author: Mr. Justice Stevens Mr. Justice Blackmun,

text:
    NORFOLK & WESTERN RAILWAY CO. v. LIEPELT, ADMINISTRATRIX
    No. 78-1323.
    Argued November 5, 1979
    Decided February 19, 1980
    SteveNS, J., delivered the opinion of the Court, in which Burger, C. J., and BreNnaN, Stewart, White, Powell, and Rehnquist, JJ., joined. BlackmuN, J., filed a dissenting opinion, in which Marshall, J., joined, post, p. 498.

      Howard J. Trienens argued the cause for petitioner. With him on the briefs were Robert L. Landess and Tobin M. Richter.

      Richard S. Fleisher argued the cause for respondent. With him on the brief was Sidney Z. Karasik.

        Francis D. Morrissey, Gus A. Svolos, Patrick F. Healy, Jr., and John T. Rank filed a brief for the National Association of Railroad Trial Counsel as amicus curiae urging reversal.

        Edward J. Kionka and Sheldon S. Cohen filed a brief for the Association of Trial Lawyers of America as amicus curiae urging affirmance.

        Edward I. Pollock and Leonard Sacks filed a brief for the Alabama Trial Lawyers Association et al. as amici curiae.

   Mr. Justice Stevens

delivered the opinion of the Court.

In cases arising under the Federal Employers’ Liability Act, most trial judges refuse to allow the jury to receive evidence or instruction concerning the impact of federal income taxes on the amount of damages to be awarded. Because the prevailing practice developed at a time when federal taxes were relatively insignificant, and because some courts are now •following a different practice, we decided to answer the two questions presented by the certiorari petition in this wrongful-death action: (1) whether it was error to exclude evidence of the income taxes payable on the decedent’s past and estimated future earnings; and (2) whether it was error for the trial judge to refuse to instruct the jury that the award of damages would not be subject to income taxation.

In 1973, a fireman employed by petitioner suffered fatal injuries in a collision caused by petitioner’s negligence. Respondent, as administratrix of the fireman’s estate, brought suit under the FELA to recover the damages that his survivors suffered as a result of his death. In 1976, after a full trial in the Circuit Court of Cook County, the jury awarded respondent $775,000. On appeal, the Appellate Court of Illinois held that it was “not error to refuse to instruct a jury as to the nontaxability of an award” and also that it was “not error to exclude evidence of the effect of income taxes on future earnings of the decedent.” 62 Ill. App. 3d 653, 669, 378 N. E. 2d 1232, 1245 (1978). The Illinois Supreme Court denied leave to appeal.

The evidence supporting the damages award included biographical data about the decedent and his family and the expert testimony of an economist. The decedent, a 37-year-old man, was living with his second wife and two young children and was contributing to the support of two older children by his first marriage. His gross earnings in the 11 months prior to his death on November 22, 1973, amounted to $11,988. Assuming continued employment, those earnings would have amounted to $16,828.26 in 1977.

The expert estimated that the decedent’s earnings would have increased at a rate of approximately five percent per year, which would have amounted to $51,600 in the year 2000, the year of his expected retirement. The gross amount of those earnings, plus the value of the services he would have performed for his family, less the amounts the decedent would have spent upon himself, produced a total which, when discounted to present value at the time of trial, amounted to $302,000.

Petitioner objected to the use of gross earnings, without any deduction for income taxes, in respondent’s expert’s testimony and offered to prove through the testimony of its own expert, an actuary, that decedent’s federal income taxes during the years 1973 through 2000 would have amounted to about $57,000. Taking that figure into account, and making different assumptions about the rate of future increases in salary and the calculation of the present value of future earnings, petitioner’s expert computed the net pecuniary loss at $138,327. As already noted, the jury returned a verdict of $775,000.

Petitioner argues that the jury must have assumed that its award was subject to federal income taxation; otherwise, it is argued, the verdict would not have exceeded respondent’s expert’s opinion by such a large amount. For that reason, petitioner contends that it was prejudiced by the trial judge’s refusal to instruct the jury that “your award will not be subject to any income taxes, and you should not consider such taxes in fixing the amount of your award.”

Whether it was error to refuse that instruction, as well as the question whether evidence concerning the federal taxes on the decedent’s earnings was properly excluded, is a matter governed by federal law. It has long been settled that questions concerning the measure of damages in an FELA action are federal in character. See, e. g., Michigan Central R. Co. v. Vreeland, 227 U. S. 59. This is true even if the action is brought in state court. See, e. g., Chesapeake & Ohio R. Co. v. Kelly, 241 U. S. 485, 491. In this case the Appellate Court of Illinois recognized that the practice then being followed in Illinois was subject; to change when this Court addresses the issue. We do so now, first considering the evidence question and then the proposed instruction.

I

In a wrongful-death action under the FELA, the measure of recovery is “the damages . . . [that] flow from the deprivation of the pecuniary benefits which the beneficiaries might have reasonably received. . . .” Michigan Central R. Co. v. Vreeland, supra, at 70. The amount of money that a wage earner is able to contribute to the support of his family is unquestionably affected by the amount of the tax he must pay to the Federal Government. It is his after-tax income, rather than his gross income before taxes, that provides the only realistic measure of his ability to support his family. It follows inexorably that the wage earner’s income tax is a relevant factor in calculating the monetary loss suffered by his dependents when he dies.

Although federal courts have consistently received evidence of the amount of the decedent’s personal expenditures, see, e. g., Kansas City S. R. Co. v. Leslie, 238 U. S. 599, 604, and have required that the estimate of future earnings be reduced by "taking account of the earning power of the money that is presently to be awarded,” Chesapeake & Ohio R. Co. v. Kelly, supra, at 489, they have generally not considered the payment of income taxes as tantamount to a personal expenditure and have regarded the future prediction of tax consequences as too speculative and complex for a jury’s deliberations. See, e. g., Johnson v. Penrod Drilling Co., 510 F. 2d 234, 236-237 (CA5 1975), cert. denied, 423 U. S. 839.

Admittedly there are many variables that may affect the amount of a wage earner’s future income-tax liability. The law may change, his family may increase or decrease in size, his spouse’s earnings may affect his tax bracket, and extra income or unforeseen deductions may become available. But future employment itself, future health, future personal expenditures, future interest rates, and future inflation are also matters of estimate and prediction. Any one of these issues might provide the basis for protracted expert testimony and debate. But the practical wisdom of the trial bar and the trial bench has developed effective methods of presenting the essential elements of an expert calculation in a form that is understandable by juries that are increasingly familiar with the complexities of modern life. We therefore reject the notion that the introduction of evidence describing a decedent’s estimated after-tax earnings is too speculative or complex for a jury.

Respondent argues that if this door is opened, other equally relevant evidence must also be received. For example, she points out that in discounting the estimate of future earnings to its present value, the tax on the income to be earned by the damages award is now omitted. Logically, it would certainly seem correct that this amount, like future, wages, should be estimated on an after-tax basis. But the fact that such an after-tax estimate, if offered in proper form, would also be admissible does not persuade us that it is wrong to use after-tax figures instead of gross earnings in projecting what the decedent’s financial contributions to his survivors would have been had this tragic accident not occurred.

Respondent also argues that evidence concerning costs of litigation, including her attorney’s fees, is equally pertinent to a determination of what amount will actually compensate the survivors for their monetary loss. In a sense this is, of course, true. But the argument that attorney’s fees must be added to a plaintiff’s recovery if the award is truly to make him whole is contrary to the generally applicable “Ameriican Rule.” See Alyeska Pipeline Service Co. v. Wilderness Society, 421 U. S. 240, 247. The FELA, however, unlike a number of other federal statutes, does not authorize recovery of attorney’s fees by the successful litigant. Only if the Congress were to provide for such a recovery would it be proper to consider them. In any event, it surely is not proper for the Judiciary to ignore the demonstrably relevant factor of income tax in measuring damages in order to offset what may be perceived as an undesirable or unfair rule regarding attorney’s fees.

