No. 79-1313.United States Court of Appeals, Fifth Circuit.
December 16, 1980.
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[EDITORS’ NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]Page 776
Sidney O. Smith, Jr., James S. Stokes, IV, Peter Q. Bassett, Atlanta, Ga., Wyck A. Knox, Jr., Augusta, Ga., Louis Clinton Burr, Chicago, Ill., for defendant-appellant.
Robert E. Goodfriend, Dallas, Tex., for Drexel, Burnham Lambert, Inc., amicus curiae.
Albert H. Dallas, Thomson, Ga., Jerry L. Sims, Atlanta, Ga., for plaintiffs-appellees.
Mark D. Young, Atty., Commodity Futures Trading Com’n, Washington, D.C., amicus curiae.
Appeal from the United States District Court for the Southern District of Georgia.
Before KRAVITCH, HENDERSON and REAVLEY, Circuit Judges.
REAVLEY, Circuit Judge:
[1] This appeal presents a single legal question: whether there exists an implied private right of action under the Commodity Exchange Act (“CEA”), 7 U.S.C. §§ 1–24, as revised in 1974, to redress commodity futures customers for damages sustained from their brokers’ violations of the antifraud provisions and broker registration requirements of that Act, 7 U.S.C. §§ 6b,[1]Page 777
and the corresponding regulations, 17 C.F.R. §§ 32.3, 32.9
(1979).[3] Relying upon such an implied right of action, as well as fraud and fiduciary violation grounds with which we are not here concerned, John Rivers and Tom Lamb brought suit below against Rosenthal Company and an agent[4] in its Memphis, Tennessee office, Carl M. Tipton. Rivers and Lamb allege that in 1976 and 1977 they suffered substantial losses in commodity futures transactions conceived and carried out in their behalf by Tipton in violation of the antifraud and registration provisions noted above.
[3] I. BACKGROUND
[4] The question we face here has already received considerable judicial attention since the 1974 amendments to the CEA. Within the past half year the Second and Sixth Circuits have ruled that an implied private right of action does exist under the CEA, but both decisions were rendered by split panels over very forceful dissents. Leist v. Simplot, 638 F.2d 283 (2d Cir. 1980) petition for cert. filed sub nom. New York Mercantile Exchange v. Liest, 49 U.S. L.W. 3388 (U.S. Nov. 12, 1980) (No. 80 757) (per Friendly, J., finding right of action for contraventions of various sections, such as 7 U.S.C. §§ 6b, 7(d), 7a(8), 13(b), proscribing market manipulation, fraud, and dilatory behavior by exchanges; Mansfield, J., dissenting); Curran v. Merrill Lynch, Pierce,
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Fenner Smith, 622 F.2d 216 (6th Cir. 1980), petition for cert. filed, 49 U.S.L.W. 3053 (U.S. Aug. 9, 1980) (No. 80-203) (private action for violation of antifraud provisions such as § 6b).[6] Since 1974 numerous district courts also have faced the issue, with a slight majority of these courts finding that a cause of action is available under various provisions.[7]
[5] A. Prior to 1974
[6] The present federal statutory scheme for regulating the trading of commodity futures traces its lineage back to The Futures Trading Act, ch. 86, 42 Stat. 187 (1921), and its successor, The Grain Futures Act, ch. 369, 42 Stat. 998 (1922). These acts, limited to grain futures, inaugurated the pattern of restricting futures trading to designated “contract markets,” i. e.,
central exchanges subject to government supervision and charged with adopting measures to prevent price manipulation.[8]
Although these acts empowered the government to take some steps against individual price manipulations, in practice almost total reliance for the regulation of such activities rested with the individual exchanges.
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powers of direct supervision and enforcement in the Department of Agriculture.
