Commercial Litigation and Arbitration

Federal Circuit Applies American Pipe to Opt-In Class Actions in Court of Federal Claims — Circuit Split on Opt-In Classes and American Pipe

From Bright v. United States, 603 F.3d 1273 (Fed. Cir. May 3, 2010):

[W]e hold that when a class action complaint is filed in the Court of Federal Claims and class certification is sought prior to expiration of the section 2501 limitations period, the limitations period is tolled. The limitations period is tolled during the period the court allows potential class members to opt in to the class. ***

American Pipe, Crown, Cork & Seal, Stone Container, and Arctic Slope outline the framework of class action tolling, as applied both against private parties and against the government. None of these cases, however, addressed class action tolling of the limitations period in 28 U.S.C. § 2501 under RCFC 23. Whether class action tolling is available for opt-in classes in the Court of Federal Claims is an issue of first impression for this court. ***

The question before us is this:

When a class action complaint is filed in the Court of Federal Claims within the six-year limitations period of 28 U.S.C. § 2501 by one named plaintiff, are putative class members permitted to opt in under RCFC 23 after expiration of the limitations period, when class certification was sought prior to expiration of the limitations period, but the complaint was not amended to add other named plaintiffs as putative class members until after expiration of the limitations period?

We consider first the difference between the opt-out procedure of FRCP 23 that was at issue in American Pipe and the opt-in procedure of RCFC 23. In American Pipe, the Supreme Court noted that under the prior version of FRCP 23, which embodied an opt-in procedure, there existed a difference of opinion among federal appeals and trial courts as to whether parties should be allowed to join or intervene as members of a "spurious" class after the termination of a limitations period, when the initial class action complaint was filed before the period had run. 414 U.S. at 549. The court observed that "[a] majority of the courts ruling on the question, emphasizing the representative nature of a class suit, concluded that such intervention was proper." ***

For example, in York v. Guar. Trust Co., 143 F.2d 503 (2d Cir. 1944), rev'd on other grounds, 326 U.S. 99, 65 S. Ct. 1464, 89 L. Ed. 2079 (1945), the Second Circuit took the position that the filing of the initial class action complaint, even in a "spurious" class action, commenced the action for the class. The court reasoned that to hold otherwise, and deny potential class members "the benefit, by intervention, of the institution of the suit by plaintiff would be to convert the Rule into a trap." 143 F.2d at 528. Likewise, in Escott v. Barchris Constr. Corp., 340 F.2d 731, 733 (2d Cir. 1965), the court permitted intervention by additional plaintiffs after the statute of limitations had run because the original action had been instituted within the statutory period. The court tolled the statute of limitations "for those in whose behalf the representative action is brought as well as for those who actually bring the action." Id. 733-34 (noting "it is certain that the existence of a representative action which does not have the effect of tolling the statute does constitute a trap."). The minority view, the Supreme Court stated, was that "since a spurious class action was essentially a device to permit individual joinder or intervention, each individual also participating would have to satisfy the timeliness requirement." American Pipe, 414 U.S. at 550.

A split of authority has continued in the wake of American Pipe. In Sperling v. Hoffmann-La Roche, Inc., 24 F.3d 463, 471 (3d Cir. 1994), the Third Circuit applied tolling to opt-in class actions under the Age Discrimination in Employment Act ("ADEA"). The court did so because "application of principles of legal tolling to a class action for age discrimination is . . . consistent with the three basic purposes a statute of limitations serves." The contrary view is exemplified by Grayson v. K Mart Corp., 79 F.3d 1086 (11th Cir. 1996). There, the Eleventh Circuit reasoned that tolling should not apply to plaintiffs suing under the ADEA, because "opt-in plaintiffs commence an ADEA civil action, not when the Complaint is filed, but when the putative plaintiff files a written consent to opt into the class action." ***

Viewing the split of authority both pre-and post-American Pipe, we find ourselves in agreement with the courts holding that class action tolling is available under an opt-in scheme. In our view, such a result is most consistent with the objectives which class action procedures are meant to achieve. See, e.g., Crown, Cork & Seal, 462 U.S. at 351 (reasoning that if the statute of limitations were not tolled by the filing of a class action, "[t]he result would be a needless multiplicity of actions--precisely the situation that [FRCP] 23 and the tolling rule of American Pipe were designed to avoid."); see also, Escott, 340 F.2d at 733 (stating that the "obvious desirability of avoiding a multiplicity of actions turns us toward favoring the representative suit and encouraging its use."); Basch v. Ground Round, Inc., 139 F.3d 6, 10 (1st Cir. 1998) ("[i]n American Pipe the Supreme Court balanced the policies served by the class action rule, [FRCP] 23, and the policies served by the statute of limitations."). In short, we think that, all other considerations being equal, the laudable goal of avoiding "multiplicity of actions" should prevail.

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