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THE PAST AND FUTURE OF EQUITABLE
REMEDIES: AN ESSAY FOR FRANK JOHNSON
James E. Pfander & Wade Formo
INTRODUCTION ....................................................................................................... 724
I. GRUPO MEXICANO AND THE PROPRIETY OF MAREVA
INJUNCTIONS ................................................................................................. 730
A. Foreign Attachment in the United States .................................................. 732
B. Equity’s Attitude Toward Pre-Judgment Creditors’ Remedies ................... 735
C. Foreign Attachment After the Due Process Revolution .............................. 739
D. Grupo Mexicano and Federal Equity in a Post- Erie World ................ 742
II. ZIGLAR / HERNANDEZ AND THE SEPARATION OF
CONSTITUTIONAL REMEDIES ..................................................................... 743
A. Ziglar/Hernandez and Grupo Mexicano ......................................... 744
B. Armstrong and Ex parte Young......................................................... 748
CONCLUSION ........................................................................................................... 752
THE PAST AND FUTURE OF EQUITABLE
REMEDIES: AN ESSAY FOR FRANK JOHNSON
James E. Pfander * & Wade Formo **
The Supreme Court has lately deployed a backward-looking and largely static approach to defining the
scope of federal remedial authority. In a series of decisions on the scope of federal equity, including Grupo
Mexicano and Exceptional Child , the Court has invoked an idealized (but often inaccurate) view
of the origins and historic scope of equitable remedies. Coupled with its recent decisions in Ziglar v.
Abbasi and Hernandez v. Mesa , which downplay remedial adequacy as a factor in the recognition of
suits under Bivens , the Court’s turn to equity’s static past threatens to separate legal and equitable
remedies that can best be understood as part of a single system.
This Essay explores the risk that a static conception of equity poses to the remedial powers of lower
federal courts, powers nowhere better illustrated than in the jurisprudence of Judge Frank Johnson. John-
son granted system-wide relief to address a range of problems, including segregated schools, inadequate
prisons, persistent racial discrimination in public employment, and schemes to disenfranchise minority
voters. While one can readily view the growth of these remedial powers over the course of the twentieth
century as the legacy of the Supreme Court’s decision in Ex parte Young , one has difficulty locating
authority for the judicial oversight of public institutions in precedents drawn from equity’s distant past.
INTRODUCTION
Among its more striking features, the equity jurisprudence of Judge Frank
Johnson, Jr. displays a good deal of confidence in the necessity for system-wide
relief and in the legitimacy of using federal judicial power to oversee the belated
reconstruction of Southern institutions.^1 His opinions display wide-ranging
concern with the equality of public schools, with the fairness of electoral pro-
- Owen L. Coon Professor of Law, Northwestern Pritzker School of Law. The authors thank the Owen L. Coon senior research program and the law school faculty fund for supporting this collaborative endeavor. We also thank the Pritzker legal research center and Tom Gaylord for help with obscure sources; Steve Burbank, Emily Kadens, Doug Laycock, Bruce Markell, Judith Resnik, and David Waddilove for com- ments on an early draft; Marty Redish for his insights into constitutional remediation; and the participants at the Notre Dame Remedies Roundtable and the Syracuse law faculty workshop for their searching assessment of an early version of these ideas. Special thanks to The University of Alabama School of Law and its Law Review for sponsoring the conference on Judge Frank Johnson at which we presented this paper. ** J.D. 2016, Northwestern Pritzker School of Law.
- On the man and his jurisprudence, see Ronald J. Krotoszynski, Jr., Equal Justice Under Law: The Jurisprudential Legacy of Judge Frank M. Johnson, Jr. , 109 YALE L.J. 1237 (2000). See also ROBERT FRANCIS KENNEDY, JR., JUDGE FRANK M. JOHNSON, JR.: A BIOGRAPHY (1978); TINSLEY E. YARBROUGH, JUDGE FRANK JOHNSON AND HUMAN RIGHTS IN ALABAMA (1981).
726 ALABAMA LAW REVIEW [Vol. 71 : 3 : 723 administration under ERISA,^6 where the Court has persisted in defining equity by reference to a somewhat idealized vision of history and tradition. This emerging reliance on idealized history, which its leading academic defender de- scribes as historically inapt but jurisprudentially sensible,^7 produces a new equity jurisprudence that hearkens back to the “days of the divided bench,” when courts of law and equity did their work in separate proceedings.^8 In treating equity as a stand-alone jurisprudence, the Court has acted in the name of judicial restraint. But its approach risks a serious distortion of the law.^9 One can see both features of the Court’s equity jurisprudence on display in Grupo Mexicano de Desarrollo S.A. v. Alliance Bond Fund, Inc.^10 There, the Supreme Court ruled that the equitable powers of the federal courts did not extend to the issuance of pre-judgment asset-freeze orders.^11 Such orders, known as Ma- reva injunctions after the leading case in the United Kingdom, have become an increasingly common feature of modern international-commercial litigation.^12 But looking backward and speaking through Justice Scalia, the Court concluded that federal courts of equity did not offer asset-freeze relief to pre-judgment
- For examples of the Court’s new equity jurisprudence, see generally Winter v. Nat. Res. Def. Coun- cil, Inc., 555 U.S. 7 (2008) (strictly applying the eBay standards in the context of a preliminary injunction); eBay v. MercExchange, LLC, 547 U.S. 388 (2006) (articulating standards for the issuance of permanent in- junctive relief); Great-West Life & Ann. Ins. Co. v. Knudson, 534 U.S. 204 (2002) (narrowing the scope of relief available under ERISA). Criticisms of the Court’s handiwork abound. See, e.g. , John H. Langbein, What ERISA Means by “Equitable”: The Supreme Court’s Trail of Error in Russell , Mertens , and Great-West, 103 COLUM. L. REV. 1317, 1317 (2003) (criticizing Knudson ); Douglas Laycock, How Remedies Became a Field: A History , 27 REV. LITIG. 161, 168 (2008) (criticizing eBay ).
