Will v. Calvert Fire Insurance

437 U.S. 655, 98 S. Ct. 2552, 57 L. Ed. 2d 504, 1978 U.S. LEXIS 10

Opinions

Mr. Justice Rehnquist

announced the judgment of the Court, and delivered an opinion in which Mr. Justice Stewart, Mr. Justice White, and Mr. Justice Stevens joined.

On August 15, 1977, the Court of Appeals for the Seventh Circuit granted a petition for writ of mandamus ordering petitioner, a judge of the United States District Court for the Northern District of Illinois, “to proceed immediately” to adjudicate a claim based upon the Securities Exchange Act of 1934 and brought by respondent, Calvert Fire Insurance Co., against American Mutual Reinsurance Co., despite the pendency of a substantially identical proceeding between the same parties in the Illinois state courts. 560 F. 2d 792, 797. The Court of Appeals felt that our recent decision in Colorado River Water Conservation Dist. v. United States, 424 U. S. 800 (1976), compelled the issuance of the writ. We granted certiorari to consider the propriety of the use of mandamus to review a District Court’s decision to defer to concurrent state proceedings, 434 U. S. 1008, and we now reverse.

I

Respondent Calvert writes property and casualty insurance. American Mutual operates a reinsurance pool whereby a number of primary insurers protect themselves against unanticipated losses. Membership in the pool requires both the payment of premiums by pool members and indemnification of the pool in the event that losses exceed those upon which the premiums are calculated. Calvert joined the pool in early 1974, but in April of that year notified American Mutual of its election to rescind the agreement by which it became a member.

In July 1974, American Mutual sued in the Circuit Court of Cook County, Ill., to obtain a declaration that the pool agreement between it and Calvert was in full force and effect. Six months later, Calvert in its answer to that suit asserted that the pool agreement was not enforceable against it because of violations by American Mutual of the Securities Act of 1933, the Securities Exchange Act of 1934, the Illinois Securities Act, the Maryland Securities Law, and the state common law of fraud. With its answer Calvert filed a counterclaim seeking $2 million in damages from American Mutual on all of the grounds that it set up in defense except for the defense based on the Securities Exchange Act of 1934. Since § 27 of that Act, 48 Stat. 902, as amended, 15 U. S. C. § 78aa (1976 ed.), granted the district courts of the United States exclusive jurisdiction to enforce the Act, Calvert on the same day filed a complaint in the United States District Court for the Northern District of Illinois seeking damages from American Mutual for an alleged violation of Rule 10b-5, 17 CFR § 240.10b-5 (1977), issued under § 10 (b) of the Act, 15 U. S. C. § 78j (b) (1976 ed.). Joined with this Rule 10b-5 count were claims based on each of the other grounds asserted by it in defense to American Mutual’s state-court action.

In February 1975, more than seven months after it had begun its state-court action, but less than one month after Calvert had filed its answer and counterclaim in that action and its complaint in the federal court, American Mutual moved to dismiss or abate the latter. The claim for dismissal was based on the substantive assertion that the reinsurance agreement was not a “security” within the meaning of the 1933 or 1934 Act. The motion to abate was based on the fact that the state proceedings commenced six months before the federal proceedings included every claim and defense except the claim for damages based on Rule 10b-5 under the 1934 Act.

In May 1975, Judge Will substantially granted American Mutual’s motion to defer the federal proceeding until the completion of the state proceedings, observing that a tentative trial date had already been set by the state court. Federal litigation of the same issues would therefore be duplicatiye and wasteful. He rejected Calvert’s contention that the court should proceed with the entire case because of its exclusive jurisdiction under the 1934 Act, noting that the state court was bound to provide the equitable relief sought by Calvert by recognizing a valid Rule 10b-5 claim as a defense to the state action.¹ Only Calvert’s claim for damages under Rule 10b-5 was subject to the exclusive jurisdiction of the federal court. Petitioner therefore stayed all aspects of Calvert’s federal action subject to' the concurrent jurisdiction of both courts, recognizing “only Calvert’s very limited claim for monetary damages under the 1934 Securities Act as a viable claim in this court.” App. to Pet. for Cert. B-9. On May 9, 1975, Judge Will heard oral argument on the basic question of whether Calvert's interest in the reinsurance pool is a security within the meaning of the 1934 Act. He has not yet rendered a decision on that issue.²

Judge Will rejected two motions to reconsider his stay order and refused to certify an interlocutory appeal pursuant to 28 U. S. C. § 1292 (b). On May 26, 1976, Calvert petitioned the Court of Appeals for the Seventh Circuit for a writ of mandamus directing Judge Will to proceed to adjudicate its Rule 10b-5 claims.³ Nearly 14 months later, on August 15, 1977, the Court of Appeals granted the petition and directed Judge Will to “proceed immediately with Calvert's claim for damages and equitable relief under the Securities Exchange Act of 1934.” 560 F. 2d, at 797.⁴

We granted certiorari to consider Judge Will's contention that the issuance of the writ of mandamus impermissibly-interfered with the discretion of a district court to control its own docket. 434 U. S. 1008 (1978).

