source: Caselaw Access Project

author: Justice Stevens Justice Kennedy,

license: Public Domain

text:
    GOLDEN STATE TRANSIT CORP. v. CITY OF LOS ANGELES
    No. 88-840.
    Argued October 3, 1989
    Decided December 5, 1989

      Stevens, J., delivered the opinion of the Court, in which Brennan, White, Marshall, Blackmun, and Scalia, JJ., joined. Kennedy, J., filed a dissenting opinion, in which Rehnquist, C. J., and O’Connor, J., joined, post, p. 113.

      Zachary D. Fasman argued the cause and filed briefs for petitioner.

      John F. Haggerty argued the cause and filed a brief for respondent.

        Kenneth S. Getter, Andrew J. Pincus, Stuart E. Abrams, Daniel R. Barney, Robert Digges, Jr., Laurie T. Baulig, and WilliamS. Busker filed a brief for the American Trucking Associations, Inc., as amicus curiae urging reversal.

        Benna Ruth Solomon and Charles Rothfeld filed a brief for the National League of Cities et al. as amici curiae.

   Justice Stevens

delivered the opinion of the Court. '

In Golden State Transit Corp. v. Los Angeles, 475 U. S. 608 (1986) (Golden State I), we held that the respondent city-had violated federal law by conditioning the renewal of petitioner’s taxicab franchise on settlement of a pending labor dispute between petitioner and its union. On remand, the District Court enjoined the city to reinstate the franchise but concluded that 42 U. S. C. § 1983 (1982 ed.) did not authorize an award of compensatory damages. The court reasoned that “the supremacy clause does not create individual rights that may be vindicated in an action for damages under Section 1983,” 660 F. Supp. 571, 578 (CD Cal. 1987), and that even though the city’s conduct was pre-empted by the National Labor Relations Act (NLRA), 49 Stat. 449, as amended, 29 U. S. C. § 151 et seq. (1982 ed. and Supp. V), a § 1983 cause of action did not lie because there had been no “direct violation” of the statute and because the Act’s comprehensive enforcement scheme precluded resort to § 1983. The Court of Appeals affirmed. 857 F. 2d 631 (CA9 1988). We granted certiorari limited to the question whether the NLRA granted petitioner rights enforceable under § 1983. 489 U. S. 1010 (1989).

I

Section 1983 provides a federal remedy for “the deprivation of any rights, privileges, or immunities secured by the Constitution and laws.” As the language of the statute plainly indicates, the remedy encompasses violations of federal statutory as well as constitutional rights. We have repeatedly held that the coverage of the statute must be broadly construed. See, e. g., Felder v. Casey, 487 U. S. 131, 139 (1988); Maine v. Thiboutot, 448 U. S. 1, 4 (1980); cf. United States v. Price, 383 U. S. 787, 801 (1966). It provides a remedy “against all forms of official violation of federally protected rights.” Monell v. New York City Dept. of Social Services, 436 U. S. 658, 700-701 (1978).

A determination that § 1983 is available to remedy a statutory or constitutional violation involves a two-step inquiry. First, the plaintiff must assert the violation of a federal right. See Middlesex County Sewerage Authority v. National Sea Clammers Assn., 453 U. S. 1, 19 (1981). Section 1983 speaks in terms of “rights, privileges, or immunities,” not violations of federal law. In deciding whether a federal right has been violated, we have considered whether the provision in question creates obligations binding on the governmental unit or rather “does no more than express a congressional preference for certain kinds of treatment. ” Pennhurst State School and Hospital v. Halderman, 451 U. S. 1, 19 (1981). The interest the plaintiff asserts must not be “too vague and amorphous” to be “beyond the competence of the judiciary to enforce.” Wright v. Roanoke Redevelopment and Housing Authority, 479 U. S. 418, 431-432 (1987). We have also asked whether the provision in question was “intended] to benefit” the putative plaintiff. Id., at 430; see also id., at 433 (O’Connor, J., dissenting) (citing Cort v. Ash, 422 U. S. 66, 78 (1975)).

Second, even when the plaintiff has asserted a federal right, the defendant may show that Congress “specifically foreclosed a remedy under § 1983,” Smith v. Robinson, 468 U. S. 992, 1005, n. 9 (1984), by providing a “comprehensive enforcement mechanis[m] for protection of a federal right,” id., at 1003; see also Middlesex County Sewerage Authority v. National Sea Clammers Assn., 453 U. S. 1 (1981); Preiser v. Rodriguez, 411 U. S. 475 (1973). The availability of administrative mechanisms to protect the plaintiff’s interests is not necessarily sufficient to demonstrate that Congress intended to foreclose a § 1983 remedy. See Wright, 479 U. S., at 425-428; cf. Rosado v. Wyman, 397 U. S. 397, 420 (1970). Rather, the statutory framework must be such that “[allowing a plaintiff” to bring a § 1983 action “would be inconsistent with Congress’ carefully tailored scheme.” Smith, 468 U. S., at 1012. The burden to demonstrate that Congress has expressly withdrawn the remedy is on the defendant. See Wright, 479 U. S., at 423; National Sea Clammers, 453 U. S., at 21, n. 31. <<fWe do not lightly conclude that Congress intended to preclude reliance on § 1983 as a remedy’ for the deprivation of a federally secured right.” Wright, 479 U. S., at 423-424 (quoting Smith v. Robinson, 468 U. S., at 1012).

Respondent argues that the Supremacy Clause, of its own force, does not create rights enforceable under § 1983. We agree. “[T]hat clause is not a source of any federal rights”; it “ ‘seeure[s]’ federal rights by according them priority whenever they come in conflict with state law.” Chapman v. Houston Welfare Rights Organization, 441 U. S. 600, 613 (1979); see also Swift & Co. v. Wickham, 382 U. S. Ill (1965). Given the variety of situations in which preemption claims may be asserted, in state court and in federal court, it would obviously be incorrect to assume that a federal right of action pursuant to § 1983 exists every time a federal rule of law pre-empts state regulatory authority. Conversely, the fact that a federal statute has pre-empted certain state action does not preclude the possibility that the same federal statute may create a federal right for which § 1983 provides a remedy.

In all cases, the availability of the § 1983 remedy turns on whether the statute, by its terms or as interpreted, creates obligations “sufficiently specific and definite” to be within “the competence of the judiciary to enforce,” Wright, 479 U. S., at 432, is intended to benefit the putative plaintiff, and is not foreclosed “by express provision or other specific evidence from the statute itself,” id., at 423.

II

The nub of the controversy between the parties is whether the NLRA creates “rights” in labor and management that are protected against governmental interference. The city does not argue, nor could it, that a § 1983 action is precluded by the existence of a comprehensive enforcement scheme. Although the National Labor Relations Board (NLRB or Board) has exclusive jurisdiction to prevent and remedy unfair labor practices by employers and unions, it has no authority to address conduct protected by the NLRA against governmental interference. There is thus no comprehensive enforcement scheme for preventing state interference with federally protected labor rights that would foreclose the § 1983 remedy. Nor can there be any substantial question that our holding in Golden State I that the city’s conduct was pre-empted was within the competence of the judiciary to enforce. Rather, the city argues that it cannot be held liable under § 1983 because its conduct did not violate any rights secured by the NLRA. On the basis of our previous cases, we reject this argument. We agree with petitioner that it is the intended beneficiary of a statutory scheme that prevents governmental interference with the collective-bargaining process and that the NLRA gives it rights enforceable against governmental interference in an action under § 1983.

