OCTOBER TERM, 1992
Syllabus
MUSICK, PEELER & GARRETT ET AL.
v. EMPLOYERS
INSURANCE OF WAUSAU ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH
CIRCUIT
No. 92-34. Argued March 1, 1993-Decided June 1, 1993
Respondents insured most of the named defendants in a suit that,
inter alia, was based on an implied private right of action
under § 10(b) of the Securities Exchange Act of 1934 and Rule lOb-5
of the Securities and Exchange Commission (a 10b-5 action), and
that eventually was settled by the parties. After funding $13
million of the settlement, respondents brought this lawsuit seeking
contribution from petitioners, who were the attorneys and
accountants involved in the stock offering that prompted the lOb-5
action. Both the District Court and the Court of Appeals,
consistent with binding Circuit precedent, recognized that
respondents had a right to seek contribution for the lOb-5
liability. Shortly after the latter court ruled in respondents'
favor, however, the Court of Appeals for the Eighth Circuit held
that there can be no implied cause of action for contribution in a
lOb-5 action.
Held: Defendants in a 10b-5 action have a right to seek
contribution as a matter of federal law. Pp. 290-298.
(a) Federal courts have authority to imply a right to
contribution in a 10b-5 action.
Northwest Airlines, Inc. v.
Transport Workers, 451 U. S. 77,
Texas Industries,
Inc. v.
Radcliff Materials, Inc., 451 U. S. 630, and the
precedents on which they are based, distinguished. The 10b-5 action
was not created by Congress, but was implied by the judiciary. The
courts having implied the underlying liability in the first place,
it would be most unfair to those against whom damages have been
assessed for the courts to now disavow authority to allocate that
liability on the theory that Congress has not addressed the issue
directly. Congress has recognized a judicial authority to shape,
within limits, the lOb-5 cause of action when, in enacting the
Insider Trading and Securities Fraud Enforcement Act of 1988 and a
statute respecting lOb-5 limitations periods, it included
provisions acknowledging the 10b-5 action without expressing any
intent to define it. Congress has left that task to the courts. pp.
290-294.
(b) A right to contribution is within the contours of the 10b-5
action.
In order to ensure that the rules established to govern such
actions are symmetrical and consistent with the 1934 Act's overall
structure and objectives, the Court must attempt to infer how the
1934 Congress would have addressed the issue of contribution had it
included the 10b-5
287
private right of action as an express provision in the Act. See,
e. g.,
Lamp!, Pleva, Lipkind, Prupis &
Petigrow v.
Gilbertson, 501 U. S. 350, 359. Two
sections of the 1934 Act containing express private rights of
action, §§ 9 and 18, are close in structure, purpose, and intent to
the lOb-5 action, and each explicitly provides for a right of
contribution. See 15 U. S. C. §§ 78i(e) and 78r(b). Consistency and
coherence therefore require that a like contribution rule be
adopted for lOb-5 actions. Moreover, there is no evidence this rule
will impede the purposes of the lOb-5 action; in the more than 20
years since the federal courts first recognized a right to
contribution for 10b-5 defendants, there has been no showing that
the right detracts from the effectiveness of the lOb-5 implied
action or interferes with the effective operation of the securities
laws. Pp. 294-298.
954 F.2d
575, affirmed.
KENNEDY, J., delivered the opinion of the Court, in which
REHNQUIST, C. J., and WHITE, STEVENS, SCALIA, and SOUTER, JJ.,
joined. THOMAS, J., filed a dissenting opinion, in which BLACKMUN
and O'CONNOR, JJ., joined,
post, p. 298.
Charles A. Bird argued the cause for petitioners. With him on
the brief were Robert G. Steiner, Alvin M. Stein, and Mark 1.
Schlesinger.
Theodore B. Olson argued the cause for respondents. Lawrence H.
Nagler, Nanci E. Murdock, Robert M. Zabb, and Darrin F. Meyer filed
a brief for respondents Employers Insurance of Wausau et al. Andrew
J. Pincus, Kenneth S. Geller, William J. Reifman, Michael A. Vatis,
Leonard P. Novello, Richard 1. Miller, and Dean 1. Ringel filed a
brief for respondents Peat Marwick Main & Co. et al.
Robert A. Long, Jr., argued the cause for the Securities and
Exchange Commission as amicus curiae urging affirmance. With him on
the brief were Acting Solicitor General Bryson, Deputy Solicitor
General Mahoney, Michael R. Dreeben, Paul Gonson, Jacob H.
