Amicus Curiae Brief — Morgan Stanley & Co. Inc. v. Pacific Mutual Life Insurance Co.

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Text

Bupreme Court, U.S

©) FILED

| FEB 24 1994

OFFIGF or

In The

Supreme Court of the United States

October Term, 1993

MORGAN STANLEY & CO. INCORPORATED;

GOLDMAN, SACHS & CO.; ERNST & YOUNG;

SALOMON BROTHERS INC.,

Petitioners,

PACIFIC MUTUAL LIFE INS. CO.,

Respondent.

On Writ Of Certiorari

To The United States Court Of Appeals

For The Fifth Circuit

BRIEF OF SPENDTHRIFT FARM, INC.

AND

BATEMAN EICHLER, HILL RICHARDS, INC.

AS AMICI CURIAE IN SUPPORT OF PETITIONERS

BARBARA B. EDELMAN

BARRY FRIEDMAN*

G. CHRISTOPHER VAN BEVER

STEVEN L. SNYDER

WYATT, TARRANT & COMBS

The Lexington Financial Center

250 West Main Street

Lexington, Kentucky 40507

(606) 233-2012

Counsel for Amicus Curiae

Spendthrift Farm, Inc.

February 1994 *Counsel of Record

[Additional Counsel Listed On Inside Cover]

ELIZABETH S. FEAMSTER

FOWLER, MEASLE & BELL

300 W. Vine Street

Kincaid Towers

Suite 650

Lexington, Kentucky 40507

(606) 252-6731

James E. Burns, Jr.

Kevin P. Muck

JOHN MIssING

BROBECK, PHLEGER & HARRISON

One Market Plaza

Spear Street Tower

San Francisco, California 94105

(415) 442-0900

Counsel for Amicus Curiae

Kemper Securities, Inc.

(formerly Bateman Eichler,

Hill Richards, Inc.)

TABLE OF CONTENTS

Page

EE GU UMIIOUIED co vicicccccccccccccccccccce iii

CE |

SUMMARY OF ARGUMENT....................... 3

IT USRENEGU bn gudébodsibdcedecccecececcese: 4

I. TO THE EXTENT IT APPLIES TO JUDG-

MENTS THAT ARE FINAL AND FROM

WHICH AN APPEAL COULD NOT BE

TAKEN, SECTION 27A(b) VIOLATES THE

CONSTITUTIONAL SEPARATION OF

POWERS BY OVERTURNING THE FINAL

DECISION OF AN ARTICLE III COURT..... 5

A. The Rule That Final Judicial Decisions

Must Be Respected Has Firm Roots In The

Understanding Of Separation Of Powers

That Informed The Drafting Of The Con-

EES SS 5

B. Hayburn's Case Preserves An Independent

Judiciary By Ensuring That Neither Con-

gress Nor The Executive Branch Overturns

Or Otherwise Revises The Final Decisions

Of An Article III Court.................. 12

C. The Rule In Hayburn’s Case Governs This

CCC ieekendenéedabcceccescecss 17

D. Arguments Advanced To Defend Section

27A(b) In Light Of Hayburn’s Case Are

ee 18

1. It Is Irrelevant That Section 27A(b)

Ordered Readjudication Rather Than

Prescribing A Result................. 19

TABLE OF CONTENTS - Continued

Page

It Is Irrelevant That Congress Is Free

To Prescribe A Rule Governing Future

Cases WUT UTUTILTELT TCT TT 20

3. It Is Irrelevant That Congress’ Interfer-

ence With Final Judgments Took The

Form Of Ordinary Legislation. ....... 21

4. The Rule In Hayburn’s Case Unques-

tionably Is That Decisions Of Article

Ill Courts Must Be “Binding And Con-

clusive Upon The Parties,” And That

Such Judgments Are Not Subject To

Revision By The Legislative Or Execu-

we BUGGED. 0 occ cccccccccccccccces 23

ll. THIS COURT DOES NOT NEED TO ADDRESS

THE CONSTITUTIONAL QUESTION

BECAUSE CONGRESS DID NOT INTEND

SECTION 27A(b) TO REACH FINAL DECI-

0 PPrrrire paeee ebnbdnencbscdaueseenenses 25

as ub) 6k | PP PPerTriITirirrii ri 29

REI 6 6.06 cccccccccncecucesesececesuceseeseses la

TABLE OF AUTHORITIES

Page

Cases:

Ashwander v. Tennessee Valley Authority, 297 U.S.

ee is cacdbecendesncetasnedienseceseieness tas 25

Axel Johnson Inc. v. Arthur Andersen & Co., 6 F.3d

Fe Se EE ad bccnuesscccesncdntdedcnonsecses 26

Barr v. McGraw-Hill, 1992 WL 196754 (S.D.N.-Y.

PEE, Ty FRU 64606 Cd Cb Kha KeKkavenndeveatencesices 27

Berning v. A.G. Edwards & Sons, Inc., 990 F.2d 272

Se A UE Sch becnccesdecccsacenenasuducuecsies 27

Chicago & Southern Air Lines, Inc. v. Waterman S.S.

Gs SE Ee SP en ccccccestsdcenceasesess 19

Califano v. Yamasaki, 442 U.S. 682 (1979)............. 25

Communications Workers of America v. Beck, 487 U.S.

PPPOE PTET TTT TT TT ST eUT TTT TT TTT rier 25

Concrete Pipe & Prods., Inc. v. Construction Laborers

Pension Trust, 113 S. Ct. 2264 (1993)............... 25

Cooperativa de Ahorro y Credito Aguada v. Kidder,

Peabody & Co., 993 F.2d 269 (1st Cir. 1993)........ 26

Daylo v. Administrator of Veterans’ Affairs, 501 F.2d

ee es Gk IED wont vecetccnecesncdascvcacs 27, 28

Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394

FRE 9 < nse cnkcovsndccdécunsesectacanecssccees 16, 21

Fleming v. Rhodes, 331 U.S. 100 (1947)............... 17

Freeland v. Williams, 131 U.S. 405 (1889)............. 17

Georgia Ass'n of Retarded Citizens v. McDaniel, 855

F.2d 805 (11th Cir. 1988), cert. denied, 490 U.S.

BF Ge ha cc cnadencaconceseeeeeseeveeséececses 26

TABLE OF AUTHORITIES — Continued

Glidden Co. v. Zdanok, 370 U.S. 530 (1962)........... 17

Gordon v. United States, 69 U.S. (2 Wall.) 561 (1865)... . 16

Gordon v. United States, 117 U.S. 697 (1865)... 16, 19, 24

Gray v. First Winthrop Corp., 989 F.2d 1564 (9th Cir.

sk Ci neckecddssanuGaddann obs cakdeaneueetas oes e 27

Harper v. Virginia Dep't of Taxation, 113 S. Ct. 2510

SD 66 bn db ad encbeesUSedeke eecereeeNenbedés tase 18

Hayburn's Case, 2 U.S. (2 Dall.) 409 (1792)....... passim

I.N.S. v. Chadha, 462 U.S. 919 (1983)................. 22

In re President's Commission on Organized Crime,

he: Pf ke SB TIT Tree ree 24

In re Sharon Steel Corp., 100 B.R. 767 (Bankr. W.D.

i adi ok 06h OO bee Cacksnenséeceneesecewensneui 24

Johnston v. CIGNA Corp., No. 92-1186, 1993 WL

500842 (10th Cir. Dec. 7, 1993)............... 2, 5, 18

Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilb-

ertson, 111 S. Ct. 2773 (1991)......... 2, 18, 20, 25, 28

Linkletter v. Walker, 381 U.S. 618 (1965)........... 18, 26

Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803).... 11

N.L.R.B. v. Jones & Laughlin Steel Corp., 301 U.S. 1

SD 6 bb0 een boneeetcscedodaneenecehentepecsussees 25

Pacific Mut. Life Ins. Co. v. First Republicbank Corp.,

997 F.2d 39 (5th Cir. 1993), cert. granted sub nom.,

Morgan Stanley & Co. v. Pacific Mut. Life Ins. Co.,

Be Ge Ge GED oF ever ee ree csicoeleceponcesves 2

TABLE OF AUTHORITIES ~— Continued

Page

Plaut v. Spendthrift Farm, Inc., 1 F.3d 1487 (6th

Cir.), reh’g denied, 11 F.3d 572 (1993), petition for

cert. filed, 62 U.S.L.W. 3503 (U.S. Jan. 11, 1994)

Pe Mss weccccccsssccecans 1, 2, 18, 19, 23, 26

Plaut v. Spendthrift Farm, Inc., 789 F. Supp. 231

(E.D. Ky. 1992), aff'd, 1 F.3d 1487 (6th Cir. 1993) ..... 2

Rabin v. Fivzar Assocs., 801 F. Supp. 1045 (S.D.NLY.

