source: Caselaw Access Project

author: Justice Blackmun Justice Scalia,

license: Public Domain

text:
    AMERADA HESS CORP. et al. v. DIRECTOR, DIVISION OF TAXATION, NEW JERSEY DEPARTMENT OF THE TREASURY
    No. 87-453.
    Argued November 29, 1988
    Decided April 3, 1989

      Blackmun, J., delivered the opinion of the Court, in which Rehnquist, C. J., and Brennan, White, Marshall, Stevens, and Kennedy, JJ., joined. Scalia, J., filed an opinion concurring in the judgment, post, p. 80. O’Connor, J., took no part in the consideration or decision of the cases.

      Mark L. Evans argued the cause for appellants in both cases. With him on the briefs were Robert L. Moore II, James P. Tuite, Charles M. Costenbader, Charles H. Fried-rich III, Laurence Reich, Frederic K. Becker, Robert E. McManus, James R. Ron, Tom O. Foster III, Paul Wehrle, John A. Carrig, and William D. Peltz.

      Mary R. Hamill, Deputy Attorney General of New Jersey, argued the cause for appellee in both cases. With her on the brief were Cary Edivards, Attorney General, John P. Miscione and Sarah T. Darroio, Deputy Attorneys General, Martin Lobel, and James F. Flug.

       Together with No. 87-464, Texaco Inc. et al. v. Director, Division of Taxation, New Jersey Department of the Treasury, also on appeal from the same court.

       Briefs of amici curiae urging reversal were filed for the American Mining Congress et al. by William L. Goldman and James A. Riedy; and for the Committee on State Taxation of the Council of State Chambers of Commerce by E. Susan Garsk, John S. Brown, Jody E. Forchheimer, Stephen A. Bokat, Jan S. Amundson, Jean A. Walker, and Paul H. Frankel.

      A brief of amici curiae urging affirmance was filed for the State of Iowa et al. by Thomas J. Miller, Attorney General of Iowa, Harry M. Griger, Special Attorney General, and Marcia Mason, Assistant Attorney General, joined by the Attorneys General for their respective States as follows: John K. Van de Kamp of California, RobeH A. Buttenvorth of Florida, Michael J. Boivers of Georgia, James T. Jones of Idaho, Frank J. Kelley of Michigan, Mike Greely of Montana, Robert Abrams of New York, Nicholas J. Spaeth of North Dakota, James E. O’Neil of Rhode Island, T. Travis Medlock of South Carolina, and Joseph B. Meyer of Wyoming.

        Solicitor General Fried, Deputy Solicitor General Wallace, and Richard G. Taranto filed a brief for the United States as amicus curiae.

   Justice Blackmun

delivered the opinion of the Court.

Appellants in this litigation are 13 major oil companies that do business in the State of New Jersey. They are subject to New Jersey’s Corporation Business Tax. They also are subject to the federal windfall profit tax imposed on producers of crude oil. None of appellants’ oil production takes place in New Jersey.

Each appellant has sought to deduct its federal windfall profit tax in calculating “entire net income” for purposes of the New Jersey Corporation Business Tax. Under the applicable New Jersey statute, however, a corporation may not deduct a federal tax that is “on or measured by profits or income.” The Supreme Court of New Jersey ruled that the windfall profit tax is a tax “on or measured by profits or income.” The question before us is whether, as so construed, the New Jersey provision runs afoul of the Commerce Clause or of the Fourteenth Amendment to the United States Constitution.

I

A

In conjunction with the decontrol of oil prices, Congress enacted the Crude Oil Windfall Profit Tax Act of 1980, Pub. L. 96-223, Tit. I, 94 Stat. 230, now codified as 26 U. S. C. §§ 4986-4998 (Act). The Act imposes a tax on the “windfall profit” that a crude-oil producer receives from the oil it produces. The “windfall profit” for each barrel of oil is essentially the difference between (a) the deregulated price for the oil (that is, its actual sales price) and (b) the regulated price that would have applied had decontrol not taken place.

One significant provision of the Act, known as the “net income limitation,” places a cap on the amount of a producer’s windfall profit that may be taxed each year: “The windfall profit on any barrel of crude oil shall not exceed 90 percent of the net income attributable to such barrel.” § 4988(b)(1). The net income attributable to each barrel is the taxable income derived from the oil removed from a particular property for a given year divided by the number of barrels from that property taken into account for that year. § 4988(b)(2).

Congress specifically has provided that, for federal income tax purposes, the windfall profit tax is deductible. 26 U. S. C. § 164(a)(4) (1982 ed., Supp. V). Although Congress may have assumed that “the windfall profit tax generally would be deductible under State income taxes,” see H. R. Rep. No. 96-304, p. 9 (1979), the Act does not require a State, in imposing a tax, to allow the deduction.

B

New Jersey’s Corporation Business Tax Act, N. J. Stat. Ann. §54:10A-1 et seq. (West 1986), imposes a tax on a portion of the “entire net income” of a corporation “for the privilege of doing business, employing or owning capital or property, or maintaining an office in this State.” §54:10A-2. For a corporation doing business both within and outside New Jersey, the portion of the “entire net income” to be taxed is determined according to a three-factor formula concerning property, receipts, and payroll. The formula calls for the average of three ratios: in-state property to total property; in-state to total receipts; and in-state to total wages, salaries, and other forms of employee compensation. §54:10A-6. Cf. Moorman Mfg. Co. v. Bair, 437 U. S. 267 (1978).

Under the Corporation Business Tax Act, a corporation’s “entire net income” is presumptively the same as its federal taxable income “before net operating loss deduction and special deductions.” § 54:10A-4(k). The statute also provides: “Entire net income shall be determined without the exclusion, deduction, or credit of . . . [t]axes paid or accrued to the United States on or measured by profits or income.” Ibid. The New Jersey Legislature adopted this “add-back” provision in 1958, long before Congress enacted the windfall profit tax in 1980. 1958 N. J. Laws, ch. 63. See 107 N. J. 307, 313, 526 A. 2d 1029, 1032 (1987).

C

In reporting to New Jersey its “entire net income” for 1980 and 1981, each of the appellants did not “add back” the amount of its federal windfall profit tax. In effect, then, each appellant claimed a deduction for that tax from its “entire net income.” As a result, appellee, the Director of the New Jersey Division of Taxation, assessed deficiencies. Appellants then brought suit against appellee in the Tax Court of New Jersey. They contended, first, that the windfall profit tax was not a “tax on or measured by profits or income,” within the meaning of the add-back provision, and, second, that a contrary construction of the add-back provision would contravene the Federal Constitution.

The Tax Court rejected these contentions and affirmed the deficiency assessments. 7 N. J. Tax 51 (1984). A consolidated motion for reconsideration was denied. 7 N. J. Tax 275 (1985). The Appellate Division of the Superior Court of New Jersey reversed, holding that the windfall profit tax was not a tax on or measured by profits or income, and, therefore, that it could be deducted from entire net income. 208 N. J. Super. 201, 505 A. 2d 186 (1986).

The Supreme Court of New Jersey, in its turn, reversed and reinstated the Tax Court’s judgment. 107 N. J. 307, 526 A. 2d 1029 (1987). The five participating justices in a unanimous opinion held that the windfall profit tax is a tax measured by “profits or income” for the purposes of the add-back provision. The court first observed that there obviously was no significant legislative intent on the .point, given the fact that the add-back provision predated the windfall profit tax by over 20 years. Id., at 313, 526 A. 2d, at 1032. Lacking evidence of legislative intent, the court went on to reason that the windfall profit tax was a tax on “income” or “profits” as a matter of both ordinary usage and “economic sense.” Id., at 324, 331, 526 A. 2d, at 1038, 1042. The court noted that the windfall profit tax, by its terms, is limited to “that increment of [an oil producer’s] income representing the excess of the uncontrolled price of oil over the controlled price.” Id., at 326, 526 A. 2d, at 1040. Also, because of the net income limitation provision, the court concluded that the amount taxed under the windfall profit tax cannot exceed a producer’s “net income per barrel.” Id., at 328, 526 A. 2d, at 1041. For these reasons, the court found it appropriate to classify the windfall profit tax as measured by income or profits.

