# Reply Brief — South Dakota v. SDDS, Inc.

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386013_2261%3A3

## Record

- **Collection:** Supreme Court brief
- **Document type:** Reply Brief
- **Published:** January 1, 1998
- **Citation:** 523 U.S. 1118

## Text

| Supreme Court, U.s.
FIEED

APR 29 1993
| MERICE OF THR pan
Jn the Supreme Court of the Qnited States

OCTOBER TERM, 1997

No. 97-1378

STATE OF SOUTH DAKOTA; WILLIAM J. JANKLOW,
as Governor; JOYCE HAZELTINE, as Secretary of State;
and MARK BARNETT, as Attorney General,
i Petitioners
SDDS, INc.,
Respondent.

On Petition for a Writ of Certiorari to the
Supreme Court of South Dakota

PETITIONER’S REPLY BRIEF

MARK W. BARNETT CHARLES ROTHFELD
Attorney General Counsel of Record
ROXANNE GIEDD MONICA B. GOLDBERG
Office of the Attorney Mayer, Brown & Platt
General 2000 Pennsylvania Avenue, N.W.
500 East Capitol Washington, D.C. 20006
Pierre, SD 57501 (202) 778-0616
GON) <AE eae BARRY FRIEDMAN
MICHAEL J. SCHAFFER DEBORAH PATTERSON
SANDRA K. HOGLAND Wyatt, Tarrant & Combs
Davenport, Evans, Hurwitz Citizens Plaza
& Smith, LLP Louisville, KY 40202

513 South Main Avenue (502) 589-5235
Sioux Falls, SD 57101-1030 (212) 998-6384
(605) 336-2880

WILLIAM P. FULLER
Woods, Fuller, Shultz &
Smith, P.C.
300 South Phillips Ave.,
Suite 300
Sioux Falls, SD 57117-5027
(605) 336-3890

TABLE OF CONTENTS

Page
A. The Court Has Jurisdiction To Hear This Case .... 2
B. The Court Below Decided The Federal Question
Eo ss Wack 40's dS koe SR Se 6
C. The Eighth Circuit’s Decision In Lenetree IV Was
Void For Lack Of Jurisdiction ............... 7

D. A State Court May Not Be Bound By A Federal-
Court Decision Issued In Violation Of The Eleventh
Si OR eg a gr 9

il

TABLE OF AUTHORITIES

Page

Cases
Atascadero State Hosp. v. Scanlon, 473 U.S. 234

CER eka k ee ak ba el ea ee 4
Bullington v. Missouri, 451 U.S. 430 (1981) ........ 4
Cox Broadcasting Corp. v. Cohn, 420 U.S. 469

CR eRe 355s nek ae eee ead 4 ck eA were
Durfee v. Duke, 375 U.S. 106 (1963) ........... 9, 10
Ex parte Young, 209 U.S. 123 (1908) ........... 2, 8
Ford Motor Co. v. Department of Treasury,

Rae ee ee EE 8a koe ee ea ees 8
Goodyear Atomic Corp. v. Miller, 486 U.S. 174

RUE eho n ks kek Re RR Ee a ee 3, 6
Hudson Distributors v. Eli Lilly & Co., 377 U.S.

5 er rr ty er ae agree eee s ame 2,4
Jefferson v. City of Tarrant, 118 S. Ct. 481

CReeEE ap eee hawk EER RRL ee 5
Kalb v. Feuerstein, 308 U.S. 433 (1940) ......... 9-10
Local No. 48, Construction & General Laborers’

Union v. Curry, 341 U.S. 542 (1963) .......... 3
Mercantile Nat’l Bank v. Langdeau, 371 U.S. 555

CE re a es Re ee re ee 5, 6
Mississippi Power & Light Co. v. Mississippi ex rel.

Mone, GET Ua. 358 CAFR) a a wie se ee ae 6
North Dakota Pharmacy Board v. Snyder’s Stores, |

OG Se ee RED sia cw Ec oer e ks ox 4,5 |
Puerto Rico Aqueduct & Sewer Auth. v. Metcalf &

Gale. Bat, Foe SB. 198 Fd ak sc See et 4

|

ill
TABLE OF AUTHORITIES — Continued

Page

wees ¥. Ge, 300 1.8. 425 19 SL Ss 6
Republic Gas Co. v. State of Oklahoma, 334 U.S.

RNR EKA eo ae ce, 5
San Diego Gas & Elec. Co. v. City of San Diego,

One Se Od EE on oc ck a ee 5
United States v. United States Fidelity & Guar.

