text:
    KAMEN v. KEMPER FINANCIAL SERVICES, INC., et al.
    No. 90-516.
    Argued March 27, 1991
    Decided May 20, 1991

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

      Richard M. Meyer argued the cause and filed briefs for petitioner.

      Michael R. Dreeben argued the cause for the Securities and Exchange Commission as amicus curiae urging reversal. With him on the brief were Solicitor General Starr, Deputy Solicitor General Roberts, James R. Doty, Paul Gonson, Jacob H. Stillman, Lucinda O. McConathy, and Randall W. Quinn.

      Joan M. Hall argued the cause for respondents. With her on the brief for respondent Kemper Financial Services, Inc., were Barry Sullivan and Sidney L Schenkier. Martin M. Ruken and Charles F. Custer filed a brief for respondent Cash Equivalent Fund, Inc.

      Briefs of amici curiae urging affirmance were filed for the Investment Company Institute by Harvey L. Pitt and James H. Schropp; and for the Business Roundtable by Dennis J. Block and Stephen A. Radin.

   Justice Marshall

delivered the opinion of the Court.

This case calls upon us to determine whether we should fashion a federal common law rule obliging the representative shareholder in a derivative action founded on the Investment Company Act of 1940, 54 Stat. 789, 15 U. S. C. § 80a-l(a) et seq., to make a demand on the board of directors even when such a demand would be excused as futile under state law. Because the scope of the demand requirement embodies the incorporating State’s allocation of governing powers within the corporation, and because a futility exception to demand does not impede the purposes of the Investment Company Act, we decline to displace state law with a uniform rule abolishing the futility exception in federal derivative actions.

1 — 1

The Investment Company Act of 1940 (ICA or Act) establishes a scheme designed to regulate one aspect of the management of investment companies that provide so-called “mutual fund” services. Mutual funds pool the investment assets of individual shareholders. Such funds typically are organized and underwritten by the same firm that serves as the company’s “investment adviser.” The ICA seeks to arrest the potential conflicts of interest inherent in such an arrangement. See generally Daily Income Fund, Inc. v. Fox, 464 U. S. 523, 536-541 (1984); Burks v. Lasker, 441 U. S. 471, 480-481 (1979). The Act requires, inter alia, that at least 40% of the investment company’s directors be financially independent of the investment adviser, 15 U. S. C. §§80a-10(a), 80a — 2(a)(19)(iii); that the contract between the adviser and the company be approved by a majority of the company’s shareholders, §80a-15(a); and that the dealings of the adviser with the company measure up to a fiduciary standard, the breach of which gives rise to a cause of action by either the Securities and Exchange Commission (SEC) or an individual shareholder on the company’s behalf, § 80a-35(b).

Petitioner brought this suit to enforce § 20(a) of the Act, 15 U. S. C. § 80a-20(a), which prohibits materially misleading proxy statements. The complaint was styled as a shareholder derivative action brought on behalf of respondent Cash Equivalent Fund, Inc. (Fund), a registered investment company, against Kemper Financial Services, Inc. (KFS), the Fund’s investment adviser. Petitioner alleged that KFS obtained shareholder approval of the investment-adviser contract by causing the Fund to issue a proxy statement that materially misrepresented the character of KFS’ fees. See App. to Pet. for Cert. 90a-91a. Petitioner also averred that she made no precomplaint demand on the Fund’s board of directors because doing so would have been futile. In support of this allegation, the complaint stated that all of the directors were under the control of KFS, that the board had voted unanimously to approve the offending proxy statement, and that the board had subsequently evidenced its hostility to petitioner’s claim by moving to dismiss. See id., at 92a-93a. The District Court granted KFS’ motion to dismiss on the ground that petitioner had failed to plead the facts excusing demand with sufficient particularity for purposes of Federal Rule of Civil Procedure 23.1. See 659 F. Supp. 1153, 1160-1163 (ND Ill. 1987).

The Court of Appeals affirmed the dismissal of petitioner’s § 20(a) claim. See 908 F. 2d 1338 (CA7 1990). Like the District Court, the Court of Appeals concluded that petitioner’s failure to make a precomplaint demand was fatal to her case. Drawing heavily on the American Law Institute’s Principles of Corporate Governance (Tent. Draft No. 8, Apr. 15, 1988), the Court of Appeals concluded that the futility exception does little more than generate wasteful threshold litigation collateral to the merits of the derivative shareholder’s claim. For that reason, the court adopted as a rule of federal common law the ALI’s so-called “universal demand” rule, under which the futility exception is abolished. See 908 F. 2d, at 1344; see also ALI, Principles of Corporate Governance, swpra, §§ 7.03(a) — (lo), and comment a. The court acknowledged this Court’s precedents holding that courts should incorporate state law when fashioning federal common law rules to fill the interstices of private causes of action brought under federal securities laws. See 908 F. 2d, at 1342. Nonetheless, because petitioner had neglected until her reply brief to advert to the established status of the futility exception under the law of Maryland — the State in which the Fund is incorporated — the court held that petitioner’s challenge to the court’s power to adopt the ALI’s universal-demand rule “c[ame] too late” to be considered. Ibid.

We granted certiorari, 498 U. S. 997 (1990), and now reverse.

II

The derivative form of action permits an individual shareholder to bring “suit to enforce a corporate cause of action against officers, directors, and third parties.” Ross v. Bernhard, 396 U. S. 531, 534 (1970). Devised as a suit in equity, the purpose of the derivative action was to place in the hands of the individual shareholder a means to protect the interests of the corporation from the misfeasance and malfeasance of “faithless directors and managers.” Cohen v. Beneficial Loan Corp., 337 U. S. 541, 548 (1949). To prevent abuse of this remedy, however, equity courts established as a “precondition for the suit” that the shareholder demonstrate that “the corporation itself had refused to proceed after suitable demand, unless excused by extraordinary conditions.” Ross v. Bernhard, supra, at 534. This requirement is accommodated by Federal Rule of Civil Procedure 23.1, which states in pertinent part:

“The complaint [in a shareholder derivative action] shall . . . allege with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors or comparable authority and, if necessary, from the shareholders or members, and the reasons for the plaintiff’s failure to obtain the action or for not making the effort.”

But although Rule 23.1 clearly contemplates both the demand requirement and the possibility that demand may be excused, it does not create a demand requirement of any particular dimension. On its face, Rule 23.1 speaks only to the adequacy of the shareholder representative’s pleadings. Indeed, as a rule of procedure issued pursuant to the Rules Enabling Act, Rule 23.1 cannot be understood to “abridge, enlarge or modify any substantive right.” 28 U. S. C. § 2072(b). The purpose of the demand requirement is to “af-for[d] the directors an opportunity to exercise their reasonable business judgment and ‘waive a legal right vested in the corporation in the belief that its best interests will be promoted by not insisting on such right.’” Daily Income Fund, Inc. v. Fox, 464 U. S., at 533, quoting Corbus v. Alaska Treadwell Gold Mining Co., 187 U. S. 455, 463 (1903). Ordinarily, it is only when demand is excused that the shareholder enjoys the right to initiate “suit on behalf of his corporation in disregard of the directors’ wishes.” R. Clark, Corporate Law § 15.2, p. 640 (1986). In our view, the function of the demand doctrine in delimiting the respective powers of the individual shareholder and of the directors to control corporate litigation clearly is a matter of “substance,” not “procedure.” See Daily Income Fund, Inc. v. Fox, supra, at 543-544, and n. 2 (Stevens, J., concurring in judgment); cf. Cohen v. Beneficial Loan Corp., supra, at 555-557 (state security-for-costs statute limits shareholder’s “substantive” right to maintain derivative action); Hanna v. Plumer, 380 U. S. 460, 477 (1965) (Harlan, J., concurring) (rule is “substantive” when it regulates derivative shareholder’s primary conduct in exercise of corporate managerial power). Thus, in order to determine whether the demand requirement may be excused by futility in a derivative action founded on § 20(a) of the ICA, we must identify the source and content of the substantive law that defines the demand requirement in such a suit.

Ill

A

It is clear that the contours of the demand requirement in a derivative action founded on the ICA are governed by federal law. Because the ICA is a federal statute, any common law rule necessary to effectuate a private cause of action under that statute is necessarily federal in character. See Burks v. Lasker, 441 U. S., at 476-477; Sola Electric Co. v. Jefferson Electric Co., 317 U. S. 173, 176 (1942).

It does not follow, however, that the content of such a rule must be wholly the product of a federal court’s own devising. Our cases indicate that a court should endeavor to fill the interstices of federal remedial schemes with uniform federal rules only when the scheme in question evidences a distinct need for nationwide legal standards, see, e. g., Clearfield Trust Co. v. United States, 318 U. S. 863, 366-367 (1943), or when express provisions in analogous statutory schemes embody congressional policy choices readily applicable to the matter at hand, see, e. g., Boyle v. United Technologies Corp., 487 U. S. 500, 511-512 (1988); DelCostello v. Teamsters, 462 U. S. 151, 169-172 (1983). Otherwise, we have in-. dicated that federal courts should “incorporate] [state law] as the federal rule of decision,” unless “application of [the particular] state law [in question] would frustrate specific objectives of the federal programs.” United States v. Kimbell Foods, Inc., 440 U. S. 715, 728 (1979). The presumption that state law should be incorporated into federal common law is particularly strong in areas in which private parties have entered legal relationships with the expectation that their rights and obligations would be governed by state-law standards. See id., at 728-729, 739-740 (commercial law); Reconstruction Finance Corp. v. Beaver County, 328 U. S. 204, 210 (1946) (property law); see also De Sylva v. Ballentine, 351 U. S. 570, 580-581 (1956) (borrowing family law because of primary state responsibility).

