On June 26, 2017, the U.S. Supreme Court issued a decision that will have a significant effect on securities class action litigation, changing the strategic calculus for both institutional plaintiffs and defendants. In California Public Employees’ Retirement System v. Anz Securities, Inc., No. 16-373, 582 U.S. ___ (2017) , the Court held that American Pipe tolling does not apply to the 3-year statute of repose for private damage claims under the Securities Act of 1933. Thus, the filing of a class action complaint under Section 11 of the Securities Act of 1933 does not toll the three-year statute of repose for individual claims that may be brought by putative class members who later decide to opt out of a class-wide settlement.
CalPERS arose out of two public securities offerings issued by Lehman Brothers Holdings in 2007 and 2008. In September 2008, with Lehman in bankruptcy, a Section 11 class action was filed against Anz Securities and other underwriters to the offerings, alleging that the registration statements included material misstatements or omissions. The class action complaint was consolidated with other securities suits against Lehman into a single multidistrict class action in the Southern District of New York. CalPERS, an unnamed member of the putative class, subsequently filed a separate complaint alleging identical causes of action against the respondents in the Northern District of California in February 2011—more than three years after the offerings closed. CalPERS’ individual suit was transferred to the Southern District of New York and consolidated with the multidistrict litigation. CalPERS opted out of the class only after the class action reached a settlement.