California Public Employees' Retirement System v. ANZ Securities, Inc. ( 2017 )

(Slip Opinion) OCTOBER TERM, 2016 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM v. ANZ SECURITIES, INC., ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE SECOND CIRCUIT
No. 16–373. Argued April 17, 2017—Decided June 26, 2017
Section 11 of the Securities Act of 1933 gives purchasers of securities “a
right of action against an issuer or designated individuals,” including
securities underwriters, for any material misstatements or omissions
in a registration statement. Omnicare, Inc. v. Laborers Dist. Council
Constr. Industry Pension Fund, 575 U. S. ___, ___; see 15 U.S. C.
§77k(a). Section 13 provides two time limits for §11 suits. The first
sentence states that an action “must be brought within one year after
the discovery of the untrue statement or the omission, or after such
discovery should have been made by the exercise of reasonable dili-
gence . . . .” The second sentence provides that “[i]n no event shall
any such action be brought . . . more than three years after the secu-
rity was bona fide offered to the public . . . .” §77m.
In 2007 and 2008, Lehman Brothers Holdings Inc. raised capital
through several public securities offerings. Petitioner, the largest
public pension fund in the country, purchased some of those securi-
ties; and it is alleged that respondents, various financial firms, are li-
able under the Act for their participation as underwriters in the
transactions. In 2008, a putative class action was filed against re-
spondents in the Southern District of New York. The complaint
raised §11 claims, alleging that the registration statements for cer-
tain of Lehman’s 2007 and 2008 securities offerings included materi-
al misstatements or omissions. Because the complaint was filed on
behalf of all persons who purchased the identified securities, peti-
tioner was a member of the putative class.
In February 2011, more than three years after the relevant securi-
ties offerings, petitioner filed a separate complaint against respond-
ents in the Northern District of California, alleging violations identi-
2 CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM v. ANZ SECURITIES, INC.
Syllabus
cal to those in the class action on petitioner’s own behalf. Soon
thereafter, a proposed settlement was reached in the putative class
action, but petitioner opted out of the class. Respondents then moved
to dismiss petitioner’s individual suit, alleging that the §11 violations
were untimely under the 3-year bar in the second sentence of §13.
Petitioner countered that the 3-year period was tolled during the
pendency of the class-action filing, relying on American Pipe & Con-
struction Co. v. Utah, 414 U.S. 538. The trial court disagreed, and
the Second Circuit affirmed, holding that American Pipe’s tolling
principle is inapplicable to the 3-year bar. It also rejected petitioner’s
alternative argument that the timely filing of the class action made
petitioner’s individual claims timely as well.
Held: Petitioner’s untimely filing of its individual complaint more than
three years after the relevant securities offering is ground for dismis-
sal. Pp. 4–17.
(a) Section 13’s 3-year time limit is a statute of repose not subject
to equitable tolling. Pp. 4–14.
(1) The two categories of statutory time bars—statutes of limita-
tions and statutes of repose—each have “a distinct purpose.” CTS
Corp. v. Waldburger, 573 U. S. ___, ___. Statutes of limitations are
designed to encourage plaintiffs “ ‘to pursue diligent prosecution of
known claims,’ ” id., at ___, while statutes of repose “effect a legisla-
tive judgment that a defendant should ‘be free from liability after the
legislatively determined period of time,’ ” id., at ___. For this reason,
statutes of limitations begin to run “when the cause of action ac-
crues,” while statutes of repose begin to run on “the date of the last
culpable act or omission of the defendant.” Id., at ___.
From the structure of §13, and the language of its second sentence,
it is evident that the 3-year bar is a statute of repose. The instruc-
tion that “[i]n no event” shall an action be brought more than three
years after the relevant securities offering admits of no exception.
The statute also runs from the defendant’s last culpable act (the se-
curities offering), not from the accrual of the claim (the plaintiff’s dis-
covery of the defect).
This view is confirmed by §13’s two-sentence structure. The pair-
ing of a shorter statute of limitations and a longer statute of repose is
a common feature of statutory time limits. See, e.g., Gabelli v. SEC,
568 U.S. 442, 453. Section 13’s history also supports the classifica-
tion. The 1933 Securities Act’s original 2-year discovery period and
10-year outside limit were shortened a year later. The evident design
of the shortened period was to protect defendants’ financial security
by reducing the open period for potential liability. Pp. 4–7.
(2) The determination that the 3-year period is a statute of re-
pose is critical here, for the question whether a tolling rule applies to
Cite as: 582 U. S. ____ (2017) 3
Syllabus
a given statutory time bar is one “of statutory intent.” Lozano v.
Montoya Alvarez, 572 U.S. 1, ___. In light of the purpose of a statute
of repose, the provision is in general not subject to tolling. Tolling is
permissible only where there is a particular indication that the legis-
lature did not intend the statute to provide complete repose but in-
stead anticipated the extension of the statutory period under certain
circumstances. A statute of repose implements a “ ‘legislative deci-
sio[n] that . . . there should be a specific time beyond which a defend-
ant should no longer be subjected to protracted liability.’ ” CTS, 573
U. S., at ___. The unqualified nature of that determination super-
sedes the courts’ residual authority and forecloses the extension of
the statutory period based on equitable principles. Thus, the Court
repeatedly has stated that statutes of repose are not subject to equi-
table tolling. See, e.g., id., at ___–___. Pp. 7–8.
(3) The tolling decision in American Pipe derived from equity
principles and therefore cannot alter the unconditional language and
purpose of the 3-year statute of repose. The source of the tolling rule
applied in American Pipe is the judicial power to promote equity, not
the power to interpret and enforce statutory provisions. Nothing in
the decision suggests that its tolling rule was mandated by a statute
or federal rule. Moreover, the Court relied on cases that are para-
digm applications of equitable tolling principles, see 414 U.S., at 559.
