author: Justice Breyer Justice Stevens, Justice Thomas,

text:
    CREDIT SUISSE SECURITIES (USA) LLC, fka CREDIT SUISSE FIRST BOSTON LLC, et al. v. BILLING et al.
    No. 05-1157.
    Argued March 27, 2007
    Decided June 18, 2007

      Breyer, J., delivered the opinion of the Court, in which Roberts, C. J., and Scalia, Souter, Ginsburg, and Alito, JJ., joined. Stevens, J., filed an opinion concurring in the judgment, post, p. 285. Thomas, J., filed a dissenting opinion, post, p. 287. Kennedy, J., took no part in the consideration or decision of the case.

      Stephen M. Shapiro argued the cause for petitioners. With him on the briefs were Kenneth S. Geller, Timothy S. Bishop, John P. Schmitz, Robert B. McCaw, Louis R. Cohen, Ali M. Stoeppelwerth, Noah A. Levine, Andrew J. Frackman, Timothy J. Muris, Richard G. Parker, Carter G. Phillips, A. Robert Pietrzak, Andrew B. Clubok, Brant W. Bishop, Bradley J. Bondi, Shepard Goldfein, Preeta D. Bansal, Richard A. Cirillo, Moses Silverman, Jon R. Roellke, Jeffrey H. Drichta, Paul Gonson, Glenn R. Reichardt, Gandolfo V. DiBlasi, Penny Shane, David M. J. Rein, Randy M. Mastro, John A. Herfort, Steven Wolowitz, Gerald J. Fields, David W. Ichel, Jayma M. Meyer, John D. Donovan, Jr., and Robert G. Jones.

      Solicitor General Clement argued the cause for the United States as amicus curiae. With him on the brief were Assistant Attorney General Barnett, Deputy Solicitor General Hungar, Deputy Assistant Attorney General Meyer, Douglas Hallward-Driemeier, Catherine G. O'Sullivan, Nancy C. Garrison, and Richard M. Humes.

      Christopher Lovell argued the cause for respondents. With him on the brief for respondent Billing et al. were Gary S. Jacobson, Melvyn I. Weiss, Howard B. Sirota, Fred Tay

      lor Isquith, J. Douglas Richards, Einer Elhauge, and Jonathan R. Macey. Russel H. Beatie filed a brief for respondent Pfeiffer.

       Briefs of amid curiae urging reversal were filed for the National Association of Securities Dealers, Inc., by Theodore B. Olson, F. Joseph Warin, Douglas R. Cox, and Amir C. Tayrani; for NYSE Group, Inc., by Jay N. Fastow; for the Securities Industry and Financial Markets Association et al. by Roy T. Englert, Jr., Gary A Orseck, Robin S. Conrad, Amar D. Sarwal, and Robert H. Bork; for the Washington Legal Foundation by James A Meyers, Garret G. Rasmussen, Daniel J. Popeo, and Richard A Samp; and for W. R. Hambrecht + Co., LLC, by Paul Michael Kaplan.

      Briefs of amid curiae urging affirmance were filed for the State of New York by Andrew M. Cuomo, Attorney General, Barbara D. Underwood, Solicitor General, Daniel Smirlock, Deputy Solicitor General, Andrew D. Bing, Assistant Solicitor General, Richard E. Grimm, and Sarah M. Hubbard, Assistant Attorney General; and for the American Antitrust Institute by Joseph Goldberg and Daniel E. Gustafson.

   Justice Breyer

delivered the opinion of the Court.

A group of buyers of newly issued securities have filed an antitrust lawsuit against underwriting firms that market and distribute those issues. The buyers claim that the underwriters unlawfully agreed with one another that they would not sell shares of a popular new issue to a buyer unless that buyer committed (1) to buy additional shares of that security later at escalating prices (a practice called “laddering”), (2) to pay unusually high commissions on subsequent security purchases from the underwriters, or (3) to purchase from the underwriters other less desirable securities (a practice called “tying”). The question before us is whether there is a “‘plain repugnancy’” between these antitrust claims and the federal securities law. See Gordon v. New York Stock Exchange, Inc., 422 U. S. 659, 682 (1975) (quoting United States v. Philadelphia Nat. Bank, 374 U. S. 321, 350-351 (1963)). We conclude that there is. Consequently we must interpret the securities laws as implicitly precluding the application of the antitrust laws to the conduct alleged in this case. See 422 U. S., at 682, 689, 691; see also United States v. National Assn. of Securities Dealers, Inc., 422 U. S. 694 (1975) (NASD); Silver v. New York Stock Exchange, 373 U. S. 341 (1963).

I

A

The underwriting practices at issue take place during the course of an initial public offering (IPO) of shares in a company. An IPO presents an opportunity to raise capital for a new enterprise by selling shares to the investing public. A group of underwriters will typically form a syndicate to help market the shares. The syndicate -will investigate and estimate likely market demand for the shares at various prices. It will then recommend to the firm a price and the number of shares it believes the firm should offer. Ultimately, the syndicate will promise to buy from the firm all the newly issued shares on a specified date at a fixed, agreed-upon price, which price the syndicate will then charge investors when it resells the shares. When the syndicate buys the shares from the issuing firm, however, the firm gives the syndicate a price discount, which amounts to the syndicate’s commission. See generally L. Loss & J. Seligman, Fundamentals of Securities Regulation 66-72 (4th ed. 2001).

At the heart of the syndicate’s IPO marketing activity lie its efforts to determine suitable initial share prices and quantities. At first, the syndicate makes a preliminary estimate that it submits in a registration statement to the Securities and Exchange Commission (SEC). It then conducts a “road show” during which syndicate underwriters and representatives of the offering firm meet potential investors and engage in a process that the industry calls “bookbuilding.” During this time, the underwriters and firm representatives present information to investors about the company and the stock. And they attempt to gauge the strength of the investors’ interest in purchasing the stock. For this purpose, underwriters might well ask the investors how their interest would vary depending upon price and the number of shares that are offered. They will learn, among other things, which investors might buy shares, in what quantities, at what prices, and for how long each is likely to hold purchased shares before selling them to others.

On the basis of this kind of information, the members of the underwriting syndicate work out final arrangements with the issuing firm, fixing the price per share and specifying the number of shares for which the underwriters will be jointly responsible. As we have said, after buying the shares at a discounted price, the syndicate resells the shares to investors at the fixed price, in effect earning its commission in the process.

B

In January 2002, respondents, a group of 60 investors, filed two antitrust class-action lawsuits against petitioners, 10 leading investment banks. They sought relief under § 1 of the Sherman Act, ch. 647, 26 Stat. 209, as amended, 15 U. S. C. § 1; § 2(c) of the Clayton Act, 38 Stat. 730, as amended by the Robinson-Patman Act, 49 Stat. 1527, 15 U. S. C. § 13(c); and state antitrust laws. App. 1,14. The investors stated that between March 1997 and December 2000 the banks had acted as underwriters, forming syndicates that helped execute the IPOs of several hundred technology-related companies. Id., at 22. Respondents’ antitrust complaints allege that the underwriters “abused the ... practice of combining into underwriting syndicates” by agreeing among themselves to impose harmful conditions upon potential investors — conditions that the investors apparently were willing to accept in order to obtain an allocation of new shares that were in high demand. Id., at 12.

These conditions, according to respondents, consist of a.requirement that the investors pay “additional anticompetitive charges” over and above the agreed-upon IPO share price plus underwriting commission. In particular, these additional charges took the form of (1) investor promises “to place bids ... in the aftermarket at prices above the IPO price” (i e., “laddering” agreements); (2) investor “commitments to purchase other, less attractive securities” (i e., “tying” arrangements); and (3) investor payment of “non-competitively determined” (i. e., excessive) “commissions,” including the “purchas[e] of an issuer’s shares in follow-up or ‘secondary’ public offerings (for which the underwriters would earn underwriting discounts).” Id., at 12-13. The complaint added that the underwriters’ agreement to engage in some or all of these practices artificially inflated the share prices of the securities in question. Id., at 32.

The underwriters moved to dismiss the investors’ complaints on the ground that federal securities law impliedly precludes application of antitrust laws to the conduct in question. (Ihe antitrust laws at issue include the commercial bribery provisions of the Robinson-Patman Act.) The District Court agreed with petitioners and dismissed the complaints against them. See In re Initial Public Offering Antitrust Litigation, 287 F. Supp. 2d 497, 524-525 (SDNY 2003) (IPO Antitrust). The Court of Appeals for the Second Circuit reversed, however, and reinstated the complaints. 426 F. 3d 130, 170, 172 (2005). We granted the underwriters’ petition for certiorari. And we now reverse the judgment of the Court of Appeals.

