DEKALB COUNTY PENSION FUND v. TRANSOCEAN LTD

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United States Court of Appeals,Second Circuit.

DEKALB COUNTY PENSION FUND, on behalf of itself and all others similarly situated, Plaintiff–Appellant, v. TRANSOCEAN LTD., Robert L. Long, Jon. A Marshall, and Transocean Inc., Defendants–Appellees.*

No. 14–0894–cv.

Decided: March 17, 2016

Before CABRANES, RAGGI, and WESLEY, Circuit Judges. Geoffrey M. Johnson (Thomas L. Laughlin & David R. Scott, on the brief), Scott+Scott LLP, New York, NY, for Plaintiff–Appellant. John W. Spiegel, Munger, Tolles & Olson LLP, Los Angeles, CA, for Defendants–Appellees Transocean Ltd., Transocean Inc., and Robert T. Long. Peter Ligh, Sutherland Asbill & Brennan LLP, New York, NY, for Defendants–Appellees Transocean Ltd., Transocean Inc., and Robert T. Long. Todd S. Fishman, Allen & Overy LLP, New York, NY, for Defendant–Appellee Jon. A. Marshall.

A statute of limitations “creates a time limit for suing in a civil case, based on the date when the claim accrued.”1 By contrast, a statute of repose “puts an outer limit on the right to bring a civil action [,] ․ measured not from the date on which the claim accrues but instead from the date of the last culpable act or omission of the defendant”—“in essence an absolute bar on a defendant's temporal liability.”2

This appeal concerns the latter, “relatively rare” species of limitations period.3 Specifically, the principal questions presented are the following: what statute of repose applies to Section 14(a) of the Securities Exchange Act of 1934 (the “1934 Act”), 15 U.S.C. § 78n(a), and when does that statute of repose begin to run?

In conjunction with Securities and Exchange Commission (“SEC”) Rule 14a–9, 17 C.F.R. § 240.14a–9, Section 14(a) prohibits “solicitation ․ made by means of any proxy statement ․ containing any statement which ․ is false or misleading with respect to any material fact.”4 Section 14(a) “do[es] not expressly provide a private right of action,” but “[t]he Supreme Court [has] recognized an implied private right of action for injury caused by [its] violation.”5 Because the private right of action in Section 14(a) is implied and not express, it is no surprise that a statute of repose is not to be found in its text. “[W]e are [therefore] faced with the awkward task of discerning the limitations period that Congress intended courts to apply to a cause of action it really never knew existed.”6

We have taken up this task before, some 25 years ago. In Ceres Partners v. GEL Associates, 918 F.2d 349 (2d Cir.1990), we concluded that the implied private rights of action in Section 14 were “analogous” to the express private rights of action in Sections 9(f) and 18(a) of the 1934 Act, 15 U.S.C. §§ 78i(f),7 78r(a),8 in large part because these actions share common goals.9 We then borrowed the three-year statutes of repose applicable to Sections 9(f) and 18(a) at the time, and applied them to Section 14.10

Approximately 12 years after we decided Ceres, however, Congress passed the Sarbanes–Oxley Act of 2002 (“SOX”), Pub.L. No. 107–204, 116 Stat. 745. Section 804(b) of SOX, now codified at 28 U.S.C. § 1658(b), extended to five years the statute of repose applicable to certain “private right[s] of action that involve[ ] a claim of fraud, deceit, manipulation, or contrivance.” Section 1658(b) thus necessitates a reexamination of our holding in Ceres. Because in that case we borrowed the three-year statutes of repose then applicable to Sections 9(f) and 18(a) and applied them to Section 14, we must determine whether Sections 9(f), 18(a), or 14(a) provide “private right[s] of action that involve[ ] a claim of fraud, deceit, manipulation, or contrivance,” to which a five-year statute of repose would now apply.

