Broker-Dealer Litigation - Greenberg Traurig LLP

1933. In opposition to the motions, the defendants argued that the putative intervenors’ claims
fell outside the applicable three-year statute of repose. The putative intervenors responded by
relying on American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), in which the Supreme
Court held that the filing of a class-action lawsuit tolls the statute of limitations for putative class
members. The court denied the putative intervenors’ motions, holding that American Pipe
tolling does not apply to statutes of repose.
In re Morgan Stanley Mortg. Pass-Through Certificates Litig., 2011 WL 4089580 (S.D.N.Y.
Sept. 15, 2011).
The court dismissed, without prejudice, plaintiffs’ claims under the Securities Act of
1933 due to the plaintiffs’ failure to specify how and when they discovered the alleged
misconduct giving rise to the claims. The court concluded that plaintiffs’ allegation regarding
discovery in “late 2008” was vague and inconsistent with positions they took in other
proceedings. The court rejected the defendants’ argument that the Securities Act claims of one
plaintiff pension fund were barred by the one-year statute of limitations under 15 U.S.C. § 77m,
concluding that downgrades of security certificates and public news articles and reports were
insufficient to put the pension fund on inquiry notice of the claims.
The court also held that the Securities Act claims asserted by newly-added plaintiffs were
timely under the tolling doctrine of American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974)
(where under certain circumstances, the commencement of a class action tolls the running of the
applicable statute of limitations for all class members, even where class status is later denied)
and were not barred by 15 U.S.C. § 77m’s three-year statute of repose. The court followed the
majority rule and concluded that the tolling principal articulated in American Pipe is legal in
nature, as it is derived from Federal Rule of Civil Procedure 23, and thus applies to statutes of
repose. In addition, the court held that American Pipe tolling was applicable even where the
original plaintiff who brought the class action lacked standing, reasoning that such a rule furthers
the policies of economy and efficiency that underpin the American Pipe doctrine and is
consistent with the purposes of the statute of repose.
Int’l Fund Mgmt. S.A. v. Citigroup, Inc., 2011 U.S. Dist. LEXIS 113660 (S.D.N.Y. Sept. 30,
2011).
The court denied the defendant’s motion to dismiss plaintiffs’ claims as time-barred
under the Securities Act of 1933. Prior to bringing their individual actions, plaintiffs were
members of the putative classes in two pending class actions alleging the same claims. The
defendants moved to dismiss, arguing that plaintiffs’ claims were barred by the one-year statute
of limitations and three-year statute of repose. The court denied the motion, holding that, under
American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), the statutes of limitations and repose
applicable to plaintiffs’ claims were both tolled during the pendency of the class actions and
thus, plaintiffs’ claims were timely.
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