341 F. Supp. 3d 698
S.D. Tex.2018Background
- Plaintiffs are individual and institutional investors asserting Exchange Act claims arising from alleged misstatements and omissions related to the Deepwater Horizon incident.
- Defendants moved for judgment on the pleadings arguing Exchange Act claims based on alleged misstatements older than five years are barred by the Exchange Act's five-year statute of repose, 28 U.S.C. § 1658(b)(2).
- The court previously applied American Pipe tolling to these claims in 2014, treating that tolling rule as legal rather than equitable; the Supreme Court later held in 2017 that American Pipe tolling is equitable in ANZ Securities.
- Defendants renewed the statute-of-repose argument after ANZ Securities; plaintiffs contended the motion was procedurally improper and argued ANZ does not control here.
- The central legal question is whether American Pipe tolling applies to the Exchange Act’s five-year repose period (i.e., whether class-action filing tolls that repose period).
- The Court concluded the Exchange Act five-year bar is a statute of repose and, applying ANZ Securities, held American Pipe’s equitable tolling does not apply; Defendants’ motion was granted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether American Pipe tolling extends the Exchange Act 5-year period | American Pipe tolling applies to Exchange Act claims; prior law-of-the-case supports tolling | ANZ Securities confirmed American Pipe is equitable; equitable tolling cannot extend a statute of repose | Court held American Pipe does not toll the Exchange Act 5-year statute of repose; claims older than five years are barred |
| Whether ANZ Securities controls despite statutory differences | ANZ is statutory interpretation of a different statute and thus not dispositive here | ANZ’s holding that American Pipe is equitable applies generally; Exchange Act’s structure shows a repose intent | Court found Exchange Act’s limitation mirrors a statute of repose and ANZ controls |
| Procedural propriety of raising the repose argument now | Motion is untimely, re-litigates issues, and was not raised earlier | Rule 12(c) may be used; intervening Supreme Court authority justifies reexamination | Court allowed the Rule 12(c) motion given the intervening change in law |
| Claim preclusion by judicial estoppel based on defendants' prior positions | Defendants previously distinguished Securities Act and Exchange Act and should be estopped | Prior positions concerned different statutory issues; not a direct contradiction | Court rejected judicial estoppel argument |
Key Cases Cited
- American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974) (establishes tolling rule for class actions but analyzed by later courts as equitable or statutory)
- Cal. Pub. Employees' Ret. Sys. v. ANZ Securities, Inc., 137 S. Ct. 2042 (2017) (holds American Pipe tolling is equitable and cannot toll a statute of repose)
- Merck & Co. v. Reynolds, 559 U.S. 633 (2010) (characterizes Section 1658(b)(2)’s five-year period as providing defendants total repose)
- CTS Corp. v. Waldburger, 573 U.S. 1 (2014) (discusses the distinct purposes of statutes of repose and reluctance to apply equitable tolling to repose)