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

FILED

| MAR -6 2016

No. 16-373 | OFFICE OF THE CI Ex

EE

IN THE

Supreme Court of the Anited States

CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM,

Petitioner,

ANZ SECURITIES, INC., ET AL.,

Respondents.

On Writ of Certiorari

to the United States Courts of Appeals

for the Second Circuit

BRIEF OF DEKALB COUNTY PENSION FUND AS

AMICUS CURIAE IN SUPPORT OF PETITIONER

DAVID R. SCOTT DAVID C. FREDERICK

WILLIAM C. FREDERICKS Counsel of Record

GEOFFREY M. JOHNSON GREGORY G. RAPAWY

ScotTt+Scott, ATTORNEYS JEREMY S. NEWMAN

AT Law, LLP BENJAMIN S. SOFTNESS

The Helmsley Building KELLOGG, HANSEN, TODD,

230 Park Avenue FIGEL & FREDERICK, P.L.L.C.

17th Floor 1615 M Street, N.W.

New York, New York 10169 Suite 400

(212) 223-6444 Washington, D.C. 20036

(202) 326-7900

March 6, 2017 (dfrederick@kellogghansen.com)

TABLE OF CONTENTS

Page

fy.' FP ft wl ty yt | 9): Eee ill

INTEREST OF AMICUS CURIAE ..............224-c0c00c000s l

SUMMARY OF ARGUMENT. .....00............ccccccseeeeeseees 2

Pe seisiik ichdaiitapcaritiihatcniitathriacintdaieidyiakcwcedsiesiins 4

I. THE RULE OF AMERICAN PIPE 18S

AN [INTERPRETATION OF FEDERAL

RULE OF CIVIL PROCEDURE 23................. 4

A. American Pipe Held That A Rule

Requiring Individual Class Mem-

bers To File Duplicate Protective

Actions Is “Inconsistent With Rule

B. Subsequent Decisions Of This

Court Reinforce The Conclusion

That American Pipe Interpreted

SII sy cucastesisbnndnscaaasabeipade ceimbasnndabaddiienesixe 7

C. American Pipe Is Not An Applica-

tion Of Equitable Tolling......................06. 10

D. Rule 23, As Interpreted In Amer-

ican Pipe, Complies With The Rules

a abana 14

Il. ANY CHANGE TO AMERICAN

PIPE’S SETTLED INTERPRETA-

TION OF RULE 23 SHOULD BE

ACCOMPLISHED THROUGH THE

RULES ENABLING ACT’S PROCE.-

DURE FOR AMENDING THE FED-

ERAL RULES OF CIVIL PROCE-

li

A. As An Interpretation Of Rule 23,

American Pipe Has _ Enhanced

Bdaere TOCIGES THUGS oo ccscscccesscescecesceesccesenes: 17

B. Congress Has Set Forth The Pro-

cess For Amending Rule 23...................... 18

CI ee i cesinkncckccscctesscteessssennsssinienecencscnenmnestess 21

ii

TABLE OF AUTHORITIES

Page

CASES

Amchem Prods., Inc. v. Windsor, 521 U.S. 591

RI i cocasccicinaneidbansganteteiaessavenenianindensnentsnbentsinesaestee: 19

American Pipe & Constr. Co. v. Utah, 414 U.S.

BI oo ccinecssomscaiindnio cornices ensecessennennsnpremscionten passim

Bailey v. Glover, 88 U.S. (21 Wall.) 342 (1875) ..... 11, 12

Beach v. Ocwen Fed. Bank, 523 U.S. 410

I io vdiccsciveinssccicn nvcniscacansnasscesnncnsnavovecpasesonsvens 16

Chardon v. Fumero Soto, 462 U.S. 650 (1983) .... 9, 10

Credit Suisse Sec. (USA) LLC v. Simmonds,

— tk @ cg. || an 10, 11

Crown, Cork & Seal Co. v. Parker, 462 U.S.

OE CIID wnccicasescccncersevccecsccsscsesestonecsssctes 8, 9, 10,13

CTS Corp. v. Waldburger, 134 S. Ct. 2175

(DOTS) 0....cccrccerccceessevcccccccnvccesseesereserssonssssorsscecsees 11, 12

DeKalb Cnty. Pension Fund v. Transocean Ltd.,

817 F.3d 393 (2d Cir. 2016), pet. for cert.

pending, No. 16-206 (filed Aug. 12, 2016) ............ 1

Dickerson v. United States, 530 U.S. 428 (2000)........ 17

Dungan v. Morgan Drive-Away, Inc., 570 F.2d

BOT (Bite Cle. 1D FE).....ccesreceesessccscscescsecsssecsenssoscoses 15

Eisen v. Carlisle & Jacquelin, 417 U.S. 156

I saci veccnstiennsiicsctnivnnssinvoneqsenstinancseapsnecinsestere 7,10

Faragher v. City of Boca Raton, 524 U.S. 775

RID on cievecncvescscvsccnessnussevennecnannonsovasssnassvanssneseasnses 18

Greyhound Corp. v. Mt. Hood Stages, Inc.,

BT OED, SI CIID aiskind ss cccsscnesisiccessccsvncevsessevovesns 15

Holmberg v. Armbrecht, 327 U.S. 392 (1946) .......... 11

iv

Kimble v. Marvel Entm’t, LLC, 135 S. Ct.

EE, CI inc. cousnsenancededenanduendenandrecsebtiens 17, 18. 19

Kirtsaeng v. John Wiley & Sons, Inc., 133 8.

fe a IS eee rea ee 13

Lampf, Pleva, Lipkind, Prupis & Petigrow v.

