Respondents' complaint alleged these professionals had joint responsibility for the securities violations and were liable for contribution under various theories, including a right to contribution based on the 10b-5 action central to the complaint in the original class suit. Subrogated to the rights of their insureds, respondents brought this lawsuit seeking contribution from petitioners, who were the attorneys and accountants involved in the public offering. Respondents, who insured most of the named defendants, funded $13 million of the settlement. The named defendants settled with the plaintiffs for $13.5 million. §§ 77k and 77 l, § 10(b) of the Securities Exchange Act of 1934 (the 1934 Act), 48 Stat. The plaintiffs alleged the stock offering was misleading in material respects, in violation of §§ 11 and 12 of the Securities Act of 1933 (the 1933 Act), 48 Stat.
The stock purchasers later brought a class action against Cousins, its parent company, various officers and directors of Cousins, and two lead underwriters. * Cousins Home Furnishings, Inc., made a public offering of its stock in December 1983. Justice KENNEDY delivered the opinion of the Court. as amicus curiae by special leave of the Court. THOMAS, J., filed a dissenting opinion, in which BLACKMUN and O'CONNOR, JJ., joined.Ĭharles A. KENNEDY, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and WHITE, STEVENS, SCALIA, and SOUTER, JJ., joined. Moreover, there is no evidence this rule will impede the purposes of the 10b-5 action in the more than 20 years since the federal courts first recognized a right to contribution for 10b-5 defendants, there has been no showing that the right detracts from the effectiveness of the 10b-5 implied action or interferes with the effective operation of the securities laws. Consistency and coherence therefore require that a like contribution rule be adopted for 10b-5 actions. Two sections of the 1934 Act containing express private rights of action, §§ 9 and 18, are close in structure, purpose, and intent to the 10b-5 action, and each explicitly provides for a right of contribution. See, e.g., Lampf, Pleva, Lipkind, Prupis & Petigrow v. In order to ensure that the rules established to govern such actions are symmetrical and consistent with the 1934 Act's overall structure and objectives, the Court must attempt to infer how the 1934 Congress would have addressed the issue of contribution had it included the 10b-5 private right of action as an express provision in the Act. (b) A right to contribution is within the contours of the 10b-5 action.
Congress has left that task to the courts.
Congress has recognized a judicial authority to shape, within limits, the 10b-5 cause of action when, in enacting the Insider Trading and Securities Fraud Enforcement Act of 1988 and a statute respecting 10b-5 limitations periods, it included provisions acknowledging the 10b-5 action without expressing any intent to define it. The courts having implied the underlying liability in the first place, it would be most unfair to those against whom damages have been assessed for the courts to now disavow authority to allocate that liability on the theory that Congress has not addressed the issue directly. The 10b-5 action was not created by Congress, but was implied by the judiciary. 2061, 68 L.Ed.2d 500, and the precedents on which they are based, distinguished. (a) Federal courts have authority to imply a right to contribution in a 10b-5 action.
Held: Defendants in a 10b-5 action have a right to seek contribution as a matter of federal law. Shortly after the latter court ruled in respondents' favor, however, the Court of Appeals for the Eighth Circuit held that there can be no implied cause of action for contribution in a 10b-5 action. Both the District Court and the Court of Appeals, consistent with binding Circuit precedent, recognized that respondents had a right to seek contribution for the 10b-5 liability. After funding $13 million of the settlement, respondents brought this lawsuit seeking contribution from petitioners, who were the attorneys and accountants involved in the stock offering that prompted the 10b-5 action. Respondents insured most of the named defendants in a suit that, inter alia, was based on an implied private right of action under § 10(b) of the Securities Act of 1934 and Rule 10b-5 of the Securities and Exchange Commission (a 10b-5 action), and that eventually was settled by the parties.
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