[8] Notwithstanding this beefing up of the federal regulatory scheme, the principal emphasis and essential philosophy of the legislation remained one of industry self-regulation through the contract markets. Curran v. Merrill Lynch, 622 F.2d at 231 Stone v. Saxon Windsor Group Ltd., 485 F. Supp. at 1214. Despite similar, though less expansive, amendments in 1968 that increased the sanctions and penalties under the CEA and added several new substantive requirements not pertinent here, Pub.L. 90-258, 82 Stat. 26 (1968), the basic approach of industry self-regulation continued until the drastic revision of the CEA in 1974. [9] Significantly for our purposes, the relatively limited role expressly legislated for the federal government to play in the active enforcement of this expanding regulatory scheme during the period 1922-1974 consisted of punitive or coercive mechanisms such as fines, removal of licenses, or criminal penalties — all sanctions against transgressors. Congress did not expressly provide for any federal judicial or administrative forum or remedy through which those injured due to fraud or other violations of the acts or regulations could seek redress from those transgressors. [10] By at least 1967 with the decision in Goodman v. H. Hentz Co., 265 F. Supp. 440, 447 (N.D.Ill. 1967), however, the courts began to fill that void by finding an implied private right of action under the CEA. See Leist v. Simplot, 638 F.2d at 309[11] B. 1974 Amendments
[12] By the early 1970’s, however, the vastly increased volume, scope and complexity of futures trading and the apparent inability of the individual exchanges to cope coherently and satisfactorily with these geometrically expanding problems compelled a reevaluation of that basic self-regulatory approach. S.Rep. No. 850, 95th Cong., 2d Sess. 8-10, reprinted in [1978] U.S. Code Cong. Ad.News, pp. 2087, 2096-98; S.Rep. No. 1131, 93d Cong., 2d Sess., reprinted in [1974] U.S. Code Cong. Ad.News, pp. 5843, 5858-59. The product of this re-evaluation was the Commodity Futures Trading Commission Act of 1974, Pub.L. 93-463, 88 Stat. 1389 (“CFTCA”). Different in character from even the significant amendments of 1936 and 1968, the CFTCA “signalled a dramatic shift from the theory of exchange self-regulation,” upon which federal futures trading legislation had been premised up to that point, Leist v. Simplot, 638 F.2d at 309, and proposed in its place “a comprehensive regulatory structure” creating a coherent uniform system of federal control over the entirety of the national futures
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trading industry. H.R. Rep. No. 975, 93d Cong., 2d Sess. 1. Consequently, rather than comprising mere patchwork additions as had all prior amendatory schemes, the CFTCA actually constituted “the first complete overhaul of the Commodity Exchange Act since its inception.” Id. (emphasis added).
[13] The CFTCA dramatically expanded federal regulatory coverage beyond agricultural products to encompass futures trading in several categories of goods and services not previously regulated. See 7 U.S.C. §§ 2, 6c(a) (b). The most significant changes pertinent to our consideration here, however, came in the total revamping of the regulatory oversight and enforcement systems designed to effectuate the shift in policy to a uniform, comprehensive federal control over the industry. [14] The focal point of this shift was the creation of the Commodity Futures Trading Commission (“CFTC”), a strong regulatory body, vested with exclusive jurisdiction over futures trading, 7 U.S.C. § 2, that was to be the keystone of the new comprehensive federal regulatory structure. Federal oversight responsibility over the daily functioning of the industry was greatly expanded through the CFTC. For example, the Commission was empowered to designate and to prescribe certain terms of operation for licensed contract markets, as well as to review all regulations and bylaws of these markets and to disapprove, alter or supplement those rules insofar as it deemed necessary. See, e. g., 7 U.S.C. § 12a(7). Further, the activities of certain classes of individual traders were for the first time brought under the federal eye by the requirement that they register periodically with the CFTC. See, e. g., 7 U.S.C. § 6k (one of the provisions forming the basis of plaintiffs’ complaint here, requiring registration of associates of futures commission merchants). [15] Central to our concern are those provisions elaborately overhauling the comparatively limited enforcement scheme extant under the old law in order to assure compliance with the new oversight provisions above, and the many substantive standards of conduct that had been carried forward into the new statutory framework virtually unchanged (such as the antifraud provision, § 6b, involved here). Consistent with the shift in philosophy toward affirmative federal responsibility, this renovated enforcement system was greatly strengthened relative to prior law both by the enhancement of some old tools and by the addition of several potent new ones. See S.Rep. No. 850, supra at 11-12, 1978 U.S. Code Cong. Ad. News at 2099-2100. For