Court Opinion

ID: 9427303
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:20:22.095689+00
Date Added: 2024-06-11T17:23:06.029387
License: Public Domain

Mr. Justice Brennan,
with whom The Chief Justice, Mr. Justice Marshall, and Mr. Justice Powell join, dissenting.
This case falls within none of the three general abstention categories, and the opinion of my Brother Rehnquist there*669fore strains to bring it within the principles that govern in a very narrow class of “exceptional” situations that involve “the contemporaneous exercise of concurrent jurisdictions.” Colorado River Water Conservation Dist. v. United States, 424 U. S. 800, 813-818 (1976). In so straining, the opinion reaches a result supported by neither policy nor precedent, ignores difficult legal issues, misapprehends the significance of the proceedings below, and casts doubt upon a decision that has stood unquestioned for nearly 70 years. Moreover, there lurks an ominous potential for the abdication of federal-court jurisdiction in the opinion’s disturbing indifference to “the virtually unflagging obligation of the federal courts to exercise the jurisdiction given them,” id., at 817 — for obedience to that obligation becomes all the more important when, as here, Congress has made that jurisdiction exclusive. I dissent.
I
Because this case came to the Court of Appeals on respondent Calvert Fire Insurance Co.’s motion for a writ of mandamus to compel Judge Will to adjudicate its claims for damages and equitable relief under the Securities Exchange Act of 1934 (1934 Act), I agree with my Brother Rehnquist that it is essential to determine precisely what obligation the District Court had to adjudicate respondent’s 1934 Act claims. That, however, is as far as my agreement goes.
On the same day Calvert filed its answer to the state suit instituted against it — an answer containing a defense under the 1934 Act that the state court was required to recognize under the Supremacy Clause — it commenced an action in Federal District Court seeking relief under the 1934 Act, the Securities Act of 1933, and various state provisions. The District Court stayed all claims alleged in this complaint, other than Calvert’s claim for money damages under Rule 10b-5 of the 1934 Act, pending the outcome of the state suit. Although the District Court did not formally stay the Rule 10b-5 damages claim and heard oral argument on the primary *670issue underlying the claim — whether a participatory interest in a reinsurance pool is a “security” — the District Court has yet to rule on this issue, so Calvert’s Rule 10b-5 damages claim, like the rest of its federal suit, remains in suspension.
Section 27 of the 1934 Act, 15 U. S. C. § 78aa (1976 ed.), gives the federal courts exclusive jurisdiction over claims arising under the Act. This jurisdictional grant evinces a legislative desire for the uniform determination of such claims by tribunals expert in the administration of federal laws and sensitive to the national concerns underlying them. When Congress thus mandates that only federal courts shall exercise jurisdiction to adjudicate specified claims, the “well established” principle1 — accepted by my Brother Rkhnquist, ante, at 662 — of McClellan v. Carland, 217 U. S. 268, 282 (1910), that “the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction,” governs a multo fortiori. Yet, relying on the completely inapposite case of Brillhart v. Excess Insurance Co., 316 U. S. 491 (1942), the opinion of my Brother Rkhnquist disregards the McClellan principle and all .but ignores the analysis set forth in Colorado River Water Conservation Dist. v. United States, supra, our most recent pronouncement on a district court’s authority to defer to a contemporaneous state proceeding.
In Brillhart, the District Court dismissed a diversity suit for a declaratory judgment because of the pendency in state court of a suit between the same parties and involving the same subject matter. The Court of Appeals reversed, holding that the dismissal was an abuse of discretion. In reversing the Court of Appeals, this Court reasoned:
“Although the District Court had jurisdiction of the suit under the Federal Declaratory Judgments Act, it *671was under no compulsion to exercise that jurisdiction. The petitioner’s motion to dismiss the bill was addressed to the discretion of the court. Aetna Casualty Co. v. Quarles, 92 F. 2d 321; Maryland Casualty Co. v. Consumers Finance Service, 101 F. 2d 514; American Automobile Ins. Co. v. Freundt, 103 F. 2d 613 . . . . The motion rested upon the claim that, since another proceeding was pending in a state court in which all the matters in controversy between the parties could be fully adjudicated, a declaratory judgment in the federal court was unwarranted. The correctness of this claim was certainly relevant in determining whether the District Court should assume jurisdiction and proceed to determine the rights of the parties. Ordinarily it would be uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues, not governed' by federal law, between the same parties.” Brillhart v. Excess Insurance Co., supra, at 494-495 (emphasis added).
As is readily apparent, crucial to this Court’s approval of the District Court’s dismissal of the suit in Brillhart were two factors absent here. First, because the federal suit was founded on diversity, state rather than federal law would govern the outcome of the federal suit. Second, and more significantly, the federal suit was for a declaratory judgment. Under the terms of the provision empowering federal courts to entertain declaratory judgment suits, 28 U. S. C. § 2201, the assumption of jurisdiction over such suits is discretionary. That section provides: “In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration . . . .” (Emphasis added.) It was primarily because federal jurisdiction over declaratory judgment suits is *672discretionary that Brillhart found the District Court’s deference to state-court proceedings permissible. This is clear from the lower court cas'es approvingly cited by Brillhart—American Automobile Insurance Co. v. Freundt, 103 F. 2d 613 (CA7 1939); Maryland Casualty Co. v. Consumers Finance Service, 101 F. 2d 514 (CA3 1938); and Aetna Casualty Co. v. Quarles, 92 F. 2d 321 (CA4 1937) — all of which emphasized that a district court’s discretion to dismiss a federal declaratory judgment suit in favor of a pending state suit is a product of the permissive nature of declaratory judgment jurisdiction.2 Obviously neither the logic nor the holding of Brillhart is pertinent where, as here, federal jurisdiction is not only non-discretionary, but exclusive.
