Page:Amicus brief - Stoneridge v Scientific-Atlanta - Chamber of Commerce of the United States of America.pdf/12

3 that contradict both the statute and this Court’s precedent. Implied causes of action should not be interpreted in ways that contradict or nullify legislative decisions. The expansion of the § 10(b) implied cause of action through “scheme” liability would both override limits on the express causes of action that Congress created and nullify Congress’s repeated decisions that only the SEC can sue for the conduct covered by “scheme” liability. Moreover, “scheme” liability contradicts Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994), on reliance and contradicts the Private Securities Litigation Reform Act of 1995 (“PSLRA”) on loss causation. These doctrines are essential means of providing reasonable limitations on liability and the Court should make clear that the “scheme” liability theory is simply untenable because it eviscerates such limitations. ARGUMENT I. “SCHEME” LIABILITY IS IMPROPERLY DERIVATIVE AND UNWORKABLE. The question before this Court is whether to recognize “scheme” liability as a legitimate implied private cause of action under § 10(b). The question presented in the amici brief of 32 state attorneys general offers a representative definition of “scheme” liability as a theory, i.e., shareholders can recover damages from actors who, acting with the requisite intent to deceive, actively engage in conduct that has the principal purpose and effect of creating a false appearance of fact in furtherance of a scheme to defraud the securities market, even when the actor has made no false statement or omission and otherwise owes no fiduciary duty to the shareholders. Brief of Ohio, et al. (“Ohio Br.”), at iii (emphasis added).