First Tuesday Update is our monthly take on current issues in commercial disputes, international arbitration, and judgment enforcement. In today's update, we examine a recent Steptoe victory in federal court on behalf of its client, Korea Electric Power Corp. and Korea Hydro & Nuclear Power Co., Ltd. (KEPCO/KHNP). This victory highlights the importance of asking fundamental questions about a plaintiff's right to sue for declaratory relief.

The Declaratory Judgment Act (the Act) provides a mechanism for litigants to address statutory or constitutional violations in federal court. But it does not by itself provide a cause of action to sue. Indeed, the Supreme Court has observed that the availability of relief under the Act "presupposes the existence of a judicially remedial right." Schilling v. Rogers, 363 U.S. 666, 677 (1960) (emphasis added). 

Thus, while the Act broadens the array of remedies accessible to litigants in federal courts, it does not establish an independent foundation for federal relief. The Supreme Court has characterized the Act as "procedural" in nature, meant to augment the remedial options available to district courts. See Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671 (1950) Accordingly, any complaint seeking relief under the Act must establish a separate and independent basis for relief in federal court.

Even when a federal statute is implicated, there is still very much the question of whether a federal remedy exists. Not every federal statute explicitly provides a private remedy, and some statutes explicitly preclude private enforcement. To determine whether a federal statute implies a private right of action, the Supreme Court has developed a four-factor test:

  1. Whether the plaintiff is part of class for whose benefit the statute was enacted.
  2. Whether there are indications of legislative intent to create or deny a private remedy.
  3. Whether a private right of action is consistent with the legislative scheme.
  4. Whether the subject matter is one typically relegated to state law and state enforcement.

See Cort v. Ash, 422 U.S. 66 (1975). The test is a difficult one, as the DC Circuit has noted that "since Cort v. Ash, the Supreme Court has been very hostile to implied causes of action." Johnson v. Interstate Mgt. Co., 849 F.3d 1093, 1097 (D.C. Cir. 2017). Steptoe's recent victory in Westinghouse Electronic Company, Inc. v. Korea Electric Power Corp., et al., No. 22-03228-APM (D.D.C. Sept. 18, 2023), demonstrates this test in practice.

In late 2022, Westinghouse Electric Company (Westinghouse) sued KEPCO/KHNP in the United States District Court for the District of Columbia. Westinghouse alleged that KEPCO/KHNP failed to comply with obligations under the Atomic Energy Act's regulations by transferring certain technical information to other countries as part of bids to build nuclear facilities. Westinghouse claimed that KEPCO/KHNP violated its regulatory reporting obligations with respect to the bids and sued to attempt to force KEPCO/KNHP to comply with what Westinghouse alleged were the reporting requirements under the Atomic Energy Act.

KEPCO/KHNP moved to dismiss the complaint, contending that Westinghouse lacked a private right of action to sue under the Atomic Energy Act.1In a September 18, 2023 decision, the District Court agreed with KEPCO/KHNP, dismissing the claims entirely. Applying the Cort factors, the District Court concluded that the Atomic Energy Act did not provide a private cause of action. Not only did the District Court reinforce Cort's "hostility" toward implying causes of action generally, Judge Mehta found no indication in the Atomic Energy Act itself that indicated Congress's intent to imply such a remedy. The Atomic Energy Act, the District Court observed, vested exclusive enforcement authority with the Attorney General, precluding private lawsuits. And since the Atomic Energy Act did not provide such a remedy, nor could the Declaratory Judgment Act, warranting full dismissal of Westinghouse's claims. 

The case is a useful reminder to would-be plaintiffs and defendants alike that a complaint must not only establish federal jurisdiction but also the provide existence of a federal remedy. While the Declaratory Judgment Act expands procedural options available to plaintiffs, it cannot in and of itself create relief not rooted in statutory or constitutional provisions. 

Footnote

1. KEPCO/KHNP also moved to dismiss on the grounds that the agreement between KEPCO/KHNP and Westinghouse required the parties to arbitrate disputes. Westinghouse conceded that it was not seeking any relief under that agreement, and the Court thus did not need to reach the arbitration issue in its September 18 decision.

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