Corporation law is one such area. See Burks v. Lasker, supra. The issue in Burks was whether the disinterested directors of a registered investment company possess the power to terminate a nonfrivolous derivative action founded on the ICA and the Investment Advisers Act of 1940 (IAA). We held that a federal court should look to state law to answer this question. See id, at 477-485. “'Corporations,’” we emphasized, “‘are creatures of state law,’ . . . and it is state law which is the font of corporate directors’ powers.” Id,., at 478, quoting Cort v. Ash, 422 U. S. 66, 84 (1975). We discerned nothing in the limited regulatory objectives of the ICA or IAA that evidenced a congressional intent that “federal courts . . . fashion an entire body of federal corporate law out of whole cloth.” 441 U. S., at 480. Consequently, we concluded that gaps in these statutes bearing on the allocation of governing power within the corporation should be filled with state law “unless the state la[w] permit[s] action prohibited by the Acts, or unless ‘[its] application would be inconsistent with the federal policy underlying the cause of action Id., at 479, quoting Johnson v. Railway Express Agency, Inc., 421 U. S. 454, 465 (1975).

Defending the reasoning of the Court of Appeals, KFS argues that petitioner waived her right to the application of anything other than a uniform federal rule of demand because she failed to advert to state law until her reply brief in the proceedings below. We disagree. When an issue or claim is properly before the court, the court is not limited to the particular legal theories advanced by the parties, but rather retains the independent power to identify and apply the proper construction of governing law. See, e. g., Arcadia v. Ohio Power Co., 498 U. S. 78, 77 (1990). It is not disputed that petitioner effectively invoked federal common law as the basis of her right to forgo demand as futile. Having undertaken to decide this claim, the Court of Appeals was not free to promulgate a federal common law demand rule without identifying the proper source of federal common law in this area. Cf. Lamar v. Micou, 114 U. S. 218, 223 (1885) (“The law of any State of the Union, whether depending upon statutes or upon judicial opinions, is a matter of which the courts of the United States are bound to take judicial notice, without plea or proof”); Bowen v. Johnston, 306 U. S. 19, 23 (1939) (same). Indeed, we note that the Court of Appeals viewed itself as free to adopt the American Law Institute’s universal-demand rule even though neither party addressed whether the futility exception should be abolished as a matter of federal common law.

The question, then, is whether the Court of Appeals drew its universal-demand rule from an improper source when it disregarded state law relating to the futility exception. To answer that question, we must first determine whether the demand requirement comes within the purview of Burks’ presumption of state-law incorporation, that is, whether the scope of the demand requirement affects the allocation of governing power within the corporation. If so, we must then determine whether a futility exception to the demand requirement impedes the policies underlying the ICA.

B

Because the contours of the demand requirement — when it is required, and when excused — determine who has the power to control corporate litigation, we have little trouble concluding that this aspect of state law relates to the allocation of governing powers within the corporation. The purpose of requiring a precomplaint demand is to protect the directors’ prerogative to take over the litigation or to oppose it. See, e. g., Spiegel v. Buntrock, 571 A. 2d 767, 773 (Del. 1990). In most jurisdictions, the board’s decision to do the former ends the shareholder’s control of the suit, see R. Clark, Corporate Law § 15.2, p. 640 (1986), while its decision to do the latter is subject only to the deferential “business judgment rule” standard of review, see, e. g., Zapata Corp. v. Maldonado, 430 A. 2d 779, 784, and n. 10 (Del. 1981). Thus, the demand requirement implements “the basic principle of corporate governance that the decisions of a corporation—including the decision to initiate litigation-should be made by the board of directors or the majority of shareholders.” Daily Income Fund, Inc. v. Fox, 464 U. S., at 530.

To the extent that a jurisdiction recognizes the futility exception to demand, the jurisdiction places a limit upon the directors’ usual power to control the initiation of corporate litigation. Although “jurisdictions differ widely in defining the circumstances under which demand on directors will be excused,” D. DeMott, Shareholder Derivative Actions § 5:03, p. 35 (1987), demand typically is deemed to be futile when a majority of the directors have participated in or approved the alleged wrongdoing, see, e. g., Barr v. Wackman, 36 N. Y. 2d 371, 381, 329 N. E. 2d 180, 188 (1975), or are otherwise financially interested in the challenged transactions, see, e. g., Aronson v. Lewis, 473 A. 2d 805, 814 (Del. 1984). By permitting the shareholder to circumvent the board’s business judgment on the desirability of corporate litigation, the “futility” exception defines the circumstances in which the shareholder may exercise this particular incident of managerial authority. See, e. g., Zapata Corp. v. Maldonado, supra, at 784.

The futility exception to the demand requirement may also determine the scope of the directors’ power to terminate derivative litigation once initiated—the very aspect of state corporation law that we were concerned with in Burks. In many (but not all) States, the board may delegate to a committee of disinterested directors the board’s power to control corporate litigation. See generally R. Clark, supra, § 15.2.3. Some of these jurisdictions treat the decision of a special litigation committee to terminate a derivative suit as automatically entitled to deference under the “business judgment rule.” See, e. g., Auerbach v. Bennett, 47 N. Y. 2d 619, 631-633, 393 N. E. 2d 994, 1001-1002 (1979). Others, including Delaware, defer to the decision of a special litigation committee only in a “demand required” ease; in a “demand excused” case, these States first require the court to confirm the “independence, good faith and . . . reasonable investigatory]” efforts of the committee and then authorize the court to exercise its “own independent business judgment” in assessing whether to enforce the committee’s recommendation, Zapata Corp. v. Maldonado, supra, at 788-789; see Spiegel v. Buntrock, supra, at 778. Thus, in these jurisdictions, “the entire question of demand futility is inextricably bound to issues of business judgment and the standards of that doctrine’s applicability.” Aronson v. Lewis, supra, at 812.

Superimposing a rule of universal-demand over the corporate doctrine of these States would clearly upset the balance that they have struck between the power of the individual shareholder and the power of the directors to control corporate litigation. Under the law of Delaware and the States that follow its lead, a shareholder who makes demand may not later assert that demand was in fact excused as futile. Spiegel v. Buntrock, 571 A. 2d, at 775. Once a demand has been made, the decision to block or to terminate the litigation rests solely on the business judgment of the directors. See ibid. Thus, by taking away the shareholder’s right to withhold demand under the circumstances where demand is deemed to be futile under state law, a universal-demand rule, in direct contravention of the teachings of Burks, would enlarge the power of directors to control corporate litigation. See 441 U. S., at 478-479.

KFS contends that the scope of a federal common law demand requirement need not be tied to the allocation of power to control corporate litigation. This is so, KFS suggests, because a court adjudicating a derivative action based on federal law could sever the requirement of shareholder demand from the standard used to review the directors’ decision to bar initiation of, or to terminate, the litigation. Drawing on the ALI’s Principles of Corporate Governance, the Court of Appeals came to this same conclusion. See 908 F. 2d, at 1343-1344. Freed from the question of the directors’ power to control the litigation, the universal-demand requirement, KFS maintains, would force would-be derivative suit plaintiffs to exhaust their intracorporate remedies before filing suit and would spare both the courts and the parties the expense associated with the often protracted threshold litigation that attends the collateral issue of demand futility.

We reject this analysis. Whatever its merits as a matter of legal reform, we believe that KFS’ proposal to detach the demand standard from the standard for reviewing board action would require a quantum of federal common lawmaking that exceeds federal courts’ interstitial mandate. Under state law, the determination whether a derivative representative can initiate a suit without making demand typically is made at the outset of the litigation and is based on the application of the State’s futility doctrine to circumstances as they then exist. D. DeMott, swpra, §5:03, at 31. Under KFS’ proposal, federal courts would be obliged to develop a body of principles that would replicate the substantive effect of the State’s demand futility doctrine but that would be applied after demand has been made and refused. The ALI, for example, has developed an elaborate set of standards that calibrates the deference afforded the decision of the directors to the character of the claim being asserted by the derivative plaintiff. See ALI, Principles of Corporate Governance §7.08 (Tent. Draft No. 8, Apr. 15, 1988); id., §7.08, Comment c, p. 120 (noting that Principles “dra[w] a basic distinction between the standard of review applicable to actions that are founded on a breach of the duty of care and the standard of review applicable to actions that are founded on a breach of the duty of loyalty”). Whether a federal court adopts the ALPs standards wholesale or instead attempts to devise postdemand review standards more finely tuned to the distinctive allocation of managerial decisionmaking power embodied in any given jurisdiction’s demand futility doctrine, KFS’ suggestion would impose upon federal courts the very duty “to fashion an entire body of federal corporate law” that Burks sought to avoid. 441 U. S., at 480.

