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




NOTICE: This opinion is subject to formal revision before publication in
the preliminary print of the United States Reports.  Readers are requested
to notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print goes to
press.

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 Blackmun delivered the opinion of the Court, except as to Part
II-A.

    In this litigation we must determine which statute of limitations is
applicable to a private suit brought pursuant to MDRV 10(b) of the
Securities Exchange Act of 1934, 48 Stat. 891, 15 U. S. C. MDRV 78j(b), and
to Securities and Exchange Commission Rule 10b-5, 17 CFR MDRV 240.10b-5
(1990), promulgated thereunder.
I
    The controversy arises from the sale of seven Connecticut limited
partnerships formed for the purpose of purchasing and leasing computer
hardware and software.  Petitioner Lampf, Pleva, Lipkind, Prupis & Petigrow
is a West Orange, N. J., law firm that aided in organizing the partnerships
and that provided additional legal services, including the prepa ration of
opinion letters addressing the tax consequences of investing in the
partnerships.  The several plaintiff-respondents purchased units in one or
more of the partnerships during the years 1979 through 1981 with the
expectation of realizing federal income tax benefits therefrom.
    The partnerships failed, due in part to the technological obsolescence
of their wares.  In late 1982 and early 1983, plaintiff-respondents
received notice that the United States Internal Revenue Service was
investigating the partnerships.  The IRS subsequently disallowed the
claimed tax benefits because of overvaluation of partnership assets and
lack of profit motive.
    On November 3, 1986, and June 4, 1987, plaintiff-respondents filed
their respective complaints in the United States District Court for the
District of Oregon, naming as defendants petitioner and others involved in
the preparation of offering memoranda for the partnerships.  The complaints
alleged that plaintiff-respondents were induced to invest in the
partnerships by misrepresentations in the offering memoranda, in violation
of, among other things, MDRV 10(b) of the 1934 Act and Rule 10b-5.  The
claimed misrepresentations were said to include assurances that the
investments would entitle the purchasers to substantial tax benefits; that
the leasing of the hardware and software packages would generate a profit;
that the software was readily marketable; and that certain equipment
appraisals were accurate and reasonable.  Plaintiff-respondents asserted
that they became aware of the alleged misrepresentations only in 1985
following the disallowance by the IRS of the tax benefits claimed.
    After consolidating the actions for discovery and pretrial proceedings,
the District Court granted summary judgment for the defendants on the
ground that the complaints were not timely filed.  App. to Pet. for Cert.
22A.  Following precedent of its controlling court, see, e. g., Robuck v.
Dean Witter & Co., 649 F. 2d 641 (CA9 1980), the District Court ruled that
the securities claims were governed by the state statute of limitations for
the most analogous forum-state cause of action.  The court determined this
to be Oregon's 2-year limitations period for fraud claims, Ore. Rev. Stat.
MDRV 12.110(1) (1989).  The court found that reports to
plaintiffrespondents detailing the declining financial status of each
partnership and allegations of misconduct made known to the general
partners put plaintiff-respondents on "inquiry notice" of the possibility
of fraud as early as October 1982.  App. to Pet. for Cert. 43A.  The court
also ruled that the distribution of certain fiscal reports and the
installation of a general partner previously associated with the defendants
did not constitute fraudulent concealment sufficient to toll the statute of
limitations.  Applying the Oregon statute to the facts underlying
plaintiff-respondents' claims, the District Court determined that each
complaint was time barred.
    The Court of Appeals for the Ninth Circuit reversed and remanded the
cases.  See Reitz v. Leasing Consultants Associates, 895 F. 2d 1418 (1990)
(judgment entry).  In its unpublished opinion, the Court of Appeals found
that unresolved factual issues as to when plaintiff-respondents discovered
or should have discovered the alleged fraud precluded summary judgment.
Then, as did the District Court, it selected the 2-year Oregon limitations
period.  In so doing, it implicitly rejected petitioner's argument that a
federal limitations period should apply to Rule 10b-5 claims.  App. to Pet.
for Cert. 8A.  In view of the divergence of opinion among the Circuits
regarding the proper limitations period for Rule 10b-5 claims, {1} we
granted certiorari to address this important issue.  --- U. S. --- (1990).
II
    Plaintiff-respondents maintain that the Court of Appeals correctly
identified common-law fraud as the source from which MDRV 10(b) limitations
should be derived.  They submit that the underlying policies and
