Petition for Writ of Certiorari — Blue Cross & Blue Shield v. Weiner

Bupreme Court, |

FILED

| MAY 30 88

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§0-1843

No.

In THE

Supreme Court of the United States

OcTOBER TERM, 1991

BLUE CROSS AND BLUE SHIELD

OF MARYLAND, INC.,

Petitioner,

v.

ROBERT WEINER, SR., MARGARET WEINER, MARK WEINER,

AND ROBERT WEINER, SR. as PERSONAL REPRESENTATIVE

OF THE EstaTE OF STEVEN WEINER,

Respondents.

On PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

Court oF APPEALS FOR THE FOURTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

SHALE D. STILLER

Counsel of Record

LEONARD E. CoHEN

ALLAN P. HiLLMAN

FRANK, BERNSTEIN, CONAWAY

& GOLDMAN

300 E. Lombard Street

Baltimore, Maryland 21202

(301) 625-3500

May 30, 1991 Attorneys for Petitioner

Se MR NER ORT EI A OE TEE ET ONS Cant A TT TTR REE AE TR TENOR

The Daily Record Co., Baltimore, MD 21202

Oe = _

QUESTION PRESENTED FOR REVIEW

Do the federal courts lack power to review a State Court

determination that federal law is inapplicable in an area

such as group insurance plans governed by ERISA, where

Congress has decreed that federal law both preempts state

law claims and grants exclusive jurisdiction over ERISA to

the federal courts; i.e, is Kalb v. Feuerstein, 308 U.S. 433

(1940) no longer of any force, with the consequence that

principles of res judicata are applicable even where a state

court judgment infringes upon an area of exclusive federal

concern?

LIST OF PARTIES

Pursuant to Rules 21.1(b) and 29.1, Petitioner states that

the following parties appeared in the United States Court of

Appeals for the Fourth Circuit:

a) Blue Cross and Blue Shield of Maryland, Inc.!

b) Robert Weiner, Sr.;

c) Mark Weiner;

d) Margaret Weiner; and

e) Robert Weiner, Sr. as Personal Representative of the

Estate of Steven Weiner.

‘ Pursuant to Rule 29.1, the corporate affiliates of Blue Cross and Blue

Shield of Maryland, Inc. are listed in Appendix E.

ili

TABLE OF CONTENTS

Page

QUESTION PRESENTED ....................... i

EES ET CETTE TET ii

So sy, iii

TABLE OF AUTHOR Tibs...................0.8. iv

RELEVANT STATUTORY PROVISIONS .......... vi

EE 2

_JURISDICTIONAL | 2

STATEMENT OF THE CASE .................... 2

REASONS FOR GRANTING THE WRIT .......... : 5

This Court Should Grant Certiorari Because the

Decision of Court Below Effectively Overrules

Kalb v. Feuerstein, and Renders Res Judicata

Applicable Even Where A State Court Judgment

Infringes Upon an Area of Exclusive Federal

Tk chu ect nestcccnes 5

Tee eee baka be wsevecweeues 12

TT ey cab veneers’ Submitted

under

separate

iv

TABLE OF CITATIONS

Cases

Consolidated Rail Corp. v. Illinois, 423 F. Supp.

941 (Regional Rail Reorg. Ct. 1976), cert.

denied, 429 U.S. 1095 (1977) .............

Durfee v. Duke, 375 U.S. 106 (1963) .........

FMC Corporation v. Holliday, 498 U.S. ‘

111 S.Ct. , 112 L.Ed.2d 356 (1990)....

Ingersoll-Rand Company v. McClendon, 498

US. , 111 S.Ct. , 112 L.Ed.2d

GE 46 tn dit cetainas bas chanins bok

International Longshoremen’s Ass'n, AFL-CIO

v. Davis, 476 U.S. 380 (1986) .............

Kalb v. Feuerstein, 308 U.S. 433 (1940) ......

Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58

CE i cide kc che 4k CRORS EEL ORAAE Sb 5 6c

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41

GG oka vo ak rer enkca eaters Fane tcc

Stoll v. Gottlieb, 305 U.S. 168 (1938).........

United States v. United States Fidelity &

Guaranty Co., 309 U.S. 506 (1940) ........

Statutes And Rules

Employee Retirement Income Security

Act of 1974 (“ERISA”), 29 U.S.C. 1001 et

passim

Treatises and Articles

Boskey & Braucher, Jurisdiction and

Collateral Attack, 40 Colum. L. Rev. 1006

RE EEC ES Se a

Developments in the Law: Res Judicata, 65

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

Leflar, McDougal and Felix, American

Conflicts Law, §79 (4th ed. 1986) .........

Restatement (Second) of Judgments, §12

REE Ae a a

13A Wright, Miller & Cooper, Federal

Practice & Procedure §3536 (Rev.ed. 1984) .

vi

RELEVANT STATUTORY PROVISIONS

Employee Retirement Income Security Act of 1974 (“ERISA”),

29 U.S.C. §§1132 and 1144 (1985).

$1132. Civil Enforcement

(a) Persons empowered to bring a civil action

A civil action may be brought —

(1) by a participant or beneficiary —

(A) for the relief provided for in subsection (c) of

this section, or

(B) to recover benefits due to him under the terms

of his plan, to enforce his rights under the terms of the plan,

or to clarify his rights to future benefits under the terms of

the plan;

(2) by the Secretary, or by a participant, beneficiary

or fiduciary for appropriate relief under section 1109 of this

title;

(3) by a participant, beneficiary, or fiduciary (A) to

enjoin any act or practice which violates any provision of this

subchapter or the terms of the plan, or (B) to obtain other

appropriate equitable relief (i) to redress such violations or

(ii) to enforce any provisions of this subchapter or the terms

of the plan;

(4) by the Secretary, or by a participant, or benefi-

ciary for appropriate relief in the case of a violation of

1025(c) of this title;

(5) except as otherwise provided in subsection (b) of

this section, by the Secretary (A) to enjoin any act or practice

which violates any provision of this subchapter, or (B) to

obtain other appropriate equitable relief (i) to redress such

vil

violations or (ii) to enforce any provision of this subchapter;

or

(6) by the Secretary to collect any civil penalty under

subsection (i) of this section.

(e) Jurisdiction

(1) Except for actions under subsection (a)(1)(B) of

this section, the district courts of the United States shall

have exclusive jurisdiction of civil actions under this sub-

chapter brought by the Secretary or by a participant, benefi-

ciary, or fiduciary. State courts of competent jurisdiction and

district courts of the United States shall have concurrent

jurisdiction of actions under subsection (a)(1)(B) of this sec-

tion.

$1144. Other laws

(a) Supersedure; effective date.

Except as provided in subsection (b) of this section, the provi-

sions of this subchapter and subchapter III of this chapter

shall supersede any and all State laws insofar as they may

now or hereafter relate to any employee benefit plan

described in section 1003(a) of this title and not exempt

under section 1003(b) of this title. This section shall take

effect on January 1, 1975.

(b) Construction and Application

vill

(6)(A) Notwithstanding any other provision of this

section—

(i) in the case of an employee welfare benefit plan

which is a multiple employer welfare arrangement

and is fully insured (or which is a multiple

employer welfare arrangement subject to an exemp-

tion under subparagraph (B)), any law of any State

which regulates insurance may apply to such

arrangement to the extent that such law provides—

(I) standards, requiring the maintenance of

specified levels of reserves and specified levels

of contributions, which any such plan, or any

trust established under such a plan, must meet

in order to be considered under such law able to

pay benefits in full when due, and

(II) provisions to enforce such standards, and

(ii) in the case of any other employee welfare

benefit plan which is a multiple employer wel-

fare arrangement, in addition to this subchap-

ter, any law of any State which regulates insur-

ance may apply to the extent not inconsistent

with the preceding sections of this subchapter.

