# Amicus Curiae Brief — Cal. Pub. Employees' Ret. Sys. v. ANZ Sec., Inc., 137 S. Ct. 811 (2017) (No. 16-373)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2017

## Text

No. 16-373

FILED

OFF
Ss

IN THE

Supreme Court of the Anited States

CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM,

Petitioner,

ANZ SECURITIBS, INC., ET AL.,

Respondents.

On Writ of Certiorari
to the United States Court of Appeals
for the Second Circuit

BRIEF FOR THE CHAMBER OF COMMERCE
OF THE UNITED STATES OF AMERICA
AS AMICUS CURIAE SUPPORTING
RESPONDENTS

BRIAN E. PASTUSZENSKI
DANIEL P. ROESER
GOODWIN PROCTER LLP
620 Eighth Avenue
New York, NY 10018

KATE COMERFORD TODD

STEVEN P. LEHOTSKY

JANET GALERIA

U.S. CHAMBER
LITIGATION CENTER

1615 H Street, NW

Washington, DC 20062

WILLIAM M. JAY

Counsel of Record
GOODWIN PROCTER LLP
901 New York Ave., N.W,
Washington, DC 20001
wjay@goodwinlaw.com
(202) 346-4000

STEPHEN D. Poss
DAVID R. FOX

GOODWIN PROCTER LLP
100 Northern Avenue
Boston, MA 02210

April oF 2017

Library of Congses

SPR ~5 2017

i

TABLE OF CONTENTS

Page
Rs GR PET EE PID ia ve oiccchiocacccovuconusevsbantessdioas ill
INTEREST OF THE AMICUS CURIAE................... l
Lob TS gg et 8) | 4S 9 i eee 2
ps ROE aS ne Ee ee ee I od OE CNT POPES IE Ny a 5

1. Statutes of Repose Are Important Under a
Wide Range of Federal and State Statutory
Schemes That Routinely Are the Subject of

er I os iclindl canendederneanevons 5
A. Congress and State Legislatures Have
Deliberately Selected Statutes of

Repose to Limit Liability ...................... 5
B. Statutes of Repose Strike a Careful

Legislative Balance to Mitigate the
Threat of Long-Pending Contingent
I i ih dee 9

C. This Case Implicates a Wide Range of
Statutes of Repose, Because Class-
Action Litigation is Common Under
the Relevant Statutes ......................6. 11

Il. Allowing Class-Action Tolling of Statutes of
Repose Would Override Congress's and the
States’ Legislative Judgments, Violating
the Separation of Powers and Depriving
Defendants of the Certainty That Statutes
of Repose Are Meant to Provide....................... 13

11

Ill. Long Experience With Abusive Class-
Action Practices Refutes Any Argument
that “Notice” Can Defeat Repose ..................... 16

A.

The Class Complaint Alone Does Not
Provide Defendants with Adequate
Notice of the Claims They May

Someday Face Under American Pipe
gE Ne = A SMR TS Ee A 17

Abusive Applications of American Pipe
Tolling Can Compound the Potential
Unfairness to Class-Action

ET EICR SAR eS ne 21

IV. Declining to Extend the Tolling Doctrine to
Statutes of Repose Will Not Overwhelm
Court Dockets or Prevent Adjudication of
I a oeenscsnsmonsennien 26

A.

IndyMac Has Not Led to an
Unworkable Surge of Protective
ON ahaa tect dnb gbntags in vopincegtinenes ees 27

The Professors’ 2002 to 2009 Study

Fails to Address the Relevant
Question—The Time From Filing to
Class Certification Decision................ 29

Allowing Tolling Would Undermine
Other, Longer Repose Periods, Not
Just the Securities Act Period ............ 31

Repose Periods Are a Legislative
Judgment So Any Changes Should Be
Ee WII sors cosaieirentenincsisincteeesdions 33

IIIT Gitiinicnciniina coucsiscschsbninseinotienepucaiiiunaal: 35

i

TABLE OF AUTHORITIES

FEDERAL CASES

Adashunas v. Negley,

626 F.2d 600 (7th Cir. 1980) .................+

American Pipe & Constr. Co. v. Utah,

OE II on vnss och cncciccsssvvasuesneesee

Archer v. Nissan Motor Acceptance
Corp..,

550 F.3d 506 (5th Cir. 2008) ................+

Arivella v. Lucent Techs., Inc.,

623 F. Supp. 2d 164 (D. Mass. 2009)......

Basch v. Ground Round, Inc.,

139 F.3d 6 (1st Cir. 1998).........::sssesereees

Beach v. Ocwen Fed. Bank,

623 U.S. 410 (1008) .............scccercorrcesesseses

Benfield v. Mocatta Metals Corp.,

26 F.3d 19 (2d Cir. 1994).............ccccssersees ,

Boilermakers Nat'l Annuity Trust Fund
v. WaMu Mortg. Pass Through
Certificates, Series AR1/,

748 F. Supp. 2d 1246 (W.D. Wash.

Be icxseecseesinaniscotddepncessvesdsubesbcconsveseressrenss

Carrera v. Bayer Corp.,

727 F.3d 300 (3d Cir. 2013).........:.eeeeees

Crown, Cork & Seal Co. v. Parker,

462 U.S. 346 (19GB) ............cccccccecssseseoes-e

CTS Corp. v. Waldburger,

134 S. Ct. 2175 (ZOT4) .............0cceccreseerenee

Page(s)

iaeseosedeii 1]

1V

Cullen v. Margiotta,
811 F.2d 698 (2d Cir.), overruled on
other grounds by Agency Holding
Corp. v. Malley-Duff & Assocs., Inc.,

SD UB BE CEU aie svnirtinstessersvamiiacss

Dusek v. JPMorgan Chase & Co.,

832 F.3d 1243 (11th Cir. 2016)..........

Edwards v. Boeing Vertol Co.,
717 F.2d 761 (3d Cir. 1983), vacated
on other grounds, 468 U.S. 1201

CRUIGEE s hockssibcaccneckeadidecasmateumteelas tana
Genesee Cnty. Emps.’ Ret. Sys. v. Thorn-

burg Mortg. Sec. Trust 2006-3,
825 F. Supp. 2d 1082 (D.N.M. 2011)

Griffin v. Singletary,

17 F.3d 356 (11th Cir. 1994)..............

Haas v. Pittsburgh Natl Bank,

526 F.2d 1083 (3d Cir. 1975)..............

Heimeshoff v. Hartford Life & Acc. Ins.
Co.,

134 S. Ct. 604 (2013) ..........cceecceeeeee-

Hill v. State St. Corp.,
No. 09-cev-12146-NG, 2011 WL

3420439 (D. Mass. Aug. 3, 2011) .......

In re Copper Antitrust Litig.,

436 F.3d 782 (7th Cir. 2006) ..............

In re Crazy Eddie Sec. Litig.,

747 F. Supp. 850 (E.D.N.Y. 1990)......

In re Elscint, Ltd. Sec. Litig.,

674 F. Supp. 374 (D. Mass. 1987)......

eee eee ee eee ee

eee eee ee ee

ere eee eee eee eee

eee eee eee eee eee

er ee |

eee eee eee eee eeae

ee ee ee

33

22

18

22

Vv

In re Exxon Mobil Corp. Sec. Litig.,
500 F.3d 189 (3d Cir. 2007)...............

In re Flag Telecom Holdings, Ltd. Sec.
Litig.,

352 F. Supp. 2d 429 (S.D.N.Y. 20085),

abrogated on other grounds, 574 F.3d

I I iisinicickencsptecacsenencessoces

In re Hanford Nuclear Reservation
Litig.,
534 F.3d 986 (9th Cir. 2007) .............
In re Morgan Stanley Mortg. Pass-
Through Certificates Litig.,
810 F. Supp. 2d 650 (S.D.N.Y. 2011)

In re Vertrue Inc. Mktg. & Sales
Practices Litig.,
719 F.3d 474 (6th Cir. 2013) .............

In re WorldCom Sec. Litig.,

496 F.3d 245 (2d Cir. 2007)............... 3

Johnson v. Nextel Comme’ns, Inc..,

660 F.3d 131 (2d Cir. 2011).....0.00.......

Johnson v. Ry. Express Agency, Inc.,
A OID so cvcccncscccncsvocsseces ces

Korwek v. Hunt,
827 F.2d 874 (2d Cir. 1987)...............

Kruse v. Wells Fargo Home Mortzg., Inc.,
No. 02-CV-3089 (ILG), 2006 WL
1212512 (E.D.N.Y. May 3, 2006) ......

