author: Justice Stevens Justice O’Connor,

text:
    CITY OF LADUE et al. v. GILLEO
    No. 92-1856.
    Argued February 23, 1994
    Decided June 13, 1994

      Stevens, J., delivered the opinion for a unanimous Court. O’Connor, J., filed a concurring opinion, post, p. 59.

      Jordan B. Cherrick argued the cause for petitioners. With him on the briefs were Robert F. Schlafly and Jay A. Summerville.

      Gerald P. Greiman argued the cause for respondent. With him on the brief were Martin M. Green, Mitchell A. Margo, and Steven R. Shapiro.

      Deputy Solicitor General Bender argued the cause for the United States as amicus curiae urging affirmance. With him on the brief wfere Solicitor General Days, Assistant Attorney General Hunger, and Amy L. Wax

      Briefs of amici curiae urging reversal were filed for the State of Hawaii et al. by J. Joseph Curran, Jr., Attorney General of Maryland, and Jack Schwartz and Diane Krejsa, Assistant Attorneys General, Robert A Marks, Attorney General of Hawaii, Pamela Carter, Attorney General of Indiana, Jeffrey R. Howard, Attorney General of New Hampshire, Fred DeVesa, Acting Attorney General of New Jersey, Ernest D. Preate, Jr., Attorney General of Pennsylvania, and Jeffrey L. Amestoy, Attorney General of Vermont; and for the National Institute of Municipal Law Officers et al. by Richard Ruda and Lee Fennell.

      Briefs of amici curiae urging affirmance were filed for the American Advertising Federation et al. by Richard E. Wiley, Lawrence W. Secrest III, Howard H. Bell, John F. Kamp, David S. Versfelt, Kenneth M. Vittor, and Slade Metcalf; for the Association of National Advertisers, Inc., by Burt Neuborne and Gilbert H. Weil; for People for the American Way et al. by Timothy B. Dyk, Elliot M. Mincberg, and Marc D. Stern; and for the Washington Legal Foundation et al. by Daniel J. Popeo and Richard A Samp.

   Justice Stevens

delivered the opinion of the Court.

An ordinance of the City of Ladue prohibits homeowners from displaying any signs on their property except “residence identification” signs, “for sale” signs, and signs warning of safety hazards. The ordinance permits commercial establishments, churches, and nonprofit organizations to erect certain signs that are not allowed at residences. The question presented is whether the ordinance violates a Ladue resident’s right to free speech.

I

Respondent Margaret P. Gilleo owns one of the 57 single-family homes in the Willow Hill subdivision of Ladue. On December 8, 1990, she placed on her front lawn a 24- by 36-inch sign printed with the words, “Say No to War in the Persian Gulf, Call Congress Now.” After that sign disappeared, Gilleo put up another but it was knocked to the ground. When Gilleo reported these incidents to the police, they advised her that such signs were prohibited in Ladue. The city council denied her petition for a variance. Gilleo then filed this action under 42 U. S. C. § 1983 against the City, the mayor, and members, of the city council, alleging that Ladue’s sign ordinance violated her First Amendment right of free speech.

The District Court issued a preliminary injunction against enforcement of the ordinance. 774 F. Supp. 1559 (ED Mo. 1991). Gilleo then placed an 8.5- by 11-inch sign in the second story window of her home stating, “For Peace in the Gulf.” The Ladue City Council responded to the injunction by repealing its ordinance and enacting a replacement. Like its predecessor, the new ordinance contains a general prohibition of “signs” and defines that term broadly. The ordinance prohibits all signs except those that fall within 1 of 10 exemptions. Thus, “residential identification signs” no larger than one square foot are allowed, as are signs advertising “that the property is for sale, lease or exchange” and identifying the owner or agent. §35-10, App. to Pet. for Cert. 45a. Also exempted are signs “for churches, religious institutions, and schools,” §35-5, id., at 41a, “[commercial signs in commercially zoned or industrial zoned districts,” §35-4, ibid., and on-site signs advertising “gasoline filling stations,” §35-6, id., at 42a. Unlike its predecessor, the new ordinance contains a lengthy “Declaration of Findings, Policies, Interests, and Purposes,” part of which recites that the

“proliferation of an unlimited number of signs in private, residential, commercial, industrial, and public areas of the City of Ladue would create ugliness, visual blight and clutter, tarnish the natural beauty of the landscape as well as the residential and commercial architecture, impair property values, substantially impinge upon the privacy and special ambience of the community, and may cause safety and traffic hazards to motorists, pedestrians, and children.” Id., at 36a.

Gilleo amended her complaint to challenge the new ordinance, which explicitly prohibits window signs like hers. The District Court held the ordinance unconstitutional, 774 F. Supp. 1559 (ED Mo. 1991), and the Court of Appeals affirmed, 986 F. 2d 1180 (CA8 1993). Relying on the plurality opinion in Metromedia, Inc. v. San Diego, 453 U. S. 490 (1981), the Court of Appeals held the ordinance invalid as a “content based” regulation because the City treated commercial speech more favorably than noncommercial speech and favored some kinds of noncommercial speech over others. 986 F. 2d, at 1182. Acknowledging that “Ladue’s interests in enacting its ordinance are substantial,” the Court of Appeals nevertheless concluded that those interests were “not sufficiently ‘compelling’ to support a content-based restriction.” Id., at 1183-1184 (citing Simon & Schuster, Inc. v. Members of N. Y. State Crime Victims Bd., 502 U. S. 105, 118 (1991)).

We granted the City of Ladue’s petition for certiorari, 510 U. S. 809 (1993), and now affirm.

II

While signs are a form of expression protected by the Free Speech Clause, they pose distinctive problems that are subject to municipalities’ police powers. Unlike oral speech, signs take up space and may obstruct views, distract motorists, displace alternative uses for land, and pose other problems that legitimately call for regulation. It is common ground that governments may regulate the physical characteristics of signs — just as they can, within reasonable bounds and absent censorial purpose, regulate audible expression in its capacity as noise. See, e. g., Ward v. Rock Against Racism, 491 U. S. 781 (1989); Kovacs v. Cooper, 336 U. S. 77 (1949). However, because regulation of a medium inevitably affects communication itself, it is not surprising that we have had occasion to review the constitutionality of municipal ordinances prohibiting the display of certain outdoor signs.

In Linmark Associates, Inc. v. Willingboro, 431 U. S. 85 (1977), we addressed an ordinance that sought to maintain stable, integrated neighborhoods by prohibiting homeowners from placing “For Sale” or “Sold” signs on their property. Although we recognized the importance of Willingboro’s objective, we held that the First Amendment prevented the township from “achieving its goal by restricting the free flow of truthful information.” Id., at 95. In some respects Linmark is the mirror image of this case. For instead of prohibiting “For Sale” signs without banning any other signs, Ladue has exempted such signs from an otherwise virtually complete ban. Moreover, whereas in Linmark we noted that the ordinance was not concerned with the promotion of esthetic values unrelated to the content of the prohibited speech, id., at 93-94, here Ladue relies squarely on that content-neutral justification for its ordinance.

In Metromedia, we reviewed an ordinance imposing substantial prohibitions on outdoor advertising displays within the city of San Diego in the interest of traffic safety and esthetics. The ordinance generally banned all except those advertising “on-site” activities. The Court concluded that the city’s interest in traffic safety and its esthetic interest in preventing “visual clutter” could justify a prohibition of off-site commercial billboards even though similar on-site signs were allowed. 453 U. S., at 511-512. Nevertheless, the Court’s judgment in Metromedia, supported by two different lines of reasoning, invalidated the San Diego ordinance in its entirety. According to Justice White’s plurality opinion, the ordinance impermissibly discriminated on the basis of content by permitting on-site commercial speech while broadly prohibiting noncommercial messages. Id., at 514-515. On the other hand, Justice Brennan, joined by Justice Black-mun, concluded that “the practical effect of the San Diego ordinance [was] to eliminate the billboard as an effective medium of communication” for noncommercial messages, and that the city had failed to make the strong showing needed to justify such “content-neutral prohibitions of particular media of communication.” Id., at 525-527. The three dissenters also viewed San Diego’s ordinance as tantamount to a blanket prohibition of billboards, but would have upheld it because they did not perceive “even a hint of bias or censorship in the city’s actions” nor “any reason to believe that the overall communications market in San Diego is inadequate.” Id., at 552-553 (Stevens, J., dissenting in part). See also id., at 563, 566 (Burger, C. J., dissenting); id., at 569-570 (Rehnquist, J., dissenting).

In Members of City Council of Los Angeles v. Taxpayers for Vincent, 466 U. S. 789 (1984), we upheld a Los Angeles ordinance that prohibited the posting of signs on public property. Noting the conclusion shared by seven Justices in Metromedia that San Diego’s “interest in avoiding visual clutter” was sufficient to justify a prohibition of commercial billboards, 466 U. S., at 806-807, in Vincent we upheld the Los Angeles ordinance, which was justified on the same grounds. We rejected the argument that the validity of the city’s esthetic interest had been compromised by failing to extend the ban to private property, reasoning that the “private citizen’s interest in controlling the use of his own property justifies the disparate treatment.” Id., at 811. We also rejected as “misplaced” respondents’ reliance on public forum principles, for they had “fail[ed] to demonstrate the existence of a traditional right of access respecting such items as utility poles . . . comparable to that recognized for public streets and parks.” Id., at 814.

These decisions identify two analytically distinct grounds for challenging the constitutionality of a municipal ordinance regulating the display of signs. One is that the measure in effect restricts too little speech because its exemptions discriminate on the basis of the signs’ messages. See Metro-media, 453 U. S., at 512-517 (opinion of White, J.). Alternatively, such provisions are subject to attack on the ground that they simply prohibit too much protected speech. See id., at 525-534 (Brennan, J., concurring in judgment). The City of Ladue contends, first, that the Court of Appeals’ reliance on the former rationale was misplaced because the City’s regulatory purposes are content neutral, and, second, that those purposes justify the comprehensiveness of the sign prohibition. A comment on the former contention will help explain why we ultimately base our decision on a rejection of the latter.

