## Facts

- From 1977 to 1981, Washington Public Power Supply System (WPPSS) issued about $2.25 billion in municipal bonds to finance construction of two nuclear power plants.
- After major cost overruns and feasibility concerns, construction was halted in 1982 and WPPSS defaulted on bond payments.
- Bond purchasers filed a federal class action against WPPSS and numerous offering participants (including professional firms), alleging material misstatements and omissions in connection with the bond offerings.
- Among other theories, plaintiffs asserted damages claims under § 17(a) of the Securities Act of 1933, contending the statute implied a private right of action.
- The initial district judge denied a motion to dismiss the § 17(a) claims, relying on existing circuit authority.
- After reassignment, the district court reconsidered and dismissed the § 17(a) claims, concluding the statute does not authorize private damages suits; the court certified the question for interlocutory appeal.
- A Ninth Circuit panel reversed, and the court reheard the case en banc to decide whether § 17(a) supports an implied private right of action.

## Issues

1. Whether § 17(a) of the Securities Act of 1933 implies a private right of action allowing purchasers to sue for damages based on alleged fraud in the offer or sale of securities.

## Decision

- The en banc Ninth Circuit affirmed the district court’s dismissal of the § 17(a) claims.
- The court held that § 17(a) does not create an implied private right of action for damages.
- The court reconsidered prior circuit statements read to allow § 17(a) private suits and rejected them to the extent they conflicted with modern Supreme Court implied-right doctrine.

## Legal Principles

- Implied private rights of action turn on congressional intent as shown primarily by statutory text and structure, not on judicial assessments of policy.
- Where Congress provides express private remedies in some provisions of a statutory scheme (e.g., Securities Act §§ 11 and 12), courts are reluctant to infer additional private remedies in neighboring provisions that lack remedial language.
- Statutory prohibitions directed at regulated actors, without rights-creating language identifying a beneficiary class, weigh against finding an implied private cause of action.
- The existence of other available remedies for securities fraud (including express Securities Act remedies and judicially recognized antifraud actions under federal securities law) supports declining to create overlapping implied damages actions absent clear congressional authorization.

## Conclusion

The Ninth Circuit, sitting en banc, held that § 17(a) of the Securities Act of 1933 does not authorize an implied private damages action and affirmed dismissal of the plaintiffs’ § 17(a) claims, limiting private plaintiffs to other statutory or recognized antifraud remedies.


In re Washington Public Power Supply System Securities Litigation, 823 F.2d 1349 (9th Cir. 1987) (en banc)