In a First, the Second Circuit Extends Discovery Accrual Rule to Commodities Exchange Act, Barring Claims

Case Name: Levy v. BASF Metals, Ltd.

Date of Opinion: February 28, 2019

Opinion by: Per curiam

Summary:

After obtaining a partial recovery in the 2014 settlement of a suit alleging platinum market manipulation class action, the plaintiff, an attorney proceeding here pro se, brought the present action against a different set of defendants on September 16, 2015. In the 2015 complaint, she raised similar platinum market manipulation claims in violation of state and federal law. She alleged that she first learned about certain conduct by the defendants, and their identities from a complaint filed in a related 2014 class action suit. The United States District Court for the Southern District of New York granted defendants’ motion to dismiss, finding that the plaintiff’s federal claims were time barred, and declined to exert supplemental jurisdiction over her state law claims.

The Second Circuit affirmed the district court’s decision in a summary order published simultaneously with a separate decision where they specifically address the plaintiff’s Commodities Exchange Act (“CEA”) claims. In so affirming that her federal claims were time-barred, the Court held, for the first time, that Rotella v. Wood, 528 U.S. 549 (2000) applies to CEA claims. Under Wood, federal courts apply a ”discovery accrual rule” – pursuant to which “discovery of the injury, not discovery of the other elements of the claim” will “start[s] the clock” for statute of limitations purposes – when a statute does not address the issue.

In applying the rule to the facts in the case, the Court found the plaintiff discovered her CEA injury when she suffered the financial losses in 2008 in what her complaint describes as “’an extraordinary, unprecedented and unjustified sudden collapse’” in market price. Because the CEA sets a two-year limitations period, plaintiff’s 2015 suit was thus time -barred. The Court emphasized that the date on which this plaintiff had actual knowledge of her injury, and not years later when she discovered additional information relating to the identity of the defendants or other information about the manipulation scheme necessary for her to bring suit, determined the limitations period.

To read the full opinion, please visit: http://www.ca2.uscourts.gov/decisions/isysquery/1cf2844b-0e2b-44da-be6b-815c2f0f5f46/1/doc/17-3823_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/1cf2844b-0e2b-44da-be6b-815c2f0f5f46/1/hilite/

Summary by: Matla Garcia Chavolla

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