1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 v.

- - - - - - - - - - - - - - - -X
GRUPO DATAFLUX, Petitioner :
: :
No. 02-1689


- - - - - - - - - - - - - - - -X
Washington, D.C.
Wednesday, March 3, 2004
The above-entitled matter came on for oral

argument before 10:48 a.m. APPEARANCES:

the Supreme Court of the United States at

WILLIAM J. BOYCE, ESQ., Houston, Texas; on behalf of the
ROGER B. GREENBERG, ESQ., Houston, Texas; on behalf of the

1 Alderson Reporting Company, Inc.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ORAL ARGUMENT OF WILLIAM J. BOYCE, ESQ.


On behalf of the Petitioner ROGER B. GREENBERG, ESQ. On behalf of the Respondents REBUTTAL ARGUMENT OF WILLIAM J. BOYCE, ESQ. On behalf of the Petitioner




2 Alderson Reporting Company, Inc.

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(10:48 a.m.) CHIEF JUSTICE REHNQUIST: We'll hear argument

next No. 02-1689, Grupo Dataflux v. Atlas Global Group.
Mr. Boyce.
MR. BOYCE: the Court:
The central in question here is whether Atlas'
Mr. Chief Justice, and may it please

post-filing change

citizenship should

be allowed

create retroactive diversity jurisdiction in this case.
To justify rewriting the longstanding time of
was was

filing rule, Atlas relies on tried to verdict

the fact that this case jurisdictional issue

before the

identified and raised in the district court. QUESTION: found May I ask you that you with respect to that?
this you fundamental
that the


had did

jurisdictional partnership




included partners not only Texas entities but
When did you find that out?
There are two answers to your

two Mexican citizens? MR. BOYCE:

question, Justice aware of the



terms of when

we became
and that's

issue, that was

after verdict,

reflected in the affidavit which

appears in the record at

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volume I, page 1887.
In terms of in the record that the question of was could have there evidence
together to

been pieced

identify this issue is yes. If --

earlier, the answer to if -- it probably

that question
have been


identified earlier, should but it was not.
QUESTION: Dataflux did.

have been identified


There's a at one

curious thing point moved

about what to add the


Mexicans as individuals as counterdefendants. MR. BOYCE: QUESTION: members of Correct.
And why would it do that if they were
If -if it was sure that

the partnership. of the

they were members need to make

partnership, then you as individuals



partners have individual liability.
MR. question, BOYCE: Honor. Two answers to that -that



under the

Texas Revised

Limited Partnership Act, the -- the partnership can sue -­
the limited partnership can sue on its own without the

participation of the limited partners. the counterclaims against Llamosa the Texas statute, we can

In terms of all of

and Robles, again under
the partnership
In this

choose to sue

itself or we can sue individual limited partners.

circumstance, our counterclaim against them was predicated

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not on their status as limited partners, but rather on the
fact that Mr. Llamosa and Mr. Robles made affirmative
to us to

misrepresentations, was our induce us lawsuit. to enter So -­
QUESTION: employees or But

position, directly

the contract that

led to the

-- the

at that

stage, you called it seems that


former employees.


the -­

that you had some inkling.
MR. BOYCE: There -there was some confusion

early on in terms of what exactly their status was and we,
Dataflux, did not thoroughly explore that issue early on.

And -- and that should have been done earlier.
But is that I would also note that the bottom line here

-- is that Atlas, the party with unique knowledge

of the exact circumstances of its partnership at the

of filing, is the party here who filed the case in Federal
court at a time when there was not diversity jurisdiction.
There certainly could have been more that we should have

done to explore the issue earlier.
QUESTION: Well, you've admitted it. You -- you

just admitted it flat out in your answer.
MR. BOYCE: Yes, Your Honor. There were

admissions that to add that

jurisdiction existed, but I to the

would hasten
rule that




cannot be stipulated

to, agreed to, created

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waiver, that



are not

effective to create jurisdiction the that outset. And -- and

if it does not exist

I would emphasize

the language

was relied on most recently in this Court's decision
which the Court noted that a

in Kontrick from January in court's

subject matter jurisdiction cannot be expanded to
And I

account for the parties' conduct during litigation. think that principle addresses that.
Is explore up? that there more that could have been

done to

this earlier --

this issue earlier

and bring it

The answer to that question is yes, but I don't think
that circumstance undermines is that as of the fundamental rule
there was

here, which

the time of filing,

not a diversity present, and because of that -­
QUESTION: sense. There Well, there was in the constitutional
under the statute. There was


diversity, but not complete diversity.
MR. BOYCE: I think the -- there is some room to
light of the dissent's

discuss that, Justice Ginsburg, in

contention that there was, in fact, no diversity where you
have one litigant here, one both are citizens of plaintiff, one defendant, and
time. It may be a

Mexico at that

situation where -­
QUESTION: me if I'm wrong. But that's not what -- well, correct

I thought that Atlas is a partnership.

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That is correct.
And that it -- and that there are

three players involved -- five. are Texan.

Two are Mexican and three

There -- there -­
So then you would have on one side

and Mexican and the other side


If you drop

out the Mexicans,

then you're left, from

the plaintiff's

side -- you're left with a complete diversity case.
MR. BOYCE: citizenships, and that Atlas is one entity with multiple

-- and if kind of

-- if the a -- a

question suggests

there was some

dismissal mechanism

available I don't

to make the -- the Mexican citizenship go away,

believe that that is available under the facts of

this case because it's -- it -- there were -­
QUESTION: But it's what happened. They did go

away for a reason unrelated to this lawsuit.
MR. BOYCE: Pursuant to Atlas' decision to

change the constitution of its of filing and before the jury.

partnership after the time
the -- to

the case was submitted to

That is correct, Your Honor.
QUESTION: MR. BOYCE: QUESTION: Yes, long before the case was tried.
Before the -- approximate -­
Well, so when the case -- when this

case was tried, there was complete diversity.

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MR. BOYCE: weeks prior became to trial,

That is




the change at that

in Atlas'

would -­


so that

point there

there is complete diversity if given effect.
And I

that post-filing change is

would submit to the Court

that under the

longstanding rule,

going back as far as 1824 in Mollan v.
the 1891 decision in Anderson has been, v.

