15‐1879‐cv
In re Lehman Bros. Sec. & ERISA Litig.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER
JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S
LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER
THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A
SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley
Square, in the City of New York, on the 8th day of July, two thousand sixteen.
PRESENT: RALPH K. WINTER,
RICHARD C. WESLEY,
GERARD E. LYNCH,
Circuit Judges.
______________________
IN RE LEHMAN BROTHERS SECURITIES AND ERISA LITIGATION,
No. 15‐1879
______________________
FOR APPELLANT: THOMAS C. GOLDSTEIN, Goldstein & Russell, P.C.,
Bethesda, MD (Joseph D. Daley, Robbins Geller
Rudman & Dowd LLP, San Diego, CA; Amanda M.
Frame, Robbins Geller Rudman & Dowd LLP, San
Francisco, CA, on the brief).
FOR APPELLEE: VICTOR L. HOU (Mitchell A. Lowenthal, Roger A.
Cooper, Jared Gerber, on the brief), Cleary Gottlieb Steen
& Hamilton LLP, New York, NY.
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Appeal from the United States District Court for the Southern District of
New York (Kaplan, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED AND DECREED that the orders of the District Court are
AFFIRMED.
The California Public Employees’ Retirement System (“CalPERS”) appeals
from two orders of the United States District Court for the Southern District of
New York (Kaplan, J.), which dismissed certain of CalPERS’s claims as time‐
barred by the three‐year statute of repose contained in section 13 of the Securities
Act of 1933, 15 U.S.C. § 77m. We assume the parties’ familiarity with the
underlying facts and the procedural history, which we reference only as
necessary to explain our conclusions.
The crux of the appeal is whether the Supreme Court’s decision to toll
statutes of limitation for putative class members—generally referred to as
“American Pipe tolling” after the originating case, American Pipe & Construction
Co. v. Utah, 414 U.S. 538 (1974)—also applies to section 13’s statute of repose. We
have held previously that American Pipe tolling does not affect the statute of
repose embodied in section 13. See Police & Fire Ret. Sys. of City of Detroit v.
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IndyMac MBS, Inc., 721 F.3d 95 (2d Cir. 2013). Undaunted, CalPERS urges us to
distinguish this case from IndyMac. We are unpersuaded.
CalPERS argues principally that, unlike in IndyMac, the putative class
action was commenced by a named plaintiff with proper standing and, therefore,
its claims were actually asserted within the three‐year statute of repose. This
argument is inconsistent with the reasoning of IndyMac. IndyMac made no
reference to the standing of named plaintiffs when it concluded that American
Pipe tolling did not apply to section 13’s statute of repose; its conclusion was
instead derived from two longstanding principles. First, if American Pipe is
grounded in equity, its tolling rule cannot affect a legislatively enacted statute of
repose. See IndyMac, 721 F.3d at 109 (citing Lampf, Pleva, Lipkind, Prupis &
Petigrow v. Gilbertson, 501 U.S. 350, 363 (1991)). Second, if American Pipe
establishes a “legal” tolling principle grounded in Rule 23, to apply it to a statute
of repose would violate the Rules Enabling Act by permitting a procedural rule
to abridge the substantive rights created by statutes of repose. Id. at 106, 109.
Accordingly, under IndyMac’s reasoning, the inapplicability of American Pipe
tolling to a statute of repose turns on the nature of the tolling rule and its
ineffectiveness against statutes of repose, not whether the named plaintiffs have
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proper standing to assert claims on behalf of a class. See also CTS Corp. v.
Waldburger, 134 S. Ct. 2175, 2187 (2014) (“[A] critical distinction between statutes
of limitations and statutes of repose is that a repose period is fixed and its
expiration will not be delayed by estoppel or tolling.” (internal quotation marks
omitted)).
CalPERS suggests that because it fell within the putative class before
exercising its right to opt out, its claims were essentially “filed” against the
defendant within three years and therefore timely. Again, we are not persuaded.
As a fundamental matter, if it were true that a putative class member’s claims
were essentially “filed” in the putative class complaint, there would be no need
for American Pipe tolling at all; any putative class complaint would count as a
legitimate “filing” of all putative class members’ claims within the limitations
period. The very principle of tolling is to permit claims not timely asserted to
proceed if the requirements for suspending the limitations period are met. Cf.
Lozano v. Montoya Alvarez, 134 S. Ct. 1224, 1231–32 (2014); Honda v. Clark, 386 U.S.
484, 496–97 (1967). To the extent that CalPERS argues that American Pipe tolling
should be conceptualized as something other than “tolling” as that term is
generally understood, that argument was presented to the IndyMac panel, which
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declined to adopt it. See Joint Br. & Special App. for Intervenors‐Appellants at
21–23, 25, IndyMac, No. 11‐2998 (2d Cir. Nov. 2, 2011), ECF No. 116.
CalPERS finally argues that to find its claims to be time‐barred violates the
due process considerations embodied in Rule 23’s opt‐out mechanism. We are
unpersuaded. The due process protections of Rule 23 are directed at preventing
a putative class member from being bound by a judgment without her consent.
See Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 175–76 (1974). In essence, the opt‐
out right merely ensures that each putative class member retains the ability to act
independently of the class action if she so elects. Cf. In re WorldCom Sec. Litig.,
496 F.3d 245, 256 (2d Cir. 2007). The opt‐out right does not confer extra benefits
to a plaintiff’s independent action. CalPERS’s right to initiate and pursue an
individual action before, during, and after the putative class action was
unchanged—including the necessity of instituting such an action within section
13’s three‐year statute of repose.
In closing, we note that the question whether American Pipe tolling applies
to statutes of repose—and if so, when—may be ripe for resolution by the
Supreme Court. Our decision in IndyMac created a circuit split with the Tenth
Circuit, see Joseph v. Wiles, 223 F.3d 1155, 1166–68 (10th Cir. 2000), and the issue
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implicates the very nature of American Pipe tolling, a question the Supreme Court
is in the best position to resolve. Indeed, the Court initially granted certiorari to
review IndyMac itself, see Pub. Emps. Ret. Sys. of Miss. v. IndyMac MBS, Inc., 134 S.
Ct. 1515 (2014), but dismissed the writ as improvidently granted, see 135 S. Ct. 42
(2014), two weeks after a motion for settlement approval was filed in the district
court, see In re IndyMac MBS Litig., No. 09 Civ. 4586 (S.D.N.Y. Sept. 11, 2014), ECF
No. 532. However, unless and until the Supreme Court informs us that our
decision was erroneous, IndyMac continues to be the law of the Circuit and its
reasoning controls the outcome of this case.
We have considered all of Appellant’s arguments and find them to be
without merit. For the reasons stated above, the orders of the District Court are
AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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