Summary
The Supreme Court held that American Pipe tolling does not permit a putative class member to commence a successive class action after the applicable statute of limitations has expired. The tolling rule permits individual claims to proceed after denial of class certification, but it does not preserve untimely follow-on class claims. The Court reversed and remanded the Ninth Circuit’s decision.
Topics
Practice areas
Questions Presented
- Whether American Pipe tolling permits a putative class member to commence a successive class action after expiration of the applicable statute of limitations.
- Whether Federal Rule of Civil Procedure 23 or the Rules Enabling Act requires permitting an otherwise untimely successive class action when individual claims would be tolled.
- Whether the holding should be limited to class actions governed by the Private Securities Litigation Reform Act of 1995.
Holdings
- American Pipe tolls the statute of limitations for putative class members who pursue individual claims after denial of class certification, but it does not permit an otherwise time-barred successive class action.
- Federal Rule of Civil Procedure 23 does not require revival of untimely class claims merely because individual claims are tolled, and denying such tolling does not violate the Rules Enabling Act.
- The Court adopted a general rule that American Pipe tolling does not extend to successive class actions filed after expiration of the limitations period, although Justice Sotomayor would have limited the holding to PSLRA-governed litigation.
Key quotations
“American Pipe does not permit a plaintiff who waits out the statute of limitations to piggyback on an earlier, timely filed class action.” (at 6)
“Time to file a class action falls outside the bounds of American Pipe.” (at 15)
Factual background
Purchasers of China Agritech common stock brought successive class actions alleging materially identical violations of the Securities Exchange Act of 1934. The first action was filed within the two-year limitations period, but the district court denied class certification; a second timely class action was then filed and also denied class certification. Michael Resh filed the third class action approximately a year and a half after the limitations period expired, without having sought lead-plaintiff status in either earlier action.
Procedural history
The district court dismissed Resh's class complaint as untimely, holding that earlier class actions did not toll the limitations period for initiating a later class claim. The Ninth Circuit reversed, concluding that American Pipe tolling extended to successive class actions. The Supreme Court granted certiorari, reversed the Ninth Circuit, and remanded.
Remand instructions
Remanded for further proceedings consistent with the opinion, including treatment of the class complaint as untimely under the Court's holding.