Thus, the Court has previously referred to American Pipe as “equita-
ble tolling.” See, e.g., Irwin v. Department of Veterans Affairs, 498
U.S. 89, 96, and n. 3. Pp. 8–11.
(4) Petitioner’s counterarguments are unpersuasive. First, peti-
tioner contends that this case is indistinguishable from American
Pipe, but the statute there was one of limitations, which may be
tolled by equitable considerations even where a statute of repose may
not. Second, petitioner argues that the timely filing of a class-action
complaint fulfills the purposes of a statutory time limit with regard
to later filed suits by individual members of the class. But by permit-
ting a class action to splinter into individual suits, the application of
American Pipe tolling here would threaten to alter and expand a de-
fendant’s accountability, contradicting the substance of a statute of
repose. Third, petitioner contends that dismissal of its individual
suit as untimely would eviscerate its ability to opt out, but it does not
follow from any privilege to opt out that an ensuing suit can be filed
without regard to mandatory time limits. Fourth, petitioner argues
that declining to apply American Pipe tolling to statutes of repose
will create inefficiencies, but this Court “lack[s] the authority to re-
write” the statute of repose or to ignore its plain import. Baker Botts
L. L. P. v. ASARCO LLC, 576 U. S. ___, ___. And petitioner’s practi-
cal concerns likely are overstated. Pp. 11–14.
4 CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM v. ANZ SECURITIES, INC.
Syllabus
(b) Also unpersuasive is petitioner’s alternative argument: that
§13’s requirement that an “action” be “brought” within three years of
the relevant securities offering is met here because the filing of the
class-action complaint “brought” petitioner’s individual “action” with-
in the statutory time period. This argument presumes that an “ac-
tion” is “brought” when substantive claims are presented to any
court, rather than when a particular complaint is filed in a particular
court. The term “action,” however, refers to a judicial “proceeding,”
or perhaps a “suit”—not to the general content of claims. Taken to its
logical limit, petitioner’s argument would make an individual action
timely even if it were filed decades after the original securities offer-
ing—provided a class-action complaint had been filed within the ini-
tial 3-year period. Congress would not have intended this result.
This argument is also inconsistent with the reasoning in American
Pipe itself. If the filing of a class action made all subsequent actions
by putative class members timely, there would be no need for tolling
at all. Pp. 14–15.
(c) The final analysis is straightforward. Because §13’s 3-year time
bar is a statute of repose, it displaces the traditional power of courts
to modify statutory time limits in the name of equity. And because
the American Pipe tolling rule is rooted in those equitable powers, it
cannot extend the 3-year period. Petitioner’s untimely filing of its
individual action is thus ground for dismissal. Pp. 16–17.
655 Fed. Appx. 13, affirmed.
KENNEDY, J., delivered the opinion of the Court, in which ROBERTS,
C. J., and THOMAS, ALITO, and GORSUCH, JJ., joined. GINSBURG, J., filed
a dissenting opinion, in which BREYER, SOTOMAYOR, and KAGAN, JJ.,
joined.
Cite as: 582 U. S. ____ (2017) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 16–373
_________________
CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM, PETITIONER v. ANZ SECURITIES, INC.,
ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE SECOND CIRCUIT
[June 26, 2017]
JUSTICE KENNEDY delivered the opinion of the Court.
The suit giving rise to the case before the Court was
filed by a plaintiff who was a member of a putative class in
a class action but who later elected to withdraw and pro-
ceed in this separate suit, seeking recovery for the same
illegalities that were alleged in the class suit. The class-
action suit had been filed within the time permitted by
statute. Whether the later, separate suit was also timely
is the controlling question.
I
A
The Securities Act of 1933 “protects investors by ensur-
ing that companies issuing securities . . . make a ‘full and
fair disclosure of information’ relevant to a public offer-
ing.” Omnicare, Inc. v. Laborers Dist. Council Constr.
Industry Pension Fund, 575 U. S. ___, ___ (2015) (slip op.,
at 1) (quoting Pinter v. Dahl, 486 U.S. 622, 646 (1988));
see 48 Stat. 74, as amended, 15 U.S. C. §77a et seq. Com-
panies may offer securities to the public only after filing a
registration statement, which must contain information
2 CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM v. ANZ SECURITIES, INC.
Opinion of the Court
about the company and the security for sale. Omnicare,
575 U. S., at ___–___ (slip op., at 1–2). Section 11 of the
Securities Act “promotes compliance with these disclosure
provisions by giving purchasers a right of action against
an issuer or designated individuals,” including securities
underwriters, for any material misstatements or omis-
sions in a registration statement. Id., at ___ (slip op., at
2); see 15 U.S. C. §77k(a).
The Act provides time limits for §11 suits. These time
limits are set forth in a two-sentence section of the Act,
§13. It provides as follows:
“No action shall be maintained to enforce any liability
created under [§11] unless brought within one year af-
ter the discovery of the untrue statement or the omis-
sion, or after such discovery should have been made
by the exercise of reasonable diligence . . . . In no
event shall any such action be brought to enforce a li-
ability created under [§11] more than three years
after the security was bona fide offered to the
public . . . .” 15 U.S. C. §77m.
So there are two time bars in the quoted provision; and
the second one, the 3-year bar, is central to this case.
B
Lehman Brothers Holdings Inc. formerly was one of the
largest investment banks in the United States. In 2007
and 2008, Lehman raised capital through a number of
public securities offerings. Petitioner, California Public
Employees’ Retirement System (sometimes called
CalPERS), is the largest public pension fund in the coun-
try. Petitioner purchased securities in some of these
Lehman offerings; and it is alleged that respondents,
various financial firms, are liable under the Act for their
participation as underwriters in the transactions. The
separate respondents are listed in an appendix to this
Cite as: 582 U. S. ____ (2017) 3
Opinion of the Court
opinion.
