PRECEDENTIAL

U N IT E D STATES COURT OF APPEALS

F O R THE THIRD CIRCUIT

No. 05-4571

IN RE: EXXON MOBIL CORP. SECURITIES

L IT IG A T IO N

O h io Public Employees Retirement Fund,

State Teachers Retirement Fund of Ohio

and Antonio N. Martins,*

A p p e llan ts (f ile d : August 27, 2007 ) D an iel B. Allanoff, Esquire M e re d ith , Cohen, Greenfogel & Skirnick 1 1 7 South 17th Street, 22nd Floor P h ila d e lp h ia , PA 19103 E rin K. Flory, Esquire S tev e W. Berman, Esquire H ag en , Berman, Sobol & Shapiro 1 3 0 1 5th Avenue, Suite 2900 S e a ttle , WA 98101 J o h n C. Murdock, Esquire (Argued) M u rd o c k , Goldenberg, Schneider & Groh 3 5 East 7th Street, Suite 600 C in c in n a ti, OH 45202 C o u n se l for Appellants Jam es W. Quinn, Esquire Jo sep h S. Allerhand, Esquire Jo h n A. Neuwirth, Esquire W e il, Gotshal & Manges 7 6 7 Fifth Avenue, 27th Floor N e w York, NY 10153 P au l F. Carvelli, Esquire M c C u s k e r , Anselmi, Rosen, Carvelli & Walsh 1 2 7 Main Street C h a th a m , NJ 07928 G re g o ry S. Coleman, Esquire (Argued) M arc S. Tabolsky, Esquire W e il, Gotshal & Manges 8 9 1 1 Capital of Texas Highway S u ite 1350, Building One A u s tin , TX 78759 C o u n s e l for Appellees OPINION OF THE COURT AMBRO, Circuit Judge B y most accounts, the merger between Exxon and Mobil h a s been quite successful. Shareholders in the new ExxonMobil h a v e benefitted from a tremendous increase in stock price since th e companies' merger in 1999. But the plaintiffs here, former sh a re h o ld e rs of Mobil, want more. They allege that a m i s re p r e s e n ta tio n by Exxon made in the course of the merger n e g o tia tio n s and ensuing votes caused them to receive fewer sh are s in the combined corporation than they otherwise were e n title d . We will never know the merits of this allegation th o u g h , for we agree with the District Court that this lawsuit is n o t timely under the relevant statutes.

I . Allegations in the Complaint1 Q u ite unlike the prevailing price of oil as we consider th is case, world oil prices in the late 1990s, as measured in c o n sta n t dollars, were near historic lows. At least partly in re sp o n se to that market condition, Exxon Corporation and Mobil C o rp o ra tio n -- a lre a d y giants in the oil industry--announced p lan s on December 1, 1998, to merge into the world's largest oil c o m p a n y, ExxonMobil Corporation. The merger was to take the f o rm of a stock-for-stock exchange whereby, in relevant detail, e a ch share of Mobil stock would be exchanged for 1.32015 sh are s of ExxonMobil, thus giving former Mobil shareholders a b o u t 30% ownership in the new company. Shareholders of b o th companies voted on and approved the stock-for-stock m e rg e r on May 27, 1999, and the Federal Trade Commission b le s s e d it some six months later. The merger took effect (i.e., sh a re s in the old companies were exchanged for new shares in E x x o n M o b il) on November 30, 1999. P r io r to the companies' respective shareholder votes, on M a r c h 26, 1999, Exxon filed its required Securities and E x c h a n g e Commission (SEC) Form 10-K for the year ending th e previous December 31. That filing, in turn, was in c o rp o ra ted by reference in the proxy statement issued by both E x x o n and Mobil in anticipation of the merger votes. Plaintiffs a ss e rt that Exxon's Form 10-K--and, therefore, the proxy sta tem e n t-- w a s false or misleading. And though their eightp a rt, three-count, 261-paragraph complaint (canvassing, inter a lia , the history of Exxon Corporation, the science and te c h n o l o g y of oil drilling, and the "objectives, concepts, and p rin c ip les " of modern accounting methods) is prolix, the basic th e o ry of plaintiffs' case can be simply stated.2 B e c a u se oil prices in the late 1990s were so low, certain o il reserves owned by Exxon had become uneconomical to tap.

T h a t is, the cost of extracting a barrel of oil from some of its d e p o sits exceeded the revenue that could be generated from the s a le of that barrel. According to Generally Accepted A c c o u n tin g Principles ("GAAP") promulgated by the Financial A c c o u n t in g Standards Board ("FASB"), uneconomical assets, lik e some of Exxon's oil reserves, require specific accounting tre a tm e n t. In March 1995, FASB issued Statement of Financial A c c o u n tin g Standard No. 121 ("SFAS 121" ), which generally r e q u ir e s that if ever a long-term asset's expected future cash f lo w is less than its book value, the asset should be classified as " im p a ire d " and its fair value be recognized as a revenue loss for th e accounting period in which the asset becomes impaired.

O n c e a company characterizes an asset as impaired, it is irr e v e rs ib le . That is, even if an asset were to become u n im p a ire d , the previously recognized accounting loss cannot be re v erse d -- eith er in that accounting period or nunc pro tu n c -- u n til the asset is actually sold.

E x x o n did not follow the impairment procedure m an d ated by SFAS 121. Instead, as candidly stated in its Form 1 0 -K , Exxon's policy was to undertake "disciplined, regular re v ie w " of its assets. This "aggressive asset management p ro g ra m ," in its estimation, would provide "a very efficient c a p ita l base." Consistent with these statements, Exxon did not re c o g n ize any of its oil reserves as impaired and, therefore, did n o t report the accounting losses that such a recognition would h a v e required. In contrast, every other major oil company re c o g n iz e d impaired assets and their resulting effect on net in c o m e during the same time-frame. The size of these writed o w n s on revenue at other oil companies in 1998 ranged from $ 7 8 million to $3.52 billion.