- Samuel L. Bray, The Supreme Court and the New Equity , 68 VAND. L. REV. 997, 1020 (2015) (describing the Court’s approach as poor history but suggesting that it might provide the basis for good jurisprudence).
- See id. at 1017 n.106 (tracing the phrase to Justice Scalia’s opinion in Mertens v. Hewitt Associates , 508 U.S. 248, 256 (1993), and identifying its use in a series of decisions).
- See, e.g. , Douglas Laycock, The Triumph of Equity , 56 LAW & CONTEMP. PROBS. 53, 81 (1993) (urging that we should focus not on the historical content of law and equity but on the content of “our law” as a whole); Robert Allen Sedler, Equitable Relief, but Not Equity , 15 J. LEG. EDUC. 293, 294 (1963) (describing it as “highly undesirable” to teach students that equity operates as a “separate system”).
- 527 U.S. 308 (1999).
- See id. at 333.
- See Mareva Compania Naviera S.A. v. Int’l Bulkcarriers, S.A., [1980] 1 All ER 213 (AC 1975). For accounts of the Mareva injunction in operation, see Lawrence Collins, The Territorial Reach of Mareva Injunctions , 105 LAW Q. REV. 262 (1989) [hereinafter Collins, The Territorial Reach of Mareva Injunctions ]. For criticism of the Mareva injunction’s rejection in Grupo Mexicano , see generally David Capper, The Need for Mareva Injunctions Reconsidered , 73 FORDHAM L. REV. 2161 (2005); Lawrence Collins, United States Supreme Court Rejects Mareva Jurisdiction , 115 LAW Q. REV. 601 (1999) [hereinafter Collins, United States Supreme Court Rejects Mareva Jurisdic- tion ]. For an account of the modern-day flexibility of the Mareva injunction, see Paul McGrath, The Freezing Order: A Constantly Evolving Jurisdiction , 31 CIV. JUST. Q. 12 (2012).
2020 ] The Past and Future of Equitable Remedies 727 creditors in the late eighteenth and early nineteenth centuries and are not au- thorized to do so today.^13 Justice Scalia justified the decision, in part, by sug- gesting that Congress should take the lead in updating federal judicial power to offer asset-freeze relief.^14 One finds a disquieting echo of this call for judicial restraint in the Court’s approach to constitutional torts in Ziglar v. Abbasi.^15 In an opinion by Justice Kennedy, the Court turned away the claims of Muslim men in the New York area who were rounded up in the wake of the September 11 attacks and sub- jected to harsh and degrading conditions of confinement at a detention facility there.^16 The claims, based on allegations that high-ranking government officials had targeted the men for harsh treatment on the basis of their religion and na- tional origin, were said to have arisen in a new context.^17 It was thus necessary to consider a range of factors in deciding whether to allow a Bivens action to proceed. In a break with earlier decisions, the Court gave no sustained attention to the adequacy of remedial alternatives.^18 Instead, the Court established a new, self-contained body of law that will typically result in the denial of any right to sue. Framed in terms of judicial restraint, Ziglar and the Court’s later decision in Hernandez v. Mesa assign Congress responsibility for striking the proper re- medial balance.^19 Meanwhile, on the equity side of the Court’s divided approach to constitu- tional remediation, the venerable Ex parte Young action^20 may soon take its cues less from the remedial needs of the twenty-first century than from a conception of “federal equity” that traces its roots to the nineteenth century. The Court’s decision in Armstrong v. Exceptional Child Center, Inc. tells an origin story that links the Ex parte Young action to a cluster of nineteenth-century decisions about the availability of equitable remedies.^21 On one reading of Exceptional Child , the Court’s emphasis on the history of equitable remedies to justify and to define
- See Grupo Mexicano , 527 U.S. at 318–20 (evaluating the availability of asset-freeze injunctions circa 1789 on the theory that the federal courts were invested with equity power under the Judiciary Act of that year).
- Id. at 322.
- 137 S. Ct. 1843 (2017).
- Id. at 1851–53, 1869.
- Id. at 1857–58.
- See id.
- See id. at 1858; Hernandez v. Mesa, 140 S. Ct. 735, 742 (2020) (emphasizing legislative primacy in the creation of rights to sue and describing the “expansion of Bivens [as] ‘a “disfavored” judicial activity’”).
- 209 U.S. 123 (1908).
- See Armstrong v. Exceptional Child Ctr., Inc., 575 U.S. 320, 324 – 27 (2015).