Such a project, moreover, would necessarily infuse corporate decisionmaking with uncertainty. For example, insofar as Delaware law does not permit a shareholder to make a demand and later to assert its futility, receipt of demand makes it crystal, clear to the directors of a Delaware corporation that the decision whether to commit the corporation to litigation lies solely in their discretion. See Spiegel v. Buntrock, supra, at 775. Were we to impose a universal-demand rule, however, the directors of such a corporation could draw no such inference from receipt of demand by a shareholder contemplating a federal derivative action. Because the entitlement of the directors’ decision to deference in such a case would depend on the court’s application of independent review standards somewhere down the road, the directors could do no more than speculate as to whether they should assess the merits of the demand themselves or instead incur the time and expense associated with forming a special litigation committee; indeed, at that stage, even the deference due the decision of such a committee would be unclear. The directors’ dilemma would be especially acute if the shareholder were proposing to join state-law and federal claims, see RCM Securities Fund, Inc. v. Stanton, 928 F. 2d 1318, 1327-1328 (CA2 1991), a common form of action in federal derivative practice, see D. DeMott, Shareholder Derivative Actions §4:08, 71 (1987). It is to avoid precisely this type of disruption to the internal affairs of the corporation that Burks counsels against establishing competing federal- and state-law principles on the allocation of managerial prerogatives within the corporation. See generally Restatement (Second) of Conflict of Laws §302, Comment e, p. 309 (1971) (“Uniform treatment of directors, officers and shareholders is an important objective which can only be attained by having the rights and liabilities of those persons with respect to the corporation governed by a single law”).

Finally, in our view, KFS overstates the likely judicial economies associated with a federal universal-demand rule when coupled with independent standards of review. Requiring demand in all cases, it is true, might marginally enhance the prospect that corporate disputes would be resolved without resort to litigation; however, nothing disables the directors from seeking an accommodation with a representative shareholder even after the shareholder files his complaint in an action in which demand is excused as futile. At the same time, the rule proposed by KFS is unlikely to avoid the high collateral litigation costs associated with the demand futility doctrine. So long as a federal court endeavors to reproduce through independent review standards the allocation of managerial power embodied in the demand futility doctrine, KFS’ universal-demand rule will merely shift the focus of threshold litigation from the question whether demand is excused to the question whether the directors’ decision to terminate the suit is entitled to deference under federal standards. Under these circumstances, we do not view the advantages associated with KFS’ proposal to be sufficiently apparent to justify replacing “the entire corpus of state corporation law” relating to demand futility. See Burks v. Lasker, 441 U. S., at 478.

C

We would nonetheless be constrained to displace state law in this area were we to conclude that the futility exception to the demand requirement is inconsistent with the policies underlying the ICA. See id., at 479-480. KFS contends that the futility exception does impede the regulatory objectives of the statute. As KFS notes, the requirement that at least 40% of the board of directors be financially independent of the investment adviser constitutes “[t]he cornerstone of the ICA’s effort to control conflicts of interest within mutual funds.” Id., at 482. KFS argues that the futility exception undermines the “watchdog” role assigned to the independent directors, see id., at 484-485, because empowering a shareholder to institute corporate litigation without the permission of the board allows the shareholder to “usurp” the independent directors’ managerial oversight responsibility. See Brief for Respondent KFS 40.

We disagree. KFS’ argument misconceives the means by which Congress intended independent directors to exercise their oversight function under the ICA. As we emphasized in Burks, the ICA embodies a congressional expectation that the independent directors would “loo[k] after the interests of the [investment company]” by “exercising the authority granted to them by state law.” 441 U. S., at 485 (emphasis added). Indeed, we specifically noted in Burks that “[t]he ICA does not purport to be the source of authority for managerial power; rather the Act functions primarily to ‘imposte] controls and restrictions on the internal management of investment companies.’” Id., at 478, quoting United States v. National Assn. of Securities Dealers, Inc., 422 U. S. 694, 705 n. 13 (1975) (emphasis added by Burks Court). We thus discern no policy in the Act that would require us to give the independent directors, or the boards of investment companies as a whole, greater power to block shareholder derivative litigation than these actors possess under the law of the State of incorporation.

KFS also-'ignores the role that the ICA clearly envisions for shareholders in protecting investment companies from conflicts of interest. As we have pointed out, § 36(b) of the ICA expressly provides that an individual shareholder may bring an action on behalf of the investment company for breach of the investment adviser’s fiduciary duty. 15 U. S. C. §80a-35(b). Congress added § 36(b) to the ICA in 1970 because it concluded that the shareholders should not have to “rely solely on the fund’s directors to assure reasonable adviser fees, notwithstanding the increased disinterestedness of the board.” Daily Income Fund, Inc. v. Fox, 464 U. S., at 540. This legislative background informed our conclusion in Fox that a shareholder action “on behalf of” the company under § 36(b) is direct rather than derivative and can therefore be maintained without any precomplaint demand on the directors. Under these circumstances, it can hardly be maintained that a shareholder’s exercise of his state-created prerogative to initiate a derivative suit without the consent of the directors frustrates the broader policy objectives of the ICA.

IV

We reaffirm the basic teaching of Burks v. Lasker, supra: where a gap in the federal securities laws must be bridged by a rule that bears on the allocation of governing powers within the corporation, federal courts should incorporate state law into federal common law unless the particular state law in question is inconsistent with the policies underlying the federal statute. The scope of the demand requirement under state law clearly regulates the allocation of corporate governing powers between the directors and individual shareholders. Because a futility exception to demand does not impede the regulatory objectives of the ICA, a court that is entertaining a derivative action under that statute must apply the demand futility exception as it is defined by the law of the State of incorporation. The Court of Appeals thus erred by fashioning a uniform federal common law rule abolishing the futility exception in derivative actions founded on the ICA.

Accordingly, the judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

       Section 20(a) states:
      “It shall be unlawful for any person, by use of the mails or any means or instrumentality of interstate commerce or otherwise, to solicit or to permit the use of his name to solicit any proxy or consent or authorization in respect of any security of which a registered investment company is the issuer in contravention of such rules and regulations as the [SEC] may prescribe as necessary or appropriate in the public interest or for the protection of investors.” 15 U. S. C. §80a-20(a).
      SEC regulations require proxy statements issued by a registered investment company to comply with the proxy statement rules promulgated under the Securities Exchange Act of 1934. See 17 CFR § 270.20a-l(a) (1990). The latter rules prohibit materially misleading statements. See § 240.14a-9.

       The ALI’s proposal would excuse demand “only when the plaintiff makes a specific showing that irreparable injury to the corporation would otherwise result.” Principles of Corporate Governance § 7.03(b). The Court of Appeals did not specifically address this aspect of the ALI’s proposal, although the court did reject the possibility that “exigencies of time” would warrant dispensing with demand. 908 F. 2d, at 1344.

       The Court of Appeals also reversed the District Court’s conclusion that petitioner could not sue under § 36(b) of the Act, 15 U. S. C. § 80a-35(b), because she was not an adequate shareholder representative under Rule 23.1. See 908 F. 2d, at 1347-1349. After holding that petitioner was not entitled to a jury trial, the Court of Appeals remanded for further proceedings on petitioner’s §36(b) claim. See id., at 1350-1351. No aspect of the Court of Appeals’ disposition of petitioner’s § 36(b) claim is before this Court.

      We have never addressed the question whether § 20(a) creates a shareholder cause of action, either direct or derivative. The SEC, as ami-cus curiae, urges us to hold that a shareholder may bring suit under § 20(a) but only on his own behalf. The parties did not litigate this question in the Court of Appeals, and because that court disposed of petitioner’s claim on different grounds, it declined to address whether § 20(a) creates a derivative action. See 908 F. 2d 1338, 1341 (CA7 1990). The petition for certio-rari likewise did not raise this issue in the questions presented. Because the question whether § 20(a) supports a derivative action is not jurisdictional, see Burks v. Lasker, 441 U. S. 471, 476, n. 5 (1979), and because we do not ordinarily address issues raised only by amici, see, e. g., United Parcel Service, Inc. v. Mitchell, 451 U. S. 56, 60, n. 2 (1981), we leave this question for another day. See Burks v. Lasker, supra, at 475-476 (assuming existence of derivative action under ICA for purposes of determining power of independent directors to terminate suit).

       We do not mean to suggest that a court of appeals should not treat an unasserted claim as waived or that the court has no discretion to deny a party the benefit of favorable legal authorities when the party fails to comply with reasonable local rules on the timely presentation of arguments. See generally Singleton v. Wulff, 428 U. S. 106, 121 (1976). Nonetheless, if a court undertakes to sanction a litigant by deciding an effectively raised claim according to a truncated body of law, the court should refrain from issuing an opinion that could reasonably be understood by lower courts and nonparties to establish binding circuit precedent on the issue decided.

