Page 21 - Ohio Vol 4 No 7

SHELLY FLEMING | Class Actions
SCOTUS Revisits American Pipe Decision,
Prohibits Application of Equitable Tolling in
Successive Class Actions
OnJune 11, 2018, the limitation from expiring, noting that United States Supreme this was “precisely the multiplicity of Court considered the activity which Rule 23 was designed
RECENT DECISION IN
CHINA AGRITECH
In China Agritech, Inc. v. Resh (2018), 138 S.Ct. 1800, the court had before it the third nearly identical class action led against the defen- dant, alleging violations of the Se- curities Exchange Act. e question posed was whether American Pipe permitted, upon the denial of class certi cation, an individual, instead of intervening or ling an individual suit, to le a successive class action. e court resolved this question in the negative, nding tolling only ap- plicable if the individual would bring an individual suit.
e court noted it was best to have all potential class representatives come forward at once. It also found that the language of Federal Civil Rule 23 now mandates that class cer- ti cation be resolved as early as prac- ticable, reasoning that such language evidences an intent that readdressing class certi cation in successive ac- tions not be permitted. Finally, the court reasoned that for equitable toll- ing of the statute of limitations to ap- ply, a plainti would need to demon- strate that they had not slept on their rights. An individual who wishes to be a representative in a class action is not acting diligently in waiting for an outcome in an existing class action.
TOLLING RULE
In reading American Pipe, Crown, and China Agritech together, the court has set clear boundaries for when equitable tolling applies in class actions. e statute of limitations is tolled where class
certi cation was
denied, and an in-
dividual intervenes
in the pending ac-
tion or le their
own individual
suit.
scope of its 1974 holding in Ameri- can Pipe & Const. Co. v. Utah (1974), 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 a then-groundbreaking case for class action attorneys. American Pipe allowed for the statute of limitations to be tolled for any individual who would have been part of a class ac- tion had it been certi ed, allowing them to intervene in a pending action upon the denial of class certi cation. In Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 350, 103 S.Ct. 2392, 76 L.Ed.2d 628, the court expanded the scope of American Pipe allowing indi- viduals to le their own separate ac- tion a er the denial of class certi ca- tion. In June, the U.S. Supreme Court dialed back its enthusiasm for Ameri- can Pipe, nding that where class cer- ti cation is denied, individuals can intervene in the pending action or le their own individual action, but the statute of limitations is not tolled for purposes of ling a successive class action.
AMERICAN PIPE
Utah brought a class action civil suit for violations of the Sherman Act. e defendants moved to deny class certi cation, which the court granted. Just days later, a group of over sixty municipalities and water districts led motions to intervene, both as of right under Rule 24(a)(2), and by permission under Rule 24(b)(2). e court denied the motion holding that the statute of limitations had expired.
e U.S. Supreme Court held that the putative class members were parties to the suit, reasoning that to hold otherwise would frustrate the purpose of class actions suits by re- quiring each individual to intervene in the action to keep their statute of
to avoid...” e court held that where the class action status was denied, “the commencement of the origi- nal class suit tolls the running of the statute for all purported members of the class who make timely motions to intervene a er the court has found the suit inappropriate for class action status.”
EXPANSION BY CROWN
In Crown, an African-American male petitioner led a charge with the Equal Employment Opportunity Commission (EEOC) against his em- ployer. e EEOC sent him a Notice of Right to Sue under the Civil Rights Act, giving him 90 days to le suit. He took no immediate action. During the pendency of the EEOC review, two other employees of the same employer led a putative class action suit against the employer, seeking to represent a class which would have covered the petitioner. e court de- nied the motion for class certi cation, and the action proceeded individu- ally. e petitioner, nearly two years a er receiving his Notice of Right to Sue, but within 90 days of the denial of class certi cation, led suit. e employer argued that the action was time-barred, but the employee main- tained that the statute of limitation wastolledduringthependencyofthe putative class action until class certi - cation was denied.
e U.S. Supreme Court agreed with the employee, extending its holding in American Pipe. While the defendant in that case argued that American Pipe applied only to inter- venors, the court clari ed that indi- viduals were not required to intervene in the action in which class certi ca- tion was denied but could le their own individual action.
AttorneyAtLawMagazine.com
Shelley Fleming has experience in class actions, employment law, domestic relations and criminal law. She gradu- ated from Ohio Northern University Pettit College of Law in 2006, where she was a Dean’s Scholarship recipient. Shelley also holds a Bachelor of Arts in political science and an MA in history from Cleveland State University. She conducts in-depth research on consumer protection claims and laws nationwide, and also drafts motions and appellate briefs. She may be reached by calling (440) 352-3391.
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