Ask the Scholar

{
    "localId": "118568252",
    "label": "JGR/Enrolled Bills - May 1984 (1 of 2)",
    "core": "doc",
    "dtoType": "document",
    "citationUrl": "https://catalog.archives.gov/id/118568252"
}

{
    "id": "118568252",
    "sourceUrl": "https://catalog.archives.gov/id/118568252",
    "contentType": "document",
    "title": "JGR/Enrolled Bills - May 1984 (1 of 2)",
    "citationUrl": "https://catalog.archives.gov/id/118568252",
    "identifierLocal": "485",
    "collections": [
        "Records of the Office of Counsel to the President (Reagan Administration)",
        "John Roberts' Subject Files"
    ],
    "iiifBase": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/reagan/6908381/40-485-6908381-021-008-2017.pdf",
    "thumbnailUrl": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/reagan/6908381/40-485-6908381-021-008-2017.pdf",
    "largeImageUrl": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/reagan/6908381/40-485-6908381-021-008-2017.pdf",
    "imageCount": 1,
    "hasImages": true,
    "source": "import",
    "hasTranscription": false
}

{
    "url": "https://catalog.archives.gov/id/118568252",
    "naId": 118568252,
    "coverageEndDate": {
        "logicalDate": "1986-12-31",
        "year": 1986
    },
    "coverageStartDate": {
        "logicalDate": "1982-01-01",
        "year": 1982
    },
    "levelOfDescription": "fileUnit",
    "recordType": "description",
    "ocrSource": "nara-archive"
}

{
    "seq": 1,
    "pageIndex": 0,
    "type": "document",
    "url": "https://s3.amazonaws.com/NARAprodstorage/lz/presidential-libraries/reagan/6908381/40-485-6908381-021-008-2017.pdf",
    "mediaId": "f3bfe2070c315eca",
    "ocrText": "Ronald Reagan Presidential Library\nDigital Library Collections\nThis is a PDF of a folder from our textual collections.\nCollection: Roberts, John G.: Files\nFolder Title: JGR/Enrolled Bills - May 1984\n(1 of 2)\nBox: 21\nTo see more digitized collections visit:\nhttps://reaganlibrary.gov/archives/digital-library\nTo see all Ronald Reagan Presidential Library inventories visit:\nhttps://reaganlibrary.gov/document-collection\nContact a reference archivist at: [email protected]\nCitation Guidelines: https://reaganlibrary.gov/citing\nNational Archives Catalogue: https://catalog.archives.gov/\nTHE WHITE HOUSE\nWASHINGTON\nMay 1, 1984\nMEMORANDUM FOR FRED F. FIELDING\nFROM:\nJOHN G. ROBERTS\nSUBJECT:\nH.R. 3689, H.R. 3690, H.R. 3691,\nH.R. 3692, H.R. 3693 and Draft\nJustice Report on the Preceding\nBills Related to Restricting or\nAbolishing Federal Diversity\nJurisdiction\nOMB has asked for our views by May 4 on a proposed report\nfrom the Department of Justice concerning H.R. 3689-\nH.R. 3693, bills to restrict or abolish Federal diversity\njurisdiction. The report -- a 25-page letter from Assistant\nAttorney General McConnell -- supports the complete abolition\napproach of H.R. 3689, and expresses support for the restriction\nof diversity jurisdiction in the other bills if it is not\npossible to secure complete abolition. The report supports\nthe creation of a mass tort action, proposed in H.R. 3690,\nto ensure a Federal forum for airplane crashes and the like.\nOpponents of abolition of diversity frequently cite such\ncases as ones that should be in Federal court but would not\nbe were diversity abolished; providing a Federal forum for\nsuch cases removes one of the leading arguments against\nabolition. The report supports an increase in the juris-\ndictional amount in diversity cases, and abstention in\ncertain diversity cases, the approach of H.R. 3691. The\nreport also supports the general notion behind H.R. 3692,\nwhich would require arbitration in diversity cases. The\ncases could be tried de novo after arbitration, but parties\nwould be penalized if they insisted on this right and won a\nsubstantially less favorable result in court than that\nawarded them in arbitration. Finally, the report supports\nH.R. 3693, which would correct an historic anomaly in\nAmerican law by eliminating the right of in-state plaintiffs\nto bring diversity suits in Federal court. The historic\njustification for diversity jurisdiction -- the potential\nhostility of state courts to out-of-state litigants -- is of\ncourse inapplicable when the person seeking a Federal forum\nis a resident of the state in question.\nThe proposed report goes on to suggest other diversity-\nrelated reforms not raised by the pending bills, such as\ndiscretionary appellate review, requiring a particularized\nshowing of bias in the state forum (similar to the required\n- 2 -\nshowing in change of venue cases), and expanding the concept\nof a corporation's citizenship so as to defeat diversity in\na greater number of cases. The report also suggests (pp.\n22-23) charging the party filing a diversity case a \"user's\nfee\" to cover the cost of having the Federal judicial system\nadjudicate the claim, including a portion of the judge's and\nsupport personnels' salaries, cost of maintaining the\ncourtroom, overhead, etc. The report notes that there may\nbe problems with such an approach, but generally suggests\nthe idea is worth pursuing. In my view the idea is ludicrous.\nThe additional administrative burden of calculating the\nentire cost of hearing any particular diversity case would\nfar outweigh any gain in reduction of such cases filed. I\nrecommend noting in our memorandum to OMB that we are not\npersuaded that this idea even merits consideration.\nI have no other objections. The Administration is clearly\non record as supporting abolition or restriction of diversity\njurisdiction. There is a caseload crisis in the lower\nFederal courts, and it is almost unconscionable to permit\ndiversity cases to crowd out cases that truly belong in\nFederal court.\nAttachment\nTHE WHITE HOUSE\nWASHINGTON\nMay 1, 1984\nMEMORANDUM FOR BRANDEN BLUM\nLEGISLATIVE ATTORNEY\nOFFICE OF MANAGEMENT AND BUDGET\nFROM:\nFRED F. FIELDING Orig. signed by FFF\nCOUNSEL TO THE PRESIDENT\nSUBJECT:\nH.R. 3689, H.R. 3690, H.R. 3691,\nH.R. 3692, H.R. 3693 and Draft\nJustice Report on the Preceding\nBills Related to Restricting or\nAbolishing Federal Diversity\nJurisdiction\nCounsel's Office has reviewed the above-referenced proposed\nDepartment of Justice report. I am not persuaded that the\nidea of \"charging a user's fee,' suggested at pages 22-23 of\nthe proposed report, merits sufficient consideration to be\nincluded in the report. I cannot envision how such a system\nwould work, and it seems probable that the administrative\nand other costs associated with calculating and assessing a\nfair \"user's fee\" would easily outweigh any benefit in\nreduction of diversity cases. Including such a poor idea in\nthe report inevitably detracts from the other good suggestions.\nFFF:JGR:aea 5/1/84\nCC: FFFielding/JGRoberts/Subj/Chron\nTHE WHITE HOUSE\nWASHINGTON\nMay 1, 1984\nMEMORANDUM FOR BRANDEN BLUM\nLEGISLATIVE ATTORNEY\nOFFICE OF MANAGEMENT AND BUDGET\nFROM:\nFRED F. FIELDING\nCOUNSEL TO THE PRESIDENT\nSUBJECT:\nH.R. 3689, H.R. 3690, H.R. 3691,\nH.R. 3692, H.R. 3693 and Draft\nJustice Report on the Preceding\nBills Related to Restricting or\nAbolishing Federal Diversity\nJurisdiction\nCounsel's Office has reviewed the above-referenced proposed\nDepartment of Justice report. I am not persuaded that the\nidea of \"charging a user's fee, \" suggested at pages 22-23 of\nthe proposed report, merits sufficient consideration to be\nincluded in the report. I cannot envision how such a system\nwould work, and it seems probable that the administrative\nand other costs associated with calculating and assessing a\nfair \"user's fee\" would easily outweigh any benefit in\nreduction of diversity cases. Including such a poor idea in\nthe report inevitably detracts from the other good suggestions.\nFFF:JGR:aea 5/1/84\nCC: FFFielding/JGRoberts/Subj/Chron\nEXECUTIVE OFFICE OF THE PRESIDENT\nOFFICE OF MANAGEMENT AND BUDGET\nWASHINGTON, D.C. 20503\nSPECIAL\nLEGISLATIVE REFERRAL MEMORANDUM\n224137 cu\nTO:\nLEGISLATIVE LIAISON OFFICER\nDepartment of Agriculture\nDepartment of the Interior\nCentral Intelligence Agency\nDepartment of Labor\nDepartment of Comerce\nDepartment of State\nDepartment of Defense\nDepartment of Transportation\nDepartment of Education\nDepartment of the Treasury\nDepartment of Energy\nVeterans Administration\nEnvironmental Protection Agency\nOffice of Personnel Management\nFederal Emergency Management Agency\nUnited States Postal Service\nGeneral Services Administration\nSmall Business Administration\nAdministrative Office of the U.S. Courts\nNational Aeronautics and Space\nDepartment of Health and Human Services\nAdministration\nDepartment of Housing and Urban Development\nSUBJECT: H.R. 3689, H.R. 3690, H.R. 3691, H.R. 3692, H.R. 3693 and draft DOJ\nreport on the preceding bills related to restricting or abolishing\nFederal diversity jurisdiction\nThe Office of Management and Budget requests the views of your\nagency on the above subject before advising on its relationship\nto the program of the President, in accordance with OMB Circular\nA-19.\nPlease provide us with your views no later than\nFriday, May 4, 1984.\nDirect your questions to Branden Blum (395-3802), the legislative\nattorney in this office.\nJames GOW C.\nAssistant Director for\nLegislative Reference\nEnclosure\nCC: K. Wilson\nM. Uhlmann\nR. Veeder\nP. Szervo\nF. Fielding\nM. Horowitz\nL. Verstandig\nU.S. Department of Justice\nOffice of Legislative Affairs\nOffice of the Assistant Attorney General\nWashington. D.C. 20530\nHonorable Robert W. Kastenmeier\nChairman\nSubcommittee on Courts, Civil Liberties,\nand the Administration of Justice\nCommittee on the Judiciary\nHouse of Representatives\nWashington, D. C. 20515\nDear Chairman Kastenmeier:\nThis is in response to your request for the views of the\nDepartment of Justice on H.R. 3689, 3690, 3691, 3692, and 3693,\nbills relating to the diversity jurisdiction of the federal\ncourts. H.R. 3689 proposes the complete abolition of federal\njurisdiction based on diversity of state citizenship, except for\nstatutory interpleader; the remaining bills set out intermediate\nreform options. The Department of Justice supports the enactment\nof the complete abolition proposal of H.R. 3689 without quali-\nfication. We would also support the enactment of the general\ntypes of reforms proposed in the other bills as preferable\nalternatives to the current system.\nOur views concerning the grounds for abolishing diversity\njurisdiction -- or limiting it as far as possible if complete\nabolition cannot be achieved -- have been stated in previous\nsubmissions to this Subcommittee. 1/ This report will accord-\ningly be concerned, for the most part, with an analysis of the\ndesign and probable effects of the various reform options. A\nfinal section sets out some additional options that merit\nconsideration by the Subcommittee.\n1/\nSee Diversity of Citizenship Jurisdiction - 1982: Hearing on\nH.R. 6691 Before the Subcomm. on Courts, Civil Liberties and\nthe Administration of Justice of the House Comm. on the\nJudiciary, 97th Cong., 2d Sess. 7-16 (1982) (testimony and\nsupplementary submission of Assistant Attorney General\nJonathan C. Rose) [hereafter cited as \"1982 House Diversity\nJurisdiction Hearing\"].\n- 2 -\nI.\nH.R. 3689 -- The \"Complete Abolition\" Proposal\nH.R. 3689 would generally abolish the diversity jurisdiction\nof the federal courts. The grounds for this reform have been\ndiscussed in our earlier statements and in the voluminous hearings\non diversity jurisdiction reform that have been held in both\nHouses of Congress over the past six years. 