Source: https://law.justia.com/cases/federal/appellate-courts/F2/634/774/454839/
Timestamp: 2020-08-15 11:36:48
Document Index: 679466036

Matched Legal Cases: ['§ 1292', '§ 13', '§ 6', '§ 6', '§ 6', '§ 6', '§ 17', '§ 505', '§ 203', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 6', '§ 13', '§ 6', '§ 6', '§ 6', '§ 6', '§ 18', '§ 13', '§ 206', '§ 806', '§ 13', '§ 13']

John Rivers and Tom Lamb (dan P. Rivers, As Executor of Thewill of John Rivers, Substituted in Place Andstead of John Rivers, Deceased),plaintiffs- Appellees, v. Rosenthal & Company, Defendant-appellant, 634 F.2d 774 (5th Cir. 1980) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Fifth Circuit › 1980 › John Rivers and Tom Lamb (dan P. Rivers, As Executor of Thewill of John Rivers, Substituted in Place...
John Rivers and Tom Lamb (dan P. Rivers, As Executor of Thewill of John Rivers, Substituted in Place Andstead of John Rivers, Deceased),plaintiffs- Appellees, v. Rosenthal & Company, Defendant-appellant, 634 F.2d 774 (5th Cir. 1980)
U.S. Court of Appeals for the Fifth Circuit - 634 F.2d 774 (5th Cir. 1980) Dec. 16, 1980
Arguing that no such private right of action exists, Rosenthal moved to dismiss under Fed. R. Civ. P. 12(b) (6), those counts of the complaint based on the alleged violations of the CEA. The district court determined that an implied right of action was available to Rivers and Lamb and denied the motion to dismiss. Upon the appropriate recommendation of the district court that the denial of this motion entailed a controlling and controversial question of law the immediate resolution of which would materially advance the ultimate termination of litigation, this court accepted the interlocutory appeal pursuant to 28 U.S.C. § 1292(b). We now reverse, holding that no implied private right of action is available to plaintiffs-appellees, Rivers and Lamb.5
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.
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 (intimating that private actions may have been maintained prior to and in greater number than is indicated by only the published decisions). In fact, all courts that decided the issue held unanimously that such a private cause of action was available under the CEA as constituted prior to 1974. See, e. g., Deaktor v. L. D. Schreiber & Co., 479 F.2d 529, 534 (7th Cir. 1973), rev'd on other grounds sub nom. Chicago Mercantile Exchange v. Deaktor, 414 U.S. 113, 94 S. Ct. 466, 38 L. Ed. 2d 344 (1973) (cause of action under 7 U.S.C. § 13b); Booth v. Peavey Co. Community Services, 430 F.2d 132, 133 (8th Cir. 1970) (§ 6(d)); Arnold v. Bache & Co., Inc., 377 F. Supp. 61, 65 (M.D. Pa. 1973) (§ 6b); McCurnin v. Kohlmeyer & Co., 340 F. Supp. 1338, 1343 (E.D. La. 1972), aff'd per curiam, 477 F.2d 113 (5th Cir. 1973). But see Chipser v. Kohlmeyer & Co., 600 F.2d 1061, 1067 & n.14 (5th Cir. 1979) (suggesting existence of pre-1974 cause of action an open question upon remand); Moody v. Bache & Co., 570 F.2d 523, 528-29 (5th Cir. 1978). Moreover-although the correctness of these decisions is dubious when measured against the present wisdom for determining the existence of implied rights of action, see e. g., Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 100 S. Ct. 242, 62 L. Ed. 2d 146 (1979) ("TAMA") and Part II, infra-this course of allowing the victims of violations to take the initiative and hail their trespassing tormentors before the courts was basically consistent with that era's fundamental approach of relying principally upon the self-policing of the futures trade by those involved in it.
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 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).
As indicated by our recent opinions in United States v. Capeletti Bros., Inc., 621 F.2d 1309, 1313 (5th Cir. 1980) and 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 in 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:
422 U.S. at 78, 95 S. Ct. at 2088 (citations omitted, emphasis in original).
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 such a cause of action to be born,11 the second of the 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 and 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.
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. 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.
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.
Plaintiffs, along with the CFTC as amicus curiae,14 contend here, however, that because courts had uniformly recognized private rights of action under the CEA prior to 1974, it is the rejection of a private right that would constitute a change in the status quo. Moreover, they suggest, Congress was or must have been aware of this judicial stance. Therefore, they argue, the onus here should be upon the defendants to prove a congressional intent to alter this status quo by abrogating this previously existing cause of action in the course of the 1974 revision. This argument has some appeal and has been accepted and deployed by several courts, all of whom eventually upheld the existence of an implied private right. See, e.g., Leist, 638 F.2d at 303; Curran v. Merrill Lynch, 622 F.2d at 234; Alken v. Lerner, 485 F. Supp. 871, 877 (D.N.J. 1980).
