Irvin S. LIEBERMAN, and all others similarly situated, Appellant v. CAMBRIDGE PARTNERS, L.L.C.; J.B. Hanauer & Co. L-3 Communications Corp. Appellant v. Wayne Clevenger, Larry Colangelo, John Fleury, Edward Gorman, Midmark Capital, L.P., Midmark Associates, Inc., Milan Resanovich, Joseph Robinson and Paul Tischler.
Nos. 04-3079, 04-3869.
United States Court of Appeals, Third Circuit.
Argued Sept. 26, 2005. Dec. 27, 2005.
As Amended Feb. 8, 2006.
440 F.3d 482
However, this does not help UTN now because UTN and Chase agreed in the district court that Lapp factors (1) through (6) and (8) were the most relevant factors for the district court to analyze. Chase, 333 F.Supp.2d at 245 n. 14. (“the parties agree that, because their goods compete in the same field, the most relevant Lapp factors are (1) through (6) and (8).“). UTN cannot fault the district court for not analyzing its claim under factor (9) when it agreed that that factor was of dubious relevance. The district court explained it was not discussing Lapp factors 7, 9, and 10 because they “are not apposite for directly competing goods...“. Id. Moreover, UTN does not even now discuss how the district court‘s failure to address any factor, including factor (9), resulted in prejudice or altered the outcome in this case.
V. CONCLUSION
For all of the above reasons, we will affirm the district court.
Matthew J. Siembieda, (Argued), Carl M. Buchholz, Timothy D. Katsiff, Evan H. Lechtman, Blank Rome LLP, Philadelphia, PA, Mark D. Simon, L-3 Communications Corp., Camden, NJ, for Appellant L-3 Communications Corp.
Lawrence M. Rolnick, Thomas E. Redburn, Jr., (Argued), Lowenstein Sandler, PC, Roseland, NJ, Robert N. Feltoon, Jacquelyn J. Ager, Conrad O‘Brien Gellman & Rohn, Philadelphia, PA, for Appellee J.B. Hanauer & Co.
John F. Smith, III, Charles L. Becker, Reed Smith LLP, Philadelphia, PA, Marc D. Powers, Matthew H. Charity, Baker & Hostetler LLP, New York, NY, for Appellees John Fleury, Edward Gorman and Paul Tischler.
Lewis D. Prutzman, Ralph A. Siciliano, Tannebaum Helpern Syracuse & Hirschtritt LLP, New York, NY, for Appellee Milan Resanovich.
Before RENDELL, FUENTES, and GARTH, Circuit Judges.
OPINION OF THE COURT
GARTH, Circuit Judge.
In these two cases, which have been consolidated on appeal, plaintiff-appellants Irvin S. Lieberman (“Lieberman“) 1 and L-3 Communications Corp. (“L-3“) instituted federal securities fraud actions after the enactment of
At issue in these cases is whether the amended limitations period of Sarbanes-Oxley revives previously expired securities fraud claims. We hold that it does not, and in doing so, join the other courts of appeals that have addressed this same question. See In re Enterprise Mortg. Acceptance Co., LLC Sec. Litig., 391 F.3d 401, 406 (2d Cir.2005) (holding that Sarbanes-Oxley does not revive stale claims); Foss v. Bear, Stearns & Co., Inc., 394 F.3d 540, 542 (7th Cir.2005) (same); In re ADC Telecomm., Inc. Sec. Litig., 409 F.3d 974, 978 (8th Cir.2005) (same). Accordingly, we will affirm the District Courts’ respective orders dismissing the actions.
I.
The facts relevant to the disposition of these appeals—i.e., those pertaining to the
A. Irvin S. Lieberman
On or about April 14, 2003, Irvin S. Lieberman filed a putative securities fraud class action against J.B. Hanauer & Company (“Hanauer“) in the United States District Court for the Eastern District of Pennsylvania. 4 In effect, Lieberman alleged that Hanauer, as underwriter of certain debt securities issued in a public offering on April 21, 1998, induced investors to purchase the securities by misrepresentation, deceit and fraud, in contravention of the federal securities law. Lieberman claimed that the investors became aware of the alleged misrepresentations only in March 2003.
The complaint was subsequently amended, and thereafter, Hanauer moved to dismiss the amended complaint for failure to state a claim under
The District Court granted Hanauer‘s motion and dismissed the amended class action complaint in its entirety, declining to apply Sarbanes-Oxley to revive Lieberman‘s expired claims. 5 Lieberman appealed.
