Petition — Napper v. Anderson

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Sutrerre Court, U.S.

FILED

| YUN 16 1975

In the ||.

ieee

Supreme Court of the United States

October Term, 19%

JIM L. NAPPER, ET UX.,

Petitioners

ANDERSON, HENLEY, SHIELDS, BRADFORD

& PRITCHARD, ETC., ET AL.,

Respondents

Petition For A Writ of Certiorari

To The

United States Court of Appeals

For The Fifth Circuit

H. AVERIL SWEITZER

226 Lakewood Tower

Dallas, Texas 75214

Of Counsel:

CHARLES BEN HOWELL

Dallas, Texas 75214

. . it appears to ws that the doctrine [of res judicata] . . . must be

treated as a compromise between two conflicting interests; the conveni-

ence of avoiding a multiplicity of suits and the adequacy of the remedies

afforded for conceded wrongs.

—Learnep Hanp!

Such a rule of public policy must be watched in its application lest a

blind adherence to it tend to defeat the even firmer established policy of

giving every litigant a full and fair day in court.

—HeErsert Goopricx2

1. Lyons v. Westinghouse Electric Corp., 222 F.2d 184, 189 (2d Cir. 1955).

2. Unstext States v. Silliman, 167 F.2d 607, 614 (3d Cir. 1948).

INDEX

OpiNiONns Below. ccccccccccccccccscccccccesscssseses

JUTISGICTION coccccccccccsccccccevssessssssesecees

Questions Presented eecceccccccvceccsssseseseseses

First Question eeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

Second Question eeeeeeeaeeeeeeeeeeeeeeeeeeoee ee

Statutes Involved eeeeeeoeeveeoeeeeeeeeeeeeeeeeeeeeee

Summary of Argument @eeseoeaee eee eeeoceeeeoceee eee eeee

Statement of the Case eeeeveeeeeeveeeeeeeeeeeeeeeoee

Federal Jurisdiction in the Court of

First Imstancecceccccccccccccccccccccccccccce

Facts of the Case ccocccccccccccccccccccccccce

Proceedings-State Courts-First Trial .eccccece

Proceedings~Eastern District of Arkansas .....

Proceedings on Remand~Arkansas State Court....

Proceedings After Reversal-Texas State

| APPT TT TTT TTT TTT TTT TTT TTTTTTTeTe

Proceedings=Northern District of Texas..eccees

Reasons for Allowing the Writ..cccccccccccceccsece

First Questions The Right of Appeal May Not Be

Unnecessarily Frustrated By the Issue Preclusion

any) | PPrrrr rT ey TTTTTTeTrrrr+rrrrrrrrrrrrrrrTtt

Evolution of the Preclusion Doctrine..cccceece

The Diversity Claim is Meritorious. .cccccccces

Johnson Co. v. Wharton Will Not Stand Up

To ANALYSIS. cccccccccovccccccccccccccecccecce

This Case Involves Collateral Application

Of The Arkansas Judgment. ..ccccccccccccesesus

The Case is Being Sacrified on the Altar

of PN EBdn 666666000600600660 06000040060 00008

Petitioners are Being Deprived of a Valuable

Right of Constitutional Proportions....ccoeee

The Question Presented is Purely One of

Federal Ee eee TT TTT TTT TTT TT TTT TT TTT

Professor Moore has been Misconstrued...c.ccoce

Many Authorities Hold Against Preclusion

Where There Was No Right of Appeal....ccceces

iii

ty INDEX

Second Question: Petitioners Have Presented

A Clear Case of Pendent Jurisdiction. .scccccecccess

A Substantia! Federal Claim was Presented.....-.

Inasmuch as the Federal Claim was Arguable,

Pendent Jurisdiction of the State Claim

Attached. ccccccccccccesccssessseseesssssesess®

Petitioners Have Been Denied the Opportunity

to Invoke the District Judges* Discretionary

Jurisdiction Over Pendent ClaimsS.cccccceseees

A Ruling of “No Power to Decide" Does Not

Constitute an Exercise of the Discretion

CO Decidecccccccccccsssesccssesessessessesese

The “Dismiss Before Trial" Rule is Not a

Mandate ccecoccccccccsesssesssssesssssssssssse

CONCLUSION, cecccceceseesseseesessssssesesesessssess

APPENDIX

Federal Court Proceedings—-ArkansaSececsccceees

(Defendants*) Petition for Removal..ecesees

(Defendants*) MOTLONsc cccccccsccesescesscces

Order (Remanding Case) ecccccccccccccccccccs

P.A.1

P.A.l

P.A.1l

P.A.2

Federal Court Proceedings—-TexaSeessccccececees PeA.2-8

Memorandum Opinion and Order.sesecesccesess

P.A.2

Fifth Circuit PrOCEediNGSececsecsecseeeescvcees P.A.8-15

Opinion, 500 F.2d BBA. coccccccccccccccceses

P.A.8

Opinion on Rehearing, 507 F.2d 723.cceceees P.A.-14

JUUGMENT sa ceeeeccesceceseeesesesesssseeseses P.A.-15

State Court ProceediNgGS~TeXaSecosececesesresecs P.A. 15-21

Opinion, Tex.Ct.Civ.App., 464 S.W.2d,496..

Supplemental Motion for Disqualification

of Judge, 162nd Dist.Ct., Dallas Co.,

TOXAScccccceccceceseeeeseseceeseseeeeeece

Motion to Certify Disqualification of

Judge, 162nd Dist.Ct., Da@llas Co.,

TEXAS ccccccccccccccesccccceeeseceseseeeee

P.A.16

P.A.19

v INDEX

Motion to Call Another Judge to Conduct

Hearing Upon Supplemental Motion For

Disqualification of Judge, 162nd

Dist.Ct., Dallas Co., TexScccccccccccccs P.A.19

Hearing on Motion for New Trial, 162nd

Dist.Ct., Dallas Co., Di ndecesesetooce P.A.20

CITATIONS

Cases: ited States reme Court

Ashe v. Swenson, 397 U.S.436(1970)....ccccccece 28,29

Bell v. Hood, 327 U.S.678(1946)....ccccccccccce 7,52

C.A.B. v. Delta Airlines, 367 U.S.3l6....cccece "45

J. I. Case Co. v. Borak,

377 Ee 55

Commissioner v. Sunnen,

333 ee 21,22, 23,24,26,

29 , 34

Commonwealth Coatings Corp. v. Continental ee

Cas.Co., 393 U.S.145(1968)...cccccreccecs 59

Cort v. Bethlehem Steel Corp.,

U.S.S.Ct.No.73-1908 (March 18,1975)....... 55

Cromwell v. Sac County, 94 U.S.351(1876)....... 18,19,33

Dallas County v. Reese, 43 U.S.L.W. 36fZ ——

_ (nay i etberieeeceseseoesorce sc 52

gland v. Medical Exrs., 375 U.S.4 eoee

The Fair v. Kohler Die Co., — %s

CE EE 54,56

Gilbert v. David, 235 U.S.561(1915)....cccccccs "31

Griffin v. Ill., 351 U.S.12(1956)....cccccccccs 42

Hagans v. Lavine, 415 U.S.528(1974)...ccccccccs 7,53

Johnson Co. v. Wharton, 152 U.S.252(1894) 5.20,20.58,

28,2

Kalb v. Feurstein, 308 "ss

Lindsey v. Normet, 405 U.S.56(1972)....cccccees 42

Mapp v. Ohio, 367 U.S.643(1961).....cccccccccce 31

Mechling Barge Lines v. U.S.,

Ee 47

Napper, et ux v. Anderson, et al.,

419 Ee 2 13,40

N.L.R.B. v. Denver Trades Council, =

341 a 43

vi INDEX

Parmelee Trans. Co. v. U.S., 351 F.2d 619 (Ct.C1.1965)

Parsons v. C & O Ry.Co.,375 U.S.71(1963)..eeeee

Rosado Ve Wyman, 397 U. Se 397 (1970) cccccccccccecs

Snith Ve Sperling, 354 U. S. 91( 1957) eccccccccsecs

United Mine Workers v. Gibbs, 383 U.S,.715(1966).

U.S. ve Munsingwear, Inc., 340 U.S. 36(1950)....-

Wyandotte Co. v. U.S. 389 U.S.191(1967).eeeeees

Cases: Lower Federal Courts

Allegheny Co. v. Maryland Cas.Co.,146 F.2d 633

(3-Pa.l944) ccccccccccccccccccccccccccseces

Brunswick v. Regent, 463 F.2d 1205(5-Fla.1972)..

A.H. Bnery Co. v. Marcan Corp., 268 F.Supp.289

(S.D. Ne ¥. 1967) cccccccccccccccccccccccscces

Estevez v. Nabers, 219 F.2d 321(5-La.1955)......

Garland Co. v. Filmer, 1 F.Supp.8(1932)....eeee0-

Geracy Inc. v. Hoover, 133 F.2d 25(C.A.D.C.1942)

Hardin v. McAvoy, 216 F.2d 399(5-Ga.1954).......

Hellebrand v. Hoctor, 222 F.Supp.81(E.D.Mo.1961)

Hellebrand v. Hoctor, 331 F.2d 453(8-Mo.1963)...

Wn.Kalivas Const.Co. v. Vent Control, Inc.,

325 F.Supp. 1008(W.D.M0.1970) ..cccccccccces

Knuth v. Erie-Crawford Dairy Coop.,

395 F.2d 420(3-Pa.1968) .cccccccccccccccces

Knuth v. Erie-Crawford Dairy Coop.,

326 F.Supp. 48(W.D.Pa.1971) .ccscccccescccce

Lyons v. Westinghouse Electric Corp.,

222 F.2d 184(2— N.Y. 1965) ccccccccccccccece

Law v. Converse, 419 F.2d 38(3-Pa.1969)...seeeee

McCurnin v. Kohlmeyer, 477 F.2d 113(5-La.1973)..

McNellis v. First Fed.S & L Assn.,

364 F.2d 251 (2-N. Y.1966) ccccccescccccccccs

Meyers v. Ampex, 491 F.2d 1103(5-Tex.1974)

498 F.2d 1092. .ccccccccccsccccsccccccesers

Napper v. Anderson et al, 500 F.2d 634,

36 , 37

507 F.2d Ure | 2,P.A.8-P.A.14

N.L.R.B. v. Denver Trades Council,

186 F.2d 326(10-Co1.1950) .ccccccccccsccces

Rapp v. Van Dusen, 350 F.2d 806(3-Pa.1965)......

Reitmeister v. Reitmeister, 162 F.2d 691

CG. VSG oa nccececécncsencssesessessees

6,55

_ INDEX

Rogers v. Valentine,

37 Poe Ree Te 8. GEG) . coccccccecccccoes

Scoville v. Bd.Educ.,

286 F.Supp. 988(N.D.I11.1968)......cccccccccs

Smith v. Sperling, 117 F.Supp.781

(S.D.Cal.1953)affd.in part, 237 F.2d 317

(9-cal.1956), rvsd.oth.gnds.,

354 A ES nee ee eee

Spilker v. Hankin,

188 Pete MG BORED cnccccccsecscocseece

Tutt v. Doby, 459 F.2d 1195(C.A.D.C.1972)..cceees

U.S. v. 111.2 Acres, 293 F.Supp.1042, (E.D.Wash.1968) ,

affd. 435 F.2d 561(9-Was ol FTO) coccccecccece

U.S. v. Munsingwear, 178 F.2d 204

EE ee pe

U.S. v. Silliman, 167 F.2d 607 G-N.J.1948)......

Webb v. Bladen, 480 F.2d 306(4-Va.1973)...ccccces

Weissinger v. U.S., 423 F.2d 795

(In banc, SP Pate Sere ecceeeccecoseoesooseses

Cases: Texas Courts

Employers Mutual Cas.Co. v. Lee,

352 S.W.2d 155(Tex.Civ.App.1961)...ceccecces

Fireman*s Fund Ins. Co. v. Bybee,

322 S.W.2d 657(Tex.Civ.App. 1959). .ccccccccce

Napper, et ux v. Johnson,

464 S.W.2d 496(Tex.CiviApp.1971)..sccccceces

Cases: Other Jurisdictions

Bakula v. Schwab, 168 N.W.378(Wisc.1918)... cee.

Hickman v. Hickman, 121 A.2d689

ESE SOLS ee ee

Horowitz v. Horowitz, 199 Atl.816(Md.1938)......

Minor v. Lapp, 33 Cal.Reptr.864

NR AE Se

New Milford Block Co. v. Ericson,

206 A.2d487 (Conn.Cir. App.Div.1964)..csceees

Schuylkill Fuel Corp. v. Nieberg,

165 ON SR ERATE Seer

46,48

3,9,13

P.A.16

INDEX

viii

CONSTITUTIONAL PROVISIONS, STATUTES & RULES

Communications Act Amendments, 1952,P.L.554,

ch.879,Sec.18,66 Stats. Tllecccececececee

28 U.S.Ce, Sec. lLAGleccccccsccccceccccecececesece

28 U.S.C., $eC1332(a) .ccccccccccccccccccccccccs

23 U.S.Cey $eC.1447(d) cccccccccccccccccccccccces

Rule 8(c) F.R.CivePeccccccccscsceceescesseseceses

Rule 12(b) (6) F.eR.CivePecccccsccccccccccsesesess

TEXTS AND OTHER

Baker, Toward a Relaxed View of Pendent

Jurisdiction, 33 U.Pitt.L.Rev.,

759 (1972) . ccccccccccccccccccsccccccscecce

The Constitution and Preclusion,

62 Mich. L.Rev.33(1963) .cccccccccccccccces

Collateral Estoppel: Its Application and

Misapplication, 29 Wash.&L.L.Rev.110(1972).

Developments-Res Judicata,

65 Harv.L.Rev.818(1952) .ccccccccccccccces

46 Am.Jur.2d, Judgments, Sections 397-399...seee.

Lavine & He, Man. Fed.Prac., 44-45 cesceeccccerces

Hart & W., Fed.Cts.113(2d ed.1973)..ceccceecees

1-B Moore, Fed.Prac., Par. 0.416..cccccccccseces

Petition for Certiorari, p.2, U.S. v. Munsingwear,

No. 23,24, 0.T.1949, UsSeSupsCteweseeeees

Petitioner's Brief, pp.8,22, U.S. v. Munsingwear,

No. 23,24 OT 1949 U.S. Sup.Ct.cccccscceces

en ADO

& & ino wy

46,47

Res. Jmts., (1942) Gee. GO(2) cccccccccccccececceces 18,22,23

25, 26,38, 48,49,50

Res. Jmts.2d, Sec.68.1(T.D.1973) ceccccccccccecces 2518,25

26, 27, 28,29

Scott, Collateral Estoppel by Judgment, |

56 Harv. LeRev.l (1942) ccccccccccccccccces 18

13 Wright & M,. Fed.Prac., Sec. 3564..ccccccccees 53,56

13 Wright & M. Fed.Prac., SeC. 3567.cccccccecces 57

IN THE

SUPREME COURT OF THE UNITED STATES

No.

October Term, 1974

JIM L. NAPPER, ET UX.,

Petitioners

ANDERSON, HENLEY, SHIELDS,

BRADFORD & PRITCHARD, ETC.,

ET AL.,

Respondents

Petition For A Writ of Certiorari

To The

United States Court of Appeals

For the Fifth Circuit

Petitioners, Jim L. Napper and wife, Jo Ann

Napper, complain of respondents, Anderson, Henley,

Shields, Bradford and Pritchard, a partnership of

L. W. Anderson, William B. Henley, Jr., Charles 0.

Shields, Addison Bradford, Jr., William A. Pritchard

and C. A. Searcy Miller, each of them sued individ-

ually and as member of defendant partnership and

petition for the issuance and service of a writ of

certiorari to the United States Court of Appeals

for the Fifth Circuit to review the judgments and

orders entered in that Court in its Cause No. 73-

3746 wherein petitioners were appellants and re-

spondents were appellees.

Notation: Unless otherwise indicated, all emphasis has

been supplied by petitioners.

OPINIONS BELOW

This case was initiated in the United States

District Court for the Northern District of Texas

on August 23, 1971 (J.A.2) The only judgment or

opinion of the District Court was its combined

"Memorandum Opinion and Order" (P.A.2-8) dated

October 3, 1973. It is unpublished. The judgment

(P.A.15) and opinion(P.A.8-13)of the Fifth Circuit

are dated September 16, 1974, the opinion being

published at 500 F.2d 634. Its per curiam

decision denying rehearing (P.A.14-]5)is dated Janu-

ary 31, 1975 and published at 507 F.2d 723.

The related Arkansas case of Napper, et ux.

v. Anderson, et al. was initiated in the Circuit

Court of Pulaski County, Arkansas on June 9, 1971

(P.A. 10), removed to the United States District

Court for the Eastern District of Arkansas on

July 12, 1971(P.A. 1), and remanded to the Pulas-

ki Circuit Court by order dated May 9, 1973(P.A.

2 ). The Court on the same date announced “find-

ings of fact and conclusions of law * * * from

the bench"(P.A. 2 ). The Pulaski Circuit Court

dismissed the case on November 15, 1973. An ap-

peal to the Arkansas Supreme Court was dismissed

on April 29, 1975. No other opinions were ren-

dered by any of the courts in the Arkansas pro-

ceedings, Federal or State, and none were published.

A petition for certiorari to the Arkansas Supreme

Court was denied here on November 18, 1974, No.

No.74-381, 419 U.S. 1023(1974)

In referring to the record of proceedings in the courts

below, petitioners will employ the following abbreviations:

(P.A. ), Petitioners* Appendix attached to the rear of this

petition; (J.A. ), Joint Appendix filed with the Clerk of

the Fifth Circuit; (R. ), Record of Proceedings prepared

by U.S. District Clerk, Northern District, Texas. It should

be noted that many of the papers from the latter court are

copies of court papers originally filed elsewhere.

Only one opinion has been rendered by trial or

appellate courts in the related Texas State Court

case of Oy Re LOCH and it is pub-

lished at 464 S.W.2d 496(Tex.Civ.App.1971)(P.A.16-

18).

JURISDICTION

The judgment of the Court of Appeals was en-

tered on September 16, 1974. The Court of Appeals

extended the time to petition for rehearirg untii

October 23, 1974. A petition for rehearing was

filed on that date, October 23, 1974 and was denied

on January 3l, 1975. On April 24, 1975 and within

90 days thereafter, Mr. Justice Powell extended the

time to petition for certiorari until June 2, 1975,

Order No. A-876. On May 29 Mr. Justice Powell

further extended the time to petition for certiorari

until June 17, 1975, Order No. A-876. The

jurisdiction of this Court is invoked under 28 U.

