source: Caselaw Access Project

author: Justice Breyer Justice O’Connor, Justice Scalia,

license: Public Domain

text:
    SARATOGA FISHING CO. v. J. M. MARTINAC & CO. et al.
    No. 95-1764.
    Argued February 18, 1997
    Decided June 2, 1997

      Keith Zakarin argued the cause for petitioner. With him on the briefs was Forrest Booth.

      Daniel B. MacLeod argued the cause for respondents. With him on the brief was Duncan Koler

         Steven B. Fisher and Michael H. Williamson filed a brief for All Alaskan Seafoods, Inc., as amicus curiae urging reversal.

        Jan S. Amundson, Quentin Riegel, and Gregory S. Gilchrist filed a brief for the National Association of Manufacturers et al. as amici curiae urging affirmance.

   Justice Breyer

delivered the opinion of the Court.

The issue before us concerns limits upon the damages that a tort plaintiff in admiralty can recover for physical damage to property caused by a defective product. In East River S. S. Corp. v. Transamerica Delaval Inc., 476 U. S. 858 (1986), the Court held that an admiralty tort plaintiff cannot recover for the physical damage the defective product causes to the “product itself”; but the plaintiff can recover for physical damage the product causes to “other property.” In this case all agree that the “product itself” consists at least of a ship as built and outfitted by its original manufacturer and sold to an initial user. This case asks how this corner of tort law treats the physical destruction of extra equipment (a skiff, a fishing net, spare parts) added by the initial user after the first sale and then resold as part of the ship when the ship itself is later resold to a subsequent user. Is that added equipment part of the “product itself,” in which case the plaintiff cannot recover in tort for its physical loss? Or is it “other property,” in which case the plaintiff can recover? We conclude that it is “other property.” Hence (assuming other tort law requirements are satisfied) admiralty’s tort rules permit recovery.

I

This case arises out of an engine room fire and flood that led to the sinking of the fishing vessel M/V Saratoga in January 1986. We must assume that a hydraulic system defectively designed by respondent Marco Seattle Inc. was one significant cause of the accident. About 15 years before the accident, respondent J. M. Martinac & Co. had built the ship, installed the hydraulic system, and sold the ship new to Joseph Madruga. Madruga then added extra equipment — a skiff, a seine net, and various spare parts — and used the ship for tuna fishing. In 1974, Madruga resold the ship to petitioner, Saratoga Fishing Co., which continued to use the ship for fishing. In 1987, after the ship caught fire and sank, Saratoga Fishing brought this tort suit in admiralty against Marco Seattle and J. M. Martinac.

The District Court found that the hydraulic system had been defectively designed, and it awarded Saratoga Fishing damages (adjusted to reflect Saratoga Fishing’s own partial fault). Those damages included damages for the loss of the equipment that Madruga had added after the initial purchase of the ship.

The Ninth Circuit held that the District Court should not have awarded damages for the added equipment. Saratoga Fishing Co. v. Marco Seattle Inc., 69 F. 3d 1432, 1445 (1995). A majority noted that the equipment, though added by Ma-druga, was part of the ship when Madruga resold the ship to Saratoga Fishing, and, for that reason, the majority held, the added equipment was part of the defective product that itself caused the harm. Applying East River’s distinction between the product that itself caused the harm and “other property,” the majority concluded that Saratoga Fishing could not recover in tort for the loss. A dissenting judge believed that the “product itself” was the ship when launched into the stream of commerce by Martinac, its original builder. Consequently, the added equipment was “other property.” We granted certiorari to resolve this uncertainty about the proper application of East River. We now agree with the dissenting judge.

II

The facts before us show: (1) a Component Supplier who (2) provided a defective component (the hydraulic system) to a Manufacturer, who incorporated it into a manufactured product (the ship), which (3) the Manufacturer sold to an Initial User, who (4) after adding equipment and using the ship, resold it to a Subsequent User (Saratoga Fishing). The applicable law is general maritime law, “an amalgam of traditional common-law rules, modifications of those rules, and newly created rules,” drawn from both state and federal sources. East River, supra, at 865; see also Fitzgerald v. United States Lines Co., 374 U. S. 16, 20 (1963); Kermarec v. Compagnie Generale Transatlantique, 358 U. S. 625, 630 (1959). The context is purely commercial. The particular question before us requires us to interpret the Court’s decision in East River: Does the term “other property,” as used in that case, include the equipment added by the Initial User before he sold the ship to the Subsequent User? We conclude that it does: When a manufacturer places an item in the stream of commerce by sélling it to an Initial User, that item is the “product itself” under East River. Items added to the product by the Initial User are therefore “other property,” and the Initial User’s sale of the product to a Subsequent User does not change these characterizations.

East River arose at the intersection of two principles that govern recovery in many commercial cases involving defective products. The first principle is that tort law in this area ordinarily (but with exceptions) permits recovery from a manufacturer and others in the initial chain of distribution for foreseeable physical harm to property caused by product defects. See Restatement (Second) of Torts § 402A (1965); W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on Law of Torts § 101 (5th ed. 1984); East River, 476 U. S., at 867. The second principle is that tort law in this area ordinarily (but with exceptions) does not permit recovery for purely economic losses, say, lost profits. See Restatement (Third) of Torts: Products Liability § 6, Comment d (Proposed Final Draft, Preliminary Version, Oct. 18,1996); e. g., Rardin v. T & D Machine Handling, Inc., 890 F. 2d 24, 27-30 (CA7 1989). The Court in East River favored the second principle, for it held that an injury to the defective product itself, even though physical, was a kind of “economic loss,” for which tort law did not provide compensation. 476 U. S., at 871.

The Court reasoned that the loss of the value of a product that suffers physical harm — say, a product that destroys itself by exploding — is very much like the loss of the value of a product that does not work properly or does not work at all. See id., at 870. In all such cases, the Court held, “[c]ontract law, and the law of warranty in particular, is well suited” to setting the responsibilities of a seller of a product that fails to perform the function for which it was intended. Id., at 872-873. The commercial buyer and commercial seller can negotiate a contract — a warranty — that will set the terms of compensation for product failure. If the buyer obtains a warranty, he will receive compensation for the product’s loss, whether the product explodes or just refuses to start. If the buyer does not obtain a warranty, he will likely receive a lower price in return. Given the availability of warranties, the courts should not ask tort law to perform a job that contract law might perform better. Ibid.; Seely v. White Motor Co., 63 Cal. 2d 9, 18-19, 403 P. 2d 145, 151 (1965) (en banc).

The Ninth Circuit reasoned that East River required it to define the defective “product itself” by looking to that which the plaintiff had purchased, for that is the product that, in principle, the plaintiff could have asked the seller to warrant. Since Saratoga Fishing, the Subsequent User, might have asked Madruga, the Initial User, to warrant the M/V Sara-toga, skiff, nets, and all, that product, skiff, nets, and all, is the “product itself” that stands outside the reach of tort recovery. In our view, however, this holding pushes East River’s principle beyond the boundary set by the principle’s rationale.

For one thing, the Ninth Circuit’s holding creates a tort damage immunity beyond that set by any relevant tort precedent that we have found. State law often distinguishes between items added to or used in conjunction with a defective item purchased from a Manufacturer (or its distributors) and (following East River) permits recovery for the former when physically harmed by a dangerously defective product. Thus the owner of a chicken farm, for example, recovered for chickens killed when the chicken house ventilation system failed, suffocating the 140,000 chickens inside. A. J. Decos-ter Co. v. Westinghouse Electric Corp., 333 Md. 245, 634 A. 2d 1330 (1994). A warehouse owner recovered for damage to a building caused by a defective roof. United Air Lines, Inc. v. CEI Industries of Ill., Inc., 148 Ill. App. 3d 332, 499 N. E. 2d 558 (1986). And a prior case in admiralty (not unlike the one before us) held that a ship charterer, who adds expensive seismic equipment to the ship, may recover for its loss in a fire caused by a defective engine. Nicor Supply Ships Assocs. v. General Motors Corp., 876 F. 2d 501 (CA5 1989). Indeed, respondents here conceded that, had the ship remained in the hands of the Initial User, the loss of the added equipment could have been recovered in tort. See Tr. of Oral Arg. 29-30. We have found no suggestion in state (or in federal) law that these results would change with a subsequent sale — that is, we have found no case, other than the Ninth Circuit case before us, that suggests that the courts would deny recovery to a subsequent chicken farmer, who had later purchased the farm, chickens, coop, ventilation system, and all.

Indeed, the denial of recovery for added equipment simply because of a subsequent sale makes the scope of a manufacturer’s liability turn on what seems, in one important respect, a fortuity, namely, whether a defective product causes foreseeable physical harm to the added equipment before or after an Initial User (who added the equipment) resells the product to a Subsequent User. One important purpose of defective-product tort law is to encourage the manufacture of safer products. The various tort rules that determine which foreseeable losses are recoverable aim, in part, to provide appropriate safe-product incentives. And a liability rule that diminishes liability simply because of some such resale is a rule that, other things being equal, diminishes that basic incentive. That circumstance requires a justification. That is to say, why should a series of resales, after replacement and additions of ever more physical items, progressively immunize a manufacturer to an ever greater extent from the liability for foreseeable physical damage that would otherwise fall upon it?

