Opposition Brief — Phillips Petroleum Co. v. Richardson

Supreme Court, U.S,

i! FILED

| O6G 28 1986

| “GSCOPH F. SPANIOL, JR,

{

CLERK

No. 86-831 —

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1986

PHILLIPS PETRCLEUM COMPANY,

Petitioner,

Vv.

SAM RICHARDSON, JR., et al.

Respondents.

BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Robert C. Compton

Compton, Prewett, Thomas &

Hickey, P.A.

423 North Washington

El Dorado, Arkansas 71730

(501) 862-3478

Attorney for Respondents

QUESTIONS PRESENTED

As Should federal courts apply the

doctrine of collateral estoppel to preclude

the consideration of factual issues

unresolved in a prior proceeding before a

state administrative agency?

2 « Should federal courts apply the

doctrine of collateral estoppel to preclude

the consideration of certain issues that

have not yet been fully and fairly adjudi-

cated in order to facilitate judicial

economy?

TABLE OF CONTENTS

Page

YUESTIONS PRESENTED 1

TABLE OF CONTENTS 11

TABLE OF AUTHORITIES Lit

STATEMENT OF THE CASE 1

ARGUMENT

I THE PETITION SHOULD BE DENIED

SINCE THE EIGHTH CIRCUIT’S

REFUSAL TO APPLY THE DOCTRINE

OF COLLATERAL ESTOPPEL IS

FULLY CONSISTENT WITH THE

CONTROLLING FEDERAL LAW IN

THAT THE ISSUE WAS NOT FULLY

AND FAIRLY ADJUDICATED 6

II THE DOCTRINE OF COLLATERAL

ESTOPPEL SHOULD NOT BE APPLIED

TO PRECLUDE THE FAIR AND FULL

AT ISSUE MERELY

CI JUDICIAL

=

oO

TABLE OF AUTHORITIES

Cases Page

Blonder-Tongue Laboratories, Inc. v.

University of Illinois Foundation,

aua U.ee. 313 pe gp ) RN PP ee 7-8

Commissioner of Internal Revenue v.

Ssunnen, 333 U.S. 591, 597 (1948) , 7

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

Sd ee 7

:

Lawlor v. National Screen Service Corp.,

3439 U.S. 322 (1955)

~

Migra v. Warren City School District

Board of Education, 465 U.S. 75

Ee rn 7

Parklane Hosiery Co. v. Shore, 439 U.S.

DES GS ks tk kw we ks 7

Richardson v. Phillips Petroleum Co.,

791 F.2d 641 (8th Cir. 1986) .. 12,15,

16

United States v. Utah Construction &

Mining Co., 384 U.S. 394 (1966) . 8,9,10,

Lay SOG at

University of Tennessee v. Elliott,

106 S. Ct. 3220 (1986) a a ae S20, 245

16,17

Other Authority

1B J. Moore, Moore’s Federal Practice

S ose05k) (20 o@. 1974) «... .. 7

-iii-

STATEMENT OF THE CASE

In 1976, the Respondents, owners of

oil and gas interests in Ouachita County,

Arkansas, brought an action before the

Arkansas Oil and Gas Commission (Commis-

sion) requesting an order to prohibit the

Petitioner’s ipieein of a unitized

secondary recovery project on the Peti-

tioner’s Ouachita County property. Follow-

ing a full hearing, the Respondents’

request was denied without prejudice. The

Commission found that the Respondents had

not demonstrated that they had suffered

irreparable harm from the project, nor that

its operation violated the Commission’s

orders.

In 1979, the Respondents again brought

an action with the Commission’. seeking

increased safeguards for the project and a

suspension of the Petitioner’s authoriza-

tion to operate the project if the safe-

guards were not followed. Following a full

hearing, the Commission denied the Respon-

dents’ application.

Thereafter, the Respondents appealed

the Commission’s 1979 decision in the

Arkansas state Circuit Court. The court

affirmed the Commission’s findings, yet

noted that the Respondents’ ”"”rights' to

proceed against [the Petitioner] for any

perceived damages to their property rights

are not affected by the action of the

Commission” (Phillips Appendix F at 31a).

