Petition for Writ of Certiorari — Louisiana Department of Natural Resources v. Avenal

Supreme Court, U.&

W) FILED

VU 456 SEP 2.0 2000

No.

™ Office Of JHE CLERK

In the

Supreme Court of the Gnited States

STATE OF LOUISIANA,

DEPARTMENT OF NATURAL RESOURCES

Petitioner

VERSUS

ALBERT J. AVENAL, JR., CLARENCE R. DUPLESSIS,

KENNETH A. FOX, FOX OYSTER COMPANY, AND

NICK L. SKANSI

Respondents

ON PETITION FOR A WRIT OF CERTIORARI TO

THE SUPREME COURT OF LOUISIANA

and

LOUISIANA COURT OF APPEAL FOR THE

FOURTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

JAMES G. BURKE, JR.

Counsel of Record

ANDREW C. WILSON

DAVID L. CARRIGEE

JEDD S. MALISH

Burke & Mayer

1100 Poydras St., Suite 2000

New Orleans, LA 70163

Telephone: (504) 569-2900

Counsel for Petitioner

Riverside Printing, L.LC., 4939 Tchoupitoulas, N. O., LA 70115, (504) 897-5000

W)

D

i

QUESTION PRESENTED

Whether a State court's refusal to apply or even recognize the

preclusive effect of a Federal court's findings of fact related

to an identical issue of whether a "taking" occurred consti- _

tutes a vioiation of the "Full Faith and Credit Clause," the

“Supremacy Clause" of the United States Constitution and/or

the federal "Full Faith and Credit" statute.

iil

LIST OF ALL PARTIES

PURSUANT TO RULE 21.1(B)

The undersigned counsel of record for the State of

Louisiana, Department of Natural Resources, Petitioner, cer-

tifies that the following listed parties have an interest in the

outcome of this case:

I State of Louisiana;

2. Louisiana Department of Natural Resources;

3. Keith J. Asevado;

4. Albert J. Avenal, Jr.;

8 Chris P. Barthelemy;

6. Gary Barthelemy;

7. Kendall M. Barthelemy;

8. Neal Beshel;

9. Anna Butscher Buras;

10. Anna Bessie Bodden Buras;

ll. Neal Buras;

se Ralph J. Buras, Jr.;

13. Ralph J. Buras, Sr.;

14. Richard Buras;

15. Donald J. Campo, III;

16. Donald J. Campo, Jr.;

17. | Donald J. Campo, Sr.;

18. Donald J. Campo;

19. Ernest J. Campo;

20. Mathilda Guerra Campo;

21. Peggy Campo;

22. += Pero B. Cibilic;

23. Anna Cibilich;

ill

Domenica Cibilich;

Richard H. Clark, Sr.;

Clear Water Oysters, Inc.;

Crescent Oysters, Inc.;

Irvin Cross;

Melvin Cross;

Sedonia Cross;

Luka Cutura;

Theresa A. Dauzart;

Clarence R. Duplessis;

Clarence R. Duplessis, Jr.;

Leona Duplessis;

Byron Encalade;

Carliss J. Encalade;

Leon M. Encalade;

Nathaniel Encalade as representative for the Estate

of Joseph Encalade;

Stanley Encalade;

M.J. Farac, Jr.;

M.J. Farac, Sr.;

Maja B. Farac;

Sinajka Farac;

Daniel R. Fernandez;

Raymond Fernandez, Jr.;

Raymond Fernandez, Sr.;

Fox Oyster Company, Inc.;

Fox Industries, Inc.;

Fox Seafood, Inc.;

Ann P. Fox;

Calvin R. Fox, Jr.;

Dale E. Fox;

Gene L. Fox;

iv

Justin Ryan Fox;

Kenneth A. Fox;

Kenneth Ryan Fox;

Marie 0. Fox;

Rodney L. Fox;

Rodney L. Fox, Jr.;

Ross Louis Fox

Estate of M.J. Franicevich;

Rene Ganer;

Gulf Quality Inc.;

Michael Guttuso;

Abraham J. Harness;

Morris Harvey;

Nathan G. Harvey;

Howard Hingle;

Laurie Duplessis Holiday;

Herman Isadore, Jr.;

J & P Oysters, Inc.;

Estate of Mayo P. Jones, Jr.;

Robert M. Keenan;

Donald J. Kennair, 111;

Donald J. Kennair, Jr.;

Ralph James Kieff, Jr.;

Ralph James Kieff, Sr.;

Joseph Labruzzo;

Rachel Fox Labruzzo;

Joey G. Latapie;

Clifford Lebouef,

Jean Lebouef:

Lorne Lebouef,

Irwin H. Lefebvre, Jr.;

Ante Lepetich;

