Brown v. Hutton Group, 795 F. Supp. 1307 (S.D.N.Y. 1992)

U.S. District Court for the Southern District of New York - 795 F. Supp. 1307 (S.D.N.Y. 1992)
April 27, 1992

795 F. Supp. 1307 (1992)

Kay N. BROWN, et al., Plaintiffs,
The HUTTON GROUP, et al., Defendants.

No. 89 Civ. 611 (WCC).

United States District Court, S.D. New York.

April 27, 1992.

*1308 *1309 Beigel & Sandler, Ltd., P.C., New York City and Chicago, Ill. (Elizabeth M. Toll, of counsel), for plaintiffs.

Spengler Carlson Gubar Brodsky & Frischling, New York City (Richard P. Swanson, of counsel), and Smith, Gill, Fisher & Butts, P.C., Kansas City, Mo., Irvin V. Belzer, Daniel R. Young, of counsel), for defendants, Indian Wells Production Co., Indian Wells Oil Co. and Hutton/Indian Wells 1983 Energy Income Fund, Ltd.

Skadden, Arps, Slate, Meagher & Flom, New York City (Edward J. Yodowitz, Robert L. Meyers, of counsel), for defendants The E.F. Hutton Group, Inc., E.F. Hutton & Co., Inc., Hutton Energy Services II, Inc., Shearson Lehman Hutton, Inc.



WILLIAM C. CONNER, District Judge:

This action is currently before the Court on the motion of plaintiffs, Kay N. Brown, et al., pursuant to Section 476 of the Federal Deposit Insurance Corporation Improvement Act of 1991, Pub.L. No. 102-242, 105 Stat. 2236 (to be codified as Section 27A of the Securities Exchange Act of 1934, 15 U.S.C. § 78aa-1) to reinstate their claims under Section 10(b) of the Exchange Act.



Plaintiff investors brought this action charging defendants with fraudulent conduct in connection with the sale of interests *1310 in an oil and gas limited partnership. Plaintiffs alleged as a first cause of action "Prospectus and Brochure Fraud" under Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act"). Second Amended Complaint ¶¶ 6-35. Plaintiffs also asserted claims of common law fraud against all defendants and a breach of fiduciary duty against defendant E.F. Hutton Group. Defendants moved to dismiss plaintiffs' claims under Section 10(b) of the Exchange Act as time-barred. Defendants also moved to dismiss for failure to state a claim pursuant to Rule 12(b) (6) Fed. R.Civ.P. and for failure to plead fraud with particularity pursuant to Rule 9(b), or, in the alternative, for summary judgment pursuant to Rule 56(b).

In an Opinion and Order dated October 18, 1991, (the "Opinion and Order") this Court dismissed plaintiffs' Section 10(b) claim as time barred in accordance with the Supreme Court's decision in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilberson, ___ U.S. ___, 111 S. Ct. 2773, 115 L. Ed. 2d 321 (1991). See Brown v. Hutton Group, 775 F. Supp. 692, 695 (S.D.N.Y.1991). The Court applied Lampf retroactively pursuant to the Supreme Court's decision in James B. Beam Distilling Co. v. Georgia, ___ U.S. ___, 111 S. Ct. 2439, 115 L. Ed. 2d 481 (1991), which was decided on the same day as Lampf. Because of the absence of complete diversity, this Court also dismissed plaintiffs' state law claims, declining to exercise pendent jurisdiction. See Brown, 775 F. Supp. at 695.

On December 19, 1991, Congress amended the Exchange Act by enacting Section 27A to modify the retroactive effect of Lampf. Section 27A provides for reinstatement, upon motion of plaintiffs, of Section 10(b) actions dismissed under Lampf, provided that they were commenced prior to June 19, 1991 and had been timely filed according to the statute of limitations applicable on June 19, 1991. Plaintiffs now move for reinstatement of their Section 10(b) claims pursuant to Section 27A. Defendants oppose this motion.

Familiarity with the facts of this action as set forth in the Court's Opinion and Order and in Judge Walker's prior decision in this matter is presumed.[1]




Motion to Reinstate Section 10(b) Claims

Section 27A of the Exchange Act overrides the retroactive application of the one-and-three-year limitations rule announced by the Supreme Court in Lampf. Section 27A provides, in pertinent part:

(b) EFFECT ON DISMISSED CAUSES OF ACTION. Any private civil 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 limitation 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 by the plaintiff not later than 60 days after the date of enactment of this section.