Lampf, Pleva, Lipkind, Prupis &
Petigrow v. Gilbertson,
EG EIIED cc cccccccesccccscccoveccoee

pomnentedeeneneadns 23

idatpepemensiudes 25

sondeninensads 22-23

aceon 14, 15, 33

val

Manor v. D.R. Horton, Inc.,
No. 2:14-CV-2222 JCM, 2016 WL

1045484 (D. Nev. Mar. 15, 2016)......................... 12
McCann v. Hy-Vee, Inc.,

ge ff, le ee eee 8, 9
MecMillian v. AMC Mortg. Servs., Inc.,

560 F. Supp. 2d 1210 (S.D. Ala. 2008)......0.......... 11
Merck & Co., Inc. v. Reynolds,

OLE RO 6
Mistretta v. United States,

I a ls alls LS
Mobil Oil Corp. v. Higginbotham,

ee cin ieciicinaniunnedisindsitiaiiacdesiicissiens 16
Moyle v. Liberty Mut. Ret. Ben. Plan,

823 F.3d 948 (9th Cir. 2016) ....... sick ciadyi cannabis 7

N.J. Carpenters Health Fund v. DLJ
Mortg. Capital, Inc.,
No. 08 Civ. 5653 (PAC), 2010 WL
6508190 (S.D.N.Y. Dec. 15, 2010)........................ 22

Natl Credit Union Admin. Bd. v.
Nomura Home Equity Loan, Inc.,

764 F.3d 1199 (10th Cir. 2014) ........ si ofa ee SAE cs 7
Palmer v. Stassinos,

236 F.R.D. 460 (N.D. Cal. 2006) .......................... 23
Piazza v. Ebsco Indus., Inc.,

273 F.3e 1341 (1 ith Car. 3001) ..........000.............-. 12

Plumbers’ Union Local No. 12 Pension
Fund v. Nomura Asset Acceptance
Corp.,
894 F. Supp. 2d 144 (D. Mass. 2012)................... 24

vill

Police & Fire Ret. Sys. of the City of
Detroit v. IndyMac MBS, Inc.,

721 F.3d 95 (2d Cir. 2013).................4..

Radford v. Gen. Dynamics Corp.,

151 F.3d 396 (5th Cir. 1998)............... (Pein rane ee. 7

Rose v. Ark. Valley Envtl. & Util. Auth.,

562 F. Supp. 1180 (W.D. Mo. 1983).....................

Salazar-Calderon v. Presidio Valley
Farmers Ass'n,

765 F.2d 1334 (5th Cir. 1985) ...................

Sawyer v. Atlas Heating & Sheet Metal
Works, Inc.,

ee fe Le} | enn

Sibbach v. Wilson & Co..,

ee Se We I tad cktgsnaciesinsiniancieientaiensmaiceensan inn

Stein v. Regions Morgan Keegan Select
High Income Fund, Inc.,

821 F.3d 780 (6th Cir. 2016) ............... :

Walker v. Armco Steel Corp..,

Se SI I ihentinscopdeeacenticasnipianiocaisencieninien

Wayman v. Southard,

Se ee i ticaticcnntneniawapooupeesnonisass

Williams v. Boeing Co.,

517 F.3d 1120 (9th Cir. 2008) .............-........c000000

Yang v. Odom,

eae 4,

eee eee eww nwne

19

15

Be ee OE Ce Ce. BOD) anes cccscnsesccccccesessseseseceses SO

STATE CASES

Ackerman v. Price Waterhouse,

683 N.Y.S.2d 179 (App. Div. 1998) .....

vlll

Bryant v. Don Galloway Homes, Inc..,

556 S.E.2d 597 (N.C. Ct. App. 2001)......2.c00.c0c00000-. 8
Klein v. Catalano,

ae ee re I FI dsvcciscetnsincscacdactecescicssens 8
Rosenberg v. Town of N. Bergen,

ee, oa so scaiadeduacstoninnieentbens g
FEDERAL STATUTES
nee te 6, 34
I tenis 13, 15, 27
Class Action Fairness Act of 2005, Pub.

a cidsan poclowudiieaiee 32

Dodd-Frank Wall Street Reform and
Consumer Protection Act, Pub. L. No.
111-203, § 1085(7), 124 Stat 1376,

RE RES UP RNa ST SN a A ee = 33
Employee Retirement Income Security

Act of 1974, 29 U.S.C. § 1101 et seq.............. passim

EL) | EE SN CDRS om 7, 10, 31
Equal Credit Opportunity Act, 15 U.S.C.

RS ae aL EEE ee See eee passim

Oe I Te I acai ieeinasita dn raeeiaed 7, 10, 12
Fair Credit Reporting Act, 15 U.S.C.

etal 6, 7.12

EER PSY ere siden iuiies 6. 31
Sarbanes-Oxley Act of 2002, Pub. L. No.

107-204, § 804(a), 116 Stat. 745, 801......000000000.... 33
SE ge ee ER Ia passim

BASEPAIRS eer Se scare 31

LX

15 U.S.C. § 77l(a)(2) ......... euliehipbaiieksuatan uiebisvlanaldasessiins 31

WP ON FO siccivcscivdicsnicc 14, 27, 31
Securities Exchange Act of |] 934, Pub L.

No. 73-291, § 207, 48 Stat. ____ BE ae RL Aen 6, 11
Truth in Lending Act, 15 U.S.C. § 1631

Ee ieliiepienicinartaneswwins cttesenss¢ostiaso ier icc 7,11

ois MaRS A MEL, LON 7
OTHER STATUTES
CAL. CORP. CODE § 25506(b) .......cesccccceeeceoeees-.. 9, 31
GA. CODE § 51-1] cm Oar nett as 8
MAss. GEN. LAws Chapter 260, § 2B................... 8, 31
MICH. Compe. LAws § 600.5838b(1)(b)............... 9, 31
N.C. GEN. STAr. § co SN ER see te, tee 8
NEB. REV. STAT. § 25-223 .0000....cccecsocecs- 8, 31
OR. REV. STAT. § I ih 2 2 Don Dari 9, 31
TENN. CODE § ee aihunetee. NEAR RE ETE, teen. g
TENN. CODE § 47-18-110 ........ccccecsscecssescssseosseoossecccc.. 9
TEX. REV. Civ. STAT. Article 581,

SEES eS aeRO art 9
WIS. STAT. § vey ha pea ag ETS ES AD MN OS at g

LEGISLATIVE HISTORY

78 Cong. Rec. 8198 ne I nr oe. 34
S. Rep. No. 94-589 ena bd I CONE en Tea 10

OTHER AUTHORITIES

Laura C. Baucus et al., Emerging Topic,
64 CONSUMER FIN. L.Q. REP. 155

NEI cbcctetiltmercienivinbendnidengeristsoiavaiudesisaneive

STEFAN BOETTRICH & SVETLANA
STARYKH, RECENT TRENDS IN
SECURITIES CLASS ACTION
LITIGATION: 2016 FULL-YEAR REVIEW

(Jan. 2017),goo.gl/o7SOz7T...................06008

6 ALBA CONTE & HERBERT NEWBERG,
NEWBERG ON CLASS ACTIONS § 21:1

I a es ccaday ios

1 CALVIN W. CORMAN, LIMITATION OF

ACTIONS § 1.1, at 4-5 (1991).......................

EMERY G. LEE III & THOMAS E.
WILLGING, IMPACT OF THE CLASS
ACTION FAIRNESS ACT ON THE
FEDERAL COURTS: PRELIMINARY
FINDINGS FROM PHASE TWO’S PRE-
CAFA SAMPLE OF DIVERSITY CLASS

ACTIONS, goo.gl/HXzfOB ...................22....--.

Thomas E. Willging & Emery G. Lee ITI,
Class Certification and Class
Settlement: Findings from Federal

Question Cases, 2003-2007...................0.204-

win eopanel 30

I

BRIEF FOR THE CHAMBER OF COMMERCE
OF THE UNITED STATES OF AMERICA
AS AMICUS CURIAE
SUPPORTING RESPONDENTS

INTEREST OF THE AMICUS CURIAE

The Chamber of Commerce of the United States of
America (“Chamber”) is the world’s largest business
federation.! It represents 300,000 direct members
and indirectly represents the interests of more than
three million businesses and professional organiza-
tions of every size, in every industry sector, and from
every region of the country. An important function
of the Chamber is to represent its members’ interests
in matters before Congress, the Executive Branch,
and the courts. To that end, the Chamber regularly
files amicus curiae briefs in cases like this one that
raise issues of concern to the nation’s business com-
munity.

This case presents an issue of great importance to
the nation’s business community—one more broadly
significant than the particular phrasing of the ques-
tion presented might otherwise suggest. Chamber
members routinely are named as defendants in puta-
tive class actions in federal court, under federal and
state statutes that impose absolute time limits on
defendants’ liability. This case involves one such

! All parties have consented to the filing of this brief. No
counsel for a party authored this brief in whole or in part, and
no person other than amicus, its members, and its counsel
made any monetary contribution intended to fund the
preparation or submission of this brief.