PPS eCGuNedcCisddd babs hen cdet eh eeevedanetense: 27

Town of Deerfield v. F.C.C., 992 F.2d 420 (2d Cir.

AAMC ahA tad bh56 he asndaedsaeeeetansbaebobae 24

United States v. Ferreira, 54 U.S. (13 How.) 40

SANG enanedeChbewhenddtsébcbvenhecuséddas 17, 24

United States v. Jefferson Elec. Mfg. Co., 291 U.S. 386

DRE SNdGs Co nedbtbeccens wa noededecutekeceactus 24

United States v. Klein, 80 U.S. (13 Wall.) 128 (1871) .... 19

United States v. O'Grady, 89 U.S. (22 Wall.) 641

SPRAV UNG AGA Ken cehddenebs- bese seekectsdedscsess 17

United States v. Schooner Peggy, 5 U.S. (1 Cranch)

SC AsihevecGhlhecdaddckeebeeewsduedecere 20

United States v. Sioux Nation of Indians, 448 U.S.

ra Winecenudd bastacacsbvasenedusk¥iaens 17, 24

Webster v. Doe, 486 U.S. 592 (1988).................. 28

CONSTITUTIONAL PRovIsIONS, STATUTES AND REGULATIONS:

ee MODs « cnc cudcedadecbeesaneéecueeus 10, 11

Securities Exchange Act of 1934, Section 27A, 15

U.S.C. § 78aa-1 (Supp. IV 1992)............... passim

TABLE OF AUTHORITIES — Continued

Page

Licistative MATERIALS:

137 Cong. Rec. $17,382-01 (1991) ........... cee eee eee 28

OrnerR AUTHORITIPS:

Susan L. Bloch, The Early Role of the Attorney General

in Our Constitutional Scheme: In the Beginning There

Was Pragmatism, 1989 Duke L.J. 561 ............. 13, 24

William S$. Carpenter, The Separation of Powers in

the Eighteenth Century, 22 Am. Pol. Sci. Rev. 32

No ch'0043 du bach nedudSeeesenenessencent 6, 7, 8, 11

Edward S. Corwin, The Progress of Constitutional

Theory Between the Declaration of Independence

and the Meeting of the Philadelphia Convention, 30 |

es es ee IL 6 84 keke ose ss oeES passim

Max Farrand, The Framing of the Constitution of the

er ee Cr Orr, wep ecdennueered sates 11

The Federalist No. 48 (James Madison).......... 7, 9, 22

The Federalist No. 78 (Alexander Hamilton).......... 11

The Federalist No. 81 (Alexander Hamilton)....... 12, 20

1 Charles G. Haines, The American Doctrine of Judi-

Chal Gepoemmntyy (EGGERS. occ ccccccsesesncsescccsscsens 8

Judicial Action by the Provincial Legislature of Massa-

chusetts, 15 Harv. L. Rev. 208 (1901-02).......... 9, 20

Harold J. Krent, Separating the Strands in Separation

of Powers Controversies, 74 Va. L. Rev. 1253 (1988) ..... 7

Evan Tsen Lee, Deconstitutionalizing Justiciability:

The Example of Mootness, 105 Harv. L. Rev. 603

REPORT PrreTTTITTTTiT TTT Tec TTT rei eee 24

vii

TABLE OF AUTHORITIES — Continued

Page

Maeva Marcus & Robert Teir, Hayburn’s Case: A

Misinterpretation of Precedent, 1988 Wis. L. Rev.

SPSseeeahsokesnabevnchessuseceeuneks veneexs 13, 15,

1 Ronald D. Rotunda & John E. Nowak, Treatise on

Constitutional Law: Substance and Procedure (2d

SRG Chal cade eka Seveuaous obi keheeiddssics

Bernard Schwartz, A History of the Supreme Court

PS ULIWER CSTR GEuhdeckenssdpeuadees penteeuesssr

Malcolm P. Sharp, The Classical American Doctrine

of “The Separation of Powers”, 2 U. Chi. L. Rev.

LA AGACE chev esw en tnceds cndeenaekhrs cance

Mark Tushnet, Constitutional Interpretation, Charac-

ter, and Experience, 72 B.U. L. Rev. 747 (1992)......

M.J.C. Vile, Constitutionalism and the Separation of

aie re ce 5, 6, 7, 10,

Gordon S. Wood, The Creation of the American

Republic 1776-1787 (1969) .............. 6, 7, 8, 10,

Benjamin F. Wright, Jr., The Origins of the Separa-

tion of Powers In America, Economica (May 1933) ....

Charles A. Wright, The Law of Fed al Courts (4th

i WGN S thes cccceadcalud pad eKee beens cieewe ck

No. 93-609

In The

Supreme Court of the United States

October Term, 1993

MORGAN STANLEY & CO. INCORPORATED;

GOLDMAN, SACHS & CO.; ERNST & YOUNG;

SALOMON BROTHERS INC.,

Petitioners,

PACIFIC MUTUAL LIFE INS. CO.,

Respondent.

On Writ Of Certiorari

To The United States Court Of Appeals

For The Fifth Circuit

BRIEF OF SPENDTHRIFT FARM, INC.

AND

BATEMAN EICHLER, HILL RICHARDS, INC.

AS AMICI CURIAE IN SUPPORT OF PETITIONERS

INTEREST OF AMICI!

Amici are named defendants in Plaut v. Spendthrift

Farm, Inc., 1 F.3d 1487 (6th Cir.), reh’g denied, 11 F.3d 572

(1993), petition for cert. filed, 62 U.S.L.W. 3503 (U.S. Jan. 11,

! Written consent to the filing of this Amicus Curiae brief has

been obtained from all parties in this case and correspondence

indicating that consent has been filed with the Court in accor-

dance with Sup. Ct. R. 37.

1994) (No. 93-1121). When Congress enacted Section 27A

of the Securities Exchange Act of 1934, 15 U.S.C. § 78aa-1

(Supp. IV 1992), the judgment in Plaut was final, the case

having been dismissed as untimely pursuant to this

Court’s decision in Lampf, Pleva, Lipkind, Prupis &

Petigrow v. Gilbertson, 111 S. Ct. 2773 (1991), and the time

tor appeal having run. Pursuant to Section 27A(b), plain-

tiffs petitioned the district court for reinstatement. The

district court dismissed plaintiffs’ petition, and the Court

of Appeals for the Sixth Circuit affirmed, both courts

holding that Section 27A(b) was an unconstitutional exer-

cise of legislative authority. See Plaut v. Spendthrift Farm,

Inc., 789 F. Supp. 231 (E.D. Ky. 1992), aff'd, 1 F.3d 1487 (6th

Cir. 1993). A petition for a writ of certiorari has been filed

seeking review in this Court of the court of appeals’

decision. That petition is pending.

The interest of amici is that this Court’s decision in

Pacific Mutual Life Insurance Co. v. First Republicbank Corp.,

997 F.2d 39 (5th Cir. 1993), cert. granted sub nom., Morgan

Stanley & Co. v. Pacific Mutual Life Insurance Co., 114 S. Ct.

680 (1994), will certainly affect, and will perhaps resolve,

the issues in Plaut. There is a distinction between the

cases, however. In Pacific Mutual the Fifth Circuit upheld

Section 27A(b); in amici’s case, and in the one other circuit

in which the application of Section 27A(b) to a final

judgment has been addressed, Section 27A(b) was struck

down as unconstitutional. See Johnston v. CIGNA Corp.,

No. 92-1186, 1993 WL 500842 (10th Cir. Dec. 7, 1993).

Amici are participating in order to brief fully the

constitutional history of the rule in Hayburn’s Case, 2 U.S.

(2 Dall.) 409 (1792), as well as its application to the case at

bar. Along with the Sixth and Tenth Circuits, amici believe

tha! .e principle in Hayburn’s Case — that final judicial

decisions cannot be subject to revision by another branch

of government — renders Section 27A(b) unconstitutional.

Yet, inexplicably, the Fifth Circuit’s decision on review in

this Court neither discusses nor refers to Hayburn’s Case.

Although there are competent counsel representing the

parties before this Court, they will need to address the

many issues discussed by the Fifth Circuit. Amici there-

fore respectfully submit this brief to ensure full discus-

sion of the one point they believe ought to be central to

this Court’s decision: Section 27A(b) is contrary to the

rule established in Hayburn’s Case, and thus unconstitu-

tional.

