Cort v. Ash,
Annotate this Case
422 U.S. 66 (1975)
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U.S. Supreme Court
Cort v. Ash, 422 U.S. 66 (1975)
Cort v. Ash
Argued March 18, 1975
Decided June 17, 1975
422 U.S. 66
Respondent stockholder brought this action seeking damages in favor of petitioner Bethlehem Steel Corp., a Delaware corporation, and injunctive relief because of advertisements in connection with the 1972 Presidential election that petitioner corporate directors had authorized from general corporate funds in alleged violation of 18 U.S.C. § 610, which prohibits corporations from making contributions or expenditures in connection with specified federal elections. Respondent alleged jurisdiction under 28 U.S.C. § 1331, and sought to state a private claim for relief under 18 U.S.C. § 610, and also invoked pendent jurisdiction for an ultra vires claim under Delaware law. The District Court's denial of a preliminary injunction was upheld on appeal, following which respondent dropped the pendent claim rather than post security for expenses under state law before proceeding with that claim. The District Court then granted petitioners' motion for summary judgment. The Court of Appeals reversed, holding that the passage of the election had not mooted the case, since damages were sought, 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 [is] proper to remedy violation of § 610."
After the Court of Appeals decision Congress enacted the Federal Election Campaign Act Amendments of 1974 (hereinafter the Amendments), under which, inter alia, the Federal Election Commission can receive citizen complaints of statutory violations and, where warranted, request the Attorney General to seek injunctive action.
1. The Amendments constitute an intervening law that relegates to the Commission's cognizance respondent's complaint as citizen or stockholder for injunctive relief against any alleged violations of § 610 in future elections, since this Court must examine this case according to the law existing at the time of its decision. United States v. Schooner Peggy, 1 Cranch 103, 5 U. S. 110; Bradley v. Richmond School Board, 416 U. S. 696, 416 U. S. 711. Pp. 422 U. S. 74-77.
2. Respondent stockholder's derivative suit with regard to the alleged 1972 violation cannot be implied under 18 U.S.C. § 610, and respondent's remedy, if any, must be under Delaware's corporation law. Pp. 422 U. S. 77-85.
(a) Section 610 was primarily concerned not with the internal relations between corporations and stockholders, but with corporations as a source of aggregated wealth, and therefore of potential corrupting influence; thus, this statute differs from other criminal statutes in which private causes of action have been inferred because of a clearly articulated federal right in the plaintiff, e.g., Bivens v. Six Unknown Federal Narcotics Agents, 403 U. S. 388, or a pervasive legislative scheme governing the relationship between the plaintiff class and the defendant class in a particular regard, e.g., J. I. Case Co. v. Borak, 377 U. S. 426. Pp. 422 U. S. 78-82.
(b) The legislative history of § 610 suggests no congressional intention to vest in corporate shareholders a federal right to damages for a violation of the statute. Pp. 422 U. S. 82-84.
(c) A private remedy would not further the statutory purpose of dulling corporate influence on federal elections, since any compelled repayment to the corporation might well not deter the initial violation. P. 422 U. S. 84.
(d) The cause of action is one traditionally relegated to state law in an area of primarily state concern. In addition to the ultra vires claim urged by respondent the alleged misuse of corporate funds might, under the law of some States, give rise to a cause of action for breach of a fiduciary duty. Pp. 422 U. S. 84-85.
496 F.2d 416, reversed.
BRENNAN, J., delivered the opinion for a unanimous Court.