21\nH.R. 3689, like earlier \"complete abolition\" proposals,\nwould retain statutory interpleader. In contrast to the general\ndiversity jurisdiction of the federal courts, the interpleader\naction serves a valid purpose. It permits a dispositive adjudi-\ncation of liability with respect to a fund where multiple\nliability might otherwise result from inconsistent verdicts in\nproceedings in different states. 3/\nH.R. 3689 differs from earlier \"complete abolition\" bills in\nproviding that its elimination of diversity jurisdiction is to\nlapse after five years. This provision is not intrinsically\ndesirable, since it risks a repetition a few years from now of\n2/\nSee id. ; Diversity of Citizenship Jurisdiction/Magistrates\nReform - 1979: Hearings on H.R. 1046 and H.R. 2202 Before\nthe Subcomm. on Courts, Civil Liberties and the\nAdministration of Justice of the House Comm. on the\nJudiciary, 96th Cong., 1st Sess. (1979) [hereafter cited as\n\"1979 House Diversity Jurisdiction Hearings\"];\nJurisdictional Amendments Act of 1979, S. 679: Hearings\nBefore the Senate Comm. on the Judiciary, 96th Cong., 1st\nSess. (1979) [hereafter cited as \"1979 Senate Diversity\nJurisdiction Hearings\"] Federal Diversity of Citizenship\nJurisdiction: Hearings on S. 2094, S. 2389 and H.R. 9622\nBefore the Subcomm. on Improvements in Judicial Machinery of\nthe Senate Comm. on the Judiciary, 95th Cong., 2d Sess.\n(1978) [hereafter cited as \"1978 Senate Diversity\nJurisdiction Hearings\"} Diversity of Citizenship\nJurisdiction/Magistrates Reform: Hearings Before the\nSubcomm. on Courts, Civil Liberties and the Administration\nof Justice of the House Comm. on the Judiciary, 95th Cong.,\n1st Sess. (1977) [hereafter cited as \"1977 House Diversity\nJurisdiction Hearings\"].\n3/\nOutside of interpleader cases, diversity jurisdiction does\nnot generally promote the efficient and consistent\nadjudication of related cases; it can easily have the\nopposite effect. Specifically, cases which would have been\nhandled as consolidated proceedings in state court may be\nsplit into separate state and federal proceedings when some\nparties choose to litigate in federal court and other\nparties must stay in state court because they lack the\nrequisite diversity of citizenship.\n- 3 -\nthe battle over diversity reform. It would be justified only as\na pragmatic concession, if such a concession is needed to gain\nacceptance of the proposal.\nII. H.R. 3690 -- Abolition of General Diversity Jurisdiction\nAnd Creation of a Mass Tort Action\nH.R. 3690 would abolish the general diversity jurisdiction\nof the federal courts in the same manner as H.R. 3689 and would\nprovide a federal forum for certain multiparty or mass tort cases\non the basis of minimum diversity.\nWe have previously stated support for the creation of this\ntype of multiparty action. 4/ As an isolated measure, this\nproposal might be criticized as adding to the workload of a\njudicial system that is already heavily overloaded. However,\nthis objection has little force against the adoption of the\nproposal as an element in a broader program of diversity juris-\ndiction reduction. The savings from H.R. 3690's general\nabolition of diversity jurisdiction, in particular, would vastly\nexceed any additional work resulting from the creation of a\nproperly designed multiparty action. 5/\nThe proposed action would provide a more efficient means of\nadjudicating mass disaster or mass tort cases, such as those\narising from airplane crashes. The existing diversity juris-\ndiction of the federal courts does not ensure that a consolidated\nforum will be available in such cases, since the multiplicity of\nparties makes it likely that some of the parties will lack the\nrequired diversity of citizenship. 6/ The proposed multiparty\naction based on minimum diversity avoids this problem. 7/ As a\n4/ See 1982 House Diversity Jurisdiction Hearing, supra note 1,\nat 11-13, 15-16.\n5/\nDiversity cases account for about one quarter of all civil\nfilings, 40% of all civil trials, and 60% of all civil jury\ntrials in the federal district courts.\n6/\nSee, e.g., Air Disaster Litigation: Hearings on H.R. 1027\nBefore the Subcomm. on Administrative Law and Governmental\nRelations of the House Comm. on the Judiciary, 97th Cong.,\n1st & 2d Sess. 43-44 (1982) (110 unresolved cases arising\nfrom plane crash remained in state court on account of lack\nof diversity) [hereafter cited as \"Air Disaster Litigation\nHearings\"].\n7/\nThe proposal of H.R. 3690 also avoids the limitation of the\ngeneral authority of the Panel on Multidistrict Litigation\nto consolidation of proceedings for pre-trial purposes. The\n(Footnote Continued)\n- 4 -\npractical matter, the creation of this action offers an advantage\nto some potential litigants that may help offset resistance to\ndiversity reform.\nThe formulation of the multiparty action contained in\nH.R. 3690 was initially proposed by the Department of Justice in\n1979. 8/ It is generally well designed to achieve its purposes.\nA federal forum would be available on the basis of minimum\ndiversity 9/ where at least twenty-five people have each incurred\ninjury to their persons or property exceeding $10,000 as the\nresult of a \"single event, transaction, occurrence, or course of\nconduct. 10/ Once such an action had been commenced in federal\n(Footnote Continued)\ncourt to which cases are transferred for consolidated\npre-trial proceedings may, as a practical matter, sometimes\nretain them for trial as well, but this possibility is\nlimited by venue rules. See 1979 House Diversity\nJurisdiction Hearings, supra note 2, at 161.\n/ See id. at 158-62.\n9/ Both the original version of the proposal and H.R. 3690 add\nsome limited requirements to the minimum diversity standard,\nso as to exclude cases of a \"purely local\" nature. See id.\nat 160. The original proposal limited the action to cases\nin which (i) minimum diversity between adverse parties\nexists and in addition a plaintiff and some other injured\nparty are citizens of different states, or (ii) a party is a\nstate citizen and an adverse party is a foreign state or a\ncitizen of a foreign state. This bill adds a third clause\ncovering cases in which minimum diversity between adverse\nparties exists and in addition at least two defendants\nreside in different states. In the formulation of this new\nclause it would be preferable to use the notion of\n\"citizenship\" instead of \"residence,\" since these concepts\nare not technically the same and the notion of \"residence\"\nmight be unclear as applied to corporations.\n10/ The bill differs slightly from the original version of the\nmultiparty action proposed by the Department of Justice, see\nid. at 158, in requiring a \"good faith\" allegation\nconcerning these jurisdictional conditions. This is\napparently meant to convey that the good faith-legal\ncertainty test that is normally applied to jurisdictional\namount claims, see note 27 and accompanying test infra,\nwould also apply in the proposed multiparty action.\nHowever, this test is not indicated by explicit language in\nother jurisdictional amount provisions; the term \"good\nfaith\" is not a fully satisfactory formulation since the\n(Footnote Continued)\n- 5 -\ncourt, other injured parties could intervene as additional\nplaintiffs, and the defendant could remove to federal court all\nrelated cases brought against it in state court.\nThe Panel on Multidistrict Litigation would be authorized to\ntransfer all of the actions to a single district court (the\n\"transferee court\") for consolidated pre-trial proceedings and a\nconsolidated trial on the question of liability. Actions would\nbe remanded to their district courts of origin for separate\ntrials on the question of damages, unless the equities of the\ncase favored having the transferee court make the damage determi-\nnations as well. The transferee court would not be bound by\nnormal choice of law rules, but would apply the same substantive\nlaw in all actions.\nWhile we generally approve of the design of the proposed\naction, we have comments on a few points which merit further\nconsideration by the Subcommittee. These are generally directed\nat minimizing the need for litigation on questions of interpre-\ntation; ensuring that the proposed action has a predictable\nscope; and ensuring that it operates efficiently:\nThe Definition of Injury. The action would be predicated on\n\"personal injury or injury to the property\" of at least twenty-\nfive persons. It would be desirable to clarify in the proposal's\nlegislative history that \"personal injury\" means physical harm to\nnatural persons (including death) and that \"injury to property\"\nmeans physical damage to, or destruction of, tangible property.\nThis interpretation is consistent with the natural under-\nstanding of the language of the proposal and with the intent\nsuggested by its legislative history. 11/ It would foreclose\ninterpretive litigation over the adequacy of intangible \"injury\"\nas a basis for jurisdiction under the action, such as the\nfinancial loss or harm involved in fraud or breach of contract\ncases. In terms of policy, there is little justification for\nextending the scope of the action to such cases. The commercial\n(Footnote Continued)\nnormal standard allows dismissal where it is legally certain\nthat the jurisdictional amount cannot be recovered, even in\nthe absence of subjective bad faith; and the language of the\nbill appears to apply its \"good faith\" requirement to the\nallegation concerning the number of persons injured rather\nthan to the allegation concerning the value of their\ninjuries. It might be preferable to address this question\nby stating in legislative history that the normal standards\nfor assessing jurisdictional claims would apply, rather than\nthrough a formulation incorporated in the language of the\nbill.\n11/ See note 12 infra.\n- 6 -\ntorts that most commonly result in financial harm to a large\nnumber of parties in a number of states -- such as antitrust\nviolations and securities frauds -- can already be sued on in\nfederal court on other jurisdictional bases.\nQualifying Events and Occurrences. The proposal refers to\ninjury resulting from a \"single event, transaction, occurrence,\nor course of conduct.\" It is clear both from the language of the\nproposal and from its legislative history that the action is\nmeant to apply to mass injury cases arising from discrete,\nspatially and temporally limited incidents, such as an airplane\ncrash, a train derailment, or a hotel fire. 12/ The term \"course\nof conduct,\" however, creates an ambiguity as to what other\nclasses of cases may also fall within the scope of the action:\nExample: In the years following World War II,\nemployees at a shipyard are exposed to asbestos in the\ncourse of their work. After a lapse of decades, some\nof the former employees of the shipyard become sick,\nwhich they believe to be the result of their exposure\nto asbestos. They attempt to bring federal multiparty\nactions, arguing that the employer's failure to take\nadequate precautions against asbestos exposure ovèr a\nperiod of years constituted \"a single\ncourse of\nconduct.\"\n=\nThe number of straightforward mass disaster cases,\nexemplified by major commercial aviation accidents, is limited;\n12/ In testimony before the Senate Judiciary Committee in 1979,\nthe Department of Justice stated that the point of a\nmultiparty action of the sort proposed in H.R. 3690 would be\nto address \"mass tort\" cases. It was stated that \"[t]he\nmost common example is the commercial airline crash;\nhowever, there are other types of mass injury cases that\nwould also be affected such as bus or train accidents.