Document: 447 U.S. 27 100 S.Ct. 2009 64 L.Ed.2d 702 Gerald A. LEWIS, Comptroller of the State Florida, etc., Appellant,v.BT INVESTMENT MANAGERS, INC., et al. No. 79-45. Argued Jan. 15, 1980. Decided June 9, Syllabus A Florida statute (§ 659.141(1)) prohibits out-of-state banks, bank holding companies, and trust companies from owning or controlling a business within that sells investment advisory services. Another 660.10) all corporations except state-chartered banks national located in performing certain fiduciary functions. Appellee company's proposal to operate appellee management subsidiary was rejected by Board Governors Federal Reserve System on ground it prohibited § 659.141(1). Appellees then brought suit District Court for declaratory injunctive relief, alleging, inter alia, 659.141(1) violates Commerce Clause joint operation section with 660.10 constitutes similar violation since but existence such statutes authority would be sought establish company Florida. The held violate Clause, because combination they discriminate against are "parochial legislation" "must deemed per se unconstitutional." court also federal Bank Holding Company Act 1956 does not foster permit types discrimination reflected statutes. granted relief both enjoined only enforcement Held: 1. Section directly burdens interstate commerce manner contravenes Clause's implicit limitation state power. Pp. 37-49. (a) While banking related financial activities profound local concern, follow these same lack important attributes Congress' power regulate support constitutional limitations powers States. Such clearly apply this case. 38-39. (b) properly concluded is "parochial" sense overtly prevents foreign enterprises competing markets. Under section, affected organizations evenhanded principal operations outside operating subsidiaries giving advice State. It follows discriminates among entities according extent their contacts economy. Exxon Corp. v. Governor Maryland, 437 117, 98 2207, 57 91, distinguished. And disparate treatment cannot justified as an incidental burden necessitated legitimate concerns, discouraging economic concentration protecting citizenry fraud, asserted interest promoting control over institutions. 39-44. (c) Neither 3(d) Act—which acquiring other States without authorization—nor 7 reserves general enact regulations applicable companies—authorizes prohibit subsidiaries. grants expansion across lines where otherwise federally prohibited. Moreover, Act's structure reveals applies acquisitions banks. intended preserve existing define pre-emptive effect law, there nothing 7's language legislative history indicate extend new have possessed absent legislation. legislation operates boundaries marked Clause. 44-49. 2. Since constitutionality neither fully placed issue nor determined Court's decision, validity section's may perform responsibilities before at stage proceedings; hence, judgment respect vacated case remanded further proceedings. amendment, interim, so apparently establishing raises jurisdictional substantive questions should addressed first instance Court. 50-53. 461 F.Supp. 1187, affirmed part, remanded. Ervin N. Griswold, Washington, D. C., appellant. John L. Warden, New York City, appellees. Mr. Justice BLACKMUN delivered opinion 1 This concerns two regulating conduct services three-judge United Court, convened pursuant 28 U.S.C. 2281 (1970 ed.),1 U.S.Const., Art. 1, 8, cl. 3, principally authorized companies. here direct appeal, see 1253, we noted probable jurisdiction resolve substantial statutory issues presented. 444 822, 41, 62 (1979). 2 * Bankers Trust Corporation (Bankers Trust) corporation organized under laws York. maintains its place meaning 2(a) 1956, 70 Stat. 133, amended, 12 1841(a) (1976 ed. Supp. II) (Act). Accordingly, subject restrictions kinds own control. Upon authorization System, however, permitted shares any which "so closely managing proper incident thereto." 4(c)(8) Act, 1843(c)(8). By regulation, has designated provision performance functions "closely related" statute. See CFR §§ 225.4(a)(4) (5) 3 In 1972, decided seek Board's approval On October year, filed formal subsidiary, planned offices Palm Beach. BT Investment Managers, Inc. (BTIM), Trust's vehicle entry into market. incorporated Delaware wholly owned November 24, 1972. Three days later qualified do application proposed BTIM provide "portfolio advice," well "general information advice, statistical forecasting industry studies" persons than Complaint ¶ 7, App. 9-10, appellant's Answer 19. 4 When Board, restricted ability compete State's At time Fla.Stat. 659.141(1), added 1972 Fla. Laws, ch. 72-96, effective March 28, State; businesses furnishing addition, corporation, association statute, public. Thus, appeared ownership although could customers serve. 