In the NLRA, Congress has not just “occupied the field” with legislation that is passed solely with the interests of the general public in mind. In such circumstances, when congressional pre-emption benefits particular parties only as an incident of the federal scheme of regulation, a private damages remedy under § 1983 may not be available. The NLRA, however, creates rights in labor and management both against one another and against the State. By its terms, the Act confers certain rights “generally on employees and not merely as against the employer.” Hill v. Florida ex rel. Watson, 325 U. S. 538, 545 (1945) (Stone, J., concurring in part and dissenting in part); see also Motor Coach Employees v. Missouri, 374 U. S. 74 (1963); Motor Coach Employees v. Wisconsin Employment Relations Bd., 340 U. S. 383 (1951); Automobile Workers v. O’Brien, 339 U. S. 454, 458 (1950). We have thus stated that “[i]f the state law regulates conduct that is actually protected by federal law, . . . pre-emption follows ... as a matter of substantive right.” Brown v. Hotel Employees, 468 U. S. 491, 503 (1984). The rights protected against state interference, moreover, are not limited to those explicitly set forth in § 7 as protected against private interference. “The NLRA . . . has long been understood to protect a range of conduct against state but not private interference.” Wisconsin Dept. of Industry v. Gould Inc., 475 U. S. 282, 290 (1986). See also New York Telephone Co. v. New York Dept. of Labor, 440 U. S. 519, 552 (1979) (Powell, J., dissenting) (“What Congress left unregulated is as important as the regulations that it imposed. It sought to leave labor and management essentially free to bargain for an agreement to govern their relationship”). And, contrary to the city’s contention, “‘[r]esort to economic weapons should more peaceful measures not avail’ is the right of the employer as well as the employee.” Machinists v. Wisconsin Employment Relations Comm’n, 427 U. S. 132, 147 (1976) (quoting American Ship Building Co. v. NLRB, 380 U. S. 300, 317 (1965)).

Golden State I was based on the doctrine that is identified with our decision in Machinists v. Wisconsin Employment Relations Comm’n, supra. That doctrine is fundamentally different from the rule of San Diego Building Trades Council v. Garmon, 359 U. S. 236 (1959), that state jurisdiction over conduct arguably protected or prohibited by the NLRA is pre-empted in the interest of maintaining uniformity in the administration of the federal regulatory jurisdiction. See Trainmen v. Jacksonville Terminal Co., 394 U. S. 369, 382, n. 17 (1969). In Machinists, we reiterated that Congress intended to give parties to a collective-bargaining agreement the right to make use of “economic weapons,” not explicitly set forth in the Act, free of governmental interference. 427 U. S., at 150. “[T]he congressional intent in enacting the comprehensive federal law of labor relations” required that certain types of peaceful conduct “must be free of regulation.” Id., at 155. The Machinists rule creates a free zone from which all regulation, “whether federal or State,” id., at 153, is excluded.

The city’s contrary argument, that the NLRA does not secure rights against the State because the duties of the State are not expressly set forth in the text of the statute, is not persuasive. We have held, based on the language, structure, and history of the NLRA, that the Act protects certain rights of labor and management against governmental interference. While it is true that the rule of the Machinists case is not set forth in the specific text of an enumerated section of the NLRA, that might well also be said with respect to any number of rights or obligations that we have found implicit in a statute’s language. A rule of law that is the product of judicial interpretation of a vague, ambiguous, or incomplete statutory provision is no less binding than a rule that is based on the plain meaning of a statute. The violation of a federal right that has been found to be implicit in a statute’s language and structure is as much a “direct violation” of a right as is the violation of a right that is clearly set forth in the text of the statute.

The Machinists rule is not designed — as is the Garmon rule — to answer the question whether state or federal regulations should apply to certain conduct. Rather, it is more akin to a rule that denies either sovereign the authority to abridge a personal liberty. As much as the welfare benefits in Maine v. Thiboutot, 448 U. S. 1 (1980), and the right to a prescribed portion of rent in Wright v. Roanoke Redevelopment and Housing Authority, 479 U. S. 418 (1987), the interest in being free of governmental regulation of the “peaceful methods of putting economic pressure upon one another,” Machinists, 427 U. S., at 154, is a right specifically conferred on employers and employees by the NLRA. Of course, Congress has the authority to retract the statutorily conferred liberty at will, just as the State in Wright and Thiboutot could relieve itself of federal obligations by declining federal funds. Cf. Guardians Assn. v. Civil Service Comm’n of New York City, 463 U. S. 582, 596 (1983) (opinion of White, J.); Rosado v. Wyman, 397 U. S., at 420. But while the rule remains in effect, it is a guarantee of freedom for private conduct that the State may not abridge.

As we held in Golden State I, respondent’s refusal to renew petitioner’s franchise violated petitioner’s right to use permissible economic tactics to withstand the strike. Because the case does not come within any recognized exception from the broad remedial scope of § 1983, we reverse the judgment of the Court of Appeals. The case is remanded for further proceedings consistent with this opinion.

It is so ordered.

Justice Kennedy,

with whom The Chief Justice and Justice O’Connor join, dissenting.

The majority concludes that 42 U. S. C. § 1983 (1982 ed.) requires the city of Los Angeles to pay compensatory damages to Golden State Transit Corp. for violating the company’s right under the National Labor Relations Act (NLRA), 29 U. S. C. § 151 et seq. (1982 ed. and Supp. V), to employ economic weapons in collective bargaining without state interference. With all respect, I dissent. Although I agree with much of the majority’s discussion of both § 1983 and the NLRA, I do not consider these statutes to provide Golden State a remedy.

Our decision in Golden State Transit Corp. v. Los Angeles, 475 U. S. 608 (1986) (Golden State I), held that the city had no power to condition the renewal of Golden State’s operating franchise upon the settlement of the company’s labor dispute because imposing such a condition would interfere with the NLRA. Although the city’s lack of power in a sense immunized Golden State from interference by the city, in my view the NLRA did not secure this immunity within the meaning of § 1983. The District Court, however, had jurisdiction to enjoin the city’s pre-empted action under other federal statutes.

I

From the earliest cases interpreting our constitutional law to the most recent ones, we have acknowledged that a private party can assert an immunity from state or local regulation on the ground that the Constitution or a federal statute, or both, allocate the power to enact the regulation to the National Government, to the exclusion of the States. A litigant has standing to contend that proper allocation of power requires a particular outcome in a dispute, and this is so whether the dispute is between individual parties, see Gibbons v. Ogden, 9 Wheat. 1 (1824); Willson v. Black Bird Creek Marsh Co., 2 Pet. 245 (1829); Hauenstein v. Lynham, 100 U. S. 483 (1880), or the dispute involves a State or its subdivisions, see Cooley v. Board of Wardens of Port of Philadelphia, 12 How. 299 (1852); City of Burbank v. Lockheed Air Terminal, Inc., 411 U. S. 624 (1973); Ray v. Atlantic Richfield Co., 435 U. S. 151 (1978). The injured party does not need § 1983 to vest in him a right to assert that an attempted exercise of jurisdiction or control violates the proper distribution of powers within the federal system.

I submit that the Court should not interpret § 1983 to give a cause of action for damages when the only wrong committed by the State or its local entities is misapprehending the precise location of the boundaries between state and federal power. The dispute over the taxicab franchise involves no greater transgression than this. The NLRA, through preemption, did create a legal interest in Golden State, an interest which the city infringed, but it does not follow that Golden State may obtain relief under § 1983.

1 — 1 h-H

The NLRA creates two relations which encompass different legal interests. The statute creates the first relation between Golden State and the striking union. The statute establishes duties that Golden State and the union have to each other and, as correlatives of these duties, rights that they have against each other. Under the NLRA, for example, each has a duty to bargain in good faith and, as correlatives of these duties, each has a right to have the other bargain in good faith. See 29. U. S. C. § 158(d) (1982 ed.). The Court of Appeals was correct to determine that the allegations oi injury in this case do not implicate the rights and duties which flow from this first legal relation. See 857 F. 2d 631, 635 (CA9 1988).

The NLRA also creates a jural relation between the city and Golden State. Although the NLRA does not provide in any detailed way how a city should act when renewing an operating franchise, the statute does have a pre-emptive effect under the Supremacy Clause. When we analyzed this preemption in Machinists v. Wisconsin Employment Relations Comm’n, 427 U. S. 132 (1976), we ruled that, although the NLRB affords the States the power to regulate activities within its peripheral concern, id., at 137, the States have no such power or authority to influence the substantive terms of collective-bargaining agreements, id., at 147-151. Applying Machinists in Golden State I, we held that the city has no power to interfere with the NLRA by conditioning Golden State’s franchise renewal upon settlement of a labor dispute. See 475 U. S., at 618.

The city’s lack of power gives rise to a correlative legal interest in Golden State that we did not discuss in Golden State I. The majority has chosen to call the interest a right. See ante, at 112. I would prefer to follow the familiar Hohfeldian terminology and say that Golden State has an immunity from the city’s interference with the NLRA. See Hohfeld, Some Fundamental Legal Conceptions as Applied in Judicial Reasoning, 23 Yale L. J. 16, 55-58 (1913) (defining the correlative of no power as an immunity). This terminology best reflects Congress’ intent to create the free zone of bargaining we described in Machinists. See 427 U. S., at 153.