In September 2008, Lehman filed for bankruptcy.
Around the same time, a putative class action concerning
Lehman securities was filed against respondents in the
United States District Court for the Southern District of
New York. The operative complaint raised claims under
§11, alleging that the registration statements for certain of
Lehman’s 2007 and 2008 securities offerings included
material misstatements or omissions. The complaint was
filed on behalf of all persons who purchased the identified
securities, making petitioner a member of the putative
class. Petitioner, however, was not one of the named
plaintiffs in the suit. The class action was consolidated
with other securities suits against Lehman in a single
multidistrict litigation.
In February 2011, petitioner filed a separate complaint
against respondents in the United States District Court
for the Northern District of California. This suit was filed
more than three years after the relevant transactions
occurred. The complaint alleged identical securities law
violations as the class-action complaint, but the claims
were on petitioner’s own behalf. The suit was transferred
and consolidated with the multidistrict litigation in the
Southern District of New York. Soon thereafter, a pro-
posed settlement was reached in the putative class action.
Petitioner, apparently convinced it could obtain a more
favorable recovery in its separate suit, opted out of the
class.
Respondents then moved to dismiss petitioner’s indi-
vidual suit alleging §11 violations as untimely under the
3-year bar in the second sentence of §13. Petitioner coun-
tered that its individual suit was timely because that 3-
year period was tolled during the pendency of the class-
action filing. The principal authority cited to support
petitioner’s argument that the 3-year period was tolled
was American Pipe & Constr. Co. v. Utah, 414 U.S. 538
4 CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM v. ANZ SECURITIES, INC.
Opinion of the Court
(1974).
The District Court disagreed with petitioner’s argument,
holding that the 3-year bar in §13 is not subject to tolling.
The Court of Appeals for the Second Circuit affirmed. In
agreement with the District Court, the Court of Appeals
held that the tolling principle discussed in American Pipe
is inapplicable to the 3-year time bar. In re Lehman
Brothers Securities and ERISA Litigation, 655 Fed. Appx.
13, 15 (2016). As the Court of Appeals noted, there is
disagreement about whether the tolling rule of American
Pipe applies to the 3-year time bar in §13. Compare Jo-
seph v. Wiles, 223 F.3d 1155, 1166–1168 (CA10 2000),
with Stein v. Regions Morgan Keegan Select High Income
Fund, Inc., 821 F.3d 780, 792–795 (CA6 2016), and Dusek
v. JPMorgan Chase & Co., 832 F.3d 1243, 1246–1249
(CA11 2016).
The Court of Appeals also rejected petitioner’s alterna-
tive argument that its individual claims were “essentially
‘filed’ in the putative class complaint,” so that the filing of
the class action within three years made the individual
claims timely. 655 Fed. Appx., at 15.
This Court granted certiorari. 580 U. S. ___ (2017).
II
The question then is whether §13 permits the filing of
an individual complaint more than three years after the
relevant securities offering, when a class-action complaint
was timely filed, and the plaintiff filing the individual
complaint would have been a member of the class but for
opting out of it. The answer turns on the nature and
purpose of the 3-year bar and of the tolling rule that peti-
tioner seeks to invoke. Each will be addressed in turn.
A
As the Court explained in CTS Corp. v. Waldburger, 573
U. S. ___ (2014), statutory time bars can be divided into
Cite as: 582 U. S. ____ (2017) 5
Opinion of the Court
two categories: statutes of limitations and statutes of
repose. Both “are mechanisms used to limit the temporal
extent or duration of liability for tortious acts,” but “each
has a distinct purpose.” Id., at ___–___ (slip op., at 5–6).
Statutes of limitations are designed to encourage plain-
tiffs “to pursue diligent prosecution of known claims.” Id.,
at ___ (slip op., at 6) (internal quotation marks omitted).
In accord with that objective, limitations periods begin to
run “when the cause of action accrues”—that is, “when the
plaintiff can file suit and obtain relief.” Id., at ___ (slip
op., at 5) (internal quotation marks omitted). In a personal-
injury or property-damage action, for example, more
often than not this will be “ ‘when the injury occurred or
was discovered.’ ” Ibid.
In contrast, statutes of repose are enacted to give more
explicit and certain protection to defendants. These stat-
utes “effect a legislative judgment that a defendant should
be free from liability after the legislatively determined
period of time.” Id., at ___–___ (slip op., at 6–7) (internal
quotation marks omitted). For this reason, statutes of
repose begin to run on “the date of the last culpable act or
omission of the defendant.” Id., at ___ (slip op., at 6).
The 3-year time bar in §13 reflects the legislative objec-
tive to give a defendant a complete defense to any suit
after a certain period. From the structure of §13, and the
language of its second sentence, it is evident that the 3-
year bar is a statute of repose. In fact, this Court has
already described the provision as establishing “a period of
repose,” which “ ‘impose[s] an outside limit’ ” on temporal
liability. Lampf, Pleva, Lipkind, Prupis & Petigrow v.
Gilbertson, 501 U.S. 350, 363 (1991).
The statute provides in clear terms that “[i]n no event”
shall an action be brought more than three years after the
securities offering on which it is based. 15 U.S. C. §77m.
This instruction admits of no exception and on its face
creates a fixed bar against future liability. See CTS,
6 CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM v. ANZ SECURITIES, INC.
Opinion of the Court
supra, at ___–___ (slip op., at 6–7); cf. United States v.
Brockamp, 519 U.S. 347, 350 (1997) (noting that a statute
that “sets forth its time limitations in unusually emphatic
form . . . cannot easily be read as containing implicit ex-
ceptions”). The statute, furthermore, runs from the de-
fendant’s last culpable act (the offering of the securities),
not from the accrual of the claim (the plaintiff ’s discovery
of the defect in the registration statement). Under CTS,
this point is close to a dispositive indication that the stat-
ute is one of repose.
