author: Justice Kennedy Justice Thomas,

text:
    MUSICK, PEELER & GARRETT et al. v. EMPLOYERS INSURANCE OF WAUSAU et al.
    No. 92-34.
    Argued March 1, 1993 —
    Decided June 1, 1993

      Charles A. Bird argued the cause for petitioners. With him on the brief were Robert G. Sterner, Alvin M. Stein, and Mark I. Schlesinger.

      Theodore B. Olson argued the cause for respondents. Lawrence H. Nagler, Nanci E. Murdock, Robert M. Zabb, and Darrin F. Meyer filed a brief for respondents Employers Insurance of Wausau et al. Andrew J. Pincus, Kenneth S. Getter, William J. Reifman, Michael A. Vatis, Leonard P. Novello, Richard I. Miller, and Dean I. Ringel filed a brief for respondents Peat Marwick Main & Co. et al.

      Robert A Long, Jr., argued the cause for the Securities and Exchange Commission as amicus curiae urging affirmance. With him on the brief were Acting Solicitor General Bryson, Deputy Solicitor General Mahoney, Michael R. Dreeben, Paul Gonson, Jacob H. Stillman, Eric Summer-grad, and Judith R. Starr.

        Paul F. Bennett, David B. Gold, William S. Leraeh, and Kevin P. Roddy filed a brief for the National Association of Securities and Commercial Law Attorneys as amicus curiae urging reversal.
      Briefs of amici curiae urging affirmance were filed for the American Institute of Certified Public Accountants by Louis A Craco and Russell

        G. Ryan; for the First Boston Corporation et al. by Stuart J. Baskin and Thomas S. Martin; and for the Securities Industry Association by Barbara Moses, Sam Scott Miller, Barry S. Augenbraun, and William A. Fitzpatrick.

   Justice Kennedy

delivered the opinion of the Court.

Where there is joint responsibility for tortious conduct, the question often arises whether those who compensate the injured party may seek contribution from other joint tortfeasors who have paid no damages or paid less than their fair share. In this case we must determine whether defendants in a suit based on an implied private right of action under § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and Exchange Commission (a 10b-5 action) may seek contribution from joint tortfeasors. Without addressing the merits of the claim for contribution in this case, we hold that defendants in a 10b-5 action have a right to seek contribution as a matter of federal law.

I

Cousins Home Furnishings, Inc., made a public offering of its stock in December 1983. The stock purchasers later brought a class action against Cousins, its parent company, various officers and directors of Cousins, and two lead underwriters. The plaintiffs alleged the stock offering was misleading in material respects, in violation of §§ 11 and 12 of the Securities Act of 1933 (1933 Act), 48 Stat. 82, 84, 15 U. S. C. §§77k and 771, § 10(b) of the Securities Exchange Act of 1934 (1934 Act), 48 Stat. 891, 15 U. S. C. §78j(b), and certain state laws. The named defendants settled with the plaintiffs for $13.5 million. Respondents, who insured most of the named defendants, funded $13 million of the settlement. 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’ 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.

In proceedings before the United States District Court for the Southern District of California and the United States Court of Appeals for the Ninth Circuit, the parties disputed the principles for determining whether the insureds had paid more than their fair share of liability in the class settlement, with scant attention being paid to the underlying issue whether liability in a 10b-5 action is accompanied by any right to contribution at all. This lack of attention is understandable, for the existence of the 10b-5 right to contribution is well established in the Ninth Circuit, Smith v. Mulvaney, 827 F. 2d 558, 560 (1987), as well as in a number of other Circuits, In re Jiffy Lube Securities Litigation, 927 F. 2d 155, 160 (CA4 1991); Sirota v. Solitron Devices, Inc., 673 F. 2d 566, 578 (CA2), cert. denied, 459 U. S. 838 (1982); Huddleston v. Herman & MacLean, 640 F. 2d 534, 557-559 (CA5 1981), aff’d in part, rev’d in part on other grounds, 459 U. S. 375 (1983); Heizer Corp. v. Ross, 601 F. 2d 330, 331-334 (CA7 1979).

Some three months after the Court of Appeals ruled in favor of respondents, 954 F. 2d 575 (CA9 1992), the United States Court of Appeals for the Eighth Circuit created a conflict on the basic issue whether defendants in a 10b-5 action have a right to contribution. In light of our decisions on contribution in other areas of federal law, the Eighth Circuit ruled that there can be no implied cause of action for contribution in a 10b-5 action. Chutich v. Touche Ross & Co., 960 F. 2d 721, 724 (1992). Petitioners requested that we resolve the conflict among the Circuits. We granted their petition for a writ of certiorari on the sole question presented: ‘Whether federal courts may imply a private right to contribution in Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities [and] Exchange Commission,” Pet. for Cert. i. 506 U. S. 814 (1992).

II

Requests to recognize a right to contribution for defendants liable under federal law are not unfamiliar to this Court. Twice we have declined to recognize an action for contribution under federal laws outside the arena of securities regulation. In Northwest Airlines, Inc. v. Transport Workers, 451 U. S. 77 (1981), we held that an employer had no right to contribution against unions alleged to be joint participants with the employer in violations of the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964. Later that same Term, in Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U. S. 630 (1981), we determined that there is no right to contribution for recovery based on violation of § 1 of the Sherman Act.

On the other hand, we endorsed a nonstatutory right to contribution among joint tortfeasors responsible for injuring a longshoreman in Cooper Stevedoring Co. v. Fritz Kopke, Inc., 417 U. S. 106 (1974). We have been careful to note that Cooper does not stand for the proposition that there is a general right to contribution under federal law. Northwest Airlines, supra, at 96-97. Indeed, the rule announced in Cooper represented an exercise of our authority to provide just and equitable remedies for cases within our admiralty jurisdiction, a jurisdiction in which the federal courts have had historic, well-recognized responsibility for the elaboration of legal doctrine. See United States v. Reliable Transfer Co., 421 U. S. 397, 409 (1975). For our purposes, therefore, Cooper is less instructive than our decisions in Texas Industries and Northwest Airlines. But the instruction we receive from the latter two eases is that they are distinguishable from, rather than parallel to, the matter now before us.

The federal interests in both Texas Industries and Northwest Airlines were defined by statutory provisions that were express in creating the substantive damages liability for which contribution was sought. Recognizing that the applicable statutes did not “implicate ‘uniquely federal interests’ of the kind that oblige courts to formulate federal common law,” Texas Industries, 451 U. S., at 642, we asked whether Congress “expressly or by clear implication” envisioned a contribution right to accompany the substantive damages right created, id., at 638, or, failing that, whether Congress “intended eourts to have the power to alter or supplement the remedies enacted,” id., at 645. See also Northwest Airlines, supra, at 91 and 97. But these inquiries are not helpful in the present context. The private right of action under Rule 10b-5 was implied by the Judiciary on the theory eourts should recognize private remedies to supplement federal statutory duties, not on the theory Congress had given an unequivocal direction to the courts to do so. Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 730, 737 (1975). Thus, it would be futile to ask whether the 1934 Congress also displayed a clear intent to create a contribution right collateral to the remedy. See Franklin v. Gwinnett County Public Schools, 503 U. S. 60, 76 (1992); id., at 71 (SCALIA, J., concurring).

If Texas Industries and Northwest Airlines are not controlling, petitioners tell us, then the precedents on which those cases were based do control. Those authorities caution against the creation of new causes of action. Universities Research Assn., Inc. v. Coutu, 450 U. S. 754, 770 (1981); Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U. S. 11, 15-16 (1979); Touche Ross & Co. v. Redington, 442 U. S. 560, 575-577 (1979). They teach that the creation of new rights ought to be left to legislatures, not courts. And, petitioners remind us, whether the right of a tortfeasor to seek contribution from those who share, or ought to share, joint liability is recognized by statute, see, e.g., Cal. Civ. Proc. Code Ann. §§875-880 (West 1980 and Supp. 1993); Tex. Civ. Prac. & Rem. Code Ann. §§32.001 and 32.002 (1986), or as a matter of common law, see, e. g., Goldman v. Mitchell-Fletcher Co., 292 Pa. 354, 364-365, 141 A. 231, 234-235 (1928); Davis v. Broad Street Garage, 191 Tenn. 320, 325, 232 S. W. 2d 355, 357 (1950), in both instances the right is thought to be a separate or independent cause of action. Cf. Northwest Airlines, supra, at 87, n. 17; Restatement (Second) of Torts §886A (1979).

This argument, like the argument based on Texas Industries and Northwest Airlines, would have much force were the duty to be created one governing conduct subject to liability under an express remedial provision fashioned by Congress, or one governing conduct not already subject to liability through private suit. That, however, is not the present state of the jurisprudence we consider here. The parties against whom contribution is sought are, by definition, persons or entities alleged to have violated existing securities laws and who share joint liability for that wrong under a remedial scheme established by the federal courts. Even though we are being asked to recognize a cause of action that supports a suit against these parties, the duty is but the duty to contribute for having committed a wrong that courts have already deemed actionable under federal law. The violation of the securities laws gives rise to the 10b-5 private cause of action, and the question before us is the ancillary one of how damages are to be shared among persons or entities already subject to that liability. Having implied the underlying liability in the first place, to now disavow any authority to allocate it on the theory that Congress has not addressed the issue would be most unfair to those against whom damages are assessed.

