Legal Alert

American ‘Pipe Dream’ – CA Court of Appeal Scrutinizes Limitations Period Tolling Arguments

March 25, 2020

Extending the United States Supreme Court’s decision in China Agritech, Inc. v. Resh, 138 S.Ct. 1800 (2018), the California Court of Appeal has held that a plaintiff cannot “stack” multiple class actions to extend the limitations period for an individual opt-out action under the American Pipe tolling doctrine.

The plaintiff in Montoya v. Ford Motor Company, No. G056752 (Cal. Ct. App. March 12, 2020) purchased a 2003 Ford Excursion new, and a jury later determined that by 2005 he knew his vehicle suffered from several problems caused by alleged design defects in its Navistar diesel engine. However, he did not file his individual lawsuit against Ford until June 2013—seven-and-one-half years later.

Plaintiff justified the delay in filing suit by pointing to the intervening pendency of two putative class actions concerning the same design defects at issue in his individual action. In 2006, the first putative class action was filed in South Carolina. Class certification was eventually denied in that action. A second class action concerning nearly identical claims was then filed in 2007 in Illinois; it was eventually resolved by a class settlement in 2013. The plaintiff opted out of the second class action and filed an individual action several months later.

The trial court, relying on American Pipe and Construction Co. v. Utah, 414 U.S. 538 (1974) and its progeny, held the plaintiff’s claims were timely because they had been tolled for both the 199-day duration of the first class action and the 1,197 days during which the second class action was pending. Plaintiff ultimately obtained a $59,000 judgment against Ford.

The appellate panel agreed that the four-year statute of limitations for the plaintiff’s breach of implied warranty claim properly was tolled during the 199-day duration of the first putative class action. However, in reversing, the Court of Appeal held that American Pipe tolling was not available during the pendency of the second class action. After canvasing both relevant federal and state authority, the panel determined that “the idea of tolling an individual action during the period of a second class action to be untenable” because such tolling “defeats the objectives of judicial economy and efficiency that were the foundations of American Pipe.”

This decision signals that courts are willing to closely scrutinize a plaintiff’s limitations period tolling arguments, particularly when it appears a plaintiff has engaged in gamesmanship or when such claims have the potential to lead to decades-old litigation on an issue otherwise efficiently resolved through a nationwide class settlement.

Ballard Spahr's Product Liability and Mass Tort Group has substantial experience representing companies that make and sell products in a wide range of litigation and counseling matters, including the defense of class actions and related opt-out group claims, as well as regulatory compliance.

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