# Reply Brief — J.P. Morgan Chase & Co. v. Retirement System of Alabama

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_2139%3A4

## Record

- **Collection:** Supreme Court brief
- **Document type:** Reply Brief
- **Published:** January 1, 2004
- **Citation:** 540 U.S. 1141

## Text

FILED |

No. 03-419 |

IN THE

Supreme Court of the United States

J.P. MORGAN CHASE & CO., et al.,
Petitioners,
v.
THE RETIREMENT SYSTEMS OF ALABAMA, et al.,

Respondents.

ON PETITION FOR.A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT

REPLY BRIEF

JAY B. KASNER
Counsel of Record
JOHN L. GARDINER
Cyrus Amir-Mokri
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
Four Times Square
New York, NY 10036
(212) 735-3000

Counsel for Petitioners

184467 cr

COUNSEL PRESS
(800) 274-3321 + (800) 359-6859

CORPORATE DISCLOSURE STATEMENT

The corporate disclosure statement for Petitioners was
set forth at page iii of their Petition for a Writ of Certiorari,
and there are no amendments to that statement.

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TABLE OF CONTENTS

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I. The Question Was Presented and Decided
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II. The Jurisdiction-Stripping Provisions of
28 U.S.C. §§ 1334(d) and 1452(b) Violate the

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Other Authorities:

H.R. Rep. No. 95-595 (1977), reprinted in 1978
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]

INTRODUCTION

The Petition raises the highly important question whether
Congress has the power to foreclose this Court’s ability to review
classes of decisions by inferior Article III courts based on the
legal content of those decisions. Petitioners submit that such
foreclosure violates the Exceptions Clause, U.S. Const. art. II],
§ 2, cl. 2. The statutes at issue, 28 U.S.C. §§ 1334(d) and
1452(b), completely withdraw from this Court’s scrutiny district
court decisions to abstain from federal bankruptcy jurisdiction,
including where, as here, the district court justifies abstention
on grounds of comity with state interests. Thus, the statutes not
only strip this Court of the appellate jurisdiction the Constitution
secures to it, they do so in an area of law that demands sensitive
balancing of state and federal interests in decisions governing
the exercise of federal jurisdiction.

The urgency of review here is further underscored by the
statutes’ real world consequences. This Court, through Justice
Story, once explained that it was essential that one tribunal finally
and conclusively decide federal questions to ensure uniformity
in the interpretation of federal law. See Martin v. Hunter s Lessee,
14U.S. (1 Wheat.) 304, 347-48 (1816). The WorldCom litigation
is an example of the doctrinal confusion and discordant rulings
that Justice Story’s opinion decries. The absence of appellate
review over bankruptcy abstention decisions has spawned
divergent case law at the district court level, with some district
courts (such as the district court below) making substantial
departures from settled abstention doctrine. These discordant
rulings result not from application of the same legal principles
to variant facts, but from disagreement over the substance of
the legal principles themselves.

Respondents’ rejoinder is diversionary. In discussing the
criteria for granting review under this Court’s Rule 10, they
principally assert that this Court should decline review because
there is no circuit conflict. (See Brief in Opposition (“Opp. Br.”’)
at 4-7.) But Petitioners never relied on the logic of circui*

2

conflicts to justify this Court’s review. Indeed, such a showing
would be impossible because to date, aside from the Eleventh
Circuit Court of Appeals, no other court has ever ruled on the
question here presented. '

Respondents thus fail to counter Petitioners’ showing that
the question presented is in and of itself important. Nor can
they dispute that abstention decisions in the district courts are
discordant, a fact starkly demonstrated by the WorldCom
litigation.? Respondents’ at best meager showing confirms that
a grant of certiorari in this case is warranted.

I. The Question Was Presented and Decided Below

Respondents contend that the question presented in the
Petition “was not before or decided by the United States District
Court below or by the Court of Appeals.” (Opp. Br. at 1.)
The statement concerning the court of appeals is demonstrably
false; the statement about the district court is true, but irrelevant.

