A Guide To Determining Class Claim Time Bars

By Marc Shapiro and Shane McCammon
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Law360 (August 13, 2020, 4:59 PM EDT) --
Marc Shapiro
Marc Shapiro
Shane McCammon
Shane McCammon
In the early days of the coronavirus pandemic, New York Gov. Andrew Cuomo issued an executive order that tolled "any specific time limit for the commencement, filing, or service of any legal action, notice, motion, or other process or proceeding" for 30 days.

New York is not alone in tolling its statute of limitations in response to COVID-19: California, Connecticut, Iowa, Kansas, Maryland, Massachusetts, Nevada and Texas all issued varying tolling orders — creating a patchwork legal environment that practitioners must carefully navigate, particularly as courts across the country slowly reopen for nonessential litigation.[1]

The pandemic-related mishmash of tolling orders highlights — and adds to — an already-muddled body of law involving the application of statutes of limitations to putative class actions. 

Understanding how statutes of limitations, tolling and choice-of-law provisions apply to the claims of putative class members has always been important. It is arguably even more critical now, with a wave of coronavirus-related class actions having recently been filed.

Will the filing of these actions automatically toll the claims of would-be class members? Or, after class certification is denied, can defendants successfully move to dismiss individual plaintiffs' untimely claims? The answer, perhaps now more than ever, is that it depends.

Fortunately, there is a certain logic to tolling, and it starts with the U.S. Supreme Court's 1974 decision in American Pipe & Construction Co. v. Utah.[2] There, the court unanimously held that a plaintiff's timely filing of an ultimately unsuccessful class action tolled the statute of limitations "for all purported members of the class who make timely motions to intervene after the court has found the suit inappropriate for class action status."[3]

Known as class action or American Pipe tolling, this principle tolls federal statute of limitations, provided three factors are met: (1) the plaintiff was among the putative class that ultimately was not certified; (2) the plaintiff subsequently alleges the same causes of action as were raised in the attempted class action, against the same defendants; and (3) the plaintiff's subsequent filing — whether an individual suit or a motion to interview — is not brought as a class action.

Critically, American Pipe involved tolling within the same federal jurisdiction: The individual plaintiffs attempted to intervene in an action pending before the same court that had denied the initial class certification. This fact left open the question of whether American Pipe applies across jurisdictions and, to some extent, whether it applies to state claims at all.

The answer to both questions depends entirely on the interplay of each jurisdiction's tolling rules and statutes of limitation, which has only become more complicated post-pandemic. To determine whether the claims asserted by a member of a failed class are time-barred, practitioners should apply the following methodology.

Identify which jurisdiction's tolling rules apply.

A bedrock principle of civil procedure is that a federal court sitting in diversity will apply state law to state claims.[4] But while seemingly straightforward, choice-of-law issues as they relate to statutes of limitations are not always clear-cut.

For example, a state court may apply its own statute of limitations to the action, while others, a majority, in fact, maintain borrowing statutes — which require the court to borrow the statute of limitations of the jurisdiction in which the cause of action arose, provided this other jurisdiction's statute of limitations period is shorter than the forum state's time bar. And with the borrowed statute of limitations come borrowed tolling rules. 

Further complicating matters, there is debate over whether federal courts sitting in diversity must apply state tolling rules, or whether American Pipe applies by its own force. Of the circuit courts that have addressed the issue, all but the U.S. Court of Appeals for the Eighth Circuit have held that a "federal court evaluating the timeliness of state law claims must look to the law of the relevant state to determine whether, and to what extent, the statute of limitations should be tolled by the filing of a putative class action in another jurisdiction."[5]

Even the one outlier, the Eighth Circuit, requires its district courts sitting in diversity to at least examine state tolling rules.[6]

Determine whether the jurisdiction recognizes American Pipe tolling and to what extent. 

Once a practitioner has determined which jurisdiction's tolling rules apply, the next step is to determine whether that jurisdiction recognizes American Pipe tolling at all and, if so, to what extent. There are five main possibilities:

1. The jurisdiction does not recognize American Pipe tolling at all, regardless of where the initial action was filed. This applies to Florida, Mississippi, Missouri and Virginia.

