No. 09-254

IN THE

~upreme ~aurt of the i~tnite~ ~,tate~

AMERICAN INSURANCE COMPANY ANDCOLUMBIA CASUALTY COMPANY, Petitioners,

V.

ASTENJOHNSON, INC., Respondent.

On Petition for a Writ of Certiorari to the UnitedStates Court of Appeals for the Third Circuit

BRIEF IN OPPOSITION

MICHAEL CONLEYANDERSON, KILL 8~ OLICK1600 Market StreetSuite 2500Philadelphia, PA 19103(267) 216-2700

September 21, 2009

ROBERT C. HEIMCounsel of Record

JUSTIN C. DANILEWITZDECHERT LLPCira Centre2929 Arch StreetPhiladelphia, PA 19104(215) 994-4000

Counsel for RespondentAstenJohnson, Inc.

~31ank Page

QUESTION PRESENTED

Whether a declaratory judgment claimseeking a declaration of legal rights - separate andindependent from a breach of contract claim - is a"legal" claim for which the Seventh Amendmentright to a jury trial is preserved.

ii

CORPORATE DISCLOSURE STATEMENTPURSUANT TO RULE 29.6

AstenJohnson Holdings Ltd. ("Holdings") is theparent of Respondent AstenJohnson, Inc. ("Asten").Asten Holdings GP owns two thirds of Holdings’shares and JWI Ltd. owns one third of Holdings’shares. None of these entities is publicly traded.

111

TABLE OF CONTENTSPage

QUESTION PRESENTED ........................................i

CORPORATE DISCLOSURE STATEMENT ..........ii

TABLE OF AUTHORITIES ....................................iv

INTRODUCTION .....................................................1

STATEMENT OF THE CASE ..................................3

REASONS FOR DENYING THE PETITION ........12

I. THERE IS NO CIRCUIT SPLIT ON THEISSUE DECIDED BELOW .............................13

II. THIS CASE IS A POOR VEHICLE FORCERTIORARI ..................................................23

A. The Decision Below Is Correct OnThe Merits ................................................23

B. Alternatively, Certiorari Review IsNot Warranted For The"Misapplication Of A Properly StatedRule Of Law". ...........................................27

C. Alternatively, If The Decision BelowConflicts With The Third Circuit’sOwens-Illinois Opinion, CertiorariReview Would Be Premature ...................28

III. THERE IS NO "CONFUSION" AMONGTHE LOWER COURTS, NOR ANY BASISFOR SUCH CONFUSION, ANDTHEREFORE NO NEED FOR THISCOURT’S CLARIFICATION ...........................30

CONCLUSION ........................................................33

TABLE OF AUTHORITIES

Page(s)

CASES

Chauffeurs, Teamsters & Helpers, Local No. 391 v.Terry,494 U.S. 558 (1990) ................................ passim

Davis v. United States,417 U.S. 333 (1974) ........................................28

Dimick v. Schiedt,293 U.S. 474 (1935) ..........................................1

Fischer Imaging Corp. v. General Electric Co.,187 F.3d 1165 (10th Cir. 1999) ......................31

Golden v. Kelsey-Hayes Co.,73 F.3d 648, (6th Cir. 1996) ...............17, 18, 22

Gonzalez v. Crosby,545 U.S. 524 (2005) ........................................27

Granfinanciera, S.A. v. Nordberg,492 U.S. 33 (1989) ..........................................31

Manning v. United States,146 F.3d 808 (10th Cir. 1998) ..................19, 22

Marseilles Hydro Power, LLC v. Marseilles Land &Water Co.,299 F.3d 643 (7th Cir. 2002) .................. passim

V

MedImmune, Inc. v. Genentech, Inc.,535 F. Supp. 2d 1020 (C.D. Cal. 2008) ...........31

Northgate Homes, Inc. v. City of Dayton,126 F.3d 1095 (8th Cir. 1997) ................passim

Owens-Illinois, Inc. v. Lake Shore Land Co., Inc.,610 F.2d 1185 (3d Cir. 1979) .................. passim

Parsons v. Bedford,28 U.S. 433 (1830) ............................................2

Simler v. Conner,372 U.S. 221 (1963) ..............................1, 22, 25

Tullv. United States,481 U.S. 412 (1987) .................................18, 31

Wisniewski v. United States,353 U.S. 901 (1957) ........................................29

Youngblood v. West Virginia,547 U.S. 867 (2006) ........................................27

CONSTITUTIONAL PROVISION, RULES ANDSTATUTE

U.S. CONST. amend. VII ..............................................1

Fed. R. Civ. P. 38(b) ..................................................14

Sup. Ct. R. 10 ...............................................24,27,28

vi

Labor Management Relations Act,29 U.S.C. § 185 (1988) ...................................17

OTHER

EUGENE GRESSMAN ET AL., SUPREME COURT PRACTICE

(9th ed. 2007) .................................................. 28

9 CHARLES ALAN WRIGHT & ARTHUR R. MILLER,

FEDERAL PRACTICE AND PROCEDURE § 2313

(1971) ..............................................................28

1

INTRODUCTION

The Seventh Amendment to the U.S.Constitution preserves the right to a jury trial for"Suits at common law, where the value incontroversy shall exceed twenty dollars." U.S.CONST. amend. VII. Asten’s request for a declarationof its legal rights is precisely such a claim. TheThird Circuit did not err, therefore, in concludingthat the district court improperly denied Asten acivil jury for that claim. Nor is there any "split"among the circuit courts of appeals on the questionpresented.

As this Court has recognized, "[m]aintenanceof the jury as a fact-finding body is of suchimportance and occupies so firm a place in ourhistory and jurisprudence that any seemingcurtailment of the right to a jury trial should bescrutinized with the utmost care." Dimick v.Schiedt, 293 U.S. 474, 486 (1935); see also Simler v.Conner, 372 U.S. 221, 222 (1963) (per curiam) ("Thefederal policy favoring jury trials is of historic andcontinuing strength."). The Third Circuit’s carefulscrutiny of the district court’s decision wasappropriate, and its conclusion correct. There is nobasis for second-guessing that conclusion.