87. Mato Lepetich;

88. John Martinez, Jr.;

89. John Martinez, Sr.;

90. Marty A. Melerine, Jr.;

91. | Matthew David Meyers;

92. Mitchell Meyers;

93. | Rhonda Fox Meyers;

94. Allan C. Molero, Jr.;

95. Janet Molero;

96. Elenora Robin Mook;

97. Cladmon Narcisse;

98. Felix Narcisse;

99. Oliver B. Narcisse, Sr.;

100. Nicolae Nitica;

101. Oyster Fisheries, Inc.;

102. Curt Pannag];

103. Patti L. Pannag];

104. Richard Patterson;

105. Pean Inc.;

106. Josip Piacun;

107. Marinko Piacun;

108. Pasko Piacun;

109. J. Piacun Company, Inc.

110. Anton N. Popich;

111. Ivo, N. Popich;

112. Port Sulphur Fisheries, Inc.;

113. Domingo Rano;

114. Arthur Reddick;

115. Arthur A. Reddick, Jr.;

116. Kevin Joseph Reddick;

117. John Dwight Riley;

118. Van Robin;

119.

120.

121.

122.

123.

124.

125.

126.

127.

128.

129.

130.

131.

132.

133.

134.

135.

136.

137:

138.

139.

140.

141.

142.

143.

144.

145.

146.

147.

148.

149.

vi

Adam R. Serigne;

Lionel R. Serigne, Sr.;

O'Neil N. Serigne;

Phillip H. Simmons, Jr.;

Helen Tesvich Skansi;

Nick L. Skansi;

Estate of Frank S. Slavich, Sr.;

Frank S. Slavich, Jr.;

Taco, Inc.;

John Taliancich;

Ann S. Tesvich;

Estate of Kuzma J. Tesvich; ~~

Frances Lynn Tesvich;

Tinson Seafood Company;

Tesvich Oysters Inc.;

Ivo Tesvich;

Jane P. Tesvich;

John A. Tesvich;

Judi Tesvich;

Kuzma I. Tesvich;

Lisa K. Tesvich;

Maria J. Tesvich;

Nedo Tesvich;

Peter J. Tesvich;

Peter Luke Tesvich;

Charlie Thompson;

Steve Thompson;

Nikola Vekic;

Robert White;

Austin Yawn;

Nikola Zarak.

Vii

TABLE OF CONTENTS

PRFID A SGFIN UMN MUD coos cascksdccvsesctissivicinnessanscnsenssessess

LIST OF ALL PARTIES PURSUANT TO RULE

Be Gia da isdadl kas thpcpsnsrccddoiareesesabioiccavcitoebonsanened’ ii

EERIE HeaE OR TINE OU Sestikencenikcivteselbtpiscidasinibcisanmenconvene li

ae UII ick cedidlesicdactitihilanscais dob denaniccs caninelantshensuheiieesaninn

STATUTORY PROVISIONS/CONSTITUTIONAL

PAA TEV EID cncssnsxnresanernnerinsesisncsneasosioend

UATE OPw. BER CANES i nceccscccntinlacsiavcdccecstsvenancceness

A. I cago ccc indaainshintaaienstianhphanincnsebeaentonl

B. Plaintiffs’ Allegations in the Parallel

Federal and State Proceedings................ eapiomidaiaiiomniie

ce BNI RII, iiss th Sedndgndediisiscainccesinirecsscennncevies

REASONS FOR GRANTING THE PETITION................

Vili

1) The Fourth Circuit's Opinion Presents a Direct

Conflict with Applicable Federal Law as

Regards the Preclusive Effect of a Prior Federal

Decision In Subsequent State Court

PN bi Aceh iahisicininivntcciacecsscmetnceckianisincensesh 1]

2) The Lower Court's Decision Also Conflicts :

With Applicable State Law.........:ccccecscocssesevessscoseees 1]

3) The Question Presented Has Serious Public

Paty COMOMAOTORIONG ocak Sidsiiinth elelsiivihdciacepesdcbis 1]

ARGUMENT: inked ks ea seks ents a i

I. The Lower State Courts' Decisions Present a

Direct Conflict with Federal Law ......................... 11

Il. The Lower State Courts’ Decisions Conflict

With Decisions of Other States ............................. 13

Ill. Application of the Federal Common Law

of Collateral Estoppel Results In The

Dismissal of Plaintiffs’ Claims .............0..........00+ 4

CIP OR BR ic hi iccahithincarscessevchcavoesh toveipachobnsinnlaniwaiuhubees 17

ix

TABLE OF AUTHORITIES

Cases Page

Abrams v. Morial

968 F.Supp. 1106 (E.D. La. 1997)... 13

Aerojet-General Corp. v. Askew

511 F.2d 710 (5* Cir), cert. denied, 423

Sa NP TI iits caccssessasnvsiiassabonivdnsentnocrice 13

Allen v. McCurry

449 U.S. 90, 101 S.Ct. 411, 66 L.Ed.2d 308

Sth iaiaved Miuadbcinileninths epectwicbodesikestatclorscavtdcstotercancn 12

Anderson v. Phoenix Investment Council of Boston

440 N.E.2d 1164 (Mass. 1982) ........cceeeeeeeeeeeeeeee 12

Avenal v. United States

OE I OI oo cit cccsncucsincecninssvonspvorind 1,6,17

Avenal v. United States

oe es | ee ge 1,16

Bernhard v. Bank ofAmerica Nat. Trust & Savings Assn.