Ill

While surprising at first glance, the notion that a regulation of speech may be impermissibly underinclusive is firmly grounded in basic First Amendment principles. Thus, an exemption from an otherwise permissible regulation of speech may represent a governmental “attempt to give one side of a debatable public question an advantage in expressing its views to the people.” First Nat. Bank of Boston v. Bellotti, 435 U. S. 765, 785-786 (1978). Alternatively, through the combined operation of. a general speech restriction and its exemptions, the government might seek to select the “permissible subjects for public debate” and thereby to “control . . . the search for political truth.” Consolidated Edison Co. of N. Y. v. Public Serv. Comm’n of N. Y., 447 U. S. 530, 538 (1980).

The City argues that its sign ordinance implicates neither of these concerns, and that the Court of Appeals therefore erred in demanding a “compelling” justification for the exemptions. The mix of prohibitions and exemptions in the ordinance, Ladue maintains, reflects legitimate differences among the side effects of various kinds of signs. These differences are only adventitiously connected with content, and supply a sufficient justification, unrelated to the City’s approval or disapproval of specific messages, for carving out the specified categories from the general ban. See Brief for Petitioners 18-23. Thus, according to the Declaration of Findings, Policies, Interests, and Purposes supporting the ordinance, the permitted signs, unlike the prohibited signs, are unlikely to contribute to the dangers of “unlimited proliferation” associated with categories of signs that are not inherently limited in number. App. to Pet. for Cert. 37a. Because only a few residents will need to display “for sale” or “for rent” signs at any given time, permitting one such sign per marketed house does not threaten visual clutter. Ibid. Because the City has only a few businesses, churches, and schools, the same rationale explains the exemption for on-site commercial and organizational signs. Ibid. Moreover, some of the exempted categories (e. g., danger signs) respond to unique public needs to permit certain kinds of speech. Ibid. Even if we assume the validity of these arguments, the exemptions in Ladue’s ordinance nevertheless shed light on the separate question whether the ordinance prohibits too much speech.

Exemptions from an otherwise legitimate regulation of a medium of speech may be noteworthy for a reason quite apart from the risks of viewpoint and content discrimination: They may diminish the credibility of the government’s rationale for restricting speech in the first place. See, e. g., Cincinnati v. Discovery Network, Inc., 507 U. S. 410, 424-426 (1993). In this case, at the very least, the exemptions from Ladue’s ordinance demonstrate that Ladue has concluded that the interest in allowing certain messages to be conveyed by means of residential signs outweighs the City’s esthetic interest in eliminating outdoor signs. Ladue has not imposed a flat ban on signs because it has determined that at least some of them are too vital to be banned.

Under the Court of Appeals’ content discrimination rationale, the City might theoretically remove the defects in its ordinance by simply repealing all of the exemptions. If, however, the ordinance is also vulnerable because it prohibits too much speech, that solution would not save it. Moreover, if the prohibitions in Ladue’s ordinance are impermissible, resting our decision on its exemptions would afford scant relief for respondent Gilleo. She is primarily concerned not with the scope of the exemptions available in other locations, such as commercial areas and on church property; she asserts a constitutional right to display an antiwar sign at her own home. Therefore, we first ask whether Ladue may properly prohibit Gilleo from displaying her sign, and then, only if necessary, consider the separate question whether it was improper for the City simultaneously to permit certain other signs. In examining the propriety of Ladue’s near-total prohibition of residential signs, we will assume, arguendo, the validity of the City’s submission that the various exemptions are free of impermissible content or viewpoint discrimination.

IV

In Linmark we held that the city’s interest in maintaining a stable, racially integrated neighborhood was not sufficient to support a prohibition of residential “For Sale” signs. We recognized that even such a narrow sign prohibition would have a deleterious effect on residents’ ability to convey important information because alternatives were “far from satisfactory.” 431 U. S., at 93. Ladue’s sign ordinance is supported principally by the City’s interest in minimizing the visual clutter associated with signs, an interest that is concededly valid but certainly no more compelling than the interests at stake in Linmark. Moreover, whereas the ordinance in Linmark applied only to a form of commercial speech, Ladue’s ordinance covers even such absolutely pivotal speech as a sign protesting an imminent governmental decision to go to war.

The impact on free communication of Ladue’s broad sign prohibition, moreover, is manifestly greater than in Lin-mark. Gilleo and other residents of Ladue are forbidden to display virtually any “sign” on their property. The ordinance defines that term sweepingly. A prohibition is not always invalid merely because it applies to a sizeable category of speech; the sign ban we upheld in Vincent, for example, was quite broad. But in Vincent we specifically noted that the category of speech in question — signs placed on public property — was not a “uniquely valuable or important mode of communication,” and that there was no evidence that “appellees’ ability to communicate effectively is threatened by ever-increasing restrictions on expression.” 466 U. S., at 812.

Here, in contrast, Ladue has almost completely foreclosed a venerable means of communication that is both unique and important. It has totally foreclosed that medium to political, religious, or personal messages. Signs that react to a local happening or express a view on a controversial issue both reflect and animate change in the life of a community. Often placed on lawns or in windows, residential signs play an important part in political campaigns, during which they are displayed to signal the resident’s support for particular candidates, parties, or causes. They may not afford the same opportunities for conveying complex ideas as do other media, but residential signs have long been an important and distinct medium of expression.

Our prior decisions have voiced particular concern with laws that foreclose an entire medium of expression. Thus, we have held invalid ordinances that completely banned the distribution of pamphlets within the municipality, Lovell v. City of Griffin, 303 U. S. 444, 451-452 (1938); handbills on the public streets, Jamison v. Texas, 318 U. S. 413, 416 (1943); the door-to-door distribution of literature, Martin v. City of Struthers, 319 U. S. 141, 145-149 (1943); Schneider v. State (Town of Irvington), 308 U. S. 147, 164-165 (1939), and live entertainment, Schad v. Mount Ephraim, 452 U. S. 61, 75-76 (1981). See also Frisby v. Schultz, 487 U. S. 474, 486 (1988) (picketing focused upon individual residence is “fundamentally different from more generally directed means of communication that may not be completely banned in residential areas”). Although prohibitions foreclosing entire media may be completely free of content or viewpoint discrimination, the danger they pose to the freedom of speech is readily apparent — by eliminating a common means of speaking, such measures can suppress too much speech.

Ladue contends, however, that its ordinance is a mere regulation of the “time, place, or manner” of speech because residents remain free to convey their desired messages by other means, such as hand-held signs, “letters, handbills, flyers, telephone calls, newspaper advertisements, bumper stickers, speeches, and neighborhood or community meetings.” Brief for Petitioners 41. However, even regulations that do not foreclose an entire medium of expression, but merely shift the time, place, or manner of its use, must “leave open ample alternative channels for communication.” Clark v. Community for Creative Non-Violence, 468 U. S. 288, 293 (1984). , In this case, we are not persuaded that adequate substitutes exist for the important medium of speech that Ladue has closed off.

Displaying a sign from one’s own residence often carries a message quite distinct from placing the same sign someplace else, or conveying the same text or picture by other means. Precisely because of their location, such signs provide information about the identity of the “speaker.” As an early and eminent student of rhetoric observed, the identity of the speaker is an important component of many attempts to persuade. A sign advocating “Peace in the Gulf” in the front lawn of a retired general or decorated war veteran may provoke a different reaction than the same sign in a 10-year-old child’s bedroom window or the same message on a bumper sticker of a passing automobile. An espousal of socialism may carry different implications when displayed on the grounds of a stately mansion than when pasted on a factory wall or an ambulatory sandwich board.

Residential signs are an unusually cheap and convenient form of communication. Especially for persons of modest means or limited mobility, a yard or window sign may have no practical substitute. Cf. Vincent, 466 U. S., at 812-813, n. 30; Anderson v. Celebrezze, 460 U. S. 780, 793-794 (1983); Martin v. City of Struthers, 319 U. S., at 146; Milk Wagon Drivers v. Meadowmoor Dairies, Inc., 312 U. S. 287, 293 (1941). Even for the affluent, the added costs in money or time of taking out a newspaper advertisement, handing out leaflets on the street, or standing in front of one’s house with a hand-held sign may make the difference between participating and not participating in some public debate. Furthermore, a person who puts up a sign at her residence often intends to reach neighbors, an audience that could not be reached nearly as well by other means.

A special respect for individual liberty in the home has long been part of our culture and our law, see, e. g., Payton v. New York, 445 U. S. 573, 596-597, and nn. 44-45 (1980); that principle has special resonance when the government seeks to constrain a person’s ability to speak there. See Spence v. Washington, 418 U. S. 405, 406, 409, 411 (1974) (per curiam). Most Americans would be understandably dismayed, given that tradition, to learn that it was illegal to display from their window an 8- by 11-inch sign expressing their political views. Whereas the government’s need to mediate among various competing uses, including expressive ones, for public streets and facilities is constant and unavoidable, see Cox v. New Hampshire, 312 U. S. 569, 574, 576 (1941); see also Widmar v. Vincent, 454 U. S. 263, 278 (1981) (Stevens, J., concurring in judgment), its need to regulate temperate speech from the home is surely much less pressing, see Spence, 418 U. S., at 409.

Our decision that Ladue’s ban on almost all residential signs violates the First Amendment by no means leaves the City powerless to address the ills that may be associated with residential signs. It bears mentioning that individual residents themselves have strong incentives to keep their own property values up and to prevent “visual clutter” in their own yards and neighborhoods — incentives markedly different from those of persons who erect signs on others’ land, in others’ neighborhoods, or on public property. Residents’ self-interest diminishes the danger of the “unlimited” proliferation of residential signs that concerns the City of Ladue. We are confident that more temperate measures could in large part satisfy Ladue’s stated regulatory needs without harm to the First Amendment rights of its citizens. As currently framed, however, the ordinance abridges those rights.