We hold that Sections 9(f) and 18(a) do indeed provide “private right[s] of action that involve[ ] a claim of fraud, deceit, manipulation, or contrivance,” to which a five-year statute of repose now applies by virtue of the enactment of SOX, but that Section 14(a) does not provide such a private right of action. Accordingly, borrowing the statute of repose applicable to Sections 9(f) and 18(a) and applying it to Section 14 is no longer appropriate, because doing so would frustrate, rather than “effect[,] Congress' objectives in enacting the securities laws.”11

We therefore hold that the same three-year statutes of repose we applied to Section 14 in Ceres—i.e., the three-year statutes of repose that, until Congress passed SOX, applied to Sections 9(f) and 18(a)—still apply to Section 14(a) today. We further hold that, like all statutes of repose, the statutes of repose applicable to Section 14(a) begin to run on “the date of the [defendant's] last culpable act or omission.”12

Primarily for these reasons, we AFFIRM the March 14, 2014 judgment of the United States District Court for the Southern District of New York (Lorna G. Schofield, Judge ), dismissing the Section 14(a) claim asserted by plaintiff-appellant DeKalb County Pension Fund (“DeKalb”) as time-barred by the applicable three-year statutes of repose, and dismissing DeKalb's claim under Section 20(a) of the 1934 Act, 15 U.S.C. § 78t(a), for failure to state a claim upon which relief can be granted.

BACKGROUND

On October 2, 2007, GlobalSantaFe Corp. (“GSF”), “an offshore oil and gas drilling contractor,” and defendant-appellee Transocean Inc. (“Transocean”), “one of the largest international providers of offshore contract drilling services for oil and gas,” jointly disseminated a proxy statement concerning a proposed merger between the companies.13 The proxy statement included numerous representations regarding Transocean's compliance with various environmental laws, its training and safety programs, and its equipment maintenance, among other subjects.14 GSF's shareholders, including DeKalb, approved the merger at a November 9, 2007 shareholder meeting.15 Pursuant to the merger's terms, DeKalb exchanged each of its GSF shares for .4757 Transocean shares and a $22.46 cash payment.16

At the time of the merger, Transocean owned various offshore oil-drilling rigs throughout the world—including the now-infamous Deepwater Horizon, which exploded on April 20, 2010, “causing ․ the worst oil spill in U.S. history.”17 In the wake of the Deepwater Horizon disaster, Transocean's stock lost more than half of its value.18

On September 30, 2010, Bricklayers and Masons Local Union No. 5, Ohio Pension Fund (“Bricklayers”) filed a class-action complaint against Transocean, as well as defendants-appellees Robert L. Long and Jon A. Marshall, the chief executive officers of Transocean and GSF, respectively, at the time of the merger.19 Bricklayers alleged that the proxy statement disseminated in advance of the merger “contained false and material statements and omissions regarding Transocean's dangerously lax safety protocols for oil drilling and reoccurring issues with [its] blowout preventer ․ technology,” in violation of Section 14(a).20

DeKalb made its first appearance in the action on December 3, 2010, when it filed a motion to be appointed as lead plaintiff.21 The District Court subsequently appointed as lead plaintiff “the DeKalb–Bricklayers Group,” which DeKalb and Bricklayers had formed together in light of “their respective financial stakes in the litigation and their mutual dedication to the prosecution of the action on behalf of the named class.”22

On April 7, 2011, the DeKalb–Bricklayers Group filed an amended class-action complaint, in which it asserted violations of Section 14(a), Rule 14a–9, and Section 20(a).23 “Section 20(a) establishes secondary liability for ‘every person who, directly or indirectly, controls any person’ directly liable under the” 1934 Act.24 “To state a claim of control person liability under [Section] 20(a), a plaintiff must show,” inter alia, “a primary violation by the controlled person.”25

On March 30, 2012, the District Court dismissed Bricklayers from the action for lack of standing, finding that it had “failed to proffer any facts showing that it was eligible to vote” on the merger or “that it retained its Transocean stock after” the Deepwater Horizon disaster.26 This dismissal left DeKalb as the sole lead plaintiff. DeKalb filed a second amended class-action complaint on April 18, 2012, in which it again asserted Section 14(a), Rule 14a–9, and Section 20(a) claims.27

