Reply Brief — Rich v. Action S. A.

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No. 91-1435

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IN THE

Supreme Court of the United States

OctToBerR TERM, 1991

MARC RICH,

Petitioner,

VS.

ACTION S.A. and DELTAMAR ESTABLISHMENT,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

COURT OF APPEALS FOR THE SECOND CIRCUIT

PETITIONER’S REPLY TO

BRIEF IN OPPOSITION

ANDREW L. DEUTSCH

Counsel of Record

Caro. M. FISCHER

Rosert A. MEISTER

MILGRIM THOMAJAN & LEE P.C.

53 Wall Street

New York, New York 10005

(212) 858-5300

Attorneys for Petitioner

TABLE OF CONTENTS

The Court has Already Definitively

Construed 6 USC. S$U4GMe) 2... wc ccc ence. l

Terrazas and Richards Are Not

Distinguishable on Their Facts ................... 4

The Court Should Review the

"APE CMO COMOMRIOR www cc seces 6

EEE OAS FN POL ee, Ee 7

TABLE OF AUTHORITIES

Cases:

American Hospital Ass'n v. N.L.RB.,

129 S. Cy OBS Ce nae ccs eee ee ee 3

Ardestani v. I.N.S.,

Lid S. Gh. SEF CD ooo 4 eee ees 2

Astoria Federal Savings and Loan Ass'n v. Solimino,

221 S. Ce. SOR CEP E) a cacdee eons ee rekeweansss 3

Bender v. Williamsport Area School Dist.,

473 US. SP0 CU 4 kc cep dk eae eee ss bbe tee we 5 6

Cotton Petroleum Corp. v. New Mexico,

S50 US. 065 CUR vn kin be a ee ee kes 6

Dewsnup v. Timm,

eee So 7). eee ed eer arr 3

Edmonds v. Compagnie Generale Transatlantique,

603 US: SEI oie eee 3

Edsell v. Mark,

179 F. 292 (9th Cir. 1910)... 0.0... cece eee eee eee. 5

Federal Power Commission v. Sunray DX Oil Co.,

oP) Was OCR 65 cnee asco ese AACR he eee aes 6

Freytag v. CLR,

RUS Ge. Bee Cae ee 6 kk x cece wee ake ReGen ss 2

TABLE OF AUTHORITIES - Continued

Gainesville v. Brown-Crummer Investment Co.,

ols ova ey X04 a oo wale kh arto 6

Glidden Company v. Zdanok,

ee sad 6 5 6-6 4 wis sn ewne ve oe ees 6

Hilton v. South Carolina Public Railways Com’n,

eR rn eer 3

Holmes v. Securities Investor Protection Corp.,

60 U.S.L.W. 4225 (U.S. Mar. 24, 1992) ............... 2

Jenkins v. Georgia,

I ES sce ce bac na eee snceenseeeees 6

Kahane v. Schultz,

653 F. Supp. 1486 (E.D.N.Y. 1987) .................. 5

King v. St. Vincent’s Hospital,

a ok a bce eas eww eaessenene ne 2

Lake Country Estates, Inc. v.

Tahoe Regional Planning Agency,

a 6

Mansfield, C. & L. M. R. Co. v. Swan,

kk hn ee eee wenenesseccas 6

Murarka v. Bachrack Bros, Inc.,

Oe Wee ee CO Gs TUE) oc ccc ccecsccuca 3

lle

TABLE OF AUTHORITIES - Continued

Nishikawa v. Dulles,

356 US. 129 (1958) 0... cece e eee cree ee eee eee 2

Patterson v. McLean Credit Union,

491 USS. 164 (1989) ..... 6. ee eee eee eee eee eens 3

Philbrook v. Glodgett,

421 US. 707 (1975) .. 2.0 e wcrc cece cece eee cces 2

Raley v. Ohio,

a so. ca caw pote ssn enaeea cess 6

Richards v. Secretary of State,

752 F.2d 1413 (9th Cir. 1985) ........--- eee eee ee

Runyon v. McCrary,

427 US. 160 (1976)... 0 ccc cece cece eee eeeenes 3

Terrazas v. Haig,

653 F.2d 285 (7th Cir. 1981) .... 2.2.2 ee ee eee eee 1,4

Terrazas v. Vance,

577 F.2d 7 (7th Cir. 1978) .....- eee eee eee eens 4

Thurston Motor Lines, Inc. v.

