''Cort v. Ash'', 422 U.S. 66 (1975), was a case in which the
United States Supreme Court
The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...
determined whether a court may
imply a cause of action from a criminal statute.
Background
Defendant
In court proceedings, a defendant is a person or object who is the party either accused of committing a crime in criminal prosecution or against whom some type of civil relief is being sought in a civil case.
Terminology varies from one jurisdic ...
/petitioner Stewart S. Cort, chairman of the
board of directors
A board of directors (commonly referred simply as the board) is an executive committee that jointly supervises the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit organiz ...
of
Bethlehem Steel Corporation
The Bethlehem Steel Corporation was an American steelmaking company headquartered in Bethlehem, Pennsylvania. For most of the 20th century, it was one of the world's largest steel producing and shipbuilding companies. At the height of its succe ...
, published a series of political advertisements in nineteen local newspapers where the company had plants, as well as several national publications (including
Time
Time is the continued sequence of existence and events that occurs in an apparently irreversible succession from the past, through the present, into the future. It is a component quantity of various measurements used to sequence events, t ...
,
Newsweek
''Newsweek'' is an American weekly online news magazine co-owned 50 percent each by Dev Pragad, its president and CEO, and Johnathan Davis, who has no operational role at ''Newsweek''. Founded as a weekly print magazine in 1933, it was widely ...
, and
U.S. News & World Report). The advertisements were in support of the business community, asserting that an allegation (supposedly made by 1972 Presidential candidate
George McGovern
George Stanley McGovern (July 19, 1922 – October 21, 2012) was an American historian and South Dakota politician who was a U.S. representative and three-term U.S. senator, and the Democratic Party presidential nominee in the 1972 p ...
) that big business was not paying its fair share of
taxes
A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...
was untrue, and suggesting that people mobilize “truth squads” to spread this idea. The funding for these ads came from Bethlehem's general corporate funds.
The
plaintiff/respondent was a shareholder of Bethlehem, and a qualified voter. He sued in the
, on behalf of both himself and the
corporation (a
derivative suit A shareholder derivative suit is a lawsuit brought by a shareholder on behalf of a corporation against a third party. Often, the third party is an insider of the corporation, such as an executive officer or director. Shareholder derivative suits ar ...
). He sued under both (a
criminal statute forbidding corporations from making contributions or expenditures in connection with Presidential elections), and the
corporate law of the state of
Delaware
Delaware ( ) is a state in the Mid-Atlantic region of the United States, bordering Maryland to its south and west; Pennsylvania to its north; and New Jersey and the Atlantic Ocean to its east. The state takes its name from the adjacent Del ...
. He then amended his complaint to drop the state law claim, after he declined to post
$35,000 in security for expenses in order to proceed with the claim.
The District Court held that the criminal penalties of the federal statute did not include any private
cause of action
A cause of action or right of action, in law, is a set of facts sufficient to justify suing to obtain money or property, or to justify the enforcement of a legal right against another party. The term also refers to the legal theory upon which a p ...
, and granted
summary judgment
In law, a summary judgment (also judgment as a matter of law or summary disposition) is a judgment entered by a court for one party and against another party summarily, i.e., without a full trial. Summary judgments may be issued on the merits of a ...
for the defendant. The plaintiff appealed. The
United States Court of Appeals for the Third Circuit
The United States Court of Appeals for the Third Circuit (in case citations, 3d Cir.) is a federal court with appellate jurisdiction over the district courts for the following districts:
* District of Delaware
* District of New Jersey
* E ...
reversed, holding that because the plaintiff sought money damages for the corporation, that a private cause of action was proper.
Issue
Could the court properly assume a private
cause of action
A cause of action or right of action, in law, is a set of facts sufficient to justify suing to obtain money or property, or to justify the enforcement of a legal right against another party. The term also refers to the legal theory upon which a p ...
for damages against corporate directors under 18 U.S.C. § 610?
Decision
Justice
William J. Brennan
William Joseph "Bill" Brennan Jr. (April 25, 1906 – July 24, 1997) was an American lawyer and jurist who served as an Associate Justice of the Supreme Court of the United States from 1956 to 1990. He was the seventh-longest serving justice ...
wrote for a unanimous Court. He found that because § 610 was a criminal statute, and because at the time suit was filed, there was no provision for civil enforcement of the statute, there was no need to imply a private cause of action. Furthermore, a statute enacted in 1974 amended the
Federal Election Campaign Act
The Federal Election Campaign Act of 1971 (FECA, , ''et seq.'') is the primary United States federal law regulating political campaign fundraising and spending. The law originally focused on creating limits for campaign spending on communicatio ...
to create the
Federal Election Commission
The Federal Election Commission (FEC) is an independent regulatory agency of the United States whose purpose is to enforce campaign finance law in United States federal elections. Created in 1974 through amendments to the Federal Election Camp ...
, which was granted primary
jurisdiction
Jurisdiction (from Latin 'law' + 'declaration') is the legal term for the legal authority granted to a legal entity to enact justice. In federations like the United States, areas of jurisdiction apply to local, state, and federal levels.
Jur ...
over such complaints. Because of this intervening law, the Court chose to apply the law which was in effect at the time the case was commenced.
Brennan also laid out four factors for determining when a cause of action should be implied from a statute:
#Is the plaintiff within the class for whose benefit the
statute
A statute is a formal written enactment of a legislative authority that governs the legal entities of a city, state, or country by way of consent. Typically, statutes command or prohibit something, or declare policy. Statutes are rules made by l ...
was enacted (i.e., does the statute create a federal right in the plaintiff's favor)?
#Is there any indication of
legislative intent
In law, the legislative intent of the legislature in enacting legislation may sometimes be considered by the judiciary to interpret the law (see judicial interpretation). The judiciary may attempt to assess legislative intent where legislation ...
, explicit or implicit, either to create or deny a cause of action?
#Is it consistent with the underlying purposes of legislative scheme to imply such a remedy for the plaintiff?
#Is the cause of action one traditionally relegated to state law, in an area specifically of concern to the states, so that it would be inappropriate to infer a cause of action based solely on federal law?
422 U.S. at 78.
Here, the Court found that there was no legislative indication that private cause of action was intended by Congress, or that the plaintiffs in this action were within the class sought to be benefited by the statute. Brennan commented that the intent to protect corporate shareholders “was at best a subsidiary purpose” of the statute. 422 U.S. at 80. He also found that implying a cause of action was inconsistent with the statute's purpose, and that the plaintiff had a remedy under state corporate law. Thus, the Third Circuit's decision was overturned.
These factors were also used in the case of ''
Cannon v. University of Chicago'', .
See also
*
List of United States Supreme Court cases, volume 422
External links
*{{caselaw source
, case = ''Cort v. Ash'', {{ussc, 422, 66, 1975, el=no
, courtlistener =https://caselaw.findlaw.com/us-supreme-court/422/66.html
, justia =https://supreme.justia.com/cases/federal/us/422/66/
, loc =http://cdn.loc.gov/service/ll/usrep/usrep422/usrep422066/usrep422066.pdf
, oyez =https://www.oyez.org/cases/1974/73-1908
United States Supreme Court cases
Implied statutory cause of action case law
1975 in United States case law
United States Supreme Court cases of the Burger Court