Class actions are vexing for defendants. The exposure can be large and the litigation can become very complex. One way to defeat a class action is on statute of limitations grounds. However, in the seminal case on statutes of limitations in the class action context, American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), the Supreme Court held when a plaintiff files a complaint on behalf of a proposed class, and where certification is denied because of the plaintiff's failure to demonstrate that "the class is so numerous that the joinder of all members is impracticable," the statute of limitations for the claim is tolled for each member of the class. Id. at 552–53. There, the Supreme Court held the commencement of the original class suit tolled the running of the statute of limitations for all purported members of the class who timely moved to intervene after the district court found the suit was inappropriate for class action status. Later, in Crown, Cork & Seal Co. v. Parker, 462 U.S. 345 (1983), the Supreme Court held the same tolling rule applies to class members who choose to file separate suits. But neither opinion addressed whether tolling continues in other contexts, such as during the pendency of an appeal after the suit is dismissed or when class certification is denied. In other words, when does tolling stop?
In Collins v. Village of Palatine, No. 16-3395, (7th Cir. 2017), the Seventh Circuit addressed whether a dismissal with prejudice strips a case of its class-action character, thereby restarting the clock on the statute of limitations. Collins concerned a class action against the Village of Palatine for violations of the Driver's Privacy Protection Act by placing parking tickets on individuals' cars that displayed an individual's personal information. The district court entered summary judgment for the Village on the first class representative's suit and denied the motion for class certification as moot. When the next class representative, Collins, tried to revive the class action, the Village moved to dismiss arguing Collins's claim was time-barred because the statute of limitations resumed when the district court dismissed the first lawsuit with prejudice.
Following American Pipe and Crown, Cork & Seal, the Seventh Circuit discussed how circuit courts have held the tolling of the statute of limitations for a class action ceases when the district court denies class certification or dismisses an uncertified class action without prejudice. The Seventh Circuit addressed the question of whether it matters for tolling purposes whether a suit is dismissed with prejudice or not. The court held it does not matter because upon dismissal, the parties are on notice that they must take steps to protect their rights. Accordingly, the court adopted the uniform rule that the statute of limitations, though tolled upon the filing of a class action, immediately resumes when an uncertified class claim is dismissed with or without prejudice.
Overall, the Collins decision adds ammunition to the tool bag for parties defending class action lawsuits. If a defendant can obtain a quick dismissal with prejudice on a non-meritorious class claim, then the statute of limitations will continue to run and the clock will add pressure to the class members. Class action defendants should add Collins to their arsenal.
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