As the Third Circuit noted, Asten’s request fora declaration of its legal rights arising from theinsurance contracts at issue would have beenrecognized at common law as an action in assumpsit- a quintessentially legal claim. Moreover, as thisCourt has long recognized, "the phrase ’Suits atcommon law’ refers to ’suits in which legal rights

[are] to be ascertained and determined .... ’"Chauffeurs, Teamsters & Helpers, Local No. 391 v.Terry, 494 U.S. 558, 564 (1990) (quoting Parsons v.Bedford, 28 U.S. 433, 447 (1830) (emphasisremoved)). Accordingly, notwithstanding the districtcourt’s conclusion that Asten had offered insufficientevidence of damages to prove its breach of contractclaim, the Third Circuit correctly concluded thatAsten’s declaratory judgment claim remained a legalone.1

Furthermore, the Third Circuit recognizedthat Asten’s request for declaratory relief wouldhelpfully determine its legal rights with respect toColumbia Casualty Company ("Columbia") andAmerican Insurance Company ("American," and,collectively, "Petitioners," or "Insurers") "inanticipation of harm" arising from the Insurers’failure to assume their contractual obligations underthe insurance agreements at issue. Pet. App. 21a.Considering the question "whether a declaratoryjudgment claim based on a contract, which would

1 It bears emphasizing that the district court neverdismissed Asten’s contract claim on the basis of Asten’spurported inability to prove damages - either in the districtcourt’s pre-trial grant of Petitioners’ motion to strike Asten’sjury demand, see Pet. App. 33a-39a, or in its subsequentopinion and order following trial, see id. at 41a-159a. Thatclaim remained in the case throughout the bench trial, and inits post-trial opinion and order the district court ruled againstAsten on the breach of contract claim, but premised that rulingupon its interpretation of the policy language, without anyreference to the purported lack of damages. See id. at 136a-138a.

3

otherwise clearly be a legal claim entitling theplaintiff to a jury, becomes an equitable claim whenfiled in anticipation of harm but before harm hasbeen suffered," the Third Circuit answeredstraightforwardly: No. Id.

Nonetheless, Petitioners request this Court’scertiorari review for three reasons. All are meritless.First, far from illustrating a circuit split, the views ofthe four circuits upon which Petitioners rely areentirely consistent with the Third Circuit’s opinion.Indeed, two of the circuits that Petitioners referencehave explicitly embraced the Third Circuit’sjurisprudence. Second, this case is a poor vehicle forcertiorari because: (a) the opinion below is plainlycorrect on the merits; (b) alternatively, even if theopinion below were incorrect (and it is not), thisCourt is traditionally reluctant to review the"misapplication of a properly stated rule of law"; and(c) even if the opinion below departed from the ThirdCircuit’s own Owens-Illinois opinion (and it doesnot), this would actually provide a compelling reasonfor this Court not to exercise certiorari review.Third, there is no "confusion among the lowercourts" and, consequently, no need for this Court’sclarification. The petition should be denied.

STATEMENT OF THE CASE

1. Factual background. Asten is aDelaware corporation founded in the 1930s inPhiladelphia, Pennsylvania. It manufactures fabricsused in the paper-making industry to dry the sheetsthat become paper. Decades ago, its predecessorsmanufactured certain dryer felts containing

4

chrysotile asbestos, and were members of the tradeassociation Asbestos Textile Institute ("ATI").

The claims in this lawsuit arose frominsurance policies provided by Columbia andAmerican, in which Asten, as the successor to thenamed insured, received insurance coverage for theperiod from April 1981 to October 1983. Under thosepolicies, the Insurers excluded from coverage certainclaims relating to "asbestosis." Specifically, theexclusion says that

[i]t is agreed that this policy does notapply to any claim alleging an exposureto or the contracting of asbestosis orany liability resulting therefrom. It isfurther agreed that this policy does notapply to any claim arising out of theInsured’s membership in the AsbestosTextile Institute.

Id. at 49a-50a. Interpreting that clause to excludefrom coverage all asbestos-related claims, ratherthan as a narrow exclusion for a particular condition-"fibrotic lung disease," id. at 2a - Columbia andAmerican declined coverage for all of Asten’stendered asbestos claims.

In a Complaint filed March 13, 2003, Astenmade three separate claims against the Insurers: abreach of contract claim seeking monetary damages,a declaratory judgment claim seeking a declarationof Asten’s rights under the insurance agreements,

5

and a bad faith claim.2 Along with its Complaint,Asten demanded a jury trial pursuant to FederalRule of Civil Procedure 38(b), and consistent withthe Seventh Amendment. Asten’s Complaint clearlydistinguished between its breach of contract anddeclaratory judgment claims, each of which appearedas separate counts under different headings.

The declaratory judgment claim, whichappeared as "Count I," alleged that Columbiabreached its promises in the relevant insurancepolicies "by failing and/or refusing to honor itspromises to defend, conduct settlement negotiations,and indemnify" Asten, id. at 164a ¶ 140, and thatAmerican similarly had "continue[d] to fail toacknowledge its coverage obligations," id. ¶ 141.Asten therefore stated that it was "entitled todeclaratory judgment.., of its rights and of theobligations of Columbia Casualty and Americanunder the.., insurance policies." Id. ¶ 144.Furthermore, Asten said that "[d]eclaratory relief...will resolve all outstanding issues between [Asten]and Columbia Casualty and American regarding theobligations of Columbia Casualty and Americanunder the . . . insurance policies." Id. at 164a-165a¶ 145. Asten sought an order from the district court

judicially declaring that the asbestosisexclusions in the . . . insurance policies

2 In its post-trial opinion and order, the district courtdismissed Asten’s declaratory judgment claim. Consequently,it likewise dismissed Asten’s bad faith claim. See Pet. App.155a.

6

[are] invalid and unenforceable, andrequiring Columbia Casualty andAmerican to pay for [Asten’s] defense ofthe Underlying Actions, outside of the... insurance policies’ indemnity limits,and to reimburse [Asten] for, or pay onbehalf of [Asten], any and all judgmentsor settlements reached in theUnderlying Actions, until such time asthe total aggregate limits of each of the

insurance policies have beenexhausted ....

Id. at 165a ¶ (a).