While we agree that some account must be taken of the pre-1974 judicial decisions inferring a cause of action and any congressional awareness of those decisions, we do not believe plaintiffs' suggested mode of analysis is appropriate to this case. As is recognized by the courts employing this approach, see, e.g., Leist, 638 F.2d at 303, 309-311, the thesis has its foundation in the traditional canon of construction that, absent express indications to the contrary, the reenactment of statutes in substantially the same form or their wholesale adoption into other statutory schemes is presumed to perpetuate and incorporate the judicial baggage that has accumulated in relation to those provisions. See, e.g., Lorillard v. Pons, 434 U.S. 575, 580-81, 98 S. Ct. 866, 869-70, 55 L. Ed. 2d 40 (1978); Alabama Association of Insurance Agents v. Board of Governors, 533 F.2d 224, 245 (5th Cir. 1976), cert. denied, 435 U.S. 904, 98 S. Ct. 1448, 55 L. Ed. 2d 494 (1978). We believe, contrary to Judge Friendly's assertions in Leist, 638 F.2d at 309-310, that the 1974 revision of the CEA simply does not fall within this paradigm.
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.
"(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 affirmative 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.
Stated charitably, we are less certain than are the plaintiffs and several of our sister courts19 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 148 (1978);20 Tennessee Valley Authority v. Hill, 437 U.S. 153, 191-194, 98 S. Ct. 2279, 2300-01, 57 L. Ed. 2d 117 (1978). Plainly, the consideration of the prior judicial interpretations here involved much less attention, even among the legislators and witnesses noted above, than the "extensive (legislative) deliberations" (albeit in hearings) of the Supreme Court's prior interpretation of a provision of the Voting Rights Act from which, in Georgia v. United States, 411 U.S. 525, 532-33, 93 S. Ct. 1702, 1707, 36 L. Ed. 2d 472 (1973), the Court presumed general congressional awareness and acceptance of that interpretation in the reenactment of the provision. See note 15, supra.
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
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 Cannon thesis to CFTCA); Alken v. Lerner, 485 F. Supp. at 876-77 (same).
The prior judicial activism and our present duty of solicitousness because of that, however, cannot alter the constitutional requirement, see note 11, supra, that a cause of action be created only by Congress. There must be some expression of affirmative congressional intent either to provide a cause of action or at least to rely on the context of judicial activism contemporary to the enactment (though the latter is somewhat unrealistic). In Cannon, for example, the Court observed that Congress "explicitly assumed that (the statute in question) would be interpreted and applied as" had the statute upon which it was patterned, including the judicial recognition or creation of an implied cause of action thereunder. 441 U.S. at 693-696, 99 S. Ct. at 1956-57 (emphasis added). We have received no such message from the enactors of the CFTCA.
Finally, plaintiffs contend that the legislative history of the 1978 amendments-specifically certain remarks of Senators Huddleston and Leahy during debate on the Senate floor-demonstrate Congress' assumption and understanding that implied private actions are available under the Act. Initially, we note that the views of subsequent Congresses (and particularly the isolated remarks of individual legislators) hardly provide the most persuasive evidence of the intent of the enacting Congress. Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 117, 100 S. Ct. 2051, 2060-61, 64 L. Ed. 2d 766 (1980); Rogers v. Frito-Lay, 611 F.2d at 1080-81. However, virtually every court to consider the issue before us since 1978 has taken into account, with varying degrees of deference, the legislative history of the 1978 amendments. Moreover, we are reminded by other Supreme Court opinions that "while the views of subsequent Congresses cannot override the unmistakable intent of the enacting one, ... such views are entitled to significant weight, ... and particularly 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.
From these restrictions and the remarks in the Senate report, it is apparent that Congress perceived even infrequent uncontrolled suits for damages even by the state governments as a threat to the goal of developing a coherent and consistent body of law. Yet, as was the case with respect to the similar concern over the exclusivity of federal jurisdiction, above, no such restraints or safeguards would be placed by the statute as presently constituted on the potentially much more numerous and diverse suits that would be lodged pursuant to an implied private cause of action. In this situation we are counselled by the Supreme Court's admonition in Santa Clara Pueblo v. Martinez, 436 U.S. 49, 64, 98 S. Ct. 1670, 1680, 56 L. Ed. 2d 106 (1978): "(w)here Congress seeks to promote dual objectives in a single statute, courts must be more than usually hesitant to infer from its silence a cause of action that, while serving one legislative purpose, will disserve the other."IV. CONCLUSION
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.