practicalities of MDRV 10(b) litigation do not justify a departure from the
traditional practice of "borrowing" analogous state-law statutes of
limitations.  Petitioner, on the other hand, argues that a federal period
is appropriate, contending that we must look to the "1-and-3year" structure
applicable to the express causes of action in MDRV 13 of the Securities Act
of 1933, 48 Stat. 84, as amended, 15 U. S. C. MDRV 77m, and to certain of
the express actions in the 1934 Act, see 15 U. S. C. 15 78i(e), 78r(c), and
78cc(b). {2}  The Solicitor General, appearing on behalf of the Securities
Exchange Commission, agrees that use of a federal period is indicated, but
urges the application of the 5-year statute of repose specified in MDRV 20A
of the 1934 Act, 15 U. S. C. MDRV 78t-1(b)(4), as added by MDRV 5 of the
Insider Trading and Securities Fraud Enforcement Act of 1988, 102 Stat.
4681.  The 5-year period, it is said, accords with "Congress's most recent
views on the accommodation of competing interests, provides the closest
federal analogy, and promises to yield the best practical and policy
results in Rule 10b-5 litigation."  Brief for Securities and Exchange
Commission as Amicus Curiae 8.  For the reasons discussed below, we agree
that a uniform federal period is indicated, but we hold that the express
causes of action contained in the 1933 and 1934 Acts provide the source.
A
    It is the usual rule that when Congress has failed to provide a statute
of limitations for a federal cause of action, a court "borrows" or
"absorbs" the local time limitation most analogous to the case at hand.
Wilson v. Garcia, 471 U. S. 261, 266-267 (1985); Auto Workers v. Hoosier
Cardinal Corp., 383 U. S. 696, 704 (1966); Campbell v. Haverhill, 155 U. S.
610, 617 (1895).  This practice, derived from the Rules of Decision Act, 28
U. S. C. MDRV 1652, has enjoyed sufficient longevity that we may assume
that, in enacting remedial legislation, Congress ordinarily "intends by its
silence that we borrow state law."  Agency Holding Corp. v. Malley-Duff &
Associates, Inc., 483 U. S. 143, 147 (1987).
    The rule, however, is not without exception.  We have recognized that a
state legislature rarely enacts a limitations period with federal interests
in mind, Occidental Life Ins. Co. v. EEOC, 432 U. S. 355, 367 (1977), and
when the operation of a state limitations period would frustrate the
policies embraced by the federal enactment, this Court has looked to
federal law for a suitable period.  See, e. g., DelCostello v. Teamsters,
462 U. S. 151 (1983); Agency Holding Corp., supra; McAllister v. Magnolia
Petroleum Co., 357 U. S. 221, 224 (1958).  These departures from the
state-borrowing doctrine have been motivated by this Court's conclusion
that it would be "inappropriate to conclude that Congress would choose to
adopt state rules at odds with the purpose or operation of federal
substantive law."  DelCostello, 462 U. S., at 161.
    Rooted as it is in the expectations of Congress, the "stateborrowing
doctrine" may not be lightly abandoned.  We have described federal
borrowing as "a closely circumscribed exception," to be made "only `when a
rule from elsewhere in federal law clearly provides a closer analogy than
available state statutes, and when the federal policies at stake and the
practicalities of litigation make that rule a significantly more
appropriate vehicle for interstitial lawmaking.' "  Reed v. United
Transportation Union, 488 U. S. 319, 324 (1989), quoting DelCostello, 462
U. S., at 172.
    Predictably, this determination is a delicate one.  Recognizing,
however, that a period must be selected, {3} our cases do provide some
guidance as to whether state or federal borrowing is appropriate and as to
the period best suited to the cause of action under consideration.  From
these cases we are able to distill a hierarchical inquiry for ascertaining
the appropriate limitations period for a federal cause of action where
Congress has not set the time within which such an action must be brought.
    First, the court must determine whether a uniform statute of
limitations is to be selected.  Where a federal cause of action tends in
practice to "encompass numerous and diverse topics and subtopics," Wilson
v. Garcia, 471 U. S., at 273, such that a single state limitations period
may not be consistently applied within a jurisdiction, we have concluded
that the federal interests in predictability and judicial economy counsel
the adoption of one source, or class of sources, for borrowing purposes.
Id., at 273-275.  This conclusion ultimately may result in the selection of
a single federal provision, see Agency Holding Corp., supra, or of a single
variety of state actions.  See Wilson v. Garcia (characterizing all actions
under 42 U. S. C. MDRV 1983 as analogous to a state-law personal injury
action).
    Second, assuming a uniform limitations period is appropriate, the court
must decide whether this period should be derived from a state or a federal
source.  In making this judgment, the court should accord particular weight
to the geographic character of the claim:

"The multistate nature of [the federal cause of action at issue] indicates
the desirability of a uniform federal statute of limitations.  With the
possibility of multiple state limitations, the use of state statutes would
present the danger of forum shopping and, at the very least, would
`virtually guarante[e] . . . complex and expensive litigation over what
should be a straightforward matter.' "  Agency Holding Corp., 483 U. S., at
154, quoting Report of the Ad Hoc Civil RICO Task Force of the ABA Section
of Corporation, Banking and Business Law 392 (1985).


    Finally, even where geographic considerations counsel federal
borrowing, the aforementioned presumption of state borrowing requires that
a court determine that an analogous federal source truly affords a "closer
fit" with the cause of action at issue than does any available state-law
source.  Although considerations pertinent to this determination will neces
sarily vary depending upon the federal cause of action and the available
state and federal analogues, such factors as commonality of purpose and
similarity of elements will be relevant.
B
    In the present litigation, our task is complicated by the
nontraditional origins of the MDRV 10(b) cause of action.  The text of MDRV
10(b) does not provide for private claims. {4}  Such claims are of judicial
creation, having been implied under the statute for nearly half a century.
See Kardon v. National Gypsum Co., 69 F. Supp. 512 (ED Pa. 1946), cited in
Ernst & Ernst v. Hochfelder, 425 U. S. 185, 196, n. 16 (1976).  Although
this Court repeatedly has recognized the validity of such claims, see Blue
Chip Stamps v. Manor Drug Stores, 421 U. S. 723, 730 (1975); Affiliated Ute
Citizens v. United States, 406 U. S. 128, 150-154 (1972); Superintendent of
Insurance v. Bankers Life & Cas. Co., 404 U. S. 6, 13, n. 9 (1971), we have
made no pretense that it was Congress' design to provide the remedy
afforded.  See Ernst & Ernst, 425 U. S., at 196 ("[T]here is no indication
that Congress, or the Commission when adopting Rule 10b-5, contemplated
such a remedy.") (footnotes omitted).  It is therefore no surprise that the
provision contains no statute of limitations.
    In a case such as this, we are faced with the awkward task of
discerning the limitations period that Congress intended courts to apply to
a cause of action it really never knew existed.  Fortunately, however, the
drafters of MDRV 10(b) have provided guidance.
    We conclude that where, as here, the claim asserted is one implied
under a statute that also contains an express cause of action with its own
time limitation, a court should look first to the statute of origin to
ascertain the proper limitations period.  We can imagine no clearer
indication of how Congress would have balanced the policy considerations
implicit in any limitations provision than the balance struck by the same
Congress in limiting similar and related protections.  See DelCostello, 462
U. S., at 171; United Parcel Service, Inc. v. Mitchell, 451 U. S. 56, 69-70
(1981) (opinion concurring in judgment).  When the statute of origin
contains comparable express remedial provisions, the inquiry usually should
be at an end.  Only where no analogous counterpart is available should a
court then proceed to apply state-borrowing principles.
    In the present litigation, there can be no doubt that the
contemporaneously enacted express remedial provisions represent "a federal
statute of limitations actually designed to accommodate a balance of
interests very similar to that at stake here -- a statute that is, in fact,
an analogy to the present lawsuit more apt than any of the suggested
state-law parallels."  DelCostello, 462 U. S., at 169.  The 1934 Act
contained a number of express causes of action, each with an explicit
limitations period.  With only one more restrictive exception, {5} each of
these includes some variation of a 1-year period after discovery combined
with a 3-year period of repose. {6}  In adopting the 1934 Act, the 73d
Congress also amended the limitations provision of the 1933 Act, adopting
the 1-and-3-year structure for each cause of action contained therein. {7}
    Section 9 of the 1934 Act, 15 U. S. C. MDRV 78i, pertaining to the
willful manipulation of security prices, and MDRV 18, 15 U. S. C. MDRV 78r,
relating to misleading filings, target the precise dangers that are the
focus of MDRV 10(b).  Each is an integral element of a complex web of
regulations.  Each was intended to facilitate a central goal: "to protect
investors against manipulation of stock prices through regulation of
transactions upon securities exchanges and in over-thecounter markets, and
to impose regular reporting requirements on companies whose stock is listed
on national securities exchanges."  Ernst & Ernst, 425 U. S., at 195,
citing S. Rep. No. 792, 73d Cong., 2d Sess., 1-5 (1934).
C
    We therefore conclude that we must reject the Commission's contention
that the 5-year period contained in MDRV 20A, added to the 1934 Act in
1988, is more appropriate for MDRV 10(b) actions than is the 1-and-3-year
structure in the Act's original remedial provisions.  The Insider Trading
and Securities Fraud Enforcement Act of 1988, which became law more than 50
years after the original securities statutes, focuses upon a specific