Having determined that the add-back provision applied to the windfall profit tax, the court rejected appellants’ federal constitutional challenge. “Because the denial of a deduction for the [windfall profit tax] was not based on the interstate nature of [appellants’] businesses and did not burden out-of-state companies, consumers, or transactions while favoring in-state activities, the disallowance did not discriminate against interstate commerce.” Id., at 338, 526 A. 2d, at 1046.

Appellants now press their federal constitutional claims in this Court. After first seeking the views of the Solicitor General of the United States, 484 U. S. 942 (1987), we noted probable jurisdiction. 486 U. S. 1004 (1988).

H J — (

In Complete Auto Transit, Inc. v. Brady, 430 U. S. 274 (1977), this Court sustained a state tax “against Commerce Clause challenge when the tax is applied to an activity with a substantial nexus with the taxing State, is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to the services provided by the State.” We repeatedly have applied this principle in subsequent cases, most recently this Term in Goldberg v. Sweet, 488 U. S. 252 (1989). See also id., at 260, n. 12 (citing other applications of the principle). Appellants do not dispute the soundness of the Complete Auto standard or the propriety of its application here. See Brief for Appellants 21. Rather, they árgue that the New Jersey Corporation Business Tax, in denying them a deduction for windfall profit tax payments, fails each of the four prongs of the Complete Auto test. We disagree.

A

There can be no doubt that New Jersey has “a substantial nexus” with the activities that generate appellants’ “entire net income,” including oil production occurring entirely outside the State. Each appellant’s New Jersey operations are part of an integrated “unitary business,” which includes the appellant’s crude-oil production. Reply Brief for Appellants 3. Consequently, there exists a “clear and sufficient nexus between [each] appellant’s interstate activities and the taxing State.” Exxon Corp. v. Wisconsin Dept. of Revenue, 447 U. S. 207, 225 (1980). That New Jersey denies a deduction for windfall profit tax does not change this conclusion. Denying a deduction for a cost associated with the production of oil cannot alter the fact that New Jersey has a substantial connection to the oil-producing activity, by virtue of the determination that this activity is conducted by a unitary business.

B

Nor has New Jersey imposed upon appellants an unfairly apportioned tax. New Jersey employs an apportionment formula that averages the percentages of in-state property, receipts, and payroll. See Part I-B, supra. We have expressly approved this apportionment formula in the past. See, e. g., Container Corp. of America v. Franchise Tax Board, 463 U. S. 159, 170 (1983). Indeed, this three-factor formula “has become . . . something of a benchmark against which other apportionment formulas are judged.” Ibid.

The use of this formula is not invalid as applied to appellants simply because New Jersey denies a deduction for windfall profit tax payments. Appellants contend otherwise, asserting that the windfall profit tax is an exclusively out-of-state expense because it is associated with the production of oil outside New Jersey. They argue that the denial of a deduction for an out-of-state expense causes a State to tax more than its fair share of a unitary business’ income. Brief for Appellants 4, 15.

Appellants, however, underestimate the fact that, for apportionment purposes, it is inappropriate to consider the windfall profit tax as an out-of-state expense. Rather, just as each appellant’s oil-producing revenue — as part of a unitary business — is not confined to a single State, Exxon Corp., 447 U. S., at 226; Brief for Appellants 3, so too the costs of producing this revenue are unitary in nature. See Container Corp., 463 U. S., at 182 (the costs of a unitary business cannot be deemed confined to the locality in which they are incurred). Thus, when a State denies a deduction for a cost of a unitary business, the resulting net figure is still a unitary one, which a State may legitimately decide to apportion according to the standard three-factor apportionment formula.

It may be that the application of this formula to appellants results in a somewhat “imperfect” measure of the New Jersey component of their unitary net income. Id., at 183. But this fact alone does not render the tax on appellants unlawful. “The Constitution does not finvalidat[e] an apportionment formula whenever it may result in taxation of some income that did not have its source in the taxing State.’” Id., at 169-170, quoting Moorman Mfg. Co. v. Bair, 437 U. S., at 272 (emphasis added in Container Corp.). On the contrary, as we have said repeatedly, in order to show unfair apportionment, a taxpayer “must demonstrate that there is no rational relationship between the income attributed to the State and the intrastate values of the enterprise” (internal quotation marks omitted). Container Corp., 463 U. S., at 180. Given the unitary nature of appellants’ oil-producing activities, coupled with New Jersey’s use of the benchmark apportionment formula, appellants have not met this burden.

C

Even if a tax is fairly apportioned, it may discriminate against interstate commerce. Westinghouse Electric Corp. v. Tully, 466 U. S. 388, 398-399 (1984). As our precedents show, a tax may violate the Commerce Clause if it is facially discriminatory, has a discriminatory intent, or has the effect of unduly burdening interstate commerce. See generally Smith, State Discriminations against Interstate Commerce, 74 Calif. L. Rev. 1203, 1239 (1986). In Tully, for example, we considered a New York income tax provision that expressly provided a tax credit for shipping products from New York rather than other States. Although the tax was fairly apportioned, the tax credit, “on its face, [was] designed to have discriminatory economic effects” and thus was invalid under the Commerce Clause. 466 U. S., at 406-407.

Of course, a tax provision need not be facially discriminatory in the Tully sense in order to violate the Commerce Clause. For example, in Bacchus Imports, Ltd. v. Dias, 468 U. S. 263 (1984), a Hawaii statute exempted from the State’s liquor tax a brandy distilled from the root of a shrub indigenous to Hawaii. Because this was a local product, the tax exemption did not need to be drafted explicitly along state lines in order to demonstrate its discriminatory design.

Bacchus Imports also involved a tax exemption for fruit wine. Although this exemption was general in nature and did not specify an indigenous product, there was evidence that it was enacted to promote the local pineapple-wine industry. Id., at 270-271. Thus, because the exemption was motivated by an intent to confer a benefit upon local industry not granted to out-of-state industry, the exemption was invalid.

Finally, American Trucking Assns., Inc. v. Scheiner, 483 U. S. 266 (1987), concerned, among other things, an unapportioned Pennsylvania axle tax on the use of Pennsylvania highways by trucks over 26,000 pounds. Although this “flat” tax applied to both in-state and out-of-state trucks, it nonetheless had a discriminatory effect by exerting “an inexorable hydraulic pressure on interstate businesses to ply their trade within the State that enacted the measure rather than ‘among the several States,”’ id., at 287, quoting U. S. Const., Art. I, §8, cl. 3. See also Halliburton Oil Well Co. v. Reily, 373 U. S. 64, 72 (1963) (Louisiana statute had the discriminatory effect of imposing a greater tax on the same goods if they were manufactured outside Louisiana than if they were manufactured within the State, thereby creating an incentive to locate the manufacturing process within the State).

New Jersey’s add-back provision, however, does not contravene any of the principles articulated in these cases. It obviously is not facially discriminatory in the Tully sense, as there is no explicit discriminatory design to the tax. Nor does it apply exclusively to a localized industry, as in Bacchus Imports. Instead, the add-back provision applies generally to any federal tax “on or measured by income or profits.” Thus, it includes the federal income tax, as well as the windfall profit tax. The federal income tax, of course, applies to corporate activity throughout the Nation. Consequently, what could be said of the statute in Bacchus Imports cannot be said of the add-back provision: that it discriminates on the basis of geographic location. See 468 U. S., at 271.

Appellants, it seems to us, miss this essential point. They argue: “The question here is whether a state may single out for special tax burdens a form of business activity that is conducted only in other jurisdictions.” Brief for Appellants 44. But this question is not presented in this litigation. The add-back provision does not single out the windfall profit tax for a deduction denial, and we need not consider here whether a statute that did so would impermissibly discriminate against interstate commerce.

Moreover, appellants concede that no discriminatory motive underlies the add-back provision. Tr. of Oral Arg. 21. Nor does the add-back provision exert a pressure on an interstate business to conduct more of its activities in New Jersey. Denying a deduction for windfall profit tax payments cannot create oil reserves where none exist and therefore cannot be considered an incentive for oil producers to move their oil-producing activities to New Jersey. Given these attributes of the add-back provision, it is difficult to see how it unconstitutionally discriminates against interstate commerce.