2020 ] The Past and Future of Equitable Remedies 729 remedies available to pre-judgment creditors. Thus blinded, the Court failed to consider the possibility that the absence of equitable relief arose not from a universal barrier to pre-judgment assistance but from an application of the an- cient rule barring equitable intervention when remedies at law appear to be ad- equate.^29 Part I further describes the surprisingly effective set of pre-judgment attachment proceedings that were available to creditors in the nineteenth cen- tury and explains how such remedies may have discouraged routine equitable intervention.^30 By looking backward to equity alone during the days of the di- vided bench, the Grupo Mexicano Court obscured system-wide remedies and ig- nored intervening changes that could have altered the assessment of the need for equitable intervention.^31 Part II shows that the separation of remedial forms that skewed the Court’s analysis of creditors’ rights in Grupo Mexicano now threatens to infect the Court’s approach to constitutional remedies as well.^32 This Part begins with an overview of the Ziglar Court’s deliberate decision, echoed in Hernandez , to downplay the significance of remedial alternatives in its evaluation of the right to sue for dam- ages. Worrisome in its own right, the Court’s approach poses greater concerns when coupled with Grupo Mexicano ’s static conception of equitable remedies. By looking to the past to define the breadth of equitable remedies for threatened violations of constitutional and statutory rights, as it did in Exceptional Child , the Court may repeat the mistake it made in Grupo Mexicano. Past decisions do not anticipate the new field of operations opened by the Ex parte Young decision and do not always anticipate all that has been done in its name in the years that have followed.^33 Inflexibly linking equitable remedies to the past offers little hope for a supple remedial jurisprudence that can respond to current chal- lenges; indeed, it may threaten the remedial framework on which Judge Johnson based many of his decrees. The Essay concludes with a sketch of the jurisprudential benefits of a more system-wide remedial perspective. We do not oppose the use of history. To the contrary, we view history, done well, as essential to a full understanding of the role of equity in a remedial system. We cannot look to equity, as represented in the treatises and decisions of a specific time in the distant past, as the basis for defining the scope of equitable remediation today. Equity tempered the rela- tively harsh, formal rules of the common law, and litigants were entitled to claim
- Ironically, the Court has recited this maxim in new equity decisions. See, e.g. , eBay v. MercExchange, 547 U.S. 388, 391 (2006) (making the inadequacy of remedies at law, such as money damages, a factor in the assessment of the propriety of permanent injunctive relief). For an argument that inadequacy be broadly applied to allow equitable relief whenever the choice of remedy might matter, see DOUGLAS LAYCOCK, THE DEATH OF THE IRREPARABLE INJURY RULE 22 – 23, 35–36 (1991) (viewing as inadequate remedies at law unless they offer relief as complete, practical, and efficient as that available in equity).
- See infra Part I.
- See infra Part I.
- See infra Part II.
- See infra Part II.
730 ALABAMA LAW REVIEW [Vol. 71 : 3 : 723 remedies in both court systems. To examine only one part of those comple- mentary bodies of law is to miss the dynamic quality of the system as a whole. Rather than asking about the history of law or equity, we must explore the his- tory of the system. Only then can we begin to reason from the past about how to frame a dynamic remedial system for today. I. GRUPO MEXICANO AND THE PROPRIETY OF MAREVA INJUNCTIONS In Grupo Mexicano , the Supreme Court was called upon to decide whether federal courts may grant pre-judgment Mareva injunctions to freeze a debtor’s assets in appropriate cases.^34 Rather than evaluate that question in light of the adequacy of other remedies today, the Court chose to consult the history of federal equity in the late eighteenth and early nineteenth century.^35 Thus, Grupo Mexicano discussed the use of a creditors’ bill, an equitable proceeding that was designed to assist creditors in securing assets to satisfy their claims. Turning to an early decision by Chancellor Kent,^36 Grupo Mexicano observed that the cred- itors’ bill was traditionally available only to those who have reduced their claims to judgments. Drawing a more general conclusion,^37 the Court found that eq- uity’s refusal to assist pre-judgment creditors was based on the principle^38 that debtors had a substantive right to control their property, free from interference, until a judgment has been entered.^39 Viewing any proposal to alter that right as work of a legislative character, the Court refused to authorize federal courts to grant a Mareva remedy.^40
- Grupo Mexicano de Desarrollo S.A. v. All. Bond Fund, Inc., 527 U.S. 308, 310 (1999).
- Id. at 319–20.
- Id. (citing Wiggins v. Armstrong, 2 Johns. 144 (N.Y. 1816)).
- Id.
- Justice Scalia explained that, as he understands things, the creditor’s bill was generally withheld prior to judgment as a matter of substantive rights, because: The rule requiring a judgment was a product, not just of the procedural requirement that remedies at law had to be exhausted before equitable remedies could be pursued, but also of the substantive rule that... “until the creditor has established his title, he has no right to interfere, and it would lead to an unnecessary, and, perhaps, a fruitless and oppressive interruption of the exercise of the debtor’s rights.” Grupo Mexicano , 527 U.S. at 319–20.
- Having characterized the general rule as substantive, Justice Scalia explained that the Court was “not inclined to speculate upon the existence or applicability to this case of any exceptions, and follow the well-established general rule that a judgment establishing the debt was necessary before a court of equity would interfere with the debtor’s use of his property.” Id. at 321.
- See Masayuki Tamaruya, The Anglo-American Perspective on Freezing Injunctions , 29 CIV. JUST. Q. 350, 364 (2010) (“Freezing injunctions in England... cannot be ordered for the purpose of providing security. Applications for freezing injunctions where there is no danger of asset dissipation are regarded as an abuse.”); see also Capper, supra note 12 , at 2170; Collins, United States Supreme Court Rejects Mareva Jurisdiction , supra note 12 , at 604.
