We maintain a number of “scorecards” on legal issues where we judge the defense advantage is sufficiently great that including all cases, even if adverse, does not violate our injunction against doing the other side’s research for them. Three of the scorecards – PMA preemption, generic preemption, and innovator liability, pretty much update themselves from the results of the case alerts we run.
The fourth – cross-jurisdictional class action tolling – is different. That’s something we’ve been interested in since the Bone Screw litigation. Back in the early 1990s, the idea of class actions in product liability/personal injury hadn’t become nearly as risible as it is today. The Bone Screw plaintiffs filed a purported nationwide class action, which lingered in the MDL a while before certification was denied. See In re Orthopedic Bone Screw Products Liability Litigation, 1995 WL 273597 (E.D. Pa. Feb. 22, 1995) (in our federal class action denial cheat sheet). Plaintiffs then claimed that this bogus class action tolled the statute of limitations of every state in the country. That set off a nationwide fight over cross-jurisdictional class action tolling, culminating in victories in Maestas v. Sofamor Danek Group, Inc., 33 S.W.3d 805 (Tenn. 2000), and Wade v. Danek Medical, Inc., 182 F.3d 281 (4th Cir. 1999) (applying Virginia law); amicus victories in Portwood v. Ford Motor Co., 701 N.E.2d 1102 (Ill. 1998), and Ravitch v. Pricewaterhouse, 793 A.2d 939 (Pa. Super. 2002), and a loss (by a different Bone Screw defendant) in Vaccariello v. Smith & Nephew Richards, Inc., 763 N.E.2d 160 (Ohio 2002).
Since cross-jurisdictional class action tolling involves many kinds of litigation – not just prescription medical product liability litigation – it requires a special effort to update. We did that the other day for the last couple of years, and in so doing we discovered the hijacking effort against the New York statute of limitations mentioned in the title of this post. As is obvious from the scorecard, for many years New York courts have considered, and rejected, cross-jurisdictional class action tolling in decisions involving state law (federal law involves the execrable American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974) decision).
The first New York case to consider if there should be cross-jurisdictional class action tolling in state-law actions was Singer v. Eli Lilly & Co., 549 N.Y.S.2d 654 (N.Y. App. Div. 1990), in which plaintiffs relied on prior, never-certified class actions to extend a special one-year statutory revival of time-barred DES cases. Singer relied on Jolly v. Eli Lilly & Co., 751 P.2d 923 (Cal. 1988), to reject cross-jurisdictional tolling. Class action tolling “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.” Singer, 549 N.Y.S.2d at 660 (citation and quotation marks omitted).
Plaintiffs, like the plaintiff in Jolly, had ample opportunity to assert timely claims, but did not. . . . [T]he mere commencement of the [other] class action did not alert defendants as to the kind of claims alleged by plaintiffs here. Thus, whether viewed as a failure to give the requisite notice or to satisfy the class membership requirement of the earlier action, the American Pipe tolling doctrine should not be applied here.
Id. (discussion of Jolly omitted).
Likewise, in New York Hormone Replacement Therapy Litigation (Ansley), 2009 WL 4905232 (N.Y. Sup. Nov. 30, 2009), an unsuccessful West Virginia class action could not toll the New York statute of limitations.
[T]his court finds defendants’ arguments persuasive to conclude that the tolling remedy authorized under the American Pipe doctrine is inapplicable here and does so relying on case law from the federal courts sitting in New York. As defendants note, American Pipe . . . involve[s] limitations periods derived from federal statutes, whereas here only New York law is implicated. . . . The wisdom of adopting the American Pipe rule in mass tort cases is, to say the least, highly debatable.
Id. at *? (citations and quotation marks omitted). New York Hormone relied on prior New York precedent involving other state’s statutes of limitations. See In re Agent Orange Products Liability Litigation, 818 F.2d 210, 213 (2d Cir. 1987) (no cross-jurisdictional class action tolling under Hawaii law); In re Rezulin Products Liability Litigation, 2005 WL 26867, at *3 (S.D.N.Y. Jan. 5, 2005) (same, applying New Mexico law). See Kaufman v. Sirius XM Radio, Inc., 980 N.Y.S.2d 276 (table), 2013 WL 5429364, at *4 (N.Y. Sup. Sept. 17, 2013) (“well established that American Pipe did not affect state law”; rejecting several arguments for class action tolling under state law) (state court decision).