Appellants nonetheless claim that the add-back provision, by denying a deduction for windfall profit tax payments, discriminates against oil producers who market their oil in favor of independent retailers who do not produce oil. But whatever disadvantage this deduction denial might impose on integrated oil companies does not constitute discrimination against interstate commerce. Appellants operate both in New Jersey and outside New Jersey. Similarly, nonproducing retailers may operate both in New Jersey and outside the State. Whatever different effect the add-back provision may have on these two categories of companies results solely from differences between the nature of their businesses, not from the location of their activities. See Exxon Corp. v. Governor of Maryland, 437 U. S. 117, 125-129 (1978) (prohibiting oil producers from retailing oil in Maryland does not impermissibly burden interstate commerce because independent interstate retailers still may compete with purely local retailers). In this respect, we agree with the analysis of the New Jersey Supreme Court. 107 N. J., at 337-338, 526 A. 2d, at 1046.

For all these reasons, we conclude that the add-back provision does not discriminate against interstate commerce.

D

There is also no doubt that New Jersey’s Corporation Business Tax is “fairly related” to the benefits that New Jersey provides appellants, “which include police and fire protection, the benefit of a trained work force, and ‘the advantages of a civilized society.’” Exxon Corp. v. Wisconsin Dept. of Revenue, 447 U. S., at 228, quoting Japan Line, Ltd. v. County of Los Angeles, 441 U. S. 434, 445 (1979). Appellants acknowledge, as they must, that New Jersey may impose a reasonable tax on a portion of their “unitary business” income. Brief for Appellants 3. That New Jersey denies a deduction for windfall profit tax payments “does not alter the fact that the . . . tax paid by [appellants] ... is related to the advantages provided by the State which aid [each] appellant’s business.” D. H. Holmes Co. v. McNamara, 486 U. S. 24, 32 (1988).

In sum, then, the Corporation Business Tax imposed on appellants satisfies all four elements of the Complete Auto test, even considering that the add-back provision denies a deduction for windfall profit tax payments.

1 f — 1 1 — 1

Appellants also contend that, by denying a deduction for windfall profit tax payments, the add-back provision violates the Due Process and Equal Protection Clauses of the Fourteenth Amendment. In light of the foregoing discussion, this contention is plainly meritless. First, appellants recognize that the Complete Auto test encompasses due process standards. Brief for Appellants 21; see also 1 J. Hellerstein, State Taxation ¶4.8, p. 123 (1983). Accordingly, having determined that the Corporation Business Tax passes all four prongs of the Complete Auto test, we also conclude that it does not violate due process.

Second, although some forms of discriminatory state taxation may violate the Equal Protection Clause even when they pose no Commerce Clause problem, see Metropolitan Life Ins. Co. v. Ward, 470 U. S. 869, 881 (1985), the add-back provision is not among them. In contrast to Ward, there is no discriminatory classification underlying the add-back provision. Moreover, there is unquestionably a rational basis for the State’s refusal to allow a deduction for federal windfall profit tax.

IV

There being no constitutional infirmity to the add-back provision as authoritatively construed by the Supreme Court of New Jersey, the judgment of that court is affirmed.

It is so ordered.

Justice O’Connor took no part in the consideration or decision of these cases.

Justice Scalia,

concurring in the judgment.

I agree with the Court’s determination that the New Jersey Corporation Business Tax does not facially discriminate against interstate commerce. See ante, at 76-77. Since I am of the view that this conclusion suffices to decide a claim that a state tax violates the Commerce Clause, see American Trucking Assns., Inc. v. Scheiner, 483 U. S. 266, 304 (1987) (Scalia, J., dissenting), I would refrain from applying, for Commerce Clause purposes, the remainder of the analysis articulated in Complete Auto Transit, Inc. v. Brady, 430 U. S. 274, 279 (1977). To the extent, however, that the Complete Auto analysis pertains to the due process requirements that there be “a ‘minimal connection’ between the interstate activities and the taxing State, and a rational relationship between the income attributed to the State and the intrastate values of the enterprise,” Mobil Oil Corp. v. Commissioner of Taxes of Vermont, 445 U. S. 425, 436-437 (1980) (citation omitted), I agree with the Court’s conclusion that those requirements have been met. See ante, at 79-80. Finally, for the reasons set forth in Part III of the Court’s opinion, I agree that the tax in this case does not violate the Equal Protection Clause.

       See Joint Committee on Taxation, General Explanation of the Crude Oil Windfall Profit Tax Act of 1980, 96th Cong., 2d Sess., 6 (Jt. Comm. Print 1981); S. Rep. No. 96-394, p. 6 (1979); H. R. Rep. No. 96-304, p. 4 (1979).

       If the oil is converted into a refined product before it is sold, or if it is removed from the producer’s premises before it is sold, the oil is assigned a “constructive sales price,” 26 U. S. C. § 4988(c)(3), which is “the representative market or [field] price of the oil. . . before conversion or transportation.” 26 CFR § 1.613-3(a) (1988).

       The Act defines “windfall profit” as “the excess of the removal price of the barrel of crude oil over the sum of — (1) the adjusted base price of such barrel, and (2) the amount of the severance tax adjustment with respect to such barrel provided by section 4996(c).” 26 U. S. C. § 4988(a). The “adjusted base price” is derived from the price of the oil in 1979, adjusted for inflation. §4989. The “severance tax adjustment” is the amount by which any severance tax imposed on the oil exceeds the severance tax that would have been imposed if the oil had been valued at its adjusted base price. § 4996(c).

       The annual taxable income for an oil-producing property is determined by reference to § 613(a) of the Internal Revenue Code of 1954, 26 U. S. C. § 613(a). See § 4988(b)(3)(A).

       At issue in these cases are the 1980 taxes of all 13 appellants and the 1981 taxes of 5 of them. Appellee has deferred action on the 1981 taxes of the other 8 appellants pending the final outcome of this litigation.

       The Tax Court consolidated 14 separate complaints raising identical issues. See 7 N. J. Tax 51, 53 (1984). Thirteen of those fourteen original plaintiffs remain parties to this litigation.

       Appellee contends that the windfall profit tax is not “site-specific” because three essential attributes of the tax do not depend on any particular location: the calculation of “removal price” (which may be constructed from market price of the oil in places far from the site at which the oil was removed from the ground); the inflation-adjustment factor; and the net income limitation. See Brief for Appellee 26-33. Whatever the merits of these contentions, we think it is unnecessary to reach them. For fair-apportionment purposes, the relevant question is whether the windfall profit tax is a cost of a unitary business, rather than what the attributes of that cost may be.

       We note, too, that if every State denied a deduction for windfall profit tax payments while applying the three-factor formula, the result would not be equivalent to an unapportioned tax, imposed by a single State on an oil company’s entire net income. In other words, “no multiple taxation would result” from more than one State’s following New Jersey’s lead. See Goldberg v. Sweet, 488 U. S. 252, 260-265 (1989) (discussing a tax to which no apportionment formula was applied).

       Appellants also contend that the windfall profit tax is not “comparable” to the federal income tax. Brief for Appellants 35. But we certainly do not find the State’s treatment of the windfall profit tax as “on or measured by income or profits” irrational or arbitrary. In significant respects, the windfall profit tax is similar to a tax on income. First, by taxing only the difference between the deregulated and regulated price for the oil, the windfall profit tax was intended to reach only the excess income derived from oil production as a result of decontrol. H. R. Rep. No. 96-304, p. 7 (1979). Second, the net income limitation exists precisely to assure that the tax is imposed only upon above-cost receipts. S. Rep. No. 96-394, p. 29 (1979). Moreover, although the Act itself characterizes the windfall profit tax as an “excise tax,” 26 U. S. C. § 4986(a), the Internal Revenue Service states that the tax’s “structure and computation bear more resemblance to an income tax.” IRS Manual Supplement — Windfall Profit Tax Program, 42 RDD-57 (Rev. 3) ¶2.01 (Aug. 28, 1987), reprinted in 2 CCH Internal Revenue Manual — Audit, p. 7567 (1987). Because the IRS believes that the windfall profit tax resembles an income táx, it surely is not irrational for New Jersey to classify the windfall profit tax, along with the federal income tax, as part of a general provision relating to federal taxes “on or measured by income or profits.”