(C) Nothing in subparagraph (A) shall affect the

manner or extent to which the provisions of this subchapter

apply to an employee welfare benefit plan which is not a

multiple employer welfare arrangement and which is a plan,

fund, or program participating in, subscribing to, or other-

wise using a multiple employer welfare arrangement to fund

or administer benefits to such plan’s participants and bene-

ficiaries.

No.

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1990

BLUE CROSS AND BLUE SHIELD OF MARYLAND,

INC.,

PETITIONER

Vv.

ROBERT WEINER, SR., MARGARET WEINER, MARK

WEINER, AND

ROBERT WEINER, SR. as Personal Representative of

the Estate of STEVEN WEINER,

RESPONDENTS

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

The Petitioner, Blue Cross and Blue Shield of Maryland,

Inc. (“Blue Cross”), respectfully requests that this Court

issue a Writ of Certiorari to review the decision of the United

States Court of Appeals for the Fourth Circuit in this case.

OPINIONS BELOW

The Opinion of the United States Court of Appeals for the

Fourth Circuit is reported at 925 F.2d 81 (4th Cir. 1991)

(App. A hereto). The Opinion of the United States District

Court for the District of Maryland, affirmed by the Fourth

Circuit, is reported at 730 F. Supp. 674 (D.Md. 1990) (App. B

hereto). The Opinion of the Florida Fourth District Court of

Appeal, the subject of Blue Cross’ federal collateral attack, is

reported at 543 So. 2d 794 (Fla. Dist. Ct. App.), review denied,

553 So. 2d 1164 (1989), cert. denied, ___ U.S. ____, 110

S.Ct. 1475, 108 L.Ed.2d 612 (1990).?

JURISDICTIONAL STATEMENT

The Order of the United States Court of Appeals for the

Fourth Circuit denying Blue Cross’ petition for rehearing

and suggestion for rehearing in banc was entered on March

1, 1991 (App. D hereto). Thus, pursuant to Rule 13.4, Blue

Cross’ filing of the instant Petition is timely. The jurisdic-

tion of this Court is invoked under 28 U.S.C. §1257.

STATEMENT OF THE CASE

Robert Weiner, Sr. (“Weiner”) purchased group health

insurance for himself and his family, through a Florida asso-

ciation of gasoline retailers. Blue Cross underwrote this

plan. The policy covered Weiner, his wife, and two dependent

children, Steven and Mark. (App. A at 2.)

In 1982, Steven was found to have AIDS, and Mark was

rendered a quadriplegic as the result of an automobile acci-

dent. (/d.) Benefits were paid under the policy for medical

care until August, 1983, when they were stopped because

Blue Cross believed that Steven and Mark were no longer

* The petition for certiorari filed for review of the Florida state court

action did not relate to the issue now presented, i.e., the propriety of collat-

eral attack to protect fundamental federal interests subject to the exclu-

sive jurisdiction of the federal courts.

covered. Weiner sued to compel continuation of benefits.

Seven months later, Blue Cross resumed payments under the

policy and reimbursed Weiner for omitted past payments.

Since March of 1984, Blue Cross has complied with all con-

tractual obligations under the policy. (App. A at 3.)

Nevertheless, the Weiners sued Blue Cross in a Florida

state court, asserting fraud, negligence, and intentional

infliction of emotional distress. In 1986, a jury returned a

verdict against Blue Cross for over $5,000,000—nearly all in

punitive damages. The trial judge awarded $1.4 million in

attorney's fees (three times the lodestar). (App. A at 3.)

In Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987), and

Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987), this

Court held that the Employee Retirement Income Security

Act of 1974 (“ERISA”), 29 U.S.C. §1001 et seq., preempted the

common law tort claims of plan participants such as the

Weiners. This Court did so in order to ensure uniform fed-

eral interpretation, that ERISA participants and plan bene-

ficiaries would have ready access to federal courts, and that

state court judgments would not destroy the goals of

ERISA.* Thus, under ERISA, the state court could not have

granted either the punitive damages or granted the exces-

sive attorneys’ fees, and there could have been no jury trial.

