to any extent, it should be reinstated to the position it occupied on June 19, 1991, thereby reviving their motion to reargue their summary judgment motion.
Gutman et al. satisfy § 27A's requirements for reinstatement to the extent that they commenced this action prior to June 19, 1991; I dismissed it as time barred subsequent to June 19, 1991; and, they filed for reinstatement within the requisite sixty day period. To fully comply with § 27A, however, plaintiffs' action must "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. . . ." Securities and Exchange Act of 1934, § 27A(b)(2), 15 U.S.C. § 78aa-1(b)(2) (emphasis added). Thus, before reinstating a complaint pursuant to a § 27A motion, § 27A(b)(2) essentially directs the reviewing court to assert a statute of limitations defense on behalf of all defendants who benefitted from Lampf's retroactive application, notwithstanding the possible failure of some defendants to raise the defense before the dismissal of the action.
To determine whether § 27A(b)(2) warrants reinstatement of a complaint Congress has instructed that we look to the "laws applicable in the jurisdiction. . . . ." In actions such as this, however, where the plaintiffs reside in various jurisdictions § 27A(b)(2) provides no clear direction as to the appropriate jurisdiction's limitations period to apply. Initially, therefore, I must consider whether "the jurisdiction" refers to the jurisdiction of filing or the jurisdiction of the plaintiff's residence. Upon the resolution of this issue, § 27A(b)(2) directs that I apply the laws of such jurisdictions as they existed June 19, 1991. As the laws in this area have changed dramatically from circuit to circuit over the past five years the determination of this issue may prove dispositive for some of the plaintiffs.
Robson argues that § 27A requires courts to focus on the law as it existed "in the resident state of the plaintiffs on June 19, 1991 with regard to the statute of limitations." Defendant's Memorandum at 7. The defendants conclude, therefore that "if each individual plaintiff's action that has been asserted in this court would have been time barred on June 19, 1991, in the state in which the plaintiff resides, then the action must be deemed time barred by this court." Id. Conversely, the plaintiffs argue that § 27A directs courts to apply the limitations period applicable on June 19, 1991 in the jurisdiction where the action was commenced. See Plaintiff's Memorandum at 2. Thus, the plaintiffs urge that I apply second Circuit law to determine the limitations period with regard to this complaint as it existed on June 19, 1991. Id. at 2-3. I agree with the plaintiffs.
Section 27A simply mandates the reinstatement of certain qualifying lawsuits dismissed as time barred after June 19, 1991. The legislative history of § 27A indicates that Congress designed the legislation to reverse the retroactive effect of Lampf and thereby turn back the clock for plaintiffs. When urging adoption of the statute senator Byran stated:
at this time we are only addressing the most immediate problem-the unfair application of the Supreme court's Lampf decision to cases that were pending at the time that the decision came down. Many courts across the country are applying Lampf to cases that were timely when filed, but are now said to be untimely. With respect to those cases, it is our intent to go back to the state of the law as it existed before Lampf.
137 Cong.Rec. S18617, S18624 (Nov. 27, 1991). I see nothing in the plain language or the legislative history of § 27A which indicates that Congress intended to accomplish anything other than the reversal of the retroactivity of Lampf. I hold, therefore that § 27A acts to reinstate actions in accordance with the laws of the jurisdiction from which they were dismissed. Thus, I must apply the laws of the Second Circuit as they existed on June 19, 1991.
When read together, Ceres Partners v. Gel Associates, 918 F.2d 349 (2d Cir. 1990), and Welch v. Cadre Capital, 923 F.2d 989 (2d Cir.), vacated and remanded sub nom., Northwest Savings Bank v. Welch, U.S. , 111 S. Ct. 2882, 115 L. Ed. 2d 1048 (1991), provide the rules in this jurisdiction, as of June 19, 1991, for determining the limitations period applicable to claims arising under § 10(b) of the '34 Act. In Ceres, the Second Circuit adopted a one year/three year limitations period for actions arising under § 10(b). The Ceres court, however, explicitly refused to address the issue of the retroactive application of the new limitations period as it did not effect the outcome of the appeal. Ceres, 918 F.2d at 364.
In Welch, the Second Circuit had occasion to address the issue of whether the limitations period announced in Ceres should apply retroactively. To this end the Welch court looked to the decision of the United States Supreme Court in Chevron Oil Co. v. Huson, 404 U.S. 97, 30 L. Ed. 2d 296, 92 S. Ct. 349 (1971). In Chevron, the Court adopted a three-part test for use when determining whether to apply a new rule of law retroactively. Id. Under Chevron a court must consider whether: (1) the new rule of law overrules clear past precedent upon which parties may have relied; (2) retroactive application of the new rule would conflict with its purposes; (3) retroactive application would produce inequitable results. Id. Applying the Chevron test, the Welch court held that the new limitations period did not apply retroactively to bar the complaint. Welch, 923 F.2d at 995. The Chevron test, however, by the very nature of its inquiry, requires a case-by-case analysis of retroactivity.
In my memorandum opinion dated May 8, 1991, I conducted this case-specific analysis with regard to Robson's motion to amend their answer to assert the statute of limitations as a defense, and concluded that, under Chevron, the retroactive application of Ceres to this complaint "would unjustly deny Gutman et al. their day in court." Gutman v. Equidyne Extractive Industries, 769 F. Supp. 121, 125 (S.D.N.Y. 1991). Accordingly, because I refused to apply Ceres retroactively, I determined that state law provided the rules regarding the applicable statutes of limitation. Id.; see also Ceres, 918 F.2d at 352-53. In my earlier opinion I analyzed this complaint to determine whether all of plaintiffs' claims satisfied the applicable statute of limitations. As such, I have previously conducted the inquiry that § 27A now requires for reinstatement. Accordingly, the claims of the New York residents were timely filed and, as for the non-New York residents, "questions of fact still remain regarding: (1) when the fraud was realized, and (2) whether circumstances tolled the statutes' accrual of time." Gutman, 769 F. Supp. at 125.
As these questions of fact still exist today, I will, for the purposes of reinstatement, assume that the complaint on behalf of the non-New York plaintiffs was timely filed. Plaintiffs' § 27A motion, therefore is hereby granted and the action is reinstated to the position it occupied on June 19, 1991.
Additionally, Robson has failed to set forth any matters or controlling decisions that I overlooked when deciding their earlier summary judgment motion. As such their motion for reargument is denied.
Discovery is to proceed promptly so that this ancient matter may be properly disposed of as soon as possible.
DATED: New York, New York
November 23, 1992
KEVIN THOMAS DUFFY, U.S.D.J.
© 1992-2004 VersusLaw Inc.