The East River answer to this question — because the parties can contract for appropriate sharing of the risks of harm — is not as satisfactory in the context of resale after an initial use. That is because, as other courts have suggested, the Subsequent User does not contract directly with the manufacturer (or distributor). Cf. Peterson v. Idaho First Nat. Bank, 117 Idaho 724, 727, 791 P. 2d 1303, 1306 (1990); Tillman v. Vance Equipment Co., 286 Ore. 747, 755-756, 596 P. 2d 1299, 1304 (1979). Moreover, it is likely more difficult for a consumer — a commercial user and reseller — to offer an appropriate warranty on the used product he sells akin to a manufacturer’s (or distributor’s) warranty of the initial product. The user/reseller did not make (or initially distribute) the product and, to that extent, he normally would know less about the risks that such a warranty would involve. Cf. Tillman, supra, at 755, 596 P 2d, at 1303-1304; Peterson, supra, at 726-727, 791 P. 2d, at 1305-1306. That is to say, it would seem more difficult for a reseller to warrant, say, a ship’s engine; as time passes, the ship ages, the ship undergoes modification, and it passes through the hands of users and resellers.

Of course, nothing prevents a user/reseller from offering a warranty. But neither does anything prevent a Manufacturer and an Initial User from apportioning through their contract potential loss of any other items — say, added equipment or totally separate physical property — that a defective manufactured product, say, an exploding engine, might cause. No court has thought that the mere possibility of such a contract term precluded tort recovery for damage to an Initial User’s other property. Similarly, in the absence of a showing that it is ordinary business practice for user/resellers to offer a warranty comparable to those typically provided by sellers of new products, the argument for extending East River, replacing tort law with contract law, is correspondingly weak. That is to say, respondents have not explained why the ordinary rules governing the manufacturer’s tort liability should be supplanted merely because the user/ reseller may in theory incur an overlapping liability in contract.

Respondents make two other important arguments. First, they say that our reasoning proves too much. They argue that, if a Subsequent User can recover for damage a defective manufactured product causes to property added by the Initial User, then a user might recover for damage a defective component causes the manufactured product, other than the component itself. Saratoga Fishing, for example, could recover the damage the defective hydraulic system caused to any other part of the ship. But the lower courts, following East River, have held that it is not a component part, but the vessel — as placed in the stream of commerce by the manufacturer and its distributors — that is the “product” that itself caused the harm. See Shipco 2295, Inc. v. Avondale Shipyards, Inc., 825 F. 2d 925, 928 (CA5 1987); see also, e. g., National Union Fire Ins. Co. of Pittsburgh v. Pratt & Whitney Canada, Inc., 107 Nev. 535, 539-542, 815 P. 2d 601, 604-605 (1991). As the Court said in East River:

‘Since all but the very simplest of machines have component parts, [a contrary] holding would require a finding of “property damage” in virtually every case where a product damages itself. Such a holding would eliminate the distinction between warranty and strict products liability.’” 476 U. S., at 867 (quoting Northern Power & Engineering Corp. v. Caterpillar Tractor Co., 623 P. 2d 324, 330 (Alaska 1981)).

Our holding here, however, does not affect this rule, for the relevant relations among initial users, manufacturers, and component suppliers are typically different from those at issue here. Initial users, when they buy, typically depend upon, and likely seek warranties that depend upon, a manufacturer’s primary business skill, namely, the assembly of workable product components into a marketable whole. King v. Hilton-Davis, 855 F. 2d 1047, 1052 (CA3 1988); Shipco 2295, supra, at 929; National Union Fire Ins., supra, at 541, 815 P. 2d, at 605. Moreover, manufacturers and component suppliers can allocate through contract potential liability for a manufactured product that does not work, thereby ensuring that component suppliers have appropriate incentives to prevent component defects that might destroy the product. King, supra, at 1054; cf. Shipco 2295, supra, at 930. There is no reason to think that initial users systematically control the manufactured product’s quality or, as we have said, systematically allocate responsibility for user-added equipment, in similar ways. Regardless, the case law does suggest a distinction between the components added to a product by a manufacturer before the product’s sale to a user, e. g., Airlift Int’l, Inc. v. McDonnell Douglas Corp., 685 F. 2d 267 (CA9 1982); King, supra; Shipco 2295, supra; and those items added by a user to the manufactured product, e. g., Nicor Supply Ships Assocs. v. General Motors Corp., 876 F. 2d 501 (CA5 1989); and we would maintain that distinction.

Second, respondents argue that our holding would impose too great a potential tort liability upon a manufacturer or a distributor. But we do not see how that is so. For one thing, a host of other tort principles, such as foreseeability, proximate cause, and the “economic loss” doctrine, already do, and would continue to, limit liability in important ways. For another thing, where such principles are satisfied, liability would exist anyway had the manufactured product simply remained in the hands of the Initial User. Our holding merely maintains liability, for equipment added after the initial sale, despite the presence of a resale by the Initial User.

We conclude that equipment added to a product after the Manufacturer (or distributor selling in the initial distribution chain) has sold the product to an Initial User is not part of the product that itself caused physical harm. Rather, in East River’s language, it is “other property.” (We are speaking, of course, of added equipment that itself played no causal role in the accident that caused the physical harm.) Thus the extra skiff, nets, spare parts, and miscellaneous equipment at issue here, added to the ship by a user after an initial sale to that Initial User, are not part of the product (the original ship with the defective hydraulic system) that itself caused the harm.

The decision of the Ninth Circuit is

Reversed.

Justice O’Connor,

dissenting.

I do not disagree with our decision to grant certiorari in this case, but I agree with Justice Scalia — and for the reasons he states — that we should affirm the judgment of the Court of Appeals.

Justice Scalia,

with whom Justice Thomas joins,

dissenting.

In East River S. S. Corp. v. Transamerica Delaval Inc., 476 U. S. 858 (1986), we adopted as part of admiralty law the so-called “economic loss” rule, which denies the purchaser of a defective product a tort action against the seller or manufacturer for purely economic losses sustained as a result of the product’s failure. Applying this rule, we held that a plaintiff may not recover in tort when a defective product damages only itself, but may recover for personal injuries and for damage to other property. See id., at 871-875. The present case involves a relative detail of application of the East River holding: whether, and under what circumstances, “other property” can include property added to the defective product, not by the plaintiff-purchaser himself, but by some earlier purchaser in the chain of ownership leading back to the manufacturer. In the context of the present case, the question is whether a skiff, a net, and communications and navigational electronics added by Joseph Madruga to the M/V Saratoga before she was sold to petitioner constitute part of the product itself (for which recovery is not available) or “other property” (for which recovery is available).

It would have been better, in my view, not to grant certio-rari in this case. By the time East River was decided, we had a wealth of lower court development to draw upon, including well-reasoned opinions taking no less than three distinct positions on the economic-loss rule. See id., at 868-871. We could be confident in our decision, knowing that it broke little new ground; the rule we adopted had been endorsed by a majority of state courts and had been tested for two decades since its enunciation by Chief Justice Traynor in Seely v. White Motor Co., 63 Cal. 2d 9, 403 P. 2d 145 (1965). In the present case, by contrast, the Court sets sail into uncharted seas. Not a single lower court decision (other than the one under review) has addressed the precise question presented: the status as “other property” of additions made by a prior purchaser who was a user. I would feel less uncomfortable about our plying these unknown waters if we were skilled navigators. But unlike state courts, we have little first-hand experience in the development of new common-law rules of tort and contract governing commercial transactions. Better to have followed some state-court pilots than to proceed on our own — and even, perhaps, to lead state courts aground. With this disclaimer, and with the admission that I am only modestly more confident of my resolution of this case than I am of the Court’s, I proceed (reluctantly) to discussion of the merits.

The Court’s opinion suggests that this is a rather straightforward case. The relevant facts — according to the Court— are quite simple, showing: “(1) a Component Supplier who (2) provided a defective component ... to a Manufacturer, who incorporated it into a manufactured product (the ship), which (3) the Manufacturer sold to an Initial User, who (4) after adding equipment and using the ship, resold it to a Subsequent User.” Ante, at 878. What the Court’s opinion does not disclose is that Madruga — the Court’s “Initial User” — was perhaps not only a user of the boat but also an entrepreneur in the business of designing, assembling, and distributing what might be described as “fully equipped tuna-fishing machines.” The M/V Saratoga was not an isolated purchase by tuna-fisherman Madruga from Martinac, but was the third of seven steel-hull tuna seiners Madruga commissioned. She was designed, in part by Madruga, specifically for use as a tuna seiner, and her construction at Mar-tinac’s shipyard was supervised personally by Madruga and by an engineer in Madruga’s employ. Madruga negotiated over the specifications and equipment for the vessel and ordered numerous changes to it during the course of construction. When delivered by Martinac, the M/V Saratoga was certainly functional as a boat, but it was not yet capable of performing the task for which it was specially designed. It was arguably still just a component of a larger tuna-fishing machine that would not be complete until Madruga installed the seine, skiff, and electronic equipment; and arguably a component of a tuna-fishing machine that Madruga was in the business of marketing.

As respondents point out, there is no finding in the record as to whether Madruga was engaged in the business of selling such products and the issue was never raised or considered. Brief for Respondents 38, n. 28. I assume that the Court disregards this issue (neither resolving it nor remanding for its consideration) because the Court deems the question irrelevant. Under the Court’s test, as I understand it, the “product” is fixed when it is sold to an “Initial User,” even if that user is also in the business of modifying and reselling the product. In my view, there is little to recommend such a rule.

