Earl Warren: Number 791, Ronald L. Crane versus Cedar Rapids and Iowa City Railway Company. Mr. Prettyman.
E. Barrett Prettyman, Jr.: Mr. Chief Justice, may it please the Court. This case involves only a single question but one of great importance in the administration of the Federal Safety Appliance Act. The question is whether in a suit under that Act brought by a non-railroad employee, the railroad can assert the defense of contributory negligence, and everyone concedes that the petitioner in this case is covered by the Act. Everyone concedes that if this same suit were brought by a railroad employee, contributory negligence could not be asserted as a defense, even though all the facts were precisely the same and the violation of the Act was precisely the same as in the case of the non-railroad employee. Here, petitioner Ronald Crane was employed as a meal house helper by Cargill, Incorporated. His job was to spot, weigh and help load railroad cars which were delivered empty by the respondent railroad to Cargill, and after loading were picked up again by the respondent railroad for delivering in interstate commerce. The trial court properly instructed the jury and this Court can assume that for the purpose of this case, the railway cars on which plaintiff was working were being used by the defendant as part of its system? Now on the night of the accident, 1963, petitioner Crane and his co-worker Harris, were handling a string of six railroad cars. Harris detached or uncoupled the two most northerly cars in the string and moved them along the tracks for weighing by means of an electric winch and cable. When these cars were returned to the string, impact was made with the remaining four cars with sufficient force to move those cars some five feet, even though the brake was on them. Now at that point, the two cars clearly should've re-coupled automatically to the string of four cars. As this Court undoubtedly knows from prior cases, the Federal Safety Appliance Act as interpreted by this Court provides that railroad cars must be equipped with couplers which couple automatically by impact and when set in the proper position of course. And which will thereafter remain coupled until set free by some purposeful act of control. Now in this case, the knuckles were in proper position, and the cars collided with sufficient impact. Both Crane and Harris who looked at the mechanism thought and testified that the knuckles were closed and that the couplers appeared to be locked, but in fact they were not locked. Hours later, Harris began to move the entire string of cars forward by attaching the winch to the second car with Crane on the third car ready to put the brakes on, and the first two cars began to move out on their own, runaway cars uncoupled to the rest of the string. Crane thought that these runaway cars were going to ram into an empty car which he thought he'd seen down the tracks and which he thought men were working, and consequently he quickly put the brake on the third car, he jumped down, he ran along the tracks, he climbed up a ladder on the back of the second car, began to turn the brake to stop these two runaway cars and he fell to the tracks to a cement pavement. The bones in his feet were jammed up into his legs and he was permanently injured. Now before proceeding further, I want to say just a word about the statement of facts given by respondent. We've answered each of these statements with citations to the record in our reply brief, but the most direct answer to them is that precisely the same argument on the facts was made twice below to the trial court in an effort to keep this case from going to the jury. Once at the conclusion of our evidence, once at the conclusion of all the evidence, twice the trial judge rejected that version of the facts, twice the trial said this case can go to the jury. And consequently we submit that the respondent railroad is not free again here to reargue these facts which properly for the -- or for the jury and which went to the jury. Crane brought his case in an Iowa State Court alleging violation of the Federal Safety Appliance Act and that the railroad had provided cars with defective couplers. From the outset of this case, Crane argued that contributory negligence was not a defense, was not a defense where there was a violation of the Federal Safety Appliance Act. That liability was absolute once a violation was shown to be approximate cause of his injury. The railroad argued otherwise. And the trial judge adopted the railroads argument and allowed the defense of contributory negligence to go to the jury and as a matter of fact put the burden on Crane to prove absence of contributory negligence rather than on the railroad to prove the presence of contributory negligence.
Potter Stewart: I suppose that's the usual rule of Iowa law?
E. Barrett Prettyman, Jr.: No sir, as a matter of fact that's the minority rule, most states --
Potter Stewart: Not -- of Iowa law.
E. Barrett Prettyman, Jr.: Oh, I'm sorry I misunderstood you.
Potter Stewart: Yes.
E. Barrett Prettyman, Jr.: It is a rule under Iowa law, yes sir.
Potter Stewart: Yes.
E. Barrett Prettyman, Jr.: Now the jury decided for the railroad and denied all recovery to Crane, the Iowa Supreme Court affirmed with two justices dissenting, although it recognized that recent opinions of this Court put the matter in some doubt. It did not feel free to depart from what it considered older case law indicating that all common law defenses except assumption of risk are applicable to non-railroad employees. That now is the issue before the Court. Now the problem arises because the Federal Safety Appliance Act was passed in 1893 without any specific reference to a remedy other than a suit for penalties by the United States. And consequently, suits for violation of this Act were brought in state courts, and the earliest case on contributory negligence from this Court, the Schlemmer case, held that in the absence of legislation at the time of the injury in that case taking away the defense, the common law controlled. We show in our brief how we think Schlemmer was misinterpreted in later decisions, but in any event it certainly true that between 1911 and 1935, this Court did state in dicta in several opinions that state law controlled as to the defense of contributory negligence. That certainly is true. In the meantime however --
Potter Stewart: Mr. Prettyman, -- Mr.-- may I interrupt just for a moment? I think I know the answer to this, but was it your submission that -- I know it was, that contributory negligence should not provide an absolute defense to the defendant in this case. Was it your submission that the rule of comparative negligence --
E. Barrett Prettyman, Jr.: No sir we didn't.
Potter Stewart: -- should apply or that no matter how great the plaintiff's negligence, he's -- there was still absolute liability on the part of the defendant, it was the latter, wasn't it?
E. Barrett Prettyman, Jr.: Yes, diminution of damages under comparative negligence would come into play only in a case under FELA only and not --
Potter Stewart: Not the Safety Appliance Act, yes.
E. Barrett Prettyman, Jr.: -- involving the violation of the Federal Safety Appliance Act. But you'll recall that in FELA, as soon as there is a violation of the Federal Safety Act, Congress made it very clear that contributory negligence went out the window altogether. Right.
Speaker: (Inaudible)
E. Barrett Prettyman, Jr.: Now FELA of course was passed in 1908, and by itself it covered only railroad employees. This Act did set out a specific cause of action, a federal cause of action. It provided that in a suit under FELA alone, as we've pointed out, the contributory negligence of the employee would diminish damages if it was only under FELA and would do away with contributory negligence if a violation of the Federal Safety Act would apply. And in those early cases under both FELA and the Safety Act, liability in those days was thought off in traditional negligence terms. The charges to the juries in those days and even in the language in this Court's opinions in those early days talked in terms of negligence, in terms of due care, and so I think it's hardly surprising that this Court in these early cases accept that the general doctrine that a contributory negligence would be applicable. But beginning in the late 1930's a change began to take place in the reading of the Safety Act. Commentators have pointed out that the change was comparable to the development or the evolution of the law in regard to interstate commerce. The court in the late 1930's, sensing that the restrictions which the state courts were placing on recovery in these cases was not the will of Congress, began requiring stricter standards of liability by the railroads for violating the Safety Act. The court finally said that liability under the Act had nothing whatever to do with negligence, negligence was completely out of the matter, and that the railroad owed an absolute duty to those properly upon its lines to maintain its equipment in efficient condition. And then in due course, the court came to the terms absolute liability, and absolute prohibition in interpreting the Safety Act. Now the use of these terms could hardly have been inadvertent or imprecise as suggested by the Iowa Supreme Court. The Shields case for example, involved the employee of an independent contractor and therefore it had nothing to do with FELA, it was not brought under FELA at all. Contributory negligence was specifically pleaded as a defense in that case. The trial court instructed the contributory negligence was not a defense. The railroad made this a point on appeal to the Fifth Circuit. The Fifth Circuit specifically said that the plaintiff was invoking absolute liability. This Court in its opinion mentioned that plaintiff was invoking absolute liability, and then it went on to say that violation of the Act did result in absolute liability. Now in the light of the record in the case like that to say that this Court had merely used the term absolute viability loosely or inadvertently of course we say simply makes no sense. What we're asking here is that this Safety Act be interpreted in the light of the overall intent of Congress, which was to impose on the railroads whatever liability was necessary to make them maintain their equipment in proper condition. And yet look what happens now if the court adapts the reasoning of the respondent in this case? The railroad is able to turn over a car, a defective car, to an independent third party such as Cargill. The railroad knows that it's not going to receive that car back on its tracks for a period of time. Now if contributory negligence can be asserted by an employee of that third party, it's very much to the advantage of the railroad to leave that car defective, leave it defective, wait till it gets back on its lines because if the injury occurs in the interim, they're going to have a lot easier time of it. How could that possibly have been the intent of Congress? Congress' intent must have been to require the railroad to fix this equipment at the earliest possible time and to impose whatever liability that required them to do it. And look what other results followed here. In this case, the trial court not only placed the burden upon Mr. Crane to prove by a preponderance or a greater weight of the evidence that he was not guilty of contributory negligence, but listen to this. It instructed that if his contributory negligence contributed in any way or in any degree directly to the injury, he could not recover at all. Now, what happens? Mr. Crane thus winds up with less chance of recovery even though the railroad violated the Safety Act then if one of the railroad's own employees had been injured and the railroad had been guilty only of simple negligence, not even of a violation of the Safety Act because in that case, the employee could recover diminished damages but at least damages of some kind whereas in -- in this case, the employee of the third party can't recover at all. And we just submit that that could not possibly have been the intent of Congress. That the intent was entirely the other way, because if it's one thing these two Act show if they're read together it's that Congress was concerned primarily about violations of the Safety Act. That's what it was concerned about if you compare the statutes every time the Safety Act is mentioned. Liability grows greater, the standards become stricter. That's what they were concerned about, the thousands of deaths and injuries that were occurring because equipment was improper. Now the type of interpretation that we seek here is certainly nothing new to the statute. Time and again this Court has read the literal language of the Act in the light of the overall writing intent of Congress. In once case for example, although the Act only refers to couplers coupling automatically by impact and uncoupling without the necessity of going between cars, this Court required in addition that the couplers remained coupled until set free by some purposeful act of control. That wasn't in the statute, but this Court added it because it thought that that was the plain meaning of Congress in passing the statute. In another case, the court struck the fellow servant defense from Safety Act cases, even though the Act itself made no reference whatever to the fellow servant rule, and the Court said the obvious purpose of the legislature was to supplant the qualified duty of the common law with an absolute duty deemed by it nor just. In still another case, it was argued that the Safety Act made clear by its various provisions that it applied only to railroad workers. And this Court held it applicable to motorist on the highway as well who came across the tracks and any one else as a matter fact who were properly on the railroads properly. And still again the court ruled that assumption of risk was just as applicable to employees of a connecting carrier as it was to the defendant railroad, even though the assumption of risk provision would seem to have been applicable only to employees of the guilty carrier. And in that case, it's interesting that the Court relied on both FELA and the Safety Act even though the case was brought only under the Safety Act. Now this brings me to the point that has been emphasized by the court so strongly many times, and that is that the Safety Act and FELA are really correlative, interdependent, interrelated statutes, each gain sustenance from the other, each must be read in the light of the other and we say that the specific abolition of the defense of contributory negligence in FELA permeates the entire Safety Act. In other words, so long as the injured party is one who is covered by the Safety Act, which is clearly the case, concededly the case here, the railroad should not be able to use contributory negligence to defeat him any more that it can now use assumption of risk to defeat him or the fellow servant doctrine to defeat him.
