Earl Warren: Number 794, the Denver & Rio Grande Western Railroad Company versus Brotherhood of Railroad Trainmen. Mr. Lucente.
Martin M. Lucente: Mr. Chief Justice, may it please the Court. I appear on behalf of the petitioner, the Denver & Rio Grande Western. The case is here on a writ of certiorari to the Court of Appeals for the Tenth Circuit. The central question presented by this case is whether a labor union may be sued for losses resulting from an unlawful strike. In judicial district in which the strike occurred in which the employees which it represents work and reside and which it acts for those employees whether the action may be brought only in another remote judicial district where the union maintained its headquarters. This action was brought by the Rio Grande against the Brotherhood of Railroad Trainmen to recover damages resulting from a strike. The Rio Grande operates a railroad system extending from Denver Colorado to Salt Lake and Ogden, Utah. Its principal place of business is in Denver and 63% of its line of road is situated in Colorado. The Brotherhood, a non-incorporated association holds representation rights and most of the railroads in the United States and it is the designated representative of trainmen employed by the Rio Grande. The Brotherhood consist of a grand lodge which is located at Cleveland, Ohio and local lodges which are situated on the lines of each of the railroads in which it represents employees. On each railroad a General Grievance Committee elected by the local lodges performs the Brotherhood's representation functions under the Railway Labor Act. On the Rio Grande, respondent Carroll, with headquarters at Denver was chairman of the Grievance Committee at the time that the strike occurred and at the time of the proceedings in the lower court. The dispute which culminated in the strike involved claims of contract violation which the Brotherhood had submitted to the National Railroad Adjustment Board on behalf of the Rio Grande employees which the Brotherhood represented. The Board sustained the claims and it awarded a full days pay for each claimant for each occasion in which it found a violation of the contract despite the fact that the claimants had suffered no monetary losses. The Rio Grande declined to make what it regarded as the arbitrary and unreasonable payments required by the awards. And in such circumstances, under the Railway Labor Act, enforcement actions are provided for which in effect test the validity of the award. The Brotherhood however, instead of filing an enforcement action undertook to compel the Rio Grande to make the payments required by the awards by calling a strike. The strike lasted for approximately eight hours. It was enjoined by the District Court and subsequently the District Court and the Court of Appeals both held that the strike was in violation of the Railway Labor Act and was unlawful. This action was subsequently brought to recover damages accruing from diversions of freight to other railroads as a result of the unlawful strike. The complaints alleged that the defendants were residents of the Judicial District of Colorado and that the venue requirements of Section 1391 of the Judicial Code had thus been satisfied. Before trial, the Brotherhood filed a motion to dismiss on the ground among others that venue was improper. This motion was denied by the District Court which subsequently rendered a judgment for the petitioner. On appeal, the court below reversed, holding that venue did not lie against the Brotherhood in Colorado but was proper only at Cleveland, Ohio where the Brotherhood maintains its headquarters. The Court of Appeals also held that respondent Carroll is not responsible for the strike and should have been dismissed. As I shall develop in the argument, this decision by the Court of Appeals to the Tenth Circuit as directly in conflict with the holding of the Second Circuit in the so-called Rutland case and it is also in conflict with basic venue principles. The venue issue, which is dominant and controlling here involves Section 1391 of Title XXVIII, which provides in part that non-diversity actions may be brought only in the judicial district in which all defendants reside. The requirement of residence imposed by this 1948 enactment is not defined insofar as unincorporated associations are concerned. And in this respect, Congress adhered to the pattern of prior legislation because the statute which was superseded by the 1948 enactment was also silent with respect to the meaning of the venue requirement which it imposed. But prior to 1948, the venue statute provided that no civil suit shall be brought in any District Court against any person in any other district and that whereof he is an inhabitant. The absence of elaboration, the definition of inhabitants was necessarily left to the Courts. As to one incorporated associations, the governing determination was made by Judge Hand in Sperry Products versus the Association of American Railroads. In Sperry Products, the relevant statute provided that in patent infringement actions, venue was proper in the district in which the defendant was an inhabitant or in which the defendant had committed acts of infringement and maintain the regular and established place of business. Judge Hand approached the venue problem in that case by determining first that unincorporated associations should be regarded as entities for venue purposes since existing law regarded them as entities for other procedural incidence such as capacity to sue and to be sued. Turning next to the question of location to be attributed to the entity, Judge Hand concluded that unincorporated associations should be considered to be present wherever they were continuously carrying on a substantial part of their business just as corporations were regarded as present in such circumstance. To determine the inhabitants of unincorporated associations, Judge Hand continued to rely on the status of corporations and thus concluded that inhabitants was limited to a single district, that of the association's principal place of business. The Sperry case does establish the principle that for venue purposes an incorporated associations should be regarded as jural entities and that their inhabitants, the term synonymous with residence in the present Section 1391 should be determined by analogy to the corporate entities which they most closely resemble. As Judge Hand stated the matter, it is really the only practicable test. Since inhabitants was the requirement not only of the patent infringement statute but also of the general venue statute at that time, Sperry Products continued to be a controlling authority with respect to venue questions arising as to an incorporated associations under the general venue statute. In 1948, when Congress revised the Judicial Code, venue in non-diversity cases was stated in terms of residence rather than inhabitants, again, without elaboration as to defendants other than corporations. Section 1391 (c), however, did define corporate residence in terms of the judicial districts in which a corporation is licensed to do or is doing business. This definition of corporate residence obviously changed the frame of reference for application of this very principle. Reliance on the corporate analogy, which was Judge Hand's basic approach in Sperry would after 1948 require consideration of the definition of residence appearing in Section 1301 (c). But this 1948 change did not impair the Sperry principle which was unquestioned at that time insofar as unincorporated associations are concerned. Moreover, the legislative history of the 1948 revision does not indicate any purpose to a negative or to restrict the application of the Sperry principle or to impose venue requirements for unincorporated associations differing from those which would result from proper regard to that judicial authority. Professor Moore, who was importantly concerned with the 1948 revision, has stated that Section 1391 was intended to continue and to build on a trend of judicial decisions relating to venue. As to unincorporated association, the trend of judicial decisions was unmistakably chartered by Sperry, existing that judicial authority would thus clearly require an analysis and treatment of residence for unincorporated associations insistent with that applicable to corporations. Certainly, the decided cases under the 1948 provisions support this conclusion. Since the 1948 revision of the judicial code, many cases upheld that consistent with Sperry residents, for unincorporated associations must be defined by reference to the corporate analogy. The leading authority, as I have stated, is the Rutland case where the Brotherhood in this case and other railroad unions argued that venue in Vermont was improper since they were doing -- since their principal headquarters were located elsewhere. In a holding against respondent, the other defendant, Judge Waterman in the Rutland case held that the provisions of the 1948 Judicial Code must be viewed in the light of preexisting law, principally Sperry Products and has thus view the residents requirement of Section 1391 was satisfied by showing that the defendant unions were doing business in the district in question. As Judge Waterman stated, we believe this accords with the practical requirement of litigation involving unincorporated associations. There are a substantial number of other decisions to the same effect and these decisions has been analyzed and characterized by Professor Moore as desirable and justified under the 1948 venue provisions. The decision of the Court of Appeals in this case is obviously in conflict with these decisions. The Rutland case and the other decisions to which I have referred also effectuate the liberalizing purpose of the 1948 amendments to the venue code. This Court in Pure Oil Company versus Suarez emphasized to that congressional purpose when it held that the definition of residence appearing in Section 1391 (c) should be read into the venue requirements of the Jones Act which had theretofore been interpreted to limit venue to a corporation's principal place of business or state of incorporation. This Court emphasized in liberalizing purpose underlying the enactment of Section 1391 and held that in the absence of restrictive indications, this purpose should be implemented by judicial updating of the 1920 venue provisions of the Judicial Code. There is also no indication in the legislative history of Section 1391 or in the terms of the statute which indicates any intent to restrict the principle of Sperry Products which would define residence for unincorporated association by reference to the corporate situation. The decision of the Court of Appeals in this case is also contrary to basic venue principles, which clearly establish that the Judicial District of Colorado is the most appropriate form for this particular proceeding. This Court stated these basic venue principles in Pure Oil Company versus Suarez where it noted that the venue provisions of Section 1391 constituted a response to a general conviction; that it was intolerable if traditional concepts of presence and residence kept the corporation from being sued wherever it was creating liabilities. In the earlier case of Neirbo Company versus Bethlehem Corporation, where this Court dealt comprehensively with venue questions, the