author:
      Justice Rehnquist
      Justice Brennan,

text:
    KEETON v. HUSTLER MAGAZINE, INC., et al.
    No. 82-485.
    Argued November 8, 1983
    Decided March 20, 1984

      Rehnquist, J., delivered the opinion of the Court, in which Burger, C. J., and White, Marshall, Blackmun, Powell, Stevens, and O’Connor, JJ., joined. Brennan, J., filed an opinion concurring in the judgment, post, p. 782.

      Norman Roy Grutman argued the cause for petitioner. With him on the briefs was Jeffrey H. Daiehman.

      Stephen M. Shapiro, by invitation of the Court, 464 U. S. 958, argued the cause as amicus curiae in support of the judgment below. Lea Brilmayer, David Kahn, and Henry Monaghan filed a brief for respondents.

      Briefs of amici curiae urging affirmance were filed for the Motor Vehicle Manufacturers Association by Robert L. Stem, Stephen M. Shapiro,

        William H. Crabtree, and Edward P. Good; for the Association of American Publishers, Inc., by R. Bruce Rich; and for CBS Inc. et al. by Robert D. Sack, Douglas P. Jacobs, Harvey L. Lipton, Peter C. Gould, Bruce W. Sanford, and Lawrence Gunnels.

   Justice Rehnquist

delivered the opinion of the Court.

Petitioner Kathy Keeton sued respondent Hustler Magazine, Inc., and other defendants in the United States District Court for the District of New Hampshire, alleging jurisdiction over her libel complaint by reason of diversity of citizenship. The District Court dismissed her suit because it believed that the Due Process Clause of the Fourteenth Amendment to the United States Constitution forbade the application of New Hampshire’s long-arm statute in order to acquire personal jurisdiction over respondent. The Court of Appeals for the First Circuit affirmed, 682 F. 2d 33 (1982), summarizing its concerns with the statement that “the New Hampshire tail is too small to wag so large an out-of-state dog.” Id., at 36. We granted certiorari, 459 U. S. 1169 (1983), and we now reverse.

Petitioner Keeton is a resident of New York. Her only connection with New Hampshire is the circulation there of copies of a magazine that she assists in producing. The magazine bears petitioner’s name in several places crediting her with editorial and other work. Respondent Hustler Magazine, Inc., is an Ohio corporation, with its principal place of business in California. Respondent’s contacts with New Hampshire consist of the sale of some 10,000 to 15,000 copies of Hustler Magazine in that State each month. See App. 81a-86a. Petitioner claims to have been libeled in five separate issues of respondent’s magazine published between September 1975 and May 1976.

The Court of Appeals, in its opinion affirming the District Court’s dismissal of petitioner’s complaint, held that petitioner’s lack of contacts with New Hampshire rendered the State’s interest in redressing the tort of libel to petitioner too attenuated for an assertion of personal jurisdiction over respondent. The Court of Appeals observed that the “single publication rule” ordinarily applicable in multistate libel cases would require it to award petitioner “damages caused in all states” should she prevail in her suit, even though the bulk of petitioner’s alleged injuries had been sustained outside New Hampshire. 682 F. 2d, at 35. The court also stressed New Hampshire’s unusually long (6-year) limitations period for libel actions. New Hampshire was the only State where petitioner’s suit would not have been time-barred when it was filed. Under these circumstances, the Court of Appeals concluded that it would be “unfair” to assert jurisdiction over respondent. New Hampshire has a minimal interest in applying its unusual statute of limitations to, and awarding damages for, injuries to a nonresident occurring outside the State, particularly since petitioner suffered such a small proportion of her total claimed injury within the State. Id., at 35-36.

We conclude that the Court of Appeals erred when it affirmed the dismissal of petitioner’s suit for lack of personal jurisdiction. Respondent’s regular circulation of magazines in the forum State is sufficient to support an assertion of jurisdiction in a libel action based on the contents of the magazine. This is so even if New Hampshire courts, and thus the District Court under Klaxon Co. v. Stentor Co., 313 U. S. 487 (1941), would apply the so-called “single publication rule” to enable petitioner to recover in the New Hampshire action her damages from “publications” of the alleged libel throughout the United States.

The District Court found that “[t]he general course of conduct in circulating magazines throughout the state was purposefully directed at New Hampshire, and inevitably affected persons in the state.” App. to Pet. for Cert. 5a. Such regular monthly sales of thousands of magazines cannot by any stretch of the imagination be characterized as random, isolated, or fortuitous. It is, therefore, unquestionable that New Hampshire jurisdiction over a complaint based on those contacts would ordinarily satisfy the requirement of the Due Process Clause that a State’s assertion of personal jurisdiction over a nonresident defendant be predicated on “minimum contacts” between the defendant and the State. See World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286, 297-298 (1980); International Shoe Co. v. Washington, 326 U. S. 310, 317 (1945). And, as the Court of Appeals acknowledged, New Hampshire has adopted a “long-arm” statute authorizing service of process on nonresident corporations whenever permitted by the Due Process Clause. 682 F. 2d, at 33. Thus, all the requisites for personal jurisdiction over Hustler Magazine, Inc., in New Hampshire are present.

We think that the three concerns advanced by the Court of Appeals, whether considered singly or together, are not sufficiently weighty to merit a different result. The “single publication rule,” New Hampshire’s unusually long statute of limitations, and plaintiff’s lack of contacts with the forum State do not defeat jurisdiction otherwise proper under both New Hampshire law and the Due Process Clause.

In judging minimum contacts, a court properly focuses on “the relationship among the defendant, the forum, and the litigation.” Shaffer v. Heitner, 433 U. S. 186, 204 (1977). See also Rush v. Savchuk, 444 U. S. 320, 332 (1980). Thus, it is certainly relevant to the jurisdictional inquiry that petitioner is seeking to recover damages suffered in all States in this one suit. The contacts between respondent and the forum must be judged in the light of that claim, rather than a claim only for damages sustained in New Hampshire. That is, the contacts between respondent and New Hampshire must be such that it is “fair” to compel respondent to defend a multistate lawsuit in New Hampshire seeking nationwide damages for all copies of the five issues in question, even though only a small portion of those copies were distributed in New Hampshire.

The Court of Appeals expressed the view that New Hampshire’s “interest” in asserting jurisdiction over plaintiff’s mul-tistate claim was minimal. We agree that the “fairness” of haling respondent into a New Hampshire court depends to some extent on whether respondent’s activities relating to New Hampshire are such as to give that State a legitimate interest in holding respondent answerable on a claim related to those activities. See World-Wide Volkswagen Corp. v. Woodson, supra, at 292; McGee v. International Life Ins. Co., 355 U. S. 220, 223 (1957). But insofar as the State’s “interest” in adjudicating the dispute is a part of the Fourteenth Amendment due process equation, as a surrogate for some of the factors already mentioned, see Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U. S. 694, 702-703, n. 10 (1982), we think the interest is sufficient.

The Court of Appeals acknowledged that petitioner was suing, at least in part, for damages suffered in New Hampshire. 682 F. 2d, at 34. And it is beyond dispute that New Hampshire has a significant interest in redressing injuries that actually occur within the State.

“ ‘A state has an especial interest in exercising judicial jurisdiction over those who commit torts within its territory. This is because torts involve wrongful conduct which a state seeks to deter, and against which it attempts to afford protection, by providing that a tort-feasor shall be liable for damages which are the proximate result of his tort.’” Leeper v. Leeper, 114 N. H. 294, 298, 319 A. 2d 626, 629 (1974) (quoting Restatement (Second) of Conflict of Laws § 36, Comment c (1971)).

This interest extends to libel actions brought by nonresidents. False statements of fact harm both the subject of the falsehood and the readers of the statement. New Hampshire may rightly employ its libel laws to discourage the deception of its citizens. There is “no constitutional value in false statements of fact.” Gertz v. Robert Welch, Inc., 418 U. S. 323, 340 (1974).

New Hampshire may also extend its concern to the injury that in-state libel causes within New Hampshire to a nonresident. The tort of libel is generally held to occur wherever the offending material is circulated. Restatement (Second) of Torts §577A, Comment a (1977). The reputation of the libel victim may suffer harm even in a State in which he has hitherto been anonymous. The communication of the libel may create a negative reputation among the residents of a jurisdiction where the plaintiff’s previous reputation was, however small, at least unblemished.

New Hampshire has clearly expressed its interest in protecting such persons from libel, as well as in safeguarding its populace from falsehoods. Its criminal defamation statute bears no restriction to libels of which residents are the victim. Moreover, in 1971 New Hampshire specifically deleted from its long-arm statute the requirement that a tort be committed “against a resident of New Hampshire.”

New Hampshire also has a substantial interest in cooperating with other States, through the.“single publication rule,” to provide a forum for efficiently litigating all issues and damages claims arising out of a libel in a unitary proceeding. This rule reduces the potential serious drain of libel cases on judicial resources. It also serves to protect defendants from harassment resulting from multiple suits. Restatement (Second) of Torts § 577A, Comment / (1977). In sum, the combination of New Hampshire’s interest in redressing injuries that occur within the State and its interest in cooperating with other States in the application of the “single publication rule” demonstrates the propriety of requiring respondent to answer to a multistate libel action in New Hampshire.

The Court of Appeals also thought that there was an element of due process “unfairness” arising from the fact that the statutes of limitations in every jurisdiction except New Hampshire had run on the plaintiff’s claim in this case. Strictly speaking, however, any potential unfairness in applying New Hampshire’s statute of limitations to all aspects of this nationwide suit has nothing to do with the jurisdiction of the court to adjudicate the claims. “The issue is personal jurisdiction, not choice of law.” Hanson v. Denckla, 357 U. S. 285, 254 (1958). The question of the applicability of New Hampshire’s statute of limitations to claims for out-of-state damages presents itself in the course of litigation only after jurisdiction over respondent is established, and we do not think that such choice-of-law concerns should complicate or distort the jurisdictional inquiry.

