Reply Brief — Blue Cross & Blue Shield v. Weiner

FIL 2D

| AUG 14 1991

OFFICE OF THE CLERK

iu

No. 90-1

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

REPLY IN SUPPORT OF

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

August 14, 1991 Attorneys for Petitioner

ED Se. EE, _ INT, CE aE

The Daily Record Co., Baltimore, MD 21202

TABLE OF CONTENTS

Page

REASONS FOR GRANTING THE WRIT .......... 2

A. The Decision Of The Court Below Conflicts

With Well-Established Precedents Of This

Court And Threatens The Right Of State

Courts To Determine Their Own

I G6 oad fees a os v 4b 44 cd a 0 2

The Decision Threatens to Eliminate the

Right of Collateral Attack............. 2

The Decision Threatens the Right of

Courts to Determine Their Own

TE Pee ee eee 3

B. The Decision Of The Court Below Conflicts

With Principles Recognized In Other

EO Fee ne oe 4

The Circuit Courts of Appeal are

Unanimous That a Court Must Have the

Right to Determine its Own

I te eae rats ee Cik ss 4

C. Wright, Miller & Cooper Expressly Rejects,

Rather than Supports, the Decision Below 5

Py ee rere rE ere are 6

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TABLE OF CITATIONS

Cases

Allegheny Corp. v. Kirby, 340 F.2d 311 (2d Cir.

1965), cert. dismissed, 384 U.S. 28 (1966) . .

Atlantic Las Olas, Inc. v. Joyner, 466 F.2d 496

WE MONEE oo a Gea stance eebay ule e.

Connecticut General Life Insurance Co. v.

Brown, 934 F.2d 1193 (11th Cir. 1991)... ..

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) .........

Eustis Mining Co. v. Beer, Sondheimer & Co.,

mae ©. Ore (ee. IBET) ...............

Gregory v. Tarr, 436 F.2d 513 (6th Cir. 1971) .

Greylock Glen Corp. v. Community Savings

Bank, 656 F.2d 1 (1st Cir. 1981) ..........

Harmon v. Brucker, 355 U.S. 579 (1958) _....

Ilan-Gat Engineers, Ltd. v. Antiqua

International Bank, 659 F.2d 234 (D.C. Cir.

In re Trimble Co., 479 F.2d 103 (3d Cir. 1973).

Johnson v. MacCoy, 278 F.2d 37 (9th Cir.

Rs pee cad cae meen, AL eee ee

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

Lambert v. Conrad, 536 F.2d 1183 (7th Cir.

Page

a ee ep

ill

Metropolitan Life Insurance Co. v. Taylor, 481

ES A are

Nestor v. Hershey, 425 F.2d 504 (D.C. Cir.

ag ek ba ae esos ss

Rumbaugh v. Winifrede Railroad Co., 331 F.2d

530 (4th Cir.), cert. denied, 379 U.S. 929

Na aR

Stoll v. Gottlieb, 305 U.S. 165 (1938).........

James Talcott, Inc. v. Collier, 357 F.2d 23 (5th

ee nena ere

Texas & Pacific Ry. Co. v. Gulf, Colorado and

Santa Fe R.R. Corp., 270 U.S. 266 (1926) ..

United States v. United Mine Workers of

America, 330 U.S. 258 (1947).............

Statutes And Rules

Employee Retirement Income Security

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

Treatises and Articles

Restatement (Second) of Judgments §12

away ies en ceees

13A Wright, Miller & Cooper, Federal

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

3,6

2,5

2,5, 6

No. 90-1843

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

REPLY IN SUPPORT OF 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 submits this Reply in

support of its request that this Court issue a Writ of

Certiorari to review the decision of the United States Court

of Appeals for the Fourth Circuit.

REASONS FOR GRANTING THE WRIT

A. The Decision of the Court Below Conflicts With Well-

Established Precedents of this Court And Threatens

The Right of State Courts to Determine their Own

Jurisdiction.

The decision below conflicts with a unanimous and

impressive array of authority from this Court, other courts,

and distinguished scholars. Review should be granted

because the holding calls into question a well-settled rule

accommodating res judicata and federal supremacy. The

holding, therefore, threatens vital federal interests by nar-

rowing to the vanishing point the right of collateral attack

upon a judgment, even where allowing that judgment to

stand would undercut the congressional mandate that there

be exclusive federal jurisdiction. Ironically, the court below

achieved that result by threatening vital state interests, rul-

ing astonishingly that under certain circumstances state

courts may not even determine their own jurisdiction. '

The Decision Threatens to Eliminate the Right of

Collateral Attack.

