April 17, 2017
OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
11 of the Securities Act of 1933 gives purchasers of
securities "a right of action against an issuer or
designated individuals, " including securities
underwriters, for any material misstatements or omissions
in a registration statement. Omnicare, Inc. v. Laborers
Dist. Council Constr. Industry Pension Fund, 575 U.S.
___, ___; see 15 U.S.C. §77k(a). Section 13 provides
two time limits for §11 suits. The first sentence
states that an action "must be brought within one year
after the discovery of the untrue statement or the
omission, or after such discovery should have been made by
the exercise of reasonable diligence . . . ." The
second sentence provides that "[i]n no event shall any
such action be brought . . . more than three years after
the security was bona fide offered to the public . . .
2007 and 2008, Lehman Brothers Holdings Inc. raised capital
through several public securities offerings. Petitioner,
the largest public pension fund in the country, purchased
some of those securities; and it is alleged that
respondents, various financial firms, are liable under the
Act for their participation as underwriters in the
transactions. In 2008, a putative class action was filed
against respondents in the Southern District of New York.
The complaint raised §11 claims, alleging that the
registration statements for certain of Lehman's 2007
and 2008 securities offerings included material
misstatements or omissions. Because the complaint was filed
on behalf of all persons who purchased the identified
securities, petitioner was a member of the putative class.
February 2011, more than three years after the relevant
securities offerings, petitioner filed a separate complaint
against respondents in the Northern District of California,
alleging violations identical to those in the class action
on petitioner's own behalf. Soon thereafter, a proposed
settlement was reached in the putative class action, but
petitioner opted out of the class. Respondents then moved
to dismiss petitioner's individual suit, alleging that
the §11 violations were untimely under the 3-year bar
in the second sentence of §13. Petitioner countered
that the 3-year period was tolled during the pendency of
the class-action filing, relying on American Pipe &
Construction Co. v. Utah, 414 U.S. 538. The trial
court disagreed, and the Second Circuit affirmed, holding
that American Pipe's tolling principle is
inapplicable to the 3-year bar. It also rejected
petitioner's alternative argument that the timely
filing of the class action made petitioner's individual
claims timely as well.
Petitioner's untimely filing of its individual complaint
more than three years after the relevant securities offering
is ground for dismissal. Pp. 4-17.
(a) Section 13's 3-year time limit is a statute of repose
not subject to equitable tolling. Pp. 4-14.
(1) The two categories of statutory time bars-statutes of
limitations and statutes of repose-each have "a distinct
purpose." CTS Corp. v. Waldburger, 573 U.S.
___, ___. Statutes of limitations are designed to encourage
plaintiffs " 'to pursue diligent prosecution of
known claims, '" id., at, while statutes of
repose "effect a legislative judgment that a defendant
should 'be free from liability after the legislatively
determined period of time, '" id., at. For
this reason, statutes of limitations begin to run "when
the cause of action accrues, " while statutes of repose
begin to run on "the date of the last culpable act or
omission of the defendant." Id., at ___.
From the structure of §13, and the language of its
second sentence, it is evident that the 3-year bar is a
statute of repose. The instruction that "[i]n no
event" shall an action be brought more than three years
after the relevant securities offering admits of no
exception. The statute also runs from the defendant's
last culpable act (the securities offering), not from the
accrual of the claim (the plaintiffs discovery of the
This view is confirmed by §13's two-sentence
structure. The pairing of a shorter statute of limitations
and a longer statute of repose is a common feature of
statutory time limits. See, e.g., Gabelli v. SEC,
568 U.S. 442, 453. Section 13's history also supports the
classification. The 1933 Securities Act's original 2-year
discovery period and 10-year outside limit were shortened a
year later. The evident design of the shortened period was to
protect defendants' financial security by reducing the
open period for potential liability. Pp. 4-7.
(2) The determination that the 3-year period is a statute of
repose is critical here, for the question whether a tolling
rule applies to a given statutory time bar is one "of
statutory intent." Lozano v. Montoya Alvarez,
572 U.S. 1, ___. 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. A
statute of repose implements a "'legislative
decisio[n] that . . . there should be a specific time beyond
which a defendant should no longer be subjected to protracted
liability.'" CTS, 573 U.S., at ___. The
unqualified nature of that determination supersedes the
courts' residual authority and forecloses the extension
of the statutory period based on equitable principles. Thus,
the Court repeatedly has stated that statutes of repose are
not subject to equitable tolling. See, e.g., id., at
___ - ___. Pp. 7-8.
(3) The tolling decision in American Pipe derived
from equity principles and therefore cannot alter the
unconditional language and purpose of the 3-year statute of
repose. The source of the tolling rule applied in
American Pipe is the judicial power to promote
equity, not the power to interpret and enforce statutory
provisions. Nothing in the decision suggests that its tolling
rule was mandated by a statute or federal rule. Moreover, the
Court relied on cases that are paradigm applications of
equitable tolling principles, see 414 U.S., at 559. Thus, the
Court has previously referred to American Pipe as
"equitable tolling." See, e.g., Irwin v.
Department of Veterans Affairs, 498 U.S. 89, 96, andn.