Jordan K. Rand, Lid,

460 U.S. 533 (1983)... ccc ccc cee eee ee reces 2

Tiobb v. Radloff,

Se ee vik cure eh eek eee eee 2

TABLE OF AUTHORITIES - Continued

Vance v. Terrazas,

SOF UD, Be CAPO 6 sc evkcanrectsuuateneuews passim

Statutes, Codes and Regulations:

8 U.S.C. §1481(c) (1982) 2.0... eee eee ee eee. passim

Respondents avoid most of the arguments which

the Petition advances. Rather, through a series of

misstatements of the law and the record facts, they seek to

divert the Court’s attention from the untenable reasoning of

the court of appeals. Petitioner responds briefly to correct

those misstatements.

Respondents wrongly argue that this is a “fact-

intensive” case presenting no issue worthy of review. (Opp.

Br. 3).* In truth, the case presents purely legal questions of

broad applicability. The decision below conflicts with this

Court’s decision in Vance v. Terrazas, 444 U.S. 252 (1980)

("Terrazas") that Congress intended former 8 U.S.C. §1481(c)

only to prescribe the burden borne by the Government in

expatriation proceedings. The ruling conflicts equally sharply

with the rulings of the Seventh Circuit in Terrazas v. Haig,

653 F.2d 285 (7th Cir. 1981) and the Ninth Circuit in

Richards v. Secretary of State, 752 F.2d 1413 (9th Cir. 1985)

that an oath of renunciation, given at the time of an

expatriating act, establishes the "intent to expatriate"

requirement of Terrazas. These conflicts present compelling

reasons for review by this Court.

The Court has Already Definitively

Construed 8 U.S.C. §1481(c)

Respondents claim that the Court should not

review the Second Circuit’s application of §1481(c) to

diversity disputes. They argue that the ruling below was

justified under the "plain language" doctrine of statutory

interpretation. (Opp. Br. 7). Respondents entirely miss the

point. The purpose of this Court’s statutory interpretation is

Hs References to “Pet.” are to the Petition for a Writ of Certiorari.

References to “Opp. Br.” are to Respondents’ Brief in Opposition.

References to “A. ”* are to the Joint Appenda filed in the United States

Court of Appeals for the Second Circuit.

’

"to ascertain the congressional intent and give effect to the

legislative will" behind a statute. Philbrook v. Glodgett, 421

US. 707, 713 (1975). The plain language doctrine comes

into play only where this Court has never before interpreted

Congress’s intent in enacting a particular federal statute.

But the Court authoritatively determined the congressional

intent behind §1481(c) in Terrazas, more than a decade ago.

It found Congress’s "evident aim" in enacting §1481(c) to be

alteration of the holding in Nishikawa v. Dulles, 356 U.S. 129

(1958), that in expatriation proceedings the Government

bears the burden of proof by clear and convincing evidence.

444 US. at 264 n.8.

The Second Circuit ignored Terrazas’ clear

holding that $1481(c) was intended to affect only

expatriation proceedings. It extended the statute’s scope to a

field Congress did not intend to reach: diversity jurisdiction.

Thus, the guiding jurisprudential principle here is not "plain

language" but the obligation of lower federal courts to follow

this Court’s precedential interpretation of a federal statute.

See, e.g., Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd.,

460 U.S. 533, 535 (1983).*

“ Respondents also misstate the Court’s approach to Statutory

interpretation. Less than a month ago, the Court held that when it is

unlikely that Congress intended a statute to be applied literally, because

doing so would upset a long-established judicial principle, “the key to the

better interpretation” lies in reviewing the statute's legislative history.

Holmes v. Securities Investor Protection Corp., 60 U.S.L.W. 4225, 4227-8 (U.S.

Mar. 24, 1992). In Terrazas itself, the Court's interpretation of §1481(c)

rested on the clear statement of congressional intent contained in the House

Report.

As the Court recently explained in Ardestani v. ILN.S., 112 S. Ct. 515,

520 (1991), interpretation of a statute from "plain language” is rejected

“when a contrary legislative intent is clearly expressed,” as it is in this case.

