Credit Suisse Securities (USA) LLC v. Simmonds (10-1261)
argument 10-1261Credit Suisse Securities (USA) LLC v. Simmonds
Supreme Court of the United States
57 min
5 speakers
8 chapters
transcribed 5 days ago
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What is the statutory basis of Section 16B and how does it define the two‑year time limit?
We'll hear argument next in case number 10-1261, Credit Suisse Securities v. Simmons.
Mr. Landau, you may proceed. Justice Scalia, may it please the Court. In Section 16B of the 1934 Exchange Act, Congress created a cause of action to allow securities issuers to recover short-swing profits from certain covered persons, but specified that a lawsuit must be brought two years after after the date the short swing profit was realized. The statute doesn't say two years after the date the defendants filed a Section 16A report, as the Ninth Circuit and respondents would like to have it. Nor does the statute say two years after the date the plaintiff discovers the short swing transaction, as the government would like to rewrite it. I'd like to make two basic points here today. First, as this Court recognized in LAMP, the two-year time limit in Section 16B
is best read as a period of repose that can't be extended at all. And second, even if Section 16B's two-year time limit could be extended, the doctrine of equitable tolling wouldn't apply to extend the time limit here, where the plaintiff didn't act diligently to bring a claim and didn't prove that any extraordinary circumstances precluded her from filing. The upshot of these two points is that this Court should reverse the Ninth Circuit's and remand the case with directions to dismiss the complaint as untimely.
JUSTICE SOTOMAYOR. On your first point, you cite LAMP. But LAMP had two limits. So it said, what was it, one year from whatever, from discovery, and then it said an outer limit at three years, and it was the same thing in Merck. Here we just say it just has what seems to me a plain vanilla statute of limitations that is traditionally subject to waiver, equitable tolling. You don't have that special kind of statute that gives you one limit and then sets a further limit that will be the outer limit.
MR. Your Honor, with respect, it's certainly true that a two-prong time limit underscores that the outer prong is a period of repose. But there are certainly no magic words that Congress has to use that doesn't have to use a two-prong time limit to establish the outer limit as a period of repose. That's really the lesson of this Court's decision in TRW and in Beggerle and Brockhamp, that the background or the default rule, the background rule that equitable polling applies isn't some — is just that. It's a background rule. And Congress, in the text or structure — JUSTICE
SOTOMAYOR What takes you out of that background rule in this case? You don't have the two-prong structure, which really did, as Justice Ginsburg said, drive the analysis. when we talked about those provisions. So that's not there. So what takes you out of the default position, which is equitable tolling applies? Sure, Your Honor. I think
the key point, Your Honor, is that this Congress in the 1934 Exchange Act was carefully attuned to the issue of time limits. Congress, there was a lot of discussion of this. This is not a situation where Congress established a liability and just didn't focus on this issue, as often happens, and left it to background statute of limitations provisions or other background rules. Congress fought long and hard about this. With respect to the two-pronged provisions, those are the fraud provisions that were set at an outer limit of three years, and then they actually created a discovery rule that said we don't even want people to wait. the whole three years, if they've discovered the facts underlying their claim, we want them to bring it within a year.
So they use discovery to shorten the time, not to extend
it. Right. But I guess I'm still not understanding why, if you look at this provision, you would think of this as anything other than an ordinary statute of limitations. What is it about this provision? I don't mean to — I mean, you can make structural arguments, but But, you know, what factors do you think in this provision makes it a statute of repose?
Two things, Your Honor. First, I'd like to just finish on the structural point, and then we also have a textual argument.
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Chapters
8 chapters
1
What is the statutory basis of Section 16B and how does it define the two‑year time limit?
0:00–7:43
2
How does the Court distinguish a statute of repose from a traditional statute of limitations in this case?
7:43–14:53
3
What arguments does Justice Sotomayor raise about the LAMP decision and its two‑prong limits?
14:53–22:31
4
How do the parties argue about equitable tolling and the plaintiff’s diligence requirements?
22:31–28:38
5
What role does the Section 16A reporting requirement play in triggering the 16B limitations period?
28:38–35:42
6
How do the Ninth Circuit’s Whitaker rule and the Second Circuit’s Litzler rule differ on discovery and actual knowledge?
35:42–42:06
7
What policy considerations does each side present about fairness, culpability, and congressional intent?
42:06–49:25
8
What are the final conclusions and recommendations of the parties regarding repose versus tolling?
49:25–57:37