1 — I HH HH

Section 1983 provides a federal remedy only for “the deprivation of any rights, privileges, or immunities secured by the Constitution and laws.” The case before us today asks how §1983 applies to claims of pre-emption. We have not answered this question in other decisions, but we have ruled that “an allegation of incompatibility between federal and state statutes and regulations does not, in itself, give rise to a claim ‘secured by the Constitution’ within the meaning of [28 U. S. C.] § 1343” or, as the majority agrees, within the meaning of § 1983. Chapman v. Houston Welfare Rights Organization, 441 U. S. 600, 615 (1979) (discussing 28 U. S. C. § 1343(3) (1976 ed.), the jurisdictional counterpart to § 1983). The pre-emptive federal statute, instead, must secure a right, privilege, or immunity in order for § 1983 to provide a remedy. 441 U. S., at 615.

The preceding analysis shows that Golden State has an immunity that arose out of a relation created by the NLRA. Unlike the majority, however, I do not think that the NLRA secures this immunity as contemplated by Chapman. Section 1983 uses the word “secure” to mean “protect” or “make certain,” Hague v. Committee for Industrial Organization, 307 U. S. 496, 526-527 (1939) (opinion of Stone, J.), in the sense of securing to “any person, any individual rights,” Carter v. Greenhow, 114 U. S. 317, 322 (1885). The section thus distinguishes secured rights, privileges, and immunities from those interests merely resulting from the allocation of power between the State and Federal Governments. Representative Shellabarger, who sponsored the bill that became § 1983, see Cong. Globe, 42d Cong., 1st Sess., 317 (1871), recognized and explained the distinction as follows:

“Most of the provisions of the Constitution, which restrain and directly relate to the States, such as those in the tenth section of first article, that ‘no State shall make a treaty,’ ‘grant letters of marque,’ ‘coin money,’ ‘emit bills of credit,’ &c., relate to the divisions of the political powers of the States and General Governments. They do not relate directly to the rights of persons within the States and as between the States and such persons therein. These prohibitions upon the political powers of the States are all of such nature that they can be, and even have been, when the occasion arose, enforced by the courts of the United States declaring void all State acts of encroachment on Federal powers. Thus, and thus sufficiently, has the United States ‘enforced’ those provisions of the Constitution. But there are some that are not of this class. These are where the court secures the rights or the liabilities of persons within the States, as between such persons and the States.” Id., at App. 69.

Representative Shellabarger spoke only of interests secured by the Constitution. Our cases in recent years have expanded the scope of § 1983 beyond that contemplated by the sponsor of the statute and have identified interests secured by various statutory provisions as well. See, e. g., Wright v. Roanoke Redevelopment and Housing Authority, 479 U. S. 418, 431-432 (1987) (right to particular calculation of rent in public housing secured by the Brooke Amendment to the United States Housing Act of 1937, 42 U. S. C. § 1437a (1982 ed. and Supp. V)); Maine v. Thiboutot, 448 U. S. 1, 2-3 (1980) (right to benefits secured by the Social Security Act, 42 U. S. C. § 602(a)(7) (1976 ed.)). None of these secured statutory interests, however, has been the sole result of a statute’s pre-emptive effect, as has Golden State’s immunity from the city’s interference.

Pre-emption concerns the federal structure of the Nation rather than the securing of rights, privileges, and immunities to individuals. Although the majority finds the Machinists pre-emption doctrine “akin to a rule that denies either sovereign the authority to abridge a personal liberty,” ante, at 112, and describes the interest of being free of governmental regulation as a right specifically conferred by the NLRA on employers and employees, ibid., I cannot agree that federal law secures this legal interest within the meaning of § 1983.

Golden State does not and cannot contend that a federal statute protects it from the city’s primary conduct apart from its governmental character. Machinists’ pre-emption, as noted above, rests upon the allocation of power rather than upon individual rights, privileges, or immunities. See Machinists, 427 U. S., at 137, 147-151. The dispute between Golden State and the city exists because the Federal Government has exercised its power under the Commerce Clause to regulate Golden State’s labor relations under the NLRA and thus has deprived the city of the power to effect its own regulations of these relations. Although our recent decisions in Wright and Thiboutot suggest that Congress could secure individual interests in Golden State through a statute, Congress did not secure them in the NLRA.

Golden State’s immunity, as defined in Machnists, has nothing to do with the substance of the requirement imposed on its collective bargaining. The immunity, for instance, would not prevent the United States from exercising its power under the Commerce Clause to authorize the actions taken by the city. The immunity, rather, permits the company to object only that the wrong sovereign has attempted to regulate its labor relations. Golden State’s immunity does not benefit the company as an individual, but instead results from the Supremacy Clause’s separate protection of the federal structure and from the division of power in the constitutional system. Federal law, as such, does not secure this immunity to Golden State within the meaning of § 1983.

The case before us differs from one in which the governmental character of the action itself constitutes only an element in the primary wrong that the injured party seeks to vindicate under the Constitution. See, e. g., Monroe v. Pape, 365 U. S. 167 (1961). So too is this case unlike statutory cases such as Maine v. Thiboutot. The plaintiffs in Thiboutot sued state officials under §1983 for withholding welfare benefits in violation of the Social Security Act, in particular, 42 U. S. C. § 602(a)(7) (1976 ed.). They claimed, in so many words, that the Social Security Act imposed upon the defendants a duty to the plaintiffs to pay the benefits and, as correlative of this duty, gave the plaintiffs a right against the defendants to have benefits paid. 448 U. S., at 2-3. The Court’s expansive interpretation of §1983 allowed the plaintiffs to recover damages for the deprivation of this statutory right. Id., at 4. The Thiboutot case, however, provides no help to Golden State. The NLRA affords Golden State no counterpart to the plaintiffs’ individual interests in the Social Security benefits.

IV

By concluding that Golden State may not obtain relief under § 1983, we would not leave the company without a remedy. Despite what one might think from the increase of litigation under the statute in recent years, § 1983 does not provide the exclusive relief that the federal courts have to offer. When we held in Golden State I that the company could survive summary judgment on a Machinists doctrine pre-emption claim, we did not purport to make a ruling with respect to § 1983 and did not even cite the provision. Our omission of any discussion of § 1983 perhaps stemmed from a recognition that plaintiffs may vindicate Machinists preemption claims by seeking declaratory and equitable relief in the federal district courts through their powers under federal jurisdictional statutes. See 28 U. S. C. §1331 (1982 ed.); 28 U. S. C. §2201; 28 U. S. C. §2202 (1982 ed.); New York Telephone Co. v. New York Dept. of Labor, 440 U. S. 519, 525 (1979) (plaintiff sought declaratory and injunctive relief on a Machinists pre-emption claim). These statutes do not limit jurisdiction to those who can show the deprivation of a right, privilege, or immunity secured by federal law within the meaning of § 1983. Because Golden State asked for such relief in its complaint, see App. 6, 7, 17, the District Court had jurisdiction to enter the injunction on behalf of the company, but not for the reasons that it stated. As it is my view that Golden State does not have a claim under § 1983, I dissent.

       Section 1983 provides:
      “Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.”

       “As the City correctly notes, it did not, and could not, violate the NLRA, or Section 8(d) specifically, since it was not a party to the collective bargaining agreement between Golden State and its Teamster drivers but rather was merely a collateral third party to the collective bargaining process. Section 8(d) of the NLRA does not create rights and obligations with respect to third parties who are not parties to a collective bargaining agreement but who, in some way, come in contact with the collective bargaining process. Rather, Section 8(d) defines the concept of collective bargaining and the obligations of the parties engaged in collective bargaining, and, in the language at issue in this case, states that the failure to make a concession during collective bargaining negotiations is not an unfair labor practice. Thus, while the Supreme Court in this case relied on Section 8(d) in holding that the City’s action was preempted because it would have the effect of forcing a bargaining concession by Golden State, it would strain the language and purpose of the NLRA and misconstrue the import of the Supreme Court opinion to find that the City ‘directly violated’ Section 8(d) solely by virtue of the fact that it took some action preempted by that section.” 660 F. Supp., at 578-579.