The Court is driven to take the position it does by the concern that liability would otherwise turn on “a fortuity, namely, whether a defective product causes . . . harm to the added equipment before or after an Initial User (who added the equipment) resells the product to a Subsequent User.” Ante, at 881. But the initial-user rule the Court embraces simply makes liability turn on a different fortuity, namely, whether the person who adds additional equipment to the product uses that product before selling it. If Madruga was engaged in the business of assembling and distributing tuna seiners, why should the fact that he briefly used the vessel before selling it enable petitioner to obtain tort damages that would plainly not be recoverable if Madruga had simply installed the components and sold the vessel? Or put in more commonplace terms: Why should the buyer of a car whose engine catches fire and destroys the entire vehicle be able to recover in a tort action against the manufacturer for the value of the dealer-added hi-fi stereo system if the car was a “demo,” but not if the car was brand new?

One rule that generally avoids making liability turn on either of the above described “fortuities” is what might be called the “last-4Q2A-seller rule.” Under this rule, the “product” would be fixed when it is sold by the last person in the chain of distribution who is, in the words of § 402A of the Restatement (Second) of Torts (1964), “engaged in the business of selling such a product.” This would offer at least as much predictability as can be expected from the Court’s approach, would ensure that the availability of tort remedies will be uniform with regard to all end-users, and would avoid making liability turn on the seemingly irrelevant question whether the distributor of the product used it before sale. The last-402A-seller rule is also more consistent with one of the principal considerations underlying our decision in East River: the desirability of invoking tort protection only where contract-warranty protection is infeasible. Defining the product as what was sold by the last person engaged in the business of selling such products denies tort recovery for those additions to the originally manufactured product which the purchaser could have covered by warranty protection (persons in the business will generally offer warranties covering the entire product; user-sellers will generally not).

The last-402A-seller rule appears to me superior to the initial-user rule adopted by the Court today, but the two are in reality quite similar and will in most cases produce the same result. Each essentially attempts to differentiate between additions made before and after the product has left the market chain of distribution. I doubt, however, whether leaving the market chain of distribution ought to be so momentous an event for the purpose at hand. So long as the plaintiff is a commercial entity (and I understand the rule under consideration to be one applicable only to commercial, as opposed to consumer, transactions, see ante, at 878-879) it seems to me to make no difference whether the purchase was made from a “402A seller” or not. Commercial entities do not typically suffer, at the time they make their purchase, a disparity in bargaining power that makes it impossible for them to obtain warranty protection on the entire product; nor are they unable to insure the product they have purchased, including those portions of it added by upstream owners. Our decision in East River suggests that in such circumstances there is inadequate reason to interfere with private ordering by importing tort liability — that is, inadequate reason to permit the purchaser to recover any tort damages for loss of the product he purchased. See East River, 476 U. S., at 872-873.

In recognition of that reality, an impressive line of lower court decisions, applying both federal and state law, has held that the purchaser of a product damaged by a defective component cannot recover in tort against the manufacturer of the component on the theory that the remainder of the product is “other property.” See, e. g., Pulte Home Corp. v. Osmose Wood Preserving, Inc., 60 F. 3d 734, 741-742 (CA11 1996) (Florida law); American Eagle Ins. Co. v. United Technologies Corp., 48 F. 3d 142, 144-145 (CA6 1995) (Texas law); Transport Corp. of America, Inc. v. International Business Machines Corp., 30 F. 3d 953, 957 (CA8 1994) (Minnesota law); King v. Hilton-Davis, 855 F. 2d 1047, 1051-1053 (CA3 1988) (Pennsylvania law), cert. denied, 488 U. S. 1030 (1989); Shipco 2295, Inc. v. Avondale Shipyards, Inc., 825 F. 2d 925, 928-929 (CA5 1987) (federal maritime law), cert. denied, 485 U. S. 1007 (1988). Although the holdings of these cases are not precisely on point (since the plaintiff was the initial purchaser-user of the defective product), the rationale of those decisions is in tension with the Court’s holding today, and supports what might be called an “object-of-the-bargain” rule. They rest on the premise that one must look to the product purchased or bargained for by the plaintiff in determining whether additions constitute “other property.” See, e. g., King, supra, at 1051 (“In determining whether a product ‘injures only itself’ for purposes of applying the East River rule . . . [one must] look to the product purchased by the plaintiff”); Shipco 2295, supra, at 928; American Eagle, supra, at 145; Casa Clara Condominium Assn. v. Charley Toppino and Sons, Inc., 620 So. 2d 1244, 1247 (Fla. 1993) (“The character of a loss determines the appropriate remedies, and, to determine the character of a loss, one must look to the product purchased by the plaintiff, not the product sold by the defendant”); see also Fox & Loftus, Riding the Choppy Waters of East River: Economic Loss Doctrine Ten Years Later, 64 Def. Couns. J. 260, 264, n. 29 (1997) (citing numerous other cases and observing that “[t]he trend in defining ‘economic loss’ is to focus on what the plaintiff purchased rather than what the defendant agreed to provide”). These courts have adopted this purchaser-oriented approach on the belief, which I think correct, that it is in accord with the policy judgments underlying our decision in East River. As the Third Circuit in King explained:

“As we read East River, it is the character of the plaintiff’s loss that determines the nature of the available remedies. When loss of the benefit of a bargain is the plaintiff’s sole loss, the judgment of the Supreme Court was that the undesirable consequences of affording a tort remedy in addition to a contract-based recovery were sufficient to outweigh the limited interest of the plaintiff in having relief beyond that provided by warranty claims. The relevant bargain in this context is that struck by the plaintiff. It is that bargain that determines his or her economic loss and whether he or she has been injured beyond that loss.” 855 F. 2d, at 1051.

There are undoubtedly other rules that can be — and have been — conceived of. One recent article describes the current state of the law regarding damage to “other property” on construction projects as follows:

“There has been a growing trend in many jurisdictions to interpret ‘economic loss’ broadly to include damage that formerly was considered ‘other property.’ Courts that follow this trend have utilized the following rationales:
“• There is no damage to ‘other property’ where the damage extends only to property within the confines of the bargain. . . . ‘Other property’ does not include damage to property if those losses are direct and consequential losses that were within the contemplation of the parties and could have been the subject of negotiations between the parties.
“•The phrase ‘other property’ does not include the type of property that one would reasonably expect, on a foreseeability test, to be damaged as a direct consequence of the failure of the product at issue.
“• No ‘other property’ has been damaged, because the allegedly defective product has been incorporated into the structure that has been damaged.
“• Losses caused by the inferior quality of the product must be considered ‘economic’ and therefore cannot be considered ‘property.’” Fox & Loftus, supra, at 265-266 (footnotes omitted).

And there can of course be combinations of the various rules. For example, one might adopt an “integrated unit” exception to the initial-user rule that the Court announces today.

As I have confessed above, I have little confidence in my ability to make the correct policy choice in an area where courts more experienced than we have not yet come to rest. I would have been inclined to let the lower federal courts struggle with this issue somewhat longer, in the hope that there would develop a common-law consensus to which we could refer for our admiralty rule, as we did in East River. Put to a choice, however, I would not select the rule adopted by the Court today. I would adopt the rule proposed by respondents and define the “product” for purposes of East River’s economic-loss rule as the object of the purchaser’s bargain. That was essentially the approach followed by the Court of Appeals below, and I would accordingly affirm its judgment.

I respectfully, and indeed diffidently, dissent.


author: Per Curiam. Chief Justice Rehnquist,

text:
    LORDS LANDING VILLAGE CONDOMINIUM COUNCIL OF UNIT OWNERS v. CONTINENTAL INSURANCE CO.
    No. 96-1033.
    Decided June 2, 1997
   Per Curiam.

In this diversity ease, the holding of the federal appellate court below has been called into question by a recent decision of the highest state court in Maryland. We must decide whether it is appropriate, in these circumstances, for this Court to grant the petition for certiorari, vacate the judgment of the lower court, and remand the case (GVR) for further consideration.

Petitioner, an association of condominium owners, sued respondent in Maryland state court, seeking to compel respondent to pay a $1.1 million judgment it had obtained against respondent’s insured, the developer of its condominium complex. In a previous action, a jury had held the developer liable for numerous defects in the complex, finding that the developer had made misrepresentations and breached various warranty obligations. Respondent had issued a general liability insurance policy covering the developer. The policy provided that respondent would pay “ 'those sums that [the developer] becomes legally obligated to pay as damages because of . . . “property damage” to which this insurance applies.”’ App. to Pet. for Cert. 2a. Under the policy, “property damage” was covered only if it was caused by an “accident.”

Respondent removed the action to the United States District Court for the District of Maryland, based on the parties’ diversity of citizenship. The District Court granted summary judgment in favor of respondent. On August 6, 1996, the Court of Appeals for the Fourth Circuit affirmed. The Court of Appeals held that, as a matter of Maryland law, an “accident” does not include the “natural and ordinary consequences of a negligent act.” Id., at 4a (internal quotation marks omitted) (citing I A Construction Corp. v. T&T Surveying, Inc., 822 F. Supp. 1213, 1215 (Md. 1993) (quoting Ed. Winkler & Son, Inc. v. Ohio Casualty Ins. Co., 51 Md. App. 190, 194-195, 441 A. 2d 1129, 1132 (1982))). Because the damages awarded in the underlying action were for breach of warranties and misrepresentations relating to poor workmanship, the Court of Appeals concluded that the damages were not caused by an “accident” within the meaning of respondent’s insurance policy. The Court of Appeals denied a petition for rehearing on September 3, 1996, and issued the mandate on September 11, 1996.

