CalPERS v. ANZ Securities

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Supreme Court of the United States
CalPERS v. ANZ Securities
Reference: 16-373
Issue: Class action litigation
Term: 2016
Important Dates
Argued: April 17, 2017
Decided: June 26, 2017
Outcome
Second Circuit Court of Appeals affirmed
Vote
5-4 to affirm
Majority
Chief Justice John G. Roberts • Anthony Kennedy • Clarence Thomas • Samuel Alito • Neil Gorsuch
Dissenting
Ruth Bader Ginsburg • Stephen Breyer • Sonia Sotomayor • Elena Kagan


CalPERS v. ANZ Securities is a case argued during the October 2016 term of the U.S. Supreme Court. Argument in the case was held on April 17, 2017. The case came on a writ of certiorari to the United States Court of Appeals for the 2nd Circuit. On June 26, 2017, in an opinion by Justice Anthony Kennedy, the court affirmed the judgment of the Second Circuit. Justice Ruth Bader Ginsburg authored a dissenting opinion that was joined by Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan.

In the case, the court held that the court's rule in American Pipe & Construction v. Utah, which suspends the time, under a statute of limitations, in which to file individual claims in civil litigation should the individual join a class action lawsuit that the individual later leaves in order to pursue their own claims does not apply to similar timetables under statutes of repose.

HIGHLIGHTS
  • The case: In American Pipe & Construction v. Utah, the U.S. Supreme Court created a rule that suspends the time, under a statute of limitations, in which to file individual claims in civil litigation should the individual join a class action lawsuit that the individual later leaves in order to pursue their own claims. The Second Circuit has held that the rule does not apply to similar timetables imposed under a statute of repose. The Tenth Circuit, however, applies the Supreme Court's rule to both statutes of limitation and statutes of repose.
  • The issue: Does the Supreme Court's rule in American Pipe apply to statutes of repose as well as statutes of limitation?
  • The outcome: The appeal is pending adjudication before the U.S. Supreme Court.


    • In brief: Unsatisfied with the settlement offered in a class action lawsuit, the California Public Employees' Retirement System (CalPERS) opted out of the class and sought to file its own individual action against various holders of Lehman Brothers securities. A federal district court dismissed CalPERS' action. The district court held that CalPERS' filing was outside of the three-year statute of repose in which to bring their claim under Section 13 of the Securities Act. The Second Circuit Court of Appeals affirmed based on a 2013 precedent, Police and Fire Retirement System of City of Detroit v. IndyMac MBS, Inc., (IndyMac), in which the Second Circuit held that a U.S. Supreme Court rule that suspends an individual's statute of limitations period should that individual join a class action litigation and later leave to file an individual claim does not apply to a statute of repose period. The Tenth Circuit Court of Appeals has held the rule, known as American Pipe tolling, applies to both statutes of limitations and statutes of repose. Argument in the case was held on April 17, 2017.

    You can review the Second Circuit's order here.[1]

    Click on the tabs below to learn more about this Supreme Court case.

    Case

    Background

    This was a case about the degree to which, in certain securities class action litigation, a statute of repose applies to a member of the class who opts out in order to pursue individual claims.

    To understand this particular case, one must understand the distinction between a statute of limitations and a statute of repose. A statute of limitations is a statute that establishes a time limit for filing a civil case based on the date when an injury allegedly occurred or was discovered, that is when the claim is said to have accrued. In statute of limitations terms, the time limit on filing begins when a claim accrues. A statute of repose, on the other hand, limits the time when an action may be brought that is unrelated to the accrual date of any cause of action. Unlike a statute of limitations that begins on the accrual date of the claim, the period of a statute of repose begins when a specific event occurs regardless of whether a cause of action has accrued.[2]

    This case centered on such timing. Specifically, this case centered on when an individual member of a class action, here CalPERS, opted out of a settlement with underwriters of securities held by Lehman Brothers. CalPERS sought to bring a separate action against Lehman's underwriters, but a federal district court dismissed CalPERS' action. The district court held that CalPERS' filing was outside of the three-year statute of repose in which to bring their claim under Section 13 of the Securities Act. Based on a Second Circuit precedent, Police and Fire Retirement System of City of Detroit v. IndyMac MBS, Inc., (IndyMac) a three-judge panel of the circuit court affirmed the dismissal.

