Warren E. Burger: We will hear arguments next in Velde against National Black Police Association. Mr. Geller, I think you may proceed when you are ready.
Kenneth Steven Geller: Thank you, Mr. Chief Justice. May it please the Court, this is a constitutional damages action, so called Bivens action against former Attorney General Edward Levi, former head of the Law Enforcement Assistance Administration, Richard Velde, and two former subordinate LEAA officials, Charles Work and Herbert Rice. The plaintiffs are six blacks and six women, and an organization that represents black police officers. Plaintiffs filed this lawsuit in September, 1975, claiming that a number of police organizations that received LEAA monetary grants were engaging in race and sex discrimination in employment. Plaintiffs allege that the defendants' failure to institute administrative proceedings under the LEAA statute to cut off federal funds to these organizations violated their rights under the due process clause of the Fifth Amendment. For this alleged constitutional violation, Plaintiffs demanded that the four defendants pay them $20 million in compensatory and punitive damages. The district court dismissed the complaint on the ground that the defendants were entitled to official immunity from these personal damage claims. However, the District of Columbia circuit reversed by a two to one vote. The majority recognized that this Court in Butz versus Economou had held that administrative officials who perform functions analogous to that of a prosecutor are absolutely immune from personal damages liability, even when constitutional claims are involved. The court of appeals concluded, however, that Attorney General Levi and the other defendants were not entitled to absolute immunity here, because under the LEAA statute as the court read it they had virtually no discretion in deciding whether to terminate LEAA funding to recipients who were alleged to have engaged in discrimination. Now, the Department of Justice has brought this case to this Court because we believe that the court of appeals decision seriously misconstrues governing legal principles not only of absolute immunity for federal officials but also of what governmental action constitutes a violation of the Equal Protection Component of the due process clause.
William H. Rehnquist: Mr. Geller, are you also going to address the Simon versus Eastern Kentucky standing problem?
Kenneth Steven Geller: We have not raised standing as a separate issue in this case, although we do think that the failure of these plaintiffs to show how the defendant's actions violated their constitutional rights shows that the complaint in this case does not allege violation of the due process clause, and we have raised that question. We have raised as our second question the failure of the complaint to state a claim.
William H. Rehnquist: Well, but standing is an Article 3 requirement in many cases, is it not?
Kenneth Steven Geller: Yes, yes, it is.
William H. Rehnquist: A jurisdictional thing which both counsel and the court are obliged to notice--
Kenneth Steven Geller: Yes. We have discussed Simon in our brief, in the section of the brief that is devoted to showing why the complaint does not state a cause of action.
Harry A. Blackmun: --All three judges below felt there was sufficient standing here on the motion to dismiss, I take it.
Kenneth Steven Geller: Well, we said that, I think, in our petition, but on further reading of the case, I am not sure that is correct. I think that Judge Tam did not find there was standing as to the claim that the plaintiffs now tell this Court they are raising. I think Judge Tam misconstrued plaintiffs' complaint as alleging that they were harmed by the actions of the grantees, and what Judge Tam said was, well, he thinks under cases like Simon versus Eastern Kentucky the plaintiffs are at least entitled to a trial to show that if the federal government had not terminated... had terminated funding, it would have had some effect on the actions of the grantees--
Harry A. Blackmun: So you are... off the statement in your brief then.
Kenneth Steven Geller: --Yes, but as I reread the court of appeals opinion just the other day, it seems quite clear that Judge Tam is saying that as to the claimant, the plaintiffs now tell the court they are raising, which has nothing at all to do with the discrimination allegedly practiced by the grantees, but only focuses on the federal government's failure to enforce the laws, he says that is essentially a citizen standing suit, and he does not agree that these plaintiffs have standing. I was explaining to the Court why the federal government thinks this case is so important.
Byron R. White: Well, do you agree with him or not?
Kenneth Steven Geller: We think that the case should be analyzed in terms of whether the complaint states a cause of action under the Fifth Amendment. We think that is the proper analysis, if the Court decides that the conduct--
Byron R. White: Well, if the reason doesn't state a cause of action, there are no allegations of injury flowing from allegedly unconstitutional action, it is a standing question, isn't it?
Kenneth Steven Geller: --It really depends upon how the Court analyzes the duties under the Fifth Amendment in this area. I agree. It can be stated in terms of standing, and as I--
Byron R. White: Well, if it can be, and may just as well, don't you have to state it that way?
Kenneth Steven Geller: --Well, I would like--
Warren E. Burger: If it is a jurisdictional question? Could it be a case or controversy issue?
Kenneth Steven Geller: --I think, as Justice Rehnquist was alluding to, that if there is no standing here, then the Court does not have jurisdiction under Article 3 of the Constitution, because there is no case or controversy, and we have cited the relevant cases in the portion of our brief, and made, I think, the relevant arguments that would be addressed in a standing issue, but we have placed it in the section of our brief that is addressed to whether the complaint states a cause of action. I think the analysis is very, very similar, and I think that the Court would have to find that there is no cause of action here.
Byron R. White: And hence no standing?
Kenneth Steven Geller: And hence no standing, because the actions of these defendants did not cause any harm to these plaintiffs--
Byron R. White: No injury in fact.
Kenneth Steven Geller: --Right. Now, we have presented three independent reasons why the decision below is wrong. First, we claim the defendants are entitled to the absolute immunity recognized in Butz versus Economou for administrative prosecutors. Second, as I just explained, we contend that the complaint in this case fails to state a cause of action against these defendants under the due process clause, the Fifth Amendment. Finally, even if the complaint could be construed to state a due process claim, because the defendants acted in good faith and had no reason to know that their actions were unconstitutional, they are entitled to qualified immunity as a matter of law and should not be forced to undergo a trial. The principal issue in this case is one of official immunity. In Butz against Economou, this Court held that government officials who must decide whether or when to initiate administrative proceedings play a role similar to that of a prosecutor who must decide whether or not to press criminal charges. For this reason, the Court held that administrative officials, like a prosecutor, are entitled to absolute immunity from personal damages claims, even when constitutional claims are involved. This immunity, the court said, is essential to ensure that agency officials may exercise their discretion in deciding whether to bring the weight of the federal government against some respondent for an alleged violation of the law, should be made free from the intimidation that is inevitably associated with the possibility of personal damages liability in the event that someone is unhappy with that decision to charge or not to charge. There is no question here that the defendants collectively were charged with the responsibility for enforcing the LEAA statute, including the anti discrimination provisions, and that when faced with an allegation of discrimination by a fund recipient, they had to decide whether or not to start administrative proceedings to cut off further federal funding. Defendants had to decide whether a charge of discrimination was likely to have merit, whether the discrimination alleged was sufficiently substantial to warrant the expenditure of LEAA's scarce investigative and prosecutorial resources, whether the ultimate sanction of partial or complete fund termination was the best way of achieving the goal of ending discrimination. We submit that these are precisely the sort of decisions this Court had in mind in Economou when it referred to agency officials performing functions analogous to that of a prosecutor. Now, the only reason that the D. C. circuit offered for refusing to accord the defendants absolute immunity was that the defendants in the court's view had virtually no discretion under the LEAA statute in deciding whether to institute fund termination proceedings. I suppose Judge Basilon in his opinion for the D. C. circuit viewed the LEAA officials as essentially clerks. Once a charge of discrimination came in, they were supposed to follow each succeeding step until the end, and if in the end they determined there was substantial discrimination, they had no discretion other than to cut off funding, and I suppose this would be the case regardless of how many complaints were filed, and regardless of how scarce the prosecutor's resources were.
Byron R. White: What was the cause of action that was attempted to be stated, a constitutional tort or complaint?
Kenneth Steven Geller: Well, the complaint raised a number of causes of action under Section 1981, under executive orders. The only cause of action that currently exists in this Court is the one directly under the Fifth Amendment and implied cause of action pursuant to this Court's decision in Bivens and Davis against Passman.
Byron R. White: Has the government ever suggested that there isn't a private cause of action in the context of this case?
Kenneth Steven Geller: Yes, the argument that was pushed in the court of appeals, although the court of appeals decision does not address it at all, is that using the analysis the court later adopted in Carlson against Green, that there should not be a cause of action implied here under the Fifth Amendment. We have not presented that argument here because there is a threshold question before you reach the Carlson versus Green analysis, which is whether there is a constitutional violation at all. Cases like Bivens and Carlson--
Byron R. White: Why do you think that is prior?
Kenneth Steven Geller: --Excuse me?
Byron R. White: If there is no private cause of action, you never get to the merits. You are talking about the merits.
Kenneth Steven Geller: Well, but this Court in Davis against Passman has held that under the due process clause of the Fifth Amendment there is an implied--
Byron R. White: Yes, but not in the... there you don't have the administrative detail, the administrative enforcement scheme.
Kenneth Steven Geller: --No, I understand, and there is an argument in--
Byron R. White: Suppose that was a valid argument. You certainly would never reach the question of a constitutional violation. You would just say we don't have to adjudicate that.
Kenneth Steven Geller: --Well, I understand that. I think it is more logical, though, to ask the question first whether the Constitution has been violated.
Byron R. White: Why?
Kenneth Steven Geller: In this case we think there is a very easy answer to that question.
Byron R. White: I know you would like it answered, but--
Kenneth Steven Geller: Well--
William H. Rehnquist: --That is like saying, before you decide whether you can sue in this Court, we will decide the merits of your lawsuit.
