Fs Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd.

Questions presented

SCOTUS records, cert granted 30 Jun 2025

The courts of appeals have split 2-1 over whether Congress created an implied private right of action in Section 47(b) of the Investment Company Act (ICA), which provides: (1) A contract that is made, or whose performance involves, a violation of this subchapter ... is unenforceable by either party .... (2) To the extent that a contract described in paragraph (1) has been performed, a court may not deny rescission at the instance of any party unless such court finds that under the circumstances the denial of rescission would produce a more equitable result than its grant and would not be inconsistent with the purposes of this subchapter. 15 U.S.C. § 80a-46(b)(1)-(2). The Third and Ninth Circuits, relying on statutory text and structure, hold that Section 47(b) does not create an implied private right of action, and a panel of the Fourth Circuit has agreed in an unpublished opinion. Only the Second Circuit-where plaintiffs may be able to sue most investment funds subject to the ICA, given New York's and the New York Stock Exchange's roles in financial operations- holds the opposite based on an "inference": parties may bring a lawsuit under Section 47(b), even though Congress never said so. The question presented is whether Section 47(b) of the ICA, 15 U.S.C. § 80a-46 (b), creates an implied private right of action.

Opinion summary

Etalia.ai summary of the majority opinion

The Court held that Section 47(b) of the Investment Company Act does not itself give private parties a right to sue for rescission of contracts that allegedly violate the Act. Justice Barrett wrote that Congress, not the courts, decides who may enforce federal law, and that Section 47(b) is written as a directive to courts about what remedy they may grant, not as rights-creating language giving individuals a cause of action. The Court also said the Act’s structure points away from an implied private remedy because the Securities and Exchange Commission is the ICA’s primary enforcer, while Congress expressly created private actions in other parts of the statute. The Court rejected Saba’s reliance on prior implied-rights cases and said the amended text of Section 47(b) does not support the broader private suit Saba sought.

Dissent summary

Etalia.ai summary of the dissenting opinions

Justice Jackson filed a dissenting opinion, joined by Justice Sotomayor, and joined by Justice Kagan as to Parts I and II. She argued that the Court ignored the text, structure, statutory history, and legislative history of Section 47(b). In her view, Congress amended the provision against the backdrop of earlier decisions recognizing an implied private right of action for rescission, and committee reports showed Congress wanted private suits to remain available. Justice Kagan filed a separate dissent saying she agreed with Justice Jackson’s Parts I and II and that the text, structure, and statutory history supported a private right of action, though she declined to join the further debate over legislative history.