II

Section 104 (a) (2) of the Internal Revenue Code of 1954, 26 U. S. C. § 104 (a)(2), provides that the amount of any damages received on account of personal injuries is not taxable income. The section is construed to apply to wrongful-death awards; they are not taxable income to the recipient.

Although the law is perfectly clear, it is entirely possible that the members of the jury may assume that a plaintiff’s recovery in a case of this kind will be subject to federal taxation, and that the award should be increased substantially in order to be sure that the injured party is fully compensated. The Missouri Supreme Court expressed the opinion that “it is reasonable to assume the average juror would believe [that its verdict will] be subject to such taxes.” Dempsey v. Thompson, 363 Mo. 339, 346, 251 S. W. 2d 42, 45 (1952). And Judge Aldisert, writing for the Third Circuit, agreed:

“We take judicial notice of the Tax consciousness’ of the American public. Yet, we also recognize, as did the court in Dempsey v. Thompson, 363 Mo. 339, 251 S. W. 2d 42 (1952), that few members of the general public are aware of the special statutory exception for personal injury awards contained in the Internal Revenue Code.
“ ‘[T]here is always danger that today’s tax-conscious juries may assume (mistakenly of course) that the judgment will be taxable and therefore make their verdict big enough so that plaintiff would get what they think he deserves after the imaginary tax is taken out of it.’
“II Harper & James, The Law of Torts § 25.12, at 1327-28 (1956).” (Footnote omitted.) Domeracki v. Humble Oil & Refining Co., 443 F. 2d 1245, 1251 (1971), cert. denied, 404 U. S. 883.

A number of other commentators have also identified that risk.

In this case the respondent’s expert witness computed the amount of pecuniary loss at $302,000, plus the value of the care and training that decedent would have provided to his young children; the jury awarded damages of $775,000. It is surely not fanciful to suppose that the jury erroneously believed that a large portion of the award would be payable to the Federal Government in taxes, and that therefore it improperly inflated the recovery. Whether or not this speculation is accurate, we agree with petitioner that, as Judge Ely wrote for the Ninth Circuit,

“[t]o put the matter simply, giving the instruction can do no harm, and it can certainly help by preventing the jury from inflating the award and thus overcompensating the plaintiff on the basis of an erroneous assumption that the judgment will be taxable.” Burlington Northern, Inc. v. Boxberger, 529 F. 2d 284, 297 (1975).

We hold that it was error to refuse the requested instruction in this case. That instruction was brief and could be easily understood. It would not complicate the trial by making additional qualifying or supplemental instructions necessary. It would not be prejudicial to either party, but would merely eliminate an area of doubt or speculation that might have an improper impact on the computation of the amount of damages.

The judgment is reversed, and the case is remanded to the Appellate Court of Illinois for further proceedings not inconsistent with this opinion.

It is so ordered.

Mr. Justice Blackmun,

with whom Mr. Justice Marshall joins, dissenting.

In this action for wrongful death arising under the Federal Employers’ Liability Act, 35 Stat. 65, as amended, 45 U. S. C. §§ 51-60, the Court today holds that if an award is granted, federal income taxes on the decedent’s lost earnings are to be taken into account and are. to reduce the amount of the award. The Court further holds that, on request, the jury must be instructed that the award is not subject to federal income tax.

I agree with neither ruling. In my view, by mandating adjustment of the award by way of reduction for federal income taxes that would have been paid by the decedent- on his earnings, the Court appropriates for the tortfeasor a benefit intended to be conferred on the victim or his survivors. And in requiring that the jury be instructed that a wrongful-death award is not subject to federal income tax, the Court opens the door for a variety of admonitions to the jury not to “misbehave,” and unnecessarily interjects what is now to be federal law into the administration of a trial in a state court.

In this day of substantial income taxes, one is sorely tempted, in jury litigation, to accept the propriety of admitting evidence as to a tort victim’s earnings net after estimated income taxes, and of instructing the jury that an award will be tax-free. This, it could be urged, is only common sense and a recognition of financial realities.

Ordinarily, however, the effect of an income tax upon the recipient of a payment is of no real or ultimate concern to the payer. Apart from required withholding, it just is not the payer’s responsibility or, indeed, “any of his business.” The concept of “net after taxes” and the omnipresence of the tax collector, to be sure, are present facts of fife and are within the constant awareness of both recipient and payer. But these factors do not change the basic character of an award for damages, whether that award be one to compensate the surviving victim for his injury, or one to compensate the deceased victim’s survivors, by way of statutory wrongful-death benefit, for their loss. The income tax effect should flow and be retained in its own channel. Surely, it should not operate to assist the tortfeasor by way of a benefit, perhaps even a windfall.

I

The employer-petitioner argues, and the Court holds, that federal income taxes that would have been paid by the deceased victim must be subtracted in computing the amount of the wrongful-death award. Were one able to ignore and set aside the uncertainties, estimates, assumptions, and complexities involved in computing and effectuating that subtraction, this might not be an unreasonable legislative proposition in a compensatory tort system. Neither petitioner nor the Court, however, recognizes that the premise of such an argument is the nontaxability, under the Internal Revenue Code, of the wrongful-death award itself.

By not taxing the award, Congress has bestowed a benefit. Although the parties disagree over the origin of the tax-free status of the wrongful-death award, it is surely clear that the lost earnings could be taxed as income. Cf. Commissioner v. Glenshaw Glass Co., 348 U. S. 426, 430-431 (1955). See generally M. Chirelstein, Federal Income Taxation 39-40 (1977). In my view, why Congress created this benefit under one statute is relevant in deciding where the benefit should be allocated under another statute enacted by Congress.

While Congress has not articulated its reasons for not taxing a wrongful-death award, it is highly unlikely that it intended to confer this benefit on the tortfeasor. Two more probable purposes for the exclusion are apparent. First, taxing the award could involve the same uncertainties and complexities noted by respondent and the majority of the courts of this country as a reason for not taking income taxes into account in computing the award. Congress may have decided that it is simply not worthwhile to enact a complex and administratively burdensome system in order to approximate the tax treatment of the income if, in fact, it had been earned over a period of time by the decedent. Second, Congress may have intended to confer a humanitarian benefit on the victim or victims of the tort. One District Court has reasoned:

“The court can divine no societal purpose that would be furthered by awarding wrongdoing defendants with the benefit of this Congressional largesse. A societal purpose would be served by benefiting innocent victims of tortious conduct. Indeed, since the victims’ chances of needing public relief are thereby diminished, this concern would be greater, not less, in the case of death, where the loss of earning capacity is total. This court therefore concludes that Congress, as with all exemptions under Section 104, '. . . intended to relieve a taxpayer who has the misfortune to become ill or injured. . . ” Huddell v. Levin, 395 F. Supp. 64, 87 (NJ 1975), quoting Epmeier v. United States, 199 F. 2d 508, 511 (CA7 1952), quoted in turn in Haynes v. United States, 353 U. S. 81, 84-85, n. 3 (1957).

See also Comment, Income Tax Effects on Personal Injury Recoveries, 30 La. L. Rev. 672, 685 (1970); Note, 69 Harv. L. Rev. 1495, 1496 (1956); Note, Taxation of Damage Recoveries from Litigation, 40 Cornell L. Q. 345, 346 (1955).

Whichever of these concerns it was that motivated Congress, transfer of the tax benefit to the FELA tortfeasor-defendant is inconsistent with that purpose. If Congress felt that it was not worth the effort to estimate the decedent’s prospective tax liability on behalf of the public fisc, it is unlikely that it would want to require this effort on behalf of the tortfeasor. And Congress would not confer a humanitarian benefit on tort victims or their survivors in the Internal Revenue Code, only to take it away from victims or their survivors covered by the FELA. I conclude, therefore, that any income tax effect on lost earnings should not be considered in the computation of a damages award under the FELA.

