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SUPREME COURT OF THE UNITED STATES
CREDIT SUISSE SECURITIES (USA) LLC,
et al., PETITIONERS v.
on writ of certiorari to the united states
court of appeals for the ninth circuit
[March 26, 2012]
Justice Scalia delivered the opinion of the
We consider whether the 2-year period to file
suit against a corporate insider under §16(b) of the
Securities Exchange Act of 1934, 15 U. S. C.
§78p(b), begins to run only upon the insider’s filing of
the disclosure statement required by §16(a) of the Act,
Under §16(b) of the Exchange Act, 48Stat.
896, as amended, a corporation or security holder of that
corporation may bring suit against the officers, directors, and
certain beneficial owners[1
the corporation who realize any profits from the purchase and sale,
or sale and purchase, of the corporation’s securities within
any 6-month period. “The statute imposes a form of strict
liability” and requires insiders to disgorge these
“short-swing” profits “even if they did not trade
on inside information or in- tend to profit on the basis of such
, 501 U.S.
, 122 (1991). Section 16(b) provides that suits must be
brought within “two years after the date such profit was
U. S. C. §78p(b).
In 2007, respondent Vanessa Simmonds filed 55
nearly identical actions under §16(b) against financial
institutions that had underwritten various initial public offerings
(IPOs) in the late 1990’s and 2000, including these
] In a
representative complaint, she alleged that the underwriters and the
issuers’ insiders employed various mechanisms to inflate the
aftermarket price of the stock to a level above the IPO price,
allowing them to profit from the aftermarket sale. App. 59. She
further alleged that, as a group, the underwriters and the insiders
owned in excess of 10% of the outstanding stock during the relevant
time period, which subjected them to both disgorgement of profits
under §16(b) and the reporting requirements of §16(a).
, at 61. See 15 U. S. C. §78m(d)(3); 17
CFR §§240.13d–5(b)(1) and 240.16a–1(a)(1)
(2011). The latter requires insiders to disclose any changes to
their ownership interests on a document known as a Form 4,
specified in the Securities and Exchange Commission regulations. 15
U. S. C. §78p(a)(2)(C); 17 CFR
§240.16a–3(a). Simmonds alleged that the underwriters
failed to comply with that requirement, thereby tolling
§16(b)’s 2-year time period.[4
] App. 62.
Simmonds’ lawsuits were consolidated for
pretrial purposes, and the United States District Court for the
Western District of Washington dismissed all of her
] In re:
Section 16(b) Litigation
, 602 F. Supp. 2d 1202 (2009). As
relevant here, the court granted petitioners’ motion to
dismiss 24 complaints on the ground that §16(b)’s 2-year
time period had expired long before Simmonds filed the suits. The
United States Court of Appeals for the Ninth Circuit reversed in
relevant part. 638 F.3d 1072 (2011). Citing its decision in
v. Whittaker Corp.
, 639 F.2d 516 (1981),
the court held that §16(b)’s limitations period is
“tolled until the insider discloses his transactions in a
Section 16(a) filing, regardless of whether the plaintiff knew or
should have known of the conduct at issue.” 638 F. 3d,
at 1095. Judge Milan Smith, Jr., the author of the panel opinion,
also specially concurred, expressing his disagreement with the
rule, but noting that the court was compelled to
follow Circuit precedent. Id.
, at 1099–1101. We
granted certiorari, 564 U. S. ___ (2011).
Petitioners maintain that these suits were
properly dismissed because they were filed more than two years
af-ter the alleged profits were realized. Pointing to dictum in
Lampf, Pleva, Lipkind, Prupis & Petigrow
, 501 U.S.
(1991), petitioners argue that §16(b)’s
limitations period is a period of repose, which is not to be
“extended to account for a plaintiff’s discovery of the
facts underlying a claim.” Brief for Petitioners 17. See
, at 360, n. 5 (“Section 16(b)
. . . sets a 2-year . . . period of
repose”). We do not reach that contention, because we
conclude that, even assuming that the 2-year period can be
extended, the Ninth Circuit erred in de-termining that it is tolled
until the filing of a §16(a) statement.
In adopting its rule in Whittaker
Ninth Circuit ex-pressed its concern that “[i]t would be a
simple matter for the unscrupulous to avoid the salutary effect of
Section 16(b) . . . simply by failing to file
. . . reports in violation of subdivision (a) and thereby
concealing from prospective plaintiffs the information they would
need” to bring a §16(b) action. 639 F. 2d, at 528
(internal quotation marks omitted). Assuming that is correct, it
does not follow that the limitations period is tolled until the
§16(a) statement is filed. Section 16 itself quite clearly
does not extend the period in that manner. The 2-year clock starts
from “the date such profit was realized.” §78p(b).
Congress could have very easily provided that “no such suit
shall be brought more than two years after the filing of a
statement under subsection (a)(2)(C)
.” But it did not.
The text of §16 simply does not support the Whittaker
court suggested that the
background rule of equitable tolling for fraudulent
] operates to toll
the limitations period until the §16(a) statement is filed.
