July 8, 2011

As Little As Possible

A couple of interesting recent decisions:

(1) Tolling - Courts are split on the issue of whether the commencement of a class action suspends the applicable statute of repose (as opposed to statute of limitations) as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action. In the recent Footbridge decision from the S.D.N.Y., the court concluded that the statute of repose cannot be extended by the commencement of a class action. (A fuller explanation of the decision and its ramifications can be found here.) That position is proving popular in the S.D.N.Y.

The court in In re IndyMac Mortgage-Backed Sec. Litig., 2011 WL 2462999 (S.D.N.Y. June 21, 2011) considered whether a class member who had filed one of the original complaints could intervene in the consolidated class action. The class member wanted to bring claims related to an offering in which the lead plaintiff had not participated. The court denied the motion. Once the class member had allowed his original complaint to be consolidated he was no longer a plaintiff and, under the Footbridge analysis, the claims were now barred by the relevant statute of repose.

(2) Duty to Disclose - What triggers a corporation's duty to disclose? In Minneapolis Firefighters' Relief Association v. MEMC Electronic Materials, Inc., 2011 WL 2417073 (8th Cir. June 17, 2011), MEMC did not disclose production problems at two of its plants for over a month, even though it had a history of providing investors with timely updates about production disruptions. Plaintiffs argued that MEMC had a duty to disclose the problems when they occured based on its prior "pattern" of disclosures. The Eighth Circuit disagreed, noting that it was "unable to find any legal authority directly supporting [plaintiffs'] pattern theory" and adopting the theory "could encourage companies to disclose as little as possible."

Posted by Lyle Roberts at July 8, 2011 5:35 PM | TrackBack
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