Kenneth Steven Geller: --No, I think cases like Bivens and Carlson against Green proceeded on the assumption that there had been a constitutional violation. The question in those cases was, should there be an implied damages action implied by this Court. The predicate for those decisions was that the Constitution had been violated. Here, we contest whether the Constitution has been violated, and we have raised that question in our petition. I agree with the Court that there is a separate issue available in this case, whether, assuming the Constitution has been violated, an implied cause of action for damages should exist. That is an issue we raised in the court of appeals, and we have not chosen to raise it in this court.
Byron R. White: Well, certainly that issue about implied cause of action, I would take it... I would classify as a non constitutional question, and you are just telling us that we have to reach a constitutional issue, although there very well may be a non constitutional way of disposing of the case.
Kenneth Steven Geller: We think the court of appeals made a number of errors in its opinion. We think the court of appeals was wrong, for example, on the question of mootness. We have chosen to restrict the questions presented in our petition to the three I have previously expressed, and we do not disagree with the Court--
Byron R. White: And you think that you can make us reach a constitutional issue.
Kenneth Steven Geller: --I would be, I think, on behalf of the defendants, they would be delighted if this Court were to reverse on the ground that there is no Bivens action here.
Warren E. Burger: What if the Court held there is no case or controversy? Isn't that the end of everything?
Kenneth Steven Geller: I think that would be the end of this case as well.
Warren E. Burger: You don't reach Bivens, you don't reach any other questions.
Kenneth Steven Geller: That's correct.
Byron R. White: And you wouldn't reach Bivens if you said there wasn't a private cause of action at all. You wouldn't reach the issue of whether there is a violation of the Constitution.
Kenneth Steven Geller: I think, though, that in light of this Court's decision in cases like Carlson against Green, Davis against Passman, it is a more difficult analysis. We think the easier question in this case is that there is simply no constitutional violation at all. Now, as I was saying, the only reason that the D. C. circuit found that these defendants were not entitled to absolute immunity is because, as the court read the statute, there was absolutely no discretion involved. We think that... you know, Judge Tam dissented on this point, and we think his dissent is clearly correct. Under Section 518 (c)(2) of the LEAA statute, defendants had to make an initial determination whether a recipient of federal funds "failed to comply with the non discrimination provisions of the LEAA statute and regulations. " This often involved difficult questions of law and allocation of LEAA resources, and if the defendants did decide to investigate a complaint and found evidence of discrimination, then under the statute they had to notify the grantee state's governor and had to decide whether the grantee "within a reasonable time" had taken appropriate steps to comply with the statute voluntarily.
Sandra Day O'Connor: Mr. Geller, I am not sure, based on what has been said, that the Court will find that we reach the merits, but assuming that the Court were to do so, do you think that the complaint that was filed, the amended complaint can be read to incorporate allegations of action by at least some of the defendants that are not discretionary type actions, which poses additional problems, of course, for the Court?
Kenneth Steven Geller: No, I don't think it can, for a number of reasons, Justice O'Connor. First of all, the complaint is very, very poorly drafted in the sense that it does not identify which of the defendants is alleged to have done what. It simply refers repeatedly to the defendants, but we think that in a Bivens action in which defendants may ultimately have to pay damages, it is essential that each defendant be identified and it would be clearly explained in the complaint what action that defendant took that violated the constitutional rights of the plaintiff. Now, the plaintiffs have attempted to rewrite their complaint since this litigation began, I think because they realized the deficiencies of the complaint, but the only allegation alleged in this complaint that is claimed--
William H. Rehnquist: Where are you reading from?
Kenneth Steven Geller: --I am reading from the joint appendix, where the complaint is reprinted, starting on Page 13. The only allegation of the defendant's conduct that is alleged to have violated the plaintiff's constitutional rights in this complaint is the failure to terminate federal funding. On Page 13, under the nature of the claim, the complaint says, plaintiffs allege that the defendants have awarded excess of a certain figure in dollars to law enforcement agencies, federal funding which has been used to discriminate on grounds of race and sex. That is the only allegation of harm. And then, on Pages--
Sandra Day O'Connor: How about all those statements on Page 20, and so forth?
Kenneth Steven Geller: --Well, on Pages--
Sandra Day O'Connor: Like a policy of not conducting any pre award compliance--
Kenneth Steven Geller: --I understand that there are a lot of allegations in the complaint about what collectively the defendants did, but I am trying to focus on what the plaintiffs have described as their constitutional harm, and on Pages 14 and 15 of the complaint, where each of the plaintiffs is identified, and each of the plaintiffs specifically states how he or she was harmed, in every single instance the only harm that is identified is the refusal to terminate LEAA funding, and I might add that both the majority and the dissent in the court of appeals construed the complaint in that fashion. In the appendix to the petition where the court of appeals decision is reprinted, the very beginning of the court of appeals' opinion on Page 2A, Judge Basilon says that the plaintiffs allege that federal agencies and officials unlawfully failed to terminate federal funding. That is the only allegation of what the constitutional violation was here, and Judge Tam agrees with--
Thurgood Marshall: --It also said willful and malicious.
Kenneth Steven Geller: --I understand that that is what they--
Thurgood Marshall: That was a quote.
Kenneth Steven Geller: --That is how the plaintiffs have described the defendant's action.
Thurgood Marshall: That is what they allege.
Kenneth Steven Geller: That is what they allege, but the only constitutional action that the defendants are alleged to have taken here that caused constitutional harm was the failure to terminate funding, and Judge Tam on Page 17A agrees with that description, and therefore we think that since that is clearly a discretionary determination under the statute, that there is no reason for this Court to wade through the rest of the plaintiff's prolix complaint to see what other grievances they have stated. The only cause of action here is for a failure to terminate funding.
William H. Rehnquist: If in fact the case were to go off on standing, and the Court were to decide that even assuming that everything was true in plaintiff's complaint there was nothing but the most speculative sort of benefit that would result to them from any judicial relief that could be granted, wouldn't that also avoid going through the prolix allegations of the complaint?
Kenneth Steven Geller: I think it would, but I think it is important even for the purposes of determining whether the plaintiffs have standing. I think we have to determine what it is they have alleged as their cause of action in order to determine whether these are people who can raise that sort of a cause of action against these defendants, and I think that therefore it is an important point, because the plaintiffs had tried to obscure the point in their briefs that the only constitutional violation alleged in this complaint is the failure to initiate fund termination proceedings. Now, we have raised two issues other than official absolute immunity in this court. They are described in the brief at some length. I don't want to spend too much time, in light of the limited time I have available, discussing the cause of action argument, which we have already alluded to. I would like to turn, if I could, to the final point in our brief, which is in some ways perhaps the most important one, and that is the question of qualified immunity. Assuming that the court of appeals was correct in holding that the defendant is not entitled to absolute immunity on this record, we think the court should have affirmed the dismissal of the complaint on the ground that the record clearly shows they are entitled to qualified immunity as a matter of law. When this Court decided Butz against Economou, that federal officials ordinarily would have only qualified immunity from personal damages liability in Bivens actions, it did so on the expressed assumption that insubstantial Bivens suits would be quickly disposed of by the lower courts even without the protection of absolute immunity. The dissent in Economou stated that the majority's assurances in this regard reflected optimism rather than prescience. In view if the federal government, based on experience, defending these cases over the last three or four years, the court's assurances in Economou unfortunately have not proven correct. This case is a prime example. The only allegation in the plaintiff's lengthy complaint or affidavits that might suggest that the defendants are not entitled to qualified good faith immunity from damages liability is the boilerplate assertion at the very end of the complaint that the defendants acted "wilfully and maliciously". That assertion is not tied into any specific factual allegations in the complaint, or substantiated in any other way.
William H. Rehnquist: Was there a trial?
Kenneth Steven Geller: There was not a trial, but there were summary judgment motions.
William H. Rehnquist: Well, but on summary judgment motions all the well pleaded allegations are treated favorably to the plaintiffs, are they not?
Kenneth Steven Geller: I think that would be the case on a motion to dismiss. On summary judgment motions, the defendant is supposed to come in with affidavits and the plaintiff is supposed to counter those affidavits.
William H. Rehnquist: But qualified immunity always involves state of mind, and that is something that a defendant can't negate.
Kenneth Steven Geller: Well, that was one of the issues raised in Butz against Economou as an example of why absolute immunity was needed as a protection against lawsuits designed to intimidate or harass. In ruling against the government's argument that there should be absolute immunity, the Court stated that "Insubstantial lawsuits against federal officials can be quickly terminated by federal courts alert to the possibilities of artful pleading. " and the Court said, and again I quote, "Damages suits concerning constitutional violations need not proceed to trial, but can be terminated on a properly supported motion for summary judgment based on the defense of immunity. "
William H. Rehnquist: By repealing the federal rules.
Kenneth Steven Geller: Well, I am reading from the Court's opinion, and my point is that that was a basic assumption.
Byron R. White: He agrees with your reading.
Kenneth Steven Geller: I gather as much.
Thurgood Marshall: Is this qualified immunity raised?
Kenneth Steven Geller: Yes, it was. It was raised in both lower courts.
Thurgood Marshall: Well, if it goes back, couldn't it be raised again? It never was tried out, was it? Because you can't try out qualified immunity without some evidence, can you?
Kenneth Steven Geller: Well, there were... voluminous evidence was submitted in this case both by the plaintiffs and by the defendants, although the district court did not dismiss this case on summary judgment grounds. It was dismissed for failure to... it was dismissed, the injunctive parts were dismissed for mootness--
Thurgood Marshall: Did it rule on qualified immunity? No, it didn't.