    In 1974, the U.S. Supreme Court issued an opinion in American Pipe & Construction v. Utah. In that case, the court held that a class action complaint tolls, or suspends, a statute of limitations. Thus, if an individual wants to opt out of a class to pursue separate, individual claims, the accrual date for individual claims may not time-barred by a statute of limitations based on when the class action suit is filed. The question in this case, however, was does the Supreme Court's American Pipe tolling rule that applies to statute of limitations also apply to statutes of repose?

    In IndyMac, the Second Circuit held that American Pipe tolling does not apply to statutes of repose. The Tenth Circuit Court of Appeals, however, has held that American Pipe tolling does apply to statutes of repose. The U.S. Supreme Court granted certiorari of an appeal of the Second Circuit's IndyMac decision, but dismissed certiorari as improvidently granted when the parties in IndyMac settled prior to oral argument at the Supreme Court. Here, the Supreme Court granted certiorari on the same question for which they granted certiorari in IndyMac.

    Petitioner's challenge

    CalPERS, the petitioner, challenged the order of the United States Court of Appeals for the 2nd Circuit that American Pipe tolling does not apply to statutes of repose under the Securities Act once a member of a class action lawsuit opts out of the class in order to pursue individual claims.

    Certiorari granted

    On September 22, 2016, CalPERS, the petitioner, initiated proceedings in the Supreme Court of the United States in filing a petition for a writ of certiorari to the United States Court of Appeals for the 2nd Circuit. The U.S. Supreme Court granted CalPERS' certiorari request on January 13, 2017, limiting argument to question one of the petition. Argument in the case was held on April 17, 2017.[3]

    Arguments


    Question presented

    Question presented:

    Does the filing of a putative class action serve, under the American Pipe rule, to satisfy the three-year time limitation in Section 13 of the Securities Act with respect to the claims of putative class members?[3]


    Audio

    • Audio of oral argument:[4]



    Transcript

    • Transcript of oral argument:[5]

    Outcome

    Decision

    On June 26, 2017, in an opinion by Justice Anthony Kennedy, the court affirmed the judgment of the Second Circuit. Justice Ruth Bader Ginsburg authored a dissenting opinion that was joined by Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan.

    In the case, the court held that the court's rule in American Pipe & Construction v. Utah, which suspends the time, under a statute of limitations, in which to file individual claims in civil litigation should the individual join a class action lawsuit that the individual later leaves in order to pursue their own claims does not apply to similar timetables under statutes of repose.[6]

    Opinion

    After a review of the factual and procedural history of the case, Justice Kennedy noted why American Pipe tolling did not apply to statutes of repose. He wrote,[6]

    “

    In light of the purpose of a statute of repose, the provision is in general not subject to tolling. Tolling is permissible only where there is a particular indication that the legislature did not intend the statute to provide complete repose but instead anticipated the extension of the statutory period under certain circumstances. ... The purpose and effect of a statute of repose ... is to override customary tolling rules arising from the equitable powers of courts. By establishing a fixed limit, a statute of repose implements a 'legislative decisio[n] that as a matter of policy there should be a specific time beyond which a defendant should no longer be subjected to protracted liability.' ... The unqualified nature of that determination supersedes the courts’ residual authority and forecloses the extension of the statutory period based on equitable principles. For this reason, the Court repeatedly has stated in broad terms that statutes of repose are not subject to equitable tolling. ...

    The final analysis, then, is straightforward. The 3-year time bar in §13 of the Securities Act is a statute of repose. Its purpose and design are to protect defendants against future liability. The statute displaces the traditional power of courts to modify statutory time limits in the name of equity. Because the American Pipe tolling rule is rooted in those equitable powers, it cannot extend the 3-year period. Petitioner’s untimely filing of its individual action is ground for dismissal.[7]

    		”

    As a result of the court's holding, the judgment of the Second Circuit was affirmed.

