreme Court has made that observation. A limitation in premium collection for this insurance would be on the portion of the wage of the employee earned within the limits of the State of Arizona. And yet, compensation benefits are based upon the overall average monthly wage. Our Act is a loss of earning capacity act in which an attempt is made to partially at least restore the lost earning capacity of an injured man. And therefore, his overall average monthly wage constitutes the basis for compensation benefits and a great portion of that overall monthly wage, in this instance, is not the source of charged premiums to the insurance carrier, in this instance, the state fund of Arizona. Now, this latter situation, as I've pointed out, was the subject of comment in the opinion below. Now, with this type of situation present, one can readily assume that the State of Arizona has had difficulty in administering its Workmen's Compensation Act, particularly with reference to those employees who were actually not domiciled in Arizona, but who might have occasion to come into the State or who might have occasion to cross over the State at intervals. And it is a fact, if the Court please, that there has been a great amount of difficulty in this respect. Once again, I am pointing to some of the things, taking the liberty of pointing to some of the things that are not actually in the paper record before us. Prior to the decision of the Supreme Court of the State of Arizona in the Watson Brothers case, a 1953 case, cited in the brief and mentioned by counsel, the Industrial Commission of Arizona was actually groping in the dark, in the field of employers engaged in interstate commerce. The Commission was attempting to cover employees of such employers while in the State of Arizona. And in doing so, it had to consider methods of collecting premium and methods of determining accurate and equitable basis for computing compensation benefits, with premiums being limited to a portion of a wage, with compensation benefits being based upon a total overall average monthly wage. Interstate employers were constantly perplexed regarding the extent of their liabilities and their responsibilities in the State of Arizona and there were numerous controversies. The matter finally reached the Supreme Court of Arizona when the Watson Brothers Transportation Company and Interstate Trucking Association refused to pay to the Industrial Commission of Arizona insurance premiums on alleged coverage for certain of their employees who happened to operate in the State of Arizona at certain intervals. The situation, as it existed in the Watson Brothers case, could only be resolved by a consideration of the entire Workmen's Compensation Act in Arizona. And the Court in that case gave them two conclusions, one, to the effect that the exacting of premiums from employers engaged in interstate commerce would constitute an undue burden upon the free flow of commerce between the states. And secondly, that the employees actually considered in the Watson Brothers case were not regularly employed in the State of Arizona under the statutory definition of regular employment. This latter conclusion was abandoned and repudiated in the instant case, the Collins case, but the first conclusion was affirmed.
Stanley Reed: Now, what -- what is that first conclusion?
John F. Franks: The first conclusion was that to impose the Act upon employers in the interstate commerce would constitute an undue burden upon the interstate commerce, if the Court please.
Stanley Reed: And therefore, it was not covered in your act?
John F. Franks: Yes, Your Honor. That was one of the conclusions in the Watson Brothers case.
Stanley Reed: And that still stands?
John F. Franks: The Court, Mr. Justice Reed, did affirm that conclusion in the instant case but repudiated the other conclusion regarding the regular employment, yes. But I would point out, if the Court please, that in this case, in the opinion below, the Court did make this positive observation. We do not decline jurisdiction, merely for the reason that decedent was engaged in interstate commerce, but in view of an additional consideration that he was also covered in another jurisdiction. Now, at that point, the Court is not speaking of duplicate premium requirements or the cost involved. They're speaking solely of the coverage, coverage in another jurisdiction. And at another point in the decision below, again, reference is made to double coverage, not double premium or double cost, but double coverage. And I interpret that to mean coverage under the Act, which of course includes all of the facets of coverage, the obtaining insurance, the -- becoming a party litigate to controversies that might arise concerning average monthly wage and questions of that nature. Now, even though the court below, in its opinion, seemingly said that the Federal Commerce Clause was the reason for its position, the language which I've just quoted would seem to indicate that the Court actually had in mind the effect of the peculiar provisions of the Arizona Act upon a non-resident employer who had covered his employees in another state. And I --
Earl Warren: Mr. Franks, how --
John F. Franks: Yes, Your Honor.
Earl Warren: How would this constitute double coverage?
John F. Franks: Well, Mr. Chief Justice Warren, in this way, coverage in the State of California, for instance, involves a payment of premiums to the State of California. It involves being subject to the jurisdiction of that state and the forum which process his claims and the other forums which handle the underwriting phases. That same thing would have to be true in the State of Arizona if the employer were covered in Arizona, paying premiums in Arizona, either to a state fund or to a private carrier authorized to ensure in Arizona, and being subject to the forums of the State of Arizona in matters of litigation and coverage.