      KFS argues that Burks is not controlling because this Court established a uniform, federal common law demand requirement in Halves v. Oakland, 104 U. S. 450 (1882). This contention is unpersuasive. In Hawes, this Court articulated a demand requirement (along with a futility exception) to protect the managerial prerogatives of the corporate directors and to prevent the collusive manufacture of diversity jurisdiction. See id., at 460-461. The latter objective, which is clearly a proper aim of federal law, is now governed not by a federal common law doctrine of demand but rather by the express terms of Federal Rule of Civil Procedure 23.1, which requires the plaintiff to allege that “the action is not a collusive one to confer jurisdiction on a court of the United States.” See also Smith v. Sperling, 354 U. S. 91, 95-98 (1957) (district court should look to “face of the pleadings and [to] nature of the controversy” to resolve jurisdictional issues in derivative action founded on diversity). Insofar as Halves aspired to regulate the substantive managerial prerogatives of directors in a derivative action founded on diversity of citizenship, the demand rule established in that ease does not survive Erie R. Co. v. Tompkins, 304 U. S. 64 (1938). Cf. Cohen v. Beneficial Loan Corp., 337 U. S. 541, 555-557 (1949) (federal court sitting in diversity must apply state seeurity-for-costs statute in derivative action). Of course, the principles recognized in Erie place no limit on a federal court’s power to fashion federal common law rules necessary to effectuate a derivative remedy founded on federal law. See Burks v. Lasker, 441 U. S., at 476. But in this respect, whatever philosophy of federal common lawmaking can be gleaned from Haioes has been eclipsed by the philosophy of Burks. In sum, Hawes is irrelevant to our disposition of this ease.

       All States require that a shareholder make a precomplaint demand on the directors. See D. DeMott, Shareholder Derivative Actions § 5:03, p. 23 (1987); id., at 65, n. 1 (Supp. 1990). Only a few States, however, have adopted a universal-demand rule. See Fla. Stat. Ann. § 607.07401(2) (Supp. 1991); Ga. Code Ann. § 14-2-742 (1989); Mich. Comp. Laws Ann. § 450.1493a(a) (1990).

      The American Bar Association’s Model Business Corporation Act likewise abolishes the futility exception to demand. See Model Business Corporation Act § 7.42(1), reprinted in 45 Bus. Law. 1241, 1244 (1990). And like the ALI’s Principles of Corporate Governance, the Model Business Corporation Act spells out a detailed set of principles for identifying the circumstances in which the decision of the directors is entitled to deference. Model Business Corporation Act § 7.44, reprinted in 45 Bus. Law., at 1246-1247. The official commentary acknowledges that these review standards “diffe[r] in certain . . . respects from the law as it has developed in Delaware and been followed in a number of other states.” § 7.44, Official Comment, reprinted in 45 Bus. Law., at 1250.

       Indeed, because “[i]n most instances, the shareholder need not specify his legal theory” in his demand, Allison v. General Motors Corp., 604 F. Supp. 1106, 1117 (Del. 1985), aff’d, 782 F. 2d 1026 (CA3 1985), the directors frequently will not be able to tell whether the underlying claim is founded on state law or on federal law. This uncertainty will further complicate managerial decisionmaking.

       KFS maintains that we should nonetheless affirm the dismissal of petitioner’s cause of action because petitioner did not plead the grounds excusing demand with sufficient particularity for purposes of Federal Rule of Civil Procedure 23.1. Because the Court of Appeals applied a universal-demand rule, it never addressed the sufficiency of petitioner’s complaint with reference to the futility exception as defined by the law of Maryland, the State in which the Fund is incorporated. Rather than take the issue up for the first time ourselves, we leave for the Court of Appeals on remand the question whether petitioner adequately pleaded excuse of demand for purposes of Rule 23.1.


source: Caselaw Access Project

author: Justice Stevens Justice Scalia,

license: Public Domain

text:
    LANKFORD v. IDAHO
    No. 88-7247.
    Argued February 19, 1991
    Decided May 20, 1991

      Stevens, J., delivered the opinion of the Court, in which Marshall, Blackmun, O’Connor, and Kennedy, JJ., joined. Scalia, J., filed a dissenting opinion, in which Rehnquist, C. J., and White and Souter, JJ., joined, post, p. 128.

      Joan Marie Fisher argued the cause for petitioner. With her on the briefs was Timothy K. Ford.

      Larry EchoHawk, Attorney General of Idaho, argued the cause for respondent. With him on the brief were James T. Jones, former Attorney General, and Lynn E. Thomas, Solicitor General.
   Justice Stevens

delivered the opinion of the Court.

We granted certiorari to decide whether the sentencing process followed in this capital case satisfied the requirements of the Due Process Clause of the Fourteenth Amendment. More narrowly, the question is whether, at the time of petitioner’s sentencing hearing, he and his counsel had adequate notice that the judge might sentence him to death.

The unique circumstance that gives rise to concern about the adequacy of the notice in this case is the fact that, pursuant to court order, the prosecutor had formally advised the trial judge and petitioner that the State would not recommend the death penalty. To place this circumstance in proper perspective, it is necessary to relate the procedural history of the case.

I

On or about June 21, 1983, Robert and Cheryl Bravence were killed at their campsite near Santiam Creek, Idaho. On December 1, 1983, the State filed an information charging petitioner with the crime of first-degree murder. The first count alleged that Robert Bravence had been beaten to death and the second count alleged that Cheryl Bravence had been killed in the same way. Identical charges were also filed against petitioner’s older brother, Mark. At the arraignment, the trial judge advised petitioner that “the maximum punishment that you may receive if you are convicted on either of the two charges is imprisonment for life or death.” App. 14.

After the arraignment, petitioner’s appointed counsel entered into plea negotiations with the prosecutor. During these negotiations, petitioner agreed to take two lie-detector tests. Although the results of the tests were not entirely satisfactory, they convinced the prosecutor that petitioner’s older brother Mark was primarily responsible for the crimes and was the actual killer of both victims. Id., at 193. The parties agreed on an indeterminate sentence with a 10-year minimum in exchange for a guilty plea, subject to a commitment from the trial judge that he would impose that sentence. In February 1984, the judge refused to make that commitment. In March, the case went to trial. The State proved that petitioner and his brother Mark decided to steal their victims' Volkswagen van. Petitioner walked into the Bravences’ campsite armed with a shotgun and engaged them in conversation. When Cheryl left and went to a nearby creek, Mark entered the campsite, ordered Robert to kneel down, and struck him on the head with a nightstick. When Cheryl returned, Mark gave her the same order, and killed her in the same manner. See State v. Lankford, 113 Idaho 688, 691, 747 P. 2d 710, 713 (1987).

Petitioner testified in support of a defense theory that he was only an accessory after the fact. The jury was instructed, however, that evidence that petitioner “was present, and that he aided and abetted in the commission of the crime of robbery” was sufficient to support a conviction for first-degree murder. App. 16. The trial judge refused to instruct the jury that a specific intent to kill was required. The jury found petitioner guilty on both counts.

At the prosecutor’s request, the sentencing hearing was postponed until after the separate trial of petitioner’s brother was concluded. The sentencing was first set for June 28, 1984, and later reset for October 1984. In the interim, pursuant to petitioner’s request, on September 6, 1984, the trial court entered an order requiring the State to notify the court and petitioner whether it would ask for the death penalty, and if so, to file a statement of the aggravating circumstances on which it intended to rely. A week later, the State filed this negative response:

“COMES NOW, Dennis L. Albers, in relation to the Court’s Order of September 6, 1984, and makes the following response.
“In relation to the above named defendant, Bryan Stuart Lankford, the State through the Prosecuting Attorney will not be recommending the death penalty as to either count of first degree murder for which the defendant was earlier convicted.” Id., at 26 (emphasis in original).

In the following month there was a flurry of activity. The trial court granted petitioner’s pro se request for a new lawyer, denied that lawyer’s motion for a new trial based on the alleged incompetence of trial counsel, denied a motion for a continuance of the sentencing hearing, and denied the new lawyer’s request for a typewritten copy of the trial transcript. In none of these proceedings was there any mention of the possibility that petitioner might receive a death sentence.

At the sentencing hearing on October 12, 1984, there was no discussion of the death penalty as a possible sentence. The prosecutor offered no evidence. He relied on the trial record, explained why he had not recommended the death penalty, and ultimately recommended an indeterminate life sentence with a minimum of “somewhere between ten and 20 years.” Id., at 104. The defense put on a number of witnesses who testified that petitioner was a nonviolent person, but that he was subject to domination by his brother Mark, who had violent and dangerous propensities. Id., at 95-97. In her argument in mitigation, defense counsel stressed these facts, as well as the independent evidence that Mark was the actual killer. She urged the court to impose concurrent, indeterminate life sentences, which would make petitioner eligible for parole in 10 years, less the time he had already served. She argued against consecutive indeterminate sentences which would have amounted to a 20-year term, or a fixed-life term that would have amounted to a 40-year minimum. She made no reference to a possible death sentence.

At the conclusion of the hearing, the trial judge made a rather lengthy statement in which he indicated that he considered petitioner’s testimony unworthy of belief and that the seriousness of the crimes warranted more severe punishment than that which the State had recommended. Id., at 114-118. At the beginning of this lengthy statement, he described the options available to the court, including the indeterminate life sentence recommended by the State, “or a fixed life sentence for a period of time greater than the number of years he would serve on an indeterminate life sentence, i. e., ten. For example, a fixed term of 40 years or death or a fixed life sentence.” Id., at 114. He concluded by saying that he would announce his decision on the following Monday.

