William H. Rehnquist: We'll hear argument now in No. 90-584, Southwest Marine, Inc., v. Bryon Gizoni. Mr. Tichy.
George J. Tichy, II: Thank you, Mr. Chief Justice, and may it please the Court: This case presents the issue whether land-based maritime employees, specifically included in the coverage of the Longshore and Harbor Workers Compensation Act, nonetheless are entitled to go to a jury trial to determine their alleged status as Jones Act seamen. The facts of this case are very straightforward, as it comes to this Court after reversal by the Ninth Circuit Court of Appeals of a summary judgment issued by the District Court of the Southern District of California. The respondent, Bryon Gizoni, is a rigger and rigger foreman for petitioner, our client, Southwest Marine. One day while working on a floating platform, a platform commonly used for ship repair work and devoid of navigational qualities, Gizoni was injured when his foot went through a hole in the platform. Typical of any ship repair person, Gizoni filed for an obtained Longshore Act benefits. In fact, he obtained in excess of <eighteen thousand dollars > [ = $ 18,000] worth of benefits, which he then used as he went out forward, not only to take care of his medical needs, but we assume, to bring a Jones Act claim, seeking to get an even bigger recovery by ignoring the administrative process and invoking the full processes of the Federal court system, including the use of a jury to determine his alleged seaman status and his Jones Act claim. What makes Gizoni's Jones Act claim peculiar and bizarre is that he is land based. He works strictly in San Diego Harbor and, by stipulation, is a ship repairman. Yet with the conviction that just about any ship repairman can also make out a Jones Act claim, regardless of congressional intent--
John Paul Stevens: May I ask you a question, just to be sure I get something straight in my mind?
George J. Tichy, II: --Yes, you certainly can.
John Paul Stevens: If he wins the Jones Act claim, assume you lose, just for purposes of argument, will you be entitled to a credit for the amount paid on the Longshoreman Act claim?
George J. Tichy, II: That is correct.
John Paul Stevens: So is there any risk of double recovery in this case? That is what I just want to make sure I--
George J. Tichy, II: There is no risk of double recovery. However, the problem is that the right to have the offset is judicially created. It is not provided in the Jones Act, and as a result, unfortunately, of what has occurred over the years with regard to the ambiguity as to whether or not one is in fact a Jones Act seaperson. In fact, there is language in the Longshore Act, which is specifically section 3(e), which provides for a credit in the event one mistakenly gets payments under the Jones Act or some other State compensation form of coverage. Essentially what has happened here, Justice Stevens and members of the Court is this: in 1927, when the Longshore Act was passed, this was the first time in which Congress had an opportunity to deal with the void which had been created in the law. That is to say, to deal with the stevedores and longshoring people. And over the years what happened unfortunately was that there was a recognition through the situs test, as opposed to the status test which was developed in 1972, that essentially what would happen is that a person could walk in or out of coverage under the Jones Act. In fact, this Court stretched to the ultimate before the passage of the Longshore Act to try and bring stevedores within the Jones Act, simply to avoid this problem of coverage. But what happened was the Congress took the baton and started roll... running with it, if you will, and determined essentially, that it would set forth a law in which it could provide coverage for those who were injured upon navigational waters who were nonsea people and additionally, by the passage of the 1972 amendments, in essence, were able to cover those who were on the adjoining areas.
Sandra Day O'Connor: --Well, Mr. Tichy, the plain language of the Longshoremen and Harbor Workers Act excludes from coverage any repairman who is a member of a crew of any vessel, and it seems to me that your position just reads that right out of the statute.
George J. Tichy, II: To the contrary, Justice O'Connor. You know, I wrestled with the arguments that were raised by the Solicitor, as well as by Mr. Gizoni's counsel, and I guess the way that you have to deal with the issue that you raise is you have to go back to the statute and you look at the language which Congress used. Congress divided those who were maritime employees into two types, and the unique language they used was shall be included, and shall not be included. We are talking about fundamental Aristotelian logic. They didn't use words other than nonincluded. They said, included are A, B, C, and D... which by the way, in this case includes harbor workers, which are a specifically designed category of maritime employee. And then Congress went one step further. Congress said, look, we are not simply covering harbor workers. We are going to specifically cover those who are ship repair persons, and so they specifically included that. By definition, Congress having provided an inclusion--
Sandra Day O'Connor: Can't a ship repair person be a member of the crew of a vessel? Isn't that possible?
George J. Tichy, II: --No. And the reason for that is, it goes back to congressional intent in this particular situation. As you so vividly wrote in your Wilander decision, a master or member of a crew of a vessel is a Jones Act seaperson. That is a specifically, not included category. What has happened here is, and the issues comes to you because of the confusion in the courts. What has happened is--
William H. Rehnquist: The statute uses the term "seaman", doesn't it, not member of a crew or--
George J. Tichy, II: --Not the Longshore Act.
William H. Rehnquist: --Not the Longshore Act, okay.
George J. Tichy, II: No, it uses a term "master" or "member" of a crew of a vessel.
William H. Rehnquist: But the Jones Act uses the term "seaman", does it not?
George J. Tichy, II: That is correct, and--
William H. Rehnquist: Where does the term, seaperson, come from in the statute?
George J. Tichy, II: --Your Honor, I suppose that is my introduction. It is seaman, Your Honor. I recognize the act, when it was amended in 1984, however, eliminated the term "longshoreman" and used the term "Longshore and Harbor Workers Act", and I suspect that the Congress very well may make that sort of change--
William H. Rehnquist: If it does, you should refer to it accordingly.
George J. Tichy, II: --Thank you, Your Honor, and I certainly will. In any event, Justice O'Connor, the term "a master and a member of a crew. " as you pointed out is the equivalent of a Jones Act seaman. And as such, was specifically excluded from the Longshore Act, but as the language was used, and specifically in Section 2(3), the term employee means any person engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations and any harbor worker, including a ship repairman. It is unequivocally stipulated in this particular case, that Mr. Gizoni is in fact a ship repairman.
John Paul Stevens: But you, of course go on. It says, "but does not include a master or member of the crew of any vessel. " So you are suggesting, I gather, that a person could not be a ship repairman on board an ocean liner or something like that? Couldn't do it.
George J. Tichy, II: There are situations where an individual is land based, which is the other pivot in the Wilander decision--
John Paul Stevens: No, but the exception talks about people who are vessels.
George J. Tichy, II: --That's right. If somebody were attached to a vessel on the high seas, out there as you will--
John Paul Stevens: What about a vessel--
George J. Tichy, II: --for weeks, and was taking care of that vessel out there, outside the 3-mile limit, that individual would probably be a master or member of the crew.
John Paul Stevens: --What about a vessel within the 3-mile limit or within the harbor itself?
George J. Tichy, II: I would submit to you, Justice Stevens, that the use of the term, harbor worker was intended to--
John Paul Stevens: No, I am asking about the use of the term, vessel.
George J. Tichy, II: --Yes.
John Paul Stevens: Aren't there vessels that do not leave the harbor?
George J. Tichy, II: Indeed, there are vessels that do not leave the harbor.
John Paul Stevens: And a person who is a member of a crew of such a vessel is not a ship repairman within the meaning of the statute, even if he spends all his time doing ship repair work. Isn't that right?
George J. Tichy, II: I would submit to you that it was the 1972 amendments that clarified that if that individual worked exclusively within the harbor, that that individual would in fact be covered by the Longshore Act. The underlying--
John Paul Stevens: He would not be on a vessel, even though the vessel never left the harbor. Because he was in the harbor, even though he was on a floating vessel, he would not be on a vessel, because the vessel stayed in the harbor. Is that your position?
George J. Tichy, II: --No. What I am saying is that for purposes of the Longshore Act--
John Paul Stevens: Right.
George J. Tichy, II: --that the 1972 amendments made it clear that there are those individuals who work exclusively within the harbor, exclusively, if you will, within the break-water, who are not subject to the type of perils of the sea which a normal seaman is; therefore, Congress used the term "harbor worker" to specifically indicate a form of inclusion. I would point out to you, that is not the issue that we have here because this is a ship repair person who is part of a shipyard who is repairing something essentially next to the shore. But the use of the term "harbor worker", I would submit to you, is intended to necessarily exclude from the inclusion of a master or a member of a crew of a vessel, those people who work exclusively within the confines of a harbor because... there are a number of reasons. One is, Congress created the Longshore Act with the object of having a no-fault, uniform system of compensation. Secondly, Congress in doing this, recognized that those people who are normally covered are land based. Those who work within the harbor areas--
John Paul Stevens: But the hypothesis, we are talking about someone who is not land based. You are talking about somebody who is based on a vessel that floats around in a harbor. You say we should treat him as though he were land based because of the term used... "harbor worker".
George J. Tichy, II: --I would submit that that is in fact the case, and I cannot imagine a situation in the real world where an individual is assigned to a vessel that operates strictly within a harbor who is not land based. And in fact, I think that really is a pivot in the Wilander decision, the recognition which the Court came to, essentially, which was that if you are talking about somebody who was land based, it was the intent of Congress to provide them with this uniform method of compensation this no-fault method of compensation to avoid multiple awards, to avoid the multiplicity of litigation, to avoid the problem that you alluded to about the possibility of inconsistent results or the necessity to achieve--
John Paul Stevens: Let me ask you this question. Maybe we have got the wrong case here, but supposing you have a case in which there are good arguments on both sides of the question of whether a person is under the statute or under the Jones Act? There must be some borderline cases.
