William H. Rehnquist: We'll hear argument first this morning in Number 88-1150, Missouri v. Kalima Jenkins. Mr. Farr?
H. Bartow Farr, III: Thank you, Mr. Chief Justice. May it please the Court: The issues in this case are important ones regarding the nature and extent of federal judicial power. The Eighth Circuit has held that a federal court, in seeking to remedy a constitutional violation, can give higher authority for state taxes than state law allows, and it further has held that the district court properly exercised that authority in this case. We think that the court of appeals was wrong on both counts. In our view, a federal court can't authorize a government to tax its citizens without its consent, and it certainly can't do so without showing that no other remedy and no other means of financing is available. xx before turning to the merits, I'd like to spend a few minutes on the issue of jurisdiction in this Court. The basic issue seems to us pretty straightforward: did the court of appeals treat our rehearing petition, which sought en banc review, as a petition for rehearing as well as one for en banc? If it did, and several circuits have made an express practice of treating petitions this way, then it seems clear to us that under the rules the time for seeking review in this Court was tolled until after the petition was denied. Now, the Eighth Circuit has said itself how it treated this particular petition. In an order that it entered nunc pro tunc it said that it had denied petitions for rehearing with suggestions for rehearing en banc, and it corrected its earlier order to reflect that fact.
William H. Rehnquist: Mr. Farr, we occasionally run into a situation here where a court of appeals or a state court will enter a judgment nunc pro tunc where the Petitioner has had his time for certiorari expire just so that the person will be able to petition in what they think is a timely manner. This would be somewhat disturbing, I think, if there were any thought that the court of appeals had just kind of given a break to your client.
H. Bartow Farr, III: Well, Your Honor, I don't think there's any reason to treat the order in that particular way for a couple of reasons. First of all, there's certainly nothing on the face of the order or anything that it suggests that it is simply doing that as an accommodation to the parties. Secondly, it is in fact the regular practice of the Eighth Circuit to treat petitions for rehearing en banc as petitions for rehearing with suggestions for rehearing en banc, just as several other circuits do, as I say, express a--
Harry A. Blackmun: A regular practice?
H. Bartow Farr, III: --I'm sorry?
Harry A. Blackmun: A regular practice?
H. Bartow Farr, III: That is what we understand from the clerk's office, that this is a practice that was instituted well before the petition was filed in this case and that the court of appeals does follow, and it is... our understanding is the only reason it was not followed in this case was simply a matter of inadvertence in the clerk's office.
Harry A. Blackmun: So there are no instances in which that was not done?
H. Bartow Farr, III: Your Honor, I can't certainly say that I know of no instances in which it was not done. All I can say is that I do understand that from a period of time beginning, I believe, sometime in 1987, that the court has been following this practice as a general matter and they have--
Sandra Day O'Connor: The Eighth Circuit has no rule to that effect, does it?
H. Bartow Farr, III: --It does not have an express rule to that effect, no.
Sandra Day O'Connor: Was there anything in the petition for rehearing en banc that indicated that it was intended to serve both purposes?
H. Bartow Farr, III: No, Your Honor, there was not. Now, I would say, though, I don't think that in any sense the court of appeals are or should be limited by what is specifically asked for in the petition. As I say, in these other circuits which do have it as an express matter of rule, there is no requirement that, in order for the rule to come into play, you actually have to have said, I would like rehearing from the panel, in the process of applying for rehearing at all. They simply have decided as a matter of internal court business that that would be the more flexible way to deal with these, in fact, I think to eliminate some of the confusion that has arisen out of problems like this one.
Byron R. White: The petition... it used the word rehearing.
H. Bartow Farr, III: I'm sorry?
Byron R. White: It used the word rehearing, at least.
H. Bartow Farr, III: Our particular petition did, yes.
Byron R. White: It didn't say just a suggestion.
H. Bartow Farr, III: That's correct.
Byron R. White: It said rehearing.
H. Bartow Farr, III: It used the word rehearing specifically, that's correct.
William J. Brennan, Jr.: Mr. Farr, did you say our clerk's office treats this as a permissible practice?
H. Bartow Farr, III: Just when... I'm sorry if I wasn't clear. It's the Eighth Circuit's clerk's office that I was talking about.
Speaker: Oh, I see.
H. Bartow Farr, III: What they have informed us, just once again, is that when a petition is filed, even if it is entitled Petition for Rehearing en Banc, it has become the regular practice of the Eighth Circuit to treat that as a petition for rehearing with a suggestion for en banc. And what the court did, therefore, in its order... its amended order... was simply to--
William J. Brennan, Jr.: But didn't you say they treat it as tolling the time when you're--
H. Bartow Farr, III: --Well, if a petition for rehearing is filed, that does toll the time under this Court's rules.
Sandra Day O'Connor: --If it's a petition for rehearing by the panel.
H. Bartow Farr, III: Well, in fact, the court's rules state a petition for rehearing. They don't specifically specify the panel, but I think that is at least--
Sandra Day O'Connor: But that's what it means.
H. Bartow Farr, III: --That is my understanding of what it means--
Sandra Day O'Connor: And the practice of this Court, I assume, is to treat both a suggestion for rehearing, or a petition for rehearing en banc, as not tolling the time?
H. Bartow Farr, III: --Your Honor, my understanding is that the practice in this Court is that if the court of appeals issues an order and says, we have essentially treated this only as a suggestion for a rehearing en banc, this Court has not taken that to toll the time. But again, I would like to go back and say that is not what the Eighth Circuit has done here. The Eighth Circuit has said, we have treated this as a petition for rehearing with a suggestion for rehearing.
Sandra Day O'Connor: Well, but that was by a nunc pro tunc order which perhaps it didn't have any authority to enter. I mean, if there wasn't any jurisdiction they can't come in later and create it by that kind of an order.
H. Bartow Farr, III: Your Honor, I don't know of anything that would prevent a court of appeals, certainly before this Court has ruled on a petition, from saying we have made a mistake in the form of our order, or the order should have read differently from the particular order that was entered and we would like to correct that order and to reflect it. That seems to me fully within the power of the court of appeals.
Sandra Day O'Connor: Yes, but when it comes here, we have to determine whether the petition to us was timely or not.
H. Bartow Farr, III: Well, that's correct, Your Honor. There's no question, this Court has to determine whether to give effect to the order of the Eighth Circuit or not. I'm not saying that... that that is not an issue before the Court. What I am saying, though, is that there is no good reason not to give effect to the order of the Eighth Circuit, because it is reflecting its practice, and what the Eighth Circuit says, at least in its order, was in fact what it did in this case, and I don't think there's any reason to second-guess the Eighth Circuit on that. One other point I would make, at least as some independent evidence to suggest that the Eighth Circuit is not engaging in some sort of device or sham, here, is what happened with the mandate. Under the rules of... the federal Appellate Procedure Rule 35, the mandate would not automatically be stayed simply by a petition or suggestion for rehearing en banc. But there's no question, in this case, that the mandate was automatically stayed. There is no order staying that, but the mandate did not issue until after the petition was denied, so we think that what the court's order says is consistent with, in fact, the way the court showed it treated the petition at the time the petition was filed. Now, turning to the merits, as I have said, the case involves questions first about whether federal courts can ever give authority for higher state taxes and, second, whether they could do so here. And these questions involve, I think, some common issues about just what judicial power is and how it ought to be exercised. I begin with what I think are two relatively uncontroversial propositions. First of all, that the federal courts do have broad remedial powers to correct for constitutional violations. The second point, however, is that that power is subject to limitation, in particular, limitations that are drawn from the Constitution itself. And these limitations can be of different kinds. For example, they can be absolute limitations, ones that completely bar the use of judicial power in a particular circumstance, or they can be more flexible. They can be limitations that allow the courts to exercise power but require the courts to take account of other important institutional interests. Now, for example, in the first category I think a federal court simply could not tell a senator or a congressman to refrain from activities which are protected under the speech and debate clause, and in fact the Court so held in Eastland v. U.S.S. F in 421 U.S. Nor do we think a federal court could tell the President that it had to appoint a particular Cabinet official. Sovereign immunity, where it applies, can be an absolute barrier to relief. But then there are other doctrines which fall under the second category, doctrines like comity and judicial restraint, which... which do require the courts to give weight to other branches of government or, in the case of comity, to state and local governments. It's simply not correct, therefore, as a starting point for this discussion, to say that a federal court can always bring about a particular result, or should always bring about a particular result in a case before it, and indeed, the particular case cited by the Eighth Circuit for the idea that courts generally must have the power to carry out their particular orders is Marbury v. Madison, a case in which this Court held that it did not have the power under Article 3 to give the relief that the litigants sought. Now, what has happened in this particular case is that the courts below have ventured into new ground. We believe for the first time ever, a federal court has authorized a government to assess and levy taxes that its citizens haven't authorized. There seem to be some very good reasons, and I will discuss them, why this power may be absolutely beyond the reach of the federal courts.