\" See\n1979 Senate Diversity Jurisdiction Hearings, supra note 2,\nat 31-32.\nSimilarly, in testimony before this Subcommittee explaining\nthe possible desirability of creating a special action for\n\"mass tort\" cases, the Department stated that \" [a]nother\npossible situation in which the diversity jurisdiction could\nserve some genuinely useful purpose today is in so-called\n'mass tort' situations. A typical example is an airline\ncrash where dozens or even 200 or 300 persons are injured or\nkilled\n\" See 1979 House Diversity Jurisdiction Hearings,\nsupra note 2, at 148. The Department's statement\naccompanying the initial proposal of the multiparty action\ncontained in H.R. 3690 consistently referred to injuries\nresulting from a single \"incident.\" See id. at 160.\n- 7 -\nadmitting such cases to the federal courts on a \"minimum\ndiversity\" basis should result in no excessive burdens for the\ncourts if it is accompanied by the elimination of the general\ndiversity jurisdiction. However, the effect of including a\nvaguely defined class of mass injury cases arising from more\ndiffuse patterns of actions or occurrences is more difficult to\nanticipate.\nWhile it is dubious that such cases were meant to be within\nthe scope of the proposed multiparty action, under the current\nformulation of the proposal a large potential exists for\nlitigation over how far the notion of \"a single\ncourse of\nconduct\" can be stretched. As a matter of policy, it is not\napparent that a federal judicial remedy designed primarily for\naviation disasters and other cases of a similar character would\nbe a suitable or adequate means of dealing with other types of\nmass injury litigation. 13/\n13/ Consider, for example, mass injury cases in which thousands\nof suits may be commenced against the same defendant over a\nperiod of years or decades. Mechanisms may be desired in\nsuch cases -- such as permanent compensation funds -- which\nensure that earlier litigants do not deplete the assets of\nthe defendant, leaving little or nothing for plaintiffs who\ndiscover their injuries and commence litigation at a later\ntime.\nThe multiparty action proposed in H.R. 3690 makes no\nprovision for the interests of parties who have not\ncommenced litigation at the time the consolidated proceeding\nis concluded in the transferee court. This omission is not\na problem for aviation cases and other mass disaster cases\nin which the injury is immediately apparent and litigation\nis generally commenced promptly after the incident. It\nwould have very different implications, however, in\nconnection with asbestos litigation and other litigation of\na similar character. See generally The Manville Bankruptcy\nand the Northern Pipeline Decision: Hearing Before the\nSubcomm. on Courts of the Senate Comm. on the Judiciary,\n97th Cong., 2d Sess. (1982) ; Court Improvements Act of 1983:\nHearings on S. 645 Before the Subcomm. on Courts of the\nSenate Comm. on the Judiciary, 98th Cong., 1st Sess. 183-84\n(1983) ; Rotbart, Manville Corporation Faces Increasing\nOpposition to Bankruptcy Filing, Wall St. J., Jan. 31, 1984,\nat 1.\n- 8 -\nThe simplest response to these problems would be to delete\nthe terms \"course of conduct\" and \"transaction\" 14/ from the\nbill. This would preserve the action for all cases that are\nclearly within its intended scope -- mass injury actions\nresulting from a single event or occurrence -- but would\nforeclose litigation over its possible application in broader\nareas. Defining the particular action proposed in H.R. 3690 in\nthis manner would not, of course, prevent the Subcommittee from\nexamining the problems of other types of mass injury litigation\nas a separate undertaking from diversity jurisdiction reform.\nTransferable Actions. The bill's provision regarding\ntransfer and consolidation, 28 U.S.C. § 1407 (i), refers to\ntransferred actions in which jurisdiction is based on the\nproposed multiparty action, 28 U.S.C. $ 1367. This should be\nbroadened to refer to all actions based on an event or occurrence\nwhich provides the jurisdictional basis for a multiparty action.\nIf some suits arising from a mass disaster are brought in federal\ncourt under proposed § 1367, while other suits arising from the\nsame incident are brought under other jurisdictional bases, such\nas the general alienage jurisdiction, 15/ it should still be\npossible to handle all of the actions under the consolidated\nprocedure proposed in the bill. The bill's current language is\nnot adequate for this purpose.\n14/ While the term \"course of conduct\" carries the greater\nexpansive potential, deletion of the term \"transaction\" also\nseems advisable, unless some specific class of cases within\nthe intended scope of the action can be described which\nwould be included if \"transaction\" were retained and\nexcluded if \"transaction\" were taken out. In general, it is\nunclear what \"transaction\" adds to the unproblematic terms\n\"event\" and \"occurrence.\"\n15/ H.R. 3690 would retain the general alienage jurisdiction\nwhich is currently provided in 28 U.S.C. $1332 (a) (2). In a\nsuit qualifying as a multiparty action which involved\nadverse parties who were American citizens and citizens of\nforeign states respectively, there would apparently be the\noption of proceeding under the general alienage jurisdiction\nprovision, or the proposed multiparty action, or both.\nThere are various other potentially overlapping grounds of\nfederal jurisdiction. For example, the sinking of a ship\nthat gives rise to a multiparty action may also give rise to\nJones Act suits, see 46 U.S.C. $688, to Death on the High\nSeas Act suits, see 46 U.S.C. $$761-68, and to general\nadmiralty jurisdiction suits, see 28 U.S.C. $1333. Aviation\ndisasters often involve claims against the government under\nthe Federal Tort Claims Act. See Douglas, Air Disaster\n(Footnote Continued)\n- 9 -\nChoice of Law. Under currently popular choice of law\ntheories, the law of different jurisdictions may be applied to\ndifferent parties in the same case on account of differences in\ntheir domiciles or other factors. The choice of law may also\ndiffer for the various elements in a single party's case. For\nexample, the law of different jurisdictions may be applied in\nconnection with the applicable standard of care and other rules\nof liability, presumptions and burdens of proof, rules of\ncontributory or comparative negligence, the amounts and types of\ncompensatory damages that may be awarded, the availability of\npunitive damages, rules governing contribution among joint\ntortfeasors, and the limitation period applicable to the action.\nThis fragmentation of the substantive law applied in a case\nhas had unfortunate consequences in mass disaster cases of the\nsort addressed by H.R. 3690, which involve dozens of parties from\na number of states. Specific problems that have arisen include\nchoice of law litigation of staggering complexity 16/; com-\nplications in the adjudication of the merits of the case result-\ning from the need to apply different bodies of law to different\nparties 17/ and different issues 18/; delay in settlements\nresulting from uncertainty over which state's law will be applied\n19/; the impetus to forum-shopping created by the perception that\na particular forum will apply a more or less favorable body of\nlaw 20/; and the perceived unfairness of drastically different\nrecoveries 21/ that may result when different bodies of law are\napplied to different parties in the same case. 22/\n(Footnote Continued)\nLitigation Without Diversity, 45 J. Air L. & Comm. 411,\n438-39 (1980)\n16/ See, e.g., In re Air Crash Disaster Near Chicago, 644 F. 2d\n594 (7th Cir. 1981).\n17/ See Air Disaster Litigation Hearings, supra note 6, at 38.\n18/ See id. at 77.\n19/ See id. at 104-05.\n20/ See id. at 106-07.\n21/ See id. at 40, 78, 102.\n22/ It is not apparent what there is to show for all the time\nand effort that is expended as a result of choice of law\nproblems in these cases. It is a debatable proposition that\nthe tort law of one state is better or more just than the\nlaw of some other state that might be applied, and in any\n(Footnote Continued)\n- 10 -\nH.R. 3690 provides that the transferee court would not be\nbound by normal choice of law rules, but would apply the same\nsubstantive law 23/ in all actions. This would eliminate the\napplication of the law of different jurisdictions to different\nparties. With appropriate clarification, it would also go far\ntoward eliminating the other problems related to choice of law in\nmass tort cases. Specifically, it should be made clear that the\napplication of the same substantive law to all actions includes a\nrequirement that the same law generally be applied to all aspects\nand elements of each party's action, and that the transferee\ncourt's choice of law would carry over to the district courts of\norigin in remands for separate trials on the question of damages.\nThis approach would not avoid the need for a choice of law by the\ntransferee court, but only one choice would be required.\nFollowing this choice, the same body of law would be applied\nuniformly in all subsequent proceedings. 24/\n(Footnote Continued)\nevent few courts employ choice of law rules that make the\napplicable law depend on such value judgments. There must\nbe some limit on the costs justified by determinations that\nhave nothing to do with the merits of the case and further\nno interest of justice.\n23/ \"Substantive law\" should be understood in the normal\nchoice-of-law sense. It does not include the choice-of-law\nrules of the state and does not include matters that are\npurely procedural, that is, the range of matters governed by\nthe Federal Rules of Civil Procedure and local rules of\ncourt in the federal courts.\n24/ The suggested principle of uniformity requires some limited\nqualifications. If a claim or issue is governed by federal\nlaw, the transferee court should, of course, apply the\npertinent federal law. For example, a multiparty action\narising from a train derailment might incorporate Federal\nEmployer's Liability Act (FELA) claims, see 45 U.S.C.\n$$51-60, and a multiparty action arising from the sinking of\na ship might incorporate Jones Act claims, see 46 U.S.C.\n$688.\nWhere necessary to avoid unfair surprise, the standards of\nconduct provided by a state's law should be applied to\nconduct which does not have a potential impact outside of\nthe state. For example, in a bus accident case, the\ndriver's negligence must obviously be reckoned in light of\nthe speed limit and other rules of the road of the place in\nwhich he was driving, even if some other state's law is\ngenerally applied in the case. See Reese, Depecage: A\nCommon Phenomenon in Choice of Law, 73 Colum. L. Rev. 58,\n63-64 (1973). On the other hand, there would be no\nunfairness in applying the law of the state chosen,\n(Footnote Continued)\n- 11 -\nAs an alternative to providing for the uniform application\nof the law of a single, unspecified jurisdiction in all actions\n-- the approach of the current formulation of the bill -- the\nSubcormittee might consider the possibility of including an\nexplicit choice of law rule in the bill. The bill could, for\nexample, state a general rule that the substantive law of the\nstate in which the transferee court is located is to be\napplied. 25/ This would provide uniformity and optimal\nsimplicity in the choice of law, and would utilize the body of\nstate law with which the judge of the transferee court is most\nlikely to be familiar. The Panel on Multidistrict Litigation\nwould be required, in any event, to make a decision concerning\nthe district in which the actions are to be consolidated. Many\n(Footnote Continued)\nwhichever it might be, in reckoning the liability of a\nmanufacturer for a defective part incorporated into an\nairplane which may be flown in other states.