# Petition — HEINOLD COMMODITIES, INC. v. NEIL LEIST (Nos. 80-936, 80-203, 80-757, 80-895) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_1943%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1981 ## Text 80-936 DEC d 1980 No. In THI . SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1980 HEINOLD COMMODITIES, iNC., THOMSON & MCKINNON AUL- CHINCLOSS KOHLMEYER INC., Petitioners, v. NEIL LEIST, PHILIP SMITH AND INCOMCO, Respondents HEINOLD COMMODITIES, INC., THOMSON & MCKINNON AUL- CHINCLOSS KOHLMEYER INC.., Petitioners, » NATIONAL SUPER SPUDS, INC., et ai., Respondents. JOINT PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT Of Counsel: LAWRENCE H. HUNT JR. STUART S. BALL One First National Plaza MICHAEL W. Davis Chicago, Illinois 60603 JOSEPH H. HARRISON, JR. (312) 329-5400 SIDLEY & AUSTIN Counsel for Petitioners One First National Plaza Chicago, Illinois 60603 Counsel for Petitioner Heinold Commodities, Inc. DoNALD G. MCCABE EDWARD J. BOYLE BARBARA A. MENTZ HaALt, MCNICOL, HAMILTON, CLARK & MURRAY 330 Madison Avenue New York, New York 10017 Counsel for Petitioner Thomson & McKinnon Auchincloss Kohlmeyer Inc. QUESTION PRESENTED FOR REVIEW Did Congress create an implied cause of action for damages against commodity brokers under the following provisions of the Commodity Exchange Act: (i) section 4a which authorizes the Commodity Futures Trading Commission, formerly the Commodity Exchange Commission, to set speculative trading and position limits for specific commodity futures contracts and which makes it un- lawful to exceed those limits; (ii) section 4b which makes it unlawful for a member of a commodity exchange “to cheat or defraud” his customers; and (iii) section 9(b) which makes it a felony for any person “to manipulate... the price of any commodity in interstate com- merce, or for future delivery on or subject to the rules of any contract market, or to corner . . . any such commodity. . .” despite expressly providing many judicial and administrative means of enforcing these provisions including criminal penalties, civil fines and an administrative remedy for plaintiffs’ claims. Similar issues are the subject of the pending petition in Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, (U.S. Aug. 9, 1980) (No. 80-203). In addition, the question whether Section 5(d), 5a(8) or 9(b) of the CEA provides an implied cause of ac- tion for damages against a commodity exchange and its officials 1 the subject of the pending petition of the New York Mercantile Exchange (“‘Exchange”’) in one of these cases. The present cases and the Curran case together provide the op: portunity for review of the implied cause of action most of the key provisions of the CEA. See Brief An with Respect to Petition for a Writ of Certiorari file change in Curran.* PARTIES BELOW The parties to the three consolidated appeals belo No. 79-7402 Appellants: Neil Leist, Philip Smith and Incon Appellees: Heinold Commodities, Inc. (“Heino son & McKinnon Auchincloss Kohlmeyer Ir son’’), Clayton Brokerage Co. of St. Louis, Exc! ard B. Levine, Howard Gabler, and Alfred Pen No. 79-7464 Appellant: Incomco, Appellee: Exchange. No. 79-7482 Appellants; National Super Spuds, Inc., Willia Jr., Willard C, Shiner, Eugene P. Weisman, Ri Raymond Rothberg, Arthur S. Armstrong, TI nek, Capgain Holdings, Inc., and Heiz Rommiu Appellees: Heinold and Thomson. Heinold and Thomson seek review of the judg 79-7402 and No. 79-7482. Heinold and Thom: parties to the appeal in No. 79-7464. *The following abbreviations are sometimes used in “CEA” for the Commodity Exchange Act, as amended (| seq.); “CFTC” for Commodity Futures Trading Commis for futures commission merchant. In addition, the page n majority and dissenting opinions which are cited in this Pi page numbers appearing in the opinions as issued by Appeals. These opinions are contained in the Appendix ( ill TABLE OF CONTENTS TABLE OF AUTHORITIES ....ceececeeeeeeenes OPINIONS BELOW ..cccccccsccccccscccccccces JURISDICTION .wcccccccccccscccccversccccese CONSTITUTIONAL AND STATUTORY PRO\ SIONS INVOLVED. .cccccccccccccvccccces STATEMENT OF THE CASE ..ccsciccccccccees REASONS WHY THE WRIT SHOULD BE A LOWED cccccccccccedeccccedsesseveccesese A, Since Congress Did Not Provide Any Priv: Right Of Action Under Any Of The Provisions The CEA, The Holding That Such Rights Can Implied Under Sections 4a, 4b And 9(b) Of TI Act Raises Important Questions Of Const tional Law In Light Of The Vesting Of Legislat Powers Exclusively In The Congress ........ B. The Majority Erred In Assuming That The Is: Was Whether “A Private Cause Of Actic Exists Under The CEA Geuerally, Rather Th Whether An Implied Cause Of Action | Damages Exists Under Section 4a, 4b Or 9 Each Separately Considered. ........ee00s C, Because The Text And Legislative History Sections 4a, 4b And 9(b) Provide No Evide: That Congress Intended To Create A Cause Action For Damages For Violation Of Th Provisions, The Majority Opinion Cannot Reconciled With Recent Decisions Of T COUrt a occccccceseeccesecosececsccccss D, The Majority Erred In Failing To Give Pro Weight To The Fact That Sections 4a, 4b / 9(b) Are Criminal Provisions Which Are Enfo1 able Both By Fines And Imprisonment And Ot Judicial And Administrative Means ....... 1. Because Sections 4a, 4b and 9(b) a provisions, no private cause of damages should be inferred whi there is no clear evidence that C tended to create such a remedy.. 2. The presumption against implic private cause of action for dama; provision imposing criminal penal made conclusive by the plethor: judicial and administrative remedi LY PFOVIGET wccccccccccccccess 3. The fact that Sections 4a, 4b and 9 no language creating a civil right | reason why no right of action sh SORTER ccccsrcccccscccccoecnes 4. The multiple remedies for violatic tions 4a, 4b and 9(b) make impli private cause of action for damage sary to achieve Congress’ purpose: The Majority Erred In Assuming, Ci Fact, That The 1974 Congress “Re-en Relevant Provisions Of The CEA, And ing Incorporated A “Preceding Judici: tation’ Upholding Implied Causes Of Even If The 1974 Amendments Con “Re-enactment” Of The Relevant Pr The CEA, The Majority Erred In Ho The Pre-1974 Lower Court Decisions To A “Settled” Interpretation Th Causes Of Action For Damages Could Under Sections 4a, 4b And 9(b) .... G. |. The basic premise of the majority's that “every” decision prior to 19 private causes of action under the ¢ EFUG cocccececeseceeccccoeces 2. The pre-1974 cases did not establ tled” judicial interpretation that ri tion against FCMs could be imp either Section 4a, 4b or 9(b) in far customer speculators since not ¢ cases $0 held .......cce eee eees Even If The Actions Of The 1974 Cor Been Relevant To The Ascertainment | tent Of The 1936 Congress In Enactin 4a, 4b And 9(b), The Majority Erred | That The 1974 Congress Conscious! That A Settled Judicial Interpret: Recognized Implied Rights Of A Damages Under Those Sections And I Preserve And Ratify Those Rights 1. No clear evidence supports the that the 1974 Congress believed th tence of implied private causes of damages had been “settled” by the pre-1974 decisions, or that Co proved and consciously refrained ing the result of those erroneous d 2. Congress must have known tha under the Securities Acts uphold causes of action for damages wer since they were based on provisio Acts entirely omitted from the Cl vi 3. That the 1974 Congress ¢ existence of private causes strated by the amendments 4. The 1974 Congress consid enact a bill which would private cause of action for tions of the CEA ....... CONCLUSION .....ccceceeceeees Vil TABLE OF AUTH! Cases Anderson v. Francis I. duPont & Co. 705 (D. Minn. 1968) .......... Arnold v. Bache & Co., Inc., 377 F.S Pen Se tees Che ned 6 an a Baird v. Franklin, 141 F.2d 238 (2d Blue Chip Stamps v. Manor Drug St Tas CASTS) sccvccceducsdccces Booth v. Peavey Co. Commodity Ser\ 152 (Gt Cie. 1976) 2 ccideseccs Brown v. Bullock, 194 F. Supp. 20 aff'd, 294 F.2d 415 (2d Cir. 1961) Cannon v. University of Chicago, : CIDTD) occccncecccescsesececs Chipser v. Kohlmeyer & Co., 600 F Sls BREF) a ccccccccnsedcecsee Chrysler Corp. v. Brown, 441 U.S. 2 Comstock Investors, Inc. v. Rosentha 1980 Transfer Binder] Comm. F (CCH) % 20,934 (C.D. Cal. 1979) Consumer Product Safety Commissi vania, Inc., 100 S.Ct. 2051 (1980) Cort v. Ash, 422 U.S. 66 (1975)... Deaktor v. L.D. Schreiber & Co., 476 Cir.), rev'd on other grounds sub Mercantile Exchange v. Deaktor, CEPIS) cedcroccocceccsaccsccre Erie Railroad Co. v. Tom 2) A eee Fischman v. Raytheon Mfg. ¢ Cit. 1951) .ccccecscecce: Fitzgerald v. Pan American F.2d 499 (2d Cir. 1956)... Gonzalez v. Paine, Webber, Ji 493 F. Supp. 499 (S.D.N.Y Goodman v. H. Hentz & Ce CRED TE. .BOGTY. oc acdeesa Gould v. Barnes Brokerage C $B eo ) Sa Gray v. Thomson McKinnon C-79-3325 SAW (N.D. | ISGO) ci b vdawensnsces Hecht v. Harris, Upham & C€ (N.D. Cal. 1968), modified Cee. IFTS) cectwniestcews Hensley v. Maduff & Sons, li Rep. (CCH) £21,017 (C.D. Insdorf v. Chicago Mercantile 606 (N.D. Ill. Oct. 18, 1965 ion, (7th Cir. Sept. 13, 196¢ International Brotherhood of States, 431 U.S. 324 (1977 J.1. Case Co. v. Borak, 377 U Johnson v. Espey, 341 F. §S ISTE) ccccccvecescevecss Kissinger v. Reporters Cor the Press, 445 U.S. 136 | Liang v. Hunt, 477 F. Supt McCurnin v. Kohlmever & (E.D. La. 1972), aff'd, Mullis v. Merrill Lynch, F Inc., 492 F. Supp. 1345 ( Nashville Milk Co. v. Ce U.S. 373 (1958) National Railroad Passeng sociation of Railroad Pi (1974) National Super Spuds, Inc. Exchange, 470 F. Supp. | Oscar Mayer & Co. v. Evar Piper v. Chris-Craft indu (1977) Reitmeister v. Reitmeister 1947) Rosee v. Chicago Board of ' Cir. 1963) Santa Fe Industries, Inc. (1977) SEC v. Capital Gains Res U.S. 180 (1963) Securities Investor Protecti U.S. 412 (1975) Seligson v. New Yi F. Supp. 1076 (S.| Miller v. New Y F.2d 762 (2d Cir. (1977) Sinking-Fund Cases, Southeastern Comm U.S. 397 (1979) .. Switchmen’s Union \ 320 U.S. 297 (194. Texas & Pacific R. (1916) T.1.M.E., Inc. (1959) Touche Ross & Co. (1979) Transamerica Morta U.S. 11 (1979) .. TVA v. Hill, 437 U.S United Egg Produces Supp. 1375 (S.D.N United Housing Fou U.S. 837 (1975) . United States v. Pric U.S. Indus., Inc. v. 4 1976) Wheeldin v. Wheeler. Wilson v. First Houst 1235 (Sth Cir. 19 cated in reliance oi (1979) Commodity Excha amended, 7 U.S 7 U.S.C. § 7US.C. § 7 U.S.C. §7 7 U.S.C. § 7 U.S.C. §12(a).. 7 U.S.C. §l2c ... 7 U.S.C. §12c(1)(A 7 U.S.C. §13(b).. 7 U.S.C. §13(c) . 7 U.S.C. §l3a-1.. 7 U.S.C. 7 U.S.C. 7 U.S.C. §21(b)(1 Commodity Futur 1974 Pub. L. Nu. 93-4 Restatement of To SUPRE) HEINOLD CON CHINCLOSS K(¢ NEIL LEIST, Pl HEINOLD CON CHINCLOSS K(¢ NATIONAL Sl JOINT PE TO THE The opinion: 167a) are not! at 2 Comm. The opinion of was reversed b 1256 (S.D.N.) The judgme 1980. The Cor for rehearing a 9, 1980. The ju §1254(1). CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED Sections 4a, 4b and 9(b) of the Commodity Exchange Act, as amended (7 U.S.C. §§6a, 6b and 13(b)), and Article |, Section | of the United States Constitution are set forth in the Appendix here- to (192a-21 3a). STATEMENT OF THE CASE Petitioners are commodity brokers which are registered as “fu- tures commission merchants” with the CFTC. The two cases in which these petitioners are defendants charge petitioners with violations of Sections 4a, 4b and 9(b) of the CEA. Section 4a, which was enacted in 1936, authorizes the CFTC to set specula- tive (cading and position limits for commodity futures contracts and makes it unlawful to exceed those limits. Section 4b, which also was enacted in 1936, makes it “unlawful to cheat or defraud” a customer in connection with the making of futures contracts.’ Section 9(b) prohibits any person from manipulating the price of or cornering any commodity in interstate commerce or for future delivery on or subject to the rules of any commodity exchange. This language was added in 1936 to Section 9 of the Grain Fu- tures Act of 1922. All three sections are criminal provisions. None of these sections, nor any other provision of the Act, ex- pressly authorizes the institution of actions by traders in the federal courts; nor does the CEA provide a general grant of juris- diction to the federal courts to hear such actions as was provided in the 1933 and 1934 Securities Acts. The CEA does, however, expressly provide for fines and impris- onment in criminal prosecutions, and for numerous other judicial and administrative means for enforcing these provisions, Among ‘The language of Section 4b is strikingly similar to the language of Section 206 of the Investment Advisers Act of 1940 (15 U.S.C. §80b-1 et seq.) which this Court held in Transamerica Mortgage visors, Ine. v. Lewis, 444 U.S, 11 (1979) did not provide a private cause of action for damages. those means, enacted in 1974, is an administrative proceeding before the CFTC for the redress of any person's claims or grievances against FCMs such as petitioners. Plaintiffs’ claims against the petitioners could have been presented and adjudicated in such an administrative proceeding. Plaintiffs in these actions are traders who held long positions in May 1976 Maine potato futures contracts which were liquidated prior to the close of trading on May 7, 1976. All of these plaintiffs are admittedly “speculators” as distinct from “hedgers,” the lat- ter being persons who produce, use, handle, or merchandise a par- ticular commodity. None of the plaintiffs was a customer of these petitioners with respect to the purchase of their “long” contracts Indeed, petitioners acted as brokers for persons on the opposite side of the market from plaintiffs The District Court granted these petitioners’ motions for sum- mary judgment on the counts in the complaints which charge violations of Sections 4a, 4b and 9(b) of the CEA.’ The plaintiffs appe ed and over the vigorous and well-reasoned dissent of Judy. Mansfield, the Court of Appeals reversed ‘The jurisdiction of the District Court in No, 79-7402 with respect to the claims asserted under the CEA was allegedly based on 28 U.S.C. §§ 1331 and 1337 and in No, 79-7482 jurisdiction was allegedly based on 28 U.S.C, §1337 ‘In reaching its decision, the District Court applied the test enunciated in Cort v, Ash, 422 U.S. 66 (1975) and applied in Cannon v. University of Chicago, 441 U.S, 677 (1979). The District Court did not have the benefit of this Court's decisions in Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11 (1979) and Touche Ross & Co. v. Redington, 442 U.S, 560 (1979), After examining the provisions of the CEA which provide the CFTC with an array of enforcement powers and these plain- tiffs with an administrative remedy to recover damages arising from violations of the Act, the District Court held that no private right of ac- tion against futures commission merchants existed under that Act because “two critical elements of the [Cort v. Ash] test, congressional in- tent and consistency with the statutory scheme, weigh strongly against the implication of such a right.” (470 F.Supp. at 1261) REASONS WHY THE WRIT SHOULD BE ALLOWE Since the enactment of the 1974 amendments to the CEA, question of the existence of implied private rights of action un the CEA has frequently been presented to the courts. The maj ty opinion lists at least nineteen decisions upholding such rig and eight decisions in addition to that of the district court in th cases denying such rights.’ The split of decisions requires a f and definitive answer by this Court The questions before the Court are of extraordinary pract importance to the commodity futures industry, The decisior the Court of Appeals, if permitted to stand, will expose comm ty brokers to enormous liability, never intended by Congress, will vitiate Congressionally-mandated procedures governing olution of disputes between commodity brokers and their ¢ tomers, The reparations procedure provided by the 1974 ame ments to the CEA and other non-judicial means for resols complaints such as arbitration will be undermined and the cos resolving Customer grievances is likely to increase. ‘Other decisions which are not cited in the opinions below but wl have passed on implied causes of action under certain provisions of CEA include Gonzalez v. Paine, Webber, Jackson & Curtis, Inc., F.Supp. 499 (S.D.N.Y. 1980); Mullis v. Merrill Lynch, Pierce, Fei & Smith, Inc., 492 F.Supp. 1345 (D. Nev, 1980); Hensley v. Madu Sons, Inc., 2 Comm. Fut. L. Rep. (CCH) 921,017 (C.D.Cal, Api 1980); and Comstock Investors, Inc. vy. Rosenthal & Co., (1977+) Transfer Binder] Comm, Fut. L. Rep. (CCH) 920,934 (C.D December 7, 1979). The courts in cach of these cases denied the ¢ tence of implied causes of action under the CEA, Since the deci sought to be reviewed, other lower courts have faced the issue and sharp division of judicial opinion continues. See Gray v. Thon McKinnon Securities, Inc,, No, C-79-3325 SAW (N.D, Cal, Septen 29, 1980) (denying an implied cause of action) In 1974, Congress required contract markets to establish proced for private arbitration of customers’ claims and grievances against exchange member (7 U.S.C, §7a(11)). In addition, a registered fut association must provide procedures for the resolution of custon claims and grievances against any member of the association (7 §21(b)(10)) In addition, the decision of the Court of Appeals will ope doors of the district courts to a large body of additional new | tion which Congress has never expressly authorized. This ts | tion of a type which this Court has held “presents a danger o atiousness different in degree and in kind from that which ac panies litigation in general.” Blue Chip Stamps v. Manor Stores, 421 U.S. 723, 739 (1975). The present cases well trate this point. Petitioners are charged with cheating an frauding persons with whom they have had no relationship. I dition, in these cases the longs are claiming manipulation b shorts and the shorts are asserting manipulation by the longs the interacting net effect of these alleged manipulations on ket prices at any specific time is impossible of even rough mea ment The holding of the Court of Appeals majority that Sectior 4b and 9(b) of the CEA provide implied causes of actio damages in favor of tiese plaintiffs is erroneous and confli principle with the decisions of this Court setting forth the dards for the implication of private causes of action.” The h« which, as pointed out in Judge Mansfield’s dissent, goe: beyond statutory construction and amounts instead to “ju legislation’ — (i) raises important questions of constitution: in light of the vesting of legislative powers exclusive Congress; (ii) erroneously assumes that the issue is wheth private cause of action” exists under the CEA generally, 1 Transamerica, supra; Redington, supra; Kissinger v. Reporters mittee for Freedom of the Press, 445 U.S. 136 (1980); Cannon, Chrysler Corp. v. Brown, 441 U.S. 281 (1979); Blue Chip Stamps, Cort, supra; Piper v. Chris-Craft Industries, Inc., 430 U.S. 1 ( Santa Fe Industries, Inc. v. Green, 430 U.S. 462 (1977); Securit vestor Protection Corp. v. Barbour, 421 U.S. 412 (1975); Nationa road Passenger Corp. v. National Association of Railroad Passe 414 U.S, 453 (1974) (“Amtrak”); Wheeldin v. Wheeler, 373 VU. (1963); 7.1.M.E., Inc. v. United States, 359 U.S. 464 (1959); S men's Union v. National Mediation Board, 320 U.S. 297 (194: Judge Mansfield’s dissent at pp. 4107-11. 6 than whether these plaintiffs can base an implied ca for damages on either Section 4a, 4b or 9(b); (ii) the principles established in this Court's decisions | statute expressly provides many judicial and a means of enforcement, including criminal penalti and an express administrative remedy, an addit remedy will rarely be implied; (iv) is based on t assertion that Congress, by amending various pro\ CEA in 1974, “re-enacted” Sections 4a, 4b and 9| the judicial interpretations given to the Act by a fe decisions based on clearly erroneous grounds; (v) er sumes that pre-1974 decisions had unanimously and interpreted the CEA as providing the causes of act plaintiffs’ claims are based despite the fact that no p sion had held that members of a class to which pla had a cause of action for damages under either Sect 9(b); (vi) erroneously avoids analysis of the legislat these sections at the time of their enactment; and (vi clusions as to the intent of the 1974 Congress which to the legislative history. If certiorari is granted, this will be the first time ti raised by the petitioners will have been placed before A. Since Congress Did Not Provide Any Private Ri; Under Any Of The Provisions Of The CEA, That Such Rights Can Be Implied Under Sectioi %b) Of That Act Raises Important Questions tional Law In Light Of The Vesting Of Legisl Exclusively In The Congress. Article I of the Constitution vests “‘all legislative p Congress. Under Article III, Congress also has sponsibility for determining the jurisdiction of the | courts. Congress alone can create rights of action a diction over them in the courts. Article III also make the legislative power can only be exercised through both Houses of “bills” which after approval by become “laws.’’ While courts can construe such law what Congress did in fact enact, the courts have n what they may feel Congress omitted, even inadv ever desirable the courts may feel such additions w cannot rewrite or correct the laws they are callec strue. Thus, under our Constitution, a right of action u “law” cannot exist unless Congress intended to cre; law was passed, and has somehow made its intentic creation must be unmistakably the “act” of Cong Mansfield said in his dissent (p. 4111): “Absent ev intent, judicial creation of a private remedy amo sumption or usurpation of the legislative function the separation of powers doctrine.” Even if these | tional principles have been occasionally overlook« such oversights cannot operate to amend the Const made clear in Erie Railroad Co. v. Tompkins, 304 (1938). In the days before Erie when the federal court existence of a federal common law, the courts utili law theory to justify actions for damages for brea statute, treating such breach as a “tort.”’ Thus this ( & Pacific R. Co. v. Rigsby, 241 U.S. 33 (1916), he ployee could bring an action based on an injury du of the federal Safety Applicance Act. The Court | “A disregard of the command of the statute act, and where it results in damage to one ¢ See TVA v. Hill, 437 U.S. 153, 194-95 (1978); Sink, 99 U.S. 700, 718 (1878); Cannon, 441 U.S. 677, 730-49 senting); See also Wilson v. First Houston Investment 1235, 1244-45 (Sth Cir. 1978) (Hill, J., dissenting), va on Transamerica, 444 U.S. 959 (1979) 8 whose especial benefit the statute was recover the damages from the party in cording to a doctrine of the common |, 39) No effort was made to ascertain whether create a cause of action; on common law pri ... be deemed to create a liability in [plainti in the form of an actionable tort. The concept of a violation of a statute c able tort is embodied in the Restatement : (1963). Logically, its validity with respect t ended with Erie Railroad, which made it federal common law, and hence no feder However, the outdated tort rationale was th lower court decisions upholding implied rij the majority opinion. Under the “tort theory,” an action co brought without any evidence of Congressi the statute prohibited certain conduct and was an obvious beneficiary of the prohibitio nition that under the Constitution an implic be just as much the intentional creation of plicit one has forced the rejection of argum¢ theory.”’ Express rejection occurred as earl v. Wheeler, 373 U.S. 647 (1963), where an tionable tort in a violation of the statute gov subpoenas was rejected. Justice Douglas pi “As respects the creation by the feder law rights, it is perhaps needless to st the free-wheeling days antedating Erie (373 U.S. at 651) "Mr. Justice Brennan dissented because he existence of federal common law torts based on v ute. Common law tort theory cannot take evidence of Congressional intent necessar private right of action not expressly pro' language. This Court has repeatedly he private cause of action not expressly pro' less be held to have been created is by fi Congressional intent to provide one. Tra 20; Amtrak, 414 U.S. at 457-58; S/PC Cannon, 441 U.S. at 731. The necessity fo tent’ was made plain in Amtrak, 414 U.S. and the “tort theory” was specifically repu: U.S. 560, 568 (1978). As Cannon, 441 | *.. [T]he fact that a federal statute has person harmed does not automatically giv of action in favor of that person.” Nev Second Circuit cases cited and relied on were expressly based on tort theory.’ Tl where recognizes the demise of the tort t B. The Majority Erred In Assuming Whether “A Private Cause Of Act CEA Generally, Rather Than Wheth Action For Damages Exists Under Each Separately Considered. The first error of the majority opinion any provision of the CEA implied a priv “a private cause of action existed under plicable to all violations of any of its prov E.g. Brown v. Bullock, 194 F.Supp. 207, ; F.2d 415 (2d Cir. 1961) (cited at p. 4049); F World Airways, 229 F.2d 499, 501 (2d Cir Fischman v. Raytheon Mfg. Co., 188 F.2d 7 (cited at p. 4047); Reitmeister v. Reitmeister Cir. 1947) (cited at p. 4051); Baird v. Frank 1944) (cited at pp. 4047, 4050). 10 reasoning, the majority opinion f 1974 “unanimously upheld the im action under the CEA” (p. 4053; ¢ reversed the District Court. The fact that none of the pre-19' ity opinion had upheld a private speculators and non-customers agi tion 4a, 4b or 9(b) was ignored majority assumed that if some plai a violation of some provision of the anybody else for violating any ott strange fallacy, the majority opini before it as whether “there is an i CEA” (p. 4022 n.1). This notion is plainly bad law. T even when an implied private reme statutory provision, it is not necess plaintiffs under the same provisio! the statute. Redington, supra; Pipe Inc., supra, Blue Chip Stamps, st causes of action may be implied u customers against their brokers, tl who are not within this protected c some courts have held that suits changes under Section 5(a) does brought by speculators against bre As a result of this mistaken view ion never faced up to the real issue The assumption that the issue was right of action existed “under the ¢ speaks at least eight times of “an im 4057, 4059 n.19, 4060 n.19, 4062, 407 times of “a private cause of action” (f 4063 n.21, 4077, 4078, 4080) and at le of action” (pp. 4051 n.14, 4059, 4060 hy damages against brokers could tomer speculators because of alle and 9(b). C. Because The Text and Legis And %b) Provide No Evide Create A Cause Of Action These Provisions, The Maj ciled With Recent Decision: Section 4b makes it unlawful with orders “for or on behalf of -- —_ INCOMCO, Plaintiff-App WAYNE COUNTY PRODUCE Co., and HAROLD Col Defen New YORK MERCANTILE EXCHANGE, Defendant-Ap — ae NATIONAL SUPER Spups, INC., WILLIAM R. BUSTE WILLARD C. CHINER, EUGENE P. WEISMEN, R WELTS, RAYMOND ROTHBERG, ARTHUR S. ARMS THEODORE BRINEK, CAPGAIN HOLDINGS, INC., an ROMMINGER, individually and on behalf of all p similarly situated, Plaintiffs-Appe New YORK MERCANTILE EXCHANGE, CLAYTON BRO! Co. oF St. Louis, INc., PRESSNER TRADING 4018 3a JACK RICHARD SIMPLOT, J.R. SimpLot Co., INDUSTRIES, INC., PETER J. TAGGARES, P.J. T, Co., C.L. Orrer, SIMTAG FARMS, KENNETH KR & B Farms, INc., HUGH V. GLENN, GE, FARMING, INC. and Ep McKay, Defi HEINOLD COMMODITIES, INC., THOMPSON & McK AUCHINCLOSS, KOHLMEYER, INC., Defendants-A} Before: FRIENDLY, MANSFIELD and KEARSE, Circuit ————_---~<> -—- —— Appeal from an order of the District Court Southern District of New York, Lloyd F. Ma Judge, 470 F.Supp. 1256 (1979), granting summary judgment to the New York M Exchange and three futures commission me defendants in three consolidated actions plaintiffs claimed damages arising out of the de sellers of the May 1976 Maine potato futures c on the ground that there is no private cause —E FRIENDLY, Circuit Judge: Plaintiffs in three consolidated action: Court for the Southern District of Ne from an order of Judge, now Chief Jud 470 F.Supp. 1256 (1979), granting ap] for partial summary judgment. The cor the complaints all claims based on | Exchange Act, (CEA), 7 U.S.C. §§ 1-19, 1974, as distinguished from other cl: antitrust laws. The actions were to r allegedly suffered by the plaintiffs as ¢ Judge MacMahon characterized as the much publicized default in May potato futures contracts, when the : 1,000 contracts failed to deliver 50,000,000 pounds of potatoes, r largest default in the history « futures trading in this country. 