The parties did not appeal the court’s

decision.

In 1981, the Respondents brought an

action for tort, nuisance, and negligence

seeking damages in an Arkansas state court.

The Petitioner’s motion to remove the case

to the Western District Court of Arkansas

was granted. The Petitioner also moved for

dismissal on the ground that the Commis-

Sion’s administrative rulings barred the

Respondents’ tort action. The district

court denied the motion on the ground that

the Commission was not able to. grant

damages und?r Arkansas law and that the

Commission’s proceedings involved the

consideration of different issues’ than

those presented in district court.

Subsequently, the district court

denied a motion by the Petitioner for

summary judgment, but granted a partial

summary judgment for the Petitioner,

reasoning that the state court’s affirma-

tion of the cCommission’s finding should

have a collateral estoppel effect regarding

the findings of fact and issues that were

necessarily decided by the Commission. The

district court dismissed the Respondents’

amended complaint after the Respondents

indicated that the court’s’ collateral

estoppel ruling had the effect of preclud-

ing the Respondents’ action.

On appeal, the United States Court of

Appeals for the Eighth Circuit reversed the

district court’s judgment and remanded the

case for trial. The Eighth Circuit

determined that the Commission did not

resolve the issues pertaining to the

damages suffered by the Respondents short

of irreparable harm. Therefore, the Eighth

Circuit concluded that the Commission’s

findings should not be given collateral

estoppel effect in the Respondents’ tort

suit.

The Petitioner subsequently sought a

rehearing and a rehearing en banc. These

petitions were denied, with the majority of

the Eighth Circuit justices concluding that

the issues resolved by the Commission were

not the same as the issue presented in the

Respondents’ tort action.

The Petitioner has now filed a

petition for a writ of certiorari with the

Supreme Court of the United States.

ARGUMENT

L. THE PETITION SHOULD BE

DENIED SINCE THE EIGHTH

CIRCUIT’S REFUSAI: TO

APPLY THE DOCTRINE OF

COLLATERAL ESTOPPEL IS

FULLY CONSISTENT WITH

THE CONTROLLING FEDERAL

LAW IN THAT THE ISSUE

WAS NOT FULLY AND

FAIRLY ADJUDICATED.

Contrary to the Petitioner’s conten-

tions, the Eighth Circuit’s refusal to

apply the doctrine of collateral estoppel

is completely in accord with the control-

ling federal authority pertaining to the

doctrine. It is well settled that the

doctrine can only be applied in cases where

the issue in question has been accorded

thorough consideration ina prior adjudica-

tion. The authorities cited by the

Petitioner illustrate this requirement

well.

In Parklane Hosiery Co. v. Shore, 439

U.S. 322 (1979), this Court addressed the

issue of the use of collateral estoppel

offensively. The majority opinion, set

forth by Justice Stewart, presented the

fundamental rule that the doctrine of

collateral estoppel applies only to

preclude the relitigation of issues

actually litigated and necessary to the

outcome of the initial adjudication. 7a.

at 327 n.5 (citing 1B J. Moore, Moore’s

Federal Practice 4 0.405[1] at 622-24 (2d

ed. 1974); Lawlor v. National Screen

Service Corn., 349 6 CWS. 322 (1955);

Commissioner of Internal Revenue v. Sunnen,

333 U.S. 591, 597 (1948); Cromwell y.

County of Sac, 94 U.&. 351, 352-53 (1876)).

Similarly, in Blonder-Tongue _ Labora-

Caries. tne. vv. lintvaeratity of Titi inaia

Foundation, 402 U.S. 313 (1971), this Court

stressed the significance of the full and

fair resolution of the issue in question in

an initial adjudication, as demonstrated in

the following passage:

Moreover, we do not suggest,

without legislative guidance,

that a plea of estoppel by an

infringement or royalty suit

defendant must automatically be

accepted once the defendant in

support of his plea identifies

the issue in suit as the iden-

tical question finally decided

against the patentee or one of

‘is privies in previous litiga-

tion. Rather, the patentee-

plaintiff must be permitted to

demonstrate, if he can, that he

did not have “a fair opportunity

procedurally, substantively and

evidentially to pursue his claim

the first time.” Eisel v.