The district court could not have decided the question
presented in the Petition because a challenge to the
constitutionality of a statute that bars appellate review is not

1. In this vein, Respondents cite a string of circuit decisions
(see Opp. Br. at 6-7) to suggest that the cases unanimously stand
opposed to Petitioners’ position. But none of the cited cases addressed
the question presented by the Petition. These cases held unremarkably
that 28 U.S.C. § 1334(d) and/or 28 U.S.C. § 1452(b) bar appellate review
of abstention decisions.

2. Respondents remark that “the Petition fail[s] to cite any
28 U.S.C. § 1334(c) and (d) statutory abstention decision of this Court,
of a Court of Appeals, or of the highest court of a state, which is contrary
to the decision of the District Court and of the Eleventh Circuit.”
(Opp. Br. at 5-6.) The Petition amply demonstrates that the district court’s
opinion is at odds with abstention principles and that it clashes with
other district court opinions. Otherwise, a search for appellate opinions
criticizing the district court’s decision would be futile, given the statutory
bar on appeals. Similarly, the Eleventh Circuit’s decision does not conflict
with any other because, as explained, no other case addresses the
Exceptions Clause question.

3

ripe until the district court has entered a final order. See Doleac
ex rel. Doleac v. Michalson, 264 F.3d 470, 492 (Sth Cir. 2001).
The first opportunity to raise the question, therefore, was before
the court of appeals, which is precisely what Petitioners did.
That Petitioners raised an Exceptions Clause challenge before
the Eleventh Circuit cannot in good faith be disputed. It is
unnecessary even to take the modest step of looking at the record
below because Respondents’ brief confirms this fact. The lengthy
passage Respondents quote from the United States’ brief in the
court of appeals in part states: “Defendants’ [i.e., Petitioners’ ]
sole constitutional complaint is that Congress exceeded its
Exception Clause power by shielding abstention orders from
Supreme Court review.” (Opp. Br. at 3 (emphasis in original).)

There also can be no question that the court of appeals
decided the Exceptions Clause question. Citing Felker v. Turpin,
518 U.S. 651 (1996), the court of appeals first held that it had
jurisdiction to determine the constitutionality of 28 U.S.C.
§§ 1334(d) and 1452(b).° It then held that the statutes were
constitutional on the authority of Ex parte McCardle, 74 U.S.
(7 Wall.) 506 (1869), and Ex parte Yerger, 75 U.S. (8 Wall.) 85
(1869), both of which were Exceptions Clause cases. If the court
of appeals was not deciding the Exceptions Clause issue, there
would have been no reason for it to refer to these decisions.

In the face of this clear record, Respondents attempt to
obfuscate the issue by asserting that the Eleventh Circuit
addressed only the constitutionality of the statutes’ bar on
appellate review by courts of appeals. (See Opp. Br. at 2-3.)
Here, Respondents conjure a “‘severability” hypothesis to state
that the court of appeals could have ruled (and in fact did rule)

3. Therefore, when the court of appeals stated that it lacked
jurisdiction to decide whether the district court’s abstention was proper
(see Opp. Br. at 1-2), it was merely stating that it had already concluded
that there was no Exceptions Clause violation and that the statutory bar
on appellate review of abstention-based remand orders remained in force.
Respondents’ contrary gloss misapprehends the court of appeals’
decision.

4

on the constitutional validity of the prohibition on its review
without actually reaching the legitimacy of the foreclosure of
this Court’s appellate jurisdiction. (See id. at 3.) This argument
is fundamentally flawed because, as explained, the Eleventh
Circuit actually ruled on the Exceptions Clause question and,
therefore, on the validity of the statutes’ prohibition on review
by this Court. In all events, the distinction Respondents seek to
draw is at best metaphysical because, in the context of
bankruptcy abstention orders, foreclosure of appellate
review in the courts of appeals itself would result in an
Exceptions Clause violation. The reason stems from the manner
in which Congress has regulated the appellate jurisdiction of
the federal courts.

