Opinion ID: 483247
Heading Depth: 4
Heading Rank: 1

Heading: The Filing of a Prior Class Action

Text: 91 In American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974) (American Pipe ), in the context of a private action to enforce the federal antitrust laws, the Supreme Court approved the intervention of third parties on whose claims the statute of limitations would otherwise have run, on the ground that the commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action. Id. at 554, 94 S.Ct. at 766. The Court reasoned that tolling was necessary to further the purposes of Fed.R.Civ.P. 23's provision for class actions, and that no injustice was done to the defendant, since the timely commencement of the class action against it provides adequate notice of the claims against it within the statutory period: 92 The policies of ensuring essential fairness to defendants and of barring a plaintiff who has slept on his rights, ... are satisfied when, as here, a named plaintiff who is found to be representative of a class commences a suit and thereby 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 may participate in the judgment. 93 Id. at 554-55, 94 S.Ct. at 766-67. 94 The American Pipe tolling principle applies also when the class action has been dismissed and those who would have been class members commence an independent suit. See Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 350-51, 103 S.Ct. 2392, 2395-96, 76 L.Ed.2d 628 (1983) (Crown, Cork ). The reason is that absent putative class members are expected and encouraged to remain passive during the early stages of the class action and to rely on the named plaintiffs to press their claims. Id. at 352-53, 103 S.Ct. at 2396-97; see also American Pipe, 414 U.S. at 552, 94 S.Ct. at 765. Not until a class is certified does a class member have any duty to take note of the suit or to exercise any responsibility with respect to it.... Id. An absent putative class member in an action where a class was never certified thus is not legally bound either by the named plaintiffs' choice of legal claims or by a dismissal for failure to allege sufficient facts to state a cause of action, even if that dismissal would have res judicata effect against the named plaintiffs. See Shelton v. Pargo, Inc., 582 F.2d 1298, 1314-15 (4th Cir.1978); Roman v. ESB, Inc., 550 F.2d 1343, 1355-56 (4th Cir.1976); 7B C. Wright, A. Miller & M. Kane, Federal Practice and Procedure Sec. 1789, at 243 (2d ed. 1986). 95 Notwithstanding the district court's belief that New York law does not provide for a toll of the statute of limitations during the pendency of a similar or related action, Memorandum of Decision and Order dated February 21, 1984, at 4, the New York courts have, in the interest of avoiding court congestion, wasted paperwork and expense, long embraced the principles of American Pipe. See Yollin v. Holland America Cruises, Inc., 97 A.D.2d 720, 720, 468 N.Y.S.2d 873, 875 (1st Dep't 1983) (Yollin) (We ... hold that the timely commencement of the action by plaintiff herein satisfied the purpose of the contractual limitation period as to all persons who might subsequently participate in the same suit as members of the class. See American Pipe.... ); Clifton Knolls Sewerage Disposal Co. v. Aulenbach, 88 A.D.2d 1024, 1025, 451 N.Y.S.2d 907, 908 (3d Dep't 1982) (the Statute of Limitations on each of plaintiff's claims was tolled during the pendency of [a prior] class action) (citing Sutton Carpet Cleaners v. Fireman's Ins. Co., 68 N.Y.S.2d 218, 224 (Sup.Ct. Bronx Co. 1947), aff'd, 273 A.D. 944, 78 N.Y.S.2d 565 (1st Dep't 1948), aff'd, 299 N.Y. 646, 87 N.E.2d 53 (1949)). In Sutton Carpet Cleaners, 68 N.Y.S.2d at 224, the court was faced with 79 individual actions, at least some of which apparently had not been timely filed, and one purported class action filed days before the running of the limitations period. The court noted that [t]he law undoubtedly is that a representative action timely brought saves all represented claims from the running of the statutory or contractual period of limitations, and ruled that tolling had occurred in the case before it even though the putative class plaintiff was not a proper representative of the class. See also 2 Weinstein-Korn-Miller, New York Civil Practice p 901.06, at 9-21 (1986) (filing of class actions tolls statute of limitations as to all members of class even if the class action is ultimately dismissed for reasons other than the fact that it was a frivolous action) (citing American Pipe ). 96 Notwithstanding the differences between the legal theories advanced by plaintiffs in the state court action and those advanced in the present action, we are persuaded that the American Pipe doctrine has applicability to the present action. The functional purpose of a statute of limitations is to prevent stale lawsuits, i.e., suits after evidence has been lost, memories have faded, and witnesses have disappeared. American Pipe, 414 U.S. at 554, 94 S.Ct. at 766. In American Pipe and Crown, Cork, 462 U.S. at 353, 103 S.Ct. at 2397, the Supreme Court held that tolling based on the filing of a prior class action is consistent with these purposes. Consequently, American Pipe tolling is properly extended to claims of absent class members that involve the same evidence, memories, and witnesses as were involved in the initial putative class action. See United Airlines, Inc. v. McDonald, 432 U.S. 385, 393-94 n. 14, 97 S.Ct. 2464, 2469-70, n. 14, 53 L.Ed.2d 423 (1977); Crown, Cork, 462 U.S. at 355, 103 S.Ct. at 2398 (Powell, J., concurring, joined by Rehnquist and O'Connor, JJ.); American Pipe, 414 U.S. at 562, 94 S.Ct. at 770 (Blackmun, J., concurring); Escott v. Barchris Construction Corp., 340 F.2d 731, 734 (2d Cir.) (tolling applies when through initial class action defendants were thus made aware of the nature of the evidence that would be needed at trial), cert. denied, 382 U.S. 816, 86 S.Ct. 37, 15 L.Ed.2d 63 (1965). 