Court Opinion

ID: 9472163
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:51:40.095805+00
Date Added: 2024-06-11T17:42:46.933793
License: Public Domain

VANCE, Circuit Judge,
concurring in part and dissenting in part:
I join the majority’s opinion with respect to section 10(b). The precepts of Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 102 S.Ct. 1825, 72 L.Ed.2d 182 (1982), however, compel me to conclude that implied causes of action exist under sections 13(d), 14(d) and 14(e) that permit Liberty to seek injunctive relief.
Divining the collective intent of a body of lawmakers is a task fraught with difficulty, and it is this task that divides the court. In my view, the majority’s resolution of Liberty's claims under the Williams Act places undue emphasis on Cort v. Ash. By lending each of the Cort factors nearly equal weight, my colleagues embrace precisely the mechanical application of Cort that the Supreme Court rejected in Touche Ross & Co. v. Redington, 442 U.S. 560, 575-76, 99 S.Ct. 2479, 2488-89, 61 L.Ed.2d 82 (1979). See California v. Sierra Club, 451 U.S. 287, 302, 101 S.Ct. 1775, 1783, 68 L.Ed.2d 101 (1981) (Rehnquist, J,, concurring). In the years since Cort the Supreme Court has emphasized that congressional intent is the touchstone of any claim of implied private right. Curran, 456 U.S. at 377-78, 102 S.Ct. at 1838-39; Touche Ross, 442 U.S. at 568, 99 S.Ct. at 2485. An examination of the intent behind section 13(d), under the guidance of Curran, is dispositive of claims under that provision as well as under sections 14(d) and 14(e).
A critical guidepost in discerning legislative intent is “Congress’ perception of the law that it was shaping or reshaping.” Curran, 456 U.S. at 377-78, 102 S.Ct. at 1838-39; see also Herman & MacLean v. Huddleston, 459 U.S. 375, 103 S.Ct. 683, 689, 74 L.Ed.2d 548 (1983). Thus in Cannon v. University of Chicago, 441 U.S. 677, 99 S.Ct. 1946, 60 L.Ed.2d 560 (1979), the Supreme Court, in recognizing a private remedy under Title IX of the Education Amendments of 1972, stressed that Title IX was modeled on Title VI of the Civil Rights Act of 1964 and was enacted at a time when Title VI had been construed as creating a private remedy. Id. at 694-703, 99 S.Ct. at 1956-1960.
In Curran, the Court expounded upon the significance of the contemporary legal context surrounding a statute’s enactment:
“Congress is presumed to be aware of an administrative or judicial interpretation of a statute and to adopt that interpretation when it re-enacts a statute without change....”
456 U.S. at 382 n. 66, 102 S.Ct. at 1841 n. 66 (quoting Lorillard v. Pons, 434 U.S. 575, 580, 98 S.Ct. 866, 870, 55 L.Ed.2d 40 (1978)).
In determining whether a private cause of action is implicit in a federal statutory scheme when the statute by its terms is silent on that issue, the initial focus must be on the state of the law at the time the legislation was enacted.... When Congress enacts new legislation, the question is whether Congress intended to create a private remedy as a supplement to the express enforcement provisions of the statute. When Congress acts in a statutory context in which an implied private remedy has already been *572recognized by the courts ... the inquiry logically is different. Congress need not have intended to create a new remedy, since one already existed; the question is whether Congress intended to preserve the pre-existing remedy.
456 U.S. at 378-79, 102 S.Ct. at 1839. Accordingly, the Curran Court viewed the comprehensive 1974 amendment of the Commodity Exchange Act (CEA),1 which did not expressly displace the unanimous case law implying a private action for damages, as proof that Congress positively intended to retain the judicially implied remedy. Once it resolved the question of legislative intent, the Curran Court perceived no need to dwell upon the remaining Cort factors. Id. at 388, 102 S.Ct. at 1844.
The evidence that Congress approved of implied relief under the Williams Act is unusually strong because it combines the indicia relied on by the Supreme Court in Cannon and Curran. Congress enacted the Williams Act and twice amended section 13(d) in a legal climate in which implied remedies had already been recognized. The majority ignores the fact that the Williams Act was cast upon the statute and regulations governing proxy solicitations, chiefly section 14(a) of the Securities Exchange-Act, 15 U.S.C. § 78n(a) (the 1934 Act).2 H.R.Rep. No. 1711, 90th Cong., 2d Sess. 3-4 (1968), U.S.Code Cong. & Admin. News 1968, p. 2811; S.Rep. No. 550, 90th Cong., 1st Sess. 2-5 (1967). On the Senate floor, Senator Williams explained:
What this bill would do is to provide the same kind of disclosure requirements which now exist, for example, in contests through proxies for controlling ownership in a company.
[It] is patterned on the present law and the regulations which govern proxy contests.
113 Cong.Rec. 24,665 (1967).
The significance of this lineage lies in J.I. Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964), decided four years before the passage of the Williams Act. In Borak the Supreme Court construed section 14(a) to allow a shareholder to sue for damages on behalf of the corporation to redress injuries from false and misleading proxy solicitation materials distributed in violation of that provision. Given the Williams Act’s origin in section 14(a), Borak gave Congress ample reason to assume that the federal judiciary would imply private rights of action to enforce the newly enacted mandates.3 See Curran, *573456 U.S. at 379, 382 n. 66, 102 S.Ct. at 1839, 1841 n. 66; Cannon, 441 U.S. at 694-703, 99 S.Ct. at 1956-1960.
