                                         PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT
                   ________

                        No. 13-3750
                        _________

     ALAN W. SCHMIDT, on behalf of himself and in a
   representative capacity on behalf of all others similarly
situated and derivatively on behalf of Genaeral Corporation,,
                              Appellant

                             v.

     JOHN A. SKOLAS; LEANNE KELLY; JOHN L.
    ARMSTRONG, JR.; ZOLA B. HOROVITZ, Ph. D.;
OSAGIE O. IMASOGIE; MITCHELL D. KAYE; ROBERT
F. SHAPIRO; PAUL K. WOTTON; ROBERT DELUCCIA;
DAVID LUCI; STEVE ROUHANDEH; JEFFREY DAVIS;
  MARK ALVINO; GENAERA LIQUIDATING TRUST;
   BIOTECHNOLOGY VALUE FUND, INC.; LIGAND
    PHARMACEUTICALS, INC.; XMARK CAPITAL
        PARTNERS, LLC; ARGYCE LLC; OHR
 PHARMACEUTICALS; JOHN L. HIGGINS; GENAERA
CORPORATION; SCO FINANCIAL GROUP; DIPEXIUM
      PHARMACEUTICALS, LLC; MACROCHEM
CORPORATION; ACCESS PHARMACEUTICALS, INC.;
               MARK N. LAMPERT
                    ________
      On Appeal from the United States District Court
         for the Eastern District of Pennsylvania
                 (D.C. No. 2:12-cv-03265)
       District Judge: Honorable Berle M. Schiller
                         _______

                Argued: September 9, 2014

 Before: RENDELL, GREENAWAY, JR. and SLOVITER
                  Circuit Judges

            (Opinion Filed: October 17, 2014)

Howard J. Bashman, Esq. (ARGUED)
Suite G-22
2300 Computer Avenue
Willow Grove, PA 19090

Lee Squitieri, Esq.
Squitieri & Fearon, LLP
32 East 57th Street
12th Floor
New York, NY 10022

             Attorneys for Appellant

Katherine U. Davis, Esq.
Carolyn E. Isaac, Esq.
Michael L. Kichline, Esq. (ARGUED)
Dechert LLP
2929 Arch Street
18th Floor, Cira Centre
Philadelphia, PA 19104




                             2
Donald A. Corbett, Esq.
Richard C. Wolter, Esq.
Lowenstein Sandler LLP
1251 Avenue of the Americas
New York, NY 10020

Christopher M. Guth, Esq.
Blank Rome LLP
130 North 18th Street
One Logan Square
Philadelphia, PA 19103

Amy C. Lachowicz, Esq.
Joseph E. Vaughan, Esq.
O’Hagan LLC
100 North 18th Street
Two Logan Square, Suite 700
Philadelphia, PA 19103

Denean K. Sturino, Esq.
O’Hagan LLC
One East Wacker Drive
Suite 3400
Chicago, IL 60601

Michael D. Blanchard, Esq. (ARGUED)
Christopher M. Wasil, Esq.
Bingham McCutchen
One State Street
Hartford, CT 06103




                              3
Jordan D. Hershman, Esq.
Bingham McCutchen
One Federal Street
Boston, MA 02110

John S. Summers, Esq.
Robert A. Wiygul, Esq.
Hangley, Aronchick, Segal, Pudlin & Schiller
One Logan Square
18th & Cherry Streets, 27th Floor
Philadelphia, PA 19103

Joseph P. Dever, Jr., Esq.
Tamar S. Wise, Esq.
Cozen O’Connor
45 Broadway
16th Floor
New York, NY 10006

Joshua N. Ruby, Esq.
Jeffrey G. Weil, Esq. (ARGUED)
Cozen O’Connor
1900 Market Street
Philadelphia, PA 19103

Paul G. Nofer, Esq.
Klehr Harrison Harvey Branzburg LLP
1835 Market Street
Suite 1400
Philadelphia, PA 19103




                             4
John T. Ryan, Esq. (ARGUED)
Latham & Watkins LLP
12636 High Bluff Drive
Suite 400
San Diego, CA 92130

Stephanie Grace, Esq.
Colleen C. Smith, Esq.
Latham & Watkins LLP
12670 High Bluff Drive
San Diego, CA 92130

             Attorneys for Appellees

                     _______________

                        OPINION
                     _______________


SLOVITER, Circuit Judge.