Asten argued that a favorable declaratoryjudgment would have secured for the company atangible legal interest. As Asten pointed out, thePetitioners’ disclaimers of coverage required Astento "burn" other insurance policies that were broaderin their coverage - because they covered non-asbestosis claims, such as mesothelioma and lungcancer, as well as asbestosis claims that thePetitioners’ policies excluded - and were thereforemore valuable to Asten. Thus, Asten’s use of thebroader insurance coverage to cover non-asbestosisclaims that should have been covered under thePetitioners’ policies meant that the broader policieswere prematurely exhausted. Consequently, thedistrict court’s declaration of Asten’s legal rightsunder the Petitioners’ policies would have allowedAsten to trigger Petitioners’ coverage for non-asbestosis claims, effectively compensating Asten forits premature use of the more valuable policies.

7

Asten’s breach of contract claim appeared as"Count II," and alleged that Asten "suffereddamages" from Columbia’s breaches. Id. at 166a¶ 154. Accordingly, the relief Asten sought under itsbreach of contract claim included

[t]he entry of an award requiringColumbia Casualty to pay [Asten] allmonetary damages suffered by [Asten]caused by its breaches, including,without limitation, compensatorydamages, consequential damages,prejudgment interest, postjudgmentinterest, and attorneys’ fees andcosts ....

Id. ¶ (a).

2. The district court’s decisions. Nearlythree years after Asten filed its Complaint, andshortly before the third listing for the start of trial,Columbia moved to strike Asten’s jury trial demand.In its memorandum of law opposing the motion tostrike, Asten clearly distinguished its declaratoryjudgment claim as an independently sufficient legalground for a jury trial. Asten Mem. of Law in Opp.to Columbia Casualty’s Mot. to Strike Jury Demandand to Bifurcate Trial at 7-9, 2006 WL 1791260 (E.D.Pa. June 26, 2006) (No. 03-1552). Furthermore,Asten argued that its "declaratory judgment count isin the nature of a legal action, not an equitableclaim," because it "is akin to an anticipated oraccelerated breach of contract claim .... " Id. at 2.Finally, Asten pointed out that Columbia hadasserted its own breach of contract counterclaim

8

which was a further reason to accord Asten its jurytrial demand. Id. at 9-10.

In a memorandum and order dated June 22,2006, the district court denied Asten’s request for ajury trial on the grounds that Asten did "not allege~]or show~ any out-of-pocket expenses as a result ofdefendants’ alleged breach of contract," and had notproduced "witnesses... to testify to specific damagessuffered .... " Pet. App. 36a. Without what itdeemed to be sufficient proof of damages, the districtcourt concluded that Asten’s contract claim did notwarrant a jury trial, and stated "that the substanceof plaintiffs claim is in equity." Id. Significantly,the district court did not dismiss Asten’s breach ofcontract claim, and that claim remained in the casethroughout the bench trial.3

Although the district court did not explicitlyconsider whether Asten’s request for a declaratoryjudgment offered an independent legal basis for itsasserted jury trial right, it appeared to accept,without elaboration, the Insurers’ argument that,without sufficient proof of damages for Asten’scontract claim, the "claim sounds in equity becausethe only relief requested is declaratory .... " Id. at35a-36a. Thus, having concluded that Asten had"requested only equitable relief," id. at 36a, thedistrict court granted Columbia’s motion to strikeand denied Asten’s jury trial request. Id. A three-week bench trial beforeU.S. District JudgeLawrence F. Stengel ensued.

See supra note 1.

9

Following trial, in an opinion dated March 30,2007, Judge Stengel accepted the Insurers’interpretation of the asbestosis exclusion. See id. at42a. Judge Stengel also ruled, inter alia, that theinsurance policies did not create any duty toindemnify or defend Asten on the part of Columbiaor American. Id. at 158a-159a.

3. The Third Circuit’s decision. Onappeal before the Third Circuit, Asten againdistinguished the two independent legal groundssupporting its jury trial right. First, Asten arguedthat, in requesting a declaration of legal rightsarising from the Insurers’ contractual breaches, ithad sought legal relief. Second, Asten asserted thatits claim for monetary damages from the Petitioners’contractual breaches was also legal in nature.

With respect to the breach of contract claims,Asten argued, as it had before the district court, thatits estimate of six million dollars in damage - thecost of defense and indemnification that Asten hadto tender to other insurers due to Columbia’s andAmerican’s disclaimers - sufficiently pled damagesto entitle it to a jury trial on that claim. Asten C.A.Br. at 51. Asten also preserved the argument thatthe Petitioners’ disclaimers of coverage hadcompelled Asten to prematurely exhaust morevaluable insurance policies that covered all asbestosclaims - i.e., both asbestosis claims, and non-asbestosis claims such as mesothelioma and lungcancer. Id. Nonetheless, the Third Circuit held"that the District Court was entitled to find thatAsten was unable to prove recoverable damages at

10

trial and to rely upon that fact in resolving theSeventh Amendment issue before it." Pet. App. 13a.

With regard to the declaratory judgmentclaim, however, the Third Circuit concluded thatAsten was entitled to a jury trial. First, the courtrecognized that its prior opinion in Owens-Illinois,Inc. v. Lake Shore Land Co., Inc., 610 F.2d 1185 (3dCir. 1979) was controlling. Id. at 15a. Like Owens-Illinois, it stated, "this case . . . [is] not an invertedlawsuit situation," and noted that the Owens-Illinois"Court therefore looked to the nature of the claim setforth in the complaint" in order to determinewhether the declaratory judgment claim was legal.Id. at 18a. Furthermore, the court noted that,

[i]f we ask "in what kind of suit[Asten’s] claim[s] would have come tocourt if there were no declaratoryjudgment remedy," Owens-Illinois, 610F.2d at 1189, it seems clear that theanswer is an action in assumpsit fordamages consisting, inter alia, ofreimbursement of litigation costs andamounts paid to victims.

The Third Circuit rejected the Insurers’arguments that Asten’s declaratory judgment claimwas the equivalent of an equitable claim for specificperformance or quia timet. First, it pointed out thatassumpsit would have provided Asten with anadequate remedy at law, and therefore no basis toseek the equitable relief of specific performance. Id.

