Opinion ID: 783836
Heading Depth: 3
Heading Rank: 2

Heading: Supreme Court Precedent Addressing Implied Rights to Contribution

Text: 45 In Northwest Airlines, a class of flight attendants sued its employer, Northwest Airlines, Inc., under the Equal Pay Act and Title VII of the Civil Rights Act of 1964, challenging the legality of the wage differential between pursers (who were males) and stewardesses (who were females). The plaintiff class won at trial, following which Northwest Airlines filed a separate action stating a claim for contribution against two unions that represented the employees with whom Northwest Airlines had bargained collectively in setting the employees' wages. The Supreme Court held that there is not an implied right to contribution under Title VII or the Equal Pay Act. Northwest Airlines, 451 U.S. at 98, 101 S.Ct. at 1584. 46 In Northwest Airlines, the Court explained that a right to contribution can be created in either of two ways: either Congress could have intended, explicitly or implicitly, to create such a right under Cort v. Ash, or a cause of action for contribution may have become a part of the federal common law through the exercise of judicial power to fashion appropriate remedies for unlawful conduct. Id. at 90, 101 S.Ct. at 1580. In examining the first possibility, the Court explained: In determining whether a federal statute that does not expressly provide for a particular private right of action nonetheless implicitly created that right, our task is one of statutory construction.... The ultimate question in cases such as this is whether Congress intended to create the private remedy-for example, a right to contribution-that the plaintiff seeks to invoke. Id. at 91, 101 S.Ct. at 1580 (citation omitted). Factors relevant to Congress's intent include legislative history, the underlying purpose and structure of the statutory scheme, and the likelihood that Congress intended to supersede or to supplement existing state remedies. Id., 101 S.Ct. at 1580 (citing Cort v. Ash, 422 U.S. at 78, 95 S.Ct. at 2088; Cannon v. Univ. of Chicago, 441 U.S. 677, 689-709, 99 S.Ct. 1946, 1953-64, 60 L.Ed.2d 560 (1979)). 47 The Court then asked whether the language of the statute demonstrated an intent to create a right of contribution. Noting that neither statute expressly created such a right, the Court explained that [t]his omission, although significant, is not dispositive if, among other things, the language of the statutes indicates that they were enacted for the special benefit of a class of which the petitioner is a member. 451 U.S. at 91-92, 101 S.Ct. at 1580-81. The Court concluded, however, that it cannot possibly be said that employers are members of the class for whose especial benefit either the Equal Pay Act or Title VII was enacted.... To the contrary, both statutes are expressly directed against employers; Congress intended in these statutes to regulate their conduct for the benefit of employees.... In light of this fact, petitioner `can scarcely lay claim to the status of beneficiary whom Congress considered in need of protection.' Id. at 92, 101 S.Ct. at 1581 (citation and footnotes omitted). 48 On this point, the Court specifically rebuked the court of appeals, which had refused to apply Cort v. Ash literally in evaluating the claim of a right to contribution. Id. at 92 n. 25, 101 S.Ct. at 1581 n. 25. The court of appeals had asked, instead, whether employees could bring suit against their unions under the statutes. The Court stated that this inquiry confused the question whether the elements of a contribution claim are established in a given case-a fact the Court assumed in deciding the case and which we also assume here 18 -with the question of whether Congress intended that contribution should be available under any circumstances. Thus, [t]he Court of Appeals erred ... because it failed to focus on whether the party seeking to invoke the implied remedy is a member of a class that Congress intended to benefit. Id., 101 S.Ct. at 1581 n. 25. 49 Next, the Court considered whether the structure of the statutes might suggest that Congress intended to create a right of contribution. Noting that both statutes established comprehensive programs designed to eliminate certain varieties of employment discrimination and contained express provision for private enforcement in certain carefully defined circumstances, and provide[d] for enforcement at the instance of the Federal government in other circumstances, the Court concluded that [t]he comprehensive character of the remedial scheme expressly fashioned by Congress strongly evidences an intent not to authorize additional remedies. Id., at 93-94, 101 S.Ct. at 1581-82. The Court explained that [i]t is, of course, not within our competence as federal judges to amend these comprehensive enforcement schemes by adding to them another private remedy not authorized by Congress. Id. at 94, 101 S.Ct. at 1582. 50 Finally, the Court noted that nothing in the legislative history suggested a congressional intent to create a right to contribution. Id., 101 S.Ct. at 1582. The Court recognized that it is not uncommon in an implied right of action case to encounter such legislative silence and that, on its own, such silence is not necessarily inconsistent with an intent to create the remedy suggested. Id., 101 S.Ct. at 1582. Nonetheless, in the absence of suggestions in the statutory language or structure that Congress intended to create such a right of action, the essential predicate for implication of a private remedy simply does not exist. Id., 101 S.Ct. at 1582. 