        Alan Schmidt, a former shareholder in the now-
defunct Genaera Corporation (“Genaera”), appeals from the
District Court order dismissing his complaint on statute of
limitations grounds. Genaera was a biotechnology company
that dissolved in June 2009 and liquidated its assets. On June
8, 2012, Schmidt brought suit in the United States District
Court for the Eastern District of Pennsylvania on behalf of
himself and all other former Genaera shareholders against the
liquidating trustee (Argyce, LLC (“Argyce”)); the Genaera
Liquidating Trust; John Skolas, who served as Argyce’s CEO




                              5
and Genaera’s former CFO; former major Genaera
shareholders Xmark Capital Partners, LLC (“Xmark”) and
Biotechnology Value Fund, Inc. (“BVF”); former directors
and officers of Genaera (“D&O defendants”); and the
purchasers of certain Genaera assets. The essence of
Schmidt’s complaint is that the liquidating trustee and the
D&O defendants breached their fiduciary duties by disposing
of promising drug technologies in tainted insider deals for far
less than their true value. He also alleges that Xmark and
BVF, Genaera’s two largest shareholders, aided and abetted
this behavior so that companies they controlled could acquire
Genaera’s assets at fire sale prices. All defendants except for
SCO Financial Group (“SCO”) moved to dismiss Schmidt’s
complaint as untimely under the applicable two-year statute
of limitations.

       Schmidt did not dispute the applicability of the two-
year statute of limitations and acknowledged that he filed suit
more than two years after the relevant assets were sold.
Instead, he argued that the statute of limitations should be
tolled under Pennsylvania’s discovery rule because he could
not have been aware of the insider nature of the sales or that
the assets were sold for far below their actual value until he
learned the details of the sales, and certain subsequent market
events suggested to him that the assets were quite valuable.
The District Court rejected this argument and held that
Schmidt had all the information he needed to file the suit
more than two years before he filed. Schmidt timely
appeals. 1


1
 The District Court had jurisdiction under 28 U.S.C. §
1332(a). This court has jurisdiction under 28 U.S.C. § 1291.




                              6
                            I.

        Genaera was a biotechnology company that developed
pharmaceutical drugs and held licenses to patents and other
intellectual property. In April 2009, Genaera’s board of
directors concluded that the company’s prospects were dim,
and announced their intent to dissolve the company. On April
18, 2009, the board unanimously approved, and
recommended that the shareholders approve, a plan of
dissolution to dispose of the company’s assets through a
liquidating trust. On May 14, 2009, the board submitted a
proxy statement to shareholders regarding the dissolution plan
and filed that proxy statement with the SEC. The proxy
statement warned shareholders that they should expect to
receive only 1/5 of a penny to 1.7 cents per share once the
assets were liquidated. The complaint alleges that the proxy
statement contained misrepresentations about whether any
Genaera officers or directors would profit from the
dissolution, and that it was flawed in various ways. The
shareholders approved the dissolution plan on June 4, 2009,
and Genaera filed articles of dissolution with the Delaware
Secretary of State on June 12, 2009. Pursuant to the
dissolution plan, the company’s assets were transferred to the
Genaera Liquidating Trust, with defendant Argyce as
liquidating trustee.

       Three of Genaera’s assets that were ultimately sold,
with the proceeds being distributed to shareholders, are
relevant to this appeal. The allegations related to each of
those assets are discussed in turn.




                                 7
                 A. The Aminosterol Assets

       The Aminosterol Assets consisted of compounds used
for treating macular degeneration. The trustee sold the
Aminosterol Assets in May 2009 for $200,000 to BBM
Holdings, Inc. (“BBM”), the predecessor to defendant Ohr
Pharmaceuticals (“Ohr”). The complaint states that in August
2009, “the Trustee publicly reported that the Aminosterol
Assets inventory had been sold for a nominal sum.” App. at
106a. It is not clear from the complaint whether the trustee’s
announcement named the purchaser or the sale price. Ohr
filed a Form 8-K in August 2009 announcing the purchase,
with the purchase agreement (including the sale price)
attached.

       The complaint avers that the purchaser, BBM, is a
shell company that arranged financing for the purchase before
Genaera’s shareholders even formally voted to dissolve the
company. The complaint further alleges that Argyce and
Skolas breached their fiduciary duties by agreeing
prematurely to this offer instead of marketing the assets
properly. The complaint also asserts that the Aminosterol
Assets were worth far more than the $200,000 sale price,
citing a May 2012 presentation in which defendant Ohr, the
successor to BBM, estimated the potential market for drugs
based on the compounds at 1.75 million U.S. patients.

                        B. Pexiganan

       Pexiganan was a topical cream for the treatment of
diabetic foot infections. MacroChem Corp. (“MacroChem”)
licensed the right to develop Pexiganan from Genaera in
2007. Under the terms of the license, Genaera would receive




                              8
payments totaling $7 million upon the achievement of certain
development milestones, up to $35 million for reaching
certain sales milestones, and 10% of sales as royalties. The
complaint alleges that at some point in 2008, “MacroChem
abruptly reversed course on Pexiganan,” App. at 86a,
spending only $45,110 on development of Pexiganan that
year.      Defendant Access Pharmaceuticals acquired
MacroChem in 2009, and ceased development of Pexiganan.
The complaint alleges that Genaera had a right under its
agreement with MacroChem to demand the return of
Pexiganan if MacroChem ceased development, but the D&O
defendants, in breach of their fiduciary duties, failed to
exercise that right. Pexiganan was ultimately returned to
Genaera Liquidating Trust in December 2009, after Genaera’s
dissolution. The complaint implies that demanding the return
of Pexiganan earlier and continuing its development could
have staved off the need to dissolve Genaera.