This view is confirmed by the two-sentence structure of
§13. In addition to the 3-year time bar, §13 contains a 1-
year statute of limitations. The limitations statute runs
from the time when the plaintiff discovers (or should have
discovered) the securities-law violation. The pairing of a
shorter statute of limitations and a longer statute of re-
pose is a common feature of statutory time limits. See,
e.g., Gabelli v. SEC, 568 U.S. 442, 453 (2013) (“[S]tatutes
applying a discovery rule . . . often couple that rule with
an absolute provision for repose”). The two periods work
together: The discovery rule gives leeway to a plaintiff who
has not yet learned of a violation, while the rule of repose
protects the defendant from an interminable threat of
liability. Cf. Merck & Co. v. Reynolds, 559 U.S. 633, 650
(2010) (reasoning that 2-year discovery rule would not
“subject defendants to liability for acts taken long ago,”
because the statute also included an “unqualified bar on
actions instituted ‘5 years after such violation’ ”).
The history of the 3-year provision also supports its
classification as a statute of repose. It is instructive to
note that the statute was not enacted in its current form.
The original version of the 1933 Securities Act featured a
2-year discovery period and a 10-year outside limit, see
§13, 48 Stat. 84, but Congress changed this framework
just one year after its enactment. The discovery period
was changed to one year and the outside limit to three
Cite as: 582 U. S. ____ (2017) 7
Opinion of the Court
years. See Securities Exchange Act of 1934, §207, 48 Stat.
908. The evident design of the shortened statutory period
was to protect defendants’ financial security in fast-
changing markets by reducing the open period for poten-
tial liability.
B
The determination that the 3-year period is a statute of
repose is critical in this case, for the question whether a
tolling rule applies to a given statutory time bar is one “of
statutory intent.” Lozano v. Montoya Alvarez, 572 U.S. 1,
___ (2014) (slip op., at 8). The purpose of a statute of
repose is to create “an absolute bar on a defendant’s tem-
poral liability,” CTS, 573 U. S., at ___ (slip op., at 6) (al-
teration and internal quotation marks omitted); and that
purpose informs the assessment of whether, and when,
tolling rules may apply.
In light of the purpose of a statute of repose, the provi-
sion is in general not subject to tolling. Tolling is permis-
sible only where there is a particular indication that the
legislature did not intend the statute to provide complete
repose but instead anticipated the extension of the statu-
tory period under certain circumstances.
For example, if the statute of repose itself contains an
express exception, this demonstrates the requisite intent
to alter the operation of the statutory period. See 1 C.
Corman, Limitation of Actions §1.1, pp. 4–5 (1991) (Cor-
man); see, e.g., 29 U.S. C. §1113 (establishing a 6-year
statute of repose, but stipulating that, in case of fraud, the
6-year period runs from the plaintiff ’s discovery of the
violation). In contrast, where the legislature enacts a
general tolling rule in a different part of the code—e.g., a
rule that suspends time limits until the plaintiff reaches
the age of majority—courts must analyze the nature and
relation of the legislative purpose of each provision to
determine which controls. See 2 Corman §10.2.1, at 108.
8 CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM v. ANZ SECURITIES, INC.
Opinion of the Court
In keeping with the statute-specific nature of that analy-
sis, courts have reached different conclusions about
whether general tolling statutes govern particular periods
of repose. Ibid., n. 15.
Of course, not all tolling rules derive from legislative
enactments. Some derive from the traditional power of
the courts to “ ‘apply the principles . . . of equity jurispru-
dence.’ ” Young v. United States, 535 U.S. 43, 50 (2002)
(alteration omitted). The classic example is the doctrine of
equitable tolling, which permits a court to pause a statu-
tory time limit “when a litigant has pursued his rights
diligently but some extraordinary circumstance prevents
him from bringing a timely action.” Lozano, 572 U. S., at
___ (slip op., at 7). Tolling rules of that kind often apply to
statutes of limitations based on the presumption that
Congress “ ‘legislate[s] against a background of common-
law adjudicatory principles.’ ” Id., at ___ (slip op., at 8).
The purpose and effect of a statute of repose, by con-
trast, is to override customary tolling rules arising from
the equitable powers of courts. By establishing a fixed
limit, a statute of repose implements a “ ‘legislative deci-
sio[n] that as a matter of policy there should be a specific
time beyond which a defendant should no longer be sub-
jected to protracted liability.’ ” CTS, 573 U. S., at ___ (slip
op., at 7). The unqualified nature of that determination
supersedes the courts’ residual authority and forecloses
the extension of the statutory period based on equitable
principles. For this reason, the Court repeatedly has
stated in broad terms that statutes of repose are not sub-
ject to equitable tolling. See, e.g., id., at ___–___ (slip op.,
at 7–8); Lampf, Pleva, 501 U.S., at 363.
C
Petitioner contends that the 3-year provision is subject
to tolling based on the rationale and holding in the Court’s
decision in American Pipe. The language of the 3-year
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Opinion of the Court
statute does not refer to or impliedly authorize any excep-
tions for tolling. If American Pipe had itself been grounded
in a legislative enactment, perhaps an argument could
be made that the enactment expressed a legislative objec-
tive to modify the 3-year period. If, however, the tolling
decision in American Pipe derived from equity principles,
it cannot alter the unconditional language and purpose of
the 3-year statute of repose.
In American Pipe, a timely class-action complaint was
filed asserting violations of federal antitrust law. 414
U.S., at 540. Class certification was denied because the
class was not large enough, see Fed. Rule Civ. Proc.
