author: Justice Brennan

text:
    NORTHWEST WHOLESALE STATIONERS, INC. v. PACIFIC STATIONERY & PRINTING CO.
    No. 83-1368.
    Argued February 19, 1985
    Decided June 11, 1985

      Brennan, J., delivered the opinion of the Court, in which all other Members joined except Marshall and Powell, JJ., who took no part in the decision of the case.

      David J. Sweeney argued the cause for petitioner. With him on the briefs were Douglas R. Grim and Mark B. Weintraub.

      Catherine G. O'Sullivan argued the cause for the United States as amicus curiae urging reversal. With her on the brief were Solicitor General Lee, Assistant Attorney General McGrath, Deputy Solicitor General Wallace, Deputy Assistant Attorney General Rule, and Edward T. Hand.

      Joseph P. Bauer argued the cause for respondent. With him on the brief was Robert R. Carney

         Ira S. Sacks filed a brief for Indian Head Inc. as amicus curiae urging affirmance.

   Justice Brennan

delivered the opinion of the Court.

This case requires that we decide whether a per se violation of § 1 of the Sherman Act, 15 U. S. C. § 1, occurs when a cooperative buying agency comprising various retailers expels a member without providing any procedural means for challenging the expulsion. The case also raises broader questions as to when per se antitrust analysis is appropriately applied to joint activity that is susceptible of being characterized as a concerted refusal to deal.

I

Because the District Court ruled on cross-motions for summary judgment after only limited discovery, this case comes to us on a sparse record. Certain background facts are undisputed. Petitioner Northwest Wholesale Stationers is a purchasing cooperative made up of approximately 100 office supply retailers in the Pacific Northwest States. The cooperative acts as the primary wholesaler for the retailers. Retailers that are not members of the cooperative can purchase wholesale supplies from Northwest at the same price as members. At the end of each year, however, Northwest distributes its profits to members in the form of a percentage rebate on purchases. Members therefore effectively purchase supplies at a price significantly lower than do nonmembers. Northwest also provides certain warehousing facilities. The cooperative arrangement thus permits the participating retailers to achieve economies of scale in purchasing and warehousing that would otherwise be unavailable to them. In fiscal 1978 Northwest had $5.8 million in sales. App. 73.

Respondent Pacific Stationery & Printing Co. sells office supplies at both the retail and wholesale levels. Its total sales in fiscal 1978 were approximately $7.6 million; the record does not indicate what percentage of revenue is attributable to retail and what percentage is attributable to wholesale. Pacific became a member of Northwest in 1958. In 1974 Northwest amended its bylaws to prohibit members from engaging in both retail and wholesale operations. See id,., at 50, 59. A grandfather clause preserved Pacific’s membership rights. See id., at 59. In 1977 ownership of a controlling share of the stock of Pacific changed hands, id., at 70, and the new owners did not officially bring this change to the attention of the directors of Northwest. This failure to notify apparently violated another of Northwest’s bylaws. See id., at 59 (Bylaws, Art. VIII, §5).

In 1978 the membership of Northwest voted to expel Pacific. Most factual matters relevant to the expulsion are in dispute. No explanation for the expulsion was advanced at the time, and Pacific was given neither notice, a hearing, nor any other opportunity to challenge the decision. Pacific argues that the expulsion resulted from Pacific’s decision to maintain a wholesale operation. See Brief in Opposition 11. Northwest contends that the expulsion resulted from Pacific’s failure to notify the cooperative members of the change in stock ownership. See Pet. for Cert. 8. The minutes of the meeting of Northwest’s directors do not definitively indicate the motive for the expulsion. App. 75-77. It is undisputed that Pacific received approximately $10,000 in rebates from Northwest in 1978, Pacific’s last year of membership. Beyond a possible inference of loss from this fact, however, the record is devoid of allegations indicating the nature and extent of competitive injury the expulsion caused Pacific to suffer.

Pacific brought suit in 1980 in the United States District Court for the District of Oregon alleging a violation of § 1 of the Sherman Act. The gravamen of the action was that Northwest’s expulsion of Pacific from the cooperative without procedural protections was a group boycott that limited Pacific’s ability to compete and should be considered per se violative of § 1. See Complaint ¶ 8, App. 4-5. On cross-motions for summary judgment the District Court rejected application of the per se rule and held instead that rule-of-reason analysis should govern the case. Finding no anti-competitive effect on the basis of the record as presented, the court granted summary judgment for Northwest. See App. to Pet. for Cert. 22-24.

The Court of Appeals for the Ninth Circuit reversed, holding “that the uncontroverted facts of this case support a finding of per se liability.” 715 F. 2d 1393, 1395 (1983). The court reasoned that the cooperative’s expulsion of Pacific was an anticompetitive concerted refusal to deal with Pacific on equal footing, which would be a per se violation of § 1 in the absence of any specific legislative mandate for self-regulation sanctioning the expulsion. The court noted that §4 of the Robinson-Patman Act, 15 U. S. C. §13b, specifically approves the price discrimination occasioned by such expulsion and concluded that §4 therefore provided a mandate for self-regulation. Such a legislative mandate, according to the court, would ordinarily result in evaluation of the challenged practice under the rule of reason. But, drawing on Silver v. New York Stock Exchange, 373 U. S. 341, 348-349 (1963), the court decided that rule-of-reason analysis was appropriate only on the condition that the cooperative had provided procedural safeguards sufficient to prevent arbitrary expulsion and to furnish a basis for judicial review. Because Northwest had not provided any procedural safeguards, the court held that the expulsion of Pacific was not shielded by Robinson-Patman immunity and therefore constituted a per se group boycott in violation of § 1 of the Sherman Act. 715 F. 2d, at 1395-1398.

We granted certiorari to examine this application of Silver v. New York Stock Exchange, supra, in an area of antitrust law that has not been free of confusion. 469 U. S. 814 (1984). We reverse.

II

The decision of the cooperative members to expel Pacific was certainly a restraint of trade in the sense that every commercial agreement restrains trade. Chicago Board of Trade v. United States, 246 U. S. 231, 238 (1918). Whether this action violates § 1 of the Sherman Act depends on whether it is adjudged an unreasonable restraint. Ibid. Rule-of-reason analysis guides the inquiry, see Standard Oil Co. v. United States, 221 U. S. 1 (1911), unless the challenged action falls into the category of “agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use.” Northern Pacific R. Co. v. United States, 356 U. S. 1, 5 (1958).

This per se approach permits categorical judgments with respect to certain business practices that have proved to be predominantly anticompetitive. Courts can thereby avoid the “significant costs” in “business certainty and litigation efficiency” that a full-fledged rule-of-reason inquiry entails. Arizona v. Maricopa County Medical Society, 457 U. S. 332, 343-344 (1982). See also United States v. Topco Associates, Inc., 405 U. S. 596, 609-610 (1972). The decision to apply the per se rule turns on “whether the practice facially appears to be one that would always or almost always tend to restrict competition and decrease output... or instead one designed to ‘increase economic efficiency and render markets more, rather than less, competitive.’” Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S. 1, 19-20 (1979) (citations omitted). See also National Collegiate Athletic Assn. v. Board of Regents of University of Oklahoma, 468 U. S. 85, 103-104 (1984) (“Per se rules are invoked when surrounding circumstances make the likelihood of anti-competitive conduct so great as to render unjustified further examination of the challenged conduct”).

