We don’t like class action tolling. We don’t think that plaintiffs should be rewarded for filing a meritless class action (or any other meritless act) with a potentially broad and lengthy exemption from the relevant statute of limitations. We particularly don’t like cross-jurisdictional class action tolling, which makes a state’s enforcement of its own statute of limitations dependent on the whims of any plaintiff’s filing anywhere in the country, particularly where some courts can take their sweet time in deciding pending motions. We have expressed our displeasure with such tolling here, here, here, and most recently here. We have even maintained a “scorecard” on this relatively esoteric subject.
Not too long ago, we complained that, over the last few years, certain pro-plaintiff decisions were hijacking previously favorable New York law and “predicting” acceptance of cross-jurisdictional class action tolling contrary to Erie conservatism and prior New York precedent. Well, the other day the New York Court of Appeals ended this dispute and adopted a form of cross-jurisdictional class action tolling, that while obnoxious to us, was less obnoxious than the results in other courts.
The decision is Chavez v. Occidental Chemical Corp., ___ N.E.3d ___, 2020 WL 6136351 (N.Y. Oct. 20, 2020). It’s not a drug or device decision, but still, it’s significant, and in this case significantly bad. The decision in Chavez to adopt cross-jurisdictional class action tolling, which was unanimous, wasn’t based on prior precedent, but rather on reading of pro-class action sentiment into the initial adoption of the state’s rules of civil procedure back in 1975 – on the basis of rather thin support. Id. at *5 (citing a “Governor’s Approval Memorandum” and letter of some sort from the lawyer for the governor to the lawyer for the lieutenant governor). On the basis of a memo and a letter, then, Chavez allowed cross-jurisdictional class action tolling:
We conclude that a determination that tolling is not available cross-jurisdictionally would subvert [the New York class action rule] − the primary function of which is to allow named plaintiffs to bring truly representative lawsuits without necessitating a multiplicity of litigation that squanders resources and undermines judicial economy, while still ensuring that defendants receive fair notice of the specific claims advanced against them.
Id. We thought this kind of “we love class actions” sentiment died out in the late 1990s, when the rampant abuse of the class action mechanism became generally recognized. But unfortunately Chavez, by channelling 1975 sentiment from minimal legislative history, reads like a blast from the past.
Nowhere did Chavez address the great majority of precedent from other states – or even prior New York precedent − rejecting cross-jurisdictional class action tolling. The only contrary argument addressed is a conflict with New York legislation prohibiting courts from tolling of the statute of limitations. Id. at *6 (“No court shall extend the time limited by law for the commencement of an action.”) (quoting statute). Chavez essentially ignored this absolute statutory language, focusing instead on a supposed statutory “purpose.”
[The statute] makes clear that courts do not have discretion to excuse late filings by plaintiffs who slept on their rights. Cross-jurisdictional tolling does not implicate this concern because injured individuals who rely on a representative class action have not slept on their rights and such tolling involves no exercise of judicial discretion.
Id. (citations omitted). However, that exception is entirely made up. It appears nowhere in the quite prohibitory statutory language.
That’s the bad part. The good part of Chavez is that, like us, the Court of Appeals was revolted by the grotesque history of this litigation, whereby plaintiffs were contending that they could take advantage of no less than 18 years (from 1993 to 2011) of supposed class action tolling. Id. at *3-4. We discussed in a prior post the blatant forum shopping, duplicative filings, and other sordid details of this litigation that never belonged in an American court to start with, so we won’t repeat that here. But in between, the original class action had been dismissed for forum non conveniens, and class certification had been denied. Id.
Even a court willing to ignore over prohibitory statutory language to recognize cross-jurisdictional class action tolling in the abstract wasn’t willing to let this particular litigation continue. Chavez thus imposed a “bright line” rule on all class action tolling – cross-jurisdictional or intra-jurisdictional:
Because recognition of cross-jurisdictional tolling implicates our statutes of limitations, a bright-line rule is necessary to provide clarity to all parties. . . . Therefore, we hold that tolling ends − as a matter of law − when there is a clear dismissal of a putative class action, including a dismissal for forum non conveniens, or denial of class certification for any reason. . . . At that point, it is no longer objectively reasonable for absent class members to rely upon the existence of a putative class action to vindicate their rights, and tolling is extinguished.
Id. at *8 (citations omitted) (emphasis added). So New York is better than Delaware on cross-jurisdictional class action tolling, but as we discussed earlier, that’s not a very high bar.
The only other thing that we’d like to point out is that cross-jurisdictional class action tolling is much less of a problem now that personal jurisdiction has tightened up and the kind of file anywhere practices that the plaintiffs in the Chavez litigation got away with are not likely still available.