On Appeal from the United States District Court for the District of New Jersey. (D.C. Civil Action No. 89-3438)
Before: Stapleton, Scirica and Roth, Circuit Judges
In this case we are required to decide whether the Submarine Cable Act of 1888*fn1 provides an implied private right of action to owners of submarine cables that are damaged as a result of the negligent conduct of others. The district court held that it does. American Tel. & Tel. Co. v. M/V Cape Fear, 763 F. Supp. 97, 105 (D.N.J. 1991). We will reverse.
The American Telephone & Telegraph Company is a member of a consortium that owns an international submarine telephone and communication cable known as TAT-7. This cable, which stretches across the bottom of the Atlantic Ocean from Tuckertown, New Jersey to Land's End, England, was severed on August 10, 1989. After detecting the break, the owners of the cable quickly dispatched an aircraft to the scene. The crew of the plane spotted the M/V Cape Fear and the M/V Little Gull within one half mile of the cable break, both dragging dredging-type fishing gear. Later inspection of the cable indicated that the damage was consistent with repeated contact with such dredging gear. No other ships capable of cutting the cable were seen in the area.
The consortium ("AT&T") filed suit in the United States District Court for the District of New Jersey. The complaint alleged that one or both of the defendant vessels had cut the cable in violation of United States maritime tort law, the Cable Act, international treaties, and customary international law. AT&T sought to recover the cost of repairing the cable (at that time estimated to be $1,500,000) and other consequential damages. In response to AT&T's complaint, Gifford Marine, Incorporated, the owner of the M/V Cape Fear and the M/V Little Gull, filed two Complaints for Exoneration from or Limitation of Liability pursuant to the Limitation of Liability Act of 1851.*fn2 Gifford Marine contended that even if its ships had damaged the cable, its liability should be limited to the value of the two vessels at the time of the incident: $1,090,000. AT&T responded that the Cable Act and international law superseded the Limitation Act, and that its total damages had increased to $3,500,000. After consolidation of the two suits, AT&T moved for judgment on the pleadings to determine whether, among other things, the defendants' liability under the Cable Act, if any, would be circumscribed by the Limitation Act. The district court held that the Cable Act, which explicitly provides for criminal prosecution, also supplies an implied private civil right of action to aggrieved cable owners. The district court also held that because the later Cable Act impliedly repealed the earlier Limitation Act, any civil liability available under the Cable Act would not be limited. The district court granted AT&T's motion for judgment on the pleadings, and this appeal followed.*fn3 Because we hold that the Cable Act provides no private cause of action, we will reverse.*fn4
The primary source of a private right of action is the text of a statute. Because the Cable Act does not expressly confer a private right on cable owners, we must decide whether one may be implied. Implication of private rights of action may "alter the remedial scheme devised by Congress for the enforcement of statutory programs and . . . place the judiciary in the role of enunciating or modifying policy decisions properly the preserve of the legislature." United States v. FMC Corp., 717 F.2d 775, 780 (3d Cir. 1983). For this reason, the crucial question is whether Congress intended to create such a right. California v. Sierra Club, 451 U.S. 287, 293, 68 L. Ed. 2d 101, 101 S. Ct. 1775 (1981). This is "basically a matter of statutory construction." Transamerica Mortgage Advisors, Inc. (TAMA) v. Lewis, 444 U.S. 11, 15, 62 L. Ed. 2d 146, 100 S. Ct. 242 (1979). The Supreme Court has set forth a four-part inquiry:
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? [Fourth,] 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?
Cort v. Ash, 422 U.S. 66, 78, 45 L. Ed. 2d 26, 95 S. Ct. 2080 (1975) (citations omitted) (emphasis in original).
The first two criteria are critical. If they do not point toward a private right, the remaining two "cannot by themselves be a basis for implying a right of action." Touche Ross & Co. v. Redington, 442 U.S. 560, 580, 61 L. Ed. 2d 82, 99 S. Ct. 2479 (1979) (Brennan, J., Concurring). By the same token, if the statute and legislative history reveal congressional intent to create a right of action, "there is no need . . . to 'trudge through all four of the factors.'" Merrill Lynch, Pierce, Fenner & Smith v. Curran, 456 U.S. 353, 388, 72 L. Ed. 2d 182, 102 S. Ct. 1825 (1982). This emphasis on the first two factors has severely weakened the once-prevailing view that a cause of action will be implied if existing statutory remedies are inadequate to fulfill the purpose of the statute. See generally FMC Corp., 717 F.2d at 782-83.
The initial question is whether the Cable Act was enacted for the benefit of a special class of which AT&T is a member. Cannon v. University of Chicago, 441 U.S. 677, 689, 60 L. Ed. 2d 560, 99 S. Ct. 1946 (1979). "That question is answered by looking to the language of the statute itself." Id. Language explicitly conferring a right directly on a class of persons indicates that Congress intended to establish a cause of action on behalf of members of the class. FMC, 717 F.2d at 781. On the other hand, when a statute imposes a duty without an "unmistakable focus" on the benefitted class, the courts are reluctant to infer a remedy. Id.
The Cable Act provides no explicit private damage remedy and is primarily criminal in nature. Under the Act it is a misdemeanor to "willfully and wrongfully break or injure, or attempt to break or injure, or . . . in any manner procure, counsel, aid, abet, or be accessory to such breaking or injury, or attempt to break or injure, a submarine cable" in a way that "interrupts or embarrasses" telegraphic communication. 47 U.S.C. § 21. It is also a misdemeanor to inflict the same injury "by culpable negligence." Id. § 22.*fn5 It would appear, then, that the statute "states no more than a general proscription of certain activities; it does not unmistakably focus on any particular class of beneficiaries whose welfare Congress intended to further." Sierra Club, 451 U.S. at 294. The existence of criminal penalties does not, however, necessarily preclude implication where there may be other indications of congressional intent to create a private cause of action. Cort v. Ash, 422 U.S. at 79.
AT&T contends that two sections of the Cable Act indicate that Congress intended to permit private suits. The first, § 28, states that "the penalties provided in this chapter for the breaking or injury of a submarine cable shall not be a bar to a suit for damages on account of such breaking or injury." 47 U.S.C. § 28. The district court held that this section merely prevents the express criminal penalties contained in the Cable Act from prohibiting a civil remedy. We agree.
In Bloomer Shippers Ass'n v. Illinois Central Gulf Railroad Co., 655 F.2d 772, 778 (7th Cir. 1981), the Court of Appeals for the Seventh Circuit concluded that similar language, standing alone, does not indicate that Congress intended to create a private federal cause of action.
In that case, Illinois Central pleaded guilty to a criminal charge of violating § 41(1) of the Interstate Commerce Act. After entry of the plea, a group of its customers filed a civil suit against the railroad, contending that they possessed an implied civil right of action under both § 41 and § 43. Among other things, § 43 stated that:
The proceedings provided for by sections 41, 42, or 43 of this title shall not preclude the bringing of suit for the recovery of damages by any party injured, or ...