The unpersuasive grope for supporting precedent in which the opinion of my Brother Rehnquist engages is especially lamentable in light of our decision only two Terms ago in Colorado River Water Conservation Dist. v. United States. In Colorado River we addressed the precise issue presented here: the circumstances in which it is appropriate for a federal district court to stay a proceeding before it in deference to a parallel state-court proceeding in situations falling within none of the traditional categories for federal abstention. We explained that, in contrast to situations in which jurisdiction is concurrent in two or more federal courts, *673where the action paralleling a federal suit is in a state court, the federal court’s power to dismiss the suit before it in deference to the parallel proceeding is limited by the “virtually unflagging obligation of the federal courts to exercise the jurisdiction given them.” 424 U. S., at 817. Because a federal district court’s power is so limited, the circumstances that justify federal-court inaction in deference to a state proceeding must be “exceptional.” Id., at 818. Just how “exceptional” such circumstances must be was made clear by our admonition that “the circumstances permitting the dismissal of a federal suit due to the presence of a concurrent state proceeding for reasons of wise judicial administration are considerably more limited than the circumstances appropriate for abstention.” Ibid. Since we had previously noted that “ ‘[abdication of the obligation to decide cases can be justified under [the abstention] doctrine only in the exceptional circumstances where the order to the parties to repair to the State court would clearly serve an important countervailing interest,’ ” id., at 813, quoting County of Allegheny v. Frank Mashuda Co., 360 U. S. 185, 188-189 (1959), the circumstances warranting dismissal “for reasons of wise judicial administration” must be rare indeed.
Such rare circumstances were present in Colorado River. There, the decisive factor in favor of staying the concurrent federal proceedings was “[t]he clear federal policy,” evinced by the McCarran Amendment, of “avoid [ing the] piecemeal adjudication of water rights in a river system ... a policy that recognizes the availability of comprehensive state systems for adjudication of water rights as the means for achieving [this] goa[l].” 424 U. S., at 819. No comparable federal policy favoring unitary state adjudication exists here. In fact, as evinced by the exclusive jurisdiction of the federal courts to determine 1934 Act claims, the relevant federal policy here is the precise opposite of that found to require deference to the concurrent state proceeding in Colorado River.
*674Ignoring wholesale the analytical framework set forth in Colorado River, whose vitality is not questioned, the opinion of my Brother Rehnquist seemingly focuses on one of the four secondary factors found to support the federal dismissal in that case — -the fact that the state proceedings were initiated before the federal suit — and finds that factor sufficient to insulate the District Court’s actions here from mandamus review. Even putting aside the opinion’s case-reading errors— its flouting of McClellan, its misreliance on Brillhart, and its misapplication of Colorado River — and analyzing this case on the opinion’s own erroneous terms, the conclusion is still compelled that the District Court had no authority to stay Calvert’s 1934 Act claims. Quite conveniently, the opinion of my Brother Rehnquist avoids any discussion of the possible res judicata or collateral-estoppel effects the state court’s determination of Calvert’s 1934 Act defense would have on Calvert’s 1934 Act claims for affirmative relief in federal court.3 To be sure, the preclusive effect of a state-court determination of a claim within the exclusive jurisdiction of the federal courts is an unresolved and difficult issue. See generally Note, Res Judicata: Exclusive Federal Jurisdiction and the Effect of Prior State-Court Determinations, 53 Va. L. Rev. 1360 (1967). For myself, I confess to serious doubt that it is ever appropriate to accord res judicata effect to a state-court determination of a claim over which the federal courts have exclusive jurisdiction; for surely state-court determinations should not disable federal courts from ruling de novo on purely legal questions surrounding such federal claims. See Cotler v. Inter-*675County Orthopaedic Assn., 526 F. 2d 537 (CA3 1975); McGough v. First Arlington National Bank, 519 F. 2d 552 (CA7 1975); Clark v. Watchie, 513 F. 2d 994 (CA9 1975). As recognized by Judge Learned Hand in Lyons v. Westinghouse Electric Co., 222 F. 2d 184, 189 (CA2 1955), “the grant to the district courts of exclusive jurisdiction over the action . . . should be taken to imply an immunity of their decisions from any prejudgment elsewhere.” I recognize that it may make sense, for reasons of fairness and judicial economy, to give collateral-estoppel effect to specific findings of historical facts by a state court’s adjudicating an exclusively federal claim raised as a defense, see Granader v. Public Bank, 417 F. 2d 75 (CA6 1969), but there are reasons why even such a limited preclusive effect should not be given state-court determinations. It is at least arguable that, in creating and defining a particular federal claim, Congress assumed that the claim would be litigated only in the context of federal-court procedure — a fair assumption when the claim is within exclusive federal jurisdiction. For example, Congress may have thought the liberal federal discovery procedures crucial to the proper determination of the factual disputes underlying the federal claim.