On that Monday, the trial judge spent the entire day conducting the sentencing hearing in Mark’s case. At 9:38 p.m., he reconvened petitioner’s sentencing hearing. After a preliminary colloquy, he read his written findings and sentenced petitioner to death. These findings, some of which were repeated almost verbatim in his later order sentencing Mark to death, repeatedly reflected the judge’s opinion that the two brothers were equally culpable.

Petitioner sought postconviction relief on a variety of grounds, including a claim that the trial court violated the Constitution by failing to give notice of its intention to impose the death sentence in spite of the State’s notice that it was not seeking the death penalty. Id., at 168. The trial court held that the Idaho Code provided petitioner with sufficient notice and that the prosecutor’s statement that he did not intend to seek the death penalty had “no bearing on the adequacy of notice to petitioner that the death penalty might be imposed. ” Id., at 200. Petitioner’s request for relief on this claim was therefore denied. Id., at 201.

In a consolidated appeal, the Idaho Supreme Court affirmed petitioner’s conviction and sentence and also affirmed the denial of postconviction relief. On the notice issue, the court concluded that the express advice given to petitioner at his arraignment, together with the terms of the statute, were sufficient. State v. Lankford, 113 Idaho, at 697, 747 P. 2d, at 719.

One justice dissented from the affirmance of petitioner’s sentence. Id., at 705, 747 P. 2d, at 727. Relying on the absence of any contention that petitioner struck any of the fatal blows, and the fact that the evidence concerning petitioner’s intent was equivocal, he concluded that the sentence was invalid under our decisions in Enmund v. Florida and Tison v. Arizona, as well as under the Idaho cases that the majority had considered in its proportionality review.

This Court granted certiorari, vacated the judgment, and remanded the case to the Idaho Supreme Court for further consideration in light of Satterwhite v. Texas, 486 U. S. 249 (1988). 486 U. S. 1061 (1988). On remand, by a vote of 3 to 2, the court reinstated its earlier judgment. 116 Idaho 279, 775 P. 2d 593 (1989). We again granted certiorari, 498 U. S. 919 (1990), to consider the question raised by the trial court’s order concerning the death penalty and the State’s response thereto.

II

Before discussing the narrow legal issue raised by the special presentencing order and the State’s response, it is useful to put to one side certain propositions that are not in dispute in this case. As a matter of substantive Idaho law, the trial judge’s power to impose a sentence that is authorized by statute is not limited by a prosecutor’s recommendation. Thus, petitioner does not argue that the State made a formal waiver that limited the trial judge’s authority to impose the death sentence. The issue is one of adequate procedure rather than of substantive power. Conversely, the State does not argue that a sentencing hearing would be fair if the defendant and his counsel did not receive adequate notice that he might be sentenced to death. The State’s argument is that the terms of the statute, plus the advice received at petitioner’s arraignment, provided such notice. This argument would plainly be correct if there had not been a presentencing order, or if similar advice had been given after petitioner received the State’s negative response and before the sentencing hearing commenced.

As a factual matter, it is also undisputed that the character of the sentencing proceeding did not provide petitioner with any indication that the trial judge contemplated death as a possible sentence. A hearing to decide whether the sentences should be indeterminate or fixed, whether they should run concurrently or consecutively, and what period of imprisonment was appropriate would have proceeded in exactly the same way as this hearing did. Indeed, it is apparent that the parties assumed that nothing more was at stake. There is nothing in the record after the State’s response to the presen-tencing order and before the trial judge’s remark at the end of the hearing that mentioned the possibility of a capital sentence. During the hearing, while both defense counsel and the prosecutor were arguing the merits of concurrent or consecutive, and fixed or indeterminate, terms, the silent judge was the only person in the courtroom who knew that the real issue that they should have been debating was the choice between life or death.

The presentencing order entered by the trial court requiring the State to advise the court and the defendant whether it sought the death penalty, and if so, requiring the parties to specify the aggravating and mitigating circumstances on which they intended to rely, was comparable to a pretrial order limiting the issues to be tried. The purpose of such orders is to eliminate the need to address matters that are not in dispute, and thereby to save the valuable time of judges and lawyers. For example, if the State had responded in the affirmative and indicated an intention to rely on only three aggravating circumstances, the defense could reasonably have assumed that the evidence to be adduced would relate only to those three circumstances, and therefore, the defense could have limited its preparation accordingly. Similarly, in this case, it was surely reasonable for the defense to assume that there was no reason to present argument or evidence directed at the question whether the death penalty was either appropriate or permissible. Orders that are designed to limit the issues would serve no purpose if counsel acted at their peril when they complied with the orders’ limitations.

It is, of course, true that this order did not expressly place any limits on counsel’s preparation. The question, however, is whether it can be said that counsel had adequate notice of the critical issue that the judge was actually debating. Our answer to that question must reflect the importance that we attach to the concept of fair notice as the bedrock of any constitutionally fair procedure. Justice Frankfurter eloquently made this point in Joint Anti-Fascist Refugee Comm. v. McGrath, 341 U. S. 123 (1951):

“Representing a profound attitude of fairness between man and man, and more particularly between the individual and government, ‘due process’ is compounded of history, reason, the past course of decisions, and stout confidence in the strength of the democratic faith which we profess. Due process is not a mechanical instrument. It is not a yardstick. It is a process. It is a delicate process of adjustment inescapably involving the exercise of judgment by those whom the Constitution entrusted with the unfolding of the process.” Id., at 162-163 (concurring opinion).
“The heart of the matter is that democracy implies respect for the elementary rights of men, however suspect or unworthy; a democratic government must therefore practice fairness; and fairness can rarely be obtained by secret, one-sided determination of facts decisive of rights.” Id., at 170 (footnote omitted).
“Man being what he is cannot safely be trusted with complete immunity from outward responsibility in depriving others of their rights. At least such is the conviction underlying our Bill of Rights. That a conclusion satisfies one’s private conscience does not attest its reliability. The validity and moral authority of a conclusion largely depend on the mode by which it was reached. Secrecy is not congenial to truth-seeking and self-righteousness gives too slender an assurance of rightness. No better instrument has been devised for arriving at truth than to give a person in jeopardy of serious loss notice of the case against him and opportunity to meet it. Nor has a better way been found for generating the feeling, so important to a popular government, that justice has been done.” Id., at 171-172 (footnote omitted).

If defense counsel had been notified that the trial judge was contemplating a death sentence based on five specific aggravating circumstances, presumably she would have advanced arguments that addressed these circumstances; however, she did not make these arguments because they were entirely inappropriate in a discussion about the length of petitioner’s possible incarceration. Three examples will suffice to illustrate the point.

One of the arguments that petitioner’s counsel could have raised had she known the death penalty was still at issue pertained to a concern voiced by the dissenting justice in the Idaho Supreme Court, who was troubled by the question whether Bryan Lankford’s level of participation met the standard described in Enmund v. Florida, 458 U. S. 782 (1982), Tison v. Arizona, 481 U. S. 137 (1987), and several Idaho cases. The dissenting justice described the majority’s opinion as having mischaracterized the trial court’s findings as to Bryan Lankford’s state of mind. State v. Lankford, 113 Idaho 688, 706, 747 P. 2d 710, 728 (1987). The factual dispute over the record, combined with the dissenting justice’s reliance on Idaho cases, demonstrates that petitioner failed to make an argument that, at least as a matter of state law, might have influenced the trial judge’s deliberations. There was, however, no point in making such an argument if the death penalty was not at issue.

One of the aggravating circumstances that the trial judge found as a basis for his sentence was that the “murders of the Bravences were especially heinous, atrocious or cruel, and manifested exceptional depravity.” App. 156-157. Even if petitioner had been the actual killer, it is at least arguable that the evidence was insufficient to support this finding. If petitioner was not the actual killer, this finding was even more questionable. The point, however, is that petitioner’s counsel had no way of knowing that the court was even considering such a finding, and therefore, she did not discuss that possibility at the sentencing hearing. It is unrealistic to assume that the notice provided by the statute and the arraignment survived the State’s response to an order that would have no purpose other than to limit the issues in future proceedings.

In view of the fact that the trial judge’s sentence appears to rest largely on his disbelief of petitioner’s testimony and consequent conclusion that he was just as culpable as his brother, the omission of certain factual evidence takes on special significance. In her postconviction motion, petitioner’s counsel represented that the results of two polygraph examinations demonstrated that petitioner was truthful in his testimony concerning his “lack of participation in, or knowledge of the killings.” App. 170. Such evidence is inadmissible in Idaho in an ordinary case and therefore, appropriately, was not offered at the sentencing hearing. Petitioner argues, however, that under the teaching of our decision in Lockett v. Ohio, 438 U. S. 586 (1978), such evidence would be admissible in a capital sentencing proceeding. Whether petitioner would ultimately prevail on this argument is not at issue at this point; rather, the question is whether inadequate notice concerning the character of the hearing frustrated counsel’s opportunity to make an argument that might have persuaded the trial judge to impose a different sentence, or at least to make different findings than those he made.