II

A

Sometimes regulatory statutes explicitly state whether they preclude application of the antitrust laws. Compare, e. g., Webb-Pomerene Act, 15 U. S. C. § 62 (expressly providing antitrust immunity), with § 601(b)(1) of the Telecommunications Act of 1996, 47 U. S. C. § 152 (stating that antitrust laws remain applicable). See also Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U. S. 398, 406-407 (2004) (analyzing the antitrust saving clause of the Telecommunications Act). Where regulatory statutes are silent in respect to antitrust, however, courts must determine whether, and in what respects, they implicitly preclude application of the antitrust laws. Those determinations may vary from statute to statute, depending upon the relation between the antitrust laws and the regulatory program set forth in the particular statute, and the relation of the specific conduct at issue to both sets of laws. Compare Gordon, 422 U. S., at 689 (finding implied preclusion of antitrust laws); and NASD, 422 U. S., at 729-730 (same), with Otter Tail Power Co. v. United States, 410 U. S. 366, 374-375 (1973) (finding no implied immunity); Philadelphia Nat. Bank, 374 U. S., at 352 (same); and Silver, 373 U. S., at 360 (same). See also Phonetele, Inc. v. American Tel. & Tel. Co., 664 F. 2d 716, 727 (CA9 1981).

Three decisions from this Court specifically address the relation of securities law to antitrust law. In Silver the Court considered a dealer’s claim that, by expelling him from the New York Stock Exchange, the exchange had violated the antitrust prohibition against group “boyeott[s].” 373 U. S., at 347. The Court wrote that, where possible, courts should “reconcilie] the operation of both [¿ e., antitrust and securities] statutory schemes . . . rather than holding one completely ousted.” Id., at 357. It also set forth a standard, namely, that “[r]epeal [of the antitrust laws] is to be regarded as implied only if necessary to make the Securities Exchange Act work, and even then only to the minimum extent necessary.” Ibid. And it held that the securities law did not preclude application of the antitrust laws to the claimed boycott insofar as the exchange denied the expelled dealer a right to fair procedures. Id., at 359-360.

In reaching this conclusion, the Court noted that the SEC lacked jurisdiction under the securities law “to review particular instances of enforcement of exchange rules”; that “nothing [was] built into the regulatory scheme which performs the antitrust function of insuring” that rules that injure competition are nonetheless “justified as furthering” legitimate regulatory “ends”; that the expulsion “would clearly” violate “the Sherman Act unless justified by reference to the purposes of the Securities Exchange Act”; and that it could find no such justifying purpose where the exchange took “anticompetitive collective action . . . without according fair proceduresId., at 357-358, 364 (emphasis added).

In Gordon the Court considered an antitrust complaint that essentially alleged “price fixing” among stockbrokers. It charged that members of the New York Stock Exchange had agreed to fix their commissions on sales under $500,000. And it sought damages and . an injunction forbidding future agreements. 422 U. S., at 661, and n. 3. The lawsuit was filed at a time when regulatory attitudes toward fixed stockbroker commissions were changing. The fixed commissions challenged in the complaint were applied during a period when the SEC approved of the practice of fixing broker-commission rates. But Congress and the SEC had both subsequently disapproved for the future the fixing of some of those rates. See id., at 690-691.

In deciding whether antitrust liability could lie, the Court repeated Silver’s general standard in somewhat different terms: It said that an “implied repeal” of the antitrust laws would be found only “where there is a ‘plain repugnancy between the antitrust and regulatory provisions.’ ” 422 U. S., at 682 (quoting Philadelphia Nat. Bank, supra, at 350-351). It then held that the securities laws impliedly precluded application of the antitrust laws in the case at hand. The Court rested this conclusion on three sets of considerations. For one thing, the securities law “gave the SEC direct regulatory power over exchange rules and practices with respect to the fixing of reasonable rates of commission.” 422 U. S., at 685 (internal quotation marks omitted). For another, the SEC had “taken an active role in review of proposed rate changes during the last 15 years,” and had engaged in “continuing activity” in respect to the regulation of commission rates. Ibid. Finally, without antitrust immunity, “the exchanges and their members” would be subject to “conflicting standards.” Id., at 689.

This last consideration — the conflict — was complicated due to Congress’, and the agency’s, changing views about the validity of fixed commissions. As far as the past fixing of rates was concerned, the conflict was clear: The antitrust law had forbidden the very thing that the securities law had then permitted, namely, an anticompetitive ratesetting process. In respect to the fiiture, however, the conflict was less apparent. That was because the SEC’s new (congressionally authorized) prohibition of (certain) fixed rates would take effect in the near-term future. And after that time the SEC and the antitrust law would both likely prohibit some of the ratefixing to which the plaintiff’s injunction would likely apply. See id., at 690-691.

Despite the likely compatibility of the laws in the future, the Court nonetheless expressly found conflict The conflict arose from the fact that the law permitted the SEC to supervise the competitive setting of rates and to “reintroducfe] . . . fixed rates,” id., at 691 (emphasis added), under certain conditions. The Court consequently wrote that “failure to imply repeal would render nugatory the legislative provision for regulatory agency supervision of exchange commission rates.” Ibid. The upshot is that, in light of potential future conflict, the Court found that the securities law precluded antitrust liability even in respect to a practice that both antitrust law and securities law might forbid.

In NASD the Court considered a Department of Justice antitrust complaint claiming that mutual fund companies had agreed with. securities broker-dealers (1) to fix “resale” prices, i. e., the prices at which a broker-dealer would sell a mutual fund’s shares to an investor or buy mutual fund shares from a fund investor (who wished to redeem the shares); (2) to fix other terms of sale including those related to when, how, to whom, and from whom the broker-dealers might sell and buy mutual fund shares; and (3) to prohibit broker-dealers from freely selling to, and buying shares from, one another. See 422 U. S., at 700-703.

The Court again found “clear repugnancy,” and it held that the securities law, by implication, precluded all parts of the antitrust claim. Id., at 719. In reaching this conclusion, the Court found that antitrust law (e. g., forbidding resale price maintenance) and securities law (e. g., permitting resale price maintenance) were in conflict. In deciding that the latter trumped the former, the Court relied upon the same kinds of considerations it found determinative in Gordon. In respect to the last set of allegations (restricting a free market in mutual fund shares among brokers), the Court said that (1) the relevant securities law “enables [the SEC] to monitor the activities questioned”; (2) “the history of Commission regulations suggests no laxity in the exercise of this authority”; and hence (3) allowing an antitrust suit to proceed that is “so directly related to the SEC’s responsibilities” would present “a substantial danger that [broker-dealers and other defendants] would be subjected to duplicative and inconsistent standards.” NASD, 422 U. S., at 734-735.

As to the other practices alleged in the complaint (concerning, e.g., resale price maintenance), the Court emphasized that (1) the securities law “vested in the SEC final authority to determine whether and to what extent” the relevant practices “should be tolerated,” id., at 729; (2) although the SEC has not actively supervised the relevant practices, that is only because the statute “reflects a cléar congressional determination that, subject to Commission oversight, mutual funds should be allowed to retain the initiative in dealing with the potentially adverse effects of disruptive trading practices,” id., at 727; and (3) the SEC has supervised the funds insofar as its “acceptance of fund-initiated restrictions for more than three decades . . . manifests an informed administrative judgment that the contractual restrictions . . . were appropriate means for combating the problems of the industry,” id., at 728. The Court added that, in these respects, the SEC had engaged in “precisely the kind of administrative oversight of private practices that Congress contemplated.” Ibid.

As an initial matter these eases make clear that Justice Thomas is wrong to regard §§77p(a) and 78bb(a) as saving clauses so broad as to preserve all antitrust actions. See post, p. 287 (dissenting opinion). The United States advanced the same argument in Gordon. See Brief for United States as Amicus Curiae in Gordon v. New York Stock Exchange, Inc., O. T. 1974, No. 74-304, pp. 8, 42. And the Court, in finding immunity, necessarily rejected it. See also NASD, supra, at 694 (same holding); Herman & MacLean v. Huddleston, 459 U. S. 375, 383 (1983) (finding saving clause applicable to overlap between securities laws where that “overlap [was] neither unusual nor unfortunate” (internal quotation marks omitted)). Although one party has made the argument in this Court, it was not presented in the courts below. And we shall not reexamine it.