Abe Fortas: Well let's see, Mr. Prettyman, this action was not brought under the Federal Employer's Liability Act.
E. Barrett Prettyman, Jr.: Correct.
Abe Fortas: It was brought only under the Federal Safety Appliance Act.
E. Barrett Prettyman, Jr.: Correct.
Abe Fortas: But your -- so that we -- I suppose we don't have before us a question whether Mr. Crane could be considered as if he were an employee under the Federal Employer's Liability Act. I remember vaguely that in some of the maritime tort cases, there are maybe one or two decisions in which somebody not an employee conventionally considered was held to be doing -- performing the duties of an employee, and therefore to come within relevant laws, but to that we can't do here. That's not involved here because you didn't bring the action under the Federal Employer's Liability Act. So what you're asking us to do is specifically and it is perhaps solely to read the Federal Safety Appliance Act as if it contained the contributory negligence in this and absolute liability provisions, whatever they may be, of the Federal Employee's Liability -- Federal Employer's Liability Act, is that right?
E. Barrett Prettyman, Jr.: Let me put it this way Mr. Justice, I'm not urging the construction you've mentioned at first simply because I don't think it's necessary. I think --
Abe Fortas: What construct?
E. Barrett Prettyman, Jr.: Well you say to treat him as if he was in fact a railroad employee.
Abe Fortas: Well, more than you think is necessary or not, you didn't -- the suit was not brought under the Federal Employer's Liability Act.
E. Barrett Prettyman, Jr.: Well, the reason it wasn't is that FELA on its face applies only to railroad workers.
Abe Fortas: I understand that, so that's -- so that possibility would be out any way.
E. Barrett Prettyman, Jr.: Yes sir.
Abe Fortas: Alright now, am I right in saying that what you're asking us to do is to read the Federal Safety Appliance Act as if it contained the contributory language, negligence language of FELA in the Goss that has accumulated with respect to FELA?
E. Barrett Prettyman, Jr.: Yes, although I might put it a little differently, I would say that I'm asking you to realize that Congress could not possibly have met to discriminate against non-railway employees leaving these two statutes together. It could not possibly have met to allow a railroad employee to recover, and a non-railroad employee properly upon the property, properly working on these cars not to recover under precisely the same circumstances. I think Congress's intent, if you read these two statutes together as the Court have said you must do, is clearly to impose as the Court itself have said absolute liability in either instance. In the (Inaudible) case, it was not under FELA either Your Honor, and yet the Court said there was absolute liability.
Abe Fortas: Well it's not inconceivable to me that Congress might establish one set of rules as to negligence for employees and another for nonemployees?
E. Barrett Prettyman, Jr.: I agree that it's not inconceivable, but if Your Honor will look at the legislative history you'll find that Congress clearly recognized right from the beginning that others -- other than railroad employees were going to be clearly affected. It provided in the preamble to the Act, for example, that this Act was an Act to promote the safety of employees and travelers by -- upon railroads by compelling.
Speaker: (Inaudible)
E. Barrett Prettyman, Jr.: That's correct sir, and I'm saying that the Safety Act provision in FELA, that is the provision that once the Safety Act is violated in FELA, you have a higher standard clearly implies that the -- that once --
Speaker: I think in a logic course that I took in college and you would've styled that as running into the fallacy of the undistributed middle, because it is true that Congress talked about the Safety Appliance Act as having them bearing upon employees but it did not talk about, or did it talk about the Federal Employer's Liability Act as having an applicability to nonemployees.
E. Barrett Prettyman, Jr.: Well the FELA of course was passed later, passed in 1908, and the -- and that statute provides as you know simply that once the Safety Appliance Act is violated that contributory negligence goes out. This Court has gone on in later cases to make clear the class of people who are covered by the Safety Appliance Act greatly broadening it, and that we simply say that this Court has recognized that you're not going to discriminate when you read these two cases -- these two Acts together unless you find specific congressional intent to rule out this kind of interpretation. And we certainly find no legislative history of any kind indicating any attempt to discriminate against or make the burden greater for the non-railroad employee. I grant Your Honor that perhaps would not be beyond the power of Congress to do so, but the point of it is that we can't find any indication that they did intend to do so. Now we pointed in our brief to all kinds of defenses that the states could use and they're presently using in their state cases in ordinary negligence actions to defeat claims by plaintiffs. And if all these are applicable in the respective states under this federal statute, we say it's going to encourage exactly what Congress was attempting to frustrate namely a spotty and differing recovery in each state under this federal statue depending upon whether the local rule happens to be stringent or liberal in the particular case. So in summary we say that absent, the specific intent to discriminate that the courts use of the term absolute liability in recent years in these cases was purposeful that so long is there is a defect as there clearly was here. So long as there is a cause or relationship between the defect and the injury that liability automatically follows. We submit that we're long past the day when an employee merely because of some negligent act no matter how slight, thereby excludes himself from all recovery under remedial legislation of this kind. I'll save the rest of my time for rebuttal if I may sir.
Earl Warren: Mr. Dallas?