1258 (footnote omitted). The basis for the court’s order was cause of action exists for breach of the important issue has divided the including those within our circuit, we 4021 6a to discuss it in some detail.' We did the district court, to begin w: the nature of the commodity fut I. COMMODITY FUTURE A commodity futures contract executory agreement for the pur particular commodity. The sell commits himself to deliver the c date in the future, while the bu then to accept delivery and pay Bromberg & Lowenfels, Securitie: ties Fraud § 4.6 (4211979); H. R. Cong., 2d Sess. 130 (1974). Every contract is standardized except pr contract involved in this case, t! potato futures contract, is for 50, grown potatoes of a specified qual specified points in cars of the | Railroad, between May 7 and May is the only variable, negotiations and the agreed prices can be spec 1 The length of our treatment, particu nature of the Commodities Futures Mar! of congressional regulation in Part III, i that when the case was argued and for : opinion was prepared, no court of appeal and we anticipated being the first to decided May 12, 1980, a divided panel the Sixth Circuit reached the issue sua and succinct opinion, held, as we do, on that there is an implied private right Curran v. Merrill Lynch, Pierce, Fenn 1300, SRLR (BNA) G-1 (May 12, 1980) dissent, Curran involved a suit by a cu court did not limit its reasoning to thi 4022 other traders. Standardization al fungible. Original sellers and offset their positions by acquir! either paying or gaining any p! Rep. No. 93-975, supra, at 130. The person who has sold a someone committed to deliver future, is said to be in a “short someone committed to accept de rare case, however, in which acti pursuant to a futures contract instances, the short and the lon positions prior to the close of tr futures contract. Although the 1 done is routinely referred to as f contracts are not “traded” in thi word. Rather they are formed ; Genealogy and Genetics of “C Commodity for Future Deliver Exchange Act, 27 Emory L. J. person seeking to liquidate his “ See H. R. Rep. No. 93-975, supra futures contracts culminate in delive: of Futures Trading 41 (1977) (less tha investor nor the person using the fut position in the market for the actua delivery. H. R. Rep. N. 93-975, supra, Inc. v. Freeman, 311 F.2d 52, 55: Delivery Requirement: An Illusory B tion in Commodity Exchanges 73 Ya In occasional instances, however, pt an alternative market for the physic: 93-975, supra, at 132. Delivery is ma by transfer of warehouse receipts or ri then transported according to the Cargill, Inc. v. Hardin, 452 F.2d 11 denied, 406 U.S. 932 (1972) 4023 form an opposite contra that his obligations unde: each other. Thus, a short ' the commodity must purc contracts; a long must si contracts. Money is nm differential between the offsetting transaction. If declined, usually because cating a drop in the pric will realize a profit; if th long will realize a profit 452 F.2d 1154, 1157 (8 U.S. 932 (1972). Futures Since money is made | contract prices, and ever short, every gain can be } loss. See Melamed, The Futures Exchange: A Cr Transaction Process, 6 H¢ (1977). The mechanics of the cx the roles of the various 5 by tracing a typical trans to invest in the futures commission merchant” (F Commodity Exchange Ac! “engaged in soliciting or purchase or sale of any « ... On... any contra U.S.C. § 2, and they are r Futures Trading Commi demand a “margin” paym is simply a security depo: adverse price movements based upon the amount a day or two; when the will call the customer margin is generally only of the contract. See Me! at 167 & n.41. FCM’s : customer’s business. The FCM relays its | “floor brokers” trading stands on the outside of are gathered other p contract. Some of the behalf of customers, w! account. Contracts are broker with an order wil by shouting and gestici signals. Someone willing across the pit in similar Observers on raised pul) transaction and feed the tions system, publicizin; event, had an opportuni the pit. The broker rela’ the FCM, who informs When two traders ha floor of the exchange, comes into play. The c futures trading system buyers and the buyer f! the interchangeability « ling of positions. H. R. S. Rep. No. 93-1131, ! Cargill, Inc. v. Hardin, : FCM’s are clearinghous must deal through | FCM’s as princip demands margin p house requires FC) close of every tradi the FCM has sust trading is computec accordingly. Melam 68. Generally speakin commodity futures facts of the instar between them are o trader with an int commodity, who de: of transferring risks R. Rep. No. 93-975. the complicated d transactions and po 17 C.F.R. § 1.3(z). T against declining p short futures contra to be able to sell, ¢ hedge against incre month when he will by a decline in price case or an advance i in the futures tran: No. 93-975, supra, supra, 452 F.2d at | at 171-73. The bene immediate participa hedging of price ri merchant to reduc business, he is at with consequent Rep. No. 93-975, 93-1131, supra, Regulation of ti Harv. J. Legis. ‘ The system w hedgers sold ani tracts.’ While he it is actually qui faced by those de for the actual co: similarly situate: shifted to other: Trading: Specula Rev. 27, 32 (197 F.2d at 1158. underlying intere take on the risks critical role of tl length in the Ho The principa is to take thi accept. The speculator w of speculato! futures mar. 3 Johnston, Unde Bus. Law. 705, ' market to be br« extremely large o and commercial volume of tradin; there to be a via offers broade execut larger numbe price | price | Witho frater1 marke would of spe larger unfille an equ same } 93-975 As comme recognized referred tc makes the Bromberg Indeed, hedgers al merely bal market but or selling 1 expectatior The Need , Geo. L. J. J. Legis. a become inv the plainti 13a Il. THE ALLEGED FACTS AND THE PROCEEDINGS BELOW The facts alleged in the three complaints here before us are broadly as follows:‘ John Richard Simplot is an Idaho potato entrepre- neur who controls J. R. Simplot and Co., Simplot Products Co., Inc., and Simplot Industries, Inc. These corporations are responsible for the processing of approximately 50% of all Idaho potato products processed and sold in the United States. Peter J. Taggeres is a Washington potato entrepreneur. He and his company, P. J. Taggares Co., process approximately 30% of all the Washington potatoes processed and sold in this country. Simplot and Taggares are equal partners in the ownership of Simtag Farms, a large farm in the State of Washington for the growing and warehousing of potatoes. Together Simplot, Taggares, and the companies they control are the largest purchasers of potatoes throughout the western potato region of Washington, Idaho and Oregon. According to the complaints, Simplot, Taggares, and the companies controlled by them, together with numerous co-conspirators, embarked in the spring of 1976 on a conspiracy to depress the price of the May 1976 Maine potato futures contract traded on the floor of the New York Mercantile Exchange (the “short conspiracy”). As stated by one of the complaints, “(bly virtue of their position in the potato processing field and the quantity of potatoes purchased by them, [the 4 We say here once and for all that our statement, in large measure, is simply what the plaintiffs contend to be the facts and is not to be read as one of facts found. Accordingly we will generally dispense with use of words such as “allegedly”, “asserted” and “claimed”. 4029 l4a conspirators] would be in a position to control the prices paid for potatoes but for the existence of the Exchange and the activity . . . in buying and selling potato futures contracts.” Simplot had encountered difficulties in the course of his customary negotiations with the Idaho Potato Growers Association, because the IPGA believed that the price of potatoes, including Maine potatoes, would be much higher than what Simplot was offering. Futures prices supported this view. A report issued on April 13, 1976 by the United States Department of Agriculture indicated that total potato stocks were down 11%, and that Maine stocks totalled only 7.4 million cwt. compared with 13.0 million cwt. on hand the previous year. An earlier report issued in August 1975 estimated that national potato acreage would be down 8% from the previous year with an even greater drop in Maine. The effect of this latter report, and other generally available information, was to drive the price of the May 1976 Maine contract from $9.75 per cwt. to a record high of $19.15 per cwt. by October 3, 1975. The activities of the short conspirators were designed to counteract the impact of these reports and other market information and rumors tending to raise the price of Maine futures. A decline in the price of potato futures would suggest to those dealing in the cash market, such as the IPGA, that supplies of Maine potatoes would be greater than earlier anticipated, and that prices in spot transactions or negotiations for all potatoes should correspondingly recede. The primary means by which the short conspirators sought to depress the futures price was the accumula- tion of a large net short position in the May contract. The conspirators allegedly agreed to sell a large number 4030 of contracts short and to refuse to liquidate these shorts at a price higher than that agreed among themselves and, if necessary, to default on the obligation to make delivery on all unliquidated contracts. Such short purchases would give the impression of the existence of a large supply of deliverable Maine potatoes and drive down the price of the contract. Simplot made $1 million available to Simtag Farms, which Simtag used to open a credit balance on March 29, 1976, with Pressner Trading Corp., a member of the New York Mercantile Exchange (the Exchange or NYME), for the purpose of buying and maintaining short positions in the May contract. At the same time, Simplot, Taggares and their other companies also began to accumulate a large number of short contracts. The brokers through which the conspirators acquired their positions included Clayton Brokerage Co. of St. Louis, Inc. (Clayton), Heinold Commodities, Inc. (Heinold), and Thompson & McKinnon, Auchincloss, Kohlmeyer, Inc. (Thompson). These three brokerage firms were, like Pressner Trading, clearing members of the Exchange and appropriately registered with the CFTC. The firms allegedly knew, or should have known, that thei customers neither intended to nor would be able t cover the large number of short positions the broker: acquired for them. On May 4, 1976, Simplot and Taggares were warnec by the CFTC that it was aware of their large shor position and that price manipulation was a violation o} the Commodity Exchange Act. The telegram concludec that although this “is not an allegation of pric manipulation, if prices of the May 1976 potato futur . . Should become artificial during liquidation due t 4031 l6a your action or inaction, we will consider wheth and your firm should be charged with price mar tion under the Commodity Exchange Act.” In th of this warning, and the impending close of trad) May 7, the conspirators not only failed to take st liquidate their large shor’ position but a increased it, again with the help and support | named brokerage firms. On the last day of tradin consolidated all the short positions they control the hands of Pressner. Clayton, Thompson and H knowingly acquiesced in this consolidation desig! concentrate the force of the manipulation. In addition to the accumulation of a large net position which they refused to liquidate at highe an agreed price, the conspirators also all manipulated the futures price by shipping quantities of unsold Idaho potatoes to the markets for immediate sale at the going price. T of such so-called “roller cars”, railroad cars of pc shipped although there is no pre-determined tends to depress the market price, and thus futures prices. Simplot and Taggares were not the only manipulating the price of the May future. A | group of eastern conspirators thought they coul the western producers at their own game. | Collins and Casper Mayrsohn are Maine merchants and traders in Maine futures. MFX modities, Inc., with Donald Silver as its presider foreign corporation engaged in business as a FCN group learned of the conspiracy of Simplo Taggares and conspired to squeeze them. Pursu this conspiracy (the “long conspiracy”), the “long” purchased as many contracts as it could, and t 4032 17a the same time maneuvered to tie up the cash market so that the shorts could not make delive longs reasoned that if the shorts had no ac deliverable potatoes, the longs would be able to the price the shorts would have to pay to liquida’ contracts. The main way in which the longs tied cash markets was by tying up all of the rail cars Bangor & Aroostook Railroad, which alone deliver potatoes to satisfy May futures contract was done by using the cars for phony export shi and leaving them loaded or only partially w when they reached appropriate destinations. Neither the longs nor the shorts would give in other. The shorts refused to liquidate their posi buying offsetting long contracts at higher th price agreed among them; the longs refused t down to the unreasonably low price demanded shorts. At the end of trading on May 7, th conspirators controlled 1893 open short positio long conspirators controlled 911 open long po There are usually only approximately 20( contracts at the end of trading on the May future. The plaintiffs were caught in the middle | these two competing conspiracies. Neil Leist is licensed member of the Exchange engaged business of trading commodities and futures own account. Incomco, a partnership, is a duly | FCM. Philip Smith is Incomco’s managing partr class action plaintiffs are traders and dealers re; ing all persons “who held a net long posi Contracts and who liquidated their long position contract between April 13, 1976 and the -.— . MANSFIELD, Circuit Judge (Diss I respectfully dissent for Commodity Exchange Act (Act) ing to well-settled principles of by the Supreme Court in Cor (1975); Cannon v. University oj (1979); Touche Ross & Co. v. Ff (1979); and Transamerica Mor Lewis, 100 S. Ct. 242 (1979), fi any Congressional intent to ap) an implied private right of a plaintiffs-appellants (1) again merchants and brokers (such Commodities Inc., Thompson closs, Kohlmeyer Inc., and Clay’ Louis, Inc.), or (2) against cont the New York Mercantile Excha the contrary, Congress express panoply of judicial and adn enforcing compliance with the / 4107 compensatory reparation orders, and criminal pens viewed as exclusive. None of the sections appellants (such as §§ 4t U.S.C. §§ 6b, 13(b), 7(d' even remotely suggestin the “especial” benefit o plaintiffs are member: considered in determini Ash, supra, 422 US. at the Act, 7 U.S.C. § 6b, t relied on by plaintiffs against the broker defe enacted for the benefit plaintiffs are not membe fraud against brokers w customer relationship. Ss § 13(b), a criminal statu reveals that it was en general public, which requirement that a statu be for the benefit of a “ Act, upon which plainti claim against the New essentially a licensing things, obligates contri certain requirements, inc manipulation. It neith members of any class, proscribes any conduct | The legislative history hundreds of pages of Cor debates, fails to contain right of action, desp witnesses and a senato) in 1974 Congress faile enact any one of se expressly provided a violations of the Act, § 505(a) (1974) (Hart bi bill). In 1968 Congress have made contract ma for violations of the A Sess. § 32 (1967). M reparations procedure \ violation of the Act can § 14, and its legislativ “Congress knew how tc when it wished to do s Ct. at 248 n.13, bh reparations procedure, provided remedies, a aggrieved by violations 93d Cong., 2d Sess. 22 Act differs sharply fron 1934, 78 U.S.C. §§ 7! majority, which does nc proceeding to recover (| Faced with this pe intent to create or appr majority relies on the revision of the Act var the now-outmoded “tor' right, had implied such existed and contends t. which Congress is pre aware) congressional s preted as congre is not under any provided by it a disassociate itsel! they were statute States, 359 U'S. never found imp! of the lower fe irrelevant for thi customers again: U.S.C. § 6b, not against brokers | Only one pre-1! & Co., 479 F.2 grounds sub noi Deaktor, 414 U. year before the private right in { Neither this nor relied on by the 1 by Congress.’ T Commodity Futures Commission Act: Hearings before | Committee on Agriculture and Forestry on S. 2485, S. 257 and H.R. 13113, supra, at 194. Representative N introduced a bill in the House, which like Senator McGo expressly created an action for treble damages. H.R. 1 Cong., 1st Sess. § 17 (1973). In 1974, Rep. Smith in! similar bill which provided for the reparations procedure eventually enacted as § 14, but deleted the provision damages. H.R. 11195, 93d Cong., 2d Sess. (1974) 4159 Luba The House Turning to the history of the legisla‘ House, the latter’s Report with respect tc only two references to an implied pr action, neither of which evince an intent preserve that right. The Report stated the 1968 amendments, which requ markets to enforce their own rules a designed to strengthen self-regulation worked to weaken it because, as the ( informed, “{[A]ttorneys to several boards of ti advising the boards of trade to redu exchange regulations designed t trading, since there is a growing b that failure to enforce the excha) violation of the Act which will su private litigants.” H.R. Rep. 93-976 The Report also stated that one of tl changing the law was “(2) Growing difficulties facing excl in self regulatory actions as a re; plaintiffs seeking damages against activities of the markets. As exam, are sued for actions taken in emerg even when the action has been taker or order of the CEA.” Jd. at 48. Similar language was used by Chairm: he discussed the bill on the House floor, 41333 (Dec. 13, 1973)."* Although it ms 16 Chairman Poage also stated on the House fl Commodity Exchange Act was enacted, courts 4160 145a an awareness by key personnel in Cor court decisions implying a cause of ac Act, it hardly constitutes approval of th« the first place, the Supreme Court reminded us that “even the contempori of a single legislator who sponsors controlling in analyzing legislative hist Product Safety Commission v. GTE supra, 48 U.S.L.W. at 4662. Second merely recognizes a “growing body of oj ing private rights of action. Had Congr approve or encourage that fledgeling | could and would have indicated as mucl than extol the virtues of private right: Report and Chairman Poage emphasize created by private rights and poin' private suits against exchanges for a them pursuant to order or request of thi CFTC. I find no logical basis for reading this language criticizing private rights of ac sional approval of such suits, which majority attempts to do. The majori Congress was not criticizing private r but merely the problems they created | ing private suits to continue, it soug exchanges from reducing their rules in civil liability by empowering the CFTC exchanges to adopt appropriate rul speculative extrapolation is not suppor! remedy for individual litigants in the Commo 119 Cong. Rec. 41333 (Dec. 13, 1973). He, of co right of action was not implied by a lower co 4161 146a in the legislative history of the « is refuted by the plain language A more sensible interpretatior ments is that Congress sought comprehensive, cohesive and regulation, H.R. Rep. 93-975, su 95-850, supra, at 10, 13. Believi of action were inconsistent w sufficiently increased the powers it, rather than private individuals for monitoring the futures tradi 17 Chairman Poage himself retreated « rights of action. In December, 1973, v the House he claimed that the threat o why the exchanges had cut back on tl however, when he presented the bill House for approval he stated “Regula working as well as it should, and part, of present law the exchanges may b regulatory activities when they should todays markets.” 120 Cong. Rec. 107: Private rights of action hardly consti law.” Thus, on the day in which C focused on the Commodity Exchange A House passed the bill—not one word rights of action. It strains credulity to that Congress somehow relied on pri' enacted the 1974 amendments 18 The majority also relies on the curso of action raised by one or two repres industry in the House hearings, se Trading Act of 1974: Hearings Befo Agriculture on H.R. 11955, 93d Con majority reads far too much in the “fa to these scattered, vague and unfocuse Supreme Court in Ernst & Ernst v. H n.24 (1975): “Remarks of this kind made in t! or hearings other than by persons nr or the drafting of a bill are entitl United States v. United Mine Wor 4162 ld47a Intent in Enacting Reparations Procedure and Other Remedies Both the 1974 Senate and tively outline the enforcement t Act as it then stood, togeth remedies recommended and fina 1131, 93d Cong., 2d Sess. 11-2 975, supra, 33-53. There is not that the panoply of enforcemen Congress, including reparation tended to supplement privat majority here urges. Indeed, linked the reparations procedu action or mentioned them in th of course it is not defendants Congress intended an express 1 what little direct evidence there the reparations procedure sug informal arbitration procedure: exclusive. The House Report, fi the reparations procedure is “intended as a_ separate supplement the informal contemplated of contract 1 intent of the Committee which can be resolved i without a formal procee (1947); United States v. Wrightu 125 (1942). This is especially so w legislative opponents who {iJn t) understandably tend to overstat Packers, 377 U.S. 58, 66 (196: Calvert Distillers Corp., 341 US 4163 proceeding] through of the contract mark to resolve that matte: 22. “A customer repara Commission will be a of enactment for hi which arise from viol those which result i the customer. The c jurisdiction to consid have not been res settlement procedurt market and registere the bill.” Jd. at 3. “The provision for ti customers accounts s equal justice for those in some way damag commodity accounts.’ (Letter to the Com Agriculture.) Congress has also explicit procedure was created to bias favoring the resolutic arbitration,” H.R. Rep. N 91 (1978), thus casting fu the procedure was inte! rights of action. Equally 1 that where futures as: procedures, thus relievin duty to adopt similar pro would have their « their claims through ; reparations proceedings, proceeding,” S. Rep. N present purposes it is sig not include a private ris 19 The few comments relic Congress’ intent to approv vague and abstruse to enti! the majority overstates statement that the act “sel 120 Cong. Rec. 10737 (A) Chairman Poage used tl enforcement provisions, ir suits and levy civil penalt these provisions were “new Poage did not mean that “supplementary” to implie meant that the remedies v already contained in the A supplement implied privat directly, not through an a) Similarly, the majority p! of Senator Talmadge on t! while discussing the exclu House bill, discussed more “In establishing this C give it exclusive jurisdi act. This will assure traders, customers, et c agency rulings. Howeve: exempt persons in the fu or regulations such as t! Futures Trading Commi bodies such as those of t! or the Securities and securities “The vesting in the administrative law judge criminal penalties is lik: courts in any way. It is authority will somewhat the entire appeal proces: the courts are expressly Moreover, in the right to recover 1 The majority als second paragraph j action. That sent Congress to the ex clause not to appr that the exclusive interfere with fe antitrust suits anc agencies or with s' law claims. Senat a that § 6 CFTC ; - Senate | Federal commoc for tyin practice (July 1! 63), the 153a analyzed, overhauled and amended the enforcement provisions of the Act refutes the majority’s claim that it somehow or other affirmatively intended such rights to continue as a supplement to the battery of enforcement weapons provided by it. Had it desired or intended this, the logical and natural procedure would have been for it to say so. SEC v. Sloan, 436 U.S. 103, 122 (1977). No court has ever imposed on Congress the contrary duty, which the majority urges, of expressly stating that the remedies provided by it are exclusive. order to assure national uniformity, Congress permitted only the CTFC or the States, under limited circumstances, to bring suit, not private individuals. In light of Congress’ cautious and careful approach to parens patriae suits under § 6d, including the insulation of contract markets from those suits, it would be anomalous for Congress to have approved private suits against contract markets and flower brokers. It is unlikely that Congress would have required States to notify CFTC of any action brought under § 6d while at the same time permitting private suits to blossom all over the country without the CFTC’s knowledge. Securities Investor Protection Corp. v. Barbour, 421 US. 419, 420-21 n.13 (1974) (“anomalous for Congress to have centralized SEC suits [against the SIPC] for the apparent convenience of the SIPC while exposing the corporation to substantively identical suits by investors ‘in any court, State or Federal’ ”). The majority's reliance on the statement of Senator Leahy to the effect that contract markets were exempted from § 6d, in part because of the deterrent effect of private suits, 124 Cong. Rec. $16527 (Sept. 28, 1978), is misplaced. Since Congress was well aware by 1978 that the lower courts had begun to deny private rights of action under the Act, 124 Cong. Rec. S10537 (July 12, 1978) (Statement of Senator Huddleston), Senator Leahy's statement must be characterized as a hope and a prayer. Moreover, the explanation rings hollow since it would apply equally well to those traders subject to parens patriae enits who, under the view adopted by Senator Leahy at least, were also subject to private causes of action. Had Congress in fact believed that traders and contract markets were subject to private rights of action, it would have been far less likely to enact a parens patriae provision subjecting traders to suit by the States. Nor would it have been as concerned as it was about exempting contract markets from those suits. 4169 ld4a Jurisdictional Provisions The majority next contends that the “savings clause” incorporated into the jurisdictional provision, § 2 of the Act, 7 U.S.C. § 2 (§ 201 in the enacted bill), explicitly preserves the private right of action implied by the lower courts. Section 201 originated in H.R. 13113 and as passed by the House it read: “Provided, That the Commission shall have exclusive jurisdiction of transactions dealing in, resulting in, or relating to contracts of sale of a commodity for future delivery, traded or executed on a domestic board of trade or contract market or on any other board of trade, exchange, or market; And provided further, That nothing herein con- tained shall supersede or limit the jurisdiction at any time conferred on the Securities Exchange Commission or other regulatory authorities under the laws of the United States or restrict the Securities and Exchange Commission and such other authorities from carrying out their duties and responsibilities in accordance with the laws of the United States.” During the Senate hearings Rep. Rodino, Chairman of the House Committee on the Judiciary, criticized the provision not on the grounds that it might eliminate private rights of action but rather because the provision might be interpreted as eliminating the jurisdiction of state courts over contract claims and the jurisdiction of federal courts over antitrust claims and suits seeking review of administrative hearings. His comments are 4170 155a set forth in full in the margin.”* He accordingly suggested the addition of a proviso to the effect that federal courts should not be ousted of their jurisdiction As a result the following proviso was enacted: 21 Chairman Rodino’s statement reads in relevant part: “This double proviso could be construed to raise a question of federal pre-emption of the commodity futures industry and, therefore, unnecessarily raises a question of federal-State relationships. Many of the millions of commodity futures contracts are presently enforceable in State courts under recognized commercial law and contract principles. This double proviso could, in effect, deprive State courts of their current jurisdiction. There does not appear to be any legislative intention or established need to achieve this pre-emption. ... “In addition, this double proviso could possibly be read as an attempt to oust even federal courts of jurisdiction. The first proviso confers ‘exclusive jurisdiction’ on the Commission for commodity transactions. Exceptions to this exclusive jurisdiction are carved out in the second proviso without, however, referring to federal district courts. That such a result was not intended in the House is readily apparent from the House action striking the original antitrust exempting provision: antitrust laws are to apply to commodity transactions and, of course, federal courts play an instrumental role in promoting as wel! as protecting the national policies expressed already in the antitrust laws. Arguably, too, if jurisdiction of federal courts were to be withdrawn also, the Commission decisions on commodity transactions would be non- reviewable by the judiciary raising, thereby, serious questions of administrative and constitutional law. “If it appears advisable to retain rather than to delete the double proviso of Section 201(B) of H.R. 13113, it would seem reasonable to amend the second proviso appropriately to define the jurisdiction, including antitrust jurisdiction, of federal courts for commodity transactions. In this regard, the second proviso could be amended to provide: “And provided further, that Nothing therein contained shall supersede or limit the jurisdiction at any time conferred on the Securities Exchange Commission or other regulatory authorities and on federal court. .. .” Commodity Futures Trading Commis- sion Act: Hearings Before the Senate Committee on Agriculture and Forestry on S. 2485, S 2578, S. 2837 and H.R. 13113, supra, at 259-60. 