II

The Court concludes that, as a matter of federal law, the jury in an FELA case must be instructed, on request, that the damages award is not taxable. This instruction is mandated, it is said, because “it is entirely possible that the members of the jury may assume that a plaintiff’s recovery . . . will be subject to federal taxation, and that the award should be increased substantially in order to be sure that the injured party is fully compensated.” Ante, at 496. The Court finds it “surely not fanciful to suppose” that the jury acted on that assumption in this case. Ante, at 497.

The required instruction is purely cautionary in nature. It does not affect the determination of Lability or the measure of damages. It does nothing more than call a basically irrelevant factor to the jury’s attention, and then directs the jury to forget that matter. Even if federal law governed such an admonition to the jury not to misbehave, the instruction required by the Court seems to me to be both unwise and unjustified, and almost an affront to the practical wisdom of the jury.

It also is “entirely possible” that the jury “may” increase its damages award in the belief that the defendant is insured, or that the plaintiff will be obligated for substantial attorney’s fees, or that the award is subject to state (as well as federal) income tax, or on the basis of any number of other extraneous factors. Charging the jury about every conceivable matter as to which it should not misbehave or miscalculate would be burdensome and could be confusing. Yet the Court’s decision today opens the door to that possibility. There certainly is no evidence in this record to indicate that the jury is any more likely to act upon an erroneous assumption about an award’s being subject to federal income tax than about any other collateral matter. Although the Court suggests that the difference in the expert’s estimation of the pecuniary loss and the total amount of the award represents inflation of the award for federal income taxes, ante, at 496-498, this is pure surmise. The jury was instructed that it could compensate for factors on which experts could not place a precise dollar value, and it is “entirely possible” that these, instead, were the basis of the award.

In any .event, it has long been settled that the giving of cautionary instructions is governed by state law when an FELA action is brought in state eourt. “[Qjuestions of procedure and evidence [are] to be determined according to the law of the forum [in cases arising under the FELA].'” Chesapeake & Ohio R. Co. v. Kelly, 241 U. S. 485, 491 (1916). This Court, to be sure, has asserted federal control over a number of incidents of state trial practice that might appear to be procedural, and has done so out of concern, apparently, for protecting the rights of FELA plaintiffs. See, e. g., Brown v. Western R. of Alabama, 338 U. S. 294 (1949) (a State cannot apply, in an FELA case, its usual rule that pleadings are construed against the pleader); Dice v. Akron, C. & Y. R. Co., 342 U. S. 359 (1952) (FELA plaintiff is entitled to a jury trial in state court notwithstanding a contrary state rule); C. Wright, Law of Federal Courts 195-196 (3d ed. 1976) ; Hill, Substance and Procedure in State FELA Actions — The Converse of the Erie Problem?, 17 Ohio St. L. J. 384 (1956). I agree, of course, that state rules that interfere with federal policy are to be rejected, even if they might be characterized as “procedural.” See, e. g., Note, State Enforcement of Federally Created Rights, 73 Harv. L. Rev. 1551, 1560-1561 (1960). See generally Note, Procedural Protection for Federal Rights in State Courts, 30 U. Cin. L. Rev. 184 (1961). I cannot conclude, however, that a purely cautionary instruction to the jury not to misbehave implicates any federal interest. This issue truly can be characterized as one of the “ordinary incidents of state procedure,” Dickinson v. Stiles, 246 U. S. 631, 633 (1918), which should be governed by state law.

Since the law of Illinois, where this case arose, is that it is not error to refuse to instruct the jury as to the nontaxability of the award, Raines v. New York Central R. Co., 51 Ill. 2d 428, 430, 283 N. E. 2d 230, 232, cert. denied, 409 U. S. 983 (1972), and since I believe the trial court correctly excluded evidence of the prospective tax liability of the deceased victim, I would affirm the judgment of the Appellate Court of Illinois.

       35 Stat. 65, as amended, 45 U. S. C. § 51 et seq.

       The issue of liability was vigorously contested at the trial and was the subject of extensive consideration by the Appellate Court of Illinois, First District. See 62 Ill. App. 3d 653, 378 N. E. 2d 1232 (1978). No aspect of that issue, however, is now before us.

       App. to Pet. for Cert. A27-A28.

       Respondent argues that the excess is adequately explained by the jury’s estimate of the pecuniary value of the guidance, instruction, and training that the decedent would have provided to his children.

       One of the purposes of the Federal Employers’ Liability Act was to “create uniformity throughout the Union” with respect to railroads’ financial responsibility for injuries to their employees. H. R. Rep. No. 1386, 60th Cong., 1st Sess., 3 (1908). See also Dice v. Akron, C. & Y. R. Co., 342 U.S. 359, 362; Brady v. Southern R. Co., 320 U. S. 476, 479; Hill, Substance and Procedure in State FELA Actions—The Converse of the Erie Problem?, 17 Ohio St. L. J. 384 (1956).

       “The Supreme Court of the United States has not spoken on this issue. Absent an authoritative pronouncement by that court we will follow the decisions of our own supreme court in Raines v. New York Central R. R. Co. (1972), 51 Ill. 2d 428, 430, 283 N. E. 2d 230, cert. denied (1972), 409 U. S. 983, . . . and Hall v. Chicago & North Western Ry. Co. (1955), 5 Ill. 2d 135, 149-52, 125 N. E. 2d 77. . . .” 62 Ill. App. 3d, at 668-669, 378 N. E. 2d, at 1245.

       This is not to say, however, that introduction of such evidence must be permitted in every case. If the impact of future income tax in calculating the award would be de minimis, introduction of the evidence may cause more confusion than it is worth. Cf. Fed. Rule Evid. 403.

       See McWeeney v. New York, N. H. & H. R. Co., 282 F. 2d 34, 37 (CA2 1960), cert. denied, 364 U. S. 870.

       See Civil Rights Act of 1964, Tit. VII, §706 (k), 78 Stat. 261, 42 U. S. C. § 2000e-5 (k); Clayton Act, § 4, 38 Stat. 731, 15 U. S. C. § 15; and numerous others collected in Alyeska Pipeline Service Co. v. Wilderness Society, 421 U. S., at 260-261, n. 33.

       The dissent takes the position that § 104 (a) (2) of the Internal Revenue Code, see nn. 11, 12, infra, which makes personal injury awards nontaxable, “appropriates for the tortfeasor a benefit intended to be conferred on the victim or his survivors.” Post, at 498-499. But we see nothing in the language and are aware of nothing in the legislative history of § 104 (a) (2) to suggest that it has any impact whatsoever on the proper measure of damages in a wrongful-death action. Moreover, netting out the taxes that the decedent would have paid does not confer a benefit on the tortfeasor any more than netting out the decedent’s personal expenditures. Both subtractions are required in order to determine “the pecuniary benefits which the beneficiaries might have reasonably received. . . .” Michigan Central R. Co. v. Vreeland, 227 U. S. 59, 70.

       The statute contains an exception for the reimbursement of medical expenses that have been taken as a deduction. The section provides in relevant part:
      “Except in the case of amounts attributable to (and not in excess of) deductions allowed under Section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include—
      (2), the amount of any damages received (whether by suit or agreement) on account of personal injuries or sickness. . . .”

       See Rev. Rul. 54-19, 1954-1 Cum. Bull. 179.

       See, e. g., Burns, A Compensation Award for Personal Injury or Wrongful Death Is Tax-Exempt: Should We Tell the Jury?, 14 DePaul L. Rev. 320 (1965); Feldman, Personal Injury Awards: Should Tax-Exempt Status Be Ignored?, 7 Ariz. L. Rev. 272 (1966); Nordstrom, Income Taxes and Personal Injury Awards, 19 Ohio St. L. J. 212 (1958).