2

statute, the Securities Act of 1933 (Securities Act),
but many federal and state laws contain similar pro-
visions. These absolute temporal limits on defend-
ants’ liability are termed “statutes of repose.” See
CTS Corp. v. Waldburger, 134 S. Ct. 2175, 2182-83
(2014); 1 CALVIN W. CORMAN, LIMITATION OF ACTIONS
§ 1.1, at 4-5 (1991). Class litigation is common under

many of these statutes.

Petitioner asserts that even though statutes of re-
pose are designed as absolute time limits, federal
courts may toll them whenever a putative class ac-
tion is filed in federal court under the class-action
tolling rule of American Pipe & Construction Co. v.
Utah, 414 U.S. 538 (1974). Under petitioner’s rule,
the statute of repose in the Securities Act, and pre-
sumably any other federal or state statute of repose,
may be circumvented by the simple expedient of fil-
ing a complaint on behalf of a putative class. Were
that the rule, it could very well expose the Chamber’s
members and other business defendants to new liti-
gation-—and potentially to new liability—long after
the point at which, in the legislature’s judgment,
they are entitled to peace. The Chamber therefore
has a strong interest in the resolution of this issue.

SUMMARY OF ARGUMENT

As this Court recognized in CTS Corp., statutes of
repose are fundamentally legislative judgments. 134
S. Ct. at 2182-83. They reflect a legislative decision
that defendants, at a certain and readily ascertained
point, are entitled to peace and need no longer worry
about defending actions taken long ago. By adopting
a statute of repose, a legislature completely extin-
guishes liability after a clearly specified time.

3

Petitioner’s broadest position—that Rule 23 some-
how supersedes Congress’s determination that liabil-
ity must come to an end on a date certain—is incon-
sistent not just with Rule 23, but with the very no-
tion of judicial rulemaking. Neither the Rules Ena-
bling Act nor the separation of powers would permit
the judiciary to write a rule contradicting the quin-
tessentially legislative decision to adopt a set period

of repose.

Petitioner submits that the mere filing of a class
action before the repose date is enough, either be-
cause it provides a degree of notice or because it
somehow constitutes the constructive “br[inging]” of
claims by absent, often indeterminate class mem-
bers. But the purpose of statutes of repose is to put
an end to unasserted claims after a date certain, not
to inform defendants that they may need to answer
such claims by new plaintiffs in the future. And the
mere pendency of a class action often does not pro-
vide reliable notice of exposure in any event. Abu-
sive applications of the American Pipe rule have pro-
liferated—for example, extending class tolling to dif-
ferent claims than those raised by a purported class
representative; extending tolling even to filings by
wholly inadequate placeholder plaintiffs, who file
claims merely to stop the clock so a suitable repre-
sentative can be sought; and approving the use of
successive class actions to evade adverse rulings.
Using these tools, class-action plaintiffs’ lawyers in
many cases are able to stretch out the repose period
far beyond what Congress or the state legislature se-

lected.

These consequences all may be avoided simply by
enforcing statutes of repose as they are wmtten and

4

were meant to be applied: to cut off liability abso-
lutely once the statutory period has run. Contrary to
petitioner’s and its amici’s arguments, declining to
extend American Pipe to repose periods does not
threaten the efficacy of the class-action procedure.
There is no evidence that the Second Circuit’s In-
dyMac rule2—which has since been adopted in the
Sixth’ and Eleventh’ Circuits as well—has produced
any of the inefficiencies that petitioner raises in the
over four years since that rule has been in effect. To
the contrary, empirical evidence shows that federal
courts efficiently manage putative class actions, in-
cluding those brought under the securities laws,
leaving adequate time to afford a meaningful choice
whether to opt out. The solution to any perceived
problems is not to disregard careful legislative judg-
ments about how long a substantive right of action
should exist: the solution is merely to announce a
clear rule that statutes of repose will be enforced as

written.

2 See Police & Fire Ret. Sys. of the City of Detroit v. IndyMac
MBS, Inc., 721 F.3d 95 (2d Cir. 2013).

3 See Stein v. Regions Morgan Keegan Select High Income Fund,
Inc., 821 F.3d 780 (6th Cir. 2016).

4 See Dusek v. JPMorgan Chase & Co., 832 F.3d 1243 (11th Cir.

2016).

5

ARGUMENT

I. Statutes of Repose Are Important Under
a Wide Range of Federal and State
Statutory Schemes That Routinely Are
the Subject of Class-Action Litigation

The Securities Act provision at issue here is just
one of the many statutes of repose, federal and state,
that could be affected by the Court’s holding in this
case. These various statutes share a common pur-
pose: ensuring that “after the legislatively deter-
mined period of time,” the defendant “should be able
to put past events behind him.” CTS Corp., 134 S.
Ct. at 2183 (quoting 54 C.J.S., LIMITATION OF
ACTIONS § 7, at 24 (2010)). Because that purpose is
“central” to statutes of repose, their time periods
“generally may not be tolled, even in cases of ex-
traordinary circumstances beyond a plaintiff's con-
trol.” Jd. And although class actions are common
under many of these statutes, none of them makes
an exception to that strong policy of repose for un-
named class members. Endorsing petitioner’s posi-
tion that a statute of repose can be tolled, ostensibly
for the sake of better class-action administration,
threatens the efficacy of hundreds of statutes of re-
pose and the careful legislative judgments they re-
flect.

A. Congress and State Legislatures
Have Deliberately Selected Statutes
of Repose to Limit Liability

As this Court explained in CTS Corp., a legisla-
ture’s enactment of a statute of repose represents a
significant policy choice. Although “there is substan-

6

tial overlap between the policies of’ statutes of re-
pose and statutes of limitations, statutes of repose
are animated by “a distinct purpose,” C7'S Corp., 134
S. Ct. at 2183, and in pursuing that purpose they
“strike a stronger defendant-friendly balance.” Jn re
Exxon Mobil Corp. Sec. Litig., 500 F.3d 189, 199-200
(3d Cir. 2007). The prohibition of tolling is “central”
to the selection of a statute of repose rather than, or
(as here) in addition to, a statute of limitations. CTS
Corp., 134 S. Ct. at 2183. Both Congress and state
legislatures have opted to include repose periods,
and to reject tolling, in a number of significant stat-
utes—statutes that the resolution of this case could
affect. A complete catalogue of repose statutes is be-
yond the scope of this brief. But certain key exam-
ples are illustrative.

1. Perhaps the best-known federal example is the
five-year repose period that governs fraud and relat-
ed claims under the securities laws, 28 U.S.C.
§ 1658(b)(2). The same statute creates a correspond-
ing limitations period for the same securities claims
(two years from discovery). This Court has empha-
sized that no matter how the limitations provision is
construed, the repose provision “giv[es} defendants
total repose,” thereby “diminish[ing] th[e] fear” of be-
ing “subject ... to hability for acts taken long ago.”
Merck & Co., Inc. v. Reynolds, 559 U.S. 633, 650
(2010).

But federal] statutes of repose also appear outside
the securities context, in a number of important and
frequently invoked statutes. For instance, Congress
included statutes of repose in the Fair Credit Report-
ing Act (FCRA), 15 U.S.C. § 1681 et seg., and the
Equal Credit Opportunity Act (ECOA), 15 U.S.C.

7

§ 1691 et seq. Both statutes place an absolute five-
year limit on recovery. See 15 U.S.C. §§ 1681p(2)
(FCRA), 1691e(f) (ECOA); see also, e.g., Archer uv.
Nissan Motor Acceptance Corp., 550 F.3d 506, 508
(5th Cir. 2008) (describing “|t]he ECOA time pre-
scription” as “a statute of repose,” as shown by its
“sweeping and direct language”); Nat? Credit Union
Admin. Bd. v. Nomura Home Equity Loan, Inc., 764
F.3d 1199, 1234 n.19 (10th Cir. 2014) (same as to
FCRA). Similarly, the Truth in Lending Act (TILA),
15 U.S.C. § 1631 et seq., imposes an absolute statute
of repose on one of the forms of relief it makes avail-
able (rescission). See id. § 1635(f); Beach v. Ocwen
Fed. Bank, 523 U.S. 410, 417 (1998).

The Employee Retirement Income Security Act of
1974 (ERISA), 29 U.S.C. § 1101 et seq., contains a
similar statute of repose—though it provides a six-
year period in which to sue. See 29 U.S.C. § 1113(1).
Federal courts treat that provision as “an outside
limit” that “serves as an absolute barrier to an un-
timely suit.” Radford v. Gen. Dynamics Corp., 151
F.3d 396, 400 (5th Cir. 1998); accord, e.g., Moyle v.
Liberty Mut. Ret. Ben. Plan, 823 F.3d 948, 959 n.5
(9th Cir. 2016) (describing this provision as a “stat-
ute of repose”).