The courts did not refute that notion. To the extent that issues preliminary to the merits were litigated before the courts, the outstanding question was not whether a private remedy existed, but rather who would have standing to sue. See, e.g., General Aircraft Corp. v. Lampert, 556 F.2d 90, 94-95 (1st Cir.1977) (section 13(d)); GAF Corp. v. Milstein, 453 F.2d 709, 719 (2d Cir.1971), cert. denied, 406 U.S. 910, 92 S.Ct. 1610, 31 L.Ed.2d 821 (1972) (section 13(d)); Electronic Specialty Co. v. International Controls Corp., 409 F.2d 937, 946 (2d Cir.1969) (sections 14(d) and 14(e)). In the three years Congress spent deliberating the 1977 amendments to section 13(d), unanimous authority granting standing to issuers continued to mount4 and Rondeau v. Mosinee Paper Corp., 422 U.S. 49, 95 S.Ct. 2069, 45 L.Ed.2d 12 (1975), was decided.
In reading Rondeau to cast doubt on the existence of a private remedy under section 13(d), the majority takes too crabbed a view of that case. Two remarks are in order. First, it is important to note that Rondeau was decided on the same day as Cort v. Ash. Justice Brennan, who wrote for a unanimous majority in Cort, explicitly stated in Rondeau that he read the Williams Act to authorize injunctive relief to issuers. Id. at 65, 95 S.Ct. at 2079 (Brennan, J., dissenting). He wrote to register his dissent precisely because he felt an injunction should have issued, a result that necessarily assumed the existence of a cause of action.
More importantly, what matters is not what Rondeau held but the impression it gave to Congress. Curran, 456 U.S. at 378 n. 61, 102 S.Ct. at 1839 n. 61. Curran contains an instructive parallel. In Chicago Mercantile Exchange v. Deaktor, 414 U.S. 113, 94 S.Ct. 466, 38 L.Ed.2d 344 (1975), the Supreme Court conferred the Commodity Exchange Commission with primary jurisdiction over private actions to enforce the CEA. The Curran Court subsequently characterized Deaktor as having “simply assumed” that the CEA afforded an implied right of action. 456 U.S. at 380-81 & 381 n. 65, 102 S.Ct. at 1840-41 & 1841 n. 65. Because Deaktor left the impression that an implied cause of action no longer was in question, the Curran Court viewed the case as part of the legal backdrop to the 1974 CEA amendments. Id. at 381, 102 S.Ct. at 1841. In the case of Rondeau, its discussion of the prerequisites of relief and its coincidence with Cort v. Ash only strengthened the assuring impression it gave.
Indeed, my colleagues elsewhere concede that lower court cases which simply assume an implied right of action "speak[ [¶]... strongly to the routine and consistent quality” of the case law. While they agree that a “plethora” of such cases supports relief under section 13(d), they refrain from lending dispositive weight to Congress’ silence in the face of this authority because in their view the focus of the 1977 amendments was too narrow, in contrast with the comprehensive reenactment in Curran, to ensure that Congress considered the question.
I take issue with the majority’s view both of the 1977 amendments and of Curran. The legislative history of the 1977 amendments reveals that Congress’ main concern was not with foreign investors but rather with the use of financial intermediaries and nominee accounts to cloak the true identity of owners, both foreign and domestic. See generally S.Rep. No. 114, 95th Cong., 1st Sess. 4-7, 12-15 (1977), reprinted in 1977 U.S.Code Cong. & Ad.News 4102-04, 4110-13. For this reason Congress amended section 13(d) to require disclosure of information concerning beneficial ownership inter*574ests.5 This change, coupled with others extending the reach of section 13(d) and mandating a centralized databank for purposes of consolidating ownership information, bespeaks a clear intent to strengthen the overall regulatory scheme consistent with a private right of enforcement. Cf. Curran, 456 U.S. at 394, 102 S.Ct. at 1847.
Likewise, nothing in Curran precludes us from giving congressional action in the face of judicially implied relief dispositive weight despite the fact that Congress did not debate the merits of private relief in the course of the deliberations over the 1977 amendments. Cf. Northwest Airlines, Inc. v. Transport Workers Union, 451 U.S. 77, 94, 101 S.Ct. 1571, 1582, 67 L.Ed.2d 750 (1981). In fact, in Herman & MacLean v. Huddleston, 459 U.S. 375, 103 S.Ct. 683, 74 L.Ed.2d 548 (1983), the Supreme Court unanimously held that the 1975 amendments to the 1934 Act effectively ratified the ample authority affirming the cumulative nature of the section 10(b) action. It reached this result, citing Cur-ran, without referring to any debates on the issue, even though the amendments themselves neither addressed nor changed section 10(b). Huddleston thus suggests a flexible approach in which a substantial remedial amendment in the face of extensive case law unanimously affording a private remedy can substitute for a more direct expression of congressional intent.
In certain respects" the claim to an implied cause of action under section 13(d) is even stronger than the parallel claim in Curran. The Williams Act, unlike the CEA, was originally enacted in a judicial climate favoring implied causes of action, and it was patterned after the very provision that Borak had previously endowed with a private remedy. Not even the CEA in Curran could lay claim to such ancestry. There was no pressing need, given Borak and Rondeau, for Congress to reexamine the case law establishing issuer redress, and it twice passed up the opportunity to do so.6 For these reasons I am convinced that we are obliged to follow Curran.