On September 17, 1996, petitioner’s counsel learned of Sheets v. Brethren Mutual Ins. Co., 342 Md. 634, 679 A. 2d 540, a recent decision of the Maryland Court of Appeals— the highest court in Maryland. (Although Sheets was handed down on July 26, 1996, 11 days before the Court of Appeals’ decision, the parties were not aware of the decision until after the mandate was issued, and therefore had not brought the case to the attention of the Court of Appeals. Pet. for Cert. 11.) Sheets cast doubt on the soundness of the Court of Appeals’ decision because it held that “an act of negligence constitutes an 'accident’ under a liability insurance policy when the resulting damage was 'an event that takes place without [the insured’s] foresight or expectation.’ ” 342 Md., at 652, 679 A. 2d, at 548 (citation and internal quotation marks omitted). The Maryland Court of Appeals also expressly disapproved Ed. Winkler & Son, supra, at 1132, and IA Construction Corp., supra, at 1215, two decisions on which the Court of Appeals had primarily relied. 342 Md., at 654-655, and n. 4, 679 A. 2d, at 549-550, and 550, n. 4.

On September 20, 1996, petitioner filed a motion asking the Court of Appeals to recall or stay its mandate based on this development in Maryland law. In its response, respondent argued in part that the Court of Appeals lacked authority to recall an already issued mandate. In a brief order, the Court of Appeals denied petitioner’s request, ruling only that “the said petition and motions are without merit.” App. to Pet. for Cert. 11a. Petitioner now asks us to grant certiorari, vacate the judgment below, and remand the case to the Court of Appeals for further consideration in light of Sheets. Pet. for Cert. 13-14.

This case fits within the category of cases in which we have held it is proper to issue a GVR order. “Where intervening developments, or recent developments that we have reason to believe the court below did not fully consider, reveal a reasonable probability that the decision below rests upon a premise that the lower court would reject if given the opportunity for further consideration, and where it appears that such a redetermination may determine the ultimate outcome of the litigation, a GVR order is ... potentially appropriate.” Lawrence v. Chater, 516 U. S. 163, 167 (1996) (per curiam). The situation here is virtually identical to that in Thomas v. American Home Products, Inc., 519 U. S. 913 (1996), a state-law case from earlier in this Term. There, after the Court of Appeals for the Eleventh Circuit ruled against petitioners, the Georgia Supreme Court overruled the holding that was the basis for the federal appeals court’s holding. Id., at 914 (Scalia, J., concurring). The appellate court nevertheless denied a petition for rehearing, and we GVR’d. As Justice Scalia wrote in concurrence, our order was in keeping with our “longstanding practice” of vacating a court of appeals’ decision based on a construction of state law that appears to contradict a recent decision of the highest state court. Id., at 915. “[A] judgment of a federal court ruled by state law and correctly applying that law as authoritatively declared by the state courts when the judgment was rendered, must be reversed on appellate review if in the meantime the state courts have disapproved of their former rulings and adopted different ones.” Huddleston v. Dwyer, 322 U. S. 232, 236 (1944) (per curiam).

Given Sheets’ explicit disapproval of the cases on which the Court of Appeals based its decision, there is reason to question the correctness of the Court of Appeals’ decision. It is true that petitioner brought Sheets to the attention of the Court of Appeals in a motion to stay or recall its mandate and that the Court of Appeals denied this motion. But the Court of Appeals’ ambiguous statement that petitioner’s request was “without merit” does not establish that it actually considered and rejected petitioner’s Sheets argument. In opposing petitioner’s motion, respondent argued that a court of appeals lacks authority to recall its mandate, and the Court of Appeals may have rested its denial of petitioner’s motion on this procedural ground. Respondent does not argue otherwise. Indeed, the procedural ground is by far the most likely, given Sheets’ explicit repudiation of the precedent on which the Court of Appeals’ original judgment hinged. Moreover, we have at least once before issued a GVR order where petitioners notified the Federal Court of Appeals of an intervening State Supreme Court’s opinion in a second petition for rehearing, which the Court of Appeals denied. See Huddleston, supra, at 235.

In these circumstances, we now grant certiorari, vacate the judgment below, and remand the case to the Court of Appeals for further consideration.

Chief Justice Rehnquist,

with whom Justice Breyer joins,

dissenting.

In Thomas v. American Home Products, Inc., 519 U. S. 913 (1996), the Court granted, vacated, and remanded a decision of the Court of Appeals for the Eleventh Circuit for reconsideration in the light of a decision of the Georgia Supreme Court that was handed down after the Court of Appeals had denied a petition for rehearing. The lower court there had had no opportunity to consider the impact of the new state-law decision.

Here, by contrast, Sheets v. Brethren Mutual Ins. Co., 342 Md. 634, 679 A. 2d 540 (1996), was expressly considered by the court below. Although Sheets was not brought to the attention of the Fourth Circuit until after it had rendered its decision and denied rehearing, petitioner raised it nonetheless before that court in a motion to recall or stay the mandate. Petitioner’s motion did not fall on deaf ears; indeed, the Fourth Circuit went to the unusual lengths of requesting a response to the motion and then, after the response was received, issuing a written order rejecting the claim. The only question discussed in that order is whether “Sheets should have required a different disposition of this case than the [original] disposition.” App. to Pet. for Cert. 10a. And the court resolved that question, concluding “[w]e are of [the] opinion the said petition and motions are without merit.” Id., at 11a.

If this Court has, without any briefs on the merits, concluded that the Court of Appeals’ refusal to alter its opinion in the light of Sheets was wrong, it should either set the case for argument or summarily reverse. True, this would require the investment of still more time and effort in a case that is in the federal courts only by reason of diversity of citizenship, see Thomas, supra, at 917 (Rehnquist, C. J., dissenting), but it would have the virtue of explicitly telling the Court of Appeals how to dispose of the case. The Court’s decision to grant, vacate, and remand in the light of Sheets, on the contrary, is muddled and cryptic. Surely the judges of the Court of Appeals are, in fairness, entitled to some clearer guidance from this Court than what they are now given.

       Although it is possible to construe this statement as being based on the procedural impropriety of raising such an issue on a motion to recall the mandate, such a construction is nowhere suggested in the order, nor is it the natural implication of the language (“without merit”) used by the court below. I see no reason for us not to take the Fourth Circuit's order at face value.


author: Chief Justice Rehnquist

text:
    BRACY v. GRAMLEY, WARDEN
    No. 96-6133.
    Argued April 14, 1997
    Decided June 9, 1997

      Gilbert H. Levy, by appointment of the Court, 519 U. S. 1106, argued the cause for petitioner. With him on the briefs was Martin S. Carlson.

      Barbara A. Preiner, Solicitor General of Illinois, argued the cause for respondent. With her on the brief were James E. Ryan, Attorney General, and Arleen C. Anderson and Steven J. Zick, Assistant Attorneys General.

        Thomas F. Geraghty filed a brief for Concerned Illinois Lawyers and Law Professors as amicus curiae urging reversal.
      A brief of amicus curiae urging affirmance was filed for the State of California et al. by Daniel E. Lungren, Attorney General of California, George Williamson, Chief Assistant Attorney General, Carol Wendelin Pollack, Senior Assistant Attorney General, Donald E. DeNicola, Supervising Deputy Attorney General, and David F. Glassman, Deputy Attorney General, joined by the Attorneys General for their respective jurisdictions as follows: Bill Pryor of Alabama, M. Jane Brady of Delaware, Dennis C. Vacco of New York, James S. Gilmore III of Virginia, Grant Woods of Arizona, Frankie Sue Del Papa of Nevada, and W. A. Drew Edmondson of Oklahoma.

   Chief Justice Rehnquist

delivered the opinion of the Court.

Petitioner William Bracy was tried, convicted, and sentenced to death before then-Judge Thomas J. Maloney for his role in an execution-style triple murder. Maloney was later convicted of taking bribes from defendants in criminal cases. Although he was not . bribed in this case, he “fixed” other murder cases during and around the time of petitioner’s trial. Petitioner contends that Maloney therefore had an interest in a conviction here to deflect suspicion that he was taking bribes in other cases, and that this interest violated the fair-trial guarantee of the Fourteenth Amendment’s Due Process Clause. We hold that petitioner has made a sufficient factual showing to establish “good cause,” as required by Ha-beas Corpus 'Rule 6(a), for discovery on his claim of actual judicial bias in his case.