Ca, Fae Sos ee CA is No 2 9, 10
Statutes
Ba Oke Ss Ee ES SE ORO EEE RR 2
Miscellaneous
18 Moore’s Federal Practice

Ce RePEc o5 = Ser as ee Sa eae 10
RESTATEMENT (SECOND) OF CONFLICT OF LAWS

a IE To ok 5 ion pane oie Bors Ce ee 10
RESTATEMENT (SECOND) OF CONFLICT OF LAWS

Pa Ses a a ee Fe ee 10
RESTATEMENT, CONFLICT OF LAws § 451(2)

EE eed cee te ee oe. 9

R. Stern, E. Gressman, S. Shapiro, & K. Geller,
SUPREME COURT PRACTICE (7th ed. 1993) .... 3, 5,6

Respondent’s brief in opposition confirms the extraordi-
nary nature of the proceedings in this case. SDDS does not
deny that the Lonetree IV litigation was brought in federal
court for the sole purpose of imposing retroactive monetary
liability on the State of South Dakota. Respondent also does
not take issue with our observation that the questions pre-
sented in the petition about the propriety of giving force to the
Lonetree IV decision raise important and recurring issues of
federal law. And SDDS appears to recognize that the proceed-
ings here offer plaintiffs across the Nation a blueprint for
circumventing the Eleventh Amendment by converting actions
brought under Ex parte Young, 209 U.S. 123 (1908), into
vehicles for obtaining money damages from States. Because
the arguments that respondent does offer lack merit — and
because the holding below cannot be reconciled with this
Court’s decisions — further review accordingly is warranted.

A. The Court Has Jurisdiction To Hear This Case

While SDDS initially contends (at Opp. 9-12) that the
Court lacks jurisdiction to consider this case, the finality rule
upon which respondent relies has “not been administered in
such a mechanical fashion.” Cox Broadcasting Corp. v.
Cohn, 420 U.S. 469, 477 (1975). To the contrary, several
considerations make plain that this case falls squarely within
the category of proceedings in which “[t]he fact that separate
and unresolved issues are pending in the [state] courts and are
subject to ‘further proceedings’ therein * * * does not render
the judgment of the [state] Supreme Court on the issue here
considered * * * nonfinal or unappealable within the meaning
of 28 U.S.C. § 1257.” Hudson Distributors v. Eli Lilly &
Co., 377 U.S. 386, 389 n.4 (1964).

To begin with, the fourth category of judgments identified
as final in Cox includes those

where [1] the federal issue has been finally decided in the
state courts [2] with further proceedings pending in which
the party seeking review here might prevail on the merits
on nonfederal grounds, thus rendering unnecessary review
of the issue by this Court, and [3] where reversal of the

2

state court on the federal issue would be preclusive of any
further litigation on the relevant cause of action rather
than merely controlling the nature and character of, or
determining the admissibility of evidence in, the state
proceedings still to come. [4] In these circumstances, if a
refusal immediately to review a state court decision might
seriously erode federal policy, the Court has entertained
and decided the federal issue, which itself has been finally
determined by the state courts for purposes of the state
litigation.
420 U.S. at 482-483.

All of these factors are present here. (1) The court below
finally decided the dispositive federal questions: whether the
Eighth Circuit’s decision in Lonetree IV was void for lack of
jurisdiction, and whether that void federal judgment may bind
a state court in a suit for money damages against a State. (2)
The State could prevail on nonfederal grounds on remand,
precluding review of the federal issue.' (3) Reversal of the
decision below would effectively dispose of the litigation
since, as we have explained (at Pet. 6-7), the South Dakota
Supreme Court indicated that it was inclined to rule for the
State on the takings claim were it free to do so. (4) Delaying
review would “present a real danger of some irreparable injury
to federal policies or constitutional concerns” embodied in the
Eleventh Amendment (R. Stern, E. Gressman, S. Shapiro, &
K. Geller, SUPREME COURT PRACTICE 99 (7th ed. 1993)) by
requiring the State to stand trial at the behest of a federal
court. See generally Goodyear Atomic Corp. v. Miller, 486
U.S. 174, 179-180 (1988); Cox, 420 U.S. at 485-486; Local
No. 48, Construction & General Laborers’ Union v. Curry,
341 U.S. 542, 550 (1963).

Among other things, on remand the State will argue that it
should prevail on state-law grounds of judicial estoppel, failure to
provide statutory notice, and failure to mitigate damages.

