Court Opinion

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Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

12-27-2005

Lieberman v. Cambridge Partners
Precedential or Non-Precedential: Precedential

Docket No. 04-3079

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                                     PRECEDENTIAL

     UNITED STATES COURT OF APPEALS
          FOR THE THIRD CIRCUIT
                __________

              Nos. 04-3079 & 04-3869
                    __________

             IRVIN S. LIEBERMAN,
           and all others similarly situated,
                               Appellant at No. 04-3079

                         vs.

        CAMBRIDGE PARTNERS, L.L.C.;
            J.B. HANAUER & CO.

                     _________

   On Appeal from the United States District Court
      for the Eastern District of Pennsylvania
                  (No. 03-cv-02317)
     District Judge: Honorable Cynthia M. Rufe
                     __________

         L-3 COMMUNICATIONS CORP.
                        Appellant at No. 04-3869
                    vs.

WAYNE CLEVENGER, LARRY COLANGELO, JOHN
FLEURY, EDWARD GORMAN, MIDMARK CAPITAL,
   L.P., MIDMARK ASSOCIATES, INC., MILAN
     RESANOVICH, JOSEPH ROBINSON and PAUL
                   TISCHLER
                   _________

      On Appeal from the United States District Court
         for the Eastern District of Pennsylvania
                    (No. 03-cv-03932)
        District Judge: Honorable Anita B. Brody

                        __________

                Argued: September 26, 2005
                      ___________

Before: RENDELL, FUENTES, and GARTH, Circuit Judges

            (Opinion Filed: December 27, 2005)
                         __________

                OPINION OF THE COURT
                      __________

John F. Innelli, Esquire (Argued)
INNELLI ROBERTSON
1818 Market Street, Suite 3620
Philadelphia, PA 19103

Attorney for Appellant Irvin S. Lieberman,
and all others similarly situated

Matthew J. Siembieda, Esquire (Argued)
Carl M. Buchholz, Esquire
Timothy D. Katsiff, Esquire
Evan H. Lechtman, Esquire
BLANK ROME LLP
One Logan Square
130 North 18th Street
Philadelphia, PA 19103

Mark D. Simon, Esquire
L-3 COMMUNICATIONS CORP.
1 Federal Street
Camden, NJ 08103

Attorneys for Appellant L-3 Communications Corp.

Lawrence M. Rolnick, Esquire
Thomas E. Redburn, Jr., Esquire (Argued)
LOWENSTEIN SANDLER, PC
65 Livingston Avenue
Roseland, NJ 07068

Robert N. Feltoon, Esquire
Jacquelyn J. Ager, Esquire
CONRAD O’BRIEN GELLMAN & ROHN
1515 Market Street, 16th Floor
Philadelphia, PA 19102

Attorneys for Appellee J.B. Hanauer & Co.

Alexander Kerr, Esquire (Argued)
Gregory J. Hindy, Esquire
McCARTER & ENGLISH, LLP
Mellon Bank Center
1735 Market Street, Suite 700
Philadelphia, PA 19103-7501

Attorneys for Appellees Wayne Clevenger, Larry Colangelo,
Joseph Robinson, Midmark Capital, LP, and Midmark
Associates, Inc.

John F. Smith, III, Esquire
Charles L. Becker, Esquire
REED SMITH LLP
1650 Market Street
2500 One Liberty Place
Philadelphia, PA 19103

Mark D. Powers, Esquire
Matthew H. Charity, Esquire
BAKER & HOSTETLER LLP
666 Fifth Avenue
New York, NY 10103

Attorneys for Appellees John Fleury, Edward Gorman and
Paul Tischler

Lewis D. Prutzman, Esquire
Ralph A. Siciliano, Esquire
TANNEBAUM HELPERN SYRACUSE & HIRSCHTRITT
LLP
900 Third Avenue
New York, NY 10022

Attorneys for Appellee Milan Resanovich
Garth, Circuit Judge.

