Opinion ID: 616615
Heading Depth: 2
Heading Rank: 2

Heading: Statute of Limitations and Class Certification

Text: We review the question of the application of the relevant statute of limitationsas we do all questions of law de novo. United States v. Domino Sugar Corp., 349 F.3d 84, 86 (2d Cir.2003). However, [a] district court's certification of a class under Rule 23 is reviewed for abuse of discretion, provided that . . . the court applied the proper legal standard[]. Brown v. Kelly, 609 F.3d 467, 475 (2d Cir.2010). This standard applies both to the district court's ultimate decision on class certification and to its rulings as to the individual Rule 23 requirements. Id.
1. Accrual of the Statute of Limitations. The Federal Rules of Civil Procedure permit maintenance of a class action only if the class is so numerous that joinder of all members is impracticable. Fed.R.Civ.P. 23(a)(1). This numerosity requirement does not mandate that joinder of all parties be impossibleonly that the difficulty or inconvenience of joining all members of the class make use of the class action appropriate. Cent. States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C., 504 F.3d 229, 244-45 (2d Cir.2007). Determination of practicability depends on all the circumstances surrounding a case, not on mere numbers. Robidoux v. Celani, 987 F.2d 931, 936 (2d Cir.1993). Nonetheless, several district courts in our Circuit have suggested that courts are likely to conclude that the numerosity requirement is satisfied when the class comprises 40 or more members and unlikely to be satisfied when the class comprises 21 or fewer. Ansari v. N.Y. Univ., 179 F.R.D. 112, 114 (S.D.N.Y.1998). In this case, the question of whether the certified class was sufficiently large to satisfy Rule 23 hinges on whether the statute of limitations for each class member's claim began to run upon receipt of his first pension payment, as the defendants contend, or upon a class member's first inquiry to the Fund regarding the amount of his benefits and the Fund's rejection of his request that his pension be calculated using one rate, as the district court concluded and as Novella urges on appeal. The parties agree that a six-year statute of limitations governs ERISA claims and that [t]he relevant date for fixing the accrual of a miscalculation claim is when a plaintiff was put on notice that the defendants believed the method used to calculate his disability pension was correct. Appellants' Br. 26 (brackets omitted) (quoting Novella III, 443 F.Supp.2d at 545); see also id. at 27 (The Fund agrees with the . . . sentence quoted above. It makes perfect sense for a claim to accrue when the participant is put on notice that the Fund `believed the method used to calculate his disability pension was correct.'); Appellees' Br. 57 (asserting that federal courts generally apply a discovery rule for the purposes of triggering the statute of limitations on an ERISA benefit claim). The parties dispute, however, the time at which a pensioner can be considered to have been put on such notice. The issue is undecided in this Circuit. [20] The defendants urge us to reject the district court's determination that the statute of limitations on a class member's claim does not begin to run until a prospective class member inquires about the calculation of his benefits and the Plan rejects his claim that the benefits were miscalculated, Novella III, 443 F.Supp.2d at 545, and the court's consequent finding that the existence of twenty-four class members whose claims were therefore timely meant that the class was numerous enough to meet the requirement of Rule 23(a)(1) of the Federal Rules of Civil Procedure. They argue that we should instead adopt a strict first-payment approach under which the statute of limitations for a miscalculation claim would begin to run when the pensioner receives his first check. In support, the defendants point to Miller v. Fortis Benefits Insurance Co., 475 F.3d 516 (3d Cir.2007), in which the Third Circuit concluded that the statute of limitations on a claim that benefits have been miscalculated starts to run when the calculation or repudiation is both clear and made known to the beneficiary. Id. at 521-22. The Miller court observed that this ordinarily will be when [the beneficiary] first receives his miscalculated benefit award because [a]t that point, the beneficiary should be aware that he has been underpaid and that his right to a greater award has been repudiated. Id. The court explicitly reject[ed] the rule proposed by the plaintiff in that case, which would have required a formal denial of benefits to trigger the statute of limitations. Id. at 521. The court did, however, require that a Fund's repudiation of the benefits [be] clear and [be] made known to the beneficiary in order for the limitations period to begin running. Id. at 520-21 (emphasis in original). The court explained that it consider[ed] the clear repudiation concept to be useful . . . , as it represents a refinement of the federal discovery rule in the context of ERISA claims for benefits. Id. at 521. The defendants rely on Miller to support their contention that the Third Circuit has adopted a strict first-payment test for the accrual of the statute of limitations in ERISA miscalculation claims, and argue that we should follow suit. Some other courts, however, including