Wisniewski v. Rodale, Inc.

• Decision Date: 13 December 2007
• Docket Number: No. 06-1305.,06-1305.
• Citation: 510 F.3d 294
• Parties: David WISNIEWSKI, on behalf of himself and all others similarly situated v. RODALE, INC. David Wisniewski, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

510 F.3d 294

David WISNIEWSKI, on behalf of himself and all others similarly situated v. RODALE, INC. David Wisniewski, Appellant.

No. 06-1305.

United States Court of Appeals, Third Circuit.

Argued September 18, 2007.

Filed December 13, 2007.

Daniel B. Allanoff (argued), Meredith, Cohen, Greenfogel & Skirnich, Philadelphia, PA for Appellant.

Susan E. Wild, Gross, McGinley, LaBarre & Eaton, Allentown, PA, Lara M. Krieger, Manatt, Phelps & Phillips, Los Angeles, CA Gregory A. Clarick (argued), Manatt, Phelps & Phillips, New York, NY, for Appellee.

Before: SLOVITER, SMITH, and WEIS, Circuit Judges.

OPINION OF THE COURT

SMITH, Circuit Judge.

This appeal requires us to determine whether § 3009 of the Postal Reorganization Act, 39 U.S.C. § 3009 (2000), which regulates the shipment of unordered merchandise, provides an implied private right of action. The District Court dismissed David Wisniewski's § 3009 claim on the ground that no implied private right of action exists under this statute. Based on our review of the statute and applicable Supreme Court jurisprudence, we will affirm.

I.

This litigation began in February 2003 when then-plaintiff Michael Karnuth sued Rodale, Inc. in the United States District Court for the Eastern District of Pennsylvania, alleging that Rodale violated the Postal Reorganization Act's unordered merchandise statute, 39 U.S.C. § 3009,¹ and various Pennsylvania state laws. Specifically, Karnuth alleged that Rodale sent him books that he had never ordered and demanded payment for them, and that he paid Rodale for one of the books to avoid damage to his credit rating. Karnuth moved to certify the case as a class action on behalf of all those to whom Rodale had sent unsolicited products and payment demands, with a subclass consisting of those who had paid in whole or in part for the unsolicited products. The court denied the motion without prejudice after Rodale alleged that Karnuth had consented to receive the books. See Karnuth v. Rodale, Inc., No. 03-00742, 2003 WL 21961399 (E.D.Pa. July 2, 2003). After Karnuth filed an amended complaint, the District Court again denied his motion for class certification in March 2005 on the ground that inconsistencies in Karnuth's two complaints could damage his credibility and thereby harm the other class members. See Karnuth v. Rodale, Inc., No. 03-00742, 2005 WL 747251 (E.D.Pa. Mar.30, 2005).

Subsequently, David Wisniewski replaced Karnuth as class representative. Like Karnuth, Wisniewski alleged that Rodale had sent him unsolicited books and that he had paid Rodale to avoid damage to his credit rating. Rodale argued that Wisniewski consented when he sent Rodale an order card that enrolled Wisniewski in a "negative option" plan, under which Rodale would ship books and bill any recipients who did not return the books within a specified time period. Wisniewski responded that the order cards failed to meet objective disclosure standards and thus were inadequate as a source of consent. Without addressing the merits of these claims, the District Court granted class certification in July 2005 with respect to the § 3009 claim and denied certification with respect to the state law claims. See Karnuth v. Rodale, Inc., No. 03-00742, 2005 WL 1683605 (E.D.Pa. July 18, 2005). Both parties moved for summary judgment on the federal and state claims, agreeing that any ruling would bind only the named parties and not the class. See Wisniewski v. Rodale, 406 F.Supp.2d 550, 553 (E.D.Pa.2005). In December 2005, the District Court dismissed the § 3009 claim on the ground that this provision does not confer an implied private right of action, and it dismissed the state law claims for lack of jurisdiction. Id. at 557-58. Wisniewski timely appealed.

On appeal, the only issue before us is whether an implied private right of action exists under § 3009.² Because this is a question of law, we exercise plenary review over the District Court's summary judgment order. Am. Trucking v. Del. Toll Bridge Comm'n, 458 F.3d 291, 295 (3d Cir.2006).

II.

