Am. Pipe & Constr. Co. v. Utah
Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), involved a federal antitrust action brought by the State of Utah on behalf of itself and other public agencies.
The suit was filed eleven days before the applicable statute of limitations was to expire.
During the course of the litigation, the federal district court ruled that the suit could not proceed as a class action.
Eight days after the trial court denied class certification, numerous Utah towns, municipalities, and water-and-sewer districts moved to intervene in the suit. Id. at 543-44.
Ruling that limitations had expired, the district court denied the motion. Id. at 544.
The Supreme Court disagreed, concluding that the motions to intervene were not time-barred. It reasoned that unless the filing of a class action tolled limitations, potential class members would be induced to file motions to intervene or to join in the suit, merely to protect themselves in the event of the denial of class certification. Am. Pipe, 414 U.S. at 553.
In its view, such a result would thwart two key goals of the class action procedure: promotion of efficiency and economy of litigation. Id.
Therefore, to protect the policies undergirding the class action procedure, the 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." Id. at 554.
Writing for the majority, Justice Stewart said:
Under present Rule 23 ... the difficulties and potential for unfairness which, in part, convinced some courts to require individualized satisfaction of the statute of limitations by each member of the class, have been eliminated, and there remain no conceptual or practical obstacles in the path of holding that the filing of a timely class action complaint commences the action for all members of the class as subsequently determined. Whatever the merit in the conclusion that one seeking to join a class after the running of the statutory period asserts a "separate cause of action" which must individually meet the timeliness requirements, such a concept is simply inconsistent with Rule 23 as presently drafted. A federal class action is no longer "an invitation to joinder" but a truly representative suit designed to avoid, rather than encourage, unnecessary filing of repetitious papers and motions. Under the circumstances of this case, where the District Court found that the named plaintiffs asserted claims that were "typical of the claims or defenses of the class" and would "fairly and adequately protect the interests of the class," Rule 23(a)(3),(4), the claimed members of the class stood as parties to the suit until and unless they received notice thereof and chose not to continue. Thus, the commencement of the action satisfied the purpose of the limitation provision as to all those who might subsequently participate in the suit as well as for the named plaintiffs. To hold to the contrary would frustrate the principal function of a class suit, because then the sole means by which members of the class could assure their participation in the judgment if notice of the class suit did not reach them until after the running of the limitation period would be to file earlier individual motions to join or intervene as parties - precisely the multiplicity of activity which Rule 23 was designed to avoid in those cases where a class action is found "superior to other available methods for the fair and efficient adjudication of the controversy." Rule 23(b)(3). (Id. at 550-51.)
Further, the Supreme Court said:
We hold that in this posture, at least where class action status has been denied solely because of failure to demonstrate that "the class is so numerous that joinder of all members is impracticable," the commencement of the original class suit tolls the running of the statute 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....
A contrary rule allowing participation only by those potential members of the class who had earlier filed motions to intervene in the suit would deprive Rule 23 class actions of the efficiency and economy of litigation which is a principal purpose of the procedure....(Id. at 552-53.)
In the Court's view, the result was "in no way inconsistent with the functional operation of a statute of limitations." Id. at 554.
It reasoned: "Since the imposition of a time bar would not in this circumstance promote the purposes of the statute of limitations, the tolling rule we establish here is consistent both with the procedures of Rule 23 and with the proper function of the limitations statute." Id. at 555.
Moreover, the Court expressly rejected the contention that limitations is the sole prerogative of Congress, because it constitutes a "'substantive' element" of a claim. Id. at 556.
To the contrary, it concluded that "the mere fact that a federal statute providing for substantive liability also sets a time limitation upon the institution of suit does not restrict the power of the federal courts to hold that the statute of limitations is tolled under certain circumstances not inconsistent with the legislative purpose." Id. at 559.