In Lampf v. Gilbertson, the United States Supreme Court finally settled the question of which statute of limitations applies to implied private causes of actions brought pursuant to section 10(b) of the Securities Exchange Act of 1934 and to rule 10b-5 of the Securities Exchange Commission. In Lampfthe Supreme Court held that "itgation instituted pursuant to § 10(b) and Rule 10b-5... must be commenced within one year after the discovery of the facts constituting the violation and within three years after such violation. This holding departed from the norm of borrowing state periods of limitation for federally created remedies for which there is no express statute of limitations. The Court reversed the decision of the court of appeals, which had held that Oregon's two-year limitation period for general fraud claims governed. The court of appeals had remanded the case for the trial court to determine whether equitable tolling applied. The Supreme Court barred plaintiffs' claim, which was filed more than three years after defendant's alleged misrepresentations, because it determined that "[tlhe 3-year limit is a period of repose inconsistent with tolling."
The most troublesome aspect of the Court's decision was that the Court applied the new limitations period retroactively and dismissed plaintiffs' claim as untimely. The holding effectively "shut the courthouse door on respondents [and all other litigants with pending 10b-(5) claims] because they were unable to predict the future.
This Article begins with an overview of the development of the "absorption doctrine" and of implied causes of action under section 10(b) and rule 10b-5. Next, the Article examines the developments that led to changes in the "absorption doctrine" and the facts and the Court's holding in Lampf. Finally, the Article concludes with an analysis of the Supreme Court's decision.
Galloway, Alexander T. III
"Lampf v. Gilbertson: The Wrong Answer to a Long-Awaited Question,"
Mercer Law Review: Vol. 43:
4, Article 15.
Available at: https://digitalcommons.law.mercer.edu/jour_mlr/vol43/iss4/15