Commercial Litigation and Arbitration

Class Actions — Circuit Splits on the Application of American Pipe

Barkley v. Woodbury County, 2012 U.S. Dist. LEXIS 71747 (N.D. Iowa May 23, 2012):

3. The tolling rule for members of a prior putative class

a. The general rule

The Eighth Circuit Court of Appeals has explained the "American Pipe rule," as follows:

In American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974), the Supreme Court held that an applicable statute of limitations is tolled during the pendency of a class action for putative class members who intervene after the denial of class certification — at least where certification is denied for failure to meet the numerosity requirement of Rule 23 of the Federal Rules of Civil Procedure. Id. at 552-53, 94 S.Ct. 756. The American Pipe rule is designed to protect the federal procedural interest by preventing duplicative litigation from purported class members during the period that certification is pending. Id. at 553, 94 S.Ct. 756. The American Pipe rule has been extended to purported members of the class who later file individual suits rather than intervene. Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 350, 103 S.Ct. 2392, 76 L.Ed.2d 628 (1983). Whether the American Pipe rule applies to subsequent class actions, however, depends on the reasons for the denial of certification of the predecessor action. See Yang v. Odom, 392 F.3d 97, 111 (3d Cir. 2004) ("[W]here class certification has been denied solely on the basis of the lead plaintiffs' deficiencies ... not because of the suitability of the claims for class treatment, American Pipe tolling applies to subsequent class actions."), cert. denied, 544 U.S. 1048, 125 S.Ct. 2294, 161 L.Ed.2d 1088 (2005); Catholic Soc. Servs., Inc. v. INS, 232 F.3d 1139, 1149 (9th Cir. 2000) (en banc) (holding that the filing of a previous class action tolled the applicable statute for a later class action where the later action was not an attempt to relitigate the denial of certification or correct a procedural deficiency in the purported class).

Great Plains Trust Co. v. Union Pacific R. Co., 492 F.3d 986, 997 (8th Cir. 2007).

b. Individual claims vs. class claims

The Barkley Plaintiffs assert, and the defendants never clearly dispute, that tolling pursuant to the "American Pipe rule" applies, at least in some circumstances, to subsequent class claims as well as to subsequent individual claims. The Barkley Plaintiffs also contend that, in Great Plains Trust, the Eighth Circuit Court of Appeals recognized that individual claims are tolled during the pendency of a prior class action, without regard to the reasons that certification of the prior class is denied, even if the tolling effect of the prior class action for subsequent class claims depends upon the reasons for denial of certification of the prior class. This argument is central to the Barkley Plaintiffs' assertion that, whether or not American Pipe tolling applies to their class claims, their individual claims were tolled, and their Amended Complaint is not subject to dismissal in its entirety. ***

[I]n American Pipe, the Court considered the tolling effect of the prior class action only as to individual claims, not as to class claims, and then only as to intervenors, not as to plaintiffs who initiate separate actions. Therefore, American Pipe does not appear to address at all the question of whether class claims are tolled.

Some courts have suggested that there is a split in the Circuit Courts of Appeals on the question of whether American Pipe tolling even applies to subsequent class claims. See generally Sawyer v. Atlas Heating and Sheet Metal Works, Inc., 642 F.3d 560, 563 (7th Cir. 2011). Assuming that there is such a split, the decision in Great Plains Trust places the Eighth Circuit Court of Appeals squarely on the side of the split holding that tolling does apply to subsequent class claims, because that decision unambiguously states that "the American Pipe rule applies to subsequent class actions," albeit with some limitations. 492 F.3d at 997.

Footnote 5. In Sawyer, the Seventh Circuit Court of Appeals noted,

As the district judge and the parties understand the cases, five courts of appeals have concluded that successive suits that rely on American Pipe's tolling principle never may proceed as class actions, while three courts of appeals have held otherwise. Compare Basch v. Ground Round, Inc., 139 F.3d 6 (1st Cir. 1998); Korwek v. Hunt, 827 F.2d 874 (2d Cir. 1987); Salazar--Calderon v. Presidio Valley Farmers Association, 765 F.2d 1334, 1351 (5th Cir. 1985); Andrews v. Orr, 851 F.2d 146, 149 (6th Cir. 1988); and Griffin v. Singletary, 17 F.3d 356 (11th Cir. 1994) (all holding that the successive suits cannot proceed as class actions), with Yang v. Odom, 392 F.3d 97, 111 (3d Cir. 2004); Great Plains Trust Co. v. Union Pacific R.R., 492 F.3d 986, 997 (8th Cir. 2007); and Catholic Social Services, Inc. v. INS, 232 F.3d 1139, 1147-49 (9th Cir. 2000) (en banc) (all holding that the successive suits may be certified as class actions). The parties ask us to choose sides.

Sawyer, 642 F.3d at 563. The Seventh Circuit Court of Appeals concluded, however, that "[t]here is no conflict," explaining,

The decisions collected in the preceding paragraph concern, not the statute of limitations or the effects of tolling, but the preclusive effect of a judicial decision in the initial suit applying the criteria of Rule 23. The opinions that Atlas Heating reads as holding that a plaintiff who relies on American Pipe to toll the statute of limitations cannot represent a class actually hold instead that a decision declining to certify a class in the first suit binds all class members, who cannot try to evade that decision by asking for a second opinion from a different judge. Class members must abide by the first court's understanding and application of Rule 23.

Sawyer, 642 F.3d at 563-64; see also Bright v. United States, 603 F.3d 1273, 1285 (Fed. Cir. 2010) (noting a split in the circuits on the considerably narrower question, not at issue here, of whether American Pipe permits the tolling of opt-in class actions under the Age Discrimination in Employment Act (ADEA)).

As the Ninth Circuit Court of Appeals recently recognized, the Circuit Courts of Appeals are also "split on whether American Pipe tolls the statute of limitations for an individual among a plaintiff-class who files an untimely, individual lawsuit before the disposition of a certification motion in the class action litigation. Compare State Farm Mut. Auto. Ins. Co. v. Boellstorff, 540 F.3d 1223, 1234 (10th Cir. 2008) (tolling limitations period); In re Hanford Nuclear Reservation Litig., 534 F.3d 986, 1009 (9th Cir. 2008) (same), with Wyser--Pratte Mgmt. Co. v. Telxon Corp., 413 F.3d 553, 569 (6th Cir. 2005) (refusing to toll limitations period under Ohio law); Glater v. Eli Lilly & Co., 712 F.2d 735, 739 (1st Cir. 1983) (refusing to toll limitations period)." Albano v. Shea Homes Ltd. Partnership, 634 F.3d 524, 535 n.8 (9th Cir. 2011). That issue is not presented in this case, however.

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