Proposed Limitation On Implied Private Rights of Action

Senate Bill 2140, introduced by Senator Kelsey, would limit the ability of courts, licensing boards, or administrative agencies to create a judicial remedy or impose an affirmative duty of care based upon violation of a statute unless the statute expressly creates the right or imposes the duty. The bill does not restrict the ability of courts to recognize an implied private right of action in the absence of a controlling statute if the action or duty is based on common law.

In some areas, particularly in federal law, courts have recognized implied private rights of action on the rationale that the statutory scheme, to be effective, must allow private parties access to the courts to enforce their rights under the law. A major example is federal securities litigation, in which the United States Supreme Court for decades has allowed investors to file legal actions alleging fraud in some areas without express statutory authorization to do so. 

Tennessee courts generally have been much more reluctant to recognize implied private rights of action. The courts determine whether a private citizen is an intended beneficiary of the statute. Courts also examine the legislative intent and the underlying purposes of the statute. An excellent recent discussion of the issue by the Tennessee Supreme Court occurred in Brown v. Tennessee Title Loans Inc., 328 S.W.3d 850, 857 (2010), in which the Court stated, quoting a previous case: “[W]here an act as a whole provides for governmental enforcement of its provisions, we will not casually engraft means of enforcement of one of those provisions unless such legislative intent is manifestly clear.” The Court declined to recognize an implied private right of action under the Tennessee Title Pledge Act for borrowers against title pledge lenders for charging excessive interest and prohibited fees.

If enacted, this bill will not affect federal law, but it may have an impact on Tennessee courts, licensing boards, and administrative agencies. It will be interesting to see whether the courts uphold the constitutionality of the legislation. Generally, under the separation of powers principle, courts look unfavorably on legislative efforts to restrict their jurisdiction, but since, as the Brown Court noted, implied private rights of action are in effect an effort by the courts to carry out legislative intent that was not expressed in legislation, this bill may not be seen as infringing on judicial prerogatives in the same manner.