There are other questions, but the principal issue presented for decision is whether a private cause of action for damages against corporate directors is to be implied in favor of a corporate stockholder under 18 U. S. C. § 610, a criminal statute prohibiting corporations from making "a contribution or expenditure in connection with any election at which Presidential and Vice Presidential electors . . . are to be voted for."
In August and September 1972, an advertisement with the caption "I say let's keep the campaign honest. Mobilize `truth squads' " appeared in various national publications, including Time, Newsweek, and U. S. News and World Report, and in 19 local newspapers in communities where Bethlehem Steel Corp. (Bethlehem), a Delaware corporation, has plants. Reprints of the advertisement, which consisted mainly of quotations from a speech by petitioner Stewart S. Cort, chairman of the board of directors of Bethlehem, were included with the September 11, 1972, quarterly dividend checks mailed to the stockholders of the corporation. The main text of the advertisement appealed to the electorate to "encourage responsible, honest, and truthful campaigning." It alleged that vigilance was needed because "careless rhetoric and accusations . . . are being thrown around these days—their main target being the business community." In italics, under a picture of Mr. Cort, the advertisement quoted "the following statement made by a political candidate: `The time has come for a tax system that says to big business—you must pay your fair share.' " It then printed Mr. Cort's rejoinder to this in his speech, including his opinion that to say "large corporations [are] not carrying their fair share of the tax burden" is "baloney." The advertisement concluded with an offer to send, on request, copies of Mr. Cort's entire speech
Respondent owns 50 shares of Bethlehem stock and was qualified to vote in the 1972 Presidential election. He filed this suit in the United States District Court for the Eastern District of Pennsylvania on September 28, 1972, on behalf of himself and, derivatively, on behalf of Bethlehem. The complaint specified two separate and distinct bases for jurisdiction and relief. Count I alleged jurisdiction under 28 U. S. C. § 1331 and sought to state a private claim for relief under 18 U. S. C. § 610, which, as mentioned, in terms provides only for a criminal penalty. Count II invoked pendent jurisdiction for a claim under Delaware law, alleging that the corporate campaign expenditures were "ultra vires, unlawful and [a] willful, wanton and gross breach of [defendants'] duty owed to [Bethlehem]." Immediate injunctive relief against further corporate expenditures in connection with the 1972 Presidential election or any
The District Court denied a preliminary injunction on October 25, 1972. 350 F.Supp. 227. While the denial was supported on three grounds,
After the affirmance on appeal, petitioners sought an order requiring respondent to post security for expenses as required by Pennsylvania law. The court declined to order such security with regard to the federal cause of action alleged in Count I, but did order respondent to post $35,000 before proceeding with the pendent claim under Count II. Rather than post security, respondent filed an amended complaint, which dropped Count II, the separate state cause of action, from the case.
We consider first the holding of the Court of Appeals that respondent has "a private cause of action . . . [as] a citizen [or as a stockholder] to secure injunctive relief." The 1972 Presidential election is history, and respondent as citizen or stockholder seeks injunctive relief only as to future elections. In that circumstance, a statute enacted after the decision of the Court of Appeals, the Federal Election Campaign Act Amendments of 1974, Pub. L. 93-443, 88 Stat. 1263 (Amendments) (amending the Federal Election Campaign Act of 1971, 86 Stat. 3), requires reversal of the holding of the Court of Appeals.
In terms, § 610 is only a criminal statute, providing a fine or imprisonment for its violation. At the time this suit was filed, there was no statutory provision for civil enforcement of § 610, whether by private parties or by a Government agency. But the Amendments created a Federal Election Commission, 2 U. S. C. § 437c (a) (1) (1970 ed., Supp. IV);
The governing rule was announced by Mr. Chief Justice Marshall in United States v. Schooner Peggy, 1 Cranch 103, 110 (1801):
We most recently reaffirmed the principle of Schooner Peggy in Bradley v. Richmond School Board, 416 U.S. 696, 711 (1974), where we said: "We anchor our holding in this case on the principle that a court is to apply the law in effect at the time it renders its decision, unless doing so would result in manifest injustice or there is statutory direction or legislative history to the contrary." There is no "statutory direction or legislative history to the contrary" in or respecting the Amendments, nor is there any possible "manifest injustice" in requiring respondent to pursue with respect to alleged violations which have yet to occur the statutory remedy for injunctive relief created by the Amendments.
