Reply Brief — Illinois Employers Insurance of Wausau v. Public Utility District No. 2

Supreme COUR, U:

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3) i UL 27 1992

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No. 91-2022 | assice oF THE CLERK |

——

A AT

In the Supreme Court

OF THE

United States

OCTOBER TERM, 1991

IN RE WASHINGTON PUBLIC POWER SUPPLY

SYSTEM SECURITIES LITIGATION

MDL-S5S51

ILLINOIS EMPLOYERS INSURANCE OF WAUSAU,

Petitioner,

VS.

PuBLic UTtiLity District No. 2 oF GRANT COUNTY,

Respondent.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

PETITIONER’S REPLY MEMORANDUM

DALE E. FREDERICKS

(Counsel of Record)

SHEPPARD, MULLIN, RICHTER & HAMPTON

Four Embarcadero Center, 17th Floor

San Francisco, California 94111

(415) 434-9100

Attorneys for Petitioner

Of Counsel:

MATTHEW R. Ross

SHEPPARD, MULLIN, RICHTER & HAMPTON

* Four Embarcadero Center, 17th Floor

San Francisco, California 94111

(415) 434-9100

Dated: July 27, 1992

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TABLE OF CONTENTS

See EERIE Sues cue tect aes eeane ss nares

REVIEW OF THIS MATTER IS NOT PREMATURE

BECAUSE THE NINTH CIRCUIT DISSOLUTION

CPUREEN. IE OUINM es Sone hk LAS RRS AW UAC Ad ERED obs

THE PETITION PRESENTS AN IMPORTANT UN-

RESOLVED FEDERAL JURISDICTIONAL QUES-

Li Pepe REET CS Tee TEE TT eT ET TERT Tre

RESPONDENTS OPPOSITION ADMITTEDLY

FAILS TO ADDRESS THE JURISDICTIONAL

Entre Cree CC ati Gee Tears conhens

TABLE OF AUTHORITIES

Federal Cases

Page(s)

Ferran, Alvarez, Olsen & Ottoboni v. Home Ins. Co.. 940

rise Sow (Fee Cie. 198 iia ieee 3,4

Hilton v. Braunskill, 481 U.S. 770 (1987) ........... 4

Pelleport Investors, Inc. v. Budco Quality Theatres, Inc.,

41 €.20 273 (9th Car. WORSE ok cua eens 3,4

Regis Associates v. Rank Hotels (Management) Ltd., 7

ona F420 193 (6h Ce. 1990) oe ase 3,4

Seedman v. U.S. Dist. Court, 837 F.2d 413 (9th Cir.

SPOOD ccc ck ceaven teu seus bee eee aa

Thermtron Products, Inc. v. Hermansdorfer, 423 U.S.

Soe NAD TOD) 6 os hie 2945 tne oe eee 3

Statutes

oe UO. § POEL, Ct OR... acai vee wee 3,4

Rules

United States Supreme Court Rule 11............... 2

No. 91-2022

In the Supreme Court

~ OF THE

United States

OCTOBER TERM, 199]

IN RE WASHINGTON PUBLIC POWER SUPPLY

SYSTEM SECURITIES LITIGATION

MDL-S5S51

ILLINOIS EMPLOYERS INSURANCE OF WAUSAL.

Petitioner.

VS.

Pustic Utitity District No. 2 o—r GRANT COUNTY.

Respondent.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

PETITIONER’S REPLY MEMORANDUM

INTRODUCTION

In its opposing brief, respondent Public Utility District No. 2 of

Grant County ignores the basis of this petition. The petition

presents a significant question of first impression as to whether,

during the pendency of an admittedly appealable remand order,

the remand order must be stayed. The answer to this question is

critical to the ability of the federal courts to maintain their own

diversity jurisdiction.

Kespondent ignores the pertinent grounds for granting certio-

rari, and has incorrectly characterized the questions presented by

this petition. Respondent’s attempts to convert the petition into a

request by petitioner Illinois Employers Insurance of Wausau

(“Wausau”) for review of the remand order itself or for

2

review of the merits of the underlying lawsuit must fail. This

Court should grant certiorari to preserve the vitality of federal

jurisdiction and to ensure that the federal courts are not divested

of their jurisdiction while hearing an appeal.

