The Supreme Court held long ago, in a case generally referred to as "American Pipe," that if the courts refuse to allow a case to go forward as a class action, all members of the class have the chance to bring suit to pursue their claims individually, even if the statute of limitations has expired, as long as the unsuccessful class action was filed in time to satisfy the statute of limitations. In a decision issued today in a case called China Agritech v. Resh, however, the Court held that plaintiffs in such cases can't try to correct the problem with the earlier class action and sue again as a class. The American Pipe rule, the Court held, only allows otherwise untimely claims to be filed as individual actions (or individual interventions in pending cases).
The decision was surprising for its near unanimity. Only Justice Sotomayor declined to go along with the 8-Justice majority, and even she accepted the Court's ruling to the extent it applies to securities cases; she disagreed only about whether the Court's ruling should apply to other kinds of class actions.
Also notable was the author of the majority opinion, Justice Ruth Bader Ginsburg. Justice Ginsburg is no enemy of class actions and has sided with class action plaintiffs in many cases. Her authorship of the Court's opinion strongly underscores that the entire range of Justices on the Court were deeply troubled by the idea that plaintiffs could repeatedly attempt to bring class actions after the statutes of limitations on their claims had otherwise expired, by piggy-backing on an earlier-filed class action that, under American Pipe, stopped the running of the statute for the claims of class members. The Court's discomfort with that result was one of the principal bases offered in the majority opinion for limiting the "tolling" effect of a class action to follow-on individual actions, not class actions.
For many cases, the result of the Court's ruling will be that if a defendant defeats a first attempt at a class action (a process that very often takes long enough that the statute of limitations will have expired), it will essentially be home free because the claims of individual class members may not be large enough to justify individual litigation. In other cases, such as high-value security matters, plaintiffs with large claims may be able to go it alone, but the efficiencies of class adjudication will be lost along with the claims of many plaintiffs who lack the ability to litigate by themselves.
It's likely that, at least in some cases where a class action looks potentially valuable and viable, plaintiffs may bring duplicative class actions in order to avoid the possibility that a problem with the first case brought may derail the claims of all class members. The most predictable result, however, is the loss of lots of small claims, particularly in employment and consumer cases, if an initial attempt at class certification is unsuccessful.