Kenneth Steven Geller: --It was dismissed on immunity grounds. One of the problems in this case is that the district court decision was prior to Butz against Economou, and therefore the district court did not... it merely said that the defendant is entitled to official immunity under Barr versus Mateo rather than--
Thurgood Marshall: Did the court of appeals rule on the qualified immunity point?
Kenneth Steven Geller: --The court of appeals did not.
Thurgood Marshall: Did not. I thought so. Suppose, Mr. Geller, that qualified immunity had only one inquiry, an objective inquiry, and had no good faith aspect to it.
Kenneth Steven Geller: I think that... I think even under the good faith aspect qualified immunity should have been accorded here, but certainly if the only inquiry was whether the law was clearly established, where the defendants violated some clearly established rule of law, I think it is quite clear in this case that the motion for summary judgment based on those grounds should have been granted since I don't think even today it is clear that what the defendants did here violated the plaintiff's constitutional rights. It certainly was not clear in 1974. The government has argued, by the way, for just such a rule of only an objective test for qualified immunity in our brief last year in the Kissinger case. We are not suggesting here that Economou should be overruled. We do think, though, that the Court should give clear guidance to the lower courts that the liberal rules of noticed pleading that may apply generally in civil litigation do not apply with the same force in Bivens actions, and that federal officials should not be forced to undergo discovery or a trial without specific allegations of wrongdoing. Allegations in this case do not even come close to meeting the appropriate standard. They suggest only that the plaintiffs had a disagreement with the defendants about how the LEAA statute ought to have been administered. We believe that these sorts of disagreements, if they are properly in court at all, should be litigated in injunctive actions such as those authorized by the Administrative Procedure Act, not in personal damages actions with their inevitable tendency to harass and intimidate public officials in the performance of their duties. Yet, as I said earlier, this case was filed in September, 1975, and six years later these defendants are still trying to escape from under this lawsuit. I would like to reserve the balance of my time.
Warren E. Burger: Mr. Larson.
E. Richard Larson: Mr. Chief Justice, and may it please the Court, initially I will respond to the government's characterization of several of the facts in this case. Thereafter, unless this Court chooses otherwise, I would like to respond to the standing issue that was raised by the Court, and then to the three issues that have been raised by the government, the absolute immunity issue, which was ruled upon and rejected by the court below, and then the two other issues which were not ruled on by either court below. First, as to the characterization, I wish to point out that respondents in this case charged the petitioners with refusing to take any enforcement action whatsoever against petitioners' discriminatory grantees. No enforcement action. More particularly, as to administrative fund termination proceedings, petitioners in this case exercised no discretionary enforcement functions. They did not function with discretion in initiating fund termination proceedings, and I will elaborate on all of these. Specifically, I mean, under the regulations in effect at the time that this action was brought, indeed, as described by Petitioner Velde and set forth in the record in this case, the regulations required LEAA to pursue court action and not administrative action to resolve matters of employment discrimination. Petitioners' deliberate decision to take away this enforcement discretion has deprived them of the discretionary function to enforce administratively their statute. This policy decision, this refusal to act, also meant that the petitioners in this case exceeded the statutory authority that had been placed upon them by Section 518(c)(3) of the Crime Control Act. In this case, the respondents charge that petitioners' refusal to enforce, coupled with their affirmative provision of continuous funding to grantees which petitioners knew were discriminatory constituted a direct violation of petitioners' Fifth Amendment steer clear obligation, the obligation to steer clear of providing significant aid to discriminatory institutions. This case, as counsel for the petitioners indicated, was dismissed on the pleadings.
Thurgood Marshall: Mr. Larson--
E. Richard Larson: As we point out also, there was no discovery in this case whatsoever. We were denied discovery.
William H. Rehnquist: --Just affidavits?
E. Richard Larson: Just affidavits. We filed discovery in the trial court. The government moved for a stay and obtained a stay on the discovery. We moved to vacate the stay. The government opposed our stay. The trial court never ruled.
William H. Rehnquist: Wouldn't a necessary element of your case to be pleaded and proved be that the plaintiffs' grievances be redressed if the action you sought to have taken by the court were taken, that is, that if funding were cut off, the police departments which you claim were discriminating would change their discriminatory policies?
E. Richard Larson: Well, let me respond to that. There are two views of standing on this case, and you are discussing the view of standing that Judge Tam took, looked at in the court below, in the court of appeals, and indeed, he found that we had standing under that view with regard to redressability, with regard to the cutoff of funds. I mean, this is even apart from the Fifth Amendment obligation and the violation that we referred to with the federal petitioners. But on redressability, simply focusing on the police departments, we think that there is more than a substantial likelihood that indeed the grantees would end their discrimination rather than lose their money. As we point out in our brief, three branches, the three coordinate branches of the federal government have already recognized the coercive power of fund termination. Two courts of appeals have held it. The executive has recognized it on occasion. And indeed Congress, in enacting Section 518(c), did so because it recognized the coercive power of fund termination.
William H. Rehnquist: Did you plead it in your complaint?
E. Richard Larson: Yes, with regard to injury, economic injury, on--
William H. Rehnquist: With regard to the substantial probability that the departments would change their policy?
E. Richard Larson: --It is generally in the complaint, yes. Now, it also is on the record, Justice Rehnquist. I should point out that one plaintiff in this case has already established standing as a matter of the record in this case. Plaintiff Shumacher is from New Orleans. In 1978, these petitioners had found the New Orleans Police Department to be discriminatory and in violation of Section 518(c), yet for two and a half years LEAA did nothing. In September of 1974... '75, we filed this lawsuit. Immediately thereafter the LEAA petitioners in this case sent a letter to the superintendent of police in New Orleans stating... not indicating they had just recently been sued, but indicating... stating straight out, and this is in the record, that we now are going to compel you to come into compliance immediately or we are going to terminate your funds. Within weeks a letter comes back from the superintendent of police in New Orleans stating, we have now eliminated the discriminatory practice, under duress, and only because of your threat to cancel our funding.
William H. Rehnquist: Well, that is fine as to New Orleans, but you are asking for relief against a great number of--
E. Richard Larson: Well, as this Court held only last week in Watt v. Energy Action unanimously per Justice O'Connor, only one plaintiff need have standing in order to maintain the action that we maintain. Indeed, I mean Watt is instructive on another matter, too. Watt... in Watt this Court recognized that the standing argument which is being raised here is based upon an improper assumption about government activity, the improper assumption being that local governments are going to look money in the face and then walk away from it. That is an improper assumption, and indeed, as we have already demonstrated conclusively on this record, with regard to Plaintiff Shumacher, the government, local grantees will not walk away from that money. They will stop their discrimination.
William H. Rehnquist: --Well, I would agree with you that you can't say that they won't, but the fact that one police department has responded to the fund cutoff certainly doesn't prove that every police department that would be involved in this case would react the same way.
E. Richard Larson: I certainly think we should have an opportunity on discovery to prove that, as Judge Tam held in his separate opinion in the court of appeals.
William H. Rehnquist: If you pleaded it, certainly.
E. Richard Larson: Let's point out that before this complaint was filed, LEAA petitioners, these government officials never, never initiated fund termination proceedings. After this case was filed, as we pointed out in January of 1976, we filed a preliminary injunction asking LEAA to finally initiate fund termination proceedings against the Philadelphia police department, where LEAA two years earlier had made a determination of discrimination but had done nothing. In response to our motion for a preliminary injunction, a letter went out to the governor of Pennsylvania to initiate indeed the fund termination proceedings. I believe that if we were given the opportunity of discovery in this case we could show that after the filing of this lawsuit, that every time that fund termination was actually threatened, that indeed the local grantees rolled over and said, we will stop our discrimination.
William H. Rehnquist: Even if LEAA was supplying only one half percent of their budget?
E. Richard Larson: The assistance here is considered quite substantial by the grantee police departments. They keep coming back and asking for the money. Indeed, the assistance is considered to be so substantial by LEAA that they have exceeded their statutory power just to continue the assistance going.
William H. Rehnquist: Well, but certainly it isn't the same in every case, is it? I mean, it isn't a uniform policy of funding 20 percent of the police departments across the country. It is specific grants.
E. Richard Larson: It is a grant in aid program, and of course one of the conditions of this grant in aid program is that the grantee comply with LEAA regulations and with the non discrimination requirement.
Byron R. White: Well, what rights of your clients are you claiming?
E. Richard Larson: We are claiming--
Byron R. White: Not to be discriminated against by the LEAA officials?
E. Richard Larson: --Oh, absolutely. I mean, our complaint with regard to each plaintiff, it says, both with the short description of the plaintiffs and then in the statement of the case as to each plaintiff, we have claimed under the Fifth Amendment that we have been... that each plaintiff has been discriminated against.
Byron R. White: The equal protection component of the Fifth Amendment?
E. Richard Larson: Component of the Fifth Amendment, yes.
Byron R. White: So it is a constitutional Bivens sort of thing you are asserting?
E. Richard Larson: Yes, it is, absolutely.
Byron R. White: Are you also claiming that you have a right under the statute?
E. Richard Larson: Yes, we are, but that is an issue which was not presented or has not been presented by the government in its cert petition and it is not at issue in this case.
Byron R. White: Did the government claim that you had no... that in the circumstances of this case, there shouldn't be an implied constitutional cause of action?
E. Richard Larson: That issue has never been raised prior to the supplemental brief in the court of appeals, the first time.