William M. Dallas: Mr. Justice. Your Honor put the finger on the very pulse of this problem here and the question is and the Honorable Court decided it on the basis that this was an action brought by a nonemployee of the railroad and that only on those instances were the action was brought by a railroad employee, was the plaintiff entitled to claim the benefits of the Federal Employer's Liability Act? And the court cited the many, many cases that had been decided by this Court which held that contributory negligence was a defense in all of those actions except for the Federal Employer's Liability Act was involved. And what we in effect have here is an endeavor to reverse a construction of the Federal Employer's Liability Act that has been existent for almost 60 years. The very first case that this Court had occasioned to pass on the Federal Safety Appliance Act was the first -- was the Schlemmer case, it was decided in 220 U.S, and that was an action that involved an injury to a railroad employee in a situation where the injury occurred prior to the time of the adoption of the Federal Employer's Liability Act. The case was tried to a jury in the state court and the jury returned the verdict in favor of the plaintiff under instructions with respect to contributory negligence. The state trial court granted the judgment not withstanding the verdict on the theory that the plaintiff was guilty of contributory negligence as a matter of law. It was then appealled to the Supreme Court of Pennsylvania and they held that the plaintiff under the -- the dissident in that case under the facts of that particular case was guilty of contributory negligence. As a matter of law and said in this -- and then the case came here, this Court said the contributory negligence continues as a defense unless it is taken away by statute. There was no statute at the time this action occurred which took it away therefore it continues to be a defense. Now I want to just say a word or two about that Schlemmer case because of the contentions that are made with respect to it in petitioner's brief. They say that this Court has misinterpret over the many years the true import of the Schlemmer opinion. Now the Schlemmer case all very definitely discusses what is contributory negligence? Namely the failure of a party to take those precautions for his own safety that another reasonably prudent person would under the same or similar circumstance. Now they say applying that rule to the facts of that case, the state court was correct in concluding that the dissident failed to take those precautions and he was not entitled to recover because contributory negligence continued to be a defense. Now the next case that we have after that arose under the Act of 1893 which was the original Federal Safety Appliance Act then in 1908 we have the Federal Employer's Liability Act. But as you recall under the Federal Employer's Liability Act as it was first enacted, it only covered those employees who were actually engaged in interstate commerce. So the person could be a railroad employee and if his activities at the time of his injury were intrastate activities then he was not entitled to the benefits of the Federal Employer's Liability Act. So he stood in the same posture with respect to his claim that the ordinary individual who was not a railroad employee he was. We had a series of cases that articulated the import of the Schlemmer case, applied that rule, carried it on and held that insofar as the Federal Safety Appliance Act was concerned, of course a federal question was presented as to what its proper construction was. What they said that an injured party who was not entitled to the benefits of the Federal Employers Liability Act did not have a federally created cause of action. That this duty to have cars equipped with those appliances which were in conformity with the Safety Appliance Act was an absolute duty. The only effect of the Federal Safety Appliance Act was to substitute a strict and absolute obligations specified by statute in lieu of the ordinary common law obligation to maintain your cars in a reasonably safe condition. Now true and from the very beginning, this Court has held that that is a absolute requirement, impose an absolute duty to comply over those strict requirements of the Federal Safety Appliance Act and its obligation that cannot be avoided by any degree of care no matter however assiduous as Justice Hughes, the Chief Justice Hughes said in the Brady case. So we come into a situation here when we start out any person injured as a result of a defective federal appliance, it doesn't make any difference who that person is, is entitled to the benefits of that Federal Safety Appliance Act. He may be a person approaching the railroad, crossing it, may be a man climbing on a car, any person as you very, very distinctly said who needs the protection of that Federal Safety Appliance Act is entitled to it. And that duty is an absolute duty in one that can result in a situation where a person injured can impose liability upon a railroad without fault, and you can have a situation here where you, as we say under the facts of this very case. If liability were to be imposed here, it would be without fault on that part of the Cedar Rapids and Iowa City Railroad because at that the time these cars were delivered, they were firmly coupled together at the time they were uncoupled by these men who were employees of Cargill for the purpose of weighing. The couplers were functioning in perfect order. It was no dispute but what these cars at the time they were delivered were in absolute perfect condition. Now, we have a situation here where this case was brought as it could be in three counts. One, ordinary common law negligence for delivering a car that was not equipped with proper couplers. Two, failure to deliver the car that was in conformity with the Federal Safety Appliance Act. Three, res ipsa loquitur. At the conclusion of plaintiff's case, the court directed a verdict against the plaintiff on all claims that were based on common law negligence because viewing the evidence from the like most (Inaudible) the plaintiff. The jury were to found that there had been any negligence on the part of the railroad company in delivering those cars, that verdict would not have had any support in the evidence. So the case proceeded to trial on this single count before the jury. Now in connection with the situation as it presented, there it was urged throughout the trial, that contributory negligence was not a defense. And when the District Court or the trial court held that it -- contributory negligence was available as a defense then the petitioner requested a so-called emergency instruction which told the jury that they found that the plaintiff was confronted with a sudden emergency so that he was required to act under circumstances, or he didn't have time for adequate deliberation then he would not be held to that degree of care that a person would be who was not confronted with such an emergency, but he would only be required to use that care for his own safety. That a reasonably prudent person would be required to use under the same or similar circumstance, so we have a fair, fair submission, it's not any lopsided submission at all. The Iowa Court said that the instructions with respect to contributory negligence were in full conformity with the Iowa law. Now you're not going to find that instruction in there Your Honor. You'll find it set out in my -- in our brief in the statement of facts certainly, and they did not set it out here and I'm reading it. I set it out here on page 4 of the brief for respondent, this is the instruction that they requested and this is what was given. When one is confronted with a sudden emergency not brought about by his own fault and because the railroad is required to act upon the impulse of the moment without sufficient time to determine with certainty the best course to pursue is not held to the same accuracy of judgment as would be required of him who had time for deliberation. Under such circumstances, he was required to act only as an ordinarily careful and prudent person would act when suddenly placed in the similar position, and he'd be so acts he is not liable for injury or damage resulting from his conduct.
Abe Fortas: But they did -- didn't the trial court give the instruction with respect to burden of proof, (Voice Overlap)?
William M. Dallas: That's right Your Honor, that's in accordance with the Iowa law and the Iowa Supreme Court said that was a correct statement of the Iowa law in contributory negligence.
Abe Fortas: And your position is that action brought under the Safety Appliance Act does not carry with it an overriding of the state statute -- of state rule as to contributory negligence?
William M. Dallas: That's right, that's right. Now that gets to the very pith of our problem. If you were to say that you had a federally created cause of action here, then you'd have a situation where you could not deviate from those federal rules and that's where you get into these lines of cases. Some of them you have here where the action was brought under the Federal Safety Appliance Act, and then the court endeavored to inject into that case. Some local rule that was common to the local jurisdiction.
Potter Stewart: I think you mean action was brought under the Federal Employer's Liability Act?
William M. Dallas: That's right, excuse me.
Potter Stewart: You used the wrong statute.
William M. Dallas: That's right, I -- excuse me for correcting my misapplication of the word. Now urging, you have those situations then. You have no right of course to inject some local rule that may result in a lack of uniformity in the procedure. But here the court has always held that you have no federally created cause of action here. And as the cases have said so frequently, the breach of this duty, the violation of the Federal Safety Appliance Act, merely gives rise to a situation where an injured person must look to the applicable state law for the remedy to recover damages for that breach. And that is precisely what the Iowa Court said in applying these earlier cases and said that there's been -- those cases had never been overruled. Now just one --
Earl Warren: We'll recess now, Mister. Mr. Dallas you may continue your argument.
William M. Dallas: Before the luncheon I had mentioned these previous cases that had been decided by this Court in the construction which this Court had given to the Federal Safety Appliance Act. And I feel that a reading of those cases does not permit any other conclusion other than the fact that in the instances where a person who is injured has the right to the benefits of the Federal Employer's Liability Act that the -- all the common law defenses are available. Now that is the situation that there can be no escape from that conclusion. Now true, you have a situation here where this Court is the final (Inaudible), what the Federal Employer's Liability Act should -- ought -- should be properly construe. But we say that --
Byron R. White: (Inaudible) Federal Safety Appliance Act?
William M. Dallas: Federal Safety Appliance Act, excuse me Your Honor, I'm -- if it wasn't for you gentlemen keeping me in line here, I had to be making some serious
Speaker: (Inaudible)
William M. Dallas: -- mistakes.
Speaker: (Inaudible)
William M. Dallas: That's right. I know, -- (Inaudible) any confusion. In other words, that brings us down to three of the more recent cases, the O'Donnell case, the Carter case and the Affolder case. They were all automatic coupler cases that were decided within a period of very few months of each other. Those were all instances where the court had an instance of injury to a railroad employee. His action was brought under the Employer's Liability Act. And in those cases the Court made pronouncements as to the fact that negligence on the part of the railroad. The failure to comply with the requirements of the Federal Safety Appliance Act those requirements, were absolute, and negligence was not an issue with respect to such compliance. Now there isn't any -- the cases in Mr. Justice Jackson when he wrote the opinion in the O'Donnell case, cited cases that were decided long prior to the cases to which I have made reference here. Insofar of his conclusion that negligence was not an issue or any legal excuse would not be available to a defense as -- a defense to a railroad, like you would have in the ordinary state statute where you have a violation, a technical violation. But if the party was able to show that he'd used every precaution that was humanly possible to avoid a violation, why then, it would be up to the jury to say, ?Well, he has a legal excuse if he finds that he did everything reasonably possible to avoid compliance.? But that defense is not available to a violation of the Federal Safety Appliance Act. And that --
Byron R. White: Could you -- let me ask you, a non-railroad employee sues in a state court over an automatic coupler, and he claims a violation of the Safety Appliance Act and the defendant says, "Well, that's true" The -- there was a defect here but it wasn't a negligent defect. And the state then before you can have a cause of action under state law, you have to prove negligence. Now do you say that the plaintiff would be -- wouldn't have to prove negligence?
William M. Dallas: He doesn't have to prove negligence at all and he didn't have --
Byron R. White: Now why not?
William M. Dallas: Well, because the federal statute, perhaps the best illustration that I can give --
Byron R. White: So you'd -- the short answer is the federal law controls?
William M. Dallas: In other words if the --
Byron R. White: The federal law means absolute liability and the federal law preempts state law in the state cause of action.
William M. Dallas: Your Honor I like that you --
Byron R. White: Is that right?
William M. Dallas: I think you've pointed up before our line of demarcation is. A violation of the federal statute constitutes a violation of an absolute duty, and we cannot escape the conformity without duty by showing any degree of care. But that's only one of the ingredients of a cause of action. In other words looking to the Federal Safety Appliance Act alone it doesn't create any cause of action, that's what it's been so many times held. In other words as Justice Clark said in the Affolder case, it --
Byron R. White: Well what is the cause of action that a plaintiff asserts when he sues in the state court?
William M. Dallas: He sues on a violation of the Federal Safety Appliance Act as creating the wrong or the breach of duty that -- as owed to him.
Byron R. White: So it isn't a cause of action for negligence?
William M. Dallas: Not a cause, not a complete, not a cause of action (Voice Overlap) --
Byron R. White: And it isn't the cause of action the state law gives him either, is it?
William M. Dallas: No but he must look to the state law for causation, for proximate cause and the other elements that --
Byron R. White: He just has to look to state law for a remedy.
William M. Dallas: Yes to look to -- that's right, that's what you said many times.
Byron R. White: I mean just as a forum. Just as a forum?
William M. Dallas: Well, in other words he must look to those requirements of the state law for what is an actionable wrong. In other words, the wrong, the breach of duty occurred but --
Byron R. White: Well, I know, but the state law says there isn't any actionable wrong unless there's negligence?
William M. Dallas: But the state is not permitted to say that Your Honor, your federal --
Byron R. White: Well, I am. Well, then why is it permitted to say that contributory negligence bars?