       The parties agree that these awards are not taxable. Of course, it would not be in the interest of either party to take the position that the award is taxable.

       Respondent maintains that a wrongful-death award is within the exclusion of § 104 (a) (2) of the Internal Revenue Code of 1954, 26 U. S. C. § 104 (a) (2), which provides that “gross income does not include . . . the amount of any damages received (whether by suit or agreement) on account of personal injuries or sickness.” Brief for Respondent 8-9, and n. 2. Petitioner, on the other hand, contends that a wrongful-death award is not, in the words of the statute, “received ... on account of personal injuries.” Petitioner points to an early ruling that wrongful-death damages are not within the Code’s definition of income because they merely replace contributions the decedent’s relatives would have received from the decedent. I. T. 2420, VII-2 Cum. Bull. 123 (1928); see Rev. Rul. 54r-19, 1954-1 Cum. Bull. 179. Alternatively, petitioner argues that even if wrongful-death damages are covered by § 104 (a)(2), Congress’ purpose in enacting that subsection was not to aid tort victims. Rather, § 104 (a) (2) can be traced to Congress’ concern in 1918 that personal injury damages were not income within the meaning of the Sixteenth Amendment, citing H. R. Rep. No. 767, 65th Cong., 2d Sess., 9-10 (1918). Brief for Petitioner 31-32, n. 23.

       Petitioner argues that a decision in this case that would rest on Congress’ purpose not to subject wrongful-death awards to federal income taxation would “fundamentally alter all forms of injury compensation in this country,” Reply Brief for Petitioner 10-11, since this nontaxability is not limited to awards under the FELA. My position, however, is merely that the policies embodied in one federal statute are relevant in aid of the interpretation of another federal statute. Absent a more explicit statement of Congress’ intent, I would not infer a congressional purpose to override the States’ traditional power to define the measure of damages applicable to state-created causes of action.

       Vacated on other grounds, 537 F. 2d 726 (CA3 1976).


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    CROWELL, SECRETARY OF STATE OF TENNESSEE, et al. v. MADER et al.
    No. 78-1780.
    Judgment vacated and case remanded October 1, 1979—
    Rehearing granted and case decided February 19, 1980
   Per Curiam.

The petition for rehearing is granted.

In Kopald v. Carr, 343 F. Supp. 51 (MD Tenn. 1972), the District Court applied this Court’s earlier holding in Baker v. Carr, 369 U. S. 186 (1962), to invalidate two senatorial dis-tricting plans. That decision resulted in the formulation of a so-called court ordered “Kopald Plan.” That plan was superseded by a 1973 legislative plan.

In this litigation the District Court invalidated the 1973 legislative plan. It enjoined the defendants from conducting any elections pursuant to that plan and retained jurisdiction to review whatever substitute the Tennessee General Assembly might enact prior to June 1, 1979, or, if necessary, to reinstate the 1972 “Kopald Plan.” The court further ordered a hearing to award fees to plaintiffs’ counsel.

In response to the State’s appeal to this Court, appellees pointed out that the legislature had enacted a new plan effective on June 6, 1979, argued that the controversy over the validity of the 1973 legislative plan had therefore become moot; and requested that the appeal therefore be dismissed. This Court, following a practice that is appropriate when an entire case has become moot but which is inappropriate when only the issues raised on appeal have been resolved, entered an order directing that the judgment of the District Court be vacated and that the entire action be dismissed as moot. Post, p. 806.

The recent legislation did not moot the entire case, but only the issues raised on appeal. Appellees may still wish to attack the newly enacted legislation or apply for attorney’s fees. We therefore vacate our prior order. In lieu thereof, we direct that the judgment of the District Court be vacated without prejudice to such further proceedings in the District Court as may be appropriate. See Diffenderfer v. Central Baptist Church, 404 U. S. 412 (1972).

It is so ordered.


author: Per Curiam. Mr. Justice Stevens,

text:
    SNEPP v. UNITED STATES
    No. 78-1871.
    Decided February 19, 1980

      Together with No. 79-265, United States v. Snepp, also on petition for certiorari to the same court.

   Per Curiam.

In No. 78-1871, Prank W. Snepp III seeks review of a judgment enforcing an agreement that he signed when he accepted employment with the Central Intelligence Agency (CIA). He also contends that punitive damages are an inappropriate remedy for the breach of his promise to submit all writings about the Agency for prepublication review. In No. 79-265, the United States conditionally cross petitions from a judgment refusing to find that profits attributable to Snepp’s breach .are impressed with a constructive trust. We grant the petitions for certiorari in order to correct the judgment from which both parties seek relief.

I

Based on his experiences as a CIA agent, Snepp published a book about certain CIA activities in South Vietnam. Snepp published the account without submitting it to the Agency for prepublication review. As an express condition of his employment with the CIA in 1968, however, Snepp had executed an agreement promising that he would “not . . . publish . . . any information or material relating to the Agency, its activities or intelligence activities generally, either during or after the term of [his] employment . . . without specific prior approval by the Agency.” App. to Pet. for Cert, in No. 78-1871, p. 59a. The promise was an integral part of Snepp’s concurrent undertaking “not to disclose any classified information relating to the Agency without proper authorization.” Id., at 58a. Thus, Snepp had pledged not to divulge classified information and not to publish any information without prepublication clearance. The Government brought this suit to enforce Snepp’s agreement. It sought a declaration that Snepp had breached the contract, an injunction requiring Snepp to submit future writings for prepublication review, and an order imposing a constructive trust for the Government’s benefit on all profits that Snepp might earn from publishing the book in violation of his fiduciary obligations to the Agency.

The District Court found that Snepp had “willfully, deliberately and surreptitiously breached his position of trust with the CIA and the [1968] secrecy agreement” by publishing his book without submitting it for prepublication review. 456 F. Supp. 176, 179 (ED Ya. 1978). The court also found that Snepp deliberately misled CIA officials into believing that he would submit the book for prepublication clearance. Finally, the court determined as a fact that publication of the book had “caused the United States irreparable harm and loss.” Id., at 180. The District Court therefore enjoined future breaches of Snepp’s agreement and imposed a constructive trust on Snepp’s profits.

The Court of Appeals accepted the findings of the District Court and agreed that Snepp had breached a valid contract. It specifically affirmed the finding that Snepp’s failure to submit his manuscript for prepublication review had inflicted “irreparable harm” on intelligence activities vital to our national security. 595 F. 2d 926, 935 (CA4 1979). Thus, the court upheld the injunction against future violations of Snepp’s prepublication obligation. The court, however, concluded that the record did not support imposition of a constructive trust. The conclusion rested on the court’s perception that Snepp had a First Amendment right to publish unclassified information and the Government’s concession— for the purposes of this litigation — that Snepp’s book divulged no classified intelligence. Id., at 935-936. In other words, the court thought that Snepp’s fiduciary obligation extended only to preserving the confidentiality of classified material. It therefore limited recovery to nominal damages and to the possibility of punitive damages if the Government — in a jury trial — could prove tortious conduct.

Judge Hoffman, sitting by designation, dissented from the refusal to find a constructive trust. The 1968 agreement, he wrote, “was no ordinary contract; it gave life to a fiduciary relationship and invested in Snepp the trust of the CIA.” Id., at 938. Prepublication clearance was part of Snepp’s undertaking to protect confidences associated with his trust. Punitive damages, Judge Hoffman argued, were both a speculative and inappropriate remedy for Snepp’s breach. We agree with Judge Hoffman that Snepp breached a fiduciary obligation and that the proceeds of his breach are impressed with a constructive trust.

II

Snepp’s employment with the CIA involved an extremely high degree of trust. In the opening sentence of the agreement that he signed, Snepp explicitly recognized that he was entering a trust relationship. The trust agreement specifically imposed the obligation not to publish any information relating to the Agency without submitting the information for clearance. Snepp stipulated at trial that — after undertaking this obligation — he had been “assigned to various positions of trust” and that he had been granted “frequent access to classified information, including information regarding intelligence sources and methods.” 456 F. Supp., at 178. Snepp published his book about CIA activities on the basis of this background and exposure. He deliberately and surreptitiously violated his obligation to submit all material for prepublication review. Thus, he exposed the classified information with which he had been entrusted to the risk of disclosure.

