Implied Cause of Action - Statutory Causes of Action

Statutory Causes of Action

An implied private right of action is not a cause of action which a statute expressly creates. Rather, a court interprets the statute to silently include such a cause of action. Over the past half century, the Supreme Court "has taken three different approaches, each more restrictive than the prior, in deciding when to create private rights of action."

In J.I. Case Co. v. Borak (1964), a case under the Securities Exchange Act of 1934, the Court, examining the statute's legislative history and looking at what it believed were the purposes of the statute, held that a private right of action should be implied under § 14(a) of the Act. Under the circumstances, the Court said, it was "the duty of the courts to be alert to provide such remedies as are necessary to make effective the congressional purpose."

In Cort v. Ash (1975), the issue was whether a civil cause of action existed under a criminal statute prohibiting corporations from making contributions to a presidential campaign. The Court said that no such action should be implied, and laid down four factors to be considered in determining whether a statute implicitly included a private right of action:

1. Whether the plaintiff is part of the class of persons "for whose especial benefit" the statute was enacted,
2. Whether the legislative history suggests that Congress intended to create a cause of action,
3. Whether granting an implied cause of action would support the underlying remedial scheme set down in the statute, and
4. Whether the issue would be one that is traditionally left to state law.

The Supreme Court used the four-part Cort v. Ash test for several years, and in applying the test, "or the most part, the Court refused to create causes of action." An important application of the test, however, came in Cannon v. University of Chicago (1979), which recognized an implied private right of action. There, a plaintiff sued under Title IX of the Education Amendments of 1972, which prohibited sex discrimination in any federally funded program. The Court, stating that the female plaintiff was within the class protected by the statute, that Congress had intended to create a private right of action to enforce the law, that such a right of action was consistent with the remedial purpose Congress had in mind, and that discrimination was a matter of traditionally federal and not state concern. Justice Powell, however, dissented and criticized the Court's approach to implied rights of action, which he said was incompatible with the doctrine of separation of powers. It was the job of Congress, not the federal courts, Justice Powell said, to create causes of action. Therefore the only appropriate analysis was whether Congress intended to create a private right of action. "Absent the most compelling evidence of affirmative congressional intent, a federal court should not infer a private cause of action."

Very shortly after Cannon was decided, the Court adopted what legal scholars have called a new approach to the issue in Touche Ross & Co. v. Redington (1979). At issue was an implied right under another section of the Securities Exchange Act of 1934, and the Court said that the first three factors mentioned in Cort v. Ash were simply meant to be "relied upon in determining legislative intent." "The ultimate question," the Court concluded, "is one of legislative intent, not one of whether this Court thinks that it can improve upon the statutory scheme that Congress enacted into law." Justice Scalia and Justice O'Connor have stated that they believe Touche Ross effectively overruled the older Cort v. Ash test.