23(a)(1), and individuals who otherwise would have been
members of the class then filed motions to intervene as
individual plaintiffs. The motions were denied on the
grounds that the applicable 4-year time bar had expired.
See 15 U.S. C. §15b. The Court of Appeals reversed,
permitting intervention.
This Court affirmed. It held the individual plaintiffs’
motions to intervene were timely because “the com-
mencement of a class action suspends the applicable stat-
ute of limitations as to all asserted members of the class.”
American Pipe, 414 U.S., at 554. The Court reasoned that
this result was consistent “both with the procedures of
Rule 23 and with the proper function of the limitations
statute” at issue. Id., at 555. First, the tolling furthered
“the purposes of litigative efficiency and economy” served
by Rule 23. Id., at 556. Without the tolling, “[p]otential
class members would be induced to file protective motions
to intervene or to join in the event that a class was later
found unsuitable,” which would “breed needless duplica-
tion of motions.” Id., at 553–554. Second, the tolling was
in accord with “the functional operation of a statute of
limitations.” Id., at 554. By filing a class complaint within
the statutory period, the named plaintiff “notifie[d] the
defendants not only of the substantive claims being
10 CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM v. ANZ SECURITIES, INC.
Opinion of the Court
brought against them, but also of the number and generic
identities of the potential plaintiffs who may participate in
the judgment.” Id., at 555.
As this discussion indicates, the source of the tolling
rule applied in American Pipe is the judicial power to
promote equity, rather than to interpret and enforce stat-
utory provisions. Nothing in the American Pipe opinion
suggests that the tolling rule it created was mandated by
the text of a statute or federal rule. Nor could it have.
The central text at issue in American Pipe was Rule 23,
and Rule 23 does not so much as mention the extension or
suspension of statutory time bars.
The Court’s holding was instead grounded in the tradi-
tional equitable powers of the judiciary. The Court de-
scribed its rule as authorized by the “judicial power to toll
statutes of limitations.” Id., at 558; see also id., at 555
(“the tolling rule we establish here” (emphasis added)).
The Court also relied on cases that are paradigm applica-
tions of equitable tolling principles, explaining with ap-
proval that tolling in one such case was based on “consid-
erations ‘deeply rooted in our jurisprudence.’ ” Id., at 559
(quoting Glus v. Brooklyn Eastern Dist. Terminal, 359
U.S. 231, 232 (1959); alteration omitted); see also 414
U.S., at 559 (citing Holmberg v. Armbrecht, 327 U.S. 392
(1946)). The Court noted too that “bad faith” was not the
cause of the District Court’s denial of class certification.
414 U.S., at 553 (internal quotation marks omitted).
Perhaps for these reasons, this Court has referred to
American Pipe as “equitable tolling.” See Irwin v. De-
partment of Veterans Affairs, 498 U.S. 89, 96, and n. 3
(1990); see also Young, supra, at 49; Greyhound Corp. v.
Mt. Hood Stages, Inc., 437 U.S. 322, 338, n. (1978) (Burger,
C. J., concurring) (using American Pipe as an example
of “[t]he authority of a federal court, sitting as a chancel-
lor, to toll a statute of limitations on equitable grounds”).
It is true, however, that the American Pipe Court did not
Cite as: 582 U. S. ____ (2017) 11
Opinion of the Court
consider the criteria of the formal doctrine of equitable
tolling in any direct manner. It did not analyze, for exam-
ple, whether the plaintiffs pursued their rights with spe-
cial care; whether some extraordinary circumstance pre-
vented them from intervening earlier; or whether the
defendant engaged in misconduct. See Holland v. Florida,
560 U.S. 631, 649 (2010) (identifying these considera-
tions); Young, 535 U.S., at 50 (same). The balance of the
Court’s reasoning nonetheless reveals a rule based on
traditional equitable powers, designed to modify a stat-
utory time bar where its rigid application would create
injustice.
D
This analysis shows that the American Pipe tolling rule
does not apply to the 3-year bar mandated in §13. As
explained above, the 3-year limit is a statute of repose.
See supra, at 5–7. And the object of a statute of repose, to
grant complete peace to defendants, supersedes the appli-
cation of a tolling rule based in equity. See supra, at 7–8.
No feature of §13 provides that deviation from its time
limit is permissible in a case such as this one. To the
contrary, the text, purpose, structure, and history of the
statute all disclose the congressional purpose to offer
defendants full and final security after three years.
Petitioner raises four counterarguments, but they are
not persuasive. First, petitioner contends that this case is
indistinguishable from American Pipe itself. If the 3-year
bar here cannot be tolled, petitioner reasons, then there
was no justification for the American Pipe Court’s contrary
decision to suspend the time bar in that case. American
Pipe, however, is distinguishable. The statute in Ameri-
can Pipe was one of limitations, not of repose; it began to
run when “ ‘the cause of action accrued.’ ” 414 U.S., at
541, n. 2 (quoting 15 U.S. C. §15b). The statute in the
instant case, however, is a statute of repose. Consistent
12 CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM v. ANZ SECURITIES, INC.
Opinion of the Court
with the different purposes embodied in statutes of limita-
tions and statutes of repose, it is reasonable that the
former may be tolled by equitable considerations even
though the latter in most circumstances may not. See
supra, at 7–8.
Second, petitioner argues that the filing of a class-action
complaint within three years fulfills the purposes of a
statutory time limit with regard to later filed suits by
individual members of the class. That is because, accord-
ing to petitioner, the class complaint puts a defendant on
notice as to the content of the claims against it and the set
of potential plaintiffs who might assert those claims. It is
true that the American Pipe Court, in permitting tolling,
suggested that generic notice satisfied the purposes of the
statute of limitations in that case. See 414 U.S., at 554–
555. While this was deemed sufficient in balancing the
equities to allow tolling under the antitrust statute, it
must be noted that here the analysis differs because the
purpose of a statute of repose is to give the defendant full
protection after a certain time.
