7 Declaratory Judgment 7 Declaratory Judgment
7.1 DECLARATORY JUDGMENTS 7.1 DECLARATORY JUDGMENTS
28 U.S.C. §§ 2201-2202
United States Code, 2018 Edition
Title 28 - JUDICIARY AND JUDICIAL PROCEDURE
PART VI - PARTICULAR PROCEEDINGS
CHAPTER 151 - DECLARATORY JUDGMENTS
From the U.S. Government Publishing Office,
(a) In a case of actual controversy within its jurisdiction, except with respect to Federal taxes other than actions brought under section 7428 of the Internal Revenue Code of 1986, a proceeding under section 505 or 1146 of title 11, or in any civil action involving an antidumping or countervailing duty proceeding regarding a class or kind of merchandise of a free trade area country (as defined in section 516A(f)(10) of the Tariff Act of 1930), as determined by the administering authority, any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.
(b) For limitations on actions brought with respect to drug patents see section 505 or 512 of the Federal Food, Drug, and Cosmetic Act, or section 351 of the Public Health Service Act.
(June 25, 1948, ch. 646, 62 Stat. 964; May 24, 1949, ch. 139, §111, 63 Stat. 105; Aug. 28, 1954, ch. 1033, 68 Stat. 890; Pub. L. 85–508, §12(p), July 7, 1958, 72 Stat. 349; Pub. L. 94–455, title XIII, §1306(b)(8), Oct. 4, 1976, 90 Stat. 1719; Pub. L. 95–598, title II, §249, Nov. 6, 1978, 92 Stat. 2672; Pub. L. 98–417, title I, §106, Sept. 24, 1984, 98 Stat. 1597; Pub. L. 100–449, title IV, §402(c), Sept. 28, 1988, 102 Stat. 1884; Pub. L. 100–670, title I, §107(b), Nov. 16, 1988, 102 Stat. 3984; Pub. L. 103–182, title IV, §414(b), Dec. 8, 1993, 107 Stat. 2147; Pub. L. 111–148, title VII, §7002(c)(2), Mar. 23, 2010, 124 Stat. 816.)
Amendment of Section
For termination of amendment by section 501(c) of Pub. L. 100–449, see Effective and Termination Dates of 1988 Amendment note below.
Historical and Revision Notes
1948 Act
Based on title 28, U.S.C., 1940 ed., §400 (Mar. 3, 1911, ch. 231, §274d, as added June 14, 1934, ch. 512, 48 Stat. 955; Aug. 30, 1935, ch. 829, §405, 49 Stat. 1027).
This section is based on the first paragraph of section 400 of title 28, U.S.C., 1940 ed. Other provisions of such section are incorporated in section 2202 of this title.
While this section does not exclude declaratory judgments with respect to State taxes, such suits will not ordinarily be entertained in the courts of the United States where State law makes provision for payment under protest and recovery back or otherwise affords adequate remedy in the State courts. See Great Lakes Dredge & Dock Co. v. Huffman, La. 1943, 63 S.Ct. 1070, 319 U.S. 293, 87 L.Ed. 1407. See also Spector Motor Service v. McLaughlin, Conn. 1944, 65 S.Ct. 152, 323 U.S. 101, 89 L.Ed. 101. See also section 1341 of this title forbidding district courts to restrain enforcements of State taxes where State courts afford plain, speedy, and efficient remedy.
Changes were made in phraseology.
1949 Act
Section corrects a typographical error in section 2201 of title 28, U.S.C.
References in Text
Section 7428 of the Internal Revenue Code of 1986, referred to in subsec. (a), is classified to section 7428 of Title 26, Internal Revenue Code.
Section 516A(f)(10) of the Tariff Act of 1930, referred to in subsec. (a), is classified to section 1516a(f)(10) of Title 19, Customs Duties.
Sections 505 and 512 of the Federal Food, Drug, and Cosmetic Act, referred to in subsec. (b), are classified to sections 355 and 360b, respectively, of Title 21, Food and Drugs.
Section 351 of the Public Health Service Act, referred to in subsec. (b), is classified to section 262 of Title 42, The Public Health and Welfare.
Amendments
2010—Subsec. (b). Pub. L. 111–148 inserted ", or section 351 of the Public Health Service Act" before period.
1993—Subsec. (a). Pub. L. 103–182 substituted "merchandise of a free trade area country (as defined in section 516A(f)(10) of the Tariff Act of 1930)," for "Canadian merchandise,".
1988—Subsec. (a). Pub. L. 100–449 temporarily substituted "1986," for "1954 or" and inserted "or in any civil action involving an antidumping or countervailing duty proceeding regarding a class or kind of Canadian merchandise, as determined by the administering authority," after "title 11,". See Effective and Termination Dates of 1988 Amendment note below.
Subsec. (b). Pub. L. 100–670 inserted "or 512" after "505".
1984—Pub. L. 98–417 designated existing provisions as subsec. (a) and added subsec. (b).
1978—Pub. L. 95–598 inserted reference to proceedings under section 505 or 1146 of title 11.
1976—Pub. L. 94–455 substituted "taxes other than actions brought under section 7428 of the Internal Revenue Code of 1954" for "taxes".
1958—Pub. L. 85–508 struck out provisions which related to District Court for Territory of Alaska. See section 81A of this title which establishes a United States District Court for the State of Alaska.
1954—Act Aug. 28, 1954, extended provisions to Alaska.
1949—Act May 24, 1949, corrected spelling of "or" in second sentence.
Effective Date of 1993 Amendment
Amendment by Pub. L. 103–182 effective on the date the North American Free Trade Agreement enters into force with respect to the United States [Jan. 1, 1994], but not applicable to any final determination described in section 1516a(a)(1)(B) or (2)(B)(i), (ii), or (iii) of Title 19, Customs Duties, notice of which is published in the Federal Register before such date, or to a determination described in section 1516a(a)(2)(B)(vi) of Title 19, notice of which is received by the Government of Canada or Mexico before such date, or to any binational panel review under the United States-Canada Free-Trade Agreement, or to any extraordinary challenge arising out of any such review that was commenced before such date, see section 416 of Pub. L. 103–182, set out as an Effective Date note under section 3431 of Title 19.
Effective and Termination Dates of 1988 Amendment
Amendment by Pub. L. 100–449 effective on date United States-Canada Free-Trade Agreement enters into force (Jan. 1, 1989), and to cease to have effect on date Agreement ceases to be in force, see section 501(a), (c) of Pub. L. 100–449, set out in a note under section 2112 of Title 19, Customs Duties.
Effective Date of 1978 Amendment
Amendment by Pub. L. 95–598 effective Oct. 1, 1979, see section 402(c) of Pub. L. 95–598, set out as an Effective Date note preceding section 101 of Title 11, Bankruptcy.
Effective Date of 1976 Amendment
Amendment by Pub. L. 94–455 applicable with respect to pleadings filed with the United States Tax Court, the District Court of the United States for the District of Columbia, or the United States Court of Claims more than 6 months after Oct. 4, 1976, but only with respect to determinations (or requests for determinations) made after Jan. 1, 1976, see section 1306(c) of Pub. L. 94–455, set out as an Effective Date note under section 7428 of Title 26, Internal Revenue Code.
Effective Date of 1958 Amendment
Amendment by Pub. L. 85–508 effective Jan. 3, 1959, on admission of Alaska into the Union pursuant to Proc. No. 3269, Jan. 3, 1959, 24 F.R. 81, 73 Stat. c16, as required by sections 1 and 8(c) of Pub. L. 85–508, see notes set out under section 81A of this title and preceding section 21 of Title 48, Territories and Insular Possessions.
Effect of Termination of NAFTA Country Status
For provisions relating to effect of termination of NAFTA country status on sections 401 to 416 of Pub. L. 103–182, see section 3451 of Title 19, Customs Duties.
Amount in Controversy
Jurisdictional amount in diversity of citizenship cases, see section 1332 of this title.
§2202. Further relief
Further necessary or proper relief based on a declaratory judgment or decree may be granted, after reasonable notice and hearing, against any adverse party whose rights have been determined by such judgment.
Notes
Historical and Revision Notes
Based on title 28, U.S.C., 1940 ed., §400 (Mar. 3, 1911, ch. 231, §274d, as added June 14, 1934, ch. 512, 48 Stat. 955; Aug. 30, 1935, ch. 829, §405, 49 Stat. 1027).
This section is based on the second paragraph of section 400 of title 28, U.S.C., 1940 ed. Other provisions of such section are incorporated in section 2201 of this title.
Provision in said section 400 that the court shall require adverse parties whose rights are adjudicated to show cause why further relief should not be granted forthwith, were omitted as unnecessary and covered by the revised section.
Provisions relating to submission of interrogatories to a jury were omitted as covered by rule 49 of the Federal Rules of Civil Procedure.
Changes were made in phraseology.
7.2 Medimmune, Inc. v. Genentech, Inc. 7.2 Medimmune, Inc. v. Genentech, Inc.
MEDIMMUNE, INC. v. GENENTECH, INC., et al.
No. 05-608.
Argued October 4, 2006
Decided January 9, 2007
*119Scalia, J., delivered the opinion of the Court, in which Roberts, C. J., and Stevens, Kennedy, Souter, Ginsburg, Breyer, and Alito, JJ., joined. Thomas, J., filed a dissenting opinion, post, p. 137.
John G. Kester argued the cause for petitioner. With him on the briefs were Paul B. Gaffney, Janet C. Fisher, Aaron P. Maurer, Harvey Kurzweil, Aldo Badini, and Henry J. Ricardo.
Deanne E. Maynard argued the cause for the United States as amicus curiae urging reversal. With her on the brief were Solicitor General Clement, Assistant Attorney General Keisler, Deputy Solicitor General Hungar, John M. Whealan, and Joseph G. Piccolo.
*120Maureen E. Mahoney argued the cause for respondents. With her on the brief for respondent Genentech, Inc., were J. Scott Ballenger, Amanda P. Biles, Daniel M. Wall, Mark A. Flagel, Roy E. Hofer, Meredith Martin Addy, John W. Keker, and Mark A. Lemley. Paul M. Smith, William M. Hohengarten, Ian Heath Gershengorn, Joseph M. Lipner, Laura W Brill, and Jason Linder filed a brief for respondent City of Hope.*
delivered the opinion of the Court.
We must decide whether Article Ill’s limitation of federal courts’ jurisdiction to “Cases” and “Controversies,” reflected in the “actual controversy” requirement of the Declaratory Judgment Act, 28 U. S. C. § 2201(a), requires a patent li*121censee to terminate or be in breach of its license agreement before it can seek a declaratory judgment that the underlying patent is invalid, unenforceable, or not infringed.
I
Because the declaratory-judgment claims in this case were disposed of at the motion-to-dismiss stage, we take the following facts from the allegations in petitioner’s amended complaint and the unopposed declarations that petitioner submitted in response to the motion to dismiss. Petitioner Medlmmune, Inc., manufactures Synagis, a drug used to prevent respiratory tract disease in infants and young children. In 1997, petitioner entered into a patent license agreement with respondent Genentech, Inc. (which acted on behalf of itself as patent assignee and on behalf of the coassignee, respondent City of Hope). The license covered an existing patent relating to the production of “chimeric antibodies” and a then-pending patent application relating to “the co-expression of immunoglobulin chains in recombinant host cells.” Petitioner agreed to pay royalties on sales of “Licensed Products,” and respondents granted petitioner the right to make, use, and sell them. The agreement defined “Licensed Products” as a specified antibody, “the manufacture, use or sale of which . . . would, if not licensed under th[e] Agreement, infringe one or more claims of either or both of [the covered patents,] which have neither expired nor been held invalid by a court or other body of competent jurisdiction from which no appeal has been or may be taken.” App. 399. The license agreement gave petitioner the right to terminate upon six months’ written notice.
In December 2001, the “coexpression” application covered by the 1997 license agreement matured into the “Cabilly II” patent. Soon thereafter, respondent Genentech delivered petitioner a letter expressing its belief that Synagis was covered by the Cabilly II patent and its expectation that petitioner would pay royalties beginning March 1, 2002. Petitioner did not think royalties were owing, believing that the *122Cabilly II patent was invalid and unenforceable,1 and that its claims were in any event not infringed by Synagis. Nevertheless, petitioner considered the letter to be a clear threat to enforce the Cabilly II patent, terminate the 1997 license agreement, and sue for patent infringement if petitioner did not make royalty payments as demanded. If respondents were to prevail in a patent infringement action, petitioner could be ordered to pay treble damages and attorney’s fees, and could be enjoined from selling Synagis, a product that has accounted for more than 80 percent of its revenue from sales since 1999. Unwilling to risk such serious consequences, petitioner paid the demanded royalties “under protest and with reservation of all of [its] rights.” Id., at 426. This declaratory-judgment action followed.
Petitioner sought the declaratory relief discussed in detail in Part II below. Petitioner also requested damages and an injunction with respect to other federal and state claims not relevant here. The District Court granted respondents’ motion to dismiss the declaratory-judgment claims for lack of subject-matter jurisdiction, relying on the decision of the United States Court of Appeals for the Federal Circuit in Gen-Probe Inc. v. Vysis, Inc., 359 F. 3d 1376 (2004). Gen-Probe had held that a patent licensee in good standing cannot establish an Article III case or controversy with regard to validity, enforceability, or scope of the patent because the license agreement “obliterate[s] any reasonable apprehension” that the licensee will be sued for infringement. Id., at 1381. The Federal Circuit affirmed the District Court, also relying on Gen-Probe. 427 F. 3d 958 (2005). We granted certiorari. 546 U. S. 1169 (2006).
*123II
At the outset, we address a disagreement concerning the nature of the dispute at issue here — whether it involves only a freestanding claim of patent invalidity or rather a claim that, both because of patent invalidity and because of noninfringement, no royalties are owing under the license agreement.2 That probably makes no difference to the ultimate issue of subject-matter jurisdiction, but it is well to be clear about the nature of the case before us.
