Warren E. Burger: Mr. Griswold, you may resume.
Erwin N. Griswold: First, I would like to make a brief further answer to what in effect were two questions closely related from Justice Stevens. This case does not involve a question of who makes a sale or what business is done. This case involves an aspect of federalism. The difference between Paine Webber and the appellee here is that the appellee is a bank, a bank holding company. And the whole history of this country for 200 years shows a constant struggle on the highest political level to maintain the position of the States with respect to the handling of money. And that's what this case is about. This is -- both the Congress and the States have passed legislation in this area over many years, and the statutes which are involved here are statutes of that type. Now, I was referring to the particular provisions in the Bank Holding Company Act. The first one of which is that a bank holding company cannot own a bank in a State unless the State says it can. The second one is that no bank holding company may -- may own any company which is not a bank, and these things are not banks, this investment advisory and it's strange to say, the trust business is not a bank. And then, there comes -- well, through these provisions, Congress has formulated a national policy in this area. This case would never have arisen were it not for an exception to Section 4 of the Bank Holding Company Act which is in 12 U.S.C. 1843 (c) (8) and is printed on page D2, Appendix D of the appellant's brief, and it says, “Hence, such prohibition shall not, with respect to any other bank holding company, apply to shares of any company the activities of which the Board,” that's the Federal Reserve Board, “after new notice, an opportunity for hearing has determined by order or regulation to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.” Now, the appellees contend that in substance by this exception, Congress has undone much of which -- what it so clearly did and intended to do in the basic parts of the very same statute. I do not think that this exception needs to be construed or should be construed to authorize any such result to authorize in effect the introduction of a new cutting edge of expansion from outside the State when the whole tenure of the statute, in its history, shows that the basic policy choice made by Congress was to protect the States from expansion by outside bank holding companies except to the extent that the State chose to authorize such expansion. The basic policies established by Congress are clear, no bank outside the State, no subsidiary which is not a bank. This gives color to, and helps to define the scope of the exemption given in (c) (8). To use the words used by the Court in another text, this basic -- another context, these basic prohibitory provisions provide emanations and a penumbra which helped to determine the intent of Congress which was expressed in (c) (8). My suggestion is that (c) (8) can be given full scope and effect by construing it to have a territorial limitation, that (c) (8) authorizes the Board to authorize a bank holding company to own a corporation which is not a bank to provide services to the bank holding company in a State where the bank holding company is authorized to own a bank. But that it should not be construed in a wide open way to authorize the bank holding company to proceed in the other States -- all other States without a limitation.
Byron R. White: Is that the -- is that the basis -- is that the construction the Board put on it?
Erwin N. Griswold: The Board has not -- the -- the Board considered this case up to the point where Florida passed the statue and then the Board said because Florida says, ”We can't go there. We will not authorize it.”
Byron R. White: Well, that's -- that's your position. Isn't that --
Erwin N. Griswold: I believe that they --
Byron R. White: -- isn't that your position?
Erwin N. Griswold: I believe that the Board has authorized some bank holding companies to have this type of subsidiary outside the State. I'm contending the Board was wrong. I know of no judicial --
Byron R. White: Well, yes.But the Board might have -- might do this in a State that didn't prevent it.
Erwin N. Griswold: It might do it in the State which didn't prevent it. That would --
Byron R. White: And you would say that if it didn't in the State that did prevent it, it was right. You would -- you would --
Erwin N. Griswold: If it did it in a State which --
Byron R. White: -- you would say the Board was quite right in -- in denying permission here because Florida prevented it.
Erwin N. Griswold: Yes, I would say that they -- they were, but I would also say that the Board has no power under this statute if properly construed because the statute ought to be construed to authorize the Board to allow the subsidiary assisting factors only in States where the bank holding company needs those factors in order to carry out its banking business --
Byron R. White: So you're --
Erwin N. Griswold: -- in those States.
Byron R. White: -- so you're disagreeing with the administrative construction of the statute.
Erwin N. Griswold: Not -- its -- there never has been a clear administrative construction by way of decision --
Byron R. White: But you said you thought the Board was wrong a moment ago.
Erwin N. Griswold: I -- I think that in those cases where the Board has authorized this outside of the State where there is a bank that properly considered judicial authority, I might hold that the Board was wrong. As Justice Cardozo said in the Panama Refining case, “The meaning of the statute is to be looked for not in any single section but in all the parts together and then their relation to the end in view.” And I would call attention to the fact that in the recent case of (Inaudible) against Boyle involving jurisdiction of appeals from the District of Columbia Court of Appeals. The -- this Court did exactly that, yet applied a -- a territorial limitation to a statute which was otherwise quite clear. Accordingly, we think that the judgement below was erroneous and should be reversed.
Warren E. Burger: Mr. Warden.
John L. Warden: Mr. Chief Justice and may it please the Court. I should point out initially that the statutory provision that Dean Griswold was just referring to, which is at D2 of the appendix of the red brief, contains no territorial limitation. It has never been construed by the Board to contain the limitation that Dean Griswold contends should be read into it. Indeed, until a few minutes ago, I wasn't aware that that argument was being made in this case. And if that construction is adopted by the Court with no basis whatsoever, it will result in invalidating literally hundreds of substantial acquisitions made by bank holding companies with the approval of the Federal Reserve Board, not disturbed by any judicial proceeding for many years.
Byron R. White: What do you say -- I -- I suppose you will get to it but what would you say the Board's error was in denying permission here?
John L. Warden: Well, Mr. Justice White, the Board has construed this Court's decision in Whitney --
Byron R. White: Yes.
John L. Warden: -- as requiring it to give effect to state law in ruling on applications whether -- whatever the constitutionality of the state law. In other words, it will not determine the constitutional question. It remits the parties to the Court for that purpose which is why this case was instituted in a three-judge District Court in Florida and brought up here as it has been. So the Board's final action was, “We would have approved or we would likely have approved this application but for the recent one, hastily enacted Florida statute --
Byron R. White: But do you think the Board also -- or -- or did it or perhaps it didn't. You don't think there's any element in the Board's decision that -- to the effect that Congress consented to this Florida's -- the kind of Florida statute?
John L. Warden: No, I do not. The Court noted in its opinion in Whitney that the Board had at that point, considered that Section 7 of the Bank Holding Company Act permitted States to preclude the doing of business by bank holding companies entirely to preclude that form of commercial organization. We don't have to reach that question in this case. Of course, since Florida permits the doing of business by bank holding companies, it permits that form of commercial organization. But I don't believe there's any indication that the Board reads Section 7 as permitting an -- and otherwise unconstitutional discrimination against out-of-state firms.
Byron R. White: Well, it is if the Congress permitted it.
