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1.7.6.2 Does American Pipe Tolling Apply to Subsequent Class Actions?

In China Agritech, Inc. v. Resh, the Supreme Court held that American Pipe tolling does not apply to subsequent class action claims.106 In an opinion authored by Justice Ginsburg, the Supreme Court clarified that American Pipe tolling does not allow putative class members to file subsequent class actions beyond the applicable statute of limitations:

American Pipe tolls the statute of limitations during the pendency of a putative class action, allowing unnamed class members to join the action individually or file individual claims if the class fails. But American Pipe does not permit the maintenance of a follow-on class action past expiration of the statute of limitations.107

The Supreme Court explained that “[t]he ‘efficiency and economy of litigation’ that support tolling of individual claims, do not support maintenance of untimely successive class actions; any additional class filings should be made early on, soon after the commencement of the first action seeking class certification.”108 The Court recognized that economy of litigation favors American Pipe tolling of individual claims until class certification is denied because only then would it be necessary for plaintiffs to pursue their claims individually.109

Regarding class claims, the Court explained that “efficiency favors early assertion of competing class representative claims.”110 That way, “[i]f class treatment is appropriate, and all would-be representatives have come forward, the district court can select the best plaintiff with knowledge of the full array of potential class representatives and class counsel.”111 If, as the Court noted, class treatment is not a viable option, the decision to deny class certification will be made early on in the case and litigated only once for all would-be class representatives.112

China Agritech drew a clear distinction between subsequent individual actions and subsequent class actions, establishing a bright line rule that “[t]ime to file a [subsequent] class action falls outside the bounds of American Pipe.”113 In reaching its conclusion in China Agritech, the Supreme Court expressly overruled the decisions in Phipps v. Wal-Mart Stores, Inc.114 and Yang v. Odom.115 The Court, however, did not disturb the proposition that putative class members may still benefit from American Pipe tolling in the assertion of their individual claims.116

Courts differ on whether American Pipe established a legal or equitable tolling doctrine.117 Some states with equitable tolling doctrines may recognize a prior putative class action as tolling the statute for a subsequent state class.118 Others have declined to do so.119

Although equitable and legal tolling often are used interchangeably, they “are not congruent.”120 A majority of states have adopted a rule allowing equitable tolling during the pendency of a class action in their own courts.121 Quite a few state courts also have held that the filing of a class action in a federal court within the state tolls the statute of limitations for the state court action, while others disagree.122 An argument for tolling based on a filing in another state is less likely to succeed.123

In short, if you are filing, planning to file, or advising clients that they may be able to file a new class action lawsuit after the applicable statute of limitations has run, you should proceed with extreme caution. In federal court, tolling will not apply to allow the filing of a subsequent class action based on a previously filed class action. In state court, such tolling may be allowed but it will depend on state law, and will take in to account the nature of the first-filed case, the claims asserted therein, and the jurisdiction in which the first-filed case was filed. Even favorable state law that allows tolling of subsequent class claims based on a previously filed class action could be reinterpreted or adjusted in light of China Agritech—a risk that warrants additional caution.

Footnotes

  • 106 Id. 138 S. Ct. at 1810.

  • 107 Id. 138 S. Ct. at 1804.

  • 108 Id. 138 S. Ct. at 1806 (citing American Pipe, 414 U.S. at 553).

  • 109 Id. 138 S. Ct. at 1806–1807.

  • 110 Id. 138 S. Ct. at 1807.

  • 111 Id.

  • 112 Id.

  • 113 Id. 138 S. Ct. at 1811. See also Practice Mgmt. Support Servs., Inc. v. Cirque du Soleil Inc., 2018 WL 3659349, at *3 (N.D. Ill. Aug. 3, 2018) (China Agritech abrogated Seventh Circuit precedent and similar cases that held that American Pipe tolling applied to successive class claims, drawing “a clear distinction between successive individual suits and successive class actions”).

  • 114 Phipps v. Wal-Mart Stores, Inc., 792 F.3d 637 (6th Cir. 2015), abrogated by China Agritech, Inc. v. Resh, ___ U.S. ___, 138 S. Ct. 1800, 201 L. Ed. 2d 123 (2018).

  • 115 Yang v. Odom, 392 F.3d 97 (3d Cir. 2004), abrogated by China Agritech, Inc. v. Resh, ___ U.S. ___, 138 S. Ct. 1800, 201 L. Ed. 2d 123 (2018).