Byron R. White: As the case comes to us, then, we... we're dealing with an... an authorization by a court to a local body to levy a tax, rather than... rather than the court itself purporting to, itself to tax?
H. Bartow Farr, III: Your Honor, I have stated it that way because first of all I don't think it makes any difference which of the two it is. I think they're both improper, but just to save quibbling over it, I think what in fact happened is that the district court ordered the school district to levy the tax. The Eighth Circuit then essentially said well, we will authorize, we will change this slightly so that we will authorize the school district to levy the tax. There is no question, however, that if the school district said, now that we've been authorized to levy the tax, we've decided not to levy it, that an order would be forthcoming, at least under the way the courts below have treated it to date. So I think that the authorization is in fact one that is backed up by the order.
Sandra Day O'Connor: Are you talking about the future or the one year, '91-'92? I thought there was some difference in the order for the future and for the one year?
H. Bartow Farr, III: Well, the... there certainly was an order that applied before... to a tax year before the court of appeals got involved, that's correct, Justice O'Connor. After that what they're saying is, we'll follow a... simply a different procedure, where we authorize the district--
Sandra Day O'Connor: Do we not have at issue the levy for '91-'92? That's not--
H. Bartow Farr, III: --I'm sorry?
Sandra Day O'Connor: --The levy for '91-'92 is not before us, then?
H. Bartow Farr, III: Well, I think that the order runs to not just the particular levy that the court had ordered, but indeed, the order to set levies in the future, so I... I would think all of them--
Sandra Day O'Connor: But do we have both questions before us, or do we not?
H. Bartow Farr, III: --I believe that both questions are before you, Justice O'Connor.
Sandra Day O'Connor: And for at least for one year, the... the court below ordered the tax--
H. Bartow Farr, III: That's correct.
Sandra Day O'Connor: --to go into effect--
H. Bartow Farr, III: That's my understanding.
Sandra Day O'Connor: --and for the future authorized the board to levy the increased tax?
H. Bartow Farr, III: That's correct.
John Paul Stevens: Mr. Farr, is the district court following the modifications that the Eighth Circuit put on?
H. Bartow Farr, III: Is the district court following--
Speaker: Yes.
H. Bartow Farr, III: --It will. What the parties by agreement, Your Honor, said for this particular tax year, we would not go through that particular process because the case was pending in this Court, but there's certainly no question, I think, that the district court intends to follow that.
Sandra Day O'Connor: And what alternative did the court below have? How was it going to achieve what it had determined had to be achieved in the absence of the money?
H. Bartow Farr, III: Well, Your Honor, I think the question is... if I understand it... how would it achieve it in the absence of the tax? Now, I think there are two questions there. First of all, if you simply isolate the funding, and as I will say, we don't think that's the correct thing to do, but if you simply isolate the funding, then we think the court should have addressed the question of whether it would have been less intrusive, as we believe it is, to simply put all of the funding responsibility on the defendants jointly. We think, although that obviously does have an effect on the state, that that is a less intrusive use of judicial power.
Sandra Day O'Connor: Well, are they... are the state and the school district jointly and severally liable here?
H. Bartow Farr, III: There is some dispute about that in the lower court, but some of the orders clearly read that way, Your Honor, yes, they do.
Sandra Day O'Connor: Well, let's assume they are jointly and severally liable, what could the court have done, just order the state to pay it all?
H. Bartow Farr, III: Your Honor, we think that would have been a less intrusive form of financing if the question came to that. Now, I want to make clear, our position here is that that is not the only alternative that the court--
Sandra Day O'Connor: But it is one alternative?
H. Bartow Farr, III: --That is one alternative, that's correct. We believe there is another alternative, however; the court, if it was going to increase the burden of the state, should have examined whether it was possible to reach the constitutional goal by means that didn't put such an enormous burden. But... so I think both of those should be considered. But we do think one of them would be the possibility of saying that the state, as the sovereign body, would be responsible for seeing that the financing was obtained.
Anthony M. Kennedy: Well, what... what is there in the record that indicates the court did not consider those less intrusive alternatives?
H. Bartow Farr, III: Well, Your Honor, we believe that there is simply... the record will stand on its own, that there is no adequate discussion by the court of looking at and rejecting the various alternatives that we are talking about. I mean--
Anthony M. Kennedy: Now, when you're talking about alternatives, are you talking about alternatives to the substantive provision of... provisions of his order, or just funding?
H. Bartow Farr, III: --What we are... essentially, what we are talking about is both, Your Honor. Because I don't think that they can be taken, one from the other, at least in our view of how the court ought to exercise power. What we think should happen is that a court, in... in putting together remedies, must be aware, from the beginning, of the particular financing concerns that are being caused by the remedy. And if you look just very briefly at the history here, from the very first order, remedial order, in June of 1985, the court indicated that the school district was going to have difficulty raising really any significant funding to contribute to the remedy. The very next year, however, the court, with only the very briefest conclusory discussion of cost, adopted, at the urging of the school district itself, an experimental remedial program, which went well beyond any remedial program ever ordered in a school desegregation case. Ten months after that, when the school district had come back in, in the meantime, and said, we don't have the funding for that order, the court issued another unprecedented order in a facilities... you know, on facilities programming, to... to impose another hundred of millions of dollars in... in liability on the defendants, again, with only the briefest discussion of the cost. xxx--
Anthony M. Kennedy: So your position is that before this... the district court can either order a tax or order the state to pay for funding, it must make a finding on the record that there are no remedies or alternatives other than the ones that it is adopting that are sufficient to meet the remedial objectives that the court has decreed?
H. Bartow Farr, III: --That's correct, Your Honor. We think that is the process. We're... we're not saying that... that there's a specific result that we're asking for here. Obviously, that is something that the court would be required to determine itself. But in terms of the process, we believe that that is something that, in exercising equitable powers, and... and let me stress again, I'm assuming at the moment we're... that there is an... a power to tax somewhere at the end of this, but before exercising any equitable powers that put these unusual burdens on, the court should engage in just that sort of analysis, and make proper findings. And--
Antonin Scalia: Did the state help out the court by making a lot of suggestions as to how it might have been done differently?
H. Bartow Farr, III: --Your Honor, we did. We made suggestions at... at every stage. Now, the court didn't accept--
Antonin Scalia: Including how the money could be raised? I'm not talking about the... the... the nature of the remedy, I'm talking about how to fund the remedy. Did the state come in and say, why don't you put it all on the state, Your Honor? That... then... then there wouldn't be any problem.
H. Bartow Farr, III: --We did not say that, Your Honor, because--
Antonin Scalia: But you're saying it now.
H. Bartow Farr, III: --What we are saying is that we believe that is an alternative that is preferable to ordering the tax. And that in terms of looking at how judicial power is exercised, that that would be less intrusive than the order to tax, even assuming that the power to tax exists at all. But--
John Paul Stevens: Mr. Franken... I'm sorry, had you finished your answer? I--
H. Bartow Farr, III: --Yes, Your Honor.
Antonin Scalia: --No, I just want to say, it's a little dog in the manger, isn't it? To not propose that below, and then come in and say, he should have laid it all on us.
H. Bartow Farr, III: Well, Your Honor, what we have said, and what we, in fact, are saying here is that we think that should be considered in conjunction with a look at the remedy itself, to determine whether all of the funds are needed. That that is the full exercise of equitable power that we are asking the court to examine. We are not even here suggesting that the proper result is simply to say, let's ignore whether these costs are absolutely necessary or ignore the burdens they may put on a particular defendant, just let's shift the money around. That's not our position in this court, and that was not our position in the courts below.
John Paul Stevens: May I just ask this? If we just confine our attention for a moment to the question we granted cert on, you... you'll recall we limited the grant to the question of power. On that issue, isn't it clear that the position you're advocating is against the best interests of your client?
H. Bartow Farr, III: Your Honor,--
John Paul Stevens: It puzzles me--
H. Bartow Farr, III: --it's only against the best interests of the client if two assumptions are made. First of all, that the court will not consider in exercise... the issue of exercise of power as to how it properly should be determined--
John Paul Stevens: --Well, I'm assuming we just... just answered the question we granted cert to decide... the question of power.