B. L-3 Communications Corp.
On July 1, 2003, L-3 Communications Corp., a leading merchant supplier of secure communications technology and other similar products, filed a securities fraud action in the United States District Court for the Eastern District of Pennsylvania, naming as defendants various officers and shareholders of SPD Technologies, Inc. (“SPD Technologies“) and a wholly-owned subsidiary, SPD Electrical Systems, Inc. (“SPD Electrical“). SPD Electrical is a manufacturer of circuit breakers and switchgear for the United States Navy‘s nuclear submarines and surface ships.
As relevant here, the complaint, advancing claims under both federal and state law, alleged that on August 13, 1998, L-3 entered into a merger agreement with SPD Technologies and Midmark Capital, L.P., a majority shareholder of SPD Technologies, whereby L-3 purchased all outstanding shares of SPD Technologies. The complaint further alleged that the defendants engaged in a deceptive scheme designed to (1) induce L-3 to pay an artificially high purchase price for the company 5 through material misrepresentations and
In a thorough and closely-reasoned opinion, Judge Brody granted the defendants’ motion and held that Sarbanes-Oxley, contrary to L-3‘s contentions, did not overcome the strong presumption against revival of time-barred claims, especially where those claims had been extinguished by a statute of repose. Under the then-applicable 1-and-3-year limitations scheme, Judge Brody concluded, L-3‘s claims had expired on August 13, 2001, three years after the date of the merger and nearly one year before the enactment of Sarbanes-Oxley. Judge Brody declined to exercise supplemental jurisdiction over the remaining state claims. 6 This appeal followed.
II.
Lieberman and L-3 now ask us to reverse the decisions below, which held that the extended limitations period of Sarbanes-Oxley did not apply to revive their expired federal securities fraud claims. Because both cases involve the identical legal issue, the parties submitted a Joint Motion for Consolidation for Purposes of Disposition. The Court granted that motion on November 5, 2004. 7
We have jurisdiction over the District Courts’ final orders dismissing the respective actions pursuant to
III.
A.
Prior to the enactment of Sarbanes-Oxley,
The 1-year period, by its terms, begins after discovery of the facts constituting the violation, making tolling unnecessary. The 3-year limit is a period of repose inconsistent with tolling... Because the purpose of the 3-year limitation is clearly to serve as a cutoff, we hold that tolling principles do not apply to that period.
Id.
As part of Sarbanes-Oxley, enacted on July 30, 2002, Congress amended the 1-
(a) [A] private right of action that involves a claim of fraud, deceit, manipulation, or contrivance in contravention of a regulatory requirement concerning the securities laws, as defined in section 3(a)(47) of the Securities Exchange Act of 1934 (
15 U.S.C. [§] 78c(a)(47) ), may be brought not later than the earlier of-(1) 2 years after the discovery of the facts constituting the violation; or
(2) 5 years after such violation.
(b) EFFECTIVE DATE.-The limitations period provided by
section 1658(b) of title 28, United States Code , as added by this section, shall apply to all proceedings addressed by this section that are commenced on or after the [July 30, 2002,] date of enactment of this Act.(c) NO CREATION OF ACTIONS.-Nothing in this section shall create a new, private right of action.
Public Company Accounting Reform and Investor Protection Act of 2002,
Both Lieberman and L-3 maintain that
The Appellees, on the other hand, contend that Lampf provided the governing limitations structure for private securities fraud claims at the time of the alleged fraudulent conduct in each case. They further contend that Lieberman‘s and L-3‘s claims had been extinguished by the then-applicable 3-year period of repose prior to the enactment of Sarbanes-Oxley. The Appellees submit that Congress never intended for Sarbanes-Oxley to apply retroactively to revive claims already extinguished by a statute of repose.
The question we must decide, then, is whether
B.
We begin our analysis with a clarification of the question presented. Retroactive application of a new statute, such as
Providing that a statute of limitations should be “applied retroactively” is a broad brush approach to what is actually a more specific inquiry. Retroactive application can reach two categories of cases: first, a group on which the statute has not run at the time the statute is amended; and second, cases on which the existing statute has run at the time of amendment. The second group is affected not only by questions of the retroactive application of the statute, but also by the need to consider the question of revival of barred claims.
Kansas Pub. Employees Ret. Sys. v. Reimer & Koger Assocs., Inc., 61 F.3d 608, 615 (8th Cir.1995) (holding that amendment to state limitations statute applied retroactively but did not revive time-barred actions). The present appeals fall into the second group of cases.
Here, we decide only whether Congress intended for
C.
The Supreme Court has frequently noted that there is a “presumption against retroactive legislation [that] is deeply rooted in our jurisprudence.” Landgraf, 511 U.S. at 265. The presumption arises because “[e]lementary considerations of fairness dictate that individuals should have an opportunity to know what the law is and to conform their conduct accordingly.” Id. Consequently, “congressional enactments... will not be construed to have retroactive effect unless their language requires this result.” Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208, 109 S.Ct. 468, 102 L.Ed.2d 493 (1988).