A private right of action³ is the right of an individual to bring suit to remedy or prevent an injury that results from another party's actual or threatened violation of a legal requirement.⁴ Although the legal requirement can be established by a number of sources, our focus is on statutory duties created by acts of Congress. Many federal statutes provide a private right of action through their express terms.⁵ Other federal statutes, however, merely define rights and duties, and are silent about whether an individual may bring suit to enforce them. For some statutes in this latter category, courts have held that "implied" private rights of action exist. Since neither party in the present case contends that the text of § 3009 provides an express private right of action, the only question before us is whether the statute confers an implied private right of action.

No consensus exists regarding when the Supreme Court first began recognizing implied private rights of action under federal statutes. In Cannon v. University of Chicago, 441 U.S. 677, 99 S.Ct. 1946, 60 L.Ed.2d 560 (1979), the majority contends that the Court's "earliest" case recognizing an implied private right of action was Texas & Pacific Railway Co. v. Rigsby, 241 U.S. 33, 36 S.Ct. 482, 60 L.Ed. 874 (1916). See Cannon, 441 U.S. at 689, 99 S.Ct. 1946 (citing Rigsby, 241 U.S. at 39, 36 S.Ct. 482).⁶ In Rigsby, the Court unanimously held that the Federal Safety Appliance acts provided an implied private right of action to an injured railroad employee against his employer. 241 U.S. at 39, 36 S.Ct. 482. Others argue that the idea of an implied private right of action existed in English common law⁷ and appeared in early U.S. cases such as Marbury v. Madison, 1 Cranch 137, 5 U.S. 137, 2 L.Ed. 60 (1803).⁸

At all events, over the past fifty years, the Supreme Court has substantially modified its test for determining whether a federal statute provides an implied private right of action. The Court's opinions have not always announced explicitly when they are overruling (or limiting to their facts) old precedents in this area. Therefore, it can be difficult to discern to what degree the Court has repudiated old tests as opposed to applying them in a different way to different statutes. We trace these changes below, explaining how the implied private right of action test has developed and where we believe it stands today.

A. J.I. Case Co. v. Borak

We begin our review with J.I. Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964), because this case exemplifies the Court's older and less restrictive approach to implied private rights of action. In Borak, the Court unanimously held that the Securities Exchange Act of 1934 implicitly authorizes a private right of action for rescission or damages to stockholders who alleged that they were injured by a consummated merger authorized with a false or misleading proxy statement in violation of § 14(a) of the Act. See 377 U.S. at 428, 435, 84 S.Ct. 1555. The Court explained its holding by emphasizing that "it is the duty of the courts to be alert to provide such remedies as are necessary to make effective the congressional purpose." Id. at 433, 84 S.Ct. 1555. Based on language in § 14(a) explicitly granting the Securities and Exchange Commission ("SEC") the authority to make rules "in the public interest or for the protection of investors," the Court deemed "the protection of investors" to be among the section's primary purposes. Id. at 432, 84 S.Ct. 1555. Noting that the SEC admits that it does not have enough time to examine every proxy statement for false and misleading statements, the Court stated that private enforcement is a "necessary supplement" to the SEC's efforts to protect investors. Id. at 432-33, 84 S.Ct. 1555. Finally, the Court asserted that a federal right of action was necessary because state law might not be adequate to protect the federally-created "rights" in the statute. Id. at 434-35, 84 S.Ct. 1555. At no point in its opinion did the Borak Court purport to discern Congress's intent regarding a private right of action (as opposed to Congress's general purposes in enacting the statute).

B. Cort v. Ash

The Supreme Court's unanimous opinion in Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), replaced the relatively loose standards of Borak with a four-factor test for determining whether an implied private right of action exists.⁹ Using this test, the Court determined that 18 U.S.C. § 610 (1970 & Supp. III), a criminal statute (later repealed) that prohibited corporations from making contributions to presidential campaigns, does not provide an implied private right of action for stockholders to sue corporate directors who violate the statute. 422 U.S. at 68-70, 95 S.Ct. 2080. The Court described its test as follows:

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"—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? Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? 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?

Id. at 78, 95 S.Ct. 2080 (emphasis in original) (citations omitted). Explaining the second prong of this test, the Court said that when federal law grants certain rights to a class of people (and thereby satisfies the first prong), "it is not necessary to show an intention to create a private cause of action, although an explicit...