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Cort v. Ash - 422 U.S. 66, 95 S. Ct. 2080 (1975)

Rule:

In determining whether a private remedy is implicit in a statute not expressly providing one, several factors are relevant. First, is the plaintiff one of the class for whose especial benefit the statute was enacted, that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff. And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the states, so that it would be inappropriate to infer a cause of action based solely on federal law?

Facts:

After the directors of a corporation had authorized the use of corporate funds to finance the cost of advertisements made in connection with the 1972 presidential election, one of the stockholders brought a two-count action against the directors in the United States District Court for the Eastern District of Pennsylvania to obtain injunctive relief against further corporate expenditures in connection with the 1972 election or any future campaign, and to obtain compensatory and punitive damages in favor of the corporation. One of the counts alleged federal jurisdiction in the District Court and asserted a private claim for relief under 18 U.S.C.S. § 610--a criminal statute prohibiting corporations from making contributions or expenditures in connection with federal elections. Following the District Court's denial of a preliminary injunction and an affirmance of the ruling by the United States Court of Appeals for the Third Circuit, there were subsequent proceedings in the District Court at which the stockholder filed an amended complaint. Summary judgment for the defendant directors was granted, but the United States Court of Appeals for the Third Circuit reversed, holding that since the amended complaint sought damages on behalf of the corporation for violation of § 610, the controversy was not moot, although the election which occasioned it was over, and that a private cause of action, whether brought by a citizen to secure injunctive relief or by a stockholder to secure injunctive or derivative damage relief, was proper to remedy the violation of § 610.

Issue:

Did the Court of Appeals err in holding that a private cause of action was authorized for a violation of § 610?

Answer:

Yes

Conclusion:

On certiorari, the Supreme Court of the United States held that the injunctive relief sought as to future elections was not available due to the amendment of § 610 by the Federal Election Campaign Act Amendments of 1974, which established an administrative procedure for processing complaints of alleged violations of § 610 and relegated to the Federal Election Commission authority to grant injunctive relief. Reversing, the Court further held that recognition of a federal right to seek relief on behalf of a corporation under § 610 would intrude into regulation of corporations, an area traditionally committed to state law, without aiding the main purpose of § 610, which was to limit the impact of corporations on federal elections.

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