In CALPERS v. ANZ Securities, the United State Supreme Court held that the filing of a class action complaint does not serve to toll the 3-year time limitation on bringing a claim under Section 13 of the Securities Act of 1933. In 2007 and 2008, CALPERS, the nation’s largest public pension fund, purchased publicly traded securities of Lehman Brothers. In 2008, a putative class action was filed against various underwriters, alleging that the Lehman Brothers’ registration offerings violated Section 11 by including material misstatements and omissions. In February of 2011, more than 3-years after the alleged misrepresentations were made, CALPERS filed a separate complaint against respondents and opted out of the class action settlement. The Southern District of New York granted the underwriters’ motion to dismiss, and CALPERS appealed. The Second Circuit affirmed.
The Court’s opinion, delivered by Justice Kennedy, makes two important rulings: (1) The 3-year time limitation on a Chapter 11 claim, which runs from the date on which a material misstatement or omission was made, is a statute of repose and not a statute of limitations, and (2) for the purposes of a class member who opts out of the class and files their own complaint, the class complaint does not toll a statute of repose. In support of the conclusion that the 3-year limitation is a statute of repose, Justice Kennedy points to the Court’s 2014 ruling in CTS v. Waldburger, which outlined clear distinctions between statutes of limitations and statutes of repose. Additionally, the Court distinguished this case from the case of American Pipe & Constr. Co. v. Utah, which held that the class complaint tolled Section 13’s 1-year statute of limitation. In American Pipe, the tolling rule was grounded in the traditional equitable powers of the judiciary which apply to the statute of limitations but does not apply to a statute of repose. The purpose of a statute of repose is to grant complete peace to defendants, and this supersedes the application of a tolling rule based in equity. As a result, the Court held the CALPERS complaint was outside the 3-year statute of repose and the 2nd Circuit judgment dismissing the complaint was affirmed.