Rader v. Greenberg Traurig (CA1 6/23/15)

The court denies “cross-jurisdictional tolling.”

Plaintiffs’ investment failed. Other investors filed a class action in federal court; when it eventually settled these plaintiffs opted out. But in the mean time the statute of limitations against the law firm that had written the offering materials had expired. They sued it anyway, arguing that the statute was tolled during the time they were members of the class. The trial court dismissed. The Court of Appeals affirms.

Plaintiffs argued that Arizona should adopt “cross-jurisdictional tolling,” which means that a class action filing in another jurisdiction can toll the statute. They began by arguing that Arizona has already adopted “inter-jurisdictional tolling,” i.e., an attempted class action in the same jurisdiction tolls the statute until class status is denied. The U.S. Supreme Court adopted that in a case called American Pipe but not all the states have. Arizona cases have referred to American Pipe a few times and one case, to decide a certified question from the Ninth Circuit, assumed that it would apply. But the Court of Appeals points out that even that case expressly did not decide whether it actually does. And it wouldn’t apply even if Arizona had adopted in since in this case the class action was certified as such and was a federal case, not one in this jurisdiction.

The jurisdiction problem is solved by cross-jurisdictional tolling, which some states have adopted. But none of those states has applied it where certification was granted.

Plaintiffs cite some federal cases in which allowed tolling even though certification was granted but the court distinguishes them because the federal system lacks a savings statute. Arizona has one, which both parties said doesn’t apply. “[B]y enacting this general Arizona savings statute, the Legislature adopted a form of cross-jurisdictional tolling, just not in the form Appellants claim should apply to their claims here.” In other words, the tolling statute can apply to filings in other jurisdictions but doesn’t include class actions. The court declines to read class actions into the statute; the wording isn’t there and the statute “involve[s] ‘very delicate policy decisions that properly belong to the legislative branch of government.’”

The analysis isn’t the best organized we’ve seen but generally gets the job done. What we’re not clear on is the court’s attitude toward the savings statute. The court says things apparently intended to imply – or that in any event do imply, whether intended or not – that the savings statute as written would indeed apply, that this opinion should not be read as authority that it doesn’t, and that what the plaintiffs are losing is their argument that something new needs to be added to Arizona law. If so, we applaud the court for limiting the analysis to the argument.

(link to opinion)