This educational guide is based on the linked primary sources. It is not a Court publication, is not affiliated with the Court, and is not legal advice.
In brief
Overview
According to Petitioners, the case concerns whether the statute of limitations for private securities fraud claims is governed by the discovery rule, which starts the clock when the plaintiff discovers the facts constituting the violation.
According to David C. Frederick, petitioners argue that Congress intended the term “discovery” in the securities fraud statute to have its ordinary meaning.
According to David C. Frederick, petitioners also contend that they would prevail under either an actual‑knowledge or constructive‑knowledge standard.
According to David C. Frederick, petitioners note that Congress included a five‑year repose period in the statute.
An amicus curiae filed on behalf of the respondents.
Background and question before the Court
Justice Scalia asked whether the Court should go beyond constructive discovery.
According to Justice Scalia, justice Scalia questioned whether “after discovery” always means after actual discovery, referencing the Lampf case.
Justice Sotomayor asked what the difference is between actual knowledge and constructive knowledge.
According to Justice Alito, justice Alito remarked that the distinction between actual and constructive knowledge might be meaningless.
Justice Breyer sought clarification on the phrasing of the statute’s start point, asking whether it begins when a reasonable person would have found sufficient facts.
What each side argues
Petitioners' Position
Petitioners assert that the discovery rule applies to the limitations period for private securities fraud claims.
According to David C. Frederick, petitioners maintain that the word “discovery” should be given its ordinary meaning.
According to David C. Frederick, petitioners argue they would succeed under either an actual‑knowledge or constructive‑knowledge standard.
According to David C. Frederick, petitioners point to the five‑year repose period written into the statute.
According to Mr. Frederick, petitioners explain that the gap between their position and the government’s is small, based on pre‑1934 interpretations of “discovery of the facts constituting” and a reasonable‑person standard.
What happened at oral argument
According to Justice Scalia, justice Scalia: “But you want to go beyond constructive discovery?”
According to Justice Scalia, justice Scalia: “Now, you are telling me that there was no choice between the two… what were we doing in Lampf, spinning our wheels?”
According to Justice Sotomayor, justice Sotomayor: “Could you tell me what the difference is between actual knowledge and constructive knowledge?”
According to Justice Alito, justice Alito: “If actual knowledge means things that the plaintiff doesn't actually know, then I don't know what the difference is between actual knowledge and constructive knowledge. It's a meaningless distinction.”
According to Justice Breyer, justice Breyer: “So how—what’s the right phrasing? … does the statute begin to run when a reasonable person would have found facts sufficient to show a violation?”
What the Court decided
Why it matters
Petitioners argue that the statute of limitations for private securities fraud claims incorporates the discovery rule, meaning the limitations period begins when the plaintiff discovers the facts constituting the violation.
Justices questioned the distinction between actual knowledge and constructive knowledge during oral argument.
According to David C. Frederick, david C. Frederick noted that Congress included a five‑year period of repose in the statute.
Terms to know
No glossary terms are available for this guide.
Primary sources
Read the source materials on the official site or open the immutable repository copy used for this guide.
- 5ac345efafa794f8ff66-r1-e74248e54e324e3e.pdforal argument transcript
Guide generated September 23, 2026. Automated validation accepted this version.