CLASS ACTIONS, STATUTES OF LIMITATIONS AND REPOSE, AND FEDERAL COMMON LAW.

Author:Burbank, Stephen B.
Position:ARTICLE
 
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After more than three decades during which it gave the issue scant attention, the Supreme Court has again made the American Pipe doctrine an active part of its docket. American Pipe addresses the tolling of statutes of limitations in federal class action litigation. When plaintiffs file a putative class action in federal court and class certification is denied, absent members of the putative class may wish to pursue their claims in some kind of further proceeding. If the statute of limitations would otherwise have expired while the class certification issue was being resolved, these claimants may need the benefit of a tolling rule. The same need can arise for those who wish to opt out of a certified class action. American Pipe and its progeny provide such a tolling rule in some circumstances, but many unanswered questions remain about when the doctrine is available.

In June 2017, the Court decided CalPERS v. ANZ Securities, holding that American Pipe tolling was foreclosed to a class member who opted out of a certified class in an action brought to enforce a federal statute (the Securities Act of 1933) that contained what the Court labeled a "statute of repose," In June 2018, the Court decided Resh v. China Agritech, which held that American Pipe tolling is not available when absent members of a putative class file another class action following the denial of certification in the first action rather than pursuing their claims individually in subsequent proceedings. In this Article we develop a comprehensive theoretical and doctrinal framework for the American Pipe doctrine. Building on earlier work, we demonstrate that American Pipe tolling is a federal common-law rule that aims to carry into effect the provisions and policies of Federal Rule of Civil Procedure 23, the federal class action device. Contrary to the Court's assertion in CalPERS, American Pipe is not an "equitable tolling doctrine." Neither is it the product of a direct mandate in Rule 23, which is the source of authority, not the source of the rule. Having clarified the status of American Pipe tolling as federal common law, we explain the basis on which the doctrine operates across jurisdictions, binding subsequent actions in both federal and state court. We argue that the doctrine applies whether the initial action in federal court was based on a federal or state cause of action--a question that has produced disagreement among the lower federal courts. And we situate American Pipe within the framework of the Court's Erie jurisprudence, explaining how the doctrine should operate when the putative class action was in federal court based on diversity jurisdiction and the courts of the state in which it was filed would apply a different rule. Finally, we discuss how CalPERS should have been decided if the Court had recognized the true nature of the American Pipe rule and if it had engaged the legislative history of the Securities Act rather than relying on labels.

Introduction 3 I. American Pipe Tolling: Source of the Rule 9 A. American Pipe: Federal Common Law vs. Federal Rule, and 10 B. Crown, Cork & Seal (and Eisen): Individual Actions and 18 C. Chardon: Accommodating the Specific Requirements of Section 1988 21 D. Post-Chardon Cases: The Hazards of String Citations 25 II. American Pipe Tolling: Source of Authority 28 A. The Different Varieties of Federal Common Law 29 B. Responding to the Bootstrapping Concern--Sources of Authority and 33 III. The Reach and Limits of American Pipe's Federal Common-Law Rule 37 A. Cases Governed by Federal Statutes with Limitations Provisions. 38 B. Responding to the Bootstrapping Concern--Sources of Authority and 42 1. The Implications of Our Approach 43 43 2. Refining the Court's Approach 3. Consequences for F2 45 IV. CALPERS Without Blinkers (Labels) 50 A. The Inadequacy (and Mischief) of Viewing American Pipe as 55 Equitable Tolling B. The Inadequacy (and Mischief) of Viewing Section 13 as a "Statute 55 of Repose" C. The Limits of Textualism 58 Conclusion 61 67 INTRODUCTION

Federal class actions often raise questions about the application in that setting of rules that were written with litigation involving individual parties in mind. Such questions are of obvious potential systemic importance when they concern rules of jurisdiction--subject matter, personal, or appellate. Litigants may regard as no less important questions that arise from rules that federal courts apply once they have jurisdiction, and the answers may also have systemic importance, even if not obvious. Questions of both types have long been with us, and the Supreme Court has usually, but not always, sought to answer them with due regard to the practical dimensions of litigation from the perspective of both the litigants and the federal judiciary, and to the bearing of such pragmatic considerations on the policies underlying the relevant rules.