U sin g these figures as reference points, plaintiffs estimate th a t Exxon should have recognized 1998 impairments losses of b e tw e e n $3.37 billion and $5.37 billion. This, of course, would h a v e reduced Exxon's net income by the same amount and, co n seq u en tly, affected its share price. The resulting lower share p ric e , in turn, would have led Mobil to demand a higher e x c h an g e rate (i.e., more shares of ExxonMobil) in its merger w ith Exxon. The evidence of this, plaintiffs say, is that one of th e means by which the two companies decided that each share o f Mobil stock would be exchanged for 1.32015 shares of E x x o n stock was by consulting a "price/earnings analysis" p e r f o r m e d by the investment banking firm Goldman Sachs.

E a r n in g s in Exxon's case would have been lower had it re c o g n iz e d the asset impairments. Given the size of the im p a irm e n ts that plaintiffs allege Exxon should have taken, M o b il shareholders would have received an additional 2.3­9% s ta k e in ExxonMobil. This corresponds with damages to those s h a re h o ld e r s estimated in the complaint to total between $4.6 b illio n and $18 billion.

N o n e of these allegations, however, suggests that Exxon fra u d u len tly issued its 1998 Form 10-K, which plaintiffs are re q u ire d to do to make out a valid securities fraud claim. For th is , plaintiffs allege other facts. First, they suggest that the t i m in g of Exxon's decision not to recognize its impaired oil re se rv e s is suspicious--in the midst of merger negotiations and v o tes (both of which would likely turn out more favorable to E x x o n the higher its earnings appeared). Second, plaintiffs cite th e claims of a confidential witness who held various financial a n a l ys t positions in Exxon's accounting department and first c a m e forward in 2003. In 1995, when SFAS 121 was first is s u e d , the witness had calculated that its effect on Exxon's f in a n c ia l reports would be to require at least a $700 million w r ite - d o w n in earnings. When the witness reported these c a lc u la tio n s to supervisors, they purportedly responded that E x x o n 's Chairman and CEO Lee R. Raymond instead had d ec ree d that SFAS 121 would have "no impact" on Exxon's f in a n c ia l reports. The witness, claiming that Exxon has a " m ilita ry-lik e culture," interpreted Raymond's statement to be ta n ta m o u n t to "marching orders for [the] Executive Staff, i.e., th e y now had to justify . . . `no impact.'" Later, the witness was a ls o told not to conduct any further impairment analyses.

T h ird , even if Exxon were allowed to ignore SFAS 121 a n d follow its own "disciplined, regular review" of its assets as p a rt of an "aggressive asset management program," plaintiffs a lle g e that Exxon's claim that it did not need to recognize any o f its assets as impaired under its own program did not comport w ith its contemporaneous public statements. If Exxon had p e rf o rm e d a bona fide analysis of any sort and determined that its oil reserves were not impaired, then it would necessarily have to expect that oil prices would rebound from their 1998 levels.

A s Exxon told the SEC in an investigation relating to this very is s u e , "the corporation does not view temporarily low oil prices a s a trigger event for conducting the impairment tests." P la in tif f s, however, cite numerous public statements from E x x o n officials (including congressional testimony by R a ym o n d ) that they allege indicate that Exxon in fact did not v iew 1998 oil prices to be temporarily low--or, at the very least, th a t Exxon was unsure whether prices would rebound. See, e.g., C o m p l. ¶ 199 (quoting Raymond's congressional testimony: " T h e only thing I can tell you about the price for the next two yea rs is we don't have a clue . . . .").

P la in tif fs filed a three-count complaint in the U.S.

D is tric t Court for the District of New Jersey against Exxon and R a ym o n d for alleged violations of (1) § 14(a) of the Securities E x ch an g e Act, 15U.S.C. § 78n(a), and SEC Rule 14a-9 p ro m u lg a te d thereunder (filing a false or misleading proxy s ta te m e n t);3 (2) § 10(b) of the Securities Exchange Act, 15 3 Section 14(a) of the Act provides that "[i]t shall be unlawful f o r any person, . . . in contravention of such rules and re g u la tio n s as the [Securities and Exchange] Commission may p re sc rib e . . . , to solicit or to permit the use of his name to s o lic it any proxy or consent or authorization in respect of any [ re g is t e r e d ] security . . . ." 15U.S.C. § 78n(a). In turn, SEC R u le 14a-9 provides in relevant part that [ n ]o solicitation subject to this regulation shall be m a d e by means of any proxy statement . . . which, a t the time and in the light of the circumstances u n d e r which it is made, is false or misleading with re sp e c t to any material fact, or which omits to s ta te any material fact necessary in order to make th e statements therein not false or misleading or U .S .C . § 78j(b), and SEC Rule 10b-5 promulgated thereunder (s e c u ritie s fraud);4 and (3) § 20(a) of the Securities Exchange A c t, 15U.S.C. § 78t(a) (derivative liability for Raymond).5 The D istric t Court granted Exxon's motion to dismiss because it ru le d that both the § 14(a) and § 10(b) claims were barred by the s ta tu te of limitations and, in any event, the § 10(b) claim was not p ro p e rly pleaded. Plaintiffs appeal each of these rulings, but we n e e d only address the timeliness issues.

I I . Discussion T h e Securities Exchange Act did not explicitly provide a private right of action for claims under either § 10(b) or § 14(a). As early as 1946, though, courts had begun to re c o g n iz e implied private rights of action based on § 10(b), see, e .g ., Kardon v. Nat'l Gypsum Co., 69 F. Supp. 512 (E.D. Pa.

1 9 4 6 ), and the Supreme Court, at least implicitly, approved, see, e .g ., Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 730 (1 9 7 5 ); Affiliated Ute Citizens v. United States, 406 U.S. 128, 1 5 0 ­ 5 4 (1972); Superintendent of Ins. v. Bankers Life & Cas.