732 ALABAMA LAW REVIEW [Vol. 71 : 3 : 723 the rise of a global economy, the proposed issuance of Mareva injunctions pre- sents a very different question today than it did in the time of Chancellor Kent and Justice Story. This Part tells the story of foreign attachment in the United States, its rise as an essential creditors’ remedy, and its declining effectiveness under the pres- sure of changing due process norms. By tracing the rise and fall of creditors’ remedies, we can more clearly see the problems with the Grupo Mexicano Court’s remedial methodology. Now that changes in due process norms have altered the effectiveness of those alternative remedies, the equity jurisprudence of the early republic that arose in the shadow of in rem procedure has doubtful rele- vance to an evaluation of the propriety of Mareva injunctions today. A. Foreign Attachment in the United States Best known from such early twentieth-century due process oddities as Har- ris v. Balk^48 and Ownbey v. Morgan ,^49 American practice on foreign attachment and garnishment stretches back to colonial British North America.^50 The New England colonies appear to have introduced the Custom of London as a matter of customary law; many of the other colonies adopted statutes to facilitate or regulate foreign attachment and garnishment.^51 As with the practice in the Mayor’s Court of London, early attachment statutes imposed a lien on the de- fendant’s attached assets; similarly, the defendant could typically secure release of the assets during the pendency of the litigation by posting a bond.^52 These 1969, a series of familiar cases read the Due Process Clause as entitling debtors to notice and some kind of hearing before the state can allow a creditor to invoke such pre-judgment remedies as garnishment, replevin, and asset attachment. See Connecticut v. Doehr, 501 U.S. 1 (1991) (foreclosing pre-judgment attachment of a debtor’s real property in litigation over an unliquidated tort claim); Fuentes v. Shevin, 407 U.S. 67 (1972) (recognizing that due process similarly requires notice and an opportunity to be heard before a creditor can invoke replevin); Sniadach v. Family Fin. Corp., 395 U.S. 337 (1969) (interpreting due process to require notice prior to the garnishment of wages).
- 198 U.S. 215, 217 (1905).
- See 256 U.S. 94, 111 (1921); see also Levy, Attachment , supra note 43 , at 400–03. Professor Beale criticized this aspect of the practice as an instrument of fraud in those cases where the defendant is too remote from the forum, and the claim too small, to make the proceedings worth the defendant’s while to actually litigate. Joseph H. Beale, The Exercise of Jurisdiction in Rem to Compel Payment of a Debt , 27 HARV. L. REV. 107, 121 – 22 (1913).
- See Levy, Attachment , supra note 43 , at 404 (suggesting that foreign attachment under the Custom of London—a process analogous to the practice at issue in Harris —may have “afforded an escape valve for pressure that might have brought about procedural reforms in the common law courts much earlier than they occurred,” and noting that the eventual emergence of procedural reforms in the common law courts “almost certainly played a large role in the... demise of foreign attachment”); Levy, Mesne Process , supra note 43 , at 95.
- See Levy, Attachment , supra note 43 , at 401.
- Millar, supra note 43 , at 491 (“First, it usually involves an affidavit setting forth the nature of the plaintiff’s demand and the amount claimed to be due, and also bringing the case within the ground relied upon, ordinarily by stating this in terms of the statute.”); see, e.g. , Tennent v. Battey, 18 Kan. 324, 328 (1877) (“Attachment-liens do not, with us, as in some states, require a judicial order for their creation. The mere affidavit of the creditor is sufficient, and that affidavit too, alleging only in general terms the existence of one of the statutory grounds for attachment.”).
2020 ] The Past and Future of Equitable Remedies 733 statutes tracked the Mayor’s Court’s practice by allowing a creditor to satisfy any ultimate judgment on the merits from the assets that had been attached (or from the bond that had been posted to procure their release).^53 The creditor’s priority in those attached assets (or bond) ran from the date of first attachment, rather than from the date of the creditor’s judgment on the underlying claim.^54 As confirmed in the Supreme Court’s well-known decision in Pennoyer v. Neff , the process of foreign attachment put a powerful set of asset-freeze rem- edies in the hands of pre-judgment creditors.^55 To be sure, Pennoyer invalidated one specific assertion of jurisdiction over real property that had been seized to satisfy an ordinary commercial debt.^56 But the Court confirmed the propriety of pre-judgment attachment of assets unrelated to the claim at issue (quasi-in- rem jurisdiction) and the use of substituted forms of notice, as through publi- cation in a local paper, when the defendant could not be found in the jurisdic- tion. Indeed, Pennoyer itself approved the attachment of the property of a nonresident defendant; Neff was living in California at the time and was una- ware of the Oregon proceeding until after his Oregon property had been sold
- Millar, supra note 43 , at 496 (“The defendant may generally obtain release of the attached property by furnishing substituted security.”).