underlying basis of the decision was that venue, though defined by legislation relates to the convenience of litigants. These principles are fully applicable to a non-incorporated association carrying on multistate business activity. Colorado, of course, is the place where the Denver & Rio Grande Western maintained its headquarters where it conducts a majority of its operations and where it handles labor problems which arise and which involves Brotherhood Railroad Trainmen. The unlawful strike occurred primarily in Colorado and most of the employees participating in the strike work and reside in Colorado. Furthermore, the entire collective bargaining relationship between the Rio Grande and the Brotherhood as Colorado as its focal point. Although the national entity is the certified representative of trainmen on the Rio Grande, it is a party to the basic Collective Bargaining Agreement only by virtue of the signature of the general chairman whose headquarters are maintained in Denver, Colorado. It is also clear that the national entity headquartered in Cleveland performs its functions on the Rio Grande primarily in the Judicial District of Colorado. The Brotherhood consists of a grand lodge at Cleveland and local lodges situated on each railroad including the Rio Grande. With respect to grievances, these local lodges and particularly the General Grievance Committee are invested with virtually complete authority to initiate and handle claims on behalf of trainmen including ultimate reference to the National Railroad Adjustment Board. The General Grievance Committee and its constituents committees are also giving primary jurisdiction to handle disputes which arise when proposed changes in the agreements are under consideration. The real and primary authority of the General Grievance Committee headquartered at Denver, is illustrated by General Rule 13 of the Brotherhood which provide that whatever action may be taken by the General Grievance Committee shall be law to the lodges on that road until reversed by the Board of Appeal. Although the president of the Brotherhood headquartered at Cleveland does exercise supervisory or appellate authority, the Brotherhood's activities on behalf of the employees of an individual railroad such as the Rio Grande, take place in the geographical area where the railroad operates. Even in the case of strike action on an individual railroad joined authority by the president of the Brotherhood and the General Grievance Committee locally headquartered must be obtained. The president may authorize the strike only if the General Grievance Committee joins with them in such authorization. These circumstances that, I submit, make it highly unreasonable to suggest that Cleveland, Ohio rather than the Judicial District of Colorado is the proper case -- proper forum in which to litigate the liability of the Brotherhood in this case. The Brotherhood's business are representing employees on the Rio Grande although based on certification of a national entity is conducted by the Brotherhood in Colorado. The Court of Appeals in this case in deciding that Cleveland, Ohio was the proper forum, was governed entirely by its interpretation of this Court's opinion in Steelworkers versus Bouligny. And that the Court of Appeals did not attempt any statutory interpretation. It did not in fact express any basic disagreement with the principle of the Rutland case. It said instead, that the Steelworkers was an implicit rejection of the principle of the Rutland case and that venue would thus be proper only at Cleveland. To consider the application of Steelworkers to the venue problem, I wish to emphasize first that from the time of Sperry Products in 1942 until this case, the venue of unincorporated associations was deemed to defend on two largely unchallenged premises. One, that for venue purposes, such associations should be regarded as entities having a residence in their own right. And two, that the residence should be determined not by a new test fashion for unincorporated associations but by analogy to corporations which such associations tend to resemble. The decision below by intruding the rule of Steelworkers, a diversity jurisdiction case, into the law of venue, strikes at this settled fundamentals of venue law. Steelworkers had nothing to do with venue and this Court said nothing in its opinion about venue problem. Rather, the issue before the Court was whether a non-incorporated labor union is to be treated as a citizen for purposes of federal diversity jurisdiction without regard to the citizenship of its members. The lower court, following the rule which have been recognized since 1889 had held that for diversity purposes, a non-incorporated association is an aggregation of individuals and thus has the citizenship of each of its members. This Court affirmed, stressing the fact that if unincorporated associations were to be treated as entities for diversity purposes, that considerable expansion in the diversity jurisdiction of the Federal Courts would result. There's nothing in this holding which has any relevance to venue. To hold that a non-incorporated association is an aggregation of individuals for a diversity of jurisdiction purposes is to avoid changing established principles applicable to federal jurisdiction. On the other hand, to hold that a non-incorporated association is an aggregation of individuals for venue purposes would be to overturn entirely venue doctrine that has been accepted for the last 25 years. There is no reason why different rules should not exist in these two different areas of the law. The rules differ because the considerations which underlie them differed. As this Court has held, the jurisdiction of the Federal Courts, their power to adjudicate is a grant of authority to them by Congress but the locality of the lawsuit, the place where judicial authority may be exercised though defined by legislation, relates to the convenience of the litigants. Thus, for example, jurisdiction is beyond the scope of litigants to confer that venue is subject to their disposition. The inapplicability of Steelworkers to the determination of the venue problems presented by this case is perhaps most clearly illustrated by the fact that although the lower court purported to rely on Steelworkers, it failed to apply the principle of Steelworkers in reaching the result which it reached in this case. Under Steelworkers, a non-incorporated association being considered an aggregation of individuals, with each of the associations would have the aggregate residents of all of its members for venue purpose. In no situation in which a non-incorporated association has members in more than one state, could it be said that all of the defendants reside within one judicial district because all of the defendants, being all of the members of the association, would have residence spelling outside the jurisdiction of a particular district. In this case, the Court of Appeals did not apply the result indicated by the principle of this Steelworkers case. Instead, it held that venue was proper at Cleveland, Ohio and thus abandoning entirely the principle of Steelworkers that a non-incorporated association is an aggregation of individuals. For these reasons, that we most respectfully suggest that the decision in Steelworkers was misinterpreted by the Court of Appeals, that the Judicial District of Colorado is the proper forum and that the lower court's decision should be reversed.
Earl Warren: Mr. Highsaw.
James L. Highsaw, Jr.: May it please the Court. The -- I believe at the outset that I should straighten out a few of the facts that have been stated by counsel. Most of the facts that he stated, either are not of the record and the remainder of them, I don't' believe he has accurately stated. Counsel stated that the strike which was here involved grew out of the carrier's refusal to accept awards, the payment of money, involving payment of money. However, in one of the two awards, the carrier refused to put into effect the contract -- interpretation of the National Railroad Adjustment Board which in our opinion was in and of itself a violation of the Railway Labor Act. Also at the time of the strike occurred, it was some two years later that this Court finally held that railroad employees were prohibited in conducting this type of strike. And counsel says that the strike occurred mostly in the Judicial District of Colorado but most of the railroad employees are in this judicial district. The record contains nothing at all on this. The strike did occur in Colorado. It also occurred to some extent in Utah. How much -- how many employees were involved in Colorado, how many in Utah is not of record. Counsel says that the B.R.T., the Brotherhood of Railroad Trainmen acts, it carries on its representation that both covered in Colorado, for its members in Colorado. This is not a fact of record. Counsel relies upon an appendix in the brief with respect to rules and regulations of Brotherhood which are not of record. With respect to which there's been no evidence taken at all as to their interpretation or their application to this particular situation. There are only a very few limited facts before the Court on this question of venue and what were there --
Byron R. White: On your approach it wouldn't make any difference how many facts like that were of record, would it?
James L. Highsaw, Jr.: Not on our approach, no, Your Honor. It does make a different apparently on the approach of the railroad area. We before the District Court put in a limited number of facts which were not contradicted, namely, that the headquarters of the B.R.T. were in Cleveland, Ohio. That the B.R.T. maintained no office in Denver, Colorado, that it's only connection with Denver, Colorado was it had some members at Denver, Colardo. And that for its Grievance Committee located in Denver, Colorado made up of members of the B.R.T. on the Denver & Rio Grande Railroad of which Mr. R. E. Carroll was chairman. Those were the only facts before both the District Court and the Court of Appeals on this venue question. Now those facts, I am going to now proceed to discuss the interpretation of the statute. First, I think we have to decide which statute we're interpreting. Counsel has made no reference at all to the amendment of the venue statute which took place on November 2, 1966 about six or seven weeks after the Court of Appeals' decision which provided that in addition -- that in non -- the diversity action such as this, there could be suit brought not only in the judicial district of the residence of the defendants but also where the claim arose. Now, the railroad has not made any assertion in this case that this amended statute was applicable to this particular case were controlling. I must say in all fairness that both counsel and myself are operating under a restriction with respect to this issue of the application of this amended statute because we -- all that -- filed briefs almost on the same day with this Court in another case in which this precise issue was involved with a suit to enforce one of these two Adjustment Board awards here. I must say that in all candor that the basis of my brief in that case and on the basis of this Court's decision in U.S. v. Alabama, I believe that the amended statute is applicable even though it creates an additional issue for me to dispose of.