C o ., 404 U.S. 6, 13 n.9 (1971). The same is true for § 14(a).

J .I. Case Co. v. Borak, 377 U.S. 426, 430­31 (1964).

H a v in g created these causes of action, courts then began to consider the time-frame within which they must be brought.

F o r decades the general practice was to "borrow" the statute of lim ita tio n s from the closest analogous state-law cause of action.

S e e , e.g., Bath v. Bushkin, Gaims, Gaines & Jonas, 913 F.2d 8 1 7 , 818 (10th Cir. 1990); Nesbit v. McNeil, 896 F.2d 380, 384 (9 th Cir. 1990); O'Hara v. Kovens, 625 F.2d 15, 17 (4th Cir. 1 9 8 0 ); Forrestal Vill., Inc. v. Graham, 551 F.2d 411, 413 (5th C ir. 1977).

R e c o g n iz in g the need to "minimize `uncertainty and tim e-c o n su m in g litigation'" inherent in that approach, our Court w a s the first to advocate and adopt uniform limitations periods f o r § 10(b) claims. In re Data Access Sys. Sec. Litig., 843 F.2d 1 5 3 7 , 1543 (3d Cir. 1988) (en banc) (quoting Malley-Duff & A s s o c s., Inc. v. Crown Life Ins. Co., 792 F.2d 341, 348 (3d Cir. 1 9 8 6 )). In Data Access we determined that using the limitations p e rio d s set out in other sections of the Securities Exchange Act w o u ld lead to the uniformity and certainty desired. Specifically, w e adopted the one-year statute of limitations and the three-year s ta tu te of repose 6 that was prevalent throughout the Securities E x c h a n g e Act for the express rights of action that the legislation d id create (e.g., §§ 9(e), 18(c), and 29(b)). Three years later, in L a m p f, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, the S u p r e m e Court approved this framework. 501 U.S. 350, 358­62 (1 9 9 1 ). Specifically, the Court adopted the limitations periods f o u n d in § 9(e) of the Securities Exchange Act as the controlling p ro v is io n . Id. at 364 n.9. Soon after the Court's approval of our D a t a Access decision, we extended its reasoning to § 14(a) c la im s as well. See Westinghouse Elec. Corp. v. Franklin, 993 F .2 d 349, 353 (3d Cir. 1993).

A t the time of the events described in plaintiffs' c o m p la in t, this is where the law stood: for securities claims b ro u g h t under §§ 10(b) and 14(a), the limitations periods c o n s is te d of a one-year statute of limitations and a three-year sta tu te of repose. On July 30, 2002, however, the Public C o m p a n y Accounting Reform and Investor Protection Act of 2 0 0 2 -- b e tte r known as the Sarbanes-Oxley Act or, simply, S a rb a n e s-O x ley-- w a s enacted. Pub. L. No. 107-204, 116 Stat.

7 4 5 . In relevant part, Sarbanes-Oxley extended the limitations p e rio d s for "private right[s] of action that involve[] a claim of f ra u d , deceit, manipulation, or contrivance in contravention of a regulatory requirement concerning the securities laws." Id.

§ 804(a), 28U.S.C. § 1658(b). Such actions now have the b e n e f it of a two-year statute of limitations and a five-year statute o f repose. Id.

B e c au s e of the timing of both the underlying events and th e filing of this case, we have a perfect storm of issues c o n c ern in g the timeliness of plaintiffs' complaint. For any of th e ir claims to be ruled timely, each of the following three c o n d itio n s must be met: ( 1 ) Sarbanes-Oxley's timing extensions must a p p ly retroactively to these claims, even though th e underlying violation had already taken place w h e n that legislation was enacted;7 7 This is the question left open by our decision in Lieberman v . Cambridge Partners, L.L.C., 432 F.3d 482, 488 (3d Cir. 2005) (" W e do not decide . . . whether Congress intended Section 804 (2 ) the statute of repose must begin as of the date o f the merger (Nov. 30, 1999) between Exxon and M o b il, not the date that the joint proxy statement w a s issued (Mar. 26, 1999); and (3 ) the statute of limitations must not have begun to run until on or after February 17, 2002 (two ye a rs prior to filing the complaint), leaving only th e statute of repose as the limitations period of a n y material concern.

W h a t this means is that if Sarbanes-Oxley does not apply to any given claim raised by plaintiffs (#1 above), then, by any ca lcu latio n , § 9(e)'s three-year statute of repose ran out over a ye a r before plaintiffs filed this suit.

P r o x y Statement Merger Sarbanes-Oxley Complaint 3333---M a r. 26, 1999 Nov. 30, 1999 July 30, 2002 Feb. 17, 2004 .-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - years A d d itio n a lly, if the repose period started on the date of the proxy s ta te m e n t rather than the date of the merger (#2 above), the fiveye a r time-frame provided by Sarbanes-Oxley would not apply h e re . This is because Sarbanes-Oxley was passed more than th re e years after the proxy statement was issued, and we have [of Sarbanes-Oxley] to have a general retroactive effect."). a lre a d y held that it did not revive previously extinguished c la im s . See Lieberman v. Cambridge Partners, L.L.C., 432 F.3d 4 8 2 , 488­92 (3d Cir. 2005). Thus, the pre-Sarbanes-Oxley th re e -ye a r statute of repose would operate to bar plaintiffs' c la im s .

P r o x y Statement Merger Sarbanes-Oxley Complaint 3333---M a r. 26, 1999 Nov. 30, 1999 July 30, 2002 Feb. 17, 2004 .-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - 3 years A n d finally, if plaintiffs became aware (or should have become a w a r e ) that the proxy statement was false, misleading, or f ra u d u le n t before February 17, 2002, then the statute of lim ita tio n s would operate independently to bar their claims (#3 ab o v e).

