source: Caselaw Access Project

author: Mr. Justice Marshall Mr. Justice Blackmun, Mr. Chief Justice Burger,

license: Public Domain

text:
    UNITED STATES v. TOPCO ASSOCIATES, INC.
    No. 70-82.
    Argued November 16, 1971
    Decided March 29, 1972

      Marshall, J., delivered the opinion of the Court, in which Douglas, BrenNan, Stewart, and White, JJ., joined. Blacemun, J., filed an opinion concurring in the result, post, p. 612. Burger, C. J., filed a dissenting opinion, post, p. 613. Powell and Rehjst-quist, JJ., took no part in the consideration or decision of the case.

      Howard E. Shapiro argued the cause for the United States. With him on the briefs were Solicitor General Griswold and Deputy Assistant Attorney General Comegys.

      Victor E. Grimm argued the cause for appellee. With him on the brief were John T. Loughlin and William R. Carney.

   Mr. Justice Marshall

delivered the opinion of the Court.

The United States brought this action for injunctive relief against alleged violation by Topeo Associates, Inc. (Topeo), of § 1 of the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. § 1. Jurisdiction was grounded in § 4 of the Act, 15 U. S. C. § 4. Following a trial on the merits, the United States District Court for the Northern District of Illinois entered judgment for Topeo, 319 F. Supp. 1031, and the United States appealed directly to this Court pursuant to § 2 of the Expediting Act, 32 Stat. 823, as amended, 15 U. S. C. § 29. We noted probable jurisdiction, 402 U. S. 905 (1971), and we now reverse the judgment of the District Court.

I

Topeo is a cooperative association of approximately 25 small and medium-sized regional supermarket chains that operate stores in some 33 States. Each of the member chains operates independently; there is no pooling of earnings, profits, capital, management, or advertising resources. No grocery business is conducted under the Topeo name. Its basic function is to serve as a purchasing agent for its members. In this capacity, it procures and distributes to the members more than 1,000 different food and related nonfood items, most of which are distributed under brand names owned by Topeo. The association does not itself own any manufacturing, processing, or warehousing facilities, and the items that it procures for members are usually shipped directly from the packer or manufacturer to the members. Payment is made either to Topeo or directly to the manufacturer at a cost that is virtually the same for the members as for Topeo itself.

All of the stock in Topeo is owned by the members, with the common stock, the only stock having voting rights, being equally distributed. The board of directors, which controls the operation of the association, is drawn from the members and is normally composed of high-ranking executive officers of member chains. It is the board that elects the association’s officers and appoints committee members, and it is from the board that the principal executive officers of Topeo must be drawn. Restrictions on the alienation of stock and the procedure for selecting all important officials of the association from within the ranks of its members give the members complete and unfettered control over the operations of the association.

Topeo was founded in the 1940’s by a group of small, local grocery chains, independently owned and operated, that desired to cooperate to obtain high quality merchandise under private labels in order to compete more effectively with larger national and regional chains. With a line of canned, dairy, and other products, the association began. It added frozen foods in 1950, fresh produce in 1958, more general merchandise equipment and supplies in 1960, and a branded bacon and carcass beef selection program in 1966. By 1964, Topeo’s members had combined retail sales of more than $2 billion; by 1967, their sales totaled more than $2.3 billion, a figure exceeded by only three national grocery chains.

Members of the association vary in the degree of market share that they possess in their respective areas. The range is from 1.5% to 16%, with the average being approximately 6%. While it is difficult to compare these figures with the market shares of larger regional and national chains because of the absence in the record of accurate statistics for these chains, there is much evidence in the record that Topeo members are frequently in as strong a competitive position in their respective areas as any other chain. The strength of this competitive position is due, in some measure, to the success of Topco-brand products. Although only 10% of the total goods sold by Topeo members bear the association’s brand names, the profit on these goods is substantial and their very existence has improved the competitive potential of Topeo members with respect to other large and powerful chains.

It is apparent that from meager beginnings approximately a quarter of a century ago, Topeo has developed into a purchasing association wholly owned and operated by member chains, which possess much economic muscle, individually as well as cooperatively.

II

Section 1 of the Sherman Act provides, in relevant part:

“Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal . . .

The United States charged that, beginning at least as early as 1960 and continuing up to the time that the complaint was filed, Topeo had combined and conspired with its members to violate § 1 in two respects. First, the Government alleged that there existed:

“a continuing agreement, understanding and concert of action among the co-conspirator member firms acting through Topeo, the substantial terms of which have been and are that each co-conspirator member firm will sell Topco-controlled brands only within the marketing territory allocated to it, and will refrain from selling Topco-controlled brands outside such marketing territory.”

The division of marketing territories to which the complaint refers consists of a number of practices by the association.

Article IX, § 2, of the Topeo bylaws establishes three categories of territorial licenses that members may secure from the association:

“(a) Exclusive — An exclusive territory is one in which the member is licensed to sell all products bearing specified trademarks of the Association, to the exclusion of all other persons.
“(b) Non-exclusive — A non-exclusive territory is one in which a member is licensed to sell all products bearing specified trademarks of the Association, but not to the exclusion of others who may also be licensed to sell products bearing the same trademarks of the Association in the same territory.
“(c) Coextensive — A coextensive territory is one in which two (2) or more members are licensed to sell all products bearing specified trademarks of the Association to the exclusion of all other persons. . .

When applying for membership, a chain must designate the type of license that it desires. Membership must first be approved by the board of directors, and thereafter by an affirmative vote of 75% of the association’s members. If, however, the member whose operations are closest to those of the applicant, or any member whose operations are located within 100 miles of the applicant, votes against approval, an affirmative vote of 85%' of the members is required for approval. Bylaws, Art. I, § 5. Because, as indicated by the record, members cooperate in accommodating each other’s wishes, the procedure for approval provides, in essence, that members have a veto of sorts over actual or potential competition in the territorial areas in which they are concerned.

Following approval, each new member signs an agreement with Topeo designating the territory in which that member may sell Topco-brand products. No member may sell these products outside the territory in which it is licensed. Most licenses are exclusive, and even those denominated “coextensive” or “non-exclusive” prove to be de facto exclusive. Exclusive territorial areas are often allocated to members who do no actual business in those areas on the theory that they may wish to expand at some indefinite future time and that expansion would likely be in the direction of the allocated territory. When combined with each member’s veto power over new members, provisions for exclusivity work effectively to insulate members from competition in Topco-brand goods. Should a member violate its license agreement and sell in areas other than those in which it is licensed, its membership can be terminated under Art. IV, §§ 2 (a) and 2 (b) of the bylaws. Once a territory is classified as exclusive, either formally or de facto, it is extremely unlikely that the classification will ever be changed. See Bylaws, Art. IX.

The Government maintains that this scheme of dividing markets violates the Sherman Act because it operates to prohibit competition in Topco-brand products among grocery chains engaged in retail operations. The Government also makes a subsidiary challenge to Topco’s practices regarding licensing members to sell at wholesale. Under the bylaws, members are not permitted to sell any products supplied by the association at wholesale, whether trademarked or not, without first applying for and receiving special permission from the association to do so. Before permission is granted, other licensees (usually retailers), whose interests may potentially be affected by wholesale operations, are consulted as to their wishes in the matter. If permission is obtained, the member must agree to restrict the sale of Topeo products to a specific geographic area and to sell under any conditions imposed by the association. Permission to wholesale has often been sought by members, only to be denied by the association. The Government contends that this amounts not only to a territorial restriction violative of the Sherman Act, but also to a restriction on customers that in itself is vio-lative of the Act.

Prom the inception of this lawsuit, Topeo accepted as true most of the Government’s allegations regarding territorial divisions and restrictions on wholesaling, although it differed greatly with the Government on the conclusions, both factual and legal, to be drawn from these facts.

Topco’s answer to the complaint is illustrative of its posture in the District Court and before this Court:

“Private label merchandising is a way of economic life in the food retailing industry, and exclusivity is the essence of a private label program; without exclusivity, a private label would not be private. Each national and large regional chain has its own exclusive private label products in addition to the nationally advertised brands which all chains sell. Each such chain relies upon the exclusivity of its own private label line to differentiate its private label products from those of its competitors and to attract and retain the repeat business and loyalty of consumers. Smaller retail grocery stores and chains are unable to compete effectively with the national and large regional chains without also offering their own exclusive private label products.
“The only feasible method by which Topeo can procure private label products and assure the exclusivity thereof is through trademark licenses specifying the territory in which each member may sell such trademarked products.” Answer, App. 11.

Topeo essentially maintains that it needs territorial divisions to compete with larger chains; that the association could not exist if the territorial divisions were anything but exclusive; and that by restricting competition in the sale of Topco-brand goods, the association actually increases competition by enabling its members to compete successfully with larger regional and national chains.

The District Court, considering all these things relevant to its decision, agreed with Topeo. It recognized that the panoply of restraints that Topeo imposed on its members worked to prevent competition in Topco-brand products, but concluded that

“[w]hatever anti-competitive effect these practices may have on competition in the sale of Topeo private label brands is far outweighed by the increased ability of Topeo members to compete both with the national chains and other supermarkets operating in their respective territories.” 319 F. Supp. 1031, 1043 (1970).

