Emulex Corp. v. Varjabedian (18-459)

argument 18-459

Emulex Corp. v. Varjabedian

Supreme Court of the United States 1h 1m 6 speakers 8 chapters transcribed 5 days ago official recording ↗

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What is the Ninth Circuit’s inferred private right of action under Section 14E?

John G. Roberts 0:00

We'll hear argument next in case 18459,

Unknown 0:05

Emulex Corporation versus John Obedian. Mr. Garr. Thank you, Mr. Chief Justice, and may it please the Court. The Ninth Circuit in this case recognized an unprecedented inferred private right to recover for negligent violations of Section 14E of the Securities Exchange Act of 1934. For two independent reasons, we would ask this Court to reverse that decision. First, as the government itself recognizes, this Court's precedents compel the conclusion that Section 14E does not confer any implied private right at all. Mr. Gar, why should we consider that when it wasn't raised in this case until, what was it, the motion for rehearing in the Court of Appeals? It went through trial court, Court of Appeals, not a word of

Unknown 1:00

Everybody accepted there was a private right of action. And you are now making the nonexistence of a private right your principal argument. But as you well know, this is a Court of Review, not a First View. If we're going to take up that question, it shouldn't start yet. Sure. Justice Ginsburg, I would point you first to this Court's decision in Central Bank of Denver, which — case, this Court confronted the exact same situation except we're actually in a much stronger position here. There, the petition for cert was on the question of whether or not the standard for an implied private right of action for aiding and abetting under Section 10 and Rule 10 was recklessness or . The cert petition didn't raise any question about whether there was an underlying implied private right for aiding and abetting.

Unknown 1:53

This Court itself raised and added that question It granted certiorari, and it resolved the case on that ground. Now, we are in a much stronger position than Central Bank because, first of all, it's undisputed that we raised this at the search days. The broader argument is fairly included within the question presented. Next, we did flag the argument below in our petition for rehearing. We specifically said on page 14 of our petition for rehearing, if Section 14E's implied right of action had to sweep in negligence, That would be grounds for eliminating it, not expanding it. And we cited the Ninth Circuit's decision explaining why there could be no private right of action under Section 17A. I'm sorry.

Unknown 2:38

I mean, Mr. Gray, that is the single sentence, right? And you don't ask the Ninth Circuit to overrule its decisions about private rights of action. It's really more just part of your argument about the negligence standard, isn't it? No, I would disagree with that. It's a separate point. flagging. We do make it on the next page as well. So there's two references. And I agree, it's not a freestanding argument. But the point of this statement in our brief is, if you really could read Section 14E to encompass negligence, then you couldn't possibly have any private right of action. Everything comes crumbling down. And we

Stephen G. Breyer 3:13

— You're saying that now, but I mean, I just want to add to it, Justice Kagan said, you told the Ninth Circuit, I take it, quote, that your client did not dispute that Section 14E provides for a private right of action. That's correct. And

Unknown 3:27

then

Stephen G. Breyer 3:27

later, you add this sentence as well, if we're wrong about negligence, then there wouldn't be a private right of action at all. I agree. That's what the sentence basically says, but

Unknown 3:37

go on. It's the same question. If I could address Justice Breyer's point just quickly, we did say at the panel stage that we did not dispute the existence of the private right because, of course, we couldn't, Ninth Circuit President had recognized that right. We did not, I think it's important to add, concede the existence of a private right. I think there's a difference between saying we don't dispute it and we agree with it. Now, I'm sorry, Justice Kagan. I think it's the same question. Right. And, of course, more broadly, under this Court's precedence, we would say clearly this Court has discretion to reach the broader issue. I mean, central bank really couldn't be more

Elena Kagan 4:14

on point. You answer discretion, but You don't answer why.