The chance duration of statutes of limitations in nonforum jurisdictions has nothing to do with the contacts among respondent, New Hampshire, and this multistate libel action. Whether Ohio’s limitations period is six months or six years does not alter the jurisdictional calculus in New Hampshire. Petitioner’s successful search for a State with a lengthy statute of limitations is no different from the litigation strategy of countless plaintiffs who seek a forum with favorable substantive or procedural rules or sympathetic local populations. Certainly Hustler Magazine, Inc., which chose to enter the New Hampshire market, can be charged with knowledge of its laws and no doubt would have claimed the benefit of them if it had a complaint against a subscriber, distributor, or other commercial partner.

Finally, implicit in the Court of Appeals’ analysis of New Hampshire’s interest is an emphasis on the extremely limited contacts of the plaintiff with New Hampshire. But we have not to date required a plaintiff to have “minimum contacts” with the forum State before permitting that State to assert personal jurisdiction over a nonresident defendant. On the contrary, we have upheld the assertion of jurisdiction where such contacts were entirely lacking. In Perkins v. Benguet Mining Co., 342 U. S. 437 (1952), none of the parties was a resident of the forum State; indeed, neither the plaintiff nor the subject matter of his action had any relation to that State. Jurisdiction was based solely on the fact that the defendant corporation had been carrying on in the forum “a continuous and systematic, but limited, part of its general business.” Id., at 438. In the instant case, respondent’s activities in the forum may not be so substantial as to support jurisdiction over a cause of action unrelated to those activities. But respondent is carrying on a “part of its general business” in New Hampshire, and that is sufficient to support jurisdiction when the cause of action arises out of the very activity being conducted, in part, in New Hampshire.

The plaintiff’s residence is not, of course, completely irrelevant to the jurisdictional inquiry. As noted, that inquiry focuses on the relations among the defendant, the forum, and the litigation. Plaintiff’s residence may well play an important role in determining the propriety of entertaining a suit against the defendant in the forum. That is, plaintiff’s residence in the forum may, because of defendant’s relationship with the plaintiff, enhance defendant’s contacts with the forum. Plaintiff’s residence may be the focus of the activities of the defendant out of which the suit arises. See Calder v. Jones, post, at 788-789; McGee v. International Life Ins. Co., 355 U. S. 220 (1957). But plaintiff’s residence in the forum State is not a separate requirement, and lack of residence will not defeat jurisdiction established on the basis of defendant’s contacts.

It is undoubtedly true that the bulk of the harm done to petitioner occurred outside New Hampshire. But that will be true in almost every libel action brought somewhere other than the plaintiff’s domicile. There is no justification for restricting libel actions to the plaintiff’s home forum. The victim of a libel, like the victim of any other tort, may choose to bring suit in any forum with which the defendant has “certain minimum contacts . . . such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ Milliken v. Meyer, 311 U. S. 457, 463 [(1940)].” International Shoe Co. v. Washington, 326 U. S., at 316.

Where, as in this case, respondent Hustler Magazine, Inc., has continuously and deliberately exploited the New Hampshire market, it must reasonably anticipate being haled into court there in a libel action based on the contents of its magazine. World-Wide Volkswagen Corp. v. Woodson, 444 U. S., at 297-298. And, since respondent can be charged with knowledge of the “single publication rule,” it must anticipate that such a suit will seek nationwide damages. Respondent produces a national publication aimed at a nationwide audience. There is no unfairness in calling it to answer for the contents of that publication wherever a substantial number of copies are regularly sold and distributed.

The judgment of the Court of Appeals is reversed, and the cause is remanded for proceedings consistent with this opinion.

It is so ordered.

Justice Brennan,

concurring in the judgment.

I agree with the Court that “[rjespondent’s regular circulation of magazines in the forum State is sufficient to support an assertion of jurisdiction in a libel action based on the contents of the magazine.” Ante, at 773-774. These contacts between the respondent and the forum State are sufficiently important and sufficiently related to the underlying cause of action to foreclose any concern that the constitutional limits of the Due Process Clause are being violated. This is so, moreover, irrespective of the State’s interest in enforcing its substantive libel laws or its unique statute of limitations. Indeed, as we recently explained in Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U. S. 694 (1982), these interests of the State should be relevant only to the extent that they bear upon the liberty interests of the respondent that are protected by the Fourteenth Amendment. “The restriction on state sovereign power described in World-Wide Volkswagen Corp. [v. Woodson, 444 U. S. 286, 291-292 (1980)] must be seen as ultimately a function of the individual liberty interest preserved by the Due Process Clause. That Clause is the only source of the personal jurisdiction requirement and the Clause itself makes no mention of federalism concerns.” Id., at 702-703, n. 10.

       Initially, petitioner brought suit for libel and invasion of privacy in Ohio, where the magazine was published. Her libel claim, however, was dismissed as barred by the Ohio statute of limitations, and her invasion-of-privacy claim was dismissed as barred by the New York statute of limitations, which the Ohio court considered to be “migratory.” Petitioner then filed the present action in October 1980.

       The “single publication rule” has been summarized as follows:
      “As to any single publication, (a) only one action for damages can be maintained; (b) all damages suffered in all jurisdictions can be recovered in the one action; and (c) a judgment for or against the plaintiff upon the merits of any action for damages bars any other action for damages between the same parties in all jurisdictions.” Restatement (Second) of Torts § 577A(4) (1977).

       “It is the general rule that each communication of the same defamatory matter by the same defamer, whether to a new person or to the same person, is a separate and distinct publication, for which a separate cause of action arises.” Id., § 577A, Comment a. The “single publication rule” is an exception to this general rule.

       New Hampshire Rev. Stat. Ann. §300:14 (1977) provides in relevant part:
      “If a foreign corporation . . . commits a tort in whole or in part in New Hampshire, such ac[t] shall be deemed to be doing business in New Hampshire by such foreign corporation and shall be deemed equivalent to the appointment by such foreign corporation of the secretary of the state of New Hampshire and his successors to be its true and lawful attorney upon whom may be served all lawful process in any actions or proceedings against such foreign corporation arising from or growing out of such . . . tort.”
      This statute has been construed in the New Hampshire courts to extend jurisdiction over nonresident corporations to the fullest extent permitted under the Federal Constitution. See, e. g.,Roy v. North American Newspaper Alliance, Inc., 106 N. H. 92, 95, 205 A. 2d 844, 846 (1964).

       We do not, therefore, rely for our holding on the fact that petitioner’s name appears in fine print in several places in a magazine circulating in New Hampshire.

       New Hampshire Rev. Stat. Ann. §644:11(1) (1974) makes it a misdemeanor for anyone to “purposely communicat[e] to any person, orally or in writing, any information which he knows to be false and knows will tend to expose any other living person to public hatred, contempt or ridicule.” (Emphasis added.)

       See N. H. Rev. Stat. Ann. § 300:14 (1977), History.

       The great majority of the States now follow the “single publication rule.” Restatement (Second) of Torts § 577A, Appendix, Reporter’s Note (1977).

       Of course, to conclude that petitioner may properly seek multistate damages in this New Hampshire suit is not to conclude that such damages should, in fact, be awarded if petitioner makes out her case for libel. The actual applicability of the “single publication rule” in the peculiar circumstances of this case is a matter of substantive law, not personal jurisdiction. We conclude only that the District Court has jurisdiction to entertain petitioner’s multistate libel suit.

       Under traditional choice-of-law principles, the law of the forum State governs on matters of procedure. See Restatement (Second) of Conflict of Laws § 122 (1971). In New Hampshire, statutes of limitations are considered procedural. Gordon v. Gordon, 118 N. H. 356, 360, 387 A. 2d 339, 342 (1978); Barrett v. Boston & Maine R. Co., 104 N. H. 70, 178 A. 2d 291 (1962). There has been considerable academic criticism of the rule that permits a forum State to apply its own statute of limitations regardless of the significance of contacts between the forum State and the litigation. See, e. g., R. Weintraub, Commentary on the Conflict of Laws §9.2B, p. 517 (2d ed. 1980); Martin, Constitutional Limitations on Choice of Law, 61 Cornell L. Rev. 185, 221 (1976); Comment, The Statute of Limitations and the Conflict of Laws, 28 Yale L. J. 492, 496-497 (1919). But we find it unnecessary to express an opinion at this time as to whether any arguable unfairness rises to the level of a due process violation.

       The defendant corporation’s contacts with the forum State in Perkins were more substantial than those of respondent with New Hampshire in this case. In Perkins, the corporation’s mining operations, located in the Philippine Islands, were completely halted during the Japanese occupation. The president, who was also general manager and principal stockholder of the company, returned to his home in Ohio where he carried on “a eontinuous and systematic supervision of the necessarily limited wartime activities of the company.” 342 U. S., at 448. The company’s files were kept in Ohio, several directors’ meetings were held there, substantial accounts were maintained in Ohio banks, and all key business decisions were made in the State. Ibid. In those circumstances, Ohio was the corporation’s principal, if temporary, place of business so that Ohio jurisdiction was proper even over a cause of action unrelated to the activities in the State.

       As noted in Calder v. Jones, post, at 790-791, we reject categorically the suggestion that invisible radiations from the First Amendment may defeat jurisdiction otherwise proper under the Due Process Clause.