The availability of collateral attack to protect areas of spe-

cial and exclusive federal concern from unwarranted state

court intrusion has been clear since Kalb v. Feuerstein, 308

U.S. 433 (1940). This right is a well-recognized exception to

the general rule of Stoll v. Gottleib, 305 U.S. 165, 173 (1938),

that subject matter jurisdiction, once litigated, cannot be the

basis of a collateral attack. The Kalb exception, reaffirmed

' Respondents state that Blue Cross is “in its eleventh court in this dis-

pute” and that “five of these courts” have rejected Blue Cross’ efforts col-

laterally to attack the Florida judgment. (Respondents’ Brief in Opposi-

tion at 2.) This rhetorical flourish ignores the undisputed fact that only

the court below (and the district court which it affirmed) have ever ruled

upon the issue presented here: whether Blue Cross can collaterally attack

the Florida judgment after exhaustion of direct appeals.

in Durfee v. Duke, 375 U.S. 106 (1963), has been universally

adopted by leading scholars and judges, see, e.g., Restatement

(Second) of Judgments §12(2) (1982); 13A Wright, Miller &

Cooper, Federal Practice & Procedure $3536 (rev. ed. 1984);

Consolidated Rail Corp. v. Illinois, 423 F. Supp. 941 (Reg.

Rail Reorg. Ct. 1976) (Friendly, Wisdom, & Thomsen, JJ.),

cert. denied, 429 U.S. 1095 (1977). The present collateral

attack should be permitted because ERISA is quintessen-

tially an area of mandatory federal concern, involving not

only exclusive federal jurisdiction, but also “super preemp-

tion,” see Connecticut General Life Insurance Co. v. Brown,

934 F.2d 1193, 1196 (11th Cir. 1991), citing Metropolitan Life

Insurance Co. v. Taylor, 481 U.S. 58 (1987).

The Decision Threatens the Right of Courts to Deter-

mine Their Own Jurisdiction.

A fundamental error made by the court below is its hold-

ing that collateral attack is “only” available where a state

court is not permitted to determine its own jurisdiction over a

controversy but does so anyway. Collateral attack, in other

words, is only possible where the “question of which jurisdic-

tion, state or federal, should control was intended to be

resolved solely by a federal court.” (App. A at 4-5; emphasis in

original.)

This distinction simply does not exist. This Court recog-

nized long ago that any court—state or federal—can and

must always have the right to determine in the first

instance whether it has jurisdiction:

Every court of general jurisdiction has power to deter-

mine whether the conditions essential to its exercise

exist.

Texas & Pacific Ry. Co. v. Gulf, Colorado and Santa Fe R.R.

Corp., 270 U.S. 266, 273 (1926). Stoll itself recognizes the

rule:

A court does not have the power, by judicial fiat, to

extend its jurisdiction over matters beyond the scope of

the authority granted to it by its creators. There must

be admitted, however, a power to interpret the language

of the jurisdictional instrument and its application to an

issue before the court.

305 U.S. at 171 (footnote citing Texas & Pacific Ry. Co. omit-

ted.) See also Harmon v. Brucker, 355 U.S. 579, 582 (1958);

United States v. United Mine Workers of America, 330 US.

258, 289 & 292 n.57 (1947) (“... a court has jurisdiction to

determine its own jurisdiction,” and its decision “binds the

parties as a thing adjudged” except where [as here] the court

has usurped jurisdiction).

Thus, the holding below that collateral attack is available

only when the state court has no right to determine its own

jurisdiction flatly conflicts with repeated holdings of this

Court. That rule, if allowed to stand, threatens the proper

functioning of our judicial system. A federal court must have

the authority to hear a collateral attack under the Kalb rule

when important federal interests such as ERISA are at

stake.

B. The Decision of the Court Below Conflicts With Gov-

erning Principles in Other Circuits.

The Circuit Courts of Appeal are Unanimous

That a Court Must Have the Right to Determine

its Own Jurisdiction.

The rationale which underlies the holding of the court

below—that a state court may be denied the right to deter-

mine its own jurisdiction—has been rejected by Courts or

Appeal across the country, including the Fourth Circuit

itself. “It goes without saying that a court has jurisdiction to

determine its own jurisdiction.” Rumbaugh v. Winifrede

Railroad Co., 331 F.2d 530, 541 (4th Cir), cert. denied, 379

U.S. 929 (1964). “Any court necessarily has jurisdiction to

inquire into its own jurisdiction.” Greylock Glen Corp. v.

