Justice Anthony Kennedy ofthe U.S. Supreme Court speaking during the Supreme Court budgethearing for the year 2012 before the House Approps Subcommittee onthe Financial Services and General Government. April 14, 2012.Photo by Diego M. Radzinschi/THE NATIONAL LAW JOURNAL.

The U.S. Supreme Courtputanotherhurdlein the path of class action plaintiffs Monday witha 5-4 ruling that strictly interpreted deadlines for opting out ofongoing securities litigation.

Ruling on the finalsitting for its current term, the court said a three-year deadlineshould govern and prevent later lawsuits in class actions. JusticeAnthony Kennedy wrote the majority opinioninCaliforniaPublic Employees' Retirement System v. ANZSecurities.

The text, purpose,structure, and history of the statute all disclose thecongressional purpose to offer defendants full and final securityafter three years, Kennedy wrote.

It was the first classaction case in which new Justice Neil Gorsuch participated, and asexpected he joined the majority in ruling againstplaintiffs.

Read more:SCOTUSTakes Up Key Timing Question in SecuritiesSuits

The ruling isa win for Paul Clement of Kirkland & Ellis, who argued for ANZSecurities. Tom Goldstein of Goldstein & Russell argued thecase for CalPERS.

DanielSommers, partner of Cohen Milstein Sellers & Toll, a plaintiffsfirm, criticized the decision. Individual investors will simplyhave their rights extinguished in cases where their interests werepreviously protected as they never will be able to navigate thepath set by the court today, Sommers said.

The case before thecourt stems from the financial crisis of 2008. CalPERS sued thebankrupt Lehman Brothers and ANZ, one of its underwriters, claimingfalse statements in registration documents. The pension fund hadbeen part of a class action, but it opted out after a settlementwas reached.

The timeline resultedin a conflict between statutory provisions that impose a deadlineon when such lawsuits must be filed. The Securities Act of 1933states that lawsuits cannot be filed more than three years afterthe securities offering. But citing a 1974 Supreme Courtprecedent,American Pipe & Construction v.Utah, CalPERS claimed that deadline can be tolled ordelayed while class actions are underway.

The U.S. Court ofAppeals for the Second Circuitruledthatthe three-year deadline could not be put off. But the SecondCircuit ruling also said the issue was ripe for resolution by theSupreme Court because of a circuit split over the issue. The highcourt ended up affirming the Second Circuit.

Justice Ruth BaderGinsburg dissented, arguing that the majority violated due processby making opt-outs more difficult. I dissent from today'sdecision, under which opting out cuts off any chance for recovery,she wrote. Justices Stephen Breyer, Sonia Sotomayor and Elena Kaganjoined the dissent.