Maloney was one of many dishonest judges exposed and convicted through “Operation Greylord,” a labyrinthine federal investigation of judicial corruption in Chicago. See United States v. Maloney, 71 F. 3d 645 (CA7 1995), cert. denied, 519 U. S. 927 (1996); see generally J. Tuohy & R. Warden, Greylord: Justice, Chicago Style (1989). Maloney served as a judge from 1977 until he retired in 1990, and it appears he has the dubious distinction of being the only Illinois judge ever convicted of fixing a murder case. Before he was appointed to the bench, Maloney was a criminal defense attorney with close ties to organized crime who often paid off judges in criminal cases. App. 54-66; 81 F. 3d 684, 696 (CA7 1996) (Rovner, J., dissenting) (“[B]y the time Malo-ney ascended to the bench in 1977, he was well groomed in the art of judicial corruption”). Once a judge, Maloney exploited many of the relationships and connections he had developed while bribing judges to solicit bribes for himself. For example, Lucius Robinson, a bailiff through whom Malo-ney had bribed judges while in practice, and Robert McGee, one of Maloney’s former associates, both served as “bag men,” or intermediaries, between Maloney and lawyers looking for a fix. Two such lawyers, Robert J. Cooley and William A. Swano, were key witnesses against Maloney at his trial. Maloney, supra, at 650-652.

Maloney was convicted in Federal District Court of conspiracy, racketeering, extortion, and obstructing justice in April 1993. Four months later, petitioner filed this habeas petition in the United States District Court for the Northern District of Illinois, claiming, among other things, that he was denied a fair trial because “in order to cover up the fact that [Maloney] accepted bribes from defendants in some cases, [he] was prosecution oriented in other cases.” United States ex rel. Collins v. Welborn, 868 F. Supp. 950, 990 (ND Ill. 1994). Petitioner also sought discovery in support of this claim. Specifically, he requested (1) the sealed transcript of Maloney’s trial; (2) reasonable access to the prosecution’s materials in Maloney’s case; (3) the opportunity to depose persons associated with Maloney; and (4) a chance to search Maloney’s rulings for a pattern of pro-prosecution bias. The District Court rejected petitioner’s fair-trial claim and denied his supplemental motion for discovery, concluding that “[petitioner’s] allegations contain insufficient specificity or good cause to justify further discovery.” Id., at 991.

The Court of Appeals affirmed by a divided vote. The court conceded the “appearance of impropriety” in petitioner’s case but reasoned that this appearance did not require a new trial because it “provide[d] only a weak basis for supposing the original trial an unreliable test of the issues presented for decision in it.” 81 F. 3d, at 688-689. Next, the court agreed that petitioner’s theory — that Maloney’s corruption “permeate[d] his judicial conduct” — was “plausible,” id., at 689, but found it not “sufficiently compelling [an] empirical proposition” to justify presuming actual judicial bias in petitioner’s case, id., at 690. Finally, the court held that petitioner had not shown “good cause” for discovery to prove his claim, as required by 28 U. S. C. § 2254 Rule 6(a). 81 F. 3d, at 690. This was because, in the court’s view, even if petitioner were to uncover evidence that Maloney sometimes came down hard on defendants who did not bribe him, “it would not show that he followed the practice in this case.” Id., at 691 (emphasis added). In any event, the court added, because petitioner had failed to uncover any evidence of actual bias without discovery, “the probability is slight that a program of depositions aimed at crooks and their accomplices ... will yield such evidence.” Ibid. We granted certiorari to address whether, on the basis of the showing made in this particular case, petitioner should have been granted discovery under Habeas Corpus Rule 6(a) to support his judicial-bias claim. 519 U. S. 1074 (1997). We now reverse.

A habeas petitioner, unlike the usual civil litigant in federal court, is not entitled to discovery as a matter of ordinary course. Thus, in Harris v. Nelson, 394 U. S. 286, 295 (1969), we concluded that the “broad discovery provisions” of the Federal Rules of Civil Procedure did not apply in habeas proceedings. We held, however, that the All Writs Act, 28 U. S. C. § 1651, gave federal courts the power to “fashion appropriate modes of procedure,” 394 U. S., at 299, including discovery, to dispose of habeas petitions “as law and justice require,” id., at 300. We then recommended that “the rule-making machinery ... be invoked to formulate rules of practice with respect to federal habeas corpus . . . proceedings.” Id., at 300, n. 7. Accordingly, in 1976, we promulgated and Congress adopted the Rules Governing §2254 Cases. Of particular relevance to this case is Rule 6(a), which provides:

“A party shall be entitled to invoke the processes of discovery available under the Federal Rules of Civil Procedure if, and to the extent that, the judge in the exercise of his discretion and for good cause shown grants leave to do so, but not otherwise.”

Before addressing whether petitioner is entitled to discovery under this Rule to support his judicial-bias claim, we must first identify the “essential elements” of that claim. See United States v. Armstrong, 517 U. S. 456, 468 (1996). Of course, most questions concerning a judge’s qualifications to hear a case are not constitutional ones, because the Due Process Clause of the Fourteenth Amendment establishes a constitutional floor, not a uniform standard. Aetna Life Ins. Co. v. Lavoie, 475 U. S. 813, 828 (1986). Instead, these questions are, in most cases, answered by common law, statute, or the professional standards of the bench and bar. See, e. g., id., at 820-821; Tumey v. Ohio, 273 U. S. 510, 523 (1927); 28 U. S. C. §§ 144, 455; ABA Code of Judicial Conduct, Canon 3C(l)(a) (1980). But the floor established by the Due Process Clause clearly requires a “fair trial in a fair tribunal,” Withrow v. Larkin, 421 U. S. 35, 46 (1975), before a judge with no actual bias against the defendant or interest in the outcome of his particular case. See, e. g., Aetna, supra, at 821-822; Tumey, supra, at 523.

The facts of this case are, happily, not the stuff of typical judicial-disqualification disputes. A judge who accepts bribes from a criminal defendant to fix that defendant’s case is “biased” in the most basic sense of that word, but his bias is directed against the State, not the defendant. Petitioner contends, however, that Maloney’s taking of bribes from some criminal defendants not only rendered him biased against the State in those cases, but also induced a sort of compensatory bias against defendants who did not bribe Maloney. Maloney was biased in this latter, compensatory sense, petitioner argues, to avoid being seen as uniformly and suspiciously “soft” on criminal defendants. The Court of Appeals, in its opinion, pointed out that this theory is quite speculative; after all, it might be equally likely that a judge who was “on the take” in some criminal cases would be careful to at least appear to favor all criminal defendants, so as to avoid apparently wild and unexplainable swings in decisions and judicial philosophy. 81 F. 3d, at 689-690. In any event, difficulties of proof aside, there is no question that, if it could be proved, such compensatory, camouflaging bias on Maloney’s part in petitioner’s own case would violate the Due Process Clause of the Fourteenth Amendment. We now turn to the question whether petitioner has shown “good cause” for appropriate discovery to prove his judicial-bias claim.

In the District Court, petitioner contended that he was “deprived of his right to a fair trial” because “[t]here is cause to believe that Judge Maloney’s discretionary rulings in this case may have been influenced by a desire on his part to allay suspicion of his pattern of corruption and dishonesty.” App. 5. In support, he submitted a copy of Maloney’s 1991 indictment, App. 16-35, and a newspaper article describing testimony from Maloney’s trial, in which attorney William Swano described an additional, uncharged incident where he bribed Maloney to fix a murder case. App. 12, n. 1, 36-38. In a supplemental motion for discovery, petitioner’s co-defendant Roger Collins alleged that “[a] Government witness in the Maloney case has advised . . . that co-defendant Bracy’s trial attorney was a former partner of Thomas Malo-ney.” App. 51. Collins attached to that motion a copy of the United States’ proffer of evidence in aggravation in Ma-loney’s case, which describes in considerable detail Maloney’s corruption both before and after he became a judge. See App. 54 (“Although [it is] difficult to imagine, Thomas Malo-ney’s life of corruption was considerably more expansive than proved at trial”). The United States’ proffer asserts, for example, that Maloney fixed serious felony cases regularly while a practicing criminal defense attorney; that, as a judge, he continued to corrupt justice through the same political relationships and organized-crime connections he had exploited as a lawyer; and that at least one attorney from Maloney’s former law firm, Robert McGee, was actively involved in assisting Maloney’s corruption, both before and after he became a judge, and also bribed Maloney himself, App. 55, 68-72. In addition, the proffer confirms that petitioner’s murder trial was sandwiched tightly between other murder trials that Maloney fixed.

As just noted above, petitioner’s attorney at trial was a former associate of Maloney’s, App. 51, and Maloney appointed him to defend this case in June 1981. The lawyer announced that he was ready for trial just a few weeks later. He did not request additional time to prepare penalty-phase evidence in this death penalty case even when the State announced at the outset that, if petitioner were convicted, it would introduce petitioner’s then-pending Arizona murder charges as evidence in aggravation. Tr. of Oral Arg. 43. At oral argument before this Court, counsel for petitioner suggested, given that at least one of Maloney’s former law associates — Robert McGee — was corrupt and involved in bribery, see supra, at 907, that petitioner’s trial lawyer might have been appointed with the understanding that he would not object to, or interfere with, a prompt trial, so that petitioner’s case could be tried before, and camouflage the bribe negotiations in, the Chow murder case. Tr. of Oral Arg. 17-18, 43-44. This is, of course, only a theory at this point; it is not supported by any solid evidence of petitioner’s trial lawyer’s participation in any such plan. It is true, however, that McGee was corrupt and that petitioner’s trial coincided with bribe negotiations in the Chow case and closely followed the Rosario murder case, which was also fixed. See n. 9, supra.