        The complaint further alleges that the liquidating
trustee ultimately sold Pexiganan in an improper, self-dealing
transaction. Specifically, certain insiders from MacroChem
founded a new company, Dipexium, which bid on Pexiganan
in liquidation. The liquidating trustee set a short deadline for
bidding, announcing the availability of Pexiganan on January
11, 2010, and setting a deadline of February 12, 2010, for
bids. The complaint alleges that this short deadline favored
the MacroChem insiders associated with Dipexium because
they were already familiar with Pexiganan. Meanwhile,
outside bidders had to await receipt of a “confidential
information     package,”     review     it,    and    perform
pharmacological, regulatory, and valuation analyses, all in
just one month before submitting their bids. Although
Pexiganan’s sales potential for Genaera was allegedly




                               9
estimated to exceed $100 million, Dipexium ultimately
acquired the rights to Pexiganan for a “minor purchase price”
and free of any royalty and milestone payment obligations.
The complaint does not contain the exact date of the sale.
And, Schmidt contends that the earliest he could have known
of Pexiganan’s sale price was 2011, when Argyce publicly
issued unaudited financial statements for the year ended
December 31, 2010, which, according to the complaint,
evidences that Pexiganan was sold for approximately
$252,000. The complaint alleges that about ninety days after
buying the rights to Pexiganan, Dipexium raised $1.07
million in funding to develop the asset, and raised another
$1.4 million ninety days after that.

                   C. Interlukin 9 (“IL9”)

       IL9 was an antibody program for asthma. Genaera had
licensed    the    technology     to   MedImmune,       LLC
(“MedImmune”). Under its agreement with MedImmune,
Genaera could have received up to $54 million in payments
and royalties if IL9 reached certain development milestones.
The complaint alleges that defendant Skolas had previously
told Schmidt that IL9 had the potential for “$3 to $4 billion
peak year sales.” App. at 99a.

       On May 18, 2010, the liquidating trustee sold IL9 for
“a mere” $2.75 million to defendant Ligand Pharmaceuticals
(“Ligand”). Two days later, Ligand conveyed half of that
interest to defendant BVF—one of Genaera’s largest
shareholders. Ligand filed the IL9 purchase agreement with
the SEC on May 24, 2010, as an attachment to a Form 8-K.
The purchase agreement disclosed the price and the
subsequent sale to BVF.




                             10
       The complaint alleges that the sale to Ligand for a “de
minimis” price was a fraudulent transaction intended to allow
BVF to acquire the asset at a price below its value. The
complaint points to the fact that prior to the liquidation, BVF
was both Genaera’s second-largest shareholder and also
owned 15% of Ligand’s stock. However, in the period before
Genaera’s dissolution, BVF sold Ligand stock until it held
less than a 10% share, and thus would no longer be
considered a Ligand insider.         BVF’s reduction in its
ownership of Ligand, the complaint alleges, was a
smokescreen to disguise the fact that the sale of IL9 to
Ligand, which subsequently conveyed it to BVF, was actually
a preferential sale to a major Genaera shareholder. Finally,
the complaint alleges that the net effect of this transfer was to
take a valuable asset that would have benefited all of
Genaera’s shareholders and transfer it to a single major
shareholder.

                               II.

       Schmidt brought suit against the liquidating trustee,
the liquidating trust, John Skolas, former officers and
directors of Genaera, BVF, Ligand, Xmark, Ohr, Dipexium,
MacroChem, Access, and SCO. The complaint contained
twelve counts. Those relevant to this appeal are:

   1. Count 1: breach of fiduciary duty by the D&O
      defendants;
   2. Count 2: breach of the duties of a trustee by the
      liquidating trustee;
   3. Count 3: waste of corporate assets by the D&O
      defendants;




                               11
   4. Count 9:      breach of fiduciary duties owed by
      controlling shareholders to minority shareholders by
      defendants Xmark, Kaye and BVF;
   5. Count 10: punitive damages;
   6. Count 11: rescission of the sale of the Aminosterol
      Assets to Ohr; and
   7. Count 12: rescission of the sale of Pexiganan to
      Dipexium.

Several of those counts also charge other defendants with
aiding and abetting. All of the defendants except SCO moved
to dismiss on statute of limitations grounds. Schmidt agreed
to dismiss counts 4-8 without prejudice before the District
Court rendered its decision.