In holding that Congress sought “consistent regulation”

and “limited remedies” in ERISA, 481 U.S. at 46, Pilot Life

explained the “careful balancing” represented by ERISA’s

civil enforcement scheme:

In sum, the detailed provisions of §502(a) set forth a

comprehensive civil enforcement scheme that repre-

sents a careful balancing of the need for prompt and

fair claims settlement procedures against the public

interest in encouraging the formation of employee bene-

3 ERISA provides a limited exception to exclusive federal jurisdiction in

$1132(a)(1)(B) in actions solely for benefits—but the parties agreed that

this section does not apply here. (App. B at 15.)

fit plans. . . . [T]he federal scheme would be completely

undermined if ERISA-plan participants and benefi-

ciaries were free to obtain remedies under state law that

Congress rejected in ERISA.

Id. at 54 (emphasis added). This Court has repeatedly reaf-

firmed the comprehensive breadth of and the exclusive fed-

eral interest represented by ERISA. Ingersoll-Rand Co. v.

McClendon, 498 U.S. ___, 111 S.Ct. , 112 L.Ed.2d 474,

482-84, 486-87 (1990); FMC Corp. v. Holliday, 498 U.S. ___.,

111 S.Ct. , 112 L.Ed.2d 356, 364-65, 368-69 (1990).

Blue Cross raised the ERISA issue—and thereby raised

the lack of state court subject matter jurisdiction—for the

first time in its appeal to the Florida state intermediate

appellate court.* Blue Cross asked that court to dismiss the

case for lack of subject matter jurisdiction or, at a minimum,

to remand the case for a full evidentiary hearing as to

whether the insurance plans were covered by ERISA. (App.

A at 4.)

In 1989, the Florida intermediate appellate court

affirmed the judgment as to Blue Cross (App. C). With

respect to the newly raised ERISA issue, the Court acknowl-

edged that the material facts were “disputed,” but, in six

sentences of its opinion, granted (in effect) summary judg-

ment on appeal to the Weiners as to the issue of whether the

plan was an ERISA plan. (App. C at 38.) No federal court has

ever ruled on that issue.°

* Pilot Life and Metropolitan Life were decided after the decision in the

Florida trial court. The very broad reading of ERISA in those cases came

as a surprise to many. See Metropolitan Life, 481 U.S. at 67 (Brennan, J.,

concurring).

5In 1988, before the decision by the Florida intermediate appellate

court, Blue Cross filed suit in the United States District Court for the

Southern District of Florida, asking that court to declare the state trial

court judgment void because the causes of action had been preempted by

ERISA, and the matter was one exclusively within the jurisdiction of the

federal courts. That court abstained, in an unreported decision. Its deci-

-_~

When the Weiners sought to enforce their judgment in

Maryland, Blue Cross removed the case and filed a motion to

vacate and to hold an evidentiary hearing on whether the

plan was covered by ERISA. The District Court denied relief

(App. B). The Fourth Circuit, though assuming that an

ERISA plan existed, nevertheless affirmed (App. A at 3-5).

REASONS FOR GRANTING THE WRIT

This Court Should Grant Certiorari Because the Deci-

sion of Court Below Effectively Overrules Kalb v.

Feuerstein, and Renders Res Judicata Applicable Even

Where A State Court Judgment Infringes Upon an

Area of Exclusive Federal Concern.

