Supreme Court: class actions can’t be brought back time after time

Class action tolling means suspending time limits on future lawsuits while a class action suit is pending. This is distinct from class action trolling which is when the Ninth Circuit adopts a deliriously liberal rule and dares the Supreme Court to reverse it.

Both phenomena were involved in today’s unanimous Supreme Court opinion in China Agritech v. Resh. In the 1974 case of American Pipe & Construction v. Utah the Court had adopted a rule permitting individual claimants to file otherwise-tardy actions after a court had declined to certify a class action. The American Pipe rule is itself decidedly indulgent toward the class action device, but it took the Ninth Circuit to take a crucial extra step off the Santa Monica pier by holding that the late-arriving claimants should themselves be able to ask for certification as a class action. After all, the first try at certification might have been based on a flawed legal strategy or incomplete factual record. Why not give our friends in the bar a second bite?

Or a third bite, or an nth: in fact the case that reached the high court was the third class action in a row attempted on the same underlying facts, a securities dispute. To almost everyone but the Ninth Circuit, the resulting danger was clear enough: without any real need to accept “no” for an answer, class action lawyers could just come back again and again with new tame plaintiffs until they find a judge willing to grant certification, the step that tends to guarantee a payday in the class action business.

Today’s unanimity is significant. On procedural and jurisdictional issues, at least, today’s liberal wing on the Court has sometimes been willing to unite with the Rehnquist-Scalia-Roberts wing to recognize and rein in the dangers of lawyer-driven overlitigation, the tactical use of lawsuits as a weapon, and so forth. Justice Ruth Bader Ginsburg, who wrote today’s opinion, has more than once joined and sometimes led such coalitions. By contrast, Justice Sonia Sotomayor has often been found alone and out on a limb in favor of a more litigation-friendly position, which happened again today: she joined in a concurrence agreeing that the Ninth Circuit had gone too far but seeking to limit the Court’s holding to securities suits governed by the Private Securities Litigation Reform Act of 1995 (PSLRA).

The Senate might want to quiz future liberal nominees – yes, there will be such – on whether they more favor the Ginsburg or the Sotomayor approach to these issues.

[cross-posted from Cato at Liberty]

7 Comments

  • More frightening is that class action lawyers could hold back plaintiffs to bundle them into so many groups that it overwhelms the possibility of a fair trial. Imagine if you’re trying to defend yourself and every other month you’re hit with a new lawsuit, each slightly different then the others. Each building off flaws identified in the previous cases. Eventually the time and cost to defend yourself is so large you settle.

  • Fair points.

    But if the individual plaintiffs aren’t time-barred, then why would their ability to use a device found in the FRCP be barred?

  • SPO, the key phrase was ” otherwise-tardy “.

    The APC v Utah rule essentially tolled the SoL for filing while the prior class was in place, allowing the litigation (specifically, unsuccessful attempts at certification) to go on essentially forever. Given the costs of repeat Discovery at the pre-certification stage, and the lack of any finality until a class wide settlement was reached, a series of individual actions, pled ad infinitum as potential classes, has an en terrorem effect on Defendants.

    one can’t be a silent potential class member until the case falls apart, then bring the potential class again until the Defendant is compelled to settle to avoid further costs, w/o regard to the underlying merits. Once the clock has ticked, it should be done.

    Or so I understand it.

    • Understood—but isn’t the point that the individuals aren’t time-barred by virtue of the pending class-action, so why would their ability to avail themselves of procedural devices in the FRCP–I could see some sort of issue preclusion argument, but Sotomayor’s argument isn’t out to lunch, as far as I can tell.

      • Agreed, issue preclusion seems a more straight forward answer to this legal knot – if you don’t like the unsuccessful certification result, appeal – don’t dismiss and start over, knowing that none of the months or perhaps years leading up to this point count against any SoL.

        • But that’s not, generally speaking, how class actions roll. The non-class representative plaintiffs are along for the ride, not expected to take up the cudgel. Venue may be inconvenient (or jurisdiction not present). Etc. etc.

          It’s just weird that those plaintiffs can file individual claims, but cannot aggregate, unless you want to bring in issue-preclusion, which isn’t easy either.

          I am not disagreeing with the result as a policy matter–it just seems that the path is far more difficult than meets the eye.

          Shouldn’t this be something the rules themselves address?

  • When does a prospective class member have to opt out of a particular class or class settlement? And is I don’t want to be part of their dismassal a valid choice?

Join the Discussion

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>