Police & Fire Retirement System of the City of Detroit v. IndyMac MBS, Inc.

721 F.3d 95

POLICE AND FIRE RETIREMENT SYSTEM OF the CITY OF DETROIT, individually, Police and Fire Retirement System of the City of Detroit, on behalf of all others similarly situated, Wyoming State Treasurer, Wyoming Retirement System, Plaintiffs,General Retirement System of the City of Detroit, Los Angeles County Employees Retirement System aka “LACERA,” Public Employees' Retirement System of Mississippi “PERS,” Proposed Intervenors–Appellants,

v. INDYMAC MBS, INC., Deutsche Bank Securities Inc., Goldman, Sachs & Company, Morgan Stanley & Company, Credit Suisse Securities (USA) LLC, Defendants–Appellees,Residential Asset Securitization Trust 2006–A5CB, et al., Defendants. ^*

Docket Nos. 11–2998–cv(L), 11–3036–cv(CON).

United States Court of Appeals, Second Circuit.

Argued: Dec. 5, 2012.

Decided: June 27, 2013.

Robin F. Zwerling (Jeffrey C. Zwerling, Justin M. Tarshis, on the brief), Zwerling, Schachter & Zwerling, LLP, New York, NY, for Proposed Intervenor–Appellant General Retirement System of the City of Detroit.

Joseph J. Tabacco Jr. (Patrick T. Egan, on the brief), Berman DeValerio, Boston, MA, for Proposed Intervenor–Appellant Los Angeles County Employees Retirement System.

Michael J. Miarmi, Joy A. Kruse, Lieff, Cabraser, Heimann & Bernstein, LLP, New York, NY, for Proposed Intervenor–Appellant Public Employees' Retirement System of Mississippi.

William R. Stein, Scott H. Christensen, Hughes Hubbard & Reed LLP, Washington, DC, for Defendant–Appellee IndyMac MBS, Incorporated.

Robert F. Serio (Aric H. Wu, Jason W. Myatt, Dean J. Kitchens, on the brief), Gibson, Dunn & Crutcher LLP, Los Angeles, CA, for Defendants–Appellees Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., and Morgan Stanley & Co. LLC.

Lawrence M. Rolnick, Thomas E. Redburn, Jr., Sheila Sadighi, Lowenstein Sandler PC, New York, NY, for Amicus Curiae W.R. Huff Asset Management Co., LLC in support of Intervenors–Appellants.

Before: CABRANES, RAGGI, and CARNEY, Circuit Judges.

JOSÉ A. CABRANES, Circuit Judge:

This appeal presents an unsettled question of law: whether the tolling rule set forth by the Supreme Court in American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974) (“American Pipe ”)—that “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action,” id. at 554, 94 S.Ct. 756—applies to the three-year statute of repose in Section 13 of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. § 77m.¹ In addition, we are called upon to decide whether non-party members of a putative class can avoid the effect of a statute of repose using the “relation back” doctrine of Federal Rule of Civil Procedure 15(c) to amend the class complaint and intervene in the action as named parties.²

This appeal comes to us from an order of the United States District Court for the Southern District of New York (Lewis A. Kaplan, Judge ) denying, in relevant part, proposed intervenors-appellants' motions to intervene.³See In re IndyMac Mortgage–Backed Sec. Lit., 793 F.Supp.2d 637 (S.D.N.Y.2011) (“ IndyMac II ”). The lead plaintiff and other putative class members alleged that defendants had made fraudulent misrepresentations and omissions in the offering and sale of certain financial instruments which they purchased. Following the District Court's dismissal of certain claims, as well as the expiration of the three-year statute of repose under Section 13, several putative class members sought to intervene in the action to revive the dismissed claims on either of two theories: (1) that the American Pipe tolling rule operated to preserve their right to sue, or (2) that Rule 15(c) of the Federal Rules of Civil Procedure allowed them to “relate back” their otherwise untimely claims to the surviving claims in the class complaint. The District Court rejected these two theories and denied the motions to intervene as barred under Section 13's statute of repose. This appeal by proposed intervenors-appellants followed.

We hold that: (1) American Pipe's tolling rule does not apply to the three-year statute of repose in Section 13; and (2) absent circumstances that would render the newly asserted claims independently timely, neither Federal Rule of Civil Procedure 24 nor the Rule 15(c) “relation back” doctrine permits members of a putative class, who are not named parties, to intervene in the class action as named parties in order to revive claims that were dismissed from the class complaint for want of jurisdiction. In practical terms, the proposed intervenors may not circumvent Section 13's statute of repose by invoking American Pipe or Rule 15(c). Accordingly, we AFFIRM the June 21, 2011 order of the District Court, insofar as it partially denied motions to intervene by the proposed intervenors.