Subject matter jurisdiction, once litigated, normally can-

not be the basis of a collateral attack. Stoll v. Gottlieb, 305

U.S. 165, 173 (1938). A well-recognized exception to that

rule arises, however, when a state court renders judgment in

an area of important and exclusive federal concern. The

exception has been recognized by this Court in Kalb v. Feuer-

stein, 308 U.S. 433 (1940) and Durfee v. Duke, 375 U.S. 106,

114 (1963), by the American Law Institute, and by leading

scholars. Because ERISA is such an area, the present collat-

eral attack should have been permitted to succeed.

sion was affirmed (upon different grounds of abstention) in 868 F.2d 1550

(11th Cir.), cert. denied, 110 S.Ct. 239 (1989). The Eleventh Circuit deci-

sion also was rendered before the decision by the Florida intermediate

appellate court. The Fourth Circuit opinion from which review now is

sought comments that the Eleventh Circuit judgment was a “decision to

abstain with respect to the same question with which we are presented.”

(App. A at 5.) That statement is wrong. The issue before the Eleventh Cir-

cuit was whether the federal courts should halt ongoing state litigation;

here the issue is whether, after that litigation is over, the federal courts

are powerless to correct a serious state court error infringing upon the

strongest federal interests.

ees

Nevertheless, in a bare page of legal analysis, the Fourth

Circuit panel ignored all of that authority. Rather, it created

a new rule—vouched for by no one and rejected univer-

sally—that permits collateral attack only in the non-ex-

istent situation in which the question of jurisdiction could be

addressed only by a federal court. This new rule ignores the

fact that any court has the initial right to pass on its own

jurisdiction, including a state court in a matter of exclusive

federal jurisdiction. This does not mean, however, that a

state court’s finding that it has subject matter jurisdiction is

immune from collateral attack in federal court.

Collateral attack is necessary here to vindicate the

extraordinary federal interest invested in ERISA. As a prac-

tical matter, under the decision below, even a state court

judgment destroying IBM’s pension plan would be insulated

from collateral attack. The panel’s opinion expressly

assumes that the Florida decision on the ERISA issue was

erroneous, but concludes that, even in these extreme circum-

stances, the federal courts have no power to permit collateral

attack. This result surely is the death-knell for Kalb and for

any doctrine that would permit collateral attack on an erro-

neous state court decision.

Even the authorities cited by the panel refute its conclu-

sion. Thus, 13A Wright, Miller and Cooper, Federal Practice

& Procedure (2d. ed. 1984), cited by the panel as recognizing

its new distinction, instead does the opposite:

[WJhen a federal statute has vested exclusive jurisdic-

tion of a particular type of case in the federal courts,

the finding by a state court that it has jurisdiction over

such a case will not preclude collateral attack upon the }

judgment rendered in the state court.

Id. at §3536, pp. 539-40 (emphasis added). Restatement (Sec- |

ond) of Judgments §12(2) (1982) provides similarly that a

judgment may be vacated on collateral attack if “[a]llowing

Ty

eT

the judgment to stand would substantially infringe the

authority of another tribunal or agency of government .”

Apart from this case, it has been universally thought true

that when Congress mandates exclusive federal jurisdiction,

a judgment resulting from a state’s erroneous assumption of

jurisdiction is “not merely erroneous but beyond its power,

void and subject to collateral attack.” Kalb, 308 U.S. at 439

(1940). The Restatement (Second) and Wright, Miller and

Cooper reflect the widespread acceptance and broad inter-

pretation of the Kalb rule. No authority accepts the contrived

and illogical construction given Kalb by the Fourth Circuit

panel (and its opinion cites none). Thus, certiorari is neces-

sary and appropriate under Supreme Court Rule 10.1(c).

In Kalb, a state court had entered a judgment during pen-

dency of a federal bankruptcy proceeding. A federal statute

provided that the filing of the federal action deprived the

state court of jurisdiction over foreclosure proceedings.

Although the defendant had sought to stay neither the fore-

closure nor the later enforcement proceeding, this Court per-

mitted collateral attack on the state court decree, holding

that it was immaterial whether the issue of subject matter

jurisdiction had been fully litigated in the state court. 308

US. at 444.