2. Statutes of repose also are common in many
state statutory schemes. For example, many states
have imposed statutes of repose on claims based on
construction defects, typically ranging from five to
ten years or more, “from the later of the specific last
act or omission of the defendant giving rise to the
cause of action or substantial completion of [an] im-
provement” to real property. FE.g., N.C. GEN. STAT.

8

§ 1-50(a)(5)(a) (six-year statute of repose).° As those
states’ courts have said, the purpose of these statutes
“is to protect from liability those persons who make
improvements to real property.” Bryant v. Don Gal-
loway Homes, Inc., 556 S.E.2d 597, 600 (N.C. Ct.
App. 2001). If the threat of liability lasted for the of-
ten decades-long life of the building (thanks to the
discovery rule), it would increase the cost of con-
struction, and might drive some out of the construc-
tion industry altogether. Moreover, the statute of
repose forecloses litigation at a time “when
‘{alrchitectural plans may have been discarded, cop-
ies of building codes in force at the time of construc-
tion may no longer be in existence, [and] persons in-
dividually involved in the construction project may
be deceased or may not be located.” Klein v. Cata-
lano, 437 N.E.2d 514, 520 (Mass. 1982) (quoting
Howell v. Burk, 568 P.2d 214, 220 (N.M. Ct. App.
1977) (alteration in original)).

States employ statutes of repose in other contexts
for similar reasons. As Judge Posner noted in
McCann v. Hy-Vee, Inc., 663 F.3d 926, 930 (7th Cir.
2011), the argument for absolute limits on liability is
“particularly strong in the case of product defects,”
and for that reason, many states have imposed stat-
utes of repose on product-liability claimns that run
“from the date of the first sale for use or consumption
of the personal property causing or otherwise bring-
ing about the injury.” GA. CODE § 51-1-11(b)(2) (ten-

5 See also, e.g., MASS. GEN. LAWS ch. 260, § 2B (similar six-year
statute of repose for improvements to real property); NEB. REV.
STAT. § 25-223 (ten-year repose period for claims of “deficiency
in the design, planning, supervision, or observation of construc:
tion, or construction of an improvement to real property’).

9

year repose period).° States have made similar
judgments with respect to professional-malpractice
claims,’ statutory consumer-protection or unfair-and-
deceptive-practice claims,’ and blue-sky-law claims.®

B. Statutes of Repose Strike a Careful
Legislative Balance to Mitigate the
Threat of Long-Pending Contingent
Liabilities

The overriding rationale for statutes of repose is
simple: “|B)jusiness planning is impeded by contin-
gent liabilities that linger indefinitely.” McCann,
663 F.3d at 930. “There comes a time when [the de-
fendant] ought to be secure in his reasonable expec-
tation that the slate has been wiped clean of ancient
obligations, and he ought not to be called on to resist
a claim” at that point. Rosenberg v. Town of N. Ber-
gen, 293 A.2d 662, 667-68 (N.J. 1972). Statutes of
repose reflect careful legislative weighing of just how
long should be deemed too long, ex ante. That is a
classically legislative judgment.

8 See also, e.g., OR. REV. STAT. § 30.905(2)(a).

’ E.g., MicH. COMP. LAWS § 600.5838b(1)(b) (six-year statute of
repose for legal-malpractice claims); TENN. CODE § 28-3-
104(c)(2) (five-year repose period for claims against accountants
or attorneys “except where there is fraudulent concealment on
the part of the defendant, in which case the action or suit shall
be commenced within one (1) year after discovery’).

* E.g., TENN. CODE § 47-18-110 (five-year statute of repose for
consumer-protection claims); WIS. STAT. § 425.307(1) (six-year
statute of repose for statutory consumer-protection claims as-
serted in an affirmative, rather than defensive, posture).

* E.g., CAL. Corp. CODE § 25506(b) (five-year statute of repose
for private state securitics-law claims); TEX. REV. Clv. STAT. art.
581, § 33(H)(2)(b) (same).

10

Accordingly, where a legislature desires to cali-
brate a statute of repose to allow more time to sue in
certain circumstances, the legislature does so explic-
itly by means of “legislatively created exceptions” —
explicit statutory rules that allow more time to sue
in certain circumstances—that (unlike tolling rules
courts read into statutory time bars) are “set forth in
the statute of repose” itself. 1 CORMAN § 1.1, at 5.
For example, ECOA’s stat':te of repose explicitly
provides for a limited form of statutory tolling when
a governmental plaintiff—but not a private plaintiff
seeking to be appointed class representative—is pur-
suing the same claim. 15 U.S.C. § 169le(f). And
ERISA’s statute of repose makes special, explicit
provision for “fraud or concealment” by a fiduciary
defendant, in which case the repose period runs from
the discovery of the violation. 29 U.S.C. § 1113.

The statute of repose can be further calibrated by
working in tandem with a statute of limitations, as
the Securities Act provision at issue here does. In
such cases, the statute of repose marks the point be-
yond which the shorter statute of limitations may
not be tolled. If everything that tolled one tolled the
other, the longer repose period would be meaning-
less. In setting the outer limit of repose, Congress
can and does weigh the need to allow a reasonable
but limited time for the considerations that typically
justify tolling of a statute of limitations, such as de-
lays in discovering the violation. Thus, for instance,
Congress has twice extended the statute of repose for
ECOA claims, including one extension expressly for
the purpose of providing more time to “develop[ | and
investigat[e] ... the necessary facts.” S. Rep. No. 94-
589, at 14 (1976). “Such an accommodation would

1]

have been unnecessary if Congress intended the
courts to engraft equitable tolling doctrines onto the
statute.” Archer, 550 F.3d at 508-09. By contrast,
Congress shortened the repose period at issue here,
and thereby limited defendants’ exposure to the
strict liability imposed by the Securities Act. See Se-
curities Exchange Act of 1934, Pub L. No. 73-291,
§ 207, 48 Stat. 907.

C. This Case Implicates a Wide Range
of Statutes of Repose, Because
Class-Action Litigation is Common
Under the Relevant Statutes

The question presented here implicates the entire
spectrum of federal and state statutes of repose, be-
cause class actions are common under virtually all of
those statutes. A decision extending Amer .can Pipe
tolling to statutes of repose therefore would be felt
well beyond the securities context.!°

Class actions are commonplace under all of the fed-
eral consumer-credit statutes, see 6 ALBA CONTE &
HERBERT NEWBERG, NEWBERG ON CLASS ACTIONS
§ 21:1, at 388-90 (4th ed. 2002), and ECOA in partic-
ular has recently seen “a wave of putative class ac-
tion lawsuits.” Laura C. Baucus et al., Emerging
Topic, 64 CONSUMBR FIN. L.Q. REP. 155, 157 (2010).
Indeed, ECOQA even specifies—in the very same pro-
vision that includes the statute of repose—that

'0 lwdeed, federal courts have already faced the question
whether American Pipe tolling applies to statutes of repose un-
der ERISA and TILA. Compare Arivella v. Lucent Techs., Inc.,
623 F. Supp. 2d 164, 176-78 (D. Mass. 2009) (ERISA, yes), with
McMillian v. AMC Mortg. Servs., Inc., 560 F. Supp. 2d 1210,
1215 (S.D. Ala. 2008) (TILA, no).

12

plaintiffs may sue on behalf of a class. See 15 U.S.C.
§ 1691e(a); see also id. § 1691e(b) (imposing a special
cap on damages recoverable in a class action). Yet
despite making certain exceptions to the timeliness
rules set out in the ECOA and FCRA statutes of re-
pose, Congress created none for class-action plain-
tiffs. The same is true under ERISA, which has been
a frequent subject of class-action litigation in recent
years.

State-law class actions also regularly implicate
statutes of repose. The construction-related and
products-liability statutes of repose discussed above
are examples. See, e.g., Manor v. D.R. Horton, Inc.,
No. 2:14-CV-2222 JCM, 2016 WL 1045484 (D. Nev.
Mar. 15, 2016) (addressing a putative class action
bringing defective construction claims against the
developer of 103 single-family homes).

Even professional malpractice—another area
where statutes of repose are well-established —-sees
its share of class-action litigation, especially in con-
texts where the malpractice tort is used to pursue
securities-related claims against accountants and
lawyers. See, e.g., Johnson v. Nextel Comme'ns, Inc.,
660 F.3d 131, 134, 137 (2d Cir. 2011); Piazza v. Ebsco
Indus., Inc., 273 F.3d 1341, 1347 (11th Cir. 2001);
Ackerman v. Price Waterhouse, 683 N.Y.S.2d 179,
184-86 (App. Div. 1998).