We must confront the law in its current form. The federal courts have accepted and exercised the principal responsibility for the continuing elaboration of the scope of the 10b-5 right and the definition of the duties it imposes. As we recognized in a case arising under § 14(a) of the 1934 Act, 15 U. S. C. § 78n(a), “where a legal structure of private statutory rights has developed without clear indications of congressional intent,” a federal court has the limited power to define “the contours of that structure.” Virginia Bankshares, Inc. v. Sandberg, 501 U. S. 1088, 1104 (1991). As to this proposition we were unanimous. See ibid. (Souter, J., joined by Rehnquist, C. J., and White, O’Connor, and Scalia, JJ.); id., at 1114 (Kennedy, J., joined by Marshall, Blackmun, and Stevens, JJ., concurring in part and dissenting in part) (“Where an implied cause of action is well accepted by our own cases and has become an established part of the securities laws ... we should enforce it as a meaningful remedy unless we are to eliminate it altogether”). See also Blue Chip Stamps, supra, at 737 (recognizing the authority of federal courts to define “the contours of a private cause of action under Rule 10b-5” and “to flesh out the portions of the law with respect to which neither the congressional enactment nor the administrative regulations offer conclusive guidance”).

We are not alone in recognizing a judicial authority to shape, within limits, the 10b-5 cause of action. The existence of that action, and our cumulative work in its design, have been obvious legislative considerations in the enactment of two recent federal statutes. The first is the Insider Trading and Securities Fraud Enforcement Act of 1988, Pub. L. 100-704, 102 Stat. 4680, which added the insider trading prohibition of § 20A to the 1934 Act. See 15 U. S. C. § 78t-l. Section 20A(d) states that “[n othing in this section shall be construed to limit or condition . . . the availability of any cause of action implied from a provision of this title.” The second statute is the recent congressional enactment respecting limitations periods for 10b-5 actions. Following our resolution two Terms ago of a difficult statute of limitations issue for 10b-5 suits, see Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U. S. 350 (1991), Congress intervened by limiting the retroactive effect of our decision, and the caution in its intervention is instructive. In an approach parallel to the one it adopted for the insider trading statute, Congress did no more than direct the applicable “limitation period for any private civil action implied under section 78j(b) of this title [§ 10(b) of the 1984 Act] that was commenced on or before June 19,1991 [the day prior to issuance of Lampf, Pleva].” 15 U. S. C. § 78aa-l (1988 ed., Supp. III).

We infer from these references an acknowledgment of the 10b-5 action without any further expression of legislative intent to define it. See Herman & MacLean v. Huddleston, 459 U. S. 375, 384-386 (1983); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U. S. 353, 378-382 (1982). Indeed, the latter statute, § 78aa-l, not only treats the 10b-5 action as an accepted feature of our securities laws, but avoids entangling Congress in its formulation. That task, it would appear, Congress has left to us.

Ill

We now turn to the question whether a right to contribution is within the contours of the 10b-5 action. The parties have devoted considerable portions of their briefs to debating whether a rule of contribution or of no contribution is more efficient or more equitable. Just as we declined to rule on these matters in Texas Industries and Northwest Airlines, we decline to do so here. Our task is not to assess the relative merits of the competing rules, but rather to attempt to infer how the 1934 Congress would have addressed the issue had the 10b-5 action been included as an express provision in the 1934 Act. See Lampf, Pleva, supra, at 359; Ernst & Ernst v. Hochfelder, 425 U. S. 185, 200-201 (1976). We do this not as an exercise in historical reconstruction for its own sake, but to ensure that the rules established to govern the 10b-5 action are symmetrical and consistent with the overall structure of the 1934 Act and, in particular, with those portions of the 1934 Act most analogous to the private 10b-5 right of action that is of judicial creation. Although we have narrowed our discretion in this regard over the years, our goals in establishing limits for the 10b-5 action have remained the same: to ensure the action does not conflict with Congress’ own express rights of action, id., at 210, to promote clarity, consistency, and coherence for those who rely upon, or are subject to, 10b-5 liability, cf. Blue Chip Stamps, 421 U. S., at 737-744, and to effect Congress’ objectives in enacting the securities laws, Santa Fe Industries, Inc. v. Green, 430 U. S. 462, 477-478 (1977).

Inquiring about what a given Congress might have done, though not a promising venture as a general proposition, does in this case yield an answer we find convincing. It is true that the initial step, drawing some inference of congressional intent from the language of § 10(b) itself, id., at 472; Ernst & Ernst, supra, at 197, yields no answer. The text of § 10(b) provides little guidance where we are asked to specify elements or aspects of the 10b-5 apparatus unique to a private liability arrangement, including a statute of limitations, Lampf, Pleva, supra, at 359, a reliance requirement, Basic Inc. v. Levinson, 485 U. S. 224, 243 (1988), a defense to liability, Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U. S. 299 (1985), or a right to contribution. Having made no attempt to define the precise contours of the private cause of action under § 10(b), Congress had no occasion to address how to limit, compute, or allocate liability arising from it.

There are, however, two sections of the 1934 Act, §§9 and 18 (15 U. S. C. §§ 78i and 78r), that, as we have noted, are close in structure, purpose, and intent to the 10b-5 action. Lampf, Pleva, supra, at 360-361. See also Basic Inc., supra, at 243; Bateman Eichler, supra, at 316, n. 28; Ernst & Ernst, supra, at 209, n. 28. Each confers an explicit right of action in favor of private parties and, in so doing, discloses a congressional intent regarding the definition and apportionment of liability among private parties. For two distinct reasons, these express causes of action are of particular significance in determining how Congress would have resolved the question of contribution had it provided for a private cause of action under § 10(b). First, §§9 and 18 are instructive because both “target the precise dangers that are the focus of § 10(b),” Lampf, Pleva, supra, at 360, and the intent motivating all three sections is the same — “to deter fraud and manipulative practices in the securities markets, and to ensure full disclosure of information material to investment decisions,” Randall v. Loftsgaarden, 478 U. S. 647, 664 (1986).

Second, of the eight express liability provisions contained in the 1933 and 1934 Acts, §§ 9 and 18 impose liability upon defendants who stand in a position most similar to 10b-5 defendants for the sake of assessing whether they should be entitled to contribution. All three causes of action impose direct liability on defendants for their own acts as opposed to derivative liability for the acts of others; all three involve defendants who have violated the securities law with scienter, Ernst & Ernst, supra, at 209, n. 28; all three operate in many instances to impose liability on multiple defendants acting in concert, 3 L. Loss, Securities Regulation 1739-1740, n. 178 (2d ed. 1961); and all three are based on securities provisions enacted into law by the 73d Congress. The Acts’ six other express liability provisions, on the other, hand, stand in marked contrast to the implied §10 remedy: §15 of the 1933 Act (15 U. S. C. §77o) and §20 of the 1934 Act (15 U. S. C. § 78t) impose derivative liability only; §§ 11 and 12 of the 1933 Act (15 U. S. C. §§ 77k and 111) and § 16 of the 1934 Act (15 U. S. C. §78p) do not require scienter in all instances, see Ernst & Ernst, supra, at 208; Kern County Land Co. v. Occidental Petroleum Corp., 411 U. S. 582, 595 (1973); § 12 of the 1933 Act and § 16 of the 1934 Act do not often -create joint defendant liability, see Pinter v. Dahl, 486 U. S. 622, 650 (1988); Kern County, supra, at 591; and § 20A of the 1934 Act (15 U. S. C. § 78t-l) was not an original liability provision in that Act, having been added to the securities laws in 1988, see Lampf Pleva, 501 U. S., at 361.

Sections 9 and 18 contain nearly identical express provisions for a right to contribution, each permitting a defendant to “recover contribution as in eases of contract from any person who, if joined in the original suit, would have been liable to make the same payment.” 15 U. S. C. §§ 78i(e) and 78r(b). These were forward-looking provisions at the time. The course of tort law in this century has been to reverse the old rule against contribution, but this movement has been confined in large part to actions in negligence. 3 F. Harper, F. James, & O. Gray, Law of Torts § 10.2, p. 42, and n. 10 (2d ed. 1986). The express contribution provisions in §§9 and 18 were, and still are, cited as important precedents because they permit contribution for intentional torts. See id., §10.2, p. 43, and n. 11; Ruder, Multiple Defendants in Securities Law Fraud Cases, 120 U. Pa. L. Rev. 597, 650-651 (1972). We think that these explicit provisions for contribution are an important, not an inconsequential, feature of the federal securities laws and that consistency requires us to adopt a like contribution rule for the right of action existing under Rule 10b-5. Given the identity of purpose behind §§ 9, 10(b), and 18, and similarity in their operation, we find no ground for ruling that allowing contribution in 10b-5 actions will frustrate the purposes of the statutory section from which it is derived.