       In addition to Hustler Magazine, Inc., Larry Flynt, the publisher, editor, and owner of the magazine, and L. F. P., Inc., Hustler’s holding company, were named as defendants in the District Court. It does not of course follow from the fact that jurisdiction may be asserted over Hustler Magazine, Inc., that jurisdiction may also be asserted over either of the other defendants. In Colder v. Jones, post, at 790, we today reject the suggestion that employees who act in their official capacity are somehow shielded from suit in their individual capacity. But jurisdiction over an employee does not automatically follow from jurisdiction over the corporation which employs him; nor does jurisdiction over a parent corporation automatically establish jurisdiction over a wholly owned subsidiary. Consolidated Textile Co. v. Gregory, 289 U. S. 85, 88 (1933); Peterson v. Chicago, R. I. & P. R. Co., 205 U. S. 364, 391 (1907). Each defendant’s contacts with the forum State must be assessed individually. See Rush v. Savchuk, 444 U. S. 320, 332 (1980) (“The requirements of International Shoe . . . must be met as to each defendant over whom a state court exercises jurisdiction”). Because the Court of Appeals concluded that jurisdiction could not be had even against Hustler Magazine, Inc., it did not inquire into the propriety of jurisdiction over the other defendants. Such inquiry is, of course, open upon remand.


source: Caselaw Access Project

author: Justice Rehnquist

license: Public Domain

text:
    CALDER et al. v. JONES
    No. 82-1401.
    Argued November 8, 1983
    Decided March 20, 1984

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

      John G. Kester argued the cause for petitioners. With him on the briefs was Aubrey M. Daniel III.

      Paul S. Ablon argued the cause for respondent. With him on the brief were Stephen S. Monroe and Richard P. Towne.

      Briefs of amici curiae urging reversal were filed for the Association of American Publishers, Inc., by R. Bruce Rich; for the Authors League of America, Inc., by Irwin Karp; and for the Reporters Committee for Freedom of the Press et al. by George R. Clark, Peter C. Gould, Barry D. Umansky, Harvey Lipton, Robert C. Lobdell, W. Terry Maguire, Robert D. Sack, Bruce W. Sanford, J. Laurent Scharff, and Richard M. Schmidt, Jr.

   Justice Rehnquist

delivered the opinion of the Court.

Respondent Shirley Jones brought suit in California Superior Court claiming that she had been libeled in an article written and edited by petitioners in Florida. The article was published in a national magazine with a large circulation in California. Petitioners were served with process by mail in Florida and caused special appearances to be entered on their behalf, moving to quash the service of process for lack of personal jurisdiction. The Superior Court granted the motion on the ground that First Amendment concerns weighed against an assertion of jurisdiction otherwise proper under the Due Process Clause. The California Court of Appeal reversed, rejecting the suggestion that First Amendment considerations enter into the jurisdictional analysis. We now affirm.

Respondent lives and works in California. She and her husband brought this suit against the National Enquirer, Inc., its local distributing company, and petitioners for libel, invasion of privacy, and intentional infliction of emotional harm. The Enquirer is a Florida corporation with its principal place of business in Florida. It publishes a national weekly newspaper with a total circulation of over 5 million. About 600,000 of those copies, almost twice the level of the next highest State, are sold in California. Respondent’s and her husband’s claims were based on an article that appeared in the Enquirer’s October 9, 1979, issue. Both the Enquirer and the distributing company answered the complaint and made no objection to the jurisdiction of the California court.

Petitioner South is a reporter employed by the Enquirer. He is a resident of Florida, though he frequently travels to California on business. South wrote the first draft of the challenged article, and his byline appeared on it. He did most of his research in Florida, relying on phone calls to sources in California for the information contained in the article. Shortly before publication, South called respondent’s home and read to her husband a draft of the article so as to elicit his comments upon it. Aside from his frequent trips and phone calls, South has no other relevant contacts with California.

Petitioner Calder is also a Florida resident. He has been to California only twice — once, on a pleasure trip, prior to the publication of the article and once after to testify in an unrelated trial. Calder is president and editor of the Enquirer. He “oversee[s] just about every function of the Enquirer.” App. 24. He reviewed and approved the initial evaluation of the subject of the article and edited it in its final form. He also declined to print a retraction requested by respondent. Calder has no other relevant contacts with California.

In considering petitioners’ motion to quash service of process, the Superior Court surmised that the actions of petitioners in Florida, causing injury to respondent in California, would ordinarily be sufficient to support an assertion of jurisdiction over them in California. But the court felt that special solicitude was necessary because of the potential “chilling effect” on reporters and editors which would result from requiring them to appear in remote jurisdictions to answer for the content of articles upon which they worked. The court also noted that respondent’s rights could be “fully satisfied” in her suit against the publisher without requiring petitioners to appear as parties. The Superior Court, therefore, granted the motion.

The California Court of Appeal reversed. 138 Cal. App. 3d 128, 187 Cal. Rptr. 825 (1982). The court agreed that neither petitioner’s contacts with California would be sufficient for an assertion of jurisdiction on a cause of action unrelated to those contacts. See Perkins v. Benguet Mining Co., 342 U. S. 437 (1952) (permitting general jurisdiction where defendant’s contacts with the forum were “continuous and systematic”). But the court concluded that a valid basis for jurisdiction existed on the theory that petitioners intended to, and did, cause tortious injury to respondent in California. The fact that the actions causing the effects in California were performed outside the State did not prevent the State from asserting jurisdiction over a cause of action arising out of those effects. The court rejected the Superior Court’s conclusion that First Amendment considerations must be weighed in the scale against jurisdiction.

A timely petition for hearing was denied by the Supreme Court of California. App. 122. On petitioners’ appeal to this Court, probable jurisdiction was postponed. 460 U. S. 1080 (1983). We conclude that jurisdiction by appeal does not he. Kulko v. California Superior Court, 436 U. S. 84, 90, and n. 4 (1978). Treating the jurisdictional statement as a petition for writ of certiorari, as we are authorized to do, 28 U. S. C. §2103, we hereby grant the petition.

The Due Process Clause of the Fourteenth Amendment to the United States Constitution permits personal jurisdiction over a defendant in any State with which the defendant has “certain minimum contacts . . . such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ Milliken v. Meyer, 311 U. S. 457, 463.” International Shoe Co. v. Washington, 326 U. S. 310, 316 (1945). In judging minimum contacts, a court properly focuses on “the relationship among the defendant, the forum, and the litigation.” Shaffer v. Heitner, 433 U. S. 186, 204 (1977). See also Rush v. Savchuk, 444 U. S. 320, 332 (1980). The plaintiff’s lack of “contacts” will not defeat otherwise proper jurisdiction, see Keeton v. Hustler Magazine, Inc., ante, at 779-781, but they may be so manifold as to permit jurisdiction when it would not exist in their absence. Here, the plaintiff is the focus of the activities of the defendants out of which the suit arises. See McGee v. International Life Ins. Co., 355 U. S. 220 (1957).

The allegedly libelous story concerned the California activities of a California resident. It impugned the professionalism of an entertainer whose television career was centered in California. The article was drawn from California sources, and the brunt of the harm, in terms both of respondent’s emotional distress and the injury to her professional reputation, was suffered in California. In sum, California is the focal point both of the story and of the harm suffered. Jurisdiction over petitioners is therefore proper in California based on the “effects” of their Florida conduct in California. World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286, 297-298 (1980); Restatement (Second) of Conflict of Laws §37 (1971).

Petitioners argue that they are not responsible for the circulation of the article in California. A reporter and an editor, they claim, have no direct economic stake in their employer’s sales in a distant State. Nor are ordinary employees able to control their employer’s marketing activity. The mere fact that they can “foresee” that the article will be circulated and have an effect in California is not sufficient for an assertion of jurisdiction. World-Wide Volkswagen Corp. v. Woodson, supra, at 295; Rush v. Savchuk, supra, at 328-329. They do not “in effect appoint the [article their] agent for service of process.” World-Wide Volkswagen Corp. v. Woodson, supra, at 296. Petitioners liken themselves to a welder employed in Florida who works on a boiler which subsequently explodes in California. Cases which hold that jurisdiction will be proper over the manufacturer, Buckeye Boiler Co. v. Superior Court, 71 Cal. 2d 893, 458 P. 2d 57 (1969); Gray v. American Radiator & Standard Sanitary Corp., 22 Ill. 2d 432, 176 N. E. 2d 761 (1961), should not be applied to the welder who has no control over and derives no direct benefit from his employer’s sales in that distant State.

Petitioners’ analogy does not wash. Whatever the status of their hypothetical welder, petitioners are not charged with mere untargeted negligence. Rather, their intentional, and allegedly tortious, actions were expressly aimed at California. Petitioner South wrote and petitioner Calder edited an article that they knew would have a potentially devastating impact upon respondent. And they knew that the brunt of that injury would be felt by respondent in the State in which she lives and works and in which the National Enquirer has its largest circulation. Under the circumstances, petitioners must “reasonably anticipate being haled into court there” to answer for the truth of the statements made in their article. World-Wide Volkswagen Corp. v. Woodson, supra, at 297; Kulko v. California Superior Court, supra, at 97-98; Shaffer v. Heitner, supra, at 216. An individual injured in California need not go to Florida to seek redress from persons who, though remaining in Florida, knowingly cause the injury in California.

Petitioners are correct that their contacts with California are not to be judged according to their employer’s activities there. On the other hand, their status as employees does not somehow insulate them from jurisdiction. Each defendant’s contacts with the forum State must be assessed individually. See Rush v. Savchuk, supra, at 332 (“The requirements of International Shoe . . . must be met as to each defendant over whom a state court exercises jurisdiction”). In this case, petitioners are primary participants in an alleged wrongdoing intentionally directed at a California resident, and jurisdiction over them is proper on that basis.

We also reject the suggestion that First Amendment concerns enter into the jurisdictional analysis. The infusion of such considerations would needlessly complicate an already imprecise inquiry. Estin v. Estin, 334 U. S. 541, 545 (1948). Morever, the potential chill on protected First Amendment activity stemming from libel and defamation actions is already taken into account in the constitutional limitations on the substantive law governing such suits. See New York Times Co. v. Sullivan, 376 U. S. 254 (1964); Gertz v. Robert Welch, Inc., 418 U. S. 323 (1974). To reintroduce those concerns at the jurisdictional stage would be a form of double counting. We have already declined in other contexts to grant special procedural protections to defendants in libel and defamation actions in addition to the constitutional protections embodied in the substantive laws. See, e. g., Herbert v. Lando, 441 U. S. 153 (1979) (no First Amendment privilege bars inquiry into editorial process). See also Hutchinson v. Proxmire, 443 U. S. 111, 120, n. 9 (1979) (implying that no special rules apply for summary judgment).

