Source: https://www.natlawreview.com/article/china-agritech-supreme-court-ends-class-action-stacking
Timestamp: 2019-04-19 20:43:56+00:00

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This week, in the closely watched case of China Agritech v. Resh,1 the U.S. Supreme Court issued an important class action ruling, holding that the tolling principles announced in its earlier American Pipe decision2 do not allow absent class members to file follow-on class action lawsuits where the statute of limitations has otherwise expired on their claims.
As we have previously noted, the question of whether American Pipe tolling applies to subsequent class action filings, not just subsequent individual actions, is important because the answer dictates whether American Pipe tolling principles enable the filing of successive (stacked) class actions in a seemingly endless effort to finally achieve certification under Federal Rule of Civil Procedure 23.
In our earlier report on oral argument in the case, we identified three critical issues on which the Supreme Court’s decision would likely turn: (1) whether absent class members who waited until after certification was denied to seek to file their own class action would be viewed as acting diligently; (2) whether a decision on class action stacking could lead to anomalous results; and (3) whether the availability of American Pipe tolling should depend on the reason for a class certification denial. Indeed, the answers to these questions proved to be outcome determinative in China Agritech.
1. Plaintiffs Who Engage in Class Action Stacking Have Not Been Diligent.
2. Permitting Class Action Stacking Would Lead to Anomalous Results.
3. The Availability of American Pipe Tolling in a Subsequent Class Action Does Not Depend on the Reason for the Underlying Class Certification Denial.
China Agritech resolves what had been a three-way split in the federal courts of appeal,19 with the Supreme Court definitively holding that American Pipe tolling does not apply to putative class members who bring subsequent, untimely class claims. In light of this ruling, pending class cases throughout the country that have relied on American Pipe tolling will likely be reexamined. Class action defendants who secure a class certification denial should have greater certainty that the class litigation will not become a multi-headed hydra.
Going forward, we may see more class cases that are filed with multiple named representatives, rather than single class representatives. Moreover, class counsel may be forced to become more cautious about selecting strongly suited lead plaintiffs, rather than settling for the first prospective plaintiff who responds to the attorney solicitation or otherwise demonstrates willingness to bring a claim. Finally, given the court’s emphasis on Rule 23(c), we would not be surprised to see some courts pressing for early class certification determinations as long as they are practicable.
 China Agritech, Inc. v. Resh, No. 17-432, 584 U.S. ___, ___ (June 11, 2018) (Slip Op., at 6).
 Slip op., at 6. Justice Sotomayor concurred with the other eight justices on the result in China Agritech, but issued a separate concurring opinion to explain that she disagreed with the breadth of the court’s holding and its analysis.
 See Menominee Indian Tribe v. United States, 136 S. Ct. 750, 755 (2016).
 Slip op., at 10 (internal citations omitted).
 Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., 559 U.S. 393 (2010).
 Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. ___ (2016).
 Some circuits previously declined to expand American Pipe to permit filing new and otherwise untimely class actions. See, e.g., Basch v. Ground Round, 139 F.3d 6, 11-12 (1st Cir. 1998); see also Griffin v. Singletary, 17 F.3d 356, 359 (11th Cir. 1994); Korwek v. Hunt, 827 F. 2d 874, 877 (2d Cir. 1987); Salazar-Calderon v. Presidio Valley Farmers Association, 765 F.2d 1334, 1351 (5th Cir. 1985). Other circuit had adopted a diametrically opposed view, holding that tolling principles permit the filing of any new and otherwise time-barred class action. See, e.g., Resh v. China Agritech, Inc., 857 F.3d 994, 1004 (9th Cir. 2017); see also Phipps v. Wal-Mart Stores, 792 F.3d 637, 652 (6th Cir. 2015); Sawyer v. Atlas Heating & Sheet Metal Works, Inc., 642 F.3d 560, 564 (7th Cir. 2011). Two other courts of appeal had adopted a hybrid approach, holding that “where class certification has been denied solely on the basis of the lead plaintiffs’ deficiencies as class representatives, and not because of the suitability of the claims for class treatment,” the tolling principle allows filing of new class claims. Yang v. Odom, 392 F.3d 97, 111 (3d Cir. 2004); accord Great Plains Trust v. Union Pacific Railroad, 492 F.3d 986, 997 (8th Cir. 2007).

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