        The District Court dismissed all counts of the
complaint with prejudice. In relevant part, it held that
Schmidt filed the breach of fiduciary duty and corporate
waste claims after the applicable two-year statute of
limitations had expired, and that the discovery rule did not
save the claims. Specifically, the District Court held that
Schmidt had “not met his burden of demonstrating that the
discovery rule should apply here.” App. at 28a. In doing so,
the District Court noted that “by May 2010, all of the relevant
transactions had occurred and been publicly announced,
through a combination of updates from [Genaera Liquidating
Trust], public SEC filings, and press releases from the
acquiring companies.” Id. at 27a. It dismissed the rescission
and punitive damages claims because they cannot stand
without their underlying claims, and dismissed counts 4-8
with prejudice, even though Schmidt had previously agreed to
dismiss those claims without prejudice.




                              12
        The District Court’s decision did not cite, and the
parties did not call to its attention, this court’s opinion in In re
Mushroom Transportation Co., 382 F.3d 325, 343 (3d Cir.
2004), which bears on this appeal because it provides
standards for applying the discovery rule in cases involving
the statute of limitations applicable to fiduciary defendants.

        Schmidt timely appeals. While he concedes that a
two-year statute of limitations applies and acknowledges that
the relevant transactions occurred more than two years before
he filed his suit, he argues that the District Court erred in
considering materials outside of the complaint in evaluating
the defendants’ motions to dismiss, and that material factual
disputes exist as to whether Pennsylvania’s discovery rule
tolled the limitations period.

                                III.

       We review a District Court’s dismissal of a complaint
under Federal Rule of Civil Procedure 12(b)(6) de novo.
Phillips v. Cnty. of Allegheny, 515 F.3d 224, 230 (3d Cir.
2008). Under Federal Rule of Civil Procedure 8, a complaint
need not anticipate or overcome affirmative defenses; thus, a
complaint does not fail to state a claim simply because it
omits facts that would defeat a statute of limitations defense.
See In re Adams Golf, Inc. Sec. Litig., 381 F.3d 267, 277 (3d
Cir. 2004) (citing Doe v. GTE Corp., 347 F.3d 655, 657 (7th
Cir. 2003) (“[L]itigants need not try to plead around
defenses”)).

      Schmidt argues that the District Court erred in two
ways: first, by considering documents not appropriate for
consideration at the motion to dismiss stage, and second, by




                                13
holding that the discovery rule did not apply to toll
Pennsylvania’s statute of limitations. We address each of
Schmidt’s arguments in turn.

                           A.

        The District Court erred in considering certain
documents attached to defendants’ Rule 12(b)(6) motions.
Technically, the Federal Rules of Civil Procedure require a
defendant to plead an affirmative defense, like a statute of
limitations defense, in the answer, not in a motion to dismiss.
See Robinson v. Johnson, 313 F.3d 128, 134-35 (3d Cir.
2002). In this circuit, however, we permit a limitations
defense to be raised by a motion under Rule 12(b)(6) “only if
‘the time alleged in the statement of a claim shows that the
cause of action has not been brought within the statute of
limitations.’” Id. (quoting Hanna v. U.S. Veterans’ Admin.
Hosp., 514 F.2d 1092, 1094 (3d Cir. 1975)). However, “‘[i]f
the bar is not apparent on the face of the complaint, then it
may not afford the basis for a dismissal of the complaint
under Rule 12(b)(6).’” Id. (quoting Bethel v. Jendoco Constr.
Corp., 570 F.2d 1168, 1174 (3d Cir. 1978)).

       “To decide a motion to dismiss, courts generally
consider only the allegations contained in the complaint,
exhibits attached to the complaint and matters of public
record.” Pension Benefit Guar. Corp. v. White Consol.
Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993); see also
Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010).
“However, an exception to the general rule is that a
‘document integral to or explicitly relied upon in the
complaint’ may be considered ‘without converting the motion
to dismiss into one for summary judgment.’”           In re




                              14
Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d
Cir. 1997) (quoting Shaw v. Digital Equip. Corp., 82 F.3d
1194, 1220 (1st Cir. 1996), superseded on other grounds by
PSLRA, 15 U.S.C. § 78u-4(b)(2)). “The rationale underlying
this exception is that the primary problem raised by looking
to documents outside the complaint—lack of notice to the
plaintiff—is dissipated ‘[w]here the plaintiff has actual notice
. . . and has relied upon these documents in framing the
complaint.” Id. (quoting Watterson v. Page, 987 F.2d 1, 3-4
(1st Cir. 1993)). “[W]hat is critical is whether the claims in
the complaint are ‘based’ on an extrinsic document and not
merely whether the extrinsic document was explicitly cited.”
Id.

       The defendants in this case attached several different
kinds of documents to their motions to dismiss. Some, like
the affidavits attached by the Dipexium defendants, clearly
may not be considered at this stage. See Cent. Contracting
Co. v. Md. Cas. Co., 367 F.2d 341, 343 (3d Cir. 1966)
(converting a motion to dismiss to a motion for summary
judgment where the parties submitted affidavits in support of
their positions). Others, like the SEC filings attached by a
number of the defendants, are matters of public record of
which the court can take judicial notice. See City of
Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 259 (3d Cir.
1998); see also Pension Benefit Guar. Corp., 998 F.2d at
1197 (explaining that “public record[s]” in this context are
materials like decision letters of government agencies and
published reports of administrative bodies).