William M. Dallas: Well, because the violation of the Safety Appliance Act --
Byron R. White: It's only because --
William M. Dallas: -- does not --
Byron R. White: -- it's only because --
William M. Dallas: -- does not mean a cause of action.
Byron R. White: It's only because of the construction of the Safety Appliance Act that --
William M. Dallas: That's -- in other words, the Safety Appliance Act is just a criminal statute that's all it amounted to. And the court has given it a construction that says that that is composed the absolute duties to comply, and as Justice Sullivan --
Byron R. White: Well, isn't much of an absolute duty is it, if it can be avoided by showing contributory negligence or just by showing negligence, not contributory, at least just negligence?
William M. Dallas: Well in other words I don't say --
Byron R. White: If the employee's negligent, the absolute liability goes out the window?
William M. Dallas: Well no, and that's where we get into this confusion when we talk about absolute liability and absolute duty, and that's where I think we get into the problems and I'm going to avert to that aspect of the case in a moment. But here, to put it this way, the -- in the Fairport case, which is the first case that where a person approached a railroad crossing and he was struck by train that didn't have the proper power brakes as required by Section 1 of the Federal Safety Appliance Act. Then the question got into the case as to whether contributory negligence of this person approaching the railroad crossing would be a defense, or more properly speaking, in that case whether last search chance was available to avoid the consequences of failure to use proper precautions when approaching the crossing. And this is what Justice Sullivan in that Fairport case, he said, "The effect of the Federal Safety Appliance Act is to transform a common law duty to use ordinary care into an absolute duty which is imposed by statute" And that absolute duty cannot be escaped by a showing of care on the part of the railroad, but that's only in one side of the aspect, he has to look further to the state law to -- the right as they say springs from the state law to recover. So they must look to the state law to see whether the state law permits or whether he's got approximate causation or whether he has --
Byron R. White: Yes, but you also have to look to federal law to see whether or not the Safety Appliance Act itself bars the defense of contributory negligence just like it bars, or just like it precludes the state conditioning recovery on negligence.
William M. Dallas: That's right, in other words, and that's why they're endeavoring to say Your Honor that your earlier cases had held that there's nothing in the Federal Safety Appliance Act which took away the defense of contributory negligence. That's the exact language of the Schlemmer case and in the absence of something taking it away why it continues to exist. Now that's -- and that is where you're asked to depart from those earlier cases, and now take on the different view on the theory that there's been a change of philosophy with respect to that and that's what I want to get into a minute here.
Hugo L. Black: May I ask you one question?
William M. Dallas: Yes sir Your Honor.
Hugo L. Black: Suppose the Securities and Exchange Act has made it illegal to trade in the certain fashion, and a suit is filed for violation of that where a man is suffered damages, would that be governed by a state or federal law?
William M. Dallas: Well, there's -- a number of those cases Your Honor where they've said that they would constitute -- I assume that you'd not have any elements of contributory negligence or with those other --
Hugo L. Black: Well, why if the state had contributory negligence about that, couldn't it put it in under your argument?
William M. Dallas: Well, in other words -- I'm not --
Hugo L. Black: Maybe the state has a different rule about it.
William M. Dallas: What I am endeavoring to say is this, that the way the statute has been construed up to now, they've said that it did not provide a complete cause of action and you had to look beyond the Safety Appliance Act for certain other elements that were essential to a complete cause of action. And in the case of the injured employee, he looked to the Federal Employer's Liability Act, and as you said in the Carter case, the wrong that resulted from a violation of a Safety Appliance Act provided the element that gave him the cause of action under the Federal Employer's Liability Act. Now we have no counter part of that unless you're going to say that all people whether they be employees or not should be treated on a same basis.
Hugo L. Black: Well, the substance of your argument then as I understand it is, has the federal -- employer -- the Safety Appliance Act was not intended to afford protection to anybody in the world except employees?
William M. Dallas: No that's not -- that's not Your Honor, in other words, in fact I realized your -- the -- that's been quite the contrary you're holding here in your view at Coray versus Southern Pacific Railroad case. You held that quite to the contrary and that case that that --
Hugo L. Black: Did I hold it?
William M. Dallas: Well, you spoke for the Court but -- (Inaudible). And you have said that that Federal Safety Appliance Act provided a -- or protection to whoever got hurt as a result of it and that's been the whole import of the Federal Safety Appliance Act. It was not a statue that was enacted for the benefit of any railroad employees alone or any particular person who might be doing any particular thing if the time he was injured. In other words it was a broad thing to protect the public generally against injuries as you -- as the Court said in that case from any defective appliance that was used and then -- so then we start out here that every member of the public, it's not a statute of the type that you have -- not a case in where you have a statute enacted for the benefit of minors, for example. And you -- now you say well you can't plead contributory negligence in that because that -- this is a statute, as they say it's enacted for the benefit of those people who aren't able to protect themselves, that's the general type. Now this statute has never been protected -- has never been construed in that aspect at all, so that you have a situation where you must look further. Now, I see my time is fast passing, I want to just say a word for concluding about the Shields case here, which is the case to which Mr. Prettyman has referred. Now that's a case and I have read with very great interest. The official transcript in that case which sets out all the instructions of the trial court and so forth, and I think that if you follow that case down you'll find everything that he says is true with respect to it, except there was no instruction given in that case by the trial court either oral or written, at least it's not set out in the record. With respect to the question of the plaintiff's contributory negligence and they tried this case both on two counts, one on common law negligence and the other on the violation of the Federal Safety Appliance Act. And there was no instruction on either, and the reason, it's rather obvious because the railroad was endeavoring to make a defense in that case on the theory that the defect on that so-called running board had been painted over so that their inspector as well as the plaintiff couldn't determine whether there was any defect on it. Therefore, they were trying to make a defense on the theory that they couldn't know about it and the plaintiff couldn't either. And so the case went to the jury and the jury returned the verdict for the plaintiff on both counts, and then when it got to the Court of Appeals and you'll notice on the Fifth Circuit they discussed only the question and they defeated the plaintiff solely on the grounds that this so-called running board was not a safety appliance within the meaning of the Federal Safety Appliance Act. And they dismissed his case then it came here on -- to review in the single question for decision here was whether this so-called dome step or running board was a safety appliance within the meaning of the Act. That caused the further problem as to whether he had to be a member of the general public or would he have to be a railroad employee to claim the benefits of the Act. And the court said that this was a safety appliance that ended that. Then the next they said, well, he was a member who was entitled to the protection of the Act. And that is here where we get the language that's been the subject matter of our haggling, therefore the liability is absolute. Now there wasn't any intention we say in that case to reverse these earlier cases at all. In fact the court as one of the cases cited is the Fairport case which very definitely and specifically held that last clear chance was available as a -- it was a local problem, it didn't present a federal question at all. Therefore you have a situation where we say that that case is not -- there was no issue of contributory negligence in that case at all when it reached this Court. And there wasn't any in it -- on it -- reached the Fifth Circuit, because when you read over the instructions, you'll find that the court never gave an instruction on contributory negligence. True as Mr. Prettyman says, the railroad accepted to the court in instructing the -- or that the contributory negligence would not constitute a defense, but there wasn't any such instruction given there, if it wasn't, never got into the printed record. So Your Honors, we submit that the Iowa Court was correct in the concluding that contributory negligence was available on the defense through an action by a non-railroad employee and that these cases were correctly decided, and that there's been no reason why the rule should not be followed as it was before. And to ask the Court to remedy a situation now that has existed for 60 years, we say is a matter for Congress rather than for the court.
Earl Warren: Mr. Prettyman.
E. Barrett Prettyman, Jr.: Mr. Justice White, you put finger exactly on the point here. Of course there is a cause of action. This Court has said so in unmistakable language, it said, "A failure of equipment to perform as required by the Federal Safety Appliance Act is in itself an actionable wrong." That's what you said in O'Donnell. Is in itself an actionable wrong in no way depended upon negligence.
Byron R. White: Just bringing it to federal court without --
E. Barrett Prettyman, Jr.: That is the point.
Byron R. White: -- (Inaudible)
E. Barrett Prettyman, Jr.: What Mr. Dallas is really arguing about is whether there is a federal cause of action and I think myself that that is questionable. I don't think that's been finally decided.
Byron R. White: There's a cause of action under federal law.
E. Barrett Prettyman, Jr.: There is clearly a cause of action under federal law which can be brought in the state courts and even Schlemmer said that it is a federal question whether a particular defense could be asserted when -- under the Federal Safety Appliance Act.
Byron R. White: (Inaudible)
E. Barrett Prettyman, Jr.: Exactly. So what do you have? You have this Court saying that under these federal statutes brought in state court, we must look to federal standards to see defenses and other matters which go directly to the question of liability. Alright, now what is this Court going to say the federal standard is? Is it going to --
Byron R. White: Well, it has said -- it has said before (Inaudible) --
E. Barrett Prettyman, Jr.: I'm sorry sir?
Byron R. White: It really has said before what -- it already answered that question before.
E. Barrett Prettyman, Jr.: It has, that's my feeling. It said he talks about a rule of law --
Byron R. White: Yes, so it's answered against you.
E. Barrett Prettyman, Jr.: No sir, no sir. He's -- he --
Byron R. White: You don't think we have to overrule any cases?
E. Barrett Prettyman, Jr.: Well, unless with a possible exception of Schlemmer. I think that Schlemmer doesn't stand for the outright proposition that contributory negligence is a defense, but if you disagree with me then yes you have to overrule Schlemmer.