Byron R. White: Yes, before judgment there?
E. Richard Larson: Before judgment, yes.
Byron R. White: But it wasn't adverted to by the court of appeals?
E. Richard Larson: It was not, no. It was assumed that we have a Bivens cause of action. Indeed the government in its brief has stated that the action here... they don't challenge our Bivens, Carlson-Green cause of action.
Byron R. White: Well, I know they don't, but didn't the Congress at one point make more detailed provisions for administrative review and cutoff?
E. Richard Larson: In 1976.
Byron R. White: Because it was dissatisfied with what had been happening?
E. Richard Larson: Yes. Much of the legislative history is set forth in our separate appendix in our brief.
Byron R. White: Yes, yes.
E. Richard Larson: There was tremendous frustration in Congress with the absolute refusal by petitioners to enforce the mandate that Congress had imposed on officials--
Byron R. White: And so they provided a more... they put more obligations, more details, procedures?
E. Richard Larson: --As one Member of Congress stated, even if LEAA continues to do nothing, we at least have added additional triggers that will initiate and require the fund cutoff that Congress had imposed in 1973.
Warren E. Burger: Let me try this hypothetical on you. Suppose allegations of the complaint stated that the Secretary of Defense and all his subordinates in dealing with billions of dollars worth of government contracts were sending 98 percent of them in the sun belt region below the frost line, or however that is identified these days. Would you have an equal protection claim based on denial of equal protection in terms of damages against the Secretary of Defense?
E. Richard Larson: There may be a claim. I don't think there would be a very good damage claim on that. I mean, this is a race and sex discrimination claim with regard to invidious discrimination.
Warren E. Burger: Well, no matter how good it is, is it good enough to sustain... to survive summary judgment?
E. Richard Larson: On those allegations, I am not sure, but where race and sex have been alleged, Mr. Chief Justice, I think the court--
Warren E. Burger: Well, what is the difference that you see here? It isn't racial. I deliberately posed it as not racial and not based on gender.
E. Richard Larson: --But the difference is the nature of the invidious discrimination, the race and sex discrimination.
Warren E. Burger: But it is denial of equal protection, isn't it, if they are sending it all south? Or sending it all north, all the contracts?
E. Richard Larson: But certainly subject to a different standard of review under this Court's decisions.
William H. Rehnquist: But you are not claiming that the government officials invidiously discriminated, are you? You are claiming that they refused to set in motion fund cutoff procedures against local officials who were invidiously discriminatory.
E. Richard Larson: We are claiming that they exceeded their statutory powers, the statutory powers set out in Section 518(c), which make the initiation of fund termination procedures non discretionary, and that by their refusal to cut off funds or have any civil rights enforcement program coupled with their affirmative, continuous funding of police departments that they knew to be discriminatory, yes, these petitioners have invidiously discriminated against the respondents in this case. That is the allegation in our complaint.
Harry A. Blackmun: Mr. Larson, could I ask you a question? I was interested... I am interested in the legislative history. Am I correct, you did not cite the conference report in your brief? I think I am correct in that, and I am curious as to why you didn't.
E. Richard Larson: I know that legislative history fairly well, Justice Blackmun. I am not sure. With regard to the '76 conference report?
Harry A. Blackmun: No, the earlier. I found the conference report rather remunerative to look at, but it is not cited in your brief, and I wondered if there was a reason for it.
E. Richard Larson: No, I can't recall what it says right now. With regard to the standing argument, to finish up, indeed, there are two perspectives on standing. We believe under Judge Tam's perspective that we have already conclusively demonstrated on this record that we do have standing. Let me point out that these documents, these post filing documents with regard to Plaintiff Shumacher appear in some of the attachments to the government's motion for summary judgment. We were not able, because we have never had discovery, to obtain this information, but I think it was inadvertently attached to the government's motion to dismiss, so that is how it got into the record. We nonetheless maintain that with regard to the majority opinion below, that we also have standing directly against... with regard to redress directly under the Fifth Amendment against the petitioners here. We have claimed that the respondents, the plaintiffs below, were harmed through pain and suffering and through violation of their constitutional rights, and we have sought both compensatory and punitive damages, and in our view those damages would indeed redress the past wrongs that have been committed by the LEAA officials in this case. We also--
Thurgood Marshall: This would apply to some men who have been out of government for quite a while.
E. Richard Larson: --They are not in government any more, but as this Court has--
Thurgood Marshall: But they are still liable to the $100 million?
E. Richard Larson: --As this Court has repeatedly pointed out, awards of punitive damages pose a very strong deterrent effect to unconstitutional action by government officials, and we believe particularly--
Thurgood Marshall: So you don't care. You think this is just tough on them?
E. Richard Larson: --Yes, it is.
Thurgood Marshall: Thank you.
E. Richard Larson: They violated the Constitution.
Thurgood Marshall: I just wanted your position.
E. Richard Larson: They did so wilfully and maliciously in our view, and we are entitled to--
Thurgood Marshall: You said that in one phrase at one place in the complaint. Didn't you?
E. Richard Larson: --I think when you read the entire complaint... I don't think we have to say wilful and malicious in every paragraph. What we do say in virtually every paragraph is that the petitioners refused, refused.
Thurgood Marshall: You said it once.
E. Richard Larson: Well, we did say it at least twice.
Thurgood Marshall: Well, twice. I stand corrected. Twice.
E. Richard Larson: We don't have to say it in every paragraph. We have met the basic rules of pleading under Rule 8A of stating jurisdiction provided--
Thurgood Marshall: Don't lecture me on the rules of pleading, please. I took those before you were born.
E. Richard Larson: --Because of our two different claims on standing, we believe that we are entitled to survive a motion to dismiss as the court of appeals held below on either theory of standing. The government's first argument in this case is an argument in which they contend that all of the petitioners are protected by an absolute prosecutorial immunity. We submit that this contention directly contravenes this Court's decision in Butz. Most important is the record in this case. As I pointed out at the outset, the government petitioners uniformly adhered to an unlawful regulation which Petitioner Velde stated in this record that that... that those regulations require LEAA to pursue court action and not administrative action to resolve matters of employment discrimination. Indeed, that regulation and the interpretation of that regulation were uniformly followed by the petitioners in this case. There never was an initiation of administrative fund termination proceedings until this case was filed. After this case was filed, the unlawful regulation was ultimately repealed, and pursuant to our motion for a preliminary injunction and the general deterrent effect of bringing a damage action, petitioners began to enforce, but prior to this, they didn't. In other words, they did not have any discretion that might even be described as prosecutorial discretion because they had deprived themselves of that discretion to go forward. Indeed, in their affidavits, their pre Butz affidavits, the government petitioners in this case nowhere described their functions as prosecutorial. They described themselves as administrators, and they described their policymaking functions. Indeed, no petitioner in the affidavits any place claimed responsibility for not initiating administrative proceedings in this case. Of course, to do so would have been exactly what we have charged the petitioners with, and that is exceeding their statutory authority under Section 518(c). The legislative history, as Justice Blackmun points out, is as obvious and clear as the statute itself. The statute says that whenever the administration makes the determination, it shall move forward and initiate the administrative proceedings. That was violated here, and accordingly not only did we allege that the petitioners, the government petitioners had violated the Fifth Amendment, but indeed they had exceeded the scope of their duty under their statute. With regard to--
Byron R. White: The LEAA determines there has been a non compliance, and you say thereupon there was triggered the duty to institute proceedings to terminate?
E. Richard Larson: --Yes, Your Honor.
Byron R. White: And you asked them to do that, and they say no, or they don't act, period.
E. Richard Larson: Well, after we filed the motion for preliminary injunction with regard to Philadelphia, they did so.
Byron R. White: Yes, but I am just wondering, is there judicial review of this action?
E. Richard Larson: No, there is not. Of their refusal to follow their statute and initiate?
Byron R. White: I know there is no particular provision for it, but wouldn't there be judicial review of it in the district court on an arbitrary and capricious standard?
E. Richard Larson: No, not for an individual claimant. There is no procedure whatsoever under this statute. On the other hand, it is absolutely clear that with regard to a grantee, a grantee has under Section 509, 510, 511 of the Act, does have administrative review of the record on that particular action. There is a hearing. There can be a rehearing, and there also is judicial review. The government's second argument which was not raised below or ruled on below is that the respondents here do not have a Fifth Amendment cause of action. As this Court pointed out earlier, we believe that this is basically a statement of proof. It is a question going to proof, and in this case there was no discovery, and a proof argument simply cannot be turned into a pleading argument, and our pleadings are more than adequate to state a Fifth Amendment cause of action, as the government even concedes under Bivens and under Davis particularly, and also under Carlson. Finally, the government argues that this case could have been decided on summary judgment, and that this Court for the first time in this case should act as a trier of fact and rule on a summary judgment motion that was not ruled on by either court below. We submit that it would have been wrong for the trial court to have ruled on the qualified immunity issue on summary judgment had it been filed in the trial court, and indeed, it would be improper for this Court to address this issue for the first time here. But particularly disturbing, indeed, I found particularly astounding is the government's argument that the normal civil... the rules that govern normal civil litigation do not apply with equal force in Bivens actions against federal officials. Indeed, in Butz v. Economou, this Court held that the standards that apply to state officials apply with equal import to federal officials, and indeed in Butz this Court specifically invoked the federal rules of civil procedure, holding that a good faith immunity on summary judgment is subject to a properly supported motion for summary judgment. Indeed, if there is any doubt about this issue with regard to the application of Rule 56 standards to the government, the advisory committee notes to Rule 56 expressly state in the very first sentence, this rule is applicable to all actions, including those against the United States, or an officer or agency thereof. As we have pointed out quite extensively in our brief, it would have been wrong as a matter of law for the court below if it had been asked to rule on qualified immunity to have granted qualified immunity in favor of the petitioners on this record. Rule 56 was not complied with by the government. For these reasons, Your Honors, we believe that the court of appeals decision below should be affirmed, and the government's arguments in this case rejected. We also believe for the reasons that I point out that there is standing in this case, that indeed one plaintiff has already conclusively demonstrated standing, and under many of this Court's decisions, including the unanimous decision last week, in Watt v. Energy Action, there is standing in this case.
