American Pipe & Construction v. Utah
In American Pipe & Construction v. Utah, 414 U.S. 538 (1974), the Supreme Court confronted the dilemma that members of a proposed class are asked to rely on a class representative to protect their interests, yet at the same time they are encouraged to file their own actions or to intervene in the proposed class action to protect their claims in the event that the representatives proposed class action is denied.
Balancing procedural interests with statute of limitations interests, the Court established a rule that the commencement of a class action equitably tolls the running of the statute of limitations for proposed class members claims until the class action is denied.
This rule discourages class members from intervening in the action until "after the Court has found the suit inappropriate for class action status," when no class member could any longer reasonably rely on the class representative. American Pipe, 414 U.S. at 553.
The Court noted that the rule applied even to class members who were not aware of the class action proceedings. Id. at 552.
Despite the breadth of the "reasonable class member" rationale, however, the Court held narrowly that the equitable tolling rule applied only to cases like that before it, in which class action certification is ultimately denied for lack of numerosity. Id. at 552-53. In American Pipe, after the district court had ruled that a federal antitrust suit could not proceed as a class action, putative class members moved to intervene in the named plaintiffs' individual action.
The Supreme Court ruled that the claims of the intervenors were not time-barred, holding that the statute of limitations was tolled by the filing of the class action as to all members of the putative class who made timely motions to intervene after the denial of class certification. 414 U.S. at 552-53, 94 S.Ct. at 765-66.
In American Pipe and Construction Co. v. Utah, 414 U.S. 538, 554 (1974) the Supreme Court established 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."
In American Pipe & Const. Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974), the Supreme Court balanced the policies served by the class action rule, Fed.R.Civ.P. 23, and the policies served by the statute of limitations.
The case arose under the Sherman Antitrust Act, and was brought as a putative class action. After the district court denied class certification, several would-be class members moved to intervene.
Although the applicable statute of limitations had run as to the intervenors, the Supreme Court held that their claims were not time-barred because the filing of the putative class action tolled the statute of limitations as to all alleged class members until the district court denied certification, "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." Id. at 552-53, 94 S.Ct. at 766.
In American Pipe and Constr. Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974), the Supreme Court permitted a tolling of the antitrust laws' statutes of limitation1 in a case which was timely filed as a class action but was subsequently held not to be maintainable pursuant to Federal Rule of Civil Procedure 23 because the class lacked the required numerosity. Fed.R.Civ.P. 23(a)(1).
The Supreme Court permitted intervention, after this finding, by putative class members whose claims, but for the pendency of the class action, would have been untimely filed.
The Court construed the necessity for equitable tolling to arise from the nature and purposes of Federal Rule 23. All potential plaintiffs had the right to rely on, and were bound by, the procedures related to a class action while it was underway. As the Court held, "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." Id. at 551, 94 S.Ct. at 765.
In American Pipe & Construction Co., v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974) the Supreme Court held that where class certification has been denied because of the failure to demonstrate that the class was sufficiently numerous, "the commencement of the original 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." (414 U.S. at 553, 94 S.Ct. 756.)
The Court explained that refusing tolling in such a circumstance 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." (Id. at 551, 94 S.Ct. 756.)