        In these two cases, which have been consolidated on
appeal, plaintiff-appellants Irvin S. Lieberman (“Lieberman”)1
and L-3 Communications Corp. (“L-3”) instituted federal
securities fraud actions after the enactment of Section 804 of the
Public Company Reform and Investor Protection Act of 2002
(“Sarbanes-Oxley”).2 That provision extended the applicable
limitations period for private securities fraud claims from the
earlier of one year after discovery of the wrongdoing or three
years after the unlawful transaction3 to the earlier of two years
after discovery or five years after the unlawful transaction. See
§ 804(a).
       Section 804 of Sarbanes-Oxley applies to all proceedings
“commenced on or after” its enactment date, or July 30, 2002.
§ 804(b). Were Section 804 applicable here, as Lieberman and
L-3 contend, the two actions would be timely, as they were filed
within the 2-and-5-year limitations structure. Both actions,
however, had earlier been time-barred under the then-applicable
1-and-3-year limitations scheme, inasmuch as the alleged

       1
        As noted below, Lieberman filed a class action
complaint on behalf of all others similarly situated.
       2
          Pub.L. No. 107-204, § 804, 116 Stat. 745, 801 (2002)
codified in part at 28 U.S.C. § 1658(b). For ease of reference,
throughout this opinion we will refer to the amended statute of
limitations provision as § 804 rather than 28 U.S.C. § 1658(b).
       3
           The pre-Sarbanes-Oxley 1-and-3-year limitations
period for private securities fraud actions was established by the
United States Supreme Court in Lampf, Pleva, Lipkind, Prupis
& Petigrow v. Gilbertson, 501 U.S. 350 (1991).

                               -5-
wrongdoing in each case occurred approximately four years
before the enactment of Section 804. Put simply, while the
actions were filed after the enactment of Section 804, they were
already extinguished by then.
       At issue in these cases is whether the amended limitations
period of Sarbanes-Oxley revives previously expired securities
fraud claims. We hold that it does not, and in doing so, join the
other courts of appeals that have addressed this same question.
See In re Enterprise Mortg. Acceptance Co., LLC Sec. Litig.,
391 F.3d 401, 406 (2d. Cir. 2005) (holding that Sarbanes-Oxley
does not revive stale claims); Foss v. Bear, Stearns & Co., Inc.,
394 F.3d 540, 542 (7th Cir. 2005) (same); In re ADC
Telecomm., Inc. Sec. Litig., 409 F.3d 974, 978 (8th Cir. 2005)
(same). Accordingly, we will affirm the District Courts’
respective orders dismissing the actions.
                                I.
         The facts relevant to the disposition of these appeals –
i.e., those pertaining to the timing of events – are not contested.
We recount them below.
A.     Irvin S. Lieberman
       On or about April 14, 2003, Irvin S. Lieberman filed a
putative securities fraud class action against J.B. Hanauer &
Company (“Hanauer”) in the United States District Court for the
Eastern District of Pennsylvania.4 In effect, Lieberman alleged

       4
         Lieberman also named Cambridge Partners, L.L.C. as
a defendant. Lieberman, however, never served process upon
Cambridge, apparently because Cambridge has ceased to exist
as a corporate entity. The District Court dismissed Lieberman’s
claims against Cambridge without prejudice for failure to effect

                                -6-
that Hanauer, as underwriter of certain debt securities issued in
a public offering on April 21, 1998, induced investors to
purchase the securities by misrepresentation, deceit and fraud,
in contravention of the federal securities law. Lieberman
claimed that the investors became aware of the alleged
misrepresentations only in March 2003.
        The complaint was subsequently amended, and
thereafter, Hanauer moved to dismiss the amended complaint for
failure to state a claim under Fed. R. Civ. P. 12(b)(6). Hanauer
argued, inter alia, that all of Lieberman’s claims were time-
barred as of April 21, 2001, three years after the date of
purchase (April 21, 1998). Lieberman argued that his claims,
filed within five years of the date of purchase, were timely under
the extended limitations period of Sarbanes-Oxley. He argued
that the amended limitations scheme was applicable because he
instituted the action on April 13, 2003, and hence after
Sarbanes-Oxley’s effective date of July 30, 2002.
       The District Court granted Hanauer’s motion and
dismissed the amended class action complaint in its entirety,
declining to apply Sarbanes-Oxley to revive Lieberman’s
expired claims.5 Lieberman appealed.