I. BACKGROUND

This appeal arises from two securities class actions, consolidated by the District Court, asserting claims for violations of Sections 11, 12(a) and 15 of the SecuritiesAct ⁴ against IndyMac MBS, Inc. (“IndyMac MBS”), an issuer of mortgage-backed securities, and certain of its officers, directors, and underwriters (jointly, “defendants”). As relevant here, IndyMac MBS issued securities known as mortgage pass-through certificates (“Certificates”) “in 106 different offerings pursuant to three registration statements and the related prospectuses and prospectus supplements.” ⁵In reIndyMac, 718 F.Supp.2d 495, 498 (S.D.N.Y.2010) (“ IndyMac I ”). The Police and Fire Retirement System of the City of Detroit (“Detroit PFRS”) and the Wyoming State Treasurer and the Wyoming Retirement System (jointly, “Wyoming” or “Wyoming entities”) commenced two separate putative class actions against the IndyMac defendants on behalf of asserted class members who had purchased Certificates in some of the 106 offerings. The District Court then consolidated the Detroit PFRS and Wyoming actions, and appointed Wyoming lead plaintiff of the consolidated action, pursuant to the Private Securities Litigation Reform Act (“PSLRA”), 15 U.S.C. § 78u–4. ⁶ Although Wyoming was the only plaintiff named in the consolidated action, the Amended Consolidated Complaint (“Amended Complaint”) raised claims on behalf of other asserted class members, who were purchasers of the IndyMac Certificates.

On June 21, 2010, the District Court dismissed for lack of standing all claims in the Amended Complaint arising from the offerings of securities not purchased by the Wyoming entities, who are the lead and sole named plaintiffs. IndyMac I, 718 F.Supp.2d at 501. The District Court explained that, as in any lawsuit, the named plaintiffs must demonstrate constitutional standing, and that the Wyoming entities had failed to make the necessary showing of injury as to the offerings of securities that they did not purchase. Id. (relying on an earlier District Court opinion in separate mortgage-backed securities litigation).

The dismissed claims included those involving securities purchased by Detroit PFRS and by other members of the asserted class, none of whom were named plaintiffs. In addition to Detroit PFRS, five members of the asserted class—(1) the City of Philadelphia Board of Pensions and Retirement (“Philadelphia”); (2) the Los Angeles County Employees Retirement Association (“LACERA”); (3) the Public Employees' Retirement System of Mississippi (“PERS”); (4) the Iowa Public Employees' Retirement System (“Iowa”); and (5) the General Retirement System of the City of Detroit (“Detroit Retirement”)—subsequently moved to intervene in the action, pursuant to Federal Rule of Civil Procedure 24,⁷ to assert claims with respect to the Certificates that those entities had purchased, but which the named Wyoming plaintiffs had not purchased.⁸ Although the three-year period of repose in Section 13 had run on their claims, these putative plaintiffs invoked the tolling rule set forth in American Pipe, where, as noted above, the Supreme Court held that “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action,” 414 U.S. at 554, 94 S.Ct. 756 (emphasis supplied). The putative plaintiffs argued that the American Pipe tolling rule, which has long been accepted in the context of statutes of limitations, applied equally to the statute of repose in Section 13. The putative plaintiffs further argued that, in the event that American Pipe tolling did not apply, it could nonetheless “relate back” its proposed amended complaint to the Amended Complaint by operation of Federal Rule of Civil Procedure Rule 15(c), see note 2, ante, despite the expiration of the three-year period for bringing these claims.

The District Court denied the motions to intervene in a thorough and careful memorandum opinion of June 21, 2011, reasoning that the Section 13 repose period had expired and could not be tolled under American Pipe or extended by operation of Rule 15(c). See Indymac II, 793 F.Supp.2d 637. Three of the five putative plaintiffs—Detroit Retirement, LACERA, and PERS—filed a notice of appeal as proposed intervenors to this Court on July 20, 2011.⁹

II. DISCUSSION

A. Standards of Review

We review de novo a district court's denial of a motion to dismiss, see, e.g., Gollomp v. Spitzer, 568 F.3d 355, 365 (2d Cir.2009), and its denial of a motion to intervene for an “abuse of discretion,” AT & T Corp. v. Sprint Corp., 407 F.3d 560, 561 (2d Cir.2005). To the extent that our analysis requires us to review interpretations of a statute, we do so de novo. See United States v. Robles, 709 F.3d 98, 99 (2d Cir.2013) (“We review de novo a district court's decision resolving a question of statutory interpretation.”); In re Sims, 534 F.3d 117, 132 (2d Cir.2008) (“A district court has...