Accordingly, the judgment of the Court of Appeals is

Affirmed.

Justice O’Connor,

concurring.

It is unusual for us, when faced with a regulation that on its face draws content distinctions, to “assume, arguendo, the validity of the City’s submission that the various exemptions are free of impermissible content or viewpoint discrimination.” Ante, at 53. With rare exceptions, content discrimination in regulations of the speech of private citizens on private property or in a traditional public forum is presumptively impermissible, and this presumption is a very strong one. Simon & Schuster, Inc. v. Members of N. Y. State Crime Victims Bd., 502 U. S. 105, 115-116 (1991). The normal inquiry that our doctrine dictates is, first, to determine whether a regulation is content based or content neutral, and then, based on the answer to that question, to apply the proper level of scrutiny. See, e. g., Burson v. Freeman, 504 U. S. 191, 197-198 (1992) (plurality opinion); Forsyth County v. Nationalist Movement, 505 U. S. 123, 133-135 (1992); Simon & Schuster, supra, at 115-116; Boos v. Barry, 485 U. S. 312, 318-321 (1988) (plurality opinion); Arkansas Writers’ Project, Inc. v. Ragland, 481 U. S. 221, 229-231 (1987); Carey v. Brown, 447 U. S. 455, 461-463 (1980); Police Dept. of Chicago v. Mosley, 408 U. S. 92, 95, 98-99 (1972).

Over the years, some cogent criticisms have been leveled at our approach. See, e. g., R. A. V. v. St. Paul, 505 U. S. 377, 420-422 (1992) (Stevens, J., concurring in judgment); Consolidated Edison Co. of N. Y. v. Public Serv. Comm’n of N. Y., 447 U. S. 530, 544-548 (1980) (Stevens, J., concurring in judgment); Farber, Content Regulation and the First Amendment: A Revisionist View, 68 Geo. L. J. 727 (1980); Stephan, The First Amendment and Content Discrimination, 68 Va. L. Rev. 203 (1982). And it is quite true that regulations are occasionally struck down because of their content-based nature, even though common sense may suggest that they are entirely reasonable. The content distinctions present in this ordinance may, to some, be a good example of this.

But though our rule has flaws, it has substantial merit as well. It is a rule, in an area where fairly precise rules are better than more discretionary and more subjective balancing tests. See Hustler Magazine, Inc. v. Falwell, 485 U. S. 46, 52-53 (1988). On a theoretical level, it reflects important insights into the meaning of the free speech principle — for instance, that content-based speech restrictions are especially likely to be improper attempts to value some forms of speech over others, or are particularly susceptible to being used by the government to distort public debate. See, e. g., ante,, at 51-53; Mosley, supra, at 95; Stone, Content Regulation and the First Amendment, 25 Wm. & Mary L. Rev. 189 (1983). On a practical level, it has in application generally led to seemingly sensible results. And, perhaps most importantly, no better alternative has yet come to light.

I would have preferred to apply our normal analytical structure in this case, which may well have required us to examine this law with the scrutiny appropriate to content-based regulations. Perhaps this would have forced us to confront some of the difficulties with the existing doctrine; perhaps it would have shown weaknesses in the rule, and led us to modify it to take into account the special factors this case presents. But such reexamination is part of the process by which our rules evolve and improve.

Nonetheless, I join the Court’s opinion, because I agree with its conclusion in Part IV that even if the restriction were content neutral, it would still be invalid, and because I do not think Part III casts any doubt on the propriety of our normal content discrimination inquiry.

      The First Amendment provides: “Congress shall make no law . . . abridging the freedom of speech, or of the press . . . .” The Fourteenth Amendment makes this limitation applicable to the States, see Gitlow v. New York, 268 U. S. 652 (1925), and to their political subdivisions, see Lovell v. City of Griffin, 303 U. S. 444 (1938).

       Ladue is a suburb of St. Louis, Missouri. It has a population of almost 9,000, and an area of about 8.5 square miles, of which only 3% is zoned for commercial or industrial use.

       The ordinance then in effect gave the city council the authority to “permit a variation in the strict application of the provisions and requirements of this chapter... where the public interest will be best served by permitting such variation.” App. 72.

       The new ordinance eliminates the provision allowing for variances and contains a grandfather clause exempting signs already lawfully in place.

       Section 35-2 of the ordinance declares that “No sign shall be erected [or] maintained” in the City except in conformity with the ordinance; §35-3 authorizes the City to remove nonconforming signs. App. to Pet. for Cert. 40a. Section 35-1 defines “sign” as:
      “A name, word, letter, writing, identification, description, or illustration which is erected, placed upon, affixed to, painted or represented upon a building or structure, or any part thereof, or in any manner upon a parcel of land or lot, and which publicizes an object, product, place, activity, opinion, person, institution, organization or place of business, or which is used to advertise or promote the interests of any person. The word ‘sign’ shall also include ‘banners’, ‘pennants’, ‘insignia’, ‘bulletin boards’, ‘ground signs’, ‘billboard’, ‘poster billboards’, ‘illuminated signs’, ‘projecting signs’, ‘temporary signs’, ‘marquees’, ‘roof signs’, ‘yard signs’, ‘electric signs’, ‘wall signs’, and ‘window signs’, wherever placed out of doors in view of the general public or wherever placed indoors as a window sign.” Id., at 39a.

       The full catalog of exceptions, each subject to special size limitations, is as follows: “[Mjunicipal signs”; “[sjubdivision and residence identification” signs; “[rjoad signs and driveway signs for danger, direction, or identification”; “[hjealth inspection signs”; “[sjigns for churches, religious institutions, and schools” (subject to regulations set forth in §35-5); “identification signs” for other not-for-profit organizations; signs “identifying the location of public transportation stops”; “[gjround signs advertising the sale or rental of real property,” subject to the conditions, set forth in §35-10, that such signs may “not be attached to any tree, fence or utility pole” and may contain only the fact of proposed sale or rental and the seller or agent’s name and address or telephone number; “[cjommercial signs in commercially zoned or industrial zoned districts,” subject to restrictions set out elsewhere in the ordinance; and signs that “identify] safety hazards.” §35-4, id, at 41a, 45a.

       The San Diego ordinance defined “on-site signs” as “those ‘designating the name of the owner or occupant of the premises upon which such signs are placed, or identifying such premises; or signs advertising goods manufactured or produced or services rendered on the premises upon which such signs are placed.’ ” Metromedia, Inc. v. San Diego, 453 U. S., at 494. The plurality read the “on-site” exemption of the San Diego ordinance as inapplicable to noncommercial messages. See id., at 513. Cf. id., at 535-536 (Brennan, J., concurring in judgment). The ordinance also exempted 12 categories of displays, including religious signs; for sale signs; signs on public and commercial vehicles; and “‘[t]emporary political campaign signs.’ ” Id., at 495, n. 3.

       Five Members of the Court joined Part IV of Justice White’s opinion, which approved of the city’s decision to prohibit off-site commercial billboards while permitting on-site billboards. None of the three dissenters disagreed with Part IV. See id., at 541 (Stevens, J., dissenting in part) (joining Part IV); id., at 564-565 (Burger, C. J., dissenting); id., at 570 (Rehnquist, J., dissenting).

       Like other classifications, regulatory distinctions among different kinds of speech may fell afoul of the Equal Protection Clause. See, e. g., Carey v. Brown, 447 U. S. 455, 459-471 (1980) (ordinance that forbade certain kinds of picketing but exempted labor picketing violated Clause); Police Dept. of Chicago v. Mosley, 408 U. S. 92, 98-102 (1972) (same).

       Of course, not every law that turns on the content of speech is invalid. See generally Stone, Restrictions of Speech Because of its Content: The Peculiar Case of Subject-Matter Restrictions, 46 U. Chi. L. Rev.
        79 (1978). See also Consolidated Edison Co. of N. Y. v. Public Serv. Comm’n of N. Y., 447 U. S., at 545, and n. 2 (Stevens, J., concurring in judgment).

      “Because we set to one side the content discrimination question, we need not address the City’s argument that the ordinance, although speaking in subject-matter terms, merely targets the “undesirable secondary effects” associated with certain kinds of signs. See Renton v. Playtime Theatres, Inc., 475 U. S. 41, 49 (1986). The inquiry we undertake below into the adequacy of alternative channels of communication would also apply to a provision justified on those grounds. See id, at 50.

       “[SJmall [political campaign] posters have maximum effect when they go up in the windows of homes, for this demonstrates that citizens of the district are supporting your candidate — an impact that money can’t buy.” D. Simpson, Winning Elections: A Handbook in Participatory Politics 87 (rev. ed. 1981).

       See Stone, Content-Neutral Restrictions, 54 U. Chi. L. Rev. 46, 57-58 (1987):
      “[T]he Court long has recognized that by limiting the availability of particular means of communication, content-neutral restrictions can significantly impair the ability of individuals to communicate their views to others.... To ensure ‘the widest possible dissemination of information[,]’ [Associated
        Press v. United States, 326 U. S. 1, 20 (1945),] and the ‘unfettered interchange of ideas,’ [Roth v. United States, 354 U. S. 476, 484 (1957),] the first amendment prohibits not only content-based restrictions that censor particular points of view, but also content-neutrál restrictions that unduly constrict the opportunities for free expression.”

       See Aristotle 2, Rhetoric, Book 1, ch. 2, in 8 Great Books of the Western World, Encyclopedia Brittanica 595 (M. Adler ed., 2d ed. 1990) (“We believe good men more fully and more readily than others: this is true generally whatever the question is, and absolutely true where exact certainty is impossible and opinions are divided”).