S.C. §1254(1).

QUESTIONS PRESENTED

On April 24, 1950, the Supreme Court granted

certiorari to consider substantially the same ques-

tion now presented. Unfortunately, the Supreme

Court disposed of tne prior case, U.S.v.Munsingwear,

Toc, ,240 U.S.36(1950) on narrow procedural anounas

not present herein and failed to expressly decide

the fundamental issue again presented by petitioners'

first question:

FIRST QUESTION:

Whether a judgment remanding a case back to the

state court, which petitioners without fault on their

part, could not have appealed as a matter of law,

can, despite the frustration of appellate review,

stand as a bar to relitigation of the identical is-

sue by the same parties in another suit originally

brought in another federal court; thereby defeating

the right of appeal that is otherwise available

in the second case?

SECOND QUESTION:

Did not the Courts below fail to distingvish

between the power to act (jurisdiction) and the

propriety to act (discretion)? Were not petitioners

thereby deprived of the opportunity to invoke the

Trial Court's discretionary jurisdiction over pen-

dent claims?

STATUTES INVOLVED

28 U.S.C., §1291:

"Final decisions of district courts. The

courts of appeals shall have jurisdiction of ap-

peals from all final decisions of the district _

courts of the United States, the United States Dis-

trict Court for the District of the Canal Zone,

the District Court of Guam, and the District Court

of the Virgin Islands, except where a direct re-

view may be had in the Supreme Court.”

28 U.S.C., §1447(d):

"An order remanding a case to the State court

from which it was removed is not reviewable on ap-

peal or otherwise, except that an order remanding

a case to the State court from which it was removed

pursuant to section 1443 of this title shall be re-

viewable by appeal or otherwise."

SUMMARY OF ARGUMENT

By Statute, a remand order is expressly non-

appealable. 28 U.S.C., §1447(d). Regardless of

whether or not the remand order by the Eastern Dis-

trict of Arkansas contained egregious error, peti-

tioners had no choice but to return to the state

courts of Arkansas where their case was finally

dispatched without touching the merits in any way.

The dismissal of a case is obviously a more

severe remedy than a remand. This is particularly

so in the present case where the Texas two year

limitation period had already run at the time that

the Northern District of Texas entered its dismissal.

Because of the difference in the nature of the remedy,

Congress has provided,and the federal courts have

always allowed, appeals from dismissal orders, even

tosis dismissing for want of diversity. 28 U.S.C.,

§1291.

The Fifth Circuit erred in holding that "the in-

ability to appeal from the order of remand does not

permit the issue actually litigated and determined

in the federal court in Arkansas to be relitigated

in the second action" (P.A. 13). The authority re-

lied upon, Johnson Co. v. Wharton, 152 U.S. 25211894),

failed to distinguish between the two aspects of

former adjudication:

(1) Those applications wherein the second suit

attempts to defeat the relief granted or denied in

the first lawsuit ("claim preclusion" or "classic

res judicata"),

(2) Those applications wherein the findings of

fact and law in the first case are invoked to decide

the second case even though the second case does not

threaten to impair the relief granted in the first

("issue preclusion" or "collateral estoppel").

The modern rule is to be found in Res,, Jmts,

2d, §68.1(T.D.1973):

§ 68.1. Exceptions to the General Rule of Issue Preclusion.

Although an issue is actually litigated and de-

termined by a valid and final judgment, and the de-

termination is essential to the judgment, relitigation of

the issue in a subsequent action between the parties is

not precluded in the following circumstances:

(a)_The party _against_whom_preclusion_is

t could not, as a matter of law, have

obt» ined review of the sae by an ap-

pellate court in the initial action; (p.1T70)

Obviously, the Eastern District of Arkansas

was not attempting to dispose of a case then pend-

ing in the Northern District of Texas. His deci-

sion could not have had direct effect upon the

Texas case. It could only have had collateral ef-

fect premised upon a claim that his ruling of "no

diversity" is conclusive. Further, it was not

necessary to dismiss the Texas action in order to

effectuate the relief contemplated by the Arkansas

remand order. The general rule of issue preclu-

sion or collateral estoppel should not be applied

here because it would frustrate the right to an

appeal of the substantive issue on which the case

turns, to-wit: whether or not this is an action

"where the matter in controversy * * * is between

* * * citizens of different States." 28 U.S.C.,

§1332(a). If the eighty year old Johnson case

cannot be distinguished, it should be overruled.

Petitioners based their claim of federal ques-

tion jurisdiction upon criminal provisions of the

Communications Act and the case of Reitmeister v.

Reitmeister,162 F.2d 691(2-N.Y.,1947), a leading

authority upon federal jurisdiction, widely cited,

holding that a federal cause of action can be based

upon a violation of the penal provisions of the

Communications Act. A number of other cases sup-

port the general proposition. Regardless of whether

or not their federal claim was upheld, it was meri-

torious and eminently arguable. Pendent jurisdic-

tion therefore existed. "* * * Whether the complaint

states a cause of action * * * must be decided after

and not before the court has assumed jurisdiction

* * *," Bell v. Hood, 327 U.S.678(1946).

The Fifth Circuit plainly erred in holding"there

was never any basis of federal jurisdiction suffi-

cient to support pendent jurisdiction***(P.A.15).

The error is spelled out so-’plainly by the cases of

Bell v. togslisee) United Mine Workers v. Gibbs,

383 U.S. 715(1966), and Hagans v. Lavine, 415 U.S.

528(1974), that the Supreme Court could easily re-

verse per curiam without briefing or argument.

Pendent jurisdiction is admittedly discretionary

jurisdiction and the District Court could have de-

clined to entertain the case. However, even though

pendent jurisdiction was brought to the attention

of the District Judge, she failed to consider the

matter and held that the case must be dismissed "for

want of jurisdiction" (P.A. 8 ).

The District Court's failure to recognize that

it possessed pendent jurisdiction deprived petition-

ers of the opportunity to invoke the District Court's

discretion to retain pendent jurisdiction. Webb v.

Bladen, 480 F.2d 306(4-Va.,1973). Especially in

view of the fact that respondents are claiming limit-

ations, petitioners were deprived of a valuable right

by the failure of the District Court to recognize

that it held discretionary jurisdiction.

STATEMENT OF THE CASE

FEDERAL JURISDICTION IN THE

COURT OF FIRST INSTANCE

Petitioners, who were plaintiffs in the Trial

Court, alleged that the case arose under the Cop-

» P.L.554, Ch.879,

munications Act Amendments of 1952

§18, 66 Stats.711, 722, and that the Court had

"federal question" jurisdiction under 28 U.S.C.,

§1337. Petitioners also alleged that they were

citizens of Arkansas, that defendants were citizens

of Texas and that diversity jurisdiction existed

under 28 U.S.C., §1332 (R.36-37).

FACTS OF THE CASE

We include a full fact statement in the hope

that the Court will desire background information.

Frankly, however, few facts are needed to apprehend

the nature of the questions presented, particularly

the first question. With one exception, the facts

stated by the Court of Appeals are correct, but we

draw attention to the fact that titioners origi-

nally moved to Arkansas in 1966 (P.A.17) and the

District Judge in Arkansas found the petitioners

to be "residents of Arkansas in all respects

(J.A.10).

e Court's statement on rehearing that “plain-

ets came complain in good faith they considered

themselves citizens of Arkansas, and were surprised

by the contrary ruling, for on September 2, i9fi,

ten days after the complaint was filed, defendants

moved to dismiss for lack of diversity" 1s, we re-

spectfully submit, very misleading. Defendants ;

swore on July 12, 1971 that petitioners “are citizens

of the State of Arkansas" (P.A. 1 ). The motion to

dismiss referred to by the Fifth Circuit did not

come until after the two year limitations period had

run and was a drastic reversal of position calculated

to trap petitioners in the wrong court.

PROCEEDINGS-STATE COURTS-FIRST TRIAL

On Janua 25, 1969, petitioners being in

strained Pinmneial circumstances, were induced to

enter into an oppressive transaction by which they

were required to transfer apparent title to their

property to one Earl B. Johnson for a fraction of

its value. Since that date, they have litigated

in an endless succession of courts without relief.

The Court of Appeals for the Fifth Circuit was the

latest to send petitioners away without reaching

the merits of the controversy.

Petitioners’ litigation with respect to their

property was initiated in the 160th District Court

of Dallas County, Texas. A defendants' judgment

was reversed on appeal, Napper v. Johnson, 464 S.W.

2d 496 (Tex. Civ. App. 1971) (Pk 16), writ of error re-

fused by Texas Supreme Court, "no reversible error."

That opinion will serve as a statement of the back-

ground facts of this case. During the course of

that trial, it was brought out for the first time

that a member of the law firm, in which petitioners

had been induced to repose their trust and confidence,

had made an under-table deal by which they, the law-

yers, could and did acquire a one-half interest in

petitioners' property.

PROCEEDINGS-EASTERN DISTRICT OF ARKANSAS

On June 9, 1971, petitioners filed in the State

Circuit Court at Little Rock, Arkansas, a complaint

against the present respondents for legal malprac-

tice and fraud (R.76-82), substantially the same as

the complaint filed in this case (J.A.17-26).

On July 12, 1971, Winslow Drummond, attorney for

these respondents filed a petition for removal in

the United States District Court for the Eastern

District of Arkansas in which he swore upon oath

that "at the commencement of this suit and at the

present time Jim L. Napper and Jo Ann Napper were

and are citizens of the State of Arkansas" (P.A.1).

It has never been retracted or qualified in any man-

ner and petitioners submit this declaration against

interest as prima facie evidence of diversity of

citizenship.

Petitioners obtained service upon their Arkansas

action under the Arkansas long-arm statute. Imme-

diately after removal of the case, respondents filed

their "Motion to Quash" contending that they were

not amenable to service under the long-arm statute

(P.A.10). Although respondents' motion was the sub-

ject of protracted proceedings, it had never been

acted upon at the time of the remand order of May

9, 1973, almost two years later (J.A.11).

Petitioners made the following statement to the

10 1

‘ . , t of

j ict Court below in their "Brief In Suppor

Jurisdiction® (J.A. 2). The respondents did not

contest it in any way. We offer it for the Court's

information as a summarization of those proceedings:

his opinion a stipulation of facts could be

worked out adequate for the purpose of passing

upon the question of long-arm jurisdiction and

urged that no hearing on the discovery motions

after the motion to quash was filed,

peng tee # notified plaintiffs that it planned

to rule on the motion without a hearing and

gave petitioners ten days to file brief, answer,

affidavits and other opposing documents. Peti-

tioners' counsel responded with the proposition

(that the burden of proof on a motion to quash

process is upon the moving party and urged nen ll

the respondents as movants had produced no proo

in support of their motion.

e Court replied ti.at in its opinion, in

a aman couvts ae burden of proving juris-

diction is upon the plaintiff. tb tage nee ‘

responded by requesting time in which to effec

discovery. Respondents opposed this request 9

the basis of the contention that the Court cou

not grant discovery until jurisdiction had been

established. Thereafter, the Court advised pe-

titioners that they would be granted time to

make discovery. Petitioners filed a request

for production of documents and six separate

sets of interrogatories. In answer to the re-

quests, respondents refused to make discovery

and answered that the Court had no jurisdiction

to order discovery. Petitioners filed a motion

to compel and asked the award of attorney's —

on the basis that defendants had gery een

(overruled upon the only contention that they

were urging in opposition to discovery. In <i

ponse to this motion, respondents filed detaile

objections to the discovery pleadings, repeti-

tiously contending that everything that —-

tioners desired to obtain was irrelevant an

too time consuming to produce.

The Court set a hearing on the discovery

question on about one week's notice. Petition-

ers' counsel replied that he would be tied up

in trial and requested an alternate date. Coun-

set for responients answered stating that in

was necessary at that time. The Court instruct-

ed the parties to negotiate regarding a stipula-

tion. Petitioners' counsel prepared a proposed

stipulation and forwarded it to defense counsel,

Defense counsel thereafter prepared their pro-

posed stipulation and served it upon petitioners'

counsel. Petitioners' counsel contacted respon-

dents for the purpose of setting up a conference

to discuss the discrepancies in the two proposed

stipulations. Defense counsel replied by letter

stating "if the one I proposed does not meet with

your approval, we can just forget it."

Petitioners renewed their request for a hear-

ing upon the motion to compel. The Court replied

by letter dated June 22, 1972 calling for the

parties to submit briefs and affidavits upon the

question of long-arm jurisdiction and stating

that it had decided not to allow discovery at

that time. “If the Court decides, after reading

the briefs and the affidavits referred to above,

that an evidentiary hearing on the jurisdictional

issues will be necessary or helpful, such a hear-

ing will be promptly scheduled." Petitioners

were unable to find any Arkansas authorities in

point and engaged in widespread research for com-

parable cases from other jurisdictions.

The Court retained the matter under advise-

ment until November. 1, when it addressed a letter

to counsel (R.30) * * * indicating that it might

be considering a ruling in favor of plaintiffs.

* * * (See also R.96). However, the Court re-

quested that respondents furnish an additional

brief before the Court proceeded further. Res-

pondents responded by filing on November 21,1972,

a motion to dismiss the case for want of diversity

jurisdiction, * * *, Plaintiffs replied that an

improperly removed case could not be dismissed,

it could only be remanded and urged that the

motion was not well taken in any instance.

Thereafter, petitioners counsel made several

inquiries of the Court as to when it might rule

and were advised that the Court was tied up with

various precedent matters, but that an early rul-

ing would be given. Finally, on March 29, 1973,

the Court by letter advised that it had recon-

sidered "the opinion that an evidentiary hearing

was unnecessary" and that such hearing "is here-

by scheduled for May 9, 1973 at 9:30 A.M. in

Little Rock." The letter stated that evidence

would be taken on both the long-arm and the di-

versity motion.

Counsel for respondents were two hours late

to the scheduled hearing and stated that they

had not gotten the hearing on their calendar.

Obviously they received notice of the hearing

because they had submitted a brief on diversity

jurisdiction as requested in the letter setting

the hearing date. When the hearing commenced,

the Court advised petitioners' counsel that he

should proceed first of all, solely upon the

diversity matter. The only witnesses were the

petitioners themselves. At the close of their

testimony, the Court remanded the case.

Petitioners' counsel was frankly astounded that

a federal court would, alter almost two years, allow

a party to impeach his own removal except on a show-

ing so strong that no other disposition is legally

permissible. To the contrary, we feel that the

Arkansas Federal Court surely erred by holding that

people who have admittedly resided in Arkansas al-

most continuously since 1966 are mere sojourners in

a strange land. In Law v. Converse, 419 F.2d 38

(3-Pa.1969), the Court refused to dismiss for want

of diversity jurisdiction on motion of the unsuccess-

ful party after a verdict had been filed. As we see

it, the Eastern District of Arkansas has permitted

that which the Third Circuit forbade.

PROCEEDINGS ON REMAND-ARKANSAS STATE COURT

After they were thrown out of the Federal Court

at Little Rock, petitioners promptly presented their

case to the State Circuit Court. On November 15,

1973, that Court sustained respondents' " i

Quash" holding “There has been ae paluaianabie a

the defendants, either individually or as a partner-

ship, with the State of Arkansas that would subject

them to the exercise of personal jurisdiction over

them by this Court." The Court rendered no opinion

and cited no supporting authority for its ruling.

An appeal was taken to the Arkansas Supreme

Court and a copy of the rules of the iektabas Supreme

Court was secured from the Clerk of that Court.

Notice of appeal was given in eleven days although

the statute allowed thirty. The transcript was not

ready within the prescribed ninety days from the

notice of appeal and a thirty day extension was

secured from the Trial Court. The transcript was

filed on the 108th day. On motion of these respon-

dents, the Arkansas Supreme Court dismissed the ap-

peal. No opinion or memorandum was delivered, but

the dismissal was apparently based on a new rule

not contained in the pamphlet provided by the Su-

preme Court's Clerk restricting Trial Court's ex-

tension authority. Petitioners urged denial of due

process because the appellate court's own clerk con-

tributed to their dilemna and that, in any case, the

fact that the notice of appeal was premature coupled

with the fact that the transcript was filed within

the overall basic time limit made the matter harm-

less, but the contentions were rejected.

A petition for certiorari addressed to the -

om reg ap ot Rae filed here on October 35,1974,

° - ° ertiorari was denied

1974, 419 U.S.1023. oe ee

PROCEEDINGS AFTER REVERSAL-

TEXAS STATE COURT

The case of Napper v. Johnson, reversed by the

Texas Court of civil Appeals was transferred to the

162nd District Court of Dallas County, Texas and re-

tried beginning July 16, 1973. As required by Texas

law, the case was submitted to the jury upon special

issues or interrogatories. The results were similar

to the first trial. Certain issues favored peti-

tioners and certain issues favored respondents.

The Court declared a mistrial and ordered the case

to be tried for a third time.

The case was tried again commencing December l6,

1974. The petitioners moved that the Judge be dis-

qualified, but they were overruled. While prepar-

ing the charge, the Court remarked that if the ver-

dict was favorable to plaintiffs, he would probably

grant judgment N.O.V. The verdict on eleven (11)

separate special issues (interrogatories) turned

out to be entirely in petitioners’ favor. The Court

thereafter announced that he had changed his mind,

that he would enter judgment on the verdict, and

that he would afterwards be inclined to act favor-

ably on a motion for new trial. His Honor pointed

out in passing that orders granting new trials

cannot be appealed under Texas practice.

Prior to the ee on motion for new trial,

petitioners renewed their motions to disqualify.

A partial transcript of the hearing on the various

motions is attached hereto (P.A.20-21). When coun-

sel attempted to obtain a hearing on the motions

to disqualify, he was ejected from the Courtroom.

His Honor then granted a new trial to the respon-

dents. No trial date has been set as of this writ-

ing.

PROCEEDINGS-NORTHERN DISTRICT OF TEXAS

As previously stated, the petitioners' complaint

is substantially identical to their pleadings in the

Arkansas courts. This case was filed August 23,1971

poor “as a precaution against having their cause

pending in the Eastern District of Arkansas] dis-

missed for want of long arm jurisdiction] after the

running of the applicable limitation period"(P.A. 3 ).

The District Court states "Plaintiffs in this cause

sought, and received, a stay in the proceedings in

this court pending a decision on the issue of diver-

sity jurisdiction * * *" (P.A. 5). The statement

is somewhat inaccurate. Defendants swore to peti-

tioners' citizenship and removed the case on July

12, 1971 (P.A. 1) and the only "jurisdictional

question" before the Arkansas Court on August 23,

1971 related to oes sam jurisdiction. It was not

until November 21, » over a year later and after

the Eastern District of Arkansas had indicated a

ruling against them that respondents attacked their

own affidavit (P.A. 2).