Although decided after Stoll, Kalb did not follow the tradi-

tional rules of res judicata, because the case involved an

explicit exercise by Congress of its power to regulate bank-

ruptcy. That power included the authority to limit jurisdic-

tion of state courts and to render judgments made beyond

those limits “subject to collateral attack.” Id. at 439. Kalb

emphasized that Congress had intended to deprive the state

courts of jurisdiction; the exercise of that power necessarily

included the ability to deny preclusive effect to judgments

made by state courts improperly asserting jurisdiction.

Kalb, however, did not hold, as the panel would have it, that

collateral attack is available only where a state court is

deprived of the right to decide whether it has jurisdiction—

because no such circumstance exists.

Kalb saw nothing remarkable about treating jurisdic-

tional foreclosure in the same breath as other federal

rights—including federal substantive rights. Nor should it

have; it should be axiomatic that federal rights can only be

determined in the manner prescribed by Congress. That is

why Kalb has been read broadly for a half century by judges

and scholars. See, e.g., Boskey & Braucher, Jurisdiction and

Collateral Attack, 40 Colum.L.Rev. 1006 (1940) (this well-

known article, assessing this Court’s views after Stoll and

Kalb, concluded that the implications of Kalb extended well

beyond bankruptcy to include labor, burdens on commerce,

suits against the military, sovereign immunity, and cases

involving “exclusive federal jurisdiction”. Id. at 1023-29)

(emphasis added); Developments in the Law: Res Judicata, 65

Harv.L.Rev. 818, 853-54 (1952).®

Kalb is cited as an example of the appropriateness of col-

lateral attack by the Restatement (Second) §12(2), but it is

far from the only example. See id. at 127. United States v.

United States Fidelity & Guaranty Co., 309 U.S. 506 (1940),

involving sovereign immunity, is another example of the

type of case referred to as appropriate for collateral attack

under §12(2). Yet, a defense of sovereign immunity does not

immediately oust the original court from jurisdiction to

determine its own jurisdiction, to determine, in other words,

® Durfee v. Duke, 375 U.S. 106 (1963), reiterates the general rule that

determinations of subject matter jurisdiction are res judicata. But Durfee,

citing Kalb, reaffirms expressly that “the general rule of finality of juris-

dictional determinations is not without exceptions. Doctrines of federal

preemption or sovereign immunity may in some contexts be controlling.”

Id. at 114. Durfee, of course, did not involve Congressionally mandated

jurisdiction; no federal interests needed to be protected. The present cir-

cumstance is diametrically different. In Durfee, there were no policy con-

siderations favoring departure from the general rule of finality; in the

present case, the federal policy considerations under ERISA could not be

stronger.

i

whether sovereign immunity exists. That issue (like the

issue of whether an ERISA pian exists) must be litigated.

Collateral attack is appropriate nonetheless because of the

important federal interest infringed by a wrongful decision

by the original court. The same argument obtains precisely

with respect to ERISA and its exceptionally strong federal

interest.

A close precedent is found in the decision by Judges

Friendly, Wisdom, and Thomsen in Consolidated Rail Corp.

v. Illinois, 423 F. Supp. 941 (Regional Rail Reorg. Ct. 1976),

cert. denied, 429 U.S. 1095 (1977). It is cited by Wright,

Miller and Cooper, id., §3536 at 540, and demonstrates the

breadth of the right of collateral attack (even beyond Kalb)

where federal interests predominate. Consolidated Rail can-

not be distinguished in principle; not surprisingly, Blue

Cross emphasized it below, but neither of the lower courts

even referred to it.