4171 156a And provided further, That, except as herein provided, nothing contained in this section sh supersede or limit the jurisdiction at any conferred on the Securities and Exchange Co sion or other regulatory authorities under the of the United States or of any State, or (ii) re the Securities and Exchange Commission and other authorities from carrying out their « and responsibilities in accordance with such Nothing in this section shall supersede or lim jurisdiction conferred on courts of the L States or any State. Other witnesses reiterated Chairman Rodino’s cisms without any reference to private rights of a Mr. Keith Clearwater, Deputy Assistant Att General, Dept. of Justice, for example, stated: “ are two problems with this language. It cou interpreted to deprive the Federal Courts of jurisdiction under the antitrust laws and to de Federal and State courts of jurisdiction to er contract and commercial law rights.” Comm Futures Commission Act: Hearings Before the § Committee on Agriculture and Forestry on S. S. 2578, S. 2837 and H.R. 13113, supra, at 663 Statements of James T. Halverson, Director of B of Competition, Federal Trade Commission, id. at 68, and Statement of Glenn Willet Clark, Profes: Law, Drake University Law School, id. at 683-8 The majority's contention that the “savings c! explicitly preserves a private right of action rests on the comment of Senator Clark, while urgin Senate to authorize private treble damage suits, “Unfortunately, the House bill does not authorize 4172 157a but section 201 of that bill may prohibit all actions. The staff has said that this was inadvertently and they hope it can be corrected Senate.” Id. at 205. This “passing reference” by a “single legislato slim reed on which to find congressional approv private right of action. Consumer Product Commission v. GTE Sylvania, Inc., supra, 48 U.i at 4662; Piper v. Chris-Craft Industries, Inc.. 430 U.S. at 31-32; Chrysler Corp. v. Brown, sup) U.S. at 311; see Ernst & Ernst v. Hochfelder, 42 185, 204 n.24 (1976). Senator Clark’s concern tl House provision might prohibit “court actions” well have been intended to refer to actions arisi of commodity contract claims. Moreover, applyi principles of Chrysler Corp., his statement m considered with the Reports of both Houses a) statements of other witnesses and Congressmen, which refute the majority’s contention that the link between the jurisdictional provision of § 2( Congress’ attitude toward private rights of acti Given the reasons expressly advanced by Chi Rodino and given that no witness indicated th revision of § 201 was intended to preserve o affect any private rights of action in federal cow evidence is overwhelming that Congress simply t the task of correcting the problem noted by Chi Rodino and others and had no intention of appri private damage action. Had Congress inten preserve jurisdiction of the federal courts over | suits it could easily have said so, as it did in § 6 it granted federal jurisdiction to hear CFTC-ir injunctive suits, and in § 14(f) when it provic such jurisdiction to enforce judgments arising reparations proceedings. 4173 158a The Act does not have any counte! jurisdictional provision of § 27 of tk Exchange Act of 1934, 15 USC. § affirmatively grants to federal courts excl tion of violations of the Act and of its re; authorizes civil suits to be brought in the « the defendant is found or resides. In a! “savings clause” here, which was directed | jurisdictional matters, could not pres damage actions, since jurisdictional prov create such rights, Redington, supra, 442 “The source of plaintiffs’ rights must be fo in the substantive provisions of the [Act seek to enforce, not in the jurisdictional p at 577 (citing cases). The 1978 Amendments Finally, although subsequent legislatio limited weight in ascertaining Congre: enacting earlier laws, Transamerica, supr at 248 n.13, the 1978 amendments are re\ Congress did not provide expressly for a of action against merchants and exchang awareness that the lower courts had be private rights of action under the Act,’ 22 ~=—s The following cases, in addition to Judge MacM this case, 470 F. Supp. 1256, have refused to imp of action under the Commodity Exchange Act: Witter & Co., 415 F. Supp. 535 (D. Neb. 1976 grounds, 571 F.2d 437 (8th Cir. 1978); Consolo Weeks-Hemphill, Noyes, Inc., 436 F. Supp. 477 Bartels v. International Commodites Corp., 435 Conn. 1977); Berman v. Bache Halsey Stuart, Shi Supp. 311 (S.D. Ohio 1979); Alkan v. Rosenthal & Fut. L. Rep. Par. 20,797 (S.D. Ohio 1979); Liang Supp. 891 (N.D. Ill. 1979); Fischer v. Rosenthal & 53 (N.D. Tex. 1979); Stone v. Saxon and Windsor Comm. Fut. L. Rep. Par. 31,100 (N.D. Ill. 1980) 4174 159a which Sen. Huddleston on the floor | deemed “unfortunate.” 124 Cong. Rec. 1 1978). Instead, Congress proposed to heavy burden on the reparations proced the failure of lower courts to imply pri action not by amending the Act to allow as we would expect if it had approved o! but rather by eliminating the hearing rs reparations claims under $5,000. § 14 § 18(b). The failure of Congress to amenc particularly significant in light of its awe time of the Supreme Court’s recent but adoption of somewhat stricter principles implication of private causes of action. 414 U.S. 453 (1974); Cort v. Ash, 422 | Securities Investor Protection Corp. v. U.S. 412 (1975); Blue Chip Stamps v. Stores, 421 U.S. 723 (1975); Piper Industries, 430 U.S. 1 (1977); Santa C Martinez, 436 U.S. 49 (1978).” Second, Congress in 1978 received .t the states that they were uncertain, in | adverse court decisions, about their al parens patriae suits for violations of t enforce their own contract and co statutes. In sharp contrast to its 19 authorize private suits, Congress expres the states to bring suits in federal co violations of the Act or to obtain mon 23. The majority responds that Congress’ omissio: reasoning that Congress could not have been av Supreme Court's retreat from a liberal view o action). But, as the Court recognized in Cannon, 698, Cort v. Ash and other cases decided prior t a stricter approach 4175 160a § 6d, 7 U.S.C. § 13a-2, and exp ability of the states to enforce consumer fraud law. § 6d(5), 7 U.) apart from the fact that Congress’ contract markets and floor broker: § 6d suggests a desire to insula! from private damage liability,** th a clear indication that “Congress } private right of action when it Transamerica, supra, 100 S. Ct. 2: Congress recognized that express ¢ suits was necessary if a right unde such litigation was to exist: “Section 12 specifically aut investigate or provecute in a | of the Act. . . . Any such ac in the proper Federal dist Commission is given the righ action as a party. This isan currently have no such expres Act.” H.R. Rep. No. 95-1181 This statement is strong evidence intended to create a right of actio1 so expressly, not by implication.’ 24 ~=©See supra note 20. 25 Equally telling is the complete absenct right of action in the exhaustive Se: Reports on the 1978 amendments, whic private remedies available under the Ac at 12-13; H.R. Rep. No. 95-1181, supn Act, its history and its enforcement pro private rights of action). This conspi course, that Congress did not believe a available 4176 l6la The Theory that Congressional § Amounts to Congressional Appr« Lacking any substantial suppo: legislative history of the Act t atively approved private rights of position boils down to the theor have been aware generally of a fe decisions implying a private righ stood prior to 1974 and ther approval of private rights unnece mind that “liJmplying a private basis of Congressional silence is a at best,” Redington, supra, 442 | from congressional silence to c must be made cautiously, if at inappropriate to rely on the pre the majority where, as here, Cc created a number of remedies whi viewed as exclusive and where, if adopt a prior judicial interpreta! additional remedy, it would have body of earlier lower federal provides a wholly inadequate bas relevance, weight, period of exist such an inference. In T.I.M.E. v. United States, su; Court expressly rejected the posi majority here. There a shipper of it had a private cause of action un Act to recover unreasonable rates in violation of the Act. After rej that the Act granted a private ri because, as here, Congress specific a proposed cause of action, the Co 4177 that the Act must be read common-law or judicially | “The Government i cases in addition to | years since passage 0 which courts have ay issue of reasonablenes was litigable, and in n question given othe attention. Under the before us cannot fairl long-standing interpre “We are told that C that the Commission common-law action fi rates paid to a motor Commission of the would lie, and that derogation of this vie acceptance of it. But i Commission’s views ir cated to committees connection with a req legislation which wou cause of action under the Commission the tions, and each time tl [Wle do not think that to grant a new author permissibly be draw authority previously | confirmed.” 359 U.S. The few decisions relic consistent with the for exceptionally long period and not, as here, an inte court, the Seventh Circuit old. In Blue Chip Stamps 421 U.S. at 733, the Co acceptance by the lower < §10(b) limiting the cause securities, coupled with th that interpretation, despit Commission’s repeated ur favor of acceptance” of th supra, 441 U.S. 677, the action under Title IX of t 1972, noted that Congres under Title [X similar to | and found that Congress had implied a right of ac! VI. The Court, however, s on the presumption used t private right of action mu expressly repealed by Cor decision on what it c affirmative intent to creat at 699. Similarly in SEC v. Slo Court rejected the argum presumed to have approve tive construction of a s enactment of the statute interpretation and the fac! the relevant Senate C< understood and approved 4 noted that “we a! general congressio! construction based in the thousands That language ir additional indicatio awareness, is sim presumption in a | Court concluded th the prior interpret: said so. This princ present case. The cases cited contrary. In Lorilla Court found that Discrimination Em, porating a number Standards Act (FL construction of tho because Congress e: FLSA provisions willingness to depé which it disagreed, the changes made intended to incorp interpretations of from the situatior references to the 5 and far between ir Congress dos not | interpretation. Reliance on Geor (1978), is similar congressional acqui decision to be pe decision was ref Congress. Indeed, approximately 73 in the Senate, id. All of these a inference as to co1 to draw in this c placed on a few s references in thot rather than upon identified Suprem Georgia. Unlike tk § 10(b), with whi Superintendent of find a brief line of are relevant to thi only one year bel knowledge of whi This hardly con recognized prior invoke the dubi majority here. Ths amended the Se 26 The other cas distinguishable. I) rights of action ai to go slow in in approve a private Second, the case: interpretation is { year old history o!/ 115 F.2d 709 (2d Electric Storage , where, unlike the references in the Bennett v. Panan opinion, su; decisions (e Chip Stam; quite differ court decisii had knowle of action ba are invoked Lastly, sii 1974 decisi theory of t unreasonabl Supreme Co by tacitly g Co. v. Unite v. Sloan, si interpretati statutory ai when thoro! Supreme C signaled a s tion of priv notice that | private righ settled. In the la: speculation reasonable issue was sq failed to ap indicate in ¢ implied one. its refusal | rights of ac 167a (Powell, J., dissenting). Under these circumstances, absent some expression of approval by Congress, formal or informal, I believe we should not imply an intent on its part to create an implied right of action. Under these circumstances, creation of a private right rests with Congress, not the judiciary. 4183 168a Opinion of the District Court UNITED STATES DISTRICT COURT Soutnern District or New York 76 Civ. 2375 (LFM), 76 Civ. 2554 (LFM), 76 Civ. 2571 (LFM), 76 Civ. 2594 (LFM) Nationa, Super Spvps, Inc. et al., Plaintiff's, —against— New Yorx Mercantite Excuance et al., Defendants. 76 Civ. 2648 (LFM) Incomco, Plaintiff, —against New Yorx Mercantite Excuance et al., Defendants. 76 Civ. 3210 (LFM) Howard BERENSON, Plaintiff, —against— Joun Ricuarp Srmptor et al., Defendants. 169a 76 Civ. 4350 (LFM) New Letsr et al., Plaintiffs, —against— Joun “1cHarp Srmpvor et al., Defendants. 76 Civ. 5200 (LF'M) Dexter Ricwarps, Plaintiff, —against— New York Mercantite Excuance et al., Defendants. APPEARANCES: Rein, Mound & Cotton By: Maurice Mound, Esq. 130 John Street New York, N.Y. 10038 —and— Cahill Gordon & Reindel By: William E. Hegarty, Charles Platto, Ruth D. McNaughton and Peter Leight, Esqs. 80 Pine Street New York, N.Y. 10005 Attorneys for defendant New York Mercantile Exchange. 170a Thompson & Mitchell By: W. Stanley Walch, Gerard K. Sandweg, J) and Kenton E. Knickmeyer, Esqs. One Mercantile Center St. Louis, Mo. 63101 —and— Barrett, Smith, Schapiro, Simon & Armstrong 26 Broadway New York, N.Y. 10004 Attorneys for defendant Clayton Brokerage Co. of St. Louis, Inc. Dewey Ballantine Bushby Palmer & Wood By: Hugh N. Fryer and Ira G. Greenberg, Esqs. 140 Broadway New York, N.Y. 10006 —and— Sidley & Austin By: Stuart 8. Ball, Lawrence H. Hunt, Jr., Thomas F’. Ryan and Michael W. Davis, E One First National Plaza Chicago, Tl. 60603 Attorneys for defendant Heinold Commodities, Inc. Hall, McNicol, Hamilton & Clark By: Donald G. McCabe, Esq. 330 Madison Avenue New York, N.Y. 10017 Attorneys for defendant Thomson & McKinnon Auchincloss Kohlmeyer, Inc. 17la Pomerantz Levy Haudek & Block By: William E. Haudek, Richard M. Meyer and Roger W. Haudek, Esqs. 295 Madison Avenue New York, N.Y. 10017 Lead Counsel for Class Plaintiffs Howard Berenson, plaintiff pro se. Robson & Toboroff By: Leonard Toboroff and Kenneth N. Miller, Esqs. 950 Third Avenue New York, N.Y. 10022 Attorneys for plaintiffs New Leist, Philip M. Smith and Incomco. Jay W. Kaufmann, Esy. 111 Broadway New York, N.Y. 10006 Attorney for plaintiff Dexter Richards. MacManon, District Judge. Defendants, the New York Mercantile Exchang “Exchange”), Richard Levine (“Levine”), Howard (“Gabler”), Alfred Pennisi (“Pennisi”), Clayton E age Co. of St. Louis, Inc. (“Clayton”), Heinold Cor ties, Inc. (“Heinold”) and Thomson & McKinnon A closs Kohlmeyer, Inc. (“Thomson”), move under 12(c), Fed.R.Civ.P., for judgment on the pleadin, in the alternative, under Rule 56(b), Fed.R.Civ.] partial summary judgment dismissing all or part complaints against them in these related actions.' *The Exchange moves in the following actions: Nationa Spuds, Inc. v. New York Mercantile Exchange, 76 Civ. 2 Civ. 2554, 76 Civ. 2571, 76 Civ. 2594 (the “consolidated ¢ 172a all parties have submitted factual materia pleadings, we treat the motions as motion summary judgment. These actions arise out of the much publ in May 1976 of Maine potato futures contra sellers of almost 1,000 contracts failed to de imately 50,000,000 pounds of potatoes, res largest default in the history of commodities ing in this country. The primary claim in th that the default was caused by certain def« manipulation. In order to understand these motions, a standing of the commodities futures industr A commodity future is a contract for the fi of a certain commodity. Except for price, all the contracts for a given commodity traded 0! are standardized and, thus, the contracts are actual trading of futures is done by future merchants and floor brokers, both of whom istered with the Commodities Futures Tradin tions’) ; Incomco v. New York Mercantile Exchang and Leist v. Simplot, 76 Civ. 4350. Levine, Gabler and Pennisi move in Leist v. 8 4350. Clayton moves in the consolidated class actiors Simplot, 76 Civ. 4350. Heinold and Thomson move in the consolidated Berenson v. Simplot, 76 Civ. 3210, and in Leist v. | 4350. The motions of the Exchange, Levine, Clayto: Thomson in Richards v. New York Mercantile Ez 5200, are denied as moot because this action was di these motions were filed. The motions of the Exchange and Clayton in B plot, 76 Civ. 3210, are also denied as moot because been discontinued as to the Exchange and Clayton. * See N.Y. Times, May 26, 1976, at 1, col. 1. 