       The precise location of many other kinds of signs (aside from “on-site” signs) is of lesser communicative importance. For example, assuming the audience is similar, a commercial advertiser or campaign publicist is likely to be relatively indifferent between one sign site and another. The elimination of a cheap and handy medium of expression is especially apt to deter individuals from communicating their views to the public, for unlike businesses (and even political organizations) individuals generally realize few tangible benefits from such communication. Cf. Virginia Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U. S. 748, 772, n. 24 (1976) (“Since advertising is the sine qua non of commercial profits, there is little likelihood of its being chilled by proper regulation and forgone entirely”).

       Counsel for Ladue has also cited flags as a viable alternative to signs. Counsel observed that the ordinance does not restrict flags of any stripe, including flags bearing written messages. See Tr. of Oral Arg. 16, 21 (noting that rectangular flags, unlike “pennants” and “banners,” are not prohibited by the ordinance). Even assuming that flags are nearly as affordable and legible as signs, we do not think the mere possibility that another medium could be used in an unconventional manner to carry the same messages alters the fact that Ladue has banned a distinct and traditionally important medium of expression. See, e. g., Schneider v. State (Town of Irvington), 308 U. S. 147, 163 (1939).

       Nor do we hold that every kind of sign must be permitted in residential areas. Different considerations might well apply, for example, in the case of signs (whether political or otherwise) displayed by residents for a fee, or in the case of off-site commercial advertisements on residential property. We also are not confronted here with mere regulations short of a ban.


source: Caselaw Access Project

author: Justice Stevens

license: Public Domain

text:
    DEPARTMENT OF TAXATION AND FINANCE OF NEW YORK et al. v. MILHELM ATTEA & BROS., INC., et al.
    No. 93-377.
    Argued March 23, 1994
    Decided June 13, 1994

      Stevens, J., delivered the opinion for a unanimous Court.

      G. Oliver Koppell, Attorney General of New York, argued the cause for petitioners. With him on the briefs were Robert Abrams, former Attorney General, Jerry Boone, Solicitor General, Peter H. Schiff, Deputy Solicitor General, and Lew A. Millenbach, Assistant Attorney General.

      Joseph E. Zdarsky argued the cause for respondents. With him on the brief were Hans Walker, Jr., Michael Roy, Guy J. Agostinelli, and Gerald T. Walsh.

      Beth S. Brinkmann argued the cause for the United States as amicus curiae urging affirmance. With her on the brief were Solicitor General Days, Acting Assistant Attorney General Schiffer, Deputy Solicitor General Kneedler, Edward J. Shawaker, and Vicki L. Plant

      Briefs of amici curiae urging reversal were filed for the State of Connecticut by Richard Blumenthal, Attorney General, and David H. Wrinn, Assistant Attorney General; for the State of Washington et al. by Christine O. Gregoire, Attorney General of Washington, and by the Attorneys General for their respective States as follows: Grant Woods of Arizona, Daniel E. Lungren of California, Robert A Butterworth of Florida, Bonnie J. Campbell of Iowa, Joseph R Mazurek of Montana, Frankie Sue Del Papa of Nevada, Heidi Heitkamp of North Dakota, Susan B. Loving of Oklahoma, Theodore R. Kulongoski of Oregon, Jeffrey B. Pine of Rhode Island, Mark Barnett of South Dakota, Jan Graham of Utah, and James E. Doyle of Wisconsin; for the Empire State Petroleum Association, Inc., et al. by Emilio A F. Petroccione and Usher Fogel; for the National Association of Convenience Stores et al. by Mark L. Austrian; for the National Governors’ Association et al. by Richard Ruda; and for the New York State Association of Tobacco and Candy Distributors, Inc., by Thomas G. Jackson.

      Briefs of amici curiae urging affirmance were filed for the Cheyenne-Arapaho Tribes of Oklahoma et al. by Melody L. McCoy, Yvonne Teresa Knight, Kim Jerome Gottschalk, Bertram E. Hirsch, Patrick L. Smith, Michael E. Taylor, Jeanne S. Whiteing, and Robert S. Thompson III; for the Muscogee (Creek) Nation by Michael Minnis, F. Browning Pipestem, and Leah Harjo Ware; for the Oneida Indian Nation of New York by William W. Taylor III and Michael R. Smith; for the Saint Regis Mohawk Tribe et al. by Bradley S. Waterman and Samuel M. Maruca; and for the Seneca Nation of Indians by Timothy B. Dyk and Beth Heifetz.

   Justice Stevens

delivered the opinion of the Court.

Cigarette consumers in New York are subject to a state tax of 56 cents per pack. Enrolled tribal members who purchase cigarettes on Indian reservations are exempt from this tax, but non-Indians making purchases on reservations must pay it. To prevent non-Indians from escaping the tax, New York has enacted a regulatory scheme that imposes record-keeping requirements and quantity limitations on cigarette wholesalers who sell untaxed cigarettes to reservation Indians. The question presented is whether New York’s program is pre-empted by federal statutes governing trade with Indians.

I

Article 20 of the New York Tax Law imposes a tax on all cigarettes possessed in the State except those that New York is “without power” to tax. N. Y. Tax Law § 471(1) (McKinney 1987 and Supp. 1994). The State collects the cigarette tax through licensed agents who purchase tax stamps and affix them to cigarette packs in advance of the first sale within the State. The full amount of the tax is part of the price of stamped cigarettes at all subsequent steps in the distribution stream. Accordingly, the “ultimate incidence of and liability for the tax [is] upon the consumer.” §471(2). Any person who “willfully attempts in any manner to evade or defeat” the cigarette tax commits a misdemeanor. N. Y. Tax Law § 1814(a) (McKinney 1987).

Because New York lacks authority to tax cigarettes sold to tribal members for their own consumption, see Moe v. Confederated Salish and Kootenai Tribes of Flathead Reservation, 425 U. S. 463, 475-481 (1976), cigarettes to be consumed on the reservation by enrolled tribal members are tax exempt and need not be stamped. On-reservation cigarette sales to persons other than reservation Indians, however, are legitimately subject to state taxation. See Washington v. Confederated Tribes of Colville Reservation, 447 U. S. 134, 160-161 (1980). In 1988, New York’s Department of Taxation and Finance determined that a large volume of unstamped cigarettes was being purchased by non-Indians from reservation retailers. According to an affidavit submitted by an official in the Department’s Audit Division, the volume of tax-exempt cigarettes sold on New York reservations in 1987-1988 would, if consumed exclusively by tax-immune Indians, correspond to a consumption rate 20 times higher than that of the average New York resident; in 1988-1989, putative reservation consumption was 32 times the statewide average. See Record 244-246 (Affidavit of Jamie Woodward). Because unlawful purchases of unstamped cigarettes deprived New York of substantial tax revenues — now estimated at more than $65 million per year — the Department adopted the regulations at issue in this case.

The regulations recognize the right of “exempt Indian nations or tribes, qualified Indian consumers and registered dealers” to “purchase, on. qualified reservations, cigarettes upon which the seller has not prepaid and precollected the cigarette tax imposed pursuant to article 20 of the Tax Law.” 20 N. Y. C. R. R. § 336.6(a) (1992). To ensure that nonexempt purchasers do not likewise escape taxation, the regulations limit the quantity of untaxed cigarettes that wholesalers may sell to tribes and tribal retailers. The limitations may be established and enforced in alternative ways. A tribe may enter into an agreement with the Department “to regulate, license, or control the sale and distribution within its qualified reservation of an agreed upon amount of [untaxed] cigarettes,” in which case wholesalers must obtain the tribe’s approval for each delivery of untaxed cigarettes to a reservation retailer. § 336.7(c)(1). In the absence of such an agreement — and apparently there have been none to date — the Department itself limits the permitted quantity of untaxed cigarettes based on the “probable demand” of tax-exempt Indian consumers. § 336.7(d)(1).

The Department calculates “probable demand” in either of two ways. If a tribe “regulates, licenses or controls the sale and distribution of cigarettes within its reservation,” the Department will rely upon evidence submitted by that tribe concerning local demand for cigarettes. § 336.7(d)(2)(i). Otherwise, the Department fixes the untaxed cigarette limit for a tribe by multiplying the “New York average [cigarette] consumption per capita” by the number of enrolled members of the affected tribe. §§ 336.7(d)(1), (d)(2)(ii). Each sale of untaxed cigarettes by a wholesaler to a tribe or reservation retailer must be approved by the Department; approval is “based upon evidence of valid purchase orders received by the agent [i e., wholesaler] of quantities of cigarettes reasonably related to the probable demand of qualified Indian consumers in the trade territory” of the tribe. Ibid. Retailers are sent “Tax Exemption Coupons” entitling them to their monthly allotment of tax-exempt cigarettes. The retailer gives copies of its coupons to the wholesaler upon delivery, and the wholesaler forwards one to the Department. See Brief for Petitioners 12-13; App. 44-45. The Department may withhold approval of deliveries to tribes or retailers who “are or have been” violating the regulations, § 336.7(d)(6), and may cancel the exemption certificates of noncomplying tribes or retailers. See §§ 336.6(d)(3), (e)(5).

Wholesalers who wish to sell tax-free cigarettes to Indian tribes or reservation retailers must ensure that the buyer intends to distribute the cigarettes to tax-exempt consumers, takes delivery on the reservation, and holds a valid state tax exemption certificate. Reservation retailers may sell unstamped cigarettes only to “qualified Indian consumers,” who at the time of first purchase must provide the retailer with a “certificate of individual Indian exemption” and provide written evidence of their identity for subsequent purchases. §§ 336.6(e)(2), (g)(1).

Wholesale distributors of tax-exempt cigarettes must hold state licenses authorizing them to purchase and affix New York cigarette tax stamps, and must collect taxes on nonexempt sales. §§ 336.7(b)(2), (e). They must also keep records reflecting the identity of the buyer in each tax-exempt sale and make monthly reports to the Department on all such sales. §§ 336.6(g)(3)-(4). New York’s regulatory scheme, unsurprisingly, imposes no restrictions on the sale of stamped cigarettes — i. e., those on which taxes have been precollected by wholesalers.

