310 separate securities fraud class actions comprise the IPO Securities Litigation. On October 13, 2004, District Judge Shira A. Scheindlin certified classes in six focus cases. The Court stated at the time that "[t]he rulings on the class certification motions in the selected cases will govern those cases only," but added that its rulings in the focus cases were "intended to provide strong guidance, if not dispositive effect, to all parties when considering class certification in the remaining actions." In December 2006, the Second Circuit reversed the class certification decision as to the six focus cases, and, in denying rehearing in 2007, added that "[n]othing ... precludes [plaintiffs] from returning to the District Court to seek certification of a more modest class, one as to which the Rule 23 criteria might be met, according to the standards we have outlined." Miles v. Merrill Lynch & Co., 471 F.3d 24 (2d Cir. 2006), reh'g denied, 483 F.3d 70 (2d Cir. 2007), reh'g en banc denied, (2d Cir. May 18, 2007).

The question for Judge Scheindlin in In re IPO Securities Litig., 2007 U.S. Dist. LEXIS 64815 (S.D.N.Y. Aug. 30, 2007), was the effect of these appellate rulings on the statute of limitations for class members in (i) the focus cases, and (ii) the non-focus cases under the American Pipe doctrine (see posts of July 28 and August 16, 2007). Judge Scheindlin ruled that the statute remained tolled as to both categories of class members.

As to the non-focus cases, there was no real issue, the Court determined: ‛There has been no ruling on any motion for class certification in any of the non-focus cases. Accordingly, American Pipe tolling is plainly still in effect in all of those cases. The tolling period began upon the filing of the class action complaints in those actions and continues until class certification is denied in those cases.“

The focus-group cases presented a question of first impression: whether, once class certification is denied, tolling ceases, even if there is room for another motion to certify a narrower class. Judge Scheindlin reasoned that:

This issue turns on the reasonableness of absent plaintiffs' reliance on the class action to advance their claims. As a result, whether tolling continues after certification is denied depends on the facts and circumstances of each case and is not amenable to a bright-line rule. Here, taking the two Second Circuit decisions in [the IPO Securities Litigation] together, it is plain that there has been no definitive decision that the six focus cases cannot proceed as a class action....Based on those two opinions, the only absent plaintiffs who may no longer reasonably rely on a class action to advance their claims are the initial allocants of the IPOs. Thus, the statute of limitations began to run for those individuals' claims on May 30, 2007. For all other putative class members, it remains reasonable for them to rely on these actions continuing as class actions and on their inclusion in those class actions unless and until this Court (or a higher court) definitively denies the pending motion for class certification

Held, the Underwriter Defendants' motion to confirm the application of the Second Circuit focus-group decision to the non-focus cases denied. Plaintiffs' request for an order confirming the continuing application of American Pipe tolling granted.