problem, namely, the "purchasing or selling [of] a security while in
possession of material, nonpublic information," 15 U. S. C. MDRV 78t-1(a),
that is, "insider trading."  Recognizing the unique difficulties in
identifying evidence of such activities, the 100th Congress adopted MDRV
20A as one of "a variety of measures designed to provide greater
deterrence, detection and punishment of violations of insider trading."  H.
R. Rep. No. 100-910, p. 7 (1988).  There is no indication that the drafters
of MDRV 20A sought to extend that enhanced protection to other provisions
of the 1934 Act.  Indeed, the text of MDRV 20A indicates the contrary.
Section 20A(d) states: "Nothing in this section shall be construed to limit
or condition the right of any person to bring an action to enforce a
requirement of this chapter or the availability of any cause of action
implied from a provision of this chapter."  15 U. S. C. MDRV 78t-1(d).
    The Commission further argues that because some conduct that is
violative of MDRV 10(b) is also actionable under MDRV 20A, adoption of a
1-and-3-year structure would subject actions based on MDRV 10(b) to two
different statutes of limitations.  But MDRV 20A also prohibits
insider-trading activities that violate sections of the 1934 Act with
express limitations periods.  The language of MDRV 20A makes clear that the
100th Congress sought to alter the remedies available in insider trading
cases, and only in insider trading cases.  There is no inconsistency.
    Finally, the Commission contends that the adoption of a 3year period of
repose would frustrate the policies underlying MDRV 10(b).  The inclusion,
however, of the 1-and-3-year structure in the broad range of express
securities actions contained in the 1933 and 1934 Acts suggests a
congressional determination that a 3-year period is sufficient.  See Ceres
Partners v. GEL Associates, 918 F. 2d 349, 363 (CA2 1990).
    Thus, we agree with every Court of Appeals that has been called upon to
apply a federal statute of limitations to a MDRV 10(b) claim that the
express causes of action contained in the 1933 and 1934 Acts provide a more
appropriate statute of limitations than does MDRV 20A.  See Ceres Partners,
supra; Short v. Belleville Shoe Mfg. Co., 908 F. 2d 1385 (CA7 1990), cert.
pending, No. 90-526; In re Data Access Systems Securities Litigation, 843
F. 2d 1537 (CA3), cert. denied sub nom. Vitiello v. I. Kahlowski & Co., 488
U. S. 849 (1988).
    Necessarily, we also reject plaintiff-respondents' assertion that
state-law fraud provides the closest analogy to MDRV 10(b).  The analytical
framework we adopt above makes consideration of state-law alternatives
unnecessary where Congress has provided an express limitations period for
correlative remedies within the same enactment. {8}
III
    Finally, we address plaintiff-respondents' contention that, whatever
limitations period is applicable to MDRV 10(b) claims, that period must be
subject to the doctrine of equitable tolling.  Plaintiff-respondents note,
correctly, that "[t]ime requirements in law suits . . . are customarily
subject to `equitable tolling.' "  Irwin v. Veterans Administration, --- U.
S. ---, --- ( 1990) (slip op. 5), citing Hallstrom v. Tillamook County, 493
U. S. 20, --- (1989) (slip op. 6).  Thus, this Court has said that in the
usual case, "where the party injured by the fraud remains in ignorance of
it without any fault or want of diligence or care on his part, the bar of
the statute does not begin to run until the fraud is discovered, though
there be no special circumstances or efforts on the part of the party
committing the fraud to conceal it from the knowledge of the other party."
Bailey v. Glover, 21 Wall. 342, 348 (1874); see also Holmberg v. Armbrecht,
327 U. S. 392, 396-397 (1946).  Notwithstanding this venerable principle,
it is evident that the equitable tolling doctrine is fundamentally
inconsistent with the 1-and-3-year structure.
    The 1-year period, by its terms, begins after discovery of the facts
constituting the violation, making tolling unnecessary.  The 3-year limit
is a period of repose inconsistent with tolling.  One commentator explains:
"[T]he inclusion of the three-year period can have no significance in this
context other than to impose an outside limit."  Bloomenthal, The Statute
of Limitations and Rule 10b-5 Claims: A Study in Judicial Lassitude, 60 U.
Colo. L. Rev. 235, 288 (1989).  See also ABA Committee on Federal
Regulation of Securities, Report of the Task Force on Statute of
Limitations for Implied Actions 645, 655 (1986) (advancing "the inescapable
conclusion that Congress did not intend equitable tolling to apply in
actions under the securities laws").  Because the purpose of the 3-year
limitation is clearly to serve as a cutoff, we hold that tolling principles
do not apply to that period.
IV
    Litigation instituted pursuant to MDRV 10(b) and Rule 10b-5 therefore
must be commenced within one year after the discovery of the facts
constituting the violation and within three years after such violation. {9}
As there is no dispute that the earliest of plaintiff-respondents'
complaints was filed more than three years after petitioner's alleged
misrepresentations, plaintiff-respondents' claims were untimely. {10}
    The judgment of the Court of Appeals is reversed.
It is so ordered.







