Appeal from final judgment entered pursuant to Fed. R. Civ. P. 54(b) in the United States District Court for the Southern District of New York (Lasker, J.) granting in part defendants-appellees' motion to dismiss claims asserted in plaintiffs-appellants' amended complaint as barred by applicable statutes of limitations. Affirmed.
This appeal involves the interplay between the filing of class action suits and the rules for tolling statutes of limitations, and contraposes two time-tested and fundamental policies: the policy favoring the rigid application of statutes of repose and the policy disfavoring the dilution of the potent procedural device established by Federal Rule of Civil Procedure 23.
The events relevant to this appeal began on March 4, 1982, with the filing of a class action suit seeking damages for losses suffered as a result of an alleged conspiratorial manipulation of the silver futures market and the concomitant well-publicized plummet of silver and silver futures prices. Gordon v. Hunt, 82-CV-1318 (Lasker, J.). The class representative in that action, Ronald Gordon, moved to certify a class of all persons who sold silver futures contracts short on the Commodity Exchange, Inc. ("Comex"), the Board of Trade for the City of Chicago ("CBOT"), or the MidAmerica Commodity Exchange, Inc. ("MidAmerica") during the eight-month period from August 7, 1979 through March 26, 1980. On July 19, 1983, the district court certified a narrower class that would be coextensive with class representative Gordon's short position trading activity, both from the perspective of Gordon's three-week period of trading and with reference to the type of contracts and place of trading. Specifically, the limited class certified consisted of "all persons who: (1) sold silver futures contracts short on Comex . . . during the period August 8, 1979 through and including August 30, 1979, and were net short at the end of any trading day during that period; and (2) liquidated any of those short silver futures positions on Comex during the period August 9, 1979 through and including September 4, 1979." The district court decided to limit drastically the scope of the class certified largely because of what it adjudged to be significant problems of manageability and intraclass conflict.
Three months after the district court limited the scope of the class, class representative Gordon moved to expand the class to cover a six-month period from July 2, 1979 through December 21, 1979. In addition, a related motion to intervene pursuant to Federal Rule of Civil Procedure 24(b) was made by four of the five appellants herein, Philip and Dorothy Korwek, Marty Finkelstein, and William L. Cohn. The district court denied these motions, finding that the motion to expand was merely an attempt to reargue the prior class certification motion and that the proposed intervenors could bring "their own plenary suit."
On November 2, 1984, three days after the district court denied the motions to intervene and expand the class, the disappointed intervenors filed the class action complaint which is the focal point of this appeal. Korwek v. Hunt, 84-CV-7934 (Lasker, J.). The complaint asserts claims virtually identical to those previously asserted in Gordon v. Hunt and names nearly all of the same parties as defendants.
By Amendment to Complaint by Stipulation Nunc Pro Tunc filed June 19, 1985, appellant James G. Williams was added as a named plaintiff. The amended complaint, along with raising individual claims, seeks to certify the class of "all persons who sold silver futures contracts short during the period July 3, 1979 through February 26, 1980, who suffered a loss as a result thereof."
On October 24, 1986, the district court granted in part and denied in part defendants-appellees' motion to dismiss the complaint in Korwek v. Hunt, concluding that the pendency of the original Gordon class certification motion tolled the statute of limitations for the claims brought individually by members of the proposed Gordon class but that it did not toll the limitations period for the subsequently filed class claims. 646 F. Supp. 953 (S.D.N.Y. 1986). The district court further held in an opinion dated December 30, 1986, that the filing of the motion to intervene did not toll the applicable statutes of limitations nor did the date of the filing of the new action relate back to the filing of the intervention motion. Judgment was entered in the United States District Court pursuant to Fed. R. Civ. P. 54(b) as to the dismissed class claims on February 2, 1987. This appeal followed.
The specific question presented on this appeal is a narrow one: whether the tolling rule established by the Supreme Court in its seminal decision, American Pipe & Construction Co. v. Utah, 414 U.S. 538, 38 L. Ed. 2d 713, 94 S. Ct. 756 (1974), applies to permit the filing by putative class members of a subsequent class action nearly identical in scope to the original class action which was denied certification. We hold that it does not, and thereby affirm the district court's judgment dismissing appellants' class claims.
American Pipe arose in the context of a civil Sherman Act treble damages action commenced by the State of Utah, and involved an appeal from the denial of the motions to intervene of purported class members following the denial of class certification. The district court had denied class certification for lack of numerosity and had denied as time-barred the motions to intervene. The Court of Appeals reversed, the the Supreme Court affirmed this decision finding that the suit was commenced as to all members of the class the State of Utah purported to represent upon the filing of Utah's complaint. In essence, the Supreme Court held that "the commencement of the original class suit tolls the running of the statute for all purported members of the class who make timely motions to intervene after the court has found the suit inappropriate for class action status." Id. at 553. The Supreme Court confined its holding to some extent to the facts before it, indicating that its holding applied "at least where class action status has been denied solely because of failure to demonstrate that 'the class is so numerous that joinder of all members is impracticable.'" Id. at 552-53 (emphasis added).
In the more recent decision of Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 76 L. Ed. 2d 628, 103 S. Ct. 2392 (1983), the Supreme Court expanded on the American Pipe holding, ruling that the filing of a class action tolls the statute of limitations as to all asserted members of a class whether they choose to intervene or file "individual actions" following the denial of class certification. Id. at 346 (emphasis added). In Crown, Cork, the Supreme Court sought to afford class members greater flexibility following the denial of class certification while remaining ever vigilant of defendants' need to be put on notice of adverse claims.
The tolling rule of American Pipe is a generous one, inviting abuse. It preserves for class members a range of options pending a decision on class certification. The rule should not be read, however, as leaving a plaintiff free to raise ...