John L. Warden: No, I said and otherwise, and they don't read Section 7 as -- as constituting a congressional validation of otherwise unconstitutional discrimination against out-of-state firms. I know of no suggestion to that effect in the Board's (Inaudible). And they made no such allusion in their opinion in this case. Secondly, I would like to note that with respect to the question of whether interstate commerce is involved in this case at all, which Dean Griswold addressed, I do not notice that contention made in the brief filed on behalf of the appellant. And the fact that the business that Bankers Trust proposes to engage in would be conducted in interstate commerce was not disputed by Florida before the three-judge District Court and in fact was conceded.
Byron R. White: Let me -- I just want to clear up one more -- one more point. Do you think the Board has -- has addressed that either way the question of congressional consent in a --
John L. Warden: To this -- to this sort of statute --
Byron R. White: Yes.
John L. Warden: -- I did not.
Byron R. White: So -- so, you don't -- you can't relay on Board construction that there is no consent.
John L. Warden: Well, that is correct. And I -- I must say I don't think that -- as I shall approach that part of the argument later that there's any need for administrative expertise --
Byron R. White: I understand.
John L. Warden: -- in determining that question.
Byron R. White: Yes, I know you -- I know you do.
William H. Rehnquist: Well, when you say there's no need for administrative expertise, you mean you don't rely in any preemption doctrine under the Bank Holding Company Act, you simply rely on what -- or what are called reversed commerce clauses from this Court?
John L. Warden: That is correct, Mr. Justice Rehnquist.
William H. Rehnquist: Because the Commerce Clause itself simply grants Congress the authority to rate late commerce among the several States.
John L. Warden: Well, that is correct, Your Honor, but the -- though -- the consistent --
William H. Rehnquist: A lot of --
John L. Warden: -- line of authority in this Court has been that it has negative implications of its own force for state statutes that discriminate against interstate commerce. There is no federal statute involved, for example, in Philadelphia against New Jersey, at least of which I'm aware. And I believe that Dean Griswold has conceded in his brief on behalf of the Conference of State Bank Supervisors at page 9, Note 4 that the Commerce Clause has exactly the same scope when relied upon to strike down discriminatory state regulation as when relied upon to justify affirmative congressional regulation. Now, to continue briefly on the interstate commerce question, the three-judge court addressed directly the question to counsel for the State of Florida below whether “the defendant made any serious contention,” I quote that, that Bankers Trust would not be engaged in interstate commerce in the business it proposes to conduct and counsel replied, and I quote, “The defendant does not.” I might add that a New York based financial institution operating these businesses in Florida by means of local officers directed from New York and affecting the flow of capital funds into the national capital market is inescapably involved in interstate commerce. The second point I would like to make is that this case does not involve banking or any issue of competitive equality between state and national banks or any question of the dual regulation of banks. The distinction between the business of banking and the businesses here involved, trust services and investment advisory services is recognized not only in the Bank Holding Company Act by Congress, which I shall address in a moment, but right on the face of Florida statute, Section 659.141 which expressly discusses as discrete businesses the business of banking, the trust business and investment advisory services.
Byron R. White: There might be lesser included offenses though, wouldn't it?
John L. Warden: [Laughs] I think not. As we pointed out in our brief, Your Honor, banks may do trust businesses and investment advisory businesses but so to many other sorts of commercial institutions --
Byron R. White: But -- but they're not --
John L. Warden: -- and indeed --
Byron R. White: But they're not unrelated to banking.
John L. Warden: They are not unrelated to banking.
Byron R. White: Otherwise, it may be -- your clients wouldn't be interested.
John L. Warden: That's quite right.
Byron R. White: Yes.
John L. Warden: And then otherwise the Federal Reserve Board wouldn't have given --
Byron R. White: (Voice Overlap) --
John L. Warden: -- the affirmative indication of that but I point out that not only the Paine Webber has engaged in investment advisory services but other forms of non-deposit trust companies such as what we proposed to set up here, engaged in trust services and so do natural persons who have no banking powers whatsoever. I think we use the illustration in our brief that the manufacturer of aircraft doesn't become the manufacturer of automobiles because it's carried on by General Motors. Now, I should also point out because I thought it might have been a bit unclear. Well, I'm talking about 659.141 that that statute itself bars us both from the investment advisory business and from the trust business, irrespective of -- of 660 because 659.141 keeps us out whether we have a local incorporated subsidiary or open an office of an out-of-state subsidiary.
John Paul Stevens: But, Mr. Warden, if --
John L. Warden: Yes, sir.
John Paul Stevens: -- the District Court was correct in holding 659.141 unconstitutional, why would we have to go ahead and assume -- assume we agreed with them just for purposes of discussion, would -- would we still have to go ahead and consider the other statute, and if so, why?
John L. Warden: I think you would, Mr. Justice Stevens, because as -- as Dean Griswold suggested in his brief, it appears that the lower court may have read 660.10 as of its own force precluding Bankers Trust New York Corporation and Holding Company from complying with its terms by incorporating a local subsidiary. Now, the statute doesn't say that on its face.
John Paul Stevens: Well, then, why should the --
John L. Warden: Yes,
John Paul Stevens: -- the federal court assume -- you know, you certainly don't strain to give the statute --
John L. Warden: Well --
John Paul Stevens: -- unconstitutional reading.
John L. Warden: Absolutely not, Your Honor, but Florida has not yet represented or conceded in this proceeding that the statute will not be so construed and enforced if Florida does so or if this Court rules that that is not what the statute means, then Section 660.10 insofar as that was the basis for the lower court's decision does not have to be reached by this Court.
William H. Rehnquist: Well, the Florida courts have never had an opportunity to interpret the law. The District Court originally abstained and you appealed saying they shouldn't have abstained.
John L. Warden: Well, at that point, Bankers Trust took the position that there was nothing unclear about the statute.
William H. Rehnquist: But to -- to say that Florida hasn't yet conceded, very, very likely the executive branch in Florida or the people representing the state banking authorities aren't in a position to make a final determination. That's for the Florida courts, I would think if its -- Florida's (Voice Overlap) --
John L. Warden: Well, if I may, Your Honor, I think that if the lower court did construe the statute the way Dean Griswold suggest it may have, the lower court clearly erred in that question of state law, is so clear that it should be disposed of by this Court.
Potter Stewart: You're talking about --
John L. Warden: But --
Potter Stewart: -- Section 660.10?
John L. Warden: -- that is -- yes, I am, Mr. Justice Stewart. But that will be a necessary part of this Court's decision if it is going to set aside the declaration below that 660.10 is unconstitutional on the ground that it prevents of its own force, Bankers Trust from complying with it. But let me -- let me --
Byron R. White: That's a suggestion that -- that we wouldn't know more about the Florida law than the District Court.
John L. Warden: Well, it's a suggestion, if you please, Mr. Justice White, that you can read statutes.
Byron R. White: Yes, well, better than -- better than the District Court.