\nIt may also be desirable to state some qualification to\nensure that the normal operation of state workmen's\ncompensation systems -- and other state compulsory insurance\nsystems adopted as a replacement for litigation -- will not\nbe interfered with, where the state whose law is generally\napplied in the case is not the state which administers the\napplicable compensation system. Cf. 28 U.S.C. $ 1445 (c)\n(civil action in state court arising under state's workmen's\ncompensation laws not removable to federal court).\nWhile this question merits consideration by the Sub-\ncommittee, it would appear that applying the same state's\nlaw to all issues would rarely present any problem in\nconnection with the issues that are likely to pose\nsignificant choice of law questions in mass tort cases. See\ngenerally Air Disaster Litigation Hearings, supra note 7, at\n75-78; Douglas, supra note 15, at 424 (1980) ; Craig &\nAlexander, Wrongful Death in Aviation and the Admiralty:\nProblems of Federalism, Tempests and Teapots, 37 J. Air. L.\n& Comm. 3, 9-10 & nn. 24-28 (1971). The few warranted\nexceptions could be articulated in the proposal's\nlegislative history.\n25/ This approach would also be subject to the limited\nqualifications noted in note 24 supra.\nCf. To Amend Title 28, United States Code, Federal Court\nProcedures with Respect to Aviation Activity: Oversight\nHearing Before the Subcomm. on Administrative Law and\nGovernmental Relations of the House Comm. on the Judiciary,\n98th Cong., 1st Sess. 77 (1983) (suggested stipulation of\njurisdiction-selecting rule for air disaster cases, such as\nlaw of the place of departure).\n- 12 -\nof the considerations that support the transfer of actions to a\ndistrict in a particular state -- such as the occurrence of the\nevent on which the action is based in the state, or a concentration\nof parties' domiciles in the state -- also tend to support the\napplication of the law of that state.\nIII. H.R. 3691 -- Increasing the Jurisdictional Amount and\nProviding for Abstention in Certain Cases\nH.R. 3691 incorporates two distinct reform proposals -- it\nwould raise the amount-in-controversy requirement from $10,000 to\n$100,000, and it would provide for abstention in favor of state\nproceedings under certain circumstances.\nThe Amount-in-Controversy Requirement. There is no reason\nin principle why diversity cases involving larger liabilities\nshould not be heard in state court. However, raising the\njurisdictional amount is one means of reducing the volume of\ndiversity cases in the federal courts which may be less strongly\nresisted than the complete abolition approach. H.R. 3691's\nproposal for raising the amount to $100,000 would be a step in\nthe right direction. 26/\nThe Subcommittee should consider some additional measures\nthat would enhance the effectiveness of this type of reform:\nThe proposed figure of $100,000 may appear to set a high\nthreshold, but it does not actually do so, since plaintiffs'\nattorneys commonly allege damages which are many times greater\nthan any recovery that can realistically be expected. Raising\nthe jurisdictional amount to $100,000 would not even have the\neffect of excluding completely the class of cases in which\ndamages below $100,000 are now claimed, since in the presence of\na higher jurisdictional threshold some claims would be inflated\nso as to exceed this threshold.\n26/ The amount in controversy requirement for diversity cases\nhas been raised a number of times in the past. It was\ninitially set at $500 by the First Judiciary Act in 1789.\nIt was raised to $2,000 in 1887, to $3,000 in 1911, and to\n$10,000 in 1958.\nThe Consumer Price Index tables prepared by the Bureau of\nLabor Statistics of the Department of Labor show that 10,000\n1958 dollars would be worth about $35,000 today as a result\nof inflation. Raising the jurisdictional amount to $35,000\nwould accordingly do no more than conform 28 U.S.C. $1331 to\nCongress's judgment concerning the proper amount at the time\nof its enactment. The figure of $3,000 set in 1911 would\nsimilarly be equivalent to about $32,500 today as a result\nof inflation.\n- 13 -\nThere is not, at present, any meaningful deterrent to this\ntype of inflation of claims. Dismissal of a facially adequate\nclaim for failure to satisfy the jurisdictional amount requirement\ndepends on a \"legal certainty\" test that is rarely satisfied. 27/\nSection 1331 (b) of the Judicial Code provides that costs may be\ndenied to and imposed on the plaintiff if the jurisdictional\namount is not ultimately recovered, but this sanction has been\nundermined by narrowing construction 28/ and \"costs\" in the\npertinent sense are limited to the narrow range of expenses\ndescribed in section 1920 of the Judicial Code.\nThe Subcommittee might consider two modifications of the\nbill in response to these problems. First, the new jurisdictional\namount could be set at some higher figure than $100,000, such as\n$250,000 or $1,000,000. Second, the sanction of section 1331 (b)\ncould be strengthened by making it mandatory whenever the jurisdic-\ntional amount is not in fact recovered and by providing a definition\nof \"costs\" that more fully captures the true cost to the government\nof carrying out the adjudication of a diversity case. Broader\nnotions of \"costs\" of this type are discussed in section VI of\nthis report.\nAbstention. H.R. 3691 also provides for staying a diversity\ncase in favor of a state adjudication if certain conditions are\nsatisfied. If a federal district court found that a state court\nhad jurisdiction of all claims and parties, and that the state\ncourt could dispose of the claims in a timely manner, a two year\nstay of the federal proceedings would be required. If the action\nhad not been concluded in the state court within the two-year\nperiod, the district court would be permitted to resume the\nfederal proceeding, \"if the interests of justice would be so\nserved,\" upon motion of any party.\nAs the sponsor's statement notes, this approach would be\n\"sensitive to the potential impact on State courts of a sudden\nshift in cases from Federal to State courts\" since \"decisions\nabout when and whether to abstain would be made on the local\nlevel.\" 29/ Since some of the opposition to diversity reform\nreflects concerns over its effect on particular state systems,\napproaches that permit local variation are worth exploring as the\nbasis for a possible compromise or accommodation. The specific\napproach proposed in H.R. 3691 does, however, present some\nproblems or concerns.\n27/ See Wright, Miller & Cooper, Federal Practice and Procedure:\nJurisdiction § 3702 (1976).\n28/ See id. at 402.\n29/ 129 Cong. Rec. H6023 (July 29, 1983).\n- 14 -\nThe maximum stay of federal proceedings required by the bill\nis two years; if the case had not been disposed of in state court\nwithin that time, the federal proceeding could resume. The\ndisposition time for a case is not, however, independent of the\nchoices of the parties. In most cases it depends primarily on\nhow long it takes the parties to decide to settle and to reach\nagreement on the terms of settlement. Even in tried cases the\nduration of the litigation may depend to a large extent on the\ndecisions of the parties, including the inclination of a party to\nresort to the familiar tactics of delay. The system proposed in\nthe bill would give a party who preferred a federal forum an\nincentive to stall in the state proceedings so that the two-year\nperiod would elapse and continuation of the federal proceeding\ncould be sought.\nThe proposal also presents the potential for arbitrary dis-\ncrepancies in the treatment of different cases and litigants.\nResumption of the federal proceeding after two years would not be\nmandatory, but would depend on the district court's judgment that\ntaking back the case would serve the interests of justice. The\n\"interests of justice\" language provides no real guidance, so the\ndecision to resume federal proceedings might largely depend, as a\npractical matter, on how busy the responsible district judge is\nwith other cases, what his general attitude is towards diversity\ncases, and how interesting he finds the particular case. A\nsimilar potential for arbitrariness is presented by the bill's\nconditioning of abstention on a district judge's judgment that\nthe action can be disposed of in state court \"in a timely\nmanner.\"\nThe Subcommittee may wish to consider other approaches that\nwould permit variations responsive to local conditions but would\nnot involve comparable risks of manipulation or arbitrariness.\nOne possibility would be to authorize the judicial councils of\nthe circuits to adopt rules governing abstention in diversity\ncases for the districts in their circuits, subject to a final\ncoordinating authority in the Judicial Conference. This would\npermit the adoption of rules suited to the conditions in particu-\nlar districts, and would provide coordinating mechanisms at both\nthe circuit level and the national level which would be capable\nof addressing problems of forum-shopping and other difficulties\nthat might otherwise result from the application of different\nabstention rules in different courts. 30/ The suggested approach\n30/ In this respect the suggested approach avoids a problem with\nthe proposal of Professor David Shapiro that the individual\ndistrict courts be allowed to decide whether to retain\ndiversity jurisdiction. See Shapiro, Federal Diversity\nJurisdiction: A Survey and a Proposal, 91 Harv. L. Rev. 317,\n339-55 (1977). It is also preferable in that it commits the\n(Footnote Continued)\n- 15 -\nmay be compared to that of Title III of H.R. 6872 of the 97th\nCongress, which would permit the circuit councils to adopt\nexpediting or priority rules for civil cases, subject to a\ncoordinating authority in the Judicial Conference. 31/\nIV. H.R. 3692 -- An Increase in the Jurisdictional Amount and\nCompulsory Arbitration\nH.R. 3692 would raise the amount-in-controversy requirement\nfor diversity cases to $100,000 and would require that diversity\ncases be submitted to arbitration. The arbitration would be\ncarried out pursuant to rules issued by the Judicial Conference,\nand would normally have to be completed within a year. Trial de\nnovo could be obtained following arbitration, but if the party\nseeking a trial obtained a substantially less favorable result\nfrom the judgment of the court than from the arbitration, that\nparty would be required to pay the opposing party the full\nexpense of the litigation, including attorney's fees. 32/\nOur remarks concerning the proposal in H.R. 3691 to raise\nthe jurisdictional amount to $100,000 are equally applicable to\nthe corresponding proposal in this bill. The arbitration\nproposal raises both questions of design and questions of basic\napproach:\nQuestions of Design. The bill contains few specifications\nconcerning the arbitration system, leaving most matters to be\ndecided by the Judicial Conference. This approach makes the\nactual operation of the system unpredictable to some extent. It\ndoes, however, have the practical advantage of avoiding the need\nto reach agreement on the details of the system at the legis-\nlative stage. It would also make adjustments in the system in\nlight of experience with its operation easier to implement than\nan approach in which significant changes would normally require\nnew legislation.