H. Bartow Farr, III: --Well, Your Honor, let me say... and I'll come back to it, that I... that I think that what I'm talking about is fairly encompassed within the question the court did grant, but the other assumption, of course, that has to be made is that the only interest of the state is the financial one. And I think that's not true. That there is a question here both of the sort of sovereignty of the state and its state laws, and essentially the commission that the state has from its people. And I think that is the thing that is so troubling about an order that involves the power to tax is that, in this particular case, what it says to the state is... or says to the school district... you have authority now from the court itself to levy a tax that the citizens have not given you authority to levy... in fact, it specifically denied you the authority to levy. And the idea of taxation without representation, which is of course a catchy slogan, but I think it's something more than that, too. I think it's rooted in the idea that the power to take property from citizens... the government's power to take that property is... is exercised through elected representatives and not through courts, unless there is individual adjudications, which of course we don't have here. So, the... that is the principle that the state does believe is one that is... is worth preserving and that its laws simply shouldn't be set aside because the court feels that that would be a more convenient way of achieving its goal.
Sandra Day O'Connor: Well, Mr. Farr, your argument makes it sound like what you're saying is there's no power to tax because it's too expensive... this program is too expensive.
H. Bartow Farr, III: Your Honor, the... the--
Sandra Day O'Connor: Is that what you're urging?
H. Bartow Farr, III: --Well, I've... I've jumped around, and let me make clear that there are two different points that I'm urging. The first is that there is no power to tax, period. That federal courts simply don't have the power to say to a legislative body or a school district, whatever, the people have not given you this authority, but I, as a federal judge... [inaudible]--
Sandra Day O'Connor: Even if there is no other alternative to remedy--
H. Bartow Farr, III: --That ultimately would--
Sandra Day O'Connor: --desegregation order?
H. Bartow Farr, III: --That ultimately would be the burden of our position, although, I would point out, of course, that in desegregation litigation, that has not proved generally necessary. The courts have been able to find remedies that will work and be effective without a tax. But logically that's... that is the ultimate extent. But that is of course the logical point that one gets to any time one puts any limits on judicial power. One can always look at a... the particular exercise of power and say, if there weren't limits on these powers, we could quash the subpoena that the House subcommittee has issued, for example, which may infringe somebody's rights. That is... so that is why you only obviously limit judicial power when the institutional considerations are of extreme importance. But we think they are of extreme importance in this particular case. So that's the first point that we are making, that that power simply does not exist in federal courts, even, as you posit, in the most extreme case. The second question, though, the second point we are putting, is that as an exercise of power, of equity and comity, that this is not the extreme case. If anything, it's the extreme case the other way, that the court essentially put itself into this whole and then said, having gotten into it, that there were only two ways to extricate itself, the tax and perhaps levying it all on the state. And we don't believe that that process should be looked at once the hole is dug. Now I would say one... one more word about power. I have made the point, I think, that the power, in and of itself, is an extraordinary power, but I think it can't just be viewed in isolation. I think the other thing that this claim of power does is it concentrates, in the federal court, a range of powers that are really quite extraordinary, beginning with the power to declare what the Constitution means... the power, of course, that everybody concedes... to the power to issue orders for particular programs, orders than require state and local officials or federal officials, in some cases, to comply and implement those programs, and ultimately, now, the ability of the courts to try to go out and get the citizens to support these programs beyond the power that they have already given to their elected representatives. That is a concentration, I believe, that is well beyond the idea of judicial power that is embodied in article three, which anticipated that courts obviously would have important power, but that power would be distributed, not just among the courts themselves, but among and... and between other branches of government.
Byron R. White: Well, Mr. Farr, let's assume that the school board or the local officials could have levied this xx under state law, that they had the power to do it. Could the court order them to enact a certain tax?
H. Bartow Farr, III: That... I am not sure of the answer to that question, Justice White.
Speaker: Well--
H. Bartow Farr, III: I think that it involves some of the... the precise concerns that I'm talking about. It's still ultimately--
Byron R. White: --Well, I know, but part of your argument must be... you say it's a job of the elected representatives to pass taxes, pass tax laws. And so I... I would think from your argument you would answer the question, no--
H. Bartow Farr, III: --Well--
Byron R. White: --you cannot order the... the authorities to pass a tax, even if you... even if... even if they have the power to do it.
H. Bartow Farr, III: --I think that is basically the position that I would take.
Byron R. White: Well, I thought so.
H. Bartow Farr, III: Let me at least explain what I see as the difference between the two. At least in that case, the citizens have authorized the legislature, or the school district, to impose those taxes on them. They have gone that far. Now I think the place where I have trouble with that exercise of judicial power is I think that people did that on the expectation that the legislature would, in fact, do it in its own judgment.
Byron R. White: Well, would you say that... would you say that the... the federal court would be out of bounds if it said, well, we realize that there is this limitation on the local authority's taxing power, but we're going to declare that unconstitutional because it's a... it inhibits a... what is a absolutely necessary remedy? We need some money for this remedy. So, that we are going to disregard that limitation on the grounds that it's unconstitutional.
H. Bartow Farr, III: I... I would think that's beyond the power of the court. If... if it is unconstitutional--
Byron R. White: Why?
H. Bartow Farr, III: --If it is unconstitutional in and of itself, of course, if--
Byron R. White: Well, what if it... what if the... what if the state just had a... just had a rule on the books, you... you shall have no power ever to comply with a court order? Can't you declare that unconstitutional?
H. Bartow Farr, III: --I think you can declare that unconstitutional.
Byron R. White: Well, here's a limitation that absolutel inhibits a proper remedy for a constitutional violation.
H. Bartow Farr, III: But I don't think... Justice White, I don't think you can simply lump all limitations together. That's the thing. I think you have to look at the effect of what the court is doing. Virtually any order could be characterized in some way as simply striking down a particular limiting power. If that was true, then... then judicial power would essentially be unlimited. I think you have to look at what the effect of the order is. And if the effect of the order is to say, we're striking down a limitation on the power of the representatives of the people to obtain money from the people, that, in fact, is a tax levied under the authority of the courts. Whether it's characterized that way or not, that's what it is. And that's what we think the courts can't do. Your Honor, if I could, I'd save the remainder of my time for rebuttal.
William H. Rehnquist: Very well, Mr. Farr. Mr. Snyder, we'll hear now from you.
Allen R. Snyder: Mr. Chief Justice, and may it please the Court: If this Court finds that it has jurisdiction in this case, and we believe there is a very serious question on that which I would like to address first, but the fundamental issue on the merits of the case is whether the court below properly exercised its power, its discretion and, we believe, its responsibility to ensure the implementation and the funding of the remedy determined by the court to be necessary to correct a clearly proven constitutional violation. Now, turning first to the jurisdictional issue, we think that the clerk of this Court was correct in his initial determination that the 90-day statutory time limit for filing petitions for writ of certiorari had run before any petition was filed and, thus, that there was a jurisdictional bar from this Court considering the case. The state now relies basically on the nunc pro tunc order that was issued just a very few days after this clerk's... this Court's clerk's determination, where the Eighth Circuit declared that it had denied petitions for rehearing and petitions for rehearing en banc. This Court, in the Credit Company v. Arkansas Central Railway case, stated clearly that jurisdiction in this Court cannot be created by an order of a lower court or by a nunc pro tunc determination. The fact is, the very plain fact is that the state did not file a petition for rehearing below.
John Paul Stevens: May I ask right there, supposing at the time the Eighth Circuit initially denied the petition for rehearing en banc, it had said the petition for rehearing and the suggestion for rehearing en banc are both denied, basically what they said in the nunc [inaudible]. Say they had said that the first time. What would your view of the case be then?
Allen R. Snyder: Well, it obviously would be a more difficult case for us. But I would suggest that the language of this Court's Rule 20.4 makes this jurisdictional question turn not on what a lower court characterizes but, rather, the language of the rule says that the timely filing of a petition for rehearing tolls the... the time for review. If the state had filed a timely petition for rehearing regardless of how it was characterized, we would concede that the time... the time would be tolled even... even regardless of the phrasing of the Eighth Circuit's rule.
Antonin Scalia: But surely it's up to the Eighth Circuit what it takes before the Eighth Circuit to file a petition for rehearing.
Allen R. Snyder: Justice Scalia--
Antonin Scalia: Could the Eighth Circuit if it wished... indeed, haven't some other circuits done so explicitly, said that when you file a petition for rehearing en banc, it shall be deemed to be a petition for rehearing with suggestion for rehearing en banc?
Allen R. Snyder: --Justice Scalia, we agree that a circuit court can do that and is certainly free to treat the petitions in any way it wishes. First of all, I think there is a serious question whether in that way it can extend this Court's jurisdiction when the rule of this Court talks in terms of whether the parties have filed a timely petition for rehearing. But we really do not need to reach that question here, because, first of all, the Eighth Circuit did not... does not have such a rule, as other circuits do. Second of all, the... the Eighth Circuit's opinion, even its nunc pro tunc opinion, contrary to the suggestion of counsel, the nunc pro tunc opinion did not say we have elected to treat this petition as if it were a petition for rehearing by the panel. It simply said we have in front of us a petition for rehearing. We have copied verbatim at page 489 of the joint appendix the entire petition for rehearing en banc that was filed by the state. I would respectfully suggest that that is not only entitled petition for rehearing en banc but, as counsel has essentially acknowledged this morning, it was in... in form and in substance in every other way a petition for rehearing en banc which is actually the title used by the Eighth Circuit in its rules to describe an en banc petition. Some--
Antonin Scalia: Mr. Snyder--
Allen R. Snyder: --circuits refer to them as suggestions.