Our conclusion is consistent with the rule adopted by the vast majority of Courts of Appeals and District Courts that have considered the question. See, e. g., In re Jiffy Lube Securities Litigation, 927 F. 2d, at 160; Smith v. Mulvaney, 827 F. 2d, at 560; Sirota v. Solitron Devices, Inc., 673 F. 2d, at 578; Huddleston v. Herman & MacLean, 640 F. 2d, at 557-559; Heizer Corp. v. Ross, 601 F. 2d, at 331-334; In re National Student Marketing Litigation, 517 F. Supp. 1345, 1346-1349 (DC 1981); B & B Investment Club v. Kleinert’s, Inc., 391 F. Supp. 720, 724 (ED Pa. 1975); Globus, Inc. v. Law Research Service, Inc., 318 F. Supp. 955, 957-958 (SDNY 1970), aff’d per curiam, 442 F. 2d 1346 (CA2), cert. denied, 404 U. S. 941 (1971). We consider this to be of particular importance because in the more than 20 years since a right to contribution was first recognized for 10b-5 defendants, DeHass v. Empire Petroleum Co., 286 F. Supp. 809, 815-816 (Colo. 1968), aff’d in part, vacated in part on other grounds, 435 F. 2d 1223 (CA10 1970), neither the Securities and Exchange Commission nor the federal courts have suggested that the contribution right detracts from the effectiveness of the 10b-5 implied action or interferes with the effective operation of the securities laws. See Brief for the Securities and Exchange Commission as Amicus Curiae 25-26. Absent any showing that the implied § 10(b) liability structure or the 1934 Act as a whole will be frustrated by finding a right to contribution paralleling the right to contribution in analogous express liability provisions, our task is complete and our resolution clear: Those charged with liability in a 10b-5 action have a right to contribution against other parties who have joint responsibility for the violation.

IV

The judgment of the Court of Appeals is affirmed.

It is so ordered.

Justice Thomas,

with whom

Justice Blackmun and Justice O’Connor join, dissenting.

In recognizing a private right to contribution under § 10(b) of the Securities Exchange Act of 1934 and Securities and Exchange Commission (SEC) Rule 10b-5, the Court unfortunately nourishes “a judicial oak which has grown from little more than a legislative acorn.” Blue Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 737 (1975). I respectfully dissent from the Court’s decision to cultivate this new branch of Rule 10b-5 law.

I

I agree with the Court’s description of its mission as an “attempt to infer how the 1934 Congress would have addressed the issue had the 10b-5 action been included as an express provision in the 1934 Act.” Ante, at 294. However, I do disagree with the Court’s chosen method for pursuing this difficult quest. The words of § 10(b) and Rule 10b-5 scarcely “suggest that either Congress in 1934 or the Securities and Exchange Commission in 1942 foreordained” the existence of a private 10b-5 action. Blue Chip Stamps, 421 U. S., at 737. Despite our conceded inability “to divine from the language of § 10(b) the express ‘intent of Congress,”’ ibid., we acquiesced in the lower courts’ consensus that an implied right of action existed under § 10(b) and Rule 10b-5. Superintendent of Ins. of N. Y. v. Bankers Life & Casualty Co., 404 U. S. 6, 13, n. 9 (1971); Affiliated Ute Citizens of Utah v. United States, 406 U. S. 128, 150-154 (1972). See Kardon v. National Gypsum Co., 69 F. Supp. 512 (ED Pa. 1946). Such acquiescence was “entirely consistent” with J. I. Case Co. v. Borak, 377 U. S. 426 (1964), which may have suggested a relatively permissive approach to the recognition of implied rights of action. Blue Chip Stamps, supra, at 730. Although we later “decline[d] to read [Borak] so broadly that virtually every provision of the securities Acts gives rise to an implied private cause of action,” Touche Ross & Co. v. Redington, 442 U. S. 560, 577 (1979), we never repudiated the 10b-5 action.

We again have no cause to reconsider whether the 10b-5 action should have been recognized at all. In summarizing its rationale, the Court states: “Having made no attempt to define the precise contours of the private eause of action under § 10(b), Congress had no occasion to address how to limit, compute, or allocate liability arising from it.” Ante, at 295. Though this statement is an adequate description of how we came to infer the private right of action, it is not an adequate defense of the Court’s reasoning. Unlike the majority, I do not assume that courts should accord different treatment to implied rights of action whose recognition may have been influenced by Borak. How a particular private cause of action may have emerged should not weaken our vigilance in the subsequent interpretation and application of that action. Our inquiries into statutory text, congressional intent, and legislative purpose remain intact. We have consistently declined to recognize an implied private cause of . action “under the antifraud provisions of the Securities Exchange Act... where it is ‘unnecessary to ensure the fulfillment of Congress’ purposes’ in adopting the Act.” Santa Fe Industries, Inc. v. Green, 430 U. S. 462, 477 (1977) (quoting Piper v. Chris-Craft Industries, Inc., 430 U. S. 1, 41 (1977)). Accordingly, the 10b-5 action must be “judicially delimited one way or another unless and until Congress addresses the question.” Blue Chip Stamps, supra, at 749. In the absence of any compelling reason to allow contribution in private 10b-5 suits, we should seek to keep “the breadth” of the 10b-5 action from “growing] beyond the scope congressionally intended.” Virginia Bankshares, Inc. v. Sandberg, 501 U. S. 1083, 1102 (1991).

The Court’s abandonment of this restrained approach to implied remedies stems from its mistaken assumption that a right to contribution is a mere “elemen[t] or aspec[t]” of Rule 10b-5’s private liability apparatus. Ante, at 295. Unlike a statute of limitations, a reliance requirement, or a defense to liability, however, contribution requires a wholly separate cause of action. This case does not require us to define the elements of a 10b-5 claim or to clarify some other essential aspect of this liability scheme. Rather, we are asked to determine whether a 10b-5 defendant enjoys a distinct right to recover from a joint tortfeasor.

The recent decision in which we established a limitations period for 10b-5 actions, Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U. S. 350 (1991), illustrates the difference that I find decisive. A limitations period is almost indispensable to a scheme of civil liability; even when federal law prescribes no express statute of limitations, we will not ordinarily assume that Congress intended no time limit. DelCostello v. Teamsters, 462 U. S. 151, 158 (1983). Rather, we “ ‘borrow5 the most suitable statute or other rule of timeliness from some other source.55 Ibid. Contribution, by contrast, was generally unavailable at common law. See Union Stock Yards Co. of Omaha v. Chicago, B. & Q. R. Co., 196 U. S. 217, 224 (1905). Those jurisdictions that have seen fit to provide contribution have usually done so by resort to legislation. Northwest Airlines, Inc. v. Transport Workers, 451 U. S. 77, 87-88, and n. 17 (1981); Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U. S. 630, 634 (1981). A court that recognizes an implied right to contribution must endorse a remedy contrary to the common law and perhaps even the legislative policy of the relevant jurisdiction.

Lampf, Pleva and like cases thus offer scant guidance when the question is not whether a right to contribution is an appropriate incident of the 10b-5 action, but whether congressional intent or federal common law justifies an expansion of the class entitled to enforce § 10(b) and Rule 10b-5 through private lawsuits. In conducting this inquiry, we cannot safely rely on Congress5 design of distinct statutory provisions. Indeed, inappropriate extension of 10b-5 liability would ‘‘nullify the effectiveness of the carefully drawn . . . express actions55 that Congress has provided through other sections of the 1934 Act. Ernst & Ernst v. Hochfelder, 425 U. S. 185, 210 (1976). However proper it may be to examine related portions of the Act when fleshing out details of the core 10b-5 action, see Lampf, Pleva, 501 U. S., at 359; id., at 365-366 (Scalia, J., concurring in part and concurring in judgment), the Court errs in placing dispositive weight on the existence of contribution rights under §§ 9 and 18 of the Act. See ante, at 296-298.

The proper analysis flows from our well-established approach to implied causes of action in general and to implied rights of contribution in particular. When deciding whether a statute confers a private right of action, we ask whether Congress — either expressly or by implication — intended to create such a remedy. Touche Ross, 442 U. S., at 575; Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U. S. 11, 15-16, 24 (1979). Where Congress did not expressly create a contribution remedy, we may infer that Congress nevertheless intended by clear implication to confer a right to contribution. Texas Industries, supra, at 688; Northwest Airlines, supra, at 90. Through the exercise of their power to craft federal common law, federal courts may also fashion a right to contribution. Texas Industries, supra, at 638; Northwest Airlines, supra, at 90.

Application of this familiar analytical framework compels me to conclude that there is no right to contribution under § 10(b) and Rule 10b-5. With respect to fashioning a common-law right to contribution, the Court readily and correctly concludes that the right to contribution recognized in Cooper Stevedoring Co. v. Fritz Kopke, Inc., 417 U. S. 106 (1974), has no bearing on the availability of contribution under the elaborate federal statutory scheme governing purchases and sales of securities. Ante, at 290. See also Texas Industries, supra, at 640-646; Northwest Airlines, supra, at 95-98. This case therefore depends exclusively on the interpretation of § 10(b) and Rule 10b-5.