\n(Footnote Continued)\ndecision to bodies -- the circuit councils and the Judicial\nConference -- which include both circuit and district\njudges. Since the intake of diversity cases at the district\ncourt level has a large effect on the workload of the courts\nof appeals, see note 54 infra, it is appropriate to have\ncircuit judges as well as district judges involved in such a\ndecision.\n31/ See H.R. Rep. No. 824, 97th Cong., 2d Sess. 17 (1982).\n32/ For purposes of valuating fees and expenses, the bill\nincorporates by reference the provisions of the Equal Access\nto Justice Act.\n- 16 -\nThe bill provides that the limitation period applicable to\nan action would generally be suspended while arbitration was\ngoing on, but would start to run again when the arbitration was\ncompleted or one year after the start of the arbitration, whichever\nwas earlier. This is problematic in a case in which the arbitration\ncontinues beyond a year because of unnecessary delay by the\ndefendant. The limitation period would begin to run again\nagainst the plaintiff, who might be forced to choose between\nseeking trial de novo despite the fact that the arbitration was\nstill going on, or foregoing the possibility of trial de novo as\na result of the expiration of the limitation period.\nAn amendment is needed to ensure that a party would not be\nprejudiced or forced to make an undesired choice on account of\ndelay attributable to the other party. The bill is obviously\ncorrect in suspending the general limitation period applicable to\nan action when it is submitted to arbitration, but restarting\nsuch a period subsequently would not be necessary if the\narbitration rules specified suitable time limits for completing\narbitration and seeking trial de novo. 33/\nThe bill provides for fee-shifting against a party who seeks\ntrial de novo if the result of the trial is substantially less\nfavorable than the arbitral award. Under current law, there are\na broad variety of rules and statutes which require that other\nremedies be pursued before a federal judicial forum is sought. 34/\n33/ Restarting a statutory limitation period after a certain\ntime is not, in any event, an effective means of controlling\ndelay during arbitration or after it, since many years may\nremain prior to the expiration of such a period. Delay by\neither party could be effectively controlled through the\nJudicial Conference's prescription of time limits for\ncompletion of the various stages of arbitration and for\nseeking trial de novo following the conclusion of\narbitration. The rules of the three federal district courts\nthat have utilized arbitration do include such time limits\nand provide that the arbitral decision becomes final if\ntrial de novo is not sought within the time allowed. See\nE.A. Lind & J.E. Shapard, Evaluation of Court-Annexed\nArbitration in Three Federal District Courts 99-118 (Federal\nJudicial Center 1983).\n34/ For example, under the Federal Tort Claims Act, a claim must\nfirst be presented to the responsible agency. See 28 U.S.C.\n$ 2675. Employment discrimination claims must be presented\nto the EEOC for conciliation as provided in 42 U.S.C.\n§ 2000e-5. State judicial remedies must be exhausted before\na state prisoner can apply for federal habeas corpus. See\n28 U.S.C. § 2254 (b). Under the Civil Rights of\n(Footnote Continued)\n- 17 -\nThere are also many provisions that require a party who has\nproceeded to litigation without necessity or adequate justifi-\ncation to bear the resulting costs and expenses, where \"neces-\nsity\" and \"justification\" are either the subject of an express\njudicial determination or are defined in terms of the outcome of\nthe case. 35/ In the circumstances in which H.R. 3692 authorizes\nfee-shifting -- a substantially less favorable verdict than the\narbitral award -- the outcome of the litigation demonstrates that\nproceeding to trial was not necessary to secure the compensation\nto which the party who sought a trial was entitled, since he\nwould actually have done better if he had accepted the arbitral\naward. Requiring that party to bear the other party's expenses\nin such circumstances is similar in principle to the existing\ncost and fee-shifting provisions noted above.\nWhile we see no problem in principle with this provision,\nthe conditioning of fee-shifting on a \"substantially less favor-\nable\" outcome introduces an element of vagueness -- and an\n(Footnote Continued)\nInstitutionalized Persons Act, suits by prisoners under 42\nU.S.C. § 1983 may be stayed up to 90 days while the\nplaintiff pursues state administrative remedies conforming\nto federal standards. See 42 U.S.C. $ 1997e.\n35/ For example, \"costs,\" as defined in 28 U.S.C. § 1920, are\nnormally included in a judgment against a party in a federal\ncase. Costs may be shifted to the plaintiff in a diversity\ncase if he fails to recover the jurisdictional amount. See\n28 U.S.C. § 1332 (b). Under 28 U.S.C. $ 1912 an appellate\ncourt \"may adjudge to the prevailing party just damages for\nhis delay, and single or double costs\" when a judgment is\naffirmed on appeal.\nThere are dozens of rules and statutes that authorize awards\nof attorney's fees, either generally or under certain\nconditions. For example, attorney's fees may be awarded in\nany case against a party who proceeds in bad faith. The\nEqual Access to Justice Act makes the government liable for\nattorney's fees to prevailing parties in civil actions not\nsounding in tort, unless the government's position is\nsubstantially justified or certain other exceptions apply.\nSee 28 U.S.C. § 2412. Under 42 U.S.C. § 1983 and the other\nstatutes specified in 42 U.S.C. § 1988, a prevailing plain-\ntiff is normally awarded attorney's fees and a prevailing\ndefendant is awarded attorney's fees if the suit was\nfrivolous, harassing, or vexatious. 42 U.S.C. $ 2000e-5 (k)\ngenerally authorizes awards of attorney's fees to prevailing\nparties in employment discrimination cases. 28 U.S.C.\n§ 1875 (d) (2) authorizes fee-shifting in favor of a juror who\nsuccessfully sues an employer for discrimination based on\njury service.\n- 18 -\nattendant likelihood of interpretive litigation -- which serves\nno obvious purpose. If the outcome of the trial is the same as\nthe arbitral award or less favorable than the arbitral award to\nany degree, it appears that the recourse to litigation was\nunnecessary to secure the compensation to which the party who\nsought a trial was entitled, and the basic rationale for fee-\nshifting is applicable. It would be preferable to provide for\nfee-shifting whenever the outcome of the trial is not more\nfavorable than the arbitral award, rather than when it is\n\"substantially less favorable. 36/\nQuestions of Basic Approach. The more basic question for\nthe Subcommittee to consider is whether requiring arbitration for\nall diversity cases in all parts of the country is too large a\nstep to take at one time. The available evidence concerning the\neffects of arbitration consists of experiments in three federal\ndistricts which have gone on for a number of years, 37/ and a\nlarger body of experience with arbitration in state systems. 38/\nIf a uniform arbitration requirement seems excessive at this\ntime, the Subcommittee may wish to consider a more flexible\napproach under which the circuit councils would be given authority\nto require arbitration of diversity cases in the districts in\ntheir circuits, subject to a coordinating authority in the\nJudicial Conference. 39/ This would enable the workload\nresulting from diversity cases to be reduced in districts in\nwhich arbitration proved to be productive, and would provide a\nlarger body of experience that would inform future legislative\ndecisions concerning the use of arbitration in federal cases.\nV. H.R. 3693 -- Limiting Access to a Federal Forum to Out-of-\nState Litigants\nThe final bill in the series is a classical intermediate\nreform option which was proposed by the American Law\n36/ Two federal district courts have used a \"not more favorable\"\nstandard in their arbitration rules concerning cost-shifting\nas a sanction for unnecessary resort to trial. See E.A.\nLind & J.E. Shapard, supra note 33, at 111, 118.\n37/ See generally id.; Levin, Court-Annexed Arbitration, 16 U.\nMich. J.L. Reform 537 (1983).\n38/ See generally Levin, supra note 37.\n39/ As noted earlier, see text accompanying note 31 supra, this\nis similar to the approach proposed for civil priority rules\nin H.R. 6872.\n- 19 -\nInstitute 40/ and considered in the 95th Congress. 41/ It would\nlimit filing in federal court in diversity cases to out-of-state\nlitigants. In relation to the historical justification of\ndiversity jurisdiction as a means of protecting parties from bias\nagainst persons from other states, there is no point in allowing\na federal forum to be sought by an in-state litigant. Such a\nlitigant could only benefit from local favoritism or partiality\nin state proceedings.\nIn relation to current law, H.R. 3693 would simply equalize\nthe position of plaintiffs and defendants. Section 1441 (b) of\nthe Judicial Code now bars a defendant from removing a diversity\ncase to federal court if he is sued in his home state, but a\nplaintiff is free to initiate a diversity suit in federal court\nin his home state.\nThe reform of H.R. 3693 would not reduce the federal diver-\nsity caseload by a proportion fully equal to the current propor-\ntion of cases brought into federal court by in-state litigants.\nConsider, for example, a case that under the current system would\nbe brought in federal court by an in-state plaintiff. Under the\nreform the plaintiff would instead have to initiate the suit in\nstate court, if he wished to litigate in his own state. This\ndoes not necessarily mean, however, that the litigation would be\ncarried out in state court, since the defendant would retain the\noption of removing the case to federal court. Also, a plaintiff\nwith the capacity to litigate in more than one state might\ndeliberately choose to sue in some state other than his home\nstate in order to have access to a federal forum. 42/ It is,\nnevertheless, reasonable to expect that the reduction in federal\n40/ See American Law Institute, Study of the Division of\nJurisdiction Between State and Federal Courts 123-25 (1969).\n41/ See generally 1978 Senate Diversity Jurisdiction Hearings,\nsupra note 2; 1977 House Diversity Jurisdiction Hearings,\nsupra note 2.\n42/ This possibility would be limited, however, by the\ndifficulty of litigating out-of-state for many litigants,\nand by venue restrictions. Under the amendment to 28 U.S.C.\n§ 1391 (a) proposed in the bill, venue would be limited to\ndistricts in which all plaintiffs or all defendants reside,\nand districts containing a substantial part of the events\ngiving rise to the claim or a substantial part of the\nproperty that is the subject of the action.\nThe potential for such forum-shopping could be further\nlimited by confining access to a federal forum to cases in\nwhich at least one of the parties is litigating in his home\nstate, as proposed in the ensuing textual discussion.\n- 20 -\ndiversity cases resulting from the enactment of H.R. 3693 would\nbe substantial.\nWe would recommend one improvement in the proposal -- the\nbill should provide that the party adverse to the party seeking a\nfederal forum must be a citizen of the state in which the suit is\nbrought. In the absence of such a limitation, a federal forum\ncould be obtained where neither party was a citizen of the state\nin which the suit was brought. 