Torrance, reflected in Watt, that

the longstanding


and should

continue to be in this case, that post changes -­
QUESTION: I thought in Mollan v. Torrance

exactly what I described happened.

Chief Justice Marshall

said you've got one spoiler on the plaintiffs' side. it out and you'll have complete diversity.
MR. as BOYCE: I in think that the

statement applied




and then

v. Watt, Your

Honor, is

that if the

change in

circumstances is the result of the addition or subtraction
of a party, that's one circumstance, but which is here we a have


entirely It




would be the same as if

a plaintiff had

lived in one State and then moved to another State.
QUESTION: same because No, it's not the same. It isn't the

a partnership is a citizen of every State in
Isn't that correct?

which a partner resides.

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Correct, under Carden.
So you have, just as if you'd have
-- in

individuals -- that's

what they

are in fact

effect, because they're jointly and you have,

severally liable.

as I said before, three Texan and two Mexicans.
one person that can say, ah, I'm going to

You don't have

defeat diversity by moving where create diversity. has ever You --

I live, or I'm going of these





That's quite

from somebody saying, I want to change my citizenship.
MR. BOYCE: because I I would respectfully Atlas' disagree, Your
changed by



virtue of changing the composition of its partnership, and
that is on all fours the same circumstance as if a -- a

litigant had lived

in one State and then tried to move to

another State in an effort to create retroactive diversity
QUESTION: But it didn't leave Texas behind.
So I

Texas was always there. just

The Mexican partners


don't see that it's anything like -- I mean, this -­
same five people. Two drop

as I said before, there's the out and

so you've got three Texans, and there were always
They didn't move to Texas. They were there

three Texans.

from the start.
MR. BOYCE: The -the function of Atlas

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citizenship after -- this


time of

filing and

thereafter claiming that cures our the Court, is State to the

is Atlas'

argument --

jurisdictional defect,

I would submit

the same thing as a citizen moving from one
other because, in effect, what Atlas is

saying, by relying on that argument, is we moved out of -­
move out of Mexico and -- and resided exclusively in Texas
as of Atlas' the time argument of suit. as That the is the whole basis for

to why

jurisdictional of the time



to Atlas, was

cured as

of trial.

And I think that's where the -- the conflict comes in with
the change of -­
QUESTION: If Atlas had been a corporation

incorporated in Texas, then there would have been complete
diversity. Right?
MR. BOYCE: QUESTION: I'm -- I didn't -­
If Atlas -instead of being a

partnership composed of five members,

it had organized as

a corporation, as a Texas corporation.
MR. BOYCE: Then it would be under the -- the

different provision of 1332. place of incorporation

It would be a citizen of its
its principal place of


business, and

that would not be the issue that -- that we

have here today.
QUESTION: But would -would -- my question is

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-- if


-- if


entity had


organized as a corporation, there would have been complete
MR. BOYCE: not be an issue here 1332 as was, as There -- there -- yes, there would

because of a different operation

applied to corporations, but the -as I read the case, is

point of Carden
that limited

partnerships are going to be treated differently.
QUESTION: MR. BOYCE: QUESTION: further, but you Yes.
There is no analog from corporate -­
But I don't want to belabor this any
do see the difference between an

individual moving -- a where

from New York to New Jersey, say, and a
partners, all of whom remain

partnership with five they are.

They don't

move anyplace else.

partners, those live human beings, were.

stay exactly what they

Their citizenship doesn't change.
MR. BOYCE: I understand the -- the point, and

our position is that when Atlas contends that it has cured
the jurisdictional defect its partnership, that by changing the composition of
same as the

is effectively


litigant moving from New Jersey to New York and claiming I
have -- I have fixed the jurisdictional problem because my
citizenship citizenship, has changed. and I think It comes that's down to a what change in


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longstanding rule that the Court has enforced repeatedly.
QUESTION: about how wasn't when far your Mr. Boyce, can I ask you a You question it

position extends? -- to raise

say that

too late to did.

the jurisdictional issue been a trial and



there had


of your losing,

you had

won, and then

you knew

about the jurisdictional

defect, and

then you waited

see what would happen on appeal. And then you Would you say dismiss?

Then you lost on appeal.
jurisdictional defect.
be required to

decided to raise the

that was -- they would then

Yes, Your Honor. All right.

I think the -­
then it was


affirmed and then you decided after the

you didn't realize it until
become final and

judgment had been entered and then a year later you

so forth, and

find out about

Could you raise it then?
MR. BOYCE: I don't think it would be the proper
after the initial case in

subject of a collateral attack which

it has been adjudicated is over with.

But in terms

of where along the line within that case can it be raised,
our position is it can be raised, indeed, must be

raised -­
QUESTION: So you say it can always be raised on

direct -- while -- until final judgment is entered, but it

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can never be raised on collateral attack.
MR. BOYCE: and I think the That is my understanding. case And -­
to the


closely analogous

hypothetical that --

that you're

putting forth would

the Capron v. Noorden case from 1804. -- in this that case court Court. Court's recent decision

It was discussed in

in Kontrick where

the plaintiff who had filed the case in Federal
and then went who filed up on appeal to this
at that late

lost at trial

The plaintiff

the case

stage identified the

lack of

jurisdiction, and then If there's the

Court said there is no jurisdiction, there's

jurisdiction here. no jurisdiction


-- the

timing of the conduct of it is not germane to that inquiry
because it's not something that can be created by the

parties' litigation conduct -­
QUESTION: maybe fine you but We have to punish you some other way,
for the other side,
our own

or make you pay costs you for

we cannot punish

that by expanding


That's your point.
That -- that's our point.
Capron against Noorden was one party
other. It wasn't a case
was complete