II

“ ‘The starting point in every case involving construction of a statute is the language itself.’ ” Ernst & Ernst, supra, at 197 (quoting Blue Chip Stamps, 421 U. S., at 756 (Powell, J., concurring)). Nothing in the words of § 10(b) and Rule 10b-5 suggests that joint tortfeasors should enjoy a right to contribution. Section 10(b) makes it

“unlawful for any person ...
“... To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest for the protection of investors.” 15 U. S. C. §78j(b).

Rule 10b-5 recasts this proscription in similar terms:

“It shall be unlawful for any person ...
“(a) To employ any device, scheme, or artifice to defraud,
“(b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
“(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person,
“in connection with the purchase or sale of any security.” 17 CFR §240.10b-5 (1992).

The sweeping words of § 10(b) and Rule 10b-5 ban manipulation, deception, or fraud in the purchase or sale of securities. “[A]ny person” who engages in such activity merits condemnation under the statute and the rule. Far from being entitled to seek the protection of § 10(b) and Rule 10b-5, joint tortfeasors must confess that these provisions were “expressly directed ... to regulate their conduct for the benefit” of others. Northwest Airlines, supra, at 92. Neither enactment suggests that Congress or the SEC intended to “softe[n] the blow on joint wrongdoers” by permitting contribution. Texas Industries, supra, at 639. Quite the contrary: As private actors “whose activities Congress [and the SEC] intended to regulate for the protection and benefit of an entirely distinct class,” joint tortfeasors “can scarcely lay claim to the status of ‘beneficiary5 55 under § 10(b) and Rule 10b-5. Piper v. Chris-Craft Industries, 430 U. S., at 37.

The “underlying... structure of the [1934 Act’s] statutory scheme” also negates the existence of a 10b-5 contribution action. Northwest Airlines, 451 U. S., at 91. The Court notes the presence of express contribution rights under §§9 and 18 of the Act, but it misconstrues the significance of these provisions. See ante, at 296-298. The ability to legislate express contribution remedies under the 1934 Act applies with no less force to § 10(b) than to §§ 9 and 18. “When Congress wished to provide a [contribution] remedy ... it had little trouble in doing so expressly.” Blue Chip Stamps, supra, at 734. Nor has Congress lacked opportunities to modify the 10b-5 action. Within the last five years, Congress has both preserved and altered the 10b-5 action through amendments to the 1934 Act. Compare Insider Trading and Securities Fraud Enforcement Act of 1988, Pub. L. 100-704, § 5,102 Stat. 4681 (stating that nothing in a new provision prohibiting insider trading “shall be construed to limit or condition . . . the availability of any cause of action implied from a provision of this title”), with 15 U. S. C. § 78aa-l (1988 ed., Supp. Ill) (altering the retroactive effect of the 10b-5 limitations period that we adopted in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U. S. 350 (1991)). See generally ante, at 293-294. Had Congress intended 10b-5 defendants to sue joint tortfeasors, a single enactment could have given effect to this policy. Congress’ failure to act does not justify further judicial elaboration of the 10b-5 action.

Moreover, contribution is inconsistent with our established views of the 10b-5 action. In Blue Chip Stamps, supra, we held that only actual purchasers and sellers of securities are entitled to press private 10b-5 suits. We based this conclusion largely on the language of § 10(b) and Rule 10b-5, which by their terms govern only “the purchase or sale of any security.” See 421 U. S., at 731-732; id., at 756-757 (Powell, J., concurring). The merits of a contribution action in this case would turn on whether “the attorneys and accountants involved in [a] public offering” bore “joint responsibility for... securities violations.” Ante, at 288-289. Even if a court were to acknowledge respondents’ status as the subrogees of securities sellers, the contribution action would be at least one level removed from the underlying exchange of securities. Blue Chip Stamps> requirement of actual purchase or sale would virtually evaporate in a contribution dispute embroiling only separate groups of professionals who had merely advised or facilitated a tainted securities transaction. The rule adopted today thus undermines not only the discernible intent of Congress and the SEC, but also our own elaboration of this regulatory scheme. Such are the risks that inhere in the “hazardous enterprise” of recognizing a private right of action despite congressional silence. Touche Ross, 442 U. S., at 571.

Ill

Once again we have been invited to join a “vigorous debate over the advantages and disadvantages of contribution and various contribution schemes.” Texas Industries, 451 U. S., at 638. Consistent with our prior practice, I would adhere to the task of resolving the “dispositive threshold question: whether courts have the power to create... a cause of.action absent legislation.” Ibid. Whether the answer to that question is “most unfair” to those who litigate private 10b-5 actions, ante, at 292, is irrelevant. Courts should not treat legislative and administrative silence as a tacit license to accomplish what Congress and the SEC are unable or unwilling to do. In their current condition, § 10(b) and Rule 10b-5 afford no right to contribution. Congress has been, and remains free to, alter this state of affairs. Accordingly, I respectfully dissent.

       U.S.C. §78j(b).

       17 CFR §240.10b-5 (1992).

       In Borak, we recognized a private party’s right "to bring suit for violation of § 14(a) of the [1934] Act” even though “Congress made no specific' reference to a private right of action in § 14(a).” 377 U. S., at 430-431.


source: Caselaw Access Project

author: Justice Thomas Justice Stevens,

license: Public Domain

text:
    FEDERAL COMMUNICATIONS COMMISSION et al. v. BEACH COMMUNICATIONS, INC., et al.
    No. 92-603.
    Argued March 29, 1993
    Decided June 1, 1993

      John F. Manning argued the cause for petitioners. With him on the briefs were Solicitor General Starr, Acting Solicitor General Bryson, Assistant Attorney General Gerson, Deputy Solicitor General Roberts, Douglas N. Letter, and Bruce G. Forrest.

      Deborah C. Costlow argued the cause for respondents. With her on the brief for respondents Beach Communications, Inc., et al. was Thomas C. Power. Daniel L. Brenner, Michael S. Schooler, Diane B. Burstein, H. Bartow Farr III, and Paul M. Smith filed a brief for respondent National Cable Television Association.

        Richard Ruda filed a brief for the National League of Cities et al. as amici curiae urging reversal.

   Justice Thomas

delivered the opinion of the Court.

In providing for the regulation of cable television facilities, Congress has drawn a distinction between facilities that serve separately owned and managed buildings and those that serve one or more buildings under common ownership or management. Cable facilities in the latter category are exempt from regulation as long as they provide services without using public rights-of-way. The question before us is whether there is any conceivable rational basis justifying this distinction for purposes of the Due Process Clause of the Fifth Amendment.

I

The Cable Communications Policy Act of 1984 (Cable Act), 98 Stat. 2779, amended the Communications Act of 1934, 47 U. S. C. § 151 et seq., to establish a national framework for regulating cable television. One objective of the Cable Act was to set out “franchise procedures and standards which encourage the growth and development of cable systems and which assure that cable systems are responsive to the' needs and interests of the local community.” §601(2), 47 U. S. C. § 521(2). To that end, Congress provided for the franchising of cable systems by local governmental authorities, § 621(a), 47 U. S. C. § 541(a), and prohibited any person from operating a cable system without a franchise, subject to certain exceptions, § 621(b), 47 U. S. C. § 541(b). Section 602(7) of the Communications Act, as amended, 47 U. S. C. A. § 522(7) (Supp. 1993), determines the reach of the franchise requirement by defining the operative term “cable system.” A cable system means any facility designed to provide video programming to multiple subscribers through “closed transmission paths,” but does not include, inter alia,

“a facility that serves only subscribers in 1 or more multiple unit dwellings under common ownership, control, or management, unless such facility or facilities us[e] any public right-of-way.” § 602(7)(B), 47 U. S. C. § 522(7)(B) (1988 ed., Supp. V).

In part, this provision tracks a regulatory “private cable” exemption previously promulgated by the Federal Communications Commission (FCC or Commission) pursuant to preexisting authority under the Communications Act. See 47 CFR § 76.5(a) (1984) (exempting from the definition of “cable television system” “any such facility that serves or will serve only subscribers in one or more multiple unit dwellings under common ownership, control, or management”)! The earlier regulatory exemption derived in turn from the Commission’s first set of cable rules, published in 1965. See Rules re Microwave-Served CATV, 38 F. C. C. 683, 741 (1965) (exempting from the definition of “community antenna television system” “any such facility which serves only the residents of one or more apartment dwellings under common ownership, control, or management, and commercial establishments located on the premises of such an apartment house”). The Cable Act narrowed the terms of the regulatory exemption by further excluding from the exemption any closed transmission facilities that use public rights-of-way.

