statute of repose

California Public Employees’ Retirement System v. ANZ Securities, Inc., et al.

Issues

Does the timely filing of a class action lawsuit stop the running of the three-year time limit for individual class members to bring their claims under Section 13 of the Securities Act? 

This case presents the Supreme Court with an opportunity to clarify the applicability of the time limitations in Section 13 of the Securities Act of 1933 for individual claims brought after a class action lawsuit has been filed in the same matter. Petitioner California Public Employees' Retirement System (“CalPERS”) argues that Section 13 is a statute of limitation, which may be overridden by judge-made rule, as opposed to a statute of repose, which is not subject to judicial extension even in cases of extraordinary circumstances. Accordingly, CalPERS asserts that a prior Supreme Court decision, American Pipe, establishes that the filing of a class action tolls the statute of limitation as to all putative members of that class. Respondent ANZ Securities, however, argues that Section 13 is a statute of repose, and under the Second Circuit precedent the American Pipe tolling rule does not extend to statutes of repose. The outcome of this case could encourage litigation strategies that decrease court efficiency or, alternatively, benefit large investors at the expense of smaller ones. 

Questions as Framed for the Court by the Parties

Does the timely filing of a valid class action satisfy or toll the three-year filing period set by Section 13 of the Securities Act of 1933 with respect to subsequent opt-out suits by individual class members?

This case arose out of the 2008 collapse of Respondent Lehman Brothers Holdings Inc. (“Lehman Brothers”). See In Re Lehman Bros. Securities and ERISA Litigation, 799 F. Supp. 2d 258, 264 (S.D.N.Y. 2011). Lehman Brothers was a large investment bank, which traded its securities on the New York Stock Exchange.

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Corner Post, Inc. v. Board of Governors of the Federal Reserve System

Issues

Whether a plaintiff’s Administrative Procedure Act claim “first accrues” under 28 U.S.C. § 2401(a) when an agency issues a rule—regardless of whether that rule injures the plaintiff on that date—or when the rule first causes a plaintiff to “suffer[] legal wrong” or be “adversely affected or aggrieved.”

This case asks the Supreme Court to decide whether Corner Post, Inc.’s (“Corner Post”) claim under the Administrative Procedure Act was barred under a particular statute of limitation, and whether that six-year statute began running 2011 when the Board of Governors of the Federal Reserve (“Federal Reserve”) published their regulation, or in 2018 when Corner Post was first founded and affected by it. Corner Post asserts that interpreting statutes of limitations to start when harm is inflicted on plaintiffs is consistent with historic models of statutory interpretation and fairness. The Federal Reserve counters that the statute in question was clear in its terms and intentions to give administrative agencies a distinct time period during which to expect legal challenges, and as such the six-year statute would begin with the promulgation of the regulation. The outcome of this case has serious implications for administrative law and statutory interpretation, particularly with respect to the practicability of suing agencies for long-standing policies.

Questions as Framed for the Court by the Parties

Whether a plaintiff’s Administrative Procedure Act claim “first accrues” under 28 U.S.C. § 2401(a) when an agency issues a rule—regardless of whether that rule injures the plaintiff on that date—or when the rule first causes a plaintiff to “suffer[] legal wrong” or be “adversely affected or aggrieved.”

In 2010, Congress amended the Electronic Fund Transfer Act to address fees for consumer debit transactions charged to merchants, “interchange fees,” by debit-card-issuing banks (e.g., Visa and Mastercard).  

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Credit Suisse Securities (USA) LLC v. Simmonds

Issues

Should Section 16(b) of the Securities Exchange Act of 1934 be construed as a statute of repose, and, if so, is it permissible to toll a statute of repose until the disclosure requirements of Section 16(a) have been met?