At the very least, this is a case in which reasonable judges might differ concerning the appropriateness of the death sentence. It is therefore a case in which some of the reasoning that motivated our decision in Gardner v. Florida, 430 U. S. 349 (1977), is applicable. In that case, relying partly on the Due Process Clause- of the Fourteenth Amendment and partly on the Eighth Amendment’s prohibition against cruel and unusual punishment, the Court held that a procedure for selecting people for the death penalty that permits consideration of secret information about the defendant is unacceptable. The plurality opinion, like the opinion concurring in the judgment, emphasized the special importance of fair procedure in the capital sentencing context. We emphasized that “death is a different kind of punishment from any other which may be imposed in this country.” Id,., at 357. We explained:

“From the point of view of the defendant, it is different in both its severity and its finality. From the point of view of society, the action of the sovereign in taking the life of one of its citizens also differs dramatically from any other legitimate state action. It is of vital importance to the defendant and to the community that any decision to impose the death sentence be, and appear to be, based on reason rather than caprice or emotion.” Id., at 357-358.

Although the trial judge in this case did not rely on secret information, his silence following the State’s response to the presentencing order had the practical effect of concealing from the parties the principal issue to be decided at the hearing. Notice of issues to be resolved by the adversary proc.ess is a fundamental characteristic of fair procedure.

Without such notice, the Court is denied the benefit of the adversary process. As we wrote in Strickland v. Washington, 466 U. S. 668 (1984):

“A capital sentencing proceeding like the one involved in this case ... is sufficiently like a trial in its adversarial format and in the existence of standards for decision . . . that counsel’s role in the proceeding is comparable to counsel’s role at trial — to ensure that the adversarial testing process works to produce a just result under the standards governing decision.” Id., at 686-687.

Earlier, in Gardner, we had described the critical role that the adversary process plays in our system of justice:

“Our belief that debate between adversaries is often essential to the truth-seeking function of trials requires us also to recognize the importance of giving counsel an opportunity to comment on facts which may influence the sentencing decision in capital cases.” 430 U. S., at 360.

If notice is not given, and the adversary process is not permitted to- function properly, there is an increased chance of error, see, e. g., United States v. Cardenas, 917 F. 2d 683, 688-689 (CA2 1990), and with that, the possibility of an incorrect result. See, e. g., Herring v. New York, 422 U. S. 853, 862 (1975) (“The very premise of our adversary system of criminal justice is that partisan advocacy on both sides of a case will best promote the ultimate objective that the guilty be convicted and the innocent go free”). Petitioner’s lack of adequate notice that the judge was contemplating the imposition of the death sentence created an impermissible risk that the adversary process may have malfunctioned in this case.

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

It is so ordered.

Justice Scalia,

with whom The Chief Justice, Justice White, and Justice Souter join, dissenting.

The Court holds that Lankford’s due process rights were violated because he did not receive adequate notice that his sentencing hearing could result in the death penalty. I disagree.

I

Lankford knew that he had been convicted of first-degree murder, and Idaho Code § 18-4004 (1987) clearly states that “every person guilty of murder of the first degree shall be punished by death or by imprisonment for life.” At arraignment the presiding judge, after reading aloud the substantive code provisions and describing the charges, told Lankford: “[T]he maximum punishment that you may receive if you are convicted on either of the two charges is imprisonment for life or death. Do you understand , 7 Record 15. Lankford stated that he did. Ibid.

The Court’s theory is that the unquestionable constitutional adequacy of this notice was destroyed by the judge’s later order that the State indicate its intentions with regard to sentencing and the prosecutor’s consequent statement that the State would not seek the death penalty. That theory would perhaps be correct if there was any reasonable basis for Lankford or his counsel to believe that the sentence could not exceed the prosecutor’s recommendation. But plainly there was not.

The Idaho death penalty statute places full responsibility for determining the sentence upon the judge. It directs that “[w]here the court finds a statutory aggravating circumstance the court shall sentence the defendant to death unless the court finds that mitigating circumstances which may be presented outweigh the gravity of any aggravating circumstance.” Idaho Code § 19-2515(c) (1987) (emphasis added). Moreover, the finding of a statutory aggravating circumstance is not dependent upon any presentation by the prosecution. Under Idaho law, “[e]videnee admitted at trial shall be considered and need not be repeated at the sentencing hearing.” § 19 — 2515(d). Anyone familiar with Lank-ford’s case and Idaho law should have recognized immediately that the judge would necessarily find at least one statutory aggravating circumstance, for the jury’s guilty verdict on the two separate murder counts established that, “[a]t the time the murder was committed the defendant also committed another murder,” § 19 — 2515(g)(2). Thus the judge would be bound by law, see § 19-2515(e), to weigh all mitigating and aggravating circumstances and to impose the death penalty unless the former outweighed the latter. Moreover, since an aggravating circumstance would necessarily have been found, in the event that Lankford did not receive the death penalty the court would be required to “detail in writing its reasons” for giving a lesser sentence. Ibid. No provision of the Idaho Code suggests that these duties placed upon the judge by § 19-2515 dissolve upon the State’s recommending a lower sentence.

Not only is Idaho statutory law clear on its face, but Idaho case law confirms it. In State v. Rossi, 105 Idaho 681, 672 P. 2d 249 (App. 1983), the defendant claimed an abuse of discretion when the trial court sentenced him to a term of imprisonment twice as long as the prosecutor had recommended. The Idaho Court of Appeals stated:

“Our Supreme Court has . . . held that no prejudicial error resulted from a court’s refusal to follow the [sentencing] recommendation of the jury. We hold that a trial court is also not bound by a sentence recommendation made by the state. . . . The state’s recommendation to the trial court is purely advisory.” Id., at 682, 672 P. 2d, at 250 (emphasis added).

Rossi was not a capital case, but nothing in any provision of the Idaho Code or in Idaho case law suggests that the rule in capital cases would be any different. Indeed, in State v. Osborn, 102 Idaho 405, 631 P. 2d 187 (1981), the Idaho Supreme Court found no error where a defendant was not informed whether the State would seek the death penalty, because “[wjhether the state would urge the maximum penalty or not was immaterial to the question of adequate notice to appellant that it was possible.” Id., at 413, 631 P. 2d, at 195.

The Court nevertheless holds that Lankford reasonably concluded from the judge’s September 6 order and the State’s response that the death penalty did not remain an issue. “The presentencing order,” the Court says, “was comparable to a pretrial order limiting the issues to be tried.” Ante, at 120. To say that is simply to assume the conclusion. Assuredly, despite the clarity of Idaho law, if the judge explicitly limited the issues to be considered at sentencing, or in some other way indicated that he would not exceed the prosecutor’s recommendation, Lankford would have a case. But was it reasonable to view the September 6 order as “a pretrial order limiting the issues to be tried”? A pretrial order having such preclusive effect is typically entered pursuant to a rule or statute that says it will be preclusive. See, e. g., Fed. Rule Civ. Proc. 16(e). When an order is not entered pursuant to such a provision, as was the case here, one would expect the order itself to specify its preclusive effect, if any. But the present order said only that the prosecutor must state his intentions. It seems to me that the absolute limit of preclusion even inferable from that order was that the prosecutor, if he did not express the intention to seek the death penalty, would not be permitted to argue for it at the sentencing hearing. The consequence of that, of course, would be that the death penalty would be less likely to be imposed, since no one would be pressing it upon the judge and defense counsel’s arguments against it would go unanswered. But neither explicitly in the order, nor as an inference of the order, nor even as a consequence of an inference, does it appear that the judge would be entirely precluded from imposing the death penalty. There was simply no basis for thinking that.

But perhaps it could be argued that, even though the judge was not legally bound by the prosecutor’s recommendation against the death penalty, his entry of the order indicated he intended (contrary to Idaho law) to be bound, and that he should be held to that indicated intent by a sort of promissory estoppel. Even as a factual matter, that argument has no support. If the judge had entered the order on his own initiative, one might think, “Why else would he demand to know the State’s position in advance unless he intended to accept it?” In fact, however, it was not the judge but defense counsel who asked that the State make its intentions clear.

“MR. LONGETEIG: I wonder could the court fix a time in which the state would file a notice of its intention in respect to capital punishment. This would materially, depending on what he does, alter our course of action in this matter.
“THE COURT: I don’t know that there is any provision that the state notify.
“MR. LONGETEIG: I’m not aware of any either. I think it would be a matter of the discretion of the court. But I would request that.
“THE COURT: Oh, well, Mr. Albers apparently doesn’t have any objections to your request. He’s indicated that, I think, as soon as he knows for sure what he wants to do, he’ll tell you.
“MR. LONGETEIG: That’s satisfactory.
“MR. ALBERS: And that will certainly be in plenty of time before the sentencing.” 7 Record 55.

Not only did the judge give no indication that he wanted the State’s recommendation because he would automatically accept it, but to the contrary he plainly indicated that, regardless of what the recommendation was, the death penalty would be at issue. Immediately following the colloquy quoted above, the record continues as follows:

“THE COURT: There obviously needs to be inquiry pursuant to 19-2515 as to the statutory aggravating circumstances that may exist regardless whether or not the state intends to pursue the death penalty.” Id., at 56.

