The Supreme Court limited the time investors have to decide whether to join securities class-action lawsuits, ruling 5-4 Monday in California Public Employees’ Retirement System vs. ANZ Securities Inc.
The ruling upholds an appellate court dismissal of CalPERS’ lawsuit against underwriters of Lehman Brothers debt offerings, ruling that temporarily participating in a timely filed class action did not extend the deadline for individual action.
In a dissenting opinion, Justice Ruth Bader Ginsburg said the decision “disserves the investing public. … The majority’s ruling will also gum up the works of class litigation. Defendants will have an incentive to slow walk discovery and other pre-certification proceedings so the clock will run on potential opt outs.”
Daniel S. Sommers, partner and co-chairman of Cohen Milstein law firm’s securities group, said in an email the Supreme Court “turned its back on both its own American Pipe (American Pipe and Construction Co. et al. vs. State of Utah et al.) precedent and practical, common-sense considerations and, in so doing, has imposed hurdles on investors that are onerous, needless and in many cases, insurmountable.”
Megan White, a spokeswoman for CalPERS, said in a e-mailed statement that the pension fund was disappointed, but that the opinion “reiterates the importance of remaining vigilant on behalf of our members in future securities class-action cases. “
“Since the collapse of Lehman Brothers in 2008, CalPERS has recovered $28.85 million from a number of defendants involved with the sale of Lehman’s bonds, including the company’s auditor, Lehman’s officers and directors, and several bond underwriters, “ Ms. White said. “The amounts recovered are substantially more than we would have obtained had CalPERS remained in the class-action suit.”
The CalPERS case centered on the three-year time limit that typically applies to suits over securities offerings. Sacramento-based CalPERS argued that the period should be extended for its complaint because a similar class-action suit was filed before the deadline. That case was settled, and CalPERS was trying to press ahead with its own suit.