William J. Brennan, Jr.: You mean applicable in the sense of the limited review on the Board --
James L. Highsaw, Jr.: It's applicable with this case in determining whether the venue was proper in the Judicial District of Colorado. Now, I would have to therefore discuss briefly with you this question of which there were no evidence taken in the District Court or no argument made in the District Court. Of course, in the Court of Appeals directed to this but that was simply that whether this claim arose in Colorado and it's our position that the whole claim did not arise in Colorado for the facts which I've just been stating to you. The record is clear that a part of the strike occurred in Utah, that a part of the injury occurred in Utah that they are claiming here, part of the diversion occurred in Utah. Consequently a part and the record does not show how much of the claim was a Utah claim, not a Colorado claim. And I believe that under the amended statute, they would have had to brought suits one in Utah and one in Colorado if they could otherwise sue under this and that there would had to been an effort to transfer one or the other. Now, I would also like to point out to the Court the cases that we've cited in our brief that interpreting a provision of the Labor Management Reporting and Disclosure Act of 1959 which establishes venue for actions under Section 1, both on the principal place of business of a union and also where the violation occurred. And both the Court of Appeals and District Court decisions, one exception under that upheld that the violation occurs where the decision is actually made. They don't apply the classic tort principle of where the injury occurred. But if the injury did occur outside of Ohio here where the decision to conduct the strike was made but did not occur solely in the District of Colorado to give this carrier a single claim in that judicial district, in other words, the claim which it prosecuted here and for which it received the amount of damages here. This brings us to the basic question which was argued in the Railroad's brief in here today, namely, that is the interpretation of the residence provision of Section 1391 (b) in Title XXVIII. And I think that it is beyond question that simply what the railroad is asking this Court to do is to read Section 1391 (c) which applies -- mentions specifically as limited by its language to corporations so as if -- it also includes unincorporated associations. Now this is specifically and exactly what it said in its main brief. This is specifically and exactly what the amicus brief for the Railroad had said no. In their reply brief, the Railroads, after reading our brief, apparently had thought a little better of this and now we're trying to argue that -- oh, really, all they're asking is an interpretation of residence of -- provisions of Section 1391 (b). But they can only get to the interpretation that they argue for by having this Court read Section 1391 (c) as if it includes unincorporated associations when it does not. And it is our position that this Court cannot read Section 1391 (c) as including unincorporated associations unless it simply legislates and that this Court should not do that. Now --
Potter Stewart: Where would the proper venue be?
James L. Highsaw, Jr.: Where would the proper venue be on residence requirements, the proper venue could be either in the Northern District of Ohio, Your Honor, or it could be under the District of Columbia statute which permit suits or you can be found, it could be in the District of Columbia. But it could not be --
Potter Stewart: I don't see where -- would not -- how that follow if under (b) it has to be brought where all the defendants reside. Certainly, all the defendants don't reside either in the Northern District of Ohio. And if they do, then none of them -- my hypothesis, reside in the District of Columbia.
James L. Highsaw, Jr.: But what --
Potter Stewart: Now how could it be brought in either place?
James L. Highsaw, Jr.: Now what the -- well, looking at the Northern District of Ohio, what the Court of Appeals held was that the Brotherhood was resided -- the Brotherhood is a jural entity resided in the Northern District of Ohio.
Potter Stewart: Well, that surely does -- violence to the statute which could be argued to be equally great as what you say you're (Voice Overlap) --
James L. Highsaw, Jr.: No, I don't think it can, Your Honor, because prior to the use of the residence language, the statute for great many years, read inhabitant and the word inhabitant had been interpreted and there's no question about this. This is conceded by the other side on their briefs if the word inhabitant had been interpreted to mean as applied to unincorporated association in the place where its principal headquarters were located. When the word residence was substituted by the 1948 Revisions, the legislative history shows that it was done -- simply the clarity was not intended to change the impact of the provision because it said that the word residence and in (Inaudible) were synonymous and there was no intent to change that.
Potter Stewart: But certainly under their reasoning of Bouligny, if that is controlling here then I should think it follows, doesn't it, with this suit, it couldn't be brought anywhere?
James L. Highsaw, Jr.: No. No, Your Honor, I would not had -- I would not be able to agree with that --
Potter Stewart: Why?
Abe Fortas: But the matter is that a suit could be brought wherever they can find the members of the union.
James L. Highsaw, Jr.: Well, I said -- I believe what I was mentioning, Your Honor, in the Graham case, this Court said that a railway labor organization could be sued in the District of Columbia. Under the District of Columbia venue statute that permits a suit where you're found, it could be sued, the federal district court here. And that union as does most of these unions have -- has a national legislative headquarters here so that it can be said to be found within the District of Columbia but Your Honors also quite right as to the substance of Bouligny holding. But the Court of Appeals was not applying the Bouligny ruling in terms of the substance or subject matter of its ruling as to whether or not an unincorporated association was a jural entity. Nobody is arguing about in this case. You could sue the B.R.T. here as a jural entity under Rule 1706 (b) of the federal rule because this was an action based on a federal statute. What the Court of Appeals was saying in the Bouligny -- in reference to Bouligny case was, in that case, the identical argument was made for interpreting Section 1332 that is made here for applying the interpretation of Section 1391 (c) urged by the Railroad and that argument was that unincorporated associations should be treated as corporations. That as a practical matter of their -- now like corporations that in the practicalities of litigation they should be so treated. That particular case, the argument was made by a union, the United State -- the Steelworkers. This Court said that, however, appealing this argument might be, it was that argument which was advanced these legislative reasons for interpreting the statute and the argument should be addressed to Congress. And identically, the same identical argument is the argument which is relied upon here by the carriers and is the argument which goes back and is derived from the Rutland case before the Second Circuit. And of course, the Second Circuit also in that case conceded that the -- there was no language in the statute on which they could base this. It simply said it was relying on audit regarded as this rule of practicality. And the Court -- this Court has said in the Bouligny case, “You can't rely on this rule of practicality for a rule to interpret the statute.” It say, "It's an argument that should be addressed to come, the jurisdiction". Yes, jurisdiction was involved in that venue but I don't think it makes any difference on the principle of interpreting the statute, Your Honor.
Abe Fortas: Well --
James L. Highsaw, Jr.: The principle is the use of this type of legislative material where you have no language and you have no legislative history, which are the normal tools for interpreting statutes. You can't rely on a practicality argument like this. That's the real significance of the Bouligny case as applied to this situation and it makes no difference. Whether the Bouligny case dealt with jurisdiction of what it dealt with this as far as the application of that particular principle one.
Abe Fortas: Well Bouligny involved of the diversity of citizenship problem?
James L. Highsaw, Jr.: That's correct, sir.
Abe Fortas: The problem on -- in Bouligny was whether for purposes of determining citizenship which has the constitutional basis in the diversity doctrine, it would take the position that a labor union is a citizen of the state where it has its principal place of business. Here, you have a question of residence, don't you?
James L. Highsaw, Jr.: That's correct.
Abe Fortas: And without a constitutional basis and the question that I suppose this case presents is whether for venue purposes, a residence of a labor union may be taken to be where it has put principal place of business, that would be Cleveland here.
James L. Highsaw, Jr.: That's correct, Your Honor.
Abe Fortas: Now, if you don't take that position, if you do follow the analogy of Bouligny all the way through then you would say that venue would be proper wherever any member of the labor union can be found because the historic doctrine is that labor union citizenship is a citizenship of its members, of each of its members.
James L. Highsaw, Jr.: If you applied the -- I believe, Your Honor, though this is the argument made by the carrier this -- what you're referring to now does appear in the brief of the National Railway Labor Conference's amicus but the carrier itself makes a different argument and I think that the -- that that argument at least put some correct setting, the substance of the Bouligny decision on the subject matter and that -- its argument is, is that if the substance of the Bouligny decision as applied to the venue problem, then you wouldn't be able to sue in any judicial district because all of the members obviously aren't residents of any particular judicial district.
Abe Fortas: But the -- if you assume that all of the defendants -- this purpose means that you have to get all of the members of the labor union but if you assume that you could sue the labor union that you had venue over anyone of its members and you could sue practically everywhere in this case.
James L. Highsaw, Jr.: That's correct. I don't believe that rule of law ever existed, Your Honor, and there's no argument in this case at all that as I said that -- that you can't sue the B.R.T. as an entity. You clearly could under the federal rules in the Coronado case. The only question is taking as a -- as an entity, as a jural entity, where is it located for the purpose of (Inaudible)?
Earl Warren: Mr. Lucente.
Martin M. Lucente: May it please the Court. Just a short response to the question of the recent amendment to the venue statute, it is true that Mr. Highsaw stated that the venue statute was amended in November of 1966 to provide and in addition to venue where all defendants reside, actions, a non-diversity and diversity actions alike, may also be brought where the claim arises. Now, that -- it -- amendment to the venue statute does not resolve the question presented by the decision of the Court of Appeals in this case. That is, where does an unincorporated association reside for venue purposes? There is still an important and very substantial interest in the question of residence as distinguished from the question raised by the amendment where the claim arises. And we accordingly urge that our position with respect to residence of unincorporated association is right, the Court of Appeals is wrong, it should be reversed. If this Court should conclude that the Brotherhood is not a residence of that Judicial District of Colorado, then it may become a question to be considered by the lower court as to whether or not the claim arose under -- in the Judicial District of Colorado under the recent amendment. But we still urged upon Your Honors that the question of residence remained a paramount one and one that is still alive very much.