97 We conclude that the American Pipe doctrine, though not applicable to all of the defendants in the present case, see Parts IV.B.1 and V.A. below, is applicable to claims against the County. The state court action filed by Cullen and Jund, asserting that they, as County employees, had been coerced to contribute funds to the Nassau County Republican Party, purported to be brought on behalf of themselves and all others similarly situated. The factual basis of that action was the same as that asserted here, i.e., that contributions were coerced from County employees and noncontributors were punished. The defendants in the putative state class action were thus on notice to preserve evidence concerning their alleged coercion of contributions from that group of persons and their alleged reprisals against those who refused to contribute. Since the alleged wrongful acts are the same, the relevant evidence, memories, and witnesses with regard to these facts are the same for both actions. 98 Obviously there are differences between the state-law causes of action that were asserted in the putative state class action and the federal causes of action asserted here that are pertinent for some purposes: for example, the civil RICO elements that have a bearing on what state statute of limitations is most analogous, see Part III.C.1, supra. But these elements are entirely peripheral. The differences that distinguish a civil RICO cause of action from state-law causes of action for purposes of determining which statute of limitations to apply are not the sorts of elements that suggest that American Pipe tolling would be inconsistent with the functional goal of statutes of limitations. For example, no special preservation of witnesses or evidence would ordinarily be necessary as to the factors of effect on interstate commerce, degree of exposure to liability (single damages vs. treble damages plus attorneys' fees), the timing of the predicate acts (whether they occurred within a 10-year period), or the existence of a RICO enterprise. The degree of exposure is a matter of law; the dates of the predicate acts will be apparent from the proof of the occurrence of those acts; the questions of whether there was a RICO enterprise and whether any person's activities affected interstate commerce would ordinarily be questions of inference to be drawn from the proof of the background facts surrounding the challenged conduct. The challenged conduct is what is common to both the RICO and the state-law claims, and that is what the defendant must be alerted to in order to preserve its evidence, record its recollections, and keep track of its witnesses. The state court complaint clearly challenged the conduct that is at issue here, and we would be hard pressed to conclude that that complaint was not sufficient to alert the defendants sued there to preserve the evidence regarding that conduct. 99 Unlike Judge Meskill in his dissenting opinion, post, we do not regard the fact that the state court action was premised on different legal theories as a reason not to apply American Pipe tolling to save the claims of class members who were not named plaintiffs in the state court action. It is not a flaw under that doctrine that the first action did not alert the defendant to have its lawyers research the applicability of a particular statute or rule of common law. Indeed, limiting American Pipe tolling to the identical causes of action asserted in the initial class action would encourage and require absent class members to file protective motions to intervene and assert their new legal theories prior to class certification, thereby producing the very results the New York courts seek to prevent by such tolling, i.e., court congestion, wasted paperwork and expense. Yollin, 97 A.D.2d at 720, 468 N.Y.S.2d at 875; see also American Pipe, 414 U.S. at 553-54, 94 S.Ct. at 766-67; Crown, Cork, 462 U.S. at 350-51, 103 S.Ct. at 2395-96. 100 In sum, because the asserted factual basis of the state court claims was the same as that of the claims asserted here and the County was made a defendant to that action, the running of the statute on the claims of the absent plaintiff class members against the County was thereby tolled. We note that the named plaintiffs in the state action, Cullen and Jund, assert here claims that accrued in 1974 and are therefore timely without regard to American Pipe tolling. 101 The time during which the running of the statute was tolled, on the American Pipe theory, was the period of the pendency of the state court action. That action was commenced on December 2, 1974. The complaint was dismissed by the trial court in February 1975, Cullen v. Margiotta, 81 Misc.2d 809, 367 N.Y.S.2d 638 (Sup.Ct.Nassau Co. 1975), and after that court's denials in 1975 and 1976 of motions for leave to replead and reargue, the dismissal was finally affirmed by the Appellate Division in October 1977. Cullen v. Margiotta, 59 A.D.2d 831, 399 N.Y.S.2d 160 (2d Dep't 1977). Hence, insofar as the American Pipe doctrine is concerned, the running of the statute of limitations was tolled from December 2, 1974, until October 1977, i.e., well past the December 14, 1976 commencement of the present action. Thus, the district court's ruling that all claims accruing prior to December 14, 1973, are time-barred was erroneous. Instead, plaintiffs are entitled to pursue here claims against the County that accrued as early as three years prior to the date of the commencement of the state court action, i.e., claims that accrued on or after December 2, 1971. 102 Further, as we next discuss, the running of the statute may, by virtue of a different theory, have been tolled for an even longer period. 103