An amended complaint was filed by petitioners

on September 25, 1973. By this complaint, petition-

ers alleged that they relied upon representations

communicated to them by respondents from Dallas,

Texas over the common carrier telephone system to

petitioners at Hardy, Arkansas and Cherokee Village,

Arkansas (J.A.19-22). Petitioners alleged that re-

spondents formed a profit splitting deal with the

mortgagee, Johnson, and that during their interstate

communications with petitioners, respondents omitted

to communicate this fact to petitioners. "Such omis-

sion tended to create in the minds of plaintiffs

the impression that defendants!’ activities with res-

pect to the transaction were devoted exclusively to

the interests of plaintiffs [and were] exclusive of

any self interest in the transaction. Such material

omission thereby caused such entire communications

to be deceptive" (J.A.19-20). Petitioners alleged

that thereafter as the 180 day period specified in

their agreement with the said Johnson began running

out, petitioners employed respondents to solicit a

30 day extension from mortgagee, Johnson. Petiticn-

ers alleged that respondents accepted and undertook

such employment while omitting to divulge their pro-

fit splitting deal with Johnson and again alleged

"Such material omission thereby caused such entire

communications to be deceptive" (J.A.20-21). They

likewise alleged that they were given false or in-

correct information regarding the expiration date

of the 180 day period, that the same was transmitted

by interstate telephone and that the same was decep-

tive (J.A. 21-22). Defendants' conduct is alleged

as constituting legal malpractice (J.A.22-23). Al-

ternatively, petitioners alleged the conduct of

respondents to be fraudulent (3.A. 23-26).

_ In support of their diversity allegations, peti-

tioners filed affidavits on nevenbes 24, 1971’ (5.A.

5-7L1]) and on August 27, 1973 (J.A.12-i4), They

further rely on the affidavit of respondents’

attorney Winslow Drummond annexed to the Petition

For Removal (P.A.1). These affidavits, which

are uncontroverted, set out that since 1966, peti-

tioners have resided almost continuously in Arkan-

sas, have maintained their only regular place of

abode there, and have lived, worked, voted and raised

their children in Arkansas.

Respondents have filed no answer and no affi-

davits. They originally urged that inasmuch as

petitioners alleged in the complaint that they “own

homestead property in Texas" (J.A.4), that "they

are citizens and residents of Texas" (J.A.4-5).

Subsequently, respondents moved for dismissal

on the grounds that the remand entered by the

Eastern District of Arkansas was conslusive upon

the diversity question (J.A.7[2]).

The District Court dismissed on October 3, 1973

(P.A.2) and the Fifth Circuit affirmed on September

16, 1974 (P.A.8). Neither the Northern District of

Texas nor the Fifth Circuit made any findings on

the merits of the diversity question although it

was fully briefed and argued by both parties. In-

stead, both Courts declared the Arkansas rulings

to be conclusive. The District Court failed to

take any express notice of petitioners' claim of

pendent jurisdiction although the matter was duly

pointed out to the Court. On appeal, the pendent

jurisdiction was again clearly pointed out. The

Fifth Circuit took no express notice of the pendent

claim in its original opinion, but held on rehear-

ing that "there was never any basis of federal

jurisdiction sufficient to support pendent juris-

diction * * *" (P,A.15).

Petitioners here submit that the Courts below

erred on both counts.

REASONS FOR ALLOWING THE WRIT

FIRST QUESTION: THE RIGHT OF APPEAL MAY NOT B

UNNECESSARILY FRUSTRATED BY THE ISSUE PRECLU-

...- StON, DOCTRINE... ee Te Peer TT Oe rr ere eee

Every system of laws in existence, and in all

likelihood, every system of laws *hat has existed

has had rules against the relitigation of matters

previously decided. Unless the Courts have the

power to reach a final conclusion in litigation and

enforce their conclusions as final, they would be

little more than perpetual debating societies.

We inherited the term "res judicata" (literally,

a thing adjudged) from the Roman law through the

common law. The common law rule was rather narrow.

There was no res judicata without the four-fold iden-

tities of parties, capacities, subject matter

(res) and nature of claim. However, the courts of

chancery gave injunctions against repetitious liti-

gation and the splitting of causes. Those courts

evolved the rule that once an issue had been full

and fairly decided, it could not be put into 3

tion between the same parties again.

The merger of law and-equity in this country

brought about a merger of the rules of former adju-

dication as applied in courts of law.and chancery.

Unfortunately, such merger brought on a great deal

of loose terminology, confusion of terms and gener-

al lack of uniformity. The courts and the writers

are prone to refer to the entire field of former

adjudication with the term "res judicata," often

without specifying what aspects of the doctrine

are being referred to. The cases and texts speak

of "res judicata","estoppel", "direct estoppel",

"estoppel by verdict","estoppel by judgment","col-

lateral estoppel","prior adjudication", “issue pre-

clusion", "claim preclusion", "merger", “extinguish-

ment", "judgment in bar",etc. The law of former

adjudication also has numerous branches that are

often confused. We mention them only in passing

because they have no application to the case in

hand: law of the case, stare decisis, the rule

against splitting, and the rule requiring the as-

sertion of counter claims and offsets in the same

action. These doctrines also have been loosely

referred to from time to time by the term “res ju-

dicata." See 46 Am.Jur.2d, Judgments, §§397-399.

The original Restatement of Judgments published

in 1942 made an effort to clarify terminology. The

field of law relating to the limiting effect of

prior judgments was entitled “former adjudication.”

The term "res judicata" was limited to its classic

or common law usage. The term "collateral estoppel"

was adopted to describe the conclusive effect of

issues previously tried. The Supreme Court has

primarily followed the terminology of the Restate-

ment employing the term "collatera! estoppel” in

several decisions.

Professor Scott, one of the reporters for the

original Restatement, expressed misgivings with the

use of the term "collateral estoppel" from the out-

set as being undescriptive. Scott, Collateral

Estoppel By Judgment, 56 Harv.L.Rev.1,3(1942). Pro-

fessor Vestal, ~ has written extensively on form-

er adjudication developed the terms "claim preclu-

sion" and “issue preclusion," Vestal, The Constitu-

tion and Preclusion, 62 Mich.L.Rev.33,34(1963). His

terminology has been adopted for use in the second

Restatement of Judgments and petitioners will em-

ploy it herein submitting that it much more ac-

curately describes the concepts involved and is,

therefore, helpful in their understanding and ap-

plication.

EVOLUTION OF THE

PRECLUSION DOCTRINE

The leading case drawing a distinction between

claim preclusion and issue preclusion is Cromwell

v. Sac County, 94 U.S.351(1876). (First suit: plain-

tiff sued for interest on certain bonds issued by

defendant county; take nothing, bonds not validly

issued, plaintiff did not prove coupons sued on

were acquired for value before maturity. Second

suit: action on other bonds, same series; plain-

tiff pleaded acquisition for value before maturity.

Held for plaintiff in second case. ):

“But where the second action bet@een ‘the same parties is

upon a lifferent claim or demand, tl judgment in the prior

action operates as an estoppel only as f& those matters in issue

or points controverted, upon the determination of which the

finding or verdict was rendered. In all cases, therefore, where

it is sought to apply the estoppel of a judgment rendered upon

one cause of action to matters arising in a suit upon a differertt

cause of action, the inquiry must always be as to the point or

question actually litigated and determined in the original

action, not what might have been thus litigated and deter-

mined. Only upon such matters is the judgment conclusive in

another action. " Id.353 ;

Since the plaintiff was not seeking the same

relief, the second suit was not precluded. While

the prior suit settled the proposition as between

the parties that plaintiff could not recover with-

out proving acquisition for value, before maturity,

it went no further. Inasmuch as the plaintiff made

such allegations in his second suit and he was not

seeking to defeat the relief granted in the first

suit (he was suing on a different claim--to recover

a different res), he was entitled to litigate his

case to judgment.

The next significant decision (which the Fifth

Circuit held controlling) was Johnson Co. v. Whar-

ton, 152 U.S.252(1894). (Dispute over patent royal-

ty agreement; plaintiff obtained judgment for small

amount of royalties accruing during early period;

under statute then existing, judgment non-appealable

because of the small amount. Plaintiff thereafter

sued for substantial amount later accruing; held,

first judgment conclusive in second case; non-appeal-

ability of former judgment has no bearing. )

Obviously, no subsequent case could be counte-

nanced which threatened to impair the relief pre-

viously grantedar denied. However, that relief was

a money judgment for royalties coming due in cer-

tain months. The second suit did not threaten

the specific relief of the first in any way but

the Court took no consideration of any possible

distinction and held that the non-appealable prior

judgment was conclusive throughout.

The Court declared that "the principle of res

judicata" does not depend upon whether the judg-

ment 1S subject to re-examination in anotier court.

The Court stated that it could find no authority

in point and “upon principle," non-appealability

should have no bearing. Id. 256,257.

We strenuously contest the Court's conclusion

that Congress intended this result by declaring

certain cases non-appealable. The converse argu-

ment will fit the situation with identical facility

and is in fact, much stronger. That is to say,

the Supreme Court could just as well have concluded

that inasmuch as Congress had expressly provided

for appeal where a larger sum was involved as in

the second case, then Congress must have intended

that the first case may not control the outcome of

the second. We suggest that the argument is equal-

ly vacuous in both directions. This is the type

situation which Congress neither foresaw nor under-

took to provide for. The truth of the matter is

that practically all of the law of former adjudi-

cation is case law. The legislative arm has left

the judicial arm free to fashion its own rules con-

cerning former adjudication.

In Johnson, the Supreme Court was free to fash-

ion whatever rule it chose to apply because, as the

Court itself pointed out, there was no pre-existing

authority in point. The Court chose a harsh rule

and it admitted as much. The Court went even fur-

ther and held that even if the plaintiff had deli-

berately carved up his case in order to frustrate

the defendant's right of appeal, it would still

apply the same rule. "Whatever mischief or injus-

tice may result * * * must be remedied by legisla-

tion," id.261. Suffice to say that 81 years have

passed without Congressional action upon the pro-

position.

The first Restatement of Judgments was recog-

nized by the Supreme Court in Commissioner v. Sun-

nen, 333 U.S.591(1947). (First case: taxpayer won

decision excluding from income royalties paid to

his wife; second case: IRS assessed taxpayer for

wife's royalty income in later years; held for IRS).

Tax liability for each year was held to be a separate

cause of action making classic res judicata (claim

preclusion) inapplicable. Collateral estoppel (is-

sue preclusion) was held to be generally applicable

to subsequent years, but the Court agreed that col-

laterai estoppel creates no vested rights. The

Court concluded that intervening decisions and a

substantial change in the legal status of such

royalty agreements constituted a compelling circum-

stance precluding the application of collateral

estoppel. Reading Johnson and Sunnen one after the

other, one will find a stark contrast in the over-

all view taken of the theo and limitati

law of former atiadhaahian.” sepeeena Aelia

"That principle is designed to prevent r i

epeti-

tious lawsuits over matters aa have soe ;

been decided and which have remainded substan-

tially static, factually and legally. It is

net meant to create vested rights in decisions

hat have become Obsol j

rhe ete or erroneous with

"And so where two cases involve inco j

; me taxes in

different taxable years, collateral estoppel

must be used with its limitations carefulle in

mind so as to avoid injustice. It must be con-

fined to stuations where the matter raised in

the second suit is identical in all respects

pe — decided in the first proceeding and

ere e controlling facts and appli

rules remain unchanged. ee

* & %* & e &

"If the relevant facts in the two cases are

separable, even though they may be similar or

identical, collateral estoppel does not govern

the legal issues which recur in the

: C sec :

x * * tn that situation, a court is art.

second proceeding to make an independent examina-

tion of the legal matters at issue. * * * Before

a party can invoke the collateral estoppel doctrine

* * * the legal matter raised in the second proceed-

ing must involve the same set of events or documents

and the same bundle of legal principles that con-

tributed to the rendering of the first judgment,"

id. 599-602.

In Sunnen, this Court relied heavily upon §§68,

69 and 70. Res.Jmts., §69(2), provides as follows:

"Where a party to a judgment cannot obtain the

decision of an appellate court because the

matter determined against him is immaterial

or moot, the judgment is not conclusive against

him in a subsequent action on a different cause

of action." Res. Jmts. ,§69(2).

Section 70, Comment d., also states that the

rules concerning the inability of a party to appeal

are applicable both to questions of law and of fact.

The first Restatement made no explicit provision

concerning preclusion when the former adjudication

was declared non-appealable by statute, but we can

see no difference in theory or practice whether the

appeal is frustrated because of mootness or an ex-

press statutory provision. The underlying premise

is the same. The right of appeal is a valuable

right. To treat a non-appealable decision as pre-

clusive in an appealable case frustrates the right

of appeal.

Section 69(2) was held controlling in Allegheny

Co. v. Maryland Cas.Co., 146 F.2d 633(3-Pa.1944),

oir ssn es U.5.855(1945). (First case: judgment

against taxpayers seeking to enjoin payment for vot-

ing machines, payment made while appeal pending,

appeal dismissed as moot; second case: county sued

for defects in machines; held, no mine e se, § Re-

lying on §69(2), the Third Circuit declared that,

inasmuch as the right of appeal was frustrated in

the first suit, the judgment in that case did not

preclude the second suit.

However, §69(2) was expressly rejected by the

Eighth Circuit in U.S. v. Munsingwear, 178 F.2d 204

(8-Minn.1949), (Suit by government for injunction

and penalty for price control violations: trial court

severed tried the injunctive claim, denied relief;

appeal dismissed as moot when price controls lifted;

trial court then dismissed damage counts on grounds

that prior judgment "bars further proceedings;" held,

preclusion is applicable). While the Eighth Circuit

discussed several Supreme Court decisions containing

widely generalized statements concerning former ad-

judication, the only case near in point and the case

upon which the Court placed primary reliance was

Johnson Co. v. Wharton, supra:

"We are satisfied that neither the District

Court nor this Court would be justified in al-

tering the doctrine of res judicata as it has

i mg been enunciated by the Supreme Court,"

id.209.

The dissent vigorously argued in favor of the

Restatement rule urging that such rule had received

inferential approval of the Supreme Court in Sunnen.

It was urged that none of the Supreme Court's deci-

sions justified "any such literal and justige thwart-

ing restrictiveness as has been done here."

A conflict with the Third Circuit decision in

Allegheny was claimed. Certiorari was applied for

and granted to consider the following question:

The dissent made another point which is wholly applica-

ble to petitioners® case. It was urged that in filing the

original motion to dismiss, the defendant had a duty to dis-

close that to the appellate court that it was planning to

urge the dismissal as conclusive in the other suit. The dis-

senting judge urged that even assuming a lack of bad faith,

a litigant still should not be permitted to profit from mis-

leading the court and that defendant was thereby “estopped”

to assert the dismissal order as being conclusive of the

other suit. (cont'd on following page)

"Whether a judgment denying an injunction, the

appeal from which has been dismissed as moot, can,

despite the frustration of appellate review, stand

as a bar to relitigation of the identical issue by the

same parties but in a suit for damages." (Pet.Cert.

p.2,U.S.v.Munsingwear,No.23,24,0.T.1949,

U.S.Sup.Ct. )

The propositions argued were as follows:

" The Government's Statutory Right to Appeal from the

Denial of the Injunction Having Been Fru~ cated

Through No Fault of Its Own, the Trial Court-

Unreviewed Judgment Does Not Bar Relitigation of the

Same Issues in the Tr:h!c Damage Actions ; :

A. Inherent in the Doctrine of Res Jadicata Is the Principle Ti at

a Prior Adjudication Is Not to Be Deemed a Barto Reale os.

When, ax Herc, the Injustice Whick Would Follow Upon -i;.- -

cation of the Doctrine Outweighs the Rersons for Its Invo. si. 1”.

*% & & %* & * * &

" , .

B. The beci of fee Devision Below 1s to Deny an Appeal ina VJ rtd

in Which Congress Lntended Appellate Reriew to Be Ao + vile.

(Ptr. Br.pp.8,22,U.S. v. Munsingwear, Ibid. )

(cont*d from preceding page)

These respondents made no effort to notify the Arkansas

court that they planned to seek dismissal of the Texas case

on the strength of the Arkansas Court*s remand order. That

Court might have ruled differently if it had been so notified.

Obviously, dismissal is a more severe remedy than remand.

The proposition is particularly applicable considering that

defendants filed a motion in the Eastern District of Arkansas

not for remand but instead moved “that this action ought to

be dismissed for want of jurisdiction"(R.66,J.A.41]). Even

though the Arkansas Court refused to dismiss and limited its

specific relief to a remand, the Fifth Circuit has held that

his order makes dismissal of another case pending in another

district mandatory. This, petitioners submit is the type of

incongruous over-application of the law of former adjudica-

tion against which this Court warned in Sunnen declaring that

the doctrine "must be used with its limitations carefully in

mind so as to avoid injustice.”

The question presented and the a rteeem

argued differ little from that which petitioners

now present.

Unfortunately, the Supreme Court did not reach

the real question as we see it and as the Eighth

Circuit saw it; that is, whether or not Johnson is

outmoded authority and whether the Restatement con-

tains the modern rule. Instead, the Court chose to

base its affirmance on the lack of skill, foresight

and diligence of counsel for the government in fail-

ing to ask the appellate court when it mooted the

prior appeal to vacate the judgment below; case re-

affirmed.

Inasmuch as there was no similar procedure avail-

able to your petitioners, the precise holding by the

Supreme Court in Munsingwear has no present applica-

tion.

However, petitioners feel that the implications

of Munsinawear are in their favor. The Court took

notice of the conflict between Johnson and the Alle-

heny-Restatement rule. While it declined to resolve

the conflict, it did declare it to be the ""duty of

the appellate court'" to vacate the decision below

Substantial dissatisfaction with the decision has been

registered. It has been criticized as setting a procedural

trap for the unwary. If the appellate court had a “duty”

to dismiss in the first case, was the Court not exalting

form over substance? Would it not have been better to apply

the equity rule calling for the Court to consider as having

been done, that which should have been done? Obviously, the

government*s failure to make the proper motion was a simple

oversight. If any prejudice oy imposition had resulted to

the opposing party, the offenaing party should be visited

with the necessary consequences of its oversight. Lacking

any indication of imposition to the opponent or grounds upon

which the Court in the prior appeal could have denied the

motion, it appears that the goverment*s cause of action was

declared forfeit simply as a penalty for failure to exercise

sufficient foresight and diligence. See Developments-Res

Judicata, 65 Harv.L. Rev.818,847-848(1952) Hart & W.,Fed.