11

at 19a. Second, the fact that the declaratoryjudgment action had its origins in bills for quia timet"would prove too much - it would result in alldeclaratory judgment actions being equitable, andwe know that not to be the case." Id.

In short, the Third Circuit concluded, "theissue posed to us is whether a declaratory judgmentclaim based on a contract, which would otherwiseclearly be a legal claim entitling the plaintiff to ajury, becomes an equitable claim when filed inanticipation of harm but before harm has beensuffered." Id. at 21a.4 "Our answer is ’no,"’ theThird Circuit concluded, "unless specialcircumstances exist which indicate that a suit on thecontract is likely to be inadequate when it isavailable." Id. Because there was no reason to thinkthat Asten’s suit for declaratory relief was "likely tobe inadequate," the court "conclude[d] that Asten[was] entitled to a jury trial on its declaratoryjudgment claims." Id.

The Third Circuit also left no doubt that thedistrict court’s denial of Asten’s jury trial right wasnot mere harmless error. "In the three weeks oftrial," it stated, "the Court heard conflictingtestimony about many material facts and resolved tocredit one fact witness over another, as well as oneexpert over another." Id. at n.5 "After doing so, itdrew a host of inferences concerning the motivation

4 In point of fact, as Asten argued, it had already sufferedharm through its premature use of the broader and morevaluable insurance policies.

12

of the parties at various stages. In short, it exercisedthe functions that Asten was entitled to have a juryexercise." Id.

Having concluded that the jury denial waserroneous, and was not harmless, the Third Circuitpartially reversed the district court and remandedthe case for further proceedings. Id. at 31a-32a. Itsubsequently denied the Insurers’ petitions forrehearing and for rehearing en banc. Id. at 162a.

Following the Third Circuit’s partial reversaland remand, Petitioners sought an extension of timein which to file their petition for writ of certiorari.On June 23, 2009 Justice Souter granted anextension of time to file the petition, from July 27,2009 to August 26, 2009. Petitioners timely filedtheir petition for certiorari on August 26, 2009.

REASONS FOR DENYING THE PETITION

Petitioners’ three putative reasons forgranting certiorari review are all equally meritless.First, there is no circuit split. Petitioners’authorities are clearly distinguishable and areentirely consistent with the Third Circuit’s opinionbelow. Second, this case is a poor vehicle forcertiorari because: (a) the opinion below was plainlycorrect on the merits; (b) alternatively, even if theopinion below were incorrect (and it is not), thisCourt is traditionally reluctant to review the"misapplication of a properly stated rule of law"; and(c) even if the opinion below departed from the ThirdCircuit’s own Owens-Illinois opinion (and it does

13

not), this would actually provide a compelling reasonfor this Court not to exercise certiorari review.Third, there is no "confusion among the lowercourts" and, consequently, no need for this Court’sclarification. For all of these reasons, the petitionshould be denied.

THERE IS NO CIRCUIT SPLIT ON THEISSUE DECIDED BELOW

Petitioners claim that the decision below"marks a significant departure from the analysisemployed by other courts of appeals," Pet. 9, thatsuch analysis "leads to a different result in thiscase," id. at 10, and that there is therefore a "squaresplit of authority," id. at 18, on the issue decided bythe Third Circuit. They are mistaken. The analysisof the other courts Petitioners cite does not differfrom the Third Circuit’s, and, to the extent theresults in those cases differ from the outcome below,that is because those cases involved indisputablyequitable - not legal - claims. Had the Third Circuitbeen confronted with the same facts as each of thosecases, it would undoubtedly have reached a similarresult. Accordingly, there is no circuit split on thequestion presented.

1. Petitioners’ prime exemplar of an opinionpurportedly diverging from the one below isMarseilles Hydro Power, LLC v. Marseilles Land &Water Co., 299 F.3d 643 (7th Cir. 2002). That caseinvolved a power company’s suit against a canalowner under a contract. Marseilles, 299 F.3d at 645-646. The power company sued to compel the canalowner to maintain a canal wall in good condition

14

and, along with this request for specific performance,also sought a preliminary injunction. Id. at 646.When the canal wall crumbled, the canal ownercounterclaimed for monetary damages - i.e., rentthat he claimed the power company owed. Id. TheSeventh Circuit held that a jury trial was warrantedfor the canal owner’s legal counterclaim, but not forthe power company’s equitable claims. Id. at 649-650.

Petitioners’ reliance uponMarseilles ismisplaced for several reasons.First, theymisleadingly cite Marseilles in order to suggest that,in determining whether a suit is one that would belegal at common law, courts should not considerwhether claims pose potentially legal issues (as isthis Court’s practice, and as the Third Circuit didbelow), but should rather focus solely on whether theremedy sought is legal or equitable. See Pet. 11("’[R]egardless of the nature of the issues likely oreven certain to arise in the case, most of whichindeed might be legal,’ it is the nature of the reliefsought that determines whether a jury trial rightexists." (quoting Marseilles, 299 F.3d at 648)).

The Seventh Circuit’s concern with the word"issue" stemmed from its review of the lower court’sefforts to discern its meaning in Rule 38(b) of theFederal Rules of Civil Procedure. See Marseilles,299 F.3d at 647-648; Fed. R. Civ. P. 38(b). And inthe context of its discussion of purely equitableclaims, the Seventh Circuit stated that "[a] suitseeking only equitable relief," like the powercompany’s "is not a suit at common law, regardlessof the nature of the issues likely or even certain to

15

arise in the case, most of which indeed might belegal .... " Marseilles, 299 F.3d at 648 (citationsomitted).5

Thus, when viewing Petitioners’ quotation ofMarseilles in its fuller context, it is clear that, unlikethis case, the Seventh Circuit’s language on whichPetitioners rely applied to an indisputably equitableclaim. It was therefore uncontroversial for theSeventh Circuit to say, in that context, that asuperimposed declaratory judgment claim could notconvert a claim for equitable relief into a legal one.