Warren E. Burger: I hope so.
John L. Warden: In this case, yes, Mr. Justice White.
Byron R. White: As a matter of state law, as a matter of state law.
John L. Warden: In this particular instance, yes, Your Honor.
Byron R. White: So you --
John L. Warden: But I might -- but I might add, Mr. Justice White, that --
Byron R. White: You're suggesting you should lose on that part of the case? [Laughter]
John L. Warden: No, I'm not suggesting we should lose on that part of the case. I'm going to get to another aspect of that statute in just a moment, but the decision below need not be affirmed on that basis if this Court construes the statute not to operate as it may have been thought to operate by the District Court. There will, nonetheless, remain, the effect of 660.10 on Bankers Trust's New York subsidiaries which conduct a large trust business and are precluded by that statute from themselves acting as an executor or testamentary trustee even without a local office. Other Florida resident, even when named in his will as such. Now, this result, I don't think, can be justified --
Byron R. White: Well, I'd -- I'd -- perhaps I understood Dean Griswold that -- didn't he suggest that this statute didn't prevent an outside executive from himself doing business across the state line?
John L. Warden: I didn't hear --
Byron R. White: Well, I --
John L. Warden: -- Dean Griswold suggest that. The statue contains --
Byron R. White: I'll -- I'll --
John L. Warden: -- some exceptions --
Byron R. White: He speaks for himself or rely on the transcript.
John L. Warden: But it says in the first paragraph [Laughs] that only local incorporated banks and trust companies and national banking --
Byron R. White: Right.
John L. Warden: -- associations having trust powers may do the following within this State --
Byron R. White: I suppose --
John L. Warden: -- and that includes acting as a trust of (Voice Overlap) --
Byron R. White: I suppose if 660.10 --
John L. Warden: -- trustee.
Byron R. White: -- if that -- if that provision had been construed to permit out-of-state corporations directly to give investment advice in a State either through a local office or -- or without a local office on the telephone or by mail, the District Court might have had a different idea about an -- the -- about the other statute because there might be a way where -- that this wouldn't -- if they could be business this way, it wouldn't be so burdensome under state commerce.
John L. Warden: I don't think that 660.10 can be read as dealing with anything other than a requirement of local incorporation. I don't think it can possibly be read to permit out-of-state corporations from doing the very businesses it says they can't do.
Byron R. White: Yes.
John L. Warden: And even if it were so read, as I mentioned a minute ago, 659.141 of its own force by its plain language, prevents the doing of these businesses in Florida by out-of-state holding companies either directly or through local subsidiaries.
Potter Stewart: As you read 660.10 simply as requiring that an executor or administrator or these other named officers be local, that is an incorporation -- incorporated or qualified in -- in Florida, is not too unusual a provision, is it? Don't -- don't many States in their probate law or decedent's estates laws require that the guardian or the administrator of a decedent's estate be a local corporation or a local resident?
John L. Warden: Mr. Justice Stewart, there are approximately 10 or so such statutes still in existence as --
Potter Stewart: Yes, you mean 10 or more States.
John L. Warden: -- as point -- yes.
Potter Stewart: Yes.
John L. Warden: As pointed out in the Conference of State Supervisors' brief.
Potter Stewart: Right.
John L. Warden: There are fewer now than there were in years past. And I might say that in Fain v. Hall, a District Court decision in Florida last year, 463 F.Supp. 661, the District Court struck down the Florida statute that limited to close relatives out-of-state individuals who could act as fiduciaries in Florida basing its decision not on the privileges and immunities rights of the fiduciaries but on the basic and fundamental right of the testator to name his own fiduciaries.
Potter Stewart: And there you say that was a -- one of the District Court?
John L. Warden: Yes, and that was not appealed by the State.
Potter Stewart: But --
William H. Rehnquist: What -- what can a prior constitutional provision did the --
Potter Stewart: Yes.
William H. Rehnquist: -- District Court rely on in that case?
John L. Warden: The Due Process Clause, Your Honor.
Potter Stewart: Of what?
William H. Rehnquist: What -- what, life, liberty, property?
John L. Warden: Yes. The -- the District Court said that selecting a fiduciary to manage one's property was a fundamental part of human liberty protected by the Due Process Clause.
Potter Stewart: And that this had been taken away without due process of law?
John L. Warden: Yes. It also found --
Potter Stewart: (Voice Overlap) versus New York.
John L. Warden: -- a classification, an arbitrary one --
Potter Stewart: Although it was -- it was legislation enacted by the state legislature.
John L. Warden: That's correct.
Potter Stewart: And that's a due process of law?
John L. Warden: That's correct. That was the holding.
Byron R. White: Would you suggest that -- suppose the -- suppose the District Court had -- had stricken down 660.10 and then said, “We needn't reach the other section,” would you --
John L. Warden: 659.141, they would have to reach, Mr. Justice White --
Byron R. White: Well, because that caused the --
John L. Warden: -- because that -- that covers both business, investment advisory and trust and of its own force considered apart from 660.10, keeps Bankers Trust from doing business in Florida (Voice Overlap) --
Byron R. White: In -- in any form?
John L. Warden: In any form.
Byron R. White: Across state line by telephone, by letter?
John L. Warden: No, no, no, no. I beg your pardon. Prevents their maintaining a local office.
Byron R. White: That is right. Right.
John L. Warden: That's correct.
Byron R. White: But it could still do business across a state line?
John L. Warden: Yes.
Byron R. White: As far as that section is concerned.
John L. Warden: It doesn't -- doesn't preclude their using the telephone or sending people down by airplane.
Byron R. White: Or acting as trustee.
John L. Warden: No, I do not believe it does, Your Honor, 660.10 does that.
Byron R. White: Yes, exactly.
John Paul Stevens: Mr. Warden, can I still -- I'm still a little puzzled about the two -- the two statutes. Assuming we hold the first statute from the District Court on the first statute, has the second statute hurt your -- because -- your client, I mean the -- the appellee here in anyway because they haven't tried to form a subsidiary or have they? In entering --
John L. Warden: No, it has been stipulated that but for 659.141 and 660.10 if considered of its own force to have that effect. Bankers Trust would apply to -- or to incorporate a local subsidiary.
John Paul Stevens: And if -- and if we read 660.10 the way you suggest the plain language indicates, there's no harm to the client, no reason to reach the constitutionality of a statute which says you've got to be locally incorporated.
John L. Warden: That is correct as to the principal issue tried below which was Bankers Trust attempt to open local offices in Florida.
John Paul Stevens: Right.
John L. Warden: That statute will, however, continue of its own force to prevent Bankers Trust's New York operating subsidiary.
John Paul Stevens: But there's no evidence they've ever tried to do anything themselves, isn't it?
John L. Warden: There is not, Your Honor. There is, however, stipulation that the enforcement of the statutes and each of them has caused Bankers Trust New York Corporation economic injury.