- Millar, supra note 43 , at 493 (“The attachment which is found to be supported has created a lien upon the attached property, real or personal, which takes priority from the date of the levy, while a personal judgment can take no priority of lien in advance of its date.”); see also RUFUS WAPLES, ATTACHMENT AND GARNISHMENT 22 (Chicago, Callaghan & Co. 1885) (“This lien... arises by operation of law upon circum- stances existing with regard to the debtor in his relation to his creditor, and upon the authorized preliminary seizure of property to conserve it for the eventual satisfaction of the debt. The legislator cannot arbitrarily give one man a lien upon the property of another any more than he can thus transfer the property itself from the owner to the favored donee; but, by general laws, a lien, not the result of the consent of parties, may constitutionally spring into existence upon the happening of certain conditions, and possess all the qualities of a conventional incumbrance upon specific property.” (emphasis added)). The United States further strengthened the interest conferred via attachment by holding it immune to attack via bankruptcy petition. WOODTHORPE BRANDON, THE CUSTOMARY LAW OF FOREIGN ATTACHMENT AND THE PRACTICE OF THE MAYOR’S COURT OF THE CITY OF LONDON 58 (London, Butterworths 1861); JOHN LOCKE, THE LAW AND PRACTICE OF FOREIGN ATTACHMENT IN THE LORD MAYOR’S COURT, UNDER THE NEW RULES OF PRACTICE 36 (London, S. Sweet
- (“Upon this principle, an attachment of bankrupt’s property after a proceeding in a foreign country, which is equivalent to an adjudication under the English Bankrupt Laws, is invalid; but where the attachment is already made, such a proceeding in a foreign country will not defeat it.”).
- See 95 U.S. 714 (1877).
- The glitch on which the Court focused was Mitchell’s failure to attach Neff’s property at the outset of the litigation. Faulting the Oregon process for having failed to assert judicial power over the property as an initial condition of adjudication, the Pennoyer Court left ample room for familiar forms of pre-judgment attachment. Id. at 720. For an account of the holding of Pennoyer , see Austen L. Parrish, Sovereignty, Not Due Process: Personal Jurisdiction Over Nonresident Alien Defendants , 41 WAKE FOREST L. REV. 1, 10–12, 11 n.46 (2006) (collecting sources on the inclusion of personal jurisdiction analysis in dicta); Stephen E. Sachs, Pennoyer Was Right , 95 TEX. L. REV. 1249, 1311 (2017) (“First, and most simply, Pennoyer ’s discussion of the Due Process Clause really was dicta. The problem wasn’t that Mitchell’s original judgment predated the Fourteenth Amendment, as is often thought; the problem was that the case arose from Neff’s federal suit to undo the sale, filed in the Circuit Court for the District of Oregon.”). Seen as implementing Justice Story’s territorial-power theory of personal jurisdiction, Pennoyer served as the dominant framework for assessing the exercise of per- sonal jurisdiction at least through the Court’s decision in International Shoe v. Washington , 326 U.S. 310, 316 (1945).
2020 ] The Past and Future of Equitable Remedies 735 that allow the Balks to contest the merits of the debt claim.^64 Like attachment, then, garnishment assists pre-judgment creditors by allowing them to obtain a security for the ultimate enforcement of their claim through the seizure of the debtor’s property.^65 Despite territorial restrictions, moreover, a defendant was not limited to pursuit of recovery in only one forum. While Pennoyer ’s regime of strict territo- riality would not allow asset-freeze orders to operate across state borders, noth- ing would prevent the creditor from pursuing the same sort of relief in the courts of other states in which the debtor held property. So long as attachments were made in these various jurisdictions, an energetic creditor could use the judgment in one forum to execute on property located across multiple jurisdic- tions, receiving priority from the time of attachment. Therefore, all of the de- fendant’s assets held within the United States would have been available for attachment, so long as a cause of action would support it in each jurisdiction in which assets were sought. Pre-suit attachment could thus provide creditors with remedies at law that were in some ways comparable to a latter-day Mareva in- junction. B. Equity’s Attitude Toward Pre-Judgment Creditors’ Remedies The Grupo Mexicano Court correctly identified the prevailing rule: nine- teenth century courts of equity would generally decline to intervene on behalf of pre-judgment creditors. But two problems come to mind. First, one must consider the possibility that the refusal of courts of equity to assist pre-judg- ment creditors was a reflection of equity’s refusal to intervene when other rem- edies were available. True, the King’s Bench and the other superior courts of common law provided little assistance to pre-judgment creditors; attachment of property was used solely to compel the appearance of a slippery defendant and any property so attached was forfeited to the Crown if the defendant failed to appear in the proceeding.^66 But unlike practice before their common law
- First, the Court (and many garnishment statutes) required notice to the indebted defendant of the action against the garnishee. (The duty to provide notice fell upon the garnishee, as a condition of perfecting the discharge of his debt to the defendant.) Second, most statutes required the Epsteins to post a bond and gave the Balks one year (and a day) to enter an appearance and contest the claim of indebtedness. If Balk could show that he owed Epstein nothing, the bond ensured that he could recover back the amount Harris paid to Epstein.
- For discussion of the differences between attachment and garnishment and of different forms of each, see Nathan Levy, Jr., Mesne Process in the Early American Colonies , 44 MISS. L.J. 671, 671–72 (1973) (dis- tinguishing primarily based on the extent that process is required prior to levy and execution and on the nature of the assets available while recognizing that the various permutations fit within the prevailing personal jurisdiction norms to which they were subject).
- That the property attached in service of common law process was unavailable to satisfy the claims of the creditor, even after judgment, helps to explain the rise of civil-side outlawry proceedings, which served as a roundabout way to give creditors some access to property in the hands of the Crown. For an account of outlawry as a creditors’ remedy, see Levy, Mesne Process , supra note 43 , at 83–87.