George J. Tichy, II: --Sure.
John Paul Stevens: How are they to be resolved?
George J. Tichy, II: Very simply, and I am glad you asked the question. This Court, in dealing with other administrative types of procedures, and in particular, we cite the Court to the National Labor Relations Act type of situations, where Congress has established an administrative agency with expertise in the particular area which is involved, what this Court has said in the past is where someone is arguably covered by that administrative act, where an agency such as the OWCP has administrative expertise, the obligation on the party asserting the claim, which is an arguable claim, must first go through that administrative agency before attempting to burden the courts in any manner, shape, or form with the type of litigation which is involved here. What you have here is a mirror image of the type of result which I think was intended--
John Paul Stevens: Then supposing an employee files a claim under the Harbor Workers Act because he is not really sure--
George J. Tichy, II: --Yes.
John Paul Stevens: --and the employer goes ahead and acknowledges the claim and there is adjudication of the issue, does that mean he is estopped from saying well, I really think I am entitled to Jones Act benefits, but in order to protect myself, I filed this claim as well. Is he estopped from bringing a Jones Act claim? What is the employee supposed to do?
George J. Tichy, II: If the matter were adjudicated, I would say yes. That is, if there was a finding of fact--
John Paul Stevens: Supposing it is not adjudicated. Supposing the employer just goes ahead and starts--
George J. Tichy, II: --Voluntarily provided the payments, as he did here. And let's assume the worst-case scenario, the employer made a mistake and everybody made a mistake because they filed under the wrong act. That, under the hypothesis that I have submitted, would not preclude him from making a Jones Act claim. That is not the fact however of this case.
Byron R. White: --Yes, but where would he go?
George J. Tichy, II: If the individual made a total error, the employer made a total error, provided the benefits, then he would have to go court, certainly.
Byron R. White: I thought you said you... I thought you said you wanted the administrative agency to decide this case.
George J. Tichy, II: I do. I took the very worst-case scenario, Justice White, which was that it was blatantly obvious that it was a mistake, and those where it is arguably covered by the Longshore Act--
Byron R. White: But what if it is just close? What if it is just close, and the employer goes ahead and pays it. It isn't adjudicated--
George J. Tichy, II: --That's right--
Byron R. White: --Well--
George J. Tichy, II: --Then they should go to the administrative agency, Justice White. If it is arguably covered by the Longshore Act, then the administrative agency with the administrative expertise should make that determination in the first instance.
Byron R. White: --Then the employee who has been getting benefits because the employer has been paying them--
George J. Tichy, II: Yes--
Byron R. White: --If he now wants to go to the Jones Act, he has to go to the administrative agency and say, by the way, I am really not covered by the Longshoremen Act?
George J. Tichy, II: --He needs to get a determination from that agency, if it is arguable that he is covered, that is what he should do. That is exactly what has happened in the litigation involving the National Labor Relations Act.
Byron R. White: So he goes up, wants, in a sense, a declaratory judgment from the agency.
George J. Tichy, II: That is the equivalent of it, but in this Court's Garmon decisions, essentially what the Court has said is, we've created the law... Congress created the law which establishes coverage, and that particular coverage is articulated on the face of the statute. If you arguably come within that, it was the intent of Congress to have that administrative agency assume the burden of determining coverage.
William H. Rehnquist: When did this requirement emerge, in the enactment of the 1972 amendments?
George J. Tichy, II: I believe so, because prior to that--
William H. Rehnquist: So before that, there was no such requirement.
George J. Tichy, II: --What happened was, prior to '72 there was only a situs test and therefore, what was happening was that an individual had to establish, in order to obtain coverage, that he was not a seaman under the Jones Act. That's what he had to establish, and that his injury occurred upon navigable waters. What happened in 1972 is that Congress established a status test and actually affirmatively designed for the first time descriptions of categories of covered people.
William H. Rehnquist: And you say, the Congress, I suppose by implication, since they didn't do it expressly, also established kind of an administrative exhaustion requirement?
George J. Tichy, II: Yes, yes. By the same parallel analysis which was utilized in the National Labor Relations Act setting, there was, I would point out to you, essentially, the same type of approach which was judicially created, recognition of, if you will, the administrative expertise side of it and a recognition that it was the intent of Congress not to allow the courts or create further burdens for the courts in the administration of justice, and present to juries, if you will, issues for which other people had been specifically trained and developed the type of expertise which is relevant to the determination of rights.
William H. Rehnquist: Is there anything in the 1972 amendments or their legislative... that suggests Congress intended to effect the traditional Jones Act procedures, which you start in court, I take it, in the Jones Act.
George J. Tichy, II: Yes, that is correct. And specific reference to your question, what we see in terms of the legislative history is the development in '72 of a status test. What had happened historically, looking at the--
William H. Rehnquist: My question was: Is there any indication in that legislative history that Congress wanted to depart from traditional Jones Act procedures, where you could go directly into court if you have a Jones Act claim?
George J. Tichy, II: --I believe the answer to that and perhaps I am not stating it as clearly as I should, is by adopting the status requirement, Congress attempted to delineate those people who must absolutely go to the OWCP for their relief, because there was a tradeoff. Employers now have to pay substantially greater benefits under that Longshore Act and the employees, of course, get greater benefits as a result. And it is a no-fault system which Congress created.
William H. Rehnquist: So that even if a claimant is saying, I don't claim under that system, I claim under the Jones Act, the claimant must still go through the administrative procedure for the Harbor Workers Act?
George J. Tichy, II: That's correct, if he is a ship repair... ship repairman, such as Mr. Gizoni. Absolutely, absolutely. Any other system would be a catastrophe for the courts as well as the administrative agencies because of the possibility of inconsistency of results. Also, it would be inconsistent with Congress' intent, because this is what would happen. If the stevedoring company or the ship repair company saw that they would have to face two types of litigation, they would controvert on the Longshore Act, instead of giving the immediate and speedy payments which Congress intended, because they would want a determination of their judicial obligations or their statutory obligations before they would pay. So the net result would be, if Gizoni prevails here, the very intent of all these laws, that is to provide benefits to people who are injured, would in fact be delayed. The beauty of the Longshore Act is they get the payments immediately. They get them when they have the need. Employers are encouraged to make those payments as quickly and rapidly as they can in order to meet the needs of those particular people.
Antonin Scalia: I am not sure I understand. Wouldn't the agency determination, of course, be reviewable in the courts?
George J. Tichy, II: It would.
Antonin Scalia: So these things are going to be decided by the courts eventually, aren't they?
George J. Tichy, II: Except, it would be reviewable in the same way that the National Labor Relations Board determination is reviewable. Since the administrative law judge would in fact be a finder of fact, that would be reviewable only if there were some... there were not substantial evidence to support the result.
Antonin Scalia: Is that a question of... whether you are a seaman under the statute, is a question of fact rather than law? I thought that the reason we are here is that this is a question of law.
George J. Tichy, II: In the case of somebody who is specifically enumerated within the included categories of 2(3), it is as a matter of law. Anybody who is within those is covered. There are however potentially maritime employees who are not within the included categories but who were intended for coverage. Those do involve issues of fact and to that extent, a factual determination may have to be made by the administrative agency. But to the extent that there would be any review of the administrative agency, to the extent that there are factual issues, it would be on a substantial evidence test, as indeed is the case with the National Labor Relations Act. And as to issues of law, that would be a matter for the court to determine on its own.
Antonin Scalia: You say, as is the case with the National Labor Relations Act. How does it come up in the context of the National Labor Relations Act?
George J. Tichy, II: In the Garmon case, essentially what happened was that an employer sued a union for picketing, which was arguably protected under the National Labor Relations Act. And what happened was the State courts of California twice said, look, you make out a claim. We are willing to listen to what you have to say. You can present it to a jury and you can get a determination. What the Supreme Court said was that you have set forth facts which are arguably within the coverage of the National Labor Relations Act.
Antonin Scalia: Sure--
George J. Tichy, II: Gentlemen, you must go to the administrative agency, the NLRB.
Antonin Scalia: --It isn't a matter of having to go to the administrative agency, not just a matter of that. It is a matter of having to go to the Feds. I mean, you have a question of preemption and we want the labor board to have the first determination rather than what could be a State court for the violation of law. That is a big difference. In this case, it is going to be a Federal agency in either case, either an administrative agency or a court.
George J. Tichy, II: Yes. It just so happened that Garmon arose in the context of a State action. But I would point out to you that that same type--
Antonin Scalia: No, but that is the crucial distinction. The issue is always going to be whether State law is preempted by Federal law, and I can see why there is strong reason to have the labor board have the first say on that. But here, it is a question of Federal law. It is either Federal maritime law or it's the Longshore Act.
George J. Tichy, II: --Let me point out one thing if I may. It is just happenstance that Garmon arose out of a State court action. You know, the Anheuser Busch case, I believe, arose out of Federal action. I think that involved, if you will, alleged antitrust violations which were perceived to be within the coverage of the National Labor Relations Act. So the fact that the action, just by happenstance, was brought in the State court as opposed to the Federal court wouldn't any less make the National Labor Relations Act dispositive, and the same parity of analysis would apply in this case.
Antonin Scalia: Do you know of any other instance like this where the issue is which of two Federal schemes would apply and where you must go to the administrative agency first?
George J. Tichy, II: Sure, Title VII of the EEOC.
Antonin Scalia: No, no. Where it says so, yes--
George J. Tichy, II: Yes.