  • 116 Lindblom v. Santander Consumer USA, Inc., 2018 WL 3219381, at *6 (E.D. Cal. June 29, 2018) (even when “proposed intervenors class claims are no longer viable in a successive action, China Agritech leaves undisturbed the proposition that movants may still benefit from American Pipe tolling in pursuit of their individual claims”).

  • 117 Police & Fire Ret. Sys. v. IndyMac MBS, Inc., 721 F.3d 95, 108 (2d Cir. 2013) (collecting cases on both sides of the question); Albano v. Shea Homes Ltd. P’ship, 634 F.3d 524, 535 (9th Cir. 2011) (“Among the issues on which there is no consensus is whether American Pipe tolling should be characterized as a legal tolling doctrine or as an equitable one.”).

  • 118 Hatfield v. Halifax, P.L.C., 564 F.3d 1177, 1186–1187 (9th Cir. 2009) (under the California equitable tolling doctrine, pendency of a previous putative class action in New Jersey tolled the statute with respect to California residents only). But see China Agritech, Inc. v. Resh, ___ U.S. ___, 138 S. Ct. 1800, 1804, 201 L. Ed. 2d 123 (2018); In re Crazy Eddie Sec. Litig., 802 F. Supp. 804, 813 (E.D.N.Y. 1992); Schur v. Friedman & Shaftan, P.C., 123 F.R.D. 611, 613 (N.D. Cal. 1988); In re Quarterdeck Office Sys., Inc., 1994 WL 374452, at *4 (C.D. Cal. Mar. 24, 1994).

  • 119 See, e.g., Anderson v. Michaels Stores Inc., 655 Fed. Appx. 573, 574 (9th Cir. 2016) (citing Perkin v. San Diego Gas & Elec. Co., 170 Cal. Rptr. 3d 335 (Cal. Ct. App. 2014)) (refusing to import “piggyback” limitation tolling doctrine into California state law even though California has adopted American Pipe tolling doctrine, at least when it is supported by policy considerations).

  • 120 Hatfield v. Halifax, P.L.C., 564 F.3d 1177, 1188 (9th Cir. 2009).

    The three factors controlling the application of the equitable tolling doctrine under California law are discussed in Hatfield. Id. at 1185.

  • 121 For a collection of these cases, see Tigg v. Pirelli Tire Corp., 232 S.W.3d 28 (Tenn. 2007). But cf. Thomas v. U.S. Bank, N.A., 789 F.3d 900 (8th Cir. 2015) (holding that, when Missouri legislature has not authorized equitable tolling with regards to class actions, a prior state court action based on same claims subsequently asserted in federal court by a different set of claimants did not toll applicable statute of limitations).

  • 122 Compare Lee v. Grand Rapids Bd. of Educ., 384 N.W.2d 165 (Mich. Ct. App. 1986) (filing of federal action tolled operation of statute of limitations as to state law employment discrimination claims), Staub v. Eastman Kodak Co., 726 A.2d 955, 965–967 (N.J. Super. Ct. App. Div. 1999) (statute of limitations was tolled from date that putative class action against same defendants was filed in federal court until the date that motion for certification of classes was denied), and Vaccariello v. Smith & Nephew Richards, Inc., 763 N.E.2d 160 (Ohio 2002) (the filing of a class action, whether in Ohio or the federal court system, tolls statute of limitations as to all asserted members of class who would have been parties had suit been permitted to continue as class action), with Wade v. Danek Med., Inc., 182 F.3d 281 (4th Cir. 1999) (applying Virginia law in products liability case and concluding that Virginia would not adopt cross-jurisdictional equitable tolling so as to toll limitations during pendency of class action filed in federal court of another jurisdiction), and Portwood v. Ford Motor Co., 701 N.E.2d 1102 (Ill. 1998) (filing of class action in federal court did not toll Illinois statute of limitations in Illinois courts).

  • 123 Ravitch v. PriceWaterhouse, 793 A.2d 939 (Pa. Super. Ct. 2002) (limitation periods on investor’s actions were not tolled by a prior class action filed in state court in New York by other investors). But see Hatfield v. Halifax, P.L.C., 564 F.3d 1177 (9th Cir. 2009) (applying California law and holding that prior putative nationwide class action in New Jersey courts equitably tolled limitations period for California residents only; New Jersey court had dismissed the action as to all non-resident plaintiffs).