 

Vanessa Simmonds brought suit under Section 16(b) of the Securities Exchange Act of 1934 in order to recoup profits realized by Credit Suisse and other investment banks in the course of engaging in short swing trading. The defendants engaged in such trading as underwriters during a series of lucrative initial public offerings in the early 2000s. Section 16(b) limits lawsuits to a two-year period following the date on which profits from trading were realized. In this case, Credit Suisse argues that the two-year time limit enunciated in Section 16(b) begins at the time the defendant realized profits, and constitutes a period of repose, which should not be extended under any circumstance. Simmonds argues that the Section 16(b) time limit should be interpreted in context with Section 16(a), which mandates disclosure in SEC filings of private transactions. Simmonds contends that, when read together, sections 16(a) and 16(b) suggest the time limit should toll until the plaintiff learns of the transaction. The Supreme Court's decision will affect the disclosure policies of investment banks and the time period during which directors can be held liable for short-swing purchases and sales.

Questions as Framed for the Court by the Parties

Whether the two-year time limit for bringing an action under Section 16(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78p(b), is subject to tolling, and, if so, whether tolling continues even after the receipt of actual notice of the facts giving rise to the claim.

In this case, respondent Vanessa Simmonds challenges the conduct of fifty-four underwriters in their activities related to a series of Initial Public Offerings (“IPOs”) of equity securities in the stock market boom of 1998 to 2000. See 

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Wex: Statute of Repose

Wex: Statute of Limitations

Securities and Exchange Commission: Securities Exchange Act of 1934

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CTS Corp. v. Waldburger

Issues

Does § 9658 of the Comprehensive Environmental Response, Compensation, and Liability Act apply to state statutes of repose in addition to state statutes of limitations?

In 2009, Respondent Peter Waldburger and other landowners discovered that their well water was contaminated with chemicals similar to the ones stored by CTS Corporation when it owned the land 20 years earlier. About two years after this discovery, Waldburger and the other landowners brought a nuisance action, subject to North Carolina law, against CTS. North Carolina requires that suits involving real property be brought within three years of the injury becoming discoverable (a statute of limitation) and within ten years of the defendant’s last act (a statute of repose). In attempting to prevent dismissal of this case, Waldburger argues that this latter ten year requirement is preempted by § 9658 of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). CTS argues that § 9658 does not apply to statutes of repose, only to statutes of limitations. The Supreme Court now has to consider whether § 9658 applies to statutes of repose. Resolution of this case will have far-reaching consequences, affecting both potential defendants, including industrial companies and the United States government, and potential victims of contamination and hazardous waste—which could include anyone who does not know that they are suffering injury from undiscovered hazardous waste.

Questions as Framed for the Court by the Parties

For certain state-law tort actions involving environmental harms, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) preempts the state statute of limitations’ commencement date and replaces it with a delayed commencement date provided by federal law. Specifically, 42 U.S.C. § 9658 provides that if “the applicable limitations period for such an action (as specified in the State statute of limitations or under common law) provides a commencement date which is earlier than the federally required commencement date, such period shall commence at the federally required commencement date in lieu of the date specified in such State statute.” Id. § 9658(a)(1). Section 9658, in turn, defines “applicable limitations period”-i.e., the state laws to which § 9658 applies-to “mean[] the period specified in a statute of limitations during which a civil action referred to in subsection (a)(1) of this section may be brought.” Id § 9658(b)(2).

In this case, the United States Court of Appeals for the Fourth Circuit deepened a split in the state and federal appellate courts by interpreting § 9658 to preempt not just state statutes of limitations but also state statutes of repose. A statute of limitations extinguishes a claimant’s right to pursue a cause of action after a certain period of time following accrual, whereas a statute of repose abolishes a cause of action as to a particular defendant after a period of time, regardless of whether the claim has accrued.

The question presented is: Did the Fourth Circuit correctly interpret 42 U.S.C. § 9658 to apply to state statutes of repose in addition to state statutes of limitations?