Antonin Scalia: --Mr. Snyder, it's not only counsel who says that that's wrong but it's the Eighth Circuit. You're... you're really... you're really saying that despite the presence of some evidence to the contrary... and I would think the failure of the Eighth Circuit to issue the mandate immediately is... is substantial evidence that it didn't make up this view of the matter afterwards. Despite that evidence, we should say the Eighth Circuit was essentially lying when it said this is how we... how we regarded this thing, now isn't that?
Allen R. Snyder: Well--
Antonin Scalia: You know, I... I'm prepared to do that where... where there is a lot of evidence to that effect, but-- [Laughter]
Allen R. Snyder: --Justice Scalia, I do not suggest that; however, I do suggest that, first of all, the failure of the mandate to issue does not, in our view, indicate that the court was treating this as a petition for rehearing. In fact, we cited the United States v. Samuels case as an example of a case where the Eighth Circuit has held up a mandate because a judge was considering en banc treatment. And so the circuit courts have the power to hold the mandate whether or not a rehearing petition has been filed.
Anthony M. Kennedy: Would the circuit court have had the authority during the pendency of this petition to amend the panel opinion? Suppose three judges of the panel had... had thought it appropriate or... or prudent to amend their opinion? Could they have done it?
Allen R. Snyder: Justice Kennedy, yes. I think they can amend the panel opinion sua sponte or based on a petition, and a new panel opinion would be a new judgment. And under the language of the statute and of this Court's rules, a new judgment provides 90 days for a new cert petition. However, if a party is relying on the timely filing of a petition for rehearing to toll the time and the judgment hasn't been changed, there's no new judgment, we submit that the issue is whether a petition for rehearing was filed; and just as in the Credit Company v. Arkansas Central Railway case, I believe the fact is that the Eighth Circuit's opinion does not accurately describe what's at page 489 of the joint appendix. And I think that the state has in essence acknowledged that they did not file what they intended to be a petition for rehearing by the panel. Now the question of whether the Eighth Circuit has a pattern and a practice and a regular custom of so treating it that might have lulled a party into filing something different or thinking as if there were a local rule that this would be treated differently, the state in its main brief cited as its principal support for the proposition that the Eighth Circuit has a regular practice the McDonnell Douglas case and said that that and other cases suggest this is how the Eighth Circuit treats all of these matters. We responded in our brief by citing two published decisions that we found, and most of these rulings on en banc petitions, I believe, are unpublished. But we found two published decisions from 1985 where en banc petitions were denied and were labeled en banc petitions without any suggestion that they were treated or otherwise denominated as panel rehearing decisions. In its reply brief, the state has come back in footnote 2 and says, 1985. Well, there are two problems, we would submit, with this argument. First is that the McDonnell Douglas case on which they initially relied was a 1973 decision, and so we are surprised now to hear that the practice is allegedly more recent. But more fundamentally, we do not believe that this Court's jurisdiction can or should rest on what counsel may or may not be advised by unknown persons and unknown details. There is nothing in the Eighth Circuit's rules or its internal operating procedures or any of its opinions that suggest that this is a standard practice. We, frankly, do not know whether this is a practice that is more commonly used than not, or less commonly. We just don't know. And I believe that this Court should not have a policy of allowing jurisdiction by anecdote. I think the jurisdictional rules should be clearly written and should be interpreted and implemented in a way that the parties and the lower courts can know what they mean and can be governed accordingly.
William H. Rehnquist: You say, then, that unless there's a rule like there is in some other circuits, a practice uniformly followed by the circuit but not confided to rule, is not sufficient?
Allen R. Snyder: I believe it would not be sufficient, Mr. Chief Justice, particularly because this Court I think is not in a good position to engage in evidentiary hearings or proceedings to try to determine what the practices might be. The best evidence of such a practice if a circuit court wishes to adopt it is to put it in the rules, which would allow the parties to know when their time was running and when it wasn't; and not only the parties filing the petition but, hopefully, the parties who might be opposing the petition would like to know when the case is final. Now turning, if I may, to the... the merits of the argument here, the state's position comes down basically to the bald suggestion that in at least some cases the federal courts simply lack the power to ensure that constitutionally-required remedies are implemented and funded. We believe that that position is without any precedent in this Court's jurisprudence and is dangerously wrong. Counsel referred to Marbury v. Madison, which was in fact cited below, and one can go back as far as Marbury v. Madison and find where Chief Justice Marshall, at page 163 of that decision, said, and I quote, "The government of the United States has been emphatically termed a government of laws and not of men. " "It would cease to deserve this high accolation if the laws failed to furnish a remedy for a clearly vested... for the violation of a clearly vested legal right. " I think since Marbury v. Madison, it's been understood that the federal courts, once they accept jurisdiction of a case and have the power to hear the case and find a violation of the Constitution, have the power and have the duty to use their equitable discretion to find and to be sure that it is implemented, a remedy for that violation.
Antonin Scalia: Why use the Constitution, Mr. Snyder? I assume it's just as bad for the state to violate a federal law. Indeed, when a state violates a federal law it's violating the Constitution, the Supremacy Clause. So I... I suppose you would say the same thing for... for any violation of a law.
Allen R. Snyder: Justice Scalia, I think... I think that is the... the implication of my position. I think the argument is stronger in the context of the kind of violation we have here, but I agree under the Supremacy Clause there should be a remedy for any violation of federal law. We would acknowledge that in exercising the lower court's discretion and power, they should look to questions and issues of comity and of federalism and equitable principles. We agree that those should be considered in fashioning the appropriate remedies.
Antonin Scalia: Suppose, Mr. Snyder, there... there are a large number of people who are violating the federal law, a really large number, and the courts' marshals can't possibly stop the violation, and the court says, you know, what I really need is an army and, you know, it tells the executive, the federal executive, this situation is out of control, they're violating federal law, and the executive, for... for whatever reason, declines to use federal troops. Now, do you think the Court has the power in... in that situation, since it must stop the violation, to requisition the state national guard and direct it in... in... in battle?
Allen R. Snyder: No. I think, Justice Scalia, that would be an inappropriate use of the Court's discretion--
Antonin Scalia: I'm not talking about inappropriate. I'm talking... never mind discretion. Does it have the power?
Allen R. Snyder: --I think as a matter of pure power--
Antonin Scalia: It does.
Allen R. Snyder: --the Court is required to find the appropriate constitutional remedy. Now there may be a... there may be a possibility such as the one you posit, Justice Scalia, where a particular remedy or maybe even the only remedy would be unworkable or beyond any realistic limits. In Lemon v. Kurtzman, which the state cites, and in some of the cases we cite--
Antonin Scalia: No, I'm just talking about power. I'm just talking about power. Let's assume that it's practicable. Does the Court have the power to do--
Allen R. Snyder: --If it is... yes, if it is practicable. Now I do think the questions of practicability, the courts... this Court and... and the courts low... lower courts, have talked about equitable discretion being limited by principles of workability, practicability, feasibility, and I submit that the hypothetical that's been suggested of raising an army is not a feasible, practical, workable solution. But I believe the courts have the power to find, if it is at all possible, a feasible and practical remedy for constitutional--
Anthony M. Kennedy: --Well... well, notice that... that in the Little Rock incident, the President called out the troops, and I assume the President and Congress are here to assist the... this federal court if it finds that Missouri is in violation of the Constitution and the federal court cannot correct it.
Allen R. Snyder: --I would hope that the... the legislative and executive branches would cooperate with--
Anthony M. Kennedy: Well, so then it's not... so then it's not necessarily a case where there's no other remedy.
Allen R. Snyder: --Well, in this case, turning to whether here there was any other remedy, it is absolutely true that in the courts below there were two possible remedies... two possible approaches to funding this remedy that were considered. The state has acknowledged that. The lower courts refer to it. One possibility was to enjoin the provisions of the state law that otherwise prevented the school board from exercising the taxing power that it has. That was one option, and that's what the Eighth Circuit did. It did not directly levy a tax of its own. It enjoined a state law which prevented the local government from acting to... to meet the constitutional duty.
Sandra Day O'Connor: Well, it certainly did more than that, at least for one year, did it not?
Allen R. Snyder: The district court--
Sandra Day O'Connor: The district court did more than that.