Plaintiffs claim that under this provision they are entitled to reinstatement of their Section 10(b) claims, which were dismissed pursuant to Lampf and Beam. Defendants[2] submit that plaintiffs' motion should be denied because (1) plaintiffs' Section 10(b) claims are untimely even under the law as it existed in this Circuit, including principles of retroactivity, on June 19, 1991; (2) Lampf and Beam are the laws which were applicable on June 19, 1991, since the Supreme Court did not make new law when it issued those decisions but simply found the law as it then existed; and (3) Section 27A is unconstitutional because by enacting that provision (a) Congress has *1311 violated the separation of powers doctrine by prescribing rules of decision to the judiciary in cases pending before it without repealing or amending the underlying law, (b) Congress has required courts to disregard their traditional function to decide cases before them based upon their best current understanding of the law, (c) Congress has required courts to reopen final judgments rendered in private civil actions, thus upsetting vested rights, and (d) Congress has violated the equal protection component of the Fifth Amendment's due process clause by irrationally distinguishing between similarly situated litigants.


A. The Limitations Period Made Applicable by Section 27A

In order to determine whether plaintiffs' claims should be reinstated pursuant to Section 27A, the Court must determine which limitations period, including principles of retroactivity, applied to plaintiffs' claims as of June 19, 1991. In Ceres Partners v. GEL Assocs., 918 F.2d 349 (2d Cir. 1990), the Court of Appeals for the Second Circuit joined the Third Circuit, see In re Data Access Systems Securities Litigation, 843 F.2d 1537 (3d Cir.), cert. denied, 488 U.S. 849, 109 S. Ct. 131, 102 L. Ed. 2d 103 (1988), and the Seventh Circuit, see Short v. Belleville Shoe Mfg. Co., 908 F.2d 1385 (7th Cir.1990), cert. denied, ___ U.S. ___, 111 S. Ct. 2887, 115 L. Ed. 2d 1052 (1991), in adopting a uniform federal statute of limitations governing claims under Section 10(b) identical to the one eventually adopted by the Supreme Court in Lampf. Under the uniform rule, a Section 10(b) claim must be brought "one year after discovery of the conduct alleged to constitute the violation, but no more than three years after the occurrence of such conduct." Ceres, 918 F.2d at 359. As this Court has ruled, "the three-year period of repose acts as an absolute bar." Mekhjian v. Wollin, 782 F. Supp. 881, 886 (S.D.N.Y. 1992).

The Ceres Court left open the question of whether the one-year/three-year rule applies retroactively to cases that were already pending at the time of its adoption. However, in Welch v. Cadre Capital, 923 F.2d 989 (2d Cir.) ("Welch I"), vacated and remanded sub nom., Northwest Savings Bank v. Welch, ___ U.S. ___, 111 S. Ct. 2882, 115 L. Ed. 2d 1048 (1991), the Second Circuit ruled that the new limitations period did not apply retroactively to bar the Welch complaint. See also Levine v. NL Indus., Inc., 926 F.2d 199, 201-02 & n. 1 (2d Cir.1991). In reaching its determination in Welch I that Ceres should not be applied retroactively to bar plaintiffs' Exchange Act claims, the Court of Appeals applied the three-part test set forth in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S. Ct. 349, 30 L. Ed. 2d 296 (1971).

The Court of Appeals explained the Chevron test as follows:

To qualify for purely prospective application, a decision `must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, ... or by deciding an issue of first impression whose resolution was not clearly foreshadowed.' (citation and footnote omitted). A court should then `weigh' in each case whether retroactive application would conflict with the purposes of the rule and whether it would produce inequitable results.

Welch I, 923 F.2d at 993. Only satisfaction of the first factor is mandatory "[i]f the proponent of nonretroactivity clears the first hurdle, the court then proceeds to the `balancing process demanded by the second and third factors.'" 923 F.2d at 994 (quoting Kremer v. Chemical Construction Corp., 623 F.2d 786, 789 (2d Cir.1980), aff'd on other grounds, 456 U.S. 461, 102 S. Ct. 1883, 72 L. Ed. 2d 262 (1982)).