Earl Warren: What would be the difference between that and public liability insurance that that -- would've had to be carried in each of the states to which a corporation like this operated?
John F. Franks: Yes, Your Honor. A great deal of difference, an entirely different field, the workmen's compensation in Arizona --
Earl Warren: I mean, from the standpoint of coverage, I -- of course, I recognize other differences, but I mean, from a standpoint of double coverage.
John F. Franks: Yes.
Earl Warren: They have to comply with the law of the state, I think.
John F. Franks: If Your -- if Your Honor please, the -- the types of insurance are not written together. Does that answer your question?
Earl Warren: Are not written together?
John F. Franks: That is correct. You'll find that --
Earl Warren: Do you mean in the practice in the insurance payment?
John F. Franks: In the practice of the insurance field, yes, Your Honor.
Earl Warren: Couldn't they agree --
John F. Franks: I doubt.
Earl Warren: -- without any great --
John F. Franks: I doubt that they are such -- there are two divergent fields and aspects.
Earl Warren: Do you mean, the difference is between -- the different states are so great that they couldn't write one policy to cover it?
John F. Franks: That would be one difference, Your Honor, yes, the extended coverage. I might point out at this point that in Arizona, the coverage is entirely different than it might be in another state due to the tremendous liability in Arizona, the unlimited liability, higher premiums. Basically, higher premiums in the state fund plus 10% higher than that if insured with a private carrier.
Earl Warren: There is going to be difference in amount that they'd have to pay, wouldn't it be?
John F. Franks: One of the differences, if Your Honor please, yes. But speaking of coverage differences in type of procedure and a duplicate situation in being subject to the forums of another jurisdiction.
Earl Warren: But if a man was hurt in -- in California, he wouldn't be subjected -- he wouldn't be subjected then to the -- to -- to the Arizona procedures if he was following the -- living under the California law, would he?
John F. Franks: No, Your Honor, I wouldn't assume that he would be, no.
Earl Warren: And -- and if he was -- and he was injured in Arizona, he wouldn't -- he wouldn't be bothered nor with his company be bothered by the California law, would it?
John F. Franks: Possibly so, Your Honor, and if they're speaking of the instance --
Earl Warren: Well, then where does the double coverage -- where does the double coverage come in?
John F. Franks: Well, of course, in this particular case, if Your Honor please, there was no coverage in Arizona on this particular employee. But if they had been covered, then he would have coverage in California under the California Act, in Arizona under the Arizona Act, an entirely different act of benefits, duplicate coverage as I see it in two different places.
Earl Warren: For injuries sustained in different states.
John F. Franks: Possibly so, Your Honor. Under -- we do have extra territorial coverage in Arizona. In other words, an employee in Arizona higher than coverage in Arizona would be covered if out into another state in the interest of the employer of business, also true of the State of California, yes, which would fly in the instant case, the man being covered in California and injured and killed in Arizona.
Harold Burton: But there's nothing to suggest in any discussion that there would be two recoveries, is it?
John F. Franks: No, Mr. Justice Burton, there is not. I believe that the full phase in credit cases cited by counsel in brief, cases of this Court in that respect, would take care of that situation where one state could allow a deduction, or a credit for a recovery made in another state. Did I answer Your Honor's question in that respect?
Stanley Reed: Mr. Counsel, would you call my attention again or -- if you said that the -- the Arizona Court relied partly on the -- on the question of whether or not the party had ensured in California?