Allen R. Snyder: --Yes, I agree that the district court, the way it phrased its order, it phrased it as implementing the tax order. The Eighth Circuit on review--
Sandra Day O'Connor: Has the district court ever implemented that order to increase the property tax levy to $4?
Allen R. Snyder: --The district court order was initially implemented prior to the Eighth Circuit's ruling. The Eighth Circuit on review... and it's the Eighth Circuit's judgment, I would submit, that's here before this court for review... the Eighth Circuit modified the district court's ruling to the extent that it said that the appropriate way to deal with this problem rather than directly calling for the tax was to enjoin the state law that prevented the board from doing it. It is that order--
Sandra Day O'Connor: Well, for the future. I thought it left in place at least one or two years of levy.
Allen R. Snyder: --The levy had been in place prior to the Eighth Circuit's ruling, and the Eighth Circuit did not try to apply its ruling retroactively, keeping in mind that the practical effect of the Eighth Circuit's ruling was to... likely still to allow for a tax.
Sandra Day O'Connor: So, the Eighth Circuit did not disapprove what had happened before. It left that in place, which included a levy at the rate of $4?
Allen R. Snyder: Yes, it did leave the levy in place that--
Byron R. White: Excuse me, I though that they affirmed that. They say we affirm the actions that the district court has taken to this point.
Allen R. Snyder: --Yes, Justice White.
Byron R. White: And then modified the procedure for the future.
Allen R. Snyder: For the future as of the day of that opinion.
Byron R. White: So, they affirmed, expressly affirmed, that additional levy for those years.
Allen R. Snyder: They affirmed the levy that had been in place up to the date of the Court of Appeals opinion--
Speaker: Yes.
Allen R. Snyder: --which had been about one year. And then--
Sandra Day O'Connor: All right. And as to that could the district court instead have ordered the state to pay all the costs?
Allen R. Snyder: --That is the second option to which I was referring. It was considered by the lower court, and we believe it is inappropriate at this stage for the state to be totally switching its position on that issue because in the district court when a motion was filed that raised the question of which of these options should be pursued, the state... and we've included this in the joint appendix in toto... the state filed pleadings that said that they recognized that under some circumstances the lower courts might have the authority to order a school district to implement a tax, or to be allowed to implement a tax, and that the state wasn't really taking a position in the district court on whether this was an appropriate case.
Sandra Day O'Connor: Well, the state's change of position, then and now, is not a very attractive posture, certainly, but that doesn't answer the legal question that we have to answer. Now, should the district court have used this other alternative and ordered the state to pick up the entire cost and thereby not have had to impose an actual tax levy at the local level--
Allen R. Snyder: No--
Sandra Day O'Connor: --that violated Missouri law?
Allen R. Snyder: --No, Justice O'Connor. In the circumstances here, we think the district court acted properly because we think that the principles of comity and federalism and equitable discretion require the district judge to look at the circumstances before him which included the positions of the parties. Comity and federalism call for the courts... they are not bars to the power of a court. They are practical and equitable considerations that a court should weigh, and they call upon the court particularly to look at the interests of the governmental defendants here--
Sandra Day O'Connor: But do you see no difference in levying an actual tax than to finding other means of paying the costs of such an order?
Allen R. Snyder: --Oh, I certainly agree, Justice O'Connor, there's a difference, and if the parties positions had been different below, I think the equitable balance and the comity issues might have come out differently. The fact is that the elected school board felt that it was appropriate for the citizens of Kansas City to pay a portion of the remedy here. The state--
William H. Rehnquist: But... but... am I not right, Mr. Snyder, that state law did not authorize them to levy this sort of a tax?
Allen R. Snyder: --That's basically correct, Mr. Chief Justice. It did authorize exactly this kind of a tax except that it had a limitation that it required a vote of the citizens of the district after the vote by the representatives.
William H. Rehnquist: Well, that's a condition to the exercise of--
Allen R. Snyder: Absolutely.
William H. Rehnquist: --of the taxing power.
Allen R. Snyder: Absolutely.
William H. Rehnquist: And the citizens-- --Just a minute. Is there any suggestion that this particular limitation was enacted to frustrate desegregation?
Allen R. Snyder: No, Mr. Chief Justice. There is nothing in the record to suggest that. We do believe, however, that cases like North Carolina v. Swann and other cases from this court suggest that if a state law has the effect of preventing the implementation of a constitutionally required remedy, to that extent, the state law can be overridden.
William H. Rehnquist: But if you have a state law saying that students in school shall be segregated by race, it's one thing to override that sort of a law by saying that is... that is itself unconstitutional. But it seems to me it's another thing to say that students shall not be segregated by race. This school district at one time did segregate them by race. We're now trying to find a remedy for that and get out into the area of how... how municipal corporations raise money.
Allen R. Snyder: Well, Mr. Chief Justice, I do not believe this court's cases limit the statutes that can be stricken where they interfere with the implementation of a remedy to those that are an independent constitutional violation, and I would cite, for example, Washington versus Fishing Vessel Association which we cited in our brief, where perfectly neutral state law provisions had the effect in that case of preventing the implementation of the remedy the court had already ordered was the right remedy. And this court said that even seemingly neutral state laws, if they have the practical effect of stopping implementation of a constitutionally required remedy, can be overridden. In this case, the state in the district court said that the one issue it cared the most about with regard to the funding was that the state felt it was wholly inappropriate for the state to pay any more money than it had already been ordered to pay, and it objected to joint and several liability or any other basis for the state to pay part of the costs that otherwise the district would have to bear. The district court, exercising his discretion in looking at principles of comity, saw that both governmental defendants, in essence, were agreed in saying that an order that allowed the school district to pay its share of the remedy allowed the citizens of the district to contribute when it had been found guilty of a constitutional violation as well, that that was the most appropriate remedy where both... all the parties agreed that that was preferable to what the state now is saying should have been done below.
Anthony M. Kennedy: Well, counsel, in... in any event, I take it you concede that this is a highly intrusive remedy.
Allen R. Snyder: Yes.
Anthony M. Kennedy: This is a drastic remedy.
Allen R. Snyder: It is an unusual remedy, Justice.
Anthony M. Kennedy: All right. Wouldn't it make sense for this court to say that before such a remedy can be adopted, the district court must make an explicit finding that the remedy it seeks to fund in this way is the most reasonable and the most feasible, and perhaps the only essential way to implement the court's ultimate decree?
Allen R. Snyder: Yes, I think that's a reasonable requirement, and it was met then.
Speaker: And that was not done here.
Allen R. Snyder: It was met here. I think if you read the opinions below, each of the remedial orders made explicit findings that this remedial decree was, "necessary" to cure the specific constitutional violations that were found, citing this court's Milliken versus Bradley, the need to tailor the remedy to the violation.
Anthony M. Kennedy: But we, of course, don't have question one on the cert petition before us, and I'm concerned that that puts the question here in a very abstract form.
Allen R. Snyder: Well, it does. It does, I believe, place us in a position where we have a final determination that the lower courts appropriately tailored this remedy to the violations found, and we think they did. What... they cited the appropriate legal standards, Milliken versus Bradley and other cases, in each of those cases.
Anthony M. Kennedy: But that's just not borne out by the record. It doesn't seem to me that there is an explicit finding that the substantial funding requirements here are essential to implementing the court's ultimate objective.
Allen R. Snyder: Well, the word that was used repeatedly by the lower court is not essential. I believe the word was necessary, but I think it means basically the same thing. And the lower court, starting in 1985, repeatedly recognized that it would be expensive to fund the remedy that was needed for the very serious constitutional violations here.
Anthony M. Kennedy: Well, of course, in McCulloch versus Maryland, we said necessary means appropriate.
Allen R. Snyder: Well, I think in the context that the district court used the word necessary, after citing Milliken versus Bradley, and finding that each of the provisions here was necessary to cure the constitutional violations, I believe the context suggests he was trying essentially to say that he found it essential.
Antonin Scalia: Mr. Snyder, do we... we... I mean, do we really... can we really believe that from this record? I mean... it... it is the case that half of the... half of the elementary schools are magnet schools, and every single one of the secondary and high schools have been made magnet schools?
Allen R. Snyder: Yes, sir.
Antonin Scalia: One of them bought a farm so that it could specialize in farming. That... that... that was in the order. A portion of the order rejected the state's claim that you didn't need so much money for painting and for repairing carpets because you could just paint the portions of the schools that needed repainting, and the court said no, that would... that would not give a... an adequate visual attractiveness that you... you have to replace all of the carpeting and paint the entire building. And you think that all of this on its face represents a determination that this was essential to... to cure the constitutional violation, so essential that we're going to raise taxes when the people don't vote for it?