We hold that jurisdiction over petitioners in California is proper because of their intentional conduct in Florida calculated to cause injury to respondent in California. The judgment of the California Court of Appeal is

Affirmed.

       Respondent’s husband subsequently filed a voluntary dismissal of his complaint.

       A geographic analysis of the total paid circulation for the September 18, 1979, issue of the Enquirer showed total sales, national and international, of 5,292,200. Sales in California were 604,431. The State with the next highest total was New York, with 316,911. App. 39-41.

       South stated that during a 4-year period he visited California more than 20 times. Id., at 32. A friend estimated that he came to California from 6 to 12 times each year. Id,., at 66.

       The Superior Court found that South made at least one trip to California in connection with the article. South hotly disputes this finding, claiming that an uncontroverted affidavit shows that he never visited California to research the article. Since we do not rely for our holding on the alleged visit, see n. 6, infra, we find it unnecessary to consider the contention.

       California’s “long-arm” statute permits an assertion of jurisdiction over a nonresident defendant whenever permitted by the State and Federal Constitutions. California Civ. Proc. Code Ann. §410.10 (West 1973) provides: “A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States.”

       The Court of Appeal further suggested that petitioner South’s investigative activities, including one visit and numerous phone calls to California, formed an independent basis for an assertion of jurisdiction over him in this action. In light of our approval of the “effects” test employed by the California court, we find it unnecessary to reach this alternative ground.

         Kulko involved an assertion of jurisdiction under the same California statute at issue here. The Court held that the case was improperly brought to the Court as an appeal, since no state statute was “drawn in question ... on the ground of its being repugnant to the Constitution, treaties or laws of the United States,” 28 U. S. C. § 1257(2). Petitioners attempt to distinguish Kulko on the ground that the defendant in that case argued only that the Due Process Clause precluded the exercise of in per-sonam jurisdiction over him, whereas petitioners argued below that the California statute as applied to them would be unconstitutional. We are unpersuaded by this shift in emphasis. The jurisdictional statute construed by the California Court of Appeal provides that the State’s jurisdiction is as broad as the Constitution permits. See n. 5, supra. As in Kulko, the opinion below does not purport to determine the constitutionality of the California jurisdictional statute. Rather, the question decided was whether the Constitution itself would permit the assertion of jurisdiction. Under the circumstances, we find an appeal improper regardless of the terminology in which the petitioners couch their jurisdictional defense.

       Although there has not yet been a trial on the merits in this case, the judgment of the California appellate court “is plainly final on the federal issue and is not subject to further review in the state courts.” Cox Broadcasting Corp. v. Cohn, 420 U. S. 469, 485 (1975). Accordingly, as in several past cases presenting jurisdictional issues in this posture, “we conclude that the judgment below is final within the meaning of [28 U. S. C.] § 1257.” Shaffer v. Heitner, 433 U. S. 186, 195-196, n. 12 (1977). See also Rush v. Savchuk, 444 U. S. 320 (1980); World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286 (1980); Kulko v. California Superior Court, 436 U. S. 84 (1978).

       The article alleged that respondent drank so heavily as to prevent her from fulfilling her professional obligations.


author: Justice Stevens

text:
    UNITED STATES v. WEBER AIRCRAFT CORP. et al.
    No. 82-1616.
    Argued January 11, 1984
    Decided March 20, 1984

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

      Samuel A. Alito, Jr., argued the cause for the United States. With him on the briefs were Solicitor General Lee, Assistant Attorney General McGrath, Deputy Solicitor General Getter, Leonard Schaitman, and Wendy M. Keats.

      Jacques E. Soiret argued the cause for respondents. With him on the brief for respondent Weber Aircraft Corp. were Marshall Silberberg and Robert M. Churella. Lawrence J. Galardi and Dean F. Cochran filed a brief for respondent Mills Manufacturing Corp.

      Briefs of amici curiae urging affirmance were filed for the Reporters Committee for Freedom of the Press et al. by Karen Syma Shinberg Cza-panskiy; for United States Forgecraft Corp. by Donald A. Way; and for Inderjit Badhwar et al. by Raymond D. Battocchi and Alfred F. Belcuore.

   Justice Stevens

delivered the opinion of the Court.

The Freedom of Information Act (FOIA), 5 U. S. C. § 552 (1982 ed.), requires federal agencies to disclose records that do not fall into one of nine exempt categories. The question presented is whether confidential statements obtained during an Air Force investigation of an air crash are protected from disclosure by Exemption 5, which exempts “inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.”

I

On October 9, 1973, the engine of an Air Force F-106B aircraft failed in flight. Captain Richard Hoover, the pilot, was severely injured when he ejected from the plane. Under Air Force regulations, the incident was a significant air crash that required two separate investigations: a “collateral investigation” and a “safety investigation.”

The collateral investigation is conducted “to preserve available evidence for use in claims, litigation, disciplinary actions, administrative proceedings, and all other purposes.” Witnesses in a collateral investigation testify under oath and generally are protected by the procedural safeguards that are applicable in other formal hearings. The record of the collateral investigation is public.

The safety investigation is quite different. It is conducted by a specially appointed tribunal which prepares a report that is intended for “the sole purpose of taking corrective action in the interest of accident prevention.” To encourage witnesses to speak fully and frankly, they are not sworn and receive an assurance that their statements will not be used for any purpose other than accident prevention. Air Force regulations contain a general prohibition against the release of safety investigation reports and their attachments, subject to an exception which allows the Judge Advocate General to release specified categories of “factual material” and “nonpersonal evidence.”

After the collateral and safety investigations had been completed, Captain Hoover filed a damages action against various entities responsible for the design and manufacture of his plane’s ejection equipment. During pretrial discovery in that litigation, two of the parties (respondents Weber and Mills) sought discovery of all Air Force investigative reports pertaining to the accident. The Air Force released the entire record of the collateral investigation, as well as certain factual portions of the safety investigation, but it refused to release the confidential portions of the safety investigation.

Confidential statements made to air crash safety investigators were held to be privileged with respect to pretrial discovery over 20 years ago. Machin v. Zukert, 114 U. S. App. D. C. 335, 316 F. 2d 336, cert. denied, 375 U. S. 896 (1963). That holding effectively prevented respondents from obtaining the pretrial discovery they sought — specifically the unsworn statements given by Captain Hoover and by the airman who had rigged and maintained his parachute equipment. Respondents therefore filed requests for those statements under the FOIA, and when the Air Force refused production, they commenced this action.

In the District Court the Government filed an affidavit executed by the General responsible for Air Force safety investigations, explaining that the material that had been withheld contained “conclusions, speculations, findings and recommendations made by the Aircraft Mishap Investigators” as well as “testimony provided by witnesses under a pledge of confidentiality.” App. 38. The affidavit explained why the General believed that the national security would be adversely affected by the disclosure of such material. The District Court held that the material at issue would not be available by law to a party other than an agency in litigation with an agency, and hence need not be disclosed by virtue of Exemption 5. The Court of Appeals reversed. 688 F. 2d 638 (CA9 1982). It agreed that the requested documents were “intra-agency memorandums” within the meaning of Exemption 5, and that they were protected from civil discovery under the Machín privilege. It held, however, that the statutory phrase “would not be available by law” did not encompass every civil discovery privilege but rather reached only those privileges explicitly recognized in the legislative history of the FOIA. It read that history as accepting an executive privilege for predecisional documents containing advice, opinions, or recommendations of Government agents, but as not extending to the Machín civil discovery privilege for official Government information. It accordingly remanded the case with directions to disclose the factual portions of the witnesses’ statements.

► — I l-H

The plain language of the statute itself, as construed by our prior decisions, is sufficient to resolve the question presented. The statements of the two witnesses are unquestionably “intra-agency memorandums or letters” and, since the Machín privilege normally protects them from discovery in civil litigation, they “would not be available by law to a party other than [the Air Force] in litigation with [the Air Force].”

Last Term, in FTC v. Grolier Inc., 462 U. S. 19 (1983), we held that Exemption 5 simply incorporates civil discovery privileges: “The test under Exemption 5 is whether the documents would be ‘routinely’ or ‘normally’ disclosed upon a showing of relevance. ” Id., at 26. Thus, since the Machín privilege is well recognized in the case law as precluding routine disclosure of the statements, the statements are covered by Exemption 5.

Grolier was consistent with our prior cases. For example, Grolier itself relied on Renegotiation Board v. Grumman Aircraft Engineering Corp., 421 U. S. 168 (1975), which Grolier quoted on the scope of Exemption 5: “ ‘Exemption 5 incorporates the privileges which the Government enjoys under the relevant statutory and case law in the pretrial discovery context.’” 462 U. S., at 26-27 (emphasis added in Grolier) (quoting 421 U. S., at 184). Similarly, in NLRB v. Sears, Roebuck & Co., 421 U. S. 132 (1975), we wrote: “Exemption 5 withholds from a member of the public documents which a private party could not discover in litigation with the agency.” Id., at 148. In Federal Open Market Committee v. Merrill, 443 U. S. 340 (1979), we wrote: “The House Report [on the FOIA] states that Exemption 5 was intended to allow an agency to withhold intra-agency memoranda which would not 'routinely be disclosed to a private party through the discovery process in litigation "with the agency . . . Id., at 353 (quoting H. R. Rep. No. 1497, 89th Cong., 2d Sess., 10 (1966)). And in EPA v. Mink, 410 U. S. 73 (1973), the Court observed: “This language clearly contemplates that the public is entitled to all such memoranda or letters that a private party could discover in litigation with the agency.” Id., at 86.