As of this writing, these are the only other two circuits to have engaged in a reasoned analysis of the existence of an implied private right of action under the CEA as constituted following the 1974 revision. But see Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Goldman, 593 F.2d 129, 133 n.7 (8th Cir.), cert. denied, 444 U.S. 838, 100 S. Ct. 76, 62 L. Ed. 2d 50 (1979) (noting summarily in dictum that "(s)uch actions are well recognized."); Hirk v. Agri-Research Council, Inc., 561 F.2d 96, 103 & n.8 (7th Cir. 1977) (similar perfunctory assertion). This court has not faced the issue heretofore, although twice since 1974 it has expressly reserved decision on the existence of a cause of action under the Act as constituted prior to the 1974 amendments. Chipser v. Kohlmeyer & Co., 600 F.2d 1061, 1067 & n.14 (5th Cir. 1979); Moody v. Bache & Co., Inc., 570 F.2d 523, 528-29 (5th Cir. 1978)
Compare, e. g., Grayson v. ContiCommodity Serv. Inc., 2 Comm.Fut.L.Rep. (CCH) P 21,033 (D.D.C. May 23, 1980) (action pursuant to 7 U.S.C. § 6b); Navigator Group Funds v. Shearson Hayden Stone, Inc., 487 F. Supp. 416 (S.D.N.Y. 1980) (§ 6b); Alken v. Lerner, 485 F. Supp. 871 (D.N.J. 1980) (§ 6b); Smith v. Groover, 468 F. Supp. 105 (N.D. Ill. 1979) (§§ 6b, 13a, 13b); Poplar Grove Planting & Refining Co. v. Bache Halsey Stuart, Inc., 465 F. Supp. 585, 589-90 (M.D. La. 1979) (§§ 6b, 6d), all finding implied private rights of action, with, e. g., Stone v. Saxon & Windsor Group Ltd., 485 F. Supp. 1212 (N.D. Ill. 1980) (construing §§ 6c(b), (c)); Sunnyside Eggs, Inc. v. Urner Barry Publ., Inc., No. 78-1661A (N.D. Ga. Mar. 28, 1980) (§ 13b); Fischer v. Rosenthal & Co., 481 F. Supp. 53 (N.D. Tex. 1979) (§ 6b); Bartels v. International Commodities Corp., 435 F. Supp. 865 (D. Conn. 1977) (§ 6b), all ruling that no private cause of action exists under the CEA as amended in 1974. See also Hofmayer v. Dean Witter & Co., Inc., 459 F. Supp. 733 (N.D. Cal. 1978) (finding right of action under fraud provisions, §§ 6b and 6o, but not for violation of registration provisions, §§ 6k and 6n (as alleged here), or for violation of exchange rules)
The mechanism through which the 1921 Act was to accomplish its systemization of the national futures trade-i. e., by the levying of a tax on all grain futures contracts traded other than on licensed contract markets-soon was declared an unconstitutional exercise of the taxing power. Hill v. Wallace, 259 U.S. 44, 42 S. Ct. 453, 66 L. Ed. 822 (1922). Almost immediately, however, Congress redrafted the substantive provisions, substituted for the offending tax section a simple proscription of all futures dealings other than on licensed contract markets, and reenacted the whole pursuant to its power to regulate interstate commerce as The Grain Futures Act. The Supreme Court upheld the new Act as constitutional in Board of Trade v. Olsen, 262 U.S. 1, 43 S. Ct. 470, 67 L. Ed. 839 (1923)
The CEA was significantly amended again in 1978. Futures Trading Act of 1978, Pub. L. 95-405, 92 Stat. 865. These alterations took the form primarily of adjustments to the framework erected in 1974. The most significant changes for our purposes were the modification of the reparations procedure to allow full-fledged hearings only for claims greater than $5,000 (as opposed to $2,500 in the original enactment), 7 U.S.C. § 18(b) & (c), and the addition of a new provision expressly allowing the attorneys general of the various states to lodge damage actions in federal courts on behalf of their residents against alleged violators of the Act, 7 U.S.C. § 13a-2. These amendments and their legislative history will be discussed more fully as they appear pertinent to the analysis below