On August 30, 2013, defendants-appellees filed a motion under Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss DeKalb's Section 14(a) claim on the ground that it was time-barred by the applicable statutes of repose, which motion the District Court granted on March 14, 2014.28 In granting the motion, the District Court borrowed the three-year statutes of repose that applied to Sections 9(f) and 18(a) before the passage of SOX and applied them to DeKalb's Section 14(a) claim, but did not address whether SOX had extended Section 9(f)'s or Section 18(a)'s statutes of repose to five years, apparently assuming that it had not.29 The District Court did, however, reject DeKalb's argument that § 1658(b) applies directly to Section 14(a).30 The District Court also held that the applicable three-year statutes of repose began to run on October 2, 2007, the date on which GSF and Transocean jointly disseminated the allegedly false and misleading proxy statement; that the statutes of repose therefore required DeKalb to have filed its Section 14(a) claim before October 2, 2010; and that DeKalb's Section 14(a) claim was consequently time-barred, inasmuch as DeKalb did not even appear in the action until December 3, 2010, approximately two months after the deadline had passed.31 The District Court also held that, because a Section 20(a) claim “is necessarily predicated on a primary violation of securities law, the dismissal of [DeKalb's Section] 14(a) claim necessarily mean[t] the dismissal of [DeKalb's Section] 20 claim as well.”32 DeKalb timely appealed.33

DISCUSSION

“We review de novo the grant of a motion to dismiss under Rule 12(b)(6) ․, accepting as true the factual allegations in the complaint and drawing all inferences in the plaintiff's favor.”34

I. The Three–Year Statutes of Repose that Applied to Sections 9(f) and 18(a) Before the Passage of SOX Continue to Apply to Section 14(a)

Before turning to the question of whether § 1658(b) applies to Sections 9(f), 18(a), or 14(a), it will be helpful to briefly describe our decision in Ceres, given its importance to our inquiry.

In Ceres, the plaintiff alleged violations of Section 10(b), 15 U.S.C. § 78j(b), Section 14(d), 15 U.S.C. § 78n(d), and Section 14(e), 15 U.S.C. § 78n(e), all of the 1934 Act, as well as SEC Rule 10b–5, 17 C.F.R. § 240.10b–5.35 As in this case, the plaintiff brought those claims pursuant to implied private rights of action.36 The two questions presented on appeal were whether those claims should be governed by a “uniform federal limitary period,” instead of whatever statute of repose applied to the most analogous state statute; and if so, what that period should be.37 Answering the first question in the affirmative, we moved to the second.38

We began by explaining that the 1934 Act “provides for a number of private actions,” including those under Sections 9(f) and 18(a), and that the “goal of these sections, as for [Section] 10(b), is to ensure full disclosure, to prohibit conduct recognized as manipulative and deceptive, and to give the SEC the authority to take steps to counter other conduct having the same effect. Thus, the actions available under the 1934 Act share common goals.”39 We then observed that the express private rights of action found in Sections 9(f) and 18(a), “for which a ․ three-year statute of [repose was] provided [,] ․ are closely related to the right of action implied under [Section] 10(b) and Rule 10b–5,” and that there is also a “permissible overlap between actions under [Section] 10(b) and those under” Section 11 of the Securities Act of 1933 (the “1933 Act), 15 U.S.C. § 77k, to which a three-year statute of repose also applied.40 Finally, because “Sections 14(d) and 14(e) of the 1934 Act ․ are similarly provisions designed to ensure that security holders receive full disclosure,” they “substantially overlap” Sections 9 and 18(a) and Rule 10b–5 as well.41 Accordingly, we concluded that since Congress has provided in Sections 9(f) and 18(a) express rights of action “that so substantially overlap” the rights of action implied under Sections 10(b) and 14, “and has provided a limitations period with respect to those express rights, the specified period provides a far more appropriate analogy than do state statutes devoted to different types of claims.”42

Thus, to summarize, we analogized the implied private rights of action in Sections 10(b) and 14 of the 1934 Act to the express private rights of action in Sections 9(f) and 18(a) of the 1934 Act and Section 11 of the 1933 Act, on the basis of the common goals that these actions share. We then borrowed the three-year statutes of repose applicable to the express private rights of action and applied them to the implied private rights of action. Notably, however, we did not take a position regarding to which of the express rights of action the implied rights of action were most similar. That is, we did not decide whether Sections 10(b) and 14 were more like Section 9(f), Section 18(a), or Section 11. Of course, there was no need for us to do so—at the time, Sections 9(f), 18(a), and 11 all had three-year statutes of repose.

