The response to our post in January on the Blain class action denial in the Paxil litigation, as well as the likely fallout from the just-decided reversal of class certification in Regents of University of California v. Credit Suisse First Boston (USA), Inc., 2007 WL 816518 (5th Cir. Mar. 19, 2007) (the subject of our last post), got us thinking about the most extreme manifestation of American Pipe class action tolling. That’s what Bexis a few years ago called “cross-jurisdictional” class-action tolling when he was participating in the appeal that became Portwood v. Ford Motor Co., 701 N.E.2d 1102 (Ill. 1998). The description has been generally adopted. Fortunately the concept mostly hasn’t.
First of all, what is it? Well, all of the Supreme Court’s class action tolling cases, American Pipe & Construction Co. v. Utah, 414 U.S. 540 (1974), Crown, Cork & Seal Co. v. Parker, 462 U.S. 345 (1983), and Chardon v. Soto, 462 U.S. 650 (1983), all involved successive suits in the same jurisdiction – federal-question cases brought in federal court. In that context the Court acted to prevent members of putative classes from having to file otherwise needless protective actions simply to toll the statute of limitations during the pendency of a class action that might or might not get certified. Thus class-action tolling generally seeks to promote “the litigative efficiency and economy that [Rule 23] in its present form was designed to serve,” American Pipe, 414 U.S. at 556, and to prevent “a needless multiplicity of actions.” Crown, Cork & Seal, 462 U.S. at 351.
While this sort of tolling essentially gives plaintiffs something for nothing – tolling the statute of limitations on the basis of a meritless class action filing – the rationale of avoiding unnecessary filings at least makes sense when talking about the same court system. If it’s a single court system, then tolling will at least preclude the burden (assuming it’s really a burden at all – there’s something to be said for collecting lots of filing fees for suits that mostly won’t go anywhere) of all these greatly feared protective actions.
“Cross-jurisdictional” tolling, on the other hand, refers to allowing a failed class action filed in jurisdiction “A” to toll the statute of limitations on an individual action later filed by a putative class member in jurisdiction “B.” In a lot of cases that means a state court action filed after a failed federal court class action. In other cases it means filing an individual action in one state after class certification is denied in a different state. In either case, the policy of avoidance of protective filings doesn’t work. In fact, the opposite is true. A liberal tolling rule only invites more suits to be filed in the jurisdiction that has it. Thus, even on its own terms, cross-jurisdictional tolling based upon meritless class actions doesn’t make sense.
Thus, even states allowing class-action tolling in some contexts do not apply it to meritless class actions filed in other jurisdictions. Illinois is one of them. It recognizes class-action tolling within the state’s own court system, Steinberg v. Chicago Medical School, 371 N.E.2d 634 (Ill. 1977), but not in the cross-jurisdictional context. Federalism was one reason not let meritless class actions filed in federal courts toll the statute of limitations in the state’s own court system:
[B]ecause state courts have no control over the work of the federal judiciary, we believe it would be unwise to adopt a policy basing the length of Illinois limitation periods on the federal courts’ disposition of suits seeking class certification. State courts should not be required to entertain stale claims simply because the controlling statute of limitations expired while a federal court considered whether to certify a class action.
Portwood v. Ford Motor Co., 701 N.E.2d 1102, 1104 (Ill. 1998). Accord Maestas v. Sofamor Danek Group, 33 S.W.3d 805, 808-09 (Tenn. 2000) (cross-jurisdictional tolling “would essentially grant to federal courts the power to decide when Tennessee’s statute of limitations begins to run. . .contrary to our legislature’s power to adopt statutes of limitations”).
Forum shopping is another major reason – and probably the best reason – why cross-jurisdictional tolling is improvident:
Our concerns with forum shopping and with the delay occasioned by the pendency of a class action in federal court are well illustrated by the instant case. . . . Plaintiffs contend that our rejection of cross-jurisdictional tolling will necessitate numerous protective filings in Illinois by plaintiffs who have class actions pending in other
jurisdictions. . . . We are convinced, however, that any potential increase in filings occasioned by our decision today would be far exceeded by the number of new suits that would be brought in Illinois were we to adopt the generous tolling rule advocated by plaintiffs.
Portwood, 701 N.E.2d at 1104-05. Accord Maestas, 33 S.W.3d at 808 (cross-jurisdictional tolling “would run the risk that [our] courts would become a clearinghouse for cases that are barred in the jurisdictions in which they otherwise would have been brought”).
Portwood recognized that “tolling a state statute of limitations during the pendency of a federal class action. . .may actually increase the burden on that state’s court system” as “plaintiffs from across the country may elect to file a subsequent suit in that state solely to take advantage of the generous tolling rule.” 701 N.E.2d at 1104. Any state recognizing cross-jurisdictional tolling would “invite into its courts a disproportionate share of suits. . .after the statute of limitations has run.” Id.