Earl Warren: Very well. We'll adjourn now.


Earl Warren: 585, The Sinclair Company, petitioner versus National Labor Relations Board. Mr. Wallace, you may continue with your argument.
Lawrence G. Wallace: Thank you Mr. Chief Justice and may it please the Court. I said yesterday that Section 8 (a) (1) of the Labor Act when read together with Section 8 (c) prohibits the employer from coercively interfering by threat of reprisal with employee free choice and selecting a bargaining representative. Now, of course, Congress never said in the Act or in its legislative history that the threat of reprisal need be in any particular form of words or that it need be confined within the compass of a single communication in order to be an unfair labor practice. Congress was concerned with substantial rights and did not create any such loopholes in this Act. Now, in this case, we are not dealing with an employer who was so ill-advised as to threaten his employees in blatant, unequivocal terms, but the Board also has a responsibility in protecting the rights that Congress has guaranteed to determine whether an employer who is carefully avoided the utterance of any specific overt threat has nevertheless intimidated his employees by getting the message across in the totality of what is said that there is a real threat of company reprisal if they should select the union. In assessing whether the employer's communications where calculated to have that effect and more importantly, whether they were likely to be understood by the employees of such a threat. The Board of course tries realistically to take into account all the circumstances including any factors that may make the employees especially susceptible to employer intimidation. As Judge Hays of the Second Circuit who was a longtime and distinguished scholar of labor law has suggested in a dissenting opinion, it is not always easy for those of us who are in a profession which shows no signs of obsolescence and which offers a wide variety of employment flexibility to appreciate that the insecurities of workers who are not so fortunately situated can make them painfully vulnerable to the pressures of equivocal or veiled threats by their employers. Now, one additional word of background may be illuminating before turning to this record, the particular kind of threat involved in this case, the threat of plant closure has long been recognized as one of the most flagrantly coercive and destructive of employee free choice. In one of the leading opinions in this entire field, Franks Brothers against the Labor Board in Volume 321 U.S. in a unanimous opinion delivered by Mr. Justice Black, the Court singled plant closure offers special emphasis in the following language. Before the election was held, petitioner conducted an aggressive campaign against the union even to the extent of threatening to close its factory if the union won the election. Now, part of the record which the Board was dealing within this case is cogently summarized I believe in the petitioner's brief and I'd like to read a few short sentences at the bottom of the page 5 and top of page 6. During this same period, 1952 to 1965, changes were made in weaving industry equipment. The company's looms were automated to the point where they could be run without an operator. Electric clutches and fingers were added, which made it much easier to operate and some skills formerly needed were eliminated. Although it was not unusual to have apprentices in 1952, the situation changed in the industry after that time because of automation. The company had had no apprentices since 1952. The question then was whether the employer's communications to this group of employees whose skills had become technologically outmoded to a substantial degree were likely to have had a coercive effect by conveying a threat of reprisal. Now, the Board relied on the purported effect of these communications as a whole rather than on any particular statements and they are rather diffusively spread over the record. It's difficult to present in the course of an oral argument, the communications as a whole, but I'll attempt to make a quick survey of them relying upon the Board's findings in its opinion at first in the distillation that it made of these communications from the record. If I can begin as background with the earlier communications starting on page 172 of the appendix in the findings and they were findings in the Board's opinion. In the first speech made to all of the employees when the president of the company first learned of the union's organizing campaign long before any demand for recognition had been made. He spoke towards the bottom of page 172 of the company's financial condition indicating that ever since the last strike, the shop had been running on thin ice. He emphasized that if the company could not agree to the union's demands, the union's only weapon is a strike and pointed out that while he did not intend to close, a strike could lead to the closing of the plant. He also told the group that the wire weavers craft was a small one that it would be difficult for them to find other jobs because it was not like finding a job as a machinist that many of them did not have the education which would make it difficult for them to find another job and that many of them were getting too old to go out and find new jobs. Continuing on page 174, he said that he did not think the Lindsay organization, the new owners was going to be concerned if through contract negotiations with the union, our people went on strike, that the strike could close respondent's plant and nothing would prevent Lindsay from having respondent's weaving worked on at Lindsay's plant in Ohio and Mississippi. He also stated the respondent was subject to foreign competition and that it was conceivable that if the plant was closed under any circumstances, that some of the work would go to foreign companies and that respondent had handled foreign wires in the past. He pointed out that all they had to do was to look around Holyoke if they thought a strike could not close respondent's plant. Now, continuing with a letter sent on November 5th to all of the employees on page 175, in the text of this letter, he said, that the new ownership is entrusted in profits and not pressure. They have no ties with Holyoke or Massachusetts. Skipping down, “The union promises you a lot but what can they deliver except pressure, the threat of a strike.” He then stated that, “I do not believe the threat of a strike will cause the new owners any loss of sleep. However, a long strike would be bad for me because I would like to remain in Holyoke.” Next, I'd like to turn to page 178 in these findings, getting into the period within 30 days before the election upon which the Board directly rely and a letter of November 30th addressed to all of the wire weavers, I'm reading from page 178, the third line. This letter warns that, “A strike can still close the Holyoke plant, but other plants can pick up the work, and that the new ownership is entrusted in profits and not pressure.” He then points out that the Teamsters Union cannot do anything to improve our profit position, but can only make big demands which the company cannot meet, and the call you out on strike because a strike is a union's only weapon to enforce its big demands. He then asks, “Can you afford a long strike when you know the Holyoke plant has been given a second chance to stay in the business and furnish jobs for all of us?” Now, I would like to turn directly to the employer's last communications during the two days before the election. First of all, a leaflet which was distributed to the wire weavers two days before the election in which appears on page 137 of the appendix in a foldout, it begins you'll note on page 137 of the appendix with a cartoon showing a grave being prepared for the Sinclair Company, surrounded by tombstones marked with the names of other companies in the area that had closed down. And underneath the cartoon, among the comments is the statement, the Holyoke-Springfield Industrial graveyard is filled with companies which died under union pressure. And then on the next page, on the reverse side, in the first column under the heading, many were sick when the union doctor came in, it says, “Some of the industrial corpses were already sick when the unions came in with big promises to the employees of what the unions could do for them. These companies needed higher production and better quality to meet the stiffer competition. The union doctors gave them bloodletting strikes restricted production and a higher labor cost. The result as you see as you look around was the death of these companies.” Then on the following page which continues the leaflet, page 139, under the caption our history is not bright against the background such as ours, your dreams of union miracles can be dangerous to your real job security. We don't know what the future holds for any of us, but you can be sure the new owners of Sinclair Company were looking for profits and not operation Holyoke rat hole into which to pour dollars without hope of profit. And then the final page, pictures five factories in the area which have closed down with the -- among the captions, unions furnished no job security here. In testimony however, on pages 40 and 41 of the appendix, the employer admitted that he had no basis for believing that unions or union activities had had anything to do with the closing of any of these plants, despite the representations in this leaflet.
Speaker: Well, what had been the history of the labor relations to this company?
Lawrence G. Wallace: There had been a union prior to 1952, an independent union which is now affiliated with the Teamsters and Wire Weaving Union. There had been a 13-week strike. After which, the plant reopened on a non-union basis until this present controversy in 1965.
Speaker: That was before the new management?
Lawrence G. Wallace: That was before the -- a company was sold to Lindsay Wire Weaving, but the president of Sinclair, the wholly-owned subsidiary is the same man who is the manager when it was an independent company. It's the son of the founder. Now, finally, I would like to turn to the note cards introduced into evidence by the company which were the basis of the final speech to the wire weavers on the day before the election. These begin on page 162 of the appendix, and I would like to naturally read selectively in the limited time we have. Beginning on page 163 in the middle of card 5, “what can they do?” meaning the union, demand higher wages and expensive welfare and pension plans which could lead to even larger losses than we have had. Although on page 69 of the record, I might point out president Sinclair testified that the company made a profit in fiscal year 1965 not losses, can call you out on strike, you people know what it is like, you have had strike experience, I don't think our new ownership will lose a minute sleep over whether the union threatens the company with a strike. They have made it clear to me that they look for profit and not a hole to pour money down. If we have to negotiate with the Teamsters and cannot reach agreement on a contract under which we can money, they could care less about the threat of strike. And continuing on the next page in the middle of card 9, "Now, I would be the last one to blacklist you for getting another job if this plant close by strike, but the Teamsters can't guarantee you another job either." Again, let's look at facts head-on, no one likes to admit his getting older. We are all Jack Benny's, we're never going to be over 39, but we don't look that way to an employment manager. Most companies probably have a large number of applicants, who are young, have better educations and certainly, a lot better insurance rating than you and I. They can be hired for a lot less money, who you have experience, but it is limited to a particular small craft. I have assumed in case we are force to shutdown because of a strike that some other plant will pick up your business, our business, excuse me. This is not necessarily so. Pressure is still on from foreign wire weavers. Maybe three months from now, I'll force to sell foreign wires if the Teamsters Union stops our production. You all know we have had to handle foreign wires in the past. Then on the next page at the end of card 12, “I have given you the facts today and by mailings as I know them to be, it's not a rosy picture for you or for me. Now, the decision is up to you. Perhaps, you feel I'm exaggerating or bluffing. I'm deadly serious and I'm deeply concerned.” And the final sentence, “To you and your dependents, this is one of the most important elections in which you'll ever vote.” We believe that on this record, in the circumstances of this community and this audience, the Court of Appeals correctly held that it was permissible, perhaps not required but permissible for the Board to conclude that the atmosphere of free choice which Congress has ordained for representation election had been undermined by an implied threat, a threat that the employer anticipated that it would not be able to agree to a contract with the union, and anticipated making other arrangements for its wire weaving needs, if the union should win the election that this would lead either to the closure of the plant or in the transfer of the wire weaving operations elsewhere. Under the Act, this was a judgment for the Board to make, subject of course to the safeguards of judicial review. It is the sort of judgment that the Board has required to make in a very large number of cases every year. For example, during the fiscal 1967, more than 8,000 representation elections were conducted by the Board, and during the same year, objections were filed with the Board to 1,369 such elections.