Community Savings Bank, 656 F.2d 1, 3 (1st Cir. 1981)

(emphasis added).* Review by this Court, therefore, is neces-

sary to resolve the conflict among the Circuits on this funda-

mental point.

C. Wright, Miller & Cooper Expressly Rejects, Rather

than Supports, the Decision Below.

The court below relied upon the treatise by Wright, Miller

& Cooper at §3536, in support of its view (App. A at 5). That

section, however, supports Petitioners:

[W]hen 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 judg-

ment rendered in the state court.

Id. at pp. 539-40; see also Restatement (Second) of Judgments

§12(2) (1982), providing similarly that a judgment may be

vacated on collateral attack if “[a]llowing the judgment to

stand would substantially infringe the authority of a tribu-

nal or agency of government ...” (citing, inter alia, Kalb,

and noting that the Restatement (Second) relies also upon

the teaching of Stoll). Id. at 125, 127.

That Wright, Miller & Cooper refutes the decision below is

demonstrated by its plain language, by its reliance upon the

* See also Ilan-Gat Engineers, Ltd. v. Antiqua International Bank, 659

F.2d 234 (D.C. Cir. 1981); Lambert v. Conrad, 536 F.2d 1183, 1185 (7th Cir.

1976); In re Trimble Co., 479 F.2d 103, 109 (3d Cir. 1973); Atlantic Las

Olas, Inc. v. Joyner, 466 F.2d 496, 498 (Sth Cir. 1972); Gregory v. Tarr, 436

F.2d 513, 515-16 (6th Cir. 1971); Nestor uv. Hershey, 425 F.2d 504, 511 (D.C.

Cir. 1969); James Talcott, Inc. v. Collier, 357 F.2d 23, 25 (5th Cir. 1966) (“it

is a fundamental rule that a court has jurisdiction to determine jurisdic-

tion.”) (emphasis added); Johnson v. MacCoy, 278 F.2d 37, 40 (9th Cir.

1960).

Restatement (Second), and by its reliance on Consolidated

Rail, in which the Special Railroad Court permitted collat-

eral attack in a case indistinguishable in principle from the

present case. It is further clear in the opinion of the Seventh

Circuit in Lambert. There, the Court held that “a court has

jurisdiction to determine its jurisdiction,” 536 F.2d at 1185,

but that such a decision can be collaterally attacked

on the grounds of certain public policies which prevail

over the doctrine of res judicata. See Wright & Miller,

supra [referring to §3536].

Id. Thus, as Lambert recognizes, Wright, Miller & Cooper

recite the rule that—as in the present case—a state court

always has jurisdiction to determine its own jurisdiction

but—as in the present case—that decision is subject to col-

lateral attack “on grounds of certain public policies which

prevail over the doctrine of res judicata.” Id.*

CONCLUSION

There is a “critical breaking point .. beyond which no lan-

guage can be forced.” Eustis Mining Co. v. Beer, Sondheimer

& Co., 239 F. 976, 982 (S.D.N.Y. 1917) (L. Hand, J.). The court

below, perhaps in an effort to achieve a sympathetic result,

has proceeded beyond the “breaking point.” It has endan-

gered the important right of collateral attack, established by

this Court to preserve and protect extraordinary federal

interests, of which ERISA is a prime example. Moreover, in

order to justify denying collateral attack at the very point at

3 Respondents mistakenly rely on Allegheny Corp. v. Kirby, 340 F.2d 311

(2d Cir. 1965), cert. dismissed, 384 U.S. 28 (1966). Allegheny (which

addressed an issue raised for the first time in a reply brief on rehearing),

however, was rejected by Wright, Miller & Cooper. It was cited by them, in

the same section discussed above, with the telling reference “/b/ut com-

pare.” §3536 at 539-40.

which all authorities recognize it is most necessary, the

court propounded a new rule, recognized nowhere, which

challenges the very right of a state court to determine its

own jurisdiction.

This decision cannot be allowed to stand. The petition for

a writ of certiorari should be granted.

Dated: August 14, 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

No. 90-1843

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1990

BLUE CROSS AND BLUE SHIELD OF MARYLAND, INC,

: PETITIONER

¥.

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

REPLY IN SUPPORT OF PETITION FOR A WRIT

OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT

1. Iam one of the counsel for Petitioner.

2. I hereby certify that, on this August 14, 1991, two

copies of the Reply in Support of 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