Soward v. Deutsch Bank AG, 814 F. Supp.2d 272 (S.D.N.Y. 2011), was the first of a string of federal court decisions likewise declining to extend class action tolling to unsuccessful state law class actions brought in other jurisdictions. Soward – a non-personal injury case − recognized that “the question of ‘whether, and to what extent, the statute of limitations should be tolled by the filing of a putative class action in another jurisdiction’ is purely a question of state law.” Id. at 281 (quoting Casey v. Merck & Co., 653 F.3d 95, 100 (2d Cir. 2011) (applying Virginia law)). Finding no basis to “import” an expansion of tort law into New York jurisprudence, Soward held:
Predicting how New York courts would rule on the issue of cross-jurisdictional tolling would be difficult. The few states that have considered the issue have been split in both their acceptance of cross-jurisdictional tolling and the rationale for their decision. Furthermore, little authority exists as to how a federal court in this Circuit decides whether a state would allow cross-jurisdictional tolling when that state has not addressed the issue. Of the federal courts that have considered this issue, most have refused to extend the doctrine into a state that has yet to consider it. . . . In the face of these overwhelming precedents, I cannot say that New York would adopt cross-jurisdictional tolling and decline to import the doctrine into New York’s law. This Court will therefore not toll New York’s statute of limitations for the period when the . . . class certification status was pending.
Id. at 281-82 (citations and footnotes omitted).
In Adams v. Deutsche Bank AG & Deutsche Bank Securities, Inc., 2012 WL 12884365 (S.D.N.Y. Sept. 24, 2012), meritless class actions failed to toll the New York statute of limitations on the strength of Soward and the lack of any contrary New York precedent:
Neither party has identified any decision in which a court applying New York law has applied cross-jurisdictional tolling. However, in a thorough and comprehensive survey of the issue, [Soward] recently declined to import the doctrine of cross-jurisdictional tolling into New York law because it is unclear whether New York courts would adopt this principle Significantly, Plaintiffs acknowledge the decision in Soward, and provide absolutely no argument as to why the Court should apply cross-jurisdictional tolling to the facts of this case or why New York courts would adopt this theory. Therefore, the Court declines to import this novel and complex feature into New York law, and finds that Plaintiffs are not entitled to tolling of the limitations period based on either [of] the . . . Class Actions.
Id. at *5 (citation omitted).
Similarly, in In re Bear Stearns Cos. Securities, Derivative, & ERISA Litigation, 995 F. Supp.2d 291 (S.D.N.Y. 2014), the court extensively discussed cross-jurisdictional class action tolling in concluding that no such thing was recognized under New York law:
[Plaintiff’s] common law fraud claims are not tolled by the pendency of the Class Action as a matter of New York law. American Pipe tolling does not apply to [plaintiff’s] state claims because it only applies to federal law causes of action. In certain circumstances, a New York statute of limitations may be tolled by the pendency of a class action, but New York currently does not recognized tolling where that class action is filed outside New York state court (so-called “cross-jurisdictional tolling”). Cross-jurisdictional tolling is at issue whenever a court considers the timeliness of state law claims originally filed outside that state’s courts.
Judges in this district have declined to recognize cross-jurisdictional tolling under state law, because such tolling can be applied only if it is clearly recognized by authoritative state court decisions.
Id. at 311 (citations omitted). Bear Stearns agreed with the “compelling policy reasons against such tolling” expressed in Vincent v. Money Store, 915 F. Supp.2d 553, 569-70 (S.D.N.Y. 2013), a case applying California law:
[U]nless all states simultaneously adopt the rule of cross-jurisdictional class action tolling, any state which independently does so will invite into its courts a disproportionate share of suits which the federal courts have refused to certify as class actions after the statute of limitations has run.
