The rules of finality, both statutory and judge made, treat a dismissal on statute-of-limitations grounds the same way they treat a dismissal for failure to state a claim, for failure to prove substantive liability, or for failure to prosecute: as a judgment on the merits.
Investors previously brought an action against respondent securities investment company for fraud and deceit in the sale and exchange of stock in violation of § 10(b) of the Securities Exchange Act of 1934. The investor's action was dismissed with prejudice and became final after they did not file an appeal. Subsequently, § 27A of the Securities Exchange Act of 1934 was codified. The investors then sought to have their action reinstated pursuant to § 27A. The district court found that the section required the reinstatement of petitioners' action, yet found the section to be unconstitutional and denied the investor’s' motion, which was affirmed by the appellate court.
Was § 27A constitutional?
The Court found § 27A to be unconstitutional and affirmed the decision of the lower court. Section 27A, by retroactively commanding federal courts to reopen final judgments, violated the fundamental principle that a judgment conclusively resolves the case. Thus, the separation of powers principle was violated by § 27A, when Congress codified the section.