       Article VI, cl. 2, of the United States Constitution provides:
      “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”

        Chapman involved the predecessor to 28 U. S. C. § 1343(a)(3) (1982 ed)., the jurisdictional counterpart to § 1983, which provides jurisdiction over civil actions “[t]o redress the deprivation, under color of any State law, statute, ordinance, regulation, custom or usage, of any right, privilege or immunity secured by the Constitution of the United States or by any Act of Congress providing for equal rights of citizens or of all persons within the jurisdiction of the United States.” We observed that if the first prepositional phrase, referring to constitutional claims, included rights secured solely by the Supremacy Clause, the additional language, providing jurisdiction for claims based on Acts of Congress providing for equal rights of citizens, would have been superfluous. See Chapman, 441 U. S., at 615. In order to give meaning to the entire statute, we held that the reference to constitutional claims therefore did not include rights secured solely by the Supremacy Clause. Ibid. The same is true with respect to § 1983. If the Supremacy Clause itself were understood to secure constitutional rights, the reference to “and laws” would have been wholly unnecessary. It follows that a Supremacy Clause claim based on a statutory violation is enforceable under § 1983 only when the statute creates “rights, privileges, or immunities” in the particular plaintiff.

       The Court of Appeals was thus mistaken in ruling that because the NLRB has exclusive jurisdiction to redress violations of the NLRA by labor and management, the federal courts do not have jurisdiction to address claims of governmental interference with interests protected by the Act. Our cases have repeatedly stressed the distinctions between the two types of claims, see Brown v. Hotel Employees, 468 U. S. 491, 503 (1984); Machinists v. Wisconsin Employment Relations Comm’n, 427 U. S. 132, 145, n. 6 (1976); Trainmen v. Jacksonville Terminal Co., 394 U. S. 369, 382, n. 17 (1969).

       Section 1(b) of the Taft-Hartley Act, 29 U. S. C. § 141(b) (1982 ed.), states in pertinent part:
      “It is the purpose and policy of this chapter ... to prescribe the legitimate rights of both employees and employers in their relations affecting commerce . . .

        Garmon pre-emption divests a state court of jurisdiction over actions where the state law prohibits the same conduct that is arguably prohibited by the NLRA, see Sears, Roebuck & Co. v. Carpenters, 436 U. S. 180, 193-198 (1978); Belknap, Inc. v. Hale, 463 U. S. 491, 510 (1983), and actions involving conduct arguably protected under the NLRA provided the injured party has a means of bringing the dispute before the Board, see Longshoremen v. Davis, 476 U. S. 380, 393, n. 10 (1986). This preemption rule “avoids the potential for jurisdictional conflict between state courts or agencies and the NLRB by ensuring that primary responsibility for interpreting and applying this body of labor law remains with the NLRB.” Brown v. Hotel Employees, 468 U. S., at 502. “Apart from notions of ‘primary jurisdiction,’ there would be no objection to state courts’ and the NLRB’s exercising concurrent jurisdiction over conduct prohibited by the federal Act.” Sears, Roebuck, 436 U. S., at 199 (footnote omitted).

       Referring to the substantive aspects of the collective-bargaining process, we wrote:
      “Our decisions hold that Congress meant that these activities, whether of employer or employees, were not to be regulable by States any more than by the NLRB, for neither States nor the Board is ‘afforded flexibility in picking and choosing which economic devices of labor and management shall be branded as unlawful.’ [NLRB v. Insurance Agents, 361 U. S. 477, 498 (1960).] Rather, both are without authority to attempt to ‘introduce some standard of properly “balanced” bargaining power,’ id., at 497 (footnote omitted), or to define ‘what economic sanctions might be permitted negotiating parties in an “ideal” or “balanced” state of collective bargaining.' Id., at 500." Machinists, 427 U. S., at 149—150.

       Cf. Bomar v. Keyes, 162 F. 2d 136 (CA2) (L. Hand, J.) (statutory privilege to sit on federal jury protected against interference by State), cert. denied, 332 U. S. 826 (1947).


author: Justice Scalia Justice Marshall,

text:
    PAVELIC & LeFLORE v. MARVEL ENTERTAINMENT GROUP, A DIVISION OF CADENCE INDUSTRIES CORP., et al.
    No. 88-791.
    Argued October 2, 1989
    Decided December 5, 1989
    Scalia, J., delivered the opinion of the Court, in which Rehnquist, C. J., and Brennan, White, Blackmun, Stevens, O’Connor, and Kennedy, JJ., joined. Marshall, J., filed a dissenting opinion, post, p. 127.

      Jacob Laufer argued the cause for petitioner. With him on the briefs was Patricia M. Karish.

      Norman B. Arnoff argued the cause for respondents and filed a brief for respondent Shukat. Robert B. McKay and Sol V. Slotnik filed a brief for respondents Marvel Entertainment Group et al.
   Justice Scalia

delivered the opinion of the Court.

Federal Rule of Civil Procedure 11 provides in part: “If a pleading, motion, or other paper is signed in violation of this rule, the court. . . shall impose upon the person who signed it... an appropriate sanction . . . .” In this case we must determine whether Rule 11 authorizes a court to impose a sanction not only against the individual attorney who signed, but also against that attorney’s law firm.

I

The action giving rise to the current controversy was instituted by plaintiff Northern J. Calloway against respondents for willful copyright infringement of his motion picture script and other related claims. The original complaint—signed and filed by Calloway’s attorney, Ray L. LeFlore—alleged that Calloway had developed an idea for a motion picture and written a script, and that respondents had begun to develop this work without his permission. Respondents filed a motion to dismiss, pointing to a series of documents annexed to the complaint that gave them the right to develop the work commercially. The District Court dismissed the complaint (with leave to refile), not on the ground that the documents authorized the alleged infringement, but because Calloway’s complaint had failed to specify the registration number of his copyright and the dates upon which the alleged acts of infringement had occurred.

An amended complaint, again signed by LeFlore, was filed several weeks later. In addition to remedying the defects that were the basis of dismissal, it newly asserted that Calloway’s signatures on the documents purporting to grant an option had been forged by respondents, and included that among the actions for which damages were sought. Plaintiff relied on this forgery claim in opposing respondents’ motions to dismiss and motions for summary judgment.

In October 1984, LeFlore joined with Radovan Pavelic to form the law partnership of Pavelic & LeFlore. Thereafter, all court papers in the case were signed:

“Pavelic & LeFlore By /s/ Ray L. LeFlore (A Member of the Firm) Attorneys for Plaintiff.”

Several of these papers, including interrogatory responses and a proposed pretrial order, continued to rely upon the allegation of forgery. At trial, the District Court found insufficient evidence to support that contention, and directed a verdict in favor of respondents on that issue. The jury returned a verdict against plaintiff on all remaining claims.

Upon respondents’ motion and after a hearing, the District Court imposed a Rule 11 sanction in the amount of $100,000 against Pavelic & LeFlore on the ground that the forgery claim had no basis in fact and had not been investigated sufficiently by counsel. Radovan Pavelic moved to relieve the firm of the sanction, contending that (1) the firm did not exist during a major portion of the litigation and therefore was not fully responsible for the Rule 11 violations, and (2) Rule 11 empowers the court to impose a sanction only upon the attorney who signed the paper, not upon that attorney’s law firm. The District Court accepted the first contention, and therefore amended its order to shift half of the sanction from the firm to LeFlore. It rejected the second contention, however, concluding that Rule 11 sanctions may be imposed “on both the individual attorney and the law firm on whose behalf he signed the papers.” Calloway v. Marvel Entertainment Group, Div. of Cadence Industries Corp., 650 F. Supp. 684, 687 (SDNY 1986).

The Court of Appeals for the Second Circuit affirmed, 854 F. 2d 1452, 1479 (1988), thus placing itself in square disagreement with an earlier holding of the Fifth Circuit that Rule 11 authorizes sanctions against no attorney other than the individual lawyer or lawyers who sign court papers, see Robin son v. National Cash Register Co., 808 F. 2d 1119, 1128-1130 (1987). We granted certiorari, 489 U. S. 1009 (1989).