John Paul Stevens: You think that's enough to require us to face that the constitutionality of the statute that says in order to engage in trust business, you got to be locally chartered? I -- well --
John L. Warden: Well, that's -- that's the state of the record, Mr. Justice Stevens. Now, if I may -- may proceed with the basic constitutional point. The statutes that Florida here seeks to sustain, a fact on their face, a simple economic protectionism that the Court held invalid per se two terms ago in Philadelphia v. New Jersey. Florida has not sought by these statutes to regulate bank holding companies in a way that is evenhanded on its face but in operation discriminates against interstate firms. The so-called regulation here in issue affects only firms not based in Florida, and it does not regulate them. It prohibits them absolutely from providing the services in question in Florida. The Exxon case upon which the opponents place their principal reliance simply does not stand for the proposition that the Commerce Clause allows a State to exclude some but not all out-of-state firms as out-of-state firms. The barrier in Exxon was not against interstate firms but against vertically integrated firms, Maryland-based or otherwise. This Court expressly noted, 437 U.S. at 126 that Maryland statutory scheme did not "distinguish between in-state and out-of-state companies in the retail market". Florida statutory scheme and start contrast does nothing but distinguish between in-state and out-of-state companies in these markets. Florida has acted not to preclude the doing of certain business by bank holding companies but to preclude out-of-state bank holding companies from doing business in Florida. Secondly, Hughs against Oklahoma did not overrule or limit Philadelphia against New Jersey. It cited the case with approval. And as our brief's note, the first point of the Hughs three point test incorporates the holding of Philadelphia and says that at the very least in the case of a statute discriminating on its face, the State has the burden to justify under strict scrutiny a non-discriminatory local purpose in the absence of non-discriminatory alternatives, Florida has done neither. As to the supposed need to protect the people of Florida from some undefined menace of large financial companies, it is sufficient just to say that the statutory scheme does not even make a pretense of doing so.
Byron R. White: But doesn't -- doesn't the statutes single out banks at least --
John L. Warden: It singles out bank holding companies.
Byron R. White: (Voice Overlap) --
John L. Warden: Yes, out-of-state bank holding companies.
Byron R. White: Yes, exactly but it doesn't single out other kinds of out-of-state companies, holding companies or otherwise.
John L. Warden: No, no. But --
Byron R. White: Doesn't --
John L. Warden: -- as for our argument, Mr. Justice White, is that under the decisions of this Court, Florida is required to treat similarly situated local corporations and out-of-state corporations similarly unless it justifies under strict scrutiny some legitimate non-protectionist reason for doing so.
Byron R. White: Well, what about in Exxon, out-of-state -- out-of-state companies that weren't refiners but who are engaged in the distribution of gasoline, could own local stations?
John L. Warden: That's correct, Mr. Justice White --
Byron R. White: So the only --
John L. Warden: -- the statute there in question --
Byron R. White: They didn't pick out refiners.
John L. Warden: Picked out refiners. This statute doesn't pick out bank holding companies, it picks out-of-state bank holding companies. Florida permits the holding company form of commercial organization --
Byron R. White: Well, the matter just so happened that every -- possibly, weren't any local refiners in Maryland.
John L. Warden: That's entirely correct but the Court --
Byron R. White: So it just picked out out-of-state refiners?
John L. Warden: That's a lesser included part of the class of --
Byron R. White: That's included in your (Voice Overlap) --
John L. Warden: -- refiners and you're saying that as a matter of fact, it was the entire class but that needn't remain so in the statute on its face attached no significance to being an interstate form or --
Warren E. Burger: But it wasn't --
John L. Warden: -- an out-of-state form.
Warren E. Burger: -- it wasn't the entire class of out-of-state, however, there were some out-of-state retailers --
John L. Warden: Non-refiners.
Warren E. Burger: -- and distributors who did not produce or refine.
John L. Warden: Yes, who were permitted to continue to operate as -- as the Court said. As I quoted a minute ago, the statute does not distinguish between in-state and out-of-state dealers in the retail market. This statute does distinguish between in-state and out-of-state bank holding companies --
Byron R. White: It isn't -- it isn't --
John L. Warden: -- on that basis.
Byron R. White: It isn't a regulation of banking and the sense -- because it doesn't affect local banks.
John L. Warden: No. It's a preclusion of the doing of interstate commerce.
John Paul Stevens: Well, if you --
John L. Warden: The protection here -- yes, sir.
John Paul Stevens: If your argument is valid, a State which did not permit bank holding company type of operation could do what Florida is trying to do here.
John L. Warden: That is a much stronger case for the State, Mr. Justice Stevens, but I would submit that is not this case.
John Paul Stevens: If that --
John L. Warden: But I would submit that in such a situation, if local banks were allowed to engage in the trust and investment advisory businesses, the sole effect of such a statute would be to preclude out-of-state competition in the trust and investment advisory businesses which Congress has recognized are not the business of banking and therefore are not within the consent it's given to the States to exclude multi-state banking.
John Paul Stevens: But under -- if I understood Mr. --
John L. Warden: That is not this case.
John Paul Stevens: If I understand Mr. Griswold correctly, so what you should look at is not just out-of-state banks or bank holding companies but all out-of-state concerns that want to enter the investment advisory service market. And as in -- in Exxon, you look at the whole investory side -- advisory service market and say keeping out a few New York banks isn't going to -- its no proof that will affect that market because there's Paine Webber and others who may come in. If I -- that's what I understood his argument.
John L. Warden: Well, there's -- there's no evidentiary record to support the contention that this has a de minimis effect and the State had the -- the burden of establishing that, given the discrimination on the face of the statute. But in any event, I don't think that's the Commerce Clause test under this Court's decisions. I think that the Commerce Clause requires the -- like in-state firms be treated the same as like out-of-state firms.
Byron R. White: Do you say -- do you say that in Exxon, if Maryland had said local refiners, if there were some, may own stations but out of -- out-of-state refiners may not.
John L. Warden: That would have been stricken by this Court --
Byron R. White: That's this case. That's this --
John L. Warden: -- (Voice Overlap) this case.
Byron R. White: Yes.
John L. Warden: Now, the kind of rationalizations presented here by Florida support this statute were rejected. I hope once and for all, when Mr. Justice Cardozo said in Baldwin against G. A. F. Seelig, 294 U.S. at 523 “to give entrance to that excuse would be to invite a speedy end of our national solidarity”. The Constitution was framed under the dominion of a political philosophy less parochial in range. Now, I'd like to turn to the contention that Congress has consented to this discrimination. The meaning of Section 3 (d) is clear on its face. That's the first of the provisions of the Bank Holding Company Act to which Dean Griswold referred. It precludes acquisition by holding companies of banks across state lines absent affirmative legislative consent by the affected State. In Section 2 (c) of the Act, Congress has defined a bank in accordance with common understanding to be an institution that accepts demand deposits and makes commercial loans.