The court held that Topco's practices were procompeti-tive and, therefore, consistent with the purposes of the antitrust laws. But we conclude that the District Court used an improper analysis in reaching its result.

Ill

On its face, § 1 of the Sherman Act appears to bar any combination of entrepreneurs so long as it is “in restraint of trade.” Theoretically, all manufacturers, distributors, merchants, sellers, and buyers could be considered as potential competitors of each other. Were § 1 to be read in the narrowest possible way, any commercial contract could be deemed to violate it. Chicago Board of Trade v. United States, 246 U. S. 231, 238 (1918) (Brandéis, J.). The history underlying the formulation of the antitrust laws led this Court to conclude, however, that Congress did not intend to prohibit all contracts, nor even all contracts that might in some insignificant degree or attenuated sense restrain trade or competition. In lieu of the narrowest possible reading of § 1, the Court adopted a “rule of reason” analysis for determining whether most business combinations or contracts violate the prohibitions of the Sherman Act. Standard Oil Co. v. United States, 221 U. S. 1 (1911). An analysis of the reasonableness of particular restraints includes consideration of the facts peculiar to the business in which the restraint is applied, the nature of the restraint and its effects, and the history of the restraint and the reasons for its adoption. Chicago Board of Trade v. United States, supra, at 238.

While the Court has utilized the “rule of reason” in evaluating the legality of most restraints alleged to be violative of the Sherman Act, it has also developed the doctrine that certain business relationships are per se violations of the Act without regard to a consideration of their reasonableness. In Northern Pacific R. Co. v. United States, 356 U. S. 1, 5 (1958), Mr. Justice Black explained the appropriateness of, and the need for, per se rules:

“[T]here are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use. This principle of per se unreasonableness not only makes the type of restraints which are proscribed by the Sherman Act more certain to the benefit of everyone concerned, but it also avoids the necessity for an incredibly complicated and prolonged economic investigation into the entire history of the industry involved, as well as related industries, in an effort to determine at large whether a particular restraint has been unreasonable — an inquiry so often wholly fruitless when undertaken.”

It is only after considerable experience with certain business relationships that courts classify them as per se violations of the Sherman Act. See generally Van Cise, The Future of Per Se in Antitrust Law, 50 Va. L. Rev. 1165 (1964). One of the classic examples of a per se violation of § 1 is an agreement between competitors at the same level of the market structure to allocate territories in order to minimize competition. Such concerted action is usually termed a .“horizontal” restraint, in contradistinction to combinations of persons at different!' levels of the market structure, e. g,, manufacturers and I distributors, which are termed “vertical” restraints. This Court has reiterated time and time again that “[h]orizontal territorial limitations . . . are naked restraints off! trade with no purpose except stifling of competition .’’ White Motor Co. v. United States, 372 U. S. 253, 263 (1963). Such limitations are per se violations of the Sherman Act. See Addyston Pipe & Steel Co. v. United States, 175 U. S. 211 (1899), aff’g 85 F. 271 (CA6 1898) (Taft, J.); United States v. National Lead Co., 332 U. S. 319 (1947); Timken Roller Bearing Co. v. United States, 341 U. S. 593 (1951); Northern Pacific R. Co. v. United States, supra; Citizen Publishing Co. v. United States, 394 U. S. 131 (1969); United States v. Sealy, Inc., 388 U. S. 350 (1967); United States v. Arnold, Schwinn & Co., 388 U. S. 365, 390 (1967) (Stewart, J., concurring in part and dissenting in part); Serta Associates, Inc. v. United States, 393 U. S. 534 (1969), aff’g 296 F. Supp. 1121, 1128 (ND Ill. 1968).

We think that it is clear that the restraint in this case is a horizontal one, and, therefore, a per se violation of § 1. The District Court failed to make any determination as to whether there were per se horizontal territorial restraints in this case and simply applied a rule of reason in reaching its conclusions that the restraints were not illegal. See, e. g., Comment, Horizontal Territorial Restraints and the Per Se Rule, 28 Wash. & Lee L. Rev. 457, 469 (1971). In so doing, the District Court erred.

United States v. Sealy, Inc., supra, is, in fact, on all fours with this case. Sealy licensed manufacturers of mattresses and bedding to make and sell products using the Sealy trademark. Like Topeo, Sealy was a corporation owned almost entirely by its licensees, who elected the Board of Directors and controlled the business. Just as in this case, Sealy agreed with the licensees not to license other manufacturers or sellers to sell Sealy-brand products in a designated territory in exchange for the promise of the licensee who sold in that territory not to expand its sales beyond the area demarcated by Sealy. The Court held that this was a horizontal territorial restraint, which was per se violative of the Sherman Act.

Whether or not we would decide this case the same way under the rule of reason used by the District Court is irrelevant to the issue before us. The fact is that courts are of limited utility in examining difficult economic problems. Our inability to weigh, in any meaningful sense, destruction of competition in one sector of the economy against promotion of competition in another sector is one important reason we have formulated per se rules.

In applying these rigid rules, the Court has consistently rejected the notion that naked restraints of trade are to be tolerated because they are well intended or because they are allegedly developed to increase competition. E. g., United States v. General Motors Corp., 384 U. S. 127, 146-147 (1966); United States v. Masonite Corp., 316 U. S. 265 (1942); Fashion Originators’ Guild v. FTC, 312 U. S. 467 (1941).

Antitrust laws in general, and the Sherman Act in particular, are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms. And the freedom guaranteed each and every business, no matter how small, is the freedom to compete— to assert with vigor, imagination, devotion, and ingenuity whatever economic muscle it can muster. Implicit in such freedom is the notion that it cannot be foreclosed with respect to one sector of the economy because certain private citizens or groups believe that such foreclosure might promote greater competition in a more important sector of the economy. Cf. United States v. Philadelphia National Bank, 374 U. S. 321, 371 (1963).

The District Court determined that by limiting the freedom of its individual members to compete with each other, Topeo was doing a greater good by fostering competition between members and other large supermarket chains. But, the fallacy in this is that Topeo has no authority under the Sherman Act to determine the respective values of competition in various sectors of the economy. On the contrary, the Sherman Act gives to each Topeo member and to each prospective member the right to ascertain for itself whether or not competition with other supermarket chains is more desirable than competition in the sale of Topco-brand products. Without territorial restrictions, Topeo members may indeed: “[cut] each other’s throats.” Cf. White Motor Co., supra, at 278 (Clark, J., dissenting). But, we have never found this possibility sufficient to warrant condoning horizontal restraints of trade.

The Court has previously noted with respect to price fixing, another per se violation of the Sherman Act, that:

“The reasonable price fixed today may through economic and business changes become the unreasonable price of tomorrow. Once established, it may be maintained unchanged because of the absence of competition secured by the agreement for a price reasonable when fixed.” United States v. Trenton Potteries Co., 273 U. S. 392, 397 (1927).

A similar observation can be made with regard to territorial limitations. White Motor Co., supra, at 265 n. 2 (Brennan, J., concurring).

There have been tremendous departures from the notion of a free-enterprise system as it was originally conceived in this country. These departures have been the product of congressional action and the will of the people. If a decision is to be made to sacrifice competition in one portion of the economy for greater competition in another portion, this too is a decision that must be made by Congress and not by private forces or by the courts. Private forces are too keenly aware of their own interests in making such decisions and courts are ill-equipped and ill-situated for such decisionmaking. To analyze, interpret, and evaluate the myriad of competing interests and the endless data that would surely be brought to bear on such decisions, and to make the delicate judgment on the relative values to society of competitive areas of the economy, the judgment of the elected representatives of the people is required.

Just as the territorial restrictions on retailing Topco-brand products must fall, so must the territorial restrictions on wholesaling. The considerations are the same, and the Sherman Act requires identical results.

We also strike down Topco’s other restrictions on the right of its members to wholesale goods. These restrictions amount to regulation of the customers to whom members of Topeo may sell Topco-brand goods. Like territorial restrictions, limitations on customers are intended to limit intra-brand competition and to promote inter-brand competition. For the reasons previously discussed, the arena in which Topeo members compete must be left to their unfettered choice absent a contrary congressional determination. United States v. General Motors Corp., supra; cf. United States v. Arnold, Schwinn & Co., supra; United States v. Masonite Corp., supra; United States v. Trenton Potteries, supra. See also, White Motor Co., supra, at 281-283 (Clark, J., dissenting).

We reverse the judgment of the District Court and remand the case for entry of an appropriate decree.

It is so ordered.

Mr. Justice Powell and Mr. Justice Rehnquist took no part in the consideration or decision of this case.

Mr. Justice Blackmun,

concurring in the result.

