In a landmark 5-4 ruling issued earlier this summer, the U.S. Supreme Court held that the filing of a putative class action does not toll the three-year statute of repose for opt-out claims brought under Section 11 of the Securities Act of 1933 (Securities Act), in California Public Employees’ Retirement System v. ANZ Securities, 137 S. Ct. 2042 (2017). By refusing to apply the equitable tolling rule of American Pipe & Construction Co. v. Utah, 414 U. S. 538 (1974), to the Securities Act’s statute of repose (Section 13 of the act), the court restored the statute’s purpose to protect defendants “from an interminable threat of liability.”
Five weeks later, on Aug. 2, the U.S. Court of Appeals for the Third Circuit revealed the broad impact of the Supreme Court’s ruling by applying it to the five-year statutes of repose applicable to claims brought under Sections 10(b), 20(a) and 20A of the Securities Exchange Act of 1934 (Exchange Act) in North Sound Capital v. Merck, Nos. 16-1364, 16-1365, 16-1366, 16-1367, 2017 U.S. App. LEXIS 14170 (3d. Cir. Aug. 2). At least in the Third Circuit, defendants now have the ability to obtain dismissals of untimely opt-out actions, whether filed under the Securities Act or the Exchange Act.
Section 13′s Three-Year Bar
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