Gilbertson, 501 U.S. 350 (1991) .................ccceee ees 11

Landgraf v. USI Film Prods., 511 U.S. 244

ee cn agiand anaes 20

Mohawk Indus., Inc. v. Carpenter, 558 U.S.

OSS Sa, tee, etal ee 19

Patterson v. McLean Credit Union, 491 U.S.

aa aaa 17

Police & Fire Ret. Sys. of Detroit v. IndyMac

MBS, Inc., 721 F.3d 95 (2d Cir. 2013) ....... 1, 10, 14

Realmonte v. Reeves, 169 F.3d 1280 (10th Cir.

SITTIN ck tds ccs spinabhachaiegsiieiebecg ditetcalalingtamemseninncisaintnh cain akan 7

Shady Grove Orthopedic Assocs., P.A. v.

Allstate Ins. Co., 559 U.S. 393 (2010) ................. 15

Sibbach v. Wilson & Co., 312 U.S. 1 (1941)........ 16, 17

Society for the Propagation of the Gospel v.

Wheeler, 22 F. Cas. 756 (C.C.N.H. 1814)

I iad il a ertieatninlmebindensinintes 20

United Airlines, Inc. v. McDonald, 432 U.S.

I ean diniebonialadamndaientedie 8, 10

Utah v. American Pipe & Constr. Co., 50 F.R.D.

99 (C.D. Cal. 1970), remanded in part, 473

F.2d 580 (9th Cir. 1973), aff'd, 414 U.S.

SSSR GE RN Ts Re 15

Walker v. Armco Steel Corp., 446 U.S. 740

ESE LE EE SE ae 18

West v. Conrail, 481 U.S. 35 (1987)..........00.00 16

STATUTES AND RULES

Clayten Act, 16 U.B.C. § 18 66 @6G. ..cccccccccccscccceessscees 4

§ 5(b), 15 U.S.C. § 16(b) (1970).....cccccceeeceeeeee 4, 5,14

FR BF oe a ee eee rarer 14

Rules Enabling Act, 28 U.S.C. § 2071 et seq. ....... es

11, 14, 15,

16, 17, 18, 19, 20

Be es te I itis cncocesaplneiakaincocedenimedc 11,18

I ad a i 18

Fee PAAR TE SS ne neem re SPOR 14

SE I a hint ieccincnsccletnaeb einen basaeletandiiesaes 19

fh 8 SEIS eae mer aR Or eRe 19

ee ee ais aie Stetscebcdsacisniodudeiasenantons 18, 20

Securities Act of 1933, 15 U.S.C. § 77a et seg. .... 3, 14

Ok TOO Oi ek co, 14

ae Oe acts eldirenittiilinistilniicintnsahataanadiasaisbncdinedt 16

eS a Ee rae eee 9, 10

8 8 AAS SN pee Map ee am RL ce en 9

Fed. R. Civ. P.:

ili ae oA ch aah estas csinalcaceleonane 16

AAS ES LES OE oe OES passim

I iiss Saisie ivan iessouns lenis ieee oniaaeaoin ible 7

Sup. Ct. R.:

FE erate MA Ae eee l

eR ET a RS ak Dk oI OT Ree PM OSS 1

vl

OTHER MATERIALS

Hadley Arkes, A Natural Law Manifesto or

an Appeal from the Old Jurisprudence to

the New, 87 Notre Dame L. Rev. 1245

(2012), available at http://scholarship.law.

nd.edu/cgi/viewcontent.cgi?article=1024&

A ai bre reece carci canestadeslauiiesss 12

3B James W. Moore, Federal Practice (2d ed.) .......... 5

Stephen R. Munzer, A Theory of Retroactive

Legislation, 61 Tex. L. Rev. 425 (1982) .............. 20

Petition for a Writ of Certiorari, American

Pipe & Constr. Co. v. Utah, 414 U.S. 538

(1974) (No. 72-1195) (U.S. filed Mar. 2,

Nee ee 15

A. Benjamin Spencer, Plausibility Pleading,

49 B.C. L. Rev. 431 (2008), available at

http://lawdigitalcommons.bc.edu/cgi/

viewcontent.cgi?article=2383&context=belr .......... 18

U.S. Courts:

How the Rulemaking Process Works, http://

www.uscourts.gov/rules-policies/about-

rulemaking-process/how-rulemaking-

process-works (last visited Mar. 5, 2017)........... 19

How to Suggest a Change to the Rules of

Practice and Procedure and Forms, http://

www.uscourts.gov/rules-policies/about-

rulemaking-process/how-suggest-change-

rules-practice-and-procedure-and-forms

SE WEE IG Gy BPE FD acceivcsc cp ncvceseonecasscovsecess 19

INTEREST OF AMICUS CURIAE'!

Amicus DeKalb County Pension Fund administers

a pension plan that manages approximately $1.3

billion in assets on behalf of current and former

employees of DeKalb County, Georgia. As part of its

duty to protect the retirement savings of participants

in the pension plan, amicus has participated in class-

action lawsuits seeking to recover damages from

securities issuers that have violated federal securities

laws and caused losses to the fund. Because amicus

manages the retirement savings of civil servants,

amicus has a longstanding institutional interest in

preserving the viability of the class-action mechanism

for protecting the rights of investors — those who, on

their own, could not feasibly or economically press a

securities lawsuit. In fact, amicus has itself been

prevented from seeking to recover for losses to its

pension plan under the rule announced in Police &

Fire Retirement System of Detroit v. IndyMac MBS,

Inc., 721 F.3d 95 (2d Cir. 2013), and applied in the

proceedings below. See DeKalb Cnty. Pension Fund

v. Transocean Ltd., 817 F.3d 393 (2d Cir. 2016), pet.

for cert. pending, No. 16-206 (filed Aug. 12, 2016).