5 reaction community decidedly negative. Comptroller, Association, Beach County Inc., comments objecting proposal. More importantly present purposes, legislature persuaded take action. 30, shortly after had State, special session amended That been books expanded customer, rather just "trust banks" theretofore read.2 amendment took effect, Governor's approval, December 21, There evidence response pending application, strong backing community. 6 April 26, 1973, conflict law. Corp., 59 Fed.Res.Bull. 364. observed contemplated de novo market acquisition ordinarily desirable procompetitive impact. Absent contrary case, intimated favorably inclined toward But found "was to, does, non-Florida companies." Fed.Res.Bull., 365. view obligation dictates itself constrained reject 1846; Whitney Nat. Orleans, 379 411, 424-425, 85 551, 559-560, 13 386 (1965). Within six months appellees action seeking relief.3 Count I complaint alleged "is designed promote lawful regulatory objectives, shelter those presently conducting competition [BTIM]." 11, 11. violations due process equal protection guarantees Fourteenth Amendment, II defects result 660.10. "[b]ut challenged statutes," "a having charter charter" engage exclusively one more regulated 14-15. ed.), submitted summary stipulated set facts. 8 divided vote, initially dismissed prejudice abstain decision either Railroad Comm'n Pullman Co., 312 496, 61 643, L.Ed. 971 (1941), Burford Sun Oil 319 315, 63 1098, 87 1424 (1943). Dickinson, 792 (ND Fla.1974). Appeals Fifth Circuit, reversed consideration merits. 559 F.2d 950 (1977). 9 remand, portions 1187 (1978). Without reaching appellees' arguments, attack commerce. reasoned "erects insuperable barrier foreign-based through subsidiaries, market," "similarly cordons off concerns." F.Supp., 1196. ruled Ibid. purposes proffered appellant, including purported desire curb anticompetitive abuses arising agglomeration power, failed justify discriminatory impact 10 Finally, eschewed argument 1842(d), 1846, question. recognized authorization. contention prohibition implicitly extends businesses, providing advice. 11 issued order granting enjoining appellees.4 appeal presents distinct statutes.5 whether statutes, viewed independently industry, second Congress, area, created area free restraints. no pre-empts question, law becomes if appears survive question pertinent reach affirmative answer first. These arise backdrop familiar principles. Congress "[t]o . several States." U.S.Const. 3. Although thus speaks terms bestowed upon long limits erect barriers trade. See, e. g., Hughes Oklahoma, 441 322, 326, 99 1727, 1731, 60 250 (1979); Philadelphia Jersey, 617, 623, 2531, 2535, 475 (1978); H. P. Hood & Sons, Du Mond, 336 525, 534-538, 69 657, 663-665, 93 865 (1949); Cooley Wardens, How. 299, 996 (1852). course, means absolute. absence conflicting legislation, retain police matters "legitimate concern," even though affected. g. , Raymond Motor Transportation, Rice, 434 429, 440, 787, 793, 54 664 Great A&P Tea Co. Cottrell, 424 366, 371, 96 923, 927, 47 55 (1976). Where interests implicated, defining appropriate scope regulation often matter "delicate adjustment." Ibid., quoting U.S., 553, S.Ct., 679 (Black, J., dissenting). Yet protect interests, generally must act consistent "ultimate principle dealings another position isolation." Baldwin G. F. Seelig, 294 511, 527, 497, 502, 79 1032 (1935). However hand, "it accomplished discriminating articles coming unless some reason, apart origin, treat them differently." 626-627, 2532. 14 Over years, used variety formulations States, consistently distinguished between outright protectionism indirect flow "where simple effected virtually rule invalidity erected." Id., 624, 2535. contrast, visits effects equally scrutiny narrowly drawn. stated Pike Bruce Church, 397 137, 90 844, 25 174 (1970): 15 "Where regulates evenhandedly effectuate public interest, incidental, will upheld imposed excessive relation putative benefits. If purpose found, degree. tolerated course depend nature involved, promoted lesser activities." 142, 847. 16 336, 1736; Hunt Washington Apple Advertising Comm'n, 432 333, 353, 97 2434, 2446, 53 383 (1977); 371-372, 927-928; Huron Portland Cement Detroit, 362 443, 80 813, 815, 852 (1960). focus inquiry practical judged chiefly effects. Best Maxwell, 311 454, 455-456, 334, 335, 275 (1940). III 17 With principles mind, turn chief object controversy, setting up projected firms possessing characteristics: kind organization purpose, bank, company, company; location 18 Appellant amici supporting his argue analysis flawed three respects: First, assertedly affects character insufficient bring play.6 Second, erroneously labeled protectionist incorrectly relied "per invalidity" identified argues treated neutral less stringent standards supra, he meets test. Third, accord significance, view, 1956. bank-related 19 arguments needs brief mention. We readily accept submission that, commercial reality, concern. As freely concede, Brief 17, n. 10, sound institutions honest practices essential health economy well-being people. surprising ever early our Republic, chartered actively activities. 