John F. Franks: Yes, Your Honor, that -- I believe Your Honor's reference is to the portion of the opinion that I quoted. That particular quotation appears on -- beginning at page 21 of the record which happens to be the appendix to petitioner's petition for writ of certiorari. Starts, we do not decline jurisdiction merely for the reason, etcetera. Well, now, if the Court please, we have argued in this case due to the effect that the opinion below is fully justified under construction of the State's statutes alone. And further, it would have to be our position that a finding regarding the Federal Commerce Clause in the opinion below is merely an immaterial consideration so far as the lower court was concerned. Now, we are naturally concerned with the type of mandate that this Court might seem fit to give to the Arizona Court. It would be one thing, of course, to relieve the Supreme Court of the State of Arizona of any compulsions that it might have regarding the Interstate Commerce Clause in this instance. On the other hand, in checking the rules of the Supreme Court of Arizona, I find that it is provided that in all cases of mandates from this Court, the clerk shall immediately send what is termed a remittitur to the Superior Court as referred to in the rule. The rule of course does not say anything about the Industrial Commission of Arizona. I think, when the rule was compiled, they probably did not visualize this type of situation. But assuming that that would have to be done, then I would maintain that that would end the matter and there would be no further opportunity to argue or seek any clarification of the opinion of the court below. But we also say in this case that the effect of the peculiar Workmen's Compensation Act in the State of Arizona is not to be ignored when we think of interstate commerce and the free flow of commerce between the State. I attempted to point out the difficulties in administering the Arizona Act with reference to premium requirements and compensation benefit provisions in connection with employees who are covered in another state but who happened to be within the territorial limits of Arizona at interval. The record has been one of subjecting such employees or the employers to litigation and controversy; a controversy, which culminated in the 1953 case of Watson Brothers. Now, to require compliance on the part of such employers engaged exclusively in interstate commerce, subjects them to many uncertainties regarding the status of their operation. It subjects them to hindrances and complications in the matter of obtaining insurance coverage that the employer desire uniformity in the handling of his insurance business or coverage, he may very well find that his own carrier of insurance is not interested in the State of Arizona. In fact, he may find that his carrier is not authorized to write insurance in Arizona. Out of hundreds of workmen's compensation, the insurance carriers in the nation and in the world, only 12 of them have seen fit to qualify and write insurance in Arizona.Basically, Arizona is not a field to the private carrier. And yet, those employers engaged in interstate commerce are generally in the habit of dealing with the private carrier in other states. It's true, they might have a carrier who is already representing them, who is authorized to write insurance in Arizona, but in this instance, they find that the rates, which the private carrier must charge them, are 10% higher than the rates available through the Arizona state fund. In this instance --
Felix Frankfurter: May I ask you to elaborate it on me, Mr. Franks, to ask you this, as you state at the outset of the trial, Mr. Franks, and it appears from the brief filed in here, the American Buslines are not here.
John F. Franks: That is correct, Your Honor.
Felix Frankfurter: They are not here. Just one in the standing ordered basis that the State claim that an award doesn't pay and has to be paid by the employer is a burden, isn't it? What is the State's interest or legal claim encouraging that the Commerce Clause bars or limits the State's power to give an award which employer -- to which the employer does not object?
John F. Franks: Mr. Justice Frankfurter --
Felix Frankfurter: I can think -- think that the decision is on the ground that the Commerce Clause limits (Inaudible), in what position?
John F. Franks: The -- the State's position, I'm speaking of the -- referring to the State, it would be the Industrial Commission of Arizona. The state agency would have to pay the award, Your Honor.
Felix Frankfurter: Out of its fund.
John F. Franks: Yes, Your Honor, the employer does not pay. If these employees, such as the deceased --
Felix Frankfurter: That means the depletion of state fund.
John F. Franks: Yes, Your Honor, in this instance, to the possible amount of $60,000 or $70,000, yes, that is what would be involved.
Felix Frankfurter: And -- and the depletion and --
John F. Franks: Without premium, if I may state.
Felix Frankfurter: That's a burden -- that's a burden upon commerce, how was that in -- how did the burden on commerce with result of the depletion of the fund? I know, because in that extent, the state funds are less. But where in the -- where -- what's your position in saying that the commerce is a burden? We're not engaging in commerce.
John F. Franks: If --
Felix Frankfurter: There isn't any --
John F. Franks: That is true, Your Honor, but in -- our business, as an insurance underwriter, which we are, we must of course deal with that situation. If people -- if -- if people of this nature are deemed to have the liability in Arizona, then of course, they have an insurable liability which would fall on the state fund in the great many instances.
Felix Frankfurter: Well, would it -- I can hear you would object in the Court on -- I think, on the merits.I can hear a ground of due process that you or for the person and the award is paid by the State Department only if the -- if the bus line is -- it's insured in the state fund in this instance.
John F. Franks: The busline is insured in the state fund in this instance, Your Honor, but --
Felix Frankfurter: So long as the -- song long as the --
John F. Franks: Excuse me.
Felix Frankfurter: As long as the busline would get premium into the state fund, you're not, at this, affected. I can see that the argument that if this prevails, then the interstate cash would no longer insure in the state fund and to that extent, if that that --because this is kind of a plain offense to Commerce Clause and affects the defendant.
John F. Franks: No, Your Honor, that would not be the contention.
Felix Frankfurter: Well then, how is -- how -- how you in a position to maintain does a burden on the Commerce Clause?