service of process. Cambridge is not a party to the present
appeal.
       5
         In the amended class action complaint, Lieberman
asserted claims under sections 12(a)(2) and 15 of the Securities
Act of 1933 (“Securities Act”), 15 U.S.C. §§ 77l, 77o, in
addition to claims under Securities and Exchange Commission
Rule 10b-5 (“Rule 10b-5”) and sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C.
§§ 78j; 78t. We forebear from a detailed description of
Lieberman’s claims, inasmuch as the threshold issue of

                               -7-
B.     L-3 Communications Corp.
       On July 1, 2003, L-3 Communications Corp., a leading
merchant supplier of secure communications technology and
other similar products, filed a securities fraud action in the
United States District Court for the Eastern District of
Pennsylvania, naming as defendants various officers and
shareholders of SPD Technologies, Inc. (“SPD Technologies”)
and a wholly-owned subsidiary, SPD Electrical Systems, Inc.
(“SPD Electrical”). SPD Electrical is a manufacturer of circuit
breakers and switchgear for the United States Navy’s nuclear
submarines and surface ships.
       As relevant here, the complaint, advancing claims under
both federal and state law, alleged that on August 13, 1998, L-3
entered into a merger agreement with SPD Technologies and
Midmark Capital, L.P., a majority shareholder of SPD
Technologies, whereby L-3 purchased all outstanding shares of
SPD Technologies. The complaint further alleged that the
defendants engaged in a deceptive scheme designed to (1)
induce L-3 to pay an artificially high purchase price for the
company through material misrepresentations and (2) conceal
the fraudulent scheme. L-3 claims not to have discovered this
scheme until January 2002. The defendants moved to dismiss
the complaint, arguing, inter alia, that the federal securities

limitations/repose cuts across all the claims. Concluding, as we
do, that Sarbanes-Oxley does not revive expired securities fraud
claims, we find it unnecessary to consider other issues presented
by Lieberman specific to the nature of the individual claims, and
dealt with by the District Court.

                               -8-
fraud claims were time-barred after August 13, 2001, three years
from the date of the merger (August 13, 1998).
       In a thorough and closely-reasoned opinion, Judge Brody
granted the defendants’ motion and held that Sarbanes-Oxley,
contrary to L-3’s contentions, did not overcome the strong
presumption against revival of time-barred claims, especially
where those claims had been extinguished by a statute of repose.
Under the then-applicable 1-and-3-year limitations scheme,
Judge Brody concluded, L-3’s claims had expired on August 13,
2001, three years after the date of the merger and nearly one
year before the enactment of Sarbanes-Oxley. Judge Brody
declined to exercise supplemental jurisdiction over the
remaining state claims.6 This appeal followed.
                               II.
       Lieberman and L-3 now ask us to reverse the decisions
below, which held that the extended limitations period of
Sarbanes-Oxley did not apply to revive their expired federal
securities fraud claims. Because both cases involve the identical
legal issue, the parties submitted a Joint Motion for
Consolidation for Purposes of Disposition. The Court granted
that motion on November 5, 2004.7
      We have jurisdiction over the District Courts’ final orders
dismissing the respective actions pursuant to 28 U.S.C. § 1291.

       6
         L-3 does not appeal the District Court’s decision to
decline the exercise of supplemental jurisdiction over its state
law claims.
       7
        While Lieberman and L-3 sometimes raise different
arguments, we hereinafter assign their respective arguments to
“Lieberman and L-3” collectively.

                               -9-
Our review is plenary. See Ballay v. Legg Mason Wood Walker,
Inc., 925 F.2d 682, 684 (3d Cir. 1991) (“This question is purely
one of statutory construction which implicates our plenary
standard of review.”).
                               III.
                                A.
       Prior to the enactment of Sarbanes-Oxley, 28 U.S.C. §
1658(b), there was no congressionally created limitations period
for federal securities fraud claims arising under section 10(b) of
the Exchange Act. As a result, in Lampf, Pleva, Lipkind, Prupis
& Petigrow v. Gilbertson, 501 U.S. 350 (1991), the Supreme
Court held that litigation instituted pursuant to section 10(b) and
Rule 10b-5 must be commenced within one year after the
discovery of the facts constituting the violation and within three
years after such violation, as statutorily prescribed for express
causes of actions contained in the Exchange Act and the
Securities Act. Id. at 362. The Lampf Court viewed the 3-year
limit as a “period of repose,” intended to impose an “outside
limit” not subject to tolling principles. Id. at 363 (citation
omitted). As the Supreme Court stated:
       The 1-year period, by its terms, begins after discovery of
       the facts constituting the violation, making tolling
       unnecessary. The 3-year limit is a period of repose
       inconsistent with tolling . . . Because the purpose of the
       3-year limitation is clearly to serve as a cutoff, we hold
       that tolling principles do not apply to that period.
Id.
       As part of Sarbanes-Oxley, enacted on July 30, 2002,
Congress amended the 1-and-3-year limitations scheme for
private securities fraud actions, previously established by the