II

We give the Federal Rules of Civil Procedure their plain meaning, Walker v. Armco Steel Corp., 446 U. S. 740, 750, n. 9 (1980), and generally with them as with a statute, “[w]hen we find the terms . . . unambiguous, judicial inquiry is complete,” Rubin v. United States, 449 U. S. 424, 430 (1981). The specific text of Rule 11 at issue here is the provision that requires a court, when a paper is signed in violation of the Rule, to “impose upon the person who signed it . . . an appropriate sanction.” Thus viewed in isolation, the phrase “person who signed” is ambiguous as to the point before us today. That is not so, however, when it is read in the total context of all the provisions of Rule 11 dealing with the signing of filings. Those provisions (all of Rule 11 except two sentences) are as follows:

“Every pleading, motion, and other paper of a party represented by an attorney shall be signed by at least one attorney of record in the attorney’s individual name, whose address shall be stated. A party who is not represented by an attorney shall sign the party’s pleading, motion, or other paper and state the party’s address .... The signature of an attorney or party constitutes a certificate by the signer that the signer has read the pleading, motion, or other paper; that to the best of the signer’s knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. If a pleading, motion, or other paper is not signed, it shall be stricken unless it is signed promptly after the omission is called to the attention of the pleader or movant. If a pleading, motion, or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney’s fee.”

In other contexts the phrase “the person who signed it” might bear the somewhat technical legal meaning of the natural or juridical person in whose name or on whose behalf the paper was signed; but in a paragraph beginning with a requirement of individual signature, and then proceeding to discuss the import and consequences of signature, we think references to the signer in the later portions must reasonably be thought to connote the individual signer mentioned at the outset. It is as strange to think that the phrase “person who signed” in the last sentence refers to the partnership represented by the signing attorney, as it would be to think that the earlier phrase “the signer has read the pleading” refers to a reading not necessarily by the individual signer but by someone in the partnership; or that the earlier phrase “[i]f a pleading ... is not signed” refers not to an absence of individual signature but to an absence of signature on behalf of the partnership. Just as the requirement of signature is imposed upon the individual, we think the recited import and consequences of signature run as to him.

Respondents’ interpretation is particularly hard to square with the text since they do not assert that “the person who signed,” and who “shall” be sanctioned under the Rule, is only the partnership (that would obviously be unacceptable), but rather is either the partnership or the individual attorney, or both, at the court’s option. But leaving that option unexpressed seems quite inconsistent with the extreme care with which the Rule, in the very same sentence, makes clear that the mandatory sanction must extend to “the person who signed [the paper], a represented party, or both.” It is surely puzzling why the text would be so precise about that but leave to speculation whether only the individual attorney or his firm or both can be sanctioned. The puzzlement does not exist, of course, if “the person who signed” means only the individual attorney.

Respondents appeal to “long and firmly established legal principles of partnership and agency,” Brief for Respondents Marvel Entertainment Group et al. 29, under which all the members of a partnership are liable for the authorized acts of a partner or employee, see Restatement (Second) of Agency § 140 (1958). We are not dealing here, however, with common-law liability, but with a Rule that strikingly departs from normal common-law assumptions such as that of delega-bility. The signing attorney cannot leave it to some trusted subordinate, or to one of his partners, to satisfy himself that the filed paper is factually and legally responsible; by signing he represents not merely the fact that it is so, but also the fact that he personally has applied his own judgment. Where the text establishes a duty that cannot be delegated, one may reasonably expect it to authorize punishment only of the party upon whom the duty is placed. We think that to be the fair import of the language here.

Respondents also rely upon the fact that after formation of the partnership LeFlore’s signature was explicitly on behalf of the firm. The simple response is that signature on behalf of the firm was not a signature that could comply with the first sentence of the Rule, and not a signature to which the later portions of the Rule attach consequences. Rule 11 says that papers must be signed “by at least one attorney of record in the attorney’s individual name.” (Emphasis added.) Even if LePlore’s signature in the fashion indicated had the effect of making the firm and all its partners (including himself) attorneys of record, it is only his signature in his individual name that satisfies the first sentence of the Rule, and it is that signature, in that individual capacity, to which the later portions of the Rule refer. It has long been thought the better practice for the attorney complying with Rule 11 not to sign for his firm, but to sign in his individual name and on his own behalf, with the name of his firm beneath. See Gavit, The New Federal Rules and State Procedure, 25 A. B. A. J. 367, 371 (1939) (Under Rule 11, “the practice for pleadings to be signed in the name of a partnership” is “undesirable” and “improper”).

Respondents, and the opinion of the Court of Appeals, rely heavily upon the contention that the policies underlying Rule 11 will best be served by holding a law firm accountable for its attorney’s violation. In the Court of Appeals’ words, “[law firm] responsibility for Rule 11 sanctions will create strong incentives for internal monitoring, and greater monitoring will result in improved pre-filing inquiries and fewer baseless claims.” 854 F. 2d, at 1480. Even if it were entirely certain that liability on the part of the firm would more effectively achieve the purposes of the Rule, we would not feel free to pursue that objective at the expense of a textual interpretation as unnatural as we have described. Our task is to apply the text, not to improve upon it.

But in any event it is not at all clear that respondents’ strained interpretation would better achieve the purposes of the Rule. It would, to be sure, better guarantee reimbursement of the innocent party for expenses caused by the Rule 11 violation, since the partnership will normally have more funds than the individual signing attorney. The purpose of the provision in question, however, is not reimbursement but “sanction”; and the purpose of Rule 11 as a whole is to bring home to the individual signer his personal, nondelegable responsibility. It is at least arguable that these purposes are better served by a provision which makes clear that, just as the court expects the signer personally — and not some nameless person within his law firm — to validate the truth and legal reasonableness of the papers filed, so also it will visit upon him personally — and not his law firm — its retribution for failing in that responsibility. The message thereby conveyed to the attorney, that this is not a “team effort” but in the last analysis yours alone, is precisely the point of Rule 11. Moreover, psychological effect aside, there will be greater economic deterrence upon the signing attorney, who will know for certain that the district court will impose its sanction entirely upon him, and not divert part of it to a partnership of which he may not (if he is only an associate) be a member, or which (if he is a member) may not choose to seek recompense from him. To be sure, the partnership’s knowledge that it was subject to sanction might induce it to increase “internal monitoring,” but one can reasonably believe that more will be achieved by directly increasing the incentive for the individual signer to take care. Such a belief is at least not so unthinkable as to compel the conclusion that the Rule does not mean what it most naturally seems to say.

For the foregoing reasons, the judgment of the Second Circuit is reversed insofar as it allows Rule 11 sanctions to be imposed against Pavelic & LeFlore. The case is remanded for further proceedings consistent with this opinion.

It is so ordered.

Justice Marshall,

dissenting.

We have consistently held that a trial judge bears the primary responsibility for managing the cases before him. One of the fundamental purposes of Rule 11 is to strengthen the hand of the trial judge in his efforts to police abusive litigation practices and to provide him sufficient flexibility to craft penalties appropriate to each case. The Court’s interpretation of Rule 11, in contrast, is overly restrictive, as it reads into the Rule an absolute immunity for law firms from any sanction for their misconduct.

Although the Court recognizes that the relevant phrase in Rule 11 —“the person who signed” the pleading, motion, or paper at issue — could mean a juridical person on whose behalf the document is signed, ante, at 124, it nonetheless finds that the phrase has a more limited meaning in the context of the Rule as a whole. As I cannot acquiesce in such an unnecessary erosion of the discretion of federal trial judges, I dissent.