It also bears mentioning that the Supreme Court expressed its approval of Ceres in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991). In Lampf, the Supreme Court took up the question of “which statute of [repose] is applicable to a private suit brought pursuant to” Section 10(b) and Rule 10b–5.43 Just as we had in Ceres, the Court looked to Sections 9(f) and 18(a) for its answer, as those sections “target the precise dangers that are the focus of [Section] 10(b).”44 According to the Court, all three sections were “intended to facilitate a central goal: to protect investors against manipulation of stock prices through regulation of transactions upon securities exchanges and in over-the-counter markets, and to impose regular reporting requirements on companies whose stock is listed on national securities exchanges.”45 Additionally, the Court noted that, “[i]n adopting the 1934 Act, ․ Congress also amended the limitations provision of the 1933 Act,” adopting a three-year statute of repose “for each cause of action contained therein.”46

Thus, the Court found, “there can be no doubt that the[se] contemporaneously enacted express remedial provisions represent a federal statute of [repose] actually designed to accommodate a balance of interests very similar to that at stake” in Section 10(b) and Rule 10b–5.47 The Court therefore “agree[d] with every Court of Appeals that ha[d] been called upon to apply a federal statute of limitations to a [Section] 10(b) claim that the express causes of action contained in the 1933 and 1934 Acts provide [the] appropriate” statute of repose, and the Court cited Ceres in support of that conclusion.48

A. Section 1658(b) Applies to Section 9(f)

We now turn to the question of whether § 1658(b) applies to Section 9(f). Although neither the Supreme Court nor we have previously addressed this issue, several lower courts have suggested that it does.49 These decisions are sound. While it is true that § 1658(b) did not expressly repeal the limitations period in Section 9(f), “an implied repeal will ․ be found where provisions in two statutes are in irreconcilable conflict.”50 This standard accurately describes the relationship between § 1658(b) and Section 9(f).

As noted, § 1658(b) applies to “a private right of action that involves a claim of fraud, deceit, manipulation, or contrivance.”51 In view of this language, we agree with the Third and Fourth Circuits that, at a minimum, Congress clearly intended it to apply to “claims requiring proof of fraudulent intent.”52 A claim arising under Section 9(f), “the statutory provision that governs securities price manipulation claims,”53 is exactly that, as it “contain[s] requirements of both manipulative motive and willfulness.”54 Thus, the statutes of repose contained in § 1658(b) and Section 9(f) both purport to apply to Section 9(f), but prescribe different periods of time. As such, they “are in irreconcilable conflict,” and “the later [statute] to the extent of the conflict [therefore] constitutes an implied repeal of the earlier one.”55

Relying primarily on a single sentence from a Senate Judiciary Committee report, other lower courts have suggested that § 1658(b) “was not intended to conflict with existing limitations periods for any express private rights of action under the federal securities laws” (such as Section 9(f)), but was instead intended to apply only to express private rights of action lacking limitations periods or to implied private rights of action (such as Section 10(b)).56 As the Supreme Court has “repeatedly held,” however, “the authoritative statement is the statutory text, not the legislative history or any other extrinsic material.”57 In fact, the Court has cast a wary eye on the specific type of report on which these district-court decisions were based:

[J]udicial reliance on legislative materials like committee reports, which are not themselves subject to the requirements of Article I, may give unrepresentative committee members—or, worse yet, unelected staffers and lobbyists—both the power and the incentive to attempt strategic manipulations of legislative history to secure results they were unable to achieve through the statutory text.58

What is more, the particular report in question seems to be especially unreliable. The specific sentence therefrom on which these lower courts relied was preceded by the following introduction:

We believe current law likely provides an adequate length of time in which people who have been defrauded can file suit․ Regrettably, the sponsors of [the original Senate version of the bill] prevailed in their effort to extend the current statute of [repose], and we would like to clarify our understanding of the intended parameters of that extension.59

In other words, the sentence that formed the basis for these decisions appears to have been drafted by those senators who lost the battle to prevent § 1658(b)'s passage, and therefore may have been engaging in the type of “strategic manipulations of legislative history” against which the Supreme Court has warned, in an effort to curtail the effect of legislation they disfavored.60

Further, even if legislative history were driving our determination, there would be plenty of other evidence to counterbalance this language.61 We need not, however, resort to any such evidence. “[C]ourts must presume that a legislature says in a statute what it means and means in a statute what it says there. When the words of a statute are unambiguous, then, this first canon is also the last: judicial inquiry is complete.”62 Here, as discussed above, § 1658(b) speaks for itself—by its terms, it applies to “private right[s] of action that involve[ ] a claim of fraud, deceit, manipulation, or contrivance,” not some subset thereof.63