The conclusion the Court reaches has its anomalous aspects, for surely, as the District Court’s findings make clear, today’s decision in the Government’s favor will tend to stultify Topeo members’ competition with the great and larger chains. The bigs, therefore, should find it easier to get bigger and, as a consequence, reality seems at odds with the public interest. The per se rule, however, now appears to be so firmly established by the Court that, at this late date, I could not oppose it. Relief, if any is to be forthcoming, apparently must be by way of legislation.

Mr. Chief Justice Burger,

dissenting.

This case does not involve restraints on interbrand competition or an allocation of markets by an association with monopoly or near-monopoly control of the sources of supply of one or more varieties of staple goods. Rather, we have here an agreement among several small grocery chains to join in a cooperative endeavor that, in my view, has an unquestionably lawful principal purpose; in pursuit of that purpose they have mutually agreed to certain minimal ancillary restraints that are fully reasonable in view of the principal purpose and that have never before today been held by this Court to be per se violations of the Sherman Act.

In joining in this cooperative endeavor, these small chains did not agree to the restraints here at issue in order to make it possible for them to exploit an already established line of products through noncompetitive pricing. There was no such thing as a Topeo line of products until this cooperative was formed. The restraints to which the cooperative’s members have agreed deal only with the marketing of the products in the Topeo line, and the only function of those restraints is to permit each member chain to establish, within its own geographical area and through its own local advertising and marketing efforts, a local consumer awareness of the trademarked family of products as that member’s “private label” line. The goal sought was the enhancement of the individual members’ abilities to compete, albeit to a modest degree, with the large national chains which had been successfully marketing private-label lines for several years. The sole reason for a cooperative endeavor was to make economically feasible such things as quality control, large quantity purchases at bulk prices, the development of attractively printed labels, and the ability to offer a number of different lines of trademarked products. All these things, of course, are feasible for the large national chains operating individually, but they are beyond the reach of the small operators proceeding alone.

After a careful review of the economic considerations bearing upon this case, the District Court determined that “the relief which the government here seeks would not increase competition in Topeo private label brands”; on the contrary, such relief “would substantially diminish competition in the supermarket field.” 319 F. Supp. 1031, 1043. This Court has not today determined, on the basis of an examination of the underlying economic realities, that the District Court’s conclusions are incorrect. Rather, the majority holds that the District Court had no business examining Topco’s practices under the “rule of reason”; it should not have sought to determine whether Topco’s practices did in fact restrain trade or commerce within the meaning of § 1 of the Sherman Act; it should have found no more than that those practices involve a “horizontal division of markets” and are, by that very fact, per se violations of the Act.

I do not believe that our prior decisions justify the result reached by the majority. Nor do I believe that a new per se rule should be established in disposing of this case, for the judicial convenience and ready pre-disability that are made possible by per se rules are not such overriding considerations in antitrust law as to justify their promulgation without careful prior consideration of the relevant economic realities in the light of the basic policy and goals of the Sherman Act.

I

I deal first with the cases upon which the majority relies in stating that “[t]his Court has reiterated time and time again that ‘[horizontal territorial limitations . . . are naked restraints of trade with no purpose except stifling of competition.’ White Motor Co. v. United States, 372 U. S. 253, 263 (1963).” White Motor, of course, laid down no per se rule; nor were any horizontal territorial limitations involved in that case. Indeed, it was in White Motor that this Court reversed the District Court’s holding that vertically imposed territorial limitations were per se violations, explaining that “[w]e need to know more than we do about the actual impact of these arrangements on competition to decide whether they . . . should be classified as per se violations of the Sherman Act.” 372 U. S., at 263. The statement from the White Motor opinion quoted by the majority today was made without citation of authority and was apparently intended primarily to make clear that the facts then before the Court were not to be confused with horizontally imposed territorial limitations. To treat dictum in that case as controlling here would, of course, be unjustified.

Having quoted this dictum from White Motor, the Court then cites eight cases for the proposition that horizontal territorial limitations are per se violations of the Sherman Act. One of these cases, Northern Pacific R. Co. v. United States, 356 U. S. 1 (1958), dealt exclusively with a prohibited tying arrangement and is improperly cited as a case concerned with a division of markets. Of the remaining seven cases, four involved an aggregation of trade restraints that included price-fixing agreements. Timken Roller Bearing Co. v. United States, 341 U. S. 593 (1951); United States v. Sealy, Inc., 388 U. S. 350 (1967); Serta Associates, Inc. v. United States, 393 U. S. 534 (1969), aff’g 296 F. Supp. 1121 (ND Ill. 1968). Price fixing is, of course, not a factor in the instant case.

Another of the cases relied upon by the Court, United States v. National Lead Co., 332 U. S. 319 (1947), involved a world-wide arrangement for dividing territories, pooling patents, and exchanging technological information. The arrangement was found illegal by the District Court without any reliance on a per se rule; this Court, in affirming, was concerned almost exclusively with the remedies ordered by the District Court and made no attempt to declare a per se rule to govern the merits of the case.

In still another case on which the majority relies, United States v. Arnold, Schwinn & Co., 388 U. S. 365 (1967), the District Court had, indeed, held that the agreements between the manufacturer and certain of its distributors, providing the latter with exclusive territories, were horizontal in nature and that they were, as such, per se violations of the Act. 237 F. Supp. 323, 342-343. Since no appeal was taken from this part of the District Court’s order, that issue was not before this Court in its review of the case. Indeed, in dealing with the issues that were before it, this Court followed an approach markedly different from that of the District Court. First, in reviewing the case here, the Court made it clear that it was proceeding under the “rule of reason/’ and not by per se rule; second, the Court saw the issues presented as involving vertical, not horizontal, restraints. It can hardly be contended, therefore, that this Court’s decision in Schwinn is controlling precedent for the application in the instant case of a per se rule that prohibits horizontal restraints without regard to their market effects.

Finally, there remains the eighth of the cases relied upon by the Court — actually, the first in its list of “authorities” for the purported per se rule. Circuit Judge (later Chief Justice) Taft’s opinion for the court in United States v. Addyston Pipe & Steel Co., 85 F. 271 (CA6 1898), aff’d, 175 U. S. 211 (1899), has generally been recognized — and properly so — as a fully authoritative exposition of antitrust law. But neither he, nor this Court in affirming, made any pretense of establishing a per se rule against all agreements involving horizontal territorial limitations. The' defendants in that case were manufacturers and vendors of cast-iron pipe who had “entered into a combination to raise the prices for pipe” throughout a number of States “constituting considerably more than three-quarters of the territory of the United States, and significantly called . . . ‘pay territory.’ ” 85 F., at 291. The associated defendants in combination controlled two-thirds of the manufactured output of such pipe in this “pay territory”; certain cities (“reserved” cities) within the territory were assigned to particular individual defendants who sold pipe in those cities at prices fixed by the association, the other defendants submitting fictitious bids and the selling defendants paying a fixed “bonus” to the association for each sale. Outside the “reserved” cities, all sales by the defendants to customers in the “pay territory” were, again, at prices determined by the association and were allocated to the association member who offered, in a secret auction, to pay the largest “bonus” to the association itself. The effect was, of course, that the buying public lost all benefit of competitive pricing. Although the case has frequently — and quite properly— been cited as a horizontal allocation-of-markets case, the sole purpose of the secret customer allocations was to enable the members of the association to fix prices charged to the public at noncompetitive levels. Judge Taft rejected the defendants’ argument that the prices actually charged were “reasonable”; he held that it was sufficient for a finding of a Sherman Act violation that the combination and agreement of the defendants gave them such monopoly power that they, rather than market forces, fixed the prices of all cast-iron pipe in three-fourths of the Nation’s territory. The case unquestionably laid important groundwork for the subsequent establishment of the per se rule against price fixing. It did not, however, establish that a horizontal division of markets is, without more, a per se violation of the Sherman Act.

II

The foregoing analysis of the cases relied upon by the majority indicates to me that the Court is not merely following prior holdings; on the contrary, it is establishing a new per se rule. In the face of the District Court’s well supported findings that the effects of such a rule in this case will be adverse to the public welfare, the Court lays down that rule without regard to the impact that the condemned practices may have on competition. In doing so, the Court virtually invites Congress to undertake to determine that impact. Ante, at 611-612. I question whether the Court is fulfilling the role assigned to it under the statute when it declines to make this determination; in any event, if the Court is unwilling on this record to assess the economic impact, it surely should not proceed to make a new rule to govern the economic activity. White Motor Co. v. United States, 372 U. S., at 263.

When one of his versions of the proposed Act was before the Senate for consideration in 1890, Senator Sherman, in a lengthy, and obviously carefully prepared, address to that body, said that the bill sought

“only to prevent and control combinations made with a view to prevent competition, or for the restraint of trade, or to increase the profits of the producer at the cost of the consumer. It is the unlawful combination, tested by the rules of common law and human experience, that is aimed at by this bill, and not the lawful and useful combination.
“I admit that it is difficult to define in legal language the precise line between lawful and unlawful combinations. This must be left for the courts to determine in each particular case. All that we, as lawmakers, can do is to declare general principles, and we can be assured that the courts will apply them so as to carry out the meaning of the law . . . 21 Cong. Rec. 2457, 2460.