3

In addition, entirely apart from the technical elements of
Cox’s fourth category, the nature of the Eleventh Amendment
principle at stake here requires immediate review. In response
to the Eighth Circuit’s judgment, the court below subjected the
State to burdensome remand proceedings that otherwise would
not have taken place. That injury to the State’s “dignitary
interests” (Puerto Rico Aqueduct & Sewer Auth. v. Metcalf &
Eddy, Inc., 506 U.S. 139, 146 (1993)) cannot be remedied in
the future. The “fundamental constitutional protection”
afforded by the Eleventh Amendment is designed both to
insure that “States not be unduly burdened by litigation” and
to “prevent the indignity of subjecting a State to the coercive
process of judicial tribunals’” (id. at 145, 146 (citation
omitted)) — and it is a crucial element of the immunity that
States may identify not only whether but where they may be
sued. Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 241
(1985). Delaying review thus would make vindication of the
State’s constitutional interests impossible. Cf. Metcalf &
Eddy, 506 U.S. at 146; Bullington v. Missouri, 451 U.S. 430,
437 n.8 (1981). And that is particularly so because the
federal-court injunction may effectively preclude the State
from raising federal issues relating to its liability in the future.
In such circumstances, immediate review plainly is in order.
See generally North Dakota Pharmacy Board v. Snyder’s
Stores, 414 U.S. 156, 163-164 (1973).

In arguing to the contrary, SDDS pointedly does not deny
that the elements of the various Cox tests are satisfied here.
Instead, it contends only that, under Cox, finality is absent
whenever additional federal questions may be addressed on
remand. Br. in Opp. 11. But the Court in Cox did not purport
to set down any such hard-and-fast rule. Nor could it have:
in at least one of the cases relied upon in Cox (420 U.S. at
484 n.11, citing Hudson Distributors), a federal issue was
prominently featured among those to be considered on
remand. See Hudson Distributors, 377 U.S. at 388 & n2

EO

4

(noting that case had been remanded to address Sherman Act
claim).

The other finality holdings cited by SDDS (at Br. in Opp.
10-11) are simply inapposite here. SDDS thus asserts that
there is no finality when a petition for certiorari presents the
question whether a taking has occurred in circumstances where
the case has been remanded for a determination of damages.
The cases cited by SDDS, however, explain that finality is
absent in such a situation “because ‘the federal constitutional
question embraces not only a taking, but a taking on payment
of just compensation. A state judgment is not final unless it
covers both aspects of that integral problem.’” San Diego Gas
& Elec. Co. v. City of San Diego, 450 U.S. 621, 633 (1980),
quoting Snyder’s Drug Stores, 414 U.S. at 163 (emphasis
added).? Here, in contrast, the petition raises no substantive
takings issue at all, instead presenting questions about the
binding effect of a federal judgment in a case seeking money
damages from a State. In this setting, the issue presented here
is “not enmeshed in the factual and legal issues comprising the
plaintiff's cause of action.” Mercantile Nat’l Bank v.
Langdeau, 371 U.S. 555, 558 (1963). See Cox, 420 U.S. at
484. The federal question offered in the petition thus is in no

2 Even in the circumstances of those cases, the Court did not state
an absolute rule rejecting finality whenever the petition presents a
takings issue and the amount of compensation remains
undetermined. See, e.g., Republic Gas Co. v. State of Ok'ahoma,
334 U.S. 62, 67 (i948) (emphasis added) (no finality in takings
case, “particularly when the property will not change hands until
after the award of compensation”); R. Stern, E. Gressman,
S. Shapiro, & K. Geller, supra, at 101 (emphasis added) (judgment
that taking occurred, when amount of compensation is not yet set,
“is not usually considered final, especially where the property will
not change hands until after the award of compensation”).

5

sense an “integral” part of the issues that remain to be decided
on remand.?

SDDS’s challenge to the Court’s jurisdiction therefore
lacks substance. “The critical federal question * * * has * * *
already been answered by the State Supreme Court.” Missis-
sippi Power & Light Co. v. Mississippi ex rel. Moore, 487
U.S. 354, 370 n.11 (1988). The legal issue that has been
decided — which relates to the binding effect of the federal-
court judgment — involves a “separate and independent
matter” from the questions to be considered on remand.
Langdeau, 371 U.S. at 558. And any delay in review will
“seriously erode federal policy” (Goodyear Atomic Corp., 486
U.S. at 179) and irreparably damage the State’s dignitary
interests. The judgment below accordingly is “ripe for
review.” Mississippi Power, 487 U.S. at 370 n.11.