See 639 F. 2d, at 527, and n. 9. Even accepting that
equitable tolling for fraudulent concealment is triggered by the
failure to file a §16(a) statement, the Whittaker
is completely divorced from long-settled equitable-tolling
principles. “Generally, a litigant seeking equitable tolling
bears the burden of establishing two elements: (1) that he has
been pursuing his rights diligently
, and (2) that some
extraordinary circumstances stood in his way.” Pace
, 544 U.S.
, 418 (2005) (emphasis added). It is well established,
moreover, that when a limitations period is tolled because of
fraudulent concealment of facts, the tolling ceases when those
facts are, or should have been, discovered by the plaintiff. 2 C.
Corman, Limitation of Actions §9.7.1, pp. 55–57 (1991).
Thus, we have explained that the statute does not begin to run
until discovery of the fraud “ ‘where the party
injured by the fraud remains in ignorance of it without any
fault or want of diligence or care on his
.’ ” Lampf
, at 363
, 21 Wall. 342, 348 (1875);
emphasis added). Allowing tolling to continue beyond the point at
which a §16(b) plaintiff is aware, or should have been aware,
of the facts underlying the claim would quite certainly be
and inconsistent with the general purpose of
statutes of limitations: “to protect defendants against stale
or unduly delayed claims.” John R. Sand & Gravel
v. United States
, 552 U.S.
, 133 (2008).
The inequity of the Whittaker
especially apparent in a case such as this, where the theory of
§16(b) liability of underwriters is so novel that petitioners
can plausibly claim that they were not aware they were required to
file a §16(a) statement. And where they disclaim the necessity
of filing, the Whittaker
rule compels them either to file or
to face the prospect of §16(b) litigation in perpetuity.
Simmonds has acknowledged that “under her theory she could
buy stocks in companies who had IPOs 20 years ago and bring claims
for short-swing transactions if the underwriters had undervalued a
stock.” 602 F. Supp. 2d, at 1218. The potential for such
endless tolling in cases in which a reasonably diligent plaintiff
would know of the facts underlying the action is out of step with
the purpose of limitations periods in general. And it is especially
at odds with a provision that imposes strict liability on putative
insiders, see Gollust
, 501 U. S., at 122. Had Congress
intended this result, it most certainly would have said so.
Simmonds maintains that failing to apply the
rule would obstruct Congress’s objective of
curbing short-swing speculation by corporate insiders. This
objective, according to Simmonds, is served by §16(a)
statements, which “provide the information necessary to
trigger §16(b) enforcement.” Brief for Respondent 24.
Simmonds—like the Ninth Circuit in
—disregards the most glaring indication that
Congress did not intend that the limitations period be
categorically tolled until the statement is filed: The limitations
provision does not say so. This fact alone is reason enough to
reject a departure from settled equitable-tolling principles.
Moreover, §16’s purpose is fully served by the rules
outlined above, under which the limitations period would not expire
until two years after a reasonably diligent plaintiff would have
learned the facts underlying a §16(b) action. The usual
equitable-tolling inquiry will thus take account of the
unavailability of sources of information other than the §16(a)
filing. Cf., e.g.
v. Unifund CCR
, 604 F.3d 908, 911–913 (CA6 2010); Santos ex
v. United States
, 559 F.3d 189, 202–203
(CA3 2009). The oddity of Simmonds’ position is well
demonstrated by the circumstances of this case. Under the
rule, because petitioners have yet to file
§16(a) statements (as noted earlier they do not think
themselves subject to that requirement), Simmonds still has two
years to bring suit, even though she is so well aware of her
alleged cause of action that she has already sued. If §16(a)
statements were, as Simmonds suggests, indispensable to a
party’s ability to sue, Simmonds would not be here.
Simmonds also asserts that application of
established equitable-tolling doctrine in this context would be
in-consistent with Congress’s intention to establish in
§16 a clear rule that is capable of “mechanical
application.” Brief for Respondent 57 (internal quotation
marks omitted). Equitable tolling, after all, involves
fact-intensive disputes “about what the notice was, where it
was disseminated, who received it, when it was received, and
whether it provides sufficient notice of relevant Section 16(a)
at 56–57. Of course this argument
counsels just as much in favor of the “statute of
repose” rule that petitioners urge (that is, no tolling
whatever) as it does in favor of the Whittaker
tolling is certainly an easily administrable bright-line rule. And
assuming some form of tolling does apply, it is preferable to apply
that form which Congress was certainly aware of, as opposed to the
rule the Ninth Circuit has fashioned.[7
] See Meyer
, 537 U.S.
, 286 (2003) (“Congress’ silence, while
permitting an inference that Congress intended to apply
background tort principles, cannot show that it
intended to apply an unusual modification of those
* * *
Having determined that §16(b)’s
limitations period is not tolled until the filing of a §16(a)
statement, we remand for the lower courts to consider how the usual
rules of equitable tolling apply to the facts of this
] We are divided 4 to 4
concerning, and thus affirm without precedential effect, the Court
of Appeals’ rejection of petitioners’ contention that
§16(b) establishes a period of repose that is not subject to
tolling. The judgment of the Court of Appeals is vacated, and the
case is remanded for further proceedings consistent with this
It is so ordered.
The Chief Justice took no part in the
consideration or decision of this case.