If the number and identity of individual suits, where
they may be filed, and the litigation strategies they will
use are unknown, a defendant cannot calculate its poten-
tial liability or set its own plans for litigation with much
precision. The initiation of separate individual suits may
thus increase a defendant’s practical burdens. See, e.g.,
Cottreau, Note, The Due Process Right To Opt Out of
Class Actions, 73 N. Y. U. L. Rev. 480, 486, and n. 29
(1998) (“A defendant’s transaction costs are likely to be
reduced by having to defend just one action”). The emer-
gence of individual suits, furthermore, may increase a
defendant’s financial liability; for plaintiffs who opt out
have considerable leverage and, as a result, may obtain
outsized recoveries. See, e.g., Coffee, Accountability and
Competition in Securities Class Actions: Why “Exit”
Works Better Than “Voice,” 30 Cardozo L. Rev. 407, 417,
Cite as: 582 U. S. ____ (2017) 13
Opinion of the Court
432–433 (2008); Perino, Class Action Chaos? The Theory
of the Core and an Analysis of Opt-Out Rights in Mass
Tort Class Actions, 46 Emory L. J. 85, 97 (1997). These
uncertainties can put defendants at added risk in conduct-
ing business going forward, causing destabilization in
markets which react with sensitivity to these matters. By
permitting a class action to splinter into individual suits,
the application of American Pipe tolling would threaten to
alter and expand a defendant’s accountability, contradict-
ing the substance of a statute of repose. All this is not to
suggest how best to further equity under these circum-
stances but simply to support the recognition that a stat-
ute of repose supersedes a court’s equitable balancing
powers by setting a fixed time period for claims to end.
Third, petitioner contends that dismissal of its individ-
ual suit as untimely would eviscerate its ability to opt out,
an ability this Court has indicated should not be disre-
garded. See Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338,
363 (2011). It does not follow, however, from any privilege
to opt out that an ensuing suit can be filed without regard
to mandatory time limits set by statute.
Fourth, petitioner argues that declining to apply Ameri-
can Pipe tolling to statutes of repose will create inefficien-
cies. It contends that nonnamed class members will inun-
date district courts with protective filings. Even if
petitioner were correct, of course, this Court “lack[s] the
authority to rewrite” the statute of repose or to ignore its
plain import. Baker Botts L. L. P. v. ASARCO LLC, 576
U. S. ___, ___ (2015) (slip op., at 12).
And petitioner’s concerns likely are overstated. Peti-
tioner has not offered evidence of any recent influx of
protective filings in the Second Circuit, where the rule
affirmed here has been the law since 2013. This is not
surprising. The very premise of class actions is that
“ ‘small recoveries do not provide the incentive for any
individual to bring a solo action prosecuting his or her
14 CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM v. ANZ SECURITIES, INC.
Opinion of the Court
rights.’ ” Amchem Products, Inc. v. Windsor, 521 U.S. 591,
617 (1997). Many individual class members may have no
interest in protecting their right to litigate on an individ-
ual basis. Even assuming that they do, the process is un-
likely to be as onerous as petitioner claims. A simple
motion to intervene or request to be included as a named
plaintiff in the class-action complaint may well suffice.
See, e.g., Brief for Washington Legal Foundation as Ami-
cus Curiae 6–11 (describing procedures); Brief for Securi-
ties Industry and Financial Markets Association et al. as
Amici Curiae 16, 19–20 (same). District courts, further-
more, have ample means and methods to administer their
dockets and to ensure that any additional filings proceed
in an orderly fashion. Cf. Dietz v. Bouldin, 579 U. S. ___,
___ (2016) (slip op., at 6) (“[D]istrict courts have the inher-
ent authority to manage their dockets and courtrooms
with a view toward the efficient and expedient resolution
of cases”).
III
Petitioner makes an alternative argument that does not
depend on tolling. Petitioner submits its individual suit
was timely in any event. Section 13 provides that an
“action” must be “brought” within three years of the rele-
vant securities offering. See 15 U.S. C. §77m. Petitioner
argues that requirement is met here because the filing of
the class-action complaint “brought” petitioner’s individual
“action” within the statutory time period.
This argument rests on the premise that an “action” is
“brought” when substantive claims are presented to any
court, rather than when a particular complaint is filed in a
particular court. The term “action,” however, refers to a
judicial “proceeding,” or perhaps to a “suit”—not to the
general content of claims. See Black’s Law Dictionary 41
(3d ed. 1933) (defining “action” as, inter alia, “an ordinary
proceeding in a court of justice”); see also id., at 43 (“The
Cite as: 582 U. S. ____ (2017) 15
Opinion of the Court
terms ‘action’ and ‘suit’ are . . . nearly, if not entirely,
synonymous”). Whether or not petitioner’s individual
complaint alleged the same securities law violations as the
class-action complaint, it defies ordinary understanding to
suggest that its filing—in a separate forum, on a separate
date, by a separate named party—was the same “action,”
“proceeding,” or “suit.”
The limitless nature of petitioner’s argument, further-
more, reveals its implausibility. It appears that, in peti-
tioner’s view, the bringing of the class action would make
any subsequent action raising the same claims timely.
Taken to its logical limit, an individual action would be
timely even if it were filed decades after the original secu-
rities offering—provided a class-action complaint had been
filed at some point within the initial 3-year period. Con-
gress would not have intended this result.