995 F. Supp.2d at 312 (quoting Vincent, 915 F.Supp.2d at 569-70). “[M]ost [federal courts] have refused to extend the doctrine into a state that has yet to consider it.” Id. (quoting Soward, 814 F. Supp.2d at 281-82). With no dispute that “New York courts have not yet spoken authoritatively on this issue,” the Bear Stearns court refused to expand the scope of New York tort law by permitting cross-jurisdictional class action tolling. 995 F. Supp.2d at 312. Bear Stearns was ultimately affirmed, but without any discussion of cross-jurisdictional class action tolling. SRM Global Master Fund Limited Partnership v. Bear Stearns Cos., 829 F.3d 173 (2d Cir. 2016).
In Gould v. Helen of Troy Ltd., 2017 WL 1319810 (S.D.N.Y. March 30, 2017), the plaintiff attempted to argue that American Pipe tolled a New York state-law class action by pointing to prior unsuccessful class actions in other states. Id. at *4. The Court responded with Kaufman’s observation that “[i]t is well established that American Pipe did not affect state law.” With no New York law supporting cross-jurisdictional tolling, “[p]laintiff’s New York . . . claims are not tolled by American Pipe. Id.
Several non-New York courts have likewise recognized that state’s rejection of cross-jurisdictional class action tolling. See In re Cathode Ray Tube CRT Antitrust Litigation, 27 F. Supp.3d 1015, 1022 (N.D. Cal. 2014) (“the Court follows the Southern District of New York in declining to import American Pipe into New York state law”; citing Soward); Romig v. Pella Corp., 2014 WL 7264388, at *5-6 (D.S.C. Dec. 18, 2014) (“there is no indication that New York recognizes cross-jurisdictional class action tolling and the court declines to establish such a rule in the first instance”); Coe v. Philips Oral Healthcare Inc., 2014 WL 5162912, at *5 (W.D. Wash. Oct. 14, 2014) (“Cross-jurisdictional tolling may be permitted where a class action is filed in New York and makes claims under New York state law; it is not, however, permitted where the class action was filed outside of New York and make no New York claims.”).
But after 2014, the attempted hijacking begins. It occurred in the context of parallel state class action antitrust claims in the LIBOR MDL litigation – demonstrating once again why defendants quite rightly hate MDLs because transferee judges contort the law to expand liability as a tool to force settlement. There are two LIBOR decisions that recklessly predict that many states – even those with contrary appellate precedent – would allow cross-jurisdictional class action tolling. See In re LIBOR-Based Financial Instruments Antitrust Litigation, 2015 WL 6243526 (S.D.N.Y. Oct. 4, 2015) (“LIBOR II”); In re LIBOR-Based Financial Instruments Antitrust Litigation, 2015 WL 4634541 (S.D.N.Y. Aug. 4, 2015) (“LIBOR I”).
Contrary to what prior New York decisions held, LIBOR I stated that “States generally recognize some form of class-action tolling.” 2015 WL 4634541, at *127. That’s simply false, as our scorecard amply demonstrates. LIBOR I purported to conduct a perfunctory “Erie analysis” without any focus on prior New York law, concluding generally that:
Absent state-specific considerations, we believe the best prediction is that a state would recognize cross-jurisdictional tolling. The most salient consideration is that the reasoning of American Pipe and analogous state-court cases applies with equal force regardless of whether a class action is filed in the same jurisdiction as the subsequent individual action or in a different jurisdiction.
* * * *
Some federal courts seem to have applied a presumption against cross-jurisdictional tolling out of a concern over federal interference with state policy. But a proper respect for state judiciaries does not require such timidity.
2015 WL 4634541, at 129-30, citing nothing supportive of these propositions, omitting citations to Erie decision LIBOR I refused to follow. The same Erie “analysis,” if it can be called that, was followed, verbatim, in LIBOR II. See 2015 WL 6243526, at *139-40. As a result, these blatantly result oriented opinions simply refused to follow prior New York precedent on cross-jurisdictional class action tolling:
Soward . . . concluded, “I cannot say that New York would adopt cross-jurisdictional tolling and decline to import the doctrine into New York’s law.” Relying on Soward (and on other federal cases dealing with non-New York law), Judge Sweet more recently found “compelling” the concern that a state “will invite into its courts a disproportionate share of suits which the federal courts have refused to certify as class actions” by accepting cross-jurisdictional tolling.