MR. BOYCE: QUESTION: on one side, one at the

party on the of the





I frankly have a hard time distinguishing this

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case from

Caterpillar which

started out

non-diverse but

before trial, became diverse.
MR. circumstances from BOYCE: I -- I would like to case is obviously address the

under which


is -is what


because that

Atlas relies very heavily on in its briefing.
And I think there are a number of important
that the

distinctions here, the citizenship of the

first and foremost being to the final



Caterpillar did not change. the -the

That was a circumstance where
litigant was dismissed


pursuant to rule 21. QUESTION: if the -- Atlas

That is not our circumstance here.
So if the come to -- this would be the the court and said, same

had to

court, I

want you

dismiss the

two Mexicans


they're no longer

part of the corporation,

and gotten an

order to -- to do that.
MR. circumstance. suing BOYCE: That would be a different

I -- I hasten to add that in terms of Atlas
Mr. Llamosa and Mr. Robles were not




itself was



and the

problem arises because

of the -- the

Mexican citizenship

of Mr. Llamosa and Robles is attributed to Atlas.
But if -- if a different circumstance is -- is

hypothesized where there's a dismissal,

then I think that

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brings rule 21 into play. -- in the Newman-Green

As -- as the Court discussed in
is a source of

decision, there

authority for addressing that circumstance under rule 21.
Here we removal case, have a situation where this a dismissal case, is not and a

this is



question arises -­
QUESTION: dismissed and My question was could they have

-- and as far

as removal, I

perhaps don't

remember Caterpillar that out of a removal.

well, but

of course, it But

That's how it happened.

the Court

didn't make the removal dispositive.
MR. BOYCE: to -to say what Your Honor, I -- I would not presume
Court meant to do, but I

the -- the

would highlight the discussion case where the was point, I

in the subsequent was made removal that


think, on the




specifically section 1441, the issue that the

being in Caterpillar

case was not fit for Federal adjudication at the
There was an

time of removal and that that was the error. untimely compliance with -­
QUESTION: Yes. It certainly

was a 1441,


the opinion certainly

alerts district judges that

when a

case comes over from the look at it to make

State court, maybe you ought sure that there is



But I didn't

think that there was anything

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peculiar about into

1441 and the obligation of a judge to look
I don't know why the same thing


wouldn't apply to 1332.
MR. BOYCE: there are different I -would submit, there's a Your Honor, that

different statutory
in Caterpillar,

overlay that --

that was being addressed statutes.

the overlay of the removal circumstance where

Here we're under a removal

this -- this

is not


Therefore, we are under section 1332 alone, and the -- the
longstanding rule that the citizenship is going to be

measured as of where

the time of filing. been followed

At -- at

this stage
years, I

the rule has

for some 180


that similar to a complete diversity requirement,
part and parcel of section 1332. So there --

it is now

there's no removal overlay to be addressed.
And here that I -- and think there's an in additional circumstance
part, Caterpillar
The was the a


operates -- the subject

to protect a defendant's in that lost case -because

right to removal. the removal right timing of


to being



dismissal of

the non-diverse


There was

a --

problem for Caterpillar time limit. In other

in bumping up against words, Caterpillar

the 1-year
operates to

protect a -- a right to invoke the Federal forum.
Here, by definition -­

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Well, I don't -- I

don't follow that

because it was wrongfully removed by the defendant, had no
right to be in the Federal forum when he got there, and -­
and the poor plaintiff who wanted to be in the State court
got stuck with losing a Federal court protecting the defendant had no right to remove. case. So it wasn't
The defendant

right to remove. It

wasn't a proper Federal case

until -- who was it -- one of the parties got dropped out.
MR. BOYCE: I -- I would go back to Lexecon's

description of Caterpillar which is that there was an -­
QUESTION: Why don't you go back to

Caterpillar's description of Caterpillar?
MR. BOYCE: Yes, Your Honor. I -- I think at -­

at bottom Caterpillar cannot be context in which it arose. QUESTION:

divorced from the removal

And it -- it was -- it was -­
on a distinction between

Do you rely

a defendant's right to a Federal forum and the plaintiff's
to a Federal forum? same. At the time It seems to me they're exactly it's -- there's the no

it's invoked,

Federal jurisdiction. MR. BOYCE: I think that under certain between a
and a

circumstances Congress defendant's right to

has made invoke a

a distinction Federal


plaintiff's right to invoke a Federal forum.
QUESTION: Then are you -- are you saying this

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is --

is the rule you rely on

a constitutional rule or a

statutory rule?
MR. BOYCE: rule operating -­
QUESTION: In other words, you don't say the
It is a -primarily a statutory

Constitution would prohibit us from affirming.
MR. BOYCE: Justice Stevens, I -- I need to qualify my answer,

because under

some circumstances

may be Article III implications here because if -- if it's
a circumstance not where you have just an issue of whether or
then that's a statutory

there's complete diversity, But if -as to 2 if


retroactive case to as

diversity is remain in happened

recognized so court for

allow a or 3

in this



situation, where

there isn't

even Article

III diversity

requirement -- let's say you have an alien versus an alien
with no citizen present. That does have Article III

QUESTION: jurisdiction as a subject matter So there's a -- there's no subject

matter of

constitutional law, just But nevertheless, you


there could be no -- no collateral attack on the judgment.
I'm not sure that I understand the -- why there couldn't

be a collateral attack if you're dead right on this.
MR. BOYCE: I think that -- and I -I cannot

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cite the case that -- that I'm relying on for that, but in
the -- in the course of reviewing, I -- I believe that I

saw the -- the statement regarding collateral attack. I --
QUESTION: QUESTION: wondering why.
QUESTION: was an You are correct in that respect.
I think you're right, but I'm



If there -- if there was -- if there
the jurisdiction in when the the direct
thing has

adjudication of


that's binding on

the parties

become final, just as well as the merits.
MR. BOYCE: primary focus here in But I -I think maybe the -- the

terms of the

applicability of the
the -­

time of filing the purposes

rule is one that of the time

-- that turns on rule.

of filing


summarized in -- in the -­
QUESTION: It is May I take you back a incomplete little way?
diversity is

unconstitutional because Minimal


diversity is fine under

the Constitution.

The statute, 1332, has always complete diversity.

been interpreted to require

When Marshall first mentions that you
by something that happens after,

can't oust jurisdiction

he doesn't talk about the statute.