Byron R. White: The court has already construed the Safety Appliance Act as not, as not preventing or as not eliminating contributory negligence as a defense.
E. Barrett Prettyman, Jr.: I don't --
Byron R. White: It has already done that.
E. Barrett Prettyman, Jr.: In Schlemmer, if you interpret it that way, it did. In the other cases following Schlemmer it was entirely dicta because the jury verdicts were always with plaintiff.
Byron R. White: Has there been any attempts to amend the Safety Appliance Act if you eliminate contributory negligence?
E. Barrett Prettyman, Jr.: No and I think the reason is and this is the point I wanted to make was that I think this doctrine is dead anyway. It isn't a doctrine of 60 years that hasn't been overruled, if you go to these cases like Shields and Affolder and Carter and O'Donnell and Brady and Meyers, what is it mean if they're not talking in terms of absolute liability and absolute prohibition. They're not just talking about absolute duty as Mr. Dallas would have you believe, they talk about absolute liability and absolute liability means --
Byron R. White: Yes, but you haven't got any cases where contributory negligence was offered as a defense and the defense has been stricken in the name of the Safety Appliance Act?
E. Barrett Prettyman, Jr.: I can give you a case Your Honor where assumption of risk --
Byron R. White: I'm not -- didn't -- I hadn't asked about that, because it's assumption of risk, it was eliminated by the Safety Appliance Act.
E. Barrett Prettyman, Jr.: Yes but only -- it would seem as to railroad employees.
Byron R. White: Well anyway, you haven't any cases on contributory negligence where the defense was stricken in the name of Safety Appliance Act?
E. Barrett Prettyman, Jr.: Yes, my -- it's my position that it was in Shields. It was pleaded in Shields, it was clearly presented, I contend in the instructions to Shields at least they objected to the instruction that the contributory negligence was deemed not to be a defense in that case, and Shields was solely under the Safety Appliance Act, not under FELA. Not it's my position that FELA chose the way only in terms to the legislative intent to make this Act one of absolute liability and that in no other way can you possibly carry out the intent of Congress. If you're going to say that is the federal standard that contributory negligence applies, if the state says so, you end up with a case like this one where a jury is allowed to conclude that if there was contributory negligence in any way or in any degree, this man gets nothing. I say that could not conceivably have been the intent of Congress. And Your Honor, the only thing I would note in addition to that is that there was a mention of this emergency instruction in an attempt to show that really what went to jury was fair. I need only say that we clearly told the court that that instruction was given solely because with our contributory negligence argument had been rejected. If you're going to talk about unfairness, let's look at this man who had been employed for six months, who admittedly was not a railroad worker, who did not know anything about couplers and yet he is deemed to be contributory negligent because he didn't see the pin drop, or he didn't stretch the cars. That is where the unfairness comes in these cases, and that clearly is not what Congress intended when it said that the railroads had to keep this equipment in effective conditions. Thank you.


William H. Rehnquist: We'll hear argument next in No. 97-1536, Arizona Department of Revenue v. the Blaze Construction Company. Mr. Irvine.
Patrick Irvine: Mr. Chief Justice, and may it please the Court: This Court should adopt a categorical bright line rule that nontribal members who work as Federal contractors on Indian reservations are subject to nondiscriminatory State taxes unless Congress expressly provides otherwise. This rule will clarify existing law, recognize a uniform rule that applies throughout the country, and provide certainty and predictability to contractors, the Federal Government, and to States. This rule is consistent with this Court's precedents regarding Federal contractors and will not require the Court to rule... overrule any of its decisions concerning taxation of persons doing business with Indian tribes or tribal members. This is the rule that the United States itself argues here should apply. If--
Sandra Day O'Connor: Let me ask you a question. There's something, legislation, called the Self-Determination Act under which, if I understand it correctly, an Indian tribe could opt to accept Federal money to build roads and projects like this using that money but itself administering the program. Now, if the tribe had done so and had awarded the contract in question here, could... could the State have been able to impose the tax then, do you think?
Patrick Irvine: --No, Your Honor. Under the authority of the Ramah Navajo School Board case, if a contractor... a nontribal member contractor deals directly with a tribal entity, then there is no State tax.
Sandra Day O'Connor: So, it was open to the tribe to protect itself had it wanted to do so--
Patrick Irvine: That's correct, Your Honor. None of the--
Sandra Day O'Connor: --and its... and its contractors.
Patrick Irvine: --None of the contracts at issue were... were taken over by tribes pursuant to self-determination, but each and every one of them could have been.
Sandra Day O'Connor: Thank you.
Patrick Irvine: In fact, if Congress decides that a different rule, a different preemption rule, should apply, it can certainly enact one. It has the authority to provide that there is no State tax in almost any circumstance and certainly in... in circumstances dealing with Indian reservations.
Sandra Day O'Connor: The... the tax here amounts to quite a bit of money all told, doesn't it? How much is at stake?
Patrick Irvine: The assessment, including interest, was approximately 1.2 million dollars. The tax, as a percentage of the gross receipts for every contract, is 3.5 percent of the gross receipts.
Sandra Day O'Connor: And yet, in fact, the State has provided very little in the nature of services, I guess, in connection with this contractor.
Patrick Irvine: We don't argue that there are any direct services directly to these contracts or the particular geographic location. As we cite in the brief, the State has not ignored these reservations and does provide numerous general services to the reservations and, indeed, to Blaze both on and off the reservation. We have not argued that there have to be direct services. And that's consistent with the rule that applies to any Federal contractor. Almost any Federal contract, whether it be on a military base or in a national forest, may involve little in the way of State services, and the State may have very little authority to regulate the contract. But Congress--
Anthony M. Kennedy: Well, but I thought that we had made a special inquiry into the extent the State has provided services when Indian sovereignty is at stake, as opposed to whether or not the State can just tax a Federal contractor without added complication of an Indian reservation.
Patrick Irvine: --That's correct, Justice Kennedy.
Anthony M. Kennedy: In other words, the Cotton Petroleum case requires us to make this sort of inquiry.
Patrick Irvine: That's correct, Your Honor, but this issue of Federal contractors has never been addressed by the Court. The existence of the Federal Government as a party to the contract really changes the nature of the analysis because the Federal sovereign is such an overwhelming presence. The Federal Government does not need the courts to protect it from States. It hasn't hesitated to... to sue States when it felt that the taxes were not... not supported by the law. The categorical test that we argue for would apply just to Federal contractors as it does with any Federal contractor throughout the country.
Anthony M. Kennedy: And... and you would say the Cotton Petroleum inquiry then is... is not necessary when there's a Federal contractor involved?
Patrick Irvine: That's correct, Your Honor. And if it... if a contract still involved a contract with someone other than the Federal Government, the Court's analysis, the balancing test, the particularized inquiry would still be effective, though as we argue in our brief, the lower court misapplied that analysis as well just because it didn't take into account that tribal sovereignty, tribal interests are not really affected in any significant way when it's a contract between a nontribal member and a nonmember such as the United States itself.
Ruth Bader Ginsburg: What about the argument that it will reduce the total amount available for road building if some money has to be spent in paying State taxes, that that money that could be spared would otherwise be available to build more roads inside the reservation?
Patrick Irvine: Your Honor, I think the... this Court has consistently held, both in the context of Federal contractors and even contracts on reservations, that the very fact that there may be economic effects are not sufficient to preempt the tax. In the case involving a Federal contractor, that's even more applicable. As this Court held in the United States v. New Mexico, even if the cost is directly passed on to the Federal Government, that's not ground for preemption. In U.S. v. New Mexico, I believe it was a cost-plus contract, so there was no doubt that the cost was passed on to the Federal Government. Economic effects themselves are not sufficient to... to preempt the tax. As the United States points out in its brief, merely because there's a tax on the Federal contractor does not necessarily mean that there will be an impact on the... the number... the amount of roads built or the amount of work done because it will hinge on what the agency does, what Congress does in their appropriations. There's no evidence that Congress hasn't appropriated funds taking into account the full amount of the taxes and equally could reduce the appropriation if there's a less... 5 percent less because of the tax. So, the economic effects are a difficult standard to apply and this Court has generally rejected it in the Federal... Federal contractor context, as well as tribal... reservation transactions.
Antonin Scalia: Are these contracts subject to Federal wage laws?
Patrick Irvine: I believe they would be. They are direct contracts with the Federal Government.
Antonin Scalia: So, there may be no economic impact at all if indeed the wages are... happen to be set according to what the rest of the industry is doing in that area no matter... and the rest of the... and the rest of the industry is paying taxes if the market is operating properly anyway. This contract wouldn't necessarily be reduced by the amount of the tax.