We IRM EE MNES BG aos ivccacsccadzcssecsessconsasencsnsees 16

Chemtron Corp. v. Business Funds, Inc.

682 F.2d 1149 (Sth Cir. 1982), vacated on

other grounds, 460 U.S. 1007, cert. denied,

a rica cndici snrncansesavennconnpisncescacses 13

X

Commercial Box & Lumber Co. v. Uniroyal, Inc

G23 Fe S71 CSU CO. TROD sisi iinsicskcesnreaveconsen 13

Copeland v. Merrill Lynch & Co.

ee ee Le B.C ere 15

Crescent City Livestock Landry & Slaughter-House

Co. v. Butchers' Union Slaughter-House & -

Live-Stock Landing Co.

TOD UB. B41, "TF BER: SRS CERI wi sivccisnserscicrccssanes 12

Cromwell v. County of Sac

94 U.S. 351, 24 L.Ed. 195 (1876)....................cc00e8 12

Embry v. Palmer

3 RTS Rp Ge fe Re. Ff | - + | ere 12

Exhibitors Poster Exch., Inc. v. National Screen S. C.

SEF SEO LI ae TITAN iiiresnineeeercininciornncinss 16

FDIC v. Lee

942 F.Supp. 255 (E.D. La. 1995).................s0s000 a

Heck v. Humphrey

512 U.S. 475, 114 S.Ct. 2364 (1994)... 12

Jeanes v. Henderson

688 S.W.2d 100 (Tex. 1985), rehearing of

cause overruled (May 1, 1985)..........:.ssseseseereees 11

Kremer v. Chemical Construction Corp.

456 U.S. 461, 102 S.Ct. 1883, 72 L.Ed.2d

ie CE aii abicdsnssniccnsidditaintindipeswaaionanien 12

XI

Magnolia Petroleum Company v. Hunt

320 U.S. 430, 64. S.Ct. 208 (1943)... eee 12

McNeal v. Paine Webber Jackson & Curtis

ee BO e CO BOT aicisvivccnvacvncaccncscrerciccrrcess 14

Nagle v. Lee

807 F.2d 435 (5 Cir. ARR ae seca 13

Parklane Hosiery Co., Inc. v. Shore

439 U.S. 322, 99 S.Ct. 649 (1979)... 16

Penn Central Transportation Co. v. City of New York

438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631

Ea iisshpecitiincaseriRhanennssiadpisiecaiadabccatsacnbindetniival 6,12

Pilie & Pilie v. Metz

PE Tn BBD GR, USD) on sasncccvnessciscentscsasrivacicine 13

Recoveredge L.P. v. Pentecost

44 F.3d 1284 (5™ Cir, 1995) o.n...cccccccccccccscssssssoees 13

Reeder v. Succession of Palmer

ee SI NS RD civcinsevescesscunntainncssscensonss 12

Rennie v. Freeway Transport |

GOO P20 DID Ce. BGG 2) nn iccascssiccinccsscssis elas 14

Stoll v. Gottlieb

305 U.S. 165, 59 S.Ct. 134 (1938)... ee 12

Xli

Stone v. Entergy Services, Inc.

99-0236*3 (La.App. 4" Cir. 8/18/99), 744

So.2d 141, writ denied, 99-2719 (La. 11/24/99),

ct a icc cile cenccutinainca warrants ence sited 14

Stovall v. Price Waterhouse Co.