Our conclusion in Part II pretermits any occasion for addressing the question of respondent's standing as a citizen and voter to maintain this action, for respondent seeks damages only derivatively as stockholder. Therefore, we turn next to the holding of the Court of Appeals that "a private cause of action . . . by a stockholder to secure . . . derivative damage relief [is] proper to remedy violation of § 610." We hold that such relief
In determining whether a private remedy is implicit in a statute not expressly providing one, several factors are relevant. First, is the plaintiff "one of the class for whose especial benefit the statute was enacted," Texas & Pacific R. Co. v. Rigsby, 241 U.S. 33, 39 (1916) (emphasis supplied)—that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? See, e. g., National Railroad Passenger Corp. v. National Assn. of Railroad Passengers, 414 U.S. 453, 458, 460 (1974) (Amtrak). Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? See, e. g., Amtrak, supra; Securities Investor Protection Corp. v. Barbour, 421 U.S. 412, 423 (1975); Calhoon v. Harvey, 379 U.S. 134 (1964). And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law? See Wheeldin v. Wheeler, 373 U.S. 647, 652 (1963); cf. J. I. Case Co. v. Borak, 377 U.S. 426, 434 (1964); Bivens v. Six Unknown Federal Narcotics Agents, 403 U.S. 388, 394-395 (1971); id., at 400 (Harlan, J., concurring in judgment).
The dissenting judge in the Court of Appeals and petitioners here suggest that where a statute provides a penal remedy alone, it cannot be regarded as creating a
Clearly, provision of a criminal penalty does not necessarily preclude implication of a private cause of action for damages. Wyandotte Transportation Co. v. United States, 389 U.S. 191, 201-202 (1967); see also J. I. Case Co. v. Borak, supra; Texas & Pacific R. Co. v. Rigsby, supra. However, in Wyandotte, Borak, and Rigsby, there was at least a statutory basis for inferring that a civil cause of action of some sort lay in favor of someone.
We need not, however, go so far as to say that in this circumstance a bare criminal statute can never be deemed sufficiently protective of some special group so as to give rise to a private cause of action by a member of that group. For the intent to protect corporate shareholders particularly was at best a subsidiary purpose of § 610, and the other relevant factors all either are not helpful or militate against implying a private cause of action.
First, § 610 is derived from the Act of January 26, 1907,
However, the legislative history of the 1907 Act, recited at length in United States v. Auto Workers, 352 U.S. 567 (1957), demonstrates that the protection of ordinary stockholders was at best a secondary concern.
Second, there is no indication whatever in the legislative history of § 610 which suggests a congressional intention to vest in corporate shareholders a federal right to damages for violation of § 610. True, in situations in which it is clear that federal law has granted a class of persons certain rights, it is not necessary to show an intention to create a private cause of action, although an explicit purpose to deny such cause of action would be controlling.
Third, while "it is the duty of the courts to be alert to provide such remedies as are necessary to make effective the congressional purpose," J. I. Case Co. v. Borak, 377 U. S., at 433, in this instance the remedy sought would not aid the primary congressional goal. Recovery of derivative damages by the corporation for violation of § 610 would not cure the influence which the use of corporate funds in the first instance may have had on a federal election. Rather, such a remedy would only permit directors in effect to "borrow" corporate funds for a time; the later compelled repayment might well not deter the initial violation, and would certainly not decrease the impact of the use of such funds upon an election already past.