Respondents contend that petitioner “is not seeking an interpretation of its present contractual obligations.” Brief for Respondent Genentech 37; see also Brief for Respondent City of Hope 48-49. They claim this for two reasons: (1) because there is no dispute that Synagis infringes the Cabilly II patent, thereby making royalties payable; and (2) because while there is a dispute over patent validity, the contract calls for royalties on an infringing product whether or not the underlying patent is valid. See Brief for Respondent Genentech 7, 37. The first point simply does not comport with the allegations of petitioner’s amended complaint. The very first count requested a “DECLARATORY JUDGMENT ON CONTRACTUAL RIGHTS AND OBLIGATIONS,” and stated that petitioner “disputes its obligation to make payments under the 1997 License Agreement because [petitioner’s] sale of its Synagis® product does not infringe any valid claim of the [Cabilly II] Patent.” App. 136. These contentions were repeated throughout the complaint. *124Id., at 104,105,108,147 3 And the phrase “does not infringe any valid claim” (emphasis added) cannot be thought to be no more than a challenge to the patent’s validity, since elsewhere the amended complaint states with unmistakable clarity that “the patent is . .. not infringed by [petitioner’s] Synagis® product and that [petitioner] owes no payments under license agreements with [respondents].” Id., at 104.4
As to the second point, petitioner assuredly did contend that it had no obligation under the license to pay royalties on an invalid patent. Id., at 104,136,147. Nor is that contention frivolous. True, the license requires petitioner to pay royalties until a patent claim has been held invalid by a competent body, and the Cabilly II patent has not. But the license at issue in Lear, Inc. v. Adkins, 395 U. S. 653, 673 (1969), similarly provided that “royalties are to be paid until such time as the 'patent... is held invalid,’ ” and we rejected the argument that a repudiating licensee must comply with its contract and pay royalties until its claim is vindicated in court. We express no opinion on whether a nonrepudiating licensee is similarly relieved of its contract obligation during a successful challenge to a patent’s validity — that is, on the applicability of licensee estoppel under these circumstances. Cf. Studiengesellschaft Kohle, m. b. H. v. Shell Oil Co., 112 F. 3d 1561, 1568 (CA Fed. 1997) (“[A] licensee . . . cannot *125invoke the protection of the Lear doctrine until it (i) actually ceases payment of royalties, and (ii) provides notice to the licensor that the reason for ceasing payment of royalties is because it has deemed the relevant claims to be invalid”). All we need determine is whether petitioner has alleged a contractual dispute. It has done so.
Respondents further argue that petitioner waived its contract claim by failing to argue it below. Brief for Respondent Genentech 10-11; Tr. of Oral Arg. 30-31. The record reveals, however, that petitioner raised the contract point before the Federal Circuit. See Brief for Plantiff-Appellant Medlmmune, Inc., in Nos. 04-1300, 04-1384 (CA Fed.), p. 38 (“Here, Medlmmune is seeking to define its rights and obligations under its contract with Genentech — precisely the type of action the Declaratory Judgment Act contemplates”). That petitioner limited its contract argument to a few pages of its appellate brief does not suggest a waiver; it merely reflects counsel’s sound assessment that the argument would be futile. The Federal Circuit’s Gen-Probe precedent precluded jurisdiction over petitioner’s contract claims, and the panel below had no authority to overrule Gen-Probe.5 Having determined that petitioner has raised and preserved a contract claim,6 we turn to the jurisdictional question.
*126III
The Declaratory Judgment Act provides that, “[i]n a case of actual controversy within its jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U. S. C. § 2201(a). There was a time when this Court harbored doubts about the compatibility of declaratory-judgment actions with Article Ill’s case-or-controversy requirement. See Willing v. Chicago Auditorium Assn., 277 U. S. 274, 289 (1928); Liberty Warehouse Co. v. Grannis, 273 U. S. 70 (1927); see also Gordon v. United States, 117 U. S. Appx. 697, 702 (1864) (the last opinion of Taney, C. J., published posthumously) (“The award of execution is ... an essential part of every judgment passed by a court exercising judicial power”). We dispelled those doubts, however, in Nashville, C. & St. L. R. Co. v. Wallace, 288 U. S. 249 (1933), holding (in a case involving a declaratory judgment rendered in state court) that an appropriate action for declaratory relief can be a case or controversy under Article III. The federal Declaratory Judgment Act was signed into law the following year, and we upheld its constitutionality in Aetna Life Ins. Co. v. Haworth, 300 U. S. 227 (1937). Our opinion *127explained that the phrase “case of actual controversy” in the Act refers to the type of “Cases” and “Controversies” that are justiciable under Article III. Id., at 240.
Aetna and the cases following it do not draw the brightest of lines between those declaratory-judgment actions that satisfy the case-or-controversy requirement and those that do not. Our decisions have required that the dispute be “definite and concrete, touching the legal relations of parties having adverse legal interests”; and that it be “real and substantial” and “admi[t] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.” Id., at 240-241. In Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U. S. 270, 273 (1941), we summarized as follows: “Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”7
*128There is no dispute that these standards would have been satisfied if petitioner had taken the final step of refusing to make royalty payments under the 1997 license agreement. Respondents claim a right to royalties under the licensing agreement. Petitioner asserts that no royalties are owing because the Cabilly II patent is invalid and not infringed; and alleges (without contradiction) a threat by respondents to enjoin sales if royalties are not forthcoming. The factual and legal dimensions of the dispute are well defined and, but for petitioner’s continuing to make royalty payments, nothing about the dispute would render it unfit for judicial resolution. Assuming (without deciding) that respondents here could not claim an anticipatory breach and repudiate the license, the continuation of royalty payments makes what would otherwise be an imminent threat at least remote, if not nonexistent. As long as those payments are made, there is no risk that respondents will seek to enjoin petitioner’s sales. Petitioner’s own acts, in other words, eliminate the imminent threat of harm.8 The question before us is whether this causes the dispute no longer to be a case or controversy within the meaning of Article III.
Our analysis must begin with the recognition that, where threatened action by government is concerned, we do not *129require a plaintiff to expose himself to liability before bringing suit to challenge the basis for the threat — for example, the constitutionality of a law threatened to be enforced. The plaintiff’s own action (or inaction) in failing to violate the law eliminates the immanent threat of prosecution, but nonetheless does not eliminate Article III jurisdiction. For example, in Terrace v. Thompson, 263 U. S. 197 (1923), the State threatened the plaintiff with forfeiture of his farm, fines, and penalties if he entered into a lease with an alien in violation of the State’s anti-alien land law. Given this genuine threat of enforcement, we did not require, as a prerequisite to testing the validity of the law in a suit for injunction, that the plaintiff bet the farm, so to speak, by taking the violative action. Id., at 216. See also, e.g., Village of Euclid v. Ambler Realty Co., 272 U. S. 365 (1926); Ex parte Young, 209 U. S. 123 (1908). Likewise, in Steffel v. Thompson, 415 U. S. 452 (1974), we did not require the plaintiff to proceed to distribute handbills and risk actual prosecution before he could seek a declaratory judgment regarding the constitutionality of a state statute prohibiting such distribution. Id., at 458-460. As then-justice Rehnquist put it in his concurrence, “the declaratory judgment procedure is an alternative to pursuit of the arguably illegal activity.” Id., at 480. In each of these cases, the plaintiff had eliminated the imminent threat of harm by simply not doing what he claimed the right to do (enter into a lease, or distribute handbills at the shopping center). That did not preclude subject-matter jurisdiction because the threat-eliminating behavior was effectively coerced. See Terrace, supra, at 215-216; Steffel, supra, at 459. The dilemma posed by that coercion — putting the challenger to the choice between abandoning his rights or risking prosecution — is “a dilemma that it was the very purpose of the Declaratory Judgment Act to ameliorate.” Abbott Laboratories v. Gardner, 387 U. S. 136, 152 (1967).
*130Supreme Court jurisprudence is more rare regarding application of the Declaratory Judgment Act to situations in which the plaintiff’s self-avoidance of imminent injury is coerced by threatened enforcement action of a private party rather than the government. Lower federal courts, however (and state courts interpreting declaratory-judgment acts requiring “actual controversy”), have long accepted jurisdiction in such cases. See, e. g., Keener Oil & Gas Co. v. Consolidated Gas Utils. Corp., 190 F. 2d 985, 989 (CA10 1951); American Machine & Metals, Inc. v. De Bothezat Impeller Co., 166 F. 2d 535 (CA2 1948); Hess v. Country Club Park, 213 Cal. 613, 614, 2 P. 2d 782, 783 (1931); Washington-Detroit Theater Co. v. Moore, 249 Mich. 673, 675, 229 N. W. 618, 618-619 (1930); see also Advisory Committee’s Note on Fed. Rule Civ. Proc.. 57, 28 U. S. C. App., p. 790.9
The only Supreme Court decision in point is, fortuitously, close on its facts to the case before us. Altvater v. Freeman, 319 U. S. 359 (1943), held that a licensee’s failure to cease its payment of royalties did not render nonjusticiable a dispute over the validity of the patent. In that litigation, several patentees had sued their licensees to enforce territorial restrictions in the license. The licensees filed a counterclaim for declaratory judgment that the underlying patents were invalid, in the meantime paying “under protest” royalties required by an injunction the patentees had obtained in an earlier case. The patentees argued that “so long as [licensees] continue to pay royalties, there is only an academic, not a real controversy, between the parties.” Id., at 364. We *131rejected that argument and held that the declaratory-judgment claim presented a justiciable case or controversy: “The fact that royalties were being paid did not make this a ‘difference or dispute of a hypothetical or abstract character.’” Ibid, (quoting Aetna, 300 U. S., at 240). The royalties “were being paid under protest and under the compulsion of an injunction decree,” and “[ujnless the injunction decree were modified, the only other course [of action] was to defy it, and to risk not only actual but treble damages in infringement suits.” 319 U. S., at 365. We concluded that “the requirements of [a] ease or controversy are met where payment of a claim is demanded as of right and where payment is made, but where the involuntary or coercive nature of the exaction preserves the right to recover the sums paid or to challenge the legality of the claim.” Ibid.10
*132The Federal Circuit’s Gen-Probe decision distinguished Altvater on the ground that it involved the compulsion of an injunction. But Altvater cannot be so readily dismissed. Never mind that the injunction had been privately obtained and was ultimately within the control of the patentees, who could permit its modification. More fundamentally, and contrary to the Federal Circuit’s conclusion, Altvater did not say that the coercion dispositive of the case was governmental, but suggested just the opposite. The opinion acknowledged that the licensees had the option of stopping payments in defiance of the injunction, but explained that the consequence of doing so would be to risk “actual [and] treble damages in infringement suits” by the patentees. 319 U. S., at 365. It significantly did not mention the threat of prosecution for contempt, or any other sort of governmental sanction. Moreover, it cited approvingly a treatise which said that an “actual or threatened serious injury to business or employment” by a private party can be as coercive as other forms of coercion supporting restitution actions at common law; and that “[t]o imperil a man’s livelihood, his business enterprises, or his solvency, [was] ordinarily quite as coercive” as, for example, “detaining his property.” F. Woodward, The Law of Quasi Contracts § 218 (1913), cited in Altvater, supra, at 365.11
*133Jurisdiction over the present ease is not contradicted by Willing v. Chicago Auditorium Assn., 277 U. S. 274. There a ground lessee wanted to demolish an antiquated auditorium and replace it with a modern commercial building. The lessee believed it had the right to do this without the lessors’ consent, but was unwilling to drop the wrecking ball first and test its belief later. Because there was no declaratory-judgment act at the time under federal or applicable state law, the lessee filed an action to remove a “cloud” on its lease. This Court held that an Article III case or controversy had not arisen because “[n]o defendant ha[d] wronged the plaintiff or ha[d] threatened to do so.” Id., at 288, 290. It was true that one of the colessors had disagreed with the lessee’s interpretation of the lease, but that happened in an “informal, friendly, private conversation,” id., at 286, a year before the lawsuit was filed; and the lessee never even bothered to approach the other colessors. The Court went on to remark that “[wjhat the plaintiff seeks is simply a declaratory judgment,” and “[t]o grant that relief is beyond the power conferred upon the federal judiciary.” Id., at 289. Had Willing been decided after the enactment (and our upholding) of the Declaratory Judgment Act, and had the legal disagree*134ment between the parties been as lively as this one, we are confident a different result would have obtained. The rule that a plaintiff must destroy a large building, bet the farm, or (as here) risk treble damages and the loss of 80 percent of its business before seeking a declaration of its actively contested legal rights finds no support in Article III.12
Respondents assert that the parties in effect settled this dispute when they entered into the 1997 license agreement. When a licensee enters such an agreement, they contend, it essentially purchases an insurance policy, immunizing it from suits for infringement so long as it continues to pay royalties and does not challenge the covered patents. Permitting it *135to challenge the validity of the patent without terminating or breaking the agreement alters the deal, allowing the licensee to continue enjoying its immunity while bringing a suit, the elimination of which was part of the patentee’s quid pro quo. Of course even if it were valid, this argument would have no force with regard to petitioner’s claim that the agreement does not call for royalties because their product does not infringe the patent. But even as to the patent invalidity claim, the point seems to us mistaken. To begin with, it is not clear where the prohibition against challenging the validity of the patents is to be found. It can hardly be implied from the mere promise to pay royalties on patents “which have neither expired nor been held invalid by a court or other body of competent jurisdiction from which no appeal has been or may be taken,” App. 399. Promising to pay royalties on patents that have not been held invalid does not amount to a promise not to seek a holding of their invalidity.
Respondents appeal to the common-law rule that a party to a contract cannot at one and the same time challenge its validity and continue to reap its benefits, citing Commodity Credit Corp. v. Rosenberg Bros. & Co., 243 F. 2d 504, 512 (CA9 1957), and Kingman & Co. v. Stoddard, 85 F. 740, 745 (CA7 1898). Lear, they contend, did not suspend that rule for patent licensing agreements, since the plaintiff in that case had already repudiated the contract. Even if Lear’s repudiation of the doctrine of licensee estoppel was so limited (a point on which, as we have said earlier, we do not opine), it is hard to see how the common-law rule has any application here. Petitioner is not repudiating or impugning the contract while continuing to reap its benefits. Rather, it is asserting that the contract, properly interpreted, does not prevent it from challenging the patents, and does not require the payment of royalties because the patents do not cover its products and are invalid. Of course even if respondents were correct that the licensing agreement or the common-law rule precludes this suit, the consequence would be that *136respondents win this case on the merits — not that the very-genuine contract dispute disappears, so that Article III jurisdiction is somehow defeated. In short, Article III jurisdiction has nothing to do with this “insurance-policy” contention.