A. A p p lic a t io n of Sarbanes-Oxley in this Case 1. C a n Sarbanes-Oxley's longer limitations p e r io d s apply to any of the claims raised in plaintiffs' complaint? T o repeat, in Lieberman we held that the lengthier lim itatio n s periods provided by Sarbanes-Oxley did not apply to c la im s that had expired under the limitation periods in place p rio r to the passage of that legislation, even if the claims were f i le d after its enactment and would be timely under its p ro v is io n s . 432 F.3d at 488­92. We explicitly reserved the q u e stio n , however, whether that Act lengthened the limitations p e rio d s for claims on which the periods were already running b u t had not yet expired. Id. at 488.

T h o u g h there is a "presumption against retroactive le g is la tio n [that] is deeply rooted in our jurisprudence," L a n d g r a f v. USI Film Prods., 511 U.S. 244, 265 (1994), it is a ls o the case that if Congress has expressly provided for re tro a c tiv e effect, a court must "enforce[] the statute as written," L ie b e rm a n , 432 F.3d at 488. As noted above, in § 804(b) of S a rb a n e s-O x le y Congress explicitly stated that "[t]he limitations p e rio d [ s] provided by section 1658(b) of title 28, United States C o d e , as added by this section, shall apply to all proceedings a d d re ss e d by this section that are commenced on or after the d a te of enactment of this Act." 116 Stat. 801. Congress used th e terms "proceedings . . . that are commenced" instead of " c laim s that accrue" or similar such language. The plain m e a n in g of these words directs that claims filed after July 30, 2 0 0 2 , receive the benefit of the extended limitations periods, e v e n if the shorter periods had already begun (but had not e x p ire d ) on the underlying causes of action. Hence, the types of c laim s listed in 28U.S.C. § 1658(b) and raised in suits with tim in g like this one--filed in 2004 but complaining of events in 1 9 9 9 -- g e t the benefit of Sarbanes-Oxley's two-year statute of l i m i ta tio n s and five-year statute of repose. The lingering q u e stio n , though, is whether each of plaintiffs' claims here is in fa ct within the scope of 28U.S.C. § 1658(b).

2. W h ic h of plaintiffs' claims benefit from t h e extended limitations periods p r o v id e d by Sarbanes-Oxley? T h ere can be no question that 28U.S.C. § 1658(b) covers c la im s based on § 10(b) of the Securities Exchange Act. The s ta tu te refers explicitly to "private right[s] of action that in v o lv e [ ] a claim of fraud . . . in contravention of . . . the s e c u ritie s laws." 28U.S.C. § 1658(b). Indeed, the implied c a u se of action recognized under § 10(b) is widely known and re f erre d to as "securities fraud." See, e.g., Insider Trading and S e c u ritie s Fraud Enforcement Act of 1988, Pub. L. 100-704, 1 0 2 Stat. 4681; Lampf, 501 U.S. at 376. To conclude that § 1658(b) does not apply to § 10(b) claims would be absurd.

But does § 1658(b) also apply to plaintiffs' § 14(a) c la im ? Section 1658(b), by its terms, applies to claims that " in v o lv e [ ] . . . fraud, deceit, manipulation, or contrivance." This w o rd in g closely tracks the language of § 10(b), which prohibits e m p l o yin g "any manipulative or deceptive device or c o n triv a n c e." Violations of § 14(a), on the other hand, may be c o m m itte d without scienter; in other words, no culpable intent is required. See Cal. Pub. Employees' Ret. Sys. v. The Chubb C o r p ., 394 F.3d 126, 143­44 (3d Cir. 2004) ("In contrast to s e c tio n 10(b) . . . , scienter is not a necessary element in alleging a section 14(a) claim."). For liability to attach under § 14(a), all th a t is required is that a proxy statement be "false or misleading w ith respect to any material fact." 17 C.F.R. § 240.14a-9(a).

G iv e n this material distinction, we conclude that C o n g r e s s did not intend to include § 14(a) claims within the sc o p e of § 1658(b), but rather intended that provision to apply to § 10(b) claims and other claims requiring proof of fraudulent in te n t.8 Several district courts have done the same analysis and rea ch ed the same conclusion when deciding § 1658(b)'s r e le v a n c e to § 14(a) and other securities-related claims. See V ir g in ia M. Damon Trust v. N. Country Fin. Corp., 325 F. Supp.

2 d 817, 822­24 (W.D. Mich. 2004) (holding that § 1658(b) does n o t apply to claims brought under § 14 of the Securities E x c h a n g e Act); In re Global Crossing, Ltd. Sec. Litig., 313 F.

S u p p . 2d 189, 196­98 (S.D.N.Y. 2003) (same);9 cf. In re Alstom S A Sec. Litig., 406 F. Supp. 2d 402, 412­18 (S.D.N.Y. 2005) 8 A plain reading of Rule 10b-5 would suggest that § 10(b) c la im s likewise do not always require proof of scienter. See 17 C .F .R . § 240.10b-5(b) (making it unlawful simply to "make any u n tru e statement of a material fact"). The Supreme Court, h o w e v e r, has ruled that despite Rule 10b-5's apparent breadth, it cannot reach conduct beyond that covered by the text of 15 U .S .C . § 78j(b), which clearly requires fraudulent intent. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 212­14 (1976).

9 The Global Crossing Court was the first to analyze this q u e stio n in any detail. In addition to the textual and logical re a so n s for its conclusion, that Court noted that the limited l e g i s la tiv e history also lent some support. See In re Global C r o s s in g , 313 F. Supp. 2d at 197 n.6; see also In re Alstom SA S e c . Litig., 406 F. Supp. 2d 402, 415 (S.D.N.Y. 2005).

(h o ld in g the same for §§ 11, 12(a)(a), and 15 of the Securities A c t of 1933); In re Firstenergy Corp. Sec. Litig., 316 F. Supp.