The reference to a statutory “inquiry” is to Idaho Code § 19-2515(d) (1987), which provides that “[i]n all cases in which the death penalty may be imposed, the court shall, after conviction, order a presentence investigation . . . and shall thereafter convene a sentencing hearing for the purpose of hearing all relevant evidence and arguments of counsel in aggravation and mitigation of the offense.” (Emphasis added). Pursuant to that section the judge did order a pre-sentence investigation — a step not required (or even specifically contemplated) by the Code except in death penalty cases. And the trial judge’s reference to statutory aggravating circumstances itself shows that the death penalty remained at issue, for only as to that penalty are qualifying aggravating circumstances specifically listed, see § 19-2515(g).

In sum, it was clear that the death penalty remained at issue in the sentencing hearing, and there is no basis for the contention that the judge “misled” Lankford to think otherwise. Since that is so, today’s decision creates a vast uncertainty in the law. If defendants are no longer to be held to knowledge of the law, or if their unreasonable expectations are henceforth to be the criteria of the process which is their due, the lawfulness and finality of no conviction or sentence can be assured. The defense created by the Court today will always be available, its success to be limited by factors we will presumably seek to identify in a series of future.cases that will undertake the impossible task of explaining how much ignorance of the law, or how much unreasonableness of expectation, is too much.

II

The Court believes, and I have assumed up to this point, that Lankford and his counsel did detrimentally rely upon the State’s declaration, i. e., that they did believe, albeit unreasonably, that the death penalty was foreclosed as a option at sentencing. It is far from clear, however, that that was so, and I do not believe that Lankford has carried the burden of establishing it.

The reality that the death penalty was not foreclosed as a matter of law was so clear — from the Idaho statutes, from the case law, and even from the judge’s explicit statement that the death-sentence “inquiry” would have to be held— that it is difficult to believe counsel thought otherwise. Counsel clearly did not believe that the prosecutor’s recommendation established the permissible maximum with regard to a sentence less than death. For though the prosecutor, who spoke first at the sentencing hearing, recommended the minimum sentence of life imprisonment with possibility of parole in 10 to 20 years, Lankford’s counsel argued specifically against life imprisonment without possibility of parole. 8 Record 329. It is conceivable, I suppose, that counsel thought the judge possessed legal authority to exceed the prosecutor’s recommendation in that respect but not in respect of imposing death; but the possibility of baseless belief that Idaho law contained such peculiar asymmetry is surely remote.

There remains, of course, the possibility that counsel genuinely (though unreasonably) believed, because of the September 6 order, that the death penalty had been precluded not in law, but as a matter of the judge’s intentions. But there is some indication that even this was not so. The judge, in his lengthy statement at the end of the sentencing hearing — concluding with the announcement that he would not sentence immediately but would take the matter under advisement — stated that the available sentences included “[f]or example, a fixed term of 40 years or death or a fixed life sentence. So there are a great number of possibilities available to this Court.” Id., at 330 (emphasis added). If Lankford’s counsel believed that the defense had been given assurance that the death penalty was (at least as a practical matter) out of the case, one would have expected a shocked objection at this point. None was made — though counsel was aggressive enough in objecting to another portion of the judge’s concluding statement, two pages later in the transcript, that the judge interrupted with “Counsel, I’m not here to argue with you.” Id., at 332.

The only evidence supporting detrimental (albeit unreasonable) reliance is the fact that counsel’s presentation at the sentencing hearing did not specifically address the death penalty. That is not terribly persuasive evidence, since all the arguments made against a life sentence or a minimum term of more than 10 years would apply a fortiori against a sentence of death. In any event, counsel’s presentation was entirely consistent with (1) belief that the death penalty was not entirely ruled out, but simply an overwhelmingly unlikely possibility, plus either (2) a tactical decision not to create the impression, by arguing the point, that that option was even thinkable, or (3) sheer negligence. If it was the last, Lank-ford may have a claim for ineffective assistance of counsel, which can be raised in a petition for habeas corpus. But he has not carried the burden of sustaining the claim made here.

* * *

Because Lankford has not established that his counsel had any basis reasonably to believe that the death penalty was, either legally or as a practical matter, out of the case — and indeed he has not even established that his counsel unreasonably believed that to be so — we have no cause to reverse the judgment of the Supreme Court of Idaho. In doing so, we seemingly adopt the topsy-turvy principle that the capital defendant cannot be presumed to know the law, but must be presumed to have detrimentally relied upon a misunderstanding of the law or a misinterpretation of the judge. I respectfully dissent.

      "No State shall. . . deprive any person of life . . . without clue process of law.” U. S. Const., Arndt. 14, §1.

       The Idaho Supreme Court explained:
      “Lankford’s defense theory was that he was only an accessory after the fact. Lankford testified in his own behalf and stated that he was dominated by his older brother who was a violent and dangerous person. He testified that he thought his brother would merely knock out the Bra-vences, and he had not pointed the shotgun at them upon entering the camp. He also testified that after the murders he was hysterical and remained in the van while his brother hid the bodies in the woods.” State v. Lankford, 113 Idaho 688, 692, 747 P. 2d 710, 714 (1987).
      Petitioner testified, in part:
      Mark “hit [Mr. Bravence] over the head with a thing about a foot long, which is a little club that he has had for a long time. ... He hit him both times in the back of the neck actually. Not in the head. Kind of across, you know, across the neck in the back (indicating). . . . Next the lady came up. Mrs. Bravence came up from the river and saw her husband laying there, and Mark told her to get on the ground. . . . Mark hit her apparently, it looked like to me, in the same place.” 4 Tr. 705-707.

       “Based upon that statute, it is therefore not necessary that the State prove that this defendant actually committed the act which caused the death of the victims, provided the State prove beyond a reasonable doubt that the defendant was present, and that he aided and abetted in the commission of the crime of robbery as alleged, or that if he was not present, that he advised and encouraged the commission of such crime.” App. 16.
      “If a human being is killed by any one of several persons engaged in the perpetration of the crime of robbery, all persons who either directly and actively commit the act constituting robbery or who with knowledge of the unlawful purpose of the perpetrator of the crime aid and abet in its commission, are guilty of murder of the first degree, whether the killing is intentional or unintentional.
      “Thus, if two or more persons acting together are perpetrating a robbery and one of them, in the course of the robbery and in furtherance of the common purpose to commit the robbery, kills a human being, both the person who committed the killing and the person who aided and abetted him in the robbery are guilty of Murder of the First Degree.” Id., at 17.

       5 Tr. 833-834; 1 Record 239-242.

       The court order provided:
      “IT IS HEREBY ORDERED AS FOLLOWS:
      “(1) Sentencing is set for October 12, 1984 at 9 a.m.;
      “(2) That on or before September 24, 1984 the State shall notify the Court and the Defendant in writing as to whether or not the State will be seeking and recommending that the death penalty be imposed herein. Such notification shall be filed in the same manner as if it were a formal pleading;
      “(3) That in the event the State shall seek and recommend to the Court that the death penalty be imposed herein the following shall be filed with the Court on or before September 24, 1984:
      “(a) The State shall formally file with the Court and serve upon counsel for the Defendant a statement listing the aggravating circumstances enumerated in Idaho Code § 19-2515(f) that it intends to rely upon and prove at the sentencing hearing to justify the imposition of the death penalty;
      “(b) The Defendant shall specify in a concise mannér all mitigating factors which he intends to rely upon at the time of the sentencing hearing.
      “Dated this 6th day of September, 1984.” App. 24-25.
      A similar order had been entered in May, but it was, in effect, reentered when the original sentencing hearing was postponed.

       The judge explained that because petitioner’s counsel had the preliminary hearing transcript, the trial tapes, and the option of consulting with former defense counsel, she had “all of the information . . . that [she] need[ed] to adequately prepare for sentencing.” Id., at 60.

       The dissent relies on the judge’s comment at the April 5, 1984, hearing, at which he had indicated that the death penalty was still a possibility, regardless of which sentence the State might ultimately recommend, see post, at 132, to support its argument that counsel should have known that the death penalty was still at issue. It should be noted not only that the judge’s comment was made prior to the State’s response of September 13, 1984, that it would not be seeking the death penalty, but also that the information was imparted to petitioner’s former counsel. See Tr. of Oral Arg. 25-27. The information was never given to the counsel who actually represented petitioner during his sentencing and who was required to proceed without a transcript of the earlier hearing. See id., at 43.
      The dissent also suggests that petitioner should have been aware that the judge was still considering the death penalty as a possibility when he ordered a presentence investigation at the April 5, 1984, hearing, see post, at 132-133, but of course, that, too, was ordered prior to the State’s response of September 13, 1984, in which the State confirmed that it would not be seeking the death penalty. Moreover, there is nothing unusual about ordering a presentence investigation prior to a sentencing.

       In Idaho, sentencing in both capital and noncapital cases is done by the trial judge alone. See Idaho Code § 19-2515 (1987).

       “Those things, all taken together, in my view and, apparently, in the jury’s view, ultimately resulted in a death occurring as part of a robbery and makes Bryan guilty of murder in the first degree. If it were not for the Felony Murder Rule, there would be a difficulty in the proof in this case and in the conviction of Bryan Lankford, but it was, and that was the law. Bryan does stand, then, convicted of two counts of first degree murder for his participation. I tend to generally believe the witnesses from Texas, the family members, and I have believed this for a long time: That Bryan has traditionally been a pretty good person, except when he’s been around Mark. Those are the reasons, the bottom line, what his family says about him as to why he would not and I would not and did not earlier recommend the death penalty, as the Court required, to be a filed document." App. 101-102; see id., at 191.