II

The correct disposition of this case hinges in large part on the appropriate standard of inquiry to be employed by a court of appeals in determining whether to issue a writ of mandamus to a district court. On direct appeal, a court of appeals has broad authority to “modify, vacate, set aside or reverse” an order of a district court, and it may direct such further action on remand “as may be just under the circumstances.” 28 U. S. C. § 2106. By contrast, under the All Writs Act, 28 U. S. C. § 1651 (a), courts of appeals may issue a writ of mandamus only when “necessary or appropriate in aid of their respective jurisdictions.” Whereas a simple showing of error may suffice to obtain a reversal on direct appeal, to issue a writ of mandamus under such circumstances “would undermine the settled limitations upon the power of an appellate court to review interlocutory orders.” Will v. United States, 389 U. S. 90, 98 n. 6 (1967).

As we have repeatedly reaffirmed in cases such as Kerr v. United States District Court, 426 U. S. 394, 402 (1976), and Bankers Life & Cas. Co. v. Holland, 346 U. S. 379, 382 (1953), the “traditional use of the writ in aid of appellate jurisdiction both at common law and in the federal courts has been to confine an inferior court to a lawful exercise of its prescribed jurisdiction or to compel it to exercise its authority when it is its duty to do so.” Roche v. Evaporated Milk Assn., 319 U. S. 21, 26 (1943). Calvert makes no contention that petitioner has exceeded the bounds of his jurisdiction. Rather, it contends that the District Court, in entering the stay order, has refused “to exercise its authority when it is its duty to do so.” Ibid. There can be no doubt that, where a district court persistently and without reason refuses to adjudicate a case properly before it, the court of appeals may issue the writ “in order that [it] may exercise the jurisdiction of review given by law.” Insurance Co. v. Comstock, 16 Wall. 258, 270 (1873). “Otherwise the appellate jurisdiction could be defeated and the purpose of the statute authorizing the writ thwarted by unauthorized action of the district court obstructing the appeal.” Roche, supra, at 25:⁵

To say that a court of appeals has the power to direct a district court to proceed to judgment in a pending case “when it is its duty to do so,” 319 U. S., at 26, states the standard but does not decide this or any other particular case. It is essential that the moving party satisfy “the burden of showing that its right to issuance of the writ is 'clear and indisputable.' ” Bankers Life & Cas. Co., supra, at 384, quoting United States v. Duell, 172 U. S. 576, 582 (1899). Judge Will urges that Calvert does not have a “clear and indisputable” right to the adjudication of its claims in the District Court without regard to the concurrent state proceedings. To that issue we now must turn.

Ill

It is well established that “the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction.” McClellan v. Carland, 217 U. S. 268, 282 (1910). It is equally well settled that a district court is “under no compulsion to exercise that jurisdiction,” Brillhart v. Excess Ins. Co., 316 U. S. 491, (1942), where the controversy may be settled more expeditiously in the state court. Although most of our decisions discussing the propriety of stays or dismissals of duplicative actions have concerned conflicts of jurisdiction between two federal district courts, e. g., Kerotest Mfg. Co., v. C-O-Two Fire Equipment Co., 342 U. S. 180 (1952); Landis v. North American Co., 299 U. S. 248 (1936), we have recognized the relevance of those cases in the analogous circumstances presented here. See Colorado River, 424 U. S., at 817-819. In both situations, the decision is largely committed to the “carefully considered judgment,” id., at 818, of the district court.

This power has not always been so clear. In McClellan, on facts similar to those presented here, this Court indicated that the writ might properly issue where the District Court had stayed its proceedings in deference to concurrent state proceedings.⁶ Such an automatic exercise of authority may well have been appropriate in a day when Congress had authorized fewer claims for relief in the federal courts, so that duplicative litigation and the concomitant tension between state and federal courts could rarely result. However, as the overlap between state claims and federal claims increased, this Court soon recognized that situations would often arise when it would be appropriate to defer to the state courts.