736 ALABAMA LAW REVIEW [Vol. 71 : 3 : 723 counterparts, courts administering the Custom of London had, since the fif- teenth century, provided prompt remedies for merchants seeking pre-judgment attachment of property to satisfy their debts.^67 With such remedies available to creditors, one can understand equity’s diffidence, in part, as a reflection of the perceived remedial adequacy of practice on foreign attachment.^68 Turning to eighteenth- and nineteenth-century sources, we find evidence (suggestive if not definitive) that remedial adequacy may indeed have driven equity’s practice at least in part. For starters, such leading treatises on equity pleading as that by George Cooper would restate the general rule that equity does not intervene to assist creditors “at large”^69 but would also recognize that changes in the scope of common law remedies would necessarily influence the breadth of equitable relief: In some cases, however, where courts of equity formerly lent their aid, the legislature has by express statute provided for the relief of creditors in the courts of common law, and consequently rendered the exertion of this juris- diction in such cases unnecessary.^70 John Mitford’s treatise on equity pleading contains language to almost precisely the same effect.^71 These statements certainly suggest that equity’s refusal to in- tervene on behalf of pre-judgment creditors may have resulted less from the application of the strict principle voiced in Grupo Mexicano than from the per- ceived adequacy of the Custom of London. Second, remedial history refutes the argument that debtors were seen as enjoying an unfettered right to control their property before a judgment was entered by a court of common law. While leading eighteenth- and early nine- teenth-century authorities recognize the general rule against the use of the cred- itor’s bill to assist pre-judgment creditors,^72 they also recognize situations in which equitable intervention was available to assist pre-judgment claimants. Just to mention two examples: pre-judgment claimants in ejectment actions were entitled to seek relief in equity to stay any waste or destruction of the property
- See supra notes 45 – 46 and accompanying text.
- Equity deferred not only to common law courts but also to the remedies available in such other courts as the high court of admiralty and the ecclesiastical courts.
- See GEORGE COOPER, A TREATISE OF PLEADING ON THE EQUITY SIDE OF THE HIGH COURT OF CHANCERY 148 – 49 (New York, I. Riley 1813); JOHN MITFORD, A TREATISE ON THE PLEADINGS IN SUITS IN THE COURT OF CHANCERY 111 – 15 (Philadelphia, P. Byrne 1812) (explaining that “the courts of equity will not assume jurisdiction where the powers of the ordinary courts are sufficient for the purposes of justice” and observing that the creditor must show by bill “that he has proceeded at law to the extent neces- sary to give him a complete title” and must “sue[] out the writs [of] execution” as a prelude to invoking equity’s assistance). Mitford (1748–1830) wrote as a baron of the exchequer before serving in the high court of chancery as Lord Redesdale.
- COOPER, supra note 69 , at 148.
- See MITFORD, supra note 69 , at 114–15 (describing the displacement of equitable relief by the legislative decision to offer relief to creditors in the courts of common law).
- See, e.g. , Wiggins v. Armstrong, 2 Johns. 144 (N.Y. 1816); COOPER, supra note 69 , at 148–49; MITFORD, supra note 69 , at 115.
738 ALABAMA LAW REVIEW [Vol. 71 : 3 : 723 Indeed, if we examine the practice of the Supreme Court in the early re- public, shortly after the adoption of the Judiciary Act of 1789, we find no sign of strict adherence to the Grupo Mexicano principle. To the contrary, in Georgia v. Brailsford , the Court issued an asset-freeze injunction on behalf of the state of Georgia, a pre-judgment creditor, staying other parties from asserting control over the proceeds of a penalty bond pending the determination of Georgia’s claim.^79 Georgia claimed it had forfeited the proceeds of the bond into its own treasury in legislation adopted during the Revolutionary War.^80 Brailsford, a subject of Great Britain, claimed a private right to the proceeds of the bond.^81 The case, on the merits, ultimately turned on whether Georgia’s legislation per- fected forfeiture of the bond (as an asset of certain disloyal citizens of Georgia who refused to take an oath of allegiance to the state) before the 1783 Treaty of Peace ended the war and foreclosed any further forfeitures of British prop- erty.^82 In the end, the Court ruled against Georgia.^83 But in the meantime, pending the trial of Georgia’s claim, the Court granted and continued injunctive relief that effectively froze the debtors’ assets in the hands of the marshal of the circuit court in Georgia, where the bond dispute was pending.^84 Four of the Court’s six Justices voted to grant injunctive relief, articulating slightly different rationales.^85 Two Justices dissented. In one dissent, Justice Johnson applied a test similar to that for a preliminary injunction today, in absence of congressional authorization). But state courts and federal courts exercising removal jurisdiction were not subject to this limitation. See id. at 336–37 (Taney, C.J., concurring) (recognizing that courts had, in practice, embraced the use of prejudgment attachment); see also supra note 42 (noting that the Judiciary Act allowed for the removal of a case to federal court and provided that attachment would hold the property in question). For an account of the federal courts’ exercise of territorial jurisdiction in the early republic, see generally Stephen E. Sachs, The Unlimited Jurisdiction of the Federal Courts, 106 Va. L. Rev. (forthcoming 2020 ). As Professor Sachs explains, federal courts were cognizant of statutory limits and reluctant to use free- standing powers to attach property under principles of international law. Id. State courts faced constraints imposed by the Full Faith and Credit Clause. Id. But those limits would not prevent a state from controlling title to property within its own territory.