We conclude that petitioner has shown “good cause” for discovery under Rule 6(a). In Harris, we stated that “where specific allegations before the court show reason to believe that the petitioner may, if the facts are fully developed, be able to demonstrate that he is . . . entitled to relief, it is the duty of the court to provide the necessary facilities and procedures for an adequate inquiry.” 394 U. S., at 300. Habeas Corpus Rule 6 is meant to be “consistent” with Harris. Advisory Committee’s Note on Habeas Corpus Rule 6, 28 U. S. C., p. 479. Ordinarily, we presume that public officials have “'properly discharged their official duties.’” Armstrong, 517 U. S., at 464 (quoting United States v. Chemical Foundation, Inc., 272 U. S. 1, 14-15 (1926)). Were it possible to indulge this presumption here, we might well agree with the Court of Appeals that petitioner’s submission and his compensatory-bias theory are too speculative to warrant discovery. But, unfortunately, the presumption has been soundly rebutted: Maloney was shown to be thoroughly steeped in corruption through his public trial and conviction. We emphasize, though, that petitioner supports his discovery request by pointing not only to Maloney’s conviction for bribe taking in other cases, but also to additional evidence, discussed above, that lends support to his claim that Maloney was actually biased in petitioner’s oivn case. That is, he presents “specific allegations” that his trial attorney, a former associate of Maloney’s in a law practice that was familiar and comfortable with corruption, may have agreed to take this capital case to trial quickly so that petitioner’s conviction would deflect any suspicion the rigged Rosario and Chow cases might attract. It may well be, as the Court of Appeals predicted, that petitioner will be unable to obtain evidence sufficient to support a finding of actual judicial bias in the trial of his case, but we hold that he has made a sufficient showing, as required by Habeas Corpus Rule 6(a), to establish “good cause” for discovery. Although, given the facts of this particular case, it would be an abuse of discretion not to permit any discovery, Rule 6(a) makes it clear that the scope and extent of such discovery is a matter confided to the discretion of the District Court.

Accordingly, the judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

        People v. Collins, 106 Ill. 2d 237, 478 N. E. 2d 267 (Collins I) (affirming convictions and death sentences), cert. denied, 474 U. S. 935 (1985); People v. Collins, 153 Ill. 2d 130, 606 N. E. 2d 1137 (1992) (Collins II) (affirming denial of petition for postconviction relief); cert. denied, 508 U. S. 915 (1993). Bracy is also under a death sentence for two murders in Arizona. State v. Bracy, 145 Ariz. 520, 703 P. 2d 464 (1985), cert. denied, 474 U. S. 1110 (1986); Bracy v. Arizona, 497 U. S. 1031 (1990) (denying petition for writ of certiorari to Arizona Supreme Court to review denial of Bracy’s petition for review of state court’s denial of petition for postconviction relief); Bracy v. Arizona, 514 U. S. 1130 (1995) (same).

       Although apparently the first in Illinois, Maloney is not, unfortunately, the first American judge to be convicted of taking bribes in murder eases. See, e. g., Ohio v. McGettrick, 40 Ohio App. 3d 25, 531 N. E. 2d 755 (1988); In re Brennan, 65 N. Y. 2d 564, 483 N. E. 2d 484 (1985).

       The Government apparently conducted such research in the Maloney case. See Proffer of the Government’s Evidence in Aggravation, App. 67 (“[A] review of computer printouts listing all of [one attorney’s] felony cases before Judge Maloney reveals that [the attorney] obtained not guilty results in all six of the cases he had before Judge Maloney”).

       The dissenting judge insisted that petitioner had shown “good cause” for discovery to support his judicial-bias claim, 81 F. 3d, at 696-699 (opinion of Rovner, J.), and went on to state that, in her view, petitioner was entitled to relief whether or not he could prove that Maloney’s corruption had any impact on his trial, id., at 699-703. The latter conclusion, of course, would render irrelevant the discovery-related question presented in this case.

       At Maloney’s trial, however, attorney William Swano provided testimony that lends some support to petitioner’s compensatory-bias theory. See 81 F. 3d, at 697 (Rovner, J., dissenting). According to Swano, Maloney retaliated against one of Swano’s clients in one of the rare cases when Swano failed to offer Maloney a bribe and, in bribe negotiations in a later case, Maloney’s bag man Robert McGee admitted as much. Swano testified that he learned that in order “ ‘to practice in front of Judge Maloney ... we had to pay.’ ” Ibid.

       We express no opinion on the correctness of the various discretionary rulings cited by petitioner as examples of Maloney’s bias. See Brief for Petitioner 5-6. We note, however, that many of these rulings have been twice upheld, and that petitioner’s convictions and sentence have been twice affirmed, by the Illinois Supreme Court. See n. 1, supra.

       The Government introduced evidence that Maloney regularly bribed Judge Maurice Pompey and Cook County Deputy Sheriff Lucius Robinson (who would later serve as Maloney’s “bag man”); that on numerous occasions, using his organized-crime connections, Maloney fixed cases for his client Michael Bertucei; and that Maloney helped orchestrate the fix in the murder ease of underworld hit man Harry Aleman. App. 54-66.

       For example, Lucius Robinson and Robert McGee, who were involved in Maloney’s corruption as a lawyer, later facilitated his bribe taking when he became a judge. United States v. Maloney, 71 F. 3d 645, 650-652 (CA7 1995), cert. denied, 519 U. S. 927 (1996); App. 22-24; 54-55. As the Government alleged in its proffer: “Maloney was closely tied to the [sic] La Cosa Nostra prior to his appointment to the bench and... major organized crime figures looked forward to [his] appointment as an opportunity to have a ‘good friend’ on the bench... [and] after his elevation to the bench, Maloney continued his close First Ward/organized crime connections, fixing the results of several murder eases of import to organized crime.” App. 54-55.

       Petitioner was tried in July 1981. William Swano testified at Malo-ney’s trial that, in October 1980, he bribed Maloney in the murder case of Swano’s client, Wilfredo Rosario. Maloney excluded Rosario’s confession and, in May 1981, acquitted Rosario after a bench trial. Maloney, supra, at 650; App. 12, n. 1, 53, n. 1. Also in May 1981, Maloney took a bribe to throw the murder case of Lenny Chow, a hit man for a Chinatown crime organization. At a bench trial that August, Maloney admitted a dying declaration, but found it unreliable, and acquitted Chow. Maloney, supra, at 650; App. 20-22,27. In 1982, Maloney and Swano fixed another murder ease in which one Owen Jones was charged with beating a man to death with a lead pipe. Maloney took $4,000-$5,000 from Jones’ mother, using his former associate Robert McGee as a “bag man,” to acquit Jones on the felony-murder charge, and to convict him of voluntary manslaughter only. Maloney, supra, at 651; App. 20, 22, 28.

       Petitioner’s lawyer did request a continuance after petitioner was convicted, on July 29,1981, and again on July 30. Maloney denied these requests, however, and the sentencing hearing was conducted the next day. See People v. Collins, 106 Ill., at 280-281, 478 N. E. 2d, at 286; 81 F. 3d, at 694-695 (“Defense lawyers know . . . [that] if they wish to gather evidence of mitigating circumstances they must do so before the trial ends, because they will have no time to do so after the trial ends. But in this case the defendants’ lawyers dropped the ball”); United States ex rel. Collins v. Welborn, 868 F. Supp. 950, 986-987 (ND Ill. 1994) (noting that “no witnesses were presented by [petitioner or his codefendant]”).

       Petitioner’s counsel admitted that he “ha[d] not made this exact same argument on a previous occasion, but it is supported by the record.” Tr. of Oral Arg. 43. Cf. Reply Brief for Petitioner 6 (“[I]t is impossible to say with confidence that Judge Maloney did not deliberately select a less experienced lawyer to represent Petitioner due to a corrupt motive, such as a desire to insure a guilty verdict and a death sentence in a high profile case”).


author: Justice Stevens

text:
    JOHNSON et al. v. FANKELL
    No. 96-292.
    Argued February 26, 1997
    Decided June 9, 1997

      Michael S. Gilmore, Deputy Attorney General of Idaho, argued the cause for petitioners. With him on the briefs were Alan G. Lance, Attorney General, David G. High, Chief Deputy Attorney General, and Margaret R. Hughes, Deputy Attorney General.

      W. B. Latta, Jr., argued the cause for respondent. With him on the brief was Eric Schnapper.

        A brief of amici curiae was filed for the Commonwealth of Kentucky et al. by A. B. Chandler III, Attorney General of Kentucky, Bill Pettus, Assistant Attorney General, Scott White, Assistant Deputy Attorney General, and Brent Irvin, Assistant Attorney General, and by the Attorneys General for their respective jurisdictions as follows: Bruce M. Botelho of Alaska, Grant Woods of Arizona, Winston Bryant of Arkansas, Daniel E. Lungren of California, Gale A. Norton of Colorado, Robert A. Butterworth of Florida, Michael J. Bowers of Georgia, Margery S. Bronster of Hawaii, James E. Ryan of Illinois, Tom Miller of Iowa, Carla J. Stovall of Kansas, Richard P. Ieyoub of Louisiana, J. Josef h Curran, Jr., of Maryland, Frank J. Kelley of Michigan, Hubert H. Humphrey III of Minnesota, Mike Moore of Mississippi, Jeremiah W. (Jay) Nixon of Missouri, Joseph P. Mazurek of Montana, Don Stenberg of Nebraska, Frankie Stie Del Papa of Nevada, Jeffrey R. Howard of New Hampshire, Dennis C. Vacco of New York, Michael F. Easley of North Carolina, Heidi Heitkamp of North Dakota, Betty D. Montgomery of Ohio, Drew Edmondson of Oklahoma, Thomas W. Corbett, Jr., of Pennsylvania, Jeffrey B. Pine of Rhode Island, Mark Barnett of South Dakota, Dan Morales of Texas, Jeffrey L. Amestoy of Vermont, Julio A. Brady of the Virgin Islands, Christine O. Gregoire of Washington, Darrell V. McGraw, Jr., of West Virginia, and James E. Doyle of Wisconsin.

