Erica W. Rutner of Lash & Goldberg in Miami. Erica W. Rutner of Lash & Goldberg in Miami.

On June 11, 2018, a nearly unanimous Supreme Court dealt a deafening blow to the practice of filing successive class actions. In China Agritech v. Resh, 584 U.S. ___ (2018), the court was faced with whether a class action filing tolls the statute of limitations for putative class members who wish to file subsequent class actions. Supreme Court precedent in American Pipe & Construction v. Utah and Crown, Cork & Seal v. Parker previously established that the filing of a class action tolls the statute of limitations for individuals who later wish to bring an individual claim. But the court was silent on whether such tolling extended to class claims, and circuit courts across the country were split on the issue. Most circuits—including the Eleventh Circuit—have held that American Pipe tolling does not extend to successive class claims. However, other circuits, including the Ninth Circuit that issued the underlying decision in Resh, have held that tolling does apply to later-filed class actions.

In the 15-page opinion authored by Justice Ruth Bader Ginsburg, eight of the nine justices resoundingly held that a plaintiff may not commence a follow-on class action that is outside the statute of limitations by “piggyback[ing] on an earlier, timely filed class action.” The court articulated that the efficiency and economy of litigation which supports tolling of individual claims does not support the tolling of class claims, and that “any additional class filings should be made early on, soon after the commencement of the first action seeking class certification.”  The court further emphasized that “if the class mechanism is not a viable option for the claims, the decision denying certification will be at the outset of the case, litigated once for all would-be class representatives.”

In reaching this decision, the court made several observations that supported its conclusion. For instance, the court found that Rule 23 weighs against class tolling because it instructs that class certification should be resolved early on. In addition, the court noted that—unlike individual tolling—if class tolling were allowed, the time for filing successive class suits “could be limitless” and that “endless tolling of a statute of limitations is not a result envisioned by American Pipe.” Furthermore, the court observed that even its decision does lead to a multiplicity of protective class-action filings—a concern expressed by respondents—such filings are not “necessarily ‘needless.’” Rather, they “may aide a district court in determining, early on, whether class treatment is warranted, and if so, which of the contenders would be the best representative.” The court also noted that the Rules provide district courts with ample tools to manage overlapping timely-filed class actions, including the ability to stay, consolidate, or transfer proceedings. In concluding, the court wrote that “what the rules do not offer is a reason to permit plaintiffs to exhume failed class actions by filing new, untimely class claims.”

There is no doubt that the outcome in Resh provides important, explicit, and uniform constraints on the practice of filing successive class actions. This is a practice that has increased significantly since the Supreme Court’s decision in Smith v. Bayer, which established that the denial of class certification does not bind unnamed members of the putative class. Given the precedent set by Bayer, permitting class tolling would—just as the court observed in Resh—result in potentially limitless filing of successive class actions. Indeed, that is precisely what occurred in Resh: the defendant defeated class certification on two successive occasions, only to be sued a third time in a virtually identical class case. While Resh does not prevent successive class actions altogether—they are still permitted so long as the successive action is timely—it does place place a finite restraint on the practice. And even where a successive class case is timely filed, defendants have stronger tools at their disposal in attempting to rely on a prior denial of class certification as persuasive authority. In Bayer, the Supreme Court referred to “principles of comity” as a potential remedy for successive class filings, but courts have since struggled with what that phrase means when evaluating the weight of a prior class certification denial. Because Resh expressly held that “the decision denying certification will be at the outset of the case, litigated once for all would-be class representatives,” it arguably indicated that the “comity” mentioned in Bayer has more teeth than what some courts have interpreted it to mean. In any event, defendants can take comfort that Resh provides for eventual finality when facing putative class action exposure.

Erica Rutner is an attorney with Lash & Goldberg in Miami and focuses on class action defense.