- For the initial grant of injunctive relief, see Georgia v. Brailsford ( Brailsford I ), 2 U.S. (2 Dall.) 402 (1792). For the extension of such relief six months later, see Georgia v. Brailsford ( Brailsford II ), 2 U.S. ( Dall.) 415 (1793). The Court’s final decision on the merits (after a jury trial of a feigned issue from the Court, sitting in equity) rejected Georgia’s claim to the frozen assets. See Georgia v. Brailsford ( Brailsford III ), 3 U.S. (3 Dall.) 1 (1794). Little attention has been paid to Brailsford and its provision for pre-judgment equitable relief. For an important exception, see Bray, supra note 7 , at 1009 n.57 (acknowledging the Brailsford injunction as “[a] possible exception” to the rule restated in Grupo Mexicano ). For further history on the dispute under- lying the Brailsford line of cases, see Doyle Mathis, Georgia Before the Supreme Court: The First Decade , 12 AM. J. LEGAL HIST. 112, 112–15 (1968).
- Brailsford I , 2 U.S. (2 Dall.) at 404–05.
- Id. at 404.
- Id.
- Id.
- Georgia had sought to intervene in the circuit court, but its attempt to do so was rebuffed on the theory that the Supreme Court had been given exclusive jurisdiction over claims involving state parties. Id. at 406 (opinion of Iredell, J.).
- Id. at 405–09. Chief Justice Jay wrote a short opinion in which he found equitable relief appropriate without providing explanation. Id. at 408– 0 9. Justice Iredell emphasized the need to provide the remedy in the absence of an opportunity for the State of Georgia to interplead at the circuit level. Id. at 405–06.
2020 ] The Past and Future of Equitable Remedies 739 explaining that a bill for injunction “should set forth a case of probable right, and a probable danger that the right would be defeated, without this special interposition of the court.”^86 Justice Cushing’s dissent took the view that Geor- gia could pursue a legal action against either prevailing party in the circuit court, thus obviating the need for equitable intervention.^87 Neither dissenting Justice, however, articulated a categorical rule of equity, barring intervention on behalf of pre-judgment creditors. Five months later, the Court unanimously upheld the prior decree, preserv- ing the injunction in anticipation of trial.^88 In a short opinion that spoke for four Justices,^89 Chief Justice Jay recognized that although “the State of Georgia has a right... to be pursued at common law,” the “ground of equity for grant- ing an injunction continues the same—namely, that the money ought to be kept for the party to whom it belongs.”^90 Justice Blair explained his similar decision as follows: Presuming, then, that there was a remedy at law, I have hitherto thought that there was no ground for the interference of this Court, as a Court of Equity. But, upon reflection, it appears, that if Brailsford, who is a British subject, should get the money, under the present judgment, and leave the country, there would be great danger of a failure of justice. It was for this reason, that the Injunction was originally granted; and I think the reason ought to carry us still farther.^91 Justice Iredell echoed these sentiments, stating that he “should never have con- sented to issue an injunction, if I had thought the legal remedy of the State was plain, adequate, and compleat.”^92 But having found “that the State of Georgia has no remedy at law,” Justice Iredell joined with the other Justices in upholding the injunction.^93 So much, then, for the claim that courts of equity categorically refused to intervene on behalf of pre-judgment creditors. C. Foreign Attachment After the Due Process Revolution Two familiar refinements of the idea of due process have narrowed the nineteenth-century practice of foreign attachment and garnishment. In the first, the Court, in International Shoe v. Washington , articulated a due process standard for the exercise of personal jurisdiction that emphasized the quality and nature
- Id. at 405 (opinion of Johnson, J., dissenting).
- Id. at 408 (opinion of Cushing, J., dissenting).
- Brailsford II , 2 U.S. (2 Dall.) 415 (1793).
- Justice Johnson did not participate. See id. at 415.
- Id. at 418–19 (opinion of Jay, C.J.).
- Id. at 418 (opinion of Blair, J.).
- Id. at 417 (opinion of Iredell, J., dissenting).
- Id.
2020 ] The Past and Future of Equitable Remedies 741 prompt post-attachment opportunity to contest the legality of the claim was thought insufficient to protect the defendant.^100 One need not decry these developments—and we certainly do not—to rec- ognize that they work a crucial change in the efficacy of creditors’ pre-judgment remedies. The Shaffer decision ends the exercise of judicial power on the basis of property alone—at least in the pre-judgment context. (The Court approved the exercise of property-based jurisdiction once a creditor has secured a judg- ment.)^101 True, a creditor can still invoke attachment remedies in a forum state in which the defendant has sufficient contacts to warrant the exercise of in per- sonam jurisdiction.^102 But that places a good deal of the property of far-flung enterprises beyond the pre-judgment reach of a forum court.^103 Similarly, the Doehr Court found that due process requires notice and an opportunity to be heard before attachment of the defendant’s property.^104 Except on a showing of somewhat ill-defined “exigent circumstances,” pre-judgment creditors can no longer secure their claims by obtaining an ex parte lien.^105 To be sure, the pre-judgment creditor may have other tools at her disposal. Failure to pay by the debtor may trigger an involuntary bankruptcy proceeding, a consequent stay of litigation, and the eventual prospect of an equitable adjust- ment of the claims of all creditors.^106 One need not denigrate its importance to recognize that bankruptcy remedies may not offer quick and inexpensive satis- faction of a creditor’s claim. Similarly, creditors may claim protection under fraudulent conveyance laws. The Uniform Fraudulent Transfer/Conveyance Act (now the Uniform Voidable Transactions Act), first promulgated in 1918 and reworked in 1984, was drafted broadly to protect everyone with a claim that due process required the plaintiff to post a bond and to convene a prompt post-attachment hearing. See Doehr , 501 U.S. at 18 (White, J., concurring) (writing for the majority of the court in an earlier part of the opinion but “deem[ing] it appropriate to consider whether due process also require[d] the plaintiff to post a bond or other security” in a part that was not joined by the majority of the court). For a full account of the case, see Robert G. Bone, The Story of Connecticut v. Doehr : Balancing Costs and Benefits in Defining Procedural Rights , in CIVIL PROCEDURE STORIES 159 (Kevin M. Clermont ed., 2d ed. 2008).
