(Slip Opinion) OCTOBER TERM, 2011 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
CREDIT SUISSE SECURITIES (USA) LLC ET AL. v.
SIMMONDS
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE NINTH CIRCUIT
No. 10–1261. Argued November 29, 2011—Decided March 26, 2012
Under §16(b) of the Securities Exchange Act of 1934, a corporation or
security holder of that corporation may sue corporate insiders who
realize profits from the purchase and sale, or sale and purchase, of
the corporation’s securities within any 6-month period. The Act provides that such suits must be brought within “two years after the
date such profit was realized.” 15 U. S. C. §78p(b).
In 2007, respondent Simmonds filed numerous §16(b) actions,
claiming that, in underwriting various initial public offerings in the
late 1990’s and 2000, petitioners and others inflated the stocks’ aftermarket prices, allowing them to profit from the aftermarket sales.
She also claimed that petitioners had failed to comply with §16(a)’s
requirement that insiders disclose any changes to their ownership interests. That failure, according to Simmonds, tolled §16(b)’s 2-year
time period. The District Court dismissed the complaints as untimely. The Ninth Circuit reversed. Citing its decision in Whittaker v.
Whittaker Corp., 639 F. 2d 516, it held that the limitations period is
tolled until an insider files the §16(a) disclosure statement “regardless of whether the plaintiff knew or should have known of the conduct at issue.”
Held: Even assuming that the 2-year period can be extended (a question on which the Court is equally divided), the Ninth Circuit erred in
determining that it is tolled until a §16(a) statement is filed. The
text of §16(b)—which starts the clock from “the date such profit was
realized,” §78p(b)—simply does not support the Whittaker rule. The
rule is also not supported by the background rule of equitable tolling
for fraudulent concealment. Under long-settled equitable-tolling
principles, a litigant must establish “(1) that he has been pursuing
2 CREDIT SUISSE SECURITIES (USA) LLC v. SIMMONDS
Syllabus
his rights diligently, and (2) that some extraordinary circumstances
stood in his way.” Pace v. DiGuglielmo, 544 U. S. 408, 418. Tolling
therefore ceases when fraudulently concealed facts are, or should
have been, discovered by the plaintiff. Allowing tolling to continue
beyond that point would be inequitable and inconsistent with the
general purpose of statutes of limitations: “to protect defendants
against stale or unduly delayed claims.” John R. Sand & Gravel Co.
v. United States, 552 U. S. 130, 133. The Whittaker rule’s inequity is
especially apparent here, where the theory of §16(b) liability is so
novel that petitioners can plausibly claim that they were not aware
they had to file a §16(a) statement. Under the Whittaker rule, alleged insiders who disclaim the necessity of filing are compelled either to file or to face the prospect of §16(b) litigation in perpetuity.
Had Congress intended the possibility of such endless tolling, it
would have said so. Simmonds’ arguments to the contrary are unpersuasive. The lower courts should consider in the first instance
how usual equitable tolling rules apply in this case. Pp. 4–8.
638 F. 3d 1072, vacated and remanded.
SCALIA, J., delivered the opinion of the Court, in which all other
Members joined, except ROBERTS, C. J., who took no part in the consideration or decision of the case.
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Cite as: 566 U. S. ____ (2012) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
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notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order
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SUPREME COURT OF THE UNITED STATES
No. 10–1261
CREDIT SUISSE SECURITIES (USA) LLC, ET AL.,
PETITIONERS v. VANESSA SIMMONDS
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 Court.
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, §78p(a).
I
Under §16(b) of the Exchange Act, 48 Stat. 896, as
amended, a corporation or security holder of that corporation may bring suit against the officers, directors, and
certain beneficial owners1
of 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 intend to profit on the basis of such information.” Gollust v.
Mendell, 501 U. S. 115, 122 (1991). Section 16(b) provides
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1
Section 16(b) regulates beneficial owners of more than 10% of any
class of equity securities. 15 U. S. C. §78p(a)(1).
2 CREDIT SUISSE SECURITIES (USA) LLC v. SIMMONDS
Opinion of the Court
that suits must be brought within “two years after the
date such profit was realized.”2
15 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 petitioners.3
In a representative complaint, she alleged that
the underwriters and the issuers’ insiders employed various mechanisms to inflate the aftermarket price of the
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2
Section 16(b) provides in full:
“For the purpose of preventing the unfair use of information which
may have been obtained by such beneficial owner, director, or officer by
reason of his relationship to the issuer, any profit realized by him from
any purchase and sale, or any sale and purchase, of any equity security
of such issuer (other than an exempted security) or a security-based
swap agreement (as defined in section 206B of the Gramm-Leach-Bliley
Act) involving any such equity security within any period of less than
six months, unless such security or security-based swap agreement was
acquired in good faith in connection with a debt previously contracted,
shall inure to and be recoverable by the issuer, irrespective of any intention on the part of such beneficial owner, director, or officer in entering into such transaction of holding the security or security-based
swap agreement purchased or of not repurchasing the security or
security-based swap agreement sold for a period exceeding six months.