Warren E. Burger: Very well. Do you have anything further, Mr. Geller?
Kenneth Steven Geller: Just a few things, Mr Chief Justice. Virtually all of the arguments that Mr. Larson just made are addressed in our reply brief, to which I would refer the Court, but there are a few things I do want to stress specifically. One, in response to Justice White's question, of course there is APA review of these decisions, and plaintiffs have brought an APA suit which is pending.
Byron R. White: In the district court?
Kenneth Steven Geller: They brought it in the district court. It was dismissed as being moot. The court of appeals reversed, and remanded for further proceedings, and those proceedings have been held in abeyance pending this Court's decision.
Byron R. White: How do you get into court in such a case?
Kenneth Steven Geller: The Administrative Procedure Act was the cause of action.
Byron R. White: But it doesn't give jurisdiction, does it?
Kenneth Steven Geller: No, jurisdiction would be under 28 USC 1331. Second, it is important to realize, because so much focus has been on the 1973 and 1976 amendments, that those were just amendments to Section 518(c)(2) of the statute, which is the antidiscrimination provision. But there is a separate section which has been in the statute since the very beginning, Section 509, which is the fund termination provision. Section 518(c)(2) simply says if the administration makes a number of findings, then it should look to Section 509 for fund termination. So, it is Section 509 that arguably is in the plaintiff's view non discretionary. We would refer the Court to the House report on Section 509 which is quoted at Page 22 of our brief, which says that under Section 509, the Attorney General may terminate or suspend payments on a finding that there is a substantial failure to comply, and that he has broad discretionary power over the fund termination process. Section 509 has not been amended at any time, and that is the fund termination provision. Now, third, as I understand Mr. Larson, he has changed the theory of the plaintiff's case yet again in response to Justice Rehnquist's earlier questions, because as I understood the theory of plaintiff's case this morning, it was that it is irrelevant what the grantees would or would not have done if the funding had been terminated, and that is found on Page 36 of their brief, when they explain why cases like Simon versus Eastern Kentucky are irrelevant here, but now we are told that that is their theory, and that they made allegations to that effect in their complaint. The final point I want to make is that although there was no discovery in this case because a motion to dismiss was quickly filed, respondents did get massive discovery from LEAA under the Freedom of Information Act while this case was pending, and they submitted voluminous materials in response to the defendant's summary judgment motion. Thank you.
Warren E. Burger: Thank you, gentlemen. The case is submitted.
Speaker: The Honorable Court is now adjourned until Monday next at ten o'clock [= 10:00].


Earl Warren: Number 62, Northern National Gas Company, Appellant, versus State Corporation Commission of the State of Kansas. Oh, I beg you -- I beg your pardon. Oh -- oh! Yes, of course, of course. Number 33, Incres Steamship Company Limited, Petitioner, versus International Maritime Workers Union. I was led astray by the Solicitor General's brief, the discussion of that case. Mr. McAllister, you may proceed now.
Breck P. Mcallister: Mr. Chief Justice, may it please the Court. This case has been adverted too already but I should like to state the facts in it because I do not believe they've been fully stated as yet. This case is here on writ of certiorari to the Court of Appeals of the State of New York to review the judgment of that Court dismissing the complaint herein on the ground that the subject matter of the action was arguably subject to the National Labor Relations Board and the National Labor -- the Labor Act under the rule of this Court in the Garmon case. Now, this action is a civil action in part in the state court seeking both damages and an injunction against the intentional interference by the respondent union with the internal order in business and property of the plaintiff company. The plaintiff in this case is a foreign corporation, a Liberian corporation, fully owned by Italian nationals, resident in Italy and the officers and directors are also Italians, resident in Italy. The defendant below is the International Maritime Workers Union which was jointly formed by the two leading American Seamen's Unions, the National Maritime Union and Seafarers' International Union. It was organized as its Constitution provides for the stated purpose of organizing and representing the foreign seamen on certain types of foreign-flag vessels and the type referred to is those whose ultimate ownership and control has no substantial connection with the country of registry. Now the ships that are involved here are two in number, the Nassau and the Victoria. Both were built in England -- I am sorry, one was built in England, and one was built in Ireland. Both are registered in Liberia and by the Liberian flag. Both have almost entirely Italian cruise recruited in Genoa and they signed -- I have to make a minor correction of the Solicitor General's statement of my Incres case. They signed Liberian articles, seamen's articles in the presence of the Liberian Council in Genoa. The officers are licensed by the Republic of Liberia. The articles stand approved by an Italian union and the record shows that a large proportion of the crew belong to this Italian union. The ships are engaged in the Caribbean cruise trade. The Nassau makes a weekly trip to British West Indies for some 30 weeks each year. The Victoria likewise makes cruises to Caribbean ports during a period of about the same length, about seven months every year. Both ships return to Genoa each year for refitting and for leave for the crew. The company in New York City maintains an agent. The agent is a wholly owned subsidiary. It is a New York corporation and this agent, like other agents of steamship lines, sells tickets and takes care of the arrival and departure of the ships and the passengers. The corporation, the foreign corporation also employs another New York corporation known as Cosmopolitan Shipping Corporation. Like other foreign lines, this Cosmopolitan Shipping Corporation is known as a ship's husband. This takes care of such matters as the physical ending of the ship, the fueling of the ship between trips, the hiring of tugboats and linesmen, and pilots, and docking, and all such physical features in the handling of a ship. Now the lawsuit below began when the respondent union commenced a campaign under its Constitution to organize the seamen on these ships. This campaign began in February of 1960. The overt incidence in this case began on Friday the 13th of May of 1960. The respondent union has admitted in its answer in the case -- in this case that on May 13th, the union representatives requested crew members of the SS Nassau to engage in this freight and indeed they did. The Nassau arrived on the morning of May 13th at about quarter of 9 with the load of passengers. The passengers were debarked. By eleven o'clock, there was a picket line. The crew takes its leave normally from 12 until four o'clock in the afternoon when again a new load of passengers comes on board for the scheduled of departure at six o'clock. The crews are under articles and under duty to return at four o'clock. They did. But then as when the activities of the union began and it appears in the record that they actually went on board the ship and urged the crew members to leave. The crew members did and to abbreviate the story, now all of the crew members did but a substantial number did. To abbreviate this part of the story, the cruise was cancelled by midnight. The crew did not return. The other ship, the Victoria, arrived in New York harbor on Sunday the 15th of May. There was a minor incident in the outer harbor. The Victoria was unable to dock because the Nassau occupied the pier to which it was accustomed to go. So, it laid anchor in the outer harbor in New York. Efforts to unload the returning passengers by tender were interfered with by a picket boat of the respondent union but a police launched took care of that situation evidently and at any rate the passengers were debarked and there was no further incident on that occasion. The real difficulty began with the Victoria on the following Tuesday when the Victoria again was scheduled to depart on another cruise. The passengers have been embarked by tender as the ship still laid anchor at quarantine in the harbor. The departure which had originally been scheduled for four o'clock in the afternoon had been postponed until 5:30 due to the problem of getting the passengers on board. When the passengers were on board and again the crew, under articles -- I mean by that they were on duty, the -- was prepared to sail. Again, a picket boat came out, this time it was manned by members of the crew of the Nassau. But the record is clear that this picket boat was sent out by a Mr. Levangie (ph), the chief picket of this union and was sent out for the very purpose that was sought to be carried out and it was successfully accomplished. A picket boat called through loud speakers in Italian to the Italian crew members and urged them to feign sickness and not to sail. This had its effect of creating confusion on shipboard and there ensued many conversations on the shipboard which I need not detail with the same result as in the case of the Nassau that the Victoria did not sail on its cruise and it was cancelled, and the passengers were debarked by tender. Now, this proceeding was as I've said in thought in the state court to seek an injunction and indeed a restraining order was obtained on Monday, the day before the Victoria incident but it apparently did not stop the activities. A permanent injunction issued on May 25th and the matter is now here. The federal question was raised below at the outset by the respondent union by cross motion to dismiss the complaint on the ground that the state court had no jurisdiction over the subject matter of the suit in view of the Federal Labor Act. That point has of course been pressed in every -- all the way out here. The question presented are of course and very obviously the Garmon rule by the state court correctly applied that rule, we contend that it did not. And of course, more basically the question of whether or not the Federal Act applies at all to the foreign seamen employed by a foreign corporation are unknown on these ships. These men of course were I repeat, was serving under foreign article which were entered abroad and the ships were of course in territorial waters at the time of these events. Now, I certainly do not wish to repeat so many of the arguments that have been made here already, many of which have a direct bearing upon the Incres case. I want to emphasize, perhaps, three parts, maybe a few more. First, I find myself in very fine company. I find the Solicitor General is on my side. I find that five foreign governments have filed briefs in the Incres case and in the related cases, all of which are also, I think on my side. That is a very welcome situation and I think the presence of so many foreign governments, ones against