Petitioner’s argument also fails because it is incon-
sistent with the reasoning in American Pipe itself. If the
filing of a class action made all subsequent actions by
putative class members timely, there would be no need for
tolling at all. Yet this Court has described American Pipe
as creating a tolling rule, necessary to permit the ensuing
individual actions to proceed. See, e.g., American Pipe,
414 U.S., at 555; Irwin, 498 U.S., at 96, n. 3; Crown, Cork
& Seal Co. v. Parker, 462 U.S. 345, 350 (1983). Indeed,
the American Pipe Court reasoned that the class-action
complaint “was filed with 11 days yet to run” in the statu-
tory period, so the motions for intervention were timely
only if filed within 11 days after the denial of class certifi-
cation. 414 U.S., at 561. If the filing of the class action
“brought” any included individual actions, it would have
sufficed for the Court to note the date on which the class
action was filed and deem all subsequent individual ac-
tions proper, regardless when filed.
16 CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
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Opinion of the Court
* * *
Tolling may be of great value to allow injured persons to
recover for injuries that, through no fault of their own,
they did not discover because the injury or the perpetrator
was not evident until the limitations period otherwise
would have expired. This is of obvious utility in the secu-
rities market, where complex transactions and events can
be obscure and difficult for a market participant to ana-
lyze or apprehend. In a similar way, tolling as allowed in
American Pipe may protect plaintiffs who anticipated their
interests would be protected by a class action but later
learned that a class suit could not be maintained for rea-
sons outside their control.
The purpose of a statute of repose, on the other hand, is
to allow more certainty and reliability. These ends, too,
are a necessity in a marketplace where stability and reli-
ance are essential components of valuation and expecta-
tion for financial actors. The statute in this case recon-
ciles these different ends by its two-tier structure: a
conventional statute of limitations in the first clause and a
statute of repose in the second.
The statute of repose transforms the analysis. In a
hypothetical case with a different statutory scheme, con-
sisting of a single limitations period without an additional
outer limit, a court’s equitable power under American Pipe
in many cases would authorize the relief petitioner seeks.
Here, however, the Court need not consider how equitable
considerations should be formulated or balanced, for the
mandate of the statute of repose takes the case outside the
bounds of the American Pipe rule.
The final analysis, then, is straightforward. The 3-year
time bar in §13 of the Securities Act is a statute of repose.
Its purpose and design are to protect defendants against
future liability. The statute displaces the traditional
power of courts to modify statutory time limits in the
name of equity. Because the American Pipe tolling rule is
Cite as: 582 U. S. ____ (2017) 17
Opinion of the Court
rooted in those equitable powers, it cannot extend the 3-
year period. Petitioner’s untimely filing of its individual
action is ground for dismissal.
The judgment of the Court of Appeals for the Second
Circuit is affirmed.
It is so ordered.
18 CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM v. ANZ SECURITIES, INC.
Opinion
Appendix of the of
to opinion Court
the Court
APPENDIX
Respondents are the following financial securities firms:
ANZ Securities, Inc.; Bankia, S. A.; BBVA Securities Inc.;
BMO Capital Markets Corp.; BNP Paribas FS, LLC; BNP
Paribas S. A.; BNY Mellon Capital Markets, LLC; CIBC
World Markets Corp.; Citigroup Global Markets Inc.;
Daiwa Capital Markets Europe Limited; DZ Financial
Markets LLC; HSBC Securities (USA) Inc.; HVB Capital
Markets, Inc.; ING Financial Markets LLC; Mizuho Secu-
rities USA Inc.; M. R. Beal & Company; Muriel Siebert &
Co. Inc.; nabSecurities LLC; Natixis Securities Americas
LLC; RBC Capital Markets LLC; RBS Securities, Inc.;
RBS WCS Holding Company; Santander Investment
Securities Inc.; Scotia Capital (USA) Inc.; SG Americas
Securities, LLC; Sovereign Securities Corporation LLC;
SunTrust Capital Markets, Inc.; Utendahi Capital Part-
ners, L. P.; and Wells Fargo Securities, LLC.
Cite as: 582 U. S. ____ (2017) 1
GINSBURG, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 16–373
_________________
CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM, PETITIONER v. ANZ SECURITIES, INC.,
ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE SECOND CIRCUIT
[June 26, 2017]
JUSTICE GINSBURG, with whom JUSTICE BREYER,
JUSTICE SOTOMAYOR, and JUSTICE KAGAN join, dissenting.
A class complaint was filed against respondents well
within the three-year period of repose set out in §13 of the
Securities Act of 1933, 15 U.S. C. §77m. That complaint
informed respondents of the substance of the claims as-
serted against them and the identities of potential claim-
ants. See American Pipe & Constr. Co. v. Utah, 414 U.S.
538, 554–555 (1974); Crown, Cork & Seal Co. v. Parker,
462 U.S. 345, 353 (1983). Respondents, in other words,
received what §13’s repose period was designed to afford
them: notice of their potential liability within a fixed time
window.
The complaint also “commence[d] the action for all
members of the class.” American Pipe, 414 U.S., at 550.
Thus, when petitioner California Public Employees’ Re-
tirement System (CalPERS) elected to exercise the right
safeguarded by Federal Rule of Civil Procedure
23(c)(2)(B)(v), i.e., the right to opt out of the class and
proceed independently, CalPERS’ claim remained timely.
See American Pipe, 414 U.S., at 550 (demanding that
class members “individually meet the timeliness require-
ments . . . is simply inconsistent with Rule 23”). Given the
due process underpinning of the opt-out right, see Wal-
2 CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM v. ANZ SECURITIES, INC.
GINSBURG, J., dissenting
Mart Stores, Inc. v. Dukes, 564 U.S. 338, 363 (2011), I
resist rendering the right illusory for CalPERS and simi-
larly situated class members. I would therefore reverse
the judgment of the Second Circuit. Accordingly, I dissent
from today’s decision, under which opting out cuts off any
chance for recovery.