The Court’s reading of the “plain meaning” of Rule 11 is based entirely on the connection it perceives between the language at the beginning of the Rule, which refers to an individual ‘“signer,”’ and the crucial language in the last sentence, which allows a court to impose sanctions on “‘the person who signed’” a pleading or paper. Ante, at 123-124. Although the text of the Rule does not foreclose the reading the Court finds compelling, that interpretation is by no means the only reasonable one — and certainly is not required by the “plain meaning.” Significantly, in three separate places the Rule identifies the person signing a document as the “signer.” Yet it uses an entirely different phrase, “the person who signed” the pleading, in its listing of parties who may be sanctioned for violations, thereby drawing an explicit distinction between the two phrases. If the drafters had intended to limit the entity that could be sanctioned under the Rule to the individual signer, they easily could have repeated the word “signer” a fourth time. The use of different phrases may reasonably be viewed as an indication of two different meanings. In the case of “signer,” the drafters unambiguously sought to refer to the individual who actually signed the document; in their subsequent use of the phrase “the person who signed,” the drafters may have signaled their intent to allow a court to impose sanctions on any juridical person, including the law firm of the individual signer. In the context of the Federal Rules of Civil Procedure, drafted by a committee familiar with traditional legal concepts, one can reasonably assume that the word “person” indicates more than just natural persons, encompassing partnerships and professional corporations as well. See, e. g., 5 U. S. C. §551(2) (Administrative Procedure Act defines “person” as an “individual, partnership, corporation, association, or public or private organization other than an agency”); N. Y. Partnership Law § 2 (McKinney 1988) (defining “person” to include “individuals, partnerships, corporations, and other associations”). At the least, an interpretation of Rule 11 that gives “person” its legal meaning is no less plausible than the majority’s more restrictive reading of the Rule.

The purposes of the Rule support this construction of Rule 11. All pleadings, motions, and papers must be signed by an attorney in his individual name. This requirement serves in part the administrative goal of identifying for the court one person who can answer questions about the papers. Because Rule 11 proceedings often occur at the end of litigation, see Advisory Committee’s Notes on Fed. Rule Civ. Proc. 11, 28 U. S. C. App., p. 129 (1982 ed., Supp. V), it will often be crucial that the relevant documents, which may have been filed months or even years earlier, identify a specific individual with knowledge of their contents. No such administrative concerns suggest that the phrase “the person who signed” the paper should be restricted to an individual.

Furthermore, as the majority emphasizes, ante, at 126, the requirement of an individual signer promotes a measure of individual accountability by ensuring that someone takes direct responsibility for each filing. Yet encouraging individual accountability and firm accountability are not mutually exclusive goals. Indeed, individual accountability may be heightened when an attorney understands that his carelessness or maliciousness may subject both himself and his firm to liability. The concern that a person take direct responsibility for each paper is not disserved by holding the law firm responsible in cases where the district court determines that both are blameworthy. In short, it is not internally inconsistent, nor does it inevitably lead to “puzzling” results, ante, at 125, to allow a trial judge the discretion to impose sanctions on a law firm, a juridical person, for which a signing attorney acts as agent.

The policies underlying Rule 11 decisively indicate that “person” should be interpreted broadly so that a court can effectively exercise discretion in formulating appropriate sanctions. Although, as the majority infers from the Rule’s text, one purpose of Rule 11 may be “to bring home” to the individual signer his personal responsibility for complying with its dictates, ante, at 126, the Rule is explicitly designed to deter improper pleadings, motions, and papers. Advisory Committee’s Notes on Fed. Rule Civ. Proc. 11, 28 U. S. C. App., p. 129 (1982 ed., Supp. V) (“The word ‘sanctions’ in the caption . . . stresses a deterrent orientation in dealing with improper pleadings”). Admittedly, in some cases, sanctions imposed solely on the individual signer may halt abusive practices most effectively. In other cases, however, deterrence might best be served by imposing sanctions on the signer’s law firm in an attempt to encourage internal monitoring. The trial judge is in the best position to assess the dynamics of each situation and to act accordingly.

Recognizing the need to tailor the sanction to each particular situation, the Advisory Committee emphasized in a related context the need for “flexibility” in dealing with violations. See ibid, (discussing the effect of the words “shall impose” on the trial court’s discretion to impose sanctions). Flexibility is no less important when a judge decides whether one, some, or all of the many entities before him should be held responsible for improper pleadings, motions, or papers. Where, as.here, the Rule itself does not demand rigidity, it is unwise for the Court to constrict the options available to a trial judge faced with a violation of Rule 11. The judge who observes improper behavior and who is intimately familiar with the facts of a case should be allowed to fashion the penalty that most effectively deters future abuse. Today’s decision unwisely ties the hands of trial judges who must deal frequently and immediately with Rule 11 violations and ill serves the goal of administering that Rule justly and efficiently. See Fed. Rule Civ. Proc. 1.

The District Court apportioned the sanction here between the signing attorney and his law firm, based on its assessment of the relative culpability of each. Calloway v. Marvel Entertainment Croup, Div. of Cadence Industries Corp., 650 F. Supp. 684 (SDNY 1986). I firmly believe that this sort of penalty is precisely what Rule 11 contemplates. I therefore cannot join the Court’s reading of the Rule which creates an immunity for law firms from its coverage.


author: Justice Marshall

text:
    UNITED STATES v. GOODYEAR TIRE & RUBBER CO. et al.
    No. 88-1474.
    Argued November 1, 1989
    Decided December 11, 1989

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

      Alan I. Horowitz argued the cause for the United States. With him on the briefs were Solicitor General Starr, Assistant Attorney General Peterson, Deputy Solicitor General Wallace, and Robert S. Pomerance.

      Barring Coughlin argued the cause for respondents. With him on the brief were Stephen L. Buescher and Deborah Z. Read.

        Wüliam H. Allen, John B. Jones, Jr., Frances M. Horner, Robert T. Cole, and Gilbert W. Rubloff filed a brief for the National Foreign Trade Council, Inc., as amicus curiae urging affirmance.

        Dennis I. Meyer, C. David Swenson, Leonard B. Terr, and Thomas A. O’Donnell filed a brief for Vulcan Materials Co. as amicus curiae.

   Justice Marshall

delivered the opinion of the Court.

In this case, we must decide whether “accumulated profits” in the indirect tax credit provision of the Internal Revenue Code of 1954, 26 U. S. C. § 902 (1970 ed.), are to be measured in accordance with United States or foreign tax principles. We conclude that “accumulated profits” are to be measured in accordance with United States principles.

I

Goodyear Tyre and Rubber Company (Great Britain) Limited (Goodyear G. B.) is a wholly owned subsidiary of Goodyear Tire and Rubber Company (Goodyear), a domestic corporation. Goodyear brought this suit seeking a refund of federal income taxes collected for the years 1970 and 1971. During those years, Goodyear G. B. filed income tax returns in, and paid taxes to, the United Kingdom and the Republic of Ireland. Goodyear G. B. also distributed dividends to Goodyear, its sole shareholder. Goodyear reported these dividends on its federal tax return, as required by 26 U. S. C. §§301, 316 (1970 ed.). Goodyear thereafter sought credit for a portion of the foreign taxes paid by Goodyear G. B. in the amount specified in § 902.

Section 902 provides a parent of a foreign subsidiary with an “indirect” or “deemed paid” credit on its domestic income tax return to reflect foreign taxes paid by its subsidiary. The credit protects domestic corporations that operate through foreign subsidiaries from double taxation of the same income: taxation first by the foreign jurisdiction, when the income is earned by the subsidiary, and second by the United States, when the income is received as a dividend by the parent. In some circumstances, a foreign subsidiary may choose to distribute only a portion of its available profit as a dividend to its domestic parent. For that reason, a domestic parent cannot automatically claim credit for all foreign taxes paid by its subsidiary: §902 limits a domestic parent’s credit to the amount of tax paid by the subsidiary attributable to the dividend issued. The foreign tax deemed paid by the domestic parent is calculated by multiplying the total foreign tax paid (T) by that portion of the subsidiary’s after-tax accumulated profits (AP-T) that is actually issued to the domestic parent in the form of a taxable dividend (D).

In 1978, Goodyear G. B. reported a net loss on its British tax return and carried back that loss to offset substantial portions of its 1970 and 1971 income. Based on the 1973 carried-back losses, British taxing authorities recalculated Goodyear G. B.’s income and tax liability for the years 1970 and 1971. Goodyear G. B. thereafter received a refund of a substantial portion of its 1970 and 1971 foreign tax payments.

In response to the refunds, and pursuant to § 905(c) of the Code which permits redetermination of the foreign tax credit whenever “any tax paid is refunded in whole or in part,” the Commissioner of Internal Revenue recalculated the indirect tax credit available to Goodyear for the tax years 1970 and 1971. The Commissioner lowered the foreign taxes paid (T) to reflect the refund. He refused, however, to lower accumulated profits (AP) for those years to reflect British tax authorities’ redetermination of Goodyear G. B.’s income. The deductions that created, for British tax purposes, the 1973 loss would not have been allowable in the computation of United States income tax if Goodyear G. B. had been a United States corporation filing a United States return. See App. 19-29 (Stipulation of Facts). In the Commissioner’s view, accumulated profits are to be calculated in accordance with United States tax principles; accordingly, the Commissioner regarded Goodyear G. B.’s 1970 and 1971 accumulated profits as unaffected by the deductions allowed under British law.

