The opinion of the court was delivered by: MORRIS E. LASKER
Axel Johnson Inc. moves under Fed. R. Civ. P. 60(b) for relief from the dismissal of its securities fraud complaint against Arthur Andersen & Co. Its earlier suit was dismissed as time-barred under the Supreme Court's decision in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 115 L. Ed. 2d 321, 111 S. Ct. 2773 (1991). Lampf established a new uniform statute of limitations for actions pursuant to § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) (1988), of one year from the date of discovery with a maximum three year period of repose, and, in conjunction with the decision issued the same day in James B. Beam Distilling Co. v. Georgia, 115 L. Ed. 2d 481, 111 S. Ct. 2439 (1991), established that the new rule was to be applied retroactively to pending suits. The basis for Johnson's motion is the newly enacted § 27A of the Act, § 476 of the Federal Deposit Insurance Corporation Improvement Act of 1991, P.L. No. 102-242, which purports to "undo" retroactive application of Lampf, and which, if valid, requires the reinstatement of Johnson's claim.
Andersen opposes the motion on the grounds that the new § 27A violates separation of powers doctrine and accordingly is unconstitutional and invalid.
Andersen also argues that even if Johnson's § 10(b) claim is reinstated, the court should not reassert jurisdiction over the related state claims, which have been pressed in state court since they were dismissed from this court for want of pendent jurisdiction in the absence Johnson's federal claims.
The Attorney General of the United States has been notified of Andersen's challenge to the constitutionality of a federal statute pursuant to 28 U.S.C. § 2403(a), and has filed a "Statement of Interest" in support of the statute's constitutionality, but has not intervened in the matter.
Johnson's motion is granted.
Axel Johnson instituted this suit on September 28, 1989, alleging claims under § 10(b) and state law. The suit was filed within the then-applicable six year limitations period borrowed from analogous New York law. On April 30, 1991, this court denied Andersen's motion to dismiss on both substantive and timeliness grounds, holding that although the Court of Appeals had established a new, one year/three year statute of limitations in Ceres Partners v. GEL Assoc., 918 F.2d 349 (2d Cir. 1990), and although Johnson's suit would have been barred under that new rule, Ceres did not apply retroactively in this case. See Axel Johnson, Inc. v. Arthur Andersen & Co., 762 F. Supp. 599 (S.D.N.Y. 1991). After that decision, the Supreme Court's decisions in Lampf and Jim Beam were handed down, and accordingly on October 11, 1991, the case was dismissed as time-barred. The time for appeal from that dismissal expired before § 27A was enacted or Johnson moved for relief.
On December 19, 1991, the President signed into law new § 27A of the Securities and Exchange Act of 1934, which provides:
(a) Effect on Pending Causes of Action. -- The limitations period for any private civil action implied under section 10(b) of this Act that was commenced on or before June 19, 1991, shall be the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991.
(b) Effect on Dismissed Causes of Action. -- Any private civil action implied under section 10(b) of this Act that was commenced on or before June 19, 1991 --
(1) which was dismissed as time barred subsequent to June 19, 1991, and
(2) which would have been timely filed under the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991,
shall be reinstated on motion by the plaintiff not later than 60 days after the date of enactment of this section.
It is not disputed that the statute, if constitutional, entitles Axel Johnson to reinstatement of its federal claims. The first motion to dismiss Johnson's claims as time-barred was denied under the law of this jurisdiction as it existed immediately before the Supreme Court decided Lampf. Johnson has filed for reinstatement of its claims within the time specified by § 27A. ...