Petitioner ably demonstrates in its brief why, under

American Pipe & Construction Co, v. Utah, 414 U.S.

538 (1974), petitioner’s individual complaint was timely

! Pursuant to Supreme Court Rule 37.6, counsel for amicus

represent that they authored this brief in its entirety and that

none of the parties or their counsel, nor any other person

or entity other than amicus or its counsel, made a monetary

contribution intended to fund the preparation or submission of

this brief. Pursuant to Rule 37.3(a), counsel for amicus also

represent that ail parties have consented to the filing of this

brief by submitting letters granting blanket consent to the filing

of amicus briefs.

2

filed and the decision below should be reversed.

Amicus supports petitioner’s arguments in full.

Amicus writes separately to expand upon a critical

point and to address the implications of that point

for the Court’s resolution of this case. Specifically,

amicus will develop further the explanation why

American Pipe can properly be understood only as

an interpretation and application of Federal Rule of

Civil Procedure 23, rather than as a judge-made

exception to statutory time limitations. Amicus will

further explain why, so understood, the rule of

American Pipe should remain intact unless and until

Rule 23 is amended under the procedures Congress

provided in the Rules Enabling Act.

SUMMARY OF ARGUMENT

I. This Court explained in American Pipe &

Construction Co. v. Utah, 414 U.S. 538 (1974), that

the basis for that decision is Federal Rule of Civil

Procedure 23. The Court described its opinion as an

“interpretation” of the rule and held that a contrary

rule requiring repetitive protective filings is “incon-

sistent with Rule 23.” Subsequent decisions of this

Court have applied American Pipe in a range of

procedural circumstances and have explained that

the policies underlying Rule 23’s text and structure

required those outcomes.

American Pipe cannot properly be considered an

application of equitable tolling, as the Second Circuit

erroneously suggested. Equitable tolling is a case-

by-case doctrine that protects specific plaintiffs who,

though diligently pursuing their rights, are unable to

bring a timely cause of action and put the defendant

on notice of their claims. American Pipe lacks these

characteristics. It is not applied case-by-case, but

rather applies to all members of a timely filed putative

3

class action, notwithstanding any specific plaintiff's

diligence. And American Pipe does not excuse a

plaintiff’s failure to put a defendant on notice of a

claim. When American Pipe applies, the filing of a

class complaint has notified the defendant of each

plaintiff’s claim. There is nothing for equity to excuse.

American Pipe also complies with the Rules Ena-

bling Act, as this Court held in American Pipe itself.

Section 13 of the Securities Act of 1933 is materially

indistinguishable from the statute this Court addressed

in that case, and the Second Circuit’s contrary

conclusion cannot be squared with this Court’s Rules

Enabling Act precedents.

Il. Because American Pipe interpreted Rule 23, it

is entitled to enhanced “statutory” stare decisis effect.

The Federal Rules of Civil Procedure are adopted by

this Court through a process prescribed by Congress,

and they have the force of law. Accordingly, when

this Court interprets a federal rule, that interpreta-

tion is best reconsidered, if at all, through the rule-

making process Congress provided. Failing to follow

that rulemaking process would unfairly penalize

injured parties with claims that would have been

considered timely and thus litigated on the merits,

had the Second Circuit followed American Pipe.

4

ARGUMENT

I. THE RULE OF AMERICAN PIPE IS AN

INTERPRETATION OF FEDERAL RULE OF

CIVIL PROCEDURE 23

A. American Pipe Held That A Rule Requir-

ing Individual Class Members To File Du-

plicate Protective Actions Is “Inconsistent

With Rule 23”

In American Pipe & Construction Co. v. Utah, 414

U.S. 538 (1974), this Court interpreted Rule 23 to

require that “the commencemcnt of a class action

suspends the applicable statute of limitations as to

all asserted members of the class who would have

been parties had the suit been permitted to continue

as a class action.” Id. at 554.

There, the State of Utah had commenced a puta-

tive class action under the federal antitrust laws,

alleging that several defendants had conspired in a

bid-rigging scheme concerning the sale of concrete

and steel pipe. See id. at 541. The district court

deemed that private action to be timely under § 5(b)

of the Clayton Act because it was filed within one

year after the conclusion of a civil action brought by

the United States. See id.2 After the court granted

the defendants’ motion for an order that the suit

could not be maintained as a class action, a group of

municipalities and other local government entities

2 Section 5(b) provided that the time for filing a private action

under the antitrust laws was “‘suspended’” during the penden-

cy, and for one year after the conclusion, of any civil proceeding

instituted by the United States; it also stated that, whenever

the suspension provision applied, any private action “‘shall

be forever barred unless commenced ... within the period of

suspension.” American Pipe, 414 U.S. at 541-42 & n.3 (quoting

15 U.S.C. § 16(b) (1970)).

5

that had been members of the putative class filed

motions to intervene as plaintiffs in the case. See id.

at 542-44. If the filing of Utah’s class complaint

stopped the running of § 5(b)’s one-year period for the

time between that filing and the district court’s order

denying class certification, then the municipalities’

motions to intervene were timely. If, however, the

one-year period continued to run against the munici-

palities despite the filing of the class complaint, then

the motions to intervene were time-barred. See id. at

544, 561.

This Court held that the intervention motions were

timely. That outcome followed from, and reflected an

interpretation of, Federal Rule of Civil Procedure 23.

As this Court stated in the opinion’s very first line,

American Pipe considered — and resolved — “the

relationship between a statute of limitations and the

provisions of [Rule] 23 regulating class actions in the

federal courts.” Jd. at 540.