Even in cases where the statutory language has been allegedly clear, this

Court has consulted legislative histories on numerous occasions to confirm

whether Congress in fact accurately reflected its intent in its words. Most

recently, see, ¢.g., King v. St. Vincent's Hospital, 112 S. Ct. 570, 575 n.14

(continued...)

Congress said nothing in the House Report in

any way suggesting that $1481(c) was intended to affect the

settled rule of Murarka v. Bachrack Bros, Inc., 215 F.2d 547

(2d Cir. 1954), under which an individual is deemed a citizen

of a foreign state for diversity purposes if so regarded by

that state. This failure to speak is most significant, for this

Court presumes that Congress does not intend a new statute

to change a long-standing rule of law if "the reports and

debates leading up to the [statute in question] contain not a

word of this concept. This silence is most eloquent, for such

reticence while contemplating an important and controversial

change in existing law is unlikely.". Edmonds v. Compagnie

Generale Transatlantique, 443 U.S. 256, 266-67 (1979). See

also Dewsnup v. Timm, 112 S. Ct. 773, 777 (1992) (where

nothing in legislative history indicated Congress intended a

change in prio: law, no such intention inferred); American

Hospital Ass'n v. N.L.R.B., 111 S. Ct. 1539, 1544 (1991)

(same). Respondents argue to the contrary (Opp. Br. 7-8),

but, not surprisingly, cite no authorities in support.

There should be no deviation from "the well-

settled principles of stare decisis applicable to this Court’s

construction of federal statutes," Runyon v. McCrary, 427

U.S. 160, 175 (1976); accord, Patterson v. McLean Credit

Union, 491 U.S. 164, 172-73 (1989) ("Considerations of stare

decisis have special force in the area of statutory

interpretation...."). See also Hilton v. South Carolina Public

Railways Com’n, 112 S.Ct. 560, 563-64 (1991). The Court

should thus review the decision beiow, which ignored both

Terrazas’ controlling interpretation of §1481(c) and the

*(...continued) |

(1991); Freytag v. CLR, 111 S. Ct. 2631, 2636 (1991); Tiobb v. Radloff, 111

S. Ct. 2197, 2200 (1991); Astoria Federal Savings and Loan Ass'n v. Solimino,

111 S. Ct. 2166, 2172 (1991).

principle that a statute will not be interpreted to repeal long-

standing rules of decision unless Congress makes clear its

intention to do so.

Terrazas and Richards Are Not

Distinguishable on Their Facts

The Court should also reach the purely legal

question of whether the Second Circuit’s opinion should

stand in light of the contrary rulings by the Seventh Circuit

in Terrazas v. Haig and the Ninth Circuit in Richards.

Respondents contend that Terrazas v. Haig and Richards are

factually distinguishable in that the individuals there did not

invoke a claim to United States citizenship after their

expatriating acts. (Opp. Br. 9-10). In fact, after Terrazas

swore an oath renouncing U.S. citizenship, he made two

statements that he did not intend to relinquish his rights as

an American citizen in taking Mexican nationality; these

assertions were given no weight in view of his explicit

renunciation of U.S. citizenship at the time of taking

Mexican nationality. See Terrazas v. Vance, 577 F.2d 7,9

(7th Cir. 1978); Terrazas, supra, 444 U.S. at 256

("[P]roceedings were instituted to determine whether

appellee had lost his citizenship by obtaining the certificate

of Mexican nationality. Appellee denied that he had....").

The Ninth Circuit also found that Richards’ oath of

renunciation of U.S. citizenship when he became a Canadian

citizen trumped his post hoc assertions that he did not have

the required specific intent. 752 F.2d at 1420-22.

Richards and Terrazas v. Haig undercut

respondents’ attempted fact distinction in another manner.

They emphasize that the relevant statements of renunciatory

intent are those made by the party at the time of his

expatriating acts. Richards, 752 F.2d 1413, 1420 n.5; Terrazas

v. Haig, supra, 653 F.2d at 288 (*[C]ircumstantial evidence

surrounding the commission of a voluntary act of

expatriation may establish the requisite intent to relinquish

citizenship"). See also Kahane v. Schultz, 653 F. Supp. 1486,

1493 (E.D.N.Y. 1987) (relevant evidence of intent is "the

conduct closest in time to the act"). In contrast -- and

further showing a true conflict between circuits -- the Second

Circuit ignored Mr. Rich’s unambiguous sworn declaration,

contemporaneous with his Spanish naturalization, that he

was renouncing his "USA nationality" (Pet. 76a), and

credited only evidence allegedly arising from nine months to

more than two years after his naturalization.*

ns Respondents’ brief grossly mischaracterizes much of the “evidence” of

petitioner’s intent in the record. There was no finding or evidence that Mr.