In resolving the question of legislative intent, several considerations recommend against the majority’s resort to Touche Ross & Co. v. Redington, 442 U.S. 560, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979). First, that case, decided in 1979, has no bearing on the state of the law as Congress perceived it in 1968, 1970 or 1977.7 Furthermore, the Touche Ross Court noted that section 17(a), the provision at issue, had no history of long-standing lower court interpretation. Id. at 577 n. 19, 99 S.Ct. at 2490 n. 19. After Cannon and Curran, that distinction became highly relevant, if not dispositive. We are bound to follow Cur-ran, the later case, to the extent that its method of elucidating legislative intent dif*575fers from Touche Ross. Importantly, Touche Ross involved a claim for money damages rather than for injunctive relief.8 Finally, an analogy to Touche Ross is no substitute for a direct examination of the origins of the Williams Act.9
“ ‘It is just as much “judicial legislation” for a court to withdraw a remedy which Congress expected to be continued as to improvise one that Congress never had in mind.’ ” Curran, 456 U.S. at 394 n. 100, 102 S.Ct. at 1847 n. 100 (quoting Leist v. Simplot, 638 F.2d 283, 313 (2d Cir.1980)). The foregoing examination, under Cannon and Curran, of the contemporary legal context surrounding the enactment and amendments of section 13(d) reveals that Congress intended to create a private right of action. This examination complete, the majority’s argument that issuers fall outside the class for whose special benefit section 13(d) was enacted lapses into irrelevance. “[T]here is no need for us to ‘trudge through all four of the [Cort] factors when the dispositive question of legislative intent has been resolved.’ ” Curran, 456 U.S. at 388, 102 S.Ct. at 1844 (quoting California v. Sierra Club, 451 U.S. at 302, 101 S.Ct. at 1784 (Rehnquist, J., concurring)).
The fact that section 13(d) underwent careful reexamination and substantial amendment in 1977, while sections 14(d) and 14(e) have not received similar scrutiny since 1970, does not dictate a different conclusion as to the existence of causes of action under the latter provisions. All three sections were cut from the same bolt — section 14(a) — and all thus came into being stamped with the imprint of Borak. Congress’ reevaluation of section 13(d) is significant because it confirmed in 1977 what was true of all three sections as of 1968, that is, that Congress expected the courts to clothe each section with the incidents of judicial relief, as the Supreme Court had done with section 14(a) in Borak.
The issue in this case thus devolves into one of standing because it raises the question whether Liberty, as the issuer, is properly authorized to seek an injunction for the benefit of the shareholders as a body. There is of course no question that Congress in framing the Williams Act took pains to “avoid[] tipping the balance of regulation either in favor of management or in favor of the person making the takeover bid.” H.R.Rep. No. 1711, 90th Cong., 2d Sess. 4 (1968), U.S.Code Cong. & Admin. News 1978, p. 2813; see also S.Rep. No. 550, 90th Cong., 1st Sess. 3 (1967); Rondeau, 422 U.S. at 58-59, 95 S.Ct. at 2075-2076. But while the sole purpose of section 13(d) is to provide shareholders with *576the necessary information to reach informed decisions whether to sell their stock, shareholders as a practical matter lack the opportunity and the information to protect their interests. To begin with, schedule 13D statements are distributed to issuers, exchanges, and the Commission, but not to the shareholder public. 15 U.S.C. § 78m(d)(1). Furthermore, only target corporations have the familiarity with day-to-day operations to recognize inaccuracies and correct them. Indiana National Corp. v. Rich, 712 F.2d 1180, 1185 & n. 2 (7th Cir.1983); GAF Corp. v. Milstein, 453 F.2d at 719-21; Steinberg, The Propriety and Scope of Cumulative Remedies Under the Federal Securities Laws, 67 Cornell L.Rev. 557, 598 n. 241 (1982). In Piper, the Supreme Court recognized that misleading statements injure the corporation by committing deceit on the shareholders as a whole. See 430 U.S. at 32 n. 21, 97 S.Ct. at 944 n. 21. As the parties best able to detect misrepresentations, issuers have standing to ensure the accuracy of the offeror’s filings for the benefit of the shareholder body.10
I close by observing that the principal effect of Curran is to refrain from conducting an independent judicial discourse on the proper ends of legislation and the best ways to achieve them. I would not second-guess, as the majority does, the advisability of issuer standing and injunctive relief under the cloak of Cort v. Ash because our role under Curran is to respect congressional intent as determined under the guidance of that case, whether or not policy considerations so advise. I am further satisfied that careful scrutiny of self-serving management claims and the judicious tailoring of injunctive relief can avoid most if not all of the deleterious effects the majority conjures. For these reasons I would grant Liberty' standing to sue for injunctive relief under sections 13(d), 14(d) and 14(e).