Analyzing the case before it under the Chevron test, the Welch I Court found that (1) Ceres overruled well-established precedent, and so was not foreseeable; (2) retroactive application of a new and shorter limitations period would not further the purposes behind the rule; and (3) the equities favored plaintiffs and argued against retroactive application of Ceres. Defendants nonetheless contend that application of the Chevron test in the instant action requires retroactive application of Ceres to plaintiffs' claims. The Court disagrees.

*1312 The Court finds the reasoning of the Second Circuit in Welch I to be dispositive of the issues presented. Examining the first Chevron factor, the Court of Appeals stated:

Ceres, which overrules well-established precedent, meets the threshold requirement for nonretroactive application. Adoption of a uniform federal limitations period changes the practice in this Circuit, which was clear at the time the alleged fraud was discovered, of looking to the law of the forum state for an appropriate statute of limitations for 10b-5 claims.

Welch I, 923 F.2d at 994. Although the Third and Seventh Circuits had adopted the uniform federal limitations period prior to the time plaintiffs commenced this suit, "the impending revision of a limitations period for 10b-5 claims was not so clearly foreshadowed that plaintiffs were chargeable with its prediction." Id.

With respect to the second factor in Chevron, the Welch I Court noted that as with all periods of repose, the new rule is intended to give notice "to potential plaintiffs of the time within which suit must commence and to potential defendants of the time beyond which exposure to liability ceases." 923 F.2d at 995. Such interests would not be furthered by application of a new and shorter limitations period, where, as here, the rule is announced after expiration of that period. Accordingly, this Court concludes that the Second Chevron factor favors only prospective application of the one-year/three-year limitations period.

Finally, this Court believes that the equities in the instant case favor plaintiffs "retroactive application would not prompt a past plaintiff into timely filing after the fact, and could constitute an unjust penalty for rightful reliance on existing law." Gutman v. Equidyne Extractive Indus., 769 F. Supp. 121, 125 (S.D.N.Y.1991). While some judges in this District have found that it would be equitable to apply the one-year/three-year rule retroactively, such cases are not binding on this Court and, in any event, are factually distinguishable. See, e.g., Varnberg v. Minnick, 760 F. Supp. 315, 316 (S.D.N.Y.1991) (Ceres applied retroactively where plaintiffs filed complaint more than two years after discovery of the alleged fraud and there was nothing in the record to suggest that plaintiffs had delayed filing in reliance on New York's six-year/two-year rule); Block v. First Blood Assocs., 763 F. Supp. 746, 752 (S.D.N.Y.1991) (Ceres applied retroactively where investors' claims were untimely even under the pre-Ceres rule). Moreover, it is clear that the majority of district judges in this Circuit have followed Welch I and found retroactive application inequitable. See, e.g., Department of Economic Development v. Arthur Andersen & Co., No. 85-1292, 1992 WL 77542, at *3, 1992 Lexis 4586, at *9 (S.D.N.Y. April 7, 1992) (finding retroactive application of Ceres inequitable on a motion to reinstate under Section 27A); Alfadda v. Fenn, No. 89-6217, 1992 WL 44369, 1992 Dist. Lexis 1958, (S.D.N.Y. Feb. 21, 1992) (refusing to apply Ceres retroactively where no showing that plaintiffs did not rely on existing law). Ceres was decided almost a year after plaintiffs brought suit, and retroactive application of the rule it announced "would unjustly deny plaintiffs' `right to a day in court.'" Welch I, 923 F.2d at 995 (quoting Chevron, 404 U.S. at 108, 92 S.Ct. at 356).[3]

*1313 Accordingly, the Court concludes that Welch I does not apply retroactively to plaintiffs' claims and that the limitations periods applicable to the Section 10(b) claims herein are to be determined by reference to pre-Ceres law.[4]


B. Constitutionality of Section 27A

As an initial matter, this Court notes that it is not to decide constitutional questions unnecessarily. See Jean v. Nelson, 472 U.S. 846, 854, 105 S. Ct. 2992, 2997, 86 L. Ed. 2d 664 (1985) ("`Prior to reaching any constitutional questions, federal courts must consider nonconstitutional grounds for decision.'" (citations omitted)); Spector Motor Service v. McLaughlin, 323 U.S. 101, 105, 65 S. Ct. 152, 154, 89 L. Ed. 101 (1944) ("If there is one doctrine more deeply rooted than any other in the process of constitutional adjudication, it is that we ought not to pass on questions of constitutionality ... unless such adjudication is unavoidable."). While ordinarily this Court would analyze the timeliness of plaintiffs' Section 10(b) claims under pre-Ceres law in an effort to determine whether such claims would have been untimely in any event, such an inquiry would involve the Court in an analysis of the limitations laws of at least 10 jurisdictions. The parties have not briefed what each of these laws is, and the Court assumes for the purposes of this motion that the claim of at least one of the plaintiffs would survive as timely under pre-Ceres law. Accordingly, the Court concludes that consideration of the constitutionality of Section 27A is unavoidable.

