The Supreme Court Rejects “Inquiry Notice” as Trigger to Start Running the Statute of Limitations in Securities Fraud Cases
In its decision in Merck & Co., Inc. v. Reynolds, No. 08-905, issued on April 27, the United States Supreme Court set forth the standard under which lower courts should evaluate motions to dismiss securities fraud cases on statute of limitation grounds. In an opinion authored by Justice Breyer, the Court rejected the argument that the statute of limitations begins to run after a potential plaintiff is placed on “inquiry notice”—the point at which facts would lead a reasonably diligent plaintiff to investigate further. Instead, the Court held that “a cause of action accrues (1) when the plaintiff did in fact discover, or (2) when a reasonably diligent plaintiff would have discovered, ‘the facts constituting the violation’—whichever comes first.”