John F. Franks: Well, if I -- Mr. Justice, if I might make this observation, unfortunately, we are arguing the federal commerce matter for the first time in this case here. It was not argued below. It was not raised below, except --
Felix Frankfurter: I thought the full case turned on throughout that this has involved a burden on commerce, was the alternate below with the carriers, did the carrier push the argument below?
John F. Franks: No, Your Honor, the carrier did not appear below. The matter was purely between the Industrial Commission of Arizona and the claimant, but the record before the Commission dealt only with the phase of the prior Watson Brothers case regarding regular employment in Arizona. The Federal Commerce Clause question was not considered. And in the initial arguments to the Supreme Court of the Arizona at the briefing, the federal question was not pressed. The Court itself seized upon the Commerce Clause after repudiating the portion of the Watson Brothers case that the Industrial Commission had relied upon.
Felix Frankfurter: Can it be said? Suppose this case here, this briefing (Inaudible), your appropriate suggestion a little a while ago to the Court, you have in mind what kind of mandate issued.
John F. Franks: Yes, Your Honor.
Felix Frankfurter: I can't quite follow what it was that the company do but suppose this -- a different issue, suppose this Court in finding that there was a federal question, finding that in fact the decision turned on -- on a construction of the Commerce Clause, and suppose this Court should live and the assumed limitation upon the State's power derived from the Commerce Clause --
John F. Franks: Yes, sir.
Felix Frankfurter: -- in this case, this Court would send the case saying that -- that limitation that -- you can think that's a constitutional worry of your mind and you can pray this, as it's been indicated. This judgment is different in direction --
John F. Franks: Yes.
Felix Frankfurter: -- to this position and can -- not inconsistent in what this Court does. If this case goes back, can your state court, does your state court free this record to say there is a defect aim on the state law and you can't have this award under the state law?
John F. Franks: Well, if Your Honor please, I would like to be able to say that that were the case in Arizona in the interest of the state fund.However, I'm not sure that I could.
Felix Frankfurter: That's not for this Court to decide.
John F. Franks: I would --
Felix Frankfurter: If we have nothing to do with that, that's a purely state (Inaudible)
John F. Franks: I would certainly --
Felix Frankfurter: If I wanted to know --
John F. Franks: -- agree with you whole-heartedly.
Felix Frankfurter: -- that you thought that was supposed to be on this record.
John F. Franks: I will have to answer that in this way, if Your Honor please, that I am not sure what the result would be. In view of the rules of court in Arizona, they might possibly immediately send it back to the Industrial Commission and say, “Pay,” I -- I don't know. Whether we'd have an opportunity to reexamine the matter before the Arizona Court, I do not know and that is one of the reasons why we are urging here the consideration of the federal question.
Felix Frankfurter: I dare say there is a quick answer that in my own mind and I had a little struggle with this, where in Arizona's interest claimed there's burden on commerce, it's a rather unusual thing for a state to say what have been -- that we can't do this because there's a burden on commerce to be immediately affect the party basing on claim. I'm sure -- it must be a quick answer but I don't think --
John F. Franks: Well, Your Honor -- if Your Honor please, to me, the answer here is simply this, that the Courts in Arizona did not seem fit to burden interstate commerce and refused to do so. They took no affirmative action in that respect. And in defining what they did, and I'm satisfied that they had ample reasons in the own -- in their own statutes and that those reasons were strong in the minds of the Court. Following the Watson Brothers decision, they in effect said, “Our Act is not applicable.” And then, in effect, said, “In lieu and behold here, we find the Commerce Clause.”
Felix Frankfurter: Didn't they find --
John F. Franks: Now, I'm afraid that's what happened, Your Honor.
Felix Frankfurter: If they found reason for their own statute, we wouldn't be here.
John F. Franks: Absolutely, Your Honor.
Felix Frankfurter: And if we could say that they find reasons on their own statute, we would have to dismiss this case, is that right?
John F. Franks: That would be correct, Your Honor.
Felix Frankfurter: But your own suggestion is that a state, any state as a member of the union could say, “We deny that they have power of the State because as a faithful member of the union, we, as our business, affects the Commerce Clause and we have to deny those powers because they want to respect the Commerce Clause.” Is that it? Is that the last argument?
John F. Franks: Well, not -- not exactly, Your Honor. No.
Felix Frankfurter: It must be that.