“Ordinarily it would be uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties. Gratuitous interference with the orderly and comprehensive disposition of a state court litigation should be avoided.” Brillhart, supra, at 495.

The decision in such circumstances is largely committed to the discretion of the district court. 316 U. S., at 494. Furthermore, Colorado River, supra, at 820, established that such deference may be equally appropriate even when matters of substantive federal law are involved in the case.

It is true that Colorado River emphasized “the virtually unflagging obligation of the federal courts to exercise the jurisdiction given them.” 424 U. S., at 817. That language underscores our conviction that a district court should exercise its discretion with this factor in mind, but it in no way undermines the conclusion of Brillhart that the decision whether to defer to the concurrent jurisdiction of a state court is, in the last analysis, a matter committed to the district court's discretion. Seizing upon the phrase “unflagging obligation” in an opinion which upheld the correctness of a district court’s final decision to dismiss because of concurrent jurisdiction does little to bolster a claim for the extraordinary writ of mandamus in a case such as this where the District Court has rendered no final decision.

We think it of considerably more importance than did the Court of Appeals that Colorado River came before the Court of Appeals on appeal pursuant to 28 U. S. C. § 1291 following outright dismissal of the action by the District Court, rather than through an effort on the part of the federal-court plaintiff to seek mandamus. Calvert contends here, and the Court of Appeals for the Seventh Circuit agreed, that Judge Will’s order deferring the federal proceedings was “equivalent to a dismissal.” 560 F. 2d, at 796. We are loath to rest our analysis on this ubiquitous phrase, for if used carelessly or without a precise definition it may impede rather than assist sound resolution of the underlying legal issue.

Obviously, if Judge Will had dismissed Calvert’s action Calvert could have appealed the order of dismissal to the Court of Appeals, which could have required such action of Judge Will “as may be just under the circumstances.” 28 U. S. C. § 2106. Since he did not dismiss the action, Calvert remained free to urge reconsideration of his decision to defer based on new information as to the progress of the state case; to this extent, at least, deferral was not “equivalent to a dismissal.”

There are sound reasons for our reiteration of the rule that a district court’s decision to defer proceedings because of concurrent state litigation is generally committed to the discretion of that court. No one can seriously contend that a busy federal trial judge, confronted both with competing demands on his time for matters properly within his jurisdiction and with inevitable scheduling difficulties because of the unavailability of lawyers, parties, and witnesses, is not entrusted with a wide latitude in setting his own calendar. Had Judge Will simply decided on his own initiative to defer setting this case for trial until the state proceedings were completed, his action would-have been the “equivalent” of granting the motion of American Mutual to defer, yet such action would at best have afforded Calvert a highly dubious claim for mandamus. We think the fact that the judge accomplished this same result by ruling favorably on a party’s motion to defer does not change the underlying legal question.

Although the District Court’s exercise of its discretion may be subject to review and modification in a proper interlocutory appeal, cf. Landis, 299 U. S., at 256-259, we are convinced that it ought not to be overridden by a writ of mandamus.⁷ Where a matter is committed to the discretion of a district court, it cannot be said that a litigant’s right to a particular result is “clear and indisputable.” ⁸

Calvert contends that a district court is without power to stay proceedings, in deference to a contemporaneous state action, where the federal courts have exclusive jurisdiction over the issue presented. Whether or not this is so, petitioner has not purported to stay consideration of Calvert’s claim for damages under the Securities Exchange Act of 1934, which is the only issue which may not be concurrently resolved by both courts.⁹ It is true that petitioner has not yet ruled upon this claim. Where a district court obstinately refuses to adjudicate a matter properly before it, a court of appeals may issue the writ to correct “unauthorized action of the district court obstructing the appeal.” Roche, 319 U. S., at 25, citing Ex parte United States, 287 U. S. 241 (1932). Calvert, however, has neither alleged nor proved such a heedless refusal to proceed as a basis for the issuance of the writ here. Its petition offers only the bare allegation that Judge Will “in effect” abated the damages claim in deference to the state proceedings. App. 12. Judge Will has never issued such an order, and the sparse record before us will not support any such inference. So far as appears, the delay in adjudicating the damages claim is simply a product of the normal excessive load of business in the District Court, compounded by “the unfortunate consequence of making the judge a litigant” in this mandamus proceeding. Ex parte Fahey, 332 U. S. 258, 260 (1947).

The judgment of the Court of Appeals is therefore

Reversed.

