On June 11, 2018, the Supreme Court issued its ruling in China Agritech, Inc. v. Resh, clarifying the scope of the tolling doctrine triggered by the filing of a class action. The doctrine, as established by earlier Court rulings, provides that the filing of a putative class action stops the running of the applicable statute of limitations during the pendency of that putative class action. If the putative class action fails, absent class members could file subsequent individual claims within the time remaining on the statute of limitations. The question presented in China Agritech was whether this tolling doctrine also permits the filing of a subsequent untimely class claims. The Court unanimously rejected that proposition, holding: “American Pipe does not permit the maintenance of a follow-on class action past expiration of the statute of limitations.”
In adopting a broad rule that rejects any tolling for class claims, the Court explains that “efficiency favors early assertion of competing class representative claims,” so that determination of the best potential class representative is made at the outset and the issue of certification is litigated only once and resolved at an early practicable time. Permitting class tolling, on the other hand, runs the risk of serial relitigation and an endless tolling of the statute of litigations. The Court also explains that the tolling doctrine is reserved for plaintiffs who do not sit on their rights: “Ordinarily, to benefit from equitable tolling, plaintiffs must demonstrate that they have been diligent in pursuit of their claims…. A would-be class representative who commences suit after expiration of the limitation period, however, can hardly qualify as diligent in asserting claims and pursuing relief.”
The Court’s sweeping denial of class tolling resolves a split in the circuit courts of appeal, where some (like the Third Circuit) permitted tolling for subsequent untimely class actions under certain circumstances and others (like the Eleventh Circuit) broadly rejected tolling for all untimely class actions, regardless of circumstances. The Court takes the approach of the Eleventh Circuit in adopting a “no-tolling-of-class-claims-ever rule”, approvingly citing Ewing Indus. Corp. v. Bob Wines Nursery, Inc., a case in which the defendants were represented by SmithAmundsen.
The China Agritech ruling has great significance for defendants. The rejection of class tolling allows for finality in litigation and closes the door on enterprising plaintiffs and their counsel from indefinitely tolling the statute of limitations by filing multiple successive class actions and dragging litigation out for years beyond the intended time limit for claims. It gives defendants the practical certainty that the issue of class certification will be litigated only once and will be resolved early on, and that they will not have to expend significant resources defending against follow-on class actions.