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statute of limitations

Gabelli v. SEC

in
Oral argument: 
January 8, 2013
Court below: 
United States Court of Appeals for the Second Circuit

“Time zone arbitrage” is an investment practice that takes advantage of the time difference between markets in the United States and abroad but that may harm international institutional investors. In its initial action against defendants, Marc J. Gabelli and Bruce Alpert (collectively, “Gabelli”), the SEC alleged that Gabelli allowed a single investor in the mutual fund they managed to engage in a time zone arbitrage.  The SEC argued that Gabelli committed securities fraud by allowing such a practice while simultaneously representing to the directors and investors of the mutual fund that time zone arbitrage would not be tolerated. The SEC action was dismissed in the United States District Court for the Southern District of New York for having exceeded the statute of limitations. However, the Court of Appeals for the Second Circuit reversed, stating that the period did not begin running for statute of limitations purposes until the SEC discovered the alleged misconduct, rather than when the alleged misconduct first occurred. The defendants now appeal, arguing that potential targets of government enforcement actions should not have to live under the constant threat of penalty for conduct long since passed. The SEC counters that wrongdoers should not benefit by virtue of their conduct being more difficult to uncover. The Supreme Court’s resolution of this case will have long lasting implications on the government’s efforts to regulate the securities market.

Questions Presented: 

Section 2462 of Title 28 of the United States Code provides that “except as otherwise provided by Act of Congress” any penalty action brought by the government must be “commenced within five years from the date when the claims first accrued.” (emphasis added). This Court has explained that “[i]n common parlance a right accrues when it comes into existence.” United States v. Lindsay, 346 U.S. 568, 569 (1954).

Where Congress has not enacted a separate controlling provision, does the government's claim first accrue for purposes of applying the five-year limitations period under 28 U.S.C. § 2462 when the government can first bring an action for a penalty?

Issue

Whether the five-year limitation for government enforcement actions begins running when the government discovered an alleged violation or when the alleged violation took place.

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Written by: 
Zachary Glantz
Jonathan Goddard
Edited by: 
Judah Druck
Additional Resources: 

Smith, et al., v. United States

in
Oral argument: 
November 6, 2012
Court below: 
United States Court of Appeals for the D.C. Circuit

Petitioner Calvin Smith was involved in a criminal drug distribution organization and imprisoned for a related murder in 1994. In 2000, a grand jury brought indictments against him. Smith defended his two conspiracy charges on the grounds that the statute of limitations barred his conviction because he had withdrawn from the conspiracy more than five years ago. The trial court directed the jury that the burden of proof was on Smith as defendant to prove withdrawal by a preponderance of the evidence. Smith claims his participation in the conspiracy during the statutory period is a necessary element of his crime that the government must prove. Additionally, since withdrawal and participation are mutually exclusive, his withdrawal would negate an essential element of the government's case against him. The United States argues that withdrawal is an affirmative defense, and the burden of proof lies with the defendant. This case will define the boundaries of Due Process Protection in conspiracy cases and similar cases involving amorphous and on-going criminal activity.

Questions Presented: 

Whether withdrawing from a conspiracy prior to the statute of limitations period negates an element of a conspiracy charge such that, once a defendant meets his burden of production that he did so withdraw, the burden of persuasion rests with the government to prove beyond a reasonable doubt that he was a member of the conspiracy during the relevant period -- a fundamental due process question that is the subject of a well-developed circuit split.

Issue(s)

Whether requiring the defendant to bear the burden of proving withdrawal from a conspiracy as an affirmative defense violates Due Process.

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Written by: 
Dillon Horne
Matthew Soares
Edited by: 
Jenny Liu

Wood v. Milyard (10-9995)

in

Oral argument: Feb. 27, 2012

Appealed from: United States Court of Appeals for the Tenth Circuit (Nov. 26, 2010)

HABEAS CORPUS, DEFENSE, STATUTE OF LIMITATIONS, WAIVER, PETITION

Petitioner Patrick Wood filed a petition for writ of habeas corpus on February 25, 2008, in order to challenge his murder conviction. On appeal, the appellate court raised, sua sponte, a 28 U.S.C. § 2244(d) statute of limitations defense that barred Wood’s claims. Wood argues that appellate courts lack authority to raise a statute of limitations defense sua sponte, because an affirmative defense is forfeited if not raised, and because the government waived its statute of limitations defense at the district court level. In opposition, Kevin Milyard argues that appellate courts do have authority to raise a statute of limitations defense sua sponte, assuming the state did not intelligently waive the defense in the district court. In determining appellate court capacity to independently raise statute of limitations defenses, this decision will impact the finality of lower court decisions.

