private civil action implied under section 78j(b) of this title that was commenced on or before June 19, 1991, shall be the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991." 15 U.S.C. § 78a a-1(a). June 19, 1991 is the day before Lampf and Beam were decided. Thus, the effect of section 27A is to prevent the retroactive application of Lampf.
Defendants argue that section 27A provides no benefit to Plaintiffs because it is unconstitutional, an issue that has divided the courts. Compare Henderson v. Scientific-Atlanta, Inc., 971 F.2d 1567 (11th Cir. 1992) and Anixter v. Home-Stake Prod. Co., 977 F.2d 1533, 1992 U.S. App. LEXIS 19549 (10th Cir. August 24, 1992) (finding section 27A constitutional) with Plaut v Spendthrift Farm, Inc., 789 F. Supp. 231 (E.D. Ky. 1992) and In re Brichard Sec. Litig., 788 F. Supp. 1098 (N.D. Cal. 1992) (finding section 27A unconstitutional). That difficult constitutional issue need not be resolved here, because whether or not section 27A is constitutional, Plaintiffs' 10b-5 claims must be dismissed. See United States v. Levy, 865 F.2d 551, 553 (3d Cir. 1989) (unnecessary decisions of constitutional issues should be avoided).
Assuming--without deciding--that section 27A is unconstitutional, Plaintiffs' 10b-5 claims are untimely. For, as discussed above, a straightforward application of Beam requires that the one-year/three-year rule of Lampf be applied retroactively in this case. Since Plaintiffs concede that they failed to file suit until six years after their causes of action allegedly accrued, their 10b-5 claims must be dismissed.
The more difficult question is what effect section 27A has on Plaintiffs' 10b-5 claims, assuming--again, without deciding--that it is constitutional. As noted above, section 27A requires courts considering the timeliness of 10b-5 claims pending on June 19, 1991 to look to "the limitation period provided by the laws applicable in the jurisdiction, including principles of retroactivity, as such laws existed on June 19, 1991." 15 U.S.C. 7Baa-1(a). On June 19, 1991 the limitation period applicable in this Circuit was the one-year/three-year rule provided by the Third Circuit's decision in Data Access; and the principles of retroactivity were those provided by Chevron Oil and the Third Circuit's decisions applying Chevron Oil to determine whether Data Access should be given retroactive effect in particular cases.
Thus, the Court must revisit the question whether Data Access should be given retroactive effect under the three-part test set forth by the Supreme Court in Chevron Oil. The Court finds that Plaintiffs fail to satisfy the first factor of the test. No clear precedent on the applicable limitation period for 10b-5 actions existed in this Circuit at the time Data Access was decided or at the time Plaintiffs' cause of action arose; and because Plaintiffs conceded they were unaware of the operative facts underlying their cause of action until 1986, they could not have relied on a limitation period longer than the three-year outside limit established in Data Access. Because Plaintiffs fail to satisfy the first Chevron Oil factor, the one-year/three-year rule of Data Access must be applied retroactively in this case, and Plaintiffs' 10b-5 claims must be dismissed as untimely. For the first factor is a treshold test; if it is not satisfied, there is no need to consider the remaining two. Gluck v. United States, 771 F.2d 750, 756 n.6 (3d Cir. 1985) ("Under Chevron Oil, a case is presumed to have retroactive effect unless, as a threshold matter, it established 'a new principle of law, either by overruling clear past precedent on which litigants may have relied . . . or by deciding an issue of first impression whose resolution was not clearly foreshadowed'" (quoting Chevron Oil Co. v. Huson, 404 U.S. 97, 106, 30 L. Ed. 2d 296, 92 S. Ct. 349 (1971))); Marino v. Bowers, 657 F.2d 1363, 1372 (3d Cir. 1981) (Weis, J., dissenting) ("it must be recognized that the first factor presents a threshold inquiry"); see also United States v. Johnson, 457 U.S. 537, 550, 73 L. Ed. 2d 202, 102 S. Ct. 2579 n.12 (1982) (under Chevron Oil establishment of a new principle of law is the "threshold test for determining whether or not a decision should be applied nonretroactively"); Milton v. Wainwright, 407 U.S. 371, 381, 33 L. Ed. 2d 1, 92 S. Ct. 2174 n.2 (1972) (Stewart, J., dissenting) ("an issue of the 'retroactivity' of a decision of this Court is not even presented unless the decision in question marks a sharp break in the web of the law"); Jackson v. Bank of Hawaii, 902 F.2d 1385, 1390 (9th Cir. 1990) (first criterion is threshold test); EEOC v. Vucitech, 842 F.2d 936, 941 (7th Cir. 1988) ("the first condition is  a threshold"); Kremer v. Chemical Constr. Corp., 623 F.2d 786, 789 (2d Cir. 1980) ("unless the first factor is satisfied, there is no occasion to consider the other two"), aff'd on other grounds, 456 U.S. 461, 72 L. Ed. 2d 262, 102 S. Ct. 1883 (1982). Accordingly, applying the limitation period this Court would have applied on June 19, 1991, Plaintiffs 10b-5 claims are now dismissed as time-barred.