20 Nonetheless, attributes. An impressive array formation organizations, rendering markets, contrary.7 understand appellant dispute enactments, rest primarily Indeed, assume sphere. 622-623, 2534-2535. For clear apply. B 21 contentions erred applying too standard Florida's authority, substantial. nonetheless agree conclusion 22 makes explicit presence indicates, markets resources make likely attempt entry. concedes 59, circumstances enactment suggest legislature's objective. 23 argues, ought declared invalid prevent entering enter obtaining license business. Furthermore, locally counterparts maintain elsewhere. analogizes Maryland prohibiting retail vertically integrated petroleum 91 said, particular corporate organizational origin citizenship enterprise. 24 involved flatly producers refiners products opening contractual arrangements. 120, 2211, enacted perceived inequities allocation outlets during fuel shortage 1973. Various oil engaged production refining sale products, number grounds. Among claimed violated discriminated refiners, were favor independent retailers, most businesses. contention. After served "controlling gasoline id., 125, 2213, separately analyzed producing-refining retailing ends industry. discriminateagainst based competitors because, fact, favored. reduced. 127, 2214. claim level "no whatsoever" "interstate dealers" did facilities. 126, Despite fact stations operated dealers small relative producer-refiners, placing shifting part enough, circumstances, violation. 126-127, 26 points similarity former, vertical similarly conglomerate industries. market, here.8 disagree, suggestion precedent engages additional form highly significant analysis. producer-refiners critical factor Exxon. Both face actual displays favoritism significantly alters status. 2536-2537; 502.9 need decide difference sufficient render invalid, convinced concerns. argued advances policies. specifically undue arena high finance; practices, presumably residents fraud; maximizing think fail 29 Discouraging fraud undoubtedly interests. heavily disproportionate places demonstrated basis inference possess evils monopoly homegrown counterparts, sharp based.10 Nor reason conclude entry, intermediate method presumed evils, particularly when large far-flung simply suffice eliminate 659.141(1)'s apparent defect. Cf. 353-354, 2446-2447; 375-376, 929-930. 30 regard institutions, doubt entirely tinge parochialism. almost possible bolstering ownership, wealth, odds using citizens competition. 538, 665; Buck Kuykendall, 267 307, 315-316, 45 324, 325-326, 623 (1925); cf. Toomer Witsell, 334 385, 403-404, 68 1156, 1165-1166, 92 1460 (1948). event, example, restrict Nor, concedes, forms. believe control, legitimately exists, advanced employed. 31 reasons, err C 32 Ordinarily, point reached end inquiry. string bow: given ways acting independently, not. chooses, exercise indirectly conferring enjoy. 542-543, 667; Prudential Insurance Benjamin, 328 408, 423-424, 66 1142, 1151-1152, 1342 (1946); International Shoe 326 310, 154, 157, 95 (1945). enabling very kind, authorizes embodied 33 rests provisions approving acquire "any bank" operations, located.11 continuing role companies.12 authorize 34 accomplish primary objectives. hands few giants. implement congressional policy nonbanking single entity. S.Rep.No.1095, 84th Cong., 1st Sess., (1955); U.S.Code Cong. Admin.News, p. 2482; First Lincolnwood 439 234, 242-243, 505, 510, 58 484 Underlying objectives tendencies credit S.Rep.No.91-1084, pp. 2-3 (1970); 1970, 5519. 35 twin goals separate provisions. creation field. 3(a) required stock assets merger 3(c) specified criteria considered determining grant approval. sharply curtailed enterprises. 4(a) forbade future What 4(c)(6), carved out exception "of financial, fiduciary, insurance nature" 137. 36 Senate, contained S. 2577, (1955). Senator Douglas introduced expanding lines. He ensure use mechanisms evade state-law branching made McFadden 36. 102 Cong.Rec. 6860 (1956) (remarks Sen. Douglas). Senate agreed amendment. included companion bill House Representatives. H.R.Rep.No.609, 2-5, "Douglas Amendment" emerged relies. 37 offers scant challenge proceeding. Preliminarily, doubtful establishes create exceptions prohibition, is, Nonbanking 4, contain parallel provision. Even interpreted ordinary canons interpretation lead restraints activities.13 38 contrast 3(d), reserve restrictive find Rather, concern legislation's criticisms might expand Committee Report "to now dual system," yet inconsistent [Act] therefore nullify effect." 2d pt. 2, (1956). Far creating evinces intent forestall broad interpretation. 