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1
    See, e. g., Nesbit v. McNeil, 896 F. 2d 380 (CA9 1990) (applying state
limitations period governing common-law fraud); Bath v. Bushkin, Gaims,
Gaines and Jonas, 913 F. 2d 817 (CA10 1990) (same); O'Hara v. Kovens, 625
F. 2d 15 (CA4 1980), cert. denied, 449 U. S. 1124 (1981) (applying state
blue sky limitations period); Forrestal Village, Inc. v. Graham, 179 U. S.
App. D. C. 225, 551 F. 2d 411 (1977) (same); In re Data Access Systems
Securities Litigation, 843 F. 2d 1537 (CA3), cert. denied sub nom. Vitiello
v. I. Kahlowski & Co., 488 U. S. 849 (1988) (establishing uniform federal
period); Short v. Belleville Shoe Mfg. Co., 908 F. 2d 1385 (CA7 1990),
cert. pending, No. 90-526 (same).

2
    Although not identical in language, all these relate to one year after
discovery and to three years after violation.

3
    On rare occasions, this Court has found it to be Congress' intent that
no time limitation be imposed upon a federal cause of action.  See, e. g.,
Occidental Life Ins. Co. v. EEOC, 432 U. S. 355 (1977).  No party in the
present litigation argues that this was Congress' purpose in enacting MDRV
10(b), and we agree that there is no evidence of such intent.