       The Solicitor General of the United States has suggested that denying a deduction for windfall profit tax payments might impermissibly give appellants an incentive to shift operations from oil production, which does not occur in New Jersey, to activities that do occur in New Jersey. Brief for United States as Amicus Curiae 18. But even if this deduction denial caused appellants to shift from oil production, there is no evidence that appellants would shift to other New Jersey activities, rather than non-oil-producing activities outside New Jersey. Indeed, precisely because the deduction denial results in a larger New Jersey tax for appellants, it creates some incentive for appellants to move their operations out of that State. Thus, in the absence of discriminatory intent or a statute directed specifically at economic activity that occurs only in a particular location (as in Bacchus Imports), a deduction denial does not unduly burden interstate commerce just because the deduction denied relates to an economic activity performed outside the taxing State.


author: Justice Stevens

text:
    FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, as receiver for MANNING SAVINGS AND LOAN ASSOCIATION v. TICKTIN et al.
    No. 87-1865.
    Argued February 27, 1989
    Decided April 3, 1989

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

      Richard G. Taranto argued the cause for petitioner. With him on the brief were Solicitor General Fried, Deputy Solicitor General Merrill, and David A. Felt.

      James B. Koch argued the cause for respondents. With him on the brief were Joseph J. Ticktin, pro se, and Irving Faber.

   Justice Stevens

delivered the opinion of the Court.

The Federal Savings and Loan Insurance Corporation (FSLIC), in its capacity as receiver of a state-chartered savings and loan association (Association), brought this action in Federal District Court against former directors of the Association claiming damages for breach of their fiduciary duties under Illinois law. The District Court, relying on Circuit precedent, held that it had jurisdiction of the case pursuant to 28 U. S. C. § 1345 because the FSLIC is an agency of the United States. App. 38-46. However, observing that there was substantial ground for difference of opinion on this controlling question of law, the court certified the jurisdictional question for interlocutory appeal. Id., at 39-46. The Court of Appeals for the Seventh Circuit reversed because it concluded that a proviso included in 20 Stat. 1042, 12 U. S. C. § 1730(k)(l), withdraws federal jurisdiction in cases in which the FSLIC “is a party in its capacity as . . . receiver ... of an insured State-chartered institution” if the suit “involves only the rights or obligations of investors, creditors, stockholders, and such institution under State law.” 832 F. 2d 1438 (1987). Since that ruling, if correct, will require dismissal of a large number of cases concerning the integrity of our financial institutions, we granted certiorari. 488 U. S. 815 (1988).

We resolve the jurisdictional issue by first considering the meaning of 28 U. S. C. § 1345 and then asking whether 12 U. S. C. § 1730(k)(l) enlarges or contracts the grant of federal jurisdiction in cases commenced by the FSLIC.

1 — 1

Federal jurisdiction over cases commenced by federal agencies is conferred by 28 U. S. C. § 1345. That section provides:

“Except as otherwise provided by Act of Congress, the district courts shall have original jurisdiction of all civil actions, suits or proceedings commenced by the United States, or by any agency or officer thereof expressly authorized to sue by Act of Congress.”

Three limits on this grant of jurisdiction are plain from its text. It applies only to civil litigation “commenced” by the federal party; it requires that the agency be “expressly authorized to sue”; and it is subject to such exceptions as may be “otherwise provided by Act of Congress.” In view of the fact that this case was commenced by the FSLIC, and the fact that the FSLIC is expressly authorized to sue and be sued, §1345 supports federal jurisdiction unless another statute otherwise provides. The question, then, is whether 12 U. S. C. § 1730(k)(l) is such a statute.

hH

The text of § 1730(k)(l) indicates that it is a statute that confirms and enlarges federal-court jurisdiction over cases to which the FSLIC is a party. It does so in two ways.

Prior to the enactment of § 1730(k)(l) in 1966, at least one court had expressed some doubt concerning the FSLIC’s status as an agency of the United States for purposes of asserting jurisdiction under § 1346. See Acron Investments, Inc. v. FSLIC, 363 F. 2d 236 (CA9), cert. denied, 385 U. S. 970 (1966). Clause (A) of the statute removed that doubt. The manifest purpose of enacting clause (A) was to foreclose the possible argument that § 1345 does not confer federal agency jurisdiction in cases brought by the FSLIC. Thus, clause (A) lends added support to the jurisdictional basis found in § 1345.

In addition, clause (B) enlarges the category of FSLIC litigation over which federal courts have jurisdiction because it covers all civil cases in which the FSLIC “shall be a party,” whereas § 1345 applies only to those “commenced” by the FSLIC. Thus, the grant of federal jurisdiction in § 1345 is expanded to include cases in which the FSLIC is named as a defendant as well as those in which it intervenes after proceedings are underway. Clause (C) further enlarges federal jurisdiction in cases involving the FSLIC by giving the agency the right to remove civil proceedings from state court to the appropriate federal district court. Thus, placing the proviso to one side for the moment, it is evident that each of the three clauses of § 1730(k)(l) was intended to buttress the FSLIC’s access to a federal forum.

There is no doubt that the proviso imposes a limit on this broad grant of federal jurisdiction. It is equally clear, however, that the proviso does not extend to clause (A) and the agency jurisdiction conferred by § 1345. Clause (B) provides that any civil suit in which the FSLIC is a party “shall be deemed to arise under the laws of the United States.” Clause (C), in turn, permits the FSLIC to remove “any such action” to federal court. Accordingly, these jurisdictional grants are predicated on the congressional finding that actions to which the FSLIC is a party “shall be deemed to arise under the laws of the United States.” The proviso qualifies this finding by describing a subcategory of cases to which the FSLIC is a party that “shall not be deemed to arise under the laws of the United States.” (Emphasis supplied.) Clause (A), however, does not rely on the presence of a federal question as a jurisdictional prerequisite, but rather confirms that the party-based jurisdiction of § 1345 is applicable in cases brought by the FSLIC. As a result, the proviso’s partial retraction of federal-question jurisdiction has no effect on clause (A), and, a fortiori, no effect on § 1345.

The Court of Appeals suggested that notwithstanding the plain language of the statute, Congress must have intended that the proviso apply to clause (A). 832 F. 2d, at 1443-1444. The court reasoned that because clause (B) applies to all civil cases in which the FSLIC is a party— whether as plaintiff or defendant — and because Congress intended to limit this grant of jurisdiction in the manner set out in the proviso, Congress must have intended that the proviso apply to clause (A) as well. To read the proviso otherwise, the court explained, would allow clause (A) “to grant jurisdiction indirectly in those cases that were deliberately and specifically excluded from the jurisdiction granted by part B.” Id., at 1444. The problem with this argument is that in an attempt to give the proviso full effect as applied to each class of cases that might fall within clause (B), the court renders clause (A) entirely redundant. Moreover, reading the proviso so as not to apply to clause (A) does not fail to give the proviso full effect as applied to clause (B). Clause (B) provides federal-question jurisdiction in any case in which the FSLIC is a party and the proviso limits this grant. The fact that clause (A) and § 1345 may provide agency jurisdiction in some of these same cases does not change the fact that the proviso has a real effect — it removes one basis of jurisdiction. We thus conclude that the language of § 1730(k)(l) not only plainly provides that the proviso does not apply to clause (A), but also is given its fullest effect by so reading the statute.

Because the proviso does not apply to clause (A), § 1730 (k)(l) is not an Act of Congress that has “otherwise provided” a limitation on the jurisdictional grant in § 1345. Accordingly, the District Court has federal agency jurisdiction over the FSLIC’s action.

The judgment of the Court of Appeals is reversed.

It is so ordered.

       The District Court relied on the Seventh Circuit’s opinion in FSLIC v. Krueger, 435 F. 2d 633 (1970). On appeal, the Seventh Circuit overruled the pertinent holding of Krueger. 832 F. 2d 1438 (1987).

