In American Pipe & Construction Co. v. Utah, 414 U. S. 538 (1974), the U.S. Supreme Court held that, as a matter of federal law, the timely filing of a class action tolls the statute of limitations for claims filed later by unnamed class members. New York courts have adopted American Pipe tolling as a matter of state law. See Osarczuk v. Associated Univs., Inc., 130 A.D.3d 592 (2d Depʹt 2015); Paru v. Mutual of Am. Life Ins. Co., 52 A.D.3d 346 (1st Depʹt 2008).
This case presents two questions about state-law American Pipe tolling: (1) whether it applies to a class action pending in another jurisdiction (so-called “cross-jurisdictional tolling”), and (2) whether the toll terminates only when class certification is denied on the merits.
This case involves a series of class actions commenced by agricultural workers who were allegedly injured by exposure to the pesticide dibromochloropropane (DBCP) while working on banana plantations in Central and South America between the 1960s and the 1980s. In brief, a putative class of injured workers first filed an action in Texas state court in August 1993. After removal, a federal district court in Texas dismissed the action on forum non conveniens grounds without addressing class certification on the merits. After some twists and turns, the case wound up in Texas state court again, which ultimately denied class certification on the merits in June 2010.
Less than three years after the Texas state court’s merits-decision on class certification, plaintiffs in this putative class action filed a complaint in a Delaware federal district court, which was then transferred to the Southern District of New York. The parties agree that plaintiffs’ claims are governed by New York’s three-year statute of limitations, and that the limitations period began to run no later than August 1993.
Defendants moved to dismiss, arguing that the applicable statute of limitations had expired. The district court disagreed. Although it acknowledged that New York law was unsettled in this area, the court held that New York courts would likely adopt cross-jurisdictional tolling for class actions filed in other jurisdictions, such that the limitations period on plaintiffs’ claims was tolled during the pendency of the Texas action. And the district court further held that New York courts would likely adopt a rule that American Pipe tolling concludes only once a class certification is denied on the merits, such that plaintiffs’ claims were tolled until the Texas state court’s June 2010 denial of class certification on the merits.
The district court certified an interlocutory appeal, and the Second Circuit found the unresolved state-law issues too close to decide without guidance from the Court of Appeals. The Court of Appeals accepted the certified questions on August 29, 2019.
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