Byron R. White: Where -- where are you reading?
John L. Warden: At Section 2 (c) of the Public --
Byron R. White: But is -- is that in the --
John L. Warden: -- Bank Holding Company Act.
Byron R. White: What -- is that Appendix C or D or --
John L. Warden: That's going to be -- I haven't printed it in there.
Potter Stewart: In your brief.
Byron R. White: The section please.
John L. Warden: Sorry. That wasn't printed as one of the statutes involved in the appendix --
Byron R. White: You suggested it in your brief.
John L. Warden: -- Mr. Justice White. That is -- is printed at pages 15 and 16 of our brief on the merits of December 19, the yellow --
Byron R. White: Right, I got it.
John L. Warden: -- brief. I believe you have --
Byron R. White: Yes.
John L. Warden: -- the appellees' brief there.
Byron R. White: Oh, that's right.
John L. Warden: This is at the Clearing House brief at pages --
Byron R. White: Oh, yes. You're not an appellee.
John L. Warden: -- 15 and 16.
Byron R. White: You're also a standard --
John L. Warden: That's correct, Your Honor. And now, this case, as I said at the outset, doesn't involve the organization or acquisition of a bank by anyone, anywhere. Indeed, that definition was amended by the Congress in 1966 to read as it -- well not quite as it now reads. It was amended again in 1970 but it was specifically amended in 1966 to remove non-deposit trust companies, which is what we're concerned with here. It never included investment advisory organizations. And the reason it was removed -- and it was amended to remove non-deposit trust companies, as stated in the Senate Report on the 1966 amendments at page 7 as follows, “The purpose of the Act was to restrain undue concentration of control of commercial bank credit and to prevent abuse by holding company of its control over this type of credit.” Then paraphrasing, the certain institutions which are included now need not be included to achieve that objective, therefore, we are redefining bank to exclude institutions like non-deposit trust companies. Now, I see that my time's up. I have two brief additional points, if I may, Mr. Chief Justice.
Warren E. Burger: You can complete it in one minute.
John L. Warden: Thank you. Section 4 to which Dean Griswold referred confers no powers on any State. That is a Section that confers on the Federal Reserve Board, the power to improve transaction such as the one that Bankers Trust wishes to engage in. Section 7, on which he also relies, is on its face, a negation of affirmative preemption. It is not a consent to the exercise of otherwise unconstitutional state legislative powers. It says this Act shall not be construed or preempted. It doesn't say the Commerce Clause shall not be construed.
Byron R. White: Let me ask you, if this -- if -- if the holding company here, if the New York holding company had wanted to acquire a bank in Florida, you would agree Florida could keep it out?
John L. Warden: Florida is empowered under this -- under the --
Byron R. White: Even if --
John L. Warden: -- bank holding --
Byron R. White: -- even if Florida holding companies may own banks?
John L. Warden: Yes. In fact --
Byron R. White: Yes.
John L. Warden: -- a holding company is a bank holding --
Byron R. White: Yes.
John L. Warden: -- company only because it --
Byron R. White: Exactly.
John L. Warden: -- owns a bank.
Byron R. White: Yes, exactly.
John L. Warden: But Congress has in the Bank Holding Company Act given not just to consent to such state legislation, it has itself affirmatively declared.
Byron R. White: That's right. And so --
John L. Warden: But it --
Byron R. White: -- so -- so that -- so Florida may -- has a choice of either discriminating against foreign holding companies or not?
John L. Warden: That's right. With -- no -- no -- no. Congress has already affirmatively prohibited multi-state bank acquisitions by bank holding companies --
Byron R. White: If state law permits --
John L. Warden: -- absent an affirmative state legislative --
Byron R. White: Alright.
John L. Warden: -- consent to that action.
Byron R. White: Florida -- Florida could permit it or it may prevent it.
John L. Warden: For -- as far as the business of banking is concerned --
Byron R. White: Exactly.
John L. Warden: -- Congress has not granted that permission as far as any other business is concerned.
Byron R. White: Yes, I understand.
John L. Warden: -- Mr. Justice White. Thank you.
Byron R. White: Thank you, gentlemen. The case is submitted. We'll hear arguments next in --


Warren E. Burger: The case is submitted. We'll hear arguments next in Roberts against the United States. Mr. Palmer, I think you may proceed when you're ready.
Allan M. Palmer: Mr. Chief Justice and may it please the Court. Perhaps the most important transcript to cite from the sentencing one that is relevant to disposition of this case did not become available until after the brief and the appendix of -- of petitioners were filed. The Court of Appeals for the D.C. Circuit sent it over here on December 5th and the briefs were filed in November 15th, as I recall. Now, the transcript we refer to is a 40-page-transcript concerning a so-called Miranda hearing held in the District Court. And, that transcript indicates that there was a wiretap in the district and, during the course of it, someone named Win was overheard.
Byron R. White: This is an argument that isn't in the brief?
Allan M. Palmer: No, it's in the briefs, Your Honor, because, although the full transcript was not available, we in fact summarized the gist of it from other source material.
Byron R. White: Thank you.
Allan M. Palmer: When it was heard on a wiretap and then a green jaguar, he was alleged to have delivered $50 or $100 worth of drugs and was observed at the situs of the tap. The young lady who owned the car was summoned to the stands subpoenaed to the US Attorney's Office. At this point, there were no indictments or criminal charges pending. She was asked “who drives the car?” She said, “The only other person that drives it is her male friend, Winfield Roberts and he's right outside the door.” Impressed with their good fortune, the district attorney and the police officers there invited him in to discuss the matter. And, as the District Attorney Mr. McSorley said, as soon as you walked in the door, the defendant or potential defendant, he was not a defendant at that time, was read his Miranda rights pursuant to the PD 47 which is a compilation of those rights, except the one that indicated he was under arrest because, clearly, he was not. He was advised he had the right to remain silent anything he said --
Warren E. Burger: In that proceeding.
Allan M. Palmer: -- may be used against him.
Warren E. Burger: Do you make any point of impropriety and giving the Miranda warning too soon rather than too late?
Allan M. Palmer: No, sir.
Warren E. Burger: No.
Allan M. Palmer: They did it out of abundance of caution --
Warren E. Burger: I see.