REVIEW OF THIS MATTER IS NOT PREMATURE

BECAUSE THE NINTH CIRCUIT DISSOLUTION

ORDER IS FINAL

Respondent argues that Supreme Court Rule 11 precludes

review of this question prior to the Ninth Circuit’s decision on

Wausau’s appeal on the merits of the District Court’s March 12,

1992 order (the “Remand Order,” attached as Appendix C to the

Petition For A Writ Of Certiorari To The United States Court Of

Appeals For The Ninth Circuit (“Petition”)).' Respondent's

unfounded argument ignores the fact thaf peittioner is not here

seeking review of the merits of the appeal of the Remand Order

presently pending before the Ninth Circuit. Rather, petitioner

seeks review of a Ninth Circuit order entered May 29, 1992 (the

“Dissolution Order,” attached as Appendix A to the Petition),

which concerns the narrow issue of whether the Remand Order

should be stayed pending appeal.’ Thus, the issue presented is not

premature; respondent’s invocation of Supreme Court Rule 11 is

necessarily misplaced.

THE PETITION PRESENTS AN IMPORTANT

UNRESOLVED FEDERAL JURISDICTIONAL QUESTION

In trying to minimize the importance of the Petition, respon-

dent wholly ignores the possible effects on petitioner of the

' Petitioner respectively refers the Court to the Petition, filed June 17,

1992, which contains the pertinent judicial orders at issue. The Petition

also contains a recitation of petitioner's corporate affiliations. No

amendments to that recitation are necessary.

* Reconsideration of that order was denied on June 5, 1992 (attached

as Appendix B to the Petition) and is now final. The Dissolution Order,

as acknowledged in the order itself, does not address the merits of

petitioner's appeal.

3

implementation of the Remand Order. As Wausau set forth in the

Petition, the Ninth Circuit has held that the implementation of an

order of remand apparently divests the federal court system of the

power to retrieve or otherwise influence the proceedings upon the

return of the file to the state court. Seedman v. U.S. Dist. Court,

837 F.2d 413 (9th Cir. 1988). However, the Ninth Circuit’s

actions in this matter are inconsistent with that pronouncement.

In this matter, the District Court remanded the case to the

Grant County, Washington, Superior Court on June 12, 1992.

Thus, while petitioner’s express right to appeal the Remand Order

(See, Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336,

345 (1976); Ferrari, Alvarez, Olsen & Ottoboni v. Home Ins. Co.,

940 F.2d 550, 553 (9th Cir. 1991); Pelleport Investors, inc. v.

Budco Quality Theatres, Inc., 741 F.2d 273, 276 (9th Cir. 1984);

Regis Associates v. Rank Hotels (Management) Ltd., 894 F.2d

193 (6th Cir. 1990)) technically remains, this right is of little

value if the remand cannot be voided. Thus, the Dissolution

Order must be reversed. For the same reasons, as a practical

matter, petitioner's right to federal jurisdiction grounded upon

removal (See, 28 U.S.C. § 1441, et seq.) is similarly jeopardized

if the Dissolution Order is allowed to stand. Review here is

necessary and proper. -

RESPONDENT'S OPPOSITION ADMITTEDLY FAILS TO

ADDRESS THE JURISDICTIONAL ANOMALY

Respondent admits that, “[a]lthough we do not address the

merits of Wausau’s position on the jurisdictional issue, we do note

that even if it is correct, review of the remand order is possibly

available through Supreme Court review of a subsequent judg-

ment in the case.” Respondent’s Brief in Opp., p. 7. On the

contrary, review of the Dissolution Order is required now, not at

the conclusion of the Ninth Circuit’s review of the merits of the

Remand Order, in order to clarify the jurisdictional anomaly

created by the Ninth Circuit.

Respondent, moreover, misconstrues petitioner's arguments.