Allen R. Snyder: I do, and I recognize that this court, not having in front of it the full record... after cert was denied, we've not transmitted all as part of the record here everything that went into those remedial determinations, and we have not briefed that issue, but I do believe that the record shows that the constitutional violations here were particularly pernicious and, in fact, resulted in the Kansas City school district becoming a 74 percent minority district because of the actions of the state and at an earlier stage the, the local officials, and that the only way to reverse what had occurred on this record was to try to make the... to bring the quality of the schools up to where they would have been but for the violation and to try to attract back into the schools the people who were driven out of them.
Antonin Scalia: Is it necessary to gold plate every school in order to achieve that result? If there is no way to get people to come back into the Kansas City schools except to make them all golden, the court could lay a tax for that.
Allen R. Snyder: Well, obviously I find that hypothetical difficult to accept, but accepting that hypothetical--
Antonin Scalia: Well, I... you know--
Allen R. Snyder: --I would say, Justice Scalia, that the principle that I suggested earlier of feasibility and practicability and workability should be the limit on the court's discretion. It would not, I submit, be feasible or practicable to gold plate all the schools.
Speaker: --All right.
Allen R. Snyder: However, we think it is feasible to do what the court below did, which is to demand that these schools be brought up to the level comparable to other schools in the area so as to attract back in the students who left when the facilities were, "literally rotting" as was found below. There were holes in the roofs. The buildings were rotting down, and water was pouring in, because the local and state authorities had stopped funding the schools. This is really--
Anthony M. Kennedy: But in the abstract way in which the question was presented here, none of those arguments are properly before us.
Allen R. Snyder: --I think that's correct, Justice Kennedy. I was trying to respond to the question of really whether the state is right in suggesting that you have to look at the scope of the remedy together with the funding order. I think that it is appropriate at this stage of the proceeding to accept the remedy which was found to be necessary, following the right precedents--
Anthony M. Kennedy: Even if that presents an abstract question divorced from the concrete realities of this case?
Allen R. Snyder: --Well, I think this court frequently will consider abstract or legal questions and will leave the factual determinations to the lower courts. I assume, perhaps presumptuously, but I assume when this court denied cert on question one, it felt that there was not a legal question worthy of review on question one, but felt that the issue raised by question two raised a legal question for review. I think they can be separated. In conclusion, we really come back to the proposition with which we started, and that is that violations of constitutional rights we believe require the federal courts to use their discretion looking at principles of comity and federalism, looking at the practical circumstances of--
Byron R. White: Well, Mr. Snyder, do you see any difference between... on... legally between what the district court did and what the court of appeals said should be done in the future?
Allen R. Snyder: --A small difference, Justice White. I think the practical--
Byron R. White: But both of them... both of them are proper?
Allen R. Snyder: --I think that the... the district court's decision is not quite as easy to articulate the defense of as the Eighth Circuit decision. I think they're both proper.
Byron R. White: Does that... is that issue before us?
Allen R. Snyder: I do not believe it is, Justice White.
Byron R. White: You mean the money's already been collected, or what?
Allen R. Snyder: Well, what I mean to say is, I think it's not before you because the Eighth Circuit in modifying the judgment... I think it's that determination that this court should review and money was collected for the first year--
Byron R. White: But it affirmed... it affirmed what the district court did for a couple of years.
Allen R. Snyder: --Well, I think it was one year.
Byron R. White: Is that issue before us?
Allen R. Snyder: I think technically it is before you, but because the Eighth Circuit modified the judgment and really recharacterized what was done for the future, I don't believe that there's any violation.
Speaker: Well, has the... has that... has what the district court did... did the levy go into effect?
Allen R. Snyder: Yes, sir.
Speaker: And was the money collected?
Allen R. Snyder: Yes, sir, it was although there was some that was paid under protest that remains awaiting this court's decision.
William H. Rehnquist: Thank you, Mr. Snyder.
William H. Rehnquist: Thank you, Mr. Snyder. Mr. Farr, you have three minutes remaining.
H. Bartow Farr, III: Thank you, Mr. Chief Justice. Just a couple of brief points. Returning momentarily to the jurisdictional question, the Respondents take the position I think, as I understand it now, that what this Court ought to do is review the particular papers that were filed in the Court of Appeals, rather than taking the Court of Appeal's order at face value. We don't think that is in fact a rule that is likely to lead to a great deal of certainty and we think that the Court of Appeals is entitled to treat the papers before it as a rehearing petition if it wishes to do so. As we have pointed out several times, several circuits do. The difference between a case like this and--
Antonin Scalia: Well, I'm... you know, I'm not sure. Where you want certainty is ex ante. You want the person who files this petition to know whether the consideration of it is going to toll his time to appeal and to tell him that he's only going to know that when the Court comes out with its decision that says well, we've treated this as this, or we've treated it as the other, that doesn't help, does it?
H. Bartow Farr, III: --But Justice Scalia, there's no such absolute certainty in any event. I mean, because everybody agrees, I believe that the Court can treat it as a petition for rehearing if it wants. It could grant it as a petition for rehearing, it could modify its opinion, all sorts of things could go on, and I think to allow the Courts that sort of flexibility as part of their own operating procedures simply makes sense even though there might be some less certainty on the front end as to what the particular litigant expects. The difference between this and the Credit Company case I think is that a Court of Appeals can and should have the power to do that. What a Court of Appeals can't do is, it can't treat June 15th as if it were June 1st. That's just something that's wholly outside the ambit of the power of a Court of Appeals and therefore that purely... that effort to convey jurisdiction by taking an action like that is literally outside its power. The second point, briefly, on the question of the position below, just so it is understood, the state's position has always been opposed to a tax. The school district, despite what it is saying right now, has at various times throughout the litigation said that the school district should bear none of the cost. We have said we as a general principle are opposed to that. We think the school district should bear some of the cost, and we think that the Court should devise remedies that allows both of those principles to be carried out, where the state would bear a burden, the school district would bear a burden, and constitutional compliance would be achieved with both of them doing that. The problem, as we have said, is that the Court simply ignored those considerations in developing the particular remedy and essentially made the kind of order that it led to, or the alternative of the state bearing all of it, a foregone conclusion. Finally, I'd just like to say... sorry?
William H. Rehnquist: Thank you, Mr. Farr. The case is submitted.


Earl Warren: Number 244, Dairy Queen, Incorporated, Petitioner, versus Honorable Harold K. Wood, et al. Mr. Egnal.
Michael H. Egnal: Mr. Chief Justice and may it please the Court. This case involves the right to a trial by jury in a civil action. The District Court judge denied the demand for a jury trial and his reasons briefly were that upon a consideration of the issues raised in the complaint and answer, he concluded that the action was purely equitable although he found that this complaint included a demand for the payment of $60,000, allegedly do by reason of the breach of contract of a facts or rather scan. The petitioner in this case held a franchise for the use of the trademark, Dairy Queen, in the State of Pennsylvania. And this agreement was made in October of 1949. The agreement provided that the total consideration for the payment of this franchise was $150,000, which a thousand was paid at the execution of the agreement and the balance was to be paid from the proceeds, 50% of the proceeds of the sale of sub-franchises provided that beginning with October of 1955, there was to be paid not less than $18,625 per annum. This payment was made regularly until October of 1954, and it was not made at that time. But the parties in January of 1955 reached a normal agreement that thereafter, the obligation of the petitioner was to merely pay 50% of the sales of sub-franchises and there would no longer be any need to meet this annual minimum payment. This continued for six years thereafter. The parties were harmonious until August of 1960 when the plaintiff in the action below, took the position that there was now due and owing the entire balance which was some $60,000 payable under the contract and the contention of the petitioner raised that was a repudiation of the oral agreement which had modified the original written agreement and which had been implemented for some six years.
John M. Harlan II: You're the respondent or the defendant, original defendant (Voice Overlap)
Michael H. Egnal: Yes sir. That is correct sir.
John M. Harlan II: And your defense was this alleged oral agreement?
Michael H. Egnal: Yes sir, made in January of 1955, and as I say, implemented for the next six years. Now, when the complaint was filed, it -- or I'm ahead of myself. In August of 1960, the position of the plaintiff below changed and it then demanded the payment of the balance to one of the contract which was indicated by a letter. That's Exhibit C attached to the complaint. And in that letter, it expressly recited that unless you pay the balance due and owing under the contract, we will consider that a material breach and we will cancel the franchise. That position was not recognized by the petitioner and subsequently a complaint was filed. In the complaint, it was sort to enjoin on the theory that the -- that the franchise had been cancelled by this x-party declaration of the plaintiff below to cancel the franchise, restrain the petitioner from many further use of the trademark and they will restrain the petitioner from collecting any moneys which it would be an incident of a continued use of the franchise and for a judgment of the amount due and owing under the contract. Our position briefly is that while there was cloth in this complaint, some equitable attire that basically, before there could be any equitable relief, this plaintiff had to establish that there was a breach of a contract, that there was an amount due under the contract.In other words, he would have to sustain the -- the legal course of action. And if that could be sustained, he would then become entitled to equitable relief.