    Concurring opinions

    There were no concurring opinions filed in this case.

    Dissenting opinions

    Justice Ruth Bader Ginsburg filed a dissenting opinion that was joined by Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan. In her dissent, Justice Ginsburg argued that notice of the filing of the class action litigation provided sufficient timeliness for when CalPERS filed their individual action. She wrote,[6]

    “

    When CalPERS elected to pursue individually the claims already stated in the class complaint against the same defendants, it simply took control of the piece of the action that had always belonged to it. CalPERS’ statement of the same allegations in an individual complaint could not disturb anyone’s repose, for respondents could hardly be at rest once notified of the potential claimants and the precise false or misleading statements alleged to infect the registration statements at issue. CalPERS’ decision to opt out did change two things: (1) CalPERS positioned itself to exercise its constitutional right to go it alone, cutting loose from a monetary settlement it deemed insufficient; and (2) respondents had to deal with CalPERS and its attorneys in addition to the named plaintiff and class counsel. Although those changes may affect how litigation subsequently plays out, ... they do not implicate the concerns that prompted §13’s repose period: The class complaint disclosed the same information respondents would have received had each class member instead filed an individual complaint on the day the class complaint was filed. ... I would hold that the filing of the class complaint commenced CalPERS’ action under §11 of the Securities Act, thereby satisfying §13’s statute of repose.[7]

    		”

    The opinion



    Filings

    The U.S. Supreme Court granted CalPERS' certiorari request on January 31, 2017, limiting argument to question one of the petition.

    Merits filings

    Parties' briefs

    • CalPERS, the petitioner, filed a merits brief on February 27, 2017.
    • The Securities and Exchange Commission, the respondent, filed a merits brief on March 29, 2017.

    Amicus curiae briefs

    The following groups filed amicus curiae briefs in support of the petitioner, CalPERS:

    • Brief of the Dekalb County pension fund
    • Brief of the North American Securities Administrators Association, Inc.
    • Brief of SRM Global Master Fund Limited Partnership
    • Brief of various current and form directors of publicly traded companies
    • Brief of various institutional investors
    • Brief of various professors of civil procedure and securities law
    • Brief of various retired federal judges

    The following groups filed amicus curiae briefs in support of the respondent, the Securities and Exchange Commission:

    • Brief of the Securities Industries and Financial Markets Association et al.

    Certiorari filings

    Parties' filings

    • CalPERS, the petitioner, filed a petition for a writ of certiorari on September 22, 2016.
    • The Securities and Exchange Commission, the respondent, filed a brief in opposition to certiorari on November 23, 2016.

    Amicus curiae filings

    The following groups filed amicus curiae briefs in support of granting certiorari:

    • Brief of various retired federal judges

    See also

    Footnotes

    1. ↑ U.S. Court of Appeals for the Second Circuit, "Summary order," July 8, 2016
    2. ↑ Garner, B., et al. (1999). Black's Law Dictionary, 7th edition, St. Paul, MN: West Group. (pages 1422-1423)
    3. ↑ 3.0 3.1 Supreme Court of the United States, Ca. Public Employees' Retirement v. ANZ Securities, Inc., January 13, 2017
    4. ↑ Supreme Court of the United States, California Public Employees' Retirement System v. ANZ Securities, Inc., argued April 17, 2017
    5. ↑ [https://www.supremecourt.gov/oral_arguments/argument_transcripts/2016/16-373_4e46.pdf Supreme Court of the United States, California Public Employees' Retirement System v. ANZ Securities, Inc., argued April 17, 2017
    6. ↑ 6.0 6.1 6.2 Supreme Court of the United States, California Public Employees' Retirement System v. ANZ Securities, Inc., June 26, 2017
    7. ↑ 7.0 7.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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