Suit to recover such profit may be instituted at law or in equity in any
court of competent jurisdiction by the issuer, or by the owner of any
security of the issuer in the name and in behalf of the issuer if the
issuer shall fail or refuse to bring such suit within sixty days after
request or shall fail diligently to prosecute the same thereafter; but no
such suit shall be brought more than two years after the date such
profit was realized. This subsection shall not be construed to cover any
transaction where such beneficial owner was not such both at the time
of the purchase and sale, or the sale and purchase, of the security or
security-based swap agreement (as defined in section 206B of the
Gramm-Leach-Bliley Act) involved, or any transaction or transactions
which the [Securities and Exchange] Commission by rules and regulations may exempt as not comprehended within the purpose of this
subsection.” 15 U. S. C. §78p(b).
3
Simmonds also named the issuing companies as nominal defendants. In re: Section 16(b) Litigation, 602 F. Supp. 2d 1202, 1204 (WD
Wash. 2009).
Cite as: 566 U. S. ____ (2012) 3
Opinion of the Court
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). Id., 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 complaints.5
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 Whittaker 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
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4
Petitioners have consistently disputed §16’s application to them,
arguing that they, as underwriters, are generally exempt from the
statute’s coverage. See 17 CFR §§240.16a–7(a) and 240.16a–10.
Simmonds contends that this exemption does not apply where the
underwriters do not act in good faith. Brief for Respondent 49. See
§240.16a–7(a). We express no view on this issue.
5
Simmonds voluntarily dismissed one of the complaints. 602
F. Supp. 2d, at 1206, n. 4.
4 CREDIT SUISSE SECURITIES (USA) LLC v. SIMMONDS
Opinion of the Court
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 Whittaker rule, but
noting that the court was compelled to follow Circuit
precedent. Id., at 1099–1101. We granted certiorari, 564
U. S. ___ (2011).
II
Petitioners maintain that these suits were properly
dismissed because they were filed more than two years after the alleged profits were realized. Pointing to dictum
in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson,
501 U. S. 350 (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 Lampf,
supra, 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 determining that it is tolled until the filing of a §16(a)
statement.
In adopting its rule in Whittaker, the Ninth Circuit expressed 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
Cite as: 566 U. S. ____ (2012) 5
Opinion of the Court
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 rule.
The Whittaker court suggested that the background rule
of equitable tolling for fraudulent concealment6
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 rule
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 v.
DiGuglielmo, 544 U. S. 408, 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 discov-
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6
Relying on our decision in American Pipe & Constr. Co. v. Utah,
414 U. S. 538 (1974), Simmonds argues that the Whittaker rule is
best understood as applying legal—rather than equitable—tolling. In
American Pipe, we held that “commencement of a class action suspends
the applicable 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.” 414 U. S., at 554. We based our conclusion
on “the efficiency and economy of litigation which is a principal purpose
of [Fed. Rule Civ. Proc. 23 class actions].” Id., at 553. Although we did
not employ the term “legal tolling,” some federal courts have used that
term to describe our holding on the ground that the rule “is derived
from a statutory source,” whereas equitable tolling is “judicially created.” Arivella v. Lucent Technologies, Inc., 623 F. Supp. 2d 164, 176
(Mass. 2009). The label attached to the Whittaker rule does not matter.
As we proceed to explain, neither general equitable-tolling principles
nor the “statutory source” of §16 supports the conclusion that the
limitations period is tolled until the filing of a §16(a) statement.
6 CREDIT SUISSE SECURITIES (USA) LLC v. SIMMONDS
Opinion of the Court
ery 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 part.’” Lampf, supra, at 363 (quoting Bailey v. Glover, 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 inequitable and inconsistent with the general
purpose of statutes of limitations: “to protect defendants
against stale or unduly delayed claims.” John R. Sand &
Gravel Co. v. United States, 552 U. S. 130, 133 (2008).
The inequity of the Whittaker rule is 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 Whittaker
rule would obstruct Congress’s objective of curbing shortswing 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 Whittaker—disregards the most
Cite as: 566 U. S. ____ (2012) 7
Opinion of the Court
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., Ruth v. Unifund CCR Partners, 604
F. 3d 908, 911–913 (CA6 2010); Santos ex rel. Beato 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 Whittaker 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 inconsistent 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) facts.”
Id, 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 rule. No tolling is certainly an easily ad-
8 CREDIT SUISSE SECURITIES (USA) LLC v. SIMMONDS
Opinion of the Court
ministrable 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 v. Holley, 537
U. S. 280, 286 (2003) (“Congress’ silence, while permitting
an inference that Congress intended to apply ordinary
background tort principles, cannot show that it intended
to apply an unusual modification of those rules”).
* * *
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 case.8
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 opinion.
It is so ordered.
THE CHIEF JUSTICE took no part in the consideration or
decision of this case.
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7
It is for this reason that we also reject the Second Circuit’s rule that
the 2-year period is tolled until the plaintiff “gets actual notice that a
person subject to Section 16(a) has realized specific short-swing profits
that are worth pursuing,” Litzler v. CC Investments, L. D. C., 362 F. 3d
203, 208 (2004). As that court itself recognized, this actual-notice rule
departs from usual equitable-tolling principles. See id., at 207.
8
The District Court said that “there is no dispute that all of the facts
giving rise to Ms. Simmonds’ complaints against [petitioners] were
known to the shareholders of the Issuer Defendants for at least five
years before these cases were filed,” 602 F. Supp. 2d, at 1217. The
Court of Appeals did not consider the accuracy of that statement, which
Simmonds disputes, Brief for Respondent 12, since it concluded the
period is tolled until a §16(a) statement is filed.