Fourth, and finally, for reasons already intimated, it is entirely appropriate in this instance to relegate respondent and others in his situation to whatever remedy is created by state law. In addition to the ultra vires action pressed here, see n. 6, supra, the use of corporate funds in violation of federal law may, under the law of some States, give rise to a cause of action for breach of fiduciary duty. See, e. g., Miller v. American Telephone & Telegraph Co., 507 F.2d 759 (CA3 1974). Corporations are creatures of state law, and investors commit their funds to corporate directors on the understanding that, except where federal law expressly requires certain responsibilities of directors with respect to stockholders, state law will govern the internal affairs of the corporation. If, for example, state law permits corporations to use corporate funds as contributions in state elections, see Miller, supra, at 763 n. 4, shareholders are on notice that their funds may be so used and have no recourse under any federal statute. We are
In Borak, supra, we said: "[If] the law of the State happened to attach no responsibility to the use of misleading proxy statements, the whole purpose of [§ 14 (a) of the Securities Exchange Act of 1934] might be frustrated." 377 U. S., at 434-435. Here, committing respondent to state-provided remedies would have no such effect. In Borak, the statute involved was clearly an intrusion of federal law into the internal affairs of corporations; to the extent that state law differed or impeded suit, the congressional intent could be compromised in state-created causes of action. In this case, Congress was concerned, not with regulating corporations as such, but with dulling their impact upon federal elections. As we have seen, the existence or nonexistence of a derivative cause of action for damages would not aid or hinder this primary goal.
Because injunctive relief is not presently available in light of the Amendments, and because implication of a federal right of damages on behalf of a corporation under § 610 would intrude into an area traditionally committed to state law without aiding the main purpose of § 610, we reverse.
It is so ordered.
James F. Rill, Thomas F. Shannon, John Hardin Young, Milton A. Smith, and Lawrence B. Kraus filed a brief for the Chamber of Commerce of the United States as amicus curiae urging reversal.
Alan B. Morrison and Reuben B. Robertson III filed a brief for Judith Bonderman et al. as amici curiae urging affirmance.
"Contributions or expenditures by national banks, corporations or labor organizations.
"It is unlawful for any national bank, or any corporation organized by authority of any law of Congress, to make a contribution or expenditure in connection with any election to any political office, or in connection with any primary election or political convention or caucus held to select candidates for any political office, or for any corporation whatever, or any labor organization to make a contribution or expenditure in connection with any election at which Presidential and Vice Presidential electors or a Senator or Representative in, or a Delegate or Resident Commissioner to Congress are to be voted for, or in connection with any primary election or political convention or caucus held to select candidates for any of the foregoing offices, or for any candidate, political committee, or other person to accept or receive any contribution prohibited by this section.
"Every corporation or labor organization which makes any contribution or expenditure in violation of this section shall be fined not more than $5,000; and every officer or director of any corporation, or officer of any labor organization, who consents to any contribution or expenditure by the corporation or labor organization, as the case may be, and any person who accepts or receives any contribution, in violation of this section, shall be fined not more than $1,000 or imprisoned not more than one year, or both; and if the violation was willful, shall be fined not more than $10,000 or imprisoned not more than two years, or both.
"As used in this section, the phrase `contribution or expenditure' shall include any direct or indirect payment, distribution, loan, advance, deposit, or gift of money, or any services, or anything of value (except a loan of money by a national or State bank made in accordance with the applicable banking laws and regulations and in the ordinary course of business) to any candidate, campaign committee, or political party or organization, in connection with any election to any of the offices referred to in this section; but shall not include communications by a corporation to its stockholders and their families or by a labor organization to its members and their families on any subject; nonpartisan registration and get-out-the-vote campaigns by a corporation aimed at its stockholders and their families, or by a labor organization aimed at its members and their families; the establishment, administration, and solicitation of contributions to a separate segregated fund to be utilized for political purposes by a corporation or labor organization: Provided, That it shall be unlawful for such a fund to make a contribution or expenditure by utilizing money or anything of value secured by physical force, job discrimination, financial reprisals, or the threat of force, job discrimination, or financial reprisal; or by dues, fees, or other monies required as a condition of membership in a labor organization or as a condition of employment, or by monies obtained in any commercial transaction."
Definitions of various terms in § 610 are included in 18 U. S. C. § 591 (1970 ed., Supp. III).
The Federal Election Campaign Act Amendments of 1974, Pub. L. 93-443, 88 Stat. 1263, §§ 101 (e), 102, increased substantially the fines for violation of § 610 and changed many of the definitions in § 591 of the terms used in § 610.