B. The Court Below Decided The Federal Question
Presented Here

SDDS’s next contention (at Br. in Opp. 12-14) — that the
federal issue was not raised or passed upon below — is
wholly insubstantial. In fact, the state supreme court expressly
decided the question presented here. That court found that the
Eighth Circuit “had jurisdiction over th[e] federal constitu-
tional matter presented in Lonetree IV.” Pet. App. 12a. And
the court below explicitly endorsed and quoted the Eleventh
Amendment analysis used in Lonetree IV in support of the

* Jefferson v. City of Tarrant, 118 S. Ct. 481 (1997), cited by
SDDS at Br. in Opp. 9-10, also is inapposite. Resolution of the
federal question would not have disposed of that case; because the
petitioners also had state-law claims that would have to be resolved
on remand in any event, the case “present[ed] the typical situation
in which the state courts have resolved some but not all of the
petitioners’ claims.” 118 S. Ct. at 487. And unlike the South
Dakota court’s holding here, the interlocutory decision in Jefferson
did not threaten significant frustration of federal policies.

6

state court’s holding that it was “bound by the recent judg-
ment of the Eighth Circuit.” Ibid. See id. at 12a-13a. In these
circumstances, there of course “can be no question as to the
proper presentation of a federal claim when the highest state
court passes on it.” Raley v. Ohio, 360 U.S. 423, 436-437
(1959). See R. Stern, E. Gressman, S. Shapiro, & K. Geller,
supra, at 131 (citing cases).

While that is enough to dispose of SDDS’s argument, it
may be added that respondent exhibits a certain gall in
faulting the State for failing to submit argument on the
significance of Lonetree IV. While SDDS blithely chides the
State because it “declined even to file a brief or submit oral
argument” on the point (Br. in Opp. 6; see id. at 12-13), the
State made clear that it took that course — and that it
refrained from presenting its Eleventh Amendment arguments
in a rehearing petition — because it believed that it was
constrained by the federal-court injunction to withhold any
argument bearing on its takings liability. See Appellees’
Motion to Remove Proceeding From Oral Argument Calendar
(Feb. 26, 1997); Pet. for Rehearing 1. And far from suggest-
ing that the State could make supplemental argument on the
point, SDDS threatened the State with contempt sanctions if
it failed to withdraw the brief that it had filed in the South
Dakota Supreme Court prior to the decision in Lonetree IV.
See Letter to Attorney General Mark W. Barnett from Edward
T. Lyons, Jr. (May 22, 1997) (reprinted in the addendum to
this brief). The State therefore can hardly be thought to have
surrendered its rights by failing to argue the issue below.

C. The Eighth Circuit’s Decision In Lonetree IV Was
Void For Lack Of Jurisdiction

It is perhaps understandable that SDDS is so imaginative
in its procedural arguments against review, because its defense
of the judgment below is entirely unavailing. In arguing that
the federal judgment found binding by the South Dakota court
was not void, SDDS’s principal contention is that the State

an ee —- a - é & = Seas ies:

7

waived its Eleventh Amendment immunity. This assertion,
however, rests on a remarkable misreading of the record.
SDDS premises its waiver argument on § 24 of the state
defendants’ answer to SDDS’s federal complaint. See Br. in
Opp. 4, 15-16. But that paragraph states:

As a{n] * * * affirmative defense, Defendants assert that
Plaintiff's claim fails on the doctrine of sovereign immu-
nity and, to the extent it can be construed to involve a
claim for monetary relief, is barred by the Eleventh
Amendment to the United States Constitution.

Far from being a case in which “the State of South Dakota
consented” to suit (Br. in Opp. 14 (emphasis in original)), the
State thus asserted its immunity to the fullest degree possible.‘

Nor does SDDS obtain any additional mileage from its
observation (at Br. in Opp. 4-5, 16) that the state defendants
participated in the Lonetree III litigation challenging the
constitutionality of the Referendum. The State has never
denied that Lonetree III, as a suit seeking prospective relief
against an ongoing (asserted) violation of federal law, could
proceed against state officials under the doctrine of Ex Parte
Young. But that cannot serve to justify the Lonetree IV
proceeding, which was commenced long after any violation of
federal law had ended, which was directed against the State
rather than state officials, which was brought for the sole

purpose of obtaining monetary relief against the State — and

CP ee,

) * In addition, SDDS is wrong in contending (at Br. in Opp. 15-

16) that a State’s appearance to defend a suit on the merits bars the
State from asserting its Eleventh Amendment immunity at a later
point in the litigation. In fact, it has long been settled that the
Amendment may be raised at any time — and, indeed, that
immunity may be asserted for the first time in this Court. See. e.g.,
Ford Motor Co. v. Department of Treasury, 323 U.S. 459, 467
(1945).