This Court has long held that certain concerted refusals to deal or group boycotts are so likely to restrict competition without any offsetting efficiency gains that they should be condemned as per se violations of § 1 of the Sherman Act. See Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U. S. 207 (1959); United States v. General Motors Corp., 384 U. S. 127 (1966); Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U. S. 656 (1961); Associated Press v. United States, 326 U. S. 1 (1945); Fashion Originators’ Guild of America, Inc. v. FTC, 312 U. S. 457 (1941); Eastern States Retail Lumber Dealers’ Assn. v. United States, 234 U. S. 600 (1914). The question presented in this case is whether Northwest’s decision to expel Pacific should fall within this category of activity that is conclusively presumed to be anti-competitive. The Court of Appeals held that the exclusion of Pacific from the cooperative should conclusively be presumed unreasonable on the ground that Northwest provided no procedural protections to Pacific. Even if the lack of procedural protections does not justify a conclusive presumption of predominantly anticompetitive effect, the mere act of expulsion of a competitor from a wholesale cooperative might be argued to be sufficiently likely to have such effects under the present circumstances and therefore to justify application of the per se rule. These possibilities will be analyzed separately.

A

The Court of Appeals drew from Silver v. New York Stock Exchange, 373 U. S. 341 (1963), a broad rule that the conduct of a cooperative venture — including a concerted refusal to deal — undertaken pursuant to a legislative mandate for self-regulation is immune from per se scrutiny and subject to rule-of-reason analysis only if adequate procedural safeguards accompany self-regulation. We disagree and conclude that the approach of the Court in Silver has no proper application to the present controversy.

The Court in Silver framed the issue as follows:

“[WJhether the New York Stock Exchange is to be held liable to a nonmember broker-dealer under the antitrust laws or regarded as impliedly immune therefrom when, pursuant to rules the Exchange has adopted under the Securities Exchange Act of 1934, it orders a number of its members to remove private direct telephone wire connections previously in operation between their offices and those of the nonmember, without giving the nonmember notice, assigning him any reason for the action, or affording him an opportunity to be heard.” Id., at 343.

Because the New York Stock Exchange occupied such a dominant position in the securities trading markets that the boycott would devastate the nonmember, the Court concluded that the refusal to deal with the nonmember would amount to a per se violation of § 1 unless the Securities Exchange Act provided an immunity. Id., at 347-348. The question for the Court thus was whether effectuation of the policies of the Securities Exchange Act required partial repeal of the Sherman Act insofar as it proscribed this aspect of exchange self-regulation.

Finding exchange self-regulation — including the power to expel members and limit dealings with nonmembers — to be an essential policy of the Securities Exchange Act, the Court held that the Sherman Act should be construed as having been partially repealed to permit the type of exchange activity at issue. But the interpretive maxim disfavoring repeals by implication led the Court to narrow permissible self-policing to situations in which adequate procedural safeguards had been provided.

“Congress . . . cannot be thought to have sanctioned and protected self-regulative activity when carried out in a fundamentally unfair manner. The point is not that the antitrust laws impose the requirement of notice and a hearing here, but rather that, in acting without according petitioners these safeguards in response to their request, the Exchange has plainly exceeded the scope of its authority under the Securities Exchange Act to engage in self-regulation.” Id., at 364 (footnote omitted).

Thus it was the specific need to accommodate the important national policy of promoting effective exchange self-regulation, tempered by the principle that the Sherman Act should be narrowed only to the extent necessary to effectuate that policy, that dictated the result in Silver.

Section 4 of the Robinson-Patman Act is not comparable to the self-policing provisions of the Securities Exchange Act. That section is no more than a narrow immunity from the price discrimination prohibitions of the Robinson-Patman Act itself. The Conference Report makes clear that the exception was intended solely to “safeguard producer and consumer cooperatives against any charge of violation of the act based on their distribution of earnings or surplus among their members on a patronage basis.” H. R. Conf. Rep. No. 2951, 74th Cong., 2d Sess., 9 (1936) (emphasis added). This section has never been construed as granting cooperatives a blanket exception from the Robinson-Patman Act and cannot plausibly be construed as an exemption to or repeal of any portion of the Sherman Act. “There is nothing in the last section of the bill [containing §“4] that distinguishes cooperatives, either favorably or unfavorably, from other agencies in the streams of production and trade, so far as concerns their dealings with others.” 80 Cong. Rec. 9419 (1936) (remarks of Rep. Utterback).

In light of this circumscribed congressional intent, there can be no argument that §4 of the Robinson-Patman Act should be viewed as a broad mandate for industry self-regulation. No need exists, therefore, to narrow the Sherman Act in order to accommodate any competing congressional policy requiring discretionary self-policing. Indeed, Congress would appear to have taken some care to make clear that no constriction of the Sherman Act was intended. In any event, the absence of procedural safeguards can in no sense determine the antitrust analysis. If the challenged concerted activity of Northwest’s members would amount to a per se violation of § 1 of the Sherman Act, no amount of procedural protection would save it. If the challenged action would not amount to a violation of § 1, no lack of procedural protections would convert it into a per se violation because the antitrust laws do not themselves impose on joint ventures a requirement of process.

B

This case therefore turns not on the lack of procedural protections but on whether the decision to expel Pacific is properly viewed as a group boycott or concerted refusal to deal mandating per se invalidation. “Group boycotts” are often listed among the classes of economic activity that merit per se invalidation under § 1. See Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U. S., at 212; Northern Pacific R. Co. v. United States, 356 U. S., at 5; Silver v. New York Stock Exchange, 373 U. S., at 348; White Motor Co. v. United States, 372 U. S. 253, 259-260 (1963). Exactly what types of activity fall within the forbidden category is, however, far from certain. “[T]here is more confusion about the scope and operation of the per se rule against group boycotts than in reference to any other aspect of the per se doctrine.” L. Sullivan, Law of Antitrust 229-230 (1977). Some care is therefore necessary in defining the category of concerted refusals to deal that mandate per se condemnation. See St. Paul Fire & Marine Ins. Co. v. Barry, 438 U. S. 531, 543 (1978) (concerted refusals to deal “are not a unitary phenomenon”). Cf. Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S., at 9.

Cases to which this Court has applied the per se approach have generally involved joint efforts by a firm or firms to disadvantage competitors by “either directly denying or persuading or coercing suppliers or customers to deny relationships the competitors need in the competitive struggle.” Sullivan, supra, at 261-262. See, e. g., Silver, supra (denial of necessary access to exchange members); Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U. S. 656 (1961) (denial of necessary certification of product); Associated Press v. United States, 326 U. S. 1 (1945) (denial of important sources of news); Klor’s, Inc., supra (denial of wholesale supplies). In these cases, the boycott often cut off access to a supply, facility, or market necessary to enable the boycotted firm to compete, Silver, supra; Radiant Burners, Inc., supra, and frequently the boycotting firms possessed a dominant position in the relevant market. E. g., Silver, supra; Associated Press, supra; Fashion Originators’ Guild of America, Inc. v. FTC, 312 U. S. 457 (1941). See generally Brodley, Joint Ventures and Antitrust Policy, 95 Harv. L. Rev. 1523, 1533, 1563-1565 (1982). In addition, the practices were generally not justified by plausible arguments that they were intended to enhance overall efficiency and make markets more competitive. Under such circumstances the likelihood of anticompetitive effects is clear and the possibility of countervailing procompetitive effects is remote.