I
CalPERS’ claim against respondents was timely
launched when the class representative filed a complaint
pursuant to §11 of the Securities Act, 15 U.S. C. §77k, on
behalf of all members of the described class, CalPERS
among them. See American Pipe & Constr. Co. v. Utah,
414 U.S. 538, 550 (1974) (under Federal Rule of Civil
Procedure 23, “the filing of a timely class action complaint
commences the action for all members of the class”). See
also ante, at 3 (CalPERS was part of putative class).
Filing the class complaint within three years of the date
the securities specified in that complaint were offered to
the public also satisfied §13’s statute of repose. As the
Court observes, ante, at 5, statutes of repose “effect a
legislative judgment that a defendant should be free from
[facing] liability after the legislatively determined period
of time.” CTS Corp. v. Waldburger, 573 U. S. ___, ___–___
(2014) (slip op., at 6–7) (internal quotation marks omit-
ted). A repose period assures a party who might be drawn
into litigation that, if no action is brought within a speci-
fied time, he will be off the hook. But whether CalPERS
stayed in the class or eventually filed separately, respond-
ents would have known, within the repose period, of their
potential liability to all putative class members.
A class complaint “notifies the defendants not only of
the substantive claims being brought against them, but
also of the number and generic identities of the potential
plaintiffs who may participate in the judgment.” Crown,
Cork & Seal Co. v. Parker, 462 U.S. 345, 353 (1983) (quot-
Cite as: 582 U. S. ____ (2017) 3
GINSBURG, J., dissenting
ing American Pipe, 414 U.S., at 555). The class complaint
filed against respondents provided that very notice: It
identified “the essential information necessary to deter-
mine both the subject matter and size of the prospective
litigation,” id., at 555—i.e., the class of plaintiffs, the
offering documents, and the alleged untrue statements
and misleading omissions in those documents, see App.
50–66. “[A] defendant faced with [such] information about
a potential liability to a class cannot be said to have
reached a state of repose that should be protected.” De-
velopments in the Law: Class Actions, 89 Harv. L. Rev.
1318, 1451 (1976).
When CalPERS elected to pursue individually the
claims already stated in the class complaint against the
same defendants, it simply took control of the piece of the
action that had always belonged to it. CalPERS’ state-
ment of the same allegations in an individual complaint
could not disturb anyone’s repose, for respondents could
hardly be at rest once notified of the potential claimants
and the precise false or misleading statements alleged to
infect the registration statements at issue.1 CalPERS’
decision to opt out did change two things: (1) CalPERS
positioned itself to exercise its constitutional right to go it
alone, cutting loose from a monetary settlement it deemed
insufficient; and (2) respondents had to deal with
CalPERS and its attorneys in addition to the named plain-
tiff and class counsel. Although those changes may affect
how litigation subsequently plays out, see ante, at 12–13,
they do not implicate the concerns that prompted §13’s
repose period: The class complaint disclosed the same
information respondents would have received had each
——————
1 To rank as a continuation of an action timely brought and serving
the purpose of repose, the individual complaint may raise only those
claims stated in the class complaint and must be launched while the
class suit is still pending.
4 CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT
SYSTEM v. ANZ SECURITIES, INC.
GINSBURG, J., dissenting
class member instead filed an individual complaint on the
day the class complaint was filed.
II
Today’s decision disserves the investing public that §11
was designed to protect. The harshest consequences will
fall on those class members, often least sophisticated, who
fail to file a protective claim within the repose period.
Absent a protective claim filed within that period, those
members stand to forfeit their constitutionally shielded
right to opt out of the class and thereby control the prose-
cution of their own claims for damages. See Wal-Mart
Stores, Inc. v. Dukes, 564 U.S. 338, 363 (2011) (“In the
context of a class action predominantly for money dam-
ages,” the “absence of . . . opt-out violates due process.”).
Because critical stages of securities class actions, includ-
ing the class-certification decision, often occur years after
the filing of a class complaint,2 the risk is high that class
members failing to file a protective claim will be sad-
dled with inadequate representation or an inadequate
judgment.
The majority’s ruling will also gum up the works of class
litigation. Defendants will have an incentive to slow walk
discovery and other precertification proceedings so the
clock will run on potential opt outs. Any class member
with a material stake in a §11 case, including every fiduci-
ary who must safeguard investor assets, will have strong
cause to file a protective claim, in a separate complaint or
——————
2Arecent study showed, for example, that the time from the filing of
a securities class complaint to the class-certification decision exceeds
two years in 66% of cases and exceeds three years in 36% of cases. See
S. Boettrich & S. Starykh, NERA Economic Consulting, Recent Trends
in Securities Class Action Litigation: 2016 Full-Year Review, p. 23
(2017), available at http://www.nera.com/content/dam/nera/publications/
2017/PUB_2016_Securities_Year-End_Trends_Report_0117.pdf (as last
visited June 19, 2017).
Cite as: 582 U. S. ____ (2017) 5
GINSBURG, J., dissenting
in a motion to intervene, before the three-year period
expires. See Brief for Retired Federal Judges as Amici
Curiae 9–14. Such filings, by increasing the costs and
complexity of the litigation, “substantially burden the
courts.” Id., at 13.
Today’s decision impels courts and class counsel to take
on a more active role in protecting class members’ opt-out
rights. See id., at 11–13. As the repose period nears
expiration, it should be incumbent on class counsel, guided
by district courts, to notify class members about the con-
sequences of failing to file a timely protective claim. “At
minimum, when notice goes out to a class beyond [§13’s
limitations period], a district court will need to assess
whether the notice [should] alert class members that
opting out . . . would end [their] chance for recovery.” Id.,
at 20.
* * *
For the reasons stated, I would hold that the filing of
the class complaint commenced CalPERS’ action under
§11 of the Securities Act, thereby satisfying §13’s statute
of repose. Accordingly, I would reverse the judgment of
the Second Circuit.