Respondents read Merrill as limiting the scope of Exemption 5 to privileges explicitly identified by Congress in the legislative history of the FOIA. But in Merrill we were confronted with a claimed exemption that was not clearly covered by a recognized pretrial discovery privilege. We held that Exemption 5 protected the Federal Open Market Committee’s Domestic Policy Directives although it was not entirely clear that they fell within any recognized civil discovery privilege because statements in the legislative history supported an inference that Congress intended to recognize such a privilege. See 443 U. S., at 357-360. Thus, the holding of Merrill was that a privilege that was mentioned in the legislative history of Exemption 5 is incorporated by the Exemption — not that all privileges not mentioned are ex-eluded. Moreover, the Merrill dictum upon which respondents rely merely indicates “that it is not clear that Exemption 5 was intended to incorporate every privilege known to civil discovery.” Id., at 354. It is one thing to say that recognition under Exemption 5 of a novel privilege, or one that has found less than universal acceptance, might not fall within Exemption 5 if not discussed in its legislative history. It is quite another to say that the Machín privilege, which has been well settled for some two decades, need be viewed with the same degree of skepticism. In any event, the Merrill dictum concludes only that “a claim that a privilege other than executive privilege or the attorney privilege is covered by Exemption 5 must be viewed with caution.” 443 U. S., at 355. The claim of privilege sustained in Machín was denominated as one of executive privilege. See 114 U. S. App. D. C., at 337, 316 F. 2d, at 338. Hence the dictum is of little aid to respondents.

Moreover, respondents’ contention that they can obtain through the FOIA material that is normally privileged would create an anomaly in that the FOIA could be used to supplement civil discovery. We have consistently rejected such a construction of the FOIA. See Baldrige v. Shapiro, 455 U. S. 345, 360, n. 14 (1982); NLRB v. Sears, Roebuck & Co., 421 U. S., at 143, n. 10; Renegotiation Board v. Bannercraft Clothing Co., 415 U. S. 1, 24 (1974). We do not think that Congress could have intended that the weighty policies underlying discovery privileges could be so easily circumvented.

Finally, the legislative history of Exemption 5 does not contain the kind of compelling evidence of congressional intent that would be necessary to persuade us to look beyond the plain statutory language. Because of the difficulty inherent in compiling an exhaustive list of evidentiary privileges, it would be impractical to treat the legislative history of Exemption 5 as containing a comprehensive list of all privileges Congress intended to adopt. Rather, the history of Exemption 5 can be understood by means of “rough analogies.” EPA v. Mink, supra, at 86. The legislative history of Exemption 5 indicates that Congress intended to incorporate governmental privileges analogous to the Machín privilege. That history recognizes a need for claims of privilege when confidentiality is necessary to ensure frank and open discussion and hence efficient governmental operations. See Grolier, 462 U. S., at 27-28; Merrill, 443 U. S., at 359; Renegotiation Board v. Grumman Aircraft Engineering Corp., 421 U. S., at 186, 189-190; NLRB v. Sears, Roebuck & Co., supra, at 150-152; Mink, supra, at 86-89; H. R. Rep. No. 1497, 89th Cong., 2d Sess., 10 (1966); S. Rep. No. 813, 89th Cong., 1st Sess., 9 (1965). The Machín privilege was recognized for precisely this reason. Thus, the Machín privilege is sufficiently related to the concerns expressed in the legislative history that we cannot say that the legislative history demonstrates that the statute should not be construed to mean what it says with respect to the Machín privilege.

We therefore simply interpret Exemption 5 to mean what it says. The judgment of the Court of Appeals is

Reversed.

       “On complaint, the district court of the United States in the district in which the complainant resides, or has his principal place of business, or in which the agency records are situated, or in the District of Columbia, has jurisdiction to enjoin the agency from withholding agency records and to order the production of any agency records improperly withheld from the complainant. In such a case the court shall determine the matter de novo, and may examine the contents of such agency records in camera to determine whether such records or any part thereof shall be withheld under any of the exemptions set forth in subsection (b) of this section, and the burden is on the agency to sustain its action.” 5 U. S. C. § 552(a)(4)(B) (1982 ed.).

       “This section does not apply to matters that are—
      “(1) (A) specifically authorized under criteria established by an Executive order to be kept secret in the interest of national defense or foreign policy and (B) are in fact properly classified pursuant to such Executive order;
      “(2) related solely to the internal personnel rules and practices of an agency;
      “(3) specifically exempted from disclosure by statute (other than section 552b of this title), provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld;
      “(4) trade secrets and commercial or financial information obtained from a person and privileged or confidential;
      “(5) inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency;
      “(6) personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy;
      “(7) investigatory records compiled for law enforcement purposes, but only to the extent that the production of such records would (A) interfere with enforcement proceedings, (B) deprive a person of a right to a fair trial or an impartial adjudication, (C) constitute an unwarranted invasion of personal privacy, (D) disclose the identity of a confidential source and, in the case of a record compiled by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source, (E) disclose investigative techniques and procedures, or (F) endanger the life or physical safety of law enforcement personnel;
      “(8) contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions; or
      “(9) geological and geophysical information and data, including maps, concerning wells.” 5 U. S. C. § 552(b) (1982 ed.).

       Air Force Regulations 110-14, ¶ 1(a) (July 18, 1977).

       Air Force Regulations 127-4, ¶ 19(a)(1) (Jan. 1, 1973).

         Id., ¶3-8(d) (Jan. 18, 1980).

         Id., ¶ 19(a)(3) (Jan. 1, 1973); id., ¶¶2-4, 2-5 (Jan. 18, 1980).

         Id., ¶ 19(a)(4) (Jan. 1, 1973) states: “Notwithstanding the restrictions on use of these reports and their attachments and the prohibitions in this regulation against their release, factual material included in accident/incident reports, covering examination of wreckage, photographs, plotting charts, wreckage diagrams, maps, transcripts of air traffic communications, weather reports, maintenance records, crew qualifications, and like nonpersonal evidence may be released as required by law or pursuant to court order or upon specific authorization of The Judge Advocate General after consultation with The Inspector General. Also, Federal law requires that an accused in a trial by court-martial will, upon proper court order, be furnished all statements sworn or unsworn in any form which have been given to any Federal agent, employee, investigating officer, or board by any witness who testifies against the accused.”

         Hoover v. Weber Aircraft Corp., No. CV 74-1064-WPG (CD Cal.).

       Weber Aircraft Corp.

       Mills Manufacturing Corp.

       “[T];he release of the withheld portions of the Aircraft Mishap Investigation for litigation purposes would be harmful to our national security. The strength of the United States Air Force, upon which our national security is greatly dependent, is seriously affected by the number of major aircraft accidents which occur. The successful flight safety program of the United States Air Force has contributed greatly to the continuously decreasing rate of such accidents. The effectiveness of this program depends to a large extent upon our ability to obtain full and candid information on the cause of each aircraft accident. Much of the information received from persons giving testimony in the course of an aircraft mishap investigation is conjecture, speculation and opinion. Such full and frank disclosure is not only encouraged but is imperative to a successful flight safety program. Open and candid testimony is received because witnesses are promised that for the particular investigation their testimony will be used solely for the purpose of flight safety and will not be disclosed outside of the Air Force. Lacking authority to subpoena witnesses, accident investigators must rely on such assurances in order to obtain full and frank discussion concerning all the circumstances surrounding an accident. Witnesses are encouraged to express personal criticisms concerning the accident.
      “If aircraft mishap investigators were unable to give such assurances, or if it were felt that such promises were hollow, testimony and input from witnesses and from manufacturers; in many instances would be less than factual and a determination of the exact cause factors of accidents would be jeopardized. This would seriously hinder the accomplishment of prompt corrective action designed to preclude the occurrence of a similar accident. This privilege, properly accorded to the described portions of an United States Air Force Mishap Report of Investigation, including those portions reflecting the deliberations of the Investigating Board, is the very foundation of a successful Air Force flight safety program.” App. 38-39.

       The District Court also held that a medical report sought by respondents was covered by Exemption 5, and that disclosure of both the report and the statements was inappropriate because in its view the public interest in maintaining confidentiality outweighed respondents’ interests in obtaining the material. The Court of Appeals rejected both of these holdings, and the Government does not seek review on either.

       Weber contends that “intra-agency memorandums or letters” cannot include statements made by civilians to Air Force personnel. Whatever the merits of this assertion, it is irrelevant to this case since the material at issue here includes only statements made by Air Force personnel.

       Weber contends that the material at issue is not privileged because it was not obtained pursuant to a promise of confidentiality. However, the District Court found otherwise, and since that finding is supported by an uncontroverted affidavit submitted by the Government to the District Court, see id., at 38, there is no basis for setting it aside. In all other respects, respondents concede that the requested material is covered by the Machín privilege, and did not file a cross-petition for certiorari challenging the Court of Appeals’ conclusion that the requested material was privileged. Thus, we assume without deciding that the material respondents seek is privileged, and do not consider the arguments of amici that no privilege is applicable here. See United Parcel Service, Inc. v. Mitchell, 451 U. S. 56, 60, n. 2 (1981); Bell v. Wolfish, 441 U. S. 520, 531-532, n. 13 (1979); Knetsch v. United States, 364 U. S. 361, 370 (1960).

       See also 462 U. S., at 28 (Brennan, J., concurring in part and concurring in judgment).

       See also 421 U. S., at 149 (footnote omitted) (“[I]t is reasonable to construe Exemption 5 to exempt those documents, and only those documents, normally privileged in the civil discovery context”).

       Respondents contend that Mink stands for the proposition that purely factual material can never qualify for protection under Exemption 5. However, the relevant portion of Mink merely states that otherwise nonprivileged factual material cannot be withheld under Exemption 5 merely because it appears in the same document as privileged material, and that Congress intended to adopt the relevant case law on privilege. Moreover, Mink cited Machín with approval as part of that case law. See 410 U. S., at 87-91, and n. 14. This reading of Mink is confirmed by the 1974 amendment to the FOIA which provides: “Any reasonably segregable portion of a record shall be provided to any person requesting such record after deletion of the portions which are exempt under this subsection.” 5 U. S. C. § 552(b) (1982 ed.). This amendment constituted Congress’ codification of this aspect of Mink. See S. Rep. No. 93-854, p. 32 (1974); 120 Cong. Rec. 17021 (1974) (remarks of Sen. Hruska).