Abe Fortas: Mr. Wallace, are you going to talk about the authorization cards here?
Lawrence G. Wallace: I am, Your Honor, in just a moment if I may. In evaluating such objections, the Board has shown appropriate solicitude for the statutory rights of employers under Section 8 (c) to express their views during the campaign. For example in a 1966 decision concerning Ameray's Corporation in Volume 162 of the NLRB reports. The Board held that that following inaccurate and intemperate criticism of the union was privilege under this section, a statement by a supervisor that the company did not want the union end that quote “all they was good for was blowing up people's houses and kidnapping their kids and that they was rammed by nothing but a bunch of gangsters.” The Board's decision also have upheld the right of an employer to explain realistically to his employees that his business situation is unfavorable and precludes increases in their compensation or other benefits, so long as this is done in a non-coercive way. The employees in such a situation might still wish to select a bargaining representative to protect them against reductions of benefits or loss of employment. Of course, we do not claim that the Board has been infallible in its judgments in every one of the many cases requiring it to draw the line between a protected expressions of views and implied threats, but we do claim that in the present case, the Board's conclusion was an unremarkable one. It was a clearly warranted implementation of the congressional mandate for protection of employee free choice from the threat of economic coercion by the employer. And indeed, we think the case would become remarkable only if this Court were to convert this record into a script which thereafter could be used by employers with impunity to intimidate their employees.
Speaker: Well, what do you mean by that?
Lawrence G. Wallace: I mean if the holding word that --
Speaker: If it was decided for you, this would be your bet or --
Lawrence G. Wallace: Well, I mean that if this record would be published and I'm certain, it would be use in counseling as to representations that could be made in the course of this campaigns, and as to which the Board could not make a judgment that the coercion unlawfully had occurred.
Potter Stewart: Well, if we decided your opponent was right in this -- on this issue, there would be nothing improper about that.
Lawrence G. Wallace: Of course, that's true.
Potter Stewart: You're just telling me that you're right in this case.
Lawrence G. Wallace: It's another way of telling it. That's -- that is quite correct. Of course, that is -- it's exactly the point I meant to make. Now, once it is decided, it was decided in this case that wrongful coercion by the employer to stride the accuracy of the elective process as a measure of employee's sentiment, the Board's remedy of a bargaining order, it seems to me became plainly warranted on the facts of this case. The union had made a very strong showing of employee support by obtaining authorization cards from a large majority of the employees; 11 of the total of 14 in the bargaining unit. The authenticity of these cards is no longer disputed and the employer never disputed the authenticity of eight of them. No claim has been made that they were obtained by misrepresentation or coercion, the cards themselves which are in the appendix on page 109 unequivocally designate the union as bargaining representative and include an application for membership in the union. In these circumstances, the employer's coercive power during the election campaign permitted the Board, and it does not always draw this inference but it permitted the Board to infer that the employer's refusal to bargain in response to the union's request based on the cards was motivated not by good faith doubt as to the union's majority status, but motivated primarily by a desire to try by wrongful means to dissipate that majority.
Potter Stewart: Now, here of course, the union lost the election.
Lawrence G. Wallace: That is correct. That -- what I just spoke of was the basis for the Board's finding of an 8 (a) (5) violation, a refusal to bargain for which a bargaining order is always the appropriate remedy. The Board held moreover in this case that even in the absence of the finding of an 8 (a) (5) violation, the bargaining order would have been an appropriate remedy for the 8 (a) (1) violation and is so indicated by the Franks Brothers case with I referred to in 320 U.S. in which this Court said that the Board had lost its -- that the union had lost its majority because of the employer's coercive threats. And nonetheless, upheld unanimously the bargaining order based on the authorization cards.
Potter Stewart: That was -- posed a date of that case.
Lawrence G. Wallace: It was in 321 U.S. and it was under the Wagner Act --
Potter Stewart: Not under the Taft-Hartley Act.
Lawrence G. Wallace: Not under the Taft-Hartley Act. Because the employer's 8 (a) (1) violation in this case could not readily be cured so as to restore the conditions necessary for an election free from the effects of his wrongful coercion. The Board was warranted in relying on the decisive majority indicated by the cards at a more accurate showing of employees' sentiment that an election would be in the existing circumstances, and thus to decide that the requested right of the employees to bargain collectively should be enforced without further delay. Now, this is not a drastic remedy because as in the case of any bargaining order, there will be opportunities for interested persons to request another election to measure any changes in employees sentiment after a reasonable period of time. In sum, therefore, we believe the Court of Appeals was entirely correct in treating this case as a rather routine example of the Board's proper discharge of its statutory responsibilities, which is the flavor one gets from the opinion of the Court of Appeals reviewing this record. Thank you.
Speaker: Can I ask you a question --
Lawrence G. Wallace: Yes, sir.
Speaker: -- the implications which you sketched out which the Board for you to answer, judgment on the totality. Has the Board ever been reversed in one of these cases where both the unfair labor practice and totality approach? Has it ever been reversed?
Lawrence G. Wallace: Not to my knowledge, although there have been relatively few cases in which the only wrongful conduct, the only unfair labor practice was in implied threats or coercion, without any wrongful interrogations or wrongful discharges. There are two Seventh Circuit cases upholding the Board in such situations that are cited in our brief, and those are the only ones that I know of other than this decision from the First Circuit, upholding an order based exclusively on this kind of unfair labor practice. Thank you.


John G. Roberts, Jr.: We'll hear argument first today in case 06-102, Sinochem International versus Malaysia International Shipping Corporation. Mr. Castanias.
Gregory Andrew Castanias: Mr. Chief Justice, and may it please the Court: This Court in Ruhrgas against Marathon encapsulated the relevant line of this Court's precedents in the rule that we suggest controls in this case. What it said, it is hardly novel for a Federal court to choose among threshold grounds denying audience to a case on the merits. Now this Court's cases extending through Steel Company and Ruhrgas and afterward, hold true to this statement. Threshold non-merits issues may be decided by a Federal court before it determines its jurisdiction, in that term meant as subject matter and personal jurisdiction. This Court in this case should hold the forum non conveniens is another one of those threshold non-merits grounds for denying audience to a case that can be considered first before jurisdiction. Adopting that rule in this case will do three things. First, it will result in a rule that is most faithful to the Court's precedents in the area. Second, it will respect the rule of Steel Company and forbid ultra vires judgments on the merits. There is no chance that a dismissal in forum non conveniens will exercise more power than is granted to the Federal courts by Article III or by Congress in statutes. And finally, it will give the Federal courts the appropriate flexibility in appropriate cases to serve important interests such as economy, constitutional avoidance, and particularly relevant in this case, international comity.
Anthony M. Kennedy: Just on the second point. I wanted... does the rule of the Federal district court in forum non conveniens where it dismisses a case for lack of a convenient form, does it have any ongoing consequences as the law of the case? I know our Chick Kam Choo precedent where we said Federal court determination forum non conveniens is not binding in a state court, but supposing in this case that the parties went to San Francisco with a... and said we want to sue there. Would the San Francisco court, the United States District Court feel bound by the determination that this dispute is determined by Chinese law, and that the Chinese court is therefore the appropriate court?
Gregory Andrew Castanias: Well, I think there are two components to your question, Justice Kennedy, and let me see if I can answer both of them. The first is whether the determination that the Federal court in Philadelphia, for example, in this case, was an inconvenient forum. Would that determination be binding on the court in San Francisco? Our view would be probably not. It would be persuasive in that case, but the forum non conveniens--
Anthony M. Kennedy: What about the ruling that this would be governed by Chinese law and that the Chinese court is the best forum to consider that? That too has no lat... has no effect beyond the court in Philadelphia?