      He continued:
      “So there are a great number of possibilities available to this Court with reference to sentencing in this case. The State and the defense have both suggested and requested that this Court impose an indeterminate life sentence or two indeterminate life sentences. The state has suggested that the Court consider letting those sentences run concurrently or together at the same time. I think one first must analyze what that would mean in this case. That sentence would result in Bryan Lankford being eligible for parole in less than ten years, considering the fact that he’s served a considerable amount of time in the County Jail. In view of the recommendation or suggestion that I run the two sentences concurrently, the recommendation would be, in essence, that this Court sentence Bryan Lankford to spend, from this day, less than five years in the penitentiary for the murder of each one of the two Bravences, whose names have not yet been spoken today.” Id., at 114-115.

       For example:
      “This court does not know how many blows were struck by Bryan Lankford or how many blows were struck by Mark Lankford. The evidence clearly demonstrates and this court finds that both Bryan Lankford and Mark Lankford committed acts of force and violence directly upon the persons of Mr. and Mrs. Bravence which acts directly and proximately caused the deaths of Mr. and Mrs. Bravence. The facts show that either Bryan Lankford or Mark Lankford could have prevented the deaths of Mr. and/or Mrs. Bravence.” Id., at 159.

       458 U. S. 782, 801 (1982) (“For purposes of imposing the death penalty, [defendant’s] criminal culpability must be limited to his participation in the robbery, and his punishment must be tailored to his personal responsibility and moral guilt”).

       481 U. S. 137, 158 (1987) (“[M]ajor participation in the felony committed, combined with reckless indifference to human life, is sufficient to satisfy the Enmund culpability requirement”).

      See, e. g., State v. Windsor, 110 Idaho 410, 716 P. 2d 1182 (1985); State v. Scroggins, 110 Idaho 380, 716 P. 2d 1152 (1985); State v. Beam, 109 Idaho 616, 710 P. 2d 526 (1985); State v. Fetterly, 109 Idaho 766, 710 P. 2d 1202 (1985).

       The statutory aggravating circumstances, identified by the trial judge for the first time when he sentenced Bryan Lankford to death, were:
      “(a) At the time the murder was committed the defendant also committed another murder ....
      “(b) The murders of the Bravences were especially heinous, atrocious or cruel, and manifested exceptional depravity. . . .
      “(c) By the murder, or circumstances surrounding its commission, the defendant exhibited utter disregard for human life. . . .
      “(d) The murders were defined as murder of the first degree by Idaho Code Section 18-4003(d) and the murders were accompanied with the specific intent to cause the deaths of Mr. and Mrs. Bravence. . . .
      “(e) The defendant, by prior conduct and by conduct in the commission of the murders at hand has exhibited a propensity to commit murder which will probably constitute a continuing threat to society.” App. 156-157.

      See, e. g., State v. McKinney, 107 Idaho 180, 186, 687 P. 2d 570, 576 (1984) (“The difference in the degrees of participation in the actual killing justifies the differences in the sentences”); State v. Small, 107 Idaho 504, 506, 690 P. 2d 1336, 1338 (1984) (Codefendants “had different backgrounds and played different parts in the commission of the crime. Under these circumstances, the disparity in the sentences was justified”).

       “A person of ordinary sensibility could fairly characterize almost every murder as ‘outrageously or wantonly vile, horrible and inhuman.’ ” Godfrey v. Georgia, 446 U. S. 420, 428-429 (1980).
      “The petitioner’s crimes cannot be said to have reflected a consciousness materially more ‘depraved’ than that of any person guilty of murder. His victims were killed instantaneously.” Id., at 433 (footnote omitted).

       In his statement toward the end of the sentencing hearing, the judge described Bryan Lankford as follows: “[H]e is a liar, and he is an admitted liar. He’s a deceitful individual.” App. 116.

       “[W]e conclude that the Eighth and Fourteenth Amendments require that the sentencer, in all but the rarest kind of capital case, not be precluded from considering, as a mitigating factor, any aspect of a defendant’s character or record and any of the circumstances of the offense that the defendant proffers as a basis for a sentence less than death.” 438 U. S., at 604 (footnotes omitted).
      “There is no perfect procedure for deciding in which cases governmental authority should be used to impose death. But a statute that prevents the sentencer in all capital cases from giving independent mitigating weight to aspects of the defendant’s character and record and to circumstances of the offense proffered in mitigation creates the risk that the death penalty will be imposed in spite of factors which may call for a less severe penalty. When the choice is between life and death, that risk is unacceptable and incompatible with the commands of the Eighth and Fourteenth Amendments.” Id., at 605.

       In his opinion concurring in the judgment, Justice White made it plain that the holding in Gardner applied only in capital cases.
      “The issue in this case, like the issue in Woodson v. North Carolina, [428 U. S. 280 (1976),] ‘involves the procedure’ employed by the State in selecting persons who will receive the death penalty. Here the sentencing judge indicated that he selected petitioner Gardner for the death penalty in part because of information contained in a presentence report which information was not disclosed to petitioner or to his counsel and to which petitioner had no opportunity to respond. A procedure for selecting people for the death penalty which permits consideration of such secret information relevant to the ‘character and record of the individual offender,’ id., at 304, fails to meet the ‘need for reliability in the determination that death is the appropriate punishment’ which the Court indicated was required in Woodson, supra, at 305. This conclusion stems solely from the Eighth Amendment’s ban on cruel and unusual punishments on which the Wood-sow decision expressly rested, and my conclusion is limited, as was Wood-son, to cases in which the death penalty is imposed.” 430 U. S., at 363-364.
      The same limitation is applicable to our decision today.

      “[T]he penalty of death is qualitatively different from a sentence of imprisonment, however long. Death, in its finality, differs more from life imprisonment than a 100-year prison term differs from one of only a year or two. Because of that qualitative difference, there is a corresponding difference in the need for reliability in the determination that death is the appropriate punishment in a specific case.” Woodson v. North Carolina, 428 U. S. 280, 305 (1976) (opinion of Stewart, Powell, and Stevens, JJ.) (footnote omitted).

        Baldwin v. Hale, 1 Wall. 223, 233 (1864) (“Common justice requires that no man shall be condemned in his person or property without notice and an opportunity to make his defense”); In re Oliver, 333 U. S. 257, 273 (1948) (due process requires that a person be given “reasonable notice of a charge against him, and an opportunity to be heard in his defense ... to examine the witnesses against him, to offer testimony, and to be represented by counsel”). In a variety of contexts, our cases have repeatedly emphasized the importance of giving the parties sufficient notice to enable them to identify the issues on which a decision may turn. See, e. g., Mullane v. Central Hanover Bank & Trust Co., 339 U. S. 306, 314 (1950) (notice must be “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections”); Armstrong v. Manzo, 380 U. S. 545, 549-550 (1965) (failure to notify petitioner of pendency of adoption proceedings deprived him of due process of law); Goss v. Lopez, 419 U. S. 565, 579 (1975) (“students facing suspension . . . must be given some kind of notice and afforded some kind of hearing”); Cleveland Bd. of Ed. v. Loudermill, 470 U. S. 532, 546 (1985) (“The tenured public employee is entitled to oral or written notice of the charges against him, an explanation of the employer’s evidence, and an opportunity to present his side of the story”). In the capital context, in which the threatened loss is so severe, the need for notice is even more pronounced.

       See Polk County v. Dodson, 454 U. S. 312, 318 (1981) (“The system assumes that adversarial testing will ultimately advance the public interest in truth and fairness”).

      Evidence at trial also established that the camping couple whom the Lankford brothers killed offered no provocation or resistance, that their skulls were brutally smashed while they were kneeling in a position of submission, that they were driven — dead or mortally injured — into a remote area where their bodies were hidden under branches and other debris and remained undiscovered until three months later. State v. Lankford. 113 Idaho 688, 691-692, 747 P. 2d 710, 713 (1987). Thus, reasonable defense counsel would also have anticipated that a sentencer might well find additional statutory aggravating circumstances, see Idaho Code § 19—2515(g)(5) (1987) (aggravating circumstance that the murder was “especially heinous, atrocious or cruel, manifesting exceptional depravity”); § 19-2515(g)(6) (aggravating circumstance that “the defendant exhibited utter disregard for human life”).

       The majority, ante, at 115, n. 7, notes that “the judge’s comment was made prior to the State’s response.” I fail to see how that is relevant. The court’s statement was that the death penalty procedures would be followed “whether or not the state intends to pursue the death penalty.” 7 Record 56 (emphasis added).
      As the Court also notes, ante, at 115, n. 7, Lankford obtained new counsel after this discussion. However, I think the knowledge of the first counsel (Mr. Longeteig) should be imputed to the second counsel (Ms. Fisher). It was obviously Ms. Fisher’s duty to inform herself of all relevant circumstances, including the knowledge of Mr. Longeteig. That should not have been difficult, as the judge specifically ordered Mr. Longeteig to remain in the case and be at Ms. Fisher’s “beck and call,” 8 Record 25, to assist her in preparing for sentencing. If Ms. Fisher failed to ask him about the death penalty that cannot be labeled a due process violation attributable to the State.