This case arises out of an FCC proceeding clarifying the agency’s interpretation of the term "cable system” as it is used in the Gable Act. See In re Definition of a Cable Television System, 5 F. C. C. Rcd. 7638 (1990). In this proceeding, the Commission addressed the application of the exemption codified in §602(7)(B) to satellite master antenna television (SMATV) facilities. Unlike a traditional cable television system, which delivers video programming to a large community of subscribers through coaxial cables laid under city streets or along utility lines, an SMATV system typically receives a signal from a satellite through a. small satellite dish located on a rooftop and then retransmits the signal by wire to units within a building or complex of buildings. See 5 F. C. C. Rcd., at 7639. The Commission ruled that an SMATV system that serves multiple buildings via a network of interconnected physical transmission lines is a cable system, unless it falls within the §602(7)(B) exemption. See id., at 7639-7640. Consistent with the plain terms of the statutory exemption, the Commission concluded that such an SMATV system is subject to the franchise requirement if its transmission lines interconnect separately owned and managed buildings or if its lines use or cross any public right-of-way. See id., at 7641-7642.

Respondents Beach Communications, Inc., Maxtel Limited Partnership, Pacific Cablevision, and Western Cable Communications, Inc. — SMATV operators that would be subject to franchising under the Cable Act as construed by the. Commission-petitioned the Court of Appeals for review. The Court of Appeals rejected respondents’ statutory challenge to the Commission’s interpretation, but a majority of the court found merit in the claim that § 602(7) violates the implied equal protection guarantee of the Due Process Clause. 294 U. S. App. D. C. 377, 959 F. 2d 975 (1992). In the absence of what it termed “the predominant rationale for local franchising” (use of public rights-of-way), the court saw no rational basis “[o]n the record,” and was “unable to imagine” any conceivable basis, for distinguishing between those facilities exempted by the statute and those SMATV cable systems that link separately owned and managed buildings. Id., at 389, 959 F. 2d, at 987. The court remanded the record and directed the FCC to provide “additional ‘legislative facts’ ” to justify the distinction. Ibid.

A report subsequently filed by the Commission failed to satisfy the Court of Appeals. The Commission stated that it was “unaware of any desirable policy or other considerations . . . that would support the challenged distinctions,” other than those offered by a concurring member of the court. App. to Pet. for Cert. 50a. The concurrence had believed it sufficient that Congress could have reasoned that SMATV systems serving separately owned buildings are more similar to traditional cable systems than are facilities serving commonly owned buildings, in terms of the problems presented for consumers and the potential for regulatory benefits. See 294 U. S. App. D. C., at 392, 959 F. 2d, at 990 (Mikva, C. J., concurring in part and concurring in judgment). In a second opinion, the majority found this rationale to be “a naked intuition, unsupported by conceivable facts or policies,” 296 U. S. App. D. C. 141, 143, 965 F. 2d 1103, 1105 (1992), and held that “the Cable Act violates the equal protection component of the Fifth Amendment, insofar as it imposes a discriminatory franchising requirement,” id., at 142, 965 F. 2d, at 1104. The court declared the franchise requirement void to the extent it covers respondents and similarly situated SMATV operators. Id., at 144, 965 F. 2d, at 1106.

Because the Court of Appeals held an Act of Congress unconstitutional, we granted certiorari. 506 U. S. 997 (1992). We now reverse.

II

Whether embodied in the Fourteenth Amendment or inferred from the Fifth, equal protection is not a license for courts to judge the wisdom, fairness, or logic of legislative choices. In areas of social and economic policy, a statutory classification that neither proceeds along suspect lines nor infringes fundamental constitutional rights must be upheld against equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification. See Sullivan v. Stroop, 496 U. S. 478, 485 (1990); Bowen v. Gilliard, 483 U. S. 587, 600-603 (1987); United States Railroad Retirement Bd. v. Fritz, 449 U. S. 166, 174-179 (1980); Dandridge v. Williams, 397 U. S. 471, 484-485 (1970). Where there are “plausible reasons” for Congress’ action, “our inquiry is at an end.” United States Railroad Retirement Bd. v. Fritz, supra, at 179. This standard of review is a paradigm of judicial restraint. “The Constitution presumes that, absent some reason to infer antipathy, even improvident decisions will eventually be rectified by the democratic process and that judicial intervention is generally unwarranted no matter how unwisely we may think a political branch has acted.” Vance v. Bradley, 440 U. S. 93, 97 (1979) (footnote omitted).

On rational-basis review, a classification in a statute such as the Cable Act comes to us bearing a strong presumption of validity, see Lyng v. Automobile Workers, 485 U. S. 360, 370 (1988), and those attacking the rationality of the legislative classification have the burden “to negative every conceivable basis which might support it,” Lehnhausen v. Lake Shore Auto Parts Co., 410 U. S. 356, 364 (1973) (internal quotation marks omitted). See also Hodel v. Indiana, 452 U. S. 314, 331-332 (1981). Moreover, because we never require a legislature to articulate its reasons for enacting a statute, it is entirely irrelevant for constitutional purposes whether the conceived reason for the challenged distinction actually motivated the legislature. United States Railroad Retirement Bd. v. Fritz, supra, at 179. See Flemming v. Nestor, 363 U. S. 603, 612 (1960). Thus, the absence of “‘legislative facts’ ” explaining the distinction “[o]n the record,” 294 U. S. App. D. C., at 389, 959 F. 2d, at 987, has no significance in rational-basis analysis. See Nordlinger v. Hahn, 505 U. S. 1, 15 (1992) (equal protection “does not demand for purposes of rational-basis review that a legislature or governing decisionmaker actually articulate at any time the purpose or rationale supporting its classification”). In other words, a legislative choice is not subject to courtroom factfinding and may be based on rational speculation unsupported by evidence or empirical data. See Vance v. Bradley, supra, at 111. See also Minnesota v. Clover Leaf Creamery Co., 449 U. S. 456, 464 (1981). “ ‘Only by faithful adherence to this guiding principle of judicial review of legislation is it possible to preserve to the legislative branch its rightful independence and its ability to function.’” Lehnhausen, supra, at 365 (quoting Carmichael v. Southern Coal & Coke Co., 301 U. S. 495, 510 (1937)).

These restraints on judicial review have added force “where the legislature must necessarily engage in a process of line-drawing.” United States Railroad Retirement Bd. v. Fritz, 449 U. S., at 179. Defining the class of persons subject to a regulatory requirement — much like classifying governmental beneficiaries — “inevitably requires that some persons who have an almost equally strong claim to favored treatment be placed on different sides of the line, and the fact [that] the line might have been drawn differently at some points is a matter for legislative, rather than judicial, consideration.” Ibid, (internal quotation marks and citation omitted). The distinction at issue here represents such a line: By excluding from the definition of “cable system” those facilities that serve commonly owned or managed buildings without using public rights-of-way, § 602(7)(B) delineates the bounds of the regulatory field. Such scope-of-eoverage provisions are unavoidable components of most economic or social legislation. In establishing the franchise requirement, Congress had to draw the line somewhere; it had to choose which facilities to franchise. This necessity renders the precise coordinates of the resulting legislative judgment virtually unreviewable, since the legislature must be allowed leeway to approach a perceived problem incrementally. See, e. g., Williamson v. Lee Optical of Okla., Inc., 348 U. S. 483 (1955):

“The problem of legislative classification is a perennial one, admitting of no doctrinaire definition. Evils in the same field may be of different dimensions and proportions, requiring different remedies. Or so the legislature may think. Or the reform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind. The legislature may select one phase of one field and apply a remedy there, neglecting the others. The prohibition of the Equal Protection Clause goes no further than the invidious discrimination.” Id., at 489 (citations omitted).

Applying these principles, we conclude that the common-ownership distinction is constitutional. There are at least two possible bases for the distinction; either one suffices. First, Congress borrowed §602(7)(B) from pre-Cable Act regulations, and although the existence of a prior administrative scheme is certainly not necessary to the rationality of the statute, it is plausible that Congress also adopted the FCC’s earlier rationale. Under that rationale, eommon ownership was thought to be indicative of those systems for which the costs of regulation would outweigh the benefits to consumers. Because the number of subscribers was a similar indicator, the Commission also exempted cable facilities that served fewer than 50 subscribers. See 47 CFR § 76.5(a) (1984). In explaining both exemptions, the Commission stated:

“[N]ot all [systems] can be subject to effective regulation with the resources available nor is regulation necessarily needed in every instance. A sensible regulatory program requires that a division between the regulated and unregulated be made in a manner which best conserves regulatory energies and allows the most cost effective use of available resources. In attempting to make this division, we have focused on subscriber numbers as well as the multiple unit dwelling indicia on the theory that the very small are inefficient to regulate and can safely be ignored in terms of their potential for impact on broadcast service to the public and on multiple unit dwelling facilities on the theory that this effectively establishes certain maximum size limitations.” In re Definition of a Cable Television System, 67 F. C. C. 2d 716, 726 (1978).

This regulatory-efficiency model, originally suggested by Chief Judge Mikva in his concurring opinion, provides a conceivable basis for the common-ownership exemption. A legislator might rationally assume that systems serving only commonly owned or managed buildings without crossing public rights-of-way would typically be limited in size or would share some other attribute affecting their impact on the welfare of cable viewers such that regulators could “safely ignor[e]” these systems.

