Not Everything Is a Pearl

Charles Stern on a hard lesson learned at the U.S. Supreme Court

Published in 2020 Louisiana Super Lawyers Magazine

There was a hotel in New Orleans called the Fountainbleau Hotel, built on the site of a former minor league baseball stadium in the early ’60s. It had been through a bankruptcy sometime in the late ’80s, and was then sold to a company for redevelopment into a storage facility. 

The new owner, out of nowhere, got sued in a foreclosure action based on an old mortgage that was in existence at the time of the bankruptcy. That suit was filed at the end of 1994, and I got involved shortly after. There were several defendants, but I was representing the owner, Fountainbleau Storage, threatened with foreclosure.

The case seemed pretty straightforward. The only real concern we had was that state courts rarely deal with bankruptcy issues. We thought we had a chance at removing the case to federal court based on a line of cases that suggested that a case barred by a prior federal court judgment might be removable. These cases, in turn, were based on a footnote from a 1981 Supreme Court opinion by then-Justice Rehnquist.

The case got removed to federal district court, and the district court ruled in our favor. The plaintiff took it to the 5th Circuit Court of Appeals, and we won again—essentially on the same basis. The plaintiff then took a flier and applied for cert to the Supreme Court. We figured it was a desperation move. Much to our surprise, in September 1997, the Supreme Court granted it. 

The essence of the argument was: If what you have in the lawsuit that’s filed is just a state-law cause-of-action, and there is a federal defense that gets raised in the answer, does the case have to stay in state court? And the minute I found out, I understood there was no reason for them to grant cert unless they wanted to reverse what the 5th Circuit had done. I knew I was behind the eight ball, but, in an odd way, it relieved a bit of the pressure.

Our brief was due in December. To write a brief to the Supreme Court is very different than writing briefs to other courts. Even if you think you’ve got Supreme Court precedent you can cite, they don’t have to follow what they’ve done before; they’re not subject to anybody else’s review. My brief had a series of arguments, but the ultimate one was based on this 1981 Supreme Court case with the footnote in it. My argument was: You wrote this footnote, you’re on the court, and there’s no real difference between our situation and the one in 1981.

The day of the argument, we were the third case, and I was anxious. The other side went first, since they had lost at the 5th Circuit. The attorney only got asked a few questions, got through his entire argument and then sat down. Twenty seconds into mine, Justice Ginsburg interrupted me with a question. By about minute 10, I was already down to my last argument, and I basically just responded to questions until I finished my 30 minutes. I analogize it to getting in the ring for 15 rounds with Ali: You know you’re going to lose, but you just want to be standing at the end.

A lot of the questioning was a kind of friendly tennis match, involving Justice Ginsburg and Justice Breyer batting me back and forth like a ball. Two of my kids were there, and my 10-year-old told me afterward that Scalia was mean. He wasn’t really mean—just a little bit sarcastic. 

At one point, I was arguing directly to Chief Justice Rehnquist about the footnote he wrote and that it had to mean something. At a minimum, I thought it meant a case like ours should be removable. He just looked at me, and said: “Mr. Stern, not everything in our footnotes is a pearl.” 

About a month later, the opinion came out: It was 9-0. My joke after was that I helped unify a fractured court. The only thing that frustrated me about the opinion was that they never addressed what this 1981 footnote was supposed to have meant. They just ignored it. But they’re the Supreme Court, and that’s what they can do if they want.


The Case at a GlanceRivet v. Regions Bank of LouisianaDate argued: Jan 21, 1998Date decided: Feb 24, 1998Question: May removal to federal court be predicated on a defendant’s assertion that a prior federal judgment has disposed of an entire matter and thus bars plaintiffs from later pursuing a state-law-based case?Decision: No. 9-0.

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