Although a concerted refusal to deal need not necessarily possess all of these traits to merit per se treatment, not every cooperative activity involving a restraint or exclusion will share with the per se forbidden boycotts the likelihood of predominantly anticompetitive consequences. For example, we recognized last Term in National Collegiate Athletic Assn. v. Board of Regents of University of Oklahoma that per se treatment of the NCAA’s restrictions on the marketing of televised college football was inappropriate — despite the obvious restraint on output — because the “case involves an industry in which horizontal restraints on competition are essential if the product is to be available at all.” 468 U. S., at 101.

Wholesale purchasing cooperatives such as Northwest are not a form of concerted activity characteristically likely to result in predominantly anticompetitive effects. Rather, such cooperative arrangements would seem to be “designed to increase economic efficiency and render markets more, rather than less, competitive.” Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., supra, at 20. The arrangement permits the participating retailers to achieve economies of scale in both the purchase and warehousing of wholesale supplies, and also ensures ready access to a stock of goods that might otherwise be unavailable on short notice. The cost savings and order-filling guarantees enable smaller retailers to reduce prices and maintain their retail stock so as to compete more effectively with larger retailers.

Pacific, of course, does not object to the existence of the cooperative arrangement, but rather raises an antitrust challenge to Northwest’s decision to bar Pacific from continued membership. It is therefore the action of expulsion that must be evaluated to determine whether per se treatment is appropriate. The act of expulsion from a wholesale cooperative does not necessarily imply anticompetitive animus and thereby raise a probability of anticompetitive effect. See Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., supra, at 9. Wholesale purchasing cooperatives must establish and enforce reasonable rules in order to function effectively. Disclosure rules, such as the one on which Northwest relies, may well provide the cooperative with a needed means for monitoring the creditworthiness of its members. Nor would the expulsion characteristically be likely to result in predominantly anticompetitive effects, at least in the type of situation this case presents. Unless the cooperative possesses market power or exclusive access to an element essential to effective competition, the conclusion that expulsion is virtually always likely to have an anticompetitive effect is not warranted. See L. Sullivan, Law of Antitrust 292-293 (1977); Brodley, 95 Harv. L. Rev., at 1563-1565. Cf. Jefferson Parish Hospital Dist. v. Hyde, 466 U. S. 2, 12-15 (1984) (absent indication of market power, tying arrangement does not warrant per se invalidation). See generally National Collegiate Athletic Assn. v. Board of Regents of University of Oklahoma, 468 U. S., at 104, n. 26 (“Per se rules may require considerable inquiry into market conditions before the evidence justifies a presumption of anticompetitive conduct”). Absent such a showing with respect to a cooperative buying arrangement, courts should apply a rule-of-reason analysis. At no time has Pacific made a threshold showing that these structural characteristics are present in this case. See Complaint, App. 2; Motion for Partial Summary Judgment, App. 9.

The District Court appears to have followed the correct path of analysis — recognizing that not all concerted refusals to deal should be accorded per se treatment and deciding this one should not. The foregoing discussion suggests, however, that a satisfactory threshold determination whether anticompetitive effects would be likely might require a more detailed factual picture of market structure than the District Court had before it. Nonetheless, in our judgment the District Court’s rejection of per se analysis in this case was correct. A plaintiff seeking application of the per se rule must present a threshold case that the challenged activity falls into a category likely to have predominantly anticompetitive effects. The mere allegation of a concerted refusal to deal does not suffice because not all concerted refusals to deal are predominantly anticompetitive. When the plaintiff challenges expulsion from a joint buying cooperative, some showing must be made that the cooperative possesses market power or unique access to a business element necessary for effective competition. Focusing on the argument that the lack of procedural safeguards required per se liability, Pacific did not allege any such facts. Because the Court of Appeals applied an erroneous per se analysis in this case, the court never evaluated the District Court’s rule-of-reason analysis rejecting Pacific’s claim. A remand is therefore appropriate for the limited purpose of permitting appellate review of that determination.

Ill

“The per se rule is a valid and useful tool of antitrust policy and enforcement.” Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S., at 8. It does not denigrate the per se approach to suggest care in application. In this case, the Court of Appeals failed to exercise the requisite care and applied per se analysis inappropriately. The judgment of the Court of Appeals is therefore reversed, and the ease is remanded for further proceedings consistent with this opinion.

It is so ordered.

Justice Marshall and Justice Powell took no part in the decision of this case.

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

       Although this patronage rebate policy is a form of price discrimination, §4 of the Robinson-Patman Act specifically sanctions such activity by cooperatives:
      “Nothing in this Act shall prevent a cooperative association from returning to its members, producers, or consumers the whole, or any part of, the net earnings or surplus resulting from its trading operations, in proportion to their purchases or sales from, to, or through the association.” 49 Stat. 1528, 15 U. S. C. § 13b.
      A relevant state-law provision provides analogous protection. Ore. Rev. Stat. §646.030 (1983).

       See L. Sullivan, Law of Antitrust 229-230 (1977); Bauer, Per Se Illegality of Concerted Refusals to Deal: A Rule Ripe for Reexamination, 79 Colum. L. Rev. 685 (1979).

       Northwest raises no challenge before this Court to the conclusion of the Court of Appeals that the cooperative’s decision to expel Pacific was a “combination or conspiracy” affecting interstate commerce within the meaning of § 1 of the Sherman Act.

       See, e. g., American Motor Specialties Co. v. FTC, 278 F. 2d 225, 229 (CA2), cert. denied, 364 U. S. 884 (1960).

       Because Pacific has not been wholly excluded from access to Northwest’s wholesale operations, there is perhaps some question whether the challenged activity is properly characterized as a concerted refusal to deal. To be precise, Northwest’s activity is a concerted refusal to deal with Pacific on substantially equal terms. Such activity might justify per se
        invalidation if it placed a competing firm at a severe competitive disadvantage. See generally Brodley, Joint Ventures and Antitrust Policy, 95 Harv. L. Rev. 1521, 1532 (1982) (“Even if the joint venture does deal with outside firms, it may place them at a severe competitive disadvantage by treating them less favorably than it treats the [participants in the joint venture]”).

       Pacific argues, however, that this justification for expulsion was a pretext because the members of Northwest were fully aware of the change in ownership despite lack of formal notice. According to Pacific, Northwest’s motive in the expulsion was to place Pacific at a competitive disadvantage to retaliate for Pacific’s decision to engage in an independent wholesale operation. Such a motive might be more troubling. If Northwest’s action were not substantially related to the efficiency-enhancing or procompetitive purposes that otherwise justify the cooperative’s practices, an inference of anticompetitive animus might be appropriate. But such an argument is appropriately evaluated under the rule-of-reason analysis.

       Given the state of this record it is difficult to understand how the Court of Appeals could have concluded that Pacific “loses the ability to use Northwest’s superior warehousing and expedited order-filling facilities, as well as any competitive advantages that may flow simply from being known in the industry as a member of an established cooperative.” 715 F. 2d 1393, 1395 (1983). The District Court had specifically found no anti-competitive effect.