Gregory Andrew Castanias: --Let me... that was the second part of your question that I was going to try to answer. And with regard to that, I think that it would not have preclusive effect in the main... in the mine run of cases. And the reason I think it wouldn't have preclusive effect is that it would be one factor in what this Court has described as a multifarious analysis under the forum non conveniens analysis at American Dredging, and so it would be hard to say that for issue preclusion, for example, that the choice of law determination in that case was necessary to the ruling dismissing the case. Now one might imagine a case at the margins where that was the case and there might be a case for preclusive effect, but that's, I think, not likely to be presented by this case.
Ruth Bader Ginsburg: Do you know any case, Mr. Castanias, where there has been a forum non conveniens dismissal in favor of a foreign forum where the plaintiff has then attempted to go into a different-- U.S. court to get a different resolution?
Gregory Andrew Castanias: And by U.S. court you mean Federal court like Justice Kennedy's hypothetical, or perhaps a state court as well?
Ruth Bader Ginsburg: Either one.
Gregory Andrew Castanias: Well, I think I have seen cases, and I can't cite them to you as I stand here right now, where litigants have tried to go to a state court. Another Federal Court, I can't think of a single one. I'm hard pressed to.
Ruth Bader Ginsburg: You... you were urging that this is a threshold issue and it has nothing to do with the merits; but there is an argument that the existence of personal jurisdiction or not might have some bearing on the forum non conveniens evaluation.
Gregory Andrew Castanias: In some cases, I suppose that could be true, Justice Ginsburg; but the point of our rule is that the only issue presented by this case is that of Federal court power. There may be a case where it is appropriate in the district court's discretion. In fact in Ruhrgas, you writing for the Court pointed out that the normal court order business is to determine subject matter jurisdiction first and then personal jurisdiction. But the point of our application of that rule in this case is there may be some cases where it's appropriate, and this is a paradigmatic example of the sort of case where it would be appropriate to decide the forum non conveniens issue first, before personal jurisdiction. I hope that satisfies... I hope that's an answer to your question.
Ruth Bader Ginsburg: Uh-huh.
Gregory Andrew Castanias: With regard to the body of this Court's decisions, we cited in our briefs cases like Leroy against Great Western, which holds that a Federal court can decide venue before deciding personal jurisdiction. In this case it's hardly different because again, as American Dredging pointed out, forum non conveniens is properly described as a supervening venue provision. The Gold Law case which we cite in our reply brief, and the solicitor general relies on, says that Federal courts have the power to transfer a case before determining personal jurisdiction. And grants even more analogous here are the extension in the Tenet case. In the case of extension, extension documents have very similar, though different, moorings as the forum non conveniens doctrine. And they're both discretionary decisions to decline to exercise jurisdiction. This Court pointed out, citing the Ellis case, and it pointed this out in the Steel Company, Ruhrgas and Tenet cases that extension can be decided first. And again, applying that precedent to the case of forum non conveniens, it's... it really does follow that forum non conveniens can be decided first. With regard to the Tenet case, that case is very close to a merits issue, perhaps even one might call it a merits issue, but it was so threshold that it was appropriate to decide the totten bar that was at issue in that case before jurisdiction. Again, and with all of these lines of cases, deciding forum non conveniens first will have... will provide no chance of the Federal court going beyond its constitutionally and statutorily exercised powers. Now, I'd like to leave the Court with one final thought about the way this, and the importance of applying this rule in this case. The complaint that Malaysia International Shipping makes against Sinochem is nothing more than a claim that Sinochem defrauded a Chinese court. There is a term used in the complaint, a fraudulent misrepresentation. The term negligent misrepresentation is also used. But make no mistake about it. The complaint in this case is that Sinochem made a misrepresentation to Chinese courts. This is precisely the sort of interference with the Chinese court system which has proceeded to judgment, and judgment by the way on these issues in favor of Sinochem and against Malaysia International, that really cries out for the flexibility inherent in our rule. Unless the Court has further questions, I'll reserve the balance of my time.
Ruth Bader Ginsburg: One question that doesn't even have to do with the issue before us. I'm curious about why we're speaking of fora, judicial fora, there was in this picture an agreement to arbitrate. What happened to that?
Gregory Andrew Castanias: I'm sorry, I didn't hear the last part of your question.
Ruth Bader Ginsburg: There was an agreement to arbitrate. And we're talking about a suit brought by one party in the United States, by the other party in China, and no arbitration occurred apparently, although I thought the contract called for it.
Gregory Andrew Castanias: My understanding, Justice Ginsburg, and this is a vague recollection from one aspect of the record, is that the arbitration clause was held not to apply in this case.
Ruth Bader Ginsburg: Thank you.
John G. Roberts, Jr.: That's not an exercise of law declaring authority on the merits?
Gregory Andrew Castanias: Oh, I'm sorry. To be clear, Mr. Chief Justice, it was not held by the district court in this case to not apply. That issue was not in front of it. But at the time--
John G. Roberts, Jr.: In other words, the district court didn't hold that it didn't apply?
Gregory Andrew Castanias: --Yes, correct. I think, I think that, I think it was agreed by the parties or understood by the Chinese court. My memory on this with regard to the record, maybe background facts that are not in the record but I, on summing it up, are a little be fuzzy. But I think to answer your question, Mr. Chief Justice, there, in abstention, an... an arbitration clause I think provides a closer question than this case does for an issue of whether it's law declaring authority, I think as your question put it. It's arguable that an arbitration clause is little more than a, in essence, a forum selection clause of the same kind that a venue provision or a forum non conveniens ruling might provide.
Antonin Scalia: It might have been the allegedly defrauded Chinese court that found that the arbitration clause did not apply?
Gregory Andrew Castanias: I'm sorry. The first part of your question I had trouble--
Antonin Scalia: It might have been the allegedly defrauded Chinese court which found that the arbitration clause did not apply.
Gregory Andrew Castanias: --That... it may be. I just, I don't have that ruling in front of me.
Antonin Scalia: I don't see how that court would have gotten into the act unless that was the case.
Gregory Andrew Castanias: Again, we'll reserve the remainder of our time for rebuttal.
John G. Roberts, Jr.: Thank you, Counsel. Mr. Hallward-Driemeier?
Douglas Hallward-Driemeier: Mr. Chief Justice, and may it please the Court: In Steel Company the Court held that it is impermissible to adjudicate the merits of a case over which the Court may lack jurisdiction. But it is another thing entirely for the Court to decline to exercise jurisdiction that it might well possess. In Ruhrgas clarified, in language that counsel has already quoted, that a court may choose among threshold grounds for denying audience to a case on the merits. Now, the dividing line between a threshold non-merits ground and a merits ground may in some cases be difficult. And the Court has... members of the Court have disagreed in some cases; but there is an easier set of cases and that is where the Court is declining to exercise jurisdiction and especially where as here, it is doing so in favor of litigation of the substantive dispute in another forum. And this Court has... has decided already that it is permissible, for example, for a court to decline to exercise supplemental jurisdiction before deciding a difficult question of whether it would possess subject matter jurisdiction over the supplemental claims at all. Forum non conveniens is in the nature of an abstention extension doctrine. In Gulf Oil, one of the first cases of this Court to describe the forum non conveniens doctrine and its factors, analogizes forum non conveniens to a Burford abstention. The Court even in Steel Company acknowledged that abstention on grounds of Younger, for example, would be permissible to decide before resolving a disputed question of jurisdiction.
Ruth Bader Ginsburg: But the Gulf Oil case does say that a forum non conveniens dismissal presupposes that the forum is one in which there's personal jurisdiction and one of proper venue. It's just another forum is more appropriate.
Douglas Hallward-Driemeier: That's, that's right, Your Honor. And the Court said so in the course of rejecting an argument that because it was conceded that jurisdiction and venue were proper in the Southern District of New York, that the doctrine of forum non conveniens could not apply. The Court said that couldn't be so, because the doctrine of forum non conveniens presupposes the availability of two fora. But the Court did not address the entirely separate question of whether the Court could assume that even I it had jurisdiction, it would not exercise it. And--
Antonin Scalia: It was not, not-- felicitously put. I think all the Court was saying was that there would no need for a doctrine of forum non conveniens where there is no personal jurisdiction. The only point of the doctrine is to get rid of the case where you... where you do have jurisdiction. And so you do not have to... but that doesn't mean that you must establish jurisdiction before you can exercise the doctrine. It is a doctrine that overrides the existence of personal jurisdiction. In that sense, it presupposes personal jurisdiction.
