Securities Class Actions: For Whom the Bell Tolls

Abstract

This article analyzes and comments on the Supreme Court appeal in Public Employees’ Retirement System v. IndyMac MBS, Inc., No. 13-640, which was scheduled to be argued to the Court on October 6, 2014. In this case, the Court was to consider whether the filing of a putative class action under Section 13 of the Securities Act of 1933, which contains a three year limitation on bringing actions under that statute, was tolled by the American Pipe rule which suspends time limitations on pursuing the claims of putative class members. In American Pipe & Construction Co. v. Utah (1974), the Supreme Court held that the commencement of a class action suspends the statute of limitations as to all class members. In IndyMac, the Court was to address whether the American Pipe tolling decision applies to suspend the three-year time limit in the Securities Act with regard to the claims of putative class members. The Court received full briefing on the issues involved in tolling in securities and non-securities class litigation. However, in the week before oral argument, the parties settled the litigation. Consequently, the Court requested additional briefing from the parties concerning whether the Court should hear oral argument. The Court subsequently withdrew the case from the Court’s opening-week oral argument docket. Nonetheless, the tolling issue under the Securities Act of 1933 remains an open issue as a consequence of the Court’s decision not to proceed with oral arguments in the case. The briefs on appeal provide a useful primer on the tolling issue and the arguments relating to the applicability - or non-applicability - of the longstanding American Pipe tolling rule for ordinary class actions.

Keywords: Securities class actions, SEC Act of 1933, tolling in securities class actions, American Pipe v. Utah, American Pipe tolling rule, class action tolling, statutes of limitation, statutes of repose, Public Employees' Retirement System v. IndyMac MBS, Inc., cert improvidently granted