First, respondent purports to restate petitioner’s position as fol-

lows: ““Wausau’s position is that the Ninth Circuit’s denial of a

4

stay in this case has effectively precluded review of any remand

order in any case where a remand is based on a non-jurisdictional

factor.” Respondent’s Brief in Opp., p. 4. This is not so. The

Petition is expressly concerned only with a collaterally appealable

Remand Order based on the interpretation of a forum selection

clause. The Dissolution Order has the practical effect of denying

petitioner this right to appeal.

Second, contrary to respondent’s assertions, the Petition does

not address, nor does it dispute, the validity of the factors applied

in assessing the grant of a stay pending appeal per Hilton \

Braunskill, 481 U.S. 770 (1987). The Petition deals qpeciticalls

with the Dissolution Order as it relates to petitioner's mght to

federal removal jurisdiction (See, 28 U.S.C. § 1441, et seq.) and

its night to appeal the Remand Order, as authorized by numerous

Ninth Circuit decisions. See, Ferrari, Alvarez, Olsen & Ottoboni \

Home Ins. Co., supra, 940 F.2d 550 (9th Cir. 1991); Pelleport

Investors, Inc. v. Budco Quality Theatres, Inc., supra, 74\ F.2d

273 (9th Cir. 1984); Regis Associates v. Rank Hotels (Manage-

ment) Ltd., supra, 894 F.2d 193 (6th Cir. 1990).

Third, respondent's assertion that the return of the case to the

Grant County Superior Court on June 12, 1992 moots the

Petition (Respondent's Brief in Opp., p. 2) is incorrect and

ignores the importance to petitioner of itS pending appeai of the

Remand Order. In short, if the Dissolution Order is not reconsid-

ered and reversed, a decision favorable to petitioner on the merits

of the appeal of the Remand Order itself may be mooted because,

under Seedman, the Ninth Circuit may be powerless to effectuate

a removal of the case from the state court back to the District

Court. Thus, the real issue presented in the Petition is not, as

respondent suggests, whether the Ninth Circuit properly applied

the standards of Hilton v. Braunskill, supra, 481 U.S. 770 (1987),

in dissolving the District Court’s April 15, 1992 stay order.

Rather, the issue is whether, as a practical matter, petitioner's

statutorily granted right to exercise federal removal jurisdiction

and its right to appeal the remand at issue wiil be allowed to fall

through jurisdictional “cracks” created by incongruous Ninth

Circuit decisions. (Compare, Ferrari, Alvarez, Olsen & Ottoboni

v. Home Ins. Co., supra, 940 F.2d 550 (9th Cir. 1991) and

5

Seedman v. U.S. Dist. Ct., supra, 837 F.2d 413 (9th Cir. 1988).)

This question should be addressed now to seal these cracks and

eliminate this jurisdictional vacuum.

Finally, petitioner seeks no relief concerning the merits of the

underlying insurance coverage dispute. To therefore Suggest, as

does respondent, that “this is just a simple insurance coverage

dispute” (Respondent’s Brief in Opp., p. 3) overlooks the impor-

tance and the nuances of petitioner’s jurisdictional argument.

CONCLUSION

The continued vitality of federal jurisdiction being at issue, a

writ of certiorari s'iuld be issued to review the order of the Court

of Appeals for the Ninth Circuit dissolving the stay of the District.

Court's Remand Order pending appeal. Respondent's request for

attorneys’ fees and double costs is inappropriate and should be

rejected.

Respectfully submitted,

? DALt E. FREDERICKS

(Counsel of Record)

SHEP! *RD, MULLIN, RICHTER & HAMPTON

Four Embartadero Center, 17th Floor

Sa‘ francisco, California 94111

(415) 434-9100

/Miorneys for Petitioner

Of Counsel: :

MATTHEW R. Ross

SHEPPARD, MULLIN, RICHTER & HAMPTON

Four Embarcadero Center, 17th Floor

San Francisco, California 941 |]

(415) 434-9100

Dated: July 27, 1992

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