By Nicholas Kaster, J.D.
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.
In response to certified questions from the U.S. Court of Appeals for the Second Circuit, New York’s high court has determined that New York law recognizes cross-jurisdictional class action tolling and that a non-merits denial of class certification in another jurisdiction ends class action tolling. As such, in a case brought by agricultural workers alleging pesticide-related injuries against the pesticide manufacturer, the 1995 orders by a federal district court in Texas—relating to a different putative class action advancing the same claims as those advanced in the case at bar—that dismissed that action on forum non conveniens grounds ended tolling, as a matter of law (Chavez v. Occidental Chemical Corp., October 20, 2020, Stein, L.).
Agricultural workers from Central and South America alleged that they suffered multiple health issues from being exposed to the pesticide dibromochloropropane (DBCP), manufactured by Occidental Chemical Corporation, between the mid-1960s and the mid-1980s when DBCP was widely used on banana plantations. The workers, after filing individual lawsuits, consolidated their claims and filed a class action lawsuit in 2012 in the federal district court in Delaware against various DBCP manufacturers, distributors, and farm owners. Their claims against Occidental Chemical Corporation were transferred from Delaware to the Southern District of New York in May 2017. Occidental moved for judgment on the pleadings, maintaining that the workers’ claims were time-barred under New York’s three-year statute of limitations for personal injury actions. The district court denied Occidental’s motion [see Products Liability Law Daily’s January 10, 2018 analysis], finding that the workers’ claims were tolled from 1993 to 2010 because of a pending class action filed in Texas state court in 1993. The Texas action was brought on behalf of all persons exposed to DBCP between 1965 and 1990. The district court reasoned that the New York State Court of Appeals likely would permit the tolling of claims in New York while a class action was pending in another jurisdiction, and would decide that the 1995 dismissal of the Texas action based on forum non conveniens and denial of class certification as moot would not terminate class action tolling. Occidental appealed, challenging both conclusions.
Second Circuit certifies questions. The U.S. Court of Appeals for the Second Circuit concluded that the questions of whether New York would allow cross-jurisdictional class action tolling—i.e., tolling of a New York statute of limitations by the pendency of a class action in another jurisdiction—and whether a non-merits dismissal of class certification would terminate class action tolling had not yet been addressed by New York’s appellate courts. Consequently, the Second Circuit certified the two questions to the New York State Court of Appeals [see Products Liability Law Daily’s August 8, 2019 analysis].
Cross-jurisdictional class action tolling. On the first question, New York’s high court concluded that New York law recognizes cross-jurisdictional class action tolling. The court held that a determination that tolling is not available cross-jurisdictionally would subvert article 9 of the New York Civil Practice Law & Rules (CPLR), which codifies New York’s class action mechanism. The primary function of article 9, the court noted, is to allow named plaintiffs to bring truly representative lawsuits without necessitating a multiplicity of litigation that squanders resources and undermines judicial economy, while still ensuring that defendants receive fair notice of the specific claims advanced against them. The court explained that CPLR article 9 is closely related to and modeled on Federal Rules of Civil Procedure rule 23, and the same animating policies the U.S. Supreme Court set forth in the 1974 case of American Pipe and Constr. Co. v Utah, 414 US 553 (1974) also underlie article 9. In American Pipe, the Supreme Court held that "the commencement of [a] class suit tolls the running of the statute [of limitations] for all purported members of the class who make timely motions to intervene after the court has found the suit inappropriate for class action status."
Both rule 23 and article 9 were intended to permit the named plaintiffs in a putative class action to act as place holders, fully representing absent class members who have the same claims, the New York court stated. Additionally, rule 23 and article 9 were designed to avoid wasteful and duplicative litigation by eliminating the need—during the pendency of the class action—for putative class members to initiate individual claims to protect their rights, while simultaneously providing notice to defendants of the claims not only of the named plaintiffs, but also of potential absent class members who could advance those same claims. It would contravene article 9 to hold that, if class action status is denied or the action otherwise terminated, putative class members are treated as if no action were ever brought. Such a rule would promote putative class members to initiate parallel individual claims in New York and other jurisdictions nearing expiration of the statute of limitations in order to protect against the risk of a subsequent denial of class certification or other non-merits termination—the very result article 9 was created to avoid. For that category of putative class members, the representative role of named plaintiffs would be illusory until class certification was granted, the court stated. Thus, in recognizing cross-jurisdictional tolling under New York law, and answering the first certified question in the affirmative, the court gave effect to the legislative policy embodied in article 9. A contrary holding would undermine the detailed class action statutory scheme crafted by the legislature, the court stated.
The court emphasized that tolling applies only if a defendant receives fair notice of all claims that might arise under New York law. Finally, because the same principles that support recognition of cross-jurisdictional tolling necessarily include those supporting intrajurisdictional tolling, the court took the opportunity to recognize American Pipe tolling intrajurisdictionally—confirming nearly forty years of Appellate Division case law acknowledging the same.
Cross-jurisdictional tolling of non-merits denial of class certification. The Second Circuit specifically requested guidance regarding whether a non-merits dismissal of class certification can end an absent class member’s objectively reasonable reliance and, therefore, the tolling of the statute of limitations. Because the court concluded that a non-merits dismissal or denial of class certification can end tolling, it answered the first part of the second question—"Can a non-merits dismissal of class certification terminate class action tolling?"—in the affirmative.
In addressing the second part of that question—"did the Orders at issue here do so?"—it noted that courts applying the law of other states already have grappled with how to apply the objectively reasonable reliance standard to the DBCP-related Texas litigation in this case, reaching contrary results. In light of this controversy, the Second Circuit requested guidance on the application of New York’s tolling rule because, even when courts have purported to apply a uniform standard to the same litigation history, they have reached differing results.
"Because recognition of cross-jurisdictional tolling implicates our statutes of limitations, a bright-line rule is necessary to provide clarity to all parties in understanding their rights and obligations and, in fairness—as with the policies underlying the application of statutes of limitations, generally—to balance the interests of both plaintiffs and defendants," the court explained. Therefore, the court held 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.
Under those circumstances, future plaintiffs are on notice that they must take steps to protect their rights because the litigation no longer compels the court to address class certification or the named plaintiffs to advance absent class members’ interests. At that point, it is no longer objectively reasonable for absent class members to rely upon the existence of a putative class action to vindicate their rights, and tolling is extinguished. Thus, in this case, the 1995 Texas orders that dismissed that action on forum non conveniens grounds ended tolling, as a matter of law, the court concluded.
Dissent. Judge River a, dissenting in part, stated that the court was unanimous in finding that the tolling of New York’s statute of limitations ceases when a potential class member may no longer reasonably rely on a putative class action in a foreign jurisdiction to address the member’s interests. However, he added, "I cannot subscribe to the majority’s adoption of a bright-line rule that turns that standard on its head by failing to consider the unique circumstances of the underlying litigation leading to a non-merits dismissal." Instead, he would have held that tolling should end only upon a dismissal that is unconditional, meaning that the court leaves potential plaintiffs without any expectation of an opportunity for future class certification.
The case is No. 39.
Attorneys: Kenneth A. Manning (Phillips Lytle LLP) for Occidental Chemical Corp. Jonathan S. Massey (Massey & Gail LLP) for Tobias Bermudez Chavez.
Companies: Occidental Chemical Corp.
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