Lastly, respondents urge us to affirm the dismissal of the declaratory-judgment claims on discretionary grounds. The Declaratory Judgment Act provides that a court “may declare the rights and other legal relations of any interested party,” 28 U. S. C. § 2201(a) (emphasis added), not that it must do so. This text has long been understood “to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants.” Wilton v. Seven Falls Co., 515 U. S. 277, 286 (1995); see also Cardinal Chemical Co. v. Morton Int'l, Inc., 508 U. S. 83, 95, n. 17 (1993); Brillhart v. Excess Ins. Co. of America, 316 U. S. 491, 494-496 (1942). We have found it “more consistent with the statute,” however, “to vest district courts with discretion in the first instance, because facts bearing on the usefulness of the declaratory judgment remedy, and the fitness of the case for resolution, are peculiarly within their grasp.” Wilton, supra, at 289. The District Court here gave no consideration to discretionary dismissal, since, despite its “serious misgivings” about the Federal Circuit’s rule, it considered itself bound to dismiss by Gen-Probe. App. to Pet. for Cert. 31a. Discretionary dismissal was irrelevant to the Federal Circuit for the same reason. Respondents have raised the issue for the first time before this Court, exchanging competing accusations of inequitable conduct with petitioner. See, e. g., Brief for Respondent Genentech 42-44; Reply Brief for Petitioner 17, and n. 15. Under these circumstances, it would be imprudent for us to decide whether the District Court should, or must, decline to issue the requested declaratory relief. We leave the equitable, prudential, and policy arguments in favor of such a discretionary dismissal for the lower courts’ consideration on remand. Similarly available *137for consideration on remand are any merits-based arguments for denial of declaratory relief.
* * *
We hold that petitioner was not required, insofar as Article III is concerned, to break or terminate its 1997 license agreement before seeking a declaratory judgment in federal court that the underlying patent is invalid, unenforceable, or not infringed. The Court of Appeals erred in affirming the dismissal of this action for lack of subject-matter jurisdiction.
The judgment of the Court of Appeals is reversed, and the cause is remanded for proceedings consistent with this opinion.
It is so ordered.
dissenting.
We granted certiorari in this case to determine whether a patent licensee in good standing must breach its license prior to challenging the validity of the underlying patent pursuant to the Declaratory Judgment Act, 28 U. S. C. §2201. 546 U. S. 1169 (2006). The answer to that question is yes. We have consistently held that parties do not have standing to obtain rulings on matters that remain hypothetical or conjectural. We have also held that the declaratory judgment procedure cannot be used to obtain advanced rulings on matters that would be addressed in a future case of actual controversy. Medlmmune has sought a declaratory judgment for precisely that purpose, and I would therefore affirm the Court of Appeals’ holding that there is no Article III jurisdiction over Medlmmune’s claim. The Court reaches the opposite result by extending the holding of Steffel v. Thompson, 415 U. S. 452 (1974), to private contractual obligations. I respectfully dissent.
I
Article III of the Constitution limits the judicial power to the adjudication of “Cases” or “Controversies.” § 2. We *138have held that the Declaratory Judgment Act extends “to controversies which are such in the constitutional sense.” Aetna Life Ins. Co. v. Haworth, 300 U. S. 227, 240 (1937). In the context of declaratory judgment actions, this Court's cases have provided a uniform framework for assessing whether an Article III case or controversy exists. In the constitutional sense, a “Controversy” is “distinguished from a difference or dispute of a hypothetical or abstract character; from one that is academic or moot.” Ibid, (citing United States v. Alaska S. S. Co., 253 U. S. 113, 116 (1920)). “The controversy must be definite and concrete, touching the legal relations of parties having adverse legal interests.” 300 U. S., at 240-241. Finally, “[i]t must be a real and substantial controversy ..., as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.” Id., at 241.
The Declaratory Judgment Act did not (and could not) alter the constitutional definition of “case or controversy” or relax Article Ill's command that an actual case or controversy exist before federal courts may adjudicate a question. See Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U. S. 270, 272-273 (1941). Thus, this Court has held that “the operation of the Declaratory Judgment Act is procedural only.” Aetna Life Ins., 300 U. S., at 240. In other words, the Act merely provides a different procedure for bringing an actual case or controversy before a federal court. The Court applied that principle in Aetna Life Ins., where an insurance company brought a declaratory judgment action against an insured who claimed he had become disabled, had formally presented his claims, and had refused to make any more insurance payments. Id., at 242. In the course of deciding that it could entertain the insurer’s declaratory judgment action, the Court specifically noted that, had the insured filed his traditional cause of action first, “there would have been no question that the controversy was of a justiciable nature . . . .” Id., at 243. Accordingly, the Act merely *139provided a different procedural tool that allowed the insurance company to bring an otherwise justiciable controversy before a federal court.
We have also held that no controversy exists when a declaratory judgment plaintiff attempts to obtain a premature ruling on potential defenses that would typically be adjudicated in a later actual controversy. In Coffman v. Breeze Corps., 323 U. S. 316 (1945), a patent owner brought a declaratory judgment action against his licensees seeking to have the Royalty Adjustment Act of 1942 declared unconstitutional and to enjoin his licensees from paying accrued royalties to the Government. This Court held that no case or controversy existed because the validity of the Royalty Adjustment Act would properly arise only as a defense in a suit by the patent holder against the licensees to recover royalties. Id., at 323-324. Accordingly, the complaint at issue was “but a request for an advisory opinion as to the validity of a defense to a suit for recovery of the royalties.” Id., at 324. And the Court noted that “[t]he declaratory judgment procedure . .. may not be made the medium for securing an advisory opinion in a controversy which has not arisen.” Ibid.; see also Calderon v. Ashmus, 523 U. S. 740, 747 (1998) (holding that a prisoner may not use a declaratory judgment action to determine the validity of a defense that a State might raise in a future habeas proceeding).
These principles apply with equal force in the patent licensing context. In Altvater v. Freeman, 319 U. S. 359, 365-366 (1943), the Court, quite unremarkably, held that a “licensee” had standing to bring a declaratory judgment counterclaim asserting the affirmative defense of patent invalidity in response to a patent infringement suit. But not to be mistaken, the Altvater Court expressly stated that “[t]o hold a patent valid if it is not infringed is to decide a hypothetical case.” Id., at 363. So too, in Cardinal Chemical Co. v. Morton Int'l, Inc., 508 U. S. 83, 86 (1993), the affirmative defense of patent invalidity was raised as a coun*140terclaim to a patent infringement suit. Although we held that a finding of noninfringement on appeal did not moot a counterclaim alleging invalidity, id., at 102-103, we stated that our holding was limited to the jurisdiction of an appellate court and reiterated that “[i]n the trial court, of course, a party seeking a declaratory judgment has the burden of establishing the existence of an actual case or controversy,” id., at 95.
II
Against the foregoing background, the case before us is not a justiciable case or controversy under Article III.
A
As a threshold matter, I disagree with the Court’s characterization of this case as including a “contractual dispute.” Ante, at 125. To substantiate this characterization, the Court points to a three-paragraph count in Medlmmune’s complaint entitled “‘DECLARATORY JUDGMENT ON CONTRACTUAL RIGHTS AND OBLIGATIONS’” and to Medlmmune’s broad allegations that “‘its Synagis® product does not infringe any valid claim of the [Cabilly II] Patent.’ ” Ante, at 123. Nowhere in its complaint did Medlmmune state why “sale[s] of its Synagis® product d[o] not infringe any valid claim of the [Cabilly II] Patent.” App. 136.1 Given the lack of specificity in the complaint, it is hardly surprising that the Court never explains what the supposed contract dispute is actually about. A fair reading of the amended complaint (and a review of the litigation thus far) shows that Medlmmune’s “contract count” simply posits that because the patent is invalid and unenforceable (as alleged in counts II and III), Medlmmune is not bound by its con*141tractual obligations. As the Court admits, “the license requires [Medlmmune] to pay royalties until a patent claim has been held invalid by a competent body . . . .” Ante, at 124 (emphasis in original). Thus, even assuming the existence of a cognizable contract claim, the validity of that claim hinges entirely upon a determination of the patent’s validity, independent of any contractual question. As such, Medlmmune’s “contract claim” simply repackages its patent invalidity claim.
Probably for this reason, Medlmmune has not pursued a contract claim at any level of the litigation. The District Court stated that the product that was the subject of the license, Synagis, was “covered by the patents at issue,” App. 349-350, and Medlmmune has never challenged that characterization. The Federal Circuit decided this case on the sole ground that a licensee in good standing may not bring a declaratory judgment action to challenge the validity of the underlying patent without some threat or apprehension of a patent infringement suit. See 427 F. 3d 958, 965 (2005). The question Medlmmune presented in its petition for certiorari, which we accepted without alteration, says nothing about a contract claim. Neither does Medlmmune’s opening brief allege a contractual dispute. Even at oral argument, it was not Medlmmune, but an amicus, that alleged there was a contract dispute at issue in this case. Tr. of Oral Arg. 21-22.
In short, Medlmmune did not “rais[e] and preserv[e] a contract claim.” Ante, at 125. In reaching a contrary conclusion, the Court states that its identification of a contract claim “probably makes no difference to the ultimate” outcome of this case. Ante, at 123. This may very well be true, if only because of the broad scope of the Court’s holding.
B
The facts before us present no case or controversy under Article III. When Medlmmune filed this declaratory judg*142ment action challenging the validity of the Cabilly II patent, it was under no threat of being sued by Genentech for patent infringement. This was so because Medlmmune was a licensee in good standing that had made all necessary royalty payments. Thus, by voluntarily entering into and abiding by a license agreement with Genentech, Medlmmune removed any threat of suit. See ante, at 128 (stating the threat of suit was “remote, if not nonexistent”). Medlmmune’s actions in entering into and continuing to comply with the license agreement deprived Genentech of any cause of action against Medlmmune. Additionally, Medlmmune had no cause of action against Genentech. Patent invalidity is an affirmative defense to patent infringement, not a freestanding cause of action. See 35 U. S. C. §§282(2)-(3). Therefore, here, the Declaratory Judgment Act must be something more than an alternative procedure for bringing an otherwise actual case or controversy before a federal court. But see Aetna Life Ins., 300 U. S., at 240 (“[T]he operation of the Declaratory Judgment Act is procedural only”).
Because neither Genentech nor Medlmmune had a cause of action, Medlmmune’s prayer for declaratory relief can be reasonably understood only as seeking an advisory opinion about an affirmative defense it might use in some future litigation. Medlmmune wants to know whether, if it decides to breach its license agreement with Genentech, and if Genentech sues it for patent infringement, it will have a successful affirmative defense. Presumably, upon a favorable determination, Medlmmune would then stop making royalty payments, knowing in advance that the federal courts stand behind its decision. Yet as demonstrated above, the Declaratory Judgment Act does not allow federal courts to give advisory rulings on the potential success of an affirmative defense before a cause of action has even accrued. Calderon, 523 U. S., at 747 (dismissing a suit that “attempted] to *143gain a litigation advantage by obtaining an advance ruling on an affirmative defense”); see also Coffman, 323 U. S., at 324 (rejecting use of the Declaratory Judgment Act as a “medium for securing an advisory opinion in a controversy which has not arisen”). Medlmmune has therefore asked the courts to render “an opinion advising what the law would be upon a hypothetical state of facts.” Aetna Life Ins., supra, at 241; see also Public Serv. Comm’n of Utah v. Wycoff Co., 344 U. S. 237, 244 (1952) (“The disagreement must not be nebulous or contingent but must have taken on fixed and final shape . . . ”). A federal court cannot, consistent with Article III, provide Medlmmune with such an opinion.
Finally, as this Court has plainly stated in the context of a counterclaim declaratory judgment action challenging the validity of a patent, “[t]o hold a patent valid if it is not infringed is to decide a hypothetical case.” Altvater, 319 U. S., at 363. Of course, Medlmmune presents exactly that case. Based on a clear reading of our precedent, I would hold that this ease presents no actual case or controversy.
Ill
To reach today’s result, the Court misreads our precedent and expands the concept of coercion from Steffel, 415 U. S. 452, to reach voluntarily accepted contractual obligations between private parties.
A
The Court inappropriately relies on Altvater, which is inapplicable to this case for three reasons. First, in Altvater, the affirmative defense of patent invalidity arose in a declaratory judgment motion filed as a counterclaim to a patent infringement suit. See 319 U. S., at 360. Second, the opinion in Altvater proceeds on the understanding that no license existed. Both the District Court and the Court of Appeals had already held that the underlying license had been terminated prior to the filing of the case. Id., at 365 (“Royalties *144were being demanded and royalties were being paid. But they were being paid ... under the compulsion of an injunction decree”). Third, and related, though the one-time licensee continued to pay royalties, it did so under the compulsion of an injunction that had been entered in a prior case. Ibid. Altvater simply held that under the unique facts of that case, the Court of Appeals erred in considering the declaratory judgment counterclaim moot because the “involuntary or coercive nature of the exaction preserve[d] the right to recover the sums paid or to challenge the legality of the claim.” Ibid.
Cardinal Chemical Co., 508 U. S. 83, is similarly inapt here. In that case, as in Altvater, the defendant raised the affirmative defense of patent invalidity in a counterclaim to a patent infringement suit. 508 U. S., at 86. We specifically held that a finding of noninfringement on appeal did not moot a counterclaim alleging invalidity. Id., at 102-103. But we stressed:
“[T]he issue before us, therefore[,] concernís] the jurisdiction of an intermediate appellate court — not the jurisdiction of... a trial court.... In the trial court, of course, a party seeking a declaratory judgment has the burden of establishing the existence of an actual case or controversy.” Id., at 95.