Thus, petitioner’s argument in its broadest form
represents a challenge not just to a single statute of
repose, but potentially to all of the statutes of repose,
federal] and state, that can collide with class actions.
The careful judgment each of those statutes reflects

13

would be replaced with an across-the-board rule that
class actions always justify more time.

IT. Allowing Class-Action Tolling of Statutes
of Repose Would Override Congress’s and
the States’ Legislative Judgments,
Violating the Separation of Powers and
Depriving Defendants of the Certainty
That Statutes of Repose Are Meant to
Provide

Extending American Pipe tolling to statutes of re-
pose, as petitioner and its amici advocate, necessari-
ly would negate the “legislative judgment” those
statutes represent: “that defendants should ‘be free
from liability after the legislatively determined peri-
od of time, beyond which the liability will no longer
exist and will not be tolled for any reason.” CTS
Corp., 134 8. Ct. at 2183 (quoting 54 C.J.S., supra,
§ 7, at 24). Petitioner contends that Rule 23 allows
the courts to set aside that legislative judgment to
avoid the inconvenience of multiple filings within the
repose period. But Rule 23 does not authorize the
judiciary to substitute courts’ convenience—much
less plaintiffs’ convenience—for a statutory policy of
repose. The Rule does not abridge the substantive
right to repose; indeed, neither the Rules Enabling
Act nor the separation of powers would permit the
judiciary to abridge that right by rule.

This Court’s decision in American Pipe described
the tolling it was recognizing as an exercise of the
“judicial power to toll statutes of limitation in federal
court.” 414 U.S. at 558 (emphasis added). This was
a judicially created rule: the Court focused on pru-
dential considerations in collective litigation, rea-

14

soning that denying tolling “would deprive Rule 23
class actions of the efficiency and economy of litiga-
tion which is a principal purpose of the procedure.”
414 U.S. at 553. The tolling rule, the Court thought,
was thus “the rule most consistent with federal class
action procedure,” id. at 554, and was “necessary to
ensure effectuation of the purposes of litigative effi-
ciency and economy that [Rule 23] was designed to
serve,” id. at 556.

Such a rule might be thought to coexist with stat-
utes of limitations, as American Pipe concluded. See
414 U.S. at 556-59. Judicially created doctrines like
“equitable tolling,” Lampf, Pleva, Lipkind, Prupis &
Petigrow v. Gilbertson, 501 U.S. 350, 363 (1991), are
reasonably commonplace, and this Court concluded
that a statute of limitations (specifying the period in
which suit ordinarily must be brought) conceivably
might be read to coexist with those tolling doctrines.
See American Pipe, 414 U.S. at 556-59.

But the rule with respect to statutes of repose is
precisely the opposite. As the Court explained in
CTS Corp., “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.” 134 S. Ct. at 2187 (quoting 4
Wright & Miller, FED. PRAC. & PROC. § 1056, at 240).
A statute of repose like that contained in 15 U.S.C.
§ 77m thus reflects a judgment that repose justifies
dispensing with nonstatutory tolling rules. Cf.
Lampf, 501 U.S. at 363.

Nothing in Rule 23 purports to override such a
judgment. See Resp. Br. 32. And neither the Rules
Enabling Act nor the separation of powers would

15

permit a judicial override of a federal legislative
judgment that governs substantive rights, not court
procedures.

The Rules Enabling Act is not an open-ended dele-
gation of the legislative power to the Judicial
Branch. Rather, it is a limited delegation of Con-
gress’s “power to regulate the practice and procedure
of federal courts,” to the governing bodies of those
courts themselves. Sibbach v. Wilson & Co., 312
U.S. 1, 9-10 (1941). Such a delegation is permissible
precisely because it is limited; some powers “are
strictly and exclusively legislative” and thus “must
be entirely regulated by the legislature itself.”
Wayman v. Southard, 23 U.S. 1, 42-43 (1825) (Mar-
shall, C.J.); see also Mistretta v. United States, 488
U.S. 361, 387 (1989) (holding that Sibbach merely
echoed “what had been our view since Wayman”). A
delegation confers, at most, the power “to make rules
not inconsistent with the statutes or constitution of
the United States.” Sibbach, 312 U.S. at 10. And for
precisely that reason, the Rules Enabling Act forbids
the judiciary from “modifyling] any substantive
right.” 28 U.S.C. § 2072(b).

What is at issue here plainly is a substantive right,
not a matter of procedure. Applying that same prin-
ciple in the Erie context, this Court has long held
that timeliness principles that form an “integral
part” of a state law must be applied in federal court,
and the Federal Rules “do{| not replace such policy
determinations.” Walker v. Armco Steel Corp., 446
U.S. 740, 752 (1980). That principle applies here
with even greater force, because the law here is a
federal one. And the prohibition of tolling is unques-
tionably an “integral part” of a statute of repose—it

16

is what distinguishes such a statute froin a statute of
limitations. See CTS Corp., 134 S. Ct. at 2183. Hav-
ing written a federal] statute of repose to which peti-
tioner’s tolling rule would be antithetical, Congress
did not turn around and delegate to the courts the
power to undo its legislative judgment through rule-
making, if the courts thought it convenient.

For good reason, therefore, Rule 23 makes no men-
tion of any tolling principle that could supersede a
statute of repose. The federal judiciary has “no au-
thority to substitute [its] views for those expressed
by Congress in a duly enacted statute,” whether
through rulemaking or federal-common-lawmaking.
Mobil Oil Corp. v. Higginbotham, 436 U.S. 618, 626
(1978). Yet that substitution is just what petitioner
seeks—to swap in the prudential considerations set
out in American Pipe in place of Congress’s contrary
decision to preclude tolling by adopting a statute of
repose.

Ill. Long Experience With Abusive Class-
Action Practices Refutes Any Argument
that “Notice” Can Defeat Repose

Even aside from the impermissibility of applying
American Pipe’s prudential tolling rule to a statute of
repose, the basis for that tolling rule is inapplicable
to statutes of repose on its own terms. A statute of
repose provides a defendant with certainty. The
mere filing of a putative class action does not justify
taking away that certainty based on the notion that
the class complaint provides notice. And abusive
practice under the American Pipe rule refutes any
claim of notice in any event.

17

A. The Class Complaint Alone Does
Not Provide Defendants’ with
Adequate Notice of the Claims They
May Someday Face Under
American Pipe Tolling

In justifying the tolling of a statute of limitations
during the pendency of a putative class action, Amer-
ican Pipe emphasized that the class-action complaint
“notifies the defendants not only of the substantive
claims being brought against them, but also of the
number and generic identities of the potential plain-
tiffs who may participate in the judgment.” 414 U.S.
at 555. The Court reasoned that the class action
thereby provides “the essential information neces-
sary to determine both the subject matter and size of
the prospective litigation” within the limitations pe-
riod. /d.; accord Crown, Cork & Seal Co. v. Parker,
462 U.S. 345, 352 (1983) (“Limitations periods are
intended to put defendants on notice of adverse
claims ... but these ends are met when a class action
is commenced.”).

Notice is not the point of statutes of repose: they
seek instead to assure defendants that any claims
not properly asserted within the statutory window
are never brought, enabling defendants to plan their
affairs with certainty. Thus, even assuming that
“generic” notice of a claim could be said to satisfy the
objectives of a limitations period,'' it certainly does
not satisfy the purpeses that underlie statutes of re-

'! “A mere announcement of an intention to sue puts defendants
on notice. No one contends, however, that this simple notice is
sufficient to toll the statute.” Jn re Copper Antitrust Litig., 436
F.3d 782, 796 (7th Cir. 2006).

18

pose. Statutes of repose are not enacted with a view
to ensuring that defendants are “notifie[d] .. . of the
number and generic identities of the potential plain-
tiffs who may participate in the judgment” later on.
American Pipe, 414 U.S. at 555. Rather, they are
meant to give defendants a date certain by which
their hability for certain acts will come to an end, s‘»
that defendants can plan their affairs accordingly.

These purposes simply are not served by a “gener-
ic” notification that some indeterminate number of
claimants are waiting in the wings, ready to take the
stage if the putative class action falters or a class
member decides to opt out (which could come many
years after the repose period has lapsed)—and per-
haps even sooner. See, e.g., In re WorldCom Sec.
Litig., 496 F.3d 245, 254 (2d Cir. 2007) (holding that
American Pipe tolling “applies also to class members
who file individual! suits before class certification is
resolved”); In re Hanford Nuclear Reservation Litig.,
534 F.3d 986, 1009 (9th Cir. 2007) (same). Not only
is the defendant receiving such “notice” left unsure
about when his potential exposure will terminate,
but the class action in many cases wiil not even pro-
vide an accurate picture of whose claims, and how
many, lie over the horizon.