example, maximum civil penalties and fines assessable against individual violators and against contract markets that failed to enforce their rules were drastically increased from $10,000 to $100,000 per episode See, e. g., 7 U.S.C. §§ 13a, 13b. The Commission also was newly empowered, for instance, to sue in federal court for injunctive relief whenever it appeared that an individual or contract market had engaged, was engaging, or was about to engage in conduct violating the Act or regulations, 7 U.S.C. § 13a-1, as well as to conduct disciplinary proceedings against exchange members, 7 U.S.C. § 12c, and revoke or suspend the registration or trading privileges of any such individual, 7 U.S.C. §§ 6n(6), 9, or contract market, 7 U.S.C. § 7b. [16] Most importantly, the 1974 Act for the first time expressly provided the means for persons injured by violations of the Act to seek redress from those responsible. First, each designated contract market was required to provide an arbitration or other informal procedure for the settlement of customers’ claims and grievances involving less than $15,000.[9] 7 U.S.C. § 7a(11). Second, the Act established an administrative reparations procedure pursuant to which complaints might be filed with thePage 781
CFTC against virtually any futures trading professional required to be registered under the Act. 7 U.S.C. § 18. The CFTC is obliged to investigate such complaints and, if warranted in the Commission’s opinion, to allow the complainant to proceed against the alleged culprit before an administrative law judge either by hearing or by depositions or certified statements of facts, depending upon the size of the claim. 7 U.S.C. § 18(b). The administrative law judge in turn is authorized to rule upon the merits of the claim and to order payment of damages necessary to compensate the injured individual. See, e.g., Gordon v. Shearson Hayden Stone, Inc., 2 Comm.Fut. L.Rep. (CCH) ¶ 21,016 (April 10, 1980). An order of payment is enforceable in federal district court, and the Commission’s ruling on the merits of a claim may be appealed by either party to the court of appeals in the designated circuit. 7 U.S.C. § 18(f), (g).[10]
[17] The question we face is whether an implied judicial private right of action also was meant to be included among the panoply of express enforcement tools in this “comprehensive regulatory structure” erected by the 1974 revision. We conclude that it was not.[18] II. DEFINING THE INQUIRY
[19] As indicated by our recent opinions in United States v. Capeletti Bros., Inc., 621 F.2d 1309, 1313 (5th Cir. 1980) an Rogers v. Frito-Lay, Inc., 611 F.2d 1074, 1078 (5th Cir.) cert. denied, ___ U.S. ___, 101 S.Ct. 246, 66 L.Ed.2d 115
(1980), this court continues to employ the factors articulated i Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), as a guide to determining whether a cause of action should be inferred from any particular statutory scheme. In Cort the Supreme Court identified four factors it considered particularly relevant to this inquiry:
[20] 422 U.S. at 78, 95 S.Ct. at 2088 (citations omitted, emphasis in original). [21] In its more recent pronouncements in Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 15, 23, 100 S.Ct. 242, 245, 249, 62 L.Ed.2d 146 (1979) (“TAMA”) and Touche Ross Co. v. Redington, 442 U.S. 560, 568, 576, 99 S.Ct. 2479, 2485, 2489, 61 L.Ed.2d 82 (1979), however, the Supreme Court has made clear that the dispositive inquiry in evaluating claims upon implied rights of action is the divining of whether Congress intended“First, is the plaintiff `one of the class for whose especial benefit the statute was enacted’ . . . that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one . . .? Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff . . .? And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law?”
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Cort criteria. Thus the Cort factors, rather than being utilized as some sort of self-contained litmus test, are useful only insofar as they help to elucidate that legislative intent.[12] Indeed, as the opinions in both TAMA an Touche Ross demonstrate, should the issue of intent be settled by, for example, the legislative history and the language or structure of the statute, the inquiry has reached its end and no purpose is served by the further ritualistic application of the remainder of the Cort litany.[13] TAMA, 444 U.S. at 23, 100 S.Ct. at 249; Touche Ross, 442 U.S. at 576, 99 S.Ct. at 2489.
[22] As indicated above and as unquestioningly recognized by every court to entertain the issue, the focus of our inquiry is properly directed to the 1974 revision of the CEA.Page 783
While many of the individual concepts and provisions originated in prior enactments, including § 6b (the antifraud provision), the overall “regulatory scheme as it exists today is a product of the 1974 amendments” and the drastic shift in regulatory philosophy that they represent. Navigator Group Funds v. Shearson Hayden Stone, Inc., 487 F. Supp. 416, 420 n. 6 (S.D.N.Y. 1980). Thus it is the intent of that Congress and the legislative history of that enactment that will form the basis of our decision here.