The cases that you are

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are discussing, out

of which

the timely

filing rule

arises -- it's a kind of out. He

a common law that he's spreading
-- the jurisdictional statute

doesn't cite the

for that.
MR. BOYCE: both Conolly I -- I have and to agree that -Torrance that

v. Taylor

Mollan v.

do not

specifically anchor it in the extent, I would -I

statute, and to -- to to acknowledge

would have

they're somewhat cryptic. statutory anchor Anderson v. as

But I think the -- the clearest
of this rule comes from

the basis




Mollan and


Conolly, does specifically anchor it in the 1875 iteration
of the diversity statute in the course of its discussion.
and I think that's the clearest indication that

And --

this is indeed -­
QUESTION: MR. BOYCE: What was the date of Anderson? 1891. Correct.

And the point that we would emphasize here, Your
Honor, is that the longstanding interpretation, similar to
complete diversity as discussed in the Owen Equipment v.

Kroger case, is now a part its predecessors.
And -- and

and parcel of section 1332 and

so it's not a

situation merely that

the Fifth Circuit is -the Court

is stepping into some area

did not expressly address it in Caterpillar.

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think the

Fifth Circuit has, in fact, gone beyond that by
rule because it's a circumstance where

creating this new it is going

contrary to

the longstanding

and understanding of 1332.
QUESTION: what the situation As I understand the bottom line was a of

would be, there

trial between

totally diverse parties. undone. There's no

You -- you say

that has to

question now

that there's


diversity between these same two parties.

So this isn't a
This wouldn't
suit for have the the same

case where there's any federalism interest. go back Atlas to the State court. This

is a proper and so you'd

to bring in

Federal court,

same court, the

same parties going over exactly

case, which does seem a terrible waste. MR. BOYCE: I -- I would focus on one portion of
in terms of an assumption
would go back to Federal

Your Honor's question, which is that this case automatically


That may well happen, but we don't know -­
QUESTION: No, no. It would be up to Atlas, but

Atlas at this point, being

totally diverse from Dataflux,
Atlas is thrown out, it can
and say, here's a fresh

could walk in -- the day that come in the revolving door


Let's start all over again.
MR. BOYCE: I think an underlying assumption of

that question

is that Atlas has not yet again changed its

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-- its partnership, and I question. QUESTION: impediment that you

do not know the answer

to that

May -- may I ask you is there another do know about like the statute of

limitations? MR. BOYCE: to your question There will be an issue -- the answer
is that -that whether or not

limitations would prevent -- present is going to

an obstacle to Atlas

be determined under the Texas savings statute
statute. There was a choice

and/or the New York savings of law dispute in the case.
QUESTION: looked into this.
MR. BOYCE: assuming Texas

Well, I


-- I

assumed you

And there is a -- a savings statute,
that would allow Atlas to

law applies,

refile suit.
One point that I would is outside the scope note -- and -- and this

of the record, but I --

I would put


it before the Court to

completely answer the question refiled once within 10 days in Federal court second Federal

is that Atlas already has the initial dismissal. then subsequently

It refiled the




There may be an issue under the savings statute
how many times do you get to refile, and -­

in terms of

and I don't know the answer to that.

We haven't looked at

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available, and -- and I presume Atlas would invoke it.
QUESTION: refile? At what point did they file and

Because the court of appeals held in their favor.
MR. BOYCE: They filed after the trial held court




the Fifth


in their

favor, and I believe that the -- the second suit was filed
in December of 2000 and dismissed in approximately October
of 2001. I think that's the chronology of it.
QUESTION: before?
MR. BOYCE: I think it was before the -- the
Dismissed after they won on appeal or

Fifth Circuit ruled in the case.
But the -that the -- the the point that I of the would emphasize is
of filing rule



transcend any individual case -­
QUESTION: imagine the What is A it? What is it? I mean,

worst case.

Lithuanian sues a On July 2nd, going to ask

citizen of
they both
is what's

Taiwan in New

York on July 1st. Well, what I'm

become citizens.

the worst -- I don't

see a constitutional problem.

didn't notice till after judgment.
What's the worst were to say, thing that could happen if we

as a matter of policy, if

you like, Federal

policy, there's an exception to the time of filing rule -­

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when nobody notices until after the judgment is entered -­
to prevent manipulation? What's the worst thing that

would happen?
MR. BOYCE: can happen Justice Breyer, the worst thing that
what was formerly being able to a bright

is uncertainty in

line rule in

terms of litigants

with some certainty whether or court.

not they belong in Federal

And I would also focus on this point, which is I
-I think the one question that the Fifth Circuit and

Atlas do not answer is what is the source of authority for
a Federal court to recognize this retroactive jurisdiction
here? It is By process of elimination, not section 1653, we know what it is not.
addresses It is only

because that

defective allegations,

not defective


section 1441 or 1446 because and it's not rule 21.

this is not a removal


So the -- the bottom line


then is what is the source of don't think

this authority and -- and I
and in fact this is

the authority is there,

contrary to section 1332.
And with that, I would reserve the balance of my
QUESTION: Very well, Mr. Boyce.

Mr. Greenberg, we'll hear from you.

24 Alderson Reporting Company, Inc.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 if the then

MR. GREENBERG: please the Court:
Respondent asks that this Court affirm the Fifth
Circuit's judgment and hold that, based on this Court's
Mr. Chief Justice, and may it

precedent, the trial court had subject matter jurisdiction
at the time of trial because the lack of complete

diversity between the parties was cured before trial.
This Court unanimously held jurisdictional defect is tried on in Caterpillar that
before trial and the and

is cured

a case

the merits

court has

Article III -- it's an matter

Article III court, it has

jurisdiction, that it has the judicial power to -­

to preside over -­
QUESTION: Yes, but Caterpillar involved a -- a

situation in which the jurisdictional a change in

defect was cured by
That has not

which parties were in the case.

occurred here.
MR. GREENBERG: QUESTION: it a different case. this.
MR. GREENBERG: Scalia, our position With all due respect, Justice
That's correct.

The party is the same, and that makes
You can't possibly say we've decided

is that

Caterpillar and the

through Caterpillar of Newman-Green and Grubbs

points out

25 Alderson Reporting Company, Inc.

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that that decision.

is not an issue The Court

that was determinative

of the

specified unanimously in Caterpillar
is cured -it didn't say has to be

that once diversity cured a certain way.