SUMMARY OF ARGUMENT

Hayburn’s Case, 2 U.S. (2 Dall.) 409 (1792), established

the principle of judicial finality: The final decisions of

Article III courts must be binding and conclusive upon

the parties, and are not subject to being overturned or

modified by the legislative or executive branches. Under-

standing the rule in Hayburn’s Case requires understand-

ing its important historical antecedents. Immediately

following the American Revolution, separation of powers

was seen as a way of preventing executive tyranny by

insulating the legislative branch. In practice, however,

this separation resulted in legislative hegemony. Prior to

the Philadelphia Convention the legislatures of the states

committed numerous abuses, including the constant

usurpation of the judicial function. Thus, the framers of

the Constitution recognized that in order to limit legisla-

tive power they needed to supplement the separation of

powers with a system of checks and balances. Chief

among these checks was an independent judiciary. But

judicial independence was meaningless without what

Corwin called the “highest attribute” of the judiciary’s

function: The power to render final judgments. Edward S.

Corwin, The Progress of Constitutional Theory Between the

Declaration of Independence and the Meeting of the Phila

delphia Convention, 30 Am. Hist. Rev. 511, 516 (1925). This

critical aspect of judicial independence was established in

Hayburn’s Case, and has been the law ever since.

In Section L of the Argument, amici explain the histor-

ical background of the rule in Hayburn’s Case, and the

evolution and adoption of the rule. Then, after explaining

how Section 27A(b) violates the rule of judicial finality

established in Hayburn’s Case, they respond to arguments

that the rule does not govern this case. In Section IL, amici

explain that this Court may nonetheless avoid the consti-

tutional question by interpreting Section 27A(b) as inap-

plicable to judgments that were final at the time Section

27A(b) was adopted.

. ARGUMENT

As applied to final judgments from which an appeal

could no longer be taken, Section 27A(b) violates the rule

of judicial finality set out in Hayburn’s Case. See Section I,

infra. This constitutional issue need not be reached, how-

ever: Section 27A(b) can and should be read in a way that

avoids application to the very small number of cases that

were final at the time of its enactment. See Section II,

infra.

I. TO THE EXTENT IT APPLIES TO JUDGMENTS

THAT ARE FINAL AND FROM WHICH AN

APPEAL COULD NOT BE TAKEN, SECTION

27A(b) VIOLATES THE CONSTITUTIONAL SEP-

ARATION OF POWERS BY OVERTURNING THE

FINAL DECISION OF AN ARTICLE If COURT.

It is a bedrock principle of American jurisprudence

that the final decisions of Article II courts may not be

revised, overturned or otherwise modified by any other

branch of government. This principle of judicial finality

was established in Hayburn’s Case, and has never been

disturbed. As the Tenth Circuit observed in Johnston ov.

CIGNA Corp., No. 92-1186, 1993 WL 500842 (10th Cir. Dec.

7, 1993), outside of the case presently before this Court,

“we cannot locate a single case where a court has upheld

an attempt by Congress to upset a final, nonappealable

judgment in a case between private parties.” Id. at *9

(footnote omitted).

A. The Rule That Final Judicial Decisions Must Be

Respected Has Firm Roots In The U derstand-

ing Of Separation Of Powers That informed

The Drafting Of The Constitution.

The rule in Hayburn’s Case resulted from the evolu-

tion of the doctrine of separation of powers from the time

of the American Revolution to the ratification of the

United States Constitution. During that period, the for-

mer colonists’ views on separation of powers changed

dramatically leading to the incorporation in the Constitu-

tion of the system of checks and balances. M.J.C. Vile,

Constitutionalism and the Separation of Powers 153 (1967).

One of the checks ultimately deemed most vital by the

Americans who ratified the Constitution was the exts-

tence of an independent judiciary. Vile, supra, at 157-58;

William S. Carpenter, The Separation of Powers in the Ligh

teenth Century, 22 Am. Pol. Sei. Rev. 32, 43 (1928). And

integral to judicial independence was the rule that the

final decisions of the judiciary could not be disturbed by

another branch of government. Hayburn’s Case, 2 U.S. (2

Dall.) 409 (1792).

Although separation of powers was much discussed

by the revolutionaries, “the meaning, it came to acquire

tor Americans was not the one it possessed for them at

the time of Independence.” Gordon $. Wood, The Creation

of the American Republic 1776-1787 152 (1969); accord Vile,

supra, at 134; Corwin, supra, at 514. The early understand-

ing focused on the concerns that motivated the Revolu-

tion, primarily, if not exclusively, curtailing despotic

executive authority. Wood, supra, at 157. Following the

Revolution, foremost on the minds of those revolution-

aries was adherence to the democratic ideal, as embodied

in the legislative branch. Id. at 157-58. Accordingly, the

separation of powers the revolutionaries had in mind

was, at most, a division of the executive and legislative

branches. Id. at 159; Vile, supra, at 137-38 (judiciary not

elevated to same level nor given same independence as

legislative and executive branches).

Despite the bipolar theory of separation of powers

prevalent in the post-Revolution years, separation of

powers in practice most often meant legislative hegemony.

Vile, supra, at 134, 143; Corwin, supra, at 514. “In every

state the most earnest efforts to keep the several depart-

ments of government within their constitutional limits

were defeated by the encroachments of the legislature

upon the executive and the judiciary.” Carpenter, supra, at

32-33. In reality, governmental control came almost com-

pletely to vest in the legislature. Id. at 34; Harold J. Krent,

Separating the Strands in Separation of Powers Controversies,

74 Va. L. Rev. 1253, 1262 (1988).

In the years following the Revolution, popular con

trol soon resulted in disturbing abuses. Contemporary

reports were full of the excesses of the state legislatures

See generally, Vile, supra, at 143-44; Corwin, supra, at 514-

21. Edmond Randolph, for example, chastised the Vir-

ginia legislature for conduct of “a most striking and

shocking nature”: Condemning a man by bill of attainder

“[wlithout being confronted with his accusers and wit-

nesses, without the privilege of calling for evidence in his

behalf, he was sentenced to death, and was afterwards

actually executed.” Malcolm P. Sharp, The Classical Ameri

can Doctrine of “The Separation of Powers”, 2 U. Chi. L. Rev

385, 394 n.19 (1935). Randolph argued that “every thing

has been drawn within the legislative vortex,” id., words

Madison echoed in The Federalist No. 48: “The legislative

department is every where extending the sphere of its

activity, and drawing all power into its impetuous vor-

tex.” Id. at 333 (James Madison) (Jacob E. Cooke ed.,

1961).

Particularly prominent and well-documented in this

pre-constitutional period was the constant usurpation of

the judicial function by the state legislatures. Vile, supra,

at 143; Wood, supra, at 154-56; Corwin, supra, at 514;

Sharp, supra, at 393. In part, this state of affairs was born

of necessity. There were too few trained judges and law-

yers, and so the legislative assemblies were required to

take up many judicial tasks. Wood, supra, at 154; Corwin,

supra, at 515. But there was a theoretical basis for this

combination of functions as well. To the revolutionaries,

from whose perspective there were only two powers that

required separating, it was common to see the judicial

power as a part of the executive “ce Wood, supra, at 159

(“the judicial power is only a branch of the executive, the

CHIEF of every country being the first magistrate”) (quo-

ting contemporary author). As the Revolution pro-

gressed, however, and as the legislative branch gained

ascendancy, it became accepted that the law ought to

operate in the hands of the people. Carpenter, supra, at

34. “The Revolutionaries had no intention of curtailing

legislative interference in the court structure and in judi-

cial functions, and in fact they meant to increase it.”

Wood, supra, at 161. Thus, usurpation of judicial functions

by the legislative branch progressed naturally from the

transter of power from the executive to popular assem-

blies.

The legislature's dominance of the judiciary was evi-

dent throughout the newly independent country. For

example, after the Rhode Island Superior Court sug-

gested a law might be unconstitutional, the legislature

held a special joint session and required the judges to

attend and defend the court’s decision. The judges

escaped impeachment but were not reappointed when

their terms expired. See 1 Charles G. Haines, The American

Doctrine of Judicial Supremacy 105-12 (1932) (discussing

1786 case of Trevett v. Weeden). Similarly, the North Caro-

lina legislature brought charges against judges who ren-

dered an adverse decision and demanded the judges

appear to defend themselves. Id. at 112-20 (discussing

1787 case of Bayard v. Singleton). Madison documented

similar abuses. Quoting Jefferson in regard to the Virginia

legislature, Madison wrote: “They have accordingly in

many instances decided rights which should have been left

to judiciary controversy.” The Federalist No. 48, at 3%

(James Madison) (Jacob E. Cooke ed., 1961). Madison

observed similar conduct by the Pennsylvania legislature:

“The salaries of the Judges, which the [state] Constitution

expressly requires to be fixed, had been occasionally var-

ied; and cases belonging to the judiciary department,

frequently drawn within legislative cognizance and

determination.” Id. at 337.