John M. Harlan II: What is the equitable relief or the equitable attire, whatever that phrase that you (Voice Overlap)?
Michael H. Egnal: Well he -- in his prayers, in his prayers, he uses the conventional prayers that would be found in a complaint equity asking that the Court enjoin this defendant, the petitioner, from any further use of a trade name. He uses a phrase that the Court should grant an accounting for the amount due and owing under the contract and uses the -- the terminology which is peculiar to equity proceeding. That is what I mean by the attire. Now, we take the position that regardless of how much there is in evaluating this complaint, how much there maybe a scribe for the legal course of action, if there is a legal course of action involved in this preceding, a right to a jury trial cannot be denied. And of course, we -- we rely on what this Court said both in its majority and my minority opinion in Beacon Theatres versus Westover which has recently been put directly, it seems to me in point on this proposition in the Thermo-Stitch case.
John M. Harlan II: What you're saying in essence is that the substance, the real guts of this cause of action is simply an action for breach of contract?
Michael H. Egnal: Yes sir.
John M. Harlan II: That's the essence.
Michael H. Egnal: That is it sir.
William J. Brennan, Jr.: Is this -- this is the case I -- that I gathered (Voice Overlap)
Michael H. Egnal: Yes and Mr. Justice Brennan, this is the case where Judge Wood after denying the jury trial, fixed the case for trial on August 1 preemptively, a trial before him without a jury. You were branded a stay on July, the 31st. I -- I'll reserve whatever time I have with Your Honor's kind permission for rebuttal.
Owen J. Ooms: Mr. Chief Justice, Honorable members of this Court --
Earl Warren: Mr. Ooms.
Owen J. Ooms: Thank you Your Honor, I'm sorry for (Inaudible). The question here involved is a very simple one. And that is whether the complaint states a legal cause of action entitling this defendant to a jury trial. Petitioner in its question presented to the Court, has limited himself to the complaint although we do not have to so limit it in order to find that all that is involved here are matters of equity consideration as we have long understood them. I would like to point out to the Court, however, that the question presented is an error for two primary reasons. The question presented assumes the conclusion that there is a legal cause of action found in this complaint as he states where a complaint asserts a legal cause of action and an equitable cause of action. In other words, the question presents, assume there is a legal question presented which we disagree and we will point out to the Court. Further in the question presented, it is stated that the basis of both cause of action is the omission of defendant to pay some of money. Now, this is not a true nor an accurate presentation. The basis of this cause of action is not based on a contract which was cancelled and which the District Court which I will go into has so found on a preliminary injunction hearing but the fact, what the defendant did subsequent to the cancellation of the contract. Now, in the complaint, there're several very important statements made which have nothing at all to do with an alleged $60,000. It is true that the statement is made in the complaint as a background operative fact that this defendant, petitioner here was in default in the amount of $60,000. It further states that the plaintiff, the respondent herein, is the owner of the Dairy Queen trademark in Pennsylvania and throughout the United States. By a system of franchise agreements and territory agreements throughout the United States, it has under its various licenses over 3000 such Dairy Queen stores. These stores are similar in appearance and the purpose of having a strict control over these stores is so that the public may know and believe that this product which they purchased is the same throughout the United States. The defendant was licensed among other things to use this trademark. It's so used it. It complied with the contract and so far as making basic annual payments for a period of time. It ceased making these annual payments and as the defendant asserts in its answer, not by way of a counter claim or a cross claim that this agreement was modified whether we call it a reformation of the contract or a novation in the contract. He says it was modified so that he no longer had to make this annual payment. Furthermore, the complaint also averse that after this contract was cancelled by the defendant for a failure to pay not only this sum of money but other sums of money through a third independent person that the defendant thereafter began unjustly in reaching itself, continue to hold itself out as a licensed Dairy Queen operator, continue to receive the moneys and so forth. In August of 1960, pursuant to paragraph 9 of the agreement, which is attached to the complaint as Exhibit A, the plaintiff cancelled that contract which it had a right to do. Now, it is true that one of the issues raised by the answer is whether we had a right to cancel or not and I will get to that as it is a very basic premise in this matter. In December, we filed a motion for preliminary injunction, and that preliminary injunction was heard, evidence and witness is produced, oral argument and briefs. On December 28, the District Court, the same judge herein, has denied the petitioner here, his right to a jury trial, made findings of facts. These findings of fact are in the appendix D in brief and opposition by the respondent herein. We do not say that these findings of fact and conclusions of law are res judicata as to the petitioner hearing. But they do have a certain standing as to what were the facts are in this matter, and this is what we get to the crux of the problem that the complaint herein is not based on the contract. The District Court found that the contract was breached whether it'd be for reason of default of payment of money. That is only the operative fact for bringing the complaint into being. The fact that it was breached, this defendant continued to collect moneys, it had no right to do. It continued to use the Dairy Queen trademark. It continued to hold itself out as a licensed Dairy Queen operator. The Court granted, under the question of balancing the equity in the case, a limited preliminary injunction. This was December 28, 1960. Defendant, although the complaint had been filed in November, had not filed an answer of any type at this time. It appealed the preliminary injunction which was affirmed but approximately two months after -- after the Court had rendered this decision in the preliminary injunction, it filed its answer and the answer did not again include any counterclaim or cross complaint, it merely raised some antitrust issues, the same that we were barred from any relief, not asking for any affirmative relief and further stated this modification in the contract. We say --
Felix Frankfurter: (Voice Overlap) did it challenge the contract -- that the original contract was breached?
Owen J. Ooms: Yes, Your Honor. The letter was stated that it was breached. We considered it breached.
Felix Frankfurter: Did the present petitioner, in the answer, challenged the claim in the complaint or the -- what you call the background operative fact?
Owen J. Ooms: Yes, they did challenge. They said there was a modification with the --
Felix Frankfurter: But did they -- did they challenge if -- if they insist that the old contract was still alive?
Owen J. Ooms: They insisted it was alive as modified by some oral agreement. Now, they don't use the word novation or renovation or reformation. The District Court in its opinion, call it an attempt at (Inaudible).
Felix Frankfurter: Then the existence of the original contract or is not an issue in this litigation or was it?
Owen J. Ooms: The existence of the continuation of this license agreement is an issue in this litigation.
Felix Frankfurter: Well --
Owen J. Ooms: Yes, Your Honor.
Felix Frankfurter: -- isn't that an -- an issue antecedent, necessarily antecedent determination whether you can claim what you claim namely that they are operating outside of the agreement and therefore all these things.
Owen J. Ooms: That is correct Your Honor. If in fact the contract had not been canceled or that we did not effect a proper cancellation because in -- in effect, there was a novation or reformation of this contract then we have no standing before the Court.
Felix Frankfurter: And so you're -- you're in conflict on whether that original contract on the date which they were licensees still alive, are you not?
Owen J. Ooms: I don't think so at all, Your Honor. The mere fact --
Felix Frankfurter: Well, I misunderstood you.
Owen J. Ooms: -- the mere fact that a contract has been breached does not necessarily mean that a legal issue has been intruded into the scene. One made by breaching a contract or cancelling a contract as for specific performance.
Felix Frankfurter: Yes I know, but if they -- if they stand on their rights under the contract, is that not an adjudicable issue in this controversy?
Owen J. Ooms: That is correct. Framed within the equitable --
Felix Frankfurter: Yes, but before you get to the equitable thing, you must decide whether they still have a contract under which they're legally operated.
Owen J. Ooms: That is correct Your Honor. But the --
Felix Frankfurter: So why is that antecedent to any equitable relief?
Owen J. Ooms: Well, the Court didn't make that finding already on witnesses and everything else that the -- and -- and testimony and exhibits that this contract in the hearing for preliminary injunction was in fact breached and have not been cured.
Felix Frankfurter: And did the -- did the present petitioner accept that?
Owen J. Ooms: The present petitioner appealed it.
Felix Frankfurter: (Voice Overlap) the petitioner will say yes.
Owen J. Ooms: Obviously, not -- you'll feel it Your Honor.
Felix Frankfurter: The original contract is no longer in existence. Yes, we're not operating under that (Voice Overlap) then the rights we may have are outside of it.
Owen J. Ooms: At no time did he do that. He appealed the decision of the -- granting the preliminary injunction to the Court of Appeals and they affirmed the District Court.
Felix Frankfurter: Is it bound by that when it goes back to the permanent injunction?
Owen J. Ooms: As res judicata, no sir. He's entitled to a full hearing on that.
Felix Frankfurter: Well, then -- then I -- if you'll forgive me, I'll repeat my question. Why isn't the determination, the resolution of that conflict you say the original conflict is gone, he should not leave.