                               -10-
Supreme Court in Lampf. Section 804 of Sarbanes-Oxley
provides:
       (a) . . . [A] private right of action that involves a claim of
       fraud, deceit, manipulation, or contrivance in
       contravention of a regulatory requirement concerning the
       securities laws, as defined in section 3(a)(47) of the
       Securities Exchange Act of 1934 (15 U.S.C. [§]
       78c(a)(47)), may be brought not later than the earlier of-
       (1) 2 years after the discovery of the facts constituting the
violation; or
       (2) 5 years after such violation.
       (b) EFFECTIVE DATE.-The limitations period provided
       by section 1658(b) of title 28, United States Code, as
       added by this section, shall apply to all proceedings
       addressed by this section that are commenced on or after
       the [July 30, 2002,] date of enactment of this Act.
       (c) NO CREATION OF ACTIONS.-Nothing in this
       section shall create a new, private right of action.
Public Company Accounting Reform and Investor Protection
Act of 2002, Pub.L. No. 107-204 § 804, 116 Stat. 745, 801,
codified in part at 28 U.S.C. § 1658(b) (emphasis added).
       Both Lieberman and L-3 maintain that Section 804 of
Sarbanes-Oxley applies retroactively to their claims, thus
extending the relevant repose period to five years after the
alleged fraudulent transactions.8 They rely on the effective date

       8
         The discovery dates are immaterial to these appeals, as
the relevant period of repose ended earlier in both instances.
See Lampf, 501 U.S. at 364 (holding that litigation instituted

                               -11-
provision of the statute, which provides that “this section, shall
apply to all proceedings . . . that are commenced on or after
[July 30, 2002].” § 804(b). Both submit that they filed their
actions after July 30, 2002, which, they claim, brings their
actions within the purview of the new statute. Section 804
would extend the respective filing deadlines to April 21, 2003
for Lieberman and August 13, 2003 for L-3. The actions are
timely if, and only if, Section 804 is applicable.9
       The Appellees, on the other hand, contend that Lampf
provided the governing limitations structure for private
securities fraud claims at the time of the alleged fraudulent
conduct in each case. They further contend that Lieberman’s
and L-3’s claims had been extinguished by the then-applicable
3-year period of repose prior to the enactment of Sarbanes-
Oxley. The Appellees submit that Congress never intended for
Sarbanes-Oxley to apply retroactively to revive claims already
extinguished by a statute of repose.
      The question we must decide, then, is whether Section
804 effectuates this resurrection of moribund securities fraud

pursuant to section 10(b) and Rule 10b-5 must be commenced
“within one year after the discovery of the facts constituting the
violation and within three years after such violation”) and § 804
(b) (providing that actions may be “brought not later than the
earlier of” 2 years after discovery or five years after the
violation) (emphasis added).
       9
        For Lieberman, the relevant dates are: (1) the fraud
occurred on April 21, 1998, the date of the public offering, and
(2) he filed the original complaint on April 14, 2003.
       For L-3, the relevant dates are: (1) the fraud occurred on
August 13, 1998 when the merger occurred, and (2) L-3 filed its
complaint on July 1, 2003.

                              -12-
claims. We now turn to its resolution.
                               B.
        We begin our analysis with a clarification of the question
presented. Retroactive application of a new statute, such as
Section 804, occurs whenever the statute is applied to causes of
action already accrued prior to its enactment date. See Landgraf
v. USI Film Products, 511 U.S. 244, 265 (1994) (“The ‘principle
that the legal effect of conduct should ordinarily be assessed
under the law that existed when the conduct took place has
timeless and universal appeal.’”) (quoting Kaiser Aluminum &
Chem. Corp. v. Bonjorno, 494 U.S. 827, 855 (1990) (Scalia, J.,
concurring)).     But that description, while accurate, is
nonetheless imprecise, at least for present purposes.
        Section 804 of Sarbanes-Oxley may be applied
retroactively to two separate categories of cases. First, it is
possible to give Section 804 retroactive effect by applying it to
all claims that have accrued but have not yet expired as of the
enactment date (July 30, 2002). Second, it is equally possible to
apply Section 804 retroactively to revive already expired claims,
an entirely separate category of cases. The Eighth Circuit Court
of Appeals has explained the distinction as follows:
       Providing that a statute of limitations should be “applied
       retroactively” is a broad brush approach to what is
       actually a more specific inquiry. Retroactive application
       can reach two categories of cases: first, a group on which
       the statute has not run at the time the statute is amended;
       and second, cases on which the existing statute has run at
       the time of amendment. The second group is affected not
       only by questions of the retroactive application of the
       statute, but also by the need to consider the question of
       revival of barred claims.

                              -13-
Kansas Pub. Employees Ret. Sys. v. Reimer & Koger Assocs.,
Inc., 61 F.3d 608, 615 (8th Cir. 1995) (holding that amendment
to state limitations statute applied retroactively but did not
revive time-barred actions). The present appeals fall into the
second group of cases.
        Here, we decide only whether Congress intended for
Section 804 to revive already expired securities fraud claims.
We do not decide the broader question, not presented by these
appeals, whether Congress intended Section 804 to have a
general retroactive effect. Though related, the two questions are
analytically distinct, requiring separate inquiries into
congressional intent. We are mindful of that distinction in
applying the well-established principles that govern our
retroactivity determination. See Martin v. Hadix, 527 U.S. 343,
362 (1999) (Scalia, J., concurring) (noting that the key question
is “retroactive in reference to what?”).
                                C.
        The Supreme Court has frequently noted that there is a
“presumption against retroactive legislation [that] is deeply
rooted in our jurisprudence.” Landgraf, 511 U.S. at 265. The
presumption arises because “[e]lementary considerations of
fairness dictate that individuals should have an opportunity to
know what the law is and to conform their conduct
accordingly.” Id. Consequently, “congressional enactments . .
. will not be construed to have retroactive effect unless their
language requires this result.” Bowen v. Georgetown Univ.
Hosp., 488 U.S. 204, 208 (1988).
        In Landgraf v. USI Film Products, the Supreme Court set
forth a two-part test for determining whether a particular statute
applies retroactively. 511 U.S. at 280. At the first stage, a court
must determine if Congress has expressly prescribed the

                               -14-
statute’s intended reach. Id. If Congress has done so, the
inquiry ends, and the court enforces the statute as it is written.
Id. If the statute is ambiguous or contains no express command,
a court must examine whether the statute would have an adverse
effect if it were held to be retroactive; that is to say, “whether it
would impair rights a party possessed when he acted, increase
a party’s liability for past conduct, or impose new duties with
respect to transactions already completed.” Id. If the statute
would do any of these things, it will not be applied retroactively,
“absent clear congressional intent” to the contrary. Id.10

       10
         As later distilled by this Court, Landgraf and its
progeny establish the following principles that courts must
employ in retroactivity determinations:

               1. There is a strong presumption against applying
       a statute in a manner that would attach new legal
       consequences to events completed before the statute’s
       enactment, i.e., a manner that would impair rights a party
       possessed when he acted, increase a party’s liability for
       past conduct, or impose new duties.
               2. If Congress has focused on the issue, has
       determined that the benefits of retroactivity outweigh the
       potential for disruption or unfairness, and has provided
       unambiguous evidence of its conclusion by directing that
       retroactive effect be given, then, and only then, will the
       presumption be overridden.
               3. Consistent with these principles, normal rules
       of statutory construction may apply to remove . . . the
       possibility of retroactivity. Nothing short of an
       unambiguous directive, however, will justify giving a
       statute a retroactive effect. Thus, when normal rules of
       statutory construction indicate that a statute is intended
       to be applied in a manner involving no retroactive effect,
       a Court need inquire no further. On the other hand, if

                                -15-
                    1. Congressional Intent
        In accordance with Landgraf, we first look to the plain
language of Section 804 of Sarbanes-Oxley. Section 804(b)
states that the revised statute of limitations “shall apply to all
proceedings addressed by this section that are commenced on or
after the [July 30, 2002] date of enactment.” Lieberman and L-3
contend that this provision clearly expresses the temporal scope
of the statute, and that the statute applies to all claims, even
previously expired ones, filed after the date of enactment. That
contention is a plausible one, but it is just as plausible to read
the provision as applying to all claims that are still viable and
not previously extinguished, filed after the date of enactment.
Even assuming, without deciding, that Section 804(b) clearly
provides for retroactive application, it does not necessarily
follow that Section 804(b) thereby clearly provides for the
resurrection of moribund claims.
         In addition, Lieberman and L-3 read Section 804(b) in
isolation. In our view, however, Section 804(b) must be
considered together with Section 804(c), which provides that
“[n]othing in this section shall create a new, private right of
action.” See U.S. v. Morton, 467 U.S. 822, 828 (1984) (“We do
not . . . construe statutory phrases in isolation; we read statutes

       such construction suggests that a retroactive effect may
       have been intended, the traditional presumption
       nevertheless bars retroactive application unless an
       unambiguous congressional directive is found.

In re Minarik, 166 F.3d 591, 597-98 (3d Cir. 1999) (considering
retroactive application of AEDPA’s gatekeeping provisions)
(citations and internal quotation marks omitted). Our decision
today is in accord with these principles.

                               -16-
as a whole.”). Section 804(c) creates, at a minimum, ambiguity
as to the temporal reach of the statute.
        Application of Sarbanes-Oxley to Lieberman’s and L-3’s
claims, previously extinguished by the 3-year statute of repose,
would create new causes of actions. As the Supreme Court has
noted, “extending a statute of limitations after the pre-existing
period of limitations has expired impermissibly revives a
moribund cause of action.” Hughes Aircraft Co. v. United
States ex rel. Schumer, 520 U.S. 939, 950 (1997) (citing
Chenault v. United States Postal Serv., 37 F.3d 535, 539 (9th
Cir. 1994) (relying on Landgraf in holding “that a newly enacted
statute that lengthens the applicable statute of limitations may
not be applied retroactively to revive a plaintiff’s claim that was
otherwise barred under the old statutory scheme because to do
so would alter the substantive rights of a party and increase a
party’s liability”)); see also Enterprise Mortg., 391 F.3d at 407
(“Where a plaintiff is empowered by a new statute to bring a
cause of action that previously had no basis in law, a new cause
of action has, in some sense of the word, been created.”).

        The salience of Section 804(c) is further magnified by the
fact that Lieberman’s and L-3’s claims had been extinguished by
a statute of repose, not merely by a statute of limitations. See P.
Stolz Family Partnership L.P. v. Daum, 355 F.3d 92, 102 (2d
Cir. 2004) (noting that “statutes of repose affect the availability
of the underlying right: That right is no longer available on the
expiration of the specified period of time”). The P. Stolz
decision distinguished a statute of repose from a statute of
limitations in the following manner:
       In general, a statute of repose acts to define temporally
       the right to initiate suit against a defendant after a

                               -17-
       legislatively determined time period. Unlike a statute of
       limitations, a statute of repose is not a limitation of a
       plaintiff’s remedy, but rather defines the right involved
       in terms of the time allowed to bring suit. “[S]tatutes of
       limitations bear on the availability of remedies and, as
       such, are subject to equitable defenses . . ., the various
       forms of tolling, and the potential application of the
       discovery rule. In contrast, statutes of repose affect the
       availability of the underlying right: That right is no
       longer available on the expiration of the specified period
       of time. In theory, at least, the legislative bar to
       subsequent action is absolute, subject to legislatively
       created exceptions . . . set forth in the statute of repose.
Id. at 102 (quoting Calvin W. Corman, Limitation of Actions, §
1.1, at 4-5 (1991)).
        If, as the Supreme Court has suggested, extending a
statute of limitations after the pre-existing period of limitations
has expired would essentially create a new cause of action, see
Hughes Aircraft, 520 U.S. at 950, then a fortiori applying
Sarbanes-Oxley to claims extinguished by a period of repose
would unequivocally create a new cause of action. Compare
Chenault, 37 F.3d at 538-39 (declining to apply new statute
retroactively to revive a claim that would otherwise be stale
under old statute of limitations). Congress undoubtedly
possesses the powers to resurrect claims extinguished by a
statute of repose, no less than claims barred by a statute of
limitations, but it must manifest those powers in the clearest
possible terms. Section 804(b), particularly when considered
with Section 804(c), does not possess the requisite degree of

                               -18-
clarity and unambiguity to accomplish this purpose.11
Therefore, reading the statute as a whole, it is clear to us that the
language of Section 804 does not unambiguously revive
previously expired securities fraud claims.
       It also bears mention that the legislative history of
Section 804 does not clearly evince the congressional intent that
Section 804 apply retroactively to revive expired securities fraud
claims. We find the Second Circuit’s analysis persuasive on this
score:
       Section 804’s precursor, Section 4 of the proposed
       Corporate and Criminal Fraud Accountability Act of
       2002, S. No.2010, was introduced by Senator Patrick
       Leahy in March 2002. Nothing in the Senate Committee
       Report for the proposed Act indicates that the extension
       of the statute of limitations was intended to revive
       expired claims or that Congress was even considering
       such a thing. See S.Rep. No. 107-146 (2002). Nor do the
       statements Senator Leahy made during the Conference
       Committee meeting on Sarbanes-Oxley, reflect any

       11
           Lieberman and L-3 argue, however, that “[s]ection
804(c) merely serves as Congress’ response to a concern that the
extended statute of limitations may have been perceived as
creating additional private substantive rights of action, that did
not previously exist under the federal securities laws.” App. (L-
3) Br. at 33. But those “cases where [the] Court has found truly
‘retroactive’ effect adequately authorized by a statute have
involved statutory language that was so clear it could sustain
only one interpretation.” Lindh v. Murphy, 521 U.S. 320, 328 n.
4 (1997). That does not describe the situation presented here,
particularly in light of Hughes Aircraft Co., supra, and
Chenault, supra.

                                -19-
       intention to revive expired claims. See Conference
       Report on Corporate Responsibility Legislation, 107th
       Cong., July 24, 2002, reprinted in Federal News Service
       (2002).
Enterp. Mortg., 391 F.3d at 408. In arguing to the contrary,
Lieberman and L-3 ignore the fact that congressional intent to
apply the statute retroactively is different from congressional
intent to revive expired claims.
       We therefore conclude that there is no clear evidence that
Congress intended Section 804 to revive previously expired
claims.12

       12
          We pause to note that application of the distinction
between mere retroactivity and the revival of expired claims
limits the relevance of the retroactivity cases relied upon by
Lieberman and L-3. In Martin v. Hadix, 527 U.S. 343 (1999),
for example, the Supreme Court considered the temporal reach
of a provision of the Prison Litigation Reform Act of 1995. In
concluding that Congress had not expressly mandated the
temporal reach of the applicable statute, the Court noted that the
statute did not contain the following language that it suggested
in Landgraf might qualify as a clear statement of congressional
intent to apply a statute retroactively: “[T]he new provisions
shall apply to all proceedings pending on or commenced after
the date of enactment.’” Id. at 354 (quoting Landgraf, supra, at
260).
        Lieberman and L-3 compare the language of Section 804
to the language quoted by the Martin court as unambiguously
prescribing the temporal reach of the statute. However, Martin
(or Landgraf) never addressed the question, presented here, of
whether a statute should be given retroactive effect to revive
expired claims.
        The same holds true with respect to United States v. One