       Moreover, in the Merrill dictum we added: “We hesitate to construe Exemption 5 to incorporate a civil discovery privilege that would substantially duplicate another exemption.” 443 U. S., at 355. Respondents do not explain how incorporation of the Machín privilege into Exemption 5 would substantially duplicate another exemption. The relevance of the Merrill dictum is further reduced by the fact that in Merrill the Court explicitly reserved the question whether the Machin privilege falls within Exemption 5. See 443 U. S., at 355-356, n. 17. Thus Merrill could hardly control the question we face today.

       The regulation governing the Machín privilege also describes it as executive privilege. Air Force Regulations 127-4, ¶ 2-5 (Jan. 18, 1980).

       Respondents also argue that their need for the requested material is great and that it would be unfair to expect them to defend the litigation brought against them by Captain Hoover without access to it. We answered this argument in Grolier, noting that the fact that in particular litigation a party’s particularized showing of need may on occasion justify discovery of privileged material in order to avoid unfairness does not mean that such material is routinely discoverable and hence outside the scope of Exemption 5. See 462 U. S., at 27-28. Respondents must make their claim of particularized need in their litigation with Captain Hoover, since it is not a claim under the FOIA.

       This difficulty is illustrated by the controversy surrounding the proposed provisions of the Federal Rules of Evidence governing privileges, which were rejected by Congress. See generally 2 J. Weinstein & M. Berger, Evidence ¶ 501[01] (1982).

       Moreover, the Senate Report stated that Exemption 5 had been drafted in response to comments of federal agencies made in the course of Committee hearings, S. Rep. No. 813, at 4, 9. During those hearings, the Government submitted material indicating that the Machín privilege should be incorporated into the FOIA. See Administrative Procedure Act: Hearings before the Subcommittee on Administrative Practice and Procedure of the Senate Committee on the Judiciary, 89th Cong., 1st Sess., 196, 206, 366-367, 418 (1966).

       “We agree with the Government that when disclosure of investigative reports obtained in large part through promises of confidentiality would hamper the efficient operation of an important Government program and perhaps even, as the Secretary here claims, impair the national security by weakening a branch of the military, the reports should be considered privileged.” 114 U. S. App. D. C., at 338, 316 F. 2d, at 339.
      It follows that recognition of the Machín privilege would not be inconsistent with the fundamental goals of the FOIA since it does not necessarily reduce the amount of information available to the public. The privilege is recognized because the Government would not be able to obtain the information but for its assurance of confidentiality. Thus, much if not all of the information covered by the Machín privilege would not find its way into the public realm even if we refused to recognize the privilege, since under those circumstances the information would not be obtained by the Government in the first place.

       Cf. Federal Open Market Committee v. Merrill, 443 U. S. 340, 367-360 (1979) (privilege for Federal Reserve’s Open Market Committee’s policy directives sufficiently analogous to privilege for confidential information concerning Government contracts mentioned in Exemption 5’s legislative history to merit incorporation into Exemption 5).

       Respondents rely on the fact that in recent years Congress has several times failed to act on proposed legislation which would have codified the Machín privilege. However, this does not represent a rejection of the privilege. To the contrary, Congress has enacted Federal Rule of Evidence 501, which recognizes the power of the courts to fashion common-law rules of privilege. Congressional refusal to codify the Machín privilege hardly limits the power of courts to recognize the privilege under Rule 501. Indeed, Rule 501 was adopted precisely because Congress wished to leave privilege questions to the courts rather than attempt to codify them. See H. R. Rep. No. 93-650, p. 8 (1973); S. Rep. No. 93-1277, pp. 11,13 (1974); supra, at 802-803, and n. 21. Congressional failure to codify this privilege is therefore irrelevant to our inquiry. Respondents also rely on legislation enacted after Exemption 5 concerning the scope of Exemption 3 and various other statutes. This legislation obviously sheds no light on the scope of Exemption 5.


author: Chief Justice Burger

text:
    UNITED STATES v. ARTHUR YOUNG & CO. et al.
    No. 82-687.
    Argued January 16, 1984
    Decided March 21, 1984

      Burger, C. J., delivered the opinion for a unanimous Court.

      Mark I. Levy argued the cause for the United States. With him on the briefs were Solicitor General Lee, Assistant Attorney General Archer, Deputy Solicitor General Bator, Stuart A. Smith, Carleton D. Powell, and Kristina E. Harrigan.

      Carl D. Liggio argued the cause for respondent Arthur Young & Co. With him on the brief were John E. Matson and Richard I. Janvey. William Eldred Jackson argued the cause for respondent Amerada Hess Corp. With him on the brief were Russell E. Brooks, John C. Maloney, Jr., and Robert G. Morrillo.

        E. Barrett Prettyman, Jr., Arnold, C. Johnson, Walter A. Smith, Jr., William A. Wise, and Walter P. Zivley filed a brief for El Paso Co. as amicus curiae urging reversal.
      Briefs of amici curiae urging affirmance were filed for the American Institute of Certified Public Accountants by Kenneth J. Bialkin and Louis A. Craco; for Arthur Andersen & Co. et al. by Eldon Olson, Victor M. Earle III, Donald Dreyfus, Harris J. Amhowitz, and Kenneth H. Lang; for the Committee on Corporate Law Departments of the Association of the Bar of the City of New York by David Lasky; and for the Tax Executives Institute, Inc., by Timothy J. McCormally.

        Stephen A. Bokat filed a brief for the Chamber of Commerce of the United States as amicus curiae.

   Chief Justice Burger

delivered the opinion of the Court.

We granted certiorari to consider whether tax accrual workpapers prepared by a corporation’s independent certified public accountant in the course of regular financial audits are protected from disclosure in response to an Internal Revenue Service summons issued under §7602 of the Internal Revenue Code of 1954 (Code), 26 U. S. C. §7602.

i — H

A

Respondent Arthur Young & Co. is a firm of certified public accountants. As the independent auditor for respondent Amerada Hess Corp., Young is responsible for reviewing the financial statements prepared by Amerada as required by the federal securities laws. In the course of its review of these financial statements, Young verified Amerada’s statement of its contingent tax liabilities, and, in so doing, prepared the tax accrual workpapers at issue in this case. Tax accrual workpapers are documents and memoranda relating to Young’s evaluation of Amerada’s reserves for contingent tax liabilities. Such workpapers sometimes contain information pertaining to Amerada’s financial transactions, identify questionable positions Amerada may have taken on its tax returns, and reflect Young’s opinions regarding the validity of such positions. See infra, at 810-813.

In 1975 the Internal Revenue Service began a routine audit to determine Amerada’s corporate income tax liability for the tax years 1972 through 1974. When the audit revealed that Amerada had made questionable payments of $7,830 from a “special disbursement account,” the IRS instituted a criminal investigation of Amerada’s tax returns as well. In that process, pursuant to Code §7602, 26 U. S. C. §7602, the IRS issued an administrative summons to Young, which required Young to make available to the IRS all its Amerada files, including its tax accrual workpapers. Amerada instructed Young not to comply with the summons.

The IRS then commenced this enforcement action against Young in the United States District Court for the Southern District of New York. See 26 U. S. C. §7604. Amerada intervened, as permitted by 26 U. S. C. § 7609(b)(1). The District Court found that Young’s tax accrual workpapers were relevant to the IRS investigation within the meaning of § 7602 and refused to recognize an accountant-client privilege that would protect the workpapers. 496 F. Supp. 1152, 1156-1157 (1980). Accordingly, the District Court ordered the summons enforced.

B

A divided United States Court of Appeals for the Second Circuit affirmed in part and reversed in part. 677 F. 2d 211 (1982). The Court of Appeals majority agreed with the District Court that the tax accrual workpapers were relevant to the IRS investigation of Amerada, but held that the public interest in promoting full disclosure to public accountants, and in turn ensuring the integrity of the securities markets, required protection for the work that such independent auditors perform for publicly owned companies. Drawing upon Hickman v. Taylor, 329 U. S. 495 (1947), and Federal Rule of Civil Procedure 26(b)(3), the Court of Appeals fashioned a work-product immunity doctrine for tax accrual workpapers prepared by independent auditors in the course of compliance with the federal securities laws. Because the IRS had not demonstrated a sufficient showing of need to overcome the immunity and was not seeking to prove fraud on Amerada’s part, the Court of Appeals refused to enforce the summons insofar as it sought Young’s tax accrual workpapers.

One judge dissented from that portion of the majority opinion creating a work-product immunity for accountants’ tax accrual workpapers. The dissent viewed the statutory summons authority, 26 U. S. C. §7602, as reflecting a congressional decision in favor of the disclosure of such workpapers. The dissent also rejected the policy justifications asserted by the majority for an accountant work-product immunity, reasoning that such protection was not necessary to ensure the integrity of the independent auditor’s certification of a corporation’s financial statements.

We granted certiorari, 459 U. S. 1199 (1983). We affirm in part and reverse in part.

HH ► — l

Corporate financial statements are one of the primary-sources of information available to guide the decisions of the investing public. In an effort to control the accuracy of the financial data available to investors in the securities markets, various provisions of the federal securities laws require publicly held corporations to file their financial statements with the Securities and Exchange Commission. Commission regulations stipulate that these financial reports must be audited by an independent certified public accountant in accordance with generally accepted auditing standards. By examining the corporation’s books and records, the independent auditor determines whether the financial reports of the corporation have been prepared in accordance with generally accepted accounting principles. The auditor then issues an opinion as to whether the financial statements, taken as a whole, fairly present the financial position and operations of the corporation for the relevant period. See n. 13, infra.

An important aspect of the auditor’s function is to evaluate the adequacy and reasonableness of the corporation’s reserve account for contingent tax liabilities. This reserve account, known as the tax accrual account, the noncurrent tax account, or the tax pool, represents the amount set aside by the corporation to cover adjustments and additions to the corporation’s actual tax liability. Additional corporate tax liability may arise from a wide variety of transactions. The presence of a reserve account for such contingent tax liabilities reflects the corporation’s awareness of, and preparedness for, the possibility of an assessment of additional taxes.