2 d 581, 601 (N.D. Ohio 2004) (§§ 11 and 12(a)(2) of the S e c u ritie s Act of 1933); Amy Grynol Gibbs, Note, It's About T im e : The Scope of Section 804 of the Sarbanes-Oxley Act of 2 0 0 2 , 38 GA. L. REV. 1403 (concluding that § 1658(b) does not ap p ly to claims under § 11 of the Securities Act of 1933).

P lain tiff s, as a fall-back position, next argue that even if § 14(a) claims are not necessarily based in fraud (and thus w o u ld not generally get the benefit of § 1658(b)'s extended s ta tu te of limitations), their particular § 14(a) claim does sound in fraud and therefore does fall within the scope of § 1658(b).

L e n d in g some support to this notion--that we should look at c laim s in a practical manner, not a "categorical" one--is that, u n d e r our precedent, if a claim not otherwise requiring proof of sc ien ter nonetheless sounds in fraud, then Federal Rule of Civil P r o c e d u r e 9(b)'s heightened pleading standard applies.1 0 See S h a p ir o v. UJB Fin. Corp., 964 F.2d 272, 287­89 (3d Cir. 1 9 9 2 ); see also Rombach v. Chang, 355 F.3d 164, 170­71 (2d C ir. 2004). Plaintiffs therefore ask whether it is fair that the sa m e thinking that is used to impose Rule 9(b) burdens on their § 14(a) claim (sounding in fraud) be used to deny them the b e n e f its of § 1658(b), which applies to fraud claims.

10 The Rule, in relevant part, provides that "[i]n all averments o f fraud or mistake, the circumstances constituting fraud or m is ta k e shall be stated with particularity." P la in tif f s' focus on perceived fairness is misplaced.

R a th e r, as we did when deciding Shapiro, we focus on the p o lic y choice of Congress as shown by the text and purpose of th e applicable law. First, the text of Rule 9(b) supported our c o n c lu s io n in Shapiro because, by its terms, the rule applied to " a v erm e n ts " (i.e., allegations to be backed up with evidence).

S e c tio n 1658(b), however, refers to "right[s] of action." This d is tin c tio n is significant because "averments," when assembled, a re what constitute "right[s] of action," and a statute using the latter term--like § 1658(b)--necessarily applies at a higher level o f generality than a statute using the former term--like Rule 9 (b ). This point was not lost on us in Shapiro. See 964 F.2d at 2 8 8 ("Rule 9(b) refers to `averments' of fraud, and thus requires u s to examine the actual allegations that support a particular le g a l claim."). Second, pleading with specificity, as required by R u le 9(b), is intended to give defendants more certainty as to the c h a rg e s they must defend. Rombach, 355 F.3d at 171. As with th a t policy choice made for the benefit of defendants, so too d o e s the policy choice of Congress to establish firm deadlines f o r securities fraud claims help defendants. Allowing plaintiffs e f fe c tiv e ly to bypass this policy judgment--and thereby select th e length of the limitations periods that will apply to a claim m e re ly by sounding their § 14(a) claim in fraud--would not p ro m o te the principal reason for having time-bars: certainty for d e f en d a n ts . We therefore see no reason to transpose our ruling in Shapiro to this case.

In ruling that § 14(a) claims do not fall within the scope o f § 1658(b), we recognize that this severs the tie between the lim i ta t io n s periods applicable to § 10(b) claims and § 14(a) c la im s that we recognized in Westinghouse. See 993 F.2d at 3 5 2 ­ 5 4 (holding that the same statute of limitations periods that a p p lie d to claims under § 10(b) also apply to those under § 14(a)). Plaintiffs make much of this link in their filings before u s. But the law has materially changed since our decision in W e s tin g h o u s e , and to use its policy arguments to claim o th e rw is e ignores what has happened since.

A s explained above, in the absence of express limitations p e rio d s for the § 14(a) implied right of action, Westinghouse n a tu ra lly relied on § 10(b)'s similar objectives--"fair corporate su f f ra g e " and "protect[ing] investors"--when deciding it could u s e as well the same method (set out in Data Access, approved in Lampf) when determining the time-bar for § 14(a) claims. Id. a t 353. Westinghouse did not say that the limitations periods for § 14(a) claims are, by their nature, the same as those for § 10(b) c laim s. Rather, that case held that in the absence of any explicit c o n g re ss io n a l command, there was good reason to think that C o n g re ss would want § 14(a) claims--just as much as § 10(b) c la im s -- to be the same as every other securities claim. Thus, th e link established by Westinghouse for § 14(a) claims was not to § 10(b), but instead (as with § 10(b) itself) to other causes of a c tio n in the securities laws.

W h e n it comes to § 10(b) claims, though, there is now a n e w consideration--namely, express limitations periods set by a law that did not previously exist. That Congress has now p ro v id e d explicit, extended limitation periods for fraud-based c la im s , such as those brought under § 10(b), is not cause to alter th e way we determine the applicable limitation periods for § 14(a) claims, which need not be fraud-based and, thus, still do n o t have express limitation periods. Though Data Access and L a m p f have now been superseded by Sarbanes-Oxley as they re la te to the time limitations on § 10(b) claims, nothing in that le g is la tio n indicates Congress's desire to supersede the rationale o f those cases as applied in Westinghouse with respect to § 14(a) c la im s .

We hold that 28U.S.C. § 1658(b) applies to claims under 1 5U.S.C. § 78j(b) (i.e., § 10(b) claims), but not to claims under 1 5U.S.C. § 78n(a) (i.e., § 14(a) claims). Because plaintiffs filed th e ir complaint over four years after the merger between Exxon a n d Mobil,1 1 the previously applicable three-year statute of re p o s e still applies and serves as a bar to their § 14(a) claim.

