Following the 2001 merger of AOL and Time Warner the stock price of the combined company, AOLTW, went into a year-and-a-half decline, and numerous shareholder class action securities fraud suits were filed. The various class actions were consolidated in a federal court in New York.
If the case is soon dismissed AOL Time Warner Inc. shareholders may be able to bring otherwise expired individual securities fraud claims against the company, but they must first wait for a decision on class certification in a pending lawsuit, a federal court in New York ruled.
When a class action is on file, the statute of limitations for an investor to file an individual claim will be “tolled” (extended while the class action is pending) but such tolling can not be used until “class certification” is approved by the court. The “standby suit”–anticipating the denial of certification– was filed by the investor, but the court determined that, because the limitations periods had expired on the investor’s individual claims his case, and the class action was still pending, tolling during the class action could not be employed and the case was dismissed.
The shareholder may not file a “standby suit”–anticipating the denial of certification–after his own limitations period has expired, the court said. Attorneys for investors warn that, although this case held that such a case may not be actually filed, investors should not delay contacting an attorney to assess the viability of and be prepared to file their own case. While class actions “toll” limitations periods, as short as two years after the fraud is exposed, much of that time has often passed prior to the date the class action was filed.
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