Drake v. Honeywell, Inc., 85-5179

• Citation: 797 F.2d 603
• Decision Date: 28 August 1986
• Docket Number: No. 85-5179,85-5179
• Parties: , 55 USLW 2074 Vicki Lynn DRAKE, et al., Appellees, v. HONEYWELL, INC., Appellant, v. WAGONER WATER HEATER CO., INC., Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 603

797 F.2d 603

87 A.L.R.Fed. 571, 55 USLW 2074

Vicki Lynn DRAKE, et al., Appellees, v. HONEYWELL, INC., Appellant, v. WAGONER WATER HEATER CO., INC., Appellee.

No. 85-5179.

United States Court of Appeals Eighth Circuit.

Submitted Dec. 10, 1985.

Decided July 23, 1986.

Rehearing Denied Aug. 28, 1986.

Scott W. Johnson, Minneapolis, Minn., for appellant.

Stanley E. Karon, St. Paul, Minn., for appellees.

Before LAY, Chief Judge, JOHN R. GIBSON, Circuit Judge, and McMANUS, ^* District Judge.

JOHN R. GIBSON, Circuit Judge.

The question presented is whether section 23(a) of the Consumer Product Safety Act, 15 U.S.C. Sec. 2072(a) (1982), creates a private cause of action for an injury resulting from noncompliance with the product hazard reporting rules issued by the Consumer Product Safety Commission. We conclude that it does not, and therefore reverse the judgment of the district court.

I.

Vicki Lynn Drake commenced this action to recover damages for personal injuries sustained in the explosion of a liquid propane gas water heater. Drake claims that the accident was caused by a design defect in the water heater control knob designed by Honeywell. She asserts common law products liability theories of relief against Honeywell including negligence, breach of warranty, and strict liability in tort.

These state law claims come to this forum pendent to a federal claim predicated upon a private cause of action under section 23(a) of the Consumer Product Safety Act, 15 U.S.C. Sec. 2072(a) (1982). See United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). Section 23(a) of the Act vests a private cause of action for damages in any person who is injured by virtue of a knowing violation of a "consumer product safety rule, or any other rule or order" issued by the Consumer Product Safety Commission, and provides attorney fees to the prevailing plaintiff. ¹ It is significant that a section 23(a) private cause of action arises from a rule violation only. Section 23(a) does not allow a private action for violations of the statute itself. Section 15(b) of the Act, 15 U.S.C. Sec. 2064(b) (1982), requires a manufacturer, distributor, or retailer who obtains information that reasonably supports the conclusion that its product contains a defect which could create a substantial product hazard to notify the Commission of the product defect. ² The Commission, at 16 C.F.R. Part 1115 (1985), has promulgated rules which elaborate on the statutory reporting requirement. These rules specify, among other things, who must report to the Commission, id. Sec. 1115.10; what information must be reported, id. Sec. 1115.12; the form the reports must take, id. Sec. 1115.13; and the timetable for reporting, id. Sec. 1115.14.

Drake claims that before the explosion which caused her injuries occurred, Honeywell had learned that the water heater control knob contained a defect which could create a substantial product hazard. She asserts that Honeywell should have reported the information to the Commission as prescribed by the rules at 16 C.F.R. Part 1115. Honeywell's failure to comply with the reporting rules, she concludes, constitutes a violation of a rule issued by the Commission and gives rise to a private cause of action under section 23(a). She seeks recovery on the theory that had Honeywell reported the information in accordance with the Commission's rules, the defect would have been cured or the water heater removed from the market and her injury prevented.

Honeywell moved the district court to dismiss the federal claim. It argued that a private cause of action cannot arise from noncompliance with the reporting rules at 16 C.F.R. Part 1115 because these are not the kind of rules that Congress intended to be enforced by the section 23(a) private mechanism. According to Honeywell, the purpose of 16 C.F.R. Part 1115 is merely to set forth the Commission's interpretation of the reporting requirements imposed by Congress under section 15(b) of the Act, to provide guidance to those whose conduct may be governed by the statute. They are interpretive rules, not legislative or substantive rules. They do not establish legally enforceable obligations and therefore cannot be violated. Honeywell thus concludes that Drake's claim, boiled down, is predicated not upon a violation of the rules issued pursuant to section 15(b), but upon a violation of section 15(b) itself. Section 23(a), however, is plain that only a rule violation is subject to private enforcement. A violation of the statute, Honeywell concedes, can be prosecuted by the Commission and punished with fines, injunction, or imprisonment. It does not, however, give rise to a private cause of action.