In view of the reduced amount of Goodyear’s tax deemed paid, the Commissioner assessed substantial tax deficiencies for the tax years 1970 and 1971. Goodyear paid the deficiencies and, following the IRS’ denial of its administrative refund claim, brought this action in the United States Claims Court, averring that foreign tax law principles govern the calculation of “accumulated profits” in §902’s tax credit. Calculating “accumulated profits” in accordance with British tax law principles, Goodyear maintained that Goodyear G. B.’s after-tax accumulated profits for 1970 and 1971 were insufficient to cover the dividends paid in those years. In such a circumstance, § 902 requires that, for the purpose of computing the indirect credit, the excess of the dividend be deemed paid out of the after-tax accumulated profits of the preceding year. If in that year the remaining portion of the dividend exceeds the after-tax accumulated profits, the remainder of the dividend is allocated or “sourced” to the next most recent year, until the dividend is exhausted. Thus, Goodyear argued that the dividends it received from Goodyear G. B. in 1970 and 1971 should have been sourced to prior tax years, 1968 and 1969, until Goodyear G. B.’s after-tax accumulated profits covered the dividends. Through this sourcing mechanism, Goodyear would, in computing its domestic tax liability for the dividends issued by Goodyear G. B., receive credit for a portion of the foreign taxes paid by Goodyear G. B. in 1968 and 1969. Because Goodyear G. B. paid substantial foreign taxes in those tax years, allocation of the dividend to those years would yield a tax deemed paid by Goodyear in excess of £1 million, over four times greater than the tax the Commissioner deemed paid. If the term “accumulated profits” is defined in accordance with domestic tax principles, as the Commissioner advocated, the dividends issued in 1970 and 1971 are fully exhausted by the accumulated profits of those years, resulting in a tax deemed paid of £247,124.

The Claims Court rejected Goodyear’s claim. 14 Cl. Ct. 23 (1987). Viewing the statutory definition of “accumulated profits” in §902(c)(1)(A) as inconclusive, id., at 28-29, the court turned to the purposes underlying § 902 and found that they favored calculation of “accumulated profits” in accordance with United States tax concepts, id., at 29-31. The Court of Appeals for the Federal Circuit reversed. 856 F. 2d 170 (1988). The court held that the “plain meaning” of § 902 “requires [accumulated profits] to be determined under foreign law.” Id., at 172. The court also held that the fundamental congressional purpose underlying § 902, “ ‘elimination of international double taxation,’” ibid, (quoting H. H. Robertson Co. v. Commissioner, 59 T. C. 53, 74 (1972), aff’d, 500 F. 2d 1399 (CA3 1974)), would be defeated if the taxes paid by a foreign subsidiary, but not its accumulated profits, were calculated in terms of foreign law. 856 F. 2d, at 172. The Court of Appeals’ decision has important consequences for the calculation of the indirect tax credit of domestic parents that have received dividends from their subsidiaries abroad. To clarify the operation of the § 902 credit in the tax years to which it applies, we granted certiorari, 490 U. S. 1045 (1989), and now reverse.

1 1 — I

Our starting point, as in all cases involving statutory interpretation, “must be the language employed by Congress.” Reiter v. Sonotone Corp., 442 U. S. 330, 337 (1979). We find that the text of § 902 does not resolve whether “accumulated profits” are to be calculated in accordance with foreign or domestic tax concepts.

It is true, as the Court of Appeals emphasized, that §§ 902 (a)(1) and 902(c)(1)(A) link “accumulated profits” to the foreign tax imposed on the subsidiary. The link is forged by describing the foreign tax as that tax imposed “on or with respect to” accumulated profits. The provisions also, however, link “accumulated profits” to “dividends” by describing “accumulated profits” as the pool from which the “dividends” are issued. Section 316(a), in turn, makes clear that domestic principles control whether a payment is a “dividend” subject to domestic tax. On the basis of this link, a leading treatise has concluded that “[ajccumulated profits of the foreign corporation . . . are, in general, equated with earnings and profits of the foreign corporation and are determined in accordance with domestic law principles.” B. Bittker & J. Eustice, Federal Income Taxation of Corporations and Shareholders ¶17.11, p. 17-44 (5th ed. 1987) (“Adoption of these principles has the virtue of correlating the denominator of the § 902 computation with the definition of dividends (the numerator), thus avoiding the possible distortions that could arise if different definitional approaches were used for the numerator and denominator of the §902 fraction”). Because § 902 relates “accumulated profits” both to the foreign tax paid by the subsidiary, calculated in accordance with foreign law, and to the dividend issued by the subsidiary, calculated in accordance with domestic law, we are unpersuaded that the statutory language is dispositive. We must therefore look beyond the statute’s language to the legislative history, purposes, and operation of the indirect tax credit.

Ill

A

The history of the indirect credit clearly demonstrates that the credit was intended to protect a domestic parent from double taxation of its income. Congress first established the indirect tax credit in § 240(c) of the Revenue Act of 1918, 40 Stat. 1082, permitting a domestic parent to receive a credit for a portion of the foreign taxes paid by its subsidiary during the year in which the subsidiary issued a dividend to the parent. This Court subsequently described the purpose of § 240 (c) as protection against double taxation. American Chicle Co. v. United States, 316 U. S. 450, 452 (1942); see also Bittker & Eustice, supra, at ¶17.11, p. 17-40.

The legislative history of the indirect credit also clearly reflects an intent to equalize treatment between domestic corporations that operate through foreign subsidiaries and those that operate through unincorporated foreign branches. In § 238(e) of the Revenue Act of 1921, 42 Stat. 259, Congress amended § 240(c) to permit a domestic corporation to claim credit for taxes its subsidiary paid in years other than those in which the dividend was issued. Prior to the amendment, a domestic corporation could not receive credit for foreign taxes paid on distributed income if its subsidiary issued the dividend out of income earned in prior years, see 316 U. S., at 453, because § 240(c) limited the credit to taxes paid by the subsidiary “during the taxable year” in which the dividend was issued. The amendment corrected this deficiency by relating the credit to the accumulated profits out of which the dividends were paid.

In defending the amended version of the indirect credit, one sponsor described the purpose of the credit as securing, for domestic corporations that receive income in the form of dividends from foreign subsidiaries, the same sort of deduction available to domestic corporations that receive income from foreign branches. 61 Cong. Rec. 7184 (1921). This goal of equalized treatment is reflected as well in testimony regarding the amendment before the Senate Committee on Finance, in which a spokesperson for the Department of the Treasury described the proposal as intended “to give this American corporation about the same credit as if conducting a branch.” Hearings on H. R. 8245 before the Senate Committee on Finance, 67th Cong., 1st Sess., pt. 2, p. 389 (1921). More recently, the Senate Report on the 1962 amendments to the indirect credit confirms Congress’ intent to treat foreign branches and foreign subsidiaries alike in terms of the tax credits they generate for their domestic companies. See S. Rep. No. 1881, 87th Cong., 2d Sess., 66-67 (1962).

B

Given these purposes, we now turn to the operation of the indirect tax credit. Goodyear contends that the failure to calculate accumulated profits in terms of foreign law subjects domestic corporations that receive dividends from their foreign subsidiaries to double taxation. This undesirable result occurs, in Goodyear’s view, because calculation of accumulated profits in accordance with domestic principles may disconnect the relationship in § 902’s formula between accumulated profits and the foreign tax paid by the subsidiary. A subsidiary incurs foreign tax liability in proportion to its foreign defined income. To recover foreign taxes paid by its subsidiary, a domestic parent’s dividend must be allocated or sourced to years in which its subsidiary paid foreign tax. If, however, accumulated profits are defined in domestic terms, the dividends of a domestic parent may be allocated to years in which the subsidiary paid little or no tax. In such a scenario, the parent may not be credited with foreign taxes paid by its subsidiary. To avoid this mismatching of accumulated profits and foreign tax, Goodyear contends that accumulated profits should be determined in accordance with the same principles that govern the imposition of the tax: those found in foreign law.