Therefore, there is not properly before us respondent's argument that the acts of a Delaware corporation violative of United States criminal statutes are ultra vires acts under Delaware corporation law, Del. Code Ann., Tit. 8, § 101; 6 W. Fletcher, Cyclopedia Corporations 335 (1968 ed.), and that his ultra vires cause of action therefore "arises under" federal law, that is, § 610, within the meaning of 28 U. S. C. § 1331. He relies upon Smith v. Kansas City Title Co., 255 U.S. 180 (1921); see also Wheeldin v. Wheeler, supra, at 659-660 (BRENNAN, J., dissenting). Not only was Count II dropped from the case by respondent, and no argument addressed to it made by him in the District Court or the Court of Appeals, but he neither cross-petitioned nor raised the contention in his Opposition to the Petition for Certiorari. Moreover, this Court must necessarily depend upon the district courts and courts of appeals for initial determinations of questions of state law; indeed, our practice of deference to such determinations should generally render unnecessary review of their decisions in this respect. Commissioner v. Estate of Bosch, 387 U.S. 456, 462 (1967); Ragan v. Merchants Transfer Co., 337 U.S. 530, 534 (1949). Obviously, then, we should not undertake to decide such questions, inherent in respondent's theory, in the first instance.
In sum, in this case "we see no cause for deviating from our normal policy of not considering issues which have not been presented to the Court of Appeals and which are not properly presented for review here." Neely v. Eby Constr. Co., 386 U.S. 317, 330 (1967); cf. Wiener v. United States, 357 U.S. 349, 351 n. (1958).
In Borak, § 27 of the Securities Exchange Act of 1934 specifically granted jurisdiction to the district courts over civil actions to "enforce any liability or duty created by this title or the rules and regulations thereunder," and there seemed to be no dispute over the fact that at least a private suit for declaratory relief was authorized; the question was whether a derivative suit for rescission and damages was also available. 377 U. S., at 340-431. Further it was clear that the Securities and Exchange Commission could sue to enjoin violations of § 14 (a) of the Act, the section involved in Borak. See § 21 of the Act, 15 U. S. C. § 78u.
Finally, in Rigsby, the Court noted that the statutes involved included language pertinent only to a private right of action for damages, although such a right of action was not expressly provided, thus rendering "[t]he inference of a private right of action . . . irresistible." 241 U. S., at 40. See also United States v. Republic Steel Corp., 362 U.S. 482, 491 (1960).
"[It] shall be unlawful for any national bank, or any corporation organized by authority of any laws of Congress, to make a money contribution in connection with any election to any political office. It shall also be unlawful for any corporation whatever to make a money contribution in connection with any election at which Presidential and Vice-Presidential electors or a Representative in Congress is to be voted for or any election by any State legislature of a United States Senator. . . ." 34 Stat. 864.
We find this excursion into extrapolation of legislative intent entirely unilluminating. In Amtrak, there was a private cause of action provided in favor of certain plaintiffs concerning the particular provision at issue. It was in this context that we referred to "[a] frequently stated principle of statutory construction . . . that when legislation expressly provides a particular remedy or remedies, courts should not expand the coverage of the statute to subsume other remedies." 414 U. S., at 458. In addition, there was specific support in the legislative history of the Amtrak Act for the proposition that the statutory remedies were to be exclusive. Id., at 458-461.
In T. I. M. E., supra, the Court did rely in part upon the fact that a particular remedy was provided with regard to certain parts of the Interstate Commerce Act to infer that none was intended with regard to others. But again, there was specific support in the legislative history for this inference. 359 U. S., at 471-472, 477, and n. 18.
Here, there was, as far as the parties have been able to point out and as far as we have been able independently to determine, no discussion whatever in Congress concerning private enforcement of § 610. Further, while § 610 was amended in ways not pertinent here in 1971, it was, as we have seen, of much earlier origin, and it would be odd to infer from Congress' actions concerning the newly created provisions of Title III any intention regarding the enforcement of a long-existing statute.
Petitioners also suggest that the legislative history of the Amendments throw a "cross-light," Pipefitters v. United States, 407 U. S., at 427, upon Congress' understanding concerning private enforcement of § 610. Any such light cast is, in our view, exceedingly dim and of little help here.