As a general matter, for cases coming through the federal
system, the certiorari or certification jurisdiction of this Court
is properly invoked only with respect to cases in the courts of
appeals. See 28 U.S.C. § 1254. The courts of appeals, in turn,
have jurisdiction to review final decisions of the district courts
“except where a direct review may be had in the Supreme Court.”
28 U.S.C. § 1291. Therefore, litigants may not as a general
matter repair to this Court upon disappointment with a result in
a district court. Direct appeal from a district court to the Supreme
Court must be specifically authorized by statute. Such statutes
exist to be sure, see 28 U.S.C. § 1253 (permitting direct appeals
to this Court from orders granting or denying injunctions in
civil actions required by an Act of Congress to be heard by a
district court of three judges); 28 U.S.C. § 2284 (requiring a
district court of three judges to hear actions challenging the
constitutionality of congressional district apportionments);
47 U.S.C. § 555(c) (constitutional challenges to 47 U.S.C. § 534
or 535 to be heard by a district court of three judges), but there
is none that permits direct review in the circumstances of this
case.

Thus, with respect to the statutes at issue here, to bar courts
of appeals from reviewing abstention orders is tantamount to
withdrawing such orders from this Court’s scrutiny, which

5

amounts to an Exceptions Clause violation. Thus, Respondents’
“severability” hypothesis is meritless even on its own terms.

II. The Jurisdiction-Stripping Provisions of 28 U.S.C.
§§ 1334(d) and 1452(b) Violate the Exceptions Clause

Respondents offer miscellaneous assertions attacking the
substance of Petitioners’ Exceptions Clause arguments.
The assertions are mostly irrelevant and none has merit.

1. Respondents claim that Petitioners argue that 28 U.S.C.
§§ 1334(d) and 1452(b) “forbid all access to review of this case”
(Opp. Br. at 7) in this Court. This is a severe overstatement.
Petitioners never have suggested that issues properly raised and
preserved in a remanded action cannot be the subject ofa petition
for certiorari under 28 U.S.C. § 1257. Petitioners point only to
what §§ 1334(d) and 1452(b) actually foreclose, which is review
of absiention and remand decisions by federal district courts.
This distinction is critical because abstention orders do not form
part of the remanded action and, therefore, contrary to
Respondents’ supposition, cannot be the subject of a certiorari
petition under § 1257 from the final decision of a state court of
last resort. (See Opp. Br. at 7).

Respondents similarly misapprehend the relevance of
mandamus and the Waco doctrine. The statutory language, which
forbids review “by appeal or otherwise” of decisions to abstain
or not to abstain, encompasses mandamus. See Jn re Federal-
Mogul Global, Inc., 300 F.3d 368, 388-89 (3d Cir. 2002),
cert. denied, 537 U.S. 1148 (2003); Jn re United States Brass
Corp., 110 F.3d 1261, 1266 (7th Cir. 1997) (Posner, J.).
Mandamus review is possible when the appeal does not request
substantive review of the abstention decision but only a
determination whether the entry of an abstention-based remand
amounted to an abuse of judicial power. See Allied signal
Recovery Trust v. Allied Signal Inc., 298 F.3d 263, 270 (3d Cir.
2002); In re Dow Corning Corp., 113 F.3d 565, 569 (6th Cir.),

6

cert. denied, 522 U.S. 977 (1997). Petitioners, however, seek
substantive review of the remand order.* The Waco doctrine is
inapt because it only permits review of remand orders ta the
extent they resolve substantive merits issues that would have
preclusive effect on the post-remand litigation in state court.
See City of Waco v. United States Fid. & Guar. Co., 293 USS.
140, 143 (1934). This case obviously does not implicate the
Waco doctrine.

2. The Petition does not raise a question concerning the
Supremacy Clause. The discussion in Section III (see Opp. Br.
at 10-11) is irrelevant.

3. Respondents next contend that because the night to
removal is a statutory procedural right created by Congress, it
is “subject to the established rule that there is no vested
constitutional right to a mode of procedure.” (Opp. Br. at 13)
Respondents again misapprehend Petitioners’ position. As the
passage Respondents quote from Doleac reveals, the cases that
address whether there is a “vested constitutional nght to a mode
of procedure” all concern due process. (See id.) This is not a
due process case, it is an Exceptions Clause case. Rights afforded
to individuals by due process are not coextensive with the
limitations imposed on Congress by the Exceptions Clause.
Different constitutional provisions that are addressed to different
concerns are analyzed differently. See Crowell v. Benson, 285
U.S. 22, 45-54 (1932) (distinguishing the analysis of due process
and Article III-based claims, even though they arose from the
same set of core facts).