The RICO Claims
Defendants contend that Plaintiffs' RICO claims must be dismissed. They point out that their alleged violations of section 10(b) and Rule 10b-5 are predicate acts upon which Plaintiffs' RICO claims are based. Defendants argue that because Plaintiffs' 10b-5 claims are time-barred, Plaintiffs are precluded from pursuing their RICO claims.
Defendants' contention lacks merit. A RICO claim may be pursued even though independent claims for predicate acts upon which the RICO claim is based are time-barred. See Halperin v. Jasper, 723 F. Supp. 1091, 1096-97 (E.D. Pa. 1989); Hill v. Equitable Bank, 655 F. Supp. 631, 655 (D. Del. 1987), aff'd on other grounds, 851 F.2d 691 (3d Cir. 1988), cert. denied, 488 U.S. 1008, 102 L. Ed. 2d 782, 109 S. Ct. 791 (1989). For RICO was not designed to provide redress to one injured by another's commission of predicate acts. Rather, RICO was designed to provide redress to one injured by another's use of certain predicate acts to invest in, acquire or maintain an interest in, or conduct the affairs of an enterprise whose activities affect interstate commerce. Morley v. Cohen, 610 F. Supp. 798, 808 (D. Md. 1985). "To interpret [the offenses composing the predicate acts] to have more than a definitional purpose would be contrary to the legislative intent of Congress." United States v. Forsythe, 560 F.2d 1127, 1135 (3d Cir. 1977).
In addition, the alleged 10b-5 violations of the Defendants are not the only predicate acts upon which the Plaintiffs' base their RICO claims. Plaintiffs also allege that the Defendants engaged in mail fraud and wire fraud under 18 U.S.C. §§ 1341, 1343. Accordingly, Defendants' motion for summary judgment on Plaintiffs' RICO claims must be denied.
The State Law Claims
Finally, based on their argument that Plaintiffs' 10b-5 and RICO claims must be dismissed, Defendants argue that under United Mine Workers of America v. Gibbs, 383 U.S. 715, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966), the Court should refuse to exercise pendent jurisdiction over Plaintiffs' state law claims. Because the Court concludes that Plaintiffs may pursue their RICO claims, Defendants' motion to dismiss Plaintiffs' state law claims will be denied.
STANLEY S. BROTMAN
UNITED STATES DISTRICT JUDGE
DATED: December 14, 1992
ORDER - December 16, 1992, Filed
This matter having come before the Court on the motion of Defendants for summary Judgment; and
For the reasons set forth in the Court's opinion of this date;
IT IS on this 14th day of December hereby ORDERED that Count I of Plaintiffs' Amended Complaint, which alleges claims under section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5, promulgated thereunder, is DISMISSED; and
IT IS FURTHER ORDERED that Defendants' motion for summary judgment on Counts II, III, IV, and V of Plaintiffs' Amended Complaint, which allege claims under the Racketeer Influenced and Corrupt Organizations Act, is DENIED; and
IT IS FURTHER ORDERED that Defendants' motion for summary judgment on Counts VI, VIII, IX, X, XI, XII, and XIII of Plaintiffs' Amended Complaint, which assert claims under statutes and common law of the State of New Jersey, is DENIED.
STANLEY S. BROTMAN
UNITED STATES DISTRICT JUDGE