The Court must construe Section 27A in a manner which renders it constitutional if fairly possible. Communication Workers of America v. Beck, 487 U.S. 735, 762, 108 S. Ct. 2641, 2657, 101 L. Ed. 2d 634 (1988); Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568, 575, 108 S. Ct. 1392, 1397, 99 L. Ed. 2d 645 (1988). When reviewing constitutional challenges to such statutes, however, courts may not press statutory construction "`to the point of disingenuous evasion.'" United States v. Locke, 471 U.S. 84, 96, 105 S. Ct. 1785, 1793, 85 L. Ed. 2d 64 (1985) (citation omitted).

Defendants argue that Section 27A violates the separation of powers doctrine because by enacting that provision Congress has prescribed rules of decision to the judiciary in cases pending before it without repealing or amending the underlying law. A violation of the separation of powers doctrine occurs when Congress enacts legislation that prescribes a rule of decision to the judicial branch of the government in cases pending before it without changing the underlying substantive or procedural law. United States v. Sioux Nation of Indians, 448 U.S. 371, 398, 100 S. Ct. 2716, 2732, 65 L. Ed. 2d 844 (1980); United States v. Klein, 80 U.S. (13 Wall.) 128, 20 L. Ed. 519 (1871). Defendants contend that, in enacting Section 27A, Congress has contravened the constitutional principles established by Klein and its progeny. However, Section 27A does not direct courts to make a specific factual finding or to apply a specific rule of decision *1314 to cases before it. Accord Axel Johnson, Inc. v. Arthur Andersen & Co., 790 F. Supp. 476, 479 (S.D.N.Y. April 25, 1992) (Lasker, J.) ("Simply put, § 27A changes the law governing time bars of § 10(b) cases filed on or before June 19, 1991. Section 27A exhibits the central characteristic of legislation, as opposed to adjudication.") (footnote omitted); TBG, Inc. v. Bendis, No. 89-2423-0, 1992 WL 80622 (D. Kansas March 5, 1992) (Section 27A does not violate the doctrine of the separation of powers because it changes the law and does not "`prescribe a rule for a decision of a cause in a certain way....'"); Ayers v. Sutliffe, No. 1-90-650, 1992 WL 207235, 1992 U.S.Dist. Lexis 3219 (S.D.Ohio Feb. 11, 1992) ("By enacting § 476 [amending § 27A] Congress has not `prescribed a rule for the decision of a cause in a particular way.'"); Bankard v. First Carolina Communications, Inc., No. 89-8571, 1992 WL 3694, at *5 (N.D.Ill. Jan. 6, 1992) (By enacting Section 27A, Congress has not directed "the courts to make a particular factual finding or to reach a particular decision on the merits of any securities fraud claim.").

The Supreme Court's recent decision in Robertson v. Seattle Audubon Society, ___ U.S. ___, 112 S. Ct. 1407, 118 L. Ed. 2d 73 (1992), lends further support to this view. In Robertson, the Supreme Court reversed the Ninth Circuit which had held that the statute in question violated the separation of powers doctrine because it directed results in certain cases without changing the underlying law. The statute at issue in Robertson explicitly referred to two pending cases and affected the outcome of those cases. The Supreme Court, however, found that since the new law did not "direct any particular findings of fact or applications of law, old or new, to fact," it was not unconstitutional. Id. 112 S. Ct. at 1408. Under Robertson, therefore, a law will not be found to be unconstitutional even where it may effect the outcome of a case, unless it directs particular findings.

Section 27A does not direct particular findings. As to actions that fall under its purview, Section 27A merely turns back the legal clock to the period just prior to Lampf and then permits courts independently to adjudicate any reopened actions on the basis of the law as they determine it then existed. As Judge Lasker noted in Axel Johnson, Inc.:

[Section 27A] does not refer to this or any other case by name, nor does it dictate specific findings of fact or conclusions of law in any case. Plaintiffs in each case within the scope of § 27A must demonstrate that their case was timely filed under the law of the jurisdiction in which the case was brought as it existed on June 19, 1991, and the court in each case is free to determine whether or not the plaintiff has made the required showing.