1 Calvert's answer in the state action explicitly contended that it was “entitled to rescission of its purchase of the aforesaid security” because of the alleged Rule 10b-5 violation. App. to Pet. for Cert. D-5. It sought identical equitable relief in its federal complaint. Id., at E-6. See Weiner v. Shearson, Hammill & Co., 521 F. 2d 817, 822 (CA9 1975); Aetna State Bank v. Altheimer, 430 F. 2d 750, 754 (CA7 1970).

2 The state court, however, has reached a decision on the issue. The Circuit Court concluded that the agreement was not a security, and therefore struck the federal issues from Calvert's answer and counterclaim. On an interlocutory appeal the Illinois Appellate Court affirmed, holding that the agreement was not a security within the meaning of either the 1933 or the 1934 Act and that, in any event, § 2 (b) of the McCarran-Ferguson Act, 15 U. S. C. § 1012 (b) (1976 ed.), exempted insurance from the reach of the federal securities laws. American Mutual Reinsurance Co. v. Calvert Fire Ins. Co., 52 Ill. App. 3d 922, 367 N. E. 2d 104 (1977), pet. for leave to appeal denied, No. 50,085 (Jan. 26, 1978), cert. denied, 436 U. S. 906 (1978).

3 As already noted, the stay order did not apply to Calvert’s claim for damages under Rule 10b-5. Judge Will had stayed Calvert’s claim for equitable relief because the state court had jurisdiction to rescind the agreement by recognition of a Rule 10b-5 defense.

The petition did not seek to require Judge Will to proceed with the state-law claims or the federal claim based on the 1933 Act. 560 F. 2d 792, 794 n. 2.

4 Although Calvert’s petition addressed only its Rule 10b-5 claims, the court went on to note: “The logic behind our holding in this case supports the conclusion that the stay of 1933 Act claims, as well as the 1934 Act claims, was improper.” 560 F. 2d, at 797 n. 6.

5 A classic example of the proper issuance of the writ to protect eventual appellate jurisdiction is Thermtron Products, Inc. v. Hermansdorfer, 423 U. S. 336 (1976), in which a case had been remanded to the state courts on grounds utterly unauthorized by the controlling statute. The dissenters in that case urged that Congress had intended to bar all review of remand orders, not that mandamus would have been inappropriate absent such a bar. Id., at 354 (Rehnquist, J., joined by Burger, C. J., and Stewart, J., dissenting).

6 This Court there held, not that the writ should issue, but that the Court of Appeals should have required the District Judge to show cause why the writ should not issue. Judge Carland presented an affidavit to this Court attempting to defend his stay order on the basis of substantially completed state proceedings. As that affidavit was not in the record before the Court of Appeals, this Court did not “pass upon the sufficiency of those proceedings to authorize the orders in question," 217 U. S., at 283, but directed the Court of Appeals to do so in the first instance.

7 Although in at least one instance we approved the issuance of the writ upon a mere showing of abuse of discretion, La Buy v. Howes Leather Co., 352 U. S. 249, 257 (1957), we warned soon thereafter against the dangers of such a practice. “Courts faced with petitions for the peremptory writs must be careful lest they suffer themselves to be misled by labels such as 'abuse of discretion’ and 'want of power’ into interlocutory review of non-appealable orders on the mere ground that they may be erroneous.” Will v. United States, 389 U. S. 90, 98 n. 6 (1967).

Beacon Theatres, Inc. v. Westover, 359 U. S. 500 (1959), is not to the contrary. Both the Court and the dissenters agreed that mandamus should issue to protect a clear right to a jury trial. Id., at 511; ibid. (Stewart, J., dissenting). The Court simply concluded that it was “not permissible,” id., at 508, for the District Court to postpone a jury trial until after most of the relevant issues had been settled in an equitable action before the court. Here, we have repeatedly recognized that it is permissible for a district court to defer to the concurrent jurisdiction of a state court.

8 That a litigant’s right 'to proceed with a duplicative action in a federal court can never be said to be “clear and indisputable” is made all the more apparent by our holding earlier this Term in General Atomic Co. v. Felter, 434 U. S. 12 (1977), that a state court lacks the power to restrain vexatious litigation in the federal courts. There, we reaffirmed the principle that “[fjederal courts are fully capable of preventing their misuse for purposes of harassment.” Id., at 19.

9 The only other issue encompassed by the writ was Calvert’s Rule 10b-5 claim for equitable relief. It is not disputed here that the state court has jurisdiction to rescind the agreement as Calvert requests. That being conceded, we find no merit in Calvert’s further argument that the statutory grant of exclusive jurisdiction in any way distinguishes this aspect of the case from our earlier decisions in which both the state and federal courts had power to grant the desired relief.