Ninth Circuit Addresses When the Tolling of the Statute of Limitations for a Purported or Certified Class Ends When the Class Definition is Narrowed

June 26, 2024

By: Stephen B. Stern

     In DeFries v. Union Pacific Railroad Co., No. 23-35119, ___ 4th ___ (9th Cir. June 14, 2024), the United States Court of Appeals for the Ninth Circuit addressed an issue of first impression, with that issue being “when does the narrowing of a class definition end . . . the tolling of the statute of limitations for members of a putative or certified plaintiff class?”  The court concluded that “ambiguity about the scope of a putative or certified class should be resolved in favor of tolling so that bystander members of the class need not rush to file separate actions or protect their rights.”

     In DeFries, Nicholas DeFries worked as a conductor for Union Pacific Railroad Company (“Union Pacific”).   After failing a routine color-vision test, he was placed in a fitness-for-duty program and later removed from his job.  At the time DeFries was removed from duty, a putative class action was pending against Union Pacific, alleging that Union Pacific administered its fitness-for-duty program in a manner that violated the Americans with Disabilities Act (“ADA”).  It was undisputed that DeFries qualified for the putative class in the original action as it was originally defined.  The definition of the class in the original action was later narrowed, however, to cover “[a]ll individuals who have been or will be subject to a fitness-for-duty examination as a result of a reportable health event at any time from September 18, 2014 until the final resolution of this action.”  The narrower class ultimately was certified by the district court that was presiding over the original class action, but the United States Court of Appeals for the Eighth Circuit reversed class certification for lack of commonality.  

     Shortly after the Eighth Circuit reversed the class certification in the original class action case, DeFries filed his own individual lawsuit in the United States District Court for the District of Oregon that raised claims similar to the claims in the original class action.  Union Pacific later moved for summary judgment, arguing DeFries’ claims were barred by the statute of limitations because the narrowing of the class in the original action clearly excluded DeFries and other color vision plaintiffs as of August 2018 (when the class was narrowed).  The district court granted Union Pacific’s motion for summary judgment, finding that the tolling period for the class ended on August 17, 2018, the date on which class counsel moved to narrow the scope of the class while noting that DeFries’ claims would be untimely even if the court held that the tolling period stopped on the date that the court accepted the narrower definition of the class (which was February 5, 2019).  DeFries appealed the district court’s dismissal to the Ninth Circuit.

     The Ninth Circuit noted there was very little guidance from the United States Supreme Court and other circuits regarding the end of the American Pipe tolling period.  To undertake its analysis, the Ninth Circuit started by explaining the American Pipe tolling rule (from the United States Supreme Court decision in American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974)) states that the commencement of a class action suspends the applicable statute of limitations for all asserted class members until the class is certified or denied.  The tolling rule is equitable in nature to modify the rigid application of a statutory time bar in a representative lawsuit to prevent injustice and avoid the unnecessary filing of repetitious papers and motions.  In doing so, purported class members should be able to rely on class counsel and the district court to represent their interests “without the need to seek or intervene or file individual suits.” (emphasis by court).  On the other hand, the purpose of statutes of limitations is “to put defendants on notice of adverse claims and to prevent plaintiffs from sleeping on their rights.”  Once a class action complaint is filed, the defendant is notified of “the essential information necessary to determine both the subject matter and size of the prospective class” and “the need to preserve evidence and witnesses respecting the claims of all the members of the class.”  Thus, the fair notice purpose of the statute of limitations is satisfied “as to all those who might subsequently participate in the suit as well as for the named plaintiffs.”  

     The court, however, noted that the end of the American Pipe tolling period is less clear.  While the court acknowledged that there is a line of district court cases that established two distinct approaches defining the end of the tolling period when class counsel voluntarily abandons claims, it noted that the issue it had to tackle concerned when the narrowing of a class definition either by class counsel or a district court ends the tolling period for particular class members of a putative or certified class and only two circuits had addressed that issue, the United States Court of Appeals for the Tenth Circuit in Satwell v. E.I. du Pont de Nemours & Co., Inc., 22 F.3d 248 (10th Cir. 1994), and the United States Court of Appeals for the Fourth Circuit in Smith v. Pennington, 352 F.3d 884 (4th Cir. 2003), each of which the Ninth Circuit reviewed and analyzed.

     In Satwell, the Tenth Circuit held that a plaintiff in a product liability action was not entitled to American Pipe tolling because the class was intended for Minnesota residents only and the plaintiff was from New Mexico.  In Pennington, the Fourth Circuit was asked to decide to what extent evidence outside the complaint could be used to construe a definition of the asserted class for purposes of determining whether the plaintiff is entitled to American Pipe tolling.  The Fourth Circuit ultimately held it was not confined by only the complaint and it could examine evidence outside the complaint that demonstrated the extent of the class the plaintiff sought to represent and have certified when making determinations about American Pipe tolling, especially where the scope of the class described in the complaint was unclear.  In both cases, the Ninth Circuit noted that the narrower definition of the purported class became unambiguous and clear to the plaintiffs in their respective cases that fell outside the applicable statute of limitations and, therefore, the claims were time barred.  

     The Ninth Circuit determined the key take away from the Satwell and Pennington decisions was the end of American Pipe tolling should examine when the narrower class definition becomes “unambiguous.”  The Ninth Circuit found this notion consistent with other principles underpinning class actions.  For example, “[e]nding American Pipe tolling with anything short of unambiguous narrowing would undermine the balance contemplated by the Supreme Court” and “[i]t would encourage putative or certified class members to rush to intervene as individuals or file individual actions.”  Furthermore, “[f]inding counsel to pursue individual claims after a class action is narrowed may be difficult or impossible for many plaintiffs.”  Thus, “[a]mbiguity in the scope of the class definition should be resolved in favor of continuing to extend American Pipe tolling to members of the putative or certified class.”

     In applying this new standard to DeFries’ claim, the Ninth Circuit found that the definition of the revised class in the original action was ambiguous, even though the better reading included color-vision plaintiffs, and only when the class was decertified was DeFries unambiguously excluded from class coverage.  As such, the Ninth Circuit found that DeFries was entitled to equitable tolling from the period between the filing of the original class action case on February 19, 2016 until the Eighth Circuit’s decision to decertify the class when it issued its mandate after its March 24, 2020 opinion, and it reversed the decision of the district court.  The details of the Ninth Circuit’s analysis regarding the ambiguity or lack thereof of the definition of the class in DeFries’ case is not pertinent for purposes of this post.

     The Ninth Circuit’s decision in DeFries is significant because it is one of the few appellate court decisions that gives guidance on when tolling the statute of limitations for purported or certified class members comes to an end upon the narrowing of the definition of the class.  This ruling is significant to plaintiffs in that it puts some onus on them to monitor potential class claims in which they may be a member and act accordingly if they clearly become excluded from the class.  It also is significant to defendants in that it provides some guidance on how to limit claims by members of a purported or certified class after the class definition is narrowed.