Opinion ID: 610593
Heading Depth: 2
Heading Rank: 1

Heading: pacific mutual life ins. co. v. first republicbank corp., et al.

Text: 8 In March 1991, Pacific Mutual Life Insurance Company (PMLI) sued investment bankers and accountants (collectively PMLI Defendants) 1 for securities fraud under § 10(b) of the 1934 Securities Exchange Act (1934 Act), 15 U.S.C. § 78j(b). PMLI's claims arise from the June 1987 merger of InterFirst Corporation and RepublicBank Corporation, PMLI's purchase of InterFirst securities in July and September 1987 for approximately $8 million, and the PMLI Defendants' facilitation of those transactions. 9 From long before PMLI purchased the securities to the time after PMLI filed its suit, this court determined the statute of limitations for implied private actions under § 10(b) according to analogous state law. When PMLI filed its suit in the United States District Court for the Northern District of Texas, our precedent recognized that the four-year limitations period applicable to fraud actions in Texas also governs § 10(b) actions filed there. In re Sioux, Ltd., Sec. Litig. v. Coopers & Lybrand, 914 F.2d 61, 64 (5th Cir.1990). For that reason, although the PMLI Defendants filed dispositive motions under FED.R.CIV.P. 9(b) and 12(b)(6), they did not contest the timeliness of PMLI's suit. 10 While these motions awaited the district court's consideration, the Supreme Court issued Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, --- U.S. ----, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991). Lampf implicitly overrules Sioux, Ltd. and many similar cases in other circuits with its holding that the Securities Exchange Act as written in 1934, not state law, establishes the limitations period for § 10(b) suits. Id. at ----, 111 S.Ct. at 2780. The Court read the Securities Exchange Act of 1934 to establish a uniform rule that [l]itigation instituted pursuant to § 10(b) ... must be commenced within one year after the discovery of the facts constituting the violation and within three years after such violation. Id. at ----, 111 S.Ct. at 2782 (1-and-3 rule). 11 On the same day that the Court rendered Lampf, it decided James B. Beam Distilling Co. v. Georgia, --- U.S. ----, 111 S.Ct. 2439, 115 L.Ed.2d 481 (1991). A plurality of the Beam Court held that Georgia's Supreme Court erred by refus[ing] to apply a rule of federal law retroactively after the case announcing the rule has already done so. Id. at ----, 111 S.Ct. at 2446. Beam teaches that when th[is] Court has applied a rule of law to the litigants in one case it must do so with respect to all others not barred by procedural requirements or res judicata. Id. at ----, 111 S.Ct. at 2448. 12 Because the Lampf Court applied the 1-and-3 rule to eliminate Gilbertson's § 10(b) claim, Beam required courts to apply the limitation rule announced in Lampf to pending claims under § 10(b). The PMLI Defendants promptly brought Lampf and Beam to the district court's attention, and the court dismissed PMLI's § 10(b) claims with prejudice in August 1991. The district court based its dismissal on the fact that the face of [PMLI's complaint establishes] that this action was filed more than three years after the alleged misrepresentations or omissions upon which [PMLI's] claim rests. Recognizing no way around Lampf and Beam, PMLI did not appeal. 13 Three months later, however, Congress provided a way around Lampf and Beam by passing § 27A, which provides: 14 (a) Effect on Pending Causes of Action.--The limitation period for any private civil action implied under section 10(b) of this Act that was commenced on or before June 19, 1991, shall be the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991. 15 (b) Effect on Dismissed Causes of Action.--Any private civil action implied under section 10(b) of this Act that was commenced on or before June 19, 1991-- 16 (1) which was dismissed as time barred subsequent to June 19, 1991, and 17 (2) which would have been timely filed under the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991, 18 shall be reinstated on motion by the plaintiff not later than 60 days after [December 19, 1991]. 19 1934 Act § 27A (amended by P.L. 102-242 (December 19, 1991)), codified at 15 U.S.C. § 78aa-1. On January 31, 1992, PMLI filed a motion to reinstate pursuant to § 27A(b). The PMLI Defendants challenged the constitutionality of § 27A(b), and the district court admitted the United States as an intervenor to explain why § 27A is constitutional. After considering the parties' written submissions, the district court held: 1) § 27A(b) contravenes due process by divesting the PMLI Defendants of their final judgment; and 2) § 27A contravenes the constitutionally-mandated retroactivity of new legal rules recognized in Beam. PMLI appeals from the district court's denial of its motion to reinstate. Pacific Mutual Life Ins. Co. v. First Republic Bank Corp., 806 F.Supp. 108 (N.D.Tex.1992). 20