In “carrying] out the meaning of the law” by making its “determin [ations] in each particular case,” this Court early concluded that it was Congress’ intent that a “rule of reason” be applied in making such case-by-case determinations. Standard Oil Co. v. United States, 221 U. S. 1, 60 (1911). And that rule of reason was to be applied in light of the Act’s policy to protect the “public interests.” United States v. American Tobacco Co., 221 U. S. 106, 179 (1911). The per se rules that have been developed are similarly directed to the protection of the public welfare; they are complementary to, and in no way inconsistent with, the rule of reason. The principal advantages that flow from their use are, first, that enforcement and predictability are enhanced and, second, that unnecessary judicial investigation is avoided in those cases where practices falling within the scope of such rules are found. As the Court explained in Northern Pacific R. Co. v. United States, supra, at 5,

“[T]here are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use.”

In formulating a new per se rule today, the Court does not tell us what “pernicious effect on competition” the practices here outlawed are perceived to have; nor does it attempt to show that those practices “lack . . . any redeeming virtue.” Rather, it emphasizes only the importance of predictability, asserting that “courts are of limited utility in examining difficult economic problems” and have not yet been left free by Congress to “ramble through the wilds of economic theory in order to maintain a flexible approach.”

With all respect, I believe that there are two basic fallacies in the Court’s approach here. First, while I would not characterize our role under the Sherman Act as one of “rambl[ing] through the wilds,” it is indeed one that requires our “examin[ation of] difficult economic problems.” We can undoubtedly ease our task, but we should not abdicate that role by formulation of per se rules with no justification other than the enhancement of predictability and the reduction of judicial investigation. Second, from the general proposition that per se rules play a necessary role in antitrust law, it does not follow that the particular per se rule promulgated today is an appropriate one. Although it might well be desirable in a proper case for this Court to formulate a per se rule dealing with horizontal territorial limitations, it would not necessarily be appropriate for such a rule to amount to a blanket prohibition against all such limitations. More specifically, it is far from clear to me why such a rule should cover those division-of-market agreements that involve no price fixing and which are concerned only with trademarked products that are not in a monopoly or near-monopoly position with respect to competing brands. The instant case presents such an agreement; I would not decide it upon the basis of a per se rule.

The District Court specifically found that the horizontal restraints involved here tend positively to promote competition in the supermarket field and to produce lower costs for the consumer. The Court seems implicitly to accept this determination, but says that the Sherman Act does not give Topeo the authority to determine for itself “whether or not competition with other supermarket chains is more desirable than competition in the sale of Topco-brand products.” Ante, at 611. But the majority overlooks a further specific determination of the District Court, namely, that the invalidation of the restraints here at issue “would not increase competition in Topeo private label brands.” 319 F. Supp., at 1043. Indeed, the District Court seemed to believe that it would, on the contrary, lead to the likely demise of those brands in time. And the evidence before the District Court would appear to justify that conclusion.

There is no national demand for Topeo brands, nor has there ever been any national advertising of those brands. It would be impracticable for Topeo, with its limited financial resources, to convert itself into a national brand distributor in competition with distributors of existing national brands. Furthermore, without the right to grant exclusive licenses, it could not attract and hold new members as replacements for those of its present members who, following the pattern of the past, eventually grow sufficiently in size to be able to leave the cooperative organization and develop their own individual private-label brands. Moreover, Topco’s present members, once today’s decision has had its full impact over the course of time, will have no more reason to promote Topeo products through local advertising and merchandising efforts than they will have such reason to promote any other generally available brands.

The issues presented by the antitrust cases reaching this Court are rarely simple to resolve under the rule of reason; they do indeed frequently require us to make difficult economic determinations. We should not for that reason alone, however, be overly zealous in formulating new per se rules, for an excess of zeal in that regard is both contrary to the policy of the Sherman Act and detrimental to the welfare of consumers generally. Indeed, the economic effect of the new rule laid down by the Court today seems clear: unless Congress intervenes, grocery staples marketed under private-label brands with their lower consumer prices will soon be available only to those who patronize the large national chains.

       Topeo, which is referred to at times in this opinion as the "association,” is actually composed of 23 chains of supermarket retailers and two retailer-owned cooperative wholesalers.

       In addition to purchasing various items for its members, Topeo performs other related functions: e. g., it insures that there is adequate quality control on the products that it purchases; it assists members in developing specifications on certain types of products (e. g., equipment and supplies); and it also aids the members in purchasing goods through other sources.

       The founding members of Topeo were having difficulty competing with larger chains. This difficulty was attributable in some degree to the fact that the larger chains were capable of developing their own private-label programs.
      Private-label products differ from other brand-name products in that they are sold at a limited number of easily ascertainable stores. A&P, for example, was a pioneer in developing a series of products that were sold under an A&P label and that were only available in A&P stores. It is obvious that by using private-label products, a chain can achieve significant cost economies in purchasing, transportation, warehousing, promotion, and advertising. These economies may afford the chain opportunities for offering private-label products at lower prices than other brand-name products. This, in turn, provides many advantages of which some of the more important are: a store can offer national-brand products at the same price as other stores, while simultaneously offering a desirable, lower priced alternative; or, if the profit margin is sufficiently high on private-brand goods, national-brand products may be sold at reduced price. Other advantages include: enabling a chain to bargain more favorably with national-brand manufacturers by creating a broader supply base of manufacturers, thereby decreasing dependence on a few, large national-brand manufacturers; enabling a chain to create a “price-mix” whereby prices on special items can be lowered to attract customers while profits are maintained on other items; and creation of general goodwill by offering lower priced, higher quality goods.

       The three largest chains are A&P, Safeway, and Kroger.

       Topeo was named in the complaint as the sole defendant, but the complaint clearly charged that its members, while not defendants, were coconspirators in Topco’s violation of the Sherman Act.

       Article IX, § 8, of the bylaws provides, in relevant part:
      “Unless a member’s membership and licensing agreement provides that such member may sell at wholesale, a member may not wholesale products supplied by the Association. If a membership and licensing agreement permits a member to sell at wholesale, such member shall control the resale of products bearing trademarks of the Association so that such sales are confined to the territories granted to the member, and the method of selling shall conform in all respects with the Association’s policies.”
      Shortly before trial, Topeo amended this bylaw with an addition that permitted any member to wholesale in the exclusive territories in which it retailed. But the restriction remained the same in all other cases.
      It is apparent that this bylaw on its face applies whether or not the products sold are trademarked by Topeo. Despite the fact that Topco’s general manager testified at trial that, in practice, the restriction is confined to Topco-branded products, the District Court found that the bylaw is applied as written. We find nothing clearly erroneous in this finding. Assuming, arguendo, however, that the restriction is confined to products trademarked by Topeo, the result in this ease would not change.

       When the Government first raised this point in the District Court, Topeo objected on the ground that it was at variance with the charge in the complaint. The District Court apparently agreed with Topeo that the complaint did not cover customer limitations, but permitted the Government to pursue this line on the basis that if the limitations were proved, the complaint could later be amended. App. 141. Topeo acquiesced in this procedure, and both sides dealt with customer limitations in examining witnesses. The District Court made specific findings and conclusions with respect to the totality of the restraints on wholesaling. In light of these facts, the additional fact that the complaint was never formally amended should not bar our consideration of the issue.

       The District Court recognized that “[t]he government has introduced evidence indicating that some applications by Topeo members to expand into territories assigned to other members have been denied,” 319 F. Supp. 1031, 1042, but concluded that these decisions by Topeo did not have an appreciable influence on the decision of members as to whether or not to expand. Topeo expands on this conclusion in its brief by asserting that “the evidence is uneontra-dicted that a member has never failed to build a new store because it was unable to obtain a license.” Brief for Appellee 18 n. 18. The problem with the conclusion of the District Court and the assertion by Topeo is that they are wholly inconsistent with the notion that territorial divisions are crucial to the existence of Topeo, as urged by the association and found by the District Court. From the filing of its answer to the argument before this Court, Topeo has maintained that without a guarantee of an exclusive territory, prospective licensees would not join Topeo and present licensees would leave the association. It is difficult to understand how Topeo can make this argument and simultaneously urge that territorial restrictions are an unimportant factor in the decision of a member on whether to expand its business.

       It is true that in Sealy the Court dealt with price fixing as well as territorial restrictions. To the extent that Sealy casts doubt on whether horizontal territorial limitations, unaccompanied by price fixing, are per se violations of the Sherman Act, we remove that doubt today.