Furthermore, as if to underscore the pointthat consideration of issues raised remains anecessary consideration for determining whether aclaim is legal, the Seventh Circuit quoted thisCourt’s statement of the appropriate two-partanalysis:

[T]o determine whether a particularaction will resolve legal rights, andtherefore give rise to a jury trial right,we examine both the nature of theissues involved and the remedy sought.First, we compare the statutory actionto 18th-century actions brought in thecourts of England prior to the merger ofthe courts of law and equity. Second,

5 As noted above, however, the Seventh Circuit ultimately

did recognize a jury trial right in Marseilles - not on the basisof the plaintiffs’ equitable claims, but because the defendant’scounterclaim was legal. See Marseilles, 299 F.3d at 649.

16

we examine the remedy sought anddetermine whether it is legal orequitable in nature. The second inquiryis the more important in our analysis.

Id. at 648 (quoting Terry, 494 U.S. at 565) (emphasisadded). Thus, while the second element of this dualanalysis may be the more important of the two, thisCourt has made clear that it is emphatically not theonly consideration that should guide courts indetermining whether a suit is legal or equitable.

Furthermore, this Court has previously beeninvited, but has thus far declined the invitation, toabandon the issues analysis prong of its two-partinquiry. In Terry, the majority explicitly stated, andapplied, the traditional two-part analysis. JusticeBrennan’s concurrence, however, advocatedabandonment of the issues analysis prong, andstated that he would have preferred to "decideSeventh Amendment questions on the basis of therelief sought." Terry, 494 U.S. at 574. This Court’srejection of that proposal demonstrates that issuesanalysis remains a relevant and importantconsideration. The Third Circuit thereforeappropriately considered the legal issues raised inAsten’s declaratory judgment claim.

Finally, it bears noting that the SeventhCircuit relied upon the Third Circuit’s case law inreaching its conclusion - a remarkable fact if theMarseilles Court perceived its decision to be at oddswith the approach of the Third Circuit. SeeMarseilles, 299 F.3d at 649 (quoting Owens-Illinoisapprovingly). Moreover, to the extent Petitioners

17

claim that Owens-Illinois is inconsistent with theThird Circuit’s decision below, that fact (if true)would provide yet another reason for this Court todefer granting certiorari until the Third Circuit’sown views have benefitted from greater percolation.6

2. Petitioners also claim that the opinionbelow diverges from the Sixth Circuit’s decision inGolden v. Kelsey-Hayes Co., 73 F.3d 648 (6th Cir.1996). Again, they are mistaken. Golden involved aclass-action suit by retired employees, and thespouses of retired employees, who sought continuedhealth insurance benefits from their formeremployer under section 301 of the LaborManagement Relations Act ("LMRA"), 29 U.S.C.§ 185 (1988). See Golden, 73 F.3d at 651-652. Theironly claim was for breach of contract, and the reliefthey sought was "declaratory, injunctive, andmonetary relief, and costs and attorney fees." Id. at652. Before the Sixth Circuit, the defendantsappealed the district court’s grant of plaintiffs’motion for a preliminary injunction, and theplaintiffs sought a writ of mandamus to secure a jurytrial. Id at 651. The Sixth Circuit affirmed thelower court’s grant of a preliminary injunction, id. at658, and denied the petition for a writ of mandamusbecause it "conclude[d] that the plaintiffs’ claims[were] entirely equitable," id. at 663.

The Golden holding is plainly consistent withthe Third Circuit’s decision below. Significantly, likethe Third Circuit, the Golden Court reached its

See infra, Part II.C.

18

result, not through a myopic focus upon theplaintiffs’ requested relief (which, in Golden,included monetary damages), but also by examiningclosely the nature of their claims. Moreover, unlikethe decision below, the Golden Court concluded thatplaintiffs’ claims were "entirely equitable," not legal.

The Golden Court reached that conclusion byconducting a two-part Terry analysis. See Terry, 494U.S. at 565 (quoting Tull v. United States, 481 U.S.412 (1987)). Under the first prong, it concluded thatthe breach of a collective bargaining agreement wasessentially a breach of contract claim. Golden, 73F.3d at 660. Under the second prong, the Courtconcluded that, although the plaintiffs soughtdamages in addition to declaratory and injunctiverelief, the monetary damages were merely’"incidental to and intertwined with’ their request forspecific performance," rendering their requestedrelief equitable. Id. at 661. Moreover, without theequitable injunctive relief that plaintiffs sought, theplaintiffs would have had "no adequate remedy atlaw." Id. at 662. It is hardly surprising, and in noway inconsistent with the opinion below, that theSixth Circuit deemed the plaintiffs’ claim equitable,not legal, under those facts.

The Third Circuit’s opinion below was decidedon an entirely different footing, for Asten did notseek equitable relief at all, and the Third Circuitappropriately recognized its request for a declarationof legal rights as a request for legal relief. Indeed,the Third Circuit correctly concluded, applying itsOwens-Illinois precedent, that, in the absence of arequest for declaratory judgment, Asten would have

19

had an adequate remedy at law (and therefore couldnot have sought equitable relief at common law)because it could have brought an action inassumpsit. See Pet. App. 18a.

3. The Tenth Circuit’s decision in Manning v.United States, 146 F.3d 808 (10th Cir. 1998), is alsoentirely consistent with the Third Circuit’s decisionbelow. In Manning, the owner of a millsite initiallysought both monetary damages and injunctive reliefafter U.S. Forest Service officials entered hisproperty to conduct an inspection without hispermission. However, the owner "subsequentlyvoluntarily dismissed the claim for monetary relief¯.. leaving only claims for declaratory and injunctiverelief .... " Manning, 146 F.3d at 810.

The Manning Court concluded that the "actionwas equitable in nature" because the millsite owner"was not requesting monetary damages, but wasseeking only equitable relief in the form of adeclaratory judgment and injunction." Id. at 812.Consequently, "[t]he fact that he requested adeclaratory judgment, in connection with theinjunctive relief, did not alter the basic equitablenature of his action." Id. Thus, because the TenthCircuit did not confront a jury trial demand in thecontext of a declaratory judgment claim seeking adeclaration of legal rights, Manning has little to sayon the question that confronted the Third Circuitbelow.