any hasty conclusion that this Act should be construed without full regard to the interests of the foreign nations that are before this Court in the amicus briefs because -- and I join the Solicitor General in one basic and fundamental point he made. We are concerned not with the Garmon type of situation of this Court acting as the -- what has been called the empire of our federal system in adjusting jurisdiction between state and nation but we are quite the contrary engaged in the adjustment if you like of power between sovereign nations. And the presence of these -- the governments, I think it must again be emphasized. And as the Solicitor General pointed out only one nation may properly, effectively, if you like, regulate labor relations on shipboard. And here, we are concerned not with a tort law such as in the Jones Act where there is a choice of law in the private international sense that we are concerned with a comprehensive regulatory law that reaches into the most important relationship on shipboard to wit the relation between the master and the crew. We regard the Benz decision as controlling here in every respect. Frankly, I do not believe that the distinction attempted by my worthy opponent is valid. The suggestion is that in that case, the ship was only temporarily in a United States port but as Mr. Justice Black, I think inquired earlier, isn't every foreign ship that comes to our harbors in here temporarily. I believe they are. I think the reach of that decision is far deeper than that. The important point that I think I should like to stress is that the Benz case is in full conformity with the established principles of international law under which we have lived for so long. I would like to mention that because several suggestions have been made. One is sort of the notion that there is some fiction maybe about registration under the flag of Liberia. And secondly, the suggestion that there is some, perhaps some -- even the word fiction was used in connection with the matter of registry of a ship in Liberia, I think, and elsewhere. I would like to point out that the Republic of Liberia has filed a brief here in which in its -- in the Appendix, it has listed the international conventions to which the Republic of Liberia is a signatory power. This appears in Appendix A to the brief of the Republic of Liberia on page 19. They have listed eight international conventions: The Intergovernmental Maritime Consultative Organization, The International Convention Safety of Life at Sea, International Load Line Convention, International Telecommunication Convention, North Atlantic Ice Patrol, The ILO Convention relating to officers, competencies, certificates, the ILO Convention relating to shipowners' liability, relating to sick and injured seamen and the ILO Convention relating to minimum age at sea. I most respectably -- respectfully submit that the Republic of Liberia is a recognized maritime power and its laws are entitled to the same recognition that all the laws of any -- of a sovereign nation that may come before this Court. I would add that the conventions to which I referred relate to the ships themselves, the control regulation exercised by the Republic over those ships. I would refer also to the statement in the brief of the Republic of Liberia that they recognized the duty to regulate and control all matters of employment and in relation to the internal management of Liberian ships and that it does regulate these matters and has what is stated in this brief to be a growing body of law with respect to minimum age, working hours, overtime wages, maintenance and care of sick and injured seamen, repatriation, and unionization. I most respectfully submit again that in this area, the Republic of Liberia being one of the four largest maritime nations in the world has and is recognizing its obligations in that respect. And I believe there should be accorded to it before this Court exactly the same recognition as would be accorded to any other nation that comes before this Court. I emphasize that because there has been some suggestions that there was something peculiar about registration under the law of that Republic. Frankly, I haven't the remotest this idea while these Italian owners chose to register these ships under the Republic -- flag of the Republic of Liberia but I suppose that's a decision, a business decision which they are entitled to make for whatever reasons may appeal to them and I do not believe that that decision is subject to criticism or review. Many individual much capital in the world of one nation is registered under the flag of some other nation, in ships under the flag of some other nation. American capital does it, British capital does it, Greeks do it, Norwegians do it, it is been going on for a very long time. I sometimes think that Columbus did it.
Potter Stewart: Mr. McAllister, the --
Breck P. Mcallister: Yes, Mr. Justice Stewart.
Potter Stewart: -- Court of Appeals' opinion was based squarely on the arguably subject (Voice Overlap) --
Breck P. Mcallister: Yes, that is correct.
Potter Stewart: -- put to Garmon.
Breck P. Mcallister: Well --
Potter Stewart: And I understand the distinction that the Solicitor General have made in which you've repeated and adopted between statutory jurisdiction and such as is here is involved and the matters that are within the expertise of the navy board such as it was involved in Garmon and perhaps --
Breck P. Mcallister: Yes.
Potter Stewart: -- in the last year's MEBA case.
Breck P. Mcallister: Right.
Potter Stewart: But assuming that that is an invalid distinction, assuming that's invalid. Certainly it is true that as of the time this case was before the New York Court of Appeals, this matter was arguably subject to the -- to Labor Board jurisdiction and because of the fact that the Labor Board had assumed jurisdiction over half a dozen and more such cases, isn't it?
Breck P. Mcallister: I perhaps should've said Mr. Justice Stewart that a -- in the early -- in May when this matter began the union filed a charge with the Regional Office of the Labor Board in New York charging us with having violated Section 8 (a) (5) of the Act for having failed to bargain with the -- what they called the -- to the chosen representatives of the crew. That charge has remained in the local office in New York every since. The Board has not acted upon that charge. It has issued no complaint and has simply done nothing. But of course, Mr. Justice Stewart, I think that your question goes deeper than that because I do think that under the decision of this Court in the Benz case that the matter was definitely not subject, to argue this subject. We believe that the Benz decision goes far deeper than the particular facts of the case.
Potter Stewart: That's what the (Voice Overlap) --
Breck P. Mcallister: Yes.
Potter Stewart: -- in the Court of Appeals, so I gather.
Breck P. Mcallister: That's what the dissent --
Potter Stewart: Yes.
Breck P. Mcallister: Yes. That is correct. Now --
Byron R. White: (Inaudible)
Breck P. Mcallister: Yes, Mr. Justice White.
Byron R. White: (Inaudible) it's necessarily to follow -- necessarily follows from the fact that the Labor Act may not apply to these foreign-flag ships to attempt with the representation of election, something like that. Does it necessarily follow that the Act doesn't apply to present the union from committing unfair labor practices or applied to otherwise protected activities?
Breck P. Mcallister: I think it does. I think the Act does not apply, Mr. Justice White.
Byron R. White: It's wholly on the ground that here in this case it is -- just because of the question of coverage that isn't preempted, is that right?
Breck P. Mcallister: No, I think that it goes -- again goes deeper than that. I think the Act must be treated as a whole. I think it truly is an integrated whole. For example, we so urge in our brief that you can't dismember the Act and give it what seems to me a lopsided application. That certain features of it might be applicable here relating to picketing, for example, but then nothing else should apply.
Byron R. White: Well, do you mean the piggy-back case, isn't -- wasn't upheld with the Railway Labor Act applied in some aspects with the -- that the Taft-Hartley Act applies to the union activities of boycotting?
Breck P. Mcallister: That is correct, Mr. Justice. But I think the distinction there is simply this, that in that case, this Court was making an adjustment between two different acts of Congress; one, the Railway Labor Act; and secondly, the Labor Board to the --
Byron R. White: But nevertheless the employer couldn't be forced to do anything into the Taft-Hartley Act in this case. But the union --
Breck P. Mcallister: True but --
Byron R. White: But the union could be prevented from doing something under the Taft-Hartley Act.
Breck P. Mcallister: True, but I think the --
Byron R. White: Similarly, its conduct would've been protected under the Taft-Hartley Act.
Breck P. Mcallister: Well, that makes --
Byron R. White: That's better if it hadn't been an unfair labor practice.
Breck P. Mcallister: Yes. Well, that maybe but I think again, you are dealing with the situation in which the full power of the United States was available there. Under the Railway Labor Act, there's the certain aspect of the relation and under the Labor Act as to others and there was a dismemberment of the Act, I --
Byron R. White: So you would say that the foreign-flag ships -- the owners of the -- came in (Inaudible) -- should not be able to file a complaint before the National Labor Relations Board.
Breck P. Mcallister: Correct. Precisely, because in that situation, there is no power of this Court --
Byron R. White: Or to sue for damages for a boycott under the Act.
Breck P. Mcallister: That they could not. That is correct. We claim -- we have filed no charge. We propose -- we do not propose to institute any action --
Byron R. White: Well, what was on the --
Breck P. Mcallister: -- because --
Byron R. White: -- you perhaps said that I -- I've forgotten, what was on the picketing of the -- were there signs, the picket carry signs, what was on them?
Breck P. Mcallister: The picket signs are in the --
Byron R. White: Are they in the record?
Breck P. Mcallister: Are in the record, Mr. Justice.
Byron R. White: (Inaudible)
Breck P. Mcallister: I've gotten -- I think they've just simply said they had no dispute with anybody else except the crew of the Nassau and the crew of the Victoria. They were attempting to avoid of course the possibility of a boycott charge. But let us see if we can find that --
Byron R. White: Points alright, (Inaudible)
Breck P. Mcallister: Very well. No. We don't think you can dismember this Act, because we think it would simply wrench it apart and the interrelationship of the various clauses in the Act would be destroyed because what Congress was doing in this Act, it seems to me, was writing an Act as a whole. It was not writing part of an Act. It was adjusting very deep seethed conflicts in Congress in the determination of what kind of picketing was to be controlled. What should be the scope of the secondary boycott provisions and all of this is related to an ultimate exercise of the rights guaranteed under Section 7, to organize, bargain, to represent.
Byron R. White: There's no question though, the entire -- they intended to -- Congress intended the Act to be applicable to the union.
