How Long Is Three Years?
The plaintiffs bar is always looking for new crevices of the law to exploit for fun and profit, and so we didn’t want to note the end of the Supreme Court term without celebrating Monday’s 5-4 decision in California Public Employees’ Retirement System v. ANZ Securities, Inc.
The case revolved around whether Calpers could proceed with a 2011 complaint over securities the pension fund purchased from offerings in 2007 and 2008. The Securities Act of 1933 says that in “no event” shall an action be brought “more than three years after the security was bona fide offered to the public.”
Other parties filed a class-action suit in 2008, but Calpers opted out and pursued its own claim, presumably because the plaintiffs thought they could eke out a bigger payout by going alone. Calpers filed in February 2011, past the three-year deadline enumerated in the law, which is why the Second Circuit Court of Appeals tossed the action. The plaintiffs argued that the deadline ought to be tolled (extended) given that the class-action litigation was filed in the allotted time frame.
The Court ruled that the three-year limit “admits of no exception” and “creates a fixed bar against future liability,” as Justice Anthony Kennedy noted in his opinion for the majority. The time limit is a statute of repose, which means it exists to protect “the defendant from an interminable threat of liability” and that the courts cannot intervene to delay the deadline, unlike some circumstances involving statutes of limitation.
The four liberal Justices dissented, which is a testament to their imaginations even when Congress writes language as unambiguous as in “no event.” Plaintiffs will keep trying to game the tort system, but Monday’s decision is an important victory for the plain text of the law.
Appeared in the June 30, 2017, print edition.