We went on to offer a hypothetical that showed a party could seek a declaratory judgment “[i]n patent litigation ... even if the patentee has not filed an infringement action.” Ibid. However, that hypothetical involved a patent holder that threatened an infringement suit against a competitor Cnot a licensee) that continued to sell the allegedly infringing product and faced growing liability. In doing so, we hypothesized a situation that paralleled the facts in Aetna Life Ins.: The patentee had a cause of action against an alleged infringer and could have brought suit at any moment, and the declaratory judgment procedure simply offered the alleged *145infringer a different method of bringing an otherwise justiciable case or controversy into court.2
B
The Court’s more serious error is its extension of Steffel, supra, to apply to voluntarily accepted contractual obligations between private parties. No court has ever taken such a broad view of Steffel.
In Steffel, the Court held that in certain limited circumstances, a party’s anticipatory cause of action qualified as a case or controversy under Article III. Based expressly on the coercive nature of governmental power, the Court found that “it is not necessary that petitioner first expose himself to actual arrest or prosecution to be entitled to challenge a statute that he claims deters the exercise of his constitutional rights.” Id., at 459 (emphasis added). Limited, as it is, to governmental power, particularly the power of arrest and prosecution, Steffel says nothing about coercion in the context of private contractual obligations. It is therefore not surprising that, until today, this Court has never applied Steffel and its theory of coercion to private contractual obligations; indeed, no court has ever done so.3
The majority not only extends Steffel to cases that do not involve governmental coercion, but also extends Steffel’s rationale. If “coercion” were understood as the Court used *146that term in Steffel, it would apply only if Genentech had threatened Medlmmune with a patent infringement suit in the absence of a license agreement. At that point, Medlmmune would have had a choice, as did the declaratory plaintiff in Steffel, either to cease the otherwise protected activity (here, selling Synagis) or to continue in that activity and face the threat of a lawsuit. But Medlmmune faced no such choice. Here, Medlmmune could continue selling its product without threat of suit because it had eliminated any risk of suit by entering into a license agreement. By holding that the voluntary choice to enter an agreement to avoid some other coerced choice is itself coerced, the Court goes far beyond Steffel.
The majority explains that the “coercive nature of the exaction preserves the right ... to challenge the legality of the claim.” Ante, at 131 (internal quotation marks omitted). The coercive nature of what “exaction”? The answer has to be the voluntarily made license payments because there was no threat of suit here. By holding that contractual obligations are sufficiently coercive to allow a party to bring a declaratory judgment action, the majority has given every patent licensee a cause of action and a free pass around Article Ill’s requirements for challenging the validity of licensed patents. But the reasoning of today’s opinion applies not just to patent validity suits. Indeed, today's opinion contains no limiting principle whatsoever, casting aside Justice Stewart’s understanding that Steffel’s use would “be exceedingly rare.” 415 U. S., at 476 (concurring opinion).
For the foregoing reasons, I respectfully dissent.
7.3 Bresgal v. Brock 7.3 Bresgal v. Brock
Michael G. BRESGAL; Scott Landfield; Karl Gaines; Thomas A. Wilson; Northwest Forest Workers Association; Plaintiffs-Appellees, Cross-Appellants, Agustín Villegas; Rene Guerrero; Jesus Ponce, Plaintiffs-Intervenors, Appellees-Cross-Appellants, v. William E. BROCK, Secretary of Labor, Defendant-Appellant, Cross-Appellee.
Nos. 86-3996, 86-4072.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted June 3, 1987.
Decided Nov. 18, 1987.
Amended March 31, 1988.
*1165Richard K. Willard, Charles H. Turner, Leonard Schaitman, and John S. Koppel, Washington, D.C., for defendant-appellant, cross-appellee.
D. Michael Dale, Portland, Or., and Mary Lewis, Woodburn, Or., for plaintiffs-appel-lees, cross-appellants.
Before ANDERSON, FARRIS and BRUNETTI, Circuit Judges.
The plaintiffs are the Northwest Forest Workers Association and individual migrant agricultural workers who have worked in forestry on a seasonal basis.
In the forestry business, as in more conventional agricultural industries, independent labor contractors often act as middlemen, hiring and transporting migrant workers for seasonal labor on land owned by others. Testimony before Congress indicated that the unscrupulous practices of independent labor contractors have injured owners and laborers alike:
It is unfortunately an all too common experience for workers to be abused by farm labor contractors. Testimony revealed that in many cases the contractor: exaggerates conditions of employment when he recruits workers in their home base, or that he fails to inform them of their working conditions at all; transports them in unsafe vehicles; fails to furnish promised housing, or else furnishes substandard and unsanitary housing; operates a company store while making unitemized deductions from workers’ paychecks for purchases, and pays the workers in cash without records of units worked or taxes withheld.
Evidence has also emerged of contractor exploitation of farmers.
S.Rep. No. 1295, 93rd Cong., 2d Sess. (1974) reprinted in 1974 U.S. Code Cong. & Ad. News 6441, 6442. The Farm Labor Contractor Registration Act of 1963, 29 U.S.C. § 1801 et seq., was enacted to prevent abuses by labor contractors. The original legislation proved ineffective, and in 1974 Congress broadened its coverage and strengthened its enforcement mechanisms. The Act (1) provides for registration of farm labor contractors with the Department of Labor, (2) requires disclosure to workers of conditions of employment, and (3) imposes standards for the payment of wages, health and safety in housing, and safety for vehicles in which workers are transported. In 1983 the Act was rewritten again, and was renamed the Migrant and Seasonal Agricultural Workers Protection Act. The provision at issue was added in 1974, and was unchanged in 1983.
The Secretary of Labor has taken the position that the Act does not apply to commercial forestry workers. The plaintiffs sought a declaratory judgment that the Act applies to forestry workers and an injunction requiring the Secretary of Labor to enforce it in the industry. The district court granted the requested relief, 637 F.Supp. 271.
DISCUSSION
I. Does the Migrant and Seasonal Agricultural Worker Protection Act apply to migrant and seasonal commercial forestry workers?
The Act originally adopted by reference the definition of “agriculture” contained in *1166the Fair Labor Standards Act, and the definition of “agricultural labor” in the Internal Revenue Code. The Department of Labor interpreted the language of the Fair Labor Standards Act, 29 U.S.C. § 203(f), to exclude forestry and lumbering operations from the rubric of “agriculture.” That interpretation is codified in the Department’s regulations. 29 C.F.R. 780.115. In the Department’s view, “agriculture” is limited to work performed by a farmer or on a farm as an incident to or in conjunction with farming operations. 29 C.F.R. 780.200 (1986). The Internal Revenue Service has interpreted the Code definition, 26 U.S.C. § 3121(g), similarly. See 26 C.F.R. 31.-3121(g)-1(a) (1987).
When the Farm Labor Contractor Registration Act was rewritten in 1974, the definition of “agricultural employment” was supplemented. Section 1802(3) was amended to read:
The term ‘agricultural employment’ means employment in any service or activity included within the provisions of section 3(f) of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(f)), or section 3121(g) of Title 26, and the handling, planting, drying, packing, packaging, processing, freezing, or grading prior to delivery for storage of any agricultural or horticultural commodity in its unmanufactured state.
29 U.S.C. § 1802(3) (emphasis added). This definition was retained when the Act was rewritten and renamed in 1983. The question is whether the language added in 1974 broadens the coverage of the Act to include forestry work. The parties agree that the Act did not cover forestry work prior to the amendments.
In construing a statute in a case of first impression, the court looks first to the language of the statute itself, then to its legislative history, and then to the interpretation given to it by its administering agency. Brock v. Writers Guild of America West, Inc., 762 F.2d 1349, 1353 (9th Cir.1985). At all times, however, the goal is to determine congressional intent. “The court’s objective is to ascertain the intent of Congress and to give effect to legislative will.” Moorhead v. United States, 774 F.2d 936, 940 (9th Cir.1985).
The Text of the Statute
At issue is the phrase “agricultural commodity.” We focus on the definition of the word “agriculture.” A fundamental canon of statutory construction is that, unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning. Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 314, 62 L.Ed.2d 199 (1979); Powell v. Tucson Air Museum Foundation of Pima County, 771 F.2d 1309, 1311 (9th Cir.1985). At the same time, “it is the duty of the court to give significance, to every word, phrase, sentence, and part of an act in pursuance of the legislative purpose, and to give effect to the statute as a whole, and not render it partially or entirely void.” Matter of Borba, 736 F.2d 1317, 1320 (9th Cir.1984); Watt v. Alaska, 451 U.S. 259, 266, 101 S.Ct. 1673, 1677, 68 L.Ed.2d 80 (1981). It is necessary to look to the purpose and intent of a statute when deciding what its terms mean. Commissioner of Internal Revenue v. Engle, 464 U.S. 206, 217, 104 S.Ct. 597, 604, 78 L.Ed.2d 420 (1984); District of Columbia v. Carter, 409 U.S. 418, 420, 93 S.Ct. 602, 604, 34 L.Ed.2d 613 (1973); United States v. Boyden, 696 F.2d 685, 687 (9th Cir.1983); 4A Sands, Statutory Interpretation § 58.06 (1984) (“It is ancient wisdom that statutes should be interpreted so that the manifested purpose or object can be accomplished.”).
We recognize that forestry workers are not commonly viewed as agricultural workers. Our examination of the underlying purposes of the Act, however, compel our conclusion that forestry workers who raise trees as a crop for harvest are engaged in “agricultural employment” for purposes of the Act. The committee reports accompanying the Act state clearly that Congress’ primary concern was the welfare of migrant laborers, particularly aliens, who are subject to abuse by labor contractors. See S.Rep. No. 1295, 93rd Cong., 2d Sess. (1974), reprinted in 1974 *1167U.S. Code Cong. & Ad. News 6441-45. The purpose of the Act was to regulate labor contractors wherever they operate. The conditions that Congress addressed in the Act, and the persons protected, are the same in the forestry industry as in more conventional agricultural industries. We find no principled reason for isolating forestry from all other agricultural areas in which migrant workers and labor contractors are common. As the district court noted, “[i]t is inconceivable that Congress intended to protect workers planting fruit trees in an orchard, and to disregard workers planting fir trees on a hillside, when both groups suffer from the same clearly identified harm.”
The Legislative History
Our interpretation of the Act is supported by the Legislative history. Congress expressly stated its understanding that farm labor contractors in the forestry business are within the Act’s coverage:
The Committee has been informed by the Commissioner of the Immigration and Naturalization Service that some government agencies have permitted the employment of illegal aliens as tree planters, thinners and other forest laborers by awarding contracts to forestry contractors who regularly employ aliens who have illegally entered the United States. The provisions of this bill and its penalties are intended to apply to such contractors.
1974 U.S. Code Cong. & Ad. News at 6444. (The House Report, H.Rep. No. 1493, 93rd Cong., 2d Sess. (1974), does not address this issue.) In reviewing this part of the legislative history, the Eleventh Circuit held that “[t]here is little doubt that the 1974 Amendments to FLORA were intended to apply to forestry contractors who employ ‘tree planters, thinners and other forest laborers.’ ” Davis Forestry Corp. v. Smith, 707 F.2d 1325, 1328 n. 3 (11th Cir.1983) (decided on other grounds).
We need look no further. The Supreme Court has instructed that the first question for the court in interpreting a statute is whether Congress had a specific intent with respect to the issue at hand. Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984). This examination begins with the language of the statute, but the court may also inspect legislative history. Abourezk v. Reagan, 785 F.2d 1043, 1053 (D.C.Cir.1986), aff'd, — U.S. —, 108 S.Ct. 252, 98 L.Ed.2d 1 (1987). “If the court finds that Congress had a specific intent with respect to the issue, the court stops there and enforces that intent regardless of the agency’s interpretation.” Abourezk, 785 F.2d at 1053 (citing Chevron, 467 U.S. at 842-43 & n. 9, 104 S.Ct. at 2781-82 & n. 9). This statement of specific intent is not conclusive, but it reinforces our conclusion regarding the language and general purpose of the statute.
The Secretary argues that the reference to forestry in the committee report is a stray statement that never found expression in the language of the amendment to § 1802(3) itself, and is therefore without effect. The amendment expanded the Act’s coverage, the Secretary contends, but only in two ways: it removed the original restriction to “interstate” commerce, and provided for coverage of the processing of “agricultural and horticultural commodities” as well as their growing and harvesting.
There is no question that the amendment to § 1802(3) effected the changes that the Secretary suggests, but there is no indication in the committee reports that those were the only changes intended. The Senate and House reports do not specify Congress’ purpose in the amendment, but emphasize the nature and magnitude of the problem with labor contractors generally. Both reports note that the primary purpose of the amendment was to provide “coverage to all aspect of commerce in agriculture.” 1974 U.S. Code Cong. & Admin. News at 6448. The words are ambiguous, but they suggest a general broadening of the definition of agricultural employment.
The language of the amendment itself contradicts the Secretary’s argument. The added language does refer to such func*1168tions as “packaging, processing, freezing, or grading,” which were not in the original definition of agricultural labor. But the amendment also covers the “handling, planting [or] drying” of agricultural commodities. These functions — if performed on a farm — are within the original definition of agricultural employment as derived from the Fair Labor Standards Act. The inclusion of these words in the amendment would be redundant if the amendment were not intended to place emphasis on the activity — any handling of an “agricultural or horticultural commodity” — and to deem-phasize the location of the activity. The amendment did not simply expand the Act to cover a wider range of activities. It was intended also to cover the planting and handling of agricultural products even when not done on a traditional “farm.”
Administrative Interpretation
The Secretary’s most forceful argument is that we should defer to the Department’s interpretation of the statute. Considerable deference is due an agency’s interpretation and application of a statute it administers. Monet v. INS, 791 F.2d 752, 753 (9th Cir.1986); Dept. of Educ., State of Hawaii v. Bell, 770 F.2d 1409, 1413 (9th Cir.1985). However, the courts are the final authorities on issues of statutory interpretation. Federal Election Comm’n v. Democratic Senatorial Campaign Comm., 454 U.S. 27, 31-32, 102 S.Ct. 38, 41-42, 70 L.Ed.2d 23 (1981); California Energy Resources Conservation and Development Comm’n v. Johnson, 807 F.2d 1456, 1461 (9th Cir.1987). Courts should not “rubber-stamp ... administrative decisions that they deem inconsistent with a statutory mandate or that frustrate the congressional policy underlying a statute.” Bureau of Alcohol, Tobacco & Firearms v. FLRA, 464 U.S. 89, 97, 104 S.Ct. 439, 444, 78 L.Ed.2d 195 (1983) (quoting NLRB v. Brown, 380 U.S. 278, 291-92, 85 S.Ct. 980, 988-89, 13 L.Ed.2d 839 (1965)); Sunshine Health Systems, Inc. v. Bowen, 809 F.2d 1390, 1394 (9th Cir.1987); Southern California Edison Co. v. FERC, 770 F.2d 779, 782 (9th Cir.1985).