American Pipe tolling, after all, rests on the notion
that the defendant is on notice of the claims of every-
one in the putative class, up until class certification
is denied.'2 Crown, Cork, 462 U.S. at 354. But class

'2 Of course, it may end earlier if, e.g., the case does not survive
to the class-certification stage. See Sawyer v. Atlas Heating &
Sheet Metal Works, Inc., 642 F.3d 560, 563 (7th Cir. 2011)
(“Tolling lasts from the day a class claim is asserted until the

19

certification is often denied precisely because the
class definition—the very thing that under American
Pipe is supposed to provide defendants with “essen-
tial information” about their liability exposure—is
inadequate to identify who is within the class and
who is not. E.g., Carrera v. Bayer Corp., 727 F.3d
300, 312 (3d Cir. 2013) (vacating class certification
because members of class were not ascertainable);
Adashunas v. Negley, 626 F.2d 600, 603-05 (7th Cir.
1980) (same). At most, such class definitions can on-
ly hint at defendants’ potential exposure. A defend-
ant may know, for example, how many products it
sold, and to whom, but may have few means of de-
termining which of their customers (if any) could
have suffered the complained-of injury. In such cas-
es, petitioner’s rule would leave defendants in great
doubt about whether they will be forced to defend old
claims (and how many and for how much), even
where the legislature, by including a statute of re-
pose, crafted the cause of action to provide certainty
and peace on a certain date.

Furthermore, even aside from the inadequacy of
the class definition recited by the plaintiffs as a
source of notice to defendants, the class claims may
not mark the outer limit of American Pipe tolling.
Aggressive plaintiffs counsel regularly rely on Amer-
ican Pipe to assert claims after a limitations period
has run, even though those claims appear nowhere in

clay the suit is conclusively not a class action[.|"): cf. Edwards v-.
Boeing Vertol Co., 717 2d 761, 766 Od Cir. 1983) C {Tolling of
the statute of limitations continuels}| until a final adverse de-
termination of class claims.”), vacated on other grounds, 468
U.S. 1201 (1984).

20

the original corplaint. Significant new issues, theo-
ries, and potential liabilities can thereby be smug-
gled into a case despite the time bar.

The differences can be dramatic. For instance, the
court below has at least twice allowed new claims
seeking treble damages to be added after the limita-
tions period has run, even though the original class-
action complaint did not contain any claim that per-
mitted recovery of treble damages. See, e.g., Benfield
v. Mocatta Metals Corp., 26 F.3d 19, 23 (2d Cir. 1994)
(allowing a plaintiff to add an otherwise-untimely
RICO claim based on American Pipe tolling, even
though the original class-action complaint contained
no RICO claims and “RICO requires more in the way
of evidence” than the claims pleaded in that origina!
complaint); Cullen v. Margiotta, 811 F.2d 698, 720-21
(2d Cir.) (similar), overruled on other grounds by
Agency Holding Corp. v. Malley-Duff & Assocs., Inc.,
483 U.S. 143, 156 (1987). The court of appeals held
that adding new claims that changed the “degree of
exposure to liability (single damages vs. treble dam-
ages plus attorneys’ fees)” was not a significant dif-
ference. Cullen, 811 F.2d at 721. That reasoning is
untenable in the context of a statute of repose: un-
derstanding the exposure to liability on the repose
date is precisely what a statute of repose is supposed
to accomplish. !*

‘8 Other courts of appeals have applied American Pipe tolling
more narrowly, limiting it to causes of action that are identical
to those alleged in the putative class-action complaint. E.g.,
Williams v. Boeing Co., 517 F.3d 1120, 1136 (9th Cir. 2008).
That reasoning is more consistent with Justice Powell’s admon-
ition that American Pipe tolling should not “leave[ ] a plaintiff
free to raise different or peripheral claims following denial of

21

B. Abusive Applications of American
Pipe Tolling Can Compound the
Potential Unfairness to Class-
Action Defendants

The concerns discussed above are only further
compounded by longstanding disagreement over the
scope of American Pipe’s tolling rule, which has led
to a number of abusive applications of the rule. That
was not unforeseen: concurring in American Pipe it-
self, Justice Blackmun warned that the Court’s deci-
sion “must not be regarded as encouragement to
lawyers in a case of this kind to frame their plead-
ings as a class action, intentionally, to attract and
save members of the purported class who have slept
on their rights,” and encouraged district judges to
“prevent th[at] type of abuse.” 414 U.S. at 561-62.
Justice Powell echoed those warnings in Crown,
Cork, adding that “|t]he tolling rule of American Pipe
is a generous one, inviting abuse.” 462 U.S. at 354.
Unfortunately, some class-action attorneys have
come to regard American Pipe’s tolling rule as pre-
cisely the sort of “encouragement” that these Justices
sought to forestall.

1. Placeholder Plaintiffs: Class-action lawyers
have too often made use of “placeholder” suits: suits
by plaintiffs who are named in the complaint to rep-
resent a putative class, but who in fact have no

class status.” Crown, Cork, 462 U.S. at 354. The lack of consen-
sus as to the scope of American Pipe’s tolling rule is itself an
important source of uncertainty for defendants as to the tem-
poral duration of their liabilities—uncertainty that is anathema
to statutes of repose and the reasons for them.

22

standing or are otherwise unsuited to assert the
class members’ claims. These “placeholders” serve
primarily to buy time until a more suitable class rep-
resentative can be substituted. That is why some
placeholder complaints are filed literally on “the last
day of the statute of limitations period.” Hill v. State
St. Corp., No. 09-cv-12146-NG, 2011 WL 3420439, at
*25 (D. Mass. Aug. 3, 2011).

The federal courts have failed to reach consensus
as to the permissibility of such tactics, creating un-
certainty that itself undermines the purpose of stat-
utes of repose. To their credit, many federal courts
have rightly rejected these efforts as abuses of Amer-
ican Pipe’s already “generous” tolling rule, and re-
fused to allow tolling. See, e.g., In re Crazy Eddie
Sec. Litig., 747 ¥. Supp. 850, 856 (E.D.N.Y. 1990)
(“There appears to be no good reason to encourage
bringing of a suit merely to extend the period in
which to find a class representative.”); In re Elscint,
Lid. Sec. Litig., 674 F. Supp. 374, 378 (D. Mass.
1987) (recognizing that to permit tolling where
named plaintiffs lack standing “may condone or en-
courage attempts to circumvent the statute of limita-
tion by filing a lawsuit without an appropriate plain-
tiff and then searching for one who can later inter-
vene with the benefit of the tolling rule”).!4 Other
federal courts appear to adopt a categorical ban on
tolling where the named plaintiff lacked standing,
which serves the same function of curbing abuse.

————

‘4 Accord N.J. Carpenters Health Fund v. DLJ Mortg. Capital,
Inc., No. 08 Civ. 5653 (PAC), 2010 WI. 6508190, at *2 n.1
(S.D.N.Y. Dec. 15, 2010); Kruse v. Wells fargo Home Mortg.,
Inc., No. 02-CV-3089 (ILG), 2006 WI 1212512, at *5-6
(E.D.N.Y. May 3, 2006).

23

See, e.g., Boilermakers Nat'l Annuity Trust Fund v.
WaMu Mortg. Pass Through Certificates, Series AR1,
748 F. Supp. 2d 1246. 1258-59 (W.D. Wash. 2010);
Palmer v. Stassinos, 236 F.R.D. 460, 465-66 & n.6
(N.D. Cal. 2006).

Even so, not every federal court has heeded Justice
Blackmun’s and Justice Powell’s admonitions. In-
deed, in allowing tolling where the named plaintiffs
lacked standing, one court has gone so far as to say
that there is nothing “singular or peculiar with re-
spect to ‘standing’ that would generally prevent the
application of the |efficiency-based] consideration ex-
pressed in American Pipe.” Rose v. Ark. Valley Envil.
& Util. Auth., 562 F. Supp. 1180, 1193 (W.D. Mo.
1983).'° Others have taken a similar view, out of
vague, largely anecdotal concerns that any doubts
about the named plaintiff's standing might threaten
the efficacy of American Pipe tolling, by leading class
members to flood the docket with protective filings.!®

'S In a similar vein, two courts of appeals have allowed Ameri-
can Pipe tolling where the named plaintiff was later found to
lack standing, at least where the class had already been certi-
fied and notice sent to the class members. See Griffin v. Sin-
gletary, 17 F.3d 356, 357, 360-61 (11th Cir. 1994); Haas v.
Pittsburgh Nat'l Bank, 526 F.2d 1083, 1095-98 (3d Cir. 1975).

