April 17, 2017

The Supreme Court heard arguments Monday in a case brought by CalPERS seeking to uphold a legal precedent on how much time investors have to join or opt out of class-action lawsuits.

Several justices seemed sympathetic to arguments raised by Thomas C. Goldstein partner at Goldstein & Russell, attorney for the $316 billion California Public Employees’ Retirement System, Sacramento, that enforcing strict deadlines for investors to file actions separate from related class lawsuits on the same issues will “amount to a huge amount of pointless paperwork” if investors feel the need to file separate lawsuits. “There are practical implications,” Justice Sonia Sotomayor said.

“From the perspective of institutional investors, this case is of enormous importance,” said Daniel S. Sommers, partner and co-chairman of Cohen Milstein law firm’s securities group, in an interview. If the Supreme Court agrees with the defendants — underwriters of Lehman Brothers debt offerings — as well as the 2nd U.S. Circuit Court of Appeals in New York, which in 2013 interpreted securities law to mean strict deadlines, “investors are going to have become much more proactive to protect their rights.”

A Supreme Court decision will be issued before the session ends in late June.

This Pensions & Investments article can be viewed here.