19 51 The Court also considered the second possible source of a right of contribution, namely, federal common law. The Court noted that, except in limited circumstances such as cases involving the rights or duties of the United States or resolution of interstate controversies, the courts' power to fashion federal common law is strictly limited. Id. at 95, 101 S.Ct. at 1582. The Court distinguished Cooper Stevedoring Co. v. Fritz Kopke, Inc., 417 U.S. 106, 94 S.Ct. 2174, 40 L.Ed.2d 694 (1974), in which it had found a nonstatutory right to contribution in the admiralty setting, noting that the constitutional grant of general admiralty jurisdiction to the federal courts provides a basis for development of judge-made rules in the area of maritime law. Id. at 95-96, 101 S.Ct. at 1583. Finally, the Court concluded that it should not create a right to contribution where Congress had enacted a comprehensive legislative scheme including an integrated system of procedures for enforcement. Id., 101 S.Ct. at 1584. The Court left open the question whether federal courts may have more power to fashion remedies in other areas of the law, such as under the antitrust laws, under which federal courts act more as common law courts. Id. at 98 & n. 42, 101 S.Ct. at 1584 & n. 42. 52 That same term the Court addressed a question not involved in but referred to in Northwest Airlines and concluded that the antitrust laws do not confer on federal courts the power to formulate a right to contribution where Congress has not created the right explicitly. Texas Indus., 451 U.S. at 646, 101 S.Ct. at 2070. The Court analyzed the question of whether the antitrust laws establish a right of contribution in the same manner as in Northwest Airlines. It concluded that there was no congressional intent to create such a right, noting that there was no indication of such an intent in the language of the statute or in the legislative history. Id. at 639, 101 S.Ct. at 2066. The Court again noted that the statutes in question were not adopted for the benefit of the participants in the prohibited conduct in question. Id., 101 S.Ct. at 2066. Rather, the petitioner was `a member of the class whose activities Congress intended to regulate for the protection and benefit of an entirely distinct class....' Id., 101 S.Ct. at 2066 (quoting Piper v. Chris-Craft Indus., Inc., 430 U.S. 1, 37, 97 S.Ct. 926, 947, 51 L.Ed.2d 124 (1977) (emphasis in Texas Industries )). The Court, therefore, concluded that any right to contribution could be derived only from federal common law. 53 The Court then expanded on its discussion in Northwest Airlines of federal courts' power to recognize a right of contribution as part of federal common law. The Court explained that the power to formulate federal common law is implicated in two basic types of cases: where a federal rule of decision is necessary to protect uniquely federal interests, and where Congress has given the courts the power to develop substantive law. Id. at 640, 101 S.Ct. at 2067. The Court found that antitrust suits, which involve the rights and interests of private parties, do not involve the duties of the federal government, the distribution of powers in the federal system, or matters necessarily subject to federal control, and, therefore, do not involve uniquely federal interests. Id. at 642, 101 S.Ct. at 2068. 54 With regard to the second type of case in which courts have the power to formulate federal common law, the paradigmatic case is Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957), in which the Supreme Court read section 301 of the Labor Management Relations Act not only as a grant of jurisdiction over certain areas of labor law but also as a grant of the power to develop common law of labor-management relations. Texas Indus., 451 U.S. at 642-43, 101 S.Ct. at 2068. The Court noted that federal courts traditionally had broad common law powers under the antitrust laws as well. Id. at 643, 101 S.Ct. at 2068. Nonetheless, the Court held that, although Congress intended to give the courts the power to develop common law defining violations of the antitrust laws, there was no similar indication of congressional intent with regard to the provisions of the antitrust laws providing for treble damages and other remedies. Id. at 643-44, 101 S.Ct. at 2068-69. Instead, the Court held, the detailed and specific remedial provisions set forth in the Sherman Act give rise to a strong presumption that Congress deliberately omitted a contribution remedy from the statute. Id. at 644-45, 101 S.Ct. at 2069-70. The Court, therefore, concluded that the antitrust laws do not confer on federal courts the broad power to formulate the right to contribution sought here. Id. at 646, 101 S.Ct. at 2070. 55 In Musick, however, the Court followed a different course, distinguishing Northwest Airlines and Texas Industries and holding that defendants in an action under Rule 10b-5 of the Securities Exchange Commission adopted pursuant to the Securities Exchange Act of 1934 have a right to seek contribution under federal law. 508 U.S. at 297, 113 S.Ct. at 2091. The Court distinguished Northwest Airlines and Texas Industries, as well as the precedents on which those cases were based, as follows: 56 The federal interests in both Texas Industries and Northwest Airlines were defined by statutory provisions that were express in creating the substantive damages liability for which contribution was sought. Recognizing that the applicable statutes did not `implicate uniquely federal interests of the kind that oblige courts to formulate federal common law,' Texas Industries, 451 U.S. at 642, 101 S.Ct. at 2068, we asked whether Congress `expressly or by clear implication' envisioned a contribution right to accompany the substantive damages right created, id. at 638, 101 S.Ct. at 2066, or, failing that, whether Congress `intended courts to have the power to alter or supplement the remedies enacted,' id. at 645, 101 S.Ct. at 2069.... But these inquiries are not helpful in the present context. The private right of action under Rule 10b-5 was implied by the Judiciary on the theory courts should recognize private remedies to supplement federal statutory duties, not on the theory Congress had given an unequivocal direction to the courts to do so. Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 730, 737, 95 S.Ct. 1917, 1922, 1926, 44 L.Ed.2d 539 (1975). Thus, it would be futile to ask whether the 1934 Congress also displayed a clear intent to create a contribution right collateral to the remedy. [ See Franklin v. Gwinnett County Public Schools, 503 U.S. 60, 76, 112 S.Ct. 1028, 1039, 117 L.Ed.2d 208 (1992); id. at 77, 112 S.Ct. at 1039 (Scalia, J., concurring)]. 57 Id. at 290-91, 113 S.Ct at 2087-88. In response to the argument that the precedents on which Northwest Airlines and Texas Industries were based should control, the Court continued: 58 This argument ... would have much force were the duty to be created one governing conduct subject to liability under an express remedial provision fashioned by Congress, or one governing conduct not already subject to liability through private suit. That, however, is not the present state of the jurisprudence we consider here. The parties against whom contribution is sought are, by definition, persons or entities alleged to have violated existing securities laws and who share joint liability for that wrong under a remedial scheme established by the federal courts. Even though we are being asked to recognize a cause of action that supports a suit against these parties, the duty is but the duty to contribute for having committed a wrong that courts have already deemed actionable under federal law. The violation of the securities laws gives rise to the 10b-5 private cause of action, and the question before us is the ancillary one of how damages are to be shared among persons or entities already subject to that liability. Having implied the underlying liability in the first place, to now disavow any authority to allocate it on the theory that Congress has not addressed the issue would be most unfair to those against whom damages are assessed. 59 We must confront the law in its current form. The federal courts have accepted and exercised the principal responsibility for the continuing elaboration of the scope of the 10b-5 right and the definition of the duties it imposes. As we recognized in a case arising under § 14(a) of the 1934 Act, 15 U.S.C. § 78n(a), `where a legal structure of private statutory rights has developed without clear indications of congressional intent,' a federal court has the limited power to define `the contours of that structure.' Virginia Bankshares, Inc. v. Sandberg, 501 U.S. 1083, 1104, 111 S.Ct. 2749, 2764, 115 L.Ed.2d 929 (1991). As to this proposition we were unanimous. See ibid. (SOUTER, J., joined by REHNQUIST, C.J., and WHITE, O'CONNOR, and SCALIA, JJ.); id., at 1114, 111 S.Ct., at 2768 (KENNEDY, J., joined by MARSHALL, BLACKMUN, and STEVENS, JJ., concurring in part and dissenting in part) (`Where an implied cause of action is well accepted by our own cases and has become an established part of the securities laws ... we should enforce it as a meaningful remedy unless we are to eliminate it altogether'). See also Blue Chip Stamps, supra, at 737, 95 S.Ct., at 1926 (recognizing the authority of federal courts to `define the contours of a private cause of action under Rule 10b-5' and `to flesh out the portions of the law with respect to which neither the congressional enactment nor the administrative regulations offer conclusive guidance'). 60 Id. at 292-93, 113 S.Ct. at 2088-89. The Court found support for its conclusions in two amendments to the securities laws, in which Congress appeared to acknowledge the judicially created Rule 10b-5 action without any further expression of legislative intent to define it. Id. at 294, 113 S.Ct. at 2089. 61 Having declined to follow Northwest Airlines and Texas Industries, the Court turned to the question whether a right to contribution is within the contours of the 10b-5 action. Id., 113 S.Ct. at 2089. The Court explained, however, that its task is not to assess the relative merits of the competing rules, but rather to attempt to infer how the 1934 Congress would have addressed the issue had the 10b-5 action been included as an express provision in the 1934 Act. Id., 113 S.Ct. at 2090. The Court acknowledged that this exercise may appear to be not a promising venture as a general proposition, but, nonetheless, found that other specific sections of the 1934 Act to which Rule 10b-5 was analogous provided a right of contribution. Id. at 295-97, 113 S.Ct. at 2090-91. 62 Beginning with the language of section 10(b) itself, the Court noted that the text provided little guidance as to a right to contribution, but found that [h]aving made no attempt to define the precise contours of the private cause of action under § 10(b), Congress had no occasion to address how to limit, compute, or allocate liability arising from it. Id. at 295, 113 S.Ct. at 2090. The Court then compared Rule 10b-5 to the eight express liability provisions in the 1933 Securities Act and the 1934 Securities Exchange Act, and found that it was most similar to two provisions that conferred an explicit private right of action, because both provisions targeted the same danger that was the focus of section 10(b), because both had the same purpose to deter fraud and manipulative practices in the securities markets and to ensure full disclosure of information material to investment decisions, and because Rule 10b-5 defendants stood in a similar position to defendants in actions based on the other two provisions. Id. at 296, 113 S.Ct. at 2090-91. Because those two provisions each contained nearly identical express provisions for a right to contribution, the Court concluded: Absent any showing that the implied § 10(b) liability structure or the 1934 Act as a whole will be frustrated by finding a right to contribution paralleling the right to contribution in analogous express liability provisions, our task is complete and our resolution clear: Those charged with liability in a 10b-5 action have a right to contribution against other parties who have joint responsibility for the violation. Id. at 298, 113 S.Ct. at 2091-92.