We pointed out in our post about the Blain case how rare class certification has become in product liability litigation – including but not limited to prescription medical products. Thus, it has always been “doubtful” that state statutes of limitations could be tolled by a class action aggregating individual product liability claims. In re Agent Orange Product Liability Litigation, 818 F.2d 210, 213 (2d Cir. 1987) (predicting Hawaii would not permit cross-jurisdictional tolling). For this reason, the California Supreme Court rejected cross-jurisdictional tolling in product liability cases:
[They] most often are not appropriate for class action certification. The major elements. . .may vary widely from claim to claim, creating a wide disparity in [many] issues. . . . The same reasons that render certification of mass-tort claims generally inappropriate render inappropriate the application and extension of American Pipe to the present case.
Jolly v. Eli Lilly & Co., 751 P.2d 923, 936 (Cal. 1988) (citations omitted). Therefore:
[P]utative class members would be ill advised to rely on the mere filing of a [multiple-incident] class action complaint to toll their individual statute of limitations. The presumption, rather, should be to the contrary – i.e., that lack of commonality will defeat certification and preclude application of the American Pipe tolling doctrine.
Id. at 937-38 (footnote omitted). Accord Bell v. Showa Denko K.K., 899 S.W.2d 749, 758 (Tex. App. 1995) (tolling by class action alleging many separate product-related injuries would be an “extension not warranted. . .and we refuse to do so”); Singer v. Eli Lilly & Co., 549 N.Y.S.2d 654, 658-60 (N.Y. App. Div. 1990) (following Jolly); Vaught v. Showa Denko K.K., 107 F.3d 1137, 1144 (5th Cir. 1997) (no cross-jurisdictional tolling in case alleging individual product injuries because “class certification has historically been disfavored”) (Texas law); see Ganousis v. E.I. duPont de Nemours & Co., 803 F. Supp. 149, 155 (N.D. Ill. 1992) (inapplicability of American Pipe to mass tort personal injury actions has “force and [is] buttressed by some respectable authority”).While cross-jurisdictional tolling has been particularly controversial in the product liability and mass tort context, judicial skepticism has hardly been limited to these areas. In the Enron Securities MDL, the court refused to allow cross-jurisdictional tolling for any state but Ohio (where state supreme court precedent uniquely permits class action tolling). In re Enron Corporation Securities, 465 F. Supp.2d 687, 719-21 (S.D. Tex. 2006). Pennsylvania law first rejected cross-jurisdictional tolling in an accountant malpractice case, Ravitch v. Pricewaterhouse, 793 A.2d 939, 944 (Pa. Super. 2002), finding forum shopping to be a concern no matter what kind of litigation was at issue.Courts thus rightly recoil from arguments that any unsuccessful class action filed in any court in the country can override every contrary state statute of limitations of every state in the country. See also Thoubboron v. Ford Motor Co., 624 A.2d 1210, 1213 (D.C. App. 1993); Wade v. Danek Medical, Inc., 182 F.3d 281, 287 (4th Cir. 1999); In re Vitamins Antitrust Litigation, 183 Fed. Appx. 1, 2 (D.C. Cir. 2006) (Florida law); Bozeman v. Lucent Technologies, Inc., 2005 WL 2145911, at *3 (M.D. Ala. Aug. 31, 2005); Williams v. Dow Chemical Co., 2004 WL 1348932, at *13 (S.D.N.Y. June 16, 2004) (Illinois law); Thelen v. Massachusetts Mutual Life Insurance Co., 111 F. Supp.2d 688, 694-95 (D. Md. 2000); Senger Brothers Nursery, Inc. v. E.I. Dupont de Nemours & Co., 184 F.R.D. 674, 682 (M.D. Fla. 1999); Barela v. Showa Denko K.K., 1996 WL 316544 at *4 (D.N.M. Feb. 28, 1996); Johnson v. American Home Products Corp., 62 Pa. D. & C.4th 20, 27-28 (Pa. C.P. Philadelphia Co. 2003).On the other side, a couple of state courts have arrived at contrary conclusions on the basis of different policy choices. Vaccariello v. Smith & Nephew Richards, Inc., 763 N.E.2d 160 (Ohio 2002); Staub v. Eastman Kodak Co., 726 A.2d 955 (N.J. Super. 1999). A couple more appear to accept cross-jurisdictional tolling without really examining the issue. In re West Virginia Rezulin Litigation, 585 S.E.2d 52 (W. Va. 2003); Hyatt Corp. v. Occidental Fire & Casualty Insurance Co., 801 S.W.2d 382 (Mo. App. 1990). Finally, a couple of federal courts have chosen to thumb their noses at the Erie doctrine and allow cross-jurisdictional tolling of state-law claims even though the state in question does not. In re General American Life Insurance Co. Sales Practices Litigation, 391 F.3d 907 (8th Cir. 2004); In re Linerboard Antitrust Litigation, 223 F.R.D. 335 (E.D. Pa. 2004) (in part). We could go into detail about these cases but this is a blog, not a brief, so why bother. Suffice it to say that we find the first group misguided, the second group uninformed, and the third group simply wrong as a matter of settled Supreme Court precedent. See Walker v. Armco Steel Corp., 446 U.S. 740, 750 51 (1980).