Inside the Courts: Supreme Court Agrees to Review American Pipe Tolling Issue

Skadden, Arps, Slate, Meagher & Flom LLP

Jay B. Kasner Edward B. Micheletti Peter B. Morrison Amy S. Park Noelle M. Reed Charles F. Smith Jennifer L. Spaziano

This morning, the Supreme Court granted the writ of certiorari in Public Employees Retirement System of Mississippi v. IndyMacMBS, Inc. The petition raises an issue regarding the application of American Pipe tolling to claims brought under the Securities Act of 1933. In American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), the Court held that “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.” Id. at 554.

The question presented in IndyMac is whether, applying American Pipe tolling, the filing of a putative class action serves to satisfy the three-year period for filing a claim contained in Section 13 of the Securities Act of 1933. The decision below, in the United States Court of Appeals for the Second Circuit, held that Section 13 establishes a statute of repose, rather than a statute of limitations, and cannot be subject to American Pipe tolling.

The Supreme Court’s decision could have broad implications for the application of American Pipe tolling in securities actions.

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