Allan M. Palmer: -- so to speak, and he was told that “If you want to answer any questions now with a lawyer present, you have the right to stop answering in any time. You also have the right to stop answering at any time until you talk to a lawyer.” This is standard PD 47 warning. Now, as the district attorney testified at this hearing at transcript 38, he said, “The petitioner fully understood his rights and the trial court agreed.” Now, initially, the petitioner was vague about any involvement in the case until an actual tape of his voice was played indicating when his own voice, the jaguar, etcetera. At that point, he admitted what was on the tape to the extent of, on two occasions, he delivered drugs with $50 or $100 to this Charles B. Thornton in a jaguar. At that point, the Prosecutor Preston said, “Well, where did you get the drugs from?” And, as the testimony indicated, at that point, police officers testified, at transcript 12, the petitioner was -- gave an evasive answer, “He refused to tell us.” The prosecutor testified. He clamped up and the conversation ended because he wouldn't go any further than that. He was advised to come back in two or three days and think it over.” He did so and he said, “I can't help you anymore,” and he left. Now, obviously, the defendant who was not advised by counsel at that point, he was not under duress, only admitted that which the Government knew. When he heard his own voice on the tapes to deliveries, he said, “Yes, I was involved in that.” As to any further involvement, any conspiracies of the persons who may be involved, he relied and, pursuant to his warning to remain silent. And, indeed, this is the very consequence envisioned by this Court in the Miranda opinion where it indicated that if the individual indicates in any manner at any time prior to or during questioning, he wants to rely on these warnings, rights. At this point, he has shown that he intends to exercise his Fifth Amendment privilege. This is precisely what this petitioner did. He was then indictment, arrested and indicted. He was arrested about a month later, indicated about two months after that. Here, again, after the indictment on three or four occasions, now, there's a transcript -- the remand transcript of January 28, 1977 that was sent to this Court also in December 5th, alluded to in the Government's brief. On three or more occasions, personally, the prosecutor spoke to his attorney for cooperation. He wanted his cooperation to testify in open court against the codefendant and to identify the other people he was involved with, the places, locations, the full conspiracy, so to speak. And, as the prosecutor testified at the remand hearing, “This was rejected out of hand. There was never any indication that Mr. Roberts would assist us and, indeed, throughout the course of this three-year-litigation." Mr. Roberts, the petitioner, consistently relied on his right to remain silent until, at the sentencing hearing, the prosecutor urged this noncooperation as a basis for increasing penalty or, as a sentencing aggravating factor and the court relying thereon and enunciated this as one of the reasons for the consecutive sentence. At that point, Mr. Roberts, the petitioner was penalized for relying on his Fifth Amendment rights which the Government concedes, at brief 37, it could not do. The court that is could not so penalize him. Now, the Government, in its brief, argues a waiver theory that this was never actually urged by petitioner during the course of the three years or the sentencing hearing. He says, at page 35 of the brief, petitioner as counsel never said that non-cooperation was based on constitutional rights and in cri -- and, immunity was never sought by petitioner or his counsel. And, further, goes on to say the, point two, that, at no time during the sentencing hearing that, in fact, counsel elude to Fifth Amendment rights. Now, these are important considerations and we're going to answer them fully, as we have in the brief, we believe. Insofar as the three-year phase --
William H. Rehnquist: But this isn't true -- true Mr. Palmer, that there was a colloquy at least before the trial where you -- where, in defense counsel, agreed to withdraw their motion to recues Judge Pratt if he would agree to concur in sentences.
Allan M. Palmer: We filed a memorandum. We don't -- previously had a -- we filed a memorandum. There was a mandamus petition we set to the judge. “We'd ask you to recuse yourself because, under the Greg opinion of this Court, you've already sentenced the man, you've heard the -- you've read the presentence report. Out of an abundance of caution to preserve this issue of fairness, the preservation, the appearance of fairness, we think the Court should recuse itself.” And, in fact, if the Court does recuse itself in the -- well, it didn't recuse itself, we said. But, if it did not recuse itself, if it gave concurring sentences, we would withdraw that claim, that's true. In a footnote, we did indicate that upon consent and advice of the defendant. Now, in many cases, petitioners arrest to cooperate. It happens all the time in District Courts, and it is understood by all experienced counsel, defense counsel, that if the man says no, obviously he's relying on his Fifth Amendment rights. He does not have to confess, say anything to the Government at all. And, indeed, in this case, the petitioner was brought -- not brought into court during the three-year-period and said, “Well, while I have you not confessed late at the scheme for the benefit of the prosecutor?” It was understood by the prosecutor and defense counsel that, by not cooperating, the defendant simply relied on his right to remain silent as he had throughout the proceedings. And so, when the Government says that the defense never came forward during these three years and said, “Well, we're relying on the Fifth Amendment as such” or that “He never asked for cooperation,” that argument is long -- the brief in that regard is long in argument and short on experience because it is generally understood that there is no right for the Government to compel this incriminating statement from the defendant. And, furthermore, we're not familiar with any instance where or a general practice whereas the defendant who says, “I would like immunity prosecution. Please give us immunity.” The Government knows what to -- knows what to do. If it wants to, it could put the man before the grand jury, if he claims his Fifth Amendment right, then give him immunity. It's not up to the defendant to ask for it. It's up for the prosecution to confer it if it deems fit. Now, at the time of the sentencing or prior thereto, from day one, June 13, 1975 when the defendant walked into the prosecutor's office, through the morning of the sentencing hearing, not one time in writing or otherwise did the Government ever urge noncooperation as a sentencing factor for aggravation or as any factor at all.
Warren E. Burger: Do you think cooperation could be used and is it sometimes argued as a reason for moderating a sentence?
Allan M. Palmer: Of course. It happens all the time.
Warren E. Burger: Well, then, it's just a one-way street in your view?
Allan M. Palmer: On these facts, it is a one-way street in the sense that the man is consciously giving up right to self-incrimination if he cooperates. In narcotic cases especially, there's a danger to one's safety, there's a danger to one's life, the -- his family, and he consciously gives up these factors, these rights, the right to silence, the right not to endanger himself or his family. And, for that reason, when a man cooperates, he does so voluntarily, fine. Courts have indeed given benefit to that. But at the Congress, it's not true because if he doesn't cooperate, there are many valid reasons such as, in this case, his reliance on the right of self-incrimination. Well, he did not cooperation -- did not cooperate and, in fact, Judge Lombard, in considering the issue in the Ramos and DiGiovanni case, a most experienced federal appellate judge, has indicated that it is a one-way street in that regard. That is quite true, Your Honor. Now, in its first allocution, prior to the -- or after the first sentence, the Government, in discussing the confession statement of the defendant, they've indicated that he did not cooperate with the Government in a historical sense, just laying out the facts. It did in no way suggested or intimated that that was the reason for the court to take into account in his sentence and, in fact, it was not urged in allocution and it was not urged by the court in sentencing. Now, we came to the second sentence that is now before us. Here, again, the Government wrote a written allocution and never once did it ever suggest, intimate, or anything else say that lack of cooperation is a sentencing factor, never said it.
Warren E. Burger: Are the -- are the prosecutors supposed to -- in the District of Columbia Circuit, do the prosecutors get into the act with recommendations?