United States v. Home Concrete & Supply, LLC (11-139)

in

Oral argument: January 17, 2012

Appealed from: United States Court of Appeals for the Fourth Circuit (Feb. 7, 2011)

In 2006, the IRS adjusted Respondent Home Concrete’s 1999 tax return, claiming that Home Concrete overstated its basis in sold assets. The Fourth Circuit found that this adjustment was untimely under the general three year statute of limitations for IRS actions, concluding that overstatements of basis are not omissions that would trigger an extended six year statute of limitations. Petitioner, the United States, argues that the language and purpose behind the statute clarify that overstating a sold asset’s basis triggers the extended period, and that the Fourth Circuit should have deferred to the IRS's statutory interpretation contained within a Treasury Department regulation finalized during the appeal. Home Concrete argues that Supreme Court precedent applies here, eliminating ambiguity in the statutory interpretation. The Supreme Court’s decision will resolve a circuit split over the proper limitations period; the decision will also address the degree of deference due to a Treasury regulation that may be interpreted as conflicting with Supreme Court precedent, and that may be viewed as applying retroactively. The Court’s decision may affect the IRS’s timeframe to detect certain complex tax schemes, and the time period within which taxpayers are subject to audits.

Merck & Co., Inc. v. Reynolds (08-905)

in

Oral argument: Nov. 30, 2009

Appealed from: United States Court of Appeals for the Third Circuit (Sept. 9, 2008)

SECURITIES EXCHANGE ACT, STATUTE OF LIMITATIONS, SCIENTER, Section 10(b)

Under 28 U.S.C. § 1658(b), a plaintiff must file a claim alleging violation of the Securities Exchange Act of 1934 no later than two years after the plaintiff discovers the facts constituting the violation.  The Courts of Appeals are in general agreement that the two-year period of limitations begins when the plaintiff had, or should have had knowledge of the facts constituting the violation.  What is at issue in this case is whether knowledge that defendant acted with the intent to deceive is a fact constituting the violation for purposes of triggering the two-year period of limitation.  The Supreme Court’s decision will resolve this question of statutory interpretation and, in so doing, will determine the delicate balance between allowing plaintiffs with meritorious claims access to the federal courts and providing certainty and repose to potential securities fraud defendants.

United States v. Clintwood Elkhorn Mining Co. (07-308)

in

Oral argument: March 24, 2008

Appealed from: United States Court of Appeals for the Federal Circuit (Apr. 27, 2007)

CBOCS West, Inc. v. Humphries (06-1431)

in

Oral argument: February 20, 2008

Appealed from: United States Court of Appeals, Seventh Circuit (Jan. 10, 2007)

THIRTEENTH AMENDMENT, EMPLOYMENT DISCRIMINATION, RETALIATION, SECTION 1981, CIVIL RIGHTS ACT OF 1866, STATUTE OF LIMITATIONS, STATUTORY INTERPRETATION

42 U.S.C. § 1981 ("Section 1981") provides that any “person within the jurisdiction of the United States” has the same right to "make and enforce" contracts, regardless of their skin color. Section 1981 protects parties from discriminatory treatment both at the time when contracts are formed, and in post-formation conduct. Section 1981 applies to many aspects of the employment relationship because that relationship is considered contractual; however, the extent of this protection is unclear. This case addresses the question of whether an employee can bring a claim for retaliation under Section 1981. Retaliation does not clearly come under the scope of Section 1981 because often it is based not on an employee's characteristic, such as race, but instead on an action taken by the employee, such as complaining about work conditions or discriminatory treatment. However, retaliation claims often overlap with, and are difficult to separate from, claims of discrimination. Should the Supreme Court decide that Section 1981 protects an employee from race-based retaliation, it will give employees greater flexibility in filing claims of retaliation, because they will not be subject to the filing deadlines and limits on damages found in Title VII of the Civil Rights Act of 1964, an alternate provision which does encompass retaliation claims.

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