Avalon Holdings, Inc. et al v. BP, PLC et al
Filing
203
ORDER granting 192 Motion for judgment on the pleadings.(Signed by Judge Keith P Ellison) Parties notified.(arrivera, 4)
United States District Court
Southern District of Texas
ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
In re: BP p.l.c. Securities Litigation
September 20, 2018
David J. Bradley, Clerk
No. 4:10-MD-2185
This document relates to:
Alameda County Emp. Ret. Assoc. et al. v. BP p.l.c. et al.
No. 4:12-cv-01256 (cons.)
Avalon Holdings Inc. et al. v. BP p.l.c. et al.
No. 4:12-cv-03715
Stichting Pensionenfonds Metaal en Techniek et al. v. BP No. 4:13-cv-00069
p.l.c. et al.
HESTA Super Fund v. BP p.l.c. et al.
No. 4:13-cv-00129
New York City Employees’ Ret. Sys. et al. v. BP p.l.c. et al. No. 4:13-cv-01393
Arkansas Teacher Retirement Sys. et al. v. BP p.l.c. et al.
No. 4:14-cv-00457
Washington State Investment Board v. BP p.l.c. et al.
No. 4:14-cv-00980
Helaba Invest Kapitalanlagegesellschaft mbH et al. v. BP No. 4:14-cv-01065
p.l.c. et al.
Maryland State Ret. and Pension System v. BP p.l.c. et al.
No. 4:14-cv-01068
GIC Private Limited v. BP p.l.c. et al.
No. 4:14-cv-01072
Pension Reserves Inv. Mgmt. Bd. of Mass. v. BP p.l.c. et No. 4:14-cv-01084
al.
Virginia Retirement System et al. v. BP p.l.c. et al.
No. 4:14-cv-01085
Louisiana State Emps.’ Ret. Sys. et al. v. BP p.l.c. et al.
No. 4:14-cv-01087
IBM U.K. Pensions Trust Ltd. et al. v. BP p.l.c. et al.
No. 4:14-cv-01279
Universities Superannuation Scheme Ltd. v. BP p.l.c. et al. No. 4:14-cv-01280
Merseyside Pension Fund v. BP p.l.c. et al.
No. 4:14-cv-01281
The Bank of America Pension Plan v. BP p.l.c. et al.
No. 4:14-cv-01418
Honorable Keith P. Ellison
MEMORANDUM AND ORDER
Pending before the Court is a motion for judgment on the pleadings to dismiss certain
claims under the Securities Exchange Act of 1934 (“Exchange Act”) as time-barred. (Doc. No.
1662.) 1 Defendants BP p.l.c., BP America, Inc., BP Exploration & Production, Inc., Anthony
1
All docket citations refer to the MDL docket, 10-md-2185.
1
Hayward, Douglas Suttles, H. Lamar McKay, Robert Dudley, and Robert Malone
(“Defendants”) argue that Exchange Act claims based on alleged misstatements made more than
five years before the filing of the actions at issue are foreclosed by the Exchange Act’s statute of
repose. Defendants filed a memorandum and a reply in support of their motion. (Doc. Nos. 1663,
1706.) Plaintiffs 2 filed a combined response. (Doc. No. 1693.)
I.
BACKGROUND
These actions arise from Defendants’ alleged misstatements and omissions related to the
Deepwater Horizon explosion. Plaintiffs are individual investors who are pursuing causes of
action under the Exchange Act and English securities law. Detailed descriptions of the facts
underlying Plaintiffs’ claims may be found in the Court’s prior orders. See In re BP p.l.c.
Securities Litig., 843 F. Supp. 2d 712, 724–25, 741–42 (S.D. Tex. 2012); In re BP p.l.c.
Securities Litig., 852 F. Supp. 2d 767, 775–78 (S.D. Tex. 2012). The procedural background
relevant to the above-listed actions may be found in the Court’s ruling on Defendants’ Motion to
Dismiss Plaintiffs’ Amended Complaints (“Third Motion to Dismiss”). In re BP p.l.c. Sec. Litig.,
No. 4:12-CV-01256-CONS, 2017 WL 7037706, at *2 (S.D. Tex. June 30, 2017) at *2-*3.
2
The plaintiffs in the following actions filed the consolidated response: Alameda Cnty. Emps.’