173a (the “CFTC”).’ Additionally, trading may | on exchanges which have complied with ce) requirements and have been designed as ' kets” by the CFTC.‘ A seller of a futures contract is, in the h trade, in a “short” position, that is, he is o liver the commodity at a future date in right to receive the purchase price. Convers a futures contract is said to be in a “long” is, he is obligated to pay the purchase pric the right to receive the commodity. As a pr however, physical delivery of the commodi only a small fraction of the futures contr: the nation’s exchanges. Most of the trade: speculators who have no intention of delive ing the actual commodity. As the last day | particular contract approaches, a speculator sition (a seller) will cover his obligation buying a contract. Similarly, a speculator tion (a buyer) will cover his obligation to p contract.° Plaintiffs, traders and a dealer in potatoe holding long positions in May 1976 Maine contracts. They allege that Clayton, Heinold futures commission merchants, conspired v their customers to manipulate and depress t May contract by selling an illegally large n contracts, thereby causing plaintiffs to sell and potatoes at an artificially depressed p 7 U.S.C. §§ 6d, 6e, 6F. ‘7 U.S.C. §§ 6, 7. *The commodities futures industry is describe in 8S. Angrist, Sensible Speculating in Commod 8S. Kroll & I. Shishko, Commodity Futures Mark 174a Plaintiffs contend that the action: and Thomson violated the Commo (the “Act”), various regulations pro! and Sections 1 and 2 of the Shermar contend that the Exchange, a design and its officers, Levine, Gabler and them for failure to take steps to p price manipulation by the other def Exchange conspired with the other ¢ late the price. Specifically, plaintiffs allege that | officers failed to report and concealed and the regulations promulgated the change and its officers violated the Ac its own rules, the Act and the CF’ that the Exchange violated Sections 1 Act. ImpiirepD Ricut or A All moving defendants contend ths partial summary judgment because right of action against them under such a right of action existed prior *7 U.S.C. § 1 et seq. 7 Plaintiffs also allege violations of th cause the obligation to obey these rules ; regulations, we consider these claims as : CFTC’s regulations. *15 U.S.C. §§ 1, 2. * E.g., Deaktor v. L.D. Schreiber & Co., rev'd on other grounds sub nom. Chicago Deaktor, 414 U.S. 113 (1973); Goodman F. Supp. 440 (N.D. Ill. 1967). 175a year, the Act was amended exten: tion before us is whether the priv: survived the 1974 amendments to th Although a number of other di: sidered this question, there is no | answer." This difference of opinii of the question to the future course us to resolve the question ourselves Under Cort v. Ash,” four factor: mining whether a private right of under a federal statute which does for one: “First, is the plaintiff ‘one oi especial benefit the statute wa: 1° Commodity Futures Trading Comn L. No. 93-463, 88 Stat. 1389 (codified at Act was further amended in 1978. Fut) Pub. L. No. 95-405, 92 Stat. 865 (codifie 11 Nine cases have stated that a priv under the Act: R.J. Hereley & Son v. | L. Rep. (CCH) § 20,773 (N.D. Ill. 1979) C 2297 (N.D. Ill. Feb. 2, 1979); Gran & Smith, Inc., Comm. Fut. L. Rep. (| 1978) ; Berenson v. Madda Trading Co. 30, 1978) ; Hoffmayer v. Dean Witter & (CCH) 7 20,694 (N.D. Cal. 1978); Kel 346 (W.D. Mich. 1977) ; Bache Halsey : F. Supp. 1231 (D.D.C. 1977); Shears Lumber Merchants, Inc., 423 F. Supt Milani v. Conticommodity Serv., Inc., 46 1976). Five cases have stated that no priv under the Act: Alkan v. Rosenthal & (CCH) ¥ 20,797 (S.D. Ohio 1979); Ber art, Shields, Inc., Comm. Fut. L. Rep. ( 1979); Bartels v. International Commo: 865 (D. Conn. 1977); Consolo v. Horni Noyes, Inc., 436 F. Supp. 447 (D. Ohi Witter & Co., 415 F. Supp. 535 (D. 1 grounds, 571 F.2d 487 (8th Cir. 1978). 12 422 U.S. 66 (1975). 1 does the statute create : plaintiff? Second, is th tive intent, explicit or i a remedy or to deny on with the underlying pur) to imply such a remed: finally, is the cause of act to state law, in an ares States, so that it woulc cause of action based sc There can be no question 1 commodities market and a | the class “for whose especi: acted.” As Senator Dole st: the 1974 amendments to the . manipulation of markets and desires to participate in fut tionally, the Act itself state: unreasonable fluctuations in persons handling the commo Thus, we find that the fir satisfied. The second element of the is more troublesome. The established an administrat “falny person complaining vision of this chapter or a thereunder by any person w 13 7d. at 78 (citations omitted 14120 Cong. Rec.-Senate 3046 accord 120 Cong. Rec.-Senate ‘ Clark). See also Ames v. Merri, Inc., 567 F.2d 1174, 1179 (2d ¢ %7 U.S.C. §5. be registered under... t administrative proceeding reparations. Judgments re proceedings are subject to of appeal"’ and may be enf The 1974 amendments ala over futures commission m The CFTC may suspend o futures commission mercha tract market.”* The CFTC j and desist orders against o civil penalties of up to $100, merchants and contract ma the Attorney General, at tl thorized to bring an actior futures commission merch: a restraining order, an inji to compel compliance witl thereunder.” We believe that under t est exclusto alterius,” * the 67 U.S.C. §18(a). 177 U.8.C. § 18(@). 7 U.8.0. §18(f). 7 U.S.C. §§ 7b, 9. 7 U.S.C. § 18a. 17 U.S.C. §§9, 188 27 U.S.C. §18a-1. The 191 provision by which a state ma: behalf of its citizens. 7 U.S.C. **? Expression of one thing Securities Investor Protection (1975) ; National R.R. Passen; Passengers, 414 U.S. 453, 458 @& Co., 592 F.2d 617, 629-30 (: cert. granted, 47 U.S.L.W. 336i reparation proceedi nary and regulatory gressional intent to the Act. This conc Congress was infor action under the A have expressly esta Thus, we conclud there be a private 1 The third element tion of a private ri; the underlying pur] the implication of su Court, this element implication of a pr order to further the Contract markets, tered persons unde! from the administra by the Act. The C monetary civil pena Act imposes two li penalty which may First, there is an 01 ** Hearings on S. 24 the Senate Committee | Sess. pt. 3, 737, 746 (18 7° S, 2837, 938d Cong vided for actual dama; treble damages for wil ** Piper v. Chris-Cri Cort v. Ash, supra, 4! U.S. 426, 432 (1964) ; tion from Federal Stat 53, 69 (1975). "7 U.S.C. § 188. the CFTC is requir the penalty will m ability to carry on lieve that both of th intent to limit the p markets, Since neit ent in private acti plication of a righ would be inconsister to limit the potentia Additionally, the against futures con sistent with the Act the purposes of thi futures commission and Thomson, are s proceedings mentio: sity to imply a rig are fully compensa] Thus, we concluc of action under the underlying purpose The fourth elem plication of a prive state concern, favo it is well settled th trading is essential Thus, our applic: clude that there is ** Td. ** See text accompa! See e.g. Smith v. Fairchild, Arabateis | (CCH) 7 20,706 at 22 Act because gressional in weigh stron Plaintiffs of action un have impliec Exchange A tiffs that th modity futu find that the different. F) vide any adi does the Co rities Excha plenary pow the CFTC." tains no cow cific grant o tions of tha *! See Natio Passengers, su 15 U.S.C. "The SEC changes is lim 15 U.S.C. §§' join brokers, Security Exch #15 U.S.C. “The d States co jurisdicti: diction of tions ther brought t ter or the Although 7 U. above, its rea attorneys gem 18la critical importance when it implied private rights of ac- tion under that Act.** Plaintiffs also argue that the CFTC interprets the Act as allowing private rights of action** and that the CF'TC’s interpretation is entitled to “‘great deference.” * How- ever, as the Supreme Court has recently stated, the ad- ministrative deference rule is not applicable where the “narrow legal issue is one particularly reserved for judicial resolution, namely whether a cause of action should be im- plied by judicial interpretation in favor of a particular class of litigants.” ™ Finally, we note that the Supreme Court’s recent deci- sion in Cannon v, University of Chicago” is readily dis- tinguishable from this case. In Cannon, the Supreme Court implied a private right of action for a victim of al- leged sex discrimination under Title IX of the Education Amendments of 1972,*° despite the existence of an adminis- trative procedure to enforce those amendments. However, the only administrative remedy under Title IX is the termination of federal grants to educational institutions which discriminate on the basis of sex. Thus, the Supreme Court found that Title [IX provided no private administra- tive remedy to victims of sex discrimination.“ In contrast, 86 Securities Investor Protection Corp. v. Barbour, supra, 421 U.S. at 424; JI. Case Co. v. Borak, supra, 377 U.S. at 430-31. ** Amicus Curiae Brief of the Commodities Futures Trading Commission submitted in Smith v. Grover, supra. 7 United States v. Consumer Life Ins. Co., 430 U.S. 725, 752 (1977) (citations omitted). %8 Piper v. Chris-Craft Indus., Inc., supra, 480 U.S. at 41 n.27. *° 47 U.S.L.W. 4549 (U.S. May 14, 1979) (No. 77-926). #9 20 U.S.C. §§ 1681-1686. "! See 47 U.S.L.W. at 4556. 182a the reparations procedure available under the Commodities Exchange Act provides a remedy directly for the benefit of private parties injured by violations. Thus, unlike Cannon, the implication of a right of action here is not necessary to provide a plenary remedy to the intended beneficiaries of the Act. Cannon is also distinguishable for a second reason. In Cannon, the Supreme Court noted that Title [IX was en- acted in 1972 when the Court had been rather liberal in finding implied rights of action. The Court found that Congress expected Title [IX to be interpreted in accordance with that liberal view.** The Commodities Exchange Act, on the other hand, was reconsidered by Congress as re- cently as last year when the Supreme Court had retreated from its liberal view toward implied rights of action.” Yet, in enacting the 1978 amendments to the Act, Congress again failed to add a section expressly providing for a private right of action despite knowledge that a number of district courts had held that the private right of action previously implied did not survive the 1974 amendments.“ Cannon teaches that the failure of Congress to provide for a private right of action must be viewed in light of the judicial attitude toward such rights at the time of enact- ment. In light of that teaching, the failure of Congress to provide for a private right of action in the 1978 amend- ments evidences an intent to deny such a right. Thus, we conclude that there is no private right of action against futures commission merchants and contract mar- kets under the Act. Since there is no private right of action under the Act, it necessarily follows that there is no private “27d. at 4554. 48 Td. #4124 Cong. Rec.-Senate 10537 (remarks of Sen. Huddleston). 183a right of action under the regulations promulgated pur- suant to the Act.“ Antitrust Clams Clayton and Heinold also move for summary judgment on the antitrust claims, asserting that there is no genuine issue of fact that they did not intend to manipulate the price of May 1976 Maine potato futures contracts. A party seeking summary judgment bears the burden of demonstrating the absence of any genuine issue of fact,** even when the motion is unopposed.*? Clayton and Heinold have submitted excerpts of deposition testimony given by certain of their employees. Although this testimony does tend to show that Clayton and Heinold lacked the intent required for a violation of the Sherman Act, it is neither conclusive nor sufficiently clear to allow us to conclude that there is no genuine issue of fact. Clayton’s employee, Del- bridge, admitted that Clayton took no steps to investigate its clients’ ability to deliver despite their large short posi- tion, and Heinold’s vice-president, Klopfenstein, admitted that Heinold did not take the steps that it normally would have taken to ensure that its short customers could deliver. Given the elusive nature of intent and its significance to an antitrust violation,“* we cannot say that there is no issue of fact regarding Clayton’s and Heinold’s knowledge and intent,** ‘6 Crane Co. v. American Standard, Inc., No. 77-7517, slip op. at 2019 n.11 (2d Cir. Apr. 4, 1979). © Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). "Td. at 160. ‘® See United States v. United States Gypsum Co., 98 S. Ct. 2864 (1978). ‘See SEC v. Research Automation Corp., 585 F.2d 31, 33 (2d Cir. 1978) (“[S]ummary judgment is likely to be inappropriate when the issues concern intent.’’). 