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Facts

From 1959 to 1985, Petitioner CTS Corporation (“CTS”) operated a fifty-four acre facility in Asheville, North Carolina, where notable quantities of chemicals were stored. Waldburger v. CTS Corp. 723 F.3d 434, 440 (4th Cir. 2013). In 1987, CTS sold this property to Mills Gap Road Associates after promising realtors that the land was clean.

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Kellogg Brown & Root v. United States ex rel. Carter

Issues

1) Does the Wartime Suspension of Limitations Act—which tolls the statute of limitations for an offense that involves fraud against the United States during wartime—apply to civil fraud claims and require a formal declaration of war?

2) Once a party files a suit, does the False Claim Act bar all subsequent suits based on similar facts indefinitely or only while the initial suit is pending before a court?

Benjamin Carter brought an action under the False Claims Act (“FCA”), alleging that Kellogg Brown & Root (“KBR”) had misrepresented water purification work and falsified time sheets in order to overbill the United States government. In this case, the Supreme Court will have the opportunity to resolve whether the Wartime Suspension of Limitations Act (“WSLA”) applies to civil suits brought under the FCA and whether the FCA bars all subsequent suits after a party files a suit based on the same underlying facts. KBR contends that the WSLA tolls the statute of limitations only for criminal suits and that the FCA bars every suit subsequent to the first suit filed on similar facts. Carter counters that the WSLA tolls both criminal and civil suits and that the FCA bars subsequent suits only when a similar suit is pending before a court. The Court’s ruling will affect whistleblowers as well as businesses and health care providers that supply services to the United States government.

Questions as Framed for the Court by the Parties

1) Whether the Wartime Suspension of Limitations Act—a criminal code provision that tolls the statute of limitations for “any offense” involving fraud against the government “[w]hen the United States is at war,” 18 U.S.C. § 3287, and which this Court has instructed must be “narrowly construed” in favor of repose—applies to claims of civil fraud brought by private relators, and is triggered without a formal declaration of war, in a manner that leads to indefinite tolling.

2) Whether, contrary to the conclusion of numerous courts, the False Claims Act’s so called “first-to-file” bar, 31 U.S.C. § 3730(b)(5)—which creates a race to the courthouse to reward relators who promptly disclose fraud against the government, while prohibiting repetitive, parasitic claims—functions as a “one-case-at-a-time” rule allowing an infinite series of duplicative claims so long as no prior claim is pending at the time of filing.

Kellogg Brown & Root (“KBR”) had a government contract to supply logistical services to the United States military in Iraq. See U.S. ex rel. Carter v. Halliburton Co., 710 F.3d 171, 174 (4th Cir. 2013). For about three months in 2005, Benjamin Carter worked for KBR as an operator of a water purification unit.

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Public Employees’ Retirement System of Mississippi v. IndyMac MBS, Inc., et al.

Issues

Does the filing of a putative class action serve, under the American Pipe rule, to suspend the three-year time limitation in § 13 of the Securities Act with respect to the claims of putative class members?

The Securities Act of 1933 (“Securities Act”) requires companies issuing a security to create offering documents that adequately outline the security’s risks to potential investors. Section 13 of the Securities Act requires a plaintiff to file a Securities Act claim within three years to allege the existence of material misstatements or omissions in these offering documents. In American Pipe & Construction Co. v. Utah, however, the Supreme Court held that many statutory time limits could be “tolled” or stopped when plaintiffs are potential members of an existing class action dealing with the same legal claim. This case should decide whether or not the time limitation in § 13 is the sort of limit subject to this “American Pipe rule.” The decision has implications for the efficiency of courts and stock issuers alike.

Questions as Framed for the Court by the Parties

Does the filing of a putative class action serve, under the American Pipe rule, to suspend the three-year time limitation in § 13 of the Securities Act with respect to the claims of putative class members?

Respondent IndyMac MBS, Inc. (“IndyMac”) is an issuer of a type of security known as mortgage pass-through certificates. See In re IndyMac Mortgage-Backed Securities Litigation, 718 F. Supp. 2d 495, 498–99 (S.D.N.Y. 2010).

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