Stanley Grossman, Stoneridge's lawyer, is seeking to revive claims against Scientific-Atlanta and Motorola. These companies sold set-top cable boxes to Charter Communications then allegedly helped the cable company pump up revenue and cash flow to meet Wall Street expectations in 2000.

A federal appeals court affirmed the dismissal of a lawsuit against Scientific-Atlanta and Motorola, finding that those companies' actions only amounted to "aiding and abetting" Charter's securities fraud, not benefiting directly from it.

That decision made the claims against the companies a dead letter under a 1994 U.S. Supreme Court case called Central Bank v. First Interstate Bank, which declared that private plaintiffs don't have a right to damages against aiders and abettors.

Grossman alleges they should be responsible because they were part of a "scheme" to defraud, a theory blessed in a 2006 case from the federal appeals court in California, but not elsewhere.

Roberts repeatedly reminded Grossman that Congress had twice declined to revive aiding-and-abetting liability: first when it considered a 1995 law aimed at alleged abuses of securities class actions, and again in 2002, when the Sarbanes-Oxley law was passed.

"We don't get in the business of implying private rights of action anymore,"  Roberts said. "We did that sort of thing in 1971. We haven't done it in quite some time. . . . We should get out of the business of expanding it, because Congress has taken over."

Moments later, Roberts prodded Grossman again, "Why shouldn't we be guided by what Congress did in reaction to the Central Bank case?" he asked.

After the court's decision in that case, Congress passed the Private Securities Litigation Reform Act. That 1995 law made it clear that the Securities and Exchange Commission could bring aiding-and-abetting claims but did not extend the privilege to ordinary investors.

"They were addressing a very specific decision from this court," Grossman said. Roberts interjected: "You are asking us to extend that liability to them, which seems inconsistent with what Congress did."

Roberts' skepticism of investors' assertions was echoed by Scalia. He said that private lawsuits based on violations of Section 10(b) of the Securities Exchange Act of 1934 are not explicitly authorized in the law but grew out of several judicial decisions.

"If it's our creation," he said of investors' right to sue under the 1934 law, "couldn't we sensibly limit it?" He dismissively described class action lawsuits as "private attorney general actions."

  Alito added another skeptical voice, saying that he saw "absolutely no difference" between Grossman's "scheme liability" test and "the elements of aiding and abetting."

Jeffrey McFadden of Steptoe & Johnson, a litigator who defends securities-fraud class actions, came away from the arguments with the impression that three of the eight participating justices were clearly indisposed to rule in favor of investors.

"As far as these justices are concerned, the boundaries have been drawn and they should not be tinkering with it," he said.

McFadden recently settled a case in which several AOL Time Warner executives who had nothing to do with the company's financial statements were alleged to have been part of a scheme. He added that he sees plaintiff lawyers asserting "scheme liability" often.

"Everyone is aware in one way or another that the company is going to use those transactions in disclosures to investors," he said. "There is just no end to the liability that companies could face."

But Ginsburg and Souter seemed to be trying to find a way to revive the investors' claims.

"The question is, is there a middle category between Charter and Central Bank?" Ginsburg asked Stephen Shapiro of Mayer Brown Rowe & Maw, who represents Scientific-Atlanta and Motorola.

Ginsburg repeatedly pointed out that the court's Central Bank ruling conceded that the bank hadn't engaged in deception. The facts in Charter are quite different:

Scientific-Atlanta and Motorola supplied set-top cable boxes to Charter. Charter agreed to pay an additional $20 per set-top box to both companies, and the companies used that money to purchase advertising from Charter at rates four to five times higher than it normally charged.

The contracts for the cable boxes were backdated to create the impression that the deals were not related. Charter essentially said, "Vendors, I need you to consummate this fraud on the public," Ginsburg said.

That led Shapiro to interject, "We don't agree with that pejorative characterization of the facts."

Shapiro ultimately responded that there could be no "reliance" by investors on these contracts because they were never disclosed to the investing public.

"You can't have primary liability without the statement made to the market," he said. "It has to be made directly to the investors."