The Court confronted such a question when determining statutory diversity of citizenship in class action litigation. It opted to consider only the citizenship of named class representatives, rather than treating a class suit as an amalgam of claims by individuals, an approach that would have excluded most such suits from federal court. (1) Yet, concerned that diversity class actions under amended Rule 23 would overtax the limited resources of the federal judiciary, the Court took care when choosing between existing nonclass models for calculating the amount in controversy required by the diversity statute. The Court's choices, forbidding the aggregation of the claims of putative class members and requiring each of them to satisfy the amount-in controversy requirement, had the purpose and effect of keeping class actions packaging small state law claims out of federal court. (2)

The advent of the modern class action in 1966 proliferated questions of this sort that arose in federal court. The inconsistency of the Court's answers, which alternated between views of the class action as a joinder or representational device, suggests the limitations of theory in a domain that puts in play so insistently the practical interests of litigants and of the institutional judiciary. (3) Moreover, by the late-1990s, when the Court returned to class actions after a long vacation, they had become a focal point of efforts to retrench federal litigation, and thus of partisan and ideological conflict, in Congress. (4) Proponents of federal litigation retrenchment understood that its prospects were best in the increasingly conservative federal courts. The hard-won enactment of the Class Action Fairness Act of 2005, (5) which reflected that understanding, (6) enabled Congress to ship the ideological conflict to the federal courts, where, abetted by migrating interest group pressure, over the subsequent decade it played an ever-growing and more polarizing influence on Supreme Court justices in the Court's class action cases. (7)

One of the questions implicating the view courts should take of class actions that assumed prominence soon after the 1966 amendments to Rule 23 involved the treatment of the claims of absent members of a putative class under the pertinent statute of limitations. Before those amendments, the lower federal courts had reached inconsistent decisions on limitations issues in so-called spurious class actions when individuals seeking to take advantage of a favorable judgment sought to intervene after the limitations period had run. (8) In American Pipe & Construction Co. v. Utah, the Supreme Court considered a similar question as to intervention by absent members of a putative Rule 23(b)(3) class action following the denial of class certification. The American Pipe 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." (9) That was because a "contrary rule allowing participation only by those potential members of the class who had earlier filed motions to intervene in the suit would deprive Rule 23 class actions of the efficiency and economy of litigation which is a principal purpose of the procedure." (10)

American Pipe itself gave rise to numerous questions, some of which still lack definitive answers more than forty years later. The Court answered one of them in Crown, Cork & Seal Co. v. Parker, (11) holding that American Pipe tolling is also available to members of a putative class who choose to file individual actions, instead of intervening, after class certification is denied. Another question that arose following American Pipe was the subject of a recent Supreme Court decision. In California Public Employees' Retirement System v. ANZ Securities, Inc. (CalPERS), (12) the Court (5-4) held that American Pipe tolling was not available to a member of a putative class asserting claims under section 11 of the 1933 Securities Act (13) who commenced a separate lawsuit against the same defendants, raising the same claims, and thereafter opted out of the class, both beyond the governing limitation periods in section 13. (14)

The CalPERS Court deemed the one-year bar in section 13 a statute of limitations and its three-year bar a statute of repose, distinguishing them on the ground that statutes of repose "are enacted to give more explicit and certain protection to defendants" (15) and "effect a legislative judgment that a defendant should be free from liability after the legislatively determined period of time." (16) Noting that the question of tolling is one "of statutory intent," (17) the Court relied on previous decisions for the conclusion that "the unqualified nature of [a statute of repose] supersedes the courts' residual authority and forecloses the extension of the statutory period based on equitable principles. For this reason, the Court repeatedly has stated in broad terms that statutes of repose are...

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