The Secretary points to the Department’s own longstanding interpretation of the Fair Labor Standards Act definition of “agricultural employment,” which was incorporated in the earlier version of § 1802(3). The focus of this case, however, is the amendment to § 1802(3), which expanded the Act’s coverage beyond the limits of the Fair Labor Standards Act definition. The Department did not construe § 1802(3) in its amended form until the onset of this litigation. The Secretary’s construction is entitled to no more deference than is the interpretation of any party to the suit. The underlying bases for deference to administrative interpretations are the agency’s special expertise in the covered area, Bureau of Alcohol, Tobacco & Firearms v. FLRA, 464 U.S. at 97, 104 S.Ct. at 444, and the probative value of congressional acquiescence in a long-standing administrative construction of the statutory language, Abourezk v. Reagan, 785 F.2d at 1054-55. The question whether forestry is covered by § 1802(3) is not one calling for expertise beyond that which the courts possess in the field of statutory construction, nor is it one about which the agency has previously expressed an opinion.
II. Was the relief granted by the district court too broad?
The Secretary argues that the district court should not have attempted to define “forestry workers” in its order, but should have allowed the Secretary to administer the statute as it applies to forestry. He argues also that the court should not have ordered him to propose amendments to regulations that are national in scope, as the suit was not a nationwide class action. We affirm the district court’s declaratory judgment, but agree with the Secretary that the injunction granted was too broad.
Scope of the Declaratory Judgment
The district court’s declaratory judgment provided that the Secretary has a duty to enforce the Act “as to recruiting, soliciting, hiring, employing, furnishing or transporting any migrant or seasonal workers for all predominantly manual forestry work, including but not limited to tree *1169planting, brush clearing, pre-commercial tree thinning and forest fire fighting.” The Secretary objects that this language usurps the legislative function by attempting to set the limits of the term “forestry work.”
The Secretary cites cases for the proposition that the agency, not the court, is responsible for determining the meaning of terms necessary for administration of the statute. None of those cases support the Secretary’s position.1 Here the district court used the language suggested by the plaintiffs to define the plaintiff group, rather than relying on the broad term “forestry workers.” The court noted that its definition was not exclusive, and that the agency was free to refine it. The court did not order the Secretary to incorporate the precise language of the judgment in its regulations. We uphold the declaratory judgment. It does not impinge on any function of the Secretary.
Scope of the Injunction
The district court ordered the Secretary to enforce the Act in the forestry industry, and to take other actions including:
(1) integrating ... forestry work into the U.S. Department of Labor’s Coordinated Enforcement Plan when the Plan is next reviewed by the Department; amending the regulations implementing the MSPA to reflect that the MSPA applies to such forestry work within 120 days after the time for taking an appeal expires; and informing the U.S. Department of Agriculture (including the U.S. Forest Service) and of the Interior (including the Bureau of Land Management), and all persons on the lists maintained by the National Forests and the Bureau of Land Management of bidders on contracts for such forestry work, that the MSPA applies to such forestry work, by providing copies of this judgment and injunction. ...
The Secretary contends that these requirements, particularly the amending of Department regulations, affect a much larger group than just the plaintiffs in this suit. Citing National Center for Immigrants’ Rights v. INS, 743 F.2d 1365, 1371 (9th Cir.1984), vacated, — U.S. —, 107 S.Ct. 1881, 95 L.Ed.2d 489 (1987), he argues that unless a suit is a class action, the injunction can cover only the named plaintiffs. National Center is not apt. In that case, the plaintiffs sought to enjoin the INS from enforcing a new regulation. The court remanded for the district court to consider whether a class should be certified. National Center, 743 F.2d at 1371. Because the injunction was preliminary, neither the trial court nor the court of appeals had ruled on substantive issues in the case, but had only determined that the plaintiff had a “fair chance” of prevailing on the merits. Id. In this case we have been called upon to rule on the question of statutory interpretation. Zepeda v. INS, 753 F.2d 719 (9th Cir.1985), which followed the rule of National Center, also concerned a preliminary injunction, and is limited to that situation. Zepeda, 753 F.2d at 728 n. 1. There is no general requirement that an injunction affect only the parties in the suit. Evans v. Harnett County Bd. of Educ., 684 F.2d 304, 306 (4th Cir.1982); Meyer v. Brown & Root Construction Co., 661 F.2d 369, 373-74 (5th Cir.1981).
Nevertheless, we recognize that agencies have sometimes been allowed to confine a *1170ruling by one court of appeals to that circuit, and continue to enforce their own interpretation of the law elsewhere. The courts have not prevented agencies from applying varying interpretations in different circuits, but have been relegated to advising the agency to do otherwise. See Hi-Craft Clothing Co. v. NLRB, 660 F.2d 910, 912 n. 1 (3d Cir.1981) (“We suggest that in most situations, a far better approach for an administrative agency would be to accept the first ruling of a court of appeals on a particular point or else seek reversal in the Supreme Court or a statutory change by Congress. To shop in a number of court of appeals in hopes of securing favorable decisions is not only wasteful of overtaxed appellate resources but dissipates agency energies as well.”). The Secretary argues that the effect of the district court’s order requiring changes in departmental regulations and other actions is to require the national adoption of the court’s interpretation of the Act, denying the Department’s privilege to enforce its own interpretation in other jurisdictions.
The Supreme Court has held that a federal agency is not necessarily entitled to confine any ruling of a court of appeals to its immediate jurisdiction. In Califano v. Yamasaki, 442 U.S. 682, 99 S.Ct. 2545, 61 L.Ed.2d 176 (1979), the Court held that there are no legal limits on the geographical scope of a class action brought in federal district court. 442 U.S. at 702, 99 S.Ct. at 2558. The Court then stated:
We concede the force of the Secretary’s contentions that nationwide class actions may have a detrimental effect by foreclosing adjudication by a number of different courts and judges, and of increasing, in certain cases, the pressures on this Court’s docket. It often will be preferable to allow several courts to pass on a given class claim in order to gain the benefit of adjudication by different courts in different factual contexts. For this reason, a federal court when asked to certify a nationwide class should take care to ensure that nationwide relief is indeed appropriate in the case before it_ But we decline to adopt the extreme position that such a class may never be certified.
Id. at 702-03, 99 S.Ct. at 2558-59. The primary concern, the Court noted, must be that the relief granted is not “more burdensome than necessary to redress the complaining parties.” Id. Thus there is no bar against class-wide, and nationwide relief in federal district or circuit court when it is appropriate.
The Secretary contends that nationwide relief is inappropriate where no class has been certified. We have already distinguished our holdings in National Center and Zepeda. A closer examination of those cases indicates that the logic behind them cannot control here. Our holdings there stemmed from the more general rule that a federal court may not attempt to determine the rights of persons not before the court. Zepeda, 753 F.2d at 727. The limited usefulness of that rule is suggested by this case. Here, a major class of persons that will be affected by our ruling — labor contractors operating in the forestry business —is not before the court. The fact that forestry labor contractors are not among the parties here does not prevent the district court, or this court, from issuing an injunction directed to the Secretary requiring him to enforce the act against forestry labor contractors. The import of the rule underlying Zepeda is that an injunction cannot issue against an entity that is not a party to the suit. The injunction here was issued only against the Secretary, who is a party.
Moreover, in Zepeda we noted expressly that in that case the injunctive relief requested could “be granted to the individual plaintiffs without the relief inevitably affecting the entire class.” 753 F.2d at 729 n. 1. Where relief can be structured on an individual basis, it must be narrowly tailored to remedy the specific harm shown. Id. at 727. On the other hand, an injunction is not necessarily made over-broad by extending benefit or protection to persons other than prevailing parties in the lawsuit — even if it is not a class action — if such breadth is necessary to give prevailing parties the relief to which they are *1171entitled. Gregory v. Litton Systems, Inc., 472 F.2d 631, 633-34 (9th Cir.1972); Professional Ass’n of College Educators v. El Paso County Community College Dist., 730 F.2d 258, 274 (5th Cir.), cert. denied, 469 U.S. 881, 105 S.Ct. 248, 83 L.Ed.2d 186 (1984). Cf. Yamasaki, 442 U.S. at 702, 99 S.Ct. at 2558; Zepeda, 753 F.2d at 728 n. 1.
Class-wide relief may be appropriate even in an individual action. Carmichael v. Birmingham Saw Works, 738 F.2d 1126, 1136 (11th Cir.1984); Harnett County Bd. of Educ., 684 F.2d at 306; Meyer, 661 F.2d 369, 373. In this case the district court could hardly require enforcement of the Migrant and Seasonal Workers Protection Act on anything other than a nationwide basis. Although individual migrant laborers are plaintiffs in this action, it is labor contractors who are most directly affected by the injunction against the Secretary. The Secretary has not suggested how the injunction to enforce can be limited to any particular group of forestry labor contractors. The Act cannot be enforced only against those contractors who have dealings with named plaintiffs, or against those contractors only insofar as they have dealings with named plaintiffs. Nor could an injunction order enforcement only as to those contractors whose base of operations is in the Ninth Circuit. Migrant laborers who are parties to this suit may be involved with contractors whose operations are concentrated elsewhere. Similarly, these plaintiffs, as migrant laborers, may travel to forestry jobs in other parts of the country under the supervision of labor contractors. We conclude that the district court did not abuse its discretion in ordering what is in effect nationwide relief. Because the Secretary is a party to this suit, an injunction against him requiring enforcement of the Act as to the forestry-related activities identified in the district court’s declaratory judgment is appropriate. The district court has the power to order nationwide relief where it is required. Yamasaki, 442 U.S. at 702, 99 S.Ct. at 2558.
The district court’s injunction is not over-broad for the reasons suggested
by the Secretary. However, because it requires the Secretary to take specific measures in enforcing the Act against forestry labor contractors, it intrudes unnecessarily on the administrative function of the agency. “[A] court may exercise its equity powers, or equivalent mandamus powers to compel courts, boards or officers to act in a matter with respect to which they may have jurisdiction, although the court will not assume to control or guide the exercise of their authority.” Virginian Ry. Co. v. System Federation No. 40, Ry. Employees Dept., 300 U.S. 515, 551, 57 S.Ct. 592, 601, 81 L.Ed. 789 (1937). An injunction against a government agency must be structured to take into account “the well-established rule that the government has traditionally been granted the widest latitude in the ‘dispatch of its own internal affairs.’ ” Rizzo v. Goode, 423 U.S. 362, 378-79, 96 S.Ct. 598, 607-08, 46 L.Ed.2d 561 (1976) (quoting Cafeteria & Restaurant Workers Union v. McElroy, 367 U.S. 886, 896, 81 S.Ct. 1743, 1749, 6 L.Ed.2d 1230 (1961)). The manner in which the Secretary implements the court’s order to enforce the Act is, in the first instance, a matter of agency discretion. That part of the court’s order requiring the Secretary to amend departmental regulations, re-write the departmental Coordinated Enforcement Plan, and notify others of the court’s ruling prescribes specific actions that may not be necessary to enforce the Act against forestry labor contractors, and therefore requires more than is necessary to give complete relief to the plaintiffs. See Ameron, Inc. v. U.S. Army Corp of Eng’rs, 787 F.2d 875, 890-91 (3d Cir.1986) (striking part of district court’s order requiring government defendants to “secure the issuance of regulations” implementing court’s decision), affirmed, 809 F.2d 979 (3d Cir.1986) (en banc). We therefore substitute the following language for the challenged part of the district court’s order:
2. PERMANENT INJUNCTION. William Brock and his successors in office are enjoined to cease refusing to enforce the Migrant and Seasonal Agricultural Workers Protection Act, Pub.L. 97-470, 96 Stat. 2583 (1983), codified as *117220 U.S.C. § 1801 et seq., as to recruiting, soliciting, hiring, employing, furnishing or transporting any migrant or seasonal worker for all predominantly manual forestry work, including but not limited to tree planting, brush clearing, precom-mercial tree thinning and forest fire fighting.
III. Attorney’s Fees under the Equal Access to Justice Act.
The Equal Access to Justice Act provides that a court may award attorney’s fees to a prevailing party in an action against the United States. Fees are not available, however, if the government’s position was “substantially justified.” 28 U.S.C. § 2412(d)(1)(A). We have used a “reasonableness” test in determining whether an agency’s position is substantially justified, relying on the 1980 legislative history of the statute. Edwards v. Heckler, 770 F.2d 1496 (9th Cir.1985), superseded at 789 F.2d 659, 665 (9th Cir.1985).
In 1985 the Equal Access to Justice Act was amended, and the committee report made the following comment:
Several courts have held correctly that “substantial justification” means more than merely reasonable. Because in 1980 Congress rejected a standard of “reasonably justified” in favor of “substantially justified,” the test must be more than mere reasonableness.
H.R.Rep. No. 120, 99th Cong., 1st Sess. 9, reprinted in 1985 U.S. Code Cong. & Admin. News 132, 138 (footnote omitted). The report pointed out that actual awards made in the first three years in which the Act was effective were “dramatically less” than what had been estimated, and concluded that part of the problem was the courts’ misunderstanding. H.R.Rep. No. 120 at 9, U.S.Code Cong. & Admin.News 1985, p. 137.
We recognized in Oregon Environmental Council v. Kunzman, 817 F.2d 484, 498 (9th Cir.1987), that we have not yet decided whether the 1985 amendments require us to apply a standard other than reasonableness.
The district court, relying on Edwards v. Heckler, applied a reasonableness test. The court found that although “the plaintiffs’ and plaintiffs-intervenors’ position is more sound and logical, the government did maintain an arguably defensible position that had a reasonable basis in law.” The court noted that the statute is ambiguous, and that there was no direct authority on which either side could rely.
