Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson/Dissent Stevens

Justice STEVENS, with whom Justice SOUTER joins, dissenting.

In my opinion the Court has undertaken a lawmaking task that should properly be performed by Congress. Starting from the premise that the federal cause of action for violating § 10(b) of the Securities Exchange Act of 1934, 48 Stat. 891, 15 U.S.C. § 78j(b), was created out of whole cloth by the judiciary, it concludes that the judiciary must also have the authority to fashion the time limitations applicable to such an action. A page from the history of § 10(b) litigation will explain why both the premise and the conclusion are flawed.

The private cause of action for violating § 10(b) was first recognized in Kardon v. National Gypsum Co., 69 F.Supp. 512 (ED Pa.1946). In recognizing this implied right of action, Judge Kirkpatrick merely applied what was then a well-settled rule of federal law. As was true during most of our history, the federal courts then presumed that a statute enacted to benefit a special class provided a remedy for those members injured by violations of the statute. See Texas and Pacific R. Co. v. Rigsby, 241 U.S. 33, 39-40, 36 S.Ct. 482, 484-485, 60 L.Ed. 874 (1916). Judge Kirkpatrick did not make "new law" when he applied this presumption to a federal statute enacted for the benefit of investors in securities that are traded in interstate commerce.

During the ensuing four decades of administering § 10(b) litigation, the federal courts also applied settled law when they looked to state law to find the rules governing the timeliness of claims. See Del-Costello v. International Brotherhood of Teamsters, 462 U.S. 151, 172-173, 103 S.Ct. 2281, 2294-2295, 76 L.Ed.2d 476 (1983) (STEVENS, J., dissenting). It was not until 1988, that a federal court decided that it would be better policy to have a uniform federal statute of limitations apply to claims of this kind. See In re Data Access System Security Litigation, 843 F.2d 1537 (CA3). I agree that such a uniform limitations rule is preferable to the often chaotic traditional approach of looking to the analogous state limitation. I believe, however, that Congress, rather than the federal judiciary, has the responsibility for making the policy determinations that are required in rejecting a rule selected under the doctrine of state borrowing, long applied in § 10(b) cases, and choosing a new limitations period and its associated tolling rules. When a legislature enacts a new rule of law governing the timeliness of legal action, it can-and usually does-specify the effective date of the rule and determine the extent to which it shall apply to pending claims. See e.g., 104 Stat. 5114, quoted ante, at 364, n. 8. When the Court ventures into this lawmaking arena, however, it inevitably raises questions concerning the retroactivity of its new rule that are difficult and arguably inconsistent with the neutral, non-policy making role of the judge. See Chevron Oil Co. v. Hudson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971); In re Data Access, 843 F.2d, at 1551 (Seitz J., dissenting).

The Court's rejection of the traditional rule of applying a state limitations period when the federal statute is silent is not justified by this Court's prior cases. Despite the majority's recognition of the traditional rule, ante, at 355, it effectively repudiates it by holding that "only where no analogous counterpart [within the statute] is available should a court then proceed to apply state-borrowing principles." Ante, at 359. The Court's principal justification for this departure is that it took similar action in DelCostello, supra. I registered my dissent in that case for reasons similar to those I express today. In that case there was nothing in the statute to lead me to believe that Congress intended to depart from our settled practice of looking to analogous state limitations. Id., 462 U.S., at 171-173, 103 S.Ct., at 2294-2295. Likewise in this case, I can find nothing in the Securities Act of 1934 that leads me to believe that Congress intended us to depart from our traditional rule and overrule four decades of established law.

The other case on which the Court primarily relies, Agency Holding Corp. v. Malley-Duff & Associates, 483 U.S. 143, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987), is distinguishable from this case. Agency Holding, did not involve a change in a rule of law that had been settled for forty years. Furthermore in that case, the Court found an explicit intent to pattern the RICO private remedy after the Clayton Act's private antitrust remedy. The remedy in the Clayton Act was subject to a four-year statute of limitations, and the Court reasonably inferred that Congress wanted the same limitations period to apply to both statutes. The Court has not found a similar intent to pattern § 10 of the 1934 Securities Act after those sections subject to a 1-and-3 year limitation. See ante, at 360-361.

The policy choices that the Court makes today may well be wise-even though they are at odds with the recommendation of the Executive Branch-but that is not a sufficient justification for making a change in what was well-settled law during the years between 1946 and 1988 governing the timeliness of action impliedly authorized by a federal statute. This Court has recognized that a rule of statutory construction that has been consistently applied for several decades acquires a clarity that "is simply beyond peradventure." Herman & MacLean v. Huddleston, 459 U.S. 375, 380, 103 S.Ct. 683, 686, 74 L.Ed.2d 548 (1983). I believe that the Court should continue to observe that principle in this case. The Court's occasional departure from that principle does not justify today's refusal to comply with the Rules of Decision Act. See e.g. Shearson/American Express v. Mcmahon, 482 U.S. 220, 268, 107 S.Ct. 2332, 2539, 96 L.Ed.2d 185 (1987) (STEVENS, J., dissenting). Accordingly, I respectfully dissent.