Products Liability Law Daily Second Circuit certifies questions concerning cross-jurisdictional class action tolling to the New York Court of Appeals
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Thursday, August 8, 2019

Second Circuit certifies questions concerning cross-jurisdictional class action tolling to the New York Court of Appeals

By Harold S. Berman, J.D.

New York’s high court was asked to determine whether cross-jurisdictional class action tolling is recognized under New York law; and whether a non-merits denial of class certification in another jurisdiction ends class action tolling.

The U.S. Court of Appeals for the Second Circuit certified two questions to the New York Court of Appeals concerning cross-jurisdictional class action tolling in a class action suit brought by banana plantation workers against a pesticide manufacturer. New York courts have not yet determined whether an action previously brought by the workers in a Texas state court could toll the New York statute of limitations. Nor was it established whether or to what extent the Texas court’s non-merits denial of class certification tolled the workers’ claims (Chavez v. Occidental Chemical Corp., August 7, 2019, Sack, R.).

Agricultural workers from Central and South America alleged that they suffered multiple health issues from being exposed to the pesticide dibromochloropropane (DBCP) between the mid-1960s and the mid-1980s when DBCP was widely used in banana plantations. The workers claimed they never were warned of DBCP’s health risks, nor were they encouraged to wear protective gear to prevent exposure to the pesticide, even though: the risks were known by 1961, the Environmental Protection Agency (EPA) identified DBCP as a carcinogen by 1976 and virtually prohibited its use by 1977, and Occidental discovered in 1977 that some of its workers were sterile.

The workers filed a class action 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 nonconveniens and denial of class certification as moot would not terminate class action tolling. Occidental appealed, challenging both conclusions.

Certification of questions to New York Court of Appeals. The Second Circuit concluded that the questions of whether New York would allow cross-jurisdictional class action tolling, or 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 these two questions to the New York State Court of Appeals.

Whether New York law recognizes cross-jurisdictional class action tolling. The Court of Appeals went on to discuss why it was appropriate to certify the question of whether New York law recognizes cross-jurisdictional class action tolling. The workers and Occidental agreed that New York’s three-year statute of limitations governed the workers’ claims, and that their claims accrued under New York law when they discovered their injuries in 1993. However, the workers and Occidental disputed whether, under New York law, the suspension of the Texas action in 1995 tolled the statute of limitations, and if so, for how long.

The Second Circuit concluded that New York courts had not yet decided the issue of whether an action pursued outside of New York tolled the New York statute of limitations of absent class members in New York courts. Given the dearth of relevant New York case law on this issue, the Second Circuit could not independently determine that the New York Court of Appeals would hold that New York law recognizes cross-jurisdictional tolling. Although New York courts had held that commencing a class action in New York tolled absent class members’ claims, that holding was insufficient for the Second Circuit to conclude how the New York Court of Appeals would address cross-jurisdictional tolling.

Effect on cross-jurisdictional tolling of non-merits denial of class certification. Even if the Second Circuit could determine that the New York Court of Appeals likely would approve cross-jurisdictional tolling, it remained unclear whether under New York law, the Texas action tolled the workers’ claims, and, if so, for how long. Neither the U.S. Supreme Court, the Second Circuit, nor the New York Court of Appeals had yet determined whether a denial of class certification must be on the merits to terminate class action tolling.

The Texas state court had denied class certification only as an administrative matter, dismissing the case on the basis of forum non conveniens, and denying class certification as moot. Additionally, the Texas court’s order included a return jurisdiction clause, which stipulated that the workers could reinstate their class action if the highest court of any relevant foreign country dismissed their claims for lack of jurisdiction. Existing case law provided little guidance on whether a non-merits denial of class status terminated tolling, and courts were divided on the potential effect on tolling of the return jurisdiction clause.

The case is No. 18-1120-cv.

Attorneys: Paul Berks (Massey & Gail LLP) for Tobias Bermudez Chavez. Timothy J. Houseal (Young Conaway Stargatt & Taylor, LLP) for Occidental Chemical Corp.

Companies: Occidental Chemical Corp.

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