II

Respondents are wholesalers licensed by the Bureau of Indian Affairs of the United States Department of the Interior (BIA) to sell cigarettes to reservation Indians. Before New York’s cigarette tax enforcement scheme went into effect, they filed separate suits in the Supreme Court in Albany County alleging that the regulations were pre-empted by the federal Indian Trader Statutes, 25 U. S. C. § 261 et seq. The trial court agreed and issued an injunction. After the Appellate Division affirmed, Milhelm Attea & Bros., Inc. v. Dept. of Taxation and Finance of New York, 164 App. Div. 2d 300, 564 N. Y. S. 2d 491 (1990), and the New York Court of Appeals denied review, we granted certiorari, vacated the judgment of the Appellate Division, and remanded for further consideration in the light of our decision in Oklahoma Tax Comm’n v. Citizen Band of Potawatomi Tribe of Okla., 498 U. S. 505 (1991). 502 U. S. 1053 (1992). On remand, the Appellate Division upheld the regulations, 181 App. Div. 2d 210, 585 N. Y. S. 2d 847 (1992), but the Court of Appeals reversed, 81 N. Y. 2d 417, 615 N. E. 2d 994 (1993).

The Court of Appeals distinguished our decisions holding that a State may require Indian retailers to collect a tax imposed on non-Indian purchasers of cigarettes, see Moe v. Confederated Salish and Kootenai Tribes of Flathead Reservation, 425 U. S. 463 (1976); Washington v. Confederated Tribes of Colville Reservation, 447 U. S. 134 (1980), on the ground that those cases involved the regulation of sales to non-Indian consumers. 81 N. Y. 2d, at 425, 615 N. E. 2d, at 997. In the Court of Appeals’ view, this case was significantly different because New York’s regulations apply to sales by non-Indian wholesalers to reservation Indians. Ibid. The court concluded that the Indian Trader Statutes, as construed in Warren Trading Post Co. v. Arizona Tax Comm’n, 380 U. S. 685 (1965), deprived the States of all power to impose regulatory burdens on licensed Indian traders. 81 N. Y. 2d, at 426-427, 615 N. E. 2d, at 997-998. Even if States could impose minimal burdens on Indian traders, the Court of Appeals alternatively held, New York’s regulations are nevertheless invalid because they “impose significant burdens on the wholesaler.” Id., at 427, 615 N. E. 2d, at 998. In particular, the regulations “dictate to Indian traders the number of unstamped cigarettes they can sell to reservation Indians and direct with whom they may trade.” Ibid. Moreover, New York’s scheme “requires wholesale distributors to prepay taxes on all cigarettes delivered on the reservations in excess of the predetermined maximum amount and, with respect to those cigarettes, imposes a sales tax on Indian retailers.” Ibid.

We granted certiorari, 510 U. S. 943 (1993), and now reverse*

III

Respondents’ challenge to New York’s regulatory scheme is essentially a facial one. In reviewing a challenge of this kind, we do not rest our decision on consequences that, while possible, are by no means predictable. For example, respondents do not contest the factual accuracy of the Department’s initial calculations of “probable demand” for tax-exempt cigarettes at particular reservations, see Record 244-248; rather, they challenge the Department’s authority to impose such limits at all. Therefore, for present purposes we must assume that the allocations for each reservation will be sufficiently generous to satisfy the legitimate demands of those reservation Indians who smoke cigarettes. In other respects as well, we confine ourselves to those alleged defects that inhere in the regulations as written.

A second limitation on our review flows from the nature of respondents’ challenge. Their claim is that the New York scheme interferes with their federally protected activities as Indian traders who sell goods at wholesale to reservation Indians. While the effect of the New York scheme on Indian retailers and consumers may be relevant to that inquiry, see Warren Trading Post, 380 U. S., at 691, this case does not require us to assess for all purposes each feature of New York’s tax enforcement scheme that might affect tribal self-government or federal authority over Indian affairs. Here we confront the narrower question whether the New York scheme is inconsistent with the Indian Trader Statutes.

IV

Throughout this Nation’s history, Congress has authorized “sweeping” and “comprehensive federal regulation” over persons who wish to trade with Indians and Indian tribes. Warren Trading Post, 380 U. S., at 687-689. An exercise of Congress’ power to “regulate Commerce ... with the Indian Tribes,” see U. S. Const., Art. I, § 8, cl. 3, the Indian Trader Statutes were enacted to prevent fraud and other abuses by persons trading with Indians. See Central Machinery Co. v. Arizona Tax Comm’n, 448 U. S. 160, 163-164 (1980). The provision principally relied upon by respondents and by the Court of Appeals, enacted in 1876 and captioned “Power to appoint traders with Indians,” states:

“The Commissioner of Indian Affairs shall have the sole power and authority to appoint traders to the Indian tribes and to make such rules and regulations as he may deem just and proper specifying the kind and quantity of goods and the prices at which such goods shall be sold to the Indians.” 19 Stat. 200, 25 U. S. C. §261.

In Warren Trading Post, we held that this provision prevented Arizona from imposing a tax on the income or gross sales proceeds of licensed Indian traders dealing with reservation Indians. The Indian Trader Statutes and the “apparently all-inclusive regulations” under them, we stated, “would seem in themselves sufficient to show that Congress has taken the business of Indian trading on reservations so fully in hand that no room remains for state laws imposing additional burdens upon traders.” 380 U. S., at 690. Therefore, Arizona’s tax “would to a substantial extent frustrate the evident congressional purpose of ensuring that no burden shall be imposed upon Indian traders for trading with Indians on reservations except as authorized by Acts of Congress or by valid regulations promulgated under those Acts.” Id., at 691. See also Central Machinery Co., 448 U. S., at 163-166 (tax on proceeds of sale of farm machinery to tribe preempted by §261).

Although language in Warren Trading Post suggests that no state regulation of Indian traders can be valid, our subsequent decisions have “undermine[d]” that proposition. See Central Machinery, 448 U. S., at 172 (Powell, J., dissenting). Thus, in Moe, we upheld a Montana law that required Indian retailers on tribal land to collect a state cigarette tax imposed on sales to non-Indian consumers. We noted that the Indian smokeshop proprietor’s competitive advantage over other retailers depended “on the extent to which the non-Indian purchaser is willing to flout his legal obligation to pay the tax. Without the simple expedient of having the retailer collect the sales tax from non-Indian purchasers, it is clear that wholesale violations of the law by the latter class will go virtually unchecked.” 425 U. S., at 482. In contrast to the tax in Warren Trading Post, which fell directly upon an Indian trader, the cigarette tax in Moe fell upon a class— non-Indians — whom the State had power to tax. 425 U. S., at 483. We approved Montana’s “requirement that the Indian tribal seller collect a tax validly imposed on non-Indians” as a “minimal burden designed to avoid the likelihood that in its absence non-Indians purchasing from the tribal seller will avoid payment of a concededly lawful tax.” Ibid.

In Colville, we upheld in relevant part a more comprehensive Washington State cigarette tax enforcement scheme that required tribal retailers selling goods on the reservation to collect taxes on sales to nonmembers and to keep extensive records concerning these transactions. We rejected the proposition that “principles of federal Indian law, whether stated in terms of pre-emption, tribal self-government, or otherwise, authorize Indian tribes thus to market an exemption from state taxation to persons who would normally do their business elsewhere.” 447 U. S., at 155. Moreover, the Tribes had failed to meet their burden of showing that the recordkeeping requirements imposed on tribal retailers were “not reasonably necessary as a means of preventing fraudulent transactions.” Id., at 160. See also California Bd. of Equalization v. Chemehuevi Tribe, 474 U. S. 9, 11-12 (1985) (per curiam).

In Potawatomi, we held that sovereign immunity barred the State of Oklahoma’s suit against a Tribe to recover cigarette taxes owed for sales to non-Indians at a convenience store owned by the Tribe. In response to the State’s protest that the Tribe’s immunity from suit made the State’s recognized authority to tax cigarette sales to non-Indians a “right without any remedy,” 498 U. S., at 514, we explained that alternative remedies existed for state tax collectors, such as damages actions against individual tribal officers or agreements with the tribes. Ibid. We added that “States may of course collect the sales tax from cigarette wholesalers, either by seizing unstamped cigarettes off the reservation, Colville, [447 U. S.,] at 161-162, or by assessing wholesalers who supplied unstamped cigarettes to the tribal stores." Ibid.

V

This is another case in which we must “reconcile the plenary power of the States over residents within their borders with the semi-autonomous status of Indians living on tribal reservations.” McClanahan v. Arizona Tax Comm’n, 411 U. S. 164, 165 (1973). Resolution of conflicts of this kind does not depend on “rigid rule[s]” or on “mechanical or absolute conceptions of state or tribal sovereignty,” but instead on “a particularized inquiry into the nature of the state, federal, and tribal interests at stake, an inquiry designed to determine whether, in the specific context, the exercise of state authority would violate federal law.” White Mountain Apache Tribe v. Bracker, 448 U. S. 136, 142, 145 (1980). See also Cotton Petroleum Corp. v. New Mexico, 490 U. S. 163, 176 (1989).

The specific kind of state tax obligation that New York’s regulations are designed to enforce&emdash;which falls on non-Indian purchasers of goods that are merely retailed on a reservation&emdash;stands on a markedly different footing from a tax imposed directly on Indian traders, on enrolled tribal members or tribal organizations, or on “value generated on the reservation by activities involving the Tribes,” Colville, 447 U. S., at 156-157. Moe, Colville, and Potawatomi make clear that the States have a valid interest in ensuring compliance with lawful taxes that might easily be evaded through purchases of tax-exempt cigarettes on reservations; that interest outweighs tribes’ modest interest in offering a tax exemption to customers who would ordinarily shop elsewhere. The “balance of state, federal, and tribal interests,” Rice v. Rehner, 463 U. S. 713, 720 (1983), in this area thus leaves more room for state regulation than in others. In particular, these cases have decided that States may impose on reservation retailers minimal burdens reasonably tailored to the collection of valid taxes from non-Indians.