8

in which the State expressly asserted its Eleventh Amendment
immunity. See Lonetree IV, 97 F.5d at 1032.

SDDS’s related argument (at Br. in Opp. 17-19) that the
Lonetree IV injunction is permissible “ancillary” relief is
flawed for similar reasons. The Eleventh Amendment
decisions cited by SDDS in support of this proposition all
involved circumstances in which the challenged relief was
necessary to terminate an ongoing violation of federal law.
But that manifestly is not the case here. The decision in
Lonetree III — which is hardly rendered “precatory” (Br. in
Opp. 19) under the State’s theory — invalidated the Referen-
dum and terminated any violation of federal law. The
Lonetree IV litigation concededly was intended simply to
obtain monetary relief from the State, and no decision of this
Court justifies such a proceeding under the Eleventh Amend-
ment.

D. A State Court May Not Be Bound By A Federal-
Court Decision Issued In Violation Of The Elev-
enth Amendment

SDDS also advances no substantial reason to deny review
when it contends that the court below was bound by the
Eighth Circuit’s judgment. Respondent does not even attempt
to defend the state court’s holding that it was bound by the
Eighth Circuit’s injunction, maintaining instead that the
decision below was based exclusively on res judicata and
collateral estoppel principles. Br. In Opp. 21. Yet SDDS
cannot show that application of those principles in this case is
reconcilable with this Court’s decisions — and it entirely fails
to establish that the Eleventh Amendment ever permits use of
a federal court judgment to bind a State in an action for

money damages.

To the contrary, SDDS acknowledges (at Br. in Opp. 20)
this Court’s recognition that “the general rule of finality of
jurisdictional determinations is not without exceptions” and
may be overcome by “[d]octrines of federal pre-emption or

.
Ne ie ol Ce ee rn

9

sovereign immunity.” Durfee v. Duke, 375 U.S. 106, 114
(1963), citing United States v. United States Fidelity & Guar.
Co, 309 U.S. 506 (1940), Kalb v. Feuerstein, 308 U.S. 433
(1940), and RESTATEMENT, CONFLICT OF LAWS § 451(2)
(Supp. 1948). And SDDS’s attempt to distinguish United
States Fidelity & Guar. and Kalb have no merit at all.
Respondent’s principal argument (at Br. in Opp. 20) appears
to be that the state defendants’ failure to file a petition in this
Court challenging the Lonetree IV decision makes the doctrine
of United States Fidelity & Guar. and Kalb inapplicable here.
But that plainly is not so: the decisions that were denied res
judicata and collateral estoppel effect in those cases also had
not been challenged on direct appeal. See United States
Fidelity & Guar., 309 U.S. at 510; Kalb, 308 U.S. at 435-436
(defendant did not seek to stay or otherwise challenge
judgment of foreclosure that later was collaterally attacked).

SDDS’s remaining contentions are equally insubstantial.
It attempts (at Br. in Opp. 20-21) to distinguish United States
Fidelity & Guar. on the ground that (in asserted contrast to
this case) the sovereign immunity claim there had not been
raised and litigated in the court in which judgment first was
entered. We explained in the petition (at 20 n.1 1), however,
that the immunity issue may in fact have been litigated in the
first forum in United States Fidelity & Guar., and that this
Court evidently did not regard the matter as significant; SDDS
makes no response to that point. In addition, as we also noted
in the petition (at 19), both the RESTATEMENT (SECOND) OF
CONFLICT OF LAws (hereinafter “RESTATEMENT”) (at § 96,
cmt. a) and leading commentators (see 18 Moore’s Federal
Practice § 130.04[3] (3d ed. 1997)) read United States Fidelity
& Guar. as an exception to the usual rule that gives res
judicata effect to a “finding by a court that it has * * *
jurisdiction over the defendant.” RESTATEMENT § 96 cmt. a
(emphasis added). Again, SDDS makes no response. The
rule of United States Fidelity & Guar. thus generally is
understood to apply in cases where the issue of jurisdiction

10

has been litigated; at worst, the issue whether sovereign
immunity strips a judgment of collateral effect in such
circumstances is an open question that should be settled by
this Court. Cf. Durfee, 375 U.S. at 114 & n.12.

