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North Sound Capital LLC v. Merck & Co.

This case concerns whether the filing of a class action complaint tolls the running of the federal securities laws’ “statutes of repose” for all members of the proposed class. The Supreme Court has long held, in what is referred to as the “American Pipe rule” after the case that originally decided the issue, that the filing of a class-action complaint generally stops the running of a statute of limitations for all class members, even if the class is not ultimately certified or class members opt out. In this securities action, however, the defendants argued that this principle should not apply to the “repose” period established by limitations periods applicable to federal securities claims. The district court accepted the defendants’ argument and dismissed this case as a result, and the plaintiffs appealed to the Third Circuit.

The U.S. Supreme Court agreed to decide this issue in 2014 in a case called Public Employees Retirement System of Mississippi v. IndyMac MBS, Inc., but ended up dismissing the case without deciding it, and now the issue is being raised in a number of federal courts across the country. Public Citizen has filed an amicus brief arguing that the American Pipe rule applies equally to statutes of limitation and repose. The case has been fully briefed and is awaiting argument and decision.