790 F. Supp. at 479.

Moreover, Section 27A represents a change in the law. Prior to the enactment of Section 27A, all Section 10(b) claims were subject to the one-year/three-year limitations period, applied retroactively pursuant to Beam. Section 27A changed the law by limiting the one-year/three-year rule to prospective application only and by subjecting Section 10(b) claims filed prior to June 19, 1991 to the limitations period determined to be applicable by the court in which the action was filed. See Bankard, 1992 WL 3694, at *5 (It might seem that Section 27A did not effect a change in the law "only because instead of delineating fully the change of law, Congress has made the change by reference, incorporating the prevailing law in the applicable jurisdiction.").[5]

Defendants also challenge the constitutionality of the new statute on the ground that Section 27A mandates the practice of "selective prospectivity," whereby a court applies a new rule in the case in which it is pronounced, but returns to the old one with respect to all others arising on *1315 facts predating the pronouncement, which defendants contend was held by the Supreme Court in Beam to be constitutionally proscribed. This Court, however, does not read Beam as disapproving of the selective prospectivity principle on constitutional grounds.

Only three Justices out of nine found a constitutional basis for the Court's conclusion that selective prospectivity of judicial decisions was impermissibleJustices Blackmun, Marshall and Scalia found that retroactive application of judicial decisions is required by Article III of the Constitution. 111 S. Ct. at 2450-51. Justice Souter, writing for the Court and joined by Justice Stevens, stated that "selective prospectivity ... breaches the principle that litigants in similar situations should be treated the same, a fundamental component of stare decisis and the rule of law generally." 111 S. Ct. at 2444. Justice Souter viewed the retroactivity issue very narrowly, as "an issue of choice of law" and refused to "speculate as to the bounds or propriety of pure prospectivity."[6]Id. at 2448. Justice White, in his concurring opinion, agreed with the "narrower ground employed by Justice Souter," rejecting the constitutionality argument made by Justice Scalia. Id. at 2449. The three dissenting Justices totally rejected Justice Scalia's constitutional interpretation of retroactivity in favor of utilizing the Chevron Oil analysis. Id. at 2453-56. Accordingly, since Beam did not declare unconstitutional the practice of "selective prospectivity," this Court cannot conclude that Congress impermissibly revived that practice in enacting Section 27A.

Defendants' argument that Section 27A unconstitutionally divests defendants of the benefit of dismissal is equally flawed. In support of their contention, defendants cite, inter alia, McCullough v. Virginia, 172 U.S. 102, 19 S. Ct. 134, 43 L. Ed. 382 (1898), Daylo v. Administrator of Veterans' Affairs, 501 F.2d 811 (D.C.Cir. 1974) and Georgia Association of Retarded Citizens v. McDaniel, 855 F.2d 805 (11th Cir.1988). But defendants' reliance on these cases is misplaced. Rather than involving the modification of a technical defense, the cases cited by defendants specifically involved divestiture of a substantive right, such as the right to receive a monetary award. See Daylo, 501 F.2d at 814-815 (refusing to grant the Veterans' Administration's motion for relief, in light of a newly enacted statute, from a judgment requiring payment of Widows' benefits).

While it is true that "[i]t is not within the power of a legislature to take away rights which have been once vested by a judgment," McCullough, 172 U.S. at 123, 19 S. Ct. at 142, this does not apply where the judgment was not based on the substantive merit of the claim, but instead was the result of the application of the defense of statute of limitations, a mere technical rule. Federal Courts have long held that unless the passage of the statute of limitations creates a prescriptive property right, such as title in adverse possession, Congress is free to revive a cause of action after the limitations period has expired. See Campbell v. Holt, 115 U.S. 620, 6 S.Ct. *1316 209, 29 L. Ed. 483 (1885). In Chase Securities Corp. v. Donaldson, 325 U.S. 304, 65 S. Ct. 1137, 89 L. Ed. 1628 (1945), the Supreme Court reaffirmed the vitality of Campbell, and found that revival of a personal civil cause of action which did not involve the creation of title did not offend Fourteenth Amendment notions of due process.