Oar ae So te Coe 1981) wei cin cnckwcn: 13

Articl f the Constitution P

= Soi Eos” Sy "SS SG see te eae ian eyauromnenes i,3,11

U.S.C.A. Const. Art. V1 § 2 ............. caisndcipyiacoubuaseaniks 1,3,11

i i ish gichleaatentglamaananules 5,7

Article 1, Section 4 of the Louisiana Constitution of

i 4,8

Statutes and Rules

ao oS Ss SOM Oea roe eT NS ee ete MOO

Be Na rites BUT sacevsscesnccinotinisbdbe einai anineeavinas 1,3,12

ieee. UII SINE TRUIIN BU aacccclancinsdsicsiensonsasnacnnaeaneciteunen 2

Miscellaneous Texts and References

C. Wright, A. Miller & E. Cooper, Federal

Practice & Procedure, Jurisdiction Section |

PN ARRAS icthiisnia taint ctaiihiconnstecseorersignmnencnnuis 14

Restatement (2d) of Judgments Section 87 (1982) ...... 13,14

l

PETITION FOR A WRIT OF CERTIORARI

Petitioner, the State of Louisiana, Department of

Natural Resources, respectfully petitions this Court to issue a

writ of certiorari to review the Judgment of the Louisiana

Court of Appeal for the Fourth Circuit on rehearing entered

in, "Albert J. Avenal, Jr., et at v. The State of Louisiana and

the Department of Natural Resources," bearing Civil Action

No. 99-C-0127, upon which the Supreme Court of Louisiana

in, "Albert J. Avenal, Jr., et at v. The State of Louisiana and

the Department of Natural Resources," bearing Civil Action

No. 00-CC-1077, has declined to exercise its discretionary,

supervisory jurisdiction. The State Fourth Circuit initially

dismissed the Plaintiffs' claims, just as the Federal Circuit

had dismissed these same Plaintiffs’ claims in a parallel pro-

ceeding. The Fourth Circuit applied the federal law of collat-

eral estoppel, and, in turn recognized the preclusive effects of

the prior federal judgment. In the subsequent decision of the

divided 3-2 panel of the Fourth Circuit, on rehearing, the

Fourth Circuit completely reversed itself and would not give

full faith and credit to, nor recognize the preclusive effect of,

the prior federal decision which had dismissed the Plaintiffs'

claims in their entirety on the basis that there simply was no

“taking” in a constitutional sense.

OPINIONS BELOW

The Opinion of the Court of Appeals for the Federal

Circuit (App. E, infra, A-46 through A-57) is reported at 100

F.3d 933 (Fed. Cir. 1996).

2

The Opinion of the United States Court of Federal

Claims is reported at 33 Fed.Cl. 778 (1995). (App. F, infra,

A-58 through A-90).

The decision of the Supreme Court of Louisiana to

decline review of the lower courts' decisions in this case

(App. D, infra, A-45) is unreported.

The decision of the Louisiana Court of Appeal for the

Fourth Circuit on rehearing (App. A, infra, A-1 through A-

18) is reported at 2000 WL 320460, 99-0127 (La.App. 4th

Cir. 3/15/00).

The decision of the original five judge panel of the

Louisiana Court of Appeal for the Fourth Circuit (App. C,

infra, A-25 through A-44) is reported at 757 So.2d 1, 99-0127

(La.App. 4th Cir. 3/3/99).

The Judgment of the District Court (App. B, infra,

A- 19 through A-24) is unreported.

JURISDICTION

The Supreme Court of Louisiana declined to exercise

its discretionary review on June 23, 2000 (App. D, infra, A-

45). The decision of the Louisiana Court of Appeal for the

Fourth Circuit, on rehearing for which review is sought, was

entered on March 15, 2000. The jurisdiction of this

Honorable Court is invoked under 28 U.S.C. § 1257 and

Rule 10 of this Court, in that the lower state courts have

decided an important federal question in a way that conflicts

directly with the decisions of this Court, the federal courts of

appeals and the highest courts and _— appellate courts of

the other states.

3

STATUTORY PROVISION/CONSTITUTIONAL

ARTICLES INVOLVED

The "Supremacy Clause", Article VI, Section 2 of the

Constitution of the United States provides:

This Constitution, and the Laws of the United States

which shall be made in Pursuance thereof, and all-

Treaties made, or which shall be made, under the

Authority of the United States, shall be the supreme

Law of the Land; and the Judges in every State shall

be bound thereby, any Thing in the Constitution or

Laws of any State to the Contrary notwithstanding.

The "Full Faith and Credit Clause", Article IV,

Section | of the Constitution of the United States provides:

Section 1. Full Faith and Credit shall be given

in each State to the public Acts,

Records, and judicial Proceedings of

every other State. And the Congress

may by general Laws prescribe the

Manner in which such Acts, Records

and Proceedings shall be proved, and

the Effect thereof.

The federal "Full Faith and Credit Statute", 28 U.S.C.

1738 provides:

The Acts of the legislature of any State, Territory, or

Possession of the United States, or copies thereof,

4

shall be authenticated by affixing the seal of such

State, Territory or Possession thereto.

The records and judicial proceedings of any court of

any such State, Territory or Possession, or copies

thereof, shall be proved or admitted in other courts

within the United States and its Territories and

Possessions by the attestation of the clerk and seal of

the court annexed, if a seal exists, together with a cer-

tificate of a judge of the court that the said attestation

is in proper form. :

Such Acts, records and judicial proceedings or copies

thereof, so authenticated, shall have the same full

faith and credit in every court within the United

States and its Territories and Possessions as they

have by law or usage in the courts of such State,

Territory or Possession from which they are taken.