As petitioner details, American Pipe began by

interpreting Rule 23 on the basis of its history and

purpose. See Pet. Br. 16-19. In its original form,

Rule 23 permitted “spurious” class actions binding

only upon named parties; the spurious class action

was “‘merely an invitation to joinder’™” that allowed

class members to “await developments in the trial or

even final judgment on the merits” to decide whether

to intervene, so that the class members could “benefit

from a favorable judgment without subjecting them-

selves to the binding effect of an unfavorable one.”

414 U.S. at 545-47 (quoting 3B James W. Moore,

Federa/l Practice 4 23.10[1], at 23-2603 (2d ed.)). The

1966 amendments to Rule 23 “were designed, in part,

specifically to mend this perceived defect in the

former Rule and to assure that members of the

6

class would be identified before trial on the merits

and would be bound by all subsequent orders and

judgments.” Id. at 547.

Under Rule 23 as amended, the class action was

transformed from “an invitation to joinder” into “a

truly representative suit designed to avoid, rather

than encourage, unnecessary filing of repetitious

papers and motions.” Jd. at 550. That purpose could

be achieved only if putative class members “stood,”

as of the filing of the class complaint, “as parties to

the suit.” Id. at 550-51. The Court thus concluded

that “the filing of a timely class action complaint

commences the action for all members of the class as

subsequently determined.” Jd. at 550.8

An alternative rule, this Court continued, would

not be “consistent with federal class action procedure”

under Rule 23 because it would preclude the efficien-

cies the Rule was adopted to allow. Id. at 553-54.

The Court thus concluded that a scheme within

which class members “must individually meet the

timeliness requirements ... is simply inconsistent

with Rule 23 as presently drafted.” Id. at 550

(emphasis added). The Court determined that its

“interpretation of the Rule” was “necessary to insure

effectuation of the purposes of litigative efficiency

and economy that the Rule in its present form was

designed to serve.” Id. at 555-56.

* Put differently, under Rule 23, a putative class member's

later-filed complaint should not be treated as “a separate cause

of action which must individually meet the timeliness require-

ments.” American Pipe, 414 U.S. at 550: see Pet. Br. 30-38.

7

B. Subsequent Decisions Of This Court Rein-

force The Conclusion That American Pipe

Interpreted Rule 23

Subsequent decisions of this Court have cemented

American Pipe’s interpretation of Rule 23 as a settled

principle of federal civil procedure. Just a few

months after American Pipe was decided, this Court

held in a federal antitrust and securities case that

each member of a class certified under Rule 23(b)(3)

who can be identified through reasonable effort must

receive notice of the right to request exclusion from

the suit. See Eisen v. Carlisle & Jacquelin, 417 U.S.

156, 159, 173-77 (1974). In so holding, the Court

rejected the argument that “class members will not

opt out because the statute of limitations has long

since run out on the claims of all class members

other than [the named plaintiff].” Jd. at 176 n.13. It

explained that the argument was “disposed of by our

recent decision in” American Pipe, “which established

that commencement of a class action tolls the appli-

cable statute of limitations as to all members of the

class.” Id.

The Court in Eisen thus recognized the critical role

American Pipe plays in ensuring the proper function-

ing of Rule 23’s provisions affording unnamed class

members rights to receive notice and to opt out.

Without American Pipe, those provisions “would be

irrelevant because the statute of limitations period

for absent class members would, more often than not,

have expired, making the right to pursue individual

claims meaningless,” as the Tenth Circuit has recog-

nized. Realmonte v. Reeves, 169 F.3d 1280, 1284

(10th Cir. 1999); see Pet. Br. 10.

Three Terms after Eisen, this Court applied Amer-

ican Pipe’s interpretation of Rule 23 to hold that an

8

unnamed class member could intervene after final

judgment in an employment-discrimination case to

appeal a denial of class certification, even though the

remaining time in the limitations period had run

between the denial] of class certification and the filing

of the motion to intervene. See United Airlines, Inc.

v. McDonald, 432 U.S. 385, 392 n.11, 396 (1977).

The Court relied on American Pipe, explaining that

“[t]he lawsuit had been commenced by the timely

filing of a complaint for classwide relief, providing

United with ‘the essential information necessary to

determine both the subject matter and size of the

prospective litigation.’” Jd. at 392-93 (quoting Amer-

ican Pipe, 414 U.S. at 555). The Court observed that

an alternative rule requiring intervention during

the limitations period “would induce putative class

members to file protective motions to intervene to

guard against the possibility that the named repre-

sentatives might not appeal from the adverse class

determination.” Jd. at 394 n.15. Such filings, the

Court said, “would be the very ‘multiplicity of activity

which Rule 23 was designed to avoid.” Id. (quoting

American Pipe, 414 U.S. at 551) (emphasis added).

In 1983, the Court issued two decisions in which it

again reaffirmed and elaborated on American Pipe’s

interpretation of Rule 23. In Crown, Cork & Seal Co.

vu. Parker, 462 U.S. 345 (1983), the Court held that

American Pipe applies not only when members of a

putative class move to intervene, but also when they

file distinct actions after a denial of class certification

and “within the time that remains on the limitations

period.” Jd. at 346-47. In that case, the original

named plaintiffs filed a putative class action alleging

employment discrimination, but class certification was

9

denied and a member of the asserted class subse-

quently filed his own lawsuit. See id. at 347-48.

