What is a private right of action?
What is the legal meaning and implications of private actions?
What are the important elements you should know!
In this article, we will break down the legal definition of a private right of action so you know all there is to know about it!
Keep reading as we have gathered exactly the information that you need!
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What is private right of action
A private right of action is when a private individual or entity, as opposed to the state, government or a public body, has the legal right to assert legal rights under the law.
When we say that the right is “private”, it relates to an individual, person, entity or organization that is anyone but the state.
When we say “action”, we refer to a lawsuit or the enforcement of legal rights.
In essence, a private right of action is when a person (other than the government or the state) has the right to commence legal proceedings or file a lawsuit against another under the law.
You can define a private right of action as the right granted to a private plaintiff to bring legal action against another party based on the Constitution, public statute or federal common law.
Why it’s important
In every democratic society, private citizens need to have the right to bring lawsuits against another who has caused them damages or has done them wrong.
This right is similar to the democratic rights of petitioning the government for a certain cause, writing to the members of Congress to express views and opinions and engaging with elected representatives.
If a person has been wronged, having the right to exercise civil rights against the wrongdoer directly is fundamental to ensure that we live in a society where individuals remain accountable for their actions.
Some laws provide for the government to exercise legal recourses against infringing companies to protect individual civil rights.
This may be effective in some circumstances but may not be effective when a single enforcement agency is tasked to handle hundreds, if not thousands, of violations committed by a single company affecting the rights of many private citizens.
The private right of action allows a private individual or private company to take action and enforce its legal rights without having to rely on a single federal enforcement agency, state or federal government to take action.
Private action legal basis
For a person to have the right to sue another or file a lawsuit against another, the law must authorize a private person or entity to that effect.
Without the legal basis allowing a private citizen or company to file a lawsuit for a particular cause of action, the action will be subject to dismissal.
For example, if someone is injured and intends to file a lawsuit against the person who caused the injury, the law must authorize the private plaintiff to file such a lawsuit.
Types of private rights of action
There are two types of private rights of action:
Let’s look at each one of them briefly.
Express private rights
When someone has an express private right of action, it means that the law specifically provides for or allows a private person or entity to file legal action.
For example, if Congress adopts a law granting private persons to file a lawsuit in certain types of personal injury cases, securities fraud, criminal enterprise or for other causes, then you expressly have the right to file a lawsuit on that basis.
Implied private rights
The second type of right of action is an implied one.
An implied private right of action is when the law does not expressly define a legal basis for a private company or person to sue another but the courts interpret the law in such a way as to authorize a private person to sue.
In essence, implied private rights of action are created through the court’s interpretation of what the legislature intended or may have wanted in the circumstances.
For example, under the Securities Exchange Act, the courts have interpreted that an implied private right of action exists in certain cases even though Congress had made no specific reference to a private right of action.
Private right of action examples
Let’s look at a few examples of instances when a private plaintiff may have a private right of action.
The California Consumer Protection Act (CCPA) does not contain statutory damages but allows a private right of action by anyone who feels they have suffered damages and sue companies for mismanaging their personal data.
This means that a company that collects or uses personal information may be exposed to a lawsuit directly from a California consumer in the event of a data breach.
This lawsuit is a private lawsuit intended by “anyone” who feels aggrieved by the company.
Another example is the biometric privacy law in Illinois allowing individuals to privately sue companies for privacy intrusions.
Under the Illinois biometric privacy law, individuals have a private right of action should companies fail to respect their legal obligations under the law resulting in damages to the individual.
7 U.S. Code § 25
A third example is the private rights of action allowed under 7 U.S. Code § 25.
Essentially, the law states:
(1) Any person (other than a registered entity or registered futures association) who violates this chapter or who willfully aids, abets, counsels, induces, or procures the commission of a violation of this chapter shall be liable for actual damages resulting from one or more of the transactions referred to in subparagraphs (A) through (D) of this paragraph and caused by such violation to any other person
(A) who received trading advice from such person for a fee;
(B) who made through such person any contract of sale of any commodity for future delivery (or option on such contract or any commodity) or any swap; or who deposited with or paid to such person money, securities, or property (or incurred debt in lieu thereof) in connection with any order to make such contract or any swap;
(C) who purchased from or sold to such person or placed through such person an order for the purchase or sale of (i) an option subject to section 6c of this title (other than an option purchased or sold on a registered entity or other board of trade); (ii) a contract subject to section 23 of this title; or (iii) an interest or participation in a commodity pool; or (iv) a swap; or
(D) who purchased or sold a contract referred to in subparagraph (B) hereof or swap if the violation constitutes (i) the use or employment of, or an attempt to use or employ, in connection with a swap, or a contract of sale of a commodity, in interstate commerce, or for future delivery on or subject to the rules of any registered entity, any manipulative device or contrivance in contravention of such rules and regulations as the Commission shall promulgate by not later than 1 year after July 21, 2010; or (ii) a manipulation of the price of any such contract or swap or the price of the commodity underlying such contract or swap.
In essence, a person who is not a registered entity or registered futures association violating the provisions of this statute will be exposed to and liable for actual damages resulting from the activities mentioned in subparagraphs (A) to (D), such as giving trading advice for a fee or making a contract of sale for a commodity.
Congress may place express private right of actions in different laws and statutes allowing individuals to file lawsuits under the law directly.
In addition to the examples we’ve named above, you can have a private right of action in legislation like:
- The Clayton Antitrust Act (CAA)
- Americans with Disabilities Act (ADA)
- Health Insurance Portability and Accountability Act (HIPPA)
These are legal actions and enforcement rights granted by Congress to private litigants to allow them to exercise their civil rights.
So what is a private action?
Let’s look at a summary of our findings.
Private right of action
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