concurring and dissenting, with whom
HUNTER, Circuit Judge, joins.This case has produced a flock of opinions representing diverse and distinct points of view. Chief Judge Seitz and Judges Gibbons, Garth, Sloviter, and Becker are of the view that persons who held convertible debentures of the Baltimore & Ohio Railroad on December 13,1977 have a cause of action under federal law. Moreover, Chief Judge Seitz and Judges Gibbons and Becker are of the view that this right of action could be automatically assigned to subsequent purchasers. Judges Adams, Garth, and Sloviter, on the other hand, would hold that assignment of the cause of action cannot occur automatically but requires an express agreement which is not present here. The court is unanimous, however, in its decision to remand the case for the purpose of determining what state law rights may be asserted by appellants under either the diversity or pendent jurisdiction of the district court.
I concur in the judgment that no federal cause of action is available to these appellants. I do not meet the question of assign-ability because I conclude that there is simply no federal cause of action available for assignment, be it automatic or otherwise.
The members of this court who believe that a federal cause of action exists rely on the separate opinions of Judges Gibbons and Garth in the panel decision of Pittsburgh Terminal Corp. v. Baltimore & Ohio R.R., 680 F.2d 933 (3d Cir.), cert. denied, - U.S. -, 103 S.Ct. 476, 74 L.Ed.2d 621 (1982). As Judge Garth makes clear in his separate opinion today, however, Pittsburgh Terminal holds only that Rule 10b-17 requires that notice be given to holders of convertible debentures when a common stock dividend is declared.1 Rule 10b-17 provides that:
(a) It shall constitute a “manipulative or deceptive device or contrivance” as used in section 10(b) of the Act for any issuer of a class of securities ... to fail to give notice in accordance with paragraph (b) of this section of the following actions relating to such class of securities:
*733(1) A dividend or other distribution in cash or in kind, except an ordinary interest payment on a debt security, but including a dividend or distribution of any security of the same or another issuer;
17 C.F.R. § 240.10b-17 (1982) (emphasis added). Thus, if Pittsburgh Terminal remains the law of this court, failure to provide this notice gives rise to a federal cause of action for damages.
Because an in banc court is free to review and overrule the decision of a previous panel. United States Court of Appeals for the Third Circuit, Internal Operating Procedures ch. VIII, C., this appeal provides an appropriate vehicle to examine the precepts which, up until now, had only been before the Pittsburgh Terminal panel. Thus, no barrier prevents us from considering whether those who held debentures as of December 13, 1977 have a federal cause of action. Also, it cannot be argued, consistent with established principles of federal jurisprudence, that last rites were administered to this issue by the Supreme Court’s denial of certiorari in Pittsburgh Terminal. “For [it is] the well-settled view that denial of certiorari imparts no implication or inference concerning the Court’s view of the merits.”2 Hughes Tool Co. v. Trans World Airlines, Inc., 409 U.S. 363, 366 n. 1, 93 S.Ct. 647, 650 n. 1, 34 L.Ed.2d 577 (1973) (citing Maryland v. Baltimore Radio Show, 338 U.S. 912, 919, 70 S.Ct. 252, 255, 94 L.Ed. 562 (1950) (Frankfurter, J.)).
I find the reasoning supporting the judgment in Pittsburgh Terminal unpersuasive. I adopt the rationale contained in the following excerpt from Judge Adams’ Pittsburgh Terminal dissent and conclude that no federal right of action exists. After determining that B & O had no contractual obligation to provide advance notice to its convertible debenture holders of the common stock dividend, Judge Adams stated that:
Judge Gibbons has concluded that Rule 10b-17 applies to the situation at hand because “B & O is the issuer of the convertible debentures, the MAC distribution is a dividend of a security, and that dividend related to the convertible debentures since it was material to a decision about exercising the conversion option.” At 941. Judge Garth, concurring exclusively on this ground, stresses that, in his view, “a dividend ‘relates to’ a security if the declaration of that dividend makes the security significantly more or less valuable .... ” At 945. Because the B & O debentures were of considerably less value after the declaration of the MAC dividend, Judge Garth has concluded that the declaration of the dividend “is an action which clearly ‘relates to’ ” that class of securities.