Patrick Irvine: That's correct, Justice Scalia. And, indeed, by looking at economic effects, that's always a difficult test to apply because it's very unpredictable. This is a tax which means that both the contractors and the Federal Government benefit by having certainty and predictability knowing when the contract is issued whether it's subject to tax, which is why we focus on who the contracting parties are as opposed to a more amorphous standard, which may very well apply in the context when tribal interests are affected but where the Federal sovereign is a party to the contract and can certainly protect itself from overreaching State taxes. Those considerations just aren't an issue. There really is no reason to apply a different rule than the categorical bright line test for reservation transactions because the cases this Court has... has decided involving reservation transactions that apply a different test have all involved effects on tribes and tribal members, contracts with tribes or tribal members, costs that are directly passed on to tribal treasuries. The Court has repeatedly drawn the line, saying that protecting tribal sovereignty, tribal interest is really what the key is in... in applying a different test. Indian sovereignty, as the Court has described, provides the backdrop against which the applicable treaties must be read. Here tribal sovereignty is not endangered by a tax on a Federal contractor because if there is any danger, it's to the Federal Government which, as I've stated, can protect itself. Merely because the cost is passed on to the Federal Government or even to a tribe is not sufficient in and of itself. There must be essentially the State reaching into the reservation and trying to regulate a transaction with a tribe. Applying State laws to tribal members on the reservation is what this Court has consistently sought to protect. It has not sought to protect nonmembers or the Federal Government from the reach of State laws anywhere within the State. The Court has, over the past 150 years or so, tried to develop different analysis, the intergovernmental tax immunity doctrine that the Court discussed in detail in Cotton Petroleum, but the Court has come around to the idea that that is just too difficult. The standard should be is the legal incidence of the tax on the Federal Government. If it is not, the tax should be sustained. If you try to look through the transaction, you do end up with a fairly free-wheeling balancing test which is difficult to apply certainly in advance, sometimes even at all. Even if the Court doesn't apply a categorical test, as we've argued under the implied preemption analysis, the lower court erred because it didn't give sufficient weight to the State's interest in regulating activities throughout the State, including on reservations. In this case, State law does not... is not imposed on any transaction involving a tribal member or a tribe. There's no impact on tribal sovereignty. Cotton Petroleum certainly held that State taxes are permissible if they do not directly and substantially affect tribal interests. Other cases of this Court hold the same, particularly the tobacco cases... excuse me... where the Court has consistently found that the State has an interest in taxing sales to nonmembers of cigarette products and other products even though it has economic impact on the tribe, even though the tribe, indeed, is the seller. So, in those cases, the tribe or the tribal member is actually a party to the transaction, but the Court has said that the State has an interest in taxing them. The State has not looked at any specific services that are required in those tobacco cases. It sort of accepted the fact that nonmembers receive services. It hasn't required a direct connection with those... with the taxed activities, and consistently applying those precedents leads to the line again that the Court will seek to protect taxes that directly impact on tribes but will not seek to protect nonmembers merely because they do business on reservations. These transactions do take place within the State of Arizona, and that's the key element here. And just because they're on a reservation does not mean different rules should apply if tribal sovereignty is not implicated, and the Court has required that that really be the test.
Speaker: What about the argument that sovereignty is implicated because you're steering... the State by taxing the contractor, when the contract is with the United States, is steering the tribe's decision not to do the... be the contracting party itself?
Patrick Irvine: That's a very indirect impact, Your Honor, and I think if... every tax will have an effect on decision making. The absence of a tax will have an effect on decision making. And if the change... the effect on decision making is the test, it becomes almost impossible to apply. In this case, the decisions are made by the Federal Government which has accepted tribal input, but ultimately the burden of the tax rests on the contractor which does business with the Federal Government which, under its own sovereign powers, has the right to make the decisions that it chooses to make. And so, there really is no direct or substantial effect on tribal decision making because the State is taxing parties that the tribe does not... or that the contractor does not even do... do business with. And the Federal Government in this case, because of its own sovereignty, is not... is the major party here. To the... even under the implied preemption analysis, if there is a passing on of the tax to anyone, it's to the Federal Government. It's not the tribe. This Court's decisions upholding the tax... the taxes on nonmembers would really govern here, and as I mentioned, the lower court just gave too little weight to the very fact that the State does have sovereign interests throughout the State, including on Indian reservations. The only limitation is when there is an impact on tribal sovereignty. In this case, the contract takes place on a reservation, but the direct impact of the tax is on that contract between Blaze and the Federal Government. Any effects on tribal sovereignty are very indirect, and therefore, even under the implied preemption analysis, there should be no... there should be no preemption here. If the Court has no further questions, I will reserve the remainder of my time.
Speaker: Very well, Mr. Irvine. Ms. Brinkmann, we'll hear from you.
Beth S. Brinkmann: Mr. Chief Justice, and may it please the Court: We believe that under United States v. New Mexico, respondent Blaze as the Federal contractor is subject to the nondiscriminatory State tax at issue here because Congress has not expressly acted to provide otherwise. The fact that the contracts involved building and maintenance of roads on Indian reservations should not alter that analysis. The Blaze company's invocation of the Indian preemption doctrine is misplaced. That doctrine has been applied by this Court in cases where nontribal members engage in direct commercial dealings with Indian tribes or members of tribes. But here, the nontribal members engaged in direct dealings with a Federal agency. Thus, the three primary concerns that trigger application of the Indian preemption doctrine are not present. First, State taxes on Federal contractors will not unduly interfere with tribal sovereignty because the United States is the contracting party, not the tribe. The tribe's involvement in the making and performance of the contract is far less significant than if the tribe was a party to the contract. Second, State taxes on Federal contractors have only an uncertain and indirect effect on a tribe's economic self-sufficiency because that effect depends on the United States' response to the State tax. The tribal treasury is not directly involved. The United States may choose not to pass the State tax on to the tribal entity. The United States may increase appropriations, or the United States may change the allocation of the funds.
Speaker: Ms. Brinkmann, what if the tribe had elected under the Self-Determination Act to take the money and... and award the contracts?
Beth S. Brinkmann: We believe that the Indian preemption doctrine then would be applied, and there would be a balancing analysis under that because in that situation, Your Honor, these concerns about direct relations with the tribe, tribal sovereignty, and economic self-sufficiency of the tribe would be at issue because the tribe would be a party to the contract. With regard to the third major reason we think that the State taxes on Federal contracts don't call for the application of that doctrine, though, is because the core concerns about the regulation of direct relations with Indians is not present because the tribe is not a... a member to the contract. Those kinds of Federal concerns are found in the Indian Commerce Clause, the Federal Government's ability to regulate commerce directly with Indian tribes, and in statutes such as the Indian trader statutes and the Self-Determination Act statute, which Justice O'Connor asked about. The interests underlying those statutes would come into play if the Indian tribe were a direct party to the contract. Also, regarding the economic self-sufficiency, as United States v. New Mexico makes clear, in a case where the United States is the contracting party, the United States has the authority to alter the imposition of that State tax by legislation. Here, of course, the tribe would not have that authority if they were the direct party to the contract. And as the Court made clear in the Montana v. Crow case and the Cotton Petroleum case, the Indian preemption doctrine in those situations protects against extraordinarily high taxes, protects the tribe. Respondent, nonetheless, invokes the Indian preemption doctrine based on purported interference with Federal interests, particularly the Self-Determination Act, which we were just discussing. As we discussed, that statute authorizes tribes to make the choice whether to take over Federal Government projects, enter into their own relationships with contractors. But in response to your question, Justice Ginsburg, to my co-counsel, we believe there's nothing in that statute that suggests that it was intended to preempt all aspects of a State law that could somehow indirectly affect a tribe's decision whether to enter into a Self-Determination Act contract. Rather, that statute reinforces the fact that there is a distinction between a contract with the Federal Government and a contract with a tribe, reinforcing the fact that when there's a tribal contract and the contract is directly with the tribe, questions of tribal sovereignty and self-determination are at issue.
Speaker: May I just ask something out of curiosity? I'm not familiar with the statute that Justice O'Connor cited. Does that statute provide for waiver of tribal sovereign immunity?
Beth S. Brinkmann: No, it does not, Your Honor.
Speaker: So that a contractor conceivably might say, well, I don't want to do business with you because I might not be able to collect.
Beth S. Brinkmann: That may be, Your Honor. There were some provisions on... in regulations also concerning requirements for liability insurance, for example, in some instances. Also though, you would have to take into other concerns about whether or not the contractor would engage in a relationship with the tribe and that way perhaps the tax instance that's at issue here would make a significant difference in--
Speaker: How do we describe the State's interest in taxing? Simply because the reservation is within the sovereign borders of the State?
Beth S. Brinkmann: --Yes, Your Honor. The Court has made clear that that land is within the State and that the State would still have interest in taxing the land within its geographic boundaries, and we think under United States v. New Mexico as a Federal contractor, the Court has made clear that there is no bar to that tax unless Congress provides otherwise expressly.
Speaker: And-- --Well, Ms. Brinkmann, you say that it would have interest in taxing that land. Actually they're taxing a transaction--
Beth S. Brinkmann: Yes.
Speaker: --that took place on the land.
Beth S. Brinkmann: I'm sorry. I misspoke. Certainly, Your Honor, it's that transaction privilege tax. It's that relationship, that contract between the contractor and the United States.
Speaker: And is this against the background of the fact that the State always provides certain services or, again, is it just this geographic location within the sovereign borders of the State?
Beth S. Brinkmann: I think it's both, Your Honor. I mean, I think that the idea that it's within the geographic boundaries of the State calls into fact the question that a State provides services to the entire geographic entity. I think it's what the Court talked about in Cotton Petroleum, the general services that are... anyone is entitled to in an organized community.
Speaker: Well, certainly it wouldn't be open to me, say, if I live in Arlington, Virginia, to refuse to pay my property tax because they're not fixing a pothole in my road, would it?
Beth S. Brinkmann: No, Your Honor. It certainly would not. If there's nothing further, Your Honor, we believe that the decision of the Arizona Court of Appeals should be reversed. Thank you.
Speaker: Thank you, Ms. Brinkmann. Mr. Smith, we'll hear from you.