Antonin Scalia: --But I mean where it doesn't say anything and where we have created a... by judicial determination, the rule that you have to go to the administrative agency first. I am trying to think of a parallel--
George J. Tichy, II: Sure.
Antonin Scalia: --And I offhand can't think of any.
George J. Tichy, II: If I can think of one, when I come back on rebuttal, I will let you know.
Speaker: Okay.
George J. Tichy, II: But the one most in line is, of course, the National Labor Relations Act. Mr. Chief Justice, if I may, I would like to reserve some time for rebuttal.
William H. Rehnquist: Very well, Mr. Tichy. Mr. Easley, we will hear now from you.
Preston Easley: Mr. Chief Justice, and may it please the Court: There are issues in this case that go far beyond the bounds of Mr. Gizoni and Southwest Marine. It affects the rights of many other maritime employees, and by way of example, I concluded a jury trial in Federal court in San Diego on Friday in which a tugboat operator was hurt on a tugboat owned by a shipyard in San Diego, and the jury found that he was a seaman and awarded benefits under the Longshore Act, and the shipyard does not accept that finding and has vowed that they will follow Gizoni to the Supreme Court because they... as it seems that every shipyard has this attitude... that the Longshore Act grants them some type of blanket immunity from the Jones Act. Somehow they were--
Anthony M. Kennedy: You just said that he was given damages under the Longshore Act, do you mean to say the Jones Act?
Preston Easley: --He was awarded benefits under the Jones Act.
Anthony M. Kennedy: Under the Jones Act?
Preston Easley: Yes, he was awarded benefits under the Jones Act, but the shipyard employer believes that the Longshore Act gives them a blanket immunity from Jones Act claims. Section 902 of the Longshore Act describes the covered employees under the act, and I won't read all the covered employees but it indicates ship repairman, shipbuilders, ship breakers, and people in those occupations. It then goes on to list eight exclusions to coverage. There are many, many ship repairmen that are not covered by the Longshore Act. If you're repairing a recreational vessel under 65 feet, you're not covered by the Longshore Act. If you're repairing a vessel under 18 tons, you're not covered by the Longshore Act. If you're repairing a vessel that is being used as a floating museum or a floating restaurant, you're not covered by the Longshore Act. If you're a member of the crew of a vessel, you're not covered by the Longshore Act. It seems that Southwest Marine wants to recognize all the exclusions to the Longshore Act except that one exclusion because they believe it works to their disfavor. Rather than immunizing shipyards from Jones Act lawsuits, the Longshore Act, I believe in its language contemplateS and allows the employee to attempt his Jones Act claim first. And I will tell you why I believe that. Section 903 of the Longshore Act, paragraph (e) says notwithstanding any other provisions of law, any amounts paid to an employee for the same injury, disability, or death for which benefits are claimed under this act, pursuant to any other worker's compensation law or Section 20 of the act, and then it describes in parentheses, 46 U.S. Code 688, parentheses, relating to recovering for injury or death of seaman shall be credited against any liability imposed by this act. So that provision gives a credit under the Longshore Act for any benefits paid under the Jones Act. So they realize that some people may take the Jones Act route first. There is another section of the Longshore Act that I believe specifically gives--
Antonin Scalia: Excuse me, it doesn't necessarily recognize that. I mean, it may have just been a voluntary payment, assuming that the person was entitled to them under the Jones Act, right?
Preston Easley: --I agree with that, it doesn't authorize a Jones Act claim, but it contemplates that a worker who is employed in one of those occupations might seek Jones Act benefits.
Antonin Scalia: Yes, but... okay.
Preston Easley: There is another provision in the Longshore Act that I believe more specifically gives a shipyard employee a right to go under the Longshore Act first, although it doesn't specifically say that, and that is Section 913(d) of the Longshore Act, Filing of Claims. And it says, tolling provision: where recovery is denied to any person in a suit brought at law or an admiralty... and the Jones Act is law and maintenance and cure are admiralty... to recover damages in respect of injury or death on the ground that such person was an employee and that the defendant was an employer within the meaning of this act, and that such employer had secured compensation to such employee under this act, the limitation of time prescribed in subdivision (a) shall begin to run only from the date of termination of such suit. So I interpret that to say, if you work for a shipyard, you can go file your Jones Act lawsuit, and if the trier of fact finds that you are covered by the Longshore Act, that you are not excluded as a vessel crew member, then that tolls the statute and they keep your Longshore Act remedies alive so you can come back and reenter the Longshore Act.
Anthony M. Kennedy: Suppose... what is the name of the bureau that is supposed to make the determinations under the Longshore Act?
Preston Easley: It is the U.S. Department of Labor.
Antonin Scalia: Yes, but I mean, it's a sub... Office of Workers'--
Preston Easley: It is the Office of Workers' Compensation Program.
Antonin Scalia: --OWCP, right?
Preston Easley: Yes, sir.
Antonin Scalia: Suppose OWCP issues a regulation in addition to making individualized determinations of who is covered? I assume they are authorized to issue a regulation saying, we will hence forward determine that this kind of a person, and it gives a detailed description, is covered by the Longshore Act, okay. Then, in a later lawsuit, somebody seeks to get Jones Act recovery, and seeks to get to the jury, in the face of this regulation that the Labor Department has issued, what is the result? Does that regulation have no effect?
Preston Easley: I think that would be subject to determination of the courts, whether or not it has an effect.
Antonin Scalia: All right.
Preston Easley: I would think that such a regulation violates the Longshore Act. The agency doesn't have unlimited license to modify the provision. Suppose the agency said, we are going to issue a regulation that the Longshore Act does not apply to women. Nobody's going to recognize that. So I think the regulations have got to be consistent with the act.
Antonin Scalia: You don't think we were... we're entitled to give the regulation any deference? Unlike other regulations where if it is within the broad range of what's reasonable, we'll say it is okay. This regulation alone has to be precisely right? There is only one meaning and we will give it that meaning?
Preston Easley: I think that is fair to say, that the courts give the final meaning to the regulation and the determination of whether the regulation is consistent with existing law.
Antonin Scalia: That's unusual, if it is so.
Preston Easley: I have a description of a maritime employee here that is two sentences long. It says: His duties consisted of taking general care of the barge. They included taking care of lines at docks, tightening or slackening them as necessary, repairing leaks, pumping out the barge, taking lines from tugs, responding to whistles from tugs, putting out navigational lights and signals, taking orders from the tugboat when being towed.
Harry A. Blackmun: Where is that from?
Preston Easley: That is what I am going to... that's from a Supreme Court case called Norton v. Warner that's cited in my brief. In reading those lines, that is a near-perfect description of my client, Bryon Gizoni, who was a rigger in the shipyard and he handled these barges, moved them around the shipyard from pier to pier, moved them to the Navy base, took them where they needed to--
William H. Rehnquist: Do you think cases like Norton against Warner and some of those cases decided in the fifties by this Court, where the Court in effect said the sky is the limit so far as a jury finding someone is a seaman... do you think those have survived in tact after our Wilander opinion?
Preston Easley: --I believe that Wilander is consistent with those earlier Supreme Court decisions.
Sandra Day O'Connor: You don't think that there was language in it that intended to cut back somewhat on some of those odd decisions that occurred some years back that made everything, including questions of law, a jury question? You don't think there was an indication in Wilander that that was no longer our view, if it ever was the view of the Court?
Preston Easley: I would say that in one way Wilander liberalized the situation, and in another way it restricted the remedy. It restricted it by making it a combined issue of fact and law rather than just fact; but it, by getting rid of the aid to navigation test, that probably swung open the biggest door that has ever been swung open since the courts have been defining seaman status. So I think Wilander ultimately makes it a lot easier to prove seaman status, because you had so many cases where people were performing functions on vessels and the vessel had no transportation function. The vessel was a dredge or used to pump waste oil or something like that. So I think that Wilander opened it up quite a bit. There is also an interesting sentence in Wilander that directly addresses the issue that is raised for review in this case, and that's, should people's status be determined by their occupation, or should their remedy be determined by their occupation? And in Wilander it says it is not the employee's particular job that is determinative, but the employee's connection to a vessel. And that's Mr. Gizoni's position here. As far as making seaman status a factual issue, Wilander creates some bounds for it, but it still, I think, leaves it pretty wide open because it says, if reasonable persons, applying the proper legal standard could differ as to whether the employee was a member of the crew, it was a question for the jury. And I think that's a scenario--
Anthony M. Kennedy: In this case, if you prevail and it goes to the jury, does the jury determine both whether or not there was a vessel and his... the extent of his connection to that vessel?
Preston Easley: --The jury usually just makes a general determination as to whether he had seaman status, and the judge--
Anthony M. Kennedy: Well, is one of the issues that is argued and submitted to the jury the question of whether or not there is a vessel?
Preston Easley: --Yes, it is. Yes, it is.
Sandra Day O'Connor: Couldn't that be a question of law, and has this Court ever decided whether all floating things in the water are vessels?
Preston Easley: Sometimes it can be a question of law. There have been judicial decisions that a floating drydock is not a vessel, and even though I take issue with that judicial determination, the law has stated that floating drydocks, even though they can move from port to port, are not vessels in navigation for Jones Act purposes. There is another scenario--
Antonin Scalia: It is always a jury question?
Preston Easley: --Not always.
Antonin Scalia: And I suppose the facts could be clear enough that there is just no evidence at all that the person was a crew member.
Preston Easley: That's right.
Antonin Scalia: I suppose that also would be taken away from the jury. So you are not claiming it always go to the jury.
