Opinion ID: 171219
Heading Depth: 3
Heading Rank: 2

Heading: Lower Court Opinions on the Instant Issue

Text: American Pipe, Eisen, and Crown all address the question of whether a litigant may intervene or file an individual suit after the class certification decision. In this case, however, the court must consider an earlier window, the time period running from the moment a class action is filed up to the time when the trial court denies class certification or the plaintiff opts not to continue as a member of the class. The Supreme Court has not addressed this question squarely, leaving it to percolate in the lower courts. At the federal appellate level, the Second Circuit has recently considered this very issue in In re WorldCom, holding that a plaintiff who chooses to bring an individual action while the class action is pending can still claim the benefit of the American Pipe tolling doctrine. And, even more recently, the Ninth Circuit, in In re Hanford Nuclear Reservation Litig., 534 F.3d 986 (9th Cir.2008), has adopted the reasoning of In re WorldCom. In earlier cases, however, both the Sixth and First Circuits have reached the opposite conclusion. [12] We agree with the analysis of the Second and Ninth Circuits. After reviewing the Supreme Court's precedents, the Second Circuit concluded that it should take at face value the Court's repeated assertion 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. In re WorldCom, 496 F.3d at 254 (quoting Crown, 462 U.S. at 353-54, 103 S.Ct. 2392). The court also echoed the point that tolling does not undermine the purpose of statutes of limitation. Id. at 255. Additionally, [w]hile reduction in the number of suits filed by class members would follow from a forfeiture rule, it was not the purpose of American Pipe either to reduce the number of suits filed, or to force individual plaintiffs to make an early decision whether to proceed by individual suit or rely on a class representative. Id. at 256. Granted, judicial efficiency and economy were foremost in the American Pipe Court's mind, but the case was not meant to induce class members to forgo their right to sue individually. Id. Thus, the tolling doctrine applies to protect separate suits whenever they are filed. Id. The Ninth Circuit recently relied on the In re WorldCom rule in concluding that members of a plaintiff-class who filed otherwise untimely individual suits before the putative class representatives decided to withdraw their motion for certification were entitled to the benefits of American Pipe tolling. In re Hanford, 534 F.3d 986, 1009. As did the Second Circuit, the Ninth Circuit concluded that applying American Pipe tolling to plaintiffs who filed individual suits before certification is consistent with the purpose underlying statutes of limitation. Id. at 1009. Moreover, that the American Pipe doctrine protects plaintiffs from being forced to file suit before the certification decision . . . doesn't mean that plaintiffs who file before certification are not entitled to tolling. They have a right to file at the time of their choosing. . . . Id. at 1009 (citation omitted). State Farm counsels that this court should instead rely on the Sixth Circuit's Wyser-Pratte decision. There, after it had already decided that the applicable two-year statute of limitations expired before this class action was filed, 413 F.3d at 568, the court continued on to find in the alternative that the purposes of American Pipe tolling are not furthered when plaintiffs file independent actions before decision on the issue of class certification, but are when plaintiffs delay until the certification issue has been decided. Id. at 569. Specifically, the Sixth Circuit concluded that freezing the situation until a class certification decision has been issued ensures that the courts will not be burdened by separate lawsuits which, in any event, may evaporate once a class has been certified. Id. (quoting In re WorldCom Inc. Sec. Litig., 294 F.Supp.2d 431, 452 (S.D.N.Y.2003) [13] ). Those separate lawsuits, the court rationalized, might disappear because putative class members usually are in a far better position [after the class certification decision] to evaluate whether they wish to proceed with their own lawsuit, or to join a class. . . . Id. (quoting In re WorldCom, 294 F.Supp.2d at 452). [14] State Farm also relies on Glater, a First Circuit case. There, the plaintiff argued that she should be considered a New Hampshire resident on the ground that she was a resident of that state at the time of the filing of a separate class action, which named Eli Lilly as a defendant and included the plaintiff in the putative class. [15] See 712 F.2d at 739. The First Circuit rejected this argument, noting that  American Pipe says nothing about [the plaintiff's] ability to maintain a separate action while class certification is pending. The policies behind Rule 23 and American Pipe would not be served, and in fact would be disserved, by guaranteeing a separate suit at the same time that a class action is ongoing. Id. Thus, the court concluded that the pendency of the [separate] class action did not preclude a dismissal of th[e] [plaintiff's] case for lack of personal jurisdiction. Id. Despite the concerns of the Sixth and First Circuits, we find the rationale of the In re WorldCom and In re Hanford decisions consonant with American Pipe's language and its conceptual and pragmatic underpinnings. For the following reasons, we join the Second and Ninth Circuits. First and foremost is the Supreme Court's language in American Pipe and Crown. Crown underscored what American Pipe first asserted: The commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class would have been parties had the suit been permitted to continue as a class action. Once the statute of limitations has been tolled, it remains tolled for all members of the putative class until class certification is denied. Crown, 462 U.S. at 353-54, 103 S.Ct. 2392 (quoting American Pipe, 414 U.S. at 554, 94 S.Ct. 756) (internal citation omitted). The Supreme Court's language is clear. And at least one Colorado appellate court has adopted this particular language from American Pipe, as contoured by Crown. See Rosenthal, 883 P.2d at 531 (The commencement of a class action tolls the statute of limitations for all members of the putative class . . . until class certification is denied.). [16] We see no reason why Colorado would not give effect to the broad language of those cases. This broad language suggests that the statute of limitations applicable to Boellstorff's claim remained tolled while the putative Clark class remained in limbo. Second, in a sense, application of the American Pipe tolling doctrine to cases such as this one does not involve `tolling' at all. Joseph v. Wiles, 223 F.3d 1155, 1168 (10th Cir.2000). The class action mechanism's inherent representativeness means that each putative class member has effectively been a party to an action against the defendant since a class action covering him was filed. Id. American Pipe made much of this principle, positing that the class action tolling doctrine would apply regardless of the reliance or awareness of putative class members. 