- See Doehr , 501 U.S. at 8 (rejecting the argument that the state’s post-deprivation hearing require- ment obviated any due process concern).
- See Shaffer v. Heitner, 433 U.S. 186, 210 n.36 (1977) (indicating that judgment creditors may pursue property of the debtor wherever found, “whether or not that State would have jurisdiction” to adju- dicate the creditor’s claim as an original matter).
- In some cases involving the extension of credit to finance the purchase of consumer goods, the company seeking to collect a debt and the consumer will be from the same state. See, e.g. , Fuentes v. Shevin, 407 U.S. 67 (1972) (invalidating a Florida-based firm’s use of replevin to reclaim Florida consumers’ property without some kind of hearing).
- Some states have begun to make garnishment available in respect of out-of-state assets, so long as the state first secures in personam jurisdiction over the garnishee firm. See, e.g. , Hotel 71 Mezz Lender LLC v. Falor, 926 N.E.2d 1202, 1208 (N.Y. 2010).
- Doehr , 501 U.S. at 16–18.
- Id. at 18.
- Creditors today cannot institute an involuntary petition on the basis of “acts of bankruptcy” as they once could. Involuntary bankruptcy petitions must be brought by at least three creditors who, in the aggregate, have something over $15,000 in uncontested, unsecured debt and can show that the debtor has failed to pay debts as they become due. See S. REP. NO. 95 - 989, at 34 (1978); see also 11 U.S.C. § 303(h) (2018).
742 ALABAMA LAW REVIEW [Vol. 71 : 3 : 723 against the debtor; it does not limit the universe of claimants to those with valid judgments.^107 It thus offers protection against fraudulent transfers that a court can reach and unwind within the confines of its jurisdiction and subpoena power. Bankruptcy, needless to say, expands the jurisdictional reach of these provisions to some extent. But the presence of property overseas—the focus of the Mareva injunction—may continue to pose substantial challenges. D. Grupo Mexicano and Federal Equity in a Post- Erie World Professor Stephen Burbank’s critique of Grupo Mexicano correctly focused on its failure to attend to the implications of the remedial question from the perspective of the Federal Rules of Civil Procedure and Erie Railroad Co. v. Tomp- kins.^108 Before Erie and its extension in Guaranty Trust v. York ,^109 one might have said that federal courts exercised equity powers that were best understood as a freestanding body of remedial law that was not constrained by the correspond- ing remedial law of the states.^110 Today, we have grown accustomed to the idea that equitable doctrines once regarded as remedial may have so dramatic an impact on the outcome of litigation as to warrant deference to state law.^111 In many circumstances, state law defines the mix of remedies for creditors; federal courts, sitting in diversity, will be loath to vary the remedial options.^112 Grupo Mexicano was a dispute between a bond fund in New York and a Mexican con- struction firm.^113 No federal question was presented.^114 One might dismiss Grupo Mexicano as essentially symbolic, aimed as it was at a target (deference to congressional primacy) that bore little connection to the state-law questions of remedial authority on which the litigation should have
- The Uniform Fraudulent Transfer Act (UFTA) was first promulgated in 1984, building on an earlier law, the Uniform Fraudulent Conveyance Act, that dates from 1918. The UFTA was amended in 2014 and renamed the “Uniform Voidable Transactions Act.” See Kenneth C. Kettering, The Uniform Voidable Transactions Act; or, the 2014 Amendments to the Uniform Fraudulent Transfer Act , 70 BUS. LAW. 777, 807 (2015). On the self-conscious drafting of the UFTA to coincide with the provisions of the Bankruptcy Code, see generally Michael L. Cook & Richard E. Mendales, The Uniform Fraudulent Transfer Act: An Introductory Critique , 62 AM. BANKR. L.J. 87 (1988).
- 304 U.S. 64 (1938). See generally Burbank, supra note 41.
- 326 U.S. 99 (1945). For a criticism of Guaranty Trust ’s approach to equity and a proposed approach that would let state law define the scope of equitable remedies for state-law claims, see generally Michael Morley, The Federal Equity Power , 59 B.C. L. REV. 217 (2018).
- On the development of the principle of federal equitable uniformity and the inapplicability of state rules defining the scope of equitable remedies, see Kristin A. Collins, “A Considerable Surgical Operation”: Article III, Equity, and Judge-Made Law in the Federal Courts , 60 DUKE L.J. 249, 274–80 (2010) (citing Robinson v. Campbell, 16 U.S. (3 Wheat.) 212 (1818)) (articulating a rule of national uniformity for federal equity and rejecting an argument that the scope of equitable remedies in federal court was limited by state law).
- See, e.g. , Tobias Barrington Wolff, Choice of Law and Jurisdictional Policy in the Federal Courts , 165 U. PA. L. REV. 1847, 1862–64, 1879–80 (2017).
- Id. at 1863–64.
- Grupo Mexicano de Desarrollo S.A. v. All. Bond Fund, Inc., 527 U.S. 308, 310–11 (1999).
- The dispute arose under New York state law as an action for breach of contract and was brought in federal court in New York, where the defendant had consented to suit. Id. at 312.