B. Section 1658(b) Applies to Section 18(a)

We next consider whether § 1658(b) applies to Section 18(a)—another issue that we have not previously addressed, and on which lower courts in our Circuit have also split.64 This question is more difficult to resolve, because unlike Section 9(f), Section 18(a) does not require a plaintiff to plead or prove scienter.65 But it does not necessarily follow that Section 18(a) is not “a private right of action that involves a claim of fraud, deceit, manipulation, or contrivance.”66

Section 1658(b) does not define “fraud.” As a result, we look to its common-law meaning, because “[i]t is a settled principle of interpretation that, absent other indication, Congress intends to incorporate the well-settled meaning of the common-law terms it uses .”67

The eighth edition of Black's Law Dictionary—which is the edition published closest in time to the passage of SOX68 —defines “fraud” in pertinent part as follows: “1. A knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment․ 2. A misrepresentation made recklessly without belief in its truth to induce another person to act.”69 The question, then, is whether Section 18(a) “involves a claim of a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment,” or “involves a claim of a misrepresentation made recklessly without belief in its truth to induce another person to act.” Focusing in particular on the second of these two formulations, we conclude that it does.

On its face, Section 18(a) unquestionably “involves a claim of a misrepresentation made ․ to induce another person to act.”70 And the Supreme Court has strongly indicated that, in order for a plaintiff to recover under Section 18(a), such a misrepresentation also must have been “made recklessly without belief in its truth,” at the very least.

In Ernst & Ernst v. Hochfelder, 425 U.S. 185, 96 S.Ct. 1375, 47 L.Ed.2d 668 (1976), the Court stated that Section 18(a) “contains a state-of-mind condition requiring something more than negligence,” and that its “legislative history ․ suggests something more than negligence on the part of the defendant is required for recovery.”71 Relying on this language, we noted in Ross v. A.H. Robins Co., 607 F.2d 545 (2d Cir.1979), that “a party may not be held liable under [Section] 10(b) unless he acted with scienter. It may well be that a similar requirement attaches to [Section] 18 liability.”72 The Supreme Court used even stronger language in Musick, Peeler & Garrett v. Employers Insurance of Wausau, 508 U.S. 286, 113 S.Ct. 2085, 124 L.Ed.2d 194 (1993), in which it stated that Section 18(a) “involve[s] defendants who have violated the securities law with scienter”; contrasted Section 18(a) with Sections 11 and 12 of the 1933 Act, 15 U.S.C. §§ 77k, 77l, and Section 16 of the 1934 Act, 15 U.S.C. § 78p, which “do not require scienter in all instances”; and described Section 18(a) as prohibiting an “intentional tort[ ].”73

In light of the Court's statement that Section 18(a) requires “scienter,” it is useful to define that term. For purposes of the securities laws, the Supreme Court has defined it as “a mental state embracing intent to deceive, manipulate, or defraud.”74 This definition corresponds almost exactly to § 1658(b)'s references to “deceit,” “manipulation,” and “fraud.”75 Moreover, the Supreme Court has explained that “the intent motivating [Section 18(a) ] is ․ to deter fraud and manipulative practices in the securities markets,”76 and we have explained that one of Section 18(a)'s goals is to “prohibit conduct recognized as manipulative and deceptive ”77 —language that, like the definition of “scienter,” matches § 1658(b)'s references to “fraud,” “manipulation” and “deceit.”78

We also think it significant that Section 18(a) imposes liability “unless the person sued shall prove that he acted in good faith and had no knowledge that such statement was false or misleading.”79 The presence of this good-faith defense means that, as a practical matter, Section 18(a) actions will generally involve proof of a defendant's state of mind, and recovery will be permitted only where a defendant acted, at a minimum, recklessly. Congress's inclusion of this defense thus further demonstrates that it intended Section 18(a) to reach only fraudulent misrepresentations, rather than negligent or innocent ones.80

Lastly, we have explicitly stated that Section 18(a) “create[s][a] private right[ ] of action for various types of fraud,”81 and we have described a violation of Section 18(a) as “fraud” on at least one other occasion.82

Taken together, these factors lead us to join the Fifth Circuit in concluding that, like Section 9(f), Section 18(a) is governed by § 1658(b), the provision that codifies Section 804(b) of SOX.83 A plaintiff asserting a Section 18(a) claim is, in essence, asserting a fraud claim—a fraud claim with respect to which the defendant, and not the plaintiff, uncharacteristically bears the burden of proof regarding scienter, but a fraud claim no less.84