3. Pp. 8-11.
(4) Petitioner's counterarguments are unpersuasive.
First, petitioner contends that this case is
indistinguishable from American Pipe, but the
statute there was one of limitations, which may be tolled by
equitable considerations even where a statute of repose may
not. Second, petitioner argues that the timely filing of a
class-action complaint fulfills the purposes of a statutory
time limit with regard to later filed suits by individual
members of the class. But by permitting a class action to
splinter into individual suits, the application of
American Pipe tolling here would threaten to alter
and expand a defendant's accountability, contradicting
the substance of a statute of repose. Third, petitioner
contends that dismissal of its individual suit as untimely
would eviscerate its ability to opt out, but it does not
follow from any privilege to opt out that an ensuing suit can
be filed without regard to mandatory time limits. Fourth,
petitioner argues that declining to apply American
Pipe tolling to statutes of repose will create
inefficiencies, but this Court "lack[s] the authority to
rewrite" the statute of repose or to ignore its plain
import. Baker Botts L. L. P. v. ASARCO LLC, 576 U.S.
___, ___. And petitioner's practical concerns likely are
overstated. Pp. 11-14.
(b) Also unpersuasive is petitioner's alternative
argument: that §13's requirement that an
"action" be "brought" within three years
of the relevant securities offering is met here because the
filing of the class-action complaint "brought"
petitioner's individual "action" within the
statutory time period. This argument presumes that an
"action" is "brought" when substantive
claims are presented to any court, rather than when a
particular complaint is filed in a particular court. The term
"action, " however, refers to a judicial
"proceeding, " or perhaps a "suit"-not to
the general content of claims. Taken to its logical limit,
petitioner's argument would make an individual action
timely even if it were filed decades after the original
securities offering-provided a class-action complaint had
been filed within the initial 3-year period. Congress would
not have intended this result. This argument is also
inconsistent with the reasoning in American Pipe
itself. If the filing of a class action made all subsequent
actions by putative class members timely, there would be no
need for tolling at all. Pp. 14-15.
(c) The final analysis is straightforward. Because
§13's 3-year time bar is a statute of repose, it
displaces the traditional power of courts to modify statutory
time limits in the name of equity. And 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
thus ground for dismissal. Pp. 16-17.
655 Fed.Appx. 13, affirmed.
KENNEDY, J., delivered the opinion of the Court, in which
ROBERTS, C. J., and THOMAS, Alito, and Gorsuch, JJ., joined.
suit giving rise to the case before the Court was filed by a
plaintiff who was a member of a putative class in a class
action but who later elected to withdraw and proceed in this
separate suit, seeking recovery for the same illegalities
that were alleged in the class suit. The class-action suit
had been filed within the time permitted by statute. Whether
the later, separate suit was also timely is the controlling
Securities Act of 1933 "protects investors by ensuring
that companies issuing securities . . . make a 'full and
fair disclosure of information' relevant to a public
offering." Omnicare, Inc. v. Laborers Dist. Council
Constr. Industry Pension Fund, 575 U.S. ___, ___ (2015)
(slip op., at 1) (quoting Pinter v. Dahl, 486 U.S.
622, 646 (1988)); see 48 Stat. 74, as amended, 15 U.S.C.
§77a et seq. Companies may offer securities to
the public only after filing a registration statement, which
must contain information about the company and the security
for sale. Omnicare, 575 U.S., at ___- ___
(slip op., at 1-2). Section 11 of the Securities Act
"promotes compliance with these disclosure provisions by
giving purchasers a right of action against an issuer or
designated individuals, " including securities
underwriters, for any material misstatements or omissions in
a registration statement. Id., at ___ (slip op., at
2); see 15 U.S.C. §77k(a).
provides time limits for §11 suits. These time limits
are set forth in a two-sentence section of the Act, §13.
It provides as follows:
"No action shall be maintained to enforce any liability
created under [§11] unless brought within one year after
the discovery of the untrue statement or the omission, or
after such discovery should have been made by the exercise of
reasonable diligence ... . In no event shall any such action
be brought to enforce a liability created under [§11]
more than three years after the security was bona fide
offered to the public . . . ." 15 U.S.C. §77m.
there are two time bars in the quoted provision; and the
second one, the 3-year bar, is central to this case.
Brothers Holdings Inc. formerly was one of the largest
investment banks in the United States. In 2007 and 2008,
Lehman raised capital through a number of public securities
offerings. Petitioner, California Public Employees'
Retirement System (sometimes called CalPERS), is the largest
public pension fund in the country. Petitioner purchased
securities in some of these Lehman offerings; and it is
alleged that respondents, various financial firms, are liable
under the Act for their participation as underwriters in the
transactions. The separate respondents are listed in an
appendix to this opinion.
September 2008, Lehman filed for bankruptcy. Around the same
time, a putative class action concerning Lehman securities
was filed against respondents in the United States District
Court for the Southern District of New York. The operative
complaint raised claims under §11, alleging that the
registration statements for certain of Lehman's 2007 and
2008 securities offerings included material misstatements or
omissions. The complaint was filed on behalf of all persons
who purchased the identified securities, making petitioner a
member of the putative class. Petitioner, however, was ...