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Atlanta�When President Bush signed the Sarbanes-Oxley corporate responsibility legislation into law last year, he enjoyed an executive’s freedom to look at the big picture. “This new law sends very clear messages that all concerned must heed,” he said from the White House. “This law says to every dishonest corporate leader: you will be exposed and punished; the era of low standards and false profits is over; no boardroom in America is above or beyond the law.” But 16 months later in Atlanta, the judges of the 11th U.S. Circuit Court of Appeals have been left to determine the clarity of a key part of the Sarbanes-Oxley Act that will determine whether the law overrides the statute of limitations. The 11th Circuit is the first federal appeals court to hear this issue. “You’re going to have to show me something with neon light and underlined by Congress,” Chief Judge J.L. Edmondson told one lawyer arguing on Nov. 22 that a statute of limitations did not block the suit under Sarbanes-Oxley. The lawyer, Conor R. Crowley of Washington, was defending a Florida federal judge’s conclusion that Section 804 (b) of the law allowed former Dean Witter investors to sue the company for making unauthorized trades in 1998-even though the statute of limitations on their claims had expired by the time Bush signed Sarbanes-Oxley into law. Florida ruling Judge Richard A. Lazarra of the Middle District of Florida wrote last March that Congress unquestionably had the right to extend limitation periods and therefore revive previously expired claims. Lazarra explained, quoting the law, that it “shall apply to all proceedings addressed by this Section that are commenced on or after the enactment of this Act”-regardless of when the alleged violation occurred. To support his decision, Lazarra quoted from an analysis submitted into the Congressional Record to provide guidance to anyone interpreting the law. The author of Section 804 (b), Senator Patrick J. Leahy, D-Vt., wrote that the section, “by its plain terms, applies to any and all cases filed after the effective date of the Act, regardless of when the underlying conduct occurred.” During the oral argument, neither Edmondson nor the other members of the panel-11th Circuit Judge Stanley F. Birch Jr. and visiting 9th Circuit Senior Judge Joseph Jerome Farris-sounded convinced by Lazarra’s decision or Crowley’s efforts to defend it. “Congress has to be explicit,” Birch said. Farris said Congress knows how to use the word “revive,” suggesting that if Congress had wanted Sarbanes-Oxley to be able to revive previously expired claims, it could have done so. “They didn’t,” Farris added. Crowley responded, “This is not about the use of the magic word ‘revival.’ “ He added that the judges should consider the legislative history carefully, especially Leahy’s comments during Senate debates in which he stated his desire to see victims of the Enron Corp. collapse be able to sue the company’s executives. But Edmondson still sounded skeptical: “Congress didn’t use language we agree they could have used to make clear” its intentions. Dean Witter’s argument Arguing for Dean Witter’s parent company, Morgan Stanley DW Inc., William H. Pratt of the New York office of Chicago-based Kirkland & Ellis had a much easier time before the panel, speaking for long stretches without being interrupted. He argued that judges in the three district courts-in the Eastern District of Virginia, the Southern District of New York and the Central District of California-made the opposite conclusion from Lazarra’s on whether the old claims could be revived by Sarbanes-Oxley. Pratt relied heavily on Section 804 (c) of the law, which he said explicitly prohibited the revival of time-barred claims. The law states, “Nothing in this section shall create a new, private right of action.” Regarding Leahy’s comments, Pratt pointed out that the senator’s analysis was added to the Congressional Record the day after the law was signed. But even if it were timely, Pratt noted that then-Senator Phil Gramm, R-Texas, appeared to disagree with Leahy. “You don’t revive time-barred claims based on mixed histories,” Pratt said. Crowley pointed out that Leahy’s analysis was submitted to the Senate before Sarbanes-Oxley was signed into law, but that a clerical error kept it from being added to the record until after the bill had been signed. The Senate, by unanimous consent, made Leahy’s analysis part of the legislative history before the bill was signed. David Carle, a spokesman for Leahy, confirmed Crowley’s account of the senator’s comments getting into the official record. Carle added that Lazarra’s interpretation of the section “is also [Leahy's] interpretation of the law he authored, and which he published at the time of enactment.”

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