A new securities class action filed last week in the Southern District of California caught our eye, and the more we dug, the curiouser things became.

The complaint (here) was filed against Avanir Pharmaceuticals, Inc. (NASDAQ: AVNR) and several current and former officers and directors of Avanir. Much of the allegations are standard run-of-the-mill allegations for a securities class action against a smaller pharmaceutical company, namely they involve FDA approval (or lack thereof) of a new drug. Some of the allegations center around alleged breaches of fiduciary duty by Avanir's former CEO and president, Gerald Yakatan.

But what really made us sit up and say "hmm," is the class period that is alleged in the complaint, the date the complaint was filed (10/30/09), and the relationship of that class period (and the filing date) to the applicable statutes of limitations and repose. The complaint was filed on behalf "of all those who purchased the Common Stock of Avanir...between July 1995 and October 31, 2006, the date the Company filed its form 10-K with the SEC for its fiscal year ending 2006."

As Kevin LaCroix has noted, there has been a recent surge of '34 Act securities class actions filed at or near the two year statute of limitations for bringing such claims, but this one seems to push the envelope a bit further.

Prior to the enactment of the Public Company Reform and Investor Protection Act of 2002 (a/k/a Sarbanes-Oxley), 28 U.S.C. § 1658(b), there was no congressionally created limitations period for federal securities fraud claims arising under section 10(b) of the '34 Act. The pre-Sarbanes-Oxley statutes of limitations and repose were one year and three years, respectively. But instead of a congressionally created limitations period, both the statutes of limitation and repose resulted from the Supreme Court's decision in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350 (1991). The Lampf Court viewed the then 3-year
limit as a "period of repose," intended to impose an "outside limit” on the cause of action, not subject to tolling principles.

Sarbanes-Oxley of course extended the statutes of limitations and repose for '34 Act claims to two and five years, respectively.

The application of the extended statutes has been a heavily litigated issue, with a number of appellate decisions having been handed over the ensuing years.

But no court that we are aware of has yet ruled that the extended statutes of Sarbanes-Oxley will reach 14 year old conduct, or save a case that was filed two years and 364 days after the end of the class period, which coincides with the "discovery" of the alleged fraud in the Avanir case.

The complaint was filed by two San Diego based law firms, the Dreher Law Firm and Aguirre, Morris & Severson LLP, both names that were initially unfamiliar to us. After a quick review of their respective websites, we have some interesting tidbits to report. Scott Dreher (the eponymous owner of the Dreher firm) left what was then known as Milberg Weiss Bershad Hynes & Lerach to found his own firm back in 1996. Dreher counts Bill Lerach among his mentors, and bears a stunning resemblance to Jimmy Neutron: Boy Genius.

UPDATE: Kevin LaCroix also has a post on the Avanir complaint, here.