2. The jurisdiction recognizes American Pipe tolling, but only if the initial class suit was filed in that state's courts. The jurisdiction, therefore, explicitly rejects cross-jurisdictional tolling. This applies to Alabama, Arizona, California, Illinois, Kentucky, Louisiana, Maryland, Pennsylvania, Tennessee and Texas.

3. The jurisdiction recognizes American Pipe tolling if the initial class suit was filed in that state or territory's courts, but it is unclear whether the jurisdiction recognizes cross-jurisdictional tolling — typically because the issue has never been directly addressed by the respective state courts or legislature.

This applies to Alaska, Arkansas, Colorado, Connecticut, Georgia, Idaho, Indiana, Iowa, Louisiana, Massachusetts, Minnesota, New Mexico, New York, North Carolina, Oklahoma, Oregon, Puerto Rico, Utah, Vermont and Washington. In this situation, federal courts making a guess using the U.S. Supreme Court's 1938 Erie Railroad Co. v. Tompkins[7] ruling are reluctant to toll across jurisdictions.[8] 

4. The jurisdiction recognizes American Pipe and will toll its statute of limitations regardless of where or in what forum the initial class action was filed. This jurisdiction, therefore, explicitly recognizes cross-jurisdictional tolling. This applies to Delaware, Hawaii, Kansas, Michigan, Montana, Nevada, New Jersey, Ohio and the Virgin Islands.

5. The jurisdiction has not addressed the applicability of American Pipe, so whether class action tolling is recognized is anybody's guess. This applies to Maine, Nebraska, New Hampshire, North Dakota, Rhode Island, South Carolina, South Dakota, West Virginia and Wyoming. In general, federal courts sitting in diversity are reluctant to apply American Pipe tolling in jurisdictions that have never addressed the issue.[9]

Apply the applicable tolling rules to the facts.

Once the practitioner determines which jurisdiction's statute of limitations and tolling rules apply, the analysis turns to applying those rules. This process often will be simple: Either the statute of limitations was tolled during the pendency of the class certification question or it was not. But there are nuances to consider. 

Application to Subsequent Class Actions

American Pipe left open the question of whether a subsequent class action could be filed after the initial class certification was denied. Known as piggybacking, a plaintiff would timely assert claims on behalf of a putative class (often extraordinarily broadly defined), only to refine and refile the class action after the district court inevitably denied certification — sometimes years after the statute of limitations would have expired.

In China Agritech Inc. v. Resh in 2018, the U.S. Supreme Court emphatically ended piggybacking — at least in federal courts.[10] Of course, just as with American Pipe itself, states are not bound by China Agritech, which involved purely federal questions and federal statutes of limitations.

Application to Appeals

Plaintiffs may argue the statute of limitations should be tolled while the denial of class certification is (or was) being appealed. But most courts that have addressed the issue have held that American Pipe tolling does not apply while the class certification denial is pending appeal.[11] 

Application to Statutes of Repose 

In addition to statutes of limitations, many states also have a statute of repose. Whereas a statute of limitations sets a filing deadline based on when the plaintiff allegedly suffered harm, a statute of repose sets an outermost limit on filing a lawsuit — based solely on the passage of time.

The question then becomes whether American Pipe tolls statutes of repose. Most jurisdictions have not addressed the issue, but a few have: Courts in both Arizona and North Carolina have held that class action tolling does not apply to statutes of repose.[12] 

Application Even When Initial Class Action Suffers From Obvious Defect 

At least one state has held that American Pipe tolling does not apply when the initial putative class action suffers from an obvious jurisdictional defect. In Cunningham v. Insurance Company of North America, the Pennsylvania Supreme Court refused to apply American Pipe tolling to an individual lawsuit filed after a "patently non-justiciable class action suit" was dismissed due to the class representative's obvious lack of standing.[13]

The Cunningham majority explained that, while Pennsylvania's statute of limitations normally is tolled upon the filing of a class action, "[w]e do not believe that the principle of tolling … contemplates that tolling will occur in cases like the present one, where the lack of standing of the class representative in the prior action … was apparent upon the face of the complaint filed therein."[14]

Based on Cunningham, practitioners defending lawsuits filed after a putative class certification is denied should examine the class complaint and look for obvious jurisdictional defects. 