the district court in this case, have required that an ERISA fund provide a formal denial of a plaintiff's application for the adjustment of benefits to trigger the running of the statute of limitations. In Miele v. Pension Plan of New York State Teamsters Conference Pension & Retirement Fund, 72 F.Supp.2d 88 (E.D.N.Y. 1999), for example, the court considered the argument that a miscalculation claim accrues on the date that a plaintiff is clearly and unequivocally informed of the amount of his benefit. Id. at 99. The court noted the logic and appeal of such a bright-line rule, which would be easily enforced and would correspond directly to the . . . rule that a clear and unequivocal denial of benefits commences the statute of limitations period. Id. (emphasis added). But, mindful of the fact that a miscalculation generally involves an award of benefits rather than a denial of benefits and thus is less likely to put a plaintiff on notice of a possible claim, id., the Miele court applied the rule adopted by the district court here: that a miscalculation claim does not accrue until a plaintiff `inquires about the amount of benefits and is told that those benefits were correctly computed.' Id. (brackets and ellipses omitted) (quoting Kiefer v. Ceridian Corp., 976 F.Supp. 829, 843 (D.Minn.1997)). Still other courts have applied a continuing-violation theory to the accrual of a claim in similar circumstances. See Meagher v. Int'l Ass'n of Machinists & Aerospace Workers Pension Plan, 856 F.2d 1418 (9th Cir.1988). Under this theory, each payment based upon an alleged miscalculation constitutes a fresh breach by the [defendants] of their duty to administer the pension plan in accordance . . . with ERISA, gives rise to [a] separate cause of action, and starts the running of a new limitations period . . . for each cause of action. Id. at 1423. Many courts have, however, expressly rejected this method. See, e.g., Miller, 475 F.3d at 522 (collecting Third Circuit cases declining to apply a continuing-violation approach to claim accrual); Edes v. Verizon Commc'ns, Inc., 417 F.3d 133, 139-40 (1st Cir.2005) (rejecting a continuing-violation theory where the wrongful conduct was the defendant's single misclassification of plaintiffs as off-payroll employees); Pisciotta v. Teledyne Indus., 91 F.3d 1326, 1332 (9th Cir. 1996) (Although the [plaintiffs] now contend that each and every time that they were entitled to a reimbursement payment it constituted a new and separate breach of ERISA . . . , the applicable four-year statute of limitations begins to run `when a plaintiff knows or has reason to know of the injury that is the basis of the action.'); Phillips v. Alaska Hotel & Rest. Emps. Pension Fund, 944 F.2d 509, 520-21 (9th Cir.1991) (declining to apply a continuing-violation approach), cert. denied, 504 U.S. 911, 112 S.Ct. 1942, 118 L.Ed.2d 548 (1992). We do not adopt the continuing-violation theory. We think that method is appropriate in ERISA cases, as elsewhere, only where separate violations of the same type, or character, are repeated over time. L.I. Head Start Child Dev. Servs., Inc. v. Econ. Opportunity Comm'n of Nassau County, Inc., 558 F.Supp.2d 378, 400 (E.D.N.Y.2008). Usually, [t]hese cases are marked by repeated decision-making, of the same character, by the fiduciaries. Id. But it is not as clear a fit in cases where, as here, the plaintiff['s] claims are based on a single decision that results in lasting negative effects. Id. at 401; see also Schultz v. Texaco, Inc., 127 F.Supp.2d 443, 447 (S.D.N.Y.2001) ([T]he mere fact that the effects of a single, wrongful act continue to be felt over a period of time does not render that single, wrongful act a single `continuing violation.'); Miele, 72 F.Supp.2d at 102 n. 14 (rejecting application of the continuing-violation theory of accrual because a pension fund has no obligation to continually reassess claim denials or benefit underpayments on a monthly basis). We also decline, however, to accept either of the approaches urged by the parties. The defendants' bright-line approach is too harsh in that it places the burden on the pensionera party less likely to have a clear understanding of the terms of the pension plan and their application to his caseto confirm the correctness of his pension award immediately upon the first payment of benefits, regardless of the complexity of the calculations, or of the adequacy of the defendants' explanation of the basis for the calculation. Indeed, this case illustrates the hazards of the defendants' approach. The SPDthe document provided to all Plan participants, including Novella and the plaintiff class, to explain the rules of the pension planis silent on the underlying issue of multiple benefit calculation rates for Disability Pensions. And, unlike the simple percentage calculation at issue in Miller, see Miller, 475 F.3d at 522; cf. Young v. Verizon's Bell Atl. Cash Balance Plan, 615 F.3d 808, 816 (7th Cir.2010) (finding a claim timely because the lump-sum payment the plaintiff received more than six years before was not so inconsistent with her current claim for additional benefits as to serve as a clear repudiation), cert. denied, ___ U.S. ___, 131 S.Ct. 2924, 179 L.Ed.2d 1245 (2011), the determination of a Disability Pension award under the defendants' Plan may have required more than a simple multiplication