                              -20-
“Piper” Aztec “F” De Luxe Model 250 PA 23 Aircraft Bearing
Serial No. XX-XXXXXXX (Piper Aztec), 321 F.3d 355 (3d Cir.
2003), where this Court interpreted the Civil Asset Forfeiture
Reform Act (“CAFRA”). Under CAFRA, in “any forfeiture
proceeding commenced on or after [August 23, 2000],” the
government must provide forfeiture under a different burden of
proof – preponderance of the evidence. Id. at 357. The Court
found that the language in the statute was clear and
unambiguous, rejecting the argument for retroactive application
to cases filed before but pending on the effective date. Id. at
357-58.
       Focusing on this Court’s conclusion that CAFRA’s
language clearly prescribed the temporal reach of the statute,
Lieberman and L-3 argue that, in Section 804, which contains
substantially identical language, Congress has also clearly
prescribed the relevant temporal scope. Piper Aztec, however,
did not consider the revival of stale claims.
       Lieberman and L-3 also rely on two cases which arguably
have interpreted similar statutory language to include previously
expired claims. See International Union of Elec., Radio and
Mach. Workers, AFL-CIO, Local 970 v. Robbins & Myers, Inc.,
429 U.S. 229, 242-43 (1976) (holding amendment to limitations
period for filing EEOC complaints applied to previously expired
but currently pending claim) and Alabama Dry Dock and
Shipbuilding Corp. v. Sowell, 933 F.2d 1561, 1563-65 (11th Cir.
1991) (interpreting statute’s instruction that it “shall apply both
with respect to claims filed after such date and to claims pending
on such date” to include previously expired claims); overruled
on other grounds, Bath Iron Works Corp. v. Director, Office of
Workers’ Compensation Programs, U.S. Dept. of Labor, 506
U.S. 153 (1993). As the Appellees point out, these cases did
not deal with claims extinguished by statutes of repose, as
opposed to statutes of limitations. Nor did either of these cases
deal with a provision similar to Section 804(c). In any event,

                               -21-
                      2. Retroactive Effect
       Having concluded that there is no clear evidence that
Congress intended for Section 804 to apply retroactively to
revive stale claims, it is necessary to ask whether retroactive
application of Section 804 to such claims would have
“retroactive effect,” i.e., “whether it would impair rights a party
possessed when he acted, increase a party’s liability for past
conduct, or impose new duties with respect to transactions
already completed.” Landgraf, 511 U.S. at 280. Our conclusion
that Section 804 may not be read to authorize the revival of
moribund claims inexorably leads to a further conclusion that
such a reading would have an impermissible retroactive effect.
Nevertheless, because the parties have briefed and argued
“retroactive effect,” we address this issue.
       Lieberman and L-3 essentially argue that application of
Section 804 to their claims does not implicate the concerns
specified by the Supreme Court in Landgraf, as Section 804
affects only the procedural posture of their action, not
substantive rules. However, it is evident that the resurrection of
previously time-barred claims “increase[s] a party’s liability” by
abolishing a complete defense to suit. See Enterprise Mortg.,
391 F.3d at 409-10 (holding that “the resurrection of previously
time-barred claims has an impermissible retroactive effect”
under Landgraf ); see also Chenault, 37 F.3d at 539 (“In this
case the rights of the defendant would be altered and its liability
increased because it would be forced to defend an action that
was previously time-barred.”).

they both predate Hughes Aircraft.          We thus find them
inapposite.

                               -22-
        Moreover, as previously stated, we are dealing with
claims extinguished by a statute of repose. Lieberman’s and L-
3’s claims would therefore affect substantive rights by creating
new causes of action. We can envision no greater retroactive
effect than this.13
        We conclude that extending the amended statute of
limitations to revive expired securities fraud claims would have
an impermissible retroactive effect. In accordance with
Landgraf then, we decline to apply Section 804 to revive
Lieberman’s and L-3’s expired claims.
                               IV.
       As noted, we are not the first circuit court to consider
whether Sarbanes-Oxley revives previously expired securities
fraud claims. Three of our sister courts of appeals have already
done so, and in each case, they have declined to apply Section
804 to such claims – as we do here. See Enterprise Mortg., 391
F.3d at 409-10; Foss, 394 F.3d at 542; In re: ADC Telecomm.,
Inc. Sec. Litig., 409 F.3d at 978.14

       13
          In a somewhat similar vein, Lieberman and L-3
contend that Section 804 does not impose new duties with
respect to past conduct, as the conduct in question was unlawful
both before and after the enactment of Sarbanes-Oxley. The
same argument was rejected by the Supreme Court in Hughes
Aircraft. See 520 U.S. at 947.

       14
          We are aware of the recent decision from the Eleventh
Circuit in Tello v. Dean Witter Reynolds, Inc., 410 F.3d 1275
(11th Cir. 2005). In that case, the district court determined that
Section 804 of Sarbanes-Oxley revived time-barred claims. The
Eleventh Circuit, however, remanded for further fact-finding,

                              -23-
       Accordingly, we will affirm the District Courts’
respective decisions dismissing the actions.

thus declining to reach the question whether Section 804 can be
applied retroactively to revive securities fraud claims. See id. at
1294 n.19.

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