STATEMENT OF THE CASE

Summary

-

Albert J. Avenal, Jr. and certain other oyster lease-

holders/fishermen filed a class action against the State of

Louisiana, Department of Natural Resources (“DNR”) in the

25th Judicial District Court for the Parish of Plaquemines on

March 29, 1994 on behalf of all persons holding oyster leas-

es on Louisiana state water bottoms within Breton Sound, an

estuary in Southeastern Louisiana. These Plaintiffs alleged

that a taking "had occurred" without "just compensation"

in violation of the Fifth Amendment of the U.S.

Constitution and Article I, Section 4, of the Louisiana

j

}

j

/

Constitution because their oyster leases were adversely

affected by the freshwater outflow ftom ‘ie Caernarvon

freshwater diversion structure located on the east bank of the

Mississippi River in Plaquemines Parish. The trial court cer-

tified and defined the class of Plaintiffs.

Meanwhile, on April 26, 1994, Albert Avenal and

these same representative Plaintiffs had also filed suit in the

U.S. Court of Federal Claims! against the United States,

i. e., the United States Army Corps of Engineers, which had

designed, financed and built the Caernarvon structure. In that

suit, these same Plaintiffs alleged a taking under the Fifth

Amendment of the U.S. Constitution, the very issue raised in

the state court proceeding.

The United States subsequently moved for summary

judgment on several grounds, all related to the takings issue.

One of these theories was that the Plaintiffs had no reason-

able investment backed expectations in their oyster leases

since they had decades of prior notice of the planning and

construction of the project. Another was that the Plaintiffs

had no compensable property interest in the continued, arti-

ficially elevated salinity conditions caused by the Mississippi

River levee system, which, in turn, allowed for oysters to

grow in historically fresh areas within Breton Sound.

On August 2, 1995, the Court of Federal Claims

granted summary judgment, concluding that the

Plaintiffs had no compensable expectancy in the

continued artificially elevated salinity levels in historically

freshwater marsh areas in Breton Sound, areas which

1 Albert J. Avenal, Jr. et al. v. The United States of America", United

States Court of Federal Claims, No. 94-26 | -L.

6

were and are the subject of the instant litigation.

On November 12, 1996, the U.S. Court of Appeals

for the Federal Circuit affirmed the lower court's judgment,

but on different grounds? . The court held that these same

oyster lessees could not have had reasonable investment-

backed expectations that their oyster leases would give them

rights protected from the planned freshwater diversions of

the state and federal governments. In doing so, it restated

and confirmed the federal position regarding takings law as

set out by this Court.4 -

The court concluded by stating:

In light of the history of events in this case, plaintiffs,

as a matter of law must be assumed to have known

that their rights to use the bottom-lands for oystering

were subject to the inevitable changes that the antic-

ipated government program would bring about.>

2 Avenal v. United States, 100 F.3d 933 (Fed. Cir. 1996).

3 Id. at 937.

4 The Federal Circuit based its holding on Penn Central Transportation

Co. v. City of New York, 438 U. S. 104, 98. S. Ct. 2646, 57 L. Ed. 2d 631

(1978).

5 Avenal, 100 F.3d at 937.

B. Plaintiffs’ Allegations in the Parallel Federal and

State Proceedings

A comparison of the allegations set forth in the

Plaintiffs' Federal Complaint and the Plaintiffs' Petition filed

in the 25th Judicial District Court reveals that the cases deal

with the identical factual issue: Whether a taking occurred as

a result of the operation of the Caernarvon freshwater diver-

sion structure. More specifically, paragraph 7 of the federal

Complaint and paragraph VIII of the state Petition alleged

that the federal and state "actions," i.e., the diversion of

freshwater from the Mississippi River to nourish, restore and

refresh the State's wetlands, results in a taking. The Federal

Complaint states as follows:

4

The hereinabove described actions of defendant have

resulted in a permanent and substantial interference

with plaintiffs’ use and enjoyment of their land

amounting to a taking of an interest in plaintiffs’

valuable property rights without compensation in

violation of the Fifth Amendment of the United

States Constitution.®

The Plaintiffs’ State Court Petition states as follows:

VII.

‘.

As a direct result of the herein above described

action of defendants, the productivity of plaintiffs’

© See App. J, infra, A-94 through A-104.

8

leases have been destroyed, resulting in a permanent

and substantial interference with plaintiffs’ use and

enjoyment of their land amounting to a taking of an

interest in plaintiffs’ valuable property rights without

compensation in violation of Article I, Section 4 of

the Louisiana Constitution of 1974, and of the Fifth

Amendment of the United States Constitution.7

With the exception of the identity of the named gov-

ernmental defendant, the Petition filed in the 25th Judicial

District Court is virtually indistinguishable from the

Complaint filed in federal court. Although the names of the

defendants are changed, the issue remains identical-whether

a taking has occurred as a result of the operation of the

Caernarvon freshwater diversion structure.