Legislative interference with the judicial function often

took the form of upsetting final judgments or simply order-

ing, the readjudication of a settled controversy. The New

Hampshire legislature, for example, “freely vacated judicial

proceedings, suspended judicial actions, annulled or mod-

ified judgments, cancelled executions, reopened controver-

sies, authorized appeals, granted exemptions from the

standing law, expounded the law for pending cases, and

even determined the merits of disputes.” Corwin, supra, at

514. New Hampshire's experience was not unique nor “more

aggravated” than other states, Corwin reports, noting

that such practices “were widespread.” Id. at 515.2

* The Provincial Legislature of Massachusetts also usurped

judicial powers, including ordering the readjudication of settled

controversies. For example, the legislature suspended the levy-

ing of an execution upon a judgment from a court; it voided a

court’s order to seize an individual's homestead as part of a

judgment; and it ordered a court to hear an appeal and sus-

pended the judgment of the lower court. Judicial Action by the

Provincial Legislature of Massachusetts, 15 Harv. L. Rev. 208,

210-12, 217 (1901-02).

A case in point was Pennsylvania, where the legislature

remitted fines, disallowed judicially established claims,

and set aside jury verdicts. Id. at 520.

The ultimate result of this disturbing accretion of all

governmental power to legislative bodies was, of course,

nothing less than our modern conception of separation of

powers, including the idea of checks and balances. The

challenge of the Philadelphia Convention was to design a

system in which legislative power could be contained.

Vile, supra, at 152-58. The idea of checks and balances was

seen as a way to limit illegitimate legislative activity:

By the time that the Convention met, impor-

tant sections of opinion among its members had

already accepted the two central positions of

modern American constitutional thought. The

separation of powers was by this time, in the

words of a contemporary pamphleteer, ‘a hack-

neyed principle’, or a ‘trite maxim’ Now, how-

ever, the idea of checks and balances, rejected at the

height of revolutionary fervour, was considered

an essential constitutional weapon to keep all

branches of government, and especially the legisla-

ture, within bounds.

Id. at 153 (emphasis added) (footnote omitted).

From this determination to check legislative abuses

came the creation of an independent judiciary. Vile, supra,

at 158; Wood, supra, at 453-54 (“The department of gov-

ernment which benefited most from this new, enlarged

definition of separation of powers was the judiciary.”).

The Convention established the judiciary as a co-equal,

third-branch of government. U.S. Const., art. II]. In order

to guarantee independence, the judges were given life

tenure, and protection against diminution of salary. Id.

§ 1.5 In The Federalist No. 78, Hamilton echoed Montes-

quieu as to the need for an independent judiciary to

guarantee liberty: “[L]liberty can have nothing to fear

from the judiciary alone, but would have every thing to

fear from its union with either of the other departments

.... ” Id. at 523 (Alexander Hamilton) (Jacob E. Cooke

ed., 1961).

The Convention's efforts to ensure an independent

judiciary produced two important ideals of constitutional

liberty, one perhaps more well-known than the other, but

the latter equally important. First, of course, is the prac-

tice of judicial review. Although the Constitution is silent

on this point, many of the framers intended judicial

review of the constitutionality of legislative enactments.

Vile, supra, at 158; Mark Tushnet, Constitutional Interpreta-

tion, Character, and Experience, 72 B.U. L. Rev. 747, 749

(1992); Benjamin F. Wright, Jr., The Origins of the Separation

of Powers In America, Economica 169, 183 (May 1933). The

Federalist Papers anticipated and justified the practice.

The Federalist No. 78, at 525 (Alexander Hamilton) (Jacob

E. Cooke ed., 1961). And Marbury v. Madison, 5 U.S. (1

Cranch) 137 (1803), justly renowned, set it in stone.

But judicial review is meaningful only if the judiciary

is independent, and there is not judicial independence if

final judicial decisions can be overturned at will by the

* The Convention explicitly rejected a Council of Revision

that would have intermingled judges and other officials in

reviewing the constitutionality of legislative enactments. Max

Farrand, The Framing of the Constitution of the United States

156-57 (9th ed. 1913); Carpenter, supra, at 42.

legislative or executive branches. As Corwin explained:

“[Tlo produce judicial review, the notion of the Constitu-

tion as law must be accompanied by the principle of the

finality of judicial constructions of the law... . " Corwin,

supra, at 524. Thus, he condemned the pre-constitutional

legislatures, accusing them of “the withholding from

judicial power of that which, to the modern way of think-

ing, is its highest attribute — to wit, power of deciding with

finality.” Id. at 516 (emphasis added). Hamilton, seeking

to justify the check of an independent judiciary, drew the

line that governs even today: “A legislature without exceed

ing its province cannot reverse a determination once made, ina

particular case; though it may prescribe a new rule for

future cases.” The Federalist No. 81, at 545 (Alexander

Hamilton) (Jacob E. Cooke ed., 1961) (emphasis added).

In order for the judiciary to function independently, its

final judgments in specific cases must be respected, with-

out regard to whether popular assemblies approve of the

result.

B. Hayburn’s Case Preserves An Independent Judi-

ciary By Ensuring That Neither Congress Nor

The Executive Branch Overturns Or Otherwise

Revises The Final Decisions Of An Article III

Court.

In Hayburn’s Case the twin pillars of the judicial check

~ the power of judicial review and the principle of

judicial finality — found voice.4 Hayburn’s Case involved

the Invalid Pensions Act, passed to provide pensions to

Revolutionary War veterans. Lacking an administrative

bureaucracy, Congress pressed into service the circuit

judges, who would hear the claims of veterans and rule

upon their validity. Judicial decisions were not final,

however: Circuit Court determinations could be over-

turned by the Secretary of War for “fraud or imposition,”

and the last word on payment rested with Congress.

Although this Court never issued an opinion on the

merits in Hayburn’s Case,” appended to the report of the

case are the opinions of the Supreme Court Justices,

riding circuit, speaking to the validity of the enactment.’

* See generally Susan L. Bloch, The Early Role of the Attorney

General in Our Constitutional Scheme: In the Beginning There Was

Pragmatism, 1989 Duke LJ. 561, 590-613; Maeva Marcus &

Robert Teir, Hayburn’s Case: A Misinterpretation of Precedent, 1988

Wis. L. Rev. 527.

* See Hayburn’s Case, 2 U.S. (2 Dall.) at 409-10. After Con-

gress amended the statute to provide for alternative relief for

the pensioners, the Court dismissed the case on grounds of

mootness. The unconstitutional statute was repealed by Con-

gress and replaced by one that did not require participation by

the Circuit Judges. Bloch, supra, at 590 n.94; Marcus & Teir,

supra, at 528 n.4.

* The written opinions reflect the views of five of the six

Justices then sitting on this Court. See Hayburn’s Case, 2 US. (2

Dall.) at 409-10. Professor Bloch reports that Justice Johnson also

expressed his views elsewhere as to the unconstitutionality of

the Invalid Pensions Act. See Bloch, supra, at 591-92 (noting that

Justice Johnson, along with Judge Bee, refused to process six

applications under the Act because he believed the court could

not “constitutionally take Cognizance of and determine on the

said Petitions”).

The judicial role required by the Invalid Pensions Act

was unanimously rejected by the judges in Hayburn’s Case

because the statute violated the principle of judicial final-

ity. 2 U.S. (2 Dall.) at 409. That principle is straightfor-

ward: The final decisions of Article III courts cannot be

subject to revision by any other branch. Id. Thus, rea-

soned the judges in Hayburn’s Case, because they were

being asked to render a decision subject to revision, the

request violated the Constitution by assigning to them a

task not “of a judicial nature.” Id. at 410 n.2 (opinion of

the Circuit Court of Pennsylvania (Justices Wilson and

Blair, and Judge Peters)).

Although the Justices wrote separately and from

locations distant, their reasoning bore great similarity.