[23] This focus on what is basically revisionary legislation, as opposed to an altogether new and original enactment, requires some adjustment or at least some reevaluation of the conventional analytical approach, however. In particular and most importantly, the fact that a private cause of action had previously been inferred under the old statutory scheme in connection with certain express provisions (such as § 6b), which were incorporated or carried forward into the present structure, raises questions concerning the type of congressional intent we are bound to search for and where the axe should fall in the absence of any definitive evidence of intent. [24] As indicated in footnote 11, supra, an implied private right of action ordinarily may be recognized only upon clear evidence that Congress affirmatively intended to provide such a remedy See Touche Ross, 442 U.S. at 568, 99 S.Ct. at 2485. Customarily, “those who contend a statute has endowed them with a cause of action must establish their proposition,” and their failure to demonstrate Congress’ intent to provide a cause of action compels the denial of such actions. Rogers v. Frito-Lay, 611 F.2d at 1085. [25] Plaintiffs, along with the CFTC as amicus curiae,[14]Page 784
the 1974 revision of the CEA simply does not fall within this paradigm.
[27] The CFTCA was not a mere reenactment, but the “first complete overhaul” of the CEA. H.R. Rep. 975, supra, at 1. While it is true as noted earlier that many of the substantive measures, such as the antifraud provision, 7 U.S.C. § 6b, were left untouched or were carried forward virtually unchanged into the new regulatory structure, the immediate context of those provisions was drastically changed. Most significantly, as delineated in Part I.B., supra, the enforcement scheme — which an implied right presumably had been thought necessary to supplement — was dramatically altered and expanded. So significant a transfiguration of the extant statutory framework is, itself, a wholesale obliteration of the prior status quo and sufficient reason for declining to adopt plaintiffs’ analytical approach, grounded as it is in the reenactment doctrine described above Stone v. Saxon Windsor Group Ltd., 485 F. Supp. at 1221 Smith v. Groover, 468 F. Supp. 105, 112-113 (N.D.Ill. 1979) (rejecting the identical approach urged here by plaintiffs and CFTC as amicus curiae).[15] Our decision to continue to require proof of affirmative congressional intent to provide a private right of action is further grounded in a related reason, however, calling into play still another canon that guides inquiries into the existence of implied causes of action. [28] As outlined in Part I.B., supra, Congress greatly expanded the federal regulatory enforcement arsenal in the 1974 Act by expressly enacting several potent new judicial and administrative tools and strengthening many of those previously contained in the CEA. Most significantly, for the first time it expressly provided for remedial mechanisms — the administrative reparations procedure, 7 U.S.C. § 18, and the requirement that exchanges provide the means for arbitration of small claims, 7 U.S.C. § 7a(11) — through which those injured by violations of the Act could seek compensation from the infractors. [29] “[I]t is an elemental canon of statutory construction that where a statute expressly provides a particular remedy or remedies, a court must be chary of reading others into it.”TAMA, 444 U.S. at 19, 100 S.Ct. at 247. Thus Congress’ express provision in 1974 of the numerous judicial and administrative means for enforcing compliance with the antifraud and other provisions of the CEA — and most particularly the remedial mechanisms of arbitration and reparations procedures — in effect creates a presumption against the implication of yet another unexpressed judicial means of enforcement and remedy.[16] This “presumption” against finding an implied right of action may be overcome, but only upon “clear contrary evidence of legislative intent” affirmatively to provide such an implied right in addition to the express remedies. National Railroad Passenger Corp. v. National Association of Railroad Passengers, 414 U.S. 453, 458, 94 S.Ct. 690, 693, 38 L.Ed.2d 646 (1974) (“Amtrak”) Accord, e.g., TAMA, 444 U.S. at 19, 100 S.Ct. at 247 Securities Investor Protection Corp. v. Barbour, 421 U.S. 412, 419, 95 S.Ct. 1733, 1738, 44 L.Ed.2d 263 (1975). Therefore, following the pattern of TAMA, we conclude that the onus remains upon plaintiffs to demonstrate “a clear and affirmativePage 785
congressional intent to approve a private right of action.”[17] Leist, 638 F.2d at 340 (Mansfield, J., dissenting). Accord, Stone v. Saxon Windsor Group Ltd., 485 F. Supp. at 1218, 1220.