of two static numbers. [21] The district court's and Novella's bright-line approachin which a limitations period does not begin to run until a prospective class member inquires about the calculation of his benefits and the Plan rejects his claim, Novella III, 443 F.Supp.2d at 545also poses problems. Under that method, a pensioner could collect benefit checks for twenty or thirty years without any obligation to inquire as to the correctness of the calculations underlying the benefit payments and could still thereafter assert a timely claim for miscalculation. Indeed, as the defendants point out, at least one class member is long dead. See Appellants' Br. 29-30. Allowing that class member's survivors to pursue his claim, the defendants say, despite the fact that he collected his benefits for years before passing away, would undermine the purpose of a statute of limitations. See, e.g., Order of R.R. Telegraphers v. Ry. Express Agency, Inc., 321 U.S. 342, 348-49, 64 S.Ct. 582, 88 L.Ed. 788 (1944) (Statutes of limitation . . . in their conclusive effects are designed to promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared.); Carey v. Int'l Bhd. of Elec. Workers Local 363 Pension Plan, 201 F.3d 44, 47 (2d Cir.1999) (Statutes of limitation serve several important policies, including rapid resolution of disputes, repose for those against whom a claim could be brought, and avoidance of litigation involving lost evidence or distorted testimony of witnesses.). To the extent that the defendants could show that the deceased class member or his survivors had information available to them by which they reasonably could have discovered the alleged miscalculation, the district court might well agree with the defendants that permitting his survivors to assert a claim more than six years after receiving such information would be inequitable. Having rejected each party's views, we choose a third approach: We conclude that notice of a miscalculation can be imputed to a pensionerand the statute of limitations will start to runwhen there is enough information available to the pensioner to assure that he knows or reasonably should know of the miscalculation. We think this method best balances a pension plan's legitimate interest in predictability and finality with a pensioner's equally legitimate interest in having a fair opportunity to challenge a miscalculation of benefits once it becomes knownor should have become knownto him. Stated another way, this case-by-case reasonableness inquiry mitigates some of the harshness of the defendants' proffered approach, while better respecting the defendants' interests in finality and repose than the district court's and Novella's chosen method. [22] We think this method is consistent with the Third Circuit's reasoning in Miller, which we read to endorse not a strict first-payment theorysuch as that urged by the defendantsbut rather a similar reasonableness approach. Indeed, in Miller, the Third Circuit appeared to contemplate that its clear repudiation rule would vary in its application to the facts of any individual case. See Miller, 475 F.3d at 521 (rejecting the plaintiff's proposed application of the clear repudiation rule, which would have required an explicit demand and refusal, and concluding that a court should ask when a beneficiary knows or should know he has a cause of action (emphasis added)); see also Fletcher v. Comcast Comprehensive Health and Welfare Plan, No. 209-cv-1272, 2011 WL 743459, at , , 2011 U.S. Dist. LEXIS 18199, at, , - (W.D.Pa. Feb. 24, 2011) (noting that Miller . . . does not stand for the proposition that every erroneously calculated benefit award automatically serves as a `clear repudiation,' and holding that [a] reasonable finder of fact could conclude that . . . [communications between the Plan and the plaintiff beneficiary] did not suffice to alert plaintiff that his benefits were being repudiated). Turning to the present case: In light of the standard we adopt, on the factual record before us, we are unable to determine whether, and if so when, each class member had information by which he knew or should have known of the miscalculation. We note that, based on the foregoing discussion, simply receiving a lower pension payment is not enough to put a pensioner on notice of a miscalculation. Conversely, actual notice to a pensioner that a double rate method was used would put him on notice. Similarly, informing a pensioner of the correct rate-times-units calculation, so that any difference between the putative calculation and the actual amount of the check would be obvious, is also probably enough. However, we cannot yet tell how many of the class members' claims are timely. We therefore cannot, at this stage of the proceedings, confirm the district court's conclusion that the class is sufficiently large to satisfy Rule 23(a)(1)'s numerosity requirement. We therefore vacate the class certification and remand to the district court for further factfinding regarding when each plaintiff class member knew or should have known that the Fund had miscalculated his Disability Pension payments, and for consideration of whether there are enough class members with timely claims to merit certification. We therefore also vacate the summary judgment in favor of the class. Finally on this score, we note that the method we adopt may in some cases require a resource-intensive, claimant-by-claimant inquiry to determine when a pensioner knew or reasonably should have known that his benefits were miscalculated. And this fact-dependent inquiry into each pensioner's accrual date may in turn lessen the value, and indeed the availability, of class actions in this kind of litigation. However, that sort of problem is not unique to this context. See, e.g., Avila v. Willits Envt'l Remediation Trust, 633 F.3d 828, 841-42 (9th Cir.) (concluding that material issues of fact precluded summary judgment regarding whether certain class members in toxic-tort class action knew or should have known of their injuries), cert. denied, ___ U.S. ___, 132 S.Ct. 120, ___ L.Ed.2d ___, 2011 WL 4530474 (Oct. 3, 2011); In re Brooklyn Navy Yard Asbestos Litig., 971 F.2d 831, 836 n. 1 (2d Cir. 1992) (differentiating between joint trials which are not questioned by plaintiffs or defendants in mass tort cases from the issue of the propriety of class actions in such cases). Moreover, the fact-intensive nature of our reasonableness approach could make it difficult for a potential class representative to meet the typicality requirement of Fed.R.Civ.P. 23(a)(3). But the case law on the effect of an individualized statute-of-limitations-accrual evaluation on a proposed class's ability to meet the typicality requirement, if any, is sparse, see Chiang v. Veneman, 385 F.3d 256, 269 (3d Cir.2004); Ruppert v. Alliant Energy Cash Balance Pension Plan, 255 F.R.D. 628, 633-34 (W.D.Wis.2009), and we decline to address whether that requirement is satisfied on the record before us. We note, however, the well-established rule that a plaintiff must satisfy all of the requirements of Rule 23, by a preponderance of the evidence, to obtain class certification, see Teamsters Local 445 Freight Div. Pension Fund v. Bombardier, Inc., 546 F.3d 196, 202 (2d Cir.2008); In re Initial Pub. Offerings Sec. Litig., 471 F.3d 24, 41 (2d Cir.2006), including the numerosity and typicality requirements of Rule 23(a), see Marisol A. v. Giuliani, 126 F.3d 372, 375-76 (2d Cir.1997) (citing Comer v. Cisneros, 37 F.3d 775, 796 (2d Cir.1994)). 2. Novella's Cross-Appeal. We find no merit in Novella's contention, asserted in his cross-appeal, that the certified class was too narrow inasmuch as the district court should not have limited it to persons receiving Disability Pensions. Novella's amended complaint asserted claims relating both to the two-rate calculation for disability pensioners and to the Plan's accrued benefit provisions. See J.A. 30-31. The district court granted summary judgment to Novella on his individual Disability Pension claims and did not reach the other accrued benefit claims, but rather dismissed them as moot in light of the fact that the other claims would entitle Novella to no further relief. When Novella subsequently moved for class certification with regard to both the Disability Pension claim and the other claims, the district court certified only the former class because it concluded that Novella lost standing to pursue the accrued benefit claims when he had already succeeded on an alternative theory of recovery. Novella II, 2004 WL 3035405, at , 2004 U.S. Dist. LEXIS 26149, at . Novella asserts in his cross-appeal that the district court confused the mootness of an issue with the mootness of a case, Appellee's Br. 16 (emphasis in original), and therefore erred in dismissing Novella's non-Disability Pension claims as moot. We agree that the claims were not moot in the technical sense; it is cases rather than reasons that become moot within the meaning of Article III. [23] Air Line Pilots Ass'n Int'l v. UAL Corp., 897 F.2d 1394, 1397 (7th Cir.1990). But where, as here, a litigant asserts multiple arguments in support of the relief he seeks, and the court grants him complete relief based upon one contention, courts also sometimes use the word `moot'. . . to refer to an issue that need not be decided in light of the resolution [by the court] in the same opinion of another issue. Id. It is in this sense that we understand the district court to have said that some of Novella's claims were moot. In any event, we agree with the district court's decision not to certify the broader class. It was Novella's choice to proceed individually first and only later move for class certification. In his briefing on his individual motion for summary judgment, Novella offered his various arguments in support of his motion in the alternative. See Novella I, 2004 WL 1752820, at , 2004 U.S. Dist. LEXIS 1266, at . The district court granted Novella complete relief on one claim and, in the exercise of its discretion, did not decide the merits of the others. It is the latter, unresolved claims that relate to the broader class for which Novella later sought certification. But by the time Novella moved for class certification, his individual claims no longer matched the claims of the broader purported class, and he therefore was no longer an appropriate representative of that broader class. [24] Stated otherwise, Novella's interest as a litigant would be to pursue the claim based on the Disability Pensions, while some class members' interest would be to pursue the claims based on the Plan's accrued benefit provisions instead. Novella therefore would not satisfy the typicality or adequacy-of-representation prongs of Rule 23(a).