4
    Section 10 of the 1934 Act provides:
    "It shall be unlawful for any person, directly or indirectly, by the
use of any means or instrumentality of interstate commerce or of the mails,
or of any facility of any national securities exchange --

    . . . . .


    "(b) To use or employ, in connection with the purchase or sale of any
security . . . any manipulative or deceptive device or contrivance in
contravention of such rules and regulations as the Commission may prescribe
as necessary or appropriate in the public interest or for the protection of
investors."  15 U. S. C. MDRV 78j.
    Commission Rule 10b-5, first promulgated in 1942, now provides:
    "It shall be unlawful for any person, directly or indirectly, by the
use of any means or instrumentality of interstate commerce, or of the mails
or of any facility of any national securities exchange,
    "(a) To employ any device, scheme, or artifice to defraud,
    "(b) To make any untrue statement of a material fact or to omit to
state a material fact necessary in order to make the statements made, in
the light of the circumstances under which they were made, not misleading,
or
    "(c) To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any person,

"in connection with the purchase or sale of any security."  17 CFR MDRV
240.10b-5 (1990).

5
    Section 16(b), 15 U. S. C. MDRV 78p(b), sets a 2-year rather than a
3-year period of repose.  Because that provision requires the disgorgement
of unlawful profits and differs in focus from MDRV 10(b) and from the other
express causes of action, we do not find MDRV 16(b) to be an appropriate
source from which to borrow a limitations period here.

6
    Section 9(e) of the 1934 Act provides:
    "No action shall be maintained to enforce any liability created under
this section, unless brought within one year after the discovery of the
facts constituting the violation and within three years after such
violation."  15 U. S. C. MDRV 78i(e).

Section 18(c) of the 1934 Act provides:
    "No action shall be maintained to enforce any liability created under
this section unless brought within one year after the discovery of the
facts constituting the cause of action and within three years after such
cause of action accrued."  15 U. S. C. MDRV 78r(c).

7
    Section 13 of the 1933 Act, as so amended, provides:
    "No action shall be maintained to enforce any liability created under
section 77k or 77l(2) of this title unless brought within one year after
the discovery of the untrue statement or the omission, or after such
discovery should have been made by the exercise of reasonable dilligence,
or, if the action is to enforce a liability created under section 77l(1) of
this title, unless brought within one year after the violation upon which
it is based.  In no event shall any such action be brought to enforce a
liability created under section 77k or 77l(1) of this title more than three
years after the security was bona fide offered to the public, or under
section 77l(2) of this title more than three years after the sale."  15 U.
S. C. MDRV 77m.

8
    Justice Kennedy would borrow the one-year limitations period contained
in the 1934 Act but not the accompanying period of repose.  In our view,
the one-and-three-year scheme represents an indivisible determination by
Congress as to the appropriate cutoff point for claims under the statute.
It would disserve that legislative determination to sever the two periods.
Moreover, we find no support in our cases for the practice of borrowing
only a portion of an express statute of limitations.  Indeed, such a
practice comes close to the type of judicial policymaking that our
borrowing doctrine was intended to avoid.

9
    The Commission notes, correctly, that the various 1-and-3-year periods
contained in the 1934 and 1933 Acts differ slightly in terminology.  To the
extent that these distinctions in the future might prove significant, we
select as the governing standard for an action under MDRV 10(b) the
language of MDRV 9(e) of the 1934 Act, 15 U. S. C. MDRV 78i(e).

10
    Section 313(a) of the Judicial Improvements Act of 1990, 104 Stat.
5114, reads:
    "Except as otherwise provided by law, a civil action arising under an
Act of Congress enacted after the date of the enactment of this section may
not be commenced later than 4 years after the cause of action accrues."

Section 313(b) states that the "amendments made by this section shall apply
with respect to causes of action accruing on or after the date [December 1,
1990] of the enactment of this Act."  This new statute obviously has no
application in the present litigation.