Supreme Court: American Pipe Tolling Is Inapplicable to Section 13’s Three-Year Statute of Repose, Which Governs Claims Under Sections 11 and 12 of the Securities Act
01.05.18
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(Article from Securities Law Alert, Year in Review 2017)
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On June 26, 2017, the Supreme Court held that American Pipe tolling does not apply to the three-year statute of repose set forth in Section 13 of the Securities Act of 1933, which governs claims brought under Sections 11 and 12 of that Act.[1] California Public Employees Ret. Sys. v. ANZ Securities, 137 S. Ct. 2042 (2017).
The Court first reaffirmed that Section 13’s three-year bar sets forth a statute of repose. The Court reasoned that the statutory language “admits of no exception and on its face creates a fixed bar against future liability.” The Court emphasized that “[t]he purpose of a statute of repose is to create ‘an absolute bar on a defendant’s temporal liability’” that “is in general not subject to tolling.” Id. (quoting CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014)). With this framework, the Court held that “the American Pipe tolling rule does not apply to the 3-year bar mandated in § 13.” The Court explained that “the object of a statute of repose, to grant complete peace to defendants, supersedes the application of a tolling rule based in equity” such as the American Pipe tolling doctrine.
[1] Section 13 establishes a one-year statute of limitations and a three-year statute of repose for claims under Sections 11 and 12. The statute provides in relevant part that “[i]n no event shall any … action be brought to enforce a liability created under [Section 11] or [Section 12(a)(1)] … more than three years after the security was bona fide offered to the public, or under [Section 12(a)(2)] … more than three years after the sale.” 15 U.S.C. § 77m.