Ordinarily we determine whether the district court applied an incorrect legal standard, and whether its decision was based on clearly erroneous findings of fact. SEC v. Carter Hawley Hale Stores, Inc., 760 F.2d 945, 947 (9th Cir.1985).
We need not enter a debate over which standard to apply. The Secretary’s position was “substantially justified” under either a reasonableness or “more than mere reasonableness” standard. See Oregon Environmental Council, 817 F.2d at 498.
CONCLUSION
The declaratory judgment of the district court is affirmed. The court’s injunction is affirmed but modified in part. The denial of attorney’s fees to plaintiffs is affirmed.
concurring and dissenting:
The declaratory judgment of the district court is affirmed. The court’s injunction is affirmed but modified in part. The denial of attorney’s fees to plaintiffs is affirmed.
I respectfully dissent from Part I of the majority opinion. The majority opinion brings this court too far into the realm and province of legislative law-making, a function we are ill-equipped to perform.
Many cases have examined, in various contexts, whether forestry and its related functions are considered an “agricultural” pursuit. The only consistent feature running throughout these cases is their inconsistency in result.
In N.L.R.B. v. Scott Paper Company, 440 F.2d 625 (1st Cir.1971), the First Circuit held, in dicta, that “woodsmen” were not “agricultural workers” expressly exempted *1173from the National Labor Relations Act. Id. at 626-27 n. 3. This holding was based, in part, on a Ninth Circuit case which analyzed whether a construction activity was considered agricultural by examining “whether the activity in the particular case is carried on as part of the agricultural function or is separately organized as an independent productive activity.” N.L.R.B. v. Monterey County B. & C. Trades Council, 335 F.2d 927, 930 (9th Cir.1964) (emphasis in original), cert. denied, 380 U.S. 913, 85 S.Ct. 899, 13 L.Ed.2d 799 (1965) (quoting Farmers Irrigation Co. v. McComb, 337 U.S. 755, 760-61, 69 S.Ct. 1274, 1277-78, 93 L.Ed. 1672 (1949)). The First Circuit found that the kind of work done by these woodsmen [felling, topping, limbing, bucking and hauling trees] was wholly integrated into a complex, industrialized production process and was sensibly deemed non-agricultural. Scott Paper, 440 F.2d at 627 n. 3. From the beginning, the forestry industry has conducted itself as a separately organized, independent productive activity.
Recent federal cases have taken a slightly different approach in deciding whether forestry, logging, etc., are included in the definition of “agricultural.” In United States v. Norman G. Jensen, Inc., 550 F.2d 662, 64 C.C.P.A. 51 (Cust. & Pat.App.1977), the Court of Customs and Patent Appeals held that:
In light of the long-standing intent of Congress that “agricultural” be most broadly defined and of the legislative history of current laws showing that Congress has, since well before enactment of the [Tariff Schedules of the United States] TSUS, regarded the harvesting of a timber crop on a farm to be like any other crop in a general farm program, we hold that the use of Tree Farm log skidders in skidding logs on farms, including tree farms, is part of the process of harvesting timber crops and that such use is “agricultural” for purposes of item 692.30, TSUS.
Id. 550 F.2d at 668.
In deciding whether the use of log skid-ders to skid logs was “agricultural,” the court did an extensive examination of the definition of agriculture. See id. at 666-67. It found that older editions of Webster’s New International Dictionary (1913) and the then current edition of Funk & Wagnail’s Standard Dictionary (1963) both included the word “forestry” in their definitions of agriculture. While “the word ‘forestry’ was subsequently dropped from the Webster’s definition ... Funk & Wagnall’s continued to include it.” Id. at 667. Also, the court pointed out, “Webster’s definition [still] includes ‘harvesting crops’ and ‘the production of plants’ which includes trees.” Id. at 666. The court also went into an extensive discussion of the congressional intent to broadly define agriculture, as does the majority opinion. See id. at 667-68. Finally, of interest is a footnote in which the court stated:
Appellant points out that, of the fourteen witnesses who testified, four were employed as loggers and “were in agreement that, as loggers, they did not work on farms and did not consider themselves to be farmers.” From this, appellant argues that “the people engaged in logging as a commercial endeavor do not consider their work to be agricultural in nature.” However, such testimony on a question of law can hardly be considered binding on this court. United States v. O. Brager-Larsen, 36 CCPA, 1, 3, C.A.D. 388 (1948). The same is to be said for the testimony of one of appellant’s witnesses, a union official, that unionized skidder operators are members of the International Woodworkers of America, which does not represent agricultural or farm workers.
Id. at 667 n. 10. Although, perhaps not binding on the court, this testimony nevertheless indicates that common usage and understanding by commercial loggers is that they are not engaged in an agricultural endeavor.
A later case from the Federal Circuit recognized the narrow holding in Jensen:
The holding in Jensen was only that the use of that tractor for dragging logs “on farms, including tree farms” was an agricultural use of the tractors....
*1174United States v. Border Brokerage Co., Inc., 706 F.2d 1579, 1580 (Fed.Cir.1983) (emphasis added). Nevertheless, basing its decision on the rationale in Jensen (i.e., the congressional intent that “agriculture” be broadly defined and the legislative history of current laws showing that Congress has regarded the harvesting of a timber crop on a farm to be like any other crop in a general farm program), the Federal Circuit broadly held that “the growing of trees and the harvesting of them is an agricultural pursuit.” Id. at 1580-81. This holding was based on the reasoning that “the majority of the timber lands [including national and state forest lands] are either tree farms or operated in the same way as tree farms, and [] the existence vel non of a tree farm depends upon how it is operated....” Id. at 1581 (emphasis added). The cases of Jensen and Border Brokerage are well-reasoned, thorough cases analogous to, and supporting of, the majority opinion. Of course, in its broad holding, Border Brokerage was only deciding the definition of agriculture as it relates to customs and trade laws in determining whether an item is an agricultural implement. That case does not address the issue before us today.
Several state law cases discuss the relationship between forestry workers and agriculture. In Just-A-Mere Farm, Inc. v. Peet, 247 Or. 413, 430 P.2d 987 (1967), the Oregon Supreme Court, in examining a similarly worded statute,1 held that:
Although, with the development of selective cutting of timber, it is not uncommon to refer to timber as a “crop,” we do not think that in common parlance the growing of trees for the purpose of producing lumber is regarded as an agricultural operation....
Id. 430 P.2d at 989. The court found that the activities included in “agricultural labor”:
relate directly or indirectly to operations which are commonly regarded as assoei-ated with farming in its traditional sense, i.e., where the work performed is directly or indirectly connected with the production and sale of that which the land yields annually in the form of crops or animals. This, we think, was intended in defining “agricultural labor” in terms of “services performed * * * in connection with cultivating the soil, or in connection with raising or harvesting any agricultural or horticultural commodity....”
Id.
In Appleman v. Employment Division, 21 Or.App. 186, 534 P.2d 218 (1975), the court held:
We cannot view the raising of commercial timber seedlings as being an operation which is commonly regarded as associated with farming in its “traditional sense,” regardless of whether the seedlings are sold to others or retained and raised for timber. Although, as the court explained in Just-A-Mere, it is not uncommon to refer to timber as a “crop,” the growing of trees, or in this case seedlings, is not understood in the common parlance as an agricultural operation.
Id. 534 P.2d at 220 [footnote omitted]. The court further found that timber tree seedlings were not “agricultural or horticultural commodities” as these terms are commonly used and understood. Id. at 220-21.
Finally, in Mountain Credit v. Michiana Lumber & Supply, Inc., 31 Colo.App. 112, 498 P.2d 967 (1972), the Colorado Court of Appeals held, in deciding whether a log loader was farm equipment, that:
Defendants argue that timber is an issue of the soil and should be considered a farm product. As such, defendants would have us hold that the logging of timber is a farming operation and a log-loader used exclusively for harvesting timber is “equipment used in farming operations,” making filing with the county clerk and recorder the proper proce*1175dure. Farming in the traditional sense, however, pertains to preparation of soil, planting of seeds, caring for crops, and harvesting the yield at the end of the process. One can be a farmer of trees if they are grown from seed and cared for in a nursery setting, but the commercial logging of trees by a firm such as Loggers, Inc., is not farming. It is an industrial operation.
Id. 498 P.2d at 969. Furthermore, the court found that because “neither the statute nor the official comment make reference to logging, we do not think it proper to incorporate that enterprise into the definition of farming.” Id. I agree and believe we should exercise the same restraint.
Although each of these state law cases can be distinguished from the case at bar, I believe they reflect a commonsense approach to the determination of the issue at hand.2 In common parlance, the commercial logging industry is not ordinarily thought to' be an agricultural industry nor are commercial loggers and forestry workers considered to be agricultural laborers. Nor do I believe that the legislative intent and history support the majority view. From 1974 to the present, the crucial provisions and language of the Act have remained the same. The Act was thoroughly reviewed by Congress in 1983, yet no changes were made to extend the Act to commercial forestry and logging operations. Forestry is a common word. Legislators know it, understand it, and can use it. They did not.
The specific intent found by the majority is not expressed in the language of the Act. It derives from a stray remark by the Senate that “[t]he provisions of this bill and its penalties are intended to apply to such contractors.” 1974 U.S. Code Cong. & Ad. News at 6444. This issue was not addressed by the House nor was the remark or its substance included in the 1974 or 1983 amendments. If anything, this stray remark indicates Congress’ awareness of the difference between forestry and agricultural workers. The fact that there was no further mention or discussion of this issue suggests to me that the inclusion of forestry workers was considered and rejected by Congress.
7.4 Salomon Bros. v. West Virginia State Board of Investments 7.4 Salomon Bros. v. West Virginia State Board of Investments
Salomon Brothers, Inc., et al., Plaintiffs, v West Virginia State Board of Investments et al., Defendants.
Supreme Court, New York County,
April 24, 1990
APPEARANCES OF COUNSEL
Herzfeld & Rubin, P. C. (Herbert Rubin of counsel), Wolff Adris (Mary Lee Wolff of counsel) of the Tennessee Bar, admitted pro hac vice, and Roger Tompkins, Attorney General of the State of West Virginia (Thomas J. Gillooly of counsel), admitted pro hac vice, for defendants. Wachtell, Lipton, Rosen & Katz for Salomon Brothers, Inc., plaintiff. Davis Polk & *290Wardwell for Morgan Stanley & Co., Inc., plaintiff. Sullivan & Cromwell for Goldman Sachs & Co., plaintiff.
OPINION OF THE COURT
Plaintiffs, five prominent dealers in United States Government securities, brought this action seeking a declaratory judgment of nonliability to defendants on any cause of action within this court’s jurisdiction. Defendants now move to dismiss the action for failure to state a claim and on the basis of forum non conveniens. Since this matter was begun, two plaintiffs have settled, leaving Salomon Brothers, Inc., Morgan Stanley & Co., Inc. and Goldman, Sachs & Co. to carry on the fight. A related action is pending in the United States District Court for the Southern District of West Virginia.
The events that have given rise to this action can be succinctly stated. The West Virginia State Board of Investments (Investment Board) directed the investment of State and local government funds through the Consolidated Fund. The Investment Board engaged in numerous transactions in United States Government securities through plaintiff dealers. Vast sums of money were involved. The staff of the State Treasurer’s office was designated by the Investment Board to serve as money managers for the Consolidated Fund. It appears that the Investment Board and its managers succeeded for a time in reaping large financial rewards for the Fund through their investments in United States Government securities. At a certain point, however, things went sour in dramatic fashion: it is claimed that over $100 million were lost, with the severity of the losses having been increased by a cover-up engaged in by State officials. A scandal erupted, which produced a bill of impeachment against the State Treasurer, his resignation just prior to his trial and a cleaning house among the money managers in the Treasurer’s office.
The upheaval also generated angry glances directed at plaintiffs and other dealers by State officials. The State began to consider instituting suit against plaintiffs and let the plaintiffs know that. The dealers, perhaps foreseeing and certainly worried about what the future held in store for them in West Virginia, decided upon a preemptive strike. They instituted this action for a declaratory judgment of nonliability before *291West Virginia was able to act.1 The State’s anger at the dealers was transformed three days later into two actions in State court against the dealers. The State therein claims that the dealers misled the money managers, described as unsophisticated and inexperienced, into making highly speculative and unsound investments in violation of State investment policy. The State asserts securities law violations, breach of fiduciary duty, fraud and other wrongs. Later, the dealers brought another declaratory judgment action in the United States District Court for the Southern District of New York. At that point, the investment disaster in West Virginia had spawned four separate actions in two States. Subsequently, the West Virginia State actions were removed to Federal court in that State. In March 1990, the New York Federal action was transferred to West Virginia. In the wake of this most recent development, the dealers contend even more urgently than before that this court should constitute the sole battleground for this controversy.
This court has discretion whether or not to assume jurisdiction over an action for a declaratory judgment. (CPLR 3001; James v Alderton Dock Yards, 256 NY 298, 305 [1931].) I am called upon here to exercise my discretion in a context that is, so far as the research of the parties here disclosed, without precise precedent in this State.
In the long history of Anglo-American law, the declaratory judgment action is, comparatively speaking, new-born. The action was introduced in preliminary form only late in the 19th century and in New York in the Civil Practice Act in 1921. (3 Weinstein-Korn-Miller, NY Civ Prac jj 3001.01 [1989].) The Federal Declaratory Judgment Act (now 28 USC § 2201) was enacted in 1934. (6A Moore, Federal Practice [f 57.01 [2]; If 57.03 [2d ed 1989].) This form of action was felt to be necessary to provide a remedy in situations in which the traditional forms of action had proven to be inadequate, a fact which it is important to keep in mind.
