Nature of the Case
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Facts
In a 1987 civil action, petitioners alleged that, in 1983 and 1984, respondents committed fraud and deceit in the sale of stock in violation of § 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 of the Securities and Exchange Commission. The District Court dismissed the action with prejudice following this Court's decision in Lampf (501 U.S. 350) which required that suits such as petitioners' be commenced within one year after the discovery of the facts constituting the violation and within three years after such violation. After the judgment became final, Congress enacted § 27A(b) of the 1934 Act, which provides for reinstatement on motion of any action commenced pre-Lampf but dismissed thereafter as time-barred, if the action would have been timely filed under applicable pre-Lampf state law. Although finding that the statute's terms required that petitioners' ensuing § 27A(b) motion be granted, the District Court denied the motion on the ground that § 27A(b) is unconstitutional. The Court of Appeals affirmed. The Court held that Section 27A(b) contravenes the Constitution's separation of powers to the extent that it requires federal courts to reopen final judgments entered before its enactment. That court found that there was no reasonable construction on which § 27A(b) does not require federal courts to reopen final judgments in suits dismissed with prejudice by virtue of Lampf. The Appeals court reasoned that the Constitution gives courts the power to decide cases conclusively subject to review only by superior courts in the Article III hierarchy. The Constitution forbids the Legislature to interfere with courts' final judgments. Section 27A(b) effects a clear violation of the foregoing principle by retroactively commanding the federal courts to reopen final judgments, and thus this exceeds Congress’ powers.
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