4. Finally, like the other opinions upon whichPetitioners rely, the Eighth Circuit’s decision inNorthgate Homes, Inc. v. City of Dayton, 126 F.3d

2O

1095 (8th Cir. 1997), does not differ from the ThirdCircuit’s approach in this case. Northgate Homesinvolved a suit by the seller of mobile homes againsta city arising from the sale of such homes in a mobilehome park, allegedly in violation of local zoningordinances. Northgate Homes, 126 F.3d at 1097-1098. Northgate initially sought declaratory andinjunctive relief in a section 1983 claim, and lateramended its complaint to add claims for variousviolations of the U.S. Constitution and Minnesotaconstitution, breach of contract, and equitableestoppel. Id. at 1098. Following dismissal of most ofNorthgate’s claims at the summary judgment stage,the only claims "[r]emaining for trial were theparties’ cross-claims for declaratory and injunctiverelief on the nonconforming use issue." Id. After abench trial, in which the city secured injunctiverelief against Northgate, Northgate appealed. Id.

Notably, the Eighth Circuit’s analysis inNorthgate Homes parallels the Third Circuit’sconsideration of the issue posed in Asten’s claim.The Eighth Circuit recognized - contrary toPetitioners’ suggestion that courts should insteadundertake an isolated focus upon the relief requested- that "[t]o determine whether there is a right to ajury trial in a declaratory judgment action, it isnecessary first to determine the nature of the actionin which the issue would have arisen absent thedeclaratory judgment procedure." Id. at 1099(emphasis added). As the Court elaborated, "if therewould have been a right to a jury trial on the issuehad it arisen in an action other than one fordeclaratory judgment, then there is a right to a jurytrial in the declaratory judgment action," but "there

21

is no right to a trial by jury if, absent the declaratoryjudgment procedure, the issue would have arisen inan equitable proceeding." Id. (emphasis added).Significantly, for this proposition the NorthgateHomes Court cited the Third Circuit’s Owens-Illinoisopinion with approval. See id. at 1099 (citingOwens-Illinois, 610 F.2d at 1189).

Ultimately, the Eighth Circuit upheld thedenial of a jury trial because it recognized thatNorthgate’s declaratory judgment claim, unlikeAsten’s, was "fundamentally equitable." Id. Indeed,the Court concluded "that Northgate’s claim, in theabsence of the declaratory judgment procedure,would have arisen in an action to enjoin the Cityfrom enforcing its zoning ordinances," and therefore"that Northgate [was] not entitled to a jury trialbecause its claim would have been an equitableclaim." Id. Once again, this result is unsurprising,and does not speak to the issue that confronted thecourt below.

The opinions of the Sixth, Seventh, Eighth,and Tenth Circuits upon which Petitioners rely allarose from distinguishable facts. Each of those casesdenied a jury trial on the basis of claims that were"only equitable," Marseilles, 299 F.3d at 648-649;7

7 While Marseilles, as noted above, see supra note 5,ultimately did recognize a jury trial right on the basis of a legalcounterclaim, it said that no such right could be premised upona complaint’s request for equitable relief in the form of aninjunction and specific performance.

22

Manning, 146 F.3d at 812, "entirely equitable,"Golden, 73 F.3d at 663, or "fundamentallyequitable," Northgate Homes, 126 F.3d at 1099. Asthe Third Circuit correctly concluded, however,Asten’s request for declaratory relief in this case wasa legal one. See Pet. App. 15a-21a.

Furthermore, while it is unquestionably true,as Petitioners note, that a plea for declaratory reliefcannot convert an otherwise equitable claim into alegal one, it is equally true that declaratory reliefdoes not remove the legal basis for a claim that, likeAsten’s, entitles the claimant to a jury trial. SeeSimler, 372 U.S. at 223 ("The fact that the action isin form a declaratory judgment case should notobscure the essentially legal nature of the action.");see also Northgate Homes, 126 F.3d at 1099 ("Thefact that a declaratory judgment is sought neitherrestricts nor enlarges any right to a jury trial thatwould exist if the issue were to arise in a moretraditional kind of action for affirmative relief.").

Finally, it is telling that neither the ThirdCircuit, nor any of the circuit court decisionsPetitioners cite in support of their circuit splitargument, evidence any awareness of the existenceof such a split. Indeed, two of those circuits actuallycite the Third Circuit’s jurisprudence approvingly.See Marseilles, 299 F.3d at 649; Northgate Homes,

23

126 F.3d at 1099.8 Under these circumstances,Petitioners’ circuit split argument rings hollow.

II. THIS CASE IS A POOR VEHICLE FORCERTIORARI

This case is a poor vehicle for certiorari for atleast three reasons. First, none of Petitioners’ fourseparate criticisms of the decision below underminethe merits of the Third Circuit’s holding. Second,even if the Third Circuit had erred in its applicationof legal rules (and it did not), this would still not be a"compelling reason" for certiorari review. Third,even if the decision below conflicted with the ThirdCircuit’s Owens-Illinois decision (and it does not),that would actually be a compelling reason not togrant certiorari review in order to permit the ThirdCircuit to resolve any alleged internal split en banc.

Ao The Decision Below Is Correct OnThe Merits

None of Petitioners’ four criticisms underminethe merits of the holding below.

1. First, Petitioners fault the Third Circuit fora statement that is only ambiguous when removedfrom its context: "When faced with a situation inwhich a party cannot tender evidence essential to itsonly legal claim, a federal trial court may strike a

8 As discussed further below, see infra Part II.C, thePetitioners’ argument that the opinion below is itself adeparture from the Owens-Illinois opinion is, if anything,another compelling reason not to grant the petition.

24

jury demand without offending the SeventhAmendment." Pet. App. 14a. Detached fromcontext, Petitioners read that statement as areflection of the Third Circuit’s view of the status ofAsten’s breach of contract claim, rather than as amore general aside or observation. Their readingclearly makes no sense in context, however, for theThird Circuit proceeded in the very next paragraphto evaluate Asten’s declaratory judgment claimseparately, and therefore understood that Asten wasasserting, not one, but two distinct legal claims. Seeid. at 15a.

