Too Many Hits on the American Pipe

Fierro v. Landry’s Restaurant Inc., No. D071904 (D4d1 May 14, 2018)

Plaintiff brings a wage an hour class action against his employer. But a prior class action with identical claims had apparently been previously dismissed for failure to bring the case timely to trial under the five-year rule in Code of Civil Procedure §§ 583.310 and 583.360. The trial court granted a demurrer to the class claims on that basis. It did, however, permit plaintiff’s individual claims to proceed because statute of limitations issues raised by Defendant weren’t evident from the face of the complaint. Plaintiff took an appeal under the death knell doctrine.

The Court of Appeal holds that dismissing the class claims was in error. First, it wasn’t clear from the record that the prior dismissal was under the five-year rule. But even if it was, a five-year dismissal under § 583.360 isn’t on the merits and thus doesn’t carry any preclusive effect. Of course, if a case has been pending for five years without a trial, the statute of limitations will usually bar the case if it’s refiled. But in the case where it’s not, the prior dismissal does not prevent the litigation of a new claim.

Which raises the issue of the statute of limitations on the class claims. Defendant had argued that they were time-barred, but the trial court didn’t reach the issue. The court explains that the issue comes down to the application of American Pipe tolling. Under that doctrine, when a class action is filed, but class cert is ultimately denied, the statute of limitations for class members to bring claims of their own is tolled from filing to the denial of class cert. The idea is that putative class members have the right to rely on a pending class action as an adequate vehicle to resolve their claims without risking their claims becoming barred by the statute of limitations.

Under federal law, American Pipe tolling ceases to run when the court denies cert. It does not continue until the denial of class cert is affirmed on appeal. But unlike in federal court, California applies the death knell doctrine to make most denials of class cert immediately appealable. (Federal class cert decisions are subject to only a discretionary appeal under Rule 23(f).) Based on this procedural difference, the Court holds that, in California, the tolling continues until a cert denial is affirmed or time to appeal has run. It is also re-started if plaintiff files an amended complaint in an effort to resolve issues that lead to the original denial, such as by subbing in a more adequate class representative as plaintiff. 

So, under the facts here, the Court holds that American Pipe should toll the statute during a significant part of the earlier litigation. Which means that the class claims couldn’t have been dismissed on demurrer, had the trial court reached the issue.

Reversed. 

The American Pipe analysis set out here here makes some sense. Given the differences in appealability, it’s not crazy to let a class member await the outcome of an appeal of a class cert denial to start the clock on her claims. 

The Court, however, seems to be missing a gigantic point. Although Defendant argued that American Pipe doesn’t apply to new class actions, only individual claims, for some reason, the Court didn’t reach that precise issue. But just last week, the U.S. Supreme Court decided China Agritech v. Mesh, in which it held (8-1) that American Pipe tolling tolls the statute of limitations for individual claims only. As the Court saw it, the point of American Pipe is to permit an individual to rely on a pending class action to delay bringing a personal suit, not to permit seriatim class actions that string along endlessly reviving claims from long ago. And unlike the issues regarding the stopping and starting of the clock due to an appeal—for which there’s a policy justification for a different California rule—there’s no good reason why California should depart from federal law in applying American Pipe only to later individual claims.