414 U.S. at 551-52, 94 S.Ct. 756. Thus, when Clark filed a class action against State Farm in August 2000, alleging the same claims later asserted by Boellstorff, Clark in essence pre-filed Boellstorff's suit. Thereafter, when Boellstorff filed her independent suit she simply retook the reins from Clark. Third, State Farm was afforded the benefit of the No Fault Act's statute of limitations. Clark's suit put State Farm on notice of the substantive claims being brought against it as well as the number and generic identities of the potential plaintiffs. American Pipe, 414 U.S. at 555, 94 S.Ct. 756; see also In re WorldCom, 496 F.3d at 254 ([T]he initiation of a class suit gives defendants all the information they need to prepare their defense.) (citing American Pipe, 414 U.S. at 553, 94 S.Ct. 756). Accordingly, application of the tolling doctrine here would not undermine the policy choices embodied by Colorado's statute of limitations. See In re WorldCom, 496 F.3d at 255. Fourth, as Boellstorff notes, locking putative class members into the class until the class certification decision makes little sense and could adversely affect certain individuals. Rule 23(c)(1)(A) [17] mandates that the trial judge [a]t an early practicable time after a putative class action is filed determine by order whether to certify the action as a class action. Fed. R.Civ.P. 23(c)(1)(A). In practice, however, this decision may take time. Here, for example, Clark filed his class action in August 2000, but did not file a motion for class certification until May 2007, nearly seven years later. The Second Circuit's rule permits litigants to decide to bring an individual action if they either (1) deem their own claims valuable enough or (2) decide that class certification is doubtful. Cf. In re WorldCom, 496 F.3d at 256 (noting that the American Pipe doctrine was not meant to induce class members to forgo their right to sue individually); Jahn v. ORCR, Inc., 92 P.3d 984, 989 (Colo.2004) (noting prerogative of class members to opt-out of class and pursue claims individually). Forcing such plaintiffs to wait out a class certification decision makes even less sense when we consider the costs of delay (for example, the possibility that the evidence will grow stale and added time the plaintiff must go without recovery). Fifth, on the macrocosmic level, the Second Circuit's rule would not substantially impede the efficiency and economy of the class action mechanism. Presumably, the only litigants likely to avail themselves of the Second Circuit's rule are those that would opt out of a certified class in any case. Permitting early opt-outs would not dramatically increase the number of cases filed: most litigants with claims valuable enough to pursue separately will likely have filed their individual claims before the end of their own limitations period. As such, the group that would file individual suits during the window at issue here is likely to approximate in number the group that would later opt-out if a class is certified or file individual suits if not. The courts' case-load will likely remain the same; the only difference is when those cases show up on the dockets. State Farm, in our opinion, has not made a convincing case that imposing an individual claim moratorium until the moment of the class certification decision would have any noticeable effect on judicial efficiency and economy. In fact, State Farm's proposed rule has the potential to backfire. The rule would compel individual class members to make a choice as the limitations period for their individual claim approaches: file an individual action now or sit tight for a class certification decision, no matter how long it might take. Litigants in this bind might file placeholder suits rather than risk placing their individual actions on ice during a potentially prolonged class certification process. Thus, State Farm's proposed rule might well precipitate a needless duplication of actions that would deprive Rule 23 class actions of the efficiency and economy of litigation which is a principal purpose of the procedure. American Pipe, 414 U.S. at 553-54, 94 S.Ct. 756. State Farm complains that the Second Circuit's rule allows plaintiffs to have their cake and eat it too, that is, to rely on a representative suit as a placeholder for purposes of the statute of limitations and then ditch the representative later. See In re Brand Name Prescription Drugs Antitrust Litig., 1998 WL 474146, at . However, that is the essence of the American Pipe holding even in the situation where the individual suit was not filed until after resolution of the class certification decision. In addition, as noted above, the American Pipe and Crown decisions highlight the fact that reliance or even awareness of the class action are irrelevant. In this vein, we have concluded that American Pipe tolling is legal rather than equitable in nature, Wiles, 223 F.3d at 1166, and operates regardless of the putative class member's awareness or reliance. [18] Thus, State Farm's protests are misplaced because the alleged unfairness of such a rule is besides the point. See Schimmer v. State Farm Mut. Auto. Ins. Co., No. 05-cv-02513-MSK, 2006 WL 2361810, at  (D.Colo. Aug.15, 2006) (The problem with Wyser-Pratte, however, is that it treats class action tolling as an equitable doctrine in which fairness considerations drive its application.). Similarly, State Farm's assertions about the potential for abuse of this tolling rule are unavailing. Justice Blackmun's concurrence in American Pipe cautioned that the opinion 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. American Pipe, 414 U.S. at 561, 94 S.Ct. 756 (Blackmun, J., concurring). State Farm presses this point, raising the specter of countless class action suits filed solely to suspend the limitations period. However, there is no evidence that American Pipe released any such flood of class actions, and the application of American Pipe that we approve here is only a very small extension of American Pipe. And, of course, it is not in the interest of class action counsel to help individual plaintiffs split off from the class.