Real Time Speaker Series: Best Practices in the Wake of CalPERS v ANZ Securities
September 28, 2017
About the Decision:
On June 26, 2017, the U.S. Supreme Court reversed over 40 years of established law and policy in ANZ Securities by ruling that the filing of a class action does not stop accrual of the "statute of repose" deadline for passive class members to file an opt-out claim. When representatives file a class action, members of the class are entitled to "opt out" and represent themselves. The issue before the Court was how statutes of limitation work in that situation. Does the filing of a class action count as the filing of a claim on behalf of each class member and stop accrual of the deadline or does a party that may ultimately want to opt out have to file its own complaint before the deadline?
The U.S. securities laws include two different kind of filing deadlines. For claims about misrepresentations in connection with the issuance of securities - in Europe often referred to as "prospectus liability" - Section 13 of the Securities Act of 1933 establishes two distinct deadlines: a one-year deadline running from the discovery of the untrue statement (the statute of limitations) and an outside three-year deadline running from the date the statement was made (the statute of repose). The Supreme Court has now made clear in ANZ Securities that the filing of class action stops accrual of the statute of limitations, but not of the statute of repose. The Court's decision effectively means that once this three-year time period has run, investors lose their right to opt out of a class action and represent their own interests. Under the right circumstances, a direct action can achieve superior results over remaining a passive class member, including a premium over the recovery as a class member and faster distribution of funds.