Opinion ID: 610593
Heading Depth: 4
Heading Rank: 2

Heading: The Right to a Statute of Repose

Text: 81 The Defendants argue that even if Congress can legitimately upset their judgments with § 27A(b), the statute still contravenes due process because it creates civil liability for past acts. Their argument rests on William Danzer & Co. v. Gulf & S.I.R. Co., 268 U.S. 633, 45 S.Ct. 612, 69 L.Ed. 1126 (1925), where the Court distinguishes between time-bar statutes that bar the remedy of suit in court, and those that extinguish the liability altogether. Id. at 637, 45 S.Ct. at 613; see also Donaldson, 325 U.S. at 312 n. 8, 65 S.Ct. at 1141 n. 8 (distinguishing Danzer according to its remedy/liability dichotomy). If a time-bar statute extinguishes liability, the Danzer Court held that a legislature cannot constitutionally amend such a statute to revive liability once extinguished. 268 U.S. at 637, 45 S.Ct. at 613. To do so would retroactively ... create liability and thus deprive the defendant of its property without due process of law in contravention of the Fifth Amendment. Id. 82 The Defendants point to the Lampf Court's distinction between a one-year statute of limitation and a three-year statute of repose, and its holding that Congress effectively created this time-bar structure in 1934. See --- U.S. at ----, 111 S.Ct. at 2780. They observe that, like the statute at issue in Danzer, the three-year repose period recognized by the Lampf Court is an absolute bar not subject to equitable tolling. Compare id. at ----, 111 S.Ct. at 2782 with Danzer, 268 U.S. at 637, 45 S.Ct. at 613. From this, they reason that Congress in 1934 enacted an absolute three-year limit on liability for § 10(b) violations. Because § 27A(b) operates in these cases to lift this three-year outside limit, the Defendants argue that the statute retroactively ... creates liability in contravention of due process according to Danzer. 83 As a preliminary matter, we note that the Usery Court squarely held that Congress may retroactively create liability for past acts, and thus compromises Danzer's holding that such legislation per se contravenes due process. See Usery, 428 U.S. at 16, 96 S.Ct. at 2893 (legislation is not unlawful solely because the effect of the legislation is to impose a new duty or liability based on past acts) (citations omitted). The Court has also questioned the continued validity of a dichotomy between remedy and right, at least where extinction of the remedy has the same effect as extinction of the right. See Donaldson, 325 U.S. at 314, 65 S.Ct. at 1142; see also Lynch, 292 U.S. at 580, 54 S.Ct. at 844. And the last time a party asked the Court to apply Danzer, the Court did not even make a determination as to whether the time-bar statute at issue affected remedy or liability. International Union of Elec., Radio & Mach. Workers v. Robbins & Myers, Inc., 429 U.S. 229, 244, 97 S.Ct. 441, 450-51, 50 L.Ed.2d 427 (1976). 84 But even if Danzer remains good law, it does not help the Defendants. Danzer and its progeny are inapposite to statutes that bar remedies, while leaving liability intact. We need look no further than Lampf to determine whether the three-year statute of repose asserted by the Defendants bars liability. 85 The Lampf Court strove for crystal clarity in stating its holding: [T]he governing standard for an action under § 10(b) [is] the language of § 9(e) of the 1934 Act, 15 U.S.C. § 78i(e). --- U.S. at ---- n. 9, 111 S.Ct. at 2782 n. 9. Section 9(e) as passed by Congress in 1934, provides: 86 No action shall be maintained to enforce any liability created under this section, unless brought within one year after the discovery of the facts constituting the violation and within three years after such violation. 87 This language unequivocally bars an action to enforce a liability, and says nothing about the continued existence of that liability. Nowhere does the Lampf Court even imply that the absolute three-year statute of repose extinguishes liability under § 10(b). We hold that it does not. 88 This holding conflicts with the Tenth Circuit's holding in Anixter v. Home-Stake Production Co., 939 F.2d 1420, 1434 (10th Cir.1991) that § 13 of the 1933 Act limits liability and not remedy. The Lampf Court relied upon § 13 to hold that § 9(e) governs § 10(b) limitations periods, yet mentioned nothing about limitation of liability. --- U.S. at ---- & n. 7, 111 S.Ct. at 2780 & n. 7. And like § 9(e), the language of § 13 unequivocally indicates a limitation of remedy, not of liability. 15 We disagree with the Anixter court's opposite conclusion. 89 The Defendants wrongly assume that a statute of repose must go to liability rather than remedy. See City of El Paso v. Simmons, 379 U.S. 497, 508 n. 9, 85 S.Ct. 577, 582 n. 9, 13 L.Ed.2d 446 (1965) ([T]he statute of repose challenged here is an alteration of remedy rather than obligation.). They are also mistaken that a time-bar statute limits liability merely because a legislature structures it as an absolute bar that is not subject to equitable tolling. In Short v. Belleville Shoe Manufacturing Co., 908 F.2d 1385 (7th Cir.1990), the court discussed § 13 as follows: 90 Courts say that equitable tolling does not apply under § 13, but this is not strictly accurate. It is better to say that equitable tolling and related doctrines do not extend the period of limitations by more than the two-year grace period § 13 allows. Congress did not obliterate these valuable doctrines so much as it set bounds on the length of delay. 91 Id. at 1391 (citations omitted). Rather than assess whether a statute is characterized as one of repose or limitation, or whether it is subject to equitable tolling, the relevant inquiry under Danzer is whether the legislature intended liability or remedy to be extinguished by a time bar. Donaldson, 325 U.S. at 311 n. 8, 65 S.Ct. at 1141 n. 8. The primary evidence of this intent is, of course, the language of the statute. 16 In this case, we understand Congress to have decided in § 9(e) that the three-year time bar goes to remedy only. 92 Accordingly, the Defendants have failed to establish that § 27A(b) unconstitutionally deprives them of any right.