Ct@l13(2d.ed.1973), Res. Jmts. ,2d,184(T.D. 1973)

when it dismisses for mootness.

"That procedure clears the path for future

relitigation of the issues between the parties

and eliminates a judgment, review of which was

prevented through happenstance."

From this statement, petitioners find the clear

inference that the Supreme Court does find the right

of appeal to be a valuable right and does feel that

a party is entitled to relief from preclusion when

review is “prevented through happenstance." The

present happenstance is that respondents secured a

ruling upon the diversity issue in a non-appealable

proceedings. Certainly, non-appealability does not

affect the judgment's vitality as a claim preclu-

sion, but issue preclusion presents a different

Situation. As stated in Sunnen, no one has “vest-

ed rights" in erroneous decisions. "Having been

frustrated through no fault of * * * [their] own,

the * * * unreviewed judgment does not bar reliti-

gation of the same issues * * *" (Ptr.Br.p.8, U.S.

v. Munsingwear, ibid.).

After 30 years, the first Restatement is being

replaced by Restatement of Judgments, <d. One of

the most valuable advances is the adoption of

Professor Vestal's terminology, “claim preclusion"

and “issue preclusion." This new, more descrip-

tive terminology should go far in clarifying the

law of former adjudication. Until definitive and

well understood terminology is adopted, it is not

possible to have definitive and well understood

laws. While the first Restatement gave specific

consideration only to the frustration of a prior

appeal on account of mootness, Restatement, 2d

lays down a more inclusive rule:

" § 68.1. Exceptions to the General Rule of Issue Preclusion.

Although an issue is actually litigated and de-

termined by a valid and fina] judgment, and the de-

termination is essential to the judgment, relitigation of

the issue in a subsequent action between the parties is

not precluded in the following circumstances:

"(a) The whom usion is

t could as a matter of law, have

obtained ew an a

court on; ~170

HHH %H% 4%

"Comment on Clause (a):

"a. Inability to obtain appellate review. As noted in

§ 68, Comments h and i, the availability of appellate review

for the correction of errors has become critical to the ap-

plication of preclusion doctrine. If appellate review is un-

available because the party who lost on the issue obtained a

judgment in his favor, the general rule of § 68 is inap-

plicable by its own terms. Similarly, if there was an al-

ternative determination adequate to support the judgment

the rule of § 68 does not apply.

"There is a need for an analogous exception to the rule

of preclusion when the determination of an issue is plainly

essential to the judgment but the party who lost on that

issue is, for some other reason, disabled from obtaining re-

view as a matter of law. Such cases can arise, for example,

because the controversy has become moot, or because the

law_does not allow appellate review of the particular cate-

gory of judgments.” (pp.171-172)

HR HEE HHH

"REPORTER'S NOTE

"This Section is new. It is designed to replace §§ 69-72 of the

first Restatement and to group under one heading the various bases

for exceptions to the preclusion doctrine.

"Clause (a) is drawn from § 69 of the first Restatement. Part

of former § 69, dealing with the effect of an appeal, is now covered

in Comment o to § 68. » remainder of former § 69, dealing with

inability to obtain appellate review because of mootness or im-

materiality, has furnished the basis of a broader exception for

cshich as a matter of law, r is unavailable, and

ituatious 1 Ww.

Comment g links this exception to the pervasive importance 0

reviewability in the application of preclusion doctrine.

"As an example of a limitation on the availability of review not

involving mootness, a number of jurisdictions limit appeals to

eases involving more than a specified amount or value. See 4 Am.

Jur. 2d, Appeal and Error $§ 20-23 (1962! (p. 183)

Surely, if the black letter rule being promul-

gated by the American Law Institute is to be fol-

lowed, there is error in the decision of the Fifth

Circuit. Respondents have made no attempt to dis-

tinguish the new §68.1, but urged instead that the

Circuit Court was Obligated to follow the Supreme

Court's decision in the Johnson case. Clearly,

the ALI considers Johnson to be outmoded. Peti-

tioners urge likewise and would submit that the

writ should be granted to explore the proposition.

We are at a loss why the Fifth Circuit failed to

even mention the new §68.1. According to Shepherd's

Citator, the federal courts have previously cited

Johnson as controlling authority only one time in

this century. That one time was the Eighth Cir-

cuit's Munsingwear decision, supra. The case is

out of step with modern day concepts.

"The federal decisiéns have made clear that

the rule of collateral estoppel in criminal

cases is not to be applied with the hypertech-

nical and archaic approach of a 19th century

pleading book, but with realism and with

rationality." Ashe v. Swenson, 397 U.S.436,

444(1970).

Ashe was, of course, a criminal ca

are signifigant differences between rt to Figen

nal actions* but the comment upon the era which spaw-

net Rae Johnson ot most descriptive. Ashe v

S$ an admitted extension of th

preclusion. Restatement, 2d, iui a

et ores in which the courts are extending issue pre-

Se pe and forbidding the relitigating of issues

at were previously decided, fully and fairly. How-

ever, there is and must be a concurrent movement >

rg Malas the rigid and overly technical approach

he e field employed before the turn of the century

e doctrine must be applied with its limitations

peertg bap Rae rate Commissioner v. Sunnen, supra

imitations is that the righ

should not be frustrated by invoking peo a

sion with respect to a prior non-appealable judgment.4

When this case was orally argued in

Honorable Chief Judge cunthened Kitnt. Seemann ane’ duets

that at least insofar as criminal law is concerned. non-

appealability seems to have no bearing, because the pros-

ecution never has the right of appeal, but yet under Ashe

v. Swenson, it may be bound by "collateral estoppel.”

The situation is not at all comparable. It is the dou-

ble jeopardy clause and not the law of former adjudication

which frustrates the prosecution from taking an appeal. In

the case at hand, the crux of the deprivation is the intro-

duction of a nonappealable judgment into a case where the

oe of appeal would otherwise be available, thus frus-

io of the underlying issue upon which the

The objective of a criminal case is punis

placing the burden upon those who would secrangeed eons |

to make out @ clear case for the exaction of the penalty

In a criminal case, a lone human being is pitted against

the power and prestige of the goverment in a contest for

human liberty. Because the contest is basically unequal

the Constitution has placed various handicaps upon the pros-

ecution, one of which is the double jeopardy provision which

provision denies the right of appellate review in all cases

after jeopardy has attached. Because of the inherent dif-

a few comparisons can be drawn from criminal prac-

THE DIVERSITY CLAIM IS MERITORIOUS

Neither the Fifth Circuit nor the Northern

District of Texas would consider the merit of the

Arkansas "no diversity" ruling. Both declared that

they were prohibited from doing so by the law of.

former adjudication. We will address the proposi-

tion but briefly.

Petitioners moved away from their home in

Dallas, Texas during the early part of 1966 (P.A.

17) and at the time of filing of this lawsuit had

continuously lived in Arkansas for over five years;

there maintaining their only place of residence,

voting, keeping their children in school, attending

church, banking and licensing their automobiles

(J.A.5-7[1], 12-14). The only exception is that

during a six month period commencing about Thanks-

giving of 1969, they stored their household goods

in Arkansas and journeyed to Colorado and Texas ~

where Mr. Napper looked for work. During this six

month period, there is no evidence that they set up

a permanent household elsewhere and the temporary

nature of their absence from Arkansas was attested

by their leaving their possessions behind them (J.

A.12-14). The Arkansas Court acknowledged that Mr.

Napper "is a resident in all respects in Arkansas"

(J.A.10).

In remanding the case, the Eastern District of

Arkansas primarily emphasized that the petitioners,

Mr. and Mrs. Napper, still owned a house in Dallas,

Texas, which they had rented out and that they had

conceded that at some date in the future, when cir-

cumstances would allow, they would like to return

to Dallas (P.A.11,J.A.9-10). A "floating intention"

to return whence one came is an insufficient basis

to maintain citizenship at the previous residence.

"From a practical standpoint, citizenship of

the parties in many diversity cases is beyond

dispute. If the full facts are that a man has

lived and worked in Connecticut for three or

four years before suit is filed and can testify

that he has no present intention of moving any-

where else to live, no one is going to make

much mileage out of a claim that he is not a

citizen of Connecticut for diversity purposes."

Lavine & H., Man.Fed.Prac., 44-45

- See also Gilbert v. David, 235 U.S.561(1915) and

Hardin v. McAvoy, 216 F.2d 300(5-Ga.1954).

One of the lesser recognized values of the right

of appeal is that its mere existence imposes discipline

upon trial courts. We believe that the right of appeal

has a definite prophylactic effect. Mapp v. Ohio, 367

U.S. 643(1961). Where appeal is available the trial

court is under compulsion to rule in accordance with the

law. In a non-appealable proceeding, the temptation

can arise to rule in accordance with one's own

subjective notions.

This is a case of legal malpractice, a case which

a judge might be inclined to regard as both "sticky"

and contentious. We make no accusations against the

Honorable Judge of the United States District Court

for the Eastern District of Arkansas. He made a

visible effort to be both considerate and cordial

toward petitioners and their counsel. All we know

is that the minds of judges like the minds of other

humans are subject to subtle influences. Certainly,

a competent and experienced federal judge knows that

remand orders are non-appealable. Whether the desire

to get rid of a "sticky" case influenced the Court's

ruling in any way, we do not know. We do know and

do here point out that the temptation to issue a

non-appealable remand order and clear his docket of

a case which he might have regarded as personally

distasteful was obviously present.

JOHNSON CO. V. WHARTON WILL

NOT STAND UP TO ANALYSIS

The Johnson decision contains several obvious

weaknesses:

(1) Specious reasoning: Of one thing we are

sure, Congress never foresaw the Johnson case and

and had no intent at all as to the issue preclusion

effect of a non-appealable judgment. Much stronger

arguments as to the supposed intent of Congress can

be made in the opposite direction. Visualize the

following argument of counsel:

Argument Favoring Preclusion:

Congress greg plain language that judg-

ments of less than $5 are non-appealable. Con-

gress placed no limitations upon such judgments.

It necessarily follows that Congress intended none.

This prior $400" judgment was just as valid, final

and enforceable as a $6,000 judgment. One of the

attributes of a valid, final and enforceable judg-

ment is that the issues as necessarily found there-

in are conclusive between the parties. It must,

therefore, be necessarily concluded that Congress

intended that the $400 judgment requires that judg-

ment also go for the_plaintiff upon his later claim

amounting to $6 ,306.>

Argument Opposing Preclusion:

Counsel has read the intent of Congress ex-

actly backwards. He is piling an inference upon

an inference. Of course, the $400 judgment is

valid, final and enforceable. The plaintiff has

collected his $400 and he may keep it. It is not

involved in this case. We do not read the intent

of Congress by inference. We read it from the

plain language of the statute. Congress intended

that judgments in excess of $500 are a alable.

The statute on its face so provides. erefore,

Congress must have intended for this latter claim

for $6,306 to be subject to an appeal. The intent-

ion of Congress to allow an appeal in this case may

not be frustrated by invoking as conclusive a prior

non-appealable judgment for only #400.

To our way of thinking, the second argument has

far greater appeal than the first because it gives

The opinion states that the second judgment was for

$6306 but it fails to mention the amount of the prior judg-

ment or the statutory minimum for appealability then in

effect. The first two figures given above are hypothetical.

the appearance of a far sounder, more reasonable

and just resolution of the competing considerations

involved. However, let us be frank and practical

for a moment. Let us call a spade a spade. The

facts are that it is extremely doubtful if Congress

had any intent whatever. The lawmakers simply did

not envision or consider the problem presented in

Johnson. The arguments in both directions concern-

ing Congressional intent are specious because Con-

gress had none.

(2) No supporting authority: Unable to find

any cases in int the decision went off on a few

generalized statements then in vogue emphasizing

so-called "res judicata" as a mechanical and mono-

lithic rule admitting no exceptions and recognizing

no countervailing considerations, the "brick wall"

approach.

(3) Cromwell case misread: The decision quotes

extensively from Cromwell, but only from its dicta.

The above quotation from Cromwell, which was the

real holding of the case, was ignored. Obviously,

Cromwell was not cited for its result, for that re-

oar Wes ° re of Pgh eget ons od Any statement

n Cromwell as to when preclu

by definition, only dicta. ee ee

ile (4) Issue Preclusion confused with claim pre-

sion: Clearly, Johnson was identical to Cromwell

jr Phy fgger that poms ware cases of issue preclu-

nly. Owever, Johnson drew no distincti

and called it all "res judicata." The failure to

distinguish the dicta from the results of Cromwell

reinforces the premise that Johnson failed to recog-

nize the important distinctions between issue and

claim preclusion.

(5) Failure to discuss necessity: A non-appeal-

able judgment must, of necessity, constitute a claim

preclusion. Otherwise, it would not be a truly final

judgment. If not, it would be available to the los-

ing party to go elsewhere and seek to defeat the

very relief (recovery, res) that was awarded. On

the contrary, issue preclusion is a non-necessary

aspect of a judgment in the sense that it goes beyond

the relief specifically awarded. Please forgive

the repetition, but the point is essential. The

dividing line, the watershed between issue preclu-

sion and claim preclusion is the question of what

relief (recovery, res) was specifically awarded in

the prior judgment. While the application may be

difficult in certain cases, the test is exceeding-

ly simple. Beyond the specific relief (recovery,

res) of a judgment, the law,in furtherance of the

policy against repetitious litigations, may give

the judgment collateral effect (hence, "collateral

estoppel"). However, this latter aspect of a judg-

ment is by definition, a case of issue preclusion

asopposed to claim preclusion.

Returning to the caption of this sub-section,

while claim preclusion is a necessary (emphasis:

necessary) element of a final judgment (otherwise,

it cannot really be final), issue preclusion is

never (emphasis: never) a necessary element of a

final judgment. Cromwell v. Sac County, supra;

Commissioner v. Sunnen, supra.

The Johnson decision wholly failed to discuss

necessity. instead, it jumped to the conclusion

that issue preclusion was the necessary effect of

a non-appealable judgment. Sunnen holds that issue

preclusion is not always, in every instance, the

necessary result of a final judgment. In that case,

preclusion was refused because of subsequent events.

While issue preclusion is, as a general rule, the

desirable result, any contention that issue preclu-

sion is, in all cases, the necessary result of a

final judgment bodaciously overstates the matter.

(6) Indirect relief that could not have been

iven directly: in 1694 the statute, as we under-

stand, srohibited the appeal of judgments under

$500. Assume that the first judgment in Johnson

had been for $6,706 and a proviso added to the

judgment that no appeal would be permitted. Obvious-

ly, the proviso would be held void and the appeal

allowed as if the proviso were not there. The trial

court had no power to impose such a condition. But,

this is exactly the indirect effect of the Johnson

case. A judgment of say, $400 was parlayed into a

non-appealable total award in the first and second

judgments of $6,706 ($400, plus $6,306). If og

law is port then a non-appealable judgment can-

not indirectly award in excess of $500 because the

ra page se is 7 nt direct awards in excess

sum. e result reached j

doesn't make good sense. _— a

THIS CASE INVOLVES COLLATERAL

APPLICATION OF THE ARKANSAS JUDGMENT

We have previously pointed out the loose i-

nology and the lack of uniformity which ee ane

law of former adjudication. The Fifth Circuit has

termed this to be a case of "estoppel by judgment

* * * accurately termed 'direct estoppel.'" (P.A.13

fn.4). Analysis reveals this statement as no more ;

than further terminological morass. The motion made

by respondents in Arkansas was that "this action

ought to be dismissed" (P.A.2). The order of the

re eet "It is ordered that this case

- s hereby, remanded to i 1

of Pulaski County, Meatball. a ae

This was all of the relief which th

Court undertook to render. He ruled oes cee eee

case that was then pending before him. He made no

ruling running to the merits of the underlying cause

of action and respondents had asked for none. He

made no ruling with respect to the pr i

g Fe present ca

was pending in lexas and respondents aske ase whch

Furthermore, inasmuch as the only reli

ef grant

by the Arkansas Court was to remand that on Rg comet

pending to the State Court of Arkansas, it is appa-

rent that nothing which the Northern Distri

rict

Texas can do or which petitioners have ren the

Texas Court to do can ssibly affect j

: : or li

impair the specific volte? orented by the eee

In fact, respondents have defended this action of legal

malpractice for nigh onto four years without ever filing an

answer and never giving a scrap of discovery.

Court. If the Arkansas judgment is to have any

efrect whatever in Texas, the effect must be in-

direct or collateral. Insofar as this case is con-

cerned, it represents torture of the English lan-

guage to say that this is a case of direct estoppel

rather than collateral estoppel.

Clearly, the present case is one of issue pre-

clusion, not claim preclusion. This is primarily

true because nothing which the Texas Court might

do or which it has been asked to do can limit or

affect or impair the relief granted in Arkansas.

The cases cited by the Fifth Circuit itself illus-

trate the terminological problem.

In Mrezs Vv. Ampex , 491 F.2d 1103(5-Tx.1974),

it is state a e Western District of Oklahom

previously had dismissed an identical action for

failure to state a claim upon which relief can be

granted. In its second opinion, ers v. Ampex,

498 F.2d 1092(5-Tx.1974), the Court Stated Whe

doctrine of direct estoppel bars the claim."

Petitioners agrees Myers is clearly a case

of claim preclusion, There, the prior judgment

went to the entire underlying dispute between the

parties. The Oklahoma Court held "Your pleadings

entitle you to no relief." If the defendant had

filed a motion for summary judgment, that court

would have granted a take nothing judgment. If

the prior court had heard the evidence, he would

have directed a verdict. His ruling destroyed the

entire dispute between the parties. His ruling

thus precluded the same claim from ever being filed

again in another court. Ergo, claim preclusion.

In contrast to petitioners' case, if Myers had

been allowed to sue in the Texas Court, the Texas

judgment sought by Myers would necessarily have

impaired the relief granted in the Oklahoma Court

because the Oklahoma Court granted relief which ran

to the very heart of the case. Thus, by necessity,

we he ‘re claim preclusion, not issue preclusion. If

"direct estoppel" is to be equated with claim pre-

clusion or classic res judicata, then we agree that

Myers is a case of direct estoppel.