   Justice Stevens

delivered the opinion of the Court.

The question presented is whether defendants in an action brought under Rev. Stat. § 1979, 42 U. S. C. § 1983, in state court have a federal right to an interlocutory appeal from a denial of qualified immunity. We hold that they do not.

I

Petitioners are officials of the Idaho Liquor Dispensary. Respondent, a former liquor store clerk, brought this action for damages under §1983 in the District Court for the County of Bonner, Idaho. She alleged that petitioners deprived her of property without due process of law in violation of the Fourteenth Amendment to the Federal Constitution when they terminated her employment. Petitioners moved to dismiss the complaint on the ground that they were entitled to qualified immunity. They contended that, at the time of respondent’s dismissal, they reasonably believed that she was a probationary employee who had no property interest in her job. Accordingly, petitioners argued, her termination did not violate clearly established law. The trial court denied the motion, and petitioners filed a timely notice of appeal to the Supreme Court of the State of Idaho.

The State Supreme Court entered an order dismissing the appeal. The court explained that an order denying a motion for summary judgment is not appealable under Idaho Appellate Rule 11(a)(1) “for the reason it is not from a final order or Judgment.” App. 67. It also rejected petitioners’ arguments that the order was appealable under 42 U. S. C. § 1983 and Behrens v. Pelletier, 516 U. S. 299 (1996). Petitioners sought rehearing, again arguing that the order was final within the meaning of the Idaho Appellate Rule, and, in the alternative, that they had a right to appeal as a matter of federal law. The court denied rehearing and dismissed the appeal.

Petitioners then filed a petition in this Court seeking either a writ of certiorari or a writ of mandamus. They pointed out that some state courts, unlike the Idaho Supreme Court, allow interlocutory appeals of orders denying qualified immunity on the theory that such review is necessary to protect a substantial federal right, see McLin v. Trimble, 795 P. 2d 1035, 1037-1038 (Okla. 1990); Lakewood v. Brace, 919 P. 2d 231, 238-240 (Colo. 1996). We granted certiorari to resolve the conflict, 519 U. S. 947 (1996), and now affirm.

II

We have recognized a qualified immunity defense for both federal officials sued under the implied cause of action asserted in Bivens v. Six Unknown Fed. Narcotics Agents, 403 U. S. 388 (1971), and state officials sued under 42 U. S. C. § 1983. In both situations, “officials performing discretionary function[s] generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.” Harlow v. Fitzgerald, 457 U. S. 800, 818 (1982).

This “qualified immunity” defense is valuable to officials asserting it for two reasons. First, if it is found applicable at any stage of the proceedings, it determines the outcome of the litigation by shielding the official from damages liability. Second, when the complaint fails to allege a violation of clearly established law or when discovery fails to uncover evidence sufficient to create a genuine issue whether the defendant committed such a violation, it provides the defendant with an immunity from the burdens of trial as well as a defense to liability. Indeed, one reason for adopting the objective test announced in Harlow was to “permit the resolution of many insubstantial claims on summary judgment.” Ibid.

Consistent with that purpose, we held in Mitchell v. Forsyth, 472 U. S. 511, 524-530 (1985), that a Federal District Court order rejecting a qualified immunity defense on the ground that the defendant’s actions — if proved — would have violated clearly established law may be appealed immediately as a “final decision” within the meaning of the general federal appellate jurisdiction statute, 28 U. S. C. § 1291. If this action had been brought in a federal court, therefore, petitioners would have had a right to take an appeal from the trial court’s order denying their motion for summary judgment.

Relying on the facts (a) that respondent has asserted a federal claim under a federal statute, and (b) that they are asserting a defense provided by federal law, petitioners submit that the Idaho courts must protect their right to avoid the burdens of trial by allowing the same interlocutory appeal that would be available in a federal court. They support this submission with two different arguments: First, that when the Idaho courts construe their own rules allowing appeals from final judgments, they must accept the federal definition of finality in cases brought under §1983; and second, that if those rules do not authorize the appeal, they are pre-empted by federal law. We find neither argument persuasive.

III

We can easily dispense with petitioners’ first contention that Idaho must follow the federal construction of a “final decision.” Even if the Idaho and federal statutes contained identical language — and they do not — the interpretation of the Idaho statute by the Idaho Supreme Court would be binding on federal courts. Neither this Court nor any other federal tribunal has any authority to place a construction on a state statute different from the one rendered by the highest court of the State. See, e. g., New York v. Ferber, 458 U. S. 747, 767 (1982); Exxon Corp. v. Department of Revenue of Wis., 447 U. S. 207, 226, n. 9 (1980); Commissioner v. Estate of Bosch, 387 U. S. 456, 465 (1967). This proposition, fundamental to our system of federalism, is applicable to procedural as well as substantive rules. See Wardius v. Oregon, 412 U. S. 470, 477 (1973).

The definition of the term “final decision” that we adopted in Mitchell was an application of the “collateral order” doctrine first recognized in Cohen v. Beneficial Industrial Loan Corp., 337 U. S. 541 (1949). In that case, as in all of our cases following it, we were construing the federal statutory-language of 28 U. S. C. § 1291. While some States have adopted a similar “collateral order” exception when construing their jurisdictional statutes, we have never suggested that federal law compelled them to do so. Indeed, a number of States employ collateral order doctrines that reject the limitations this Court has placed on § 1291. Idaho could, of course, place the same construction on its Appellate Rule 11(a)(1) as we have placed on §1291. But that is clearly a choice for that court to make, not one that we have any authority to command.

IV

Petitioners also contend that, to the extent that Idaho Appellate Rule 11(a)(1) does not allow an interlocutory appeal, it is pre-empted by §1983. Relying heavily on Felder v. Casey, 487 U. S. 131 (1988), petitioners first assert that preemption is necessary to avoid “different outcomes in § 1983 litigation based solely on whether the claim is asserted in state or federal court,” id., at 138. Second, they argue that the state procedure “impermissibly burden[s]” the federal immunity from suit because it does not adequately protect their right to prevail on the immunity question in advance of trial.

For two reasons, petitioners have a heavy burden of persuasion in making this argument. First, our normal presumption against pre-emption' is buttressed by the fact that the Idaho Supreme Court’s dismissal of the appeal rested squarely on a neutral state Rule regarding the administration of the state courts. As we explained in Howlett v. Rose, 496 U. S. 356, 372 (1990):

“When a state court refuses jurisdiction because of a neutral state rule regarding the administration of the courts, we must act with utmost caution before deciding that it is obligated to entertain the claim. See Missouri ex rel. Southern R. Co. v. Mayfield, 340 U. S. 1 (1950); Georgia Rail Road & Banking Co. v. Musgrove, 335 U. S. 900 (1949) (per curiam); Herb v. Pitcairn, 324 U. S. 117 (1945); Douglas v. New York, N. H. & H. R. Co., 279 U. S. 377 (1929). The requirement that a state court of competent jurisdiction treat federal law as the law of the land does not necessarily include within it a requirement that the State create a court competent to hear the case in which the federal claim is presented. The general rule, 'bottomed deeply in belief in the importance of state control of state judicial procedure, is that federal law takes the state courts as it finds them.’ Hart, [The Relations Between State and Federal Law], 54 Colum. L. Rev. [489, 508 (1954)]; see also Southland Corp. v. Keating, 465 U. S. 1, 33 (1984) (O’Connor, J., dissenting); FERC v. Mississippi, 456 U. S. [742, 774 (1982)] (opinion of Powell, J.). The States thus have great latitude to establish the structure and jurisdiction of their own courts.”

A second barrier to petitioners’ argument arises from the nature of the interest protected by the defense of qualified immunity. Petitioners’ argument for pre-emption is bottomed on their claims that the Idaho rules are interfering with their federal rights. While it is true that the defense has its source in a federal statute (§ 1983), the ultimate purpose of qualified immunity is to protect the State and its officials from overenforcement of federal rights. The Idaho Supreme Court’s application of the State’s procedural rules in this context is thus less an interference with federal interests than a judgment about how best to balance the competing state interests of limiting interlocutory appeals and providing state officials with immediate review of the merits of their defense.

Petitioners’ arguments for pre-emption are not strong enough to overcome these considerable hurdles. Contrary to petitioners’ assertions, Idaho’s decision not to provide appellate review for the vast majority of interlocutory orders— including denials of qualified immunity in § 1983 cases — is not “outcome determinative” in the sense that we used that term when we held that Wisconsin’s notice-of-claim statute could not be applied to defeat a federal civil rights action brought in state courts under § 1983. Felder, 487 U. S., at 153. The failure to comply with the Wisconsin statute in Felder resulted in a judgment dismissing a complaint that would not have been dismissed — at least not without a judicial determination of the merits of the claim — if the case had been filed in a federal court. One of the primary grounds for our decision was that, because the notice-of-claim requirement would “frequently and predictably produce different outcomes” depending on whether § 1983 claims were brought in state or federal court, it was inconsistent with the federal interest in uniformity. Id., at 138.