Bruce C. Smith: Mr. Chief Justice, and may it please the Court: In 1980, the State of Arizona came to this Court and admitted that it wanted to tax a nonmember use of BIA roads, and this Court in White Mountain v. Bracker told the State of Arizona, you cannot tax when a nonmember uses those same BIA roads. Now the State is here to say when a nonmember is building those same BIA roads, we are entitled to tax it. Under the implied preemption analysis for Indian cases, this Court should affirm the decision of the Arizona Court of Appeals and hold that this tax is preempted. The central issue in this case is, I believe, what test should this Court apply. Should it apply the United States v. New Mexico rule, or should it apply Indian preemption analysis? There are several reasons why United States v. New Mexico simply does not work here. United States v. New Mexico is a decision of this Court based on the clash of only two sovereigns, that is, State authority and Federal authority, and whether States can tax contractors with the Federal Government. That two-sovereign dispute is not at issue when you are dealing with Indian tribes. This Court has recognized on a number of occasions that Indian tribes and their relationship to States and the Federal Government is a unique one in our constitutional system. And the other thing that is important to consider is that the agency here that is dealing with these Indian tribes is the BIA. It's not the Department of Energy or the old Atomic Energy Commission in United States v. New Mexico. We are dealing here with the Bureau of Indian Affairs, an agency whose sole obligation is to satisfy a trust obligation that it has toward Indian tribes. The other important consideration here that is not present in United States v. New Mexico analysis--
Speaker: Mr. Smith, I... I suppose that the Government is speaking here for... for the BIA, don't you think?
Bruce C. Smith: --I would submit, Your Honor, that the Government is speaking on behalf of the BIA at the highest levels, but I think if you carefully read the Government's brief and you look at the record in this case, most notably the testimony of Mr. Ward that is in the joint appendix and the full transcript that is an appendix to our appellate brief, you'll see that there are differences between what the Government says and what Mr. Ward said in his testimony. Mr. Ward recognized that one of my obligations is to do the most that we can on behalf of these tribes. The Government says, we... there... excuse me... there is no interest that the tribes have once we have them contracted. That is simply not true in this case.
Speaker: What was Mr. Ward's position in the Bureau of Indian Affairs?
Bruce C. Smith: Mr. Ward was the contracting officer for all of the Navajo contracts that are at issue in this case. Mr. Ward put the contracts out for bid. He reviewed the contracts. He went to the Federal Government and got a comparison bid to make sure that the bids were in line, and he ultimately awarded the contracts. The record shows that he signed all of these contracts.
Speaker: And he himself is a Federal employee, I take it.
Bruce C. Smith: He himself is a Federal employee. Mr.--
Speaker: Of the Bureau of Indian Affairs?
Bruce C. Smith: --Yes, that's true. And now, the Government's position here is, well, this is not going to interfere in tribal sovereignty. I believe that it will interfere in tribal sovereignty because if this Court upholds Arizona's taxes, what it's going to do is it's going to send a message maybe not to the people down the street who are making broad policy statements, but it is going to interfere with the way Mr. Ward will do his job tomorrow and the way in which the Navajos, the Gila River reservations, and the other tribes interact with Mr. Ward. Mr. Ward will now have to go to these tribes and say, if you want a hundred percent of your Federal dollars under these contracts, you should do the contracts yourself, but if you can get by with 95 percent of the budget for your contracts, then we can do that. That is fulfilling the trust obligation, and... and under the contracts that were at issue in this case, that was his regulatory obligation, to tell the tribes the financial impacts of these tribal self-determination decisions. This Court has repeatedly said--
Speaker: Well, certainly in White Mountain Apache Tribe, it was the tribe that entered into the contract with the logging company, was it not?
Bruce C. Smith: --Yes, it was, Your Honor.
Speaker: And that isn't the case here. This comes much closer to the New Mexico case, does it not?
Bruce C. Smith: I don't believe that it comes closer to the New Mexico case, Justice O'Connor, for this reason. Congress has given to tribes the right to make these what are called 638 decisions, the self-determination contract decision. Congress has said, when you decide to contract or when you decide not to contract, those are both equal self-determination decisions. You are... we are not going to--
Speaker: Well, the tribe could have opted under the act to ask for the money and do its own contracting.
Bruce C. Smith: --Yes, it could have, Your Honor. But you must recognize the realities of our Indian tribes and their particular situations. Some tribes like the Navajo Nation may have expertise in an area, for example, road construction, and they may have the ability to contract. But the policy of Congress here is we're not going to prejudice you if there's a decision about perhaps building a... a jail for the tribe or building a clinic if you don't have the expertise in that area. You should get the same amount of money. We're not going to interfere, and Congress has specifically told the Government in 1994 when it amended the tribal Self-Determination Act, we don't want the BIA to interfere when Indian tribes make these decisions. Now, if we have a situation where Congress is responding to Indian tribes about interference with tribal self-determination decisions, Congress has responded, clarified its intent, has mandated that the BIA promulgate Self-Determination Act regulations, and those regulations say, we are not going to interfere with tribal sovereignty, then you have a situation where the decision process itself, whether or not to contract, is heavily regulated by statutes and regulations. You have that preemptive effect. You have those... you have the situation like Ramah Navajo and the Bracker case where the congressional policies are preempted by State law. And like the Ramah Navajo case and like the Bracker decision, we have a case here in which Arizona does not have any interest in the construction activity at issue.
Speaker: But unlike those two cases, it's a U.S. contractor contract, and is there any precedent, other than this Arizona Appeals Court, that says that the State can tax when the contract is between the United States and the contractor as distinguished from the two cases on which you rely where the contract was with the tribe itself?
Bruce C. Smith: No, Justice Ginsburg. I am not aware of any such case. But what I am aware of is prior decisions of this Court like in the Colville case where it addressed a... an argument of tribal self-determination and the Court applied the same preemption balancing test to determine whether the State tax was preempted by Federal law. Now, in the Colville case, the Court applied that balancing test and upheld the State tax because what was at issue there was they... as the Court characterized it, they're simply marketing a tax exemption and making cheaper cigarettes available to non-Indians. That's not--
Speaker: Well, why... why couldn't one take the positions... your big point is that there are three sovereigns in this picture... that the tribe, whenever it chooses to act as sovereign, that is, make the contract itself, its tribal sovereignty is respected, but when it chooses to let the United States act as kind of patriarch for it, then it isn't exercising its sovereign capacity? It's more in the position of... of the ward of the United States who is acting for its benefit.
Bruce C. Smith: --If we were dealing with a clean slate and simply as a matter of Federal common law, I might agree with you, Justice Ginburg... Ginsburg, but what we have here is the Court looks to Congress to tell it what is... how Congress is exercising its plenary authority. And in this instance, Congress has told the United States that self-determination decisions whether or not to contract are both equal self-determination decisions. So, you can't simply presume that it's not exercising its sovereign decision making process. One of the issues that has come up in this case is whether there's going to be any interference with the tribal decision making process, and it will have a direct impact on that decision making process.
Speaker: Well, what if the Indian tribe were to lease property to a non-Indian business entity? The business entity sets up operation and does business on the reservation on the... from the leased premises with non-Indians. The State wants to tax. You could make the same argument, that to allow the State to tax would interfere with tribal sovereignty.
Bruce C. Smith: The... those kinds of commercial relationships, Justice O'Connor, have been dealt with by the Court in the past. If you look at the cases that were cited by one of the amici, those kinds of commercial relationships--
Speaker: Do you say there the State is free to impose its taxes?
Bruce C. Smith: --I think that what the Court should do is apply its implied preemption analysis, look at the situation, and see whether there's an overriding Federal and tribal interest that should preempt this kind of tax. The beauty of this Court's implied preemption analysis is that it takes into consideration the interests of all three parties who are being affected by--
Speaker: And it makes it very difficult to apply any general principle. It's a case-by-case analysis every time so that people really don't know what the outcome is going to be until perhaps it gets to this Court.
Bruce C. Smith: --This Court in many factual situations does not apply a bright line rule. This Court in free speech cases, religion cases, and discrimination cases applies tests. It applies factors. And if you look at State taxation of interstate cases or State taxation of foreign commerce clause cases, this Court still applies factors, determines whether those factors are satisfied, and then determines whether the State nondiscriminatory tax will be upheld. I submit that the Federal preemption analysis that this Court has adopted, while it does require case-by-case analysis, is not a difficult and is not an unduly burdensome test.
Speaker: But it's certainly more difficult than the United States v. New Mexico doctrine. I mean, I don't think we've had a case on State taxation of Federal entities since our decision in United States against New Mexico, which is a signal that it's a readily understood and applicable doctrine in the lower courts.
Bruce C. Smith: I agree, Your Honor. It is a readily understood test. However, that test does not take into consideration the Federal and tribal interests that are at issue in cases like this.
Speaker: Well, certainly the Federal Government here is saying it does take into consideration the Federal interest.
Bruce C. Smith: I would disagree with... with the United States' position on whether it's going to interfere with their relationships with Indian tribes. I think when you get down to the Mr. Wards of this world in the BIA, it is going to have a direct and it is going to have a substantial impact on the way in which they are interacting with these Indian tribes. The Court must keep--
Speaker: Well, the idea that we should be concerned about a BIA employee when the BIA itself isn't concerned strikes me as... as... as rather unusual, to say the least.