C. Section 1658(b) Does Not Apply to Section 14(a)

The import of the foregoing analysis is that the landscape has fundamentally changed since we decided Ceres. To recapitulate, in Ceres, our primary points of reference for determining which statute of repose applies to Section 14 were the statutes of repose that applied to Sections 9(f) and 18(a) before the passage of SOX. But § 1658(b) has since extended those statutes of repose to five years.85

Thus, if we were to take the same analytical approach that we took in Ceres to the question before us today—i.e., borrow the statutes of repose applicable to Sections 9(f) and 18(a)—the statute of repose applicable to Section 14(a) would be five years. But this would be an absurd result, undeniably contrary to clearly expressed congressional intent, and would frustrate, rather than “effect[,] Congress' objectives in enacting the securities laws.”86 We would, essentially, be applying § 1658(b) to Section 14(a), albeit indirectly. And yet, Congress has specified that § 1658(b) applies only to “private right[s] of action that involve[ ] a claim of fraud, deceit, manipulation, or contrivance,”87 which Section 14(a) does not.88

Confronted, then, with one of the “inevitable ․ difficult problems regarding the interplay of the [1934 Act's] express and implied remedies” that we predicted “such a complex scheme of regulation” would “spawn,”89 we resort to a simpler methodology.

“We assume that Congress is aware of existing law when it passes legislation.”90 Thus, we presume that, when Congress passed SOX, it was “aware of [two features of] the judicial background against which it [was] legislat[ing]”91 : (1) Ceres and many similar decisions borrowing the three-year statutes of repose then applicable to Sections 9(f) and 18(a) and applying them to Section 14(a);92 and (2) myriad decisions holding that “[l]iability can be imposed [under Section 14(a) ] for negligently drafting a proxy statement.”93 Put differently, Congress must have known that, by extending only the statute of repose applicable to “private right[s] of action that involve[ ] a claim of fraud, deceit, manipulation, or contrivance,”94 the statutes of repose applicable to Section 14(a) would remain intact. And from this knowledge, we conclude that Congress “affirmatively intended to preserve” them.95 We therefore hold that the same three-year statutes of repose that we applied to Section 14 in Ceres—which are the three-year statutes of repose that, until Congress passed SOX, applied to Sections 9(f) and 18(a)—still apply to Section 14(a) today.

II. The Three Year Statutes of Repose Applicable to Section 14(a) Begin to Run on the Date of the Defendant's Last Culpable Act or Omission

Having concluded that Section 14(a)'s three-year repose period is not affected by § 1658(b), we must now determine when that period begins to run.

The three-year statute of repose previously applicable to Section 9(f) stated that “[n]o action shall be maintained to enforce any liability created under this section, unless brought ․ within three years after such violation, ”96 while the three-year statute of repose previously applicable to Section 18(a) stated that “[n]o action shall be maintained to enforce any liability created under this section unless brought ․ within three years after such cause of action accrued.”97 In the case before us, DeKalb argues that, because of this difference in language, we must choose between the two standards, and urges us to pick Section 18(a)'s “accrual” standard rather than Section 9(f)'s “violation” standard.98 According to DeKalb, its Section 14(a) claim is timely under the “accrual” standard, because it “accrued on April 20, 2010, the date the Deepwater Horizon disaster revealed that ․ Transocean had systematically violated numerous health, safety and environmental laws on the Deepwater Horizon drilling rig and on a company-wide basis.”99

DeKalb cites Lampf, arguing that it requires us to determine which section is most analogous to Section 14(a) and then to apply that section's repose language to Section 14(a). We are not persuaded. In Lampf, the Supreme Court recognized that the 1934 Act's statutes of repose, including those in Sections 9(f) and 18(a), all “relate to ․ three years after violation,” regardless of any differences in statutory language.100 Thus, we conclude that, when applying a statute of repose, we do not need to choose between these two standards, because Lampf dictates the same result.