Cc. Proceedings Below

In accordance with the State trial court's pre-trial

scheduling order, on December 15, 1998, DNR filed several

motions for summary judgment, including one based on the

issue of collateral estoppel. DNR asserted that the preclusive

effect of the prior federal decision dismissing Plaintiffs’

claims on summary judgment was an issue of federal law and

required that the state court proceedings likewise be dis-

missed based upon federal common law, specifically collat-

eral estoppel. The Honorable William A. Roe denied DNR's

Motion from the bench on January 5, 1999.8

7 See App. K, infra, A-105 through A- 114.

8 See App. B, infra, A-19 through A-24.

9

From that adverse decision, DNR filed an application

for supervisory writs in the Louisiana Court of Appeal for the

Fourth Circuit seeking to invoke that Court's discretionary

supervisory jurisdiction. DNR's writ application was filed

January 15, 1999, and the issues were fully briefed by both

parties. On March 3, 1999, a five judge panel of the Fourth

Circuit issued a 3-2 decision, reversing the Trial Court and

granting DNR's Motion, thereby dismissing Plaintiffs' claims

in their entirety. The Court based its ruling on the fact that the

preclusive effect of a prior federal decision is an issue of fed-

eral law, and therefore applied federal law of collateral estop-

pel to decide the issue. On March 17, 1999 Plaintiffs filed an

application for rehearing and/or rehearing en banc. The

Fourth Circuit granted a writ of certiorari to review the entire

twenty (20) volume record, presumably to determine

whether the federal issues in both cases were the same,

according to Judge Miriam Waltzer, the author of the original

opinion.?

On March 15, 2000 the same five judge panel issued

another 3-2 decision, this time reversing their prior decis.on

and affirming the lower court's dismissal of the Motion for

Summary Judgment. The Fourth Circuit ruled that collateral

estoppel, whether based upon federal common law or any

other source of law, would simply not apply in Louisiana.

This element of the decision presented for the first time the

issues which are the subject of this Petition.

9 See App. A, infra, A-15, dissent of Judge Waltzer.

10

Significantly, Judge Waltzer observed in her dissent,

issued with the decision on rehearing, that the majority of the

panel had issued a decision which conflicted directly with

entrenched federal and state law on the issue, not to mention

specific constitutional authority:

In deciding the preclusive effect of a federal judg-

ment, we are bound by Louisiana law (and arguably

the United States Constitution) to apply federal law.

Collateral estoppel, or issue preclusion, is a concept

firmly entrenched in federal law. (Citations omit-

ted.)10

The issue thus framed by Judge Waltzer presents the

specific constitutional conflict that forms the basis for the

Petition. It should be noted that the Court also concluded that

this Court's reasonable investment-backed expectations test

for a taking would never be used in Louisiana, deeming it

"irrelevant."11

On April 14, 2000, DNR filed an application for

supervisory writs with the Supreme Court of Louisiana,

seeking to have that Court exercise its discretionary, supervi-

sory jurisdiction. This application was denied on June.23,

2000. From these adverse decisions below, DNR seeks to

invoke this Court's jurisdiction. In essence, Petitioner seeks

to have the original decision of the Louisiana Court of

Appeal for the Fourth Circuit reinstated, terminating the state

litigation in line with the termination of the federal litigation.

10 See App. A, infra, A-15, dissent of Judge Waltzer.

11 See App. A, infra, A-10.

1]

REASONS FOR GRANTING THE PETITION

1) The Fourth Circuit's Opinion presents a direct con-

flict with applicable federal law as regards the

preclusive effect of a prior federal decision in subse-

quent state court proceedings.

2) The Lower Court's decision also conflicts with appli-

cable State law, including not only the law of

Louisiana but also that of other states, on the same

issue.

3) The question presented has serious public policy

considerations in that a precedent has been set for

federal factual findings to be relitigated in state

courts. This will in turn generate piecemeal litigation

and inconsistent findings on the state and federal lev-

els, in direct contravention of the Supremacy Clause,

the Full Faith and Credit Clause and the Full Faith

and Credit Statute.

ARGUMENT

1. The Lower State Courts’ Decisions Present a

Direct Conflict with Federal Law.

