Stevens: Stoneridge Decision Limits Access to Justice
In his dissent in Stroneridge (see earlier article), Justice Stevens wrote that a basic jurisprudential principle is that "every wrong shall have a remedy," and that the majority opinion's "hostility" towards implied causes of action is not grounded in "the first two centuries of this Nation's history." He contended that "Courts near in time to the enactment of the securities laws recognized that the principle in Rigsby [ -- the right to recover the damages from the party in default is implied -- ] applied to the securities laws," and the decision "simply cuts back further on Congress’ intended remedy." The following is an excerpt from his dissent (footnotes are omitted).
A theme that underlies the Court’s analysis is its mistaken hostility towards the §10(b) private cause of action. Ante, at 13. The Court’s current view of implied causes of action is that they are merely a “relic” of our prior “heady days.” Correctional Services Corp. v. Malesko, 534 U. S. 61, 75 (2001) (SCALIA, J., concurring). Those “heady days” persisted for two hundred years.
During the first two centuries of this Nation’s history much of our law was developed by judges in the common-law tradition. A basic principle animating our jurisprudence was enshrined in state constitution provisions guaranteeing, in substance, that “every wrong shall have a remedy.” Fashioning appropriate remedies for the violation of rules of law designed to protect a class of citizens was the routine business of judges. See Marbury v. Madison, 1 Cranch 137, 166 (1803). While it is true that in the early days state law was the source of most of those rules, throughout our history—until 1975—the same practice prevailed in federal courts with regard to federal statutes that left questions of remedy open for judges to answer. In Texas & Pacific R. Co. v. Rigsby, 241 U. S. 33, 39 (1916), this Court stated the following:
“A disregard of the command of the statute is a wrongful act, and where it results in damage to one of the class for whose especial benefit the statute was enacted, the right to recover the damages from the party in default is implied, according to a doctrine of the common law expressed in 1 Com. Dig., tit. Action upon Statute (F), in these words: ‘So, in every case, where a statute enacts, or prohibits a thing for the benefit of a person, he shall have a remedy upon the same statute for the thing enacted for his advantage, or for the recompense of a wrong done to him contrary to the said law.’ (Per Holt, C. J., Anon., 6 Mod. 26, 27.)”
Judge Friendly succinctly described the post-Rigsby, pre-1975 practice in his opinion in Leist v. Simplot, 638 F. 2d 283, 298–299 (CA2 1980):
“Following Rigsby the Supreme Court recognized implied causes of action on numerous occasions, see, e.g., Wyandotte Transportation Co. v. United States, 389 U.S. 191 . . . (1967) (sustaining implied cause of action by United States for damages under Rivers and Harbors Act for removing negligently sunk vessel despite express remedies of in rem action and criminal penalties); United States v. Republic Steel Corp., 362 U.S. 482 . . . (1960) (sustaining implied cause of action by United States for an injunction under the Rivers and Harbors Act); Tunstall v. Locomotive Firemen & Enginemen, 323 U.S. 210 . . . (1944) (sustaining implied cause of action by union member against union for discrimination among members despite existence of Board of Mediation); Sullivan v. Little Hunting Park, Inc., 396 U.S. 229 . . . (1969) (sustaining implied private cause of action under 42 U.S.C. §1982); Allen v. State Board of Elections, 393 U.S. 544 . . . (1969) (sustaining implied private cause of action under §5 of the Voting Rights Act despite the existence of a complex regulatory scheme and explicit rights of action in the Attorney General); and, of course, the aforementioned decisions under the securities laws. As the Supreme Court itself has recognized, the period of the 1960’sand early 1970’s was one in which the ‘Court had consistently found implied remedies.’ Cannon v. University of Chicago, 441 U.S. 677, 698 . . . (1979).”
In a law-changing opinion written by Justice Brennan in 1975, the Court decided to modify its approach to private causes of action. Cort v. Ash, 422 U. S. 66 (constraining courts to use a strict four-factor test to determine whether Congress intended a private cause of action). A few years later, in Cannon v. University of Chicago, 441 U. S. 677 (1979), we adhered to the strict approach mandated by Cort v. Ash in 1975, but made it clear that “our evaluation of congressional action in 1972 must take into account its contemporary legal context.” 441 U. S., at 698–699. That context persuaded the majority that Congress had intended the courts to authorize a private remedy for members of the protected class.
Until Central Bank, the federal courts continued to enforce a broad implied cause of action for the violation of statutes enacted in 1933 and 1934 for the protection of investors. As Judge Friendly explained:
“During the late 1940’s, the 1950’s, the 1960’s and the early 1970’s there was widespread, indeed almost general, recognition of implied causes of action for damages under many provisions of the Securities Exchange Act, including not only the antifraud provisions, §§ 10 and 15(c)(1), see Kardon v. National Gypsum Co., 69 F.Supp. 512, 513–14 (E.D.Pa.1946); Fischman v. Raytheon Mfg. Co., 188 F.2d 783, 787 (2 Cir. 1951) (Frank, J.); Fratt v. Robinson, 203 F.2d 627, 631–33 (9 Cir. 1953), but many others. These included the provision, § 6(a)(1), requiring securities exchanges to enforce compliance with the Act and any rule or regulation made thereunder, see Baird v. Franklin, 141 F.2d 238, 239, 240, 244–45 (2 Cir.), cert. denied, 323 U.S. 737 . . . (1944), and provisions governing the solicitation of proxies, see J. I. Case Co. v. Borak, 377 U.S. 426, 431–35 . . . (1964). . . . Writing in 1961, Professor Loss remarked with respect to violations of the antifraud provisions that with one exception ‘not a single judge has expressed himself to the contrary.’ 3 Securities Regulation 1763–64. See also Bromberg & Lowenfels, supra, §2.2 (462) (describing1946–1974 as the ‘expansion era’ in implied causes of action under the securities laws). When damage actions for violation of §10(b) and Rule 10b–5 reached the Supreme Court, the existence of an implied cause of action was not deemed worthy of extended discussion. Superintendent of Insurance v. Bankers Life & Casualty Co., 404 U.S. 6 . . . (1971).” Leist, 638 F. 2d, at 296–297 (footnote omitted).
In light of the history of court-created remedies and specifically the history of implied causes of action under §10(b), the Court is simply wrong when it states that Congress did not impliedly authorize this private cause of action “when it first enacted the statute.” Ante, at 16. Courts near in time to the enactment of the securities laws recognized that the principle in Rigsby applied to the securities laws.Congress enacted §10(b) with the understanding that federal courts respected the principle that every wrong would have a remedy. Today’s decision simply cuts back further on Congress’ intended remedy. I respectfully dissent.