39 reliance misplaced. removed. Therefore, injunction sustained. IV 40 brings us, finally, purport reasons below, decision. vacate remand proceedings necessary light opinion. 41 already noted, insofar conjunction followed approach, basis. Jointly, limit led "cordons Having address standing alone. consider, many issue, refused premature. 1201. 42 focused concatenation require incorporation condition doing Railway Express Agency, Virginia, 282 51 201, 75 450 (1931). Because approach taken definitive ruling issue. touched obliquely declared, motion clarification, exclude Juris. Statement E2. specific determination speculate about 43 controversy requirements expressly join battle facts show, moreover, prevented BTIM's processed permission approved parties stipulate organize so. interpret stipulation mean willing comply requirement, contesting validity, ask us resolve, raised pleadings. 44 One counsels attempting evaluate juncture. Depository Institutions Deregulation Monetary Control 1980, 712(b), No.96-221, 94 189 (Mar. 31, 1980).14 subsidiary. "repealed" terms, 712(c), 1981, indications temporary moratorium applications prelude permanent restrictions. Nevertheless, review below stands. Diffenderfer Central Baptist 404 412, 414, 574, 575, 567 (1972). questions, substantive, determine 660.10's V 46 summary, affirm declares unconstitutional enjoins enforcement. portion relates 660.10, opinion.15 ordered. unaffected subsequent repeal 2281, inapplicable commenced August 12, 1976. Pub.L. 94-381, 1120. 72-726, 1-7. reads part: "[N]o conducted state, shall acquire, [or] retain, own, indirectly, all, substantially of, over, conducted, furnishes [to banks] state." italicized words added, bracketed deleted, 1973 petitioned Second Circuit denying petition withdrawn, leave reinstate, outcome suit. Initially entire sentence unconstitutional. Juris, A1. order, declaration dealing D1-D2. rendered govern establishment Florida; accordingly 1201 Fla.1978). jurisdiction, appeal. White Regester, 412 755, 761, 2332, 2337, 314 (1973). Part IV, infra. Division Securities, "grandfather" clause, 659.141(3), office. moot leaves prohibit. departed Supporting amici, continue press Conference Supervisors Amicus Curiae 8-12. Some leading examples banking, trust, include National seq.; Securities 1933, 48 74, 77a Exchange 1934, 881, 78a Indenture 1939, 1149, 77aaa 1940, 789, 80a-1 seq. express finding commerce, Advisors 847, 80b-1. like discernible goods Locally channel clients' investments competitors. record. sold produced refined directed least conceivable recommend decline assign weight proof concerning Appellant's maintained weakened discussed III-C, unlikely enough identified. in-state extensive Government evils. relies 135, 238, provides: "Notwithstanding thereof voting in, date [July 1966] became whichever later, out-of-State located, merely implication. total deposits largest." subsection "The construed preventing exercising hereafter thereof." 138. attempts latter observations arguing geographical well. asserts gave 4(c) narrow effectively controlled parent company. Transamerica 1014, 1016-1017 (1957). geographically confined virtue applied operations. undercut 1970 amendments revised 4(c). controls one-bank formerly exempt, adopted changes give greater discretion administering Act. 12-13 H.R.Rep.No.91-387, (1969); Chase, Emerging Financial Conglomerate: Liberalization Geo.L.J. 1225, 1236-1237 liberalize "related" proposals met different receptions Houses final product compromise. substitute phrase "functionally adopted; "financial, dropped "business banking" changed "banking." Amendments 91-607, 103, 84 1763; Note, Geo.Wash.L.Rev. 1200, 1219-1223 (1971). disagreement conferees exact import breadth permit. Compare H.R.Conf.Rep.No.91-1747, (1970), 116 41950-41952 (1970) Rep. Patman), 41953-41954 Widnall); 42424 Sparkman); 42435-42436 Bennett). 71 Mich.L.Rev. 1170, 1206-1207 debate note change "banking" explicitly prior requirement relationship Letter dated 23, Arthur Burns, Chairman, Representative Patman, reprinted 41959 Geo.Wash.L.Rev., 1220. Once made, infers previous removed along derived. "Section (12 1842(d)) inserting (1) (d) adding following: "(2)(A) Except provided subparagraph (B), paragraph regarding "(B) Subparagraph (A) 5, opened "(C) paragraph, term 'trust company' whose limited entitled 'An Currency,' September 1962 92a), located. "(c) hereby repealed 1981." Regulatory Reform 1976, 1976 Fla.Laws, 76-168, 3(2)(t), repeals, July chs. 659 660 Statutes "relating banking." chapters 76-168 recites "the Legislature [t]o systematic [licensing businesses] periodic termination, modification, reestablishment programs functions." advised S.B. 347 347; bills substance intact mooting litigation; adjourns. filed, remain become moot, whatever ultimate disposition bills.

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