Commercial Litigation and Arbitration

Legal Standards Governing the Creation of Private Rights of Action by Statute

From Logan v. U.S. Bank N.A., 2010 U.S. Dist. LEXIS 46314 (C.D. Cal. April 12, 2010):

A statute explicitly creates a private right of action when the statute contains language that defines a cause of action. *** Statutes that expressly provide for a private right of action identify the person(s) able to bring suit, those that are potentially liable, the forum for suit, and the potential remedy available. See Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 166 (2008) (holding that 15 U.S.C. § 77k provides an express private right of action because it says that "any person acquiring such security . . . may, either at law or in equity, in any court of competent jurisdiction, sue . . . every person who signed the registration statement. . ."); Murphey v. Lanier, 204 F.3d 911, 912 (9th Cir. 2000) ("The statute provides for an explicit private right of action for an injunction or damages: A person or entity may . . . bring in an appropriate court of that State (A) an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation, (B) an action to recover for actual monetary loss from such a violation, or to receive $ 500 in damages for each such violation, whichever is greater, or (C) both such actions"). When a statute "does not mention the availability of any action to enforce its mandates, nor [does it]. . . explicitly describe a forum in which suit may be brought or a plaintiff for whom such a forum is available," the statute does not contain an express private right of action. ***

If a statute does not create an express private right of action, a court will examine whether the statute implies such a right. See Cort v. Ash, 422 U.S. 66, 78 (1975), overruled in part by Touche Ross & Co. v. Redington, 442 U.S. 560 (1979). In Cort, the Supreme Court set forth four factors that are relevant when determining whether a statute provides an implied right of action: (1) whether the plaintiff is a member of a class for whose benefit that statute was enacted; (2) whether there is an indication of Congress's intent to create or deny a private remedy; (3) whether a private remedy would be consistent with the statute's underlying purposes; and (4) whether the cause of action traditionally is relegated to state law. 422 U.S. at 78. The Supreme Court subsequently made clear, however, that the second factor carries more weight than the others because "[t]he central inquiry remains whether Congress intended to create, either expressly or by implication, a private cause of action." Touche, 442 U.S. at 575. See also Thompson v. Thompson, 484 U.S. 174, 189 (1988) (Scalia, J., concurring) ("[W]e effectively overruled the Cort v. Ash analysis in [Touche Ross], . . . converting one of its four factors (congressional intent) into the determinative factor").

To determine whether a private right of action was intended under a given statute, courts employ the analysis set forth by the Supreme Court in Alexander v. Sandoval, 532 U.S. 275 (2001). In Sandoval, which involved the interpretation of Title VI of the Civil Rights Act of 1964, the Court observed that "[l]ike substantive federal law itself, private rights of action to enforce federal law must be created by Congress." 532 U.S. at 286. Unless the statute in question evinces an intent to create a private remedy, "a cause of action does not exist and courts may not create one, no matter how desirable that might be as a policy matter, or how compatible with the statute." Id. at 287. Thus, statutory intent is determinative. Id. at 286. The Ninth Circuit has held, in fact, that courts need not evaluate the remaining Cort factors if they conclude that Congress did not intend to create a private right of action. Stupy v. United States Postal Service, 951 F.2d 1079, 1081 (9th Cir. 1991).

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