2. Second, while apparently recognizing thatthe Third Circuit applied a proper rule of law whenit considered "how Asten’s suit ’would have come tocourt if there were no declaratory judgment action,’"Pet. 19 (quoting Pet. App. 18a), Petitioners maintainthat the Third Circuit improperly applied that ruleof law, purportedly by "ignor[ing] Asten’s actual lackof entitlement to any legal relief," and by"hypothesiz[ing] an entirely different set of factsthat, if present, could have supported a legal claimby Asten," id.9

Petitioners mistakenly believe that, becausethe district court found Asten’s proof of damagesinadequate (although the district court stopped short

9 As discussed further below, see infra Part II.B, this Courthas a well-founded reluctance to grant certiorari review on thebasis of an alleged "misapplication of a properly stated rule oflaw." Sup. Ct. R. 10.

25

of dismissing Asten’s contract claim on that basis10),Asten’s declaratory judgment claim either becameinsupportable or was somehow transmuted into aclaim for equitable relief. Neither is the case.

First, the district court’s conclusion withrespect to Asten’s damages proof- even thoughmistaken - was relevant to Asten’s breach ofcontract claim, but did not remove the separate basisfor the declaration of legal rights that Asten soughtunder the insurance agreements. Indeed, as Astenargued, it had suffered damages, in part, due to thenecessity of drawing upon broader and morevaluable lines of insurance coverage as a result ofPetitioners’ refusal to cover Asten’s non-asbestosisclaims. This independent proof of the damagesAsten suffered from the Petitioners’ breach, at aminimum, supported Asten’s independentdeclaratory judgment claim for legal relief. Second,there is no alchemy by which to convert a request fordeclaratory relief from a fundamentally legal claiminto an equitable one. See Simler, 372 U.S. at 223.Accordingly, the Third Circuit properly applied itsrule of law to determine that Asten’s request fordeclaratory relief would, at common law, have been alegal cause of action in assumpsit.

3. Third, Petitioners charge that the decisionbelow "appears to presume, wrongly, that contractissues are by nature legal claims to which jury trialrights apply." Pet. 21. This argument is a strawman, for the Third Circuit presumed no such thing.

See supra note 1.

26

On the contrary, its lengthy quotation from Owens-Illinois illustrates that it was well aware that someclaims arising from contracts are equitable, notlegal. See Pet. App. 16a (quoting Owens-Illinois’description of "a declaratory judgment [claimasserting] . . [plaintiffs] right under an optionagreement to compel the defendant’s conveyance ofcertain realty"). It merely concluded, in thisinstance, that Asten’s request for declaratory reliefwas legal, and therefore entitled it to a jury trial. Id.at 21a. Finally, while one might argue that theThird Circuit could have done a better job - if onlyfor clarity’s sake - of articulating the legal remedyAsten sought (i.e., the declaration of rights stemmingfrom the insurance agreements), this omission was,at worst, only harmless error.

4. Fourth, Petitioners criticize the court belowfor what they claim was a misapplication of theThird Circuit’s own Owens-Illinois precedent. Infact, the opinion below is just as consistent withOwens-Illinois as it is with the opinions of theSeventh and Eighth Circuits that cited Owens-Illinois approvingly. See Marseilles, 299 F.3d at 649;Northgate Homes, 126 F.3d at 1099. And for muchthe same reason: like each of the cases upon whichPetitioners rely for their circuit split argument,Owens-Illinois involved an equitable claim. SeeOwens-Illinois, 610 F.2d at 1189. For this reason, itis unsurprising that the court below and the Owens-Illinois Court applied the same legal rule to differentfacts and therefore reached different results.

27

Alternatively, Certiorari Review IsNot Warranted For The"Misapplication Of A ProperlyStated Rule Of Law"

Even if there were any validity to Petitioners’quibbles with the merits of the Third Circuit’sholding (and there is not), Petitioners would still facea significant hurdle in this Court’s traditionalreluctance to grant certiorari review of "themisapplication of a properly stated rule of law." Sup.Ct. R. 10. See also Youngblood v. West Virginia, 547U.S. 867, 873 (2006) (Scalia, J., dissenting) (statingthat "[e]ven when we suspect error, we may havemany reasons not to grant certiorari outright,"including "an overcrowded docket, a reluctance tocorrect ’the misapplication of a properly stated ruleof law,’" and "this Court’s Rule 10"); Gonzalez v.Crosby, 545 U.S. 524, 544 n.7 (2005) (Stevens, J.,dissenting) ("[E]rror correction is a disfavored basisfor granting [certiorari] review .... ").

As noted above, the Third Circuit’s "properlystated rule of law" for determining whether adeclaratory judgment claim is legal or equitablederived from its Owens-Illinois opinion.ll There, theThird Circuit stated that, to determine whether adeclaratory judgment claim is legal or equitable, "[a]workable formula that has been developed is to

11 As noted above, Petitioners do not dispute that the rule oflaw the Third Circuit applied was a proper one. Rather, theychallenge the application of the Third Circuit’s properly statedrule of law. See supra Part II.A.2 (quoting Pet. 19).

28

determine in what kind of suit the claim would havecome to court if there were no declaratory judgmentremedy." Owens-Illinois, 610 F.2d at 1189 (citing 9CHARLES ALAN WRIGHT ~ ARTHUR R. MILLER,

FEDERAL PRACTICE AND PROCEDURE § 2313 (1971)).See also Pet. App. 18a ("The teachings of Owens-Illinois reflect the law generally."). Applying thatformula, the Third Circuit concluded that, in theabsence of a declaratory judgment claim, Asten’sclaim would have been "an action in assumpsit." Id.Petitioners may dislike that particular application ofthe properly stated Owens-Illinois rule, and evenbelieve it to be an incorrect application of that rule,but neither objection (even if valid) furnishes a"compelling reasonD" for certiorari review. Sup. Ct.R. 10.