       The District Court relied not just on the complaint and
SEC filings, but also on “updates from [Genaera Liquidating
Trust] . . . and press releases from the acquiring companies”




                              15
that the defendants attached to their motions to dismiss. App.
at 27a. The defendants argue that these materials, available
before June 8, 2010, contain all the information Schmidt
needed to ascertain his injury. While that may be true, these
materials may not be considered at the motion to dismiss
stage. They are not integral to the complaint—the complaint
was not “based” on press releases or updates from Genaera
Liquidation Trust, but rather on sales transactions. See In re
Burlington Coat Factory Sec. Litig., 114 F.3d at 1426. Nor
are those documents the records of a government agency. See
Pension Benefit Guar. Corp., 998 F.2d at 1197.

       Moreover, taking notice of these postings on Genaera
Liquidating Trust’s website and the press releases is
inconsistent with the rationale of the integral documents
exception. As this court explained in In re Burlington Coat
Factory Securities Litigation, the justification for the integral
documents exception is that it is not unfair to hold a plaintiff
accountable for the contents of documents it must have used
in framing its complaint, nor should a plaintiff be able to
evade accountability for such documents simply by not
attaching them to his complaint. See 114 F.3d at 1426. But
Schmidt claims that he never saw the updates on the Genaera
Liquidating Trust website and disputes that they were
publicly posted on the dates that the defendants claim that
they were posted. He asserts that the document on which he
based his complaint is Genaera Liquidating Trust’s financial
information for fiscal year 2010, which was disclosed
sometime in 2011 in a report by the liquidating trustee.
Therefore, the District Court’s reliance on press releases and
updates from Genaera Liquidating Trust was improper.




                               16
                                B.

       We now turn to whether, based only on the documents
properly considered at the motion to dismiss stage (the
complaint, the SEC filings, and certain “integral documents”
such as the fiscal report on which Schmidt relied), Schmidt’s
claims should have been dismissed on statute of limitations
grounds.

        The parties do not dispute that Pennsylvania’s two-
year statute of limitations for claims of breach of fiduciary
duty and corporate waste applies. “The general rule is that
the statute of limitations begins to run as soon as a right to
institute and maintain suit arises.” Haugh v. Allstate Ins. Co.,
322 F.3d 227, 231 (3d Cir. 2003) (citing Crouse v. Cyclops
Indus., 745 A.2d 606, 611 (Pa. 2000)).

         Looking only to the dates alleged in the complaint, it
is clear that Schmidt’s right to assert claims related to the
Aminosterol Assets and IL9 arose before June 8, 2010. The
sale of the Aminosterol Assets occurred at the latest by June
8, 2009, when the trustee accepted a $50,000 down payment
for the assets. The sale of IL9 to Ligand occurred on May 18,
2010. All of the conduct by BVF that was allegedly intended
to cover up the self-dealing nature of the IL9 sale occurred in
2008 and 2009. These dates are all contained in Schmidt’s
complaint, and are before June 8, 2010. Unless the discovery
rule tolls the statute of limitations, an issue which is discussed
infra, these claims are time-barred.




                               17
       In contrast, the claims arising from the Pexiganan sale
are not facially time-barred, even without reliance on the
discovery rule. The complaint states that the liquidating
trustee solicited bids for the sale of the Pexiganan Assets on
January 11, 2010, and set a February 12, 2010 deadline for
bids. However, there is no precise sale date, and the
complaint vaguely references that the sale took place in 2010.
David Luci of Dipexium submitted an affidavit averring that
Dipexium purchased Pexiganan on April 8, 2010. But an
affidavit from a defendant may not be considered in deciding
a motion to dismiss. See Cent. Contracting Co., 367 F.2d at
343. There is no document in the record that might properly
be considered on a motion to dismiss, such as an asset
purchase agreement, that establishes that the sale of
Pexiganan occurred before June 8, 2010.             Therefore,
Schmidt’s claims arising out of this sale are not time-barred
even without considering the discovery rule.

                              C.

        “The discovery rule is a judicially created device
which tolls the running of the applicable statute of limitations
until the point where the complaining party knows or
reasonably should know that he has been injured and that his
injury has been caused by another party’s conduct.” Crouse,
745 A.2d at 611. “In order to determine when the statute
should begin to run, the finder of fact focuses on whether the
plaintiff was reasonably diligent in discovering his injury.”
Id. “Pursuant to application of the discovery rule, the point at
which the complaining party should reasonably be aware that
he has suffered an injury is a factual issue ‘best determined by
the collective judgment, wisdom and experience of jurors.’”
Id. (quoting White v. Owens-Corning Fiberglas, Corp., 668




                              18
A.2d 136, 144 (Pa. Super. Ct. 1995)). “[O]nly where the facts
are so clear that reasonable minds cannot differ may the
commencement of the limitations period be determined as a
matter of law.” Id.

