Croll

MEMORANDUM

I

BACKGROUND

Plaintiffs filed this action to recover damages in connection with certain transactions in commodity futures occurring in 1976. Plaintiffs allege violations of the Commodity Exchange Act (CEA), 7 U.S.C. §§ 1 et seq. Defendants move to dismiss on the ground that exclusive jurisdiction with respect to matters arising under the CEA resides initially in the Commodity Futures Trading Commission (CFTC) and that the federal courts have jurisdiction only after plaintiff has exhausted the administrative remedies under the Act.

II

DISCUSSION

A. In 1974, Congress amended the CEA to create the CFTC. 7 U.S.C. § 2 states in part

At the same time, Congress established a system of trial-like “reparations” proceedings.

Prior to the amendments, the courts had implied a private right of action. Hecht v. Harris, Upham & Go., 430 F.2d 1202 (9th Cir. 1970). The issue, then, is whether the 1974 amendments revoked any implied private right of action and gave jurisdiction to the federal courts only after completion of the reparations proceedings before the CFTC.

B. In Cort v. Ash, 422 U.S. 66 , 95 S.Ct. 2080 , 45 L.Ed.2d 26 (1975), the Supreme Court established a four-part…