16 See, e.g., Genesee Cnty. Emps.’ Ret. Sys. v. Thornburg Mortg.
Sec. Trust 2006-3, 825 F. Supp. 2d 1082, 1161-64 (D.N.M. 2011);
In re Flag Telecom Holdings, Ltd. Sec. Litig., 352 F. Supp. 2d
429, 456 (S.D.N.Y. 2005), abrogated on other grounds, 574 F.3d
29 (2d Cir. 2009). Still others have tried to stake out a middle
ground, allowing tolling where class members arguably had
some reasonahle basis for believing the named plaintiff had
standing, or where the named plaintiff's standing “was neither
‘straightforward’ nor ‘well settled,” but rejecting it where “the
purported class representative so clearly lacks standing that
allowing |tolling] would condone (and even invite) the filing of

24

In other words, these courts have allowed efficacy
considerations to trump the statute: even though the
original class-action complaint was filed by a mere
placeholder who did not share any injury (or the re!-
evant injury) with the putative class, these courts
nonetheless have deemed it preferable to tolerate
such abuses than to have the plaintiffs with standing
file their own timely complaints.

The upshot of these discordant approaches is that
class-action lawyers, often enough, can get away
with relying on placeholder plaintiffs and broad class
definitions, effectively allowing them to extend the
otherwise-applicable time limits for as long as the
placeholder class definition remains pending. That
mav wel! end up being long after the statute of re
pose would otherwise have run, allowing absent class
members extra time to bring claims that the statute
was supposed to have cut short.

2. “Stacked” Class Actions: The problem is fur-
ther exacerbated by the phenomenon of “stacked”
class actions: when a putative class action is dis-
missed or denied certification, members of that failed
class bring not just their own individual cases, but a
new putative class action. The goal is generally to
seek a different result from a different judge. See,
e.g., Basch v. Ground Round, Inc., 139 F.3d 6, 11-12
(1st Cir. 1998).

placeholder lawsuits.” Plumbers’ Union Local No. 12 Pension
Fund v. Nomura Asset Accepiance Corp., 394 F. Supp. 2d 144,
156 (D. Mass. 2012); In re Morgan Stantey Morty. Pass-Through
Certificates Litig., 810 F. Supp. 2d 650, 670 (S.D.N.Y. 2011).

25

Here, too, the federal courts are divided. The
Third Circuit allows tolling so long as the prior class
action “was not rejected because of any defects in the
class itself but because of [the named plaintiffs] defi-
ciencies as a class representative.” Yang v. Odom,
392 F.3d 97, 108 (3d Cir. 2004) (citation omitted).
More recently, the Sixth Circuit allowed tolling for a
successive class action simply because the district
court never reached the class-certification issue. Jn
re Vertrue Inc. Mktg. & Sales Practices Litig., 719
F.3d 474, 479 (6th Cir. 2013). Other courts hold to
the contrary that “potential individual plaintiffs
cannot extend thfe] limitations period by relying on
successive class actions which allege the same class
and the same claims.” Basch, 139 F.3d at 12; accord
Korwek v. Hunt, 827 F.2d 874, 879 (2d Cir. 1987);
Salazar-Calderon v. Presidio Valley Farmers Ass'n,
765 F.2d 1334, 1351 (5th Cir. 1985).

Both practices—placeholder plaintiffs and stacked
class actions—stem from a longstanding lack of clari-
ty in the federal courts concerning the scope of Amer-
ican Pipe’s tolling rule, and raise the very real possi-
bility of unlimited tolling. Too often, courts applying
American Pipe have approved tactics that would al-
low a succession of suits, even wholly inadequate
placeholder suits, to toll the time limit “perpetually.”
Basch, 139 F.3d at 11. Combined, the lack of doctri-
nal clarity and the abusive applications of American
Pipe that arise from it critically undermine certainty
for defendants. But where, as here, that certainty is
guaranteed by a statute of repose, this Court can
prevent any such abuses simply by applying the out-
er limit that Congress wrote, and holding that the

26

American Pipe doctrine—however construed—cannot
override the statute of repose.

1V. Declining to Extend the Tolling Doctrine
to Statutes of Repose Will Not
Overwhelm Court Dockets or Prevent
Adjudication of Legitimate Claims

Much of petitioner’s argument rests on the result-
driven notion (hat American Pipe tolling must apply
to repose periods. Petitioner claims that the sup-
posed need to file protective parallel complaints
would create a “logistical and risk management
nightmare for courts and defendants,” apparently
because Section 13’s three-year repose period is too
short—and securities class-action litigation takes too
long—for putative class members to wuit unti! the
fate of the class action is decided before deciding
whether to opt out. Pet. Br. 22-25: see also Institu-
tional Investors’ Br. 15-24; Washington Br. 13; Direc-
tors’ Br. 11-15; Profs.’ Br. 5-15; Judges’ Br. 7-14.

To be sure, the tolling rule this Court adopted in
American Pipe was animated by a concern that deny-
ing tolling there “would deprive Rule 23 class actions
of the efficiency and economy of litigation which is a
principal purpose of the procedure.” 414 U.S. at 553.
Even so, the Court recognized that its authority to
grant tolling extended no further than what was
“consonant with the legislative scheme.” 7d. at 558.
Here, as explained. tolling is simply incompatible
with a “legislative scheme” that includes a statute of
repose. And even if this Court were free to craft peti-
tioners contrary rule—irrespective of the text of the
statute of repose, the contents of Rule 23, and the

27

constraints of the Rules Enabling Act—petitioner’s
submission rests on a flawed analysis.

A. IndyMac Has Not Led to an
Unworkable Surge of Protective

Filings
The most obvious flaw with the petitioner's asser-
tion that the IndyMac rule will produce an unworka-
ble surge of protective filings is also the most
straightforward: In the years since this Court dis-
missed the IndyMac petition as improvidently grant-
ed, petitioner’s inefficiency theory has been tested

and found wanting.

It has now been more than three years since the
Second Circuit held in IndyMac that American Pipe
tolling does not apply to 15 U.S.C. § 77m’s statute of
repose, and the Sixth and Eleventh Circuits have
since adopted that same holding. IndyMac, 721 F.3d
95; Stein, 821 F.3d 780; Dusek, 832 F.3d 1243. Yet
there is no evidence whatsoever that these decisions
have produced the unmanageable flurry of protective
filings and duplicative litigation that petitioner says
is the inevitable result of that rule. Indeed, there is
no evidence that the decisions have caused any prob-
lems whatsoever. Two of petitioner's amici point to a
single case in which some number of protective fil-
ings were made- -the Petrobras Securities Litigation
case—and there is no indication that those filings
caused any concrete problem even there. See Institu-
tional Investors Br. at 15-16; Washington Br. at 13.
Nor is it even clear that these filings were the result
of the IndyMac rule, as plaintiffs may choose to opt-
out for any number of other reasons.

28

Thus, despite the fact that the IndyMac rule has
been tried and has succeeded, academic amici submit
here the same analysis of federal-court securities
class actions filed between 2002-2009 that they sub-
mitted in IndyMac. Profs.’ Br. 5-16.

In an effort to justify their reuse of this stale and
empirically contradicted analysis, the professurs ar-
gue that JndyMac was limited to a particular cause
of action, and that this, together with a cirewit split,
has meant that litigants “would have been uncertain
as to whether they would enjoy American Pipe’s pro-
tection if class certification were denied.” Jd. at 17.
They also argue that there is limited post-JndyMac
data. Jd. at 18-20. But each of those arguments fails
to overcome the clear, contrary experience in the
Second Circuit in the years since IndyMac.

As for litigants’ supposed “uncertain|ty| as_ to
whether they would enjoy American Pipe’s protec-
tion,” id. at 17, that would be expected to produce
more protective filings, not fewer. Litigants so con-
cerned about protecting their rights thal they would
make protective filings in case class certification
were denied would surely also make protective fil-
ings in case this Court upholds the IndyMac rule.
Yet there is no evidence that they have done so in
any meaningful numbers.

As for the supposed lack of data, the professors
concede that there are dozens of pending class ac-
tions in which the effects of IndyMac can be observed
as to at least some portion of the class. /d. at 18-19.
Yet the professors offer no evidence that the rule has
produced any surge in protective filings, much less
an unworkable one. ‘lo the contrary, as respondents

29

have explained, there has been no surge in filings at
all. Resps.’ Cert. Opp. 19-22.