The preclusive effect of a prior federal decision

emanates from the United States Constitution's "Supremacy

Clause"!2 and "Full Faith and Credit Clause",!3 as well as

12 Article VI, Section 2.

13 Article IV, Section 1.

12

the federal "Full Faith and Credit Statute",!4 all of which

require each state to give the same effect to the judgments of

federal courts as those judgments have in the jurisdictions

where rendered.!5

The doctrines of res judicata and collateral estoppel

are most important in assuring that judgments are conclusive,

thus avoiding re-litigation of issues that were or could have

been raised in the original action (res judicata) and of ques--

tions of law or fact necessary to the judgment in the original

action (collateral estoppel).!© The two doctrines "relieve par-

ties of the cost and vexation of multiple lawsuits, conserve

judicial resources, and, by preventing inconsistent decisions,

encourage reliance on adjudication.” !7

14 98 U.S.C. § 1738.

IS Heck v. Humphrey, 512 U.S. 475, 488 n. 9, 114 S.Ct. 2364, 2373

n. 9 (1994); Magnolia Petroleum Company v. Hunt, 320 U.S. 430, 437-

438, 64 S.Ct. 208, 212- 212 (1943); Stoll v. Gottlieb, 305 U.S. 165, 167

- 171, 59 S.Ct. 134, 135 - 138 (1938); Crescent City Livestock Landry &

Slaughter-House Co. v. Butchers’ Union Slaughter-House & Live-Stock

Landing Co., 120 U.S. 141, 160, 7 S.Ct. 482, 474 (1887); Embry v.

Palmer, 107 U.S. 3, 9 - 10, 2 S.Ct. 25, 27 - 30 (1872).

16 Kremer v, Chemical Construction Co,, 456 U.S. 461, 102 S.Ct. 1883,

1889 n. 5, 72 L.Ed.2d 262 (1982); Cromwell v. Count of Sac, 94 U.S.

351, 24 L.Ed. 195 (1876).

17 Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 415, 66 L.Ed.2d —

308 (1980).

13

When a State court is faced with the issue of deter-

mining the preclusive effect of a Federal court's judgment, it

is the federal law of res judicata which must be examined.!8

The federal rule of preclusion governs any federal judgment,

even when the Court renders a decision on state law issues.!9

Further, the preclusive effect of a prior federal decision is not

limited to the doctrine of res judicata and extends to collat-

eral estoppel as well.2®

Il. The Lower State Courts' Decisions Conflict with

Decisions of Other States.

The Courts of the States that have addressed this

issue have likewise concluded that when a State court is

required to determine the preclusive effects of a judgment

rendered by a Federal court exercising federal

question jurisdiction, it is the federal law of res judicata

18 Nagle v, Lee, 807 F.2d 435, 439 (Sth Cir. 1987); Chemtron Corp. v.

Business Funds, Inc., 682 F..2d 1149, 1188 (Sth Cir. 1982), vacated on

other grounds, 460 U.S. 1007, cert denied, 406 U.S. 1013 (1983); Stovall

y. Price Waterhouse Co., 652 F.2d 537, 540-41 (Sth Cir. 1981);

Commercial Box & Lumber Co. v. Uniroyal, Inc., 623 F.2d 371, 373 (Sth

Cir. 1980); Aerojet-General Corp. v. Askew, 511 F.2d 710, 715 (Sth Cir.),

cert. denied, 423 U.S. 908, (1975); Restatement (2d) of Judgments

Section 87 (1982).

19 Recoveredge L.P. v. Pentecost, 44 F.3d 1284, 1290 n. 11 (5th Cir.

1995).

20 Copeland v, Merrill Lynch & Co., 47 F.3d 1415, 1422 (Sth Cir. 1995):

FDIC v. Lee, 942 F.Supp. 255, 257 (E.D. La. 1995); Abrams v. Morial,

968 F.Supp. 1106, 1109 (E.D. La. 1997).

14

that must be applied.2! Louisiana Courts, until this matter,

have observed "the principle that_a State court must apply

federal law in deciding upon at least the central core of res

judicata effects of any Federal court judgment is immanent

within the Constitution and laws establishing our federal sys-

tem."22 The Fourth Circuit's refusal to apply the federal rule

of collateral estoppel also conflicts with a decision issued by

the very same court.23 Accordingly, the lower Courts’ deci-

sions in this matter present a direct conflict not only with

applicable federal law, but also applicable state law, even that

of Louisiana.

111. Application of the Federal Common Law of

Collateral Estoppel Results in the Dismissal

of Plaintiffs’ Claims.

The federal law of collateral estoppel, which the trial

court is required to apply, consists of four elements:

(1) The issue at stake must be identical to the

one involved in the prior action;

-

21 See, e.g., McNeal v, Paine Webber Jackson & Curtis, 332 (Ga. 1982);

Anderson _v. Phoenix Investment Council of Boston, 293 S.E.2d 440

N.E.2d 1164, 1167 (Mass. 1982); Rennie v. Freeway Transport, 656 P.2d

919, 921 (Or. 1982); Jeanes v. Henderson, 688 S.W.2d 100, 103 (Tex.