Application to Cases Where Plaintiffs Opted Out of the Class Before Certification Was Determined

Occasionally, would-be class members jump ship before the trial court even gets a chance to rule on certification. And sometimes, these opt-out plaintiffs file suit after the limitations period has expired.

Many courts, however, have refused to apply American Pipe tolling in this situation, explaining that the doctrine's purpose of maximizing judicial efficiency would be defeated if plaintiffs could voluntarily pursue their claims while certification was pending.[15]

Conclusion

For the class action defense practitioner, successfully defeating a certification petition almost always will greatly reduce the client's liability exposure. But winning the certification battle is not the same as winning the war.

With the putative class successfully splintered, the defense practitioner must now prepare to fight subsequent individual lawsuits — often with multiple intervening plaintiffs from many different jurisdictions, each carrying different statutes and rules of procedure into the courtroom. Understanding how statutes of limitations and tolling rules apply to these subsequent, post-certification denial cases can be the difference between a quick-strike victory and protracted litigation at great cost to the client.

Correction: A previous version of this article cited the wrong case in footnote 5. The error has been corrected.



Marc Shapiro is a partner and Shane McCammon is a career associate at Orrick Herrington & Sutcliffe LLP.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.


[1] We've created a table breaking down how each jurisdiction treats class action tolling which is accessible here.

[2] 414 U.S. 538 (1974).

[3] Id. at 553.

[4] See, e.g., Vaught v. Showa Denko K.K. 107 F.3d 1137, 1146 (5th Cir.1997); Walker v. Armco Steel Corp. , 446 U.S. 740, 750-53 (1980).

[5] See Casey v. Merck & Co., Inc. , 653 F.3d 95, 100 (2d Cir. 2011).

[6] See Adams Public School Dist. v. Asbestos Corp., Ltd. , 7 F.3d 717, 719 (8th Cir. 1993).

[7] Erie Railroad Co. v. Tompkins , 304 U.S. 64 (1938).

[8] See, e.g., In re Vioxx Prod. Liab. Litig. , 522 F. Supp. 2d 799, 809 (E.D. La. 2007) ("Absent clear guidance, however, the Court will not expand Pennsylvania's class action tolling doctrine.").

[9] See In re Vioxx Prod. Liab. Litig. , 522 F. Supp. 2d at 809.

[10] 138 S. Ct. 1800, 1806 (2018).

[11] See, e.g., Yang v. Odom , 392 F.3d 97, 102 (3d Cir. 2004), abrogated on other grounds by China Agritech, 128 S. Ct. 1800; Porter v. So. Nev. Adult Mental Health Svcs. , 2017 WL 6379525, *5 (D. Nev. Dec. 13, 2017) (noting most circuit courts do not toll in such a circumstance), aff'd 788 Fed. App'x 525 (9th Cir. 2019); Lopez v. Liberty Mut. Ins. Co. , 2015 WL 3630570, at *9 (C.D. Cal. Mar. 6, 2015) ("[A] majority of the Circuit Court of Appeals have held that this tolling ends when a class is decertified or a case is dismissed, even if the decision is appealed.").

[12] Albano v. Shea Homes Ltd. Partnership , 254 P.3d 360, 364-66 (Ariz. 2011); Cacha v. Montaco, Inc. , 554 S.E.2d 388, 393 (N.C. App. 2001)

[13] 530 A.2d 407, 411 (Pa. 1987). 

[14] Id. at 409.

[15] See, e.g., In re Dynamic Random Access Memory (Dram) Antitrust Litigation , 516 F. Supp. 2d 1072, 1102-03 (N.D. Cal. 2007); In re Heritage Bond Litig. , 289 F. Supp. 2d 1132, 1150 (C.D. Cal. 2003) (compiling cases).

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