Public Employees’ Retirement System of Mississippi v. IndyMac MBS, Inc.
March 10, 2014
Case #: 13-640
721 F.3d 95 (2d Cir. 2013)
Full Text Opinion: http://www2.bloomberglaw.com/public/desktop/document/Police__Fire_Ret_Sys_of_Detroit_v_IndyMac_MBS_Inc_721_F3d_95_2d_C
Civil Procedure: Whether the filing of a putative class action serves, under American Pipe & Construction Co. v. Utah, to satisfy the three year time limitation in § 13 of the Securities Act with respect to the claims of putative class members.
Respondent was in the business of marketing mortgage-backed securities. It issued mortgage pass-through certificates to potential investors. Ultimately, the certificates lost their value and were not profitable to the investors. Petitioner was among the investors who bought these pass-through certificates and, along with other investors, joined in a class-action lawsuit claiming that Respondent's underwriting statements contained false and misleading information and failed to disclose that the lending guidelines used in advancing the mortgage loans to home buyers had not, in fact, been followed.
Petitioners filed the lawsuit under the Securities Act of 1933, which sets a time limit of one year for filing lawsuits to enforce the statute, and specifies that in no event may any lawsuit be filed more than three years after the security involved had been offered to the public or had been sold. Petitioners filed their class-action claim in October 2009. The lower court ruled that the three-year filing deadline had been missed and the U.S. Court of Appeals for the Second Circuit agreed. The Second Circuit’s ruling was based on alternative theories, one of which included the Supreme Court’s 1974 decision in American Pipe & Construction Co. v. Utah. In American Pipe, the Supreme Court ruled that the filing of a class-action lawsuit suspends the running of a filing deadline for all class members. The court granted certiorari here and must determine whether the American Pipe precedent dictates that the lawsuit in this case served to interrupt the three-year time limit for filing class-action lawsuits.