John HALL and Brenda Hall, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants v. VARIABLE ANNUITY LIFE INSURANCE COMPANY; Variable Annuity Marketing Company; Variable Annuity Life Insurance Company Separate Account A; Valic Financial Advisors Incorporated; John A. Graf; Robert A. Devlin; Kent E. Barrett; Bruce R. Abrams; M. Kathleen Adamson; Mary L. Cavanaugh; Carl J. Santillo; Robert P. Condon; Rebecca G. Campbell; Unknown Parties, named as Does 1-100 inclusive, Defendants-Appellees.
No. 12-20440
United States Court of Appeals, Fifth Circuit
Aug. 15, 2013
727 F.3d 372
Before STEWART, Chief Judge, and DAVIS and WIENER, Circuit Judges.
Albarado, 199 F.3d at 766.
Id. (alterations to first paragraph in original).
B.
it is not yet established as to whether a negligence action against a nonsubscribing employer “arises under” the TWCA. Because our sister courts are split on the issue and this Circuit has not expressly ruled on the issue, the Court finds that ambiguity exists as to whether the instant action is in fact removable.
Home Depot reasons that in light of perceived “ambiguity,” and without relying on the language of
Despite Home Depot‘s creative parsing, the remand was based on
Robert B. Carey, Esq., Attorney, Leonard Wayne Aragon, Esq., Attorney, Hagens Berman Sobol Shapiro, L.L.P., Phoenix, AZ, Austin P. Tighe, Jr., Feazell & Tighe, L.L.P. Austin, TX, for Plaintiffs-Appellants.
Daniel McNeel Lane, Jr., Esq., Akin Gump Strauss Hauer & Feld, L.L.P., San Antonio, TX, Ashley Brooke Vinson, Akin Gump Strauss Hauer & Feld, L.L.P., San Francisco, CA, for Defendants-Appellees.
Plaintiffs-Appellants John and Brenda Hall (“the Halls“) were members of a certified class of securities fraud plaintiffs
I.
The facts relevant to the instant case begin with an identical lawsuit brought against the Variable Annuity Life Insurance Company (“VALIC“) by another set of plaintiffs. In April 2001, James Drnek and Maureen Tiernan filed a class action complaint (“the Drnek action“) against VALIC alleging that VALIC had committed securities fraud by misrepresenting the prospective tax benefits of its annuities. In January 2004, the Drnek court certified a nationwide class of purchasers of VALIC deferred annuities. The plaintiffs in the instant case, the Halls, had purchased a VALIC deferred variable annuity in 2000 and were members of the Drnek class.
Following class certification, class counsel allowed the district court‘s expert and fact witness disclosure deadline to expire without identifying any expert witnesses or producing any expert reports. When class counsel finally filed an expert and fact witness list nearly six months after the disclosure deadline, VALIC immediately moved to strike the plaintiffs’ witness list and exclude the witnesses’ testimony. The district court agreed that class counsel‘s lapse was inexcusable and granted the motion on August 17, 2004. Without any expert or witness testimony, the court reasoned, the Drnek plaintiffs would not be able to prove a class-wide measure of damages, so the district court vacated its prior order granting class certification.1 The Drnek class representatives appealed the district court‘s decision to exclude their witnesses, which the Ninth Circuit affirmed.2
On December 21, 2009, the Halls filed the instant class action against VALIC in the Southern District of Texas reciting the same claims previously outlined in the Drnek action.3 VALIC promptly moved to dismiss the Hall complaint, arguing that the five-year statute of repose applicable to securities fraud actions had expired before the Halls filed their complaint. Although the parties agreed that the filing of the Drnek class action “tolled,” or temporarily suspended, the running of the statute of repose against putative class members, they disagreed about whether the Drnek court‘s vacatur of class certification caused the tolling to cease. Agreeing with VALIC, the district court found that the statute of repose resumed running against putative members of the Drnek class when the Drnek court vacated its certification order. Because the Halls filed their class action more than five years after the Drnek court vacated its certification order, the district court concluded that the Halls’ claim had been extinguished. The district court then entered an order dismissing the action, and the Halls now appeal.
II.
“We review a district court‘s grant of a motion to dismiss de novo.” Bowlby v. City of Aberdeen, Miss., 681 F.3d 215, 219 (5th Cir.2012).
III.
court denies certification or decertifies a class, “the putative class members ha[ve] no reason to assume that their rights [a]re being protected.” Taylor v. United Parcel Serv., Inc., 554 F.3d 510, 520 (5th Cir.2008). Although the denial of class certification or the decertification of the class might potentially be reversed on appeal, such a ruling nonetheless serves as notice to the once-putative class members that they are “no longer parties to the suit and ... [a]re obliged to file individual suits or intervene.” See id.8 Accordingly, the unsuccessful appeal of either a decertification or a denial of certification does not extend the tolling period. See id. at 519.
In the instant case, the district court found that the Drnek court‘s vacatur of certification was the functional equivalent of a denial of certification. As the district court pointed out, “While the Drnek court used the label ‘vacated,’ the court also made it clear that the case would not proceed as a class action.” Because the Drnek court‘s vacatur order “un-certified” the class and left no room for the action to proceed as a class, it had effectively denied certification.