Ret. Assoc. et al. v. BP p.l.c. et al., 4:12-cv-1256 (cons.); Stichting Pensioenfonds Metaal en
Techniek et al. v. BP p.l.c. et al., 4:13-cv-0069; HESTA Super Fund v. BP p.l.c. et al., 4:13-cv0129; N.Y.C. Emps.’ Ret. Sys. et al. v. BP p.l.c. et al., 4:13-cv-1393; The Bank of Am. Pension
Plan v. BP p.l.c. et al., 4:14-cv-1418; IBM U.K. Pensions Trust Ltd. et al. v. BP p.l.c. et al., 4:14cv-1279; Merseyside Pension Fund v. BP p.l.c. et al., 4:14-cv-1281; Univs. Superannuation
Scheme Ltd. v. BP p.l.c. et al., 4:14-cv-1280. Plaintiffs in the following actions joined the
response: GIC Private Ltd. v. BP p.l.c. et al., 4:14-cv-1072; Wash. State Inv. Bd. v. BP p.l.c. et
al., 4:14-cv-0980; Avalon Holdings, Inc. et al. v. BP p.l.c. et al., No. 4:12-cv-03715; Arkansas
Teacher Ret. Sys. et al. v. BP p.l.c. et al., No. 4:14-cv-00457; Virginia Ret. Sys. et al. v. BP p.l.c.,
et al., No. 4:14-cv-01085; Maryland State Ret. and Pension Sys. v. BP p.l.c. et al., No. 4:14-cv01068; Pension Reserves Inv. Mgmt. Bd. of Mass. v. BP p.l.c. et al., 4:14-cv-01084; Louisiana
State Emps.’ Ret. Sys. et al. v. BP p.l.c., et al., 4:14-cv-01087; Helaba Invest
Kapitalanlagegesellschaft Mbh et al. v. BP p.l.c. et al., 4:14-cv-01065. (Doc. Nos. 1694, 1695,
1696, 1697, 1698, 1699, 1700, 1702, 1703).
2
Additional procedural background specific to Defendants’ statute of repose argument is
relevant here. Defendants raised their statute of repose argument on two prior occasions.
First, Defendants raised the statute of repose argument in their Amended Second Tranche
Consolidated Motion to Dismiss (“Second Tranche Motion to Dismiss”), which the Court
decided in September 2014. See In re BP p.l.c. Sec. Litig., No. 4:13-CV-1393, 2014 WL
4923749, at *1 (S.D. Tex. Sept. 30, 2014); see also MDL Doc. No. 718 at 41-42. Defendants
asked the Court to dismiss causes of action based on alleged misstatements made more than five
years before the filing of the individual actions. The Court applied the tolling rule set out in
American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), which provides that the filing
of a class action tolls applicable statutes of limitations as to all putative class members until class
certification is denied or until the individual ceases to be a member of the class. At the time,
there was a circuit split regarding the application of American Pipe tolling to statutes of repose.
The primary question was whether American Pipe tolling was an equitable rule, in which case it
would not apply to statutes of repose. In re BP p.l.c. Sec. Litig., 2014 WL 4923749, at *4. This
Court concluded that American Pipe tolling was a legal rule, and further determined that it
applied to the Exchange Act claims in this case. Id. at *4-*5.
On June 26, 2017, the Supreme Court held that American Pipe tolling is equitable in
nature and thus does not apply to the three-year statute of repose that governs claims under
Section 11 of the Securities Act of 1933. Cal. Pub. Employees’ Ret. Sys. v. ANZ Sec., Inc., 137 S.
Ct. 2042, 2052, 198 L. Ed. 2d 584 (2017). This precedent is the basis for Defendants’ motion.
Defendant Malone raised the statute of repose argument in his motion for reconsideration
of the Court’s decision on the Third Motion to Dismiss. (See Doc. No. 1584, at 4 n. 4.)
Defendants had not argued for dismissal based on the statute of repose in their Third Motion to
3
Dismiss; briefing and argument had been completed prior to the ANZ Securities decision. (See
Doc. Nos. 1419, 1546; Minute Entry dated 5/8/2017.) In his motion for reconsideration,
Defendant Malone briefly raised the statute of repose argument in a footnote, stating that
“Plaintiffs’ Exchange Act claims are also barred by the five-year statute of repose, 28 U.S.C. §
1658(b)(2), because Mr. Malone’s April 2007 statement was made more than five years before
any of the above-captioned actions were filed.” (Doc. No. 1584, at 4 n. 4.) Plaintiffs countered
that this presented “a new legal theory impermissibly raised for the first time in a motion for
reconsideration.” (Doc. No. 1587, at 15.) The Court declined to decide the statute of repose issue
raised in the motion for reconsideration, since it had not been raised in the original briefing.
(Doc. No. 1632, at 4.)
II.