This Court’s prior decisions also make clear that, when a court decides whether securities law precludes antitrust law, it is deciding whether, given context and likely consequences, there is a “clear repugnancy” between the securities law and the antitrust eomplaint — or as we shall subsequently describe the matter, whether the two are “clearly incompatible.” Moreover, Gordon and NASD, in finding sufficient incompatibility to warrant an implication of preclusion, have treated the following factors as critical: (1) the existence of regulatory authority under the securities law to supervise the activities in question; (2) evidence that the responsible regulatory entities exercise that authority; and (3) a resulting risk that the securities and antitrust laws, if both applicable, would produce conflicting guidance, requirements, duties, privileges, or standards of conduct. We also note (4) that in Gordon and NASD the possible conflict affected practices that lie squarely within an area of financial market activity that the securities law seeks to regulate.

B

These principles, applied to the complaints before us, considerably narrow our legal task. For the parties cannot reasonably dispute the existence here of several of the conditions that this Court previously regarded as crucial to finding that the securities law impliedly precludes the application of the antitrust laws.

First, the activities in question here — the underwriters’ efforts jointly to promote and to sell newly issued securities — is central to the proper functioning of well-regulated capital markets. The IPO process supports new firms that seek to raise capital; it helps to spread ownership of those firms broadly among investors; it directs capital flows in ways that better correspond to the public’s demand for goods and services. Moreover, financial experts, including the securities regulators, consider the general kind of joint underwriting activity at issue in this case, including road shows and bookbuilding efforts essential to the successful marketing of an IPO. See Memorandum Amicus Curiae of SEC in IPO Antitrust, Case No. 01 CIV 2014 (WHP) (SDNY), pp. 15,39-40, App. D to Pet. for Cert. 124a, 138a, 155a-157a (hereinafter Brief for SEC). Thus, the antitrust complaints before us concern practices that lie at the very heart of the securities marketing enterprise.

Second, the law grants the SEC authority to supervise all of the activities here in question. Indeed, the SEC possesses considerable power to forbid, permit, encourage, discourage, tolerate, limit, and otherwise regulate virtually every aspect of the practices in which underwriters engage. See, e. g., 15 U. S. C. §§ 77b(a)(3), 77j, 77z-2 (granting SEC power to regulate the process of bookbuilding, solicitations of “indications of interest,” and communications between underwriting participants and their customers, including those that occur during road shows); § 78o(c)(2)(D) (granting SEC power to define and prevent through rules and regulations acts and practices that are fraudulent, deceptive, or manipulative); §78i(a)(6) (similar); §78j(b) (similar). Private individuals who suffer harm as a result of a violation of pertinent statutes and regulations may also recover damages. See §§ 78bb, 78u-4, 77k.

Third, the SEC has continuously exercised its legal authority to regulate conduct of the general kind now at issue. It has defined in detail, for example, what underwriters may and may not do and say during their road shows. Compare, e. g., Guidance Regarding Prohibited Conduct in Connection with IPO Allocations, 70 Fed. Reg. 19672 (2005), with Regulation M, 17 CFR §§242.100-242.105 (2006). It has brought actions against underwriters who have violated these SEC regulations. See Brief for SEC 13-14, App. D to Pet. for Cert. 136a-138a. And private litigants, too, have brought securities actions complaining of conduct virtually identical to the conduct at issue here; and they have obtained damages. See, e. g., In re Initial Pub. Offering Securities Litigation, 241 F. Supp. 2d 281 (SDNY 2003).

The preceding considerations show that the first condition (legal regulatory authority), the second condition (exercise of that authority), and the fourth condition (heartland securities activity) that were present in Gordon and NASD are satisfied in this case as well. Unlike Silver, there is here no question of the existence of appropriate regulatory authority, nor is there doubt as to whether the regulators have exercised that authority. Rather, the . question before us concerns the third condition: Is there a conflict that rises to the level of incompatibility? Is an antitrust suit such as this likely to prove practically incompatible with the SEC’s administration of the Nation’s securities laws?

III

A

Given the SEC's comprehensive authority to regulate IPO underwriting syndicates, its active and ongoing exercise of that authority, and the undisputed need for joint IPO underwriter activity, we do not read the complaints as attacking the bare existence of IPO underwriting syndicates or any of the joint activity that the SEC considers a necessary component of IPO-related syndicate activity. See Brief for SEC 15,39-40, App. D to Pet. for Cert. 138a, 155a-157a. See also IPO Antitrust, 287 F. Supp. 2d, at 507 (discussing the history of syndicate marketing of IPOs); App. 12 (complaint attacks underwriters “abus[ej” of “the preexisting practice of combining into underwriting syndicates” (emphasis added)); H. R. Rep. No. 1383, 73d Cong., 2d Sess., 6-7 (1934); S. Rep. No. 792, 73d Cong., 2d Sess., 5 (1934) (law must give to securities agencies freedom to regulate agreements among syndicate members). Nor do we understand the complaints as questioning underwriter agreements to fix the levels of their commissions, whether or not the resulting price is “excessive.” See Gordon, 422 U. S., at 688-689 (securities law conflicts with, and therefore precludes, antitrust attack on the fixing of commissions where the SEC has not approved, but later might approve, the practice).

We nonetheless can read the complaints as attacking the manner in which the underwriters jointly seek to collect “excessive” commissions. The complaints attack underwriter efforts to collect commissions through certain practices (i. e., laddering, tying, collecting excessive commissions in the form of later sales of the issued shares), which according to respondents the SEC itself has already disapproved and, in all likelihood, will not approve in the foreseeable future. In respect to this set of claims, they contend that there is no possible “conflict” since both securities law and antitrust law aim to prohibit the same undesirable activity. Without a conflict, they add, there is no “repugnance” or “incompatibility,” and this Court may not imply that securities law precludes an antitrust suit.

B

We accept the premises of respondents’ argument — that the SEC has full regulatory authority over these practices, that it has actively exercised that authority, but that the SEC has disapproved (and, for argument’s sake, we assume that it will continue to disapprove) the conduct that the antitrust complaints attack. Nonetheless, we cannot accept respondents’ conclusion. Rather, several considerations taken together lead us to find that, even on these prorespondent assumptions, securities law and antitrust law are clearly incompatible.

First, to permit antitrust actions such as the present one still threatens serious seeurities-related harm. For one thing, an unusually serious legal line-drawing problem remains unabated. In the present context Only a fine, complex, detailed line separates activity that the SEC permits or encourages (for which respondents must concede antitrust immunity) from activity that the SEC must (and inevitably will) forbid (and which, on respondents’ theory, should be open to antitrust attack).

For example, in respect to “laddering” the SEC forbids an underwriter to “[s]olici[t] customers prior to the completion of the distribution regarding whether and at what price and in what quantity they intend to place immediate aftermarket orders for IPO stock,” 70 Fed. Reg. 19675-19676 (emphasis deleted); 17 CFR §§242.100-242.105. But at the same time the SEC permits, indeed encourages, underwriters (as part of the “bookbuilding” process) to “inquir[e] as to a customer’s desired future position in the longer term (for example, three to six months), and the price or prices at which the customer might accumulate that position without reference to immediate aftermarket activity.” 70 Fed. Reg. 19676.

It will often be difficult for someone who is not familiar with accepted syndicate practices to determine with confidence whether an underwriter has insisted that an investor buy more shares in the immediate aftermarket (forbidden), or has simply allocated more shares to an investor willing to purchase additional shares of that issue in the long run (permitted). And who but a securities expert could say whether the present SEC rules set forth a virtually permanent line, unlikely to change in ways that would permit the sorts of “laddering-like” conduct that it now seems to forbid? Cf. Gordon, supra, at 690-691.