. 7 U.S.C. § 1 et seq.

. Section 14(a) provides:
It shall be unlawful for any person, by the use of the mails or by any means or instrumentality of interstate commerce or of any facility of a national securities exchange or otherwise, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors, to solicit or to permit the use of his name to solicit any proxy or consent or authorization in respect of any security (other than an exempted security) registered pursuant to section 781 of this title.
Under Commission rules promulgated pursuant to section 14(a), see 17 Fed.Reg. 11,431 (1952), participants in proxy contests must file written proxy statements informing shareholders of their identities, their shareholdings, and sources of financing. 17 C.F.R. § 240.14a-3 (1983).
The Williams Act added sections 13(d) and 14(d), (e) and (f) to the 1934 Act. The legislative history is replete with statements that the disclosure machinery authorized by section 14(a) was the model both for sections 14(d) — (f), regulating cash tender offers, and for section 13(d), governing large-scale, stock acquisitions:
The cash tender offer is similar to a proxy contest, and the committee could find no reason to continue the present gap in the Federal securities laws which leaves the cash tender offer exempt from disclosure provisions....
The bill would correct the current gap in our securities laws by amending the Securities Exchange Act of 1934 to provide for full disclosure in connection with cash tender offers and other techniques for accumulating large blocks of equity securities of publicly held companies.
H.R.Rep. No. 1711, 90th Cong., 2d Sess. 3-4 (1968) (emphasis added), U.S.Code Cong. & Admin.News 1968, p. 2813.