O n ly plaintiffs' § 10(b) claim, therefore, has the potential to be v iab le given the facts here, and we thus continue with that claim a lo n e down the timing gauntlet. B. W h e n do §§ 9(e)'s and 1658(b)'s statutes of r e p o se begin to run? A s described above, the limitations period established by 2 8U.S.C. § 1658(b) for securities fraud claims consists of a " tw o -ye a r/f iv e -ye a r " scheme; the pre-Sarbanes-Oxley set up, ta k e n from § 9(e) of the Securities Exchange Act, sported a " o n e -ye a r/th re e -ye a r" scheme, but was identical to § 1658(b) in a ll other material respects. Under both systems, courts have c o n sis te n tly referred to the shorter time period as a statute of lim ita tio n s and the longer period as a statute of repose. See, e.g., L a m p f, 501 U.S. at 360, 362, 363; Tello v. Dean Witter R e y n o ld s , Inc., No. 03-12545, ___ F.3d ___, 2007 WL 2141701, a t *6 (11th Cir. July 27, 2007); Margolies v. Deason, 464 F.3d 5 4 7 , 551 (5th Cir. 2006). The question we address here is when d id § 9(e)'s and § 1658(b)(2)'s statutes of repose begin to ru n -- a t the time of Exxon's alleged misrepresentation (the M a rc h 1999 proxy statement)1 2 or at the time its merger with M o b il was consummated (late November 1999). If it is the f o rm e r, then the three-year statute of repose provided by § 9(e) s e rv e s to bar plaintiffs' § 10(b) claim, as that period would have e x p ire d four months before Sarbanes-Oxley became law.

(A g a in , under our precedent, Sarbanes-Oxley did not revive p re v io u s ly extinguished claims. See Lieberman, 432 F.3d at 4 8 8 ­ 9 2 .) A statute of repose bars "any suit that is brought after a s p e c if ie d time since the defendant acted . . . , even if this period e n d s before the plaintiff has suffered a resulting injury." B LACK'S at 1451 (emphasis added). Unlike statutes of lim ita tio n s , which traditionally do not begin to run until a cause o f action has accrued (i.e., when all required elements have o c c u rre d ) and the onset of which is often subject to delay by late d isc o v e r y of the injury (or when a reasonable person should h a v e discovered it), statutes of repose start upon the occurrence o f a specific event and may expire before a plaintiff discovers h e has been wronged or even before damages have been su ff ere d at all. Accord Nesladek v. Ford Motor Co., 46 F.3d 7 3 4 , 737 n.3 (8th Cir. 1995) ("A statute of repose is different f ro m a statute of limitations . . . because a tort limitations statute ExxonMobil. See Kahan v. Rosenstiel, 424 F.2d 161, 171 n.10 (3 d Cir. 1970). Whatever statements Exxon may have made in its subsequent Form 10-Qs, they were not "in connection with" th e exchange of shares at the merger. Only the proxy statement s e rv e d this function. d o e s not begin to run until the injury, death, or damage o c c u rs -- o r until the cause of action accrues. On the other hand, a statute of repose prevents the cause of action from accruing in th e first place."); ADOLPH J. LEVY, SOLVING STATUTE OF L IMIT A T IONS PROBLEMS § 3.01, at 76 (1987). It might be said th a t statutes of repose pursue similar goals as do statutes of lim itatio n s (protecting defendants from defending against stale c la im s ), but strike a stronger defendant-friendly balance. Put m o re bluntly, there is a time when allowing people to put their w ro n g f u l conduct behind them--and out of the law's reach--is m o re important than providing those wronged with a legal re m e d y, even if the victims never had the opportunity to pursue one.

T h u s , while it is true that for a § 10(b) claim to "accrue" th e re must be an exchange of securities (here, the November 1 9 9 9 consummation of the merger) 1 3 , see Dura Pharms., Inc. v. B r o u d o , 544 U.S. 336 , 341 (2005), and only then do plaintiffs s u f f e r any actual injury, nevertheless the specific acts targeted b y a § 10(b) cause of action are fraudulent statements th e m s e lv e s. It therefore is more consonant with the traditional u n d e r s ta n d in g of how a statute of repose functions for the re p o se periods of § 9(e) and § 1658(b)(2) to begin from the date o f Exxon's alleged misrepresentation: the March 26, 1999, p ro x y statement. S u p p o rtin g this view is the text of the relevant statutes th e m s e lv e s, especially in relation to the limitations periods a p p lic a b le to other causes of action provided by the Securities E x c h a n g e Act. Notably, § 9(e) and § 1658(b)(2) set their s ta tu te s of repose relative to the "violation," not to the "accrual," o f the cause of action. In light of our discussion above, this w o rd choice is important. Coupled with the observation that the re p o se periods associated with other causes of action provided b y the same Act do use the term "accrue," see, e.g., 15U.S.C.

§ 78r(c) (§ 18 of the Act), this suggests that Congress knew that th e terms carried different meanings.

T h e Supreme Court has also weighed in, although only i n a dictum. The concluding line of Lampf, which disposes of th e case, reads: "As there is no dispute that the earliest of p la in tif f - r e s p o n d e n ts ' complaints was filed more than three ye a rs after petitioner's alleged misrepresentations, plaintiffre sp o n d e n ts ' claims were untimely." Id. at 364 (emphasis a d d e d ). As the misrepresentations in Lampf occurred at about th e same time as the exchange of securities, whether the date to b e g in running the statute of repose is the date of the m is re p re se n ta tio n was not necessary to the Court's decision.

N o n e th e le ss its focus was on the alleged misrepresentation, not th e exchange of securities.