       There has been much recent commentary on the wisdom of per se rules. See, e. g., Comment, Horizontal Territorial Restraints and the Per Se Rule, 28 Wash. & Lee L. Rev. 457 (1971); Averill, Sealy, Schwinn and Sherman One: An Analysis and Prognosis, 15 N. Y. L. F. 39 (1969); Note, Selected Antitrust Problems of the Franchisor: Exclusive Arrangements, Territorial Restrictions, and Franchise Termination, 22 U. Fla. L. Rev. 260, 286 (1969); Sadd, Antitrust Symposium: Territorial and Customer Restrictions After Sealy and Schwinn, 38 U. Cin. L. Rev. 249, 252-253 (1969); Bork, The Rule of Reason and the Per Se Concept, pt. 1, Price Fixing and Market Division, 74 Yale L. J. 775 (1965).
      Without the per se rules, businessmen would be left with little to aid them in predicting in any particular case what courts will find to be legal and illegal under the Sherman Act. Should Congress ultimately determine that predictability is unimportant in this area of the law, it can, of course, make -per se rules inapplicable in some or all cases, and leave courts free to ramble through the wilds of economic theory in order to maintain a flexible approach.

       The District Court’s findings of fact include the following:
      “33. A competitively effective private label program to be independently undertaken by a single retailer or chain would require an annual sales volume of $250 million or more and in order to achieve optimum efficiency, the volume required would probably have to be twice that amount.” 319 F. Supp. 1031, 1036.

       There is dictum in the case to the effect that United States v. Addyston Pipe & Steel Co., 85 F. 271 (CA6 1898), aff’d, 175 U. S. 211 (1899), established a “division of markets” as unlawful in and of itself. 356 U. S., at 5. As I will show, however, Addyston Pipe established no such thing; it was primarily a price-fixing case.

       I cannot agree with the Court’s description of Sealy as being “on all fours with this case.” Ante, at 609. Sealy does support the proposition that the restraints on the Topeo licensees are horizontally imposed. Beyond that, however, Sealy is hardly controlling here. The territorial restrictions in Sealy were found by this Court to be so intimately a part of an unlawful price-fixing and policing scheme that the two arrangements fell together:
      “[T]his unlawful resale price-fixing activity refutes appellee’s claim that the territorial restraints were mere incidents of a lawful program of trademark licensing. Cf. Timken Roller Bearing Co. v. United States, [341 U. S. 593 (1951)]. The territorial restraints were a part of the unlawful price-fixing and policing.” 388 U. S., at 356.

       In summarizing its findings, the District Court made the following statements:
      “When the story is seen as a whole, there is no blinking the fact that there is no free commerce in titanium. Every pound of it is trammelled by privately imposed regulation. The channels of this commerce have not been formed by the winds and currents of competition. They are, in large measure, artificial canals privately constructed. . . .
      “. . . No titanium pigments enter the United States except with the consent of NL [defendant National Lead]. No foreign titanium pigments move in interstate commerce except with like approval. No titanium pigment produced by NL may leave the ports of the United States for points outside the Western Hemisphere.” 63 F. Supp. 513, 521-522.

       The District Court clearly decided the case under the “rule of reason,” It found that there was “a combination and conspiracy in restraint of trade; and the restraint is unreasonable. As such it is outlawed by Section 1 of the Sherman Act.” 63 F. Supp., at 523 (emphasis added). The court rejected the argument made by the defense that the basic agreement on which the arrangement was founded was permissible under “the doctrine which validates covenants in restraint of trade when reasonably ancillary to a lawful principal purpose .... [T]he world-wide territorial allocation was unreasonable in scope when measured against the business actualities.” Id., at 524 (emphasis added).

       “The appellees did not appeal from the findings and order invalidating [territorial] restraints on resale by distributors . . . .” 388 U. S., at 368.

       “The Government does not contend that a per se violation of the Sherman Act is presented by the practices which are involved in this appeal .... Accordingly, we are remitted to an appraisal of the market impact of these practices.
      “. . . [W]e must look to the specifics of the challenged practices and their impact upon the marketplace in order to make a judgment as to whether the restraint is or is not 'reasonable’ in the special sense in which § 1 of the Sherman Act must be read for purposes of this type of inquiry.” 388 U. S., at 373-374.

       “We are here confronted with challenged vertical restrictions as to territory and dealers. . . . These are not horizontal restraints, in which the actors are distributors with or without the manufacturer’s participation.” 388 U. S., at 372.

       Among the facts found by the District Court are the following: .private-label brand merchandising, which is beyond the reach of the small chains acting independently and which by definition depends upon local exclusivity, permits the merchandiser to offer the public “lower consumer prices on products of high quality” and “to bargain more favorably with national brand manufacturers”; such merchandising fosters “the establishment of a broader supply base of manufacturers, thereby decreasing dependence upon a relatively few, large national brand manufacturers”; it also enables “[s]mailer manufacturers, the most common source of private label products, who are generally unable to develop national brand name recognition for their products, [to] benefit ... by the assurance of a substantial market for their products . . . .” 319 F. Supp., at 1035.

       It seems ironical to me that in another antitrust case decided today, Ford Motor Co. v. United States, ante, p. 562, the Court, in contrast to its handling of the instant case, goes out of its way to commend another District Court for its treatment of a problem involving “predictions and assumptions concerning future economic and business events.” Id., at 578.

       The national chains market their own private-label products, and these products are available nowhere else than in the stores of those chains. The stores of any one chain, of course, do not engage in price competition with each other with respect to their chain’s private-label brands, and no serious suggestion could be made that the Sherman Act requires otherwise. I fail to see any difference whatsoever in the economic effect of the Topeo arrangement for the marketing of Topco-brand products and the methods used by the national chains in marketing their private-label brands. True, the Topeo arrangement involves a “combination,” while each of the national chains is a single integrated corporation. The controlling consideration, however, should be that in neither case is the policy of the Sherman Act offended, for the practices in both cases work to the benefit, and not to the detriment, of the consuming public.


author: Mr. Justice White Me. Justice Douglas,

text:
    ALEXANDER v. LOUISIANA
    No. 70-5026.
    Argued December 6-7, 1971
    Decided April 3, 1972
    White, J., delivered the opinion of the Court, in which Burger, C. J., and BreNNAN, Stewart, Marshall, and BlackmuN, JJ., joined, and in Part I of which Douglas, J., joined. Douglas, J., filed a concurring opinion, post, p. 634. Powell and Rehnquist, JJ., took no part in the consideration or decision of the case.

      Charles Stephen Ralston argued the cause for petitioner. With him on the brief were Jack Greenberg, James M. Nabrit III, Margrett Ford, and Charles Finley.

      Bertrand DeBlanc argued the cause for respondent. With him on the brief were Jack P. F. Gremillion, Attorney General of Louisiana, Harry Howard, Assistant Attorney General, and Charles R. Sonnier.

      Birch Bayh filed a brief for the National Federation of Business and Professional Women's Clubs, Inc., as amicus curiae urging reversal.
   Mr. Justice White

delivered the opinion of the Court.

After a jury trial in the District Court for the Fifteenth Judicial District of Lafayette Parish, Louisiana, petitioner, a Negro, was convicted of rape and sentenced to life imprisonment. His conviction was affirmed on appeal by the Louisiana Supreme Court, and this Court granted certiorari. Prior to trial, petitioner had moved to quash the indictment because (1) Negro citizens were included on the grand jury list and venire in only token numbers, and (2) female citizens were systematically excluded from the grand jury list, venire, and impaneled grand jury.. Petitioner therefore argued that the indictment against him was invalid because it was returned by a grand jury impaneled from a venire made up contrary to the requirements of the Equal Protection Clause and the Due Process Clause of the Fourteenth Amendment. Petitioner’s motions were denied.

According to 1960 U. S. census figures admitted into evidence below, Lafayette Parish contained 44,986 persons over 21 years of age and therefore presumptively eligible for grand jury service; of this total, 9,473 persons (21.06%) were Negro. At the hearing on petitioner’s motions to quash the indictment, the evidence revealed that the Lafayette Parish jury commission consisted of five members, all of whom were white, who had been appointed by the court. The commission compiled a list of names from various sources (telephone directory, city directory, voter registration rolls, lists prepared by the school board, and by the jury commissioners themselves) and sent questionnaires to the persons on this list to determine those qualified for grand jury service. The questionnaire included a space to indicate the race of the recipient. Through this process, 7,374 questionnaires were returned, 1,015 of which (13.76,%') were from Negroes, and the jury commissioners attached to each questionnaire an information card designating, among other things, the race of the person, and a white slip indicating simply the name and address of the person. The commissioners then culled out about 5,000 questionnaires, ostensibly on the ground that these persons were not qualified for grand jury service or were exempted under state law. The remaining 2,000 sets of papers were placed on a table, and the papers of 400 persons were selected, purportedly at random, and placed in a box from which the grand jury panels of 20 for Lafayette Parish were drawn. Twenty-seven of the persons thus selected were Negro (6.75%). On petitioner’s grand jury venire, one of the 20 persons drawn was Negro (5%), but none of the 12 persons on the grand jury that indicted him, drawn from this 20, was Negro.