It didn't say has to

be cured by a

dispensable party leaving, et cetera. a case has been tried

It said simply once

and diversity obtained at the

of trial, that the -- that -­
QUESTION: white horse conflict in there are Well, Caterpillar certainly is not a

case for you. the

Otherwise, there wouldn't be a
way there is. but Certainly
there are

circuits the



differences too.
MR. GREENBERG: Respectfully, Chief Justice

Rehnquist, our position is that the facts in this case are
much narrower of than Caterpillar. Here we We fall under have, the


Caterpillar. in Caterpillar the case

did not

example, as inception

a mistaken the

challenge at decided




Caterpillar to overlook when it There is no issue of that ilk.

did not remand the


there was


that you

overlooked or whoever was representing Atlas.
When did Atlas first become aware that the

citizenship of each partner counts for diversity?

I mean,

this was set up as a Texas business, but in a partnership,

26 Alderson Reporting Company, Inc.

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a corporation, And when

each partner's

citizenship counts
aware of that

equally. rule?

did you

first become

MR. if the


Justice that

Ginsburg, I don't know
answering your
in the record

record reflects I don't

issue, but party




adverted to

that issue

until the

motion to

dismiss was

filed by Grupo Dataflux.

Therefore, the case continued on
verdict without either party
there may have been a

from filing through trial to adverting to the fact


jurisdictional problem until after -­
QUESTION: that the Is it your understanding that the -­
this case would have the

attorney for Atlas in

obligation to advise it was discovered?

the court of the

problem the moment

Does the attorney have an ethical duty

to advise that the original pleading was -- was misleading
as -- as soon as the attorney finds out that this existed?
MR. GREENBERG: yes. side, And I -- and I as the Justice Kennedy, I believe so,
on either

believe that the parties court I might add,

as well

if the

learned of or had an issue would have brought it up, but I
think certainly counsel had an ethical duty to do so.
The -- the issue before you is whether this case
creates a new or different exception to the rule of time

27 Alderson Reporting Company, Inc.

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of filing, and we posit contrary to -to the

it does not because position of the

petitioner -­

Caterpillar stands for the propositions, as I have stated,
which are overwhelming according to the court. Finality

in that opinion, costs of litigation, litigants waiting in
line. That is an exception to the rule of the time of



case falls within much

narrower -- because

the Fifth Circuit said, if it's cured before trial and not
raised till after trial, then much narrower test.
QUESTION: What -- what's the latest time it can
that's the test. That's a

be raised in the view of the Fifth Circuit?
MR. GREENBERG: In the -in the view of the

Fifth Circuit, raised before trial but not raised -but raised

-- cured before trial,
the court's

after is what

test was.
QUESTION: you -- you have exception. And Yes, but in your time of filing rule,
Now, this is an

a very definite period. when is the --

under the

rule of

exception, when is the last time this can be raised? MR. respectfully, before GREENBERG: Chief Justice I would -I would would --

Rehnquist, time


trial is

-- is

the last

it can

be raised

because Caterpillar says once a case has been tried. very clear.

28 Alderson Reporting Company, Inc.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to a jury.

And -- and our --

in this case Atlas was


And as Justice Ginsburg correctly pointed out,
back to the same court. of costs line And if the

this case goes right considerations of people, tried litigants to have


of litigation,

waiting in any

to have this

their cases
Court should


meaning, then


that on the facts of this

case and say, well, it
all over again, just

would be as Yogi Berra said, deja vu to go try this case. QUESTION: Does -- does

the record tell us


the partnership was changed in its composition? MR. GREENBERG: The -- the record does not. The

-- the record only reflects that trial, the will, two Mexican partners longer partners. it was

6 -- 6 months before the
were bought out, That was was if you

were no of

not finalized
from the


some --

-- it


parties' standpoint, but some document

there was

a technical need

from the NASD, and

I'm not sure

that's in

the record, that that's why petitioner says, really only finally cured a month before

well, it was
trial. But

nevertheless -­
QUESTION: Did the same attorneys represent the

partnership in -- in this change of partner transaction as
were representing the -- Atlas in the litigation?
MR. GREENBERG: No. No, Your -no, Justice

29 Alderson Reporting Company, Inc.

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Kennedy, that is not the case.
QUESTION: of all, explain Do you see any impediment? Or, first

to me what

that second filing was.

Boyce told us -­

-- that you filed a second complaint.
That is not in the record, but
case after


what occurred is when the judge dismissed this

the jury trial, the thought process was, well, let's start
anew so that whatever happens on appeal, that case will be
advanced so much it would be tried right away, we thought.
But after discussing it and after thinking about it, we

didn't want two cases to go along at the same time. -- it -- we dismissed it without prejudice,

So we

relying on

whatever happens in this case.
QUESTION: the outcome was -­
MR. before GREENBERG: Oh, yes. We did that long
So you did that before you knew what

we knew what

the -- long before

we knew what the

outcome or the briefing was in Circuit.
QUESTION: -now it's Do

-- in the -- in the

you know of any impediment? you can go back to


for sure that

the same
all over

court with again.

the same parties, do

the same thing

Mr. Boyce said that as far as the Texas statute of

30 Alderson Reporting Company, Inc.

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limitations is there anything

concerned, it's not a that -- apart from

problem. repeating


-- is

the same

thing, that would put you at a disadvantage?
MR. GREENBERG: I don't know there's a that Mr. Boyce is a bright lawyer and

what's in his mind, but as for me, I believe
in the Texas statutory scheme

savings clause

upon ruling by this Court, if Circuit and this

it were not to uphold
to be refiled in

the Fifth

case had

district court, I would pertain shows that And I don't

-- I believe

that that savings that in the


except -- except --

record it

New York law is

to apply to

this litigation.

know whether New

York substantive law

apply or Texas procedural law would apply.
My coming here today, of course, was the hope of
an affirmance and not have to face that issue. QUESTION: there's no plaintiff And -­

Under the Fifth Circuit rule, suppose
suit is filed State as because the
one in of the

diversity when the resides and in the




the plaintiff


order to

create diversity. that to occur court?

Doesn't the Fifth Circuit

rule permit
of the

without destroying the jurisdiction

MR. GREENBERG: QUESTION: before trial.