       Title 12 U. S. C § 1730(k)(l) provides:
      “Notwithstanding any other provision of law, (A) the Corporation shall be deemed to be an agency of the United States within the meaning of section 451 of title 28; (B) any civil action, suit, or proceeding to which the Corporation shall be a party shall be deemed to arise under the laws of the United States, and the United States district courts shall have original jurisdiction thereof, without regard to the amount in controversy; and (C) the Corporation may, without bond or security, remove any such action, suit, or proceeding from a State court to the United States district court for the district and division embracing the place where the same is pending by following any procedure for removal now or hereafter in effect: Provided, That any action, suit, or proceeding to which the Corporation is a party in its capacity as conservator, receiver, or other legal custodian of an insured State-chartered institution and which involves only the rights or obligations of investors, creditors, stockholders, and such institution under State law shall not be deemed to arise under the laws of the United States. No attachment or execution shall be issued against the Corporation or its property before final judgment in any action, suit, or proceeding in any court of any State or of the United States or any territory, or any other court.” (Emphasis supplied.)
      Title 28 U. S. C. § 451, in turn, provides in relevant part:
      “The term ‘agency’ includes any department, independent establishment, commission, administration, authority, board or bureau of the United States or any corporation in which the United States has a proprietary interest, unless the context shows that such term was intended to be used in a more limited sense.”

       Title 12 U. S. C. § 1725(c) provides that the FSLIC “shall have power . . . [t]o sue and be sued, complain and defend, in any court of competent jurisdiction in the United States

         See n. 2, supra.

       Had Congress intended to limit not only the federal-question jurisdiction of clauses (B) and (C) but also the party-based jurisdiction of § 1345, it could easily have drafted a more general proviso asserting that the defined subclass of cases “shall not fall within the federal jurisdiction."

       Because we conclude that the proviso does not modify clause (A) and that jurisdiction was thus properly asserted under § 1345, we need not address the FSLIC’s alternative arguments that the proviso is inapplicable because this suit does not involve “only . . . rights or obligations . . . under State law!’ and does not involve “only the rights or obligations” of parties listed in the proviso.


author: Per Curiam. Justice Brennan, Justice Stevens,

text:
    WRENN v. BENSON et al.
    No. 88-6494.
    Decided April 17, 1989

      Together with No. 88-6497, Wrenn v. Department of Mental Health of Ohio, also on motion for leave to proceed informa pauperis.

   Per Curiam.

On March 27, 1989, we denied pro se petitioner Curtis Wrenn’s request to proceed in forma pauperis under this Court’s Rule 46.1 in filing petitions for certiorari in Wrenn v. Benson and Wrenn v. Ohio Dept. of Mental Health, 489 U. S. 1095. Since October Term 1986, petitioner has filed 22 petitions for certiorari with the Court. We denied him leave to proceed informa pauperis with respect to 19 of those petitions, and he paid the docketing fee required by this Court’s Rule 45(a) on one occasion. He also filed one petition for rehearing.

This Court’s Rule 46.1 requires that “[a] party desiring to proceed in this Court informa pauperis shall file a motion for leave to so proceed, together with his affidavit in the form prescribed in Fed. Rules App. Proc., Form 4 . . . setting forth with particularity facts showing that he comes within the statutory requirements.” Our decision to deny a petitioner leave to proceed in forma pauperis is based on our review of the information contained in the supporting affidavit of indigency. In petitioner’s case, a review of the affidavits he has filed with his last nine petitions for certiorari indicates that his financial condition has remained substantially unchanged. The Court denied him leave to proceed informa pauperis with respect to each petition. Petitioner has nonetheless continued to file for leave to proceed in forma pauperis.

In In re McDonald, 489 U. S. 180, 184 (1989), we said: “Every paper filed with the Clerk of this Court, no matter how repetitious or frivolous, requires some portion of the institution’s limited resources. A part of the Court’s responsibility is to see that these resources are allocated in a way that promotes the interests of justice. ” We do not think that justice is served if the Court continues to process petitioner’s requests to proceed informa pauperis when his financial condition has not changed from that reflected in a previous filing in which he was denied leave to proceed informa pauperis.

We direct the Clerk of the Court not to accept any further filings from petitioner in which he seeks leave to proceed informa pauperis under this Court’s Rule 46.1, unless the affidavit submitted with the filing indicates that petitioner’s financial condition has substantially changed from that reflected in the affidavits submitted by him in Wrenn v. Benson and Wrenn v. Ohio Dept. of Mental Health, 489 U. S. 1095 (1989).

It is so ordered.

Justice Brennan,

with whom Justice Marshall joins,

dissenting.

I dissent from this order for the reasons stated in In re McDonald, 489 U. S. 180, 185 (Brennan, J., dissenting), and in Brown v. Herald Co., 464 U. S. 928 (1983) (Brennan, J., dissenting).

Justice Stevens,

dissenting.

Because I believe the preparation and enforcement of orders of this kind consume more of the Court’s valuable time than is consumed by the routine denial of frivolous motions and petitions, see In re McDonald, 489 U. S. 180, 185 (1989) (Brennan, J., dissenting); Brown v. Herald Co., 464 U. S. 928 (1983) (Brennan, J., dissenting); id., at 931 (Stevens, J., dissenting), I respectfully dissent.

       See Wrenn v. Benson and Wrenn v. Ohio Dept. of Mental Health, 489 U. S. 1095 (1989) (IFP status denied); Wrenn v. New York City Health &

        Hospitals Corporation and Wrenn v. United States District Court, 489 U. S. 1008 (1989) (same); Wrenn v. Thornburgh, 488 U. S. 1039 (1989) (same); Wrenn v. Bowen, 488 U. S. 1028 (1989) (same); Wrenn v. Commissioner, 486 U. S. 1041 (1988) (same); Wrenn v. Gould, 484 U. S. 1067 (1988) (same; paid docketing fee required by this Court’s Rule 45(a) and submitted petition in compliance with Rule 33); Wrenn v. Gould, 484 U. S. 961 (1987) (IFP status denied); Wrenn v. Board of Directors, Whitney M. Young, Jr., Health Center, Inc., and Wrenn v. Bowen, 484 U. S. 894 (1987) (same); Wrenn v. Capstone Medical Center, 483 U. S. 1003 (1987) (same); Wrenn v. Weinberger, 481 U. S. 1047 (1987) (same); Wrenn v. Christian Hospital NE-NW, 479 U. S. 1081 (1987) (same); Wrenn v. McFadden, 479 U. S. 1028 (1987) (same); Wrenn v. Ohio Dept. of Mental Health, 479 U. S. 1016 (1986) (same); Wrenn v. Ohio Dept. of Mental Health, 479 U. S. 981 (1986) (same); Wrenn v. Missouri, 479 U. S. 981 (1986) (same); Wrenn v. Ohio Dept. of Mental Health, 479 U. S. 928 (1986) (same); Wrenn v. Ohio Dept. of Mental Health, 479 U. S. 809 (1986) (same); Wrenn v. St. Charles Hospital, 477 U. S. 907 (1986); Wrenn v. Walters, 475 U. S. 1128 (1986).

        Wrenn v. Gould, 485 U. S. 1015 (1988).

       The Clerk of the Court provides the following Form 4 affidavit to those who seek assistance in drafting in forma pauperis papers:
      “I, [John Doe], being first duly sworn, depose and say that I am the petitioner in the above-entitled case; that in support of my motion to proceed without being required to prepay fees, costs, or give security therefor, I state that because of my poverty I am unable to pay the costs of this case or to give security therefor; and that I believe I am entitled to redress.
      “I further swear that the responses which I have made to the questions and instructions below relating to my ability to pay the cost of proceeding in this Court are true.
      “1. Are you presently employed?

        “a. If the answer is yes, state the amount of your salary or wages per month and give the name and address of your employer.
      “b. If the answer is no, state the date of your last employment and the amount of salary or wages per month which you received.
      “2. Have you received within the past twelve months any income from a business, profession or other form of self-employment, or in the form of rent payments, interest, dividends, or other sources?
      “a. If the answer is yes, describe each source of income and state the amount received from each during the last twelve months.
      “3. Do you own any cash or checking or savings account?
      “a. If the answer is yes, state the total value of the items owned.
      “4. Do you own any real estate, stocks, bonds, notes, automobiles, or other valuable property (excluding ordinary household furnishings and clothing)?
      “a. If the answer is yes, describe the property and state its approximate value.
      “5. List the persons who are dependent upon you for support and state your relationship to those persons.
      “I understand that a false statement or answer to any question in this affidavit will subject me to penalties for perjury.”