Granted that the Arkansas Court based his remand

order upon a finding of no diversity, this does not

obscure the fact that all he undertook to do was to

remand "this case" to the Pulaski County Circuit

Court. There is a clear distinction between the

judgment given and the findings which lead to a

judgment. Where the subsequent case threatens the

relief granted formerly, there is a case of claim

reclusion. Otherwise, there can be no case except

one of issue preclusion. If it is only the issues

determined in the first case that are being given ~

effect in the second case, then, unless we are to

slaughter the language, the first judgment is being

given collateral effect rather than direct effect.

The proposition is irrevocably true because the

first judgment does not encompass the relief sought

in the second case. Conversely, in Myers, the court

by necessary implication ruled that ese pleadings

will perpetually fail to state a cause" and gave re-

lief not only to "this case" but gave permanent re-

lief against the same pleadings wherever they may

appear. Ergo, claim preclusion attached to those

pleadings. The same appears to be true of Estevez

v. Nabers,219F.2d 321(5-La.1955). The opinion there

states that the first suit was "dismissed on the

ground that there was no justiciable controversy"

and further states that “the first action having

held the complaint was defective in failing to al-

a 8 er aa of a justiciable nature, we may

nsider e correctne

the facts there alleged." ee ve ens ae

The Estevez opinion fails to disclose th i-

culars of the complaints ruled upon, but we Eda

that in the first case, the court did not dismiss

upon any narrow procedural grounds or upon grounds

of prematurity or defect in parties, but it went

further and held that it had no power or jurisdic-

tion to review exclusion orders issued by the Imni-

gration Service either then or ever. If this was

the gist of the original ruling, then the secoad

case was a direct attack upon the relief granted in

the first and we have another case of claim preclu-

sion, not issue preclusion,

The slipperiness of the concepts being discussed

is illustrated by the dissent of His Honor, Judge

+ Ming nets a opinion below), in Weissinger

v. U.S., 423 F.2d 795(In banc, 5-Fla.1970), where

Estevez was cited in the opposite direction--that

is, a contention of "no preclusion" was there made

on authority of Estevez, while Estevez is now cited

as authority for application of preclusion. Rely-

ing on Estevez, it was urged:

"all that the district court could Proper’

mean by the words ‘with prejudice’ Lin the

prior action] was the plaintiff could not

again contest the issues of whether a demand

was necessary, and, if so, whether one had

been made. The words * * * do not show that

the claim or cause of action is barred."

Likewise, all that the Arkansas Court could .

properly mean was that he was disposing of the case

or proceedings in his Court. He did not rule upon

a claim or cause of action pending in another court.

His ruling, if it is to be applied in another court,

can only have collateral effect. Clearly, this is

a collateral estoppel which "must be used with its

limitations carefully in mind so as to avoid in-

justice," Commissioner v. Sunnen, supra at 599.

rm “direct estoppel" is discussed in Res.

Jats, 5, Commend d, and enous reference is made

tO , comment b, for an illustration:

° e action was dismissed because of the

nanSeteien of a third person as defendant, and

the plaintiff thereafter brings an action on

the same cause of action without joining the

third person, the plaintiff is not entitled

again to litigate the question whether the third

person was a necessary party."

do not argue with that definition of "direct

ia maseet estoppel as there employed na.

synonymous with claim preclusion, not issue preclu-

sica. To allow the second suit would be to allow

an attempt to defeat or impair the relief granted

in the first. Clearly, this is impermissible, but

these petitioners make no such attempt.

THE CASE IS BEING SACRIFIED ON

THE ALTAR OF RHETORIC

While the terminology differed me nner nartig ef

the distinction between the relief afforded (either

granted or denied, denial amounting to a grant of

relief to the opponent) and the findings of fact

and conclusions of = Rr gs a basis for that re-

lief was clearly spelled out in Cromwell v. Sac

County, supra. Cromwell thereby sets out the dif-

ference between claim preclusion and issue preclu-

sion although those terms were not employed. Pri-

marily, the distinction is whether or not the plain-

tiff seeks to impair the relief afforded in the first

case. While the test is stated in many places, it

was forcefully spelled out in McNellis v. First Fed.

S&L _Assn., 364 F.2d 251(2-N.Y.1966),cert.den. 305

eVDe , Ve

"*The decisive test is this, whether the substance

of the rights or interests established in the

first action will be destroyed or impaired by

the prosecution of the second.'

"As indicated above, the state action here deter-

mined that the two $62,000 payments could not be

recovered by the trustees; success in the action

now before us could not ‘destroy or impair' that

determination." McNellis v. First Fed.S&L Assn.,

++ Mile 251(2-N. e ,cer -Gen,. *Ve 7

"A judgment in one action is conélusive in a

later one, * * * when the two causes of action

have such a measure of identity that a different

judgment in the second would destroy or impair

rights or interests established by the first.

Cromwell v. County of Sac, 94 U.S.351

* * *, "The distinction, though elaborated with

special emphasis in many judgments of the Supreme

Court * * * is not the doctrine of that court

alone.

* & & %& te * &

"The decisive test is this, whether the sub-

stance of the rights or interests established

in the first action will be destroyed or im-

paired + prosecution of the second. * * *,"

Schuylki Fuel Corp. v. Nieber 165 N.E.456

(N.Y.1929)(Per Cardozo, C.J.). ,

Schuylkill quoted and cited as controlling:

Moreno v. Marbil Productions, 296 F.2d 543 (2-N.Y.

TS6I).

The test was easy to apply in Cromwell. It is

perhaps most difficult to apply in cases of dismis-

sal such as Myers, Estevez and Napper. In order to

decide whether claim preclusion or issue preclusion

is to apply, it is necessary to analyze the nature

and extent of the relief granted in the prior judg-

ment. Sometimes, in order to determine what relief

was granted, it is necessary to look at the plead-

ing upon which the Court ruled and otherwise view

the ruling in context. Please excuse the repeti-

tion, but the point is crucial. The Arkansas Court

granted no relief beyond the return of that parii-

cular case (1.e., the proceedings numbered L.R.

71-C-124) to the Court below. Anything else that

was said or done was a mere finding upon which the

grant of relief was made. If the Arkansas judgment

is to be given any further effect, the English lan-

guage defines that effect as collateral.

Like Cromwell, Johnson Co. v. Wharton was a case

in which it was easy to distinguish issue preclusion

from claim preclusion and the question was one of

issue preclusion only. However, the Supreme Court

in accordance with the practice of the day labeled

it all as res judicata. The terminological failure

to identify the two separate doctrines led to the

Court's failure to consider whether they should be

treated differently.

Congress intended for judgments less than $500

to be non-appealable, the Court declared. From this

sound premise, the Court jumped to the conclusion

that Congress intended a $400 judgment to conclusive-

ly require the entry of a judgment of $6,306. what

a complete non sequitur! Consonant with too many

decisions of that era regarding former adjudication,

the Supreme Court became so enmeshed with fine-spun

theories and with obscure ees Ie ps Hs that it fail-

ed to recognize the fundamental distinction involved.

Certainly Congress intended or should have in-

tended that there could be no subsequent lawsuit in

which the plaintiff's right to recover $400 could be

questioned, pepends eee of non-appealability. How-

ever, the holding that the $400 judgment controlled

the claim for $6,306 was, we suggest, brought about

because the Court had lost sight of the distinction

between issue preclusion and claim preclusion.

If this Court will lay aside the "19th centruy

leading book" case of Johnson Co. v. Wharton and

ook at the case in bar “with realism and rational-

ity," Ashe v. Swenson, supra, it will be plain that

petitioners’ Case is likewise being immersed in the

quick sands of terminology whereas if a commonsense

approach is taken, petitioners must prevail.

However the doctrines might be labeled, however

fine the theories may be spun, it is obvious that

this case only concerns the collateral effect of the

Arkansas judgment and that petitioners are not here

attempting to attack or restrict the relief specif-

cally afforded in the non-appealable Arkansas order.

It borders upon the ridiculous to essume that the

Arkansas judge was attempting to control the outcome

of a Texas case. Label this case as you will, as

preclusion, as ws ge ry either direct or indirect

(collateral) or call it a late-for-breakfast case,

it makes no difference. No amount of relief in this

case will ag tees ae upon the-relief awarded in

Arkansas or deprive respondents of any "vested rights"

(Commissioner v. Sunnen, supra) that may have accrued

to them by reason of that order.

If the Supreme Court will pierce the veil of

terminology and look at the true nature of the case

in bar, it will agree that there is no valid basis

beneath the terminological differences for the frus-

tration of the right of appeal, granted by Congress

with respect to the present case.

PETITIONERS ARE BEING DEPRIVED OF A

VALUABLE RIGHT OF CONSTITUTIONAL PROPORTIONS

The right of appeal as an integral part of the

federal system was inferentially recognized by the

Constitutional provision creatine a Supreme Court

"with — jurisdiction." Congress and the

courts themselves have the right to regulate and

limit jury trial from the federal system. But we

do not think they can abolish appeals any more than

jury trial. To do so would, in effect, abolish

the Supreme Court itself. ,

On the other hand, respondents have no Consti-

tutional right to assert preclusion by former ad-

judication, “a doctrine judicial in origin." Com-

missioner v. Sunnen, supra,597. If the right of

appeal is rooted in the Constitution, it should

not be defeated by an overzealous application of

the lesser principle of collateral estoppel.

Griffin v. Ill., 351 U.S.12(1956), held that

due process does not obligate any state to provide

the right of appeal. Even so, we urge, as above,

that the federal system must provide for an appeal.

It went on to hold appeal sufficiently fundamental

that it may not be denied on the basis of unmean-

ing ful distinctions. To clothe a non-appealable

order of remand with the armor of preclusion irrev-

ocably serves to frustrate appellate review of a

dismissal, even though the law plainly allows an

appeal where a case is dismissed for want of diver-

sity. This, we submit, is the same type of unmean-

ingful distinction condemned in Griffin v. Illinois.

"When an appeal is afforded, however, it can-

not be granted to some litigants and capricious-

ly or arbitrarily denied to others without vio-

lating the Equal Protection Clause. ***,"

Lindsey v. Normet, 405 U.S.56,76-77(1972).

On authority of Lindsey, it is presented that

the law of former odjaditetion may not be applied

so as to arbitrarily or capriciously frustrate the

right of appeal. Any other application traverses

Constitutional safeguards. The case of Garland

Co. v. Filmer, 1 F.Supp.8,12(1932), supports the

Same proposition:

"Were there no claim that plaintiffs' rights

under the Constitution of the United States

had been invaded, the plea of res judicata

would be @complete defense to these cases.* * *

If, however, there is no right of appeal upon

this federal question from the highest court

of the state to the United States Supreme Court,

the judgment * * * may not be pleaded as res

judicata in the present cases. A determination

of a federal constitutional question by a state

tribunal is not conclusive if there is no right

of appeal to the federal courts."

It has numerously been held that the law of

former adjudication must yield when it comes in con-

flict with laws and principles of greater weight.

Kalb v. Feurstein, 308 U.S.433(1940), England v.

Medical Exrs., 375 U.S.411(1964). In NEB Vv.

Denver lIrades Council, 186 F.2d 326(10-Col.1950),

It was held that the doctrine of former adjudication

could not prevail where it conflicted with the Con-

gressional intention that disputes be decided in the

first instance by the N.L.R.B. The proposition was

inferentially upheld by this Court's affirmance.

N.L.R.B. v. Denver Trades Council, 341 U.S.675(1951).

ee also Spilker v. Hankin, -2d 35(C.A.D.C.1951).

THE QUESTION PRESENTED IS

PURELY ONE OF FEDERAL LAW

While the law of former adjudication is a matter

of general law, it is to be pointed out and empha-

sized that the question presented inquires only if

the federal court has jurisdiction of the case.

Thusly stated, the question is peculiarly one of

federal law for the Jederal courts alone have the

power to determine their own jurisdiction. Smith

v. Sperling, 354 U.S.91,95-96(1957). The question

presented ¢ thus narrowed:

Must a federal court in passing upon a question

of diversity jurisdiction give conclusive effect to

a non-appealable remand order previously issued by

another federal court?

In answering this question, the Supreme Court

is free to declare the rule which it thinks will

best serve the federal policies involved without

regard to the general law. We would hasten to point

out that we have never challenged the rights of the

courts below to weigh the decision of the Arkansas

Court for its persuasive effect. All we urge here

is that it should not be given conclusive effect

because the right of appeal, a valuable right if

not a Constitutional right, will be frustrated.

When respondents first urged upon the Northern

District of Texas that the order of the Eastern

District of Arkansas had deprived it of jurisdic-

tion, petitioners' counsel went to the books ex-

pecting to find a "white horse" case for the sub-

ject of diversity jurisdiction has been much liti-

gated. Suprisingly, we found only two cases. Neither

respondents nor the courts below have found a one.

Both cases found are favorable to petitioners.

In Hellebrand v. Hoctor, 222 F.Supp.81(E.D.Mo.

1961), the Court emphasized that diversity must be

determined as of the date each successive complaint

is filed. It, therefore, concluded that the dis-

missal of the first suit for failure to present evi-

dence upon the diversity claim was not "res adjudi-

cata" in the second. In view of the policy that

federal courts must continuously re-examine their

jurisdiction, the affirmance of the case on other

grounds implies approval, Hellebrand v. Hoctor,

331 F.2d 453(8-Mo.1963). The case of Wn.Kalivas

Const.Co. v. Vent Control,Inc., 325 F.Supp. 1008

TW.D.Mo. 1970), involves a Similar claim and an

identical ruling.”

Apparently the Fifth Circuit undertook to distinquish

Hellebrand and Kalivas in the final paragraph of its opin-

ion stating “plaintiffs had the burden of proving that they

had changed their citizenship between July 12 and August

23, 1971." This, we submit, was error. It is true that

laintiffs have the burden of proving jurisdiction but this

r cont'd on following page)

See also, Smith v. Sperlin 117 F.Supp.781

809(S.D.Cal.1953), affd- in pact, 237 F. 24° 317(9-

Cal.1956), rvsd.oth.gnds., 354 U.S.91(1957), where

the Court held that its ruling upon diversit 1

be inapplicable to a trial on ‘he aerktas —

"So also the findings of this court which serve

as predicate for the cornciusion that the plain-

tiff-stockholder's corporation is not in ‘anta-

gonistic hands' cannot operate to bar contrary

findings by a court havin plenary jurisdiction

of the case, since the selloteces estoppel doc-

trine is not applicable to such interlocutory

or 'incidental' determinations of fact * * *,"

Similarly, Parsons v. C.&0. -Co., 375 U.S.71

(39692 not ware seats court re regarding forum

nveniens do not preclude the fed

passing upon the claim. a Soe nae

In C.A.B. v. Delta Airlines, 367 U.S.316. it wa

stated that whenever questions concerning finality :

of decisions, either administrative or judicial,

arise, that there are two opposi :

both must be recognized: pposing policies which

"* * * The desirability of finality on the one

hand and the public interest in seachise what,

ultimately, appears to be the right result on

the other. Since these policies are in tension,

it is necessary to reach a co j j

nd 9°39]. 403. mpromise in each

7. (cont'd from preceding page)

proposition goes no further than the proposition in-

tiffs have the burden of proof in pont ag Pleinirhe

never have the burden of disproving defensive issues. Both

res judicata" and “estoppel” are expressly declared by

Rule 8(c),F.R.Civ. P. to be defensive issues upon which

respondents have the burden. Petitioners met their burden

with factual affidavits establishing prima facie that on

August 23, 1971 when this suit was filed, they were citizens

of Arkansas. If respondents wished to defeat these affi-

davits through a claim of preclusion, the burden of doing

SO was upon them Rule 8(c) so provides,

Why, we ask, can the competing policies not be

better adjusted by treating the former decision on

the diversity question, which necessarily was aimed

at a different date, as persuasive only, leaving

the second court free to examine the facts as it

finds them? Would such a competing policy not bet-

ter serve the interest of the law and the litigants?

PROFESSOR MOORE HAS BEEN MISCONSTRUED

The Fifth Circuit apparently cites 1-B Moore,

Fed.Prac.,90.416[5h, in support of its ruling, but

we do not read it so. We believe that Moore has

read Johnson as a case of claim preclusion only.

Citing Johnson, he states that "a final judgment

is res judicata," id.2301,(emphasis supplied),

even where no appeal is allowed. If "res judicata"

is taken to mean "claim preclusion," the statement

is eminently correct, but not presently applicable.

He continues:

"When the inability to appeal is made to depend

upon the absence of a jurisdictional minimum,

the effect of the lower court's judgment as col-

lateral estoppel presents a more clouded question.

* * * But if such a lower court judgment is

urged as collaterally conclusive Lan issue pre-

clusion] of a dispositive issue in a later action

on a cause of action inviving an amount suffi-

cient to meet the jurisdictional standard for

appeal, legislative intent would be frustrated

should the judgmert be given collateral estoppel

effect." id.230l.

In support of his proposition, he cites Fireman's

Fund Ins.Co. v. Bybee, 322 S.W.2d657(Tex.Civ.App.

" ppellate court overturned $600 judgment for

claimant because insurer had previously obtained

$19.90 judgment against claimant; Texas law forbids

appeals under $20.) as a horrible example of the

overextension of the law of former adjudication.

Taking a hypothetical non-appealable judgment

for less than $100, Moore argues that the legisla-

ture did not intend to allow to the court “power

to adjudicate claims in excess of $100 except

subject to review *** [on appeal]" and concludes:

"On analogy to the principle that a court should

not be permitted to exercise jurisdiction in-

directly through the collateral estoppel effects

of its judgments, over cases that are beyond its

jurisdiction to adjudicate directly, the judg-

a = - — y os Claims should be denied

ollateral estoppel effect in thi j i -

$a.2301.02, pp Ss situation,

Petitioners' argument is the same. A federal

district court does not have jurisdiction to order

that there shall be no right of appeal when a case is

dismissed, and that which it does not. have power to

do directly may not be accomplished indirectly.

Professor Moore also interprets the Munsingwear

case favorably to petitioners.

Unless the right of appeal is a valuable right

ps na nog pellate court have a "duty" to mes

e opinion belo Says Moore, 1-B Moore, Fed. °

q0.416[6],p.2326: : y Peg sProce

"***Unless the appellant was in some way res-

ponsible for losing *** 'the right of appeal],

giving collateral estoppel effect to the lower

court judgment unnecessarily frustrates legisla-

tive intent ***, While the litigant may have

had his day in court ***, he has not had as

much of a day in court as Congress or the State

Legislature intended to give him.