Allan M. Palmer: Well, Your Honor, it's interesting. Prior to 1970 or 1971, prosecutors never recommended sentences. It is only a recent occurrence. Having started in about 1970 or 1971, this report, for example, I was there prosecuting cases up until 1968, the Government stood mute at every sentencing, never said a word. It's a recent innovation, so to speak.
Thurgood Marshall: And it varies around the country.
Allan M. Palmer: Yes, I remember I once clerked, when I was a student, in the Second Circuit, a long time ago, many years ago and they always allocuted. I remember the prosecutors allocuted their rights since time and memorial, I believe.
William J. Brennan, Jr.: Mr. Palmer, do you think it would be permissible for a district judge to have a policy that when he takes a plea, that he tells the defendant that he, he -- in his own sentencing practice, if the defendant cooperates, he'll probably get one year. If he does not cooperate, he'll probably get two years, assuming it fits the normal pattern of a certain kind of defense?
Allan M. Palmer: I don't believe so because it's forcing the defendant to give up Fifth Amendment rights which is still in here after the plea, as in this case, for example.
William J. Brennan, Jr.: But -- but you did acknowledge, if I understood your response to the Chief Justice, that the judge could have such a policy that if the man cooperates, he'll only sentence him a year instead of an otherwise appropriate sentence of two.
Allan M. Palmer: I think he could so sentence the man if he cooperates, but I don't think the judge can get involved in that decision insofar as the defendant is concerned. I think when the judge gets involved with it, he's coercing the man to give up his Fifth Amendment rights. That's where the danger is.
William J. Brennan, Jr.: Well, supposing he had 10 -- 10 very similar cases. In the first one, the man cooperates and he says, “I'm only giving you one year because you cooperated.” The next man, he gives him two years. He didn't cooperate and he says nothing about it, but he established the pattern by what he actually did. So, the lawyer now knows by -- based on a series of cases that if his client cooperates, he'll get one year and if he doesn't cooperate, he'll probably get two. Can the l -- I take it, the lawyer could tell the defendant.
Allan M. Palmer: You know, that's a fact of life in the trial courts all the time. That's true.
William J. Brennan, Jr.: But it's a fact of life that the judge cannot tell the defendant.
Allan M. Palmer: I think, at that point, he's coercing the defendant to give up his Fifth Amendment rights which he can't do, and I'm going to get into that a little further in the even broader detail, if the Court will. Now, the Government erroneously suggests the reason why the Government urged this lack of cooperation in its brief. It indicates at page 814 and 841 of its brief that, well, the Government was responding to petitioner counsel's argument to the effect that the courts should consider his cooperation or limited statement as to involvement as a mitigating factor, and the Government responded “tit-for-tat,” so to speak. At brief 8 -- at 8 of its brief, the Government says, “In addition, the prosecutor response to the defense counsel's remarks about the extent of petitioner's cooperation with the Government." We never alluded to his cooperation as such as a mitigating factor. What we did do, when you read the sentencing transcript, is to allude to the facts of the statement he gave to show that the case was not as large or serious as urged by the Government because, insofar as the facts were concerned in the statement the defendant gave, he said that, on two or three occasions, he delivered drugs worth $50 or $100 for Mr. Charles Thornton's own personal use. And, indeed, when the search warrants were executed to six of them, found in Thornton's house was bottle top cookers and syringes in dish of personal use. Furthermore, we urge that Thornton, a previously convicted narcotic felon who pleaded to gambling and narcotic law violations was sentenced to probation by another federal judge in the very same case in which this petitioner was charged. So --
Warren E. Burger: If it wasn't a very big deal as you were suggesting --
Allan M. Palmer: No, sir.
Warren E. Burger: Doesn't that undercut your argument or his argument, I should say, that he was liable to be murdered and liquidated if he cooperated with the prosecution?
Allan M. Palmer: Well, whose argument does Your Honor refer to? I don't --
Warren E. Burger: Well, you've just been -- I thought you were telling us that this wasn't a very big narcotics operation.
Allan M. Palmer: It was not a very big -- insofar as this petitioner was concerned, as we saw it. Notwithstanding that fact, if someone gave him the drugs, who was a person in the more a distribution type of role, to that person, whether you call it a small amount distributed or not, the individuals who supplied from above are very concerned about their liability and the danger comes from them, I would think, as the case has indicate. In any event --
Warren E. Burger: Do you think the judge, in those circumstances, is not entitled to take into account that with the damage that the use of drugs does to a great many people that peddlers -- drug peddlers should be put away for quite a while?
Allan M. Palmer: Of course the judge could take that into account.
Warren E. Burger: I thought that's what he did here.
Allan M. Palmer: Well -- he --
Warren E. Burger: He sure complained --
Allan M. Palmer: -- took into account several factors, Your Honor. Now, if this judge never talked about cooperation, never alluded to it, possibly, the sentence he gave might have been a viable one. The fact is, theory aside, he specifically alluded to lack of cooperation as a sentencing factor, and I'm going to now refer to that more specifically. Now, the real reason the Government alluded to noncooperation was this. We urged in writing and orally that when you have pleas or verdicts concerning two phone counts, two so-called phone counts, now there was about 16 judges in the District Court here active and seen who hear criminal cases. No judge in the District of Columbia has ever given consecutive sentences for two or more telephone counts.
William H. Rehnquist: Mr. Palmer, a moment ago you said that if the judge had not alluded to the absence of cooperation, the sentence he gave might have been a viable one, was the one word you used. And then, you mentioned sentencing factors. Is there some case from this Court that holds absent if, constitutional or statutory violation, a sentence is to be reviewed by an appellate court on the basis of the sentencing factors the judge took into consideration?
Allan M. Palmer: Well, the Grayson case itself so hold, as we read it. In Grayson, the Court said -- one of the reasons may be impermissible that I'm going to sit in this man for -- sentence this man for, this page -- 438 U.S. at page 44, and the Court said, “Mr. Grayson, I'm going to sentence you to a prison term because, one, to deter you and, two, it is my view that your defense was a fabrication and it doesn't have the slightest merit whatsoever. And, I feel it's proper for me to mention the second factor because, if it's an improper factor, I want the Court of Appeals to know it so they can reverse me.” Of course, the Court of Appeals did reverse him, then, it came to this Court which upheld that sentencing factor.
William H. Rehnquist: Well, but that was the District Court's view --
Allan M. Palmer: Right.
William H. Rehnquist: -- that sentencing factors could be taken into consideration even though the sentence imposed was limit -- in the limits proscribed by law.
Allan M. Palmer: I think that the factor was an improper or impermissible one. It is the basis upon which to reverse the sentence.
William H. Rehnquist: How do you know whether it's improper or impermissible?