John F. Franks: My argument would be that when a state feels that due to the peculiar scheme -- scheme perhaps is not a good word, although, it's used in the case, but a peculiar pattern or system of our own acts, our own statute pertaining to the field of workmen's compensation, when we feel they are not applicable to a certain situation then that should end the matter.
Felix Frankfurter: You can -- you can make that position perfectly easy. As a matter of law -- I mean, as a matter o law, there's no difficulty where the State, taking that position in the construction of its statute wherein it's a different stage, they say there's a constitutional compulsion that they have there.
John F. Franks: Yes. Well, I certainly agree with that, Your Honor, and that is, of course, the main reason we're here. I'm trying to point out in defense of the Supreme Court of Arizona that I fear they had the reasons without having to refer to commerce between the States, but for some reason that I say, it was, for the first time, raised by the Supreme Court itself practically. It was argued on motion for rehearing, after the decision, petitioner's motion for rehearing, then the commerce question was argued. And the Supreme Court, as a matter -- it wasn't argued, it was presented in petition but there was no argument. And summarily, the petition was dismissed by the Court and we had the application for a rehearing.
Felix Frankfurter: We have a suggestion .What I get from your -- what I get perhaps unjustifiably from your -- what I heard from what you say is that you really think the Court should have been -- should have gone on the state ground, and on the whole level, it's a very considerable reason while, in fact, consciously or unconsciously, they did. And then, Mr. Frank makes a suggestion having had a reason to experience with the Commerce Clause, there are very alert students of the Commerce Clause and a lot of them waived through (Inaudible)
John F. Franks: Well, that might be a -- an entirely correct observation, Your Honor. I --
Stanley Reed: Well, what -- what happened below, was it not Mr. Franks that the Commission was ordered to dismiss this claim that had been filed with it? I don't find any -- any mandates here except on page 39 of the petition for certiorari.
John F. Franks: Well, that, Mr. --
Stanley Reed: And that -- and that was on the petition for rehearing.
John F. Franks: Well, Mr. Justice Reed, the mandate, I don't know whether it's in the record or not.
Stanley Reed: Well, don't -- don't look for it.
John F. Franks: But the -- the effect of the Supreme Court's decision was to sustain the Industrial Commission of Arizona. I might explain to you --
Stanley Reed: And they -- and they had held that these parties were not entitled to recover under the Act of Arizona?
John F. Franks: That is correct. Not -- not on in any interstate commerce theory, if the Court please --
Stanley Reed: I understand that.
John F. Franks: -- on this regularly employed theory, yes. Now, under the --
Stanley Reed: Now, -- now, it went back to them. It will -- when it goes back, it'll go back to the point.
John F. Franks: If -- when it goes back from here, Your Honor?
Stanley Reed: Yes.
John F. Franks: That is -- one of the things that puzzled me is to how it might go back to the Industrial Commission. If the Supreme Court of Arizona merely send it back in a form of the common mandate, which their rules as far as Superior Court is concerned, referred to as remittiturs, then I assume the Commission would have nothing further to do but to reverse its own position, and in effect, to pay this claim or grant suitable award in this claim. That is probably what would happen, yes. Under the laws of Arizona, the Industrial Commission of Arizona is a quasi-judicial body and it constitutes a forum in which claims are adjudicated and claims cases go directly to the Supreme Court of Arizona on writ of certiorari. That is not true, however, in rate or premium cases, which happened to be the Watson Brothers case to which we refer. Those cases go by direct appeal and trial de novo to the Superior Courts and then to the Supreme Court and it is for that reason that I emphasize the importance of the Watson Brothers case, because in that case, they had a trial record and these matters of how this Commerce is affected and the cost of premiums, if counsel please, was all thoroughly gone into in the trial record. And I -- I'm convinced that it was actually the trial record in the Watson Brothers case that somewhat influenced the Court in this case, it not having an adequate record before it. It must have been where they got the federal aspect that's from the record of the Watson Brothers case a prior case.
Felix Frankfurter: This is a -- this is an illustration of alert regards by the State, by an alert respect to the Constitution of the United States, isn't that it?
John F. Franks: That perhaps is true, Your Honor. I certainly was alert, obvious from the opinion and pointed out the status of the record before the Court.
Sherman Minton: Absent -- this question of commerce, did the Supreme Court of Arizona hold that compensation could be required here to give -- recovered here in Arizona?
John F. Franks: Seemingly, Mr. Justice Minton, yes, in this case. Now, that is, of course, one of the arguments between counsel here where we draw some fine lines. I have referred to the statement of the Court where they talk about duplicate coverage in some point.