Breck P. Mcallister: The what?
Byron R. White: -- there's no question that Congress intended the Act to be applicable to union such as picketing here.
Breck P. Mcallister: But not -- not I would say, Mr. Justice when the union --
Byron R. White: The -- but didn't intend it to be applicable at the suit of a foreign flag.
Breck P. Mcallister: No. I would say that the -- our position is a very flat one, Mr. Justice. We think in the words of Mr. Manoli that the Labor Board has no business here. In other words, we do not recognize the basic primary right of an American union to seek to organize the seamen on a foreign-flag ship, the foreign seaman on a foreign-flag ship or to represent them, to intrude into the internal affairs of these ships by bargaining with these men, with the owners of these ships, or to do anything in that direction, and the court below, the New York court, found that the acts of this union were illegal and tortious under state law. And I should like to call the attention of the Courts to the decision of the Appellate Division here which was reversed on the preemption ground but a decision that has been followed in a later case and represents the law of New York as to the illegality of this conduct. We argue that this was tortuous and the Court so held. It declared the Appellate Division in this case that the striking or other interference with the internal management of the crew of the vessel, away from its own port was illegal. And I should like to call the attention of the Court to the fact that the Appellate Division relied upon the decision of this Court in the Southern Steamship case against the Labor Board in 316 U.S., which is indeed a federal decision and it may show that we have here the problem of a federal maritime tort. The state court did not reach that question. It isn't before this Court but Mr. Justice White asked the question and I thought I should describe the holding in the state court that this is indeed illegal. It's just we respectfully request that the judgment of the Court of Appeals be reversed.
Earl Warren: Mr. Ostrin.
H. Howard Ostrin: Mr. Chief Justice, may it please the Court. The Solicitor General in the Empresa case, the United States Court of Appeals for the Second Circuit in the Empresa case, the Appellate Division of the Supreme Court of the United States of the -- Supreme Court of New York State in the Incres case have all held and all agreed that the flag law does not govern this situation by itself. Mr. Cox, of course, has some reservations but Judge Friendly in the Empresa case stated the Board is right in saying, “The scope of its powers in respect of seamen is not to be determined by the simple notion that a Honduran registered ship is a floating piece of Honduran territory. That is a mere fiction -- a figure of speech whose fictitious character was exposed long ago”. Mr. Cox --
Potter Stewart: The final paragraph in that opinion (Inaudible) -- it'll be more helpful to your -- the point you're now making but (Inaudible)
H. Howard Ostrin: Mr. Cox, in his brief to this Court at page 13 stated, “The flag in registry of a vessel are not always decisive”. At page 45 of this brief, he said, “This is not to say that Congress necessarily intended the Act never to be applicable to foreign-flag vessels. There maybe situations in which other considerations may outweigh the law of the flag and may call for the application of the Labor Act to foreign-flag vessels”. And again at page 45 of his brief, he said, “One would have to consider not only the weight of this country's interest but also the possible significance if any of the fact that the doctrine that the law of the flag to control was established long prior to the growth of true flag of convenience shipping”. The Attorney General in his brief to the Board in the West India case said, “It is elementary that the Board has the duty in the first instance of making the determination of whether seamen and ships involved are employees and employers within the Act”. And that the terms employee and employer in the Act draw substance from the policy and purposes of the Act, the circumstances and background of the particular employment relationships, and all the hard facts of industrial life. Citing National Labor Relations Board against E. C. Atkins, 331 United States, and he continued in his brief to say, “Through its past, the Board must not only bring an appreciation of economic realities but is free to take account of the more relevant economic and statutory considerations in determining whether or not, the Act is applicable”. The Appellate Division for the Supreme Court of the State of New York in this case said, “The Liberian nationality of plaintiff and the Liberian registry of the ships should not be conclusive of the character of the shipping involved”. The NLRB has inappropriate cases involving American ships flying foreign flags of convenience ships has so determined and the conclusions are entirely persuasive. So that when the -- this case came to the New York State Court of Appeals, there was no question was that the Board, as Mr. Justice Stewart noted, had already asserted jurisdiction of the foreign-flag cases. Now, I respectfully submit that it has had been suggested, if not perhaps stated by Judge Friendly and suggested by the Solicitor General that Congress did intend the Board to have jurisdiction over certain types of foreign-flag operations. And isn't -- it's not correct to say that in those circumstances, surely the Board has the right and has the primary jurisdiction to determine whether or not in a given situation, it should assert jurisdiction over a foreign-flag operation. I hardly think that Congress when it wrote the Act carved out to all convenient classifications as it was suggested by the Solicitor General. And I respectfully submit that on the strength of his own argument, on the strength of his own observation that the National Labor Relations Board does have primary jurisdiction in this area. Now, if the Court of Appeals was correct and if we are to apply the context test as we submit was promulgated by this Court in the Larson case and I think was necessarily followed by Judge Friendly in the Empresa case. Then I say, that it is certainly arguable that the National Labor Relations Board has jurisdiction from the first instance and that the New York State Court of Appeals was correct. Now, we must remember that the union had filed a charge against the Incres Company which was pending before the National Labor Relations Board. And as we learned from Myers against Bethlehem Steel Company which to my knowledge has never been reversed or modified or distinguished, the Board must first be allowed to exhaust its administrative processes before resort can be had to the courts. And I say that even if a charge had not been filed, then certainly under the arguable subject doctrine, first promulgated in Garmon and later I submit extended in Marine Engineers Beneficial Association against Interlake that this was a case of preemption pure and simple. I know that my adversary refers to the arguable subject doctrine as not being applicable here because they don't reach the threshold question. But surely the Board was required to grapple with the threshold question of commerce in Myers against Bethlehem, and was also required to grapple with the threshold question of what constitutes a labor organization in Interlake. And so we say that this Court need go no further than the preemption doctrine. However, should this Court go or choose to go beyond preemption then I respectfully submit that on the facts of this case which were glossed over by the Solicitor General, that on the facts in this case, the kind of shipping that Incres is engaged in is truly the shipping of the United States. Let us examine the operation of Incres. Its two vessels are registered under the law of Liberia. It has, at least it claims to have a home office in England or in London. What it does in that office, we don't know. Nothing was said about it in the summary hearing before the Supreme Court of the State of New York. It is owned concededly by Italian National. But what are its operations? These two vessels both come to New York City and operate not temporarily, not casually, not transiently, but regularly in the cruise business between New York City and the Caribbean. And in so conducting its business is competing with our own American flag vessels engaged in the same trade, engaged in the same cruise business. And how does it operate? It operates admittedly through a wholly owned New York State subsidiary, the Incres agency, and both utilize the same offices at 39 Broadway. They both have the same letterhead. Mr. Berman Jerry is not only the President of Incres Line, the foreign corporation and the member of its Board of Directors, but he is also the President and/or rather an officer, and a Member of the Board of Directors of the New York State Corporation. And he, together with Mr. Wilson, conduct the day to day operations of these two luxury vessels.
Hugo L. Black: Who owns them?
H. Howard Ostrin: They are owned by Italian nationals, Mr. Justice Black. But they are operated exclusively with the one exception of once a year it takes a trip to Italy.
Potter Stewart: Actually technically it's -- they're owned by Liberian corporation, are they not?
H. Howard Ostrin: Technically by a Liberian corporation.
Potter Stewart: But you --
H. Howard Ostrin: Never have been to Liberian waters -- in Liberian waters, never been to Liberian.
Hugo L. Black: How you -- how do you distinguish your case then from Benz?
H. Howard Ostrin: Whoa! I think it's -- we think it's rather simple to distinguish this case from Benz. Benz as this Court noted, the Marine Corps noted that its only connection with American commerce or with American trade was that it happened transiently or temporarily to be in American waters and that American union happen to have participated in the picketing. I have said --
William O. Douglas: Well, if that's true every foreign ship coming through this country go temporarily here?
H. Howard Ostrin: Well, I can't accept that, Mr. Justice Douglas because concededly even our American owned vessels are here temporarily but that doesn't preclude the NLRB from asserting jurisdiction over them. It's in a very nature of this industry that ships come and go but I think the critical question is, in whose commerce are they engaged in? Now, clearly in Benz this vessel happened to be here almost fortuitously. It was not engaged in the commerce of the United States. It was not engaged in our shipping. It happened to have been here at the time when a dispute erupted. But in this case, in Incres, these vessels make regular, weekly trips.
Hugo L. Black: Well, do you not have to say that the opinion went further than it should with this language if you say to distinguish it. That we are left unconvinced, leaves us convinced that Congress did not fashion the Labor Act. It is our labor dispute between nationals of other countries operating ships under foreign law. The whole background of the Act is concerned with industrial strikes between American employers and employees?
H. Howard Ostrin: I think so, Mr. Justice Black for this reason. The Board has never hesitated to assert jurisdiction of a foreign nationals. And when -- at least we hope to that we are reading Benz correctly when we say that what was intended and we don't presume to --
Hugo L. Black: I mean by this language.
H. Howard Ostrin: Yes. We don't presume to be speaking for Mr. Justice Clark but we feel it was intended was when words, American seamen, American employers were usually mean that seamen engaged in American commerce. For example, the National Maritime Union represents hundreds of aliens, foreign nationals and the other seafaring unions do. The NLRB has never hesitated to assert jurisdiction over foreign employers or foreign employees. As a matter of fact, in the Italian Lines case, the Board asserted jurisdiction over all of the resident alien employees of the Italian Lines who are based here in New York. Well concededly, you can't face a vessel in a stationary place but I submit that the seamen on these transient vessels as they must be should be accorded the same rights and protections under our Act as are the seamen who worked on American flag vessels.