. Congress is presumed to be familiar with the judicial decisions interpreting the -provisions upon which a new enactment is modeled. Curran, 456 U.S. at 382 n. 66, 102 S.Ct. at 1841 n. 66. In this instance there also exists evidence that committee witnesses brought Borak to the *573attention of the drafters of the Williams Act. Hearings before the Subcommittee on Securities of the Senate Committee on Banking and Currency on S. 510, 90th Cong., 1st Sess. 67, 140 (1967) (testimony of Profs. Israels and Painter).

. See the majority opinion, 734 F.2d at 562 n. 37.

. The committee observed that the disclosure of beneficial interests was necessary to combat several evils:
While there are sound reasons for use of street and nominee names to facilitate securities transactions, their widespread use raises a numbers [sic] of problems both for investors and for the formulation of public policy. For one thing, street name and nominee accounts impose one or more layers between the issuer and the beneficial owner thereby making issuer-shareholder communications more difficult and expensive. For another reason, street name and nominee accounts impede public access to information regarding the control of publicly held corporations and make it possible for power and influence to be exercised with relative anonymity.
Id. at 5, reprinted in 1977 U.S.Code Cong. & Ad.News 4102-03. The Senate Report contains an extensive discussion of the street name loophole but it expresses concern for increased foreign control of domestic corporations per se only in passing.

. Cf. Andrus v. Allard, 444 U.S. 51, 57, 100 S.Ct. 318, 323, 62 L.Ed.2d 210 (1979) ("[I]t is particularly relevant that Congress ... twice reviewed and amended the statute without rejecting" an established precedent).

. In footnote 35, the majority suggests a definition of the contemporary legal context of a statute that would require Congress to peer into a crystal ball and predict Touche Ross and other developments in the law. Such a definition, if adopted, would wholly distort the meaning of Curran. In portraying the legal context of the CEA, the Supreme Court restricted its discussion to the routine and consistent prior authority approving an implied cause of action under that Act, and under that Act alone. 456 U.S. at 378-82, 102 S.Ct. at 1839-41.

. See Piper, 430 U.S. at 41-42, 97 S.Ct. at 949-950 (observing that preliminary injunctive relief rather than damages would better fulfill the purposes of the Williams Act); Steinberg, The Propriety and Scope of Cumulative Remedies Under the Federal Securities Laws, Cl Cornell L.Rev. 557, 596-97 (1982); Aranow, Einhorn & Berlstein, Standing to Sue to Challenge Violations of the Williams Act, 32 Bus.Law. 1755, 1763 (1977).

. Nor do the Commission investigative powers vested in section 21 of the Act, 15 U.S.C. § 78u, preclude judicial implication of private relief. Only last year the Court in the context of section 10(b) observed:
We also reject application of the maxim of statutory construction, expressio unius est ex-clusio alteráis.... As we stated in SEC v. Joiner Corp., 320 U.S. 344, 350-351, 64 S.Ct. 120, 123, 88 L.Ed. 88 (1943), such canons "long have been subordinated to the doctrine that courts will construe the details of an act in conformity with its dominating general purpose.” See generally Silver v. New York Stock Exchange, 373 U.S. 341, 357, 83 S.Ct. 1246, 1257, 10 L.Ed.2d 389 (1963) (favoring “an analysis which reconciles the operation of both statutory schemes with one another rather than holding one completely ousted”). We believe the maxim cannot properly be applied to a situation where the remedies redress different misconduct and where the remedial purposes of the Acts would be undermined by a presumption of exclusivity.
Huddleston, 459 U.S. at 387 n. 23, 103 S.Ct. at 690 n. 23. The Court made further note of section 28(a) of the 1934 Act, 15 U.S.C. § 78bb(a), which states that the express remedies of the Act are to be supplemented by "any and all” additional remedies. Id. at 383, 103 S.Ct. at 688.
Importantly, section 21 predates the Williams Act by thirty-four years. There is no indication that Congress in enacting the Williams Act envisioned section 21 as the sole remedy for violations of section 13(d).

. In Rondeau, for example, the Supreme Court assumed without deciding that injunctive relief in favor of the issuer would serve the goal of neutrality which is "directed toward ... the protection of investors." Piper, 430 U.S. at 29, 97 S.Ct. at 943. The decision in Piper does not detract from Rondeau because Piper's holding by its terms is limited to denying standing to competing offerors suing for damages under section 14(e). Id. at 42 n. 28, 97 S.Ct. at 949 n. 28.