Reply Brief — Attorney General of New Jersey v. First Family Mortgage Corp.

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BILED

No. 87-937 JUN 27 1988

EEE Gent? :

LOL, JR.

Iu the Supreme Court of the UniterSrarea—

OCTOBER TERM, 1987

ATTORNEY GENERAL OF NEW JERSEY,

PETITIONER

FIRST FAMILY MORTGAGE CORPORATION OF FLORIDA,

RESPONDENT

On Writ of Certiorari to the

Supreme Court of New Jersey

REPLY BRIEF IN SUPPORT OF

MOTION TO DISMISS OR VACATE

STEPHEN M. SHAPIRO

Counsel of Record

ANDREW L. FREY

KENNETH S. GELLER

JOHN E. MUENCH

Mayer, Brown & Platt

2000 Pennsylvania Avenue, N.W.

Washington, D.C. 20006

(202) 463-2000

Counsel for Respondent

WILSON - Epes PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

TABLE OF AUTHORITIES

Cases: Page

Brockington Vv. Rhodes, 396 U.S. 41 5

California Coastal Commission Vv. Granite Rock Co.,

107 S.Ct. 1419 rae 3-4

City of Mesquite Vv. Aladdin’ 8 Castle, Ine., AB 5 ‘U. Ss.

RUNES NO Yas Eye een ey Ae ra 7

Deakins v. Monaghan, 108 S. - ; 523. 5

Diamond v. Charles, 476 U.S. 54.............. 6

DeFunis v. Odegaard, 416 US. ‘a 7

Hall v. Beals, 396 U.S. 45 . 8

_ ‘4

Iron Arrow Honor Society V. Heckler, 464 U.S. 67.. 6,7

Meyer Vv. Grant, 56 U.S.L.W. 4516 . 5)

National Association of Greeting Card Publishers

v. United States Postal Service, 462 U.S. 810 1

Reeves, Inc. v. Stake, 447 U.S. 429..... : 4

United States v. W.T. Grant Co., 345 U.S. 629 6, 7

Weinstein v. Bradford, 423 U.S. 147....................... 4

isconsin Department of Industry v. Gould, Inc.,

5 U.S. 282 fradine {

Statute:

N.J.S.A.14A: 13-15e

Iu the Supreme Court of the United States

OCTOBER TERM, 1987

No. 87-937

ATTORNEY GENERAL OF NEW JERSEY,

PETITIONER

FIRST FAMILY MORTGAGE CORPORATION OF FLORIDA,

RESPONDENT

On Writ of Certiorari to the

Supreme Court of New Jersey

REPLY BRIEF IN SUPPORT OF

MOTION TO DISMISS OR VACATE

First Family demonstrated in its Motion to Dismiss

or Vacate (at 7-10) that this case no longer involves a

“present, live controversy of the kind that must exist

if * * * [this Court is] to avoid advisory opinions on

abstract questions of law.” Hall v. Beals, 396 U.S. 45,

48 (1969) (per curiam). The only cause of action as-

serted by First Family in the courts of New Jersey, the

mortgage foreclosure claim against Linda Durham, was

terminated by the satisfaction of Ms. Durham’s mortgage

debt. Moreover, petitioner, who intervened on the side of

Ms. Durham in the appellate proceedings below, has no

independent claim for relief against First Family. This

Court’s resolution of the constitutional questions pre-

sented by the petition, therefore, could not affect the rights

of any party to this case. In short, this is a one-sided

controversy that petitioner seeks to use as a vehicle to

obtain an advisory opinion on the constitutionality of the

New Jersey Reporting Act. The speculative assertions on

which petitioner relies in his Brief in Opposition to per-

suade the Court to the contrary simply confirm that this

case does not present a justiciable dispute.

First Family’s former parent company was acquired

by First Nationwide Bank after the filing of the petition

in this case. The new owners have no interest in chal-

lenging the constitutionality of the New Jersey require-

ment that foreign corporations that “receive payments

from persons residing in this State * * * aggregating in

excess of $25,000 regardless of any other connection with

this State,” N.J.S.A. 14A:13-15e, file an Activities Re-

port. As petitioner concedes (Br. in Opp. 7), the new

owners have brought First Family into full compliance

with the Reporting Act by filing the required Report.

Furthermore, the new owners of First Family intend to

comply fully with the reporting requirement in the

future.’

1 Contrary to petitioner’s suggestion (Br. in Opp. 10), First

Family’s opening brief plainly stated that its new owners intend

to comply with the Reporting Act in the future, and that they have

no intention of resurrcecting the constitutional challenge to the

reporting requirement that was initiated prior to the change in

ownership. See Motion at 12 (“Any resolution of those questions

should await a case in which the foreign corporation (unlike First

Family) is unwilling or (unable) to comply with the Reporting

Act as written”); id. at 6 (“The new owners, having no interest in

pursuing a constitutional attack on the Reporting Act, have taken

steps to put an end to the unwanted controversy they had in-

herited’’).