Stillman, Eric Summergrad, and Judith R. Starr. *
* Paul F. Bennett, David B. Gold, William S. Lerach, and Kevin
P.
Roddy filed a brief for the National Association of
Securities and Commercial Law Attorneys as
amicus curiae
urging reversal.
Briefs of
amici curiae urging affirmance were filed for
the American Institute of Certified Public Accountants by
Louis
A. Craco and
Russell
288
JUSTICE KENNEDY delivered the opinion of the Court. Where there
is joint responsibility for tortious conduct, the question often
arises whether those who compensate the injured party may seek
contribution from other joint tortfeasors who have paid no damages
or paid less than their fair share. In this case we must determine
whether defendants in a suit based on an implied private right of
action under § 10(b) of the Securities Exchange Act of 1934 and
Rule 10b-5 of the Securities and Exchange Commission (a 10b-5
action) may seek contribution from joint tortfeasors. Without
addressing the merits of the claim for contribution in this case,
we hold that defendants in a 10b-5 action have a right to seek
contribution as a matter of federal law.
I
Cousins Home Furnishings, Inc., made a public offering of its
stock in December 1983. The stock purchasers later brought a class
action against Cousins, its parent company, various officers and
directors of Cousins, and two lead underwriters. The plaintiffs
alleged the stock offering was misleading in material respects, in
violation of §§ 11 and 12 of the Securities Act of 1933 (1933 Act),
48 Stat. 82, 84, 15 U. S. C. §§ 77k and
77l, § 10(b) of the
Securities Exchange Act of 1934 (1934 Act), 48 Stat. 891, 15 U. S.
C. § 78j(b), and certain state laws. The named defendants settled
with the plaintiffs for $13.5 million. Respondents, who insured
most of the named defendants, funded $13 million of the settlement.
Subrogated to the rights of their insureds, respondents brought
this lawsuit seeking contribution from petitioners, who were the
attorneys and accountants involved in the public offering.
Respondents' complaint alleged these pro-
G. Ryan; for the First Boston Corporation et al. by Stuart J.
Baskin and Thomas S. Martin; and for the Securities Industry
Association by Barbara Moses, Sam Scott Miller, Barry S.
Augenbraun, and William A. Fitzpatrick.
289
fessionals had joint responsibility for the securities
violations and were liable for contribution under various theories,
including a right to contribution based on the 10b-5 action central
to the complaint in the original class suit.
In proceedings before the United States District Court for the
Southern District of California and the United States Court of
Appeals for the Ninth Circuit, the parties disputed the principles
for determining whether the insureds had paid more than their fair
share of liability in the class settlement, with scant attention
being paid to the underlying issue whether liability in a 10b-5
action is accompanied by any right to contribution at all. This
lack of attention is understandable, for the existence of the 10b-5
right to contribution is well established in the Ninth Circuit,
Smith v.
Mulvaney, 827 F.2d
558, 560 (1987), as well as in a number of other Circuits,
In re Jiffy Lube Securities Litigation, 927 F.2d
155, 160 (CA4 1991);
Sirota v.
Solitron Devices,
Inc., 673 F. 2d 566, 578 (CA2), cert. denied, 459 U. S. 838
(1982);
Huddleston v.
Herman &
MacLean,
640 F.2d
534, 557-559 (CA5 1981), aff'd in part, rev'd in part on other
grounds,
459 U. S.
375 (1983);
Heizer Corp. v.
Ross, 601 F.2d
330, 331-334 (CA71979).
Some three months after the Court of Appeals ruled in favor of
respondents,
954 F.2d
575 (CA9 1992), the United States Court of Appeals for the
Eighth Circuit created a conflict on the basic issue whether
defendants in a 10b-5 action have a right to contribution. In light
of our decisions on contribution in other areas of federal law, the
Eighth Circuit ruled that there can be no implied cause of action
for contribution in a 10b-5 action.
Chutich v.
Touche
Ross &
Co., 960 F. 2d 721, 724 (1992). Petitioners
requested that we resolve the conflict among the Circuits. We
granted their petition for a writ of certiorari on the sole
question presented:
"Whether federal courts may imply a private right to
contribution in Section 10(b) of the Securities Exchange Act of
290
1934 and Rule 10b-5 of the Securities [and] Exchange
Commission," Pet. for Cert. i. 506 U. S. 814 (1992).
II
Requests to recognize a right to contribution for defendants
liable under federal law are not unfamiliar to this Court. Twice we
have declined to recognize an action for contribution under federal
laws outside the arena of securities regulation. In
Northwest
Airlines, Inc. v.