Preston Easley: That's right. There is another situation where the law has determined vessel status, and that is, if you are using a barge to move things around in a shipyard or some other location, the barge will probably qualify as a vessel in navigation. Some shipyards and maritime employers take barges and they fasten them all to the dock and they tie up vessels against the outboard side of the barge and they use the barge as a dock. And the courts have held that if you are using a barge for a dock, then the barge does not become a vessel in navigation. So there are certain scenarios where the court has said, this is just not a vessel in navigation for Jones Act purposes, and I'm not saying that those should be thrown to the jury every time and let the jury overturn these legal decisions. But I agree with the language in Wilander that when reasonable minds can differ, then it's a question that should go to the jury. I want to point out something else about how ridiculous this occupation test is if you want to read it literally. And that is, the Longshore Act is extended to the outer continental shelf by the Outer Continental Shelf Lands Act, and the occupations enumerated in the Outer Continental Shelf Lands Act are workers involved in exploring, developing, removing, or transporting natural resources of the outer continental shelf. So if we are going to devise a statutory occupational test, then I guess every member of a crew boat that takes workers offshore, every kind of vessel used in this offshore oil drilling and exploration and transportation would fall under the Jones Act. Even some of the oil companies have proposed removing oil from fixed platforms with oil tankers and shipping the oil away from the platform. So if we are going to be literal on the occupation, then all those tanker crews that are pumping oil off the outer continental shelf are going to have to first submit themselves to the Department of Labor for a finding of seaman status. That's why the occupational test is too unreasonable to apply. The Court has made a similar ruling or a ruling in a case similar to this. It is a footnote in Gray v. Herb's Welding which dealt with longshore jurisdiction versus State workers' compensation jurisdiction for the first 3 miles offshore. And there is a footnote by the Supreme Court that says, "Floating structures have been treated as vessels by lower courts. " "Workers on them, unlike workers on fixed platforms, enjoy the same remedies as workers on ships. " So I think there is some precedent that says that there is no Longshore Act exclusion from people in those occupations seeking seaman status. Something that's an interesting comparison that has come into my own mind with regard to your Wilander case is virtually every shipyard has a paint barge. That's a barge that has scaffolding permanently mounted on it that is moved all around the shipyard to paint the offshore side of each vessel. And I would think it unusual to have a system where an individual painting a fixed oil rig from a boat could have seaman status, but a man painting a vessel from a floating barge that moves around the shipyard could not seek seaman status. In a lot of these cases that were decided by the Supreme Court in the fifties, the individuals very arguably had harbor worker status rather than Jones Act, but they were still given the right to have these issues determined by the jury.
William H. Rehnquist: What's the difference between a vessel and a barge?
Preston Easley: In legal terms, none. The barge is a vessel in navigation for purposes of the Jones Act, and that's stated in the Norton v. Warner case and it's stated in other cases. It is defined as any contrivance capable of transportation on water. The Longshore Act provides some immunity to shipyards that I am going to concede them. If the person is not a member of the vessel crew, the '84 amendments did away with the dual-capacity doctrine, where the shipyard has a dual capacity as vessel owner in addition to its capacity as the employer. So when vessels are in the yard for repair, the shipyard repairman cannot claim that the shipyard is owner pro hac vice of the vessel being repaired and then sue the shipyard in a second capacity as owner pro hac vice of the vessel. But for the shipyard to get that immunity, there has to be a showing that the worker is covered by the Longshore Act and not a member of the crew. I have heard the term "land based" bantered around a lot in this litigation. Whether a person is land based or not I don't think determines the issue. There are many people that are land... that don't sleep on the vessel, that are land based: ferry boat operators, tour boat operators, tugboat operators in a harbor. Shipyards want to force Jones Act employees into the Longshore Act, and the test they want to use is, workers that are arguably covered by the Longshore Act should have to go to the Department of Labor first. And that raises a real interesting question as to who makes this determination as to who is arguably covered by the Longshore Act, who then has to go to the Department of Labor, because according to the shipyards, the tugboat operators and captains are arguably covered by the Longshore Act. Thank you.
William H. Rehnquist: Thank you, Mr. Easley. Mr. Long, we will hear from you.
Robert A. Long, Jr.: Thank you, Mr. Chief Justice, and may it please the Court: Let me begin by saying a word about this primary jurisdiction point. We see no basis in the Longshore Act, including its 1972 amendments or the Jones Act for concluding that Congress intended to remit the determination of seaman status to the special expertise of the Secretary of Labor. Juries have been making that determination under the Jones Act since 1920. Federal courts sitting in admiralty have been making that determination since long before that, and in fact, we think a provision of the Longshore Act refutes the primary jurisdiction argument. Section 13(d), 33 U.S.C. 913(d) tolls the statute of limitations under the Longshore Act, in the event that a suit is brought at law or in admiralty. We think if the Secretary were meant to have primary jurisdiction, there would be no reason to have a tolling provision, certainly not a perfectly general tolling provision such as 13(d).
Antonin Scalia: What happens if the Secretary issues a regulation dealing with this subject? Would the court in admiralty ignore it or what? Or he shouldn't issue it?
Robert A. Long, Jr.: I would think not, after... it is perfectly clear after Wilander that seaman is linked to master or member of a crew of a vessel. If the Secretary were to issue a regulation interpreting that phrase, I would think it would be entitled to deference from the courts.
Antonin Scalia: It would be?
Robert A. Long, Jr.: Yes, it would be.
Antonin Scalia: So if he issues a regulation, the courts, in the Jones Act case, would have to follow his regulation, even though he is issuing it under--
Robert A. Long, Jr.: If it is a reasonable interpretation of the phrase "master or member of a crew of a vessel. " And I draw that conclusion from the Court's holding in Wilander that master or member of a crew restates who is a seaman under the Jones Act.
Antonin Scalia: --All right, and then suppose he doesn't issue a regulation, but in fact the claimant goes to him for a case determination initially and he decides that the work is covered. That worker could then not later challenge that and bring a Jones Act--
Robert A. Long, Jr.: If the issue of seaman status is actually litigated and adjudicated in the proceeding under the Longshore Act, then we do think that there would be issue preclusion. Our position in this case does rest on the plain language of the statute. We do think it's quite clear, under the exclusions of Section 2(3) of the Longshore Act, that a ship repairman, if he or she is a member of a crew of a vessel, is not covered by the Longshore Act and is entitled to a remedy under the Jones Act. If the ship repairman has a sufficiently permanent connection to a vessel in navigation, which may be a vessel that stays entirely within a harbor, and if that ship repairman contributes to the function of the vessel or the accomplishment of its mission, which may be a special purpose, then that repairman would meet the definition of a seaman or a member of a crew.
Sandra Day O'Connor: --Mr. Long, that is how you would give effect to the mutual exclusivity of the two acts?
Robert A. Long, Jr.: No, we don't... well, yes, excuse me, Justice O'Connor. They are mutually exclusive, if you are a master or a member of a crew, then you are covered by the Jones Act and not by the Longshore Act. We think petitioner's argument is inconsistent with the language and the structure of the other exclusions. There are eight of them. The exclusion for a master or member of a crew is only one. There is an exclusion for a ship repairman who is employed to repair a recreational vessel under 65 feet. That's Section 2(3)(f). There is an exclusion for a ship repairman engaged by the master to repair a vessel under 18 tons net. That's Section 2(3)(h). We think it is quite clear from the structure of the statute that Section 2(3) defines a very broad category of maritime employee and then cuts out various subcategories, including a master or member of a vessel. We also think petitioner's position to contrary to this Court's recognition in Wilander that seaman status is not a pure question of law, but a mixed question of law and fact; and therefore, if reasonable persons, applying the correct legal standard could differ as to whether the employer was a member of a crew, it is a question for the finder of fact.
Sandra Day O'Connor: Do you think it is a question of law, whether a vessel is a vessel?
Robert A. Long, Jr.: It can be, Your Honor. We think in certain cases it would be quite proper for the District Court to decide that question as a matter of law. As we understand it for example, a construction platform, even if it floats on water, is not a vessel as a matter of law.
John Paul Stevens: May I go back to Justice Scalia's hypothetical with you a moment? And you suggested that if there had been an actual adversary adjudication by the agency in this case, that would be binding on the employee. Are there cases that so hold?
Robert A. Long, Jr.: I am not aware of cases that so hold. There are cases that suggest that. Fontenont against AWI is one. This is a long proceeding that involves a number of informal stages under the Longshore Act. There are cases such as Boatel v. Delaware that hold that the informal stages are not sufficient to give a collateral estoppel effect.
Byron R. White: But the issue would have to be there as to whether it's... he is a seaman or not?
Robert A. Long, Jr.: It would have to be there and actually litigated, Your Honor.
John Paul Stevens: So that means, I take it, in cases like this, the employer would be well advised always to resist payment in order to get the benefit of adjudication in a doubtful case?
Robert A. Long, Jr.: Well, we don't agree that that will be the result in every case. Litigation is costly. We think there are workers who are clearly covered under the Longshore Act and not under the Jones Act. In those cases--
John Paul Stevens: No, we are just talking about doubtful cases, always. I mean, if it is perfectly clear, the lawyers will work that out.