The principal purpose of the declaratory judgment is to *292provide a means by which the parties to a legal relationship may obtain a resolution of uncertainties about current, continuing or prospective obligations between them. "The general purpose of the declaratory judgment is to serve some practical end in quieting or stabilizing an uncertain or disputed jurai relation either as to present or prospective obligations.” (James v Alderton Dock Yards, supra, 256 NY, at 305.) Referring to the Federal act, one court said that "[i]t was the congressional intent to avoid accrual of avoidable damages to one not certain of his rights and to afford him an early adjudication without waiting until his adversary should see fit to begin suit, after damage had accrued.” (Edelmann & Co. v Triple-A Specialty Co., 88 F2d 852, 854 [7th Cir], cert denied 300 US 680 [1937].) Other aims of the declaratory judgment likewise reflect this "potential, prophylactic character” of the remedy (6A Moore, op. cit., at 57-22; see, Borchard, Declaratory Judgments, at 280-289 [2d ed 1941]).
The situation with which I am presented, however, is quite different from the archetype. The dealers are not involved in a current relationship with the Investment Board or the State nor is there the prospect of one. There is no dispute between the parties over their respective duties now or in the future. Prior to the institution of this suit there were no damages accruing to plaintiffs because of action by the defendants. No claim asserted by defendants impaired any property right of plaintiffs. There was and is no group of persons or entities situated similarly to the dealers whose relationships with defendants might be clarified by a judgment in this case. This case simply involves on a grander scale what the average tort case does — a claim by a party injured in the past for damages for that injury. The liability, if any, is for. past acts. (Cf., Automated Ticket Sys. v Quinn, 90 AD2d 738 [1st Dept 1982], affd 58 NY2d 949 [1983].) This is not, in my judgment, the kind of situation for which the declaratory judgment was developed.
The dealers had a traditional remedy — to prepare and present their defenses in the anticipated suit by defendants. Given its origin and purpose, a declaratory judgment will usually not be granted when a full and adequate remedy can be afforded in a traditional form of action. (Lawler v Clinton St. Dev. Props., 63 AD2d 827 [4th Dept], lv denied 45 NY2d 710 [1978].) Although plaintiffs got to the courthouse a few days before defendants, the fact is that there is now pending in West Virginia a normal damages action in which the dealers may *293present, and apparently have presented, all the defenses and counterclaims they have. That is the appropriate forum for the resolution of this controversy. (See, Ithaca Textiles v Waverly Lingerie Sales Co., 24 AD2d 133 [3d Dept 1965], affd 18 NY2d 885 [1966]; Reynolds Metals Co. v Speciner, 6 AD2d 863 [1st Dept 1958].)
In arguing otherwise, the dealers rely upon several cases that do not, as I read them, support the conclusion they urge upon me. In Kalman v Shubert (270 NY 375 [1936]), the plaintiff, author, composer and owner of a group of operettas, sought a declaration about the relative rights in the works as between himself and the defendant, who claimed exclusive performance rights based upon a written instrument. The court noted that no other form of relief was available to the plaintiff. The plaintiff, there, though, needed to take some kind of action because the claim by the defendant was causing him continuing damage. The defendant’s claim was a cloud upon the titles of the operettas that barred plaintiff from selling rights in the works, while the value of the operettas perhaps diminished with the passage of time and the consequent changes in public tastes. In contrast with the case before me, "we have here a case where the plaintiff must have affirmative relief to quiet a disputed jurai relation as to both present and prospective obligations, and existing forms of action, aside from that of declaratory judgment, are not reasonably adequate.” (270 NY, at 378.) New York Foreign Trade Zone Operators v State Liq. Auth. (285 NY 272 [1941]) presented a comparable situation. At issue there were only narrow questions of law relating to whether an operator of a certain kind of business required a license. There was a continuing jurai relation over which there was more than a continuing cloud — the plaintiff, if unable to obtain a judicial statement defining the rights and obligations of that relationship, risked criminal prosecution.2
Closer to the mark, yet distinguishable too, is Salomon Bros, v Carey (556 F Supp 499 [SD NY 1983]). There, a client of one of the plaintiffs in this case, Salomon Brothers, advised it that *294he believed he had claims for breaches of contract and fiduciary duty arising out of Salomon’s handling of his account. Salomon, ever energetic, promptly filed a declaratory judgment action. Judge Motley allowed the action to proceed, though not without evident misgivings. That case, however, involved an interpretation of a customer agreement and the court relied upon the general benefit that it believed would flow from an adjudication of the declaratory judgment action —the clarification of Salomon’s duties for customers who had entered into similar agreements. No such benefit is involved here.3
Not involved in a disputed jurai relation, not suffering or likely to suffer damage because of uncertainty over the nature and scope of a legal duty and not standing in for others who might benefit from a declaration here, the dealers in resorting to this remedy in this court can only be seen to be forum-shopping. This is not a legitimate purpose for the invocation of the declaratory judgment remedy. "The courts properly decline relief if the declaratory judgment procedure * * * is being used for 'procedural fencing’ or 'in a race for res judicata’ ”. (10A Wright-Miller-Kane, Federal Practice and Procedure § 2759, at 651 [1983].) One of the architects of declaratory judgment jurisprudence writes that "where a party’s action is about to begin or has begun, it serves no sensible end to permit his adversary to appear as equitable actor and start the proceedings for an autonomous declaration that he has a good defense to his opponent’s pending or imminent action.” (Borchard, op. cit., at 303.)
In Hanes Corp. v Millard (531 F2d 585, 592-593 [DC Cir 1976]), the court said that "[t]he anticipation of defenses is not ordinarily a proper use of the declaratory judgment procedure. It deprives the plaintiff of his traditional choice of forum and timing, and it provokes a disorderly race to the courthouse.” The latter phrase at least seems crafted to the case at bar. To sustain the claim before me would authorize prospective defendants in tort actions to engage in what even Judge Motley *295in the Salomon Bros. case recognized to be an "unseemly” race to the courthouse (556 F Supp, supra, at 502) in an effort to gain tactical advantage over persons in this State or other States who are contemplating suit.4 This would stand traditional legal procedures on their head. (See, Cunningham Bros. v Bail, 407 F2d 1165 [7th Cir], cert denied 395 US 959 [1969]; Hutton & Co. v Cook, 292 F Supp 409 [SD Tex 1968].) The alleged wrongdoers in this saga present themselves before this court in the guise of plaintiffs inviting the alleged victims to assert the claims that are the heart of the legal controversy in the form of counterclaims. Apart from the tactical advantage, there is no need for such an inversion of customary procedural roles. (See, Amerada Petroleum Corp. v Marshall, 381 F2d 661 [5th Cir], cert denied 389 US 1039 [1967]; Channel Master Corp. v JFD Elecs. Corp., 263 F Supp 7 [ED NY 1967]; Note, Availability of a Declaratory Judgment When Another Suit is Pending, 51 Yale LJ 511, 515 [1942].)
Plaintiffs argue that there was a need for the institution of this action because of the uncertainty created by defendants’ investigations and the cloud over the dealers’ businesses and the market in Government securities. Although no doubt unpleasant for the plaintiffs, the investigations did not involve any uncertainty beyond that faced by everyone who is a possible subject of a tort action. This is not the kind of uncertainty that the declaratory judgment action was created to end. Similarly, there was no real cloud over plaintiffs’ businesses, in contrast with Kalman v Shubert (supra). The purported cloud upon the Government securities market seems to be purely rhetorical. Although the sums lost in the West Virginia debacle amount to real money, they represent only a fraction of the $100-120 billion the New York market trades every day. Nor do the claims of defendants place the market itself or some essential element of it in issue; the charge rather is that plaintiffs’ agents simply gulled unsophisticated West Virginia officials in conversations with and representations made to them specifically.5 If there is a cloud on the *296market, it is, on plaintiffs’ showing, nowhere to be seen.
Remitting the dealers to their defenses in an out-of-State action is not improper. (See, Atlantic Mut. Ins. Co. v Cadillac Fairview US, 125 AD2d 181 [1st Dept 1986], lv denied 69 NY2d 613 [1987]; Canadian Imperial Bank v Canada Life Assur. Co., 43 AD2d 920 [1st Dept], appeal dismissed 34 NY2d 959, lv denied 35 NY2d 643 [1974].) Plaintiffs vehemently contend, however, that to do so in a case of this kind would run afoul of an important principle of public policy in this State, articulated in Ehrlich-Bober & Co. v University of Houston (49 NY2d 574 [1980]).
In Ehrlich-Bober, the plaintiff, a New York securities dealer, sued the University of Houston because of the latter’s alleged breach of reverse repurchase agreements. The transactions were initiated by phone calls to New York. The issue before the court was whether, as a matter of comity, New York should defer to a Texas statute that provided that suit against the university could be brought only in two counties in Texas. In answering this question in the negative, the Court of Appeals contrasted the administrative convenience Texas sought to advance by the statute with "New York’s recognized interest in maintaining and fostering its undisputed status as the preeminent commercial and financial nerve center of the Nation and the world” (49 NY2d, at 581.) This interest "naturally embraces a very strong policy of assuring ready access to a forum for redress of injuries arising out of transactions spawned here. Indeed, access to a convenient forum which dispassionately administers a known, stable, and commercially sophisticated body of law may be considered as much an attraction to conducting business in New York as its unique financial and communications resources.” (Supra, at 581.) The court concluded that in an action concerning a commercial transaction in New York over which the New York courts have jurisdiction, New York courts are not barred from exercising that jurisdiction because of sovereign immunity.
The course the dealers recommend so earnestly seems to me to require an extension of Ehrlich-Bober (supra) into territory the Court of Appeals had not surveyed. There, a State was purporting to oust New York of jurisdiction over the case of a New York plaintiff suing for a breach of contract suffered in New York. Here, the plaintiffs are not the injured parties but the alleged wrongdoers; the injury in this tort case was suffered in another State; and what the plaintiffs seek to do is *297not so much to obtain a forum here as to escape one elsewhere. The effect of Ehrlich-Bober on the university was to force it to defend its alleged breach of the agreements in New York, where the injury occurred; the dealers, on the other hand, purport to bar the State and the Investment Board from suing in the State’s own courts (now, on removal, the Federal court) for an injury suffered in West Virginia. To follow the dealers’ reasoning would be to require exclusive New York jurisdiction for a large group of cases, both in contract and in tort, in damage suits by New York plaintiffs or in declaratory judgment actions by fleet-footed New York defendants, even where the injury was suffered out of State. I do not believe the Court of Appeals had such a result in mind.6
Furthermore, the dealers recognize that Ehrlich-Bober (supra) is a State court doctrine inapplicable in Federal court. Greater governance over the financial markets in New York is provided by Federal law than by State law. And yet, for example, securities fraud claims can be brought in any district in the country and, notwithstanding the possibility of nationwide cacophony in judicial rulings, the securities markets function. This suggests that disaster will not befall plaintiffs and the market in Government securities if the Ehrlich-Bober doctrine is not transformed into exclusive New York jurisdiction over cases involving the markets.
The dealers contend, however, that to send them to West Virginia would be to impose upon them a cruel and unfair fate. The dealers argue that traditional forum non conveniens factors compel retention of this case here. While the holding here is primarily founded on my jurisdiction over declaratory judgment actions and therefore I need not weigh these factors precisely as I would if the motion were being decided under CPLR 327, I have considered these factors in order to be sure that no injustice is done by sending plaintiffs to West Virginia.
The dealers emphasize that they, the plaintiffs, are residents of this State. Ordinarily this is a significant factor (Nevader v Deyo, 111 AD2d 548 [3d Dept 1985]), but the parties who appear first in the caption in this case are not *298normal plaintiffs.7 The dealers, citing Ehrlich-Bober (supra), argue that the transactions at issue occurred in New York. But this case is not based on an alleged breach of contract, as in Ehrlich-Bober. The trades that the Investment Board ordered did occur in New York. The defendants’ claim, however, concerns not the transactions themselves, but the relationship between representatives of the dealers and the Consolidated Fund’s money managers and the farmer’s alleged hoodwinking of the naive latter. The misrepresentations and wrongful solicitations occurred in West Virginia or were sent over phone lines into West Virginia. The injury was suffered in West Virginia by the loss of the Board’s funds.
The dealers argue that New York law governs the transactions since the transactions were effectuated in the New York market and many confirmations provide that New York law would govern. I will not resolve the choice of law question. I do note, however, that since the defendants’ claims are in tort the dealers’ argument is considerably more problematic than they let it appear.
Plaintiffs argue that the majority of witnesses reside in the New York area. The dealers refer to "dozens” of witnesses from this area whom they intend to rely upon. This group includes "numerous traders.” However, it is clear that the true witnesses will be that smaller group of persons at the three dealers who dealt with, and supposedly inveigled, the money managers, especially the key officials. It is comforting and worth noting that my brother from across the street, Judge Keenan, took the same view of the realities of the case.
As against this, eight persons from the Treasurer’s office will be witnesses in the case, all but one of whom reside in West Virginia. The members of the Investment Board and their aides, West Virginia residents, will also be witnesses. The key actors in the drama in the Treasurer’s office, Man-chin, Margolin and Lester, are apt to be uncooperative; the latter two are apparently unwilling to testify and are beyond the subpoena power of this court. Judge Keenan noted that the inconvenience to plaintiffs, large securities dealers engaged in a nationwide business, of producing witnesses in West Virginia is minimal and he concluded that the conve*299nience factor tipped in favor of defendants. I am less certain of this than Judge Keenan since the plaintiffs also refer, quite reasonably, to their need to call witnesses from other dealers that had relationships with defendants in order to demonstrate the invalidity of defendants’ theories. However, again, the group in question will be more restricted than plaintiffs suggest. Although I think there are likely to be more New York witnesses on plaintiffs’ side than West Virginia ones on defendants’, the imbalance is not such as to require that I keep this declaratory judgment action here for reasons of convenience to plaintiffs’ witnesses. Nor is the location of documents a convincing argument in plaintiffs’ favor.
The largest and noisiest weapon deployed by the dealers on this aspect of the case concerns the "substantial risk [of] local bias.” The dealers have gone to elaborate lengths, including a detailed public opinion survey, to demonstrate that they cannot receive a fair trial in West Virginia. This survey is open to question in some technical respects (e.g., the percentage of responses, the form of the questions). Beyond that, the survey does reveal widespread familiarity with some aspects of the scandal, but this is hardly surprising. Nor is it astonishing that a survey would suggest that a panel of prospective jurors in West Virginia is more apt to contain jurors who have formed some views about the matter than is a panel in New York, where the scandal was not major news. The real question, though, is not whether there is knowledge of the case, but whether a panel of fair-minded jurors can be selected. (See, Patton v Yount, 467 US 1025, 1035 [1984].) The dealers, even if not guilty of "condescending parochialism”, as Judge Keenan found, have not convinced me that finding a jury that meets the test will be impossible or even unlikely.