We respectfully disagree with our fellow judges’ predictions of New York law. Specifically, we disagree with our colleagues’ prediction that New York would reject cross-jurisdictional tolling to the extent that those decisions are predicated on floodgate concerns.
LIBOR I, 2015 WL 4634541, at *133-34; LIBOR II, 2015 WL 6243526, at *145 (citations omitted).
The LIBOR decisions thus violated the most fundamental aspect of Erie – that “[a] federal court in diversity is not free to engraft onto those state rules exceptions or modifications which may commend themselves to the federal court, but which have not commended themselves to the State in which the federal court sits.” Day & Zimmerman, Inc. v. Challoner, 423 U.S. 3, 4 (1975). The Second Circuit in particular has long cautioned:
[T]he proper function of this Court is to ascertain what New York law is, and not to speculate about what it will be, or in Learned Hand’s felicitous phrase, “to embrace the exhilarating opportunity of anticipating a doctrine which may be in the womb of time, but whose birth is distant.” Spector Motor Service v. Walsh, 139 F.2d 809, 823 (2d Cir. 1943) (dissent), vacated 323 U.S. 101 (1944). It is certainly not our function to apply the rule we think better or wiser.
Garland v. Herrin, 724 F.2d 16, 17 (2d Cir. 1983) (emphasis added). In more modern terms, this same inherent Erie conservatism has been expressed as an admonition that “we are mindful that our role as a federal court sitting in diversity is not to adopt innovative theories that may distort established state law.” Travelers Insurance Co. v. Carpenter, 411 F.3d 323, 329 (2d Cir. 2005) (citation and quotation marks omitted).
Thus the current attempt to hijack the New York statute of limitations through cross-jurisdictional class action tolling began with two essentially identical decisions that ignored prior precedent and made an Erie prediction while turning Erie on its head.
The hijacking continued in Famular v. Whirlpool Corp., 2017 WL 2470844 (S.D.N.Y. June 7, 2017), a purported economic loss class action. First, the court in Famular claimed “not [to be] aware of a New York state court that has addressed whether New York recognizes tolling based on a case filed outside New York.” Id. at *7. Well, we’ve cited three such decisions in this blogpost – Singer, New York Hormone, and Kaufman – so somebody didn’t look very hard. Second, Famular opted to follow LIBOR, including its subversion of the Erie doctrine:
[Defendant] argues the Court should follow a line of federal cases refusing to apply cross-jurisdictional tolling because New York courts have not recognized cross-jurisdictional tolling. . . . [T]he bulk of the contrary authority relies on a presumption against cross-jurisdictional tolling. But the reasoning underlying this presumption is unpersuasive.
First, some courts have suggested that a federal court should not impose a legal doctrine where the state courts have not determined an uncertain issue. This is sometimes explained by “a concern over federal interference with state policy.” But this reasoning is unsound because it ignores the federal courts’ duty in these cases. As the Second Circuit has repeatedly instructed, when New York’s courts have not decided an issue of state law, it is the federal court’s “job to predict how the New York Court of Appeals would decide the issue”. . . . Thus, the Court would be ignoring its duty by adopting a presumption against imposing a legal rule the state courts have not addressed without a reasoned basis for doing so.
Second, [defendant] argues the Court should not recognize cross-jurisdictional tolling based on docket-control concerns. In [LIBOR], the court convincingly explains that the justification for rejecting cross-jurisdictional tolling − namely, “a risk that a state will attract individual out-of-state plaintiffs after a failed federal class action” − is unpersuasive, at least in New York.
Id. at *7-8 (citations omitted).
That rationale simply not the law – it’s the opposite of the law. Erie does not give federal courts applying state law a blank check to write on a blank slate. So we thought we’d take a look at what courts in the Second Circuit have actually “repeatedly instructed.” For example, how often has the injunction in Travelers v. Carpenter against Erie predictions of “innovative” liability theories been cited? How about:
[W]e must apply the statute as it has been interpreted and applied by New York’s highest court. As we have previously explained, “our role as a federal court sitting in diversity is not to adopt innovative theories that may distort established state law. Instead we must carefully predict how the state’s highest court would resolve the uncertainties that we have identified.”