The Circuit Court of New York (Chief Justice Jay, Justice

Cushing, and Judge Duane) stated that the tasks assigned

under the Act were not “properly judicial” because the

Act “subjects the decisions of these courts, made pur-

suant to those duties, first to the consideration and sus-

pension of the secretary at war, and then to the revision

of the Legislature.” Id. Similarly, the Circuit Court of

Pennsylvania (Justices Wilson and Blair, and Judge

Peters) complained that the court’s judgments “might

.. . have been revised and controled by the legislature,

and by an officer in the executive department.” Id. “Such

revision and control,” the Court stated, “we deemed radi-

cally inconsistent with the independence of that judicial

power which is vested in the courts....” Id. Finally, the

Circuit Court of North Carolina (Justice Iredell and Judge

Sitgreaves) stated “inasmuch as the decision of the court

is not made final, but may be at least suspended in its

operation by the secretary at war. . . this subjects the

decision of the court to a mode of revision which we

consider to be unwarranted by the constitution.” Id. Sum-

ming up, the North Carolina Circuit Court stated, in

words that govern here:

[NJjo decision of any court of the United States

can, under any circumstances . . . agreeable to

the constitution, be liable to a reversion, or even

suspension, by the legislature itself, in whom no

judicial power of any kind appears to be vested,

but the important one relative to impeachments.

Id.

The importance of the rule in Hayburn’s Case should

be self-evident. The judiciary was conceived by the peo-

ple as an important check on legislative power, and thus

a guarantee of the rights of private citizens. See Corwin,

supra, at 517 (explaining that the “structural and func-

tional shortcomings of the early state constitutions

played directly into the hands of both popular and doctri-

nal tendencies which distinctly menaced what Madison

called ‘the security of private rights’ ”). That check is

worthless, however, if it may be overturned at will by the

legislative branch, effecting popular will as against pri-

vate rights. In order to serve as a check, the final judg-

ments of the judicial branch must be respected. It is

telling that the first act of judicial review by Justices of

this Court was taken in the name of judicial finality. See

Marcus & Teir, supra, at 530 (remarking that the New York

Circuit Court’s views “represented the first instance of

federal judges discussing the constitutionality of a piece

of federal legislation”).

Perhaps the most powerful paean to the absolute

nature of the principle of judicial finality is found in

Chiet Justice Taney’s opinion for the Court in Gordon v.

United States, 117 U.S. 697 (1865), published after his

death.” Gordon involved the establishment of the Court of

Claims. The statute there at issue provided for payment

of the judgments of the Court of Claims, or of the

Supreme Court if an appeal was taken, but no payment

could be made until “the claim allowed has been esti-

mated tor by the Secretary of the Treasury, and Congress,

upon such estimate, shall make an appropriation for its

payment.” Id. at 698. While this Court upheld the statute

with regard to the Court of Claims, it determined that as

applied to the Supreme Court, the statute violated the

principle of judicial finality. Id. at 704.

Writing to overturn the statute at issue in Gordon,

Chief Justice Taney stated that the judgment of an Article

Ill court must be “final and conclusive upon the rights of

the parties.” Id. at 702 (emphasis added). “|N]o principle

of constitutional law has been more firmly established or

constantly adhered to... . ” Id. at 704.8 That rule, that

judicial decisions must be “final and conclusive, and may

* The judgment in Gordon v. United States was published at

69 U.S. (2 Wall.) 561 (1865). That judgment indicates an opinion

would be forthcoming. Some twenty years later the Court

assented to printing the opinion Chief Justice Taney had pre-

pared, which the Clerk had located at the suggestion of mem-

bers of the Court. 117 U.S. at 697.

* While legislative encroachments upon the judiciary are

rare, the principle of finality is relied upon every day. See Feder-

ated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981) (discuss-

ing res judicata).

not be subject to revision by another branch of govern-

ment,” has been adhered to consistently by this Court. See

Glidden Co. v. Zdanok, 370 U.S. 530, 541 (1962); United

States v. O'Grady, 89 U.S. (22 Wall.) 641, 647-48 (1875);

United States v. Ferreira, 54 U.S. (13 How.) 40, 49-52

(1852).

C. The Rule In Hayburn’s Case Governs This Case.

Resolution of this case turns on a straightforward

application of the rule that neither the legislative nor the

executive branch may overturn a final decision of an

Article Il court. This rule represents, again to quote

Corwin, the “highest attribute” of an independent Article

* United States v. Sioux Nation of Indians, 448 U.S. 371 (1980),

is not to the contrary. In that case, Congress provided for adjudi-

cation of certain claims of the Sioux against the United States,

although the claims had been litigated previously and final

judgments had been entered. Rather than finding the statute

that authorized relitigation a violation of Hayburn’s Case, this

Court correctly observed that all Congress had done was waive

the United States’ defense of res judicata. Id. at 407 (finding that

“Congress had not ‘reversed’ the Court of Claims’ holding that

the claim was barred by res judicata . . . . [[]t only was providing

a forum so that a new judicial review of the Black Hills claim

could take place”). Moreover, it is noteworthy that Sioux Nation

involved litigation in which the United States was a party. No

case involving purely private parties authorizes Congress to

overturn or otherwise review a judicial decision.

Nor are Freeland v. Williams, 131 U.S. 405 (1889), or Fleming

v. Rhodes, 331 U.S. 100 (1947), to the contrary. Neither Fleming

nor Freeland involve revision or modification of the judgment of

an Article III court by Congress, and therefore, neither case has

any relevance whatsoever to the separation of powers issue

presented by Section 27A(b).

Hl court. Corwin, supra, at 516. Yet, Section 27A(b), to the

extent it applies at all to this case, squarely violates the

rule.

In this case, as in Plaut and CIGNA, the courts had

determined that the complaints were untimely filed, pur-

suant to this Court's decision in Lampf. Final judgment

was entered in each case, and in each case the time for

taking an appeal expired with no appeal taken. Those

decisions were the final decisions of Article II] courts. See

Linkletter v. Walker, 381 U.S. 618, 622 n.5 (1965) (defining

“tinal judgment”); cf. Harper v. Virginia Dep't of Taxation,

113.S. Ct. 2510, 2517 (1993) (retroactive application of new

law only applies to those cases, civil and criminal, “still

open on direct review”). Despite those final decisions,

with Section 27A(b) Congress nonetheless ordered the

Article II] courts to adjudicate the cases again.

D. Arguments Advanced To Defend Section 27A(b)

In Light Of Hayburn’s Case Are Unavailing.

It seems difficult to avoid the conclusion that, to the

extent it applies to overturn final judgments, Section

27A(b) runs atoul of the rule of judicial finality. Nonethe-

less, in the various proceedings in this and other Section

27A(b) cases, arguments have been advanced as to why

what appears obvious is not so. These arguments largely

reflect a failure to confront squarely the principles of

judicial finality, and most of the arguments are flatly

belied by the historical record. Amici submit that none of

these arguments avoid the conclusion that as applied to

final decisions from which timely appeal could not be

taken, Section 27A(b) is unconstitutional.

1. It Is Irrelevant That Section 27A(b) Ordered

Readjudication Rather Than Prescribing A

Result.

It is irrelevant that Congress simply required read-

judication of the claims that had been finally decided,

rather than prescribing a result. The rule in Hayburn’s

Case is not a prohibition on telling a court how to decide a

case. It is a prohibition on failing to give “binding and

conclusive” effect to the final judgment of an Article II

court. Chicago & Southern Air Lines, Inc. v. Waterman S.S

Corp., 333 U.S. 103, 114 (1948); Gordon v. Linited States, 117

U.S. at 702 (“final and conclusive”) (Taney, C.J.). The

prohibition on prescribing certain rules of decision comes

instead from United States v. Klein, 80 U.S. (13 Wall.) 128

(1871). But Hayburn’s Case provides an entirely separate

rule from Klein. See Plaut, 1 F.3d 1487, 1497 n.14 (“we

believe § 27A(b) forces the courts to rule again on cases

they have dismissed with prejudice, not that it forces the

courts to rule on those cases (or any cases) in a particular

way’).

The historical record makes clear that the crux of the

rule in Hayburn’s Case is finality, without regard to

whether the legislature actually resolves the dispute

among the parties. Time and again on the list of griev-

ances about legislative usurpation of judicial indepen-

dence were complaints about legislatures reopening final

judgments. These complaints were separate from, and in

addition to, concerns about overturning on the merits.!°

Both forms of revision were equally untenable.

10 See, e.g., Corwin, supra, at 514-15 (New Hampshire legis-

lature “vacated judicial proceedings, suspended judicial

2. It Is Irrelevant That Congress Is Free To

Prescribe A Rule Governing Future Cases.

Similarly, it also is irrelevant that Congress remains

free at any time to prescribe a rule applicable in future

cases. There is no doubt that Congress is free to prescribe

rules to govern future events. The Federalist No. 81, at 545

(Alexander Hamilton) (Jacob E. Cooke, ed., 1961) (Con-

gress may not reverse judicial determination “though it

may prescribe a new rule for future cases”). In fact, when

Congress so acts, the decision is applicable to any case

pending on appeal at the time of the enactment. United

States v. Schooner Peggy, 5 U.S. (1 Cranch) 103, 110 (1801).