For the reasons set out above--the traditional u n d e rs ta n d in g of how statutes of repose function, the text of § § 9(e) and 1658(b)(2), and a Supreme Court dictum--we hold th a t the repose period applicable to § 10(b) claims as set out in § § 9(e) and 1658(b)(2) begins to run on the date of the alleged m is r e p re s e n ta tio n .1 4 P la in tif f s counter the analysis underlying this holding w ith a single case: Baron v. Allied Artists Pictures Corp., 717 F .2 d 105 (3d Cir. 1983). In Baron we were presented with the q u e stio n of when the then-applicable Delaware statute of lim ita tio n s began to run for a § 14(a) claim for damages. We b e g a n our analysis by stating that "[i]t is a rule of general a p p lic a tio n that a cause of action for the recovery of damages a c cru e s only when it could be prosecuted to a successful c o n c lu s io n ." Id. at 108. We then distinguished between an a c tio n seeking injunctive relief and one for damages. In a d a m a g e s action, we said, the statute of limitations cannot begin to run until the plaintiff has been injured--i.e., until damages h a v e been suffered. Id. at 108­09. Plaintiffs here argue that b e c au s e they are seeking damages, the limitations period, p u rs u a n t to Baron, cannot begin running until the merger date, f o r that is when their damages were suffered and, therefore, w h e n the alleged tort of securities fraud was completed by the ex ch an g e of securities (from Mobil to ExxonMobil).

In light of our discussion on this issue, though, Baron is re a d ily distinguishable: because it was decided under the preD a t a Access/pre-Lampf framework, it dealt only with a statute o f limitations as borrowed from Delaware law. Baron had no o c c a s io n to consider the effect of a statute of repose on its h o ld in g . It is possible that Baron yet has currency when it c o m e s to the statute of limitations periods provided in §§ 9(e) a n d 1658(b)(1), but we leave that question for another day.1 5 B e c a u s e the statute of repose applicable to § 10(b) claims b e g in s to run on the date of the alleged fraudulent statement, p lain tiff s here, under Lieberman, 432 F.3d at 488­92, cannot b e n e fit from Sarbanes-Oxley's extension of the statute from th re e years to five, as any such claim based on Exxon's March 2 6 , 1999, proxy statement became time-barred on March 26, 2 0 0 2 , over four months before Sarbanes-Oxley became law.

T h e District Court was correct to dismiss their § 10(b) claim as u n t i m e l y.

* * * * * B e c a u s e 28U.S.C. § 1658(b) does not apply to § 14(a) c la im s , count one of plaintiffs' suit is time-barred, and the D is tr ic t Court was correct to dismiss it. Additionally, because th e statute of repose applicable to § 10(b) claims begins to run o n the date of an alleged misrepresentation, count two of p la in tif f s' suit is time-barred, and the District Court was correct in dismissing it as well. Finally, because plaintiffs' § 20(a) c la im against Raymond is predicated on the existence of another v a lid securities claim (and, as noted, none exist), the District C o u r t again was correct to dismiss that claim. For these reasons, th e judgment of the District Court is affirmed.1 6

* P u rs u a n t to Rule 12(a), F.R.A.P. Appeal from the United States District Court f o r the District of New Jersey (D .C . Civil Action Nos. 04-cv-01257 & 04-cv-01921) D is tric t Judge: Honorable Freda L. Wolfson Argued January 8, 2007 B e f o r e : McKEE, AMBRO, and FISHER, Circuit Judges.

1 "[W]hen ruling on a defendant's motion to dismiss, a judge m u s t accept as true all of the factual allegations contained in the c o m p l a in t." Erickson v. Pardus, 551 U.S. ___, 127 S. Ct. 2197,

2 2 0 0 (2007) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. _ _ _ , 127 S. Ct. 1955, 1965 (2007)). On an appeal from the g ra n t of a motion to dismiss, we apply the same standard as does a district court. Yarris v. County of Del., 465 F.3d 129, 134 (3d C ir. 2006).

2 Allegations of fraud must be pleaded "with particularity," F ED. R. CIV. P. 9(b), and pleading requirements are heightened e v e n further in securities fraud cases by the Private Securities L itig a tio n Reform Act of 1995 ("PSLRA"). Still, it should not b e forgotten that the "plain statement" rule still applies in these c a s e s , as it does in every civil case. See FED R. CIV. P. 8(a) (re q u irin g "a short and plain statement of the claim showing that th e pleader is entitled to relief" (emphases added)). necessary to correct any statement in any earlier c o m m u n ic a tio n with respect to the solicitation of a proxy for the same meeting or subject matter w h ic h has become false or misleading.

1 7 C.F.R. § 240.14a-9(a). We refer to claims brought pursuant to 15U.S.C. § 78n(a) and Rule 14a-9 as "§ 14(a) claims."

4 Section 10(b) of the Act provides that "[i]t shall be unlawful f o r any person . . . (b) [t]o use or employ, in connection with the p u rc h a se or sale of any security . . . , any manipulative or d e c ep tiv e device or contrivance in contravention of such rules a n d regulations as the [Securities and Exchange] Commission m ay prescribe . . . ." 15U.S.C. § 78j. In turn, SEC Rule 10b-5 p ro v id e s that [ i]t shall be unlawful for any person, directly or in d ir e c tly . . . (a ) [t]o employ any device, scheme, or a rtif ic e to defraud, (b ) [t]o make any untrue statement of a m a te ria l fact or to omit to state a material f a ct necessary in order to make the s ta te m e n ts made, in the light of the circu m s t a n c e s under which they were m a d e , not misleading, or (c ) [t]o engage in any act, practice, or c o u rs e of business which operates or w o u ld operate as a fraud or deceit upon any person, in connection with the p u rc h a s e or sale of any security.

1 7 C.F.R. § 240.10b-5. We refer to claims brought pursuant to

1 5U.S.C. § 78j(b) and Rule 10b-5 as "§ 10(b) claims."

5 Section 20(a) of the Act provides that [ e ]v e ry person who, directly or indirectly, controls a n y person liable under any provision of this c h a p te r or of any rule or regulation thereunder s h a ll also be liable jointly and severally with and to the same extent as such controlled person to a n y person to whom such controlled person is lia b le , unless the controlling person acted in good f a ith and did not directly or indirectly induce the a c t or acts constituting the violation or cause of a c ti o n .

