ING Obtains Two Second Circuit Victories

November 22, 2013

On November 22, the Second Circuit, in two related decisions, affirmed Judge Kaplan’s dismissal of Securities Act claims brought on behalf of investors in three separate offerings of securities issued by ING in June 2007, September 2007, and June 2008 which, collectively, raised over $ 4.5 billion.

Judge Kaplan had granted in full Cleary Gottlieb’s motion to dismiss the claims based upon alleged misstatements and omissions in the June 2007 and September 2007 offering materials. He also dismissed many of the claims based upon the June 2008 offering, noting that those that survived dismissal were a “close call.” Class certification discovery thereafter ensued, and it revealed that the sole remaining plaintiff lacked standing to prosecute the action. Judge Kaplan accordingly denied the remaining plaintiff’s motion for class certification, and, with no other plaintiff to pursue the claims surviving Rule 12(b)(6) dismissal, dismissed the case in its entirety. Before he could do so, however, an intervenor sought to enter the case to pursue the surviving claims about the June 2008 offering. But the intervention motion was not made until after the applicable three-year statute of repose had run on those claims. Accordingly, Judge Kaplan denied the motion to intervene, and closed the case.

Two appeals followed. The first, brought by the intervenor, addressed whether Judge Kaplan erred in finding that American Pipe tolling did not apply to the Securities Act’s statute of repose. While the law was unsettled at the time the appeal was taken, the Second Circuit’s decision in Police & Fire Retirement Systems of the City of Detroit v. IndyMac MBS, Inc., 721 F.3d 95 (2d Cir. 2013) settled it, foreclosing the intervention as untimely.

In the second appeal, the Second Circuit affirmed Judge Kaplan’s dismissal of the claims based upon the June and September 2007 offerings, holding that the June 2007 offering claims were barred by the statute of limitations because the facts ING disclosed more than a year before the initial complaints were filed would have alerted a reasonably diligent plaintiff to the alleged misstatements and omissions in the June 2007 offering, and that the statements challenged in the September 2007 offering were opinions, and plaintiffs failed to plausibly allege ING did not believe those opinions at the time they were made.