Similarly, in respect to “tying” and other efforts to obtain an increased commission, from future sales, the SEC has sought to prohibit an underwriter “from demanding ... an offer from [its] customers of any payment or other consideration [such as the purchase of a different security] in addition to the security’s stated consideration.” 69 Fed. Reg. 75785 (2004). But the SEC would permit a firm to “allocate] IPO shares to a customer because the customer has separately retained the firm for other services, when the customer has not paid excessive compensation in relation to those services.” Ibid., and n. 108. The National Association of Securities Dealers (NASD), over which the SEC exercises supervisory authority, has also proposed a rule that would prohibit a member underwriter from “offering or threatening to withhold” IPO shares “as consideration or inducement for the receipt of compensation that is excessive in relation to the services provided.” Id., at 77810. The NASD would allow, however, a customer legitimately to compete for IPO shares by increasing the level and quantity of compensation it pays to the underwriter. See ibid. (describing NASD Proposed Rule 2712(a)).

Under these standards, to distinguish what is forbidden from what is allowed requires an understanding of just when, in relation to services provided, a commission is “excessive,” indeed, so “excessive” that it will remain permanently forbidden, see Gordon, 422 U. S., at 690-691. And who but the SEC itself could do so with confidence?

For another thing, evidence tending to show unlawful antitrust activity and evidence tending to show lawful securities marketing activity may overlap, or prove identical. Consider, for instance, a conversation between an underwriter and an investor about how long an investor intends to hold the new shares (and at what price), say, a conversation that elicits comments concerning both the investor’s short and longer term plans. That exchange might, as a plaintiff sees it, provide evidence of an underwriter’s insistence upon “laddering” or, as a defendant sees it, provide evidence of a lawful effort to allocate shares to those who will hold them for a longer time. See Brief for United States as Amicus Curiae 27.

Similarly, the same somewhat ambiguous conversation might help to establish an effort to collect an unlawfully high commission through atypically high commissions on later sales or through the sales of less popular stocks. Or it might prove only that the underwriter allocates more popular shares to investors who will help stabilize the aftermarket share price. See, e. g., Department of Enforcement v. Respondent, Disciplinary Proc. No. CAF030014 (NASD Hearing Panel, Mar. 3, 2006), pp. 12-13 (redacted decision), called for review, Complaint No. CAF030014 (NASD Nat. Adjudicatory Council, Apr. 11, 2006).

Further, antitrust plaintiffs may bring lawsuits throughout the Nation in dozens of different courts with different nonexpert judges and different nonexpert juries. In light of the nuanced nature of the evidentiary evaluations necessary to separate the permissible from the impermissible, it will prove difficult for those many different courts to reach consistent results. And, given the fact-related nature of many such evaluations, it will also prove difficult to ensure that the different courts evaluate similar faet patterns consistently. The result is an unusually high risk that different courts will evaluate similar factual circumstances differently. See Hovenkamp, Antitrust Violations in Securities Markets, 28 J. Corp. L. 607, 629 (2003) (“Once regulation of an industry is entrusted to jury trials, the outcomes of antitrust proceedings will be inconsistent with one another ... ”).

Now consider these factors together — the fine securities-related lines separating the permissible from the impermissible; the need for securities-related expertise (particularly to determine whether an SEC rule is likely permanent); the overlapping evidence from which reasonable but contradictory inferences may be drawn; and the risk of inconsistent court results. Together these factors mean there is no practical way to confine antitrust suits so that they challenge only activity of the kind the investors seek to target, activity that is presently unlawful and will likely remain unlawful under the securities law. Rather, these factors suggest that antitrust courts are likely to make unusually serious mistakes in this respect. And the threat of antitrust mistakes, i e., results that stray outside the narrow bounds that plaintiffs seek to set, means that underwriters must act in ways that will avoid not simply conduct that the securities law forbids (and will likely continue to forbid), but also a wide range of joint conduct that the securities law permits or encourages (but which they fear could lead to an antitrust lawsuit and the risk of treble damages). And therein lies the problem.

This kind of problem exists to some degree in respect to other antitrust lawsuits. But here the factors we have mentioned make mistakes unusually likely (a matter relevant to Congress’ determination of which institution should regulate a particular set of market activities). And the role that joint conduct plays in respect to the marketing of IPOs, along with the important role IPOs themselves play in relation to the effective functioning of capital markets, means that the securities-related costs of mistakes is unusually high. It is no wonder, then, that the SEC told the District Court (consistent with what the Government tells us here) that a “failure to hold that the alleged conduct was immunized would threaten to disrupt the full range of the Commission’s ability to exercise its regulatory authority,” adding that it would have a “chilling effect” on “lawful joint activities ... of tremendous importance to the economy of the country.” Brief for SEC 39-40, App. D to Pet. for Cert. 157a.

We believe it fair to conclude that, where conduct at the core of the marketing of new securities is at issue; where securities regulators proceed with great care to distinguish the encouraged and permissible from the forbidden; where the threat of antitrust lawsuits, through error and disincentive, could seriously alter underwriter conduct in undesirable ways, to allow an antitrust lawsuit would threaten serious harm to the efficient functioning of the securities markets.

Second, any enforcement-related need for an antitrust lawsuit is unusually small. For one thing, the SEC actively enforces the rules and regulations that forbid the conduct in question. For another, as we have said, investors harmed by underwriters’ unlawful practices may bring lawsuits and obtain damages under the securities law. See supra, at 276-277. Finally, the SEC is itself required to take account of competitive considerations when it creates securities-related policy and embodies it in rules and regulations. And that fact makes it somewhat less necessary to rely upon antitrust actions to address anticompetitive behavior. See 15 U. S. C. § 77b(b) (instructing the SEC to consider, “in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation”); § 78w(a)(2) (the SEC “shall consider among other matters the impact any such rule or regulation would have on competition”); Trinko, 540 U. S., at 412 (“[T]he additional benefit to competition provided by antitrust enforcement will tend to be small” where other laws and regulatory structures are “designed to deter and remedy anticompetitive harm”).

We also note that Congress, in an effort to weed out unmeritorious securities lawsuits, has recently tightened the procedural requirements that plaintiffs must satisfy when they file those suits. To permit an antitrust lawsuit risks circumventing these requirements by permitting plaintiffs to dress what is essentially a securities complaint in antitrust clothing. See generally Private Securities Litigation Reform Act of 1995,109 Stat. 737; Securities Litigation Uniform Standards Act of 1998,112 Stat. 3227.

In sum, an antitrust action in this context is accompanied by a substantial risk of injury to the securities markets and by a diminished need for antitrust enforcement to address anticompetitive conduct. Together these considerations indicate a serious conflict between, on the one hand, application of the antitrust laws and, on the other, proper enforcement of the securities law.

We are aware that the Solicitor General, while recognizing the conflict, suggests a procedural device that he believes will avoid it (in effect, a compromise between the differing positions that the SEC and Antitrust Division of the Department of Justice took in the courts below). Compare Brief for Dept, of Justice, Antitrust Division, as Amicus Curiae in Case No. 01 CIV 2014, p. 23 (seeking no preclusion of the antitrust laws), with Brief for SEC 39-40, App. D to Pet. for Cert. 155a-157a (seeking total preclusion of the antitrust laws). He asks us to remand this case to the District Court so that it can determine “whether respondents’ allegations of prohibited conduct can, as a practical matter, be separated from conduct that is permitted by the regulatory scheme,” and in doing so, the lower court should decide whether SEC-permitted and SEC-prohibited conduct are “inextricably intertwined.” See Brief for United States as Amicus Curiae 9, 26. The Solicitor General fears that otherwise, we might read the law as totally precluding application of the antitrust law to underwriting syndicate behavior, even were underwriters, say, overtly to divide markets.

The Solicitor General’s proposed disposition, however, does not convincingly address the concerns we have set forth here — the difficulty of drawing a complex, sinuous line separating securities-permitted from securities-forbidden conduct, the need for securities-related expertise to draw that line, the likelihood that litigating parties will depend upon the same evidence yet expect courts to draw different inferences from it, and the serious risk that antitrust courts will produce inconsistent results that, in turn, will overly deter syndicate practices important in the marketing of new issues. (We also note that market divisions appear to fall well outside the heartland of activities related to the underwriting process than the conduct before us here, and we express no view in respect to that kind of activity.)

The upshot is that all four elements present in Gordon are present here: (1) an area of conduct squarely within the heartland of securities regulations; (2) clear and adequate SEC authority to regulate; (3) active and ongoing agency regulation; and (4) a serious conflict between the antitrust and regulatory regimes. We therefore conclude that the securities laws are “clearly incompatible” with the application of the antitrust laws in this context.

The Second Circuit’s contrary judgment is

Reversed.

Justice Kennedy took no part in the consideration or decision of this case.