Although Moe and Colville dealt most directly with claims of interference with tribal sovereignty, the reasoning of those decisions requires rejection of the submission that 25 U. S. C. §261 bars any and all state-imposed burdens on Indian traders. It would be anomalous to hold that a State could impose tax collection and bookkeeping burdens on reservation retailers who are themselves enrolled tribal members, including stores operated by the tribes themselves, but that similar burdens could not be imposed on wholesalers, who often (as in this case) are not. Such a ruling might well have the perverse consequence of casting greater state tax enforcement burdens on the very reservation Indians whom the Indian Trader Statutes were enacted to protect. Just as tribal sovereignty does not completely preclude States from enlisting tribal retailers to assist enforcement of valid state taxes, the Indian Trader Statutes do not bar the States from imposing reasonable regulatory burdens upon Indian traders for the same purpose. A regulation designed to prevent non-Indians from evading taxes may well burden Indian traders in the sense that it reduces the competitive advantage offered by trading unlimited quantities of tax-free goods; but that consideration is no more weighty in the case of Indian traders engaged in wholesale transactions than it was in the case of reservation retailers.

The state law we found pre-empted in Warren Trading Post was a tax directly “imposed upon Indian traders for trading with Indians.” 380 U. S., at 691. See also Central Machinery, 448 U. S., at 164. That characterization does not apply to regulations designed to prevent circumvention of “concededly lawful” taxes owed by non-Indians. See Moe, 425 U. S., at 482-483. Although broad language in our opinion in Warren Trading Post lends support to a contrary conclusion, we now hold that Indian traders are not wholly immune from state regulation that is reasonably necessary to the assessment or collection of lawful state taxes. That conclusion does not, of course, answer the Court of Appeals’ alternative basis for striking down the New York scheme— namely, that it imposes excessive burdens on Indian traders.

VI

Respondents vigorously object to the limitation of wholesaler’s tax-exempt cigarette sales through the “probable demand” mechanism. We are persuaded, however, that New York’s decision to stanch the illicit flow of tax-free cigarettes early in the distribution stream is a “reasonably necessary” method of “preventing fraudulent transactions,” one that “polices against wholesale evasion of [New York’s] own valid taxes without unnecessarily intruding on core tribal interests.” Colville, 447 U. S., at 160, 162. The sole purpose and justification for the quotas on untaxed cigarettes is the State’s legitimate interest in avoiding tax evasion by non-Indian consumers. By imposing a quota on tax-free cigarettes, New York has not sought to dictate “the kind and quantity of goods and the prices at which such goods shall be sold to the Indians.” 25 U. S. C. §261. Indian traders remain free to sell Indian tribes and retailers as many cigarettes as they wish, of any kind and at whatever price. If the Department’s “probable demand” calculations are adequate, tax-immune Indians will not have to pay New York cigarette taxes and neither wholesalers nor retailers will have to precollect taxes on cigarettes destined for their consumption. While the possibility of an inadequate quota may provide the basis for a future challenge to the application of the regulations, we are unwilling to assume, in the absence of any such showing by respondents, that New York will underestimate the legitimate demand for tax-free cigarettes. The associated requirement that the Department preapprove deliveries of tax-exempt cigarettes in order to ensure compliance with the quotas does not render the scheme facially invalid. This procedure should not prove unduly burdensome absent wrongful withholding or delay of approval— problems that can be addressed if and when they arise. See Colville, 447 U. S., at 160 (burden of showing that tax enforcement scheme imposes excessive regulatory burdens is on challenger).

New York’s requirements that wholesalers sell untaxed cigarettes only to persons who can produce valid exemption certificates and that wholesalers maintain detailed records on tax-exempt transactions likewise do not unduly interfere with Indian trading. The recordkeeping requirements and eligible buyer restrictions in the New York scheme are no more demanding than the comparable measures we approved in Colville. See n. 8, supra. Indeed, because wholesale trade typically involves a comparatively small number of large-volume sales, the transactional recordkeeping requirements imposed on Indian traders in this case are probably less onerous than those imposed on retailers in Moe and Col-ville. By requiring wholesalers to precollect taxes on, and affix stamps to, cigarettes destined for nonexempt consumers, New York has simply imposed on the wholesaler the same precollection obligation that, under Moe and Colville, may be imposed on reservation retailers. We therefore disagree with the Court of Appeals’ conclusion that New York has in this way “imposefd] a sales tax on Indian retailers.” 81 N. Y. 2d, at 427, 615 N. E. 2d, at 998 (emphasis added). Again assuming that the “probable demand” calculations leave ample room for legitimately tax-exempt sales, the precollection regime will not require prepayment of any tax to which New York is not entitled.

The United States, as amicus supporting affirmance, agrees with the Court of Appeals’ alternative holding that the New York scheme improperly burdens Indian trading. In addition to the provisions disapproved by the Court of Appeals, the United States attacks the requirement that reservation retailers obtain state tax exemption certificates on the ground that it invades the BIA’s “sole power and authority” to appoint Indian traders. We do not, however, understand the regulations to do anything more than establish a method of identifying those retailers who are already engaged in the business of selling cigarettes. At this stage, we will not assume that the Department would refuse certification to any federally authorized trader or stultify tribal economies by refusing certification to new reservation retailers. Indeed, the Department assures us that certification is “virtually automatic” upon submission of an application. Reply Brief for Petitioners 5 (citing 20 N. Y. C. R. R. § 336.6(f)(1) (1992)).

The United States also objects to the provisions for establishing “trade territories” and allocating each reservation’s overall quota among its retail outlets. Depending upon how they are applied in particular circumstances, these provisions may present significant problems to be addressed in some future proceeding. However, the record before us furnishes no basis for identifying or evaluating any such problem. Agreements between the Department and individual tribes might avoid or resolve problems that are now purely hypothetical. Possible problems involving the allocation of cigarettes among reservation retailers would not necessarily threaten any harm to respondent wholesalers, whose main interest lies in selling the maximum number of cigarettes, however ultimately allocated.

Because we conclude that New York’s cigarette tax enforcement regulations do not, on their face, violate the Indian Trader Statutes, the judgment of the New York Court of Appeals is reversed.

It is so ordered.

       The petitioners in this case are the Department of Taxation and Finance of the State of New York, its Commissioner James W. Wetzler, and the Tax Appeals Tribunal of the State of New York. For convenience we refer to petitioners collectively as the Department.

       The cigarette regulations are similar to regulations New York adopted in an effort to prevent sales of untaxed gasoline to non-Indians on reservations. See Herzog Bros. Trucking, Inc. v. State Tax Comm’n, 69 N. Y. 2d 536, 508 N. E. 2d 914 (1987) (finding regulations pre-empted by federal law), vacated and remanded, 487 U. S. 1212 (1988), on remand 72 N. Y. 2d 720, 533 N. E. 2d 255 (1988).

       The regulation cites as examples of such evidence “records of previous sales to qualified Indian consumers, records relating to the average consumption of qualified Indian consumers on and near its reservation, tribal enrollment, or other statistical evidence, etc.” 20 N. Y. C. R. R. §336.7(d)(2)(i) (1992).

       The Department determines the “trade territory” in consultation with the tribe if the tribe has undertaken to regulate the sale and distribution of cigarettes; otherwise, the Department determines the trade territory “based upon the information at its disposal.” §336.7(d)(3)(ii).

       See §§ 336.6(d)(1), (f)(1); § 336.7(b)(1). The purchasing tribe or retailer must display its exemption certificate at the time of first purchase, and must sign an invoice for subsequent purchases. § 336.6(g)(1).

       A “qualified Indian consumer” is an enrolled member of one of New York’s exempt Indian nations or tribes “who purchases or intends to purchase cigarettes within the boundaries of a qualified reservation for such Indian’s own use or consumption (i. e., other than for resale) within such reservation.” §336.6(b)(l)(ii).

       The other Indian trader provisions state that persons who establish their fitness to trade with Indians to the BIA’s satisfaction shall be permitted to do so, 25 U. S. C. §262, authorize the President to prohibit the introduction of goods into Indian country and to revoke licenses, §263, and impose penalties for unauthorized trading, §264. BIA regulations under the statutes are codified at 25 CFR §§ 140.1-140.26 (1993).

       We described the recordkeeping requirements as follows:
      “The state sales tax scheme requires smokeshop operators to keep detailed records of both taxable and nontaxable transactions. The operator must record the number and dollar volume of taxable sales to nonmembers of the Tribe. With respect to nontaxable sales, the operator must record and retain for state inspection the names of all Indian purchasers, their tribal affiliations, the Indian reservations within which sales are made, and the dollar amount and dates of sales. In addition, unless the Indian purchaser is personally known to the operator he must present a tribal identification card.” Colville, 447 U. S., at 159.

       In fact, in Colville, the tribal retailers obligated to collect state taxes on cigarette sales to non-Indians and keep detailed sales records were licensed Indian traders. See Confederated Tribes of Colville v. State of Wash., 446 F. Supp. 1339, 1347 (ED Wash. 1978).

       “According to the Federal Government, there are approximately 125 federally licensed Indian traders in New York, of whom the 64 wholesalers are all non-Indians and the 61 retailers are all Indians. See Brief for United States as Amicus Curiae 2, n. 1.