Robert A. Long, Jr.: --I think to be honest that in doubtful cases, there is some incentive to go ahead and litigate the issue. We think the legislative history supports the plain language of the statute. I think it is worth noting that the original 1927 act actually had a provision in it at one point that would have extended the Longshore Act to crew members of all vessels owned by U.S. citizens, and that was taken out. The Court discussed that in South Chicago Coal against Bassett, and the '72 amendments which added this more expansive definition of maritime employment were intended to extend the coverage to certain injuries on land, not to restrict--
John Paul Stevens: Can I ask another question about tactics in this situation? If you are right, would it not, if an employer could afford to do so, he would be better off generally, in a doubtful case, to litigate the Jones Act claim first because that tolls the statute of limitations for the other, right?
Robert A. Long, Jr.: --Yes.
John Paul Stevens: So that would be the normal way to do it is to litigate rather than filing a claim and taking the risk that you would get an adverse adjudication. I would suppose what he would want to... would he be trying to prove that the employee is a seaman?
Robert A. Long, Jr.: I think under Justice Stevens' hypothetical, the employee would want to prove he's--
Byron R. White: He doesn't want to be subject to a Jones Act suit.
Robert A. Long, Jr.: --Right, but the employer would prefer to pay under the Longshore Act in many cases because--
Byron R. White: Exactly, so that is kind of a funny position for him to be in, to go before the administrative agency. He'd be trying to prove something he really doesn't want to prove.
Robert A. Long, Jr.: --I think in practice in many cases, of course, these workers don't have the resources and may be in genuine doubt about which the two schemes covers them. So they will go in and make a claim under the Longshore Act and then they may--
John Paul Stevens: And run the risk of an adjudication that would foreclose their Jones Act claim?
Robert A. Long, Jr.: --It does run that risk, Your Honor. Let me just say very briefly about policy, there is no risk of double recovery here. It is well established that you get a credit for any amount paid under one statute against any liability under the other statute. And it's not clear to us that the costs will be much higher under this system. Petitioner's proposed rule we think would still leave a lot of uncertainty about whether particular workers are covered, and the situation we have here is basically the situation that we had in the Fifth Circuit, possibly the largest admiralty circuit, since 1959 when they decided the Robison case, until very recently when they decided this Pizzitolo case. And as far as we can tell, there have not been ruinous insurance costs or a tremendous flood of litigation in the Fifth Circuit. So we do believe that this is a rule that the employers can live with... if there are no further questions.
William H. Rehnquist: Thank you, Mr. Long. Mr. Tichy, do you have rebuttal? You have 6 minutes remaining.
George J. Tichy, II: Thank you very much, Mr. Chief Justice. I guess when I am asked a question I dwell on it for some point, but in reference to Justice Scalia's comments, I can think of two parallel situations in the Federal jurisdiction. One is the relationship between the National Labor Relations Act and the antitrust laws, and the second is Justice White's decision in Schwalb, which was in fact decided by this Court in 1989--
Byron R. White: That was a Court decision, wasn't it?
George J. Tichy, II: --Excuse me?
Byron R. White: That was a Court decision, wasn't it?
George J. Tichy, II: That's correct, but it was, Your Honor, and you know the case much better than I ever will--
Byron R. White: I don't even remember it.
George J. Tichy, II: --But it relates, if I recall, to two concurrent forms or potentially concurrent forms of Federal relief. One was FELA and the other was the Longshore and Harbor Workers Act, and of course, in that case, you went, I think to the extent of elucidating for those of us who practice in this area, the extent to which the Longshore Act does in fact apply, indicating the integral part of and essential characteristic to cover the individuals who are involved maintenance at conveyor belt.
John Paul Stevens: Just refresh my recollection, because I don't remember the case even as well as Justice White does.
George J. Tichy, II: Okay.
John Paul Stevens: Did that case hold that you must go to... bring your administrative claim before you litigate your FELA claim?
George J. Tichy, II: What happened in this case was that a claim was attempted to be made under FELA, and there was raised as a defense that the Longshore Act applied. And it was ultimately determined by this Court that indeed the Longshore Act applied because the individuals, who were essentially maintenance employees, were, if you will... and not very highly paid individuals necessarily, were involved in picking up coal around a conveyor belt that was used to load coal on to a vessel--
John Paul Stevens: In other words, that case held that they were covered by one statute rather than the other--
George J. Tichy, II: --Correct.
John Paul Stevens: --But did it say anything about which proceeding you must commence first?
George J. Tichy, II: I think implicit in that, and I will certainly leave it to the Justices to discuss in more detail, is where you arguably have a claim which is within the Longshore Act, that's where you should initiate your proceeding, that's where your focus should be, and that's where you should go. Now I would point out further--
John Paul Stevens: There claim there wasn't arguably, their claim, as a matter of law was within that statute.
George J. Tichy, II: --Well, ultimately you determined that.
John Paul Stevens: Yes.
George J. Tichy, II: Absolutely. When this Court decided Wilander, there were two very interesting and articulate points that were raised. First of all, on page 813 of the decision, Justice O'Connor stated: Thus, it is odd but true that the key requirement for Jones Act coverage now appears in another statute, referencing the Longshore Act. Subsequently, on the top of page 814, Justice O'Connor states: Whether under the Jones Act or general maritime law, seaman do not include land-based workers. Mr. Gizoni is a land-based worker.
Antonin Scalia: Mr. Tichy, do you know how to pronounce Wilander?
George J. Tichy, II: I assume it is Wilander.
Antonin Scalia: You don't know that firsthand?
George J. Tichy, II: I worked in North Shipping, Sweden for some time in my youth. I am assuming that it is pronounced that way. Maybe it is German I am not sure.
Antonin Scalia: We ought to agree with this-- --Wilander is a Swedish name.
George J. Tichy, II: That is what I assumed, and in my youth many years ago I did have the opportunity to speak some of the language, though not well.
Byron R. White: That is the way it is pronounced in the broadcast of tennis tournaments. [Laughter]
George J. Tichy, II: That's right, and there we have decided on the dispositive determination.
Sandra Day O'Connor: Maybe we can call it McDermott and solve the problem that way. [Laughter]
George J. Tichy, II: Okay, thank you very much, Justice O'Connor. In summation, for all the reasons which we have raised before this Court: application of basic rules of statutory construction, specifically 2(3); implementation of congressional intent, which of course is reflected in the 1972 amendments; avoidance of multiple litigation; avoidance of multiple and inconsistent results; maintenance of a uniform, less expensive and more certain no-fault compensation system, as well as the simplicity of definitional language and, I submit to you, fundamental logic, petitioner, Southwest Marine, requests that the decision of the Ninth Circuit Court of Appeals be reversed. Thank you.
William H. Rehnquist: Thank you, Mr. Tichy. The case is submitted.


Earl Warren: Number 19, The American Oil, Appellant, versus P. G. Neill et al. Mr. Goodman, you may continue your argument.
Frank I. Goodman: Mr. Chief Justice, may it please the Court. I'd like to correct an answer I gave yesterday to a question asked by Mr. Justice White. Mr. Justice White's question was whether or not a supplier who wished to bid for this AEC business was required to submit two bids in alternative form. One based upon delivery at the seller's Bulk Plant and the other based upon delivery at the installation site in Idaho. Mr. Justice White suggested, I believe, that if that were true, then sooner or later the supplier would be required to get an Idaho dealer’s license. If not in order to submit his bid then at least an order to perform the contract if it were awarded to him on the basis of delivery in Idaho. The answer to the question, I believe, Mr. Justice White is “no”. There's no requirement in this contract by either expressed or implied which requires the bids be submitted in that alternative form. And in the absence of such requirement, I think its clear that they need not be. Item 63 and 64 which are the two AEC items involved here, each comprise two sub-items, A and B. Sub-item A in each case invites a bid f.o.b. the Bulk Plant. Sub-item B, invites a bid f.o.b. the installation site in Idaho. Just as a supplier is free to bid on anyone or more of the items in the invitation without having to bid on all 600 of them, by the same token he’s free to bid on either of these two sub-items without necessarily having to bid on both of them unless he chooses to do so.Obviously, it would be to the advantage of the seller to bid on both them if they were in a position to because that would give him two strings to his bow. But there's no indication in the contract that the Government would turn down the low bid if were say on item -- Sub-item A merely because it were not accompanied by another bid on Sub-item B. The upshot of this is that even if Utah Oil Company had never done a dollars worth of business in Idaho and did not hold an Idaho dealer’s permit, it could still a bid for this contract and it would still have been awarded this contract f.o.b. its Bulk Plant in Utah. So insofar as this transaction is concerned, the State of Idaho has given the seller no benefit for which it can reasonably demand compensation.
Earl Warren: Do I understand Mr. Goodman the company did not bid in the alternative? It just bid on --
Frank I. Goodman: No, it did bid. But it --
Earl Warren: -- f.o.b.-- f.o.b. Utah.