Runner v. New York Stock Exchange, Inc., 568 F.3d 383, 386 (2d Cir. 2009) (citations omitted); accord National Union Fire Insurance Co. v. Stroh Cos., 265 F.3d 97, 106 (2d Cir. 2001); City of Johnstown, N.Y. v. Bankers Standard Ins. Co., 877 F.2d 1146, 1153 (2d Cir. 1989); Avedisian v. Quinnipiac University, 387 F. Appx. 59, 60 (2d Cir. 2010); Shillingford v. Astra Home Care, Inc., 293 F. Supp.3d 401, 416 (S.D.N.Y. 2018); In re General Motors LLC Ignition Switch Litigation, 2016 WL 3996243, at *2 (S.D.N.Y. July 22, 2016); Versatile Housewares & Gardening Systems, Inc. v. Thill Logistics, Inc., 819 F. Supp.2d 230, 236 (S.D.N.Y. 2011); In re Methyl Tertiary Butyl Ether (MTBE) Products Liability Litigation, 274 F.R.D. 106, 112 (S.D.N.Y. 2011); Empire City Capital Corp. v. Citibank, N.A., 2011 WL 4484453, at *2 (S.D.N.Y. Sept. 28, 2011); Musaji v. Banco do Brasil, 2011 WL 2507712, at *3 (S.D.N.Y. June 21, 2011); Travelers Casualty & Surety Co. v. Dormitory Authority, 735 F. Supp.2d 42, 88 (S.D.N.Y. 2010); Liddle & Robinson, LLP v. Garrett, 720 F. Supp.2d 417, 424 (S.D.N.Y. 2010); Hunt v. Enzo Biochem, Inc., 471 F. Supp.2d 390, 412 n.140 (S.D.N.Y. 2006); Cooper Industries, Inc. v. Agway, Inc., 987 F. Supp. 92, 104 (N.D.N.Y. 1997) (adding, “this Court will not create or extend New York law to recognize such a novel duty; that is the bailiwick of New York’s courts and legislature”). That’s five Second Circuit cases and twice that number of New York district court cases.
And before that formulation, we had the more colorful version originally penned by Judge Learned Hand, and quoted, above, in Garland, 724 F.2d at 17. The distinctive language makes that proposition particularly easy to search for. Several additional Second Circuit and New York District Courts have used Judge Hand’s terminology to embrace the principle that Erie precludes the sort of expansive predictions of state law consciously engaged in by the courts in LIBOR and Famular. See, in addition to Garland: Hausman v. Buckley, 299 F.2d 696, 704 (2d Cir. 1962); Katt v. City of New York, 151 F. Supp.2d 313, 335 n.17 (S.D.N.Y. 2001), aff’d in pertinent part, 372 F.3d 83 (2d Cir. 2004); Levesque v. Kelly Communications, Inc., 1993 WL 22113, at *6 (S.D.N.Y. Jan. 25, 1993); Eskimo Pie Corp. v. Whitelawn Dairies, Inc., 284 F. Supp. 987, 993 (S.D.N.Y. 1968).
But on the question of cross-jurisdictional class action tolling under New York law, the hijacking of the New York statute of limitations by federal courts determined to facilitate class actions has proceeded apace in 2018. Chavez v. Occidental Chemical Corp., 300 F. Supp.3d 517, 530 (S.D.N.Y. 2018), reconsideration denied, 2018 WL 620488 (S.D.N.Y. Jan. 29, 2018), became the first case purporting to apply cross-jurisdictional class action tolling in a personal injury action. Perhaps emboldened by current political practices, Chavez falsely stated that “Courts in this District have split, 2–2, on in their predictions as to whether the New York Court of Appeals would apply cross-jurisdictional tolling as a matter of New York law.” Id. at 530 (omitting Gould and Adams decisions discussed above).
Chavez then followed the Erie error that LIBOR began, also characterizing the refusal to predict “expand[ing]” state-law liability – the position embraced in the seven Second Circuit cases just discussed − as “timidity.” Id. “[L]argely for the reason stated in LIBOR” Chavez predicted that that an unsuccessful class action, filed anywhere (the plaintiffs weren’t even Americans), would trump the New York statute of limitations even though more than 17 years had elapsed. Id. at 532. At least Chavez agreed to certify the issue to the Second Circuit. Id. at 538 (“Whether New York law permits cross-jurisdictional class action tolling is both a disputed question of law in this District and an issue whose resolution in plaintiffs’ favor is a necessary predicate to the continued survival of this complex and important multi-national litigation”). That appeal is pending. See Chavez v. Occidental Chemical Corp., No. 18-1120 (2d Cir.).