Justice Stevens,

concurring in the judgment.

When investment bankers cooperate in underwriting an initial public offering (IPO), they increase the amount of capital available to firms producing goods and services and make additional securities available for purchase. By agglomerating networks of investors and spreading the risk of overvaluation, syndicates make positive contributions to the economy that could not be achieved through independent action. See 426 F. 3d 130, 137-138 (CA2 2005). In my view, agreements among underwriters on how best to market IPOs, including agreements on price and other terms of sale to initial investors, should be treated as procompetitive joint ventures for purposes of antitrust analysis. In all but the rarest of eases, they cannot be conspiracies in restraint of trade within the meaning of § 1 of the Sherman Act, 15 U. S. C. § 1.

After the initial purchase, the prices of newly issued stocks or bonds are determined by competition among the vast multitude of other securities traded in a free market. To suggest that an underwriting syndicate can restrain trade in that market by manipulating the terms of IPOs is frivolous. See United States v. Morgan, 118 F. Supp. 621, 689 (SDNY 1953) (Medina, J.) (“[T]he syndicate system has no effect whatever on general market prices, nor do the participating underwriters and dealers intend it to have any. On the contrary, it is the general market prices of securities of comparable rating and quality which control the public offering price .... The particular issue, even if a large one, is but an infinitesimal unit of trade in the ocean of security issues running into the billions, which constitutes the general market”); see also Hovenkamp, Antitrust Violations in Securities Markets, 28 J. Corp. L. 607, 615-618 (2003). It is possible, of course, that the practices described in the complaints in these two cases may have enabled the underwriters to divert some of the benefits of the offerings from the issuers to themselves, thus breaching the agents’ fiduciary obligations to their principals. But if such an injury did occur, it is not an “antitrust injury” giving rise to a damages claim by investors. See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U. S. 477, 489 (1977).

Nor do I believe that the so-called “laddering” and “tying” described in the complaints constitute vertical restraints that violate either the Sherman Act or §2(c) of the Robinson-Patman Act, 15 U. S. C. § 13(c). Given the magnitude of the market these practices are alleged to have influenced, I think it obvious as a matter of law that there has been no injury to any relevant competition. Unlike in Bell Atlantic Corp. v. Twombly, 550 U. S. 544 (2007), there is no need to engage in discovery to determine whether there is any merit to the plaintiffs’ claims. See id., at 593-595 (Stevens, J., dissenting).

The defendants moved to dismiss for failure to state a claim on the ground, among others, that the plaintiffs’ claims challenge “the ordinary activities of participants in underwriting syndicates, which aré recognized to be completely lawful and pro-competitive.” Record, Doc. 98, p. 72. I agree and would hold, as we did in Parker v. Brown, 317 U. S. 341, 351-352 (1943), that the defendants’ alleged conduct does not violate the antitrust laws, rather than holding that Congress has implicitly granted them immunity from those laws. Surely I would not suggest, as the Court did in Twombly, and as it does again today, that either the burdens of antitrust litigation or the risk “that antitrust courts are likely to make unusually serious mistakes,” ante, at 282, should play any role in the analysis of the question of law presented in a case such as this.

Accordingly, I concur in the Court’s judgment but not in its opinion.

Justice Thomas,

dissenting.

The Court believes it must decide whether the securities laws implicitly preclude application of the antitrust laws because the securities statutes “are silent in respect to antitrust.” See ante, at 271. I disagree with that basic premise. The securities statutes are not silent. Both the Securities Act and the Securities Exchange Act contain broad saving clauses that preserve rights and remedies existing outside of the securities laws.

Section 16 of the Securities Act of 1933 states that “the rights and remedies provided by this subchapter shall be in addition to any and all other rights and remedies that may exist at law or in equity.” 15 U. S. C. §77p(a). In parallel fashion, §28 of the Securities Exchange Act of 1934 states that “the rights and remedies provided by this chapter shall be in addition to any and all other rights and remedies that may exist at law or in equity.” §78bb(a). This Court has previously characterized those clauses as “confirm[ing] that the remedies in each Act were to be supplemented by ‘any and all’ additional remedies.” Herman & MacLean v. Huddleston, 459 U. S. 375, 383 (1983).

The Sherman Act was enacted in 1890. See 26 Stat. 209. Accordingly, rights and remedies under the federal antitrust laws certainly would have been thought of as “rights and remedies” that existed “at law or in equity” by the Congresses that enacted that Securities Act and the Securities Exchange Act in the early 1930’s. See § 77p; § 78bb. Therefore, both statutes explicitly save the very remedies the Court holds to be impliedly precluded. There is no convincing argument for why these saving provisions should not resolve this case in respondents’ favor.

The Court’s opinion overlooks the saving clauses seemingly because they do not “explicitly state whether they preclude application of the antitrust laws.” Ante, at 270; see also Brief for Petitioners 33, n. 5. As the Court observes, some statutes contain saving clauses specific to antitrust. See, e. g., Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U. S. 398, 406 (2004) (“‘[Nothing in this Act or the amendments made by this Act shall be construed to modify, impair, or supersede the applicability of any of the antitrust laws’ ” (quoting Telecommunications Act of 1996, § 601(b)(1), 110 Stat. 143, note following 47 U. S. C. § 152)). But the mere existence of targeted saving clauses does not demonstrate — or even suggest — that antitrust remedies are not included within the “any and all” other remedies to which the securities saving clauses refer. Although Congress may have singled out antitrust remedies for special treatment in some statutes, it is not precluded from using more general saving provisions that encompass antitrust and other remedies. Surely Congress is not required to enumerate every cause of action — state and federal — that may be brought. When Congress wants to preserve all other remedies, using the word “all” is sufficient.

Petitioners also argue that the saving clauses should not apply because the clauses did not play a role in the Court’s prior seeurities-antitrust pre-emption cases. Brief for Petitioners 33, n. 5 (“[N]either provision was found to bar immunity in Gordon [v. New York Stock Exchange, Inc., 422 U. S. 659 (1975),] or [United States v. National Assn. of Securities Dealers, Inc., 422 U. S. 694 (1975) (NASD)]”). Be that as it may, none of the opinions in Silver v. New York Stock Exchange, 373 U. S. 341 (1963), Gordon, or NASD — majority or dissent — offered any analysis of the saving clauses. Omitted reasoning has little claim to precedential value. Absent any indication that these omissions were the product of reasoned analysis instead of inadvertent oversight, I would not allow the Court’s prior silence on this issue to erect a perpetual bar to arguments based on a full reading of the statute’s relevant text.

Finally, it might be argued that the saving clauses preserve only state-law rights and remedies. This argument has no textual basis. If Congress had intended to limit the clauses to state law, it surely would not have phrased them to preserve “any and all” rights and remedies. Other provisions in both Acts, including a later sentence in the section containing the Securities Exchange Act’s saving clause, suggest that Congress explicitly referred to States when it intended to impose a state-law limitation. See, e.g., 15 U. S. C. §77v(a) (referring to “State and Territorial courts”); § 78bb(a) (referring to the “securities commission ... of any State”); cf. 17 U. S. C. § 301(b) (“Nothing in this title annuls or limits any rights or remedies under the common law or statutes of any State ... ”). Given Congress’ demonstrated ability to limit provisions of the securities laws to States and the lack of any such limitation here, the saving clauses cannot be understood as limited only to state-law rights and remedies.

A straightforward application of the saving clauses to this case leads to the conclusion that respondents’ antitrust suits must proceed. Accordingly, we do not need to reconcile any conflict between the securities laws and the antitrust laws. I respectfully dissent.

       The Court suggests that the argument advanced in my opinion was not preserved by respondents. See ante, at 275. Respondents’ principal contention in the Court of Appeals below was that “[t]he federal securities laws do not expressly immunize Defendants’ alleged conduct from prosecution under the federal antitrust laws.” See, e. g., Brief for Appellants in No. 03-9288 (CA2), pp. 15-16. Because a full reading of the securities laws is essential to analyzing respondents’ central argument, I do not consider arguments based on the saving clauses unpreserved. Cf. United States v. Morton, 467 U. S. 822, 828 (1984) (“[W]e read statutes as a whole”).

