Inside the Courts: Supreme Court Rules That Equitable Tolling Does Not Apply to Section 13 of the Securities Act

Skadden, Arps, Slate, Meagher & Flom LLP

Boris Bershteyn Robert A. Fumerton Jay B. Kasner Scott D. Musoff Susan L. Saltzstein

In one of the first cases argued before new Justice Neil Gorsuch, the Supreme Court in California Public Employees’ Retirement System v. ANZ Securities, Inc. (CalPERS), No. 16-373, slip op. at 16-17 (June 26, 2017), decided today that the three-year statute of repose under Section 13 of the Securities Act barred an individual plaintiff’s Section 11 claims. Justice Kennedy delivered the opinion, joined by Justices Roberts, Thomas, Alito and Gorsuch, affirming the Second Circuit’s underlying decision. Justice Ginsburg wrote the dissenting opinion, joined by Justices Breyer, Sotomayor and Kagan. The opinion marks a victory for defendants, holding that the tolling principle discussed in American Pipe is inapplicable to the three-year time bar. The Court applied a “straightforward analysis” and held that “[t]he 3-year time bar in Section 13 of the Securities Act is a statute of repose.” (Op. at 16.) The majority concluded that the “statute displaces the traditional power of courts to modify statutory time limits in the name of equity.” (Id.)

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