SCOTUS to decide deadline issue in suit over losses in mortgage-backed securities
Posted Mar 10, 2014 05:01 pm CDT
The U.S. Supreme Court has agreed to decide whether a pension system met the time limit to pursue claims against investment banks that underwrote mortgage-backed securities.
The Public Employees’ Retirement System of Mississippi argues it met the three-year deadline because it would have been a class member in a would-be class action filed within the time limit, Reuters and Bloomberg News report. The cert petition is here (PDF).
MissPERS had sought to intervene in the purported class action after defendants claimed the lead plaintiff, Wyoming’s retirement system, lacked standing to assert claims for securities it did not purchase, according to the cert petition. A federal judge denied the motion to intervene, reasoning that MissPERS’ claims were time-barred. The judge also agreed with the standing claim and dismissed claims asserted on behalf of MissPERS and others.
The New York-based 2nd U.S. Circuit Court of Appeals upheld the ruling against MissPERS in June 2013, saying the time limit is a statute of repose, which differs from the statute of limitations that was at issue in American Pipe & Construction Co. v. Utah. The 1974 Supreme Court case held that a class-action filing suspends the statute of limitations as to all asserted members of the class.
An amicus brief (PDF) filed on behalf of public pension funds says that the 2nd Circuit decision “would force public pension funds to incur significantly higher costs of monitoring class actions and either intervening or filing individual class actions to prevent their claims from being time-barred.”