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BROWN v. HUTTON GROUP

April 27, 1992

KAY N. BROWN, et al., Plaintiffs, against THE HUTTON GROUP, et al., Defendants.

Conner


The opinion of the court was delivered by: WILLIAM C. CONNER

CONNER, D.J.:

 This action is currently before the Court on the motion of plaintiffs, Kay N. Brown, et al., pursuant to Section 476 of the Federal Deposit Insurance Corporation Improvement Act of 1991, Pub. L. No. 102-242, 105 Stat. 2236 (to be codified as Section 27A of the Securities Exchange Act of 1934, 15 U.S.C. ยง 78aa-i) to reinstate their claims under Section 10(b) of the Exchange Act.

 BACKGROUND

 In an Opinion and Order dated October 18, 1991, (the "Opinion and Order") this Court dismissed plaintiffs' Section 10(b) claim as time barred in accordance with the Supreme Court's decision in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilberson, 115 L. Ed. 2d 321, 111 S. Ct. 2773 (1991). See Brown v. Hutton Group, 775 F. Supp. 692, 695 (S.D.N.Y. 1991). The Court applied Lampf retroactively pursuant to the Supreme Court's decision in James B. Beam Distilling Co. v. Georgia, 115 L. Ed. 2d 481, 111 S. Ct. 2439 (1991), which was decided on the same day as Lampf. Because of the absence of complete diversity, this Court also dismissed plaintiffs' state law claims, declining to exercise pendent jurisdiction. See Brown, 775 F. Supp. at 695.

 On December 19, 1991, Congress amended the Exchange Act by enacting Section 27A to modify the retroactive effect of Lampf. Section 27A provides for reinstatement, upon motion of plaintiffs, of Section 10(b) actions dismissed under Lampf, provided that they were commenced prior to June 19, 1991 and had been timely filed according to the statute of limitations applicable on June 19, 1991. Plaintiffs now move for reinstatement of their Section 10(b) claims pursuant to Section 27A. Defendants oppose this motion.

 Familiarity with the facts of this action as set forth in the Court's Opinion and Order and in Judge Walker's prior decision in this matter is presumed. *fn1"

 DISCUSSION

 Motion to Reinstate Section 10(b) Claims

 Section 27A of the Exchange Act overrides the retroactive application of the one-and-three-year limitations rule announced by the Supreme Court in Lampf. Section 27A provides, in pertinent part:

 (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.

 Plaintiffs claim that under this provision they are entitled to reinstatement of their Section 10(b) claims, which were dismissed pursuant to Lampf and Beam. Defendants *fn2" submit that plaintiffs' motion should be denied because (1) plaintiffs' Section 10(b) claims are untimely even under the law as it existed in this Circuit, including principles of retroactivity, on June 19, 1991; (2) Lampf and Beam are the laws which were applicable on June 19, 1991, since the Supreme Court did not make new law when it issued those decisions but simply found the law as it then existed; and (3) Section 27A is unconstitutional because by enacting that provision (a) Congress has violated the separation of powers doctrine by prescribing rules of decision to the judiciary in cases pending before it without repealing or amending the underlying law, (b) Congress has required courts to disregard their traditional function to decide cases before them based upon their best current understanding of the law, (c) Congress has required ...


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