Allan M. Palmer: Well, we look at it and, if it strikes us in the realm of human experience as an improper factor that he shouldn't consider, I think the reversal is required. For example, more -- if he had said, “Well, Mr. so and so, you are a particular ethnic group” or “you are a particular race”--
William H. Rehnquist: Well, that would be a constitutional claim, would it not?
Allan M. Palmer: It would indeed, and we think, in this sense, the use of the improper factor has always been understood or has always been a basis upon which to, at least, reverse the sentence even though it has been within the proper guideline.
William H. Rehnquist: But do you define improper factor as being a violation of some constitutional claim?
Allan M. Palmer: In this case, there was such a violation of a constitutional claim, the Fifth Amendment.
William H. Rehnquist: And you -- and so, that's what you mean when you say improper factor.
Allan M. Palmer: Yes, sir. That was the critical or most important factor in this case, the violation of the Fifth Amendment and the right to remain silent which was penalized on the facts of this case. That is true. That is the outstanding reason. Now, as we indicated, no federal judge before in this jurisdiction had ever given consecutive sentences --
Thurgood Marshall: But can a -- then, can a federal district judge in this District give consecutive sentences despite what you said?
Allan M. Palmer: I'm not sure. We -- it's never been decided.
Thurgood Marshall: Well, what's to stop him from doing it?
Allan M. Palmer: Well, there's the rule of lenity. We urge that you have a wiretap case. The lead count here was a wiretap and several overt acts.
Thurgood Marshall: My point, you say that a judge can't give two consecutive sentences.
Allan M. Palmer: On these facts, I'm not sure.
Thurgood Marshall: Well, I mean, suppose a man is caught with $18 billion worth of dope, hand it out to children on the corner. Could he be given two consecutive sentences?
Allan M. Palmer: I guess, in those aggravating circumstances, it's -- I'm just looking to the facts of this case and where there was a conspiracy and four overt acts. Two of the overt acts were also substantive counts, use of the telephone. Our point was, under the rule of lenity, we made an argument that the main count is the lead conspiracy count. If, pursuant to that, you have 200 phone calls, does that mean a man can get 800 years consecutively for use of the phone and only 15 years for use of conspiracy?
Thurgood Marshall: If he made them -- if he made them with children?
Allan M. Palmer: I don't know about children. There were no children involved in this case, if it please the Court.
Thurgood Marshall: I know, but it's --
Allan M. Palmer: Hard facts --
Thurgood Marshall: You know 200 involved in this either.
Allan M. Palmer: Well, hard facts make different circumstances, I would submit.
Warren E. Burger: Mr. Palmer, where do we get the -- where do we find this data that you mentioned on judges never giving consecutive sentences?
Allan M. Palmer: Well, we urged it in our statement of facts prior to sentencing.The district attorney, in sentencing --
Warren E. Burger: I'm thinking about documenting it. Where is that report?
Allan M. Palmer: Well, it was based on (a) my experience of 17 years in the District Court, having conferred with drug agents, etcetera, and the Government conceded it at the sentencing. It was never controverted in the Court of Appeals and, indeed, not controverted here. In fact, the prosecutor said that, in asking for consecutive sentences at appendix 34 and 45, we realize we're going against custom and practice in this courthouse and I'd like to explain why we're doing so. It's not to appear as to sigh and agree. And then, he launched for three pages the argument that this lack of cooperation should move the District Court to do what no other District Court had ever done before, that is, impose consecutive sentences for two telephone counts. Now, after he allocuted, the Court turned to us and said, “Do you want to make a response, Mr. Palmer?” and, remember, at this point, the issue had not been joined. Of course, the Government had never, until that moment, urged this is a sentencing factor. And, for a brief paragraph, we de -- when you're dealing with an allocution, you're trying to persuade somebody. It's not a legal argument. And, we said to the Court, “Well, apparently in this situation, the codefendant Thornton got probation." This defendant is before the Court, he isn't -- he hasn't cooperated. The defendant -- the Government is obviously mad at him. Let's give him the time we can, as much as we can, while we've got him before us and then, I went on to another matter. And, in these circumstances, we don't think we can be faulted for not raising the issue having -- we never thought about the issue, the implications of the right to remain silent, the Miranda warnings, etcetera when Courts of Appeal are -- appeals are divided on the issue. In fact, that's why we're here today. So, we can't be faulted for not raising at that time and, indeed, the issue only came into the case when the judge, in imposing sentence, said, “That is one of the factors I'm relying upon.” After that, the case went on appeal and we researched the law, presented it to the Court of Appeals, and the case ultimately wound its way here. Now, since the record below was silent, in effect, as to the reasons for the lack of cooperation, other than this Fifth Amendment issue which is clearly there, it was impermissible for the Court to penalize lack of cooperation when lack of cooperation could just as easily have been, as Judge Lombard said in his opinions, from fear of harm, danger to himself, or his family, or other like reasons. In other words, there's no reason to say that failure to cooperate on these facts was because the man was not amenable to rehabilitation. Now, there's a further consideration here, and that is the fact that, in this case, the prosecutor urged consecutive penalties because petitioner failed to cooperate over the entire course of the case. At appendix 36, he said, “Throughout the long process that has occurred some-June of 1975, when he first came into my office, up to today, he still has refused to cooperate.” Now, at the stage where the defendant was in the prosecutor's office and he refused to cooperate, the defendant was then penalized in part because, at that point, unrepresented by counsel, he didn't confess everything the Government wanted to know, indicate where he got the drugs from and things of that nature, and we think that is clearly impermissible. Secondly, between the -- the indictment and the plea, as we understand it, the defendant has pleaded not guilty. He has no duty to confess, cooperate with the Government. He's Fifth Amendment rights have not been waived in any shape or form and, yet, the defendant was penalized in this case, during this phase of this case also, because he never came and said, “Prosecutor, let -- I want to lay my soul bare to you.” I think that's impermissible. And, in line with the question that Justice Stevens asked, for example, under Grayson, we think a judge could probably say to a defendant “Mr. Defendant, you're going to testify.” The Supreme Court has said, “If you do and do so falsely, and you're convicted, I'm going to take that into account when I impose sentence.” But, we don't think that, prior to the disposition of the case, the defendant can be brought into the courtroom and the judge say to him, “Now, Mr. Defendant, you know, I've heard you haven't cooperated in here. The Government wants you to testify against your codefendant. You haven't done that. You haven't indicated who you got your drugs from, and I think that's something that should be done and, if you don't do it, when -- if you're convicted and the sentencing comes about, I'm going to penalize you for that.” I think that is totally impermissible, coercive, collides with fundamental rights of a defendant in a criminal case. And, for these reasons, we think the sentencing in this case on these facts was improper. Now, I have five minutes to go and I'd like to reserve those for rebuttal. Thank you.
Warren E. Burger: Very well. I think we want to ask you to take two minutes today and the rest tomorrow. We'll resume at 10 o'clock in the morning.