Opinion ID: 776899
Heading Depth: 2
Heading Rank: 3

Heading: Other Factors in the Analysis

Text: 23 A strong presumption that Congress did not intend a private right of action places a heavy burden on the plaintiffs to demonstrate otherwise. See Victorian v. Miller, 813 F.2d 718, 721 (5th Cir.1987) (To establish an implied private right of action under a federal statute, a plaintiff bears the relatively heavy burden of demonstrating that Congress affirmatively contemplated private enforcement when it passed the relevant statute.). The plaintiffs raise a series of arguments in an attempt to rebut the presumption. 24 They argue that a failure by this Court to recognize a private right of action to enforce §§ 26(f) and 27(i) would constitute an ill-advised break with a long line of decisions recognizing implied private rights of action as a way of promoting the policies served by the ICA. The plaintiffs correctly note that an overwhelming majority of courts interpreting the ICA have recognized implied private rights of action to enforce many of its sections. 4 When those cases were decided, however, courts had more latitude to weigh statutory policy and other considerations than they do now. Before 1975, courts generally recognized an implied private right of action in any federal statute enacted for the benefit of a special class. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 374, 102 S.Ct. 1825, 72 L.Ed.2d 182 (1982). Although the Supreme Court adopted a more structured approach in Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), it nonetheless held that legislative intent was only one of several factors that courts could consider in the analysis. Id. at 78, 95 S.Ct. 2080 (in determining existence of a federal private right of action, courts may consider (1) whether the plaintiff is one of the class for whose especial benefit the statute was enacted, (2) whether there is any indication of legislative intent, explicit or implicit, to create or deny such a remedy, (3) whether the private cause of action would be consistent with the underlying purposes of the legislative scheme, and (4) whether the cause of action is one traditionally relegated to state law (emphasis in original; internal quotation marks omitted)). In a series of recent decisions, however, the Supreme Court has reduced the importance of the Cort factors other than legislative intent, first by characterizing them as mere tools for determining legislative intent, see Touche Ross, 442 U.S. at 575-76, 99 S.Ct. 2479, and then by subordinating them to statutory text as interpretive sources, see, e.g., Northwest Airlines, Inc. v. Transp. Workers Union of Am., AFL-CIO, 451 U.S. 77, 91, 101 S.Ct. 1571, 67 L.Ed.2d 750 (1981). Past decisions reflecting judicial willingness to make effective [statutory] purpose in the context of implied rights of action belong to an ancien regime. Sandoval, 532 U.S. at 287, 121 S.Ct. 1511 (internal quotation marks omitted). 25 We also reject the plaintiffs' argument that when Congress added §§ 26(f) and 27(i) to the ICA in 1996 it expected courts to recognize implied rights of action to enforce them because courts had recognized other implied rights under the ICA in the past. 26 [W]e [do not] agree ... that our cases interpreting statutes enacted prior to Cort v. Ash have given dispositive weight to the expectations that the enacting Congress had formed in light of the contemporary legal context.... We have never accorded dispositive weight to context shorn of text. In determining whether statutes create private rights of action, as in interpreting statutes generally,... legal context matters only to the extent it clarifies text. 27 Id. (internal citations and quotation marks omitted). A statutory provision that does not use rights-creating language, in a statute that provides for other remedies and contains explicit private rights of action to enforce other sections, creates no ambiguity on the question of an implied private right of action that legal context might clarify. Where a statute is unambiguous as we use that term here, the context in which it was passed does not matter. 28 The plaintiffs next argue that two pieces of legislative history suggest that Congress intended courts to recognize implied private rights of action to enforce §§ 26(f) and 27(i). First, the plaintiffs point to a House of Representatives committee report accompanying the 1980 amendments to the ICA (which did not contain §§ 26(f) and 27(i)) stating that the committee expects the courts to imply private rights of action under this legislation. H.R.Rep. No. 96-1341, at 29 (1980), reprinted in 1980 U.S.C.C.A.N. 4800, 4811. Second, the plaintiffs cite to a House committee report accompanying the 1996 ICA amendments (which did add §§ 26(f) and 27(i)) that states that the new provisions subject variable insurance contracts to more general prohibitions against excessive fees, similar to the way mutual funds are treated under the Act. H.R.Rep. No. 104-622, at 45 (1996), reprinted in 1996 U.S.C.C.A.N. 3877, 3908. This report is relevant, the plaintiffs argue, because mutual funds are regulated under § 36(b), which, as we have indicated, explicitly provides for private remedies. The plaintiffs read this report to signify that Congress intended that its prohibitions on excessive fees on variable insurance contracts be enforced through the same means used to punish excessive mutual fund fees. 29 The plaintiffs' appeal to legislative history suffers from the same shortage of statutory ambiguity that mars their legal context argument. Where the text of a statute is unambiguous, judicial inquiry is complete[] except in rare and exceptional circumstances, and legislative history instructive only upon the most extraordinary showing of contrary intentions. Garcia v. United States, 469 U.S. 70, 75, 105 S.Ct. 479, 83 L.Ed.2d 472 (1985) (internal quotation marks omitted). A report prepared by a House committee on one piece of legislation cannot constitute an extraordinary showing of congressional intent for different legislation passed sixteen years later, and so the legislative history of the 1980 amendments does not disturb the presumption that arises from the text of sections added in 1996. And the analogy drawn in the 1996 legislative history between the treatment of variable insurance contracts and mutual funds under the ICA demonstrates no contradictory intent regarding remedies, especially where the language itself indicates that the analogy refers to that which is prohibited rather than how that prohibition will be enforced. 30 Finally, we reject the plaintiffs' argument that Congress must have intended §§ 26(f) and 27(i) to be enforceable through private rights of action because Congress did not allocate enough money to the SEC to do the job by itself. Even were we able to assess the adequacy of the SEC's funding relative to its mandate, a method of determining statutory intent based on fluctuating annual budget allocations would resemble divination more than analysis. There is no basis whatever upon which to conclude that Congress wished us to determine statutory meaning based on the magnitude of its appropriations to the agency charged with the statute's enforcement. 5 31 Because we hold that the ICA does not provide for a private right of action for violations of §§ 26(f) and 27(i), we do not reach the defendants' alternative arguments for dismissing the complaint.