       See Wrenn v. Benson and Wrenn v. Ohio Dept. of Mental Health, 489 U. S. 1095 (1989) ($2,309.67 per month in salary; $46 in cash; $72,000 home; $250 savings bond; 4 dependents); Wrenn v. United States District Court and Wrenn v. New York City Health & Hospitals Corporation, 489 U. S. 1008 (1989) ($1,390.20 per month in salary; $72 in cash; $72,000 home; $250 savings bond; 4 dependents); Wrenn v. Thornburgh, 488 U. S. 1039 (1989) ($1,390.20 per month in salary; $72 in cash; $72,000 home; $250 savings bond; 4 dependents); Wrenn v. Bowen, 488 U. S. 1028 (1989) ($2,309.67 per month in salary; $46 in cash; $72,000 home; $250 savings bond; 4 dependents); Wrenn v. Commissioner, 486 U. S. 1041 (1988) ($1,073 per month in salary; $14,496 per year in retirement benefits; $42 in cash; $72,000 home; 4 dependents); Wrenn v. Gould, 484 U. S. 961 (1987) ($1,073 per month in salary; $8,400 per year in retirement benefits; $61 in cash; $72,000 home; 4 dependents); Wrenn v. Bowen, 484 U. S. 894 (1987) ($1,073 per month in salary; $8,400 per year in retirement benefits; $61 in cash; $72,000 home; 4 dependents).


author: Justice White

text:
    CALIFORNIA et al. v. ARC AMERICA CORP. et al.
    No. 87-1862.
    Argued February 27, 1989
    Decided April 18, 1989

      White, J., delivered the opinion of the Court, in which all other Members joined, except Stevens and O’Connor, JJ., who took no part in the consideration or decision of the case.

      Thomas Greene, Supervising Deputy Attorney General of California, argued the cause for appellants. With him on the briefs were John K. Van de Kamp, Attorney General, Andrea Sheridan Ordin, Chief Assistant Attorney General, Sanford N. Grushin, Assistant Attorney General, Owen Lee

      Kwong, and H. Chester Horne, Jr., Deputy Attorney General, Don Siegelman, Attorney General of Alabama, and James B. Prude, Assistant Attorney General, Robert K. Corbin, Attorney General of Arizona, Hubert H. Humphrey III, Attorney General of Minnesota, Stephen P. Kilgriff, Deputy Attorney General, and Kathleen M. Mahoney, Special Assistant Attorney General.

      Roy T. Englert, Jr., argued the cause for the United States as amicus curiae urging reversal. With him on the briefs were Solicitor General Fried, Assistant Attorney General Rule, Deputy Solicitor General Merrill, Deputy Assistant Attorney General Starling, Catherine G. O’Sullivan, and Marion L. Jetton.

      Theodore B. Olson argued the cause for appellees. With him on the brief for appellee ARC America Corp. were Phillip H. Rudolph, John J. Hanson, and John J. Waller, Jr. David J. Leonard and David H. Nix filed a brief for appellees Class Members Allied Concrete, Inc., et al.

      Briefs of amici curiae urging reversal were filed for Thirty-five States et al. by J. Joseph Curran, Jr., Attorney General of Maryland, Michael F. Brockmeyer, and Ellen S. Cooper, Alan M. Barr, and Craig J. Hornig, Assistant Attorneys General, Grace Berg Schaible, Attorney General of Alaska, and Richard D. Monkman, John Steven Clark, Attorney General of Arkansas, Duane Woodard, Attorney General of Colorado, and Thomas P. McMahon, First Assistant Attorney General, Joseph I. Lieberman, Attorney General of Connecticut, and Robert M. Langer and Steven M. Rutstein, Assistant Attorneys General, Charles M. Oberly III, Attorney General of Delaware, and David G. Culley, Deputy Attorney General, Robert A. Buttenvorth, Attorney General of Florida, Wairen Price III, Attorney General of Hawaii, and Robert A. Marks, Rod Kimura, and Ann Catherine Blank, Deputy Attorneys General, Neil F. Hartigan, Attorney General of Illinois, Linley E. Pearson, Attorney General of Indiana, and Frank A. Baldivin, Deputy Attorney General, Thomas J. Miller, Attorney General of Iowa, and John R. Perkins, Deputy Attorney General, Robert T. Stephan, Attorney General of Kansas, and David M. Cooper, Assistant Attorney General, William J. Guste, Jr., Attorney General of Louisiana, James E. Tierney, Attorney General of Maine, and Stephen L. Wessler, Deputy Attorney General, James M. Shannon, Attorney General of Massachusetts, and George Weber, Assistant Attorney General, Frank

        J. Kelley, Attorney General of Michigan, Michael C. Moore, Attorney General of Mississippi, and Robert E. Sanders, Special Assistant Attorney General, William L. Webster, Attorney General of Missouri, and Tom A. Glassberg, Assistant Attorney General, Mike Greely, Attorney General of Montana, and Joe Roberts, Assistant Attorney General, Robert M. Spire, Attorney General of Nebraska, and Dale A. Comer, Assistant Attorney General, Stephen E. Merrill, Attorney General of New Hampshire, and Terry L. Robertson, Senior Assistant Attorney General, W. Cary Edwards, Attorney General of New Jersey, and Laurel A. Price, Deputy Attorney General, Robert Abrams, Attorney General of New York, Anthony J. Celebrezze, Jr., Attorney General of Ohio, and Doreen C. Johnson, Assistant Attorney General, Robert H. Henry, Attorney General of Oklahoma, and Jane Wheeler, Assistant Attorney General, James E. O’Neil, Attorney General of Rhode Island, and Robyn Y. Davis, Assistant Attorney General, Roger A. Tellinghuisen, Attorney General of South Dakota, W. J. Michael Cody, Attorney General of Tennessee, and Perry A. Craft, Deputy Attorney General, Jim Mattox, Attorney General of Texas, Mary F. Keller, Executive Assistant Attorney General, and Aliene D. Evans, Assistant Attorney General, David L. Wilkinson, Attorney General of Utah, and Richard M. Hagstrom, Assistant Attorney General, Mary Sue Terry, Attorney General of Virginia, and Allen L. Jackson, Assistant Attorney General, Kenneth O. Eikenberry, Attorney General of Washington, and Carol A. Smith, Assistant Attorney General, Charles G. Brown, Attorney General of West Virginia, C. William Ullrich, First Deputy Attorney General, and Dan Huck, Deputy Attorney General, Donald J. Han-away, Attorney General of Wisconsin, and Kevin J. O’Connor, Assistant Attorney General, and Joseph B. Meyer, Attorney General of Wyoming; for the Consumers Union of U. S., Inc., by Alan Mark Silbergeld; and for the National Conference of State Legislatures et al. by Benna Ruth Solomon, David J. Burman, and Thomas L. Boeder.

      Briefs of amici curiae urging affirmance were filed for the Business Roundtable by Thomas B. Leary and Janet L. McDavid; for the Chamber of Commerce of the United States by Bert W. Rein, James M. Johnstone, and Stephen A. Bokat; and for the National Association of Manufacturers by Otis Pratt Pearsall, Philip H. Curtis, Ronald C. Redcay, Jan S. Amundson, and Quentin Riegel.

        Robert K. Corbin, Attorney General, and Anthony B. Ching, Solicitor General, filed a brief for the State of Arizona as amicus ciiriae.

   Justice White

delivered the opinion of the Court.

In Illinois Brick Co. v. Illinois, 431 U. S. 720 (1977), the State of Illinois brought suit on its own behalf and on behalf of a number of local governmental entities seeking treble damages under §4 of the Clayton Act, 38 Stat. 731, as amended, 15 U. S. C. § 15(a), for an alleged conspiracy to fix the price of concrete block in violation of § 1 of the Sherman Act, 26 Stat. 209, as amended, 15 U. S. C. § 1. The State and the local governments were all indirect purchasers of concrete block — that is, they did not purchase concrete block directly from the price-fixing defendants but rather purchased products or contracted for construction into which the concrete block was incorporated by a prior purchaser. The Court held that, with limited exceptions, only overcharged direct purchasers, and not subsequent indirect purchasers, were persons “injured in [their] business or property” within the meaning of § 4, and that therefore the State of Illinois was not entitled to recover under federal law for the portion of the overcharge passed on to it.

