Ninth Circuit Holds that American Pipe Tolls Statute of Limitations for Absent Class Member Who Files Suit Before Class Certification Decided

Deciding what it described as an issue of first impression in the Circuit, the Ninth Circuit held in In re Hanford Nuclear Reservation Lit., 2008 U.S. App. LEXIS 16479 (9th Cir. July 29, 2008), that Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974) tolls the statute of limitations for a plaintiff who files a separate action pending class certification:

[I]n WorldCom. In re Worldcom Sec. Litig., 496 F.3d 245, 256. (2nd Cir. 2007), ... [t]he Second Circuit ... held that American Pipe tolling does apply to plaintiffs who file their actions before a decision on class certification. The Second Circuit explained that applying American Pipe tolling to plaintiffs who filed individual suits before certification is consistent with the purpose underlying statutes of limitations. Id. at 255. Statutes of limitations are intended to provide notice to defendants of a claim before the underlying evidence becomes stale. As the Supreme Court held in American Pipe, however, the filing of a timely class action provides defendants with notice of the claim, so a follow-on individual suit cannot surprise defendants. Id.

The Second Circuit also reasoned that although the American Pipe doctrine protects plaintiffs from being forced to file suit before the certification decision, that doesn't mean that plaintiffs who file before certification are not entitled to tolling. Id. at 256. They have a right to file at the time of their choosing and denying tolling would diminish that right. We find the Second Circuit's reasoning persuasive and adopt it.

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