In urging otherwise, DeKalb invokes “the discovery rule,” pursuant to which, “where a plaintiff has been injured by fraud and remains in ignorance of it without any fault or want of diligence or care on [its] part, the bar of the statute does not begin to run until the fraud is discovered,” or until “it could have been discovered” “in the exercise of reasonable diligence.”101 This argument fails not only because, as explained in Part I of this opinion, Section 14(a) claims do not demand fraud, but also because the discovery rule does not extend to statutes of repose. As courts have observed, statutes of repose “are surgical strikes by the legislature against the discovery rule”102 that consequently “override[ ]” it.103 And the Supreme Court has unambiguously characterized the three-year limitations period previously applicable to Section 18(a) as a statute of “repose,” not a statute of limitations.104

We are bound by this characterization—with which, it should be noted, DeKalb agrees.105 In any event, holding that the statutes of repose applicable to Section 14(a) begin to run only when the alleged claim was or could have been discovered—an inherently fluid calculus—would defeat their “distinct purpose,” which is to “effect a legislative judgment that a defendant should be free from liability after the legislatively determined period of time.”106 Indeed, an “injury need not [even] have occurred, much less have been discovered,” for a statute of repose to begin to run.107 Instead, the statutory period is “measured ․ from the date of the [defendant's] last culpable act or omission.”108

Accordingly, we hold that the three-year statutes of repose applicable to Section 14(a) begin to run on the date of the violation,109 which we consider to be the date of the defendant's last culpable act or omission.110 Because Section 14(a) and Rule 14a–9 jointly prohibit “solicitation ․ made by means of any proxy statement ․ containing any statement which ․ is false or misleading with respect to any material fact,”111 the relevant date in this case was October 2, 2007, when GSF and Transocean jointly disseminated the allegedly false and misleading proxy statement.112 DeKalb therefore had until October 2, 2010 to file its Section 14(a) claim, but it did not appear in the action until December 3, 2010.113 As a result, DeKalb's claim is time barred.

III. DeKalb's Lead–Plaintiff Motion Does Not “Relate Back” Under Rule 17(a)(3) of the Federal Rules of Civil Procedure to Bricklayers' Filing of the Original Class Action Complaint

DeKalb also argues that, even if it did not appear in the action until after the applicable statutes of repose had run, “the District Court's opinion would still need to be reversed [or] remanded because [Bricklayers'] original class action complaint was timely filed” on September 30, 2010, and DeKalb's “lead plaintiff motion [of December 3, 2010] relates back to the initial filing.”114 In making this argument, DeKalb relies on Rule 17(a)(3) of the Federal Rules of Civil Procedure, which provides the following:

The court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action. After ratification, joinder, or substitution, the action proceeds as if it had been originally commenced by the real party in interest.

According to DeKalb, “the consolidated complaint naming DeKalb as a lead plaintiff should be deemed timely filed on September 30, 2010 because DeKalb was substituted in as the ‘real party in interest.’ “115

Rule 17(a)(3), however, has no bearing here. That rule “was added ․ to avoid forfeiture and injustice when an understandable mistake has been made in selecting the party in whose name the action should be brought” and “codifie[d] the modern judicial tendency to be lenient when an honest mistake has been made in selecting the proper plaintiff.”116 DeKalb has not even suggested that whatever “mistake” may have led to its tardy appearance was “understandable” or “honest,” nor pointed to a “semblance of any reasonable basis” therefor.117 Rather, “through minimal diligence, [DeKalb] could have avoided the operation of the ․ statute of repose simply by making [a] timely motion[ ] to intervene in the action as [a] named plaintiff[ ], or by filing [its] own timely action[ ].”118

In any event, DeKalb's lead-plaintiff motion cannot relate back to Bricklayers' complaint, because that complaint “was a nullity.”119 Bricklayers was not dismissed because it lacked standing to assert DeKalb's claims—it was dismissed because it lacked standing to assert its own claims. In other words, this is simply not a “situation[ ] in which it [was] unclear at the time the action [was] filed who had the right to sue and it [was] subsequently determined that the right belonged to a party other than the party that instituted the action.”120 Accordingly, we will not “distort [ ]” Rule 17(a)(3) to allow DeKalb “to circumvent the limitations period.”121

IV. The Private Securities Litigation Reform Act of 1995 Does Not Toll the Statutes of Repose Applicable to Section 14(a)

DeKalb further claims that “the 60–day period provided by the [Private Securities Litigation Reform Act of 1995 (“PSLRA”), Pub.L. No. 104–67, 109 Stat. 737,] for members of the prospective class to move for appointment should legally toll the statute of repose.”122 DeKalb devotes a single paragraph to this argument. And no wonder—it is a difficult one to fathom. The section of the PSLRA to which DeKalb appears to be referring reads as follows, in pertinent part:

Not later than 20 days after the date on which the complaint is filed, the plaintiff ․ shall cause to be published ․ a notice advising members of the purported plaintiff class ․ that, not later than 60 days after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class.123

Nothing about this language even remotely suggests that the PSLRA was intended to toll the applicable statutes of repose for the 60 days during which a member of the purported class may file a lead-plaintiff motion, and we have been unable to locate any authority that even arguably supports this notion. Perhaps tellingly, DeKalb cites none. We therefore reject DeKalb's argument out of hand.124

V. The American Pipe Tolling Rule Does Not Extend to the Statutes of Repose Applicable to Section 14(a)

Lastly, DeKalb asserts that so-called “American Pipe tolling”—that is, the tolling rule that the Supreme Court described in American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974)—applies here, and renders its Section 14(a) claim timely. In so arguing, DeKalb ignores our decision in Police & Fire Retirement System of City of Detroit v. IndyMac MBS, Inc., 721 F.3d 95 (2d Cir.2013).

In American Pipe, the Supreme Court held that “the 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.”125 And in IndyMac, “our conclusion [was] straightforward: American Pipe's tolling rule, whether grounded in equitable authority or on Rule 23 [of the Federal Rules of Procedure], does not extend to the statute of repose in Section 13” of the 1933 Act, 15 U.S.C. § 77m.126

We reasoned that, if the rule is equitable in nature, its extension to Section 13's statute of repose is barred by Lampf, in which the Supreme Court stated that equitable “ ‘tolling principles do not apply to that period.’ “127 But critically, when the Court referred to “that period” in Lampf, it was referring to not only Section 13's three-year statute of repose, but also the three-year statutes of repose then applicable to Sections 9(f) and 18(a)—the very same statutes of repose that we found applicable to Section 14(a) in the first part of this opinion.128 As such, this aspect of our holding in IndyMac -that if the American Pipe tolling rule is equitable in nature, Lampf precludes its extension to Section 13's statute of repose—applies equally to the statutes of repose applicable to Section 14(a).

In IndyMac, we also reasoned that, if the American Pipe tolling rule is legal in nature, its extension to Section 13's statute of repose is barred by the Rules Enabling Act.129 Underlying this determination was our observation that, because “the statute of repose in Section 13 creates a substantive right,” and because “the Rules Enabling Act forbids interpreting Rule 23 to abridge, enlarge, or modify any substantive right,” “[p]ermitting a plaintiff to file a complaint or intervene after the repose period set forth in Section 13 ․ has run would therefore necessarily enlarge or modify a substantive right and violate the Rules Enabling Act.”130 But we also stated that all statutes of repose create a substantive right.131 Thus, this aspect of our holding in IndyMac—that if the American Pipe tolling rule is legal in nature, the Rules Enabling Act precludes its extension to Section 13's statute of repose—applies equally to the statutes of repose applicable to Section 14(a) as well.

Therefore, regardless of whether American Pipe's tolling rule is equitable or legal in nature, it does not extend to the statutes of repose applicable to Section 14(a).

CONCLUSION

We have considered all of DeKalb's other arguments and find them to be without merit. Accordingly, for the foregoing reasons, we hold as follows:

(1) Sections 9(f) and 18(a) provide “private right[s] of action that involve [ ] a claim of fraud, deceit, manipulation, or contrivance,” to which a five-year statute of repose now applies under § 1658(b), but Section 14(a) does not provide such a private right of action.

(2) The same three-year statutes of repose that applied to Sections 9(f) and 18(a) before the passage of SOX, which we borrowed and applied to Section 14 in Ceres, still apply to Section 14(a) today.

(3) The statutes of repose applicable to Section 14(a) begin to run on the date of the defendant's last culpable act or omission.

(4) DeKalb's lead-plaintiff motion does not “relate back” under Rule 17(a)(3) to Bricklayers' filing of the original class-action complaint.

(5) The PSLRA does not toll the statutes of repose applicable to Section 14(a).

(6) The American Pipe tolling rule does not extend to the statutes of repose applicable to Section 14(a).

Accordingly, we AFFIRM the District Court's March 14, 2014 judgment dismissing DeKalb's Section 14(a) claim as time-barred by the applicable three-year statutes of repose and its Section 20 claim for failure to state a claim upon which relief can be granted.

JOSÉ A. CABRANES, Circuit Judge: