Opinion ID: 845747
Heading Depth: 1
Heading Rank: 6

Heading: class action tolling doctrine

Text: The Court of Appeals opinion addressed only whether the relation-back doctrine applied to this case. [3] The majority opinion, however, relies solely on the class action tolling doctrine. This is a different issue governed by a different court rule. The tolling of the period of limitations in class actions is governed by MCR 3.501(F)(1). The relation back of amendments is governed by MCR 2.118(D). The majority concludes that [b]ecause the claim was not time-barred in this particular case, we need not decide whether the amendment to the class-action complaint... related back to the date of the initial filing. Ante at 97. In Michigan, class actions are governed by court rule. MCR 3.501(A) describes the nature of a class action. It provides, in relevant part: (1) One or more members of a class may sue or be sued as representative parties on behalf of all members in a class action only if: (a) the class is so numerous that joinder of all members is impracticable; (b) there are questions of law or fact common to the members of the class that predominate over questions affecting only individual members; (c) the claims or defenses of the representative parties are typical of the claims or defenses of the class[.] MCR 3.501(F)(1) provides that [t]he statute of limitations is tolled as to all persons within the class described in the complaint on the commencement of an action asserting a class action. While this court rule tolls the period of limitations for all persons within the class described in the complaint, it is utterly silent regarding those claims to which the tolling provision applies. The majority holds that MCR 3.501(F) only requires the assert[ion] of a class action to trigger the tolling of the period of limitations for all claims arising out of the same factual and legal nexus as long as the defendant has notice of the class members' claim and the number and generic identities of the potential plaintiffs. Ante at 107 n. 10. I disagree. MCR 3.501(F) codifies the United States Supreme Court's decision in American Pipe & Constr. Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974). In American Pipe, the Supreme Court held that the commencement of the original class suit tolls the running of the statute for all purported members of the class who make timely motions to intervene after the court has found the suit inappropriate for class action status. Id. at 553, 94 S.Ct. 756. One year later, in Johnson v. Railway Express Agency, Inc., 421 U.S. 454, 95 S.Ct. 1716, 44 L.Ed.2d 295 (1975), the Supreme Court held, in a non-class context, that a timely filing of a charge of employment discrimination with the Equal Employment Opportunity Commission under Title VII of the Civil Rights Act did not toll the limitations period for an action, based on the same facts, under 42 USC 1981. The Court stated, [t]he tolling effect given to the timely prior filings in American Pipe and in Burnett [ v. New York C.R. Co., 380 U.S. 424, 85 S.Ct. 1050, 13 L.Ed.2d 941 (1965)] depended heavily on the fact that those filings involved exactly the same cause of action subsequently asserted. Id. at 467, 85 S.Ct. 1050 (emphasis added). In Crown, Cork & Seal Co., Inc. v. Parker, 462 U.S. 345, 350-52, 103 S.Ct. 2392, 76 L.Ed.2d 628 (1983), the Supreme Court extended the tolling of the period of limitations to those who bring individual actions after class certification is denied and to those who elect to opt out of the class action to file individual claims. Justice Powell concurred, cautioning, however, as follows: [ American Pipe ] must not be regarded as encouragement to lawyers in a case of this kind to frame their pleadings as a class action, intentionally, to attract and save members of the purported class who have slept on their rights. The tolling rule of American Pipe is a generous one, inviting abuse. It preserves for class members a range of options pending a decision on class certification. The rule should not be read, however, as leaving a plaintiff free to raise different or peripheral claims following denial of class status. In American Pipe we noted that a class suit notifies the defendants not only of the substantive claims being brought against them, but also of the number and generic identities of the potential plaintiffs who participate in the judgment. Within the period set by the statute of limitations, the defendants have the essential information necessary to determine both the subject matter and size of the prospective litigation. When thus notified, the defendant normally is not prejudiced by tolling of the statute of limitations. It is important to make certain, however, that American Pipe is not abused by the assertion of claims that differ from those raised in the original class suit. As Justice Blackmun noted, a district court should deny intervention under Rule 24(b) to preserve a defendant whole against prejudice arising from claims for which he has received no prior notice. [ Id. at 354-355, 103 S.Ct. 2392 (Powell, J., concurring) (citations omitted).] In Dressel v. Ameribank , this Court dealt with a similar issue and fact pattern as the issue and facts in this case. In Dressel, the plaintiffs, acting on behalf of a class of similarly situated borrowers, filed a complaint in the Kent Circuit Court alleging that Ameribank violated Michigan law by charging them an excessive document preparation fee. The plaintiffs claimed, among other things, that Ameribank violated Michigan usury law and Michigan's statutory prohibition against the unauthorized practice of law by charging a $400 document preparation fee on their November 17, 1997, loan. On March 22, 1999, the circuit court certified the plaintiffs' case as a class action. On July 2, 1999, the circuit court dismissed the case, holding that Ameribank's document preparation fee did not violate Michigan's usury law and that Ameribank did not engage in the unauthorized practice of law. The plaintiffs moved for reconsideration and sought leave to amend their complaint to include, among other things, a TILA claim. On September 3, 1999, the circuit court denied their requests. The circuit court held that the plaintiffs' TILA claim was barred by the TILA's one-year statute of limitations because the plaintiffs' complaint was filed on December 21, 1998, more than 13 months after their November 17, 1997, loan. [4] In Weston v. Ameri-Bank, 265 F.3d 366 (C.A.6, 2001), the plaintiff obtained a loan from Ameribank on April 1, 1998. The bank charged the plaintiff a $350 document preparation fee. The Weston plaintiff was a member of the Dressels' class action in the Dressel case. On September 10, 1999, seven days after the Dressels' request for consideration and leave to amend their complaint was denied, the Weston plaintiff filed suit in federal district court, alleging that the $350 document preparation fee violated TILA because it was not properly disclosed. She claimed that the period of limitations on her TILA claim was tolled during the pendency of the Dressels' class action. The district court determined that the Weston plaintiff's claim was barred by the TILA's one-year statute of limitations. The Court of Appeals for the Sixth Circuit affirmed, holding that the statute of limitations for putative class members of the original class is tolled only for substantive claims that were raised, or could have been raised, in the initial complaint. Id. at 368. The majority contends that two separate views exist regarding the class-action tolling doctrine. It states that some courts have relied on Justice Powell's concurrence to conclude that the class-action tolling doctrine applies only to identical claims that were raised or could have been raised in the initial class-action complaint. The majority cites Weston in support of this proposition. The majority further contends that other courts have held that subsequent claims filed after class certification has been denied need not be identical to the original class action for tolling to apply. See Tosti v. City of Los Angeles, 754 F.2d 1485 (C.A.9, 1985); Barnebey v. EF Hutton & Co., 715 F.Supp. 1512 (M.D.Fla., 1989). Rather, they need only share a common factual and legal nexus to the extent that the defendant would likely rely on the same evidence or witnesses in mounting a defense. Ante at 105, citing Cullen v. Margiotta, 811 F.2d 698, 719 (C.A.2, 1987). The majority purportedly adopts this view, but does not recognize that even a claim that shares a common factual and legal nexus with the initial claim cannot be tolled if the period of limitations had already run on the subsequent claim before the initial complaint was filed. Simply stated, there is nothing to toll. Thus, whether the tolling doctrine applies only to substantive claims that were raised or could have been raised or to all claims arising from a common factual and legal nexus, the TILA claim in question was not, and could not have been, brought initially by class representative Cowles because the TILA's one-year period of limitations had already run before she filed her complaint. Because Paxson did not seek to intervene until after the period of limitations had also run on her TILA claim, she too could not toll the statute of limitations. Lastly, the majority, citing Justice Powell's concurrence in Crown, Cork & Seal, contends that the linchpin of whether the period of limitations is tolled under the class-action tolling doctrine is notice to the defendant of both the claims and the number and identities of the potential plaintiffs. It concludes that Paxson's TILA claim, which involved the same factual bases and the same evidence, memories, and witnesses, was not such a different or peripheral claim so that tolling is not permitted. The majority has misconstrued Justice Powell's concurrence. Justice Powell specifically noted that American Pipe must not be used as a tool to encourage lawyers to frame pleadings to attract purported class members who have slept on their rights. Crown, Cork & Seal, supra at 354, 103 S.Ct. 2392 (Powell, J., concurring). He went on to state that [t]he rule should not be read ... as leaving a plaintiff free to raise different or peripheral claims following denial of class status. Id. Finally, he noted that a class action notifies the defendant of the substantive claims being brought against them and of the number and generic identities of the people participating in the judgment. Id. Justice Powell's comments support neither Cowles's attempt to add a different claim nor the majority's conclusion in this case. To allow Cowles to bring her TILA claim now, after sleeping on her rights, does not promote the purpose of the statute of limitations of eliminating stale claims. Nor does it notify defendant of the substantive claims being brought against it. Rather, under the majority's rule, any unnamed class member may, at any time, seek to intervene and file an amendment adding different or peripheral claims, long after the period of limitations has run on such claims, as long as the claims involve the same factual and legal nexus. Michigan courts do not and should not allow tolling where the new claim involves different legal theories than those pleaded in the first case. See Dressel, supra ; Weston, supra . I would follow the Sixth Circuit's rule that the tolling doctrine applies only to substantive claims that were actually raised, or could have been raised, in the initial complaint. [5] Weston, supra at 368. Cowles's initial complaint alleged solely state law violations. Cowles did not raise, nor could she have raised, the TILA claim in her initial complaint because the period of limitations had already run. Thus, Cowles's filing of the original class action, alleging solely state law claims, did not toll the one-year period of limitations for Paxson's TILA claim. Moreover, Paxson's intervention does not alter this conclusion because she did not seek to intervene until after the period of limitations had run on her TILA claim. [6] Accordingly, I would reverse the judgment of the Court of Appeals and reinstate the trial court's grant of summary disposition to defendant.