The critical point in this case is that no matter how

one characterizes what Congress did, the case was not

pending on appeal at the time Congress acted. The case

was final. That the judgment may rest on a statute of

limitations is immaterial: To the extent the judgment spo-

ken of is a final judgment, it is immune from legislative

revision, even though the statute of limitations surely is

not. To hold otherwise is to reduce Hayburn’s Case to a

nullity.!!

actions, annulled or modified judgments”); id. at 520 (Pennsyl-

vania legislature remitted fines and disallowed judicially

established claims); Judicial Action by the Provincial Legislature of

Massachusetts, supra, at 210 (legislature overturned execution

order); id. at 217 (legislature suspended judgment).

'! It likewise certainly must be irrelevant (although it has

been argued) that the statute Congress enacted is seen - at least

by the plaintiffs in these cases - as undoing the mischief of this

Court's decision in Lampf. The revolutionary legislatures no

doubt often felt - as Congress apparently felt when it sought to

undo the work of this Court — that the judicial branch had gone

3. It Is Irrelevant That Congress’ Interference

With Final Judgments Took The Form Of

Ordinary Legislation.

The United States repeatedly has argued that Con-

gress in enacting Section 27A did not sit as a “court of

errors” but performed a “quintessentially legislative” act

of prescribing the statute of limitations. But it plainly is of

no significance, as argued above, that the reversal of

Article Il decisions took the form of a statute of limita

tions. The reality of the matter is that the legislative

decision overturned a final judicial decision. The United

States may be advancing an argument that Section 27A(b)

was quintessentially legislative because it took the form

astray. That sense of “Right and Justice” is precisely what moti-

vated the revolutionary legislatures: |

They continually tried cases in equity, occasionally

extended temporary equity power to some common

law court for a select purpose, and often granted

appeals, new trials, and other kinds of relief in an

effort to do what “is agreeable to Right and Justice.”

As a committee of the Maryland Assembly declared

in 1719, “a legislative body is not tied to common

rules, for if the thing be just they make new rules or

dispense with old ones as to the manner of doing it.’

Wood, supra, at 155. But as the Constitution’s framers came

ultimately to understand, there must be a limitation upon the ad

hoc undoing of judicial decisions by the legislative branch. That

limitation is expressed in Hayburn’s Case. a

Similarly, it is well understood that a judgment is final and

conclusive whether or not it is based on a correct understanding

of the law: “Nor are the res judicata consequences of a final

judgment on the merits altered by the fact that the judgment

may have been wrong or rested on a legal principle subse-

quently overruled in another case.” Federated Dept Stores, Inc. o.

Moitie, 452 U.S. 394, 398 (1981).

of a statute. But the framers foresaw and rejected this

argument over two hundred years ago. In The Federalist

No. 48 Madison wrote:

If therefore the Legislature assumes executive

and judiciary powers, no opposition is likely to

be made; nor if made can it be effectual; because in

that case, they may put their proceeding into the

form of an act of Assembly, which will render them

obligatory on the other branches. They have

accordingly in many instances decided rights

which should have been left to judiciary contro-

versy....

ld. at 336 (James Madison) (Jacob E. Cooke ed., 1961).

The difficulty with this argument, if indeed the

United States is making it, is that it excuses legislative

action simply because it is in the form of a statute,

without regard to what the statute does. But labeling an

act “quintessentially legislative” does not avoid its

unconstitutional impact. “The concept of legislative

power here expressed is obviously a purely formal one:

‘legislative power’ is any power which the legislative

organ may choose to exercise by resort to the ordinary

parliamentary processes.” Corwin, supra, at 516. Indeed,

because the only way Congress can act is through the

legislative process, see I.N.S. v. Chadha, 462 U.S. 919

(1983), the proper focus is upon the impact of the legisla-

tive act. What Congress has done is to reverse final

judgments, and that is impermissible.

4. The Rule In Hayburn’s Case Unquestiona-

bly Is That Decisions Of Article III Courts

Must Be “Binding And Conclusive Upon

The Parties,” And That Such Judgments Are

Not Subject To Revision By The Legislative

Or Executive Branches.

Finally, there seems to be some argument that Hay-

burn’s Case does not even stand for the proposition for

which amici cite it. Thus, the United States has made the

following odd argument:

Defendants assert that the panel here cor-

rectly relied upon Hayburn’s Case because the

Supreme Court there established that neither

Congress nor the Executive can disturb a final

judgment of an Article III court. This statement

is manifestly wrong, and can easily be checked

by reading the statements by the Justices in that

case.

There is absolutely no indication of even the

slightest kind that the Justices in Hayburn’s Case

held that Congress cannot enact new legislation

that has the effect of overriding a prior judg-

ment of a court. Since that is not what happened

in Hayburn’s Case, there would have been no

reason for the Justices even to address that ques-

tion, and they did not.

United States’ “Reply to Response to Petition by the

United States for Rehearing with an In Banc Suggestion”

at 4a-5a, in Plaut, 1 F.3d 1487 (see Appendix).

From the time of Hayburn’s Case to the present, that

decision has stood for the proposition that the final deci-

sions of Article III courts are not subject to revision by the

legislative or executive branches. In Gordon, Chief Justice

Taney stated, with regard to the rule in Hayburn’s Case,

“no principle of constitutional law has been more firmly

established or constantly adhered to.” 117 U.S. at 704. The

decision has been cited numerous times, by this Court!?

and by the lower courts," for just this proposition.

Numerous commentators are in accord.'4

It is true that in Hayburn’s Case Congress did not

enact a law overturning a judicial decision. That is

because the courts that spoke in that case did not give

Congress a chance to do so. Rather than subject their

rulings to congressional overturning, the courts declined

to perform the statutory duties, the first instance in which

a court invalidated an Act of Congress. But the courts

were clear as to their reason for doing so: It was because

Article III final judgments are not subject to revision.

That rule is clear, and amici submit that as to the small

number of Section 27A(b) cases that had gone to final

'2 See, e.g., United States v. Sioux Nation of Indians, 448 U.S.

371, 391-92 (1980); United States v. Jefferson Elec. Mfg. Co., 291

U.S. 386, 400 & n.29 (1934); United States v. Ferreira, 54 U.S. (13

How.) 40, 49-52 (1852).

'S See, e.g., Town of Deerfield v. F.C.C., 992 F.2d 420, 427-28

(2d Cir. 1993); In re President's Commission on Organized Crime,

783 F.2d 370, 375 (3d Cir. 1986); In re Sharon Steel Corp., 100 B.R.

767, 774 (Bankr. W.D. Pa. 1989).

'4 See, e.g., 1 Ronald D. Rotunda & John E. Nowak, Treatise

on Constitutional Law: Substance and Procedure § 2.13(e) (2d ed.

1992); Bernard Schwartz, A History of the Supreme Court 25-26

(1993); Charles A. Wright, The Law of Federal Courts § 12 & n.28

(4th ed. 1983); Bloch, supra, at 592; Evan Tsen Lee, Deconstitu-

tionalizing Justiciability: The Example of Mootness, 105 Harv. L.

Rev. 603, 646-47 (1992); Marcus & Teir, supra, at 530.

judgment, its application is equally clear: Section 27A(b)

cannot operate to disturb final, non-appealable judg-

ments.

ll. THIS COURT DOES NOT NEED TO ADDRESS

THE CONSTITUTIONAL QUESTION BECAUSE

CONGRESS DID NOT INTEND SECTION 27A(b)

TO REACH FINAL DECISIONS.

The Supreme Court will not address a constitutional

question “if there is also present some other ground upon

which the case may be disposed of.” Ashwander v. Tennes-

see Valley Authority, 297 U.S. 288, 347 (1936) (Brandeis, J.,

concurring). When faced with the argument that a statute

is unconstitutional, the Court therefore must “first deter-

mine whether it is fairly possible to interpret the statute

in a manner that renders it constitutionally valid.” Com-

munications Workers of America v. Beck, 487 U.S. 735, 762

(1988); accord Concrete Pipe & Prods., Inc. v. Construction

Laborers Pension Trust, 113 S. Ct. 2264, 2283 (1993); Califano

v. Yamasaki, 442 U.S. 682, 693 (1979). If a constitutionally

valid interpretation is possible, it is the Court’s “plain

duty” to adopt such an interpretation. N.L.R.B. v. Jones &

Laughlin Steel Corp., 301 U.S. 1, 30 (1937).