The district court denied Honeywell's motion to dismiss. Drake v. Lochinvar Water Heater, Inc., 618 F.Supp. 549 (D.Minn.1985). The court acknowledged that the word "rule" is not defined in the Act. However, focusing on the plain meaning of "rule," the district court concluded that the product hazard reporting rules issued by the Commission, even if interpretive rules, are plainly "rules" within the meaning of section 23(a). Thus, the court held that a private action can be maintained against Honeywell for its alleged violation of 16 C.F.R. Part 1115. The district court later amended its order to certify the issue for interlocutory review and this appeal followed.

II.

Section 23(a) by its terms permits a private cause of action for the violation of "a consumer product safety rule, or any other rule or order" issued by the Commission. The Act defines "consumer product safety rule," 15 U.S.C. Sec. 2052(a)(2), but does not define the scope of the "other rule" provision. Nonetheless, the reporting rules issued by the Commission, whether legislative or interpretive, are patently within the plain meaning of the word "rule." Therefore, it would appear from the language of section 23(a) that a failure to comply with the reporting rules gives rise to a private cause of action. ³

Our investigation, however, only starts with the statutory language. The question whether a statute permits a private right of action is ultimately one of congressional intent. Universities Research Association, Inc. v. Coutu, 450 U.S. 754, 770, 101 S.Ct. 1451, 1461, 67 L.Ed.2d 662 (1981). " '[A] thing may be within the letter of the statute and yet not within the statute, because not within its spirit, or within the intention of its makers.' " United Steelworkers of America v. Weber, 443 U.S. 193, 201, 99 S.Ct. 2721, 2726, 61 L.Ed.2d 480 (1979) (quoting Church of the Holy Trinity v. United States, 143 U.S. 457, 459, 12 S.Ct. 511, 512, 36 L.Ed. 226 (1892)). To discover that intention we must not fix on a single word or sentence, but must examine the law as a whole. Panama Refining Co. v. Ryan, 293 U.S. 388, 439, 555 S.Ct. 241, 256, 79 L.Ed. 446 (1935) (Cardozo, J., dissenting). While section 23(a) states that a private action may flow from a violation of a rule, it does not similarly provide for private actions based on a violation of the statute itself. Ordinarily, when a federal statute explicitly creates a private cause of action, it does so for violations of its own provisions, not just for violations of rules that may be issued pursuant to those provisions. This approach was taken, for example, in a similarly comprehensive consumer protection statute enacted just four years earlier, the Consumer Credit Protection Act, 15 U.S.C. Secs. 1601-93 (1982 & West Supp.1986). See 15 U.S.C. Sec. 1640(a) (1982) (permitting private action against any creditor who fails to comply with any part of the statute). From this obvious and unambiguous omission, we must conclude that Congress intentionally withheld from private persons the right to seek damages based on an injury resulting from a violation of the statute.

Section 15(b) of the statute specifically requires reporting of substantial product hazards. Violation of section 15(b) cannot be prosecuted by private action. The trouble with applying the plain meaning of "rule" to the Commission's substantial product hazard reporting rules, then, is that such a reading effectively renders privately enforceable the reporting requirement contained in section 15(b) of the statute. This would seem to frustrate the congressional intent, expressed by the omission of section 23(a), to deny a private cause of action to those injured from a violation of the statute itself. Thus, from a view of the Act as a whole, we would conclude that despite the plain meaning of "rule," failure to comply with the Commission's reporting rules does not give rise to a private cause of action. ⁴

III.

Our conclusion, that Congress did not intend a section 23(a) private action to arise from noncompliance with the Commission's reporting rules, is reinforced when the problem is viewed through the lens of well-settled principles of administrative law. The Constitution, of course, does not explicitly recognize federal administrative rulemaking authority. Rather, the power to make law resides with the Congress, and administrative agencies may make rules enforceable as law only when that power exclusive to the legislature is properly delegated by statute. Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 398, 60 S.Ct. 907, 914, 84 L.Ed. 1263 (1940). Rules enacted by an administrative agency pursuant to statutory delegation, called substantive or legislative rules, must be judicially enforced as if laws enacted by Congress itself. Batterton v. Francis, 432 U.S. 416, 425 & n. 9, 97 S.Ct. 2399, 2405 & n. 9, 53 L.Ed.2d 448 (1977); United States v. Mersky, 361 U.S. 431, 437-38, 80 S.Ct. 459, 463, 4 L.Ed.2d 423 (1960). Rules not enacted pursuant to an explicit statutory delegation of lawmaking power, called interpretive rules, are issued merely to provide guidance to parties whose conduct may be governed by the underlying statute, and to courts which must construe it. They "carry no more...