Broker-Dealer Litigation - Greenberg Traurig LLP

complaint lacked named plaintiffs who had purchased certain certificates but who failed to
intervene at that time, subsequently abandoned claims related to the certificate, and raised them
again when action on the certificates was time-barred. The court also denied motions to
intervene with respect to all offerings with expired statutes of repose, on the ground that, by their
terms, statutes of repose do not permit any form of tolling or application of the relation back
doctrine. Claims related to the sole offering that was not barred by the statute of repose were
found to be tolled and subsequently filed within the remaining limitations period, thus rendering
them timely under applicable statutes of limitation. Although the putative intervenors did not
have standing to assert the claims at issue, the court nonetheless permitted the claims to proceed
on the ground that holding otherwise would undermine the policies of efficiency and economy
served by Federal Rule of Civil Procedure 23 and American Pipe & Construction Co. v. Utah,
414 U.S. 538 (1974), which encourages parties like the putative intervenors to remain passive
during early stages of the class action rather than making protective filings to preserve their
claims (particularly where, as here, defendants were on notice of the claims sought to be asserted
by the putative intervenors). Putative intervenors who did not seek intervention within the
limitations period once the tolling period ended were time-barred and were not permitted to
intervene in order to assert those claims. The court denied the motion for leave to amend to add
certain underwriting defendants because the claims sought to be asserted related to time-barred
offerings for which the limitations period had run.
In re Lehman Bros. Sec. & Erisa Litig., 799 F.Supp.2d 258 (S.D.N.Y. 2011).
The district court granted in part and denied in part defendants’ motions to dismiss a third
amended class action complaint alleging violation of, inter alia, Section 11 of the Securities Act
of 1933, arising from a 2006 shelf registration statement pursuant to which over $31 billion in
debt and equity securities were issued. The court held that claims by twenty-four newly named
plaintiffs were timely under the statute of limitations given recent constructions of American
Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), pursuant to which the filing of a class
action suspends applicable statutes of limitations even where the putative class plaintiff does not
have standing to assert the claims at issue. Although timely for statute of limitations purposes,
the court held that the claims were time-barred to the extent the applicable statute of repose had
run; the court rejected application of any relation back theory because, by its terms, the statute of
repose has no exceptions. The court rejected valuation of commercial real estate as the basis for
a Section 11 claim given plaintiffs’ failure to allege that Lehman did not believe its valuations to
be true at the time they were issued, and given their failure to substantiate allegations that
Lehman violated Statement of Financial Accounting Standards 157. The court sustained alleged
misstatement and omissions for Section 11 claims to the extent such statements or omissions had
sufficiently stated a claim under the Securities Exchange Act of 1934 (including for allegedly
artificial reductions in net leverage, insufficient risk management practices, and significant
concentration of credit risk). The court also sustained alleged misstatements related to principal
protected notes because, at this stage of litigation, the court was unable to conclude as a matter of
law that repeated and emphasized statements about principal protection were offset sufficiently
by “inconspicuous and scattered warnings” in other SEC filings about Lehman’s solvency. The
Section 11 claim was sustained against an individual defendant who did not sign the registration
B.1
9