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LUNDY v. MORGAN STANLEY & CO.

June 26, 1992

JAMES M. LUNDY, et al., Plaintiff,
v.
MORGAN STANLEY & CO., Defendant.



The opinion of the court was delivered by: BARBARA A. CAULFIELD

 This matter comes before the court on plaintiff's motion to reinstate its Section 10(b) claims. Upon consideration of the briefs and arguments of the parties, plaintiff's motion is GRANTED.

 BACKGROUND

 The plaintiff class in this matter filed this action stating several claims under Section 10(b) of the Securities and Exchange Act of 1934, and Rule 10b-5 of the Securities and Exchange Commission promulgated thereunder. On November 12, 1991, Chief Judge Thelton Henderson dismissed plaintiff's Section 10(b) claims pursuant to the retroactive application of the statute of limitations established by the United States Supreme Court in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 115 L. Ed. 2d 321, 111 S. Ct. 2773 (1991). Lampf held that all claims under Section 10(b) and Rule 10b-5 must be filed within one year after the date of discovery of the facts constituting the violation, but in no event later than three years after the violation.

 On December 19, 1991, President Bush signed into law the Comprehensive Deposit Insurance Reform and Taxpayer Protection Act of 1991, Pub. L. No. 102-242 §§ 476 27 A. 105 Stat. 2236. Section 476 of the Act amended the Securities and Exchange Act of 1934 by adding Section 27A. 15 U.S.C. § 78aa. Section 27A of the Act provides:

 (a) Effect on Pending Causes of Action. The limitation period for any private civil action implied under section 10(b) of this Act that was commenced on or before June 19, 1991, shall be the limitations period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991.

 (b) Effect on Dismissed Cause of Action. Any private action implied under Section 10(b) of this Act that was commenced on or before June 19, 1991:

 (1) which was dismissed as time barred subsequent to June 19, 1991, and

 (2) which would have been timely filed under the limitations period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991,

 shall be reinstated on motion of the plaintiff not later than 60 days after the enactment of this section.

 Plaintiff timely filed this motion within 60 days after the enactment of Section 27A. Defendant opposes plaintiff's motion for reinstatement, arguing that Section 476 is an unconstitutional encroachment on the powers of the Federal Judiciary because it prescribes rules of decision in pending cases. *fn1"

 DISCUSSION

 In the short time since Section 27A has been enacted, it has been the subject of numerous constitutional challenges in federal district courts throughout the country. These constitutional challenges are a testament to the somewhat precarious wording of the statute. However, it is not the role of this court to pass judgment on Congress' word and phrase choices. Defendant's challenge to this legislation merely asks this court to determine whether or not Section 27A violates Article III of the United States Constitution.

 First, it should be noted that the Constitutional challenge to Section 27A posed by defendant is narrow; "whether Congress, rather than withdrawing the jurisdiction of Article III courts, may control the exercise of that jurisdiction by limiting the power of Article III courts to judge independently the questions of law and fact in cases which come before them." Laurence H. Tribe, American Constitutional Law, at 49 (1988). As the issue raised by defendant goes to the heart of the separation of powers contemplated by the ...


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