Transport Workers, 451 U. S. 77 (1981), we
held that an employer had no right to contribution against unions
alleged to be joint participants with the employer in violations of
the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of
1964. Later that same Term, in
Texas Industries, Inc. v.
Radcliff Materials, Inc., 451 U. S. 630 (1981), we
determined that there is no right to contribution for recovery
based on violation of § 1 of the Sherman Act.
On the other hand, we endorsed a nonstatutory right to
contribution among joint tortfeasors responsible for injuring a
longshoreman in
Cooper Stevedoring Co. v.
Fritz Kopke,
Inc., 417 U. S.
106 (1974). We have been careful to note that
Cooper
does not stand for the proposition that there is a general right to
contribution under federal law.
Northwest Airlines, supra,
at 96-97. Indeed, the rule announced in
Cooper represented
an exercise of our authority to provide just and equitable remedies
for cases within our admiralty jurisdiction, a jurisdiction in
which the federal courts have had historic, well-recognized
responsibility for the elaboration of legal doctrine. See
United
States v.
Reliable Transfer Co., 421 U. S. 397, 409
(1975). For our purposes, therefore,
Cooper is less
instructive than our decisions in
Texas Industries and
Northwest Airlines. But the instruction we receive from the
latter two cases is that they are distinguishable from, rather than
parallel to, the matter now before us.
The federal interests in both
Texas Industries and
Northwest Airlines were defined by statutory provisions that
were
291
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, we asked whether Congress
"expressly or by clear implication" envisioned a contribution right
to accompany the substantive damages right created, id., at 638,
or, failing that, whether Congress "intended courts to have the
power to alter or supplement the remedies enacted,"
id., at
645. See also
Northwest Airlines, supra, at 91 and 97. 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
(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 (1992);
id., at 71 (SCALIA, J., concurring).
If
Texas Industries and
Northwest Airlines are not
controlling, petitioners tell us, then the precedents on which
those cases were based do control. Those authorities caution
against the creation of new causes of action.
Universities
Research Assn., Inc. v.
Coutu, 450 U. S. 754, 770
(1981);
Transamerica Mortgage Advisors, Inc. v.
Lewis, 444 U.
S. 11, 15-16 (1979);
Touche Ross &
Co. v.
Redington, 442
U. S. 560, 575-577 (1979). They teach that the creation of new
rights ought to be left to legislatures, not courts. And,
petitioners remind us, whether the right of a tortfeasor to seek
contribution from those who share, or ought to share, joint
liability is recognized by statute, see,
e. g., Cal. Civ.
Proc. Code Ann. §§ 875-880 (West 1980 and Supp. 1993); Tex. Civ.
Prac. & Rem. Code Ann. §§ 32.001 and 32.002 (1986), or
292
as a matter of common law, see,
e. g., Goldman v.
MitchellFletcher Co., 292 Pa. 354, 364-365, 141 A. 231,
234-235
(1928); Davis v.
Broad Street Garage, 191
Tenn. 320, 325, 232 S. W. 2d 355, 357 (1950), in both instances the
right is thought to be a separate or independent cause of action.
Cf.
Northwest Airlines, supra, at 87, n. 17; Restatement
(Second) of Torts § 886A (1979).
This argument, like the argument based on
Texas
Industries and
Northwest Airlines, 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.
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
293
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 (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 (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 (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").
We are not alone in recognizing a judicial authority to shape,
within limits, the 10b-5 cause of action. The existence of that
action, and our cumulative work in its design, have been obvious
legislative considerations in the enactment of two recent federal
statutes. The first is the Insider Trading and Securities Fraud
Enforcement Act of 1988, Pub. L. 100-704, 102 Stat. 4680, which
added the insider trading prohibition of § 20A to the 1934 Act. See
15 U. S. C. § 78t-1. Section 20A(d) states that "[n]othing in this
section shall be construed to limit or condition ... the
availability of any cause of action implied from a provision of
this title." The second statute is the recent congressional
enactment respecting limitations periods for 10b-5 actions.
Following our resolution two Terms ago of a difficult statute of
limitations issue for 10b-5 suits, see
Lampf, Pleva, Lipkind,
Prupis &
Petigrow v.
Gilbertson, 501 U. S. 350 (1991),
Congress intervened by limiting the retroactive effect of our
decision, and the caution in its intervention is instructive.
In
294
an approach parallel to the one it adopted for the insider
trading statute, Congress did no more than direct the applicable
"limitation period for any private civil action implied under
section 78j(b) of this title [§ 10(b) of the 1934 Act] that was
commenced on or before June 19, 1991 [the day prior to issuance of
Lampf, Pleva]." 15 U. S. C. § 78aa-1 (1988 ed., Supp.
III).
We infer from these references an acknowledgment of the 10b-5
action without any further expression of legislative intent to
define it. See
Herman &
MacLean v.
Huddleston, 459 U. S. 375, 384-386
(1983);
Merrill Lynch, Pierce, Fenner &
Smith,
Inc. v.
Curran, 456 U. S. 353, 378-382
(1982). Indeed, the latter statute, § 78aa-1, not only treats the
10b-5 action as an accepted feature of our securities laws, but
avoids entangling Congress in its formulation. That task, it would
appear, Congress has left to us.
III
We now turn to the question whether a right to contribution is
within the contours of the 10b-5 action. The parties have devoted
considerable portions of their briefs to debating whether a rule of
contribution or of no contribution is more efficient or more
equitable. Just as we declined to rule on these matters in
Texas
Industries and
Northwest Airlines, we decline to do so
here. Our 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. See
Lampf,
Pleva, supra, at 359;
Ernst &
Ernst v.
Hochfelder, 425 U. S. 185, 200-201
(1976). We do this not as an exercise in historical reconstruction
for its own sake, but to ensure that the rules established to
govern the 10b-5 action are symmetrical and consistent with the
overall structure of the 1934 Act and, in particular, with those
portions of the 1934 Act most analogous to the private 10b-5 right
of action that is of judicial creation. Although
295
we have narrowed our discretion in this regard over the years,
our goals in establishing limits for the 10b-5 action have remained
the same: to ensure the action does not conflict with Congress' own
express rights of action, id., at 210, to promote clarity,
consistency, and coherence for those who rely upon, or are subject
to, 10b-5 liability, cf.
Blue Chip Stamps, 421 U. S., at
737-744, and to effect Congress' objectives in enacting the
securities laws,
Santa Fe Industries, Inc. v.
Green,
430 U. S. 462,
477-478 (1977).
Inquiring about what a given Congress might have done, though
not a promising venture as a general proposition, does in this case
yield an answer we find convincing. It is true that the initial
step, drawing some inference of congressional intent from the
language of § 10(b) itself, id., at 472;
Ernst &
Ernst, supra, at 197, yields no answer. The text of § 10(b)
provides little guidance where we are asked to specify elements or
aspects of the 10b-5 apparatus unique to a private liability
arrangement, including a statute of limitations,
Lampf, Pleva,
supra, at 359, a reliance requirement,
Basic Inc. v.
Levinson, 485
U. S. 224, 243 (1988), a defense to liability,
Bateman
Eichler, Hill Richards, Inc. v.
Berner, 472 U. S. 299 (1985), or
a right to contribution. Having 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.
There are, however, two sections of the 1934 Act, §§ 9 and 18
(15 U. S. C. §§ 78i and 78r), that, as we have noted, are close in
structure, purpose, and intent to the 10b-5 action.
Lampf,
Pleva, supra, at 360-361. See also
Basic Inc., supra, at
243;
Bateman Eichler, supra, at 316, n. 28;
Ernst
&
Ernst, supra, at 209, n. 28. Each confers an explicit
right of action in favor of private parties and, in so doing,
discloses a congressional intent regarding the definition and
apportionment of liability among private parties. For two distinct
reasons, these express causes of action are of particular
significance in determining how Congress would have re-
296
solved the question of contribution had it provided for a
private cause of action under § 10(b). First, §§ 9 and 18 are
instructive because both "target the precise dangers that are the
focus of § 10(b),"
Lampf, Pleva, supra, at 360, and the
intent motivating all three sections is the same-"to deter fraud
and manipulative practices in the securities markets, and to ensure
full disclosure of information material to investment decisions,"
Randall v.
Loftsgaarden, 478 U. S. 647, 664
(1986).
Second, of the eight express liability provisions contained in
the 1933 and 1934 Acts, §§ 9 and 18 impose liability upon
defendants who stand in a position most similar to 10b-5 defendants
for the sake of assessing whether they should be entitled to
contribution. All three causes of action impose direct liability on
defendants for their own acts as opposed to derivative liability
for the acts of others; all three involve defendants who have
violated the securities law with scienter,
Ernst &
Ernst, supra, at 209, n. 28; all three operate in many
instances to impose liability on multiple defendants acting in
concert, 3 L. Loss, Securities Regulation 1739-1740, n. 178 (2d ed.
1961); and all three are based on securities provisions enacted
into law by the 73d Congress. The Acts' six other express liability
provisions, on the other hand, stand in marked contrast to the
implied § 10 remedy: § 15 of the 1933 Act (15 U. S. C. § 770) and §
20 of the 1934 Act (15 U. S. C. § 78t) impose derivative liability
only; §§ 11 and 12 of the 1933 Act (15 U. S. C. §§ 77k and 77l) and
§ 16 of the 1934 Act (15 U. S. C. § 78p) do not require scienter in
all instances, see
Ernst &
Ernst, supra, at 208;
Kern County Land Co. v.
Occidental Petroleum Corp.,
411 U. S. 582,
595 (1973); § 12 of the 1933 Act and § 16 of the 1934 Act do not
often create joint defendant liability, see
Pinter v.
Dahl, 486 U.
S. 622, 650 (1988);
Kern County, supra, at 591; and §
20A of the 1934 Act (15 U. S. C. § 78t-1) was not an original
liability provision in that Act, having been added to the
securities laws in 1988, see
Lampf, Pleva, 501 U. S., at
361.
297
Sections 9 and 18 contain nearly identical express provisions
for a right to contribution, each permitting a defendant to
"recover contribution as in cases of contract from any person who,
if joined in the original suit, would have been liable to make the
same payment." 15 U. S. C. §§ 78i(e) and 78r(b). These were
forward-looking provisions at the time. The course of tort law in
this century has been to reverse the old rule against contribution,
but this movement has been confined in large part to actions in
negligence. 3 F. Harper, F. James, & O. Gray, Law of Torts §
10.2, p. 42, and n. 10 (2d ed. 1986). The express contribution
provisions in §§ 9 and 18 were, and still are, cited as important
precedents because they permit contribution for intentional torts.
See id., § 10.2, p. 43, and n. 11; Ruder, Multiple Defendants in
Securities Law Fraud Cases, 120 U. Pa. L. Rev. 597, 650-651 (1972).
We think that these explicit provisions for contribution are an
important, not an inconsequential, feature of the federal
securities laws and that consistency requires us to adopt a like
contribution rule for the right of action existing under Rule
10b-5. Given the identity of purpose behind §§ 9, 10(b), and 18,
and similarity in their operation, we find no ground for ruling
that allowing contribution in 10b-5 actions will frustrate the
purposes of the statutory section from which it is derived.
Our conclusion is consistent with the rule adopted by the vast
majority of Courts of Appeals and District Courts that have
considered the question. See,
e. g., In re Jiffy Lube Securities
Litigation, 927 F. 2d, at 160;
Smith v.
Mulvaney,
827 F. 2d, at 560;
Sirota v.
Solitron Devices, Inc.,
673 F. 2d, at 578;
Huddleston v.
Herman &
MacLean, 640 F. 2d, at
557-559; Heizer Corp. v.
Ross, 601 F. 2d, at 331-334;
In re National Student
Marketing Litigation, 517 F. Supp. 1345, 1346-1349 (DC 1981);
B &
B Investment Club v.
Kleinert's, Inc.,
391 F. Supp. 720, 724 (ED Pa. 1975);
Globus, Inc. v.
Law
Research Service, Inc., 318 F. Supp. 955, 957-958 (SDNY 1970),
aff'd
per curiam, 442 F.2d
1346 (CA2), cert. denied,
298
THOMAS, J., dissenting
404 U. S. 941 (1971). We consider this to be of particular
importance because in the more than 20 years since a right to
contribution was first recognized for 10b-5 defendants,
DeHass v.
Empire Petroleum Co., 286 F. Supp. 809,
815-816 (Colo. 1968), aff'd in part, vacated in part on other
grounds,
435 F.2d
1223 (CAlO 1970), neither the Securities and Exchange
Commission nor the federal courts have suggested that the
contribution right detracts from the effectiveness of the 10b-5
implied action or interferes with the effective operation of the
securities laws. See Brief for the Securities and Exchange
Commission as
Amicus Curiae 25-26. 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.
IV
The judgment of the Court of Appeals is affirmed.
It is so ordered.
JUSTICE THOMAS, with whom JUSTICE BLACKMUN and JUSTICE O'CONNOR
join, dissenting.
In recognizing a private right to contribution under § 10(b) of
the Securities Exchange Act of 19341 and Securities and Exchange
Commission (SEC) Rule 10b-5,2 the Court unfortunately nourishes "a
judicial oak which has grown from little more than a legislative
acorn."
Blue Chip Stamps v.
Manor Drug Stores,
421 U. S. 723,
737 (1975). I respectfully dissent from the Court's decision to
cultivate this new branch of Rule 10b-5 law.
115 U. S. C. § 78j(b).
217 CFR § 240.lOb-5 (1992).
299
I
I agree with the Court's description of its mission as an
"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."
Ante, at 294. However, I do disagree with the
Court's chosen method for pursuing this difficult quest. The words
of § 10(b) and Rule 10b-5 scarcely "suggest that either Congress in
1934 or the Securities and Exchange Commission in 1942
foreordained" the existence of a private 10b-5 action.
Blue Chip
Stamps, 421 U. S., at 737. Despite our conceded inability "to
divine from the language of § 10(b) the express 'intent of
Congress,'"
ibid., we acquiesced in the lower courts'
consensus that an implied right of action existed under § 10(b) and
Rule 10b-5.
Superintendent of Ins. of N.
Y. v.
Bankers Life &
Casualty Co., 404 U. S. 6, 13, n. 9
(1971);
Affiliated Ute Citizens of Utah v.
United
States, 406 U. S.
128, 150-154 (1972). See
Kardon v.
National Gypsum
Co., 69 F. Supp. 512 (ED Pa. 1946). Such acquiescence was
"entirely consistent" with J.
1. Case Co. v.
Borak,
377 U. S. 426
(1964), which may have suggested a relatively permissive approach
to the recognition of implied rights of action.3
Blue Chip
Stamps, supra, at 730. Although we later "decline[d] to read
[Borak] so broadly that virtually every provision of the
securities Acts gives rise to an implied private cause of action,"
Touche Ross &
Co. v.
Redington, 442 U. S. 560, 577
(1979), we never repudiated the 10b-5 action.
We again have no cause to reconsider whether the 10b-5 action
should have been recognized at all. In summarizing its rationale,
the Court states: "Having 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
3 In
Borak, we recognized a private party's right "to
bring suit for violation of § 14(a) of the [1934] Act" even though
"Congress made no specific reference to a private right of action
in § 14(a)." 377 U. S., at 430-431.
300
THOMAS, J., dissenting
limit, compute, or allocate liability arising from it."
Ante, at 295. Though this statement is an adequate
description of how we came to infer the private right of action, it
is not an adequate defense of the Court's reasoning. Unlike the
majority, I do not assume that courts should accord different
treatment to implied rights of action whose recognition may have
been influenced by
Borak. How a particular private cause of
action may have emerged should not weaken our vigilance in the
subsequent interpretation and application of that action. Our
inquiries into statutory text, congressional intent, and
legislative purpose remain intact. We have consistently declined to
recognize an implied private cause of action "under the antifraud
provisions of the Securities Exchange Act ... where it is
'unnecessary to ensure the fulfillment of Congress' purposes' in
adopting the Act."
Santa Fe Industries, Inc. v.
Green, 430 U.
S. 462, 477 (1977) (quoting
Piper v.
Chris-Craft
Industries, Inc., 430 U. S. 1, 41 (1977)).
Accordingly, the 10b-5 action must be "judicially delimited one way
or another unless and until Congress addresses the question."
Blue Chip Stamps, supra, at 749. In the absence of any
compelling reason to allow contribution in private 10b-5 suits, we
should seek to keep "the breadth" of the 10b-5 action from
"grow[ing] beyond the scope congressionally intended."
Virginia
Bankshares, Inc. v.
Sandberg, 501 U. S. 1083, 1102
(1991).
The Court's abandonment of this restrained approach to implied
remedies stems from its mistaken assumption that a right to
contribution is a mere "elemen[t] or aspec[t]" of Rule 10b-5's
private liability apparatus.
Ante, at 295. Unlike a statute
of limitations, a reliance requirement, or a defense to liability,
however, contribution requires a wholly separate cause of action.
This case does not require us to define the elements of a 10b-5
claim or to clarify some other essential aspect of this liability
scheme. Rather, we are asked to determine whether a 10b-5 defendant
enjoys a distinct right to recover from a joint tortfeasor.
301
The recent decision in which we established a limitations period
for 10b-5 actions,
Lampf, Pleva, Lipkind, Prupis &
Petigrow v.
Gilbertson, 501 U. S. 350 (1991),
illustrates the difference that I find decisive. A limitations
period is almost indispensable to a scheme of civil liability; even
when federal law prescribes no express statute of limitations, we
will not ordinarily assume that Congress intended no time limit.
DelCostello v.
Teamsters, 462 U. S. 151, 158
(1983). Rather, we " 'borrow' the most suitable statute or other
rule of timeliness from some other source."
Ibid.
Contribution, by contrast, was generally unavailable at common law.
See
Union Stock Yards Co. of Omaha v.
Chicago, B.
& Q.
R. Co., 196 U. S. 217, 224
(1905). Those jurisdictions that have seen fit to provide
contribution have usually done so by resort to legislation.
Northwest Airlines, Inc. v.
Transport Workers,
451 U. S. 77,
87-88, and n. 17 (1981);
Texas Industries, Inc. v.
Radcliff Materials, Inc., 451 U. S. 630, 634
(1981). A court that recognizes an implied right to contribution
must endorse a remedy contrary to the common law and perhaps even
the legislative policy of the relevant jurisdiction.
Lampf, Pleva and like cases thus offer scant guidance
when the question is not whether a right to contribution is an
appropriate incident of the 10b-5 action, but whether congressional
intent or federal common law justifies an expansion of the class
entitled to enforce § 10(b) and Rule 10b-5 through private
lawsuits. In conducting this inquiry, we cannot safely rely on
Congress' design of distinct statutory provisions. Indeed,
inappropriate extension of 10b-5 liability would "nullify the
effectiveness of the carefully drawn ... express actions" that
Congress has provided through other sections of the 1934 Act.
Ernst &
Ernst v.
Hochfelder, 425 U. S. 185, 210
(1976). However proper it may be to examine related portions of the
Act when fleshing out details of the core 10b-5 action, see
Lampf, Pleva, 501 U. S., at 359; id., at 365-366 (SCALIA,
J., concurring in part and concurring in judgment), the Court errs
in placing disposi-
302
THOMAS, J., dissenting
tive weight on the existence of contribution rights under §§ 9
and 18 of the Act. See
ante, at 296-298.
The proper analysis flows from our well-established approach to
implied causes of action in general and to implied rights of
contribution in particular. When deciding whether a statute confers
a private right of action, we ask whether Congress-either expressly
or by implication-intended to create such a remedy.
Touche
Ross, 442 U. S., at 575;
Transamerica Mortgage Advisors,
Inc. v.
Lewis, 444 U. S. 11, 1516, 24
(1979). Where Congress did not expressly create a contribution
remedy, we may infer that Congress nevertheless intended by clear
implication to confer a right to contribution.
Texas Industries,
supra, at 638;
Northwest Airlines, supra, at 90. Through
the exercise of their power to craft federal common law, federal
courts may also fashion a right to contribution.
Texas
Industries, supra, at 638;
Northwest Airlines, supra, at
90.
Application of this familiar analytical framework compels me to
conclude that there is no right to contribution under § 10(b) and
Rule 10b-5. With respect to fashioning a common-law right to
contribution, the Court readily and correctly concludes that the
right to contribution recognized in
Cooper Stevedoring Co.
v.
Fritz Kopke, Inc., 417 U. S. 106 (1974), has
no bearing on the availability of contribution under the elaborate
federal statutory scheme governing purchases and sales of
securities.
Ante, at 290. See also
Texas Industries,
supra, at 640-646;
Northwest Airlines, supra, at 95-98.
This case therefore depends exclusively on the interpretation of §
10(b) and Rule 10b-5.
II
"'The starting point in every case involving construction of a
statute is the language itself.'''
Ernst &
Ernst,
supra, at 197 (quoting
Blue Chip Stamps, 421 U. S., at
756 (Powell, J., concurring)). Nothing in the words of § 10(b) and
Rule
303
10b-5 suggests that joint tortfeasors should enjoy a right to
contribution. Section 10(b) makes it
"unlawful for any person ...
" ... To use or employ, in connection with the purchase or sale
of any security registered on a national securities exchange or any
security not so registered, any manipulative or deceptive device or
contrivance in contravention of such rules and regulations as the
Commission may prescribe as necessary or appropriate in the public
interest for the protection of investors." 15 U. S. C. §
78j(b).
Rule 10b-5 recasts this proscription in similar terms:
"I t shall be unlawful for any person ...
"(a) To employ any device, scheme, or artifice to defraud,
"(b) To make any untrue statement of a material fact or to omit
to state a material fact necessary in order to make the statements
made, in the light of the circumstances under which they were made,
not misleading, or
"(c) To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any person,
"in connection with the purchase or sale of any security." 17
CFR § 240.10b-5 (1992).