I'll answer -­
say this is done just

Then let's

31 Alderson Reporting Company, Inc.

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MR. GREENBERG: after the trial?


the issue

then is


I would respectfully say this,
Circuit rule allows that, I


not only do I think the Fifth

think Caterpillar allows that.
QUESTION: You think which?
I think Caterpillar -­


-the unanimous decision of


this Court, would allow that same fact situation, but -­
QUESTION: quite different who was here person, happened It's -- it's really -- it's really

to say, look it, it's the same party here
of the trial, this all through. who -very same

at the outset been other

and he's is one



person It


it's quite

jurisdiction has

gotten out.

seems to me -- we had

something different you know, originally

to say we had

one person,

with -- with a

certain citizenship.
It was bad as to -­

That's -- that same person is here. as to him originally, but now citizenship.

it's changed because that that's


changed his

I'm not sure

same situation.

It seems to me quite different.
It seems to me that that situation is
dealt with when he said you


Justice Marshall

32 Alderson Reporting Company, Inc.

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cannot oust

a court of jurisdiction then it I mean,

once lodged.

So if

there is authority, plaintiff moves.

doesn't matter whether the plaintiff

who certainly

couldn't move and become non-diverse and hope to escape an
adverse judgment -- I thought firm, that a -- I thought that rule it's just a And I was

single plaintiff, if


lawsuit, jurisdiction that

is not ousted.

don't think

Caterpillar in any way suggests

that that one party

plaintiff situation would be different.
The -- the partnership is sort of in between.

It's not like a single individual, but it's not quite like
Caterpillar parties.
MR. GREENBERG: page Third 11 that the Circuit in I -- I noted in Caterpillar at
from the
in the
either where there were wholly discrete

Court cited which

the McMahan case was a change



after the filing, but before

the trial so as

to empower the court with complete diversity and the court
had the judicial power to decide the case.
I take opinion referred it that if to the this Court in its unanimous

McMahan case,

Knop v.

that it -- it understood that change in that not dispute the fact, therefore, that the

case and did
change in a

limited partnership is acceptable so that when that change
occurs and then there is complete diversity and then there

33 Alderson Reporting Company, Inc.

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is a

trial, that the court

has the Article

III judicial

power to decide the case.
Or as -- or while not on as Justice Souter said in Lexecon,

all fours with this case by any means, there

was no continuing defiance but merely untimely compliance.
In this case there was no continuing Once the defiance of the




partners were

bought out of the limited partnership, this court acquired
the power, cases, Green, and once it acquired the power, the lineage of
cases from -say this from Grubbs, Newman-
power to

the thread of

and Caterpillar

court has the

consider that case.
QUESTION: Well, Grubbs -what -what --

Grubbs was a removal case.
MR. direct filing GREENBERG: case -- you Yes, that is true. The only -- Chief

are correct, Justice

Justice Rehnquist. QUESTION: I'm glad to know that.

(Laughter.) MR. GREENBERG: that, but of course, Well -- and -- and following on
Newman-Green, a rule 21 case,

admittedly is -- the court

very instructive here gave the plaintiff the party.

because Newman-Green
option of dismissing
took the option.

the dispensable

The plaintiff

While the case was on appeal, the appellate court gave the

34 Alderson Reporting Company, Inc.

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The plaintiff dismissed the dispensable party and

the court said okay, we had jurisdiction then to render -­
the district court had jurisdiction then to render summary
judgment in that case.
The plaintiff could have turned down that power

and said, no, I don't want to lose that dispensable party.
He may be the money man. He may be the one that I can

come after later on.
So approving, you do have will, this the Court act of in Newman-Green




unilaterally to make stay in Federal

the decision

whether it's going

court or in

that case --

well, stay in

Federal court.
Here, petitioner different there are two -there are issues: was -the -removal the

raises than

salient and this




covered the unilateral in my final thing about

opinion, and I will say to questions,

-- subject

about the

And that is once a removal or are the case comes to this court by

by direct filing, the jurisdictional questions
that point, and that is, is there

same at And the

diversity? wasn't and

in Caterpillar, court erroneously



well, there
later on




obtained and we

had Article III jurisdictional

35 Alderson Reporting Company, Inc.

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power to try the case.
I -it's like Once coming to you get rules. by Washington, D.C. to Washington, Once we be filing, by

train, boat, plane. you're before subject to the


the same court

-- came
or once



Caterpillar in the removal filing, the test was the We -- we believe this is a very, very narrow case.
QUESTION: question? In -May in your I just ask you one



is the



advocate a one-way street in jurisdiction when the case the plaintiff moved

the sense that if there

was filed, then the next State of the

to the same


there would nevertheless the way down the line? MR. GREENBERG: correct.
QUESTION: adopt it, is preserve or 100 -to

continue to be

jurisdiction all

That -- Justice Stevens, that is

So it's -it's -a

this -- this rule, if it's always creation


it's to -a




MR. power, it GREENBERG: Once the or it is court acquires the
by the

doesn't lose it

not divested

actions of the parties.
QUESTION: I just want to be Okay. Then the second question is -­
-- is if

100 percent sure on your view

36 Alderson Reporting Company, Inc.

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is discovered




though it had been corrected a day or 2 later, there would
still be a duty to dismiss the complaint, dismiss for want
of jurisdiction because there was no jurisdiction at the

time of filing, under your view.
MR. it's not GREENBERG: It's Respectfully, what I believe of a Justice Stevens,
Caterpillar says

my view.

because Caterpillar speaks

case having been

The words are cases tried on -- on -- and I hope it's page
11 -- it -- it -­
QUESTION: filing, not -Well, that would be the end of

not before trial.

He said -- the

-- the

question is before -- you're -- you're taking the position
before trial. Once trial has started -­
I think the court would have to

MR. GREENBERG: dismiss the case.



not what


Having been tried is what -­
MR. GREENBERG: QUESTION: It says, having been tried.
that to mean the trial

I -- I take

having been completed.
So do I. So I'm agreeing with


I think the court -­
QUESTION: As Caterpillar said, that if at the

37 Alderson Reporting Company, Inc.

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time of trial -­
you have no spoiler in the

picture, which was what Caterpillar was.
MR. GREENBERG: QUESTION: something And That's correct.
if there's a sentence the facts in that says



Caterpillar was

before the trial began, it was complete diversity.
MR. GREENBERG: QUESTION: That's correct.
Justice Stevens, when

Your answer to

he put his question, was yes.
in fact it's noticed before And the

trial is complete, it is you believe the answer

necessary to dismiss. is, one, yes, and

you believe

that's implicit in Caterpillar because you agree with what
Justice Scalia said.
MR. GREENBERG: That is correct. That's very

well put and I thank you very much.
QUESTION: Suppose -- suppose -­
I honestly thought that was my

MR. GREENBERG: answer.