        Amicus the Seneca Nation argues that New York’s cigarette tax regulations violate treaties between it and the United States insofar as the regulations allow New York to tax any transactions occurring on Seneca tribal lands. See Brief for Seneca Nation of Indians as Amicus Curiae 18-26; but see Brief for United States as Amicus Curiae 21-24. We do not address this contention, which differs markedly from respondents’ position and which was not addressed by the Court of Appeals. See United Parcel Service, Inc. v. Mitchell, 451 U. S. 56, 60, n. 2 (1981).


author:
Justice Scalia
      Justice Stevens,

text:
    O’MELVENY & MYERS v. FEDERAL DEPOSIT INSURANCE CORPORATION, as receiver for AMERICAN DIVERSIFIED SAVINGS BANK, et al.
    No. 93-489.
    Argued March 21, 1994
    Decided June 13, 1994

      Scalia, J., delivered the opinion for a unanimous Court. Stevens, J., filed a concurring opinion, in which Blackmun, O’Connor, and Souter, JJ., joined, post, p. 90.

      Rex E. Lee argued the cause for petitioner. With him on the briefs were Robert D. McLean, Carter G. Phillips, Joseph R. Guerra, Peter D. Keisler, Richard D. Bernstein, Gregory R. Smith, Joseph M. Lipner, and Elliot Brown.

      Deputy Solicitor General Bender argued the cause for respondents. With him on the brief were Solicitor General Days, James A. Feldman, Ann S. DuRoss, Richard J. Osterman, and Jerome A. Madden.

      Briefs of amici curiae urging reversal were filed for Arthur Andersen & Co. et al. by Carl D. Liggio, Kathryn A Oberly, Jon N. Ekdahl, Harris J. Amhowitz, Howard J. Krongard, Edwin D. Scott, and Eldon Olson; for Banking and Business Lawyers by Keith R. Fisher, John C. Deal, David S. Willenzik, Neal L. Petersen, Henry H. Fox, and Michael J. Halloran; and for Lee H. Henkel III by Keith A Jones.

        C. Edward Simpson, Theodore H. Focht, and Michael E. Don filed a brief for the Securities Investor Protection Corporation et al. as amici curiae urging affirmance.
      Briefs of amici curiae were filed for the American Bar Association by R. William Ide III, John J. Curtin, Jr., and Arthur W. Leibold, Jr.; and for Shrader & York et al. by Eugene B. Wilshire, Jr., and Patrick J. Dyer.

   Justice Scalia

delivered the opinion of the Court.

The issue in this case is whether, in a suit by the Federal Deposit Insurance Corporation (FDIC) as receiver of a federally insured bank, it is a federal-law or rather a state-law rule of decision that governs the tort liability of attorneys who provided services to the bank.

I

American Diversified Savings Bank (ADSB or S&L) is a California-chartered and federally insured savings and loan. The following facts have been stipulated to, or are uncontroverted, by the parties to the case, and we assume them to be true for purposes of our decision. ADSB was acquired in 1983 by Ranbir Sahni and Lester Day, who respectively obtained 96% and 4% of its stock, and who respectively served as its chairman/CEO and president. Under their leadership, ADSB engaged in many risky real estate transactions, principally through limited partnerships sponsored by ADSB and its subsidiaries. Together, Sahni and Day also fraudulently overvalued ADSB’s assets, engaged in sham sales of assets to create inflated “profits,” and generally “cooked the books” to disguise the S&L’s dwindling (and eventually negative) net worth.

In September 1985, petitioner O’Melveny & Myers, a Los Angeles-based law firm, represented ADSB in connection with two real estate syndications. At that time, ADSB was under investigation by state and federal regulators, but that fact had not been made public. In completing its work for the S&L, petitioner did not contact the accounting firms that had previously done work for ADSB, nor state and federal regulatory authorities, to inquire about ADSB’s financial status. The two real estate offerings on which petitioner worked closed on December 31,1985. On February 14,1986, federal regulators concluded that ADSB was insolvent and that it had incurred substantial losses because of violations of law and unsound business practices. Respondent stepped in as receiver for ADSB, and on February 19,1986, filed suit against Messrs. Sahni and Day in Federal District Court, alleging breach of fiduciary duty and, as to Sahni, Racketeer Influenced and Corrupt Organizations Act violations. Soon after taking over as receiver, respondent began receiving demands for refunds from investors who claimed that they had been deceived in connection with the two real estate syndications. Respondent caused ADSB to rescind the syndications and to return all of the investors' money plus interest.

On May 12,1989, respondent sued petitioner in the United States District Court for the Central District of California, alleging professional negligence and breach of fiduciary duty. The parties stipulated to certain facts and petitioner moved for summary judgment, arguing that (1) it owed no duty to ADSB or its affiliates to uncover the S&L’s own fraud; (2) that knowledge of the conduct of ADSB’s controlling officers must be imputed to the S&L, and hence to respondent, which, as receiver, stood in the shoes of the S&L; and (3) that respondent was estopped from pursuing its tort claims against petitioner because of the imputed knowledge. On May 15, 1990, the District Court granted summary judgment, explaining only that petitioner was “entitled to judgment in its favor ... as a matter of law.” The Court of Appeals for the Ninth Circuit reversed, on grounds that we shall discuss below. 969 F. 2d 744 (1992). Petitioner filed a petition for writ of certiorari, which we granted. 510 U. S. 989 (1993).

II

It is common ground that the FDIC was asserting in this case causes of action created by California law. Respondent contends that in the adjudication of those causes of action (1) a federal common-law rule and not California law determines whether the knowledge of corporate officers acting against the corporation’s interest will be imputed to the corporation; and (2) even if California law determines the former question, federal common law determines the more narrow question whether knowledge by officers so acting will be imputed to the FDIC when it sues as receiver of the corporation.

The first of these contentions need not detain us long, as it is so plainly wrong. “There is no federal general common law,” Erie R. Co. v. Tompkins, 304 U. S. 64, 78 (1938), and (to anticipate somewhat a point we will elaborate more fully in connection with respondent’s second contention) the remote possibility that corporations may go into federal receivership is no conceivable basis for adopting a special federal common-law rule divesting States of authority over the entire law of imputation. See Bank of America Nat. Trust & Sav. Assn. v. Parnell, 352 U. S. 29, 33-34 (1956). The Ninth Circuit believed that its conclusion on this point was in harmony with Schacht v. Brown, 711 F. 2d 1343 (CA7 1983), Cenco Inc. v. Seidman & Seidman, 686 F. 2d 449 (CA7 1982), and In re Investors Funding Corp. of N. Y. Securities Litigation, 523 F. Supp. 533 (SDNY 1980), 969 F. 2d, at 750, but even a cursory examination of those cases shows the contrary. In Cenco, where the cause of action similarly arose under state common law, the Seventh Circuit’s analysis of the “circumstances under which the knowledge of fraud on the part of the plaintiff’s directors [would] be imputed to the plaintiff corporation [was] merely an attempt to divine how Illinois courts would decide that issue.” Schacht, supra, at 1347 (citing Cenco, supra, at 455). Likewise, in Investors Funding, the District Court analyzed the potential affirmative defenses to the state-law claims by applying “[t]he controlling legal principles [of] New York law.” 523 F. Supp., at 540. In Schacht, the Seventh Circuit expressly noted that “the cause of action [at issue] arises under RICO, a federal statute; we therefore write on a clean slate and may bring to bear federal policies in deciding the estoppel question.” 711 F. 2d, at 1347.

In seeking to defend the Ninth Circuit’s holding, respondent contends (to quote the caption of its argument) that “The Wrongdoing Of ADSB’s Insiders Would Not Be Imputed To ADSB Under Generally Accepted Common Law Principles,” Brief for Respondent 12 — in support of which it attempts to show that nonattribution to the corporation of dishonest officers’ knowledge is the rule applied in the vast bulk of decisions from 43 jurisdictions, ranging from Rhode Island to Wyoming. See, e. g., id., at 21-22, n. 9 (distinguishing, inter alia, Cook v. American Tubing & Webbing Co., 28 R. I. 41, 65 A. 641 (1905), and American Nat. Bank of Powell v. Foodbasket, 497 P. 2d 546 (Wyo. 1972)). The supposed relevance of this is set forth in a footnote: “It is our position that federal common law does govern this issue, but that the content of the federal common law rule corresponds to the rule that would independently be adopted by most jurisdictions.” Brief for Respondent 15, n. 3. If there were a federal common law on such a generalized issue (which there is not), we see no reason why it would necessarily conform to that “independently... adopted by most jurisdictions.” But the short of the matter is that California law, not federal law, governs the imputation of knowledge to corporate victims of alleged negligence, and that is so whether or not California chooses to follow “the majority rule.”

We turn, then, to the more substantial basis for the decision below, which asserts federal pre-emption not over the law of imputation generally, but only over its application to the FDIC suing as receiver. Respondent begins its defense of this principle by quoting United States v. Kimbell Foods, Inc., 440 U. S. 715, 726 (1979), to the effect that “federal law governs questions involving the rights of the United States arising under nationwide federal programs.” But the FDIC is not the United States, and even if it were we would be begging the question to assume that it was asserting its own rights rather than, as receiver, the rights of ADSB. In any event, knowing whether “federal law governs” in the Kimbell Foods sense — a sense which includes federal adoption of state-law rules, see id., at 727-729 — does not much advance the ball. The issue in the present case is whether the California rule of decision is to be applied to the issue of imputation or displaced, and if it is applied it is of only theoretical interest whether the basis for that application is California’s own sovereign power or federal adoption of California’s disposition. See Boyle v. United Technologies Corp., 487 U. S. 500, 507, n. 3 (1988).

In answering the central question of displacement of California law, we of course would not contradict an explicit federal statutory provision. Nor would we adopt a court-made rule to supplement federal statutory regulation that is comprehensive and detailed; matters left unaddressed in such a scheme are presumably left subject to the disposition provided by state law. See Northwest Airlines, Inc. v. Transport Workers, 451 U. S. 77, 97 (1981); Milwaukee v. Illinois, 451 U. S. 304, 319 (1981). Petitioner asserts that both these principles apply in the present case, by reason of 12 U. S. C. § 1821 (d)(2)(A)(i) (1988 ed., Supp. IV), and the comprehensive legislation of which it is a part, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub. L. 101-73,103 Stat. 183.