This conclusive reliance upon congressional intent in the evaluation of claims of implied rights of action is not simply an expedient tool or canon of construction, but is rooted in the limitations of the functional role allotted the judiciary by the Constitution. United States v. Capeletti Bros., 621 F.2d at 1312; Rogers v. Frito-Lay, 611 F.2d at 1078. See also Cannon v. University of Chicago, 441 U.S. 677, 742, 99 S. Ct. 1946, 1981-85, 60 L. Ed. 2d 560 (1979) (Powell, J., dissenting). Although we may breathe practical life into them, the federal judiciary-endowed with no legislative or policy making authority-has no power to "imply" or otherwise to create private causes of action supplementary to express statutory schemes. Rather, we may only recognize or infer rights of action affirmatively created by the Legislative Branch, whether that affirmative legislative intent is manifested expressly in statutory language or by implication in statutory structure, context, or legislative history. That this approach may justifiably be characterized as a retrenchment from that applied in the recent past, when causes of action might have been judicially "implied" merely upon a court's policy determination that such a cause would be useful or "necessary" to statutory goals, is a lamentable indictment of our past failure to recognize or confine ourselves to our constitutionally assigned role and our concomitant willingness to countenance Congress' abdication to the courts of its constitutionally assigned policy making responsibility. See Cannon v. University of Chicago, 441 U.S. at 742-749, 99 S. Ct. at 1981-85 (Powell, J., dissenting). See also, TAMA, 444 U.S. at 23, 100 S. Ct. at 249 (Powell, J., concurring and indicating that the approach deployed there was consistent with his Cannon dissent)
Since the primary indicators of legislative intent are the language and overall structure of a statute as well as its legislative history and the context of its enactment, the first and third of the Cort factors are useful guideposts to intent, although not as directly to the point as the inquiry directed by the second criterion. Touche Ross, 442 U.S. at 576, 99 S. Ct. at 2489; Rogers v. Frito-Lay, 611 F.2d at 1078-79 n.4
Our path is smoothed somewhat in that respect here by appellant Rosenthal's decision not to dispute two of the four Cort criteria. Appellant first has conceded, as it must, that regulation of the commodity futures trade plainly is not an area traditionally relegated to state law. Therefore, this fourth factor, to the extent that it carries any weight, balances in favor of the plaintiffs and will not be discussed further. Appellant further conceded in its Reply Brief that the first Cort factor-that plaintiffs are members "of a class for whose especial benefit to the statute was enacted"-should similarly be resolved in plaintiffs' favor. We are less certain of the correctness or advisability of this concession, particularly in light of this court's rigorous analysis of this factor in United States v. Capeletti Bros., 621 F.2d at 1313-14. Also, compare TAMA, 444 U.S. at 23, 100 S. Ct. at 249 (observing that § 206 of the Investment Advisors Act, 15 U.S.C. § 806-6 (an antifraud statute strikingly similar to that in issue here), "concededly was intended to protect the victims of the fraudulent practices it prohibited") with Cannon v. University of Chicago, 441 U.S. 677, 690 n.13, 99 S. Ct. 1946, 1955 n.13 (1979) (intimating in dictum that rule 10b-5 under the Securities Exchange Act of 1934 merely "create(s) duties on the part of persons for the benefit of the public at large" rather than a right in specific persons). See also Leist v. Simplot, 638 F.2d at 304-307, dissent at 334-338 (majority and dissent differ with regard to "especial benefit" factor when CEA applied to futures "speculators"). In fact, concession of this factor might have seriously skewed our analysis of the case under the puzzling assertion by the Supreme Court in Cannon that where "it is clear that federal law has granted a class of persons certain rights, it is not necessary to show an intention to create a cause of action, although an explicit purpose to deny such a cause of action would be controlling." 441 U.S. at 693, 99 S. Ct. at 1956, quoting Cort v. Ash, 422 U.S. at 82, 95 S. Ct. at 2089 (dictum) (emphasis in original)
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 to 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 third Cort criteria.