Who -- who is that man?


38 Alderson Reporting Company, Inc.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to hasten answer.


I honestly thought that

was my


I did too.
But -- but I also -- I also have
Justice Ginsburg's opinion
In -­

MR. GREENBERG: to point

out that

says cured -- you know, if it's cured before trial. in this case, it was cured It before trial, but

it wasn't

raised before trial.

was raised after the trial.

fall well within the umbrella of Caterpillar.
QUESTION: Suppose you had gone to that trial

with the two Mexicans still in the partnership and you had
won, and then could you then have said to the court, we
of here.

don't need those

Mexican partners?

They're out

So now, we'd like to make those two

a motion under rule 21 to lineup. Could

people from the party

you have

done that?
MR. GREENBERG: Under rule 21, if they were

dispensable, yes.
QUESTION: So you're suggesting that a plaintiff
as a defendant could play, going to go in say,

could play the same game oh, I'm going trial,

to go in -- I'm to have

and get my
in the
If I

and I'm going

those two spoilers my mouth.

case, and if

I win, fine,

I won't open

lose, out they go and I start over again.
MR. GREENBERG: I understand the question, and

39 Alderson Reporting Company, Inc.

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respectfully, Justice Ginsburg, I would

say that rule 21,

Newman-Green, and Caterpillar does allow that.
I would there are other If say, though, checks on -on the on the other hand, ethics that

of --


they do go in with that type of mental frame
there are ethical obligations, and The court -- for you you're

of mind, that

going to face the wrath of the court. a -cause a hearing, for why you example, to you

may have
to show

should be

sanctioned for


things to the court. QUESTION: kind of

I'm very concerned about that.
If -- if the rule you're that proposing

invites the


of conduct

you say

prohibited, maybe there's something wrong with the rule.
MR. GREENBERG: Justice -­
QUESTION: Well, you're -- you're proposing a
I'm not proposing a rule, Chief

rule that is derived, you say, from Caterpillar.
MR. GREENBERG: case on its facts I'm proposing within that -- that this
exception in




I'm not advocating any new rule.
Well, except that there was not a


limited partnership in Caterpillar.
MR. GREENBERG: There was not a limited

partnership in Caterpillar, but diversity was cured before
trial and the issue was not raised until after trial.

40 Alderson Reporting Company, Inc.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 do agree filing

QUESTION: we're looking turn on

And I suppose you would argue that if

for bright line rules, we shouldn't make it
nature of a particular jurisdictional

what the

defect was or they moved to partner resign

another State or you let that. The

or something like

bright line

rule, it seems to me, has to turn on whether it's

bright line to say you can make this objection up till the
time of bright a verdict in the trial court or it's equally

line to say you can do

it up to the time that the
You can't do it after

appellate court

judgment is final.

-- we all agree you can't do it on collateral attack.
And I don't know why one is any more bright line
than the other, unless you get into these ramifications

that there's a difference between difference between the -- the State or -- or

removal and filing or a

plaintiff moving to another
Those are all -- it

adding a partner. one of those

seems to me any

would depart from the

for a bright line rule.
MR. GREENBERG: with that. -I is a We Respectfully, Justice Stevens, I
think the rule -and the time it has of

rule is

general rule


subject to within the Yes, there


fall -- we --

this case falls exception. but


Newman-Green, Grubbs in the

are distinctions

factual issues,

those distinctions are without a difference as far as what

41 Alderson Reporting Company, Inc.

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we would ask this Court to do.
QUESTION: because in the other that could Well, they're pretty big distinctions
cases, they were just extra parties

be dropped out.

Here the whole partnership -­
There was -­

the nature of the partnership had to change.

the -- the initial premise for the jurisdiction was based on the identity and the composition


partnership, not the of the parties that

identity and the composition are in the complaint.

of all

Now, that may

be metaphysical, but it -- it does seem to me to open more
room for manipulation than existed just with Caterpillar

on the books.
MR. GREENBERG: Respectfully, Justice Kennedy, I
I -- I do not think it Two reasons.

will answer your question.

the door to more manipulation.

Number one, in Texas the general partner has the
right to bring lawsuits. The limited partners do not have

the right to sue or be sued in their name on behalf of the
limited partnership. here.
The -- the second point more important discuss intent. talk about -- the -- and I think this Court does is
That's a very important distinction

precedent of this

Caterpillar, Newman-Green, Grubbs did not

what were the parties' intent at the time that
III power came to this court.

the jurisdictional Article

42 Alderson Reporting Company, Inc.

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Since there is

is no discussion in those cases of intent, it
that intent is not an issue. It's an

my reading


Did the court have jurisdiction or does it not?
And I think there are checks and balances on

lawyers who would manipulate, as you say, Justice Kennedy.
QUESTION: rules? Can I get back to -- to bright line

It seems to me it is a bright

line rule, that you

can preserve jurisdiction very bright line.

by dismissing a party.

I don't think it's very bright line know, whenever there was a

to say, you

jurisdictional defect whatever? the

later is cured -- in any way involves an alteration What about an They

I mean, this case
of the



partnership. of

alteration of the citizenship reincorporate somewhere What about a -- a else

the corporation? thing

before the


private Is that

individual who covered?

decides to move to another State?

Is this bright line when

-- when we still have
of us?

all of these -- all of these future cases in front It seems to me it is not.
MR. GREENBERG: Caterpillar at page

Respectfully, Justice Scalia, in
11, there are overriding

considerations to those analogies, which of course are not
the facts here. There's no showing of intent here.