Columbia Packing Co., 181 F.Supp.

298, 301 (Mass. 1960).

Id. at 332-33 (footnote omitted).

The Supreme Court’s holdings in the

cases of United States v. Utah Construction

& Mining Co., 384 U.S. 394 (1966) and

University of Tennessee v. Elliott, 106 S.

Ct. 3220 (1986) continue to adhere to these

basic requirements for the application of

the doctrine of collateral estoppel. Those

cases are relevant to the present case

since they indicate that the doctrine of

collateral estoppel may be applied in

Situations where an administrative body

does not have the authority to decide a

particular issue, such as damages, but

necessarily has determined the facts

pertaining to that issue while addressing a

separate issue that is within its author-

ity. United States v. Utah Construction &

Mining Co., supra, 384 U.S. at 418-19;

University of Tennessee v. Elliott, supra,

106 S. Ct. at 3226. Despite the breadth of

these rulings, they do not dispense with

-10-

the prerequisite that the administrative

body actually address and resolve the

issues to which the doctrine is to be

applied. Thus, this court set forth

several criteria in Utah Construction to be

utilized in determining whether the

doctrine should be applied in such cases:

(1) the administrative body must have been

acting in a judicial (or quasi-judicial)

capacity; (2) the body must have actually

resolved disputed issues of fact which were

properly before it; and (3) the parties

must have had an adequate opportunity to

litigate the facts in the proceedings. 384

U.S. at 422. In the recent Elliott deci-

sion, this Court reaffirmed not only the

general applicability of the doctrine of

collateral estoppel to certain adjudica-

tions by administrative bodies, but also

-ll1l-

the aforementioned criteria when it

remanded the case before it to the lower

court for the purpose of ascertaining

whether the criteria had been satisfied.

106 &. Ct. a 3227.

In the present’ case, the Eighth

Circuit’s refusal to apply the doctrine of

collateral estoppel to the Commission’s

findings is in complete accord with the

basic tenets of the doctrine set forth in

Utah Construction and Elliott. Notwith-

standing the Petitioner’s inaccurate

characterization of the Eighth Circuit’s

rationale for its holding, the court’s

refusal to apply the doctrine in the

present case was actually based upon the

ground that the Commission never resolved

the facts pertaining to the issue of the

Respondents’ damages except to conclude

-12-

that the Respondents had not’ suffered

irreparable harm warranting injunctive

relief. The court found that the record of

the Commission’s proceedings demonstrated

that the Commission members recognized its

lack of authority to award monetary damages

pursuant to Arkansas law, and therefore

deliberately chose not to make a finding as

to issues pertaining to damages short of

irreparable harm. Richardson v. Phillips

Petroleum Co., 791 F.2d 641, 645-46 (8th

Cir. 1986). The Petitioner disagrees with

the Eighth Circuit’s conclusion regarding

this point, and relies on certain language

appearing in the Commission’s 1979 findings

of fact that indicate that the Respondents

did not present sufficient evidence to

demonstrate the full range of injuries that

they suffered from the Petitioner’s

-13-

operations (Phillips Petition at 6 n.10,

7). It suffices to say that the Eighth

Circuit examined the full record of the

Commission’s proceedings and concluded

that, notwithstanding the language relied

on by the Petitioner, the Commission did

not actually decide the issue of the

Respondents’ damages short of irreparable

harm.+ This conclusion was reiterated by

the Eighth Circuit in its August 25, 1986

order denying the Petitioner’s motion for

1 Equally without merit is the Peti-

tioner’s suggestion that the Respondents

"stipulated themselves out of federal

court” by indicating that they were unable

to proceed with their action in the

district court following that court’s

ruling that the Commission’s’ findings

should be given collateral estoppel effect.

This statement by the Respondents, far from

being an admission of the correctness of

the district court’s ruling, simply sets

forth the obvious conclusion that’ the

Respondents were unable to proceed in light

of the court’s decision.

rehearing en banc. 799 F.2d 426, 427 (8th

Cir. 1986).