       The District Court stated:
      “I think that in a case of this nature, in order to move an antitrust violation, it is necessary to show some restraint of competition, and I don’t believe that is shown here. Even if it is a group boycott, I still believe under [Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F. 2d 71 (CA9 1969), and Ron Tonkin Gran Turismo, Inc. v. Fiat Distributors, Inc., 637 F. 2d 1376 (CA9 1981)], that the Rule of Reason operates. And I think if you apply the Rule of Reason to the facts that are submitted by the parties here that are not disputed in this case, you come to the conclusion that there is [sic] simply been no showing by the Plaintiff in this case of a restraint of competition as distinguished from possible damage to the Plaintiff by being expelled from the association.” App. to Pet. for Cert. 23-24.


source: Caselaw Access Project

license: Public Domain

text:
    BATEMAN EICHLER, HILL RICHARDS, INC. v. BERNER et al.
    No. 84-679.
    Argued April 15, 1985
    Decided June 11, 1985

      Brennan, J., delivered the opinion of the Court, in which White, Blackmun, Powell, Rehnquist, Stevens, and O’Connor, JJ., joined. Burger, C. J., concurred in the judgment. Marshall, J., took no part in the decision of the case.

      Robert S. Warren argued the cause for petitioner. With him on the briefs were Phillip L. Bosl and Gail Ellen Lees.

      Geoffrey P. Knudsen argued the cause for respondents Berner et al. With him on the brief was John H. Boone.

      Bruce N. Kuhlik argued the cause pro hac vice for the Securities and Exchange Commission as amicus curiae urging affirmance. With him on the brief were Solicitor General Lee, Deputy Solicitor General Claiborne, Daniel L. Goelzer, Paul Gonson, Jacob H. Stillman, and Larry R. Lavoie.

         Edward H. Fleischman, Martin P. Unger, Catherine A. Ludden, and William J. Fitzpatrick filed a brief for the Securities Industry Association as amicus curiae urging reversal.

   Justice Brennan

delivered the opinion of the Court.

The question presented by this ease is whether the common-law in pari delicto defense bars a private damages action under the federal securities laws against corporate insiders and broker-dealers who fraudulently induce investors to purchase securities by misrepresenting that they are conveying material nonpublic information about the issuer.

I

The respondent investors filed this action in the United States District Court for the Northern District of California, alleging that they incurred substantial trading losses as a result of a conspiracy between Charles Lazzaro, a registered securities broker employed by the petitioner Bateman Eichler, Hill Richards, Inc. (Bateman Eichler), and Leslie Neadeau, President of T. O. N. M. Oil & Gas Exploration Corporation (TONM), to induce them to purchase large quantities of TONM over-the-counter stock by divulging false and materially incomplete information about the company on the pretext that it was accurate inside information. Specifically, Lazzaro is alleged to have told the respondents that he personally knew TONM insiders and had learned, inter alia, that (a) “[v]ast amounts of gold had been discovered in Surinam, and TONM had options on thousands of acres in gold-producing regions of Surinam”; (b) the discovery was “not publically known, but would subsequently be announced”; (c) TONM was currently engaged in negotiations with other companies to form a joint venture for mining the Surinamese gold; and (d) when this information was made public, “TONM stock, which was then selling from $1.50 to $3.00/share, would increase in value from $10 to $15/share within a short period of time, and . . . might increase to $100/share” within a year. Complaint ¶¶ 16-17, App. 10-12. Some of the respondents aver that they contacted Neadeau and inquired whether Laz-zaro’s tips were accurate; Neadeau stated that the information was “not public knowledge” and “would neither confirm nor deny those claims,” but allegedly advised that “Lazzaro was a very trustworthy and a good man.” Id. ¶ 19, App. 12.

The respondents admitted in their complaint that they purchased TONM stock, much of it through Lazzaro, “on the premise that Lazzaro was privy to certain information not otherwise available to the general public.” Id. ¶ 15, App. 10. Their shares initially increased dramatically in price, but ultimately declined to substantially below the purchase price when the joint mining venture fell through. Id. ¶¶ 22-26, App. 13-14.

Lazzaro and Neadeau are alleged to have made the representations set forth above knowing that the representations “were untrue and/or contained only half-truths, material omissions of fact and falsehoods,” intending that the respondents would rely thereon, and for the purpose of “influ-enc[ing] and manipulating] the price of TONM stock” so as “to profit themselves through the taking of commissions and secret profits.” Id. ¶¶23, 30, 38, App. 13, 15-16. The respondents contended that this scheme violated, inter alia, § 10(b) of the Securities Exchange Act of 1934, 48 Stat. 891, 15 U. S. C. § 78j(b), and Securities and Exchange Commission (SEC) Rule 10b-5 promulgated thereunder, 17 CFR §240.10b-5 (1984). They sought capital losses and lost profits, punitive damages, and costs and attorney’s fees. App. 26.

The District Court dismissed the complaint for failure to state a claim. The court reasoned that “trading on insider information is itself a violation of rule 10b-5” and that the allegations in the complaint demonstrated that the respondents themselves had “violated the particular statutory provision under which recovery is sought.” App. to Pet. for Cert. C-2. Thus, the court concluded, the respondents were in pari delicto with Lazzaro and Neadeau and absolutely barred from recovery. Ibid.

The Court of Appeals for the Ninth Circuit reversed. Berner v. Lazzaro, 730 F. 2d 1319 (1984). Although it assumed that the respondents had violated the federal securities laws, id., at 1324, the court nevertheless concluded that “securities professionals and corporate officers who have allegedly engaged in fraud should not be permitted to invoke the in pari delicto doctrine to shield themselves from the consequences of their fraudulent misrepresentation,” id., at 1320. The Court of Appeals noted that this Court had sharply restricted the availability of the in pari delicto defense in antitrust actions, see Perma Life Mufflers, Inc. v. International Parts Corp., 392 U. S. 134 (1968), and concluded that, essentially for three reasons, there was no basis “for creating a different rule for private actions initiated under the federal securities laws,” 730 F. 2d, at 1322. First, the court reasoned that, in cases such as this, defrauded tippees are not in fact “equally responsible” for the violations they allege. Ibid. Second, the court believed that allowing the defense in these circumstances would be “totally incompatible with the overall aims of the securities law” because the threat of a private damages action is necessary to deter “insider-tipster[s]” from defrauding the public. Id., at 1323. Finally, the court noted the availability of means other than an outright preclusion of suit to deter tippees from trading on inside information. Id., at 1324, n. 3.

The lower courts have divided over the proper scope of the in pari delicto defense in securities litigation. We granted certiorari. 469 U. S. 1105 (1985). We affirm.

1 — I HH

The common-law defense at issue in this case derives from the Latin, in pari delicto potior est conditio defendentis: “In a case of equal or mutual fault. . . the position of the [defending] party ... is the better one.” The defense is grounded on two premises: first, that courts should not lend their good offices to mediating disputes among wrongdoers; and second, that denying judicial relief to an admitted wrongdoer is an effective means of deterring illegality. In its classic formulation, the in pari delicto defense was narrowly limited to situations where the plaintiff truly bore at least substantially equal responsibility for his injury, because “in cases where both parties are in delicto, concurring in an illegal act, it does not always follow that they stand in pari delicto; for there may be, and often are, very different degrees in their guilt.” 1 J. Story, Equity Jurisprudence 304-305 (13th ed. 1886) (Story). Thus there might be an “inequality of condition” between the parties, id., at 305, or “a confidential relationship between th[em]” that determined their “relative standing” before a court, 3 J. Pomeroy, Equity Jurisprudence §942a, p. 741 (5th ed. 1941) (Pomeroy). In addition, the public policy considerations that undergirded the in pari delicto defense were frequently construed as precluding the defense even where the plaintiff bore substantial fault for his injury: “[TJhere may be on the part of the court itself a necessity of supporting the public interests or public policy in many cases, however reprehensible the acts of the parties may be.” 1 Story 305. Notwithstanding these traditional limitations, many courts have given the in pari delicto defense a broad application to bar actions where plaintiffs simply have been involved generally in “the same sort of wrongdoing” as defendants. Perma Life Mufflers, Inc. v. International Parts Corp., 392 U. S., at 138.