"[Author's footnote] *** Justice Douglas, in

Munsingqwear *** assumed the proposition stated

o-) HEF"

In Mechling Barge Lines v. U.S., 368 U.S.324

(1961), this Court interpreted Munsingwear to the

same effect:

"*** This Court [there] enguacess the view that

a party should not be concluded in subsequent li-

tigation by a District Court's resolution of is-

sues, when appellate review of the judgment

incorporating that resolution, otherwise

available as of right, fails because of

intervening mootness. * * * We think the

principal enunciated in Munsingwear at least

equally applicable to unteviouse administra-

tive orders * * *,*

The denial of the right of appeal is the

denial of the right of appeal. It is of little

consequence to the victim of a murder whether he

was shot with a gun or stabbed with a knife; he

is still dead. Likewise, it matters not whether

appeal of a case is denied for mootness or because

of express non-appeallabilitysthe result is the

same. The right is valuable and important and may

not be deprived unless a competing policy demands

it. As we have shown, there is no such competing

policy and no such demand.

MANY AUTHORITIES HOLD AGAINST PRECLUSION

WHERE THERE WAS NO RIGHT OF APPEAL

In varying contexts, the courts have emphasi-

zed the right of appeal and have refused to apply

issue preclusion when the party could not appeal.

In Bakula v. Schwab, 168 N.W.378(Wisc.1918)

the Court stated:

"An element essential to constitute res adjud-

icata is a right of appeal from the judgment."

In Hickman v. Hickman, 121 A.2d 689(Dela. Sup.

1956), the Court refused to allow preclusive effect

to a justice of the peace finding that a Nevada

divorce was valid "from which determination in this

State there lies no appeal." In New Milford Block

Co. v. Ericson, 206 A.2d 487 (Conn.Cir.App. Div. 1964)

the Court refused to apply issue preclusion to a

small claims judgment which the statute declared

to be "final, conclusive and non-appealable."

While the Texas Court expressly refused to

follow Res. Jmts.,§69(2) in Fireman's Fund Ins. Co.

v. Bybee, supra, a subsequent Texas case did follow

the Restatement and held that inasmuch as "no effec-

tive appellate review was available in the prior

suit," issue preclusion was inapplicable. Employers

Mutual Cas. Co. v. Lee, 352 S.W.2d 158(Tex-Ctv App.

° titioners submit the later Texas case as

the better authority. For a case in accord, with

Employers. see Horowitz v. Horowitz 199 Atl.816(Md.

Res. Jmts,§69(2) was also followed in Minor v.

Lapp, 33 Cal.Reptr.864(Cal.App.1963) a moot appeal

case, the Court stating that "to preclude any pos-

sible claim of application of res judicata, we dis-

miss wiciuut prejudice.”

"Although a substantial portion of this cnin-

ion relates to the issue of whether the clain-

ed loss is deductible under the tax laws, we

stress that this is dicta only and will have

no collateral estoppel effect in any other

forum. Thus, defendant's inability to appeal

his judgment will not preclude its reasserting

the deductibility defense in a refund suit for

a later year.” Parmelee Trans. Co. v. U.S. 351

F.2d 619, 621 (Ct.CI.1965).

In U.S. v. 111.2 Acres, 293 F.Supp.1042,1049

(E.D.Wash. a .2d 561(9-Wash.1970),

the State of Washington had appeared as amicus

curiae in previous litigation and judgment had

gone against it. Relying on §69(2), it was

held that the ruling had no preclusive effect

because an amicus has no right of appeal.

In Geracy Inc. v. Hoover, 133 F.2d 25(C.A.D.C.

1942) a tenant’s action for damages to his goods

caused by the landlord's negligent repair to the

roof, the tenant was held precluded by the prior

judgment for possession obtained in an inferior

court. Justice Rutledge (later of the Supreme

Court) vehemently dissented:

"I do not think Congress intended these conse-

quences or that the Municipal Court should ad-

judicate a claim in excess of its jurisdic-

tional limit * * *.

"Congress intended the Municipal Court to

keep within the bounds of power prescribed.

* * *

"Congress intended none of these results.

* *& & * & & * &

"If res judicata could be thought rightly

to require such results, this judge-made

rule should give way before being allowed

to dictate consequences so unjust and so

contrary to the intent and explicit prohibi-

tion of Congress.

* ee %* & & %* &

"In my Opinion therefore, the bar of res

judicata should not be applied further than

to prevent relitigation of the right to pos-

session and the claim for rent [being all

that the inferior court had been authorized

by Congress to decide]."

The parallel to the present case is obvious.

Congress did not empower the U.S. District Court

sitting in the Eastern District of Arkansas: to

expressly provide that a dismissal of order can-

not be appealled. Particularly, the Arkansas court

could not have ordered dismissal of a Texas case

and prohibit the right of appeal. Congress did

not tater that which cannot be done by direction

should be accomplished by indirection.

It appears that the dissent in Geracy has now

become the law in the District of Columbia. See

Tutt v. Doby, 459 F.2d 1195(C.A.D.C.1972) where

the Court held*no preclusion" expressly relying

on Res. Jmts., §69 (2).

Professor Scott, one of the principal repor-

ters for the original Restatement declared as fol-

lows back in 19423

"A judgment rendered by the trial court may

not be conclusive by way of collateral

estoppel because the unsuccessful party can-

nut obtain the decision of the appellate

court upon the matter decided adversely to

him. The fact that a party who might have

appealed fails to do so is immaterial; but

the fact that he is unable to appeal is of

importance." Scott, Collateral Estoppel, 56

Harv.L.Rev. 1,15(1942).

It is now 1975 and the law of former adjudi-

cation as expressed in the new Res. Jmts., §68.1 is

the only rule that comports with the modern view.

The law of prior adjudication is not a mechanical

monolitt, "It is not meant to create vested

rights." Issue preclusion must be applied with

its limitations carefully in mind so as to avoid

injustice."

In Collateral Estoppel:It's Application and

Misapplication, 29 Wash EL Ree LiOtIo72) it Is

tite that the doctrine of prior adjudication is

subject to many ambiguities, that no hard and fast

rules can be drawn, that there are conflicting

policies and standards, that the theories are com-

plex, and that the law is fraught with danger if

mechanically applied. These are the considerations

which the Supreme Court failed to recognize in 1894

and the Fifth Circuit failed to recognized in 1974.

Even the first Mr. Justice Harlan who wrote

that decision conceded that the result was harsh.

However, the Court declared that it had no power

to alter this mechanical rule described as “res

judicata” and declared that relief must come

through legislative action. It is now 8l years

later and no legislative action is in sight; the

reason being that the law of prior adjudication is

almost entirely a creature of the courts,"judicial

in origin, “Commissioner vy, Sunnen, Supra at 597.

If it is harsh, if it is difficult to understand,

if it is inflexible, it is because the courts have

made it so.

This case presents an opportunity for the

Supreme Court to assist the ALI in its work toward

a modern, realistic, flexible, common-sense view

of the law of prior adjudication. To this

end petitioners ask that certiorari be granted.

SECOND QUESTION: PETITIONERS HAVE PRESENTED A

CLEAR CASE OF PENDENT JURISDICTION

Within the last few terms, the Supreme Court.

has decided several knotty cases on the subject

of pendent jurisdiction. To our way of thinking,

the present case is entirely different. There is

open and shut error on the face of the opinion be-

low. The Court's statement that "there was never

any basis of federal jurisdiction [stated in the

complaint] sufficient to support pendent jurisdic-

tion *** ," applies the wrong test. Unless the

federal claim is completely insubstantial, it in-

vokes federal jurisdiction.

The error shown is of the type for which this

court can and should issue a per curiam order,

grant the writ, vacate and remand without briefing

and formal argument as the court did in Dallas

County v. Reese, 43 U.S.L.W.36/f (May I9, 1975).

e error is of the type that such action would be

appropriate.

In Bell vs. Hood, 327 U.S.678(1946), the lower

courts dismissed for want of jurisdiction but the

Supreme Court reversed:

"Before deciding that there is no jurisdic-

tion, the District Court must look to the way

the complaint is drawn to see if it is drawn

so as to claim a right to recover under the

Constitution and laws of the United States.

For to that extent ‘the party who brings a

suit is master to decide what law he will

rely upon. * * * 'Where the complaint as here,

is so drawn as to seek recove directly under

the Constitution or laws of the United States

the federal court, but for two possible excep-

tions later noted, must entertain the suit.

* * * Whether the complaint states a cause of

action on which relief could be granted is a

question of law and, just as issue of fact,

it must be decided after and not before the

court has assumed jurisdiction over the con-

troversy. If the court does later exercise

its sasbedietion to determine that the alle-

gations in the complaint do not state any

grounds for relief, then dismissal of the

case would be on the merits, not for want of

jurisdiction. * * * The previously carved

out exceptions are that a suit may sometimes

be dismissed for want of jurisdiction where

the alleged claim under the Constitution or

federal statutes clearly a ars to be imma-

terial and made solel +5 Fre u se of

obtaining juriedh ction or where ak fain

S P) nsubstantial an rivolous (empha-

Sis Suppiteay."

In their newest volume received from the

printer on April 3, 1975, Wright and Miller discuss

many decisions of this Court and conclude:

"Thus a federal court must dismiss for want

of jurisdiction if the federal claim that is

the basis for jurisdiction is obviously with-

out merit or is wholly frivolous. It similarly

must dismiss for want of jurisdiction if the

claim is clearly foreclosed by prior decisions

of the Supreme Court. The test for dismissal

et Seuss oat begun ba #y,foa

tion o aus ty to the cla edera

urisdiction exists. Wright & M. Fed.Prac.

§3564 7 pp. 429-430 .

In Hagans v. Lavine, 415 U.S.528(1974), it

was held that a challenge to a Welfare regulation

could not be regarded as insubstantial when the

Supreme Court had never passed on a similar regul-

ation and the regulation was not so patently immune

from federal claims to require no meaningful con-

sideration.

Nor does it make any difference whether the

plaintiff ultimately prevails upon his federal

claim as long as he pleads an arguable claim.

"If the plaintiff really makes a substantial

claim under an act of Congress, there is

jurisdiction whether the claim ultimately be

held good or bad." The Fair v. Kohler Die

Company 228 U.S.22,25(1913).

The merest poruees of the text and authori-

ties cited clearly reflects that the Fifth Circuit

has applied the wrong test in the present case.

A SUBSTANTIAL FEDERAL CLAIM WAS PRESENTED.

The District Court's opinion states "Defen-

dants' previous Motion to Dismiss for lack of jur-

isdiction together with their challenge to plain-

tiffs' amended complaint are now before the Court

under Fed.R.Civ.P. 12(b) (1) [motion to dismiss

for want of jurisdiction of the subject matter].

As hereinafter set forth, this cause is dismissed

without prejudice for want of jurisdiction" (P.A.

The complaint alleges :

"This is a civil action or proceeding arising

under the Communications Act Amendments of

1952, P.L.554, ch.879,§18,66 Stats.711,722,

prohibiting the interstate transmission of

any communications in furtherance of any

scheme to obtain money or property by means

of false or fraudulent pretenses, representa-

tions or promises, as hereinafter more fully

appears. This Court has original jurisdiction

of this case under 28 U.S.C. §1337." (J.A.17)

Plaintiffs proceeded to allege specific mat-

ters as being represented and held out to them and

further specifically alleged that defendants as

fiduciaries deliberately omitted certain material

facts causing their communications to be deceptive

(J.A. 18-22).

"15, Each of the aforesaid communications,

representations, statements and omissions

was conducted by and between defendants situ-

ated at Dallas, Texas and plaintiffs situated

at Cherokee Village, Arkansas and Hardy,

Arkansas over the common carrier telephone

facilities between the said points.

16. In making the said communications, repre-

sentations, and omissions, defendants utili-

zed the facilities of interstate commerce.

17. Such communications, representations and

Omissions were made, conducted and transacted

in the course of interstate commerce."(J.A.22)

The complaint further alleges the conduct of

defendants as “false, fraudulent, and deliberate

* * * done as part of a scheme to deprive plain-

tiffs of their ownership of said property * * * "

(J.A.23). In support of their federal claim, pet-

itioners cited and discussed approximately fifteen

authorities holding that a private right of action

— be on a paw statutes, criminal

nd regulator includin andotte - Vv. U.S.

389 U. 8.191 (1967) and 59 Se Cee he

377 U.S.426(1964). Petitioners placed primary

reliance upon re vo ei tel ater 162 F.2d

691(2-N.Y.1947 ere Judge Learne and held that

the sections of the Communications Act which de-

clared to be criminal, the unauthorized intercep-

tion and publication of interstate telephone mes-

sages, created a federal cause of action for

damages.

As a general proposition, it cannot be denied

that the federal courts have numerously inferred

a federal cause of action from federal criminal

statutes. A case of this classification was argued

before this Court on March 18, 1975, Cort v.

Bethlehem Steel Corp.,U.S. S.Ct.No.73-1908. In

Cort as we understand it, the general principal

is not in dispute, only the application of that

principle. Similarly, the only dispute which could

have been open in the Fifth Circuit was the appli-

cation of the principle, not the existence of the

principle: federal criminal statues can create a

federal cause of action for damages.

The particular wire fraud statute under which

petitioners were proceeding had never been con-

strued before. Respondents did not contend to the

opposite and neither of the courts held to the

contrary. The fact that the Fifth Circuit rejected

Reismeister and held the case to be controlled

y a decision concerning mail fraud without dis-

cussing the various other cases urged by petition-

ers did not control the question as to whether a

federal question had been pleaded. The Fair v.

Kohler Die Company, supra. It has never been sug-

gested that Sati ttonere’ federal claim was “so

attenuated and unsubstantial as to be absolutely

devoid of merit", Hagans v. Lavine, supra. Whether

or not the federal claim could have been dismissed

under Rule 12{>) (6), F.R.Civ.P., “Failure to State

a Claim Upon 1c elief Can Be Granted," is im-

material. Beyond doubt, the claim was of suffici-

ent substance to invoke the jurisdiction of the

federal court.

INASMUCH AS THE FEDERAL CLAIM WAS ARGUABLE,

PENDENT JURISDICTION OF THE STATE CLAIM ATTACHED.

"If the plaintiff raises a substantial federal

question, the * * * decision must go on the

merits * * *, Jurisdiction is not lost because

the court ultimately concludes that the claim

is without merit. * * * The only practical

importance of the distinction between the two

kinds of dismissals is that if the federal

claim is substantial enough to invoke federal

jurisdiction, the court has power to exercise

pendent jurisdiction over other claims that

also may be asserted in the complaint, for

which there is no independent jurisdictional

basis." 13 Wright & M., Fed. Prac.,§3564,pp.

429-430.

Pendent jurisdiction is almost as old as the

federal union. The doctrine was revisited, broad-

ened, and re-affirmed in United Mine Workers v.

Gibbs,383 U.S.715(1966). If there is jurisdiction

because of a federal question of substance, there

is power to hear pendent claims that “derive from

a common nucleus of operative fact." The federal

court has pendent jurisdiction of any state law

claims that a plaintiff “would ordinarily be ex-

pected to try all in one judicial proceeding." In

Hagans v. Lavine, supra., a marginal federal con-

sti tutional Claim was held sufficient to confer

pendent jurisdiction over a federal statuatory

claim, for which the amount in controversy re-

quirement was not satisfied. Pendent jurisdiction

was also upheld in Rosado v. Wyman,397 U.S.397

(1970).

_ Many cases are cited and discussed in 13

Wright & M.,Fed. Prac. , §3567.

It follows as the night the day that the

district court erred in holding that it had no

jurisdiction, pendent or otherwise over the peti-

tioners' claims to recover for defendants' false

representations made over the common carrier tele-

phone system. It had pendent jurisdiction vesting

it with the power to proceed to trial.

PETITIONERS HAVE BEEN DENIED THE OPPORTUNITY

TO INVOKE THE DISTRICT JUDGES' DISCRETIONARY

JURISDICTION OVER PENDENT CLAIMS

Of course, pendent jurisdiction is discre-

tionary jurisdiction. Gibbs declared that "pen-

dent jurisdiction is a doctrine of discretion,

not of plaintiff's right," and that trial courts

should look to “considerations of judicial eco-

nomy, convenience and fairness to litigants," Id.

726. We present that petitioners were entitled

to urge the District Judge to invoke her discre-

tionary jurisdiction and that her erroneous ruling

of "no jurisdiction" deprived them of this right.

We concede that the usual rule is to dismiss pen-

dent claims when the federal claim is dismissed,

but dismissal is not automatic. Under the parti-

cular facts of this case, the court should not

have dismissed:

(1) Respondents swore that diversity existed

and removed this cause of action (a different case,

same cause of action) out of the Arkansas State

Court, kept it there almost two years with one

dilatory motion after the other and then impeached

their own affidavits so as to cause the’case to be

sent back to the state court where it was dismis-

sed for lack of long-arm jurisdiction.

(2) Their motives are plain. The Arkansas

Federal Court had indicated it was going to sus-

tain long-arm jurisdiction and defendants were

attempting to engage in forum shopping.

(3) By impeaching their own affidavit, res-

pondents managed to manuever a ruling of "no

diversity" in a non-appealable proceedings thus

depriving these petitioners of the right to con-

tend on appeal of error in that finding of "no

diversity."

(4) Respondents have made only a token effort

to establish the correctness of the Arkansas ruling

of "no diversity." They are satisfied to claim

that petitioners have been manuevered out of the

right to contest it. We urge that, at most, the

soundness of the Arkansas Court's ruling is ques-

tionable. Respondents contend that even though

the order was non-appealable, the finding of "no-

diversity" is conclusive. We submit the obvious

proposition that the ultimate function of the

courts is to dispense justice. 1f the District

Court below finds the non-appealable Arkansas

remand order to be unsound, or even questionable,

should the Court not weight this factor heavily

in favor of retaining its discretionary pendent

jurisdiction?

(5) Respondents' manuevering is not over by

any means. They unabashedly advised both of the

Courts below that they will urge the two year

statute of limitations against Petitioners if the

case is dismissed and refiled in the Texas state

court. Should the District Court decline pendent

jurisdiction when to do so will expose petitioners

to a claim of limitations?

