CLIENT PUBLICATION
LITIGATION | July 19, 2016
Two Recent Second Circuit Decisions Provide Opportunity
for Supreme Court to Address Whether American Pipe
Tolling Extends to Statutes of Repose
The tolling rule established by the Supreme Court in American Pipe & Construction Co. v. Utah
generally provides that the commencement of a class action in federal court suspends the
applicable statute of limitations for all members of the proposed class.1 Lower courts are divided
over whether American Pipe tolling applies to statutes of repose. In 2014, the Supreme Court
granted certiorari to review the Second Circuit’s holding in Police & Fire Retirement System of
City of Detroit v. IndyMac MBS, Inc. that American Pipe tolling does not apply to the statute of
repose in Section 13 of the Securities Act of 1933,2 but subsequently dismissed the writ as
improvidently granted after the IndyMac parties resolved that litigation.3 Two recent decisions
from the Second Circuit, however, may provide new opportunities for the Supreme Court to
consider the issue. In In re Lehman Brothers Securities & ERISA Litigation, No. 15-1879, 2016
WL 3648259 (2d Cir. July 8, 2016), the Second Circuit re-affirmed its IndyMac holding,
expressly acknowledged that IndyMac had created a circuit split on the issue,4 and suggested
that the question was ripe for Supreme Court review. The next week, in SRM Global Master
Fund Limited Partnership v. Bear Stearns Companies, No. 14-507, 2016 WL 3769735 (2d Cir.
July 14, 2016), the Second Circuit extended the rationale of IndyMac to the Securities Exchange
Act of 1934, holding that American Pipe tolling does not apply to the five-year repose period
established by 28 U.S.C. § 1658(b)(2) for claims under Section 10(b) of the Exchange Act.
Background
The issue in IndyMac was whether the tolling rule announced in American Pipe—that the filing of a class action tolls
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the statute of limitations for all members of the proposed class—applied to Section 13’s statute of repose. The
1 See 414 U.S. 538, 554 (1974).
2 See 721 F.3d 95, 104-10 (2d Cir. 2013), cert. granted, 134 S. Ct. 1515 (2014).
3 See 135 S. Ct. 42 (2014).
4 See Joseph v. Wiles, 223 F.3d 1155, 1166-68 (10th Cir. 2000).
5 Section 13 establishes a one-year statute of limitations, triggered for Section 11 and 12(a)(2) claims by “the discovery of the untrue statement or
the omission, or after such discovery should have been made by the exercise of reasonable diligence,” and then provides for a separate three-
year repose period, as follows: “In no event shall any such action be brought to enforce a liability created under [Section 11] … more than three
years after the security was bona fide offered to the public, or under [Section 12(a)(2)] … more than three years after the sale.” 15 U.S.C. § 77m.
