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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1994
- **Citation:** 510 U.S. 1189

## 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

to

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

iv
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

v

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

vi

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

24

11

21

1]

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
SJ

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.

rh

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).

i

10

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

11

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.

12

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

13

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”).

14

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

15

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”).

lo

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).

17

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).

18

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.

19

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

20

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

21

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).

22

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.

23

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

24

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.

25

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

26

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-

27

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.”).

28

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.

29

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

la

No. 92-5591

IN THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

ED PLAUT, et al.,
Plaintiffs-Appellants,
v.
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

2a

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

3a

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

da

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

5a

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

ba

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.

7a

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

8a

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0464%3A11. Public record. Not legal advice.