As we explained in our case summary, this case raised questions about the tolling doctrine from American Pipe & Construction Co. v. Utah, 414 U. S. 538 (1974), whereby the timely filing of a class action tolls the statute of limitations for claims filed later by unnamed class members. Specifically, this case raised: (1) whether American Pipe tolling applies to a class action pending in another jurisdiction (so-called “cross-jurisdictional tolling”), and (2) whether the toll can be terminated by a dismissal that is not on the merits. In a partially divided decision, the Court (Stein, J.) answered both questions in the affirmative.
The Court unanimously agreed that New York law recognized cross-jurisdictional tolling–that is, recognized that the filing of a class action in another jurisdiction tolls the statute of limitations for unnamed class members in a later-filed New York action. Federal law recognized cross-jurisdictional tolling, and the Court concluded that the same policies that animated the decision to adopt the rule as a matter of federal law also justified its adoption as a matter of New York law. Moreover, because cross-jurisdictional tolling arose from the “express legislative design” of CPLR article 9, its adoption did not run afoul of CPLR 201, which in essence prohibits courts from extending limitations periods set by statute.
The Court emphasized two qualifications on the application of cross-jurisdictional tolling: the original class action must have been timely filed; and the original class action must have given defendants “fair notice of all claims that might arise under New York law.” Further, the Court expressly limited its holding to class actions originally filed in a United States jurisdiction; the Court expressed no opinion on whether cross-jurisdictional tolling would apply to actions filed in foreign courts.
On these points, the Court was unanimous. But the Court divided on how to measure when the toll ended. Every judge agreed that the toll terminates when “it is no longer objectively reasonable for absent class members to rely upon the putative class action to vindicate their rights.” Writing for a four-judge majority, Judge Stein adopted a bright-line rule to determine when this occurs: they concluded that “tolling ends—as a matter of law—when there is a clear dismissal of a putative class action, including a dismissal for forum non conveniens, or denial of class certification for any reason.” This bright-line rule would benefit all parties, the majority explained, by providing clarity about when the tolling period ended.
The dissenters would have held that tolling ends “only upon a dismissal that is unconditional, meaning that the court leaves potential plaintiffs without any expectation of an opportunity for future class certification.” Such a rule, the dissenters explained, better aligned with the “analytic and practical” reason for class action tolling, which was to prevent the unnecessary multiplication of lawsuits. To achieve that goals, tolling is allowed so long as unnamed plaintiffs can reasonably “rely on the existence of the suit to protect their rights.” Certainly, a denial of class certification would extinguish any such reliance. But other dismissals might not, for instance where the dismissal expressly anticipates that the plaintiffs will have a future opportunity to return and certify their class. Unnamed plaintiffs, the dissenters explained, could reasonably think that the original class continued to protect their rights despite such a dismissal. And forcing them prematurely into court to file their own protective actions, despite the possibility of relief in the original action, would undermine the purpose for tolling in the first place.