1985), rehearing of cause overruled (May 1, 1985); Restatement (2d) of

Judgments section 87 (1982); C. Wright, A. Miller, & E. Cooper. Federal

Practice & Procedure, Jurisdiction section 4468 (1981).

22 Pilie & Pilie v. Metz, 547 So.2d 1305, 1308 (La. 1989); Reeder v,

Succession of Palmer, 623 So.2d 1268, 1271 (La. 1993).

23 Stone v. Entergy Services, Inc, 99-0236*3 (La.App. 4" Cir, 8/18/99),

744 So.2d 141, 142; writ denied, 99-2719 (La. 11/24/99), 750 So.2d 989.

/

/

15

(2) The issue must have been actually litigated

in the prior action; :

(3) The determination of the issue in the prior

action must have been a necessary part of

the judgment in that earlier action; and

(4) There is no special circumstance that would

make it unfair to apply the doctrine.24

All of the factors necessary for the court to apply the

federal law of collateral estoppel have been met. First, as can

be seen from the federal Complaint and the state court

Petition, the takings issue is identical. Second, the takings

issue was actually litigated in both the federal trial court and

federal appellate court, with the appellate court specifically

affirming summary judgment based on the fact that the

Plaintiffs had no reasonable investment-backed expectations

in their leases.25 More importantly, the Fourth Circuit's opin-

ion on rehearing does not indicate that there is any factual

distinction between the two cases. As to the third element of

the collateral estoppel test, the takings issue was a necessary

part of the federal judgment. In fact, the decision on the tak-

ings issue was the core of the dispute. Finally, there is no spe-

cial circumstance that would make it unfair to apply the doc-

trine of collateral estoppel.

24 Copeland, supra, at 1423.

25 See App. C, infra, A-25 through A-44.

16

This Court has specifically held that collateral estop-

pel may be asserted by a party even if that party was not

involved in the prior litigation.26 This application has been

labeled defensive collateral estoppel, wherein a plaintiff is

estopped from asserting a claim that the plaintiff has previ-

ously litigated and lost against another defendant.27 As the

United States Fifth Circuit has held, "collateral estoppel bars

a plaintiff from assailing the defendants for proceeding with-

out change upon a course of conduct previously held lawful

against plaintiff’s identical attack."28 In other words, the

defensive use of collateral estoppel precludes a plaintiff from

re-litigating identical issues by merely switching adver-

saries."29 Stated succinctly, defensive collateral estoppel

may be urged by a party to the second suit who was not even

a party to the first suit.3®

As the Federal Circuit affirmed the Court of Federal

Claims’ dismissal of the Plaintiffs' complaint on summary

judgment, and all of the elements of collateral estoppel have

been met, the Trial Court should have applied the doctrine of

defensive collateral estoppel and dismissed the Plaintiffs’

claims in the instant state litigation in their entirety. The

26 Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 326-333, 99 S.Ct.

649-52 (1979).

27 1g

28 Exhibitors Poster Exch., Inc. v. National Screen S.C., 517 F.2d 110,

114 (Sth Cir. 1975).

29 Parklane Hosiery, supra, at 329, 651, citing Bernhard v, Bank of

America Nat. Trust & Savings Assn., 122 P.2d 892, 895 (Cal. 1942).

30 id.

17

mere substitution of governmental entities should not have

resulted in a finding that collateral estoppel does not apply,

where the factual record in the state and federal proceedings

is, as here, identical.

CONCLUSION

If the lower State Court's decision is allowed to stand

as is, a precedent will have been set for state courts to ignore

the factual findings of a federal court deciding the same

issue. This will not only lead to inconsistent decisions on the

same issue but also spawn an entire wave of state litigation

in which Plaintiffs may seek a "second bite at the apple."

Plaintiffs will now be able to test their theories in federal

court, and, if dissatisfied with the results, thereafter seek a

different result on_the same factual issue in a state court.

If allowed to stand, this decision will place at risk all

governmental projects financed by combined State and

Federal funding sources. Plaintiffs will test their theories in

one court system or the other and then proceed to recovery in

whichever court recognizes their claims. This anomalous sit-

uation encourges inconsistent findings by the Federal and

State Court systems, in complete contravention of specific

constitutional and statutory authority as interpreted by this

Court.

BY:

18

RESPECTFULLY SUBMITTED,

RICHARD P. IEYOUB

Attorney General

JAMES G. BURKE, JR. (Bar No. 3676)

Counsel of Record

ANDREW C._WILSON (Bar No. 1162)

DAVID L. CARRIGEE (Bar No. 3892)

JEDD S. MALISH (Bar No. 23846) me

Burke & Mayer

1100 Poydras St., Suite 2000

New Orleans, LA 70163

Telephone: (504) 569-2900

Counsel for The State of Louisiana through

the Department of Natural Resources