[30] The history of judicial recognition of a private cause of action under the CEA prior to 1974 justifies some adjustment to and tailoring of the traditional formulation of the precise nature of congressional intent that must be shown. Rather than requiring establishment of a legislative intent to create a cause of action, we will require proponents of the implied right here to show, first, simply that Congress was actually aware in 1974 of this prior judicial recognition of an implied right of action, and second, that it approved these holdings and affirmatively intended to adopt or incorporate this extant, judicially articulated, right of action into the comprehensive express legislative enforcement scheme erected by the 1974 Act.[18] It is to this precise inquiry, in addition to the arguments and evidence put forth by plaintiffs, along with our sister courts’ attempt to satisfy this inquiry, that we now turn our attention.[31] III. CONGRESSIONAL INTENT [32] A. Content of Act and Legislative History
[33] The direct sources from which plaintiffs might demonstrate the requisite congressional intent to provide, or to continue to provide, a private right of action are the legislative history, language and structure of the 1974 Act. Our study of these sources, however, guided by the plaintiffs’ arguments, fails to yield any such “clear . . . evidence of legislative intent” to adopt such a private right.
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of course have access to the courts,” p. 249, and that “courts . . . have already held they have jurisdiction over private complaints,” p. 321). See also Senate Hearings, supra, at 737, 746 (statement of Professor Roy Schotland, arguing for an express private right of action and assurance “that Federal and State courts are still open” (emphasis added)).
[35] Stated charitably, we are less certain than are the plaintiffs and several of our sister courts[19] that these few fleeting references — sometimes cryptic and all comparatively isolated among the hundreds of pages of testimony and debate that comprise the legislative history of the 1974 Act — are sufficient to establish that the entire Congress was even aware of and duly considered the existence of any previously inferred cause of action in its deliberations and vote upon the CFTCA. See SEC v. Sloan, 436 U.S. 103, 119-123, 98 S.Ct. 1702, 1712-14, 56 L.Ed.2d 148Page 787
rely almost totally on the jurisdictional savings proviso of 7 U.S.C. § 2. Set amid the ascription of exclusive jurisdiction over futures trading to the CFTC, this proviso states that “[n]othing in this section[24] shall supersede or limit the jurisdiction conferred on courts of the United States. . . .” This, plaintiffs contend, affirmatively demonstrates the intent of Congress to retain the power of the courts to entertain private actions under the CEA. See A. Bromberg R. Lowenfels, Securities Fraud Commodities Fraud § 461 at 82.362-.363 (1979).
[38] The language of the proviso does not clearly evince an intent to approve of implied private actions, however,[25] and the legislative history relevant to this specific proviso indicates that it probably was intended to serve another purpose entirely. The House, Senate and Conference reports all are mute as to the purpose behind the proviso, which was added to H.R. 13113 in the Senate. Allusions to the provision during debates on the floor are similarly unenlightening. [39] Only recourse to the attenuated source of hearing testimony gives any hope of insight. Plaintiffs argue, therefore, that the proviso was enacted in response to the admonitions of Senator Dick Clark and Professor Roy Schotland that some sort of express assurance should be given complainants that the courts were still open to them under the new Act. Senate Hearings, supra, at 205, 737 746.[26] [40] Rosenthal contends, on the other hand, that the more likely stimulus for the proviso was the statement of the Chairman of the House Judiciary Committee, Representative Peter Rodino, Senate Hearings, supra, at 257-60, and the testimony of Deputy Assistant Attorney General Keith Clearwaters directly attacking the exclusive jurisdiction provision of § 2 to which the proviso was eventually added, id. at 663-64. The concern of both these witnesses was that the all — encompassing language of § 2, allocating to the CFTC exclusive jurisdiction over the futures trade, was so broad that it even “could be interpreted to deprive Federal courts of their jurisdiction under the antitrust laws and to deprive Federal and State courts of jurisdiction to enforce contract and commercial law rights” in the futures area. Id. at 663. Because the statements, as opposed to those relied upon by plaintiff, are derived from extensive and pointed attacks on the very section that the proviso later served to amend and because they, like the proviso itself, are directed to the question of jurisdiction as opposed to a single cause of action, see note 25, supra, the Rodino-Clearwaters’ statements do appear to be the somewhat more likely source for the proviso. [41] Unfortunately, we may only speculate since, as stated above, Congress gave us no indication of which, if either, of these sets of comments spurred it to add the provisoPage 788
of § 2. We are likewise unable to deduce the answer with any certainty solely on the basis of the nature of the comments. Even this statement and the sheer speculativeness of the true answer, however, effectively blunt plaintiffs’ reliance on the § 2 proviso as a “clear and affirmative” indication of congressional intent to approve or adopt an implied cause of action.
