California Public Employees' Retirement System v. ANZ Securities, Inc.

Background

California Public Employees’ Retirement System (a large public pension fund) bought securities in Lehman Brothers offerings and was a member of a timely-filed putative class suit. After opting out of that class and rejecting a proposed settlement, CalPERS filed its own individual suit more than three years after the offerings. The key question was whether the earlier class filing kept CalPERS’ separate suit timely under the Securities Act’s time limits.

Reasoning

The Court focused on the two-part timing rule in Section 13 of the Securities Act: a one-year discovery rule and a three-year outer limit. It held that the three-year limit is a statute of repose that starts from the securities offering and gives defendants final protection. Because a statute of repose is meant to be an absolute time limit, the Court ruled that the equitable tolling rule from American Pipe does not extend that three-year period. The result: CalPERS’ late individual suit cannot proceed and dismissal is affirmed.

Real world impact

Investors who are part of a putative class but later opt out cannot rely on the class filing to preserve three-year repose deadlines. The decision increases pressure on potential class members to file protective claims or intervene before three years expire and gives defendants greater certainty about exposure after three years. This ruling resolves a timing question rather than the merits of any securities claim.

Dissents or concurrances

Justice Ginsburg (joined by three colleagues) dissented, arguing that a timely class complaint should preserve individual claims and protect opt-out rights, warning that the majority’s rule could unfairly cut off investors and complicate class litigation.