The sweeping words of § 10(b) and Rule 10b-5 ban manipulation,
deception, or fraud in the purchase or sale of securities. "[A]ny
person" who engages in such activity merits condemnation under the
statute and the rule. Far from being entitled to seek the
protection of § 10(b) and Rule 10b-5, joint tortfeasors must
confess that these provisions were "expressly directed ... to
regulate their conduct for the benefit" of others.
Northwest
Airlines, supra, at 92.
304
THOMAS, J., dissenting
N either enactment suggests that Congress or the SEC intended to
"softe[n] the blow on joint wrongdoers" by permitting contribution.
Texas Industries, supra, at 639. Quite the contrary: As
private actors "whose activities Congress [and the SEC] intended to
regulate for the protection and benefit of an entirely distinct
class," joint tortfeasors "can scarcely lay claim to the status of
'beneficiary'" under § 10(b) and Rule 10b-5.
Piper v.
Chris-Craft Industries, 430 U. S., at 37.
The "underlying ... structure of the [1934 Act's] statutory
scheme" also negates the existence of a 10b-5 contribution action.
Northwest Airlines, 451 U. S., at 91. The Court notes the
presence of express contribution rights under §§ 9 and 18 of the
Act, but it misconstrues the significance of these provisions. See
ante, at 296-298. The ability to legislate express
contribution remedies under the 1934 Act applies with no less force
to § 10(b) than to §§ 9 and 18. "When Congress wished to provide a
[contribution] remedy ... it had little trouble in doing so
expressly."
Blue Chip Stamps, supra, at 734. Nor has
Congress lacked opportunities to modify the 10b-5 action. Within
the last five years, Congress has both preserved and altered the
10b-5 action through amendments to the 1934 Act. Compare Insider
Trading and Securities Fraud Enforcement Act of 1988, Pub. L.
100-704, § 5, 102 Stat. 4681 (stating that nothing in a new
provision prohibiting insider trading "shall be construed to limit
or condition ... the availability of any cause of action implied
from a provision of this title"), with 15 U. S. C. § 78aa-1 (1988
ed., Supp. III) (altering the retroactive effect of the 10b-5
limitations period that we adopted in
Lampf, Pleva, Lipkind,
Prupis &
Petigrow v.
Gilbertson, 501 U. S. 350 (1991)).
See generally
ante, at 293-294. Had Congress intended 10b-5
defendants to sue joint tortfeasors, a single enactment could have
given effect to this policy. Congress' failure to act does not
justify further judicial elaboration of the 10b-5 action.
305
Moreover, contribution is inconsistent with our established
views of the 10b-5 action. In
Blue Chip Stamps, supra, we
held that only actual purchasers and sellers of securities are
entitled to press private 10b-5 suits. We based this conclusion
largely on the language of § 10(b) and Rule 10b-5, which by their
terms govern only "the purchase or sale of any security." See 421
U. S., at 731-732; id., at 756-757 (Powell, J., concurring). The
merits of a contribution action in this case would turn on whether
"the attorneys and accountants involved in [a] public offering"
bore "joint responsibility for ... securities violations."
Ante, at 288-289. Even if a court were to acknowledge
respondents' status as the subrogees of securities sellers, the
contribution action would be at least one level removed from the
underlying exchange of securities.
Blue Chip Stamps'
requirement of actual purchase or sale would virtually evaporate in
a contribution dispute embroiling only separate groups of
professionals who had merely advised or facilitated a tainted
securities transaction. The rule adopted today thus undermines not
only the discernible intent of Congress and the SEC, but also our
own elaboration of this regulatory scheme. Such are the risks that
inhere in the "hazardous enterprise" of recognizing a private right
of action despite congressional silence.
Touche Ross, 442 U.
S., at 571.
III
Once again we have been invited to join a "vigorous debate over
the advantages and disadvantages of contribution and various
contribution schemes."
Texas Industries, 451 U. S., at 638.
Consistent with our prior practice, I would adhere to the task of
resolving the "dispositive threshold question: whether courts have
the power to create ... a cause of action absent legislation."
Ibid. Whether the answer to that question is "most unfair"
to those who litigate private 10b-5 actions,
ante, at 292,
is irrelevant. Courts should not treat legislative and
administrative silence as a tacit license to accomplish what
Congress and the SEC are unable or unwill-
306
THOMAS, J., dissenting
ing to do. In their current condition, § lO(b) and Rule lOb-5
afford no right to contribution. Congress has been, and remains
free to, alter this state of affairs. Accordingly, I respectfully
dissent.
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