There's --

there's -- the

only showing is

neither party

43 Alderson Reporting Company, Inc.

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adverted to the issue. QUESTION:

This case was tried. a difference

But -­
between the


absence of jurisdiction involved when

at the outset,

which is what

you have a plaintiff from the same State as

the defendant which can't be cured by the plaintiff moving
to a diverse words, that in the State, and imperfect jurisdiction, in other

you do have diversity, but you have a spoiler
That is -that is very clear in


Caterpillar, less clear in the


Although the
an entity the

partners are five individuals, they are not way a corporation is.
MR. GREENBERG: That's correct.

In this

-- in

this partnership, there were, I think, two corporations.
QUESTION: entity? Wasn't the partnership sued as an

I thought that it was sued as a partnership.
MR. GREENBERG: It was a sued as a partnership.

That is correct.
QUESTION: As a partnership. And so -­


Yes, and two individuals.
there was no jurisdiction


initially over the partnership.
MR. GREENBERG: QUESTION: sued. That's correct.
it was sued. The -­
It -- it

It wasn't --

It was the plaintiff, wasn't it? MR. GREENBERG: Atlas sued -­

44 Alderson Reporting Company, Inc.

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-and was counterclaimed


against by Dataflux as an entity, and then Dataflux third-
partied in the two Mexican individuals.
QUESTION: But at -at the outset, contrary to
a matter of imperfect

the earlier statement, jurisdiction. Period. There

it was not was no



The -- of the partnership. MR. GREENBERG: Scalia, the way at the time According to Carden I read it, of filing. v. Arkoma,

the jurisdiction did That was only cured

not obtain later, but

the overriding this Court

consideration is once a

in Caterpillar

unanimously by been tried in

diversity case

Federal court, with the

rules of decisions

under State law, under Erie v. Tompkins, considerations of
finality, efficiency, and economy become overwhelming. I have to take those words as they are, they If

overwhelming, then it is overwhelming in this case because
this case is narrower than Caterpillar. Why send this

case back?
I would ask this Court -- these principles apply
regardless of whether through removal or the case arrives to Federal I would ask court

original filing.

Court, on behalf of the respondent, that this Court these principles to conclude that

the trial court in this

45 Alderson Reporting Company, Inc.

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case had subject matter jurisdiction at the time of trial,
and allow this case to return the district court for entry
of judgment consistent with the jury verdict.
QUESTION: Thank -­
If there are no more questions,


I give back the Court my -- the balance of my time.
QUESTION: Thank you, Mr. Greenberg.

Mr. Boyce, you have 4 minutes remaining.
MR. BOYCE: I Justice would Thank you, Mr. Chief Justice.
to elaborate on an answer to


Breyer's question, which has been touched on by a
the questions here, And I -which is what's the worst

number of

that can happen. this. Once the

I think the of

point would change


a post-filing

citizenship is -- is taken as a given, then I think you're
-- you're both ways. setting up a situation where the door swings

Jurisdiction can be created

and jurisdiction

can be destroyed by virtue of post-filing changes.
QUESTION: mean, you Well, he says it's the opposite.
I but I mean, it's very

-- you could

do that,

clear to say it could destroy it; no. yes.

It could create it;

I mean, that's not hard to understand, and there's a

lot of authority.

46 Alderson Reporting Company, Inc.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 say. court says


The -- the rule -- if -- if the line

is drawn there, then I -- I think that raises implications
of manipulation. You can move and create it and then move
If -- if the concern is creating

back and not destroy it. incentives -­

Only if the court says -- only if the
the rule, even the timely filing

so because

rule was -- was something that John Marshall said and it's
been that way ever since, with exceptions and recognizing

that a human individual is different from a corporation is
different from a partnership. If -- if a court is going

to make such a regime, surely it would make a sensible one
and not one that's subject to abuse.
MR. BOYCE: If -- there -there may be -- the
The -- the question

-- the court will do what it will do. is, is there an --

a creation of additional opportunities

for manipulation or confusion, and we -­
QUESTION: What are they?
MR. BOYCE: And -- and I submit that if the
What are they? You were going to

bright line rule is no longer bright, if it -- if it turns
on the fact of how far into the trial court proceedings

before this came up, then it's -- the -- the time when you
need certainty most, in terms of being able to decide

whether or not you have

jurisdiction, that's when there's

47 Alderson Reporting Company, Inc.

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going to be the least

amount of clarity.


that's the

real -- the real problem that's -- that's created here.
And -- and Justice Stevens had -- the question saying, well, -- the line? -- had asked the

why don't we just draw

You want a bright line rule?

We'll -- we'll

draw it at the time of trial. that what you're setting up of time, a

I think the problem here is
is a circumstance a Federal where for

some period court is

trial court, vires, to

acting ultra

borrow the phrase

Steel Company, for some period you say the -the

of time prior to change

that is

post-filing a

could court


You've got

Federal trial

operating without authority. QUESTION: No.

It's issuing orders.

You assume the

defect has been cured.
MR. BOYCE: of that for 3 But prior to the time of that curing
circumstance as you where you've got had here
a Federal

defect, you have a years, for example,

district court issuing summary -­
QUESTION: MR. BOYCE: make is -- is this. And as you had in Caterpillar. And -- and I guess the point I would If Caterpillar opened the door to a did not open


of retroactive wide.

jurisdiction, it and the --

that door very

And --

the choice

should that -- should that

door be opened wider and


48 Alderson Reporting Company, Inc.

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are the would

problems that result from that. be that the confusion and

And our position
uncertainty going to and

opportunities for manipulation from

that are


opening that door wider make it appropriate to leave

the line drawn where -­
QUESTION: deliberately there's no that?
MR. BOYCE: That may not be a -- a circumstance
Can you imagine a plaintiff's lawyer
Federal lawsuit where he knows

filing a

Federal jurisdiction?

Why would

he ever

that -- that is likely to happen, but -­
QUESTION: But you're talking about deliberate

manipulation, and I just don't lawyer would ever do that. MR. BOYCE: issue is -- is one I of -- I

understand why a competent

think the

-- the of

greater a




circumstance like this case or as the Capron case where the

going back as early as case gets filed and


tried and then the issue comes up.
I do want to to the Knop case.
CHIEF JUSTICE REHNQUIST: The case is submitted.
(Whereupon, at 11:47 a.m., the case in the
Thank you, Mr. Boyce.
make one note about the reference

above-entitled matter was submitted.)

49 Alderson Reporting Company, Inc.