Owen J. Ooms: That's correct.
Felix Frankfurter: Why is that not a -- a legal question?
Owen J. Ooms: Well, the mere fact that a contract whether it has been cancelled or not, Your Honor does not immediately makes this a legal question. The question is, what if --
Felix Frankfurter: It doesn't -- it doesn't decide what the -- what the relief should be.
Owen J. Ooms: No, that is correct Your Honor.
Felix Frankfurter: But it does bring in to controversy whether a contract exists or is dead.
Owen J. Ooms: That is correct and on the --
Felix Frankfurter: Is that not a legal question?
Owen J. Ooms: No, sir, Your Honor.
Potter Stewart: (Voice Overlap) an issue, that very issue could be presented as the main issue in a purely equitable proceeding --
Owen J. Ooms: That is --
Potter Stewart: -- for specific performance of a contract.
Owen J. Ooms: That is absolutely our reformation (Voice Overlap)
Potter Stewart: The answer would deny the existence of the contract.
Owen J. Ooms: Judge Wood in his opinion cites the fact of a cancellation of a contract framed within the equity forms as we know it, is one that has been cognizable by courts of equity from time and memorial. In other words, if we had come in here --
Felix Frankfurter: That is what we've got here. We have -- this is a suit within four specific performance of a contract. And the defendant said, there is no contract or this is a -- there is no contract. Here, you've got a suit based for money, the antecedent of which is that the contract is no longer in existence.
Owen J. Ooms: I disagree, Your Honor. This is not a suit based for -- for money, there is much more. We say we have effectively canceled the contract. It is true the defendant herein contest that fact. We say that the acts subsequent to our effective cancellation makes it necessary for a court of equity to enjoin this defendant on a preliminary injunction basis until a final hearing from doing these various acts and to take whatever money he is receiving and pay them into the registry of a court. Now, in effect what he is doing by his answer and he -- and this, we have to distinguish from the Beacon versus Westover case and so forth. The Beacon versus Westover case was where the defendant filed a counterclaim which clearly raised legal issues. And the Court thereby -- the opinion by Justice Black stated that he was entitled to a jury trial on these legal issues. And that he was entitled to go forward with them before the hearing, before the chancellor for the simple reason that because he had filed, that is that plaintiff had filed a declaratory judgment relief, he couldn't have anticipated and -- and removed any chance for the defendant to have a trial. Therefore, the legal issue should be heard first since there might be collateral, estoppel or estoppel by judgment. We don't have that issue here. We have set forth a fact that this defendant has banned in default in 60 -- to the amount of $60,000. This is the operative fact for -- one of the operative facts might I add.
Hugo L. Black: What do you mean by default?
Owen J. Ooms: The contract says that he must pay the money that's sent forth under the contract or else we can immediately cancel the agreement. And -- in paragraph 9, it says this is of the essence of the contract --
Hugo L. Black: Do you mean --
Owen J. Ooms: -- 9 and 12.
Hugo L. Black: -- do you mean by that that he breached the contract?
Owen J. Ooms: That is correct.
Hugo L. Black: Is that a preliminary which you have to determine before you admit to a case, decided in your favor?
Owen J. Ooms: That's right and we had --
Hugo L. Black: Is a breach of contract traditionally or legal claims?
Owen J. Ooms: If a breach of contract was a claim for money damages as Judge Wood stated in his lower opinion, if it's for money damages then it's clearly cognizable by law and he's entitled to a right for a jury trial. But that is what we're here for --
Felix Frankfurter: But a breach of contract by which the defendant seeks to escape money damages is not a legal question you can say.
Owen J. Ooms: Please rephrase that again Your Honor.
Felix Frankfurter: In this case, if I don't know more than what you've stated to me because that's what I read with Judge Wood's opinion. In this case, you say a contract is no longer in existence and therefore it is subject to other liabilities.
Owen J. Ooms: That is correct.
Felix Frankfurter: -- injunction, not to misuse the name for which he's entitled to, money that he's improperly collected. He denied this. He said, "They are not subject to those moneys that are coming."
Owen J. Ooms: That's correct.
Felix Frankfurter: Because if contract is alive and I'm merely a subject to the terms of that contract in whatever parts, monetary duties arrived out of that contract, I suppose he subjects himself.
Owen J. Ooms: That would be a correct position on his part and he perhaps could have done this by availing himself under the declaratory judgment statute after we had told him that he had breached the contract. But we are proceeding --
Felix Frankfurter: (Voice Overlap) can he -- can he resist your -- your prayers for relief based on the assumption that he -- that your assumption that he breached this contract which he denies and he says, “I'm not subject to that. This contract is still alive, you can sue me for whatever -- for whatever rights you have under this contract.”
Owen J. Ooms: Let me --
Felix Frankfurter: Suppose you sued for rights -- your rights under this contract where would that be, on the law side or equity side?
Owen J. Ooms: We'll be on the equity side in this case Your Honor because he's trying to reform a written instrument and as Judge Wood has cited the cases and if we had cited --
Felix Frankfurter: Well you --
Owen J. Ooms: -- on the last page of our brief.
Felix Frankfurter: You've now said something, you give a different answer to what my whole question is based on, namely that he insists that the original contract is alive, not that he insists that it should be reformed.
Owen J. Ooms: Well, Your Honor --
Felix Frankfurter: All my questions derived from what I expect from counsel, you -- who know this record and I don't. Does he or does he not say the original contract (Inaudible) its original integrity?
Owen J. Ooms: The answer then is no Your Honor.
Felix Frankfurter: Alright.
Owen J. Ooms: He says it has been modified. Now, it does not remain in its entirety. In other words, we are not proceeding under a contract as it was originally drafted.
Felix Frankfurter: Does he inform in -- in effect grant a written modification of this contract to which there has been an oral -- about which has been an oral change? Is that what he want?
Owen J. Ooms: I couldn't answer that question. No one has asked him and I don't know.
Felix Frankfurter: Well he really get it -- to the seek reformation of the contract?
Owen J. Ooms: That is correct.
Felix Frankfurter: Do you seek reformation?
Owen J. Ooms: I used the word reformation in the District Court.
Felix Frankfurter: Who seeks reformation, you or he?
Owen J. Ooms: He does where --
Felix Frankfurter: Then he is seeking -- if he seeks reformation then he certainly is asking for equitable relief.
Owen J. Ooms: I would say that the answer certainly, he speaks exactly what he is not saying here, namely when he was in modification, it's framed in the equitable side, in our prayer for the complaint, we asked for three things, an injunction enjoining him from the use of this trademark, from holding himself as the license operator and from collecting money as a Dairy Queen operator. Number two, and accounting for all damages. Now --
Hugo L. Black: Can you have any of that relief unless he has breached his contract?
Owen J. Ooms: Unless he has breached this contract in total, no, Your Honor. That is absolutely correct.
John M. Harlan II: Or put it the other way around, what he stands on is a contract right which he has do what you claim he has no license.
Owen J. Ooms: That is correct and we say --
John M. Harlan II: So that ultimately your issue between you is whether there's a breach of contract.
Owen J. Ooms: That is correct Your Honor and we --
John M. Harlan II: Why isn't that a legal cause of action?
Owen J. Ooms: Because the fact that this breach of contract as he is saying, we have a good contract. Here's the position he is in, we have a good contract but it's been modified as such. If it's been modified as the District Court said then there's a no novation. A novation of a contract is one cognizable in equity. If it is as I say, an attempt at reformation of the contract, that is still under the law that we have cited.
John M. Harlan II: (Voice Overlap) in reformation of the contract is there -- you just said that the contract is -- just made the right to do this.
Owen J. Ooms: No, the contract does not give him the right to do this at all.
John M. Harlan II: That's what he said at times.
Owen J. Ooms: No, he does not say that. He says that “I am still under this contract but we have modified the oral payment -- the payments of this by some oral agreement.” We modify it if that is -- the party has modified it. We deny this and we asked him for strict accounting for the moneys, not only the $60,000. Now, it's unfortunate. But let me phrase the hypothetical if it please, Justice Harlan. If we had never mentioned the $60,000 as the background operative fact for the breach of the contract as well as other sums of money, and merely said that he breached the contract, the question would then arise, have we in anyway injected anything, any money amounts as what he claims we have here, we have a debt -- an action in debt. We don't claim the action in debt. We claim this $60,000 as only one element of the accounting which we ask for. Now, could it be said then if we never mentioned the $60,000 as there was here, a legal action. When he -- when he says, “No, I didn't breach, we didn't breach the contract because what we have done --”
Earl Warren: Finish your sentence.
Owen J. Ooms: Alright, because what we have done has orally modified this agreement. In other words, we either inserted, made a novation in it or reformation of it.
Earl Warren: We'll recess now.