As the Supreme Court further noted with respect to Statutes of Limitation "[t]heir shelter has never been regarded as what is now called a `fundamental' right ... the history of pleas of limitation shows them to be good only by legislative grace and to be subject to a relatively large degree of legislative control." Chase Securities, 325 U.S. at 314, 65 S. Ct. at 1142. Moreover, statutes of limitation "are by definition arbitrary, and their operation does not discriminate between the just and the unjust, or the voidable and unavoidable delay." Id. "Legislation to alter such a technical defense, and its application even to dismissed cases, goes far less to the heart of the judicial function than would a legislative attempt to reverse adjudications which had addressed the true merits of the disputes in question." Alex Johnson, Inc., 790 F. Supp. at 484.

Thus, although the Supreme Court's decision in Lampf may have given defendants an opportunity to avoid litigating the Section 10(b) claims, the reinstatement of those claims through an alteration in the statute of limitation creates no special hardship or unfair surprise.[7]

Lastly, the Court rejects defendants' contention that the statute is irrational and creates arbitrary classifications in contravention of the Fifth Amendment's Guarantee of Equal Protection.[8] Retroactive legislation, even legislation reversing Supreme Court decisions and reopening judgments, is not violative of due process or equal protection as long as "retroactive application of a statute is supported by a legitimate legislative purpose furthered by rational means." PBGC v. R.A. Gray & Co., 467 U.S. 717, 729, 104 S. Ct. 2709, 2717, 81 L. Ed. 2d 601 (1984). Here, Congress had a rational basis for applying Section 27A only to those claimants who filed claims prior to June 19, 1991, the date Lampf was decided. "Lampf changed the rules in the middle of the game for thousands of fraud victims who already had suits pending." 137 Cong.Rec. S18623 (daily ed. November 27, 1991) (comments of Senator Richard Bryan). "All those who filed claims subsequent to the Lampf and Beam decisions did have notice of the change in the law and of the fact they would be precluded from pursuing claims which accrued outside of the one-year/three-year period of limitations." Ayers, supra, 1992 WL 207235, at *2, 1992 U.S.Dist. Lexis 3219, at *5-6. Accordingly, the Court finds that Section 27A withstands defendants' equal protection clause challenge because Congress had a legitimate legislative purpose, to protect the reasonable expectations of those claimants who filed prior to Lampf, *1317 that was furthered by enacting Section 27A.



For the foregoing reasons, plaintiffs' motion to reinstate the Section 10(b) claims is granted.



[1] Judge Walker's decision is published at 735 F. Supp. 1196 (S.D.N.Y.1990).

[2] The Court considers together the arguments made in separate briefs by the Hutton Defendants (The E.F. Hutton Group, Inc., E.F. Hutton & Co., Inc., Hutton Energy Services II, Inc., and Shearson Lehman Hutton, Inc.) and the Indian Wells Defendants (Indian Wells Production Company, Indian Wells Oil Co. and Hutton/Indian Wells 1983 Energy Income Fund, LTD.).

[3] Relying upon case law in the Third and Seventh Circuits, see Short v. Belleville Shoe Mfg. Co., 908 F.2d 1385, 1390 (7th Cir.1990), cert. denied, ___ U.S. ___, 111 S. Ct. 2887, 115 L. Ed. 2d 1052 (1991); Gatto v. Meridian Medical Assocs., Inc., 882 F.2d 840 (3d Cir.1989), cert. denied, 493 U.S. 1080, 110 S. Ct. 1136, 107 L. Ed. 2d 1041 (1990), defendants take the position that since plaintiffs allegedly were not aware of their potential claim until after the three-year absolute bar period of Ceres had passed, they cannot argue that they then delayed suit in reliance upon a longer state law limitations period. Thus, defendants submit, it follows that plaintiffs cannot argue that retroactive application of Ceres to their claims would produce inequitable results. This analysis, while followed by other Circuits, does not mandate a conclusion by this Court that retroactive application of Ceres to plaintiffs' claims would not produce inequitable results. The Second Circuit in Welch I did not endorse any one particular factual circumstance as requiring a finding that the equities favor retroactive application of Ceres. Furthermore, in Henley v. Slone, 961 F.2d 23, 26 (2d Cir.1992), the Court of Appeals indicated that it envisions retroactive application of Ceres in only the very narrowest of circumstances, if any.