Appellants in the present case, the States of Alabama, Arizona, California, and Minnesota, brought suit in the appropriate federal courts on their own behalf and on behalf of classes of all governmental entities within each State, excluding the Federal Government, seeking treble damages under §4 of the Clayton Act for an alleged nationwide conspiracy to fix prices of cement in violation of § 1 of the Sherman Act. Appellants are, at least in part, indirect purchasers of cement, and so under Illinois Brick, like the State of Illinois in that case, would not be entitled to recover on their indirect purchaser claims under § 4 unless those claims fell within one of the exceptions. In their complaints, however, appellants also alleged violations of their respective state antitrust laws under which, as a matter of state law, indirect purchasers arguably are allowed to recover for all overcharges passed on to them by direct purchasers. The claims under these state indirect purchaser statutes are the focus of this case.

Numerous similar actions were filed by other plaintiffs in various District Courts, and the actions were transferred to the United States District Court for the District of Arizona for coordinated pretrial proceedings. In re Cement and Concrete Antitrust Litigation, 437 F. Supp. 750 (JPML 1977). The District Court certified the actions as class actions and established a number of plaintiff classes. Between July 1979 and October 1981, several major defendants settled with the various classes, resulting in a settlement fund in excess of $32 million. The settlements left distribution of the fund for later resolution, subject to approval of the District Court.

Appellants sought payment out of the settlement fund for their state indirect purchaser claims. Appellees, class members who are direct purchasers, objected. When the District Court approved a plan for distributing the settlement fund, it refused to allow the claims against the fund pursuant to state indirect purchaser statutes. According to the District Court, “[s]uch statutes are clear attempts to frustrate the purposes and objectives of Congress, as interpreted by the Supreme Court in Illinois Brick, and, accordingly, are preempted by federal law.” App. to Juris. Statement A-31 (emphasis omitted).

The Ninth Circuit affirmed. In re Cement and Concrete Antitrust Litigation, 817 F. 2d 1435 (1987). The Court of Appeals identified “three purposes or objectives of federal antitrust law in this context,” as defined by Illinois Brick and Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U. S. 481 (1968): avoiding unnecessarily complicated litigation; providing direct purchasers with incentives to bring private antitrust actions; and avoiding multiple liability of defendants. 817 F. 2d, at 1445. If state laws permitting indirect purchasers to recover were construed to restrict direct purchasers to suing only for the amount of any overcharge they have absorbed, the Court of Appeals was of the view that state law conflicted directly with federal law as construed in Illinois Brick. Alternatively, if state law permitted indirect purchasers to bring claims for damages in addition to the claims brought by direct purchasers, it would “impermissibly interfere with the three policy goals outlined in Hanover Shoe and Illinois Brick.” 817 F. 2d, at 1445. The Court of Appeals therefore held that state indirect purchaser claims that did not satisfy any exception to Illinois Brick were pre-empted.

Appellants appealed to this Court, invoking our jurisdiction under 28 U. S. C. § 1254(2). We noted probable jurisdiction, 488 U. S. 814 (1988), and we now reverse.

We should first make it clear exactly what the issue is before us. These cases alleged violations of both the Sherman Act and state antitrust Acts. The settlements, as we understand it, covered both the federal and the state-law claims; the settlement fund was intended to be distributed in complete satisfaction of those claims. Under federal law, no indirect purchaser is entitled to sue for damages for a Sherman Act violation, and there is no claim here that state law could provide a remedy for the federal violation that federal law forbids. Had these cases gone to trial and a Sherman Act violation been proved, only direct purchasers would have been entitled to damages for that violation, and there is no suggestion by the parties that the same rule should not apply to distributing that part of the fund that was meant to settle the Sherman Act claims. The issue before us is whether this rule limiting recoveries under the Sherman Act also prevents indirect purchasers from recovering damages flowing from violations of state law, despite express state statutory provisions giving such purchasers a damages cause of action.

The path to be followed in pre-emption cases is laid out by our cases. It is accepted that Congress has the authority, in exercising its Article I powers, to pre-empt state law. In the absence of an express statement by Congress that state law is pre-empted, there are two other bases for finding pre-emption. First, when Congress intends that federal law occupy a given field, state law in that field is pre-empted. Pacific Gas & Electric Co. v. State Energy Resources Conservation and Development Comm’n, 461 U. S. 190, 212-213 (1983). Second, even if Congress has not occupied the field, state law is nevertheless pre-empted to the extent it actually conflicts with federal law, that is, when compliance with both state and federal law is impossible, Florida Lime & Avocado Growers, Inc. v. Paul, 373 U. S. 132, 142-143 (1963), or when the state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,” Hines v. Davidowitz, 312 U. S. 52, 67 (1941). See, e. g., Silkwood v. Kerr-McGee Corp., 464 U. S. 238, 248 (1984).

In this case, in addition, appellees must overcome the presumption against finding pre-emption of state law in areas traditionally regulated by the States. See Hillsborough County v. Automated Medical Laboratories, Inc., 471 U. S. 707, 716 (1985). When Congress legislates in a field traditionally occupied by the States, “we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.” Rice v. Santa Fe Elevator Corp., 331 U. S. 218, 230 (1947). Given the long history of state common-law and statutory remedies against monopolies and unfair business practices it is plain that this is an area traditionally regulated by the States. Cf. Florida Lime & Avocado Growers, supra, at 146 (regulation to “prevent the deception of consumers”).

In light of these principles, the Court of Appeals erred in holding that the state indirect purchaser statutes are preempted. There is no claim that the federal antitrust laws expressly pre-empt state laws permitting indirect purchaser recovery. Moreover, appellees concede that Congress has not pre-empted the field of antitrust law. Brief for Appellee ARC America Corp. 10, n. 5; Brief for Appellees Allied Concrete, Inc., et al. 4. Congress intended the federal antitrust laws to supplement, not displace, state antitrust remedies. 21 Cong. Rec. 2457 (1890) (remarks of Sen.. Sherman); see Cantor v. Detroit Edison Co., 428 U. S. 579, 632-635 (1976) (Stewart, J., dissenting). And on several prior occasions, the Court has recognized that the federal antitrust laws do not pre-empt state law. See Watson v. Buck, 313 U. S. 387, 403 (1941); Puerto Rico v. Shell Co., 302 U. S. 253, 259-260 (1937); cf. Exxon Corp. v. Governor of Maryland, 437 U. S. 117, 133-134 (1978).

Appellees’ only contention is that state laws permitting indirect purchaser recoveries pose an obstacle to the accomplishment of the purposes and objectives of Congress. State laws to this effect are consistent with the broad purposes of the federal antitrust laws: deterring anticompetitive conduct and ensuring the compensation of victims of that conduct. Illinois Brick, 431 U. S., at 746; Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U. S. 477, 485-486 (1977). The Court of Appeals concluded, however, that such laws are inconsistent with and stand as an obstacle to effectuating the congressional purposes and policies identified in Hanover Shoe and Illinois Brick In this respect, the Court of Appeals has misunderstood both Hanover Shoe and Illinois Brick.

Neither of those cases addressed the pre-emptive force of the federal antitrust laws. Neither case contains any discussion of state law or of the relevant standards for pre-emption of state law. As we made clear in Illinois Brick, the issue before the Court in both that case and in Hanover Shoe was strictly a question of statutory interpretation — what was the proper construction of § 4 of the Clayton Act. See, e. g., 431 U. S., at 736.

It is one thing to consider the congressional policies identified in Illinois Brick and Hanover Shoe in defining what sort of recovery federal antitrust law authorizes; it is something altogether different, and in our view inappropriate, to consider them as defining what federal law allows States to do under their own antitrust law. As construed in Illinois Brick, § 4 of the Clayton Act authorizes only direct purchasers to recover monopoly overcharges under federal law. We construed §4 as not authorizing indirect purchasers to recover under federal law because that would be contrary to the purposes of Congress. But nothing in Illinois Brick suggests that it would be contrary to congressional purposes for States to allow indirect purchasers to recover under their own antitrust laws.