All this is not to say that I disagree with the refusal of the opinion of my Brother Rehn'quist to decide what preclusive effects the state court’s determination of Calvert’s Rule 10b-5 defense would have in Calvert’s federal action, so much as it is to expose the opinion’s error in failing even to consider the res judicata/collateral estoppel problem in evaluating the District Court’s obligation to adjudicate Calvert’s Rule 10b-5 claim. In my view, regardless of whether the state-court judgment would be given res judicata or collateral-estoppel effect, it was incumbent upon the District Court — at least in the absence of other overriding reasons — expeditiously to adjudicate at least Calvert’s 1934 Act claims. If res judicata effect is accorded the prior state-court judgment, the exclusive jurisdic*676tion given the federal courts over 1934 Act claims would be effectively thwarted, and the policy of uniform and effective federal administration and interpretation of the 1934 Act frustrated. A stay having so undesirable a consequence could possibly be justified only by compelling circumstances absent here. On the other hand, if the state-court adjudication is not given res judicata or collateral-estoppel effect, the 1934 Act claims will have to be adjudicated in federal court in any event, and there would be no reason for staying the federal action since nothing that transpires in the state proceedings would affect the adjudication of the federal claims. Thus, regardless of the proper disposition of the res judicata/collateral estoppel question, it is clear that a district court should not stay claims over which the federal courts have exclusive jurisdiction. See Cotler v. Inter-County Orthopaedic Assn., supra; Lecor, Inc. v. United States District Court, 502 F. 2d 104 (CA9 1974).
II
Whether evaluated under the “clear abuse of discretion” standard set forth in La Buy v. Howes Leather Co., 352 U. S. 249, 257 (1957), or under the prong of Will v. United States, 389 U. S. 90, 95 (1967), and Roche v. Evaporated Milk Assn., 319 U. S. 21, 26 (1943), that permits the use of mandamus “to compel [an inferior court] to exercise its authority when it is its duty to do so,” the issuance of the writ of mandamus by the Court of Appeals was proper; there is simply a complete dearth of “exceptional” circumstances countervailing the District Court’s “unflagging obligation” to exercise its exclusive jurisdiction. The opinion of my Brother Rehnquist asserts, however, that the District Court “has not purported to stay consideration of Calvert’s claim for damages under the Securities Exchange Act of 1934,” but rather has simply “not yet ruled upon this claim.” Ante, at 666. While technically accurate, this characterization of the status of the proceedings below utterly ignores two important facts that shed more than *677a little illumination on the true procedural posture of this case. First, at the time the Court of Appeals granted the writ, Calvert’s Rule 10b-5 damages action had been before Judge Will for more than 2% years without a ruling on the basic legal issue underlying the claim. Second, and for me disposi-tive, the District Court indicated that it would give the state court’s determination that the disputed transaction did not involve a “security” within the meaning of the 1934 Act res judicata effect, App. to Brief for Respondent Calvert Fire Insurance Co. E-l, thereby depriving Calvert of a federal-court determination of a legal issue within the exclusive jurisdiction of the federal courts.
This Court has held that mandamus will lie to correct a district court’s improper deference to pending state-court proceedings, McClellan v. Carland, 217 U. S. 268 (1910), and to preserve a proper federal-court determination of a federal issue, Beacon Theatres, Inc. v. Westover, 359 U. S. 500 (1959). Where, as here, both of these justifications are present, the propriety of the issuance of the writ cannot be questioned. I would affirm the Court of Appeals.

 See, e. g., Thermtron Products, Inc. v. Hermansdorfer, 423 U. S. 336, 344-345 (1976); Meredith v. Winter Haven, 320 U. S. 228, 234-235 (1943).

 These decisions recognized, however, that even where a federal suit seeks only declaratory relief, a district court does not have unbridled authority to dismiss the action in deference to a concurrent state suit. For example, the court in Maryland Casualty Co. v. Consumers Finance Service, 101 F. 2d, at 515, observed:
“The granting of the remedy of a declaratory judgment is . . . discretionary with the court and it may be refused if it will not finally settle the rights of the parties or if it is being sought merely to determine issues involved in cases already pending. Aetna Casualty & Surety Co. v. Quarles, 4 Cir., 92 F. 2d 321. It may not be refused, however, merely on the ground that another remedy is available ... or because of the pendency of another suit, if the controversy between the parties will not necessarily be determined in that suit.”

 Because the Court of Appeals held that “the district court should not have deferred to the state court on grounds of federalism in light of Colorado River," it found it unnecessary to “reach the difficult issue of whether the conclusion of the state proceedings would have a collateral estoppel effect on the Rule 10b-5 claim for damages over which the court had retained jurisdiction but declined to resolve.” 560 F. 2d 792, 797.