Douglas Hallward-Driemeier: --That... that's right, Your Honor. And in the court already determined it lacked subject matter jurisdiction or if venue was improper, then forum non conveniens would have no work to do. But Gulf Oil certainly didn't address this question of the ordering of these restful matters. And of course the doctrine of forum non conveniens, its entire purpose is to allow litigation to occur in a more convenient and appropriate forum, and it would undermine severely the purposes of the doctrine--
John Paul Stevens: Do I correctly understand your argument to be that, that in this case it happened to be the doubt about personal jurisdiction rather than subject matter jurisdiction but you would make the same argument if it were a doubt about subject matter jurisdiction?
Douglas Hallward-Driemeier: --That's right, we would. And, and one of the cases that Ruhrgas quoted and relies on was the D.C. Circuit's decision in... Papandreou, which involved subject matter jurisdiction under the Foreign Sovereign Immunities Act. And there the Court quite rightly said that it would be improper to force a foreign sovereign to undergo extensive jurisdictional discovery in this case when it was clear that at the end of the day the Court would dismiss day in favor of a foreign forum in any event. So it would apply to, to questions of subject matter jurisdiction as well as personal--
John G. Roberts, Jr.: Can a district court do both? Can it say I've reached personal jurisdiction, I conclude that I, we do not have jurisdiction over this case? And in the alternative be dismissed on forum non conveniens grounds if it turns out we do?
Douglas Hallward-Driemeier: --I think they could do both. The second would be really superfluous.
John G. Roberts, Jr.: But not if there's, I presume, if there's an appeal.
Douglas Hallward-Driemeier: If... if... an appeal, the court could, the court of appeals could affirm on either ground. Again, to emphasize the point that counsel has made, the argument here is not that forum non conveniens must necessarily be decided before jurisdictional questions. In fact, the natural order would be to decide jurisdictional issues first. But as the Court held in the analogous circumstance of venue in the Leroy decision, there are circumstances that counsel in favor of reversing that order, such as avoiding a difficult constitutional issue or, as in Mr. Papandreou, avoiding imposing the burden of jurisdictional discovery on a foreign sovereign or foreign entity when a case going to be dismissed in the end in any event. If the Court has no further questions--
Anthony M. Kennedy: In Martin, in the hypothetical where this case is dismissed for forum non conveniens and then they go to another Federal district court, could the second Federal district court say this has already been heard by the first district court; I'm not getting into it? Or, or does that district court have, have to go through the motion again?
Douglas Hallward-Driemeier: --Well, I think the second court would have to at the very least ascertain that circumstances had not changed or that there weren't relevant difference of facts. Your, your hypothetical earlier was of filing, refiling this suit in California.
Antonin Scalia: Now, why is that? Now... to some extent this is a call for the district judge. There is a degree of discretion involved in it, and it's entirely conceivable that one district judge would correctly dismiss the case for forum non conveniens whereas another district judge faced with the same question would not do so. And both of them would be acting lawfully; isn't that... isn't that conceivable?
Douglas Hallward-Driemeier: It is in the nature of a discretionary determination, as Your Honor says, that... that different judges could reach different decisions. In the Parsons case, Parsons versus Chesapeake and Ohio Railway, the Court emphasized there the question was whether a state court's forum non conveniens determination had preclusive effect on a Federal court's analysis of the factors. And this Court held that did it not. In large part because it's impossible to know that every factor would be the same or would be weighed the same by the second court. And so I think it would be open to the second court to, to reanalyze the issues; but even if it weren't, even if there were some preclusive effects, I don't think that that undermines our position, because it is, of course, equally true of other threshold determinations such as personal and subject matter jurisdiction that they may have issue-preclusive effects in subsequent litigations. For example, a trial court could decide that it lacks subject matter jurisdiction because the amount in controversy is insufficient because under state law, the plaintiff would not be able to recover punitive damage. That determination would be given issue-preclusive effect in a subsequent suit filed by the same plaintiff in another district court. In fact Justice Scalia wrote an opinion on that subject in the-- D.C. Circuit in the Dozier versus Ford Motor Company.
Ruth Bader Ginsburg: Mr. Hallward-Driemeier, because your time is running out, there is a question about a court without personal jurisdiction dismissing on forum non conveniens ground, and that is, it's common, as you know, to condition forum non conveniens dismissals on the defendant's undertaking that the defendant will not raise the statute of limitations and other conditions. If the Court has no personal jurisdiction over the defendant, it would be unable to impose such conditions; isn't that so?
Douglas Hallward-Driemeier: Our understanding of a conditional dismissal in this circumstance is that the dismissing court is explaining its understanding of the world, and that... and facts as they bear upon its analysis, such as is the defendant subject to jurisdiction in a foreign forum. Oftentimes, the plaintiff... if I could answer... oftentime the plaintiff objects to dismissal because they can't sue the defendant in the foreign forum. The defendant agrees to waive any objection to jurisdiction. That understanding of fact is a condition of the dismissal. If it later proves to be untrue because the defendant objects to jurisdiction of the foreign court, it would be open to the plaintiff to seek to reopen the first suit on that ground. Thank you very much.
John G. Roberts, Jr.: Thank you, Counsel. Ms. Higgins.
Ann-Michele G. Higgins: Thank you, Mr. Chief Justice, and may it please the Court: We believe that this Court should affirm the judgment of the Court of Appeals for the Third Circuit based on three reasons. We believe that personal jurisdiction is a requirement articulated in Gulf Oil versus Gilbert which remains before this judicially created doctrine may be evaluated. Second, we believe that adopting the Third Circuit holding establishes a clear, bright line discrete rule that is easy to enforce and appropriate to evaluate at any other appellate level. And third, we argue that the nature of the doctrine of forum non conveniens itself presupposes jurisdiction before making a ruling to dismiss for some other convenient forum. The analysis that has brought the case to this Court has included a divergence of opinions between various circuit courts. In the briefing, all parties tend to agree that forum non conveniens is a non-merits-based ground for evaluating a ruling. The Fifth Circuit has decided otherwise. We, we express some issue with the fact that in looking at a forum non conveniens analysis, the Court necessarily, as the Government has conceded in its brief, takes a peek at the merits of the dispute. The other issue that arises is that if a court dismisses a case based on forum non conveniens, and then an appeal is sought, the appellate court always has the opportunity to evaluate both the subject matter jurisdiction and the personal jurisdiction. The Seventh Circuit in the Intek versus-- Engle case, came up with such a ruling recently. They expressed support for the Second Circuit and the D.C. Circuit, saying that it is appropriate to be able to deal with non-threshold matters such as forum non conveniens without ascertaining jurisdiction. In fact, the court acknowledged that they thought the dicta expressed in the Ruhrgas opinion would become the holding of this Court. However, for judicial efficiency, it decided to go through the analysis to determine whether or not there was personal jurisdiction in the case. It went through subject matter of the case and personal jurisdiction, and it determined that there was no jurisdiction.
Antonin Scalia: Well, that only proved that an appellate court can affirm on grounds other than the ground relied upon by the district court, even if the ground relied upon by the district court is also a valid ground. It's up to an appellate court... it's available to an appellate court, especially where the ground is jurisdiction, to choose to look into jurisdiction and say there isn't any. I don't know, I don't know how that adds to your case.
Ann-Michele G. Higgins: Justice Scalia, I think it's appropriate. Both parties cite the vast waste of judicial resources that would occur if forum non conveniens had to establish personal jurisdiction first. And frankly, we see that as the other way. The Insight case in our opinion--
Antonin Scalia: Well, you found one appellate court that chose to do it that way. Frankly, if I were sitting on an appellate panel I wouldn't do it that way if I thought the forum non conveniens ground was valid.
Ann-Michele G. Higgins: --Well, I tend to agree with you on that point as well--
Antonin Scalia: Yes.
Ann-Michele G. Higgins: --with it. But I think what the Third Circuit was stressing in its opinion is that you cannot subject the parties to litigate in another forum if there is some chance that your own forum does not have the personal jurisdiction. It is a prerequisite of the doctrine itself. And we believe that--
John Paul Stevens: May I ask this question. We talk of course about the unnecessary burden on the litigants, but I wonder if there isn't even a more fundamental problem with the procedure that the Third Circuit followed here. That is, is there really a case or controversy down there? Does the defendant have any motivation to spend a lot of money fighting about jurisdiction when he knows that the case is going to be transferred anyway? Is this a real live controversy on the issue that's left open?
Ann-Michele G. Higgins: --I think it is, Justice Stevens, and I think the Court would address that by saying certainly on the negligent misrepresentation claim at this stage the record indicates that there was a ruling in China, but the appellate window is still open. And certainly the evidence has long gone into the Chinese case. Those are completely separate issues.
Ruth Bader Ginsburg: There couldn't be any question about the alternate forum taking jurisdiction here, because it, in fact, had. A proceeding was ongoing in China. So you brought up the question about the Court gives up... if the Court dismisses on forum non conveniens and then the supposedly more convenient forum doesn't take the case. But that can't be a factor in this case, where the other forum was in China and was indeed litigating the case.
