Law School Case Brief
Burford v. Sun Oil Co. - 319 U.S. 315, 63 S. Ct. 1098 (1943)
Although a federal equity court does have jurisdiction of a particular proceeding, it may, in its sound discretion, whether its jurisdiction is invoked on the ground of diversity of citizenship or otherwise, refuse to enforce or protect legal rights, the exercise of which may be prejudicial to the public interest; for it is in the public interest that federal courts of equity should exercise their discretionary power with proper regard for the rightful independence of state governments in carrying out their domestic policy.
In the present action brought before the federal district court, Sun Oil Co. attacked the validity of an order of the defendant Texas Railroad Commission granting the petitioner Burford a permit to drill four wells on a small plot of land in the East Texas oil field. Jurisdiction of the federal court was invoked because of the diversity of citizenship of the parties, and because of the Companies' contention that the order denied them due process of law. Texas Railroad Commission sought to dismiss the action, arguing that the federal court lacked jurisdiction over the case. The Circuit Court of Appeals for the Fifth Circuit refused to dismiss the action.
Should the federal court exercise jurisdiction over this allegedly diversity case?
The United States Supreme Court reversed the circuit court of appeals and dismissed the action although it assumed that the federal court had jurisdiction based on the diversity of citizenship of the parties and the contention that the order violated the Due Process Clause, U.S. Const. amend. XIV. The Court held that abstention was appropriate where the questions of regulation of the oil industry by defendant, a state administrative agency, so clearly involved basic problems of Texas policy that equitable discretion should have been exercised to give the Texas courts the first opportunity to consider them. The Court found that the state provided a well-organized system of regulation and review, to which the federal courts could have made only a small contribution, and that delay, misunderstanding of local law, and needless federal conflict with the state policy were certain to result from their intervention.,
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