291 F. Supp. 3d 364
S.D. Ill.2018Background
- FDIC, as receiver for Colonial Bank, sued underwriters and depositors over misrepresentations in prospectus supplements for eight RMBS certificates Colonial bought in mid-2007; Colonials' heavy losses followed mortgage defaults and FDIC became receiver in August 2009.
- FDIC filed suit in 2012 (initially asserting only §11 and §15 claims under the 1933 Act), amended in 2017 to add five new claims: Alabama Securities Act (Counts A, B), Nevada Uniform Securities Act (Counts C, D), and §12(a)(2) of the 1933 Act (Count E).
- Defendants moved to dismiss the newly added claims as time-barred by statutes of repose/limitations and for undue delay; they also argued depositor defendants are not "sellers" under state law because they did not sell certificates to Colonial.
- Court analyzed applicable time bars: §12(a)(2) of the 1933 Act (3-year statute of repose), Nevada Act (5-year repose), Alabama Act (2-year statute of limitations, subject to relation back/tolling), and the FDIC extender statute.
- Court concluded §12(a)(2) and Nevada claims were extinguished by statutes of repose and cannot be revived by Rule 15(c) relation back; Alabama claims (limitations-based) related back to the 2012 complaint and survived; depositor defendants were not "sellers" under Alabama law and Alabama claims against them were dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether claims subject to statutes of repose (§12(a)(2) and Nevada Act) may relate back under Fed. R. Civ. P. 15(c) | Relation back to the 2012 complaint makes the 2017 amendments timely | Statutes of repose create an absolute bar that Rule 15(c) cannot circumvent; Rule 15 cannot abridge substantive repose rights | Dismissed: relation back cannot overcome statutes of repose; §12(a)(2) and Nevada claims time-barred |
| Whether Alabama Securities Act claims (statute of limitations) relate back under Rule 15(c) | Alabama claims arise from same conduct and thus relate back to 2012 pleading | Undue delay and prejudice arguments (asserted) | Allowed: limitations (not repose) govern; Rule 15(c) applies and Alabama claims relate back to 2012 |
| Whether depositor defendants are "sellers" under Alabama Securities Act §8-6-19(a)(2) | FDIC: Nomura suggests depositors can be statutory sellers (under federal law/SEC regs) | Depositors did not sell to Colonial; Pinter privity/seller test bars liability for remote sellers | Dismissed as to depositors: under Alabama law depositor defendants are not statutory sellers to Colonial |
| Whether Rule 15(c) (or Federal Rules) supersedes repose because Rules are later federal law | Relation back is a procedural rule and should apply; Rules have statutory force | Rules Enabling Act forbids rules that abridge substantive rights like repose | Court rejects plaintiff: Rules cannot be interpreted to modify substantive repose rights; repose controls |
Key Cases Cited
- California Pub. Employees' Ret. Sys. v. ANZ Sec., Inc., 137 S.Ct. 2042 (2017) (statute of repose creates an absolute bar on temporal liability)
- CTS Corp. v. Waldburger, 134 S.Ct. 2175 (2014) (distinguishing statutes of repose from statutes of limitations)
- Police & Fire Ret. Sys. of City of Detroit v. IndyMac MBS, Inc., 721 F.3d 95 (2d Cir. 2013) (Rule-based tolling/class-action tolling does not overcome §13 repose)
- Nomura Holding Am., Inc. v. Federal Housing Fin. Agency, 873 F.3d 85 (2d Cir. 2017) (SEC regs support treating depositors as statutory sellers under §12(a)(2) of the 1933 Act)
- Pinter v. Dahl, 486 U.S. 622 (1988) (to be a "statutory seller" requires a buyer-seller/privity-like relationship)
- American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974) (class-action tolling principles)