Through its appearance here and in other litigation, along with its official pronouncements on the subject, see 41 Fed.Reg. 3994 (1976), the CFTC has made clear its belief that an implied right of action is available to private litigants. Ordinarily the interpretation of a statute by the agency charged with its administration would be entitled to great deference. See United States v. Consumer Life Ins. Co., 430 U.S. 725, 752, 97 S. Ct. 1440, 1454, 52 L. Ed. 2d 4 (1977). The Supreme Court made clear in Piper v. Chris-Craft Industries, Inc., 430 U.S. 1, 41 n.27, 97 S. Ct. 926, 949 n.27, 51 L. Ed. 2d 124 (1977), however, that such deference was not to be accorded on the narrow issue, "reserved for judicial resolution," of whether an implied right of action should be recognized under the statute
Cf. Georgia v. United States, 411 U.S. 526, 532-33, 93 S. Ct. 1702, 1706-07, 36 L. Ed. 2d 472 (1973) (applying the reenactment doctrine to uphold perpetuation of Supreme Court interpretation of the provision reenacted, with some changes in context, where, unlike here, that prior interpretation had been the subject of "extensive deliberations" at least in hearings, and Congress had thereafter done nothing to alter or foreclose that interpretation)
Indeed, the presumption is much more appropriately suited to this case than to the TAMA decision from which the formulation of the rule quoted in text was drawn. Navigator Group Funds v. Shearson Hayden Stone, Inc., 487 F. Supp. at 420. There the Supreme Court declined to infer a private cause of action for damages largely on the basis of express enforcement provisions merely aimed at sanctioning violators of the substantive provisions. As the court in Navigator Group Funds observed, the express provisions of the CFTCA include compensatory remedial mechanisms which are more truly functional alternatives to the implied judicial forum sought by injured customers. 487 F. Supp. at 420
Given such proof, the actual correctness or incorrectness of these earlier judicial decisions would be largely immaterial. "For the relevant inquiry is not whether Congress correctly perceived the then state of the law, but rather what its perception of the state of the law was." Brown v. General Services Administration, 425 U.S. 820, 828, 96 S. Ct. 1961, 1965, 48 L. Ed. 2d 402 (1976). Thus, if Congress embraced such a cause of action and intended its perpetuation in the revised regulatory system, this affirmative intent renders completely irrelevant to our purposes the question of the propriety, under whatever standards, of the decisions originally giving birth to the cause of action. Accord, Cannon v. University of Chicago, 441 U.S. at 709, 99 S. Ct. at 1964
E. g., Leist v. Simplot, 638 F.2d 283 at 308-310; Curran v. Merrill Lynch, 622 F.2d at 234; Alken v. Lerner, 485 F. Supp. at 877; Smith v. Groover, 468 F. Supp. at 113
In Sloan, the Supreme Court rejected the SEC's contention that its longstanding interpretation of a particular section of the Securities Exchange Act of 1934 had been essentially incorporated into that section by Congress' reenactment of the provision in substantially the same form. In doing so, even though the Senate committee overseeing the reenactment had not only acknowledged but expressly approved of the SEC's construction in its official report, the Court declined "to presume general congressional awareness of the Commission's construction based only upon a few isolated statements in the thousands of pages of legislative documents." 436 U.S. at 121, 98 S. Ct. at 1713
In the context of a similar situation, the Supreme Court stated in Cannon that "(i)t is always appropriate to assume our elected officials, like other citizens, know the law"-referring to the prior judicial construction of a statute upon which the one under the Court's consideration had been patterned. 441 U.S. at 696, 99 S. Ct. at 1957-58 (dictum). This suggests that awareness of the prior judicial constructions recognizing an implied right of action under the CEA apparently may merely be ascribed to Congress. However, the wisdom of imputing to Congress the knowledge upon which we then, in turn, assume that legislation is predicated, seems dubious. See SEC v. Sloan, 436 U.S. at 118-24, 98 S. Ct. at 1712-14, and note 20 supra
Each party seeks to embellish the basic analysis above, to some extent. Plaintiffs contend, supported by some district courts, that Congress' failure to enact these express provisions actually provides evidence that Congress recognized and approved the existing implied right and saw no need to supplement or expand it. See Navigator Group Funds, 487 F. Supp. at 423, quoting Smith v. Groover, 468 F. Supp. 113; Alken v. Lerner, 485 F. Supp. at 877. This is a very attenuated inference, however, and we join in the statement of the Supreme Court in T.I.M.E., Inc. v. United States, 359 U.S. 464, 478, 79 S. Ct. 904, 912, 3 L. Ed. 2d 952 (1959): "we do not think that from the failure of Congress to grant a new authority any reliable inference can permissibly be drawn to the effect that any authority previously claimed was recognized and confirmed."
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.
It has been suggested that the passage of the express cause of action for states in § 13a-2 demonstrates that "when Congress wished to provide a private damage remedy, it knew how to do so and did so expressly," Touche Ross, 442 U.S. at 571, 99 S. Ct. at 2487, and it obviously, therefore, did not intend to provide a cause of action for individuals under the CEA. See, e.g., Stone v. Saxon & Windsor Group Ltd., 485 F. Supp. at 1220-21. While we are not insensitive to the logic of this position, the legislative history of § 13a-2 indicates that a primary motivator in making explicit the right of states to sue may have been the need to overcome various common law prerequisites and restrictions on such parens patriae suits. See S.Rep.No. 850, supra, at 25. Accord, Leist v. Simplot, 638 F.2d at 319-320