LEGAL STANDARD
Under Federal Rule of Civil Procedure 12(c), “[a]fter the pleadings are closed but within
such time as not to delay the trial, any party may move for judgment on the pleadings.” “A
motion brought pursuant to Fed. R. Civ. P. 12(c) is designed to dispose of cases where the
material facts are not in dispute and a judgment on the merits can be rendered by looking to the
substance of the pleadings and any judicially noticed facts.” Great Plains Tr. Co. v. Morgan
Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002) (quotation marks omitted).
Pleadings must be construed liberally, in the light most favorable to the plaintiff. Id.
III.
PROCEDURAL PROPRIETY OF THE MOTION
Before turning to the substance of Defendants’ motion, the Court must address the
procedural arguments that Plaintiffs raise in their response brief. Plaintiffs argue that
Defendants’ motion is procedurally barred on multiple grounds.
4
First, Plaintiffs argue that the Court’s holding in its decision on the Second Tranche
Motion to Dismiss established the law-of-the-case regarding American Pipe tolling, and that this
prior holding cannot be disturbed. A court may reexamine its prior decision if “controlling
authority has since made a contrary decision of the law applicable to such issues.” Royal Ins. Co.
of Am. v. Quinn-L Capital Corp., 3 F.3d 877, 880 (5th Cir. 1993). The Court’s reasoning to reach
its decision that the Exchange Act’s five-year statute of repose was subject to American Pipe
tolling—that the rule was legal and not equitable—has been directly affected by the ANZ
Securities decision. Accordingly, it is appropriate for the Court to re-examine the issue.
Plaintiffs further argue that Defendants are improperly attempting to use a Rule 12(c)
motion to litigate issues that were not timely raised in their Rule 12(b)(6) motion. This argument
is not based in Rule 12 itself. A motion under Rule 12(c) may be filed “after the pleadings are
closed but within such time as not to delay the trial.” Rule 12(g) limits the filing of subsequent
motions under certain sections of Rule 12(b), but it does not prevent the filing of subsequent
motions for failure to state a claim. See Rule 12(g)(2). In support of their argument, Plaintiffs
provide an unpublished opinion from the Northern District of Texas, in which a court declined to
consider arguments raised in a Rule 12(c) motion that had already been decided in the court’s
ruling on an earlier Rule 12(b) motion. See Gonzalez ex rel. E.G. v. Bond, No. 16-cv- 0068-BL,
2017 WL 3493124, at *7 (N.D. Tex. June 29, 2017) (Report and Recommendation adopted by
2017 WL 3491853, at *1 (N.D. Tex. Aug. 14, 2017)). In Gonzalez, there was no intervening
change in law or other circumstances that would have affected the court’s previous analysis of
the arguments. Such is not the case here.
Lastly, Plaintiffs argue that Defendants are using their Rule 12(c) motion to re-litigate an
issue that was already rejected by the Court when it was raised in Mr. Malone’s motion for
5
reconsideration. Plaintiffs misconstrue the Court’s holding. The Court concluded that it would
not address the statute of repose argument raised in Mr. Malone’s motion for reconsideration,
because the issue was not part of the underlying motion of which Mr. Malone sought
reconsideration. Defendants had good reason not to raise the issue in their Third Motion to
Dismiss—ANZ Securities had not been decided until after briefing was complete and argument
had been heard.
The Court is not persuaded by Plaintiffs’ arguments that the motion for judgment on the
pleadings is procedurally barred.
IV.
STATUTE OF REPOSE ANALYSIS
The Exchange Act has a five-year statute of repose. 28 U.S.C. § 1658(b)(2); see Merck &
Co. v. Reynolds, 559 U.S. 633, 650 (2010); Hall v. Variable Annuity Life Ins. Co., 727 F.3d 372,
375 n. 4 (5th Cir. 2013).
Defendants argue that the Exchange Act’s statute of repose bars Plaintiffs’ Exchange Act
claims based on alleged misstatements made more than five years before the filing of the actions.
The dispositive question before the Court is whether the tolling rule set forth in American Pipe &
Construction Company v. Utah, 414 U.S. 538 (1974), which suspends the running of the statute
of limitations against class members’ claims, applies to Plaintiffs’ Exchange Act claims.
Historically, courts have disagreed about whether American Pipe tolling applies to
statutes of repose. Generally, statutes of repose are not subject to equitable tolling. ANZ Sec., 137
S. Ct. at 2052 (“[T]he object of a statute of repose, to grant complete peace to defendants,
supersedes the application of a tolling rule based in equity.”); see also CTS Corp. v. Waldburger,
134 S. Ct. 2175, 2183 (2014). Some courts found that American Pipe tolling was legal, i.e.,
grounded in statute (Rule 23), while others characterized it as equitable. Compare Bright v.
