Court Opinion

ID: 8910149
Source: CourtListenerOpinion
Date Created: 2022-11-27 02:38:35.930173+00
Date Added: 2024-06-11T17:08:27.461081
License: Public Domain

MOORE, Circuit Judge
(dissenting):
I would affirm, largely for the reasons set forth in Judge Pierce’s well-reasoned opinion.
*242Plaintiff is the recipient of a pension from the New York City Teachers’ Retirement System. He retired in 1953 and since then has been on a pension — $3,000 a year. There is no allegation that any of the acts complained of have caused his pension to cease or payments to have been diminished. Indeed, paragraph 9b of his complaint reveals that he is unable to allege any injury to his interests because his retirement account was fully funded at the time of his retirement and apparently has remained fully funded up to this day. Furthermore, his actuarial calculations show that his expectant lifetime pension is $39,000; the $1.6 billion in the Funded Assets Account of the Retirement System amounts to $64,600 for each retiree, more than enough to fund his expected pension. Hence, Kirshner has not been injured by the acts complained of. See Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970).
Not only has Kirshner failed to allege facts to support his standing to sue, but also, as appears from Judge Pierce’s opinion, he has failed to state a cause of action on his nonsecurities law claims. The gravamen of his complaint is that certain investments in New York City bonds made' recently, at a time when the City was in dire financial straits, were improvident. In view of the prominence given to the City’s financial plight in the public press, I am willing to take judicial notice that investment in its securities would be highly questionable. However, in addition to the many burdens placed upon the judiciary, I am unwilling to add that of investment counsel to an employees pension fund to the list. Support for this position is found in a decision of New York’s highest court in Sgaglione v. Levitt, 37 N.Y.2d 507, 375 N.Y. S.2d 79, 337 N.E.2d 592 (1975) and in Judge Conner’s decision in Tron v. Condeilo, 427 F.Supp. 1175 (S.D.N.Y.1976). Whatever relief, if any, to which plaintiff may be entitled may be had through the state courts where breach of fiduciary duty may be asserted and equitable relief and damages, if any, awarded.1
The majority opinion supports most of Judge Pierce’s decision and disagrees only with his treatment of Kirshner’s securities law claims. Even if Kirshner has standing to bring this action, as the majority finds he does, his complaint should still be dismissed for failure to state a cause of action under § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and § 17 of the Securities Act of 1933, 15 U.S.C. § 77q. In my opinion, the majority’s holding that the complaint states a cause of action under § 10(b) and § 17 constitutes an ill-advised extension of the reach of the antifraud provisions of the securities laws as they have been applied to allegations of corporate mismanagement.2
There has been a tendency over recent years to rely upon various sections of the Securities Exchange laws to create causes of action by the recital of section numbers such as § 10(b), Rule 10-b(5) and § 17, as if the mere recital had a talismanic effect and would bring some kind of a triable action into being.
The private cause of action under § 10(b) was created by federal courts in order to effectuate congressional policies arguably embodied in the securities legislation passed in 1933 and 1934. Thus the broad extension of the private § 10(b) action has not been mandated by Congress; it is rather a matter of the courts seeking to erect a rational enforcement system on a very shaky base. However, a rational enforcement system ought to take into account the latest efforts of Congress to regulate retirement trust *243fund managements. In the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1381, Congress has established detailed and complex rules to control pension fund managers. In pertinent part, ERISA provides that pension fund trustees have a duty of undivided loyalty to the beneficiaries, 29 U.S.C. § 1104, and regulates the extent to which a pension fund can hold securities issued by the employer, 29 U.S.C. §§ 1106-1107. ERISA contains complex disclosure and reporting requirements, but nowhere does it require that trustees must disclose in advance to the beneficiaries their proposed investment transactions, 29 U.S.C. §§ 1021-1026. If Congress had wanted to require pension fund trustees to disclose investment transactions, Congress would have enacted such a rule. Although this case involves a public employee pension fund, the majority’s holding that a pension beneficiary has a cause of action against the trustee is equally applicable to private pension funds which are covered by ERISA. Moreover, since Congress has elected not to burden municipal employee pension funds with ERISA’s requirements, 29 U.S.C. § 1003, a federal court should not create a new disclosure duty on the dubious foundation of § 10(b) and apply it to public employee pension funds in this case. I would find that Kirshner’s complaint has not stated a federal cause of action upon which relief can be granted.
In short, I believe that Judge Pierce has correctly analyzed the amended complaint (and the law applicable thereto) and found it wanting. With that analysis I concur and hence would affirm.

. The availability of a state court remedy for breaches of fiduciary duty and the traditional role of state law in regulating trust fund fiduciaries add additional support to my belief, explained later in the text, that Kirshner has failed to state a cause of action under § 10(b). See Santa Fe Industries, Inc. v. Green, 430 U.S. 462, 478, 97 S.Ct. 1292, 51 L.Ed.2d 480 (1977).

. See Santa Fe Industries, Inc. v. Green, 430 U.S. 462, 475 n.15, 97 S.Ct. 1292, 51 L.Ed.2d 480 (1977) and the cases cited therein; Jacobs, How Santa Fe Affects 10b-5’s Proscriptions Against Corporate Mismanagement, 6 Sec. Reg.L.J. 3 (1978).