4. The suggestion that Thermtron Products, Inc. v. Hermansdorfer,
423 U.S. 336 (1976), overruled in part by Quackenbush v. Allstate
Insurance Co., 517 U.S. 706 (1996), somehow may permit review here
is also mistaken. That decision construed 28 U.S.C. § 1447(d) — not
28 U.S.C. § 1334(d) as Respondents contend (see Opp. Br. at 8) — and
concluded that substantive review of remand decisions is forbidden
unless remand is based on an extra-statutory factor. See Thermtron
Prods., 423 U.S. at 351-52. By its terms, the principle underlying
Thermtron Products is inapplicable here, where Petitioners seek
substantive review of the abstention order.

7

Respondents are also wrong to assert that, by virtue of its
power to create a statutory right to removal, Congress has
“plenary power” to limit appeals to this Court. (See Opp. Br. at
11-12.) The argument proves too much. Congress has plenary
authority to create statutory causes of action and procedural rules
in all areas in which it legislates. Yet one cannot plausibly argue
that Congress has “plenary power” to withdraw the Supreme
Court’s appellate jurisdiction in al/ of these instances.
Recognition of such authority would allow Congress to
withdraw completely this Court’s appellate jurisdiction and thus
give currency to the observation that the “Exceptions will
swallow the rule.” As in other areas of constitutional law, the
“greater” power here does not include the “lesser.” See, e.g.,
Republican Party of Minnesota v. White, 536 U.S. 765, 788
(2002). Just because Congress may have plenary power to create
procedural rights does not confer upon it absolute license to
withdraw them from this Court’s appellate jurisdiction once they
have been created.

4. Turning to the Exceptions Clause (see Opp. Br. at 14),
Respondents make two basic assertions. First, they contend that
the history of Congress’s legislation shows that it has had plenary
power over this Court’s appellate jurisdiction. (See id. at
15-16.) Second, they posit that this Court itself has held
that Congress enjoys this sweeping power. (See id. at 16-20.)
Both contentions are incorrect.

So long as it remains the province of the judiciary “to say
what the law is,” Marbury v. Madison, 5 U.S. (1 Cranch) 137,
177 (1803), particularly on the subject of the Constitution, Acts
of Congress must give way. See id. at 176 (“The powers of the
legislature are defined, and limited; and that those limits may
not be mistaken, or forgotten, the constitution is written.”);
see also United States v. Morrison, 529 U.S. 598, 616 (2000)
(“Under our written Constitution, however, the limitation of
congressional authority is not solely a matter of legislative
grace.”). The mere fact that legislation has survived for many
years does not immunize it from constitutional scrutiny.

8

See, e.g., INS v. Chadha, 462 U.S. 919, 941-42 & n.13, 959
(1983) (striking down legislative veto, which Congress had been
enacting for fifty years). The history of Congressional
enactments cannot, therefore, settle the issue.

In all events, historical trends support Petitioners’ reading
of the Exceptions Clause. For instance, Respondents mistakenly
characterize the grant to this Court in 1802 of jurisdiction in
federal criminal cases “where the judges of the circuit court
were divided on a question of law” (see Opp. Br. at 15) as an
exercise of the Exceptions power. In truth, this was an exercise
of Congress’s power to regulate this Court’s appellate
jurisdiction, see U.S. Const. art. III, § 2, cl. 2, and this particular
exercise comports perfectly with Petitioners’ understanding of
the Exceptions Clause, because it preserves this Court’s ability
to ensure uniformity m federal criminal law.’ The other evidence
adduced by Respondents, construed most favorably to their
stance, bespeaks a constant expansion of this Court’s appellate
jurisdiction over time. This supports the view that there in fact
is a developing consensus that all questions of federal law
decided by Article III courts must in some way have the
opportunity to reach this Court.