... [T]hese considerations are not sufficient to establish that the dividend declaration “related to” the class of debenture securities as that term is used in Rule 10b-17. Put simply, Rule 10b-17 never was meant to deal with a situation similar to that before us today.
Nothing in the Commission’s “Notice of Proposed Rule Making” or in the language of the rule itself suggests that Rule 10b-17 was intended to override the common law and accord debenture holders significant additional substantive rights. When the Rule was proposed by the Securities Exchange Commission in 1971, it was described as a rule “to require companies whose securities are publicly traded to furnish public investors with timely advance notice of the right to receive dividend[s] and other rights which accrue to holders of record of a specified class of securities as of a specialized date (‘the record date’).” 36 Fed.Reg. 3430 *734(1971). In other words, the Rule was designed to ensure that purchasers of securities receive all the fruits of the transaction to which they legally are entitled —namely, distributions made after the sale but before the change in ownership is reflected in the corporation’s record books....
The differences between the scenario depicted by the SEC and the present case could not be more obvious. In the situation described by the SEC, the purchaser — independent of Rule 10b-17 — has accrued the right to receive certain benefits. In such a case, the Rule acts simply to assure that these rights will not be impeded because of the inadequacies inherent in corporate bookkeeping. Here, in contrast, the debenture holders have a right to convert their debentures into shares of common stock. That right has not been defeated. Under well-established common law principles, however, they have no right — unless otherwise specified in the debenture — to notice of corporate actions that may affect the value of the conversion option.
Had the debenture holders foreseen the possibility that B & 0 would spin off its non-rail assets, arguably they may have bargained for — and paid for — the right to advance notice of the event. Despite the well-settled precedent of Pratt [v. American Bell Telephone Co., 141 Mass. 225, 5 N.E. 307 (1886) ] and Parkinson [v. West End St. Ry. Co., 173 Mass. 446, 53 N.E. 891 (1899)], however, the B & 0 indenture did not require such notice to the debenture holders and the price of the debenture presumably reflected this fact. For this Court today — almost thirty years after the drafting of the indenture — to ignore what was set forth as the intent of the parties and fundamentally to alter the terms of the contract is, in my view, not only legally erroneous but improvident.
680 F.2d at 952-54 (footnotes omitted).
There are yet other sound reasons for not meeting the assignability issue. Putting aside considerations that make suspect a gratuitous viewpoint that states, “Were I to meet this issue, I would hold, etc.,” I fear that going off on an alternate ground might dilute the expression of my firmly held conviction that the December 13, 1977 debenture holders had no federal cause of action to assign. It is basic to our federal judicial system that, as to subject matter jurisdiction, the reach of the federal courts shall not exceed their statutory grasp as established by Congress. In determining that grasp, courts should not torture statutory language, legislative history, or agency regulations to fashion a cause of action where none has been expressly or impliedly provided by Congress. While my views on this subject have not always carried this court, see, e.g., Ash v. Cort, 496 F.2d 416, 426-29 (3d Cir.1974) (Aldisert, J., dissenting), they have found a modicum of acceptance elsewhere, see, e.g., Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975).
Accordingly, I reach only the threshold issue, concluding that the original debenture holders have no federal cause of action and, a fortiori, neither do their putative assignees.
. In Baltimore Radio Show Justice Frankfurter stated:
Inasmuch, therefore, as all that a denial of a petition for a writ of certiorari means is that fewer than four members of the Court thought it should be granted, this Court has rigorously insisted that such a denial carries with it no implication whatever regarding the Court’s views on the merits of a case which it has declined to review. The Court has said this again and again; again and again the admonition has to be repeated.
338 U.S. at 919, 70 S.Ct. at 255.