Opinion ID: 468850
Heading Depth: 2
Heading Rank: 2

Heading: Claim-by-Claim Approach Rejected

Text: 13 In undertaking the second step of its analysis, the Supreme Court in Wilson stated: 14 If the choice of the statute of limitations were to depend upon the particular facts or the precise legal theory of each claim, counsel could almost always argue, with considerable force, that two or more periods of limitations should apply to each Sec. 1983 claim. Moreover, under such an approach different statutes of limitations would be applied to the various Sec. 1983 claims arising in the same State, and multiple periods of limitations would often apply to the same case. 15 Id. at ----, 105 S.Ct. at 1946 (footnotes omitted). 5 16 The Supreme Court concluded that [t]here is no reason to believe that Congress would have sanctioned this interpretation of its statute. Id. Instead, the Supreme Court found that the federal interests in uniformity, certainty, and the minimization of unnecessary litigation all support the conclusion that Congress favored, id. at ----, 105 S.Ct. at 1947, the selection, in each state, of the one most appropriate statute of limitations for all Sec. 1983 claims. Id. 17 The federal interests considered in Wilson are no less important in selecting limitations periods for actions under Sec. 10(b) and Rule 10b-5 than they are in selecting such periods under Sec. 1983. The comprehensive scheme of statutes and regulations designed to police the securities industry is indicative of a strong federal interest. The interstate purchase or sale of any security must comply with Rule 10b-5. Section 10(b) and Rule 10b-5 are frequently the basis of securities actions in federal court. Moreover, the statute of limitations applicable to the action is a frequently litigated issue. For example, the appropriate statute of limitations has been litigated in the following cases brought in federal district courts in Georgia: Kennedy v. Tallant, 710 F.2d 711 (11th Cir.1983); Diamond v. Lamotte, 709 F.2d 1419 (11th Cir.1983); McNeal v. Paine, Webber, Jackson & Curtis, Inc., 598 F.2d 888 (5th Cir.1979); Miller v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 572 F.Supp. 1180, 1184 (N.D.Ga.1983); Taylor v. Bear Stearns & Co., 572 F.Supp. 667, 672 (N.D.Ga.1983); Osterneck v. E.T. Barwick Industries, Inc., 79 F.R.D. 47 (N.D.Ga.1978); Mooney v. Tallant, 397 F.Supp. 680 (N.D.Ga.1975). Other cases in this circuit which have recently litigated this issue include: White v. Sanders, 650 F.2d 627 (5th Cir. Unit B 1981); First Federal Savings & Loan Ass'n v. Mortgage Corp. of the South, 650 F.2d 1376, 1378 (5th Cir.1981); Wood v. Combustion Engineering, Inc., 643 F.2d 339 (5th Cir.1981); Dupuy v. Dupuy, 551 F.2d 1005 (5th Cir.), cert. denied, 434 U.S. 911, 98 S.Ct. 312, 54 L.Ed.2d 197 (1977); Nortek, Inc. v. Alexander Grant & Co., 532 F.2d 1013, 1015 (5th Cir.), cert. denied, 429 U.S. 1042, 97 S.Ct. 742, 50 L.Ed.2d 754 (1977); Hudak v. Economic Research Analysis, Inc., 499 F.2d 996 (5th Cir.1974); Byrne v. Gulfstream First Bank & Trust Co., 528 F.Supp. 692 (S.D.Fla.1981), aff'd, 720 F.2d 686 (11th Cir.1983). 18 If we followed the district court's claim-by-claim approach and applied a two-year statute of limitations to actions brought by purchasers, see Diamond v. Lamotte, 709 F.2d 1419, and a four-year period to actions brought by sellers, litigation would be more complex, more uncertain, and lacking in uniformity. For example, in a churning action, half of the transactions involve the plaintiff as a purchaser and half as a seller. It is uncertain whether a single statute of limitations would apply or whether a two-year statute of limitations would apply to purchaser claims and a four-year statute of limitations to the seller claims. Moreover, the latter approach would certainly be awkward and more complex. Second, where the plaintiff has exchanged stocks for stocks, e.g., as part of a merger, it is not clear whether he should be considered a purchaser or seller. Third, many securities transactions, e.g., purchases of puts, involve elements of purchase and sale. 6 19 Faced with similar complexity and uncertainty in Wilson, the Supreme Court pointed out: 20 On a human level, uncertainty is costly to all parties. Plaintiffs may be denied their just remedy if they delay in filing their claims, having wrongly postulated that the court would apply a longer statute. Defendants cannot calculate their contingent liabilities, not knowing with confidence when their delicts lie in repose. 21 Wilson v. Garcia, --- U.S. at ---- n. 34, 105 S.Ct. at 1947 n. 34. 22 In light of the Supreme Court's decision in Wilson v. Garcia and the strong federal interests in uniformity, 7 certainty, and minimization of unnecessary litigation in determining the appropriate statute of limitations for Sec. 10(b) and Rule 10b-5 claims, we hold that the federal courts must select, in each state, one most appropriate statute of limitations for Sec. 10(b) and Rule 10b-5 claims whether asserted by sellers or by purchasers. 8 23