Frank I. Goodman: No. It did bid. It happened to bid on the alternative --
Earl Warren: Beg Pardon --
Frank I. Goodman: -- (Voice Overlap) it submitted its bid, f.o.b. -- one bid, f.o.b. Utah and another bid f.o.b. installation site in Idaho. My point is that it was not required to do so and it could if simply submitted a bid f.o.b. Utah and that bid presumably would have been accepted. And the argument is made that Idaho is entitled to tax this transaction because the seller does other business within the State of Idaho. As I was saying yesterday when time ran out, the decisions of this Court, particularly, the Norton case and the General Motors case made it clear that when a state taxes a corporation for the privilege of doing business within its borders, it may not include within the measure of that tax any interstate or out of state transactions, which do not grow out of activities of the seller within the state and which are wholly dissociated from any such activities. The burden of proof rests upon the taxpayer to demonstrate this dissociation or lack of relationship and in the General Motors case, the Court concluded that the taxpayer failed to meet that burden. So the majority of the Court held in the General Motors case that the State of Washington was entitled to tax General Motors on the unapportioned gross receipts from all of its sales to dealers in Washington. Including those sales in which the dealers simply said its order to GM's zone headquarters in Portland, Oregon and received shipment directly from Portland. But the basis for that holding, if I understand it, was that General Motors had within the State of Washington resident sales representatives who worked with the dealers and who helped them to strengthen their sales organizations and expand their markets and those in state activities indirectly contributed to the very sales which the State of Idaho was trying to -- which the State of Washington was trying to tax. Now, in the present case, there's no such relationship between the sale of the Atomic Energy Commission and any activities which Utah Oil may have been conducting within the State of Idaho. It's quite clear that this sale owed nothing to those activities. It is true that Utah Oil made deliveries within Idaho to some of the other government agencies under other items contained in the same invitation for bids. But as I indicated yesterday, the AEC transaction was totally unrelated to all of those other items. The Government could have accepted the bid for AEC business and rejected all of the others or could have accepted the others and rejected this bid. And undoubtedly, it would have done so had each been -- bid not been the most advantageous one from the Government’s standpoint on its own individual merits.
Earl Warren: May ask if the alternative bid reflected the tax that’s here in question?
Frank I. Goodman: Yes, Your Honor, it did. The -- the bid f.o.b. installation site in Idaho included the tax, the bid f.o.b. Bulk Plant in Utah excluded the tax. I would point out too that the contract for the AEC business was not awarded even at the same time as the awards for the other items. The other items were all awarded on September 15, 1959 whereas the AEC contract was awarded 43 days later on October 28th. In our replied brief on page 4, I believe, we inaccurately stated that the time difference between the two awards was two days.That should have been 43 days. Finally, I would note that all of the other items contained in this invitation for bids involved relatively trivial amounts of gasoline compared to the amounts involved here. The nine other items which were awarded to Utah Oil Company under this invitation involved a grand total of 18,000 gallons of gasoline whereas our -- our single AEC transaction involves 60 times that much -- 1,200,000 galloons. And we submit that the mere fact that Utah Oil had earlier been awarded contracts to make relatively small sales to other government agencies at other locations within the State of Idaho, in no way gives the State the right to tax this transaction which was unrelated to those others in which involved no activities within the State of Idaho. If the Court please, I'd like to reserve the balance of my time.
Earl Warren: You may. Attorney General Shepard.
Allan G. Shepard: Mr. Chief Justice and Associate Justices, may it please the Court. I would suggest to the Court that this is a case of a type which the Court has not specifically dealt with before. I would also suggest to the Court that the law which we contend governs this case is not particularly complicated and has been enunciated by the Court before. I would suggest to the Court that what is complicated about this case, extremely complicated, if the Court please, is the factual pattern. And I would further suggest that this factual pattern is complicated because the appellants and the Government sought to and did make it complicated. I think certain guide post should be enunciated at the outset because frankly, there was a great deal of confusion in the briefs. And I would say that the record is poor in this case from the State of Idaho standpoint. This was a tax which was imposed on a dealer. There has been talked around and about in the briefs as to whether there is a use tax or is it a sales tax, what type of tax is it. It is, if the Court please, a tax upon the dealer. It is designed for the Idaho Supreme --
Byron R. White: The Court said, it's on the gas or the --
Allan G. Shepard: Mr. Justice?
Byron R. White: The words of the statute as I understand it, this is a tax on gas --
Allan G. Shepard: Well, the Idaho's --
Byron R. White: -- payable by the dealers, and --
Allan G. Shepard: Yes sir.
Byron R. White: -- and that may mean that it's a tax on the dealer, from the Idaho's standpoint, but the law says it's a tax on gasoline.
Allan G. Shepard: The Idaho Supreme Court has enunciated Mr. Justice White but it is a tax on the dealer. However, I would agree that there is some ambiguity in the opinion of the Court in this particular case below in which the Court becomes concerned with enunciating perhaps that the utilization of the tax is for the construction of highways, for the maintenance of highways. But essentially it is a tax on the dealer, although I agree perhaps ultimately a tax on the gas.
Speaker: (Inaudible)
Allan G. Shepard: I beg your pardon.
Speaker: Are you bound by the facts of the case that the Supreme Court to put on the tax?
Allan G. Shepard: I think the Court has so ruled in the past, Mr. Justice Harlan. I think there is no question of sales or use tax, and I think the only validity or materiality of the sales and use tax cases as enunciated by this Court before is in the language of those cases which announces that a state is not inhibited from reaching apart beyond its borders to impose a tax.
Byron R. White: They're bound by these facts.
Allan G. Shepard: I would suggest also to this Court that this is not a case of governmental immunity. As stated before, this is a tax on the dealers and I don't think that the resurrection of McCleod versus Maryland adds anything to the case. Or in particularly I don't think that there is any materiality to the governmental immunity argument since the overruling of the Panhandle case. And I would take that it is a established law now as announced by this Court that the fact that a tax is imposed upon a person who deals with the Government and at the ultimate result of that tax may be that the Government pays more for a product or for a contract because of the imposition of the tax upon some other person since the overruling of Panhandle is no longer material. I would suggest also, that the one of the guide points in this case is that no tax is imposed until the gasoline is received in Idaho. And the gasoline which is the subject to really of this case was actually received in Idaho. It was used to propel busses operated by a private company, if the Court please, to transport for hire its employees and employees of other private companies over thousands of miles of highways all in the State of Idaho, to and from the operations of that and other private companies.
Earl Warren: When were these -- was this gasoline received in Idaho?
Allan G. Shepard: It was received in the years 1959 and 1960, Mr. Chief Justice.
Earl Warren: And where?
Allan G. Shepard: In the late months of 1959, Mr. Chief Justice. The Utah Oil Company, the predecessor of appellant here. In conformance with the statute submitted reports to the State of Idaho as it was required to do as a licensed dealer indicating that it had shift to a small town in Idaho known as the Code of Idaho. I'm sorry to say that I can't recall the precise gallonage, but the quantities of the gasoline sold under the contract here to Phillips Petroleum Company -- I would say this, appellants for the first time in this Court suggest that the submission of such report by the appellant was a result of a clerical error by some person in appellant's office. The rest of the gasoline of appellant contends at least was delivered f.o.b. Salt Lake. The record is in controversy Mr. Chief Justice as to that point. There are -- I should explain further perhaps at this point as quickly as I may, that this case was decided at the trial level on a motion for summary judgment. Therefore, there was no testimony as such but there were affidavits back and forth on both sides as to the facts.
Byron R. White: The rules, Mr. General, that the record of the Courts were probably literally true, weren't they? I suppose Utah Oil Company actually delivered this gasoline to the common carrier down in the Salt Lake with the -- and Phillips Petroleum Company is probably consignee of it, wasn't it?
Allan G. Shepard: There are affidavits in the record and I was about to make this point, Mr. Justice White by or I should say there were affidavits indicating that the traffic manager of Phillips Petroleum Company at Idaho Falls stated flatly that the gasoline was ordered by Phillips Petroleum Company that the common carrier to deliver it from Salt Lake to Idaho Falls was designated by Phillips Petroleum Company, that the costs of so transporting the gasoline by common carrier were paid by Phillips Petroleum Company, that the gasoline was unloaded by Phillips Petroleum Company employees. And further if the Court please, this was not by the same traffic manager but the record contains an allegation that the entire transaction, the statement was supposedly made by Phillips' officials that the entire transaction was the sham paper, wash transaction, however one might characterize it, entered into by the AEC, Phillips Petroleum, and Utah Oil for the sole purpose of subverting the tax. This is in controversy certainly in the record.
Earl Warren: Is Phillips a carrier?
Allan G. Shepard: I was going to get into that, Your Honor, when I try to lay up the facts a little more --
Earl Warren: -- (Voice Overlap) then you go ahead in your own words?
Allan G. Shepard: I think I might turn to the facts in the case in or about 1950, Phillips Petroleum Company Your Honor, among others, had contracts with the AEC for the operation of a reactor test site in Idaho, a very large installation approximately the size of Rhode Island. This is some approximately 150 miles north of the Idaho-Utah border. Phillips as a part of this operating contract for operating reactors and doing really complicated nuclear energy work of -- as a corollary event, or necessary corollary perhaps operated a fleet of buses, as a subject for transporting for hire personnel employed by it and other private contractors of G.E., Argonne Laboratories, Westinghouse, of other contractors who have other contracts with the AEC to do the same thing. Varying in distances, they transported these employees from 16 or 18 tunnels in Idaho from distances varying up to 75 miles to and from work. I should point out that this reactor test site is located in a desert, a substantial distance from any community at all and there's no governmental housing at the site. It's all from neighboring tunnels. This was done over highways located outside this test site which were constructed and maintained by the State of Idaho. Now, appellant makes a point in its brief, in its reply brief, I think it's merely a carping argument, the Government had in its federal aid relationships with the State of Idaho furnish some of the money for the construction of these highways, and certainly this is true. But I don't think the argument is really worthy of the Government. The companies at that time in 1950, sought to avoid the imposition of the Idaho gasoline tanks. That effort failed after the rulings by the Idaho Attorney General's office and the rulings of the Comptroller General's office. These rulings are contained in the record in the case here. And it was not until 1959 that another attempt was made to subvert the imposition of Idaho gasoline tax which is resulted in this case here. In 1959, the General Services Administration as it had done in the past call for bids for gasoline to be furnished as counsel stated to some 607 government sites in the four northwest states. Now, I would point out particularly that out of these 607 governmental installations, it was required that gasoline be delivered to every single one of those sites with the exception of two those here, which has been stated, the bidding parties were permitted to bid in the alternative as to delivering f.o.b. Salt Lake City or f.o.b. site in Idaho.