In Landgraf v. USI Film Products, the Supreme Court set forth a two-part test for determining whether a particular statute applies retroactively. 511 U.S. at 280. At the first stage, a court must determine if Congress has expressly prescribed the statute‘s intended reach. Id. If Congress has done so, the inquiry ends, and the court enforces the statute as it is written. Id. If the statute is ambiguous or contains no express command, a court must examine
1. Congressional Intent
In accordance with Landgraf, we first look to the plain language of
In addition, Lieberman and L-3 read
Application of Sarbanes-Oxley to Lieberman‘s and L-3‘s claims, previously extinguished by the 3-year statute of repose, would create new causes of actions. As the Supreme Court has noted, “extending a statute of limitations after the preexisting period of limitations has expired impermissibly revives a moribund cause of action.” Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939, 950, 117 S.Ct. 1871, 138 L.Ed.2d 135 (1997) (citing Chenault v. United States Postal Serv., 37 F.3d 535, 539 (9th Cir.1994) (relying on Landgraf in holding “that a newly enacted statute that lengthens the applicable statute of limitations may not be applied retroactively to revive a plaintiff‘s claim that was otherwise barred under the old statutory scheme because to do so would alter the substantive rights of a party and increase a party‘s liability“)); see also Enterprise Mortg., 391 F.3d at 407 (“Where a plaintiff is empowered by a new statute to bring a cause of action that previously had no basis in law, a new cause of action has, in some sense of the word, been created.“).
The salience of
In general, a statute of repose acts to define temporally the right to initiate suit against a defendant after a legislatively determined time period. Unlike a statute of limitations, a statute of repose is not a limitation of a plaintiff‘s remedy, but rather defines the right involved in terms of the time allowed to bring suit.
“[S]tatutes of limitations bear on the availability of remedies and, as such, are subject to equitable defenses..., the various forms of tolling, and the potential application of the discovery rule.” In contrast, statutes of repose affect the availability of the underlying right: That right is no longer available on the expiration of the specified period of time. In theory, at least, the legislative bar to subsequent action is absolute, subject to legislatively created exceptions... set forth in the statute of repose.
Id. at 102 (quoting Calvin W. Corman, Limitation of Actions, § 1.1, at 4-5 (1991)).
If, as the Supreme Court has suggested, extending a statute of limitations after the pre-existing period of limitations has expired would essentially create a new cause of action, see Hughes Aircraft, 520 U.S. at 950, then a fortiori applying Sarbanes-Oxley to claims extinguished by a period of repose would unequivocally create a new cause of action. Compare Chenault, 37 F.3d at 538-39 (declining to apply new statute retroactively to revive a claim that would otherwise be stale under old statute of limitations). Congress undoubtedly possesses the powers to resurrect claims extinguished by a statute of repose, no less than claims barred by a statute of limitations, but it must manifest those powers in the clearest possible terms.
It also bears mention that the legislative history of
Section 804‘s precursor, Section 4 of the proposed Corporate and Criminal Fraud Accountability Act of 2002, S. No.2010, was introduced by Senator Patrick Leahy in March 2002. Nothing in the Senate Committee Report for the proposed Act indicates that the extension of the statute of limitations was intended to revive expired claims or that Congress was even considering such a thing. See S.Rep. No. 107-146 (2002). Nor do the statements Senator Leahy made during the Conference Committee meeting on Sarbanes-Oxley, reflect any intention to revive expired claims. See Conference Report on Corporate Responsibility Legislation, 107th Cong., July 24, 2002, reprinted in Federal News Service (2002).
Enterp. Mortg., 391 F.3d at 408. In arguing to the contrary, Lieberman and L-3 ignore the fact that congressional intent to apply the statute retroactively is different from congressional intent to revive expired claims.
We therefore conclude that there is no clear evidence that Congress intended
Having concluded that there is no clear evidence that Congress intended for
Lieberman and L-3 essentially argue that application of
Moreover, as previously stated, we are dealing with claims extinguished by a statute of repose. Lieberman‘s and L-3‘s claims would therefore affect substantive rights by creating new causes of action. We can envision no greater retroactive effect than this. 13
We conclude that extending the amended statute of limitations to revive expired securities fraud claims would have an impermissible retroactive effect. In accordance with Landgraf then, we decline to apply Section 804 to revive Lieberman‘s and L-3‘s expired claims.
IV.