Consolidated Rail sued in the Special Railroad Court for

relief from an injunction issued by the United States Dis-

trict Court for the Northern District of Illinois, which had

restrained its operations under a trackage agreement. The

Special Court, created under the Regional Rail Reorganiza-

tion Act, held that the validity of the trackage agreement

was a matter within its exclusive jurisdiction, and that res

judicata did not bar a collateral attack on the jurisdictional

issue. It reversed the holding of the Illinois federal court on

the jurisdictional issue even though that issue had been

fully litigated in that forum, 425 F. Supp. at 947 n.11. As is

true here, the first court had the right to determine its own

jurisdiction, and had done so; but the Special Court held that

it could entertain a collateral attack when the decision of the

first court was wrong. Distinguishing Stoll, it held:

The basic problem presented is the extent to which lit-

igated questions of subject matter jurisdiction are to

be protected from collateral attack. Although the poli-

cies of terminating litigation, avoiding inconsistent

ee

10

results, and repose, which support application of res

judicata to questions of subject matter jurisdiction,

may vindicate the general rule that litigated ques-

tions of subject matter jurisdiction cannot be collater-

ally attacked, the policy basis for the rule should make

us wary of its procrustean application. Here, counter-

vailing policy considerations support the conclusion

that Congress, in passing the Act and §209(e) in par-

ticular, intended to void determinations made by

other courts, when these determinations were

reserved for our exclusive consideration.

The legislative mandate overpowers the general rule.

Kalb v. Feuerstein is the leading decision for the prin-

ciple that the legislature may void judgments. .. .

The exclusive jurisdiction sections [of the Rail Act]

make clear that Congress desired that one court make

these necessary determinations. It is not every chal-

lenge relating to the Act that Congress brought within

our exclusive province but only those where the critical

nature of the determination demands the consistent

interpretation possible only when review is concen-

trated in a single court. The ambit of the Special

Court’s exclusive jurisdiction was carefully considered

by Congress. Congressional concern focused on pro-

viding for exclusive jurisdiction to oust problems

which could be effectively dealt with by other courts.

The assumption was then that certain matters would

be exclusively attended to by the Special Court, and

congressional efforts were directed to determining

which matters warranted sensitive treatment .

In sum, the purposes of the Act and the language of

the Act compel us to hold that Congress concluded

that the policies supporting our exclusive jurisdiction

outweigh the policies of res judicata.

423 F. Supp. at 947-50 (emphasis added; footnotes omitted).

The decision to allow collateral attack turned in part on

the Congressional goals of “consistent interpretation” and

avoidance of impediments to the “effective implementation

of the Act.” Id. at 948-49. Similarly, in ERISA, Congress bal-

anced protection of employees with avoidance of ruinous

punitive damage state court litigation (and the resulting

exorbitant insurance costs), which would prevent businesses

from adopting employee benefit plans. Pilot Life, 481 U.S. at

54. This case demonstrates the wisdom of that concern.

The Fourth Circuit opinion does assert that “commenta-

tors are assiduously careful to make the very same distinc-

tion” made by the panel (App. A at 5), citing 13A Wright,

Miller, and Cooper §3536 n.12. But that reference simply is

wrong. Footnote 12 rmerely quotes §12 of the Restatement

(Second) (which rejects the panel’s position), and refers gen-

erally to an obscure law review article published before the

Restatement (Second), the view of which has been rejected by

that work.’

This rejection of the panel’s analysis by the leading

authorities is logical. A court (including the Florida state

court in this case) has—and must have—the right to deter-

mine its own jurisdiction; otherwise our legal system would

face gridlock. Thus, if Cardozo sues the Holmes Law Book

Company in state court, and Holmes Law Book Company

files a Chapter 11 petition, the state court still would have to

decide if it has jurisdiction to proceed. The state court might

be called upon to decide if it is the same Holmes Lawbook

? The Wright, Miller and Cooper text reads: “When a federal statute has

vested exclusive jurisdiction of a particular type of case in the federal

courts, the finding by a state court that it has jurisdiction over such a case

will not preclude collateral attack upon the judgment rendered in the

state court.” Jd. at 539-40. That the treatise does not agree with the panel

is made clear by the text following footnote 12, and by footnote 13, which

refers for support to Kalb and Consolidated Rail—both of which reject the

panel’s view.