Section 1821(d)(2)(A)(i), which is part of a title captioned “Powers and duties of [the FDIC] as . . . receiver,” states that “the [FDIC] shall,... by operation of law, succeed to— all rights, titles, powers, and privileges of the insured depository institution____” 12 U. S. C. § 1821(d)(2)(A)(i) (1988 ed., Supp. IV). This language appears to indicate that the FDIC as receiver “steps into the shoes” of the failed S&L, cf. Coit Independence Joint Venture v. FSLIC, 489 U. S. 561, 585 (1989), obtaining the rights “of the insured depository institution” that existed prior to receivership. Thereafter, in litigation by the FDIC asserting the claims of the S&L— in this case California tort claims potentially defeasible by a showing that the S&L’s officers had knowledge — “‘any defense good against the original party is good against the receiver.’” 969 F. 2d, at 751 (quoting Allen v. Ramsay, 179 Cal. App. 2d 843, 854, 4 Cal. Rptr. 575, 583 (1960)).

Respondent argues that § 1821(d)(2)(A)(i) should be read as a nonexclusive grant of rights to the FDIC receiver, which can be supplemented or modified by federal common law; and that FIRREA as a whole, by demonstrating the high federal interest in this area, confirms the courts’ authority to promulgate such common law. This argument is demolished by those provisions of FIRREA which specifically create special federal rules of decision regarding claims by, and defenses against, the FDIC as receiver. See 12 U. S. C. § 1821(d)(14) (1988 ed., Supp. IV) (extending statute of limitations beyond period that might exist under state law); §§ 1821(e)(1), (3) (precluding state-law claims against the FDIC under certain contracts it is authorized to repudiate); § 1821 (k) (permitting claims against directors and officers for gross negligence, regardless of whether state law would require greater culpability); § 1821(d)(9) (excluding certain state-law claims against FDIC based on oral agreements by the. S&L). Inclusio unius, exclusio alterius. It is hard to avoid the conclusion that § 1821(d)(2)(A)(i) places the FDIC in the shoes of the insolvent S&L, to work out its claims under state law, except where some provision in the extensive framework of FIRREA provides otherwise. To create additional “federal common-law” exceptions is not to “supplement” this scheme, but to alter it.

We have thought it necessary to resolve the effect of FIRREA because respondent argued that the statute not only did not prevent but positively authorized federal common law. We are reluctant to rest our judgment on FIRREA alone, however, since that statute was enacted into law in 1989, while respondent took over as receiver for ADSB in 1986. The FDIC is willing to “assume . . . that FIRREA would have taken effect in time to be relevant to this case,” Brief for Respondent 35, n. 21, but it is not self-evident that that assumption is correct. See Landgraf v. USI Film Products, 511 U. S. 244, 268-270, 274 (1994); cf. id., at 290-291 (Scalia, J., concurring in judgment). It seems to us imprudent to resolve the retroactivity question without briefing, and inefficient to pretermit the retroactivity issue on the basis of the FDIC’s concession, since that would make our decision of limited value in other cases. As we proceed to explain, even assuming the inapplicability of FIRREA this is not one of those cases in which judicial creation of a special federal rule would be justified.

Such cases are, as we have said in the past, “few and restricted,” Wheeldin v. Wheeler, 373 U. S. 647, 651 (1963), limited to situations where there is a “significant conflict between some federal policy or interest and the use of state law.” Wallis v. Pan American Petroleum Corp., 384 U. S. 63, 68 (1966). Our cases uniformly require the existence of such a conflict as a precondition for recognition of a federal rule of decision. See, e.g., Kamen v. Kemper Financial Services, Inc., 500 U. S. 90, 98 (1991); Boyle, supra, at 508; Kimbell Foods, 440 U. S., at 728. Not only the permissibility but also the scope of judicial displacement of state rules turns upon such a conflict. See, e. g., Kamen, supra, at 98; Boyle, supra, at 508. What is fatal to respondent’s position in the present case is that it has identified no significant conflict with an identifiable federal policy or interest. There is not even at stake that most generic (and lightly invoked) of alleged federal interests, the interest in uniformity. The rules of decision at issue here do not govern the primary conduct of the United States or any of its agents or contractors, but affect only the FDIC’s rights and liabilities, as receiver, with respect to primary conduct on the part of private actors that has already occurred. Uniformity of law might facilitate the FDIC’s nationwide litigation of these suits, eliminating state-by-state research and reducing -uncertainty — but if the avoidance of those ordinary consequences qualified as an identifiable federal interest, we would be awash in “federal common-law” rules. See United States v. Yazell, 382 U. S. 341, 347, n. 13 (1966).

The closest respondent comes to identifying a specific, concrete federal policy or interest that is compromised by California law is its contention that state rules regarding the imputation of knowledge might “deplet[e] the deposit insurance fund,” Brief for Respondent 32. But neither FIRREA nor the prior law sets forth any anticipated level for the fund, so what respondent must mean by “depletion” is simply the forgoing of any money which, under any conceivable legal rules, might accrue to the fund. That is a broad principle indeed, which would support not just elimination of the defense at issue here, but judicial creation of new, “federal-common-law” causes of action to enrich the fund. Of course we have no authority to do that, because there is no federal policy that the fund should always win. Our cases have previously rejected “more money” arguments remarkably similar to the one made here. See Kimbell Foods, supra, at 737-738; Yazell, supra, at 348; cf. Robertson v. Wegmann, 436 U. S. 584, 593 (1978).

Even less persuasive — indeed, positively probative of the dangers of respondent’s facile approach to federal-common-law-making — is respondent’s contention that it would “dis-serve the federal program” to permit California to insulate “the attorney’s or accountant’s malpractice,” thereby imposing costs “on the nation’s taxpayers, rather than on the negligent wrongdoer.” Brief for Respondent 32. By presuming to judge what constitutes malpractice, this argument demonstrates the runaway tendencies of “federal common law” untethered to a genuinely identifiable (as opposed to judicially constructed) federal policy. What sort of tort liability to impose on lawyers and accountants in general, and on lawyers and accountants who provide services to federally insured financial institutions in particular, “ ‘involves a host of considerations that must be weighed and appraised,’” Northwest Airlines, Inc., 451 U. S., at 98, n. 41 (quoting United States v. Gilman, 347 U. S. 507, 512-513 (1954))—including, for example, the creation of incentives for careful work, provision of fair treatment to third parties, assurance of adequate recovery by the federal deposit insurance fund, and enablement of reasonably priced services. Within the federal system, at least, we have decided that that function of weighing and appraising “ ‘is more appropriately for those who write the laws, rather than for those who interpret them. ’ ” Northwest Airlines, supra, at 98, n. 41 (quoting Gilman, supra, at 513).

We conclude that this is not one of those extraordinary cases in which the judicial creation of a federal rule of decision is warranted. As noted earlier, the parties are in agreement that if state law governs it is the law of California; but they vigorously disagree as to what that law provides. We leave it to the Ninth Circuit to resolve that point. The judgment is reversed and the case remanded for proceedings consistent with this opinion.

So ordered.

Justice Stevens,

with whom Justice Blackmun, Justice O’Connor, and Justice Souter join, concurring.

While I join the Court’s opinion, I add this comment to emphasize an important difference between federal courts and state courts. It would be entirely proper for a state court of general jurisdiction to fashion a rule of agency law that would protect creditors of an insolvent corporation from the consequences of wrongdoing by corporate officers even if the corporation itself, or its shareholders, would be bound by the acts of its agents. Indeed, a state court might well attach special significance to the fact that the interests of taxpayers as well as ordinary creditors will be affected by the rule at issue in this case. Federal courts, however, “unlike their state counterparts, are courts of limited jurisdiction that have not been vested with open-ended lawmaking powers.” Northwest Airlines, Inc. v. Transport Workers, 451 U. S. 77, 95 (1981). Because state law provides the basis for respondent FDIC’s claim, that law also governs both the elements of the cause of action and its defenses. Unless Congress has otherwise directed, the federal court’s task is merely to interpet and apply the relevant rules of state law.

Cases like this one, however, present a special problem. They raise issues, such as the imputation question here, that may not have been definitively settled in the state jurisdiction in which the case is brought, but that nevertheless must be resolved by federal courts. The task of the federal judges who confront such issues would surely be simplified if Congress had provided them with a uniform federal rule to apply. As matters stand, however, federal judges must do their best to estimate how the relevant state courts would perform their lawmaking task, and then emulate that sometimes . purely hypothetical model. The Court correctly avoids any suggestion about how the merits of the imputation issue should be resolved on remand or in similar cases that may arise elsewhere. “The federal judges who deal regularly with questions of state law in their respective districts and circuits are in a better position than we to determine how local courts would dispose of comparable issues.” Butner v. United States, 440 U. S. 48, 58 (1979).

       For simplicity’s sake, we refer to a “receiver” throughout, which we identify as the FDIC. The reality was more complicated. The first federal entity involved was the Federal Savings and Loan Insurance Corporation (FSLIC), which was appointed conservator of ADSB in 1986 and receiver in June 1988. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub. L. 101-73,103 Stat. 183, abolished FSLIC, and caused FDIC, the manager of the FSLIC resolution fund, to be substituted as receiver and party to this case. See id., §§215, 401(a)(1), 401(f)(2).

       The Court of Appeals appears to have agreed with the first of these contentions. Instead of the second, however, it embraced the proposition that federal common law prevents the attributed knowledge of corporate officers acting against the corporation’s interest from being used as the basis for an estoppel defense against the FDIC as receiver. Since there is nothing but a formalistic distinction between this argument and the second one described in text, we do not treat it separately.