Respondents argue that Congress did not intend common ownership to be a surrogate for small size, since Congress simultaneously rejected the FCC’s 50-subscriber exemption by omitting it from the Cable Act. Brief for Respondents 22. Whether the posited reason for the challenged distinction actually motivated Congress is “constitutionally irrelevant,” United States Railroad Retirement Bd. v. Fritz, supra, at 179 (internal quotation marks omitted), and, in any event, the FCC’s explanation indicates that both common ownership and number of subscribers were considered indicia of “very small” cable systems. Respondents also contend that an SMATV operator could increase his subscription base and still qualify for the exemption simply by installing a separate satellite dish on each building served. Brief for Respondents 42. The additional cost of multiple dishes and associated transmission equipment, however, would impose an independent constraint on system size.

Furthermore, small size is only one plausible ownership-related factor contributing to consumer welfare. Subscriber influence is another. Where an SMATV system serves a complex of buildings under common ownership or management, individual subscribers could conceivably have greater bargaining power vis-a-vis the cable operator (even if the number of dwelling units were large), since all the subscribers could negotiate with one voice through the common owner or manager. Such an owner might have substantial leverage, because he could withhold permission to operate the SMATV system on his property. He would also have an incentive to guard the interests of his tenants. Thus, there could be less need to establish regulatory safeguards for subscribers in commonly owned complexes. Respondents acknowledge such possibilities, see id., at 44, and we certainly cannot say that these assumptions would be irrational.

There is a second conceivable basis for the statutory distinction. Suppose competing SMATV operators wish to sell video programming to subscribers in a group of contiguous buildings, such as a single city block, which can be interconnected by wire without crossing a public right-of-way. If all the buildings belong to one owner or are commonly managed, that owner or manager could freely negotiate a deal for all subscribers on a competitive basis. But if the buildings are separately owned and managed, the first SMATV operator who gains a foothold by signing a contract and installing a satellite dish and associated transmission equipment on one of the buildings would enjoy a powerful cost advantage in competing for the remaining subscribers: He could connect additional buildings for the cost of a few feet of cable, whereas any competitor would have to recover the cost of his own satellite headend facility. Thus, the first operator could charge rates well above his cost and still undercut the competition. This potential for effective monopoly power might theoretically justify regulating the latter class of SMATV systems and not the former.

Ill

The Court of Appeals quite evidently believed that the crossing or use of a public right-of-way is the only conceivable basis upon which Congress could rationally require local franchising of SMATV systems. See 296 U. S. App. D. C., at 143, 965 F. 2d, at 1105; 294 U. S. App. D. C., at 389, 959 F. 2d, at 987. As we have indicated, however, there are plausible rationales unrelated to the use of public rights-of:way for regulating cable facilities serving separately owned and managed buildings. The assumptions underlying these rationales may be erroneous, but the very fact that they are “arguable” is sufficient, on rational-basis review, to “immuniz[e]” the congressional choice from constitutional challenge. Vance v. Bradley, 440 U. S., at 112.

The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

So ordered.

Justice Stevens,

concurring in the judgment.

Freedom is a blessing. Regulation is sometimes necessary, but it is always burdensome. A decision not to regulate the way in which an owner chooses to enjoy the benefits of an improvement to his own property is adequately justified by a presumption in favor of freedom.

If the owner of a large building decides to improve it by installing his own electric generator, or by placing a windmill on the roof, government might well decide to regulate his use of that improvement. But if government permits the installation, it can surely allow the owner to use the electricity that it generates for whichever appliances on the property that he selects. However, if the owner elects to sell electricity to his neighbors, a justification for regulation that did not previously exist might arise. For he would be seeking access to an already regulated market.

A television antenna, like a windmill, is a somewhat unsightly species of improvement. Nonetheless, the same analysis applies. Government may reasonably decide to regulate the distribution of electricity or television programs to paying customers in the open market without also regulating the way in which the owner of the antenna, or the windmill, distributes its benefits within the confines of his own property. In my opinion the interest in the free use of one’s own property provides adequate support for an exception from burdensome regulation and franchising requirements even when the property is occupied not only by family members and guests, but by lessees and co-owners as well, and even when the property complex encompasses multiple buildings.

The master antenna serving multiple units in an apartment building is less unsightly than a forest of individual antennas, each serving a separate apartment. It was surely sensible to allow owners to make use of such an improvement without incurring the costs of franchising and economic regulation. Even though regulation might have been justified— indeed, the Federal Communications Commission (FCC) at one time considered imposing such regulation, see Cable Television Systems, 63 F. C. C. 2d 956, 996-998 (19.77)—a justification for nonregulation would nevertheless remain: Whenever possible, property owners should be free to use improvements to their property as they see fit.

That brings us to the “private cable” exemption as applied to satellite master antenna television (SMATV) systems. A justification for the “private cable” exemption that rests on the presumption that an owner of property should be allowed to use an improvement on his own property as he sees fit unless there is a sufficient public interest in denying him that right simply does not apply to the situation in which the improvement — here, the satellite antenna — is being used to distribute signals to subscribers on other people’s property. In that situation, the property owner, or the SMATV operator, has reached out beyond the property line and is seeking to employ the satellite antenna in the broader market for television programming. .While the crossing of that line need not trigger regulatory intervention, and the absence of such a crossing may not prevent such intervention, it certainly cannot be said that government is disabled, by the Constitution, from regulating in the ease of the former and abstaining in the ease of the latter. Such a policy is adequately justified by the presumption in favor of freedom.

Thus, while I am not fully persuaded that the “private cable” exemption is justified by the size of the market which it encompasses, see ante, at 317-318, or by the Court's “monopoly” rationale, see ante, at 319-320, I agree with its ultimate conclusion. In my judgment, it is reasonable to presume that Congress was motivated by an interest in allowing property owners to exercise freedom in the use of their own property. Legislation so motivated surely does not violate the sovereign’s duty to govern impartially. See Hampton v. Mow Sun Wong, 426 U. S. 88, 100 (1976). Accordingly, I concur in the judgment of the Court.

      The Cable Television Consumer Protection and Competition Act of 1992, Pub. L. 102-385, 106 Stat. 1460 — enacted after the decision of the Court of Appeals in this case — amended the Communications Act to provide, among other things, for the regulation of rates charged by cable systems. See §3,106 Stat. 1464. The 1992 Act renumbered the subsections of 47 U. S. C. § 522 but did not amend the provision at issue, which is now subsection (7). We refer to the current version of the Communications Act.

       In its initial interpretation of the Cable Act, the Commission had ruled that the dispositive distinction between a cable system and other video distribution systems was “the crossing of the public rights-of-way, not the ownership, control or management” of the buildings served. In re Amendments of Parts 1, 68, & 76, 104 F. C. C. 2d 386, 396-397 (1986). After a District Court held that this interpretation contravened the unambiguous terms of the statute, the Commission abandoned it in the proceedings at issue here. See In re Definition of a Cable Television System, 5 F. C. C. Rcd. 7638, 7641 (1990).

       Respondents also claimed that the Cable Act’s franchise requirement violates the First Amendment and that the § 602(7)(B) classification should receive heightened scrutiny under the Due Process Clause because it discriminates on the basis of speech activities. The Court of Appeals held the First Amendment claim unripe, 294 U. S. App. D. C., at 386-387, 959 F. 2d, at 984-985, and refused to address the heightened scrutiny argument without first applying “rational basis” analysis, id, at 388, 959 F. 2d, at 986.

       Chief Judge Mikva dissented for the reasons given in his earlier concurrence. 296 U. S. App. D. C., at 144, 965 F. 2d, at 1106.

       The Court of Appeals had also questioned whether there existed a rational basis for distinguishing facilities connecting separately owned buildings by wire from those that do not connect separate buildings or that do so only by wireless media, such as radio or microwave transmission. See 294 U. S. App. D. C., at 382, 389, 959 F. 2d, at 980, 987. In its second opinion, however, the court found it unnecessary to consider that question, see 296 U. S. App. D. C., at 143, 965 F. 2d, at 1105, and it is not presented here.

       As they did in the Court of Appeals, respondents seek heightened scrutiny, claiming that the statute discriminates on the basis of First Amendment activities. Brief for Respondents Beach Communications, Inc., et al. 12-17 (hereinafter Brief for Respondents). We will confine ourselves, however, to the question presented, which is limited to whether the distinction in §602(7)(B) is “rationally related to a legitimate government purpose under the Due Process Clause.” Pet. for Cert. I. The Court of Appeals did not reach respondents’ heightened-serutiny challenge because it found merit in their rational-basis contentions. 294 U. S. App. D. C., at 388, 969 F. 2d, at 986. In renewing their arguments for heightened scrutiny here, see Brief for Respondents 14-15, respondents point to the burdens imposed on franchised cable systems under the newly enacted Cable Television Consumer Protection and Competition Act of 1992, an Act the Court of Appeals had no opportunity to consider. In these circumstances, respondents’ arguments for heightened scrutiny are best left open for consideration by the Court of Appeals on remand.
      Respondents also raise a threshold issue. They argue that no case or controversy exists, or that the issue is “moot,” on the theory that Congress “adopted” the Court of Appeals’ “construction” of §602(7) (presumably thereby acquiescing in the judgment that local franchising must depend on use of public rights-of-way) when it took no action to amend or defend the provision in later passing the 1992 Act. Brief for Respondents 8-12. Cf. Lorillard v. Pons, 434 U. S. 575, 580-581 (1978). This notion of congressional adoption of statutory interpretations, however, has no place in constitutional review, and the controversy presented in this case is obviously a live one, since petitioners stand ready to defend the statute as drafted.