Petitioner, however, contends (Br. in Opp. 9) that,

“(njotwithstanding First Family’s present willingness

to file the activities report, there is clearly no certainty

that such filings will be made in the future,” and there-

fore “the instant controversy can be repeated.” Ac-

cordingly, in petitioner’s view, this case is saved from

mootness by the “capable of repetition, yet evading re-

view” doctrine. This argument is doubly flawed.

First, the “capable of repetition, yet evading review”

doctrine requires that there be a “reasonable expecta-

tion” that the controversy will recur, Meyer v. Grant, 56

U.S.L.W. 4516, 4517 n.2 (1988); it is plainly insuffi-

cient that a controversy ‘‘can be repeated” (Br. in Opp.

9; emphasis added). In this case, there is no basis—

much less a reasonable basis—for suggesting that it is

likely that the new owners of First Family will refuse to

file an Activities Report in the future. Following First

Family’s acquisition by First Nationwide Bank, there

is no reason to treat it any differently than any other

foreign corporation that is in compliance with the Re-

porting Act. It is, of course, possible to speculate that

any corporation currently in compliance with the Act

might fail to file an Activities Report in the future, but

that possibility plainly does not create a justiciable dis-

pute regarding the constitutionality of the Act between

the State of New Jersey and every foreign corporation

subject to (and currently complying with) the Act’s

requirements.

Petitioner’s reliance (Br. in Opp. 8) on California

Coastal Commission v. Granite Rock Co., 107 S.Ct. 1419

(1987), to support his novel “capable of repetition”

argument is inexplicable. In that case, a mining com-

pany, which had a federal right to operate on certain

federally-owned lands pursuant to a federally-approved

five-year plan of operations, challenged a state commis-

sion’s power to exercise permit authority with respect

to those mining operations. Before the case reached this

Court, the mining company’s five-year plan of opera-

tions expired. This Court held that the case was not moot

for two reasons. First, the state commission claimed

continuing authority to require reclamation in connection

with the mining that had already occurred. Second, be-

cause the mining company intended to continue its mining

operations in the future, it was “likely” that the state

would again assert its regulatory authority over those

operations. Jd. at 1423-24. Thus, Granite Rock provides

no support for petitioner’s suggestion that a controversy

is “eapable of repetition” whenever its recurrence is

not logically impossible.

Beyond that, petitioner has not even attempted to ex-

plain how the issues presented in the petition would

“evade review” if they were to recur. As our Motion to

Dismiss or Vacate demonstrated (at 9), there is no pos-

sibility that those constitutional issues will evade review.

If a foreign corporation that has not filed an Activities

Report initiates litigation in the New Jersey courts, the

party against whom the action is brought will have a full

opportunity to litigate the corporation’s right to pursue

the action before any final judgment in favor of the

foreign corporation could be entered.* In sum, this case

clearly fails to satisfy either branch of the “capable of

repetition, yet evading review” doctrine.

* Thus, petitioner’s reliance on Wisconsin Department of Indus-

try Vv. Gould, Inc., 475 U.S. 282 (1986), is completely misplaced.

There, the challenged state action had a statutory life of only

three years. Accordingly, the Court’s conclusion that the case was

not moot was a commonplace application of the established principle

that the evading review requirement is satisfied when “the chal-

lenged action was in its duration too short to be fully litigated

prior to its cessation or expiration.” Weinstein v. Bradford, 423

U.S. 147, 149 (1975) (per curiam). See also National Association

of Greeting Card Publishers v. United States Postal Service, 462

U.S. 810, 820 n.14 (1983); Reeves, Inc. Vv. Stake, 447 U.S. 429,

434 n.5 (1980).

Il.

Petitioner also contends that this case may be saved

from mootness by the “voluntary cessation” doctrine.

Petitioner’s contention is demonstrably wrong. That doc-

trine applies only to cases in which a defendant against

whom injunctive relief is sought contends that the case

is moot because the defendant has voluntarily discontin-

ued the challenged conduct. See Deakins v. Monaghan,

108 S.Ct. 523, 529 n.4 (1988) (doctrine applies where

“a defendant attempts to avoid appellate review by vol-

untarily ceasing the challenged conduct without losing the

ability to reinitiate the conduct once the mooted case is

dismissed”) (emphasis in original).

In this case, First Family is not a defendant, and peti-

tioner has no claim for relief against First Family. This

was a private mortgage foreclosure suit, not a govern-

ment enforcement action, and petitioner intervened in

this case solely te defend the constitutionality of the Re-

porting Act when it came under attack in the private

dispute. When that dispute terminated, there no longer

existed a case or controversy to support petitioner’s re-

quest for a ruling sustaining the validity of the Report-

ing Act. Because petitioner has no independent basis

for relief against First Family, this case is moot. See

Brockington v. Rhodes, 396 U.S. 41, 43 (1969) (per

curiam). The doctrine of “voluntary cessation” is simply

inapplicable.

