12 F.4th 337
3d Cir.2021Background:
- SEPTA invested pension funds in Orrstown Bank's March 2010 stock offering and later bought stock on the open market; disclosures in 2011–2012 allegedly revealed misrepresentations and caused the stock price to fall.
- In May 2012 SEPTA sued on behalf of two classes: a Securities Act class tied to the March 2010 offering and an Exchange Act (open-market) class; early amended complaints were filed and litigated.
- The District Court allowed a timely First Amended Complaint, then after a Second Amended Complaint dismissed many Securities Act and some Exchange Act claims (but left certain Exchange Act claims against Orrstown defendants); discovery was delayed by regulatory review.
- In April 2019 SEPTA sought leave to file a Third Amended Complaint to reassert previously dismissed Securities and Exchange Act claims (and revive claims against Underwriters, the Auditor, and some officers) based on discovery; defendants argued those reasserted claims were time-barred by the Securities Act’s 3-year and the Exchange Act’s 5‑year statutes of repose.
- The District Court granted leave to amend, reasoning the reasserted claims were part of an action brought within the repose periods and that its earlier partial dismissals did not end the action under Rule 54(b); defendants obtained interlocutory appeal under 28 U.S.C. §1292(b).
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 15(c) applies when an amendment merely restates or amplifies an original claim | Rule 15(c) covers amendments that add detail or particularity to existing claims | Rule 15(c) should not apply to revive previously dismissed claims after repose | Held: Yes — Rule 15(c) applies to amplifications/restatements of original claims (Bensel line of authority). |
| Whether relation back under Rule 15(c) can operate to avoid statutes of repose | Relation back preserves the original filing date without extending the repose period and so may apply | Statutes of repose are absolute and their unqualified protection forbids relation back | Held: Yes — Rule 15(c) may permit relation back here; allowing it does not extend the repose period or disturb vested repose rights when the action was timely filed. |
| Whether the Rules Enabling Act forbids applying Rule 15(c) in a way that affects substantive repose rights | REA does not bar relation back because no vested repose right exists while a plaintiff’s timely action is pending | Applying Rule 15(c) would abridge defendants’ substantive right to repose, violating the REA | Held: No violation — defendants had no vested right to repose as to SEPTA because the action was pending when repose ran, so REA does not bar relation back here. |
| Whether the District Court abused its discretion in granting leave to amend under Rule 15(a) | Leave was proper because relation back (and Rule 15 standards) make the amendments timely and allow merits resolution | Amendment would be futile because repose periods had expired | Held: No abuse — because relation back can render the amendments timely, the District Court did not err in granting leave under Rule 15(a). |
Key Cases Cited
- Cal. Pub. Emps.' Ret. Sys. v. ANZ Sec., Inc., 137 S. Ct. 2042 (U.S. 2017) (statutes of repose create an "unqualified" temporal bar and are not subject to equitable tolling)
- CTS Corp. v. Waldburger, 573 U.S. 1 (U.S. 2014) (statutes of repose set an outer limit on the right to bring actions)
- Bensel v. Allied Pilots Ass'n, 387 F.3d 298 (3d Cir. 2004) (relation-back covers amendments that restate or amplify original claims)
- Krupski v. Costa Crociere S.p.A., 560 U.S. 538 (U.S. 2010) (analytical distinction between Rule 15(a) leave to amend and Rule 15(c) relation back)
- Crostley v. Lamar County, 717 F.3d 410 (5th Cir. 2013) (relation-back analysis applied where initial suit was filed before limitations expired)
- Police & Fire Ret. Sys. v. IndyMac MBS, Inc., 721 F.3d 95 (2d Cir. 2013) (discusses limits on using procedural rules to avoid repose and REA concerns; distinguished in this opinion)
- In re Exxon Mobil Corp. Sec. Litig., 500 F.3d 189 (3d Cir. 2007) (explains defendant-friendly purpose of statutes of repose)