Opinion ID: 2671513
Heading Depth: 2
Heading Rank: 1

Heading: The Statutes of Limitation and Repose

Text: On appeal, the parties’ contentions on this issue have dramatically changed. In the Appellants’ Brief, the Plaintiffs contend that the district court erred by holding that inquiry notice triggered the statute of limitations because the Supreme Court has rejected the inquiry notice standard. (Appellants’ Br. at 16.) In response, the Defendants do not dispute that the district court erred by applying the inquiry notice standard. Nor do the Defendants dispute that the Plaintiffs’ complaint met the statute of limitations under the Merck & Co., Inc. v. Reynolds, 559 U.S. 633, 130 S. Ct. 1784 (2010), standard. Instead, the Defendants contend that we should affirm anyway because the Plaintiffs’ complaint was untimely 4 Case: 13-13081 Date Filed: 04/28/2014 Page: 5 of 7 under the five year statute of repose. (Appellees’ Br. at 8.) The Plaintiffs reply that at least one investment (Walter’s $10,000 investment in 2008) is within the statute of repose and that Walter’s other investments should be brought in under the continuing fraud doctrine. (Appellants’ Reply Br. 2, 4.) We agree with both parties that the district court erred by applying the inquiry notice standard. In Merck, the Supreme Court specifically rejected the inquiry notice standard and in doing so overruled Theoharous v. Fong, 256 F.3d 1219, 1228 (11th Cir. 2001), and implicitly overruled Tello v. Dean Witter Reynolds, Inc., 410 F.3d 1275, 1283 (11th Cir. 2005), which the district court relied on. Merck, 559 U.S. at 652, 130 S. Ct. at 1798. In the ordinary case, we would accept the Defendants’ invitation and consider whether the district court’s order should be affirmed on an alternative basis, the five year statute of repose. However, at least one claim, Walter’s $10,000 investment, appears to be timely under the statute of repose. And, the Plaintiffs contend that other violations may be timely under the continuing fraud doctrine. The district court has not had the opportunity to consider this issue. So, under these circumstances, we vacate the district court’s order and remand for the district court to consider first these contentions about the statute of repose. 5 Case: 13-13081 Date Filed: 04/28/2014 Page: 6 of 7 B. The Heightened Pleading Standard for Securities Fraud The district court dismissed the Plaintiffs’ pro se complaint in the alternative for failing to meet the heightened pleading standards under the PSLRA. The Plaintiffs acknowledge that the amended complaint does not meet the heightened pleading standard, but contend that they should be allowed to amend their complaint to comply. (Appellants’ Reply Br. at 3, 6.) The Plaintiffs never brought a motion to amend the complaint before the district court. Of course, the Plaintiffs could not have brought a motion for leave to amend the complaint because the district court had already ruled that the claims were untimely and closed the case— amendment was futile and this appeal was their only option. In this procedural posture, the district court has never denied a motion to amend the pleadings. Thus, we have no district court order to review on this issue. Furthermore, whether the Plaintiffs should have leave to amend will depend on the district court’s resolution of whether their claims are timely. If the claims are not timely, then amendment will still be futile. The Plaintiffs should bring their motion for leave to amend before the district court on remand.