December 09, 2015 Articles

Class Action Tolling of the Securities Act's Statute of Repose: Resolving the Circuit Split

At least five Supreme Court justices might conclude that the three-year cut-off in section 13 is not subject to tolling

By Eric S. Pettit and Jeffrey M. Hammer

The History of American Pipe Tolling as Applied to Securities Act Claims
In American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), the Supreme Court held that “the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.” Under the American Pipe rule, putative class members can wait—without concern that their claims will be time-barred—to decide whether to intervene or file an independent lawsuit until the court rules on class certification. The purpose of the American Pipe rule, sometimes referred to as the class action tolling rule, is to safeguard “the efficiency and economy of litigation which is a principal purpose of” Federal Rule of Civil Procedure 23.

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