Dr. William Welch Iii, Dr. Andrew Guest, and Mrs. Elizabethguest, Plaintiffs-appellants, v. Cadre Capital, R. Laken Mitchell, Esq., John Roberts, Ednalou Ballard, Norman Ballard, Financial Centresecurities, Northwest Mutual, a Savingsinstitution, Defendants-appellees,mutual Fire & Marine Inland Insurance Company, Defendant, 946 F.2d 185 (2d Cir. 1991)

The amicus curiae advances the interesting argument that the Supreme Court has indeed used selective prospectivity on one occasion and done so precisely in the context of applying a new limitations rule. In Saint Francis College v. Al-Khazraji, supra, the Court affirmed the Third Circuit's decision declining to apply retroactively the two-year limitations period that the Third Circuit had determined in Goodman v. Lukens Steel Co., 777 F.2d 113 (3d Cir. 1985), was applicable to actions under 42 U.S.C. § 1981 (1988). Yet the Third Circuit had applied its limitations ruling to the parties in the Goodman case, and its decision to do so was explicitly affirmed by the Supreme Court in Goodman v. Lukens Steel Co., 482 U.S. 656, 107 S. Ct. 2617, 96 L. Ed. 2d 572 (1987), a case decided one month after Saint Francis College. The amicus contends that this is selective prospectivity, but there are reasons for believing that the Supreme Court might not regard it as such.

First, Goodman applied the new limitations rule only to limit the period of recoverable damages, whereas Saint Francis College declined to apply the two-year limitations rule to render untimely a suit brought within the previously applicable six-year limitations period. The Supreme Court may be instructing that as to section 1981 suits, the two-year limitations period applies entirely prospectively when the issue is timeliness of suit and entirely retroactively when the issue is the extent of recoverable damages. Second, the Court noted that when the Goodman suit was filed, the Third Circuit law as to the applicable limitations period was unsettled, whereas when the Saint Francis College suit was filed several years later, Third Circuit law had settled upon a six-year limitations period. See Goodman, 482 U.S. at 663, 107 S. Ct. at 2622. Retroactive application of the new two-year period was thus thought permissible for the Goodman plaintiffs, but not for the Saint Francis College plaintiff.

Of course, the plaintiffs in the pending case are more like the plaintiff in Saint Francis College than like the plaintiffs in Goodman, since they filed a suit timely under clearly settled pre-existing law, and the rejection of selective prospectivity defeats their suit entirely, rather than merely limiting the amount of damages. Nevertheless, we cannot ignore the fact that the latest pronouncement from the Supreme Court in Jim Beam declares that it is error not to apply fully retroactively a new rule that has been applied to the parties in the case in which the rule was announced, as occurred in Lampf. When the Supreme Court issues a decision like Jim Beam, when Justice White, without disagreement from any member of the Court, pointedly reports that there is no precedent for selective prospectivity in the civil context, and when the pending case is remanded for reconsideration in light of Jim Beam and Lampf, but not also in light of Saint Francis College, we are obliged to apply Lampf retroactively to all cases that were pending on direct review when Lampf was decided. Were it not for Jim Beam, we would welcome the opportunity to withhold retroactive application of the new limitations rule from all plaintiffs (other than those in the Lampf litigation) who filed timely under the pre-existing limitations period, for all of the reasons we set forth in Welch I. But, until advised to the contrary, we feel obliged to disregard the prior teaching of Saint Francis College and apply the more recent guidance of Jim Beam.

It is also arguable that, even if retroactive rulings are generally applicable to all cases pending on direct review, a retroactive ruling like Lampf should not be accorded general retroactive effect to all litigation pending on direct review for the reason that the decision on retroactivity was made without any explicit discussion of the issue. That argument too, however, is foreclosed by Jim Beam. That decision evoked the dissenting votes of three justices precisely on the ground that the Bacchus Imports decision had resolved the retroactivity issue without any explicit discussion of it and for that reason should not be accorded broad retroactive effect. Jim Beam, 111 S. Ct. at 2451 (O'Connor, J., with whom Rehnquist, C.J., and Kennedy, J., join, dissenting). But the majority's decision in Jim Beam, rendered the same day Lampf was decided, makes it evident that the retroactive ruling in Lampf is to be applied retroactively to all cases not finally adjudicated on the date when Lampf was decided.

Appellants contend that the retroactivity ruling of Jim Beam applies only to newly announced rules of constitutional law, but Jim Beam makes clear that, at least in the civil context, its retroactivity principle applies to "a rule of federal law," Jim Beam, 111 S. Ct. at 2446, plainly covering both constitutional and statutory rulings.

In the pending case, the complaint is untimely under the one-year/three-year limitations period of Lampf and Ceres Partners. We therefore vacate our prior decision in Welch I and direct that the judgment of the District Court, Welch v. Cadre Capital, 735 F. Supp. 467 (D. Conn. 1989), dismissing appellants' complaint on statute of limitations grounds, is affirmed.