Ann-Michele G. Higgins: Yes, Justice Ginsburg; but as practical matter, with the resolution of this case by this Court we would certainly have to start the process, whatever ruling this Court finds, all over again. We certainly cannot participate in the action in China because that has already gone on. We would have the option to participate in the case in the United States because those specific issues were not litigated in China.
Ruth Bader Ginsburg: I'm sorry. I'm not following you, so please straighten me out. I thought that the claim was that a fraud had been committed on the Chinese court.
Ann-Michele G. Higgins: That is correct, Your Honor.
Ruth Bader Ginsburg: Your claim was that a fraud had been committed on the Chinese court in connection with the arrest of this vessel and the ensuing proceedings?
Ann-Michele G. Higgins: That is correct, Justice Ginsburg.
Ruth Bader Ginsburg: Now, why in the world should a court in the United States get involved in determining whether a fraud was committed on a Chinese court?
Ann-Michele G. Higgins: Justice Ginsburg, we believe it was appropriate for U.S. review because of the balancing of the maritime commerce that occurred in the case because of the bills of ladings. Although the district court believed that Chinese law would apply to the contract for the sale of the steel coils, in fact we would make the argument that with the various charter parties in the case, including the bill of lading that you reference, indeed American law would apply and there would be some different issues that would be evaluated.
Ruth Bader Ginsburg: American law to determine whether a fraud had been committed on the Chinese court? It seems just stating it that it might be offensive to the Chinese court to have another court determine whether it had been defrauded.
Ann-Michele G. Higgins: That would have been a concern, Justice Ginsburg, except that issue was brought up expressly before the Chinese court; and if I may refer you to page 18 of the joint appendix, the Chinese court ruled that, quote, "Given that the People's Republic of China and the U.S. are different sovereignties with different jurisdictions, whether the appellant has taken actions at any U.S. court in respect of this case will have no effect on the exercise by a Chinese court of its competent jurisdiction over said case. "
Ruth Bader Ginsburg: Well, that was a very polite way of the Chinese court saying: We don't care what the United States court is doing; we've got this case, we've got the ship, and we're going to adjudicate it; and it doesn't matter. We don't have to say anything to the United States to chastise it for even thinking it could become involved in this matter. It was polite.
Ann-Michele G. Higgins: And I agree with you, Your Honor, except it is the only indication in the record that there is some foreign nation that has expressed an opinion on this. If you read the brief by the Solicitor General, the Government would have us think that every single case is going to involve foreign nations and delicate foreign policy disputes and such other factors. Very clearly, there is no such evidence in the record and the only evidence we do have is from another sovereign, China, that says if you have a U.S. cause of action we have no problem if a U.S. court adjudicates it on the merits. Having said that, the issue here was whether or not personal jurisdiction should have been decided before the forum non conveniens. And again, we would just go back to our second point, where the court believes that it can't evaluate a doctrine without having... if it's a required factor of the doctrine that a sitting court making a ruling on that issue has to presuppose personal jurisdiction.
Antonin Scalia: Well, why... I mean, I assume that in deciding forum non conveniens... that there is an inconvenient forum, the court making that judgment would assume that there was personal jurisdiction and would simply say, you know, put that into the mix. Assuming we have personal jurisdiction, is this nonetheless an inconvenient forum? And if the court can say yes, that's the end of the game. I don't see what you have to gain here. Suppose the Court does decide that it has jurisdiction and dismisses for forum non conveniens? What, what... what are you gambling for here? I don't understand what's the... what's the desirable outcome you hope to achieve?
Ann-Michele G. Higgins: Well, for Malaysia International the desirable outcome would be upholding the Third Circuit opinion. It then gets remanded to the district court.
Antonin Scalia: Right, and the district court at best for you, at best, finds personal jurisdiction. If it finds no personal jurisdiction, you know, it dismisses for that reason instead of for forum non conveniens. If it finds personal jurisdiction, it would say: Oh, there is personal jurisdiction; but I assumed there was personal jurisdiction when I dismissed it for forum non conveniens, so this is really the same call that I made before. Dismissed for forum non conveniens.
Ann-Michele G. Higgins: And Justice Scalia, I concede that, but you would also have the ability of the defendant to waive personal jurisdiction. Again, you get into the judicial resources. The defendant could choose to waive it at that point in time and then I am right back again--
Ruth Bader Ginsburg: Why would a defendant that has moved to dismiss for forum non conveniens waive jurisdiction? It seems to me that there is something in this picture that is to your advantage and that is if you can get the Court to say, well, we have to do personal jurisdiction first, you ask for discovery on that issue and it goes out on forum non conveniens without deciding personal jurisdiction, you are not going to get that discovery.
Ann-Michele G. Higgins: --That is correct, Your Honor, and then I would have to look for an evaluation of forum non conveniens that was favorable to the client. That was one of the issues that we raised on appeal to the Third Circuit; and the court did not make a ruling on that.
Antonin Scalia: Yeah, but discovery for its own sake is no fun. What does discovery for its own-- sake achieve? [Laughter] Unless there's something at the end of the discovery. Now, maybe what you hoped is that the Republic of China would not accede to the discovery and therefore, you would get a default judgment or something. You know, I just... I just don't see what's at the end of this game for you.
Ann-Michele G. Higgins: That's one possibility. But again, we talked about the policy issues of why the Government came in with the position they did. They suggested that the United States had a very distinct interest in avoiding delay, burdensome discovery, and difficult legal issues; and frankly, my thought is the same as yours. Any party has those desires to avoid those issues and come to a ruling in their favor. In this case we would hope that with an adoption of personal jurisdiction first, then the court would be required to rule on our motion to reevaluate forum non conveniens and we might be able to convince the court to be able to pursuit the case here. In this particular case, that is the goal that we seek because that is, as you say, all we have to do at the end of the game with it. I also wanted to--
Antonin Scalia: I guess we should ask the other side, but I think I know what their answer will be, whether if the Court does dismiss on the basis of forum non conveniens without first addressing personal jurisdiction, it must assume the existence of personal jurisdiction? And what do you think?
Ann-Michele G. Higgins: --I think it has to, Your Honor.
Antonin Scalia: Yes, I agree.
Ann-Michele G. Higgins: The Seventh Circuit case--
Antonin Scalia: I agree. So how are you going to get a different result then when it goes back and the court of appeals says, oh, yes, you had personal jurisdiction, just as you thought you did, whereupon the district court says, oh, yeah, same result.
Ann-Michele G. Higgins: --But there is the possibility of a case happening, as it happened in the In Re Bridgestone case, which was a Seventh Circuit case. In that case the court dismissed for forum non conveniens and the... I believe it dealt with the country of Mexico. The parties had obtained a ruling in Mexico saying that the Mexican courts were not to take jurisdiction of the case. Under those circumstances the court was required to take back the case because it no longer had the alternate forum in which to adjudicate the dispute. So I think that's the one example of the case that you raise.
Ruth Bader Ginsburg: But we know that that's not going to happen here, because the Chinese court has adjudicated the case.
Ann-Michele G. Higgins: Not on this issue, Your Honor, and actually not on the bills of lading issue. You did raise that point and there is still the potential of arbitration taking place under the various charter parties to adjudicate the rights and liabilities of the remaining parties in the action. So that matter is still open as well.
Ruth Bader Ginsburg: We're dealing with, because it's a foreign nation, not the codified forum non conveniens that's in 1404 and 1406. And you are treating this as it were counterpart to 1404, which is forum non conveniens. But 1406 is wrong venue and, as you know, in the Goldlaw case this Court said a court can transfer even though it lacks personal jurisdiction and is a place of improper venue. Now, why isn't the forum non conveniens doctrine as applied to foreign nations a combination of 1404 and a 1406, and if it includes 1406 then you don't need your personal jurisdiction, you don't need venue, you just transfer it to a place where those conditions exist?
Ann-Michele G. Higgins: I think, Your Honor, in that case, it's... as the doctrine developed, the difference lies in the statutory framework of the 1404 versus the judicially created version of the forum non conveniens. I think you're correct that as forum non conveniens exists today, side by side with 1404, you certainly have the limited application that it will apply to only foreign nations or to a State court. And that's what I thought was the benefit of creating a rule that's rather limited in scope, that will not touch many other factors. It can be discrete. It can be applied easily. And that comports with Federal Rules of Civil Procedure 1. We thought that was one of the reasons why a finding by this Court would be able to ease the administration of cases along those lines. If the Court has no other questions, I certainly would urge that, based on precedent and logic and the terms of the doctrine of forum non conveniens itself, that the ruling of the Third Circuit be upheld. Thank you.
John G. Roberts, Jr.: Thank you, Ms. Higgins. Mr. Castanias, you have 9 minutes remaining.
Gregory Andrew Castanias: Mr. Chief Justice, unless the Court has further questions, we'll rest on the argument given in the briefs.
John G. Roberts, Jr.: Thank you, counsel. The case is submitted.