Bruce C. Smith: --This Court in many of its criminal procedure cases takes into consideration what the effect of its rulings will be for the police officers on the street. Will this rule be difficult to apply? How easy will this rule be to apply? That is the same consideration that the Court should take into consideration for Mr. Ward because it is not the Solicitor General's office that on a day-to-day basis carries into effect the United States' trust responsibilities to this Nation's Indian tribes.
Speaker: What do we do with... with contractors with the Federal Government itself? We don't apply this case-by-case weighing as to... to what extent the... the State's imposition of a tax upon this contract with the Federal Government will affect the sovereignty interests of the Federal Government, blah, blah, blah. I mean, you know, we... there would be no end to litigation if we did that. We simply have a flat rule. You can do it.
Bruce C. Smith: I agree but--
Speaker: And why should we have a different rule for the Indian tribes?
Bruce C. Smith: --The reason why we have a different rule and the Court should adopt a different rule for Indian tribes is because of that unique trust relationship because in these situations the Government doesn't deal with Indian tribes as a mere recipient of Federal money. It deals with them on a government-to-government basis.
Speaker: But you can't demand more of a person than that he treats someone as well as he would treat himself, and if the Federal Government doesn't... doesn't deem it a... too much of an imposition upon its own sovereignty to have... to have its contracts taxed by the States, why should it deem it an excessive imposition upon the tribes' sovereignty to have their contracts taxed by the States?
Bruce C. Smith: Because Congress has said that self-determination decisions are equal expressions, and what this does is it adds an additional factor into the tribal calculus of whether or not to make a self-determination decision.
Speaker: Well, sure, but any tax is... is going to affect how the tribe decides to do business to some degree. And... and we're supposed to sit here and decide whether the degree is too much contract by contract? You'd have to do it contract by contract, wouldn't you?
Bruce C. Smith: In some situations, Justice Scalia, you may have to do that, but when you... I think when you look at the broader issues that are involved here, I think that decisions by this Court or the lower courts can help clarify the issue. I think that decisions by the Ninth Circuit have clarified sales tax issues in Arizona law. I think that decisions by this Court have clarified the... the smoke shop line of cases. However, in the contracting situation, if this Court adopts our rule, it will send a message and it will provide clarity to this situation. We are talking about something that is crystal clear. It's the tax. It's the percentage of tax. And the Court, probably for the first time, has before it an actual record of the... of the impact of this tax. Mr. Ward provided that testimony, and he said that a 5 percent tax will mean a 5 percent reduction in the amount of roads that are built. That is what is a very, very important and a very, very crucial decision for this Court to consider. The tax itself affects tribal procurement processes. How much money are we going to have? If we decide after the planning stage to determine the scope of the road contract, well, what's going to be left? Is the... is the Federal Government going to budget enough money for this project? We've designed it, and in many situations tribes have the right to take money from the Government and plan their own roads. Will there be enough money to build the road that we have planned? How much is going to be there? That is an important--
Speaker: Well, if it's clear that the taxes can be imposed, then in the Federal budgeting and appropriation process, that amount can be taken into consideration. I think it's very helpful to have a clear rule and not monkey around with some case-by-case analysis, and certainly the budgeting and appropriation processes can take into account all the expenditures that will be required and the costs, including applicable State taxes.
Bruce C. Smith: --If the Court were to adopt that standard and send the message to Congress, I do not believe that it will still in... in the future have the effect that... that you desire, Justice O'Connor, because what is going to happen under the Transportation Equity Act for the 21st Century is that Congress is going to authorize money to Indian tribes on a tribe-by-tribe basis. Those Indian tribes are then going to be left with the position of knowing what money has been budgeted for them. They're going to be in the position of, as in this case, setting the priorities, working on the planning with the BIA, and then they have to decide whether or not to enter into the Self-Determination Act decision. It's much like the decision that State legislatures and Congress make every year when they do tax projections. How much money are we going to have in our budget for us this year? What kind of projects--
Speaker: May I ask, Mr. Smith? Your rule isn't limited to road building, is it, the rule you advocate?
Bruce C. Smith: --No.
Speaker: No matter what... if they build houses or ski resorts or casinos, anybody contracting with the tribe would have a tax exemption.
Bruce C. Smith: A contract with the tribe, Justice Stevens?
Speaker: The Federal Government. With the Federal Government doing anything for the tribe. Of course, a fortiori, if it's a contract directly with the tribe, of course, it would be totally exempt under your view.
Bruce C. Smith: Yes.
Speaker: Yes.
Bruce C. Smith: I think in those situations, for example, looking at... at gaming casinos, you'd have to look at the Federal, State, and tribal interests involved. That's a balancing test that... that other folks have engaged in and we know how to apply it. I believe that it's very simple. You simply look at the State involvement with the on-reservation activity. You look at the Federal and tribal interests that are involved and you do the balancing test and you make the decision as to where it comes out. Now, in some of the cases that have been cited in the briefs like the Gila River case, you had a situation in which the State or State agencies were actively involved in the on... on-reservation activity. Policemen were provided for certain events. In that case, the Court was able to determine this is how the balancing test comes out. Going back to the contracting situation, you would look at situations involving perhaps under the Indian Health Service a clinic or a medical facility and the other applicable Federal statutes to determine what kind of... of balancing and how that test comes out. The petitioners and the United States have argued that, you know, we... we don't have to necessarily consider each and every factor. And this is just one factor and it's almost like a slippery slope here. But what is important to consider is this Court's decisions in the New Mexico v. Mescalero Apache Tribe and in the White Mountain/Bracker case itself. In both of those decisions, this Court said, we need to consider whether this tax would affect the full objectives of the Federal legislation. Similarly in the New Mexico/Mescalero Apache case, the Court said, how is this going to affect the legislation? And that's what we have here. We have a tax. It's a set percentage of a tax. And the Court has to ask itself, is this going to interfere with Congress' stated objective, interfering with decisions on whether or not to enter into these Self-Determination Act decisions? It clearly will. Like in Bracker where the Court condemned the imposition of the tax, even though it was only 5,000 or 6,000 dollars in annual taxes, this Court said that that tax will add an additional factor for the parties to consider, and that is sufficient for us to find that the tax is preempted. This road construction contract is no different than the construction contract at issue in the White Mountain/Bracker case. We believe that that case is on all fours with this case but for the issue of whether or not the Court should apply preemption analysis to Indian roads.
Speaker: Mr. Smith, I gather that... you said the contractor, but at least according to the petitioner's brief, the... there are a number of contracts all over the State with different... different tribes. Is that correct?
Bruce C. Smith: Yes, Your Honor, that is correct. What happened in this situation is Mr. Ward... he is a Navajo representative of the BIA. Given the size of the Navajo tribe, they have their own special BIA office. There's also evidence in the record that's alluded to regarding the Phoenix office. That is another BIA office and they administer Federal programs and interact with Federal tribes in the Phoenix office. There are a number of BIA offices and they deal with the tribes in their jurisdiction.
Speaker: And so, your client did work not just on the Navajo reservation but on a number of other Indian properties, if one may call it that, in the State.
Bruce C. Smith: That's correct, Your Honor. Blaze built roads on the Navajo reservation. It built roads on the Hopi reservation, the Papago... now it's called the Tohono O'odham... reservation, the Gila reservation, and the Colorado River Indian reservation. If there are no further questions, thank you.
Speaker: Thank you, Mr. Smith. Mr. Irvine, you have 7 minutes remaining.
Patrick Irvine: Thank you, Your Honor. I met Mr. Ward at the hearing. I think I've met a lot of Mr. Wards in different capacities. And I think officials at that level want a clear rule. Mr. Ward, I'm sure, wants to be able to tell the people, the contractors, whether it's taxable or not. If the test is we don't know because it depends on whether the State provides services, we don't know because it depends on which statute authorizes the funding and what may apply, that's no help to Mr. Ward. It's no help to Blaze Construction. It's no help to the State of Arizona in deciding whether the tax is permissible. So, in terms of... of the interest of... of lower levels of the BIA, I would think a... a clear bright line rule, as the United States itself argues here, should be the answer. In terms of multiple sovereignties, here there is a clash between only two sovereigns, the State and the Federal Government. The tribe is not a party to the transaction. The transactions take place on the reservation, but the tribe is... is not affected except indirectly through the Federal sovereignty. The agency certainly is the Bureau of Indian Affairs which does have trust responsibilities to the tribes, but that's a function which is... is between the tribes and the Federal Government. It's not something that the State is involved in. There's nothing in the record that shows that Congress expects the State of Arizona to help the BIA pay its bills by not imposing its taxes. And certainly there can be interference with tribal decision making because of a State tax, but if there is no tax on Federal contractors, there can equally be interference with Bureau of Indian Affairs decision making. Would the Bureau then have to decide whether to construct projects on the reservation or off the reservation because there might be some tax effect? The Indian Health Service has a hospital in Phoenix, good transportation, good other health care. If there's a tax savings, should they be enticed to move 20 or 30 miles to a reservation just because of the tax effects? As I mentioned earlier, there's always an effect of... on... there's always an effect on decision making whether there is or isn't a tax. Finally, as far as the Self-Determination Act goes, that doesn't even apply to the contracts at issue. These contracts were not between the tribe and the contractor. Each of the tribes chose not to exercise their option under the Self-Determination Act. This Court has never preempted a tax on a reservation based on a statutory scheme that doesn't even apply to the regulated activity, and I suggest it shouldn't here either. If there are no further questions, I'll conclude with that.
William H. Rehnquist: Thank you, Mr. Irvine. The case is submitted.
Speaker: The honorable court is now adjourned until tomorrow at ten o'clock.