[42] Plaintiffs find little support elsewhere in the legislative history of the 1974 Act.[27] On the other hand, appellant Rosenthal seeks to solidify its case further by arguing that at least one aspect of that legislative history indicates an intent to deny the existence of a private cause of action. [43] In the process of enacting the CFTCA, Congress considered, but failed to adopt, no fewer than three bills containing express private rights of action. H.R. 11195, 93d Cong., 1st Sess. § 17(3) (1973); S. 2837, 93d Cong., 1st Sess. § 505 (1973); S. 2578, 93d Cong., 1st Sess. § 203(3) (1973). The weight to be given to a failure to enact such a provision — not an outright rejection by vote of either house — is unclear. Compare Amtrak, 414 U.S. at 460-61, 94 S.Ct. at 694. (“Committee’s deliberate failure to adopt that proposal . . . cannot but give weight” to the committee’s disapproval of the principle contained in the proposal) with Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 381-82 n. 11, 89 S.Ct. 1794, 1802 n. 11, 23 L.Ed.2d 371 (1969) (“unsuccessful attempts at legislation are not the best guides to legislative intent”). Whatever clear inference might ordinarily be drawn from such an occurrence is largely undercut here by the fact that each of the bills provided for treble damages, at least for willful violations of the Act. Congress’ refusal to adopt these bills might just as reasonably be presumed to have derived from an opposition to treble damages as from an opposition to the damage remedy itself. Alken v. Lerner, 485 F. Supp. at 877. Consequently, this indicator of Congress’ purported intent to deny private rights of action is hardly less equivocal than those relied upon by plaintiffs to show the opposite intent.[28]Page 789
[44] Having failed to distill any tangible evidence of affirmative congressional intent from the legislative history, language or structure of the 1974 Act, plaintiffs next argue that a congressional purpose to provide a cause of action may be inferred simply from the context or zeitgeist in which the legislation was enacted. They rely for this assertion on the discussion in Cannon v. University of Chicago, 441 U.S. 677, 698, 99 S.Ct. 1946, 1958, 60 L.Ed.2d 560 (1979), to the effect that statutes, such as the CFTCA, enacted during a period when the courts were much more liberal in their approach to implied rights of action, see, e. g., J. I. Case v. Borak, 377 U.S. 426, 433, 84 S.Ct. 1555, 1560, 12 L.Ed.2d 423 (1964), must be judged in light of that “contemporary legal context.”[29] From this, they contend that it must be presumed, in the absence of contrary evidence, that Congress expected the judiciary to supply any cause of action consistent with the prevalent pattern of interpretation of that time. Accord, Navigator Group Funds v. Shearson Hayden Stone, 487 F. Supp. at 421 (applying the CannonPage 790
so when the intent of the enacting Congress is obscure.”Seatrain Shipbuilding Corp. v. Shell Oil Co., 444 U.S. 572, 596, 100 S.Ct. 800, 814, 63 L.Ed.2d 36 (1980) (citations omitted). Accord, Cannon v. University of Chicago, 441 U.S. at 686 n. 7, 99 S.Ct. at 1952 n. 7 (subsequent legislative history not as pertinent as contemporary history, but helpful to some extent). Therefore, we shall attempt to glean what we can from this field of legislative material.
[48] The remarks in question of Senators Huddleston and Leahy, reproduced in the margin,[30] do indicate a clear assumption on the part of these two legislators that an implied private right of action was available under the CEA even after the 1974 revision. There is no indication elsewhere, however, that this assumption was shared by the remainder of Congress. In fact, certain other aspects of the 1978 legislative history imply th absence of such an assumption on the part of Congress as a whole. [49] For example, the Senate report on the bill, S.Rep. No. 850, 95th Cong., 2d Sess., reprinted in [1978] U.S. Code Cong. Ad. News, p. 2087, twice catalogs the means by which “customers are afforded protection” under the CEA, and each time conspicuously omits to mention an implied private right of action. Id. at 12-13, 32, U.S. Code Cong. Ad.News at 2100-2101, 2120 (the latter passage states, in reference to a provision not included in the bill as enacted, that “[a]ggrieved customers . . . would have the choice of seeking resolution of their claims through association arbitration or reparations proceedings or a Commission reparations proceeding”). See also H.R. Rep. No. 975 supra, at 22 (similarly noting that the reparations procedure was “designed to supplement the informal `settlement procedures’ contemplated of the contract markets . . . which are required under other sections of the legislation,” omitting any reference to such a procedure being supplementary to any judicial forum). [50] A second indicator that the assumption expressed by Senators Huddleston and Leahy was not one shared by the remainder of Congress is found in the 1978 amendment expressly providing a cause of action to the states, 7 U.S.C. § 13a-2.[31]Page 791
Section 13a-2(2) provides exclusive jurisdiction to the federal courts for suits based on violations of the CEA and brought by states under this section. No such provision exists with respect to the Act generally. The rationale behind this reservation of exclusive jurisdiction is two-fold: (1) to draw upon the extensive experience developed exclusively in federal courts in similar cases under the Securities Exchange Act of 1934 under which they similarly hold exclusive jurisdiction, 15 U.S.C. § 78aa, and (2) by means of recourse to this experience, to evolve a unified “coherent body of [decisional] law” under the CEA. S.Rep. No. 850, supra, at 25, 1978 U.S. Code Cong. Ad.News at 2113. In view of these goals, it would be anomalous indeed for Congress to require exclusive jurisdiction only of these relatively infrequent suits by states while continuing to countenance an implied cause of action, without such a restriction, for any individual who cares to sue. The natural inference is, therefore, that no such individual suits were contemplated.
