This morning I attended the oral argument in China Agritech, Inc. v. Resh. The case arises against the backdrop of the long-standing rule declared in American Pipe and Construction Co. v. Utah (1974) that the filing of a putative class action tolls the time for absent class members to bring individual claims while the case remains pending as a potential class action. The question in China Agritech is whether American Pipe's equitable tolling rule applies beyond the context of individual actions and also allows absent class members to file a successive putative class action after the statute of limitations period has run.
It is too early to tell how the Court will rule, and the Justices had tough questions for both sides. (The transcript is available here (pdf)). As questions from at least two of the Justices indicated, the American Pipe rule itself has been controversial, and it is not necessarily clear that the Court would adopt the same rule today. The central justification for the American Pipe rule was to protect absent class members (whether they are aware of a pending class action or not) from needing to join as parties or intervene in the class action, or (as the Court later held in Crown, Cork & Seal Co. v. Parker (1983)) to file their own individual actions.
But as the Chief Justice put it, successive class actions "might be different . . . because if you allow the second" class action to be filed outside the statute of limitations, "you've got to allow the third and then the fourth and the fifth. And there's no end in sight." Likewise, Justice Gorsuch asked, "can you stack them forever, so that [plaintiffs may] try, try again, and the statue of limitations never really has force in these cases?"
Counsel for the plaintiff argued that this result might not occur in practice because plaintiffs' counsel would not bring successive class actions unless they could come up with a different reason why the class should be certified in their case, and courts could police against new class actions by choosing to deny certification on the basis of comity. And in any event, he suggested that the risk of successive class actions is the necessary consequence of the American Pipe doctrine, contending that once an individual plaintiff is able to take advantage of equitable tolling to bring a new action outside the statute of limitations, he or she should be able to use any of the devices available under the Federal Rules of Civil Procedure—including a new class action under Rule 23.
My take: The concerns that led the Court to adopt the American Pipe rule are focused on protecting absent class members who in theory rely upon a pending class action to redress their claims. But those concerns do not (and should not) extend to people who wish to serve as representative plaintiffs in a new class action. Such potential class representatives (and their lawyers) should be encouraged to file competing class actions sooner rather than later. That approach would afford district courts an opportunity at the outset to identify the best lead plaintiffs and interim lead counsel. And it would spare courts and defendants from the costs and burdens of an endless daisy chain of class actions that could reach years—if not decades—into the past.
Originally published March 26, 2018
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