       See also Dandridge v. Williams, 397 U. S. 471, 485 (1970) (classification does not violate equal protection simply because it “is not made with mathematical nicety or because in practice it results in some inequality”) (internal quotation marks omitted); Metropolis Theatre Co. v. Chicago, 228 U. S. 61, 69-70 (1913) (“The problems of government are practical ones and may justify, if they do not require, rough accommodations — illogical, it may be, and unscientific”); Heath & Milligan Mfg. Co. v. Worst, 207 U. S. 338, 354 (1907) (“logical appropriateness of the inclusion or exclusion of objects or persons” and “exact wisdom and nice adaptation of remedies are not required”).

       According to respondents, the FCC’s pre-Cable Act common-ownership exemption provides no support for the rationality of § 602(7)(B) for another reason. They assert that the regulatory exemption’s sole purpose was to exempt master antenna television (MATV) facilities — ordinary rooftop antenna facilities that receive conventional broadcast signals for transmission by wire to units within a single multiunit building or complex, see 294 U. S. App. D. C., at 379-380, 959 F. 2d, at 977-978. Respondents argue that this prior exemption merely reflected the FCC's judgment that common antennas, unlike SMATV systems, were nothing more than residential amenities posing no threat to broadcast services. See Brief for Respondents 23-25. This argument is unavailing, because Congress is not bound by the administrative derivation of the “private cable” exemption. Moreover, regardless of the origin of the exemption, the Commission had already applied it to SMATV facilities before passage of the Cable Act. See In re Earth Satellite Communications, Inc., 95 F. C. C. 2d 1223, 1224, n. 3 (1983), aff’d sub nom. New York State Comm’n on Cable Television v. FCC, 242 U. S. App. D. C. 126, 749 F. 2d 804 (1984). Indeed, in these proceedings, the Commission construed §602(7) to apply equally to SMATV and MATV facilities. See 5 F C. C. Rcd., at 7639-7641.

       Approximately 25% of all multiple dwellings units are in complexes large enough to support an SMATV system. See C. Ferris, Cable Television Law: A Video Communications Practice Guide ¶ 21.02, p. 21-3, n. 2 (1983). Furthermore, whereas the FCC had, prior to enactment to the Cable Communications Policy Act of 1984 (Cable Act), 98 Stat. 2779, exempted from regulation cable systems of less than 50 subscribers as well as those serving commonly owned multiple unit dwellings, Congress exempted only the latter when it passed the Cable Act, leaving out the exemption based on system size. Respondents thus make a strong argument that Congress may have rejected the very rationale upon which the FCC, and the Court, rely.

       The Court’s theory assumes a great deal about the nature of what is essentially a hypothetical market. Moreover, the Court’s analysis overlooks the competitive presence of traditional cable as a potential constraint on an SMATV operator’s capacity to extract monopoly rents from landlords.

       The Court states that a legislative classification must be upheld “if there is any reasonably conceivable state of facts that could provide a rational basis for the classification,” and that “[w]here there are ‘plausible reasons’ for Congress’ action, ‘our inquiry is at an end,’” ante, at 313-314. In my view, this formulation sweeps too broadly, for it is difficult to imagine a legislative classification that could not be supported by a “reasonably conceivable state of facts.” Judicial review under the “conceivable set of facts” test is tantamount to no review at all.
      I continue to believe that when Congress imposes a burden on one group, but leaves unaffected another that is similarly, though not identically, situated, “the Constitution requires something more than merely a ‘conceivable’ or ‘plausible’ explanation for the unequal treatment.” United States Railroad Retirement Bd. v. Fritz, 449 U. S. 166, 180 (1980) (Stevens, J., concurring in judgment). In my view, when the actual rationale for the legislative classification is unclear, we should inquire whether the classification is rationally related to “a legitimate pin-pose that we may reasonably presume to have motivated an impartial legislature.” Id., at 181 (emphasis added).


text:
    NOBELMAN et ux. v. AMERICAN SAVINGS BANK et al.
    No. 92-641.
    Argued April 19, 1993
    Decided June 1, 1993

      Philip I. Palmer, Jr., argued the cause for petitioners. With him on the brief was Rosemary J. Zyne.

      Michael J. Schroeder argued the cause for respondents and filed a brief for respondent American Savings Bank, F. A. Molly W. Bartholow and Charles L. Kennon III filed a brief for respondent Standing Chapter 13 Trustee.

      Briefs of amici curiae urging reversal were filed for the Consumer Education and Protective Association et al. by Henry J. Sommer, Gary Klein, Daniel L. Haller, and Lawrence Young; and for Harold J. Barkley, Jr., pro se.

      Briefs of amici curiae urging affirmance were filed for the State of Alaska by Charles E. Cole, Attorney General, Mary Ellen Beardsley, Assistant Attorney General, and Richard Ullstrom; for the American Bankers Association et al. by John J. Gill, Michael F. Crotty, Lynn A Pringle, Alvin C. Harrell, Laura N. Pringle, and James R. Martin, Jr.; for the Federal Home Loan Mortgage Corp. by Dean S. Cooper and John C. Morland; for the Federal National Mortgage Association by William J. Perl-stein and Sharon A Pocoek; for the Mortgage Bankers Association of America by William E. Cumberland and Roger M. Whelan; for the National Association of Realtors et al. by William M. Pfeiffer and Laurene K Janik; and for Nationsbanc Mortgage Corporation by Michael C. Barrett, Mary A Daffin, and G. Tommy Bastían.

   Justice Thomas

delivered the opinion of the Court.

This case focuses on the interplay between two provisions of the Bankruptcy Code. The question is whether § 1322(b)(2) prohibits a Chapter 13 debtor from relying on § 506(a) to reduce an undersecured homestead mortgage to the fair market value of the mortgaged residence. We conclude that it does and therefore affirm the judgment of the Court of Appeals.

I

In 1984, respondent American Savings Bank loaned petitioners Leonard and Harriet Nobelman $68,250 for the purchase of their principal residence, a condominium in Dallas, Texas. In exchange, petitioners executed an adjustable rate note payable to the bank and secured by a deed of trust on the residence. In 1990, after falling behind in their mortgage payments, petitioners sought relief -under Chapter 13 of the Bankruptcy Code. The bank filed a proof of claim with the Bankruptcy Court for $71,335 in principal, interest, and fees owed on the note. Petitioners’ modified Chapter 13 plan valued the residence at a mere $23,500 — an uncontroverted valuation — and proposed to make payments pursuant to the mortgage contract only up to that amount (plus prepetition arrearages). Relying on § 506(a) of the Bankruptcy Code, petitioners proposed to treat the remainder of the bank’s claim as unsecured. Under the plan, unsecured creditors would receive nothing.

The bank and the Chapter 13 trustee, also a respondent here, objected to petitioners’ plan. They argued that the proposed bifurcation of the bank’s claim into a secured claim for $28,500 and an effectively worthless unsecured claim modified the bank’s rights as a homestead mortgagee, in violation of 11 U. S. C. § 1322(b)(2). The Bankruptcy Court agreed with respondents and denied confirmation of the plan. The District Court affirmed, In re Nobelman, 129 B. R. 98 (ND Tex. 1991), as did the Court of Appeals, 968 F. 2d 483 (CA5 1992). We granted certiorari to resolve a conflict among the Courts of Appeals. 506 U. S. 1020 (1992).

II

Under Chapter 13 of the Bankruptcy Code, individual debtors may obtain adjustment of their indebtedness through a flexible repayment plan approved by a bankruptcy court. Section 1322 sets forth the elements of a confirmable Chapter 13 plan. The plan must provide, inter alia, for the submission of a portion of the debtor’s future earnings and income to the control of a trustee and for supervised payments to creditors over a period not exceeding five years. See 11 U. S. C. §§ 1322(a)(1) and 1322(c). Section 1322(b)(2), the provision at issue here, allows modification of the rights of both secured and unsecured creditors, subject to special protection for creditors whose claims are secured only by a lien on the debtor’s home. It provides that the plan may

“modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor’s principal residence, or of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims.” 11 U. S. C. § 1322(b)(2) (emphasis added).