The Fourth Circuit also sought support from Jnternational Longshore-

men’s Ass'n, AFL-CIO v. Davis, 476 U.S. 380, 393 (1986), which it cites,

with a “Cf”, as “flatly distinguishable” from Kalb (App. A at 5). But this

Court, in discussing the right of collateral attack on the same page as that

cited by the panel, held that “this case [Davis] is in all relevant aspects the

same as Kalb.” Id. at 393 n.11 (emphasis added). That is a fair measure of

the magnitude of error by the Fourth Circuit.

12

Company or perhaps a Holmes Law Book Company incorpo-

rated in another state. If the state court is wrong, however,

the Supremacy Clause and Kalb make clear that the error

can be corrected in federal court.

CONCLUSION

Recently, in Ingersoll-Rand, this Court recognized the

danger of approval of erroneous state court determinations

which threaten the overwhelming federal interests embod-

ied in ERISA:

Allowing state based actions like the one at issue here

would subject plans and plan sponsors to burdens not

unlike those that Congress sought to foreclose

through § 514(a). Particularly disruptive is the poten-

tial for conflict in substantive law. It is foreseeable

that state courts, exercising their common law

powers, might develop different substantive stan-

dards applicable to the same employer conduct,

requiring the tailoring of plans and employer conduct

to the peculiarities of the law of each jurisdiction.

Such an outcome is fundamentally at odds with the

goal of uniformity that Congress sought to imple-

ment.

112 L.Ed.2d at 486.

For a half century it has been settled doctrine that a state

court cannot bootstrap itself into subject matter jurisdiction

over federal issues which Congress has reserved for the

exclusive jurisdiction of federal courts. So important is this

rule, and so vital is it to the effective working of our federal

system, that the normal rules of preclusion do not prevent

collateral attack. Professor Robert Leflar, the great conflicts

scholar, has explained:

No appearance and no amount of litigation. . .will

give effectiveness to a judgment by a court that had

no competence to hear the type of lawsuit in which

the judgment was rendered. Thus, parties cannot by

|

13

appearing before a state court “bootstrap” it into

jurisdiction over a federal matter.

Leflar, McDougal and Felix, American Conflicts Law, §79 at

235, 238 (4th ed. 1986).

That view of Kalb has been the view of scholars. Great

judges have read Kalb similarly. No court has held that an

admittedly erroneous decision of a state court is entitled

absolutely to preclusive effect even where Congress has

mandated that the subject matter of the dispute is within

the exclusive jurisdiction of the federal courts. No court has

created—-let alone accepted—the artificial limit on Kalb

adopted by the Fourth Circuit, a distinction which, if

approved, would seriously damage the doctrine of Federal

Supremacy, and would radically alter the relationship

between federal and state courts in cases where Congress

has mandated both preemption of state law claims and

exclusive federal jurisdiction. Certiorari should be granted

to review the decision in this case.

Dated: May 30, 1991 Respectfully submitted,

Shale D. Stiller

Leonard E. Cohen

Allan P. Hillman

Frank, Bernstein, Conaway &

Goldman

300 East Lombard Street

Baltimore, Maryland 21202

(301) 625-3500

Attorneys for Petitioner

14

No.

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1990

BLUE CROSS AND BLUE SHIELD OF MARYLAND, INC.,

PETITIONER

V.

ROBERT WEINER, SR., MARGARET WEINER, MARK

WEINER, AND

ROBERT WEINER, SR. as Personal Representative of

the Estate of STEVEN WEINER,

RESPONDENTS

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

CERTIFICATE OF SERVICE TO

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

1. I am one of the counsel for Petitioner.

2. I hereby certify that, on this May 30, 1991, two copies

of the Petition for a Writ of Certiorari were served by mail,

postage prepaid, upon Larry S. Stewart, Esquire, Suite

1900, 44 West Flagler Street, Miami, Florida 33130, counsel

for Respondents.

Allan P. Hillman

AR iste tect es 00 tet