United States: Don't Underestimate The Statute Of Limitations

Last Updated: November 17 2016
Article by Steven Boranian

As we hurtle into the holiday season, we are reminded that good things often come in small packages. That certainly was the case in a one-and-a-half-page opinion that the Ninth Circuit filed last week in a prescription antidepressant case.  The case is Plumlee v. Pfizer, Inc., No. 14-16924, 2016 WL 6610223 (9th Cir. No. 9, 2016), and the lesson was that the statute of limitations can be a powerful thing.

The facts are pretty simple: The plaintiff alleged that she stopped taking Zoloft in June 2008 because she believed it was ineffective "contrary to [the manufacturer's] representations."  But she did not file her class action lawsuit until more than four years later. Id. at *1.  That sounds to us as though the plaintiff filed after the expiration of any applicable statute of limitations, and it sounded that way to the district court too, leading to an order dismissing the case.

The Ninth Circuit affirmed, holding that California's discovery rule did not extend the plaintiff's time to sue. The core holding is as follows:

Under the discovery rule, [Plaintiff's] failure to allege any facts that she exercised reasonable diligence between June 2008 and May 2012, or that she was unable to discovery the factual basis for her claims between June 2008 and May 2012 despite exercising reasonable diligence, constitutes a sufficient basis for affirming the district court's dismissal with prejudice . . . ."

Id.  This may seem like a routine result at first blush, but let's unpack this a little bit.  First, we find it interesting that the district court dismissed the plaintiff's complaint under Rule 12(b)(6).  We do not often see courts ruling on statutes of limitations on the pleadings, although there is no reason why discovery should be necessary when the defense is evident on the face of the complaint.  Here, the plaintiff alleged that she believed the product was ineffective in June 2008 despite "representations to the contrary." Id.  In other words, she suspected wrongdoing, which caused her claim to accrue under any application of the discovery rule.  From that point, the clock was ticking.

Second, the Ninth Circuit based its holding on a faithful application of inquiry notice, which is the correct standard under California law.  Under inquiry notice, it does not matter whether the plaintiff had actual notice of her claims or whether she had some form of constructive notice.  Instead, where a complaint shows on its face that a claim would be barred without the benefit of the discovery rule, the plaintiff must plead specific facts showing (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. Id. We boldfaced the second part because that is where the plaintiff's complaint came undone.  She alleged that she did not discover her claims until she saw a rerun of 60 Minutes in May 2012, where reporters questioned the effectiveness of antidepressants. Id.  But the plaintiff did not allege facts showing that she was reasonably diligent in discovering her claims.  And, if she had been diligent, she would have found "extensive" public information (in addition to 60 Minutes) discussing Zoloft and alleging that it was no more effective than a placebo. Id. at **1-2.  Having failed to conduct herself as a "reasonably diligent consumer" would, the discovery rule could not rescue this plaintiff's claims.

Third, this was a 12(b)(6) motion, so how did the court know about the "extensive" public information that was available to an inquiring would-be plaintiff? The district court took judicial notice of an "extensive record of documents." Id. *2.  This might be the most important part of this opinion.  We have reviewed neither the defendant's request for judicial notice nor the district court's order granting it.  But where a plaintiff attempts to plead her way into the discovery rule, we view judicial notice of public information debunking that allegation as fair game.  It is not as though the court had to take notice of the truth of the documents.  It was sufficient to take judicial notice that the information was out there and available to those who reasonably inquired.

Fourth, remember that this was a class action. That matters because this plaintiff's failure to exercise diligence placed her (or more accurately her attorneys) between a rock and a hard place.  To save her own claim from a time bar, the plaintiff had to plead delayed discovery.  But the inquiry into whether, when, and how the plaintiff "discovered" her claim is individual to that specific plaintiff—and to every other member of the class she purported to represent.  By seeking the protection of the discovery rule, the plaintiff introduced an element into the case that will cause an individual, case-dispositive issue—delayed discovery—to predominate over common issues.  The Ninth Circuit held that this plaintiff could not serve as a class representative [Id. at *2], but we question whether her proposed class could ever have been certified.

Finally, the district court dismissed the plaintiff's First Amended Complaint with prejudice, after allowing the plaintiff one opportunity to amend. Id. at *2.  Okay, maybe this point is not all that interesting, but we often comment that some courts grant leave to amend too liberally.  Not this court.  The district judge told plaintiff that her original complaint was deficient, gave her one opportunity to cure the defects, and ended the case for all time when the plaintiff could not come through.  We can usually live with second chances—just not third, fourth, fifth, etc.—and in this case we appreciate the district court's disciplined approach.

The takeaway is that we should not underestimate the statute of limitations. It can put an end to stale claims, as it did here, and it can also serve as useful lever against class certification.  These plaintiffs' attorneys may find a new plaintiff and try again.  Maybe they already have.  But given the result here, we don't like their chances.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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