I

For over 90 years, it has been established that a criminal conviction of a Negro cannot stand under the Equal Protection Clause of the Fourteenth Amendment if it is based on an indictment of a grand jury from which Negroes were excluded by reason of their race. Strauder v. West Virginia, 100 U. S. 303 (1880); Neal v. Delaware, 103 U. S. 370 (1881). Although a defendant has no right to demand that members of his race be included on the grand jury that indicts him, Virginia v. Rives, 100 U. S. 313 (1880), he is entitled to require that the State not deliberately and systematically deny to members of his race the right to participate as jurors in the administration of justice. Ex parte Virginia, 100 U. S. 339 (1880); Gibson v. Mississippi, 162 U. S. 565 (1896). Cf. Hernandez v. Texas, 347 U. S. 475 (1954). It is only the application of these settled principles that is at issue here.

This is not a case where it is claimed that there have been no Negroes called for service within the last 30 years, Patton v. Mississippi, 332 U. S. 463, 464 (1947); only one Negro chosen within the last 40 years, Pierre v. Louisiana, 306 U. S. 354, 359 (1939); or no Negroes selected “within the memory of witnesses who had lived [in the area] all their lives,” Norris v. Alabama, 294 U. S. 587, 591 (1935). Rather, petitioner argues that, in his case, there has been a consistent process of progressive and disproportionate reduction of the number of Negroes eligible to serve on the grand jury at each stage of the selection process until ultimately an all-white grand jury was selected to indict him.

In Lafayette Parish, 21% of the population was Negro and 21 or over, therefore presumptively eligible for grand jury service. Use of questionnaires by the jury commissioners created a pool of possible grand jurors which was 14% Negro, a reduction by one-third of possible black grand jurors. The commissioners then twice culled this group to create a list of 400 prospective jurors, 7% of whom were Negro — a further reduction by one-half. The percentage dropped to 5% on petitioner’s grand jury venire and to zero on the grand jury that actually indicted him. Against this background, petitioner argues that the substantial disparity between the proportion of blacks chosen for jury duty and the proportion of blacks in the eligible population raises a strong inference that racial discrimination and not chance has produced this result because elementary principles of probability make it extremely unlikely that a random selection process would, at each stage, have so consistently reduced the number of Negroes.

This Court has never announced mathematical standards for the demonstration of “systematic” exclusion of blacks but has, rather, emphasized that a factual inquiry is necessary in each case that takes into account all possible explanatory factors. The progressive decimation of potential Negro grand jurors is indeed striking here, but we do not rest our conclusion that petitioner has demonstrated a prima facie case of invidious racial discrimination on statistical improbability alone, for the selection procedures themselves were not racially neutral. The racial designation on both the questionnaire and the information card provided a clear and easy opportunity for racial discrimination. At two crucial steps in the selection process, when the number of returned questionnaires was reduced to 2,000 and when the final selection of the 400 names was made, these racial identifications were visible on the forms used by the jury commissioners, although there is no evidence that the commissioners consciously selected by race. The situation here is thus similar to Avery v. Georgia, 345 U. S. 559 (1953), where the Court sustained a challenge to an array of petit jurors in which the names of prospective jurors had been selected from segregated tax lists. Juror cards were prepared from these lists, yellow cards being used for Negro citizens and white cards for whites. Cards were drawn by a judge, and there was no evidence of specific discrimination. The Court held that such evidence was unnecessary, however, given the fact that no Negroes had appeared on the final jury: “Obviously that practice makes it easier for those to discriminate who are of a mind to discriminate.” 345 U. S., at 562. Again, in Whitus v. Georgia, 385 U. S. 545 (1967), the Court reversed the conviction of a defendant who had been tried before an all-white petit jury. Jurors had been selected from a one-volume tax digest divided into separate sections of Negroes and whites; black taxpayers also had a “(c)” after their names as required by Georgia law at the time. The jury commissioners testified that they were not aware of the “(c)” appearing after the names of the Negro taxpayers; that they had never included or excluded anyone because of race; that they had placed on the jury list only those persons whom they knew personally; and that the jury list they compiled had had no designation of race on it. The county from which jury selection was made was 42%' Negro, and 27% of the county’s taxpayers were Negro. Of the 33 persons drawn for tjie grand jury panel, three (9%) were Negro, while on the 19-member grand jury only one was Negro; on the 90-man venire from which the petit jury was selected, there were seven Negroes (8%), but no Negroes appeared on the actual jury that tried petitioner. The Court held that this combination of factors constituted a prima facie case of discrimination, and a similar conclusion is mandated in the present case.

Once a prima facie case of invidious discrimination is established, the burden of proof shifts to the State to rebut the presumption of unconstitutional action by showing that permissible racially neutral selection criteria and procedures have produced the monochromatic result. Turner v. Fouche, 396 U. S. 346, 361 (1970); Eubanks v. Louisiana, 356 U. S. 584, 587 (1958). The State has not carried this burden in this case; it has not adequately explained the elimination of Negroes during the process of selecting the grand jury that indicted petitioner. As in Whitus v. Georgia, supra, the clerk of the court, who was also a member of the jury commission, testified that no consideration was given to race during the selection procedure. App. 34. The Court has squarely held, however, that affirmations of good faith in making individual selections are insufficient to dispel a prima facie case of systematic exclusion. Turner v. Fouche, supra, at 361; Jones v. Georgia, 389 U. S. 24, 25 (1967); Sims v. Georgia, 389 U. S. 404, 407 (1967). “The result bespeaks discrimination, whether or not it was a conscious decision on the part of any individual jury commissioner.” Hernandez v. Texas, 347 U. S., at 482. See also Norris v. Alabama, 294 U. S., at 598. The clerk’s testimony that the mailing list for questionnaires was compiled from nonracial sources is not, in itself, adequate to meet the State’s burden of proof, for the opportunity to discriminate was presented at later stages in the process. The commissioners, in any event, had a duty “not to pursue a course of conduct in the administration of their office which would operate to discriminate in the selection of jurors on racial grounds.” Hill v. Texas, 316 U. S. 400, 404 (1942). See also Smith v. Texas, 311 U. S. 128, 130 (1940). Cf. Carter v. Jury Commission, 396 U. S. 320, 330 (1970). We conclude, therefore, that “the opportunity for discrimination was present and [that it cannot be said] on this record that it was not resorted to by the commissioners.” Whitus v. Georgia, supra, at 552.

II

Petitioner also challenges the Louisiana statutory-exemption of women who do not volunteer for grand jury service. Article 402, La. Code Crim. Proc. This claim is novel in this Court and, when urged by a male, finds no support in our past cases. The strong constitutional and statutory policy against racial discrimination has permitted Negro defendants in criminal cases to challenge the systematic exclusion of Negroes from the grand juries that indicted them. Also, those groups arbitrarily excluded from grand or petit jury service are themselves afforded an appropriate remedy. Cf. Carter v. Jury Commission, supra. But there is nothing in past adjudications suggesting that petitioner himself has been denied equal protection by the alleged exclusion of women from grand jury service. Although the Due Process Clause guarantees petitioner a fair trial, it does not require the States to observe the Fifth Amendment’s provision for presentment or indictment by a grand jury. In Duncan v. Louisiana, 391 U. S. 145 (1968), the Court held that because trial by jury in criminal cases under the Sixth Amendment is “fundamental to the American scheme of justice,” id., at 149, such a right was guaranteed to defendants in state courts by the Fourteenth Amendment, but the Court has never held that federal concepts of a “grand jury,” binding on the federal courts under the Fifth Amendment, are obligatory for the States. Hurtado v. California, 110 U. S. 516, 538 (1884).

Against this background and because petitioner’s conviction has been set aside on other grounds, we follow our usual custom of avoiding decision of constitutional issues unnecessary to the decision of the case before us. Burton v. United States, 196 U. S. 283, 295 (1905). See Ashwander v. Tennessee Valley Authority, 297 U. S. 288, 346-348 (1936) (Brandeis, J., concurring). The State may or may not recharge petitioner, a properly constituted grand jury may or may not return another indictment, and petitioner may or may not be convicted again. See Ballard v. United States, 329 U. S. 187, 196 (1946).

Reversed.

Mr. Justice Powell and Mr. Justice Rehnquist took no part in the consideration or decision of this case.

Me. Justice Douglas,

concurring.

While I join Part I of the Court’s opinion, I am convinced we should also reach the constitutionality of Louisiana’s exclusion of women from jury service. The issue is squarely presented, it has been thoroughly briefed and argued, and it is of recurring importance. The Court purports to follow “our usual custom” of avoiding unnecessary constitutional issues. But that cannot be the sole rationale, for both questions are of constitutional dimension. We could just as well say that deciding the constitutionality of excluding women from juries renders it unnecessary to reach the question of racial exclusion.

It can be argued that the racial exclusion admits of the “easier” analysis. But this Court does not sit to decide only “easy” questions. And even when faced with “hard” constitutional questions, we have often decided cases on alternate grounds where a decision on only one would have been dispositive. See, e. g., Dunn v. Blumstein, ante, p. 330.

Petitioner complains of the exclusion of blacks and women from the grand jury which indicted him. Conceivably, he could have also complained of the exclusion of several other minority groups. Would he then be relegated to suffer repetitive re-indictment and re-conviction while this court considered the exclusion of each group in a separate lawsuit?