        Generally, the plaintiff bears the burden of showing
that the discovery rule tolls the statute of limitations. See
Dalrymple v. Brown, 701 A.2d 164, 167 (Pa. 1997).
However, while a court may entertain a motion to dismiss on
statute of limitations grounds, Robinson, 313 F.3d at 135, it
may not allocate the burden of invoking the discovery rule in
a way that is inconsistent with the rule that a plaintiff is not
required to plead, in a complaint, facts sufficient to overcome
an affirmative defense. See In re Adams Golf, Inc. Sec. Litig.,
381 F.3d at 277 (citing Doe v. GTE Corp., 347 F.3d 655, 657
(7th Cir. 2003) (“[L]itigants need not try to plead around
defenses”)); Oshiver v. Levin, Fishbein, Sedran & Berman,
38 F.3d 1380, 1384 n.1 (3d Cir. 1994). This distinction
comes to the fore here, where the applicability of the
discovery rule is not evident on the face of the complaint but
the plaintiff also does not plead facts that unequivocally show
that the discovery rule does not apply.

        This court has stated, in the context of the discovery
rule, that when “the pleading does not reveal when the
limitations period began to run . . . the statute of limitations
cannot justify Rule 12 dismissal.” Barefoot Architect, Inc. v.
Bunge, 632 F.3d 822, 835 (3d Cir. 2011). Several of our
sister circuits have held the same. See USPPS, Ltd. v. Avery
Dennison Corp., 676 F.3d 1341, 1345 (Fed. Cir. 2012)
(“[W]hen reviewing a trial court’s dismissal under Federal
Rule of Civil Procedure 12(b)(6), [an appellate court is]
required to accept all well-pleaded facts as true” and cannot




                              19
dismiss a complaint unless it can “definitively say that the
discovery rule . . . [does] not apply.” (internal quotation
marks and citation omitted)), vacated on other grounds, 133
S. Ct. 1794 (2013); Hollander v. Brown, 457 F.3d 688, 691
n.1 (7th Cir. 2006) (stating that dismissal may be appropriate
when “the plaintiff effectively pleads herself out of court by
alleging facts that are sufficient to establish the defense”);
Jones v. Rogers Mem. Hosp., 442 F.2d 773, 775 (D.C. Cir.
1971) (holding that the “statute of limitations is an affirmative
defense, Fed. R. Civ. P. 8(c), and need not be negatived by
the language of the complaint”).

       The District Court appears to have relied on the non-
precedential opinion in Brawner v. Education Management
Corp., 513 F. App’x 148 (3d Cir. 2013) (per curiam). In that
case, this court dismissed a complaint in which a former
student sued the Art Institute of Philadelphia based on his
unsatisfactory experience. Id. at 149-50. He brought suit in
2011, but had attended the school in the late 1990s, and his
last dealing with the school was in 2005. Id. at 150-51. This
court determined that “no reasonable factfinder could
conclude that [the plaintiff] filed within the limitations
period.” Id. at 150. However, our conclusion was based on
the plaintiff’s “complaint and other filings” which showed
that “he knew he was injured and made repeated inquiries of
the various defendants.” Id. at 151. In other words, the
Brawner plaintiff “effectively [pleaded himself] out of court
by alleging facts that [were] sufficient to establish the
defense.” See Hollander, 457 F.3d at 691 n.1.

      In this case, Schmidt has not pleaded himself out of
court. As discussed in further detail below, nothing in
Schmidt’s complaint clearly suggests that he did in fact have




                               20
knowledge of the full scope of his injury prior to June 8,
2010. Instead, the District Court dismissed Schmidt’s
complaint for failing to affirmatively show that he exercised
“reasonable diligence” with respect to discovering his injury.
Requiring Schmidt to make a showing of reasonable diligence
was premature. The District Court effectively required
Schmidt to plead around an affirmative defense in his
complaint, which is inconsistent with Rules 8 and 12(b)(6)
and with this court’s decision in Barefoot Architect.

       Under a de novo review, applying the proper standards
as discussed supra, we conclude that it is not evident on the
face of the complaint and documents properly considered at
the motion to dismiss stage whether the discovery rule saves
Schmidt’s claims. Because Schmidt limits his appeal to the
claims involving the allegedly improper sales of the
Aminosterol Assets, IL9, and Pexiganan, we only need to
consider the facts pertaining to these transactions.

        As to the Aminosterol Assets, Ohr’s August 2009 SEC
filing establishes that the Aminosterol Assets were sold on
August 21, 2009, for $200,000. Thus, Schmidt’s claims
arising out of this transaction are untimely unless the
discovery rule applies. It is not clear whether “reasonable
diligence” should have required Schmidt to look at the SEC
filings of a company that heretofore had nothing to do with
Genaera. There is no evidence within the complaint or other
integral documents to show that Schmidt knew or should have
known the identity of the buyer. If he did know the identity,
perhaps a court could find that “reasonable diligence”
required him to seek out the buyer’s SEC filings to find the
sale price of the assets. However, there is no indication in the




                              21
pleadings or integral documents that Schmidt had this
information.