[4] Nor can the Court agree with defendants' position that Lampf and Beam are the laws which were applicable on June 19, 1991. In rejecting the same argument made here by defendants, that the Supreme Court merely found the law as it existed, the court in Ayers v. Sutliffe, 1992 U.S.Dist. Lexis 3219, at *2 (S.D.Ohio Feb. 11, 1992), stated:

Lampf and Beam clearly effected a change in the existing law. Lampf established a new one-year/three-year period of limitations for federal securities fraud claims, which unquestionably altered the governing law in this and many other jurisdictions, and Beam mandated retroactive application of the new law. In addition, [Section 27A] obviously precludes this court from applying a Chevron analysis in order to determine whether Lampf should be applied retroactively to this case. The unequivocal language of [Section 27A] mandates that the court not apply Lampf to plaintiffs' claims, irrespective of the result a Chevron analysis might yield.

See also Venturtech II v. Deloitte Haskins & Sells, 88-1012-CIV-5-H, 1992 WL 104310 (E.D.N.C. Feb. 24, 1992) (rejecting defendant's argument that pre-Lampf law was the same as Lampf because courts "find the law, not make it").

[5] Several district courts in other jurisdictions have found Section 27A unconstitutional on the grounds that it violates the separation of powers doctrine. See, e.g., In re Brichard Securities Litigation, 788 F. Supp. 1098 (N.D.Cal.1992); Bank of Denver v. Southeastern Capital Group, Inc., 789 F. Supp. 1092 (1992).

[6] This Court does not agree with the analysis of the District Court in TGX Corp. v. Simmons, 786 F. Supp. 587 (E.D.La.1992), which found that Section 27A was unconstitutional since it "effect[s] the selective prospectivity constitutionally proscribed in Beam." Notwithstanding Justice Souter's pronouncement that the grounds for the Court's decision were confined entirely to an issue of choice of law, the District Court of Louisiana was persuaded that the Supreme Court's rejection of selective prospectivity was rooted in Article III of the Constitution since the Court specifically referenced Griffith v. Kentucky, 479 U.S. 314, 107 S. Ct. 708, 93 L. Ed. 2d 649 (1987), a case in which the Supreme Court abandoned the possibility of selective prospectivity in the criminal context. Justice Souter's reliance on Griffith, however, does not support the TGX court's conclusion that retroactivity is constitutionally mandated. Griffith held that in criminal cases a new rule must be applied retroactively on two grounds: the integrity of judicial review under Article III, and the principle of equality. Griffith, 479 U.S. at 322-23, 107 S. Ct. at 712-13. Justice Souter in Beam found Griffith to apply to civil cases on the principles of stare decisis and equality, not on the basis of judicial integrity under Article III, as the Louisiana court would have it. See Beam, 111 S. Ct. at 2446 ("Griffith cannot be confined to the criminal law. Its equality principle, that similarly situated litigants should be treated the same, carries comparable force in the civil context.").

[7] In addition to the arguments set forth above, the Court further notes that Rule 60(b) (6) permits a court to relieve a party from final judgment where there is a post-judgment change in the law having retroactive application. See Matarese v. LeFevre, 801 F.2d 98, 106 (2d Cir.1986), cert. denied, 480 U.S. 908, 107 S. Ct. 1353, 94 L. Ed. 2d 523 (1987). Because Section 27A provides that for a retroactive change in the law, this action may also be reinstated under Rule 60(b) (6). Accord Axel Johnson, Inc., 790 F. Supp. at 482 ("[T]he seeming finality of judgment is rendered less certain by the short time that passed between its execution and passage of § 27A, particularly in light of ... Rule 60(b).... [H]ere the motion was plainly brought within the `reasonable time' contemplated by the Rule, particularly in light of the provision that relief could be granted up to one year after the initial dismissal for nonapplicable specified reasons.").

[8] Defendants' reliance on the concurring opinion of Justice Blackmun in Logan v. Zimmerman Brush Co., 455 U.S. 422, 102 S. Ct. 1148, 71 L. Ed. 2d 265 (1982) is wholly misplaced. That case, which dealt with the inadvertent scheduling of a conference for a date 5 days after expiration of the 120-day statutory period under the Illinois Fair Employment Practices Act, cannot be construed to support the argument defendants seek to advance here because the irrational treatment given plaintiff in that case followed not from any inherent flaw in the statutory provision at issue but from a Commission's simple scheduling error that resulted in disqualification under the statute.