The Supreme Court/The Supreme Court.iso/pc/ascii/1990/90_333/90_333.d2

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Subject: 90-333 -- DISSENT, LAMPF v. GILBERTSON




    SUPREME COURT OF THE UNITED STATES


No. 90-333



LAMPF, PLEVA, LIPKIND, PRUPIS & PETIGROW, PETITIONER v. JOHN GILBERTSON et
al.

on writ of certiorari to the united states court of appeals for the ninth
circuit

[June 20, 1991]




    Justice O'Connor, with whom Justice Kennedy joins, dissenting.

    I agree that predictability and judicial economy counsel the adoption
of a uniform federal statute of limitations for actions brought under MDRV
10(b) and Rule 10b-5.  For the reasons stated by Justice Kennedy, however,
I believe we should adopt the one year from discovery rule, but not the
threeyear period of repose.  I write separately only to express my
disagreement with the Court's decision in Part IV to apply the new
limitations period in this case.  In holding that respondent's suit is
time-barred under a limitations period that did not exist before today, the
Court departs drastically from our established practice and inflicts an
injustice on the respondents.  The Court declines to explain its
unprecedented decision, or even to acknowledge its unusual character.
    Respondents, plaintiffs below, filed this action in Federal District
Court in 1986.  Everyone agrees that, at that time, their claims were
governed by the state statute of limitations for the most analogous state
cause of action.  This was mandated by a solid wall of binding Ninth
Circuit authority dating back more than 30 years. {1}  See ante, at 2.  The
case proceeded in the District Court and the Court of Appeals for almost
four years.  During that time, the law never changed; the governing
limitations period remained the analogous state statute of limitations. {2}
Notwithstanding respondents' entirely proper reliance on this limitations
period, the Court now holds that their suit must be dismissed as untimely
because respondents did not comply with a federal limitations period
announced for the first time today -- four-and-one-half years after the
suit was filed.  Quite simply, the Court shuts the courthouse door on
respondents because they were unable to predict the future.
    One might get the impression from the Court's matter-offact handling of
the retroactivity issue that this is our standard practice.  Part IV of the
Court's opinion comprises, after all, only two sentences: the first
sentence sets out the 1- and 3-year rule; the second states that
respondents' complaint is untimely for failure to comply with the rule.
Surely, one might think, if the Court were doing anything out of the
ordinary, it would comment on the fact.
    Apparently not.  This Court has, on several occasions, announced new
statutes of limitations.  Until today, however, the Court had never applied
a new limitations period retroactively to the very case in which it
announced the new rule so as to bar an action that was timely under binding
Circuit precedent.  Our practice has been instead to evaluate the case at
hand by the old limitations period, reserving the new rule for application
in future cases.
    A prime example is Chevron Oil Co. v. Huson, 404 U. S. 97 (1971).  The
issue in that case was whether state or federal law governed the timeliness
of an action brought under a particular federal statute.  At the time the
lawsuit was initiated, the rule was that federal law governed.  This Court
changed the rule, holding that the timeliness of an action should be
governed by state law.  The Court declined to apply the state statute of
limitations in that case, however, because the action had been filed long
before the new rule was announced.  The Court recognized, sensibly, that
its decision overruled a long line of Court of Appeals' decisions on which
the respondent had properly relied, id., at 107; that retroactive
application would be inconsistent with the purpose of using state statutes
of limitations, id., at 107-108; and that it would be highly inequitable to
pretend that the respondent had " `slept on his rights' " when, in reality,
he had complied fully with the law as it existed and could not have
foreseen that the law would change.  Id., at 108.
    We followed precisely the same course several years later in Saint
Francis College v. Al-Khazraji, 481 U. S. 604 (1987).  We declined to apply
a decision specifying the applicable statute of limitations retroactively
because doing so would bar a suit that, under controlling Circuit
precedent, had been filed in a timely manner.  We relied expressly on the
analysis of Chevron Oil, holding that a decision identifying a new
limitations period should be applied only prospectively where it overrules
clearly established Circuit precedent, where retroactive application would
be inconsistent with the purpose of the underlying statute, and where doing
so would be "manifestly inequitable."  Saint Francis College, supra, at
608-609.
    Chevron Oil and Saint Francis College are based on fundamental notions
of justified reliance and due process.  They reflect a straightforward
application of an earlier line of cases holding that it violates due
process to apply a limitations period retroactively and thereby deprive a
party arbitrarily of a right to be heard in court.  See Wilson v.
Iseminger, 185 U. S. 55, 62 (1902); Brinkerhoff-Faris Trust & Savings Co.
v. Hill, 281 U. S. 673, 681-682 (1930).  Not surprisingly, then, the
Court's decision in Chevron Oil and Saint Francis College not to apply new
limitations periods retroactively generated no disagreement among members
of the Court: the opinion in Chevron Oil was joined by all but one Justice,
who did not reach the retroactivity question; Saint Francis College was
unanimous.
    Only last Term, eight Justices reaffirmed the commonsense rule that
decisions specifying the applicable statute of limitations apply only
prospectively.  See American Trucking Associations, Inc. v. Smith, 496 U.
S. --- (1990).  The question presented in American Trucking was whether an
earlier decision of the Court -- striking down as unconstitutional a
particular state highway tax scheme -- would apply retroactively.  In the
course of explaining why the ruling would not apply retroactively, the
plurality opinion relied heavily on our statute of limitations cases:


"When considering the retroactive applicability of decisions newly defining
statutes of limitations, the Court has focused on the action taken in
reliance on the old limitation period -- usually, the filing of an action.
Where a litigant filed a claim that would have been timely under the prior
limitation period, the Court has held that the new statute of limitation
would not bar his suit."  Id., at --- (slip op., at 23).


    Four other Justices, while disagreeing that Chevron Oil's retroactivity
analysis should apply in other contexts, reaffirmed its application to
statutes of limitations.  The dissenting Justices stated explicitly that it
would be "most inequitable to [hold] that [a] plaintiff ha[s] ` "slept on
his rights" ' during a period in which neither he nor the defendant could
have known the time limitation that applied to the case."  Id., at ---
(Stevens, J., dissenting), quoting Chevron Oil, supra, at 108.
    After American Trucking, the continued vitality of Chevron Oil with
respect to statutes of limitations is -- or should be -- irrefutable;
nothing in James B. Beam Distilling Co. v. Georgia, --- U. S. --- (1991),
alters this fact.  The pres ent case is indistinguishable from Chevron Oil
and retroactive application should therefore be denied.  All three Chevron
Oil factors are met.  First, in adopting a federal statute of limitations,
the Court overrules clearly established Circuit precedent; the Court admits
as much.  Ante, at 2.  Second, the Court explains that "the federal
interes[t] in predictability" demands a uniform standard.  Ante, at 6.  I
agree, but surely predictability cannot favor applying retroactively a
limitations period that the respondent could not possibly have foreseen.
Third, the inequitable results are obvious.  After spending
four-and-one-half years in court and tens of thousands of dollars in
attorney's fees, respondents' suit is dismissed for failure to comply with
a limitations period that did not exist until today.
    Earlier this Term, the Court observed that "the doctrine of stare
decisis serves profoundly important purposes in our legal system."
California v. Acevedo, --- U. S. --- (1991) (slip op., at 13).  If that is
so, it is difficult to understand the Court's decision today to apply
retroactively a brand new statute of limitations.  Part IV of the Court's
opinion, without discussing the relevant cases or even acknowledging the
issue, declines to follow the precedent established in Chevron Oil, Saint
Francis College, and American Trucking, not to mention Wilson and
Brinkerhoff-Faris.    The Court's cursory treatment of the retroactivity
question cannot be an oversight.  The parties briefed the issue in this
Court.  See Brief for Respondents 45-48; Reply Brief for Petitioner 18-20.
In addition, the United States, filing an amicus curiae brief on behalf of
the Securities and Exchange Commission, addressed the issue explicitly,
urging the Court to remand so that the lower court may address the
retroactivity question in the first instance.  Nevertheless, the Court, for
reasons unknown and unexplained, chooses to ignore the issue, thereby
visiting unprecedented unfairness on respondents.
    Even if I agreed with the limitations period adopted by the Court, I
would dissent from Part IV of the Court's opinion.  Our prior cases dictate
that the federal statute of limitations announced today should not be
applied retroactively.  I would remand so that the lower courts may
determine in the first instance the timeliness of respondents' lawsuit.
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1
    See Robuck v. Dean Witter & Co., 649 F. 2d 641, 644 (1980); Williams v.
Sinclair, 529 F. 2d 1383, 1387 (1976); Douglass v. Glenn E. Hinton
Investments, Inc., 440 F. 2d 912, 914-916 (1971); Hecht v. Harris, Upham &
Co., 430 F. 2d 1202, 1210 (1970); Royal Air Properties, Inc. v. Smith, 312
F. 2d 210, 214 (1962); Fratt v. Robinson, 203 F. 2d 627, 634-635 (1953).
2
    See Davis v. Birr, Wilson & Co., 839 F. 2d 1369, 1369-1370 (CA9 1988);
Volk v. D. A. Davidson & Co., 816 F. 2d 1406, 1411-1412 (CA9 1987); Semegen
v. Weidner, 780 F. 2d 727, 733 (CA9 1985); SEC v. Seaboard Corp., 677 F. 2d
1301, 1308-1309 (CA9 1982).