The Petitioner also insists that the

determination of facts pertaining to the

full range of an aggrieved party’s injuries

is a threshold requirement for a decision

to grant or withhold injunctive relief, but

common sense suggests otherwise. Indeed,

the interests of judicial economy seem to

be best served by reaching only those facts

necessary to adjudicate the issue before

the administrative body or court.

Since the record of the Commission’s

proceedings indicated that the Commission

did not resolve as a threshold issue the

facts regarding the full range of harm

suffered by the Respondents, the Eighth

Circuit considered whether the Commission’s

treatment of the issue of irreparable harm

—-15-

was itself sufficient to constitute a full

and fair adjudication of the issue of

damages. Pursuant to the Supreme Court’s

ruling in Migra v. Warren City School

District Board of Education, 465 U.S. 75

(1984), a federal court must apply the law

of the forum state regarding the preclusive

effect of state adjudications. The Eighth

Circuit in Richardson found that under the

law of Arkansas, the legal concepts and

burdens of proof presented in an adminis-

trative action for injunctive relief are

deemed to be distinct from those involved

in an action for compensatory damages in

state court; thus the adjudication of the

issue of irreparable harm did not inci-

dently also serve to adjudicate the issue

of compensatory damages. 791 F.2d at 645-

47.

-16-

The conclusion of the Eighth Circuit

is in complete accord with the holdings of

mited stat - tah ¢ ) tj ; Mini

Co., supra, and University of Tennessee v.

Elliott, supra. The Eighth Circuit in

Richardson expressly recognized that “there

are likely many instances in which it might

be appropriate to find that the Commis-

sion’s findings have a collateral estoppel

effect on the litigation of issues in a

related state court action.” Id. at 646.

The court did not indicate that an

administrative body could never resolve

factual issues relevant to the issue of

compensatory damages while addressing a

case involving the remedy of injunctive

relief. Rather, the Eighth Circuit merely

concluded that in the present case, the

factual issues regarding the full scope of

-17<

the Respondents’ damages had not actually

been resolved by the Commission, regardless

of the Commission’s authority to do so.

In light of the foregoing discussion,

it is clear that the Petitioner’s argument

that the Eighth Circuit’s holding in this

case will have the effect of weakening this

court’s rulings in Utah Construction and

Elliott is without merit. The Eighth

Circuit has merely recognized that the

administrative body must actually adjudi-

cate an issue before it can be given a

collateral estoppel effect, a conclusion

that is in complete accord with this

Court’s own decisions.

-18-

II. THE DOCTRINE OF COLLAT-

ERAL ESTOPPEL SHOULD

NOT BE APPLIED TO PRE-

CLUDE THE FAIR AND FULL

LITIGATION OF AN ISSUE

MERELY TO FACILITATE

JUDICIAL ECONOMY.

As indicated in the first section of

this brief, the Petitioner has erroneously

characterized the basis for the Eighth

Circuit’s decision in this case. The court

relied on the Commission’s actual failure

to determine the issue of damages rather

than the Commission’s lack of authority to

do so under the law of Arkansas.

There is no authority to support the

argument that the requirement of a full and

fair adjudication of an issue as a prereq-

uisite to the application of the doctrine

of collateral estoppel may be dispensed

with in order to promote judicial

efficiency and _ finality. While the

-19-

Respondents acknowledge the importance of

these considerations, such factors do not

take precedence over a litigant’s right to

have his case fully and fairly adjudicated.

Therefore, the Petitioner’s argument is

without merit.

-20-

CONCLUSION

In light of the fact that the Eighth

Circuit’s decision is consistent with

this Court’s rulings regarding collateral

estoppel, and no conflict between

circuits or important public issues are

presented by this case, the petition for

Writ of Certiorari should be denied.

Respectfully submitted,

Robert C. Compton

Compton, Prewett, Thomas &

Hickey, P.A.

423 North Washington

El Dorado, Arkansas 71730

(501) 862-3478

Attorney for Respondents

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