B. The Professors’ 2002 to 2009 Study
Fails to Address the Relevant
Question—The Time From Filing to
Class Certification Decision

Moreover, even setting aside the contrary real-
world evidence, the professors’ analysis of the 2002
to 2009 data does not provide a complete picture of
why the claims that are the focus of their analysis
are at risk of being time-barred without tolling of the
repose period. ‘The professors’ figures show only
(1) the date when the class action complaint was
filed, and “?) how long it took to reach a dismissal or
certification ruling from the date when the repose
period first started running. Profs.’ Br. 7. What that
presentation leaves obscured, however. is how long it
actually took the federal court to rule on dismissal or
class certification after the class-action complaint
was filed. In other words, the professors’ analysis
does not differentiate between class members whose
time ran out because the district judge took too long,
and those whose time ran out only because the
named plaintiff—and indeed, the absent class mem-
ber himself—simply waited too long to file in the first

place.

At least one study suggests that, in most cases,
federal courts are not taking too long to dispose of
securities class actions. That study, comprising all
federal-court securities class actions filed between
2000 and 2016, found that: (1) the vast majority, 7?
percent, were dismissed or settled before any motion
for class certification was filed; (2) of the minority of

30

cases in which a class certification motion was filed,
only 55 percent reached a decision on that motion: (3)
“falpproximately 64° of the decisions on motions for
class certification that were reached were within
three years from the original filing dale of the com-
plaint’: and (4) “|t]he median time was about 2.5
years.” STEFAN BorrTTrRicH & SVETLANA STARYKH,
RECENT TRENDS (N SECURITIES CLASS ACTION
LITIGATION: 2016 FULL-YEAR REVIEW 21-23 (Jan.
2017), goo.gl/o7SOzT.!7

In sum, there is no evidence that the /ndyMac rule
has in fact proved problematic in the years since the
Second Circuit adopted it in /ndvMac. And federal
courts in the vast majority of recent securities class
actions disposed of motions to dismiss or for class
certification with time to spare on the statute-of-
repose clock. In the Securities Act context, that time,
even if only a little less than a vear in most cases,
should be adequate for class members deciding
whether to opt out, considering that (1) the statute
already expects fast action from plaintiffs, who are in
uny event required to bring claims under Section 11
or 12{a)(2) of the Securities Act “within one year af-
ter the discovery of the untrue statement or the
omission,” 15 U.S.C. § 77m; (2) plaintiffs need not
start from scratch, but can conduct their own inves-
tigation with the benefit of the work the named
plaintiffs counsel has already done; and (3) plain-
tiffs, in many jurisdictions, need not wait for class

' The saine study reports that the median “time to resolution.”
ie. “the time between filing of the first complaint and
resolution (whether settlement or dismissal),” for federal-court
securities class activins has “declined by more than 10%.” during
the past decade, and is now 2.4 years. Id. at 27.

3]

certification to be denied before filing in order to reap
the benefit of American Pipe tolling of the applicable
limitations period, and thus have plenty of time in
which to file no matter how long a certification deci-
sion takes. See Hanford Nuclear, 534 F.3d at 1009;
WorldCom, 496 F.3d at 255.

C, Allowing Tolling Would Undermine
Other, Longer Repose Periods, Not
Just the Securities Act Period

Moreover, even assuming that the Securities Act’s
repose period creates special problems—and there is
no clear evidence that it does—it is not at all appar-
ent that similar difficulties exist under other stat-
utes of repose in the mine-run of federa!-court class-
action litigation. As noted, many statutes of repose
at both the federal and state level, see Part I1.A, are
significantly longer than the one at issue here. For
blue sky, professional malpractice, and consumer
protection claims (as well as breach-of-fiduciary-duty
claims under ERISA), five- or six-year periods are
typical.'* With construction-defect and _ product-
hability claims, ten-year periods also are common. !®

Studies confirm that these periods are long enough
to afford putative class members considering wheth-
er to opt out a meaningful opportunity to do so. For
example, a 2012 study examined federal-court, fed-
eral-question class actions filed or removed between
2003 and 2007. See Thomas E. Willging & Emery G.

8 Fig., 15 U.S.C. § 1681p(2); 29 U.S.C. § 1113; CAL. Corr. CODE
§ 255068(b); Mic. COMP. LAWS § 600. 4848h(1)(b).

19 Fig.. NET. REV. STAT. § 25-223; OR. Rev. STAT. § 30.905(2)(a);
but see MASS. GEN. LAWS ch. 260, § 2B.

32

Lee III, Class Certification and Class Settlement:
Findings from Federal Question Cases, 2003-2007, 80
U. Cin. L. REV. 315, 316-26 (2012). The authors
found that for cases originally filed in federal court
(excluding Fair Labor Standards Act collective ac-
tions), those that did not end in settlement ended in
a median of “about 9.3 months.” Jd. at 328, 344.
Those that were settled “took a median time of ...
about 20.9 months.” /d. The picture was much the
same for federal-question class actions removed to
federal court: those that were not remanded (typical-
ly, within 3.7 months) terminated within “about 9.9
months” in cases that were not settled, about 24.6
months in cases that were. Id.

These findings are largely consistent with those of
a 2008 study, by the same authors, of 231 federal-
court diversity class actions filed between 2003 and
2005. See EMERY G. LEE III & THOMAS E. WILLGING,
IMPACT OF THE CLASS ACTION FAIRNESS ACT ON THE
FEDERAL COURTS: PRELIMINARY FINDINGS FROM
PHASE Two’s PRE-CAFA SAMPLE OF DIVERSITY CLASS
ACTIONS 1, 17-18 (2008), goo.gl/HXzfO0B. That study
found that of those cases that were not remanded,
after a median of about 3.5 months: (1) the median
time for voluntary dismissals was 9 months; (2) the
median time to disposition by “motion, sua sponte
order, or summary judgment” was 14 months; and (3)
the median time to class settlement was 18.4
months. Id. at 7.

Against a statute of repose that allows ten, five, or
even three years to sue, the one or two years neces-
sary to dispose of many class actions leaves ample

time to make an informed choice whether to opt out.
Cf. Heimeshoff v. Hartford Life & Acc. Ins. Co., 134

33

S. Ct. 604, 612 n.4 (2013) (concluding that plaintiff
who must spend “15 to 16 months” exhausting ad-
ministrative remedies out of a three-year contractual
limitations period “still [has] ample time for filing
suit”). To the extent that time still proves insuffi-
cient, in all likelihood that will most often be a func-
tion of delay in filing suit in the first place, not of de-
lay in case management.

D. Repose Feriods Are a Legislative
Judgment So Any Changes Should
Be Left to Congress

In any event, even assuming for the sake of discus-
sion (and contrary to all evidence) that a three-year
statute of repose is too short to accommodate the re-
alities of federal-court securities-class-action practice
in the absence of American Pipe tolling, that is a leg-
islative question, not a judicial one. See Johnson v.
Ry. Express Agency, Inc., 421 U.S. 454, 463-64
(1975). Congress is perfectly free to lengthen the re-
pose period if it wishes; indeed, Congress has acted
to lengthen statutes of repose at least twice in recent
memory, including in the securities context. See
Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204,
§ 804(a), 116 Stat. 745, 801 (inserting what is now 28
U.S.C. § 1658(b)(2), providing five-year statute of re-
pose for securities fraud claims);?? Dodd-Frank Wal]
Street Reform and Consumer Protection Act, Pub. L.
No. 111-203, § 1085(7), 124 Stat. 1376, 2085 (2010)
(lengthening ECOA’s statute of repose to five years).

20 The statute of repose for such claims previously was three
years. See Lampf, 501 U.S. at 364 n.9 (citing 15 U.S.C. § 78i(e)).

34

The Securities Act, of course, has a three-year
statute of repose precisely because Congress previ-
ously adopted a much longer repose period, thought
better of it, and amended the statute to shorten it.
Congress selected three years as the “reasonable
time” after which a corporate officer need no longer
fear lability. 78 Cong. Rec. 8198 (May 7, 1934)
(statement of Sen. Fletcher). And in the years since
Indymac Bank, Congress has not chosen to lengthen
the repose period or to provide for tolling by statute.
Arguments that Congress chose too short a time to
suit the interests of class-action plaintiffs should be
addressed to that body, not to this Court.

35

CONCLUSION
The judgment of the court of appeals should be

affirmed.

Respectfully submitted.

BRIAN E. PASTUSZENSKI
DANIEL P. ROESER
GOODWIN PROCTER LLP
620 Kighth Avenue
New York, NY 10018

KATE COMERFORD TODD

STEVEN P. LEHOTSKY

JANET GALERIA

U.S. CHAMBER
LITIGATION CENTER

1615 H Street, NW

Washington, DC 20062

April 5, 2017

WILLIAM M. JAY

Counsel of Record
GOODWIN PROCTER LLP
901 New York Ave., N.W.
Washington, DC 20001
wjay@goodwinlaw.com
(202) 346-4000

STEPHEN D. Poss
DAVID R. Fox

GOODWIN PROCTER LLP
100 Northern Ave.
Boston, MA 02210

Counsel for Amicus Curiae

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0709%3A11. Public record. Not legal advice.