Opinion ID: 728787
Heading Depth: 3
Heading Rank: 1

Heading: Which Law Governs?

Text: 13 The usual source for a statute of limitation for an action brought under a federal statute is the statutory text. Unfortunately, because the 10b-5 action is an implied right of action, 14 [t]he text of § 10(b) provides little guidance where we are asked to specify elements or aspects of the 10b-5 apparatus unique to a private liability arrangement ... Having made no attempt to define the precise contours of the private cause of action under § 10(b), Congress had no occasion to address how to limit, compute, or allocate liability arising from it. 15 Musick, 508 U.S. at 295, 113 S.Ct. at 2090. The Supreme Court has recently explained the proper method for resolving questions about 10b-5 actions in such a situation: 16 When the text of § 10(b) does not resolve a particular issue, we attempt to infer how the 1934 Congress would have addressed the issue had the 10b-5 action been included as an express provision in the 1934 Act. For that inquiry, we use the express causes of action in the securities Acts as the primary model for the § 10(b) action. The reason is evident: Had the 73d Congress enacted a private § 10(b) right of action, it likely would have designed it in a manner similar to the other private rights of action in the securities Acts. 17 Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164, ----, 114 S.Ct. 1439, 1448, 128 L.Ed.2d 119 (1994) (internal quotation marks and citations omitted) (citing Musick ). The Musick Court explained the rationale for, and the purposes of, this methodology: 18 We [attempt to infer how the 1934 Congress would have addressed the issue had the 10b-5 action been included as an express provision in the 1934 Act in order] to ensure that the rules established to govern the 10b-5 action are symmetrical and consistent with the overall structure of the Act and, in particular, with those portions of the Act most analogous to the private 10b-5 right of action ... [O]ur goals in establishing [those rules are] to ensure the action does not conflict with Congress' own express rights of action, to promote clarity, consistency and coherence for those who rely upon or are subject to 10b-5 liability, and to effect Congress' objectives in enacting the securities laws. 19 Musick, 508 U.S. at 294-95, 113 S.Ct. at 2090 (citations omitted). Thus, the fundamental question is what statute of limitations the 1934 Congress would have chosen for 10b-5 contribution actions if it had included a private right of action under § 10(b) in the 1934 Act. 20 Asdar argues that a state statute of limitations should govern its contribution action because there is no federal statute of limitations expressly applicable to contribution actions under § 10(b) and Rule 10b-5 and because when no federal statute of limitations applies the federal courts as a general rule borrow the most closely analogous statute from state law. While Asdar is correct as to the general rule, see, e.g., Wilson v. Garcia, 471 U.S. 261, 266-67, 105 S.Ct. 1938, 1942, 85 L.Ed.2d 254 (1985) (When Congress has not established a time limitation for a federal cause of action, the settled practice has been to adopt a local time limitation as federal law if it is not inconsistent with federal law or policy to do so.), that rule does not apply to 10b-5 actions after the Supreme Court's decision in Lampf. The Lampf Court decided that 21 where ... the claim asserted is one implied under a statute that also contains an express cause of action with its own time limitation, a court should look first to the statute of origin to ascertain the proper limitations period.... When the statute of origin contains comparable express remedial provisions, the inquiry usually should be at an end. Only where no analogous counterpart is available should a court then proceed to apply state-borrowing principles. 22 501 U.S. at 359, 111 S.Ct. at 2780. Lampf makes clear that in determining what statute of limitations Congress would have intended to govern a contribution claim in a 10b-5 action, we must look first to the Securities Act of 1933 and to the 1934 Act. 23 In Musick, the Supreme Court held that contribution is available in 10b-5 actions by divining Congressional intent as to the judicially created 10b-5 action from those express causes of action Congress created in the federal securities laws that are closest in structure, purpose and intent to the 10b-5 action, those under §§ 9 and 18 of the 1934 Act. 508 U.S. at 295, 113 S.Ct. at 2090. After examining the provisions allowing contribution in those sections (codified at 15 U.S.C. §§ 78i(e), 78r(b)), 4 the Court concluded that consistency required it to adopt a like contribution rule for the 10b-5 action. Id. at 297, 113 S.Ct. at 2091. 5 In determining Congressional intent as to limitations on 10b-5 contribution actions, it is therefore particularly appropriate to focus on those provided for §§ 9 and 18. 24