The Halls assert that the district court erred by determining that a vacatur of certification is equivalent to a denial of certification. As the Halls emphasize, the requirements for certifying a class action are set forth in
While the Halls’ argument does have some theoretical appeal, it is ultimately unpersuasive for several reasons. First, although the Halls are correct that the vacatur of a certification order has the effect of nullifying that order, it is not necessarily true that a vacatur completely reinstates the parties’ pre-existing procedural and temporal statuses. As many of our own supervisory instructions recognize, the vacatur of a judgment and the reinstatement of a pre-existing judgment are conceptually distinct actions.9 Moreover, the instant case illustrates the unfairness of finding that a vacatur of class certification implicitly reactivates a pending motion for certification. Here, the Drnek plaintiffs’ years-old motion for certification would silently perpetuate tolling for putative class members, leaving VAL-
IC indefinitely exposed to the stale claim of an uncertified class.
Second, the Halls have offered us no real reason to distinguish between a decertification order and a vacatur of certification. Although the Halls insist that the vacatur of certification is different from decertification because vacatur does not involve a consideration of Rule 23‘s requirements, the Halls ignore the fact that the basis of the Drnek court‘s vacatur was fundamentally a Rule 23 class certification issue. The record verifies that the Drnek court vacated its class certification order because the plaintiffs could not “prove a class-wide measure of damages,” a classic issue of common question predominance under
Recognizing that a vacatur of class certification causes tolling to cease is also most consistent with our reasoning in similar cases. In Taylor v. UPS, we considered how long the statute of limitations remained tolled for an employment discrimination plaintiff who had been a member of a certified class of similarly situated plaintiffs. 554 F.3d at 513. Although the class‘s claims were dismissed on the merits in 2000, the dismissal was not affirmed on appeal until 2004. Id. After delving into American Pipe, its Supreme Court progeny, and finally its Fifth Circuit progeny, we found that “it is clear from the[] cases that if the district court denies class certification under Rule 23, tolling of the statute of limitations ends.” Id. at 519. We reasoned,
In those cases, the district court‘s refusal to certify the class was tantamount to a declaration that only the named plaintiffs were parties to the suit. Thus, those cases logically concluded that after the district court‘s denial of certification, the putative class members had no reason to assume that their rights were being protected. Stated differently, they were notified that they were no longer parties to the suit and they should have realized that they were obliged to file individual suits or intervene in the class action.
The principles enunciated in Taylor weigh in favor of finding that American Pipe tolling ceases when a certification order is vacated. In the words of the Taylor court, the Drnek court‘s decision to vacate certification was “tantamount to a declaration that only the named plaintiffs were parties to the suit.” 554 F.3d at 520. Through this lens, a vacatur of certification is no different than a decertification or a denial of certification. Plaintiffs whose class certification has been vacated simply have no reason to think that the ex-class representative will continue to protect their interests. While a putative class representative might later succeed in overturning the vacatur of certification, we have consistently deemed reliance upon the possibility of reversal as irrelevant for purposes of tolling.12
As evidenced by the instant case, a contrary rule would allow non-class members to sit on their rights indefinitely while awaiting full appellate review of a decision that does not legally apply to them. In contrast, the resumption of a statute of repose after a vacatur of certification puts the onus of filing individual claims only on those putative class members who have officially lost their status as a class. Accordingly, we hold that the Drnek court‘s vacatur of certification caused American Pipe tolling to cease and the statute of repose to resume running. Because the Halls brought this action after the statute of repose expired, their claim has been extinguished.13
IV.
For the reasons stated above, the judgment of the district court is AFFIRMED.
W. EUGENE DAVIS
UNITED STATES CIRCUIT JUDGE
Notes
In those cases, the district court‘s refusal to certify the class was tantamount to a declaration that only the named plaintiffs were parties to the suit. Thus, those cases logically concluded that after the district court‘s denial of certification, the putative class members had no reason to assume that their rights were being protected. Stated differently, they were notified that they were no longer parties to the suit and they should have realized that they were obliged to file individual suits or intervene in the class action.
Id. at 520.
When a class is certified, however...., unless the district court later decertifies the class for failure to satisfy the Rule 23 factors, members of the certified class may continue to rely on the class representative to protect their interests throughout the entire prosecution of the suit, including appeal. A contrary rule would require certified class members to immediately intervene or file individual suits in the event of a merits dismissal of the class action in the district court. Such a rule would not work to prevent “needless multiplicity of actions,” and would ignore the intended benefit of certification—efficient representation of a class of claimants.
Id. at 520-21 (quoting Crown, Cork & Seal, 462 U.S. at 351, 103 S.Ct. 2392). Because the Taylor plaintiff was still a member of a certified class even after a merits dismissal, we determined that he retained the right to rely on the class representatives to protect his interest—and American Pipe tolling—until 2004 when the dismissal was finally affirmed. Id. at 521. Such a conclusion honors both Rule 23‘s purpose as a vehicle of efficient group representation and limitation statutes’ role in providing timely notice of adverse claims and preventing harmful delay. See id.; Crown, Cork & Seal, 462 U.S. at 352, 103 S.Ct. 2392. However, the Supreme Court squarely foreclosed this argument in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 131 S.Ct. 2541, 2551-52, 180 L.Ed.2d 374 (2011), where the Court reiterated that the district court‘s “rigorous analysis” under Rule 23 inevitably “will entail some overlap with the merits of the plaintiff‘s underlying claim. That cannot be helped.” 131 S.Ct. at 2551-52.