The Court explained that limiting the American

Pipe rule to intervention would generate “[m]uch the

same inefficiencies” the Court sought to avoid in

American Pipe. Id. at 350. Just as in the case of

intervention, the Court explained, “[a] putative class

member who fears that class certification may be

denied would have every incentive to file a separate

action prior to the expiration of his own period of

limitations,” resulting in “a needless multiplicity of

actions — precisely the situation that Federal Rule of

Civil Procedure 23 and the tolling rule of American

Pipe were designed to avoid.” Jd. at 350-51.

The same year it decided Crown, Cork & Seal, the

Court applied American Pipe’s interpretation of Rule

23 in a case where state law supplied the limitations

period. See Chardon v. Fumero Soto, 462 U.S. 650

(1983). The Court explained that American Pipe had

adopted a “federal rule” that “the statute of limita-

tions is tolled by the filing of an asserted class

action” and noted the court of appeals’ recognition

that American Pipe “had interpreted the Federal

Rules of Civil Procedure” to permit such tolling. IZd.

at 654, 658. ‘The dissenting Justices in Chardon

agreed with the majority that American Pipe “inter-

pretied] Rule 23 to contain a rule that, during the

pendency of a class action, underlying statutes of

limitations would be tolled as to individual class

members.” Jd. at 665 (Rehnquist, J., dissenting); see

id. at 667-68.

4 The plaintiffs’ claims in Chardon arose under 42 U.S.C.

§ 1983, and the Court had interpreted 42 U.S.C. § 1988 to

require courts to borrow both state statutes of limitations and

state rules for tolling those statutes. See 462 U.S. at 657. The

10

This Court’s decisions in Eisen, McDonald, Crown,

Cork & Seal, and Chardon reaffirmed that American

Pipe is an interpretation of Rule 23 and demonstrate

that that interpretation is necessary for Rule 23 to

operate as intended in a rarge of procedural postures.

Moreover, as petitioner correctly explains, neither

Congress nor this Court has sought to amend Rule 23

to operate any differently in the decades since Amer-

ican Pipe was decided. See Pet. Br. 21-22. Rather,

as recently as 2012, this Court described American

Pipe as having “based [its] conclusion on ‘the effi-

ciency and economy of litigation which is a principal

purpose of [Fed. Rule Civ. Proc. 23 class actions].’”

Credit Suisse Sec. (USA) LLC v. Simmonds, 566 U.S.

221, 226 n.6 (2012) (quoting American Pipe, 414 U.S.

at 553) (second brackets added in Credit Suisse).

C. American Pipe Is Not An Application Of

Equitable Tolling

The Second Circuit in Police & Fire Retirement

System of Detroit v. IndyMac MBS, Inc., 721 F.3d 95

(2d Cir. 2013), professed ambivalence concerning “the

source of authority” for American Pipe and suggested

that it might be an application of equitable tolling.

721 F.3d at 108. It is not. See Pet. Br. 18-19.

American Pipe’s holding derives from statutory, not

——$ oe

Court held that, in a § 1983 case, the “federal interest in assur-

ing the efficiency and economy of the class-action procedure,”

embodied in Rule 23, “is vindicated as long as each unnamed

plaintiff is given as much time to intervene or file a separate

action as he would have under” analogous state law. Id. at 661

(footnote omitted). In Chardon, that meant applying Puerto

Rico’s rule providing that the limitations period ran anew from

the denial of class certification. See id. at 661-62. The dissent

would have held that American Pipe requires suspension rather

than renewal in all cases. See id. at 665 (Rehnquist, J., dissent-

ing).

11

equitable, authority. American Pipe relied on an

“interpretation” of Rule 23, 414 U.S. at 555-56, which

is itself an exercise of this Court’s rulemaking power

under the Rules Enabling Act, 28 U.S.C. § 2072.

A proper understanding of equitable tolling

confirms that American Pipe derives from Rule 23,

not equity. The principles of equitable tolling have

been “long-settled” for centuries. Credit Suisse, 566

U.S. at 227. Although courts apply the doctrine in

various circumstances, “[glenerally, a litigant seek-

ing equitable tolling bears the burden of establishing

two elements: (1) that he has been pursuing his

rights diligently, and (2) that some extraordinary

circumstances stood in his way.” Jd. (emphasis omit-

ted); see CTS Corp. v. Waldburger, 134 S. Ct. 2175,

2183 (2014) (equitable toiling applies “when a litigant

has pursued his rights diligently but some extra-

ordinary circumstance prevents him from bringing a

timely claim”). For example, equitable tolling may

excuse an untimely filing in a fraud case “where the

party injured by the fraud remains in ignorance of it

without any fault or want of diligence or care on his

part” or “where the ignorance of the fraud has been

produced by affirmative acts of the guilty party.”

Bailey v. Glover, 88 U.S. (21 Wall.) 342, 347, 348

(1875); see also Lampf, Pleva, Lipkind, Prupis &

Petigrow v. Gilbertson, 501 U.S. 350, 363 (1991)

(citing Bailey’s formulation of equitable tolling).

