Recently on June 11, 2018, the Supreme Court, in China Agritech, Inc. v. Resh, 138 S.Ct. 1800 (2018), unanimously held that the statute of limitations is not tolled on successive class actions when a putative class action is filed. Previously in American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), the Supreme Court ruled that the claims of non-named plaintiffs were not barred by the statute of limitations if the class action of which they were a member failed. The statute of limitations for the individual claims was tolled while the class action was pending. In China Agritech, the Court held that this same tolling rule does not apply to allow unnamed plaintiffs to file a new class action on behalf of themselves and others if the original class action fails.
Writing for the majority, Justice Ginsburg wrote that American Pipe “tolls the statute of limitations during the pendency of a putative class action, allowing unnamed class members to join the action individually or file individual claims if the class fails. But American Pipe does not permit the maintenance of a follow-on class action past expiration of the statue of limitations.”
In declining to extend American Pipe, the Court explained that extending the tolling rule to successive class actions would promote inefficiency and conflict with very reason for the American Pipe tolling rule: “The watchwords of American Pipe are efficiency and economy of litigation, a principal purpose of Rule 23 as well. Extending American Pipe tolling to successive class actions does not serve that purpose.”
Justice Ginsburg reasoned that extending the American Pipe rule to class actions would result in the inefficiency of multiple successive belated class actions and “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.” Accordingly, individual claimants not specifically named in the class action will be able to maintain their own claims but will not be able to simply refile a new class action and have a second attempt at class certification.
The China Agritech decision provides clarity and assurance to a defendant that if class certification is defeated, and the statute of limitations has expired, it will only face individual suits and not a resurrected class action. It also forces potential claimants to bring suit in a timely manner, instead of being able to wait to file their class action until after an already pending class action has failed.