1 5U.S.C. § 78t(a).

6 A statute of limitations is "[a] law that bars claims after a s p e c if ie d period." BLACK'S LAW DICTIONARY 1450 (8th ed.

2 0 0 4 ) [hereinafter BLACK'S]. It is generally subject to a " d is c o v e ry rule," meaning that it does not begin to run until the p la in tif f is aware (or should be aware) of his claim. A statute of rep o se is "[a] statute barring any suit that is brought after a s p e c if ie d time since the defendant acted." Id. at 1451. It is g e n e ra lly not subject to a discovery rule. See Lampf, Pleva, L ip k in d , Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 363 (1 9 9 1 ). Further material differences between statutes of lim ita tio n s and repose are discussed in Part II.B., infra.

11 Whether the merger date, in fact, marks the proper date on w h ic h to start running the statute of repose is the focus of the n e x t section. That date, however, is the latest any party claims th a t the statute of repose began to run.

12 Like Exxon's Form 10-K, which was incorporated into the M a rc h 26, 1999, proxy statement, Exxon filed several Form 10Q s with the same alleged misrepresentation regarding impaired asse ts. We reject plaintiffs' assertion that these Form 10-Qs are re lev a n t to our discussion. Securities fraud requires that a m is re p re se n ta tio n be "in connection with the sale or purchase of a n y security." 15U.S.C. 78j(b) (emphasis added); see also 17 C .F .R . § 240.10b-5. The "sale" here is, of course, the merger re q u irin g the exchange of Mobil shares for shares of 13 But see infra note 14.

14 Even if we were to conclude that the statute of repose sh o u ld be calculated from when plaintiffs' Mobil shares were e x c h an g e d for shares in ExxonMobil, this suit might still be tim e -b a rre d . This is because one view holds that an "exchange" o f securities occurs not on the date they formally change hands, b u t rather the date the parties become committed to exchange the s e c u ritie s . Grondahl v. Merritt & Harris, Inc., 964 F.2d 1290,

1 2 9 4 (2d Cir. 1992); Radiation Dynamics, Inc. v. Goldmuntz,

4 6 4 F.2d 876, 890­91 (2d Cir. 1972); Hill v. Equitable Bank,

6 5 5 F. Supp. 631, 638 (D. Del. 1987), aff'd sub nom. Hill v. E q u ita b le Trust Co., 851 F.2d 691 (3d Cir. 1988). Determining th e date of the relevant investment decision requires a "close e x a m in a tio n of the documents relevant to the formation" of the e x c h a n g e agreement, Hill, 655 F. Supp. at 638, to determine " w h e n parties to the transaction are committed to one another," R a d i a t io n Dynamics, 464 F.2d at 891. For a case using this a p p ro a c h , see In re Colonial Ltd. P'ship Litig., 854 F. Supp. 64,

8 4 ­ 8 5 (D. Conn. 1994). Regardless whether we would adopt this approach, it is u n clea r how it would apply in this case. Here, shareholders ap p ro v ed the merger of Exxon and Mobil on May 27, 1999. If t h a t date is used as the date of "exchange," then, just as is the c a se under our holding here, the formerly applicable three-year s ta tu te of repose would have expired before the passage of S a rb a n e s-O x ley in July 2002, and plaintiffs' § 10(b) claim w o u ld not have been revived by that legislation. See Lieberman, 432 F.3d at 488­92. On another view though, the merger c o n te x t may require a more nuanced analysis. The necessity of g a in in g approval from various governmental agencies, as well a s the possible existence of escape clauses in the merger a g r e e m e n t itself, may delay the time when the parties may p ro p e rly be considered "committed." Given our holding here, w e need not consider this question.

15 Because Baron applied federal law when determining when th e statute of limitations began (in contrast to its use of state law to set the length of the limitations period itself), there is no o b v io u s reason why its holding would have been affected by D a t a Access, Lampf, or Sarbanes-Oxley. Moreover, as our d is c u s s io n at the beginning of this section would suggest, Baron is consistent with the general understanding about when a statute o f limitations begins to run: upon accrual of the cause of action (i.e ., when each element is complete) or when a reasonable p e rso n would have known that he had a cause of action. With th e tort of securities fraud, this includes an exchange of s e c u ritie s and in the merger context may not occur until the m e rg e r is finally consummated. But see supra note 14. Baron's lo g ic , therefore, may still apply when calculating §§ 9(e)'s and

1 6 5 8 ( b )( 1 )' s statutes of limitations. W e note, however, that, like § 1658(b)(2), the terms of § 1658(b)(1) also refer to a "violation." Likewise with § 9(e). T o say that the statute of limitations begins at a different time th a n the statute of repose would require the same word to have tw o meanings within the same statutory provision--a significant te x tu a l mountain to climb. One District Court in this Circuit has refused the challenge, concluding that both the statute of lim ita tio n s and statute of repose begin as of the date of an a lle g e d misrepresentation. In re Phar-Mor, Inc. Sec. Litig., 892 F . Supp. 676, 686­88 (W.D. Pa. 1995). How to reconcile the t e x t of § 1658(b)(1) with Baron and with the traditional u n d e rs ta n d in g of when a statute of limitations begins to run is an u n d e rta k in g we need not yet attempt.

16 Given these holdings, we need not address whether p la in tif f s' claims were barred by the applicable statute of lim itatio n s or whether their § 10(b) claim was adequately p lead ed under Rule 9(b) and the PSLRA. We note, however, th a t were we to reach the latter issue, we have doubt that the § 10(b) claim was adequately pleaded, as few of plaintiffs' a lle g a ti o n s raise the requisite "strong inference" that Exxon a c te d fraudulently.