On October 20, 2020, the Court of Appeals issued a decision in Chavez v. Occidental Chem. Corp., 2020 NY Slip Op. 05839, adopting cross-jurisdictional class action tolling of the statute of limitations, explaining:
We conclude that a determination that tolling is not available cross-jurisdictionally would subvert article 9—the primary function of which is to allow named plaintiffs to bring truly representative lawsuits without necessitating a multiplicity of litigation that squanders resources and undermines judicial economy, while still ensuring that defendants receive fair notice of the specific claims advanced against them. CPLR article 9 is closely related to and modeled on Federal Rules of Civil Procedure rule 23, and the same animating policies the United States Supreme Court discussed in American Pipe and its progeny also underlie article 9. Both rule 23 and article 9 were intended to permit the named plaintiffs in a putative class action to act as placeholders, fully representing absent class members who have the same claims. Additionally, rule 23 and article 9 were designed to avoid wasteful and duplicative litigation by eliminating the need—during the pendency of the class action—for putative class members to initiate individual claims to protect their rights, while simultaneously providing notice to defendants of the claims not only of the named plaintiffs, but also of potential absent class members who could advance those same claims. It would contravene article 9 to hold that, if class action status is denied or the action otherwise terminated, putative class members are treated as if no action were ever brought. Such a rule would promote putative class members to initiate parallel individual claims in New York and other jurisdictions nearing expiration of the statute of limitations in order to protect against the risk of a subsequent denial of class certification or other non-merits termination—the very result article 9 was created to avoid. For that category of putative class members, the representative role of named plaintiffs would be illusory until class certification was granted. Thus, in [*6]recognizing cross-jurisdictional tolling under New York law, and answering the first certified question in the affirmative, we give effect to the legislative policy embodied in article 9; indeed, as noted, a contrary holding would undermine the detailed class action statutory scheme crafted by the legislature.
In light of this framework, we reject Occidental’s argument that CPLR 201 prevents us from recognizing cross-jurisdictional tolling. CPLR 201 provides that an action must be commenced within the time specified in this article unless a different time is prescribed by law or a shorter time is prescribed by written agreement. No court shall extend the time limited by law for the commencement of an action. To be sure, we have long recognized that the various tolling provisions to the Statutes of Limitation are largely, if not exclusively, the product of legislative design. As a rule time limitations created by statute are not tolled in the absence of statutory authority because courts may only construe provisions made by the Legislature creating exceptions or interruptions to the running of the time limited by statute and may not themselves create such exceptions. Our recognition of American Pipe tolling cross-jurisdictionally does not run afoul of the statute or its purposes because it is predicated on the express legislative design of CPLR article 9. CPLR 201 makes clear that courts do not have discretion to excuse late filings by plaintiffs who slept on their rights. Cross-jurisdictional tolling does not implicate this concern because injured individuals who rely on a representative class action have not slept on their rights and such tolling involves no exercise of judicial discretion—it turns entirely upon the existence of a class action.
Moreover, our statute of limitations doctrines are intended to promote repose, not undermine other significant statutory schemes. Our recognition of American Pipe cross-jurisdictional tolling harmonizes any tension between two statutory schemes adopted by the legislature, CPLR articles 2 and 9, and is not an exercise of judicial discretion. We emphasize that tolling applies only if a defendant receives fair notice of all claims that might arise under New York law. In addition, we reiterate that the putative class action, itself, must be timely and comport with CPLR 202. Finally, because the same principles that support recognition of cross-jurisdictional tolling necessarily include those supporting intra-jurisdictional tolling, we take this opportunity to recognize American Pipe tolling intra-jurisdictionally—confirming nearly forty years of Appellate Division case law acknowledging the same.
(Internal quotations and citations omitted.)
Here is how the decision makes a difference. If, for example, a class action is timely brought in New York state court two years before the statute of limitations runs out and is litigated for four years before class certification is denied, an individual still has two years from the date class certification is denied to bring an individual claim because of regular class action tolling (often called American Pipe tolling, after a US Supreme Court case). In other words, the statute of limitations “clock” is stopped during the pendency of the class action. But, without cross-jurisdictional class action tolling, the same suit brought in Federal court (even in New York) or the courts of another state would not toll the statute of limitations, meaning that, for example, if class certification was denied in the SDNY, it could then be too late for an individual to sue (putting aside some other state court rules that could save the lawsuit). Cross-jurisdictional class action tolling means that a class action in a court other than New York state court still tolls the time members of the proposed class have to bring individual actions.
It is not unusual for the statute of limitations to be an issue in complex commercial litigation. Contact Schlam Stone & Dolan partner John Lundin at email@example.com if you or a client have questions regarding whether claims are barred by the statute of limitations.
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