43/ There is no point in retaining\nthis option under the historical justification of diversity\njurisdiction noted above, 44/ since bias against persons from\nother states in the forum state would not create a relative\nadvantage for either party in a case in which both parties were\nnot citizens of the forum state.\nVI. Other Reform Options\nA. Discretionary Appellate Review\nThe Subcommittee should consider a suggestion of Judge Carl\nMcGowan of the D.C. Circuit that appellate review in diversity\ncases be made available only by leave of the courts of\nappeals. 45/ Diversity cases now account for about 15% of\nappeals from district court decisions; making appellate review\ndiscretionary would plausibly eliminate much of the burden that\nis currently imposed on the courts of appeals by these cases.\nThis reform would involve a departure from the normal rule\nthat a litigant is afforded one appeal as a matter of right\nbeyond the trial stage. However, the principal benefits provided\nby appellate review in other contexts -- correction of legal\nerrors and maintenance of decisional uniformity -- are not\nrealized in the normal manner in diversity cases.\nFederal diversity jurisdiction, to begin with, involves\ntransferring a class of state law cases from the state judges --\nwho have the greatest expertise and familiarity with this body of\nlaw -- to federal district judges, whose exposure to state law is\nmore limited. The federal courts of appeals are further removed\nfrom the state systems whose law they are required to apply in\ndiversity cases. A federal district judge often has had prior\n43/ This was not allowed between 1789 and 1875. Changes in the\nstatutory language in 1875 abrogated the requirement that at\nleast one party must be a citizen of the forum state.\n44/ I.e., protection from bias against persons from other\nstates.\n45/ See McGowan, The View from an Inferior Court, 19 San Diego\nL. Rev. 659, 666 (1982).\n- 21 -\nexperience as a practitioner in the legal system of the state in\nwhich his district is located. The federal appellate circuits,\nhowever, generally extend over a number of states, so a circuit\njudge hearing a diversity appeal will most likely have no first-\nhand experience with the legal system of the state whose law is\nbeing applied in the case.\nDiversity appeals accordingly subject the decisions of\ndistrict judges, who have some degree of expertise on state law\nmatters, to review for error by circuit judges, who have\nrelatively little expertise in pertinent state law. Appellate\nreview of this character is less likely to provide significant\nbenefits in terms of increased accuracy than appellate review in\nnormal federal cases which depend on the interpretation and\napplication of federal law. 46/\nAppellate review in diversity cases also does not operate in\nthe normal manner to produce decisional uniformity. The federal\ncourts of appeals have no authority to expound or develop state\nlaw, but are limited to serving as \"ventriloquist's dummies\" for\nthe state courts in diversity cases; their decisions on state law\nissues do not, of course, have any binding effect on the courts\nof the states within the circuit. Moreover, a federal appellate\ndecision on a state law issue has only provisional value in\nproducing uniformity in the decisions of the district courts in\nlater diversity cases in the circuit, since it loses effect if\nthe state courts subsequently address the issue and reach a\ndifferent conclusion. 47/\nHence, appellate review in federal diversity cases serves\nthe normal functions of appellate review, at best, to a limited\ndegree. It is dubious that the slight benefits that may result\nfrom making such review available as a matter of right justify\nthe costs and burdens that result to the federal courts of\n46/ In other words, if an appellate panel reverses a district\ncourt judgment on federal law grounds, it is probable that\nthe appellate panel is correct and the district court was\nmistaken. When an appellate panel reverses a district court\njudgment on state law grounds in a diversity case, however,\nit may be equally probable or more probable that the\nappellate panel is mistaken and the district judge was\ncorrect. If this is so, then appellate review of state law\nquestions in diversity cases produces no net gain in terms\nof error correction, or may actually be counterproductive.\n47/ See American Institute of Chemical Engineers V. Reber-Friel\nCo., 682 F.2d 382, 392 (2d Cir. 1982) (Feinberg, C.J.,\nconcurring).\n- 22 -\nappeals. For diversity cases that incidentally present signifi-\ncant questions of federal law or procedure, discretionary review\nby the courts of appeals should be an adequate recourse. 48/\nB. Charging a User's Fee\nFederal diversity jurisdiction has remained in existence\nbecause many members of the trial bar and certain of their\nclients prefer maintaining a choice of forums in diversity cases.\nGratifying this preference consumes a large part of the total\nresources of the federal judicial system. This misallocation of\nfederal resources could be corrected by charging diversity\nlitigants who seek a federal forum the costs to the federal\ngovernment of carrying out the resulting adjudications. This\nwould preserve a federal forum in diversity cases for litigants\nwho considered such a forum valuable enough to warrant paying for\nit, but would end the commitment of federal resources to a\nfunction which the states are fully competent to perform.\nCosts can now be charged to litigants in diversity cases\nand other cases in federal court, but the expenses characterized\nas \"costs\" are a small fraction of the true expense of adjudica-\ntions to the federal government. They do not include, for\nexample, the portion of the salary of the judge and judicial\nsupport personnel allocated to work on a case, or the costs of\nmaintaining courtroom facilities and other elements of overhead.\nA fuller measure of costs would be required in implementing this\napproach.\nOne possibility would be to determine on a case-by-case\nbasis how much carrying out an adjudication had cost the govern-\nment, and to charge that amount to the party who had filed in\nfederal court. The determinations involved would be similar in\nmany respects to those required in making awards of attorney's\nfees. While the example of attorney's fees awards suggests that\nthis approach would not be impossible, it also suggests that it\ncould be burdensome and time-consuming. A case-by-case deter-\nmination would also increase record-keeping burdens, since\n48/ Under this proposal it would not, of course, be necessary\nfor each judge of a court of appeals to pass on an\napplication for discretionary review. The courts of appeals\nwould be free to adopt the more efficient procedure of\ndelegating the screening function for discretionary review\nto a smaller number of judges, just as the function of\ndeciding cases on the merits is now routinely delegated to\nthree-judge panels. Cf. Fed. R. App. P. 22 (request to a\ncircuit court for a certificate of probable cause, which is\nrequired as a prerequisite to appeal in habeas corpus\nproceedings, is to be considered by a circuit judge or\njudges as the court directs).\n- 23 -\njudicial personnel would have to keep track of the amount of time\nthey had spent on particular diversity cases.\nA second possibility would be to have diversity litigants as\na class bear the full cost of diversity cases as a class by\ncharging in each case the average amount. In other words, the\naverage total cost to the federal judicial system of a diversity\ncase would be determined, and any diversity litigant filing in\nfederal court would be charged a filing fee equal to that amount.\nThis would be the simplest and most efficient approach.\nA final possibility would be some hybrid of the preceding\ntwo approaches. For example, a uniform fee corresponding to the\nbasic salary and overhead costs of the average diversity case\nmight be charged in each case, and, in addition, readily ascer-\ntainable costs of specified types which had been present in a\nparticular case could be charged at their actual amounts. 49/\nThis approach would avoid a potentially burdensome case-by-case\ninquiry as to the actual total cost of a case to the system, but\nwould result in a closer approximation of the amount charged to\nactual cost.\nC. Requiring a Particularized Showing of Bias\nThe continuation of diversity jurisdiction is sometimes\njustified by reference to a supposed danger of bias in state\nproceedings against litigants from other states. Access to a\nfederal forum in diversity cases might be conditioned on a\nshowing that bias of this type would actually be encountered in\nstate proceedings.\nThis approach would be consistent with that taken under\nother remedies for bias. In both the state and federal systems,\nfor example, a purely abstract possibility of bias is not grounds\nfor granting a change of venue; rather, an actual danger of bias\nin the initial venue must be established. Under the \"local bias\"\nrationale for retaining federal diversity jurisdiction, it is\nconceived of as a change-of-venue mechanism, by which cases are\nremoved from a state jurisdiction to the federal jurisdiction as\na response to possible bias against out-of-state litigants.\nGiven this conception, it is difficult to see why the\nshowing of an actual danger of bias that is normally required for\nchange of venue should be dispensed with. This approach could be\nimplemented by requiring, as a condition for proceeding in\nfederal court in diversity cases, a showing by a party that he\nwould be denied an impartial trier or tribunal in state\nproceedings on account of bias against persons from other states,\n49/ Cf. the compensation schedules for \"costs\" in chapter 123 of\nthe Judicial Code.\n- 24 -\nand that transferring the case to federal court would avoid such\nbias.\nD.\nRedefining Corporate Citizenship\nA final possibility would be to re-define the notion of\nstate citizenship for corporations so that diversity of citizen-\nship would be present in a smaller class of cases. This has been\ndone in the past. State citizenship for corporations was initially\ndefined as the state of incorporation. As a result of legislation\nadopted in 1958, however, a corporation is now also deemed a\ncitizen of the state in which it has its principal place of\nbusiness. 50/ Since most diversity cases involve corporate\nlitigants, 51/ broadening the notion of state citizenship for\ncorporations could have a significant effect on the volume of\ndiversity cases.\nIt might, for example, be provided that a corporation is a\ncitizen of any state in which it is licensed to do business. 52/\nThis approach seems consonant with the supposed function of\ndiversity jurisdiction as a safeguard against bias against\nout-of-state parties. Under the stated condition, a corporation\nwould be an in-state enterprise as well as an out-of-state\nenterprise -- even if its principal place of business and place\nof incorporation were elsewhere -- and would not obviously be\nmore exposed to the possibility of local bias than other business\noperations in the state. 53/\n50/ See 28 U.S.C. $ 1332 (c). As a result of legislation adopted\nin 1964, $ 1332 (c) further provides that, in a direct action\nagainst an insurer, the insurer is also deemed a citizen of\nthe state of which the insured is a citizen.\n51/ See 1978 Senate Diversity Jurisdiction Hearings, supra\nnote 2, at 66 (one or both of the opposing parties is a\ncorporation in over 75% of diversity cases).