Sherman Minton: Well, if that's -- if that's true, then this argument about, as suggested by Justice Frankfurter might -- as the Commerce might fall out as a mere surplusage.
John F. Franks: Well, that could possibly be, Your Honor. I see that it might. If the Court please, I would --
Stanley Reed: How -- how -- before you go on, could --
John F. Franks: Yes, Mr. Justice --
Stanley Reed: How did these people, petitioners here, how -- how do they come under the Workmen's Compensation Act? What bring -- the -- the statutes bring them under without paying anything or filing anything, or saying anything?
John F. Franks: If the Court please, if Your Honor please, the Industrial Commission of Arizona is the forum for all processing of industrial claim even where there is all process in the forum. The quasi-judicial body adjudicates even where there is no insurance. If an employer fails to comply with the Act, if he -- if he ignores the Act and carries no insurance and takes the risk of liability unto himself, the Industrial Commission, still upon claim being made, is commanded by the law to process that claim and enter an award, which is in effect, a judgment against the employer himself, there being no-insurance carrier. In this particular instance, the employer, American Buslines, carried a policy with the state fund, but only covering their employees at the docks in Phoenix or the office help in Phoenix, not the policy, specifically, eliminated the employer -- the employees in this category because of the Watson Brothers decision which said, “We have no jurisdiction over them.” But the claim was properly filed with the Industrial Commission of Arizona. There is no argument about that. Our dispute is whether it's over, whether the state fund as an insurance carrier is liable for the payment of the benefits that might be due to this widow and child under the Arizona Act. Now, of course, we still bear in mind that the widow is fully protected under the California Act. And I believe counsel has pointed out in footnote to his brief that she did file her claim in California. However, this probably had been held in abeyance pending this matter, but reserved her statutory limitation rights. The claim was undoubted or apparently filed. If the Court please, our conclusion is merely this, very frankly, we feel that there were reasons for the Court's decision below resting in state statute. The Court should be permitted to construe its state statutes and that the federal question, which they injected into this case in their opinion, is probably secondary and that the State should be free to construe its own acts, especially, where they have placed no burden upon interstate commerce. Thank you.
Earl Warren: Mr. Frank.
John P. Frank: Could I have the petition please on this? May it please the Court. I -- I think by now, every member on the bench is keenly aware of problems and there is really, only moments more time worth -- worth taking. You can see what happened, namely, that this matter came up to the State Supreme Court below. The petitioner there contended that the Watson Brothers case should be overruled. Mr. Franks contended, on the other hand, that it should be followed, that there were adequate reasons in state law for deciding this against the petitioners. It is, I think, reasonably apparent that almost to his horror; the -- the Supreme Court went off on a frolic of its own. It repudiated the Watson Brothers case that decided it was wrong but on -- this Federal Constitution precluded it from going the last step of the way. The -- the essence of the problem --
Felix Frankfurter: Do we seriously consider a problem?
John P. Frank: As a matter --
Felix Frankfurter: Should we seriously consider a problem?
John P. Frank: I would say, Mr. -- Mr. Justice, that -- that I should not have -- have been lied some about it because I know that our justices suffered pretty mildly over this case. They were distressed as of course they would be. And as you can see, from the earnestness with which all the points in view are expressed, that was a -- a serious and indeed troublesome matter of Court. Now, essentially, the only argument that is made here in defense of the opinion below is that -- well, I shall say not the only one, there are two. First, the no-federal question was decided because despite the extensive consideration by the Court, there are other unstated grounds which the Court had in mind, which accounted for its conclusion. Let me say merely that that cannot amount to any independent state ground, and an independent state ground of what would be required. Passage to which Mr. Franks refers at the top of page 21, I think if seen in fuller context, is not really as disturbing as -- as he suggests. At page 20 and 21, the discussion is full. The sentence he quotes is, “We do not decline jurisdiction merely for the reason that the decedent was engaged in interstate commerce, but in view of an additional consideration that he was also covered in another jurisdiction. If decedent had not been covered in California, then there would have be no duplication upon which to find an undue burden. It is not the application and so on. It is the double application." In other words, the Court is, I think, can fairly be said to be resting on a conception of the Commerce Clause. The other point, which is made by Mr. Franks, is that the law, as interpreted below, a creed of the constitutional limitation will create much difficulty and perhaps it will because it's a problem for -- for others to worry with. Beyond that, I -- I have no further comment unless the bench has questions. Thank you very much.