In Perma Life, we emphasized “the inappropriateness of invoking broad common-law barriers to relief where a private suit serves important public purposes.” Ibid. That case involved a treble-damages action against a Midas Muffler franchisor by several of its dealers, who alleged that the franchise agreement created a conspiracy to restrain trade in violation of the Sherman and Clayton Acts. The lower courts barred the action on the grounds that the dealers, as parties to the agreement, were in pari delicto with the franchisor. In reversing that determination, the opinion for this Court emphasized that there was no indication that Congress had intended to incorporate the defense into the antitrust laws, which “are best served by insuring that the private action will be an ever-present threat to deter anyone contemplating [illegal] business behavior.” Id., at 139. Accordingly, the opinion concluded that “the doctrine of in pari delicto, with its complex scope, contents, and effects, is not to be recognized as a defense to an antitrust action.” Id., at 140. The opinion reserved the question whether a plaintiff who engaged in “truly complete involvement and participation in a monopolistic scheme” — one who “aggressively supported] and further[ed] the monopolistic scheme as a necessary part and parcel of it” — could be barred from pursuing a damages action, finding that the muffler dealers had relatively little bargaining power and that they had been coerced by the franchisor into agreeing to many of the contract’s provisions. Ibid.

In separate opinions, five Justices agreed that the concept of “equal fault” should be narrowly defined in litigation arising under federal regulatory statutes. “[B]ecause of the strong public interest in eliminating restraints on competition, . . . many of the refinements of moral worth demanded of plaintiffs by . . . many of the variations of in pari delicto should not be applicable in the antitrust field.” Id., at 151 (Marshall, J., concurring in result). The five Justices concluded, however, that where a plaintiff truly bore at least substantially equal responsibility for the violation, a defense based on such fault — whether or not denominated in pari delicto — should be recognized in antitrust litigation.

Bateman Eichler argues that Perma Life — with its emphasis on the importance of analyzing the effects that fault-based defenses would have on the enforcement of congressional goals — is of only marginal relevance to a private damages action under the federal securities laws. Specifically, Bateman Eichler observes that Congress expressly provided for private antitrust actions — thereby manifesting a “desire to go beyond the common law in the antitrust statute in order to provide substantial encouragement to private enforcement and to help deter anticompetitive conduct” — whereas private rights of action under § 10(b) of the Securities Exchange Act of 1934 are merely implied from that provision — thereby, apparently, supporting a broader application of the in pari delicto defense. Brief for Petitioner 32. Bateman Eichler buttresses this argument by observing that, unlike the Sherman and Clayton Acts, the securities laws contain savings provisions directing that “[t]he rights and remedies provided by [those laws] shall be in addition to any and all other rights and remedies that may exist at law or in equity” — again, apparently, supporting a broader scope for fault-based defenses than recognized in Perma Life.

We disagree. Nothing in Perma Life suggested that public policy implications should govern only where Congress expressly provides for private remedies; the classic formulation of the in pari delicto doctrine itself required a careful consideration of such implications before allowing the defense. See supra, at 307. Moreover, we repeatedly have emphasized that implied private actions provide “a most effective weapon in the enforcement” of the securities laws and are “a necessary supplement to Commission action.” J. I. Case Co. v. Borak, 377 U. S. 426, 432 (1964); see also Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 730 (1975). In addition, we have eschewed rigid common-law barriers in construing the securities laws. See, e. g., Herman & MacLean v. Huddleston, 459 U. S. 375, 388-389 (1983) (common-law doctrines are sometimes of “questionable pertinence” in applying the securities laws, which were intended “to rectify perceived deficiencies in the available common-law protections by establishing higher standards of conduct in the securities industry”); A. C. Frost & Co. v. Coeur d’Alene Mines Corp., 312 U. S. 38, 43 (1941) (rejecting the unclean-hands defense on the facts of the case because it would “seriously hinder rather than aid the real purpose” of the securities laws). We therefore conclude that the views expressed in Perma Life apply with full force to implied causes of action under the federal securities laws. Accordingly, a private action for damages in these circumstances may be barred on the grounds of the plaintiff’s own culpability only where (1) as a direct result of his own actions, the plaintiff bears at least substantially equal responsibility for the violations he seeks

       The investors named Lazzaro, Neadeau, TONM, and Bateman Eichler as defendants. Complaint ¶¶ 5-8, App. 7-8. The investors charged that Neadeau and TONM had “directly and indirectly participated with, aided and abetted, and conspired with” Lazzaro in the scheme. Id. ¶ 9, App. 8; see also id. ¶ 40, App. 17. Bateman Eichler’s liability was premised on its status as a “controlling person” of Lazzaro within the meaning of § 20(a) of the Securities Exchange Act of 1934, 48 Stat. 899, 15 U. S. C. § 78t(a). Complaint ¶¶ 5, 39, App. 7, 16-17. See n. 25, infra.

      Although Lazzaro, Neadeau, and TONM also are respondents in this Court, see this Court’s Rule 19.6, we shall use “respondents” to refer exclusively to the investor plaintiffs, who are defending the judgment of the Court of Appeals for the Ninth Circuit in this Court.

       Gold exploration has been conducted in Surinam for more than 100 years, but production has declined dramatically since early in this century. Complaint ¶ 11, App. 9. The areas in which TONM had been engaged in exploration “were historically mined by Surinamese natives using primitive methods,” and were accessible to the outside world “primarily by motorized canoes and helicopter.” Id. ¶12, App. 9. Lazzaro allegedly told the investors that TONM’s discovery “compared favorably to, if not better than, those in South Africa,” and that development “would not require deep mining” because “[g]eologists in Surinam were finding gold nuggets in dry creek beds.” Id. ¶ 16, App. 11.

       Lazzaro also allegedly told the investors that, after the announcement, TONM shareholders “would automatically receive” additional stock in TONM’s subsidiary, International Gold and Diamond Exploration Corp., Inc., “without the payment of any additional monies.” Ibid, (emphasis in original).

       The respondents purchased the stock in late 1979 and early 1980 for between $1.50 and $3 per share, and the price of the stock rose to $7 per share by the fourth quarter of 1980. Id. ¶ 22, App. 13. “[S]ome or all” of the respondents claim to have told Lazzaro at this time that they wanted to sell their shares, but “Lazzaro stated that he would let the plaintiffs know when to sell the TONM stock, and that they should not sell just because the stock had reached $7.00/share because it would go higher still.” Ibid. The stock then plummeted “to approximately $1.00 per share” by the end of 1980, and fell to “less than ... $1.00 a share” early the next year. Id. ¶¶ 24-25, App. 14.

       In the alternative, Lazzaro and Neadeau are alleged to have made these representations “recklessly with wanton disregard for the truth.” Id. ¶32, App. 15.

       Neadeau is alleged to have owned approximately 100,000 shares of the outstanding common stock of TONM, and Lazzaro is alleged to have “controlled over a million shares of TONM stock through stock purchased by himself and his clients.” Id. ¶¶ 8, 23, App. 8, 13. See also id. ¶ 16, App. 12 (“Lazzaro and his relatives owned a large block of TONM stock”). The investors charged that “Lazzaro could thereby and did influence and manipulate the price of TONM stock through purchases and sales thereof, and through the dissemination of false information to plaintiffs and others.” Id. ¶23, App. 13.