Potter Stewart: Mr. Shepard here -- you said, there's been an earlier effort to avoid business tax which --
Allan G. Shepard: Yes, Mr. Justice --
Potter Stewart: -- the amount is (Voice Overlap), have that gone up through the Supreme Court of your state too?
Allan G. Shepard: No, sir. That had terminated when the Idaho Attorney General's office at that time supported I guess one might say by the Comptroller General's opinion rule that the tax must be paid and the contractor then involved and the Government complied. So it never --
Potter Stewart: What were the differences in the facts, the fact there in 1951 or when it was. Was it -- was the sale made inside the State of Idaho?
Allan G. Shepard: Mr. Justice, the record doesn't show this but I'm positive that their sale was made at that time within the State.
Potter Stewart: Within the State?
Allan G. Shepard: Yes, sir.
Potter Stewart: To a --
Allan G. Shepard: So that in that way, the --
Potter Stewart: -- and not to the United States itself, but rather to the contractor?
Allan G. Shepard: No, I think it was made to the United States itself. And I could be wrong, as I say, this is not in the record.
Potter Stewart: Just like then but -- or is that in another case, that's not this case and I should think the United States itself would be immune from state accusation?
Allan G. Shepard: One would think so. So I must be wrong in saying it was United States, it must have been a direct sale to a contractor.
Potter Stewart: Uh-hmm.
Allan G. Shepard: Appellant has stated that the appellant bid on approximately 90 of these 607. I may have misunderstood them. I think the record indicates that it had been in approximately 30 installations through the northwest, substantially in Idaho. It was a successful bidder on nine of these installations and of these nine, seven were to be delivered in Idaho, f.o.b. the site in Idaho. The tax was to be paid thereon. They were delivered at f.o.b. site in Idaho, the tax was paid thereon and no demand for refund has been made by appellant. Now, I think the -- I should discuss here to some extent the importance of this contract because to my way of thinking, appellants in our case hangs on the -- to me rather slender thread of its attempting, in its ability perhaps, to convince this Court that this is a completely severable court, that the Court should ignore every single instance of petroleum sales in this contract and concentrate merely on these two items of this government contract.
Earl Warren: Now, I've been wondering if -- if this is any different from let us say, Sears, Roebuck that operates in great many states of the union and the Government called for bids and it did in this case, and Sears, Roebuck entered the bid for delivery and say Utah, and the Government accepted the bid, would -- would they be liable for your tax?
Allan G. Shepard: Well, of course Mr. Chief Justice, you're talking about two entirely different types of --
Earl Warren: I beg your pardon.
Allan G. Shepard: -- tax, you're talking therein about two entirely different types of taxes.
Earl Warren: No, I -- I just wondered. Are they different and if so, in what respect are they different?
Allan G. Shepard: Well, I think this would fall squarely within the cases governing sales and use tax.
Earl Warren: I beg your pardon.
Allan G. Shepard: I think these would fall within the cases governing sales and use tax.
Earl Warren: Sears, Roebuck?
Allan G. Shepard: Yes.
Earl Warren: If -- if the Government bought them out of the state?
Allan G. Shepard: I think so, Your Honor.
Earl Warren: Uh-hmm.
Allan G. Shepard: I think I should point out to the Court that this contract had one seller, Utah Oil Company. It had one purchaser. It had one contract number. It dealt with one item, gasoline, of one quality. It was each item in that contract was subject to the whole plethora of governmental conditions imposed in contracts, the Walsh-Healey Act, the anti-kickback provisions of every kind and type of the many that the Government imposes. And every single item in that contract was subject to the conditions set forth and yet appellant would have us believe that these can be severed, these can tossed up after one side, that they have no necessary relation to each other merely because the same product to be sold to the same person in the same quality, subject to the same contractual conditions was to be delivered part in one place and part in another. And I submit to the Court that this is a strictly artificial device of attempting to sever this merely to avoid the payment of the tax. And I think the Court should view the contract to furnish gasoline to the Government by Utah Oil both within and without the State of Idaho as a whole because I can see no valid or logical reason for severance other than the artificial one of hoping to avoid the tax.
Arthur J. Goldberg: But General, I thought in the opinion of the Supreme Court, it doesn't mean it would be read by the federal court of Utah?
Allan G. Shepard: I was just coming to that Your Honor. I was about to state that appellant is a corporation licensed to do business in the State of Idaho which supplies no necessary connection in and of itself, I would suggest to the Court. Appellant, however, is also a licensed dealer which status it sought voluntarily and while it is not an issue here, I would state that the Idaho statutes merely provide that one may obtain such status by paying a flat fee of $5. It is does not vary. And upon this basis Mr. Justice Goldberg, as you point out of the Idaho Court appeared to hang it decision that there was sufficient connection or sufficient nexus of this -- I would say, appears on the surface and perhaps it was unfortunate language by the Court. But I think the Court meant more in its decisions actually when it's -- then just that it was a licensed dealer. Because I think the contract in the record here disclosed the more far-flung operations of Utah Oil successor to appellant here in Idaho, it was furnishing gasoline within Idaho at points varied over landscape by substantial distances. Unfortunately, the record is silent as to the precise number, if any, or miles of pipeline that the appellant owns in Idaho, the tank farms that it owns and operates, if any, the number of service stations it owns and operates, the amount of rolling stock it owns and operates in the state -- all of these things I suggest related directly to the sale of its petroleum products. But I would also suggest to the Court that there is absolutely nothing in this record to suggest appellant's contention in its brief, that the majority of appellant's petroleum business were done outside the State of Idaho.
Arthur J. Goldberg: But you don't seemed quite connected to the Court's opinion, at least two items here included in this record where it said it is very important adjunct in your argument?
Allan G. Shepard: Well as I say, the record is controversial on that point Mr. Justice.
Arthur J. Goldberg: (Inaudible) in the record, that these (Inaudible), is it the AEC (Inaudible) on the gasoline, on what rates of (Inaudible) by the agency transport (Inaudible) the Government impose (Inaudible) to their own customers. It seemed to me that the District Court had said, that these (Inaudible) on our decision. Do you think it will be (Inaudible)?
Allan G. Shepard: No, Your Honor. I don't think this Court should. I point out the conflict in the record to indicate some substantiation of my contention that this is a paper or a wash transaction which this Court has struck down in cases like Scripto as an example.
Arthur J. Goldberg: But were in the view of the summary judgment or in the event however the findings of the fact (Inaudible)?
Allan G. Shepard: There are none, Your Honor except in the pleadings in the trial court, affidavit wise. Affidavits by Mr. P. G. Neill and Mr. Robert Bakes, B-A-K-E-S, and I'm sorry, I don't have the direct citation of that in the record. A state gasoline tanks levied so much per galloon and used for construction and maintenance in -- of highways, we contend this is not unconstitutional even when imposed upon gasoline used by vehicles in interstate commerce is we take it to be clear. We also suggest that such taxes are neither unusual nor exotic every state in the federal government have in. We also take the state may reach beyond its borders and tax transaction. If sufficient connection or nexus exists between the person taxed and the taxing state, and as this Court stated in Scripto, some definite link, some minimum connection between the state and the person, property or transaction, it seeks to tax must exist. And such a connection, it is our contention certainly exists in this instant factual situation, put in other way the cases asked, what benefits -- what opportunities has the State afforded this person or company it seeks to tax, an appellant raises the same question, and I would answer that in this. First, appellant sought and gained a license dealer status which the Idaho courts states authorized the appellant to engage in the very activity which it now claims to be exempt in the tax. And secondly, appellant imports gas in Idaho. It sells gas in Idaho. This tax it seeks to avoid is a constitutionally dedicated tax which must be used for the construction and maintenance of highways. And without such highways, I suggest to this Court, the appellant's product would have no value, no usage within the State of Idaho nor could it benefit him to import it into Idaho. Thirdly, it imported a portion of the gasoline which it sold to the Government within the State of Idaho over these very same highways for which this tax is imposed. And fourthly, the gasoline was destined for and used to propel vehicles in commercial use over these very, again, Idaho highways. Appellant stated that a large part of its case rests on Norton. I would suggest that there are substantial differences between Norton and this case here. In Norton, the company shipping into the State as the Court observed manufactured some 225,000 different items which were ordered by mail and it also maintained a wholesale house so to speak in Chicago. And it sold these items through the mail to a myriad of customs. Here, one seller, one product, one purchaser and I suggest that if the Court that it had before in Norton, a factual situation where it had been one company dealing in product and selling to one customer that the result in Norton might have been different. I would suggest that very probably the language of Mr. Justice Clark concurred in by Mr. Justice Black and Douglas in that Norton case is extremely applicable here in view of the Government's attempt to assist this corporation in avoiding its tax. I would suggest Utah Oil Company and American Oil Company forward in this language wherein the -- those dissenting Justices said in their point, “In maintaining a local establishment of such magnitude, petitioner has adopted the label of home-town merchant. After it has received the manifold advantages of that label, we could not give our sanction to its claim made at taxpaying time that with respect to direct sales it is only an itinerant drummer”. I think that language is applicable here. I think the decision of the Idaho court below should be affirmed.