I believe the time has come to reject the dictum in Strauder v. West Virginia, 100 U. S. 303, 310, that a State “may confine” jury service “to males.” I would here reach the question we reserved in Hoyt v. Florida, 368 U. S. 57, 60, and hold that Art. 402, La. Code Crim. Proc., as applied to exclude women as a class from Lafayette Parish jury rolls, violated petitioner Alexander’s constitutional right to an impartial jury drawn from a group representative of a cross-section of the community.

It is irrelevant to our analysis that Alexander attacks the composition of the grand jury that indicted him, not the petit jury which convicted him, for it is clear that a State which has a grand jury procedure must administer that system consonantly with the Federal Constitution. The Court asserts, however, that “federal concepts” of a grand jury do not obligate the States, and cites Hurtado v. California, 110 U. S. 516, 538. Ante, at 633. But Hurtado supports no such proposition. That case merely held that the Fifth Amendment grand jury requirement was not binding on the States. It said nothing as to the constitutional requirements which obtain once a State chooses to provide a grand jury, and we are directed to no other case which does speak to the subject. But this Court has said time and again, regardless of a State’s freedom to reject the federal grand jury, and to reject even the petit jury for offenses punishable by less than six months’ imprisonment, Baldwin v. New York, 399 U. S. 66, “Once the State chooses to provide grand and petit juries, whether or not constitutionally required to do so, it must hew to federal constitutional criteria . . . Carter v. Jury Commission, 396 U. S. 320, 330.

It is furthermore clear that just such a “federal constitutional criterion]” is that the grand jury, just as the petit jury, must be drawn from a representative cross-section of the community. The Court was speaking of both grand and petit juries in Carter v. Jury Commission, supra, when, quoting Smith v. Texas, 311 U. S. 128, 130, it defined the jury as “a body truly representative of the community.” 396 U. S., at 330. The Court was speaking of grand and petit juries when it said in Brown v. Allen, 344 U. S. 443, 474: “Our duty to protect the federal constitutional rights of all does not mean we must or should impose on states our conception of the proper source of jury lists, so long as the source reasonably reflects a cross-section of the population suitable in character and intelligence for that civic duty.” (Emphasis supplied.) As Mr. Justice Black said, speaking for the Court in Pierre v. Louisiana, 306 U. S. 354, 358: “Indictment by Grand Jury and trial by jury cease to harmonize with our traditional concepts of justice at the very moment particular groups, classes or races . . ’. are excluded as such from jury service.” (Footnote omitted.)

The requirement that a jury reflect a cross-section of the community occurs throughout our jurisprudence: “The American tradition of trial by jury, considered in connection with either criminal or civil proceedings, "necessarily contemplates an impartial jury drawn from a cross-section of the community. Smith v. Texas, 311 U. S. 128, 130; Glasser v. United States, 315 U. S. 60, 85.” Thiel v. Southern Pacific Co., 328 U. S. 217, 220. Accord, Williams v. Florida, 399 U. S. 78, 100; Witherspoon v. Illinois, 391 U. S. 510, 520; Ballard v. United States, 329 U. S. 187, 192-193; Labat v. Bennett, 365 F. 2d 698, 722-724.

This is precisely the constitutional infirmity of the Louisiana statute. For a jury list from which women have been systematically excluded is not representative of the community.

“It is said, however, that an all male panel drawn from the various groups within a community will be as truly representative as if women were included. The thought is that the factors which tend to influence the action of women are the same as those which influence the action of men — personality, background, economic status — and not sex. Yet it is not enough to say that women when sitting as jurors neither act nor tend to act as a class. Men likewise do not act as a class. But, if the shoe were on the other foot, who would claim that a jury was truly representative of the community if all men were intentionally and systematically excluded from the panel? The truth is that the two sexes are not fungible; a community made up exclusively of one is different from a community composed of both; the subtle interplay of influence one on the other is among the imponderables. To insulate the courtroom from either may not in a given case make an iota of difference. Yet a flavor, a distinct quality is lost if either sex is excluded. The exclusion of one may indeed make the jury less representative of the community than would be true if an economic or racial group were excluded.” Ballard v. United States, supra, at 193-194. (Emphasis supplied; footnotes omitted.)

The record before us, moreover, indisputably reveals that such a systematic exclusion operated with respect to the Lafayette Parish jury lists. There were no women on the grand jury that indicted petitioner, and there were no women on the venire from which the jury was chosen. While the venire was selected from returns to questionnaires sent to parish residents, not a single one of the some 11,000 questionnaires was even sent to a woman. This was done deliberately.

The State relies on the fact that the automatic exemption it grants to women is the same as the one upheld in Hoyt v. Florida, 368 U. S. 57. In Hoyt, however, there were women on the jury rolls, and the jury commissioners had made good-faith efforts to include women on the jury lists despite the fact that they had an automatic exemption unless they volunteered for service. Id., at 69 (Warren, C. J., concurring). Here, on the other hand, only the feeblest efforts were made to interest women in service, and there was testimony that only a single woman had filled out a jury service questionnaire. This, out of a parish population of 45,000 adults, 52% of whom were female.

The absolute exemption provided by Louisiana, and no other State, betrays a view of a woman’s role which cannot withstand scrutiny under modern standards. We once upheld the constitutionality of a state law denying to women the right to practice law, solely on grounds of sex. Bradwell v. State, 16 Wall. 130. The rationale underlying Art. 402 of the Louisiana Code is the same as that which was articulated by Justice Bradley in Bradwell:

“Man is, or should be, woman’s protector and defender. The natural and proper timidity and delicacy which belongs to the female sex evidently unfits it for many of the occupations of civil life. The constitution of the family organization, which is founded in the divine ordinance, as well as in the nature of things, indicates the domestic sphere as that which properly belongs to the domain and functions of womanhood. The harmony, not to say identity, of interests and views which belong, or should belong, to the family institution is repugnant to the idea of a woman adopting a distinct and independent career from that of her husband. . . .
“. . . The paramount destiny and mission of woman are to fulfil the noble and benign offices of wife and mother. This is the law of the Creator. And the rules of civil society must be adapted to the general constitution of things, and cannot be based upon exceptional cases.” Id., at 141-142.

Classifications based on sex are no longer insulated from judicial scrutiny by a legislative judgment that “woman’s place is in the home,” or that woman is by her “nature” ill-suited for a particular task. See, e. g., Reed v. Reed, 404 U. S. 71. But such a judgment is precisely that which underpins the absolute exemption from jury service at issue. Insofar as Hoyt, supra, embodies this discredited stereotype, it should be firmly disapproved. See Johnston & Knapp, Sex Discrimination by Law: A Study in Judicial Perspective, 46 N. Y. U. L. Rev. 675, 708-721 (1971).

Louisiana says, however, that women are not totally excluded from service; they may volunteer. The State asserts it is impractical to require women affirmatively to claim the statutory exemption because of the large numbers who would do so. This argument misses the point. Neither man nor woman can be expected to volunteer for jury service. Hoyt, supra, at 64-65. See L. Kanowitz, Women and the Law 30 (1969). Thus, the automatic exemption, coupled with the failure even to apprise parish women of their right to volunteer, results in as total an exclusion as would obtain if women were not permitted to serve at all.

Some violations of due process of law may be excused in the context of a criminal trial, if the error cannot be shown to have had an effect on the outcome. See, e. g., Giglio v. United States, ante, p. 150; Napue v. Illinois, 360 U. S. 264, 272. But the right to a representative jury is one which would be trivialized were a similar requirement imposed:

“We can never measure accurately the prejudice that results from the exclusion of certain types of qualified people from a jury panel. Such prejudice is so subtle, so intangible, that it escapes the ordinary methods of proof. It may be absent in one case and present in another; it may gradually and silently erode the jury system before it becomes evident. But it is no less real or meaningful for our purposes. If the constitutional right to a jury impartially drawn from a cross-section of the community has been violated, we should vindicate that right even though the effect of the violation has not yet put in a tangible appearance. Otherwise that right may be irretrievably lost in a welter of evidentiary rules.” Fay v. New York, 332 U. S. 261, 300 (Murphy, J., dissenting).

A statutory procedure which has the effect of excluding all women does not produce a representative jury, and is therefore repugnant to our constitutional scheme. Cf. White v. Crook, 251 F. Supp. 401, 408-409 (MD Ala. 1966). For these reasons, I would hold Art. 402, La. Code Crim. Proc., to be unconstitutional.

       255 La. 941, 233 So. 2d 891 (1970). Petitioner was indicted for aggravated rape, and a 12-member jury unanimously returned a verdict of “Guilty without Capital Punishment.”

       401 U. S. 936 (1971).

       Petitioner does not here challenge the composition of the petit jury that convicted him. The principles that apply to the systematic exclusion of potential jurors on the ground of race are essentially the same for grand juries and for petit juries, however. Pierre v. Louisiana, 306 U. S. 354, 358 (1939). See generally Neal v. Delaware, 103 U. S. 370 (1881).