Equitable tolling is thus a case-by-case doctrine

concerned with avoiding a specific sort of unfairness

in a specific case. See Holmberg v. Armbrecht, 327

U.S. 392, 396 (1946) (doctrine of equitable tolling

“eschews mechanical rules” and seeks to avoid “an

inequity founded upon some change in the condition

or relations of the property or the parties”) (emphasis

12

added). Specifically, it seeks to protect a blameless

plaintiff who, in a particular case, filed late due to

circumstances beyond his control.5 In operating this

way, equitable tolling excuses the usual requirement

codified in statutory time bars that defendants be

notified of claims against them within a certain time

period, when doing so is necessary to ensure fairness

to the plaintiff. Cf. Bailey, 88 U.S. (21 Wall.) at 349

(observing that allowing a defendant to ensure dis-

missal by intentionally hiding his fraud during the

limitations period would “make the law which was

designed to prevent fraud the means by which it is

made successful and secure”).®

American Pipe is unlike equitable tolling in two

crucial respects. First, it is not applied case-by-case,

plaintiff-by-plaintiff, in an attempt to right wrongs

and preserve fundamental fairness. It is a rule of

procedure that applies to any member of a putative

class, regardless whether the plaintiff acted dili-

gently during the limitations period. As interpreted

5 The moral principle underlying equitable tolling is both

intuitive and fundamental. See Hadley Arkes, A Natural Law

Manifesto or an Appeal from the Old Jurisprudence to the New,

87 Notre Dame L. Rev. 1245, 1252 (2012) (setting forth “one

of the truly ‘first principles’ we draw from the logic of moral

judgment,” namely, “that we do not hold people blameworthy or

responsible for acts they were powerless to affect’), available at

http://scholarship.law.nd.edu/cgi/viewcontent.cgi?article=1024&

context=ndlr.

6 Because equitable tolling is fundamentally concerned with

fairness to the plaintiff, it is understandable that equitable

tolling is incompatible with statutory repose periods, which

prioritize the defendant's right to achieve peace. See Waldburger,

134 S. Ct. at 2183; Pet. Br. 40. American Pipe, however,

elevates the interests of neither the plaintiff nor the defendant;

it furthers the procedural policies of Rule 23. See 414 U.S. at

555-56.

13

in American Pipe, “Rule 23 both permits and encour-

ages class members to rely on the named plaintiffs

to press their claims.” Crown, Cork & Seal, 462 U.S.

at 352-53 (emphasis added). Had equity been its

source, the American Pipe rule would have been

limited to those who reasonably relied on the class-

action filing, whereas the Court in American Pipe

expressly refused to apply a “different ... standard

... to those members of the class who did not rely

upon the commencement of the class action (or who

were even unaware that such a suit existed).” 414

U.S. at 551.

Second, American Pipe does not excuse the failure

to notify defendants of adverse claims, as does equi-

table tolling. On the contrary, this Court has recog-

nized that American Pipe applies where the filing of

a timely class action “‘notifies the defendants not

only of the substantive claims being brought against

them, but also of the number and generic identities

of the potential plaintiffs.” Crown, Cork & Seal, 462

U.S. at 353 (quoting American Pipe, 414 U.S. at 555);

see also American Pipe, 414 U.S. at 562 (Blackmun,

J., concurring) (claims to which American Pipe applies

“invariably will concern the same evidence, memories,

and witnesses as the subject matter of the original

class suit, and the defendant will not be prejudiced

by later intervention”). Thus, under American Pipe,

there is no lack of notice for equity to excuse.’

’ Passing references to American Pipe in a couple of this

Court’s equitable-tolling decisions provide no basis on which

to ignore the fundamental differences between American Pipe’s

interpretation of Rule 23 and the doctrine of equitable tolling.

Cf. Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351, 1368

(2013) (“Is the Court having once written dicta calling a tomato

a vegetable bound to deny that it is a fruit forever after?”).

14

D. Rule 23, As Interpreted In American Pipe,

Complies With The Rules Enabling Act

American Pipe’s interpretation of Rule 23 comports

fully with the Rules Enabling Act. In IndyMac, the

Second Circuit concluded (in the alternative) that

applying American Pipe to § 13 of the Securities Act

of 1933, 15 U.S.C. § 77m, would modify a “substan-

tive right” protected by § 13 and thereby violate the

Rules Enabling Act. 721 F.3d at 109; see 28 U.S.C.

§ 2072(b) (Federal Rules of Civil Procedure may not

“abridge, enlarge or modify any substantive right”).

That is incorrect.

American Pipe itself rejected an argument that the

“‘substantive’ element” of the statutory time bar

caused the Court’s interpretation of Rule 23 to

violate the Rules Enabling Act. See 414 U.S. at 556-

58. “The proper test,” the Court explained, “is not

whether a time limitation is ‘substantive’ or ‘proce-

dural,’ but whether tolling the limitation in a given

context is consonant with the legislative scheme.” Id.

at 557-58. Allowing petitioner to pursue claims that

were filed on a class-wide basis within the repose

period is consonant with § 13 and the policies statutes

of repose are intended to further. See Pet. Br. 50-51.

In addition, the Second Circuit’s conclusion that

American Pipe implicates the Rules Enabling Act

because §13 is “a statute of repose” defining “a

substantive right,” IndyMac, 721 F.3d at 109 n.17,

ignores that § 13 is relevantly indistinguishable from

the provision at issue in American Pipe. The statute

in American Pipe, 15 U.S.C. § 16(b) (1970) (now

codified at 15 U.S.C. § 16(i)), provided that lawsuits

not “commenced” within one year of a government suit

under the antitrust laws would be “forever barred.”

See 414 U.S. at 542 n.3. Notably, the one-year period

15

ran from the conclusion of the government action —

a time unrelated to a plaintiff’s discovery of a claim.

The provision thus bore the same hallmarks that

respondents claim characterize “statutes of repose.”

See Br. in Opp. 26.8 Accordingly, § 13’s characteris-

tics as a repose period provide no basis to distinguish

this Court’s holding in American Pipe that its rule

was “consonant with the legislative scheme” and did

not implicate the Rules Enabling Act. 414 U.S. at

557-58.