The parties agree that the “other than” exception in § 1322(b)(2) proscribes modification of the rights of a homestead mortgagee. Petitioners maintain, however, that their Chapter 13 plan proposes no such modification. They argue that the protection of § 1322(b)(2) applies only to the extent the mortgagee holds a “secured claim” in the debtor’s residence and that we must look first to § 506(a) to determine the value of the mortgagee’s “secured claim.” Section 506(a) provides that an allowed claim secured by a lien on the debtor’s property “is a secured claim to the extent of the value of [the] property”; to the extent the claim exceeds the value of the property, it “is an unsecured claim.” Petitioners contend that the valuation provided for in § 506(a) operates automatically to adjust downward the amount of a lender’s undersecured home mortgage before any disposition proposed in the debtor’s Chapter 13 plan. Under this view, the bank is the holder of a “secured claim” only in the amount of $23,500 — the value of the collateral property. Because the plan proposes to make $23,500 worth of payments pursuant to the monthly payment terms of the mortgage contract, petitioners argue, the plan effects no alteration of the bank’s rights as the holder of that claim. Section 1322(b)(2), they assert, allows unconditional modification of the bank’s leftover “unsecured claim.”

This interpretation fails to take adequate account of § 1322(b)(2)’s focus on “rights.” That provision does not state that a plan may modify “claims” or that the plan may not modify “a claim secured only by” a home mortgage. Rather, it focuses on the modification of the “rights of holders” of such claims. By virtue of its mortgage contract with petitioners, the bank is indisputably the holder of a claim secured by a lien on petitioners’ home. Petitioners were correct in looking to § 506(a) for a judicial valuation of the collateral to determine the status of the bank’s secured claim. It was permissible for petitioners to seek a valuation in proposing their Chapter 13 plan, since § 506(a) states that “[s]ueh value shall be determined ... in conjunction with any hearing ... on a plan affecting such creditor’s interest.” But even if we accept petitioners’ valuation, the bank is still the “holder” of a “secured claim,” because petitioners’ home retains $23,500 of value as collateral. The portion of the bank’s claim that exceeds $23,500 is an “unsecured claim componen[t]” under § 506(a), United States v. Ron Pair Enterprises, Inc., 489 U. S. 235, 239, n. 3 (1989) (internal quotation marks omitted); however, that determination does not necessarily mean that the “rights” the bank enjoys as a mortgagee, which are protected by § 1322(b)(2), are limited by the valuation of its secured claim.

The term “rights” is nowhere defined in the Bankruptcy Code. In the absence of a controlling federal rule, we generally assume that Congress has “left the determination of property rights in the assets of a bankrupt’s estate to state law,” since such “[pjroperty interests are created and defined by state law.” Butner v. United States, 440 U. S. 48, 54-55 (1979). See also Barnhill v. Johnson, 503 U. S. 393, 398 (1992). Moreover, we have specifically recognized that “[t]he justifications for application of state law are not limited to ownership interests,” but “apply with equal force to security interests, including the interest of a mortgagee.” Butner, supra, at 55. The bank’s “rights,” therefore, are reflected in the relevant mortgage instruments, which are enforceable under Texas law. They include the right to repayment of the principal in monthly installments over a fixed term at specified adjustable rates of interest, the right to retain the lien until the debt is paid off, the right to accelerate the loan upon default and to proceed against petitioners’ residence by foreclosure and public sale, and the right to bring an action to recover any deficiency remaining after foreclosure. See Record 135-140 (deed of trust); id., at 147-151 (promissory note); Tex. Prop. Code Ann. §§ 51.002-51.005 (Supp. 1993). These are the rights that were “bargained for by the mortgagor and the mortgagee,” Dewsnup v. Timm, 502 U. S. 410, 417 (1992), and are rights protected from modification by § 1322(b)(2).

This is not to say, of course, that the contractual rights of a home mortgage lender are unaffected by the mortgagor’s Chapter 13 bankruptcy. The lender’s power to enforce its rights — and, in particular, its right to foreclose on the property in the event of default — is cheeked by the Bankruptcy Code’s automatic stay provision. 11 U. S. C. § 362. See United Savings Assn. of Texas v. Timbers of Inwood Forest Associates, Ltd., 484 U. S. 365, 369-370 (1988). In addition, § 1322(b)(5) permits the debtor to cure prepetition defaults on a home mortgage by paying off arrearages over the life of the plan “notwithstanding” the exception in § 1322(b)(2). These statutory limitations on the lender’s rights, however, are independent of the debtor’s plan or otherwise outside § 1322(b)(2)’s prohibition.

Petitioners urge us to apply the so-called “rule of the last antecedent,” which has been relied upon by some Courts of Appeals to interpret § 1322(b)(2) the way petitioners favor. E. g., In re Bellamy, 962 F. 2d 176, 180 (CA2 1992); In re Hougland, 886 P. 2d 1182, 1184 (CA9 1989). According to this argument, the operative clause “other than a claim secured only by a security interest in... the debtor’s principal residence” must be read to refer to and modify its immediate antecedent, “secured claims.” Thus, § 1322(b)(2)’s protection would then apply only to that subset of allowed “secured claims,” determined by application of § 506(a), that are secured by a lien on the debtor’s home — including, with respect to the mortgage involved here, the bank’s secured claim for $23,500. We acknowledge that this reading of the clause is quite sensible as a matter of grammar. But it is not compelled. Congress chose to use the phrase “claim secured... by” in § 1322(b)(2)’s exception, rather than repeating the term of art “secured claim.” The unqualified word “claim” is broadly defined under the Code to encompass any “right to payment, whether . . . seeure[dj or unsecured” or any “right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether . . . seeure[d] or unsecured.” 11U. S. C. § 101(5) (1988 ed., Supp. III). It is also plausible, therefore, to read “a claim secured only by a [homestead lien]” as referring to the lienholder’s entire claim, including both the secured and the unsecured components of the claim. Indeed, § 506(a) itself uses the phrase “claim ... secured by a lien” to encompass both portions of an undersecured claim.

This latter interpretation is the more reasonable one, since we cannot discern how § 1322(b)(2) could be administered under petitioners’ interpretation. Petitioners propose to reduce the outstanding mortgage principal to the fair market value of the collateral, and, at the same time, they insist that they can do so without modifying the bank’s rights “as to interest rates, payment amounts, and [other] contract terms.” Brief for Petitioners 7. That appears to be impossible. The bank’s contractual rights are contained in a unitary note that applies at once to the bank’s overall claim, including both the secured and unsecured components. Petitioners cannot modify the payment and interest terms for the unsecured component, as they propose to do, without also modifying the terms of the secured component. Thus, to preserve the interest rate and the amount of each monthly payment specified in the note after having reduced the principal to $23,500, the plan would also have to reduce the term of the note dramatically. That would be a significant modification of a contractual right. Furthermore, the bank holds an adjustable rate mortgage, and the principal and interest payments on the loan must be recalculated with each adjustment in the interest rate. There is nothing in the mortgage contract or the Code that suggests any basis for recalculating the amortization schedule — whether by reference to the face value of the remaining principal or by reference to the unamortized value of the collateral. This conundrum alone indicates that § 1322(b)(2) cannot operate in combination with § 506(a) in the manner theorized by petitioners.

In other words, to give effect to §506(a)’s valuation and bifurcation of secured claims through a Chapter 13 plan in the manner petitioners propose would require a modification of the rights of the holder of the security interest. Section 1322(b)(2) prohibits such a modification where, as here, the lender’s claim is secured only by a lien on the debtor’s principal residence.

The judgment of the Court of Appeals is therefore

Affirmed.

Justice Stevens,

concurring.

At first blush it seems somewhat strange that the Bankruptcy Code should provide less protection to an individual’s interest in retaining possession of his or her home than of other assets. The anomaly is, however, explained by the legislative history indicating that favorable treatment of residential mortgagees was intended to encourage the flow of capital into the home lending market. See Grubbs v. Houston First American Savings Assn., 730 F. 2d 236, 245-246 (CA5 1984) (canvassing legislative history of Chapter 13 home mortgage provisions). It therefore seems quite clear that the Court’s literal reading of the text of the statute is faithful to the intent of Congress. Accordingly, I join its opinion and judgment.

       Section 506(a) provides, in part, as follows:
      “An allowed claim of a creditor secured by a lien on property in which the estate has an interest... is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property,... and is an unsecured claim to the extent that the value of such creditor’s interest... is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor’s interest.”
      11 U. S. C. § 506(a).

       Four Circuits have held that § 1322(b)(2) allows bifurcation of undersecured homestead mortgages. In re Bellamy, 962 F. 2d 176 (CA2 1992); In re Hart, 923 F. 2d 1410 (CA10 1991); Wilson v. Commonwealth Mortgage Corp., 895 F. 2d 123 (CA3 1990); In re Hougland, 886 F. 2d 1182 (CA9 1989).

       As a general provision under Chapter 5 of the Bankruptcy Code, § 506(a) applies in an individual bankruptcy case under Chapter 13. See 11 U.S.C. § 103(a).

         Under § 1322(b)(5), the plan may, “notwithstanding paragraph (2) of this subsection, provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending on any .. . secured claim on which the last payment is due after the date on which the final payment under the plan is due.”