184a Accordingly : 1. There being no just reason for delay, the Clerk court is directed, pursuant to Rule 54(b), Fed.R.Civ enter final judgment: A. In favor of the Exchange on its motior partial summary judgment on the sixth claim | first amended consolidated class action compla National Super Spuds, Inc. v. New York Merc Exchange, 76 Civ. 2375, 76 Civ. 2554, 76 Civ. 257 76 Civ. 2594; the first and fourth claims of the plaint in Incomco v. New York Mercantile Exchan Civ. 2648; and the fourth claim of the compla Leist v. Simplot, 76 Civ. 4350; B. In favor of Levine, Gabler and Pennisi on motion for summary judgment on the fourth cla the complaint in Letst v. Simplot, 76 Civ. 4350; C. In favor of Clayton on its motions for 7 summary judgment on the fourth claim of th amended consolidated class action complaint i tional Super Spuds, Inc. v. New York Mercantil change, 76 Civ. 2375, 76 Civ. 2554, 76 Civ. 2571 4 Civ. 2594; and the first claim of the complaint in v. Simplot, 76 Civ. 4350; D. In favor of Heinold and Thomson on thei tions for partial summary judgment on the | claim of the first amended consolidated class complaint in National Super Spuds, Inc. v. New Mercantile Exchange, 76 Civ. 2375, 7@°%Liv. 2554, 7 2571 and 76 Civ. 2594; the first claim of the com in Leist v. Simplot, 76 Civ. 4350; and the second of the complaint in Berenson v. Simplot, 76 Civ. to the extent that it asserts a claim under the Act 185a 2. Clayton’s and Heinold’s motions for summar ment in their favor on all other claims against t} denied in all respects. So ordered. Dated: New York, N.Y. May 29, 1979 /8/ Lioyp F, MacMas Luioyp F, MacMa United States Distric 186a Judgment of the Court of Appe UNITED STATES COURT OF API For tne Seconp Crecurr Ata stated Term of the United States Cou for the Second Circuit, held at the United house in the City of New York, on the eight) one thousand nine hundred and eighty. 79-7402, 79-7464, 79-7482 New, Leist, Pump Samira and Inc Plaintif Joun Ricuarp Siupror, J.R. Stueror & Crayton Brokerace Co. or Sr. Louvr Herrotp CommMonpities Inc., ef a Defenda Present: Hon. Henny J. Frrenpry, Hon. Wavren R. Mansrtern, How. Amartya L. Krarsre, rai Appeal from the United States District | Southern District of New York. 187a This cause came on to be heard on the record from the United States District Southern District of New York, and was arg On Consmperation Wuereor, it is now h adjudged, and decreed that the order of said be and it hereby is reversed in accordance w of this court with costs to be taxed against th A. Danian F By: /s/ A A ] 188a ORDER DENYING RE! UNITED STATES COURT SECOND CIRCUI At a Stated Term of the United States for the Second Circuit, held at the Unite the City of New York, on the ninth day sand nine hundred and eighty. PRESENT: Hon. HENRY J. FRIEN HON. WALTER R. MAN Hon. AMALYA L. KEA! 79-7402 Neit Leist, Puicie SMITH ar against JOHN RICHARD SIMPLO CLAYTON BROKERAGE Co. or St. Lou! MODITIES, INC., THOMSON & Mch KOHLMEYER, INC., NEw York M RICHARD B. LEVINE, HOWARD Gat 189a 79-7464 INCOMCO, against THE New YORK MERCANTILE EXCH Propuce Co., & HAROI THE NEw YORK MERCANTI 79-7482 NATIONAL SUPER Spups, INC., WILLI LARD C. SHINER, EUGENE P. WE RAYMOND ROTHBERG, ARTHUR S. BRINEK, CAPGAIN HOLDINGS, IN¢ individually and on behalf of all p against New YorRK MERCANTILE E) HEINOLD ComMMobpITIES, INC., and T! AUCHINCLOSS, KOHLME A petition for a rehearing having be for the defendant-appellee Heinold Co Upon consideration thereof, it is Ordered that said petition be and he ORDER DENYING R UNITED STATES (¢ SECONI Ata Stated Term of the Unit for the Second Circuit, held at! the City of New York, on the r sand nine hundred and eighty. 79. NeIL LEeIst, PHILIP ag JOHN RICHARI CLAYTON BROKERAGE CO. OF MODITIES, INC., THOMSON KOHLMEYER, INC., NEW RICHARD B. LEviNeE, Hov THE New YorK MERCANTI PRODUCE Co, 4 THE New York M 74 NATIONAL SUPER Spups, IN«¢ LARD C, SHINER, EUGEN RAYMOND ROTHBERG, A) BRINEK, CAPGAIN HOLD! individually and on behal a| New YorRK MERCA HEINOLD COMMODITIES, IN«¢ AUCHINCLOSS, A petition for rehearing con! be reheard en banc having be defendant-appellee, Heinold C Upon consideration thereof, Ordered that said petition Consti Sec. |. All legislatiy Congress of the Unite: House of Representat Provisions ¢ Section 4a, 49 Stat Sec. 4a. (1) Exces contracts of sale of su or subject to the rules reasonable fluctuatior such commodity, is a state commerce in su ishing, eliminating, o shall, from time to t hearing, by order, pro trading under contra delivery on or subject may be done by any pe diminish, eliminate, o tion shall be construc different trading limi tures, or delivery mor and selling operations paragraphs (A) and ( actions commonly kne from fixing trading lit from trading limits fir (2) The commissiv (not to exceed ten di which, and until such shall be unlawful for (A) directly o sell, under contr delivery on or su markets to which modity during ar limit fixed for o1 order for or with (B) directly o sell, under contr delivery on or st any amount of s such person a net or with respect i ing limit fixed b position in such o (3) No order issue apply to transactions transactions, For the ing transactions shal delivery on or subject tent that such sales ar chase of the same ca any commodity for f any board of trade to sales of the same cas! amount of any comm< (A) the amou or in good faith twelve months, « ries) which such (B) an amoui future delivery products or byp chased by such | delivery product (4) This s futures comr of this Act o1 son are mad person. This on behalf of, authorized a; Section 4a §6a. Exces trai app (1) Exces: sale of such ¢ the rules of fluctuations modity, is an merce in sucl nating, or pre to time, afte: proclaim and be done or pc tracts of sale to the rules « necessary to termining wh tions held an controlled by and trading « positions and done by, two implied agre« 195a were held by, or the trading were done by, a single person. Noth- ing in this section shall be construed to prohibit the commission from fixing different trading or position limits for different com- modities, markets, futures, or delivery months, or different trad- ing limits for buying and selling operations, or different limits for the purposes of paragraphs (2)(A) and (B) of this section, or from exempting transactions normally known to the trade as “spreads” or “straddles” or “arbitrage” or from fixing limits applying to such transactions or positions different from limits fixed for other transactions or positions. The word “arbitrage” in domestic mar- kets shall be defined to mean the same as a “spread” or “strad- dle”. The Commission is authorized to define the term “interna- tional arbitrage”. (2) The commission shall, in such order, fix a reasonable time (not to exceed ten days) after the order's promulgation; after which, and until such order is suspended, modified, or revoked, it shall be unlawful for any person- (A) directly or indirectly to buy or sell, or agree to buy or sell, under contracts of sale of such commodity for future delivery on or subject to the rules of the contract market or markets to which the order applies, any amount of such com- modity during any one business day in excess of any trading limit fixed for one business day by the commission in such order for or with respect to such commodity; or (B) directly or indirectly to hold or control a net long or a net short position in any commodity for future delivery on or subject to the rules of any contract market in excess of any position limit fixed by the commission for or with respect to such commodity: Provided, That such position limit shall not apply to a position acquired in good faith prior to the effec- tive date of such order. (3) No order issued under paragraph (1) of this section shall apply to transactions or positions which are shown to be bona fide hedging transactions or positions as such terms shall be defined by the Commission within one hundred and eighty days after the 196a effective date of the Commodity Futures Trading Commission Act of 1974 by order consistent with the purposes of this chapter. (4) This section shall apply to a person that is registered as a futures commission merchant or as floor broker under authority of this chapter only to the extent that transactions made by such person are made on behalf of or for the account or benefit of such person. This section shall not apply to transactions made by, or on behalf of, or at the direction of, the United States, or a duly authorized agency thereof. Section 4b, 49 Stat. 1493-94 (1936) Sec. 4b. It shall be unlawful for any member of a contract market, or for any correspondent, agent, or employee of any member, in or in connection with any order to make, or the mak- ing of (1) any contract of sale of any commodity in interstate commerce, or (2) any contract of sale of any commodity for fu- ture delivery made, or to be made, on or subject to the rules of any contract market for or on behalf of any person if such contract for future delivery is or may be used for (a) hedging any transaction in interstate commerce in such commodity or the products or by products thereof, or (b) determining the price basis of any trans- action in interstate commerce in such commodity, or (c) deliver- ing any such commodity sold, shipped, or received in interstate commerce for the fulfillment thereof (A) to cheat or defraud or attempt to cheat or defraud such person; (B) willfully to make or cause to be made to such person any false report or statement thereof, or willfully to enter or cause to be entered for such person any false record thereof; (C) willfully to deceive or attempt to deceive such person by any means whatsoever in regard to any such order or con- tract or the disposition or execution of any such order or con- tract, or in regard to any act of agency performed with re- spect to such order or contract for such person; or 197a (D) to bucket such order, or to fill such order by offset against the order or orders of any other person, or willfully and knowingly and without the prior consent of such person to become the buyer in respect to any selling order of such person, or become the seller in respect to any buying order of such person. Nothing in this section or in any other section of this chapter shall be construed to prevent a futures commission merchant or floor broker who shall have in hand, simultaneously, buying and selling orders at the market for different principals for a like quantity of a commodity for future delivery in the same month, from executing such buying and selling orders at the market price: Provided, That any such execution shall take place on the floor of the exchange where such orders are to be executed at pub- lic outcry across the ring and shall be duly reported, recorded, and cleared in the same manner as other orders executed on such ex- change: And provided further, That such transactions shall be made in accordance with such rules and regulations as the Com- mission may promulgate regarding the manner of the execution of such transactions. Section 4b, 7 U.S.C. $66 § 6b. Contracts designed to defraud or mislead; bucketing orders; buying and selling orders for commodities It shall be unlawful (1) for any member of a contract market, or for any correspondent, agent, or employee of any member, in or in connection with any order to make, or the making of, any contract of sale of any commodity in interstate commerce, made, or to be made, on or subject to the rules of any contract market, for or on behalf of any other person, or (2) for any person, in or in connec- tion with any order to make, or the making of, any contract of sale of any commodity for future delivery, made, or to be made, on or subject to the rules of any contract market, for or on behalf of any other person if such contract for future delivery is or may be used for (a) hedging any transaction in interstate commerce in such com- 198a modity or the products or by-products thereof, or (b) deterr the price basis of any transaction in interstate commerce 1) commodity, or (c) delivering any such commodity sold, sh or received in interstate commerce for the fulfillment the: (A) to cheat or defraud or attempt to cheat or dk such other person; (B) willfully to make or cause to be made to such person any false report or statement thereof, or willfi enter or cause to be entered for such person any false | thereof; (C) willfully to deceive or attempt to deceive such person by any means whatsoever in regard to any such or contract or the disposition or execution of any such or contract, or in regard to any act of agency performe respect to such order or contract for such person; or (D) to bucket such order, or to fill such order by against the order or orders of any other person, or wil and knowingly and without the prior consent of such rf to become the buyer in respect to any selling order ol person, or become the seller in respect to any buying or such person. Nothing in this section or in any other section of this ch shall be construed to prevent a futures commission merchi floor broker who shail have in hand, simultaneously, buyin selling orders at the market for different principals for | quantity of a commodity for future delivery in the same mn from executing such buying and selling orders at the m price: Provided, That any such execution shall take place « floor of the exchange where such orders are to be executed a! lic outcry across the ring and shall be duly reported, recorde cleared in the same manner as other orders executed on suc change: And provided further, That such transactions sh made in accordance with such rules and regulations as the mission may promulgate regarding the manner of the exec of such transactions. 