The Filing of a Class Action Tolls Claims from the Date of Filing Until the Date the Lawsuit Can No Longer Proceed as a Class Action.
Falk v. Children’s Hospital Los Angeles, 237 Cal.App.4th 1454 (originally filed June 3, 2015; certified for publication June 24, 2015)
Under American Pipe & Constr. Co. v. Utah (1974) 414 U.S. 538, 552-53, and Crown, Cork & Seal Co. v. Parker (1983) 462 U.S. 345, 350, 354, it is well-settled that the filing of a class action tolls the statute of limitations period for all putative class members until class certification is denied, at which point individual class members may decide whether to file their own lawsuits or move to intervene in the pending action.[i] The issue in this case was whether the tolling period could be applied where a class action did not end with denial of class certification.
Plaintiff’s employment ended on August 25, 2006 which allowed her until August 25, 2010 to file a wage claim under normal circumstances (assuming four years’ statutory period – three years for wage claims (Cal. Code of Civ. Proc. § 338(a) and Bus. & Prof. Code § 17200, et seq.). Plaintiff did not file her action until December 3, 2012. Two other class actions were filed against the employer prior to Plaintiff’s action: May 1, 2007 (Palazzolo) and January 27, 2012 (Mays). In Palazzolo, summary judgment was entered in favor of the employer on April 7, 2009 as to the individual plaintiff’s claims. Palazzolo appealed the summary judgment, which was affirmed, and remittitur issued on February 3, 2011. The employer filed a notice of related cases relating Mays to Palazzolo.
The employer moved for summary judgment in Plaintiff’s case, arguing that American Pipe was distinguishable for three reasons: (1) the Palazzolo judgment was the same as an adverse ruling on the merits; (2) American Pipe tolling only applied to individual actions, not successive class actions; and (3) the claims in Palazzolo did not provide the employer sufficient notice of Plaintiff’s claims. Plaintiff contended that (1) Palazzolo tolled Plaintff’s claims; (2) the employer was judicially estopped from relating Mays to Palazzolo; and (3) the trial court should equitably toll the statute of limitations. The trial court granted summary judgment.
The court of appeal relied on the reasoning in Sawyer v. Atlas Hearing & Sheet Metal Works, Inc. (7th Cir. 2011) 642 F.3d 560, 562-63, that “Tolling lasts from the day a class claim is asserted until the day the suit is conclusively not a class action,” and that the manner in which the action ended (denial of class certification, abandonment by the plaintiff of the action, “or any other fashion”) was irrelevant to effectuate American Pipe’s purpose of enabling members of a putative class to rely on a pending action to preserve their statutes of limitations. Under Sawyer, denial of class certification was important only if the reason for the denial would apply to subsequent class actions, such as issues with class size, predominance, or individualized inquiry.
The court of appeal held that the summary judgment in Palazzolo, which disposed of the plaintiff’s individual claims before class certification, was not an adverse ruling on the merits of the class claims and therefore American Pipe should apply. The appellate court further held that Palazzolo’s claims gave the employer sufficient notice of the Plaintiff’s claims in the instant action and therefore American Pipe tolling should apply for that reason, as well.
Finally, as to the extent of the tolling period, the court of appeal held that Plaintiff’s argument that in the absence of a denial of class certification the Palazzolo tolling period should have ended on the issue date of the remittitur (February 3, 2011) was equitable. Plaintiff’s wage claims were thus timely filed, although her penalty claims had expired.[ii] The appellate court also held that Plaintiff could file a successive class action to Palazzolo’s because there was no ruling in Palazzolo regarding any deficiency with the claims of the putative class (just the individual), a practice known as “piggybacking” that has been approved by the Ninth Circuit.
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