\n52/ For discussion of other possible changes in the notion of\ncorporate citizenship, see American Law Institute, supra\nnote 40, at 125-29; Wright, Miller & Cooper, supra note 27,\n$3601 at 583 (proposal to bar federal forum where\ncorporation doing business in state is sued on a claim\narising from its activities in the state).\n53/ Consider, for example, a case in which a citizen of Delaware\nsues a corporation which is incorporated in Delaware\n(\"Corporation A\") but does no business there, and an\notherwise similar case in which a Delaware citizen sues a\ncorporation (\"Corporation B\") which is not a citizen of\nDelaware as that notion is currently defined but which\n(Footnote Continued)\n- 25 -\n* * *\nIn sum, the Department of Justice supports the general\nabolition of diversity jurisdiction proposed in H.R. 3689 and\nsupports the intermediate reform options proposed or suggested by\nthe remaining bills as discussed in this report.\nThe limitation or elimination of diversity jurisdiction is\nlong overdue. No other pending reform is of comparable\nimportance in relieving the overload of the federal judicial\nsystem 54/; no reform could be more appropriate as an adjustment\nof feceral-state responsibilities under the principles of\nfederalism. We commend the leadership you have shown on this\nissue and earnestly hope that this initiative will be met with a\nspirit of statesmanship and accommodation among other interested\nmembers of Congress.\nThe Office of Management and Budget has advised that there\nis no objection to the submission of this report from the\nstandpoint of the Administration's program.\nSincerely,\nRobert A. McConnell\nAssistant Attorney General\n(Footnote Continued)\ncarries on substantial business in Delaware and employs many\npeople in the state. If we assume -- as the \"local bias\"\nrationale for retaining diversity jurisdiction requires --\nthat people in Delaware are prejudiced against out-of-state\nbusinesses, it is apparent that Corporation A would be at\ncreater risk on account of such prejudice than Corporation\nB, but the current rules would allow a federal forum in the\nsuit against B but not A. The suggested re-definition of\ncorporate citizenship would avoid such perverse results.\n54/ As noted earlier, diversity cases account for about\none-quarter of all civil filings, 40% of all civil trials,\nand 60% of all civil jury trials in the federal districts\ncourts, and for about 15% of appeals from district court\ndecisions. They take up over one-fifth of the total work\ntime of federal district judges. See Federal Judicial\nCenter, Federal District Court Time Study 15 (1979).\nID #\n224137 CU\nJV\nWHITE HOUSE\nF6050\nCORRESPONDENCE TRACKING WORKSHEET\no OUTGOING\nH . INTERNAL\n1. INCOMING\nDate Correspondence\nReceived (YY/MM/DD)\n/\n/\nName of Correspondent: James MURR\nOMB\nMI Mail Report\nUser Codes: (A)\n(B)\n(C)\nSubject: H.R 3689 H.R. 3690, H.R. 3691 H.R 3692, H.R 369\nand draft DOJ report on the preceding bills\ndiversity Jurisdiction\nrelated to redistricting or oraddishing Federal\nROUTE TO:\nACTION\nDISPOSITION\nTracking\nType\nCompletion\nAction\nDate\nof\nDate\nOffice/Agency\n(Staff Name)\nCode\nYY/MM/DD\nResponse\nCode\nYY/MM/DD\nCUHOU\nORIGINATOR 84,04,27\n/\n/\nReferral Note:\nCUAT 18\n84,04,27\n584,05,04\nReferral Note:\n/\n/\n/\n/\n-\nReferral Note:\n/\n/\n/\n/\n-\nReferral Note:\n/\n/\n/\n/\n-\nReferral Note:\nACTION CODES:\nDISPOSITION CODES:\nA . Appropriate Action\nI Info Copy Only/No Action Necessary\nA Answered\nC Completed\nC Comment/Recommendation\nR - Direct Reply w/Copy\nB - Non-Special Referral\nS Suspended\nD Draft Response\nS For Signature\nF . Furnish Fact Sheet\nX Interim Reply\nto be used as Enclosure\nFOR OUTGOING CORRESPONDENCE:\nType of Response = Initials of Signer\nCode = \"A\"\nCompletion Date = Date of Outgoing\nComments:\nKeep this worksheet attached to the original incoming letter.\nSend all routing updates to Central Reference (Room 75, OEOB).\nAlways return completed correspondence record to Central Files.\nRefer questions about the correspondence tracking system to Central Reference. ext. 2590.\n5/81\nTHE WHITE HOUSE\nOffice of the Press Secretary\nFor Immediate Release\nMay 3, 1984\nThe President today signed the following legislation:\nS. 1186 which restores coastal trading privileges for the vessels\nDad's Pad and Zorba; and\nS.J. Res. 210 which designates the year beginning April 1, 1984,\nand ending March 31, 1985, as the \"Year of Excellence in Education.\"\n=\n# # #\nTHE WHITE HOUSE\nWASHINGTON\nMay 2, 1984\nMEMORANDUM FOR FRED F. FIELDING\nFROM:\nJOHN G. ROBERTS\nofd\nSUBJECT:\nDraft OMB Report on S. 919, a Bill\nto Reauthorize the Equal Access to\nJustice Act and for Other Purposes\nOMB has asked for our views as soon as possible on a\nproposed OMB report on S. 919, a bill to reauthorize and\namend the Equal Access to Justice Act. The brief OMB report\nreiterates points made in the more elaborate Justice Depart-\nment report on S. 919, which we cleared several weeks ago.\nThe report expresses support for a reauthorization of the\nEqual Access to Justice Act, but objects to provisions in\nS. 919 that would change the current law. Specifically, the\nreport objects to a provision defining the position of the\nUnited States that must be \"substantially justified\" to\navoid shifting legal fees as the underlying agency action\nrather than the position argued in court. This provision\nwould greatly expand the inquiry under the Act and require\ncourts to go beyond the position argued in court and\nscrutinize previous agency arguments, even though the agency\nabandoned them. The OMB report also opposes extending the\nAct to non-adversary Social Security Act hearings, and to de\nnovo review of agency determinations not to award fees under\nthe Act.\nThis report is consistent with the previously-cleared\nJustice report, and I have no objections.\nAttachment\nTHE WHITE HOUSE\nWASHINGTON\nMay 2, 1984\nMEMORANDUM FOR BRANDEN BLUM\nLEGISLATIVE ATTORNEY\nOFFICE OF MANAGEMENT AND BUDGET\nFROM:\nFRED F. FIELDING Orig. signed by FFF\nCOUNSEL TO THE PRESIDENT\nSUBJECT:\nDraft OMB Report on S. 919, a Bill\nto Reauthorize the Equal Access to\nJustice Act and for Other Purposes\nCounsel's Office has reviewed the above-referenced report,\nand finds no objection to it from a legal perspective.\nFFF:JGR:aea 5/2/84\nCC: FFFielding/JGRoberts/Subj/Chron\nTHE WHITE HOUSE\nWASHINGTON\nMay 2, 1984\nMEMORANDUM FOR BRANDEN BLUM\nLEGISLATIVE ATTORNEY\nOFFICE OF MANAGEMENT AND BUDGET\nFROM:\nFRED F. FIELDING\nCOUNSEL TO THE PRESIDENT\nSUBJECT:\nDraft OMB Report on S. 919, a Bill\nto Reauthorize the Equal Access to\nJustice Act and for Other Purposes\nCounsel's Office has reviewed the above-referenced report,\nand finds no objection to it from a legal perspective.\nFFF:JGR:aea 5/2/84\n1\nCC: FFFielding/JGRoberts/Subj/Chron\nID #.\nCU\nWHITE HOUSE\nCORRESPONDENCE TRACKING WORKSHEET\n0 . OUTGOING\nH INTERNAL\nI . INCOMING\nDate Correspondence\nReceived (YY/MM/DD)\n/\n/\nName of Correspondent:\nJames Murr\nMI Mail Report\nUser Codes: (A)\n(B)\n(C)\nSubject: Draft OMB report on S. 919 a bill to\nreauthorize the Equal Access to Justice Act and\nfor others purposes\nROUTE TO:\nACTION\nDISPOSITION\nTracking\nType\nCompletion\nAction\nDate\nof\nDate\nOffice/Agency\n(Staff Name)\nCode\nYY/MM/DD\nResponse\nCode\nYY/MM/DD\nCuttou\nORIGINATOR 84/04/30\n/\n/\nReferral Note:\nCUAT 18\nD 84 74 30\n$84,05,01\nReferral Note:\nC.O.B B\n/\n/\n/\n/\nReferral Note:\n/\n/\n/\n/\n-\nReferral Note:\n/\n/\n/\n/\n-\nReferral Note:\nACTION CODES:\nDISPOSITION CODES:\nA . Appropriate Action\nI Info Copy Only/No Action Necessary\nA Answered\nC Completed\nC Comment/Recommendation\nR. Direct Reply w/Copy\nB - Non-Special Referral\nS Suspended\nD - Draft Response\nS For Signature\nF - Furnish Fact Sheet\nX . Interim Reply\nto be used as Enclosure\nFOR OUTGOING CORRESPONDENCE:\nType of Response = Initials of Signer\nCode = \"A\"\nCompletion Date = Date of Outgoing\nComments:\nKeep this worksheet attached to the original incoming letter.\nSend all routing updates to Central Reference (Room 75, OEOB).\nAlways return completed correspondence record to Central Files.\nRefer questions about the correspondence tracking system to Central Reference, ext. 2590.\n5/81\nEXECUTIVE OFFICE OF THE PRESIDENT\nOFFICE OF management AND BUDGET\nWASHINGTON, D.C. 20503\nApril 27, 1984\nSPECIAL\nLEGISLATIVE REFERRAL MEMORANDUM\nTO:\nLEGISLATIVE LIAISON OFFICER\nDepartment of Justice\nDepartment of Health and Human Services\nDepartment of the Interior\nDepartment of the Treasury\nGeneral Services Administration\nDepartment of Transportation\nDepartment of Housing and Urban Development\nDepartment of Defense\nFederal Labor Relations Authority\nNational Labor Relations Board\nSmall Business Administration\nSUBJECT:\nDraft OMB report on S. 919, a bill to reauthorize the Equal Access\nto Justice Act and for other purposes\nThe Office of Management and Budget requests the views of your\nagency on the above subject before advising on its relationship\nto the program of the President, in accordance with OMB Circular\nA-19.\nPlease provide us with your views no later than\nCOB Tuesday, May 1, 1984. (NOTE: A Justice report on S. 919 was circulated for\ncomment 4/19/84.)\nDirect your questions to Branden Blum (395-3802), the legislative\nattorney in this office.\nJames C. Murr for\nAssistant Director for\nLegislative Reference\nEnclosure\nCC: C. Wirtz\nK. Wilson\nP. Szervo\nP. Woodworth\nR. Greene\nF. Fielding\nHonorable Strom Thurmond\nChairman\nDRAFT\nCommittee on the Judiciary\nUnited States Senate\nWashington, D.C. 20510\nDear Mr. Chairman:\nS. 919, permanently reauthorizing the Equal Access to Justice Act\ncreates serious problems in its present form. The Administration\nis particularly concerned about the provisions of S. 919 that\nwould (a) extend the Act to Social Security Act hearings, and,\n(b) define the position of the United States which must be\n\"substantially justified\" to include the \"underlying agency\naction\".\nThe underlying agency action provision, if adopted, is certain to\ngenerate lengthy litigation over which parties within an agency\ntook given positions, and when they did so -- all for sole direct\npurpose of determining and further generating legal fee payments.\nMoreover, in most cases where agency actions are overturned, the\nprovision would, in effect, establish an automatic fee payment\nrequirement. (This is a result rejected by the D.C. Circuit in\nthe case of Spencer V. NLRB, 712 F.2d 539.) Further, as a result\nof the provision in S. 919 that would eliminate the judgment fund\nas a source of payment, excessive and unanticipated fee payments\nwill come out of S&E accounts and will increase the pressure for\nand incidence of late-year appropriations supplementals.\nAccordingly, the Administration strongly believes that\nmaintenance of the status quo or modification of the current\nlanguage of the bill is in order.\nThe proposed extension of Act to non-adversary Social Security\nAct hearings is also objectionable, and may have the unintended\neffect of forcing government representation at all stages of SSA\nproceedings. The protracted administrative proceedings likely to\nresult from extension of the Act to such hearings will, in the\nend, adversely affect the ability of claimants to pursue\nbenefits. Such a result would not be consistent with current\nefforts to improve the SSA system. Accordingly, the\nAdministration strongly opposes any inclusion of non-adversary\nSSA hearings under the Act.\nThe Administration is also concerned about the de novo review\nprovision which will require the court to conduct a complete\nrehearing of the agency determination not to award EAJA fees.