199a Section Sa(11), 7 U.S.C. $7a(11) § 7a. Duties of contract markets Each contract market shall Settlement of customers’ claims and grievances (11) provide a fair and equitable procedure through ; tion or otherwise (such as by delegation to a registered association having rules providing for such procedures) settlement of customers’ claims and grievances agair member or employee thereof: Provided, That (i) the use procedure by a customer shall be voluntary, (11) the pr shall not be applicable to any claim in excess of $15,000, | procedure shall not result in any compulsory payment ex agreed upon between the parties, and (iv) the term “custo1 used in this paragraph shall not include a futures com merchant or a floor broker, Section 6(b), 7 U.S.C. $9 §9. Exclusion of persons from privilege of “contract m: procedure for exclusion; penalties; review by c appeals If the Commission has reason to believe that any perso! than a contract market) is manipulating or attempting to ulate or has manipulated or attempted to manipulate the price of any commodity, in interstate commerce, or fo! delivery on or subject to the rules of any contract market willfully made any false or misleading statement of a 1 fact in any registration application or any report filed \ Commission under this chapter, or willfully omitted to any such application or report any material fact which is1 to be stated therein, or otherwise is violating or has violate the provisions of this chapter or of the rules, regulations, ¢ of the Commission thereunder, it may serve upon such | complaint stating its charges in that respect, which co shall have attached or shall contain therein a notice of 200a specifying a day and place not less than three da vice thereof, requiring such person to show cau: should not be made prohibiting it from trading the rules of any contract market, and directing | markets refuse all trading privileges to such pers notice of the Commission, and to show cause why of such person, if registered as futures commiss any person associated therewith as described in s title, commodity trading advisor, commodity poo floor broker hereunder, should not be suspended | hearing may be held in Washington, District of C: where, before the Commission, or before an Adn Judge designated by the Commission, which Adn Judge shall cause all evidence to be reduced to w with transmit the same to the Commission. Ur ceived, the Commission may prohibit such person or subject to the rules of any contract market and tract markets to refuse such person all trading pi for such period as may be specified in the order, an is registered as futures commission merchant or | ciated therewith as described in section 6k of this | trading advisor, commodity pool operator, or as fl under, may suspend, for a period not to exceed si voke, the registration of such person, and may as a civil penalty of not more than $100,000 for eac Notice of such order shall be sent forthwith by re by certified mail or delivered to the offending pi governing boards of said contract markets. Afte! the order by the Commission, the person against \ may obtain a review of such order or such other e to the court may seem just by filing in the Unite appeals of the circuit in which the petitioner is « written petition, within fifteen days after the not is given to the offending person praying that the o) mission be set aside. A copy of such petition sh 20la transmitted by the clerk of the court to the Comr upon the Commission shall file in the court the r made, as provided in section 2112 of Title 28. | the petition the court shall have jurisdiction to a or modify the order of the Commission, and tl Commission as to the facts, if supported by t dence, shall in like manner be conclusive. Section 8(a), 7 U.S.C. $12(a) § 12(a). Investigations respecting operations o and others subject to this chapter; sults; restrictions (a) For the efficient execution of the provisio and in order to provide information for the use Commission may make such investigations as il to ascertain the facts regarding the operations « and other persons subject to the provisions of Commission may publish from time to time t such investigation and such general statistical | ered therefrom as it deems of interest to the That except as otherwise specifically authorize the Commission may not publish data and infor separately disclose the business transactions or of any person and trade secrets or names of cu Section 8c, 7 U.S.C. § 12c §12¢c. Disciplinary actions; notice; revie Commission (1)(A) Any exchange or the Commission if to act, may suspend, expel, or otherwise discipli is a member of that exchange, or deny any pers« change. Any such action shall be taken solely 1 the rules of that exchange. 202a (B) Any suspension, expulsion, discip procedure established by an exchange rul ten notice to the Commission and to the p expelled, or disciplined, or denied access, \ includes the reasons for the exchange acti ner the Commission prescribes. An exch its findings and the reasons for the exchi proceeding, including the action taken « but shall not disclose the evidence theref who is suspended, expelled, or disciplined, the Commission. (2) The Commission may, in its diser with such standards and procedures as review any decision by an exchange wher ed, expelled, otherwise disciplined, or d change. In addition, the Commission mi upon application of any person who is ac other exch» nge action, review such actio (3) The Commission may affirm, mod any exchange decision it reviews pursuant section, after a determination on the reco the exchange was in accordance with the Subject to judicial review, any order of t pursuant to paragraph (2) of this secti change in its further treatment of the m: (4) The Commission, in its discretion, action taken pursuant to paragraph (1) review thereof. Section 9, 42 Stat. 1003 (1922) Sec. 9. Any person who shall violate th of this Act, or who shall fail to evidence in said section by a record in writing as t 203a shall knowingly or carelessly deliver foi mails or in interstate commerce by tele; or other means of communication fals ingly inaccurate reports concerning cr or conditions that affect or tend to affe terstate commerce, shall be deemed gui upon conviction thereof, be fined not m¢ oned for not more than one year, or bo of prosecution. Section 9, 49 Stat. 1501 (1936) Sec. 9. Any person who shall violat 4, section 4a, section 4b, section 4c, sec 4h, or section 4i of this Act, or who shal manipulate the price of any commodit or for future delivery on or subject to trade, or who shall corner or attempt modity, or who shall fail to evidence a section 4 of this Act by a record in writ who shall knowingly or carelessly deliv for transmission through the mails or | telegraph, telephone, wireless, or other false or misleading or knowingly inac crop or market information or conditi affect the price of grain in interstate cx guilty of a misdemeanor, and, upon c not more than $10,000 or imprisonme year, or both, together with the costs ¢ Section 9, 82 Stat. 33~34 (1968) Sec. 9. (a) It shall be a felony punis than $10,000 or imprisonment for not both, together with the costs of prosecu mission merchant, or any employee or ¢ steal, purloin, or with criminal intent cc use of another, any money, seci in excess of $100, which was ri chant to margin, guarantee, or any customer of such commiss' customer as the result of sucl ‘value’ as used in this paragraph or cost price, either wholesale « (b) It shall be a felony puni: $10,000 or imprisonment for n together with the costs of pros ulate or attempt to manipulate terstate commerce, or for future of any contract market, or to co; commodity, or knowingly to de transmission through the mails graph, telephone, wireless, or false or misleading or knowing crop or market information or affect the price of any commod (c) Except as provided in px tion, it shall be a misdemeanor than $10,000 or imprisonment both, together with the costs « violate the provisions of sectior 4c, section 4d, section 4e, sectio fail to evidence any contract me a record in writing as therein r Section 9(b), 7 U.S.C. $13(t § 13(b). Price manipulation; ¢ semination of false ing price of comma (b) It shall be a felony puni $500,000 or imprisonment for together with the costs of pros ulate or attempt to manipulate terstate commerce, or for futur of any contract market, or to such commodity, or knowingly for transmission through the n telegraph, telephone, wireless, false or misleading or knowin crop or market information 01 affect the price of any comm knowingly to violate the provisi 6c(¢), 6h, 60( 1), or 23 of this ti or misleading statement of a m plication or report filed with omit in any application or | required to be stated therein. | the case of any violation descri person who is an individual, $100,000, together with the co Section 9(c), 7 U.S.C. $1 3(c § 13(c). Other violations; mis: (c) Except as provided in si this section, it shall be a misde more than $100,000 or impris¢ or both, together with the cost violate any provisions of sect 60(2), or 12b of this title, or to tioned in section 6 of this titk required, Section 6c, 7 U.S.C. $13a- § 13a-1. Action to enjoin ¢ writs and orders; Whenever it shall appear to market or other person has eng gage in any act or pra sion of this chapter or a is restraining trading | Commission may brin; the United States or tt tory or other place subj to enjoif such act or p) chapter, or any rule, courts shall have jurisd That no restraining orc sions of this chapter sh; proper showing, a perm ing order shall be gran Commission, the distric ed States courts of any diction of the United § writs of mandamus, or any person to comply ' rule, regulation, or ord ing the requirement thz sary to remove the dan; rule, regulation, or ord damus, or order affordi action under this sectic the defendant is found | in the district where th is about to occur, and ¢ district in which the d« defendant may be fou: suant to this section, tl General to bring the ; bring the action, it shal and advise him of subs: Section 6d, 7 U.S. § 13a-2. Jurisdictio (1) Whenever it s State, the administr; such other official as the residents of that ened or adversely aff tract market, clearin engaging or is about a violation of any pro or order of the Comm in equity or an actio such act or practice, any rule, regulation, obtain damages on | further and other rel (2) The district cc courts of any territ« States for the Distric Suits in equity and ac force any liability o; regulation, or order damages or other rel cation, such courts sh damus, or orders affc to comply with the p tion, or order of the C ment that the defend: the danger of violati« tion, or order. Upon injunction or restrai) (3) Immediately State shall serve writ provide the ¢ Commission action and, u therein, and (| (4) Any si court of the | the defendan! wherein the ¢ occur, and pr which the de! may be founc (5) For pu tion, nothing the administi thorized Stat them by the | minister oath nesses or the (6) For pu the United S) of Puerto Ric (7) Nothi rized State ol an alleged vic ute of such S Section 6(1 § 15. Enfor For the pu sions of this | proceeding ui any Adminis! 209a Commission may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, or other records that the Commission deems relevant or material to the inquiry. The attendance of witnesses and the production of any such records may be required from any place in the United States or any State at any designated place of hearing. In case of contumacy by, or refusal to obey a subpoena issued to, any person, the Commission may invoke the aid of any court of the United States within the jurisdiction in which the investigation or pro- ceeding is conducted, or where such person resides or transacts business, i; requiring the attendance and testimony of witnesses and the production of books, papers, correspondence, memoran- da, and other records. Such court may issue an order requiring such person to appear before the Commission or member or Ad- ministrative Law Judge or other officer designated by the Com- mission, there to produce records, if so ordered, or to give tes- timony touching the matter under investigation or in question. Any failure to obey such order of the court may be punished by the court as a contempt thereof. All process in any such case may be served in the judicial district wherein such person is an inhabi- tant or transacts business or wherever such person may be found. Section 14, 7 U.S.C. $18 § 18. Complaints against registered persons Petition (a) Any person complaining of any violation of any provision of this chapter or any rule, regulation, or order thereunder by any person who is registered or required to be registered under section 6d, 6¢, 6), or 6m of this title may, at any time within two years after the cause of action accrues, apply to the Commission by pe- tition, which shall briefly state the facts, whereupon, if, in the opinion of the Commission, the facts therein contained warrant such action, a copy of the complaint thus made shall be forwarded 210a by the Commission to the respondent, who shail be called upon to satisfy the complaint, or to answer it in writing, within a reason- able time to be prescribed by the Commission. Investigation and hearing (b) If there appear to be, in the opinion of the Commission, any reasonable grounds for investigating any complaint made under this section, the Commission shall investigate such com- plaint and may, if in its opinion the facts warrant such action, have said complaint served by registered mail or by certified mail or otherwise on the respondent and afford such person an oppor- tunity for a hearing thereon before an Administrative Law Judge designated by the Commission in any place in which the said per- son is engaged in business: Provided, That in complaints wherein the amount claimed as damages does not exceed the sum of $5,000, a hearing need not be held and proof in support of the complaint and in support of the respondent’s answer may be sup- plied in the form of depositions or verified statements of fact. Determination (c) After opportunity for hearing on complaints where the damages claimed exceed the sum of $5,000 has been provided or waived and on complaints where damages claimed do not exceed the sum of $5,000 not requiring hearing as provided herein, the Commission shall determine whether or not the respondent has violated any provision of this chapter or any rule, regulation, or order thereunder. Bond requirement when complainant is nonresident; waiver (d) In case a complaint is made by a nonresident of the United States, the complainant shall be required, before any formal action is taken on his complaint, to furnish a bond in double the amount of the claim conditioned upon the payment of costs, in- cluding a reasonable attorney's fee for the respondent if the respondent shall prevail, and any reparation award that may be 2ila issued by the Commission against the complainant on any coun- terclaim by respondent: Provided, That the Commission shall have authority to waive the furnishing of a bond by a complainant who is a resident of a country which permits the filing of a com- plaint by a resident of the United States without the furnishing of a bond. Reparations (e) If after a hearing on a complaint made by any person under subsection (a) of this section, or without hearing as provided in subsections (b) and (c) of this section, or upon failure of the party complained against to answer a complaint duly served within the time prescribed, or to appear at a hearing after being duly notified, the Commission determines that the respondent has violated any provision of this chapter, or any rule, regulation, or order thereunder, the Commission shall, unless the offender has already made reparation to the person complaining, determine the amount of damage, if any, to which such person is entitled as a result of such violation and shall make an order directing the offender to pay to such person complaining such amount on or before the date fixed in the order. If, after the respondent has filed his answer to the complaint, it appears therein that the respon- dent has admitted liability for a portion of the amount claimed in the complaint as damages, the Commission under such rules and regulations as it shall prescribe, unless the respondent has already made reparation to the person complaining, may issue an order directing the respondent to pay to the complainant the undisputed amount on or before the date fixed in the order, leaving the re- spondent’s liability for the disputed amount for subsequent deter- mination. The remaining disputed amount shall be determined in the same manner and under the [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_1943%3A1. Public record. Not legal advice.