The independent auditor draws upon many sources in evaluating the sufficiency of the corporation’s tax accrual account. Initially, the corporation’s books, records, and tax returns must be analyzed in light of the relevant Code provisions, Treasury Regulations, Revenue Rulings, and case law. The auditor will also obtain and assess the opinions, speculations, and projections of management with regard to unclear, aggressive, or questionable tax positions that may have been taken on prior tax returns. In exploring the tax consequences of certain transactions, the auditor often engages in a “worst-case” analysis in order to ensure that the tax accrual account accurately reflects the full extent of the corporation’s exposure to additional tax liability. From this conglomeration of data, the auditor is able to estimate the potential cost of each particular contingency, as well as the probability that the additional liability may arise.

The auditor’s tax accrual workpapers record this process of examination and analysis. Such workpapers may document the auditor’s interviews with corporate personnel, judgments on questions of potential tax liability, and suggestions for alternative treatments of certain transactions for tax purposes. Tax accrual workpapers also contain an overall evaluation of the sufficiency of the corporation’s reserve for contingent tax liabilities, including an item-by-item analysis of the corporation’s potential exposure to additional liability. In short, tax accrual workpapers pinpoint the “soft spots” on a corporation’s tax return by highlighting those areas in which the corporate taxpayer has taken a position that may, at some later date, require the payment of additional taxes.

I — I I — I HH

In seeking access to Young’s tax accrual workpapers, the IRS exercised the summons power conferred by Code § 7602, 26 U. S. C. §7602, which authorizes the Secretary of the Treasury to summon and “examine any books, papers, records, or other data which may be relevant or material” to a particular tax inquiry. The District Court and the Court of Appeals determined that the tax accrual workpapers at issue in this case satisfied the relevance requirement of § 7602, because they “might have thrown light upon” the correctness of Amerada’s tax return. Because the relevance of tax accrual workpapers is a logical predicate to the question whether such workpapers should be protected by some form of work-product immunity, we turn first to an evaluation of the relevance issue. We agree that such workpapers are relevant within the meaning of § 7602.

As the language of § 7602 clearly indicates, an IRS summons is not to be judged by the relevance standards used in deciding whether to admit evidence in federal court. Cf. Fed. Rule Evid. 401. The language “may be” reflects Congress’ express intention to allow the IRS to obtain items of even potential relevance to an ongoing investigation, without reference to its admissibility. The purpose of Congress is obvious: the Service can hardly be expected to know whether such data will in fact be relevant until they are procured and scrutinized. As a tool of discovery, the § 7602 summons is critical to the investigative and enforcement functions of the IRS, see United States v. Powell, 379 U. S. 48, 57 (1964); the Service therefore should not be required to establish that the documents it seeks are actually relevant in any technical, evi-dentiary sense.

That tax accrual workpapers are not actually used in the preparation of tax returns by the taxpayer or its own accountants does not bar a finding of relevance within the meaning of § 7602. The filing of a corporate tax return entails much more than filling in the blanks on an IRS form in accordance with undisputed tax principles; more likely than not, the return is a composite interpretation of corporate transactions made by corporate officers in the light most favorable to the taxpayer. It is the responsibility of the IRS to determine whether the corporate taxpayer in completing its return has stretched a particular tax concept beyond what is allowed. Records that illuminate any aspect of the return — such as the tax accrual workpapers at issue in this case — are therefore highly relevant to legitimate IRS inquiry. The Court of Appeals acknowledged this: “It is difficult to say that the assessment by the independent auditor of the correctness of positions taken by the taxpayer in his return would not throw ‘light upon’ the correctness of the return.” 677 F. 2d, at 219. We accordingly affirm the Court of Appeals’ holding that Young’s tax accrual workpapers are relevant to the IRS investigation of Amerada’s tax liability.

IV

A

We now turn to consider whether tax accrual workpapers prepared by an independent auditor in the course of a routine review of corporate financial statements should be protected by some form of work-product immunity from disclosure under §7602. Based upon its evaluation of the competing policies of the federal tax and securities laws, the Court of Appeals found it necessary to create a so-called privilege for the independent auditor’s workpapers.

Our complex and comprehensive system of federal taxation, relying as it does upon self-assessment and reporting, demands that all taxpayers be forthright in the disclosure of relevant information to the taxing authorities. Without such disclosure, and the concomitant power of the Government to compel disclosure, our national tax burden would not be fairly and equitably distributed. In order to encourage effective tax investigations, Congress has endowed the IRS with expansive information-gathering authority; § 7602 is the centerpiece of that congressional design. As we noted in United States v. Bisceglia, 420 U. S. 141, 146 (1975):

“The purpose of [§ 7602] is not to accuse, but to inquire. Although such investigations unquestionably involve some invasion of privacy, they are essential to our self-reporting system, and the alternatives could well involve far less agreeable invasions of house, business, and records.”

Similarly, we noted in United States v. Euge, 444 U. S. 707, 711 (1980):

“[T]his Court has consistently construed congressional intent to require that if the summons authority claimed is necessary for the effective performance of congres-sionally imposed responsibilities to enforce the tax Code, that authority should be upheld absent express statutory prohibition or substantial countervailing policies.”

While §7602 is “subject to the traditional privileges and limitations,” id., at 714, any other restrictions upon the IRS summons power should be avoided “absent unambiguous directions from Congress.” United States v. Bisceglia, supra, at 150. We are unable to discern the sort of “unambiguous directions from Congress” that would justify a judicially created work-product immunity for tax accrual workpapers summoned under §7602. Indeed, the very language of § 7602 reflects precisely the opposite: a congressional policy choice in favor of disclosure of all information relevant to a legitimate IRS inquiry. In light of this explicit statement by the Legislative Branch, courts should be chary in recognizing exceptions to the broad summons authority of the IRS or in fashioning new privileges that would curtail disclosure under §7602. Cf. Milwaukee v. Illinois, 451 U. S. 304, 315 (1981). If the broad latitude granted to the IRS by § 7602 is to be circumscribed, that is a choice for Congress, and not this Court, to make. See United States v. Euge, 444 U. S., at 712.

B

The Court of Appeals nevertheless concluded that “substantial countervailing policies,” id., at 711, required the fashioning of a work-product immunity for an independent auditor’s tax accrual workpapers. To the extent that the Court of Appeals, in its concern for the “chilling effect” of the disclosure of tax accrual workpapers, sought to facilitate communication between independent auditors and their clients, its remedy more closely resembles a testimonial accountant-client privilege than a work-product immunity for accountants’ workpapers. But as this Court stated in Couch v. United States, 409 U. S. 322, 335 (1973), “no confidential accountant-client privilege exists under federal law, and no state-created privilege has been recognized in federal cases.” In light of Couch, the Court of Appeals’ effort to foster candid communication between accountant and client by creating a self-styled work-product privilege was misplaced, and conflicts with what we see as the clear intent of Congress.

Nor do we find persuasive the argument that a work-product immunity for accountants’ tax accrual workpapers is a fitting analogue to the attorney work-product doctrine established in Hickman v. Taylor, 329 U. S. 495 (1947). The Hickman work-product doctrine was founded upon the private attorney’s role as the client’s confidential adviser and advocate, a loyal representative whose duty it is to present the client’s case in the most favorable possible light. An independent certified public accountant performs a different role. By certifying the public reports that collectively depict a corporation’s financial status, the independent auditor assumes a public responsibility transcending any employment relationship with the client. The independent public accountant performing this special function owes ultimate allegiance to the corporation’s creditors and stockholders, as well as to the investing public. This “public watchdog” function demands that the accountant maintain total independence from the client at all times and requires complete fidelity to the public trust. To insulate from disclosure a certified public accountant’s interpretations of the client’s financial statements would be to ignore the significance of the accountant’s role as a disinterested analyst charged with public obligations.

We cannot accept the view that the integrity of the securities markets will suffer absent some protection for accountants’ tax accrual workpapers. The Court of Appeals apparently feared that, were the IRS to have access to tax accrual workpapers, a corporation might be tempted to withhold from its auditor certain information relevant and material to a proper evaluation of its financial statements. But the independent certified public accountant cannot be content with the corporation’s representations that its tax accrual reserves are adequate; the auditor is ethically and professionally obligated to ascertain for himself as far as possible whether the corporation’s contingent tax liabilities have been accurately stated. If the auditor were convinced that the scope of the examination had been limited by management’s reluctance to disclose matters relating to the tax accrual reserves, the auditor would be unable to issue an unqualified opinion as to the accuracy of the corporation’s financial statements. Instead, the auditor would be required to issue a qualified opinion, an adverse opinion, or a disclaimer of opinion, thereby notifying the investing public of possible potential problems inherent in the corporation’s financial reports. Responsible corporate management would not risk a qualified evaluation of a corporate taxpayer’s financial posture to afford cover for questionable positions reflected in a prior tax return. Thus, the independent auditor’s obligation to serve the public interest assures that the integrity of the securities markets will be preserved, without the need for a work-product immunity for accountants’ tax accrual workpapers.

We also reject respondents’ position that fundamental fairness precludes IRS access to accountants’ tax accrual workpapers. Respondents urge that the enforcement of an IRS summons for accountants’ tax accrual workpapers permits the Government to probe the thought processes of its taxpayer citizens, thereby giving the IRS an unfair advantage in negotiating and litigating tax controversies. But if the SEC itself, or a private plaintiff in securities litigation, sought to obtain the tax accrual workpapers at issue in this case, they would surely be entitled to do so. In light of the broad congressional command of § 7602, no sound reason exists for conferring lesser authority upon the IRS than upon a private litigant suing with regard to transactions concerning which the public has no interest.