       The general qualifications for’jurors set by Louisiana law are that a person must be a citizen of the United States and of Louisiana who has resided in the parish for at least a year prior to jury service, be at least 21 years old,, be able to read, write, and speak the English language, “[n]ot be under interdiction, or incapable of serving as a juror because of a mental or physical infirmity,” and “ [n] ot be under indictment for a felony, nor have been convicted of a felony for which he has not been pardoned.” La. Code Crim. Proc., Art. 401 (1967).

       Testimony at the hearing on the motion to quash the indictment also revealed that there were 40,896 registered voters in the parish. Of this total, 17,803 were white males, and 16,483 were white females; 3,573 were Negro males, and 3,037 were Negro females. App. 38.

       One hundred and eighty-nine questionnaires had no racial designation. App. 15.

       There are some inconsistencies in the record as to the total number of Negroes in this group. The State introduced a certification by the clerk of the court stating that there were 25 Negroes and four persons with no race shown. App. 15. A count of the actual list of jurors, however, shows 27 Negroes and five persons with no race shown. App. 16-24.

       Section 4 of the 1875 Civil Rights Act, 18 Stat. 336, now codified as 18 U. S. C. § 243, affirms and reinforces this constitutional right: “No citizen possessing all other qualifications which are or may be prescribed by law shall be disqualified for service as grand or petit juror in any court of the United States, or of any State on account of race, color, or previous condition of servitude; and whoever, being an officer or other person charged with any duty in the selection or summoning of jurors, excludes or fails to summon any citizen for such cause, shall be fined not'more than $5,000.”

       We take note, as we did in Whitus v. Georgia, 385 U. S. 545, 552 n. 2 (1967), of petitioner’s demonstration that under one statistical technique of calculating probability, the chances that 27 Negroes would have been selected at random for the 400-member final jury list, when 1,015 out of the 7,374 questionnaires returned were from Negroes, are one in 20,000. Brief for Petitioner 18 n. 18.

       Article 402, La. Code Crim. Proc.: “A woman shall not be selected for jury service unless she has previously filed with the clerk of court of the parish in which she resides a written declaration of her desire to be subject to jury service.”

       The fact that Alexander is a male challenging the exclusion of females from the jury rolls is not of significance, for his claim rests, not on equal protection principles, but on the right of any defendant to an impartial jury, no matter what his sex or race.

       While Carter arose under the Equal Protection Clause, and concerned the right of prospective jurors excluded from the venire solely by reason of their race, the analysis is the same in the instant case, where the question is the accused’s right to an impartial jury. Turner v. Louisiana, 379 U. S. 466.

       The cases most precisely articulating the requirement that a jury reflect a cross section of the community arose under our supervisory power over the federal courts. See, e. g., Ballard v. United States, 329 U. S. 187; Thiel v. Southern Pacific Co., 328 U. S. 217; Glasser v. United States, 315 U. S. 60. The detail with which these cases were written, however, simply reflects our obligation to provide guidelines for the federal system. It is consistent with our principle of federalism that the States be permitted greater latitude in fashioning their jury-selection procedures, but to avoid constitutional infirmity the result must be designed to produce a representative cross section of the community. Brown v. Allen, 344 U. S. 443, 474; Carter v. Jury Commission, 396 U. S. 320, 322, 333.

       Mr. LeBlanc, clerk of the court in Lafayette Parish, and a member of the parish jury commission, testified as to the process by which the venire was chosen at the hearing on the motion to quash Alexander’s indictment:
      “A. The slips or list that are put in the general venire box are made from questionnaires that I mailed out.
      “Q. Now, who is this questionnaire sent to? How is that determined?
      “A. To the different people in the Parish by the registrar of voter’s list and the telephone book, city directory, different lists that are submitted by school board or any list that we can find that we think we got address [sic] for the mixed race one way or the other.
      “Q. Was the questionnaire mailed to any women at all?
      “A. We have received some that was filled in by some ladies. I think one.
      “Q. Did you mail any to any women intentionally or did you intentionally exclude women when you mailed them?
      “A. We didn’t mail any to the women.” App. 35, 53.

       The only evidence in the record that any effort whatsoever was expended to encourage women to volunteer for jury service was a statement by Mr. LeBlanc that he had “discussed that with the Assistant District Attorney,” and that he had “sent her at [sic] different women’s clubs to explain to the women the possibility of being on the jury.” App. 54. He also averred that “we’re working on the women to submit names and intention to serve.” Ibid.

      As indicated in n. 5, supra, however, these efforts produced but a single questionnaire from a woman. The 11,000 questionnaires sent to men, on the other hand, resulted in over 7,000 responses. App. 15.

       Testimony of Mr. LeBlanc. See nn. 5-6, supra.

         No State now prohibits women from service on juries altogether, Alabama’s prohibition having been found unconstitutional in White
        v. Crook, 251 F. Supp. 401 (MD Ala. 1966). Most States afford equal treatment to men and women, although exemptions are frequently provided for women who are pregnant or who have children under 18 at home. Five States now allow women an absolute exemption, based solely on their sex, but they must affirmatively request it. Ga. Code Ann. § 59-124 (1965); Mo. Const., Art. I, § 22 (b); N. Y. Judiciary Law § 507 (7) (1968); R. I. Gen. Laws Ann. § 9-9-11 (1970); Tenn. Code Ann. §22-101, §22-108 (1955).

       Perhaps the purest articulation of the objection to woman jury service is that of Judge Turner, dissenting in Rosencrantz v. Territory, 2 Wash. Ter. 267, 5 P. 305 (1884), a case in which a female defendant challenged the grand jury which indicted her on the ground that it included married women living with their husbands. The challenge was rejected over Judge Turner’s dissent:
      “It is said that the rights of the weaker sex, if I may now call them so, are more regarded than in the days of Blackstone; and that the theory of that day, that women were unfitted by physical constitution and mental characteristics to assume and perform the civil and political duties and obligations of citizenship, has been exploded by the advanced ideas of the nineteenth century. This may be true. No man honors the sex more than I. None has witnessed more cheerfully the improvement in the laws of the States, and particularly in the laws of this Territory, whereby many of the disabilities of that day are removed from them, and their just personal and property rights put upon an equal footing with those of men. I cannot say, however, that I wish to see them perform the duties of jurors. The liability to perform jury duty is an obligation, not a right. In the case of woman, it is not necessary that she should accept the obligation to secure or maintain her rights. If it were, I should stifle all expression of the repugnance that I feel at seeing her introduced into associations and exposed to influences which, however others regard it, must, in my opinion, shock and blunt those fine sensibilities, the possession of which is her chiefest charm, and the protection of which, under the religion and laws of all countries, civilized or semi-civilized, is her most sacred right.
      “If one woman is competent as a juror, all women having the same qualifications are competent. If women may try one case, they may try all cases. It is unnecessary to say more, to suggest the shocking possibilities to which our wives, mothers, sisters, and daughters may be exposed .... These observations, however, are not pertinent here. The question is, What is the law?
      “I say, that the laws now concerning the important incidents of a jury trial are, by express constitutional provision, what they were at the common law, and that under that law a jury was no jury unless it was composed of men.” Id., at 278-279, 5 P., at 309-310.

       In Fay v. New York, 332 U. S. 261, there is also a dictum approving the constitutionality of excluding women from jury service. Relying solely on the proposition that: “Until recently, and for nearly a half-century after the Fourteenth Amendment was adopted, it was universal practice in the United States to allow only men to sit on juries,” the Court opined that “woman jury service has not so become a part of the textual or customary law of the land that one convicted of crime must be set free by this Court if his state has lagged behind what we personally may regard as the most desirable practice in recognizing the rights and obligations of womanhood.” Id., at 289-290. This dictum was totally irrelevant to the holding in Fay, approving New York’s special “blue-ribbon” jury system, for the Court stated flatly that: “The evidence does not show that women are excluded from the special jury.” Id., at 278. Indeed, there were women on the very jury which was at issue in the case. Ibid.

      The “nose-counting” approach which led to the Fay Court’s refusal to recognize woman jury service as “part of the textual or customary law of the land” has, of course, been thoroughly undermined by subsequent events. See n. 8, supra. It has been suggested that the decision itself was overruled by Duncan v. Louisiana, 391 U. S. 145. Id., at 185 n. 25, and text following (Harlan, J., dissenting). And what little there may be left after Duncan, is, like Strauder v. West Virginia, 100 U. S. 303, and Hoyt v. Florida, 368 U. S. 57, based on an obsolete view of woman’s role which does not square with reality. “[The Fay] dictum . . . calls to mind — in its total reliance on historical practice as justification for sex discrimination — the . . . observation . . . that attitudes can be more formidable than arguments.” Johnston & Knapp, Sex Discrimination by Law: A Study in Judicial Perspective, 46 N. Y. U. L. Rev. 675, 715 (1971). See State v. Emery, 224 N. C. 581, 601, 31 S. E. 2d 858, 871 (1944) (Seawell, J., dissenting). See also Rosencrantz v. Territory, supra (Turner, J., dissenting).