       The Court’s suggestion that the clauses were intended to save only securities-related rights and remedies is subject to many of the same criticisms. See ante, at 275. The Securities Act of 1933 provided no private federal remedy for fraud in the purchase or sale of registered securities. On the Court’s proposed reading of §77p, however, a federal action for mail or wire fraud and a state-law action for fraud, which are not securities-related rights or remedies, would not have been included within the Securities Act’s saving provision.


source: Caselaw Access Project

author: Justice Stevens Justice Kennedy, Justice Thomas,

license: Public Domain

text:
    TENNESSEE SECONDARY SCHOOL ATHLETIC ASSOCIATION v. BRENTWOOD ACADEMY
    No. 06-427.
    Argued April 18, 2007
    Decided June 21, 2007

      Stevens, J., announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I, II-B, III, and IV, in which Roberts, C. J., and Scalia, Kennedy, Souter, Ginsburg, Breyer, and Alito, JJ., joined, and an opinion with respect to Part II-A, in which Souter, Ginsburg, and Breyer, JJ., joined. Kennedy, J., filed an opinion concurring in part and concurring in the judgment, in which Roberts, C. J., and Scalia and Auto, XX, joined, post, p. 304. Thomas, X, filed an opinion concurring in the judgment, post, p. 306.

      Maureen E. Mahoney argued the cause for petitioner. With her on the briefs were J. Scott Ballenger, Alexander Maltas, and Richard, L. Colbert.

      Dan Himmelfarb argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Clement, Assistant Attorney General Keisler, Deputy Solicitor General Garre, and Mark B. Stern.

      James F. Blumstein argued the cause for respondent. With him on the brief were H. Lee Barfield II, W. Brantley Phillips, Jr., and Ross I. Booher.

       Briefs of amici curiae urging reversal were filed for the Arizona Interscholastic Association, Inc., et al. by James B. Gessford, Mark Mignella, Alexander Halpem, Kenneth L. Mallea, Mallory V. Mayse, Mark Geiger, and Don G. Carter; for the Boyd-Buchanan School et al. by W. Lee Maddux and Rosemarie L. Bryan; for the National Federation of State High School Associations by William E. Quirk; and for the National School Boards Association by Pamela S. Karlan, Jeffrey L. Fisher, Francisco M. Negrón, Jr., Amy Howe, Kevin K. Russell, and Thomas C. Goldstein.

      Briefs of amici curiae urging affirmance were filed for the Association of Christian Schools International by Floyd Abrams; for Brentwood Academy Parents et al. by Robert M. Bastress, Jr.; for the Bridges Academy of Nashville, Tennessee, by Christopher D. Kratovil; for the Center for Education Reform and Excellent Education for Everyone by Martin S. Kaufman and Briscoe R. Smith; for the Institute for Justice by Andrew McBride and Clark M. Neily III; for the National Alliance for Public Charter Schools et al. by Christopher P. Ferragamo; for the National Women’s Law Center et al. by Virginia A Seitz, Marcia D. Greenberger, Jocelyn F. Samuels, and Dina R. Lassow; for the Roman Catholic Diocese of Nashville, Tennessee, et al. by William Bradford Reynolds; and for the Tennessee Lawyers’ Association for Women by Linda Carver Whitlow Knight.

      A brief of amicus curiae was filed for the National Collegiate Athletic Association by William C. Odie.

   Justice Stevens

announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I, II-B, III, and IV, and an opinion with respect to Part II-A, in which Justice Souter, Justice Ginsburg, and Justice Breyer join.

The principal issue before us is whether the enforcement of a rule prohibiting high school coaches from recruiting middle school athletes violates the First Amendment. We also must decide whether the sanction imposed on respondent for violating that rule was preceded by a fair hearing.

I

Although this case has had a long history, the relevant facts may be stated briefly. The Tennessee Secondary School Athletic Association (TSSAA) is a not-for-profit membership corporation organized to regulate interscholastic sports among its members, which include some 290 public and 55 private high schools in Tennessee. Brentwood Academy is one of those private schools.

Since the early 1950’s, TSSAA has prohibited high schools from using “undue influence” in recruiting middle school students for their athletic programs. In April 1997, Brent-wood’s football coach sent a letter to a group of eighth-grade boys inviting them to attend spring practice sessions. See App. 119. The letter explained that football equipment would be distributed and that “getting involved as soon as possible would definitely be to your advantage.” Ibid. It was signed ‘Tour Coach.” Ibid. While the boys who received the letter had signed a contract signaling their intent to attend Brentwood, none had enrolled within the meaning of TSSAA rules. See id., at 182 (defining “enrolled” as having “attended 3 days of school”). All of the boys attended at least some of the spring practice sessions. As the case comes to us, it is settled that the coach’s pre-enrollment solicitation violated the TSSAA’s antirecruiting rule and that he had ample notice that his conduct was prohibited.

TSSAA accordingly sanctioned Brentwood. After proceeding through two layers of internal TSSAA review, Brentwood brought this action against TSSAA and its executive director in federal court under Rev. Stat. §1979, 42 U. S. C. § 1983. As relevant here, Brentwood made ■ two claims: first, that enforcement of the rule was state action in violation of the First and Fourteenth Amendments; and second, that TSSAA’s flawed adjudication of its appeal had deprived the school of due process of law. The District Court granted relief to Brentwood, but the Court of Appeals reversed, holding that TSSAA was a private voluntary association that did not act under color of state law. We granted certiorari and reversed, holding that the District Court was correct on the threshold issue. Brentwood Academy v. Tennessee Secondary School Athletic Assn., 531 U. S. 288 (2001). On remand, the Sixth Circuit sent the case back to the District Court, which once again ruled for Brentwood. 304 F. Supp. 2d 981 (MD Tenn. 2003). TSSAA appealed, and the Court of Appeals affirmed over one judge’s dissent. 442 F. 3d 410 (2006). The majority held that the antirecruiting rule is a content-based regulation of speech that is not narrowly tailored to serve its permissible purposes. Id., at 420-431. It also concluded that the TSSAA Board improperly considered ex parte evidence during its deliberations, thereby violating Brentwood’s due process rights. Id., at 433-438.

We again granted certiorari, 549 U. S. 1105 (2007), and we again reverse.

II

The First Amendment protects Brentwood’s right to publish truthful information about the school and its athletic programs. It likewise protects the school’s right to try to persuade prospective students and their parents that its excellence in sports is a reason for enrolling. But Brent-wood’s speech rights are not absolute. It chose to join TSSAA, an athletic league and a state actor invested with a three-fold obligation to prevent the exploitation of children, to ensure that high school athletics remain secondary to academics, and to promote fair competition among its members. TSSAA submits that these interests adequately support the enforcement against its member schools of a rule prohibiting coaches from trying to recruit impressionable middle school athletes. Brentwood disagrees, and maintains that TSSAA’s asserted interests are too flimsy and its rule too broad to support what the school views as a serious curtailment of its constitutional rights. Two aspects of the case taken together persuade us that TSSAA should prevail.

A

The antirecruiting rule strikes nowhere near the heart of the First Amendment. TSSAA has not banned the dissemination of truthful information relating to sports, nor has it claimed that it could. Cf. Virginia Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U. S. 748 (1976) (striking down a prohibition on advertising prices for prescription drugs). It has only prevented its member schools’ coaches from recruiting individual middle school students. Our cases teach that there is a difference of constitutional dimension between rules prohibiting appeals to the public at large, see 44 Liquormart, Inc. v. Rhode Island, 517 U. S. 484, 495-500 (1996), and rules prohibiting direct, personalized communication in a coercive setting.

Ohralik v. Ohio State Bar Assn., 436 U.S. 447 (1978), nicely illustrates the point. In Ohralik, we considered whether the First Amendment disabled a state bar association from disciplining a lawyer for the in-person solicitation of clients. The lawyer argued that under our decision in Bates v. State Bar of Ariz., 433 U. S. 350, 384 (1977), which invalidated on First Amendment grounds a ban on truthful advertising relating to the “availability and terms of routine legal services,” his solicitation was protected speech. We rejected the lawyer’s argument, holding that the “in-person solicitation of professional employment by a lawyer does not stand on a par with truthful advertising about the availability and terms of routine legal services, let alone with forms of speech more traditionally within the concern of the First Amendment.” 436 U. S., at 455. We reasoned that the solicitation ban was more akin to a conduct regulation than a speech restriction:

“ ‘[I]t has never been deemed an abridgment of freedom of speech or press to make a course of conduct illegal merely because the conduct was in part initiated, evidenced, or carried out by means of language, either spoken, written, or printed.’ Numerous examples could be cited of communications that are regulated without offending the First Amendment, such as the exchange of information about securities, corporate proxy statements, the exchange of price and production information among competitors, and employers’ threats of retaliation. for the labor activities of employees____ Each of these examples illustrates that the State does not lose its power to regulate commercial activity deemed harmful to the public whenever speech is a component of that activity.” Id., at 456 (citations omitted).