\nThe result would be an increase in the cost of litigation and\ncourt time and would further increase the number of fee awards.\nThe Administration is prepared to support a straight\nreauthorization of the Act on a permanent basis or to reach\nfurther compromise on the language of the bill, but strongly\nrecommends against favorable consideration by the Committee of\n2\nS. 919 in its current form.\nDRAFT\nSincerely,\nDavid A. Stockman\nDirector\nTHE WHITE HOUSE\nWASHINGTON\nMay 16, 1984\nMEMORANDUM FOR FRED F. FIELDING\nFROM:\nJOHN G. ROBERTS OPR\nSUBJECT:\nH.R. 4176 -- Boundary Confirmation of\nthe Southern Ute Indian Reservation\nRichard Darman has asked for comments on the above-\nreferenced enrolled bill by 5:00 p.m. Thursday, May 17.\nThis bill is intended to remove the considerable confusion\nthat has arisen over the status of land within the Southern\nUte Indian Reservation in Southwestern Colorado, and the\naccompanying confusion concerning legal jurisdiction. The\nbill would fix the boundaries of the reservation, define\n\"Indian trust land\" within the reservation, and then specify\nwhich authority has jurisdiction over Indians and non-Indians\non such land. Indian territorial jurisdiction over non-Indians\nis limited to trust land, and non-Indians on trust land are\nsubject to Federal enclave law pursuant to 18 U.S.C. § 1152\nonly on such trust land. The bill would also permit the\nState of Colorado to exercise criminal and civil jurisdiction\nover incorporated towns within the reservation.\nOMB and Interior recommend approval, Justice has no objection,\nand Agriculture defers to Interior. Agriculture unsuccessfully\nattempted to have a provision added to the bill specifying\nthat the bill did not affect the San Juan National Forest;\nbut language to this effect was included in the pertinent\ncommittee reports. I have reviewed the memorandum for the\nPresident prepared by OMB Assistant Director for Legislative\nReference James M. Frey, and the bill itself, and have no\nobjections.\nAttachment\nTHE WHITE HOUSE\nWASHINGTON\nMay 16, 1984\nMEMORANDUM FOR RICHARD G. DARMAN\nASSISTANT TO THE PRESIDENT\nFROM:\nFRED F. FIELDING Orig. signed by FFF\nCOUNSEL TO THE PRESIDENT\nSUBJECT:\nH.R. 4176 -- Boundary Confirmation of\nthe Southern Ute Indian Reservation\nCounsel's Office has reviewed the above-referenced enrolled\nbill, and finds no objection to it from a legal perspective.\nFFF:JGR:aea 5/16/84\nCC: FFFielding/JGRoberts/Subj/Chron\nTHE WHITE HOUSE\nWASHINGTON\nMay 16, 1984\nMEMORANDUM FOR RICHARD G. DARMAN\nASSISTANT TO THE PRESIDENT\nFROM:\nFRED F. FIELDING\nCOUNSEL TO THE PRESIDENT\nSUBJECT:\nH.R. 4176 -- Boundary Confirmation of\nthe Southern Ute Indian Reservation\nCounsel's Office has reviewed the above-referenced enrolled\nbill, and finds no objection to it from a legal perspective.\nFFF:JGR:aea 5/16/84\nCC: FFFielding/JGRoberts/Subj/Chron\nID #. 204551 CU\nWHITE HOUSE\nCORRESPONDENCE TRACKING WORKSHEET\n0 . OUTGOING\nH - . INTERNAL\nI - INCOMING\nJGR\nDate Correspondence\nReceived (YY/MM/DD)\n/\n/\nName of Correspondent:\nRichard Darman\nMI Mail Report\nUser Codes: (A)\n(B)\n(C)\nSubject: H.R. 4176 - Boundary Confirmational\nthe Southern uTe Indian Reservation\nROUTE TO:\nACTION\nDISPOSITION\nTracking\nType\nCompletion\nAction\nDate\nof\nDate\nOffice/Agency\n(Staff Name)\nCode\nYY/MM/DD\nResponse\nCode\nYY/MM/DD\nClettou\nORIGINATOR 84 /05/15\n/\n/\nReferral Note:\nCUAT 18\n14\n84/05/15\nS 8405117\nReferral Note:\n5:00pm\n/\n/\n/\n/\n-\nReferral Note:\n/\n/\n/\n/\n-\nReferral Note:\n/\n/\n/\n/\n-\nReferral Note:\nACTION CODES:\nDISPOSITION CODES:\nA . Appropriate Action\nI . Info Copy Only/No Action Necessary\nA Answered\nC Completed\nC - Comment/Recommendation\nR - Direct Reply w/Copy\nB . Non-Special Referral\nS : Suspended\nD Draft Response\nS For Signature\nF . Furnish Fact Sheet\nX Interim Reply\nto be used as Enclosure\nFOR OUTGOING CORRESPONDENCE:\nType of Response = Initials of Signer\nCode = \"A\"\nCompletion Date = Date of Outgoing\nComments:\nKeep this worksheet attached to the original incoming letter.\nSend all routing updates to Central Reference (Room 75, OEOB).\nAlways return completed correspondence record to Central Files.\nRefer questions about the correspondence tracking system to Central Reference, ext. 2590.\n5/81\nDocument No. 204551ss\nWHITE HOUSE STAFFING MEMORANDUM\nDATE:\n5/15/84\nACTION/CONCURRENCE/COMMENT DUE BY:\n5:00 p.m. May 17th\nSUBJECT:\nH.R. 4176 BOUNDARY CONFIRMATION OF THE SOUTHERN UTE\nINDIAN RESERVATION\nACTION FYI\nACTION FYI\nVICE PRESIDENT\nMcFARLANE\nMEESE\nMcMANUS\nBAKER\nMURPHY\nDEAVER\nOGLESBY\nSTOCKMAN\nROGERS\nDARMAN\nP\nSS SPEAKES\nFELDSTEIN\nSVAHN\nFIELDING\nVERSTANDIG\nFULLER\nWHITTLESEY\nHERRINGTON\nHICKEY\nJENKINS\nREMARKS:\nPlease provide any comments/recommendations by 5:00 p.m. Thursday,\nMay 17th.\nThank you.\nRESPONSE:\nRichard G. Darman\nAssistant to the President\n1984 MAY 15 PM 5: 18\nExt. 2702\nRo.\nOFFICE OF PRESIDENT UNITED\nEXECUTIVE OFFICE OF THE PRESIDENT\nS\nOFFICE OF MANAGEMENT AND BUDGET\n1984 MAY 15 4: 23\nWASHINGTON, D.C. 20503\nMEMORANDUM FOR THE PRESIDENT\nSubject: Enrolled Bill H.R. 4176 - Boundary Confirmation of the\nSouthern Ute Indian Reservation\nSponsor - Rep. Kogovsek (D) Colorado\nLast Day for Action\nMay 22, 1984 - Tuesday\nPurpose\n(1) Confirms the boundaries of the Southern Ute Reservation in\nColorado and (2) clarifies criminal and civil jurisdiction over\nIndians and non-Indians.\nAgency Recommendations\nOffice of Management and Budget\nApproval\nDepartment of the Interior\nApproval\nDepartment of Justice\nNo objection\n(Inf\nDepartment of Agriculture\nDefers to Interior\nDiscussion\nH.R. 4176 would (1) confirm the boundaries of the Southern Ute\nReservation in southwestern Colorado to conform to the\nadministrative area within which the Bureau of Indian Affairs now\nexercises its service responsibilities; (2) define Indian trust\nland for the purpose of establishing criminal and civil\njurisdiction within the reservation boundaries; and (3) clarify\ncriminal and civil jurisdiction over Indians and non-Indians on\nthe trust and non-trust lands within the reservation.\nIn 1868 a reservation for the Ute Indians was established in\nsouthwestern Colorado. Between then and 1938 a series of actions\nunder Federal laws caused the Southern Ute Reservation to become\na checkerboard of individually-owned Indian trust land, private\nhomesteaded land, and federally-owned reservation trust lands.\nCheckerboard patterns of land ownership on other Indian\nreservations have led to extensive litigation over civil and\ncriminal jurisdiction by creating opportunities for defendants to\nchallenge the authority of whatever government is prosecuting\nthem. H.R. 4176 is designed to avoid such litigation by\nlegislatively clarifying jurisdiction over lands and persons\nwithin the boundaries of the Southern Ute Reservation.\n2\nAs enrolled, H.R. 4176 incorporates all but one of the amendments\nrecommended by the Administration in testimony before Senate and\nHouse Committees. The Congress did not adopt Department of\nAgriculture language stating that the bill would not affect\nexisting ownership or management of lands within the San Juan\nNational Forest; however, language to this effect was included in\ncommittee reports. In its enrolled bill letter, Agriculture\nadvises that with the understanding that the bill does not\ndirectly affect National Forest System lands, it defers to the\nSecretary of the Interior.\nH.R. 4176 passed both Houses of the Congress by voice vote.\nAssistant James m.Srey Director for\nLegislative Reference\nEnclosures\nH.R. 4176\nAinety-eighth Congress of the United States of America\nAT THE SECOND SESSION\nBegun and held at the City of Washington on Monday, the twenty-third day of January,\none thousand nine hundred and eighty-four\nAn Act\nTo confirm the boundaries of the Southern Ute Indian Reservation in the State of\nColorado and to define jurisdiction within such reservation.\nBe it enacted by the Senate and House of Representatives of the\nUnited States of America in Congress assembled,\nCONGRESSIONAL PURPOSE\nSECTION 1. The purposes of this Act are-\n(1) to resolve uncertainty over the boundaries of the Southern\nUte Indian Reservation and the status of unrestricted land on\nsuch reservation, and\n(2) to avoid long and costly litigation over issues dependent on\nreservation or Indian country status.\nINDIAN TRUST LAND DEFINED\nSEC. 2. For purposes of this Act, the term \"Indian trust land\"\nmeans any land within the boundaries of the Southern Ute Indian\nReservation which—\n(1) is held by the United States in trust for the benefit of the\nSouthern Ute Indian Tribe or individual Indians, or\n(2) is owned by the United States and reserved for use or\nactually used in the administration of Indian affairs.\nAny right-of-way bounded on both sides by Indian trust land shall be\nIndian trust land. Any other right-of-way shall not be Indian trust\nland.\nBOUNDARIES OF THE SOUTHERN UTE INDIAN RESERVATION DEFINED\nSEC. 3. The Southern Ute Indian Reservation in the State of\nColorado is declared to have the following boundaries:\n(1) Bounded on the north by the southern boundary of the\nlands—\n(A) ceded to the United States by certain bands of Ute\nIndians under the Articles of Convention entered into on\nSeptember 13, 1873, and ratified by the Act approved\nApril 29, 1874 (18 Stat. 36), and\n(B) described in article I of such Articles of Convention.\n(2) Bounded on the south by the boundary line between the\nStates of Colorado and New Mexico as described in article II of\nthe treaty between the United States and the Ute Indians\nconcluded March 2, 1868, and proclaimed November 6, 1868 (15\nStat. 619).\n(3) Bounded on the west by the eastern boundary of the Ute\nMountain Ute Indian Reservation.\n(4) Bounded on the east by the southernmost 15 miles of the\neastern boundary of the lands reserved to the Ute Indians by\narticle II of the treaty between the United States and the Ute\nH.R. 4176-2\nIndians concluded March 2, 1868, and proclaimed November 6,\n1868 (15 Stat. 619), except that the lands east of such boundary\nin township 32 north, range 1 west, New Mexico principal\nmeridian, that are held by the United States in trust for the\nbenefit of the Southern Ute Indian Tribe are part of the South-\nern Ute Indian Reservation.\nJURISDICTION OVER RESERVATION\nSEC. 4. (a) Such territorial jurisdiction as the Southern Ute Indian\nTribe has over persons other than Indians and the property of such\npersons shall be limited to Indian trust lands within the reservation.\n(b) Any person who is not an Indian and the property of any such\nperson shall be subject to the jurisdiction of the United States under\nsection 1152 of title 18, United States Code, only on Indian trust\nland.\n(c) Any law of the United States related to the sale, possession,\nintroduction, or manufacture of alcoholic beverages or to trading\nwith Indians within Indian country, or within the Indian reserva-\ntion, shall apply, with respect to the Southern Ute Indian Reserva-\ntion, only on Indian trust land.\nJURISDICTION OVER INCORPORATED MUNICIPALITIES WITHIN THE\nRESERVATION\nSEC. 5. The State of Colorado shall exercise criminal and civil\njurisdiction within the boundaries of the town of Ignacio, Colorado,\nand any other municipality which may be incorporated under the\nlaws of Colorado within the Southern Ute Indian Reservation, as if\nsuch State had assumed jurisdiction pursuant to the Act of\nAugust 15, 1953 (67 Stat. 588), as amended by the Act of April 11,\n1968 (82 Stat. 79).\nSpeaker of the House of Representatives.\nVice President of the United States and\nPresident of the Senate."
}