As noted, we are not the first circuit court to consider whether Sarbanes-Oxley revives previously expired securities fraud claims. Three of our sister courts of appeals have already done so, and in each case, they have declined to apply Section 804 to such claims as we do here. See Enterprise Mortg., 391 F.3d at 409-10; Foss, 394 F.3d at 542; In re ADC Telecomm., Inc. Sec. Litig., 409 F.3d at 978. 14
Accordingly, we will affirm the District Courts’ respective decisions dismissing the actions.
No. 05-1002.
United States Court of Appeals, Third Circuit.
Argued Oct. 19, 2005.
Jan. 5, 2006.
As Amended on Rehearing Feb. 1, 2006.
Michael P. Malakoff, Erin M. Brady, (Argued), Malakoff, Doyle & Finberg, Pittsburgh, PA, for Appellant.
Martin C. Bryce, Jr., (Argued), Ballard, Spahr, Andrews & Ingersoll, Philadelphia, PA, for Appellee.
Before SMITH, STAPLETON, and NYGAARD, Circuit Judges.
OPINION OF THE COURT
NYGAARD, Circuit Judge.
At issue in this appeal is whether the Truth in Lending Act requires all pertinent credit information be disclosed by a single creditor, or whether the requirements of the TILA can be satisfied if some of the required credit information is disclosed by a third party. More specifically, we address the question of whether a creditor violated the provisions of the TILA when it excluded certain debt cancellation fees from the calculation of the finance charge without disclosing the amount of the fees and that the debt cancellation coverage was voluntary, despite the fact that the disclosures were ultimately made by a non-creditor third party.
Notes
- There is a strong presumption against applying a statute in a manner that would attach new legal consequences to events completed before the statute‘s enactment, i.e., a manner that would impair rights a party possessed when he acted, increase a party‘s liability for past conduct, or impose new duties.
- If Congress has focused on the issue, has determined that the benefits of retroactivity outweigh the potential for disruption or unfairness, and has provided unambiguous evidence of its conclusion by directing that retroactive effect be given, then, and only then, will the presumption be overridden.
- Consistent with these principles, normal rules of statutory construction may apply to remove... the possibility of retroactivity. Nothing short of an unambiguous directive, however, will justify giving a statute a retroactive effect. Thus, when normal rules of statutory construction indicate that a statute is intended to be applied in a manner involving no retroactive effect, a Court need inquire no further. On the other hand, if such construction suggests that a retroactive effect may have been intended, the traditional presumption nevertheless bars retroactive application unless an unambiguous congressional directive is found.
Lieberman and L-3 compare the language of Section 804 to the language quoted by the Martin court as unambiguously prescribing the temporal reach of the statute. However, Martin (or Landgraf) never addressed the question, presented here, of whether a statute should be given retroactive effect to revive expired claims.
The same holds true with respect to United States v. One “Piper” Aztec “F” De Luxe Model 250 PA 23 Aircraft Bearing Serial No. 27-7654057 (Piper Aztec), 321 F.3d 355 (3d Cir.2003), where this Court interpreted the Civil Asset Forfeiture Reform Act (“CAFRA“). Under CAFRA, in “any forfeiture proceeding commenced on or after [August 23, 2000],” the government must provide forfeiture under a different burden of proof-preponderance of the evidence. Id. at 357. The Court found that the language in the statute was clear and unambiguous, rejecting the argument for retroactive application to cases filed before but pending on the effective date. Id. at 357-58.
Focusing on this Court‘s conclusion that CAFRA‘s language clearly prescribed the temporal reach of the statute, Lieberman and L-3 argue that, in Section 804, which contains substantially identical language, Congress has also clearly prescribed the relevant temporal scope. Piper Aztec, however, did not consider the revival of stale claims.
Lieberman and L-3 also rely on two cases which arguably have interpreted similar statutory language to include previously expired claims. See International Union of Elec., Radio and Mach. Workers, AFL-CIO, Local 790 v. Robbins & Myers, Inc., 429 U.S. 229, 242-43, 97 S.Ct. 441, 50 L.Ed.2d 427 (1976) (holding amendment to limitations period for filing EEOC complaints applied to previously expired but currently pending claim) and Alabama Dry Dock and Shipbuilding Corp. v. Sowell, 933 F.2d 1561, 1563-65 (11th Cir.1991) (interpreting statute‘s instruction that it “shall apply both with respect to claims filed after such date and to claims pending on such date” to include previously expired claims); overruled on other grounds, Bath Iron Works Corp. v. Director, Office of Workers’ Compensation Programs, U.S. Dept. of Labor, 506 U.S. 153, 113 S.Ct. 692, 121 L.Ed.2d 619 (1993). As the Appellees point out, these cases did not deal with claims extinguished by statutes of repose, as opposed to statutes of limitations. Nor did either of these cases deal with a provision similar to Section 804(c). In any event, they both predate Hughes Aircraft. We thus find them inapposite.