Petitioners’ reliance on Felder is misplaced because “outcome,” as we used the term there, referred to the ultimate disposition of the case. If petitioners’ claim to qualified immunity is meritorious, there is no suggestion that the application of the Idaho rules of procedure will produce a final result different from what a federal ruling would produce. Petitioners were able to argue their immunity from suit claim to the trial court, just as they would to a federal court. And the claim will be reviewable by the Idaho Supreme Court after the trial court enters a final judgment, thus providing petitioners with a further chance to urge their immunity. Consequently, the postponement of the appeal until after final judgment will not affect the ultimate outcome of the case.

Petitioners’ second argument for pre-emption of the state procedural Rule is that the Rule does not adequately protect their right to prevail in advance of trial. In evaluating this contention, it is important to focus on the precise source and scope of the federal right at issue. The right to have the trial court rule on the merits of the qualified immunity defense presumably has its source in § 1983, but the right to immediate appellate review of that ruling in a federal case has its source in § 1291. The former right is fully protected by Idaho. The latter right, however, is a federal procedural right that simply does not apply in a nonfederal forum.

The locus of the right to interlocutory appeal in §1291, rather than in § 1983 itself, is demonstrated by our holding in Johnson v. Jones, 515 U. S. 304 (1995). In that case, government officials asserting qualified immunity claimed entitlement to an interlocutory appeal of a District Court order denying their motion for summary judgment on the ground that the record showed a genuine issue of material fact whether the officials actually engaged in the conduct that constituted a clear violation of constitutional law. Id., at 307-308. We concluded that this circumstance was different from that presented in Mitchell, 472 U. S., at 528, in which the subject of the interlocutory appeal was whether a given set of facts showed a violation of clearly established law, and held that although § 1291 did allow an interlocutory appeal in the latter circumstance, such an appeal was not allowed in the former.

In so holding, we acknowledged that “whether a district court’s denial of summary judgment amounts to (a) a determination about pre-existing ‘clearly established’ law, or (b) a determination about ‘genuine’ issues of fact for trial, it still forces public officials to trial.” 515 U. S., at 317. But we concluded that the strong “countervailing considerations” surrounding appropriate interpretation of § 1291 were of sufficient importance to outweigh the officials’ interest in avoiding the burdens of litigation.

The “countervailing considerations” at issue here are even stronger than those presented in Johnson. When preemption of state law is at issue, we must respect the “principles [that] are fundamental to a system of federalism in which the state courts share responsibility for the application and enforcement of federal law.” Howlett, 496 U. S., at 372-373. This respect is at its apex when we confront a claim that federal law requires a State to undertake something as fundamental as restructuring the operation of its courts. We therefore cannot agree with petitioners that § 1983’s recognition of the defense of qualified immunity preempts a State’s consistent application of its neutral procedural rules, even when those rules deny an interlocutory appeal in this context.

The judgment of the Supreme Court of the State of Idaho dismissing petitioners’ appeal is therefore affirmed.

It is so ordered.

       Because affidavits had been filed in support of the motion, the court treated it as a motion for summary judgment.

       Of course, when a ease can be dismissed on the pleadings or in an early pretrial stage, qualified immunity also provides officials with the valuable protection from “the burdens of broad-reaching discovery,” Harlow v. Fitzgerald, 457 U. S. 800, 818 (1982).

       While Mitchell v. Forsyth, 472 U. S. 511 (1985), involved a Bivens v. Six Unknown Fed. Narcotics Agents, 403 U. S. 388 (1971), action against a federal official, we have also construed § 1291 to authorize similar appeals in actions brought against state officials under § 1983. See, e. g., Johnson v. Jones, 515 U. S. 304 (1995).

       “Final decision” is the operative term of § 1291, whereas “[j]udgments, orders and decrees which are final” is the language of Idaho Appellate Rule 11(a)(1).

       Thus, in Mitchell we explained: “In holding these and Similar issues of absolute immunity to be appealable under the collateral order doctrine, see Abney v. United States, [431 U. S. 651 (1977)]; Helstoski v. Meanor, 442 U. S. 500 (1979); Nixon v. Fitzgerald, 457 U. S. 731 (1982), the Court has recognized that a question of immunity is separate from the merits of the underlying action for purposes of the Cohen test even though a reviewing court must consider the plaintiff’s factual allegations in resolving the immunity issue. Accordingly, we hold that a district court’s denial of a claim of qualified immunity, to the extent that it turns on an issue of law, is an appealable ‘final decision’ within the meaning of 28 U. S. C. § 1291 notwithstanding the absence of a final judgment.” 472 U. S., at 528-530 (footnote omitted).

       See, e. g., Richardson v. Chevrefils, 131 N. H. 227, 231, 552 A. 2d 89, 92 (1988) (“Although all of the court’s rulings . .. would normally be treated as interlocutory, . . . [w]e have followed Mitchell in accepting the State defendants’ appeal from the order denying their motion for summary judgment”); Murray v. White, 155 Vt. 621, 626, 587 A. 2d 975, 977-978 (1991) (“In [Mitchell], the Supreme Court held that a trial court’s denial of a claim of qualified immunity met these [collateral order] requirements, and we agree with this determination”); Park County v. Cooney, 845 P. 2d 346, 349 (Wyo. 1992) (“We believe the state decisions which allow appeal, for the reasons detailed in Mitchell..., are better reasoned; and -we therefore hold that an order denying dismissal of a claim based on qualified immunity is an order appealable to this court”).

       See, e. g., Goldston v. American Motors Corp., 326 N. C. 723, 727, 392 S. E. 2d 735, 737 (1990) (disqualification of counsel is appealable under state collateral order doctrine notwithstanding Richardson-Merrell Inc. v. Koller, 472 U. S. 424 (1985)); Hanson v. Federal Signal Corp., 451 Pa. Super. 260, 264-265, 679 A. 2d 785, 787-788 (1996) (same for class certification denial notwithstanding Coopers & Lybrand v. Livesay, 437 U. S. 463 (1978)).

       See Brief for Petitioners 22.

       Unlike the notiee-of-elaim rule at issue in Felder v. Casey, 487 U. S., at 140-145, Idaho Appellate Rule 11(a)(1) does not target civil rights claims against the State. See also Howlett v. Rose, 496 U. S. 356, 380-381 (1990). Instead, it generally permits appeals only of “[jludgments, orders and decrees which are final,” without regard to the identity of the party seeking the appeal or the subject matter of the suit. Petitioners claim that the rule is not neutral because it permits interlocutory appeals in certain limited circumstances but denies an appeal here. But we have never held that a rule must be monolithic to be neutral. Absent evidence that Appellate Rule 11(a)(1) discriminates against interlocutory appeals of §1983 qualified immunity determinations by defendants — as compared with other types of appeals — we must deem the state procedure neutral.

       It does warrant observation that Rule 12(a) of the Idaho Appellate Rules provides that the State Supreme Court may grant permission “to appeal from an interlocutory order or decree . . . which is not otherwise appealable under these rules, but which involves a controlling question of law as to which there is substantial grounds for difference of opinion and in which an immediate appeal . . . may materially advance the orderly resolution of the litigation.” Presumably, petitioners could have sought review under this permissive provision, and the Idaho Supreme Court might have granted review if, in the view of that court, the officials’ claim to immunity was so substantial that the suit should not proceed.

       See also Brown v. Western R. Co. of Ala., 338 U. S. 294, 296-299 (1949) (Federal Employers’ Liability Act (FELA) pre-empted different state pleading requirements when effect was to defeat plaintiff’s cause of action); Garrett v. Moore-McCormack Co., 317 U. S. 239, 243-244 (1942) (federal Jones Act pre-empted different state burden of proof regarding releases when effect was to defeat plaintiff’s cause of action).

       Petitioners’ reliance on Dice v. Akron, C. & Y. R. Co., 342 U. S. 359 (1952), is therefore misplaced. In Dice we held that the FELA preempted a state rule denying a right to a jury trial. In that case, however, we made clear that Congress had provided in FELA that the jury trial procedure was to be part of claims brought under the Act. Id,., at 363 (citing Bailey v. Central Vermont R. Co., 319 U. S. 350, 354 (1943)). In this case, by contrast, Congress has mentioned nothing about interlocutory appeals in § 1983; rather, the right to an immediate appeal in the federal court system is found in §1291, which obviously has no application to state courts.

       We have made it quite clear that it is a matter for each State to decide how to structure its judicial system. See, e. g., M. L. B. v. S. L. J., 519 U. S. 102, 111 (1996) (States under no obligation to provide appellate review) (citing eases); Kohl v. Lehlback, 160 U. S. 293, 299 (1895) (“[T]he right of review in an appellate court is purely a matter of state concern”); McKane v. Durston, 153 U. S. 684, 688 (1894) (“[W]hether an appeal should be allowed, and if so, under what circumstances or on what conditions, are matters for each State to determine for itself”).