[51] B. Consistency With Statutory Goals
[52] Our final inquiry is that directed by the third Cort
criterion. Like our excursion into more direct indicators of legislative intent, this foray also yields only conflicting or equivocal results. It is, of course, true that the recognition of an implied private right of action for damages would provide another, perhaps useful, enforcement tool in harmony with the aim of the CEA to protect futures customers from fraud and market manipulation. Curran v. Merrill Lynch, 692 F.2d at 234-35.[32]
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[55] IV. CONCLUSION
[56] The foregoing analysis of the language, structure and legislative history of the 1974 version of the CEA and its 1978 amendments obviously has yielded a result that might be described as emphatically equivocal. Although some individual passages or aspects of the Act appear to give some insight, these inferences frequently conflict with those from other passages or, upon closer examination, their apparent persuasiveness dims or vanishes. Chief Justice Marshall once observed that “[w]here the mind labours to discover the design of the legislature, it seizes everything from which aid can be derived . . . .” United States v. Fisher, 2 Cranch. 358, 386, 2 L.Ed. 304 (1805), quoted in, Brown v. General Services Administration, 425 U.S. 820, 825, 96 S.Ct. 1961, 1964, 48 L.Ed.2d 402 (1976). After our analysis of the legislative material and decisions of other courts on this question, we might add that in this metaphysical pursuit of prescience the mind often snatches at shadows and mirages in its attempt to discern evidence of such congressional design — a singularly inappropriate base upon which to predicate an implied private cause of action.
It shall be unlawful (1) for any member of a contract market, or for any correspondent, agent, or employee of any member, in or in connection with any order to make, or the making of, any contract of sale of any commodity in interstate commerce, made, or to be made, on or subject to the rules of any contract market, for or on behalf of any other person, or (2) for any person, in or in connection with any order to make, or the making of, any contract of sale of any commodity for future delivery, made, or to be made, on or subject to the rules of any contract market, for or on behalf of any other person if such contract for future delivery is or may be used for (a) hedging any transaction in interstate commerce in such commodity or the products or by-products thereof, or (b) determining the price basis of any transaction in interstate commerce in such commodity, or (c) delivering any such commodity sold, shipped, or received in interstate commerce for the fulfillment thereof —
(A) to cheat or defraud or attempt to cheat or defraud such other person;
(B) willfully make or cause to be made to such other person any false report or statement thereof, or willfully to enter or cause to be entered for such person any false record thereof;
(C) willfully to deceive or attempt to deceive such other person by any means whatsoever in regard to any such order or contract or the disposition or execution of any such order or contract, or in regard to any act of agency performed with respect to such order or contract for such person;
* * * * * *
(1) It shall be unlawful for any person to be associated with any futures commission merchant or with any agent of a futures commission merchant as a partner, officer, or employee (or any person occupying a similar status or performing similar functions), in any capacity which involves (i) the solicitation or acceptance of customers’ orders (other than in a clerical capacity) or (ii) the supervision of any person or persons so engaged, unless such person shall have registered, under this chapter, with the Commission and such registration shall not have expired nor been suspended (and the period of suspension has not expired) or revoked, and it shall be unlawful for any futures commission merchant or any agent of a futures commission merchant to permit such a person to become or remain associated with him in any such capacity if such futures commission merchant or agent knew or should have known that such person was not so registered or that such registration had expired, been suspended (and the period of suspension has not expired) or revoked: Provided, That any individual who is registered as a floor broker or futures commission merchant (and such registration is not suspended or revoked) need not also register under these provisions.
