In an opinion today, Judge Swain ruled Section 13 of the Securities Act, which states that no action may be brought “more than three years after the security was bona fide offered to the public” was not extended by the so-called “FDIC Extender Provision” of the Financial Institutions Reform, Recovery, and Enforcement Act (or “FIRREA”) because, she concluded, the FDIC Extender Provision applied only to statutes of limitations, which are generally triggered from the time a claim accrues (or can be brought), as opposed to statutes of repose, which set forth an absolute end date for suit, regardless of equitable considerations and regardless of whether the harm necessary to sue even arisen.
Judge Swain’s ruling was based on the Supreme Court’s decision CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014), which rejected the application of a similar extender law in the context of federal environmental law. She went further and found that Waldburger “implicitly” overruled parts of a Second Circuit ruling in one of the FHFA cases, FHFA v. UBS, which, based on an extender law, found the claims at issue to be timely: “The analytical framework set out by the Supreme Court in Waldburger calls into question the Second Circuit’s analysis of the extender provision . . . in its UBS decision, implicitly overruling material aspects of the UBS decision’s rationale.”
Judge Swain also disagreed with the Tenth Circuit, which, after having been instructed to reconsider a ruling based on Waldburger, maintained its original conclusion that the extender law would apply.
If Judge Swain’s ruling carries the day with the Second Circuit, it would be welcome news to Nomura and RBS, which are in the midst of a trial against the FHFA involving a substantially identical issue.