Co Alternatively, If The DecisionBelow Conflicts With The ThirdCircuit’s Owens-Illinois Opinion,Certiorari Review Would BePremature

Even if the opinion below conflicted with theThird Circuit’s Owens-Illinois opinion (and it doesnot), the resulting internal circuit split wouldactually provide a compelling reason not to grantcertiorari review. "Ordinarily, a conflict betweendecisions rendered by different panels of the samecourt of appeals is not a sufficient basis for grantinga writ of certiorari." EUGENE GRESSMAN ET AL.,

SUPREME COURT PRACTICE 253 (9th ed. 2007). Thisis because internal circuit splits are mostappropriately resolved by the circuit in questionthrough en banc review. See Davis v. United States,

29

417 U.S. 333, 340 (1974) (noting denial of certiorarifollowing Solicitor General’s argument that internalcircuit split should be resolved by the circuit); seealso Wisniewski v. United States, 353 U.S. 901, 902(1957) (per curiam) ("[D]oubt about the respect to beaccorded to a previous decision of a different panelshould not be the occasion for invoking soexceptional a jurisdiction of this Court as that oncertification. It is primarily the task of a Court ofAppeals to reconcile its internal difficulties.").

The Court’s practice of not intervening inintra-circuit splits is well founded. In the event aclear difference between the approach of the ThirdCircuit and other courts emerges in the future - adifference, it bears repeating, that is not evident onthe present record - other circuits may by then havehad a chance to "weigh in." Such percolation wouldgreatly benefit this Court’s consideration of theissues. On the other hand, it appears more likelythat further percolation will obviate the need forgranting certiorari at all. An en banc panel of theThird Circuit would likely remove any doubt as tothe consistency of the Third Circuit’s approach withthose of other circuits.l~ In either case, however,granting certiorari now - on the basis of a claimeddifference of opinion within the Third Circuit thatcould be resolved in en banc review - would consume

le The fact that the Third Circuit denied a petition for enbanc review in this case, see Pet. App. 162a, suggests, asargued above, that there is in fact no conflict between thedecision below and Owens-Illinois.

3O

limited judicial resources prematurely by invitingthis Court’s untimely intervention.

III. THERE IS NO "CONFUSION" AMONGTHE LOWER COURTS, NOR ANY BASISFOR SUCH CONFUSION, ANDTHEREFORE NO NEED FOR THISCOURT’S CLARIFICATION

Petitioners’ final effort to secure this Court’sreview is a Hail Mary pass - a weakly supportedassertion that there is a need to clarify "significantconfusion among the lower courts" on an importantquestion of constitutional law. Pet. 24. Becausethere is no such confusion, nor any basis for it, thereis no need for this Court’s clarification.

Significantly, the "confusion" that Petitionersallege is not confusion about the issue in this case.Rather, it is "more generally," about "the appropriateanalysis for determining jury trial rights indeclaratory judgment actions." Id. For the reasonsdiscussed above, however, this case is a poor vehicleto embark upon a general effort at clarification orrestatement of this area of the law. To the extentconfusion among the lower courts in fact exists (adubious proposition, given the dearth of support),this Court should await a better vehicle forclarification.

Petitioners’ argument founders on theirproffered evidence of just two examples of purportedlower court confusion - the opinions of a districtcourt and a circuit court, both within the TenthCircuit - neither of which exhibit particular

31

"confusion" regarding the appropriate analysis toundertake in cases like this one. Id. at 24-25. SeeMedlmmune, Inc. v. Genentech, Inc., 535 F. Supp. 2d1020, 1022 (C.D. Cal. 2008) (recognizing this Court’stwo-part Seventh Amendment analysis with littledifficulty); Fischer Imaging Corp. v. General Elec.Co., 187 F.3d 1165, 1168 (10th Cir. 1999) (same).13

Furthermore, there is no reason to believe that "[t]hedecision below leaves trial courts uncertain whethera jury trial is necessary in actions involving arequest for a declaratory judgment where theplaintiff has no valid claim for legal relief." Pet. 26(emphasis added). As discussed at length above, thisis not such a case. The Third Circuit correctlyconcluded that Asten does have a valid claim forlegal relief.

Petitioners also claim that this Court’s ownjurisprudence "exacerbate[s]" the confusion of lowercourts. Pet. 25. This is allegedly because, in theirview, Terry - contrary to this Court’s previousopinions in Tull and Granfinanciera, S.A. v.Nordberg, 492 U.S. 33 (1989) - improperlyemphasizes the analysis of issues rather thanrequested relief. Id. This claim holds no water,because it relies upon a bald-faced misstatement ofthe Terry Court’s approach. Indeed, rather thanquote the Terry Court’s complete statement of the

13 Fischer provides further evidence that, contrary toPetitioners’ assertion, the Tenth Circuit has not "split" from theThird Circuit. Indeed, the opinion below cites Fischer asillustrative of the fact that "It]he teachings of Owens.Illinoisreflect the law generally." Pet. App. 18a (citing Fischer).

32

two-part analysis it actually employed, Petitionersquote a fragment, leaving the impression that Terryrelied upon only the first of the two prongs.Compare Pet. 25 ("[T]he Court’s plurality opinion inTerry... appears to focus the Seventh Amendmentinquiry on the ’nature of the issues involved,’ Terry,494 U.S. at 565, rather than.., on the nature of theclaim and the relief sought.") with Terry, 494 U.S. at565 ("To determine whether a particular action willresolve legal rights, we examine both the nature ofthe issues involved and the remedy sought.").14 Inthis way, Petitioners sow confusion where none infact exists. Plainly, because there is no "confusion,"nor any basis for it, there is no need for clarification.

14 As it happens, the second prong of Terry’s analysis - theremedy analysis - was outcome determinative in that case. SeeTerry, 494 U.S. at 570. See also id. at 573 ("Considering bothparts of the Seventh Amendment inquiry, we find thatrespondents are entitled to a jury trial on all issues presentedin their suit."). Accordingly, there is no basis for Petitioners’claim that Terry "focus[ed]" on the issues analysis "rather than¯.. on the nature of the claim and the relief sought." Pet. 25.

33

CONCLUSION

For the foregoing reasons, the petition for a writof certiorari should be denied.

Respectfully submitted,

MICHAEL CONLEYANDERSON, KILL & OLICK1600 Market StreetSuite 2500Philadelphia, PA 19103(267) 216-2700

ROBERT C. HEIMCounsel of Record

JUSTIN C. DANILEWITZDECHERT LLPCira Centre2929 Arch StreetPhiladelphia, PA 19104(215) 994-4000

September 21, 2009 Counsel for RespondentAstenJohnson, Inc.

dlank Page