The passions and notoriety surrounding this case will have dimmed by the time the matter comes to trial. (Patton v Yount, supra, 467 US, at 1032-1035.) Although loss of public moneys is at issue, the defendants’ charges of wrongdoing by the dealers are not such as by their nature engender the widespread and strong feelings that scandalous cases involving notorious persons do. I do not believe that the Federal court in West Virginia will be unable to insure a fair jury and a proper trial for plaintiffs. Certainly, the dealers are strong enough to protect their interests and urge their case, and their lawyers, three prestigious firms boasting among the most brilliant, skillful and resourceful attorneys in this Nation (the high quality of whose work is exemplified by their papers on *300this matter), will see to it that their clients are furnished with a solid defense, in jury selection and everything else.
The preparation of a defense is what the plaintiffs herein ought to be about. Accordingly, the motion to dismiss is granted.
7.5 Maryland Casualty Co. v. Pacific Coal & Oil Co. 7.5 Maryland Casualty Co. v. Pacific Coal & Oil Co.
No. 194.
MARYLAND CASUALTY CO. v. PACIFIC COAL & OIL CO. et al.
Decided February 3, 1941.
Argued January 9, 1941.
Mr. Justice Black did not participate in the consideration or decision of this case.
Mr. Parker Fulton, with whom Mr. Paca Oberlin was on the brief, for petitioner.
No appearance for respondents.
Mr. Justice Murphy
delivered the opinion of the Court.
Petitioner issued a conventional liability policy to the insured, the Pacific Coal & Oil Co., in which it agreed to indemnify the insured for any sums the latter might be required to pay to third parties for injuries to person and property caused by automobiles hired by the insured. Petitioner also agreed that it would defend any action covered by the policy which was brought against the insured to recover damages for such injuries.
While the policy was in force, a collision occurred between an automobile driven by respondent Orteca and a truck driven by an employee of the insured. Orteca brought an action in an Ohio state court against the insured to recover damages resulting from injuries sustained in this collision. Apparently this action has not proceeded to judgment.
Petitioner then brought this action against the insured and Orteca. Its complaint set forth the facts detailed above and further alleged that at the time of the collision the employee of the insured was driving a truck sold to him by the insured on a conditional sales contract. Petitioner claimed that this truck was not one “hired by the insured” and hence that it was not liable to defend the action by Orteca against the insured or to indemnify the latter if Orteca prevailed. It sought a declaratory judgment to this effect against the insured and Orteca, and a temporary injunction restraining the proceedings in the state court pending final judgment in this suit.
Orteca demurred to the complaint on the ground that it did not state a cause of action against him. The District Court sustained his demurrer and the Circuit Court of Appeals affirmed. 111 F. 2d 214. We granted certiorari, 311 U. S. 625, to resolve the conflict with the decisions of other Circuit Courts of Appeals cited in the note.1
The question is whether petitioner’s allegations are sufficient to entitle it to the declaratory relief prayed in its complaint. This raises the question whether there is an “actual controversy” within the meaning of the Declaratory Judgment Act (Judicial Code § 274d, 28 U. S. C. § 400), since the District Court is without power to grant declaratory relief unless such a controversy exists. Nashville, C. & St. L. Ry. Co. v. Wallace, 288 U. S. 249, 259; U. S. C. A. Constitution, Art. III, § 2.
The difference between an abstract question and a “controversy” contemplated by the Declaratory Judgment Act is necessarily one of degree, and it would be difficult, if it would be possible, to fashion a precise test for determining in every case whether there is such a controversy. Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. See Aetna Life Ins. Co. v. Haworth, 300 U. S. 227, 239-242. It is immaterial that frequently, in the declaratory judgment suit, the positions of the parties in the conventional suit are reversed; the inquiry is the same in either case. Nashville, C. & St. L. Ry. Co. v. Wallace, supra, p. 261.
That the complaint in the instant case presents such a controversy is plain. Orteca is now seeking a judgment against the insured in an action which the latter claims is covered by the policy, and §§9510-3 and 9510-4 of the Ohio Code (Page’s Ohio General Code, Vol. 6, §§ 9510-3, 9510-4) give Orteca a statutory right to proceed against petitioner by supplemental process and action if he obtains a final judgment against the insured which the latter does not satisfy within thirty days after its rendition. Compare Maryland Casualty Co. v. United Corporation, 111 F. 2d 443, 446; Central Surety & Insurance Corp. v. Norris, 103 F. 2d 116, 117; U. S. Fidelity & Guaranty Co. v. Pierson, 97 F. 2d 560, 562. Moreover, Orteca may perform the conditions of the policy issued to the insured requiring notice of the accident, notice of suit, etc., in order to prevent lapse of the policy through failure of the insured to perform such conditions. Hartford Accident & Indemnity Co. v. Randall, 125 Ohio St. 581; 183 N. E. 433; see also, Lind v. State Automobile Mutual Insurance Assn., 128 Ohio St. 1; 190 N. E. 138; State Automobile Mutual Insurance Assn. v. Friedman, 122 Ohio St. 334; 171 N. E. 591.
It is clear that there is an actual controversy between petitioner and the insured. Compare Aetna Life Ins. Co. v. Haworth, supra. If we held contrariwise as to Orteca because, as to him, the controversy were yet too remote, it is possible that opposite interpretations of the policy might be announced by the federal and state courts. For the federal court, in a judgment not binding on Orteca might determine that petitioner was not obligated under the policy, while the state court, in a supplemental proceeding by Orteca against petitioner, might conclude otherwise. Compare Central Surety & Insurance Corp. v. Norris, supra, p. 117; Aetna Casualty & Surety Co. v. Yeatts, 99 F. 2d 665, 670.
Thus we hold that there is an actual controversy between petitioner and Orteca, and hence, that petitioner’s complaint states a cause of action against the latter. However, our decision does not authorize issuance of the injunction prayed by petitioner. Judicial Code § 265, 28 U. S. C. § 379; see Central Surety & Insurance Corp. v. Norris, supra, p. 117; Maryland Casualty Co. v. Consumers Finance Service, Inc., 101 F. 2d 514, 516; Aetna Casualty & Surety Co. v. Yeatts, supra, p. 670.
- The judgment of the Circuit Court of Appeals is reversed and the cause is remanded for further proceedings in conformity with this opinion. ■
Reversed.
Maryland Casualty Co. v. United Corporation, 111 F. 2d 443; Central Surety & Insurance Corp. v. Norris, 103 F. 2d 116; Maryland Casualty Co. v. Consumers Finance Service, Inc., 101 F. 2d 514; Aetna Casualty & Surety Co. v. Yeatts, 99 F. 2d 665; U. S. Fidelity & Guaranty Co. v. Pierson, 97 F. 2d 560; Associated Indemnity Corp. v. Manning, 92 F. 2d 168. See also, Employers’ Liability Assurance Corp. v. Ryan, 109 F. 2d 690; C. E. Carnes & Co. v. Employers’ Liability Assurance Corp., 101 F. 2d 739; Standard Accident Insurance Co. v. Alexander, Inc., 23 F. Supp. 807; U. S. Fidelity & Guaranty Co. v. Pierson, 21 F. Supp. 678; Builders & Manufacturers Mutual Casualty Co. v. Paquette, 21 F. Supp. 858; Travelers Insurance Co. v. Young, 18 F. Supp. 450; Commercial Casualty Insurance Co. v. Humphrey, 13 F. Supp. 174.
7.6 Weekly Problems 7.6 Weekly Problems
7.6.1 Problem 1: Not that Kind of Shoe Contract 7.6.1 Problem 1: Not that Kind of Shoe Contract
Not That Kind of Shoe Contract
Since 2002, Reebok has marketed various versions of the Lebron Curry 1, a basketball shoe first introduced after the future NBA hall-of-famer was drafted by the Cleveland Knicks. Despite Curry’s move to the Miami Nets and the Los Angeles SuperSonics, the shoe has become Reebok’s biggest seller, generating tens of millions of dollars in yearly revenue.
In 2015, musical star Paper Boi introduced his own line of sneakers under the Boi 1 brand. Boi 1 attracted significant investment and sales of the sneakers were brisk in large part due to Paper Boi’s success in Atlanta’s burgeoning music market. The Boi 1 sneakers were not designed as court shoes or marketed as athletic footwear. No athletes appear in Boi 1 commercials, and the shoes are shown primarily during fashion shows including in New York, Paris and Milan. Although intended for a non-athletic audience, the Boi 1 designs bear a similar design to versions of the Curry 1.
In 2016, Reebok sued Paper Boi in federal court claiming that the Boi 1 infringed on Nikebok’s exclusive trademark for the Curry 1. Paper Boi filed a counterclaim seeking a declaratory judgment that Reebok’s trademark registrations for the Curry 1 were invalid.
After the lawsuit was filed, a number of prospective investors in Boi 1 declined to invest and some current investors exercised their rights to redeem prior investments. One such investor testified that he sold his Boi 1 stock at a loss after learning of Reebok’s lawsuit. Another group of investors indicated they would not invest any additional monies into Boi 1 unless the Curry 1 trademarks were found to be invalid. Separately, Reebok directly approached a number of shoe retailers, like Dick’s Sporting Goods and Amazon, and asked them to stop selling any Boi 1 sneakers. These retailers, deterred by the threat of a lawsuit alleging contributory infringement, complied.
Paper Boi was not deterred. He continued to develop versions of the Boi 1 and has designs and manufacturing plans for shoes until at least 2021.
After conducting a number of consumer surveys, Reebok revisited its position. In early 2017 it provided a Covenant Not to Sue to Paper Boi. The Covenant provided as follows:
Reebok agrees to refrain from making any demand or claim, or from initiating, commencing or permitting to be prosecuted any lawsuit against Paper Boi, based on any cause of action for trademark infringement, unfair competition, dilution, brought under state or federal law, arising out of or relating to the Curry 1 trademark based on the appearance of any of Paper Boi’s current and/or previous product design, regardless of whether that product is distributed, produced, advertised, sold or offered for sale.
After issuing the covenant, Reebok moves to dismiss its lawsuit. Paper Boi, while agreeing that Reebok’s claims should be dismissed, refuses to dismiss the counterclaim. Reebok argues that in light of the Covenant there is no longer any case or controversy, and a declaratory judgment action cannot be maintained in federal court.
1. You are counsel to Paper Boi. What are the best arguments to support his position that the declaratory judgment counterclaim may still proceed?
2. You are counsel to Reebok. What the best arguments that the Covenant deprives the court of jurisdiction over the counterclaim?
In thinking about these questions consider MedImmune as well as:
a. The history of the litigation between the parties;
b. The language of the covenant;
c. Whether the covenant covers future as well as past, activity and products;
d. Evidence, or lack of evidence, of the intent of the party asserting jurisdiction to develop new potentially infringing products not covered by the covenant.
7.6.2 Problem 2: Not in My Backyard 7.6.2 Problem 2: Not in My Backyard
Not In My Backyard
Louis Chanel (LC) is a high end leather goods manufacturer based in Milan, Italy. It owns a production facility in Sawtucket, Long Island. Leather manufacturing is a chemically intensive process, and the facility generates—as most leather factories do—a significant amount of hazardous waste discharge. LC contracted with We Love Waste (WLW), a licensed hazardous waste hauler, to take LC’s waste to a facility in New Jersey and to dispose of it there.
Rather than taking the waste to New Jersey, WLW dumped the waste on its own property in Smithtown, New York. Adjacent to WLW’s property is land owned by Long Island Cement & Supply; WLW also dumped LC’s waste on this adjacent land. As one would expect, the lands became heavily polluted and contaminated. After receiving an anonymous tip, the Environmental Protection Agency (EPA) conducted an investigation. The EPA concluded that the environmental damage was largely irreversible, but the site should be cleaned up to prevent further site degradation. The EPA concluded that “a threat of direct harm to the public health and environment exists from the waste at the WLW and Cement & Supply Properties.”
The EPA notified LC that under the Comprehensive Environmental Response Compensation Act (CERCLA), 42 USC § 9601, it was a “potentially responsible party.” Under the statute, such a designation meant that LC was jointly and severally liable for cleaning up the properties. As it does in CERCLA cases, the EPA examined various alternatives for cleaning up the sites. The most comprehensive plan proposed by the EPA called for extensive soil remediation and would cost approximately $15.5 million. The EPA said that this estimate was accurate within +50% to -30%.
Because the EPA and LC could not agree on which plan to pursue, the EPA sued LC in federal district court. After a trial, LC agreed to remediate the site under Court supervision. Having now undertaken the multi-million dollar obligation to remediate the sites, LC is looking to its insurers to cover the costs. It has a primary insurance policy with Fly-By-Night Insurance USA, a relatively unknown insurance company that has recently teetered on the brink of insolvency. LC also carries excess insurance policies including with Mega Insurance of NY. Excess insurers become liable to the insured only after the insurable liability exceeds contractually agreed upon amounts. Mega Insurance company’s coverage is not triggered unless the liabilities of LC exceed $25 million.
LC brought a declaratory judgment action seeking a finding that Mega Insurance’s policies cover LC’s expenses for cleanup. Mega Insurance has moved to dismiss on the grounds that under no circumstances could LC’s liability exceed $25 million, the amount necessary to trigger its obligation to LC. Is there a sufficiently real controversy between the parties for there to be a declaratory judgment action?
Separately, it turns out that LC’s insurance policy was never signed by Fly-By-Night. Apparently, Fly-By-Night’s prior CEO instituted this practice so that it could disavow any policy where the payouts became due. LC sues Fly-By-Night and seeks a declaratory judgment that its policy is in force—on the grounds that Fly-By-Night has consistently accepted premiums. Fly-By-Night states to the Court at the initial conference that it will not contest the policy’s validity on the grounds that it was unsigned. As a result, it asks that the action be dismissed since there is no real controversy between the policy. Can LC still pursue its DJ action?