727 F.3d 372
5th Cir.2013Background
- Halls were members of the Drnek class action proceeding against VALIC; Drnek certified a nationwide class in 2004 and later vacated the certification in 2004 due to failure to prove damages, effectively ending class treatment.
- Halls later filed a putative class action in 2009 in the SDTX asserting the same securities fraud claims against VALIC.
- District court held the five-year statute of repose for §1658(b) expired before the 2009 filing, and tolling ceased when the Drnek certification was vacated.
- The parties agreed American Pipe tolling applied, but disagreed whether the Drnek vacatur stopped tolling.
- Court concluded American Pipe tolling ceased upon vacatur/decertification or denial of class certification, resuming the repose clock.;
- This case affirms the district court’s dismissal of the Halls’ complaint as time-barred under the statute of repose.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does vacatur of class certification stop American Pipe tolling? | Hall | Valic | Yes; tolling ends when certification is vacated. |
| Is vacatur functionally equivalent to decertification/denial of certification for tolling purposes? | Hall contends vacatur is not the same as decertification | Valic argues it is equivalent to denial/decertification | Vacatur is treated as the functional equivalent, ending tolling. |
| Should tolling continue during the pendency of a vacatur decision based on merits issues (damages)? | Hall asserts merits factors kept tolling alive | Valic asserts tolling ends regardless of merits | Tolling ends; merits overlap does not preserve tolling. |
| Does Taylor v. UPS support tolling cessation upon vacatur? | Hall cites Taylor to preserve tolling | Valic rejects extending tolling after vacatur | Taylor supports cessation of tolling upon vacatur. |
Key Cases Cited
- American Pipe & Construction Co. v. Utah, 414 U.S. 538 (U.S. 1974) (tolls putative class members during pendency of class action)
- Crown, Cork & Seal Co., Inc. v. Parker, 462 U.S. 345 (U.S. 1983) (tolling for all class members; tolling ends when certification denied/decertified)
- Taylor v. United Parcel Serv., Inc., 554 F.3d 510 (5th Cir. 2008) (tolling ends when class certification denial/decertification occurs)
- Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (S. Ct. 2011) (overlap of merits with Rule 23 analysis does not defeat tolling principles)
- Deposit Guar. Nat’l Bank, Jackson, Miss. v. Roper, 445 U.S. 326 (U.S. 1980) (reversals of district court certification relate back for tolling)