The Court of Appeals also erred in concluding that state indirect purchaser statutes interfere with accomplishing the purposes of the federal law that were identified in Illinois Brick. First, the Court of Appeals concluded that state indirect purchaser statutes interfere with the congressional purpose of avoiding unnecessarily complicated proceedings on federal antitrust claims. But these state statutes cannot and do not purport to affect remedies available under federal law. Furthermore, state indirect purchaser actions will not necessarily be brought in federal court. 817 F. 2d, at 1445. Unlike the federal indirect purchaser claims asserted in Illinois Brick, which would have been exclusively within the jurisdiction of the federal courts, 15 U. S. C. §§ 15(a), 26, claims under state indirect purchaser statutes could be brought in state courts, separately from federal actions brought by direct purchasers. Moreover, federal courts have the discretion to decline to exercise pendent jurisdiction over state indirect purchaser claims, even if those claims are brought in the first instance in federal court. See Mine Workers v. Gibbs, 383 U. S. 715, 725-726 (1966). Since many state indirect purchaser actions would be heard in state courts, at least when the federal courts determined that hearing those claims would be overly burdensome, any complication of federal direct purchaser actions in federal court would be minimal.

Second, the Court of Appeals reasoned that allowing state indirect purchaser claims could reduce the incentives of direct purchasers to bring antitrust actions by reducing their potential recoveries. The presence of indirect purchaser claims would reduce settlement offers to direct purchasers, the Court of Appeals believed, and if the total liability were to exhaust a defendant’s assets, the direct purchasers would have to share the defendant’s estate in bankruptcy with indirect purchasers. But the Court in Illinois Brick was not concerned with the risk that a plaintiff might not be able to recover its entire damages award or might be offered less to settle. Indeed, taken to its extreme, the Court of Appeals’ logic would lead to the pre-emption of any state-law claims against antitrust defendants, even if wholly unrelated, because the presence of other litigation could threaten the defendants with bankruptcy and reduce their willingness to settle. Illinois Brick was concerned that requiring direct and indirect purchasers to apportion the recovery under a single statute — § 4 of the Clayton Act — would result in no one plaintiff having a sufficient incentive to sue under that statute. State indirect purchaser statutes pose no similar risk to the enforcement of the federal law.

Appellees argue that because the defendants in these antitrust actions have settled and there is a limited settlement fund, the indirect purchasers’ claims are pre-empted because those claims will likely reduce the amount that can be paid from the fund to direct purchasers. But as we said earlier, the settlement covered both federal and state-law claims, and whatever amount is allocable to federal claims will be distributed only to direct purchasers. Indirect purchasers will participate only in distributing the funds available to claimants under state law. Even if the settlement fund is not to be divided between state and federal-law claimants, the settlement necessarily was intended to dispose of all claimants, whether claiming under federal or state law and whether direct or indirect purchasers. That direct purchasers may have to share with indirect purchasers is a function of the fact and form of settlement rather than the impermissible operation of state indirect purchaser statutes.

Third, the Court of Appeals concluded that state indirect purchaser claims might subject antitrust defendants to multiple liability, in contravention of the “express federal policy” condemning multiple liability. 817 F. 2d, at 1446 (citing Illinois Brick; Associated General Contractors of California, Inc. v. Carpenters, 459 U. S. 519, 544 (1983); and Blue Shield of Virginia v. McCready, 457 U. S. 465, 474-475 (1982)). But Illinois Brick, as well as Associated General Contractors and Blue Shield, all were cases construing § 4 of the Clayton Act; in none of those cases did the Court identify a federal policy against States imposing liability in addition to that imposed by federal law. Ordinarily, state causes of action are not pre-empted solely because they impose liability over and above that authorized by federal law, see Silkwood v. Kerr-McGee Corp., 464 U. S., at 257-258; California v. Zook, 336 U. S. 725, 736 (1949), and no clear purpose of Congress indicates that we should decide otherwise in this case.

When viewed properly, Illinois Brick was a decision construing the federal antitrust laws, not a decision defining the interrelationship between the federal and state antitrust laws. The congressional purposes on which Illinois Brick was based provide no support for a finding that state indirect purchaser statutes are pre-empted by federal law. The judgment of the Court of Appeals is therefore reversed.

So ordered.

Justice Stevens and Justice O’Connor took no part in the consideration or decision of this case.

       Section 4 provides as follows:
      “[A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee.” 15 U. S. C. § 15(a).

       The Court noted two possible exceptions: when the direct purchaser and the indirect purchaser have entered into pre-existing cost-plus contracts, Illinois Brick Co. v. Illinois, 431 U. S., at 732, n. 12, and when the direct purchaser is owned or controlled by the indirect purchaser, id., at 736, n. 16.

       The statutes of Alabama, California, and Minnesota expressly allow indirect purchasers to sue. See Ala. Code § 6-5-60(a) (1975) (allowing recovery by any person “injured or damaged . . . , direct or indirect”); Cal. Bus. & Prof. Code Ann. § 16750(a) (West Supp. 1989) (allowing recovery “regardless of whether such injured person dealt directly or indirectly with the defendant”); Minn. Stat. §325D.57 (1988) (allowing recovery by any person “injured directly or indirectly”). A number of other jurisdictions have similar statutes. Colo. Rev. Stat. §6-4-106 (Supp. 1988); D. C. Code § 28-4509(a) (1981); Haw. Rev. Stat. §480-14(c) (1985); 111. Rev. Stat., ch. 38, ¶60-7(2) (1988); Kan. Stat. Ann. §50-801(b) (Supp. 1988); Md. Com. Law Code Ann. § 11-209 (1983); Mich. Comp. Laws Ann. § 445.778 (West Supp. 1988); Miss. Code Ann. § 75-21-9 (1972); N. M. Stat. Ann. § 57-l-3(A) (1987); R. I. Gen. Laws § 6-36-12(g) (1985); S. D. Codified Laws §37-1-33 (1986); Wis. Stat. § 133.18 (1987-1988).
      The Arizona statute, Ariz. Rev. Stat. Ann. § 44-1408(A) (1987), generally follows the language of the Clayton Act, but it might be interpreted as a matter of state law as authorizing indirect purchasers to recover. This is appellants’ position. See Brief for Appellants 19, n. 6; Juris. Statement 9. Appellees dispute this interpretation, Brief for Appellee ARC America Corp. 21, n. 14, and the District Court and the Court of Appeals did not pass on this question given their holdings that even if the statute was so interpreted it was pre-empted by federal law. We express no opinion on this question of Arizona law.

       At the time of the enactment of the Sherman Act, 21 States had already adopted their own antitrust laws. Mosk, State Antitrust Enforcement and Coordination with Federal Enforcement, 21 A. B. A. Antitrust Section 358, 363 (1962). Moreover, the Sherman Act itself, in the words of Senator Sherman, “does not announce a new principle of law, but applies old and well recognized principles of the common law to the complicated jurisdiction of our State and Federal Government.” 21 Cong. Rec. 2456 (1890).

       Cf. National Cooperative Research Act of 1984, 15 U. S. C. § 4303(c) (1982 ed., Supp. V); Export Trading Company Act of 1982, 15 U. S. C. §§4016, 4002(a)(7).

       In one respect, the Court of Appeals was overly narrow in its description of the congressional purposes identified in Illinois Brick. In Illinois Brick, the Court was concerned not merely that direct purchasers have sufficient incentive to bring suit under the antitrust laws, as the Court of Appeals asserted, but rather that at least some party have sufficient incentive to bring suit. Indeed, we implicitly recognized as much in noting that indirect purchasers might be allowed to bring suit in cases in which it would be easy to prove the extent to which the overcharge was passed on to them. See 431 U. S., at 732, n. 12.

       Contrary to the Court of Appeals’ suggestion, 817 F. 2d, at 1445, there is no contention here that the state indirect purchaser statutes themselves seek to limit the recovery direct purchasers can obtain under federal law.