6
United States, 603 F.3d 1273, 1282, 1285–86 (Fed. Cir. 2010) (describing American Pipe as
“statutory” tolling) and Joseph v. Wiles, 223 F.3d 1155, 1167 (10th Cir. 2000) (describing
American Pipe as “legal” tolling) with Bridges v. Dep’t. of Md. State Police, 441 F.3d 197, 211
(4th Cir. 2006) (“The American Pipe/Crown, Cork & Seal equitable tolling rule is a limited
exception to the universal rule that statutes of limitations are impervious to equitable
exceptions.”). Other courts avoided the legal-equitable question, holding that even if American
Pipe tolling were legal in nature, it would not apply to a statute of repose, because a statute of
repose confers a substantive right, and the Rules Enabling Act does not permit the Federal Rules
of Civil Procedure to modify substantive rights. See Police & Fire Ret. Sys. of City of Detroit v.
IndyMac MBS, Inc., 721 F.3d 95, 109 (2d Cir. 2013).
In 2017, the Supreme Court decided ANZ Securities, finding that American Pipe tolling
did not apply to the Securities Act’s three-year statute of repose. Petitioner was a member of a
putative class of securities purchasers, who opted out of the class when the action settled. ANZ
Sec., 137 S. Ct. at 2048. Petitioner filed a separate complaint against the defendants, after the
expiration of the 3-year period for filing suit. Id. The Court held that the time limitation at issue
was a statute of repose and that the legislature intended to provide defendants complete
protection from suit after three years passed. Id. at 2050-51. The Court held that the rule set forth
in American Pipe was equitable in nature, and that it therefore could not toll the Securities Act’s
statute of repose. Id. at 2052.
Defendants argue that the application of ANZ Securities to the present case is simple:
ANZ Securities clarifies that American Pipe tolling is an equitable rule. Equitable tolling does not
apply to statutes of repose. The five-year time-bar in the Exchange Act is a statute of repose, thus
American Pipe tolling is inapplicable. In response, Plaintiffs argue that the rule is not so simple,
7
since ANZ Securities is grounded in statutory interpretation and does not analyze the statute at
issue in this case.
ANZ Securities is indeed grounded in statutory interpretation. The statutory interpretation
question that the Court answered was whether the Securities Act’s three-year time bar was a
statute of repose, rather than a statute of limitation. “The determination that the 3–year period is
a statute of repose is critical in this case, for the question whether a tolling rule applies to a given
statutory time bar is one ‘of statutory intent.’” ANZ Sec., 137 S. Ct. at 2050. “Tolling is
permissible only where there is a particular indication that the legislature did not intend the
statute to provide complete repose but instead anticipated the extension of the statutory period
under certain circumstances.” Id.
Courts routinely characterize the Exchange Act’s five-year statutory time restriction as a
“statute of repose.” See, e.g., Hall, 727 F.3d at 375 n. 4; Dusek v. JPMorgan Chase & Co., 832
F.3d 1243, 1249 (11th Cir. 2016), cert. denied, 137 S. Ct. 2326, 198 L. Ed. 2d 755 (2017); see
also Merck, 559 U.S. at 650 (stating that section 1658(b)(2) gives defendants “total repose after
five years”).
Analysis of the statute itself supports this characterization.
A statute of repose is
intended to give defendants complete protection from litigation after a defined period of time has
passed. Id. at 2049. In contrast, a statute of limitation is intended to promote the timely pursuit of
claims by plaintiffs. Id. In ANZ Securities, the Court looked at the plain language and structure of
the Securities Act’s time-limitation to determine that the three-year limit was intended as a
complete bar. The relevant provision, Section 13, sets out two time limits: a shorter limit after
discovery of an untrue statement or omission, and a longer limit after the security offering or sale
from which the claim arises. 15 U.S.C § 77m. The longer limit is phrased “in no event shall any
8
such action be brought…” Id. (emphasis added). The Court found no other indications that the
legislature did not intend to provide complete repose. ANZ Sec., 137 S. Ct. at 2050. The statute
setting forth the limitations periods applicable to Exchange Act claims, 28 U.S.C. Section
1658(b), is similar in structure to Section 13. The Exchange Act limitations statute provides two
different terms—a shorter one that begins after the discovery of the facts constituting the
violation, and a longer one that begins after the violation itself. This supports a conclusion that
the longer time-restriction, calculated from the defendant’s acts, is intended to be a statute of
repose.
Although a few courts have relied upon ANZ Securities in cases involving the Exchange
Act and ERISA claims, the opinions do not provide much guidance to this Court. The Third
Circuit, in an unpublished decision, applied ANZ Securities to Exchange Act claims, holding that
the claims were not tolled by the filing of a securities class action. N. Sound Capital LLC v.
