Starnes Canale Funeral Directors v. Regions Morgan Keegan Select
821 F.3d 780
| 6th Cir. | 2016Background
- Plaintiffs (Stein Plaintiffs and Canale Plaintiffs) invested in five RMK/Regions funds and lost ~90% of value in 2007–2008; plaintiffs allege overvaluation, concentration, and concealed risks and assert federal securities claims (Securities Act §§11,12(a)(2),15; Exchange Act §§10(b),20(a); Rule 10b-5).
- Various earlier proceedings: FINRA arbitrations (Stein recovered $2.5M; Canale Funeral arbitration denied), a 2008 Stein state-court suit (dismissed without prejudice), and the Rice state-court derivative action (dismissed with prejudice in 2011).
- Two putative class actions (In re Morgan Keegan and Willis) were filed in Dec 2007 and later centralized; class certification was eventually resolved (Willis certified Aug 2013; Morgan Keegan settlement/class approved Nov 2015).
- Plaintiffs filed individual federal complaints on Oct 25, 2013. Defendants moved to dismiss as time-barred; district court initially denied but then, on reconsideration applying Wyser-Pratte, dismissed as time-barred by statutes of limitations; the Sixth Circuit affirms but grounds dismissal on statutes of repose.
- Central legal questions: whether American Pipe tolling applies to plaintiffs who filed independent suits before class-certification rulings (Wyser-Pratte issue) and whether American Pipe tolling extends to statutes of repose (repose vs. limitations).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does American Pipe tolling apply when a putative class member files an independent action before class-certification is decided (Wyser-Pratte forfeiture)? | Plaintiffs: Wyser-Pratte is wrongly decided/minority rule; tolling should protect their timely rights despite filing independent actions or arbitrations. | Defendants: Wyser-Pratte controls in 6th Cir.; filing independent actions forfeits American Pipe tolling. | Court: Wyser-Pratte remains binding; plaintiffs forfeited tolling as to defendants named in the earlier class suits; but Wyser-Pratte does not extend forfeiture to defendants not named in the subsequent independent action. |
| Does American Pipe tolling extend to statutes of repose (e.g., Securities Act 3-year, Exchange Act 5-year repose)? | Plaintiffs: American Pipe tolled repose periods while class certification was pending, so their Oct 2013 suits are timely. | Defendants: Repose periods are absolute; American Pipe (equitable or Rule‑23 based) cannot toll repose; repose gives defendants substantive right to be free of liability. | Court: Joins Second Circuit (IndyMac) — American Pipe does not toll statutes of repose; repose bars plaintiffs’ claims. |
| Were plaintiffs’ claims barred by statutes of repose given alleged last misconduct in July 2008? | Plaintiffs: (implicitly) tolling should preserve claims; otherwise injustice from delay in class proceedings. | Defendants: Last alleged misconduct occurred by July 2008; three‑ and five‑year repose periods expired before Oct 25, 2013. | Court: Repose periods began by July 2008; claims filed Oct 2013 (beyond 3‑ and 5‑year repose) are time‑barred. |
| Can equitable exceptions (e.g., tolling) save the claims despite repose? | Plaintiffs: equitable/class-action tolling applies. | Defendants: statutes of repose are not subject to equitable tolling. | Court: Equitable tolling (and American Pipe) cannot overcome statutory repose; no exception applies. |
Key Cases Cited
- American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974) (class-action tolling of statutes of limitations)
- Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350 (1991) (Securities Act’s 1‑year/3‑year framework; three‑year period is repose)
- CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014) (distinguishing statutes of limitation and repose; repose not subject to equitable tolling)
- Wyser‑Pratte Mgmt. Co. v. Telxon Corp., 413 F.3d 553 (6th Cir. 2005) (6th Cir. rule: filing independent action before class‑certification forfeits American Pipe tolling)
- Police & Fire Ret. Sys. of City of Detroit v. IndyMac MBS, Inc., 721 F.3d 95 (2d Cir. 2013) (American Pipe does not toll statutes of repose)
- Joseph v. Wiles, 223 F.3d 1155 (10th Cir. 2000) (contrary view: American Pipe tolls repose)
- Merck & Co. v. Reynolds, 559 U.S. 633 (2010) (§1658(b)(2) five‑year limit is an unqualified repose giving total repose after five years)