        As to the IL9 Assets, Ligand’s SEC filing dated May
18, 2010, establishes that Ligand purchased the IL9 Assets on
May 18, 2010 for $2.75 million, and Ligand conveyed a 50%
interest to BVF on May 20, 2010 for $1.375 million. As
discussed, supra, these dates are before June 8, 2010, and
Schmidt’s claims as to them are untimely unless the discovery
rule applies. As with the Aminosterol Assets, it is unclear
whether “reasonable diligence” requires Schmidt to seek out
the SEC filings of a company previously unassociated with
Genaera. Again, the crucial missing link is any evidence in
the record showing that Schmidt knew or should have known
of the identity of the buyer. If he had known the buyer’s
identity, he might reasonably be charged with looking at the
buyer’s SEC filings to determine the purchase price of the
assets and the fact of the allegedly fraudulent circumstances
surrounding the sale, such as BVF’s reduction of its Ligand
ownership and its immediate acquisition of a 50% interest in
IL9. However, it is impossible to tell based on the documents
properly considered at this stage how much Schmidt knew,
and when.

      As to the Pexiganan Assets, the date of sale cannot be
determined on the basis of any document that we may
consider that may have been available to Schmidt before June
8, 2010. Thus, dismissal of Schmidt’s claims with respect to
the Pexiganan sale was not appropriate at the motion to
dismiss stage.

      Moreover, the existence of the fiduciary relationship
between Schmidt, as a former shareholder, and several of the




                             22
defendants weighs in favor of finding that the discovery rule
tolls the limitations period for all three of the assets at issue.
“[T]he existence of a fiduciary relationship is relevant to a
discovery rule analysis precisely because it entails such a
presumptive level of trust in the fiduciary by the principal that
it may take a ‘smoking gun’ to excite searching inquiry on the
principal’s part into its fiduciary’s behavior.”           In re
Mushroom Transp. Co., 382 F.3d at 343 (applying
Pennsylvania’s discovery rule). The District Court held
Schmidt to a standard of “reasonable diligence” in
determining that Schmidt should have known of his injuries
by June 8, 2010. However, the concept of “reasonable
diligence” in the fiduciary context is more deferential to
plaintiffs, and acknowledges that it might take a “smoking
gun” for a plaintiff to be on notice of a fiduciary’s
wrongdoing. There is nothing in the limited record we may
consider at this stage that amounts to the sort of “smoking
gun” that would trigger Schmidt’s diligence obligations.

       In summary, it was premature for the District Court to
dismiss Schmidt’s complaint on statute of limitations grounds
at this early stage of the litigation. Because Schmidt’s
allegations do not facially show that his claims as to
Aminosterol, IL9, and Pexiganan are time-barred, their
dismissal by the District Court must be reversed.

                               D.

       The defendants offer a host of alternative bases for
affirming dismissal, and urge this court to affirm on those
bases. It is premature to consider those arguments, which the
District Court did not reach and Schmidt did not brief on
appeal.




                               23
                             IV.

       The claims arising out of the sales of the Aminosterol
Assets, IL9, and Pexiganan cannot be considered time-barred
at this stage. We will reverse the portion of the District
Court’s order dismissing these claims. Because the District
Court’s dismissal of the rescission and punitive damages
claims was based on its statute of limitations ruling, we will
also reverse the decision as to those claims. Finally, because
the District Court dismissed counts 4-8 with prejudice based
on its statute of limitations ruling, we will also reverse the
dismissal with prejudice of those counts. The remainder of
the order will be affirmed.




                             24
                       Schmidt v. Skolas

                         No. 13-3750



RENDELL, Circuit Judge, dissenting:

        I see no reason to remand this case to the District
Court and would affirm. As the Majority notes: “Schmidt did
not dispute the applicability of the two-year statute of
limitations and acknowledged that he filed suit more than two
years after the relevant assets were sold.” (Maj. Op. 6.) 1
Schmidt’s main argument on appeal is that the District Court
improperly considered matters outside the record regarding
the events in question in dismissing his case. This is a
diversionary tactic, and is incorrect.

       The District Court’s reference to documents in its
opinion that demonstrate that Schmidt’s concession was
correct, i.e., that all the events in question did occur prior to
the requisite two-year period, was not necessary to the
dismissal. Once Schmidt conceded his tardiness, the sole
relevant issue was whether the discovery rule would save
him, and the District Court determined, based on Schmidt’s
own assertions, that it would not. Schmidt’s protestations and
Majority’s extensive narrative as to what the Amended
Complaint revealed are, therefore, a red herring and beside
the point.

