Class Action Timing Case Granted High Court Review

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By Antoinette Gartrell

The U.S. Supreme Court has agreed to decide a class-litigation timeliness issue that could revive a lawsuit against the underwriters of more than $31 billion in Lehman Brothers’ debt offerings ( Calif. Pub. Emp. Ret. Sys. v. ANZ Securities, Inc., U.S., No. 16-373, 1/13/17 ).

The justices will hear an appeal from the California Public Employees’ Retirement System on the applicability of “ American Pipe tolling” to a three-year time limit set out in 1933 Securities Act Section 13, with respect to the claims of presumed class members. The justices had decided to tackle the topic two years ago in an unrelated case, but the parties settled their differences before oral argument.

In American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), the high court ruled in an antitrust case that the commencement of a class action suspends the applicable statute of limitations as to all would-be class members.

Timing Turmoil

The pension fund alleged in 2011 that the underwriters didn’t disclose risks related to Lehman investments in subprime mortgages in the years before the firm’s demise. The district court dismissed the claims as time-barred and the U.S. Court of Appeals for the Second Circuit affirmed. It said that the inapplicability of American Pipe tolling to a statute of repose “turns on the nature of the tolling rule and its ineffectiveness against statutes of repose, not on whether the named plaintiffs also have standing to assert claims on behalf of a class.” The decision conflicted with a Tenth Circuit ruling that a pending class action tolls the ‘33 Act’s statute of repose.

In its petition to the high court, CalPERS told the justices that its ’33 Act Section 11 claims would have been timely if the three-year statute of repose had been tolled by the filing of a class lawsuit based on the same alleged misconduct.

CalPERS is represented by Thomas C. Goldstein of Goldstein & Russell PC, Bethesda, Md. ANZ Securities is represented by Victor L. Hou of Cleary Gottlieb Steen & Hamilton LLP, New York.

To contact the reporter on this story: Antoinette Gartrell in Washington at

To contact the editors responsible for this story: Phyllis Diamond at; Seth Stern at

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