Merck & Co. Inc., 702 F. App'x 75, 81 (3d Cir. 2017). The appeal was already pending when
ANZ Securities was decided. The parties agreed that tolling did not apply in light of the holding
in ANZ Securities, so the Third Circuit did not analyze the issue. A court in the Southern District
of New York applied ANZ Securities in an ERISA action, holding that American Pipe tolling did
not apply to the plaintiff’s claims that were time-barred by ERISA’s statute of repose. Leber v.
Citigroup 401(k) Plan Inv. Comm., 323 F.R.D. 145, 153 (S.D.N.Y. 2017). The court explained
that ANZ Securities established that American Pipe was equitable tolling and that ERISA’s sixyear bar was a statute of repose, since the Supreme Court had used ERISA as an illustrative
example of a statute of repose. Id.
Plaintiffs point to cases in which courts have declined to extend ANZ Securities, but they
are distinguishable from the cases before this Court. A bankruptcy court in the Southern District
9
of New York held that ANZ Securities did not alter a previous conclusion that the two-year
lookback period of Section 548(a)(1) of the bankruptcy code was not a statute of repose. Sec.
Inv'r Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC, No. AP 08-01789 (SMB), 2018 WL
1442312, at *14 (Bankr. S.D.N.Y. Mar. 22, 2018), as corrected (Mar. 26, 2018). The bankruptcy
statute has little in common with Section 13 and Section 1658(b). Plaintiffs also cite to a recent
district court case from this district, in which the court found that ANZ Securities did not alter its
decision to certify a class. In re Cobalt Int'l Energy, Inc. Sec. Litig., No. CV H-14-3428, 2017
WL 3620590, at *3 (S.D. Tex. Aug. 23, 2017). In Cobalt Energy, defendants sought
reconsideration of the court’s class certification decision, arguing that Securities Act and
Exchange Act claims of unnamed class members were not filed individually within the threeyear statute of repose, and thus were barred by ANZ Securities. Id. at *2. The court found
defendants’ argument to be misplaced. ANZ Securities analyzed whether individuals who opted
out of a class could file claims after the expiration of the statute of repose, not whether putative
class members had timely claims where the putative class action was filed within the statute of
repose period but not certified until after it expired. Id. at *3. This procedural posture and the
argument at issue shares nothing with the procedural posture in the present cases.
The Court thus relies on its own reading of the Exchange Act’s limitation statute, along
with prior case law characterizing the five-year bar as a statute of repose, to conclude that the
five-year bar is a statute of repose, not subject to equitable tolling.
Finally, Plaintiffs argue that Defendants previously tried to distinguish Securities Act
cases from Exchange Act cases when it suited their needs, and they urge the Court to look
skeptically upon Defendants’ change in position. In their argument on a prior motion to dismiss,
Defendants distinguished a Securities Act case about the means by which plaintiffs may establish
10
scienter. In re: BP p.l.c. Sec. Litig., No. 4:10-MD-2185, 2016 WL 3090779, at *10 (S.D. Tex.
May 31, 2016). Plaintiffs assert that Defendants should therefore be estopped from arguing that
ANZ Securities, a Securities Act case, applies to Plaintiffs’ Exchange Act claims. Courts may
apply judicial estoppel where a party’s position directly and specifically contradicts its previous
position on the issue. See Republic of Ecuador v. Connor, 708 F.3d 651, 654 (5th Cir. 2013)
(holding that party judicially estopped from arguing that a specific international tribunal was not
subject to discovery statute, where party had repeatedly argued same tribunal was subject to
same statute before other courts). Here, Defendants’ arguments do not directly contradict their
prior argument about the applicability of Securities Act cases to Exchange Act claims, since the
arguments relate to different statutory provisions and elements. Estoppel is not appropriate in this
case.
V.
CONCLUSION
After considering the parties’ filings and the applicable law, the Court finds that the
Exchange Act’s five-year statute of repose applies to Plaintiffs’ Exchange Act causes of action.
The Court holds that Defendants’ Motion for Judgment on the Pleadings is GRANTED.
The parties are directed to confer regarding which claims are untimely under the fiveyear statute of repose and to submit a stipulation. If the parties cannot agree, then Plaintiffs may
file a short brief identifying which claims identified in Defendants’ Corrected Appendix A (Doc.
No. 1706-1) are contested.
11
IT IS SO ORDERED.
Signed this 18th day of September, 2018.
HON. KEITH P. ELLISON
UNITED STATES DISTRICT JUDGE
12
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?