The Second Cuircuit’s holding also cannot be

squared with this Court’s Rules Enabling Act prece-

dents. The Second Circuit’s reasoning appears to be:

(1) § 13 protects a substantive right; (2) American

Pipe would affect § 13; therefore, (3) American Pipe

violates the Rules Enabling Act. But the proper test

‘is not whether the rule affects a litigant’s substan-

tive rights; most procedural rules do.” Shady Grove

Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S.

393, 407 (2010) (plurality) (emphasis added). Rather,

“lwjhat matters is what the rule itself regulates.” Id.

(emphasis added); see also id. at 412 n.10 (distin-

guishing between “what the Federal rule regulates

8 In fact, the provision at issue in American Pipe has been re-

ferred to as a “statute of repose.” The district court in American

Pipe called it an “antitrust statute of repose.” Utah v. American

Pipe & Constr. Co., 50 F.R.D. 99, 103 (C.D. Cal. 1970), remanded

in part, 473 F.2d 580 (9th Cir. 1973), aff'd, 414 U.S. 538 (1974).

In their petition for a writ of certiorari, the defendants in that

case referred to the provision as a “statute of repose.” Pet.

for Cert. at 22, American Pipe, supra, No. 72-1195 (U.S. filed

Mar. 2, 1973), 1973 WL 346627. And, four years after American

Pipe, this Court quoted with approval the Ninth Circuit’s

description of the provision as “‘a statute of repose.’” Greyhound

Corp. v. Mt. Hood Stages, Inc., 437 U.S. 322, 334 (1978) (quoting

Dungan v. Morgan Drive-Away, Inc., 570 F.2d 867, 869 (9th Cir.

1978)).

16

[and] its incidental effects”); Sibbach v. Wilson & Co.,

312 U.S. 1, 14 (1941) (“[t]he test must be whether a

rule really regulates procedure”). Here, as petitioner

explains, the rule regulates Rule 23’s precise proce-

dural concern: whether the plaintiff may recover

through a distinct lawsuit or only as part of the

original class action.®

In all events, § 13 does not in fact protect any

substantive right for purposes of the Rules Enabling

Act. See Pet. Br. 50 & n.11. It governs only when

a lawsuit may be brought. When Congress enacts

statutes that create or destroy substantive rights to

relief, it does so in clear terms. See Beach v. Ocwen

Fed. Bank, 523 U.S. 410, 416-17 (1998); compare

15 U.S.C. §77m (governing when a suit may be

“brought”) with id. § 1635(f) (“An obligor’s right of

rescission shall expire three years after the date of

consummation ....”) (emphases added). It did not

do so here.

% Put differently, American Pipe determines what event

constitutes the timely filing of a complaint under a federal

statutory limitations period. This Court has held that such a

determination is procedural and properly made by the Federal

Rules. See West v. Conrail, 481 U.S. 35, 38-39 (1987) (complaint

timely filed under federal statute of limitations because suit

was “commenced” as that term was defined under Federal Rule

of Civil Procedure 3).

17

Il ANY CHANGE TO AMERICAN PIPE’S

SETTLED INTERPRETATION OF RULE 23

SHOULD BE ACCOMPLISHED THROUGH

THE RULES ENABLING ACT’S PROCEDURE

FOR AMENDING THE FEDERAL RULES

OF CIVIL PROCEDURE

A. As An Interpretation Of Rule 23, American

Pipe Has Enhanced Stare Decisis Effect

American Pipe’s interpretation of Rule 23 is

entitled to great weight under this Court’s cases.

The Court has held that, while “{o]verruling prece-

dent is never a small matter,” Kimble v. Marvel

Entm't, LLC, 135 S. Ct. 2401, 2409 (2015), stare

decisis principles apply with even greater force to

decisions interpreting federal statutes, see Patterson

v. McLean Credit Union, 491 U.S. 164, 172 (1989).

In such cases, “the legislative power is implicated,

and Congress remains free to alter” the operation

of the federal rule in issue. /d. at 172-73. The

rationale underlying statutory stare decisis is that,

when this Court interprets a statute (or a rule), the

holding “effectively becomes part of the statutory

scheme, subject ... to congressional change. Absent

special justification, they are balls tossed into Con-

gress’s court, for acceptance or not as that branch

elects.” Kimble, 1358S. Ct. at 2409.

The same rationale applies to interpretations of

the Federal Rules of Civil Procedure. Those rules

“ha[ve] the force of a federal statute.” Sibbach, 312

U.S. at 13. And, just like federal statutes, they can

be changed by Congress. See Dickerson v. United

States, 530 U.S. 428, 437 (2000). Parties unhappy

with the way this Court interprets a federal rule can

simply “take their objections across the street, and

Jongress can correct any mistake it sees.” Kimble,

18

135 S. Ct. at 2409; see also Walker v. Armco Steel

Corp., 446 U.S. 740, 749 (1980) (noting that “the

doctrine of stare decisis weighs heavily against”

overruling a precedent interpreting a Federal Rule of

Civil Procedure).

Indeed, the case for enhanced stare decisis is even

stronger in the context of the Federal Rules because

this Court, in addition to Congress, is empowered

to adopt amendments on its own. See 28 U.S.C.

§§ 2072(a), 2074(a) (rules proposed by this Court take

effect unless Congress provides otherwise by law);

see also A. Benjamin Spencer, Plausibility Pleading,

49 B.C. L. Rev. 431, 462 (2008), available at http://

lawdigitalcoommons.bc.edu/cgi/viewcontent.cgi?article=

2383&context=belr. And it is stronger still here, where,

despite 30 amendments to the Federal Rules since

American Pipe was decided, the rule of American Pipe

has remained undisturbed. See Pet. Br. 21; see also

Faragher v. City of Boca Raton, 524 U.S. 775, 792

(1998) (force of statutory stare decisis is “enhanced”

when Congress amends a statute “without providing

any modification of [this Court’s] holding”).