SDDS’s discussion of Kalb (at Br. in Opp. 21), mean-
while, is simply mystifying. Respondent reports that Kalb
“merely held that the state court proceedings giving rise to the
appeals could be collaterally attacked in the federal bankruptcy
court.” In fact, the collateral attack in Kalb occurred in state
court. But more fundamentally, SDDS evidently acknowl-
edges the holding in Kalb that a determination of jurisdiction
need not be given res judicata or collateral estoppel effect.
The Court thus explained in Kalb that the lack of jurisdiction
in the court issuing the first judgment rendered its decisions
“nullities subject to collateral attack,” and that this was so
“whether the issue of jurisdiction was actually contested in the
[first] Court, or whether it could have been contested.” 308
U.S. at 439, 444 (footnote omitted). As we explained in the
petition (at 20), Kalb thus stands for the proposition that,
while a court’s determination of its subject matter ordinarily
is not subject to collateral challenge, a state court may not
apply that “rule of res judicata when to do so would conflict
with an important federal policy.” RESTATEMENT § 97, cmt.
c. We also noted that the Eleventh Amendment states just
such a federal policy. Again, SDDS makes no response to
these points. Review of the decision below therefore plainly
is in order.

For the foregoing reasons and the reasons stated in the
petition, the petition for a writ of certiorari should be granted.

Respectfully submitted.

— a

MARK W. BARNETT
Attorney General
ROXANNE GIEDD
Office of the Attorney
General
500 East Capitol
Pierre, SD 57501
(605) 773-3215

MICHAEL J. SCHAFFER
SANDRA K. HOGLAND
Davenport, Evans, Hurwitz
& Smith, LLP
513 South Main Avenue
Sioux Falls, SD 57101-1030
(605) 336-2880

WILLIAM P. FULLER
Woods, Fuller, Shultz &
Smith, P.C.
300 South Phillips Ave.,
Suite 300
Sioux Falls, SD 57117-5027
(605) 336-3890

APRIL 1998

11

CHARLES ROTHFELD
Counsel of Record
MONICA B. GOLDBERG
Mayer, Brown & Platt
2000 Pennsylvania Avenue, N. W.
Washington, D.C. 20006
(202) 778-0616

BARRY FRIEDMAN
DEBORAH PATTERSON
Wyatt, Tarrant & Combs
Citizens Plaza
Louisville, KY 40202
(502) 589-5235

(212) 998-6384

ADDENDUM

May 22, 1997

VIA FACSIMILE (605) 773-4106
AND U.S. MAIL

Hon. Mark W. Barnett

Attorney General

State of South Dakota

500 East Capitol

Pierre, SD 57501-3215

Re: SDDS. Inc., v. State of South Dakota, et. al.
South Dakota Supreme Court, No. 19555

Dear Attorney General Barnett:

The State Defendants’ motion requesting the Supreme Court
to remove this case from the oral argument calendar explicitly
acknowledged that the Eighth Circuit’s decision in In re SDDS
Inc., 97 F.3d 1030 (8th Cir. 1996), together with the federal
court injunction entered thereon, effectively “constrain” the
State Defendants from presenting any “meaningful” oral
argument in the case. This is understandable, of course, because
the precise arguments that the State Defendants had previously
used in this case to resist liability for the consequences of the
unconstitutional referendum are now foreclosed by the decision
and injunction entered in the federal courts.

But simply refraining from reasserting these arguments orally
is not enough. In order to comply with the injunction, SDDS
believes that it was also incumbent on the State Defendants to
withdraw the brief in which these same arguments remain on
display in this case. SDDS expressly questioned why this had
not been done — and whether the failure to do so would violate
the injunction — when it responded in writing to the State
Defendants’ motion to dispense with oral argument. This
cautionary indication has been ignored. The State Defendants

Hon. Mark W. Barnett
May 22, 1997
Page 2

have instead apparently determined to take their chances that in
possible further proceedings in federal court, their token
compliance of foregoing oral argument will be deemed suffi-
cient to avoid any imposition of sanctions. SDDS disagrees and
respectfully suggests that the State Defendants are proceeding
at considerable peril.

In the event that its prior admonition was not understood,
SDDS wants at this time to make it unmistakably clear to the
State Defendants that, as SDDS understands the mandate and
injunction of the federal courts, the brief of the State Defendants
should be withdrawn immediately.

Very truly yours,

Edward T. Lyons, Jr.
Attorney for SDDS, Inc.

cc: SDDS, Inc.

---

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