Section 27A(b) can and should be interpreted in a

constitutionally valid manner. By its terms, Section

27A(b) directs the reinstatement of a “private civil action”

that had been dismissed as time barred after the Lampf

decision, but it does not evince an intent by Congress to

undo a “final judgment,” i.e. a case “where the judg-

ment . . . was rendered, the availability of appeal

exhausted, and the time for petition for certiorari had

elapsed.” Linkletter v. Walker, 381 U.S. 618, 622 n.5 (1965);

accord Georgia Ass'n of Retarded Citizens v. McDaniel, 855

F.2d 805 (11th Cir. 1988) (interpreting Congress’ retroac-

tive application of law to “actions” brought prior to a

certain date as being inapplicable to final judgments),

cert. denied, 490 U.S. 1090 (1989). Judge Keith adopted this

distinction in Plaut. In his separate opinion, Judge Keith

refused to strike down Section 27A(b) in its entirety,

reasoning that it should be interpreted to apply only to

those cases still on appeal:

In the case at hand, Congress was unable to

protect these litigants under section 27A(b),

because by the time 27A(b) was enacted, the

time period for filing an appeal had passed.

Nevertheless, for those litigants who did appeal

the district court's initial dismissal of their

claim, section 27A(b) does not disturb final

judgments, and is therefore consistent with sep-

aration of powers requirements.

1 F.3d at 1500 (Keith, J., concurring in part and dissenting

in part).

Other circuit courts that have upheld the constitu-

tionality of Section 27A when applied to pending cases

have also recognized the constitutional implications of

reinstating a “final judgment.”!5 Two district courts have

'S See Axel Johnson Inc. v. Arthur Andersen & Co., 6 F.3d 78, 83

(2d Cir. 1993) (“Because the claims at issue had not passed into

final judgment within the constitutional definition of that term

at the time that Judge Lasker reinstated Johnson’s

complaint, Andersen's challenge to the application of § 27A(b)

fails.”); Cooperativa de Ahorro y Credito Aguada v. Kidder, Peabody

& Co., 993 F.2d 269, 273 n.11 (1st Cir. 1993) (“It is well estab-

avoided the constitutional problems raised by Section

27A(b) by interpreting the statute to not apply to final

and unappealed judgments.'® See also Daylo v. Administra-

tor of Veterans’ Affairs, 501 F.2d 811, 823 (D.C. Cir. 1974)

(court unwilling to interpret act as disturbing final judg-

ments without clear evidence that act was so intended).

The legislative history of Section 27A demonstrates

Congress’ intent to apply Section 27A(b) only to those

suits that were dismissed but which had not yet become

final. In discussing the bill that was to become Section

27A, its co-sponsor stated that the bill would not upset

the final judgment regarding the parties whose rights

lished that a party's property right in a cause of action does not

vest ‘until a final, unreviewable judgment has been obtained.’

At the time that Section 27A was signed into law, no final

judgment had been entered in the instant case.”) (citations omit-

ted); Berning v. A.G. Edwards & Sons, Inc., 990 F.2d 272, 277 (7th

Cir. 1993) (“[I]n the instant case there is no final judgment to be

upset. At the time that section 27A was passed, this case was

pending on appeal.”); Gray v. First Winthrop Corp., 989 F.2d 1564,

1571 (9th Cir. 1993) (“none of these cases involve ‘final judg-

ments’ in the constitutional, separation of powers sense of the

term”).

16 Barr v. McGraw-Hill, 1992 WL 196754, at *7 n.17 (S.D.N_-Y.

Aug. 3, 1992) (“the Court finds that because section 27A(b) stops

at allowing the reinstatement of section 10(b) actions, and does

not speak of judgments, no constitutional problem is pre-

sented”); Rabin v. Fivzar Assocs., 801 F. Supp. 1045, 1055

(S.D.N.Y. 1992) (“Although § 27A(b) directs courts to reinstate

cases dismissed as time barred subsequent to June 19, 1991 if

they would have been timely under the law existing on that

date, it does not speak specifically to cases in which final judg-

ment has been entered and the time for appeal has expired.”).

were adjudicated in Lampf. On November 21, 1991, Sena-

tor Garn addressed Senator Riegle, co-sponsor of the

“Securities Investor Protection Act.” Senator Garn stated

that it was his understanding that the bill “is not

intended to apply to or in any way affect the parties or

the claims in the Lampf decision itself. The Supreme

Court's final judgment in the Lampf case will remain

intact for the parties in that case.” 137 Cong. Rec.

$17,382-01 (1991). Senator Garn then asked Senator Riegle

if this was the correct interpretation of the bill. Jd. Senator

Riegle replied, “Yes, that is correct.” Id. Yet if Section

27A(b) were read to apply to the final judgment in this

case, it would necessarily apply to the litigants who were

before this Court in Lampf.

Consistent with the legislative history, Section 27 A(b)

can and should be interpreted so as not to overturn final

judgments. If Section 27A(b) overturns final judgments,

then it violates separation of powers and the rule in

Hayburn’s Case. This Court need not resolve the question,

however. It is the usual practice of this Court to assume

that Congress enacted legislation that does not present

such a “serious constitutional question.” Webster v. Doe,

486 U.S. 592, 603 (1988); accord Daylo, 501 F.2d at 818-19,

823. Amici respectfully submit that would be the appro-

priate course in this case.

CONCLUSION

Accordingly, amici respectfully request this Court

either rule that Section 27A(b) does not reach cases that

had gone to final judgment at the time of its enactment,

or rule — alternatively — that if those cases are within the

ambit of Section 27A(b), the section violates the rule in

Hayburn’s Case.

ELIZABETH S. FEAMSTER

FOWLER, MEASLE

& BELL

300 W. Vine Street

Kincaid Towers

Suite 650

Lexington, Kentucky 40507

(606) 252-6731

JAmMes E. Burns, Jr.

Kevin P. Muck

JOHN MISSING

BROBECK, PHLEGER &

HARRISON

One Market Plaza

Spear Street Tower

San Francisco, California

94105

(415) 442-0900

Counsel for Amicus Curiae

Kemper Securities, Inc.

(formerly Bateman Eichler,

Hill Richards, Inc.)

Respectfully submitted,

BARBARA B. EDELMAN

BARRY FRIEDMAN*

G. CuHristorpHeR VAN BevVER

STEVEN L. SNYDER

WYATT, TARRANT &

COMBS

The Lexington Financial

Center

250 West Main Street

Lexington, Kentucky 40507

(606) 233-2012

Counsel for Amicus Curiae

Spendthrift Farm, Inc.

*Counsel of Record

APPENDIX

United States’ “Reply to Response to Petition by

the United States for Rehearing with an In Banc

Suggestion” in Plaut v. Spendthrift Farm, Inc., 1

F.3d 1487 (6th Cir.), reh’g denied, 11 F.3d 572

(1993), petition for cert. filed, 62 U.S.L.W. 3503

Oe We ss conte dbunvucscrasencosdwi

No. 92-5591

IN THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

ED PLAUT, et al.,

Plaintiffs-Appellants,

SPENDTHRIFT FARM, INC., et al.,

. Defendants-Appellees.

ON APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE EASTERN DISTRICT OF KENTUCKY

REPLY TO RESPONSE TO PETITION

BY THE UNITED STATES FOR REHEARING

WITH AN IN BANC SUGGESTION

PAUL GONSON FRANK W. HUNGER

Solicitor Assistant Attorney General

JACOB H. STILLMAN KAREN K. CALDWELL

Associate General Counsel United States Attorney

LESLIE E. SMITH DOUGLAS LETTER

Senior Litigation Counsel BARBARA C. BIDDLE

Securities and Exchange SCOTT R. McINTOSH

Commission (202) 514-3602

Washington, D.C. 20549 Attorneys, Appellate Staff

Civil Division, Room 3617

Department of Justice

Washington, D.C. 20530

The United States and the plaintiffs/appellants in

this case petitioned for rehearing in banc, and the Court

directed the defendants/appellees to file a response.

Defendants’ response warrants this short reply making

two points.

First, defendants do not rebut our contention that

this case involves a question of exceptional importance.

Second, defendants’ reliance upon the various statements

by the Justices in the moot controversy in Hayburn’s Case,

2 U.S. (2 Dall.) 409 (1792) is manifestly wrong because it

misrepresents what was at stake there, and thus the

meaning of those statements.

1. As we pointed out in our rehearing petition, sev-

eral factors combine to make this one of those rare

instances in which rehearing in banc consideration is war-

ranted.