The Government contests Goodyear’s characterization of this case as one of “double taxation.” In the Government’s view, the dividends received by Goodyear should not be allocated to prior years because to do so would permit Goodyear to avoid taxation altogether on domestically defined income that its subsidiary earned in 1970 and 1971. Under domestic rules, Goodyear G. B. earned sufficient income in 1970 and 1971 to cover the dividends it issued to Goodyear in those years. That British taxing authorities recognized little income in those years should not, in the Government’s view, prevent the United States from recognizing the substantial income attributable to those years under domestic rules. According to the Government, the foreign tax paid in 1968 and 1969 by Goodyear G. B.— the years to which Goodyear seeks to source its dividends — relates to income that Goodyear G. B. chose not to distribute during those years as dividends to Goodyear. To credit Goodyear with taxes paid on undistributed income, the Government concludes, would be inequitable because it would provide domestic parents that operate through foreign subsidiaries favorable treatment visa-vis' domestic corporations that use foreign branches.

Goodyear attempts to avoid the force of the Government’s-analysis by exploring hypothetical situations in which the calculation of accumulated profits in accordance with domestic rules presents a more plausible claim of double taxation than does this case. For example, if a subsidiary earns an equal amount of income under foreign and domestic rules, but those rules regard the income as being earned in different years, the domestic parent would be credited with a lower portion of the tax paid by the subsidiary if domestic timing rules govern. This result appears anomalous because the same credit should be available where foreign and domestic tax principles recognize equal amounts of income and the amount of tax paid remains constant. The effect of the divergence in foreign and domestic tax principles is particularly clear when a subsidiary pays a substantial foreign tax in a given year and the amount of income recognized under domestic rules in that year is zero. In such a circumstance, none of the tax paid by the subsidiary can be credited to the parent because a dividend cannot be sourced to a year in which there are no accumulated profits.

Goodyear’s hypotheticals persuade us that if accumulated profits are calculated according to domestic tax principles, situations can arise in which § 902’s statutory goal of avoiding double taxation will be disserved. Equally persuasive, however, is the Government’s claim that defining accumulated profits in terms of foreign tax principles can unfairly advantage domestic parents that operate through foreign subsidiaries over companies operating through unincorporated branches. Thus, no definitional approach to “accumulated profits” uniformly and unqualifiedly satisfies the dual purposes underlying the indirect credit.

C

We nonetheless believe that the Government’s interpretation of “accumulated profits” is more faithful to congressional intent. Our view is informed first and most significantly by our assessment that the risk of double taxation outlined by Goodyear is less substantial than the risk of unequal treatment cited by the Government. Defining “accumulated profits” in accordance with domestic tax concepts results in double taxation only when a dividend is sourced to a year in which domestic tax concepts recognize little or no income and yet a subsidiary pays substantial foreign tax. Goodyear offers no basis for the suggestion that such mismatching commonly occurs.

Goodyear’s approach, on the other hand, leads to unequal tax treatment of subsidiaries and branches whenever the foreign taxing authority calculates income more or less generously than the United States. A domestic corporation must pay tax on all income of a foreign branch that is recognized under domestic law. Under Goodyear’s interpretation, a domestic corporation may in some cases receive credit for taxes paid on income that, under domestic rules, the parent never received. This result is difficult to square with the express congressional purpose of ensuring tax parity between domestic corporations that operate through foreign subsidiaries and those that operate through foreign branches.

The Government’s approach is also supported by administrative interpretations of § 902. In defining the credits available against foreign tax under the predecessor to § 902, the Commissioner stated that “[i]t is important in establishing the amount of the accumulated profits that it be based as a fundamental principle upon all income of the foreign corporation available for distribution to its shareholders whether such profits be taxable by the foreign country or not.” I. T. 2676, XII-1 Cum. Bull. 48, 50 (1933) (emphasis added). The Commissioner’s approach requires a domestic assessment of income for the purposes of calculating accumulated profits. The Commissioner’s position is reflected as well in a formal regulation promulgated by the Treasury in 1965, Treas. Reg. § 1.902-3(c)(l), 26 CFR § 1.902-3(c)(l) (1972), which defines “accumulated profits” under § 902(a)(1) as “the sum of [t]he earnings and profits of [the foreign subsidiary] for such year, and [t]he foreign income taxes imposed on or with respect to the gains, profits, and income to which such earnings and profits are attributable.” Defining a subsidiary’s “accumulated profits” as its “earnings and profits” reflects an intent to calculate accumulated profits according to domestic principles, because “earnings and profits” in this context is a domestic tax concept.

Lastly, we find support for the Government’s position in the statutory canon adopted in Biddle v. Commissioner, 302 U. S. 573, 578 (1938), that tax provisions should generally be read to incorporate domestic tax concepts absent a clear congressional expression that foreign concepts control. This canon has particularly strong application here where a contrary interpretation would leave an important statutory goal regarding equal tax treatment of foreign subsidiaries and foreign branches to the varying tax policies of foreign tax authorities.

IV

“Accumulated profits,” as that term appears in § 902’s indirect tax credit, should be calculated in accordance with domestic tax principles. The judgment of the Court of Appeals is therefore reversed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

       Section 902(a) provides:

        “For purposes of this subpart, a domestic corporation which owns at least 10 percent of the voting stock of a foreign corporation from which it receives dividends in any taxable year shall—
      “(1) to the extent such dividends are paid by such foreign corporation out of accumulated profits (as defined in subsection (c)(1)(A)) of a year for which such foreign corporation is not a less developed country corporation, be deemed to have paid the same proportion of any income, war profits, or excess profits taxes paid or deemed to be paid by such foreign corporation to any foreign country or to any possession of the United States on or with respect to such accumulated profits, which the amount of such dividends (determined without regard to section 78) bears to the amount of such accumulated profits in excess of such income, war profits, and excess profits taxes (other than those deemed paid). . . .” 26 U. S. C. § 902 (1970 ed.).

       The formula for calculating the §902 credit is as follows:

       The operation of this sourcing principle is described in General Foods Corp. v. Commissioner, 4 T. C. 209, 215 (1944).

       Calculation of the indirect credit for tax years beginning after 1986 is governed by the amended version of § 902 established by the Tax Reform Act of 1986, 100 Stat. 2528, 26 U. S. C. §902 (1982 ed., Supp. V). The amended version substantially overhauls the method of calculating the credit and removes the controversy regarding the definition of “accumulated profits.” The current version of § 902(c)(1) replaces “accumulated profits” with “undistributed earnings,” which are defined as the “earnings and profits of the foreign corporation (computed in accordance with sections 964 and 986).” Section 964(a) in turn provides that “the earnings and profits of any foreign corporation . . . shall be determined according to rules substantially similar to those applicable to domestic corporations." 26 U. S. C. §964(a) (1982 ed.).

       Senator Smoot stated:
      “[A] foreign subsidiary is much like a foreign branch of an American corporation. If the American corporation owned a foreign branch, it would include the earnings or profits of such branch in its total income, but it would also be entitled to deduct from the tax based upon such income any income or profits taxes paid to foreign countries by the branch in question. Without special legislation, however, no credit can be obtained where the branch is incorporated under foreign laws.”

       The 1962 amendment addresses a tax preference that results if a domestic parent is credited with foreign taxes paid on subsidiary income that is used to satisfy the subsidiary’s foreign tax obligations. In such a circumstance, the parent receives credit for taxes paid on undistributed income. This Court sought to eliminate this tax advantage in American Chicle Co. v. United States, 316 U. S. 450, 452 (1942), by including in the § 902 credit only those taxes paid on a subsidiary’s after-tax income. The 1962 amendment addressed the problem differently, permitting a domestic parent to include all foreign taxes paid in its § 902 calculation but also requiring the parent to treat such taxes as a deemed dividend from its subsidiary. The amendment thus requires domestic parents to “gross up” the dividend income they receive by the amount of the foreign taxes attributable to such income. See S. Rep. No. 1881, 87th Cong., 2d Sess., 69 (1962). The Senate Report, describing the purpose of the amendment as removing an “unjustified tax advantage” for domestic parents, illustrates how foreign subsidiaries and foreign branches are treated unequally absent the “grossing up” requirement, even under the American Chicle rule. S. Rep. No. 1881, supra, at 66-67.