Monday, July 20, 2015

A Good Reason to Address Class Cert Early

Falk v. Children’s Hospital L.A., No. B251182 (D2d3 Jun 24, 2015)

This case is about so-called American Pipe tolling. See Am. Pipe & Const. Co., v. v. Utah, 414 U.S. 538 (1974). It was developed under federal law, but generally applies in California as well. The gist of the doctrine is that a plaintiff who is within the class definition in a pending class action can rely on that action in deferring to bring her own suit. The statute of limitations on her claims gets tolled during that period. The whole point is to deter every potential class member from feeling like they need to jump in to preserve their rights, which would defeat the whole point of the class action procedure.

There are, of course, some nuances to the rule. Some corollary rules include: 

(1) the tolling lasts from the filing of the prior class action until (a) the denial of class cert; or (b) the pre-certification dismissal of the case on other grounds; 

(2) the later plaintiff isn’t entitled to tolling for a new class action if the court denied certification due to reasons common to the class (i.e., common issues don’t predominate); 

(3) on the other hand, if class cert was denied for an individualized reason (e.g., plaintiff was inadequate) the tolling still applies;

(4) when the court decides issues about the merits of a putative class rep’s claims before deciding on certification, the tolling lasts until a judgment on those claims is final, including the resolution of any appeals;

(5) the tolling only applies when the defendant has actual notice of the nature and scope of the class claims; and 

(6) if there are multiple class actions pending, a plaintiff can tack together tolling periods from each action.

The facts of this case are a little confusing, but the result makes sense. There are a bunch of wage and hour class actions filed against a hospital making similar allegations. The first—filed way back in 2007—was dismissed when the trial court granted summary judgment for the hospital without certification ever being litigated. Although the allegations in that complaint weren’t the clearest, they were sufficient to give the hospital notice of the gist of the claims. That the current complaint was better and more specific doesn’t change that result. So under (1)(b) and (4) of the above rules, the SOL on this case gets tolled while the first case was pending.

The next issue comes down to time. The hospital says that whatever tolling might apply ends on the entry of judgment in the first case. Plaintiff says it lasted till the remittitur issued after a lengthy appellate process. The case law suggests that in cases where class cert is denied under corollary (2) above, the tolling stops at the denial. But when the first case never reaches the cert issue because defendant decided to litigate an individual plaintiff’s merits first, the court finds that a potential class member is entitled to rely on the potential for certification after a merits reversal in waiting to bring suit. So here, the tolling lasted until the appellate process had run its course.

Finally, the court explains that a new class plaintiff isn’t required to have intervened in the prior class case in order to merit tolling. The whole purpose of the rule is to dissuade numerous individuals from getting personally involved in a class action, when that is the most efficient vehicle to resolve the dispute. An intervention requirement would not further that purpose. So there was nothing wrong with plaintiff bringing her own class action and relying on tolling from the first case.


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