Drawing on these examples, we found that the “[i]n-person solicitation by a lawyér of remunerative employment is a business transaction in which speech is an essential but subordinate component,” id., at 457, the prohibition of which raised few (if any) First Amendment problems.

Ohralik identified several evils associated with direct solicitation distinct from the harms presented by conventional commercial speech. Direct solicitation “may exert pressure and often demands an immediate response, without providing an opportunity for comparison or reflection,” ibid.; its goal “may be to provide a one-sided presentation and to encourage speedy and perhaps uninformed decisionmaking,” ibid.; and it short circuits the “opportunity for intervention or counter-education by agencies of the Bar, supervisory authorities, or persons close to the solicited individual,” ibid. For these reasons, we concluded that in-person solicitation “actually may disserve the individual and societal interest, identified in Bates, in facilitating ‘informed and reliable decisionmaking.’ ” Id., at 458 (quoting Bates, 433 U. S., at 364).

We have since emphasized that Ohralik’s “narrow” holding is limited to conduct that is “ ‘inherently conducive to overreaching and other forms of misconduct.’” Edenfield v. Fane, 507 U. S. 761, 774 (1993) (quoting Ohralik, 436 U. S., at 464); see also Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U. S. 626, 641 (1985) (emphasizing that Ohralik involved a “practice rife with possibilities for overreaching, invasion of privacy, the exercise of undue influence, and outright fraud”). And we have not been chary of invalidating state restrictions on solicitation and commercial advertising in the absence of the acute risks associated with in-person legal solicitation. See Edenfield, 507 U. S., at 775 (striking down a restriction on in-person solicitation by accountants because such solicitation “poses none of the same dangers” identified in Ohralik)', Zauderer, 471 U. S., at 639-647 (invalidating a restriction on truthful, nondeceptive legal advertising directed at people with specific legal problems); Shapero v. Kentucky Bar Assn., 486 U. S. 466, 472-478 (1988) (overturning a blanket proscription on all forms of legal solicitation). In our view, however, the dangers of undue influence and overreaching that exist when a lawyer chases an ambulance are also present when a high school coach contacts an eighth grader.

After all, it is a heady thing for an eighth-grade student to be contacted directly by a coach — here, “Your Coach”— and invited to join a high school sports team. In too many cases, the invitation will come accompanied with a suggestion, subtle or otherwise, that failure to accept will hurt the student’s chances to play high school sports and diminish the odds that she could continue on to college or (dream of dreams) professional sports. Cf. App. 119 (“I do feel that getting involved as soon as possible would definitely be to your advantage”). Such a potent entreaty, playing as it does on youthful hopes and fears, could well exert the kind of undue pressure that “disserve[s] the individual and societal interest ... in facilitating ‘informed and reliable decision-making.’” Ohralik, 436 U. S., at 458. Given that TSSAA member schools remain free to send brochures, post billboards, and otherwise advertise their athletic programs, TSSAA’s limited regulation of recruiting conduct poses no significant First Amendment concerns.

B

Brentwood made a voluntary decision to join TSSAA and to abide by its antirecruiting rule. See Brentwood, 531 U. S., at 291 (“No school is forced to join”); cf. Grove City College v. Bell, 465 U. S. 555, 575 (1984). Just as the government’s interest in running an effective workplace can in some circumstances outweigh employee speech rights, see Connick v. Myers, 461 U. S. 138 (1983), so too can an athletic league’s interest in enforcing its rules sometimes warrant curtailing the speech of its voluntary participants. See Pickering v. Board of Ed. of Township High School Dist. 205, Will Cty., 391 U. S. 563, 568 (1968) (holding that the scope of a government employee’s First Amendment rights depends on the “balance between the interests of the [employee], as a citizen, in commenting upon matters of public concern and the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees”); see also Board of Comm’rs, Wabaunsee Cty. v. Umbehr, 518 U. S. 668, 679 (1996) (“eschewing]” a formal approach to determining which contractual relationships call for the application of Pickering balancing). This is not to say that TSSAA has unbounded authority to condition membership on the relinquishment of any and all constitutional rights. As we recently emphasized in the employment context, “[s]o long as employees are speaking as citizens about matters of public concern, they must face only those speech restrictions that are necessary for their employers to operate efficiently and effectively.” Garcetti v. Ceballos, 547 U. S. 410, 419 (2006). Assuming, without deciding, that the coach in this case was “speaking as [a] eitize[n] about matters of public concern,” ibid., TSSAA can similarly impose only those conditions on such speech that are necessary to managing an efficient and effective state-sponsored high school athletic league.

That necessity is obviously present here. We need no empirical data to credit TSSAA’s commonsense conclusion that hard-sell tactics directed at middle school students could lead to exploitation, distort competition between high school teams, and foster an environment in which athletics are prized more highly than academics. See Paris Adult Theatre I v. Slaton, 413 U. S. 49, 60 (1973). TSSAA’s rule discourages precisely the sort of conduct that might lead to those harms, any one of which would detract from a high school sports league’s ability to operate “efficiently and effectively.” Garcetti, 547 U. S., at 419. For that reason, the First Amendment does not excuse Brentwood from abiding by the same antirecruiting rule that governs the conduct of its sister schools. To hold otherwise would undermine the principle, succinctly articulated by the dissenting judge at the Court of Appeals, that “[h]igh school football is a game. Games have rules.” 442 F. 3d, at 444 (opinion of Rogers, J.). It is only fair that Brentwood follow them.

Ill

The decision to sanction Brentwood for engaging in prohibited recruiting was preceded by an investigation, several meetings, exchanges of correspondence, see App. 120-123 (fax from Brentwood’s coach to TSSAA’s executive director); id., at 124-127 (memorandum from director to Brentwood’s headmaster); id., at 128-133 (letter from the headmaster responding to the director’s memorandum); id., at 204-211 (letter from TSSAA director to headmaster with further questions); id., at 212-229 (responsive letter from Brent-wood’s headmaster), an adverse written determination from TSSAA’s executive director, id., at 238-244, a hearing before the director and an advisory panel composed of three members of TSSAA’s Board of Control, see id., at 254-258, and finally a de novo review by the entire TSSAA Board of Directors, see id., at 269-271. During the investigation, Brentwood was notified of all the charges against it. At each of the two hearings, Brentwood was represented by counsel and given the opportunity to adduce evidence. No evidence offered by Brentwood was excluded.

Brentwood nevertheless maintains that its due process rights were violated when the full TSSAA Board, during its deliberations, heard from witnesses and considered evidence that the school had no opportunity to respond to. Some background is necessary to understand the claim. One of the matters under investigation was whether an Amateur Athletic Union basketball coach named Bart King had pushed talented middle school students — ^including a basketball star named Jacques Curry — to attend Brentwood. See, e. g., id., at 220,222 (letter from Brentwood’s headmaster discussing the allegation that King had told Curry that if he attended Brentwood, he “would probably have a car when he is in the tenth grade”). Brentwood consistently maintained that King had no affiliation with the school and no authority to act on its behalf. See, e. g., id., at 221-222. Nevertheless, the initial decision by TSSAA’s executive director, as well as the subsequent decision by the director and the advisory panel, declared Curry (as well as several other players) ineligible to play for Brentwood. See id., at 243 (blanket ineligibility), 255 (ineligibility for varsity sports).

As it had in earlier stages of the case, in Brentwood’s final appeal to the TSSAA Board, the school offered live testimony from Curry and an affidavit from King denying the alleged recruiting violations. See id., at 264-267 (Curry’s testimony); id., at 261 (listing “Affidavit of Bart King” as an exhibit). Once Curry had testified, Brentwood’s counsel advised the board that King was available to answer any questions, but did not call him as a witness. After reviewing the evidence, the board found that Brentwood had committed three specific violations of its rules, none of which appeared to involve either King or Curry, and it reinstated Curry’s eligibility. Id., at 269-271. As a penalty for the three violations, the board put Brentwood’s athletic program on probation for four years, excluded the boys’ basketball and football teams from tournament playoffs for two years, and imposed a $3,000 fine. Id., at 270.

During its deliberations, the board discussed the case with the executive director who had presided at the earlier proceedings and two TSSAA investigators, none of whom had been cross-examined. The investigators also provided handwritten notes to the board detailing their investigations; Brentwood never received those notes. The District Court found that the consideration of the ex parte evidence influenced the board’s penalty decision and contravened the Due Process Clause. 304 F. Supp. 2d, at 1003-1006. The Court of Appeals accepted that finding, as well as the conclusion that the evidence tainted the fairness of the proceeding. 442 F. 3d, at 433-438. TSSAA now maintains that the lower courts erred.

We agree. Even accepting the questionable holding that TSSAA’s closed-door deliberations were unconstitutional, we can safely conclude that any due process violation was harmless beyond a reasonable doubt. To begin with, it is hard to believe that the King allegations increased the severity of the penalties leveled against Brentwood. But more importantly, Brentwood’s claim of prejudice rests on the unsupported premise that it would have adopted a different and more effective strategy at the board hearing had it been given an opportunity to cross-examine the investigators and review their notes. Despite having had nearly a decade since the hearing to undertake that cross-examination and review, Brentwood has identified nothing the investigators shared with the board that Brentwood did not already know. Perhaps that is why Brentwood never explains what a more effective strategy might have looked like. Brentwood obliquely suggests it might have had King testify at the hearing, but it gives no inkling of what his testimony would have added to the proceedings. We are not inclined to speculate on its behalf.

IV

We accordingly reverse the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.

It is so ordered.

Justice Kennedy,

with whom The Chief Justice, Justice Scalia, and Justice Alito join, concurring in part and concurring in the judgment.

Although I have little difficulty concluding that the regulation at issue does not contravene the First Amendment, I do not agree with the principal opinion’s reliance on Ohralik v. Ohio State Bar Assn., 436 U. S. 447 (1978). Ohralik, as the principal opinion notes, involved communications between attorney and client, or, more to the point, the in-person solicitation by an attorney of an accident victim as a potential client. Ohmlik was later extended to attorney solicitation of accident victims through direct mail, though the Court was closely divided as to the constitutionality of that extension. See Florida Bar v. Went For It, Inc., 515 U. S. 618 (1995). But the Court has declined to extend the Ohralik rule beyond the attorney-client relationship.

In Edenfield v. Fane, 507 U. S. 761 (1993), the Court struck down a ban on solicitation from accountants to potential clients. The Court there made clear that Ohmlik “did not hold that all personal solicitation is without First Amendment protection.” 507 U. S., at 765, 774. It further noted that “Ohralik’s holding was narrow and depended upon certain ‘unique features of in-person solicitation by lawyers’ that were present in the circumstances of that case.” Ibid. (quoting Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U. S. 626, 641 (1985)).

In my view it is both unnecessary and ill advised to rely upon Ohralik in the instant matter. By doing so, the principal opinion, at a minimum, is open to the implication that the speech at issue is subject to state regulation whether or not the school has entered a voluntary contract with a state-sponsored association in order to promote a code of conduct affecting solicitation. To allow freestanding state regulation of speech by coaches and other representatives of nonmember schools would be a dramatic expansion of Ohralik to a whole new field of endeavor. Yet by relying on Ohralik the principal opinion undermines the argument that, in the absence of Brentwood Academy’s consensual membership in the Tennessee Secondary School Athletic Association, the speech by the head coach would be entitled to First Amendment protection.

For these reasons I must decline to join Part II-A of the principal opinion and any other portion of Part II that suggests Ohralik is applicable here. It is evident, furthermore, that a majority of the Court agrees with this position. See post this page and 307 (Thomas, J., concurring in judgment). I do join the remainder of the Court’s opinion and the judgment that ensues.

Justice Thomas,

concurring in the judgment.

In resolving this case, the Court applies the Pickering v. Board of Ed. of Township High School Dist. 205, Will Cty., 391 U. S. 563 (1968), line of cases to hold that the Tennessee Secondary School Athletic Association (TSSAA) did not violate Brentwood’s First Amendment rights. Ante, at 299-300. Until today, Pickering governed limitations on the speech rights of government employees and contractors. The Court uproots Pickering from its context and applies it to speech by a private school that is a member of a private athletic association. The need to stretch Pickering to fit this case was occasioned by the Court when it held that TSSAA, a private organization, was a state actor. Brentwood Academy v. Tennessee Secondary School Athletic Assn., 531 U. S. 288 (2001) (Brentwood I). Because Brent-wood I departed so dramatically from our earlier state-action cases, it is unsurprising that no First Amendment framework readily applies to this case. Rather than going through the bizarre exercise of extending obviously inapplicable First Amendment doctrine to these circumstances, I would simply overrule Brentwood I. See id., at 305-315 (Thomas, J., dissenting).

The Court’s extension of Pickering to this context is therefore unnecessary, but the principal opinion’s application of Ohralik v. Ohio State Bar Assn., 436 U. S. 447 (1978), ante, at 296-299, is outright wrong. For the reasons expressed in Justice Kennedy’s opinion concurring in part and concurring in the judgment, ante, at 304-305 and this page, Ohralik is a narrow rule addressed to a particular context that has no application to the facts of this case. For these reasons, I concur in the Court’s judgment.

       When asked at trial about this language from the offending letter, the Brentwood football coach acknowledged that “[i]n some cases” the middle school student is “not going to think that’s optional.” App. 301.

       The District Court's conclusion that “[t]here was no indication from the TSSAA before the final hearing... that the organization was still considering the Bart King allegations” is clearly erroneous. 304 F. Supp. 2d 981, 1004, n. 29 (MD Tenn. 2003); see also 442 F. 3d 410, 435, and n. 20 (CA6 2006) (affirming finding). Brentwood appealed to the full board in part to overturn the ineligibility sanction that had been leveled against Curry and several other players. See App. 255. Because the only justification for declaring Curry ineligible was that King had improperly recruited him to play for Brentwood, the King allegations were obviously at issue. Brentwood understood as much. It otherwise would have been wasted effort for King to submit an affidavit and for Curry to testify.
      Similarly, given that Curry testified in some detail about his relationship with King, id., at 264-267, the Court of Appeals incorrectly concluded that the discussion of King was limited to a brief exchange about whether King would testify. See 442 F. 3d, at 435 (“Evidently this was the only discussion of King at the hearing”).

       “[Brentwood’s lawyer]: Any other questions? That’s going to be it for our proof. If I could make just a few concluding remarks.
      “By the way, we have Bart King here to answer any questions. And it was our intention to put him on, but I don’t know if you all are interested in extending for five minutes to hear from Bart King or not. He’s here if you want him.
      “[TSSAA’s executive director]: No.
      “[Brentwood’s lawyer]: No. All right.” App. 267.

       At trial, a board member testified that the board “dropped” the charges relating to King, id., at 347 (testimony of Michael Hammond), which explains why the board restored Curry’s eligibility. The fine, the probationary period, and the playoff suspension had all been imposed at earlier stages of the proceedings, see id., at 243, 255, suggesting that the board was as a practical matter just affirming penalties associated with the remaining recruiting violations. The King allegations appear to have played a negligible role in choosing which penalties to assess.
      The District Court drew its contrary conclusion from a single piece of evidence: the board president’s affirmative response dining a deposition to a question about whether the King allegations supported the board’s finding that the recruiting rule had been violated. 442 P. 3d, at 435-436. As the board president clarified at trial, however, while the King allegations were a “ Tactor’ ” in the board’s discussions, the “ “final penalty did not involve Bart King____ [Tjhe final penalty really dealt with the letter from Mr. Flatt.’” Id., at 436. Thinking it a close call, ibid. (“Whether the King issue was actually a factor in the penalties ultimately imposed is far less certain”), the Court of Appeals held that the District Court could credit the board president’s deposition testimony over his subsequent qualification of that testimony. We agree with the dissenting judge below that “so slender an evidentiary reed” cannot support the conclusion that TSSAA violated Brentwood’s procedural rights. Id., at 454 (opinion of Rogers, J.).

       Nor has our independent review of the investigators’ notes unearthed any allegation of misconduct that would have been new to Brentwood. See XV App. in No. 03-5245 etc. (CA6 2006), pp. 4178-4193.

       Holding that TSSAA is not a state actor would also resolve Brent-wood’s due process claim.