American Pipe & Constr. Co. v. Utah
In American Pipe & Constr. Co. v. Utah, 414 U.S. 538, 94 S. Ct. 756, 38 L. Ed. 2d 713 (1974), the State of Utah filed a timely putative class action alleging civil antitrust violations. 414 U.S. at 541-42.
Several months later, the district court ruled the case could not proceed as a class action under Federal Rule of Civil Procedure 23 because the putative class was not "'so numerous that joinder of all members was impracticable.'" Id. at 543.
Days later, purported members of the putative class moved to intervene as plaintiffs. Id. at 543-44.
The district court, however, denied intervention, finding any claims by the putative interveners were time-barred. Id. at 544.
On those facts, the United States Supreme Court recognized what has become known as intra-jurisdictional tolling.
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. Id. at 552-53.
American Pipe added that failing to recognize this type of tolling during the pendency of a putative class action where class certification was denied based on a lack of numerosity would create mischief and unnecessary litigation and "deprive Rule 23 class actions of the efficiency and economy of litigation which is a principal purpose of the procedure." Id. at 553-54.
Potential class members would be induced to file protective motions to intervene or to join in the event that a class was later found unsuitable. In cases such as this one, where the determination to disallow the class action was made upon considerations that may vary with such subtle factors as experience with prior similar litigation or the current status of a court's docket, a rule requiring successful anticipation of the determination of the viability of the class would breed needless duplication of motions. Id.
Thus, American Pipe found "the rule most consistent with federal class action procedure must be 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.
American Pipe also noted that tolling was "in no way inconsistent with the functional operation of a statute of limitations" because the putative class action would put a defendant on notice even if class certification ultimately was denied. Id. at 554-55.
In American Pipe & Constr. Co. v. Utah, the Supreme Court stated:
A . . . 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," . . . the claimed members of the class stood as parties to the suit until and unless they received notice thereof and chose not to continue. . . . 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 . . . . 414 U.S. at 550-51.