Respondents’ reading of case law (see Opp. Br. at 18-19)
was anticipated in the Petition. As explained there, the broad
pronouncements in some of this Court’s decisions must be
tethered to the controlling facts therein presented. Otherwise,
taken to their logical conclusion, those pronouncements would
recognize a plenary power to control this Court’s appellate
jurisdiction that Congress clearly does not possess, and cannot

5. Whereas an “exception” completely forecloses this Court’s
ability to review a case or question, “regulation” merely affects the mode
in which the case may reach this Court’s docket and the
manner in which this Court may exercise its appellate jurisdiction.
Thus, contrary to Respondents’ supposition (see Opp. Br. at 16),
Congress’s provision for certiorari jurisdiction does not constitute an
“exception” but a “regulation,” because such jurisdiction does not at all
forbid this Court’s review of any classes of cases.

9

possess if this Court properly is to fulfill its constitutional
responsibility of ensuring the uniformity in interpretation of
federai law.°

5. Respondents’ assertion that neither Mangus v. Miller,
317 U.S. 178 (1942), nor Thompson v. Magnolia Petroleum
Co., 309 U.S. 478 (1940), “involved abstention in the context
of bankruptcy-related cases” (see Opp. Br. at 20-21) is frivolous.
The legislative history of 28 U.S.C. § 1334(c)(1) — the
bankruptcy abstention statute here relevant — identifies the
paradigm for abstention as follows: “‘The [discretionary
abstention]. subsection recognizes the exigencies that arise in
such cases as Thompson v. Magnolia Petroleum, 309 U.S. 478
.. (1940), in which it is more appropriate to have a State court
hear a particular matter of State law.”” Jn re Pan American Corp.,
950 F.2d 839, 846 (2d Cir. 1991) (alteration in original) (quoting
H.R. Rep. No. 95-595, at 446 (1977), reprinted in 1978
U.S.C.C.A.N. 5963, 6401). As the Second Circuit recognized,
§ 1334(c) “codifie[s] Magnolia Petroleum.” Pan American, 950
F.2d at 846. Because Congress intended for “statutory”
abstention to mimic “non-statutory” abstention doctrine,
Respondents’ attempt to distinguish between “statutory” and
“non-statutory” abstention (see Opp. Br. at 21-22) a fortiori
fails. The cases cited by Respondents (see id.) do not stand for
a contrary proposition; the reason why abstention was deemed
unreviewable in those cases was because, unlike 28 U.S.C.
§ 1447(d) (which was the statute at issue in Quackenbush vy.
Allstate Insurance Co., 517 U.S. 706 (1996), and from which
abstention-based remand orders are exempt, see id. at 711-12),
28 U.S.C. §§ 1334(d) and 1452(b) specifically prohibit review
of abstention orders.

6. Respondents are also incorrect to assert that Petitioners advocate
limiting the exceptions power to precluding review of questions of fact.
(See Opp. Br. at 16.) Congress may prohibit review of questions of law,
but they must be done in a manner that is neutral with respect.to legal
content, such as amount-in-controversy limitations.

10

6. The final quiver in Respondents’ bow is that this Court
should forego review because the case has advanced in state
court. (See Opp. Br. at 22-23.) The point is factually incorrect
and legally irrelevant. Respondents do not, and cannot contend,
for example, that the controversy is moot. Relief for Petitioners
will be timely, moreover, because the litigation in state court is
only in its preliminary stages, with discovery tracking the
multidistrict litigation in the Southern District of New York
(where this action should have been transferred in the first place
(see Petition at 2-8)). The constitutional question here presented
is ripe for immediate consideration and decision.

CONCLUSION

For the foregoing reasons, and for the reasons set forth in
the Petition, Petitioners respectfully request that this Court grant
the writ of certiorari.

Respectfully submitted,

JAY B. KASNER
Counsel of Record
JOHN L. GARDINER
Cyrus AMIR-MokRri
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
Four Times Square
New York, NY 10036
(212) 735-3000

Counsel for Petitioners

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_2139%3A4. Public record. Not legal advice.