Most recently, Hart v. BHH, LLC, 323 F. Supp.3d 560 (S.D.N.Y. 2018), reconsideration denied, 2018 WL 5729294 (S.D.N.Y. Nov. 2, 2018), described Chavez as “the most recent and persuasive case law in this District.” Id. at 556. Following Chavez, Hart needed only one paragraph to conclude that cross-jurisdictional class action tolling, arising from failed Ohio class action, trumped the New York statute of limitations in a warranty class action brought in New York. Id.
We can only hope that the Second Circuit continues its decades of insistence on Erie conservatism in the Chavez appeal. However, there’s a possibility that the court won’t even have to reach the question – and for the best of reasons. In June of this year, while the Chavez appeal was pending, the Supreme Court decided that American Pipe tolling does not allow stacking of one class action after another. See China Agritech, Inc. v. Resh, 138 S. Ct. 1800, 1811 (2018) (“the Rules do not offer . . . a reason to permit plaintiffs to exhume failed class actions by filing new, untimely class claims”). Without ever having to consider state law, the Court rejected the perverse practice of seriatim class actions, all based on American Pipe, tolling statute of limitations effectively forever:
[Plaintiffs’] proposed reading would allow the statute of limitations to be extended time and again; as each class is denied certification, a new named plaintiff could file a class complaint that resuscitates the litigation. . . . [T]he time for filing successive class suits, if tolling were allowed, could be limitless. . . . Most statutory schemes provide for a single limitation period without any outer limit to safeguard against serial relitigation. Endless tolling of a statute of limitations is not a result envisioned by American Pipe.
Id. at 1808-09 (citations and footnotes omitted).
All of the recent New York Erie-offending cross-jurisdictional class action tolling decisions − LIBOR, Famular, Chavez, and Hart − were, like China Agritech, class actions seeking to take advantage of the purported tolling effect of an earlier, unsuccessful class action (or, in Chavez, multiple, successive failed class actions). Thus, they should all independently fall under China Agritech – unless the purveyors of class actions are now going to argue that hypothetical New York cross-jurisdictional class action tolling (not affirmatively recognized by any New York court) is even broader than the federal American Pipe doctrine. A fortiori, we don’t think that any possible reading of New York law would extend American Pipe to this absurd extreme. With class action stacking now prohibited under the American Pipe doctrine, assertion of cross-jurisdictional class action tolling on the same theory should decrease considerably.
Finally, the fact that all recent New York cross-jurisdictional class action tolling decisions (including the favorable Bear Stearns and Gould decisions) have involved plaintiffs attempting to stack one class action on another in contravention of American Pipe, should open the eyes of those courts that tend to exhibit almost blind faith in the class action mechanism and seek to extend it in various and sundry ways. This includes similar, concurrent attempts being made to carve out class actions from constitutional Due Process constraints on personal jurisdiction under Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (most recently discussed just last week), as well as proponents of cy pres distributions.
Frankly, class actions, at least those seeking money damages, are no longer (if they ever were) instruments for pursuit of social good. Rather they are tools that the lawyers bringing them use for personal enrichment. They can bring big, scary-looking lawsuits without even the bother of dealing with real clients. Rather than benefiting society, they extort huge fees for themselves, and little if anything for the supposed classes, by bringing litigation that, without class actions, would be too trivial for anybody to bother with. This kind of bottom-feeding litigation is of no benefit to anyone but lawyers. The kind of “enforcement” these class actions purport to pursue, if needed, can be brought far more efficiently and equitably by law enforcement and/or administrative agencies. The abusive litigation and legal gamesmanship on a grand scale that Rule 23, and similar state rules, have engendered is why we believe that Rule 23(b) should simply be done away with, and that Congress and other legislative bodies should decide whether (and under what standards) any particular statute, or common-law claim, should support representative litigation.