LOCATION: U.S. Court of Appeals for the Fifth Circuit
DOCKET NO.: 81-680
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Fifth Circuit
CITATION: 459 US 375 (1983)
ARGUED: Nov 09, 1982
DECIDED: Jan 24, 1983
James L. Truitt - on behalf of the Petitioner
Paul Gonson - as amicus curiae
Robert H. Jaffe - on behalf of Respondent
Facts of the case
Media for Herman & MacLean v. HuddlestonAudio Transcription for Oral Argument - November 09, 1982 in Herman & MacLean v. Huddleston
Audio Transcription for Opinion Announcement - January 24, 1983 in Herman & MacLean v. Huddleston
William J. Brennan, Jr.:
Justice Marshall has two opinions, 81-680, MacLean v. Huddleston and 1613, Memphis Back v. Garner.
The first two cases come to us on writ of certiorari to the United States Court of Appeals for the Fifth Circuit.
They raised two issues concerning the general antifraud provisions of the Securities Exchange Act of 1934, specifically Section 10(b).
Section 10(b) prohibits the use of any fraudulent devised by any person in connection with the purchase or sale of any security.
We have long recognized that private parties can bring an action for damages based on Section 10(b).
The first question presented in this case is whether a private right of action exists under 10(b) for fraudulent activities when the conduct may also be expressly attributable under a separate provision of a related act, Section 11 of the Securities Act of 1933.
Section 11 is a narrowly tale of provision that permits a purchaser of registered securities to bring an action against certain specific parties to a misstatement or omissions contained in the registrations statement.
The Court of Appeals held that the availability of an expressed remedy under Section 11 of the 1933 Act did not borrow suit for damages under 10(b) of the 1934 Act and we affirm that holding.
Section 11 of the 1933 Act were designed to a four special protection to purchasers of registered securities but would be anomalous to deprive such purchasers of the protection against fraud when Section 10(b) of the 1934 Act provided to all persons who deal in securities. The two actions are distinct and address different types of wrongdoing.
They may overlap on occasion but our private -- our prior decisions have permitted such overlap under the security laws.
The second issue in these cases involves the standard of proof applicable under an action under 10(b).
In a typical civil suit for money damages, the plaintiff must prove their case by a preponderance of the evidence.
But the Court of Appeals held that a plaintiff in a 10(b) action must establish his case by a higher standard “clear and convincing” evidence.
We reverse this holding.
The higher standard of proof may have been applied historically in certain kind of law fraud actions, but these suits have little relevance to modern actions under the federal securities laws.
We have only required a higher standard of proof when particularly important individual rights are at stake, such as in deportation proceeding, but here, the balance of interest rate was a traditional standard of proof.
Accordingly, the General of the Court of Appeals has affirmed in part and reversed in part and otherwise a mandate for proceedings consistent with this opinion.
Justice Powell took no part in the consideration or decision of these cases.