(6) And the delay--petitioners were bilked

out of their property way back in 1969. Almost

six years have passed. They have been through

court after court Each a

é — grees that they ha

aweaY serious lawsuit" (J.A.11) and ‘hich’ Game hieiee

. ey should go elsewhere for relief. How long, Oh

mr 9 pot eee ereainiy, the Court should con-

e time that the case has be

and the prospects that the case might ~ge Ae mos

delayed in decidin c be

dent jutiedictiea,” whether to exercise its pen-

(7) Please do not 1 i

é ose sight of the i

faanl dandeoks et Pig pom of malpractice and

rm o awyers (and their i

ance carrier, Continental Ca lt =

about the political entent yoy | colitie te

‘ t €s and intrigues th

exist in most every courthou Re petits

ers obtain a really fair t ial § yy eee

County Courthouse where the c yeas Gate

Court has f

hear motions to dis ity, ie & aot

é quality, has set asid i

ie 5 ai and has ordered a fourth a

Pe ott 1d Ie Sh ge is too far removed to know

; Ny, Hut not so far away and

so ignorant of human nature or to b ; neh

existence of an area of j — =

, ; possible concern,

wstinn ink sete enough to eveluste =O

: tioners are entitled t

Court exercise its discretion upon the nt» Pig

(8) At a minimum i

» we have a situati

bw passtsenete are locked in combat ah saoaiee

seaeiiidnes on Courthouse daily and are personally

come up for sp-elestion ence eee ee ese a pes

to is Seaiéee ko naan —— Our years and look

, Ene ; €ir campaigns. With

pointing accusing fingers at a .

that, with respect to a poe eget Ps indy

Dallas County Courthouse dos et ete

unty oes not exhibi

characteristics of even-handed Sustice and Judicial

re at the core of D

of Law. In re Murchison, 349 U.S.133(1955)

(9) Cases such as Cc i

V. Continental Cas.Co., 303 Us tte Toeeyoss er

Van Dusen, -2d 806(3-Pa.1965), held tha

courts must not only be im j j

t partial in fa im-

rvs: in appearance and emphasize P ap ert

nces which contain even the temptation to par-

tiality must be avoided. Thrust anyone’whom you

desire into the shoes of these petitioners, he

will approach the Dallas County Courthouse with

misgivings ¢ . to whether he can obtain a fair

trial. And, if the case goes against him, he is

certain to go away convinced that he is the victim

of bias and prejudice. Speaking from the stand-

point of essential justice, this is a type of case

that deserves to be heard in a federal forum.

(10) Weighing the circumstances together, it

is presented that this case favors, if it does not

command, the exercise of pendent jurisdiction.

A RULING OF "NO POWER TO DECIDE" DOES NOT

CONSTITUTE AN EXERCISE OF THE DISCRETION

TO DECIDE.

The proposition is simple, as long as

the District Judge was under the impression that

she had no power to consider the case, she could

not weigh the pros and cons for and against the

exercise of discretion. In Parsons v. C&O Ry.Co.,

supra, it was held that the federal court's ruling

of no jurisdiction to consider the forum non con-

veniens issue upon its merits, was not equal to an

exercise of discretion upon the question.

In Knuth v. Erie-Crawford Dairy Coop., 395

F.2d 420,426[(3-Pa. 1968), the tattetioniry dismis-

sal of pendent claims was reversed because "the

court lacked an acceptable basis for exercising

its discretion."

On remand, the District Court ruled in favor

of pendent jurisdiction:

"After a case has been waiting for years to

reach the courtroom and then testimony had been

taken for several weeks, sound judicial adminis-

tration dictates that the trial continue to a con-

clusion. Furthermore, it would not simply be a

matter of remanding to the state * * * because in

those forums the statue of limitations could be

raised as an aimost insurmountable defense to the

plaintiffs' cause. Indeed, it would probably have

been an abuse of discretion not to conclude the

case." Knuth v. Erie-Crawford Dairy Coop. ,326 F.

Supp. 48,57(W.D. Pa.1971).

"A failure to recognize the existance of

authority to exercise discretion does not amount

to its exercise. We therefore conclude that in

order to afford the District Court the opportunity

to exercise its discretion in the first instance,

we must vacate the dismissal * * * and remand for

proceedings consistent with this opinion." Webb v.

Bladen, 480 F.2d 306(4-Va.1973). oS eas

We do not contend that every case containing

pendent claims must be remanded when the trial

court mistakenly dismisses for want of jurisdiction

when it properly should have dismissed for failure

to state a federal cause of action. Pendent jur-

isdiction is concerned with "judicial economy,

convenience and fairness to litigants," United

Mine Workers v. Gibbs, supra. If the Court of

Appeals examines the record and finds no substan-

tial basis upon which the District Court might

reasonably exercise its discretion in favor of

pendent jurisdiction, the Court of Appeals can

declare the error harmless and affirm. But, cer-

tainly, the present case is not one of harmless

error. Petitioners have a sound basis for their

claim of pendent jurisdiction.

It is also possible that the Court of Appeals

might properly decline to remand if the plaintiff

had failed to point out the existence of pendent

jurisdiction to the district court. However, your

petitioners did point out the existence of pendent

jurisdiction to the District Court (Brief Support-

ing Jurisdiction, filed September 4, 1973, J.A.2)

and respondents filed their opposition thereto

(Supplemental Motion to Dismiss, filed September

25, 1973)(J.A.3R34-35). Thereafter, the District

Court dismissed the entire action "for want of jur-

isdiction." (J.A.27) impliedly ruling that pendent

jurisdiction was not present. Petitioners are

entitled to have the matter returned to the Dis-

trict Court where the District Court after being

apprised that it indeed does have jurisdiction,

may exercise her sound judicial discretion upon

the matter.

THE “DISMISS BEFORE TRIAL"

RULE IS NOT A MANDATE °

The real question upon the claim of pendent

jurisdiction, if there be one, asks not whether

pendent jurisdiction exists but whether this be

a case in which the power might rightfully be

exercised. We refer to the declaration in Gibbs

that "if the federal claims are dismissed before

trial even though not insubstantial in a juris-

dictional sense, the state claims should be dis-

missed as well," Id.726. Petitioners suggest

that this statement should be interpreted as a

guideline, rather than a mandate. According to

Rosado v. Wyman,397 U. S.397, 402,404 ,405(1970),

ere is no absolute rule requiring a district

court to dismiss every case where the federal

issue fails before trial upon the merits:

"In the case before us the constitutional

claim was declared moot prior to decision

by the three-judge court and the question

arises whether that circumstance removed

not only the obligation but destroyed the

power of a federal court to adjudicate the

pendent claim. We think not.

* & * & * * &

"Respondents analogize dismissal for mootness

to dismissal for want of a substantial claim

and rely on language in United Mine Workers

v. Gibbs, to the effect at a federal cour

should not pass on a state claim when the

federal claim falters at the threshold and

is 'dismissed before trial.’ 383 U.S., at

726. The argument would appear to be that

once a federal court loses power over the

jurisdiction-conferring claim, it may not —

consider a pendent claim. They contend that

mootness, like insubstantialit is a thres-

held: Sunledhetions’ Getest..

%* & * & x * *®

"We are not willing to defeat the common

policy of pendent jurisdiction--the abaeeeree-

tion of judicial energy and the avoidance

of multiplicity of litigation--by a concep-

tual approach that would require jurisdiction

over the primary claim at all stages as a

prerequisite to resolution

claim. * * *," of the pendent

Various federal courts have held tha

can and should retain pendent seebedbecien pes

though the federal claim was dismissed before

trial. Scoville v. Bd.Educ., 286 F.Supp.988(N.D.111.

1968), rvsd.oth.gnds.425 F.2d sot eit isos}

McCurnin v. Kohlmeyer,477 F.2d 113(5-La.1973); A.

He oapes oF v. Marcan Corp., 268 F.Supp.289(S.D.

-Y. 19€ . ; 2-N.Y.1968); Rogers v.

Valentine, 37 F.R.D.231(S.D.N.Y.1964), eee

v. Regent,463 F.2d 1205(5-Fla.1972).

"Should the pendent claim al ismi

if the federal claim fails a ae

Hart & W., Federal Courts, 2d Ed.(1973),p.925. If

limitations has run * * * in the interim," it is

suggested that essential fairness requires the

federal court to retain jurisdiction. A study by

the ALI is cited to the effect that discretionarv

dismissal be conditioned on a specific finding that"

‘determination * * * in a State court is in the

° itioners a i

their claim to pendent oa peaches

See also, Baker, Toward a Relaxed View of

Pendent Jurisdiction, 33 U.Pitt.L.Rev., 750 (107

ripe: Macey Gibbs does not lay down any hn nea

imitations on the handling of pendent issues and

that the federal courts should not fence them-

selves in with arbitrary rules. By retaining a

pendent issue for trial, urges the author, the

federal court is doing no more than it does in

any garden variety diversity case. Intrusion on

the state courts' jurisdiction, says the author,

is a false issue. Wherever the state forum is

more appropriate, jurisdiction maybe declined.

The only guideline required or necessary, it is

concluded, is the guideline in Gibbs of “judicial

economy, convenience and fairness.

We have already stated why under the parti-

cular facts of this case, the District Court

should not have dismissed, We would point out

that respondents originally brought this litiga-

tion into the federal enclave by swearing that

petitioners are citizens of Arkansas. Only when

it suited their own objectives did they impeach

their affidavit. The respondents conceded to

both of the courts below that they will resist

a refiling of this litigation in state court upon

grounds of limitations. Is this alone not a suf-

ficient basis for the exercise of pendent juris-

diction?

CONCLUSION

The errors presented by this petition are a

bit unusual. Under the first question, petition-

ers urge that the Court of Appeals has erred by

blindly following a decision of this Court which

might have been controlling except that it has

long since been outmoded. Under the second ques-

tion, petitioners urge the converse. The Court of

Appeals has wholly failed to follow the control-

ling decisions of this Court, all of them of re-

cent vintage, regarding pendent jurisdiction.

Either of the questions presents an ample

basis for this petition.

Your petitioners ask

that a Writ of Certiorari be granted.

Of counsel:

Charles Ben Howell

Dallas, Texas

Junell , 1975

Respectfully submitted,

H. AVERIL SWEITZER

226 Lakewood Tower

Dallas, Texas 75214

APPENDIX

' FEDERAL COURT PROCEEDINGS--ARKANSAS

NO. LR--71-C-124 JIM L. NAPPER & WIFE, PLAINTIFFS

V. ANDERSON, HENLEY, SHIELDS, BRADFORD & PRITCHARD,

ETC., DEFENDANTS, U.S. DISTRICT COURT, E.D.ARK.W.D.

[ DEFENDANTS] PETITION FOR REMOVAL

[Filed E.D.Ark.,July 13, 1971; R.28-29]

l. This is a civil action between citizens of

different states, the amount in controversy exceeds

the sum of $10,000.00, exclusive of interest and

costs, and this is a matter of which this court

has jurisdiction.

2. At the time of the commencement of this

suit and at the present time Jim L. Napper and Jo

Ann Napper were and are citizens of the State of

Arkansas.

* * * * * * * * *

4. This action was filed in the Circuit Court

of Pulaski County, Arkansas, on June 9, 1971.

* * * * * * * * *

WHEREFORE, defendants petition for removal of

this cause to this court from the Circuit Court of

Pulaski County, Arkansas.

* * * * * * * * *

Winslow Drummond, being duly sworn, states

that he is one of the attorneys for the defendants

and that the facts alleged in the foregoing peti-

tion for removal are true to the best of his in-

formation, knowledge and belief.

[Here omitting jurat dated July 12, 1971]

[ DEFENDANTS'] MOTION

[Caption as iamedisvely foregoing;

* * * * * * * * *

3. Paragraph 3 of the amended complaint states:

"Notwithstanding the fact that plaintiffs, Jim L.

Napper and wife, Jo Ann Napper, own homestead prop-

erty in Texas, they have established and maintain

sufficient residence in the State of Arkansas to

P.A.2

entitle them to invoke the diversity jurisdiction

of the United States District Court for the East-

ern District of Arkansas." It would appear, there-

fore, that the plaintiffs are citizens of the

State of Texas and that there is, therefore, no

diversity of citizenship between the plaintiffs

and the defendants and that this action ought to

be dismissed for want of jurisdiction.

ORDER [ REMANDING CASE]

[Caption as immediately foregoing;

filed E.D.Ark.,May 10,1973;R.64

Presently pending in this case is a motion to

remand filed by defendants for failure of diver-

sity jurisdiction. On this day an evidentiary

hearing was held and in conformity with the find-

ings of fact and conclusions of law as stated by

the Court from the bench at the conclusion of the

presentation of evidence and argument, it is or-

dered that this case be, and it is hereby, remanded

to the Circuit Court of Pulaski County, Arkansas.

Dated this 9th day of May, 1973.

FEDERAL COURT PROCEEDINGS--TEXAS

NO. CA 3-5046-B JIM L. NAPPER et ux v. ANDERSON,

HENLEY, SHIELDS, BRADFORD & PRITCHARD, et al,

U.S. DISTRICT COURT, N.D.TEXAS,DALLAS DIVISION

MEMORANDUM OPINION AND ORDER

[Filed Oct.3,1973;R.49-54]

Defendants’ previous Motion to Dismiss for lack of

jurisdiction together with their challenge to plaintiffs’

Amended Complaint are now before the court under Fed. R.

Civ. P 12(b) (1). As hereinafter set forth, this cause is

dismissed without prejudice for want of jurisdiction.

P.A.3

Following litigation in the Texas state courts respecting

the validity of a certain real estate instrument, Naper v. Johnson,

464 S.W.24 496 (Tex. Civ. App. 1971), writ ref. n.r.e., plaintiffs

filed a complaint on June 9, 1971, in the Circuit Court, Pulaski

County, Arkansas, against the: law firm and its members that

represented plaintiffs in the real estate transaction at issue.

On July 12, 1971, defendants in the Arkansas state court

proceeding filed a Petition for Removal in the United States

District Court for the Eastern District of Arkansas asserting

diversity jurisdiction.

Immediately after removal, defendants filed s Motion to |

Quash Service of Process. While that Motion was pending, on

Hovecmber 21, 1972, defendants filec a Motion to Dismiss for want

of diversity jurisdiction asserting plaintiffs to be domiciled in

Texas.

While the plaintiffs' complaint was pending in the fedcra.

district court in Arkansas after removal from the state court,

plaintiffs filed on August 23, 1971, in this court anothér complaint

against the same defendants as were named in the Arkansas

proceeding. This second complaint was identical, except for minor

grammatical changes, to the complaint pending in the federal

district court in Arkansas. Paragraph four (4) of the complaint

filed in this cause alleges in pertinent part:

Plaintiffs are filing this suit as a

precaution against having their cause

dismissed after the tunning of the

applicable limitation period. Plaintiffs

request that the Court withhold pro-

ceedings hereon pending a ruling by the

federal courts of Arkansas upon the

jurisdictional question.

P.A.4

On September 25, 1973, plaintiffs filed their Amended

Complaint in this cause. This Amended Complaint re-stated

the same cause of action and same jurisdictional allegations that

were presented in the Arkansas litigation; however, as an alternative

cause of action, plaintiffs alleged “federal question" jurisdiction

under 28 U.S.C. 1337 by virtue of defendants’ violation of the

penal standards of the Wire Fraud Act, 18 U.S.C. 1343 (1970).

Paced with a challengeto their allegation of diversity

jurisdiction grounded in the remand order by the federal district

court in Arkansas, plaintiffs'amendment to their Complaint is an

attempt to estaplish “federal question" jurisdiction so as to

creete pendent jurisdiction over what is otherwise a state law

cause of action contingent upon diversity jurisdiction.

Under the authority of Oppendeim v_ Sterling, 368 F.2d 516, 518-19

(10th Cir. 1966), cert. den. 386 U.S. 1011 (1967), reh. den. 388

U.S 925 (1967), 389 U.S. 1059 (1968), this court rejects plaintitf:'

“federal question"

/ jurisdiction allegations relating to 28 U.S.C. 1337. Accord

Van Daeje v. Vinci, 294 F. Supp. 71 (N.D. Ill. 1968).

In rejecting this allegation of jurisdiction, this court notes

thet 28 U.S.C. 1337 applies only to civil action arising from an

Act of Congress regulating commerce. The cited statute, 18 U.S.C.

1343 (1970), is penal in nature and does not create any

civil action as does, for example, the various securities

acts. Moreover, a careful reading of 18 U.S.C. 1343 (1970)

shows it not to regulate commerce, but rather to regulate

personal behavior arising out of commerce. FPinally, as a

matter of judicial philosophy, were 28 U.S.C. 1337 to apply

P.A.5

in this situation, then jurisdiction could be created in any

cause by merely alleging a violation of a federal penal

statute, an argument rejected in Van Daele, supra.

As to the remand order entered by the federal district

court in Arkansas, this court has examined the briefs submitted

by counsel in this cause and reviewed the exhibits attached thereto.

It is clear that the federal district court in Arkansas conducted

a full evidentiary hearing into the issue of diversity and

applied the facts presented at that hearing in ruling that

plaintiffs were domicilei in Texas although residents of Arkansas.

It is wel’ established that in a in personam action pending

in two courts yom the same parties on the same cause of action,

both courts may proceed with the litigation until a judgment is

obtained in one that is res judicata in the other. Princess Lida

of Thurn and Taxis v. Thompson, 305 U.S. 456, 466 (1938). However,

plaintiffs in this cause sought, and received, a stay in the

proceedings in this court pending a decision on the issue of

diversity jurisdiction in the Arkansas litigation. There can be

no challenge to the fact that the Arkansas federal court had

jurisdiction to determine the issue of diversity jurisdiction.

See Ripperger v. A. C. Allyn & Co., 113 F.2d 332 (2nd Cir.), cert. den.

311 U.S. 695 (1940). In that context, the remand order for lack

of diversity jurisdiction is a final judgment that cannot be

questioned despite the izck of an appeal from that order.

This bar is equally applicable to remand orders and to

judgments on the issue of diversity jurisdiction. With respect to

P.A.6

remand orders, see Metropolitian Cas. Ins. Co. v. Stevens, 312 U.S.

563 (1940); ssouri Pacific . Vv. Pi , 160 U.S. 556 (1895);

Yankaus v. Feltstein, 244 U.S. 127 (1917). With respect to

judgments on diversity, see McCormick v. Sullivant, 10 Wheat.

(23 U.S.) 192, 199 (1825); Evers v. Watson, 156 U.S. 527 (1895).

between — on

In this cause, which is / the same parties and/the same

cause of action as before the federal district court in Arkansas,

the Arkansas judgment on the domicile of plaintiffs is res judicata

on that issue. As such, this court cannot make any inquiry into the

standard Sf law applied or the findings of fact made by that court.

See Burgess v. Nail, 103 F.ij 37, 43-44 (10th Cir. 1936); In re

Constructors of Pla., Inc., 349 F.2d 595 (Sth Cir.), cert. den.