       That section provides:
      “It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange—
      “(b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.”

       That Rule provides:
      “It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
      “(a) To employ any device, scheme, or artifice to defraud,
      “(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
      “(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.”

       In addition, the respondents sought recovery pursuant to § 17(a) of the Securities Act of 1933, 48 Stat. 84, as amended, 15 U. S. C. § 77q(a), see Complaint ¶¶ 48-50, App. 20, which the parties and the courts below have treated as comparable to § 10(b) for purposes of applying the in pari delicto defense. We express no view as to whether a private right of action exists under § 17(a). Compare Keys v. Wolfe, 709 F. 2d 413, 416 (CA5 1983), with Stephenson v. Calpine Conifers II, Ltd., 652 F. 2d 808, 815 (CA9 1981). The respondents also alleged various other federal claims and pendent state-law claims that are not before us.

       See, e. g., Tarasi v. Pittsburgh National Bank, 555 F. 2d 1152 (CA3) (allowing defense), cert. denied, 434 U. S. 965 (1977); Malamphy v. Real-Tex Enterprises, Inc., 527 F. 2d 978 (CA4 1975) (per curiam) (sustaining submission of defense tó jury); Woolf v. S. D. Cohn & Co., 515 F. 2d 591, 601-605 (CA5 1975) (rejecting defense on facts of case), on rehearing, 521 F. 2d 225, vacated and remanded on other grounds, 426 U. S. 944 (1976); Kuehnert v. Texstar Corp., 412 F. 2d 700 (CA5 1969) (allowing defense); Kirkland v. E. F. Hutton & Co., 564 F. Supp. 427, 433-437 (ED Mich. 1983) (rejecting defense on motion for summary judgment); Grumet v. Shearson/American Express, Inc., 564 F. Supp. 336 (NJ 1983) (allowing defense); Xaphes v. Shearson, Hayden, Stone, Inc., 508 F. Supp. 882, 884-887 (SD Fla. 1981) (rejecting defense on motion to dismiss); Moholt v. Dean Witter Reynolds, Inc., 478 F. Supp. 451 (DC 1979) (rejecting defense on motion for summary judgment); In re Haven Industries, Inc., 462 F. Supp. 172, 177-180 (SDNY 1978) (allowing defense); Nathanson v. Weis, Voisin, Cannon, Inc., 325 F. Supp. 50 (SDNY 1971) (rejecting defense); Wohl v. Blair & Co., 50 F. R. D. 89 (SDNY 1970) (denying motion to strike defense). Cf. Silverberg v. Paine, Webber, Jackson & Curtis, Inc., 710 F. 2d 678, 691 (CA11 1983); Mallis v. Bankers Trust Co., 615 F. 2d 68, 76 (CA2 1980), cert. denied, 449 U. S. 1123 (1981); Can-Am Petroleum Co. v. Beck, 331 F. 2d 371, 373 (CA10 1964).

       Black’s Law Dictionary 711 (5th ed. 1979).

       See, e. g., Higgins v. McCrea, 116 U. S. 671, 685 (1886); Austin’s Adm’x v. Winston’s Ex’x, 11 Va. 33, 47 (1806) (“He who comes here for relief must draw his justice from pure fountains”). See also Holman v. Johnson, 1 Cowp. 341, 343, 98 Eng. Rep. 1120, 1121 (K. B. 1775):
      “The objection, that a contract is immoral or illegal as between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed .... The principle of public policy is this; ex dolo malo non oritur actio [out of fraud no action arises].... It is upon that ground the Court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff.”

       See, e. g., McMullen v. Hoffman, 174 U. S. 639, 669-670 (1899):
      “To refuse to grant either party to an illegal contract judicial aid for the enforcement of his alleged rights under it tends strongly towards reducing the number of such transactions to a minimum. The more plainly parties understand that when they enter into contracts of this nature they place themselves outside the protection of the law, so far as that protection consists in aiding them to enforce such contracts, the less inclined will they be to enter into them. In that way the public secures the benefit of a rigid adherence to the law.”

       See also Tarasi v. Pittsburgh National Bank, 555 F. 2d, at 1157; L. Loss, Fundamentals of Securities Regulation 1197 (1983); Comment, Availability of an In Pari Delicto Defense in Rule 10b-5 Tippee Suits, 77 Colum. L. Rev. 1084, 1086, n. 15 (1977).

       Sherman Act, 26 Stat. 209 et seq., as amended, 16 U. S. C. § 1 et seq.; Clayton Act, 38 Stat. 730 et seq., as amended, 15 U. S. C. § 12 et seq.

       See 392 U. S., at 145 (White, J., concurring); id., at 147-148 (Fortas, J., concurring in result); id., at 148-149, 151 (Marshall, J., concurring in result); id., at 154-155 (Harlan, J., joined by Stewart, J., concurring in part and dissenting in part).

       Justice White concluded that “the in pari delicto defense in its historic formulation is not a useful concept” in antitrust law, but emphasized that he “would deny recovery where plaintiff and defendant bear substantially equal responsibility for injury resulting to one of them.” Id., at 143, 146. The other four Justices would have allowed explicit, though limited, use of the in pari delicto defense itself. Id., at 147 (Fortas, J., concurring in result); id., at 148-149 (Marshall, J., concurring in result); id., at 153 (Harlan, J., joined by Stewart, J., concurring in part and dissenting in part).

       See Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 730 (1975); Superintendent of Insurance v. Bankers Life & Cas. Co., 404 U. S. 6, 13, n. 9 (1971).

       See § 16 of the Securities Act of 1933, 48 Stat. 84, 15 U. S. C. § 77p; § 28(a) of the Securities Exchange Act of 1934,48 Stat. 903, as amended, 15 U. S. C. § 78bb(a).

       In Frost, we quoted approvingly from an SEC memorandum arguing that “ Tilt appears to us to be entirely immaterial whether in such a case, the agreement is labelled “void” or the parties are held to be “in pari delicto.” There, labels, as often is the case, merely state the conclusion reached, but do not aid in solution of the problem. The ultimate issue is whether the result in the particular case would effectuate or frustrate the purposes of the Act.’” 312 U. S., at 44, n. 2.


author: Justice Rehnquist,

text:
    CALDWELL v. MISSISSIPPI
   is revie wable,” the prosecutor sought to minimize the sentencing jury’s role, by creating the mistaken impression that automatic appellate review of-the jury’s sentence would provide the authoritative determination of whether death was appropriate. In fact, under Mississippi law the reviewing court applies a “presumption of correctness” to the sentencing jury’s verdict. 443 So. 2d 806, 817 (1983) (Lee, J., dissenting). The jury’s verdict of death may be overturned only if so arbitrary that it “was against the overwhelming weight of the evidence,” or if the evidence of statutory aggravating circumstances is so lacking that a “judge should have entered a judgment of acquittal notwithstanding the verdict.” Williams v. State, 445 So. 2d 798, 811 (Miss. 1984).

Laypersons cannot be expected to appreciate without explanation the limited nature of appellate review, especially in light of the reassuring picture of “automatic” review evoked by the sentencing court and the prosecutor in this case. Ante, at 325-326. Although the subsequent remarks of the prosecutor to which Justice Rehnquist refers in his dissent, post, at 345-346, may have helped to restore the jurors’ sense of the importance of their role, I agree with the Court that they failed to correct the impression that the appellate court would be free to reverse the death sentence if it disagreed with the jury’s conclusion that death was appropriate. See ante, at 340-341, n. 7. I believe the prosecutor’s misleading emphasis on appellate review misinformed the jury concerning the finality of its decision, thereby creating an unacceptable risk that “the death penalty [may have been] meted out arbitrarily or capriciously,” California v. Ramos, supra, at 999, or through “whim ... or mistake,” Eddings v. Oklahoma, 455 U. S. 104, 118 (1982) (concurring opinion).

Justice Rehnquist,

with whom The Chief Justice and Justice White join,

dissenting.

The Court holds that under the Eighth Amendment it is “constitutionally impermissible to rest a death sentence on a determination made by a sentencer who has been led to believe that the responsibility for the appropriateness of the defendant’s death rests elsewhere.” Ante, at 328-329. Even if I were to agree with this proposition in the abstract, I do not believe that under the circumstances of this case it can properly be applied to justify the overturning of petitioner’s death sentence.

Petitioner robbed a grocery and bait shop owned by a Mr. and Mrs. Faulkner. When Mrs. Faulkner screamed, petitioner shot her twice and fled with a bank bag taken from the counter. After a trial the jury found petitioner guilty of capital murder, and the case proceeded to the sentencing phase. At that point the prosecution sought to prove four aggravating factors under Mississippi law, including the facts that the offense was committed while petitioner was engaged in a robbery, and that petitioner had previously been convicted of four felonies involving the use of threats or violence to the person. With respect to the latter factor the prosecution introduced evidence that petitioner had been convicted of felonies four times since 1975 — twice for armed robbery, once for attempted armed robbery, and once for aggravated assault. In mitigation petitioner introduced testimony from family and friends emphasizing petitioner’s youth and his sound upbringing, and indicating that he was a nice person and a hard worker.

At the guilt phase the jurors had been instructed that they were the “sole judges of the facts,” and that it was their duty to find those facts in accordance with the evidence presented, and to apply the rules of law charged by the judge to the facts found. The jurors were also charged that statements made by counsel were not evidence. Prior to closing argument at the sentencing phase the judge further charged the jury that it “must now decide whether the Defendant will be sentenced to death or to life imprisonment.” To return the death penalty, the jury was instructed that it must find at least one aggravating circumstance, and that the aggravating circumstances found must outweigh the mitigating circumstances.

Counsel then presented closing arguments. Pursuant to Mississippi law the prosecutor spoke first and last; his initial statement for the most part argued the aggravating factors, and petitioner does not complain of anything said there. Defense counsel then spoke; as the Court indicates, this argument consisted mostly of a plea for mercy, which emphasized the jury’s “awesome responsibility.” The prosecutor then made the rebuttal argument of which petitioner complains. Because the Court mischaracterizes the prosecutor’s statements, it is worth noting again what the prosecutor actually said:

“I’m in complete disagreement with the approach the defense has taken. ... I think it’s unfair. . . . Now, they would have you believe that you’re going to kill this man and they know — they know that your decision is not the final decision. My God, how unfair can you be? Your job is reviewable.”

At this point defense counsel objected, but the trial court allowed the prosecutor to continue after stating: “I think it proper that the jury realizes that it is reviewable automatically as the death penalty commands. I think that information is now needed by the jury so they will not be confused.”

Counsel continued:

“[Defense counsel] insinuat[ed] that your decision is the final decision and that they’re gonna take Bobby Caldwell out in front of this Courthouse in moments and string him up and that is terribly, terribly unfair. For they know, as I know, and as Judge Baker has told you, that the decision you render is automatically reviewable by the Supreme Court.”

The Court’s account stops here, but the prosecutor went on to state:

“Now, thank God, you have a yardstick to follow. Thank God, you have a set of rules and regulations like they do in a football game. What are the rules and regulations that you, under your oath, must follow in determining the punishment? Number 1, under your oath, you must decide the facts. That’s your job. Not mine, not theirs, not the Judge’s, not anybody’s — yours. You decide what those facts are. I can’t tell you what they are, and you take the rules of law — this right here — the rule book, and you apply them, and you render a fair and impartial trial without passion, without prejudice, without sympathy.” (Emphasis supplied.)

The prosecutor then recounted some of the recent history of capital punishment in this country, explaining that this Court originally struck down state capital punishment statutes because of its perception that the death penalty was being imposed arbitrarily. The prosecutor concluded by noting that in response to this Court’s concern over arbitrariness

“our Mississippi Legislature . . . adopted the very procedure that you are undergoing now. They said before the death penalty is arbitrarily automatically imposed, the Jury — the people — the people, not the Court — the people, the heart of the system, must determine — must determine — that the aggravating circumstances, those which tend to say that the death penalty is justified must outweigh the mitigating circumstances, those which say that the lesser should be applied. So, that’s how it all evolved, and that’s why you’re in the Jury Box to determine the punishment, and that’s why, I think it’s totally improper to put you in the picture of hang man with a black mask on. That’s not fair. You must take the rules, apply the law, and render a fair verdict.”

At several points in its opinion the Court supplies its own characterization of the prosecutor’s argument. Thus, the Court states that this is a case where “a sentencer . . . has been led to believe that the responsibility for determining the appropriateness of the defendant’s death rests elsewhere,” ante, at 329, and that “[t]he argument here urged the jurors to view themselves as taking only a preliminary step toward the actual determination of the appropriateness of death — a determination which would eventually be made by others and for which the jury was not responsible.” Ante, at 336. See also ante, at 333. The Court then builds on this characterization by supplying a further assumption — that a jury that has a lowered sense of responsibility is more likely to vote for the death penalty. The Court hypothesizes that a capital sentencing jury may wish to “send a message” of disapproval even though it is not convinced that death is the appropriate punishment, and that a jury that has been assured that any “error” in imposing the death penalty can be corrected on appeal may feel comfortable with “delegating” its responsibility by voting for death. This “delegation” of responsibility to the appellate courts violates the Eighth Amendment, the Court reasons, because an appellate court is unable to confront and examine the individual circumstances of the defendant firsthand, and is further bound to review the jury’s determination with a presumption of correctness. Finally, after distinguishing our decisions in California v. Ramos, 463 U. S. 992 (1983), and Donnelly v. DeChristoforo, 416 U. S. 637 (1974), the Court concludes that the sentence here must be overturned because the prosecutor’s argument was “fundamentally incompatible with the Eighth Amendment’s heightened ‘need for reliability in the determination that death is the appropriate punishment in a specific case.’” Ante, at 340 (quoting Woodson v. North Carolina, 428 U. S. 280, 305 (1976) (plurality opinion)).

In Donnelly v. DeChristoforo, this Court rejected a claim that a state murder conviction should be overturned on due process grounds because of statements made by the prosecutor during closing argument. We there stressed that “not every trial error or infirmity which might call for application of supervisory powers correspondingly constitutes a ‘failure to observe that fundamental fairness essential to the very concept of justice.’” 416 U. S., at 642 (quoting Lisenba v. California, 314 U. S. 219, 236 (1941)). Similarly, this Court’s recent opinions concerning the Eighth Amendment, while recognizing that the “qualitative difference of death from all other punishments requires a correspondingly greater degree of scrutiny of the capital sentencing determination,” California v. Ramos, supra, at 998-999, have also noted that in general the Eighth Amendment is satisfied where the procedures ensure that the sentencer’s discretion is “suitably directed and limited so as to minimize the risk of wholly arbitrary and capricious action.” Zant v. Stephens, 462 U. S. 862, 874 (1983); Barclay v. Florida, 463 U. S. 939, 950 (1983) (plurality opinion). Thus, in both Zant and Barclay we upheld death sentences despite the fact that they had been based in part on invalid aggravating circumstances, where the jury also had found valid aggravating circumstances.