“As against this superpowered form of stare

decisis,” respondents “would need a _ superspecial

justification to warrant” abrogating American Pipe.

Kimble, 135 S. Ct. at 2410; see id. at 2409 (such

a justification must rise “above the belief that the

precedent was wrongly decided”). They have presented

no such justification.

B. Congress Has Set Forth The Process For

Amending Rule 23

The Rules Enabling Act authorizes this Court to

prescribe rules of procedure for cases in the United

States district courts. See 28 U.S.C. § 2072. It also

provides for the method of prescribing those rules,

19

see id. § 2073, and for the submission of rules to

Congress before they take effect, see id. § 2074.

In exercising the rulemaking authority Congress

granted, this Court promulgates rules of civil proce-

dure through a “committee process” that invites

input from judges, scholars, government agencies,

and members of the bar and the public.'° Interested

parties can submit suggestions for changes to the

rules.'! “Federal Rules take effect after an extensive

deliberative process involving many reviewers: a Rules

Advisory Committee, public commenters, the Judicial

Conference, this Court, the Congress.” Amchem

Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997).

Observing the rulemaking process when altering

the way Federal Rules operate honors the statutory

stare decisis principles described above. This Court’s

initial interpretation of a rule puts the ball in

“Congress’s court, for acceptance or not as that

branch elects.” Kimble, 135 S. Ct. at 2409. And

Congress exercises that prerogative through the

process it prescribed in the Rules Enabling Act. Cf.

Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100, 114-

19 (2009) (Thomas, J., concurring in part and concur-

ring in the judgment) (questions committed to the

Court’s Rules Enabling Act authority best addressed

through the “full airing that rulemaking provides”).

Additionally, declining to follow American Pipe’s

interpretation of Rule 23 in this case would retro-

10 U.S. Courts, How the Rulemaking Process Works, http://

www.uscourts.gov/rules-policies/about-rulemaking-process/how-

rulemaking-process-works (last visited Mar. 5, 2017).

\l See U.S. Courts, How to Suggest a Change to the Rules of

Practice and Procedure and Forms, http://www.uscourts.gov/rules-

policies/about-rulemaking-process/how-suggest-change-rules-

practice-and-procedure-and-forms (last visited Mar. 5, 2017).

20

actively deprive petitioner (and similarly situated

plaintiffs, such as amicus) of the ability to have their

claims adjudicated on the merits. Such an outcome

would violate “[e]lementary considerations of fair-

ness,” which “dictate that individuals should have an

opportunity to know what the law is and to conform

their conduct accordingly.” Landgraf v. USI Film

Prods., 511 U.S. 244, 265 (1994); see also id. (“settled

expectations should not be lightly disrupted”). The

Rules Enabling Act mitigates this sort of unfairness

by inserting a delay between a rule’s adoption and its

taking effect and by permitting this Court to prevent

a new rule from applying to pending proceedings

where “the application of such rule in such proceed-

ings would not be feasible or would work injustice.”

28 U.S.C. § 2074(a).!?

Beyond upsetting the settled expectations of peti-

tioner, a retroactive change to American Pipe would

grant respondents an unjustifiable windfall. Under

American Pipe, Rule 23 has long protected the ability

of putative class members to press their own lawsuits

where a timely class complaint has been filed. With

notice of a change in the Rule (or had the Second

Circuit not refused to follow American Pipe’s inter-

12 As this Court has recognized, the law has long disfavored

changes in law that “attach|] a new disability[] in respect to

transactions ur considerations already past.” Society for the

Propagation of the Gospel v. Wheeler, 22 F. Cas. 756, 767

(C.C.N.H. 1814) (No. 13,156) (Story, J.); see also Landgraf, 511

U.S. at 265 (“[T]he principle that the legal effect of conduct

should ordinarily be assessed under the law that existed when

the conduct took place has timeless and universal appeal.”);

Stephen R. Munzer, A Theory of Retroactive Legislation, 61

Tex. L. Rev. 425, 471 (1982) (“The rule of law .. . is a defeasible

entitlement of persons to have their behavior governed by rules

publicly fixed in advance.”).

21

pretation of Rule 23), petitioner would have filed the

requisite protective action and would presumably

have recovered for its injuries. C/. Pet. Br. 14 (noting

that respondents settled with the class members that

did not opt out). Yet, rather than suggest a change to

the Committee on Rules of Practice and Procedure,'*

respondents seek a change in class-action procedure

that would amount to immunity from liability in this

and other pending cases.

CONCLUSION

The judgment of the court of appeals should be

reversed.

13 See U.S. Courts, How To Suggest a Change to the Rules of

Practice and Procedure and Forms, http://www.uscourts.gov/rules-

policies/about-rulemaking-process/how-suggest-change-rules-

practice-and-procedure-and-forms (last visited Mar. 5, 2017).

DAVID R. SCOTT

WILLIAM C. FREDERICKS

GEOFFREY M. JOHNSON

ScoTr+Scot;t, ATTORNEYS

AT LAW, LLP

The Helmsley Building

230 Park Avenue

17th Floor

New York, New York 10169

(212) 223-6444

March 6, 2017

22

Respectfully submitted,

DAVID C. FREDERICK

Counsel of Record

GREGORY G. RAPAWY

JEREMY S. NEWMAN

BENJAMIN S. SOFTNESS

KELLOGG, HANSEN, TODD,

Ficer. & FREDERICK, P.L.L.C.

1615 M Street, N.W.

Suite 400

Washington, D.C. 20036

(202) 326-7900

(dfrederick@kellogghansen.com)