New York Second Circuit Court Denies Two Remanded Stock Drop Cases

The Circuit Court for the Second District of New York continues to be a tough place to plead a stock drop case. In May in In re Citigroup, it ruled that the heightened pleading standards under the Fifth Third Bancorp v. Dudenhoeffer ruling required that plaintiffs show "special circumstances" as to why trustees should act on public information to remove company stock. Plaintiffs asked for reconsideration under the Supreme Court's Tibble v. Edison International ruling extending the statute of limitations for filing a lawsuit to six years in certain cases rather than three. The court said that did not apply here because plaintiffs had said the information was public as of 2008. Interestingly, the court also said that Tibble applied to buying mutual funds at too high a price, creating an accrual of responsibility that differs from not selling stock, in which case only the three-year period would apply. In In re Lehman Bros, the same court came to much the same conclusions as to the heightened pleading standards under Dudenhoeffer and the inapplicability of the six-year statute of limitations under Tibble.