Byron R. White: Mr. Attorney General, do you suggest that this transaction is as -- is almost or fairly a sham, that through which we ought to, at least take a brief peek and that even if we did, all it get to and according to you is that this was really a contract for delivery inside Idaho.
Allan G. Shepard: Yes.
Byron R. White: That these two -- that these two items in the whole list should be treated like the others, namely that this Utah Oil Company really was delivering the gasoline to the United States in Idaho. But now, what cases here in this Court would permit the State of Idaho to tax -- put a tax on the dealer or in the gasoline the dealer is delivering, inside Idaho where the only connection with the State of Idaho is just the delivery of the gasoline.
Allan G. Shepard: You said placing tax on the Government?
Byron R. White: On the dealer -- on the dealer, not on the Government, on the dealer.
Allan G. Shepard: Where the --
Byron R. White: Here is Utah Oil Company makes a contract in Salt Lake with the United States and it agrees to deliver to the United States in Idaho. And it does so, it delivers at the site pursuant to the contract. Do you suggest that under that situation, Idaho most certainly could impose a tax?
Allan G. Shepard: Yes, Your Honor.
Byron R. White: Now, what cases in this Court would permit that?
Allan G. Shepard: I would say there are none permitted, none that are permitted, Your Honor. This tax is not imposed on the Government. It is not a sales tax.
Byron R. White: I know it's not imposed on the Government, but it's imposed on the dealer for making an interstate sale.
Allan G. Shepard: Yes, Your Honor. I would suggest that probably King & Boozer -- there is language in King & Boozer which would permit that.
Byron R. White: Well, I think it might -- the State might be -- I think the State might be permitted to put a sales tax on that kind of a transaction. Now, how about putting this kind of a tax on that kind of a transaction?
Allan G. Shepard: Oh, I would say that the rationale of King versus Boozer is not necessary restricted --
Byron R. White: Yes.
Allan G. Shepard: -- to sales and use tax.
Byron R. White: Alright.
Earl Warren: Yes, Mr. Goodman.
Frank I. Goodman: Mr. Chief Justice, may it please the Court. It seems to me that Mr. Shepard has confused two quite different issues. The first issue is where the gas was delivered. We say that it was delivered in Utah. It makes no difference whatever to that issue whether the party to whom it was delivered was the Phillips Petroleum Company or the United States, from the standpoint of the Commerce Clause or of the Due Process Clause, the important point is that the delivery was made outside of the taxing state.
Byron R. White: Well, Mr. Goodman, if the statute of Commerce Clause argument is any good, it doesn't make any difference either where -- where it was delivered, does it? To the extent that your place of delivery has got something to do with due process, I suppose?
Frank I. Goodman: Mr. Justice White, I know frankly of no cases either way on the question of whether delivery alone within a state provides sufficient justification for taxing the transaction --
Byron R. White: For taxing the dealer or the gasoline.
Frank I. Goodman: That's right. I simply cannot think of any case which bears on that question. So, I think that would be a matter of first impression in this Court.
Byron R. White: All even if -- even if the -- even if you look at this case as sham case, the sham transactions as if the paper avoidance of delivery in Idaho, you still would have that question left?
Frank I. Goodman: Yes, you would. That's correct. And all of the cases that I can think of where sales taxes were sustained upon the dealer, upon the seller, there was more activity within the taxing state in particular where there was solicitation within the taxing state to justify the imposition of the tax.
Hugo L. Black: How do you say that that's a sham?
Frank I. Goodman: Well, of course, we say that that's absurd. It wasn't a sham. I'm not quite sure I know what the word sham means in these circumstances. It's quite true --
Hugo L. Black: You said a diversion under which --
Frank I. Goodman: Well, it's true that the Government accepted the low bid in this case and the bid was low partly because of the fact that it didn't have a tax included within it. That incidentally was not the only reason it was low. The bid would have been low even if it had included the tax though this doesn't appear in the record. On this question of --
Hugo L. Black: Now, do you agree that what you said I -- this appellant, as I understood you say, I thought you said it conceived I haven't join them. Do you agree, the Government and the company concede this claim may not be controlled?Conceive this claim, and all of it, to escape payment of the Utah tax?
Frank I. Goodman: No, Your Honor. We do not concede that. That statement is made and one of the affidavit submitted by the appellees and that's the only evidence they have in the record. We do not concede that to be true. Now, as far as Phillips Petroleum Company is concerned, the question of whether Phillips or the Government was the purchaser of this gasoline and the owner of this gasoline after it was purchased becomes relevant only on the assumption that this is a tax upon the purchaser rather and upon the dealer. And both parties have agreed that it is a tax on the dealer. Our argument would be precisely the same if the tax -- if the sale had been made to someone other than the Government. It depends on in no respect upon the doctrine of governmental immunity so long as the tax is regarded as a tax upon the dealer. And I would -- I would say this too with respect to this question of tax avoidance. We do not deny that the State of Idaho has power to impose a tax upon Phillips Petroleum Company for its participation in this overall transaction. Undoubtedly, Phillips does in a sense used the gasoline for its own profit-making interest and I would suppose that under this Court's decision in the Union Carbide case, the State of Idaho could impose a tax upon Phillips. This is not such a tax. Its not a claim that's being imposed upon Phillips and even it were imposed upon Phillips, the State of Idaho could not require this taxpayer Utah Oil Refining Company to collect the tax from Phillips because Utah Oil had no dealings with Phillips, it receives no money from Phillips, it has no way of obtaining reimbursement from Phillips for any amounts which it is required to pay over to the State.
Hugo L. Black: Do you agree that that withholds the tax for using -- use of the gas in Idaho?
Frank I. Goodman: It could tax the Phillips Petroleum Company, I would suppose Your Honor, yes.
Hugo L. Black: From anybody who use it --
Frank I. Goodman: You couldn't tax United States, no.
Hugo L. Black: Well, that's on immunity you mean.
Frank I. Goodman: Pardon me sir?
Hugo L. Black: You mean that because of immunity.
Frank I. Goodman: That's right.
Hugo L. Black: That's immunity.
Frank I. Goodman: That's right. It could tax --
Hugo L. Black: But otherwise, you would agree what was said --
Frank I. Goodman: Oh, yes. It could tax any private purchaser for the use of the gasoline. Mr. Justice Stewart in reply to your question awhile ago about the circumstances of the earlier incidents in which the Government has said to have tried to evade the tax, the facts in those cases were that the sales were being made within Idaho by Idaho sellers to the United States. And the Department of Agriculture originally took the position that the Idaho tax was a tax upon the Government and therefore could not be imposed. The Attorney General of Idaho then issued a ruling that the tax was on the dealer not upon purchaser. The Comptroller General agreed and therefore permitted the tax to be paid. Now, the State of Idaho wants it the other way too. It wants to say that it can even impose the tax from the dealer as an out-of-state dealer. One further point, the State of Idaho relies rather heavily in its briefs and in this oral argument too, upon a series of cases ending with Scripto versus Carson, a series of use tax cases in which it is true, the Court has intimated that a state may require an out-of-state seller to collect for it a use tax imposed upon the in-state user so long as there is some sort of nexus with the taxpayer, not necessarily with the particular transaction. But this Court has never held that it could impose a tax upon the out-of-state dealer himself by virtue of transactions other than the one which is sought to be taxed.
Byron R. White: Mr. Goodman, did you say you didn't know -- you don't know of any cases which, in this Court which might sustain the State's imposition of the tax on the dealer, his only connection with the State in a particular transaction, the delivery of the gasoline within the State. Now, what's wrong with Norton? I mean after awhile --
Frank I. Goodman: Well --
Byron R. White: -- the only thing that happened here is somewhat in Idaho, United States and Idaho solicits some -- gasoline makes a contract to buy it outside the State, and the out-of-state seller agrees to sell it and ships it interstate to them.
Frank I. Goodman: I think that's right, Mr. Justice White. In the Norton -- in the Norton case, the deliveries were made in Illinois. The carriers were selected by the -- by the seller, Massachusetts seller. So, so that would be a case in which the delivery constituted a nexus between the taxing state and the transaction. Yet, this Court held that (Voice Overlap) --
William J. Brennan, Jr.: That wasn't --
Frank I. Goodman: -- couldn't be tax.
William J. Brennan, Jr.: -- that wasn't so if it's a direct sales, was it, in Massachusetts? That was only as to the sales by the Phillips where the seller's office in Illinois had some connections?
Frank I. Goodman: Yes. But the -- even the direct sales from Massachusetts to Illinois --
William J. Brennan, Jr.: They were exempted?
Frank I. Goodman: They were exempted, but deliveries were made within the state of Illinois in the sense that the -- it was the seller rather than the buyer --
William J. Brennan, Jr.: But they held that they --
Frank I. Goodman: -- who chose the carrier and paid the transportation charges.
William J. Brennan, Jr.: And they held that those sales would not be subjected to the Illinois --
Frank I. Goodman: That's correct.
Byron R. White: -- that's the point.
Frank I. Goodman: So that would be an example of the kind of case you have --
Byron R. White: So, why have you hung your case here on, on the -- I guess the contractor that -- why do made so much to that fact, the contract that made outside of the -- or the delivery was outside the State?
Frank I. Goodman: Well, because we think that --
Byron R. White: Does it really make any difference?
Frank I. Goodman: Perhaps not Your Honor, but the fact is that delivery was made outside the State and that without more certainly makes this an extraterritorial transaction.