Rich took Spanish citizenship in 1982 to facilitiate flight from an anticipated

indictment. Cf Opp. Br. 6. The district court flatly refused to draw such an

inference from the facts when respondents’ counsel requested it. (A. 1489-

90). The argument is, moreover, irrelevant: “an alleged expatriate’s ‘specific

intent’ to renounce his citizenship does not turn on his motivation.”

Richards, supra, 7S2 F.2d at 1422.

Respondents’ claim that “Rich held himself out to the business

community in Switzerland by listing himself as such in the Commercial

Register of Zug” (Opp. Br. 6) conflicts with the district court’s conclusion

that Mr. Rich himself had no role in entering or updating entries in the

Register and that the Register was therefore not significant evidence on the

question of his intent to expatriate. (Pet. 23a).

The assertion that Rich claimed to be a United States citizen in Swiss

litigation in May 1983 (Opp. Br. 6-7) — while having no bearing on his intent

in August 1982, the important date — again distorts the record. Mr. Rich's

Swiss lawyer gave sworn evidence that Ae drafted the statement in reliance

on the entry in the Zug Commercial Register, and did not review the

representation with Mr. Rich before filing the complaint. (A. 1188).

Respondents never contradicted this evidence.

Finally, respondents’ assertion that Mr. Rich “claimed US. citizenship”

by alleged use of a U.S. passport (Opp. Br. 6-7) is simply wrong. Ar the

relevant time, issuance of a passport by the Department of State was not

evidence that the bearer was a citizen of the United States, Edsel! v. Mark,

179 F. 292, 293 (%h Cir. 1910). By the same token, travelling on a US.

passport was not then equivalent to a “claim” of US. atizenship.

a

The Court Should Review the "Dual Citizenship" Question

Respondents do not address the remaining legal

question -- how is a dual citizen to be treated in diversity

disputes -- except to argue that this Court should not decide

it because it was allegedly not raised below by petitioner.

(Opp. Br. 8-9). But that question was unequivocally reached

and decided by the court of appeals. (Pet. 5a-6a). Thus,

regardless of whether petitioner advanced the argument

below, that question is properly before this Court for review.

Cotton Petroleum Corp. v. New Mexico, 490 U.S. 163, 176 n.11

(1989); Jenkins v. Georgia, 418 U.S. 153, 157 (1974); Federal

Power Commission v. Sunray DX Oil Co., 391 U.S. 9, 49 n.45

(1968); Raley v. Ohio, 360 U.S. 423, 436 (1959).

Assuming arguendo that the court of appeals had

never ruled on this issue, it would still be properly raised on

this appeal due to the fundamental importance of federal

subject matter jurisdiction. As this Court has held,

"[w)hether diversity of citizenship exists may be questioned in

direct review for the first time in this Court." Glidden

Company v. Zdanok, 370 U.S. 530, 537 (1962). See also

Gainesville v. Brown-Crummer Investment Co., 277 U.S. 54, 59

(1928); Mansfield, C. & L. M. R. Co. v. Swan, 111 US. 379,

382 (1884). In fact, questions concerning the lack of subject

matter jurisdiction are so important that they may be raised

by the Court itself even if none of the parties below has

previously raised the issue. Bender v. Williamsport Area

School Dist., 475 U.S. 534, 541 (1986); Lake Country Estates,

Inc. v. Tahoe Regional Planning Agency, 440 U.S. 391, 399

(1979).

Conclusion

For the reasons stated above and in the Petition,

a writ of certiorari should issue to review the judgment of

the court of appeals.

Respectfully submitted,

ANDREW L. DEUTSCH

53 Wall Street

New York, New York 10005

(212) 858-5300

Counsel of Record and

Attomey for Petitioner

Marc Rich

Of Counsel:

MILGRIM THOMAJAN & LEE P.C.

Carol M. Fischer

Robert A. Meister