1
  At oral argument before the District Court, Schmidt’s
counsel acknowledged that “we missed the two-year period
by a couple of weeks.” (App. 1576a.)
       The District Court’s ruling was based on the fact that
Schmidt failed to assert why, with the exercise of reasonable
diligence, he could not have known of the injury, i.e., that the
prices were too low, as the discovery rule requires. Dilworth
v. Metro. Life Ins. Co., 418 F.3d 345, 349 (3d Cir. 2005). The
Majority makes passing reference to a weaker burden that
Schmidt could actually satisfy, i.e., that he didn’t know the
prices until later. But that is not the test or the burden.
Schmidt has never come close to setting forth any facts as to
why he, a very sophisticated investor, who kept himself aware
of the value of these assets, could not have known, after the
proxy statement revealed the dissolution plan in May 2009,
that the sale prices – presumably available through some
investigation – were inadequate. 2



2
  In the Amended Complaint, Schmidt pled facts that actually
undermined the applicability of the discovery rule. He stated
that “[i]n 2009, Genaera had several valuable assets”
including IL9, Pexiganan, and the Aminosterol Assets, and
that “[t]hese were all valuable assets in which Genaera had
invested large sums of money in their development over the
previous decade.” (App. 67a-68a.) He also stated that he
“throughout the years has held many conversations with
Genaera officers and directors concerning the Core Assets,
their value and the prospects for their commercial
exploitation and/or monetization.” (App. 69a.) If he knew that
the assets were so valuable and that they had been the subject
of considerable investment over the previous decade, then
surely he was on inquiry notice when he received the proxy
statement indicating that Genaera was liquidating its shares
for pennies on the dollar.




                               2
        Indeed, before the District Court at oral argument,
Schmidt’s counsel conceded that Schmidt received notice in
2010 of sales of certain assets previously owned by Genaera
and that, for the next two years, “he was putting together all
the facts and circumstances.” (App. 1583a.) Before our panel
at oral argument, Schmidt’s counsel insisted that the
discovery rule applies because he did not “learn” of the
Defendants’ alleged wrongdoing until 2011. That argument is
insufficient because “a plaintiff's subjective knowledge is
insufficient to invoke the discovery rule.” Vitalo v. Cabot
Corp., 399 F.3d 536, 543 (3d Cir. 2005). In other words,
“[m]istake, misunderstanding, or lack of knowledge in
themselves do not toll the running of the statute.” Fine v.
Checcio, 582 Pa. 253, 266 (2005). At oral argument, despite
repeated questions, Schmidt did not provide any indication of
what, if anything, he did by way of diligence, or any reason
why he could not have learned of the alleged wrongdoing
earlier.

        A plaintiff, faced with a clear “miss” of the statute of
limitations, must come forth with some basis for invoking the
discovery rule. See Mest v. Cabot Corp., 449 F.3d 502, 511
(3d Cir. 2006) (“the plaintiff attempting to apply the
discovery rule bears the burden of demonstrating that he
exercised reasonable diligence in determining the existence
and cause of his injury.”). See also Hocker v. CitiMortgage,
Inc., Civ. 09-973, 2012 WL 174967, at *3 (M.D. Pa. Jan. 20,
2012) (dismissing claims because “Plaintiff has failed to meet
her burden of establishing equitable tolling because she has
made no argument as to how she was reasonably diligent in
investigating and bringing the instant claims . . . .”);
Haagensen v. Pennsylvania State Police, Civ. 08-727, 2009
WL 1437608, *6 (W.D. Pa. May 21, 2009) (recommending




                               3
dismissal because “Plaintiff bears the burden of
demonstrating that these exceptions [discovery rule or
equitable tolling] to the statute of limitations apply.”).

        As the District Court explained in its opinion, “to toll
the statute of limitations on every plaintiff’s mere assertion
that he needed time to put together all the facts and
circumstances would eviscerate the very concept of a
limitations period.” (Dist. Ct. Op. 12.) “Although the purpose
of the ‘discovery rule’ is to mitigate in worthy cases the
harshness of an absolute and rigid period of limitations, the
rule cannot be applied so loosely as to nullify the purpose for
which a statute of limitations exists.” Ingenito v. AC & S,
Inc., 633 A.2d 1172, 1176 (Pa. Super. Ct. 1993). This is not a
matter of consideration of matters outside the record; this is,
instead, a matter of what a plaintiff who has failed to comply
with the statute of limitations must do to satisfy the discovery
rule.

       Tellingly, Schmidt does not argue that there are facts
he would have adduced if this matter had been treated, as he
urges, as a motion for summary judgment. 3 I suggest there are
none, and remand is therefore unnecessary. I would affirm.




3
  I suggest that to tell District Court judges that, in deciding a
motion to dismiss, they cannot take into account the
concessions and candor of counsel at oral argument unless
they first convert the motion to one for summary judgment is
to exalt form over substance and waste judicial resources.




                                4