383 U.S. 912 (1965). This is true even if the legal standard has

changed, see Barzin v. Selective Service Local Board No. 14, 446 F.2d

1382 (3rd Cir. 1971)..

fo maintain a diversity action in federal court in a

removal action, diversity must exist at both the time of the

filing and at the date of removal. 1A J. MOORE, FEDERAL

PRACTICE Para. 0.161(1) at page 528 with supporting cases cited

in note 34. Thus, the Arkansas judgment that plaintiffs are

residents of Texas is res judicata as to the date of filing

of that complaint (June 9, 1971) and the date of removal

(July 12, 1971).

The issue is joined, therefore, whether plaintiffs changed

domicile between July 12, 1971, and the date this cause was filed,

August 23, 1971.

P.A.7

of changed circumstances

When a party attempts to assert the doctrine with respect to

an issue relating to jurisdiction, the standard is

very strict. For example, having once been dismissed for lack of

a justiciable controversy, an alien's suit to bar deportation after

a final deportation order was issued is still barred by the doctrine

of res judicata. Estevez v. Nabers, 218 F.2d 321 (5th Cir. 1955).

Accord, Ripperger v. A.C. Allyn & Co., 113 F 2d 332 (2nd Cir.), cert.

den. 311 U.S. 695 (1940); Hellebrand v. Hoctor, 222 F. Supp. 81

(E.D. Mo. 1963), affirmed 331 F.2d 453 (8th Cir. 1964).

Despite being permitted by this court to amend their Complaint,

plaintiffs in this cause do not allecse any change in circumstances.

that assert any change in domicile since July 12, 1971. The

Supplemental Affidavit executed by plaintiffs on August 23, 1973,

purporting to state their subjective intentions in July, 1971, is

substantially identical to the previous Affidavit filed in this

cause and does not allege and factual changes subsequent to July 12,

1971, that suggest a change in domicile from Texas to Arkansas.

Indeed, plaintiffs’ counsel argues *. . . the Arkansas Pederal

Court erred by holding that people who have admittedly resided in

Arkansas. . . are mere sojourners in a strange land.” Plaintiffs’

‘September 6, 1973, Brief at Page 7. But as noted, this court cannot

initiate inquiries into the legal or factual standard applied

in Arkansas.

The burden is solely upon plaintiffs to plead sufficient

facts to vest this court with jurisdiction and they have failed to

do so.

P.A.8

IT IS THEREFORE ORDERED, ADJUDGED and DECREED that the P.A.9

NAPPER v. ANDERSON, HENLEY, SHIELDS, ETC.

2 Judgment e649

Exvoppel by judgment precluded plaintiffs from success-

fully asserting diversity jurisdiction in federal district court

where another federal district court had dismissed prior action

involving same parties based upon determination that, as of

date of removal of the prior action to the federal court, both

plaintiffs and defendants were citizens of Texas and plaintiffs

failed to plead or prove that they had changed their citizen-

ship between date of removal of the prior action and date on

which subsequent action was filed, even though plaintiffs

were not able to appeal from order remanding the prior action

above styled and numbered cause be and the same hereby is DISMISSED

FOR WANT OF JURISDICTION without prejudice.

IT IS FURTHER ORDERED, ADJUDGED and DECREED that each party

shall bear their own costs in this cause.,

FIFTH CIRCUIT PROCEEDINGS

NO. 73-3746 JIM L. NAPPER AND WIFE JO ANN NAPPER

PLAINTIFFS-APPELLANTS v. ANDERSON, HENLEY, SHIELDS,

BRADFORD & PRITCHARD, ETC., DEFENDANTS-APPELLEES

U.S. COURT OF APPEALS, FIFTH CIRCUIT

OPINION

Sept. 16, 1974

[500 F.2d 634]

Plaintiffs brought diversity action against Texas law

partnership and individual partners for alleged malpractice

and alternatively sought to recover for alleged violation of

Wire Fraud Act. The United States District Court for the

Northern District of Texas, Sarah Tilghman Hughes, J., dis-

missed for want of jurisdiction and the plaintiffs appealed.

The Court of Appeals, Rives, Circuit Judge, held that Wire

Fraud Act did not operate to create federal cause of action for

damages, and that estoppel by judgment precluded plaintiffs

from successfully asserting diversity jurisdiction where prior

action filed against defendants by plaintiffs in another district

court had been dismissed based upon determination that, as of

date of removal of the prior action to federal district court,

both plaintiffs and defendants were citizens of Texas and

change of plaintiffs’ citizenship between date of removal of

the prior action and filing of complaint in present case had not

been pleaded or proved.

Affirmed.

1. Telecommunications 498

Wire Fraud Act did not operate to create federal cause of

action for damages against defendants who were alleged to

have violated the Act. 18 U.S.C.A. §§ 1341-1343.

to state court.

3. Judgment ¢-720

Estoppel by judgment will not permit matters actually

litigated and determined between same parties in one proceed-

ing to be relitigated.

4. Judgment 634

Estoppel by judgment is accurately termed “direct estop-

pel” where issue has actually been litigated and determined in

an action between same parties based upon same cause of

action.

See publication Words and Phrase for other judi-

cial constructions and definitions.

Appeal from the United States District Court for the North-

ern District of Texas.

Before BROWN, Chief Judge, and RIVES and DYER,

Circuit Judges.

RIVES, Circuit Judge:

This appeal is from a judgment of the district court dismiss-

ing the case for want of jurisdiction and without prejudice.

We affirm.

The complaint seeks the recovery of damages from a Dallas,

Texas, law partnership and the individual partners for alleged

P.A.10

NAPPER v. ANDERSON, HENLEY, SHIELDS, ETC.

malpractice involving the validity and effect of a conveyance

of the Napper’s home in Dallas." The first action asserting

this claim was filed by plaintiffs on June 9, 1971, in the

Circuit Court of Pulaski County, Arkansas. The complaint

alleged that the cause of action arose in Arkansas, and sought

to have the Arkansas state court acquire “long-arm” jurisdic-

tion over the Texas defendants (See Arkansas Statutes 27-—

2502).

On July 12, 1971, defendants filed a petition for removal to

the Federal District Court for the Eastern District of Arkan-

sas asserting diversity jurisdiction that the plaintiffs were

citizens of Arkansas and the defendants were citizens of

Texas. Defendants then filed in the federal district court to

which the case had been removed a motion to quash the

“long-arm” service of process.

The next month, on August 23, 1971, the plaintiffs filed im

the United States District Court for the Northern District of

Texas a complaint in the present case, identical, except for

minor grammatical changes, to the complaint pending in the

federal district court in Arkansas. This complaint stated:

“Plaintiffs are filing this suit as a precaution against having

their cause dismissed after the running of the applicable

limitations period. Plaintiffs request that the Court with-

hold proceedings hereon permding a ruling by the federal

courts of Arkansas upon the jurisdictional question.”

Plaintiffs based federal jurisdiction on diversity of citizenship,

asserting that the defendants were all citizens of Texas and

going into some detail as to their own citizenship:

“Notwithstanding the fact that plaintiffs, Jim L. Napper

and wife, Jo Ann Napper, own homestead property in

Texas, they have established sufficient residence in the

State of Arkansas to entitle them to invoke the diversity

1. The conveyance is that described in Napper v. Johnson, Tex.Civ.

App.1971, 464 S.W.2d 496.

P.A.11

NAPPER v. ANDERSON, HENLEY, SHIELDS, ETC.

jurisdiction of the United States District Court for the

Northern District of Texas.”

The defendants on September 2, 1971, moved to dismiss plain-

tiffs’ complaint for lack of jurisdiction, alleging:

“It affirmatively appears on the face of Plaintiffs’ com-

plaint that they are citizens and residents of Texas, as are

‘the Defendants, so that no diversity of citizenship exists.

In the alternative, if it does not affirmatively appear on the

face of Piaintiffs’ complaint that they are citizens of the

State of Texas, then Defendants affirmatively assert that

they are citizens of such state, so that there is no diversity

of citizenship, and the Court has no jurisdiction over the

cause of action asserted by Plaintiffs.”

More than a year later, on November 21, 1972, the defend-

ants filed in the federal district court in Arkansas a motion to

dismiss for want of diversity jurisdiction, asserting plaintiffs

to be citizens of the same state as were defendants, that is

Texas. On May 9, 1973, a hearing was conducted on that

motion to dismiss. The district judge found that the plaintiffs

at the time of filing their complaint and since had the inten-

tion of going back to Texas. In part, the Judge said:

“The Court believes that his [Mr. Napper’s] intention

when he came here was not to make Arkansas his home on

an indefinite basis, that that is what is absent and, there-

fore, he remained domiciled in Texas and remained a Texas

citizen, although residing in Arkansas.”

The case was accordingly remanded to the Circuit Court of

Pulaski County, Arkansas. That state court never reached

the merits, but ultimately sustained the defendants’ motion to

quash the “long-arm” service of process.

{1} On September 25, 1973, the plaintiffs filed in the

present case an amended complaint reasserting the same claim

based on diversity jurisdiction with the same allegations of

citizenship. As an alternative claim, the plaintiffs sought to

recover damages alleged to have resulted from violation by

P.A.12

NAPPER v. ANDERSON, HENLEY, SHIELDS, ETC.

the defendants of the wire fraud act, 18 U.S.C. § 1343." The

plaintiffs claim that violation of that criminal statute operates

to create a federal cause of action for damages against the

defendants, and assert jurisdiction under 28 U.S.C. § 1337.

In Oppenheim v. Sterling, 1966, 368 F.2d 516, 518-519, the

Tenth Circuit held that 18 U.S.C. §§ 1341, 1342, relating to

mail fraud, are purely penal and rejected “the view that a

violation of these penal statutes as such affords the court

federal question jurisdiction in a civil case.” The wire fraud

act, 18 U.S.C. § 1348, is closely analogous to the mail fraud

statute, 18 U.S.C. § 1341, and likewise evidences no intent of

Congress to grant additionai federal question jurisdiction in

civil cases. Reitmeister v. Reitmeister, 2 Cir. 1947, 162 F.2d

691, does not persuade us differently.

[2-4] Estoppel by judgment precludes the plaintiffs from

successfully asserting diversity jurisdiction. The distinction

between res judicata and estoppel by judgment is discussed in

Commissioner v. Sunnen, 1948, 333 U.S. 591, 597, 598, 68 S.Ct.

715, 92 L.Ed. 898. Estoppel by judgment will not permit

matters actually litigated and determined between the same

parties in one proceeding to be relitigated (333 U.S. at 598, 68

S.Ct. 715). We agree with the full and amply supported

“§ 1343. Fraud wire, radio, or television

" 8 ene tauiea Goaned ar tenuis to anttnn Gay egheann Or

‘artifice to defraud, or for obtaining money or property by means

of false or fraudulent pretenses, representations, or promises,

transmits or causes to be transmitted by means of wire, radio, or

television communication in interstate or foreign commerce, any

writings, signs, signals, pictures, or sounds for the of

executing such scheme or artifice, shall be fined not more than

$1,000 or imprisoned not more than five years, or

“§ 1337. Commerce and anti-trust regulations

. S The Gatriat courte aha have evlgfaal justediction of any civil

action or proceeding arising under any Act of Congress regulating

commerce or protecting trade and commerce against restraints

and monopolies.” ”

4. The estoppel by judgment is accurately termed “direct estoppel

where the issue is actually litigated and determined in an action

between the same parties based upon the same cause of action. See

P.A.13

NAPPER v. ANDERSUN, HENLEY, SHIELDS, ETC.

discussion in 1B Moore’s Federal Practice 4 0.405{5], that

“the underlying policy of res judicata is not restricted to a

valid judgment that deals solely with the merits; it extends

to and includes matters in abatement, such as jurisdiction of

the subject matter, federal jurisdiction, jurisdiction over the

res, jurisdiction over the defendant, venue, and related

matters.” (Footnotes omitted.)

As between the two federal district courts, the inability to

appeal from the order of remand does not permit the issue

actually litigated and determined in the federal court in

Arkansas to be relitigated in the second action. Johnson

Company v. Wharton, 1894, 152 U.S. 252, 14 S.Ct. 608, 38

L.Ed. 429; see also the full discussion of and possible limita-

tions to this rule in 1B Moore’s Federal Practice { 0.416{5].

The federal district court in Arkansas held that as of July

12, 1971, the date of removal, it lacked jurisdiction because

plaintiffs were on that date citizens of Texas. To sustain

federal jurisdiction in the Texas district court, plaintiffs had

the burden of proving that they had changed their citizenship

between July 12 and August 23, 1971, when their complaint in

the present case was filed. Though afforded ample opportuni-

ty to do so, the plaintiffs have never pleaded or proved any

change of citizenship during that crucial period. The district

court properly dismissed the case for want of jurisdiction, and

its judgment is

Affirmed.

A.L.I. Restatement, Judgments § 45 comment d; Estevez v. Nabers,

5 Cir. 1955, 219 F.2d 321, 324; Myers v. Ampex, Inc., 5 Cir. 1974,

498 F.2d 1092 [1974]; 46 Am.Jur.2d § 397, p. 566 n. 7. That

distinction between “direct estoppel” and “collateral estoppel” helps

to make clear our conclusion that neither the standards of law

applied by the federal district court.in Arkansas nor its findings of

fact may be relitigated.

Adm. Office, U.S. Courts—West Publishing Company, Saint Paul, Minn.

P.A.14

Jim L. NAPPER and wife, Jo Ann Napper,

Plaintiffs-Appellants,

Vv.

ANDERSON, HENLEY, SHIELDS, BRADFORD &

PRITCHARD, etc., Defendants-Appellees.

No. 73-3746.

United States Court of Appeals,

Fifth Circuit.

P.A.15

NAPPER v. ANDERSON, HENLEY, SHIELDS, ETC.

filed, defendants moved to dismiss for lack of diversity. The

amended complaint filed two years later, on September 25,

1978, sought recovery also on a claimed federal cause of action

which we held to be nonexistent. There was never any basis

of federal jurisdiction sufficient to support pendent jurisdic-

tion of the state law claim.'

The panel, therefore, declines to grant appellants’ petition

for rehearing.

The Petition for Rehearing is denied and no member of this

panel nor Judge in regular active service on the Court having

requested that the Court be polled on rehearing en banc (Rule

[507 F.2d 723] Rule 12), the Petition for Rehearing En Banc is denied.

1. See Hurn v. Oursler, 1938, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed.

Appeal from the United States District Court for the North- 1148; Mine Workers v. Gibbs, 1966, 383 U.S. 715, 725, 86 S.Ct.

ern District of Texas; Sarah Tilghman Hughes, Judge. 1130, 16 L.Ed.2d 218; Rosado v. Wyman, 1970, 397 U.S. 397, 404, 90

S.Ct. 1207, 25 L.Ed.2d 442; Moor v. County of Alameda, 1973, 411

ON PETITION FOR REHEARING AND PETITION FOR U.S. 693, 710, et seq., 93 S.Ct. 1785, 36 L.Ed.2d 596. Cf. Lazier v.

Weitzenfeld, 1975, 505 F.2d 896 [1975]; Perry v. Jones, 1975, ——

REHEARING EN BANC F.2d — [1975).

(Opinion September 16, 1974, 5 Cir. 1974, 500 F.2d 634). ee ee ee

Before BROWN, Chief Judge, and RIVES and DYER, JUDGMENT

Circuit Judges. [Caption as immediately foregoing

filed Sept.16,1974]

PER CURIAM:

ideration of appellants’ petition for rehearing, the This cause came on to be heard on the transcript

oo van - mes of the record from the United States District Court

panel adheres to its decision reported in 500 F.2d 634, that the ; ;

district court properly dismissed the case for want of jurisdic- a District of Texas, and was argued

tion. Bei! v. Hood, 1946, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. ON CONSIDERATION WHEREOF, It is now here order-

939, does nct require a different result. ed and adjudged by this Court that the judgment of

Admittedly, the defendants have all along been citizens of the said District Court in this cause be, and the

Texas. It now appears that on August 23, 1971, the date of oe affirmed; ,

> age mee s further ordered that plaintiffs-appellants

filing the complaint in the Texas federal district court, the pay to defendants-appellees, the costs on appeal to

plaintiffs were also citizens of Texas. The plaintiffs cannot be taxed by the Clerk of this Court.

complain that in good faith they considered themselves citi-

zens of Arkansas, and were surprised by the contrary ruling,

for on September 2, 1971, ten days after the complaint was

STATE COURT PROCEEDINGS - TEXAS

P.A.16

NAPPEBR v. JOHNSCN

Cite as 464 8. W.2d 498

Jim L. NAPPER and Wife Je Ann Napper,

Appellants,

Earl B. JOHNSON, Appelice.

Ne. 4974.

Court of Civil Appeals of Texas,

Waco.

Feb. 4, 1971.

Rehearings Den'ed March 4, 1971

Action to cancel instrument in form of

deed. The 160th District Court, Dallas

County, Hoyet A. Armstrong, J., rendered

judgment for defendant, and plaintiffs ap-

pealed. The Court of Civil Appeals, Mc-

Donald, C. J., held that finding that grantee

did not know or should not have known

that grantors intended instrument to oper-

ate as mortgage was against great weight

and preponderance of evidence.

Reversed and remanded.

|. Evidence €>265(10)

Litigant’s direct unqualified testimony

regarding his personal knowledge is bind-

ing on him.

2. Partnership €>159

One partner’s knowledge, or what be

should have known, is binding on othet

partner.

3. Mortgages €—38(5)

Retention of possession by grantor

circumstance indicating mortgage rather

than sale.

4 Mertgages 301)

Disparity between value of property

and sale price is circumstantial evidence

that grantee should have known that trans-

action was intended as mortgage.

5. Mortgages €=38(!)

Finding that grantee did not know or

should not have known that grantors in-

tended instrument to operpte as mortgage

was against great weight and prepori-

derance of evidence.

eS —

Charles Ben Howell, Dallas, for appel-

lants.

Anderson, Henley, Shields, Bradford &

Pritchard, W. A. Pritchard, Dallas, De-

Lange, Hudspeth, Pitman & Katz, Eugene

J. Pitman, Houston, for appellee.

OPINION

McDONALD, Chief Justice.

This is an appeal by plaintiffs Napper

and wife from a take nothing judgment,

in a suit to cancel an instrument in the

form of a deed, which plaintiffs executed

to defendant Johnson on their home.

Plaintiffs assert the instrument was in-

tended to operate as a mortgage.

Plaintiffs sued defendant alleging they

owned their home in Dallas; that they re-

quested a $15,000. loan from defendant;

that defendant to mask the real effect of

the transaction required plaintiffs to sign

a deed to their property; that the deed is

-oid because in truth and in fact it was an

‘tended mortgage

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