Congress has granted to the IRS “broad latitude to adopt enforcement techniques helpful in the performance of [its] tax collection and assessment responsibilities.” United States v. Euge, 444 U. S., at 716, n. 9. Recognizing the intrusiveness of demands for the production of tax accrual workpapers, the IRS has demonstrated administrative sensitivity to the concerns expressed by the accounting profession by tightening its internal requirements for the issuance of such summonses. See Internal Revenue Manual §4024.4 (CCH 1981). Although these IRS guidelines were not applicable during the years at issue in this case, their promulgation further refutes respondents’ fairness argument and reflects an administrative flexibility that reinforces our decision not to reduce irrevocably the §7602 summons power.

V

Beyond question it is desirable and in the public interest to encourage full disclosures by corporate clients to their independent accountants; if it is necessary to balance competing interests, however, the need of the Government for full disclosure of all information relevant to tax liability must also weigh in that balance. This kind of policy choice is best left to the Legislative Branch. Accordingly, the judgment of the Court of Appeals is affirmed in part and reversed in part, and the case is remanded for proceedings consistent with this opinion.

It is so ordered.

       See, e. g., Securities Exchange Act of 1934, §§ 12(b)(1)(J)-(L), 48 Stat. 892, as redesignated, 78 Stat. 565, 15 U. S. C. §§ 78£(b)(1)(J)-(L); Regulation S-X, 17 CFR § 210 et seq. (1983). See also n. 5, infra.

       Section 7602 of the Code, 26 U. S. C. § 7602, provides as follows:
      “For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, or collecting any such liability, the Secretary is authorized—
      “(1) To examine any books, papers, records, or other data which may be relevant or material to such inquiry;
      “(2) To summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform the act, or any other person the Secretary may deem proper, to appear before the Secretary at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and
      “(3) To take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry.”

       Section 7604 of the Code, 26 U. S. C. § 7604, provides:
      “If any person is summoned under the internal revenue laws to appear, to testify, or to produce books, papers, records, or other data, the United States district court for the district in which such person resides or is found shall have jurisdiction by appropriate process to compel such attendance, testimony, or production of books, papers, records, or other data.”

       The IRS summons served upon Young sought the production of records concerning the business transactions and affairs of Young’s client, Amerada. Accordingly, under Code § 7609(a)(1), 26 U. S. C. § 7609(a)(1), Amerada was entitled to notice of the IRS summons. Section 7609(b)(1) provides that “any person who is entitled to notice of a summons under subsection (a) shall have the right to intervene in any proceeding with respect to the enforcement of such summons under section 7604.”

       See Securities Act of 1933, Schedule A (25)-(27), 48 Stat. 88, 15 U. S. C. § 77aa (filing of audited financial statement prior to registration of new stock issue); Securities Exchange Act of 1934, §§ 12(b)(1)(J)-(L), 48 Stat. 892, as redesignated, 78 Stat. 565,15 U. S. C. §§ 78((b)(1)(J)-(L) (filing of audited financial statement prior to listing securities on an exchange); Securities Exchange Act of 1934, §§ 13(a)(2), 13(b), 48 Stat. 894, as amended, 15 U. S. C. §§78m(a)(2), 78m(b); 17 CFR §§249.310, 249.460 (1983) (filing of annual reports); Securities Exchange Act of 1934, § 14, 48 Stat. 895, as amended, 15 U. S. C. § 78n; Schedule 14A, Item 15, 17 CFR §240.14a-101 (1983) (filing of audited financial statement in connection with proxy and information statements).

       Regulation S-X, 17 CFR § 210 et seq. (1983), prescribes the qualifications of accountants and the contents of the accountants’ reports that must be submitted with corporate financial statements. In particular, 17 CFR §210.1-02(d) (1983) requires that the financial statements of a public corporation must be audited by an accountant “in accordance with generally accepted auditing standards.” “Generally accepted auditing standards” are promulgated by a committee of the public accounting profession’s national organization, the American Institute of Certified Public Accountants (AICPA). See 1 AICPA Professional Standards (CCH) § 150.02 (1972).

       See 1 AICPA, Statement on Auditing Standards § 110.01 (1972). Promulgated by the accounting profession’s Financial Accounting Standards Board, “generally accepted accounting principles” are the conventions, rules, and procedures that define accepted accounting practices. See W. Meigs, E. Larsen, & R. Meigs, Principles of Auditing 25-26 (5th ed. 1973); H. Stettler, Auditing Principles 12-16 (5th ed. 1982).

       See 1 AICPA Professional Standards (CCH) § 509 (1974).

       For example, the characterization of the proceeds of a sale as capital gain instead of ordinary income, the claiming of an investment tax credit, and the attribution of a transaction to a future tax year are decisions requiring judgment calls in gray areas of the Code, any one of which might result in a recomputation of the corporation’s outstanding tax liability.

       In United States v. Powell, 379 U. S. 48 (1964), the Court refused to impose a probable-cause requirement in connection with the enforcement of an IRS summons under § 7602. Instead, the Court held that the IRS need show only “that the investigation will be conducted pursuant to a legitimate purpose, that the inquiry may be relevant to the purpose, that the information sought is not already within the Commissioner’s possession, and that the administrative steps required by the Code have been followed . . . .” Id., at 57-58 (emphasis added).

       The relevance standard employed by the Second Circuit — whether the documents at issue “might have thrown light upon the correctness of the return” — appears to be widely accepted among the Courts of Appeals. See, e. g., United States v. Wyatt, 637 F. 2d 293, 300 (CA5 1981); United States v. Turner, 480 F. 2d 272, 279 (CA7 1973); United States v. Ryan, 455 F. 2d 728, 733 (CA9 1972); United States v. Egenberg, 443 F. 2d 512, 515-516 (CA3 1971); Foster v. United States, 265 F. 2d 183, 187 (CA2), cert. denied, 360 U. S. 912 (1959). In United States v. Harrington, 388 F. 2d 520, 524 (1968), the Second Circuit amplified this test by stating that “the ‘might’ in the articulated standard, ‘might throw light upon the correctness of the return,’ is... an indication of a realistic expectation rather than an idle hope that something may be discovered.” But in United States v. Coopers & Lybrand, 550 F. 2d 615 (1977), the Court of Appeals for the Tenth Circuit held that tax accrual workpapers not prepared in connection with the filing of a corporate tax return were not relevant within the meaning of § 7602.

       The petition for certiorari did not question the relevancy of the tax accrual workpapers, and respondents have not filed a cross-petition raising the issue. Respondents have, however, argued before this Court that the Court of Appeals erred in holding that Young’s tax accrual workpapers were relevant to the IRS investigation of Amerada within the meaning of § 7602. Respondents were clearly entitled to do so, for our precedents establish that a prevailing party may urge any ground in support of the judgment, whether or not that ground was relied upon or even considered by the court below. See, e. g., United States v. New York Telephone Co., 434 U. S. 159, 166, n. 8 (1977); Dandridge v. Williams, 397 U. S. 471, 475-476, n. 6 (1970).

       An unqualified, opinion, the most favorable report an auditor may give, represents the auditor’s finding that the company’s financial statements fairly present the financial position of the company, the results of its operations, and the changes in its financial position for the period under audit, in conformity with consistently applied generally accepted accounting principles. See 1 AICPA, Statement on Auditing Standards §§ 510, 511.01 (1973). Alternatively, the auditor may give a qualified, opinion, which states that the financial statements are fairly presented except for, or subject to, a departure from generally accepted accounting principles, a change in accounting principles, or a material uncertainty. Id., § 512. An adverse opinion is a reflection of the auditor’s determination that the corporation’s financial statements do not fairly present the financial position, results of operations, or changes in financial position of the company in conformity with generally accepted accounting principles; an adverse opinion is issued when the auditor determines that the corporation has materially misstated certain items on its financial statements. Id., § 513. Finally, a disclaimer of opinion expresses the auditor’s inability to draw a conclusion as to the accuracy of the corporate financial records. A disclaimer of opinion is generally issued when the auditor lacks sufficient information about the financial records to issue an overall opinion. Id., § 514. See generally A. Arens & J. Loebbecke, Auditing: An Integrated Approach 643-660 (1976).

       The inclusion in an audited financial statement of anything less than an unqualified opinion could send signals to stockholders, creditors, potential investors, and others that the independent auditor has been unable to give the corporation an unqualified bill of financial health. Such a public auditor’s opinion could well have serious consequences for the corporation and its shareholders.

       Indeed, rather than protecting the investing public by ensuring the accuracy of corporate financial records, insulation of tax accrual workpapers from disclosure might well undermine the public’s confidence in the independent auditing process. The SEC requires the filing of audited financial statements in order to obviate the fear of loss from reliance on inaccurate information, thereby encouraging public investment in the Nation’s industries. It is therefore not enough that financial statements be accurate; the public must also perceive them as being accurate. Public faith in the reliability of a corporation’s financial statements depends upon the public perception of the outside auditor as an independent professional. Endowing the workpapers of an independent auditor with a work-product immunity would destroy the appearance of auditor’s independence by creating the impression that the auditor is an advocate for the client. If investors were to view the auditor as an advocate for the corporate client, the value of the audit function itself might well be lost. See generally Arens & Loebbecke, supra, at 55-58.

       See, e. g., Securities Act of 1933, § 19, 48 Stat. 85, 15 U. S. C. § 77s(b) (for purposes of all “necessary and proper” investigations, SEC is empowered to “require the production of any books, papers, or other documents which the Commission deems relevant or material to the inquiry”); Securities Exchange Act of 1934, § 21, 48 Stat. 899, 15 U. S. C. § 78u(b) (same); Fed. Rule Civ. Proc. 26(b)(1) (parties may obtain discovery of “any matter, not privileged, which is relevant to the subject matter involved in the pending action”).

       The new IRS guidelines provide that access may be had to accountants’ tax accrual workpapers only in “unusual circumstances” and only as a “collateral source for factual data.” The guidelines require the prior written approval of the Chief of the Examination Division of the IRS before an examining agent may request tax accrual workpapers; in addition, they state that the examiner should first take all reasonable means to secure the information from the corporation itself before issuing a summons to the independent auditor.