Hugo L. Black: Well, assuming that's true, how do you get around in effect? How do you say -- was this -- this boat is owned by a national of another country?
H. Howard Ostrin: Yes.
Hugo L. Black: Registered under the (Voice Overlap) --
H. Howard Ostrin: Under the laws of Liberia.
Hugo L. Black: Trans -- carries passengers of course --
H. Howard Ostrin: Carry American passengers --
Hugo L. Black: Other people whether many ships (Inaudible) foreign countries carry American passengers, (Voice Overlap) --
H. Howard Ostrin: The distinction is I think is a relatively simple one, Mr. Justice Black. Let's try to analogize with the Queen Mary. The Queen Mary is based and it operates in the commerce of Great Britain. It goes from Great Britain to the United States and back. These vessels, while owned by Italian Nationals and while applying the flag of Liberia don't engage regularly in the commerce of Italy and certainly, it doesn't touch Liberian ports or Liberian waters, and there's a vast difference in the Queen Mary. It is truly the shipping of Great Britain and when it comes to these American ports, this is merely not -- it's nothing more than an incident of the shipping of Great Britain. But I don't think we can say that this is truly the shipping of Italy.
Potter Stewart: But you could say --
H. Howard Ostrin: (Inaudible)
Potter Stewart: Excuse me. You could say on your analogy that this is the shipping of the West Indies because the Queen Mary is just as much in the -- carries I suppose without knowing, it carries as many Americans to England as it does Englishmen to the United States, (Voice Overlap).
H. Howard Ostrin: I couldn't say that. I couldn't say that either Mr. Justice Stewart for this reason. That every voyage originates in New York City. The terminal points in the Caribbean are not always the same. The voyage begins in New York and ends in New York. The vessels are provisioned in New York. All consular communications are directed from the Liberian consulate to the office in New York, not Italy, not Liberia, not Central America, or the Caribbean, but all of the provisioning and everything that is done is done in New York City. And I submit --
Potter Stewart: A great deal of this is done I'm sure over the Queen Mary too, wouldn't it, (Voice Overlap) --
H. Howard Ostrin: Well, except -- except there is this -- and I think it's a real distinction that on the case of the Queen Mary, the vessel is -- first of all, is engaged in the commerce of the flag nation. That's another vast distinction. Secondly, it is truly engaged in the commerce of Great Britain. Now, I don't think that we can say the same for the two Incres vessels which are clearly engaged in the commerce of the United States and are nothing more than floating hotels and I might say, financed with American capital. There is a $4 million mortgage loan advanced by the American -- by the Bank of America covering these two vessels and the interesting thing is that the New York agency guarantees the payment of this loan. So that when the loan was first made, it was signed by a Mr. Barnett as both officer of Incres, and is the foreign corporation, and also as an officer of the New York Incorporated agency. When that loan was extended, it was signed by Mr. Berman Jerry as President of the foreign corporation and also as an officer and director of the New York State Corporation so that not only are these two vessels regularly engaged in the trade of the United States they are financed by American capital. They've worked hand in hand together with a New York Corporation. And as I said before, they received all of their consular communications in their New York office. So that we cannot merely say that there are no connections with American commerce. Now something -- and much has been said on the subject of the internal order. I submit that a distinction must be drawn and has been drawn between discipline on board ship and wages and powers. And just as this has been recognized in the Treaty between the United States and Honduras, so is it recognized but even stronger in the Treaty between the United States and Liberia. And I refer to page 55 of our brief. It begins at page -- the bottom of page 54. Treaty -- this is the -- this is Article X of the Consular Convention between the United States and Liberia. And it says, “A consular officer shall have exclusive jurisdiction over controversies arising out of the internal order of private vessels of this country and shall a law in exercised jurisdiction in cases wherever arising between officers and crews pertaining to the enforcement of discipline on board provided the vessels, person in charge of long doing shall have entered the port within its consular district”. And then the language continues at the bottom of page 55 of our brief and it says, “Such consular officer shall also have jurisdiction also over issues concerning the adjustment of wages and the execution of contracts relating thereto provided however, that such jurisdiction shall not exclude the jurisdiction”, and here's where the language is stronger than in the Honduran Treaty, “shall not exclude the jurisdiction conferred on local authorities under existing or future laws”.
Hugo L. Black: I thought that is very much the same as the closing part of Section 12 --
H. Howard Ostrin: Very much to same.
Hugo L. Black: -- of the Treaty. But that still brings you back doesn't it to the question whether our local law does this?
H. Howard Ostrin: Well, I submit --
Hugo L. Black: The Treaty is (Voice Overlap) is opened I presume but we must interpret our Act to whether to include this jurisdiction?
H. Howard Ostrin: Well, I submit that they must have been thinking of our local and existing laws. Not only for this but if we look at page 369 -- of Section 369 of the Liberian Labor Code which is referred to at page 2 of our supplemental statement we find this very interesting provision. Notwithstanding anything in this chapter, nothing shall prevent a shipowner or an employer from entering into agreements with employees covering the provisions of this chapter as a consequence of collective bargaining or otherwise embodying standards not lower than those required by this chapter. Now I submit that Section 369, if read together with Article X of the Consular Convention, not only contemplates the making of collective bargaining agreements but also contemplates that the local law shall have the right to make those collective bargaining or collective bargaining agreements maybe made under the local law. Now, since the vessels doesn't ever touch Liberian waters are we to expect that the seamen can get any sort of appropriate, realistic representation by let us say, a Liberian based union where they never go there? And similarly, since the vessel only goes to Italy once a year at which time the crew members take their vacations or leave the employee of that vessel, are they to receive the necessary and realistic protection that goes with representation by a labor organization from an Italian based union? Or isn't this more realistic to assume particularly if we are mindful of the language in the Atkins case on the basis of hard economic reality, that the best place and the only place where these seamen can get the proper and appropriate representation is from an American based union when these vessels come into port, as they do every week and when their grievances are processed as they do everyday. Now, Mr. Justice White asked a very pertinent question in my adversary report. This Act work both ways. Now, what about the application of the Labor Act against unions? And Mr. McAllister was quite right -- quite correct when he said that, “We have not sought to invoke the Taft-Hartley Act against this union. But the record factor that in the Navios case which is cited in our brief and which resulted from the picketing of the (Inaudible) in Philadelphia that not only were did -- were secondary boycott charges filed by secondary employers against this very union, International Maritime Workers Union, and not only where those charges processed but those charges were settled and there is presently pending in the courts of Pennsylvania, damage suits under Section 301. Mr. Justice Douglas in his dissent in the Benz case noted quite properly I submit, that there too that employers and foreign employers have utilized the Act against American unions, who are engaged in picketing of foreign-flag vessels.
Speaker: (Inaudible)
H. Howard Ostrin: Pardon?
Speaker: (Inaudible)
H. Howard Ostrin: We say that if they are to be subjected to their obligations under the Act and if these foreign employers or foreign-flag operators through American -- or not their instance can use the Act against them. Then certainly I submit that they are entitled to the protection of the Act. Mr. Rhine in his remarks said that this is a two-way street and what we can do to Honduras, Honduras can do to us. Well, I think this requires us to look into it but for a moment to how the Airlines Stewardess cases were handled. There, this Court held that the Railway Labor Act I think was -- had no application. There the employees were based abroad. In this case, the foreign employees, the Italian nationals are based in the United States. They work out of the United States. They are in the commerce of the United States, why then should not either Liberia or Italy respect our laws and respect our rights to exercise Board jurisdiction in this sensitive area of labor relations? I submit that if this is true -- a two-way street and I believe it is then since they are operating here, certainly, just as we had no jurisdiction over airline stewardess, stewardesses who are operating abroad by the same token neither Liberia nor Italy should exercise jurisdiction in labor relations matters over seamen who work regularly and only in the United States and out of United States ports. I think -- perhaps I'm just sticking my neck out just a little bit on this.
William O. Douglas: What was -- what was that case decided though, it maybe 10 years ago where the -- that this Court held that the Fair Labor Standards Act (Voice Overlap) --
H. Howard Ostrin: That was the Foley case.
William O. Douglas: Foley case.
H. Howard Ostrin: Yes, sir. And that's covered in our brief. I would like to close on this note. I think it is recognized now and certainly has been recognized by the Geneva Convention that there is little more to the law of the flag and the Convention has already adopted -- I see my time is up, if I may --
Earl Warren: You may finish your statement to (Inaudible).
H. Howard Ostrin: Thank you. The Convention has already adopted a rule that there must be a genuine link between the flag nation and the vessel. They recognized that flag law is involved. And now, we have the European common market commenting on the same thing and I think it's merely here set the very guts of this question. The (Inaudible) studies pointed out, I quote, “The extent to which shipowners, charters, etcetera, have recourse to the courts of the flag state of the defendant probably reflects to a greater degree than most aspects of shipping, the true relationship between the ship and her flag where a shipping company has no assets in the flag state and the owners, directors, and managers are not nationals. It is useless to have recourse to the courts in those countries as they cannot enforce their decisions. It is significant that even the owners of vessels under flags of convenience prefer to have their disputes settled in the courts of the maritime countries and this is precisely what they're going to give.” They don't go to Italy to this -- to settle their disputes here. They don't go to Liberia to settle their disputes here but they come here and they utilize our ports.