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The Supreme Court has more recently observed in TAMA, however, that “the mere fact that the statute was designed to protect advisers’ clients does not require the implication of a private cause of action for damages on their behalf. [citations omitted]. The dispositive question remains whether Congress intended to create any such remedy.” 444 U.S. at 24, 100 S.Ct. at 249. We can only assume that this statement serves to repudiate the curious allusion in the Cannon statement to a drastically more liberal approach to “intent” where the first Cort criterion is satisfied. At the least, insistence upon the strict standard would seem reasonable in situations where (as opposed t Cannon) any “rights” of the class, at least potentially, may be adequately secured by the statute’s express remedies. Consequently, we shall assume, arguendo, the correctness of appellants’ concession and analyze this factor no further as well, directing our attention only toward the second and thir Cort criteria.
“Often the most effective enforcement tool is a private suit where the plaintiff can recover three times his actual damages. The McGovern bill also authorizes them. Unfortunately, the House bill not only does not authorize them, but section 201 of the bill [now 7 U.S.C. § 2] may prohibit all court actions. The staff of the House Agriculture Committee has said that this was done inadvertently and they hope it can be corrected in the Senate.”
Senate Hearings supra, at 205.
Professor Schotland, while addressing the proposed reparations procedure, observed more generally that “[i]f you do choose to retain [the reparations mechanism] . . . there should be explicit language in the statute that federal and state courts are still open if a complainant prefers to go to trial there.” Id. at 737, 746.
A second example is the reliance in Leist, 638 F.2d at 312 314, for instance, on the observation of Senator Talmadge that “[i]t is hoped that giving the Commission this [reparations] authority will somewhat lighten the burden upon the courts . . . .” 120 Cong.Rec. 30459 (1974). The argument raised from this is that if the reparations procedure had been intended fully to displace rather than supplement implied judicial actions, the Senator would have known rather than “hoped” that the burden on the courts would be significantly lightened. Aside from the fact that the Senator’s statement concludes by noting, however, that the entire appeal and enforcement process remains in the courts, this particular statement was made with respect to a bill in which the right of appeal from a reparations proceeding lay initially t district court. H.R. 13113, supra, § 106. Thus while one might hope for a reduction in judicial time commitments, there was little reason to expect a decreased docket of cases.
Rosenthal, on the other hand points out that the reparations procedure that was eventually enacted first made its appearance in H.R. 11955, immediately after the failure and withdrawal of the express judicial cause of action in H.R. 11195. See Fischer v. Rosenthal Co., 481 F. Supp. at 56. While this very well could be mere coincidence, one might infer from the chain of events that the reparations procedure was indeed viewed by Congress as displacing any judicial forum. The legislative history contains no express discussion elucidating any relationship between the two.
“Compounding the undue stress placed on the reparation program, certain Federal district courts have taken the unfortunate position that Congress intended reparations to be the exclusive forum for adjudicating commodity customer claims. [citations omitted.] In order to alleviate the burden on the Commission’s reparation program, the committee adopted an amendment that provides — for reparation complaints where the amount claimed as damages does not exceed $5,000 — that a hearing be held only on the novel or basic issues that are determinative of the case. Thus, an aggrieved commodity customer will be able to obtain more expeditious treatment of his claim should the customer elect to pursue a claim in reparations rather than to proceed to arbitration or pursue in court the private right of action which has been judicially implied for violations of certain provisions of the Commodity Exchange Act, or which in the future courts may recognize for other provisions of the act.”
124 Cong.Rec. 10537 (1978).
Senator Leahy, in discussing the new provision expressly allowing states to pursue parens patriae actions for damages on behalf of their residents, observed:
“The exemption from State suits provided to contract markets is justified due to the deterrent effect on contract markets caused by Commission regulation, institution of Commission enforcement proceedings, and the implied private rights of action that may be brought against those contract markets that fail to discharge their duties under the Commodity Exchange Act. In those actions brought by a State under this bill, a customer who makes an informed, voluntary election to have his State sue on his behalf to recover monetary damages for a particular violation would thereby extinguish that person’s other alternatives for redress: arbitration reparations, or judicially implied private rights of civil action under the Act.”
124 Cong.Rec. S. 16527 (daily ed. Sept. 28, 1978).
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