McCann v. Hy-Vee, Inc.
2011 U.S. App. LEXIS 23316
7th Cir.2011Background
- Denise McCann and Anthony McCann divorced in August 2002.
- The divorce decree transferred almost a third of Anthony’s Hy-Vee stock to Denise and set alimony through 2007 and ongoing until August 2012 unless stock was sold.
- Hy-Vee’s CFO allegedly told Denise the stock could be sold only upon certain triggering events, which purportedly kept her from losing alimony.
- On June 12, 2007 Hy-Vee agreed to buy back the transferred shares, paying Denise about $908,000 (Anthony sent $709,000; Denise later surrendered the shares in January 2008).
- Anthony stopped alimony after Hy-Vee’s 2007 buyback, depriving Denise of expected payments totaling $220,500 through 2012.
- Denise filed September 25, 2009 a securities-fraud complaint (Section 10(b)/Rule 10b-5) against Hy-Vee; district court dismissed as untimely under §1658(b).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1658(b)(2) is a statute of repose or limitations. | McCann argues a limitations approach (discovery-based start). | Hy-Vee argues a repose approach (starts from violation). | §1658(b)(2) is best treated as a statute of repose. |
| When did the 'violation' occur for §1658(b) purposes? | Injury or discovery could trigger the period. | Violation occurs at the time of the misrepresentation (August 2002). | Violation occurred in August 2002; suit in 2009 is untimely under §1658(b)(2). |
| Is Denise’s private action untimely under §1658(b) given the 2002 misrepresentation and 2007 stock buyback? | N/A | Time barred by five-year window from the violation. | Untimely; 2002 violation falls outside the five-year period. |
Key Cases Cited
- Merck & Co. v. Reynolds, 130 S. Ct. 1784 (U.S. 2010) (discusses discovery vs. injury timing for statute of repose/limitations in securities cases)
- In re Exxon Mobil Corp. Securities Litigation, 500 F.3d 189 (3d Cir. 2007) (treats §1658(b) as a statute of repose regime in some contexts)
- Beard v. J.I. Case Co., 823 F.2d 1095 (7th Cir. 1987) (illustrates distinction between limitations and repose)
- Roskam Baking Co. v. Lanham Machinery Co., 288 F.3d 895 (6th Cir. 2002) (illustrates limits vs. repose concepts in product/securities contexts)
- Schellenbach v. SEC, 989 F.2d 907 (7th Cir. 1993) (SEC enforcement can proceed without injury, informing scope of ‘violation’)