Petitioner cryptically suggests (Br. in Opp. 8) that

there is a live “case or controversy” regarding the valid-

ity of the Reporting Act because, as an_ intervenor-

defendant below, he remains a party in this Court under

Rule 10.4. However, an intervenor’s status as a party

under this Court’s rules does not establish the justici-

ability of the issues that the intervenor wishes to press

on this Court for decision. Where, as here, the dispute

between the real parties in interest has become moot,

()

* *

there is “no case for the intervenor] to join” and

the “intervenor’s right to continue the suit in the ab-

sence of the party on whose side intervention was _ per-

mitted is contingent upon a showing by the intervenor

that he fulfills the requirements of Art. III.” Diamond

v. Charles, 476 U.S. 54, 64, 68 (1986). Petitioner has

no independent basis for relief against First Family,

and therefore he does not satisfy the requirements of

Article IT1.

Petitioner also notes that Ms. Durham, on whose side

petitioner intervened as a defendant, did not participate

in the ‘appellate proceedings below, and that petitioner’s

intervention was motivated not by a desire to benefit

Ms. Durham, but to preserve the constitutionality of the

Reporting Act that had come under attack in the private

mortgage foreclosure dispute. These objections are com-

pletely beside the point. First Family does not dispute

that petitioner had a legally cognizable interest in defend-

ing the constitutionality of the Reporting Act at a time

when there was a live controversy relating to the validity

of the Act and when resolution of that controversy would

have affected the rights of the parties to the litigation.

However, once the mortgage dispute was resolved, peti-

tioner’s unilateral interest (no matter how intense) in

securing a ruling sustaining the validity of the Act is

not a constitutionally adequate substitute for a concrete

dispute between adverse parties.

At all events, even if the “voluntary cessation” doc-

trine were applicable to a situation where a party's ac-

tions were not undertaken “to escape the threat of an in-

junction,” Jron Arrow Honor Soci ty V. Heckler, 464 U.S.

67, 72 (1983), it would not revive a ease such as this

one where there is “no reasonable expectation” that the

controversy will recur. United States v. W.T. Grant Co.,

345 U.S. 629, 633 (1953). Indeed, the very case peti-

tioner cites for the proposition that the voluntary cessa-

tion doctrine saves a case from mootness whenever a

controversy “can be repeated” involved conduct that was

virtually certain to recur. In City of Mesquite v. Alad-

din’s Castle, Inc., 455 U.S. 283 (1982), an amusement

center challenged the constitutionality of a municipal

licensing ordinance. While the case was pending in the

lower court, the city amended the ordinance to delete the

challenged language. This Court held that the case was

not moot, noting that the city had eapressly siated its

intention to reenact the challenged ordinance if the lower

court’s injunction against its enforcement were vacated.

455 U.S. at 289 & n.11. (Petitioner fails to include foot-

note 11 in its selective quotation (Br. in Opp. 10) from

City of Mesquite.)

By contrast, upon learning of the controversy relating

to First Family’s prior failure to file an Activities Re-

port, First Family’s new owners promptly filed the Re-

port and terminated the pending constitutional challenge

to the reporting requirement by forgiving Ms. Durham’s

entire mortgage debt and dismissing its own appeal in

this Court. Moreover, First Family has expressly repre-

sented to this Court that it will comply with the Report-

ing Act in the future. There is, in short. no “cognizable

danger of recurrent violation” of the Reporting Act by

First Family. United States v. W. T. Grant Co.. supra,

845 U.S. at 633. See also ron Arrow Honor Society v.

Heckler, supra, 464 U.S. at 72 (“Because the University

has announced its decision [to exclude Iron Arrow’s ac-

tivities from campus] to Iron Arrow, the public, and

the courts, we conclude that there is ‘no reasonable like-

lihood’ that the University will later change its mind

and decide to invite Iron Arrow to return’): DeFunis v.

Odegaard, 416 U.S. 812, 317 (1974). Any contrary as-

sertion represents naked speculation totally devoid of

factual support.

Petitioner’s desire to litigate the constitutionality of

the Reporting Act against a foreign corporation that is

willing to comply with its requirements is understand-

uble. However, Article III requires that constitutional

questions be decided in an adversary context based on

more than “speculative contingencies.” Hall v. Beals,

supra, 396 U.S. at 49.

For the reasons stated above, and in our motion, the

order granting certiorari in this case should be vacated

and the petition dismissed as moot, or the judgment of

the Supreme Court of New Jersey should be vacated and

the cause remanded for such proceedings as that court

deems appropriate. Alternatively, the petition should be

dismissed as improvidently granted.

Respectfully submitted.