Whether Snepp violated his trust does not depend upon whether his book actually contained classified information. The Government does not deny — as a general principle— Snepp’s right to publish unclassified information. Nor does it contend — at this stage of the litigation — that Snepp’s book contains classified material. The Government simply claims that, in light of the special trust reposed in him and the agreement that he signed, Snepp should have given the CIA an opportunity to determine whether the material he proposed to publish would compromise classified information or sources. Neither of the Government’s concessions undercuts its claim that Snepp’s failure to submit to prepublication review was a breach of his trust.

Both the District Court and the Court of Appeals found that a former intelligence agent’s publication of unreviewed material relating to intelligence activities can be detrimental to vital national interests even if the published information is unclassified. When a former agent relies on his own judgment about what information is detrimental, he may reveal information that the CIA — with its broader understanding of what may expose classified information and confidential sources — could have identified as harmful. In addition to receiving intelligence from domestically based or controlled sources, the CIA obtains information from the intelligence services of friendly nations and from agents operating in foreign countries. The continued availability of these foreign sources depends upon the CIA’s ability to guarantee the security of information that might compromise them and even endanger the personal safety of foreign agents.

Undisputed evidence in this case shows that a CIA agent’s violation of his obligation to submit writings about the Agency for prepublication review impairs the CIA’s ability to perform its statutory duties. Admiral Turner, Director of the CIA, testified without contradiction that Snepp’s book and others like it have seriously impaired the effectiveness of American intelligence operations. He said:

“Over the last six to nine months, we have had a number of sources discontinue work with us. We have had more sources tell us that they are very nervous about continuing work with us. We have had very strong complaints from a number of foreign intelligence services with whom we conduct liaison, who have questioned whether they should continue exchanging information with us, for fear it will not remain secret. I cannot estimate to you how many potential sources or liaison arrangements have never germinated because people were unwilling to enter into business with us.” 456 F. Supp., at 179-180.

In view of this and other evidence in the record, both the District Court and the Court of Appeals recognized that Snepp’s breach of his explicit obligation to submit his material— classified or not — for prepublication clearance has irreparably harmed the United States Government. 595 F. 2d, at 935; 456 F. Supp., at 180.

Ill

The decision of the Court of Appeals denies the Government the most appropriate remedy for Snepp’s acknowledged wrong. Indeed, as a practical matter, the decision may well leave the Government with no reliable deterrent against similar breaches of security. No one disputes that the actual damages attributable to a publication such as Snepp’s generally are unquantifiable. Nominal damages are a hollow alternative, certain to deter no one. The punitive damages recoverable after a jury trial are speculative and unusual. Even if recovered, they may bear no relation to either the Government’s irreparable loss or Snepp’s unjust gain.

The Government could not pursue the only remedy that the Court of Appeals left it without losing the benefit of the bargain it seeks to enforce. Proof of the tortious conduct necessary to sustain an award of punitive damages might force the Government to disclose some of the very confidences that Snepp promised to protect. The trial of such a suit, before a jury if the defendant so elects, would subject the CIA and its officials to probing discovery into the Agency’s highly confidential affairs. Rarely would the Government run this risk. In a letter introduced at Snepp’s trial, former CIA Director Colby noted the analogous problem in criminal cases. Existing law, he stated, “requires the revelation in open court of confirming or additional information of such a nature that the potential damage to the national security precludes prosecution.” App. to Pet. for Cert, in No. 78-1871, p. 68a. When the Government cannot secure its remedy without unacceptable risks, it has no remedy at all.

A constructive trust, on the other hand, protects both the Government and the former agent from unwarranted risks. This remedy is the natural and customary consequence of a breach of trust. It deals fairly with both parties by conforming relief to the dimensions of the wrong. If the agent secures prepublication clearance, he can publish with no fear of liability. If the agent publishes unreviewed material in violation of his fiduciary and contractual obligation, the trust remedy simply requires him to disgorge the benefits of his faithlessness. Since the remedy is swift and sure, it is tailored to deter those who would place sensitive information at risk. And since the remedy reaches only funds attributable to the breach, it cannot saddle the former agent with exemplary damages out of all proportion to his gain. The decision of the Court of Appeals would deprive the Government of this equitable and effective means of protecting intelligence that may contribute to national security. We therefore reverse the judgment of the Court of Appeals insofar as it refused to impose a constructive trust on Snepp’s profits, and we remand the cases to the Court of Appeals for reinstatement of the full judgment of the District Court.

So ordered.

Mr. Justice Stevens,

with whom Mr. Justice Brennan and Mr. Justice Marshall join,

dissenting.

In 1968, Frank W. Snepp signed an employment agreement with the CIA in which he agreed to submit to the Agency any information he intended to publish about it for prepubli-cation review. The purpose of such an agreement, as the Fourth Circuit held, is not to give the CIA the power to censor its employees’ critical speech, but rather to ensure that classified, nonpublic information is not disclosed without the Agency’s permission. 595 F. 2d 926, 932 (1979); see also United States v. Marchetti, 466 F. 2d 1309, 1317 (CA4 1972), cert. denied, 409 U. S. 1063.

In this case Snepp admittedly breached his duty to submit the manuscript of his book, Decent Interval, to the CIA for prepublication review. However, the Government has conceded that the book contains no classified, nonpublic material. Thus, by definition, the interest in confidentiality that Snepp’s contract was designed to protect has not been compromised. Nevertheless, the Court today grants the Government unprecedented and drastic relief in the form of a constructive trust over the profits derived by Snepp from the sale of the book. Because that remedy is not authorized by any applicable law and because it is most inappropriate for the Court to dispose of this novel issue summarily on the Government’s conditional cross-petition for certiorari, I respectfully dissent.

I

The rule of law the Court announces today is not supported by statute, by the contract, or by the common law. Although Congress has enacted a number of criminal statutes punishing the unauthorized dissemination of certain types of classified information, it has not seen fit to authorize the constructive trust remedy the Court creates today. Nor does either of the contracts Snepp signed with the Agency provide for any such remedy in the event of a breach. The Court’s per curiam opinion seems to suggest that its result is supported by a blend of the law of trusts and the law of contracts. But neither of these branches of the common law supports the imposition of a constructive trust under the circumstances of this case.

Plainly this is not a typical trust situation in which a set-tlor has conveyed legal title to certain assets to a trustee for the use and benefit of designated beneficiaries. Rather, it is an employment relationship in which the employee possesses fiduciary obligations arising out of his duty of loyalty to his employer. One of those obligations, long recognized by the common law even in the absence of a written employment agreement, is the duty to protect confidential or “classified” information. If Snepp had breached that obligation, the common law would support the implication of a constructive trust upon the benefits derived from his misuse of confidential information.

But Snepp did not breach his duty to protect confidential information. Rather, he breached a contractual duty, imposed in aid of the basic duty to maintain confidentiality, to obtain prepublication clearance. In order to justify the imposition of a constructive trust, the majority attempts to equate this contractual duty with Snepp’s duty not to disclose, labeling them both as “fiduciary.” I find nothing in the common law to support such an approach.

Employment agreements often contain covenants designed to ensure in various ways that an employee fully complies with his duty not to disclose or misuse confidential information. One of the most common is a covenant not to compete. Contrary to the majority’s approach in this case, the courts have not construed such covenants broadly simply because they support a basic fiduciary duty; nor have they granted sweeping remedies to enforce them. On the contrary, because such covenants are agreements in restraint of an individual’s freedom of trade, they are enforceable only if they can survive scrutiny under the “rule of reason.” That rule, originally laid down in the seminal case of Mitchel v. Reynolds, 1 P. Wms. 181, 24 Eng. Rep. 347 (1711), requires that the covenant be reasonably necessary to protect a legitimate interest of the employer (such as an interest in confidentiality), that the employer’s interest not be outweighed by the public interest, and that the covenant not be of any longer duration or wider geographical scope than necessary to protect the employer’s interest.

The Court has not persuaded me that a rule of reason analysis should not be applied to Snepp’s covenant to submit to prepublication review. Like an ordinary employer, the CIA has a vital interest in protecting certain types of information; at the same time, the CIA employee has a countervailing interest in preserving a wide range of work opportunities (including work as an author) and in protecting his First Amendment rights. The public interest lies in a proper accommodation that will preserve the intelligence mission of the Agency while not abridging the free flow of unclassified information. When the Government seeks to enforce a harsh restriction on the employee’s freedom, despite its admission that the interest the agreement was designed to protect — the confidentiality of classified information — has not been compromised, an equity court might well be persuaded that the case is not one in which the covenant should be enforced.

But even assuming that Snepp’s covenant to submit to pre-publication review should be enforced, the constructive trust imposed by the Court is not an appropriate remedy. If an employee has used his employer’s confidential information for his own personal profit, a constructive trust over those profits is obviously an appropriate remedy because the profits are the direct result of the breach. But Snepp admittedly did not use confidential information in his book; nor were the profits from his book in any sense a product of his failure to submit the book for prepublication review. For, even if Snepp had submitted the book to the Agency for prepublication review, the Government’s censorship authority would surely have been limited to the excision of classified material. In this case, then, it would have been obliged to clear the book for publication in precisely the same form as it now stands. Thus, Snepp has not gained any profits as a result of his breach; the Government, rather than Snepp, will be unjustly enriched if he is required to disgorge profits attributable entirely to his own legitimate activity.

Despite the fact that Snepp has not caused the Government the type of harm that would ordinarily be remedied by the imposition of a constructive trust, the Court attempts to justify a constructive trust remedy on the ground that the Government has suffered some harm. The Court states that publication of "unreviewed material” by a former CIA agent “can be detrimental to vital national interests even if the published information is unclassified.” Ante, at 511-512. It then seems to suggest that the injury in such cases stems from the Agency’s inability to catch “harmful” but unclassified information before it is published. I do not believe, however, that the Agency has any authority to censor its employees’ publication of unclassified information on the basis of its opinion that publication may be “detrimental to vital national interests” or otherwise “identified as harmful.” Ibid. The CIA never attempted to assert such power over Snepp in either of the contracts he signed; rather, the Agency itself limited its censorship power to preventing the disclosure of “classified” information. Moreover, even if such a wide-ranging prior restraint would be good national security policy, I would have great difficulty reconciling it with the demands of the First Amendment.

The Court also relies to some extent on the Government’s theory at trial that Snepp caused it harm by flouting his pre-publication review obligation and thus making it appear that the CIA was powerless to prevent its agents from publishing any information they chose to publish, whether classified or not. The Government theorized that this appearance of weakness would discourage foreign governments from cooperating with the CIA because of a fear that their secrets might also be compromised. In support of its position that Snepp’s book had in fact had such an impact, the Government introduced testimony by the Director of the CIA, Admiral Stans-field Turner, stating that Snepp’s book and others like it had jeopardized the CIA’s relationship with foreign intelligence services by making them unsure of the Agency’s ability to maintain confidentiality. Admiral Turner’s truncated testimony does not explain, however, whether these unidentified “other'5 books actually contained classified information. If so, it is difficult to believe that the publication of a book like Snepp’s, which does not reveal classified information, has significantly weakened the Agency’s position. Nor does it explain whether the unidentified foreign agencies who have stopped cooperating with the CIA have done so because of a legitimate fear that secrets will be revealed or because they merely disagree with our Government’s classification policies.

In any event, to the extent that the Government seeks to punish Snepp for the generalized harm he has caused by failing to submit to prepublication review and to deter others from following in his footsteps, punitive damages is, as the Court of Appeals held, clearly the preferable remedy “since a constructive trust depends on the concept of unjust enrichment rather than deterrence and punishment. See D. Dobbs, Law of Remedies § 3.9 at 205 and § 4.3 at 246 (1973).” 595 F. 2d, at 937.

II

The Court’s decision to dispose of this case summarily on the Government’s conditional cross-petition for certiorari is just as unprecedented as its disposition of the merits.

Snepp filed a petition for certiorari challenging the Fourth Circuit’s decision insofar as it affirmed the entry of an injunction requiring him to submit all future-manuscripts for pre-publication review and remanded for a determination of whether punitive damages would be appropriate for his failure to submit Decent Interval to the Agency prior to its publication. The Government filed a brief in opposition as well as a cross-petition for certiorari; the Government specifically stated, however, that it was cross petitioning only to bring the entire case before the Court in the event that the Court should decide to grant Snepp’s petition. The Government explained that “[bjecause the contract remedy provided by the court of appeals appears to be sufficient in this case to protect the Agency’s interest, the government has not independently sought review in this Court.” In its concluding paragraph the Government stated: “If this Court grants [Snepp’s] . . . petition for a writ of certiorari in No. 78-1871, it should also grant this cross-petition. If the petition in No. 78-1871 is denied, this petition should also be denied.” Pet. for Cert, in No. 79-265, p. 5.

Given the Government’s position, it would be highly inappropriate, and perhaps even beyond this Court’s jurisdiction, to grant the Government’s petition while denying Snepp’s. Yet that is in essence what has been done. The majority obviously does not believe that Snepp’s claims merit this Court’s consideration, for they are summarily dismissed in a footnote. Ante, at 509, n. 3. It is clear that Snepp’s petition would not have been granted on its own merits.

The Court’s opinion is a good demonstration of why this Court should not reach out to decide a question not necessarily presented to it, as it has done in this case. Despite the fact that the Government has specifically stated that the punitive damages remedy is “sufficient” to protect its interests, the Court forges ahead and summarily rejects that remedy on the grounds that (a) it is too speculative and thus would not provide the Government with a “reliable deterrent against similar breaches of security,” ante, at 514, and (b) it might require the Government to reveal confidential information in court, the Government might forgo damages- rather than make such disclosures, and the Government might thus be left with “no remedy at all,” ante, at 515. It seems to me that the Court is foreclosed from relying upon either ground by the Government’s acquiescence in the punitive damages remedy. Moreover, the second rationale is entirely speculative and, in this case at least, almost certainly wrong. The Court states that.

“[p]roof of the tortious conduct necessary to sustain an award of punitive damages might force the Government to disclose some of the very confidences that Snepp promised to protect.” Ante, at 514.

Yet under th,e Court of Appeals’ opinion the Government would be entitled to punitive damages simply by proving that Snepp deceived it into believing that he was going, to comply with his duty to submit the manuscript for prepubli-cation review and that the Government relied on these misrepresentations to its detriment. I fail to see how such a showing would require the Government to reveal any confidential information or to expose itself to “probing discovery into the Agency’s highly confidential affairs.” Ante, at 515.

Ill

The uninhibited character of today’s exercise in lawmaking is highlighted by the Court’s disregard of two venerable principles that favor a more conservative approach to this case.

First, for centuries the English-speaking judiciary refused to grant equitable relief unless the plaintiff could show that his remedy at law was inadequate. Without waiting for an opportunity to appraise the adequacy of the punitive damages remedy in this case, the Court has jumped to the conclusion that equitable relief is necessary.

Second, and of greater importance, the Court seems unaware of the fact that its drastic new remedy has been fashioned to enforce a species of prior restraint on a citizen’s right to criticize his government. Inherent in this prior restraint is the risk that the reviewing agency will misuse its authority to delay the publication of a critical work or to persuade an author to modify the contents of his work beyond the demands of secrecy. The character of the covenant as a prior restraint on free speech surely imposes an especially heavy burden on the censor to justify the remedy it seeks. It would take more than the Court has written to persuade me that that burden has been met.

I respectfully dissent.

       Upon the eve of his departure from the Agency in 1976, Snepp also executed a “termination secrecy agreement.” That document reaffirmed his obligation “never” to reveal “any classified information, or any information concerning intelligence or CIA that has not been made public by CIA . . . without the express written consent of the Director of Central Intelligence or his representative.” App. to Pet. for Cert, in No. 78-1871, p. 61a.

       At the time of suit, Snepp already had received about $60,000 in advance payments. His contract with his publisher provides for royalties and other potential profits. 456 F. Supp. 176, 179 (ED Va. 1978).

       The Court of Appeals and the District Court rejected each of Snepp’s defenses to the enforcement of his contract. 595 F. 2d 926, 931-934 (CA4 1979); 456 F. Supp., at 180-181. In his petition for certiorari, Snepp relies primarily on the claim that his agreement is unenforceable as a prior restraint on protected speech.
      When Snepp accepted employment with the CIA, he voluntarily signed the agreement that expressly obligated him to submit any proposed publication for prior review. He does not claim that he executed this agreement under duress. Indeed, he voluntarily reaffirmed his obligation when he left the Agency. We agree with the Court of Appeals that Snepp’s agreement is an “entirely appropriate” exercise of the CIA Director’s statutory mandate to "protec [t] intelligence sources and methods from unauthorized disclosure,” 50 U. S. C. §403 (d)(3). 595 F. 2d, at 932. Moreover, this Court’s cases make clear that — even in the absence of an express agreement — the CIA could have acted to protect substantial government interests by imposing reasonable restrictions on employee activities that in other contexts might be protected by the First Amendment. CSC v. Letter Carriers, 413 U. S. 548, 565 (1973); see Brown v. Glines, ante, p. 348; Buckley v. Valeo, 424 U. S. 1, 25-28 (1976); Greer v. Spock, 424 U. S. 828 (1976); id., at 844-848 (Fowell, J., concurring); Cole v. Richardson, 405 U. S. 676 (1972). The Government has a compelling interest in protecting both the secrecy of information important to our national security and the appearance of confidentiality so essential to the effective operation of our foreign intelligence service. See infra, at 511— 512. The agreement that Snepp signed is a reasonable means for protecting this vital interest.

       The Government's concession distinguished this litigation from United States v. Marchetti, 466 F. 2d 1309 (CA4), cert. denied, 409 U. S. 1063 (1972). There, the Government claimed that a former CIA employee intended to violate his agreement not to publish any classified information. 466 F. 2d, at 1313. Marchetti therefore did not consider the appropriate remedy for the breach of an agreement to submit all material for prepub-lication review. By relying on Marchetti in this litigation, the Court of Appeals overlooked the difference between Snepp’s breach and the violation at issue in -Marchetti.

       The first sentence of the 1968 agreement read: “I, Frank W. Snepp, III, understand that upon entering duty with the Central Intelligence Agency I am undertaking a position of trust in that Agency of the Government. . . .” App. to Pet. for Cert. in No. 78-1871, p. 58a.

       Quite apart from the plain language of the agreement, the nature of Snepp’s duties and his conceded access to confidential sources and materials could establish a trust relationship. See 595 F. 2d, at 939 (Hoffman, J., concurring in part and dissenting in part). Few types of governmental employment involve a higher degree of trust than that reposed in a CIA employee with Snepp’s duties.

       Every major nation in the world has an intelligence service. Whatever fairly may be said about some of its past activities, the CIA (or its predecessor the Office of Strategic Services) is an agency thought by every President since Franklin D. Roosevelt to be essential to the security of the United States and — in a sense — the free world. It is impossible for a government wisely to make critical decisions about foreign policy and national defense without the benefit of dependable foreign intelligence. See generally T. Powers, The Man Who Kept the Secrets (1979).

       In questioning the force of Admiral Turner’s testimony, Mr. Justice SteveNs’ dissenting opinion suggests that the concern of foreign intelligence services may not be occasioned by the hazards of allowing an agent like Snepp to publish whatever he pleases, but by the release of classified information or simply the disagreement of foreign agencies with our Government’s classification policy. Post, at 522-523. Mr. Justice Stevens’ views in this respect not only find no support in the record, but they also reflect a misapprehension of the concern reflected by Admiral Turner’s testimony. If in fact information is unclassified or in the public domain, neither the CIA nor foreign agencies would be concerned. The problem is to ensure in advance, and by proper procedures, that information detrimental to national interest is not published. Without a dependable prepublication review procedure, no intelligence agency or responsible Government official could be assured that an employee privy to sensitive information might not conclude on his own — innocently or otherwise — that it should be disclosed to the world.
      The dissent argues that the Court is allowing the CIA to “censor” its employees’ publications. Post, at 522. Snepp’s contract, however, requires no more than a clearance procedure subject to judicial review. If Snepp, in compliance with his contract, had submitted his manuscript for review and the Agency had found it to contain" sensitive material, presumably— if one accepts Snepp’s present assertion of good intentions — an effort would have been made to eliminate harmful disclosures. Absent agreement in this respect, the Agency would have borne the burden of seeking an injunction against publication. See Alfred A. Knopf, Inc. v. Colby, 509 F. 2d 1362 (CA4), cert. denied, 421 U. S. 992 (1975); United States v. Marchetti, 466 F. 2d 1309 (CA4), cert. denied, 409 U. S. 1063 (1972).

       Although both the District Court and the Court of Appeals expressly found otherwise, Mr. Justice Stevens says that “the interest in confidentiality that Snepp’s contract was designed to protect has not been compromised.” Post, at 516-517. Thus, on the basis of a premise wholly at odds with the record, the dissent bifurcates Snepp’s 1968 agreement and treats its interdependent provisions as if they imposed unrelated obligaT tions. Mr. Justice SteveNS then analogizes Snepp’s prepublication review agreement with the Government to a private employee’s covenant not to compete with his employer. Post, at 518-520. A body of private law intended to preserve competition, however, simply has no bearing on a contract made by the Director of the CIA in conformity with his statutory obligation to “protec [t] intelligence sources and methods from unauthorized disclosure.” 50 U. S. C. §403 (d)(3).

       Judge Hoffman’s dissent suggests that even this remedy may be unavailable if the Government must bring suit in a State that allows punitive damages only upon proof of compensatory damages. 595 F. 2d., at 940. The Court of Appeals majority, however, held as a matter of federal law that the nominal damages recoverable for any breach of a trust agreement will support an exemplary award. See id., at 936, and n. 10, 937-938.

       See id., at 939 (Hoffman, J., concurring in part and dissenting in part). Mr. Justice Stevens concedes that, even in the absence of a written contract, an employee has a fiduciary obligation to protect confidential information obtained during the course of his employment. Post, at 518. He also concedes that all personal profits gained from the exploitation of such information are impressed with a constructive trust in favor of the employer. Post, at 521. In this case, he seems to think that the common law would not treat information as “confidential” unless it were “classified.” See, e. g., post, at 518. We have thought that the common-law obligation was considerably more expansive. See, e. g., Restatement (Second) of Agency §§ 396 (c), 400 and Comment c, 404 and Comments b, d (1958); 5 A. Scott, Trusts § 505 (3d ed. 1967). But since this case involves the breach of a trust agreement that specifically required the prepublication review of all information about the employer, we need not look to the common law to determine the scope of Snepp’s fiduciary obligation.

       Snepp also signed a termination agreement in 1976 in which he made substantially the same commitment.

       In response to an interrogatory asking whether it contended that “Decent Interval contains classified information or any information concerning intelligence or CIA that has not been made public by CIA,” the Government stated that “[f]or the purpose of this action, plaintiff does not so contend.” Record Item No. 24, p. 14. Because of this concession, the District Judge sustained the Government’s objections to defense efforts to determine whether Decent Interval in fact contains information that the Government considers classified. See, e, g., the testimony of Admiral Stansfield Turner, Director of the CIA, Tr. 135; and of Herbert Hetu, the CIA’s Director of Public Affairs, Tr. 153.

       See, e. g., 18 U. S. C. § 798, which imposes a prison term of 10 years and a $10,000 fine for knowingly and willfully publishing certain types of classified information; 18 U. S. C. § 794, which makes it a criminal offense punishable by life in prison to communicate national defense information to a foreign government; and 5 U. S. C. §8312, which withdraws the right to Government retirement benefits from a person convicted of violating these statutes. See also Exec. Order No. 12065, 3 CFR 190 (1979), note following 50 U. S. C. § 401 (1976 ed., Supp. II), which provides administrative sanctions, including discharge, against employees who publish classified information. Thus, even in the absence of a constructive trust remedy, an agent like Snepp would hardly be free, as the majority suggests, “to publish whatever he pleases.” Ante, at 513, n. 8.

       In both his original employment agreement and the termination agreement Snepp acknowledged the criminal penalties that might attach to any publication of classified information. In his employment agreement he also agreed that a breach of the agreement would be cause for termination of his employment. No other remedies were mentioned in either agreement.

       In a footnote, see ante, at 515, n. 11, the Court suggests that it need not look to the common law to support its holding because the .case involves a written contract. But, inasmuch as the contract itself does not state What remedy is to be applied in the event of a breach, the common law is the only source of law to which we can look to determine what constitutes an appropriate remedy.

       See, e. g., Sperry Rand Corp. v. A-T-O, Inc., 447 F. 2d. 1387, 1392 (CA4 1971) (Virginia law), cert. denied, 405 U. S. 1017; Tlapek v. Chevron Oil Co., 407 F. 2d 1129 (CA8 1969) (Arkansas law); Structural Dynamics Research Corp. v. Engineering Mechanics Research Corp., 401 F.Supp. 1102, 1120 (ED Mich. 1975) (Michigan law); Restatement (Second) of Agency § 396 (c) (1958) (“Unless otherwise agreed, after the termination of the agency, the agent: . . . (c) has a duty to account for profits made by the sale or use of trade secrets and other confidential information, whether or not in competition with the principal . . .”).

       As the court held in Herbert Morris, Ltd. v. Saxelby, [1916] A. C. 688, 704, the employer’s interest in protecting trade secrets does not outweigh the public interest in keeping the employee in the work force:
      “[A]n employer can [not] prevent his employee from using the skill and knowledge in his trade or profession which he has learnt in the course of his employment by means of directions or instructions from the employer. That information and that additional skill he is entitled to use for the benefit of himself and the benefit of the public who gain the advantage of his having had such admirable instruction. The case in which the Court interferes for the purpose of protection is where use is made, not of the skill which the man may have acquired, but of the secrets of the trade or profession which he had no right to reveal to any one else. . . .”

       See, e. g., Briggs v. R. R. Donnelley & Sons Co., 589 F. 2d 39, 41 (CA1 1978) (Illinois law); American Hot Rod Assn., Inc. v. Carrier, 500 F. 2d 1269, 1277 (CA4 1974) (North Carolina law); Alston Studios, Inc. v. Lloyd V. Gress & Associates, 492 F. 2d 279, 282 (CA4 1974) (Virginia law); Mixing Equipment Co. v. Philadelphia Gear, Inc., 436 F. 2d 1308, 1312 (CA3 1971) (New York law); Water Services, Inc. v. Tesco Chemicals, Inc., 410 F. 2d 163, 167 (CA5 1969) (Georgia law); Restatement (Second) of Contracts § 330 (Tent. Draft No. 12, Mar. 1, 1977).

       The covenant imposes a serious prior restraint on Snepp’s ability to speak freely, see n. 17, infra, and is of indefinite duration and scope— factors that would make most similar covenants unenforceable. See, e. g., Alston Studios, Inc. v. Lloyd V. Gress & Associates, supra, at 283 (holding void under Virginia law a covenant with no geographical limitation); American Hot Rod Assn., Inc. v. Carrier, supra, at 1279 (holding void under North Carolina law a covenant with no durational or geographical limitation); E. L. Conwell & Co. v. Gutberlet, 429 F. 2d 527, 528 (CA4 1970) (holding void under Maryland law a covenant with no durational or geographical limitation).

       The Court correctly points out that the Government may regulate certain activities of its employees that would be protected by the First Amendment in other contexts. Ante, at 509, n. 3. But none of the cases it cites involved a requirement that an employee submit all proposed public statements for prerelease censorship or approval. The Court has not previously considered the enforceability of this kind of prior restraint or the remedy that should be imposed in the event of a breach.

       If he had submitted the book to the Agency and the Agency had refused to consent to the publication of certain material in it, Snepp could have obtained judicial review to determine whether the Agency was correct in considering the material classified. See United States v. Marchetti, 466 F. 2d 1309, 1317 (CA4 1972), cert. denied, 409 U. S. 1063. It is noteworthy that the Court does not disagree with the Fourth Circuit’s view in Marchetti, reiterated in Snep-p, that a CIA employee has a First Amendment right to publish unclassified information. Thus, despite its reference in footnote 3 of its opinion to the Government’s so-called compelling interest in protecting “the appearance of confidentiality,” ante, at 509, n. 3, and despite some ambiguity in the Court’s reference to “detrimental” and “harmful” as opposed to “classified” information, ante, at 511-512, I do not understand the Court to imply that the Government could obtain an injunction against the publication of unclassified information.

       The District Judge sustained the Government’s objections to questions concerning the identity of other agents who had published the unauthorized works to which Admiral Turner referred. Tr. 136. However, Admiral Turner did testify that the harmful materials involved “primarily the appearance in the United States media of identification of sources and methods of collecting intelligence. . . .” Id., at 143. This type of information is certainly classified and is specifically the type of information that Snepp has maintained he did not reveal in Decent Interval. See, e. g., Snepp’s December 7, 1977, interview on the Tomorrow show, in which he stated: “I have made a very determined effort not to expose sources or methods. . . .” Government’s Requests for Admissions, Record Item 19, Exhibit I, p. 5.

       Snepp’s attorneys were foreclosed from asking Admiral Turner whether particular foreign sources had stopped cooperating with United States’ authorities as a direct result of the publication of Decent Interval. Tr. 138. Thus, it is unclear whether or why foreign sources may have reacted unfavorably to its publication. However, William E. Colby, the CIA’s former Director, did indicate in his testimony that foreign nations generally have a stricter secrecy code than does the United States. Id., at 175-176.

       One of the Court’s justifications for its constructive trust remedy is that “it cannot saddle the former agent with exemplary damages out of all proportion to his gain.” Ante, at 516. This solicitude for Snepp’s welfare is rather ironic in view of the Draconian nature of the remedy imposed by the Court today.

       I have been unable to discover any previous case in which the Court has acted as it does today, reaching the merits of a conditional cross-petition despite its belief that the petition does not merit granting certiorari.

       Which, it should be noted, does not appear anywhere in the Government’s 5-page cross-petition.

       The mere fact that the Agency has the authority to review the text of a critical book in search of classified information before it is published is bound to have an inhibiting effect on the author’s writing. Moreover, the right to delay publication until the review is completed is itself a form of prior restraint that would not be tolerated in other contexts. See, e. g., New York Times Co. v. United States, 403 U. S. 713; Nebraska Press Assn. v. Stuart, 427 U. S. 539. In view of the national interest in maintaining an effective intelligence service, I am not prepared to say that the restraint is necessarily intolerable in this context. I am, however, prepared to say that, certiorari having been granted, the issue surely should not be resolved in the absence of full briefing and argument.