Donnelly, Zant, and Barclay teach that a death sentence need not be vacated in every case where the procedures by which it is imposed are in some way flawed. If the prosecutor in this case actually had argued to the jury that it should go ahead and impose the death sentence because it did not really matter — the appellate court would correct any “mistake” the jury might make in choice of sentence — and if the trial judge had not corrected such an argument, I might well agree that the process afforded did not comport with some constitutional norm related to procedural fairness. But despite the Court’s sweeping characterization the argument here fell far short of telling the jury that it would not be responsible for imposing the death penalty. Admittedly, some of the remarks early in the prosecutor’s rebuttal indicated that the jury’s decision was not “final” because it was subject to appellate review. But viewed in its entirety, cf. Cupp v. Naughten, 414 U. S. 141 (1973), it is evident that the thrust of the prosecutor’s argument was that the jury was not solely responsible for petitioner’s sentence. In addition to appellate review, the prosecutor referred to the decision of the Mississippi Legislature to allow capital punishment, to the rules that the jury must follow in determining the appropriate sentence, and to the jury’s ultimate responsibility under the law to render a “fair verdict,” “without passion, without prejudice, without sympathy.”

There is nothing wrong with urging a capital sentencing jury to disregard emotion and render a decision based on the law and the facts. Despite the Court’s rhetorical references to the need for “reliable” sentencing decisions rendered by jurors that comprehend their “awesome responsibility,” I do not understand the Court to believe that emotions in favor of mercy must play a part in the ultimate decision of a. capital sentencing jury. Indeed, much of our Eighth Amendment jurisprudence has been concerned with eliminating emotion from sentencing decisions. Here the prosecutor did not suggest that the prospect of appellate review should lead the jurors to lean toward the death penalty, and the prosecutor’s statements that followed the challenged portion of the argument forcefully emphasized the jury’s important role under Mississippi law in determining whether to impose death.

Indeed, under the circumstances here the importance of the jury’s role could hardly have been lost on the jurors themselves. The charge at the guilt phase highlighted the jurors’ role as factfinders and their duty to follow the law in reaching their conclusions. The importance of their role at sentencing was evident from the charge, from the impassioned plea for mercy from petitioner’s counsel, petitioner, and petitioner’s mother, as well as from the prosecutor’s rebuttal. It is indeed difficult to agree with the Court that a group subjected to all this attention nevertheless interpreted a few remarks by the prosecutor to mean that the group’s decision was no more than a sideshow — a mere “preliminary step” toward the ultimate sentencing determination.

Once it is recognized that the Court has overstated the seriousness of the prosecutor’s comments the Court’s analysis tumbles like a house of cards. Given that it is highly unlikely that the jury’s sense of responsibility was diminished, there is no need to respond to the Court’s conjecture that the jury would in addition have “delegated” its responsibility by erring in favor of imposing the death penalty. And even assuming that the challenged statements were in some way infirm, I believe this is a case where we should heed the directives of Donnelly, Zant, and Barclay, and hold that any error did not amount to constitutional error. During the course of a heated trial prosecutors may make many statements that stray from debating society rules as to relevancy, but the ultimate inquiry must be whether the statements rendered the proceedings as a whole fundamentally unfair. I do not believe this analysis is substantially altered because the challenged statements were made during a capital sentencing proceeding. Although the fact that this is a capital case calls for careful review of applicable legal principles, it seems to me that the Court’s concern would be essentially the same if at the guilt phase the prosecutor had told the jury to go ahead and convict because any mistakes would be corrected on appeal. Cf. ante, at 334, n. 5, and authorities cited therein.

I therefore find unconvincing the Court’s scramble to identify an independent Eighth Amendment norm that was violated by the statements here. The Court’s string citations to our prior cases, many of which yielded only plurality opinions, which hold that capital sentencing juries must be allowed to consider all forms of mitigating evidence so as to facilitate individualized and rational determinations of the appropriateness of capital punishment, simply highlight the lack of authority for the path that the Court now takes. Nor do I find particularly illuminating the citation to dicta that the Eighth Amendment requires procedures that will ensure a “reliable” determination that death is an appropriate punishment. Although the Eighth Amendment requires certain processes designed to prevent the arbitrary imposition of capital punishment, it does not follow that every proceeding that strays from the optimum is ipso facto constitutionally unreliable. Zant and Barclay hold as much.

Nor does the Eighth Amendment prohibit any and all communication to a capital sentencing jury concerning the availability of appellate review. In California v. Ramos, we upheld against Eighth Amendment challenge a California statute that required capital sentencing juries to be informed that the sentence of life without possibility of parole was subject to commutation by the Governor. We noted, inter alia, that the instruction was “merely an accurate statement of a potential sentencing alternative,” 463 U. S., at 1009, and held that informing the jury of the possibility of commutation did not inject too speculative a concern into the jury’s deliberations. Although we noted in Ramos that the challenged information bore more than marginal relevance to the jury’s sentencing determination, Ramos is not distinguishable from this case on that ground; there is no constitutional requirement that all information received by a sentencing jury be “relevant.” In any event, the fact that the jury’s determination is subject to appellate review, if not common knowledge, is in any event information concerning the judicial process that one would think the jury is entitled to know. Nor do I think this case distinguishable from Ramos because here the prosecutor’s statements “misrepresented” the appellate process. There are circumstances where misrepresentations by prosecutors will violate due process, see Miller v. Pate, 386 U. S. 1 (1967); Brady v. Maryland, 373 U. S. 83 (1963), but here the reference to appellate review certainly did not include an express statement that such review was de novo, and any implication along those lines was cured by the later statements emphasizing the jury’s responsibility under the Mississippi sentencing scheme.

This Court should avoid turning every perceived departure from what it conceives to be optimum procedure in a capital case into a ground for constitutional reversal. In this case the State of Mississippi proved four aggravating factors, including that petitioner previously had been convicted of four crimes involving threat of violence to a person. The jury was instructed to find the facts based upon the evidence and to apply those facts to the law as charged; at the sentencing proceeding it was told that it must find that the aggravating factors outweighed the mitigating factors, and the prosecutor’s argument stressed these aspects of the jury’s singular duty. There is no indication in the record that the jury returned the death sentence on any basis other than the evidence adduced, nor is there any reason to question the. jury’s conclusion. Under those circumstances I do not think that the Eighth Amendment or any other provision of the Constitution requires that petitioner’s death sentence be overturned. I would affirm the judgment of the Mississippi Supreme Court.

       The Court notes that other state courts have condemned the type of argument challenged here, ante, at 334, and that the Mississippi Supreme Court, since its decision in this ease, has also found such an argument to be reversible error. See Williams v. State, 445 So. 2d 798 (1984). But these facts suggest that draconic intervention by this Court in the name of the Eighth Amendment generally is not required to correct aspects of state procedure that appear less than ideal to all of us. Doctrinal development in the tradition of the common law, where state-court decisions commend themselves not by their authority but by their reason, ultimately bids fair to remedy such minor departures from procedural norms as may be involved in this case.