This month, we discuss Police & Fire Ret. Sys. of Detroit v. IndyMac MBS,1 in which the U.S. Court of Appeals for the Second Circuit addressed important unsettled questions concerning the applicability of the tolling rule established by the U.S. Supreme Court in American Pipe & Constr. v. Utah2 to the three-year statute of repose in Section 13 of the Securities Act of 1933.3 The court also addressed whether unnamed members of a putative class could avoid application of the statute of repose by intervening as named parties and utilizing Federal Rule of Civil Procedure 15(c)'s "relation back" doctrine to amend the complaint.
In an opinion by Judge José A. Cabranes, joined by Judges Reena Raggi and Susan L. Carney, the court held that American Pipe tolling does not apply to the statute of repose in Section 13, regardless of whether American Pipe's tolling rule is characterized as "equitable" or "legal" in nature. Consistent with precedent, the court concluded that equitable tolling principles do not apply to Section 13's statute of repose. The court also held that "legal tolling" does not apply because Section 13's three-year limitations period creates a substantive right to be free from litigation after that period had elapsed and because the Rules Enabling Act4 prohibits the courts from modifying such substantive rights when interpreting federal procedural rules.
