— Johnson Fistel, LLP (@JF_LLP) August 17, 2018
A recent decision by the U.S. Supreme Court has created new urgency for those considering when and whether to bring claims for relief on behalf of themselves or others similarly situated. Over forty years ago, in the landmark American Pipe case, the Supreme Court held that the “commencement of a class action suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.” Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974). The Supreme Court of the United States recently clarified and updated this rule in China Agritech, Inc. v. Resh, 138 S. Ct. 1800 (2018).
In China Agritech, the Court unanimously held that the American Pipe rule only tolls a putative class member’s individual claims and does not allow a putative class member to file a new class action after the statute of limitations has expired. China Agritech, 138 S. Ct. at 1808 (“Ordinarily, to benefit from equitable tolling, plaintiffs must demonstrate that they have been diligent in pursuit of their claims,” “A would-be class representative who commences suit after expiration of the limitation period, however, can hardly qualify as diligent in asserting claims and pursuing relief.”). In other words, the Court held that “American Pipe does not permit a plaintiff who waits out the statute of limitations to piggyback on an earlier, timely filed class action.” China Agritech, 138 S. Ct. at 1806.
Moreover, when considered in conjunction with the Court’s other recent decision in California Public Employees’ Retirement System v. ANZ Securities Sec., Inc., 137 S. Ct. 2042 (2017), which held that American Pipe class action tolling applies only to statutes of limitation and not statutes of repose, absent class members can no longer wait until a decision on class certification has been rendered to decide whether to opt out and pursue their claims individually because waiting for a decision on class certification risks running afoul of the applicable statute of repose, thus time-barring their claims. For example, Securities Act claims carry a two-year limitations period and a five-year repose period (see 15 U.S.C. § 77m), and any Section 10(b) securities fraud claims carry a two-year limitations period and a five-year repose period (see 28 U.S.C. § 1658(b)).
In light of these decisions, it is imperative that those seeking to bring securities or other claims consider whether to bring those claims before the clock runs out and the statute of limitation or statute of repose applicable to those claims bar those claims from being filed. Such would-be plaintiffs should not rely on the pendency of an already-filed class action to preserve their rights with respect to when to bring a case. Actions to consider include, but are not limited to, timely filing related claims or intervening in the pending class proceeding. Please feel free to contact our offices if you have any concerns regarding these issues.