“There Is Too A Conflict,” Says Eleventh Circuit

    Asserting that other courts of appeals have misread one of its precedents, the Eleventh Circuit has insisted that its law differs from that of other circuits on the question whether the pendency of a failed class action tolls the statute of limitations for a class member who attempts to file another class action. In yesterday's decision in Ewing Industries Corp. v. Bob Wines Nursery, Inc.the court of appeals held that when an attempt to bring a case as a class action fails for any reason, the action tolls the statute of limitations for class members only if they seek to file or join in an individual action; they can't "piggy-back" a class action onto a previous class action.

    Other circuits have in previous cases distinguished Eleventh Circuit precedent, holding that  it doesn't deny tolling when the first class action failed to achieve certification because of the inadequacy of the class representative or some other reason that is not based on the unsuitability of the claims themselves for class treatment. Those courts (including the Third, Sixth, Seventh and Ninth CIrcuits) have held that the so-called American Pipe tolling rule allows a follow-on class to benefit from the tolling effect of an earlier putative class action when the defect in the first action was something other than that the class was inherently uncertifiable.  


   In yesterday's decision, the Eleventh Circuit said it "disagree[d] with the courts that have distinguished [its precedent] from facts similar to those in this case." The result was that the court considered itself bound by precedent to hold that a Telephone Consumer Protection Act (TCPA) class action was time-barred even though a previous attempted class action had been timely and the only reason it could not proceed as a class action was that it turned out the proposed class representative had not received the unlawful fax that the class was complaining about. The new class representative had no such problem, but under the Eleventh Circuit's ruling that plaintiff could benefit from tolling of the statute only for its individual claim, not those of the class as a whole.

    A few years back, Judge Easterbrook of the Seventh Circuit stated in a case called Sawyer v. Atlas Heating & Sheet Metal Works, Inc., 642 F.3d 560 (7th Cir. 2011), that "there is no conflict" on this issue. According to Easterbrook, results holding that a second action can't proceed in such circumstances aren't really driven by tolling principles, but by preclusion: If the reason a court held that a case couldn't proceed as a class action was that the class's claims were unsuitable for certification, then that decision, he thought, bound the whole class. But if the reason was the unsuitability of a particular class representative, then the class shouldn't be barred from fixing the problem and benefiting from the tolling effect of the first action.

    Turns out Judge Easterbrook's reasoning was wrong, as the Supreme Court held only two weeks later that denials of class certification have no preclusive effect on other class members. Smith v. Bayer Corp., 131 S. Ct. 2368 (2011). So preclusion can't provide a basis for distinguishing follow-on classes that get the benefit of American Pipe tolling from those that don't.

     But that doesn't mean the Eleventh Circuit is right, either. The Eleventh Circuit's holding is that even though individual class members are not barred from bringing individual actions (because their individual claims benefit from the tolling effect of the failed class action), they can't join their claims as a class for policy reasons (avoiding "piggy-backing"). That reasoning runs afoul of another Supreme Court decision, Shady Grove Orthopedic Associates v. Allstate Insurance Co., 559 U.S. 393 (2010), which holds that individuals who have viable claims are entitled to assert them as a class under Rule 23 if the Rule's criteria are satisfied. If a class member would have a claim in an individual action, there is no legitimate basis for saying he can't have it in an otherwise proper class action.

    In short, the right answer isn't that American Pipe tolling never applies in a subsequent class action, or even that it sometimes applies, but that it always does. Now, when will a court realize that?

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