A panel of this Court has, over a partial dissent,

struck down as unconstitutional on separation of powers

grounds a duly enacted Act of Congress. This ruling is in

direct conflict with a contemporaneous decision by the

Fifth Circuit. And, the reasoning employed by the panel

of this Court has been rejected by the Ninth and Tenth

Circuits in upholding a related subsection of the statutory

provision at issue.

Defendants quibble in unimportant ways with our

reliance on these factors. They say that the Fifth Circuit in

its Pacific Mutual Life Insurance Co. v. First Republicbank

Corp., 997 F.2d 39 (Sth Cir. 1993) opinion did not address

Hayburn’s Case. However, Hayburn’s Case was specifically

discussed in the briefs filed in the Fifth Circuit. In any

event, the issues in this case and in Pacific Mutual are

identical, and the panel's ruling here accordingly creates

a direct conflict among the circuits.

Defendants point out that the six circuits other than

the Fifth Circuit that have to date upheld Section 27A

have done so in the context of cases arising under subsec-

tion (a) of that section, while this case involves subsection

(b). We are well aware of the difference between these

two sections. However, what we explained in our rehear-

ing petition (at 2) is that the constitutional analysis

employed by the panel of this Court here is inconsistent

with that used by the Ninth Circuit in Gray v. First Win-

throp Corp., 989 F.2d 1564 (9th Cir. 1993), and the Tenth

Circuit in Anixter v. Home-Stake Production Co., 977 F.2d

1533 (10th Cir. 1992), cert. denied, 113 S. Ct. 1841 (1993).

Indeed, one of the district court rulings reversed in Gray

by the Ninth Circuit cited Hayburn’s Case (see In re

Brichard Securities Litigation, 788 F. Supp. 1098, 1107 (N.D.

Cal. 1992)), and that case was discussed at length by the

parties in their briefs before the Ninth Circuit. This Court

need only glance at the opinions from the Fifth, Ninth,

and Tenth Circuits to see the inconsistency in approach

between them and the panel here.

Thus, the decision by the panel here is quite isolated

among the courts of appeals.

A question of exceptional importance is always

involved when a court of appeals invalidates an Act of

Congress, a rare occurrence. It is even rarer when an

appellate court does so on separation of powers princi-

ples, which go to the heart of our system of government.

Moreover, the Act of Congress struck down here is

not some obscure provision secretly inserted by a single

legislator without any discussion into a gargantuan bill.

To the contrary, Section 27A was debated in Congress and

was the product of complete legislative consideration.

In sum, defendants have merely argued that the

panel here was right. They have not in any way under-

mined our contention that consideration by this full

Court is warranted if the Court is going to strike down a

thoroughly considered Act of Congress on separation of

powers grounds, in direct conflict with a recent ruling by

another circuit, and using reasoning that was rejected by

other circuits also in recent opinions. Such a serious act

and creation of a clear conflict in the circuits calls for in

banc review by this Court. We note that four other circuits

make clear in their rules or operating procedures that

creation of a circuit split like this is a ground for rehear-

ing in banc. See D.C. Circuit Rule 14; Seventh Circuit Rule

40(c); Ninth Circuit Rule 35-1; Fourth Circuit IOP 40.5.

2. Defendants assert (Response at 2, 3) that the

panel here correctly relied upon Hayburn’s Case because

the Supreme Court there established that neither Con-

gress nor the Executive can disturb a final judgment of an

Article III court. This statement is manifestly wrong, and

can easily be checked by reading the statements by the

Justices in that case.

The statute at issue in Hayburn’s Case authorized the

Secretary of War to revise judgments of an Article III

court regarding pension awards to Revolutionary War

veterans. See Act of March 23, 1792, ch. 11, 1 Stat. 243.

Under the statute, federal circuit courts were directed to

examine pension applicants and “transmit [to the Secre-

tary of War] the result of their inquiry, in case *** the

7 oe wt ks ee EP oe ~_ nee Bt OB

te oe am SO ED we me

NS a! tee ae

applicant should be put on the pension list.” Id. at 244.

The Secretary of War was then authorized to “withhold

the name of such applicant from the pension list, and

make report ** * to Congress” in any case in which he

had “cause to suspect imposition or mistake.” [bid.

The Justices made clear in their various statements in

Hayburn’s Case that neither the Executive Branch nor Con-

gress can “sit as a court of errors” (2 U.S. at 410) review-

ing decisions by Article III courts.

There is absolutely no indication of even the slightest

kind that the Justices in Hayburn’s Case held that Con-

gress cannot enact new legislation that has the effect of

overriding a prior judgment of a court. Since that is not

what happened in Hayburn’s Case, there would have been

no reason for the Justices even to address that question,

and they did not.

As we pointed out in our rehearing petition, seven

circuits have concluded that, in enacting Section 27A,

Congress did provide new legislation having the effect of

overriding prior rulings. It is not clear to us if the panel

here indeed meant to disagree with these circuits on this

point, but it might have. See slip op. at 22 n.15 (“In

enacting §27A, Congress did not ‘change the underlying

wy fer”

If the panel indeed held that Congress did not pass

any new legislation in enacting Section 27A, rehearing in

banc is even more appropriate because of the overwhelm-

ing court of appeals authority holding otherwise. See slip

op. at 11 n.11 (listing rulings by seven circuits upholding

Section 27A). If the panel did not, we are quite puzzled as

to why defendants believe that Hayburn’s Case provides

the answer here, and why the panel so ruled. It is pre-

cisely because the panel accepted this misconceived argu-

ment that a new look by the full Court is needed. Indeed,

the failure of the Pifth Circuit in Pacific Mutual to discuss

Hayburn’s Case in its opinion, even though that case was

raised in the briefs, is quite understandable given the

significant difference between the statutory scheme

involving Revolutionary War veterans and Section 27A.

3. Finally, we note with interest that defendants do

not even attempt to address our reliance in our petition

on Supreme Court precedents such as Fleming v. Rhodes,

331 U.S. 100, 107 (1947), and Freeland v. Williams, 131 U.S.

405, 417-21 (1889). Those decisions show that the

Supreme Court has upheld statutes that legislatively

annul court judgments affecting private rights. Unless

defendants can deal with these cases, they have a very

difficult time stating a convincing argument that there is

some constitutional prohibition against legislation like

Section 27A.

Rehearing is needed so that we can in briefing

rather than in the restrictive medium of a rehearing peti-

tion — address the various Supreme Court precedents

involving legislative overrides of court judgments, and so

that the Court can inquire whether defendants have any

ways to get around those precedents.

For these reasons, and those stated in our rehearing

petition, rehearing im banc should be granted.

Respectfully submitted,

PAUL GONSON PRANK W. HUNGER

Solicitor Assistant Attorney General

JACOB H. STILLMAN KAREN K. CALDWELL

Associate General Counsel LInited States Attorney

LESLIE EF. SMITH /s/ Douglas Letter

Senior Litigation Counsel DOUGLAS LETTER

Securities and Exchange BARBARA C. BIDDLE

Commission SCOTT R. McINTOSH

Washington, DC. 20549 (202) 514-3602

Attorneys, Appellate Staff

Civil Division, Room 3617

Department of Justice

Washington, D.C. 20530

September 27, 1993

CERTIFICATE OF SERVICE

| hereby certify that on September 27, 1993, I have

served the foregoing REPLY TO RESPONSE TO PETI-

TION BY THE UNITED STATES FOR REHEARING WITH

AN IN BANC SUGGESTION by mailing true copies, first-

class postage prepaid, to:

J. Montjoy Trimble

Trimble-Bowling

163 West Short Street

Lexington, Kentucky 40507

Richard C. Ward, Esq.

Wyatt, Tarrant & Combs

The Lexington Financial Center

250 West Main Street

Lexington, Kentucky 40507

James E. Burns, Jr., Esq.

Brobeck, Phleger & Harrison

Spear Street Tower

One Market Plaza

San Francisco, CA 94105

Guy R. Colson, Esq.

Fowler, Measle & Bell

400 Bank One Plaza

Lexington, Kentucky 40507

Harry B. Miller, Esq.

Miller, Griffin & Marks

271 West Short Street

Suite 700

Lexington, Kentucky 40507-1292

William E. Johnson, Esq.

Stoll, Keenon & Park

1000 First Security Plaza

Lexington, Kentucky 40507-1380

L. Clifford Craig, Esq.

Taft, Stettinius & Hollister

1800 Star Bank Center

Cincinnati, Ohio 45202

David Edwards, Esq.

Pillsbury, Madison & Sutro

P.O. Box 7880

San Francisco, CA 94120

/s/ Douglas Letter

Douglas Letter

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.