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

Heading: Which Section Governs?

Text: 29 Since the one-year/three-year structure governs contribution actions under 10b-5, deciding whether the statute bars Asdar's claim requires us to determine when the statute begins to run. This might seem to raise a question of whether the limitation of § 9 or of § 18 applies to 10b-5 contribution actions. Although each section contains an identical limitations structure, the language of the limitation, as noted above, differs slightly. The three-year limitation period on actions under § 9 begins at the time of the violation, and the one-year period in that section begins with the discovery of the facts constituting the violation. In § 18, the one-year period begins with the discovery of the facts constituting the cause of action , and the three-year period begins when such cause of action accrue[s]. 30 The opinion of the Leslie Fay court suggests that this difference should be seen as significant when the action at issue is one for contribution: 31 [T]he existing rule ... is that an action for contribution accrues at the time a judgment is entered against the direct defendant and is paid by him.... [T]he [Musick ] Court did not reach the question whether [§ 9 or § 18] would control the applicable statute of limitations for contribution claims. The section 18(c) rule that begins the limitations period upon accrual is consistent with the long-standing rule governing accrual of contribution claims.... Lampf, even when read in conjunction with Musick, Peeler, does not compel a conclusion that the applicable statute of limitations for a section 10(b) contribution claim is the one-year/three-years from the time of violation rule of section 9(e). 32 Leslie Fay, 918 F.Supp. at 754-55 (internal quotation marks and citations omitted). If this view is correct, applying § 9's limitation to 10b-5 contribution actions would require that the action be brought within three years of the underlying securities violation, while applying § 18's limitation would allow the contribution action anytime within three years of payment of the judgment on the underlying violation. 33 The differences in terminology between § 9 and § 18 do not, however, bear the weight that the Leslie Fay court has placed on them. 7 Section 9 enumerates a host of practices that shall be unlawful, while § 18 basically provides only that one who makes a false or misleading statement in a required filing shall be liable ... for damages to one who trades a security in reliance on the statement. Since § 9 outlaws certain practices, its statute of limitations naturally speaks of a violation; since § 18 only creates liability to private persons, its statute of limitations naturally speaks of a cause of action. Thus, despite the differing language, the statute ordinarily begins to run under each section when a person commits the act that gives rise to liability under that section. 34